100 - Criteria

Transcripción

100 - Criteria

annual report 07
Executive summary
Portfolio as of December 31/12/2007
Valuation
Services
Energy
% stake
MM
35.53%
12.67%
6,366
3,770
Abertis
21.12%
2,972
Agbar
+ Desembolso OPA
Telefónica
BME
27.67%
16.44%
5.48%
3.53%
1,140
680
5,540
138
Grupo Port Aventura
Otros
97.12%
100%
854
75
Gas Natural
Repsol YPF
Intl Banking
Banco BPI
Boursorama
The Bank of East Asia
Otros
Infrastructure
Services
Valuation
Financial
% stake
MM
25.02%
20.44%
8.89%
–
1,019
143
683
147
100%
67%
2,210
40
100%
100%
100%
100%
224
70
100
22
Insurance
CaiFor
GDS-Correduría
Specialized Financial Services
InverCaixa Gestión
CaixaRenting
Finconsum
GestiCaixa
Leisure
21,535
82%
4,658
18%
26,193
Performance of asset value
Performance of Criteria CaixaCorp’s listed
portfolio vs. benchmark indices
€milion
801
26,104
Net
investment
GAV
Gross
asset
value
(712)
26,193
Charge in
value
130
120
19.1%
110
10.9%
10.4%
100
Net
debt
(4,708) IPO proceeds + Green Shoe
= 3,848
(1,264)
NAV
Net asset
value
21,396
24,929
June 30
December 31
90
Share price performance
3,287 million
shares
Jan-07
Mar-07
CriteriaCaixaCorp
Listed Portfolio
Dividend
income
3,363 million shares
+1.6%
7.0
-33.9 %
-30.4%
Share price
4.0
Dec-07
Replicated
investments
Eurostox50
24-11-07
09-12-07
Net
extraordinary
profit
Net profit
+26%
24-12-07 31-12-07
2,316
1,833
1,696
599
69
117
461
2006
3.0
09-11-07
Nov-07
1,187
578
-1.5%
25-10-07
Replicated
investments
Ibex35
+4%
Discount -30.3%
5.0
10-10-07
Sep-07
+43%
NAV per share
8.0
-28.1%
Jul-07
Non-consolidated results
9.0
6.0
May-07
530
2007
Dividends: same
consolidation
scope
2006
Dividends
from new
acquisitions
2007
2006
2007
Dividends
from divested
stakes
> On December 13, 2007 an interim dividend of €0.03/share was paid with a charge to net recurring profit for October and
November 2007, equivalent to an annual yield of c.4%.
> On March 6, 2008 the Board of Directors approved the proposed final dividend €0.02/share for 2007, to be submitted to
the Annual General Meeting for approval.
> The total dividend with a charge to 2007 paid since October 10, 2007 is €0.05/share, which on an annualized basis and
indexed to the flotation price of €5.25/share, would imply a yield of 4.28%.
annual report 07
Letter from the Chairman
04
1. An introduction to Criteria CaixaCorp
08
2. Economic context and market performance
12
3. Highlights for the year
a. IPO
b. Development of corporate governance
c. Positive Net Asset Value performance
d. Strong portfolio returns
e. Growing results
f. Dividend yield of 4.28%
g. Boosting communication with shareholders
16
18
21
22
22
23
24
26
4. Capital structure
a. Shareholder structure
b. “la Caixa”, core shareholder
c. Share price analysis
30
32
34
40
5. The company
a.Mission statement. Vision. Business lines
b.Dividend policy
c.Organizational structure
i. Corporate Governance
ii. Human resources
iii. Key procedures
Decision making: investment-divestment
Main risk factors and risk control
iv. Corporate Social Responsibility
44
46
49
50
50
60
64
64
66
66
6. Portfolio of investees
a. Investment portfolio
b. Portfolio description
c. Active management of the portfolio
d. Portfolio returns
e. Our investments
74
76
78
82
86
88
7. Financial analysis
a. Highlights
b. Financial information
c. Non-consolidated financial statements
d. Consolidated financial statements
e. Risk factors
f. Tax matters
Criteria CaixaCorp annual report 07
contents
130
132
136
138
147
157
161
03
Dear Shareholder,
The IPO of Criteria CaixaCorp was the highlight of 2007. The process got underway in November
2006, when the Board of Directors of Caja de Ahorros y Pensiones de Barcelona, “la Caixa”, the
company’s sole shareholder at that time, approved an analysis for the flotation of its investment
portfolio. The objective of the operation was to establish a market benchmark for portfolio
management, increasing the independence of this management from “la Caixa”, and taking
advantage of the opportunities for growth and development offered by the capital markets. On
June 7, 2007, in the “la Caixa” Annual General Assembly the Criteria CaixaCorp IPO was formally
approved.
360,000 new shareholders
After the CNMV (National Commission of Stock Markets) approved the offering prospectus, Criteria
CaixaCorp was successfully listed on October 10. Its shares began trading at €5.25 per share.
Following the IPO, Criteria CaixaCorp’s free float stood at 22% and its shares are now in the hands
of over 360,000 new investors.
It is worth highlighting that both tranches of the offering were heavily oversubscribed. The success
of the operation is even more significant if we consider that it is one of the largest placements
ever made in Spain carried out at a difficult time for the financial markets, particularly the real
estate and financial sectors.
04
Substantial upside potential
Bearing in mind that Criteria CaixaCorp’s shares are trading at a discount to net asset value (30.3%
at December 31, 2007), which is smaller than the discount shown by other similar companies, it
would appear that the shares have significant upside potential, notwithstanding the extreme
financial market volatility seen since mid January 2008.
Criteria CaixaCorp’s shares dropped 1.5% from the listing price between October 10 and December
31, 2007, closing the year at €5.17. This fall in the share price contrasted with 1.6% increase in
the net asset value per share of Criteria CaixaCorp’s portfolio over the same period. The company
has not been immune from the sharp equity market correction seen at the beginning of 2008.
I would also point out that following a favorable ruling by the CNMV’s technical advisory committee,
Criteria CaixaCorp joined the Ibex35 on February 4. Joining Spain’s benchmark index, the yardstick
by which the major equity portfolio managers measure their performance, will give greater visibility
to the company and increase its liquidity.
A drive towards international expansion
Criteria CaixaCorp’s goal is to become an investment benchmark in financial companies which are
able to create value, with a focus on international expansion. It is an ambitious project but Criteria
CaixaCorp has an important factor in its favor: “la Caixa”’s experience in retail banking and its
ability to create value and synergies from new acquisitions. Criteria CaixaCorp will prioritize
investments in the financial sector to strike a medium-term balance vis-à-vis its services industry
investment portfolio, without neglecting its presence in strategic sectors of the economy such as
telecommunications, energy, infrastructure management, basic services and the leisure industry.
Criteria CaixaCorp expects to continue to create value at all its investees, shaping each company’s
strategic direction through direct involvement in their corresponding governing bodies. This strategy
is what gives our hard-to-replicate portfolio of investees the characteristics that make it an attractive
investment vehicle for the general public.
Sucess and sustainable development
Sustainable development is part of Criteria CaixaCorp’s business philosophy and an integral part
of its business model. We consider this to be a voluntary commitment that goes beyond legal
requirements and bylaw stipulations. Therefore, it is our job to ensure that our employees are
aware of and responsibly and correctly adhere to these business ethics in all our undertakings. As
shareholders, we will ensure that the companies we invest in work responsibly and ethically. It is
essential for Criteria CaixaCorp to obtain an economic profit to be able to carry on this important
social function.
Main operations in 2007
In line with the company’s stated objectives, in the second half of 2007 several transactions were
carried out which have strengthened our portfolio.
05
Acquisition of 50% of CaiFor
An agreement was reached with the group’s former partner Fortis to acquire 50% of the CaiFor
Group for €950 million. The transaction was completed on November 12, 2007. The CaiFor Group
is the leading provider of life insurance in Spain. Its current positioning, combined with the potential
for growth in other segments of the insurance industry in Spain and abroad, provide the strategic
rationale for its full integration into the Criteria CaixaCorp project.
Acquisition of 8.89% of Bank of East Asia
The first step in our expansion into international financial institutions is the acquisition of an 8.89%
stake in The Bank of East Asia (BEA). Based in Hong Kong with a network of more than 50 branches
in China, specialist magazine “The Asian Banker” named it the best foreign retail bank in China
in 2006. The acquisition was made in two stages. The first block was taken by purchasing shares
in the organized market. The second stake was taken by subscribing to a capital increase. The total
investment was 628 million. We see enormous potential in the Chinese market due to both its
economic growth and the relatively low penetration of banking services.
Agbar takeover
Following the acquisition of a 6.67% of Agbar’s share capital in November 2007, the takeover bid
for Sociedad General de Aguas de Barcelona (or Agbar) launched jointly with our historic partner
Suez Environnement in 2007, was successfully completed in January 2008, with acceptances
totaling 50,205,817 shares, representing 33.55% of Agbar’s share capital. Criteria CaixaCorp
invested €852 million in Agbar. Now the transaction has been settled and Criteria CaixaCorp and
Suez Environnment jointly control 90% of Agbar’s share capital.
After working together for more than 15 years, the groups led by Criteria CaixaCorp and Suez
Environnment aim to leverage the success of the takeover to reinforce Agbar's business project,
jointly managing the company in accordance with the criteria laid out in the current shareholder
agreement.
By securing control of Agbar, Criteria CaixaCorp will be able to reinforce its active management
model, predicated on participating in the governing bodies and exercising significant influence in
the decision-making of its investees, the development of their businesses and carrying out corporate
deals. The bidding companies intend to keep Agbar as a listed company for the next two years,
with a free float of around 30%.
Sale of Occidental (OHM) and Caprabo, S.A.
At the end of July the company sold its stake in the Occidental Group (OHM) to Valenza, BBVA’s
private equity fund, and Pontegadea Inversiones, S.L.
On September 13, the sale of its 20% stake in Caprabo, S.A. to Grupo Eroski was completed. This
investment, held through Caixa Capital Desarrollo SCR de régimen simplificado, dated back to 2003.
06
It is important to note that all these operations are part of the everyday business of a company
like Criteria CaixaCorp, whose core business is the active management of its investment portfolio
(investing and divesting), and this makes year-on-year comparisons of results and accounts nonmeaningful. The corporate restructuring undertaken prior to the IPO makes this caveat particularly
relevant in 2006 and 2007.
New Board of Directors
On September 6, five new directors were appointed to Criteria CaixaCorp’s Board, all of them
independent. The Board of Directors now has fifteen members, of which one third are independent,
to safeguard the interests of all the company’s shareholders. Through their involvement as members
of the Audit and Control and Appointments and Remuneration committees, we trust they will
contribute their expertise to the good governance of the company, helping to shape our general
strategy.
The two transactions generated revenues €454 million for the company and €140 million in
consolidated capital gains.
As one chapter in the history of Criteria CaixaCorp closes, another chapter is opened, which we
believe will benefit us all. Our main objective is the management of a company focused on value
creation and satisfying our shareholders. Therefore, it is our policy to reward shareholders via
dividends with a charge to steadily increasing earnings and we will pay out 90% of Criteria
CaixaCorp net recurring profit each year in the form of dividends. This dividend policy is even more
pertinent in the current context of financial market volatility.
Yours faithfully,
Ricard Fornesa Ribó
07
1
08
An investment group with financial and services
stakes, which offers long term value for the
shareholder through active portfolio
management.
Introduction to
Criteria CaixaCorp
09
1_ Introduction to Criteria CaixaCorp
Introduction to Criteria CaixaCorp
Criteria CaixaCorp is an investment group with
a portfolio of financial and services investees
and a strong commitment to internationalization,
with an active portfolio management policy that
offers shareholders long-term value.
Our investment portfolio is the
largest in Spain in terms of asset
value and it includes relevant
stakes in top-ranking companies
that are leaders in their sectors.
Our investment portfolio is the largest in Spain
by asset volume. It has a value of €26,193 million
at December 2007 and includes top-ranking
companies with leadership or significant positions
in their respective markets and the capacity to
create recurrent value and returns. We hold
investments in strategic sectors such as energy,
telecommunications, infrastructure and services.
Our active management policy involves taking
influential positions in our investees, playing an
active role in their governing bodies and
10
consequently helping to define their policies and
strategies, boosting their continued development
and creating value for shareholders.
We employ a value management policy in our
investments. This means identifying investment
and divestment opportunities on the market,
with a manageable risk level. To do this we have
extensive knowledge of the sectors we invest in
and a proven track record that bolsters our status
as investor.
Criteria CaixaCorp has been trading on the
Spanish stock market since October 10, 2007,
and joined the Ibex 35 on February 4, 2008. It
is one of the top ten companies by market
capitalization.
Criteria CaixaCorp’s investment portfolio at
December 31, 2007 was as follows:
8% International banking
82% Services
8% Insurance
GAV
26,193 MM
2% Specialized financial
services
11
2
12
Financial markets: In the first half of the year,
the main worry was related to the increase in
inflation, while in the second half, it was
because of a general loss of confidence in the
financial markets due to the subprime
mortgage crisis, as well as the liquidity crisis
in the sector.
Economic context and financial
market performance
13
2_ Economic context and financial market performance
Economic context and financial
market performance
Criteria CaixaCorp operates in an economic and
financial environment which inevitably affects
its activities. The financial markets were
particularly turbulent in 2007. The year stands
out for two reasons:
(i) The uneven performance between the first
and second half.
(ii) Several benchmark indicators hit historic highs
amid the crisis that broke out in the capital
markets.
The first half of the year was apparently normal.
Inflation was the largest concern, leading the
ECB to raise its official interest rate twice. It
reached 4% on June 6.
The subprime crisis
The turning point was in August: when central
banks undertook the first measures to alleviate
the symptoms of the subprime mortgage crisis
in the US (low quality mortgage loans which are
also used in highly-leveraged structured
products). There were two responses to these
developments:
(ii) The US Federal Reserve reduced its interest
rates to 5.75% (50bp).
The impact of the subprime crisis started to be
felt as the major financial entities on Wall Street
reported negative earnings. Then,
announcements of writedowns to cover forecast
losses stared to appear. The crisis was immediately
felt on the financial markets, which became
more volatile as a result of the uncertainty
perceived and lack of confidence over the scope
and duration of the situation.
In contrast to this, during the last quarter of the
year, several indicators hit historic highs: The
Dow Jones index, Brent oil prices and the
euro/dollar cross. In Spain, the Ibex35 reached
a historic high on November 8.
The loss of confidence in the financial markets
was felt mostly keenly by banking entities due
to uncertainties over the impact the crisis was
likely to have on their financial results. This lack
of confidence triggered a liquidity crisis in the
sector although the impact was much less severe
in the monetary and bond markets.
(i) The European Central Bank (ECB) carried out
a liquidity injection into the interbank market.
Expected growth in Spain
continues to be above the
European average but forecasts
have been revised downwards
due to the influence of the US
economy, oil prices and the
dollar as well as a change in
the growth trend in the
residential construction sector.
14
Slowdown in growth
In response to this market performance, the ECB
left its tightening campaign on hold and kept
its key intervention rate at 4%, while the FED
cut its intervention rate a further 100bp in
September and down to 4.25% at December
31. This was the first concerted move by the
central banks of the US, the eurozone, the UK,
Switzerland and Canada to inject liquidity into
the system and alleviate the pressure on the
interbank markets.
The measures implemented by the central banks
did not have the completely desired effect. The
extreme volatility of the equity markets in the
first few months of 2008 in response to signs
of weakness in the US economy, is evidence
of this.
These events did not have the same impact on
all stock markets. Emerging markets rose strongly
in the year while the US and European bourses
closed the year up despite the losses recorded
in the second half. The Standard & Poor’s US
index closed slightly up and the EuroStoxx 50
and the Ibex35 both recorded gains, although
much lower than in 2006. In Spain, the Ibex35
gained ground in the fourth quarter and closed
the year with an increase of 7.3%.
The European economy is also showing
indications of slowdown although the indicators
published to date do not throw up any clearcut conclusions regarding the market scenario
in 2008. However, consumer and business
confidence indices have contracted substantially.
Leading analysts have revised downwards their
growth forecasts for the major world economies.
Spain continues to grow above the European
average but forecasts have also been revised
downwards due to external factors mainly the
US economy, oil prices and the dollar and internal
factors change in the growth trend in the
residential construction sector.
Concerted central bank action
15
3
16
Main significant events and decisions made
by Criteria CaixaCorp during 2007.
a. The IPO
b. Development of corporate governance
c. Positive net asset value performance
d. Positive portfolio returns
e. Growing results
f. Dividend yield of 4.28%
Significant events in the year
g. Boosting communication with shareholders
17
3_ Significant events in the year
The IPO
June 2007:
“la Caixa”’s General
Assembly formally
approves the IPO
September 2007:
IPO prospectus is
approved by the
CNMV
October 2007:
Criteria CaixaCorp
starts trading on
the market
November 2007:
Green-shoe is
exercised
November 2006:
“la Caixa”’s Board of
Directors approves the
study of the floatation
of its investment
portfolio
The IPO process got underway in November
2006, when the Board of Directors of ‘‘la Caixa’’
approved an analysis of the flotation of its
investment portfolio through Criteria CaixaCorp.
The objective of the operation was to establish
a market benchmark for portfolio management,
increasing the independence of this management
from “la Caixa” and taking advantage of the
opportunities for growth and development
offered by the capital markets. “la Caixa”’s
objective has always been to maintain a
controlling stake in Criteria CaixaCorp with the
aim of creating a vehicle for the international
expansion of the “la Caixa’’ Group.
18
In January 2007, the internal restructuring of
Criteria CaixaCorp got underway in order to
create an investment portfolio which would
ensure the future development of the business
based on the criteria of maximizing shareholder
value, in line with its defined strategy.
Therefore, in 2007, internal restructuring
operations were carried out prior to the IPO,
incorporating the following lines of action: The
exclusion of those investments which did not
respond to Criteria CaixaCorp’s strategic
objectives (institutional companies, support
companies or venture capital firms at start-up
stage, among others), and the inclusion of
Pre-IPO
Total shares: 2,629,870,800
“la Caixa”
100 %
Post-IPO
(post green-shoe)
“la Caixa”
Freefloat
78 %
22 %
19
investments held by other ‘‘la Caixa’’ Group
companies which did fit in with Criteria
CaixaCorp’s strategy.
On June 7, 2007, the General Assembly of ‘‘la
Caixa’’ formally gave their blessing to the Criteria
CaixaCorp IPO.
The main objectives for the IPO
were to achieve a market
assessment of the portfolio
management, to access capital
markets and the international
banking expansion.
stated that they had exercised most of the green
shoe rights conceded by the company. The
flotation was successfully completed.
360,000 new shareholders
Following the IPO, Criteria CaixaCorp’s free floats
stands at 22%, and its shares are now in the
hands of 360,000 new investors. The offering
involved the issue of 733 million new shares
including those issued pursuant to greenshoe
exercised by the underwriters.
The breakdown of the offering by tranche was
the following: 55% retail, 40% institutional and
5% employees.
It is worth highlighting that all tranches of the
offering were heavily oversubscribed:
> 4.1 times on the retail tranche
After the CNMV (National Commission of stock
Markets) approved the offering prospectus on
September 20, 2007, Criteria CaixaCorp was
successfully listed on October 10. Its shares
began trading at €5.25 per share.
On November 6, Morgan Stanley & Co.
International Limited and UBS Limited,
underwriters of the Criteria CaixaCorp IPO,
20
> 2.1 times on the institutional tranche
The success of the placement, one of the largest
IPOs in Spain, is even more remarkable in light
of the scant investor confidence in the equity
markets.
Criteria CaixaCorp has always been committed
to applying the best corporate governance
practices, particularly after its flotation. The
objective of these best practices is to protect
the minority shareholder, achieve transparency
in management and high standards in all
decision-making processes.
To meet these objectives, Criteria CaixaCorp has
adhered to the recommendations of the Unified
Corporate Governance Code when setting up
its governing bodies and establishing their makeup, functions and specification of competences.
Criteria CaixaCorp’s Board of Directors has fifteen
members of recognized prestige and experience:
one third of these independent.
The Board of Directors has set up two Board
committees: the Audit and Control Committee
and the Appointments and Remuneration
Committee. Both are mainly comprised of
independent directors and chaired by an
independent director.
applied. This protocol is a public agreement
which defines each company's respective scope
of activity, regulates information flows to enable
“la Caixa” to meet the requirements imposed
by its supervising body, determines intragroup
contracts and services and establishes control
mechanisms and resolves potential conflicts of
interest.
Lastly, the Board of Directors has approved the
new internal rules of conduct on matters relating
to the securities markets. This regulation
determines the conduct and performance to be
followed by Board members, employees, and
external advisors and consultants in relation to
their operations, and the treatment, use and
dissemination of confidential, privileged and
significant information. This code overrides any
earlier internal procedures in order to promote
transparency in the activities of group companies
and ensure investors are duly informed and
protected.
Development of
Corporate Governance
Furthermore, Criteria CaixaCorp has signed an
Internal Protocol of Relationships with its core
shareholder, “la Caixa”, which as a savings bank,
is subject to Bank of Spain supervision, and must
therefore comply with the regulations thereby
Best practices in
corporate governance
Criteria CaixaCorp counts on a
Board of Directors of
recognized prestige and
experience, a third of which
are independant.
21
Positive net asset value performance
The increase in asset value owes to two main
reasons: since the company’s asset value was
first published on June 30, 2007, and following
the restructuring carried out prior to the IPO,
financial investments made have been higher
than the portfolio value loss and revenues
obtained from the flotation (including the green
shoe) have allowed the company to significantly
reduce debt.
Positive portfolio returns
The listed portfolio has outperformed its
benchmark indices since January 1, 2007. The
chart below shows a comparison of the
performance marked by Criteria CaixaCorp’s
listed portfolio and two alternative investment
vehicles in which the same amounts would have
been invested: the Ibex35 and the Eurostoxx50.
Criteria CaixaCorp’s portfolio has produced a
higher return than both indices.
Performance of net asset
value
Performance of Criteria CaixaCorp’s listed
portfolio vs. benchmark indices
€million
130
26,104
Net
investment
GAV
Gross
asset
value
Net
Debt
NAV
Net asset
value
801
(712)
26,193
Change in
value
120
19.1%
110
10.9%
10.4%
100
(4,708) IPO proceeds + Green Shoe
= 3,848
(1,264)
21,396
24,929
June 30
December 31
90
Jan-07
Mar-07
CriteriaCaixaCorp
Listed Portfolio
May-07
Jul-07
Sep-07
Replicated
investments
Ibex35
Nov-07
Dec-07
Replicated
investments
Eurostoxx50
Note: The data in the graph show the domestic market value of an investment in its
benchmark index (using the share price at the end of the month), assuming that all
of the amounts invested or divested in the portfolio were invested or divested for the
same amount in the benchmark index. Taxes and dividend income are excluded.
22
It is important to note that comparisons between
2006 and 2007 are not meaningful due to the
IPO process and the internal restructuring taken
out prior to the operation.
Non-consolidated results:
Criteria CaixaCorp reported a 26% increase in
2007 net profit to €2,316 million. €599 million
in dividends (+4%) from investees and €1,696
million of net extraordinary income (+43%)
corresponding mainly to the restructuring carried
out prior to the IPO and specific divestments
drove earnings.
Consolidated results:
At the consolidated level, net attributable profit
for the Group fell 20% to €1,726 million in
relation to 2006. This figure entailed net recurring
profit of €1,180 million (+31%) and ¤546 million
of net extraordinary income. The level of
extraordinaries was high, but far below the
€1,260 million recorded in 2006.
The drop in extraordinary income was a result
of divestments and corresponding capital gains
booked in 2006, i.e. the sale of the stakes in
Banco Sabadell and Inmobiliaria Colonial, being
substantially higher than the figures posted in
2007, a year in which the divestments of Suez,
Caprabo and Grupo OHM took place.
Growing results
In 2007, Criteria CaixaCorp's
non-consolidated net profit
amounted to 2,316 million euros,
an increase of 26% compared
to the year before.
23
Dividend yield of 4.28%
The dividend yield from October
10 to the end of the year
amounted to €0.05 per share
At December 13, 2007, only 10 weeks after
company was listed, the Board of Directors
resolved to pay an interim dividend of €0.3 per
share against 2007 results. This implied a dividend
yield of over 4%, on the closing price at
December 12 (€5.17). This dividend was paid
on January 17, 2008.
Also, the Board of Directors at its meeting held
on March 6, 2008 submitted a proposal to the
Shareholders' Meeting to pay a final dividend
against 2007 results of €0.2 per share.
24
Together these payments imply a total dividend
paid of more than €168 million. This figure
corresponds to the distribution of recurrent
earnings obtained between the IPO in October
to the year-end 2007. The total dividend per
share paid out stands at €0.5, which annualized
and compared with the listing price of €5.25 by
share is the equivalent of an annual dividend
yield of 4.28%. Criteria CaixaCorp therefore
generated a substantial dividend yield barely
three months after coming to market.
25
Boosting communication with
shareholders
One of the objectives of floating Criteria
CaixaCorp was to establish a market benchmark
for portfolio management. Therefore, from the
very beginning the company has taken on a
commitment to become a benchmark both in
terms of its relations with investors and through
the quality of the service it provides, based on
the transparency of information.
Monthly net asset value updates
A first step in this policy of increasing
transparency is the regular dissemination of
updated information relating to Criteria
CaixaCorp’s portfolio and net asset value. For
the shareholders to have access to this
information details relating to the company, its
investment portfolio and specifically, its net asset
value, are published on the corporate website
(www.criteria.com). This not general practice
among companies engaged in the same activity.
By publishing a monthly net asset value update,
Criteria CaixaCorp is providing its shareholders
with a benchmark with which they can compare
the trading price of their shares and the market
26
value of the companies making up their
investment portfolios, listed and unlisted, from
which they can determine the value of the debt
taken out by the company at any given time.
Furthermore, in January 2008, the company
revised the value of its unlisted assets thereby
meeting its commitment to do this on a yearly
basis as disclosed in the IPO prospectus filed
with the CNMV. This revision updates the
valuations verified by independent experts only
six months previously.
Creation of an Investor Relations
department
To improve relations with shareholders Criteria
CaixaCorp has set up an Investor Relations
department whose basic objective is to ensure a
continuous two-way flow of information between
the company and the investment community.
This department maintains close contact with all
the company’s business areas and its management
to ensure that information which may be of
interest to the market is made available.
Phone: +34 93 411 75 75
E-mail:
[email protected]
Postal address:
Avda. Diagonal, 621-629, Torre II,
08028 Barcelona
The Investor Relations department has been
extremely active since it was set up in the last
quarter of 2007 as part of the Criteria CaixaCorp’s
IPO. It received a total of 148 calls and 80 emails
during this period. 208 queries made in the first
three months of 2008, which were all addressed
by Criteria CaixaCorp, in addition to various
meetings and roadshows. 169 of these queries,
(47 phone calls and 122 emails) were submitted
by minority shareholders.
Maximum access to analysts reports
Since the black out period ended on November
17, Spanish and international financial analysts
have been publishing reports on the company.
At December 31, 2007, 12 investment research
companies had Criteria CaixaCorp on their list
of coverage: Ahorro Corporación, Banesto Bolsa,
Bankinter, Cheuvreux CA, Citigroup,
Ibersecurities, Interdin, JP Morgan, M&B Advisors,
Morgan Stanley, Société Générale and UBS. In
line with its policy of transparency, Criteria
CaixaCorp gives the widest access possible to
all the valuations made by research analysts,
publishing them on its webpage:
www.criteria.com.
Our 360,000 minority investors require a
permanent consultancy service for which the
following channels have been set up:
We note that most analysts (92%) hold a Buy
or a Hold recommendation on Criteria’s shares.
We would also point out that the average target
price at the year-end was €6.02/share.
Analysts recommendations:
Sell
8%
Buy
Neutral
67 %
25 %
27
Publication of quarterly results and
significant events
In accordance with the best practices
recommended by the CNMV, Criteria CaixaCorp
makes a results presentation each quarter which
is broadcast on the corporate website,
www.criteria.com. This allows financial analysts
and investors to follow the management team’s
presentation without having to attend the
meeting in person. A Q&A session is held at the
end of each session where questions may be
phoned in or sent by email.
The company also issues significant event notices
for specific operations, e.g.: information
published by Criteria CaixaCorp relating to the
takeover bid for Aguas de Barcelona or the
purchase of The Bank of East Asia, which is
available on the corporate website.
Direct contact with shareholders
A good relationship with institutional investors
requires direct contact in the form of meetings
with Criteria CaixaCorp’s investor relations
specialists and, on occasion, with the company’s
senior management. In Criteria CaixaCorp’s first
months of trading, several roadshows and
meetings were held in various cities in Spain and
28
Europe, where institutional investors had the
opportunity to air opinions and exchange views
and opinions with the managing director. The
Investor Relations team also holds meetings with
investors at their request.
Criteria CaixaCorp will hold its first General
Shareholder Meeting since the IPO in Barcelona
in June. All information relating to this meeting
will be available on the corporate website from
the day the meeting is called. There will be a
video-broadcast for those shareholders unable
to attend the meeting in Barcelona.
Eventually, Criteria CaixaCorp expects to hold
other types of meeting with analysts and
institutional investors to discuss the company’s
performance and growth strategy. This could
take the form of an “Investors Day” or another
type of large event.
Specialized trade fairs are also a good opportunity
for direct contact between the company and its
shareholders. Criteria CaixaCorp takes part in
the main stock-market fairs held in Spain
(Borsadiner in Barcelona and Bolsalia in Madrid).
The company has a stand at these events where
it provides information and answers shareholders’
queries. For Criteria CaixaCorp, this direct contact
with shareholders is the perfect opportunity to
Regularly-updated corporate website
The corporate website is another key tool for
ensuring active communication with
shareholders. The corporate website
www.criteria.com offers a wide range of
content relating to the company which is revised
and updated on an on-going basis. The main
sections and content making up the website are
the following:
On the opening page of www.criteria.com we
highlight the content likely to be of most interest
to the shareholders and most likely to require
updating, such as the share price and its
performance compared to benchmark indices.
There is also a direct link to published press
releases, analysts’ recommendations on Criteria
CaixaCorp and a recording of the most recent
results presentation, among other useful
information resources.
provide them with economic-financial
information and explain the company’s strategy,
while at the same time addressing any concerns
arising in order to detect areas of improvement.
> Corporate information: About us, Significant
milestones, Business vision and strategy, Lines
of business, Board of Directors, Management
team and Corporate Social Responsibility
> Investment portfolio: Investments and
divestments.
