03 inf gob corp y memo act ING:Maquetación 1 22/06/11 … ·...

Corporategovernancereportand reportof the auditcommission

2010A N N U A L R E P O R T

03

03_inf_gob_corp_y_memo_act_ING:Maquetación 1 22/06/11 10:06 Página 226

Contents

2010 REPORT OF THE AUDIT COMMISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228

A. PROPERTY STRUCTURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228

B. STRUCTURE OF THE COMPANY MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 234

C. RELATED-PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260

D. RISK CONTROL SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261

E. GENERAL MEETING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265

F. EXTENT TO WHICH CORPORATE GOVERNANCE RECOMMENDATIONS ARE FOLLOWED . . . . . . . . . . . . 268

G. OTHER IMPORTANT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281

2010 REPORT OF THE AUDIT COMMISSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283

I. INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283

II. 2010 ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 284

2010 ANNUAL REPORT 227


CORPORATE GOVERNANCE REPORT AND 2010 REPORT OF THE AUDIT COMMISSION

2010 ANNUAL REPORT228

2010 REPORT OF THE AUDIT COMMISSION

For greater comprehension of the model and in order to complete the information correctly please read the instructions

at the end of this report.

A - PROPERTY STRUCTURE

A.1 Complete the following table on the company’s share capital:

Indicate where there are different types of shares with different associated rights:

NO

A.2 Provide details the direct and indirect holders of significant holdings of your company on the date of closure of the

financial period excluding the corporate executives:

Date of most recentmodification

Share capital (euros)

Number of shares Number of voting rights

19/11/2001 37,027,478.40 61,712,464 61,712,464

Name or corporate name of the shareholder

Number of indirect voting rights (*)

% of total voting rights

GUBEL, S.L 21,340 50.110

CORPORACION FINANCIERA ALBA, S.A.

AS INVERSIONES, S.L

FMR LLC

BNP PARIBAS SA

Number of direct voting rights

30,902,693

0 6,175,000 10.006

3,281,781 0 5.318

0

1,902,934

3,123,185

0

5.061

3.084




Indicate the most significant movements in the share structure during the financial period:

A.3 Complete the following tables regarding members of the Board of Directors of the Company with voting rights

associated with shares in the company:

Name or corporate name of shareholder Date of transaction Description of transaction

BNP PARIBAS SA 30/11/2010 Has exceeded 3% of the sharecapital

FMR LLC

FIDELITY INTERNATIONAL FUND

27/04/2010Has exceeded 5% of the sharecapital

17/11/2010Has exceeded 3% of the sharecapital

Name or corporate name ofthe director

Number of in directvoting rights (*)

% of the total voting rights

MS HELENA IRENE REVOREDO DELVECCHIO 30,924,033 50.110

MR CHRISTIAN GUT REVOREDO

MS MIRTA MARIA GIESSO CAZENAVE


0

20,603 0 0.033

189,832 3,281,781 5.625

MR PEDRO GUERRERO GUERRERO 100 33,000 0.054

Name or corporate name of the indirect

shareholder



GUBEL, S.L 21,340 0.035


FMR LLC

Through: name or corporate name of the direct stakeholder

PROREVOSA, S.A

ALBA PARTICIPACIONES, S.A 6,175,000 10.006

FIDELITY INTERNATIONAL 2,213,700 3.587




Complete the following tables on the Members of the Board of Directors of the company holding rights in company

holdings:

A.4 Indicate, if appropriate, the family, commercial, contractual or corporate relations existing between significant

stake holders in so far as they are known by the company, unless they are of scant relevance or derive from ordinary

trading activities:

A.5 Indicate, if appropriate, the commercial, contractual or corporate relations existing between significant sta-

keholders and the company and /or its group, unless they are of scant rrelevance or derive from ordinary trading

activities:

Type of relation:

Commercial

Brief description:

Lease by Proactinmo S.L. (subsidiary of Gubel, S.L.) to Prosegur of an office building for an initial term of five (5) years

up to 2015. The annual income in the 2010 period amounted to 1,188 thousand euros.

Director’s name or corporate name

Number of indirect option

rights

No of equivalentshares

MR CHRISTIAN GUT REVOREDO 0 48,906

Number of direct option

rights

48,906


0.079

Name or corporate name of indirect stakeholder

Number of in direct voting rights


MS HELENA IRENE

REVOREDO DELVECCHIO

30,902,693 50.075

MS HELENA IRENE

REVOREDO DELVECCHIO

MS MIRTA MARIA

GIESSO CAZENAVE

Through: name or corporate name of the direct stakeholder

GUBEL, S.L.

PROREVOSA, S.A. 21,340 0.035

AS INVERSIONES, S.L 3,281,781 5.318

MR PEDRO GUERRERO

GUERRERO

VALORES DEL DARRO, SICAV,S.A.

33,000 0.053

% of total voting rights in the power of the board of directors 55.822




Type of relation:

Commercial

Brief description :

Banca March S.A. is one of the financial credit institutions in the syndicated credit granted to the Company. Banca

March’s stake in said loan amounts to 4,156 thousand euros, of which 3,681 thousand euros are made available

on 31/12/10 and 475 thousand euros are not available. Furthermore, during the period various deposits were

made in Banca March S.A for the sum of 105,000 thousand euros, which generate total interests of 852 thousands

euros. On closure of the financial period 2010, two deposits were outstanding each amounting to 25,000 thou-

sand euros

Type of relation:

Commercial

Brief description:

Prosegur has provided corporate security services to Banca March S.A. for the sum of 2,413 thousand euros during the

financial period 2010

A.6 Indicate whether the company has been informed of shareholders’ agreements which affect it pursuant to the terms

of art. 112 of the LMV, If appropriate provide a brief description and list the shareholders involved in the agreement:

NO

Indicate if the company is aware of the existence of shares agreed on between its shareholders, and, If appropriate, pro-

vide a brief description:

NO

In the event that during the period there has been any amendment to, or breakdown of the agreements or concerted

shares indicate this:

Related name or corporate name

GUBEL, S.L


CORPORACION FINANCIERA ALBA, S.A


CORPORACION FINANCIERA ALBA, S.A




A.7 Indicate whether there is any natural or legal person who exercises or may exercise control over the company in

accordance with article 4 of the Law on Market Securities, If appropriate indicate this:

YES

A.8 Complete the following tables on the company’s own bought back shares:

On the date of closure of the financial period:

(*) Through:

Provide details of significant variations, in accordance with the terms of Royal Decree 1362/2007 carried out during the

financial period:

A.9 Provide details of the conditions and the duration of the current mandate of the Board of Directors in order to buy

back or transfer own shares.

The Ordinary General Meeting of shareholders of Prosegur Compañia de Seguridad S.A. in its meeting of28 June 2010 agreed to renew the authorisation granted by the General Meeting (on 29 June 2009) forbuy back of own shares directly or through Group companies, in the terms which are duly transcribedbelow:

Name or corporate name

MS HELENA IRENE REVOREDO DELVECCHIO

Comments

Through the company GUBEL S.L.

Number of direct shares Number of indirect shares (*) % of total share capital

1,953,543 0 3.200

Total 0

Capital gains (capital losses) of own shares transferred during the period (thousands of euros) 0




1.- Authorise buy back of shares in Prosegur Compañia de Seguridad S.A. by the company and its subsidiarycompanies pursuant to the terms of articles 75 and subsequent articles of the Law on Limited Companiescomplying with the requirements established under current legislation at any given time and in the followingconditions:a) The purchases should be made directly by the Company or indirectly through their subsidiary companiesand these shall be formalised by means of sale, swap or any other valid monetary legal transaction underlaw. b) The nominal value of the shares to be purchased added, if appropriate, to those it already holds, either directlyor indirectly, shall not exceed the legally permitted maximum percentage at any given time.c) The purchase price per share shall be as a minimum the nominal value and as a maximum that of the stockmarket price on the date of acquisition increased by 10%.d) This authorisation is granted for a period of five years.It is expressly stated that this authorisation may be used, either totally or partially, for buy back of ownshares to be delivered or transferred to directors or employees of the Company or companies of theirgroup, directly or as a consequence of their exercise of option rights, all of which is within the frameworkof the remuneration systems referenced to the stock market value of the shares in Prosegur Compañia deSeguridad S.A. 2.- Authorise the Board of Directors in the widest terms to exercise the authorisation which is the object ofthis agreement and carry out the remaining provisions contained therein, with the the Board of Directorsbeing authorised to delegate those powers granted to the Executive Committee, the Chairperson of the Boardof Directors, the Chief Executive Officer or any other persons granted powers by the Board of Directors tothis effect. 3.- To leave null, in the unused part, the authorisation granted under pont five of its agenda of the Ordinary Ge-neral Meeting of the Company held on 29 June 2009.

A.10 Indicate, if appropriate, the legal and statutory restrictions on exercise of voting rights as well as the legal res-

trictions on purchase or transfer of shares in the corporate capital. Indicate whether there are legal restrictions on the

exercise of voting rights:

NO

Indicate whether there are statutory restrictions on the exercise of voting rights:

NO

Indicate whether there are legal restrictions on the purchase or transfer of shares in the corporate capital:

NO

A.11 Indicate whether the General Meeting has agreed to adopt neutralisation measures in respect of a public bid for

purchase by virtue of the terms of the Law 6/2007.

NO

If appropriate, explain the measures approved and the terms in which the ineffectiveness of the restrictions will occur:

Maximum percentage of voting rights which a shareholder may exercise due to legal restriction 0

Maximum percentage of voting rights which a shareholder may exercise due to a statutory restriction 0




B - STRUCTURE OF THE COMPANY MANAGEMENT

B.1 Board of Directors

B.1.1 Provide details of the maximum and minimum number of directors stipulated in the corporate articles:

B.1.2 Complete the following table with the Members of the Board

Indicate any resignations from the Board of Management during the financial period:

B.1.3 Complete the following tables with information on the company directors and their different roles:

Maximum number of directors 15

Minimum number of board directors 5

Name or corporatename of the director

MS HELENA IRENE RE-VOREDO DELVECCHIO

Representa-tive

Post held onthe board

Date first appointment

Date final appointment

Election procedure

- CHAIR PERSON

30/06/1997 28/06/2010 VOTING IN THESHAREHOLDERS’

MEETING

MR ISIDRO FERNAN-DEZ BARREIRO

- VICE CHAIR PERSON


MEETING

MR CHRISTIAN GUTREVOREDO

- CHIEF EXECU-TIVE OFFICER


MEETING

MS CHANTAL GUT RE-VOREDO

- DIRECTOR 30/06/1997 28/06/2010 VOTING IN THESHAREHOLDERS’

MEETING

MR EDUARDOPARAJA QUIROS


MEETING

MR EUGENIO RUIZ-GALVEZ PRIEGO


MEETING

MS MIRTA MARIAGIESSO CAZENAVE


MEETING

MR PEDRO GUERREROGUERRERO


MEETING

Total number of board members 8




EXECUTIVE DIRECTORS

EXTERNAL DIRECTORS REPRESENTING SUBSTANTIAL SHAREHOLDERS

EXTERNAL INDEPENDENT COMPANY DIRECTORS

Name or corporate name of the company director

MR. PEDRO GUERRERO GUERRERO

Profile- Law degree from the Complutense University of Madrid.- State Attorney, Stock broker and Notary Public of Madrid (leave of absence).- Former Chairman of the Governing Association of the Madrid Stock Exchange and the Stock Exchange society. - Former founding member and Vice Chairman of AB Asesores Bursátiles.- Chairman of Bankinter (member of the Board of Directors since 2000). Chairman of the bank’s Executive Committee.

Name or of the company director Committee which has proposedtheir appointment

Post indicated in the companyorganisation chart


APPOINTMENTS AND REMUNERATION COMMITTEE

EXECUTIVE CHAIR PERSON

MR CHRISTIAN GUT REVOREDO APPOINTMENTS AND REMUNERATION COMMITTEE

CHIEF EXECUTIVE OFFICER

Total number of company directors 2

Total % of the board 25.000

Name of the company director

Committee which has proposedtheir appointment

Name or corporate name of thesignificant shareholder represented or who has

proposed his/her appointment

MR ISIDRO FERNANDEZ BARREIRO APPOINTMENTS AND REMUNERATION COMMITTEE

CORPORACION FINANCIERAALBA, S.A.

MS CHANTAL GUT REVOREDO APPOINTMENTS AND REMUNERATION COMMITTEE

GUBEL. S.L.

Total number of external directors 3


MS MIRTA MARIA GIESSO CAZENAVE APPOINTMENTS AND REMUNERATION COMMITTEE

AS INVERSIONES, S.L.

Total number of independent company directors 1

Total % of the Board 12.500




OTHER EXTERNAL COMPANY DIRECTORS

Give details of the reasons why they cannot be considered major shareholder representatives or independent and their

links, albeit with the company or its directors, or with its shareholders.


