CEMENTOSPORTLANDVALDERRIVASGROUP

2006ANNUALREPORT

El Alto factory: Keystone drill, manufactured in 1912.

ANNUAL REPORT FOR THE 2006 FINANCIAL YEAR, SUBMITTED BY THE BOARD OF DIRECTORS OF CEMENTOS PORTLAND VALDERRIVAS, S.A.TO THE GENERAL SHAREHOLDERS’ MEETING, CALLED FOR 13 JUNE 2007

CONTENTS

PROPOSALS FOR THE AGM GOVERNING BODIES OF THE CEMENTOS PORTLANDVALDERRIVAS GROUP

07

MAIN GROUP HIGHLIGHTS

15

LETTER FROM THE CHAIRMAN

23

RESOLUTIONS TO BE ADOPTEDAT THE AGM

63

5726ACTIVITY REPORT28 Macroeconomic environment

28 World and eurozone economies29 Spain

30 Construction and cement industries30 Spain34 USA and other countries

34 Group activities in 200637 Acquisition of a majority stake in

Corporación Uniland38 Takeover bid for Cementos Lemona 38 Other transactions39 Cement40 Concrete42 Aggregates43 Dry mortar44 Transport44 Investments46 Industrial development46 Quality, environment and human

resources48 New corporate information system48 Analysis of consolidated results

of the year51 Share performance54 Shareholders’ return

67 11581REPORTS BY THE BOARD OFDIRECTORS

68 Certificate of Cash Assets71 Report on the

amendment to theArticles of Incorporation

73 Report on theamendment to the Regulations of the General Shareholders’Meeting

75 Report on theamendment to the Regulations of theBoard of Directors

78 Report on the ShareCapital Increase

119 ANNUAL REPORTS. AUDITORS AND MANAGEMENT REPORTS OF THE CONSOLIDATEDACCOUNTS

177 ANNUAL REPORTS. AUDITORS AND MANAGEMENT REPORTS OF CEMENTOS PORTLANDVALDERRIVAS, S.A.

ANNUAL CORPORATEGOVERNANCE REPORT

Vallcarca factory, Barcelona, Spain.

CEMENTOS PORTLAND VALDERRIVASGROUP

GOVERNING BODIES OF THE

7

CEMENTOS PORTLAND VALDERRIVAS, S.A.

Chairman & Chief Executive Officer José Ignacio Martínez-Ynzenga Cánovas del Castillo

Deputy chairman Esther Koplowitz Romero de Juseu

Voting members EAC Inversiones Corporativas, S.L., represented by:Alicia Alcocer Koplowitz

EAC Medio Ambiente, S.L., represented by:Esther Alcocer Koplowitz

Ibersuizas Alfa, S.L., represented by:Luis Chicharro Ortega

Fernando Falcó Fernández de Córdova, Marqués de Cubas

Feliciano Fuster Jaume

Cartera Navarra, S.A., represented by:

José María Iturrioz Echamendi

Cartera Deva, S.A., represented by:

Jaime Llantada Aguinaga

Jaime de Marichalar y Sáenz de Tejada, Duque de Lugo

Rafael Martínez-Ynzenga Cánovas del Castillo

Rafael Montes Sánchez

José Manuel Revuelta Lapique

Concha Sierra Ordóñez

José Ignacio Taberna Ruiz

Vicente Ynzenga Martínez-Dabán

Non-voting Secretary José Luis Gómez Cruz

Deputy Secretary Vicente Ynzenga Martínez-Dabán

The appointment of EAC, Medio Ambiente, S.L. as Director, represented by Esther Alcocer Koplowitz wasratified at the Annual General Meeting held on 1 June 2006.The Board of Directors held on 28 March 2007 appointed Vice-Secretary to Vicente Ynzenga Martínez-Dabán.

BOARD OF DIRECTORS

8

Chairman José Ignacio Martínez-Ynzenga Cánovas del Castillo

Voting members EAC Inversiones Corporativas, S.L., represented by:Alicia Alcocer Koplowitz

Ibersuizas Alfa, S.L., represented by:Luis Chicharro Ortega

Fernando Falcó Fernández de Córdova, Marqués de CubasJaime de Marichalar y Sáenz de Tejada, Duque de LugoRafael Martínez-Ynzenga Cánovas del CastilloRafael Montes SánchezJosé Manuel Revuelta Lapique

Non-voting Secretary José Luis Gómez Cruz

Chairman Fernando Falcó Fernández de Córdova, Marqués de Cubas

Voting members Ibersuizas Alfa, S.L., represented by:Luis Chicharro Ortega

Cartera Navarra, S.A., represented by:José María Iturrioz Echamendi

Concha Sierra Ordóñez

Non-voting Secretary José Luis Gómez Cruz

EXECUTIVE COMMITTEE

AUDIT AND COMPLIANCE COMMITTEE

Chairman José Ignacio Taberna Ruiz

Voting members EAC Medio Ambiente, S.L., represented by:Esther Alcocer Koplowitz

Feliciano Fuster JaumeVicente Ynzenga Martínez-Dabán

Non-voting Secretary José Luis Gómez Cruz

NOMINATION AND REMUNERATION COMMITTEE

9

In an effort to comply as far as possible with the Unified Code of Good Government for listed companies,and since the Chairman of the Nomination and Remuneration Committee, Vicente Ynzenga Martínez-Dabán,is an executive director, he stepped down as Chairman at the Board meeting held on 28 March 2007, remaining on the committee as member.At the same meeting, José Ignacio Taberna Ruiz, non-executive independent director, who was alreadymember of that Committee, was appointed Chairman.

10

Chairman José Ignacio Martínez-Ynzenga Cánovas del Castillo

Voting members José Ignacio Domínguez HernándezPablo Espeso MartínezJosé Luis Gómez CruzÁngel Luis Heras AguadoManuel Llop AlbaladejoManuel de Melgar y OliverMaría Luisa Otero GarcíaJosé Manuel Revuelta LapiqueJaime Úrculo Bareño

Secretary Vicente Ynzenga Martínez-Dabán

MANAGEMENT COMMITTEE

11

Chairman & Chief Excecutive Officer José Ignacio Martínez-Ynzenga Cánovas del Castillo

General Manager Planning and Control

and Chariman’s Assistant José Manuel Revuelta Lapique

General Secretary Vicente Ynzenga Martínez-Dabán

General Manager Administration and Finance Jaime Urculo Bareño

General Manager Legal Department José Luis Gómez Cruz

General Manager Internal Audit Department José Ignacio Domínguez Hernández

General Manager Cementos Portland Valderrivas Spain Ángel Luis Heras Aguado

General Manager Cementos Portland Valderrivas USA Manuel Llop Albaladejo

Corporate and Institutional Relations General Manager Manuel de Melgar y Oliver

General Manager Marketing and Sales Ángel Luis Heras Aguado

General Manager Human Resources María Luisa Otero García

General Manager Technical Pablo Espeso Martínez

Administration and Finance Manager José Manuel Huertas Montero

Manager of Human Resources Administration Cristóbal Moyá García

Legislative Industrial Affairs and Contingencies Manager María Francisca Hermida Alberti

Legislative International and Corporative Affairs Manager María del Mar Sáez Ibeas

Industrial Benchmarking Manager Luis Ángel Herreras López

Commercial Manager Spain Antonio Crous Millet

Foreign Trade Manager Francisco Centeno Fornies

Purchases Manager Juan Manuel Jiménez Valenzuela

Communications Manager Javier Hernández Fernández

Industrial Development Manager Juan Carlos Urcelay Gordóbil

Aggregates Division Manager Manuel Ruigómez Domínguez

Concrete Division Manager Antonio Martínez-Avial Ynzenga

Mortar Division Manager Jesús Serra Motas

I+D+i Manager Serafín Lizarraga Galarza

Engineering Manager Julio Bermúdez Medina

Environment and Sustainability Manager Carlos San Félix García

Spain Operations Manager Francisco Zunzunegui Fernández

Strategic Planning Manager Victor Hugo García Brosa

Trade Policy Manager Angel Faramín Burgos

Budgets Manager Manuel Doreste Miranda

Institutional Relations Manage José Ramón Bujanda Sáenz

Investor Relations Manager Julián García Ureta

Security Manager Federico Fontanals Armengol

Insurance Manager Santiago de Gomar Roca

Prevention Service Manager Jesús López Carvajal

Information Systems Manager Jaime Ferrer García

Manager of the Factory in Alcalá de Guadaira Jesús María Álvarez Laurnaga

Manager of the Factory in El Alto Miguel Reche Islán

Manager of the Factory in Hontoria Santiago Ruiz de Valbuena Melero

Manager of the Factory in Olazagutía Ángel Caballero Chacón

EXECUTIVE MANAGEMENT

12

GROUP AND ASSOCIATED COMPANIES

CEMENTGIANT CEMENT HOLDING, INC. Chief Executive Officer: Manuel Llop Albaladejo

CEMENTOS ALFA, S.A. General Manager: Francisco Zunzunegui Fernández

CEMENTOS LEMONA, S.A. General Manager: Nicolás Gaminde Alix

CEMINTER MADRID, S.L. Joint Manager: Ángel Faramín Burgos

CORPORACIÓN UNILAND, S.A. General Manager: Antonio Crous Millet

CONCRETE, AGGREGATES AND DRY MORTAR

MORTEROS VALDERRIVAS, S.A. Joint Manager: Jesús Serra Motas

HORMIGONES Y MORTEROS PREPARADOS, S.A. Joint Manager: Antonio Martínez-Avial Ynzenga

ARIDOS Y PREMEZCLADOS, S.A. Joint Manager: Manuel Ruigómez Domínguez

HORMIGONES ARKAITZA, S.A. Joint Manager: Antonio Martínez-Avial Ynzenga

APLICACIONES MINERALES, S.A. Chief Executive Officer: Pablo Espeso Martínez

HORMIGONES Y ÁRIDOS DEL PIRINEO ARAGONÉS, S.A. Chief Executive Officer: Aurelio Martínez Martínez

HORMIGONES DEL BAZTÁN, S.L. Managing Director: Ignacio Carrillo Arzuaga

HORMIGONES CALAHORRA, S.A. Chief Executive Officer: Dionisio Ruiz Ijalba

HORMIGONES DELFÍN, S.A. Manager: José Antonio Martínez Rodríguez

HORMIGONES DE LA JACETANIA, S.A. Chief Executive Officer: Antonio Martínez-Avial Ynzenga

HORMIGONES REINARES, S.A. Manager: Eduardo Reinares Vicuña

HORMIGONES EN MASA DE VALTIERRA, S.A. Chief Executive Officer: Eugenio Soldevilla Villoslada

HORMIGONES DEL ZADORRA, S.A. Manager: Javier Chocarro Huesa

CANTERAS DE ALAIZ, S.A. General Manager: Manuel Ruigómez Domínguez

CANTERAS Y HORMIGONES VRE, S.A Manager: José María Amescua Díaz

LÁZARO ECHEVERRÍA, S.A. Chief Executive Officer: Andrés Echeverría Delfrade

NOVO HORMIGONES VITORIA, S.A. Manager: Carlos Ibáñez de Garayo

SILOS Y MORTEROS, S.L. Chief Executive Officer: Dionisio Ruiz Ijalba

TRANSPORT

ATRACEMSA Joint Manager: Gerardo Agudo del Pozo

NAVARRA DE TRANSPORTES, S.A. Manager: Juan Carlos López de Aguileta López

OTHER ACTIVITIES

CARBOCEMSA General Manager: Jaime Real de Asúa Arteche

Alcalá de Guadaíra factory, Seville, Spain.

Cement mill, Montevideo, Uruguay

DEVELOPMENTS IN CEMENTOS PORTLAND VALDERRIVASGROUP

15

Cementos Portland Valderrivas,founded in 1903 with its head officesin Pamplona, is the largest Spanish-owned cement group. It is part ofthe Fomento de Construcciones yContratas Group (FCC), which holdsa 67% stake in its capital, theremainder traded through theelectronic dealing system of theMadrid Stock Exchange. At 29December 2006, the Company has amarket capitalisation of 2,756 millioneuros. In 2006, the Companyachieved a growth of 50% in itsturnover, to 1,467 million euros,while net profit rose by 28% to 176million euros.

Apart from the strong organic growthderiving from sustained cementconsumption on the Spanish market,over the past ten years the Grouphas made six major acquisitions,putting it among the largestinternational cement groups in termsof turnover, with transactions inEurope, North and South Americaand North Africa. The principallandmarks in this expansion strategyare summarised below:

• 1993: merger of PortlandValderrivas, Cementos Portlandand Cementos Hontoria, to createCementos Portland Valderrivas.

• 1995: acquisition of a majoritystake in the affiliated companyCementos Alfa, increasing thegroup’s presence in Cantabria andother important areas. Its directand indirect interests now total87.85%.

• 1998: acquisition of CementosAtlántico, subsequently merginginto Cementos Portland in 2002,giving the Group access to theAndalusian market.

• 1999: acquisition of Giant CementHolding, extending our presence in the Eastern part of the UnitedStates, from Pennsylvania to SouthCarolina.

• 2006: a takeover bid was made topurchase an additional 68% inCementos Lemona, in which the Group previously held 30%,strengthening its presence in theBasque Region in Spain andacquiring an almost 100%ownership over the US operationsin the State of Maine. At 31December 2006 it had a 98.28%interest in this company.

• 2006: acquisition of 51% ofCorporación Uniland, therebyentering into the Catalonian marketin Spain and the Argentina,Uruguay and Tunisia markets.Together with the purchase of 51% for 1,092 million euros, agroup of shareholders weregranted with put options for fiveyears over shares up to a further22.5% of Corporación Uniland, for482.5 million euros. At 31December 2006, it had a 53.22%interest in this company.

The incorporation of Cementos Lemona and Corporación Uniland transactionsproduced a considerable quantitative andqualitivative increase in all the financialfundamentals of the Cementos Portland Valderrivas Group

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AVERAGE EMPLOYMENT (Persons)

NET FUNDS FROM OPERATIONS (Million euros)CAGR: 25.3%

NET EARNINGS PER SHARE

(euros)CAGR: 11.5%

486.8

303.8273.5

232.5197.4

6.3

4.94.6

5.3

4.1

4,233.1

1,487.31,318.6

1,294.11,442.0

1,374.3

1.001.9899.7

810.9745.2

288.0

211.5189.2

197.5176.7

485.3

312.3269.6

277.0270.5

3,551

2,6742,7082,7942,798

GROSS OPERATING EBITDA

(Million euros)CAGR: 15.7%

1,523.1

121.7155.8150.5139.1

CAPITAL EXPENDITURE (Million euros)CAGR: 81.9%

PROFIT BEFORE TAX (Million euros)CAGR: 13.0%

EQUITY(Million euros)CAGR: 16.5%

TOTAL ASSETS(Million euros)CAGR: 30.9%

NET DEBT/EBITDA(Times)

3.04

0.420.540.58

1.19

02 03 04 05 06

02 03 04 05 06

02 03 04 05 06

02 03 04 05 06

02 03 04 05 06

02 03 04 05 06

02 03 04 05 0602 03 04 05 06 02 03 04 05 06

NET DEBT(Million euros)CAGR: 46.4%

132.4

1,474.5

145.6

320.7

161.3

ATTRIBUTABLE NETEARNINGS(Million euros)CAGR: 11.5%

175.9

137.1127.3

148.5

113.8

1,466.6

978.4886.8

865.6831.4

02 03 04 05 06

TURNOVER(Million euros)CAGR: 15.2%

02 03 04 05 06

02 03 04 05 06

The Cementos Portland Valderrivas Group strategy focuses

on sustainable growth, respecting the environment while

generating value for its shareholders and society, based

on the most demanding policies of profitabilty and

commitment to its environment. Apart from the corporate

acquisitions made, capital expenditures in fixed assets over

the period 2002-2006 totalled 700 million euros.