> Information for shareholders and investors:
Introduction, Economic-financial information,
Share information, Corporate governance,
Significant events, Investors’ agenda and
Contact information.
29
4
30
The controlling shareholder of Criteria CaixaCorp
is “la Caixa”, the number one savings bank in
Spain and the third largest Spanish financial
institution.
a. Shareholder structure
b. “la Caixa”, core shareholder
c. Share price performance
Capital structure
31
4_ Capital structure
Capital structure
Changes in the company’s share capital as a
result of the IPO were as follows:
09/10/2007
07/11/2007
Prior to capital
increase
Offering- 657,500,000 Green-shoe
exercised:
Employees 5%:
2,629,870,800
32.875.000
Retail 55%:
361,625,000
Institutional 40%:
263,000,000
3,362,889,837
75,519,037
Prior to its listing, Criteria CaixaCorp’s share
capital stood at 2,629,870,800 shares. After the
IPO, the number of shares now stands at
3,362,889,837, with a free float of 22%, divided
among more than 360,000 new shareholders
and 733,019,037 newly-issued shares, including
the green shoe. Criteria CaixaCorp’s shares have
a nominal value of €1.
On October 9, 2007, the shareholder structure
after the capital increase and prior to exercising
the green shoe was as follows:
Pre-IPO
Post offering
After the capital increase the free float stood at
20%, but on November 7, 2007, after the green
shoe option was exercised by the underwriters,
it rose to 22%.
Criteria CaixaCorp’s core shareholder is “la
Caixa”, Spain’s leading savings bank by assets
and branches.
The capital increase made for the IPO, broken
down by tranche, is shown below:
Placement
Total shares: 3,287,370,800 (pre green-shoe)
“la Caixa”
“la Caixa”
100%
80%
Freefloat
20%
8%
11%
Employees 1%
Institutional
Retail
32
Capital increase
657,500,500 shares
(20% of share capital at 10/10/2007)
Employees
5%
Geographical breakdown of
institutional institucional tranche
Institutional
US
40%
39%
Spain
20%
Rest of the world
1%
Retail
UK
55%
11%
Rest of Europe
29%
33
“la Caixa”, core shareholder
Over 100 years of experience
Caja de Ahorros y Pensiones de Barcelona,
”la Caixa”, Criteria CaixaCorp’s core shareholder,
was created as a result of the merger between
Caixa de Pensions per a la Vellesa i d'Estalvis de
Catalunya i Balears, founded on April 5, 1904
and Caixa d'Estalvis i Mont de Pietat de
Barcelona, founded in 1844. The merger took
place in 1990 and the result is the current
financial entity, the legitimate successor and
continued line of both these companies.
The third largest Spanish financial
group, with a clear growth strategy
The “la Caixa” Group is the third largest Spanish
financial entity with a business volume (customer
deposits plus lending), of €385,639 million at
December 31, 2007. The Group reported
consolidated profit of €2,488 million in 2007,
with recurring profit of €2,011 million, up 33.5%.
As a result of the clear growth strategy
implemented after the merger in 1990 “la Caixa”
has experienced a substantial increase in
commercial activity, business volumes and results.
34
A three-way strategic development
objective: Economic, social and
sustainable
The objectives of “la Caixa” go beyond the strictly
financial concerns, of achieving profitable, efficient
and solvent growth to focus on other areas that
give shape to its commitment to society, by
reinforcing community initiatives, and its
commitment to sustainability, which is defined as
responsibility and ethics in all of its activities which
generate a source of trust. This approach secures
the future of “la Caixa” as the commitments it
has acquired voluntarily will contribute to increasing
the overall profitability of the Group.
Financial Bottom Line: Profitable,
efficient and solvent growth
To enhance profitable, efficient and solvent
growth of the Group. The Banking Business is
based on providing quality professional personal
advice to customers using a multichannel
distribution system with the branch, supported
by the latest technology, at the core of its
relationships. The investees business manages
strategic, financial and community investments,
is a source of recurring high returns and controlled
risk, and contributes to the development of the
fabric of manufacturing industry.
To reinforce the foundational origins by carrying
out programs for the wellbeing of the
community through its Financial and
Community Projects areas, working in
coordination. ”la Caixa” aims to work
proactively and flexibly to complement coverage
of society's basic needs, secure universal access
to financial services and bolster the fabric of
the country's manufacturing industry, while
reinforcing its special identity and managing
resources efficiently and in tune with the area
it serves.
Sustainable Bottom Line: guided by
responsability to society
Guided by responsability to society: Ethics and
Corporate Reputation.
The responsibility of “la Caixa”, as a source of
trust, can be clearly seen in the way it harmonizes
and identifies its values with those of the parties
it comes into contact with, in its good
management practices based on responsible
and transparent management, and in the way
it takes into account ethical behavior, employee
relationships, the environment and contributing
to the socio-economic development of its
environment.
The good management practices of “la Caixa”,
based on the responsible exercise of their
obligations by the General Assembly, the Board
of Directors and the Control Committee, secure
stability and strength for the Institution.
“la Caixa” Group in 2007: high quality,
efficient, profitable, secure and solvent
growth
Social Bottom Line: reinforce the
foundational origins
In 2007 “la Caixa” increased its customer base
by 400,000 to 10.5 million. The increase in
commercial banking activity has made “la Caixa”
leader in the private banking segment with a
penetration rate of 20.6% in 2007.
“la Caixa” is a benchmark in multichannel
management. At December 31, 2007 it had 5,468
offices in Spain, the largest branch network in the
financial sector in Spain with a share of 11.9%. It
also had 10 representative offices in Porto, Lisbon,
Brussels, Paris, Milan, London, Frankfurt, Stuttgart,
Casablanca and Peking and two operational offices
in Warsaw and Bucharest. “la Caixa” has the
largest network of self-service terminals (8,011
Leader in multichannel management
Spain
Customers
(million)
+0.4
10,1
2006
10,5
2007
International
Offices
+289
5,179 5,469
2006
2007
Employees
+1.101
25,241
2006
26,342
2007
Operational offices
Representative offices
35
terminals) and is leader in the on-line banking
segment with five million customers.
> Secure growth:
- High level of liquidity at €25,146 million (up
by 7,312). 10.1% of total assets, the result
of active, forward-looking management.
- High quality of loan investment with the
exercise of high levels of prudence in both
assessment and allowances (the default ratio
stands at 0.55% with non-performing loans
coverage at 281%, 336% if mortgage
guarantees are included.
Banking business volumes managed rose from
€170,237 million in 2002 to €385,639 million
in 2007, with an increase of 14.3% in 2007.
The 13.3% increase in customer deposits and
15.8% rise in lending in 2007 is evidence of the
balanced nature of this growth.
The company also increased its market share:
10.5% in customer deposits, 11% in mortgage
loans, 13.2% in payrolls and 17.6% in revenue
from cards.
> Solvent growth: excellent core capital figure of
8.0% (+1.8) with the capital ratio (BIS) at 12.1%
(+0.6).
Profits have also been driven by this growth.
Therefore, net profit attributable to the Group
in 2007 was €2,488 million, of which €2,011
million were recurring profits, up 33.5% in
relation to 2006.
This positive performance has allowed the group
to meet the targets for 2007 as set down in the
“la Caixa”’s strategic plan.
All of the above, in addition to the targets for
development and business diversification established
in the strategic plan for 2007-2010, will guarantee
the success of the Group’s growth and development
projects in the complex and demanding scenario
anticipated in 2008.
“la Caixa” reported high quality growth in all
its business lines in 2007, strengthening its
efficiency, profitability, security and solvency.
> Efficient growth: the efficiency ratio improved
to 42.9% (-5.0)
> Profitable growth: the recurrent ROE stood at
19.4% (-0.1)
“la Caixa” Group in 2007: High quality growth
€ million
Strong increase
in revenues...
+14.3%
...customer
funds...
+13.3%
385,639
337,260
...and lending.
+15.8%
+33.5%
161,789
223,850
197,495
Strong rise in
recurring profit
2,011
139,765
1,505
2006
36
2007
2006
2007
2006
2007
2006
2007
With a budget of 500 million
euros, “la Caixa” finances and
maintains a vast program of
social, cultural, scientific and
educational activities through
Community Projects.
”la Caixa” has financed and maintains a wide
range of social, cultural, educational and scientific
activities through its welfare work. The entity
allocates part of its earnings to specific community
projects and has had a Community Projects
department since 1918 in place to allow these
projects to be managed more professionally and
efficiently. In 2007 ”la Caixa” allocated €400
million to Community Projects, one of the largest
budgets for this type of activity in the world. The
budget for 2008 is €500 million, 25% higher
than the previous year.
1st in Spain
2nd in Europe
Obra Social
“la Caixa”
400
Obra Social
Caja Madrid
220
Community Projects
5th in the world
Wellcome Trust
742
Obra Social
“la Caixa”
400
Bill & Melinda
Gates
Foundation
Wellcome Trust
Obra Social
Caixa Galicia
90
Atlantic
Philanthropies
Fundación
ONCE
89
Obra Social
Caja Madrid
220
The Ford
Foundation
Obra Social
Kutxa
76
Monte dei
Paschi di Siena
197
Obra Social
“la Caixa”
348
1,186
742
Merck Co.
Foundation
661
547
400
37
Legislation applicable to “la Caixa”
”la Caixa” is a financial institution subject to
Bank of Spain legislation and supervision and,
at group level, to legislation governing solvency
and equity standards. This legislation governs,
among other factors, the investments that the
financial entity is able to make.
Other legislation which may affect potential
investments made by Criteria CaixaCorp as a
result of its links with ”la Caixa” include:
> Law 26/1988, of July 29 in relation to the
Discipline and Supervision of Credit
Institutions and Royal Decree 1245/1995,
of July 14, on the establishment of banks,
cross-border transactions and other matters
relating to the legal framework of credit
institutions.
As a result, any significant investment made by
Criteria CaixaCorp in credit entities or credit
financial institutions are subject to prior approval
by Bank of Spain, in the following two
circumstances:
(i) The incorporation of a credit entity abroad.
(ii) Acquisition of a significant stake in an existing
credit entity abroad, when this entity will be
incorporated in or has its registered offices
in a non EU member state.
38
>The provisions of Royal Legislative Decree
1/2008, of March 11, passed by the Generalitat
de Cataluña approving the revised text of the
laws governing Catalonian savings banks, shall
also apply to “la Caixa”.
> “la Caixa” is subject to the legal and regulatory
framework applicable to savings banks at both
national and regional level.
This legislation has specific implications with
regard to issues of corporate governance. These
are reflected in “la Caixa”’s Corporate
Governance Annual Report which is available
on the company’s website and that of the CNMV.
For instance, according to Decree 190/1989, of
August 1, passed by the Generalitat de
Catalunya, “la Caixa”’s Investment Committee
(a delegate committee of the Board of Directors
with advisory, not executive, functions) must
inform the Board of Directors or Executive
Committee of all strategic and stable investments
and divestments carried out either by “la Caixa”
directly or by any of its subsidiaries. The
committee must also report on the financial
viability of these operations and state whether
they fit in with “la Caixa”’s budget and strategy.
“la Caixa”’s Control Committee is
the governing body in charge of
supervising the management of
affairs by the Board of Directors
of “la Caixa”, overseeing their
efficiency within the guidelines of
the General Assembly and the legal
regulations.
the General Assembly, the company’s purpose
and legal requirements. “la Caixa”’s Control
Committee is comprised of nine members elected
by the General Assembly from among its members
who are not members of the Board of Directors.
Its functions include issuing an opinion and it
can even submit a proposal to the Department
of Economy and Finance to suspend Board of
Directors’ resolutions if these contravene
provisions in force.
Pursuant to the afore-mentioned legislation,
direct or indirect investments made by savings
banks in real state, shares, interests or other
material assets, the acquisition of significant
stakes in credit entities, the granting of large
loans or concentration of risk in a single person
or group, insofar as these investments exceed a
specified amount or stake or a specified volume
of equity, may require prior authorization from
the Generalitat de Catalunya’s Department of
Economy and Finance and/or the Bank of Spain.
To comply with national and regional legislation
governing savings banks, the Board of Directors
or the Executive Committee at “la Caixa” (the
investment committee reports to both) shall
exercise the necessary control, at the highest
level, over the strategic investments and
divestments made by Criteria CaixaCorp to
prevent or minimize the negative impact these
may have on its solvency or equity.
Additionally, pursuant to the afore-mentioned
legislation, all savings banks must have a Control
Committee in place to ensure the management
activities implemented by the Board of Directors
comply with the lines of action put forward by
39
Share price performance
Criteria CaixaCorp’s shares were listed for trading
on October 10, 2007 at an issue price of
€5.25/share. As a result of increasing market
volatility in the second half of 2007, the share
price dropped 1.5% to close the year at
€5.17/share.
The average daily trading volume for Criteria
CaixaCorp’s shares was 6.8 million, rising to
101.6 million shares traded on the first day of
trading.
We highlight the following key data:
Market cap at year-end
€17,386
IPO issue price
€5.25
High price (19/10/2007)1
€5.25
1
Low price (23/11/2007)
€4.98
Share price at year-end
€5.17
Maximum daily trading volume (shares)
101,560,000
Minimum daily trading volume (shares)
684,914
Average daily trading volume (shares)
6,752,470
(1) Share price at COB
Trading volume (number of shares)
105.000.000
20.000.000
15.000.000
10.000.000
5.000.000
0
10/10/2007
40
25/10/2007
09/11/2007
24/11/2007
09/12/2007
24/12/2007
31/12/2007
with the main benchmark indices and an analysis
of changes in the discount:
1. Criteria CaixaCorp’s share price performance vs. benchmark indices:
110
105
+2.1%
100
We analyze the performance of the share price
during its first three months of trading from two
standpoints: A comparison of the share price
-1.0%
-1.5%
95
90
10/10/2007
25/10/2007
Criteria CaixaCorp
09/11/2007
Ibex 35
24/11/2007
09/12/2007
24/12/2007
31/12/2007
Eurostoxx50
In the chart above we can see that the share
price dropped 1.5% in its first three months of
trading. This performance is in line with that of
the European markets, where, as an example,
the Eurostoxx50 lost 1% in the same period.
However, the Ibex35 rose 2.1%.
41
2. The discount:
9.0
NAV per share
8.0
+1.6%
7.0
-28.1%
-33.9 %
-30.4%
Discount
-30.3%
6.0
-1.5%
5.0
Share price
4.0
3.0
10/10/2007
25/10/2007
09/11/2007
24/11/2007
Another method of analyzing share price
performance is by tracking the discount. The
“discount” is defined as the difference between
Criteria CaixaCorp’s net asset value and the
company’s capitalization at closing prices. Looking
at these figures we can observe that the discount
has increased from 28% at the time of the IPO
to 30.3% at year-end 2007; at times rising
above 33%.
This increase is due to the fact the net value of
Criteria CaixaCorp’s assets has grown by 1.6%
since the flotation, while the share price has
dropped 1.5%.
09/12/2007
24/12/2007
31/12/2007
The discount suggests to investors that they
hold shares in a company whose assets have a
market value which is higher than the price paid
per share. This difference between the market
value and the price paid is important as it
indicates that the shares may have upside
potential - the difference between the two
variables could reduce notwithstanding the
impact on Criteria CaixaCorp’s share price caused
by the extreme volatility seen on the financial
markets.
Discount performance
35%
34%
33%
32%
31%
30%
29%
28%
27%
10/10/2007
42
25/10/2007
09/11/2007
24/11/2007
09/12/2007
24/12/2007
31/12/2007
43
5
44
Criteria CaixaCorp’s objective is to become
an industrial and financial group of reference,
with a commitment to creating value and
achieving a balance between the satisfaction
of shareholders and employees and the
development of the company.
a. Mission statement. Vision. Business lines
b. Dividend policy
c. Organizational structure
ii. Human Resources
iii.Key processes
Decision making: investment – divestment
The company
45
5_ The company
Mission statement. Vision.
Business lines
Mission statement
Criteria CaixaCorp is an investment group with
stakes in industrial and financial companies, with
a firm commitment to international growth that
creates long-term value for its shareholders via
the active management of its portfolio, boosting
the growth, development and return of the
companies it invests in, within a framework of
controlled risk.
Services
Includes stakes in companies which are leaders in their
respective markets with proven capacity to grow and
create value. We focus on Spanish companies with
operations abroad in the infrastructure, energy and
services sectors, among others, that have built up a
profitable portfolio offering upside potential and the
capacity to pay an attractive dividend.
Vision
Criteria CaixaCorp’s objective is to become an
industrial and financial benchmark, with a focus
on value creation and achieving a balance
between shareholder satisfaction and the
company’s development.
Business lines
Criteria CaixaCorp has a multi-sector portfolio
combining investments in listed and unlisted
companies, which are leaders or benchmarks in
their respective fields and which together make
up a diversified portfolio that is non-replicable,
giving the company a privileged position in the
market.
It has two main business lines:
46
Financial
Includes investments in the international banking sector
via stakes acquired in banks outside Spain and
investments in (non listed) subsidiaries operating in
Spain in areas such as insurance and specialized financial
services (asset management, operational leasing,
consumer finance...).
Management principles and strategy
We uphold the following management principles:
Active management of our investments:
Criteria CaixaCorp plays an active role in the
governing bodies of its investees, and is involved
in defining their future strategies, co-coordinating
their management teams and contributing to
the medium/long term development of their
business activities.
Value management of our investments:
Criteria CaixaCorp carries out investments,
divestments and corporate projects according to
the opportunities offered by the market. The
priority is always to create value and return for
shareholders. Therefore, Criteria CaixaCorp’s
buying and selling positions depend on the
markets and the company has the flexibility and
experience required to identify the best
opportunities.
Increased exposure to the financial
business:
Criteria CaixaCorp’s objective is to acquire stakes
in financial entities to balance out its portfolio
which is currently skewed towards investments
in services companies. One of Criteria CaixaCorp’s
strong points is the retail banking experience of
its core shareholder, “la Caixa” and its ability to
create value and synergies from new acquisitions.
Criteria CaixaCorp’s project is based on portfolio
management which is distinct from “la Caixa”,
which guarantees the interest of all our
shareholders, but is buoyed by its core
shareholder’s experience, knowledge, position
and renown in the financial sector.
Criteria CaixaCorp has extensive knowledge of
all its business lines, as a result of successful
investments and the on-going analysis of new
opportunities.
Medium/long term investment focus:
Criteria CaixaCorp’s active management approach
implies a medium/long term investment horizon,
maximizing value with a focus on corporate
development and involvement in the strategies
of our investees, and divesting at the right time.
Strategic performance
Financial services
Increased exposure to
the financial business
me
Banking
m
diu
/lon
g te
rm
Criteria CaixaCorp today
Financial services
Investment in
non-listed cpmanies
Listed
investments
Services
Financial
82%1
18%1
Criteria CaixaCorp
management model
VALUE CREATION
Future strategy
Services 60-40%
Financial 40-60%
Criteria CaixaCorp’s
“active management”
business model
+
“la Caixa”’s banking
experience
+
Synergies
INCREASED VALUE
CREATION
(1) Percentage of gross asset value at December 31, 2007
47
5_ The company
Strategy by business line
Each business line has its own strategic focus to
take advantage of opportunities for investment
and growth in each sector and geographical
market.
Services:
Our objective is to make selective investments
and divestments, identifying and taking
advantage of opportunities arising on the market.
Although the weight of investment in services
will be reduced as a percentage of the entire
portfolio, it will remain sizeable - between 40%
and 60% in the medium/long term. Criteria
CaixaCorp’s objective is to create a value
differential in these companies which operate
in strategic sectors of the economy, taking core
positions in their shareholder structures which
allow it to play an active role in their governing
bodies, key decision-making and the
development of their business strategies. Criteria
CaixaCorp holds key positions in these companies
and may even obtain the corresponding control
premium.
Financial business:
Criteria CaixaCorp will gradually increase its
investments in the financial business, both in
the retail banking segment and specialized
financial services such as insurance, asset
management, operational leasing and consumer
finance. On a medium/long term horizon,
investments in the financial business are expected
to account for between 40% and 60% of total
assets.
48
a) Financial business - International banking:
Our strategy involves increasing exposure to
the financial business, particularly , through
investments in companies focused on
international retail banking. Investments will
be carried out mainly in central Europe, the
NAFTA area, markets with high growth
potential and other nearby markets where
we expect to create value on the basis of
“la Caixa”’s experience in the retail banking
sector, which, having proved to be competitive
in the Spanish market, we intend to apply in
other areas.
b) Financial business - Insurance and
specialized financial services: Our objective
is to grow our investments in the insurance
and specialized financial services, by
expanding and consolidating our positions
in Spain. These businesses naturally leverage
on the “la Caixa”’s growing distribution
network and the potential for cross-selling.
In the medium/long term, these businesses
could expand abroad, taking advantage of
the experience acquired and within the
framework of Criteria CaixaCorp’s increasing
exposure to the international banking
business. These investments naturally
complement the banking activity which we
intend use as a support for our expansion in
the banking sector abroad.
Criteria CaixaCorp plans to pay out most (c.90%)
of its non-consolidated distributable recurring
profit each year as a dividend, excluding capital
gains on divestments, which, to maintain the
company’s investment capacity and drive its
ordinary activities, will be used for reinvestment
in line with our stated investment strategy.
Additionally, to boost shareholder remuneration
and in line with the policy described in the
paragraph above, the company may consider
other forms of shareholder remuneration such
as share buybacks or extraordinary dividend
payments.
Returns to the
shareholders
Criteria CaixaCorp plans to
pay out most (c. 90%) of its
non-consolidated distributable
recurring profit each year as
dividends, excluding capital gains
on divestments.
Dividend policy
Therefore, Criteria CaixaCorp is working to be
able to offer shareholders a dividend around
€0.21/share against 2008 results, which would
imply a minimum dividend yield of 4% for
shareholders who took part in the IPO and over
5% for those who invested at €4/share.
49
5_ The company
Organizational structure
One of Criteria CaixaCorp’s main objectives is
to guarantee the transparency, independence
and good governance of the company in order
to safeguard the interests of all its shareholders.
A corporate governance policy which is both
transparent and compliant with the
recommendations of the Unified Good
Governance Code is essential to ensure the trust
of all investors, Spanish and international alike.
The management and control of Criteria
CaixaCorp are divided between the General
Shareholders' Meeting, the Board of Directors,
the Board committees (Audit and Control
committee and Appointments and Remuneration
committee) and the General Management.
Company Structure
Number of shares and significant shareholdings
At the close of the financial year, the only
shareholder on the CNMV’s register with a
significant shareholding in the company was
Caja de Ahorros y Pensiones de Barcelona,
“la Caixa”, with a holding of 78.03% of Criteria
CaixaCorp’s share capital.
Board members and Treasury stock (year-end 2007)
Name of Board member
Number of direct
voting rights
Number of indirect
voting rights
% of total
voting rights
Ricardo Fornesa Ribó
María Amparo Camarasa Carrasco
Isidro Fainé Casas
Salvador Gabarró Serra
Manuel García Biel
Javier Godó Muntañola
Jorge Mercader Miró
Juan María Nin Génova
Miquel Noguer Planas
Manuel Raventós Negra
Isabel Estapé Tous
Susana Gallardo Torrededia
David K. P. Li
Alain Minc
Joan Rosell Lastortras
294,000
3,273
66,191
7,003
4,449
0
1,496
66,391
3,561
17,330
46,191
0
0
0
0
0
0
0
0
3,423
1,230,000
0
0
0
0
2,180
58,700
0
0
32,382
0.009%
0.000%
0.002%
0.000%
0.000%
0.037%
0.000%
0.002%
0.000%
0.001%
0.001%
0.002%
0%
0%
0.001%
TOTAL BOARD
509,885
1,326,685
0.055%
The company does not own any treasury shares,
either directly or through any of its subsidiaries.
However, on September 6, 2007, the sole
shareholder at that time, “la Caixa”, gave Criteria
CaixaCorp’s Board of Directors authorization to
acquire its own shares directly or through group
companies for the purpose of either sale or
cancellation after the date the company’s shares
50
were admitted for trading and for a period of
18 months from the date of the resolution,
provided the shares acquired (in addition those
already held) did not exceed 5% of the share
capital.
Criteria CaixaCorp has not been informed of
any shareholders’ agreements signed by its
shareholders for the concerted exercise of voting
rights or which could constrain the free transfer
of shares.
With regard to other strategic agreements, we
would point out that in relation to the takeover
bid launched for Sociedad General de Aguas de
Barcelona, on November 21 and December 19,
2007, Criteria CaixaCorp, S.A. signed two
amendments to the HISUSA shareholders’
agreement signed on July 18, 2006 relating to
their stake in Sociedad General de Aguas de
Barcelona with “la Caixa”, Suez, S.A., Suez
Environnement, S.A. and Suez Environnement
España, S.L.U. respectively. The CNMV was
informed of these amendments via significant
event notices published on November 21 and
December 20, 2007.
General Shareholders' Meeting
The functions, types and competences of the
General Meeting, in addition to the most
significant factors relating to the calling and
organization of the Meeting, voting procedures
on proposed resolutions, majorities required for
adopting resolutions and other issues relating
to the functioning of the General Shareholders’
Meeting are regulated by the company Bylaws
and Shareholders’ Meeting regulations.
Shareholders may access these documents on
the company’s webpage (www.criteria.com).
The General Shareholders’ Meeting shall be
convened by the Board of Directors, by means
of a notice published at least one month prior
to the date of the meeting. The notice shall state
the date and place of the meeting and all the
items on the agenda. From the date the notice
for the meeting is published, shareholders shall
have the right to receive at their registered
address, immediately and free of charge, all
proposed resolutions, reports and other relevant
documents. These documents shall be made
available on the company's webpage, although
shareholders may also request a copy of the full
text of the documents made available to them
be delivered or sent to them free of charge.
Shareholders may request information or
clarification relating to any item on the agenda
or formulate questions in writing regarding any
publicly available information that the company
has filed with the Spanish Securities & Exchange
Shareholders’ agreements and other strategic
agreements
51
5_ The company. Organizational structure
Commission (CNMV) since the last General
Shareholders’ Meeting. Shareholders may also
request any information or clarification they
consider appropriate relating to any items on
the agenda during the meeting.
Shareholders who own at least 1,000 shares,
individually or in combination with other
shareholders, recorded in the appropriate register
five days in advance of the date of the meeting
shall have right of attendance. Shareholders
with attendance rights may delegate another
person, not necessarily another shareholder, to
represent them. Proxies must be appointed
specifically for each Meeting, in writing or by
means of remote communication which duly
guarantee the identity of the voter.
electronic or other means of remote
communication, provided that the company has
established procedures to guarantee the identify
of the shareholder or proxy-holder exercising the
right to vote, the number of shares represented
and whether the vote is for or against the proposed
resolution or an abstention. In any case, the
procedures established for delegating voting rights
or voting by remote means shall be published in
the notice of the General Shareholders’ Meeting
and on the company's website.
Regardless of the requirements for publication
laid down by law or in the regulations in each
case, shareholders may be informed of the
resolutions adopted at the General Shareholders
Meeting on the company's website.
Votes on resolutions relating to items on the agenda
may be delegated or cast by shareholders by post,
From left to right and front to back: Alain Minc, Juan Maria Nin Génova, Isabel Estapé Tous, Isidre Fainé Casas, Ricardo Fornesa Ribó, Francisco
Reynés Massanet, Adolfo Feijoo Rey, Susana Gallardo Torrededia, David K.P. Li, Manel García Biel, Jordi Mercader Miró, Salvador Gabarró Serra,
Miquel Noguer Planas, Maria Amparo Camarasa Carrasco, Manuel Raventós Negra, Juan Rosell Lastortras and Javier Godó Muntañola.
52
Structure
Apart from those issues governed by the General
Shareholders' Meeting, the Board of Directors
is Criteria CaixaCorp’s highest decision-making
body. It should ensure that the company abides
by the pertinent laws and regulations in its
dealings with stakeholders and fulfils its
obligations and contracts in good faith; respects
the customs and good practices of the sectors
and territories where it does business and upholds
any social responsibility principles it has subscribed
to voluntarily.
The Board of Directors should approve the
company’s strategy, control the organization of
the Group to implement this strategy and
supervise and control the company’s
management to ensure it meets its stated targets
and respects its social purpose and interests.
The Board of Directors has fifteen members. The
Chairman of the Board is the only executive
member. Nine directors are proprietary directors
appointed on the recommendation of “la Caixa”
and the remaining five are independent directors.
When exercising its powers to propose
appointments to the General Shareholders'
Board of Directors
Good practices in Corporate
Governance are essential to
ensure the trust of all investors.
53
Meeting and co-opt directors to fill vacancies,
the Board shall endeavor to ensure that external
(or non-executive) directors represent a majority
over executive directors on the Board and that
the latter should be the minimum necessary.
attending in person or represented by proxy.
In the event of a tie, the Chairman shall not
have the casting vote.
Directors shall hold office for a term of six years,
without prejudice to their reappointment or
removal by the Board at any time as established
by company bylaws and prevailing legislation.
Pursant to Criteria CaixaCorp’s company bylaws,
the Board of Directors may be remunerated by
up to 4% of the consolidated profit, net of
general expenses, interest, taxes and other
amounts allocated to writedowns and D&A,
unless the Board itself agrees to reduce its
remuneration in the years it deems such a
reduction to be necessary. The resulting amount
shall be employed to remunerate the Board of
Directors and Board committees and members
of these Boards who carry out executive duties.
The amount shall be distributed among the
directors, and particularly the Chairman, as the
Board sees fit according to the duties and
dedication of each one, in the form of attendance
fees, bylaw-stipulated remuneration,
compensation for executive duties, among others.
Function
The Board of Directors shall meet in ordinary
session at least six times a year and, at the
Chairman’s initiative, whenever he considers it
necessary for the smooth running of the company.
The Board of Directors shall also meet when
requested to do so by at least two of its members
or one of its independent directors.
There shall be a quorum for Board meetings
when half plus one of the Board members are
present or represented thereat. And, unless
required otherwise by company bylaws or
prevailing legislation, resolutions shall be passed
by an absolute majority of the Board members
54
Remuneration
Directors carrying out executive functions at the
company, whatever the nature of their legal
relationship, shall be entitled to receive
The afore-mentioned amounts payable to
members of the Board may only be received
after the minimum 4% dividend has been paid
out to shareholders pursuant to article 130 of
the revised text of Public Limited Companies
Law.
by the General Shareholders’ Meeting. Where
appropriate, the agreement will list the number
of shares to be delivered, the exercise price for
the options, and the price of the shares taken
as reference and the term set for this type of
compensation.