MR. EDUARDO PARAJA QUIROS

Company, manager or shareholder with whom he is linked

Reasons He cannot be considered a substantial shareholder representative as (1) he does not hold a stake or amount ofshares which is greater than or equal to that which is considered to be legally significant or to have been desig-nated due to his role as shareholder, even though his holding does not reach said amount, and (ii) he does not re-present the shareholders indicated in section (i). He cannot be considered an independent company director ashe has been chief executive of the company and five (5) years have not yet elapsed since he resigned his post


MR. EUGENIO RUIZ-GALVEZ PRIEGO

Company, manager or shareholder with whom he maintains a link


Reasons He cannot be considered shareholding company director as (i) he does not hold a stake or amount of sharesgreater than or equal to that which is considered to be legally significant or to have been designated due tohis role as shareholder even though his holding does not reach said amount) he does not represent the sha-reholders indicated in section (i). He cannot be considered to be an independent company director as he hasbeen director of the Corporación Financiera Alba S. A. Since June 2010.

Indicate the variations which, if appropriate, have occurred during the period in the tipologia of each company director:

Name or corporate name directors Committee proposing appointment

MR EDUARDO PARAJA QUIROS APPOINTMENTS AND REMUNERATIONS COMMITTEE

MR EUGENIO RUIZ-GALVEZ PRIEGO APPOINTMENTS AND REMUNERATIONS COMMITTEE

Total number of other external company directors 2



Previous status Present status

MR EUGENIO RUIZ-GALVEZ PRIEGO INDEPENDENT OTHER EXTERNAL

Date of change

01/06/2010




B.1.4 Explain, if appropriate, the reasons why directors representing substantial shareholders have been appointed by

shareholders whose holding is less than 5% of the capital.

Indicate whether formal requests for attendance on the Board from shareholders whose holding is equal to or greater

than that of others at whose instigation they were appointed directors representing substantial shareholders. If appro-

priate explain the reasons why these requests were not addressed.

NO

B.1.5 Indicate whether any director has resigned from his/her post during his/her mandate and whether said member

has given his/her reasons to the Board, for doing so and through which means, and in the event that the/she did not do

so in writing to the full Board, explain below at least the grounds that he/she gave:

NO

B.1.6 Indicate should these exist, the powers and authority granted to the directors(s):

Name or corporate name of board member

MR. CHRISTIAN GUT REVOREDO

Brief description The Board Member has been delegated all the powers of the Board of Directors except for those which cannotbe delegated by law, or pursuant to the Corporate Articles and the Regulation on Boards of Directors.

Name or corporate name of the director

MS. HELENA IRENE REVOREDO DELVECCHIO

Brief description The Company Chair person as Chief Executive Office has been granted permanent and wide ranging powers ofadministration and disposal.

B.1.7 Identify if appropriate, the Board members holding posts of managers or directors in other companies which are

part of the same group as the listed company:

Name or corporate name of director

Corporate name of the groupcompany

Post

MR CHRISTIAN GUT REVOREDO ESC SERVICIOS GENERALES. S.L.U. JOINT AND SEVERAL MANAGER

MR CHRISTIAN GUT REVOREDO FORMACIÓN, SELECCIÓN Y CONSUL-TORÍA, S.A.

JOINT AND SEVERAL MANAGER

MR CHRISTIAN GUT REVOREDO PROSEGUR ACTIVA ESPAÑA. S.L.U JOINT AND SEVERAL MANAGER

MR CHRISTIAN GUT REVOREDO PROSEGUR ACTIVA HOLDING.S.L.U JOINT AND SEVERAL MANAGER

MR CHRISTIAN GUT REVOREDO PROSEGUR MULTISERVICIOS.S.A. JOINT AND SEVERAL MANAGER

MR CHRISTIAN GUT REVOREDO PROSEGUR TECNOLOGIA. S.L.U. JOINT AND SEVERAL MANAGER

MR CHRISTIAN GUT REVOREDO PROSEGUR TRANSPORTE DE VALORES. S.A.


MR CHRISTIAN GUT REVOREDO SERVIMAX SERVICIOS GENERALES. S.A





B.1.8 Provide details, if appropriate, of the company directors who are members of the Board of Management of

other listed companies in official stock exchange markets in Spain differing from their group , and of which the com-

pany has been notified:

B.1.9 Indicate and if appropriate explain whether the company has established regulations regarding the number of bo-

ards of management to which its directors may belong:

NO

B.1.10 With respect to recommendation number 8 of the Unified Code, indicate the policies and general strategies of

the company that the full session of the Board of Directors is designed to approve:

Name or corporate name of director

Corporate name of the listedcompany

Post


BANCO POPULAR ESPAÑOL. S.A DIRECTOR


GESTEVISIÓN TELECINCO. S.A. DIRECTOR

MR ISIDRO FERNANDEZ BARREIRO CORPORACION FINANCIERA ALBA. S.A

2ND VICE CHAIRMAN

MR EDUARDO PARAJA QUIROS METROVACESA. S.A CHIEF EXECUTIVE OFFICER

MR EUGENIO RUIZ-GALVEZ PRIEGO EBRO FOODS. S.A. BOARD MEMBER

MR PEDRO GUERRERO GUERRERO BANKINTER. S.A. CHAIRMAN

Investment and financing policy Yes

Definition of company group structure Yes

Corporate governance policy Yes

Corporate social responsibility policy Yes

Strategic or business plan and the annual management targets and budget Yes

The remuneration policy and performance assessment of senior managers Yes

Control and risk management policy Yes

Dividends policy and the buy back portfolio and in particular its limits Yes




B.1.11 Complete the following tables with respect to additional remuneration of board members accruing during the fi-

nancial period:

a) In the company which is the object of this report:

b) For membership of company directors of other boards of management and/or senior management of groupcompanies:

Type of remuneration In thousands euros

Fixed remuneration 1,560

Variable remuneration 400

Expenses 851

Statutory Amounts 0

Options in shares and/or other financial instruments 0

Others 44

Total 2,855

Other benefits In thousands euros

Advances 0

Credits granted 0

Pension plans and funds: Contributions 0

Pension plans and funds: obligations contracted 0

Life insurance premiums 49

Company guarantees in favour of board members 0




c) Total remuneration per type of director:

Type of remuneration In thousands euros

Fixed remuneration 0

Variable remuneration 0

Expenses 0

Statutory Amounts 0

Options in shares and/or other financial instruments 0

Others 0

Total 0

Other benefits In thousands euros

Advances 0

Credits granted 0

Pension plans and funds: Contributions 0

Pension plans and funds: obligations contracted 0

Life insurance premiums 0

Company guarantees in favour of board members 0

Type of director By company By group

Executive 1,533 0

External representing substantial shareholder 435 0

External independent 104 0

Other external 783 0

Total 2,855 0




d) With respect to the profit attributed to the controlling company

B.1.12 Identify those senior managers who are not executive directors, and indicate the total remuneration accrued in

their favour during the year:

Total remuneration to directors (in thousands of euros) 2,855

Total remuneration to directors/profit attributed to the controlling company (expressed in %) 1.8

Name or Company Post

MR LUIS JAVIER ORO PRADERA SECURITIES LOGISTICSAND CASH MANAGEMENTBUSINESS DIRECTOR

MR JOSE ANTONIO LASANTA LURI STRATEGY AND ASIAN EXPANSION DIRECTOR

MR GONZAGA HIGUERO ROBLES REGIONAL DIRECTOR EUROPE

MR FRANCISCO JAVIER POVEDA GIL INTERNAL AUDITDIRECTOR

MR GUILLERMO RUIZ SAN JUAN IT DIRECTOR

MR SANTIAGO GARCÍA-ARENAL LOPEZ DORIA REGIONAL DIRECTORLATAM

Total senior management remuneration (in thousands of euros) 3,139

MS SAGRARIO FERNÁNDEZ BARBE LEGAL DIRECTOR

MR FABIÁN BLANCO ORTIZ ACTIVE BUSINESS DIRECTOR

MR MIGUEL ÁNGEL BANDRÉS GUTIÉRREZ STRATEGIC RESOURCESDIRECTOR

MR ALEJANDRO COROMINAS MENÉNDEZ REGIONAL DIRECTORSPAIN

MR FERMIN SANZ SERRANO RISK MANAGEMENT DIRECTOR

MR ANTONIO RUBIO MERINO ECONOMIC FINANCIAL DIRECTOR

MR JUAN MARIA DE MORA NARVÁEZ HUMAN RESOURCES DIRECTOR

MR JORGE OÑORO MEDRANO BUSINESS DEVELOPMENTDIRECTOR

MR LEONARDO EZEQUIEL GUTIERREZ TECHNOLOGY BUSINESSDIRECTOR

MR FEDERICO AUGUSTO MEEUS RAMIREZ ACTIVE SURVEILLANCEBUSINESS DIRECTOR

MR RODRIGO ZULUETA GALILEA CEO LATAM




B.1.13 Identify in an aggregated manner whether there are guarantee or golden parachute clauses for cases of dismis-

sal or change of control in favour of senior manager, including the executive directors, of the company or of its group.

State whether these contracts have to be reported to and/or approved by the governing bodies of the company or its

group:

B.1.14 State the process for establishing the remuneration of the members of the Board of Directors and the relevant

statutory clauses.

Indicate whether the full Board has reserved approval of the following decisions.

Number of beneficiaries 0

Body that authorises the clauses NO

Board of Directors Stockholders’ Meeting

YES

Is the Stockholders’ Meeting informed of the clauses? NO

Process for establishing the remuneration of the members of the Board of Administration and the relevant statutory clauses

In accordance with that stated in article 22 of the Company Statutes, the post of Director is remunerated. Theremuneration of the Directors shall consist of a fixed annual allowance and expenses for attending each ses-sion of the administrative body of the Company and its Committees. The remuneration that the Company maymake to its Directors as a whole must not exceed the maximum quantity decided upon for this purpose by theGeneral Shareholders’ Meeting, which shall remain in force until it is amended. The setting of the exact amountto be paid within this limit and its distribution among the various Directors is decided by the Board of Admi-nistration, on proposal from the Appointments and Remuneration Committee.Article 28 of the Company’s Board of Director Regulations establishes that the Director shall be entitled to ob-tain the remuneration set by the Board of Directors in accordance with both the statutory provisions and theindications of the Appointments and Remunerations Committee. In any event, section 2 of the article in ques-tion stipulates the Board must ensure that the remuneration of the Director is moderated in line with market re-quirements and, where appropriate, that a part thereof is linked to the performance of the Company. Moreover, in agreement with that stated in article 5.3 of the Company’s Board of Director Regulations, theBoard has the power, which must be exercised directly, to approve the system and annual amount of the re-muneration of the Directors, which must be paid in an aggregated manner and, whatever the case, within thelimits set in the company statutes. To this end the amount to be paid to the Directors as such must be set wai-ving the salaries and other cash remunerations received by the Executive Directors and submitted for case-by-case consideration by the Board.Finally, under section 2.d) of article 17 of the Board Regulations, it is for the Appointments and RemunerationsCommittee to propose to the Board of Directors the system and the amount of the Directors’ annual remune-ration. Likewise, the aforementioned Committee must periodically review the remuneration systems, a processthat shall include weighting their suitability and performance levels, in accordance with section 2.e) of the samearticle.




B.1.15 State whether the Board of Directors approves a detailed remuneration policy and specify the questions upon

which it rules:

YES

B.1.16 State whether the Board submits a report on directors’ remuneration policy to be voted upon by General Mee-

ting, as a separate agenda item and, for purposes of consultation. If appropriate, explain those aspects of the report that

deal with the remunerations policy approved by the Board for future years, the most significant changes in such policies

in light of that applied during the year and a global summary of how the remuneration policy was applied throughout the

year. Provide details of the role played by the Remunerations Committee and if external advice was sought, the identity

of the external consultants that provided it:

NO

Following proposal from the company’s CEO, to appoint and dismiss senior managers, aswell as decide their compensation clauses.

Yes

The remuneration of the directors and, in the case of executives, the additional remunerationfor their executive functions and other conditions that their contracts must respect.

Yes

The amount of the fixed components, with breakdown if appropriate, of the expense allo-wances for attending the meetings of the Board and its Committees and an estimation ofthe fixed annual remuneration they give rise to

Yes

Variable remuneration concepts Yes

The main characteristics of the forecasting systems, with an estimation of their equivalentannual amount or cost

Yes

The terms and conditions that must be respected by contracts of those who perform seniormanagerial functions, such as executive directors

Yes

Questions ruled by the remuneration policy

The Board of Directors approves an annual report on the Director remunerations policy that includes the policyapproved for the current year or, where appropriate, future years, as well as how the remunerations policy wasapplied during the previous year. This report is made available to the Company’s Ordinary General Shareholders’Meeting through the publication of the notice of meeting announcement, with shareholders having the right to rightto examine it and obtain a copy at the company’s registered office, or to ask to have it sent to them immediatelyand free of charge.




B.1.17 State, when applicable, the identity of those Board members who are also members of the Board of Directors,

senior managers or employees of companies that have substantial holdings in the quoted company and/or in compa-

nies forming part of its group:

Detail, when applicable, the relevant relationships, other than those listed above, of the members of the Board of Direc-

tors that link them to the substantial shareholders and/or to companies within the group:

Role played by the Remunerations Committee

- To report to the Board of Directors on remuneration policy and to propose the payment method and amount ofthe Directors’ annual remuneration to the Board. - To review the remuneration programmes by weighting their suitability and performance levels. - To ensure the transparency of the Directors’ remunerations.

