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Report andAccounts2004Rede Ferroviria Nacional Refer, E.P.

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Report & Accounts 2004

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Rede Ferroviria Nacional, EP

Letter from the President2004 was the second complete year in office for the Board of Directors of REFER EP which I have the honour of

presiding over. This is, therefore, an appropriate moment to summarise the activities carried out by the company

over the past year and to highlight some of our priorities for 2005.Firstly, it must be noted that there was a change in the composition of the Board of Directors of the company

during 2004 as the result of the Resolution of the Council of Ministers n 103/2004 (2nd series), of 24 September,

which nominated Manuel Alfredo Aguiar de Carvalho to be a member of REFERs Board of Directors, substituting

Antnio Bentes Correia Alemo, who ceased his duties. The Board of Directors expresses its appreciation and the

companys recognition of the contribution made by Antnio Bentes Correia Alemo during the time in which he

held office.

Set against a background of the guidelines defined by the government authorities for the railway sector, for our

company 2004 was noteworthy for the following facts which I feel must be highlighted: In 2002, when the Board of Directors assumed office, several areas were defined as having priority. It is with

great pleasure that, two years later, I can say that many of the objectives set out at that time were achieved

during 2004.

For example, on 30 May 2004, before the inauguration of the European Football Championships (Euro

2004) held in our country, the direct railway link between Braga and Faro, the so-called Atlantic Axis, was

opened. The line allows safe, comfortable and fast railway travel and is a major milestone in the

modernisation of the backbone of our railway network.

The restructuring of the company, considered as a strategic objective of REFER for directing the company

towards its core business, was consolidated throughout 2004 through the re-organisation of the General

Engineering Department.

In order to properly carry out its mission of making the investments necessary to modernise the national

railway network in the name of the State, REFER has to ensure that it has the different types of engineering

skills and specialist techniques which allow more efficient management of human and financial resources.

The creation of the Operating Control Centres (OCC) Project Department in 2004 was the first step towards

the setting up of centralised operating control centres aimed at optimising network operations and the

management of railway circulation, with high standards of safety, efficiency and quality.

REFER continues its work on re-classifying and eliminating level crossings in order to ensure suitable safety

levels with regard to crossings. We are rapidly approaching the European average with regard to the

indicator for the number of level crossings per kilometre of railway line.

The closing of the Rossio Tunnel last October was one of the most notable happenings of 2004.

The Board of Directors decision to close the tunnel for use was not an easy one to take but the companys

2004

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mission, as the manager of railway infrastructure, of ensuring the safety of people and assets, clearly had to

take precedence over considerations of any other nature.

The involvement and support, from the outset, of the Ministry of Public Works, Transport and Communications

and of the various transport operators of Lisbon metropolitan area allowed the rapid implementation of

alternative solutions for minimising the inevitable inconvenience caused to the members of the public usingthe railway line in question.

The re-opening of the Rossio Tunnel is forecast for June 2006, after the completion of major work which has

been considered necessary for several decades now but which had always been successively postponed

until now.

The creation of the REFER Branch in the North in the first semester of 2004 allowed us to coordinate work with

the high speed rail network authority (RAVE) with regard to the Porto Vigo route.

In addition, seeking more efficient management of resources, the Board of Directors approved the setting

up of a REFER/ RAVE/REFER TELECOM task force for information systems and technologies to seek outsynergies and to consolidate IT matters.

REFERs information systems and technology department is currently working with RAVE to define the

conceptual design of the common SAP R/3 system for the companies in the so-called REFER Group.

Special mention should be made of the fact that REFER completed the process of obtaining a public

financial rating during 2004.

The rating awarded is based on REFERs status as an EPE (Public State Company). The companys rating is

very close to the rating level for the Portuguese Republic and is thus considered satisfactory.

REFER was analysed by two of the most important international rating agencies, Moodys and Standard &

Poors, and this allows investors to understand REFERs positioning in terms of credit risk. The conditions have

thus been created for the company to diversify its financing sources by accessing the international capital

markets, in coordination with its supervising government authorities. The first such instance of this was

finalised during the first quarter of 2005 with a 600 million euro bond issue.

On the internal level, several matters took place in 2004 which I consider were important for the organisation.

Firstly, I want to mention the commemoration of REFERs seventh anniversary which took place in Entroncamento

Railway Complex when about 700 company employees were present during an event when friendly

companionship was the order of the day.

Also worthy of mention were the two Staff Members Meetings held in 2004 at which staff from our affiliated

companies also took place, namely: REFER TELECOM, FERBRITAS, INVESFER, RAVE and CPCOM. These were

excellent opportunities to debate the challenges facing the companies in the REFER Group. The culture of

communication and sharing of ideas evident at these meetings is something which we intend to build on in the

future.

In a similar context I must also refer to the various thematic workshops held to provide suitable information to all

interested parties in order to ensure that our employees have suitable conditions for enabling them to carry out

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their functions properly in the REFER universe.

Lastly, I want to mention the launching in the final quarter of 2004 of a pilot project involving 45 staff members with

the objective of identifying our in-house human resource potential.

For the year 2005 several targets have been set out in the companys activity plan. The following are worthy of

special mention: Phased implementation of external contracting of the railway network conservation and maintenance work;

Preparation of the National Railway Network Master Plan and the reconfiguration of the current network,

ensuring its inter-connection with the future high-speed railway network;

Implementation of an integrated document management solution covering the entire company.

On my behalf and on behalf of the Board of Directors, I would like to publicly express my gratitude to all the

companys employees for their hard work and the many hours they have dedicated in their respective areas. Their

efforts are the base on which the companys route in the future is built and I am sure that REFER can count on

everyones support to achieve the objectives which have been defined.

Jos Braamcamp SobralPresident of the Board of Directors

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ContentsGoverning Bodies...................................................................................................................................7

REFER in2004....................................................................................................................................9

REFERs Cultural, Social and Sporting events in 2004.....................................................................13

Macroeconomic Environment..............................................................................................................15

Economic and Financial Situation........................................................................................................18

The Company .......................................................................................................................................21

Safety..............................................................................................................................................22

Strategic Planning...........................................................................................................................23

Human Resources...........................................................................................................................24Purchasing and Logistics.................................................................................................................25

Information Systems........................................................................................................................26

Environment....................................................................................................................................27

Real Estate Assets............................................................................................................................29

Auditing and Quality Management ................................................................................................30

International Relations.....................................................................................................................31

General Engineering Department...................................................................................................33

General Operations and Conservation Department.......................................................................41REFERs Northern Branch..................................................................................................................46

Investments and Coverage of Investments ...........................................................................................48

REFER Group.........................................................................................................................................53

Economic Financial Performance.....................................................................................................56

Financial ...............................................................................................................................................67

Statements ..................................................................................................................... .......................67

Annex to the Balance Sheet and the Profit and Loss Account ..............................................................73

Reports and Certification of Accounts ..................................................................................................96

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Mission:To provide the market with competitive transport

infrastructure, managing and developing the

railway network efficiently and safely, with respect

for the environment.

Governing Bodies

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Governing Bodies

rg os oc a s

Member of the Board ofDirectors

Lus Miguel Silva

Responsible for: General Engineering Department;

REFERs Northern Branch;

Environment.

Member of the Boardof Directors

Jos Marques Guedes

Responsible for: Economy and Finances; Planning and Control; Auditing and Quality Systems; Purchasing and Logistics.