At the meeting held on November 8, 2007, the
Board of Directors, pursuant to company bylaws,
established annual remuneration for each of its
members at €90,000 and €30,000 for each
member of the Audit and Control Committee
and each member of the Appointments and
Remuneration Committee.
remuneration for these duties which may be
either a fixed amount or a variable amount in
addition to incentive schemes and benefits which
may include pension plans and insurances and,
where appropriate, social security payments. In
the event of removal not caused by a breach of
contract, directors may be entitled to receive
compensation.
Additionally, within the limits specified in the
paragraphs above, directors may receive
compensation in the form of company shares
or shares in another listed group company,
options or other share-based instruments. This
compensation must be reported to and approved
Board members
Name
Type of director
Executive Chairman
Ricard Fornesa Ribó
Executive
Directors
Maria Amparo Camarasa Carrasco
Isabel Estapé Tous
Isidre Fainé Casas
Manel García Biel
David K. P. Li
Jordi Mercader Miró
Alain Minc
Juan Mª Nin Génova
Juan Rosell Lastortras
Proprietary
Independent
Proprietary
Proprietary
Independent
Proprietary
Proprietary
Independent
Proprietary
Independent
Proprietary
Proprietary
Proprietary
Independent
Secretary (non board member)
Adolfo Feijóo Rey
Secretary (non board member)
55
Committees: Functions and composition
Article 40 of Criteria CaixaCorp’s bylaws
establishes the obligation of the company to
create an Audit and Control Committee pursuant
to the stipulations of the 18th additional provision
of the Spanish Securities Market Act (Ley del
Mercado de Valores), which requires entities
issuing securities admitted to trading on official
secondary markets to have such a committee.
Article 13 of the Regulations of the Board of
Directors establishes the rules governing the
composition and functioning of this committee.
Audit and Control Committee
as carrying out any other actions established
in the Protocol to ensure the best compliance
with the afore-mentioned supervisory function,
and, in general, any others attributed thereto
by Law and other regulations applicable to
the company.
Composition of the Audit and Control
Committee:
Name
Position held
Alain Minc
Juan Mª Nin Génova
Chairwoman
Member
Member
The main functions of the Audit and Control
Committee are as follows
> To make recommendations to the Board of
Directors, for submission to the General
Shareholders’ Meeting, for the appointment
of the external auditor.
> Review the company’s accounts and periodic
financial reporting which the Board of Directors
must disclose to the markets.
> Monitor compliance with legal requirements
and the correct application of generallyaccepted accounting principles.
> Supervise the internal audit services; ensuring
compliance with the auditing contract, that
the opinion on the Annual Financial Statements
and the main content of the auditor's report
are drafted clearly and precisely, and monitoring
the independence of the auditing function.
> Check for compliance with internal rules of
conduct and the rules of corporate governance.
> Report any transaction which implies, or may
imply, a conflict of interest.
> Supervise compliance with the Internal Protocol
governing the relationship between “la Caixa”
and the company and the companies
belonging to their respective groups, as well
56
Appointments and Remuneration Committee
In contrast to the Audit and Control Committee,
the Appointments and Remuneration Committee
is not a legal requirement. Notwithstanding,
article 39 of the company's bylaws establishes
that the Board of Directors shall create a
Appointments and Remuneration Committee
from among its members. Article 14 of the
Regulations of the Board of Directors, approved
on September 6, 2007, sets forth the rules
governing the composition and operation of
this Committee.
The main functions of the Appointments and
Remuneration Committee are as follows:
> To submit to the Board of Directors proposals
for the appointment of independent directors
for their co-option or for the Board to submit
to the General Shareholders’ Meeting and
report on the appointment of other types of
directors.
> Propose to the Board the system for and the
amount of directors’ and senior executives’
annual compensation and the individual
remuneration and other contractual conditions
for executive officers.
Composition of the Appointments and
Remuneration Committee:
Name
Position held
Isabel Estapé Tous
Isidre Fainé Casas
Juan Rosell Lastortras
Chairwoman
Member
Member
Compliance with regulations
Criteria CaixaCorp has a two-tier support and
supervisory structure which ensures compliance
with the various regulations which directly affect
the company and its group.
The Audit and Risk Control department, reporting
to the Audit and Control Committee, is
responsible for monitoring compliance with
financial information processes and internal risk
management systems, as established in article
13.1 of Criteria CaixaCorp’s Board of Directors’
Regulations.
The Legal Advisory and Compliance Department
broadly monitor the company’s compliance with
all the legal requirements applicable to a listed
company and supports the Audit and Control
Committee in the task of informing the Board
of Directors of the changes that need to be
made to adapt the company’s bylaws to
regulatory changes and improve internal
compliance practices and procedures. In the
latter function, it works with the Secretary of
the Board to achieve excellence in the field of
corporate governance.
The function of the Criteria CaixaCorp’s
Compliance department is explained in detail in
the Internal Code of Conduct on matters relating
to the securities markets.
The Internal Code of Conduct determines the
standards of conduct and performance to be
followed in relation to the operations described
therein and the treatment, use and dissemination
of confidential, privileged and significant
information.
The Legal Advisory and Compliance Department
oversees compliance with the legal requirements
to which the group is subject. Subsidiaries subject
to specific regulatory norms (CaiFor, Invercaixa
and Finconsum) have their own compliance staff
and procedures in place, working in co-ordination
with Criteria CaixaCorp’s Legal Advisory and
Compliance department.
> Consider the suggestions submitted to it by
the Chairman, Board members, executives and
shareholders of the company, particularly when
drawing up appointment proposals.
Related-Party Transactions and Protocol
for Internal Relationships
Related-Party Transactions
According to article 4 of Criteria CaixaCorp’s Board
of Directors’ Regulations, the Board as a plenary
body shall approve all transactions the company
conducts with directors, significant shareholders,
shareholders with board representation or with
other persons related thereto (Related-party
transactions) and authorization from the Board
shall not be required for related-party transactions
that simultaneously meet the following three (3)
conditions:
> they are carried out by virtue of adhesion
contracts, whose conditions are standardized
and applied en masse to many clients;
> the are carried out at market prices or rates,
generally established by the party acting as the
provider of the good or service in question; and
> the amount of the transaction is not more
than one per cent (1%) of the consolidated
annual revenue of the group of which the
company is the parent.
Furthermore, the Audit and Control Committee
supervises compliance with regulations governing
Related-Party Transactions. Specifically, this
57
Committee is responsible for checking that
information relating to these transactions is
reported to the market, in compliance with the
provisions of Ministry of Economy and Finance
Order 3050/2004 of September 15, 2004, and
to report on transactions which imply, or may
imply, a conflict of interest and, overall, on the
issues addressed in Chapter IX of the Board of
Directors’ Regulations regarding the general
obligations of board members.
As stated in the 2007 Annual Corporate
Governance Report submitted by Criteria
CaixaCorp to the CNMV, no significant relatedparty transactions between the company and
its executives or directors took place last year.
Transactions between the company and
“la Caixa” carried out in 2007 are related in
detail in the Annual Corporate Governance
Report submitted by the company to the CNMV.
Protocol for Internal Relationships
To regulate its relationship with the core
shareholder and to increase transparency,
independence and good governance practices,
in line with the second recommendation of the
Unified Good Governance Code, Criteria
CaixaCorp and “la Caixa” have drawn up a joint
protocol for internal relationships which will
allow them to forestall and regulate conflicts of
interest and at the same time comply with
different regulatory and market requirements.
The objective of this protocol is to outline Criteria
CaixaCorp’s main business areas, define the
general lines of any potential business relationship
or services agreement that Criteria CaixaCorp
and its group could enter into with the “la
Caixa” and other “la Caixa” group companies
and ensure an adequate flow of information so
that “la Caixa” and the company are able to
prepare their financial statements and meet their
periodic reporting and supervision obligations
58
with the Bank of Spain and other regulatory
agencies. Criteria CaixaCorp’s Audit and Control
Committee is responsible for overseeing and
supervising these functions.
The protocol for internal relationships establishes
that Criteria CaixaCorp shall continue to invest
in the sectors in which it currently holds
investments and likewise act as a vehicle and
instrument of acquisition-led growth for “la
Caixa”, particularly in the area of international
expansion, via stakes acquired in companies in
the banking and financial sectors. The protocol
also governs potential investments made jointly
by Criteria CaixaCorp and “la Caixa” in a specific
business or preferential investment asset when
so advised by legal, financial, strategic or similar
reasons.
It also establishes the general regulations
applicable to services rendered, or to be rendered
at a future date, by companies belonging to the
“la Caixa” group to Criteria CaixaCorp and its
subsidiaries, and vice versa. Any new intra-group
service or transaction shall always have a
contractual relationship and must always be
ruled by the general principles of transparency
and carried out under market conditions.
The Board of Directors shall monitor the
publication of the annual reports prepared by
Criteria CaixaCorp’s Audit and Control
Committee via the media available to company
to ensure that the general public, and more
specifically, Criteria CaixaCorp shareholders who
are not “la Caixa” shareholders, are aware of
the extent of the company’s adherence to the
principles established in the Protocol.
Criteria CaixaCorp considers that it complies
substantially with the Recommendations of
Corporate Governance issued by the
government’s special ad hoc working group,
known as the “Unified Good Governance Code”
of May 19, 2006, as stated in its Annual
Corporate Governance Report submitted to the
CNMV and published on the latter’s website
(www.cnmv.es) and that of the company
(www.criteria.com).
In particular, corporate governance
recommendations adopted by Criteria CaixaCorp
include the number of company Board members
(currently set at fifteen) which complies with
recommendation 9 of the Unified Good
Governance Code (between five and fifteen).
Also, one third of the company’s Board members
are independent directors, as specified in
recommendation 13 of the Unified Code (five
of its fifteen Board members are independent
directors). Furthermore, fourteen of the fifteen
directors on the company's Board of Directors
are external directors. Therefore, the company
complies with recommendation 10 of the Unified
Good Governance Code, as external proprietary
and independent directors make up the majority
of its Board of Directors.
The company’s Audit and Control and
Appointments and Remuneration Committees
are made up exclusively of external directors
(most of which are independent) chaired in both
cases by independent directors, in compliance
with recommendation 44.
Although only 20% of the company’s Board of
Directors is currently comprised of women, it
should be borne in mind that, as specified in
recommendation 15 of the Unified Code, the
process of filling board vacancies has no implicit
bias against women candidates and furthermore,
the two of the Board committees are chaired by
female directors.
Adherence to Corporate Good
Governance Recommendations
The company is aware of its obligation to carry
out all its activities with the utmost transparency,
and therefore plans to progressively adapt its
internal corporate governance regulations
according to the recommendations put forward
by the Audit and Control Committee as part of
their remit.
Lastly, we note that in order to strengthen the
company’s transparency, independence and good
governance Criteria CaixaCorp and “la Caixa”,
as a listed company and its core shareholder
respectively, have subscribed to the Protocol for
Internal Relationships described above.
On September 6, 2007, the company’s sole
shareholder appointed Isabel Estapé Tous, Susana
Gallardo Torrededia, David K.P. Li, Alain Minc
and Don Joan Rosell Lastortras as independent
directors of Criteria CaixaCorp, without any prior
proposal by the Appointments and Remuneration
Committee, in line with recommendation 27 of
the Unified Code, as this Committee did not
exist at that date. However, the rules established
in heading 5 of section III of the Unified Good
Governance Code were followed when
classifying a director as independent as set down
in article 18 of Criteria CaixaCorp’s Board of
Directors’ Regulations.
59
ii. Human Resources
The key to our success
Human resources are one of the key factors for
the development of Criteria CaixaCorp. The
company’s purpose is to identify, grasp,
implement and follow up business opportunities
and these activities have to be carried out on
the basis of team work, a constant exchange of
relevant information and specialized knowledge
(technical and sector) in addition to the
appropriate management skills.
Therefore, Criteria CaixaCorp requires its
employees to be well-educated, highly-qualified
and committed.
All human resources management systems are
designed to help each and every one of the
company’s employees bring the highest added
value to Criteria CaixaCorp or other group
companies.
into line with those of a listed company and
with our growth strategy, based on the best
international human resources management
policies.
Innovation and experience
Criteria CaixaCorp has a staff of 107 employees
characterized by their proven experience in
business management (senior employees in key
posts), youth (average age 36), qualification
(87% are university graduates) and previous
experience in different business sectors.
The company’s senior management is comprised
of the Executive Chairman, Ricardo Fornesa Ribó,
and the Managing Director, Francisco Reynés
Massanet.
The Management Committee, named during
the 2008, comprises the company’s managing
director, Francisco Reynés Massanet, and the
heads of its different business areas:
Criteria CaixaCorp is particularly committed to
creating value for the shareholder, and since the
company was listed its human resources and
related policies have been progressively brought
From left to right: Xavier Moragas Freixa, Antoni Garriga Torres, Jordi Morera Conde, Carmen Gimeno Olmos, Francisco Reynés Massanet,
Almudena Gallo Martinez, Juan María Hernández Puértolas, Lluís Vendrell Pí and Francesc Bellavista Auladell.
60
Director of Internal Audit and Risk Management
Almudena Gallo Martínez:
Human Resources and CSR Director
Antoni Garriga Torres:
Director of Corporate Office and Investor Relations
Carmen Gimeno Olmos:
Director of Insurance and Financial Services Portfolio
Juan María Hernández Puértolas:
External Communications Director
Xavier Moragas Freixa:
Finance Director
Jordi Morera Conde:
Director of Banking Investment Portfolio
Lluís Vendrell Pí:
General Counsel
HR management
The main lines of Criteria CaixaCorp’s HR
management policy are the following:
Selection
Criteria CaixaCorp’s selection processes look at
the professional experience, competences and
personal qualities of the candidates, using
confidential, unbiased assessments which respect
diversity and equal opportunities.
Maximizing professional development
Criteria CaixaCorp focuses on professional
training and development.
Training is one of the key pillars of Criteria
CaixaCorp’s strategy. Therefore, the group is
developing (for implementation in 2008 and
thereafter) the appropriate training plans and
procedures for the needs and competences of
its employees, along with professional
development and talent management programs.
Criteria CaixaCorp also provides aid for individual
training programs.
3,754 training hours were booked in 2007,
which is an average of 35 training hours per
employee in the year.
Francesc Bellavista Auladell:
In 2008, a new professional development model
based on competence management will be rolled
out. This will feature a dictionary of competences,
development paths and evaluation tools.
Strategy-linked compensation policy
Compensation should be linked to the company’s
business strategy and shareholders’ interests
and therefore a real return from the company’s
investment in people should be ensured.
In 2008 a project is underway to design a
compensation system which fits in with Criteria
CaixaCorp’s business needs and is consistent
with market practices.
Furthermore, a performance appraisal system
will be introduced to clarify and prioritize the
contribution each employee makes to achieving
company’s targets on both an individual basis
and as part of a team. Common standards will
be identified not only for achieving results but
also governing how these results are to be
achieved.
The ultimate goal is to link compensation to
responsibility and performance, offering a full
remuneration package (fixed, variable, social
benefits).
The specialized nature of our business requires
a high degree of training and therefore in 2007
a total of 3,664 external training hours were
given, mostly in prestigious institutions such as
business schools and universities or at specialized
forums.
61
Diversity and equal opportunities
Internal communications
A range of employees with diverse backgrounds,
experience and knowledge is essential for a
company with an international investment focus.
Dialogue with employees is another key factor
in the management of human resources. Criteria
CaixaCorp has several communications channels
with its employees in place, including the intranet
- its main internal communications channel.
Regular meetings are also held between groups
of eight or nine employees and the management,
in order to make relations with employees closer
and more fluid.
Criteria CaixaCorp promotes the
professional and personal
development of its employees and
guarantees equal opportunities
for all of them.
Criteria CaixaCorp promotes the professional
and personal development of its employees
and guarantees an equal opportunities policy
and with this objective in mind, the company
is implementing a conciliation policy which
spans a wide range of initiatives. Some of
these are designed to make working conditions
more flexible.
Furthermore, on a quarterly basis, the
management team informs employees of the
company's performance to encourage them to
play an active part in the achievement of results.
Workplace risk prevention
The company’s workplace risk prevention policies
and systems are focused on the type of activity
carried out by all employees at Criteria CaixaCorp,
and are implemented by an external prevention
service. The different risks associated with each
type of job have been assessed and a prevention
program is in place to deal with these risks,
which are mainly related to ergonomic issues,
working with CPUs, trips and stress.
Breakdown of employees
Qualification
Seniority
> 10 years
Degree.
Postgraduate
degree (mba, etc.)
6-10 years
3-5 years
Other
University degree/Postgraduate qualification: 87%
62
0-2 years
Average seniority: 7 years
Key indicators
Criteria CaixaCorp employees receive the
necessary training in risk prevention. Specifically,
a special course held periodically for all new
employees, so ensuring that all members of staff
receive the appropriate training.
> Number of employees at December
31, 2007: 107
With regard to activity coordination, is worth
highlighting the company’s relationship with “la
Caixa”, which owns and manages the office
building (Torre II) which houses Criteria
CaixaCorp’s activities. “la Caixa” directly manages
and controls building accesses and security and
the implementation of different drills, along with
activities involving coordination with suppliers
and subcontracted companies.
> % of women holding management
positions: 23%
Facts and figures
> Average age: 36
> % of women: 60%
In 2007 only one accident (involving vehicles)
was reported, which resulted in sick leave of
139 days.
> Nationalities: 4
The company has worked with “la Caixa”’s risk
prevention team to identify, treat and prevent
incidences of semicircular lipoatrophy caused
by environmental conditions in the offices. In
response to this, Criteria CaixaCorp designed
and implemented a series of preventative
measures for all users of the office building,
along with treatments for the persons affected.
Breakdown by age
Breakdown by gender
< 30 years
30-39 years
Average age: 36 years
40-49 years
Men
50-59 years
Women
Women: 60%
63
iii. Key processes
Decision making: investment –
divestment
Criteria CaixaCorp’s main decision-making
process relates to investments and divestments.
These investments/divestments may be the result
of an active search by Criteria CaixaCorp’s
management team or its governing bodies. Or
they may be the result of operations presented
to Criteria CaixaCorp by external economic
agents (e.g. investment banks). A viability study
is carried for all potential investments and
divestments which considers all standpoints:
strategic, legal/fiscal and economic/financial.
This study is submitted to the Internal Investment
Committee and the Management Team who
decide whether the project should be passed
on to the corresponding governing bodies.
The governing bodies responsible for appraising
and approving investment projects are:
a) The Audit and Control Committee: This
committee analyzes the investments and
divestments made by Criteria CaixaCorp to
determine whether there are any conflicts of
interest between “la Caixa” and Criteria
CaixaCorp. When “la Caixa” and Criteria
64
CaixaCorp make a joint investment, the
Committee shall draw up a report, that it will
make available to the company’s Board of
Directors so that this body may evaluate, in
advance, the appropriateness or
inappropriateness of this joint investment
with “la Caixa” or the respective “la Caixa”
group company.
The Audit and Control Committee must to
report to the Board on the creation or
acquisition of stakes in special purpose vehicles
or entities domiciled in countries or territories
considered to be tax havens, as well as any
other transactions or operations of a similar
nature which, due to their complexity, may
deteriorate the transparency of the company
or of the group to which it belongs;
b) Board of Directors: This is the company’s
highest governing body, except in issues
falling under the remit of the General
Shareholders' Meeting.
The Board of Directors approves all
investments and operations considered to be
strategic by virtue of their amount or special
characteristics, unless this approval
corresponds to the General Shareholders’
Meeting. It also assess the creation or
c) “la Caixa” Investment Committee:
“la Caixa” is a savings bank subject to the
provisions of Royal Legislative Decree 1/2008
of March 11, approving the revised text of
the Law governing the Catalonian savings
banks sector passed by the Catalonian
parliament and other applicable provisions.
This legislation has specific implications for
savings banks with regard to issues of
corporate governance. For instance, “la
Caixa”’s Investment Committee (a delegate
committee of the Board of Directors with
advisory, not executive, functions) is
responsible for evaluating and informing “la
Caixa”’s Board of Directors or Executive
Committee of all strategic and stable
investments and divestments carried out either
directly by “la Caixa”, or by any of its
subsidiaries (such as Criteria CaixaCorp).
The committee must also report on the
financial viability of these operations and
state whether they comply with “la Caixa”’s
budget and strategy. An investment or
divestment is considered to be strategic, and
therefore “la Caixa”’s Investment Committee
must inform the Board of Directors or
Management Committee of its financial
viability, when it involves the acquisition or
disposal of a significant stake in a listed
company, as well as investments in business
projects where the company is involved in
the management or governing bodies,
provided that the investment or divestment
corresponding to the “la Caixa” group
accounts for more than 3% of its equity.
When this 3% threshold is not exceeded,
investments and divestments may by carried
out, without prior assessment by the
Committee, within the specified fluctuation
range.
acquisition of stakes in special purpose vehicles
or entities domiciled in countries or territories
considered to be tax havens, as well as any
other transactions or operations of an similar
nature which, due to their complexity, may
deteriorate the transparency of the Group.
65
a) Internal Audit
The main risks affecting Criteria CaixaCorp are:
b) Compliance
a) Market/Sector risk: as around 86% of the
company's investment portfolio is made up
of listed companies. The listed companies in
which Criteria CaixaCorp invests are exposed
to fluctuations in price and trading volumes
caused by factors beyond its control. In
addition, the portfolio is subject to risk relating
to concentration in the services sector and
country/interest rate risk.
c) Risk management
b) The second biggest risk is Compliance risk:
Criteria CaixaCorp is subject to sector,
mercantile and fiscal regulations and a
complex and changing legislative framework
making non-compliance with legal
requirements a potential risk which could
lead to sanctions (in Spain or abroad) or a
possible loss of reputation.
c) Exchange rate risk: exposure to exchange
rate risk, either through direct investments
made by Criteria CaixaCorp in assets in
currencies other than the euro (BEA, exposure
to the Hong Kong dollar), or indirect exposure
through investees (a large part of Repsol YPF’s
revenues are USD-denominated).
As part of the on-going process to improve its
internal control systems and effectively manage
risks, Criteria CaixaCorp has contracted the
advisory services of Ernst & Young, leader in risk
management. Specifically, Ernst & Young has
been contracted to identify opportunities to
improve the risk situation and the procedures
and controls designed to reduce or eliminate
exposure to these risks.
In order to strengthen the company’s internal
control systems, the following departments have
been created:
66
These departments are supervised by the Audit
and Control Committee and the Board of
Directors.
Criteria CaixaCorp’s vision and mission statement
define the company’s strategy. Therefore, the
creation of long-term value and a desire to be a
benchmark imply a commitment to combining
financial success with sustainable development,
creating value for both the company and its
stakeholders. This means that for Criteria
CaixaCorp’s executive management, decisiontaking is based not only on financial criteria but
also on the social and environmental consequences
of our actions.
Criteria CaixaCorp is setting up mechanisms to
ensure at all times the awareness and commitment
of our employees and directors as regards the
correct application of the two main challenges
facing the company, i.e. business ethics and
transparency in all our relationships with
stakeholders and the responsible management
of our investment portfolio. Criteria CaixaCorp
shares the principles of the OECD Guidelines for
Multinational Enterprises and underscore our
commitment to working along these lines.
1. Services portfolio
a) Energy and basic services companies,
leaders in sustainability
Criteria CaixaCorp’s strategy, based on its
vision and mission statement, and carried out
mainly through the active management of
its portfolio, obliges the company, as a
shareholder, to assess the risks and
opportunities relating to sustainable
development affecting its portfolio of
investees. Therefore, as a shareholder, Criteria
CaixaCorp has started to develop internal
policies to identify and manage social and
environmental risk at its investees, in order
to ensure that these companies work in a
responsible and ethical manner.
Investees on the company’s portfolio differ
widely with regard to social and environmental
risk. Therefore, listed companies, mainly in
the services sector, have well-defined CSR
strategies in place, as they are also multinational companies that report information
on a regular and transparent basis, in
accordance with the best reporting practices
in the development of their sustainability
strategies.
The problem of global warming is particularly
significant for most of them and is therefore
one of the main environmental risks to be
analyzed and evaluated in terms of its impact
on the performance of our portfolio.
Therefore, the leadership position held by
these companies in the various SRI indices
and rankings should be factored into the
periodic analysis of their performance as a
good indicator of the sustainable
management of their activities.
Concienciación y compromiso
Criteria CaixaCorp shares the
principles of the OECD Guidelines
for Multinational Enterprises and
highlights its commitment to
establish strategic work lines as
well as its commitment to a
responsible management.
CSR challenges facing Criteria CaixaCorp
as an active shareholder
Repsol YPF, Gas Natural, Abertis and Telefónica
are all listed on the most important SRI indices,
i.e. the DJSI index and/or the FTSE4good.
Also, all these companies and Agbar are part
of the Corporate Reputation Forum and have
won prizes and been awarded distinctions
for CSR in Spain and abroad. We highlight
their position in MERCO (the Spanish
corporate reputation monitor), and Telefónica
and Repsol YPF’s top-ranking positions among
the leading companies in Europe for CSR
according to “The Good Company Ranking
2007” or Gas Natural, Repsol YPF and
Telefónica’s place as finalists in the GRI
international prize-giving for the best CSR
annual report.
b) Port Aventura
In our role as sole shareholder, we particularly
analyze the risk relating to the environmental
and social impact of the activities carried out
by Port Aventura. Also, as Port Aventura’s
strategy is closely linked to its natural and
social surroundings, it is extremely important
to develop the business while ensuring respect
for its surroundings.
Port Aventura has a Certified Environmental
Management system in place, pursuant to
67
European EMAS regulations and ISO 14001,
which ensure that the company identifies
and manages the environmental impact of
its activities. Also, from a social standpoint,
the largest impact relates to human resources
management as the company employs a wide
variety of people and its business is extremely
seasonal in nature.
2. Financial portfolio. Ethical and transparent
management and fraud prevention
The management of our financial portfolio is
based on the criteria of transparency and ethical
management, bearing in mind the relationships
that our core shareholder “la Caixa” has on its
own account with the companies in which we
hold a controlling interest.
Our reputation depends largely on the
appropriate management of this portfolio and
the transparency of our relationships with
investees, ensuring that our minority shareholders
are not adversely affected as a result of any lack
of transparency.
The risk management program which is currently
being designed and which should be
implemented throughout 2008 will focus on
strengthening all aspects of risk management
relating to the company’s reputation, including,
pursuant to Criteria CaixaCorp’s CSR policy, both
portfolio management processes and investment
and divestment procedures.
Criteria CaixaCorp’s Internal Audit and Global
Risk Control department reports directly to Audit
and Control Committee, drawing up the
pertinent internal control reports and also takes
part in establishing internal control procedures
for the unlisted companies over which we
exercise control, as part of its function to identify
and manage risk at these companies and report
regularly to their respective governing bodies.
68
Specifically, in the area of fraud prevention, we
highlight the synergies arising with “a Caixa”’s
Internal Audit department. A joint team has
been created to facilitate fraud control and risk
processes relating to the unlisted portfolio, and
all internal audit reports relating to this portfolio
have a section dedicated to fraud.
Another factor affecting reputation relating to
ethical management is the prevention of money
laundering, and here we also highlight the close
collaboration between Criteria CaixaCorp and
“la Caixa”’s compliance departments to monitor
all the former’s investments in financial
companies.
In the area of transparency and ethical
management the company has two important
tools: the Internal Code of Conduct which
regulates the conduct of Criteria CaixaCorp
employees in regard to asset management and
use of confidential, privileged and important
information, and the Protocol for internal
Relationships with “la Caixa”, which establishes
the framework for Criteria CaixaCorp’s
relationship with “la Caixa” in order to define
the activities to be developed by both entities
and avoid the unfair treatment of minority
shareholders.
Other CSR factors at Criteria CaixaCorp
1. International Advisory Board
An International Advisory Board was created on
February 7, 2008, made up of professionals with
a prestigious track-record in the world of
economic and finance, and extensive knowledge
of the international global markets. Its objective
is to make Criteria CaixaCorp an investment
benchmark with an investment strategy based
on the management of a portfolio that cannot
be replicated, to excel in active portfolio
management (solvent, dynamic and efficient
portfolio management) and a strong strategic
focus on shareholder value creation with a
medium/long term investment approach.
The creation of this Board underscores one of
Criteria CaixaCorp’s key goals, i.e. to expand in
the international financial arena, which is central
to its strategic focus.
Clear functions have been described for the
Advisory Board, based on its knowledge.
Functions include:
> Providing high levels of advice, appraisal and
knowledge with regard to market
opportunities.
> Analyzing opportunities for acquiring
significant stakes in banks in the US, eastern
Europe and major emerging markets.
> Reinforcing the criteria of prudence, discretion
and risk assessment.
As part of its duties, the International Advisory
Board shall assess a wide range of risks and
opportunities (economic-financial and
environmental and social), backed by its specialist
knowledge in these areas, along with the
renewable energy market, development via new
technologies and research.
socially or environmentally sensitive is also
factored in. Therefore, the role of the
International Advisory Board in helping to identify
and assess these risks is considered to be
extremely important.
2. Developing corporate values. Code of Ethics
EFrom 2008, the company plans to create a
Code of Ethics containing its corporate values.
This code will, among other aspects, be an
external and internal showcase for the values
comprising Criteria CaixaCorp’s business project,
and its independence from “la Caixa”’s project,
with which it clearly shares values but has its
own trajectory.
In the area of transparency
and ethical management, the
company has two important tools
to guarantee these principles: the
Internal Code of Conduct and the
Internal Protocol for relations
with “la Caixa”.
The projected Code of Ethics is based on the
company's vision and mission statement,
developing the corporate values that should be
reflected in Criteria CaixaCorp team of
professionals.
Today, all Criteria CaixaCorp employees have
signed an internal code of conduct relating to
asset investment and divestment operations,
and to the treatment, utilization and
dissemination of confidential information, as
this is a regulated activity to which Criteria
CaixaCorp is particularly sensitive. The projected
Code of Ethics will clearly refer to this regulation
but is much broader in scope as it will also set
the base for the conduct of the Criteria CaixaCorp
team in the performance of their day-to-day
activities. Therefore, the Code of Ethics will have
the corresponding safeguard mechanisms in
place, putting Criteria CaixaCorp among the
Spanish companies to have adopted a Code of
Ethics in line with best practices.
At the same time, as we have already mentioned
with regard to decision-making processes relating
to investments and divestments, reputation risk
deriving from actions or scenarios which are
69
3. Green office policy
Criteria CaixaCorp’s activity does not have a
direct impact on the environment that can be
considered significant in terms of the impact
had by some companies on its portfolio.
Although we aware that our biggest challenge
lies in ensuring, via controlling their governing
bodies, the environmental impact caused by
these companies is properly managed, we also
know that a working environment designed to
minimize this impact is always necessary and a
reflection of our desire to conform to the best
practices.
