caixabank...portfolio at december 31/12/2009 € million executive summary dividends paid since ipo...

09 annual report

09 a

nnua

l rep

ort

Avda. Diagonal 621-629. Torre II, Planta 808028 Barcelona

Telephone: (+34) 93 409 21 21

www.criteria.com

Portfolio at December 31/12/2009€ million

Executive Summary

Dividends paid since IPODividend Year €/share Date paid

Interim 2007 0.03 17/01/2008

Final 2007 0.02 17/06/2008

TOTAL 2007 0.05

Interim 2008 0.05 02/07/2008

Interim 2008 0.10 02/12/2008

Final 2008 0.06 27/05/2009

TOTAL 2008 0.21

Interim 2009 0.10 01/12/2009

Final (*) 2009 0.131 Expected: Jun-2010

TOTAL 2009 0.231

(*) Final dividend subject to approval by shareholders at the General Meeting to be held on May 19, 2010.

% stake Value

Gas Natural 36.43% 5,065

Repsol YPF 12.68% 2,898

Abertis 25.04% 2,771

Agbar 25% (*) 667

Telefónica 5.16% 4,372

BME 5.01% 94

Port Aventura (**) 505

Other 61

Treasury shares 47

16,480

SERVICES

% stake Value

SegurCaixa Holding 100% 2,384

+ Adeslas (*) 1,178

GDS - Correduría 67% 25

InverCaixa 100% 186

CaixaRenting 100% 62

FinConsum 100% 123

GestiCaixa 100% 22

3,980

INSURANCE AND SPECIALIZED FINANCIAL SERVICES

% stake Value

BPI 30.10% 574

Boursorama 20.85% 176

The Bank of East Asia 14.99% (***) 832

GF Inbursa 20.00% 1,343

Erste Group Bank 10.10% 995

3,920

INTERNATIONAL BANKING

Gross Asset Value (GAV) (1) 24,380

(1) Pro-forma GAV, including: (*) Pro-forma: including the investment in Adeslas and partial divestment in Agbar (assuming 100% acceptance of the delisting tender offer). (**) 50% of Port Aventura Entertainment and 100% of Mediterranea Beach & Golf Resort, S.A. (***) Share capital increase completed on January 14, 2010, which brought the total stake to 5.18% (€331 million).

Performance of asset value(Pro-forma € million)

Resultado consolidado

Beneficio neto recurrente

Bª recurrente: 10%

Beneficio neto no recurrente

2008

1.117

92

1.225

–58

2009

-10000

-5000

0

5000

10000

15000

20000

25000

Net investments

Change in value

Net debt

GAV

NAV 14,252 17,616

(6,764)

31/12/2008 31/12/2009

3,0093,175

24,38018,196

(3,944)

5.5

5.0

2.5

3.5

3.0

4.5

4.0

2.0

18.5%

23.6%

NAV per share

Discount

Share price

31/12/2008 28/02/2009 30/04/2009 30/06/2009 31/08/2009 31/10/2009 31/12/2009

31/12/08

–34.4% 31/03/09

–33.9%

30/06/09

–25.4%

30/09/09

–32.4%

31/12/09

–37.1%

Share price and trading discount €/share

-300

0

300

600

900

1200

1500

-300

0

300

600

900

1200

1500

Consolidated profit € million

+24%

2008 2009

1,1171,225

2008 2009

1,059

1,117

(58)

92

1,225

1,317

+10%

Net recurring profit Net profit attributable to the group

Net recurring profit Net non-recurring profit

IBEX 35 Criteria CaixaCorpEURO STOXX 50

140

130

80

100

90

120

110

7031/12/2008 28/02/2009 30/04/2009 30/06/2009 31/08/2009 31/10/2009 31/12/2009

29.8%

21.1%18.5%

Share price vs. benchmark indices

10%

09 annual report

Contents

LetterfromtheChairman 5

1. AnintroductiontoCriteriaCaixaCorp 11

2. Economiccontextandfinancialmarketperformance 15

3. Highlightsfortheyear 23

a. Mergers and Acquisitions: our strategy in full swing 24b. Trends in profits and earnings 31c. Compliance with the dividend payment commitment and the dividend policy 32d. Credit rating 33e. New financing policy 34f. Presence in the key stock market indices 36g. “Criteria and its Shareholders” Program 37

4.Capitalstructure 41

a. Shareholder structure 42b. ”la Caixa,” the core shareholder 44c. Share price analysis 50

5. Thecompany 55

a. Mission statement, vision, values and business lines 56b. Organizational structure 59

i. Governing bodies 59ii. Advisory Board 70iii. Human resources 71iv. Key procedures and risk management 75

c. Corporate Social Responsibility 84

6. Investmentportfolio 93

a. Company structure 94b. Active portfolio management 96c. Investment portfolio 103

7. Financialanalysis 159

a. Consolidated financial statements 160b. Non-consolidated financial statements 171c. Fiscal aspects and considerations 180

Criteria CaixaCorp annualreport09 _ Letter from the Chairman _ 5

Letter from the Chairman

Dear Shareholders

2009 got underway with major tension in the financial markets as the global financial crisis took a turn for the worse after Lehman Brothers collapsed in September 2008. As a result, the main stock market indices plunged further, hitting their floor in mid-March. At that time, the IBEX 35 was at its lowest level since 2003, while benchmark European and US indices had not been so low since 1996.

The world’s leading economies continued to suffer from the abrupt loss of confidence and the widespread credit clampdown, and they were unable to shake off the deep recession. As economies weakened and no imminent rise in inflation was on the horizon, central banks eased monetary conditions further by slashing their benchmark interest rates. Expansionary policies were also launched, with central banks injecting major amounts of cash into their systems and substantially expanding their balance sheets.

The global nature of the crisis clearly called for international coordination, and world leaders responded at the G-20 summit held in London in early April 2009. Fortunately, the magnitude and swiftness of the liquidity measures applied, the monetary and fiscal stimulus programs unveiled by governments, and a series of highly-coordinated international measures kept the risk of financial collapse at bay.

In the second quarter, the economic outlook started to brighten, especially in Asia, where the massive Chinese stimulus package was proving successful. Green shoots also began appearing in the United States and Europe, although somewhat less intensely than in the East.

Spurred by these renewed perspectives, stock markets began edging toward recovery from their March lows. The same occurred in other financial markets, such as private fixed income and the interbank market, where risk premiums settled back to where they had been prior to the demise of Lehman Brothers.

In tune with the economic recovery and encouraged by accommodating monetary conditions from central banks, the financial markets sprang back from the March lows throughout the second half of the year. The IBEX-35 rose 29.8% over the course of 2009, while the DJ EURO STOXX 50 gained 21.1%. Credit market risk premiums shrank significantly as well.

As economies and markets stabilized and inflation began to rally, the main central banks started to design exit strategies for their unconventional monetary policies. During this time, however, government economic stimulus measures had built up ballooning budget deficits. In response, some governments have already announced measures toward fiscal consolidation. Financial markets are therefore increasingly focusing more on determining governments’ capacities to reduce their budget deficits in the medium term.

Business confidence indicators suggest that the economic recovery will be firmly in place in 2010, although the speed of this recovery could vary on a country-by-country basis.

As in other developed economies, economic activity is currently stabilizing in Spain, although the country is somewhat lagging behind its peers on the road to full recovery. Specifically, Spain will need some time to adjust after several years of intense growth driven by the construction boom and to overcome its cumbersome budget deficit (11.4% at year-end 2009) and spiraling unemployment, which soared to 18.8% in the fourth quarter of the year.

6

Although we are undoubtedly at the turning point of the economic crisis, with the risks of total financial collapse well behind us and signs of recovery all around, we must not forget that recovery will be even slower and more delicate than in previous economic recessions. At this point, uncertainty as to how things will play out in the future is unusually high. Consequently, any sustained improvement in real activity indicators and, especially in the labor market, will probably take some time to emerge.

I am convinced that, with the right macroeconomic decisions and with the day-to-day work, efforts, and progress that our country can and must carry out, we will overcome the current situation and Spain will once again return to its rightful economic position.

Keeping to our strategy

Crisis or no crisis, the overriding objective of each and every person at Criteria is the creation of long-term value for our shareholders. We are achieving this goal by actively managing our portfolio of investments, and driving the growth, development and profitability of our investee companies, all with a manageable level of risk.

As all Criteria stakeholders know, our strategy primarily focuses on increasing the weight of investments in the financial sector, by acquiring stakes in banks operating in countries with a high potential for growth, as well as through other corporate moves to optimize our insurance business.

Therefore, since the IPO of Criteria in October 2007, investments carried out and committed amount to nearly €8,500 million, with investments in the financial sector representing 77% of the total. The huge progress we have made toward our goal is illustrated by the fact that financial assets rose from 17% of the portfolio’s gross asset value (GAV) at flotation to 33% at present.

In keeping to this strategy, in 2009, we improved our ties with the international banking institutions in which we hold stakes, namely Erste Group Bank, The Bank of East Asia (BEA) and GF Inbursa, among others. During the year, we entered into strategic and commercial agreements and increased our stake in both Erste Group Bank and BEA. We have also crafted a deal to acquire Adeslas, the largest Spanish health insurance group, selling off part of our stake in Aguas de Barcelona. Likewise, we have brought a key industrial partner into Port Aventura to help us breathe new life into the theme park. At the same time, Criteria strives to further the strategic development of our investees, as evidenced by the considerable backing provided for Gas Natural’s acquisition of Unión Fenosa.

In total, these transactions warranted an investment of over €3,000 million. Such decisive steps forward were largely possible thanks to the steadfast commitment and involvement of ”la Caxia”, our core shareholder. The bank’s support for Criteria’s endeavors means that we do not have to let any great opportunities slide by because of liquidity issues, and it allows us to share ”la Caixa”’s retail banking experience and know-how with our partners.

At December 31, 2009, the gross asset value of Criteria’s portfolio, including transactions that were committed but not completed at that date, amounted to €24,380 million, compared to €18,196 million at December 31, 2008. The staggering growth in the value of the portfolio in 2009 is due to both the net investments made and committed during the year (investments in Gas Natural, Erste Group Bank, BEA and Adeslas, and divestments in Agbar) and the recovery in value of our investees, which exceeded €3,100 million over the 12-month period.


Strong profits in the year

Criteria ranks third among all IBEX 35 companies in terms of profit growth from 2008 to 2009. In absolute profit terms, Criteria comes in eighth.

This accomplishment evidences the undeniable value of Criteria’s shares, even in a time of crisis. Thanks to the company’s diversified portfolio, consolidated profits of €1,317 million were locked down, up 24% on the prior year.

Consolidated recurring net profit totaled €1,225 million in 2009, 10% higher than in 2008. Dividends received from available-for-sale investees remained stable, while profits from associates climbed significantly (up 18%). Profits from subsidiaries dropped 15% compared to the same period of the prior year, primarily due to the harsh conditions affecting the consumer credit sector.

Our portfolio also generates large amounts of liquidity, as dividends received from investees stood at a very healthy €981 million in 2009.

Dividend policy

Based on the strong profits booked in 2009, we were able to push our dividend per share up 10% from 2008 to 2009. The total dividend against 2009 earnings will be €0.231 per share, for a per-dividend yield of 7%. This return is among the highest of IBEX 35 companies. Shareholders who took part in the IPO have seen a per-dividend yield of 4.4%.

This dividend represents a payout of 63% of our consolidated recurring profit.

In order to uphold our generous dividend policy and to benefit shareholders even further, Criteria has decided to make quarterly dividend payments beginning in September 2010.

Criteria share price performance

Criteria CaixaCorp’s shares have performed in line with the major benchmark indices. At December 31, 2009, Criteria’s shares were traded at €3.295, for gains of 18.5%, while the IBEX 35 and the EURO STOXX 50 ended the year with gains of 29.8% and 21.2%, respectively. At March 31, 2010, Criteria’s shares have gained an additional 11.35%, outperforming the IBEX 35 (down 8.95%) and the Euro STOXX (down 1.1%).

New financing policy

In 2009, the company designed a new financing policy to lengthen debt maturity, diversify financing through capital market debt issues, and hedge its interest rate to reduce the risk stemming from possible increases in rates.

As a result, Standard & Poor’s (S&P) assigned Criteria CaixaCorp a long-term credit rating of A, stable outlook, and a short-term rating of A-1. The rating agency cited Criteria’s conservative and stable capital structure, healthy financial flexibility as well as the composition and quality of its portfolio.

8

This credit rating opened the doors to the fixed income capital markets, and in late November 2009 the company launched a five-year, fixed-coupon plain vanilla bond issue for €1,000 million.

Other key aspects

To boost another of the Group’s key values, transparency, Criteria CaixaCorp continues to implement the “Criteria and its Shareholders” program, intended to bring the company closer to its investors and ensure the utmost transparency in all shareholder/company dealings. This program encompasses the areas of communication, information and exclusive products for shareholders.

To date, Criteria’s management team has held corporate roadshows in Madrid, Valencia, Barcelona, Palma de Mallorca, Zaragoza, Bilbao, Seville and Malaga. Shareholders have provided very positive feedback on the initiative, indicating that it has brought them closer to Criteria’s management team and allowed them to both express their concerns and receive up-to-date information and responses.

In addition, to open a channel of direct communication with shareholders, the innovative Azul Criteria program was recently unveiled. Through this initiative, participating shareholders can receive regular information on the company’s performance, as well as pertinent announcements such as the dividends payment schedule and calls to the General Shareholders’ Meeting. The program also includes discounts and special offers from our investees, through the Criteria Shareholder Card. This unique nationwide initiative demonstrates, once again, the importance Criteria places on its relationship with shareholders. The Shareholder Card program is proving to be a resounding success, with 27,000 cards activated until the end of first quarter 2010.

In application of Criteria’s commitment to Corporate Social Responsibility, in 2009 the company joined the FTSE4Good sustainability index, adhered to the United Nations Global Compact, and, for the second year in a row, was selected to form part of the Dow Jones Sustainability Index (DJSI).

Criteria is highly visible in financial markets, forming part of the main stock market indices: the IBEX 35, the MSCI Europe (Morgan Stanley Capital International), the MSCI Pan Euro, the DJ STOXX 600, the FTSEurofirst 300, the Dow Jones Sustainability Index, the Spain Titans 30 Index, the BCN Top Euro and FTSE4Good.

In 2010, we look to build even closer relationships with our international banking partners in order to become a key player in their retail banking endeavors. In the coming year, we also expect to wrap up the acquisition of Adeslas and to bring it into our SegurCaixa Group, shoring up both businesses as well as our place at the forefront of the sector. Through these two action plans, coupled with our steady focus on actively managing our portfolio, we expect to continue creating value, more than compensating our more than 300,000 shareholders for the confidence they have placed in the company.

I would like to take this opportunity to welcome Gonzalo Gortázar, who was appointed Criteria’s new CEO in July 2009. In his new position at the helm of our Group, he will assume leadership for guiding and encouraging this ambitious project. I support him in his endeavors.


In closing, I would like to express my sincere gratitude to my predecessor, the Honorary Chairman of Criteria, Ricardo Fornesa. The Spanish state recently bestowed Mr. Fornesa with the Gold Medal for Merit in the Workplace for his generosity and his untiring efforts in guiding our company in the years following its flotation. I not only have great esteem for Mr. Fornesa personally, but I also share his vision of making Criteria a benchmark international financial and industrial group, ensuring value for its shareholders.

I would also like to recognize Francisco Reynés, Criteria’s former CEO, who efficiently steered Criteria through the years following its flotation, and last year was appointed CEO of Abertis to continue developing successfully one of Criteria’s most important investees.

Yours faithfully,

IsidroFainéCasasChairman of Criteria CaixaCorp

Criteria CaixaCorp is an investment group with a portfolio of holdings in the banking, financial and services industries, with a strong commitment to international expansion. The Group’s objective is to increase the value of the investments, identifying and analyzing new investment and divestment opportunities in the market with a controlled risk level.

An introduction to Criteria CaixaCorp 1

12

1. An introduction to Criteria CaixaCorp

Criteria CaixaCorp is an investment group with a portfolio of holdings in the banking, financial and services industries, and a strong commitment to international expansion. The company actively manages its portfolio to offer shareholders long-term value.

Criteria CaixaCorp’s current investment portfolio is the largest among European private investment groups in terms of asset volume, with a total pro-forma value of €24,380 million at December 2009. The portfolio includes top-ranking companies with solid leadership positions in their respective activity sectors and in the countries in which they operate, along with the capacity to create recurring value and returns. In addition to its holdings in the banking and financial sectors, Criteria is present through its investees, in strategic sectors such as energy, telecommunications, infrastructure and services.

In order to actively manage its investments, Criteria strives to assume influential positions in its investees. By participating in these

companies’ governing bodies and actively contributing to the design of the most appropriate business strategies and policies, Criteria contributes to the continued success of its investees, and, clearly, to the creation of value for its own shareholders.

Criteria’s portfolio management approach also aims to boost the value of its investments by identifying and analyzing new market investment and divestment opportunities, within a manageable level of risk. As Criteria has extensive experience and a profound understanding of the industries in which it has holdings, it is especially well-prepared for dealing in the investment sector.

Criteria CaixaCorp has traded on the Spanish stock market since October 10, 2007 and has formed part of the IBEX 35 since February 4, 2008. It is one of the largest Spanish companies by market capitalization.

Criteria CaixaCorp’s investment portfolio at December 31, 2009, was as follows:

Criteria CaixaCorp’s current investment portfolio is the largest among European private investment groups in terms of asset volume.

Criteria CaixaCorp annualreport09 _ 1. An introduction to Criteria CaixaCorp _ 13

Gross asset value: €24,380 (1) million

(1) Pro-forma(*) Percentage distribution taking into account the Adeslas/Agbar transactions underway at December 2009. Criteria expects to complete these transactions in the first half of 2010.

15% Insurance

2% Specialized financial services

16% International banking

67% Services

(*)

(*)

2009 was a turning point in the economic and financial crisis that had curbed activity over the previous two years.

Economic context and financial market performance

2

16

Throughout 2009, Criteria CaixaCorp felt the effects of the financial crisis that first shook the global markets in the summer of 2007, and the increasingly intense economic crisis that followed. Like 2008, 2009 was a complicated year. However, a clear shift occurred between the first quarter of 2009 and the following three quarters; while financial markets continued their downward spiral and economies entered into recession in the first three months of the year, in mid-March a turning point was reached. At that time, investor confidence once again edged upward. Some economies even recorded positive growth in the second half of the year.

This turning point was at least partially brought about by the measures both central banks and governments implemented to shore up failing economies. Unprecedented coordination between international economic authorities slowly restored investor confidence.

In the second half of the year, the majority of economies were clearly on the path to recovery. Nevertheless, at present there is some uncertainty about the strength of this recovery, as companies are deleveraging and economic stimulus measures are being wrapped up.

The global economy in recession

The burst of the real estate bubble in a number of countries, the difficulty to get financing due to the credit crunch in the financial entities, the drop in global trade and the slump in investor confidence all took their toll on activity. The block of developed economies (and many emerging economies as well) hit an economic recession at some point during the second half of 2008 and the first half of 2009.

Never before had an economic recession appeared across so many countries at precisely the same time. This made it the worst recession since the meltdown following the 1929 stock market crash. According to the Organisation for Economic Co-operation and Development (OECD), 100% of OECD economies were in

recession at some point between 2008 and 2009. In other recent economic crises, only 30% or 40% of OECD members had been affected. The global nature of the crisis clearly called for international coordination, which culminated with the G-20 summit in London in April 2009.

Although the definitive figures are not yet in, the International Monetary Fund (IMF) estimates that the global economy fell 1% in 2009, with developed economies the hardest hit. Emerging economies were more resilient to the global situation.

Governments and central banks to the rescue

A number of governments announced stimulus packages in late 2008, although many of these measures were not implemented until early 2009. Some were extended during the first half of the year.

The leading central banks continued to ease monetary conditions. At the end of 2008 the US Federal Reserve had already set its benchmark interest rate at 0%-0.25%. The Bank of England set its rate at 0.50%, while the European Central Bank (ECB) slashed its benchmark interest rate to 1.00% in May, the lowest since the creation of the single-currency union. However, central banks went even beyond traditional monetary policy and embarked on expansionary policies, injecting major amounts of cash into their systems and substantially expanding their balance sheets. Inflation was kept very low, and even negative in some countries, which allowed banks to widely develop such policies throughout the year. In this context, the ECB launched a program to buy covered bonds valued up to €60,000 million and extended open market transactions for up to one year. These initiatives were designed to provide enough liquidity for commercial banks to continue to extend loans to businesses and individuals, as well as to shore up banks’ financial stability.

2. Economic context and financial market performance

Criteria CaixaCorp annualreport09 _ 2. Economic context and financial market performance _ 17

Signs of recovery

The magnitude and swiftness of liquidity measures, the monetary and tax stimulus plans, and the high degree of international coordination for these measures paved the way for the first signs of macroeconomic stability to appear in the second quarter of 2009.

In fact, the United States and certain eurozone countries had already returned to positive growth in the second half of 2009. Emerging economies, especially in Asia and led by China, recovered more swiftly and surely. The economies that already suffered from macroeconomic imbalances before the crisis were the most hard-pressed to resume normal activity.

Since the summer, economic growth forecasts for the coming years have been pushed upwards for the majority of the developed economies. However, this newfound optimism did not bring about a return to the growth rates enjoyed before the recession hit. Rather, key economic players are still in the lengthy process of deleveraging, which will curb growth potential in the mid-term, especially considering the blow taken by the labor market.

Thanks to the recovery in oil prices, inflation picked up slightly in the last months of the year. However, when taking into account the excess

In the second quarter of 2009, the first green shoots of macroeconomic stabilization appeared.

production capacity across various sectors, inflationist pressure does not appear imminent. This should allow central banks to keep interest rates at accommodating levels for some time.

In any event, the economic recovery already seen has spurred monetary authorities to design exit strategies to end this situation of abundant liquidity. This is precisely the main risk facing financial markets at present: the impending end

Real GDP: China, US and Germany year-on-year growth

6

5

4

3

2

1

0

China

US

Germany

Source: Bloomberg

13

%

11

9

7

3

1

5

–1

–3

–5

–798 99 00 01 02 03 04 05 06 07 08 09

18

of monetary stimulus from both central banks and governments.

Meanwhile, government accounts in developed countries took a major hit due to higher public spending in 2008 and 2009, coupled with plummeting public revenue. These countries recorded ballooning budget deficits, which ran to over 10% of the GDP in countries such as the United States and the United Kingdom. These major budget deficits have given rise to uncertainties in financial markets regarding the ability of some governments to repay their debt. Consequently, in 2010 debt markets will focus increasingly on the implementation and credibility of fiscal consolidation programs in the most public-debt burdened economies.

Financial markets in 2009

The liquidity and confidence crisis that first shook markets and activity in 2007 was exacerbated with the collapse of Lehman Brothers in September 2008. This historic event generated major uncertainty regarding the solvency of certain companies, as well as heavy losses in the global stock markets in the first months of

2009. Poor business performance, together with the deteriorating macroeconomic situation, was the main factor behind the adverse start to the year in the financial markets. At March 9, 2009 the accumulated dives seen in stock market prices brought the IBEX 35 to its lowest point since 2003. Benchmark European and US indices had not been so low since 1996. At the same time, fear of deflation and economic recession reduced public debt yields to historic lows in both the US and in Europe.

In March, things began to look up after some financial institutions once again had profits on their books and announced that they would probably not require any additional injections of public funds. With a collapse of the financial system looking less likely and the appearance of some green shoots suggesting that the economy had already floored, financial markets began to edge upwards. Despite the initial losses, stock markets ended the year with gains (IBEX 35: 29.8%; DJ EURO STOXX 50: 21.1%). Spain’s benchmark index partially benefitted from its exposure to Latin America.

Performance of the IBEX 35 and the DJ EURO STOXX 50

5,000

IBEX 35 (left scale)

DJ EURO STOXX 50 (right scale)

Source: Bloomberg

18,000

4,50016,000

3,50012,000

2,5008,000

2,0006,000

3,00010,000

1,5004,00031/12/06 30/06/07 31/12/07 30/06/08 31/12/08 30/06/09 31/12/09

4,00014,000


The abundant liquidity injected by central banks also contributed to containing public debt yields, despite the high volume issued. In the second half of the year, concern over the sustainability of debt in certain European countries, including Spain, caused the risk premium on their national debt to increase with respect to the benchmark German debt.

The primary corporate debt market also benefitted from the abundant liquidity created by expansionary monetary policies. While in early 2009 companies had only been able to access financing by issuing government-backed senior instruments maturing within three years

at most, the terms and the instruments investors were willing to acquire gradually relaxed. Corporate debt spreads in the secondary market reflected improved expectations, with risk premiums falling throughout the year, although not returning to pre-crisis levels.

In the currency market, the US dollar appreciated against the euro in the first months of the year, when it was used as a safe-haven currency in a scenario of growing risk aversion. Currency market trends also switched tracks as of March, as investors regained their risk appetite. In the fourth quarter, the euro neared its record high, at around US$/€ 1.50. Among emerging

In March, global stock markets were at the lowest in recent years. Since those floors, recovery has been swift.

20

economies, Eastern European currencies plunged throughout the first quarter, although in the second half of the year some did recover part of what they lost. Lastly, countries exporting raw materials generally saw an appreciation in their currencies in the second half of the year.

Despite the progress made in 2009, financial markets have not fully returned to their pre-crisis situation.

The Spanish economy in 2009

As in the rest of the developed economies, in 2009 the Spanish economy lost around 4%, the largest slump in economic activity since the Second World War. The most recent economic indicators for developed economies suggest that activity is stabilizing somewhat, although full economic recovery in Spain could lag behind that of its trade partners. Specifically, it will take some time for the Spanish economy to level out the macroeconomic imbalances that had been building up even before the crisis hit (massive weight of the real estate sector, private sector debt and ballooning foreign deficit). In that regard, the IMF forecasts that economic activity in Spain will continue to fall in 2010, in contrast to the remaining developed economies.

The Spanish labor market remains a major source of weakness, with one of the highest unemployment rates in Europe, at nearly 20% of the working-age population. Although the government’s economic stimulus measures helped curb the job loss rate in the second half of the year, the high public deficit for 2009 (which will most likely remain high in 2010 as well) will require fiscal adjustments, some of which are already in motion. However, the volume of

public debt compared to GDP remains below the European average.

The deterioration of the Spanish labor market, coupled with the waning confidence in the future, were behind the drop in household spending in 2009, which up until the crisis had been one of the major drivers of economic growth. In turn, lower household spending skewed the current account deficit, reducing it to approximately 5% of GDP, half of the 2007 figure.

In some months of 2009, prices in Spain dropped for the first time (year-on-year) since statistics became available (1961). In reality, this fall in prices is largely attributable to the plunge in oil prices. However, it is also partly due to reductions in the price of goods and services made by companies in response to lower aggregate demand.

In Spain, the financial system has proven to be very solid, compared with other countries where the public sector has had to intervene.

Unemployment in Spain % of working-age population

6

5

4

3

2

1

0

Source: Bloomberg

25

%

20

15

10

5

097 98 99 00 01 02 03 04 05 06 07 08 09


On the other hand, the Spanish financial system has proven to be very solid, especially in comparison with other countries where governments had to step in to avoid a systemic crisis. Nevertheless, the banking sector requires some restructuring to offset the credit boom during the years leading up to the crisis.

Spain’s Banking Restructuring Fund (Fondo de Reestructuración Ordenada Bancaria, FROB), with an initial allowance of €9,000 million and leverageable up to €90,000 million, will be a key instrument in building a more stable and solid financial system for the future.

Criteria CaixaCorp has advanced significantly in the development of its strategy with increases in its stakes in international banking and insurance. At the same time, the company has implemented a new financing policy and has carried out new initiatives to assure maximum transparency with regards to its shareholders.

Highlights for the year

a. Mergers and Acquisitions: our strategy in full swing _24

b. Trends in profits and earnings _31

c. Compliance with the dividend payment commitment and the dividend policy _32

d. Credit rating _33

e. New financing policy _34

f. Presence in the key stock market indices _36

g. “Criteria and its Shareholders” Program _37

3

24

3_a. Mergers and Acquisitions: our strategy in full swing

During 2009 Criteria CaixaCorp maintained its focus on international growth and on leading the ”la Caixa” Group’s banking expansion. Therefore, Criteria made significant investments that greatly enhanced its international presence and constituted a decisive step forward in the strategy defined at flotation, namely to increase the weight of investments in the financial sector to approximately 40%-60% of the total value of assets.

Criteria has investments in high-growth potential markets, such as Mexico (GF Inbursa), Central and Eastern Europe (Erste Group Bank) and the Asia-Pacific region (The Bank of East Asia). The banking sectors in all these regions are expected to see significant mid- and long-term expansion. In these markets, Criteria is seeking robust traditional banking institutions boasting outstanding management teams and local partners with solid experience and market knowledge. Criteria’s holdings in these entities have a long-term focus, creating value by identifying banking business opportunities between these partners and ”la Caixa,” on the basis of commercial and business cooperation.

In 2009 Criteria increased its stakes in Erste Group Bank to 10.1% and, following the share capital increase of January 14, 2010, in The Bank of East Asia to 14.99%. Criteria is represented on the Boards of Directors of both companies and has entered into key agreements regulating ”la Caixa” and Criteria’s shareholder and commercial relationship with these financial institutions.

In addition, in 2009, Criteria’s insurance group, SegurCaixa Holding, was shored up, locking in its leadership position in the Spanish insurance sector through the agreement to acquire Adeslas, a top health insurance provider.

As a result of the considerable investments in the international banking and insurance sectors and taking into account the transactions underway at year end, investments in the financial sector now account for 33% of the total value of assets, compared to 26% at 2008 year end and 18% at the time of the IPO.

Criteria also maintains its strategy to support its industrial-sector investees in those operations that will drive their future success and create value. This strategy is exemplified in Criteria’s backing for Gas Natural’s acquisition of Unión Fenosa, a milestone in the company’s history, and the securing of a new industrial partner in Port Aventura, which will significantly boost the park’s business.

Increase in the stake in Erste Group Bank to 10.1%

In 2009, Criteria increased its stake in Erste Group Bank from 4.90% to 10.1%. This additional investment was primarily carried out through the €635 million subscription to Erste Group Bank share capital increase in November 2009. Criteria subscribed 36% of the capital increase through the acquisition of subscription rights from the Die Erste Foundation, for the nominal amount of one euro. The interest held

As a consequence of the investments in the international banking sector and insurance, the financial portfolio reached 33% of the total asset value.

Criteria CaixaCorp annualreport09 _ 3. Highlights for the year _ 25

by the Die Erste Foundation, which did not participate in the share capital increase, was diluted to 26%.

The transaction was carried out pursuant to the following agreements signed on June 4, 2009:

(i) Preferred partnership agreement between Criteria and the Die Erste Foundation, to govern their relationship as shareholders of Erste Group Bank. This agreement formalized both the amicable nature of the dealings between the two entities and the long-term strategic outlook for Criteria’s stake in Erste Group Bank. Under this agreement, Criteria may increase its stake to 20%, subject to the consent of the Die Erste Foundation.

(ii) Agreement between ”la Caixa,” Criteria and Erste Group Bank to define certain client-centered corporate and sales collaboration areas. This agreement grants Criteria the preemptive right to participate in any investment opportunities where the Erste Group Bank is seeking a partner.

(iii) Social welfare collaboration agreement between ”la Caixa” Foundation and the Die Erste Foundation, paving the way for an exchange of ideas and experiences in

the areas of integration, culture and social development, and for possible joint action.

At the Erste Group Bank General Meeting of May 12, 2009, shareholders ratified the appointment of Juan Maria Nin, Deputy Chairman of Criteria and CEO of ”la Caixa,” to Erste Group Bank’s Supervisory Board and its Strategy Committee.

Erste Group Bank AG was founded in 1819 as the first savings bank in Austria. The bank was floated in 1997 to develop the retail banking business in Central and Eastern Europe. It is currently the second-largest banking group in Austria and one of the leading groups in Central and Eastern Europe. Erste Group Bank is market leader in the Czech Republic, Slovakia and Romania.

Since its flotation, the bank’s customer base has grown considerably, both organically and through acquisitions of other entities, from 600,000 customers in 1997 to 17.5 million customers at present. A total of 95% are European Union citizens. Erste Group Bank employs over 50,000 professionals serving customers at over 3,200 branch offices in eight countries (Austria, Czech Republic, Slovakia, Romania, Hungary, Croatia, Serbia and Ukraine).

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Erste Group Bank currently trades on the Vienna, Prague, and Bucharest stock exchanges and forms part of the following indices: Austrian Traded Index (ATX), DJ EURO STOXX Bank Index, MSCI All World, FTSE Eurofirst 300 and FTSE All World, among others.

Criteria’s actions in relation to Erste Group Bank locked in its position as the second-largest shareholder. As Criteria exercises significant influence in Erste Group Bank, it is better positioned to work closely with the core shareholder in specific areas that can create long-term value for both groups.

Increased stake in The Bank of East Asia (BEA) to 14.99%

On December 30, 2009, Criteria signed an agreement undertaking to subscribe a large part of the share capital increase in BEA. This brought Criteria’s stake in the Hong Kong-based bank from 9.81% to 14.99% and entailed an investment of HKD 3,698 million (€331 million). The transaction was completed on January 14, 2010.

The transaction was carried out pursuant to the following agreements signed between ”la Caixa,” Criteria and BEA on June 22, 2009:

(i) Strategic investment agreement to lay out the terms of Criteria’s ownership interest in BEA. This agreement, under which Criteria may increase its stake to 20%, subject to consent by BEA, formalized the amicable nature of the dealings between the two entities and the long-term strategic outlook for Criteria’s stake in BEA.

(ii) Strategic collaboration agreement between ”la Caixa,” Criteria and BEA in order to maximize their respective commercial and business opportunities. Under the terms of the agreement, BEA will be the exclusive vehicle for Criteria’s investments in Asian-Pacific banks and financial institutions. BEA and ”la Caixa” will also collaborate and

assist each other in developing mutually-beneficial banking services and products.

(iii) Letter of intent between the ”la Caixa” Foundation and the Bank of East Asia Charitable Foundation Limited to explore and carry out corporate social responsibility initiatives and to contribute to the development of individuals and communities where both groups operate, including, but not limited to, the fields of health, education, culture, science and the environment.

BEA’s share capital increase was carried out through the private placement of funds (preferential subscription rights not applicable) from two of its strategic partners, Criteria and the Japanese bank Sumitomo Mitsui Banking Corporation. This transaction will allow BEA to expand its business, especially regarding its growth strategy in China, and to boost its capital adequacy ratios.