Member of the Board ofDirectors

Manuel Alfredo Aguiar de Carvalho

Responsible for: General Operating and Conservation

Department;o Conservation and Maintenance

Department;

Real Estate Assets;

President of the Board ofDirectors

Jos Braamcamp Sobral

Responsible for the following areas: Coordination of the Board of Directors; Relations with the supervising authorities; Information systems and technology

Vice-President of the Board ofDirectors

Jos Osrio e Castro

Responsible for the following areas: General Operating and Conservation

Department;o Operating Department;

General administration; Legal area Strategic Planning; Communication and Image; Human resources; Safety

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1997Founding of REFER.

The Board of Directors took office in May 1997.

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REFER in2004REFER, as the company responsible for managing the national railway network, has to guarantee the regular and

continuous supply of this public service, carrying out its activities in an effective way to provide operators with

competitive infrastructure, managing and developing an efficient and safe railway network, with respect for theenvironment.

Alongside this objective, and ensuring it is carried out, is REFERs constant concern to ensure that its employees are

fully trained and qualified to do their jobs.

At the end of 2004 our company had 4 258 employees. 191 new employees joined the company during the year

while 569 workers left REFER, with 91% of the latter resulting from the payroll adjustment process.

Giving top priority to the investment projects on account of their role in the modernisation and development of the

national railway network made sense during the major capital spending phase which took place up to 2004. With

this cycle now having been completed, the organisational structure should evolve to take account of new

priorities, namely:

Making full use of all synergies;

Centralising specialised railway engineering skills;

The functional management of investments;

The optimisation of the management of human and material resources.

Accordingly, in 2004 the re-organisation of our company continued with the General Engineering Department

being changed to a structure based on the centralisation of technical specialities.

The General Engineering Department defined a new organisational model to enable the improvement of

operating efficiency and to ensure, simultaneously, greater flexibility and matching of skills to the new realities of

railway investment. In this model, the Engineering Department has become a skills centre equipped with a critical

mass able to ensure the development of technical capabilities and to guarantee an effective response to internal

client, investment, conservation, and network operation needs.

The Board of Directors took the decision to create the Mission for the implementation of the Operating Command

Centres (OCCs), which later gave rise to the creation of the OCC Project Department, thus ensuring the work will

be done which is necessary for the construction of the Operating Command Centres, so that network operations

can be optimised and railway circulation management carried out with high standards of safety, efficiency and

quality. Three OCCs will be set up to cover the entire country.The Operating Command Centres will combine the functions of Centralised Traffic Control (CTC), Regulation,

Circulation Supervision, Catenary Tele-command, Public Information System (PIS), Video-Surveillance System,

Infrastructure Function and the Telecommunications function.

On the technological level, the year 2004 was marked by a set of initiatives aimed at taking better advantage of

our corporate system, the SAP system, after the technological upgrade carried out at the end of 2003. During the

year the extension of the PM module to the entire network of the Conservation function was completed. The

Remedy system was also extended to the permanent teams in the different Conservation Operating Zones and

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they were connected to the RDC system, promoting the concept of Service Management supported by a Web

application.

Other examples of REFERs technological initiatives were: the implementation of multimedia kiosks in 31 railway

stations and the remote access to our systems by a VPN infrastructure, made available to previously authorised

users.In 2004 the General Secretariat section continued its role as a liaison body between the Board of Directors and

REFERs operating structure. During the year in question two meetings of REFER Group staff members were

organised, as were three workshops.One of the objectives achieved with these initiatives was the improvement of

the communication channels throughout the companys structure. The consequent speeding up of

communication has led to reduced costs. The Documentation Centre saw a significant increase in the number of

registered readers as well as a major increase in the number of documents under its control. Currently the Centre

has about 5 000 types of document, twice the number at the end of the previous year.

During 2004, the Planning and Control Department, as part of its task to provide management information to theBoard of Directors, consolidated and improved the Corporate Balanced Score Card (BSC). After a presentation

session with the Ministry of Public Works, Transport and Housing (MOPTH) and the Secretary of State for Transport (SET),

direct access to our Corporate BSC was made available to the MOPTH.

The Planning and Control Department undertook three control sessions during the first half of the year, specifically

to monitor the progress of work on the Atlantic Axis with the objective of ensuring the fulfilment of the public

commitment made by REFER regarding the start-up of operations on that route.

On 30 May 2004, the inaugural journey was made on the Braga / Faro route. A specialAlfa Tilting train left Braga at

08h35m and reached Faro at about 14h30m. Since that time, railway passengers can now travel between Lisbon

and Faro in less than three hours.

At the same time, the multimedia kiosks installed inside the railway stations were officially inaugurated. On 2

February a protocol was signed with UMIC (Mission Unit for Innovation and Knowledge), under which our company

will participate actively in the initiatives of that unit which seek to promote the Information Society. One of REFERs

initiatives in this regard was the installation of 64 broad band points (multimedia kiosks) located in 31 railway stations

with the objective of familiarising the public with the new technology.

REFER is also going to participate in the Community Networks project which promotes the development of

infrastructure in less-favoured areas and encourages technological solutions.

REFER is constantly concerned with all aspects of safety, namely, the safety of our workers and installations and

operating safety. The Safety Department plays a fundamental role in this area.

During the Euro 2004 football championships, a REFER helicopter, with the participation of employees from the

Conservation and Safety Departments, inspected the Cascais, Sintra, South, North, Beiras, Minho, Douro, and

Guimares lines and the Cceres and Braga branch lines. Photographs were also taken during the inspections,

allowing us to improve and update data available on the status of the network.

Fulfilling REFERs duty to ensure that railway transport conditions are reliable and safe, the Rossio Tunnel was shut

down on 22 October 2004 for major repair work. After this decision was taken, the Board of Directors nominated a

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committee of experts to produce a report on the situation. This report stated that the re-opening of the tunnel

should only be done after the structural reinforcement of four critical zones. A strong, continuous support should be

installed along the entire perimeter of the tunnel section in those zones.

Several possible work scenarios were analysed. The solution chosen consists of structural work involving the

construction of a closed, reinforced concrete section in the interior of the tunnel, the construction of a continuousconcrete rail platform, the installation of an automatic monitoring system with remote data transmission and the

installation of new passive safety equipment. This work will have an overall cost estimated at 49 550 000 euros,

including the project, inspection and supplementary work. The re-opening of the tunnel is planned for June 2006.

As is the case ever more these days, the undertaking of all these actions must take account of environmental

aspects. In this regard, the Environmental Department, one year after its creation, has identified 153 different

activities coming under its area of interest which can be grouped into four specific areas:

Quality Management and Environment

Environmental Assessment Environmental Monitoring

Specialist technical areas.

The increased number of technical staff members in this department has enabled a substantial amount of effort

to be put into two very important areas: Quality Management and Environment and Waste Management.

One of the mainstays of our company is the General Department of Operations and Conservation (GDOC) which

comprises the Operations Department, the Conservation and Maintenance Department and the Management

Department. The activities of this General Department is closely connected with REFERs core business since they

basically seek to guarantee the reliability and safety of railway transport, resorting more and more to sophisticated

technological systems which reduce the risks of dependence on the human factor.

Along with the completion of the investments in the Atlantic Axis, the GDOC undertook several projects for

rationalising operations and improving management. Of particular interest is the new strategy for conservation

which is based on increasing the use of contractors and new equipment for inspecting and recording the state of

infrastructure elements. The development of the Quality Management System is aimed at obtaining certification of

the companys activities on a gradual basis. After the Lisbon Conservation Operating Zone was certified the quality

system was implemented for the Oporto Conservation Operating Zone and the intention is to extend the quality

system to cover all the other Conservation Operating Zones. New operating management tools were

implemented, taking advantage of the new technologies installed and the development of a management

culture directed towards gradually balancing the operating results account.