Were external consultants used?

Identity of the external consultants

Director’s name or company name

Company name of the substantialshareholder

Post


GUBEL, S.L PRESIDENT AND CEO

MR ISIDRO FERNANDEZ BARREIRO CORPORACION FINANCIERA ALBA, S.A

2nd VICE PRESIDENT

MR CHRISTIAN GUT REVOREDO GUBEL, S.L DIRECTOR

MS CHANTAL GUT REVOREDO GUBEL, S.L. SECRETARY OFTHE BOARD

MS MIRTA MARIA GIESSO CAZENAVE AS INVERSIONES, S.L PRESIDENT AND CEO




Name or company name of the linked director

MS. HELENA IRENE REVOREDO DELVECCHIO

Name or company name of the linked substantial shareholder

GUBEL, S.L.

Description of relationship

PARTNER WITH INDIVIDUAL CONTROL


MR. CHRISTIAN GUT REVOREDO


GUBEL, S.L.


PARTNER WITH NON-CONTROLLING MINORITY SHAREHOLDING


MS. CHANTAL GUT REVOREDO


GUBEL, S.L.


PARTNER WITH NON-CONTROLLING MINORITY SHAREHOLDING


MS. MIRTA MARIA GIESSO CAZENAVE


AS INVERSIONES, S.L.


PARTNER WITH INDIVIDUAL CONTROL

B.1.18 State whether board regulations were changed in any way during the year:

NO

B.1.19 State the procedures for appointing, re-electing, assessing and removing directors. List the competent bodies,

the procedures to be followed and the criteria to be used in each of the procedures.

Appointment

The Company’s Statutes stipulate that the Board of Directors must consist of a minimum of five and a maxi-

mum of fifteen members in accordance with Recommendation 9 of the Unified Code of Good Governance and

that they must be appointed by the General Meeting. Provisionally, the Board of Directors, in accordance with




the provisions of the Spanish Limited Companies Act and of the Company Statutes may cover existing vacan-

cies by co-option.

In this regard it must be pointed out that the appointment of Directors in the Company is, as a general rule, subject

to the decision of the General Meeting. Only on special occasions when it is essential to do so due to vacancies ha-

ving arisen since the General Meeting is action taken in accordance with the provisions of the Spanish Limited Com-

panies Act, to appoint by co-option, with this decision being ratified by the first General Meeting held subsequently.

Apart from that, and under all circumstances, nomination proposals for the appointment of Directors must respect that

stipulated by the Company’s Board of Directors’ Regulations and be preceded by the corresponding Appointments and

Remunerations Committee report.

Therefore, and in accordance with the powers assigned to it, the Appointments and Remunerations Committee must re-

port, with criteria of objectivity and concern for the company’s interests, the proposals concerning the appointment, re-

election and cessation of Directors of the Company and assess whether the candidates chosen to fill the vacancies have

the necessary competencies, knowledge and experience to do so.

On the other hand, and in accordance with that established in its Regulations, the Board of Directors, when exercising

its powers of proposal to the General Meeting and of co-option to fill vacancies, must ensure that in the composition of

the body external directors constitute a majority over executive directors and reduce the number of the latter to the mi-

nimum necessary in view of the complexity of the Company.

Whatever the case, the proposals for the re-election of directors that the Board of Directors decides to submit to the Ge-

neral Meeting must be drawn up in a formal process. This must involve a report issued by the Appointments and Re-

munerations Committee assessing the quality of the work and dedication to the post of the directors proposed during

their previous term of office.

Finally, the Board of Directors and the Appointments and Remunerations Committee, within the limits of their com-

petencies, must ensure that the candidates for election are persons of recognised solvency, competency and expe-

rience, especially with respect to those chosen to fill the posts of independent director as per article 8 of the

Regulations of the Board.

Re-election

The Directors are appointed for a period of three years, and may be re-elected one or more times for periods of equal duration.

Notwithstanding the aforementioned, it shall not be possible for independent directors to hold their post for longer than

twelve consecutive years unless their status changes to that of director representing substantial shareholders, executive

or of other external director.

As with proposals for appointment, proposals for the re-election of directors that the Board of Directors decides to sub-

mit to the General Meeting must be drawn up in a formal process, which must involve a report issued by the Appoint-

ments and Remunerations Committee assessing the quality of the work and dedication to the post of the directors

proposed during their previous term of office.

Assessment

In accordance with the provisions of the Regulations of the Board of Directors, the President must organise and coordi-

nate the periodic assessment of the Board and, where appropriate, of the CEO with the Presidents of the Appointments

and Remunerations Committee and of the Audit Committee.




Cessation or Removal

Directors must leave their posts when the time for which they were appointed has elapsed and when the General Mee-

ting or the Board of Directors so decide under the powers conferred upon them legally or by statute. Notwithstanding

the aforementioned, it shall not be possible for the Board of Directors to propose the cessation of any independent di-

rector except in a case of failure to fulfil his or her duties and the Appointments and Remunerations Committee issuing

a report to that effect.

B.1.20 State the circumstances in which the directors are required to resign.

Under article 24.2 of the Regulations of the Board, Directors must present their resignation to the Board of Directors

and resign in the following cases:

a) Whenever they leave the executive posts with which their appointment as director was associated.

b) Whenever they are involved in any of the legally defined cases of incompatibility or prohibition.

c) Whenever they are tried for an allegedly criminal deed or are the object of disciplinary proceedings for a serious or

very serious misdemeanour heard by the supervisory authorities.

d) When they receive a severe warning from the Audit Commission for having infringed their obligations as director.

e) When their continued membership of the Board might endanger the interests of the Company or when the reasons

for which they were appointed are no longer valid (for example, when a director representing substantial shareholders

disposes of his or her shares in the Company).

B.1.21 Explain whether the duties of CEO of the company is incumbent in the post of President of the Board. If they are,

state the steps that have been taken to limit the risks of accumulation of powers in a single person:

NO

State and, where appropriate, explain if rules exist that entitle one of the independent directors to request a notice Board

meeting announcement or the inclusion of new items in the agenda in order to coordinate and reflect the concerns of

the external directors and to guide the assessment made by the Board of Administration:

YES

B.1.22 Are reinforced majorities other than legal majorities required in any type of decision?:

NO

State how agreements are adopted by the Board of Directors indicating at least the minimum quorum and the type of

majorities required for adopting agreements:

Explanation of the rules

Under article 10.3 of the Regulations of the Board, the Board of Directors can empower an independent Direc-tor to perform the following actions: (i) to request the President of the Board of Directors to call a Board mee-ting; (ii) to request the President of the Board of Directors to include new items in the agenda; (iii) to coordinateand make known to the President of the Board of Directors the concerns of the external directors; and (iv) toguide the assessment made by the Board of Directors of the work of the President of the Board. Notwithstan-ding the aforementioned, the Board of Directors has not expressly empowered any independent Director to per-form these actions.




Description of the agreement:

All agreements

B.1.23 Explain whether there are specific requirements, other than those relating to directors in general, for being ap-

pointed as President of the Board.

NO

B.1.24 State whether the Chairman has a casting vote:

YES

B.1.25 State whether the statutes or the regulations of the board set any age limit on the directors:

NO

B.1.26 State whether the statutes or the regulations of the board set a limited term of office for independent di-

rectors:

YES

Quorum %

Personal or proxy attendance of half the Directors plus one 51.00

Type of majority %

Agreements must, at all times, be adopted by an absolute majority of votes cast by those Di-rectors attending the session, either physically or by proxy except in cases where, for certainagreements to be valid, the law requires the favourable vote of a larger number of Directors.

51.00

Matters subject to a casting vote

Under article 23 of the Company Statutes the vote of the President of the Board of Directors shall be a casting votein the event of a tie in the adoption of agreements.

Age limit of President Age limit of CEO Age limit of director

0 0 0

Maximum length of term of office (in years) 12




B.1.27 If the number of female directors is low or zero, explain the reasons for this and the initiatives adopted to correct

the situation

In particular, state whether the Appointments and Remunerations Committee has established procedures to ensure

that the selection processes not to suffer from any implicit bias that hinders the recruitment of female directors and

deliberately seek female candidates who meet the required profile:

YES

B.1.28 State whether formal processes exist for the delegation of votes in the Board of Directors. If so, describe

them briefly.

Article 23 of the Company Statutes establishes that it shall be possible for absent Directors to be represented at

Board meetings by another Director by means of a written delegation that must endeavour, as far as possible, to

contain voting instructions.

On the other hand, in accordance with that established in article 18 of the Regulations of the Board of Directors, direc-

tors must make every possible effort to attend the sessions of the Board and, when they cannot do so personally, en-

sure that the proxy representation they confer upon another member of the Board corresponds to a director pertaining

to the same group and includes appropriate instructions.

B.1.29 State the number of meetings held by the Board of Directors during the year. Also state, if appropriate, the num-

ber of times the board has met without the attendance of its President:

State the number of meetings that the various Board committees held during the year:

Indicate the main procedures

Under article 17 of the Regulations governing the Company’s Board of Directors, the responsibilities of the Ap-pointments and Remunerations Committee include informing the Board on questions relating to the gender di-versity if it is deemed necessary in light of the composition of the Board of Directors.

Number of board meetings 5

Number of board meetings without the presence of the president 0

Number of Executive or Delegate Committee meetings 11

Number of Audit Committee meetings 7

Number of Appointments and Remunerations Committee meetings 3

Number of Appointments Committee meetings 0

Number of Remunerations Committee meetings 0




B.1.30 State the number of meetings held by the Board of Directors during the year without the attendance of

all its members. The count must consider representations allocated without specific instructions as non-atten-

dance:

B.1.31 State whether the individual and consolidated annual accounts presented to the Board for approval are pre-

viously certified:

YES

Identify, if appropriate, the person(s) who certified the company’s individual and consolidated annual accounts prior to

their formulation by the board:

B.1.32 Explain the mechanisms, if any, established by the Board of Directors to prevent the individual and con-

solidated accounts that it draws up being presented to the General Meeting with reservations in the auditors’

report.

There is rigorous control by the company’s Senior Financial Management Team to ensure that the individual and con-

solidated accounts are drawn up in accordance with the accounting principles generally accepted in Spain and the

IFRS, with all the Prosegur companies being audited by a single auditor: KPMG Auditores, S.L.

Likewise, the Audit Committee’s duties include the maintaining of relations with the external auditors. This task includes

ensuring that the opinion of the audit report of the annual accounts contains no reservations and holding the appropriate

conversations with these external auditors as and when the accounts are drawn up.

Finally, article 44 of the Regulations of the Board requires the Board of Directors to produce the final accounts in such a

way that there is no room for reservations expressed by the auditor. However, when the Board considers that the judge-

ment of the auditor must prevail, it must publically explain the content and scope of the discrepancy.

Number of director non-attendances throughout the year 2

% of no non-attendances with respect to total votes throughout the year 2.500

Name Post

MR CHRISTIAN GUT REVOREDO CEO




B.1.33 Is the secretary of the board a director?

NO

B.1.34 Explain the procedures for appointing and removing the Secretary of the Board, indicating whether this appoint-

ment and cessation is made known by the Appointments Committee and approved by the full Board.

Does the secretary of the Board have the special duty of overseeing the recommendations for good gover-

nance?

YES

B.1.35 State the mechanisms, if any, established by the company to preserve the independence of the auditor, of the fi-

nancial analysts, of the investment banks and of the rating agencies.

The Audit Committee works to ensure that the independence of the external auditors is maintained. To do so the

former, whenever it deems convenient, requests to attend the meetings of the latter.

In this regard, article 44 of the Board Regulations establishes that the Board of Directors must not use

those firms of auditors whose overall fees are expected to exceed five per cent , of their total income du-

Appointment and cessation procedure

Under article 21 of the Company Statutes, the Board of Directors must appoint a Secretary who could be a non-Director. Likewise, article 12.4 of the Board of Director Regulations establishes that the appointment and cessationof the Secretary must be reported by the Appointments and Remunerations Committee and approved by the fullBoard of Directors.

Does the Appointments Committee report the appointment? YES

Does the Appointments Committee report the cessation? YES

Does the full Board approve the appointment? YES

Does the full Board approve the cessation? YES

Remarks

In accordance with that established in 12.3 of the Board of Directors Regulations, the Secretary must at all times at-tend to the formal and material legality of the actions of the Board and ensure that its procedures and rules of gover-nance are respected and regularly reviewed. The Secretary shall also ensure that the actions of the Board remain inline with the statutes of the Company, the regulations of the General Meeting and Board and the recommendations ofgood corporate governance.




ring the previous year and must publically report the total fee paid by Prosegur to the firm of auditors for

services other than auditing.

With respect to financial analysts and investment banks there is as yet no established procedure whatever for

guaranteeing their independence, although Prosegur has always dealt with them in a transparent manner and its

criteria have always been based on principles of professionalism, soundness and independence in its judge-

ments.

As for the rating agencies, this point does not apply as Prosegur has no relationship with them.