The aim of Criteria CaixaCorp’s green office
policy is to implement the best practices in the
management of the office environment.
a) Consumption
Criteria CaixaCorp is currently developing a
project to refurbish its offices. The
refurbishment will be based on the concepts
of comfort, functionality and environmental
efficiency. Specifically, the restroom areas will
be installed with sensors which automatically
shut off the electric light or water when no
longer needed.
The energy consumed by Criteria CaixaCorp’s
offices in 2007 has been estimated on the
70
basis of the average monthly consumption
of one of its three floors. The total energy
consumed by the three floors in 2007 was
288 Kwh.
Water consumption has been calculated on
the basis of data from the general water
meter at the Torre II building (“la Caixa”’s
office building housing Criteria CaixaCorp’s
offices) for 2007, reflecting a monthly average
of between 1200 and 1500 m3 for the whole
building (12 floors). Therefore, the average
monthly consumption per floor is estimated
at between 100 and 125 m3, a total of
between 3600 and 4500 m3 for the three
floors in 2007.
These resources will be systematically
measured and evaluated to identify
opportunities to improve energy savings, in
line with the best practices in environmental
office management.
b) Separating waste
At the same time, in the cafeteria and areas
around the coffee machines, containers
have been installed so that rubbish can be
separated according to its type and
subsequently recycled.
In 2007, 2750 packets of 500 sheets of
recycled paper were used. Through
“la Caixa”’s services company, Criteria
CaixaCorp has contracted a paper disposal
service which in addition to guaranteeing
the confidential treatment of the waste
paper, ensures that it is recycled.
The company’s objective is to reduce the
consumption of paper by using new
technologies incorporating electronic filing
and double sided printing.
5. Purchasing policy and suppliers
Most of Criteria CaixaCorp’s purchases relate to
external advisory services, although other goods
and services are also purchased, mainly relating
to office maintenance and which are largely
managed through SUMASA, “la Caixa”’s services
company which manages the office building.
In 2008 Criteria CaixaCorp will define its
purchasing policy, where selection will be based
on environmental and social criteria for both the
suppliers of services and the products themselves.
c) Paper consumption
6. Participation in forums
4. Travel policy
The travel policy implemented by the company
is significant from an environmental and social
standpoint as the advent of new technologies
means that meetings can be held on
videoconference and this implies a significant
improvement in both areas.
A new travel policy is currently being defined,
which will include responsible management
criteria relating to means of travel, trips, meetings
and vehicle hiring.
Criteria CaixaCorp’s takes part in specialized
forums to establish stable channels through
which it can get to know its market and
regulatory environment. We highlight its
membership of the following associations and
organizations: Círculo de Empresarios, Asociación
para el Progreso de la Dirección (APD), Asociación
Española de Directivos, Asociación Española de
Contabilidad y Administración de Empresas
(AECA), Asociación Española para las Relaciones
con Inversores (AERI) and la Asociación de padres
de personas con discapacidad derivada de
Trastorno Mental Severo (Associació DAU).
Corporate values
The Code of Ethics project is
based on the company's vision
and mission statement,
developing the corporate values
that should be reflected in
Criteria CaixaCorp's team of
professionals.
71
Criteria CaixaCorp in compliance with
GRI guidelines
The objective of Criteria CaixaCorp’s 2007 Annual
Report is to offer a reliable and balanced view
of the company’s activities in terms of its business
strategy and including the main challenges
thrown up by CSR which have been identified
following a materiality analysis carried out on
the sector’s external information base and internal
information, following a methodology based on
the Accountability AA 1000 Assurance Standard.
The objective of the 2007 Annual Report is
therefore to inform all the company’s
stakeholders about its 2007 results – not only
its financial results but also about the
management of its main environmental and
social risks and opportunities relating to our
business. The recommendations included in the
GRI’s “CSR report guidelines” have been
followed.
The report has been self-declared as “B” by
Criteria CaixaCorp’s management according to
the GRI application levels.
GRI application levels
C
C+
B
B+
A
A+
Self declaration
Third party
checked
GRI checked
GRI guideline recommend included an index to
indentify the position of the various indicators
included in the documents making up the report.
72
This index is available on www.criteria.com with
the GRI indicators listed by category and part of
the Annual Report in which they can be found.
73
6
74
06
The services portfolio accounts for 82%
of the gross asset value (GAV). Criteria
CaixaCorp's strategic objective is to increase
the weight of the financial portfolio from
medium to long term.
a. Structure
b. Portfolio breakdown
c. Active portfolio management
d. Portfolio returns
e. Our investments
Our investment portfolio
75
6_ Our investment portfolio
Structure
At December 31, 2007:
1.74%
5.02%
16.74%
(49.00%)
5.03%
(67.60%)
52.90%
Hisusa
9.27%
Repinves
33.06%
SERVICES - LISTED COMPANIES
BME
Telefónica 1
Repsol YPF
Agbar
Gas Natural
(3.53%)
(5.48%)
(12.67%)
(27.67%)
(35.53%)
SERVICES - NON LISTED COMPANIES
Hotel Caribe
Port Aventura
Holret
Boursorama
(60.00%)
(97.12%)
(100.00%)
(20.44%)
76
(100.00%)
0.83%
(1) 0,94% of this investment is owned pursuant to an equity swap.
GP Des. Urb.
Tarraconenses
19.61%
22.13%
(100.00%)
74.99%
Caixa Capital
Desarrollo
Hodefi
(100.00%)
50.00%
INSURANCE
20.00%
(100.00%)
AgenCaixa
(100.00%)
100.00%
Invervida Con.
(100.00%)
(100.00%)
GDS
Correduría
(67.00%)
9.00%
(21.12%)
SegurCaixa
20.00%
0.50%
99.00%
(100.00%)
0.50%
(100.00%)
80.00%
VidaCaixa
Abertis
Crisegen Inv.
50.00%
80.00%
7.75%
(50.10%)
CaiFor
0.50%
Inversiones
Autopistas
Grupo CaiFor
INTERNATIONAL BANKING
SPECIALIZED FINANCIAL SERVICES
BEA
BCP
Banco BPI
GestiCaixa
InverCaixa
CaixaRenting
FinConsum
(8.89%)
(1.03%)
(25.02%)
(100.00%)
(100.00%)
(100.00%)
(100.00%)
10,02%
1.03%
8.89%
(100.00%)
(100.00%)
91.00%
Catalunya de
Valores
15.00%
Negocio de Fin.
e Inversiones
77
Portfolio breakdown
Services
Total stake
Number of shares
(thousand)
Board
representation1
Listed
Market value
(€million)
20,606
Energy
Gas Natural
35.53%
159,078
5 out of 17
6,366
Repsol YPF
12.67%
154,627
2 out of 16
3,770
21.12%
134,856
6 out of 21
2,972
27.67%
41,400
5 out of 12
1,140
16.44%
24,592
5.48%
261,644
2 out of 17
5,540
3.53%
2,953
1 out of 15
138
Port Aventura
97.12%
2,770
9 out of 11
Hotel Caribe Resort
60.00%
10,761
4 out of 7
24
Real State portfolio
100.00%
–
7 out of 7
75
Total stake
Number of shares
(thousand)
Board
representation1
Market value
(€million)
Infrastructure
Abertis
Services/other
Agbar
+ TOB payment
Telefónica
2
BME
680
Non-listed
929
830
Insurance and financial services
Listed
1,992
1,992
International banking
Banco BPI
25.02%
190,185
2 out of 21
1,019
Boursorama
20.44%
17,759
2 out of 10
143
8.89%
146,965
–
683
Banco Comercial Portugués
1.03%
37,203
–
109
–
–
–
38
Other
Non-listed
2,666
2,250
Insurance
CaiFor
GDS-Correduría
100.00%
42,640
11 out of 11
67.00%
0,3 3
1 out of 1
2,210
40
416
Specialized financial services
InverCaixa Gestión
100.00%
3
7 out of 7
CaixaRenting
100.00%
0,1
5 out of 5
70
FinConsum
100.00%
56
7 out of 7
100
GestiCaixa
100.00%
250
7 out of 7
22
Total LISTED
224
22,598
Total NON LISTED
Gross asset value (GAV)
3,595
26,193
(1) At February 29, 2008
(2) A portion of this investment –a 0.94% stake- is owned pursuant to an equity swap worth €726M (45 million shares at a price of €16.14/share)
(3) Shareholdings
78
Investments in listed companies are valued at
the year-end 2007 closing price. Investments in
non-listed companies are valued according to
the valuations carried out by the company itself,
following the methodology used on June 30,
which were revised by an independent expert,
as stated in the IPO prospectus. The only
exception is the valuation of Port Aventura’s real
state business which was appraised by an
independent third party on December 31.
The gross asset value of the investment portfolio
can be broken down as follows:
Services - Listed
79%
86% of the portfolio is accounted for by listed
companies, while the remaining 14%
corresponds to investments in non-listed
companies.
86% of the portfolio corresponds
to listed companies, while the
remaining 14% corresponds to
investments in non-listed
companies.
Listed
86%
Non listed
14%
The chart below shows the performance of net
asset value (NAV) and its components in the
second half of 2007, as the Criteria CaixaCorp
first published its NAV data on June 30, 2007,
when the restructuring prior to the IPO had been
completed. This figure was revised and checked
by independent experts.
Insurance and
specialized
financial services
10%
International
banking
8%
Services Non-listed
3%
Today, the services portfolio accounts for 82%
of the gross asset value (GAV), while the financial
portfolio accounts for 18%. Criteria CaixaCorp’s
strategic goal is to rebalance its portfolio mix
over the medium to long term until the financial
services sector accounts for 40-60% of the total.
Net asset value (NAV)
€million
26,104
GAV
Gross
asset
value
821
(20)
(712)
Investments
Divestments
Change in
value
IPO proceeds + Green Shoe = 3,848
26,193
Net debt
(4,708)
NAV
Net asset
value
21,396
24,929
June 30
December 31
(1,264)
79
The breakdown of the main components is shown below:
€million
Market value
30/06/2007
Investments
Divestments
Change
in value
Market value
31/12/2007
Gas Natural
7,179
-
-
(813)
6,366
Repsol YPF
4,476
40
-
(746)
3,770
Abertis
2,874
82
-
16
2,972
957
172
-
11
1,140
4,284
27
-
1,229
5,540
128
-
-
10
138
1,251
-
-
(232)
1,019
226
3
-
(86)
143
-
628
-
55
683
68
109
(20)
(10)
147
21,443
1,061
(20)
(566)
21,918
2,711
1,030
(146)
3,595
1,950
(1,270)
-
-
680
26,104
821
(20)
(712)
26,193
(4,708)
3,444
-
-
(1,264)
21,396
4,265
(20)
(712)
24,929
Agbar
Telefónica
BME
Banco BPI
Boursorama
Other listed stakes
Total listed
Total non-listed
Other investments
TOTAL GAV
Net debt
2
TOTAL NAV
1
Includes investments made by Criteria CaixaCorp and investments made by group holding companies.
(1) At June 30, 2007 the investment commitment in Agbar amounted to €1 billion based on the assumption of 100% acceptance in the takeover bid. Ultimately,
the acceptance rate achieved in January 2008 has permitted to jointly get a 90% stake, so the amount to be paid directly and indirectly by Criteria CaixaCorp
was €852 million (including €172 million in connection with the acquisition of the stake directly from Torreal at the end of 2007).
(2) The pro-forma net debt position takes into consideration transactions underway but not yet completed at each close.
80
The increase in the net asset value seen from
June 30 is mainly due to the 73% reduction in
the debt position as a result of the proceeds
obtained from the IPO and the exercise of the
green shoe (€3,848 million). This has allowed
the company to reduce its debt to 4.8% of gross
asset value at December 31, 2007 which offers
considerable scope for further investments should
they be considered appropriate.
We would also highlight the increase in value
attributable to investments made in the second
half of 2007, mainly The Bank of East Asia (€628
million) and Banco Comercial Portugués (€94
million), both in the international finance
business, and other investments made in the
services sector. The increases have offset the
€712 million decline in the value of the portfolio.
This decline was confined mainly to Criteria
CaixaCorp’s investments in listed companies
(basically Gas Natural, Repsol YPF and Banco
BPI) whose value dropped more than the increase
in value marked by the rest of our investments,
notably Telefónica (€1,229 million), in the second
half of 2007.
The 73% reduction in the
debt position is a result of
the proceeds obtained from
the IPO (€3,848 million).
Decrease in debt position
€million
-73%
Net
debt
(4,708)
(1,264)
GAV
26,104
26,193
% debt
s/GAV
18.0%
4.8%
June 30
December 31
81
Active portfolio management
Evidence of Criteria CaixaCorp’s active portfolio
management is reflected in the investments and
divestments made during the year.
1
The table below shows the main investments
made in 2007, reflecting only new investees for
the Criteria CaixaCorp group:
Investments
€million
Telefónica
CaiFor (50%) / SegurCaixa (20%)
% acquired
Effective
(acquisitions and contributions)
1.46
1,130
50.00
1,018
8.89
628
Abertis
1.71
232
Agbar
4.16
172
BME
3.53
123
BCP
1.03
105
Repsol YPF
0.17
53
FinConsum
45.00
50
3.14
12
–
53
Port Aventura
Other
Total executed
3,576
Pending commitments
Agbar
680
Total committed
680
Total investments executed and committed
Investments made by Criteria CaixaCorp in
Financial companies in 2007 include:
> Grupo CaiFor: On July 11 an agreement was
reached with Fortis (its partner at that time)
to acquire its 50% stake in the CaiFor Group
(leader in the life insurance segment in Spain),
an investment it had held since the company’s
foundation in 1992, for €950M. The deal
closed successfully on November 12, 2007
following receipt of the corresponding
authorization from the Directorate of Insurance
4,256
and Pension Funds, and the Spanish anti-trust
authority. A further €68 million was paid in
dividends.
> The Bank of East Asia: In line with the strategy
of acquiring significant stakes in international
financial entities, since July 2007 Critiera
CaixaCorp has acquired shares on the open
market amounting to 4.34% of the share
capital (4.13% after capital increase) of HongKong based The Bank of East Asia, BEA, rated
the best foreign commercial bank in China in
(1) Excluding operations relating to the company restructuring prior to the IPO described in detail in the Prospectus filed with the CNMV on September 20,
2007.
82
The active portfolio
management that Criteria
CaixaCorp carries out is reflected
in the investments and
divestments made throughout
the year.
> It has also increased its stakes in Banco
Comercial Portugués, Boursorama, Banco BPI
and Finconsum.
Investments made by Criteria CaixaCorp to
increase its stakes in Services companies include:
> Telefónica: Acquisition of 45,000,000 shares
of Telefónica, representing 0.94% of its share
capital hedged by an equity swap for an
investment of €726.15 million. A further stake
of 0.52% was acquired on the open market
for an investment of ¤404 million.
> Agbar: The purchase commitment recognized
in the second half of 2007 and pending at
the year-end relates to the takeover bid for
Agbar. On October 1, 2007, Criteria CaixaCorp,
Hisusa, Suez Environnement and Suez
Environnement España filed before the CNMV
a request for authorization of a public takeover
bid for 65,152,672 Agbar shares, representing
43.54% of its share capital. January 16, 2008
marked the end of the acceptance period for
the Agbar takeover bid. Shareholders
representing 50,205,817 shares or 33.55%
of the company’s share capital (or 77.06% of
the shares to which the bid was targeted)
accepted. This transaction was completed in
January, 2008, and amounted to a total
expense of €680 million in addition to the
€172 million invested in the purchase of stakes
in Agbar from Torreal.
2006 by the trade journal, “The Asian Banker”.
In late 2007, Criteria CaixaCorp increased its
stake in BEA to 8.89%, after fully subscribing
to the bank’s capital increase.
> The company also increased its positions in
Abertis, Repsol YPF and Port Aventura and
acquired “la Caixa”’s 3.53% stake in Bolsas
y Mercados Españoles for €123 million.
The most significant divestments include:
Divestments
€million
Suez
% sold
Effective
Consolidated
net gain
1.1
527
220
Caprabo
20.0
259
81
Grupo OHM
40.2
172
45
2.0
287
30
0.29
36
9
1,281
385
Atlantia
BCP
Total
83
> Suez: In December 2006 the operation to sell
the company’s 1.36% stake in Suez got
underway when 0.3% was divested. In January
2007, Criteria CaixaCorp sold the remaining
part of the stake (1.06%) for €527 million,
obtaining gross capital gains of €278 million
(€220 million after taxes). Net IRR since 1999
is 6.6%.
> Caprabo: The sale was completed in
September, generating a consolidated pre-tax
capital gain of €90 million (a net capital gain
of €81 million). Net IRR since 2003 is 8.0%.
> OHM Group: the sale of this holding was
completed in late July, and generated a
consolidated pre-tax capital gain of €50 million
(a net capital gain of €45 million). Net IRR
since 1998 is 1.5%.
> Atlantia (formerly Autostrade): In June 2007,
Criteria CaixaCorp sold its entire 2.006% stake
in Atlantia for €287 million. This operation
produced a pre-tax capital gain of €30 million.
Net IRR since 2006 is 14.7%.
Involvement in governing bodies
Criteria CaixaCorp is committed to becoming
involved in the governing bodies of all the
companies making up its investment portfolio,
playing an active role in defining their future
policies and strategies and contributing to their
growth and development.
Below we show a list of related Directors at
these companies at February 29, 2008:
Services - Listed
5 out of 17
2 out of 16
Executive chairman:
2nd vicechairman:
Isidro Fainé Casas
Directors:
Director:
Enrique Alcántara García Irazequi
Carlos Kinder Espinosa
Francisco Reynés Massanet
6 out of 21
5 out of 12
Chairman:
Chairman and CEO:
Isidro Fainé Casas
2nd vicechairman:
2nd vicechairman:
G3T, S.L., represented by
Carmen Godia Bull
Directors:
Enrique Corominas Vila
Marcelino Armenter Vidal
Enrique Corominas Vila
Leopoldo Rodés Castañé
2 out of 17
1 out of 15
1st vicechairman
2nd vicechairman:
Isidro Fainé Casas
Tomás Muniesa Arantegui
Director:
Antonio Massanell Lavilla
84
Directors:
9 out of 11
4 out of 7
Executive chairman and CEO:
Executive chairman:
Lluís Rullán Colom
Lluís Rullán Colom
Directors:
Directors:
María Amparo Camarasa Carrasco
Isidro Fainé Casas
Josep Maria Grau Greoles
Joan Rosell Lastortras
Juan Antonio Samaranch Torelló
Sebastián Sastre Papiol (Secretario
Consejero)
Mercedes de Pablo López
Francisco E. Ruiz Armengol
Sebastián Sastre Papiol
Services - Non-listed
Financial - Listed
2 out of 21
2 out of 10
Directors:
Directors:
Criteria CaixaCorp, S.A., represented by:
Marcelino Armenter Vidal
Isidro Fainé Casas
“la Caixa” represented by:
Criteria CaixaCorp, S.A., represented by:
Financial - Non-listed
11 out of 11
5 out of 5
Chirman:
Chirman:
Ricardo Fornesa Ribó
Antonio Vila Bertrán
CEO:
CEO:
Tomás Muniesa Arantegui
Ángel Esteban Serrano
Directors:
Directors:
Isidro Fainé Casas
Juan Antonio Samaranch Torelló
Miquel Valls Masseda
José Vilarasau Salat
Juan Antonio Alcaraz García
Carmen Gimeno Olmos
Jordi Soldevila Gasset
1 out of 1
Sole administrator:
Miguel Tarré Tarré
7 out of 7
Chirman:
Josep Ramon Montserrat Miró
Directors:
Juan Antonio Alcaraz García
Carmen Gimeno Olmos
Ignacio M. Moreno de Guerra Oyarzábal
Joan Morla Tomàs
Inmaculada Puig Pla
7 out of 7
7 out of 7
Executive chairperson:
Chirman:
Asunción Ortega Enciso
Fernando Cánovas Atienza
Directors:
Directors:
Lluis Deulofeu Fuguet
Carmen Gimeno Olmos
Jorge Mondéjar López
Olga Roca Casasús
Roser Vilaró Vives
Santiago Armada Martínez de Campos
Ernest Gil Sánchez
Carmen Gimeno Olmos
Xavier Jaumandreu Patxot
Josep Ramon Montserrat Miró
85
Portfolio returns
real performance of the investment alternatives
existing at January 1, 2007 for the net asset
value of the listed portfolio: a hypothetical
investment in Criteria CaixaCorp or investment
of the equivalent amount in the Ibex-35 or
Eurostoxx-50.
Criteria CaixaCorp’s listed
investment portfolio once
again outperformed the major
benchmark indices, despite
the instability of the markets,
reaffirming its excellent
track record.
2. Daily analysis since the floatation of
Criteria CaixaCorp’s listed portfolio with
no replicated model of investments and
divestments on benchmark indices:
In 2007, Criteria CaixaCorp’s listed investment
portfolio once again outperformed the major
benchmark indices, despite the instability of the
markets. This reaffirms the excellent track record
of Criteria CaixaCorp’s listed portfolio which has
historically offered higher growth the Spanish
(Ibex35) and European (Eurostoxx50) benchmark
indices.
Using October 10, 2007 (the date of Criteria
CaixaCorp’s listing) as a base, the performance
of the listed portfolio has largely tracked the
Ibex35, and has been superior to that of the
Eurostoxx50. The following chart shows the real
performance of both indices compared to Criteria
CaixaCorp’s listed portfolio excluding the impact
of purchases/sales to calculate changes in value.
1. 2007 monthly analysis with a
replicated model of investments and
divestments on benchmark indices:
The listed portfolio has outperformed its
benchmark indices on a monthly basis since
January 1, 2007. The following chart shows the
Performance of Criteria CaixaCorp’s listed portfolio vs. benchmark indices
130
120
19.1%
110
10.9%
10.4%
100
90
Jan-07
Mar-07
CriteriaCaixaCorp
listed portfolio
May-07
Replicated investments
Ibex35
Jul-07
Sep-07
Nov-07
Dec-07
Replicated investments
Eurostoxx50
Notes:
• Excluding the Telefónica equity swap.
• The data in the graph show the domestic market value of an investment in its benchmark index (using the share price at the end of the month), assuming
that all of the amounts invested or divested in the portfolio were invested or divested for the same amount in the benchmark index. Taxes and dividend
income are excluded.
86
Daily analysis since the floatation of Criteria CaixaCorp’s listed portfolio with
no replicated model of investments and divestments on benchmark indices.
120
110
+2.1%
+2.0%
– 1.0%
100
90
80
10/10/2007
25/10/2007
Adjusted listed portfolio
09/11/2007
Ibex 35
24/11/2007
09/12/2007
24/12/2007 31/12/2007
Eurostoxx 50
87
6.e
88
Gas Natural
Boursorama
Repsol YPF
The Bank of East Asia (BEA)
Abertis
Grupo CaiFor
Grupo Agbar
GDS-Correduría
Telefónica
InverCaixa
Bolsas y Mercados Españoles (BME)
CaixaRenting
Port Aventura
FinConsum
Hotel Caribe Resort
GestiCaixa
Our investments
Banco BPI
89
Chairnan: Salvador Gabarró
CEO: Rafael Villaseca
Shares traded: Spain (IBEX-35)
Website: www.gasnatural.com
Gas Natural
Leading gas operator in Spain
The Gas Natural Group is the leading gas
operator in Spain. It is an energy services
multinational focused on the supply,
distribution and sale of natural gas in Spain,
Latin America, Italy and France and electricity
generation in Spain and Puerto Rico.
2007 highlights
The company unveiled its 2008-2012 Strategic
Plan, through which Gas Natural aims to become
a vertically integrated international operator and
enter new developed markets in the Atlantic and
Mediterranean Basin. Among its key financial
targets, the company plans to achieve a CAGR
of over 8% in net profit and 10% in dividends,
with a forecast investment of €12,500 million.
Purchase of five combined-cycle units (2,233
MWh of installed capacity) and a gas pipeline in
Mexico valued at USD1,448 million. This
acquisition gives Gas Natural a platform from
which to embark on future growth opportunities
in the NAFTA markets (Canada, the USA and
Mexico).
Gas Natural sells its 9.4% stake in Naturgas
Energía to Energías de Portugal (EDP) for €122
million.
Gas Natural acquires the gas group Italmeco,
with 350,000 customers in Italy.
Repsol YPF and Gas Natural sign an agreement
to take part in a consortium with the Angolan
company Sonagol and other international energy
companies to develop an integrated gas project
in Angola.
Suez increases its share in Gas Natural by 5.9%,
putting its direct interest at 6.3% (Criteria
CaixaCorp and Suez also hold 5% through
HISUSA, in which Criteria CaixaCorp holds a
49% stake).
Gas Natural increases its stake in Gas Natural
BAN (Argentina) to 70% with an investment of
USD55.4 million.
Gas Natural is awarded three major contracts
for 2008 with Adif, TMB and Telefónica,
amounting to a total supply of 1,850 GWh.
Business performance in the year
Gas Natural posted double digit net profit growth
in 2007 despite the decline in gains from assets
sales and the fact the company was operating
in an unfavorable scenario during the year. On
one hand, the mild winter and high rainfall levels
led to a fall in gas sales and a drop in combinedcycle power generation, negatively impacting
electricity prices in the pool. On the other hand,
the weakness of the dollar and Latin American
currencies against the euro has had a negative
impact on dollar-denominated activities, such as
Key financial data
€million
Income statement
Revenues
EBITDA
Operating income
Net Profit
2006
2005
10,093
2,277
1,567
959
10,348
1,912
1,263
855
8,527
1,519
969
749
220
200
180
2007
2006
2005
160
3,690
15,420
6,070
3,091
13,355
5,652
3,615
13,712
5,411
140
Data per share
2007
2006
2005
100
EPS ( )
Dividends accrued
2.14
1.04
1.91
0.90
1.67
0.75
Operating indicators
2007
2006
2005
11,115
292,730
18,700
10,662
294,451
19,514
10,179
305,324
10,466
Balance sheet
Net debt
Total Assets
Total equity
Gas customers ('000)
Gas supplied (GWh)
Electric power produced (GWh)
90
240
2007
120
80
01/01/2004
01/01/2005
Gas Natural
01/01/2006
Bloomberg
European Utilities
01/01/2007
Dow Jones
Industrial
Our opinion...
Of all the world’s energies, natural gas is expected
to show the strongest growth in the future, due
mainly to the increasing concerns over the
environment and the need for gas for power
generation. A substantial part of this growth
must be covered by liquefied natural gas (LNG),
a market in which Gas Natural, along with
Repsol YPF, holds a privileged position. In a
scenario which is increasingly global and
complex, vertical integration throughout the
value chain and the availability of competitive
and flexible gas are a key advantage and a
significant platform for growth.
businesses, which in addition to growth, confer
secure and stable cashflow that allow the group
to meet its shareholder remuneration program.
The Strategy Plan presented to the market last
November is ambitious and its main objective
is to transform the company into a verticallyintegrated international natural gas and LNG
operator. A healthy financial structure will allow
it to meet the challenges put down by this
Strategy Plan via projected investments €12,500
million and maintaining dividend increase of
10% through to 2012, and maintaining its
current risk and credit ratings (A from Standard
& Poor’s).
midstream operations, electricity generation in
Puerto Rico or gas distribution in Latin America.
Nonetheless, group EBITDA rose almost 20%
and net profit grew more than 10% driven
mainly by the strong performance of the gas
distribution business in Latin America, and,
above all, wholesale and retail gas sales, where
it reported substantially growth in a fully
liberalized market and achieving high customer
retention levels.
In addition to Gas Natural’s strong position in
the liberalized markets, more than half the
group's EBITDA is obtained from regulated
Criteria CaixaCorp in Gas Natural
Market value (€million)
6,366
Stake held
35.53%
Voting rights
33.06%
Board representation
5 out of 17
91
Chairman: Antonio Brufau Niubó
1st vicechairman: Luis Fernando del Rivero Asensio
Shares traded: Madrid (IBEX-35), New York and Argentina
Website: www.repsolypf.com
Repsol YPF
One of the world’s largest
oil companies
Repsol YPF is a leading international
integrated oil and gas company, operating
in more than 30 countries and a leadership
position in Spain and Argentina. It is one
of the ten largest private oil companies
in the world and the largest private
energy company in Latin America
measured by assets.
2007 highlights
Repsol YPF and the Petersen group signed an
agreement for the sale of up to 25% of YPF. In
the first phase, Repsol YPF will sell 14.9% of
YPF for US$2,235 million. The agreement also
includes a call option on another 10.1% of the
company and contemplates the upcoming IPO
of approximately 20% of YPF.
Sale of 10% of CLH for €353 million,
generating a gross capital gain of €298 million.
Following the sale, Repsol YPF’s stake in CLH
stands at 15%.
New discoveries include: gas field in Bolivia
(Repsol YPF is the consortium operator with a
stake of 37.5%) and a deep water oil field in
the Santos basin (Brazil) (25% stake held jointly
with Petrobrás and British Gas).
Repsol YPF and Gas Natural sign an agreement
to take part in a consortium with the Angolan
company Sonagol and other international energy
companies to develop an integrated gas project
in Angola.
Repsol YPF is awarded a 15-year contract worth
US$15,000 to supply liquefied natural gas (LNG)
to a regasification plant at the port of Manzanillo
(Mexico).
Repsol YPF sells its sky-scraper designed by
Norman Foster on Madrid’s Paseo de la
Castellana to Caja Madrid for €815 million.
In 2007, the oil sector witnessed an 11% increase
international crude prices referenced to the Brent
index, which, due to the strength of the euro
against the dollar did not have the expected impact
on industry earnings. Furthermore, the company
has been operating in a difficult context, marked
by a generalized increase in lifting costs and greater
fiscal pressures exerted by producer countries.
Nonetheless, Repsol YPF reported record net profit
of €3,188 million, paid a generous dividend (c.40%
increase) and reduced its net debt by 26% thanks
to its strong cashflow generation.
Key financial data
€million
Income statement
Revenues
EBITDA
Operating income
Net Profit
200
2007
2006
2005
53,865
8,573
5,808
3,188
55,080
9,053
5,911
3,124
51,045
9,139
6,161
3,120
180
160
2007
2006
2005
140
3,493
47,164
18,511
4,396
45,201
17,433
4,513
45,782
16,262
120
Data per share
2007
2006
2005
EPS ( )
Dividends accrued
2.61
0.86
2.56
0.66
2.56
0.55
2007
2006
2005
Hydrocarbon reserves (Mbep)
Hydrocarbon production (Mbep)
Processed crude (Mtep)
2,404
379
57
2,612
412
56
3,328
416
55
Balance sheet
Net debt
Total Assets
Total equity
100
80
01/01/2004
01/01/2005
Repsol YPF
01/01/2006
Bloomberg
European Utilities
01/01/2007
Dow Jones
Industrial
Our opinion...