In 2004 the modernisation of the railway network saw the investment of approximately 477 million euros, including

those in PIDDAC.

Below, we list a few of the investments completed in the year in question with the objective of modernising existing

railway infrastructure:

Guimares Line: widening of track and electrification. This railway line has a fundamental role in the transport

movements of the regions inhabitants.

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Vizela Station: major remodelling following the conversion work on the Guimares Line.

Doubling-up and electrification of the Lousado Nine section of the Minho Line, following a variety of jobs

carried out on the Oporto / Braga route, creating a modern infrastructure and thus improving mobility

standards for both people and goods.

Doubling-up and electrification of the Braga Branch Line. Together with the work on the Lousado-Ninesection, this is a significant step towards reducing journey time, in comfortable and safe conditions, on the

Minho connections. It is thus the first section of the Atlantic Axis to be completed.

Braga Station, as part of the Stations with Life project, which will affect the urban landscape surrounding the

station.

Parque das Cidades Station, built from scratch on km 332 of the Algarve Line, between the stations of Loul

and Faro, in the village of So Joo da Venda. The station directly serves the new Algarve football stadium

used in Euro 2004.

Fogueteiro Setbal section. From 6 October 2004 it has been possible to travel between the cities of

Lisbon and Setbal on a train in less than an hour. The railway service operated by the company Fertagus,

using the 25 de Abril Bridge, allows direct train journeys to be made for the first time between the two cities.

Mira Sintra Meleas Station, eliminating the restrictions existing between the Sintra and the Western Lines.

Pvoa de Santa Iria Station.

With regard to the coverage of these investments the States contributions are not sufficient and have been

reduced over the years. In 2004 the States contributions only covered 4,3% of investments.

The structure of the PIDDAC financial cover was as follows: Chapter 50 represented about 4,3% (20,6 million

euros), Community Funds 15,9% (75,6 million euros) and Other Finance Sources represented 79,8% (380,8

million euros). It should be pointed out that, as in previous years, the PIDDAC and Community Funds

contributions have been decreasing and so resorting to debt is a major part of the financial cover for the

companys investments. This obviously has a negative impact in terms of the financial charges involved.

In spite of the difficulties referred to above it was possible to reach many of the objectives which we had set

ourselves for the year, thanks to the dedication and competence of all the companys employees.

We must also acknowledge the Audit Committees loyal and diligent collaboration and thank the financial

institutions, the National Railway Transport Institute and the Ministries supervising this sector for their indispensable

support towards the achievement of REFERs objectives.

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REFERs Cultural, Social and Sporting events in 2004Here we point out some of the actions which REFER has undertaken to promote cultural, social and sporting

activities.

Railway Cross-Country Championship

(Entroncamento, Parque do Bonito)

Railway Club of Portugal National rowing

champions 2003

REFERs seventh anniversary

My Fair Lady Athletics meeting 25 and 40 Years of Railway Company

lunch Photographic exhibition by Lusa Ferreira

The Edge of the City

Artistic lighting of Rossio Station Celebration

of railway patrimony

Stations with Life

Lisbon Carregado, 148 years of rail

transport

REFER Christmas parties

Newspaper Linha

Exhibition in Rossio Station atrium

Eco-tracks

REFER holiday camps

Almada municipal theatre

Entroncamento railway old folks home Dona Maria II National Theatre

Tile Paintings

IT for young people

Cinema shows

Study grants

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1998The object of international appreciation, with an honourable

mention in the Brunel prizes, the bridge over the Tranco River

on the Northern Line, came into service on January 1998.

In May 1998, the Gare do Oriente became operational.

On 15 November 1998, the first North-South railway crossing

took place on the 25 de Abril Bridge.

MacroeconomicEnvironment

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Macroeconomic EnvironmentIn 2004, Portuguese Gross Domestic Product (GDP) grew by 1,1%, in contrast to what took place in the

previous year when GDP underwent negative growth of 1,3%.

This growth was noted in a strong expansion of private internal demand (2004 increase of 1,9% against -

2,5% in 2003) and led to an increase in the financing needs of the Portuguese economy and a reduction

in private savings rates.

Gross Fixed Capital Formation (GFCF) grew moderately last year (1,8%). This modest recovery, after the

recession of 2003, was based on different contributions from the different components, combining a

favourable evolution in business investment, a reduction of public investment and virtually no contribution

from housing investment.

The growth in exports was very significant at 6,8%. The Banco de Portugal is forecasting accelerated

export growth for the next two years (7,5% for 2005 and 8,6% for 2006). Some of the events which took

place in 2004 contributed to this positive evolution, notably the holding of the European Football

Championships. On the other hand, the negative growth in automobile sector exports weakened share

gains given the significant weight of this sector in Portuguese exports.

The growth rate for import volumes was abnormally high last year when compared with the evolution of

overall demand. Part of these imports may be associated with temporary factors.

The Current Account and Capital Account worsened. The joint deficit of these accounts increased from

3,6% of GDP in 2003 to 5,4% in 2004. Contributing to this fact was a negative balance for net exports, in

spite of the favourable behaviour of exports.

This worsening reflected not only just a deterioration in exchange terms, related with the increase in the

price of oil to historic highs, but also the referred anomalous growth of import volumes.

Employment grew slightly (0,4%) and an acceleration is forecast for the next two years. In spite of a

decrease in public sector employment this was offset by growth in private sector employments.

Workers salaries rose by nearly 3,7% in the private sector in 2004, while for the entire economy this growth

was about 3,2%. For 2005 and 2006, changes in salaries must take in account the reduction in inflation

and changes in productivity.

The inflation rate dropped from 3,3% in 2003 to 2,5% in 2004, and a slight decrease is forecast for the

coming two years.

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Source: Banco de Portugal, Economic Bulletin of December 2004

MACROECONOMIC SCENARIO IN 2004 2003 2004 (E)Private consumption -0,7 2,2

Public consumption 0,5 0,6

GFCF -9,6 1,8

Domestic demand -2,5 1,9

Exports 4,1 6,8

Global demand -1 3

Imports -0,5 8,2

GDP 1,3 1,1

Current Account + Capital Account(%GDP ) -3,6 -5,4Harmonised Index of Consumer Prices 3,3 2,5

(E) Estimate

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1999On 29 July 1999 the railway line on the 25 de AbrilBridge was officially inaugurated. This work was

awarded a prize by the International Bridge

Conference (USA). Also inaugurated at the same time

was the North South Railway Axis, a fundamental

element for connecting the south bank of the Tagus

River to Lisbon. A notable feature of this new railway

connection, which runs for 28 km from Fogueteiro to

Entrecampos, is that it is run by a private operator.

Economic and FinancialSituation

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Economic and Financial SituationREFERs economic and financial situation underwent an expected worsening during 2004. Although the level of

investment in 2004 was substantially below the levels seen in 2003, it was still very significant and can be expected

to remain at similar levels for the next 3 or 4 years. At the same time, the contributions from the State Budget under

Chapter 50 were very low and community financing was not sufficient to prevent a very high budget deficit which

had to be covered by resorting to loans. Simultaneously, the operating deficit is tending to grow. As the investment

projects are being completed, the financial charges associated with them are being passed on to the operating

deficit, adding to an operating deficit which results directly from the fact that the compensation payments are

systematically less than the differential between the income coming from providing services to the operators and

the costs which rendering these services entail.