CEMENTOS PORTLAND VALDERRIVAS GROUP1993 2006 CAGR

06/93 %

Cement & clinker sales (tonnes) 2,276,493 14,483,992 15.3

Cement factories 4 15 10.7

Million euros

Turnover 184 1,467 17.3

EBITDA 52 485 18.8

Attributtable Net Profit 7 176 27.6

Dividends + Attendance Fees 13 88 16.1

Equity 263 1,374 13.6

Share price (euros) 16.17 99.00 15.0

Average no. of employees (persons) 1,194 3,551 8.7

18

As a result of this acquisitions policy and the sustained

organic growth, the size of the Group has changed

significantly over the 13-year period from 1993 to 2006, as

illustrated by the following table:

Monjos factory, Barcelona, Spain.

USACement: 3Concrete: 10Aggregates: 2Sea terminals: 4Inland terminals: 4

UKSea terminals: 2

HOLANDActividad de trading

ARGENTINACement: 2Concrete: 6Aggregates: 2

URUGUAYCement: 1Concrete: 4Aggregates: 1

SPAINCement: 8Concrete: 130Aggregates: 55Dry mortar: 20Sea terminals: 6Inland terminals: 4

TUNISIACement: 1Concrete: 4Aggregates: 1Sea terminals: 1

GROUP HIGHLIGHTS 2006

Cement

15

Concrete

154

Aggregates

61

Dry mortar

20

Sea terminals

13

Inland terminals

8

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GROUP HIGHLIGHTS 2006

Turnover 1,467 million euros

Cement and Clinker Sales 14.5 million tonnes*

Employees (at 31-12-2006) 4,649 persons

ROE 14.8%

* Include sales of Cementos Lemona for the entire year 2006 and those of Corporación Uniland from 1 August to 31 December 2006.

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CEMENTOS PORTLAND VALDERRIVAS GROUP 2002 2003 2004 2005 2006 Change %

06/05Thousand euros

Turnover 831,430 865,626 886,824 978,380 1,466,557 49.9

Gross Operating Profit (EBITDA) 270,519 277,027 269,628 312,309 485,315 55.4

Profit Before Tax 176,728 197,458 189,198 211,520 287,994 36.2

Attributable Net Earnings 113,774 148,475 127,250 137,104 175,865 28.3

Net Funds from Operations 197,363 232,456 273,483 303,768 486,806 60.3

Capital Expenditure 139,146 150,544 155,806 121,676 1,523,120 1,151.8

Net Debt 320.653 161.305 145,578 132.394 1,474,531 1,013.7

Equity 745,163 810,913 899,701 1,001.921 1,374,254 37.2

Net Debt/Equity (times) 0.43 0.20 0.16 0.13 1.07 712.0

Net Debt/EBITDA (times) 1.19 0.58 0.54 0.42 3.04 616.7

Net Earnings per Share (euros) 4.09 5.33 4.57 4.93 6.32 28.3

Total Assets 1,442,025 1,294,145 1,318,611 1,487,253 4,233,131 184.6

NB: 2002-2003 figures prepared according to National Chart of Accounts2004-2006 figures prepared according to International Financial Reporting Standards

CEMENTOS PORTLAND VALDERRIVAS S.A.2002 2003 2004 2005 2006 Change %

06/05Thousand euros

Turnover 382,965 421,155 426,338 491,534 556,514 13.2

Gross Operating Profit (EBITDA) 169,893 184,149 183,106 189,279 171,210 (9.5)

Profit Before Tax 136,874 153,420 127,926 204,202 227,729 11.5

Net Profit 90,152 129,421 91,569 136,605 153,160 12.1

Net Funds from Operations 123,850 173,268 157,276 167,170 200,766 20.1

Net Debt 208,798 20,443 (30,615) (105,501) 650,104 –

Equity 649,509 737,730 779,191 854,553 937,416 9.7

Dividend 37,581 44,540 58,459 69,595 87,968 26.4

Net Earnings per Share (euros) 3.24 4.65 3.29 4.91 5.50 12.1

Dividend per Share (euros) 1.35 1.60 2.10 2.50 3.16 26.4

NB: According to the National Chart of AccountsNB: By application of the rules on accounting of emission allowances in 2005 and 2006, the final figure for net profit is not altered.

2002 2003 2004 2005 2006 Change %06/05

Aggregate Sales: Thousand units

Cement and Clinker (tonnes) 9,573 10,005 10,224 11,025 14,484 31.4

Concrete (m3) 4,848 5,144 5,216 5,464 6,819 24.8

Aggregates (tonnes) 16,298 18,635 19,652 19,245 22,372 16.2

Dry Mortar (tonnes) 602 648 714 837 1,678 100.5

Transport (tonnes) 3,024 3,304 3,415 3,673 4,032 9.8

Average no. Employees (persons) 2,798 2,794 2,708 2,674 3,551 32.8

NB: 2006 sales include those of Cementos Lemona for the whole year and those of Corporación Uniland from 1 August to 31 December.

21

San Luis factory, Argentina.

Minas factory, Uruguay.

CHAIRMAN’S STATEMENT

23

24

Chairman’s Statement

2006 was an extremely important year for Cementos Portland Valderrivas, with strong growth

rates generated in all business areas, supplemented by the acquisitions of a further 66.3%

in Cementos Lemona –increasing our interest to 98.28%– and 53% of Corporación Uniland,

thereby achieving a very significant qualitative and quantitative expansion of the Group’s sco-

pe of action, becoming the leading Spanish cement group and one of the 10 largest cement

groups worldwide in terms of market capitalisation.

These two acquisitions are especially significant for Cementos Portland Valderrivas, as we

have been interested in controlling both companies for a long time and through them we will

broaden our presence on the Spanish market, especially in the Catalonia region, where our

presence was previously very small, and incorporate interesting operations in two regions of

the world with substantial development potential: South America and North Africa. We com-

peted with the largest cement groups in the world in the acquisition of Corporación Uniland

and we are therefore very pleased to be the new majority shareholder, with the opportunity

to collaborate, from now on, in a joint strategy of value generation, creating major economies

of scale and synergies.

The economic results of the year were highly satisfactory, with a 50% growth in sales to 1,467

million euros, a 55% growth in EBITDA to over 485 million euros, and a 28% improvement

in our net profit, to 176 million euros. Earnings per share also increased by 28% to 6.3 euro.

Equity grew by 37.2% to over 1,374 million at year end. If we eliminate the effect of the two

acquisitions mentioned, which have been consolidated in our accounts as of 1 March and 1

August, respectively, the increase in turnover through purely organic growth was 12.3%. The

effect of the acquisitions on our accounts will obviously be much more visible in 2007, sin-

ce the Group’s aggregate cement and clinker sales totalled 18.9 million tonnes in 2006, com-

pared to 14.5 million tonnes recorded at the date of incorporation of Lemona and Uniland

and 11.0 million in 2005.

This growth was sustained by the favourable evolution of the sector in an extremely buoyant

economic context, with an excellent 3.9% growth of the Spanish economy. Despite a slow

down in the growth rate of the construction sector, from 6.0% in 2005 to 5.9% in 2006, ce-

ment consumption in Spain rose 8.2% in 2006 to 55.7 million tonnes, a new record for the

tenth year consecutive. In the United States, with a 3.3% growth in GDP, the consumption

of 127.4 million tonnes was down slightly by 0.7% compared to 2005. In Argentina, Tunisia

and Uruguay demand for cement totalled 8.8 million, 6.0 million and 0.6 million tonnes, up

19%, 2% and 10.7%, respectively.

Through the acquisitions made during the year, we have considerably expanded our geogra-

phical reach. The Cementos Portland Valderrivas Group currently produces in 5 countries on

3 continents, and is a well-diversified cement group, by product and geographically, with a

headcount of 4,700 employees and an installed capacity of almost 19 million tonnes of ce-

ment. Since the merger of Portland Valderrivas, Cementos Portland and Cementos Hontoria

way back in 1993, Cementos Portland Valderrivas has evolved from a company owning 4 fac-

tories into one of the largest companies in the sector worldwide, operating 15 plants and

constantly striving to achieve further growth in its core business.

The Group continued its ambitious investment policy in 2006, permanently maximising the

economic efficiency, combined with the most stringent energy consumption policy possible

with current technology. Capital expenditure in 2006, excluding financial acquisitions, totalled

132.4 million euros, and the acquisition of a majority stake in Corporación Uniland and the

takeover bid for Cementos Lemona accounted for 1,391 million euros.

In 2006, our company became one of the six Spanish members of the prestigious World Sus-

tainability Council, which promotes the best practice in sustainable growth policies respec-

ting the environment, through major corporations..

The strong development of our Group is logically reflected in shareholder returns, both through

an excellent share performance, with a 43.3% increase in its market price in 2006, and through

a dividend of 3.16 euro in such year. Our acquisitions strategy was entirely financed through

an efficient use of the capital markets, without any additional contribution by shareholders.

We were able to finance our expansion through debt, not only due to our strong cash-gene-

rating capacity but also to our solid balance sheet. Thus, we have been able to maintain a

very satisfactory return on equity (ROE), at 14.8% in 2006. The Lemona and Uniland trans-

actions were financed with long-term syndicated loans involving some of the leading Spanish

and foreign financial institutions, and we appreciate their support in our strategic actions.

We would like to express our gratitude to all those who have made our business success

possible, especially all our employees, whose work has been extremely valuable, our clients

and also our suppliers, including financial institutions, who with their support and perseve-

rance, also participate in our growing development and, therefore, our positive contribution

to society. I would like to express my appreciation to them all for their contribution to our ex-

cellent results in 2006, and I also extend my gratitude to all of you, our shareholders, for your

support and your unconditional trust in the Board of Directors.

José Ignacio Martínez-YnzengaChairman

25

MACROECONOMIC ENVIRONMENTWorld and eurozone economiesSpain

CONSTRUCTION AND CEMENT INDUSTRYSpainUSA and other countries

GROUP ACTIVITIES IN 2006Acquisition of a majority stake in Corporación UnilandTakeover bid for Cementos LemonaOther transactionsCementConcreteAggregatesDry mortarTransportCapital expenditureIndustrial developmentQuality, environment and human resourcesNew corporate information systemAnalysis of consolidated results of the year Share performanceShareholder returns

I

II

III

26

ACTIVITY REPORT

Enfidha factory, Tunisia.

27

I. MACROECONOMIC ENVIRONMENT: WORLD AND EUROZONE ECONOMIES

There was a slight improvement in the growth rate of the

world economy in 2006, at 5.1%, compared to 4.2% in

2005. The highlights of the year were:

• Consolidation of the upswing in Europe, particularly in

Germany, where the economy grew 2.7%, its highest rate

since 2000. Overall, the GDP of the eurozone grew 3.0%.

Once again in 2006, oil prices and the euro/dollar exchange

rate were decisive factors in the evolution of the world

economy. The falling price of crude in the second half of

the year, from approximately 80 dollars/barrel to a band of

55-60 dollars, eased the pressure on prices worldwide. At

the same time, the depreciation of the dollar against the

euro is an important factor affecting the structure of growth

in the Eurozone, likewise the continuous increase in the US

foreign debt, which is now equivalent to 6.5% of the US

GDP.

• Confirmation of the expansion in Japan.

• Good level of growth in Latin America, based essentially

on the prices of raw materials.

• Acceleration of growth in China, where the GDP rose by

more than 10%.

• Levelling off in the USA, despite the high rates of activity,

with a GDP growth of 3.3%.

TRENDS IN GDP (Year-on-year percentage changes)

2003 2004 2005 2006

OECD 2.0 3.3 2.6 3.2

USA 2.7 4.2 3.2 3.3

EMU 0.7 1.8 1.8 3.0

UK 2.2 3.2 1.9 2.7

Japan 1.4 2.7 1.9 2.2

Developing & emerging countries 5.9 7.2 6.3 7.0

Latin America* 2.2 5.9 4.4 5.2

Worldwide 4.0 5.1 4.2 5.1

Source: Spanish Ministry of Finance, BBVA and World Bank, 2006 provisional data*: Argentina, Brazil, Chile, Colombia, Mexico, Peru, Uruguay and Venezuela

INFLATION TRENDS (Year-on-year percentage changes)

2003 2004 2005 2006

OECD 2.5 2.5 2.5 2.5

USA 2.3 2.7 3.4 3.2

EMU 2.1 2.1 2.2 2.2

UK 1.4 1.3 2.0 2.3

Japan (0.3) 0.0 (0.3) 0.2

Latin America 7.1 6.8 5.9 5.1

Source: Spanish Ministry of Finance and BBVA, 2006 provisional data

28

SPAIN

The Spanish economy performed well again in 2006, with

a greater balance between internal and external demand.

The Gross Domestic Product (GDP) grew by 3.9%, four

decimals more than in 2005 and one decimal more than

the initial estimate in the Government Budget. Employment

grew by 3.1%, equivalent to 550,000 new full-time jobs,

accompanied by a further reduction of unemployment to

8.5% of the total labour force. Overall, Spain’s economic

According to the International Monetary Fund, the world

GDP was almost 47.8 billion dollars in 2006, 50% higher

than the level recorded in 2000, corresponding to annual

growth rates mostly over 4%. Both IMF and OECD forecasts

suggest that these growth rates will level off in 2007 and

2008, due to the slowdown of the expansion phase of the

US economy, whose GDP represents almost 29% of the

world GDP.

growth was more balanced than in 2005, with a smaller

negative contribution from the external sector.

We highlight three positive factors:

• 3.9% growth of the GDP, extending the long expansion

cycle that began in 1995.

• Creation of 550,000 jobs and reduction of unemployment

to 8.5%.

