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2023 ReportAnnual Report 20 20 2 Index 03 05 09 24 80 88 1 Letter from the Chairperson Letter from the CEO Corporate governance and ethics Strategy and value creation FCC in 2020 Business lines Appendix I. Financial Statements 199 Appendix II. FCC Group 2020 Sustainability Report Appendix III. Annual Corporate Governance Report 484 634 2 3 4 5 A1 A2 A3 3 FCC_Annual Report_2020 | Letter from the Chairperson | Page 1 of 2 The strength of a large company Dear shareholders, This letter, accompanying our Group’s 2020 Report, could not begin without first remembering all the people who have fought against COVID-19 over these months and have been able to overcome the disease and especially those who have directly suffered the loss of loved ones as a result of the pandemic. To them all, I offer solidarity, hope and encouragement. We can all agree that 2020 was a demanding year and a very complex one to manage. It has been a tough, strange and diffi- cult year that has reconfirmed that FCC´s true strength and best capital are its people, their work and their dedication. Despite adverse moments, we have all been able to take bold decisions and work together. Together we have overcome the present challenges and togeth- er we will take on those to come. Our clear goal is to continue to satisfy the needs of our customers, workers, suppliers, the companies in which we work and the shareholders. Despite adverse moments, we have all been able to take bold decisions and work together Esther A. Koplowitz Chairwoman of the FCC Group Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Letter from the Chairperson | Page 2 of 2 4 The good results recorded –that surpass all forecasts– accurately reflect the company’s response to the pandemic Once again THANK YOU for your hard work, and for having known how to deal with the different waves of uncertainty we have faced and for doing what you do best: applying the meth- ods and values that make up our business plan in your work each day, giving your very best to offer an excellent service. Once again our teams have more than demonstrated their abil- ity, their commitment and the determination that drives them. Thank you. Despite what has happened, FCC kept going throughout this difficult year and with an exceptional effort we have continued to push forward our Group’s activity and growth, as shown by the results which exceeded all forecasts. The details can be found in this annual report, which are an accurate reflection of the company’s extraordinary response to the pandemic´s negative circumstances. Indeed in 2020 the company made a gross operating profit of 1.047 million euros, 2.1% higher than the previous year and an attributable net profit of 262.2 million euros, practically the same as 2019. This is a great performance that was mainly supported by sus- tained income from Environment and Water activities. In light of their being essential services they suffered less impact than oth- er activities with restrictions in place to combat the health crisis. The higher contribution of income in Concessions has also helped, with an increase of 73.7 million euros, and in Construc- tion, which has managed to maintain its activity levels, notably with an increase of 6% in Spain and 9.4% in other European countries. All this activity has been accompanied by a very significant ef- fort to reduce the Group’s financial debt what has amounted to 21.8% compared to 2019, mainly owing to actions carried out in Environment, Cement and Concessions. Finally, I would like to highlight the 17.9% increase in equity, as a result of the stability in net income as well as the high percent- age of shareholders who opted to reinvest the annual flexible dividend in new company shares, demonstrating their complete confidence in our Group. Without doubt another difficult year lies ahead. However, ac- cording to the latest 2021 IMF and OECD macroeconomic fore- casts, a gradual recovery of the global economy is expected, which should be positive for us. Therefore, despite a high degree of continued uncertainty, we fully trust our business model, strategy and team leadership to allow us to continue growing and creating value for our share- holders. I end this letter by thanking our shareholders for their support and our board of directors, as well as the undisputed leadership of Carlos Slim and Grupo Carso, whose support and trust of the company’s management committee has once again been decisive in successfully managing this difficult year. Esther A. Koplowitz Chairwoman of the FCC Group Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Letter from the CEO | Page 1 of 4 5 Thank-you to all our professionals Pablo Colio Abril CEO of the FCC Group Letter from the CEO Dear shareholders, I would like to begin by thanking and recognising our almost 60,000 professionals, particularly our front-line workers provid- ing essential services, a job that they have performed extraordi- narily well in this difficult year framed by the pandemic. We have ensured the provision of our excellent services, with perhaps, the most important aim in our recent history: guaranteeing the health and well-being of citizens in a health and socio-economic environment that demanded teamwork and solutions all work- ing towards a common goal. Services such as the collection and treatment of waste and street cleaning, managing the end- to-end water cycle or the management and maintenance of transport infrastructures all acquired vital importance as they are in the first line of defence against the pandemic. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 6 FCC_Annual Report_2020 | Letter from the CEO | Page 2 of 4 Together we have again shown that we can successfully face any global challenge, offering our human capital and our expe- rience to the needs of the cities of which we are part. This has only been possible with our dedicated teams, who have always distinguished themselves with their commitment and high lev- el of professionalism. Throughout this year, we maintained and reinforced essential citizen services in the communities in which we operate at a time that has been critical for human welfare and for the viability of the cities themselves. For all this, to all of you, my sincere thanks. We also have a duty to the society of which we are part. The current social and health crisis in which we find ourselves has brought to light the vulnerability of the market, companies, in- stitutions and, above all, of the disadvantaged. With the aim of making its greatest possible contribution, our Group has active- ly collaborated on numerous initiatives in this very difficult year towards the social reconstruction of the country, while trying to alleviate the terrible effects of the pandemic as much as possi- ble. These initiatives have been and are an exercise of solidarity and responsibility by the company and our professionals with society, of which FCC wants to be an essential part and at the forefront. It should also be emphasised that it has been a priority to incor- porate the best practices into our services to ensure the health and safety of our teams, which are fundamental pillars of our business culture. In addition, our Group has fully committed it- self and offered its support to its customers, helping them man- age one of the most complex situations that all citizens have faced. The pandemic has coincided with our company’s 120th an- niversary, again demonstrating our capacity for resilience and adaptation to all contingencies, thanks to the human and tech- nological experience we have accumulated over more than a century. We have once again proven that we are capable of recovering from the greatest adversities and making every diffi- culty an opportunity; working together and serving society. This has been part of FCC’s DNA since 1900. Solid foundations on which to build the future The various measures carried out at operational, structural and financial levels driven by the FCC’s new shareholding struc- ture since 2015 – with the Carso Group as its reference – have provided the Group with a competent resiliency that has been demonstrated in this tough pandemic year. During these years, I have to emphasise that it has been possi- ble to recover FCC’s position as a Group specialised in environ- mental services management in the operational area; managing the end-to-end water management cycle and the development and management of infrastructure. In addition, it has been pos- sible to improve risk management systems; increase ethical commitment; encourage synergies between different business areas and promote corporate brand equity with the aim of in- creasing profitability on operations and customer satisfaction. In the structural area, the Group has reinforced its profitability and operating cash flow by implementing strict expense con- tainment and reducing structural and corporate costs to be more agile and competitive in the markets in which the FCC Group operates. Finally, I would like to comment that in the financial area, the Carso Group leadership proved to be essential in carrying out a combined consolidation process of the capital structure, through two capital increases: one in December 2014 and the other in March 2016. These two capital increases totalling 1.709 The measures carried out at operational, structural and financial levels driven by the FCC’s new shareholding structure since 2015 – with the Carso Group as its reference – have provided the Group with a competent resiliency that has been demonstrated in this tough pandemic billion euros, served as a base for a thorough restructuring and subsequent reduction of the company’s debt. Thanks to these actions, FCC has a solid structure, so we can say that our Group is prepared to manage the challenges and difficulties that the future may bring with guarantees of success. Our balanced and diversified business model, supported by a committed and consolidated shareholder support, has placed us on the path towards profitable and sustainable growth and has allowed us to fulfil our commitment to offer citizens a global service, on par with our cooperation in consolidating socially integrated cities. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 7 FCC_Annual Report_2020 | Letter from the CEO | Page 3 of 4 Despite the impact of the pandemic, our turnover has remained stable in 2020 and we therefore continue to be a world bench- mark in environmental services, end-to-end water manage- ment, construction and management of infrastructures, as well as the production of associated materials. The FCC Group is present in more than 30 countries, in whose markets we have obtained 40.37% of the revenues in the last year, guaranteeing the global expansion that we have seen as group that is over one hundred years old, but also the confi- dence in the possibilities of our domestic market. Our journey as a Group places us in an ideal position for the future: a strategy, a business model and a culture that reaffirm our purpose and a broad journey in innovation to respond to global challenges. Sustainability placed at the centre of our development Providing added value has always been at the centre of our business strategy. Sustainability has been a turning point for the company to continue its socially responsible and sustainable transition contribution to present and future cities. From the outset, FCC has always been characterised by the responsibility to improve people’s well-being and respond successfully and effectively to urban challenges: demograph- ic, economic, environmental and social changes, in search of greater daily sustainability. We are living at a time when it is crucial that we review the growth models of the past to embark on a new phase of more sustainable and inclusive prosperity, which allows us to act with greater coordination and effectiveness to face these global challenges. Our journey as a Group places us in an ideal position for the future We have a decade ahead of us for the 2030 Agenda to materi- alise by achieving the Sustainable Development Goals (SDGs), which guide the efforts of public and private sectors to respond to the main global challenges. We ensure that, as a citizen services benchmark company, we will continue to maintain and consolidate the sustainable development of the societies in which we operate, promoting the contribution to the SDGs through our strategy and responsible management. To this end, we have renewed our commitment to the United Nations Global Compact and its ten principles, an initiative of which we have been a part of for more than 10 years. I would like to remind you that this year we are celebrating the 15th anniversary of the FCC Group’s first social responsibility report, demonstrating our Group’s commitment to transparency and communicating our performance in social, environmental and good governance matters. So as to not miss the date, in 2020 the Board of Directors prepared and approved our Sus- tainability Report, corresponding to 2020 financial year, detail- ing the company’s social, environmental and good governance performance. This report will allow us to understand how we integrate care for the environment, respect for people and im- peccable behaviours into our business model, with the latter through our Compliance Model, the apex of which is our Code of Ethics and Conduct that was updated in 2019 by the FCC Group’s Board of Directors. Gross operating profit increases 2.1% As mentioned previously, in a year as complicated as the one just passed, the Group has demonstrated its resilience and made a profit that exceeded the most pessimistic forecasts on the impact of the pandemic, showing positive results in key in- dicators. In 2020, the company made a gross operating profit of 1.047 billion euros, 2.1% higher than the previous year. Net attributable profit reached 262.2 million euros, practically stable but with a slight contraction of 1.7% compared to 2019. Net turnover in 2020 was 6.158 billion euros, 1.9% lower. This exceptional performance, given the circumstances of 2020, was mainly backed by sustained income from Environment and Wa- ter activities, thanks to their nature as essential services, which saw a somewhat lower impact than that suffered by other activ- ities due to restrictions since March 2020 to combat the health crisis. Also noteworthy is the higher contribution of income in Concessions, which meant a 73.7 million euro increase in in- come. In Construction, activity levels were maintained in practi- cally all geographies where the company operates, despite the extraordinary difficulties experienced in many of them as a result of the health crisis. Geographically, despite the situation, the 6% increase in Spain and 9.4% in other European countries stand out. These geographies contribute approximately 72.6% of the Group’s turnover. On the other hand, it is worth highlighting the reduction in the Group’s financial debt of 21.8% compared to 2019, mainly due to actions carried out in the Environment, Cement and Conces- sions areas. Finally, equity increased by 17.9%, as a result of the stability in net income and the high percentage of shareholders who opted to reinvest the annual flexible dividend in new shares of the entity. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Letter from the CEO | Page 4 of 4 Throughout the year, each FCC business area has starred in key events. Noteworthy, in the Environment area is the agreement reached in 2020 with an investment group for the purchase of 49% of the capital – for 198 million pounds sterling – in the subsidi- ary Green Recovery Projects Limited, which owns five energy recovery plants in the United Kingdom. On the other hand, it is worth mentioning the growth in the United States as it was the first year of activity for the solid waste collection service in Volusia (Florida) and Omaha (Nebraska); and highlights, in turn, the award obtained last October as the best valued company in terms of technical criteria for the Barcelona cleaning and col- lection contract. The Water area has consolidated its leadership in Spain, with several end-to-end water management cycle contracts re- newed in 2020, among which the contract in Vigo stands out as this received a five-year extension worth about 260 million euros. On the other hand, the renewals obtained in 2020 having a loyalty rate of close to 100% is also of note. The business’s stability ensured the ratings agency Fitch to grant a positive in its last credit rating review. The Construction area was awarded the contract to design and construct a new hospital in Jersey. The value of the con- tract is 26.5 million euros in the design phase and 550 million euros in its execution. On the other hand, the 239 million euro award for the E6 motorway in Norway and the construction and maintenance project of a section of the Mayan Train, in Mexico for close to 800 million euros are particularly relevant. In Con- cessions, I would like to highlight the award – with other part- ners – for the extension of the A465 motorway in Wales (United Kingdom), a project that will improve the connectivity and de- velopment of the region and that has a planned investment of more than 600 million euros, an infrastructure that in turn will be built by the Construction area. In the Cement area, the activity accounted for approximately 81% of the Group’s total revenues in 2020, with 38% coming from international markets, mainly Tunisia and the United King- dom. It is worth highlighting the 58.9 million euro contribution from the sale of CO2 rights, compared to 5.8 million euros in the previous year, which allowed – together with a notable decrease in energy costs – a sizeable increase of 61.9% in EBITDA for the period. 8 We face the upcoming years with great optimism, confident in our solid experience, our culture that is oriented towards results and austerity and our unbeatable human capital Finally, be certain that we will continue working every day to of- fer global, innovative and social impact solutions that allow the efficient management of resources and improvement of infra- structure, contributing to increasing the quality of life of citizens, and reinforcing the sustainable progress of society. I am in no doubt that our culture of constant innovation and our commitment to integrity and rigour with social well-being will allow us to consolidate ourselves at the forefront of developing the communities of tomorrow and continue to be an interna- tional benchmark group in the provision of citizen services. We face the upcoming years with great optimism, confident in our solid experience, our culture that is oriented towards results and austerity and our unbeatable human capital, all with the desire to build a business future based on the amazing socially responsible record we have and that, with total security, we will overcome this hard time we have had to live through. I am convinced that, with our work and our strength as a Group, we will continue to build the future of FCC together, day after day. Pablo Colio Abril CEO of the FCC Group Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 9 Corporate Governance and ethics 2 Good Governance _ 10 The FCC Group’s due diligence _ 16 The FCC Group’s Risk Management Model _ 20 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 10 FCC_Annual Report_2020 | Corporate governance and ethics | Good Governance | Page 1 of 6 Good Governance In its commitment to Good Governance, the FCC Group aligns its Corporate Governance guidelines with the recommendations of the Code of Good Governance for listed companies from the Spanish National Securities Market Commission (CNMV) that apply to it, and particularly with those recommendations that in- clude Corporate Social Responsibility amongst the competen- cies of the Board of Directors. Aware of the enormous roll that corporate governance plays in the organisation’s performance, the FCC Group complies, in whole or in part, with 86.44% of the recommendations that applied to it in 2020. In addition, to provide a greater definition of the company’s Cor- porate Governance practices, the FCC Group prepares an “An- nual Corporate Governance Report” and the “Annual Remuner- ation Report”, following the guidelines of CNMV report. Both reports are available on the FCC Group’s corporate website. Additionally, the FCC Group – in line with its commitment to continuous improvement and to be at the forefront in ethics and good governance matters – pays particular attention to interna- tional good practices such as those issued by the International Corporate Governance Network (ICGN) and other prescriber organisations in Corporate Governance. FCC complies with 86.44% of the recommendations of the Code of Good Governance for companies listed with the CNMV In a formal manner, through its Articles of Association and the Board of Directors Regulations, the Group defines the responsi- bilities of the governing body. FCC’S ARTICLES OF ASSOCIATION BOARD OF DIRECTORS REGULATIONS They formally include: The responsibilities of the company’s governing body. The identification of any kind of risk that may affect the business. Supervision of proper operational functioning. Decision making which ensures the interests of the company are protected in the long term. