2015 Annual Report 2 FCC_Annual Report_2015 01. Letter from the Chairwoman 3 02. Letter from the CEO 4 03. Governing Bodies 8 04. Goals and Strategy 11 05. Regulatory Disclosures 13 06. FCC in Figures 15 07. Environmental Services 22 Index 08. Water Management 45 09. Infrastructure 63 10. Cement 107 11. Financial Statements 116 12. Corporate Governance 414 13. Corporate Social Responsibility Report 524 14. Executive Personnel 641 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Letter Letter from Governing Goals and Regulatory FCC Environmental Water Infrastructure Cement Financial Corporate CSR Executive from the the CEO Bodies Strategy Disclosures in Figures Services Management Statements Governance Personnel Chairwoman 3 FCC_Annual Report_2015 Letter from the Chairwoman. Page 1 of 1 The Success of Working Together Dear Shareholder, You are holding the annual report of our Company that We have carried out all these tasks in our search to ensure contains the breakdown of everything done throughout 2015. that FCC fits in better with the conditions of the markets in which we operate, thereby creating improved conditions for A very special and decisive year for the present and future of the Company to take advantage of the opportunities we face FCC. A year with important milestones like the second capital in our businesses in order to continue advancing on the path increase, supported by FCC's two largest shareholders, to profitability that we have set. However, we still have a long Carlos Slim and Grupo Carso, and my mother Esther way to go. Koplowitz, who thus confirm their support and commitment to the Company. In addition, the process of renegotiating the Dear shareholders, we live in new times, times that require debt, especially the so-called Tranche B, was successfully new ways of addressing new and significant challenges. We completed, as you are aware, at the end of April last year. take on these challenges with the certainty of having behind us an extraordinary team, the trust gained day-by-day from our Along with this, we have made a significant effort to improve customers and all your support. cash generation, to advance the process of divestment in businesses that we do not see as strategic at the moment, Henry Ford said: "Coming together is a beginning. Keeping to renew a large part of the contracts and promote actions together is progress. Working together is success". At FCC, aimed at finding new revenue. Operations which will we have got to where we are together, we are continuing in strengthen the Group's capital and financial structures the same way, and we are clear that only by working together that will enable us to further reduce our debt and leverage and with a common spirit, we will be able to remain what we resources for other strategic purposes. are, a world leader in the Water sector, Citizen' Services and Infrastructure. This has been, is, and shall be our strongest After the arrival, last August, of Carlos Jarque as Group commitment. CEO, together with the significant efforts to be made in the area of finances, operations also came to the forefront of our priorities with a clear objective: achieving increased Esther Alcocer Koplowitz operational and technical efficiency. And that is what we Chairwoman of FCC have done, with the implementation of new organisational structures that increase the synergies between our businesses, thereby reducing overheads and operating leverage. 01 02 03 04 05 06 07 08 09 10 11 12 13 14 Letter Letter from Governing Goals and Regulatory FCC Environmental Water Infrastructure Cement Financial Corporate CSR Executive from the the CEO Bodies Strategy Disclosures in Figures Services Management Statements Governance Personnel Chairwoman 4 FCC_Annual Report_2015 Letter from the CEO. Page 1 of 4 A Year of Transformations This is the first time I have the pleasure of addressing the The capital increase was undoubtedly a fundamental financial shareholders of FCC as the Group CEO. When defining decision last year but it was not the only one. Directly in financial year 2015 I think the best way to do it is by connection with this new cash injection, we embarked on highlighting the thorough transformation we have experienced a new renegotiation of our debt, especially focusing on the in virtually every area of FCC Group. The financial, operating so-called Tranche B, with a goal of achieving a quitclaim and governance areas (just to name the most important ones) of at least 15% from our creditors, and this was finally have been modified substantially in order to face the future with implemented at the end of the first four months of 2016. At greater guarantees. the same time we have negotiated with the various financial entities in order to lower the interest rates on our financing, One of the milestones in the year was the 709 million euro as well as extending the debt