Distrito Castellana Norte (DCN), the company owned by BBVA, Constructora San José and Merlin Properties that is in charge of urban development Madrid Nuevo Norte, received good news in 2020, although this was not transferred to its annual accounts for the time being, which it has presented recently in the commercial register. In these, the company reports losses in the year of 4.3 million euros, 11% less than the losses of 4.9 million in 2019. The result before taxes (the company is taxed under the tax consolidation regime with the BBVA group, its parent company) was also negative at 6 million, one less than in the previous year.
But the continuity in the big numbers does not reflect the importance that last year had for the company. As reflected in the explanatory part of the annual accounts, on July 24, 2020 the Official Gazette of the Community of Madrid completed the last procedure to launch Madrid Nuevo Norte, one of the largest urban projects in Europe. Also known as Operation Chamartín, in reference to the train station whose land is the origin of a whole real estate plan for the north of the capital that includes 2.6 million square meters (imagine more than 900 soccer fields together), it had been stuck from its early stages in 1993. That was precisely the year DCN was established, then under the name Desarrollo Urbanístico Chamartín SA. After the green light from the City Council and the regional government “there are no circumstances that prevent the current project from being completed within the execution schedules of each of the phases,” say the annual accounts, 27 years later.
A step too decisive not to find a reflection in the activity of DCN. The accounts, for example, record a substantial increase of 321,490 euros in intangible fixed assets within the IT applications section. “The acquisitions recorded in the 2020 financial year under this heading mainly correspond to software for urban management ”, clarifies the annual report. In inventories, where the company values its land and plots at almost 125 million euros, it realizes an expenditure of almost 7 million during 2020 in “technical studies, rental of facilities, architects’ fees, legal and urban advice” and “Personnel expenses related to the new project to modify the General Plan”, a necessary step required by the City Council to give final approval to the operation, although this has not been spared any subsequent setback.
Extension of the workforce
The personnel section, precisely, is one of those that registered the most substantial changes. The workforce rose from 45 to 55 people and spending grew from 5 million in 2019 to 6.5 million last year. Senior management, however, received less compensation than in the previous year, since these went from 2.4 million to 1.8 million. And also the remuneration and allowances of the board of directors, entirely made up of men, fell from 661,490 euros in 2019 to 250,000 euros last year. The expenses chapter also includes more than 764,000 euros for the rental of its headquarters and commercial offices, as well as the leasing of photocopiers and vehicles. And the short-term provisioning of 7.5 million to satisfy a claim from the General Directorate of Taxes of the Community of Madrid that generated a long dispute in the courts finally resolved last year.
DCN ended 2020 with a share capital of 175.9 million euros, after a capital increase of almost 8 million approved at the end of the year. This did not alter the percentage of participation of the three partners in the company, with BBVA as the majority (75.5%), ahead of Merlin (14.5%) and Constructora San José (10%). In the subsequent events, a new extension agreed this year for 20 million is reported, which was approved by the shareholders’ meeting, as well as the annual accounts, last May.
The accounts include the convocation of that meeting, in which the only tangential allusion to the battle that the three partners is waging for control of the company appears. BBVA, with its vast majority of control, included on the agenda a modification of the bylaws that eliminates the preferential acquisition right of the partners in the event of the sale of shares to a third party. Merlin, which in 2019 bought its stake from San José and has never hidden its interest in expanding positions (for which the preferential acquisition is a great advantage), teamed up with the construction company to bring this change to arbitration and request the precautionary stoppage of measure.