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 11 FCC_Annual Report_2020 | Corporate governance and ethics | Good Governance | Page 2 of 6 The Group’s Governing Bodies The FCC Group’s Governance is based on five essential bodies that allow the company to work with the greatest efficiency, per- forming each of the functions and powers assigned to it. In this regard, the General Shareholders’ Meeting is the com- pany’s highest decision-making body, establishing its compe- tencies in the Regulations of the FCC General Shareholders’ Meeting. For matters not attributed to the General Shareholders’ Meet- ing, the Board of Directors has the highest powers and faculties to manage, direct, administer and represent the company. This, in turn, has set up three committees for more effective manage- ment and supervision: the Executive Committee, the Audit and Control Committee and the Appointments and Remunerations Committee. General Shareholders' Meeting It is governed by the provisions of Law, the Company's Articles of Association, and the Regulations of the General Meeting. It guarantees equality amongst all shareholders in terms of information, participation and the right to vote in the General Meeting. Board of Directors Charged with managing and representing the FCC Group. It is the body responsible for supervising and controlling the company’s management, entrusted to the CEO and Senior Management. Executive Committee Audit and Control Committee A permanent delegation body appointed by the Board of Directors, which in turn defines the powers attributable to it, as well as the Directors which must be part of it. It is responsible for making decisions in relation to the investments of the FCC Group, access to credit, loans, guarantees or guarantee lines, or other instruments of a financial nature. Supports the Board, reviewing the preparation of financial and non-financial information, internal control and the independence of the external auditor. The members must have technical knowledge of the Group’s activity sectors. Additionally, at least one of the members must have knowledge of accounting and/or auditing. Appointments and Remunerations Committee It is the body charged with: information, advice and proposal regarding the appointment, re-election, ratification and removal of directors, remuneration of directors and senior executives of the FCC Group, as well as the control of possible conflicts of interest and related transactions, without prejudice to other functions, whatever they may be, attributed by Law, the company's Articles of Association or the Board of Directors Regulations. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Corporate governance and ethics | Good Governance | Page 3 of 6 12 Executive Committee Audit Committee Appointments and Remunerations Committee Composition of the Board of Directors and its Committees C: Committee chair (1) Representing Dominum Desga, S.A. (2) Representing Samede Inversiones 2010, S.L.U. (3) Representing EAC Inversiones Corporativas, S.L. (4) Representing Dominum Dirección y Gestión, S.A. (5) Representing Inmobiliaria AEG, S.A. de CV. Esther Alcocer Koplowitz(1) Chairwoman (Proprietary) Esther Koplowitz Romero de Juseu(2) Deputy Chairwoman (Proprietary) Pablo Colio Abril CEO Alicia Alcocer Koplowitz(3) Proprietary Carmen Alcocer Koplowitz(4) Proprietary Gerardo Kuri Kaufmann Executive Álvaro Vázquez de Lapuerta Independent Carlos Slim Helú(5) Proprietary Alejandro Aboumrad González Proprietary P Alfonso Salem Slim Proprietary Juan Rodríguez Torres Proprietary Antonio Gómez García Proprietary Manuel Gil Madrigal Independent Henri Proglio Independent P P Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 13 FCC_Annual Report_2020 | Corporate governance and ethics | Good Governance | Page 4 of 6 Diversity on FCC Group’s Board of Directors In addition to socially responsible inclusion, diversity is consid- ered an essential principle for all FCC Group employees, includ- ing the governing bodies. For this reason, the Appointments and Remunerations Committee is tasked with ensuring that selection processes favour diversity of gender, experience and knowledge, and that they do not have any implicit biases that may result in discrimination. On the Board of Directors, with regard to other diversity indica- tors in FCC’s governing bodies, 50% of the members are Span- ish, the other 50% are other nationalities (Mexican and French). The composition of the Board is shown graphically below: 14 directors 71% men 29% women The percentage of female directors on the FCC Board of Directors, at 31 December 2020, was 28.57% FCC's Board of Directors Nationalities of the Board of Directors 64% Proprietary 22% Independent 14% Executive 50% Spanish 50% Foreign Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Corporate governance and ethics | Good Governance | Page 5 of 6 14 Operation of the Board and its Committees In 2020, the Board of Directors met a total of nine times, with an average attendance of 90.48%, complying therefore with the requirements of Article 34.1 of the Board of Directors Regula- tions and Article 31.2 of the Articles of Association. They stipu- late that the Board of Directors will meet as often as necessary to effectively carry out its functions, with a minimum of at least once each quarter. Additionally, each of the Board’s committees also held a high number of meetings to ensure the Group’s proper management. Conversely, pursuant to article 34.4 of the Board of Directors Regulations, the necessary information is made available to the directors so that they can form their opinion and cast their vote in relation to the matters submitted for consideration in order to improve the efficiency of the meetings. During 2020, the Board met nine times, with an average attendance of 90.48% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Corporate governance and ethics | Good Governance | Page 6 of 6 15 Remunerations policy Pursuant to the Company Articles of Association, the directors’ remuneration system must be aimed towards the company’s long-term profitability and sustainability, incorporating the nec- essary precautions to avoid excessive risk taking and rewarding unfavourable results. The directors’ remuneration must therefore be in line with the importance of the company, the economic situation and the market standards of comparable companies. The General Shareholders’ Meeting is responsible for agreeing said remuneration considering the roles and responsibilities of each member. Other than fixed remuneration, there are allow- ances for personal attendance at Board meetings and inter- nal committees that are convened during the year, as well as another variable amount for executive directors, based on the meeting of corporate targets. More information on FCC’s Remunerations Policy, as well as the remuneration accrued by each director, is available in the Annual Remunerations Policy, available on the FCC Group’s corporate website. Principles and criteria for setting remuneration Relationship with the market standards and the economic position of the company Motivation and retention of the most qualified professionals Remuneration linked to attendance at meetings Promotion of long-term profitability and sustainability Transparency Link with professional performance and qualifications Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 16 FCC_Annual Report_2020 | Corporate governance and ethics | The FCC Group’s due diligence | Page 1 of 4 The FCC Group’s due diligence Compliance Model, Code of Ethics and Conduct, policies and procedures In line with the principles established in its Code of Ethics and Conduct, the FCC Group has a Compliance Model – reinforced by an i nternal control system – that guarantees its compliance and not incurring any criminal offences. The system has a set of regulations, with policies and proce- dures; of a Crime Prevention Manual; and a map of crimes, risks and controls, designed to prevent and detect risks and minimise their impacts. COMPLIANCE REGULATIONS OF THE FCC GROUP Code of Ethics and Conduct Crime Prevention Manual Anti-corruption Model Partners Relationship Policy Investigation and Response Procedure Ethics Channel Procedure Human Resources Policy Regulation of the Compliance Committee Agents Policy Gifts Policy Tenders Policy Protocol to Prevent and Eradicate Harassment Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Corporate governance and ethics | The FCC Group’s due diligence | Page 2 of 4 For the Model to operate correctly, the Group’s Criminal Pre- vention body – the Compliance Committee – was set up, with self-governing powers on initiative and control, made up of: the corporate Compliance Officer (chair), General Legal Counsel and Human Resources management. In 2020, the Group’s Compliance Committee met eighteen times (eleven ordinary and seven extraordinary meetings). The Group’s Compliance Model also has a series of instruments to supervise and continuously improve its design and effective- ness. Among others, and in accordance with the Prevention Manual, those responsible for controls and processes review and certify around 3,000 controls in the Compliance Tool every six months. In 2020, the most significant due diligence actions on the Group’s Compliance Model were: Throughout 2020, two certifications of the Compliance Model were performed, reviewing around 3,000 controls 17 MOST SIGNIFICANT ACTIONS The review and update of the criminal risk map, focused on risk assessment after the impact of COVID-19. The approval of new regulatory developments, such as sponsorship and donation procedures, and update of the Protocol to Prevent and Eradicate Harassment. Reviewing the design of controls related to international anti-corruption. Rolling out the International Compliance Model at Cementos Portland Valderrivas, and progressing its implementation in the international subsidiaries of the Environmental Services and Aqualia. Internal Audit’s supervision of the Compliance Model. Carrying out two self-assessments and certifications on the compliance tool. Designing and launching new online training related to the Code of Ethics and Conduct, and on Crime Prevention. Defining the supplier approval procedure in terms of Compliance – jointly with the FCC Group’s Purchasing Department. Conducting 195 due diligence evaluations on third parties. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Corporate governance and ethics | The FCC Group’s due diligence | Page 3 of 4 18 Training on and disseminating the Compliance Model Continuing with the commitment to disseminate and provide training on the Compliance Model, both in Spain and interna- tionally, FCC has implemented various communications, infor- mation and training programmes extended to the entire work- force. In 2020, in line with the aim of expanding training’s international scope, the online course on the Code of Ethics and Conduct was translated and adapted into six new languages. Since the launch of this training in 2019, 7,998 employees have completed done it, with a completion rate of 88%. In addition, 1,229 new employees have done so successfully as part of the company’s Welcome pack. In 2020, five online training courses on Compliance were also given through Campus FCC, the Group’s training platform, with 18,321 participants and a total of 11,633 hours of training. The set of regulations on the Compliance Model and their as- sociated policies are available on the corporate intranet and on the Group’s website, except for confidential procedures, which are only available on the corporate intranet. Since its launch, 7,998 employees and 1,229 new employees have taken the online course on the Code of Ethics and Conduct In 2020, five online training courses on Compliance were given, with 18,321 participants and a total of 11,633 hours of training Ethics Channel The FCC Group has a complaints channel that allows workers and other stakeholders to report situations that may lead to po- tential legal breaches of the Code of Ethics and Conduct and its set of regulations. A total of 117 notifications were received via the FCC Group’s Ethical Channel in 2020, 34 more than in 2019, mostly of a labour nature. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 19 FCC_Annual Report_2020 | Corporate governance and ethics | The FCC Group’s due diligence | Page 4 of 4 Respect for Human Rights in the FCC Group Accountability and tax transparency Within its sphere of influence and pursuant to the legal frame- work of each country, the FCC Group promotes, ensures and protects respect for human rights and public freedoms among its staff wherever it operates. In 2020, with the aim of strengthening its commitment to the principles set out in the Code of Ethics and Conduct and its Compliance Model, the Group’s Board of Directors approved an update to the Protocol to Prevent and Eradicate Harassment. FCC has its own Human Rights Policy – approved by the Board of Directors – that includes the company’s express commitment to guarantee freedom of association and collective bargaining; decent and paid employment; the rights of ethnic minorities and indigenous peoples; health and safety; data privacy; and re- spect for communities, and also demonstrating the complete rejection of child labour, forced labour and work carried out in harsh, extreme, subhuman or degrading conditions. The Protocol seeks to promote a fair and diverse working envi- ronment. Among other aspects, some measures that stand out are: not tolerating any conduct that involves discrimination; pro- moting a culture of respect and awareness campaigns against harassment; offering specific training in this regard; ensuring complaint mechanisms are streamlined; adopting disciplinary measures and guaranteeing the labour and social protection rights of victims. To reinforce its commitment and ability to act, the company ad- heres to the main international frameworks, such as the United Nations Global Compact; the Universal Declaration of Human Rights Framework; the Declaration on the Rights of the Child; the different conventions of the International Labour Organiza- tion (ILO); and other agreements of Building and Wood Work- ers’ International (BWINT). In 2020, in addition to Human Rights, the FCC Group’s End-to- End Water Management Company – Aqualia– jointly promoted a Declaration with other organisations representing the entire water supply and sanitation value chain aimed at European Un- ion institutions to consider water and sanitation as a Human Right within the European legislative system, thus guaranteeing these services for all citizens. In matters of tax, the company adheres to the Ministry of Fi- nance’s Code of Good Tax Practices, which establishes the principles of transparency and mutual trust, as well as good faith and loyalty between parties, guaranteeing a more effective relationship without legal uncertainty. Additionally, and to minimise the risks of tax breaches, FCC has its own Tax Code of Conduct, which is mandatory for all persons linked to any Group company. In line with the values established in the Code of Ethics and Conduct, this document sets out the FCC Group’s basic principles in tax matters, in- cluding compliance with applicable tax regulations, respect for the “Tax Area Regulatory Framework Control”, and ensures that senior management review relevant decisions in tax matters and promote transparency. The Group’s Sustainability Report, attached to this document, details the profits after taxes and the taxes on profits paid in each country where FCC is present in 2020, together with the public subsidies received. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 20 FCC_Annual Report_2020 | Corporate governance and ethics | The FCC Group’s Risk Management Model | Page 1 of 4 The FCC Group’s Risk Management Model The FCC Group operates in a wide range of countries and in different sectors, so its activities are subject to diverse environ- mental, socio-economic and regulatory frameworks. The FCC Group is therefore exposed to the risks inherent to its activities and to risks related to environmental, economic, social and ge- opolitical developments at local and global levels. To generate sustained value in this environment, the FCC Group has a Risk Management Model designed to analysis the internal and external context and to identify and assess the potential risks that could affect the Group’s various units, as well as es- tablishing mechanisms integrated into the organisation’s pro- cesses that allow the risks to be managed within the accepted levels, providing the Board of Directors and Senior Manage- ment with a reasonable assurance regarding achievement of the main defined objectives. Activities included in the FCC Group’s Risk Management Model are the assessment of risks, in terms of impact and probability of occurrence, giving rise to risk maps, and subsequently es- tablishing activities to anticipate, prevent and control the effect of identified risks to mitigate them. The Model also includes the establishment of reporting flows and communications mecha- nisms at different levels, which allow both decision-making and their review and continuous improvement. The analysis of the environmental, economic, social and institutional context, and the alignment of the FCC Group culture with the strategy and accepted risk as key for sustainable growth CULTURE VALUES Environmental Social and institutional context Regulatory framework Economic outlook GROWTH PROFITABILITY Strategic objectives Definition of the strategy Monitoring of risks Accepted risk Identification of risks Mitigation of risks Map of risks ordered in terms of criticality Controls and responsibilities Action plans Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Corporate governance and ethics | The FCC Group’s Risk Management Model | Page 2 of 4 21 Organisational structure for risk management The risk management process works across the entire organi- sation, establishing different coordinated levels to maximise its efficiency and enhance its effectiveness. The Board of Directors is responsible for approving the FCC Group’s risk control and management policy, identifying those risks the company considers key and implementing and moni- toring the appropriate internal control and information systems. The Audit and Control Committee is responsible for supervising and analysing the effectiveness of internal control and the risk control and management policy. Board of Directors Audit and Control Committee Senior Management First Risk Management level Second Risk Management level Third Risk Management level Heads of operational management and reporting of risks from the operations, at both a geographical and project level. This level has support and control teams – controlled by Management – that are in charge of overseeing the effective control of risks and ensuring they are managed according to the risk appetite. Continuous improvement is a significant point in the Model at this level. Corporate and transversal functions responsible for risk supervision, including the Compliance role. Risk Management is responsible for coordinating, supervising and monitoring the Model Internal Auditor acts as last control layer. BUSINESS UNITS CORPORATE Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Corporate governance and ethics | The FCC Group’s Risk Management Model | Page 3 of 4 Significant risk scenarios 22 STRATEGIC Natural disasters, climate or global health crises. Cuts in forecasts for investment and demand. Political and socio-economic instability in countries and/or regions. Loss of market share. Regulatory changes. Impairment of reputational image. RESPONSE PLANS Consolidation of the international position as a provider of services classified as essential: waste management, water and infrastructure. Retaining market share in mature markets, with stable demand and predictable cash flows. FINANCIAL Credit risk. Liquidity risk. Exchange rate fluctuation. Interest rate fluctuation. Limitations on access to financial markets. Recoverability of deferred tax assets. Impairment of goodwill. RESPONSE PLANS Continuously monitoring the credit quality of clients, liquidity lines and financing. Strengthening the financial and equity structure to improve the balance between own and Search for new public-private collaboration formulas to develop the end-to-end water third-party funds. cycle, environmental services and infrastructure. Optimisation of floating-rate debt exposure and analysis of hedging instruments on interest Internal strategy for adaptation to climate change in Horizon 2050. rate fluctuations. Integrating the businesses into the circular and low-carbon economy and alignment with Control of asset risk management and updating and monitoring goodwill values and the SDGs (Sustainable Development Goals). deferred tax assets. Investment in technology, innovation and process control. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Corporate governance and ethics | The FCC Group’s Risk Management Model | Page 4 of 4 Significant risk scenarios (continued) 23 COMPLIANCE OPERATIONAL Potential breach of the Code of Ethics and Conduct. Unilateral termination or modification of the contract, RESPONSE PLANS Regulatory breaches. Contractual breaches. RESPONSE PLANS contractual controversies and litigation. Rescheduling of projects. Risks arising from relations with third parties. Formal economic and technical, and contractual management planning systems with clients and third parties, applying an active negotiation policy. Uncertainty in the evolution of raw material prices and Training, coordination and development of the Group’s supply chains. human resources. Structured and formalised Compliance Model. Risks associated with digitisation. Monitoring of key suppliers and periodic analysis of Organisational structure of Compliance at different levels Cyberattacks. and for the different businesses, coordinated by the Compliance Committee. Training programmes on ethics in the Compliance and Values schools of Campus FCC. Regulated systems with detailed procedures. Monitoring of contractual and regulatory requirements in project management plans. Risks for the safety and health of people. Environmental damage. Loss of human capital. Labour conflicts. deviations. Quality management systems, environmental management and occupational risk prevention in accordance with international standards. Operational unit and information security management system also according to international standards. Monitoring plans for specific project risks. Appropriate insurance coverage. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 24 Strategy and value creation 3 FCC Group’s mission, vision and values _ 25 Strengths of the business _ 28 CSR Policy. Social value creation _ 31 Response to future challenges _ 60 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Mission, vision and values | Page 1 of 3 25 FCC Group’s mission, vision and values FCC’s vision defines the future sought by the company and gives a purpose to its action. Therefore, all its components share the same culture and are part of the same project: a sin- gle FCC. To achieve its vision, FCC develops and manages environmen- tal services, end-to-end water cycle management and large in- frastructure services while maintaining the highest standards of operating excellence and applying the strictest ethical principles set out in the FCC Group’s Code of Ethics and Conduct in all its areas and activities. For the company’s staff the Code of Ethics and Conduct rep- resent the highest standards in the FCC’s Group’s range of policies and procedures that allows a strengthened culture of compliance that supports the creation of long-term value in its project. MISSION What we do Design, carry out and efficiently and sustainably manage environmental services, end-to-end water cycle management and the construction of large infrastructure works to improve the lives of citizens. VISION What we want to be For the group to be an international leader in Citizen Services, offering global and innovative solutions for the efficient management of resources and improvement of infrastructure, contributing to improving the quality of life of citizens, and the sustainable progress of society. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Mission, vision and values | Page 2 of 3 Beyond the leadership position in the different businesses – key in the communities of the future and as a result of its technical and professional capacities – FCC has established certain inal- ienable conduct guidelines, which are essential for the Group to operate successfully in a sustainable and responsible manner. It’s about values. These values are part of the new Code of Ethics and Conduct of the FCC Group and are intended to transmit and instil the principles in all company employees. 26 WE ARE more than 59,000 professionals operating in more than 30 countries. WE SHARE a common challenge: improve the quality of life of citizens and contribute to sustainable progress. WE FOLLOW the same path guided by the principles of the FCC’s New Code of Ethics and Conduct. 5 Well-being and development of communities We are aware of the value our services bring to society and we are committed to protecting the environment and the development and well-being of communities. 1 Honesty and respect We want to be recognised through honest behaviour deserving of the trust of collaborators, customers and suppliers as reference partners in the long term. Our values 2 Focused on results We pursue improvement and goals to make the FCC Group a leader in profitability and competitiveness. 4 Loyalty and commitment We favour diversity, promote professional development and recognise merit and creativity as a stimulus to productivity and progress. 3 Rigour and professionalism We show exemplary behaviour and a vocation to the service, developing our ability to seek efficient and innovative solutions. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Mission, vision and values | Page 3 of 3 FCC Group’s principles of action 27 Honesty and Respect 1 2 3 4 We respect legality and ethical values. Zero tolerance towards bribery and corruption practices We act against money laundering and the financing of terrorist activities. We protect free competition and good market practices. Rigour and Professionalism 5 6 7 8 9 We behave ethically on the stock market. We avoid conflicts of interest. Rigour in control, reliability and transparency. We protect the reputation and image of the Group. We use the company’s resources and assets efficiently and safely. 10 We monitor the ownership and confidentiality of data and information. Loyalty and Commitment 11 12 Our customers are at the centre. The health and safety of people are paramount. 13 We promote diversity and fair treatment. 14 We are committed to our environment. 15 We interact with the community transparently. 16 We extend the commitment to our partners in the business. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 28 FCC_Annual Report_2020 | Strategy and value creation | Strengths of the business | Page 1of 3 Strengths of the business Experience More than 120 years of experience creating value for citizens Care for the environment Environmental Management Systems certified according to UNE–EN ISO 14001 in all business areas Investment in the community The FCC Group has allocated a total of 4 million euros to social action, non-profit entities and foundations Health and safety Occupational Health and Safety Systems certified according to ISO 45001 in all business areas Internationalisation Present in more than 30 countries Professionalism More than 59,000 professionals specialised in various areas Ethics and integrity Compliance Model of the FCC Group Quality Quality Management Systems certified according to UNE-EN ISO 9001 in all business areas Corporate Social Responsibility CSR 2020 Master Plan Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Strengths of the business | Page 2 of 3 Keys to a diversified business 29 Environment •• Waste collection. •• Street cleaning. •• Urban solid waste treatment and recycling. •• Ground maintenance. •• Maintenance of sewerage networks. •• Industrial waste treatment and recycling. •• Recovery of contaminated soils. •• Facility Management. End-to-end water management cycle •• Comprehensive management of public services. •• Operation, maintenance and technical assistance services. •• Design, construction and financing of water infrastructure. Infrastructure Cement •• Civil works. •• Construction. •• Industrial. •• Concessions. •• Infrastructure maintenance. •• Prefabricated construction. •• Brand image. •• Cement. •• Trading. •• Other businesses (concrete, aggregates and mortars). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Strengths of the business | Page 3 of 3 International footprint 30 14 23 24 25 26 27 28 29 30 31 32 33 Panama Colombia Ecuador Peru Chile Algeria Tunisia Egypt Saudi Arabia United Arab Emirates Qatar 1 2 3 4 5 6 7 8 9 10 11 Spain Portugal France Germany United Kingdom Ireland Italy Austria Belgium Czech Republic Poland 12 13 14 15 16 17 18 19 20 21 22 Slovakia Hungary Romania Serbia Bulgaria The Netherlands Norway USA Mexico Dom. Republic Nicaragua Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A31319202122232425262745917672830313233298101118121615132 31 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 1 of 29 CSR Policy. Social value creation Sustainability in FCC’s business model For the FCC Group, its own sustainability challenges contribute to promoting solutions and detecting opportunities linked to its own business model. To respond to the challenges, and identify factors and trends that may lead to changes in the company’s evolution, FCC relies for its sustainable performance with a solid strategy, a consolidated structure, management tools and an outstanding network of support and contact with stakeholders. The FCC Group’s Code of Ethics and Conduct, approved in 2012 and revised in 2019, is the central element to responsi- bly manage FCC’s activity. The commitments acquired and the framework for action are included in the Corporate Social Re- sponsibility Policy (hereinafter CSR Policy), approved in 2016 by the Group’s Board of Directors, and which is monitored by the Executive Committee, in accordance with recommenda- tions 53 and 54 of the Code of Good Governance from the CNMV (National Securities Market Commission). In 2020, the FCC Group’s commitment to sustainability in social, environmental and good governance matters meant celebrating a history of more than 120 years of activity and 15 years of communicating and publishing, through the Social Respon- sibility Reports, the business’s contribution to sustainable de- velopment. Additionally this year, in a global context marked by the health and socio-economic crisis from COVID-19, the FCC Group has responded with experience, resilience and profes- sionalism to the new challenges, never neglecting its commit- ment to guarantee the well-being of people, respect for human rights and caring for and preserving the environment. The diversified business model that characterises the compa- ny is backed by a committed and consolidated global service to citizens. Our cooperation is fundamental in the development and transformation of sustainable cities and communities. This is why FCC is involved in responding successfully, effectively – and from an integrity and business ethics standpoint – to ur- ban challenges and daily sustainability. This contribution to development is aimed at promoting sustainable urbanisation, affected by demographic changes and the expansion of cities; responsible economic development, taking care of consump- tion and the production of natural resources; the fight against climate change, with its own strategy and betting on energy effi- ciency and emissions control; and progress in equality, inclusion and social development. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 2 of 29 The CSR Policy establishes the company’s main strategic lines for sustainable development, which are developed through its Corporate Responsibility committees. To implement the Policy effectively, FCC has a Group Corporate Responsibility Commit- tee and other committees in the different businesses that favour compliance and promote progress aligned with our own activ- ities. All management and strategy revolves around the CSR Master Plan, which concluded its fourth edition in 2020, to make way for the next ESG 2025 Plan. In addition to the Code of Ethics and Code Conduct, the CSR Policy and the Master Plan, the company has other policies and action plans with the aim of addressing the different challeng- es of the Group in social, labour and environmental matters. In this structure and model, we support each other to work on the 2030 Agenda by achieving the Sustainable Development Goals (SDGs). In 2020, we renewed our commitment to the United Nations Global Compact for another year, to maintain and consolidate the sustainable development of the societies in which we operate. 32 Likewise, it is essential for the Group to know and respond to environmental, social and good governance demands and ex- pectations through communication and dialogue with stake- holders. From these, and from the materiality study that iden- tifies the most relevant and significant issues to the company, the priorities and lines of action with the greatest impact on each of the businesses are established. The 2020 materiality study revealed certain relevant issues that are cut across all businesses such as ethics, compliance and good governance; safety, health and well-being, the circu- lar economy and waste. In addition, some environmental issues such as energy and climate change become more significant this year. FCC's stakeholders and tools for dialogue Customers Satisfaction surveys. UNE ISO 9001 certified business lines to guarantee the best quality products and services. Different channels for dialogue based on business area. Partners Communication channels are established with other companies in the sector. They highlight the figure of the interlocutor, the collaboration agreements, alliances, sponsorship, business forums, symposia and publications. Suppliers and contractors Information and awareness raising sessions. Obligatory compliance with FCC's Code of Ethics and Conduct. Commitment to comply with the ten Principles of the UN Global Compact. Employees FCC one – Corporate intranet. Periodic in-person meetings on information of interest. Employee portal. Somos FCC: quarterly online magazine. Communities FCC's various business areas promote dialogue with local communities to understand their expectations and maximise the social benefits created by its projects. Shareholders and investors Public administrations and regulators Shareholders' office. Corporate website with information relating to economic performance. Voluntary participation in sectoral self-regulation and legislation development initiatives. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 33 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 3 of 29 FCC Group’s CSR Policy The FCC Group’s Corporate Social Responsibility Policy in- cludes commitments on business integrity and ethics, respect for the environment and contributing value to society. To develop, implement and comply with of the CSR Policy, master plans with specific programmes and objectives are de- veloped, with fulfilment and monitoring of them coordinated through the Group’s Corporate Responsibility committees and its areas. Principles of action In accordance with the CSR Policy, the principles of action that guide the FCC Group’s behaviour are: Quality and innovation: based on continuous improvement to meet and satisfy the needs of our customers and stakeholders. Integrity in actions: with behavioural guidelines that respond to the highest level of demand of our values. Management efficiency: meeting objectives, protecting and optimising resources. Proximity and commitment: creating value and smart, inclusive and respectful environments. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 34 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 4 of 29 CSR Master Plan 2020 In November 2017, the FCC Group’s Board of Directors ap- proved its fourth CSR 2020 Master Plan, establishing its re- sponse to social, economic and environmental challenges in different action plans grouped into three strategic pillars: citizen connection, smart services and exemplary behaviour. In 2020, work was done on different programmes to round off the 2020 CSR Master Plan, starting the path towards a new ESG 2025 strategy, which will be designed in 2021. Strategic pillars and action programmes of the 2020 Master Plan Axis 1: FCC citizen connection Its approach is based on considering citizens as the stars of sustainable cities, with FCC responding to the challenges and expectations of the communities, through different action plans, promoting social dialogue with administrations and stakehold- ers. Several programmes and initiatives have been developed to achieve this: 1 FCC + Acción: focusing efforts on developing social ac- tion projects through solidarity initiatives and collabora- tion agreements with non-profit organisations. FCC has launched solidarity communications campaigns, commu- nity outreach and volunteer programmes and projects to guarantee access to water and humanitarian aid initiatives for people at risk of social exclusion. FCC has worked with its own means and resources to achieve these programmes, but has also had its workforce and been supported by foundations and non-profit organ- isations such as UNHCR, Cáritas, Red Cross, La Caixa Foundation and ONCE Foundation, among others. 2 FCC + Educa: a programme that takes advantage of the technical knowledge and skills that FCC’s professionals have to promote environmental training and awareness pro- grammes in society. The programme has been developed from online education- al channels, taking part in training and information sessions in schools and academic centres, the organisation of open days for students in our work centres as well as participa- tion in various dissemination and awareness activities. During the term of the Plan, campaigns have been designed to inform and offer training on the SDGs, the environmen- tal and sustainable management of water and waste, the responsible use and consumption of natural and energy resources or on social issues, such as raising awareness about the harsh living conditions of refugees. FCC has also established numerous agreements with Spanish universities and has participated in different work- ing groups related to sustainability, innovation and the envi- ronment. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 35 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 5 of 29 3 City 2025: this programme places FCC as a facilitator of dialogue between various stakeholders to collaboratively build sustainable, inclusive and humane cities, participating in roundtables where the main urban challenges are ad- dressed. FCC has taken part in diverse forums, roundtables, plans and studies, with public and private institutions and other stakeholders, providing business experience and promoting sustainable challenges for cities of the future: sustainability, innovation, technology, social and economic recovery or the humanisation of cities. 4 Measurement of socio-economic impact: the company sees knowing and measuring the scope of the social, eco- nomic and environmental impact of its activity as essential, improving two-way communication with stakeholders and adapting the message to each of them. Related to this, FCC has been involved in studies to as- sess sustainable development, established indicators in its businesses based on internationally recognised criteria, and has various tools to assess and measure risks, impacts and material issues. Axis 2: Smart services FCC participates in designing sustainable cities of the future, betting on the continuous improvement of its internal processes and its services offering, developing innovative and sustainable initiatives, projects and procedures. The company works to create new skills to address the action programmes that respond to the main environmental challeng- es. These programmes are: 1 FCC plan for a Circular Economy the FCC Group – main- ly through the end-to-end water management cycle and waste processing – contributes to transitioning towards the circular production model, developing improvement actions and objectives to reduce, reuse and recover outflows. 2 Climate change and eco-efficiency: the FCC Group has approved its own Climate Change Strategy 2050 that iden- tifies the risks in dealing with this global challenge and de- fined the climate objectives and measurement indicators to allow adaptation to new business opportunities associated with climate change and emissions reduction. This programme promotes actions to implement process- es with lower greenhouse gas emissions, promote energy efficiency and renewable energies, prevent pollution and protect the natural environment through responsible man- agement and consumption of natural resources as well as minimising the impact of emissions, discharges and waste generated and managed by our activities. Since the Master Plan was implemented, the various busi- ness lines have led European projects transitioning towards a circular production model, participating in workshops and working groups, optimising the consumption of resources through innovative processes or certifying their waste man- agement systems. Businesses are betting on the use of sustainable materi- als, on electric mobility, on the control and management of emissions of dusty materials in infrastructure activities, on reducing emissions in their plants, with the installation of fil- ters, as well as the implementation of measures to prevent and contain spills and to minimise noise and light pollution. Projects within the Group have mainly consisted of the re- covering waste and turning it into resources that can be used, as well as in the efficient use of natural and water re- sources, promoting the reuse of waste and wastewater and promoting the use of industrial by-products and alternative fuels such as biomass. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 6 of 29 36 3 Response to water stress: the company is an agent that contributes to reducing water stress, mainly through the effi- cient provision of its end-to-end water management service, as well as through defining a water footprint perimeter that allows areas for improvement and savings to be identified. 4 Protecting biodiversity: to mitigate the impact of its activity on the natural environment –and promote its conservation– FCC publicly commits to ensuring the care for, preservation and repair of biodiversity in areas where the company oper- ates. FCC has worked to ensure responsible and efficient water management in each of its activities, taking into account the infrastructure and availability of water in the areas where it operates. The businesses have launched initiatives to raise awareness among employees on the sustainable, responsible and ra- tional use and consumption of water; resource optimisation and use programmes have been established, and the net- works and phases that make up the end-to-end water cycle have been improved to generate a greater amount of water resources, better use and maximum guarantees for their use and consumption. In its commitment to biodiversity, the company has alliances with nature protection groups to maintain and control of bi- odiversity; it has developed projects to protect and recover ecosystems; it has promoted the mapping of areas of in- terest for biodiversity and protected areas; it has restored various areas dealing with the morphological repair and revegetation; and has transplanted plant species, trans- ferred animal species or physical protected specimens. 5 FCC InnovaCSR: FCC develops innovative projects to generate a competitive advantage, increase efficiency in its processes and search for new solutions to face global challenges, such as the fight against climate change or the transition to an circular economy model, and that minimise the impact of its activities on the environment. FCC has R&D projects, betting on technological innovation, smart management, eco-efficiency and automation of pro- cesses, modernisation of operations and machinery, as well as research and development of new products and more eco-efficient materials to extend the useful life of infrastruc- tures. The company also uses integrated management and con- trol tools and promotes knowledge management, partici- pating in studies, roundtables and innovative projects. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 37 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 7 of 29 Axis 3: Exemplary behaviour An axis for the ethical and integrity commitment with the highest standards of behaviour throughout the value chain, with collab- orators, stakeholders and the community, in which environmen- tal, social and good governance commitments are included. Based on the FCC Group’s Code of Ethics and Conduct and the Compliance Model, various programmes have been devel- oped that promote and strengthen the company’s principles and values, as well as their compliance. 1 FCC culture: the company works to consolidate and pro- mote a solid and transversal corporate culture, to turn em- ployees into brand ambassadors, increase their sense of belonging and promote a culture of respect and exemplary performance. To consolidate and guarantee this culture of ethics and in- tegrity, the company has worked to provide an appropri- ate and up-to-date regulatory framework, promoted by its Compliance Committee, and has established the necessary means, channels and tools for communication and connec- tion with the workforce, in addition to a strong training pro- gramme. 2 Responsible procurement: a programme to apply environ- mental, social and good governance criteria in the supply chain, with FCC’s firm commitment to introducing sustain- ability in the processes of contracting goods and services, and responsible purchasing. In this sense, the 2020 update of the Purchasing Manual and the drafting of procedures to manage the approval of suppliers, which include financial and non-financial aspects, as well as reformulating the ethical clauses for contracting, have been key. 3 XHumanRights: respect for human rights in all the commu- nities in which FCC operates requires a quality, respectful and dignified work environment to be respected. To promote, oversee, guarantee and protect the respect for human rights, the company adheres to the main interna- tional frameworks; it has established prevention and control mechanisms, as well as reporting channels, and has im- plemented internal and external dissemination, training and awareness-raising actions. In 2019, the Group’s Board of Directors approved FCC’s Human Rights Policy. 4 Talent2: competencies + leadership: professional devel- opment at FCC, with a focus on talent management, and increasing productivity and efficiency. The Group has focused its efforts on developing skills that allow improved performance at all levels of the organisation. The commitment incorporates an ambitious educational and training programme, adapted to the workforce’s needs, and with advanced management tools. FCC has also participated in a number of meetings, pro- grammes and projects with institutions, entities and schools to promote leadership, talent and professional develop- ment. 5 Equality and diversity: a programme designed to increase employment, promotion and remuneration opportunities – in terms of equality and diversity – across all the Group’s activities. To advance and strengthen equality and diversity in the com- pany, FCC has developed different plans and programmes aimed at managing generational, gender and disability is- sues, in numerous processes such as selection and hiring, promotion, inclusion, accessibility and non-discrimination, and with particular attention paid to the prevention of har- assment and the fight against gender violence. Specific training programmes and information and aware- ness campaigns have been developed for this. Likewise, alliances have been established with specialised entities to promote and consolidate the company’s commitment to equality and diversity. 6 Health and safety comes first: a programme that pro- motes a preventative culture on occupational risks, health, safety and well-being of the workforce, developing improve- ment plans and consolidating itself as a safe and healthy company. The main lines of action relate to the FCC Group’s Health, Safety and Well-being Policy and to the certification of Health and Safety management systems. Specific health and wellness programmes have been developed; inform- ative and participatory channels, platforms and campaigns; and collaborations with organisations, associations and en- tities specialised in caring for and promoting occupational health and safety. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 8 of 29 FCC’s contribution to the 2030 Agenda FCC Group transversal SDG contribution 38 FCC Construcción contributes to the SDGs through the con- struction of infrastructures for the sustainable development of cities and communities, with energy efficient facilities, investing in research and promoting the responsible management of re- sources and waste and the reduction of emissions, therefore impacting on SDGs: 6, 7, 11, 12 and 13. Cementos Portland Valderrivas encourages digital transforma- tion and the application of technologies that allow it to manu- facture resilient and sustainable products; researches solutions to reduce the consumption of water, raw materials and energy in its facilities; promotes the efficient use of natural resources; and works to reduce CO2 emissions that result from its activity, contributing therefore to SDGs: 9, 11, 12 and 13. Likewise, the FCC Group contributes indirectly to SDGs: 5, 15 and 16. The Group’s Sustainability programmes and the 2020 CSR Master Plan have been aligned with the 17 Sustainable Devel- opment Goals (SDGs) since their approval by the UN in 2015. The FCC Group’s track record in CSR matters highlights the link between the company’s strategy and the SDGs, internalising the commitments of the 2030 Agenda and integrating them into its business model. Through its various activities, the FCC Group contributes di- rectly to different Sustainable Development Goals. Each of the Group’s business lines defines the SDGs that they consider a priority based on their direct contribution: FCC’s Environmental Services activity is an area that contributes to the employment for thousands of people and that promotes the integration of people with disabilities into the workforce. It is also committed to technological innovations to optimise the management, recovery and use of waste, through initiatives for a more efficient use of natural resources. This business impacts on SDGs: 8, 9, 10 and 12. Aqualia, for its part, has a particular responsibility with its con- tribution on preventing infections and the spread of diseases in water and sanitation management services; promotes access and efficiency of water resources; applies technologies that im- prove the efficiency and reliability of processes, promoting the reuse of waste water and encourages collaboration with univer- sities and research centres, thus impacting on SDGs: 3, 6, 9, 11, 12 and 17. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 39 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 9 of 29 The FCC Group’s people The FCC Group considers its human team a strategic asset, maintaining firm respect for human and labour rights recog- nised in national and international legislation, diversity, equal opportunities and non-discrimination. People management also responds to the commitment to talent and professional development, to social dialogue and communication, to digital transformation and to a safe and healthy working environment. People are a priority for FCC. For this reason, you_ was born in 2020, the FCC Group’s human resource management brand. you_ summarises the essence of who we are, it is our new way of being, of doing, of evolving, of innovating, of feeling and of projecting our future Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 10 of 29 Human capital profile FCC operates in over 30 countries around the world, which means more than 120 nationalities among the nearly 60 thou- sand professionals that make up the workforce. FCC is a company that is noteworthy for its job stability, with 72% of its staff on permanent contracts. Even those with a tem- porary contract enjoy great job stability, as they are assigned to a contract, which has recognised mandatory subrogation by collective agreement. Distribution of the workforce by geographic area Distribution of the workforce by sex Distribution by sex and functional level 22.3% 77.7% men Directors and Managers 82 437 Middle Management Technical staff Administrative staff Various trades 551 3,067 1,660 3,898 1,975 1,004 9,078 Woman Man Distribution by sex and age range Spain 75.44% Other EU 10.58% <35 years 35-54 years >54 years 1,850 6,788 7,501 3,995 Woman Man 15,570 Rest of the world 10.76% USA and Canada 0.98% Latin America 2.24% 40 37,995 24,043 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3women FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 11 of 29 41 Betting on talent The FCC Group has opted for skills-based management, pro- moting talent and the continuous development of profession- als. The six cross-cutting skills that apply throughout the FCC Group are: Focused on Results Customer orientation Flexibility Working in Communication Alignment Teams In 2020, 693 internal mobility processes were published In 2020, FCC participated in SONDERSLAND, the largest meeting of young talent in the world The long-term success of the Group depends on our ability to attract, motivate and develop people, and therefore, the follow- ing commitments are assumed in this regard: To prioritise internal promotion to fill vacancies. In 2020, 693 internal mobility processes were published. To develop a welcome programme that favours rapid inte- gration into the position and the company (on boarding on Campus). To promoting young people’s access to their first job through programmes and other agreements. In 2020, FCC participated in SONDERSLAND, the largest meeting of young talent in the world. In addition, one of the fundamental aspects of global talent management is training and skilling the workforce. During 2020, various schools have been developed within its own training platform, Campus FCC, and more than 500,000 hours of train- ing have been given to a large number of people from all func- tional levels. FCC Campus Schools Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 12 of 29 Training hours by functional level and business area Diversity and equality 42 Domestic Environmental Services Water Management Construction Cement Central Services National Subtotal International Environmental Services Water Management Construction Cement International Subtotal Total Directors and Managers Middle Management Technical staff Administrative staff Various trades Total 5.686 4.890 1.944 339 2.077 14.936 946 2.246 3.192 18.128 32.828 17.035 11.588 833 1.284 63.568 11.216 2.949 524 14.689 33.064 9.750 36.004 1.943 6.439 87.200 12.399 16.734 1.521 646 31.301 78.257 118.501 18.364 132.096 222.038 6.386 4.016 674 2.516 9.890 26.522 2.264 53 47.951 80.074 6.054 12.369 31.955 170.826 368.485 7.788 3.237 741 212 11.978 43.933 106.222 1.639 937 36 138.571 23.856 6.147 1.418 108.833 169.992 279.659 538.477 FCC projects itself as a Group that is committed to equality and diversity regarding its ethical principles and equal opportunities values, working on three fundamental pillars: Gender: for balance and professional development be- tween genders, guaranteeing equal opportunities between men and women and being committed to female leader- ship. People with disabilities: for labour integration and inclu- sion of talent. Generational: for cooperation between the different gener- ations that work together at FCC, consolidating the incor- poration of young talent. Gender equality The principle of equal opportunities for FCC is an inalienable commitment to act, set out in its Code of Ethics and Conduct and in each of its Company Equality Plans that cover almost 100% of the workforce in Spain, regardless of whether there is a legal obligation or not. On the other hand, the Equality Plan in force in the United Kingdom should be noted. As a result of the FCC Group’s conviction to promoting women, the percentage of women holding management positions at the end of 2020 was 15.80% of all these types of positions. The FCC Group develops and takes part in training programmes aimed at creating an enriching work environment, free from dis- crimination and which favours diversity, with two training and development initiatives for women in leadership positions worth highlighting: the Promociona Project and the EOI Development Programme. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 43 FCC employs 1,440 people in Spain who have a recognised disability equal to or greater than 33% In terms of accessibility, FCC continues to design solutions that favour a working environment that is free of obstacles and bar- riers. During 2020, new accessibility improvements were made to several of the company’s buildings, and the training action “Universal accessibility and design for all” was given. FCC employs 1,440 people in Spain who have a recognised disability equal to or greater than 33%. FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 13 of 29 In 2020, through Campus, a total of 6,013 workers in Spain were trained on this matter. The FCC Group is particularly committed to the fight against gender violence in all its facets, based on two fundamental prin- ciples of action: zero tolerance for gender violence and support for the social and professional integration of victims. For this, the company maintains close collaboration with the network of “Enterprises for a Society Free of Gender Violence” in its work, spreading and raising awareness, as well as supporting the job placement of the women who are subject to this. In addition, it partners with different foundations and entities to promote the labour insertion and integration of victims, such as the Incorpo- ra Foundation (La Caixa), the Adecco Foundation, the ONCE Foundation and the Red Cross. Disability FCC continues to move forwards in its commitment to diversity and labour inclusion, and promotes actions and projects that encourage the employment of people with disabilities, contract- ing products and services from special employment centres (CEE), support for education and entrepreneurship in addition to working towards universal accessibility in our buildings. In terms of awareness, and to celebrate International Day of Peo- ple with Disabilities, FCC launched the “Diversity and disability” training action through one of the Campus schools. The company actively collaborates in programmes and with or- ganisations who are specialised in integrating people with dis- abilities into the workforce, such as the INSERT Programme of the ONCE Foundation, the Entrepreneurship Classroom of the Prevent Foundation and the Incorpora Foundation of La Caixa, among others. Specifically in 2020, and to deal with the new social and economic challenges derived from COVID-19, FCC is part of the Inclusive Reconstruction Pact, promoted by the Inserta Forum, head of the ONCE Foundation, for a sustainable and inclusive reconstruction “without leaving anyone behind”. In 2020, through Campus, a total of 6,013 workers in Spain were trained on this matter Against harassment and gender violence To complement the complaints channel included in the Code of Ethics and Code Conduct, the Group has the Protocol to Prevent and Eradicate Harassment that was reviewed and ap- proved in 2020 and that aims to prevent, resolve and punish workplace, sexual or gender-based harassment, thus reflecting the FCC Group’s commitment that it does not tolerate abuse of authority or any type of harassment. The protocol, which is mandatory, includes a declaration of principles, the definition of harassment, the procedure for ac- tion against harassment, the guarantee of confidentiality of the process and the prohibition of retaliation. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 14 of 29 44 Social relationships and work organisation For FCC, social dialogue and discussion with teams, legal rep- resentatives, trade unions and other social agents is essential in promoting and facilitating agreements through negotiation and other collective processes. FCC actively participates in the collective bargaining of agreements or conventions, both at a workplace level and sectoral, state, regional or provincial levels. In Spain, 100% of FCC’s personnel are covered by the Collec- tive Agreement, and more than 900 agreements are applied. The organisation of work in the FCC Group’s various compa- nies responds to the productive needs of each activity pursuant to the standards and regulations applicable in each sector and location. At FCC, correct management of the organisation and working time is deemed essential, with various initiatives considered to achieve this, focusing on matters of conciliation, flexibility, joint responsibility and digital disconnection, which are adapted to the different realities and organisational or productive needs of each centre, function, sector or activity. In 2020, FCC launched the FCC 360 App, which allows com- mon management processes (mainly payroll and personal income tax certificates) to be optimised and keeps the entire workforce informed and connected, allowing two-way, stream- lined and efficient communications. In 2020, and in line with the Technological Media Usage Policy, training was given on the responsible use rules of technological media (8,781 people) and technological tools (1,430 people), focusing on digital disconnection. In 2020, and in line with the Technological Media Usage Policy, FCC gave training on the responsible use rules of technological media to 8,781 people and technological tools to 1,430 people, focusing on digital disconnection In 2020, due to the pandemic caused by COVID-19, countless organisational and production measures were designed and implemented to safety, quickly and efficiently respond to the cri- sis. Along with the goal of protecting the health and safety of its workforce, the aim and the need to guarantee the continuity of the business and social action were addressed, because they provide a wide range of essential services for the community at all times that are and were critical and essential during the pandemic. In Spain, 100% of FCC’s personnel are covered by the Collective Agreement, and more than 900 agreements are applied Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 45 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 15 of 29 Health and safety FCC consolidates its preventive and health promotion culture, based on its policy on occupational health, safety and well-be- ing, whose strategic fundamentals of preventing occupational risks, the participation of the workforce and stakeholders and maintaining the most demanding certification standards. In addition, the company remains committed to the health and well-being of people and work spaces, which translates into multiple initiatives, procedures and processes. Thanks to FCC’s track record and experience in prioritising health and safety across all its activities, and to the manage- ment of the company’s Medical Services, FCC was able to maintain services to citizens during the COVID-19 crisis with total professionalism and guarantees. Pursuant to international standards such as ISO 45001, 95% of the workforce is covered by a certified health and safety man- agement system. Pursuant to international standards such as ISO 45001, 95% of the workforce is covered by a certified health and safety management system FCC Live Healthy The FCC Live Healthy Portal is the platform available to the workforce that includes part of the preventive man- agement in terms of health, safety and well-being as well as information and healthy challenges. FCC participated in the fourth Edition of the #eHealth- Challenge2020, the largest Inter-company Online Ol- ympiad in the world. FCC participated in the fourth Edition of the #eHealthChallenge2020, the largest Inter-company Online Olympiad in the world In 2020, many of the actions focused on supporting and counteracting the effects of the pandemic, with protocols, campaigns, workshops and specific activ- ities, taking advantage of technological resources to reach the workforce and continue to encourage their participation in the healthy activity the company pro- motes in areas such as food, physical activity, stress management, emotional well-being, etc. Evolution of the accident and absenteeism rate 17.07 Frequency rate Reduced by 28% compared to 2019 0.67 Severity rate Reduced by 26% compared to 2019 0.44 Absenteeism rate due to work accident Reduced by 38% compared to 2019 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 46 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 16 of 29 FCC’s respect for the environment In its commitment and responsibility to the environment, the FCC Grou promotes solutions to encourage urban resilience, improve people’s quality of life and control the effects that the activity may have on protecting and caring for the environment. In 2020, FCC’s environmentally certified activity is 83% Environmental policy and the management of environmental aspects The application of the precautionary principle in the FCC Group materialises through the design and execution of its corporate Environmental Risk Management Model, as well as the risk pre- vention activities of each business. Each business line monitors each processes, identifying, as- sessing and managing the impacts produced, with the aim of adopting the necessary practices to minimise them. Throughout 2020, the FCC Group allocated a total of 43.7 mil- lion euros to the prevention of environmental risks. The FCC Group has an Environmental Policy applicable to all companies, which is an integral part of the Environmental Man- agement System. It establishes the principles on conserving the environment, the use of natural resources and FCC’s main commitments on this issue: protecting the environment, com- plying with legal requirements and promoting the continuous improvement of environmental performance, and can establish additional commitments in each business. FCC also includes the maintenance of a certified Environmental Management System in accordance with international regula- tions among its priority aims. All FCC Group businesses cur- rently have Environmental Management Systems certified in accordance with ISO 14001, guaranteeing the correct manage- ment of significant environmental aspects, compliance with leg- islation and the establishment of a commitment to continuous improvement. In 2020, FCC’s environmentally certified activity is 83%. Throughout 2020, the FCC Group allocated a total of 43.7 million euros to the prevention of environmental risks Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 17 of 29 47 FCC’s contribution to the circular economy and reducing its wastes The FCC Group promotes reducing its own waste, developing its activity at the same time as promoting sustainability and be- ing inspired by the principles of the circular economy – its max- im being “to close the life cycle” of resources – ensuring their subsequent incorporation into the productive process. To formalise its commitment to the circular economy, as a means of moving forwards with sustainable development, the FCC Group adheres to the Pact for a Circular Economy, pro- moted by the Government of Spain’s Ministry of Agriculture, Fisheries and Food and Ministry of Economy, Industry and Competitiveness. Through this initiative, all the signatories are involved in the transition towards a new, more sustainable and environmentally friendly economic model. Through the development of master plans, or business sus- tainability plans, the lines of work and the roadmap in waste reduction, reuse and recovery have been formulated, leading to a reduction in its environmental impact. The FCC Group’s Environmental Services activity is clearly com- mitted to a circular economy model through the conversion of waste into resources, optimising its use. Some of the business’s projects are: Life Infusion Project Life4Film Project Plasmix Project To convert leachate treatment plants in factories to produce and recover biomethane and bio-based fertilizers. Whose objective is to avoid incineration and dumping of plastic film waste. Optimising the recovery of plastics that may be used in new products, including the packaging of foodstuffs. Aqualia incorporating the reuse and reinsertion of water in the natural cycle into its services. The company leads the MIDES project for the purification of wastewater and the supply of drinking water from salt water, exploiting the synergies between both processes. With the coordination of Aqualia, and in collaboration with FCC’s Environmental Services area, it participates in the Deep Purple project, investigating innovative techniques in the management of effluents for the recovery of by-products. FCC Construcción focuses its contribution on its commitment to innovation, promoting the use of new sustainable and re- usable materials. The business develops a strategy within the ReSOLVE framework to reuse inert materials from construction sites, effluents and wastewater from processes or removed topsoil. It also promotes digitisation to reduce the consumption of resources by applying Building Information Modelling (BIM) research. The Cement business applies strategies to recovery energy and waste materials in order to improve production efficiency and the activity’s sustainability, for example substituting fossil fuels for biomass energy. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 48 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 18 of 29 Other projects led by FCC are also committed to sustainable mobility, such as UMBRELLA whose objective is to use organic waste from water treatment to generate biogas; METHAGRO, a prototype for obtaining biogas from organic waste from an agri-food plant; and LIFE Landfill Biofuel, to obtain and produce biomethane suitable for use in vehicles from the enrichment of landfill biogas. In 2020, nearly 2.3 million tonnes of waste was generated, a 43% decrease compared to the previous year. The following shows the evolution of the total waste generated by the FCC Group, as well as its distribution by business area. In 2020, nearly 2.3 million tonnes of waste was generated, a 43% decrease compared to the previous year Evolution of total waste generated (T) Distribution of total waste generated (%) 3,211,360 4,078,233 2,323,266 2018 2019 2020 51.1% Construction area 25.1% Environment area 23.4% Aqualia 0.3% Cementos Portland Valderrivas Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 49 Aqualia leads the European LIFE Phoenix project that addresses the problem derived from the reuse of wastewater, as well as the threat posed by emerging pollutants and microplastics; and the RUN4LIFE project, a wastewater treatment system without a connection to the sewerage network, reusing 100% of the so-called “grey water”. FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 19 of 29 The responsible use of resources at FCC The possible scenario of natural resources being depleted and the environment being degraded prompts the FCC Group to implement increasingly efficient management models, compat- ible with sustainable development and that reflect its commit- ment to preserving the environment. Aqualia, based on its own activity, efficiently manages each phase that makes up the end-to-end water cycle, to ensure optimal use of resources in all of them (purification, desalination, wastewater treatment and treatment plants of treated water for reuse). Responsible water management The FCC Group works to ensure responsible and efficient water management in each of its activities, taking into account the infrastructure and availability of water in the area. FCC’s Environmental Services area is committed to using tech- nologies and equipment that allow for the rational use of this resource, raising awareness among its operational personnel and promoting the use of water from alternative sources. As an example, the rainwater harvesting project in the Harborough contract in the UK captured 11,000 litres of water in 2020. FCC Construcción is committed to rational consumption and raising awareness among its employees about the sustainable use of water. Cementos Portland Valderrivas works to optimise consumption and improve water networks by reducing losses caused by old or deteriorated pipelines. The following figure shows the evolution in total water extraction in the last three years for the FCC Group: Water extraction (m3) Distribution of water consumption (%)(1) 13,016,152.0 13,848,749.4 14,579,492.7 93.7% Environment area 6.6% Construction area 5.0% Cementos Portland Valderrivas 2018 2019 2020 (1) Aqualia's consumption is not considered, as the water monitored is the water managed at its facilities. There are no systems to measure consumption of rainwater or from desalination plants in the Infrastructure area. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 20 of 29 Consumption of raw materials The responsible management and optimisation of raw materials is another key issue for the FCC Group in each of its business units. Some of the initiatives implemented are: Cementos Portland Valderrivas promoting the sustainability of natural resources, encouraging the use of raw materials and alternative fuels. The FCC Group’s Environmental Services area reusing the materials contained in the waste of the production cycle as sec- ondary raw materials and using recycled materials to replace raw materials in several of its facilities. In addition to raw materials, other types of materials associ- ated with activities are consumed, such as process materials, lubricants and reagents, semi-finished products and packaging materials. Aqualia ensuring a minimum and necessary consumption of the reagents used in the water management purification pro- cess. FCC Construcción reducing the consumption of land, using the material extracted in the clearing of cuttings and embank- ments as backfill in the work itself. The consumption figures for 2020 are: Materials used (T) Raw materials (metals, minerals, wood, etc.) Process materials, lubricants and reagents Semi-manufactured products Packing and packaging material (paper, cardboard, plastics) 2020 41,396,446 96,849 3,726,276 8,671 TOTAL 45,228.,241 50 FCC Construcción incorporates Blockchain technology through the BIMCheck project, a platform to improve productivity through the automation of quality control and management processes, improving the traceability of materials and document control, and is the first globally to combine both applications in one project. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 21 of 29 51 Energy consumption The FCC Group carries out various measures to increase ener- gy efficiency, trying to use an increasing amount of energy from alternative sources in its processes and remaining committed to renewable energies. FCC’s businesses work on improving energy efficiency in its fa- cilities and processes through different projects, such as replac- ing lights with LEDs, renewing equipment, training in efficient driving, installing presence detectors, installing photovoltaic so- lar energy at water consumption points, or replacing fossil fuels with alternative fuels in high energy consumption processes, such as the manufacture of cement. The Group’s energy consumpti on in the last three years is shown below, reflecting the company’s efforts in this area: Direct and indirect consumption of energy(GJ) Renewable energy consumption 43,456,989 48,431,483 43,103,946 10,786,857.0 13,107,941.6 11,606,735.8 2018 2019 2020 2018 2019 2020 The FCC Group’s Environment area and Aqualia have an Energy Management System certified in accordance with ISO 50001. At the 2019/2020 edition of the European Business Awards for the Environment (EBAE Awards), FCC Environment won an award for a project aimed at implementing affordable electric mobility in urban services. Cementos Portland Valderrivas is committed to using renewable energy for the production of cement and renews its EMAS Environmental Management and Audit System. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 52 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 22 of 29 FCC facing climate change and reducing emissions In line with its commitment to climate change management, the FCC Group has given consideration to the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB). These rec- ommendations are structured in: governance model, strategy, risk management and metrics and objectives to inform inves- tors and other stakeholders about the management and inte- gration of risks and opportunities derived from climate change in their business model. FCC has a Climate Change Strategy, which establishes the strategic lines and the roadmap until 2050, basing its manage- ment for the adaptation and mitigation of climate change on five fundamental pillars: Communication, Reduction, Innovation, Supervision and Adaptation. Climate-related risks and opportunities are included within the FCC Group’s Risk Management Model, which guarantees their periodic evaluation and the establishment of controls to prevent and detect them. In 2020, the FCC Group saw its direct (scope 1) and indirect (scope 2) emissions decrease by 12.76% compared to the previous year Adapting to new opportunities associated with climate change and reducing emissions are used by businesses to develop and promote programmes such as: The ie-Urban Project from FCC Environment, a new 100% electric collector vehicle designed to improve safety, reduce emissions and increase its useful life. The main risks related to climate change include exposure to extreme meteorological events, water scarcity, new limits on GHG emissions, new regulations regarding the energy recovery of waste or the energy certification of buildings, among others. The ABAD Bioenergy technology, patented by Aqualia, is a comprehensive biogas cleaning, improvement and pu- rification system that allows a higher quality biomethane to be obtained at a lower price. Regarding the measurement of impacts, this affects the annual calculation of the carbon footprint of each business line. The FCC Group’s greenhouse gas (GHG) emissions are detailed be- low, including scopes 1 and 2. Different methodologies have been used in the calculations for each of the Group’s activity sector, all of them in line with the GHG Protocol. The FCC Group’s direct and indirect GHG emissions (tCO2e) 731,600 7,870,743 604,073 6,900,204 768,792 5,165,274 The Bici Sendas R&D project, by FCC Construcción, establishing modular and self-sufficient bicycle lanes with sustainable materials. The European BioReco2Ver project, by Cementos Port- land Valderrivas, to obtain alternative processes in the pro- duction of chemical products from the capture of industrial CO2 emissions. 