29

INTEREST RATES (Percentage rates %)

dic.-03 dic.-04 dic.-05 dic.-06

USA 1.00 2.25 4.50 5.25

EMU 2.00 2.00 2.25 3.50

UK 3.75 4.75 4.50 5.00

Japan 0.10 0.10 0.10 0.25

Source: BBVA

USA: MACROECONOMIC INDICATORS (Year-on-year percentage changes)

2003 2004 2005 2006

GDP 2.7 4.2 3.2 3.3

Inflation 2.3 2.7 3.4 3.2

Unemployment 6.0 5.5 5.1 4.6

Interest rate 1.00 2.25 4.50 5.25

Source: Spanish Ministry of Finance

EUROZONE: MACROECONOMIC VARIABLES (Year-on-year percentage changes)

2003 2004 2005 2006

GDP 0.7 1.8 1.8 3.0

Inflation 2.1 2.1 2.2 2.2

Unemployment 8.7 8.9 8.6 7.8

Interest rate 2.00 2.00 2.25 3.50

Source: Spanish Ministry of Finance

• Surplus of public sector of 1.1% over GDP.

There are two negative factors:

• Inflation of 2.7%, in a context of historically very high oil

prices and a tendency towards levelling off.

Within the components of the 3.9% growth in GDP in 2006,

the following are worth mentioning:

• Internal demand contributed 4.9 points to growth,

compared to 5.2 in 2005, while the negative contribution

of the external sector was reduced to 1.0, from 1.7 points

pulling down the GDP growth in 2005, as exports grew

at a faster rate than imports, especially in the first half

of the year.

• Within internal demand, consumption slowed down, falling

four decimals in 2006 to 3.9%, having eased in both

households and public sectors. Even so, domestic

demand is still the driving force of growth, boosted by

(i) interest rates, which are still low in real terms, although

rising, (ii) immigrant flows, (iii) the rising female employment

rate and (iv) the creation of jobs.

• Investment also slowed down in 2006, although unevenly

across the different sectors. Capital Investment grew by

9.7%, compared to 9.0% in 2005, while investment in

construction levelled off, at 5.9% compared to 6.0% in

the previous year, and investment in other products fell

to 3.2% from 7.5% in 2005. The construction sector

recorded a 5.9% growth in 2006, pushed up once again

by residential building and infrastructures, while non-

residential building dropped slightly in the last quarter of

the year.

• In the external sector, exports of goods grew by 5.6%, a

significant improvement from the zero growth in 2005,

while the service exports rose 7.5%, compared to 4.5%

in the previous year. Goods exports recorded a strong

• Imbalance of the external sector, although at more

moderate rates than in 2005 and with prospects of

improving as the German economy starts to recover

its traditional role as the driving force of European

growth.

growth in the first quarter, which then levelled off during

the year, with an upturn in the last quarter. Imports of

goods and services increased by 8.4%, 1.4 points more

than in 2005.

The sustained good performance of the Spanish economy

has been achieved in a positive international economic

context, in which globalisation pressure, the absence of any

significant monetary tensions and the strong contribution of

emerging regions, Latin America and especially China and

India, to the world economic growth, are causing substitution

effects that benefit a balanced economic evolution of the

global economy.

II. CONSTRUCTION AND CEMENTINDUSTRIES

SPAIN

The environment in which the Cementos Portland Valderrivas

Group operated in 2006 was favourable as a whole, with

a particularly good trend within the business in Spain.

The main facts in these sectors were:

• Construction maintained its strong level of activity in

2006, with a growth in the sector’s GDP of 5.9% which,

although one decimal lower than in 2005, clearly over

the average growth of the economy, at 3.9%. With a

volume of production of 185,200 million euros, the sector

directly accounted for around 30% of the national GDP

growth and employed 12.9% of the labour force, thereby

30

SPAIN: MACROECONOMIC VARIABLES (Year-on-year percentage changes)

2003 2004 2005 2006

GDP 3.0 3.1 3.5 3.9

Inflation 3.0 3.0 3.4 2.7

Unemployment 11.5 11.0 9.2 8.5

Source: Spanish Ministry of Finance

increasing its relative weight in the economy and its

multiplier effect in many sectors, including the cement

sector.

• In 2005, the factors behind the sector’s buoyancy were

civil engineering, boosted by public tenders and

residential building. Although demand was more or less

uniform throughout the year, it tended to level off in the

last few months. This could be explained by the upturn

The breakdown of 2006 production in the construction

sector in Spain is indicated below, compared with 2005

figures:

• Residential building: 36%; maintained its strong growth,

although less dynamic than in 2005. Demand held strong

throughout the year.

• Non-residential building: 16%; this segment recovered

slightly due to the increase in private demand and

continued work for the public sector.

• Renovation and maintenance work: 24%; the trend is

stable, maintained by the rising prices within the real

estate market.

• Civil engineering: 24%; regional governments are still the

major generators of this activity, through public tenders

and concessions.

The distribution of public tenders by type of work is

indicated below:

in interest rates and strong growth of property prices,

which could be limiting household purchasing power

and reducing the number of transactions, especially in

the second home segment.

• Certificates of new works were issued for 864,000 homes,

18.5% up on 2005, confirming the solid strength of this

activity. Cement consumption was also clearly rising,

which is another positive aspect.

31

CONSTRUCTION INDUSTRY IN SPAIN (Year-on-year percentage changes)

2003 2004 2005 2006

Gross fixed capital formation 4.3 5.5 6.0 5.9

Gross value added 4.3 5.1 5.4 5.3

Confidence indicator 11.0 14.0 22.0 14.0

Affiliates 4.3 5.6 8.9 7.9

Source: Bank of Spain

PUBLIC TENDER BY TYPE OF WORK

Roads: 24.2%

Social infrastructure: 20.3%

Other building work: 6.3%

Other civil engineering: 18.4%

Housing: 4.5%

Water works: 12.7%

Railways: 13.5%

The distribution of work among the different types of client

was as follows:

• Autonomous Communities: 15,945 million euros.

• Local Authorities: 14,976 million euros.

Cement and clinker imports in Spain increased by 15.2%

in 2006, from 10.7 to 12.3 million tonnes, while exports

continued their decline, dropping 22.1% from 1.4 to 1.1

million tonnes.

• Ministry of Development: 11,120 million euros.

• Ministry of Environment: 2,669 million euros.

• Other Authorities: 1,981 million euros

The development of the construction sector varied among

the different regions. Cantabria, Catalonia, Castile-La

Mancha, Extremadura, La Rioja and Murcia recorded

growth above the average, which in 2006 was of 6%;

Likewise, Asturias, Valencia and Galicia were on the

average. Andalusia, Aragon, Balearic Islands, Canary

Islands, Castile-Leon, Madrid, Navarre and the Basque

Country grew, although below the average rate.

The Spanish cement sector grew at a faster rate than

construction: demand rose 8.2% year on year to 55.7 million

tonnes, an historic record. The dynamism of the sector was

due to the major building projects –such as the new terminal

at Barcelona airport and the four tower blocks on the site

of the former Real Madrid sports grounds– and to public

works, for example, laying the M-30 ring road in Madrid

underground.

32

TRENDS ON THE SPANISH CEMENT MARKET (Thousand tonnes)

Year-on-year Cement Year-on-year Cement Year-on-year Cement percentage & clinker percentage & clinker percentage

Year consumption rates imports rates exports rates

1997 26,795 8.4 3,044 (16.5) 5,572 (11.0)

1998 30,990 15.7 3,108 2.1 4,104 (26.3)

1999 34,627 11.7 4,342 39.7 3,110 (24.2)

2000 38,439 11.0 4,919 13.3 2,160 (30.5)

2001 42,150 9.7 6,595 34.1 1,445 (33.1)

2002 44,120 4.7 7,479 13.4 1,451 0.4

2003 46,223 4.8 8,154 9.0 1,252 (13.7)

2004 47,956 3.7 8,197 0.5 1,589 26.9

2005 51,510 7.4 10,719 30.8 1,447 (8.9)

2006 55,744 8.2 12,343 15.2 1,127 (22.1)

Source: Oficemen, 2006 provisional data

PUBLIC TENDER BY PUBLIC AUTHORITIES

Autonomous Communities 34.2%

Local Administrations 32.1%

Ministry of Public Works 23.8%

Ministry of the Environment 5.7%

Other of General Administration 4.2%

33

YEAR-ON-YEAR CHANGE IN CEMENT CONSUMPTION IN SPAIN(%)

97 98 99 00 01 02 03 04 05 060.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

EVOLUTION OF CEMENT CONSUMPTION IN SPAIN(Thousand tonnes)

97 98 99 00 01 02 03 04 05 0620,000

30,000

40,000

50,000

60,000

EVOLUTION OF FOREIGN TRADE IN CEMENT AND CLINKER IN SPAIN(Thousand tonnes)

97 98 99 00 01 02 03 04 05 060

5,000

10,000

15,000

Cement & clinker imports Cement & clinker exports

UNITED STATES AND OTHER COUNTRIES

The US residential construction market slumped, but it was

offset by the upturn in non-residential construction and

In Argentina, the improved economic situation, together

with the stability of the peso, have contributed towards an

increased consumption and imports of cement, to over 8.8

million tonnes and 0.8 million tonnes, respectively.

As a result of the increase in cement market, Tunisian

demand rose 2.0% to 6 million tonnes, due mainly to tourist

and infrastructure projects.

In Uruguay, the focusing on the construction sector to

recover the economy had a positive effect on cement

consumption, which increased to 0.56 million tonnes, up

10.7% on 2005.

III. GROUP ACTIVITIES IN 2006: The Cementos Portland Valderrivas Groupis now the leading Spanish cementproducer

Following the acquisition of Uniland, the Cementos Portland

Valderrivas Group has increased its market share in Spain

from 17% to 24% and is expected to double its international

business in 2007. The new Group, present in strongly

developing countries such as Tunisia, Argentina and

Uruguay, apart from Spain, the United States, the United

public works. Cement consumption slowed down by 0.7%

to 127.4 million tonnes, while imports grew by 7.9% to

35.5 million tonnes and exports rose by 3.9% to 0.8 million

tonnes.

Kingdom and the Netherlands, has 15 cement factories

with a total annual capacity of 18.8 million tonnes, 154

concrete plants with an aggregate capacity of 8.6 million

cubic metres, 61 aggregate quarries of 25.9 million tonnes,

20 dry mortar plants with an annual capacity of 2.7 million

and other additional businesses. Consequently, the

Cementos Portland Valderrivas Group is now the leading

Spanish cement group, in terms of output, and the seventh

worldwide.

The Group, which has employed an average of 3,551

employees during the year, is structured around its parent

company, Cementos Portland Valderrivas, S.A., which has

4 cement plants, in Alcalá de Guadaira, El Alto, Hontoria

and Olazagutía, 90 concrete plants, 33 aggregate quarries

and 4 dry mortar factories.

The trend of the Group’s core businesses will be analysed

elsewhere in this report. The cement, concrete, aggregate

and dry mortar figures include the sales of Cementos

Lemona for the entire year 2006, since this Group was

already within the perimeter of the Cementos Portland

Valderrivas business, while the sales of Corporación Uniland

are included from the date of its acquisition, 1 August 2006,

to year end.

34

TRENDS ON THE US CEMENT MARKET (Million tonnes)

Year-on-year Cement Year-on-year Cement Year-on-year Cement percentage & clinker % Tasas & clinker percentage

Year consumption rates imports Interanuales exports rates

1997 96.02 6.3 17.39 24.5 0.79 (1.5)

1998 102.46 6.7 23.78 36.7 0.74 (6.3)

1999 108.86 6.2 28.74 20.9 0.69 (6.8)

2000 110.47 1.5 28.23 (1.8) 0.74 7.2

2001 112.81 2.1 25.48 (9.7) 0.75 1.4

2002 110.02 (2.5) 23.80 (6.6) 0.83 10.7

2003 114.09 3.7 22.82 (4.1) 0.87 4.8

2004 121.98 6.9 27.03 18.4 0.75 (13.8)

2005 128.28 5.2 32.89 21.7 0.77 2.7

2006 127.40 (0.7) 35.50 7.9 0.80 3.9

Source: US Department of the Interior, Geological Survey, 2006 provisional data

35

Harleyville factory, South Carolina, USA.

36

Vallcarca factory, Barcelona, Spain.

ACQUISITION OF A MAJORITY STAKE IN CORPORACIÓN UNILAND: One of the most important transactions in the history of Cementos Portland Valderrivas

STRATEGIC ASPECTS. The purchase of a majority

interest in Corporación Uniland is the largest corporate

transaction made to date by the Cementos Portland

Valderrivas Group. Uniland has considerable prestige on

the cement market and a highly competent management

team. It is the leading cement producer in Catalonia,

with access to the Mediterranean markets with high

strategic potential and others with solid growth prospects.

It has a very balanced business portfolio, with high

operating margins, so it has a substantial cash generation

capacity.

The main assets of Corporación Uniland are:

• In Spain, it owns two cement factories in Barcelona

(Vallcarca and Monjos), with a production capacity of 3.2

million tonnes a year, 28 concrete plants, 9 aggregate

quarries, 12 dry mortar plants and a cement terminal at

Barcelona port.

• In Tunisia, it holds an 88% interest in the capital of Société

de Ciments d’Enfidha, which has one factory with a

capacity of 2.3 million tonnes, 4 premixed concrete plants,

one aggregate quarry and one sea terminal.

• In Argentina it holds 50% of Cementos Avellaneda, which

has two factories, in Olavarría and San Luis, with a total

capacity of 1.2 million tonnes a year, 6 ready-mixed

concrete and 2 aggregate quarries.

• In Uruguay it owns 50% of Cementos Artigas, which has

a factory near Montevideo with an annual capacity of

300,000 tonnes, 4 ready-mixed concrete plants and 1

aggregate quarry.

• In the United Kingdom, it wholly owns Southern Cement,

which has a cement terminal in Ipswich, near London.

• Finally, it owns a subsidiary specialising in trading in

the Netherlands and 75% of the company Gulfland

Cement, in the USA, which owns three terminals in

Louisiana.

The Group expects to obtain significant synergies as a

result of this transaction, which will, over the first two years,

be divided into strategic, operating, financial and tax

synergies.

The strategic synergies derive from flexibility to adjust to

imbalances on the markets, through foreign trade and

common logistic redistribution. The operating synergies

derive from joint streamlining of all operations in Spain,

thereby cutting costs; a greater capacity to meet the

challenges of the Kyoto Protocol, leading to more

sustainable production; transfer of best practices both in

Spain and in international production plant; and commercial

optimisation of all the vertically integrated businesses in

the new Group.

Finally, the financial and tax synergies arise out of

optimisation of the balance-sheet structure and reduction

of the cost of capital, and the possibility of obtaining

efficiencies deriving from the creation of the new Cementos

Portland Valderrivas Group.