During 2004, and as has been the case since the formation of the company, a substantial part of the loans

for financing REFERs investment work came from the European Investment Bank (EIB). The new loans taken

on, all of which are guaranteed by the State, total 330 million euros and are to finance investments madeon the Northern Line, on the Lisbon-Algarve Connection and on the Lisbon and Oporto suburban train

networks.

In the first half of the year, REFER went through the process of obtaining a rating from two of the most

reputable international rating agencies: Standard & Poors and Moodys. In addition to analysing all the

information available on REFER, the rating agencies analysts met the companys Board of Directors and the

Secretaries of State for the Treasury, for Finances and for Transport, in order to assess the States support for

the companys activities. The process was completed at the start of June with REFER being awarded an Aa3

rating by Moodys and one of AA- by Standard & Poors. In both cases the ratings are just one notch below

the rating given the Portuguese Republic and REFERs ratings are indexed to the latters ratings.

In December, however, Standard & Poors decided to lower REFERs rating to A+, thus putting the company

two notches below that of Portuguese sovereign debt. The arguments invoked by the rating agency were

the decrease in the proportion of debt with the explicit guarantee of the State, which of course was the

main reason for REFER obtaining it s own rating, a decrease in contributions from the State budget and fears

that government policy might favour the road sector to the detriment of the railways. A new assessment

should be made as soon as it is possible for the analysts to hold a meeting with the new government and

REFER is convinced that the rating level awarded initially will be restored.

Although, as requested by the government supervising authorities, REFER presented a Programme Contract

proposal in February, it had not been possible by the end of the year to begin the negotiations which would

have led to its signing. A clear definition, for a multi-year horizon, of the contributions which REFER will receive

from the State budget for its operating and investment activities, of the schedule for receiving such

contributions and of the effectiveness and efficiency commitments which the company undertakes to

abide by would be extremely beneficial for managing the company, particularly from the financial point of

view. When such a contract exists, by making the States support even more explicit it will certainly enable

REFERs rating to be upgraded and will thus contribute to the obtaining of financing in substantially more

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attractive conditions. As we are dealing with a public business organisation this will be an advantage for the

State itself.

After the completion of the rating process, in July REFER contacted a very wide selection of national and

international banks in order to get proposals for raising 600 million euros of financing, without a State

guarantee. The best proposal was presented by JP Morgan and this was mandated to put together aconsortium formed by JP Morgan, Merrill Lynch and Banco Esprito Santo de Investimento. Although the initial

intention was to make the bond issue at the start of the final quarter of the year, it was only possible to make

the issue in March 2005.

The delay in obtaining long term financing meant an abnormally high use of short term credit lines had to

be resorted to. This led to an imbalance between the companys financial structure and its needs. Although

Standard & Poors felt that a weak point of the company is the fact that the level of short term credit

commitments is just below 300 million euros in a negotiated total greater than 1 000 million euros, REFER has

never felt at any time that the financial system might have any doubts about our company. Nor has REFERever had any liquidity problems for meeting its commitments in a timely manner.

Against this background of the use of high levels of short term credit, resulting from the long time period

required for obtaining the authorisations necessary for taking on long term debt, in 2004 REFER began

preparing commercial paper programmes with several national banks. This form of financing, more

favourable since the company has now lost the stamp duty exemption which it had benefited from since its

formation, is starting to substitute part of REFERs existing short term lines of credit.

When a company has a debt level as high as that of REFER, it is advisable to implement a strategy for the

active management of interest rate risk (since all the liabilities are in euros there is no exchange rate risk).

During 2004, the company continued to carry out interest rate derivative operations, taking advantage of

the particularly favourable environment for fixing rates and moving towards its objective of having 60% fixed

rates and 40% variable rates. Contracted operations are always very conservative in relation to the risk to

which the company is exposed and a diversification strategy is followed. Instead of just reducing financial

charges, the objective of this way of operating is to limit exposure to increases in interest rates, particularly

since the income that the company receives comes from a controlled price and is very inelastic with regard

to changes in the economic cycle.

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2000On 28 May 2000 the Santa Cruz/Damaia and

Reboleira stations on the Sintra line were

inaugurated.

In October 2000 REFER began studies for making

use of deactivated railway assets.The electrification of the 4 main ports in the

country (Sines, Setbal, Lisbon and Leixes) was

completed in October 2000

The Company

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TheComp n

Board of DirectorsGeneral Secretariat Strategic

Planning

Planning and

ControlAuditing andQualitySystemsSafety

Environment

Communication andImage

Legal OfficeInternationalRelations

Economy and

Finance

Human

Resources

Purchasing andLogistics

IT Systems

Real EstateAssets

General Engineering

Department

Engineering

Investments

Innovation andStandardisation

Crossings andLevel CrossingsManagement

DepartmentRailway installationon 25 de Abril

bridge

General Operationsand ConservationDepartment

Conservation and

MaintenanceOperations

REFERs NorthernBranch

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SafetyDuring 2004, the Safety Department, which was formed in mid-2003, sought to stabilise its structure but still

has some work to do to complete this.

The department sought to attend to activities on three fronts: Safety at Work, regarding both company

employees and safety on construction projects; Safety in Installations, from the emergency and security

perspectives; and Operating Safety, to support the companys operating units;

The main activities can be summarised as follows:

Completion of the preparation of all the emergency plans for all the RFN lines, for a total of 16 IET;

Completion of 3 internal emergency plans for 3 central buildings with the respective training and tests.

Start of preparation of said plans for another four buildings;

Strengthening of surveillance at the time of EURO 2004 and implementation of surveillance measures

in new operating sites;

Leading a working group preparing a list of access roads for railway infrastructure (Decision 89/03);

Study of railway rescue in accordance with Decree Law DL 270/2003 for presentation of a contract

proposal to CP;

Participation in a working group with CP for the prevention of forest fires (Decree Law 156/2004);

Special relationship with SNBPC, PSP, GNR and other security and information services providing

information on the companys structure and objectives;

Providing explanations and training on coordination of safety in construction jobs, in accordance with

Decree Law 273/2003, with analysis and preparation support from PSS. Random visits to working and operating areas;

Support to various company units regarding both safety and security matters.

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Strategic PlanningAmong the activities carried out in the Strategic Planning area, particular mention should be made of the

development of the Railway Network Master Plan, with which we intend to establish a base proposal which

will then allow the re-launching of the studies necessary for drawing up a National Railway Plan.

This Master Plan seeks to integrate the planning of the High Speed network in a strategy which will allow

making full use of the synergies existing between that network and the conventional railway network,

minimising the impacts of this articulation in the configuration of new operating models in the national,

Iberian and European plans.

In this regard there has been close collaboration between REFERs and RAVEs planning units.

With the same objective in mind, the Strategic Planning department has also been developing studies of the

conventional network. Special mention should be made here of the Technical and Economic Feasibility

Study and Market Study of new railway system connections in the Western region" and the "Feasibility Study of

the railway system between Lagos and Vila Real de Santo Antnio".

Some economic-financial studies were also made to support candidature presentations for structural funds

for some of the projects which are part of trans-European networks.

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Ful l T ime Employees

3000

3500

4000

4500

5000

5500

6000

6500

2000 2001 2002 2003 2004

Average

December

54%

7%

7%

5%

2%

3%

12%

6%3%

1%

Basic Wage

Other Fixed

Grade/Shift

AllowanceVariable Work

Nigth Shift/Allowance

Premiums

Meal Subsidy

Travel

Holid. Pay + 13th

Additional Salary

Wage Bill

Human Resources

2004 was notable for the largest number of new

employees entering from outside (191) since REFER took

on all the functions that it currently carries out. Coupled

with a renewal of upper management, there was a

rejuvenation of employees in the Circulation area. 569

employees left the company, 91% of these did so under

the payroll adjustment process.