B.1.36 State whether the Company changed its external auditor during the year. If so, identify both the present and for-

mer auditors:

YES

If there were disagreements with the former auditor, explain the content thereof:

NO

B.1.37 State whether the firm of auditors does work for the company and/or its group other than auditing and if

so state the fees received for such work and the percentage it represents of the fees billed to the company and/or

its group:

YES

B.1.38 State whether the auditors’ report of the previous year’s annual accounts shows reservations or qualifications. If

appropriate, state the reasons given by the President of the Audit Committee to explain the content and scope of these

reservations or qualifications.

NO

Former auditor Present auditor

PRICEWATERHOUSECOOPERS AUDITORES, S.L. KPMG AUDITORES, S.L.

Group Total

Cost of work other than auditing (thousands of euros)

395 475

Company

80

Cost of work other than auditing /Totalamount billed by the firm of auditors (in %)

35.210 35.06034.330




B.1.39 State the number of years that the current firm of auditors has consecutively audited the annual accounts of the com-

pany and/or its group. Also, state the percentage represented by the number of years audited by the current firm of audi-

tors over the total number of years during which the annual accounts have been audited:

B.1.40 State the holdings of the members of the company’s Board of Directors in the capital of companies that per-

form the same, similar or complementary type of activity as that of the corporate purpose of the company and its

group of which the company has been made aware. Also, state the posts or duties that they occupy or perform in

these companies:

B.1.41 State and if appropriate describe whether there is a procedure for enabling directors to use external ad-

visors:

YES

B.1.42 State and if appropriate describe whether there is a procedure for enabling directors to have access to the in-

formation they need to prepare the meetings of the administrative bodies with sufficient time:

YES

Group

Number of consecutive years 1

Company

1

No. of years audited by the current firm ofauditors/No. of years the company hasbeen audited (in %)

5.05.0

GroupCompany

Details of the procedure

The procedure is described in article 27 of the Board of Directors Regulations.External Directors can request the Company to contract, at its own expense, legal, accountancy, financial other ex-pert consultants. This request must be submitted with respect to specific problems of certain importance and com-plexity arising from the duties inherent to their post.The decision to hire experts must be reported to the Chairman and can be vetoed by the Board of Directors if it is shown:a) That it is not necessary for the proper fulfilment of the duties that the external Directors are expected to perform;b) That its cost is not reasonable in view of the importance of the problem and of the assets and income of the company;or c ) That the technical assistance being sought can be provided adequately by the company’s own experts andtechnicians.




B.1.43 State and if appropriate describe whether the company has established rules that require the directors to report

and, if appropriate, resign in cases that could damage the company’s credit and reputation:

YES

B.1.44 State whether any member of the Board of Directors has notified the company that he or she has been tried or

oral proceedings have been opened against him or her for any of the offences set out in article 124 of the Spanish Li-

mited Companies Act:

NO

State whether the Board of Directors has analysed the case. If the answer is yes, provide a reasoned explanation of the

decision taken as to whether or not the director should continue in his or her post.

NO

B.2 Board of Director Committees

B.2.1 List all of the Board of Director Committees and their members:

Details of the procedure

Under article 18.2 of the Regulations of the Board, unless expressly otherwise specified by the President, the me-etings of the Board of Directors must be announced with a minimum of three days’ notice and the notice announ-cement must always include the Agenda of the meeting and be accompanied by the relevant information once thishas been duly summarised and prepared.Furthermore, article 12 of the Board Regulations expressly requires the Secretary to give the Directors the neces-sary advice and information to ensure the correct functioning of the Board.Finally, under article 26 of the Board Regulations, the Directors enjoy the widest powers to be informed about anyaspect of the Company, to examine its books, records, documents and other background information regarding thecompany’s business operations and to inspect its premises, with this right of information extending to the subsidiarycompanies, be they Spanish or foreign.

Explain the rules

Under article 24.2 of the Board of Directors Regulations the Directors must submit their resignation to the Boardof Directors and, if it is accepted, resign when their continued membership of the Board could affect the interestsof the Company.

Decision Taken Reasoned explanation




EXECUTIVE OR REPRESENTATIVE COMMISSION

AUDIT COMMITTEE

APPOINTMENTS AND REMUNERATIONS COMMITTEE

B.2.2 State whether the Audit Committee has the following duties.

Name Post Type


PRESIDENT EXECUTIVE

MS CHANTAL GUT REVOREDO BOARD MEMBER REPRESENTING SUBSTAN-TIAL SHAREHOLDERS

MR CHRISTIAN GUT REVOREDO BOARD MEMBER EXECUTIVE

MR EUGENIO RUIZ-GALVEZ PRIEGO BOARD MEMBER OTHER EXTERNAL

MR ISIDRO FERNANDEZ BARREIRO BOARD MEMBER REPRESENTING SUBSTAN-TIAL SHAREHOLDERS

MR PEDRO GUERRERO GUERRERO BOARD MEMBER INDEPENDENT

Name Post Type

MR EUGENIO RUIZ-GALVEZ PRIEGO PRESIDENT INDEPENDENT



Name Post Type

MR PEDRO GUERRERO GUERRERO PRESIDENT INDEPENDENT






B.2.3 Give a description of the rules for organisation and operation, as well as the responsibilities assigned to each of

the committees of the Board.

Name of committee


Brief description a) Regulation. Articles 26 of the Company Statutes and 17 of the Board Regulations.b) Composition. The Appointments and Remunerations Committee shall consist of a minimum of three (3) and a maxi-mum of five (5) members of the Board of Directors. The Chairman must, in all cases, be an independentdirector.Operation. The Appointments and Remunerations Committee may regulate its own operations, using, in the absence ofspecific rules, the operating rules established for the Board of Directors, provided that these are compatible withthe nature and function of the Committee.The Appointments and Remuneration Committee shall meet every time the Board of Directors or the Presidentof the Board of Directors requests a report or the adoption of proposals and, in any event, whenever a meetingis deemed convenient for the proper working of the Board. In any event, it must meet once a year to prepare the information on the remuneration of the Directors that theBoard of Directors has to approve and include in its annual public documentation.c) Powers. The Appointments and Remunerations Committee has the following basic responsibilities: a) formulating and reviewing the criteria to be followed for the composition of the Board of Directors and the se-

Supervising the preparation and integrity of the financial information relating to the com-pany and, if appropriate, to the group, checking compliance with regulations, the properdelimitation of the consolidation scope and the correct application of the accountingprinciples

YES

Periodically reviewing the internal control and risk management systems in order to ensure thatthe main risks are correctly identified, managed and made known

YES

Ensuring the independence and effectiveness of the internal audit; proposing the selection, ap-pointment, re-election and cessation of the head of the internal audit service; proposing thebudget for this service; receiving periodical information about its activities; and checking thatsenior management takes the conclusions and recommendations of its reports into account

YES

Establishing and supervising a mechanism that allows the employees to report, confidentiallyand, if deemed appropriate, anonymously, any irregularities of potential importance, especiallyof a financial and accounting nature, of which they become aware within the company

YES

Bringing before the Board the proposals for selection, appointment, re-election and substitu-tion of the external auditor, as well as the conditions for hiring the auditor

YES

Receiving regular information from the external auditor about the audit plan and the results of itsimplementation, and checking that senior management takes its recommendations into account

YES

Ensuring the independence of the external auditor YES

In the case of groups, ensuring that the auditor of the group assumes responsibility for the au-dits of the companies that make it up

YES




lection of candidates; reporting on the proposals for appointment as Directors and senior managers of the Com-pany and of its subsidiary companies, assessing the necessary competencies, knowledge and experience ofthe candidates who are to fill the vacancies. For these purposes any Director may submit possible candidatesto fill vacancies for consideration by the Committee. b) bringing before the Board proposals for the appointment of directors so that it can proceed to appoint themdirectly (co-option) or accept the proposals for subsequent submission to the Meeting for approval;c) proposing to the Board the members who are to make up each of the Committees;d) proposing to the Board of Directors the system and the amount of the annual remuneration of the directors; e) periodically reviewing the remuneration programmes by weighting their suitability and performance levels;f) ensuring the transparency of the remuneration of the Directors and the senior managers and, in the case of thelatter, proposing the basic conditions of their contracts to the Board;g) reporting on transactions that involve or could involve conflicts of interest and, in general, on matters coveredby chapter IX of these Regulations;h) examining or organising, if appropriate, and if so required by the Board of Directors, the successor to the Pre-sident, making the corresponding proposals and issuing the appropriate reports;i) reporting to the Board regarding questions relating to gender diversity if considered necessary in light of thecomposition of the Board of Directors.

Name of committee

EXECUTIVE OR DELEGATE COMMITTEE

Brief description a) Regulation Articles 25 of the Company Statutes and 15 of the Board regulations. b) Composition The Executive Committee must comprise a minimum of three (3) and a maximum of seven (7) members of theBoard of Directors.The Executive Committee, which shall be chaired by the President of the Board of Directors. In all cases, the adoption of agreements to appoint members of the Executive Committee shall require the fa-vourable vote of at least two thirds of the members of the Board of Directors. The post of Secretary of the Executive Committee shall be filled by the Secretary of the Board of Directors.c) Operation The Executive Committee shall meet when called to do so by its President and, in the absence of rules specificto it, apply operational rules established for the Board of Directors provided that they are compatible with the na-ture and operation of the Committee. In any event, the Executive Committee shall hold at least seven ordinary sessions a year.In those cases in which, in the opinion of the President or of three members of the Executive Committee, theimportance of the matter so requires, the agreements made by the Committee shall be submitted for ratifica-tion by the full Board. The same shall apply to matters that the Board has referred to the Executive Commit-tee for its consideration while reserving the final decision on them. In any other case, the agreements reachedby the Executive Committee shall be valid and binding with no need for later ratification by the full Board.d) Responsibilities The Executive Committee enjoys the widest powers of representation, administration, management and dispo-sition and, in general, all the powers of the Board of Directors, except for those that cannot be delegated by lawor statute or those that cannot be delegated under the Regulations of the Board of Directors.e) Relationship with the Board of Directors. The Delegate Committee shall inform the Board promptly and individually of the matters discussed and of the de-cisions reached at its meetings, with copies of the minutes of these meetings being made available to the mem-bers of the Board.

Name of committee

AUDIT COMMITTEE

Brief description




a) Regulation: Articles 27 of the Company Statutes and 16 of the Board Regulations.b) Composition The Audit Committee must comprise a minimum of three (3) and a maximum of five (5) members of the Boardof Directors and shall, in all cases, include a majority of non-executive Directors appointed by the Board of Di-rectors following proposal by the Appointments and Remunerations Committee whilst ensuring that all of themhold the status of External Directors.The Board of Directors must appoint, from among its non-executive Directors, the member who is to chairthe Audit Committee, who shall act under the title of President of the Audit Committee and who must be re-placed every four years, although he/she may be re-elected when one year has elapsed since his or her ces-sation.The Audit Committee shall appoint a Secretary, who shall draw up the minutes of the agreements of that Com-mittee. The Secretary shall be appointed by the Committee with no need for him or her to be a Director or Com-mittee member.c) Operation It shall be possible for the Audit Committee to regulate its own operation and, in the absence of rules specific toit, apply operational rules established for the Board of Directors provided that they are compatible with the na-ture and operation of the Committee.The Audit Committee must hold at least four (4) ordinary sessions a year. Extraordinarily, the Audit Committee shallmeet whenever the Board of Directors or its President requests the issuing of a report or the adoption of propo-sals and, in any event, whenever convenient for the correct performance of its duties.Any member of the senior manager team or of the Company’s workforce who is required to do so shall be boundto attend meetings of the Committee and collaborate with it and provide access information that he or she has avai-lable. The Committee may also require the auditors to attend its meetings.d) Responsibilities The Audit Committee has the following basic responsibilities:a) To propose the appointment of the auditor, the terms and conditions of the contracting process, the scope ofthe professional mandate and, if appropriate, the revocation or non-renewal of the appointment;b) To review the company’s accounts, to oversee compliance with the legal requirements and the correct appli-cation of generally accepted accounting principles, as well as reporting on proposals for the amendment of ac-counting principles and criteria suggested by the company’s senior management;c) To act as a channel of communication between the Board of Directors and the auditors, to assess the results of eachaudit and the responses of the company’s senior management team to its recommendations and to mediate in theevent of disagreement between the former and the latter in connection with the principles and criteria to be applied inpreparing the financial statements;d) To check the appropriateness and integrity of the internal control systems and review the appointment and re-placement of its managers;e) To supervise compliance with the auditing contract, ensuring that the opinion on the annual accounts and themain contents of the auditors’ report are presented clearly and accurately;f) To review prospectuses, the periodic financial information and any other relevant information that the Board mustsupply to the markets and its supervisory bodies;g) To supervise the internal audit services, if these exist, for which purpose the head of internal auditing must present tothis Committee, annually, its work plan, any incidents and a report of its activities;h) To be fully familiar with the process of financial reporting and with the internal control systems. To be able, for thispurpose, to identify the types and levels of risks, the measures taken to mitigate the impact of the risks identifiedand to have a sound working knowledge of the company’s control, information and risk management systems;i) To examine compliance with the company’s internal codes of conduct, with these Regulations and, in general,with the Company’s rules of corporate governance and to make the necessary proposals for improvement. j) In particular, the duties of the Audit Committee include receiving information and, if appropriate, issuing a reporton (i) the actions taken and the decisions adopted by the Senior Regulation Compliance Management Team in theperformance of its duties in accordance with the provisions of the Company’s Internal Code of Conduct; and (ii) toapply disciplinary measures to apply, if appropriate, to members of the Company’s senior management team;k) To establish, if deemed opportune, and, if appropriate, to supervise a system that allows the employees to re-port, confidentially, and if it is considered appropriate, anonymously, irregularities of potential importance, espe-cially of a financial and accounting nature, that may be observed within the company; and




l) To report to the Board on the creation or acquisition of holdings in special purpose companies or com-panies registered in tax havens or complex transactions whenever required to do so by the Board of Di-rectors.