DETAILS OF THE OPERATION. On 4 June 2006,

Cementos Portland Valderrivas notified the National

Securities Market Commission (CNMV) that by a resolution

adopted by its Board of Directors, it had entered into an

agreement to purchase Portland S.L., a company holding

0.54% of the capital of Corporación Uniland, S.A., which

was thus included in the Cementos Portland Valderrivas

Group. At the same time, Portland, S.L. closed a deal to

purchase a majority stake in the share capital, no less

than 50.46%, with other shareholders of Corporación

Uniland.

On 19 June, the corresponding notification of business

concentrations was submitted to the Spanish Fair Trading

Authority as required under the Competition Act no. 16/1989

of 17 July, which was one of the premises for the

acquisition.

On 26 July, the Fair Trading Authority issued a positive

decision on the purchase of Uniland and on 4 August,

Portland, S.L. concluding the purchase of the majority

stake with other shareholders of Corporación Uniland.

The resulting 51% had a value of 1,092 million euros, and

Cementos Portland Valderrivas has undertaken to purchase

up to 73.5% within a period not exceeding 5 years, at

the same price per share. This transaction was funded

with external financing, structured in two credit facility

agreements for a total sum of 1,580 million euros.

On 12 December, Cementos Portland Valderrivas, through

Portland, S.L., exercised a call options over 114,448 shares,

representing 2.18% in the share capital of Corporación

Uniland, S.A., raising the interest held by Cementos Portland

Valderrivas in Corporación Uniland through Portland, S.L.

to 53.22% at 31 December 2006. Finally, as a post-balance

sheet event, on 26 January 2007 the call option was

exercised over a further 175,242 shares, representing 3.33%

in the capital of Corporación Uniland and as of 12 April

2007, the Group acquired 13,000 shares that accounted

for 2.47%, rising a total stake in Corporacion Uniland up

to 59.02%.

37

TAKEOVER BID FOR CEMENTOS LEMONA:The Group continues to grow

STRATEGIC ASPECTS. Cementos Lemona has one

cement factory in Spain, in Lemona (Vizcaya), with an

annual capacity of 1.25 million tonnes; it also has seven

concrete plants, five aggregate quarries and two dry mortar

plants.

In the USA, in the State of Maine, through CDN-USA, jointly

owned by Cementos Lemona (50%) and Cementos Portland

Valderrivas (50%), it has another factory with an annual

output of 700,000 tonnes, ten ready-mixed concrete plants

and one aggregate quarry.

The conditions were published at the end of 2005 to

purchase a majority stake in Lemona, in which Cementos

Portland Valderrivas already held a 30% interest. A

conservative estimate set savings deriving from integration

at 4 million euros, and these estimates were confirmed in

2006.

DETAILS OF THE OPERATION. On 12 January 2006, a

takeover bid was made over the 100% shares of Cementos

Lemona, at a price of 32 euro per share, and the operation

was closed on 22 February 2006, through which it

purchased shares representing a 96.06% stake. The

external financing of the takeover bid was arranged the

same day; the level of acceptance of the bid required an

investment by Cementos Portland Valderrivas of over 234

million euros.

On 17 March, Cementos Portland Valderrivas, S.A.

proposed delisting the Cementos Lemona shares, making

an irrevocable order to purchase the remaining shares in

Cementos Lemona, S.A., between Monday, 20 March up

to conclusion of the delisting process, at the same price

as that offered in the takeover bid, i.e. 32 euro/share, less

the dividend to be distributed. Thus, from 1 June 2006,

when a final dividend was paid of 0.49 euro/share, the

price offered was 31.51 euro/share.

On 10 May, the General Meeting of Cementos Lemona

resolved to apply for delisting of the Company’s shares on

the Madrid and Bilbao Stock Exchanges. The corresponding

delisting application was filed with the National Securities

Market Commission (CNMV) on 2 June.

On 15 June, the Executive Committee of the CNMV studied

the application and resolved to open the period for pleadings

in the Intermediate Delisting Procedure, which began on 22

June, when the decision was published. The Company

received notification from the CNMV on 13 September 2006

of the delisting of the Cementos Lemona shares on the

Madrid and Bilbao stock exchanges, their last day of trading

being 19 September 2006, inclusive. At 31 December 2006,

Cementos Portland Valderrivas has a direct interest in

Cementos Lemona of 98.28%.

OTHER TRANSACTIONS:

In January, Cementos Alfa, S.A., a subsidiary of Cementos

Portland Valderrivas, purchased the remaining 50% of RH

Enterprises (UK), which in turn held 50% of Dragon Alfa,

the latter also 50%-owned by Cementos Alfa, S.A. As a

result, Cementos Alfa, S.A. now wholly owns Dragon Alfa

and RH Enterprises.

Also in January, Canteras y Hormigones Quintana, partly-

owned by Cementos Alfa, acquired 100% of Transportes

Cántabros de Cementos Portland, S.L. for a purchase price

of over 200,000 euros.

38

Lemona factory, Vizcaya, Spain.

In October, Cementos Portland Valderrivas bought the stake

held by its subsidiary Hormigones y Morteros Preparados

in Hormigones Tabarca, changing its name to Morteros

Valderrivas, S. L.

In December, Almacenes, Tránsitos y Reexpediciones, S.A.

merged into Cementrade, S.A., with no change in the

percentage of interest held by Cementos Portland Valderrivas

of 87.8%.

Following the acquisition by Cementos Portland Valderrivas

of a majority stake in Cementos Lemona, CPV now

controls all the share capital of the US groups GIANT and

CDN-USA, creating a favourable situation for the

integration of the two groups with a view to obtaining

cost economies, tax savings and administrative

simplifications in keeping with the new situation. On 31

December, took place the takeover merger between CDN-

USA and Giant Cement Holding Inc., the latter as the

acquirer. As a result, the assets and liabilities of CDN-

USA have been absorbed into those of Giant Cement

Holding Inc. Cementos Portland Valderrivas now has a

direct interest of 85.74% in the new company and an

indirect interest of 14.01%, through Cementos Lemona

S.A. (6.53%) and Telsa, S.A. (7.48%).

CEMENT: Strong year-on-year growth of 31.4%,in a context of new record levels in cementconsumption

Cement consumption in Spain has once again achieved a

new record level, with a consumption of 55.7 million tonnes

in 2006. Within this context, the Cementos Portland

Valderrivas Group increased its cement and clinker sales

by 31.4% year on year, largely due to the incorporation of

Corporación Uniland. The acquisition of Uniland contributed

in 3.1 million tonnes to the Group’s total cement sales of

14.5 million tonnes, owning a total of 15 factories: 8 located

in Spain, 3 in the United States, 2 in Argentina, 1 in Tunisia

and 1 in Uruguay.

In 2006, 70% of the cement sales, some 10.1 million tonnes,

were produced in Spain, and 15.3%, 2.2 million tonnes, in

the USA, through Giant Cement Holding and CDN-USA.

The remainder are distributed among the UK with 0.5 million

tonnes with a growth of 18.5%, partly due to the

contribution of Uniland; Tunisia with 0.7 million tonnes,

representing 5.1% of the Group sales; Argentina with 0.4

million; Uruguay with 0.1 million tonnes and 0.4 million

tonnes sold in other countries.

The parent company, Cementos Portland Valderrivas,

S.A., still makes the largest contributions in cement and

clinker sales, accounting for practically half the Group’s

output, 7.0 million tonnes, which represent 48.0% of the

total production. The factories in Alcalá de Guadaira, El

Alto, Hontoria and Olazagutía have sold 6.7 million tonnes

of grey cement and 0.3 of white cement, respectively.

After the parent company, Corporación Uniland sold 3.1

million tonnes, representing 21.4% of the cement

business, and the US enterprises Giant Cement and CDN-

USA accounted for 15.1% of the cement sales.

39

CEMENT AND CLINKER SALES (Tonnes)

Change %2002 2003 2004 2005 2006 06/05

Companies

Cementos Portland Valderrivas 5,925,276 6,299,835 6,471,767 6,925,964 6,952,782 0.4

Corporación Uniland – – – – 3,094,400 –

Cementos Alfa 966,023 965,458 1,004,399 990,398 1,019,695 3.0

Cementos Lemona 742,354 754,327 716,607 862,239 888,007 3.0

Giant Cement Holding 1,464,283 1,467,504 1,485,790 1,576,977 1,613,187 2.3

CDN-USA 475,452 518,048 545,620 552,644 583,196 5.5

Ceminter Madrid – – – 116,913 132,656 13.5

Dragon Alfa – – – – 200,069 –

Total 9,573,388 10,005,172 10,224,183 11,025,135 14,483,992 31.4

NB: The 2006 sales include those of Corporación Uniland from 1 August to 31 December.

Within the sales of Cementos Portland Valderrivas, S.A., in

Spain and by regions, the Community of Madrid accounted

for 29.2% of the cement sold, followed by Andalusia with

24.3%, Castile-Leon with 19.7% and Navarre and

Extremadura with 8.5% and 6.5%, respectively. 11.8% of

the Group sales are distributed among Castile-La Mancha,

Basque Country, La Rioja, Aragon and other communities.

In sales by type of client, 41.9% of production was sold to

concrete producers, 34.9% was purchased by wholesalers,

11.8% by prefabricated manufacturers, 6.7% by construction

firms and the remainder by other consumers.

The cement sales of Alfa rose from 990,398 tonnes to

1,019,695, a year-on-year growth of 3.0%, the same rate

achieved in 2006 by Cementos Lemona, which sold 888,007

tonnes. Their combined output represented 13.2% of the

Group. Giant Cement Holding and CDN-USA, which both

merged at the end of 2006, with a total of 2,196,383 tonnes

sold, recorded a year-on-year growth of 3.1%. Ceminter

Madrid, acquired in 2005, recorded the largest sales growth

in 2006 with 13.5%, although its output accounted for just

0.9% of the total. Finally, Dragon Alfa sold 0.2 million tonnes,

1.4% of the Group’s total cement sales, with 15 factories:

8 in Spain, 3 in the United States, 2 in Argentina, 1 in Tunisia

and 1 in Uruguay.

CONCRETE: 27% of the Group’s productionplants belong to Uniland

Total sales of concrete by the Cementos Portland Valderrivas

Group increased by 24.8% in 2006, to 6.8 million cubic

metres. Of this volume, the incorporation of Uniland added

1.1 million m3, with a total of 42 plants: 28 in Spain, 6 in

Argentina, 4 in Tunisia and 4 in Uruguay. Overall, therefore,

the Group has 154 concrete production manufacturing

facilities, 130 of them in Spain.

Cementos Portland Valderrivas recorded a year-on-year

growth of 5.2%, crossing the threshold of 5.0 million cubic

metres of concrete sold, equivalent to 73.6% of the Group

total sales. The other companies also contributed to the

growth of the concrete business, especially Cementos

Lemona, which raised its sales by 18.3% to 0.4 million

40

DESTINATION OF CEMENT AND CLINKER SALES (Tonnes)

Change %2002 2003 2004 2005 2006 06/05

Spain 7,424,851 7,789,349 7,940,677 8,517,303 10,120,780 18.8

USA 1,939,735 1,985,552 2,031,410 2,129,621 2,212,997 3.9

UK 208,802 230,271 252,096 378,211 448,016 18.5

Tunisia 742,522 –

Argentina 429,013 –

Uruguay 108,119 –

Others 422,545 –

Total 9,573,388 10,005,172 10,224,183 11,025,135 14,483,992 31.4

CEMENT AND CLINKER SALES BY COMPANY

2006

C. P. Valderrivas 48.00%

Ceminter Madrid 0.92%

Dragon Alfa 1.38%

CDN-USA 4.03%

Cementos Lemona 6.13%

Cementos Alfa 7.04%

Giant Cement Holding 11.14%

Corporación Uniland 21.36%

CEMENT & CLINKER SALES (Million tonnes) CAGR: 10.9%

02

0

2

4

6

8

10

12

14

03 04 05 06

cubic metres, followed by Cementos Alfa, which achieved

11.5% year-on-year growth. In the same period, Hympsa

produced 3.9 million cubic metres of ready-mixed concrete,

exceeding its previous year’s output by 9.7%.

The concrete division of the Cementos Portland Valderrivas

Group supplies most of the Spanish region. It fleets over

1,000 truck mixers covering 70,000 km daily through

Andalusia, Aragon, Cantabria, Castile-La Mancha, Castile-

Leon, Catalonia, Valencia, Extremadura, La Rioja, Madrid,

Navarre and the Basque Country, providing the best

service to its customers through a production planning

system.

Some of the most important works where the Cementos

Portland Valderrivas Group has supplied concrete include:

• Repsol Tower, taking the M30 ring road underground, the

Centro Islazul and the Northern underground in Madrid;

• Underground and enlargement of the Torres de Nuevo

Torneo business park in Seville;

• Breña and Arenoso (Montoro) dams in Cordoba;

• Underground and IKEA shopping centre in Malaga;

• Despeñaperros section of the A4 highway in Ciudad Real;

• La Plata highway in the section Monesterio-Fuente de

Cantos, Badajoz;

• Burgos hospital;

• Caissons at Tarragona Harbour;

• Barcelona airport terminal building.

Within our environmental policy, we continue investing in

concrete recyclers to eliminate solid waste, and pursue our

objective of increasing the number of plants with zero liquid

waste.

The Group’s concrete companies have practically all been

certified with the standard UNE EN ISO 9001 and several

plants have also been awarded the N product certificate

by AENOR.

41

CONCRETE SALES (Cubic metres)

Change %2002 2003 2004 2005 2006 06/05

Companie

Cementos Portland Valderrivas 4,020,244 4,344,685 4,596,139 4,768,590 5,018,607 5.2

Cementos Alfa 385,976 387,337 200,886 205,335 228,991 11.5

Cementos Lemona 287,117 252,752 250,920 297,810 352,232 18.3

Corporación Uniland – – – – 1,088,048 –

CDN-USA 154,375 159,605 167,665 192,148 130,840 (31.9)

Total 4,847,712 5,144,379 5,215,610 5,463,883 6,818,718 24.8

NB: The 2006 sales include those of Corporación Uniland from 1 August to 31 December.

Harleyville factory, South Carolina, USA.

CONCRETE SALES(Million cubic metres) CAGR: 8.9%

02 03 04 05 06

0

1

2

3

4

5

6

7

AGGREGATES: Year-on-year growth of 16.2%

The aggregates division of the Cementos Portland

Valderrivas Group sold a total of 22.4 million tonnes of

aggregates in 2006, which was a considerable improvement

(up 16.2%) over 2005, when production practically came

to a standstill. Much of this growth attributed to the

incorporation of the 13 aggregate quarries of Uniland, which

contributed 2.3 million tonnes, and the development of

Cementos Portland Valderrivas, increasing its output by

4.6% with the opening of its new Aripresa plant in Loranca

de Tajuña (Guadalajara), adding a further 0.7 million tonnes.

Cementos Alfa and Cementos Lemona also improved,

achieving year-on-year growth rates of 18.3% and 6.8%,

respectively, in production.