maturities in the areas of Water, capital increase that was approved at the end of December. Environmental Services and Energy, among others. As you are aware, it is the second capital increase carried out recently by our Group after the one approved in late 2014, as As I commented to the financial analysts who monitor our share a result of which Carso Group became a majority shareholder on the stock exchange, “these operations will reinforce the in FCC. Group’s capital and financial structure and will also allow us to reduce our debt, strengthen Cementos Portland and channel The new cash injection represents the definitive commitment of funds towards other strategic corporate purposes.” our foremost shareholder, Carlos Slim, with FCC. Our second largest majority shareholder, Esther Koplowitz, also took part in The financial front was supplemented by a determined effort the increase, reasserting her historical links with the Group and to improve cash generation, further progress in the process with all the people it comprises. The support of the two most of divesting from businesses that no longer fit in the Group’s important shareholders of FCC by way of this new injection of future strategy and the renewal of contracts, aside from funds will provide a sound growth platform, together with the seeking new revenues. Accordingly, in the second half of possibility of attaining better credit terms for our debt. last year there was an intensive debt collection and claims process. In the Construction activity alone over 250 million euros were recovered. 0102 03 04 05 06 07 08 09 10 11 12 13 14 Letter Letter from Governing Goals and Regulatory FCC Environmental Water Infrastructure Cement Financial Corporate CSR Executive from the the CEO Bodies Strategy Disclosures in Figures Services Management Statements Governance Personnel Chairwoman 5 FCC_Annual Report_2015 Letter from the CEO. Page 2 of 4 The major divestments were the sales of Globalvía and The following lines of action are prominent: Corporate Governance Cemusa. The sales transaction involving our urban furniture • Synergies. The Group’s intercompany work has become firm represents our exit from a non-strategic business for an unwavering line of action for all our business areas. Besides these structural changes, there were other milestones the Group. Meanwhile the sale of Globalvía will entail a cash FCC Industrial is a good example. Through measures in the field of governance last year, most importantly in the injection that could reach 210 million euros in 2016 and such as the integration of affiliates (Matinsa) and the composition of the Board of Directors. Following the capital 2017, part of which were already paid in the first four months grouping of various maintenance activities (roads, railway increase towards the end of 2014 in which Carso Group of this year. Further in this respect, sales processes have infrastructures, electromechanical facilities, power efficiency became a shareholder, on 14 January there were new commenced in the transportation area, which we expect to projects, etc.), around 450 people were relocated in the appointments of proprietary directors by co-opting: Inmobiliaria be completed this year, and the Group took part in the capital second half of 2015. AEG S.A. de C.V., represented by Carlos Slim Helú; Inmuebles increase of Realia, where our stake amounts to 36.9%. Inseo S.A. de C.V., represented by Juan Rodríguez Torres, • Reduction of expenses. Austerity and budget control We must also underscore the fact that FCC has renewed Alejandro Aboumrad González and Gerardo Kuri Kaufmann. remain as an unavoidable management approach. a significant number of its contracts in the Water and Throughout the year administration expenses were brought Also, the remodelling of the Board that had started a month Environmental Services areas, once again showing the service down by 8%. Wage restraint, the amortisation of vacancies and a half before was completed on 28 February, with the quality, experience and soundness of our business. These wherever it is not essential to fill the position, the reduction inclusion of the representatives of Control Empresarial de contracts represent solid revenues for the future. of the budget for leases, sponsorships and lower travel Capitales S.A. de C.V. Here it was a matter of independent All of these initiatives have strengthened our finances, reducing expenses were some of the initiatives carried out to directors, and Manuel Gil Madrigal, Henri Proglio and Álvaro expenses and financial leverage. achieve this. Vázquez de la Puerta were designated members of the Board. The last change in the governance of FCC took place • Centralised purchases. A system of centralised purchases on 18 August, when Juan Béjar stepped down as CEO and has been established for the entire Group. This new Working as a Group I assumed that office.