At the end of the year REFER has 4 258 employees.

The changes made in terms of personnel admissions do

not mean that REFER has abandoned its policy of

improving the skills of its human resources. In this regard

there were 334 changes in professional categories and an

increase in internal technical and technological training, with 2 700 people being involved in the training

courses begun in 2004.

Personnel costs were within forecast levels, in spite of the increase resulting from promotions and the

updates to the index table and meal subsidies.

In structural terms the various cost components did not show any significant changes in comparison with

previous years.In order to manage the companys knowledge and skills

more specifically in light of its strategic objectives,

promoting the professional development of our

employees, a study was carried out on the

implementation of the new careers system.

In the context of the REFERs social policy, the company

maintained current benefits. Significant cash increases,

greater than the inflation rate, were made to the studygrants and pre-school subsidies. The Social Action Fund,

set up in 2003, completed its first full year of existence.

It was possible to decrease the number of labour dispute cases by 27%.

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Purchasing and LogisticsIn the Purchasing and Logistics department special mention should be made of the completion of the

qualification processes for the supply of ballast and gravel, concrete sleepers, the provision of hygiene and

cleaning services and the operational leasing of vehicles. The qualification processes were started for rail

and track switching device suppliers and for hazardous and normal waste disposal operators.

In the Logistics department a new consultation system was introduced for the sale of each lot of used /

waste materials to waste disposal companies. The Logistics area was also re-organised to allow the

outsourcing of the work-yard operations of REFERs logistics complex in Entroncamento.

The e-Reception software was also introduced. This is a tool for managing the parties involved in receiving

materials and allows the material reception process to be managed with greater efficiency andeffectiveness.

Special mention should be made of the qualification of suppliers and service providers in order to make

contracting more nimble through the later opening of limited tenders or negotiating processes. We also held

our first electronic bidding process for the acquisition of IT equipment from the major manufacturers.

Another important feature was the use of technical drawings, digitalised on SAP, in rail material purchase

processes.

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Information Systems2004 was noteworthy for a set of initiatives aimed at taking greater advantage from the SAP systems in the

company and from the technological upgrade carried out at the end of 2003.

Thus, in addition to the completion of the PM module extension process and the entire Conservation

function, very important initiatives were started in the areas of document management (technical

engineering documentation) and of financial information (by resorting to the data warehouse).

Furthermore, a licensing agreement was signed whereby REFER group companies can share licences which

they have already bought or which they may buy in the future.

In relation to the SAP systems, a pilot project was launched in the Conservation area to try out the possibilities

offered by mobile computing solutions for the work of the operating teams.

The Remedy system was extended to the permanent team members of the different Conservation

Operating Zones and was connected to the RDC system, thus promoting the concept of service

management, backed up by a web application developed internally in this period.

In the technological area, multimedia kiosks were installed in 31 railway stations. In addition, an SMS solution

was installed and VPN infrastructure was set up to make it possible for previously authorised users to have

remote access to our systems.

In the latter two cases, use was also made of the functions of the geographical information systems through

back-office work. Although not visible, this is indispensable for the next steps which are to be taken.

Lastly we must mention the setting up, during the first quarter of 2005, of an operation which is going to allowmajor work to be done on the capacity and performance of the server infrastructure.

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Environment2004 was the first full year of existence of REFERs Environmental Department. Following on from the work

started in 2003, the department continued to make a survey of the different activities which it must look

after. A total of 153 different activities which must be carried out in a systematic way have been identified,

not including those involving the actual department itself. These activities have been grouped into four

major areas: Quality and Environmental Management, Environmental Assessment, Environmental Monitoring

and Specialist Technical Areas.

As a result of the increase of staff members in 2004, the department was able to increase its activities in two

specific areas: Quality and Environmental Management and Waste Management (the latter is classified as

a Specialist Technical Area).

In the Quality and Environmental Management area an introductory document was prepared for the initialenvironmental survey of REFER. A first survey was also one of the REFER processes, especially those processes

related to the activities of the General Engineering Department and the General Operations and

Conservation Department, through the analysis of regulatory documents for the various specialist areas,

identifying the environmental impacts through the inputs and outputs of the activities undertaken. The

procedures of the Environmental Department were also set up in terms of their internal organisation and the

preparation of procedures complying with the requisites of Standards NP EN ISO 14001:1999.

With regard to Environmental Assessment, environment assessments were carried out on a wide range of

projects during 2004. Monitoring of these same projects was carried out and support was also given to the various REFER units in the area of the environment. The department also defined the standard

environmental requisites for tender processes for studies and projects. In addition, the department handled

enquiries coming from outside REFER concerning the analysis of potential environmental interference of

several projects with the national rail network.

With regard to Environmental Monitoring, opinions were prepared in the context of consultation processes for

contractors and service providers. Assessments were made of proposals for carrying out contract

construction jobs and environmental auditing observation work was undertaken. The department also

developed the environmental terms of reference for the tender programmes and contract specifications for

contract work (and inspection) and provision of services.

Concerning noise, the department prepared a management plan for noisy activities, encouraged actions

for framing responses to complaints about noise caused by railway circulation (namely the preparation of

noise charts and the respective noise reducing plans) and considered various acoustic protection projects.

The Ferr 3 model was installed (in partnership with the Higher Technical Institute Signal Analysis and

Processing Centre) and the simulation process which the model allows was begun. Updating work on the

model was also carried out.

In the area of waste, the management standard for used and waste materials was developed in partnership

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with the Purchasing and Logistics Department and a tender process was opened for the development of

the e-waste software application with the Information Systems Department. In another joint action with the

Purchasing and Logistics Department, provisional standards were developed for waste management as was

the qualification process for operators handling REFERs hazardous and non-hazardous waste. The

department prepared a first study on the description of waste. Several actions were taken with regard to therecycling of diverse materials and operations were carried out to tidy up the materials accumulated at

Entroncamento. Support in the area of waste management was provided to various company units.

Also in the area of waste management, the Environmental Department carried out steps to identify new

ways of getting value from waste. This involved the organisation of suitable collection circuits adapted to

the specific characteristics of the types of waste plus the careful identification of operators which have the

capacity to extract value from the waste in question. This work has enabled us to reduce treatment costs

and sometimes even to assign a positive economic value to waste. Of particular note in this regard are

batteries, rubber linings and ceramic insulators.The Board of Directors, recognising that successful waste management also involved raising the awareness

of and motivating the entire company in order to promote collection, sorting and selective routing of

different materials and waste, as well as making people aware that they are or can be active elements in

the company in this regard, has linked a social element to this area, assigning 10% of the revenue resulting

from the sale of waste to REFERs social action fund. The main purpose of the social action fund, which is

managed by the Human Resources Department, is to assist REFER employees who are particularly in need

of help.

The Environmental Department has also undertaken archaeological work in partnership with vora University

(preparation of archaeological risk letters for the route Sines-vora-Elvas). The department participated in the

standardisation process for specific environmental themes and also provided specific technical support in

matters concerning ecological systems.

Lastly, it should be noted that the Environmental Department has provided technical support to RAVE on

specific matters such as the strategic assessment of environmental impacts and the assessment of

environmental impact.

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Real Estate AssetsFor the Real Estate Assets Department, 2004 was a year for defining and studying a new strategy guided by

a new model of thinking about railway assets. This strategy seeks to alter the visibility of the existing assets.