By totals, Cementos Portland Valderrivas accounted for

66.1% of the business and, together with Cementos Lemona

(14.4%) and Corporación Uniland (10.1%), supplied 90.6%

of the Group’s total aggregates production. By regions, in

Madrid sales, 2.9 million tonnes, and prices have both

remained at the same levels as in 2005. In other regions,

business improved, in the Basque Country by 6.8% and

in Cantabria by 18.3%.

The Group has 61 plants, 55 of which are in Spain,

distributed among Andalusia, Aragon, Cantabria, Castile-La

Mancha, Castile-Leon, Catalonia, Extremadura, La Rioja,

Madrid, Murcia, Navarre and the Basque Country. Of these,

the 9 plants recently incorporated in the Group are situated

in Catalonia: Roselló (gravel pit), Vallcarca (limestone quarry),

Olerdola (limestone quarry), Orpí (limestone quarry), San

Sadurní (gravel pit), Arbolí (limestone quarry), García (gravel

pit), Ullá (limestone quarry) and Colomers (gravel pit).

On an international scale, apart from the two plants the

Group already had in the USA, it now also has 4 plants

from Uniland, 2 in Argentina, 1 in Tunisia and 1 in Uruguay,

from which it obtains 528,632 tonnes.

In 2006, this business unit renewed the quality and

environmental certificates of its plants on the basis of the

management systems installed, and consolidated the

application of and compliance with the requirements for

obtaining CE certification for all its products, achieving a

high level of customer satisfaction.

With regard to health and safety at work as a fundamental

aspect, entirely integrated in the business management of

the Group, a Health and Safety at Work System has been

implemented at all work places, adjusted to and complying

with Standard OHSAS 18001 as audited and certified by

AENOR for all the processing plants and offices of

ARIPRESA.

42

AGGREGATES SALES (Tonnes)

Change %2002 2003 2004 2005 2006 06/05

Companies

Cementos Portland Valderrivas 12,558,535 14,629,473 15,088,657 14,137,725 14,791,798 4.6

Cementos Alfa 1,625,611 1,671,592 1,663,733 1,340,091 1,584,686 18.3

Cementos Lemona 1,219,742 1,360,952 1,905,047 3,011,735 3,215,042 6.8

Corporación Uniland – – – – 2,251,479 –

CDN-USA 239,059 211,746 158,869 168,206 157,614 (6.3)

Giant Cement Holding 654,874 760,882 835,840 587,575 371,018 (36.9)

Total 16,297,821 18,634,645 19,652,146 19,245,332 22,371,637 16.2

NB: The 2006 sales include those of Corporación Uniland from 1 August to 31 December.

AGGREGATES SALES (Million tonnes) CAGR: 8.2%

02 03 04 05 060

2

4

6

8

10

12

14

16

18

20

22

DRY MORTAR: Sales have doubled

The dry mortar business is the fastest growing division of

the Group. The integration of the 12 Uniland dry mortar

plants, together with an organic growth of 20.8%, raised

total sales by 100.5%, from 0.8 million tonnes in 2005 to

1.7 million in 2006.

Cementos Portland Valderrivas, which has 4 dry mortar

production plants, recorded 26.9% growth, contributing in

42.5% of the total sales of this division. The Uniland plants,

with an output of 0.7 million tonnes, account for 39.7% of

total sales. Cementos Alfa and Cementos Lemona sold 0.2

and 0.1 million tonnes, respectively, contributing 10.1%

and 7.6% to the total.

The dry mortar business has continued its expansion, in

terms of the number of plants and on-site bulk mortar

silos, and in its catalogue of packaged products. Of the

factories making up this division prior to the incorporation

of Prebesec (Corporación Uniland), four already dispatched

packaged products, and in 2006 the process was set to

introduce this sales channel in Seville and Malaga. This

channel is expected to develop significantly in the coming

years, enabling the Group to increase its operations with

wholesalers and distributors, offering a broad array of

special mortars and masonry products.

The 20 dry mortar plants existing at present, in the provinces

of Seville, Malaga, Madrid, Navarre, La Rioja, Cantabria,

Vizcaya, Alava, Zaragoza, Mallorca, Valencia, Lerida,

Barcelona and Gerona, recorded satisfactory growth in both

bulk and bagged production.

During 2006, the Group supplied mortar to major works,

mentioning especially:

• the work in progress to take the M-30 ring road

underground, with injection mortar and masonry and

tunnel mortars in numerous underground stations in

Madrid;

• the underground and tramway line in Seville;

• the Isozaki Towers and underground train station of

Miribilla (RENFE) in Bilbao;

• the Music Palace in Vitoria;

• and the injections in special foundations in Gibraltar,

Barcelona and Murcia.

CE certification, which is mandatory for all mortars put

on the market, has been obtained for all plants, under

the new harmonised standards UNE EN 998-1 and UNE

EN 998-2.

The factories in Madrid, Vizcaya and Cantabria have

obtained environmental certification by AENOR and those

in Seville and Malaga should obtain such certification

shortly.

43

DRY MORTAR SALES (Tonnes)

Change %2002 2003 2004 2005 2006 06/05

Companies

Cementos Portland Valderrivas 430,102 444,413 456,856 562,132 713,191 26.9

Cementos Alfa 94,935 115,792 133,892 144,399 170,149 17.8

Cementos Lemona 76,901 87,690 123,350 130,538 127,894 (2.0)

Corporación Uniland – – – – 666,898 –

Total 601,938 647,895 714,098 837,069 1,678,132 100.5

NB: The 2006 sales include those of Corporación Uniland from 1 August to 31 December.

0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

DRY MORTAR SALES(Million tonnes) CAGR: 29.2%

02 03 04 05 06

TRANSPORT: Growth continues

The Group companies Natrasa and Atracemsa increased

their business by 9.8%, transporting 4.0 million tonnes

of cement and raw materials. Despite its relatively small

weight in the business Natrasa increased sales by 19.1%,

carrying 0.8 million tonnes, while Atracemsa, which

accounts for 81.1% of the business, transported 3.3 million

tonnes.

Apart from the utmost important transactions in the

corporate history of the Cementos Portland Valderrivas

Group, the takeover bid for all the shares in Cementos

Lemona and the acquisition of the majority stake in

Corporación Uniland, which required a total investment in

financial assets of 1,390.7 million euros, the Group has

continued its policy of modernising and enlarging its

industrial facilities. It spent a total sum of 132.4 million

euros on this, 23,5% more than the previous year, investing

126.7 million euros in tangible fixed assets and 5.7 million

in intangible fixed assets.

The Keystone Cement factory in Pennsylvania was

refurbished during 2006, as approved in 2005, to modify

the dry production procedure. Work is progressing

according to schedule and is due to be completed within

the first half of 2008. This investment, of over 150 million

euros, will enhance competitiveness, by considerably

reducing the costs of production, and will also increase

the cement production capacity from 600,000 to

1,000,000 tonnes/year, optimising our service to

consumers.

To comply with environmental requirements, two cylindrical

clinker silos and a hopper are being built at the Harleyville

44

TRANSPORT (Tonnes)

Change %2002 2003 2004 2005 2006 06/05

NATRASA 504,380 565,637 638,374 639,018 760,954 19.1

ATRACEMSA 2.519,160 2,737,956 2,777,026 3.034,158 3,271,014 7.8

Total 3,023,540 3,303,593 3,415,400 3,673,176 4,031,968 9.8

NB: The 2006 sales include those of Corporación Uniland from 1 August to 31 December.

CAPITAL EXPENDITURE (Thousand euros)

Change %2002 2003 2004 2005 2006 06/05

Intangible fixed assets 9,096 8,221 16,495 4,313 5,655 31.1

Tangible fixed assets 123,233 122,361 131,461 102,877 126,716 23.2

Financial fixed assets 6,817 19,962 7,849 14,487 1,390,749 9,500.0

Total 139,146 150,544 155,805 121,677 1,523,120 1,151.8

INVESTMENTS: Investment of 1,391 million euros in theacquisition of Uniland and takeover bid for Cementos Lemona

The Cementos Portland Valderrivas Group invested a total

of 1,523.1 million euros during 2006.

0

1

2

3

4

TRANSPORT(Million tonnes) CAGR: 7.5%

02 03 04 05 06

factory in South Carolina, to prevent the emission of dust

into the air, as occurred at the old warehouse for this

product. The new silos, built of ready-mixed concrete, will

have a total capacity of 50,000 tonnes and the hopper of

1,800 tonnes. The investment includes a silo filling system

using metal conveyors and elevators, a metal conveyor

system for removing product from the silo and sending

clinker to the cement mills, and bag filters to prevent

emissions. The new facility will increase storage capacity,

thus enabling the production of different types of clinker.

It is expected to be completed within twelve months,

totalling an investment of 12.5 million dollars.

The existing electrostatic filter of clinker kiln VII is being

replaced with a bag filter at the factory El Alto (Madrid). This

enhances production security, due to the possibility of doing

maintenance work without shutting down the furnace, and

costs less than other options available on the market. This

investment guarantees fulfilment of the voluntary agreement

signed with the Regional Department of Environment in

respect of the kiln operating conditions, and the Company

will be entitled to a significant deduction in its corporation

tax. A total investment of 5.2 million euros is required.

At the same factory, the white clinker production line has

been upgraded in order to make it more competitive,

increase production to meet demand and allow compliance

with environmental regulations.

With this investment of 18.4 million euros, the white

clinker production has been raised from 700 to 900

tonnes/day, which is equivalent to an increase from

270,000 to 350,000 tonnes a year in white cement

production capacity. This modification of the facilities

has affected costs by reducing energy consumption,

and has reduced the fixed unit costs by increasing

production. Likewise, SO2, NOx and CO2 emissions have

also been reduced considerably.

All this has been achieved by modifying the cooling system

and installing a latest generation calciner.

An innovative, experimental Air Quality Control Predictive

Model has been implemented at the Madrid factory to

indicate 72 hours in advance the effect of factory emissions

on the concentration of air-polluting substances in the

environment. The system has been designed with state-

of-the-art technology in dynamic air quality simulation

models.

A new medium electricity grid substation has been built at

the factory in Hontoria (Palencia), with an investment of

2.2 million euros.

The finished product and process quality services have

also been centralised in a new, modern laboratory at this

factory, with a capital expenditure of 0.8 million euros.

Moreover, work has begun to build a multi-chamber silo

for clinker, with a capacity of 55,000 tonnes, with the aim

of confining the storage of raw materials and products in

accordance with the commitments acquired with the

45

Waste treatment plant, South Carolina, USA.

Department of Environment of the Regional Government

of Castile-Leon.

A new building is being erected at the Alcalá de Guadaira

(Seville) factory to house the offices and quality laboratory.

The cost of this investment is 1.5 million euros.

In environmental aspects, we have continued to extend the

best available techniques to control greenhouse gas

emissions, such as those existing at the El Alto factory and

other three factories in the Group, implementing the SNCR

(Selective Non-Catalytic Reduction) system, a pioneer

system proved to be effective for reducing NOx emissions.

Cementos Alfa has a terminal at Raos port, Santander, to

facilitate cement exports to the UK. As mentioned before,

in the previous year Alfa increased its interest in Dragon

Alfa, with a plant in Gloucester, from 50% to 100%. This

terminal has an unloading capacity of 300,000 tonnes and

recorded sales of 200,000 tonnes in 2005 and 2006.

Therefore, in the first four months of the year the Company

decided to enlarge the export facilities. This work is in

progress, to give these facilities their own dock and an

additional 8,000 tonne silo, to enhance efficiency and access

to new markets. The silo unloading system is also being

modified, by double railway tracks to double the capacity

and ship-loading system. Capital expenditure will exceed

12.5 million euros.

INDUSTRIAL DEVELOPMENT: Compatible with the sustainable developmentof operations

The Group continued this year with the strategy of making

sustainable development compatible with industrial

operations by searching for sub-products and waste to be

used instead of natural resources, as raw materials and as

alternative fuels, forming the basis of the environmental

policy and one of the decisive factors for reducing CO2.

emissions.

The use of decarbonated industrial sub-products has been

incorporated in the production process, with a beneficial

effect on the environment.

Agreements have been signed with waste managers for

the use of biomass byproducts as alternative fuels, and

pilot tests have been developed for the use of forestry

biomass, with a neutral effect on the recording of

greenhouse gas emissions.

A six-year agreement has been signed to collaborate under

SIGNUS in the processing of unused tyres and participate

in energy recovery projects, after the processing and

preparation of the tyres.

Collaboration with the authorities continued to find solutions

for certain flows of waste from other industrial processes,

working jointly with the R+D+I department and applying

the Group’s innovation and know-how.

Definitively, the Group has put into practice the commitment

to develop industrial operations focusing on constant

improvement, reducing the effects of such activity, making

a better use of resources through the employment of

alternative fuels and materials, and communication with all

the players involved to improve social well being.

QUALITY, ENVIRONMENT AND HUMAN RESOURCES: A Group that looks after the environment

Once again, in the aim of continuous improvement in

customer satisfaction, Cementos Portland Valderrivas, S.A.,

has guaranteed the quality of its products and has also

put three new types of cement on the market: cement CEM

IV/B 32,5 N from the Olazagutía factory, especially for

packaged sales, with extremely good properties for its main

intended purpose, masonry and small works; white cement

BL I 52,5 R, from the El Alto factory, which is more

competitive on the market of prefabricated white products;

and cement CEM I 52,5 R/SR, from Alcalá de Guadaira,

unique in Spain in its mechanical type, resistant for

applications in gypsiferous soils and sea waters.

The quality management system has incorporated the

control and monitoring of greenhouse gas emissions,

46

especially CO2, at all the Group’s factories, as evidenced

in the inspections made during 2006. The growth of the

cement market has, therefore, been met while applying the

strategy to control and reduce those emissions.

Cementos Portland Valderrivas continues its progress

towards a sustainable model for its industrial activities,

obtaining in 2006 integrated environmental authorisations

for its factories in Alcalá de Guadaira in Seville and El Alto

in Madrid. This is the ultimate achievement of the Voluntary

Agreements made at 31 December 2006, applying the

rigorous environmental legislation in all the Group’s factories

before it is legally obliged to do so.

The strategy of continuous improvement in attitude and

conduct in all areas of environmental management is

recognised by the EMAS (Eco-Management and Audit

Scheme) Registration at the El Alto factory, in application

of Regulation (EC) No 761/2001. The attached Environmental

Statement, informing on the environmental impact and

performance of the business, may be consulted by any

interested parties on the Company’s web site and at the

work place.

Cementos Portland Valderrivas has undertaken to apply

the EC Regulation regarding eco-management and audit

at all its factories within the next few years, consolidating

the image of excellence on which it wishes to base its

environmental management system. This effort was

recognised in March 2006 when the El Alto factory

obtained the Environment Prize, awarded for the best

environmental management in large organisations by the

Community of Madrid, the Official Chamber of Commerce

and Industry of Madrid, and the Business Confederation

of Madrid.