On June 1, 2009, the Board of Directors of BEA appointed Isidro Fainé Casas, Chairman of Criteria and of ”la Caixa,” as the first board member from a Western country in the history of the bank. The appointment was ratified by shareholders at the Extraordinary General Meeting of December 4, 2009. In late August 2009, Isidro Fainé also joined BEA’s Nomination Committee.

Founded in 1918, BEA is Hong Kong’s fifth-largest bank in terms of assets. It is listed on the Hong Kong stock exchange and is part of the Hang Seng index. BEA is the largest independent financial institution in Hong Kong and is authorized to operate in China, where it has done business since 1920. It is among the best-positioned foreign banks in that country, with the second-largest foreign franchise in terms of number of offices and an innovative and groundbreaking product offer. BEA China was recognized as the “best localized foreign bank” in 2009. The bank enjoys considerable prestige and boasts a well-diversified business model.


BEA is Criteria’s referent partner in the most economically dynamic region in the world. This will open the door for Criteria to a market whose long-term growth perspectives are truly exceptional. BEA is a quality platform for operating in the Asia-Pacific region, especially in China. The increased dealings with BEA shore up Criteria’s position as the first shareholder with significant influence and pave the way for the companies to jointly analyze those areas of collaboration that can create long-term value for both groups.

Strengthened position in Banco BPI

In 2009 Criteria invested a total of €10 million in BPI, raising its total stake from 29.38% to 30.1%. This increase was carried out through selective acquisitions in January and February 2009, taking advantage of market conditions.

With its current stake, Criteria CaixaCorp maintains its position as the largest shareholder of BPI, a position held since it purchased its first stake in 1995.

At the April 22, 2009 General Meeting, the shareholders of BPI resolved to increase the number of members on the Board of Directors

from 23 to 25 and approved the appointment of two new directors. One of the new directors was Ignacio Álvarez Rendueles, proposed by Criteria, which raised Criteria’s representation on BPI’s Board of Directors to four members.

At the same meeting, the shareholders also resolved to raise the limit on voting rights, as established in the bank’s by-laws, from 17.5% to 20%.

On October 1, 2009, ”la Caixa” and BPI signed a strategic collaboration agreement to provide services to companies operating in Spain and Portugal. As part of the agreements, the banks will open two specialized business centers, namely the ”la Caixa” Centro de Empresas de Mercado Ibérico in Madrid and the BPI Gabinete de Empresas Espanholas in Lisbon.

This agreement, in the context of supporting BPI’s business development, furthers cooperation between the two financial entities and lays the grounds for the largest corporate-client banking network in the Iberian Peninsula (80 ”la Caixa” business centers in Spain and 54 BPI centers in Portugal).

Photo taken and loaned by Criteria shareholder, Laura Salayero, winner of the “Criteria as seen by its shareholders 2010” photographic competition

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The agreement will also take advantage of the synergies between the two financial institutions to provide the best global corporate-client offer and to allow corporate clients to receive the same exemplary service in both Portugal and Spain.

The BPI Group is the third-largest private financial group in Portugal in terms of business volume. BPI is a multi-specialist financial group focusing primarily on banking activities. It offers a complete line of financial products and services for corporate, institutional and individual customers.

The BPI Group primarily operates in Portugal, holding a strong competitive position in this highly developed market, and in Angola, an emerging economy that has seen strong and sustained growth in recent years. Through its 50.1% stake in Banco de Fomento, S.A. (BFA), BPI is a leader in the Angolan market.

Acquisition of 99.79% of Adeslas and partial divestment in Agbar

In October 2009, Criteria and Suez Environnement signed a memorandum of understanding to shift their strategic interests in the health services and water and environmental management businesses. Under the terms of the understanding, which is expected to become effective in 2010, Criteria will acquire Agbar’s 54.79% interest in Compañía de Seguros Adeslas, S.A. (Adeslas). Parallel to this agreement, Criteria also signed a memorandum of understanding with Malakoff Médéric to acquire its 45% stake in Adeslas. As a result of these agreements, Criteria will hold a 99.79% interest in Adeslas, with a total investment of €1,178 million.

Adeslas is the leading health insurer in Spain, with a market share of over 20%. Its three million-strong client base represents an attractive mix of individual, group and government-employee policies. Adeslas also owns 11 private hospitals, 52 dental clinics and 30 medical centers.

With this transaction, the Criteria Group aims to expand its presence in the insurance sector, and to that end will incorporate this equity

holding in SegurCaixa Holding. The integration of these two groups, SegurCaixa Holding and Adeslas, will place Criteria at the forefront of the Spanish insurance sector, one of the areas expected to see the strongest growth over the coming years.

The integration of the two groups will also open Criteria to over six million clients (individuals and groups) and a distribution channel comprising over 1,800 insurance brokers and agents and 223 offices, as well as SegurCaixa Holding’s own commercial network, in addition to the more than 5,300 ”la Caixa” offices.

The obvious complementary nature of the product offer, client bases and distribution channels will give rise to considerable synergies, benefiting both existing and future clients and accelerating the growth of the insurance group.

Prior to the Adeslas transaction, Agbar will launch a delisting tender offer for the 10% of Agbar shares held by minority shareholders.

As set out in the agreement with Suez Environnement, upon completion of the delisting offer and based on the number of minority shareholders that accept the offer, Criteria will sell Suez Environnement the number of Agbar shares it needs to reach a total interest of 75.01% in that company. Criteria will sell the shares for between €647 million and €871 million. Criteria’s final interest in Agbar will narrow to between 15% and 25%, based on the results of the delisting offer.

Criteria will continue to serve on Agbar’s Board of Directors as a key minority shareholder. The shareholders will sign an updated agreement in order to reflect the new shareholder structure.

Backing for the deal between Gas Natural and Unión Fenosa

At its July 2008 meeting, the Board of Directors of Criteria agreed to back Gas Natural’s acquisition of a 45.3% stake in Unión Fenosa and its subsequent public takeover bid for the remaining share capital in that company.

Gas Natural financed this transaction through a €3,502 million share capital increase, which


was successfully completed on March 28, 2009. Criteria invested €1,313 million in this capital increase, in proportion to its stake in the gas utility. In mid-April the acceptance period for Gas Natural’s takeover bid concluded, with acceptance from 69.5% of the capital targeted by the bid. This brought Gas Natural’s stake in Unión Fenosa’s capital to 95.2% once the takeover bid and financial instruments and sales contracts held by Gas Natural were settled.

In addition in April, the Boards of Directors of Gas Natural and Unión Fenosa signed a merger project agreement setting out the swap of three Gas Natural shares for every five shares held in Unión Fenosa. The project was approved at the General Shareholders’ Meetings of both companies in June, and the merger was completed in September. Following the merger, Criteria’s interest in Gas Natural stood at 36.43%.

This transaction was a milestone in Gas Natural’s history, consolidating the vertically-integrated gas and electricity group, a leader in Europe, and confirming its position as the largest global operator of liquefied natural gas (LNG) from the Atlantic and Mediterranean basin. The deal will also allow Gas Natural to meet its strategic plan commitments more rapidly, and create considerable value for shareholders by taking advantage of major synergies.

Telefónica: restructuring of interests

In 2009 Criteria acquired 1% of the share capital of Telefónica, S.A., subject to financial contracts that hedge the market risk on the shares. The company also sold shares representing 1% of Telefónica’s capital for a consolidated net gain of €265 million.

As a result of the aforementioned transactions and following a share capital reduction in Telefónica, S.A. through the redemption of 141 million treasury shares, Criteria’s total stake in Telefónica, S.A. at December 31, 2009, stood at 5.16%, of which 1.03% is subject to financial contracts.

Investindustrial: a new partner in Port Aventura

In September 2009, Criteria and Investindustrial reached an agreement whereby the latter would become a 50% partner in the company managing the Port Aventura theme park. Criteria will retain the remaining 50%.

Investindustrial operates primarily in southern Europe, with over 20 years of experience in industrial investments and ample know-how of the theme park sector. Investindustrial formerly held a majority stake in Gardaland, Italy’s most popular theme park attracting approximately

Photo taken and loaned by Criteria shareholder, Agustín Fernández

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3.5 million visitors a year, where it contributed to bolstering the park’s growth and profitability.

By bringing Investindustrial into the shareholder structure of Port Aventura (through the subscription of a €94.8 million capital increase), Criteria gained a respected investment partner with sound experience in the sector. The business plan aims to breathe new life into the theme park in order to ensure its long-term strength. The plan calls for investments of approximately €80 million over the next four years. These efforts will benefit the customers, employees and shareholders of Port Aventura, and will lock in its position as one of the top theme parks in southern Europe.

The transaction was completed in December 2009, following the restructuring and spinoff

of Port Aventura, S.A. into two independent companies. The first company, Port Aventura Entertainment, S.A., is 50% owned by Criteria and 50% owned by Investindustrial and comprises the Port Aventura theme park, the Caribe Aquatic Park and the Port Aventura and Caribe Resort hotels, as well as transaction of the Gold River and El Paso hotels and the Convention Center. The second company, Mediterranea Beach & Golf Resort, S.A., is a solely-owned subsidiary of Criteria and holds the land for residential and commercial use, the three golf courses, the Beach Club, and ownership of the Gold River and El Paso hotels and the Convention Center. The hotels and Convention Center have been leased to Port Aventura Entertainment, S.A.


Recurring net consolidated growth stood at €1,225 million, up 10% on the prior year. This variation mainly includes a significant rise in profits contributed by associates (up 18%), which has been partially offset by the weaker performance of fully-consolidated subsidiaries. Total consolidated profit was €1,317 million, up 24% on the 2008 profit of €1,059 million.

Non-consolidated recurring net profit for the year rose 8% year-on-year to €871 million. Recurring dividends from investees amounted to €981 million, which was 8% above the figure seen in 2008 on a like-for-like basis.

The quality and solid nature of the assets forming Criteria CaixaCorp’s portfolio are behind the overall rise in the Group’s profits.

Consolidated figures € million

31/12/2009 31/12/2008

Recurring net profit 1,225 1,117

Net profit attributable to the Group 1,317 1,059

Weighted average number of shares outstanding (in millions) 3,353 3,361

EPS on recurring net profit (€) 0.37 0.33

EPS on total net profit (€) 0.39 0.31

EPS: earnings per share.

3_b. Trends in profits and earnings

Consolidated profit€ million

1.1171.225

-58

92

-200

0

200

400

600

800

1.000

1.200

1.400

2008 2009

Beneficio neto recurrente Beneficio neto no recurrente

Recurring net profit

Recurring profit: 10%

Non-recurring net profit

2008

1,117

92

1,225

(58)

2009

Both individual and consolidated recurring net profit increased during the year, up 8% and 10% on 2008, respectively.

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3_c. Compliance with the dividend payment commitment and the dividend policy

The expected dividend of €0.231 per share against 2009 profits includes the €0.10 per share paid on December 1, 2009 and the final dividend of €0.131 per share subject to approval by the shareholders at the General Meeting to be held on May 19, 2010. This is an attractive return for shareholders, as the dividend yield is 7% on the basis of the share price at December 31, 2009 and 4.4% for shareholders who participated in the IPO.

Following the company’s latest investments, controlling interests and investments in associates represent over 70% of the total value of the portfolio and of the consolidated income statement. Therefore, the Board of

Directors has considered it appropriate to refer the dividend policy to consolidated earnings, given that this more accurately reflects the company’s performance.

Consequently, the new dividend policy approved by the Board of Directors establishes that the dividend must equal or exceed 60% of recurring consolidated profits. In addition, in line with other market practices and with the preferences expressed by Criteria shareholders, the company resolved to distribute quarterly dividends in September, December, March and June beginning in September 2010.

Dividend payments made since the company’s flotation are as follows:

Dividend Year €/share Payment date

Interim 2007 0.03 17/01/2008

Final 2007 0.02 17/06/2008

Interim 2008 0.05 02/07/2008

Interim 2008 0.10 02/12/2008

Final 2008 0.06 27/05/2009

Interim 2009 0.10 01/12/2009

Final (*) 2009 0.131 June/2010

(*) Final dividend subject to approval by the shareholders at the General Meeting to be held on May 19, 2010.


In order to reaffirm the healthy financial structure of Criteria and to gain access to fixed income capital markets, on July 27, 2009, Criteria CaixaCorp finalized the process for obtaining its first credit rating from Standard & Poor’s (S&P).

The high rating assigned by the agency (long-term rating of A, stable outlook, and short-term rating of A-1) was based on Criteria’s conservative and stable capital structure, its healthy financial flexibility and the composition and quality of its portfolio.

When assessing financial flexibility, S&P placed considerable importance on both the high liquidity derived from the elevated proportion of listed investees and the support provided by ”la Caixa,” the majority shareholder and holder of an AA credit rating.

The excellent portfolio quality is reflected in the fact that the majority of the listed companies

are leaders in their respective sectors, boast good credit ratings , and have an international profile that reduces exposure to the domestic economy.

Another key point supporting Criteria’s rating is that at December 2009 dividends received from the companies comprising the portfolio were six times higher than the company’s total operating expenses and financial expenses. This evidences the strong liquidity position enjoyed by Criteria.

Lastly, S&P placed considerable bearing on Criteria CaixaCorp’s moderate debt level of less than 30% of its gross asset value (GAV). One of Criteria’s objectives is to maintain this percentage, and to that end is actively working to further its strategy without permanently increasing debt above that margin.

3_d. Credit rating

In 2009 Criteria finalized the process for obtaining its first credit rating from Standard & Poor’s (S&P).

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In 2009 Criteria defined a new financing policy, based primarily on the following key points:

• Maintaining a debt ratio (pro-forma debt/GAV) that does not exceed 30% for an extended period of time.

• Striking a balance in the debt structure whereby multi-year volatility in the income statement is reduced. Under the Group’s policy, approximately 50% of borrowings are at fixed interest rates or are subject to fixed interest hedges.

• Gradually diversifying financing sources and lengthening maturities of existing debt, based on prevailing market conditions.

• Periodically performing bond market issues in order to establish a market benchmark for Criteria debt.

At December 31, 2008, Criteria’s only external financing was a €6,500 million credit facility extended by the main shareholder, ”la Caixa.” This facility matures in July 2011 and bears interest at a variable rate of Euribor plus 100 basis points.

In 2009 and in line with the aforementioned policy, Criteria took a number of steps to substantially modify its debt structure.

The company signed a contract with ”la Caixa” for two €1,000 million fixed-rate loans, with the principal repayable at maturity (November 2013 for one loan, and November 2016 for the other). In addition, the limit of the credit facility extended by ”la Caixa” was reduced by €1,000 million, to €5,500 million. The remaining conditions of the credit facility were not changed.

As a result of these operations, Criteria extended the average maturity of its debt and converted the interest rate to a fixed interest rate for loans totaling €2,000 million.

Secondly, on November 12, 2009 the company launched its first plain vanilla bond issue, with a view to diversifying its financing sources, lengthening the average maturity of debt and creating a European-market benchmark for the company’s credit value. The issue totaled €1,000 million and matures in November 2014. The issue was disbursed on November 20, 2009.

Demand for the bond issue, which was placed with 200 institutional investors, was 2.2 times the amount of the issue, evidencing institutional investors’ keen interest in Criteria and its project and reiterating the company’s solvency.

The bonds bear an annual coupon of 4.125%. The implied yield is 4.233%, as the bonds were issued at a price of 99.522%.

3_e. New financing policy

Debt structureAt December 31, 2009

54%Floating rate

46%Fixed-rate


Situation December 2008

Type of Financing Type of interest TypeAmount

(€ million) Maturity

Credit Facility Euribor+100 pb Floating 6,500 (*) July 2011

Situation December 2009

Type of Financing Type of Interest / Coupon TypeAmount

(€ million) Maturity

Credit Facility Euribor+100 bp Floating 5,500 (*) July 2011

Loan 3.579% Fixed 1,000 November 2013

Bond 4.125% (1) Fixed 1,000 November 2014

Loan 4.416% Fixed 1,000 November 2016

(*) Maximum amount.(1) Implied yield upon issue of 4.233%.

The bond issue was carried out under Criteria’s Fixed Income Program, registered with the Comisión Nacional del Mercado de Valores (CNMV), the Spanish securities market regulator, on September 29, 2009. This program foresees the possibility of issues totaling up to

€3,000 million and reflects Criteria’s bid to be a recurring bond market issuer.

Criteria’s borrowings from its main shareholder, ”la Caixa,” are renewable at maturity on the basis of its prevailing financing needs.

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National indices: IBEX 35

In February 2008, barely three and a half months after the company’s IPO, Criteria CaixaCorp joined the IBEX 35 index.

Criteria’s free float (percentage of share capital traded on the market) stands at 20.55%, placing it among the top stocks on the IBEX 35 in terms of market capitalization.

Joining Spain’s benchmark index, the yardstick by which the major equity portfolio managers measure their performance, gave greater visibility to Criteria CaixaCorp and increased the liquidity of its shares.

International indices

In view of Criteria CaixaCorp’s considerable market capitalization, the company has also joined other European benchmark indices. As these indices are overseen and managed by private companies, their update depends solely on the management companies’ own criteria.

Criteria forms part of the following indices: MSCI Europe (Morgan Stanley Capital International), MSCI Pan-Euro, DJ STOXX 600, FTSEurofirst 300 and Spain Titans 30 Index. Consequently, Criteria is not only a benchmark for national equity portfolio managers, but is also strengthening its position as a benchmark in the European arena.

Business sustainability indices

In 2009 Criteria locked in its position in the main sustainability stock market indices,

gaining a slot in the FTSE4Good set, namely the FTSE4Good Global, FTSE4Good Europe and the FTSE4Good IBEX 35. The prestigious FTSE index rates companies’ investments on a sustainability scale based on the corporate social responsibility practices applied. The index confirms that Criteria complies with certain fundamental requirements regarding the environment, stakeholder relations, human rights, suppliers, anti-corruption and climate change.

For the second year in a row, Criteria has been selected to form part of the Dow Jones Sustainability Index (DJSI), both in the DJSI World and the DJSI STOXX. As only around 10% of the companies included in the global Dow Jones indices are selected for this sustainability rating, Criteria’s presence once again speaks of its strong performance in economic, social and environmental dimensions, both in terms of its activity and investments. Criteria CaixaCorp has the distinction of being the only Spanish financial services company to form part of the DJSI.

Criteria’s concern with sustainability mirrors the corporate social responsibility policy pursued by its main shareholder, ”la Caixa,” which manages its business based on social responsibility criteria and makes a significant contribution to society through social welfare projects. In further application of this commitment, Criteria adheres to the United Nations Global Compact, pledging to implement the compact’s ten principles in the areas of human rights, labor, the environment and anti-corruption.

3_f. Presence in the key stock market indices


With a view to ensuring the utmost transparency in all shareholder/company dealings, in 2009 Criteria launched a series of initiatives under the “Criteria and its Shareholders” program. These initiatives provide shareholders with a direct communication channel to the company, relevant information, and tools to gain deeper knowledge of the financial and stock market sector.

Organization of the “Criteria and its Shareholders” program

Based the needs reported by its shareholders, Criteria developed four main lines for its shareholder program:

1. Two-way Shareholder-Criteria dialogue.

2. Relevantinformation for shareholders.

3. Sharingofknowledge of financial and stock market issues.

4. Offers and discounts in participating companies, through the recently-launched Azul Criteria program.

1. Dialogue

The CNMV requires that all listed companies provide basic channels for communicating with their shareholders. Criteria has gone beyond this requirement and created a direct two-way dialogue link with its shareholders. This link allows shareholders to voice their concerns and express their real needs, which Criteria takes into account in its ongoing program updates.

Criteria has set up the following channels to ensure this two-way dialogue:

• ShareholderOffice. It opened in 2009 at the company’s Barcelona headquarters, where shareholders receive one-on-one assistance from the shareholder relations team.

• Shareholder Services. Criteria provides an email address, phone number and postal address for shareholders to contact the company directly. In 2009 the office logged 2,025 exchanges with shareholders.

3_g. “Criteria and its Shareholders” Program

A breakdown of issues discussed in these exchanges is as follows:

Shareholder ServicesIssues discussed, 2009

2% Finances

3% Share price

12% Dividend policy

19%Other

11% JGA

30%Roadshows

21%Azul Criteriaprogram

• Corporate roadshows by Criteria’s management team in major Spanish cities. These roadshows allow shareholders to address any concerns they may have directly to Criteria’s management team. In 2009, presentations were made in Madrid, Valencia, Barcelona, Palma de Mallorca, Zaragoza, Bilbao and Seville, attracting more than 2,700 participants. More roadshows will be held in coming years, reaching shareholders throughout the country.

• Tradeshows. Criteria took part in the main shareholder tradeshows organized in Spain (Bolsalia in Madrid and Borsadiner in Barcelona) in order to provide shareholders and potential investors with information about the company and to dispel any uncertainties they may have had.

• General Shareholders’ Meeting. At the General Meeting, shareholders exercise their voting rights, receive all legally-required information, and are able to bring questions before the company’s top representatives. The last Annual General Meeting featured a session where shareholders were provided one-on-one assistance and informed of all the initiatives and actions that Criteria had arranged for them. The Annual General Meeting was shown via webcast for shareholders unable to personally attend the

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meeting. Shareholders unable to attend were also able to vote remotely.

2. Information

In order to allow greater ease and access, Criteria created a special section on its website www.criteria.com featuring the information that, according to the market studies carried out and statistics from the website itself, appears to hold the most interest for shareholders.

This area, called ShareholderServices, includes the following sections:

• Reports on the company.

• Analyst opinions on Criteria.

• Information on the dividend policy and on the General Shareholders’ Meeting.

• Charts depicting the share price and comparison with the main stock market indices.

• Information on presentations and other similar events.

The area also contains a Frequently Asked Questions section addressing the most common shareholder concerns.

Lastly, to give all shareholders the opportunity to improve their financial and stock market knowledge, a glossary of financial terms has been included on the site.

Criteria’s website has received over 1,450,000 visits, making it one of the information sources most consulted by shareholders.

Through the Information services feature, shareholders can also subscribe to Criteria mailings.

3. Knowledge sharing

Criteria aims to provide tools and content to help its shareholders increase their knowledge about the stock market and finance. This initiative forms part of the “Learn with Criteria” program and includes activities such as conferences on stock market issues and guides and dictionaries with useful content for anyone interested in investing in the stock market. The program also entails collaboration with top-level finance and market educational institutions.

4. Offers and discounts: Azul Criteria Program

The Azul Criteria program addresses two key shareholder needs: greater knowledge of the company and benefits of shareholder status through Criteria’s investees and subsidiaries. The new program creates a means for more direct, active and ongoing dialogue with shareholders.

Under the Azul Criteria program, shareholders enjoy a wide range of special offers on products and services from Criteria investees.


Shareholders wishing to take advantage of these offers must hold a Criteria Shareholder Card, which is freeofcharge for as long as the individual remains a shareholder. Shareholders can choose to use the card as a stored value card, a debit card or a credit card.

Encouraging shareholder participation

In 2009 Criteria organized a photo competition to recognize its shareholders’ knowledge of the company. A large number of shareholders took part in the program, allowing them to get to know Criteria even better.

The program “Criteria and its Shareholders” makes relevant information available through direct channels of communication with the company.

Criteria CaixaCorp’s controlling shareholder is ”la Caixa”, Spain’s leading savings bank in terms of assets and number of branches.

Capital structure

a. Shareholder structure _42

b. ”la Caixa,” the core shareholder _44

c. Share price analysis _50

4

42

4_a. Shareholder structure

At December 31, 2009, Criteria CaixaCorp’s share capital stood at 3,362,889,837 shares, with a par value of one euro each. Criteria CaixaCorp’s controlling shareholder is ”la Caixa,” Spain’s leading savings bank in terms of assets and number of branches.

At December 31, 2009, ”la Caixa” held a 79.45% stake in Criteria. No changes in ”la Caixa”’s ownership interest have occurred since December 31, 2008.

Exercising the authorization granted at the Annual General Meeting of May 7, 2009, Criteria CaixaCorp, S.A.’s Board of Directors renewed the approval to acquire up to 44.25 million treasury shares representing approximately 1.32% of the company’s capital, providing the net investment does not exceed €177 million and based on prevailing market conditions. This measure is aimed at increasing the market liquidity of the

company and the stability of its trading price. At December 31, 2009, Criteria held 14,216,350 own shares, representing 0.42% of total share capital.

The company’s free float (taken as the percentage of share capital not held by the majority shareholder) stood at 20.55% at December 31, 2009. This percentage is distributed among the approximately 320,000 shareholders. Minority shareholders (including employees and members of the Board of Directors) hold approximately 71% of this floating capital, while 27% is held by institutional investors and 2% is held as treasury shares. The shareholder structure of Criteria CaixaCorp at December 31, 2009 is shown in the chart on the next page.

At December 31, 2009, international investors account for 72% of Criteria’s institutional shareholder base, while national investors

72% of Criteria CaixaCorp’s institutional shareholders are international investors and 28% are domestic investors.

Evolution of Criteria’s shares

Green-shoe75,519,037

After IPO3,362,889,837

Before the capital increase2,629,870,800

IPO- 657,500,000Employees 5%:32,875,000

Retail shareholders 55%:361,625,000

Institutional shareholders 40%:263,000,000

07/11/200709/10/2007

Changes in the number of company shares as a result of the October 2007 IPO.

Criteria CaixaCorp annualreport09 _ 4. Capital structure _ 43

represent the remaining 28%. In 2009 the weight of national institutional investors rose 11 percentage points above the 17% accounted for at the 2008 year end.

International investors are mainly from the United States, Britain and Europe. During 2009 the percentage of Continental European investors in Criteria’s institutional shareholder base rose considerably, from 16% at December

31, 2008 to 30% at the 2009 year end. These investors currently represent the largest institutional group. In contrast, the weight of US investors dropped significantly, from 45% at the 2008 year end to 22% at December 31, 2009. The distribution of shareholders by geographic region is shown in the lower chart.

72% of Criteria CaixaCorp’s institutional shareholders are international investors and 28% are domestic investors.

Geographic distribution of theinstitutional shareholder baseDecember 31, 2009

18%UK

30%European Union

28%Spain

22%US

2%Other

Shareholder Structure December 31, 2009

6

5

4

3

2

1

0

79.45%”la Caixa”

Source: Criteria, based on market studies performed by external consultants

20.55%Free Float

~71% Retail shareholders and employees~27% Institutional investors~2% Treasury stock

44

4_b. ”la Caixa,” the core shareholder

Over 100 years of experience

Caja de Ahorros y Pensiones de Barcelona, ”la Caixa,” Criteria CaixaCorp’s core shareholder, was established by 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 created the current financial institution, the legitimate successor and continued line of both these companies.

The third-largest Spanish financial group, with a clear growth strategy

As a result of the clear growth strategy implemented after the 1990 merger, the ”la Caixa” Group has substantially expanded its commercial activity, business volumes, and results over the past few years. At December 31, 2009, ”la Caixa” was the third-largest Spanish financial group, with a business volume (loans and customer funds) of €415,825 million. Recurring net profit attributable to the Group stood at €1,710 million. ”la Caixa”’s commercial network comprises 5,326 branches and serves 10.5 million customers.

A three-pronged strategic development objective: economic, social and sustainable

”la Caixa”’s objectives go beyond mere numbers.Efficient, profitable, and solvent growth is the base which allows ”la Caixa” to fulfill its commitment to society through social welfare projects and its commitment to sustainability, by acting responsibly and ethically at all times to create confidence and build on its corporate reputation.

Financial objective: efficient, profitable and solvent growth

The retail banking business, which is the core of the ”la Caixa” Group’s activities, aims to

offer professional, innovative and high-quality advisory services to individuals and companies through optimal strategic segmentation. This is achieved through an efficient, multi-channel distribution system in which the branch network, using cutting-edge technology, plays a key role in interacting with customers, the very core of the organization.

The retail banking strategy calls for a constant expansion of their portfolio offered, specialized attention for specific segments (corporate, private banking, and personal banking), and the expansion of ”la Caixa” activities into new markets.

Social objective: create value for the company by covering basic human needs

”la Caixa” was founded with the mission of improving the communities in which it operates. The company lives out this mission today by carrying out social initiatives (in unemployment issues, poverty, etc.) through concerted actions with the financial network.

Working proactively and flexibly, ”la Caixa”’s objective in these social programs is to help ensure that society’s basic needs are met, to secure universal access to financial services, and to strengthen the country’s industrial framework. At the same time, ”la Caixa” seeks to reinforce its unique identity while efficiently managing resources in line with the specific needs of the area it serves.

Sustainable objectives: committed to serving communities

”la Caixa”’s responsibility is based on its fundamental core values: confidence, excellence in service, and a commitment to society. These principles underlie the company’s responsible management, transparency and good corporate governance, and are applied throughout the organization’s chain of value by streamlining social and environmental criteria into all decisions.


”la Caixa” in 2009: consolidation of financial strength and robust commercial capacity

At present, ”la Caixa” is a benchmark institution for household and corporate banking. ”la Caixa” applies appropriate segmentation and multi-channel management to its client relationships, ensuring specialized, professional and quality service. ”la Caixa” has the largest branch network in the Spanish financial system (5,315 branches in Spain at December 31, 2009, with a 12% market share) and the largest network of self-service terminals (7,951). The entity is leader in both online banking (over 6 million customers) and mobile banking (more than 1.4 million customers). ”la Caixa” has eight representative offices abroad and three operational offices in Warsaw, Bucharest and Casablanca.

In 2009, thanks to the ”la Caixa” Group’s intense commercial activity and massive customer base of 10.5 million, the Group’s banking volume was €415,825 million, total customer funds managed stood at €237,799 million, and the lending portfolio reached €178,026 million. This places ”la Caixa” at the forefront of retail banking in the Spanish market, with a 21.6% share. In 2009 the entity shored up its already high market shares: 10.4% in customer deposits, 10.0% in loans, 10.5% in mortgage loans, 13.8% in life savings insurance, 12.8% in direct pension deposits, 15.1% in direct salary deposits, 17.7%

in card purchases, and 20.9% in point-of-sale purchases, among other products and services.

The solid increase in ”la Caixa” Group revenue, driven by the network’s commercial capacity in traditional banking and the rise in income from the investment portfolio, coupled with successful policies to contain and streamline operating expenses, has brought about a 12.3% rise in operating recurring income. The considerable generation of recurring income has allowed the entity to handle the higher allowances needed and to bring in recurring net profit of €1,710 million, down 16.7% on 2008.

Net profit attributable to the ”la Caixa” Group stood at €1,510 million, 16.2% lower than the 2008 figure, after allocating an additional provision of €200 million, net of taxes, for future business risks, in application of prudent criteria and foresight. Extraordinary gains attributable to the Group totaled €249 million, while the same amount was allocated to additional provisions to cover possible defaults upon enforcement of collection schedules and other restatements.

In 2009, the ”la Caixa” Group further bolstered its financial strength, as evidenced by:

• A high-quality, diversified, and well-secured lending portfolio, with strict risk and provision management. At December 31, 2009 the non-performing loan ratio stood at 3.42%, below the average for the Spanish financial sector.

46

The coverage ratio stood at 62% (127% when including mortgage guarantees) and the generic provision to ensure the company’s future financial resilience amounts to €1,835 million.

• Excellent liquidity levels, reaching €21,208 million (7.8% of assets), almost all of which is immediately available. Moreover, as ”la Caixa” mainly finances its operations through customer deposits (70%), dependence on wholesale markets is very low.

• Excellent solvency levels, with a core capital adequacy ratio of 8.7%, Tier 1 CAR of 10.4% and a BIS II capital adequacy ratio of 11%. These ratios are among the highest in the sector, especially for Tier 1 resources. The ”la Caixa” Group is able to finance its additional capital needs through its recurring business.

• Very good ratings, which Standard & Poor’s, Moody’s and Fitch all confirmed in the AA range for 2009.

• High yields, with recurring ROE of 11.3% and sustained improvement in efficiency (recurrent cost/income ratio of 42.9%, for a 2.3% improvement on the prior year).

All of the above, coupled with the targets for development and business diversification

established in the 2007-2010 Strategic Plan, will guarantee the success of the ”la Caixa” Group’s growth and development goals for the future.

Welfare projects

As it does in its financial activity, ”la Caixa” responds to the concerns of its communities through its social welfare projects. The entity was well aware that 2009 was a difficult year for many underprivileged groups, and put special efforts into meeting their needs.

In 2009, ”la Caixa” renewed its commitment to social projects, earmarking a total of €500 million to these programmes.

Meeting the needs of society and providing educational, environmental, scientific and cultural activities

Social programmes

Helping others, regardless of age or condition, by providing them with opportunities that, in turn, help meet their needs has always been one of the key principles of ”la Caixa.” With this mission in mind, in 2009 special attention was placed on social programmes, with 65% of the total social welfare budget being earmarked for these needs.

“Now, more than ever before, we must help alleviate the main concerns of our communities, including unemployment and poverty. It is time to offer new opportunities to people”

Isidro Fainé, Chairman of ”la Caixa”, Criteria and the ”la Caixa” Foundation


These programmes include:

• CaixaProinfancia programme. To fight against child poverty in Spain, since 2007 over €100 million has been used to improve the living conditions of more than 140,000 children.

• Incorpora programme. This programme facilitates the workplace integration of certain groups at risk of social marginalization. By late 2009, over 23,000 people had been placed in work positions through this programme, which boasts 358 workplace incorporation specialists and over 9,452 participating companies.

• Integrated care for people who are very ill. Through this initiative, ”la Caixa” helps those people nearing the final stages of life. A total

of 30 multidisciplinary teams have been selected and trained in the areas of emotional, psychological and spiritual support. ”la Caixa” has earmarked €11 million to this programme, which has served over 17,000 individuals to date.

• Elderly people. This programme supports the integration and social participation of the elderly through volunteering, membership in associations, familiarity with new computer technology, continuing education and self-reliance.

Educational programmes

Educational initiatives include the Scholarshipprogramme, which allows deserving students the means to complete Masters courses in Spain,

Welfare Projects expenditure in 2009

14% Cultural programmes

7% Educational and research programmes

65%Social programmes

14% Environmentaland scientificprogrammes

11% Cultural programmes

12% Environmentaland scientificprogrammes

Welfare Projects budget for 2010

71%Social programmes

6% Educational and research programmes

48

With a view to preserving the environment, ”la Caixa”’s Social Welfare programme drives initiatives like the projects promoting the preservation of the sea and natural spaces.

post-graduate courses abroad, PhD courses in biomedicine, and journalism internships. In 2009 ”la Caixa” awarded 276 scholarships.

Environment programmes

The Social Welfare promotes environmentally-friendly initiatives such as the ”la Caixa” in favour of the sea programme and the Conservationofnaturalspacesandreintegrationintosociety programme. The latter programme makes special efforts to hire individuals at risk of social marginalization to carry out environmental tasks, and in 2009 over 1,800 people were integrated into the project.

Cultural programmes

Knowledge-sharing and cultural programmes include:

• Implementation of a new line of collaboration with top museums such as the Prado Museum and the Louvre.