This will require an enormous effort in terms of human and financial resources and has as its guideline finding

the best alternatives for the use of these resources. In this way we want to find new way of looking after and

adding value to REFERs real estate assets. On the internal level this will entail a radical change in the way

the company operates and in the way the various REFER departments and the group companies look on

these assets. A new organisational model is currently being completed as part of the real estate assets

strategic plan.

Of the work carried out by the department in the year in question we must highlight the inauguration of the

first Eco-track located on the old Mono railway branch-line, for which the promoters were the Valena

and Mono local government authorities. The objective of this project was to transform the old re-activated

railway route into a facility at the service of the regional population and economy, as has been done in

other countries such as Spain. In this regard a seminar was organised on this subject to raise the awareness

of public and private entities concerning this project. By the end of the year concessions had been granted

to local authorities for a total of 160 km and it is foreseen that concessions will be granted for the remaining

500 km, including stretches of railway without train circulation, in the next few years.

In 2004, a start was made to contracting work which will provide the company with a geographic

information system (GIS), in support of the Real Estate Assets Department, which will be in full accordance

with the policy defined by the Board of Directors for this type of management support tool.

Other highlights were the opening to the public of the car parks at the railway stations of Braga, Campanh,

Meleas, Palmela and Venda do Alcaide. There are currently about 20 000 parking spaces next to railway

stations which are available for the use of railway passengers.

Another notable event which will have a marked impact on the future operations of REFER and other

companies of the group was the start of the construction of the new headquarters: the Railway Campus

being built near to the Brao de Prata station.

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Auditing and Quality ManagementIn 2004, in the Internal Auditing area, auditing actions were carried out in areas of risk. Of particular note were

those actions done on long duration infrastructure investments, the scrap metal survey processes, the contracting

of services for infrastructure maintenance and the management of real estate assets.

In the Quality Management area, work was continued on implementing the quality policy with the consolidation /

evolution of the Quality Management System (QMS) in the Lisbon Conservation Operating Zone, where certification

has been obtained, the continuation of the implementation of the QMS in the Oporto Conservation Operating

Zone, with a view to obtaining certification, and the start of the same process in the central units of the Operating

Department.

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International RelationsIn 2004 a strategy was approved for REFERs international relations which puts emphasis on strengthening its

institutional representation in international organisations, the monitoring of the common policies of the EU, its

Iberian relationship and its presence on coordination committees and working groups of a technical nature.

As a consequence, an adjustment was defined for the International Relations Departments strategy with the

following aspects being attended to: representation on international organisations with support being given

to the Board of Directors and REFERs other bodies in this regard, presence on working groups of a technical

nature and those involving the transmission of international knowledge, the guaranteeing of updated

information on initiatives/actions of interest for the sector in the area of transport undertaken by the EU, the

transmission of information to and from the exterior, and the facilitation of relations between the companys

bodies and international reality.The following actions were carried out as a result of the above: maintaining of institutional presence in the

associations which REFER is a member of (EIM, UIC, CEEP and APOCEEP); intervention on the UIC

Infrastructure Committee, critical analysis of the presence of REFER in UIC Projects in which participation is

obligatory and the early definition of a strategy to follow in deciding whether to join projects of this type; the

accompanying of common policies of interest to the sector, spreading information about the respective

contents within the company and looking after the preparation of opinions on legislative proposals; the re-

formulation of publication support for relevant information for the railway sector, enriching and broadening

the disclosure of information; the creation of a network of correspondents within the company, a linkbetween the International Relations Department and those company units which most frequently have

some activities of an international nature, in order to improve the respective relationship; support for visits of

foreign entities to REFER.

The Department contributed in this way to the companys relations with international reality, supporting REFER

in appropriate reactions to international events which affect it, absorbing external knowledge in a structured,

organised and active fashion, giving the company the capability to influence decisions on matters affecting

its business and representing its interests as a railway infrastructure management company.

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General EngineeringDepartment

The main objective of the transformation process of the GeneralEngineering Department (GED) has been to define an operating

model to improve the efficiency of the management of technicaland engineering resources and, simultaneously, to allow the

establishment of the Engineering Department of the GED as acentralised skills and knowledge unit to look after the provision of

services to investment, conservation and network operations.Source: Refer News

Board of DirectorsGeneral Secretariat Strategic

Planning

Planning and

ControlAuditing andQualitySystemsSafety

Environment



Economy and

Finance

Human

Resources


IT Systems

Real EstateAssets

Engineering

Investments




bridge

General Operationsand ConservationDepartment

Conservation andMaintenance

Operations

REFERs NorthernBranchGeneral EngineeringDepartment

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General Engineering DepartmentMajor changes were made in 2004 in the organisation of the General Engineering Department (GED).

In the GED the following units were closed during the year: the Mission for Signalling, Telecommunications and

Safety Systems, the Oporto / Braga Project team, the Atlantic Axis department, the Construction Teams, Port

Accesses, the Management Support Department, the teams for the Sintra/Cascais, Beira Baixa, Northern Line,

North South Crossing, Lisbon Algarve, and the Aveiro Port projects and the Signalling and Telecommunications

Nucleus of the New Technologies Department. Also closed down was the Mission for Work of the Rossio Tunnel,

created by decision n 24/03 of the Board of Directors.

As a consequence of the re-organisation of this department the following units were created: the Signalling and

Telecommunications Nucleus of the New Technologies Department, the Investments Department, the Aveiro Port

Project and the Department of Coordination and Management Control, under the command of the GeneralEngineering Director. Also created were: Units for the Northern Line, Aveiro Port Connection, Beira Baixa Line, Lisbon

Metropolitan Area and the Sines Elvas Connection, coming under the Investments Department, the Rossio Tunnel

Project Group under the control of the General Conservation and Operations Director and REFERs Northern Branch,

coming under the control of the Board of Directors.

In December, the physical move of the GED to the ARTs Building in Parque das Naes was completed.

In 2004, in the Quality and Safety area the Engineering Department undertook a set of actions in the context

of the standardisation and approval / certification of circulating and other materials.

In the area of Technical Engineering Standardisation, REFER was represented on the UIC Civil EngineeringTrack Expert Group and participated in the works of the CEN-TC256WG 15 Track Alignment and Design

Parameters-Broad Gauge group and in the CEN-TC 256, SCI, WG 4 Restoration of Rails by Electric Arc

Welding group.

Inside the company the technical staff members of the various specialist areas were involved in the

Standardisation Plan. This work included the preparation / updating of technical instructions and standards

for the various specialist areas.

Work was carried out for the approval and receipt of track, catenaries and inert materials through the

management of service provision contracts. New installations were also received and handed over. This

involved checking that the work done was in accordance with the job projects and carrying out tests prior to

facilities being brought into service.

During 2004, the Innovation and Standardisation Department continued its work on the process of

harmonising standard preparation procedures. The department also represented REFER at seminars on

standardisation in the railway sector organised in 2004 by the IPQ Portuguese Quality Institute and by the

Portuguese Roads Institute. The department also represented REFER actively at the 5th seminar on innovation

and quality in the railway sector.

The department participated on REFERs behalf in the updating of the UIC files on signalling and

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telecommunications and provided technical advice to the National Institute of Railway Transport INTF, in

the context of the development of technical inter-operability specifications.

A migration and implementation plan was prepared for the Portuguese ERTMS system for the conventional

network and this was coordinated with the same plan for the ERTMS of the high speed network.

A feasibility study was prepared and the technical and budget estimations elements prepared for theopening of the tender process for the supply, assembly and technical evaluation of the first installation of the

GSM-R digital radio system, an essential component for the development of the nation high speed and

conventional networks.