Over the last seven years Repsol YPF has been
operating in an extremely complex environment,
particularly in Latin America but nonetheless
has posted consistent growth in net profit, cash
generation, investment and, above all, dividends,
while at the same time considerably reducing
debt. The company’s business mix, with a lower
weighting of upstream activities than the industry
average, coupled with an undisputed position
of leadership in the Spanish R&M market, a fully
integrated business covering the entire value
chain in Argentina and a stake of 30.8% in Gas
Natural, offers shareholders lower exposure to
international crude price volatility and therefore
more stable cashflow generation.
At the end of 2007 Repsol YPF carried out an
operation which will be key to developing its
future strategy. The sale of 25% of YPF to the
Petersen group and subsequent placement of
an additional stake via a share offering is
important for the future development of Repsol
YPF’s Strategy Plan as it will mean the
incorporation of a Argentinean industrial partner
with a enormous experience in the regulated
markets, while at the same time better
diversifying its assets and re-balancing its position
in Latin America and improving its financial
structure. This will put the company in an
unbeatable position to achieve organic growth
and remunerate shareholders. Therefore, the
recently-announced Strategy Plan for 20082012 puts forward some ambitious financial
targets, including a dividend increase of over
10% a year.
Repsol YPF is one of the ten
largest private oil companies
in the world and the main
private energy company in
Latin America measured by
assets. It leads the market in
Spain and Argentina.
Criteria CaixaCorp in Repsol YPF
Market value (€ million)
3,770
Stake held
12.67%
Voting rights*
14.29%
2 out of 16
(*) Limited to 10% by the company's Bylaws
€million
€
3,500
1.2
3,000
1.0
2,500
0.8
2,000
0.6
1,500
0.4
1,000
0.2
500
0
0.0
2001
2002
2003
Net profit
2004
2005
2006
2007
Dividend per share
93
Chairman: Isidro Fainé Casas
CEO: Salvador Alemany Mas
Website: www.abertis.com
Abertis
European leader in
infrastructure management
Abertis is one of the leading European
operators in transport and communications
infrastructure management. It operates in
the following sectors: toll roads,
telecommunications infrastructure, airports,
car parks and the development of logistics
platforms. The company is present in 16
countries through its different areas of
infrastructure management.
On December 31, 2007, Abertis Logística
reached an agreement to acquire €202 million
worth of properties in Barcelona and Madrid
from Inmobiliaria Colonial for its logistics
activities.
2007 highlights
On December 5, 2006, Abertis acquired 32%
of the listed French satellite company, Eutelsat,
for €1,077 million, closing the operation in
2007.
In 2007 Abertis’ key financial indicators grew
significantly (revenues +9%, EBITDA +8%), due
mainly to the positive performance marked by
its different business activities, particularly toll
roads, telecommunications and airports which
together accounted for 95% and 99% of group
revenue and EBITDA respectively.
On September 19, 2007, Abertis acquired fifteen
airports in Latin America from ACS for €271
million.
On October 31, 2007, Abertis Telecom purchased
28.4% of the satellite operator Hispasat for
€199 million. The operation is pending approval
by the competition authorities.
On January 4, 2008, Abertis reached a
preliminary agreement to acquire ACS’ stakes
in two toll road concessions in Chile for
approximately €700 million.
Toll roads: The 3% increase in total ADT (3.2%
in Spain, 3% Sanef) and the 3.1% tariff rise led
to growth of 8% and 9% in revenues and
EBITDA respectively in 2007.
On November 23, 2007, Abertis bought an
additional 4.6% of Portuguese toll road company
Brisa for €272 million, putting its total stake at
14.6%
Key financial data
€million
Income statement
2007
2006
2005
3,620
2,269
62.7%
1,485
682
3,335
2,099
62.9%
1,343
530
1,906
1,204
63.2%
833
511
2007
2006
2005
20,828
5,020
12,510
19,217
4,447
11,836
8,447
3,036
4,211
Data per share
2007
2006
2005
EPS ( )
Dividends accrued
1.07
0.53
0.87
0.50
0.88
0.50
Revenues
EBITDA
EBITDA margin
EBIT Operating income
Net Profit
Balance sheet
Total Assets
Total equity
Net debt
94
Income /Operating indicators
Toll road management
ADT
Telecommunication management
Airport management
Number of passengers
(TBI) (thousand million)
Average number of employees
2007
2006
2005
2,751
26,450
396
300
2,537
25,669
369
282
1,209
24,825
281
282
23.6
11,364
22.2
10,763
21.3
7,831
Abertis is one of the leading
European operators in
infrastructures, transport and
communications management,
with sustained growth and
attractive profitability.
Airports: Revenues grew 6% and EBITDA rose
14% (lfl) as a result of higher passenger numbers,
the tariff increase and cost control.
The company posted a net profit increase of
29% to €682 million, 20% stripping out nonrecurring items.
Abertis has diversified further by sector and
geographical area, with investments worth
€2,140 million (the highlight is the €1,077
million investment in Eutelsat). The investments
in DCA and Hispasat will be recognized in 2008.
Gross debt was €12,873 million, with an average
cost of 5.2%, an average maturity of 8.4 years
and 83% bearing a fixed interest rate.
Our opinion...
Telecommunciations: This activity performed
well on the back of the renewal of digital and
analogue contracts and increased DTT coverage,
with revenues up 7% and EBITDA growth of
12% in 2007 (lfl).
Abertis’ low risk profile offers sustained growth
and an attractive return. The company operates
in regulated, transparent markets and generates
stable, recurrent cashflow. It also offers an
increasing and sustainable shareholder
remuneration policy.
Criteria CaixaCorp in
Abertis Infraestructuras
Market value (€million)
2,972
Stake held
21.12%
Voting rights
24.99%
6 out of 21
240
220
200
180
160
140
120
100
80
01/01/2004
01/01/2005
Abertis
01/01/2006
Ibex 35
01/01/2007
Eurostoxx 50
95
Chairman: Jorge Mercader Miró
Managing director: Angel Simón Grimaldos
Website: www.agbar.es
Grupo Agbar
Spanish leader in drinking water
supply and health insurance
Grupo Agbar is a multi-concession company
which operates in areas related to
community services. Its core businesses are
the complete water cycle, health insurance
and healthcare management. Grupo Agbar
is one of the world’s leading water
companies and the top-ranking private
urban water management company in
Spain, where serves more than 20 million
inhabitants. It also has a significant
international presence. The company’s
healthcare business is carried out through
Adeslas, Spanish market leader by premium
volume and clients, with more than 2.6
million insured clients.
management company The Carlyle Group for
€1,480 million. Agbar received €541.6 million
from the sale of its 53.1% stake in Applus+,
generating a net capital gain of €217 million.
2007 highlights
Takeover bid filed on the shares not controlled
by the main shareholders of SGAB by Criteria
CaixaCorp, Hisusa, Suez Environnement España
and Suez Environnement. After its completion,
they now jointly control 90% of its capital.
Criteria CaixaCorp’s stake in SGAB stands at
44.10%.
Grupo Agbar reported net profit of €352.5
million in 2007, an increase of 110.8% on 2006.
This rise was due largely to the sale of Applus+
which implies an after-tax capital gain of €217
million, and the strong organic performance of
the group's core businesses, i.e. water and waste
management and healthcare. Stripping out the
extraordinary results, recurrent net profit stood
at €147 million, an increase of 6% on 2006.
Grupo Agbar (53.1%), Unión Fenosa (25%) and
Caja Madrid (21.9%) sell Applus+ to fund
Grupo Agbar will manage drinking water supply
and wastewater treatment projects in Jiangsu
province (China) – population of 70 million
people – in a joint venture with Golden State
Water Group Corporation. The operation involves
three 30-year contracts and will require an
investment of €30 million by Agbar.
The company is awarded a five and a half year
concession contract for the management and
supply of water and waste treatment services
in the province of Orán (Algeria).
Key financial data
€million
Income statement
2007*
2006
2005
240
Revenues
EBITDA
Operating income
Net profit
2,861
557
371
353
3,122
580
372
167
2,749
481
303
252
220
Balance sheet
2007*
2006
2005
160
Net debt
Total assets
Total equity
533
5,951
2,695
1,600
6,303
2,648
994
5,604
2,569
140
Data per share
2007*
2006
2005
100
EPS ( )
Dividends accrued
2.356
0.455
1.12
0.435
1.71
0.423
Operating data
2007*
2006
2005
1,427.1
1,088.0
542.8
63.8
1,217.6
987.3
414.4
129.4
Revenues - water and waste
1,563.2
Revenues - healthcare
1,233.2
Revenues - inspection and certification
0
Other revenues
64.6
(*) Grupo Applus+ is recognized on the 2007 consolidated income statement and balance
sheet as a discontinued operation.
96
200
180
120
80
01/01/2004
01/01/2005
Agbar
01/01/2006
Ibex 35
01/01/2007
Eurostoxx 50
In the water business, the group also entered
two new international markets: China and
Algeria. It also consolidated its position in the
UK, through Bristol Water, where good forecasts
have been confirmed now that the proposed
business plan has been implemented.
Agbar Group is Spain's urban
water management company
and one of the world leaders in
its sector. It also deals in health
insurance and health care
management, carried out
through Adeslas.
Grupo Agbar is also involved in two major
projects to improved the quality and quantity
of the water supply in the Barcelona metropolitan
area from 2009: the installation of inverse
osmosis membranes at the Sant Joan Despí
drinking water treatment plant (investment of
€60 million) and the construction of a
desalination plant at Llobregat (investment:
€150 million).
In 2007, Grupo Agbar was awarded 21 new
drinking water supply contracts (servicing 44,000
people) in the Water and Wastewater
management sector in Spain, and renewed a
further 59 contracts (213,000 people). It won
23 tenders in the sewerage business (159,000
people) and was awarded an additional 41
management contracts for wastewater treatment
stations (equivalent to 285,000 people).
The positive performance of the Water and
Healthcare units is reflected in the organic growth
achieved in Spain and abroad, with revenues
rising 8% and operating profit up 10%.
In 2007, Adeslas consolidated its leadership
position in the Spanish health insurance market,
in terms of both the number of customers
insured and premiums received, increasing its
customer portfolio by 219,670 (+9.2% vs. yearend 2006) with more than 2.6 million customers
insured.
97
The sale of Applus+ has allowed Grupo Agbar
to significantly reduce its net debt, from €1,599
million at year-end 2006 to €533 million at yearend 2007. This puts the company in a privileged
position, allowing it to successfully carry out
new investments in its strategic business areas.
Our opinion...
In 2007, Criteria CaixaCorp, S.A., jointly with
Suez Environnement, S.A., Suez Environnement
España, S.L.U. and HISUSA (the holding 51%
owned by Suez Environnement España, S.L.U
and 49% owned by Criteria CaixaCorp, S.A.),
launched a takeover bid for 100% of the shares
of Sociedad General de Aguas de Barcelona,
S.A. not already owned by the bidders for a
price of ¤27.65 per share. The takeover bid was
authorized by the CNMV on December 27, 2007
and completed successfully in January 2008,
having been accepted by 77.06% of the shares
subject to the bid, the equivalent of 33.55% of
Agbar’s share capital. Following completion of
the takeover bid, the buyers now control 90%
of Agbar’s share capital, with Criteria CaixaCorp,
S.A.’s stake totaling 44.10%.
The success of the takeover bid will allow the
groups led by “la Caixa” and Suez to reinforce
Agbar's business project, jointly managing the
company in accordance with the criteria laid
out in the shareholders agreement.
By securing control of Agbar, Criteria CaixaCorp
will be able to reinforce its active management
model, predicated on participating in the
governing bodies and having significant influence
in the decision-making of its investees, in the
development of their businesses and in drawing
up corporate deals, with the overriding aim of
generating significant value for shareholders.
The bidding companies intend to keep Agbar
as a listed company for the next two years, with
a free float of around 30%.
Criteria CaixaCorp in Agbar (at 31/12/2007*)
€1,140 million
Payment pending from takeover bid
€680 million (16.44%) (*)
Stake held
27.67%
Voting rights
56.46% (jointly with Suez Environnement
–concerted action- in accordance with the provisions
of the shareholders agreement signed
on July 18, 2006, and amended on November 21
and December 19, 2007).
5 out of 12 (at February 28, 2008)
(*) Following completion of the takeover bid for Agbar, Criteria CaixaCorp, S.A. holds a stake of 44.10% in Agbar’s share capital. Pursuant to
the provisions of the shareholders agreement signed on July 18, 2006, amended on November 21 and December 19, 2007, Criteria CaixaCorp,
S.A. and Suez Environnement, with a joint stake of 90% in Agbar, exercise joint and concerted control of the company.
98
99
Chairman: César Alierta Izuel
1st vice chairman: Isidro Fainé Casas
Shares traded: Europe, USA, Latin America, Japan
Website: www.telefonica.es
Telefónica
Leading full-service
telecommunications operator
in Europe
Telefónica is one of the world’s leading fullservice telecommunications companies, with
a significant international presence in
Europe, Latin America and Africa. In Spain,
Telefónica offers services to more than 46
million customers, with more than 134
million in Latin America and approximately
42 million in the other European countries
where it operates. Telefónica this year
successfully completed its integration of
European mobile telephony company O2,
and consolidated its European presence
with the acquisition of a significant stake
in Telecom Italia. The Group ranks fourth
among the world’s leading
telecommunications companies, it is the
largest full-service European carrier and
second in the Eurostoxx 50 ranking.
2007 highlights
Telefónica presents its growth targets for 20062010E, which call for a CAGR in revenues of
5%-8%, 7%-11% in OIBDA, 16%-20% in
operating income, along with operating cashflow
generation of more than 60,000 million in four
years, underpinned by strong organic growth
at all of the company’s businesses and focusing
on shareholder remuneration.
Telefónica proposes to pay a dividend of €1 per
share against 2008 profits, bringing forward by
one year its commitment to double the dividend
paid in 2005.
Telefónica buys back 147.6 million of its own
shares, the equivalent of 3% of its share capital.
Telefónica indirectly acquires a 10% share of
Telecom Italia’s voting rights.
VIVO (Telefónica’s Brazilian mobile subsidiary)
agrees the purchase of controlling stakes in
mobile carriers Telemig Celular Participaçoes
and Tele Norte Celular Participaçoes, subject to
the approval of the regulators, strengthening
its leadership position in the mobile telephone
market in Brazil.
Key financial data
€million
Income statement
2007
2006
2005
56,441
22,825
13,388
8,906
52,901
19,126
9,421
6,233
37,383
15,056
8,363
4,446
2007
2006
2005
45,284
105,873
22,855
52,145
108,982
20,001
30,067
73,174
16,158
Data per share
2007
2006
2005
EPS ( )
Dividends accrued
1.87
0.65
1.304
0.55
0.913
0.50
2007
2006
2005
Revenues - Spain
Revenues - Latin America
Revenues - Europe
Revenues - Other
Total accesses (million)
37%
35%
26%
2%
228.5
37%
35%
27%
1%
203.2
51%
42%
6%
1%
153.5
Revenues
OIBDA
Operating income
Net profit
Balance sheet
Net debt
Total Assets
Total equity
100
220
200
180
160
140
120
100
80
01/01/2004
Telefónica
01/01/2005
Ibex 35
01/01/2006
01/01/2007
Eurostoxx Telecommunications
Telefónica completes the sale of its 99.7% stake
in Endemol for €2,629 million, generating capital
gains of €1,368 million.
Telefónica sells its 100% stake in the UK
company Airwave O2 Ltd for a capital gain of
€1,296 million.
In 2007, Telefónica consolidated its position of
leadership as a full-service telecommunications
operator in highly-competitive markets.
Following on from previous years, in 2007
Telefónica posted growth above the sector
average and is a benchmark for international
management. Telefónica posted record net profit
of €8,906 million in 2007, up 42.9% vs. 2006,
with an increase in free cashflow of 33% to
€14,798 million. 2007 results reflect the
company’s sound growth profile, underpinned
by the organic growth of its businesses, the
value contributed by geographical and business
diversification, an efficient cost structure, the
increasingly significant synergies obtained via
integrated management and an active portfolio
rotation when appropriate (in 2007 more than
€2,600 million in net capital gains from the sale
of stakes in Endemol and Airwave). Telefónica’s
geographical balance and international
expansion is reflected in its breakdown of
revenue by region: Spain accounts for 37%, the
rest of Europe 26% and Latin America 35%.
Telefónica ranks fourth
among the world’s leading
telecommunications
companies. It ranks first as
the largest full-service
European carrier and second
in the Eurostoxx 50 ranking.
At year-end 2007 Telefónica had more than 228
million accesses, an increase of 12.5% vs.
December 2006 and ranks as the third largest
company in the world measured by customer
accesses. Telefónica’s customer base grew by
more than 25 million accesses as a result of the
strong commercial activity in all its markets.
101
Our opinion...
Telefónica offers sustainable growth,
profitability, and geographical and business
scale and diversity. Shareholder remuneration
and organic business growth are the company’s
main strategic objectives for the next few years.
Telefónica's primary objective of remunerating
shareholders has been evidenced further by
the announcement of a dividend payment of
one (1) euro per share against 2008 results,
bringing forward by one year the commitment
of doubling its 2005 dividend by 2009 and the
introduction of new share buyback programs.
Over the past few years, Criteria CaixaCorp’s
stake in Telefónica has increased significantly
in value. In 2007, Telefónica shareholders
obtained a return of 41.9% on their investment
(31.2% in 2006) as a result of the positive
share price performance (+37.8% in 2007) and
via dividend payments.
Criteria CaixaCorp in Telefónica
Market value * (€ million)
Stake held *
Voting rights
5,540
5.48%
5.48%
2 out of 17
(*) Includes the 0.94% stake subject to an equity swap for an investment of €726 million
102
103
Chairman: Antonio J. Zoido Martínez
Ist vicechairman: José A. Barreiro Hernández
Website: www.bolsasymercados.es
BME
BME, the fourth largest
European exchange
Bolsas y Mercados Españoles (BME) is the
company that integrates all the securities
markets and financial systems in Spain. The
parent group comprises the Madrid,
Barcelona, Bilbao and Valencia stock
exchanges, MF Mercados Financieros,
Iberclear, BME Consulting, the Alternative
Equity Market (MAB) and Instituto BME.
2007 highlights
The Spanish stock market ranks fourth in Europe
by size, while Spain is the fifth largest economy
by GDP.
In July 2007, Bolsas y Mercados Españoles was
listed on the Ibex35 and in October it joined
the ranks of the Dow Jones Spain Titans 30.
2007 was an exceptional year, with records in
trading volume, capitalization and liquidity. It
was also a historic year for IPOs, with a total of
ten public offerings made, beating the previous
highest volume reached in 2000.
During the year, several new services and
products were made available to investors:
Creation of new indices, development of ETFs
and the Alternative Equity Market (MAB) for
new investment vehicles, etc. As a consequence,
BME is one of the leading exchanges able to
face the growing international competition and
to contribute to a higher liquidity in the market.
The SIBE platform (the electronic trading system)
has started operating in the Dominican Republic
stock market, meaning that five Latin American
markets are now using the Spanish trading
platform.
Performance highlights by business line are:
> Equity: cash traded in equities on the SIBE
system increased by 45% to €1,665,873
million.
> Settlement: the number of trades settled
during the year, including equity trades and
private and public fixed income securities,
increased by 26% to 44 million operations.
> Derivatives: 52 million contracts traded.
Key financial data
€million
Income statement
2006
2005
377
285
275
201
285
191
185
131
233
145
140
102
Balance sheet
2007
2006
2005
130
Net debt
Total assets
Total equity
-475
5,176
499
-358
4,385
428
-404
3,592
475
120
Data per share
2007
2006
2005
90
EPS (€)
DPS (€)
2.41
1.55
1.56
0.92
1.22
0.52
2007
2006
2005
Revenues
EBITDA
Operating income
Net Profit
Trading Volume - Equity
Trading Volume - Fixed Income
Trading Volume - Derivatives
(million contracts)
104
180
2007
1,672,399 1,158,899 850,421
1,303,019 1,172,564 1,196,673
51.9
47.1
40.1
170
160
150
140
110
100
80
01/01/2004
01/01/2005
BME
01/01/2006
Ibex 35
01/01/2007
Eurostoxx 50
All business units reported strong EBITDA,
especially equities (+44%) and the settlement
business (+62%).
The company reported a net profit of €201
million, an increase of 54% compared to the
previous year due to the strong revenue growth
resulting from the 33% rise in trading volume
and control over operating costs (up only 1.8%).
Bolsas y Mercados Españoles
ranks fourth in Europe by
size. In July 2007, it was
listed on the Ibex35 and in
October it joined the ranks
of the Dow Jones Spain
Titans 30.
Our opinion...
This investment offers a high dividend yield (a
payout of over 70% in 2007). The company has
one of the highest margins in the sector. The
net profit has grown significantly since the IPO
in July 2007.
Criteria CaixaCorp in Bolsas
y Mercados Españoles
138
Stake held
3.53%
Voting rights
3.53%
1 out of 15
105
Chairman: Lluís Rullán Colom
CEO: Lluís Rullán Colom
Shares traded: –
Website: www.portaventura.es
Port Aventura
Leading theme park in Spain and
the second largest in southern
Europe
Port Aventura is the leading theme park in
Spain and the second largest in southern
Europe by number of visits. With more than
four million visits in 2007, Port Aventura
has grown steadily, consistently
incorporating new attractions and
branching into new business areas which
have changed it from a mere theme park
to a resort.
2007 highlights
Port Aventura posted a 9.5% increase in
revenues in 2007, fuelled mainly by increases
in both the numbers of visitors to the park (+5%
to a new record high of 4.1 million) and the
number of hotel guests (6% increase in average
occupancy, to an average of 76%). These drove
a 19% improvement in net profit over 2006.
This performance is the result of the company’s
focus on becoming a family leisure resort and
branching into new business areas, with the
aim of turning Port Aventura into a unique allyear resort. Evidence of this is the new attraction
opened in 2007: Furius Baco, a roller coaster
ride which goes from 0 to 135 km/h in 3 seconds
and the celebration of special events at
Halloween and Christmas and the access to the
sea through the inauguration of the Beach Club
in 2006.
Key financial data
Sales, EBITDA & number of visits performance
€million
Income statement
2007
2006
2005
183
49
32
15
167
45
27
12
143
39
21
6
2007
2006
2005
Net debt
Total assets
Net equity
289
561
191
222
439
176
223
413
163
80
Other data
2007
2006
2005
0
Revenues
EBITDA
Operating income
Net profit
Balance sheet
EPS* ( )
Avg. number of employees
5.2
2,556
2.5
2,556
1.3
2,364
Operating data
2007
2006
2005
Number of visits (thousand)
4,112
3,924
3,800
* In 2007 a capital decrease was made by buying shares to reduce the number
of shares by virtually half.
106
Millions
of visits
€million
200
160
166.7
128.8
182.6
142.7
4.0
3.8
120
40
4.2
24.4
39.4
44.8
2005
2006
49.2
3.6
3.4
3.2
2004
Sales
Ebitda
2007
Number of visits
At the same time, the company is developing
a SCR project in order to strengthen the position
and perception of Port Aventura as a responsible
company which is committed to its social and
environmental surroundings.
Port Aventura is in a process
of continuous growth, with a
diversified offer full of unique
attractions which makes it an
all-year-round tourist
destination in itself.
Our opinion...
Port Aventura, which currently consists of a
theme park, a water park, a Beach club and
three superior 4-star hotels (one of which is the
Hotel Caribe Resort, under management
contract), is growing steadily, implementing the
measure necessary to become the second largest
resort in Europe and the only one with access
to the sea, with a diversified offer and unique
attractions which are becoming increasingly
popular with the general public and are making
it an all-year-round tourist destination in itself.
Also, progress was made in 2007 on the zoning
project for the land adjacent to the park and
the construction of three golf courses (totaling
45 holes) expected to be opened in the second
half of 2008.
Synergies deriving from different business
activities and the on-going development of new,
complementary businesses, should lead to
economies of scale and more efficient
management, in addition to greater return for
shareholders, while at the same time pursuing
the aim of optimizing service quality and working
in harmony with the social and environmental
surroundings which define the company.
Criteria CaixaCorp in Port Aventura
830
Stake held
97.12%
Voting rights
97.12%
9 out of 11
107
Chairman: Lluís Rullán Colom
Shares traded: –
Website: www.portaventura.es
Hotel Caribe Resort
Hotel Caribe Resort is a 504-room hotel
located inside the Port Aventura resort. It
is located on a 75,000 m2 plot and built
around a central lake and swimming pools
(area of more than 6,000m2), making it the
only resort of this kind in the Iberian
peninsula.
Since 2006 the hotel has been managed by
Port Aventura to take advantage of its sales
force and obtain synergies.
The Hotel Caribe Resort is
built around a large central
lake and swimming pools on
75,000 m2 of land, making it
the only resort of its kind on
the Iberian Peninsula.
In 2007 the hotel reported an increase in both
the occupancy rate (+9%) and average revenue
per room (2%) vs. 2006. Stable efficiency ratios
resulted an 11% increase in EBITDA.
These results are fruit of the effort made by Port
Aventura to extend and diversify its offer and
to turn Port Aventura into a unique resort that
is open all year round.
Key financial data
Ebitda and Overnight stays performance
€thousand
Income statement
2007
2006
2005
Revenues
EBITDA
Operating income
Neto profit
5,642
4,839
1,769
428
5,387
4,362
1,239
166
12,398*
2,663
-569
-1,320
Balance sheet
2007
2006
2005
25,015
44,069
18,363
26,965
45,348
17,936
28,159
47,203
17,769
Net debt
Total assets
Net equity
Other data
2007
2006
2005
EPS ( )
Avg. Number of employees
0.02
-
0.01
-
-0.07
156
Operating data
2007
2006
2005
263,171
238,204
211,691
Overnight stays
* The hotel has been managed by Port Aventura since 2006 and receives annual
income for its services equivalent to the income generated by the hotel
business. This is booked as “Revenues”.
108
€million
Overnight stays
6,000
280.000
5,000
240.000
4,000
200.000
3,000
160.000
2,000
120.000
1,000
80.000
0
2004
Ebitda
2005
2006
2007
Overnight stays
Criteria CaixaCorp in Hotel Caribe Resort
Stake held
Voting rights
24
60%
60%
4 out of 7
109
Chairman: Artur Santos Silva
Ist vicechairman: Carlos da Camâra Pestana
Shares traded: Portugal
Website: www.bancobpi.pt
Banco BPI
A reputable brand and operational
excellence
BPI is the fourth largest private Portuguese
financial group. Headed by Banco BPI, it is
a multi-specialist financial group, centred
on banking activities, offering a full range
of financial products and services to
business, institutional and private
customers.
2007 highlights
On March 13, 2006 Banco Comercial Portugués
(the leading Portuguese private bank) announced
a takeover bid for 100% of BPI at a price of
€5.7 per share. This bid was considered to be
hostile and rejected by BPI’s Board of Directors.
On April 24, 2007 Banco Comercial Portugués
increased its offer to €7 per share, conditional
on 82.5% acceptance if Banco BPI’s 17.5%
limit on voting rights remained unchanged.
The bid was unsuccessful and was finalized on
May 7, 2007.
On October 25, 2007, BPI’s Board of Directors
proposed a friendly merger with Banco Comercial
Portugués, though negotiations between the
banks finally broke down on November 25, 2007.
In 2007 Banco BPI reported a 14.0% increase
in total assets. Total customer funds and net
loans to customers rose by 10.8% and 10.6%
respectively, in relation to 2006. Net profit
increased by 15% to €355 million and EPS was
€0.47 (+15%). ROE increased to 22.4%.
This improvement owed basically to the rise in
NII (+14%), fees (+13%) and net trading income
(+60%), although this was partly offset by the
increase in operating expenses (+13%) relating
to the branch-opening plan and higher defaults
(+158%) resulting from the increase in lending
volumes.
Key financial data
€million
Income statement
2007
2006
2005
Net interest income
Gross income
Net operating income
Net profit
662
1,216
562
355
581
1,018
442
309
546
899
379
251
Business data
2007
2006
2005
27,231
40,916
68,147
1,635
9.9%
24,630
36,911
61,541
1,451
9.4%
20,963
32,880
53,843
1,181
11.5%
Data per share
2007
2006
2005
Number of shares (million)
EPS ( )
Dividends accrued
760
0.47
0.16
760
0.41
0.12
760
0.33
0.10
Operating data
2007
2006
2005
53.7%
1.0%
22.4%
803
9,345
56.6%
1.1%
24.3%
692
8,288
57.7%
1.3%
23.7%
622
7,493
Net loans to customers
Customer funds
Total banking business volume
Total equity
Total Tier
110
Cost-to-Income ratio
NPL ratio
ROE
Number of branches
Number of employees
280
260
240
220
200
180
160
140
120
100
80
01/01/2004
01/01/2005
Banco BPI
01/01/2006
Portugal PSI20
01/01/2007
D.J. Eurostoxx Banks
“la Caixa”’s investment in BPI dates back to
1995. Since then, “la Caixa” has accompanied
the entity on a process of far-reaching changes
and various acquisitions through which Banco
BPI has changed from an investment bank to a
retail bank and become fourth in the ranking
of private financial entities in Portugal.
Banco BPI is a financial institution that
strategically fit with “la Caixa”’s philosophy.
Banco BPI has taken advantage of opportunities
arising on the Portuguese market (and on the
international markets, mainly Angola) to grow and
hone its skills and, as a result, its total assets have
grown by more than 38% in the last five years and
its net profit has risen by more than 120%, achieving
a market share of 10% in Portugal.
Banco BPI has taken
advantage of market
opportunities to grow and
develop its skills. As a result,
its total assets have grown
by more than 38% in the
last five years.
Criteria CaixaCorp in Banco BPI
1,019
Stake held
25.02%
Voting rights
17.5%
(by-articles of
association
stipulated
maximum)
2 out of 21
Our opinion...
111
Chairman: Vincent Taupin
CEO: Vincent Taupin
Shares traded: France
Website: www.boursorama.com
Boursorama
Leading online distributor of
savings products
Incorporated in 1995 with total assets of
approximately €3,000 million, Boursorama
is a French financial company belonging to
the Société Générale group (its main
shareholder with a 56% stake). It is one of
the leading European online distributors
of savings products and operates in four
countries: France, as an online bank, and
in the UK, Spain and Germany as an online
broker.