B.2.4 State the powers of counselling, consultation and, if appropriate, delegation of each of the committees:

Name of committee


Brief description

Consultation and control committee

Name of committee


Brief description Body corporate with a general decision-taking capacity and the ability to expressly delegate all the powers in-herent to the Board of Directors except for those that cannot be delegated by law or company statute.

Name of committee

AUDIT COMMITTEE

Brief description

Consultation and control committee

B.2.5 State, if appropriate, if the Board committees are governed by their own regulations and, if so, the place where

such regulations are available for consultation and any amendments made to them during the year. Also state whether

any voluntary annual report has been compiled on the activities of each committee.

Name of committee


Brief description

The organisation and operation of the Board of Directors Committees are specifically regulated in the Regulationsgoverning the Board of Directors, which are available for consultation on the Company’s website and on the website of the Spanish Stock Market Commission.

Name of committee


Brief description The organisation and operation of the Board of Directors Committees are specifically regulated in the Regulationsgoverning the Board of Directors, which are available for consultation on the Company’s website and on the website of the Spanish Stock Market Commission.

Name of committee

AUDIT COMMITTEE

Brief description




The organisation and operation of the Board of Directors Committees are specifically regulated in the Regulationsgoverning the Board of Directors, which are available for consultation on the Company’s website and on the website of the Spanish Stock Market Commission.

B.2.6 State whether the composition of the executive committee reflects the participation in the Board of the various di-

rectors depending on their category:

YES

C - RELATED-PARTY TRANSACTIONS

C.1 State whether the full Board has reserved the authority to approve, following a favourable report from the Audit Com-

mittee or any other Committee to which this responsibility has been delegated, the transactions which the Company ca-

rries out with Directors, significant shareholders or parties represented on the Board, or with persons related to these parties:

YES

C.2 List material transactions involving a transfer of resources or obligations between the company or companies from

its group and the company’s significant shareholders:

C.3 List material transactions involving a transfer of resources or obligations between the company or companies from

its group and the company’s administrators or directors.

C.4 List material transactions performed by the company with other companies in its group which are not eliminated in

the preparation of the consolidated financial statements and were not, in terms of their object and conditions, performed

in the ordinary course of the Bank’s business.

C.5 State whether the members of the Board of Directors were involved in any situations of conflict of interests during

the year, pursuant to Article 127 ter of the Spanish Companies Act.

NO

C.6 Detail the mechanisms in place for detecting, determining and resolving possible conflicts of interests between the

company and/or its group and its directors, executives or significant shareholders.

Name or company name of the significant

shareholder

Nature of the relationship

Type of operation

GUBEL, S.L. COMMERCIAL Leases

Name or company nameof company or entity

from its group

PROACTINMO, S.L.0

Amount (in thousand

euros)

1,188


COMMERCIAL Financing agreements: loansand contributions ofcapital (lender)

BANCA MARCH,S.A. 3,681


COMMERCIAL Provision of services

BANCA MARCH,S.A. 2,413




The Board of Directors Regulations of Prosegur Compañía de Seguridad, S.A. establish certain mechanisms for the de-

tection, identification and resolution of possible conflicts of interests with directors:

-Reporting obligations: the directors are required by Article 38 of the aforementioned Regulations to inform the

Company of all positions held and activities performed by them in other companies or entities and, in general, to

communicate any fact or situation which may be of significance in relation to their actions as directors of the

Company.

-Abstention obligations: the directors are required by Article 33 of the Board Regulations to refrain from at-

tending and participating in deliberations on matters in which they have a personal interest. For theses pur-

poses, a director is also considered to have a personal interest when the matter in question affects a member

of his/her family or a company in which he/she occupies a management position or owns a significant sha-

reholding.

Similarly, the aforementioned Article stipulates that the directors may not perform, directly or indirectly, professional

or commercial transactions with the Company unless they have first communicated the situation of conflict of in-

terests and the Board, following a report by the Appointments and Remuneration Committee and Regulatory

Compliance Directorate, has approved the transaction.

With regard to significant shareholders, Article 39 of the Board Regulations stipulates that the Board is responsible for

examining any transactions performed by the Company with a significant shareholder and/or any other party conside-

red related pursuant to the applicable legislation; no transaction may be authorised without the Appointments and Re-

muneration Committee having first issued a report assessing the operation from the point of view of equality in the

treatment of shareholders and market conditions.

C.7 Is more than one Group company listed on a stock exchange in Spain?

NO

Identify the subsidiaries that are listed

D - RISK CONTROL SYSTEMS

D.1 General description of the risks policy of the company and/or its group, detailing and evaluating the risks covered

by the system and indicating the adequacy of the systems based on the profile of each type of risk.

Prosegur has implemented, through various areas, an extensive risks control system. The Company analyses, evalua-

tes and monitors all relevant factors by which its day-to-day management may be affected. In this way, it protects its as-

sets and the interests of customers, employees and shareholders, contributing to its improved development and building

up greater confidence in the business.

Through its Internal Audit department, which adopts a systematic and thorough approach in the assessment and im-

provement of risk management processes, control and governance, Prosegur guarantees that its risks control system

is adequate and sufficient.

Prosegur’s risks are financial, operational, compliance-related and reputational.




1. Financial risks

The Economic-Financial Department, in accordance with the guidelines set by the Board of Directors, is the area res-

ponsible within Prosegur for the management of the financial risks to which the Company is exposed. Its task is to mi-

nimise the potential adverse affects of the climate of financial uncertainty on Prosegur’s profitability. Prosegur’s activities

are exposed to exchange rate risk, credit risk, prices risk, liquidity risk and interest rate risk.

1.1 Exchange rate risk

Prosegur operates internationally and is therefore exposed to an exchange rate risk on operations denominated in

foreign currency; specifically the currencies concerned are the Argentinean peso, the Brazilian real, the Chilean

peso, the Peruvian sol and, to a lesser extent, the Colombian peso, the Mexican peso, the Uruguayan peso and

the Paraguayan guarani. The exchange rate risk derives from future commercial transactions, equity invested

abroad, operating income and financial positions denominated in currencies other than Prosegur’s functional cu-

rrency.

To control the exchange rates deriving from these operations, Prosegur’ policy is to use the instruments which it consi-

ders appropriate at each moment in time to balance and neutralise risks related to monetary flows of receivables and

payables, consideration being given to market forecasts.

Prosegur’s established strategy is one of long-term permanence in the foreign markets in which it is present, and it has

therefore adopted a policy of not hedging equity investments in the various countries and assuming the risk of conver-

sion into euros of payables and receivables denominated in the currencies in question.

What it does hedge, by contrast – either through financial instruments or through the use of natural hedges - is the ge-

neration of income and the protection of cash surpluses in those currencies which make a significant contribution to Pro-

segur’s operating result.

1.2. Credit risk

Prosegur has no significant credit risk concentrations. The default percentage in the sector in which it operates is not

significant. If customers have been independently rated then these ratings are used. When there is no independent

rating, the credit control area assesses the customer’s credit quality, taking into consideration its financial position, past

experience and other factors. Individual credit limits are established based on internal and external ratings, in accor-

dance with the limits set by the Economic and Financial Directorate. There is regular monitoring of the application of

credit limits.

In 2007, Prosegur signed a securitisation programme for part of its order book, implying the sale of invoices without re-

course, meaning that the credit risk is transferred in the sale. The duration of this programme is 5 years.

1.3. Prices risk

Because Prosegur’s main activity is a services business, based extensively on human capital, there are no significant risks

relating to volatility in prices. During 2010, collar structures have been maintained to limit the impact on costs corres-

ponding to the consumption of diesel oil by the fleet of armour-plated vehicles.

1.4. Liquidity risk

Prudent management of the liquidity risk requires the maintaining of sufficient cash and negotiable securities, and the avai-

lability of short-, medium- and long-term financing through a sufficient amount in committed credit facilities so that Pro-




segur’s business objectives can be met securely, efficiently and punctually. The objective of the Corporate Cash De-

partment is to maintain sufficient liquidity and availability of financing to guarantee the smooth running of Prosegur’s bu-

siness operations.

The Economic-Financial Management monitors Prosegur’s liquidity reserve provisions - including available credit and

cash and cash equipments – based on forecast cash flows.

1.5. Risk related to interest rates, cash flows and fair value

Prosegur is exposed to interest rate risk in view of the monetary assets and liabilities recorded in its balance

sheet.

Prosegur analyses dynamically its exposure to interest rate risk. During 2010, the majority of Prosegur’s financial liabili-

ties at variable rates of interest were denominated in euros.

Various scenarios are simulated taking into consideration refinancing, the renewal of current positions, alter-

native financing and hedging operations. Based on these scenarios, Prosegur calculates the effect on income

of a particular interest rate variation. In each simulation, the same interest rate variation is applied for all cu-

rrencies. Scenarios are only prepared for the more significant liability positions on which interest accrues at va-

riable rates.

Based on different scenarios, Prosegur manages the interest rate risk on cash flows through swaps of variable to varia-

ble and variable to fixed interest rates.

During 2010, Prosegur has carried out interest rate swaps to allow for greater flexibility in the structure of fixed-term

drawdowns.

2. Operational and compliance risks

Through its Integral Risks Management (IRM) department, Prosegur operates a programme for the ongoing analysis

of all its operational processes, the aim being to detect, evaluate and manage effectively all risks deriving from such

processes.

Prosegur is aware of the positive impact that this control function has on its services and it therefore allocates sig-

nificant resources to this area. Its operations are subject on an ongoing basis to both presential and remote audit

procedures.

In addition, the Integral Risks Management department participates actively in the investigation and analysis activities in

respect of third-party purchasing operations.

Attention is drawn to the role played by the IRM Council, which is currently established in Europe and is soon to be es-

tablished in South America. Its role is to monitor and provide assistance in relation to claims or disputes in the Cash Ma-

nagement activity, helping to identify best practice and in the design of procedures which minimise the possibility of

losses being incurred.

The IRM Council plays an essential role in the prevention of money laundering and is responsible for the internal organi-

sation which constitutes the Money Laundering Prevention Unit in Spain. This Unit exists in accordance with legislation

which requires Prosegur to implement control measures to prevent the transport of funds being used for money laun-

dering purposes.

Once again, Prosegur is demonstrating its leadership in this area. Responsibility for Integral Risk Management also co-

vers the integral management of the company’s quality and environmental policy.




The main objectives of the Prosegur Quality and Environmental Policy are as follows:

- To aim for customer satisfaction by providing an excellent service which the company is continually striving

to improve.

- To pursue the business activity in a manner which shows respect for the environment and for human rights and

social awareness.

- To promote among employees the raising of environmental awareness and the use of good practice, and the

dissemination of these principles in their work and personal habits.

Finally, the Insurance Management department is responsible for passing operational risks on to the insurance market.

The Prosegur insurance portfolio is made up of different global and local programmes which cover its assets, employees,

shareholders, activities and third parties.

3. Reputational risks

Relations between Prosegur and its main interest groups conform strictly to the basic principles and standards established

in the “Code of Ethics and Conduct” approved by the Board of Directors.

Similarly, as a listed Company, Prosegur has its Internal Conduct Regulations (ICR) which are applicable in areas related

to securities markets, their purpose being to ensure that the law is strictly complied with.

Both these documents are public and are available for consultation on the Company’s web site at www.prose-

gur.com.

There is an internal reporting procedure for the communication of irregular or inappropriate conduct or any deviations from

the standards established in these documents.

D.2 State whether or not any of the various types of risk (operational, technological, financial, legal, reputational, tax, etc.),

affecting the company and/or its group has materialized during the year.

NO

If yes, indicate the circumstances which led to such materialisation and whether or not the established control

systems worked.

D.3 State whether there is any committee or other governance body responsible for establishing and supervising these

control mechanisms.

YES

If yes, provide details of its functions.

Name of committee or body

AUDIT COMMITTEE

Description of functions

The functions delegated to this committee for these purposes include the following:

- Knowledge of the Company’s financial reporting process and internal control systems, identifying the types and

levels of risk, measures to mitigate the impact of the risks identified and the control, reporting and risk manage-

ment systems.




- Relations with the Company’s external auditors for the purpose of receiving information on issues which may

undermine the external auditors’ independence and any other issues relating to the audit process, and any other

communications envisaged in audit legislation and technical audit rules.