Two issue of the CINCIA e TCNICA magazine were published, aimed at spreading technical and

scientific knowledge and understanding inside the company and among its partners.

Engineering DepartmentIn 2004, in the area of quality and safety, the Engineering Department undertook a series of actions in the

context of the standardisation and approval / certification of circulating and other materials.

Inside the company, the technical staff members of the various specialist areas were involved in the

Standardisation Plan. This work included the preparation / updating of technical instructions and standards

for the various specialist areas.

Investments DepartmentNorth Line

With regard to studies and projects, the following work was started in 2004: Study of corridors, preliminary

study and environmental impact study of the Santarm bypass; Re-formulation of the project for building the

Mato Miranda / Entroncamento section; Preliminary study of the rehabilitation of the Ftima and Albergaria

tunnels; Re-assessment studies of the noise impact and minimising measures projects for sub-sections 2.1

(Entroncamento Albergaria) and 3.2 (Quintans Ovar); Re-formulation of the modernisation of sub-section

3.3 (Ovar - Vila Nova de Gaia).

A tender was also opened for the preparation of preliminary studies, work projects and environmental

impact study for the modernisation of sub-section 2.3 (Alfarelos Pampilhosa).

During 2004, the drainage project between kms 10+500 and 22+500 and the project for the widening of

the flyover over the EN-109, on sub-section 3.2 (Quintans Ovar) were completed.

In terms of construction, special mention is made of the completion of the contract work on the new

southern diagonal at Alverca and the start of the following work: Modernisation of the sub-section Vila Franca

de Xira Norte Azambuja, Construction of the viaduct, over- and under-passes and respective access and

connection roads on the section Azambuja Vale de Santarm; Construction of over- and under-passes

phase 3, on sub-section 2.1 (Entroncamento Albergaria); Assembly of catenary tele-command in sub-

section 2.1 (Entroncamento Albergaria); Substitution of the So Loureno and Simes bridges on Sub-

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section 2.2 (Albergaria Alfarelos); Finishing off work on Aveira station; Construction of Quinta do Cruzeiro

over-pass on Sub-section 3.2 (Quintans Ovar); and lowering of the track at the Espinho city crossing.

Contract work also continued in 2004 on the modernisation of Sub-section 2.1 (Entroncamento Albergaria)

and the modernisation of Sub-section 3.2 (Quintans Ovar), with the latter being now in its closing stages.

Tenders were opened for the following jobs: Modernisation of the section Azambuja Vale de Santarm (atthe awarding stage); Modernisation of Coimbra B station; Construction of over-passes at Avanca and

Salreu and the passengers building at Estarreja station on Sub-section 3.2 (at the awarding stage);

Construction of the Aveiro inter-face(at the awarding stage); Carrying out of electrical and ventilation

facilities for the Aveiro road under-pass; Supply and installation of transformer stations at Aveiro station (work

being started).

With regard to Signalling, Telecommunications and Convel, the following contract jobs were completed:

Public information system on the Azambuja line; Telecommunications system for the Moscavide stopping

place; Signalling and Convel for the new south diagonal at Alverca; and Signalling and Convel of Sub-section 3.2 (Quintans Ovar).

During 2004, the contract job started for the signalling and telecommunications work on Sub-sections 1.2

and 1.3 (section Alhandra (not included) Vale de Santarm (not included), and the contract jobs

continued for the signalling and telecommunication work on Sub-section 2.1 (Entroncamento Albergaria)

and the telecommunications work on Sub-section 3.2 (Quintans Ovar).

Also of note was the closure in 2004 of 17 level crossings with 193 level crossings having been closed since

the start of the project.

Aveiro Port ConnectionThis project is for the construction of the Cacia multi-mode platform and the railway branch line linking with

Aveiro port.

At the start of 2004, the public hearing was held for the environmental impact study but due to some

technical questions which were raised the project for building the railway branch line to Aveiro port had to

be re-drafted. The environmental impact study also had to be changed and will probably be ready at the

start of next year.

Beira Baixa LineWith regard to the modernisation of the Beira Baixa line, in which the work has been done in phases and

sub-divided into sections, on the section Mouriscas A Castelo Branco work continued on Signalling,

Telecommunications, Electrification, Tele-command of the Catenary and Supervision, and on the re-

modelling of the Rdo and Castelo Branco stations. On the same section, contracts were awarded for

studies and projects to allow the Alvega-Ortiga station to be converted into a stopping place.

During 2004, on the section Castelo Branco / Covilh, work was completed on the passenger platform of

Vale de Prazeres and Tortosendo stations and at the end of the year the final stages of work were underway

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on the over-pass at Km 150+049. Contracts were also awarded for several studies and projects, namely

those referring to lines, the re-modelling of stations and over- and under-passes.

On the section Covilh / Guarda, the bridge strengthening contract job, covering 5 bridges, was completed

in 2004. Work was started on assessing the project for widening the Baica under-pass and contracts were

awarded for projects for 6 bridges to replace the existing ones. In addition, various studies and projectswere carried out for over- and under-passes, lines, station re-modelling and electrification.

Lisbon Metropolitan Area Lisbon Algarve Connection, Bulk Materials Route and Tunes-Lagos Section

In 2004, on the section Pinhal Novo/ Faro the essential parts of the modernisation of the line infrastructure

elements were completed with the finishing of the work on the section Tunes / Faro. Of the 150 level

crossings existing in 1998, 134 had been eliminated by the end of 2004.

On the section Ermidas/Funcheira, the line infrastructure modernisation work allowing speeds of up to 220km/h was completed, as was the electrification (catenary for speeds up to 220km/h), the installation of

Convel and land-train radio systems, the re-sizing and optimisation of station layouts, platforms and

accesses and the construction of over- and under-passes for the closure of level crossings.

On the section Funcheira/Faro, the modernisation was completed of the line infrastructure, electrification,

new signalling, integrated telecommunications network, the installation of Convel and land-train radio

systems and over- and under-passes.

The new Parque das Cidades station at km 331,800 of the Algarve line came into service.

On the bulk materials route, the installation of new signalling and telecommunications systems wascompleted on the section Funcheira/Ourique.

On the Algarve line between Tunes and Lagos, work was started on the new Lagos station (2nd phase).

Sintra and Cascais LinesOn the Sintra line modernisation project, ten stations have been re-modelled and four new ones have

been built. The Barcarena/Tercena and Cacm stations have still to be re-modelled and the

quadruplication of the section of adjoining lines still has to be done.

In 2004, the Mira Sintra / Meleas station was completed. This has allowed the Cacm family of trains

to start doing their reversing there and has allowed the Meleas level crossing to be closed. The work was

completed to make it possible for all the Sintra line to be commanded and controlled from the

Campolide CTC. A contract was awarded for the acoustic barriers.

Tenders were opened for the construction of the Papel under-pass, which will allow the last road level

crossing on this line to be closed, and for the work on the Barcarena/Tercena station.

With regard to the re-modelling of the Cacm station, the respective work project was developed during

the year and is near to completion.

In relation to the modernisation of the Cascais line, two stations have been re-modelled and the park for

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rolling stock has been built at Carcavelos, where the level crossing has also been eliminated. The

substitution of the metal bridges in Oeiras has also been completed.

In 2004, the re-modelling of the Pao de Arcos passenger platforms and roof was completed and the

contract was awarded for the construction of the Parede pedestrian under-pass.

North-South CrossingWith most of the work projects having been completed, in 2004 construction was started on the new

Setbal station, the quadruplication of the loop line between Chelas (Technical terminal) and Brao de

Prata and the Siderurgia Nacional branch line.