The improved relations with the closest interested parties

were confirmed at the “Environmental Reporting Workshops”

held at the Alcalá de Guadaira and El Alto factories, which

were a great success, and the excellent attendance of the

“Open Day” at the El Alto factory.

Detailed information on the environmental impact of

the Company’s activities is set out in the Sustainability

Report 2006 of the Cementos Portland Valderrivas

Group, prepared in accordance with the GRI Guidelines

(Global Reporting Initiative), reporting from three points

of view on the Company’s economic, environmental and

social performance and comparing it with previous

years.

Cementos Portland Valderrivas continues to uphold the

value of Occupational Hazard Prevention, convinced that

the Group’s contribution should not be confined, within the

scope of labour practices, to protecting and respecting

workers’ basic rights, but should encourage and promote

quality in the working environment and the value of relations

with employees. Considerable importance has been

emphasized in recent years to “socially responsible”

behaviour, considering this the type of conduct that goes

beyond the stipulated minimums and aims to reach levels

of excellence in all compulsory aspects, and even in some

that are not compulsory. In this regard, occupational hazard

prevention is undoubtedly one of the essential aspects of

corporate social responsibility.

The “Canal Portland – Preventive Approach” campaign,

begun in 2004, continuing in 2006, with new videos of

actual scenes from ordinary work at all factories,

supplemented with the animated character, “Dummy-

Portland”, based on the “crash test dummies” and a

campaign slogan: “Don’t be a dummy”, to illustrate bad

conduct. This preventive information and training action is

made available on the web site www.canalportland.com.

This makes Prevention accessible to everyone everywhere,

with the hope of reducing not only accidents at work, but

also accidents suffered by people within the circles of those

participating in the programme.

As mentioned earlier, 2006 was a very important year in

the Cementos Portland Valderrivas Group, requiring a

significant effort by its employees, in order to

simultaneously carry out the different projects developed

over the year. Once again, the Group’s professionals

have proved their capacity to work, as proved with the

start-up, as of 1 July, of the Information Management

System (SAP) in Cementos Portland Valderrivas and

Atracemsa, and the parallel work done on setting up the

same system for subsequent implementation in Hympsa

and Aripresa.

Another significant achievement, which also involved a

large number of professionals within the Group, is the

different work teams set up to assist in the integration of

Uniland, Lemona and Alfa, requiring considerable

perseverance and dedication. During the year the Human

Resources Department incorporated the Lemona Group

and Ceminter Madrid, S.L. in its Management System,

significantly increasing the information handled by that

system.

In an effort to further enhance employees’ access to

information, a process that the Group began several years

ago, it was started up at the Olazagutía factory, consisting

on a pilot programme to increase personel access to the

Employee Portal by installing an “Information Terminal” with

easy access to the Portal. This initiative was welcomed by

employees and will be followed up by installing these

terminals in the other factories. The Hontoria factory will

be the next one to be installed.

47

Moreover, the Group is convinced that every hour employed

in training is profitable, professional furtherance has

continued to be one of the pillars of Human Resources

Management in 2006. During this year, the greatest efforts

and dedication were applied to the total training given for

the new Information Management System, with almost

5,000 hours of training. More than 95% of the training

courses were given by internal staff. At the same time, the

continuous improvement training plan established for every

year was maintained, with the aim of adjusting the expertise

and skills of the employees to the Group’s needs.

NEW CORPORATE INFORMATION SYSTEM: A huge effort that will result in a greater and better positioning of the Group

The installation and start-up of the SAP-based management

information system was completed on schedule during

2006 in two of the Group’s businesses, cement and

transport. Cementos Portland Valderrivas, S.A. and

Atracemsa were the first to operate with this new system.

The integration between SAP and other strategic methods

was also concluded, such as i-Historian for connection

with the cement factory processing systems, and others

for controlling and managing truck traffic.

The development and installation of the new system in the

other businesses (aggregates, concrete and mortar) was

scheduled for the first half of 2007, owing to the need to

assign resources to the acquisitions made in 2006 and the

other projects already in progress.

The following SAP modules are included in this technological

update project:

• Administration and Finance

• Management Control

• Warehouses and Purchases

• Sales and Distribution

• Maintenance

• Production

• Quality

• Managing Officers

• Documentary Management

All this is involving an enormous effort at all levels, both

for building and implementing the new system and for

adapting processes and people to entail major redefinitions

of procedures to make them compatible with the new

tool and promote the best practices.

This effort will place the Cementos Portland Valderrivas

Group in a better position for the future, giving it excellent

basis for integrating the recent corporate acquisitions and

any others that may be made in the future, known as

open technologies, where barriers cease to be a serious

obstacle.

Open systems are the only way to compete in a world in

which connectivity and collaborative environments are

essential to minimise times for obtaining information,

maximise use of material means and eliminate the obstacle

of geographical distribution.

Once the necessary stages of installation, implementation,

stabilisation, adaptation and maturity of all the technical

and human components have been completed, an extremely

important investment will be made in the internal and

external resources assigned to this ambitious renovation

project, which will deliver a lengthy period of stability of

the Corporate Information Systems.

ANALYSIS OF CONSOLIDATED RESULTS OF THE YEAR: Major quantitative and qualitative progresses

PROFIT AND LOSS ACCOUNT.

The developent of the Cementos Portland Valderrivas Group

in 2006 was highly satisfactory, characterized by absolute

and relative improvements in its main performance

indicators.

The takeover bid for Cementos Lemona, consolidated as

of 1 March, and the acquisition of Corporación Uniland,

as of 1 August, had a very positive effect on the 2006

figures, bringing an important quantitative and qualitative

change for the Group. The purchases of Ceminter and

Dragon Alfa in the third quarter of 2005 also contributed

to the growth of the business and results in 2006.

Overall, the net turnover was 1,466.6 million euros,

representing a growth of 49.9% and 488.2 million over 2005,

due to increases in the volume of sales and the level of

average prices. The acquisitions contributed a total of 368.10

million euros to the increase in turnover and 37.6 points to

the growth of 49.9 percentage points, while organic growth

contributed 12.3 points and 120.1 million euros, as

summarised in the following chart. Geographically, the

domestic turnover grew by 44.7%, from 769.8 to 1,113.5

million euros; while international sales grew 69.2%, from

208.6 to 353.0 million euros.

48

Of the additional total turnover of 488.2 million euros, 144.4

million (29.5%) corresponded to the Group’s international

business, and 83% of that 114.4 million was due to the

acquisitions made, as shown in greater detail in the following

chart. In the United States, sales increased by 52.7 million

euros. The contributions to turnover by the countries in

which the Group began operating for the first time in 2006

were as follows: Argentina 28.2 million euros; Tunisia 24.7

million; Uruguay 7.8 million; France 6.3 million; and the

Netherlands 3.0 million euros.

49

TOTAL TURNOVER(Million euros)

2005

978.4

120.1119.0

237.2 11.9

12.3%

12.2%24.2%

1.2%

1,466.6

488.2

49.9%

(1) Dragon Alfa Cement

Organic Growth

Growth through acquisitions

Lemona Uniland Other acquisitions (1) 2006

INTERNATIONAL TURNOVER(Million euros)

2005

208.624.5

30.9

77.2 11.8

11.7% 14.8%

37.0%

5.6%

353.0

144.4

69.2%

(1) Dragon Alfa Cement

Organic Growth

Growth through acquisitions

Lemona Uniland Other acquisitions (1) 2006

The Group posted an EBITDA of 485.3 million euros in

2006, 55.4% higher than the 312.3 million recorded in 2005.

Of this 173.0 million increase, 107.1 million are due to the

acquisitions of Lemona (40.6 million), Corporación Uniland

(64.6 million) and others (1.9 million), and 65.9 million to

The Group attained a profit before tax of 288.0 million

euros, up 36.2% on the 211.5 million of 2005. The profit

attributable to the parent company was 175.9 million euros,

up 38.8 million euros, or 28.3%, year on year. Finally, funds

from operations totalled 486.8 million euros, compared to

303.8 million euros generated in the previous year,

representing growth of 60.3%.

BALANCE SHEET.

The Group’s consolidated balance sheet underwent a

significant change in 2006, multiplied by 2.8 as a result of

the incorporation of Lemona and Corporación Uniland. The

total assets of the Cementos Portland Valderrivas Group

at 31 December were valued at 4,233.1 million euros,

2,745.8 million more than in 2005, a year-on-year growth

of 184.6%. The Group considerably increased its size,

taking advantage of its excellent balance sheet and

borrowing capacity, as it had done previously with the

acquisitions of Cementos Atlántico in 1998 and Giant

Cement in 1999, allowing a better use of equity and

maintaining an adequate ROE.

The incorporation of the Lemona Group and Uniland in the

tangible fixed assets contributed 1,298.6 million euros of

the 2,745.8 million mentioned. The increase in intangible

fixed assets is mostly due to inappropriate goodwill. The

organic growth, as summarised in the following chart. The

EBITDA/sales margin rose to 33.1% in 2006, from 31.9%

in 2005. Overall, therefore, the Group achieved noticeable

improvements in all areas.

decrease in investments in associated companies is mainly

due to the elimination of Cementos Lemona, which is now

fully consolidated instead of being recorded by the equity

method, while the increase in non-current financial assets

is due to the registering of the call option over Uniland

shares.

The Group equity totalled 1,374.3 million euros at 31

December 2006, up 37.2% on the 1,001.9 million euros

recorded at 31 December 2005. This amount comprises

the equity of the parent company totalling 1,078.5 million

euros, 11.6% up on the 966.7 million euros recorded at 31

December 2005. Minority interests, including the interests

of minority shareholders in the equity and totalling 295.8

million euros, increased by 260.6 million euros after the

incorporation of Lemona and Uniland.

At year-end 2006, non-current liabilities totalled 2,447.0

million euros, with a significant increase due to the

financing obtained for the acquisitions of Lemona and

Uniland, including put options for 435 million euros, and

the incorporation of their debts. The increase in other

non-current liabilities is due mainly to recording of the

deferred tax on the assignment of goodwill to fixed assets

in Lemona, CDN and Uniland, in a sum of 273 million

euros. Current liabilities increased by 208.7 million euros,

50

EBITDA(Million euros)

2005

312.3

65.9

40.6

64.6 1.9

21.1%

13.0%

20.7%

0.5%

485.3

173.0

55.4%

(1) Dragon Alfa Cement

Organic Growth

Growth through acquisitions

Lemona Uniland Other acquisitions (1) 2006

of which 64.5 million corresponded to the short-term

financing of Lemona and Uniland, and 93.4 million to both,

the increase in trade accounts receivable upon

incorporation of the aforesaid groups and the increase in

accrued corporation tax payable, in a sum of 25.3 million

euros.

At 31 December 2006, the Group recorded a net debt of

1,474.5 million euros, compared to 132.4 million euros,

recorded at 31 December 2005. The major acquisitions

made during the year raised the net debt/equity ratio from

13.2% to 107.3%, placing it at the level of other groups in

the cement sector. Similarly, the net debt/total assets ratio

rose from 8.9% in December 2005 to 34.8% in December

2006. The net debt/EBITDA ratio was 3.0 times at year-end

2006 and is expected to continue falling over forthcoming

years.

At the Extraordinary Shareholders’ Meeting of Cementos

Portland Valderrivas, S.A., held on 22 November 2006, it

was resolved to apply tax consolidation to Cementos

Portland Valderrivas, S.A., as controlling company, and all

the companies in its tax group.

The Spanish stock market has consolidated its position

within the group of 10 stock exchanges worldwide with a

capitalisation over one billion dollars, according to the

figures published by the World Federation of Exchanges

(WFE). Coinciding with its 175 anniversary, in 2006 the

Spanish stock exchange closed the most brilliant year in

its history, with the following figures:

• Yield of 31.8% and 35% including dividends. Over the

past 10 years, the cumulative annual yield of the Spanish

stock exchange, including gross dividends, was 15%,

compared to 8.3% in the USA, 11.4% in France, 7.3%

in the UK and 2.60% in Japan.

SHARE PERFORMANCE: The most brilliant year in the history of theSpanish stock exchange

THE MARKETS IN 2006.

This year has been especially dynamic on equity markets,

due to the proliferation of corporate transactions by private

equity firms, causing a bullish trend in many securities.

Consequently, the performance of the equities markets

was outstanding in 2006, with the following average price

revalorizations in the principal indexes:

• Euro Stoxx 50: +15.2%

• Dax (Germany): +21.98%

• CAC 40 (France): +17.5%

• IBEX 35 (Spain): +31.7%

• FOOTSIE 100 (UK): +10.7%

• Nikkei (Japan): +6.9%

• Standard & Poors (USA): +13.6%

51

THE 10 LARGEST STOCK EXCHANGES IN THE WORLD BY SIZE AND TRADING VOLUMES IN 2006(Billion dollars)

CashStock Exchange Capitalisation Stock Exchange Traded

NYSE 15.42 NYSE 21.79

TOKYO 4.61 NASDAQ 11.81

NASDAQ 3.87 LONDON (LSE) 7.58

LONDON (LSE) 3.79 TOKYO 5.83

EURONEXT 3.71 EURONEXT 3.81

TORONTO STOCK EXCHANGE (TSX) 1.70 GERMAN STOCK EXCHANGE (DEUTSCHE BÖRSE) 2.74

GERMAN STOCK EXCHANGE (DEUTSCHE BÖRSE) 1.64 SPANISH STOCK EXCHANGES & MARKETS (BME) 1.94

HONG KONG STOCK EXCHANGE 1.72 ITALIAN STOCK EXCHANGE 1.60

SPANISH STOCK EXCHANGES & MARKETS (BME) 1.32 SWISS STOCK EXCHANGE 1.40

SWISS STOCK EXCHANGE 1.21 KOREAN STOCK EXCHANGE 1.34

Source: WFE. Figures at December 2006

• 10 IPOs of new corporations: Renta Corporación,

Parquesol, Riofisa, Grifols, Astroc Mediterráneo, Técnicas

Reunidas, GAM, Bolsas y Mercados Españoles (BME),

Vocento and Vueling. The Spanish stock exchange was

thus the second European market in 2006 by transaction

volume in IPOs.

• 22 authorised takeover bids, for an equivalent transaction

value of over 102,000 million euros.

• Capital increases totalling of 26,747 million euros.

• Dividends totalling 23,000 million euros.

• Capitalisation of 1,134,137 million euros.

• 1,150,000 million euros traded through the stock exchange

networking (SIBE), 25% more than the 848,209 million

traded in 2005. A total of 23.1 million deals were closed,

compared to 17.1 million in 2005.