• Projects to build CaixaForum centers in Zaragoza and Seville.

• Reflection and analysis through new publications in the Studies Service Social Studies series, the ”la Caixa” Economy and Society Department and the ”la Caixa” Corporate Social Responsibility and Corporate Governance Department at the IESE Business School.

Legislation applicable to ”la Caixa”

”la Caixa” is subject to state and autonomous community legislation as well as the oversight

of the Bank of Spain and the Catalonian Regional Government. The Group is also subject to compliance with capital adequacy and equity requirements. This legislation affects, among other aspects, the governing bodies and the investments that the financial institution is able to make.

”la Caixa” is subject to Catalonian Regional Government Royal Legislative Decree 1/2008, of March 11, approving the revised text of the Law governing the Catalonian savings bank sector. This decree establishes that the governing bodies are the General Assembly, which is the highest decision-making body; the Board of Directors, which is the representative and management body; and the Control Committee, which ensures that the Board of Director’s management decisions are in line with the guidelines set by the General Assembly, the institution’s purposes, and legal requirements.

With regard to the legal framework for investments, in accordance with Catalonian Regional Government Royal Decree 164/2008, of August 26, the ”la Caixa” Investment Committee (a Board of Directors committee with advisory, not executive, functions) is responsible for informing the Board of Directors and the Executive Committee of all strategic and stable investments and divestments carried out either directly by ”la Caixa” or by any of its subsidiaries. The committee must also report on the financial viability of these investments and state whether they are in line with ”la Caixa”’s budget and strategy.


To comply with national and autonomous community legislation governing savings banks, the Board of Directors and the Executive Committee of ”la Caixa” (both of which receive reports from the Investment Committee) ultimately control the strategic investments and divestments made by Criteria CaixaCorp in order to prevent or minimize the negative impact these may have on the capital adequacy or eligible capital of ”la Caixa.”

Notwithstanding the above, pursuant to this legislation, direct or indirect investments made by savings banks in property, shares, equity holdings, or other tangible assets, the acquisition

of significant stakes in credit institutions, 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 capital, may require prior authorization from the Catalonian Regional Government’s Department of Economy and Finance and/or the Bank of Spain.

Savings banks are also subject to specific corporate governance requirements, as set out in CNMV Circular 2/2005, of April 21. The ”la Caixa” corporate governance report is available on its website (www.lacaixa.es) and on the CNMV website (www.cnmv.es).

50

Trading volume (No. of shares)

35,000,000

40,000,000

25,000,000

30,000,000

15,000,000

5,000,000

10,000,000

20,000,000

031/12/2008 31/03/2009 30/06/2009 30/09/2009 31/12/2009

4_c. Share price analysis

Criteria CaixaCorp’s stock gained 18.5% in 2009, ending the year at €3.295 per share. The maximum share price for the period was €3.54.

Criteria’s average daily trading volume was 3.2 million shares.

Key share performance figures for the year are as follows:

Share price at 2009 year end 3.295 €

Market cap at year end (million) 11,081 €

Share price at 2008 year end 2.78 €

Maximum share price (19/10/2009) (*) 3.54 €

Minimum share price (12/03/2009) (*) 2.05 €

Maximum daily trading volume (in shares) (30/11/2009) 38,177,990

Minimum daily trading volume (in shares) (25/05/2009) 870,309

Average daily trading volume (in shares) 3,200,832

(*) Closing price.

Criteria’s share price performance during 2009 has been analyzed from two standpoints: firstly, the share price was compared with the main benchmark indices and, secondly, the implicit trading discount was analyzed in comparison with the real value of shares.

1. Criteria CaixaCorp’s share price vs. main benchmark indices

As shown in the above chart, Criteria shares gained 18.5% over the course of the year, closing at €3.295 per share. During the same period the


IBEX 35 and the DJ EURO STOXX 50 gained 29.8% and 21.1%, respectively.

2. Trading discounts

The second method for 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.

At December 31, 2009, the discount stood at 37.1%, higher than in the previous quarter and than the 2008 year-end figure of 34.4%.

This discount suggests that the market value of the assets is higher than the price paid per share, indicating potential upside as the gap between both variables narrows. This upside potential is reflected in financial analysts’ opinions of Criteria CaixaCorp, the majority of which have issued “Buy” or “Hold” recommendations.

The discount also allows shareholders to receive yields which are significantly higher than the market average, given that Criteria shares are priced below the net market value of its underlying assets. Consequently, the same amount of dividends received from Criteria

In 2009, the share price closed the year at €3.295 per share, which means an increase in value of 18.5% compared to the beginning of the year.

140

130

80

100

90

120

110

7031/12/2008 31/03/2009 30/06/2009 30/09/2009 31/12/2009

IBEX 35

Criteria CaixaCorp

29.8%

21.1%18.5%

EURO STOXX 50

Criteria CaixaCorp’s shareprice performance

52

5.5

5.0

2.5

3.5

3.0

4.5

4.0

2.0

18.5%

23.6%

NAV per share

Discount

Share price

31/12/2008 31/03/2009 30/06/2009 30/09/2009 31/12/2009

31/12/08–34.4% 31/03/09

–33.9%

30/06/09–25.4%

30/09/09–32.4%

31/12/09–37.1%

NAV per share performance vs. share price

means a significantly higher per-dividend yield, percentage-wise, when calculated with respect to the market value of shares.

Criteria’s per-dividend yield was 7%, higher than those paid by the companies comprising its portfolio.

Coverage

At December 31, 2009, a total of 17 Spanish and international analysts issued opinions on Criteria CaixaCorp shares. Of these analysts, 71% issued “Buy” or “Hold” recommendations. During the first months of 2010 a new firm, Analistas Financieros Internacionales (AFI),


initiated coverage of Criteria, bringing the total number of research analysts covering the stock to 18.

Analyst opinions provide Criteria shareholders with an independent, external source to help them understand market opinion on the shares and to obtain a better overview of the trends and potential upside or downside of the shares.

The consensus among the group of analysts placed Criteria’s target price at year-end 2009

at €3.85 per share, above the actual trading price (€3.30). This indicates clear upside which, together with the predominance of “Buy” and “Hold” recommendations from analysts, reinforces the view that Criteria is considered to be a good investment alternative.

During the first quarter of 2010, 72% of analysts issued “Buy” or “Hold” recommendations, with an average target price of €3.88 per share.

Analysts’ consensus March 31, 2010

39%Hold

33% Buy

28%Sell

Analyst recommendations

Criteria’s activity is divided into two business lines: Financial, which includes International Banking, Insurance and Specialized Financial Services, and that of Services, which comprises the stakes in companies that are leaders in their markets.

The company

a. Mission statement, vision, values and business lines _56

b. Organizational structure _59

i. Governing bodies _59

ii. Advisory Board _70

iii. Human resources _71

iv. Key procedures and risk management _75

c. Corporate Social Responsibility _84

5

56

Mission statement

Criteria CaixaCorp is an investment group with stakes in the banking, financial, and services sectors and a firm commitment to international growth. The company aims to create long-term value for its shareholders through the active management of its portfolio, driving the growth, development, and profitability of the companies in which it invests.

Vision

As the ”la Caixa” Group’s vehicle for international expansion, Criteria CaixaCorp aims to become a benchmark international investment and financial group, focused on creating value and balancing shareholder and employee satisfaction with company growth.

Values

Criteria CaixaCorp’s values include transparency in all stakeholder dealings, rigor in managing investments, and soundness and professionalism of its entire team in continually identifying, analyzing, and studying new business and investment opportunities and increasing value for shareholders.

Business lines

Criteria CaixaCorp has a multi-sector portfolio that combines investments in listed and non-listed companies that are leaders or benchmarks in their respective fields.

The company invests in two main business lines: the financial sector and the services sector.

Financial sector

The financial sector business includes international banking investments through stakes acquired in banks outside Spain. It also comprises investments in non-listed subsidiaries operating in Spain in areas such as insurance and specialized financial services (asset management, operating leases, consumer financing, etc).

Criteria CaixaCorp aims to gradually increase its investments in the financial sector, both in retail banking and in insurance and specialized financial services companies. Investments in the financial sector, which accounted for 18% of the portfolio at flotation and currently represent 33% (including transactions underway at the 2009 year end), are slated to account for between 40% and 60% of the total asset value in the medium to long term.

The financial business comprises the following areas:

a) International banking

Criteria CaixaCorp expects to further its strategy of increasing exposure in the financial business, especially in the international arena, by acquiring interests in banks focused on the retail banking sector. In keeping with the goals set at the IPO, past and future acquisitions mainly relate to companies in America, Asia and Central Europe, as well as in other countries with high growth

5_a. Mission statement, vision, values and business lines

Criteria CaixaCorp’s main objective is to create value and to balance the satisfaction of the shareholders and employees with the development of the company.

Criteria CaixaCorp annualreport09 _ 5. The company _ 57

potential. Criteria also looks to geographically close markets where, together with ”la Caixa,” its core shareholder, it will be able to create value as the vehicle for ”la Caixa”’s international expansion.

b) Insurance and Specialized Financial Services entities

These investments are viewed as a natural complement to the banking activity. Criteria sees these investments as support for the ”la Caixa” network. Investments in the sectors of insurance and specialized financial services and the financial investment will boost growth while expanding and strengthening Criteria’s position in the Spanish market. These businesses naturally leverage ”la Caixa”’s growing distribution network and the potential for cross-selling.

Services business

The services business includes stakes in companies that are leaders in their respective markets and have proven capacity to grow and create value, even in adverse economic conditions. Criteria’s investments have focused on Spanish companies operating internationally, in defensive sectors such as infrastructure, energy, and services, among others. Criteria has built a portfolio of profitable investees able to generate recurring income, offering upside and attractive dividends.

Criteria CaixaCorp has considerable know-how in its lines of business, thanks to successful investments and on-going analysis of new opportunities.

Criteria CaixaCorp will continue to make selective investments and divestments by identifying and taking advantage of market opportunities. In these companies, which operate in strategic sectors of the economy, Criteria’s objective is to create a value differential. This is achieved by taking core positions in the shareholder structures of these companies, allowing Criteria to play an active role in their governing bodies, is well in key decision-making and the development of business strategies. Criteria CaixaCorp holds key positions in these companies and could even see the corresponding control premiums derive from its positions of influence.

Management principles and strategy

Criteria upholds the following management principles:

Greater exposure to financial businesses

Criteria CaixaCorp’s objective is to acquire stakes in financial institutions and in the Spanish insurance sector in order to balance out its portfolio, which is currently geared towards investments in services companies. Criteria is especially well-positioned to meet this target thanks to the retail banking experience of its core

58

shareholder, ”la Caixa,” and its ability to create value and synergies through new acquisitions.

Active management of investments

Criteria CaixaCorp plays an active role in the governing bodies of its investees. The company collaborates with the management teams of these investees in defining their future strategies and contributes to the medium/long-term sustainable development of their business activities.

Value management of investments

Criteria CaixaCorp carries out investments, divestments and mergers and acquisitions based on prevailing market opportunities and with a view to creating value and returns for shareholders. As a result, Criteria’s buying and selling positions depend on the markets. In this context, Criteria has the flexibility and experience necessary to identify the best opportunities and the best time to act.

Medium/long-term investment focus

Criteria CaixaCorp’s active management approach implies a medium/long-term investment horizon, maximizing value with a focus on sustainable corporate development and involvement in the strategies of its investees, investing and divesting at the most opportune moments.

Maximum transparency in dealing with shareholders and other stakeholders

Criteria CaixaCorp works to ensure maximum transparency in all its dealings with shareholders and other stakeholders. To do so, the company establishes close relationships with all groups that have an interest in the company’s activities, providing complete and relevant information for their specific needs. This information covers issues such as company results, management, and corporate strategy, as well as any other matter which may be of interest to stakeholders.

Criteria CaixaCorp actively participates in the government bodies of its stakes, and is involved in the definition of its future strategies.


5_b. Organizational structure

GOVERNING BODIES

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 ensuring the trust of investors, both from Spain and abroad. Management and control of Criteria CaixaCorp are divided between the shareholders at their General Meeting, the Board of Directors, the Board committees (Executive Committee, Audit and Control Committee, and Appointments and

Remuneration Committee) and the General Management.

Shareholder structure

Number of shares and significant stakes

At the close of the financial year, the only shareholder on the CNMV’s register with a significant interest in the company was Caja de Ahorros y Pensiones de Barcelona, ”la Caixa,” holding 79.45% of Criteria CaixaCorp’s share capital.

Within the framework of the authorization to acquire treasury stock granted at the General Shareholders’ Meeting of May 7, 2009 and in

Interests in Criteria CaixaCorp held by members of the board of directorsAt December 31, 2009

DirectorNo. of shares No. of shares

%direct indirect Total

Isidro Fainé Casas 567,505 0 567,505 0.017%

Juan Mª Nin Génova 234,491 0 234,491 0.007%

Isabel Estapé Tous 200,000 1,090 201,090 0.006%

Salvador Gabarró Serra 7,003 0 7,003 0.000%

Susana Gallardo Torrededia 0 58,700 58,700 0.002%

Javier Godó Muntañola 0 1,230,000 1,230,000 0.037%

Gonzalo Gortázar Rotaeche 300,100 0 300,100 0.009%

Immaculada Juan Franch 5,611 0 5,611 0.000%

David K. P. Li 0 0 0 0.000%

Maria Dolors Llobet Maria 2,100 0 2,100 0.000%

Jordi Mercader Miró 1,496 0 1,496 0.000%

Alain Minc 10,000 0 10,000 0.000%

Miquel Noguer Planas 3,561 0 3,561 0.000%

Leopoldo Rodés Castañé 9,700 0 9,700 0.000%

Juan Rosell Lastortras 0 32,382 32,382 0.001%

Francesc Xavier Vives Torrents 0 0 0 0.000%

TOTAL 1,341,567 1,322,172 2,663,739 0.079%

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order to increase the market liquidity of the company’s shares and regular trading thereof, the Board of Directors of Criteria approved the acquisition of up to 44.25 million shares, representing 1.32% of the company’s share capital, providing the net investment does not exceed €177 million and in accordance with prevailing market conditions.

At December 31, 2009, Criteria held a total of 14,216,350 treasury shares, representing 0.423% of its share capital.

Shareholders’ agreements

Criteria CaixaCorp has not been informed of any agreements among its shareholders for the concerted exercise of voting rights or which could limit the free transfer of shares.

Shareholders’ agreements in connection with Criteria’s investees, as reported to the CNMV, are as follows:

Gas Natural

On January 11, 2000, ”la Caixa,” the controlling shareholder of Criteria CaixaCorp, and Repsol YPF signed a shareholders’ agreement regarding Gas Natural. This agreement was subsequently modified in agreements signed on May 16, 2002, December 16, 2002, and June 20, 2003. Under this agreement, ”la Caixa” and Repsol YPF undertook to exercise their voting rights in Gas Natural’s corporate bodies so as to maintain an uninterrupted balance between the number of members on Gas Natural’s Board of Directors and Executive Committee appointed by Repsol YPF and by ”la Caixa.” The parties also undertook to reach a consensus regarding Gas Natural’s strategic plan prior to submitting it to the Board of Directors.

The parties agreed that the pact would remain in effect as long as both shareholders maintained or increased their interest up to at least 15% of Gas Natural’s share capital. The shareholders’ agreement may be dissolved as a result of any changes in the control structure of either of the parties or of Gas Natural, at the request of either ”la Caixa” or Repsol YPF.

The agreement of January 11, 2000, and all subsequent agreements were reported to the CNMV and disclosed at the time of signing. In accordance with the third transitional provision of Law 26/2003 of July 17 (Law on Transparency), the agreements were entered in the Barcelona Companies Registry in July 2006.

By virtue of the aforementioned agreements, ”la Caixa” and Repsol YPF, which separately hold a controlling interest in accordance with regulations governing public takeover bids, exercise joint control over Gas Natural for regulatory and anti-trust purposes. Their combined stake in Gas Natural exceeds 50% and, together, they have appointed over half of the members of the Board of Directors. In accordance with prevailing legislation, these agreements are considered to be a concerted action between ”la Caixa” and Repsol in Gas Natural.

Aguas de Barcelona

In the initial agreement and subsequent amendments signed by Suez, ”la Caixa,” Suez Environnement, Suez Environnement España and Criteria CaixaCorp in connection with Hisusa and its stake in Sociedad General de Aguas de Barcelona, S.A. (Agbar), duly registered with the CNMV, the parties agreed that in the event of a change in control in any of the parties thereto, the Hisusa partner pertaining to the Group not affected by that change would be entitled to call

At Criteria, the management and control of the company is divided among the General Shareholders’ Meeting, the Board of Directors, the delegated commissions and the Management Committee.


for the dissolution and liquidation of Hisusa in accordance with the terms of said agreements.

On October 22, 2009, Criteria CaixaCorp and Suez Environnement issued a notice in connection with their combined 90% stake in Agbar reporting that they had decided to shift their strategic interests in the group health services sector and in the environmental and water management sector. To that end, the parties signed a memorandum of understanding setting out various transactions, including: the launch by Agbar of a tender offer aimed at delisting its shares from the Spanish stock exchange, the reorganization of both companies’ stakes in Agbar in order to channel all interests through Hisusa, and the rescission of the current shareholders’ agreements regulating joint control over Agbar, once the transactions listed in the memorandum of understanding are completed and after a new agreement is signed to regulate their relationship as direct shareholders of Hisusa and indirect shareholders of Agbar, based on the new stakes held. The definitive agreement was signed on January 14, 2010.

Annual General Meeting

The functions, types and responsibilities of the shareholders at their Annual General Meeting, the most significant factors relating to the

formation and course of the Annual General Meeting, the procedures for voting on proposed resolutions, the majorities required for adopting resolutions, and other issues relating to the functioning of the General Shareholders’ Meeting are set out in the company’s by-laws and in the Regulation of the Annual General Meeting. Shareholders may access these documents on the company’s website (www.criteria.com).

The Annual General Meeting is convened by the Board of Directors by means of a notice published at least one month prior to the date of the meeting. This notice shall relay the date, place of the meeting, and all agenda items. From the date the notice of the meeting is published, shareholders have the right to receive at their registered address, immediately and free of charge, the proposed resolutions, reports and other relevant documentation. This information is also posted on the company website. Shareholders may request information or clarification relating to any agenda items or submit written questions regarding any publicly available information that the company has filed with the CNMV since the last Annual General Meeting. During the meeting, shareholders are able to request information or clarification they consider appropriate in connection with any agenda items.

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Shareholders who own at least 1,000 shares, individually or in combination with other shareholders, held through book entries made at least five days in advance of the meeting date are entitled to attend. Shareholders entitled to attend the meeting may appoint another person, not necessarily another shareholder, as proxy. Proxies must be appointed specifically for each meeting, in writing or by means of remote communication that duly attests to the identity of the shareholder.

Shareholders may vote on proposed resolutions pertaining to agenda items or appoint a proxy for this vote through postal or electronic correspondence or by another means of remote communication, provided that, for such cases, the company has established procedures which duly guarantee the identity of the person exercising the vote and a record of status (shareholder or proxy holder), the number of shares with which he or she is voting, and the direction of the vote or, where applicable, the abstention. The procedures established for delegating voting rights or voting by means of remote communication will be published in the notice of the Annual General Meeting and on the company’s website.

Regardless of the requirements for publication laid down by law or in the regulations in each case, information regarding the resolutions adopted at the Annual General Meeting will be made available to shareholders on the company’s website.

Board of Directors Chairman

Isidro Fainé Casas

Deputy Chairman

Juan Mª Nin Génova

Directors

Isabel Estapé Tous

Salvador Gabarró Serra

Susana Gallardo Torrededia

Javier Godó Muntañola

Gonzalo Gortázar Rotaeche

Immaculada Juan Franch

David K. P. Li

Maria Dolors Llobet Maria

Jordi Mercader Miró

Alain Minc

Miquel Noguer Planas

Leopoldo Rodés Castañé

Juan Rosell Lastortras

Francesc Xavier Vives Torrents

Secretary (non-director)

Alejandro García-Bragado Dalmau

Deputy Secretary (non-director)

Adolfo Feijóo Rey


Organization

Apart from those issues governed by the shareholders in the General Meeting, the Board of Directors is Criteria CaixaCorp’s highest decision-making body. Its core duty is to ensure that the companies’ relationship with stakeholders complies with the applicable laws, fulfils its obligations and contracts in good faith, respects the customs and good practices of the sectors and areas where it does business, and upholds any social responsibility principles it has voluntarily accepted.

The Board of Directors approves the company’s strategy and the organization needed to implement it, as well as supervises and controls the company’s management to ensure it meets all stated targets and remains in line with the corporate purpose and interest.

In 2009 a number of changes were made to the composition of the Criteria CaixaCorp Board of Directors. At year end, there were 16 members serving on the Board.

When exercising its powers to propose appointments to the Annual General Meeting and co-opt directors to fill vacancies, the Board endeavors to ensure that external (or non-executive) directors represent a majority over

executive directors on the Board and that the latter represents the required minimum.

Directors hold office for a term of six years, notwithstanding their reappointment or removal by the Board at any time as established in the company by-laws and prevailing legislation.

Procedures

The Board of Directors meets in ordinary session at least six times a year and whenever the Chairman considers it necessary for the smooth running of the company. The Board of Directors also meets when a session is requested by at least two of its members or one of its independent directors.

A quorum is declared for Board meetings when one-half plus one of the Board members are present or represented. Unless otherwise required by company by-laws or prevailing legislation, resolutions are passed by an absolute majority of the Board members attending in person or represented by proxy. In the event of a tie, the Chairman does not have the casting vote.

Remuneration

Pursuant to Criteria CaixaCorp’s by-laws, the Board of Directors may receive remuneration

From left to right and front to back: David K. P. Li, Javier Godó Muntañola, Salvador Gabarró Serra, Juan María Nin Génova, Isidro Fainé Casas, Gonzalo Gortázar Rotaeche, Jordi Mercader Miró, Immaculada Juan Franch, Alain Minc, Alejandro García-Bragado Dalmau, Francesc Xavier Vives Torrents, Susana Gallardo Torrededia, Leopoldo Rodés Castañé, Maria Dolors Llobet Maria, Miquel Noguer Planas, Isabel Estapé Tous, Juan Rosell Lastortras and Adolfo Feijóo Rey

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of up to 4% of the consolidated profit, net of general expenses, interest, taxes and other amounts allocated to depreciation and amortization, unless the Board itself agrees to reduce its remuneration in the years it deems such a reduction to be necessary. The resulting amount is used to remunerate members of the Board of Directors and the Board committees, as well as members of these boards who also carry out executive duties. The amount is distributed among the directors, and particularly the Chairman, as the Board sees fit, based on the duties and position of each member. The Board also determines the form of remuneration, such as attendance fees, by-law stipulated remuneration, or compensation for executive duties.

Directors carrying out executive duties, regardless of the nature of their legal relationship with the company, are entitled to receive remuneration for these duties. This remuneration may be either a fixed amount, a variable amount, or part of incentive schemes, as well as through benefits such as pension plans and insurance and, where appropriate, social security payments. In the event of removal not due to a breach of duties, directors may be entitled to receive compensation.

The aforementioned amounts may only be paid to members of the Board after the minimum 4% dividend has been paid out to shareholders pursuant to article 130 of the revised text of the Spanish Public Companies Act (Texto Refundido de la Ley de Sociedades Anónimas).

In addition, within the limits specified in the above paragraphs, 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 ratified by shareholders at the General Meeting. Where appropriate, the resolution must state the number of shares to be delivered, the strike price for the options, the price of the shares taken as reference and the term set for this type of compensation.

At the meeting held on December 4, 2008, the Board of Directors resolved to set remuneration for 2009 at the same amount paid in 2008 regardless of the remuneration for additional duties and functions of each member, the Board resolved to pay an annual remuneration of €90,000 to each director and €30,000 to each member of the Audit and Control Committee and of the Appointments and Remuneration Committee.

At the meeting held on May 7, 2009, and on the proposal of the Appointments and Remuneration Committee, the Board resolved to create an Executive Committee. Annual remuneration for each member on the newly-created committee was set at €30,000.

Committees: functions and composition

Executive Committee

At the May 7, 2009, meeting and on the proposal of the Appointments and Remuneration Committee, the Board of Directors resolved to create an Executive Committee.

The organization and functions of the Executive Committee are primarily regulated in article 39 of the by-laws and articles 11 and 12 of the Board of Directors Regulations. The Executive Committee is governed by applicable legislation,

In 2009, the Board of Directors of Criteria CaixaCorp approved the proposal to maintain the same remuneration for the Board as in 2008.


the company’s by-laws and the Board of Directors Regulations. Aspects not specifically defined for the Executive Committee are governed by the rules of procedure set forth in the Board of Directors Regulations for general Board procedures.

The Executive Committee has been delegated all of the responsibilities and powers available to it both legally and under the company’s by-laws. In terms of procedure, the Executive Committee is subject to the limitations set forth under article 4 of the Board of Directors Regulations.

The members of the Executive Committee are as follows:

Name Post

Isidro Fainé Casas Chairman

Isabel Estapé Tous Member

Mª Dolors Llobet Maria Member

Juan Mª Nin Génova Member

Audit and Control Committee

Article 40 of Criteria CaixaCorp’s by-laws requires the company to create an Audit and Control Committee, in compliance with the 18th additional provision of the Spanish Securities Market Act (Ley del Mercado de Valores), which requires companies issuing securities admitted to trading on official secondary markets to have such a committee. Article 13 of the Board of Directors Regulations establishes the rules governing the composition and operation of this committee.

The main duties of the Audit and Control Committee are as follows:

• Propose to the Board of Directors the appointment of the external auditor for submission at the Annual General Meeting.

• Review the company’s accounts and the periodic financial reporting which the Board of Directors must disclose to the markets.

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• Monitor compliance with legal requirements and the correct application of generally-accepted accounting principles.

• Supervise the internal audit service and compliance with the auditing contract, ensuring that the opinion on the annual financial statements and the main content of the auditors’ report are drafted clearly and precisely, and to monitor the independence of the external auditor.

• Supervise compliance with the internal code of conduct and the rules of corporate governance.

• Report any transaction that implies or may imply a conflict of interest.

• Supervise compliance with the internal protocol governing the relationship between ”la Caixa,” Criteria and the companies belonging to their respective groups, and to carry out any actions established in the protocol to better carry out the aforementioned supervisory function, and in general, to perform any other duties attributed thereto by law and other regulations applicable to the company.

The members of the Audit and Control Committee are as follows:

Name Post

Susana Gallardo Torrededia Chairwoman

Alain Minc Member

Juan Mª Nin Génova Member

Appointments and Remuneration Committee

In contrast to the Audit and Control Committee, companies are not legally required to create

appointments and remuneration committees. Nevertheless, article 39 of the company’s by-laws establishes that the Board of Directors shall create an Appointments and Remuneration Committee from among its members. Article 14 of the Board of Directors Regulations, 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:

• 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 shareholders at the Annual General Meeting, and to advise 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 directors.

• Consider the suggestions received from the Chairman, Board members, executives and shareholders of the company when performing their functions, and particularly, when drawing up appointment proposals.

The members of the Appointments and Remuneration Committee are as follows:

Name Post

Juan Rosell Lastortras Chairman

Jordi Mercader Miró Member

Xavier Vives Torrents Member

Criteria has a two-tier support and supervisory structure to ensure compliance with the various regulations.


Compliance

Criteria CaixaCorp has a two-tier support and supervisory structure to ensure compliance with the various regulations to which the company and its group are subject.

The Audit and Risk Management Department, which reports to the Audit and Control Committee, is responsible for monitoring compliance with financial reporting processes and internal risk management systems, as established in article 13.1 of Criteria CaixaCorp’s Board of Directors Regulations.

The Legal Affairs Department and the Compliance area monitor the company’s compliance with all the legal requirements applicable to a listed company. These units also support the Audit and Control Committee in the task of advising the Board of Directors and making proposals in connection with the modifications needed to adapt the company’s by-laws to regulatory changes and to improve internal compliance practices and procedures. This area collaborates with the Secretary of the Board of Directors to achieve excellence in corporate governance.

Compliance procedures at Criteria are explained in detail in the Internal Code of Conduct on matters relating to the securities markets.

The Internal Code of Conduct sets the standards of conduct and performance to be followed in relation to the operations described and the treatment, use and disclosure of confidential, privileged and relevant information.

The Legal Affairs Department and the Compliance area oversee compliance with the legal requirements to which the Group is subject. Subsidiaries subject to specific regulations (SegurCaixa Holding Group, InverCaixa, and FinConsum) have their own compliance staff and procedures in place, working in coordination with Criteria’s Legal Affairs Department and the Compliance unit.

Related-party transactions and the Protocol for Internal Relationships

Related-party transactions

In accordance with article 4 of the Criteria CaixaCorp Board of Directors Regulations, the Board, in plenary session, is responsible for approving transactions with related parties, defined as transactions between the company

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and directors, significant shareholders, shareholders with representation on the Board, or persons related to these parties. This article stipulates that Board authorization is not required for related-party transactions that meet all of the following criteria:

• They are governed by standard contracts applied on an across-the-board basis to a large number of clients;

• They are carried out at market prices or rates, set on a general basis by the party supplying the goods or service; and

• Their amount does not exceed 1% of the consolidated annual revenue of the Group of the parent company.

Furthermore, the Audit and Control Committee supervises compliance with regulations governing related-party transactions. In particular, this committee is responsible for verifying that information relating to these transactions is reported to the market, in compliance with Ministry of Economy and Finance Order 3050/2004, of September 15, 2004, and for advising on transactions which imply, or may imply, a conflict of interest and, overall, on all the issues addressed in Chapter IX of the Board of Directors’ Regulations regarding the general obligations of Board members.

Transactions between the company and ”la Caixa” carried out in 2009 are reported in detail in the Annual Corporate Governance Report submitted by the company to the CNMV. This report also provides information on transactions between the company and its Board members and senior management.

Protocol for Internal Relationships

To regulate Criteria’s relationship with its controlling shareholder and to enhance transparency, independence and good governance, 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. The protocol allows them to reduce and regulate conflicts of interest, comply with regulatory and market requirements and guarantee due respect and protection for the interests of other Criteria CaixaCorp shareholders within a framework of transparency in relations between both groups.

The protocol is designed to outline Criteria’s main business areas, define the general parameters of any potential business relationship or services agreement that Criteria and its Group may enter into with ”la Caixa” and other ”la Caixa” Group companies. It also ensures an adequate flow of information to allow ”la Caixa” and Criteria to prepare financial statements and meet their periodic reporting and supervision obligations with the Bank of Spain and other regulatory bodies. Criteria CaixaCorp’s Audit and Control Committee is responsible for overseeing and supervising compliance with the protocol.

The protocol for internal relationships establishes that Criteria CaixaCorp will 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 international expansion, through stakes in companies in the banking and financial sectors. The protocol also

Criteria’s internal relations protocol, endorsed together with ”la Caixa”, allows for the regulation of possible conflicts of interest, responds to the requirements of the market, and protects the interests of the rest of the shareholders.


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.

The protocol establishes the general regulations applicable to services rendered, or to be rendered at a future date, by ”la Caixa” Group companies to Criteria and its subsidiaries, and vice versa. Any new intra-group service or transaction must always be subject to a contract, ruled by the general principles of transparency, and carried out under market conditions.

The Board of Directors monitors the publication of the annual reports prepared by Criteria’s Audit and Control Committee via the media available to the company to ensure that the general public, and more specifically, Criteria CaixaCorp shareholders who are not ”la Caixa” shareholders, are aware of the degree of the company’s compliance with the principles established in the protocol.

Adherence to Corporate Good Governance Recommendations

Criteria CaixaCorp considers that it largely complies with the recommendations set out in the Unified Good Governance Code of May 19, 2006 issued by the government’s

special working group. Criteria’s compliance with these recommendations is laid out in the company’s Annual Corporate Governance Report submitted to the CNMV and published on both the CNMV website (www.cnmv.es) and on that of the company (www.criteria.com).

In particular, to highlight Criteria’s corporate good governance, fourteen of the sixteen members of its Board of the Directors are external. Criteria, therefore, complies with the 10th recommendation of the Unified Good Governance Code, as external members make up the large majority of the Board of Directors.

In 2009 there were various changes in the composition of the Board of Directors which, at December 31, 2009, comprised 16 members. There are five independent members on Criteria’s Board which, mathematically speaking, is not exactly one-third of Criteria’s Board (standing at 31.25%). However, this far exceeds the strict proportionality between shareholder structure and representation on the Board regarding minority shareholder representation given that Criteria’s free float accounts for 20.55% of its share capital (excluding treasury stock).

As mentioned above, the company has an Executive Committee, an Audit and Control Committee and an Appointments and Remuneration Committee. The majority of

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the members of these last two committees are independent directors, as are the two chairmen.

In terms of female directors sitting on the Board, it is important to note that in accordance with recommendation 15 of the Unified Good Governance Code, the process for filling board vacancies has no implicit bias against women candidates.

At year-end 2009, 25% of Criteria’s Board of Directors, 40% of Criteria’s independent directors and half of the members of the Executive Committee were female.

This percentage of women on the Board is significantly higher than the average for IBEX 35 companies. In fact, with four female directors, Criteria CaixaCorp has the second-highest number (in absolute terms) of female directors among all IBEX 35 companies.

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 to the recommendations put forward by the Audit and Control Committee as part of their functions.

Lastly, in order to enhance the company’s transparency, independence and good governance, Criteria and ”la Caixa,” as a listed company and the controlling shareholder, respectively, have subscribed to the Protocol for Internal Relationships described above.

ADVISORY BOARD

Since its creation on February 7, 2008, the International Advisory Board has successfully achieved one of its main objectives, namely

to advise Criteria CaixaCorp, S.A. in its international financial expansion, a pillar of its corporate strategy.

In order to work more efficiently with the Board of Directors and the Board committees, in 2009 three new members were appointed to the International Advisory Board. On July 30, 2009, the Board of Directors unanimously resolved to appoint André Azoulay, Jordi Gual and Andreas Treichl, all of whom have extensive experience in the financial and economic sectors and significant knowledge of the international financial markets.

On December 17, 2009, Rodrigo de Rato Figaredo resigned from the International Advisory Board.

Following these changes, the membership on the International Advisory Board is currently as follows:

• André Azoulay

• Josep Maria Bricall

• Jordi Gual

• Ashok Khosla

• Christian Pierret

• John Reed

• Andreas Treichl

On November 5, 2009 the Board of Directors unanimously approved the regulations governing the organization and operation of the International Advisory Board. These regulations set out the guiding principles of the Advisory Board, as well as its basic rules and procedures.

With four female directors, Criteria CaixaCorp has the second-highest number (in absolute terms) of female directors among all IBEX 35 companies.