2007 highlights
Following purchase and absorption of CaixaBank
France in 2006, completed in December of the
same year, Boursorama shifted its activity in
France towards a direct banking model, including
a network of 20 branches and a full range of
banking products and services carrying the
Boursorama Banque brand.
In the last quarter of 2007, the bank acquired
82.49% of OnVista AG following the purchase
of the 77.40% agreed upon by the main
shareholders (after German competition
authorities gave their approval), an additional
3.51% on the market, and another 1.58% after
the end of the takeover acceptance period, after
a bid was launched for 100% of the company
in late October.
OnVista AG is the owner of the leading financial
information website in Germany:
www.onvista.de. This acquisition will enable
Boursorama to accelerate the development of
its online distribution of savings products in
Germany.
The company reported a net profit increase of
68% in 2007 to €48 million. This was due to
the increase in the banking business, boosted
by the acquisition of Caixabank France in 2006
and higher advertising revenues, deriving from
the growing contribution from OnVista.
Additionally, synergies deriving from the
reorganization of its activities in France and the
UK boosted the cost-to-income ratio to 69%.
Key financial data
€million
Income statement
2006
2005
85
219
68
48
49
177
44
29
17
103
22
19
2007
2006
2005
180
1,883
13,152
15,035
553
16.6%
2,148
12,166
14,314
517
16.3%
43
7,496
7,540
181
n.a.
160
Data per share
2007
2006
2005
Number of shares (million)
EPS ( )
Dividends accrued
86.9
0.55
0
86.4
0.33
0
68.6
0.27
0
Net interest income
Gross income
Net profit
Business data
Net loans to customers
Customer funds
Total banking business volume
Total equity
Total Tier
Operating data
112
280
2007
Cost-to-Income
ROE (net profit/total equity)
Number of branches
Number of employees
2007
2006
2005
68.8%
8.7%
20
911
75.2%
5.5%
20
839
78.2%
10.2%
0
523
260
240
220
200
140
120
100
80
01/01/2004
01/01/2005
Boursorama
01/01/2006
Francia CAC40
01/01/2007
D.J. Eurostoxx Banks
and Self Trade Bank, respectively and in Germany
it operates through the leading financial
information portal: www.onvista.de and under
the Fimatex and Veritas brands.
Our opinion...
Securities transactions grew 9% as a result of
the high market volatility in 2007, particularly
as a result of the subprime crisis in the US.
However, revenues from the securities business
dropped from 53% of total revenues in 2006
to 42% in 2007, while revenues from the
banking business and advertising increased.
The Boursorama group operates in four
countries: France, where it is leader in online
financial information through its portal
www.boursorama.com and a key player in the
online banking segment through the brand
Boursorama Banque. It ranks among the top
three players in the online brokerage market in
the UK and Spain under the brands Self Trade
In 2007 Criteria CaixaCorp increased its stake
in Boursorama to over 20% to reflect the stable
nature of this investment.
“la Caixa” is currently analyzing with Boursorama
the possibility of creating an online bank in
Spain from Boursorama’s Self Trade Bank,
through which it has been operating in Spain
since 2003, with more than 22,600 accounts.
Taking advantage of its leading
position in Europe, Boursorama
plans to develop its online
distribution of financial products.
Such an agreement would bolster Boursorama’s
presence in Spain and strengthen “la Caixa”’s
position of leadership in the online banking
segment.
Criteria CaixaCorp in Boursorama
143
Stake held
20.44%
Voting rights
20.44%
2 out of 10
113
Chairman: David Li Kwok-po
CEO: David Li Kwok-po
Shares traded: Hong Kong
Website: www.hkbea.com
BEA
Leading private bank in Hong Kong
and the best commercial bank in
China
Founded in 1918, The Bank of East Asia
(BEA) is Hong Kong's fifth largest private
bank (and the No. 1 independent bank).
BEA, which carries an A- rating from
Standard & Poor’s and an A2 rating from
Moody’s (long-term debt), was named the
best foreign commercial bank in China in
2006. Its shares have been traded on the
Hong Kong stock market since 1973.
BEA reported a 35.2% increase in Total banking
business volume in 2007 to €45,949 million.
Total customer funds and loans rose 38.0% and
31.4% respectively. Highlights include the 62%
increase in loans granted in China, which have
grown as a percentage of total lending from
28% to 36%.
Net profit rose 20.6% to €361 million in relation
to 2006. EPS increased by 18.3% to €0.23. ROE
grew to 14.6%.
2007 highlights
On March 20, 2007 BEA obtains authorization
from the Chinese regulator to operate in
mainland China as a local bank.
On September 18, 2007 BEA reaches an
agreement with the Malaysian financial holding
company, Affin Holdings Bread, by which it will
acquire up to 25% of its share capital.
In 2007 BEA continued to roll out its expansion
strategy, opening 18 new branches in China
and two in the US, where it plans to have 17
at year-end 2008. The bank also adopted Basel
II solvency standards in 2007, which will lead
to improved risk management and a more
efficient use of capital.
On December 27, 2007 BEA increases capital
by 4.76% to finance its expansion in mainland
and other foreign markets. The increase was
fully subscribed by Criteria CaixaCorp and will
come into force in 2008.
Key financial data
€million
Income statement
Net interest income
Gross income
Net profit
Business data
Net lending
Customer funds
Revenues
Total equity
Core Capital
Total Tier
114
€million
2007
2006
2005
Data per share
2007
2006
2005
521
768
359
361
435
659
357
299
328
519
258
239
Avg. number of shares
(million)
Dividends accured
1,565
0.14
1,534
0.13
1,502
0.11
Operating data
2007
2006
2005
2007
2006
2005
18,945
27,004
45,949
2,622
7.4%
12.6%
14,415
19,571
33,987
2,375
10.5%
14.2%
12,018
16,627
28,645
2,108
11.2%
17.4%
Cost-to-Income
ROE
Number of branches
Number of employees
53.2%
14.6%
217
9,493
45.8%
13.7%
176
7,725
50.2%
12,2%
160
6,443
ECB exchange rate at 31/12/2007: HK$11.48/ ¤
The investment in BEA
represents a quality foothold
in Asia at a time when the
relations between Spain and
Asia are generating increasing
amounts of business.
The investment in BEA forms part of the
company’s strategy to acquire significant stakes
in foreign financial entities. It represents a quality
foothold in Asia, at a time when relations
between Spain and Asia are generating
increasing amounts of business.
BEA has been present in the Chinese market
since 1920, and was able to take advantage
of this to become one of the first four banks
worldwide to obtain a license to operate in the
country as a local bank. In the next few years
the contribution of the Chinese market to the
bank’s total results is expected to increase. It
currently accounts for 24% of gross profit
thanks to the far-reaching expansion policy
implemented by the bank, which expects to
double its current branch network in China to
100 branches by 2010.
The capital increase subscribed by Criteria
CaixaCorp in December 2007, which will come
into force in 2008, should increase the bank’s
scope for future growth and allow it to pursue
its expansion into the Chinese market.
Our opinion...
Criteria CaixaCorp in BEA
683
Stake held
8.89%
Voting rights
8.89%
-
240
220
200
180
160
140
120
100
80
01/01/2004
BEA
01/01/2005
01/01/2006
Hong Kong - Hang Seng Indice
01/01/2007
Hang Seng Finance
115
Chairman: Ricardo Fornesa Ribó
CEO: Tomás Muniesa Arantegui
Shares traded: Website: www.caifor.es
CaiFor
The bancassurance
benchmark in Spain
The CaiFor group operates in the
complementary pension plan and personal
insurance market. It employs a multichannel
distribution strategy, mainly for
bancassurance products, through “la Caixa”
branches. It also uses other distribution
channels: The intermediary and advisory
channel for businesses and groups, Internet
– via the “la Caixa” website- and telephone
sales. CaiFor is made up of three operating
companies: VidaCaixa (an insurance
company specialized in life insurance and
pension fund management), SegurCaixa (a
non-life insurance company) and AgenCaixa
(a network of business advisors specialized
in the group’s products).
2007 highlights
According to estimates made by ICEA for 2007,
the Spanish insurance sector grew 3.9%,
although there were indications of slowdown
compared to 2006 in both life and non-life
segments. The life insurance business was
affected by changes in tax legislation which had
a negative impact on savings insurance products
VidaCaixa
Key financial data
Key data
In December, CaiFor’s Board of Directors was
reorganized, putting the number of members
at 11.
The CaiFor group exceeded 3 million individual
customers in 2007.
In April, CaiFor launched its car insurance activity,
becoming the first Spanish bancassurance
company to offer its own auto insurance, thereby
covering all of its customers’ basic insurance
needs.
Group pension plans Group life-savings insurance
2007
2006
2005
1,427,099
1,567,168
1,871,239
16,204,577 16,444,936 16,591,175
356,135
346,136
346,188
296,000
296,000
296,000
131,153
106,837
100,433
8,4%
14,6%
,
Group life-risk
and health
6,1%
Individual
pension
plans
36,7%
Individual life-savings
insurance
2,598,663 2,758,801 2,996,264
27,511,577 26,824,987 25,900,651
Key ratios
2007
2006
2005
ROE
Solvency margin
coverage ratio
37%
31%
30%
1.1
1.3
1.4
Other
2007
2006
2005
121,153
106,890
73,609
441
429
419
Dividends paid
at CaiFor group headquarters
116
On November 12, Criteria CaixaCorp signed an
agreement to acquire the 40% stake in
VidaCaixa and the 60% stake in SegurCaixa
held by Fortis after obtaining the corresponding
authorization from the Directorate of Insurance
and Pension Funds (DGSFP), and the Spanish
anti-trust authority. VidaCaixa and SegurCaixa
were valued at €1,769 million and €372 million
respectively for this transaction and for Criteria
CaixaCorp’s IPO.
VidaCaixa. Premiums and contributions to
pension funds 2007. €2,599 million
€thousand
Data according to the accounting plan for insurance companies
Premiums issued
Technical reserves net
of reinsurance
Total equity
Subordinated debt
Net profit
Premiums and contributions
to pension funds
Resources under management
and pension plans. The slowdown in the nonlife business was due mainly to the slow growth
of the auto insurance business, affected by the
strong competition in this segment.
Individual life-risk
insurance
8,2%
26,1%
2007 was a good year for CaiFor group
companies: VidaCaixa posted a net profit of
€131 million (+23%), while SegurCaixa reported
an increase of 15% to €26 million, year-on year.
CaiFor’s consolidation as
the Spanish insurance market
leader is based on its exclusive
access to the largest branch
network in Spain and
“la Caixa”’s customer base.
At VidaCaixa, this good progress was driven by
the excellent performance of life-risk insurance
products and the increase in funds managed by
the company, despite the unfavorable tax regime
for savings products and pension plans.
insurance, which rose 10% and 13%
respectively, compared to. 2006.
In 2007 VidaCaixa issued premiums and
contributions to pension funds to the amount
of €2,599 million, a decrease of 6% compared
to 2006. This was due to the new tax
framework for savings products. However,
premiums for life-risk and health insurance,
for both individual customers and groups, grew
by more than 10%. Furthermore, VidaCaixa
continues to head the life insurance market in
Spain in terms of resources under management.
SegurCaixa reported a year-on year revenue
growth of 22% in 2007 to €184 million, driven
by the afore-mentioned increase in home and
accident insurance. Additionally, the company
launched its car insurance activity during the year,
through its “SegurAuto” product and at yearend, this segment already accounted for more
than 10% of total revenues, meeting the targets
set for this activity.
The improvement seen at SegurCaixa was mainly
due to the increase in sales of home and accident
SegurCaixa. Premiums by product 2007
AgenCaixa. Sales breakdown. 2007
€184 million
€424 million
Other
Car
insurance
5,9%
Health insurance
1,6%
10,2%
30,3%
Home
insurance
Accident
insurance
7,8%
Life-savings
insurance
Home
insurance
76,2%
7,8%
Life-risk,
accident
and other
insurance
Pension
plans
11,1%
49,1%
117
AgenCaixa, the CaiFor subsidiary in charge of
selling its insurance and pension plans, recorded
€424 million in 2007 in premiums and pension
plan contributions. At year-end 2007, Agencaixa
had a staff of 17 representatives and 282 advisors,
distributed throughout CaiFor’s points of sale in
Spain.
Our opinion...
CaiFor’s exclusive access to the largest branch
network in Spain and “la Caixa”’s customer
base, together with existing market
opportunities, are important bases for its
consolidation as the Spanish insurance market
leader:
segments, developing new business lines. It’s
important to highlight the recently-launched
car insurance product, where CaiFor is the first
bancassurance group in Spain to offer its own
car insurance.
According to Criteria CaixaCorp’s strategic plan,
organic growth in both business lines can be
enhanced by selective acquisitions in Spain, and
in the medium/long term, abroad.
If the purchase of MorganStanley Wealth
Management S.V. S.A.U by “la Caixa” is
completed, Criteria CaixaCorp or one of its
subsidiaries will acquire the pension fund
management business.
Life insurance: The low penetration of this
business in Spain offers high growth potential
as the country converges with the EU.
Furthermore, VidaCaixa is expanding its product
range to include those segments with the best
growth prospects.
Non-life business: Growth in this area will be
achieved by increasing market share in profitable
SegurCaixa
Key financial data
CaiFor Group performance
€thousands
Data according to the accounting plan for insurance companies
Key data
€million
2007
2006
2005
184,417
150,899
126,792
160,810
40,714
25,745
138,688
37,469
22,317
116,871
31,052
18,652
Key ratios
2007
2006
2005
Combined ratio
ROE
Solvency margin coverage ratio
80%
66%
1.4
77%
65%
1.4
78%
66%
1.5
Otther
2007
2006
2005
Premiums issued
Technical reserves net
of reinsurance
Total equity
Net profit
Dividends paid
22,500
15,900
13,100
Net profit
28,000
27,500
27,000
26,500
26,000
25,500
25,000
24,500
24,000
23,500
23,000
180
160
140
120
100
80
60
40
20
0
2004
2005
118
2006
2007
Aggregate net profit
Criteria CaixaCorp in CaiFor
2,210
Stake held
100.00%
Voting rights
100.00%
11 out of 11
119
Sole administrator: Miguel Tarré Tarré
Website: www.gdsseguros.com
GDS-Correduría
Excellent results in a transition year
GDS-Correduría is an insurance broker that
analyzes the risks its customers may incur
on all levels (personal, family, professional,
business, among others), offering tailormade solutions by negotiating coverage
with the most appropriate and highlysolvent insurance companies. In addition,
in the event of a claim, the company takes
charge of all the paperwork and manages
the claim in defense of its customers
interests. GDS Correduría de Seguros is
67% owned by Criteria CaixaCorp and 33%
owned by Unipsa, an insurance broker
owned by the March group.
GDS-Correduría increased its
net profit by 19%, despite
losses due to the enactment
of the new governing law.
2007 highlights
2007 was the first full year since the law
governing private insurance and reinsurance
(Law 26/2006 of July 17) went into effect.
According to ICEA estimates, in 2007 the
insurance sector showed signs of slowdown
compared to the previous year.
The main impact of the new law on GDSCorreduría was the loss of volume discounts
and insurance products sold through the
“la Caixa” branches.
The stake in GDS-Correduría was valued at
€40 million for the purposes of the Criteria
CaixaCorp IPO.
Key financial data
GDS-Correduría performance
€thousand
Key data
Commissions charged
Other operating revenue
Financial results
Operating expense
Net profit
Total equity
2007
2006
2005
10,613
352
603
-5,683
3,973
611
9,783
1,230
410
-6,296
3,333
471
7,238
1,230
175
-3,544
3,317
654
2007
2006
2005
111,848
3,833
44
115,839
3,517
41
88,347
3,026
41
€million
Premiums
Net profit
140
4
120
100
3
80
2
60
Operating data
Premiums net of
cancellations
Dividends paid
40
1
20
0
0
2004
Premiums
120
2005
2006
2007
Net profit
Our opinion...
2007 proved to be a very good year, as net
profit increased by 19%, despite the loss of
some business segments and volume discounts
after the enactment of the new law.
Criteria CaixaCorp’s investment allows us to be
present in a profitable sector, which also
complements the CaiFor group’s activities. GDSCorreduría specializes in insurance products for
specific business areas and this gives Criteria
CaixaCorp access to activities which are not
covered by the products and services offered by
VidaCaixa and SegurCaixa.
Therefore, in this new regulatory framework,
the company focused on strengthening its most
profitable segments and negotiating the fees
received for services rendered, which kept
revenues in line with the previous year. Therefore,
fees from the auto and general insurance
segments rose 24% and 16%, respectively.
The volume of premiums for the year totaled
€112 million, a decline of 3.45% compared
to.2006. It’s important to point out that the
reorientation of GDS Correduria led to a change
in the business mix.
Criteria CaixaCorp in GDS-Correduría
Stake held
Voting rights
40
67.00%
67.00%
1 out of 1
121
Executive chairwoman: Asunción Ortega Enciso
Shares traded: Website: -
InverCaixa
InverCaixa has increased its market share
in a difficult year for the sector
InverCaixa is “la Caixa”’s asset management
company. InverCaixa manages a wide range
of products: Investment funds, OEICs (open
ended investment companies) and
portfolios. It also advises “la Caixa” with
regard to the commercialization of
investment funds managed by third parties.
InverCaixa, however, slightly increased its market
share in investment funds, to 5.6% and has
maintained its third position in the ranking of
fund managers.
The funds managed by Invercaixa have no direct
or indirect investments in subprime assets.
2007 highlights
2007 was a difficult year for the investment
fund industry in Spain, as assets under
management decreased by 6% and the sector
experienced a significant flight of assets
(c.€20,000 million). The more conservative funds
were the hardest hit in a scenario of rising
interest rates and strong competition from
deposits. In the second half of the year, financial
institutions launched aggressive campaigns to
capture deposits as a result of the lack of liquidity
on the interbank markets in the aftermath of
the subprime crisis.
By the end of 2007, InverCaixa’s assets under
management amounted to nearly €14,000
million. The 4% year-on-year decrease in funds
managed was slightly smaller than the sector
average.
The funds managed by InverCaixa hold an
excellent position in the return rankings, with
more than 80% of its assets between the first
and second quartile (excluding guaranteed
funds). In addition, the average return obtained
on investment funds in the year was higher than
the sector average.
Assets under management and net
profit performance
Key financial data
€thousand
Income statement
Total revenues
Net profit
Balance sheet
Equity
Operative data
Total AuM (€ million)
Investment funds
SICAVs
Number of investment funds
Market share
Number of employees
€millions
2007
2006
2005
151,146
8,849
182,177
12,579
176,475
12,151
16,000
2007
2006
2005
12,000
12
28,683
48,542
48,739
10,000
10
8
14
14,000
2007
2006
2005
8,000
13,955
13,318
637
177
5.6%
126
14,609
14,022
587
159
5.5%
123
14,923
14,441
482
143
5.8%
109
6,000
6
4,000
4
2,000
2
0
0
2004
2005
Assets under management
122
2006
2007
Net profit
Our opinion...
The main growth opportunities for this company
lie in taking better advantage of “la Caixa”’s
distribution network and consolidating its
strategy with regard to the types of funds sold.
Specifically, the company will continue to expand
its offer with a sophisticated range of active
management products with an outstanding
service which is personalized according to
customer segment (retail, personal and private
banking). We also believe the company will
benefit from the increase in household planning
and diversification of financial products.
InverCaixa reported a net profit for 2007 of €9
million, marking a decline from 2006. This was
due to lower AuM, lower average commissions
–owing to fierce competition- and poorer
financial market performance.
InverCaixa continues to
expand its current offer with
a sophisticated range of active
management products, and it
offers outstanding service
totally personalized according
to the customer segment.
Furthermore, all non-organic growth
opportunities will be studied. We note that if
“la Caixa”completes the acquisition of Morgan
Stanley Wealth Management S.V. S.A.U., Criteria
CaixaCorp will acquire the asset management
business which will be integrated into InverCaixa.
Criteria CaixaCorp in InverCaixa
224
Stake held
100.00%
Voting rights
100.00%
7 out of 7
Breakdown of investment funds
Guaranteed
funds
ST fixed
income funds
25%
39%
Global
funds
13%
Fixed income
funds
Equity
funds
Mixed
funds
16%
5%
2%
123
Executive chairman: Antonio Vila Bertrán
Shares traded: –
Website: www.caixarenting.es
CaixaRenting
Strong profitable growth
CaixaRenting offers operational and
financial leasing services for vehicles and
equipment. Its offer is aimed at private
customers and SMEs and products are
distributed mainly through “la Caixa”’s
branch network. In addition, it manages
fleets of vehicles.
2007 highlights
It currently manages a total of 35,986 vehicles:
30,927 under operational leasing contract and
5,059 under fleet management.
In 2007, the penetration rate for vehicle
operational leasing in Spain increased compared
to total registrations (10.5% in December 2007
compared to 9.5% in December 2006).
2007 was a good year for CaixaRenting, which
improved its market share in operational leasing
units purchased (6.2% compared to 5% in
2006), and achieved a 24% year-on-year increase
in its fleet, doubling the sector average.
Key financial data
CaixaRenting’s volume of new investment
increased significantly (+19% year-on-year) with
a 25% increase in vehicles and 12% growth in
equipment, amounting to a total of €443 million.
At year-end 2007, CaixaRenting had leased
assets worth €953 million, +23% year-on-year.
The company reported a net profit of €5.3
million due to the growth of its portfolio as
well as an increase in profitability.
New production and net profit performance
€thousand
Income statement
2007
2006
2005
Net profit
5,356
2,414
3,000
Balance sheet
2007
2006
2005
952,897
772,067
623,598
Total leased assets
Operating data
2007
2006
2005
Total new investment
442,858
New investment in vehicles
261,541
New investment in equipment
and other assets
181,317
Fleet of vehicles under management 35,986
Number of employees
193
370,816
208,592
336,163
197,954
162,224
29,027
176
138,209
25,113
156
€million
5
4
3
2
1
0
2004
Vehicles
124
6
500
450
400
350
300
250
200
150
100
50
0
2005
2006
Equipment and other assets
2007
Net profit
CaixaRenting’s main competitive advantage is
its ability to sell products through its preferential
access to “la Caixa”’s distribution network, in
addition to distribution via agents. This
distribution channel offers access to the most
profitable segments: individual and self-employed
customers and SMEs.
The company offers global management of all
services related to the product and high quality
standards. This enables it to attract customer
loyalty and obtain profitable growth.
It also has high growth potential as Spain has
a penetration rate for vehicle operational leasing
which is lower than the European average and
offers a bright outlook for the next few years.
CaixaRenting offers the global
management of all services
related to the product as well
as high quality standards.
This differential allows it to
obtain growth with high
levels of profitability.
Our opinion...
Criteria CaixaCorp in CaixaRenting
70
Stake held
100.00%
Voting rights
100.00%
5 out of 5
125
Chairman: Josep Ramón Montserrat Miró
Managing Director: Dalmau Ribot Padilla
Shares traded: –
Website: www.finconsum.es
FinConsum
“la Caixa”’s specialized consumer
credit service at points of sale
FinConsum offers consumer credit products
through points of sale (distributors of
consumer goods or services and automobile
dealers facilitated by “la Caixa”’s distribution
network and its own commercial offices).
It also carries out direct marketing
campaigns using information databases’
information.
2007 highlights
This sector has strong potential for further
growth and has performed well over the past
few years, with outstanding loans growing 21%
in 2007. In 2007, default rates rose in the
financial industry in general, and in the consumer
finance segment in particular.
In February 2007, Criteria CaixaCorp regained
100% control of the company after acquiring
the 45% held by Sofinco (Crédit Agricole). This
put an end to the joint venture set up in 2000.
The company ended 2007 with an outstanding
investment of €852 million, up 24% from the
year before. However, new investment was
down 4% as 2006 figures included new
investment from a vendor that contributed a
large volume of business in a short period of
time, but that did not continue in 2007.
Excluding this impact, new investment would
have increased by 22%.
Key financial data
Investment and net profit performance
€thousand
Income statement
Net interest income
Net profit
Balance sheet
Outstanding loans
Total assets
€million
2007
2006
2005
37,945
48,839
(9,661)
35,350
42,654
2,185
25,798
30,709
2,147
900
4
800
2
2007
2006
2005
600
829,654
882,157
675,976
726,088
492,637
504,741
500
-2
400
-6
700
0
300
Operating data
Consumer finance contracts
(Number)
Car finance contracts
(Number)
Doubtful rate
Number of employees
126
2007
2006
2005
336,177
419,524
214,331
-8
200
-10
100
17,651
7.7%
280
18,347
4.9%
248
13,597
2.7%
211
-12
0
2004
Direct mkt
2005
Autos
2006
Consumption
2007
Net profit
Our opinion...
2007 was a difficult year for consumer finance
companies and particularly for FinConsum, due
mainly to the increase in defaults. However, the
consumer finance sector in Spain is still expected
to grow, but less than in previous years.
FinConsum is undergoing a process of
stabilization and consolidation. This process will
be based on the further standardization of the
management of the entire value chain, with the
objective of achieving quick and efficient
operations for the final customer and a better
management of risk and doubtful debt.
The higher cost of risk related to doubtful debt,
coupled with the €5.7 million fine related to a
lawsuit filed by a vendor, led FinConsum to
report a loss in 2007 of €9.6 million. The ruling
is currently being appealed.
FinConsum is undergoing a
process of stabilization and
consolidation, based on the
further standardization of the
management of the entire
value chain.
Criteria CaixaCorp in FinConsum
Stake held
Voting rights
100
100.00%
100.00%
7 out of 7
127
Chairman: Fernando Cánovas Atienza
Managing Director: Xavier Jaumandreu Patxot
Shares traded: –
Website: www.gesticaixa.es
GestiCaixa
Decline in asset securitization activity
GestiCaixa is the securitization fund
manager of “la Caixa” and other financial
companies. GestiCaixa manages mortgage
and asset securitization funds.
2007 highlights
The securitization business in Spain went through
two distinct periods in 2007:
In the first half of the year, activity was strong,
carrying on from previous years. Securitization
volumes were 62% higher than in the first half
of 2006 reaching €65,000 million.
GestiCaixa set up four new
securitization funds in 2007,
and it currently ranks sixth
in the securitization
management segment
measured by new issues.
However, in the second part of the year, activity
was negatively impacted by the confidence crisis
caused by the subprime crisis in the US. No new
Spanish securitization has been placed on the
market since July. Several new issues have been
made but the issuers have kept the securitized
bonds on their balance sheets to ensure liquidity.
It is worth highlighting that GestiCaixa does
not manage any securitization funds of
subprime assets.
Volume managed and net profit
performance
Key financial data
€thousand
Income statement
2007
2006
2005
€million
Revenues
Net profit
3,487
1,749
3,210
1,587
2,858
1,401
14,000
Balance sheet
2007
2006
2005
10,000
Equity
1,954
3,391
1,965
8,000
Operating data
2007
2006
2005
6,000
11,931
22
8,919
17
4,291
5
6
2,906
4
6
Volume managed
(€ million)
13,961
Number of funds under management
26
Issuance volume
(€ million)
4,249
Number of new funds
4
Number of employees
7
128
2.0
12,000
1.5
1.0
4,000
0.5
2,000
0.0
0
2004
2005
Volume managed
2006
2007
Net profit
Our opinion...
Despite this complex environment, GestiCaixa
set up four new securitization funds in 2007,
with a total issuance of €4,250 million, similar
to the level seen in 2006. Two of these funds
were set up with third party financial institutions
(Banco Sabadell and Banco Pastor) and the other
two with “la Caixa”.
The securitization market came to a standstill
in the second half of the year. However, we
believe the company still has long term growth
potential. The expansion of the business will
depend primarily on the development of the
regulatory environment (types of assets that can
be included in securitization funds) as well as
customers’ financing requirements.
At December 31 2007, GestiCaixa managed
twenty-six securitization funds (twelve mortgage
funds and fourteen asset funds), with a total
volume of €14,000 million, up 17% compared
to 2006.
GestiCaixa ranks sixth in the securitization
management segment measured by new issues,
with a market share of 3%.
2007 Business performance
Criteria CaixaCorp in GestiCaixa
22
Stake held
100.00%
Voting rights
100.00%
7 out of 7
Net profit for the year rose 10% to €1.75 million.
Securitization funds managed
Assets fundsother entities
“la Caixa”
mortgage
funds
34%
44%
Mortgage
funds - other
entities
6%
“la Caixa”
asset funds
16%
129
7
130
In 2007, Criteria CaixaCorp was successfully listed
on the stock exchange. Previous to the IPO, a
series of transactions were carried out to adjust
the consolidation scope in order to guarantee
the future development of the Group in line
with the strategy to maximize the value.
a. Highlights
b. Financial information
c. Non-consolidated financial statements
d. Consolidated financial statements
e. Risc factors
f. Tax matters
Financial analysis
131
7_ Financial analysis
Highlights
The IPO operation
In 2007 Criteria CaixaCorp successfully
completed its IPO.
In November 2006, the Board of Directors of
“la Caixa” approved an analysis for the flotation
of its investment portfolio by listing Criteria
CaixaCorp. The objective of the IPO was to
establish a market benchmark for portfolio
management and create a vehicle for
international expansion in the banking and
financial markets, and to take advantage of the
opportunities for growth and development
offered by the capital markets.
The main objectives for the
IPO were to achieve a market
assessment of the portfolio
management, to access capital
markets and the international
banking expansion.
At its General Assembly held on June 7, 2007,
“la Caixa” passed a resolution approving the
flotation of Criteria CaixaCorp and authorized
the sale of shares in this company to the limit
of 49% of its share capital. These agreements
were ratified at the Extraordinary General
Assembly of “la Caixa” on July 19, 2007, with
special regard to the shareholder structure after
the IPO and/or offering.
Criteria CaixaCorp was successfully listed on
October 10, 2007, when its shares started
trading. In the first stage of the operation,
132
657,500,000 new shares were issued. Later, on
November 7, 2007, a further 75,519,037 shares
were added following the exercise of the green
shoe option by the global coordinators. The
shares started trading at €5.25 per share (nominal
value of €1 and share premium of €4.25),
increasing Criteria CaixaCorp’s equity by €3,848
million.
Corporate restructuring prior to the IPO
In order to restructure Criteria CaixaCorp’s
investment portfolio prior to the IPO, a series of
transactions were carried out in the first half of
2007 to ensure the future development of the
business based on the criteria of maximizing
shareholder value, in line with its defined strategy.
The following restructuring transactions were
carried out:
1. The sale of specific investments owned by
Criteria CaixaCorp to “la Caixa”, namely:
a. Investments in companies where no further
activity was expected
b. Companies engaged in “la Caixa”
multichannel management services
c. Companies offering support services to
“la Caixa”
d. Institutional investments
e. Venture capital firms at start-up stage
(entrepreneurial companies) with
institutional support for innovation
2. The acquisitions from “la Caixa” of the
investments held in companies whose activity
forms part of Criteria CaixaCorp’s strategy.