Spain was the most bullish market among the large

economies, and the monetary market fund was also

boosted by the strong consolidation activity in both the

electricity sector, with Endesa, Iberdrola and Unión

Fenosa capturing investors’ attention, and the property

sector, in which takeover bids have been made for 100%

of 4 large corporations, Fadesa, Inmobiliaria Colonial,

Urbis and Parquesol. This trend has continued in the

first quarter of 2007 with the announced takeover bid

for Riofisa.

CEMENTOS PORTLAND VALDERRIVAS.

The price of the Company’s share has traditionally been

linked to the “Basic Materials, Industry and Construction”

index, which is naturally linked to the evolution of the

building sector. In 2006 the share was listed in the 253

sessions on the Electronic Stock Market; a total of 4,022,190

shares were traded, compared to 9,078,935 in 2005, when

FCC increased its interest from 58.76% to 66.82%, with

an average daily volume of trading of 15,898 shares.

The Cementos Portland Valderrivas share closed the year

on 29 December 2006 at a price of 99.00 euro, giving it a

market capitalisation of 2,755,943,982 euro, higher than

69.10 euro at year-end 2005, equivalent to an increase in

value of 43.3% over the year. In 2006 the share price

fluctuated between a lowest quote of 67.25 euro, recorded

on 3 January, and a highest quote of 105.70 euro, reached

on 8 December. In terms of dividend yield, the interim

dividend of 1.08 euro/share paid in November 2006 plus

the final dividend of 2.08 euro/share proposed at the AGM

gave a return over the average price in 2006 of 3.7%. This

rate, somewhat lower than in previous years, is due to the

increase in the share price, despite the considerable the

pay-out increase in recent years.

The performance of the Cementos Portland Valderrivas

share was excellent in the period, beating an historic record

in market price to date. The incorporation of the latest

acquisitions created a significant increase in value for

shareholders, who gained almost 30 euros per share in

2006.

The quotation of Cementos Portland Valderrivas was higher

than that of the principal cement companies worldwide

practically throughout the whole year.

In the first four months of 2007, the share remained firm,

with a bullish trend, reaching an all-time high of 123.30

euro on 26 February, its price 24.6% higher than year-end

2006; the minimum quotation was 100.20 euro on the first

day of trading in January.

52

INDICATORS OF SHARE VALUEChange %

2002 2003 2004 2005 2006 06/05

Last price (euros) 35.90 47.00 48.00 69.10 99.00 43.3

Enterprise value/EBITDA (Veces) 4.9 5.3 5.5 6.6 8.7 32.4

PER (Veces) 8.8 8.8 10.5 14.0 15.7 11.7

Dividend Yield (%) 3.8 4.1 4.4 4.2 3.7 (10.1)

El Alto factory, Madrid, Spain.

53

ECOLUTION OF QUOTATION OF CEMENTOS PORTLAND VALDERRIVASON THE ELECTRONIC STOCK MARKET

(2006)

Jan Feb

MaximumWeighted average

Minimum

Mar Apr May Jun Jul Aug Sep Oct Nov Dec60

65

70

75

80

85

90

95

100

105

euros

QUOTATION TRENDS OF THE PRINCIPAL CEMENT GROUPSWORLDWIDE IN 2006

(2006)

Jan

Cementos Portland Valderrivas

Indexes base 100

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Lafarge Holcim Cemex

VOLUME TRADED OF CEMENTOS PORTLAND VALDERRIVASON THE ELECTRONIC STOCK MARKET

(2006)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0

100,000

200,000

300,000

400,000

500,000

600,000

SHAREHOLDER RETURNS: Excellent shareholder returns

The Board will propose a dividend of 88.0 million euros at

the forthcoming General Shareholders’ Meeting, accounting

for a remuneration of 3.16 euro/share, 26.4% higher than

2005.

This remuneration is equivalent to 50% of the attributable

net profit of the Group and 57.4% of the profit obtained

by Cementos Portland Valderrivas, S.A. in 2006.

CEMENTOS PORTLAND VALDERRIVAS, S.A. REMUNERATION OF SHAREHOLDERS Change %

2002 2003 2004 2005 2006 06/05

Number of shares 27,837,818 27,837,818 27,837,818 27,837,818 27,837,818 –

Shareholder return (euro/share) 1.35 1.60 2.10 2.50 3.16 26.4

Total amount (euro) 37,581,054 44,540,509 58,459,418 69,594,545 87,967,505* 26.4

(*) This amount includes all the shares in the company, including treasury stock.

54

55

Olazagutía factory, Navarre, Spain.

Mataporquera factory, Cantabria, Spain.

57

PROPOSALS TO THE GENERAL MEETING

I. APPROVAL OF THE ANNUAL ACCOUNTS AND MANAGEMENT OF CORPORATE AFFAIRS BY THE GOVERNING BODIES

The Board proposes approval of the separate and consolidated annual accounts (balance sheet, profit and loss account and

notes to the accounts) and directors’ reports of Cementos Portland Valderrivas, S.A. and its consolidated group, as presented

before the General Shareholder’s Meeting, and approval of the management of corporate affairs by the Board of Directors

and company management, all corresponding to 2006.

II. APPROVAL OF THE APPLICATION OF PROFIT FOR THE YEAR

The Legal Reserve being funded in the amount required by law, the Board proposes the following application for the 2006

profit:

Profit for the year 153,159,687.13 euro

– Interim dividend (15-11-06) 1.08 euros/share

– Final dividend 2.08 euros/share

– Total dividend 3.16 euros/share

– Voluntary Reserve: After paying the interim and final dividend, the amount corresponding to the shares outstanding and

entitled to remuneration at the date of payment shall be set aside.

The Board proposes payment of the final dividend of 2.08 euro/share as from 18 June 2007, the corresponding taxes payable

by the shareholder.

Transcribed on page 68 is the Report issued at the time by the Board of Directors on the cash assets forecast to meet the

payment of the 2006 results interim dividend.

III. INDICATION OF THE NUMBER OF DIRECTORS, WITHIN THE LIMITS ESTABLISHED IN THE ARTICLES OF ASSOCIATION; APPOINTMENT, IF APPROPRIATE, OF DIRCTORS AND RE-ELECTION OF DIRECTOR

To facilitate the entrance on the Board of such persons considered appropriate, within the limits stipulated in Article 25 of

the Articles of Association, it is proposed raising the number of Board members, currently established in sixteen to seventeen.

If the number of Board members is set at seventeen, the Board proposes appointing Meliloto, S.L. director. The Nomination

and Remuneration Committee has issued a favourable report on this proposal, in pursuance of Article 17 of the Regulations

of the Board, which was also approved by the Executive Committee on 24 April 2007, by virtue of the delegation made by

the Board on 28 March 2007. If this appointment is approved, the candidate would be elected non-executive proprietary

director.

Also in compliance with Article 27 of the Articles of Association, the Board proposes re-election, due to expiry of its term

of office, of the director EAC Inversiones Corporativas, S.L. The Nomination and Remuneration Committee issued a favourable

report on this proposal, in pursuance of Article 19 of the Regulations of the Board, which was also approved by the Board

on 28 March 2007.

58

IV. APPROVAL OF THE ALTERATION OF THE ARTICLES OF ASSOCIATION

To fulfil with the Unified Code of Good Governance of Listed Companies, the Board proposes altering the following articles

of the Articles of Association:

Title III. Corporate Bodies. Chapter I. General Meeting of Shareholders: Article 21, Deliberation. Adopting of Resolutions.

Chapter II. Board of Directors: Article 24, Board of Directors, Article 25, Composition, Article 26, Disqualifications, Article 27,

Term of Office and Duties, Article 28, Notice of Call. Meetings, Article 29, Deliberation. Quorum. Resolutions, Article 31,

Chairman, Article 33, Directors’ Emoluments. Chapter IV. Audit and Compliance Committee, Article 35, Audit and Compliance

Committee, Article 36, Powers. Title VII. Dissents: Article 43, about Dissents.

Transcribed on page 71 is the Report issued by the Board of Directors on the amendment to the Articles of Incorporation.

V. APPROVAL OF THE MODIFICATION OF THE REGULATIONS OF THE GENERAL MEETING

Similarly, and also to adjust to the Unified Code of Good Governance of Listed Companies, the Board proposes modification

of the following articles of the Regulations of the General Shareholders’ Meeting.

Preamble. Title I. Concept, Types and Duties of the General Meeting: Article 3, Duties of the General Meeting. Title III. General

Meetings. Chapter I. Quorum: Article 9, Right and duty to attend, Article 11, Presiding Board, Article 12, Quorum. Chapter

II. Infrastructure and Means: Article 13, Infrastructure, means and services at the venue. Chapter III. Contributions by

shareholders: Article 17, Information. Chapter IV. Voting and documentation of resolutions: Article 18, Voting on proposals.,

Article 19, Adoption of Resolutions and declaration of voting results.

Transcribed on page 73 is the Report issued by the Board of Directors on the amendment to the Regulations of the General

Shareholders’ Meeting.

INFORMATION ON THE AMENDMENT TO THE REGULATIONS OF THE BOARD OF DIRECTORS

Page 75 includes an explanatory summary of the amendment to the Regulations of the Board of Directors, approved at

its meeting of 28 March 2007.

VI. AUTHORISATION TO INCREASE THE CAPITAL

It is proposed authorising the Board to increase the capital, in pursuance of section 153.1.b) of the Corporations Act, on

one or several occasions, without prior consultation of the General Meeting and as and when it may deem fit, up to a limit

of 50% of the Company’s present capital, with monetary contributions, with or without share premiums, within no more than

five years after the date of the general meeting, and to decide on the issue conditions, and alter Article 5 of the Articles of

Association accordingly.

Transcribed on page 78 is the mandatory Report issued by the Board of Directors in favour of this proposal.

59

VII. AUTHORISATION TO BUY BACK OWN SHARES

It is proposed authorising the Board to buy back own shares of the Company under any title for a consideration, directly or

through subsidiaries in its group, subject to the limits on time and treasury stock stipulated in law, at a price not exceeding

the higher of the following two pursuant to the National Securities Market Commission Circular 12/98:

a) the price of the last transaction effected on the market by independent parties,

b) the highest price contained in a purchase order from the portfolio of orders, nor lower than 10% of the market price

on the date on which the purchase is made, if there has been trading on the stock market that day, or otherwise the

preceding day.

This authorisation renders null and void the authorisation granted at the General Shareholders’ Meeting on 1 June 2006.

VIII. APPOINTMENT OF AUDITOR FOR THE COMPANY AND GROUP ACCOUNTS

It is proposed appointing Deloitte, S.L. auditor of the Company and group accounts for a period of one year, which may be

extended according to the terms stipulated in law. The Audit and Compliance Committee has issued a favourable report on

this proposal, pursuant to Article 44 of the Regulations of the Board, and it was approved by the Board on 28 March 2007.

IX. EVIDENCING THE FOREGOING RESOLUTIONS IN A PUBLIC DEED

It is proposed authorising the Chairman and Secretary of the Board so that either of them may, jointly and severally, take

such actions and execute such documents as may be necessary in respect of the interpretation, application, rectification,

remedy, fulfilment and execution of the resolutions adopted by the general meeting and evidence them in a deed, such that

those so requiring may be entered in the Mercantile Register. It is also proposed authorising them to deliver the annual

accounts.

60

Thomaston factory, Maine, USA.

61

Hontoria factory, Palencia, Spain.

63

RESOLUTIONS TO BE ADOPTED AT THE ANNUAL GENERAL MEETING

I. Approval of the annual accounts (balance sheet, profit and loss account and notes to the accounts) and directors’

report of Cementos Portland Valderrivas, S.A. and its consolidated group for 2006, and the management of corporate

affairs by the Board of Directors and management in the same year.

II. Approval of the allocation of profits obtained in 2006.

III. Indication of the number of directors, within the limits established in the Articles of Association, appointment of director

and re-election of director.

IV. Approval of alteration of the Articles of Association.

V. Approval of the modification of the Regulations of the General Meeting.

VI. Authorisation of the board to make capital increases over the next five years on one or several occasions, on the

terms and conditions established in Article 153 of the Corporations Act.

VII. Authorisation to buy back own shares and authorisation to subsidiaries to buy shares in Cementos Portland Valderrivas,

S.A., all subject to the limits and requirements stipulated in section 75 et seq. of the Spanish Corporations Act.

VIII. Appointment of auditors for the Company and its Group.

IX. Delegation to the Chairman and Secretary of the board so that any one of them, jointly and severally, may execute

the resolutions adopted at the General Shareholders’ Meeting and evidence in a public deed any which are to be

recorded in the Trade Register, and to make any corrections or rectifications that may be necessary.

José Ignacio Martínez-Ynzenga

Chairman and Chief Executive Officer Director

65

Mataporquera factory, Cantabria, Spain.

REPORTS BY THE BOARD OF DIRECTORS

67

CERTIFICATE OF CASH ASSETS

At the meeting held in Madrid, on 31 October 2006, the Board of Directors of Cementos Portland Valderrivas, S.A., in order

to comply with the provisions of Article 216 of the revised text of the Limited Companies Law in relation to the allocation

of an “interim dividend” of 1.08 euros per share, to be paid as of 15 November 2006, drew up the following provisional

liquidity statement at 30 September 2006:

PROFIT FORECAST FOR 2006 FINANCIAL YEAR Million euros

Pre-tax Profit 210.0

Estimated Profit Tax 68.5

After-tax Profit 141.5

To be deducted:

Losses from previous financial years –

Legal reserve for allocation –

Statutory reserve for allocation –

Maximum amount to be distributed 141.5

Amount proposed for distribution 30.1

CASH ASSETS FORECAST

Cash assets 8.5

Temporary financial investments 40.9

Collections scheduled until 15/11/2006 92.0

Credit facility available 135.0

276.4

Payments scheduled until 15/11/2006 –103.8

Cash assets balance scheduled on the date of payment of the interim dividend 172.6

Madrid, 31 October 2006

68

69

Alcalá de Guadaíra factory, Seville, Spain.

70

El Alto factory, Madrid, Spain.

REPORT BY THE BOARD OF DIRECTORS OF CEMENTOS PORTLAND VALDERRIVAS, S.A. ON THE AMENDMENTS TO THE ARTICLES OF INCORPORATION Article 144rd of the Revised Text of the Limited Companies Law states that any amendment to the Articles of Incorporation re-

quires that a written report be drawn up by the Administrators to justify the amendment, or, as the case may be, by the sha-

reholders who submitted the proposals.

In compliance with this precept, the members of the Board of Directors will submit the suitability of amending Articles 21st, 24th,

25th, 26th, 27th, 28th, 29th, 31st, 33rd, 35th, 36th and 43rd of the Articles of Incorporation to the decision of the General Shareholders’

Meeting, with the aim of adapting these articles to the regulations of the Unified Code of Good Government of listed compa-

nies, although not all the amendments proposed are directly aimed at this end.