HUMAN RESOURCES

A key to success

Human resources are one of the key factors in the development of Criteria CaixaCorp. The identification, promotion, implementation and monitoring of business opportunities all make up the essence of the company.

However, these activities require teamwork, an ongoing exchange of relevant information, specific technical know-how and sector knowledge, and precise management skills. Criteria therefore ensures that its employees are well-prepared, highly-qualified and high-performing.

All human resources management systems are designed to help each and every company employee contribute the highest added value to Criteria and its investees.

Innovation and experience

Criteria CaixaCorp has a staff of 100 employees with proven experience in business management (senior employees in key posts). Criteria’s professionals are highly qualified (80%

are university graduates) and have previous experience in different business sectors. The average age of employees is 36.08 years.

The CEO, Gonzalo Gortázar Rotaeche, oversees the senior management of the company.

The Management Committee is formed by the CEO, Gonzalo Gortázar Rotaeche, and the heads of the various business units.

Comprehensive human resources management

Criteria CaixaCorp strives for exemplary human resources management by focusing on the following points.

Strict and comprehensive selection processes

In its selection processes, Criteria CaixaCorp assesses candidates’ professional abilities, while bearing in mind the values of diversity, equal opportunities and non-discrimination. Selection processes are confidential and independent.

Selection specialists look for professionals with the skills and qualities needed to ensure their successful integration in the company. Criteria

From left to right: Ashok Khosla, Josep Maria Bricall, Andreas Treichl, John Reed, André Azoulay, Jordi Gual and Christian Pierret

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attracts and selects talented individuals with a view to fostering mutual growth: that of Criteria CaixaCorp and that of all its employees.

Criteria CaixaCorp places special attention on bringing in young professionals with high potential and the capacity to grow within the company. In 2009 the company honored 13 collaboration agreements with various universities and business schools (including University of Barcelona, Autonomous University of Barcelona, University of Jaén, Polytechnic University of Catalonia, ESADE Business School, and IESE Business School, among others). Under these agreements, Criteria offers budding professionals the opportunity to apply their knowledge to a real-life context while developing their skills and training in the workplace.

Responsible and competitive compensation systems

Compensation is necessarily linked to the company’s business strategy and shareholders’ interests, and therefore must ensure a real return on the company’s investment in people.

In 2009 the company implemented the compensation policy defined and approved in 2008. This policy is adapted to its organizational structure and is consistent with market practices, its business strategy and shareholder interests.

The performance appraisal system designed in 2008 was effectively introduced across the entire company in 2009. Under this target-based system, evaluations are more in line with the business strategy and with the professional performance of Criteria’s team.

The end goal of the compensation policy is to tie compensation to the level of responsibility and degree of contribution, as well as to apply individual management criteria based on performance and the achievement of specific targets and results.

Programs to maximize professional development

In 2009 the company began preparing a Competency Framework, to be completed in 2010. This framework will be a key tool for ensuring that professionals are well matched to

Human resources are one of the key factors in the development of Criteria CaixaCorp.

Management CommitteeGonzalo Gortázar Rotaeche CEO

Francesc Bellavista Auladell Director of Internal Audit and Risk Management

Adolfo Feijóo Rey General Secretary’s Office

Almudena Gallo Martínez Director of Human Resources and CSR

Antoni Garriga Torres Director of Corporate Office and Investor Relations

Carmen Gimeno Olmos Director of the Insurance and Financial Services Portfolio

Juan María Hernández Puértolas External Communications Director

Xavier Moragas Freixa Finance Director

Jordi Morera Conde Director of the Banking Investment Portfolio

Lluís Vendrell Pi Director of Legal Affairs


their responsibilities and duties, and will serve as the basis for the professional development and talent management model.

This model will also feature a training plan to facilitate the professional growth of company employees.

In 2009, Criteria began compiling information on the real training needs of its employees. This data will serve as the foundation for an annual plan of programs aimed at improving three key areas: technical knowledge, skills and a greater knowledge of Criteria. The company also helps cover the cost of employees’ specific individual training needs.

All training activities are evaluated upon completion in order to continually improve and adapt training actions to employee needs and to fine-tune the next training plan.

In 2009, 9,382 hours of training were logged in the company, for a yearly average of 93.82 hours per employee.

Commitment to equality and respect for individuals

Criteria CaixaCorp is committed to equal treatment and opportunities for all its employees, regardless of gender, and to the promotion of non-discrimination. In 2009 there were no discrimination-related issues in the company.

In 2009 Criteria’s Equality Committee began designing an equality plan, which features a work/life balance policy. The plan, which will be completed in 2010, will set out specific actions aimed at transmitting the values of equality and non-discrimination within the company, as well as preventative measures to avoid any type of gender-based discrimination.

Fluid, transparent dialogue with employees

Criteria’s employees are one of the company’s most-valued assets and key stakeholders. Consequently, the company places priority on maintaining constructive dialogue with

From left to right: Xavier Moragas Freixa, Lluís Vendrell Pi, Juan María Hernández Puértolas, Almudena Gallo Martínez, Jordi Morera Conde, Gonzalo Gortázar Rotaeche, Adolfo Feijóo Rey, Carmen Gimeno Olmos, Francesc Bellavista Auladell and Antoni Garriga Torres

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employees and keeping them informed of all matters influencing their duties and responsibilities, as well as of information on the company and its business environment.

One of the measures adopted by Criteria with these objectives in mind was the establishment of various channels of communication with employees, namely the intranet. The company is currently working to add new features to this key internal communication tool in order to enhance dialogue and exchange of information with employees.

General Management regularly informs employees of changes and developments within the company, thereby making them aware of

Criteria’s results and involving them in strategy implementation.

A sound occupational health and safety plan

The company’s occupational health and safety policies and systems have been designed for all types of activities carried out by employees at Criteria CaixaCorp. These preventive activities are implemented by an external prevention service. The risks associated with each job profile have been assessed and a prevention plan has been drawn up to address these risks which mainly relate to ergonomics, working in front of computer screens, business trips and stress.

Breakdown by gender

38%Men

62%Women

Breakdown of management positions

20%Female executives

80%Male executives

Breakdown by ageAverage age: 36.08 years

15%<30 years

62%30-39 years

3%50-59 years

20%40-49 years

Education

20%Other

80%University/Post-graduate degree (MBA, PhD etc.)


Key indicatorsFigures at December 31, 2009

Number of employees: 100

Average age: 36.08

% of women: 62%

% of women in management positions: 20%

Nationalities: 4

KEY PROCEDURES AND RISK MANAGEMENT

Decision making: investment–divestment

Criteria CaixaCorp’s main decision-making process relates to investment and divestment. These investments and divestments may be the result of an active search by Criteria’s management team or its governing bodies. They may also be the result of transactions proposed to Criteria by external economic agents, such as investment banks. All potential investments and divestments are subject to a prior viability study taking into account all possible standpoints: strategic, legal, tax, economic-financial and corporate social responsibility.

This study is submitted to the Management team, which decides whether the project should be passed on to the corresponding governing bodies.

The governing bodies responsible for assessing and approving investment projects are:

a) Audit and Control Committee

This committee analyzes Criteria CaixaCorp’s potential investments and divestments to determine whether there are any possible conflicts of interest between ”la Caixa” and Criteria.

The Audit and Control Committee advises the Board on the creation or acquisition of stakes in special purpose vehicles or companies 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, could impair the transparency of the company or the Group.

b) Board of Directors

The Board of Directors is the company’s highest governing body, except in issues falling under the remit of the General Shareholders’ Meeting.

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The Board of Directors approves all investments and transactions considered to be strategic by virtue of their amount or special characteristics, unless this approval corresponds to the shareholders in General Meeting. The Board also assesses the creation or acquisition of stakes in special purpose vehicles or companies 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, could impair the transparency of the Group.

c) ”la Caixa” Investment and divestment Committee

As a saving bank, ”la Caixa” is subject to Legislative Royal Decree 1/2008 of March 11, 2008, approving the revised text of the Law governing the Catalonian savings banks sector and passed by the Catalonian parliament, as well as to other applicable provisions.

This legislation has specific implications for savings banks with regard to corporate governance. For instance, ”la Caixa”’s Investment Committee (a Board of Directors committee with advisory, non-executive functions) is responsible for evaluating and informing the 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 transactions 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 Executive Committee of its financial viability, when it involves the acquisition or disposal of a significant stake in a listed company or when it relates to business projects where the company is involved in the management or governing bodies, provided that the investment for the ”la Caixa” Group accounts for more than 3% of its eligible capital (1% in the case of divestments). When this threshold is exceeded, investments and divestments may be carried out, without prior assessment, within the fluctuation range determined by the Committee itself.

Risk management

As a ”la Caixa” Group company, one of Criteria’s main principles is to monitor the quality of risk and to safeguard the Group’s capital adequacy mechanisms. To this end, Criteria has designed and implemented a Risk Management Framework. This framework aims to address the essential elements of risk management, as follows:

• Definition of Criteria CaixaCorp’s management objectives for the different risk areas: credit risk, market risk and operational risk.

• Mainstreaming risk control throughout Criteria’s organizational structure entrusted with monitoring and controlling the company’s managed positions.

As a ”la Caixa” Group company, one of Criteria’s main principles is to monitor the quality of risk and to safeguard the Group’s capital adequacy mechanisms.


• Decision-making process and approval of new transactions: description of the process and persons in charge of contracting.

• Description and composition of the company’s committees as part of the decision-making and management processes.

• Implementation of policies to manage the different risk areas.

• Determination of limits for trading portfolio transactions : specific limits defined by Criteria CaixaCorp’s Board of Directors in addition to the global limit established by the Board of Directors of ”la Caixa”.

• Securities and counterparties permitted for Criteria’s market trading activity.

Several methods and tools are used to measure and monitor risk. These methods and tools allow the company to assess and quantify its risk exposure and, consequently, take the appropriate measures to minimize the impact of these risks on its consolidated financial statements.

• For stakes not classified as available-for-sale, the most significant risk is default. Accordingly, the Probability of Default and Loss Given Default approach is applied. This same analysis

is carried out for the available-for-sale stakes in Repsol and Telefónica.

• For available-for-sale investments, the most significant risk is market risk and, therefore, the value at risk (VaR) model is applied.

The Group classifies its main risks in 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 foreign exchange rate fluctuations.

• Liquidity risk: mainly relates to a lack of liquidity in certain investments.

• 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. Credit risk also covers portfolio investments in jointly-controlled entities and associated companies.

• Risk relating to the insurance business: relates to the technical or subscription risk. Technical-actuarial risks are carefully controlled.

The main risks and policies adopted to minimize their impact on the Group’s financial statements are as follows:

78

I. Market risk

Market risk is the risk that the value of a financial instrument may vary as a result of changes in share prices, interest rates or foreign exchange rates. This could lead to a decrease in 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 and long term.

Price risk

At December 31, 2009, practically all of the Group’s investments in equity instruments were in listed companies. As a result, the Group is exposed to the market risk generally associated with listed companies. The prices and trading volume of shares in listed companies may fluctuate due to factors beyond the Group’s control.

In view of the turmoil affecting the financial world and stock markets, the market value of investments plummeted in 2008 and up to early 2009. The market value of securities was therefore below the individual cost of acquisition recorded for some of these investments. As the key economic indicators stabilized and improved throughout 2009, these values recovered significantly during the year. As a result of this recovery, the market value of available-for-sale investments stood at €7,594 million at December 31, 2009 (€6,150 million at December

31, 2008), with gross underlying capital gains of €3,055 million (€1,965 at December 31, 2008).

The Group’s specialized teams continually monitor investee transactions, in accordance with the degree of influence the Group has in these companies. The teams use a combination of indicators that are updated periodically. In addition, in conjunction with ”la Caixa”’s Strategic Risk Management Department, Criteria CaixaCorp’s teams measure the risk exposure of its investment 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 (New Basel Capital Accord) regulations for banking institutions. Risk is also measured on the basis of likelihood of default, using models based on the PD/LGD approach, following the guidelines set out in the New Basel Capital Accord.

Management monitors these indicators on an individualized basis to ensure the best decisions are taken on the basis of the market’s observed and forecast performance and the Group’s strategy.

Interest rate risk

Interest rate risk mainly arises as a result of changes in the financial cost of debt bearing interest at variable rates and in the value of financial assets bearing a fixed interest rate

On December 31, 2009, the market value of Criteria’s available-for-sale investments rose to €7,594 million, with unrealized capital gain before taxes of €3,055 million.


(mainly loans granted and debt investments held). Accordingly, this risk basically arises from financial and insurance activities and Group borrowings. Interest rate risk management assesses the sensitivity of the fair value of assets and liabilities to changes in the structure of the market rate curve.

Interest rate risk is managed and controlled directly by the management team of each company involved.

The Group’s financial entities are exposed to the interest rate risk arising from their financial assets and fixed-rate credits and loans, acquired in line with their activities, while borrowings are arranged at fixed and floating rates. The

risks associated with these financial assets are assessed periodically based on prevailing market conditions in order to decide whether to arrange new hedges or to amend the floating rate loan terms and conditions. The policies adopted enable the Group to mitigate the interest rate risk associated with financial assets bearing fixed interest rates.

Insurance companies are required to calculate technical provisions in accordance with the maximum interest rate published by the Spanish General Directorate of Insurance. If the real rate of return on investments is lower, the insurance provision is calculated using the effective interest rate. When certain investments are assigned to insurance transactions, the interest

Assets subject to exchange-rate fluctuationsBalance sheet Assets Currency € million(1) Comments

Investments accounted for using the equity method

GF Inbursa MXN 1,449

The Bank of East Asia

HKD 715 Investment of €331 million in 2010

Available-for-sale financial assets / debt instruments

Fixed-income insurance segment

USD

GBP

JPY

205

37

5

Risk hedged with financial swaps in euros

(1) Equivalent value in euros at December 31, 2009.

80

rate used to calculate the technical provisions is determined using the internal rate of return of the investments.

Exchange rate risk

The euro is the functional currency for most of the assets and liabilities on the Group’s consolidated balance sheet. The main assets subject to exchange-rate fluctuations are listed in the table below.

Criteria’s policy is to hedge those items that may affect the company’s profits. Consequently, only cash flows are hedged. Shareholdings are not hedged as they are considered very long-term investments.

The Group may also be indirectly exposed to exchange-rate risk through foreign currency investments made by its investees.

The Group’s policy, according to the global risk involved, revolves around arranging derivative financial instruments in the same currencies or in currencies belonging to the economic environment of the assets in which the investment is being made.

II. Liquidity risk

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 relating 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 duly meet its commitments. This objective is achieved through constant 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.

III. Credit risk

Credit risk 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 associated with fixed-income investments in insurance and financial portfolios made via loans and credit granted to customers. The Group is also exposed to credit risk relating to the possible insolvency in the associates in which it holds interest (mainly listed companies).

The Group’s credit risk is managed through strict internal guidelines defined by the management team. These guidelines define the types of assets that can be included in the investment portfolio, using the main rating, maturity, counterparty and concentration scales as parameters. These guidelines are particularly significant for the insurance business, where the majority of the company’s fixed-income investments are concentrated.

The Group’s financial activity is subject to a credit risk control and monitoring policy whereby the current and future risk level is measured and controlled using specialized tools (scoring matrixes, transaction securing rules, recovery management, and others) and the monitoring of the compliance and effectiveness of these


tools. The counterpoint to risk is always the risk acceptance level for the transactions pursued.

A priori, the value of investments in jointly-controlled entities and associates, amounting to €11,969 million is not exposed to the risk of a change in the price of the shares, since their market price does not affect the figures stated on the consolidated balance sheet or consolidated income statement because of the way investments of this nature are accounted for. The risk for the Group in investments of this nature is associated with the business

performance, and possible bankruptcy, of the investee, of which market share prices are a mere indicator. In general, this risk can be classified as a credit risk. The tools used to assess these risks are PD/LGD models and the guidelines contained in the New Basel Capital Accord (NBCA).

IV. Risks relating to the insurance business

The risks associated with the various branches of the insurance business are managed directly by the SegurCaixa Holding Group’s management

The Group’s financial activity is subject to a credit risk control and monitoring policy whereby the current and future risk level is measured and controlled using specialized tools.

82

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 policies relating to:

• Technical risks in the insurance business:

a) Subscription

Risk acceptance on the basis of main actuarial variables (age, insured sum and duration of the guarantee).

b) Tariffs

In accordance with regulations issued by the Spanish General Directorate of Insurance and Pension Funds, tariffs in the life insurance business are established using the mortality tables permitted by prevailing legislation. In addition, the interest rates for the tariffs are applied in accordance with the maximum rate set by the Law of Regulation and Supervision of Private Insurance approved by Royal Decree 2486/1998 of November 20.

c) Reinsurance

Risk is appropriately diversified among several reinsurance companies with sufficient capacity to absorb unexpected losses, thereby stabilizing the number of claims.

The definitions and monitoring of these policies allows them to be modified in order to adapt risks to the Group’s global strategy.

Insurance management is primarily concerned with the treatment of claims and the size of provisions. Technical provisions are estimated using specific procedures and systems.

• Concentration of insurance risk

Risks occurring in the branches of insurance in which the group operates are widely diversified given the large number of policyholders, the number of different branches in which it operates, and the small amount of each individual claim. Therefore, management considers that the concentration of insurance risk in Group activities is very low.

• Claims

The Group operates mainly in life and non-life insurance segments. Therefore, historic claim-related information is not relevant, given the short time elapsing between the time the claim is filed and its settlement – less than one year in most instances.

V. Operational risk

Operational risk is defined as the risk of incurring a loss as a result of errors in operating processes.

Criteria’s risk management process covers aspects related with IT systems and personnel, administrative processes, information security as well as legal aspects.


The risk management process covers issues relating to systems and personnel, administrative processes, information security and legal matters. These issues are managed in order to establish adequate controls to minimize possible losses.

As part of the on-going process to improve its internal control systems and effectively manage risk, Criteria CaixaCorp complies with all the requirements stipulated in its Procedures and Control Manual aimed at reducing or eliminating exposure to these risks.

The following departments work to strengthen

the company’s internal control systems:

a) Internal audit

b) Compliance

c) Risk management

These departments are supervised by the

Audit and Control Committee and the Board of

Directors.

84

Criteria ensures that the companies in which it invests work ethically and responsibly. Each investee is required to identify its business-specific commitments to corporate citizenship.

Since its incorporation, Criteria CaixaCorp has undertaken to combine the company’s financial success with sustainable development. This means basing decisions not only on financial criteria, but also on the consequences of its actions for society and the environment.

For Criteria, the most important Corporate Social Responsibility (CSR) issues are defined by the activities it carries out within the framework of its mission, vision, and values. As such, Corporate Social Responsibility is fully integrated into Criteria’s responsible management of its investment portfolio.

In 2009, Criteria met all its corporate social responsibility objectives and moved forward in the areas of corporate citizenship it considers most important.

Approval of a CSR policy

In order to foster CSR throughout the entire company and to involve all departments in the design of this policy, Criteria created a work team of representatives from all areas. This team is playing a key role in meeting all CSR objectives and challenges the company has set.

Thanks to the dedicated efforts and participation of this team, Criteria unveiled

its CSR policy, approved by the Board of Directors (www.criteria.com/infocorporativa/politicaresponsabilidad_es.html). The main lines of this policy are as follows:

• Excellence in corporate governance: application of the highest corporate governance standards, ensuring transparency, independence and good governance in the company.

• Ethical and socially-responsible investing: inclusion of ethical, social and environmental criteria in all investment and divestment processes.

• Supporting the development of entities with which it collaborates, with special focus on training and professional development and on promoting equality, diversity, flexibility and a work/life balance.

A series of objectives, set out below, have been identified on the basis of the above three points.

Criteria’s participation in the main sustainability pacts and indices

In line with one of its CSR objectives, namely to adhere to the main sustainability pacts and join the main sustainability indices, Criteria has adhered to the United Nations Global Compact. This is yet one more step forward in its commitment to human rights, the environment, labor policies and the fight against corruption. Criteria also subscribes to the guidelines for multinational companies set

5_c. Corporate Social Responsibility

Criteria CaixaCorp is a company truly committed to sustainability.


2009 objectives Current situation

Effective approval and implementation of Criteria’s Code of Ethics.

3 The Code, which establishes values and guiding principles on the basis of input from its main stakeholders, has been approved. (www.criteria.com/infocorporativa/responsabilidadsocial_en.html)

Continue drafting the annual report according to the highest level of the GRI, G3 A, with external verification.

3 Criteria has prepared the new annual report in accordance with the highest level of GRI, G3 A. This report is subject to verification.

Strengthen Criteria’s position in the Dow Jones Sustainability Index (DJSI).

3 Criteria has improved its DJSI rating compared to the prior year.

Criteria CaixaCorp’s inclusion in the FTSE4GOOD index.

3 Criteria is a member of the FTSE4 Good index (IBEX 35, Europe and Global).

Adherence to the United Nations Global Compact and effective definition of environmental policies.

3 Criteria has adhered to the United Nations Global Compact and has defined its environmental policy. (www.criteria.com/infocorporativa/responsabilidadsocial_en.html)

by the Organization for Economic Co-operation and Development (OECD).

In 2009, Criteria cemented its position in the leading sustainability stock market indices. The company now forms part of the FTSE4Good index (IBEX 35, Europe and Global), the prestigious FTSE index that rates the investments of companies as sustainable on the basis of their corporate social responsibility practices. In order to be included in this index, Criteria successfully met a number of requirements relating to environmental management, human and labor rights, suppliers, anti-corruption measures and the fight against climate change.

In addition, for the second year in a row, Criteria has been selected to form part of the Dow Jones Sustainability Index, both the global DJSI World and the European DJSI STOXX. Criteria is the only Spanish financial services company to have a secured a slot in this index. The company has not only strengthened its position on the

index, in line with the objective set for 2009, but has also improved its rating in comparison with the prior year.

Excellence in corporate governance

Criteria is a benchmark for incorporating CSR values into its corporate governance, given that the Board of Directors Regulations establish that the Board itself is entrusted with establishing the CSR policy.

Among other good practices and in addition to the internal protocol governing the relationship between Criteria and ”la Caixa” to bolster the transparency, independence, and good governance of the company, Criteria’s accomplishments in this field include having four women on the Board of Directors, the analysis of opportunities and risk map improvements carried out in 2009, and the two-tier support and monitoring structure (Internal Audit and Legal Affairs Department/Compliance area) to ensure compliance with all CSR regulations.

86

One step further in ethical management

Criteria’s Code of Ethics, approved by the Board of Directors, was designed with input from the main stakeholder groups. This code represents the company’s commitment to “a job well done,” in accordance with the values, principles and standards (both internal and external) it has voluntarily set or adhered to.

The purpose of this code is to set the guidelines for how everyone at Criteria (directors, executives and employees) must act in the course of their duties, and to guide relationships with the company’s collaborators and the relationships of these with other stakeholders. Criteria has disclosed its Code of Ethics so that investees and suppliers may become familiar with the values set out therein, and be encouraged to adopt similar guidelines.

Every single individual at Criteria CaixaCorp is required to become familiar with the code, to comply with the standards set out in it, and to help ensure that all guidelines and principles of conduct are respected (www.criteria.com/infocorporativa/responsabilidadsocial_es.html).

Progress in Criteria’s environmental strategy

As part of its Corporate Social Responsibility strategy, Criteria has melded environmental aspects into all its operating and strategic business decisions. In 2009 the company unveiled its environmental policy after this had been approved by the Management team (www.criteria.com/infocorporativa/politicaresponsabilidad_es.html).

Under its environmental policy, Criteria undertakes the following commitments:

• To comply with all environmental regulations and legislation applicable to the activities it carries out, as well as with other commitments Criteria has voluntarily undertaken.

• To apply good environmental practices and principles in all activities.

• To train employees and to raise their awareness of environmental issues, encouraging their

participation in the company’s environmental policy.

• To establish and monitor an environmental management system within the company and in investees.

• To avoid pollution from its activities by implementing the necessary improvement measures and by taking into account all key issues for safeguarding the environment.

• To disclose its environmental policy among all goods and services providers and to ensure that they comply with these policies when they carry out activities in Criteria’s work centers.

• To make the environmental policy available to all interested parties.

As part of the environmental management system, in 2009 Criteria carried out a number of energy-efficiency and sustainable mobility actions aimed at reducing its carbon footprint. These initiatives included installing automatic water and light-saving systems and reducing the number of hours lights were turned on in Criteria’s centers. In addition, in line with the company’s travel policy, business trips were limited to those strictly necessary. The company also encouraged the use of public transportation and video-conferences, and, where possible, opted for train travel over air travel.

Criteria has also reduced the amount of utilities and supplies it consumes, such as electricity (2.5% less use) and paper (12% less paper compared to 2008). In 2009 the company launched a program for the selective collection of office waste. As part of this program, nearly 20 tons of paper and cardboard and 443 kilos of plastic were recycled (see www.criteria.com/infocorporativa/indicegri_es.html for details of materials and utilities consumed).

In terms of purchases of equipment, especially electric and electronic equipment, Criteria’s purchasing policy stipulates that such procurement decisions must take into account the environmental and social track record


of suppliers, as well as the environmental characteristics of the product in question.

As Criteria serves on the governing bodies of its investee companies, as an active shareholder, it is able to assess the risks and opportunities presented by the many challenges to sustainable development. As such, the strategic positioning of Repsol YPF, Gas Natural, Abertis, Telefónica, and Agbar on climate change is of vital importance. These companies are all working towards eco-efficiency and reduced emissions, and are strongly committed to their employees, suppliers, clients, and shareholders in order to better the communities in which they operate. They are also committed to preserving biodiversity.

Criteria is firmly committed to gaining greater knowledge of the environmental track record of its investees and to encourage them to make any improvements necessary in this area.

Greater commitment to communities

Criteria is committed to the progress of its communities. This commitment takes many forms, from contributions to the welfare fund operated by its main shareholder, ”la Caixa,” to investments in companies that carry out key social projects, and through its own direct community programs.

These direct programs aim to positively influence the communities in which Criteria operates, by encouraging good practices and by contributing to further knowledge of CSR through collaboration with research centers and initiatives sponsored by academic institutions. These initiatives include:

• Agreement with the ESADE Business School’s Social Innovation Institute to publish the digital magazine Empresa y Derechos Humanos (Companies and Human Rights).

• Support for IESE Business School’s Doing Good Doing Well conferences, in which Masters students and representatives from the professional world work together towards new strategies and models promoting more responsible businesses.

Criteria has also supported a number of social projects and campaigns run by organizations working in underprivileged neighborhoods in Barcelona. It has also donated computer equipment and other important staple goods to non-profit organizations working in Africa.

Criteria is particularly proud of the volunteer service rendered by many of its employees in a variety of community projects (food banks, etc.).

88

Improved dialogue with stakeholders

Criteria firmly believes that the relationship, dialogue and ongoing communication with its stakeholders is of vital importance, and continually strives to improve this relationship. Criteria’s first initiatives in this field primarily focus on two stakeholder groups, namely shareholders and Criteria’s professionals.

Criteria is implementing a number of measures to improve its dialogue with shareholders, including the Criteria and its Shareholders program, the Azul Criteria Program, and various financial training events. Details of these measures are provided in earlier sections of this report.

With respect to its employees, Criteria has designed a set of human resources policies and programs focusing on training and development, remuneration policies, and the equality plan. These efforts are discussed in further detail in earlier sections of this report.

In 2010, Criteria is ready to tackle the challenges of building better relationships with other stakeholders and of consolidating its dialogue with all these groups.

New challenges and commitments

In 2009 Criteria defined its CSR strategy and action plan for 2010-2011. This plan mainly entails:

• Suitable management of intangible aspects of the business, by progressing in CSR policies and procedures.

• Uniting group companies around the same CSR goals, encouraging them to be aware of and apply the policies.

• Enhancing knowledge of Criteria’s stakeholders and of their expectations for the company, building better relationships with all these groups.

• Monitoring and managing Criteria’s reputation.

• Positioning Criteria as an attractive company for socially-responsible investment, on the basis of both its own responsible investments and long-term sustainable strategy.

• Improving the company’s presence in prestigious international sustainability indices.

• Participating in CSR-specific forums and agreements.

• Ascertaining greater knowledge of the environmental track record of investees and helping them to improve wherever needed.

• Furthering Criteria’s community action, bringing it in line with the company’s strategy and activity and with that of its main shareholder.

Thanks to this plan, Criteria will move from merely complying with CSR standards to a

C C+ B B+ A A+

Self-declaration

Third-party verification

GRI verification


unique benchmark position as a company truly committed to corporate citizenship.

Criteria’s Annual Report complies with GRI guidelines

The 2009 Annual Report bears witnesses to the current economic situation and the company’s performance in this context. In addition, it includes information of interest to stakeholders regarding compliance with the corporate strategy, Criteria’s share price, corporate governance and performance indicators. The report is shaped around the mission, vision and values of the company, including those issues that came to light in the materiality analysis.

The 2009 Annual Report addresses Criteria CaixaCorp as a company, as well as the most notable events surrounding its activity and that of its investees. The objective of the report is to inform all stakeholders of the company’s 2009 results – not only its financial results, but also the management of its main environmental and social risks and opportunities. The

recommendations set out in the Global Reporting Initiative (GRI) G3 guidelines, as well as the protocol for the indicators set out in the Financial Services sector supplement, have been followed in preparing this Annual Report.

The report has been self-qualified as “A+” by Criteria CaixaCorp’s management according to the GRI application levels, and the rating has been verified by GRI. The company has also engaged KPMG for external assurance of the self-declaration on application of the principles, and will submit it to GRI for review. The verification report forms part of this Annual Report.

GRI recommends including an index to identify the various GRI indicators included in annual reports. This index is available at www.criteria.com/infocorporativa/indicegri_es.html and shows where each GRI indicator, listed by category, can be found in Criteria’s 2009 Annual Report.

Further information on the methodology used in preparing the CSR report can be found at www.criteria.com/infocorporativa/indicegri_es.html.

90

Independent Assurance Reportto the Management of Criteria CaixaCorp, S.A.

(Free translation from the original in Spanish.In case of discrepancy, the Spanish language version prevails.)

We performed a review on the social and environmental information contained in Criteria CaixaCorp, S.A., (hereinafter Criteria) Annual Report for the year ended 31 December 2009 and the GRI index which complements it (hereinafter “the Report”).

The Management is responsible for the preparation and presentation of the Report in accordance with the Sustainability Reporting Guidelines version 3.0 (G3) of the Global Reporting Initiative as described in the section entitled “Criteria’s Annual Report according to the GRI guidelines”. The self-declared application level, which has been confirmed by Global Reporting Initiative, is detailed in the above-mentioned section. Criteria’s management is also responsible for determining its objectives in respect of the selection and presentation of sustainable development performance; and for establishing and maintaining appropriate performance management and internal control systems from which the reported performance information is derived.

Our responsibility is to carry out a limited assurance engagement and to issue an independent report based on the work performed, which refers exclusively to the information corresponding to the year 2009. Data corresponding to previous years have not been the object of review. We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000, “Assurance Engagements other than Audits or Reviews of Historical Financial Information”, issued by the International Auditing and Assurance Standards Board. This standard requires that we plan and perform the engagement to obtain limited assurance about whether the Report is free from material misstatement and that we comply with the independence requirements included in the International Federation of Accountants Code of Ethics which outlines detailed requirements regarding integrity, objectivity, confidentiality and professional qualifications and conduct.

A limited assurance engagement on a sustainability report consists of making inquiries to Management, primarily to the persons responsible for the preparation of information presented in the Report, and applying analytical and other evidence gathering procedures, as appropriate through the following procedures:

• Interviews with relevant Criteria’s staff concerning the application of sustainability strategy and policies.

• Interviews with relevant Criteria’s staff responsible for providing the information contained in the Report.

• Analysing the processes of compiling and internal control over quantitative data reflected in the Report, regarding the reliability of the information, by using analytical procedures and review testing based on sampling.

• Reading the information presented in the Report to determine whether it is in line with our overall knowledge of, and experience with, the sustainability performance of Criteria.

• Verifying that the financial information reflected in the Report was taken from the annual accounts of Criteria, which were audited by independent third parties.


2

The extent of evidence gathering procedures performed in a limited assurance engagement is less than that for a reasonable assurance engagement, and therefore a lower level of assurance is provided. Also, this report should not be considered an audit report.

Our multidisciplinary team included specialists in social, environmental and economic businessperformance.

Based on the procedures performed, as described above, nothing has come to our attention that causes us to believe that the data included in the Annual Report of Criteria CaixaCorp. S.A. for the year ended 31 December 2009 have not been reliably obtained, that the information has not been fairly presented, or that significant discrepancies or omissions exist, nor that the Report is not prepared, in all material respects, in accordance with the Sustainability Reporting Guidelines (G3) of the Global Reporting Initiative as described in the “GRI Evaluation” section of the Report.

Under separate cover, we will provide Criteria’s management with an internal report outlining our complete findings and areas for improvement.

KPMG Asesores, S.L.

(Signed)

Julián Martín BlascoPartner

23 April 2010

The Financial business portfolio represents 33% of GAV. Criteria CaixaCorp’s strategic objective is to increase the weight of the financial sector to reach a 40%-60% balance.

Investment portfolio

a. Company structure _94

b. Active management of the portfolio _96

c. Investment portfolio _103

6

94

6_a. Company structure

Services – Listed companies

9.28%

5.02%

Inversiones Autopistas(50.10%)

7.75%

20.65%

66.44%

11.54%

Specialized financial services

91.00%9.00%

Serveis

AgenCaixa (100.00%)

GDS Correduría (67.00%)

0.50%

0.50%

0.50%

100.00% 20.00%

100.00%

Group SegurCaixa Holding

80.00%

Insurance

International banking

19.51%Boursorama (20.85%)

9.81%

1.34%

Services - Non-listed companies

40.29%

80.58%

Hisusa (49.00%)

Repinves (67.60%)

VidaCaixa (100.00%)

Invervida Con. (100.00%)

SegurCaixa (100.00%)

99.00%

SegurCaixa Holding (2)

(100.00%)

Port Aventura Entertainment (50.00%)

GP Des. Urb. Tarraconenses(100.00%)

100.00%

9.71%

19.42%

BME (5.01%)

Telefónica (1) (5.16%)

Repsol YPF (12.68%)

Agbar (2) (44.10%)

Gas Natural (36.43%)

Abertis (25.04%)

Holret (100.00%)

Hodefi (100.00%)

Mediterranea Beach & Golf Resort (100.00%)

BEA (3) (9.81%)

Banco BPI (30.10%)

GF Inbursa (20.00%)

Erste Group Bank (10.10%)

Negocio de Fin. e Inversiones (100.00%)

GestiCaixa (100.00%)

InverCaixa (100.00%)

CaixaRenting (100.00%)

FinConsum (100.00%)

(1) Includes 1.03% subject to derivative contracts.(2) Subject to a transaction underway (pending completion), which will narrow the total stake to between 15% and 25% and will result in the addition of Adeslas to the SegurCaixa Holding Group.(3) In January 2010 Criteria subscribed to a share capital increase. raising its ownership stake to 14.99%.

