Grupo Dragados buys HBG and becomes the leader in services and concessions in Spain

Yesterday Grupo Dragados finalized the purchase of stock in HBG representing 98.9% of its share capital. This buy-out means that the Dutch group will be included in Grupo DragadosÂ' assets.

Grupo Dragados will center its strategy on lowering costs, integrating equipment and manpower and taking maximum advantage of the synergies that the operation produces: being leader in liberalizing and developing the services and concessions markets in the new countries where it becomes established and taking the dredging business to the Iberian Peninsula and Latin America.

With the purchase of HBG and the simultaneous and direct access to the markets of the U.S.A., Great Britain, Ireland, Germany, Belgium and Holland, Grupo Dragados has changed its company profile, and its area of influence and specific weight have shifted from Latin America to Europe. The result will be a wider range of services, including the dredging business and a more balanced international presence.

In addition to becoming the leader in the Spanish ranking of services and construction, both by revenues and by profits, Grupo Dragados is now third among the European companies in the field and its economic and financial ratios have improved substantially. The net profit of Grupo Dragados will increase almost 30% this year to 310 million euros and total revenues will grow 84% to 10,100 million euros.

Furthermore, the company will invest in diversification. The total figure for this year is approximately 400 million euros of which 250 million euros will be in services (mainly waste treatment, port logistics and integrated services for public and private clients) and 150 million euros for contracting and developing new concessions. During the next three years (2002-2004) around 1,000 million euros are to be invested.

At the end of this year, the level of gearing of Grupo Dragados will be less than 50% of its shareholders funds and at the end of next year it will be less than 40%. The acquisition of HBG will finance itself in three and a half years thanks to the cash-flow that the Dutch group generates on its own, about 185 million euros this year. This means that the 756 million euro investment made by Grupo Dragados to buy HBG will have a profitability of 25%.

Grupo Dragados will use the HBG companies as a platform for international diversification. Another objective is to take advantage of the expected development of the industrial and construction activities in Central and Eastern Europe when the E.U. expands in that direction and begins to offer structural funds. HBG is already present in Poland and the Czech Republic and its industrial division, Tebodin, is active in engineering in most of the countries in these areas.

The concessions market in Europe is on the verge of starting to develop again. Germany will release 10 toll roads for bid shortly while Holland, Ireland and Great Britain are developing their respective plans. In all, it is expected that this market in Europe will represent 14,000 million euros in 2004.

New concessions

In fact, there are 18 new transport infrastructure concessions being tendered in Europe for which Grupo Dragados has submitted offers or will do so shortly, half in collaboration with local companies of the former HBG Group. Five have already been submitted, four are in the prequalification stage and another nine will be submitted soon. These concessions are in Germany, Holland, Great Britain, Ireland, Greece, Portugal and Italy.

If we consider that, according to the analysts, Dragados Concessions wins one of every three or four concessions for which it makes an offer and that from now on its participation will increase both in the operation of these transport infrastructures and their construction through its local companies, the expectations for Grupo Dragados regarding the profitability of these projects and the development of this line of business increase significantly. The first of the new toll roads (the Mossel Bridge) in Germany, the tramway in Southampton in Great Britain, the Tesalonica Tunnel in Greece and

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