The following construction and supply contracts were completed: Palmela and Venda do Alcaide

stations; line and platform of the section Pinhal Novo / Setbal; electrification of the sections Coina /

Pinhal Novo and Pinhal Novo / Setbal; acoustic barriers on the sections Coina / Pinhal Novo and Pinhal

Novo / Setbal; pedestrian over-passes on the section Pinhal Novo / Setbal; telecommunication systemsbetween Pinhal Novo / Setbal, Convel between Coina / Pinhal Novo and Pinhal Novo / Setbal and the

over-pass at Recosta (Barreiro).

Construction work was started on the joint headquarters of the Ramiro Jos Group and the So Joo de

Deus Parish Offices.

Oporto / Braga ProjectDuring 2004, re-modelling was completed on the sections Lousado Nine, Nine station, Nine Tadim and

Tadim Braga. This work involved the duplication of the new sections, the electrification of the line, and the

re-modelling of the stations and respective halts.

This work also led to the elimination of 17 of the 53 level crossings on the route through the construction of a

wide grid of over- and under-passes and the setting up of various access roads.

The completion of these jobs enabled the Braga Faro connection to be inaugurated in May 2004.

Railway line on the 25 de Abril BridgeSeveral jobs were carried out on this line in 2004. Of particular interest was the contract job for the

installation of new rigid beam support devices for the suspension bridge. This work allowed the original

support devices, whose behaviour in response to train movements was not reliable, to be replaced. Also

noteworthy was the re-formulation of the electricity supply system for the railway lighting on the bridge and

the access viaduct with the installation of a new transformer post and an emergency generating group. The

work carried out was monitored by LNEC (National Civil Engineering Laboratory), in the context of a

cooperation protocol signed by REFER, LNEC and IEP (Portuguese Roads Institute) for the structural monitoring

of the 25 de Abril Bridge, in accordance with decision n 23184/2002, of 10 October, of the Minister of

Public Works, Transport and Housing (MOPTH, currently the Minister of Public Works, Transport and

Communications (MOPTC)), in which it is stated that the major developments in which the MOPTH (current

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MOPTC) is or becomes involved in, as the supervising ministry, will be monitored by LNEC in the areas in

which LNEC has relevant skills and competence.

Crossings and Level Crossings Management Department With regard to the elimination and re-classification of level crossings, in 2004 the following actions were

carried out in collaboration with the Investments Department and REFERs Northern Branch:

As can be seen, in 2004 there were 205 eliminations and 96 re-classifications, with planned numbers being

exceeded.

The work carried out by REFER which enabled the elimination or re-classification of these level crossings was

as follows: construction of 56 over- and under-passes which enabled the elimination of 63 level crossings

and the re-classification for pedestrians-only of another 2, the construction/improvement of alternative roads

which allowed the elimination of 135 level crossings and the re-classification for pedestrians-only of another3, the automation of 8 level crossings, the alteration of automation, with the installation of half barriers, on 26

level crossings and ensuring regulatory line of sight at 56 level crossings.

In addition to this work, 5 over- and under-passes were built by municipal councils and this led to the

elimination of 7 level crossings.

As a result of the above, on 31 December 2004 there were 1 476 level crossings on all the lines with traffic

on the railway network. This is an average density of 0,524 level crossings/km, compared to 0,600 level

crossings/km at the end of 2003. The level crossings are distributed as follows:

Planned Planned Done

NORTHERN BRANCH 34 37 0 0

INVESTMENTS DEPARTMENT

North Line Project 11 9 0 0

Beira Baixa Project 6 1 2 0

Sintra /Cascais Project 1 1 0 1North South Project 9 6 0 0

Lisbon Algarve Project 24 23 7 13

Sub total 51 40 9 14

CROSSINGS AND LC MANAGEMENT DEPARTMENT

Department for Elim. and re-class. LCs 114 121 55 56

LC Management Department 0 0 31 26

Sub total 114 121 86 82

OUTSIDE ENTITIES 5 7 --- ---

TOTALS 204 205 95 96

REFER unit LCs eliminated LCs re-classifiedDone

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In the year in question, work was also done on matching the classification of all (152) of the old level

crossings of 1st, 2nd, 3rd or 4th categories (with guard) on railway lines with traffic to conform with the Level

Crossing Regulations Decree-Law n 568/99 of 23 December.

An awareness and educational campaign was also carried out, coordinated by the Communication and

Image Department, being broadcast on Portuguese TV channels under the title of Stop, Listen and Look.

The combined effect of all these actions has been a gradual decrease in the number of level crossing

accidents, as can be seen in the following table.

With Guard 156

Automatic Type A 3

Automatic Type B 242

Automatic Type C 95

Without Guard 617

Pedestrians 191

Subtotal 1304

Private Level Crossings 172

TOTAL 1476

CLASSIFICATION NUMBERS

340

Public LevelCrossings

Level Crossing A ccidents 1990 to 200 4

0

50

100

150

200

250

Year

n

of

Accidents

Total Collisions Persons Hit

Total 234 218 198 205 182 166 147 144 144 154 119 123 113 105 102

Collisions 199 173 160 171 160 148 129 122 127 129 104 106 95 90 84

Persons Hit 35 45 38 34 22 18 18 22 17 25 15 17 18 15 18

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

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Board of D irectorsGeneral Secretariat StrategicPlanning

Planning and

ControlAuditing andQuality

SystemsSafety

Environment



Economy andFinance

Human

Resources


IT Systems

Real EstateAssets

Engineering

Investments




bridge

Conservation andMaintenance

Operations

REFERs NorthernBranchGeneral EngineeringDepartment General Operationsand ConservationDepartment

The General Operations and ConservationDepartment is responsible for the operationalmanagement of the railway network, providingrailway operators with suitable circulation channels,the use of reliable infrastructure and the commandand regulation of traffic, with high standards of safetyand quality.

Source: REFER News

General Operations andConservationDepartment

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General Operations and Conservation DepartmentConservation and MaintenanceDuring 2004, the Conservation and Maintenance department implemented a qualification system for

suppliers providing services in the railway infrastructure maintenance area, covering the specialist areas of

line and geotechnical matters, civil construction, low tension, catenary and special structures.

Currently, market imperatives and the companys strategic orientation are aiming toward the contracting

out of all railway infrastructure maintenance work. This move, currently in progress, requires the Conservation

and Maintenance department to adjust to a new reality, optimising available resources, seeking to maintain

existing know-how while simultaneously increasing skills, particularly in the area of contract management.

In light of the perspective of contracting out the maintenance services, a strategy has been drawn up for

the overall conservation activity for the railway infrastructure. The Conservation and Maintenance

Department thus put in place a set of strategic objectives in 2004 with a view to improving its skills in the

area of monitoring the state of the railway infrastructure in real time, by extending the Permanent

Infrastructures system to the entire railway network and by the completion of the integrated conservation

management project.

With a view to achieving the objective of continually improving Conservation and Maintenance processes, the

project to implement the Conservation and Maintenance quality management system is currently in progress. This

is being done in accordance with standard NP EN ISO 9001:2000. In 2004, following the certification of the Lisbonconservation operating zone, the quality management system was launched in the Oporto conservation

operating zone.

Operations DepartmentCirculation ManagementThe Circulation Management department started the e-post project for distributing service orders in 2003

and this was put into full use during 2004.

Work was started for the launching of the e-telegrams project which seeks to facilitate the methods currently

used in the recording of telephone communications.

The manoeuvring networks underwent a significant increase bot

refer 2004_en

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