100,00%

Criteria CaixaCorp annualreport09 _ 6. Investment portfolio _ 95

Services – Listed companies

9.28%

5.02%

Inversiones Autopistas(50.10%)

7.75%

20.65%

66.44%

11.54%

Specialized financial services

91.00%9.00%

Serveis

AgenCaixa (100.00%)

GDS Correduría (67.00%)

0.50%

0.50%

0.50%

100.00% 20.00%

100.00%

Group SegurCaixa Holding

80.00%

Insurance

International banking

19.51%Boursorama (20.85%)

9.81%

1.34%

Services - Non-listed companies

40.29%

80.58%

Hisusa (49.00%)

Repinves (67.60%)

VidaCaixa (100.00%)

Invervida Con. (100.00%)

SegurCaixa (100.00%)

99.00%

SegurCaixa Holding (2)

(100.00%)

Port Aventura Entertainment (50.00%)

GP Des. Urb. Tarraconenses(100.00%)

100.00%

9.71%

19.42%

BME (5.01%)

Telefónica (1) (5.16%)

Repsol YPF (12.68%)

Agbar (2) (44.10%)

Gas Natural (36.43%)

Abertis (25.04%)

Holret (100.00%)

Hodefi (100.00%)

Mediterranea Beach & Golf Resort (100.00%)

BEA (3) (9.81%)

Banco BPI (30.10%)

GF Inbursa (20.00%)

Erste Group Bank (10.10%)

Negocio de Fin. e Inversiones (100.00%)

GestiCaixa (100.00%)

InverCaixa (100.00%)

CaixaRenting (100.00%)

FinConsum (100.00%)

(1) Includes 1.03% subject to derivative contracts.(2) Subject to a transaction underway (pending completion), which will narrow the total stake to between 15% and 25% and will result in the addition of Adeslas to the SegurCaixa Holding Group.(3) In January 2010 Criteria subscribed to a share capital increase. raising its ownership stake to 14.99%.

100,00%

96

6_b. Active portfolio management

Criteria’s active portfolio management is mainly reflected in the investments and divestments it performs throughout the year, and in its presence in the governing bodies of each company in which it holds an ownership interest.

In 2009 Criteria’s active portfolio management was especially apparent, as by year end the company had doubled the weight of financial sector investments, compared to the position held at the time of the IPO. Criteria also strengthened its ties with partners in the banking sector, investing in winning companies that strive for long-term value. The company has also laid the foundations for creating a market leader in the Spanish insurance sector through the Adeslas transaction.

This management focus is also clearly reflected in some of the transactions described previously in this report, such as the €652 investment in Erste Group Bank, the €331 investment in BEA, the Adeslas/Agbar deal for €1,178 million, and the €1,313 million backing for Gas Natural in its takeover of Unión Fenosa.

During the year, Criteria took on an active role on the Boards of Directors of each and every investee. This allows the company to directly participate in the definition of their future policies and strategies and contribute to their growth and development.

Net Asset Value

Criteria CaixaCorp’s net asset value (NAV) is as follows:

€ million

31/12/2009 31/12/2008

GAV (gross asset value) (1) 24,380 18,196

Pro-forma net debt position2 (2) (6,764) (3,944)

NAV 17,616 14,252

Net debt / GAV 28% 22%

Millions of shares 3,363 3,363

NAV/share (€) 5.24 4.24

(1) Pro-forma GAV, including transactions underway for investment in Adeslas and partial divestment in Agbar. Listed investees were valued by multiplying the number of shares by the closing price at the date considered. Non-listed investees were appraised using valuations at December 31, 2009.

(2) Pro-forma figures are based on the aggregate net debt/cash position reflected in the non-consolidated financial statements of Criteria CaixaCorp and holding companies, as well as on transactions in progress.

The active management that Criteria CaixaCorp carries out in its portfolio is reflected in the investments and divestments made throughout 2009.


Portfolio breakdown

ServICeS Total stake Board

representationMarket value

(€M)

Listed companies 16,514

energy 7,963

Gas Natural 36.43% 5 out of 17 5,065

Repsol 12.68% 2 out of 16 2,898

Infrastructure 2,771

Abertis 25.04% 7 out of 20 2,771

Services/other 5,780

Agbar 44.10% (1) 5 out of 13 1,314

Telefónica (2) 5.16% 2 out of 17 4,372

BME 5.01% 1 out of 15 94

Non-listed companies 566

PortAventura Group (3) – – 505

Real estate portfolio 100.00% 5 out of 5 61

INSurANCe AND FINANCIAl ServICeS

Listed companies 3,589

International banking 3,589

GF Inbursa 20.00% 3 out of 16 1,343

Erste Group Bank 10.10% 1 out of 18 995

The Bank of East Asia 9.81% (4) 1 out of 18 501

Banco BPI 30.10% 4 out of 25 574

Boursorama 20.85% 2 out of 10 176

Non-listed companies 2,802

Insurance 2,409

SegurCaixa Holding Group 100.00% 9 out of 10 2,384

GDS-Correduría de Seguros 67.00% 1 out of 1 25

Specialized Financial services 393

InverCaixa Gestión 100.00% 7 out of 7 186

CaixaRenting 100.00% 5 out of 5 62

Finconsum 100.00% 8 out of 8 123

GestiCaixa 100.00% 7 out of 7 22

Treasury shares 47

Pending commitments 862

TOTAl GAv 24,380

(1) Agbar is subject to a transaction underway (pending completion), which will narrow the total stake to between 15% and 25%, and will result in the addition of Adeslas to the SegurCaixa Holding Group.

(2) 1.03% held through financial contracts.(3) Comprises Port Aventura Entertainment, S.A. (50%, with 6 out of 13 board members) and Mediterranea Beach & Golf Resort, S.A. (100%,

with 5 out of 6 board members).(4) In January 2010 Criteria subscribed to a share capital increase, lifting its ownership stake to 14.99%.

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Investments in listed companies are valued at the 2009 closing price, while investments in non-listed companies are based on the company’s valuations at December 31, 2009. The methods used in these valuations are generally accepted by the market and identical to those used in the December 31, 2008 valuations.

The distribution of the portfolio’s gross asset value is detailed in the above graph.

Taking into account the Adeslas-Agbar and The Bank of East Asia deals (committed in 2009 and completed in 2010), at December 31, 2009, investments in the services sector account for 67% of the company’s GAV. The financial sector represents the remaining 33%, which is 16 percentage points higher than at

the date the company was floated and 6 points higher than at December 31, 2008. Criteria CaixaCorp therefore continues to follow a strategy of rebalancing its investment portfolio, placing greater weight on financial sector investments without excluding particularly attractive investments in the services sector. Criteria CaixaCorp’s strategic goal is to continue shifting the portfolio mix over the medium to long term until the financial services sector accounts for 40%-60% of the total.

At December 31, 2009, listed companies accounted for 82% of Criteria CaixaCorp’s total portfolio, while investments in non-listed companies represented 18%. This distribution is similar to that seen at December 31, 2008.

14% Insurance and Specialized financial services

5% Non-listed services

69%Listed services


Financial(26%)

Services(74%)

Distribution of the portfolio’s gross asset valueDecember 2008

17% Insurance and Specialized financial services

2% Non-listed services

65%Listed services


Financial (33%)

Services(67%)

December 2009

In 2009, Criteria almost doubled its weight in the financial portfolio compared to its position at the IPO.


Details of the net asset value and its major components in 2009 are shown in the lower chart. A further breakdown is provided in the table on the next page, which takes into account both investments made by Criteria CaixaCorp and those made by the Group holding companies.

The net asset value rose 34% due to recovery in the value of listed companies and to the investments made during the year.

The company’s overall debt also rose significantly after planned investments were carried out. These primarily include subscriptions to capital increases carried out in Gas Natural (€1,313 million) and Erste Group Bank (€635 million in a capital increase and €17 million in market acquisitions). Debt at December 31, 2009 included committed transactions in connection with the acquisition of Adeslas (€1,178 million), divestment in Agbar

82%Listed

18% Non-listed

December 2009

81%Listed

19% Non-listed

Distribution of the portfolio: listed and non-listedDecember 2008

Evolution of NAV € million

18,196GAV

Net investments Change in valueInvestment commitments

Adeslas Agbar BEA

NAV

Net debt

862

(3,944)

14,252 17,616

(6,764)

24,380

31/12/2008 31/12/2009

2,147

3,175

1,178 (647)(*) 331

3,009

(*) Assuming that the final stake in Agbar will be 25%, which would require 100% acceptance of Agbar’s de-listing tender offer.

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(€647 million) and investment in The Bank of East Asia (€331 million). These transactions will be completed in 2010.

As a result of the foregoing, Criteria’s debt level stands at 28%. This figure remains below the mid-term debt/GAV target of 30%.

At December 31, 2008, Criteria’s only source of financing was a €6,500 million credit facility extended by ”la Caixa”. This facility matures in July 2011 and bears interest at a variable

rate of Euribor + 100 basis points. As part of Criteria’s specific plan to implement the new financing policy, discussed above, in late 2009 the company signed contracts for two €1,000 million fixed-interest loans maturing in 2013 and 2016, issued bonds on the capital market totaling €1,000 million (maturing in 2014) and reduced the maximum drawdown permitted on the aforementioned credit facility to €5,500 million.

Gross asset value (GAV) € million

Market value 31/12/08

Investments/divestments Change in value

Market value 31/12/09

Treasury shares 18 19 10 47

Gas Natural 3,239 1,313 513 5,065

Repsol 2,337 – 561 2,898

Abertis 2,115 – 656 2,771

Agbar 964 – 350 1,314

Telefónica 3,736 (48) 684 4,372

BME 77 – 17 94

Banco BPI 463 10 101 574

Boursorama 84 – 92 176

The Bank of East Asia 248 – 253 501

GF Inbursa 1,121 – 222 1,343

Erste Group Bank 252 652 91 995

Other listed stakes 40 (39) (1) –

TOTAL LISTED 14,694 1,907 3,549 20,150

TOTAL NON-LISTED 3,502 240 (1) (374) (2) 3,368

Other investment commitments

Adeslas – 1,178 – 1,178

Agbar – (647) (647)

The Bank of East Asia – 331 – 331

TOTAl GAv 18,196 3,009 3,175 24,380

(1) Corresponds to capital calls paid in VidaCaixa and subscription of the capital increases carried out in SegurCaixa Holding, VidaCaixa, FinConsum and CaixaRenting. The CaixaRenting capital increase subscription was paid in December 2009.

(2) Corresponds to changes in the values of non-listed companies at December 31, 2009, based on new assessments.


Reconciliation of pro-forma debt with debt recognized at December 31, 2009€ million

Borrowings (1) (6,560)

Net balance of receivables/payables and others 352

Net debt of holding companies 306

Investment commitments (862)

Criteria CaixaCorp net debt position (6,764)

(1) Includes interest payable classified under current liabilities.

Evolution of proforma net debt€ million

Pro-forma net debt

OtherCommitted investments

Dividends received

Dividends paid

GAVDebt/GAV

Net debt

18,19622%

24,38028%

(6,764)

31/12/2008 31/12/2009

(3,009)

(millones €)

Deuda neta31/12/2008

(3.944)

(2.147)

1.022 (297)

(4.862)Inversiones Netas

Otros

(536)

31/12/2009

Dividendos

Pagados(6.764)

Dividendos

Cobrados

(3,944)

1,022

(2,147)

(297)(536)

(862)

(862)

Invers.comprom

.

(3.009)

Evolución deuda neta

GAV18.196Deuda/GAV 22%

24.380 28%

Investment portfolio

International banking _104

Insurance and specialized financial services _122

Services _136

6_c.

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TheBPIGroupisthethird-largestprivatefinancialgroup in Portugal in terms of business volume.BPI is a multi-specialist financial group focusingprimarilyonbankingactivities.Itoffersacompletelineoffinancialproductsandservicesforcorporate,institutionalandindividualcustomers.

The BPI Group primarily operates in Portugal, holding a strong competitive position in this highly developed market, and in Angola, an emerging economy that has seen strong and sustained growth in recent years. Through its 50.1% stake in Banco de Fomento, S.A. (BFA), BPI is a leader in the Angolan market.

2009 highlights

In 2009 BPI’s shareholder structure was modified when, on March 3, 2009, BCP sold its qualifying holding in BPI (87,214,836 shares) to Santoro Finance in an off-market sale, pursuant to the December 2008 agreement signed between BCP and Santoro Financial Holdings, S.A. (hereinafter Santoro). The 9.69% qualifying holding is attributed to Santoro, as sole owner of the share capital and voting rights of Santoro Finance, as well as to Isabel José dos Santos, as shareholder of Santoro.

At the General Meeting held on April 22, 2009, the shareholders of BPI resolved to increase the number of members on the Board of Directors from 23 to 25 and approved the appointment of two new directors. One of the new directors was Ignacio Álvarez Rendueles, proposed by Criteria, raising Criteria’s representation on BPI’s Board of Directors to four members.

At the same meeting, the shareholders also resolved to raise the limit on voting rights, as established in the bank’s by-laws, from 17.5% to 20%.

On October 1, 2009, ”la Caixa” and BPI signed a strategic collaboration agreement to provide services to companies operating in Spain and Portugal. As part of the agreements, the banks will open two specialized business centers, namely the ”la Caixa” Centro de Empresas de Mercado Ibérico in Madrid and the BPI Gabinete de Empresas Espanholas in Lisbon. This lays the grounds for the largest corporate-client banking network in the Iberian Peninsula, with 80 ”la Caixa” business centers in Spain and 54 BPI centers in Portugal at December 2009.

Business performance during the year

Banco BPI’s total assets grew 10% in 2009. Customer funds and the lending guaranties portfolio rose 0.6% and 1.2%, respectively, compared to 2008.

BPI’s net profit at December 31, 2009 was €175 million, up 16% on the prior year, and ROE stood at 8.8%. Given that in December 2008 the bank sold 49.9% of Banco de Fomento, S.A. (BFA/Angola) to local investors, BPI’s 2009 profit includes only 50.1% of that investee, while the 2008 figure included 100%.

BPI’s net interest income fell 8.7% during the year due to stagnation in business volumes and lower margins. However, this decrease was partially offset by the rise in income from financial operations, as commissions and fees remained stable. Furthermore, the cost containment measures implemented in Portugal (number of branches remained stable at 805, while the number of employees dropped 301 to 7,599, primarily due to early retirements) offset the expansion in Angola, where 16 new branches were opened (currently 129) and the number of employees rose by 240 to 1,838.

Despite the current adverse economic environment, Banco BPI has one of the best capital adequacy positions in Portugal and a good liquidity position. It shows the best loans/deposit ratio in the Portuguese banking sector (132%) and customer deposits as its main source of funding. BPI is the only major Portuguese bank that has not issued government-backed debt. Banco BPI’s non-performing loan rate was 1.8% in December 2009, and its coverage ratio was 99%, one of the best in the country.

BPI is the only iberian bank that maintains its pre-crisis (i.e., pre-June 2007) credit rating, although it has been assigned a negative outlook. The BPI Group’s long-term S&P rating is A, negative outlook, at July 2009, while its Moody’s rating at September 2009 is A1, negative outlook, and its Fitch rating (August 2009) is A+, negative outlook. The ratings are based on the bank’s attractive market position, the solid and stable management of its executive team, its adequate credit risk profile, the best track record in asset quality among its peers, and its comfortable liquidity and capital adequacy positions. The rating agencies applied the negative outlook in 2009 to reflect BPI’s challenge of improving the profitability of the Portugal business in the current adverse macroeconomic situation, its dependency on the Angola business, and the bank’s exposure to the Spanish corporate sector.

Chairman: Mr. Artur Santos Silva First Vice-Chairman: Mr. Carlos da Camâra Pestana Second Vice-Chairman: Mr. Fernando UlrichTrading market: Portugal Website: www.bancobpi.pt

Banco BPI (BPI)A solid brand with operational excellence

Criteria CaixaCorp informeanual09 _ 6. La cartera de participadas _ 105Criteria CaixaCorp annualreport09 _ 6. Investment portfolio _ 105

CriteriaCaixaCorpinBancoBPI

Market value (€ million) 574

Stake held 30.10%

Voting rights 20% (by-law stipulated maximum)

Board representation 4 out of 25

Keyfinancialdata€ million

Incomestatement 2009 2008 2007

Net interest income 617 676 662

Total operating income 1,165 1,182 1,216Net operating income 490 484 562Net attributable profit 175 150 355

Business 2009 2008 2007

Lending and guaranties 34,465 34,069 32,483Customer funds 34,372 34,176 32,037

Business volume 68,837 68,245 64,520Attributable equity 1,847 1,498 1,635Tier I 8.6% 8.8% 6.2%

Total Tier 11.0% 11.3% 9.9%

Datapershare 2009 2008 2007

Total number of shares (million) 900 900 760EPS (€) 0.19 0.17 0.47Dividends accrued (€) 0.07 0.19 0.16

Operatingindicators 2009 2008 2007

Cost/income ratio 58% 59% 54%NPL ratio 1.8% 1.2% 1.0%ROE 8.8% 9.0% 22.4%Branches 945 933 864

Employees (year end) 9,437 9,498 9,345

BPI is a benchmark in Portugal for liquidity and asset quality. It maintains its capital adequacy ratios, placing it ahead of its main competitors in the current context of economic and financial crisis.

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Photo taken and loaned by Criteria shareholder, Pol Ibars, winner of the “Criteria as seen by its shareholders 2009 ” photographic competition

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Our opinion...

The ”la Caixa” Group has held a stake in BPI since 1995. Since then, ”la Caixa” has backed the bank on a process of its many changes and acquisitions, through which Banco BPI has transformed from an investment bank to a retail bank. BPI currently ranks third among private financial institutions in Portugal.

As an investment in the financial sector, BPI is a strategic fit with Criteria’s investment philosophy. In 2009 Criteria reiterated its commitment as core shareholder through market acquisitions of BPI shares bringing its total stake to 30.1% at December 31, 2009. Criteria also increased its representatives on BPI’s Board of Directors, to four out of 25. Pursuant to Bank of Portugal authorization of August 2006, Criteria may acquire up to a 33% stake in BPI.

Banco BPI has taken advantage of opportunities arising in the Portuguese and international markets (especially in connection with former Portuguese colonies) to grow and to fine-tune its skills. As a result, its total assets have risen 15% per year, on average, over the last five years, achieving a market share of 13% in Portugal and nearly 17% in Angola.

BPI ranks among the top banks in Portugal in terms of liquidity and asset quality. It maintains its capital adequacy ratios, which places it in an advantageous position for growth and consolidation in Portugal, once the current economic crisis subsides. The banks’ planned expansion in Angola through its stake in BFA will enable it to further maximize the potential for growth and relevant banking activity in that country, while maintaining its position in the Angolan market.

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BoursoramaisaFrenchfinancialonlinedistributioncompany forming part of the Société GénéraleGroup(itsmainshareholder,witha56%stake). Itwas incorporated in 1995 and currently has totalassetsofapproximately€3,100million.

Boursorama is one of the leading European online distributors of savings products and operates in four countries. In France, Boursorama is a key player in online banking and a leading distributor of online financial information. Boursorama Banque (France) combines excellent customer serve with the most competitive rates. In the United Kingdom and Spain, it is one of the top three online brokers. Boursorama also operates in Germany with a 92.9% stake in OnVista AG through its OnVista Bank brand.

2009 highlights

In early 2008, ”la Caixa” and Boursorama publically announced their intention to jointly create an online bank in Spain. This joint venture was launched in 2009 under the name Self Bank. During the year, ”la Caixa” and Boursorama signed a shareholders’ agreement and requested a banking license from the Bank of Spain. Following new technological developments, in 2009 Self Bank launched its one-stop banking service. In addition to brokerage services and savings products, since June Self Bank has offered a wide range of financial products. Despite the difficult market conditions, the bank’s year-end marketing campaign tripled the number of accounts opened in the fourth quarter.

After the reorganization of the Group in Germany, in the third quarter OnVista Bank launched a new competitive and innovative brokerage services offer. The launch of On Vista Bank was highly successful, as evidenced by the spectacular fourth-quarter rise in the number of accounts.

In October 2009, Boursorama appointed Hugues Le Bret, a member of the Société Générale Group Management Committee, to the Board of Directors, replacing Vincent Taupin as Chairman/CEO, effective January 1, 2010.

Vincent Taupin was appointed to carry out new duties within Société Générale Group.

As Boursorama is currently expanding, it does not distribute dividends.

Business performance in the year

In 2009 Boursorama’s total assets rose slightly, to over €3,100 million. The number of orders executed hit a new all-time high, increasing 10% compared to 2008.

The number of new accounts opened was up 11%, driven by the spectacular rise in bank accounts opened in France (36%). Customer deposits (life insurance, investment funds and savings accounts) were 22% higher in 2009 after recovering from their 2008 fall.

Boursorama reported net profit of €49 million, 2% lower than in the previous year. 2009 results were affected by non-recurring income and expenses in connection with the sale of 49% of Self Bank España to ”la Caixa” (proceeds of €14 million), as well as by the impairment recognized on transactions in Germany (€11 million).

Net interest income dropped 13%, mainly due to lower margins and income from advertising in France and Germany, as a result of the economic situation. These reductions were more than offset by the 15% rise in fees and by the 10% reduction in costs implemented at Boursorama.

Against the backdrop of the current financial crisis, Boursorama’s capital adequacy position is double that of the major French banks and far exceeds regulatory requirements. The company has no problems with its asset quality or NPL ratio and has a reduced securities portfolio. Throughout the year, Boursorama maintained its lending position in the interbank market and has a leverage ratio far below the average for French banks. Boursorama does not have a rating.

Our opinion...

In 2007, Criteria CaixaCorp exceeded the 20%-mark for its stake in Boursorama, strengthening its position in 2008 reaching the 20.9%. This shareholding was secured to reflect the long-term outlook for this investment, which was ratified in the joint venture agreement signed between ”la Caixa” and Boursorama. Criteria CaixaCorp’s interest in Boursorama remained stable throughout 2009.

Chairman: Mr. Vincent Taupin CEO: Mr. Vincent TaupinTrading market: France Website: www.boursorama.com

BoursoramaLeading online distributor of savings products in Western Europe


CriteriaCaixaCorpinBoursorama


Stake held 20.85%

Voting rights 20.85%




Net interest income 75 86 85Total operating income 200 210 219

Net operating income 68 62 68

Net attributable profit 49 50 48

Business 2009 2008 2007

Net lending 1,706 1,783 1,883

Customer funds 11,909 9,224 13,152Business volume 13,615 11,008 15,035Attributable equity 628 578 553

Tier I 28% 17% 8.7%


Total number of shares (million) 87.3 86.9 86.9EPS (€) 0.56 0.57 0.55


Cost/income ratio 66% 71% 69%ROE (Net profit/average equity) 8.1% 8.8% 9.0%

Branches 14 14 20Employees (year end) 731 746 911

Boursorama is one of the leading European online distributors of savings products, with operations in France, the United Kingdom, Germany and Spain.

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Boursorama’s strategy revolves around developing its position in the countries in which it operates (France, Spain, the UK and Germany), while looking for acquisition opportunities in the rest of Europe. Boursorama’s management team has led the company through a number of successful acquisitions and absorptions in recent years, with six entities acquired for €540 million since 2002.

Boursorama is a solid, stable institution, with no liquidity problems and a low NPL ratio. The current financial crisis has not significantly affected the company due to its type of business and the fact that it is not excessively touched by times of market volatility.

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ErsteGroupBankwasfoundedin1819asAustria’sfirstsavingsbank.Itwasfloatedin1997todevelopthe retail bankingbusiness inCentral and EasternEurope. Since its flotation, its customer base hasgrown both organically and through numerousacquisitions,from600,000to17.5million.95%ofitscustomersareEuropeanUnioncitizens.ErsteGroupBank employs over 50,000 professionals servingcustomersatmorethan3,200branchofficesineightcountries (Austria, the Czech Republic, Slovakia,Romania,Hungary,Croatia, SerbiaandUkraine). Itis currently the second-largest banking group inAustriaandoneofthemaingroupsinCentralandEasternEurope.ThebankisthemarketleaderintheCzechRepublic,SlovakiaandRomania.

2009 highlights

In response to the difficult market situation and the new international capital adequacy standards, on October 30, 2008, Erste Group Bank announced that it was in negotiations with the Austrian government for the issue of Tier I eligible participation capital of up to €2,700 million. The proposed issue was aimed at shoring up the bank’s capital base and providing liquidity for Austrian companies. On February 27, 2009, Erste Group Bank and the Austrian government launched the issue. This Austria-specific instrument is perpetua, and has an initial cost of 8%. It does not entail the issue of ordinary or convertible shares, it does not carry voting rights, and it does not establish restrictions in the dividend policy. A total of €1,764 million was subscribed in this issue, in part by the Austrian government (€1,224 million) and in part by private investors (€540 million).

At the General Meeting of May 12, 2009, the shareholders of Erste Group Bank approved the distribution of dividends of €0.65 per share, as well as the appointment of Juan Mª Nin, CEO of ”la Caixa” and Vice-Chairman of Criteria, to Erste Group Bank’s Supervisory Board and Strategy Committee.

In order to strengthen their strategic alliance, on June 4, 2009 Criteria, ”la Caixa,” Erste Group Bank and the Erste Foundation signed the following agreements: (i) a preferred partnership agreement between Criteria and the Erste

Foundation, the controlling shareholder of Erste Group Bank, to govern their relationship as shareholders of the bank and to confirm both the amicable nature of the dealings between the entities and the long-term strategic outlook for the investment; (ii) an agreement between ”la Caixa”/Criteria and Erste Group Bank to define certain corporate and sales collaboration areas; and (iii) a collaboration agreement between the ”la Caixa” Foundation and the Erste Foundation regarding collaboration in social welfare projects.

On October 29, 2009, Erste Group Bank announced a share capital increase, not subject to guarantee, of up to €1,920 million (up to 60 million shares at a maximum price of €32 per share), in order to shore up the bank’s capital ratios and improve its capital structure. The bank also announced that this share capital increase would not be applied to return the participation capital already issued. On November 17, 2009, Erste Group Bank successfully completed the capital increase for €1,740 million (60 million shares at €29 per share). Pursuant to the preferred partnership agreement Criteria and the Erste Foundation signed in June 2009 to regulate their relationship as shareholders of the Erste Group Bank, Criteria subscribed 36% of the aforementioned share capital increase. The subscription was primarily carried out through acquisition of the Erste Foundation’s subscription rights in Erste Group Bank, for a nominal amount of €1 each. Criteria’s overall investment in this capital increase amounted to €635 million, bringing its total interest in Erste Group Bank to 10.1%.


In 2009 Erste Group Bank’s total assets remained in line with the 2008 figure. Net lending and deposits rose 1.5% and 3%, respectively, bringing the loan/deposit ratio to 115%. This reflects the strength of the retail banking business model strategy and the bank’s ability to finance growth in lending with customer deposits.

Net operating income stood at €3,771 million, up 25.8% on 2008 thanks to the increase in operating revenue (improved net interest income and trading income) and the reduction in costs. The bank’s cost/income ratio improved from 57.2% in 2008 to 50.2% in 2009.

Erste Group Bank’s net profit was €903 million, 5.1% higher than at December 31, 2008. Profit was mainly affected by higher loan loss provisions (from 88 basis points to 161 basis points). All Central and Eastern European subsidiaries, except in the Ukraine, ended the year with a profit on their income statements. The NPL ratio rose from 4.7% in 2008 to 6.6% at the current year end and ROE stood at 9.1%.

Chairman: Mr. Heinz Kessler CEO: Mr. Andreas TreichlTrading market: Vienna Website: www.erstegroup.com

Erste Group Bank AG A reputable brand and leader in Austria and CEE


CriteriaCaixaCorpinErsteGroupBank


Stake held 10.1%

Voting rights 10.1%




Net interest income 5,221 4,913 3,946

Total operating income (1) 7,579 6,999 6,155Net operating income (1) 3,771 2,997 2,513

Net attributable profit 903 860 1,175

Business 2009 2008 2007

Net lending 124,180 122,402 110,660

Customer funds 147,802 145,835 136,783Business volume (2) 271,982 268,237 247,443Attributable equity 12,709 8,079 8,452Tier I 9.2% 6.2% 6.1%Total Tier 12.7% 9.8% 10.1%


Total number of shares (million) 378 317 316EPS (€) 2.57 2.89 3.92Dividends accrued (€) 0.65 0.75 0.65


Cost/income ratio 50% 58% 59%NPL ratio 6.60% 4.70% 4.20%ROE 9.10% 9.60% 14.10%Branches 3,205 3,159 2,908Employees (year end) 50,488 52,648 52,442

(1) Does not include profits from financial assets.

(2) Excluding off balance-sheet customer funds (figures not available).

Erste Group Bank was founded in 1819 as Austria’s first savings bank. Today, the bank provides services to 17.5 million customers through 3,200 branches in eight countries.

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Erste Group Bank’s capital adequacy ratios strengthened during the year, with Tier Total rising from 9.8% in 2008 to 12.7%, and Tier I moving from 6.2% to 9.2%. This improvement was mainly due to the participation capital issue in the first half of the year (€1,764 million) and to the share capital increase of €1,740 million in November 2009.

At the General Meeting in May 2010, the directors of Erste Group Bank will propose to shareholders the distribution of a €0.65 per share dividend against 2009 profits, maintaining the dividend approved in 2008.

As per the latest report published in December 2009, Erste Group Bank’s long-term S&P rating remained at A throughout the two years of the crisis, with a revision to negative outlook in October 2008 to reflect the possible downturn of the eurozone economy. The rating is bolstered by the excellent quality of the bank’s name in Austria and the European Union, the stability of its management team and its comfortable liquidity position.

Our opinion...

The investment in Erste Group Bank fits into Criteria’s international expansion plan in Central and Eastern Europe, a geographic region classified as strategic at Criteria’s IPO.

Erste Group Bank is an excellent partner for Criteria in the Central and Eastern European region, as it has a strong and diversified presence in these markets. It is a leading retail banking chain with strong business performance, a stable shareholder base and a consolidated management team that has led its successful expansion in the region.

The increase in Criteria’s stake in Erste Group Bank from 4.9% to 10.1% is a key step in the company’s strategy to shore up the relationship with Erste Group Bank, the top banking chain in Central and Eastern Europe. This region boasts high mid- and long-term growth potential and a stable framework, as the majority of the region’s countries are members of the European Union.

Thanks to Erste Group Bank’s business model, liquidity position, and large, diversified and well-managed client base, the bank brought in solid operating profits that place it in a strong position for overcoming the current economic crisis.

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Founded in 1965, Grupo Financiero Inbursa (GFI)offers services in commercial and retail banking,assetmanagement,lifeandnon-lifeinsurance,andpensionplans.Italsoprovidessecuritiesbrokerageand asset custody services. It is the sixth-largestMexicanfinancialgroupbyassets,and the largestbyassetmanagementandcustodyservices.Itistheleading provider of property/casualty insuranceandabenchmarkcommercialbank.GFIshareshavebeen tradedon theMexican stock exchange since1994andformspartoftheMexbolIndex.Itisoneofthe largestfinancialgroups inLatinAmericabymarketcapitalization.

2009 highlights

At the General Meeting held on April 30, 2009, shareholders approved the distribution of a dividend of MXN 0.50 per share, up 11% on the prior year.

On July 28, 2009, it was reported that Gonzalo Gortázar Rotaeche replaced Francisco Reynés Massanet as the substitute for Isidro Fainé Casas on the Grupo Financiero Inbursa Board of Directors.

On September 7, 2009, the company announced the creation of the Inbursa Foundation, which grew from collaboration between ”la Caixa” and GFI. The Foundation’s social projects will aim to foster employment, promote health initiatives and education, and support the development of international cooperation projects. GFI has contributed a total of MXN 1,000 million (€53 million) for the Foundation’s budget.


In 2009, GFI’s total consolidated assets grew 27% in comparison with the previous year. Gross lending rose 10% while customer deposits were up 5% thanks to the 21% increase in off balance-sheet deposits.

Grupo Financiero Inbursa’s net attributable profit under Mexican accounting regulations was up 132%, to MXN 8,068 million. This increase was mainly due to the 41% improvement in net interest income as a result of higher lending with better margins, and to the rise in income on financial transactions. These improvements were partially

offset by higher allowances for non-performing loans, in line with the management team’s prudent policy.

The Group’s NPL ratio was 2.8% (3.1% for Mexican banks as a whole), while the coverage ratio was 358% (170% in the Mexican banking system).

As part of its retail banking business plan, prepared in conjunction with ”la Caixa”, GFI opened 102 new branches in 2009, bringing its total number of offices to 198 at the year end.

The Group maintained a good liquidity position, strengthening its lending position in the interbank market and refraining from debt issues.

The capital adequacy ratio of Banco Inbursa (which represents 70% of the Group’s total assets) was approximately 22%, in line with the ratio at December 31, 2008, and the highest among its main competitors.

In 2009, Banco Inbursa’s S&P long-term rating remained unchanged at BBB with stable outlook, GFI as a Group does not have a rating. This rating is based on the bank’s high capital levels, good asset quality, high coverage ratio, strong efficiency indicators, adequate liquidity and financing position, and its potential to grow in the Mexican market thanks to the retail banking strategic alliance with Criteria/”la Caixa”. The bank kept its positive rating despite its loan and related-party concentration and exposure to currency risk. S&P’s rating for Mexico is BBB+ / stable.

Our opinion...

The investment in GFI fits in with Criteria’s international expansion plan. GFI is a strategic alliance for expanding retail banking in Mexico in collaboration with an experienced management team and the Slim family. GFI contributes its infrastructure and knowledge of the Mexican market to optimize the cross-selling of banking products. Criteria, through ”la Caixa”, contributes the experience and know-how needed for developing the retail banking segment. To this end, ”la Caixa” and GFI have co-designed a retail banking business plan. The main commercial focus will be securing deposits while maintaining a prudent policy regarding mortgage and consumer lending.

GFI serves as a springboard for expansion in the Americas. The shareholders’ agreement signed between the Slim family and Criteria establishes that Criteria will be GFI’s exclusive partner, while GFI will be the sole expansion vehicle for the financial business of the Slim family and Criteria in the Americas.

