The FCC Group CEO stated that, “despite the progress of previous years, 2016 was a year of challenges for the Group since at the global level, the economic performance was heterogeneous by region with some of them in full recession. At the local level there was a recession on infrastructure works in Spain and a fall in the consumption of water and waste collection, and at the FCC Group level there was still an onerous structure of expenses, high financial leverage and persistent losses.”

As a consequence, he added, “It was necessary to react against this environment (global, local and company) and in response, important changes were made in FCC in 2016 in the financial, operational and governability areas.”

He also stated that, “despite the continuing challenges in 2016, FCC Group improved its financial results and operational capacities” through a series of policies and events, some of which have been very important and have added to the efforts of previous years.

During his message, Carlos M. Jarque stated that, “with the effort of everyone, the Group started to deliver positive results in a change of cycle” and stressed that “in 2016 important changes were made in the company in the financial, operational and governability areas.”

These three areas to which the CEO referred are marked by a series of important milestones that have become part of the century-old group’s history as a leader in public services.

He stated that he has always believed in the importance of internal communication and that he is also a firm believer in the importance of teamwork for the progress of institutions and companies. This necessitates having the latest information available to all levels in the organisation, with the vision and mission and work programme priorities clearly defined. The meeting that was held followed this theme.

The CEO reviewed the latest financial operations carried out in the previous year, emphasising the enlargement of share capital by €709.5 million to strengthen the company’s capital structure and reduc the Group’s debt. The funds are destined to reduce the so-called Section B of debt with a discharge of 15%, to supporting financially the Cementos Portland Valderrivas subsidiary and to reduce leverage.

He also stated that with the various measures in 2016, the reduction of FCC’s net debt was €1,883 million, a reduction of 34.3% over the previous year and that the year ended with the optimising of the rest of the debt, including the issue of bonds in FCC Aqualia (at five and 10 years) for €1,350 million last June, as well as new agreements with the banks, involving the reduction of the cost of the Group’s debt from an average of 4.54% to a current level of 2.5%.

In his speech, Jarque noted that other milestones that marked the path taken by FCC were the divestitures totalling €294.2 million compared to €38.5 million in 2015 and the important recovery of the debits and claims totalling €171 million.
He also reported the high level of contract renewals with rates at historic maximums in the activities of full cycle water management and environmental services, 99% and 93%, respectively, and the high level of contracting in 2016 that contributed positively to maintaining the visibility of future income.

He mentioned the new contracts, notable among which were the award of the Millerhill Edinburgh & Midlothian recycling and re-use plant in the United Kingdom for €511 million, the contract for the El Salitre wastewater treatment plant in Colombia awarded to FCC Aqualia for €130.5 million, the award with the Grupo Carso of the new Mexico City airport terminal for €3,900 million and the environment division increased its global portfolio by four times its annual income.

The CEO also announced that during the last financial year, the company also carried out an important restructuring of historic acquisitions for the amount of €401 million, especially in Cementos Portland Valderrivas for €300 million, and participated in two enlargements of share capital in Realia for €87.3 million.

Referring to the operational area, Carlos M. Jarque stated that the synergies between the activities of the various business areas were very significant and contributed greatly to the value of the Group, involving a “cultural change”.
Thanks to these synergies, a layoff in the industrial area of €30 million with the loss of human capital was avoided. Thus the Group now works “as a single company”.

This was joined by the continuous effort to implant an austere discipline of administrative costs, reduced by 13% over the previous year, the centralising of purchases that gave a saving of 22% and the simplification of new organisational structures including a layoff that reduced the staff in the Construction areas by 649 persons and other productivity means adopted (better use of spaces and time and the modernising of the information systems).

In this sense, Jarque urged the directors to continue to work with strict austerity in their areas. For FCC it was an inflection point, as stated by the CEO, Carlos M. Jarque. “Despite the challenges that still remain, 2016 was an inflection point and thanks to the efforts of everyone in FCC, the Group continues to see positive results.”

In the meeting, Jarque presented the Group’s strategic lines, the opportunities for the future and the Corporate Social Responsibility activities.

The CEO reviewed the financial results for 2016. During this year, FCC obtained an EBITDA of €833.7 million, an increase of more than 2.3% over the previous year, due to the notable reduction of structural and administrative costs in the Group overall.

As a proportion of income, the administrative costs dropped from more than 6.2% in January 2016 to less than 4% in December of the same year. The productivity measurement (EBITDA generated per employee) increased by +56% in the last four years compared to the reduction in productivity of -38% reached by the sector in the same period. In this aspect, the Managing Director urged the directors to continue improving productivity in all areas.

In governability matters, the CEO noted the obligatory IPO launched by the Grupo Carso on FCC after the increase in share capital, increasing the FCC Board to 15 members, and the exclusion IPO on Cementos Portland Valderrivas (increasing FCC’s shareholding to 96%), both processes concluded successfully.

He added that 2016 was a year of change of cycle for the FCC Group and a year in which productivity progressed in a “new culture” with austerity, new projects and financial optimising. At this time, the Group has achieved stability and has the necessary solidity to continue with the proposed line of growth and to continue working to become a profitable and sustainable company with a clear social commitment.

At the end of his speech, Carlos M. Jarque gave all those present a message, stating, “I urge you to continue working with enthusiasm, dedication, with strict austerity and to continue progressing to increase productivity,” adding that we are working well, stressing the importance of continuing to “put all possible enthusiasm into our work to continue building a Group of which we can all feel proud every day. There are no lesser contributions – I am counting on the support of each of you.”

He ended his speech with thanks, stating that “you are the fundamental part that makes FCC Group function”.