- Supervision of internal audit services, when such services exist, in which connection the person in charge of

internal audit is required to present to the Commission annually the internal audit work plan, an account of any

incidents which have arisen and a report on these activities.

- Verify the suitability and integrity of control systems and review the appointment and replacement of the per-

sons responsible.

D.4 Identification and description of processes for compliance with the various regulations by which the company and/or

its group is affected.

Prosegur engages in private security activities; this activity is subject to specific regulations in the various countries in

which the company operates, without prejudice to the other legislation which is applicable in each case.

The Company, in this connection, pays particular attention to compliance with the various regulations affecting Prose-

gur; for this, it has an organisational structure which incorporates specific controls. These include the existence of a Fi-

nancial Directorate and a Legal Advisory Directorate, each of which, in its particular area of competence, oversees

compliance with applicable legislation (external and internal).

E - GENERAL MEETING

E.1 State and, if appropriate, provide details on differences arising with respect to the minimum quorum requirements

established in the Spanish Companies Act (SCA) for the valid assembly of the General Meeting.

NO

E.2 State and if appropriate list any differences with respect to the regime established in the Spanish Companies Law

for the passing of company resolutions.

NO

Describe how the regime differs from that envisaged in the Spanish Companies Law.

% quorum difference with respect to provisions of Article 102 of the Spanish

Companies Law for resolutions in general

% quorum difference with respect toprovisions of Article 103 of the SpanishCompanies Law for special resolutions

Quorum required at 1st call 0 0

Quorum required at 2nd call 0 0




E.3 List the rights of shareholders in relation to the general meetings insofar as they differ from those established in

the Spanish Companies Law.

No shareholders’ rights in relation to general meetings which differ from those envisaged in the Spanish Companies Law

have been established.

E.4 Describe the measures, if any, adopted to encourage participation of shareholders at General Shareholders’ Mee-

tings.

The General Meeting Regulations envisage a series of measures designed to encourage the shareholders to take part

in the Meeting. These consist primarily of giving shareholders, sufficiently in advance, access to all the information on the

matters included in the Agenda, not only by providing them with the relevant supporting documentation in physical form

but also by making these documents available through the Company’s web site.

Information is also required to be provided on the measures and procedures to be used for arranging representation at

the General Meeting; as from the day after the notice calling the Meeting has been published, named attendance and

delegation cards are required to be issued to all shareholders entitled to attend who request them.

In addition, although this is not expressly envisaged in the By-laws or in the Meeting Regulations, the company allows

for the division of votes in the case of financial brokers who are registered as legitimate shareholders but act on behalf

of different clients.

E.5 Indicate whether the chairmanship of the General Meeting is held by the chairman of the Board of Directors. Where

appropriate, indicate the measures which are adopted to guarantee independence and smooth running of the General

Meeting:

YES

Details of measures

Pursuant to the General Meeting Regulations:1. The Chairman of the General Meeting is responsible for:a) Directing the meeting so that deliberations take place in accordance with the Agenda.b) Establish the order of deliberations are to take place and the order in which those wishing to speak are to be given the floor.c) Decide upon the form in which resolutions are to be voted upon in accordance with the provisions of these Regulations.d) Solve any doubts, requests for clarification or complaints which may arise in relation to the agenda, the attendancelist, title to shares, delegations or representative powers, requirements for the valid assembly of the meeting and thepassing of resolutions by the Meeting or restrictions on voting rights established in the by-laws.e) Give the floor to shareholders who request permission to speak, instructing speakers to end their addresses or re-fusing to give the floor when there are reasons for such action, and bring debates to a close when he/she feels thatthe issue in question has been sufficiently discussed, all in accordance with the provisions of these Regulations.f) Indicate when resolutions are to be voted upon and declare the results of voting procedures.g) In general, exercise all powers required for smooth running of the meeting, including the interpretation of the con-tent of the Regulations.




E.6 Indicate, where appropriate, any amendments made during the year to the General Meeting Regulations.

No amendments have been made to the General Meeting Regulations during 2010.

E.7 Give details of attendance at general meetings held during the year to which this report corresponds:

E.8 Indicate briefly the resolutions passed at general meetings held during the year to which this report corresponds and

the percentage of votes by which each resolution has been passed.

General Shareholders’ Meeting of 28 June 2010

Proposals

I. Examination and approval of the annual accounts and management report of both Prosegur Compañía de Seguridad,

S.A. and its consolidated group, and the proposal with respect to the allocation of results and of the Board of Directors’

management, all in respect of the year 2009 (approved by 99,88%).

II. Shareholder remuneration: distribution of dividends to be charged to 2009 income (approved by 100%).

III. Re-election of Directors.1.Re-election of Ms. Helena Irene Revoredo Devecchio (approved by 98.14%). 2.Re-election of Mr. Isidro Fernández Barreiro (approved by 88.28%).3.Re-election of Mr. Christian Gut Revoredo (approved by 99.60%).4.Re-election of Ms. Mirta María Giesso Cazenave (approved by 89.56%)5.Re-election of Ms. Chantal Gut Revoredo (approved by 97.60%).

IV. Authorisation for the acquisition of treasury stock, either directly or through Group companies (approved by

99.65%).

V. Appointment of the auditor of Prosegur Compañía de Seguridad, S.A. and of its consolidated group (approved by

99.84%).

VI. Setting of the maximum annual Directors’ remuneration in accordance with Article 22 of the Articles of Association

(approved by 99.73%)

VII. The granting of powers for the formalisation, interpretation, rectification and execution of the resolutions passed by

the General Shareholders’ Meeting (approved by 100%).

28/06/2010

Attendance figures

Date of General

Meeting

% attending inperson

% represented

% remote voting

Electronic voting

Other

Total

65.830 22.380 0.000 0.000 88.210




E.9 Indicate whether there is any restriction in the By-laws which establishes a minimum number of shares which must

be held to be able to attend the General Meeting.

YES

E.10 Indicate and explain the reasons for the policies applied by the company in relation to the delegation of votes at the

general meeting.

The Company has established no specific policy in relation to the delegation of votes.

E.11 Indicate whether the company is aware of the policies followed by institutional investors in relation to participation

or non-participation in company decisions.

NO

E.12 Indicate the address and manner of accessing the content of the corporate governance report in the company’s web site.

Address: www.prosegur.com

Manner of accessing content of corporate governance report: Main page / Shareholders and investors / Corpo-

rate governance.

F- EXTENT TO WHICH CORPORATE GOVERNANCE RECOMMENDATIONS ARE FOLLOWED

Indicate the extent to which the Company follows the recommendations of the Unified Code on Good Corporate Go-

vernance. If any of these recommendations is not followed, explain the recommendations, rules, practices or criteria

which the company applies.

1. The bylaws of listed companies should not limit the number of votes which may be cast by a single shareholder, or

impose other restrictions on the company’s takeover via the market acquisition of its shares.

See headings: A.9, B.1.22, B.1.23 and E.1, E.2

Complied with

2. In the event that a dominant and subsidiary company are listed, they should both indicate publicly and in precise terms:

a) Their respect areas of activity and any business dealings between them, as well as business dealings between

the listed subsidiary and other companies in the group;

b) The mechanisms in place to resolve possible conflicts of interest which may arise.

See headings: C.4 and C.7.

Not applicable

3. Even when not expressly required to do so by commercial legislation, Boards of Directors should submit operations implying any

change to the company’s structure – particularly those operations listed below - to the General Shareholders' Meeting for approval:

Number of shares required to be able to attend the General Meeting 61712




a) The transformation of listed companies into holding companies through a process of subsidiarisation, i.e. re-

allocating to subsidiaries core activities that were previously carried out by the originating firm, even though the

latter retains full control of the former;

b) Any acquisition or transfer of key operating assets that would effectively alter the company's corporate purpose;

c) Operations that effectively add up to the company's liquidation.

Complied with

4. The detailed proposals containing the resolutions to be passed by the General Meeting, including the information re-

ferred to in Recommendation 28, are to be made public at the time of publishing the notice calling the meeting.

Complied with

5. Separate votes should be taken at the General Meeting on matters which are substantially separate so that share-

holders can express their preferences in each case. This rule is to be applied in particular to:

a) The appointment or ratification of appointment of directors, with separate voting on each candidate;

b) Changes to the bylaws, with votes being taken on all articles or groups of articles that are substantially independent.

See heading: E.8.

Complied with

6. Companies are to allow split votes, so that financial intermediaries who are registered as legitimate shareholders

but act on behalf of different clients can cast their votes according to the clients’ instructions.

See heading: E.4.

Complied with

7. The Board of Directors should carry out its duties with a common purpose and under independent criteria, treat all

shareholders equally and be guided by the Company's interests, which are understood to be the sustained maximiza-

tion of the company's financial value.

The Board should also ensure that in its relationships with stakeholders the company respects laws and regulations;

complies with its obligations and contracts on a good-faith basis; respects common uses and good practices in the

sectors and territorial areas in which it carries out its activities; and observes those additional principles of corporate res-

ponsibility that it has voluntarily accepted.

Complied with

8. The core components of the Board's mission should be to approve the company's strategy and organisation

of resources required to carry it forward, and ensure that management meets the objectives set while pursuing the

company's interests and corporate purpose. To this end, the Board should be reserved competence for the ap-

proval of:

a) The company's general policies and strategies. In particular:

i) The strategic or business plan, management targets and annual budgets;

ii) Investment and financing policy;

iii) Design of the structure of the corporate group;




iv) Corporate governance policy;

v) Corporate social responsibility policy;

vi) Policy as regards the remuneration and evaluation of performance of senior officers;

vii) Risk control and management policy, and the periodic monitoring of internal information and control

systems;

viii) Policy on dividends and treasury stock shares, and the limits to be applied.

See headings: B.1.10, B. 1.13, B.1.14 and D.3.

b) The following decisions:

i) On the proposal of the company's chief executive, the appointment and removal of senior officers, and their

severance clauses.

See heading: B.1.14

ii) Directors' remuneration and, in the case of executive directors, the additional consideration for their exe-

cutive duties and other conditions to be met by their contracts.

See heading: B.1.14

iii) The financial information listed companies must periodically disclose.

iv) Investments or operations of all kinds considered strategic owing to their amount or special characteris-

tics, except when approval by the General Meeting is required.

v) The incorporation or acquisition of interests in special purpose entities or entities resident in countries or

territories classed as tax havens, as well as any analogous transactions or operations whose complexity

may impair the group's transparency.

c) Transactions which the company conducts with directors, significant shareholders or shareholders with Board

representation or other persons related thereto (“related-party transactions”).

However, Board authorisation will not be required for related-party transactions that simultaneously meet the fo-

llowing three conditions:

1ª. They are governed by standard contracts applied on an across-the-board basis to a large num-

ber of clients;

2ª. They are performed at rates set on a general basis by the person supplying the goods or services;

3ª. Their amount does not exceed 1% of the company’s annual revenues.

It is recommended that related-party transactions be approved only following a favourable report by the Audit

Committee or such committee as may have been assigned this function and that the directors involved in the

transaction, apart from neither exercising nor delegating their votes, should remain absent from the meeting room

while the Board deliberates and votes on the transaction.

The powers attributed herein to the Board should be non-delegatable, with the exception of those powers men-

tioned in b) and c), which can be delegated to the Executive Committee in urgent cases, subject to subsequent

ratification by the full Board.

See headings: C.1 and C.6

Complied with




9. In the interests of the effectiveness and in view of the participatory nature of its functioning, the Board of Directors

should comprise between five and fifteen members.

See heading: B.1.1.

Complied with

10. The number of domanial and independent external directors should make up the large majority of the Board and the

number of executive directors should be the minimum required, taking into consideration the complexity of the corpo-

rate group and the percentage stakeholdings corresponding to executive directors in the company’s capital.

See headings: A.2, A.3, B.1.3. and B.1.14.

Explain

The percentage of the total members of the Board of Directors which represents the substantial external board

members plus the independent external board members is 50%.

11. If there is any external director who cannot be considered as representing substantial or independent shareholders,

the company should explain this circumstance and their links, whether with the company or its senior managers, or with

its shareholders.

See section: B.1.3

Complies

12. Among the external directors, the relationship between the number of directors representing substantial share-

holders and the number of independent directors should reflect the proportion between the capital of the company

represented by the directors representing substantial shareholders and the rest of the capital.

This criterion of strict proportionality can be relaxed, so that the weight of the directors representing substantial

shareholders is greater than would correspond to the total percentage of capital they represent:

1º In highly-capitalised companies where holdings that are legally regarded as substantial are scarce or non-

existent, but there are shareholders, with share packages of high absolute value.

2º In the case of companies where there is a plurality of shareholders represented on the Board, and they are not

linked to each other.

See sections: B.1.3, A.2 and A.3

Complies

13. The number of independent directors should represent at least a third of the total of directors.

See section: B.1.3

Explain

The independent external Directors represent twenty-five per cent (25%) of the total number of Directors of the

Company, regarded up to now as a sufficient number in view of the existing capital structure and the complexity

of the Group.