Chairman: Mr. Marco Antonio Slim Domit CEO: Mr. Marco Antonio Slim Domit Trading market: Mexico Website: www.inbursa.com.mx

Grupo Financiero Inbursa Mexico’s sixth-largest financial group by assets, and largest by asset management and custody services


KeyfinancialdataFigures in MXN million and according to Mexican accounting regulations


Net interest income 9,234 6,571 3,873Total operating income 10,425 5,083 5,842

Net operating income 6,561 1,539 2,768

Net attributable profit 8,068 3,481 5,166

Business 2009 2008 2007

Net lending 142,724 130,983 73,192

Customer funds 352,510 335,735 246,115Business volume 495,234 466,718 319,307Attributable equity 61,747 54,355 40,419

Tier I (Banco Inbursa) 22.1% 21.9% 19.4%Total Tier (Banco Inbursa) 22.4% 22.3% 19.6%


Number of shares (million) 3,334 3,334 3,135

Net profit 2.42 1.04 1.65Dividends accrued 0.50 0.45 0.40


Cost/income ratio (1) 23% 41% 29%NPL ratio 2.8% 2.5% 1.8%ROE (Net profit/average equity) 13.9% 7.3% 13.7%

Branches 198 96 91Employees 5,994 5,751 5,499

(1) NPL provisions were excluded from ordinary income, while results were included using the equity method.

The investment in GFI represents a strategic alliance for expanding retail banking in Mexico and is a springboard for expansion in the Americas.

CriteriaCaixaCorpinGFInbursa

Market value (€ million) 1,343

Stake held 20.00%



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Foundedin1918,TheBankofEastAsia(BEA)isthefifth-largestbank inHongKong in termsofassetvolume,andthelargestindependentbank.Itisthesecond-largest foreign banking chain in China bynumberofbranches, receiving the “best localizedforeign bank” distinction in 2009. BEA offerscommercial, personal, corporate, and investmentbankingtoclientsinHongKongandChina.ItalsoservestheChinesecommunityabroadthroughitspresenceinsoutheastAsia,NorthAmerica,andtheUnitedKingdom.ItislistedontheHongKongstockexchange since 1930 and formspart of theHangSengindex.

2009 highlights

At the Ordinary General Meeting held on April 16, 2009, shareholders approved the distribution of a final dividend of HKD 0.02 per share against 2008 profits (compared to HKD 1.18 per share in 2007) and a bonus share issue of one new share for every 10 shares held, to commemorate the bank’s 90th anniversary.

On June 1, 2009, the Board of Directors of BEA appointed Isidre Fainé Casas as the first board member from a Western country. The appointment was ratified at the bank’s Extraordinary General Shareholders’ Meeting on December 4, 2009. In late August 2009, Isidre Fainé also joined BEA’s Nomination Committee.

To strengthen the strategic alliance between BEA, ”la Caixa” and Criteria, the following agreements were signed on June 22, 2009: (i) a strategic investment agreement between Criteria and BEA to regulate the terms of Criteria CaixaCorp’s shareholding in BEA; (ii) a strategic collaboration agreement between ”la Caixa”, Criteria and BEA to maximize their respective commercial and business opportunities; and (iii) a letter of intent between the ”la Caixa” Foundation and the Bank of East Asia Charitable Foundation Limited to explore and carry out Corporate Social Responsibility initiatives.

At the presentation of results for the first half of the year, on August 25, 2009, BEA announced the distribution of an interim dividend of HKD 0.28 per share, up 33% on 2008.

On November 5, 2009, the bank issued hybrid capital instruments in the amount of US$ 500 million. These instruments comprised a combination of subordinate debt

maturing on November 5, 2059 and perpetual preference shares. This issue, traded on the Singapore exchange, was the first of its type in Hong Kong, and has strengthened BEA’s capital ratios. The bank has an early redemption option in 2019.

In application of the agreements signed in June, on December 30, 2009, the bank announced a HKD 5,113 million share capital increase through the private placement of funds (preferential subscription rights not applicable) with two of its strategic partners, Criteria (subscribing HKD 3,698 million) and the Japanese bank Sumitomo Mitsui Banking Corporation (subscribing the remaining HKD 1,416 million). This transaction, which concluded on January 14, 2010 with the admission to trading of the new shares issued, will allow BEA to enhance its business, especially with respect to its growth strategy in China, and to boost its capital ratios. The transaction raised Criteria’s stake in the Hong Kong-based bank from 9.81% to 14.99%.


BEA’s total consolidated assets grew 2% from 2008 to 2009. The rebound of its Chinese activity in the second half of the year led to an 8% rise in gross lending and a 5% rise in deposits. The loan/deposit ratio remained stable at approximately 72%.

BEA’s net attributable profit increased from HKD 39 million to HKD 2,565 million. The increase in results from financial operations, which was affected by non-recurring items in 2008, partially offset the lower net interest income, higher operating expenses due to expansion in China, and higher NPL provisions. The cost/income ratio improved from 90% to 60%. The NPL ratio stood at 1% at BEA, 0.5% in Hong Kong and 0.2% in China.

BEA maintained growth in its core business thanks to the contribution of the banking activity in China, which accounted for 46% of pre-tax profit. Between January 2009 and January 2010 the subsidiary BEA China continued its expansion plan, opening 11 new branches, for a total of 74 offices in late January 2010. BEA’s expansion in China will be further driven by the entry into force in November 2009 of Supplement VI to the Mainland and Hong Kong Closer Economic Partnership Arrangement, which eases the requirements for opening offices in the Guangdong province. Between November 2009 and January 2010, BEA China opened three new branches in Guangdong, which is adjacent to Hong Kong and has the largest population and the highest per-capita income in China, with a total of 24 offices.

The Group maintained its lending position in the interbank market and boasted a 43% liquidity ratio, well above the 25% legal minimum required by the Hong Kong Monetary

Chairman: Dr. The Hon. Sir David Li Kwok-po CEO: Dr. The Hon. Sir David Li Kwok-po Trading market: Hong Kong Website: www.hkbea.com.

The Bank of East Asia (BEA) Largest independent bank in Hong Kong and one of the best-positioned foreign banks in China


CriteriaCaixaCorpinBEA

Market value (€ million) 501(*)

Stake held 9.81%(**)

Voting rights 9.81%(**)


(*) In addition to the market value of the 9.81% stake (€501 million), Criteria has committed to an investment of €331 million in the aforementioned share capital increase pending completion. Consequently, the value of this investment at December 31, 2009 was €832 million.

(**) On January 14, 2010, and following completion of BEA’s share capital increase announced on December 30, 2009, the stake and voting rights held increased to 14.99%.

KeyfinancialdataFigures in HKD million and according to Hong Kong accounting regulations


Net interest income 6,747 6,793 5,977Total operating income 10,188 6,457 8,814Net operating income 4,059 678 4,123

Net attributable profit 2,565 39 4,144

Business 2009 2008 2007

Net lending 246,309 229,295 217,487Customer funds (*) 364,618 340,329 310,003Business volume (*) 610,927 569,624 527,490Attributable equity 35,165 32,146 30,099Tier I 9.4% 9.1% 7.4%

Total Tier 13.3% 13.8% 12.6%


Number of shares (million) 1,849 1,673 1,574Net profit 1.36 0.02 2.65

Dividends accrued 0.30 1.41 1.51


Cost/income ratio 60% 90% 53%NPL ratio 1.0% 0.7% 0.6%ROE 7.7% 0.1% 14.6%Branches 251 238 215

Employees 10,540 10,863 9,493

(*) Excluding off balance-sheet customer funds (figures not available).

The investment in BEA is a quality platform in Asia, given the bank’s prestigious reputation, its diversified business and its focus on China.

BEA

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Photo taken and loaned by Criteria shareholder, Gloria Berenguer, winner of the “Criteria as seen by its shareholders 2009” photographic competition

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Authority. BEA China also issued bonds totaling CNY 4,000 million, making it the first Hong Kong bank to issue this type of product to retail investors. The issue shores up and diversifies the subsidiary’s financing sources, and better prepares it to handle accelerated activity growth in China.

Following the hybrid capital issue of HKD 500 million in November 2009, BEA’s capital adequacy ratio stands at 13.3%. In addition, the share capital increase carried out in January 2010 will place its Tier 1 at above 11%, in line with the sector average, and its Total Tier higher than 15%.

BEA has also announced the payment of a final dividend for 2009 of HKD 0.48, compared to the HKD 0.02 paid in 2009 against 2008 profits. The final dividend is subject to approval by shareholders at the General Meeting to be held on April 22, 2010.

S&P’s January 2009 long-term rating for BEA was A-, while Moody’s September 2008 rating was A2. These ratings are backed by BEA’s comfortable solvency position, satisfactory liquidity, well-adapted risk management leading to good quality assets, a diversified business model, and the potential of its activity in China. S&P’s negative outlook revision in January 2009 reflects the possibility that the current global economic situation, especially in Hong Kong and China, could negatively affect results and the quality of the bank’s assets. S&P’s rating for Hong Kong is AA+ and A+ for China.

Our opinion...

The investment in BEA fits in with Criteria’s strategy to acquire significant stakes in foreign financial institutions.

BEA has become the exclusive vehicle for Criteria’s expansion in banking and financial institutions in the Asia-Pacific region, and a quality platform in a region with one of the highest growth potentials worldwide.

BEA is an attractive investment option, given its experienced management team, prestigious reputation, diversified business model, and focus on China, where it is one of the best-positioned foreign banks. BEA has operated in China since 1920 and has capitalized on its long-standing presence to become, in March 2007, one of the first four banks worldwide to obtain a license to operate in China as a local bank. In coming years, BEA China is expected to continue leading the Group’s growth, thanks to its major organic expansion in that country. The current commercial network of 74 branches is expected to be expanded to 100 in the short term.

The above developments, along with Criteria’s recently strengthened position in BEA, will pave the way for the two groups to reach new agreements aimed at further improving their relationship and bolstering their guarantees for success.


Photo taken and loaned by Criteria shareholder, Ester Vinyals, winner of the “Criteria as seen by its shareholders 2009” photographic competition

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SegurCaixaHoldingoperatesinthecomplementarypensionfundsandindividualandcorporateinsurancemarkets. It employs a multi-channel distributionstrategy, focusing mainly on bancassurancedistributionthroughover5,300”laCaixa”branches.SegurCaixa Holding also uses other distributionmeans, such as the intermediary and advisorychannel for businesses and groups, Internet – viathe”laCaixa”website–,andtelephonesales.

2009 highlights

The most important development for SegurCaixa Holding in 2009 was undoubtedly the agreement reached for the acquisition of Adeslas, Spain’s leading health insurance company. Adeslas, whose market share exceeds 20%, will be incorporated into the insurance group during 2010. This acquisition will enable SegurCaixa Holding to strengthen its presence in the non-life branch, offer a more complete and diversified product portfolio, and operate through additional distribution channels. The three million new insurance customers contributed by Adeslas will also provide SegurCaixa Holding with a springboard for major growth.

In 2009 SegurCaixa Holding deepened its Corporate Social Responsibility commitments by adhering to the United Nations Global Compact, a set of ten principles in the areas of human rights, labor, the environment and anti-corruption. VidaCaixa, the Group’s life insurance and pension funds manager, adopted the UN-backed Principles for Responsible Investment, making it the first Spanish company to fully adhere to these principles. These initiatives, among others such as participation in the children’s vaccination project “Global Alliance for Vaccines and Immunization” and certification as a family-friendly business, confirm the Group’s strategy to include corporate social responsibility throughout all its activities and actions.

In 2009 many sectors of the Spanish economy were once again severely affected by the economic crisis. Although the insurance sector has been more resilient than others, it has begun to feel the effects of the turmoil. The closure

of businesses and companies, the rise in unemployment, the reduction in vehicle and property sales, and the credit clampdown negatively affected insurance premiums tied to the repayment of mortgages and loans, as well as comprehensive risk insurance, builder insurance against structural failure, and automobile insurance, to name the most important. Nevertheless, the recovery in financial markets in 2009, the steepening of the interest rate curve, and the greater tendency of households to save during recessions have boosted the savings business (pension funds and life insurance).

According to the insurance research organization, ICEA, the Spanish insurance sector grew 1.2%. However, while this increase was driven by life insurance premiums (up 5.8%), non-life premiums fell 2.6% due to the weakness in the automobile branch, the main non-life business in Spain (down 5.4%). Life insurance premiums rose significantly, due to the tendency of households to save during recessions, while growth in other main non-life businesses, such as health and multi-risk (5.1% and 3.1%, respectively), was considerably lower than in previous years.


Despite the difficult economic environment, the SegurCaixa Holding Group performed well in 2009, closing the year with significant growth in both revenue and profits.

The Group’s net profit stood at €209 million, up 9% on the prior year. Business volume (premiums and pension funds contributions) rose 55% to €4,952 million, while the volume of funds managed exceeded €31,000 million.

The Group’s savings line performed especially well during the year, as premiums and pension funds contributions were up 101% and 29%, respectively, compared to the prior year, closing 2009 at €4,243 million. Growth in life-risk and accident insurance was curbed by the unfavorable economic environment, rising only 5% to €417 million.

In the non-life insurance business, in 2009 SegurCaixa Holding built up its product offer for SMEs and self-employed workers and continued to consolidate its auto business, with premiums reaching €88 million (80% higher than the booked premiums in 2008). Growth in multi-risk home insurance and health insurance was also above market growth rates, closing the year at €166 million (up 13%) and €38 million (up 28%), respectively.

Chairman: Mr. Ricardo Fornesa RibóCEO: Mr. Tomás Muniesa Arantegui Website: www.segurcaixaholding.com

SegurCaixa HoldingLaunching the Group’s transformation


45.5%Life-saving (individual)

27.6% Individual pension funds

13.1% Life-savings (group)

12.5% Group pension funds

Premiumsandpensionfundscontributions(2009)€4,243 million

CriteriaCaixaCorpinSegurCaixaHolding


Stake held 100.00%




Figures under IFRS

Premiumsandcontributions 2009 2008 2007

Life-risk and accident 417 397 378

Home 166 148 140

Health 38 29 18Auto 88 48 19Total risk 709 622 555

LIfe-savings insurance 2,541 1,263 1,058

Pension funds contribution 1,702 1,318 1,172Total savings 4,243 2,581 2,230

Total risk and savings 4,952 3,203 2,785

Assetsmanaged 2009 2008 2007

Technical provisions 17,467 16,345 16,367Pension funds and

EPSV personal pension 13,584 11,860 11,283Total assets under management 31,051 28,205 27,650

Keyratios 2009 2008 2007

ROE 32% 40% 33%

Solvency ratio 1.44 1.31 1.16


Net profit 209 192 160Equity 770 503 457

Subordinated liabilities 296 296 296Average number of employees

SegurCaixa Holding Group 911 888 740

The acquisition of Adeslas will make SegurCaixa Holding one of the top insurers in Spain.

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Our opinion...

The foundation of SegurCaixa Holding’s leadership in the Spanish insurance sector is its exclusive access to the client base of the largest banking branch network in Spain.

In addition, the Group’s good reputation and image among its customers, its leading position in terms of quality of service and the development of new products will allow the Group to build on its current market share. The integration of Adeslas, with its distribution channels and 3 million clients, will be a huge source of potential growth and crossed sales.

Lastly, the current economic situation could give rise to new acquisition opportunities that would match Criteria CaixaCorp’s strategic plan and add to the Group’s organic growth.


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Riskinsurancepremiums(2009)€709 million

23.4%Home insurance

12.4%Auto insurance

5.3%Health insurance

24.6% Life-risk and accident (group)

34.2% Life-risk and accident (individual)

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GDS-CorreduríadeSeguros isan insurancebrokerspecializing in advising companies on insurance-related matters. The company analyzes the riskexposure of all its clients and negotiates themost appropriate coverage with highly-solventinsurancecompanies.GDSalsohandlespaperworkand manages the claims process to safeguard itscustomer’s interests. GDS Correduría de Segurosis 67% owned by Criteria CaixaCorp and 33% byMarch-Unipsa,theMarchGroup’sinsurancebroker.

2009 highlights

As indicated above, the ICEA research group estimates that the Spanish insurance sector grew 1.2% in 2009. Yet while the life business increased 5.8%, the non-life business, GDS-Correduría de Seguros’ main business line, fell 2.6%, in line with the declining trend seen in recent years. The downwards pressure on insurance premiums in the difficult economic context is directly lowering brokerage income.


In 2009, net profit fell 34% to €98 million, primarily due to the 8% decrease in brokered premiums. Commissions were down 10%, in line with the drop in volume of premiums.

In the automobile branch, brokered premiums in 2009 were down 7% on the prior year. The 12% growth in vehicle fleet partially offset the drop in the operational leasing and the individual automobile insurance businesses.

In view of the downward trend in the automobile business, the company is building up its general corporate insurance business. The improved results in renewable insurance for companies has partly mitigated the 20% drop in construction insurance, resulting in an overall decrease in this business line of 10%.

Our opinion...

As GDS-Correduría de Seguros advises companies on all aspects of their insurance needs, it is a perfect complement to the SegurCaixa Holding Group’s other businesses, allowing it to participate in business segments not already covered.

We consider that the company’s new strategy of focusing on insurance for businesses is a positive step forward.

Sole administrator: Mr. Miguel Tarré Tarré Website: www.gdsseguros.com

GDS-Correduría de SegurosShifting the business focus


CriteriaCaixaCorpinGDS-CorreduríadeSeguros


Stake held 67.00%



Keyfinancialdata€ thousand


Fees charged 9,144 10,673 10,613

Other operating income 110 108 352Financial results 124 764 603

Operating expenses (5,419) (5,582) (5,683)

Net profit 2,771 4,175 3,973


Brokered premiums net of cancellations 98,388 106,922 111,848Equity 409 513 611Dividends paid 2,875 4,274 3,833Average number of employees 48 49 44

GDS-Correduría de Seguros has redesigned it activities to focus on the most profitable businesses.

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CaixaRenting offers operational and financialleasing services for vehicles, equipment, and realstate.ItfocusesitsservicesonindividualsandSMEsand distributes its products mainly through the”la Caixa” branch network. The company alsomanagesfleetsofvehicles.

2009 highlights

After a sharp decrease in the first half of 2009, vehicle registrations throughout Europe recovered in the second half of the year, largely due to the vehicle renewal plans offered in different markets. At December 31, 2009, total European vehicle registrations were down 1.6% compared to 2008, while registrations in Spain were down 18%.

The operational leasing business was especially complicated in 2009, given that the government incentives to reactivate the automobile sector did not apply to leased vehicles.

In this context, the annual purchasing volume dropped 20% in CaixaRenting, which is significantly lower than the sector average (down 50%).

The operational leasing business for equipment and other assets was also affected by the crisis. Nevertheless, CaixaRenting reported the same level of new investment as in 2008.


At December 31, 2009, CaixaRenting managed leased assets amounting to €1,072 million, in line with the prior year. Of these assets, 52% were vehicles, 37% were equipment and 12% were real estate. CaixaRenting’s new investments fell 10%, with a total volume of €362 million. This decline was largely due to the economic crisis and the complex situation facing the automobile market.

Notwithstanding, CaixaRenting improved its position in the ranking of vehicle purchases, coming it at sixth.

The company manages approximately 35,000 vehicles, of which 32,000 are subject to operational leases and 3,000 are part of its fleet management business.

CaixaRenting closed the year with losses of €25 million, mainly due to losses on the sale of used vehicles (due to the current economic situation) and to an extraordinary provision for the decline in the value of assets and for loan losses (residual values and doubtful loans).

Our opinion...

The company’s main competitive advantage is its ability to sell products through its preferential access to ”la Caixa”’s distribution network, in addition to distribution through vendors. This channel offers access to the most profitable segments: individuals, self-employed customers and SMEs.

The company offers comprehensive management of all services related to the product, following the highest quality standards. This sets CaixaRenting apart from competitors and locks in customer loyalty.

CaixaRenting’s priorities for the coming year are to achieve margin growth, manage overdue receivables, and focus on sales of used vehicles.

We consider that once the current economic crisis has subsided, both the doubtful rate and the vehicle market (new and used) will level out. At that point CaixaRenting will be a streamlined company with high growth potential.

Executive Chairman: Mr. Antonio Vila Bertrán CEO: Mr. François X. M. Miqueu Website: www.caixarenting.es

CaixaRenting Company specialized in the operational leasing of vehicles, equipment, and real state of ”la Caixa”


CriteriaCaixaCorpinCaixaRenting


Stake held 100.00%





Net profit (25) (8) 5

Balancesheet 2009 2008 2007

Total leased assets 1,072 1,071 953


Total new investment 362 401 443New investment in vehicles 156 195 262

New investment in equipment and other assets 206 207 181

Fleet of vehicles under management (no.) 34,894 38,212 35,986

Number of employees 224 211 193

CaixaRenting will have high growth potential, once the economic crisis has passed.

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FinConsumoffersconsumercreditproductsthroughpointsofsale(distributorsofconsumergoodsandservices and automobile dealers, facilitated bythe ”la Caixa” distribution network and its owncommercial branches). FinConsumalso carries outdirectmarketingcampaigns.

2009 highlights

In 2009, the economic situation significantly affected consumer credit companies, bringing about higher doubtful rates, lower financed volume (due to the fall in spending) as well as liquidity problems.

Against this backdrop, FinConsum has made extraordinary provisions in its credit portfolio, and it has shored up its solvency. As FinConsum obtains financing from ”la Caixa”, it has not encountered liquidity problems.


On the business front, both outstanding loans and new investment fell by 6% and 20%, respectively. This decrease was mainly due to the following:

• Lower consumer confidence, higher unemployment, and the resulting decline in household spending, especially plunging vehicle sales.

• A selected portfolio based on strict risk and profitability criteria.

As a result of the rising cost of risk associated with default and the numerous extraordinary provisions made, the company ended the year with losses of €60 million.

Our opinion...

2009 was a difficult year for consumer financing entities and, consequently for FinConsum, mainly due to the higher doubtful rates and the drop in activity.

In preparation for 2010, FinConsum has stepped up both its technological base and its efficiency. The quality of the financing portfolio will be a top priority. The company is also maintaining and/or extending its agreements with large vendors, while managing a highly professional collections team.

We believe that once the current economic crisis has subsided, the consumer credit sector will once again be profitable and FinConsum will be prepared to meet the challenges of the future.

Chairman: Mr. Josep Ramón Montserrat MiróCEO: Mr. François X.M. Miqueu Website: www.finconsum.es

FinConsum”la Caixa”’s specialized consumer credit service at points of sale


CriteriaCaixaCorpinFinConsum


Stake held 100.00%





Interest income 50 40 38Gross profit 64 54 49

Loss for the period (60) (37) (10)


Outstanding loans 725 852 830Total assets 781 919 882


Consumer and direct credit contracts (no.) 249,844 337,222 336,177

Automobile credit contracts (no.) 12,233 13,865 17,651

Doubtful debt rate 14.0% 10.9% 7.7%Number of employees 379 369 280

FinConsum offers consumer credit products at points of sale.

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Outstandingloansandnetresult€ million

132

GestiCaixa manages mortgage and assetsecuritization funds promoted by ”la Caixa” andotherfinancialinstitutions.

2009 highlights

GestiCaixa set up five new securitization funds in 2009, doubling the volume issued compared to the prior year. The company ranks fifth in terms of new issues by securitization fund managers.

Even though the securitization bond markets remained closed during the year, securitization activity did not cease completely in Spain as entities have used securitization as a way to generate guarantees for the European Central Bank.

Total securitized assets amounted to approximately €86,300 million, down 35% on the prior year. This decrease was mainly because financial entities are not growing in assets and because the ratings of many originators have dropped considerably.


In 2009, GestiCaixa made total issues of €8,925 million, which represents a market share of 10%. Three funds were set up with ”la Caixa” and the remaining funds were set up in other entities (Banco Sabadell and Grupo Uralita).

At December 31, 2009, GestiCaixa managed 35 securitization funds, with a total volume of over €21,700 million (up 39% on 2008).

Net profit stood at €2 million, in line with figures for the previous year.

Our opinion...

We believe that this business has upside in the medium term, given that financial institutions will continue to securitize their asset portfolios in order to obtain liquidity once investor confidence is restored.

Chairman: Mr. Fernando Cánovas AtienzaCEO: Mr. Xavier Jaumandreu Patxot Website: www.gesticaixa.es

GestiCaixa Significant asset securitization activity in GestiCaixa, even though the securitization markets remain virtually closed


CriteriaCaixaCorpinGestiCaixa


Stake held 100.00%





Revenues 4 3 3

Net profit 2 2 2


Equity 2 2 2


Volume managed 21,703 15,632 13,961

Funds managed (no.) 35 31 26Volume issued 8,925 3,937 4,249New funds (no.) 5 6 4Number of employees 9 8 7

GestiCaixa set up five new securitization funds in 2009, for a total of €8,925 million.

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5% Mortgage funds - other entities

52%Asset funds ”la Caixa”

22% Asset funds - other entities

21% Mortgage funds ”la Caixa”

134

InverCaixais”laCaixa”’sassetmanagementcompany.It manages a wide range of products: investmentfunds,Open Ended InvestmentCompanies (OEICs),andportfolios.Italsoadvises”laCaixa”onmarketinginvestmentfundsmanagedbythirdparties.

2009 highlights

InverCaixa was a leader in net subscriptions in 2009, bringing in assets of nearly €1,600 million and notably improving its market share (from 6.9% at December 2008 to 8.5% at year-end 2009). The company ranks third among Spanish investment fund managers.

InverCaixa’s performance is commendable considering that the volume of assets managed in Spain fell 3%, with net outflows of €11,640 million from the sector.

The rate of outflows from investment funds is slowing down compared to the previous two years, as bank deposits are losing their appeal and certain financial entities are encouraging this type of investment product.


At December 31, 2009, InverCaixa had €14,780 million in CIS assets under management, which performed very well during the year, with a growth of 18%.

Funds managed by InverCaixa also ranked high in terms of returns, with almost 90% of assets between the first and second quartile. InverCaixa’s average return on managed funds was above the sector figures.

InverCaixa reported net profit of €7 million, higher than at the 2008 close.

Our opinion...

Despite difficulties in the sector over the past three years, we are confident that, as demonstrated in 2009, InverCaixa is well-positioned to maximize the sector recovery in the medium and long term as investors return, spurred by greater confidence and by the lower yields offered by other assets.

The focus on private and retail banking within the ”la Caixa” commercial network lays a strong foundation for InverCaixa’s future growth.

Executive Chairwoman: Ms. Asunción Ortega Enciso

InverCaixa In 2009, InverCaixa was at the forefront of net inflows of assets under management in Spain, notably improving its market share


CriteriaCaixaCorpinInverCaixa


Stake held 100.00%





Revenues 105 112 151

Net profit 7 4 9


Equity 95 93 29


Total assets under management 14,780 12,554 13,955

Investment funds 13,805 11,587 13,318

OEICs 975 967 637Market share 8.49% 6.91% 5.60%Number of employees 143 145 126

InverCaixa had €14,780 million in assets under management at year-end 2009.

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Patrimonio gestionado Resultado neto

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Evolutionofassetsundermanagementandnetprofit€ million

Investmentfundassets,byfamilytype

14% Mixed funds

8% Equity funds

34%Guaranteed funds

5% Others

2% Monetary funds

37% Fixed income funds

136

Abertis operates in the motorways,telecommunications infrastructure, airport, carpark, and logistics platform sectors. It is one ofthe leading European operators in transport andtelecommunications infrastructure management.Through its different infrastructure managementareas, Abertis is present in 18 countries spanningthree continents. In recent years the company hasdiversifiedboth its businesses and its geographicalpresence, and today approximately one-half of itsrevenuesaregeneratedoutsideSpain.

2009 highlights

The total yield received by Abertis shareholders in 2009, including final dividends, the bonus share issue and interim dividends, was 8.5% higher than in 2008.

On March 17, 2009, Acesa, an Abertis subsidiary, concluded the project to widen the AP-7 highway in Tarragona to three lanes. The project required a €150 million investment in Tarragona and formed part of the overall plan to widen 123 km of the AP-7 highway in the provinces of Tarragona and Gerona to three and four lanes, for a total cost of €500 million.

On May 11, 2009, the Board of Directors appointed Salvador Alemany as the new Chairman of the Abertis Group, while ratifying his duties as CEO. The former Chairman, Isidro Fainé, remains on the Board as First Vice-Chairman.

On May 26, 2009 the former CEO of Criteria CaixaCorp, Francisco Reynés was appointed to the Board of Abertis as an executive director.

The acquisition of Itínere’s 50% stake in the Spanish motorway concessionaire Avasa and its 50% and 75% stakes in the Chilean concessionaires Rutas del Pacífico and Elqui, respectively, for a total of €605 million, was completed on June 26, 2009.

As part of its fixed income program, on September 30, 2009, Abertis issued seven-year bonds with an annual coupon of 4.625%, for a total of €1,000 million.

For the fourth year in a row, Abertis is a member of the Dow Jones Sustainability Indices (both World and STOXX), coming in one point above the average in the three dimensions analyzed: economic, environmental and social.


In 2009 Abertis reported 6.9% growth in income and an 7.9% increase in EBITDA, mainly due to consolidation of the assets acquired in 2008 and 2009, the strong performance of the telecommunications business and its cost containment policy. These factors helped offset the slowdown in the toll roads and airports businesses. Net profit was €653 million, up 5.6% on 2008.

The sector and international diversification strategy carried out in recent years has allowed the Abertis Group to balance out its income statements, despite unfavorable global economic conditions.

In the toll roads business (74% of total Group income and 85% of EBITDA), average daily traffic (ADT) fell 3.2% (down 7.4% in Spain and no change in France). This was partially offset, in terms of income, by the additional revenue from the annual tariff revision.

In the telecommunications segment, the main business indicators improved as a result of the tariff revision for CPI-referenced contracts, the extended digital terrestrial television coverage, new contracts secured, new services rendered, and the positive performance of the satellite operators, Hispasat and Eutelsat.

In 2009 Abertis began focusing its future growth efforts on consolidating acquisitions made in recent years and increasing its current equity interests. Total investments amounted to €1,394 million in 2009, including the acquisition of Itínere’s equity holdings in various companies in which Abertis already held interests (Avasa, Rutas del Pacífico and Elqui).

Gross debt amounted to €14,932 million, up 3.9%, mainly in connection with the acquisition of Itínere’s assets. At December 31, 2009, the cost and average maturity of debt was 4.6% and 7.2 years, respectively. 84% of Group debt is financed at fixed interest rates or hedged through fixed-interest swaps.

Chairman and CEO: Mr. Salvador Alemany Mas Trading market: Spain (IBEX 35) Website: www.abertis.com

AbertisEuropean leader in infrastructure management


Abertis

Ibex 35

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CriteriaCaixaCorpinAbertisInfraestructuras


Stake held 25.04%





Net revenue 3,935 3,679 3,620

EBITDA 2,435 2,256 2,269

EBITDA Mg 61.8% 61.3% 62.7%

Operating income 1,483 1,448 1,485

Net profit 653 618 682


Total assets 24,637 22,221 20,828Equity 5,762 4,779 5,020

Net debt 14,590 14,059 12,510


EPS (€) 0.93 0.92 1.07

Dividends accrued (€) 0.60 0.58 0.53

Income/Operatingindicators 2009 2008 2007

ADT (average daily traffic) 23,828 25,697 26,450

Toll road management 2,923 2,756 2,751

Telecommunications management 541 431 396

Airport management 278 301 300

Number of passengers (TBI) (M) 22.6 24.5 23.6

Average number of employees 12,484 11,894 11,364

Abertis has focused its strategy on the reinforcement of its positions in assets where it currently participates, as well as in the control of its operating costs.

138

Our opinion...

Abertis’ low risk profile offers sustained growth and an attractive return. The company operates in regulated, transparent markets and generates stable, recurrent cash flow. The geographic and business diversification carried out in recent years has helped balance the income statement in a time of economic slowdown. Abertis strives to provide increasing and sustainable shareholder returns.

140

The Agbar Group is a multi-concession companywhichoperates inareas relatedtopublicservices,specificallyintheintegratedwatercycleandhealth.Agbar is the largestprivateurbanwater companyin Spain, providing service to nearly 13 millionresidents inmore than 1,200municipalities in allregionsofthecountry.Thecompanyalsoprovideswastewaterservicestoover8.3millionpeople.

The Agbar Group is one of the world’s leading water companies, supplying drinking water and wastewater services to over 10 million people in Chile, the United Kingdom, China, Colombia, Algeria, Cuba and Mexico. Agbar strikes a balance between respecting and conserving environmental resources and supplying communities with water suitable for daily use.

Up to now, the company’s healthcare business has been channeled through Adeslas, the Spanish health insurance market leader in terms of premium volume and clients, with almost 3 million insured clients. Prevention of health problems and promotion of good health are among Adeslas’ core values.

2009 highlights

On October 21, 2009, Criteria and Suez Environnement resolved to lead Agbar to launch a delisting tender offer for the 10% of share capital in free float, at €20 per share. After the bid is settled and Agbar’s shares are delisted, Criteria will acquire a 54.79% interest in Adeslas from Agbar for €687 million. Criteria will also sell Suez Environnement the number of shares in Agbar/Hisusa it needs to reach a 75.01% stake in Agbar, at a price of €20 per share.

At the Extraordinary General Meeting held on January 12, 2010, the shareholders of Agbar resolved as follows: (i) to request the delisting of Agbar shares, launching a delisting tender offer for 14,964,171 shares (10% of Agbar’s share capital), at €20 per share; (ii) to reduce share capital in Agbar with a charge to freely-distributable reserves, by redeeming the shares acquired through the delisting offer; and (iii) to approve the sale of Agbar’s 54.79% interest in Compañía de Seguros Adeslas, S.A. to Criteria CaixaCorp, S.A. for €687 million.

On January 14, 2010, Criteria CaixaCorp and Suez Environnement signed the definitive agreement, whereby

Criteria CaixaCorp undertakes to sell Suez Environnement the number of shares in Agbar/Hisusa it needs to reach a 75.01% stake in Agbar, at €20 per share. On the same date, Criteria and Agbar signed an agreement committing to the sale/purchase of stake in Adeslas.

With respect to Agbar’s investments, in 2009 the company’s Board of Directors approved a €20 million investment to acquire a 50% stake in Taeyong Environment Technologies (Taeyong Entec), a South Korean environmental technology company, thereby acquiring control over its operations.

In the environmental business line, Agbar acquired a 100% interest in Interlab, a laboratory specializing in environmental issues and industrial hygiene. This transaction forms part of Agbar’s clear strategy to shore up its environmental division.

In the healthcare business, in the first half of 2009 Adeslas acquired 28 dental clinics from Dental Line, enlarging its Spanish network of dental clinics and becoming the national sector leader.

In 2009 Agbar paid an extraordinary dividend against reserves of €2.00 per share and a final dividend against 2008 profits of €0.4081 per share. The total 2008 dividend therefore amounted to €0.6006 per share, up 10% on the prior year.


The Agbar Group reported a net profit of €166.8 million for 2009, down 29.1% on 2008. This decrease was mainly due to lower extraordinary gains, given that in 2008 the company had recognized an €81 million gain on the sale of shares in Suez, among other items.