Total investments committed and made by
Criteria CaixaCorp in 2007 amount to €4,256
million, excluding those relating to the
restructuring prior to the IPO.
We highlight the following:
CaiFor
and obtained an attributable stake of 4.16%.
As a result of the transaction, the bidders went
on to hold 56.46% of Agbar’s share capital and
achieved joint control of the company.
On December 27, 2007, the CNMV authorized
the bid made jointly by the two companies,
which effectively extended to the shares of Agbar
they did not control, i.e. 43.54% of Agbar’s
share capital, at a price of €27.65 per share.
On July 11, 2007, a preliminary agreement was
reached with Fortis to acquire its 50% stake in
the CaiFor group (which encompasses CaiFor
itself, VidaCaixa, SegurCaixa and AgenCaixa)
for a total amount of €950 million. The
acquisition was completed on November 12,
2007, after authorization was obtained from
the regulatory authorities and the purchase
agreement drawn up. The company has
exercised full control of the insurance business
since that date.
Consequently, the purchase commitment relating
to the takeover bid for Agbar that Criteria
CaixaCorp had pending at year-end 2007 was
carried out in January 2008. Shareholders
representing 33.55% of the company’s share
capital accepted the offer which required an
outlay of €680 million by Criteria CaixaCorp, in
addition to the €172 million paid to acquire the
stake held by Torreal.
Agbar
In 2007, in line with its strategy of acquiring
significant stakes in international financial entities,
Criteria CaixaCorp purchased 8.89% of the
share capital of Bank of East Asia for €628
million. The purchase was made in two stages.
Firstly, shares representing a 4.34% stake (4.13%
after capital increase) were acquired on the
market in the second half of 2007, for an amount
of €283 million and the second purchase was
made on December 27, 2007, once authorization
had been obtained from the Spanish authorities
to increase the stake to over 5%. The second
stake was obtained by fully subscribing to a
capital increase of 4.76%, for an investment of
€345 million, giving the company a total stake
of 8.89% at December 31, 2007 (after the
corresponding earnings dilution).
On April 10, 2007, Criteria CaixaCorp, Hisusa,
Suez Environnement and Suez Environnement
España (the bidders) informed the CNMV through
a joint significant event notice of their intention
to launch a takeover bid for all of the shares of
Aguas de Barcelona (Agbar) they did not own.
On October 10, 2007, the CNMV admitted the
bid for processing.
In accordance with Royal Decree 1066/2007 of
July 27, which allows control to be obtained
prior to the authorization of the bid, on
November 21, 2007, Torreal, S.A. sold its shares
to the bidders (at a price of €27.65 per share)
with the following breakdown: 1.74% of Agbar’s
share capital was sold directly to Criteria
CaixaCorp and 4.93% to Hisusa. Criteria
CaixaCorp paid €172 million in this transaction
Investments made in 2007
133
All of these investments fit in with Criteria
CaixaCorp management’s investment strategy.
The company also increased its stakes in
companies already held in the portfolio, including
Abertis Infraestructuras, Banco Comercial
Portugués and Telefónica.
Divestments made in 2007
The total value of divestments made in 2007
was €1,281 million, excluding transactions
relating to the restructuring made prior to the
IPO.
The most significant transactions were the
following:
Suez
The divestment of the 1.36% stake held in Suez,
initiated in late 2006 (when 0.3% was sold),
was completed in 2007. This meant that the
sale of 1.06% held in the company was sold at
the beginning of 2007 for €527 million, for a
net consolidated gain of €220 million.
Caprabo
In September 2007, the sale of the 20% stake
held by Critieria CaixaCorp in Caprabo to the
Eroski group was completed for an amount of
€259 million and a net consolidated gain of €81
million, in addition to €16 million relating to
guarantees granted by the former owners.
Occidental Hotels Management Group
In July, the company sold its entire stake in OHM
to BBVA’s private equity fund, Valanza, and
Pontegadea Inversiones for €172 million and a
net consolidated gain of €45 million. In addition
to €7 million relating to guarantees granted by
the former owners.
134
Atlantia
Lastly, in June, the company sold its entire stake
in Atlantia (formerly Autostrade) on the market
for €287 million and a net consolidated gain
of €30 million.
Dividend policy and dividends paid by
Criteria CaixaCorp
Criteria CaixaCorp’s Board of Directors resolved
to pay three interim dividends in 2007, against
results for that year. The first two dividends (for
a joint amount of €1,680 million) were agreed
on prior to the IPO of Criteria CaixaCorp.
Following the IPO, the company redefined its
shareholder remuneration policy. Criteria
CaixaCorp plans to pay out the majority (c.90%)
of its non-consolidated recurring profit each year
as a dividend, excluding gains on the disposal
of investments, which will be used for
reinvestment in line with its stated investment
strategy, in order to maintain the company’s
investment capacity and drive its ordinary
activities.
Only 10 weeks after the company was listed,
the Board of Directors resolved to pay a third
interim dividend of €101 million (€0.03/share).
This corresponds to around 90% of the net
recurring profit obtained in October and
November 2007, thus complying with Criteria
CaixaCorp’s dividend policy described above.
Comparability of information
Criteria CaixaCorp’s core business is active
investment portfolio management. This means
that the company is consistently analyzing
transactions which may lead to the acquisition
or disposal of a stake in a company.
Furthermore, at the General Shareholder Meeting
on March 6, 2008, Criteria CaixaCorp’s Board
of Directors proposed the payment of a final
dividend of €67 million (€0.02/share) against
2007 results. Therefore, the dividends paid
against net recurring profit since Criteria
CaixaCorp’s IPO total €168 million (€0.05/share),
in line with the company’s dividend policy.
Therefore, the effect of these acquisitions and
disposals on the company's financial statements,
non-consolidated and consolidated (a summary
of which is shown below), may make these
statements difficult to compare. This is even
more important in 2007, when the restructuring
of the company carried out prior to the IPO had
a significant impact on the comparison with
2006, in addition to several investments/disposals
made in the normal course of the company’s
operations.
135
Financial information
Key financial data for Criteria CaixaCorp
Non-consolidated financial data
31/12/2007
31/12/2006
620
646
Total net profit
2,316
1,833
Shares outstanding (M)
3,363
2,630
0.83
0.70
0.22
0.24
0.07%
0.04%
€million
Recurring net profit 1
EPS on total net profit (€) 2
EPS on recurring net profit (€)
1, 2
Recurring operating expense as a % of NAV
01/10/2007-31/12/2007
EPS on recurring net profit, 4Q07 (€)
0.06
(1) Including the release of the €101 million portfolio provision in 2006
(2) Pro forma for the IPO, based on the weighted average number of shares for the corresponding period (2.789 billion equivalent shares)
Net debt and liquidity position
Criteria CaixaCorp’s net asset value (NAV) breaks down as follows:
31/12/2007
30/06/2007
GAV 1 (Gross asset value)
26.193
26.104
Pro-forma net debt 2
(1,264)
(4,708)
NAV
24,929
21,396
Net debt / GAV
4.8%
18%
Shares outstanding 3 (M)
3,363
2,630
7.41
8.14
€million
NAV/share (€)
(1) Listed investees were appraised using the number of shares and the closing price at the date considered. Non listed investees at June 30 were valued based
on internal analysis at that date using widely recognized valuation methods that were validated by independent experts (see IPO prospectus). At year-end,
this internal analysis was updated in-house, except for the Port Aventura land which was assessed by an independent expert.
(2) Pro-forma figures based on the net debt position reflected in the non-consolidated financial statements, the net cash positions at the holding companies
and transactions in progress but not yet completed.
(3) Contemplates the equity offering (including the exercise of the green-shoe) entailing the issuance of 733 million shares.
Criteria CaixaCorp’s objective is to maintain a
net debt/GAV ratio of below 20%, with net
debt understood to be bank debt less the cash
and cash equivalents of Criteria CaixaCorp and
the holding companies.
136
Criteria CaixaCorp had a net debt/GAV ratio
of around 19.7% prior to the IPO, which was
reduced to around 5% at year-end 2007, as
the proceeds from the capital increase held to
fund the IPO were used by Criteria CaixaCorp
to reduce its existing debt.
At year-end 2007, Criteria CaixaCorp’s credit
facilities comprised two credit lines granted to
the company by “la Caixa”. The first has a limit
of €2,500 million and matures on June 30,
2009. At December 31, 2007 a balance of
€1,590 million had been drawn down on this
facility. The second has a limit of €2,900 million
and matures June 30, 2008. No balance has
been drawn down on this facility. The interest
rate on both facilities for credit balances is onemonth Euribor plus 30 basis points.
The reconciliation between the credit balance
of the Criteria CaixaCorp’s facilities and its proforma net debt position is shown in the table
below:
As a result, the company currently has a net
debt/GAV ratio which leaves scope to increase
debt by around €4,000 million by undertaking
additional investments.
€million
Credit balance
Equity Swap guarantee deposits
(1,590)
291
Net balance payables/receivables and others
(36)
Net debt holding companies
751
Commitments pending relating to Agbar TOB
Criteria CaixaCorp net debt
(680)
(1,264)
137
Non-consolidated financial statements
The non-consolidated financial statements have been prepared in accordance with generally
accepted accounting principles in Spain.
Balance sheet
€million
ASSETS
2007
2006
Non - current assets
Financial investments
Investments in group companies
Investment in associates
Portfolio of long-term securities
Long-term loans to group companies
Provisions
1
13,020
3,289
5,373
4,264
134
(40)
9
8,398
2,249
3,348
2,940
0
(139)
Total fixed assets
13,021
8,407
Debtors
Cash
134
796
3
1,118
187
2,167
Total current assets
933
3,472
13,954
11,879
TOTAL ASSETS
€million
LIABILITIES
2007
2006
EQUITY:
Share capital
Issue premium
Reserves
Legal reserve
Voluntary reserve
Profit/loss
Interim dividend paid out in the financial year
3,363
7,711
526
526
–
2,316
(1,961)
2,630
5,999
1,148
526
622
1,833
(500)
Total equity
11,955
11,110
Provision for risk and expenses
Long-term debt with group companies
Credit facilities
Deferred tax liabilities
Other liabilities
10
183
1,590
15
–
–
15
211
Total non-current liabilities
1,605
226
384
360
13,954
11,879
Total current liabilities
TOTAL LIABILITIES
138
In the first half of 2007, the afore-mentioned
corporate restructuring process was carried out
prior to the IPO to adjust Criteria CaixaCorp's
consolidation scope. As a result the following
transactions were carried out:
1. Sale to “la Caixa”of companies
(i) Where no further activity was expected
> Caixa de Barcelona Seguros de Vida, S.A. de Seguros y
Reaseguros, (hereinafter, CaixaVida)
> Corporación Hipotecaria Mutual E.F.C., S.A.
> RentCaixa, S.A.
(ii) Engaged in “la Caixa” multichannel
management services
> e-”la Caixa” S.A. and its subsidiaries:
- ECT MultiCaixa, S.A.
- C3 Caixa Center, S.A.
- Serviticket, S.A.
(iii) Providing support to “la Caixa” or institutional
investors
> Banco de Europa, S.A. and its subsidiaries:
- Telefónica Factoring, E.F.C., S.A.
- FinanciaCaixa 2, E.F.C, S.A.
- Telefónica Factoring Brasil, L.T.D.A.
- GDS-CUSA, S.A.
> Servicios Urbanos y Mantenimiento, S.A. (SUMASA),
> PromoCaixa, S.A.
> Caixa Preference, S.A.U.
> Telefónica Factoring México, S.A.
(iv) Venture capital firms at start-up stage
(entrepreneurial companies) with an element
of institutional support for innovation
>
>
>
>
>
>
>
>
(v) Other
>
>
>
>
>
>
>
>
>
>
Long-term investments:
Barcelona Emprèn, S.C.R., S.A.
BCN Ventures, S.G.E.C.R., S.A.
Catalana d'Iniciatives, S.C.R., S.A.
Invercat Exterior, F.C.R.
Neotec Capital Riesgo, S.C.R., S.A.
Caixa Capital Risc, S.G.E.C.R., S.A.
Caixa Capital Semilla, S.C.R. de régimen simplificado, S.A.,
Caixa Capital Pyme Innovación, S.C.R. de régimen
simplificado, S.A.,
> Iniciativa Emprendedor XXI, S.A
Edicions 62, S.A.
Trade Caixa I, S.A.
Inforsistem, S.A.
Inversiones Inmobiliarias Oasis Resort, S.L.
Inversiones Inmobiliarias Teguise Resort, S.L.
4-D Neuroimaging
Directo Inc.
Chip Card, S.A.
Productora Eléctrica Urgelense, S.A.
Foment de Ciutat Vella, S.A.
139
2. Criteria CaixaCorp acquired the following stakes from “la Caixa”:
Name
Stake acquired (%)
Abertis Infraestructuras, S.A. 1
Inversiones Autopistas, S.L 1, 2
Telefónica, S.A. 1
Bolsas y Mercados Españoles, S.H.M.S.F, S.A
Gas Natural, S.D.G, S.A 1
FinConsum, E.F.C, S.A. 1
CaixaRenting, S.A. 1
GestiCaixa, S.G.F.T, S.A 1
12.79
50.10
0.39
3.53
0.20
55.00
100.00
6.00
Most of these investments were sold previously to “la Caixa” by other companies belonging to the Criteria CaixaCorp group.
(1) Purchase from “la Caixa” of the holdings it had in companies whose activity forms part of Criteria's strategy.
(2) Holding company with a 7.75% interest in Abertis Infraestructuras, S.A.
Movements in “Investments in Group
companies”, “Investments in Associates” and
“Long-term investment securities” in the
accompanying 2007 balance sheets are shown
in the tables below:
Stakes in Group
companies
Stakes in Associates
and Multigroup companies
Long-term sercurities
portfolio
Balance at 31/12/2006
2,249
3,348
2,940
Investments
2,516
2,211
1,633
0
0
0
34
52
876
98
0
524
259
658
13
0
0
0
2
1,786
312
0
0
0
0
0
40
0
0
0
0
0
72
0
1
0
0
123
0
0
0
0
0
0
0
0
0
53
0
1,441
16
€million
Abertis
Banco BPI
BME
Caifor
CaixaRenting
Crisegen Inversiones
FinConsum
Gas Natural
Inversiones Autopistas
Holret
Negocio de Finanzas e Inversiones I
Port Aventura
Repsol
Sgab
Telefonica 1
Other
Divestments
(759)
(10)
(12)
Banco de Europa 2
Caixa de Barcelona Seguros de Vida 2
e-la Caixa 2
Other
(68)
(488)
(89)
(114)
(10)
(12)
Transfers
Dividends against portfolio cost
Other 3
176
(570)
(323)
(176)
0
0
0
0
(297)
Balance at 31/12/2007
3,289
5,373
4,264
(1) Equity Swap contracts for €726M have been taken out on 0.94% of the stake..
(2) Divestments associated with the internal reorganization prior to the IPO.
(3) Companies transferred as part of the contribution to the capital increase at Negocio de Finanzas e Inversiones I, S.L. and Hodefi, S.A.S., made
by Criteria CaixaCorp.
140
FinConsum, E.F.C., S.A.:
In February 2007, Criteria CaixaCorp acquired
45% de Finconsum, E.F.C., S.A. from Sofinco
for €38 million. On December 20, 2007, a €12
million capital increase was held, fully subscribed
by Criteria CaixaCorp, which at year-end 2007
owned 100% of this company.
Negocio de Finanzas e Inversiones I, S.L.:
On March 29, Criteria CaixaCorp subscribed the
entire capital increase in this company for €298
million (of which €100 million was capital and
the remainder was share premium), through the
non-monetary contribution of 11,470,159 shares
in Atlantia, S.p.A. (formerly Autostrade, S.p.A.),
representing 2.01% of its share capital, 367,548
shares in Boursorama, S.A., representing 0.43%
of its share capital and 14,385,783 shares in
Banco Comercial Portugués, S.A., representing
0.40% of its share capital. The cost value of this
non-monetary contribution recognized by Criteria
CaixaCorp was the carrying amount of these
shares in Criteria CaixaCorp.
The company subsequently paid a dividend, of
which €96 million was recognized by Criteria
CaixaCorp as a deduction from the cost of the
investment.
On November 5, 2007, Criteria CaixaCorp
subscribed an additional capital increase
(monetary in this case) for a nominal amount of
€120 million and a share premium of €240
million, destined to company transactions.
CaiFor, S.A., Crisegen Inversiones, S.L. (antes
Fortis AG España Invest, S.L.) y VidaCaixa, S.A.
de Seguros y Reaseguros:
On July 11, 2007, Criteria CaixaCorp and Fortis
reached an agreement whereby Criteria
CaixaCorp would acquire the stakes held by
Fortis in CaiFor, S.A. (50%) and SegurCaixa, S.A.
de Seguros y Reaseguros (20%), through Criteria
CaixaCorp’s purchase of the holding company
Fortis AG España Invest, S.L. (owner of 50% of
CaiFor), and CaiFor, S.A.’s subsequent acquisition
of 20% of SegurCaixa, held by Fortis España
Invest, S.L.. On November 12, 2007, after
authorization had been obtained from the
pertinent authorities, the purchase of 50% of
CaiFor’s shares went ahead, through the
acquisition of 100% of Fortis AG España Invest,
S.L. for €876 million. Through this transaction,
Criteria CaixaCorp obtained a 100% stake in
CaiFor, S.A., and its subsidiaries VidaCaixa, S.A.
de Seguros y Reaseguros, SegurCaixa, S.A. de
Seguros y Reaseguros and AgenCaixa, S.A.
Consequently, its investment in VidaCaixa, S.A.
de Seguros y Reaseguros y CaiFor, S.A. was
reclassified from “Investments in Associates and
Multigroup companies” to “Investments in Group
companies”. On December 20, 2007 Criteria
CaixaCorp paid €34 million in dividends relating
to CaiFor, S.A. The remaining amount was paid
directly by CaiFor and therefore is not recognized
in the non-consolidated financial statements.
The most significant investments made in 2007,
excluding those relating to the restructuring
prior to the IPO, were the following:
On December 12, 2007, it was resolved to
change the name of Fortis AG España Invest,
S.L to Crisegen Inversiones, S.L.
141
Port Aventura, S.A.:
Criteria CaixaCorp acquired an additional 3.14%
interest in Port Aventura, S.A. for €13 million.
The total interest held by Criteria CaixaCorp at
December 31, 2007, is 97.12%.
Banco BPI, S.A.:
Criteria CaixaCorp acquired a 6.45% holding in
Banco BPI, S.A. for €310 million and an additional
0.02% interest for €1 million from the subsidiary
Catalunya de Valores S.G.P.S., U.L. Criteria
CaixaCorp’s direct interest in Banco BPI, S.A. at
December 31, 2007 was 15% and Criteria
CaixaCorp’s total investment stood at 25.02%.
Sociedad General de Aguas de Barcelona, S.A.
(Agbar):
On April 10, 2007, Hisusa, Suez Environnement,
Suez Environnement España S.L.U. and Criteria
CaixaCorp informed the CNMV, through a joint
significant event notice followed by an additional
significant event notice dated April 13, 2007,
of their intention to launch a takeover bid for
all of the shares of Agbar they did not own at
a price of €27.65 per share. After obtaining the
pertinent authorization from the authorities, the
takeover prospectus was approved by December
27, 2007, and the bid was pending completion
at December 31, 2007. Prior to this, on
November 21, Hisusa, Suez Environnement, S.A.
and Criteria CaixaCorp announced the acquisition
from Torreal, S.A., Agbar’s second largest
shareholder with a 6.671% stake in the company,
subsequent to its irrevocable commitment to
transfer its shares as part of the takeover
transaction. This transaction gave Criteria
CaixaCorp and Suez Environnement a joint
interest of 56.46% in Agbar, and both parties
undertook to jointly manage and exercise control
over Agbar. Criteria CaixaCorp acquired Torreal
142
S.A.’s direct stake of 1.74% in Agbar from
Torreal, S.A. for €72 million (€172 million at
Criteria CaixaCorp group level).
Telefónica, S.A.:
In 2007, Criteria CaixaCorp acquired Telefónica
S.A. shares worth €715,061 thousand, of which
€311 million were acquired from “la Caixa” as
part of the Group’s restructuring process.
Additionally, on June, 2007, Criteria CaixaCorp
acquired an additional 0.94% in Telefónica’s
share capital for €726 million thereby optimizing
the net financial return on the investment. This
investment was hedged through derivative
hedging instruments and equity swap contracts,
and accordingly is not subject to market risk and
is recognized at cost.
Debtors
The decrease in this heading relative to December
31, 2006 was mainly due to a €539 million
payment pending in 2006 for the sale of 1.11%
of Suez’s share capital sold by Criteria CaixaCorp
to Negocio de Finanzas e Inversiones I (100%
owned by Criteria CaixaCorp, and holder of
most of the group's international investments).
Additionally, an amount of €482 million relating
to the last transactions which took place at the
very end of 2006 related to the sale of Banco
de Sabadell were still pending settlement. Both
amounts were paid in January 2007.
Short-term Financial Investments
The breakdown of short-term financial
investments is mainly as follows:
> Short-term loans granted by Criteria
CaixaCorp to group companies for investment
purposes:
– €6 million to Crisegen Inversiones, S.L. on
December 20, 2007, in relation to CaiFor
transaction maturing June 30, 2008 and
paying interest at a rate of one-month
Euribor plus 30 basis points with monthly
interest settlements
– €250 million to Negocio de Finanzas e
Inversiones I for the acquisition of the stake
in The Bank of East Asia on December 27,
2007, maturing March 31, 2008, and
paying interest at a rate of one-month
Euribor plus 30 basis points with monthly
interest settlements
> Equity swap guarantee deposits of €291
million on December 31, 2007, correspond
to the equity swap contracts subscribed on
the 45,000,000 Telefónica shares which
require a guarantee deposit which will be
adjusted throughout the life of the derivative
by contributions made by the either the
counterparties or Criteria CaixaCorp,
according to the market value of Telefónica’s
shares. This deposit ensures that the funds
are made available to both parties in the
event of the partial or full cancellation of the
contract, early or at maturity. The contract
also establishes a return on the guarantee
deposit paying interest at the daily EONIA
rate for the previous month.
– €100 million to Hisusa on November 20,
2007, to finance the acquisition of
7,371,613 Agbar shares from Torreal, S.A..
This transaction formed part of the IPO
process described above. The loan matures
on November 20, 2008, and pays interest
at a rate of 1-day Euribor plus 30 basis
points with monthly settlements.
Cash
The cash balance increased significantly in 2006,
as a result of the disposal of significant
investments in the second half of the year. The
most noteworthy were: Inmobiliaria Colonial
(€686 million) and Banco de Sabadell (€912
million).
Equity
The movement in Equity between January 1 and
December 31, 2007, was follows:
€million
Equity at 31/12/2006
Final dividend 2006
Distribution of share premium and voluntary reserve
11,110
(165)
(3,194)
Capital increases
3,848
Profit attributable to 2007
2,316
Interim dividend 2007
(1,961)
Equity at 31/12/2007
11,955
143
> On March 8, 2007, the sole shareholder
approved: (i) the payment of a final dividend
of €165 million; and (ii) to allocate €1,168
million from 2006 profits to voluntary reserves.
2007 profits. This dividend was paid on July
31, 2007.
> On June 7, 2007, the Board of Directors
approved the payment of the first interim
dividend of €1,010 million out of 2007
profits. This dividend was paid on June 29,
2007.
> Capital increase on October 10, 2007 via the
issuance of 657,500,000 shares with a
nominal value of €1 each. Later, on November
7, 2007 the company held a second capital
increase, issuing an additional 75,519,037
shares, due to the exercise of the green shoe
option by the underwriters.
> On June 21, 2007, the sole shareholder
approved the payment of: (i) €403 million
with a charge to the share premium; and (ii)
€1,790 million with a charge to the company’s
voluntary reserves.
> On December 13, 2007, the Board of Directors
approved the payment of a third interim
dividend of €101 million with a charge against
2007 profits. This dividend was paid on
January 17, 2008.
> On July 30, 2007, the sole shareholder
approved a €1,000 million share premium
distribution, which was paid on July 31,
2007.
> On June 26, 2007, the Board of Directors
approved the payment of the second interim
dividend of €850 million with a charge against
Payable to credit entities
Includes the amounts drawn down on credit
facilities taken out with “la Caixa”. The credit
facilities have a combined limit of €5,400 million
and bear interest at Euribor plus 30 basis points.
Non-consolidated income statement
January-December
€million
2007
2006
Dividends from investees
Dividends from changes in consolidation
Operating expenses
530
69
(18)
461
117
(10)
Operating profits, recurring
581
568
Portfolio provisions (net)
21
101
Financial profit (net)
31
18
Recurring profit
633
687
Corporate income tax
(13)
(41)
Net recurring profit
620
646
Non recurring profit
1,442
1,588
Corporate income tax
254
(401)
Net non recurring profit
1,696
1,187
Net profit for the year
2,316
1,833
The income statement presented herein has been prepared in accordance with the principles and accounting provisions contained in the Spanish General Chart
of Accounts. However, for purposes of explaining the key data it has been presented in accordance with the criteria used by the company’s management.
144
€million
Recurring net profit
Recurring net profit fell 4% in 2007, due mainly
to the reversal of security price fluctuation
allowances for some investments in 2006.
Recurring net dividends grew 4% to €599 million
compared to the previous year.
The breakdown of dividends was as follows:
January-December
2007
2006
Telefónica
112
92
Gas Natural
154
132
Repsol YPF
99
73
Repinves
36
29
Abertis
10
10
CaiFor
57
44
BPI / Catalunya de Valores
16
16
VidaCaixa
24
21
Other
22
44
530
461
Abertis
25
-
Telefónica
20
-
BPI/Cat. Valores
14
-
Inv. Autopistas
7
-
Recurring dividends, same consolidation scope
Bolsas y mercados
3
-
69
-
Caixa Barcelona Vida
-
43
Banco Sabadell
-
29
Suez
-
17
Caixa Capital Risc
-
10
Dividends from new acquisitions
Inmobiliaria colonial
-
8
Other
-
10
Dividends from investments sold
-
117
599
578
Total
In 2007, Criteria CaixaCorp reported a nonconsolidated net profit of €2,316 million, an
increase of 26% on the previous year. Of this
amount, €1,696 million correspond to
extraordinary income deriving mainly from the
restructuring operations carried out at the
company prior to the IPO and specific disposals
made at the beginning of 2007. Recurring
dividends rose 4%to €599 million in relation to
2006, however, like-for-like recurring dividends
rose 15% compared to 2006.
15.0%
3.6%
145
If the evolution of the dividends are analyzed in
a constant scope, the recurring dividends rose
15% in 2007 compared to 2006.
Operating expenses increased due to the process
of adaptation to the needs of listed company.
In annualized terms, they represent approximately
0.1% of the net asset value at December 31.
This level of operating expenses compares very
favourably with Criteria CaixaCorp's peers.
Non-recurring income also includes the Criteria
CaixaCorp’s IPO-related expenses, including €59
million in banking fees paid to the global
coordinators, and €38 million in Transfer tax on
the capital increases, both before taxes.
In 2006, the non-recurring income mainly
included gross proceeds from the disposals of
investments in Inmobiliaria Colonial (€559 million)
and Banco de Sabadell (€929 million).
Non-recurring income
In 2007, the internal restructuring carried out
by the company prior to the IPO led to an
extraordinary dividend income of €1,565 million,
of which €1,350 million related to the dividend
paid by Caixa Barcelona Vida. Caixa Barcelona
Vida was sold to “la Caixa” as part of the
reorganization process.
€million
-4%
700
If the evolution of the
dividends are analyzed in a
constant scope, the
recurring dividends rose
15% in 2007 compared to
the same period of 2006.
646
620
31
600
18
101
21
117
500
Release of portfolio
provisions
400
300
599
530
Recurring dividends change
in consolidation scope
578
461
15%
200
Recurring dividends same
consolidation scope
Operating
expenses
100
0
-18
-13
-10
-41
-100
2007
146
Financial profit, net
69
2006
Income tax
Key data for the consolidated group headed by Criteria CaixaCorp (hereinafter, the Group) are as
follows:
31/12/2007
€million
31/12/2006
1,180
899
Net profit attributable to equity holders of the parent 1
1,726
2,159
(1) Profit fell in relation to 2006 due to changes in the consolidation scope and disposals made in 2006
At December 31, 2007, Criteria CaixaCorp
consolidated its shareholdings in accordance
with the IFRS. This means:
> The full consolidation of subsidiaries of
companies over which it has control (generally
over 50% of the voting rights).
> The equity method of jointly controlled
companies.
Consolidated financial data
> Recognition of other investments in which
the company owns less than 20% of the
voting rights as available-for-sale financial
assets.
The following table presents the Criteria
CaixaCorp Group’s investments at December
31, 2007, grouped by the consolidation method
applied:
> Consolidation using the equity method of
companies in which it owns at least 20% of
the voting rights,
Full consolidation
Equity method
Available for sale financial
assets
Specialized financial
services
Services-Listed companies
Services-Listed companies
100.00%
CaixaRenting
100.00%
Gas Natural
35.53%
Repsol YPF
12.67%
VidaCaixa
SegurCaixa
AgenCaixa
100.00%
100.00%
100.00%
FinConsum
100.00%
Abertis
21.12%
Telefónica
5.48% 1
InverCaixa
Gestión
100.00%
Grupo Agbar 2
27.67%
BME
GDS-Correduría
67.00%
GestiCaixa
100.00%
Insurance
CaiFor
3.53%
Services Non-listed
companies
Caixa Capital
Desarrollo
Banco BPI
25.02%
BEA
8.89%
100.00%
Holret
100.00%
Boursorama
20.44%
BCP
1.03%
Port Aventura
97.12%
Hotel Caribe
Resort
60.00%
(1) The investment includes 45,000,000 shares of Telefónica, representing 0.94% of its share capital, hedged by an equity swap
(2) Jointly controlled with the Suez group.