14. The character of each director should be explained by the Board to the General Meeting, which should make or ra-

tify appointment, and it should be confirmed or, if appropriate, reviewed annually in the Annual Corporate Governance

Report, following verification by the Appointments Committee. This Report should also explain the reasons for the ap-

pointment of directors representing substantial shareholders at the instance of shareholders whose shareholding is less




than 5% of the capital; and reasons should be given, if appropriate, for why heed has not been taken of formal requests

for presence on the Board from shareholders whose shareholding is equal to or greater than that of others at whose re-

quest representing substantial shareholders have been appointed.

See sections: B.1.3 and B.1. 4

Complies

15. When the number of women directors is low or zero, the Board should explain the reasons and the initiatives taken to

remedy the situation; and, in particular, the Appointments Committee should ensure that when new vacancies arise:

a) The selection procedures do not suffer from implicit bias that hinders the selection of women directors;

b) The company should deliberately seek, and include among the potential candidates, women who meet the

required professional profile.

See sections: B.1.2, B.1.27 and B.2.3

Not Applicable

16. The Chairman, being responsible for the efficient operation of the Board, should ensure that the directors receive suf-

ficient prior information; stimulate debate and the active participation of the directors during the meetings of the Board,

protecting their freedom to take a position and express an opinion; and organise and coordinate with the Chairpersons

of the relevant Committees the periodical assessment of the Board, as well as, if appropriate, that of the CEO.

See section: B.1.42

Complies

17. When the Chairperson of the Board is also the CEO of the company, one of the independent directors should

be empowered to ask for the calling of a meeting of the Board or the inclusion of new items on the agenda; to co-

ordinate and have reflected the concerns of the external directors; and to direct the assessment by the Board of

its Chairperson.

See section: B.1.21

Not Applicable

18. The Secretary of the Board should especially ensure that the actions of the Board:

a) Are in accordance with the letter and the spirit of the Law and its regulations, including those approved by the

regulatory bodies;

b) Conform to the Statutes of the company and the Regulations of the Meeting, of the Board and others that the

company may have;

c) Pay regard to the recommendations of good governance contained in this Unified Code that the company has

accepted.

And, to assure the independence, impartiality and professionalism of the Secretary, their appointment and ces-

sation should be reported by the Appointments Committee and approved by the full Board; and this procedure

for appointment and cessation should appear in the Regulations of the Board.

See section: B.1.34

Complies




19. The Board should meet sufficiently often to effectively perform its duties following the schedule of dates and to-

pics set at the start of the year, each Director being entitled to propose other items for the agenda that were not pro-

posed initially.

See section: B.1.29

Complies

20. The cases of absenteeism by the directors should be reduced to indispensable cases and quantified in the Annual Cor-

porate Governance Report. If proxy representation were to be unavoidable, this should be conferred with instructions.

See sections: B.1.28 and B.1.30

Complies

21. When the directors or the Secretary state their concerns about any proposal or, in the case of the directors, about

the running of the company and such concerns are not resolved in the Board, the person stating the concern may ask

for this to be recorded in the minutes.

Complies

22. The Board in plenary session should assess once a year:

a) The quality and efficiency of the Board's operation;

b) Starting from the report made by the Appointments Committee, the performance of their duties by the Chair-

man of the Board and by the CEO of the company;

c) The operation of its Committees, starting from the reports that these present.

See section: B.1.19

Complies

23. All the directors should be able to make use of the right to gather such additional information as they consider ne-

cessary on matters within the competency of the Board. And, unless the Statutes or the Regulations of the Board esta-

blish otherwise, address their petition to the Chairman or Secretary of the Board.

See section: B.1.42

Complies

24. All the directors should be entitled to obtain from the company the necessary advice to fulfil their duties; and the com-

pany should judge the suitable channels to exercise this right, which may in special circumstances include external con-

sultancy charged to the company.

See section: B.1.41

Complies

25. The companies should establish an orientation programme to provide new directors quickly with sufficient knowledge

of the company, as well as its rules of corporate governance. They should also offer the directors programmes to up-

date their knowledge when circumstances so advise.

Complies




26. The companies should require the directors to dedicate to their duties the time and effort necessary to perform

them efficiently and, as a consequence:

a) The directors should inform the Appointments Committee of their remaining professional obligations, in case

they interfere with the dedication required;

b) The companies should establish rules on the number of boards on which its directors may sit.


Complies Partially

The Director must inform the Company of all the posts that they hold and of the activities performed in other

companies, and, in general, of any fact or situation that might prove relevant to their actions as adminis-

trator of the Company, although no rules are established on the number of boards on which its directors

may sit.

27. The proposal for appointment or re-election of directors brought by the Board to the General Meeting, as well as their

provisional appointment by co-option, should be approved by the Board:

a) At the proposal of the Appointments Committee, in the case of independent directors

b) Following report from the Appointments Committee, in the case of the remaining directors.

See section: B.1.2

Complies

28. The companies should publish and update on their web sites the following information about their di-

rectors:

a) Professional and biographical profile;

b) Other Boards to which they belong regardless of whether or not they are publicly quoted companies;

c) Indication of the category of director to which they belong, as appropriate, indicating, in the case of directors

representing substantial shareholders, the shareholder they represent or with whom they are linked.

d) Date of their first appointment as director in the company, as well as of subsequent appointments, and;

e) Shares in the company, and options over them, of which they are a holder.

Complies

29. The independent directors should not remain as such for an unbroken period greater than 12 years.

See section: B.1.2

Complies

30. The directors representing substantial shareholders should present their resignation when the shareholder they

represent sells all of their shareholding. They should also do so, in the appropriate number, when this shareholder

reduces their holding to a level that requires a reduction in the number of its directors representing substantial sha-

reholders.

See sections: A.2, A.3 and B.1.2

Cumple




31. The Board of Administration should not propose the cessation of any independent director before completion of the

statutory period for which they were appointed, unless there is just cause, appreciated by the Board following report from

the Appointments Committee. In particular, just cause shall be considered to exist when the director has failed to per-

form the duties inherent to the post or incurred any of the circumstances described in section 5 of section III of the de-

finitions of this code.

The cessation of independent directors can also be proposed resulting from takeover bids, mergers or other

similar company operations that bring about a change in the capital structure of the company when such

changes in the structure of the Board are caused by the criterion of proportionality described in Recom-

mendation 12.


Complies

32. The companies should establish rules that require the directors to report and, if appropriate, resign in cases that could

damage the credit and reputation of the company and, in particular, they should be required to inform the Board if they

are charged with criminal offences, as well as the outcomes of their trial.

If a director is tried or oral proceedings are opened against them for any of the offences set out in article 124 of

the Law of Limited Liability Companies, the Board should examine the case as soon as possible and, in light of

its particular circumstances, decide whether or not it is right for the director to continue in their post. Moreover,

the Board should give a reasoned account of the matter in the Annual Corporate Governance Report.


Complies

33. All the directors should clearly state their opposition when they believe that a proposal submitted to the Board might

be contrary to the company’s interest. The independent and other directors who are not affected by the potential con-

flict of interest should especially also do so in case of decisions that could harm the shareholders not represented on

the Board.

When the Board takes substantial or repeated decisions about which a director has stated serious reservations,

they draw the appropriate conclusions and if they opt to resign, the reasons should be given in the letter referred

to in the following recommendation.

This Recommendation also applies to the Secretary of the Board, even though they are not a director.

Complies

34. When, as a result of resignation or for any other reason, a director leaves without completing their mandate, they should

explain the reasons in a letter sent to all the members of the Board. Regardless of whether or not such cessation is repor-

ted as an important event, the reason for the cessation should be mentioned in the Annual Corporate Governance Report.

See section: B.1.5

Not Applicable

35. The remuneration policy approved by the Board should cover at least the following matters:

a) Amount of fixed items, with breakdown, if appropriate, of the expense allowances for participation in the Board

and its Committees and an estimate of the annual fixed remuneration they give rise to;




b) Variable remuneration items, including, in particular:

i) Classes of directors to whom they apply, as well as explanation of the relative importance of the variable

remuneration items to fixed items.

ii) Criteria for assessing results on which any right to remuneration in shares, share options or any variable

item is based;

iii) Based parameters and basis for any annual bonus sysmtem or other benefits not paid in cash and

iv) an estimate of the absolute amount of the variable remuneration that will arise from the proposed remu-

neration plan, depending on the degree of compliance with the hypotheses or goals taken as reference.

c) Main characteristics of the provisions systems (for example, complementary pensions, life insurance and si-

milar items), with an estimate of their value or equivalent annual cost.

d) Conditions to be met in the contracts of people with senior management duties such as executive directors,

which must include:

i) Duration;

ii) Period of notice; and

iii) Any other clauses relating to contract bonuses, as well as compensation or golden parachute for early

termination or termination of the contractual relationship between the company and the executive di-

rector.

See section: B.1.15

Complies

36. Remuneration by means of issuing shares in the company or the Group's companies, options over shares or ins-

truments referenced to the share price, variable remuneration linked to the performance of the company or provision

systems should be limited to the executive directors.

This recommendation shall not apply to the issuing of shares, when this is not conditional on the directors kee-

ping them until their cessation as director.

See sections: A.3 and B.1.3

Complies

37. The remuneration of the external directors should be appropriate to reward their dedication, qualification and res-

ponsibility that the post demands; but not so high as to compromise their independence.

Complies

38. The remuneration related to the results of the company should take into account any possible provisos that appear

in the external auditor's report and that undermine these results.

Not Applicable

39. In the case of variable remuneration, the remuneration policies should include appropriate technical cautions so

as to ensure that such remuneration bears a relationship to the professional performance of its beneficiaries and

should not derive simply from the general evolution of the markets or the company’s sector of activity or from other

similar circumstances.

Complies




40. The Board should submit to a vote at the General Meeting, as a separate item on the agenda, and for the pur-

poses of consultation, a report on the policy for remuneration of directors. This report should be made available to

the shareholders, separately or in any other form that the company may consider appropriate.

This report shall focus especially on the remuneration policy approved by the Board for the current year,

as well as, if appropriate, forecasts for future years. It shall cover all questions referred to in Recommen-

dation 35, except those points that could imply revealing sensitive commercial information. It shall stress

the most significant changes in such policies compared to the past year to which the General Meeting re-

fers. It shall also include an overall summary of how the remuneration policy was applied in that past year.

The Board should also report on the role played by the Remuneration Committee in drawing up the remu-

neration policy and, if external consultation has been sought, the identity of the external consultants that pro-

vided it.

See section: B.1.16

Complies Partially

The company complies with the recommendation as shown in section B.1.16, although it does not submit the

report to a vote at the General Meeting.

41. The Annual Report should detail the individual remuneration of the directors during the year and include:

a) The personalised breakdown of the remuneration of each director, including, if appropriate:

i) The attendance allowances or other fixed remuneration as director;

ii) Additional remuneration as Chairperson or member of a Board committee;

iii) Any remuneration for participation in benefits or bonuses, and the reason why they were granted;

iv) The contributions in favour of the director to defined contribution retirement plans; or the director’s in-

creased consolidated rights as regards defined contribution retirement plans;

v) Any compensation agreed or paid in the event of termination of their duties;

vi) Remuneration received as director of other companies of the Group;

vii) Remuneration for performance of senior management duties by the executive directors;

viii) Any remuneration item other than the foregoing, of whatsoever kind or whatever part of the Group’s

pays it, especially when it counts as a linked operation or its omission distorts the fair image of the total re-

muneration received by the director.

b) The personalised breakdown of possible awards to directors of shares, options over shares or any other ins-

trument referenced to the share price, with details of:

i) Number of shares or options granted in the year, and conditions for the year;

ii) Number of options exercised during the year, with an indication of the number of shares affected and

the execution price;

iii) Number of outstanding options at year end, with an indication of their execution price, date and other fi-

nancial year requirements;

iv) Any change during the year to the conditions for executing options already granted.

c) Information about the relationship, in this past year, between the remuneration obtained by the executive di-

rectors and the results or other measures of the company’s performance.




Explain

The remuneration of the administrators is added to the annual report, broken down by remuneration items.

42. When there is a Delegate or Executive Committee (hereinafter, "Delegate Committee"), the participation structure

of the different categories of directors should be similar to that of the Board and its secretary should be the secretary

of the Board.


Complies

43. The Board should always know of matters dealt with and the decisions taken by the Delegate Committee, and

all members of the Board should receive copies of the minutes of the meetings of the Delegate Committee.

Complies

44. The Board of Administration should establish among its number, as well as the Audit Committee required

by the Securities Market Law, a Committee, or two separate committees, for Appointments and Remuneration.

The rules for the composition and operation of the Audit Committee and the Appointments and Remuneration

Committee(s) should appear in the Regulations of the Board, and include the following:

a) The Board should appoint the members of these Committees, taking into account the knowledge, aptitudes

and experience of the directors and the mission of each Committee; deliberate on their proposals and reports;

and they should report to the first plenary meeting of the Board after their meetings on their activity and account

for the work they have performed;

b) These Committees should be comprised exclusively of external directors, with a minimum of three. The above

is understood as without detriment to the attendance of executive directors or senior managers, when this is ex-

pressly agreed by the members of the Committee.

c) Its Chairpersons should be independent directors.

d) They should be able to call on external consultants, when they consider it necessary to fulfil their duties.

e) Minutes should be kept of its meetings, with copies sent to all the members of the Board.