Agbar’s various business lines all grew moderately, with operating income rising 4.5% and operating profit up 3.3%. This increase was mainly due to the addition to the consolidated Group of Essal in Chile and STC and to the change in the method used for consolidating Agbar’s interest in the China-based Jiangsu Water Group, both of which offset the impact of adverse exchange rates in Chile and the United Kingdom. Stripping out the effects of the change in the consolidated group and currency exchange, operating profit was similar to that recognized in 2008.

In 2009, the Agbar Group was awarded 33 new untreated water-related contracts (servicing 485,107 residents) and renewed 29 such contracts (servicing 170,614 inhabitants}, both for services in Spain. Regarding treated water, Agbar was awarded 20 new contracts (servicing 559,241 residents) and renewed 16 contracts (121,504 residents). Agbar was awarded 22 contracts to manage wastewater treatment facilities, under which the company will manage a volume

Chairman: Mr. Jorge Mercader Miró CEO: Mr. Angel Simón Grimaldos Trading market: Spain Website: www.agbar.es

Agbar Spanish leader in drinking water supply and health insurance



Incomestatement 2009(2) 2008(2) 2007(1)

Net revenue 1,851 1,771 2,861EBITDA 530 498 557

Operating income 348 333 371Net profit 167 235 353

Balancesheet 2009(2) 2008 2007(1)

Net debt 1,402 540 533Total assets 6,546 6,127 5,951Equity 2,688 2,705 2,695

Datapershare 2009(2) 2008(2) 2007(1)

EPS (€) 1.114 1.572 2.356Dividends accrued (€) 2.4081 0.5635 0.455

The completion of the transactions agreed between Criteria CaixaCorp and Suez Environnement will shift Agbar’s strategic interest to focus exclusively on the water and environmental businesses.

Operatingindicators 2009(2) 2008(2) 2007(1)

Revenue, Spain 1,177 1,124 2,302Revenue, Chile 416 386 340Revenue, UK 106 115 125

Revenue, China 24 – – Revenue, Others 11 10 3

(1) The Applus+ Group’s contribution to the consolidated income statement and the consolidated balance sheet for 2007 is shown under discontinued operations. The health segment (Adeslas) has been fully consolidated.

(2) The contribution of the health segment (Adeslas) to the consolidated income statements for 2008 and 2009 and to the consolidated balance sheet for 2009 is presented under discontinued transactions.

Photo taken and loaned by Criteria shareholder, Laura Salayero

142

of wastewater equivalent to 861,157 inhabitants. It also renewed 15 contracts to manage a volume of wastewater equivalent to 170,176 inhabitants. Lastly, Agbar was awarded 23 new contracts (289,233 residents) and renewed 13 contracts (129,869 residents) in the sewerage business.

In 2009 three major water quality and volume improvement projects were put into operation for the Barcelona metropolitan area. These projects include the Sant Joan Despí reverse osmosis plant (investment of €53 million) and the Prat de Llobregat desalination plant (€179 million), with nominal annual production capacities of 48 Hm3 and 60 Hm3, respectively, and widing the capacity of the brine collector (investment of €55 million).

In terms of Agbar’s international activities, in Chile the consortium formed by Agbar (51%) and Degrémont (49%) was awarded the contracts to build the Mapocho waste water treatment plant and to renovate the El Trebal waste water treatment plant, as well as to manage and maintain both plants (five- and seven-year contracts, respectively), for a total of €260 million.

At December 31, 2009, Adeslas had almost 3 million insured clients, up 5.6% on 2008. The Adeslas Group is the leading health insurance provider in Spain, with a market share of 21%.

Our opinion...

The completion of the transactions agreed between Criteria CaixaCorp and Suez Environnement will shift the company’s strategic interest to focus exclusively on the water and environmental businesses, and will entail its integration into the Suez Environnement Group. Nevertheless, Criteria will continue to serve on Agbar’s Board of Directors as a key minority shareholder. Shareholders will sign an updated agreement to reflect the new shareholder structure.

The inflow of funds from the sale of Agbar’s stake in Adeslas to Criteria CaixaCorp will allow the company to finance its present and future transactions.

The future of the Agbar Group will play out in a business in which government management is still key. An increased private share is, therefore, foreseeable, especially on an international scale, as the global economic crisis could speed up the privatization of water services to curb the drop in income from the construction sector. Agbar investments and services will be geared towards socially-responsible projects in stable environments, with legal certainty and recurring cash generation. The increasing population and scarcity of water resources will also trigger a greater use of water cycle technologies and management systems.


Agbar

Ibex 35

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Sharepriceperformancevs.benchmarkindicesCriteriaCaixaCorpinAgbar


Stake held 44.10%

Voting rights (1) 90%


(1) Joint stake with Suez Environment: joint control and concerted action in Agbar, based on the shareholders’ agreement signed on July 18, 2006, and amended on November 21 and December 19, 2007. This agreement and its amendments are effective until the definitive agreements signed on January 14, 2010, between Suez Environnement and Criteria CaixaCorp have been executed.

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BolsasyMercadosEspañoles (BME) integrates thesecurities registration, clearing and settlementsystems and the Spanish secondary markets.TheBMEGroupcomprisestheMadrid,Barcelona,Bilbaoand Valencia stock exchanges, AIAF Mercado deRenta Fija, MEFF, Iberclear, the Alternative EquityMarket (MAB),VisualTrader, BMEConsulting, BMEInnova,BMEMarketDataandInfobolsa.

2009 highlights

The stock market passed through two distinct phases in 2009. During the first phase, up to March, the downturn carried over from 2008 continued and the stock markets continued to plunge. However, the various government bail-outs and stimulus plans began to yield results at about that time, and the markets began recovering considerably. The capitalization of the Spanish stock market was over €1 billion, recovering the level lost in September 2008.

In 2009, BME launched several initiatives to strengthen its business, including: share price trading at three decimal points to improve liquidity and narrower price spreads, improved efficiency in post-trade processing thanks to Link Up Markets, the new trade repository for OTC instruments, and the launch of new indices such as the IBEX 35 Inverso, among others.


Performance highlights in the key business lines were as follows:

• Equity: Accumulated trading volume was €899,051 million in 2009, down 27.9% on the prior year. The number of shares traded was 118,697 million, 6.7% below 2008.

• Derivatives: Futures and options traded in BME’s derivatives market reached a record high in 2009, with 93.1 million contracts over the year, up 12% on 2008. Options on shares (35.5 million contracts) was 94% above the 2008 figure.

• Fixed income: Corporate debt trades amounted to €3.69 billion in 2009, which is a new annual record and represents a 53.8% rise on 2008. The number of transactions in 2009 was also an annual record, with 917,321 trades, up 13.6% on 2008.

BME’s net profit totaled €150 million in 2009. This was 21% lower than the figure reported in 2008, mainly due to the drop in activity in the equity line.

Our opinion...

We believe that BME’s share price has upside based on the recovery of the financial markets, the strength of its dividend yield, its well-positioned and efficient business model, and possible corporate moves in the sector.

Chairman: Antonio J. Zoido Martínez First Vice-Chairman: José A. Barreiro Hernández Trading market: Spain (IBEX 35)Website: www.bolsasymercados.es

BMEBME, an efficient, integrated and diversified business model


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CriteriaCaixaCorpinBEA


Stake held 5.01%

Voting rights 5.01%




Revenues 297 349 377EBITDA 210 250 285

Operating income 202 242 275

Net profit 150 191 201


Net debt (324) (431) (475)

Total assets 11,622 5,798 5,176Equity 453 466 499


EPS (€) 1,79 2,28 2,41

Accrued ordinary dividends (€) 1,99 2,00 1,55


Equity trading volume 899,051 1,246,349 1,672,399

Number of trades settled 34,822,132 40,295,729 43,568,231

The Spanish stock exchange is among the most liquid exchanges in the world.

Photo taken and loaned by Criteria shareholder, Ramón Fuentes

146

The Gas Natural Group is one of the ten largestmultinational European utilities and a leader inverticalgasandelectricityintegrationinSpainandLatinAmerica.Itisalsothelargestglobaloperatorofliquefiednaturalgas(LNG)intheAtlanticbasin.Following the recent merger with Unión Fenosa,GasNaturaloperatesin23countries,servingover20millionclients(9millioninSpain),andboastinganinstalledelectriccapacityof18GW.

2009 highlights

On April 14, 2009, the acceptance period for Gas Natural’s takeover bid of Unión Fenosa concluded, with 69.5% of the capital targeted accepting the offer. This brought Gas Natural’s stake in Unión Fenosa’s capital to 95.2%.

At the General Meetings of Gas Natural and Unión Fenosa held in June 2009, the shareholders of both companies approved the merger by absorption of Unión Fenosa and Unión Fenosa Generación into Gas Natural, at a swap rate of three Gas Natural shares for every five shares in Unión Fenosa. The merger was completed on September 7, 2009.

In order to finance the transaction, Gas Natural performed two successful share capital increases. In the first increase, in which preferential subscription rights were applicable, 447.8 million new shares were issued for a total of €3,502 million. In the second capital increase, 26.2 million shares were issued through the share swap defined in the merger project. Gas Natural also divested assets totaling €3,600 million, exceeding the €3,000 million debt-reduction divestment plan previously announced. The only regulatory divestment pending relates to 2,000 MW of combined cycle energy in Spain. As part of these divestments, Gas Natural sold 1% of Red Eléctrica Española (€43 million), 5% of Enagás (€155 million), 13.01% of Indra (€320 million), its gas business in Murcia and Cantabria (€330 million), 64% of the Colombian company EPSA ($1,100 million), 504,000 supply points and 412,000 gas customers in Madrid (€800 million), as well as energy production assets in Mexico ($1,225 million plus reimbursement of contributions and payables, for a total of $240 million).

Gas Natural has forecast operating synergies from the merger at €350 million. These synergies are expected to be fully apparent as from 2011. The company also expected annual savings of €200 million in recurring investment. In any event, in 2010 Gas Natural will present an updated

synergies plan that forecasts greater savings in costs and investments.

To refinance part of its debt and diversify its sources of financing through capital market issues, in 2009 and January 2010 Gas Natural made seven bond issues for a total of €6,950 million, with an average coupon of 4.7% and an average maturity at over seven years.


In 2009, Gas Natural completed its acquisition of Unión Fenosa, which enabled it to maintain double-digit net profit growth despite the fall in energy demand and the highly volatile energy prices, currency markets and financial markets.

EBITDA growth was over 50%, thanks to the full consolidation of Unión Fenosa’s activities as of April 30, 2009. Pro-forma EBITDA was in line with 2008, despite the current economic context. This evidences the strength of the regulated businesses, and it highlights the success of Gas Natural’s business model, which is based on a balance between regulated and non-regulated businesses in the gas and electricity markets.

Both the success of the capital increase and the strong demand for the company’s debt issues, along with its on-target compliance with the asset divestment plan, have allowed Gas Natural to greatly reduce its net debt. At December 31, 2009, the company had reduced the €18,260 million loan initially granted to finance the acquisition to a balance of only €7,500 million. Including the bond issue performed in January and collections from the sale of assets in 2009, in the first few months of 2010, the company further reduced the balance payable to €3,313 million.

Our opinion...

Of all the world’s energies, natural gas is expected to show the strongest growth in the future, driven by increasing concerns about 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, has a major foothold. In an increasingly globalized and complex scenario, vertical integration throughout the value chain and the availability of a competitive and flexible gas supply are a key advantage and a significant platform for growth.

The acquisition of Unión Fenosa was a key transaction for Gas Natural’s future strategy. Thanks to the deal, Gas Natural is set to meet its strategic plan objectives and to exceed 2012 targets, while maintaining its debt levels and boosting profits. The transaction has also set the stage for the creation of a vertically-integrated European leader in gas and electricity as well as the largest LNG operator

Chairman: Salvador GabarróChief executive Officer: rafael villaseca Trading market: Spain (IBeX 35) Website: www.gasnatural.com

Gas NaturalSpain’s leading integrated gas and electricity operator


CriteriaCaixaCorpinGasNatural


Stake held 36.43%





Net revenue 14,879 13,544 10,093EBITDA 3,937 2,564 2,277Operating income 2,448 1,794 1,567

Net profit 1,195 1,057 959


Net debt 20,916 4,913 3,690Total assets 45,352 18,765 15,420Equity 10,681 6,376 6,070


EPS (€) 1.48 2.36 2.14



Gas customers (‘000) 11,534 11,492 11,115Gas supply (GWh) 286,152 292,629 292,730

Electricity generated (GWh) 54,125 31,451 18,700

In 2009, Gas Natural completed its acquisition of Unión Fenosa, posting double-digit growth in net profit and dividends.

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EURO STOXX 50

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Photo taken and loaned by Criteria shareholder, Agustín Fernández

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in the Atlantic and Mediterranean area, serving over 20 million customers and boasting 18 GW of installed capacity throughout the world. Ultimately, this will allow Gas Natural to create value for shareholders through organic growth and integration synergies.

The absorption of Unión Fenosa, which will change the face of Gas Natural, has been backed by the company’s core shareholders, Criteria and Repsol. Both of these companies have pledged to contribute to Gas Natural’s equity in order to keep its rating from slipping after the acquisition of Unión Fenosa has been settled.

Gas Natural is committed to its policy of raising dividends by 10% each year, ensuring sustainable shareholder remuneration and growth.


Photo taken and loaned by Criteria shareholder, José Manuel Pérez de Sousa

150

RepsolYPFisaleadinginternationalintegratedoiland gas company, operating in over 30 countries,headingtherankinginSpainandArgentina.Itisoneofthetenlargestprivateoilcompaniesintheworldand the largest private energy company in LatinAmerica,intermsofassets.

2009 highlights

In 2009 Repsol’s new exploration business strategy proved to be a resounding success. The company discovered 15 oil and gas deposits, including some of the most important discoveries made anywhere in the sector in 2009. Thanks to these exploration efforts, Repsol has incorporated considerable new oil and gas resources, which will enable growth in reserves and production over the coming years. The new deposits are mainly in Brazil, northern Africa and Mexico.

In Brazil, the company discovered four deep-water deposits in the Santos Basin, an area with one of the greatest potential reserves in the world. Production tests performed by the company set the estimated recoverable volume from the Guará well (in which Repsol has a 25% stake) at between 1,100 million and 2,000 million BOE of light crude oil and gas, confirming the company’s high expectations for the area.

In the Gulf of Mexico, the company discovered the new Buckskin deposit, and production began in the Shenzi field (in which Repsol has a 28% stake), exceeding initial production estimates by over 20%. The platform has a production capacity of 100,000 barrels of oil and 8,900 barrels of natural gas per day. Repsol holds a solid position in the US Gulf of Mexico, one of the highest-potential deep-water areas in the world and one of the ten key projects in the company’s strategic plan.

Repsol also discovered six new natural gas deposits in northern Africa, four of which are in Algeria. The company’s exploration efforts also revealed a deep-water deposit in Sierra Leone, evidencing the potential of this previously unexplored region.

In Venezuela, the Perla 1x well was confirmed to be the largest gas discovery in Repsol’s history (recoverable gas

reserves of between 1,000 million and 1,400 million BOE). The company operates in a 50/50 deal with ENI, the consortium that discovered the deposit.

In connection with its stake in Gas Natural, Repsol subscribed the share capital increase carried out in that company as part of its acquisition of Unión Fenosa. Repsol’s investment in the capital increase amounted to €1,080 million and was proportional to its ownership interest held.


In 2009 oil industry earnings were shaken by the drop in demand and the fall in international oil and gas prices, as well as the production restrictions imposed by the Organization of the Petroleum Exporting Countries (OPEC) and the abrupt decline in refining and chemical processing margins.

Against this backdrop and in line with the rest of the sector, Repsol’s net profit fell to €1,559 million in 2009 (down 39% on 2008). Measures enacted by Repsol to respond to the current economic context included securing cost savings of €800 million in 2009 and the company reduced its planned investments for 2008-2012 from €28,900 million to €25,000 million.

Our opinion...

Over recent years Repsol YPF has been operating in an extremely complex environment, particularly during the last year and a half, in which the entire sector felt the effects of the global economic crisis. This caused international oil and gas prices and, especially, refining margins to plummet.

Nevertheless, Repsol’s business mix, which is more diversified than that of its peers, coupled with its undisputed position of leadership in the Spanish R&M market, its stake in Gas Natural – a leading gas and electricity utility in Spain and Latin America –, and the major advances made in the upstream business (especially the success of explorations carried out in the last two years) have all prepared the company to meet the challenges of the future.

The recent deposit discoveries are especially relevant, given that they set the bases for future growth in reserves and production. Thanks to these recent discoveries, Repsol boasts one of the most promising portfolios for the coming decade. The company is especially well-positioned in Brazil, as one of the main operators in a country with an extremely high growth potential.

Chairman: Mr. Antonio Brufau NiubóFirst Vice-Chairman: Mr. Luis Fernando del Rivero AsensioSecond Vice-Chairman: Mr. Isidro Fainé Casas Trading markets: Spain (IBEX 35), New York and Argentina Website: www.repsol.com

Repsol One of the world’s largest oil companies


CriteriaCaixaCorpinRepsolYPF


Stake held 12.68%

Voting rights (*) 14.31%


(*) Limited to 10% by the company’s by-laws.



Net revenue 49,032 60,975 55,923EBITDA 6,749 8,160 8,573


Net profit 1,559 2,711 3,188


Net debt 10,928 3,334 3,493



EPS (€) 1.29 2.23 2.61


Operatingindicators,ex-YPF 2009 2008 2007

Hydrocarbon reserves (M BOE) 1,060 1,067 1,117Hydrocarbon production (M BOE) 122 122 142Crude processed (Mtoe) 35 39 40

Thanks to its successful exploration efforts, Repsol has one of the highest expected future growth rates in the sector.

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152

Telefónicaisoneoftheworld’sleadingintegratedtelecommunications operators, with a majorpresence in Europe and Latin America. It is abenchmarkintheSpanishandPortuguese-speakingmarkets.Telefónicahasalmost265millionaccessesandoneof themostglobalprofiles in thesector,morethan60%ofitsbusinesscomesfromoutsidetheSpanishmarket.

ThecompanyisleaderinallofitsbusinesssegmentsinSpain,whereitboastsnearly47millionaccesses.In Europe, Telefónica operates in the UnitedKingdom, Germany, Ireland, the Czech RepublicandSlovakia,–inadditiontoSpain–,servingover49millionclients.Withnearly169millionaccessesinLatinAmerica,Telefónicaisleaderintheregion’slargest countries (Brazil, Argentina, Chile andPeru). ItalsohassignificantoperationsinMexico,Colombia, Venezuela, and Central America. TheGroupranksthirdinmarketcapamongtheworld’sleading telecommunications companies, is thelargest integrated European operator, and ranksthirdontheDJEUROSTOXX50.

2009 highlights

In October, Telefónica reiterated its 2010 EPS targets of €2.10 and dividends per share (DPS) target of €1.40 (up 21.7% on 2009 DPS of €1.15). The minimum DPS target for 2012 was set at €1.75.

Telefónica also announced its consolidated financial guidance, citing CAGR for 2008-2012 of (i) revenue: between 1% and 4%; (ii) OIBDA: between 2% and 4%; (iii) EBIT: between 4% and 7%; (iv) operating cash flow: between 5% and 7.5%; (v) CapEx (accumulated 2009-2012): €30,000 million; (vi) operating cash flow (accumulated 2009-2012): in excess of €64,000 million; and (vii) free cash flow (accumulated 2009-2012): in excess of €40,000 million.

Telefónica reiterated that over the next few years it will give special priority to the disciplined use of cash flow, focusing on dividend growth, stabilizing leverage and selective M&A processes.

At their Ordinary General Meeting, Telefónica shareholders approved a share capital reduction through the redemption of 141 million treasury shares. This reduction was carried out in December 2009. Shareholders also approved a plan

to encourage Telefónica Group employees to buy shares in the company, up to a total assigned value of €60 million.

In terms of investments, in 2009 Telefónica shored up its presence in both China and Germany, as well as its stake in the pay television business. The company also confirmed its investment in Italy by renewing the shareholders’ agreement in Telco, S.p.A. for three years, until April 27, 2013.

Telefónica and China Unicom formalized their strategic alliance by signing a share exchange agreement equivalent to US $1,000 million. Under the terms of the agreement, Telefónica gained control of 8.06% of the voting rights of China Unicom, while that company assumed 0.87% of Telefónica’s share capital with voting rights.

Telefónica signed an agreement with Telecom Italia for the purchase of 100% of Hansenet, one of the leading broadband operators in the German market, for a firm value of €900 million.

In the pay television business, Telefónica entered into an agreement with the PRISA Group and Sogecable for the acquisition of a 22% stake in Digital+, the pay television branch of the PRISA Group, for a firm value of €2,350 million (100%), with a total estimated investment of approximately €492 million.

In late 2009, Telefónica acquired 100% of the share capital of JAJAH for €145 million. This company provides Internet-based voice services and is based in Silicon Valley and in Israel.

In terms of divestments, Telefónica sold its 32.18% stake in Méditel, the second-largest mobile telephone operator in Morocco, for €400 million. The stake was sold to local shareholders of the company, alongside the 32.18% interest simultaneously sold by shareholder Portugal Telecom.

In compliance with the shareholder remuneration commitment of €1 per share prior to first half of 2009, Telefónica paid an interim dividend of €0.50 per share (gross) on account of 2009 profits. Subsequently, it paid a dividend of €0.50 per share (gross), charged against freely-distributable reserves.


Throughout 2009 and in a complex operating environment caused by the global macroeconomic situation, Telefónica stood out for its solid performance in a highly competitive sector. The company closed the year having met its stated financial targets, for the seventh year in a row. The broad diversification of operations, the company’s competitive leadership in the main markets, and its proven capacity to meet its targets have set the foundation for Telefónica’s future growth. At the same time, the company maintained

Chairman: Mr. César Alierta Izuel Vice-Chairman: Mr. Isidro Fainé Casas Trading markets: Spain (IBEX 35), US, Latin America and Japan Website: www.telefonica.es

TelefónicaLeading integrated operator in the European telecommunications sector


CriteriaCaixaCorpinTelefónica


Stake held (1) 5.16%

Voting rights 5.16%


(1) 1% subject to an equity swap.



Net revenue 56,731 57,946 56,441OIBDA 22,603 22,919 22,825


Net profit 7,776 7,592 8,906


Net debt 43,551 42,733 45,284



EPS (€) 1.71 1.63 1.87



Revenue – Spain 35% 36% 37%Revenue – Latin America 40% 38% 35%Revenue – Europe 24% 25% 26%Revenue – Other 1% 1% 2%

Total accesses (millions) 264.6 259.1 228.5

Telefónica stood out for its solid performance in a highly competitive sector, meeting all the financial targets set for 2009, for the seventh year in a row.

Telefónica

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154

notable operating efficiency, as demonstrated by the OIBDA margin and its high cash generation.

Telefónica’s net profit totaled €7,776 million in 2009, up 2.4% on 2008, with an EPS of €1.71, for a year-on-year increase of 4.5%. Operating cash flow rose 8% in organic terms, to €15,346 million, reflecting the company’s efforts to maximize efficiency and leverage economies of scale.

Results for 2009 show the company’s sound growth profile, underpinned by the value contributed by geographical and business diversification, its strong competitive edge in the markets in which it operates, and an efficient cost structure. Revenue from the Latin America businesses accounts for 40.5% of the Group’s total revenue, while Telefónica Spain and Telefónica Europe represent 34.7% and 23.9% of revenue, respectively.

The company’s financial strength gives it the flexibility necessary to move in the current complex credit markets and to reiterate its commitment to prioritizing shareholder remuneration in the use of cash flow generated.

At December 31, 2009 Telefónica had nearly 265 million accesses, an increase of 5.1% (13 million accesses) on December 2008 on a like-for-like basis. This growth was due to the strong sales efforts made in all its businesses and markets.

Our opinion...

Telefónica offers sustained growth, profitability, economies of scale, and geographical and business diversity. Continued shareholder remuneration, controlled debt levels and selective future acquisitions comprise the company’s main strategic objectives for the coming years and underline its value as a defensive investment. The company’s excellent cash-generation ability puts it on sound footing to meet dividend targets in the medium term, which sets it apart in the global economic context. Therefore, despite the macroeconomic difficulties being felt world-wide, Telefónica has reiterated its short- and mid-term guidance and its dividend targets to 2012.

156

PortAventura remains the premier theme park inSpainintermsofrevenues,visitsandprofitability,andrankssecondinsouthernEuropebynumberofvisits.Sinceitfirstopenedin1995,PortAventura’sprivilegedlocationontheCostaDorada(Tarragona)and steady growth through new attractions andnewbusinesseshasallowedtheparktodiversifyitsresort offer, becoming a tourist destination in itsownright.Thisclaimisborneoutbythe3,300,000visitorswelcomedin2009andthenewbusinessesunveiledduringtheyear.

2009 highlights

Port Aventura continued to enhance its offer with the opening of the Gold River theme hotel in July, and the October inauguration of the 14,500 m2 state-of-the-art Convention Center (capacity 4,000).

In December 2009 the company formalized its joint venture agreement with Investindustrial, the former majority shareholder of Gardaland, Italy’s most popular theme park. In accordance with the agreement, Investindustrial subscribed a share capital increase and paid a share premium in the company holding ownership of the theme park. Investindustrial’s total investment amounted to €94.8 million. To complete the deal, a corporate restructuring was undertaken, as a result of which Port Aventura S.A. was spun off into two independent companies. The first company, Port Aventura Entertainment, S.A., is 50% owned by Criteria and 50% owned by Investindustrial and comprises the Port Aventura theme park, the Caribe Aquatic Park and the operation of the Port Aventura, Caribe Resort, Gold River and El Paso hotels and the Convention Center. The second company, Mediterranea Beach & Golf Resort, S.A., is a solely-owned subsidiary of Criteria and holds the land for residential and commercial use, the three golf courses, the Beach Club, and ownership of the Gold River and El Paso hotels and the Convention Center. The hotels and Convention Center have been leased to Port Aventura Entertainment, S.A.

As in previous years, the company has furthered its commitment to its Corporate Social Responsibility project, to bolster the position and perception of Port Aventura as a responsible company committed to society and the environment. Therefore, in addition to the quality certificates already granted and confirmed for the resort’s different businesses, in 2009 it became a Certified Gold Audubon International Sanctuary member, the highest possible distinction for golf courses implementing environmentally sustainable management.


In the past season, the theme park attracted 3.3 million visitors, down slightly (7%) on the prior year. This decrease was lower than that recorded in the amusement park sector in general, stemming from the global recession.

Although the drop in number of visitors brought sales down to 14% below those of 2008, the impact at EBITDA level was partially offset by the cost containment policy implemented in mid-2008 and maintained throughout 2009.

Thanks to management’s efforts this season, the resort remains one of the most-popular theme parks in Southern Europe. The park will build further on its offer, as evidenced by the inauguration of the new Gold River theme hotel and the Convention Center in 2009.

Our opinion...

The joint venture agreement between Criteria and Investindustrial represents the start of a new era for Port Aventura, with renewed momentum.

The share capital increase will enable the company to carry out an ambitious investment program of around €80 million over the next four years. These investments will benefit patrons, employees and shareholders of Port Aventura, and will confirm its position as a leading theme park in southern Europe.

Port Aventura Entertainment, S.A.Chairman: Mr. Antonio MassanellWebsite: www.portaventura.es

Mediterranea Beach & Golf Resort, S.A.Chairman: Mr. Lluís Rullán ColomVice-Chairman: Mr. Antonio MassanellVice-Chairman: Mr. Juan Antonio Samaranch

Port Aventura The most popular theme park in Spain and one of the largest in southern Europe


Revenueandvisits

3.5

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Sales (left scale)

Number of visits (right scale)

40 32

163137

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EBITDA Ventas Número de visitas (millones)

02008

40

163

2009

32

137

€ million Million of visits

CriteriaCaixaCorpinPortAventuraEntertainment


Stake held 50%

Voting rights 100%


CriteriaCaixaCorpinMediterraneaBeach&GolfResort


Stake held 100%

Voting rights 100%

Board representation 5 out 6

Keyfinancialdata(1)€ million

Incomestatement 2009 2008

Net revenue 137.2 163.3

EBITDA 31.6 39.7

Net profit 8.1 9.4

Otherfigures 2009 2008

Average number of employees 2,014 2,363

Operatingindicators 2009 2008

Number of visits (thousands) 3,309 3,573

(1) As a result of the aforementioned corporate restructuring, financial data shown above corresponds to the Criteria Group’s interest in Port Aventura in 2009 (11 months) and 2008.

Criteria CaixaCorp’s consolidated recurring net profit rose 10% in 2009, ensuring attractive shareholder returns.

Financial analysis

a. Consolidated financial statements _160

b. Non-consolidated financial statements _171

c. Fiscal aspects and considerations _180

7

160

7_a. Consolidated financial statements

Criteria CaixaCorp consolidates its investees in accordance with International Financial Reporting Standards (IFRS). In particular:

• Subsidiaries and companies in which the group exercises control (generally holding over 50% of voting rights) are fully consolidated.

• Jointly-controlled entities are accounted for using the equity method.

• Companies in which the Group directly or in directly exercises significant influence are accounted for using the equity method. In the majority of cases, significant influence is understood to exist either when the Group holds at least 20% of voting rights of the investee or where the Group has signed collaboration agreements and is represented in the governing bodies of the investee.

• Other investees in which the Group owns less than 20% of the voting rights are accounted for as available-for-sale financial assets.

The following table shows the Criteria CaixaCorp Group’s shareholdings at December 31, 2009, grouped by the consolidation method applied:

FULL CONSOLIDATION

Insurance

SegurCaixa Holding 100.00%

VidaCaixa 100.00%

SegurCaixa 100.00%

AgenCaixa 100.00%

GDS-Correduría de Seguros 67.00%

SpecializedFinancialServices

CaixaRenting 100.00%

FinConsum 100.00%

InverCaixa Gestión 100.00%

GestiCaixa 100.00%

Services-Non-listedCompanies

Holret 100.00%

Mediterranea Beach&Golf Resort 100.00%

EQUITY-ACCOUNTED COMPANIES

Services–ListedCompanies

Gas Natural 36.43%

Abertis 25.04%

Agbar 44.10%

InternationalBanking

GF Inbursa 20.00%

BPI 30.10%

Boursorama 20.85%

Erste Group Bank 10.10%

The Bank of East Asia 9.81% (1)

Services–Non-listedCompanies

Port Aventura Entertainment 50.00%

AVAILABLE-FOR-SALE FINANCIAL ASSETS

Services–ListedCompanies

Repsol 12.68%

Telefónica 5.16%

BME 5.01%

(1) On January 14, 2010, the company subscribed a share capital increase bringing its stake to 14.99%.

Criteria CaixaCorp annualreport09 _ 7. Financial analysis _ 161

Consolidated balance sheet summary € million

31/12/2009 31/12/2008

CRITERIA CAIXACORP’S KEY CONSOLIDATED ASSETS

Goodwill and other intangible assets 872 912

Property, plant and equipment and investment properties 1,005 1,349

Investments accounted for using the equity method 11,969 8,519

Non-current financial assets 27,624 25,308

Other assets 519 482

NON-CURRENT ASSETS 41,989 36,570

Current financial assets 6,371 4,563

Cash and cash equivalents 354 1,543

Other current assets 392 825

CURRENT ASSETS 7,117 6,931

TOTAL ASSETS 49,106 43,501

CRITERIA CAIXACORP’S KEY CONSOLIDATED LIABILITIES

EQUITY 14,321 12,413

Provisions for insurance contracts and others 17,587 16,445

Long-term debt 8,672 7,871

Deferred tax liabilities 1,095 901

NON-CURRENT LIABILITIES 27,354 25,217

Provisions for insurance contracts 487 418

Borrowings from credit institutions and others 6,465 5,210

Other current liabilities 479 243

CURRENT LIABILITIES 7,431 5,871

TOTAL EQUITY AND LIABILITIES 49,106 43,501

Details of and movements in the main accounts of Criteria CaixaCorp’s consolidated balance sheet are as follows:

Goodwill and other intangible assets

Goodwill and other intangible assets mainly relates to those assets generated on the acquisition of the entire insurance business (SegurCaixa Holding Group) in 2007, as well

as the acquisition from ”la Caixa” of Morgan Stanley’s Collective Investment Schemes (CIS) and pension funds management business in 2008.

Investments accounted for using the equity method

Movements during the year were as follows:

162

The change in consolidation method relates to recognition of the Criteria Group’s stakes in Erste Group Bank and The Bank of East Asia, which had previously been classified as available-for-sale financial assets and are now accounted for using the equity method. The heading also relates to recognition of the Group’s 50% stake in Port Aventura Entertainment, S.A., the company resulting from the spin-off of the Port Aventura business, which was previously 100% owned by the Group and therefore fully consolidated at December 31, 2008.

In September 2009, Criteria CaixaCorp announced the agreement whereby Investindustrial would become a shareholder of a new company, Port Aventura Entertainment, S.A. The deal aims to bring in a partner with extensive experience in the leisure sector to optimize the management of the company’s different business lines. To do so, the two main activities were spun off in accordance with their respective needs and the maturity of each business.

Investindustrial secured its stake in December 2009 through the exclusive subscription of a share capital increase for €94.8 million, obtaining a 50% stake in Port Aventura Entertainment, S.A. Prior to this transaction, in November 2009, Port Aventura, S.A. was restructured through the partial spin-off into two independent companies:

• Mediterranea Beach & Golf Resort, S.A. (previously Port Aventura, S.A.), which holds

the land for residential and commercial use, the three golf courses and the Beach Club. This company also owns the El Paso and Gold River hotels and the Convention Center, but these assets have been leased to Port Aventura Entertainment, S.A. The spin-off entailed a capital reduction of €60 million.

• Port Aventura Entertainment, S.A., as beneficiary of the partial spin-off, comprises the Port Aventura theme park, the Caribe Aquatic Park, and the Port Aventura and Caribe Resort hotels, as well as operation of the Gold River and El Paso hotels and the Convention Center. The assets were contributed to an existing dormant company through a share capital increase of €60 million. As mentioned above, Investindustrial acquired its 50% stake in this company in December 2009 through the subscription of a €94.8 million share capital increase.

The change in value resulting from application of the equity method mainly corresponds to the inclusion of profits generated by these companies (€850 million), net of dividends received (€601 million).

Based on analyses performed by the Group and in application of conservative and prudent criteria, an impairment allowance of €250 million in respect of the value of certain banking investees was recognized at the 2009 year end. As the valuation adjustment entailed the application of an €81 million provision for

Movement of investments accounted for using the equity method € million

BALANCE AT 31/12/08 8,519

Acquisitions and capital increases 1,323

Gas Natural 1,313

BPI 10

Change in consolidation method 2,061

Translation differences 28

Change in value due to application of the equity method 288

Impairment allowances (250)

BALANCE AT 31/12/09 11,969


risks and expenses made in 2008, impairment allocated to the income statement amounted to €169 million, prior to income tax.