147
Consolidated balance sheet summary
€million
Criteria CaixaCorp consolidated balance sheet - main asset headings
31/12/2007
31/12/2006
Goodwill and other intangible assets
Property, plant and equipment and investment properties
Investments consolidated under the equity method
Other non-current assets
784
1,140
5,381
28,594
121
27
1,027
4,459
25,070
317
Non-current assets
36,020
30,900
Financial assets
Cash and cash equivalents
Other current assets and other
2,689
1,185
787
2,078
3,376
1,047
Current assets
4,661
6,501
40,681
37,401
Total Assets
€million
Criteria CaixaCorp consolidated balance sheet - main liability headings
31/12/2007
31/12/2006
Total equity
15.014
14.945
Long-term provisions
Long-term debt
Deferred tax liabilities
Equity instruments classified as financial liabilities
16,242
4,005
1,591
-
13,631
1,989
1,424
3,000
Non-current liabilities
21,838
20,044
Provisions for insurance contracts
Interest-bearing loans and borrowings and other
Other current liabilities
404
2,971
454
169
1,773
470
Current liabilities
3,829
2,412
40,681
37,401
Total equity and liabilities
The main changes in the balance sheet at
December 31, 2007 were the result of the
internal restructuring carried out prior to the
148
IPO and the acquisition of Fortis’ entire insurance
business, summarized below:
As part of the internal restructuring of Criteria
CaixaCorp prior to the IPO, the group sold to
“la Caixa” those subsidiaries which for various
reasons would not form part of its group. The
most important disposals, given their impact of
comparability of information, were those of
Caixa de Barcelona Seguros de Vida, SA de
Seguros y Reaseguros and Caixa Preference,
SAU. Therefore, at December 31, 2006 the
Group’s consolidated balance sheet included
assets totalling €6,489 million, technical
provisions of €3,406 million and equity
instruments classified as financial liabilities of
€3,000 million relating to these companies.
Acquisition of Fortis’ entire insurance
business
Since 1992, “la Caixa” and Fortis had jointly
controlled the insurance business carried out by
the CaiFor and comprised mainly of the
companies CaiFor, SA (parent), VidaCaixa, SA
de Seguros y Reaseguros (hereinafter VidaCaixa),
engaging mainly in the sale of individual and
collective life and health insurance, SegurCaixa,
SA de Seguros y Reaseguros (hereinafter
SegurCaixa), engaging primarily in the sale of
home and accident insurance, and AgenCaixa,
SA engaging in commercial insurance advisory
services and the distribution of products and
services. “la Caixa”’s branch network was the
CaiFor group’s most important distribution
channel.
On July 11, 2007 a preliminary agreement was
reached with Fortis to acquire its stake in the
CaiFor group for €950 million. The acquisition
was completed on November 12, 2007 after
authorization was obtained from the regulatory
authorities and the purchase agreement drawn
up. The group obtained full control of the
insurance business from that date and at
December 31, 2007, included on its consolidated
balance sheet all the assets and liabilities relating
to the insurance business, mainly available-forsale financial assets (securities) and provisions
for insurance contracts, in addition to goodwill
and intangible assets arising from the business
combination, the impact of which is reflected
below.
Movements in the main accounts of the
consolidated balance sheet are as follows:
Internal restructuring prior to flotation
Goodwill and other intangible assets
The increase in this heading was almost entirely
due to the acquisition of CaiFor’s insurance
business from Fortis, of which €198 million was
recognized in intangible assets linked to the life
and non-life insurance portfolios and €574
million was taken to goodwill.
Investments consolidated under the equity
method
The movement in this heading in 2007 was as
follows:
€million
Balance at December 31, 2006
Investments
Abertis
Agbar
Boursorama
Gas Natural
BPI
Divestments
4,459
415
232
172
8
2
1
(9)
Transfers Boursorama *
132
Change in value due to application
of equity method of consolidation
384
5,381
(*) Transferred to “Available-for-sale financial assets” after a stake of over
20% was obtained during the year.
149
The variation in value of investments consolidated
under the equity method corresponds mainly to
profits relating to these companies (€697 million)
net of dividends (€274 million).
At December 31, 2007, the heading included
goodwill from Gas Natural (€422 million), BPI
31/12/2006
Total stake (%)
Market value
Total stake (%)
Market value
Gas Natural, SDG, SA
35.53%
6,366
35.51%
4,769
Abertis Infraestructuras, SA
21.12%
2,972
19.21%
2,616
Banco BPI, SA
25.02%
1,019
25.00%
1,123
Sociedad General de Aguas de Barcelona, SA
27.67%
1,140
23.46%
976
Boursorama, SA
20.44%
143
-
-
Market value
11,640
9,484
Acquisition cost
5,091
4,192
Gross capital gain
6,549
5,292
The most significant transactions carried out in
investments consolidated under the equity
method in 2007 were the following:
> Abertis Infraestructuras, S.A.: The
acquisition of 1.71% of the share capital de
Abertis Infraestructuras, SA. for €232 million,
of which 1.12% (€150 million) was acquired
from “la Caixa” in the restructuring prior to
the IPO. The company’s stake in Abertis
Infraestructuras, SA at December 31, 2007,
was 21.12% and its controlling stake was
24.99% (understood to be control over the
total stake through its subsidiaries).
150
The table below shows the stake held and market
value of the main listed companies included in
this heading:
31/12/2007
€million
Company
(€339 million), Abertis (€311 million), Agbar
(€99 million) and Boursorama (€65 million).
> Sociedad General de Aguas de Barcelona,
S.A.: The Group increased its ownership
interest by 4.21% in 2007, mostly as part
of the takeover bid for Agbar. The acquisition
of the Torreal group’s 4.16% stake required
an investment outlay of €172 million for the
Group. At December 31, 2007, Criteria
CaixaCorp’s ownership interest in Agbar
stood at 27.67%.
At December 31, 2007, these were mainly
available-for-sale financial investments, both
debt instruments associated with the insurance
business (€16,010 million) and equity
investments related to portfolio activities
(€10,590 million). It also included loans and
receivables of €1,729 million, mainly from the
financial services business.
Available-for-sale financial assets (debt
instruments) increased by €4,136 million due
mainly to the incorporation of assets from
CaiFor’s insurance business in November 2007.
The movement in available-for-sale equity
instruments in 2007 is shown in the table below:
€million
2007
8,439
Investments
2,085
Telefónica
BEA
Repsol YPF
BCP
Other
1,131
628
53
123
105
45
Divestments of listed companies
(850)
Suez
Atlantia
BCP
(527)
(286)
(37)
Divestments of non-listed companies
(461)
Caprabo
OHM Group
Other
(238)
(179)
(44)
Valuation adjustments
1,516
Transfers
(139)
10,590
The main investments and divestments made
by the Group in the year were as follows:
> The Bank of East Asia, Ltd. In 2007, in line
with its strategy of acquiring significant stakes
in international financial institutions, Criteria
CaixaCorp purchased 8.89% of the share
capital of The Bank of East Asia (hereinafter
BEA) for €628 million. BEA is a company
listed on the Hong Kong stock exchange and
forms part of the Hang Seng index (the main
Chinese stock market index in Hong Kong).
The purchase was made in two stages. Firstly,
shares representing a stake of 4.34% were
acquired on the market in the second half of
2007 for an amount of €283 million, and
the second purchase was made on December
27, 2007, once authorization had been
obtained from the Spanish regulatory
authorities to increase the stake to over 5%.
The second stake was obtained by fully
subscribing to a capital increase of 4.76%,
for an investment of €345 million, giving the
company a total stake of 8.89% at December
31, 2007 after the corresponding earnings
dilution.
Financial assets.
> Telefónica, S.A.: The Group increased its
interest in Telefónica, SA by 1.58% for an
investment of €1,131 million. At December
31, 2007, its total stake in the operator’s
share capital was 5.48%. At the same time,
in June 2007, several Equity Linked Swap
contracts were taken out on a 0.94% stake
in Telefónica, SA. The objective of this was
to establish a fair value hedging relationship
between the portfolio and the derivative,
eliminating the risk of changes in value.
Therefore, there is market risk relating to the
remaining 0.64% of the shares acquired in
the year and to the 3.90% stake acquired in
previous years. At December 31, 2007, both
the portfolio and the derivative were carried
at market value.
151
At December 31, 2007, the
financial assets were mainly
available-for-sale financial
investments, including debt
instruments associated with the
insurance business as well as
equity investments related to
portfolio activities.
> Suez, SA. In January 2007, Criteria CaixaCorp
sold its entire stake in Suez, SA (1.05%) for
a capital gain of €279 million (€220 million
after taxes). In 2006, the Group sold a 0.3%
stake for a capital gain of €76 million (€61
million after taxes).
> Atlantia, SpA. (formerly Autostrade, SpA):
In June 2007, Criteria CaixaCorp sold its
entire 2.01% stake in Atlantia SpA for €287
million. The group recognized a gain (pre and
after tax) of €30 million from this transaction.
> Caprabo, SA. In September, 2007, the Group
sold the 20% stake held in the company
through its subsidiary, Caixa Capital Desarrollo
SCR de Régimen Simplificado, SA, to the
Eroski group for €259 million, recording a
gross capital gain of €90 million (€81 million
after taxes).
152
> Occidental Hoteles Group. In July 2007,
the Group sold through its subsidiary Caixa
Capital Desarrollo SCR de Régimen
Simplificado, SA, the 30.37% stake it held
in the Group made up of Occidental Hotels
Management (30.37%), Soteltur, SL (50%)
and Soteltur Internacional, BV (50%), to
Valanza, a venture capital firm belonging to
BBVA, and Pontegadea Inversiones, SL. for
€172 million, recording a gross capital gain
of €50 million (€45 million after tax).
> Boursorama, SA. In 2006, Hodefi, SAS,
received a 19.9% stake in the share capital
of Boursorama, SA as part of the payment
from the sale of CaixaBank France, SA. In
January 2007, after increasing the stake to
over 20%, the investment was consolidated
under the equity method and recorded under
Investments consolidated under the equity
method.
31/12/2007
€million
Companies
Telefónica, S.A.
Repsol YPF, S.A.
The Bank of East Asia Limited
Banco Comercial Portugués
Boursorama, S.A.
Atlantia SpA
Suez, S.A.
Other
Market value
share prices. The table below shows the stake
and market value of the main listed investments
in this heading:
31/12/2006
Total Stake (%)
Market value
Total Stake (%)
Market value
5.48%
12.67%
8.89%
1.03%
3.53%
-
5,814
3,770
683
109
137
38
10,551
3.90%
12.50%
0.28%
19.74%
1.99%
1.05%
-
3,093
3,997
29
176
248
525
8,068
Acquisition cost
5,391
3,964
Gross capital gain
5,160
4,104
Loans and receivables included under non-current
financial assets decreased by €2,819 million,
due mainly to the deconsolidation of Caixa
Preference SAU (€3,000 million) as a result of
the restructuring process prior to the IPO.
Additionally, the increase in trading income led
to an increase of €208 million in non-current
loans and receivables.
Long-term provisions. At December 31, 2007,
long-term provision were mainly comprised of
provisions for insurance contracts of €16,190
million, an increase of €2,629 million in relation
to 2006. The change reflects the incorporation
of the insurance business acquired form the
CaiFor group in November 2007 for €6,473
million and the €3,406 million decrease due to
the elimination of Caixa Barcelona Vida in the
first half of 2007. The remainder corresponds
to normal insurance activities.
In 2007, the value of the investments in this
heading increased by €1,516 million (€1,061
million after taxes) due to the increase in their
Long-term debt. At December 31, 2007, the
balance of €4,004 million included the credit
facility granted to Criteria CaixaCorp and drawn
down by the amount of €1,590 million and the
€1,714 million in credit facilities granted to the
company’s financial institutions, with financing
in both cases obtained from “la Caixa”.
Equity instruments classified as financial liabilities
have decreased from €3,000 million at year-end
2006 to not being included on the balance sheet
at December 31, 2007 following the elimination
of Caixa Preference, S.A.U., as part of the
restructuring carried out prior to the IPO.
Interest-bearing loans and other borrowings,
were €2,971 million, an increase of €1,198
million due almost entirely to the increase in
repurchase operations relating to the insurance
business, largely due to the incorporation of
CaiFor’s assets.
153
Consolidated income statement
summary
although they are presented according to the
Group management model.
The consolidated income statement shown below
has been prepared in accordance with IFRS,
January-December
2007
2006
Net income from equity instruments
276
268
3%
Net profit of companies consolidated under the equity method
670
471
42%
Net profit of companies under the full consolidation method
234
160
46%
€million
Net non-recurring profit from the disposal of investments and others
Net profit attributed to the group
Net profit attributed to the group was €1,726
million (a decrease of 20% compared to 2006).
However, consolidated recurring net profit in 2007
was €1,180 million, an increase of 32% compared
to 2006. This increase was due to the increase in
profit reported by companies consolidated under
the full consolidation method and companies
consolidated by the equity consolidation method,
where net profit increased by 46% and 42%,
respectively. Extraordinary results fell from €1,260
million in 2006 to €546 million in 2007. This
decrease was due to the significant disposals carried
out in 2006, mainly Banco de Sabadell and
Inmobiliaria Colonial, which led to net consolidated
capital gains of €698 and €680 million, respectively.
Investment disposals made in 2007 (Suez, Caprabo,
Grupo OHM and Atlantia) resulted in net
consolidated capital gains of €220, €81, €45 and
€30 million respectively.
154
% Var.
1,180
899
32%
546
1,260
(57%)
1,726
2,159
(20%)
Movements in the headings mentioned above
were as follows:
Income from equity instruments
Dividends earned on available-for-sale financial
assets remained largely stable overall, increasing
by 3%. However, income obtained from the
investments in Telefónica and Repsol YPF in 2007
increased by 30%, pursuant to the dividend
policies adopted these companies. The disposal
of the investment in Banco de Sabadell in 2006
had the opposite affect on the comparison with
2007. The gains from this sale are recognized
in Net profit from the disposal of investments
and other non-recurring.
The breakdown of these gains by company,
before and after tax, is as follows:
2007
2006
% Var.
Telefonica
Repsol YPF
Banco de Sabadell
Other
132
134
–
10
103
101
29
35
28%
33%
–
71%
Income from equity instruments
276
268
3%
€million
Profit (loss) from companies consolidated under
the equity method
Profit attributable to the Group from companies
consolidated under the equity method (Gas
Natural, Abertis, Agbar, BPI and Boursorama in
2007) increased by 42% in total, from €471
million in 2006 to €670 million in 2007, net of
taxes and minority interests, due to the higher
results reported by these companies. Profit before
tax and minority interests were €491 and €697
million in 2006 and 2007 respectively.
It’s important to highlight the contributions made
to this increase by Banco BPI, due to the increase
of the participations in this company in 2006
and, to a lesser extent, to the higher results
reported by the company, higher results made
by Agbar’s due mainly to the disposal of the
stake in Applus+, and due to the profits reported
by Abertis as a result of the growth achieved
during the year. The contribution of Gas Natural
grew by 8%, contributing most to this heading.
January-December
Net profit (loss) from companies consolidated
under the full consolidation method
This heading includes revenues and expenses
corresponding the Group’s different activities
January-December
2007
2006
2,227
2,740
1,578
317
332
(1,599)
1,785
380
575
(2,002)
€million
Revenues
Insurance activity
Financial activity
Other activities
Expenses arising from activities
Gross margin from companies consolidated by the full and proportionate method
628
738
(122)
(114)
(147)
2
12
(151)
(137)
(187)
73
(33)
Pre-tax profit
259
303
Income tax
(23)
(101)
Consolidated profit for the year
236
202
(2)
(42)
234
160
Personnel expenses
Depreciation
Other operating expenses
Other profits/losses
Finance profit/loss
Profit attributable to minority interests
Net profit (loss) from companies consolidated under the full consolidation method
155
Net profit from the disposal of investments and
other non-recurring profit
(insurance, finance, real estate, leisure,
operational leasing, etc.) and results reported
by portfolio companies, mainly Criteria
CaixaCorp, SA, and financial revenues and
expenses relating to the Group’s financial
position.
The internal restructuring carried out prior to
the IPO in 2007, and the disposal of Inmobiliaria
Colonial in 2006 (gain recognized in Net profit
from the disposal of investments) led to a
decrease in net revenues in 2007 compared to
2006, and likewise to a decrease in Expenses
arising from activities, Personnel expenses,
Depreciation, Other operating expenses and
Profit attributable to minority interests.
Revenues from Other activities in 2007 mainly
relate to Port Aventura (€192 million) and the
Group’s operational leasing (€115 million). In
2006, €283 million corresponding to the real
estate business (basically Inmobiliaria Colonial)
was included, while this contribution was €63
million in 2007.
This heading includes the sale of available-forsale assets (Suez, Caprabo, Atlantia and OHM in
2007 and Banco de Sabadell in 2006) and the
sale of stakes in consolidated companies (mainly
Inmobiliaria Colonial in 2006), with gains of €461
and €385 million before and after tax respectively.
Other non-recurring profit in 2007 included
deductions for the reinvestment of capital gains
from the sale of assets made in previous years to
the amount of €104 million. In 2006, this heading
was mainly an extraordinary provision related to
the insurance business made for Caixa Barcelona
Vida. This stake was sold as part of the internal
restructuring process carried out prior to the IPO.
The breakdown of these results, before and after
tax, was as follows:
January-December
2007
Before tax
After tax
Before tax
After tax
Profit from the disposal of investments
465
388
2,067
1,484
Suez
€million
279
220
76
61
Caprabo
90
81
–
–
Atlantia
30
30
–
–
OHM
50
45
–
–
–
–
1,015
680
Inmobiliaria Colonial
Banco Sabadell
–
–
929
698
Other
16
12
47
45
Other non-recurring profit
(224)
82
158
(288)
Deductions applied for the reinvestment of capital gains
-
104
-
-
Extraordinary provision for insurance activity
-
-
(286)
(200)
82
54
(2)
(24)
547
546
1,779
1,260
Other
Profit attributable to equity holders of
the parent company
156
2006
The group engages in a wide variety of activities,
particularly (a) holding equity investments in
listed companies, (b) life and non-life insurance
activities and (c) consumer credit financial
activities.
Several methods and tools are
used to assess and measure the
Group's exposure to risk, and
consequently to take the
appropriate decisions to minimize
the impact of these risks on its
annual consolidated financial
statements.
> Credit risk. The risk of incurring losses as a
result of debtors failing to meet their
contractual payment obligations and possible
losses caused by changes in credit ratings.
This type of risk also covers portfolio
investments in multigroup and associated
companies.
> Operational risk. Risk relating to errors in the
implementation and executions of
transactions.
Risk factors
> Risk relating to the insurance business.
Technical or subscription risk. Technicalactuarial risk is carefully controlled.
Below, the main risks and the measures adopted
by the company to minimize their impact on its
financial statements are described.
I. Market risk
Its main financial risks are associated with its
portfolio of investees, and to a lesser extent,
risks relating to the insurance and financial
activities. The management’s priority is to identify
the main risks related to its main business
activities and apply the appropriate measures to
offset this risk on a decentralized basis, given
the variety of its business activities and its high
degree of specialization. Several methods and
tools are used to measure and monitor risk.
These methods and tools allow the company to
assess and measure the Group’s risk exposure
and consequently take the appropriate measures
to minimize the impact of these risks on its
consolidated financial statements.
The group has identified its main risks according
to the following categories:
> Market risk. Risk of variations in the value of
its investments in other companies, classified
as available-for-sale assets, variations in the
interest rate and in exchange rates.
> Liquidity risk. Mainly due to a lack of liquidity
in its investments.
Market risk is the risk that the value of a financial
instrument may vary as a result of changes in
the share price, interest rate or exchange rate.
This could lead to a decrease in net equity or
losses caused by movements in market prices
and/or the breakdown of positions making up
the investment portfolio, not the trading
portfolio, in the medium-long term
Equity price risk
At December 31, 2007, the Group’s investments
in financial instruments classified as availablefor-sale financial assets had a market value of
€10,585 million, implying pre-tax underlying
capital gains of €5,195 million. At December
31, 2007, 99% of the market value of the
group’s assets corresponded to investments in
listed companies. Therefore, the Group is exposed
to market risk generally associated with listed
companies. Listed companies are exposed to
fluctuations in price and trading volumes caused
by factors beyond the company’s control.
157
The company has specialized teams which
continuously monitor transactions carried out
in investees according to their importance, using
indicators which are monitored on an on-going
basis. Additionally, in tandem with “la Caixa”’s
Strategic Risk Management Department, Criteria
CaixaCorp measures the risk exposure of its
investments from the standpoint of the risk
inherent in market price volatility using VaR
models on the interest rate yield differential in
relation to risk-free interest rates as proposed
by Basel II regulations for banking institutions,
and from the viewpoint of the uncertainty of
default, using models based on the PD/LGD
approach, also following the guidelines contained
in the NBCA.
These indicators are monitored on an ongoing
basis to ensure that the most appropriate
decisions are always adopted on the basis of
the past and projected performance of the
markets and of the Group’s strategy.
Interest rate risk
Interest rate risk arises mainly as a result of
changes in (a) financial expenses relating to
variable rate debt, and (b) the value of financial
assets bearing a fixed interest rate (mainly loans
granted and investments in debt). Therefore,
the risk derives mainly from the Group’s financial
and insurance activities and its debt. Therefore,
interest rate risk management considers the
sensitivity of the fair value of assets and liabilities
to changes in the structure of the market rate
curve.
This risk is managed and directly controlled by
the management of the companies concerned.
The Group’s financial institutions are exposed
to interest rate risk caused by their fixed-rate
financial investments and lending acquired as
part of their activities, while its debt bears a
158
variable interest rate. Risk associated with these
financial assets are assessed on a regular basis
in accordance with prevailing market conditions
to decide when to enter into new cash flow
hedges or modify their variability. The measures
adopted mitigate the interest risk associated
with financial assets bearing fixed interest rates.
Insurance companies must calculate the
mathematical provision in accordance with the
maximum interest rate published by the Dirección
General de Seguros. If the real return on the
investments is lower, the insurance provision
shall be calculated using the effective interest
rate. Additionally, where specific operations are
assigned to insurance transactions, the interest
rate applied to calculate the technical provisions
shall be determined according to the internal
rate of return of the investment.
Exchange rate risk
The functional currency of virtually all the assets
and liabilities on the Group’s consolidated balance
sheet is the Euro. However, the functional
currency of the €628 million investment in The
Bank of East Asia, Ltd. at December 31, 2007
is the Hong-Kong dollar (HKD). This means there
is exchange rate risk related to this investment.
The Group’s policy, according to the global risk
involved, revolves around arranging derivative
financial instruments or incurring debt in the
same currencies or in currencies belonging to
the economic environment of the assets in which
the investment is being made.
The Group may also be exposed indirectly to
exchange rate risk through foreign currency
investments made by its investees.
Liquidity risk arises when a financial investment
cannot be divested rapidly enough without
incurring significant additional costs or when
sufficient liquidity is not available to meet
payment obligations.
The liquidity risk associated with the possibility
of converting financial investments into cash is
insignificant as these investments are generally
listed on deep and active markets.
Liquidity risk related to the ability to meet
payment obligations derives mainly from the
insurance business. Therefore, the Group
manages its liquidity so that it is always able to
meet its commitments. This objective is achieved
through active liquidity management, which
consists of an on-going monitoring of the balance
sheet maturity structure, the early detection of
possible inadequate short-medium term liquidity
structures, and the adoption of a strategy that
gives stability to the sources of financing.
II. Credit risk
This is the risk of incurring losses due to the
failure of debtors to meet their contractual
payment obligations or to changes in the risk
premium that are linked to debtors’ financial
solvency. The main credit risks are linked to fixedincome investments on insurance and financial
portfolios made via loans and credits granted to
customers. There is also credit risk relating to
the Group’s investments in associated companies,
mainly listed companies, which is distinct from
the risk of market value of their shares.
The Group’s credit risk management is governed
by strict internal guidelines defined by the
directors. These guidelines define the types of
assets likely to be included in the investment
portfolio using definition parameters such as
the main rating scales, maturities, counterparts
A credit risk management
and monitoring system exists
for the Group's financial
activities using specialized
tools (e.g. scoring systems,
procedures to capture
transactions, repayment
management, etc.) as well
as a monitoring of the use and
effectiveness of these tools.
II. Liquidity risk
and concentration. These guidelines are
particularly significant for the insurance business
where the majority of the company's fixedincome investments are concentrated.
The Company implements credit risk
management and monitoring systems for its
financial activities based on the evaluation and
management of current and future risk using
specialized tools (e.g. scoring systems, procedures
to capture transactions, repayment management,
etc.) and monitoring the effectiveness of these
tools. The counterpoint to risk is always the risk
acceptance level for the transactions pursued.
The company’s investments in multigroup and
associated companies (valued at €5,381 million)
is not in theory subject to the risk of share price
variations, as they do not affect consolidated
balance sheet or income statement figures given
that these investments are consolidated under
the equity method. The risk of this type of
investment derives from the business
performance of the investees, or its eventual
bankruptcy. The share price is merely an indicator.
This risk is generally considered to be credit risk.
The tools used to assess these risks are PD/LGD
models, and following the guidelines contained
in the NBCA.
159
IV. Risk relating to the insurance business
Concentration of insurance risk
The risks associated with the various branches
of the insurance business are managed directly
by the CaiFor Group’s management team, which
has drawn up a technical scorecard to keep the
synthetic vision of the technical performance of
the products up to date. This scorecard defines
the following policies:
Risks occurring in the insurance activities where
the Group operates are widely diversified given
the large number of policy-holders and the small
amount of each individual claim. Therefore, the
management considers that the concentration
of insurance risk in group activities is low.
Claims
Subscription risk
Risk acceptance according to the main actuarial
variables (age, capital insurance and duration
of the guarantee).
Tariffs
In accordance with regulations issued by the
Directorate of Insurance and Pension Funds,
tariffs in the life insurance business shall be
established using the mortality tables permitted
by current legislation. Additionally, the interest
rates for the tariffs shall be established according
to the maximum rate set by the law governing
and monitoring private insurance activities
approved by Royal Decree 2486/1998 of
November 20.
Reassurance
This involves an appropriate diversification of
risk among several reassurance companies with
sufficient capacity to absorb unexpected losses,
thereby giving stability to claims.
The definitions and monitoring of these policies
allows these to be modified in order to adapt
risk to the Group’s global strategy.
The treatment of loans and the size of the
provisions are the basic principles of insurance
management. Technical provisions are estimated
using specific procedures and systems.
160
The group operates mainly in the life and home
insurance business segments. Therefore, the
information related to historic claims is not
significant given the short time elapsing between
the filing of the claim and its settlement – less
than a year in virtually all cases.
V. Operational risk.
This is defined as the risk of losses deriving from
errors in operating processes.
Risk management procedures encompass systems
and personnel issues, administrative processes,
information security and legal aspects. These
are managed with the aim of establishing
adequate controls to minimize possible losses.
Criteria CaixaCorp’s main business objective is
to carry out investments to create value in the
medium/long term. This means that the payment
of taxes is generally deferred by Criteria to the
moment when the investments are transferred.
The current breakdown of Criteria CaixaCorp’s
Criteria CaixaCorp carries out
investments to create value in the
medium/long term. This means
that the payment of taxes is
generally deferred by Criteria to
the moment when the stakes are
transferred.
investment portfolio allows the application of
specific tax benefits regulated by current
legislation. The main tax benefits are the
following:
> Holding and acquiring stakes of over 5%
means that:
– Dividends received from these investments
do not pay taxes as they are eligible for
the double taxation relief under article 30.2
of the revised Corporate Income Tax Act
(hereinafter TRLIS) for companies resident
in Spain or for the application of the
exemption regulated by article 21 of TRLIS,
for non-resident companies.
– The double taxation relief to avoid the
double taxation may also be applied to the
capital gains obtained on the disposal of
the investments in relation to the retained
earnings accrued by the investment during
the time the interest is held - article 30.5
of TRLIS-, for resident companies, and the
exemption regulated by article 21 of TRLIS,
for non-resident companies.
> Furthermore, Criteria CaixaCorp holds the
100% stake of a company which applies the
tax regime regulating companies holding
foreign investments “Entidades de Tenencia
de Valores Extranjeros” (hereinafter, ETVE)
through which it carries out investments in
companies in which it does not hold a stake
equal to or higher than 5% but has an
acquisition cost higher than €6 million. Under
the ETVE tax regimen dividends and capital
gains deriving from these companies are
exempt from taxation.
Tax matters
> Criteria CaixaCorp also has a stake in a venture
capital company which tax regimen allows
to apply a 99% exemption to any capital
gain obtained from the sale of its investments.
The dividends received by the venture capital
company from its investments benefit for the
application of the double taxation relief
regardless the percentage and the holding
period of the investment.
> Furthermore, the corporate income tax rate
applicable in 2008 has been reduced to 30%
(from 32.5% in 2007). However, article 42
of TRLIS allows, when specific requirements
are met, the reinvestment relief, a tax credit
to be applied to capital gains arising from
the disposal of shareholdings of at least 5%
in portfolios entities subject to the
reinvestment of the proceeds in qualifying
assets (the capital gain is effectively taxed at
a rate of 18%). Criteria CaixaCorp’s objective
is to maximize the reinvestment relief.
161
As of 31 december 2007, the group still has
pending of application the reinvestment relief
relating to the disposal of investments carried
out in 2006. This tax credit will be applied by
Criteria CaixaCorp when the reinvestment of
the proceeds of said disposals takes place
pursuant to article 42 of TRLIS.
Lastly, it is important to highlight that Criteria
CaixaCorp has historically transferred its stakes
in listed companies at a significant premium to
their share price, which, in general, offsets the
tax effect relating to the investments
Resident participations
%> 5; 1 year
Non resident
participations
%> 5; 1 year
Non resident
participations 1
%> 5; 1 year;
> 6MM€
Otrhers 2
Dividends
Double taxation relief
Exemption 3
Exemption 3
15% 4 / 30% 5
Capital gains
Price-Cost-Non
distributed income 6
= Taxable Gains
Exemption 3
Exemption 3
Price-Cost =
Taxable Gains
Taxation =
Taxable Gains x 30%
Taxation =
Taxable Gains x 30%
Reinvestment relief
(Deduction)
If reinvestment of price
of sales: 12%
deduction 7
N/A
N/A
N/A
Taxation =
Taxable Gains x 18%
(30%-12%)
(1) Participations held by the ETVE (Negocio de Finanzas e Inversiones): BCP; 0,84% of Boursorama, and others.
(2) Participations < 5% and < €6M or non resident participations >5% that do not meet the requirements to apply the exemption established in art. 21 TRLIS.
(3) Withholding tax practised in the country of residence of the participation, if any, becomes the final taxation of the dividend or the gain.
(4) Only for residents <5%.
(5) For dividends from non resident participations >5% there is the possibility to apply the deduction established in art. 32 TRLIS.
(6) Accrued reserves during the participation is held.
(7) Assuming that art. 42 TRLIS requirements are met (Sales >5%; Reinvestment > 5%; reinvestment has to be made 1 year before or 3 years after of the
sale).
162
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100 - Criteria

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