Complies

45. The supervision of compliance with the internal codes of conduct and the rules of corporate governance should be

assigned to the Audit Committee, the Appointments Committee, or, if they exist separately, to the Corporate Gover-

nance Compliance committees.

Complies

46. The members of the Audit Committee, and especially its Chairperson, should be appointed with a view to their kno-

wledge and experience in accountancy, auditing or risk management.

Complies




47. The quoted companies should have an internal audit function that, under the supervision of the Audit Committee,

oversees the correct operation of the information and internal monitoring systems.

Complies

48. The head of internal auditing should present the Audit Committee with its annual work plan; should report to

it directly on incidents that arise in its development; and should, at the end of each year, submit a report of ac-

tivities.

Complies

49. The policy for controlling and managing risks should at least identify:

a) The various kinds of risk (operational, technological, financial, legal, reputational, etc.) that the

company faces, including among the financial risks, the contingent assets and other off-balance-

sheet risks;

b) Setting the level of risk that the company considers acceptable;

c) The proposed measures to mitigate the impact of the risks that have been identified, should they mate-

rialise;

d) The internal information and monitoring systems that will be used to control and manage the aforementioned

risks, including contingent assets or other off-balance-sheet risks.

See sections: D

Complies

50. The Audit Committee’s duties should include:

1º In connection with the internal information and monitoring systems:

a) Supervising the drawing up and integrity of the financial information for the company and, if appropriate,

the group, reviewing compliance with regulatory requirements, the suitable delimitation of the consolidation

perimeter and the correct application of accounting criteria.

b) Periodically the internal systems for monitoring and managing risks, so that the main risks are properly

identified, managed and made known.

c) To ensure the independence and effective functioning of internal auditing; to propose the selection, ap-

pointment, re-election and cessation of the head of the internal audit department; to propose the budget for

that department; to receive periodical information about its activities; and to check that the senior manage-

ment takes the conclusions and recommendations of its reports into account.

d) To establish and supervise a mechanism that enables employees to report, confidentially and, if considered

appropriate anonymously, any irregularities of potential importance, especially financial and accounting, that

they become aware of within the company.

2º In connection with the external auditor:

a) To bring to the Board the proposals for selection, appointment, re-election and replacement of the exter-

nal auditor, as well as the conditions for appointing the auditor.

b) To receive regular information from the external auditor about the audit plan and the results of its execu-

tion, and to check that the senior management takes its recommendations into account.

c) To ensure the independence of the external auditor and, for that purpose:




i) The company should report a change of auditor to the CNMV (Spanish Stock Market Commission) as a rele-

vant fact and accompany it with a statement on the possible existence of disagreements with the outgoing au-

ditor and, if there have been any disagreements, their content.

ii) There should be assurance that the company and the auditor respect prevailing rules on provision of services

other than auditing, the limits to the auditor’s business concentration and, in general, other rules and regulations

established to ensure the independence of the auditors;

iii) If the external auditor withdraws it should examine the circumstances that caused this.

d) In the case of groups, prefer that the group's auditor assumes responsibility for the audits of the compa-

nies that comprise this.

See sections: B.1.35, B.2.2, B.2.3 and D.3

Complies

51. The Audit Committee may call in any employee or senior manager of the company, and even have them appear with

no other senior manager present.

Complies

52. The Audit Committee should report to the Board, prior to its taking any decisions on the following matters set out in

Recommendation 8:

a) The financial information that, because it is publicly quoted, the company must make public from time to time.

The Committee should ensure that the intermediate accounts are drawn up with the same accounting criteria as

the annual accounts and, for that purpose, consider the suitability of a limited review by the external auditor.

b) The creation or purchase of participations in special purpose companies or companies domiciled in countries

or territories regarded as tax havens, as well as any other transactions or operations of a similar nature that, be-

cause of their complexity, could harm the Group’s transparency.

c) Linked operations, unless this prior reporting function has been assigned to another supervision and monito-

ring committee.


Complies

53. The Board of Administration should endeavour to present the accounts to the General Meeting without reservations

or provisos in the audit report and, in exceptional cases where they may exist, both the Chairperson of the Audit Com-

mittee and the auditors should clearly explain to the shareholders the content and scope of these reservations or provi-

sos.

See section: B.1.38

Complies

54. The majority of the members of the Appointments Committee, or of the Appointments and Remuneration Commit-

tee if there is only one should be independent directors.

See section: B.2.1

Explain

The Appointments and Remuneration Committee is comprised of three members, one of whom (the one who

holds the post of Chairperson of the Committee) is independent and two represent substantial shareholders.




55. In addition to duties set out in the above recommendations the Appointments Committee should also have the fo-

llowing duties:

a) To assess the competencies, knowledge and experience necessary in the Board and consequently to define

the necessary functions and aptitudes in candidates who are to fill each vacancy, and evaluate the time and de-

dication required for them to perform their duties well.

b) To examine or organise, in a way considered appropriate, the succession to the Chairperson and the CEO and, if

appropriate, make proposals to the Board, so that this succession is ordered and well-planned.

c) To report the appointments and cessations of senior managers that the CEO proposes to the Board.

d) To report to the Board on questions of gender diversity set out in Recommendation 14 of this Code

See section: B.2.3

Complies

56. The Appointments Committee should consult the Chairperson and the CEO of the company, especially concerning

matters relating to the executive directors.

The Appointments Committee should consult the Chairperson and the CEO of the company, especially concer-

ning matters relating to the executive directors.

Complies

57. In addition to the duties set out in the above recommendations the Remuneration Committee should have the follo-

wing duties:

a) To propose to the Board of Administration:

i) The remuneration policy for directors and senior managers;

ii) The individual remuneration of the executive directors and the other conditions of their contracts.

iii) The basic contractual conditions of senior managers.

b) To oversee compliance with the remuneration policy established by the company.


Complies

58. The Remuneration Committee should consult the Chairperson and the CEO of the company, especially concerning

matters relating to the executive directors and senior managers.

Complies

G - OTHER IMPORTANT INFORMATION

If it is considered there is any important principle or aspect relating to the corporate governance practices applied by your

company, which has not been covered in this report, please state and explain this below.

GENERAL CLARIFICATION: It is stated that the information contained in this report refers to the financial year en-

ding on 31 December 2010, except in matters for which a different reference date is specifically given.




EXPLANATORY NOTE TO SECTION A.2.:

BNP Paribas, S.A. stopped being a substantial shareholder on 15 February 2011.

EXPLANATORY NOTE TO SECTION A.3.:

The number of shares shown in the corresponding table under the heading ‘number of equivalent shares’, refers

to the maximum number of shares receivable under the option, although the actual number of shares received

will depend on compliance with the terms and conditions established in the Long-Term Incentive Plan approved

by the General Shareholder Meeting on 27 June 2008.

EXPLANATORY NOTE TO SECTION C.2:

BNP Paribas S.A. is not included in linked transactions because it stopped being a substantial shareholder on

15 February 2011 (as indicated in the EXPLANATORY NOTE TO SECTION A.2).

This section can be used to include any other information, clarification or nuance relating to the above sections of the

report inasmuch as they are relevant and not repetitive.

In particular, please state whether the company is subject to legislation other than Spanish legislation for its corporate go-

vernance and, if appropriate, include the information the company is obliged to supply and that differs from what is requi-

red in this report.

Binding definition of independent director:

Please state whether any of the independent directors has or has had any relationship with the company, its substantial

shareholders or its senior managers, which, being sufficiently significant or important, would have made it impossible for

the director to be considered as independent in accordance with the definition set out in section 5 of the Unified Code

of Good Governance:

NO

Date and signature:

This annual corporate governance report was approved by the Board of Administration of the company at its meeting

held on

24/02/2011

Please state whether any Directors voted against or abstained on the approval of this report.

NO


ANNUAL CORPORATE GOVERNANCE REPORT AND 2010 REPORT OF THE AUDIT COMMISSION

ANNUAL REPORT 2010 283

2010 REPORT OF THE AUDIT COMMISSION

I. INTRODUCTION

Regulations and Duties.

The regulations governing the Audit Commission are set down in Article 27 of the Company Articles of Incorporation, and

in Article 16 of the regulations of the Board of Directors.

Its functions are described in paragraph B.2.3 of the Corporate Governance Report.

Membership of the Commission and attendance at meetings in 2010.

At 31 December 2010, the membership of the Audit Commission was as follows:

Non-executive Commission Secretary: Ms Sagrario Fernández Barbé

(*In Prosegur’s 2010 Annual Corporate Governance Report, Mr Eugenio Ruiz-Gálvez Priego is formally listed as “Other

outside director” since on 1 June 2010 he was appointed to the Board of Directors of Corporación Financiera Alba.

S.A. as an independent outside director)

In accordance with the Commission’s regulations, meetings are held at least 4 times per year, whenever summoned by

the Board of Directors, the Audit Commission or the Commission Chairman.

In 2010, the Commission convened 7 times.

Attendance at Audit Commission meetings held in 2010 was as follows:

Name Type of directorship

Mr Eugenio Ruiz-Gálvez Priego (Chairman) Independent director *

Dña. Chantal Gut Revoredo Representative director for Gubel, S.L.

D. Isidro Fernández Barreiro Representative director for

Corporación Financiera Alba, S.A.


ANNUAL CORPORATE GOVERNANCE REPORT AND 2010 REPORT OF THE AUDIT COMMISSION


Based on the order of the day of the Commission, management personnel and outside advisors have also attended

these meetings.

Minutes are taken for each Audit Commission meeting, which may be consulted by members of the Board of Di-

rectors.

II. 2010 ACTIVITIES

1. FINANCIAL INFORMATION

The Commission carefully reviews the financial information contained in the annual accounts of the Company and the

Group before it is reviewed and issued by the Executive Commission and the Board of Directors. The Commission

also looks at quarterly financial statements and other information that is sent to the markets and to the regulatory

bodies.

In 2010, particularly during the meetings held on 24 February, 26 April, 26 July and 25 October, the Commission revie-

wed the information periodically sent by the Company to the CNMV (Spanish Stock Market Commission).

2. ANNUAL AUDIT OF ACCOUNTS

At its meeting on 24 May, the Commission moved to request that the Board of Directors propose the appointment of

KPMG Auditores S.L. to the shareholders at the Annual General Meeting, as auditors of the individual and consolidated

annual accounts of Grupo Prosegur and Group companies in 2010, replacing PricewaterhouseCoopers.

The auditors attended the meetings held on 24 February (PricewaterhouseCoopers), to present their audit conclusions

on the 2009 accounts, and on 26 July (KPMG Auditores S.L.), to present a preview of salient matters and conclusions

of work carried out in relation to the audit of the accounts for the first half of 2010.

3. CODES OF CONDUCT

The Audit Commission is responsible for monitoring compliance with the code of ethics and conduct and, generally, with

all corporate governance regulations.

In 2010, the Audit Commission monitored compliance with the Internal Code of Conduct of Prosegur Compañía de

Seguridad, S.A. on matters relating to the securities markets, in accordance with current legislation applicable to pu-

Mr Eugenio Ruiz-Gálvez Priego 7 meetings

Ms Chantal Gut Revoredo 7 meetings

Mr Isidro Fernández Barreiro 7 meetings




blicly listed companies, and compliance with the Code of Ethics and Conduct of the Grupo Prosegur, which sets

down the principles and standards of conduct that must be observed by all personnel, and which governs relations

among all stakeholders as a result of their activity: employees, clients, suppliers, shareholders, associates and third

parties. Furthermore, as the chief supervisory body, it has issued a mandate to begin work on a Master Plan for Cor-

porate Responsibility for the Group that will be ready in 2011.

4. INTERNAL CONTROL SYSTEMS

One of the Audit Commission’s functions is to be familiar with Grupo Prosegur’s internal control procedures, and its risk

control, reporting and management system.

On 24 February 2010, the Head of Internal Audit presented the Commission with the report for 2009 and the work plan

for 2010 based on the Group’s risk map. In the course of executing the plan, risks linked to regulatory compliance and

operational risk were reviewed. During the seven Audit Commission meetings he attended, the Head of Internal Audit pre-

sented a progress report on the work plan.

Some of the main activities carried out by the internal audit department under the Audit Commission include:

• Review of the risk map for each business and each country in which the Group is present.

• Execution of projects contained in the 2010 work plan.

• Receipt and review of complaints received through the complaints channel.

• Two progress reports on recommendations contained in the audit reports. For each recommendation, a for-

mal document was issued specifying the commitments regarding each line of business audited which contained

the proposed plan of action, the person(s) or department(s) responsible for executing the plan, the planned date

of execution and, where possible, an assessment of the results obtained.


This report has used recycled paper for printing with properties that ensure the proper management of forests

and respect for human rights throughout the production chain according to international standards.

Specifications: Plaster Double Layer, eggshell, 30% recycled paper fiber for post-consumer recycled white cut

10%, 60% FSC virgin fiber material credit.

Other certifications: ISO9001/ISO14001/OSHAS 18001.


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