Details of goodwill of companies accounted for using the equity method at December 31, 2009 and December 31, 2008 were as follows:

Goodwill€ million

31/12/2009 31/12/2008

Abertis 691 691

GF Inbursa (1) 626 616

Gas Natural 587 587

BEA (1) 412 –

BPI 350 355

Agbar 274 274

Erste Group Bank 174 –

Boursorama 66 66

GOODWILL 3,180 2,589

(1) Goodwill subject to exchange rate variations.

Inventory, including stake percentage and market value of investments accounted for using the equity method€ million

31/12/2009 31/12/2008Company Stake Market value Stake Market value

Gas Natural 36.43% 5,065 37.49% 3,239

Abertis Infraestructuras 25.04% 2,771 25.04% 2,115

GF Inbursa 20.00% 1,344 20.00% 1,121

Agbar 44.10% 1,314 44.10% 964

Erste Group Bank 10.10% 995 – (1) –

BPI 30.10% 574 29.38% 463

The Bank of East Asia 9.81% 501 – (1) –

Boursorama 20.85% 176 20.95% 84

MARKET VALUE 12,740 7,986

Acquisition cost 12,064 8,681

GROSS CAPITAL GAIN (CAPITAL LOSS) 676 (695)

(1) These interests were classified as available-for-sale in 2008.

The percentage ownership and the market value of the investments in the main listed companies

accounted for using the equity method are as follows:

164

The most significant transactions in companies accounted for using the equity method in 2009 were Gas Natural and BPI.

In the case of Gas Natural and in connection with that company’s acquisition of Unión Fenosa, at the meeting on July 30, 2008, the Board of Directors of Criteria CaixaCorp resolved to back the acquisition of 45.306% of Unión Fenosa and Gas Natural’s resulting takeover bid for the remaining share capital. Criteria CaixaCorp pledged to contribute to Gas Natural’s equity in order to keep its rating from slipping after its takeover bid for Unión Fenosa has been settled.

On March 28, 2009, Criteria CaixaCorp subscribed €1,313 million in the share capital increase in Gas Natural, in proportion to its stake of 37.49%. The share capital increase, for a total of €3,502 million, formed part of the merger of Unión Fenosa and Gas Natural and was used to partially finance the latter’s takeover bid. This bid was successfully completed in April 2009. As Gas Natural’s core shareholder, Criteria backed this acquisition throughout the entire process. In 2009, in accordance with the prospectus for the takeover bid for Unión Fenosa filed with the CNMV, the Gas Natural stake was recognized as a jointly-controlled entity, while in the prior year it had been recognized as an associate. This change in treatment had no affect on the balance sheet or the income statement, as either way the stake fell under the heading “Investments

in associates and jointly-controlled entities.” On April 24, Gas Natural’s Board of Directors approved the merger by absorption of Unión Fenosa, S.A. and Unión Fenosa Generación, S.A. into Gas Natural. This approval was reported to the CNMV on the same date. At December 31, 2009, Criteria CaixaCorp’s direct interest in Gas Natural amounted to 36.43%.

With respect to BPI, in the first half of 2009, the Group increased its stake by 0.72% through an investment of approximately €10 million.

Financial assets

At December 31, financial assets mainly comprised available-for-sale financial investments, both fixed-income assets associated with the insurance business (€18,394 million) and equity investments in the investment portfolio (€7,594 million). Financial assets also include loans and receivables of €1,450 million, relating mainly to the financial services business.

The table above shows the movements in 2009 in equity holdings classified as available-for-sale.

The main investments and divestments carried out by the Criteria CaixaCorp Group in 2009 were the transaction in Telefónica and the acquisition of a further stake in Erste Group Bank, from 4.90% at December 31, 2008, to 10.10% at December 31, 2009. Criteria currently holds the second-largest stake in Erste Group

Movements in the balance of available-for-sale equity investments€ million

BALANCE AT 31/12/08 6,690

Acquisitions and capital increases 1,341

Telefónica 689

Erste Group Bank 652

Sale - Telefónica (776)

Valuation adjustments 2,314

Transfers (1,975)

BALANCE AT 31/12/09 7,594


Bank, after the Erste Foundation, which has a 26.1% interest.

With respect to the Telefónica transaction, in 2009 Criteria acquired 1% of the operator’s share capital (47,050,000 shares) for €689 million. Criteria also entered into a derivatives contract to hedge the fair value of this 1% stake. The contract initially matures on April 2010 and can be renewed at the request of Criteria CaixaCorp. Pursuant to the hedge contract,

the dividend rights arising from the hedged shares are exchanged for assumption by the counterparty of the risk of changes in the value of the shares and interest on the investment in the hedged item tied to the Euribor rate. Criteria maintains all the voting rights carried by the shares. In addition, Criteria sold 1% of the stake for a net gain of €265 million. Accordingly, at December 31, 2009, Criteria held a total interest of 5.16% in Telefónica.

Inventory, including stake percentage and market value of investments classified as available-for-sale€ million

31/12/2009 31/12/2008Stake Market value Stake Market value

Telefónica 5.16% 4,602 (1) 5.01% 3,736

Repsol 12.68% 2,898 12.68% 2,337

Bolsas y Mercados Españoles 5.01% 94 5.01% 77

The Bank of East Asia – – 9.86% 248

Banco Comercial Portugués – – 0.79% 30

Erste Group Bank – – 4.90% 252

Other – – – 10

MARKET VALUE 7,594 6,690

Acquisition cost 4,539 5,549

GROSS CAPITAL GAINS 3,055 1,141

(1) Includes gains of €230 million from the derivative contract.

On December 31, 2008, Criteria’s stake in Gas Natural was 36.43%, in Erste Group Bank it was 10.10%, and in Telefónica it was 5.16%.

166

Transfers include the interest held in Erste Group Bank (€1,280 million) and The Bank of East Asia (€695 million), which have been accounted for using the equity method after Criteria determined that it exercises significant influence in both these companies based on the increased stake held and the collaboration agreements signed.

Net gains recognized under equity in the consolidated balance sheet amounted to €1,896 million at December 31, 2009.

Current financial assets

The increase in current financial assets derives fully from the increased liquidity generated by sales of insurance company assets with repurchase agreements (€1,571 million). This liquidity was balanced with a charge to the current liabilities caption Borrowings from credit institutions. Current financial assets also comprise the guarantee deposit made with counterparties in connection with the derivative contract on the 1% stake in Telefónica, for €239 million.

Equity

The main variations during the year relate to higher net profit attributable to the parent company, which amounted to €1,317 million, and to greater valuation adjustments in equity (€1,041 million), as a result of the share price performance of the equity investments the Group recognizes at market value, with a balancing entry in equity.

Criteria paid final dividends against 2008 earnings of €201 million, and an interim dividend on account of 2009 profit for €335 million.

Provisions for insurance contracts and others

Provisions for insurance contracts and others amounted to €17,587 million at December 31, 2009, up 7% on the prior year. This increase is a result of the rise in premiums in the Group’s insurance business.

Movement in the Group’s equity€ million

BALANCE AT 31/12/08 12,413

Consolidated profit attributable to the Group 1,317

Valuation adjustments (increases/(decreases) recognized in equity) 1,041

Reserves of entities accounted for using the equity method 108

Minority interests 10

Treasury shares (19)

Final dividend – 2008 (201)

Interim dividend – 2009 (335)

Other movements in equity (13)

BALANCE AT 31/12/09 14,321


Long-term debt

At December 31, 2009, long-term debt stood at €8,672 million including a credit facility on which €3,547 million was drawn down during the year and two long-term loans of €1,000 million each, both of which are in Criteria’s name. Long-term debt also includes €1,679 million in connection with the credit facilities extended to the Group’s financial institutions. Financing in all these cases was granted by ”la Caixa”, as the permanent source of funds for Criteria’s investment and financing activities.

Long-term debt also includes Criteria’s first plain vanilla bond issue for €1,000 million, maturing in November 2014. Demand for the bond issue, which was placed with 200 institutional investors, was 2.2 times the amount of the issue. The bonds bear an annual coupon of 4.125% and have an implied yield of 4.233%. At

December 31, 2009, debt corresponding to the bonds at amortized cost was €992 million.

The bond issue was carried out under Criteria’s Fixed Income Program and registered with the CNMV on September 29, 2009. This program foresees the possibility of issues totaling up to €3,000 million. The final terms of the placement were registered with the CNMV on November 26, 2009. The objective of the issue was to diversify the sources of financing, lengthen maturities and create a benchmark for the value of the company in the debt market.

Borrowings from credit institutions and others

Borrowings from credit institutions and others, under current liabilities, mainly comprised loans associated with repurchase agreements totaling €5,714 million.

In 2009, Criteria closed its first plain vanilla bond issue for €1,000 million, maturing in 2014.

168

Consolidated income statement summary€ million

31/12/2009 31/12/2008 Change

Income from equity instruments (available-for-sale assets) 379 386 (2%)

Net profit of companies accounted for using the equity method 813 688 18%

Net profit of fully-consolidated companies 139 164 (15%)

Net finance cost (89) (99) (10%)

Net operating expense (17) (22) (23%)

RECURRING NET PROFIT 1,225 1,117 10%

Net gains/(loss) on divestments

and other non-recurring results 92 (58) –

NET PROFIT ATTRIBUTABLE

TO THE PARENT COMPANY 1,317 1,059 24%

Detailed of dividends received from companies classified as available-for-sale€ million

31/12/2009 31/12/2008 Change

Telefónica 212 203 4%

Repsol 147 159 (7%)

Other 20 24 (17%)

TOTAL 379 386 (2%)

Net profit attributable to the Criteria Group amounted to €1,317 million, up 24% on the prior year. This increase is mainly due to overall improvement in profits contributed by companies accounted for using the equity method (up €125 million on 2008) and to non-recurring profit of €92 million, compared to non-recurring losses of €58 million in 2008.

Details of the headings shown in the above income statement summary were as follows:

Income from equity instruments

Dividends received from companies classified as available-for-sale financial investments were down 2% overall, primarily as a result of lower dividends distributed by Repsol. Dividends received by the companies were as follows:

Consolidated income statement The consolidated income statement shown below has been prepared in accordance with

International Financial Reporting Standards, although it is presented according to the Criteria CaixaCorp Group management model.


Net profit of companies accounted for using the equity method

The increase in profits contributed to the Group by companies accounted for using the equity method (Gas Natural, Abertis, GF Inbursa, Agbar, BPI and Boursorama) rose 18% during the year, from €688 million in 2008 to €813 million in 2009, net of income taxes and minority interests. This rise was mainly due to the contribution from GF Inbursa (the consolidated income statement for 2008 only reflected profits from this company for three months), as well as the higher net profits contributed by Gas Natural, Abertis and BPI.

Net profit of fully-consolidated companies

Net profit of fully-consolidated companies included revenues and expenses corresponding to the Group’s business lines (insurance, financing, operating leasing, etc.).

The most significant variations from 2008 to 2009 were:

• An 11 % rise in contributions from the insurance sector, mainly due to improved activity in the different insurance branches in which the Group operates (higher premium volume, principally in the savings line).

• Lower contributions from Specialized Financial Services companies as a result of allowances made to cover the greater risk of default on receivables in these companies.

• Greater finance cost due to the €20 million reduction in finance income, as term deposits of approximately €500 million were cancelled in early 2009, as well as to the higher finance cost in 2009 in connection with cash flow hedges in specialized financial services companies.

Contribution of segments to the consolidated recurring net profit€ million

31/12/2009 31/12/2008

Insurance 266 240

Specialized Financial Services (23) (16)

Other non-listed (2) 2

PROFIT BEFORE TAXES AND FINANCIAL INCOME 241 226

Net finance cost (51) (8)

PROFIT BEFORE TAXES 190 218

Income tax (58) (61)

PROFIT FROM CONTINUING OPERATIONS 132 157

Profit from discontinued operations 8 9

PROFIT BEFORE MINORITY INTERESTS 140 166

Minority interests (1) (2)

PROFIT ATTRIBUTABLE TO THE PARENT COMPANY 139 164

170

Net finance cost

The increase in net finance cost was mainly due to lower interest rates, which offset the rise in debt required for the Group’s investments.

Net gains on divestments and other non-recurring results

In 2009 gains on the sale of investments included €265 million in connection with the net gain on the sale of 1% of Telefónica shares. No significant sales were made in 2008.

Other non-recurring results in 2009 mainly related to the impairment of banking

investments (€118 million, €169 million gross) and the recognition of loan loss provisions in consumer financing companies (€38 million, net).

In 2008 the impairment of available-for-sale equity investments amounted to €124 million and provisions for risks and expenses to €56 million, net. However, the company also recognized deductions for the reinvestment of gains on the sale of equity investments in prior years amounting to €127 million, which partially offset these allowances.

Gains/(losses) on divestments and other non-recurring results€ million

31/12/2009 31/12/2008

Before taxes After taxes Before taxes After taxes

Gains/(losses) on the saleof investments 361 265 6 4

Deductions applied – 5 – 127

Impairment (226) (158) (177) (124)

Other (29) (20) (93) (65)

Other non-recurring profit/(loss) (255) (173) (270) (62)

NET GAIN/(LOSS) ATTRIBUTABLE

TO THE PARENT COMPANY 106 92 (264) (58)


The non-consolidated financial information has been prepared in accordance with the accounting principles laid out in the new Spanish General

Chart of Accounts approved by Royal Decree 1514/2007 on November 16.

7_b. Non-consolidated financial statements

Balance sheet€ million

31/12/2009 31/12/2008

Intangible and tangible assets 4 4

Long-term investments in Group companies,

associates and jointly-controlled entities 14,126 12,481

Investments in Group companies 3,140 3,567

Investments in associates and jointly-controlled entities 10,986 8,732

Long-term loans to Group companies – 182

Long-term financial investments 6,818 5,776

Deferred tax assets 583 355

NON-CURRENT ASSETS 21,531 18,616

Debtors – 141

Short-term financial investments 357 247

Short-term accruals 1 1

Cash and cash equivalents 5 2

CURRENT ASSETS 363 391

TOTAL ASSETS 21,894 19,007

Equity 12,630 12,180

Share capital 3,363 3,363

Share premium 7,711 7,711

Reserves 918 826

Treasury shares (40) (19)

Profit for the year 1,013 803

Interim dividend paid during the year (335) (504)

Valuation adjustments 1,460 774

EQUITY 14,090 12,954

Provisions for risks and expenses 34 91

Bonds and other marketable securities 992 –

Long-term loans from Group companies 5,610 5,189

Deferred tax liabilities 883 677

NON-CURRENT LIABILITIES 7,519 5,957

Short-term debt and creditors 55 96

Hedging derivatives 230 –

CURRENT LIABILITIES 285 96

TOTAL EQUITY AND LIABILITIES 21,894 19,007

172

Non-current assets

Investments in Group companies, associates and jointly-controlled entities, and long-term available-for-sale assets

The main changes in Criteria’s non-consolidated balance sheet relate to investments in Group

companies, investments in associates and jointly-controlled entities, and long-term financial investments. Details of these changes are as follows.

Details of changes of investments in Group companies, associates and jointly-controlled entities, and long-term available-for-sale assets€ million

Investments in Group companies

Investments in associates and

jointly-controlled entities

long-term financial

investments (1)

BALANCE AT 31/12/08 3,567 8,732 5,776

ACQUISITIONS AND CAPITAL INCREASES 240 1,323 1,341

SegurCaixa Holding 84

FinConsum 100

CaixaRenting 30

VidaCaixa 26

Gas Natural 1,313

BPI 10

Erste Group Bank 652

Telefónica 689

SALES (717)

Telefónica (717)

RECLASSIFICATIONS, MERGERS AND OTHERS (2) (522) 1.123 (994)

IMPAIRMENT (145) (192) –

CHANGE IN FAIR VALUE – – 1,412

Telefónica 893

Repsol 411

Erste Group Bank 91

Bolsas y Mercados Españoles 17

BALANCE AT 31/12/09 3,140 10,986 6,818

(1) Includes available-for-sale financial assets – equity instruments.(2) Basically comprises the reclassification of Erste Group Bank from long-term financial investments to interests in entities accounted for

using the equity method, and the impact of the absorption of Caixa Capital Desarrollo and Crisegen Inversiones into Criteria CaixaCorp.


The most significant acquisitions performed by Criteria CaixaCorp in 2009 were as follows:

a. Group companies

As part of the merger by absorption, dissolving but not liquidating Crisegen Inversions, Criteria Caixa Corp assumed direct ownership of that company’s 50% stake in SegurCaixa Holding. Consequently, at December 31, 2009, Criteria CaixaCorp owned 100% of SegurCaixa Holding.

A number of share capital increases were carried out in Group companies in 2009, namely in VidaCaixa (€26 million), FinConsum (€100 million) and Caixa Renting (€30 million). SegurCaixa Holding performed two capital increases, both of which were fully subscribed by Criteria CaixaCorp (€84 million and €82 million). Criteria subscribed the first of these two increases through monetary contributions and the second through a non-monetary contribution of a 20% stake in VidaCaixa, S.A. As a result of this transaction, at December 31, 2009, SegurCaixa Holding holds a 100% interest in VidaCaixa.

The Port Aventura transaction, mentioned above, brought in Investindustrial as a key partner through the subscription of a €94.8 million share capital increase, whereby the company obtained a 50% stake in Port Aventura Entertainment, S.A. This transaction did not have any effect on Criteria CaixaCorp’s income

statement. Given that Criteria relinquished control over this company, and based on the agreement signed with the new shareholder, the ownership interest in this company was reclassified under investments in associates and jointly-controlled entities.

b. Associates and jointly-controlled entities

In addition to the Gas Natural transactions, which required an investment of €1,313 million, and the €10 million investment in connection with BPI, as described above, in 2009 Criteria CaixaCorp increased its stake in Erste Group Bank to 10.10% at December 31, 2009.

Applying the principles set out in the Spanish General Chart of Accounts and in view of the voting rights held, representation in the governing bodies, and the agreements signed, it has been determined that the company exercises significant influence in Erste Group Bank.

In view of the higher stake held and the greater influence exercised, this equity interest was reclassified from available-for-sale financial assets to investments in associates and jointly-controlled entities. This reclassification was carried out bearing in mind the valuation adjustments made previously, which amounted to €132 million at December 31, 2009.

At the Annual General Meeting in April 2009, shareholders of Agbar resolved to distribute extraordinary dividends with a charge to

174

reserves of €27 million. This amount has been recognized as a decrease in the cost of the investment.

On October 22, 2009, Criteria CaixaCorp signed two memorandums of understanding (ratified on January 14, 2020) with Suez Environnement and with Malakoff Médéric, a France-based insurance and pension Group, for the acquisition of 99.79% of the share capital of Compañía de Seguros Adeslas, S.A. (Adeslas), for a total of €1,178 million. As mentioned above, as part of this transaction, Agbar will launch a delisting offer targeting the 10% of Agbar capital held by minority shareholders. Based on the degree of acceptance of the offer, Criteria CaixaCorp will sell Suez Environnement the number of Agbar shares it needs to reach a 75.01% interest in Agbar. Criteria will sell the shares for between €647 million and €871 million. As a result, Criteria’s shareholding in Agbar will narrow to between 15% and 25%, depending on the take-up rate for the tender offer.

Criteria will continue to be represented on Agbar’s Board of Directors in its capacity as benchmark minority investor, mirroring the excellent long-standing relationship between ”la Caixa”/Criteria and the GDF-Suez Group. The parties will sign a new shareholders’ agreement in order to reflect the new shareholder structure.

c. Available-for-sale financial assets

In accordance with the new Spanish General Chart of Accounts, available-for-sale financial assets were valued at the 2009 reporting date at their fair value. The value used for listed companies was the year-end trading price. The recovery in the financial markets and in share prices at the end of 2009 is reflected in Criteria CaixaCorp’s accounts, through increases in the fair value of investments. When the company obtains significant influence in an investee classified as an available-for-sale financial asset, the valuation adjustments made in equity prior to reclassification remain in equity until the investment is sold or otherwise derecognized.

In 2009, on the basis of the increased stake held and the collaboration agreements signed with the main shareholder of Erste Group Bank, as mentioned above, Criteria has determined that it exercises significant interest in the holding. Accordingly, in December 2009 the stake in Erste Group Bank was reclassified to investments in associates and jointly-controlled entities.

The transaction in Telefónica discussed above is also included in Investments in associates and jointly-controlled entities. This transaction entailed the acquisition of a 1% interest in Telefónica for €689 million, subject to a derivative contract.

In June 2009, the company sold 1% of its stake in Telefónica for €737 million, for a net gain of €215 million.

Impairment

According to Criteria CaixaCorp’s policies for maintaining, monitoring and overseeing its investees, and following prudent criteria in light of the current global financial and economic situation, the company tested the majority of its stakes to determine whether any possible unrecoverable impairment in their value had occurred. Criteria calculated the recoverable value of its portfolio using generally accepted valuation methods. The results of these analyses were as follows:

• Group companies. The company measured the recoverable value of all these investments using generally accepted valuation methods, based chiefly on estimates of its share in future cash flows from the investee company, whether from its ordinary activities or its disposal or derecognition. Based on the analysis performed and as a result of the increase in defaults in the financial sector and in the consumer financing business, and bearing in mind the situation in the automobile market which has affected the operating lease business, the company has identified impairment losses of €145 million.

• Associatesand jointly-controlledentities. Since 2008, a number of adverse indicators have been noted, including a sharp fall in the


share prices of investees and lower margins at certain companies. These assets were tested for impairment, primarily using discounted cash flow and discounted dividends methods, applying conservative assumptions and prudent criteria. Based on the analysis, the company has recognized impairment losses in connection with the value of certain banking investees. At December 31, 2009, valuation adjustments amounted to €192 million, of which €81 million relate to the application of a provision for risks and expenses made in 2008.

• Available-for-salefinancialassets–equityinstruments. Criteria has determined that none of the accumulated decreases in the market value of investments classified as available-for-sale financial assets were

produced continually over a period of more than 18 months, or exceeded 40%. Nevertheless, and as a basic tool for managing and consistently monitoring these equity investments, the company has performed internal valuations on this Group of stakes, using the same methodology applied for valuing investments in Group companies, jointly-controlled entities and associates. The various analyses performed have not revealed the need to make additional impairment allowances in 2009.

Equity

Movement in Criteria CaixaCorp’s equity from January 1, 2009, to December 31, 2009 was as follows:

Movement in equity€ million

equityvaluation

adjustmentsequity (after

adjustments)

BAlANCe AT 31/12/08 12,180 774 12,954

Final dividend for the prior year (201) (201)

Profit for the year 1,013 1,013

Interim dividend paid during the year (335) (335)

Net treasury shares acquired (19) (19)

Other movements (8) (8)

Valuation adjustments 686 686

BAlANCe AT 31/12/09 12,630 1,460 14,090

176

At the Annual General Meeting held on May 7, 2009, shareholders approved distribution of a final dividend against 2008 profits of €0.06 per share, equivalent to a maximum of €202 million. This dividend, which in May 2009 was paid to the holders of shares in circulation at that time, amounted to a disbursement of €201 million. Accordingly, the final charge to voluntary reserves was €99 million.

On October 8, 2009, the Criteria CaixaCorp Board of Directors approved the distribution of an interim dividend on account of 2009 profits of €0.10 per share. The total dividend paid, after deducting treasury shares, was €335 million.

Valuation adjustments include the net amount of the differences between market value and the cost of acquisition of assets classified as available-for-sale. These differences are taken to the income statement when the assets are sold or when an impairment loss is recorded.

Non-current liabilities

Bonds and other marketable securities

Bonds and other marketable securities comprise Criteria CaixaCorp’s first bonds issue of November 12, 2009. The issue totaled €1,000

million and matures on 2014 (further details provided earlier in this report).

Long-term loans from Group companies

At December 31, 2008, the company held a €6,500 million credit facility from ”la Caixa”, maturing on December 31, 2009. The total drawdown on the facility, which bore interest at Euribor + 100 basis points, was €5,189 million at year-end 2008. In 2009 Criteria CaixaCorp negotiated the extension of the credit facility to July 2011 and subsequently reduced the limit to €5,500 million. At December 31, 2009 the company had drawn down €3,547 million.

In November 2009 ”la Caixa” extended two new €1,000 million long-term loans to Criteria. The first loan bears annual interest at a fixed rate of 3.579% and matures on November 6, 2013, while the second loan accrues annual interest at a fixed rate of 4.416% and falls due on November 6, 2016. Interest falls due quarterly.

Based on the new debt structure created in 2009, approximately 50% of borrowings are referenced to fixed rates. Criteria is therefore partially protected from potential interest rate hikes.


Non-consolidated income statement€ million

31/12/2009 31/12/2008

Dividends from investees 981 916

Operating expenses (30) (28)

OPERATING INCOME (RECURRING) 951 888

Net finance cost (126) (131)

RECURRING PROFIT 825 757

Income tax 46 46

RECURRING NET PROFIT 871 803

Extraordinary dividends 106 89

Gains on divestments and others 310 5

NON-RECURRING INCOME 416 94

NON-RECURRING EXPENSE (263) (316)

NON-RECURRING PROFIT 153 (222)

Income tax (11) 222

NON-RECURRING NET PROFIT 142 0

NET PROFIT 1,013 803

Income statement In 2009 Criteria CaixaCorp reported non-consolidated net profit of €1,013 million. Of

this figure, recurring net profit amounts to €871 million and non-recurring net profit to €142 million.

178

Recurring net profit

Recurring net profit rose 8% compared to the prior year, primarily due to the 7% rise in dividends from investees and the 4% reduction in finance costs.

Operating expenses are among the lowest in the market when compared to the net asset value.

In 2009 net finance cost amounted to €126 million. This figure basically comprises interest on draw downs of the credit facility in order to finance investments and on long-term loans contracted during the period. The 4% reduction in finance costs compared to 2008 is mainly due to the drop in interest rates, which offset the rise in debt resulting from the company’s heavier investments during the year.

Dividend from investees€ million

31/12/2009 31/12/2008

Telefónica 212 203

Gas Natural 286 186

SegurCaixa Holding 138 86

Repsol/Repinves 147 158

Abertis/ Inversiones Autopistas 101 87

Hisusa 18 26

GF Inbursa 18 0

BPI/Catalunya de Valores 18 35

Agbar 7 10

BME 8 10

Erste Group Bank 10 2

Caixa Capital Desarrollo 8 94

Other 10 19

TOTAL 981 916

The increase in the recurring net results for 2009 is due to the increase of 7% in the dividends coming from the stakes, and the reduction of 4% in financial expenses.


Non-recurring net profit

In 2009, Criteria CaixaCorp generated non-recurring net profit of €142 million, broken down as follows:

• Non-recurring extraordinary dividends received from Agbar (€106 million)

• Net gains on the sale of 1% of Telefónica shares (€215 million)

• Impairment allowances on investees, net of taxes (€179 million)

On a net basis, there were no non-recurring profits in 2008, given that income derived from extraordinary dividends of €89 million and income tax deductions for reinvestment of €127 million offset the impairment allowances and other provisions made (€221 million).

-131 -126

916 981

-28 -30

4646

-200

0

200

400

600

800

1000

Impuesto sobre beneficios

Gastos de explotación

Dividendos

Resultado financiero, neto

Recurring net profit€ million

Dividends

Income tax

Net finance cost

Operating expenses

871803

46

916

(131)(28)

46

981

(126)(30)

+8%

+7%

–4%

180

Criteria CaixaCorp’s key mission is investing in companies, and therefore it may incorporate or hold interests in other companies, as partner or shareholder, through the subscription or acquisition and holding of shares.

Specifically, Criteria’s main business objective is to carry out investments to create value in the medium/long term. This means that Criteria CaixaCorp generally defers its tax payments to the moment when its investments are sold or otherwise transferred.

The current breakdown of Criteria’s investment portfolio allows for specific tax benefits, providing the company complies with requirements set out in prevailing regulations. The main tax benefits to which Criteria is entitled are as follows:

• Holding and acquiring stakes of over 5% means that:

– Dividends received from investees are exempt from taxation, as they are eligible for double taxation relief, provided for in article 30.2 of the revised Corporate Income Tax Act (hereinafter TRLIS) for companies resident in Spain. Non-resident companies may avail themselves of the exemption set out in article 21 of TRLIS.

– Deductions may be applied to the capital gains obtained as a result of the transfer of investments to avoid double taxation in the amount that corresponds to the net increase

in retained profits generated by the investee over the period the stake is held (article 30.5 of TRLIS, for resident companies). Non-resident companies may avail themselves of the exemption set out in article 21 of TRLIS.

• Furthermore, Criteria holds an ownership interest of 100% in a company which is subject to the tax regime regulating companies holding foreign investments (hereinafter, ETVE), through which it may make investments in companies in which it does not hold a stake equal to or higher than 5%, but with an acquisition cost higher than €6 million. Under the ETVE system, dividends and capital gains from these companies are exempt from taxation.

The income tax rate for 2009 is 30%. However, when specific requirements are met, article 42 of TRLIS allows for the deduction for reinvestment of extraordinary gains to be applied so that gains deriving from the transfer of portfolios larger than 5% may be taxed at a rate of 18%. Criteria CaixaCorp’s objective is to maximize the deduction for reinvestment of extraordinary income.

Finally, it bears noting that Criteria CaixaCorp has historically transferred its stake in listed companies with a significant premium compared to its share price. In general, this offsets the tax implications stemming from the divestments.

7_c. Fiscal aspects and considerations


Fiscal aspects 2009

Stake in companies

resident in Spain

>5%; +1 year

Stake in non-resident companies >5%; +1 year

Stake in non-resident companies >5%; > €6M; +1 year (1) Other (2)

Dividends Double taxation relief Exemption (3) Exemption (3) 15% (4) / 30% (5)

Capital gains from transfer

Sale price – Taxable cost = Gross capital gains

Gains - Retained

earnings (6) = Taxable capital gains

Taxation = Taxable capital gains x 30%

Exemption (3) Exemption (3) Sale price – Taxable cost = Taxable capital gains Taxation = Taxable capital gains x 30%

reinvestment relief (deduction)

If the sale price is reinvested (7): 12% deductionTaxation = Taxable capital gains x 18% (30%-12%)

N/A N/A N/A

(1) Investments held through an ETVE (Negocio de Finanzas e Inversiones, S.L.)(2) Investments < 5% and < €6M or investments in non-resident companies >5% that are not eligible to apply the exemption set out in art.

21 TRLIS.(3) Any withholdings made in the country of residence of the investee will be the final taxation of the dividend or capital gains.(4) Applicable only to companies resident in Spain with a stake < 5%.(5) For dividends from investments in non-resident companies > 5%, the deduction provided for in art. 32 of the TRLIS may be applied.(6) Retained profit generated by the investee during the period in which the investment was held and subject to art. 30.5 TRLIS.(7) Under article 42 of the TRLIS (Divestment > 5%; Reinvestment > 5%, reinvestment must be made one year before or three years after

the divestment).

Portfolio at December 31/12/2009€ milion

Executive Summary

Dividends paid since IPODividend Year €/share Date paid

Interim 2007 0.03 17/01/2008

Final 2007 0.02 17/06/2008

TOTAL 2007 0.05

Interim 2008 0.05 02/07/2008

Interim 2008 0.10 02/12/2008

Final 2008 0.06 27/05/2009

TOTAL 2008 0.21

Interim 2009 0.10 01/12/2009

Final (*) 2009 0.131 Expected: Jun-2010

TOTAL 2009 0.231

(*) Final dividend subject to approval by shareholders at the General Meeting to be held on May 19, 2010.

% stake € million

Gas Natural 36.43% 5,065

Repsol YPF 12.68% 2,898

Abertis 25.04% 2,771

Agbar 25% (*) 667

Telefónica 5.16% 4,372

BME 5.01% 94

Port Aventura (**) 505

Other 61

Treasury shares 47

16,480

SERVICES

% stake € million

SegurCaixa Holding 100% 2,384

+ Adeslas (*) 1,178

GDS - Correduría 67% 25

InverCaixa 100% 186

CaixaRenting 100% 62

FinConsum 100% 123

GestiCaixa 100% 22

3,980

INSURANCE AND SPECIALIZED FINANCIAL SERVICES

% stake € million

BPI 30.10% 574

Boursorama 20.85% 176

The Bank of East Asia 14.99% (***) 832

GF Inbursa 20.00% 1,343

Erste Group Bank 10.10% 995

3,920

INTERNATIONAL BANKING

Gross Asset Value (GAV) (1) 24,380

(1) Pro-forma GAV, including: (*) Pro-forma: including the investment in Adeslas and partial divestment in Agbar (assuming 100% acceptance of the delisting tender offer). (**) 50% of Port Aventura Entertainment and 100% of Mediterranea Beach & Golf Resort, S.A. (***) Share capital increase completed on January 14, 2010, which brought the total stake to 5.18% (€331 million).

Performance of asset value(Pro-forma € millions)

Resultado consolidado

Beneficio neto recurrente

Bª recurrente: 10%

Beneficio neto no recurrente

2008

1.117

92

1.225

–58

2009

-10000

-5000

0

5000

10000

15000

20000

25000

Net investments

Change in value

Net debt

GAV

NAV 14,252 17,616

(6,764)

31/12/2008 31/12/2009

3,0093,175

24,38018,196

(3,944)

5.5

5.0

2.5

3.5

3.0

4.5

4.0

2.0

18.5%

23.6%

NAV per share

Discount

Share price

31/12/2008 28/02/2009 30/04/2009 30/06/2009 31/08/2009 31/10/2009 31/12/2009

31/12/08

–34.4% 31/03/09

–33.9%

30/06/09

–25.4%

30/09/09

–32.4%

31/12/09

–37.1%

Share price and trading discount €/share

-300

0

300

600

900

1200

1500

-300

0

300

600

900

1200

1500

Consolidated profit € million

+24%

2008 2009

1,1171,225

2008 2009

1,059

1,117

(58)

92

1,225

1,317

+10%

Net recurring profit Net profit attributable to the group

Net recurring profit Net non-recurring profit

IBEX 35 Criteria CaixaCorpEURO STOXX 50

140

130

80

100

90

120

110

7031/12/2008 28/02/2009 30/04/2009 30/06/2009 31/08/2009 31/10/2009 31/12/2009

29.8%

21.1%18.5%

Share price vs. benchmark indices

10%

09 annual report

09 a

nnua

l rep

ort

Avda. Diagonal 621-629. Torre II, Planta 808028 Barcelona

Telephone: (+34) 93 409 21 21

www.criteria.com

caixabank...portfolio at december 31/12/2009 € million executive summary dividends paid since ipo...

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