As the Board understands, not all the recommendations are included in the Articles of Incorporation, since the majority of them,

affect the Regulations of the Board of Directors more than the Articles of Incorporation. The latter were amended during the

meeting of 28 March 2007, about whose content specific information will be given to the Meeting when it is held.

Article 21 compiles Recommendations 5th and 6th which refer to the separate vote for the appointment or ratification of

Directors and for the proposed amendments to the Articles of Incorporation, as well as the split vote for the financial interme-

diary companies.

Article 24th includes the general supervisory function that Recommendation 8th attributes to the Board of Directors.

Article 25th includes, insofar as is possible, Recommendation 9th, which refers to the desirable size of the Board, reducing the

established maximum from 23 to 19, which, although greater than the recommended 15, reduces the size of the Board without

ignoring the possibility of having Directors who are qualified in the different areas of business of our trading activity.

Article 26 has been amended to include the legal reference made to the old law of incompatibilities to refer it to the current

one.

Article 27, as a final note in the second paragraph, it extends the duties of the representative as an individual when the Direc-

tor is a corporation.

Article 28, which refers to the meetings held by the Board of Directors, includes, in its new paragraphs two and three, recom-

mendations 19 and 17, respectively, establishing at the proposal of at least two Directors, the possibility of debating a point

not covered in the initial agenda, and the possibility of appointing an external Director to request a Board meeting, the inser-

tion of new points in the agenda, and to manage the evaluation by the Chairman of the Board when this figure is also the Chief

Executive Officer of the company.

This article also amends the period for a call to Board meetings at five days, formerly set at eight days.

The amendment to Article 29 is not strictly in response to a recommendation of the Unified Code, but to the suitability of re-

ducing the majorities required for making decisions, which, currently established at 75% of the members of the Board to be

present or represented, it therefore would be established at the absolute majority of the Directors present, except in the event

of permanent delegations of powers or amendment to the Regulations of the Board of Directors, in which case the vote in

favour of two-thirds of the members of the Board will be required.

Article 31, on the competencies of the Chairman of the Board, includes Recommendation 16, which requests that the Chair

ensures that the Directors receive sufficient information in relation to the subjects for discussion, and succeeds in promoting

the debate among the different members of the Board. They will also organise and coordinate the annual evaluation of the func-

tioning of the Board and of its delegated Commissions.

Article 33, on the Director’s remuneration, is not only in compliance with Article 103 of the Limited Companies Law, which sta-

tes that the remuneration of all the Directors, including the executives, should be established in the Articles of Incorporation,

but also the spirit of recommendations 35 et seq.

Articles 35 and 36, both refer to the Audit and Control Commission, introduce the need for its members, who have increased

from four to five, are a majority of external Directors and at least one of them has to be independent. Regarding the compe-

tencies, albeit it already included more generically beforehand, they are treated more extensively in response to recommenda-

tions 46 to 53, both inclusive.

Finally, the amendment proposed in Article 43, which refers to the shareholders’ dissidence with the company, only refers to a

generic mention to current legislation on arbitration, whose current reference to Law 36/1998 is no longer applied as this

regulation has been derogated.

Madrid, 28 March 2007

71

72

Cement mill, Montevideo, Uruguay.

REPORT BY THE BOARD OF DIRECTORS OF CEMENTOS PORTLAND VALDERRIVAS, S.A. ON THE AMENDMENT TO THE REGULATIONS OF THE GENERAL SHAREHOLDERS’ MEETING

The Board of Directors of Cementos Portland Valderrivas, S.A. has agreed to meet, insofar as is possible, the recommendations

of the Unified Code of good government of listed companies, which will apply as of the next financial year.

The proposed amendment affects the preface and Articles 3, 9, 11, 12, 13, 17, 18 and 19.

The sole aim of the amendment to the preface is to include the latest rules applicable to the General Shareholders’ Meetings

of listed companies.

The proposed Article 3 includes the 3rd recommendation of the aforementioned Unified Code and is correlated with the

proposed amendment to Article 23 of the Articles of Incorporation, where the exclusive powers of the General Shareholders’

Meeting are extended to agreements that could, a priori, be reserved for the Board of Directors, but which, due to their

special importance, may affect the true nature of the company.

Article 9 includes the possibility of attending to the Meeting, as well as the venue in the city where the Company’s address

registered, under the premises that the company provides to this effect, by audiovisual technology that allow the recognition

and identification of the shareholders, may entitle them to be considered as attending and so cast their corresponding vote.

For this, as well as the main site of the meeting, the call would state the additional premises, which do not necessarily have

to be located in the same metropolitan limits as the registered address.

Concerning to the constitution of the Committee of the Meeting, Article 11 establishes the possibility of its being chaired; in

the absence of the Chairman, by the Deputy Chairman and, to the same extent, the replacement the Secretary by the Deputy

Secretary should the former not to be possible to attend.

Articles 12 and 19 refer to the quorum needed for the constitution of the Meeting and of the majority needed for the consent

of agreements. In line with the amendment to the aforementioned Article 3 of the Regulations of the Meeting, an overall

quorum in certain agreements that relate to the merger, split and capital increase, reduction and liquidation of the company.

Article 13, referring to the infrastructure, resources and services that the venue must have, reflects a rule of nowadays

common use of the company, it consists of providing all of the shareholders who attend the Meeting with not only the

documentation referring to the proposals but also the reports drafted by the Board or by its Commissions on issues subject

to approval.

Article 17, on the information to shareholders attending to the Meeting; it introduces the figure of the Internal Auditor, as the

person authorised, at the instance of the Chair, to answer the questions that may be raised during the session and which

are within their competencies.

In line with Article 21 of the Articles of Incorporation, with reference in both cases to recommendations 5 and 6 of the Unified

Code, Article 18 includes the individual voting on the appointments or re-election of Directors, and individual or homogeneous

voting on proposed article amendments. As well as it is authorised the split voting in shareholder companies that act as

financial intermediaries.

Madrid, 28 March 2007

73

74

Minas factory, Uruguay.

75

INFORMATION OF THE BOARD OF DIRECTORS OF CEMENTOS PORTLAND VALDERRIVAS,S.A. ON THE AMENDMENT TO THE REGULATIONS OF THE BOARD OF DIRECTORS.

The following articles of the Regulations of the Board of Directors are amended with the aim of adapting them, before the

scheduled time, and insofar possible, to the Recommendations of the Unified Code of Good Government for listed companies.

Article 2, relating to the Recommendations of the Unified Code of Good Government scope of application, it includes the

definition that the Unified Code gives to Senior Management.

Article 5, on Qualitative Composition of the Board, it reduces the maximum number of Board members from 23 to 19.

Article 6, on Qualitative Composition of the Board, it includes the definition that the aforementioned Code gives to independent

external directors, proprietary directors, executive directors and other externals bodies, as well as including the presence of

independent directors on the Board with the aim of establishing a reasonable balance among the proprietary directors.

Article 7, on the Powers of the Board of Directors, it includes the scope of duties of the Board and, the foremost essential

duty of supervision, which is divided into three fundamental responsibilities according to the terminology of the Code: strategic,

monitoring and communication.

Article 8, relating to the general duties of the Board of Directors, it expressly establishes the compulsory nature of submitting

the operations that mean, de facto, either an amendment to the Company’s activity or its liquidation by approval of the

General Shareholders’ Meeting.

Article 14, about market relations, it includes the obligation of having a company’s website, properly updated, through which

information related to the company Directors is made public.

Article 15, concerning the Auditors, it determines the mandatory explanation by the Chairman of the Audit and Control

Commission together with the company’s external Auditor, in the event of exceptions exist with regard to the Annual Accounts

of the actual financial year; all in accordance with the principle of transparency of information to shareholders and markets.

Article 17, on the appointment of Directors, it includes the separate vote for each appointment or re-election of a Director,

and the plans for addressing the issues of gender diversity, both regarding the provision of vacancies and in situation of

deficiency or no female presence on the company’s administrative body.

To the effect that new Directors can have better knowledge of the different business areas of the company that they are

going to administer, an obligation is included to make available to them an information dossier on these points, together

with the corporate social responsibility report and the sustainability report for the previous year.

Article 21, on the dismissal of Directors, it includes the proportional reduction of Proprietary Directors in the event of the

partial sale of their interest in the company; the requirement to explain the reasons for the dismissal or resignation, in

the event that the Director does so prior to the expiry of the mandate for which they were appointed, and the compulsory

nature of its communication as a relevant fact to be recorded in the Annual Corporate Government Report, unless express

opposition by the Director in question.

Article 26, relating to the conflict of interests, requires the need of a prior report by the Audit and Control Commission,

instead of the appointment of the Appointments and Remunerations Commission, in the case of direct and/or indirect

professional and/or commercial transactions between the Director in question and the Cementos Portland Valderrivas Group.

Article 36, which regulates the figure of the Chairman of the Board of Directors, establishes the concern that, in the event

that the same person holds both, this post and Chief Executive of the company, an external or independent Proprietary

Director may request the Board to meet, to include points on the Agenda, as well as to manage the evaluation of the Chairman

by the Board.

The old Paragraph Three, relating to the fact that the Chairman of the Board of Directors must also assume the chair of the

Executive Commission, is removed.

Therefore, a new Point Three is included, relating to the coordination between the Chair of the Board and the Chairmen of

the Audit and Control Commission and the Appointments and Remunerations Commission, concerning the evaluation of the

running Board.

Article 39, related to the Secretary of the Board and their duties, a new point establishes that their appointment and dismissal

must be reported by the Appointments and Remunerations Commission and approved by the plenary of the Board.

A relation of all their duties is described more extensively and in detail.

Article 40, on the Deputy Secretary, it also includes the one stated above for the Secretary, as is only appropriate when their

appointment and dismissal has been reported by the Appointments and Remunerations Commission.

Article 41, relating to the Meetings of the Board of Directors, it includes the reduction of the number of days the call to

meeting has to be made, decreasing from eight days to five, and in the event of an emergency, it decreases from forty-eight

hours to twenty-four.

It also establishes the possibility that at least two Directors may request the inclusion of points on the Agenda of the meeting

in question and they must be dealt with during the meeting.

The need for an attendance quorum between those present and those represented, half plus one of the Directors, is also

determined for the valid adoption of agreements..

It is included the proactive role of the Chairman of the Board when encouraging Directors to participate.

The system for adopting agreements is determined.

It also regulates the possibility of delegation to another Director and the way in which representation is to be made, the

references in the Annual Corporate Government Report for unjustified non-attendances and the compulsory nature of taking

the minutes of the meetings, with these reflecting everything that the Directors want to record.

Article 41b, on the place where the meeting is held, it includes the possibility of holding the Board meeting via videoconference,

and the applicable terms of participation and voting systems in this case.

Article 41c, on the Self-Assessment of the Board of Directors, it includes the recommendations of the Code, in terms of

periodic evaluation of the running of the Board, its Commissions, the Chairman and the Managing Director.

Article 43, on the Executive Commission, it introduces the same reduction in normal and emergency deadlines for a call to

a meeting, already approved by the Board of Directors, and the compulsory nature of facilitating the minutes of this Commission

and the documentation attached to them to all of the Members of the Board.

The Chairman of the Executive Commission becomes the Managing Director.

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Article 44, relating to the Audit and Control Commission, raises the number of members to five instead of the present four;

they must have knowledge of accounting, auditing or risk management.

The figure of the internal Auditor, their duties and their reporting to the aforementioned Commission is established.

The different duties of the Commission are specified in terms of the supervision of the company’s risk control and management

policy, in relation with the information and internal control systems and the external Auditor.

The possibility of attendance at its meetings by company employees and/or directors is contemplated.

The compulsory regulation of the issuing of reports in cases such as those relating to financial information that the company

has to provide as a listed company; that means, when acquiring or having an interest in companies resident in “tax refuges”

and in the event of linked operations.

A copy of the minutes of the sessions of this Commission must be provided to all Members of the Board of Directors.

Article 45, on the Appointments and Remunerations Commission, it also rises the number of members from four to five, and

a detailed summary of its duties has to be made in terms of the need of proposal issues. It should be stressed that, in the

case of independent directors, a proposal is drawn up for both, their appointment and re-election.

Any of the cases, it evaluates the competence and experience of the different candidates to fill the vacancies on the Board,

and the time dedicated to their task.

It also reports on the appointment and dismissal of Senior Managers and gender diversity issues.

As a new attribute, the role of this Commission is regulated when examining and organising the succession of the Chairman

of the Board and of the Chief Executive of the company.

It is emphasised that the register of Directors and Senior Managers posts includes all in the Cementos Portland Valderrivas

Group.

It is attributed the body that proposes to the Board of Directors the remuneration policy of Directors and Senior Managers,

as an essential role in matters of remuneration; ensuring the effecting of the company’s remuneration policy concerning the

individual remuneration of Executive Directors and the conditions of their contracts and of the Senior Managers’ contracts.

Finally, we should highlight that a new duty entrusted to this Commission is supervision of the fulfilment of the internal codes

of conduct and of the rules of good corporate governance in the company.

Madrid, 28 March 2007

REPORT BY THE BOARD OF DIRECTORS OF CEMENTOS PORTLAND VALDERRIVAS, S.A., ON THE PROPOSAL OF AUTHORISATION TO THE BOARD TO INCREASE THE SHARE CAPITAL

To comply with the provisions of Article 144.1.a) of the current Limited Companies Law and Article 23 of the Articles of

Incorporation, and in order that the proposed authorisation of the Board to increase the Share Capital, which is developed

as follows, may be examined and, as the case may be, approved by the company’s General Shareholders’ Meeting, the

Board of Directors of Cementos Portland Valderrivas, S.A. has drafted the following report to justify this.

The aim of this delegation, in favour of the Board of Director, is to be able to deal with possible future investments, avoiding

the need to call a General Shareholder’s Meeting of the company, based on the legal timescales that this involves and the

subsequent delay in making these investments.

It is expected that this way the Administrative Body will be able to meet the needs of resources mentioned above, and it is

given the flexibility required so that at the time and under the conditions deemed relevant, one or more capital increases

can be made up to the authorised maximum.

The proposal is drawn up by unanimity of the Directors, considering the above statutory principle in terms of the compulsory

overall majority for the adoption of an agreement.

As a consequence to the meeting held on 28 March 2007, the Board of Directors unanimously agreed to submit the adoption

of the following agreement to the General Shareholders’Meeting:

“It is proposed to authorise the Board of Directors to increase the Share Capital, in accordance with the Article 153.1b) of

the Limited Companies Law, on one or more times, without prior consultation of the General Shareholders’ Meeting and in

the event that the amount is deemed appropriate, with a limit of 50% of the Company’s Share Capital at the present time,

and it must be made by monetary contributions, with or without premium, within a maximum of five years as of the agreement

of the Meeting, as well as to determine the issue conditions and to amend, in line with the agreement, Article 5 of the Articles

of Incorporation.”

Madrid, 28 March 2007

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Olavarría factory, Argentina.

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