2018 2019 2020 Indirect GHG emissions (scope 2) (t CO2 eq) Direct GHG emissions (scope 1) (t CO2 eq) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 23 of 29 53 In addition, the FCC Group aims to reduce polluting atmos- pheric emissions (mainly NOx, SOx and particulates) associated with its businesses, although these emissions are not consid- ered contributors to climate change as with as GHG emissions. The main atmospheric emissions by type of pollutant are de- tailed below: With regard to NOx, SOx and particulates – the main emissions resulting from the activities – the proportion of each of them is detailed below: Aqualia Cementos Portland Valderrivas Construction area Environment area NOx SOx Persistent organic pollutants (POPs) Volatile Organic Pollutants (VOCs) Particulates (MP) HCL HF Emissions of ozone-depleting substances (ODS) 72 5,988 0 – – – – – 1 717 0 144 125 8 1 – 437 6 – 21 1,264 – – – 5,303 495 0 142 53 54 1 – Total 11,801 1,218 0 306 1,443 62 2 1 Emissions of NOx, SOx and Particulates (T) 82% NOx 8% SOx 10% Particulates FCC Construcción obtains the “calculate and reduce” stamp from the Carbon Footprint Registry, for its offsetting and CO2 absorption projects The specific measures adopted in each of the Group’s busi- nesses with regard to atmospheric emissions vary significant- ly depending on the activity carried out: The FCC Group’s Environmental Services area is commit- ted to favouring the active degassing of landfill with meas- ures to control diffuse emissions of powdery materials. To minimise these emissions inside the facilities and during transport, the necessary cleaning is carried out, accumula- tions of dust are removed and it is ensured that the partic- ulates deposited on roads do not disperse. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 24 of 29 FCC Construcción has preventive measures such as cov- ering the trucks that transport powdery materials, using tubes to transport rubble from heights, dampening down roads and stockpiles or using machinery with humidifiers to reduce the emissions derived from drilling. Cementos Portland Valderrivas, which produces significant emissions into the atmosphere from clinker furnaces, en- sures compliance with emission limits by installing sleeve and electrostatic filters to reduce concentrations in chan- nelled sources. In addition, to avoid diffuse emissions, it installs filters for transports and transfers of powdery mate- rials; it installs closed storage and windscreens; dampens down tracks and sweepers and vacuum trucks. In relation to discharges, preventive measures taken include the installation of water purification systems; the neutralisation of effluents with basic pH, or placing containment elements near water bodies. In relation to noise pollution, FCC ensures that local regulations on noise are respected and installs acoustic screens, carrying out tasks that minimise the impact and using more modern and quieter machinery. To minimise the impacts derived from light pollution, meas- ures are taken such as the installation of timers and presence detection systems, or the use of directional light, which only illuminates only the area necessary without impacting the en- vironment. Protecting biodiversity The FCC Group various businesses must ensure they care for, preserve and restore the biodiversity in the areas where the company carries out its activity and where they may affect the ecosystems and the species that live in them. Last year, FCC managed to protected 1,142 hectares of sensi- tive areas and restored 700 hectares of affected areas. To mitigate the impact of activities on the natural environment and to promote the conservation of biodiversity, the company establishes alliances; develops projects to protect and recover ecosystems; maps areas of interest for biodiversity and restores areas with the transplantation of plant species and the transfer of animal species or the physical protection of specimens. Some specific projects include: The Chamaeleo Project to recover the common chameleon population present in the Coto de la Isleta pine forest, in Puerto de Santa María, in Cádiz, Spain. Collaboration in projects with the non-profit organisation SEO Birdlife – Spanish Ornithology Society – by FCC Medio Ambiente Iberia. Aqualia’s involvement in recovering the Alcázar de San Juan lagoons, in Ciudad Real, Spain, with treated water. The adaptation of building façades, by FCC Construcción, to allow swifts to nest during their migratory passage. The restoration in the quarries by the Cement business, with the morphological repair and revegetation of the ex- ploited surface using native species. 54 FCC Environment UK in the relocation of voles from the Greengairs landfill designed a bespoke habitat with 425 metres of water banks, affording these rodents with enough ground to dig, shelter and breed. The transfer will take place once there is enough vegetation in the area, and it will be used to carry out a review of their health, evaluating their weight, sex and probability of reproduction. The sensitive protected areas and spaces where the different business areas are located, with some kind of official biodiver- sity protection are: Natural areas that are protected or have high biodiversity value. Areas where the landscape is catalogued as relevant. Areas with high biodiversity value. Watercourses that are highly valuable or important to local communities and indigenous populations. Impact on catalogued or protected vegetation. Impact on catalogued or protected animal species. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 25 of 29 FCC and its commitment to society To be a key actor in sustainable progress, the FCC Group incor- porates social action into its business strategy, thus contributing to the creation of employment and wealth in the communities in which it operates, in a joint effort to promote their well-being and development. To maximise positive social impact, FCC promotes smart and inclusive progress in cities, launching various actions and en- couraging social dialogue with administrations and stakehold- ers at all times. FCC’s social and solidarity initiatives FCC and its staff are truly committed to social equality through initiatives with various NGOs and other collaborating entities, through participation in various social projects; promoting ed- ucational and training plans; promoting access to the labour market of different groups; and fostering community develop- ment and social inclusion. FCC also reflects the company’s commitment – and that of its staff – through initiatives that foster the spirit of solidarity and commitment to the most vulnerable groups. Some of the solidarity campaigns in which the company and FCC staff have participated – in collaboration with foundations and entities that understand and respond to social needs – have been: The collection of books and school supplies for the Melior Foundation, part of its “Not without my textbooks” initiative. The collection of food and personal hygiene products, “Do- nate kindness kilos”, together with the Pan y Peces Foun- dation. The #gaszynchallenge campaign, promoting donations to contribute to the well-being of hospitalised children in Po- land. 55 The FCC Group has contributed to the social reconstruction of the country after the effects of COVID-19, carrying out a solidarity campaign in support of food banks under the “No home without food” initiative, in collaboration with the La Caixa Foundation and CaixaBank, with the aim of helping the most vulnerable families affected by the crisis. The solidarity of the workforce came about in the form of donations, together with the financial con- tribution from the company, which added a total of 131,000 euros to this campaign. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 26 of 29 The FCC Group’s social initiatives in the community The FCC Group demonstrates its commitment to local commu- nities through projects based on four social axes that extend across the company. ACTIONS IN THE COMMUNITY 56 Integration of vulnerable groups, social inclusion and access to basic services Creating value in communities Assessment of the social and environmental impact of operations Cooperation in educating and raising awareness The FCC Group, through its business model and activities car- ried out, favours access to basic services, such as electricity, drinking water and sanitation, enabling the economic and social development of the communities in which it operates. In addition, due to the social and economic impact generated by COVID-19 in 2020, FCC continued to provide the services required to minimise any impact on the well-being of citizens, contributed to promoting greater hygiene in public spaces, assisted in the early detection of the virus in wastewater and has participated in different social and economic reconstruction projects, with a particular focus on more vulnerable groups. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 57 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 27 of 29 The FCC Group’s socio-economic contribution to sustainable development The company promotes sustainable social development through its own activities and by through monetary contribu- tions to social entities to meet the socio-economic needs of the most disadvantaged communities and groups. In the last year, and considering the implications of the pan- demic at a social level, the FCC Group has allocated a total of 4 million euros through contributions and donations to non-profit organisations, foundations and associations. The FCC Group has allocated a total of 4 million euros to social action, non-profit entities and foundations FCC Communities Foundation, in the United Kingdom donated more than 6.1 million pounds in 2020 In addition, through the FCC Communities Foundation the Unit- ed Kingdom, more than 6.1 million pounds was donated in 2020. Due to the COVID-19 pandemic, the FCC Group’s En- vironmental Services area launched the #EstoNO- tienequePARAR initiative, carried out selflessly clean hospitals and collect waste in hotels. In addition, FCC Medio Ambiente Iberia collaborated with a total of 2.7 million euros to the development and implementation of social and environmental initiatives in 2020. FCC Environment UK, through its FCC Communities Foundation, contributes and channels its funds to two programmes: FCC Community Action Fund and FCC Scottish Action Plan, which work on projects that con- tribute to developing communities in areas such as bio- diversity or heritage protection. Aqualia launched a great educational project through aqualiaeduca.com and participated in the “Brave Blue World” documentary on Netflix – through All-Gas – about the production of biofuels from algae. In addition, the com- pany carried out more than one hundred cultural, sporting and environmental collaborations. The main contribution of FCC Construcción to progress- ing communities is the creation of direct and indirect em- ployment, and prioritising local suppliers, who account for more than 90% of the total. In addition, the company launched a volunteer programme in Panama to plant trees and to promote recycling in schools. Cementos Portland Valderrivas focuses on the supplier selection processes, based on objective competition and transparency in the process, and collaborations included the donation of cement blocks to various city councils in Madrid and to the NGO Remar. Contribution of the FCC Group in 2020 Donations to non-profit entities and foundations Sponsorship Contributions to associations Other contributions These contributions reinforce the Group’s commitment to the 2030 Agenda and allow the company to actively contribute to the SDGs related to economic progress, the reduction of ine- qualities and the present and future social development of com- munities. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creation | Page 28 of 29 58 FCC’s commitment to its customers and suppliers FCC’s commitment to its customers The FCC Group aims to achieve excellence in service, seeking to offer the highest quality and providing differential value. Each business strives to get to know its customers, offering products and services according to their needs, with their satisfaction being a priority. Consequently, the Group works towards lasting relationships, based on mutual trust, honesty, professional re- sponsibility and the contribution of value. Both FCC and all its collaborators strive to identify, satisfy and anticipate the needs of customers (internal and external), also committing on innovation and continuous improvement within the different business lines. Due to the wide range of goods and services offered by the FCC Group, the type of customer is also wide (public and pri- vate entities; direct users; etc.), however, in all of them, there is the concern and response to: • Assess and improve customer service and satisfaction, for which each business has different communications and measurement tools, suitable for their services’ customers and users. Ensure the health and safety of both customer and user – beyond the established legal requirements – with specific management systems that allow the impacts and risks of their activity on customers, users and in communities where they operate to be assessed, controlled and minimised. • Complaints management, for which each Group business has specific tools and procedures to deal with communica- tions received from customers and users. – At FCC Medio Ambiente Iberia, around 1,700 customer complaints have been received, of which more than 90% have been resolved. – Nationally and internationally, Aqualia has received 16,180 complaints from customers and users. – FCC Construcción has received 105 complaints, 80% of which were resolved at the end of the year. – In Cement, 15 complaints have been received and 60% of them have been resolved. – More than 4,000 satisfaction surveys have been sent out by Environmental Services area and FCC Environment CEE, in which customers rated the company’s work as satisfactory or very satisfactory. – Aqualia seeks to offer a close and personalised customer service that allows it to offer solutions in an streamlined, fast, simple and efficient manner. It has several channels for this, such as the telephone service, the virtual office, mobile apps or social networks. In addition, almost 10,000 customer and institutional satisfaction surveys were sent out, with positive, good and excellent assessment results. – The Construction area has a customer contact person who is responsible for addressing any suggestions, deal- ing with the information, managing the collaboration and communicating the actions to be taken. A total of 350 surveys were sent out in 2020, of which 88.6% gave an “excellent” rating. – Cementos Portland Valderrivas uses various communica- tion channels, such as the Digital Channel for customers and direct contact with the commercial team. In 2020, a total of 1,008 quality surveys were sent to end users, resulting in an average rating of 4.11 out of 5. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | CSR Policy. Social value creations | Page 29 of 29 59 The FCC Group updated the Purchasing Manual in 2020, working on the analysis and updating the environmental, social and governance risks map for suppliers and contractors. The FCC Purchasing Manual is based on three key principles: transparency, competitiveness and objectivity. Throughout 2020, a total of 382 suppliers com- pleted the approvals process. FCC’s commitment to the value chain and its suppliers The FCC Group’s Code of Ethics and Code Conduct is the company’s starting point in terms of integrity to work to the highest standards of behaviour with stakeholders and socie- ty as a whole. Internally, efforts are being made to strengthen control and supervision systems, and environmental, social and good governance commitments and criteria are integrated into the supply chain and the value chain. The basic principles that partners, collaborators and suppliers must comply with are: Expressing rejection of corruption, bribery and fraud, ac- crediting ethical behaviours in all business relationships. Defending and protecting fundamental human and labour rights, as recognised internationally in the Universal Decla- ration of Human Rights and in the Declaration of the Inter- national Labour Organization (ILO). Accrediting compliance with occupational health and safe- ty standards. Establishing sustainable environmental management in all its activities that respects the environment. In terms of procurement, the company introduces sustainability in the processes of contracting goods and services through its commitment to responsible purchasing. Suppliers and contrac- tors are a significant stakeholder group given their size: in Spain alone, the Group has established business relationships with more than 32,500 suppliers. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 60 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 1 of 20 Response to future challenges Our evolving environment A business model which responds to the challenges of cities of the future FCC is one of the international benchmark groups in providing citizen services, operating in over 30 countries, providing exten- sive experience in environmental services, in end-to-end water cycle management, as well as the development and manage- ment of infrastructures and the production of associated ma- terials. The FCC Group’s vision “To contribute to the development and progress of cities, creating value for all citizens and for its cus- tomers, shareholders and collaborators” gives a purpose for the entire company, guiding the Group’s actions and allowing a shared goal to be established by all those who are part of the organisation and its stakeholders. In this way, a cross-cutting culture is reinforced that is applied to its activities irrespective of the different business lines, contributing to the economic, social and environmental development of society as a whole. Through its ongoing work and business strategy, the FCC Group has positioned itself as one of the most important citi- zen services groups worldwide. About 40.3% of the company’s turnover comes from international markets, mainly in Europe (28.5%), the Middle East (4.7%), Latin America (2.8%), North Africa (2.8%) and the United States (1.3%). Since the Group was founded, social and economic develop- ment of cities has allowed the business to progress. Sustaina- bility is essential for cities of the future to face the main global challenges, such as climate change, population growth, poverty and equal opportunities. In 2020, the health crisis posed a new challenge for the oper- ations of cities. New needs to prevent the spread of COVID-19 arose, such as greater hygiene measures in public spaces, while maintaining basic services. Citizens underwent an event that has had the greatest health, economic and social impact on a global scale in recent decades. COVID-19 affected cities and inhabitants, transforming the way of interacting, consump- tion habits and mobility patterns, among other factors. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 61 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 2 of 20 GLOBAL TRENDS Population pressure and concentration of the population in cities Approximately 56.2% of the world’s population currently lives in cities and this percentage is expected to continue to increase in upcoming decades. By 2050, cities are expected to have 68% of the world’s population, which means that 1.2 million kilometres will be urbanised in the next three decades1. The population increase and settlement in urban centres means that towns become cities, which will expand geographically and increase their population density. This means new challenges for the FCC Group regarding the management of land and nat- ural resources so that cities continue to be functional, which (1) Source: World Bank. (2) Source: Cities in the World, OECD Urban Studies. requires resources and infrastructures to be optimised in the short, medium and long term. levels of hygiene in homes, shopping areas, offices and on pub- lic transportation are crucial in overcoming the pandemic2. Despite the impact of pandemic on demographic changes not yet being known, long-term estimates indicate that the world will continue to urbanise in upcoming decades, albeit at a lower rate in those highly urbanised areas. The first indications about COVID-19 pointed to urban density being correlated with the spread of the disease, however, the relative success of man- aging the virus in very densely populated areas such as Seoul, Singapore or Tokyo has made the scientific community think that conurbation, and not density, is the main culprit. In urban areas, addressing overcrowding and maintaining acceptable The expansion of cities will require huge investment in infra- structure in upcoming decades, which should allow large urban centres to be maintained. In this context, social demands for this urbanisation to be sustainable are increasing. To deal with this expansive trend in cities, the FCC Group it committed to the development of Smart Cities and sustainable urban accessibility, minimising the environmental impact of its processes and services. Approximately, 56.2% of the world’s population In Latin America and the Caribbean, 81.2% of the lives in cities. By 2030, there are expected to be 43 megacities, most of them in developing countries. population lives in urban areas, up from 41.3% in 1950. While fewer than 20% of Africans and Asians lived in cities in 1950, that number has risen to 43% and 51%, respectively. Seventy-five per cent of global GDP comes from urban areas and 60% relate to fewer than 1,000 cities and metropolitan areas with more than 500,000 inhabitants. Around 75% of global energy use is concentrated in cities, compared to just 45% in 1990. Household water demand has grown 600% since 1960. Cities in 2030 will account for between 60% and 80% of energy consumption, 70% of GHG emissions and 70% of GDP. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 62 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 3 of 20 FCC’s response to the challenges and opportunities posed Challenges Opportunities 1 Creation of sustainable cities, guaran- teeing mobility, connectivity and inter- urban connection, which will require the development of more complex urban infrastructures. FCC Construcción contributes more than 120 years of experience in executing large transport infrastructure projects, demonstrating a great capacity for managing public and private interest projects that are unique and with a high degree of specialisation. The company develops its projects under the highest standards of quality and sus- tainability through innovative actions and supported by the compa- ny’s research, so as to make the infrastructures resilient, efficient and sustainable. It is a pioneer in the development of good practices and actions to protect the environment as well as in the execution of ur- ban transport infrastructures (metro, airports, high speed trains, roads, bridges, tunnels, etc.), as well as health, sports and cultural infrastruc- tures. 2 Manage waste generated in cities and provide municipal services, protecting the value of urban ecosystems and committing to sustainability requires in-depth knowledge of the sector and innovative solutions to address an in- creasing population. FCC Environment is a leading global player in the collection, stor- age and treatment of urban and industrial waste and in the provi- sion of services in cities. The company serves more than 66 million people in almost 5,000 municipalities, managing almost 24.5 million tonnes of waste annually. These capacities afford FCC Environment a privileged position to manage the increase in recycling needs in cities that follow the EU objectives for 2035. The company is also committed to innovation, offering solutions (SHES or Smart Human & Environmental Services) to make cities more sustainable, efficient and socially responsible places, and working with them in achieving the SDGs of the UN 2030 Agenda. E-mobility technology will be decisive in this transformation and a differential element in competitiveness in the coming years. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 4 of 20 63 Challenges Opportunities 3 Invest in quality and sustainable materi- als that meet new infrastructure needs, providing greater durability and resil- ience and making them more sustaina- ble. For the FCC Group, constant innovation in the use of primary and recycled materials implies increased efficiency and reduced costs. The Life Cycle Analysis (LCA) of civil engineering elements is a fundamental factor to bear in mind, both when building new infrastructures and when adapting existing infrastructures3. Sustainability for FCC Construcción, both for buildings and infrastruc- tures, has a key impact on the technological scope and on the choice of materials used on site. A more suitable design for adverse and ex- treme weather events, more efficient construction processes and a less intensive carbon emissions activity are the axes of the company’s innovation policy and a capital resource in its development. Cementos Portland Valderrivas is a leading producer of high-quality products adapted to the needs of its customers and each construction project. It also innovates to improve the quality and increase the range of its products’ qualities. 4 Creation of infrastructures that guaran- tee quality management of the end-to- end water cycle (purification, distribu- tion, sanitation and treatment) in large cities. Aqualia, the fourth largest water management company in Europe and the ninth in the world by population served, serves nearly 30 mil- lion people in 17 countries. Likewise, the company annually purifies and treats more than 600 million m3 of water and analyses over one million samples to guarantee the quality of the water distributed. The company’s extensive experience in the design, construction, financing and operation of treatment plants, as well as its commitment to de- veloping innovative technologies, position Aqualia as a company that can provide solutions that ensure access to water and its quality in the cities of the future. (3) Source: World Cities Report 2020, UN Habitat. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 64 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 5 of 20 Climate change and water stress on the global agenda The UN climate summit, COP 26, will be held in November 2021 in Glasgow (Scotland). Experts hope that the Glasgow meeting will be the most important in curbing the rise in global temper- atures since the countries reached the Paris Accord in 2015. The fight against climate change is one of the greatest global challenges. It must be borne in mind that the proportion of CO2 in the atmosphere reached a record 417 ppm in 2020. The last time this figure was reached was four million years ago, when global temperatures were between two and four times higher and the sea level between 10 and 25 metres higher than today. If this trend continues, the concentration of CO2 would be 800 ppm at the end of the 21st century, reaching a temperature 12 degrees higher, on an uninhabitable planet. The impacts derived from this phenomenon include changes in weather patterns, as well as a greater probability of extreme events, such as floods or droughts in different regions of the world. A quarter of the world’s population is facing water scar- city due to population growth, economic development and climate change. The United Nations projects that the global demand for fresh water will exceed supply by 56% by 2030. Conversely, 2020 was the hottest year in Europe on record. In June 2020, eastern Siberia reached 38°C, the highest ever re- corded in the Arctic Circle. In a year marked by the pandemic, global CO2 emissions fell by around 6% globally, the steepest decline since World War II. However, global energy-related CO2 emissions are projected to recover in 2021 and grow by 4.8% as demand for coal, oil and gas pick up with the economy. The transition to a low-carbon economy is high on the public sector agenda, a transition in which the private sector plays a key role in setting emission reduction targets. In this sense, FCC works on numerous innovation projects related to replac- ing fossil fuels and promoting alternative energies. Some pro- jects are of particular importance, such as the introduction of collection vehicles with hybrid technology (electric-fuel cell) or the production of hydrogen from biogas generated in waste treatment (FCC Environment); the transformation of biogas into biomethane for the automotive industry (Aqualia); the construc- tion of infrastructure to promote the hydrogen industry (FCC Construcción); or the use of activated clays to replace clinker (Cementos Portland Valderrivas). The proportion of CO2 in the atmosphere reached a record 417 ppm in 2020. 2020 was the hottest year on record in Europe. The Arctic is warming twice as fast as the rest of the world. In June 2020, eastern Siberia (Russia) reached 38°C, the highest ever recorded in the Arctic Circle. Between 1979 and 2018, the proportion of Arctic sea ice, which is at least five years old, decreased from 30% to 2% according to the IPCC. In 2021, global energy-related CO2 emissions are projected to recover and grow by 4.8% as demand for coal, oil and gas pick up with the economy. In 2020, global Co2emissions2emissions fell by around 6% globally, the steepest decline since World War II. A quarter of the world’s population is facing up to water scarcity due to population growth, economic development and climate change. The United Nations projects that the global demand for fresh water will exceed supply by 56% by 2030. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 65 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 6 of 20 FCC’s response to the challenges and opportunities posed Challenges Opportunities 1 To guarantee access to water, in quan- tity and quality, for a growing popula- tion, taking measures that protect the resource. Aqualia, as an international leader in the end-to-end water manage- ment cycle, develops solutions to minimising the impact that climate change can have on the availability of water resources. Likewise, aware of how key such a scarce resource is, it continuously invests in improving the distribution network to minimise losses throughout the end-to-end water cycle and implements awareness-raising measures to promote responsible consumption. 2 Facilitate access to water in developing countries, as well as develop desalina- tion, treatment and purification tech- nologies that respond to the needs of population. 3 Improve architecture and urban design in light of climate change and the risks of disasters. In countries where the availability of fresh water is limited and is in- creasingly threatened by climate change, Aqualia develops desali- nation solutions that meet the needs of local populations, as well as projects with very different water needs, so technological innovation is key to improving efficiency in the use of water. FCC Construcción develops resilient infrastructures and promotes urban design adapted to the consequences of climate change and gives due consideration to the possible physical risks of adverse me- teorological phenomena. Urban and architectural solutions must meet the dual function of minimising the adverse effects that they may pro- duce and of resist those that will occur as a result of global warming, and provide resilient solutions that allow development to progress, but a sustainable development, with better qualities, better benefits and quality of life for people, while being more respectful to the environ- ment. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 7 of 20 66 Challenges Opportunities 4 Mitigate the FCC Group’s contribution to climate change. The FCC Group has launched initiatives to mitigate its contribution to climate change The FCC Group works to mitigate its contribution to climate change. For this reason, the company has launched various initiatives on its path to sustainability such as approving the Group’s Climate Change Strategy for 2050, the implementation of energy efficiency measures, reduction of energy consumption, fuel replacement, promotion of re- newable energies, equipment renewal, energy use of waste or carbon footprint registration, among others. Likewise, all the Group’s business areas develop different R&D projects and give training sessions to raise awareness, encouraging participation in working groups on innovation and climate change. FCC Environment works to minimise its contribution to climate change and offer a competitive advantage in the provision of smart and sustainable services. It is worth highlighting the promotion of al- ternative energies in the provision of urban services, the use of biogas from landfill, its energy use such as electricity or biomethane, or the installation of photovoltaic panels in centres, among others. Aqualia focuses its efforts on increasing energy efficiency in the end- to-end water cycle through hydroelectric generation, photovoltaic solar self-consumption, electricity generation from biogas or its transforma- tion into biomethane for the automotive industry. FCC Construcción works to reduce the energy consumption of its operations, as well as to use and promote the use of renewable en- ergies whenever possible, with the aim of mitigating its contribution to climate change. It studies more efficient construction processes with lower emissions and, as far as possible, selects the materials with lower emission intensities and promotes more efficient construction solutions during their useful life. On the other hand, FCC Construcción calculates its carbon footprint in all the countries in which it operates and has become the only construction company in the world that has third parties verify the emissions reports after calculations, which it publishes annually, raising awareness among its own staff, as well as interested parties, and providing confidence in its activity and in the measures it adopts, with a view to mitigating its emissions. Cementos Portland Valderrivas focuses its efforts to reduce GHG emissions on replacing conventional fuels in clinker kilns (such as bio- mass or waste); optimisation of the hydrogen injection process in the furnace; the promotion of photovoltaic self-consumption in the factory or the replacement of clinker with activated clays, whose emissions are lower per tonne of cement produced. The work of the Cement area in replacing raw materials and recovering implied more than 270,000 tonnes of CO2 emissions being avoided in 2019 (latest data available). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 8 of 20 67 Challenges Opportunities 5 Mitigate the impact that physical and transition risks related to climate change may have on the company. The FCC Group is aware that its business lines are exposed to risks derived from climate change and develops different action plans within the organisation based on the activity carried out by each of them. Taking into account the possible climatic impacts derived from glob- al warming on the company’s operations, the FCC Group focuses its efforts on being part of the solution, maintaining its leadership in the end-to-end water management cycle, environmental services and development and infrastructure management, as well as promoting synergies between different business lines with the aim of enhancing profitability, transversally mitigating climatic events and promoting the Group’s sustainable development. For FCC Construcción, the risks associated with climate change are seen as an opportunity that, far from negatively affecting the company, differentiates it due to its ability to provide solutions for the greater well-being of the societies in which it operates. The role of construc- tion in adapting the planet to global warming is a lever for inspiration and actions in the company, and physical and business risks are ap- proached from a growth perspective and contribution to greater sus- tainability of the planet. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 69 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 10 of 20 FCC’s response to the challenges and opportunities posed Challenges Opportunities 1 ntegrate circularity by reducing the use of raw materials and preparing them for reuse. FCC Construcción has a circular economy strategy around six are- as of action defined under the ReSOLVE framework. This framework encourages the identification of business opportunities linked to the transition towards a circular economy as a production model. Some of the company’s measures are the reuse of inert gasses from other pro- jects, effluents and wastewater from processes, or removed topsoil, or maximising the use of recoverable elements, such as removable walls or the use of portable treatment plants for use in different projects, as well as the use of recycled materials. Within the Construction area, FCC Industrial has become the first construction company to obtain the “Zero Waste” certificate from AENOR. Cementos Portland Valderrivas applies circular economy techniques by implementing energy and waste material recovery strategies to im- prove production efficiency and the sustainability of its activity. To avoid the extraction of mineral resources, the company uses secondary raw materials during the different phases of the production process, thus reusing resources from other industries. The effort to recycle materials and energy recovery avoided sending 482,000 tonnes of waste to landfill in 2020. It should be noted that, between 2014 and 2019, the Group in Spain used more than 1.6 mil- lion tonnes of alternative raw materials and recovered 631,000 tonnes of waste. 2 Minimise the production of waste and promote circularity in their collection and treatment. FCC Environment is committed to the circular economy; trying to convert waste into resources, optimising its use. In this sense, this business encourages a research and technological approach by im- plementing various innovative projects. Some of these projects are Life METHAmorphosis, for the use of biomethane production from waste treatment plants; Life4Film, whose objective is to avoid incineration and dumping of plastic film waste; o Deep Purple, a pilot project to manage the effluents generated in the organic waste treatment facility. It is also worth highlighting the participation of FCC Environment in a wind blade recycling project, the first industrial-scale project in Europe, to be located in Spain. This project, which could generate more than 400 direct jobs in Spain, will seek to recover its main components, mostly glass and carbon fibre and resins, and their use in sectors such as energy, aerospace, automotive, chemical or construction. For FCC Construcción, circularity goes far beyond the correct man- agement of waste. We are aware that waste and resources can be the same thing and that it is necessary to work from the standpoint that waste generated is a resource that will allow us to not consume others. The economy and suitable minimisation of waste generated, together with the reuse of it in places where, otherwise, it would be neces- sary to consume resources, has, in addition to the obvious benefit for the sustainability and well-being of the planet, the economic effect of cost savings in the segregation, storage, transport and management of waste that will not be eliminated and the savings implied by the non-consumption of raw materials that, otherwise, would need to be acquired. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 69 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 10 of 20 FCC’s response to the challenges and opportunities posed Challenges Opportunities 1 ntegrate circularity by reducing the use of raw materials and preparing them for reuse. FCC Construcción has a circular economy strategy around six are- as of action defined under the ReSOLVE framework. This framework encourages the identification of business opportunities linked to the transition towards a circular economy as a production model. Some of the company’s measures are the reuse of inert gasses from other pro- jects, effluents and wastewater from processes, or removed topsoil, or maximising the use of recoverable elements, such as removable walls or the use of portable treatment plants for use in different projects, as well as the use of recycled materials. Within the Construction area, FCC Industrial has become the first construction company to obtain the “Zero Waste” certificate from AENOR. Cementos Portland Valderrivas applies circular economy techniques by implementing energy and waste material recovery strategies to im- prove production efficiency and the sustainability of its activity. To avoid the extraction of mineral resources, the company uses secondary raw materials during the different phases of the production process, thus reusing resources from other industries. The effort to recycle materials and energy recovery avoided sending 482,000 tonnes of waste to landfill in 2020. It should be noted that, between 2014 and 2019, the Group in Spain used more than 1.6 mil- lion tonnes of alternative raw materials and recovered 631,000 tonnes of waste. 2 Minimise the production of waste and promote circularity in their collection and treatment. FCC Environment is committed to the circular economy; trying to convert waste into resources, optimising its use. In this sense, this business encourages a research and technological approach by im- plementing various innovative projects. Some of these projects are Life METHAmorphosis, for the use of biomethane production from waste treatment plants; Life4Film, whose objective is to avoid incineration and dumping of plastic film waste; o Deep Purple, a pilot project to manage the effluents generated in the organic waste treatment facility. It is also worth highlighting the participation of FCC Environment in a wind blade recycling project, the first industrial-scale project in Europe, to be located in Spain. This project, which could generate more than 400 direct jobs in Spain, will seek to recover its main components, mostly glass and carbon fibre and resins, and their use in sectors such as energy, aerospace, automotive, chemical or construction. For FCC Construcción, circularity goes far beyond the correct man- agement of waste. We are aware that waste and resources can be the same thing and that it is necessary to work from the standpoint that waste generated is a resource that will allow us to not consume others. The economy and suitable minimisation of waste generated, together with the reuse of it in places where, otherwise, it would be neces- sary to consume resources, has, in addition to the obvious benefit for the sustainability and well-being of the planet, the economic effect of cost savings in the segregation, storage, transport and management of waste that will not be eliminated and the savings implied by the non-consumption of raw materials that, otherwise, would need to be acquired. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 11 of 20 70 Challenges Opportunities 3 Integrate circularity into water manage- ment. Aqualia incorporates the concept of circular economy into itself by providing catchment, treatment, storage, distribution, sanitation and purification services, including the reuse and reintroduction of water into the natural cycle. Additionally, and to reduce negative impacts on the environment, the water resources used in operations are purified, eliminating waste and guaranteeing the best conditions when returning the resources to the environment. 4 Commitment to transferring society to a circular economy model and achieving the European Union recycling objec- tives. To formalise its commitment to circularity, as a means of moving for- wards with sustainable development and mitigating the effects derived from climate change, in 2017, the FCC Group adhered to the Pact for a Circular Economy, promoted by the Government of Spain’s Ministry of Agriculture, Fisheries, Food and Environment and Ministry of Econ- omy, Industry and Competitiveness. Through this initiative, all the sig- natories are involved in the transition towards a new, more sustainable and environmentally friendly economic model. FCC Construcción is committed to changing society in this regard, and itself, and participates in the European circular economy strate- gy. This is a strategy that establishes ambitious targets to reduce the generation of waste but goes further, as seen in the recently published Spanish circular economy strategy in which, aware of the holistic na- ture of this approach, it also sets quantified targets for the use of re- newable energies, quality employment, reuse of process water and many other measures integrated not only in FCC Construcción’s strat- egy, but particularly in specific objectives and goals that are regularly monitored and declared periodically through Environmental Communi- cations and the Sustainability Report. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 71 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 12 of 20 The disruption of new technologies Technological revolution is observed in the day-to-day life of cities. Big Data, Internet of Things (IoT) or Blockchain systems are able to service cities to completely modify the existing in- frastructure. By 2030, the number of devices connected to the internet could reach 125 billion, compared to seven billion in 2017. These technologies could be a potential market of 23 trillion dollars by then. In this year marked by lockdowns, con- nectivity saw very significant growth. For example, the number of active users of social networks increased by 13% and the number of internet users by 7.3%. The digitisation of cities implies a structural amendment to how citizens relate to their environment, from their consumption pat- terns to the way they do business. This transformation reaffirms citizen empowerment and contributes to a greater role for indi- viduals in making decisions that affect how the cities in which they live develop. Investment in Smart Cities is estimated to reach 203 billion dollars by 2024. Included in this, 5G will play a key role, whose connections total around 600 million worldwide in 2021 and will reach three billion by 2025. Citizens increasingly want more, demanding quality information about the various products and services offered, taking advan- tage of interconnectivity and easy access to smart devices. Aware of the importance of being at the forefront, the FCC Group annually invests resources in R&D projects with the aim of being a benchmark in new technologies and therefore offer- ing continuous improvements to citizens that have an impact on their quality of life. By 2030, the number of devices connected to the Between January 2020 and January 2021, the number Investment in Smart Cities will increase to 203 billion internet will reach 125 billion, compared to seven billion in 2017. of social media users increased by 13%, mainly driven by the pandemic. dollars by 2024. Key digital technologies could be a 23 trillion dollar 5G connections will be 600 million worldwide in 2021 market by 2030. and three billion in 2025. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 72 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 13 of 20 FCC’s response to the challenges and opportunities posed Challenges Opportunities 1 Digitise the provision of services within each FCC area. Aqualia uses its Aqualia Water Analytics (AWA) platform to intelligently and more efficiently manage the end-to-end water cycle, transforming the way it operates. AWA is an analytical tool that offers the company a cross-sectional analysis of the end-to-end water cycle, covering the complete data cycle from its collection. tive is to improve the company’s productivity and ensure excellence in processes and results by automating on-site quality control and man- agement methods. FCC Construcción was the first global construction company to use the combination of BIM and Blockchain in one of its projects. FCC Environment CEE has developed a new application in Slovakia to notify users when the different types of waste will be collected. This practical tool modernises the waste collection system in Slovakian mu- nicipalities, which was previously managed by printed schedules that citizens had to check and review the times they took out their waste for collection. FCC Construcción develops multiple innovation projects related to digitisation and in Construction 4.0 in general, among which include the creation of BIMCheck, a platform that works with Blockchain tech- nology over BIM (Building Information Modelling), whose main objec- The FCC Group launched its new FCC360 App in 2020, which is another step towards the company’s commitment to investing in in- novation and new technologies to improve the competitiveness of its teams, to promote corporate culture and company values. The ease of developing applications and the wide mobility in society has allowed one of the company’s old desires to come true; to inte- grate the entire community of FCC employees. It is the first time that the company has reached all workers online, so this channel will allow it to reinforce internal communications. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 14 of 20 73 Challenges Opportunities 2 Develop business models that respond to the future needs of its customers and of society in general. FCC Environment is committed to technological innovation through its promotion of smart, sustainable and connected cities to improve the well-being of citizens and focuses its R&D projects in five main areas: e-mobility, machinery, the economy circular, sustainable devel- opment and the “VISION”, and Information Technologies (IT). FCC Construcción actively promotes innovation through its main ac- tivities, as it is aware of its importance to the company as a differen- tiating factor in a highly competitive market. The innovation projects in the FCC Group’s construction area are aligned with its R&D policy, focusing its efforts on providing added value in terms of sustainability. Aqualia participates in European, national and regional R&D pro- grammes related to water management and is co-financed by the Spanish Administration or the European Union (FP7, LIFE, H2020, Eco-Innovation, etc.). The application of big data, smart services, platforms and tools bring about a change in the company’s business model, which is necessary to respond to the needs and challenges of the future. Every year, the Cement business is committed to applying R&D pro- cesses through the research and development of new products, as is acutely aware of social demands in environmental matters. 3 Sustainably construct and manage infrastructure, adapting it to the new needs and applying new technologies. FCC Construcción actively promotes innovation through its main ac- tivities, as it is aware of its importance to the company as a differen- tiating factor in a highly competitive market. The innovation projects in the FCC Group’s construction area are aligned with its R&D policy, focusing its efforts on providing added value in terms of sustainability. It is firmly committed to new digital technologies with long paths in the sector, such as BIM (Building Information Modelling), Blockchain, Artificial Intelligence and Big Data, drones or sensors, among others, to generate data that improves business intelligence and strategic de- cision making. To adapt to the changing context and ensure the competitiveness of its activities in the market, Cementos Portland Valderrivas works on technological innovation in products and materials to extend the useful life of infrastructures. On the other hand, the Cement area applies in- novative techniques through alternative manufacturing processes and eco-efficient materials to move forwards with the sustainable construc- tion of cities. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 74 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 15 of 20 The increase of public-private collaboration According to the World Bank, public-private partnerships are a solution in infrastructure development, as they can provide more efficient procurement, focus on customer satisfaction and life cycle maintenance, and provide new sources of investment. This is particularly evident in emerging markets and develop- ing economies, since these countries face greater infrastructure growth needs and, in turn, have debt levels at record highs. It is estimated that the infrastructure investment needs of emerging countries amounts to 4.3% of GDP and close to 1 trillion dollars per year. Experts assure that the model is effective for high-cost and high-visibility projects that involve social and technical com- plexities, with the potential to build synergies, develop com- petencies and create an effective framework for alliances and cooperation, especially when the community, stakeholders and experts are involved from the outset. Likewise, PPPs have been fundamental elements in responding to the coronavirus pandemic, demonstrating that by working together, the public and private sectors can provide solutions that benefit all of society. Linked to recovery and public-private partnership, in July 2020, the European Commission agreed to create the so-called “NextGenerationEU”, a temporary recovery fund in addition to the multi-annual budget of the European Un- ion (EU) for 2021-2027 . Up to 750 billion euros can be issued between 2021 and 2026 and the funds will be used to tackle the consequences of the COVID-19 crisis and to accelerate the digital, green and ecological transitions of the European econ- omy. In this context, the FCC Group has identified the various high-impact projects in Spain that could fit into the resilience and recovery mechanism, aligned with the pillars of the Funds and the “Spain Can” Plan and in which PPPs can have sig- nificant synergies. These projects are related to the replacing conventional fuels and the production of renewable energies (for example, fuel cell, biomethane, solar, hydrogen, biomass), promoting of energy efficiency, treatment and purification pro- The high-impact projects identified by the FCC Group could mobilise more than 2.5 billion euros throughout Spain jects, 5G cybersecurity or replacement of raw materials, among others. Projects identified by the FCC Group could mobilise more than 2.5 billion euros throughout Spain with a substantial impact in terms of employment, emissions reduction, circular economy and competitiveness. Likewise, FCC actively collab- orates with other companies in the sector and associations on investment initiatives that total approximately 120 billion euros. In 2020, the added value of PPP transactions in the European market reached a financial close of 7.9 billion euros. In 2020, the transport sector continued to be the most important in terms of value, with transactions worth 4.9 billion euros. The added value of the public-private associations in It is estimated that the infrastructure investment Europe decreased 27% compared to 2019. needs of emerging countries amount to 4.3% of GDP and are close to 1 trillion dollars a year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 75 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 16 of 20 La respuesta de FCC a los retos y oportunidades planteados Challenges Opportunities 1 To take full advantage of innovation in the private sector, combining public and private capital. FCC Construcción, with more than 120 years of experience, con- tinues to be a leader in carrying out civil engineering and residential and non-residential construction projects, and has wide ranging expe- rience in developing projects under the concession system. Numerous future opportunities have been identified for infrastructure concession contracts in the US, Europe, the Middle East and Latin America. There are a multitude of opportunities for public-private partnership at FCC Environment resulting from the capital investments that will be necessary to meet the recycling and landfill targets set by the EU. As an example, it is worth highlighting FCC Environment’s involvement in a wind turbine blade recycling project, an example public private partnership project. 2 Incorporate best practices and efficien- cy by using the specialised private man- agement model. Aqualia’s activity focuses on concessions and services, covering concessions for distribution networks, BOT (“Build Operate Transfer”), O&M and irrigation services, as well as technology and network tasks covering EPC (“Engineering Procurement Construction”) contracts and industrial water-treatment activities. These skills mean the company is a clear option for this type of opportunity Income in the Water area grew in 2021 due to the greater contribution of the new concessions contracts abroad. FCC Construcción is the usual solution for the design and execution of different technically complex urban and transport infrastructures. Various international investment funds collaborate with FCC Construc- ción in responding to different infrastructure needs; an example is the project to design and construct, operate and maintain the A-9 motor- way in Amsterdam (Netherlands). 3 Stimulate investment and strengthen growth in infrastructure and provision of services. In 2020, FCC Concessions was selected to extend the A465 main road in Wales (United Kingdom) under a PPP model. The project will improve connectivity and development in the region and has a planned investment of more than 600 million euros. 4 Financing projects in an environment of highly indebted public administrations. It is worth highlighting the 21.8% reduction in the FCC Group’s finan- cial debt compared to 2019, which gives it an outstanding capacity to be involved in various public projects. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 17 of 20 FCC’s strategy: focus on growth with profitability 76 The FCC Group faces the future with confidence and has shown that it has sufficient resilience to overcome times of cri- sis such as those we are experiencing now and those it has overcome in its 120 year-history. This resilience is based on solid foundations, a leading-edge risk management framework, a commitment to good governance and sustainability, and the importance of keeping an eye on future challenges. With the aim of promoting the sustainable evolution of cities, and positioning itself at the forefront of their competitive envi- ronment, the FCC Group has developed its cross-cutting value creation model. This model, which is shared by all the Group’s businesses, is based on the following value creation levers: Value creation levers Quality and innovation: FCC is an operator that has significant experience in these businesses, with a differ- entiated technical specialisation, able to lead large con- sortia in complex projects. Likewise, it has a highly spe- cialised and committed human team, which prioritises protecting its health and safety and who are capable of providing innovative solutions and taking care of improv- ing people’s lives on a daily basis. Integrity in its actions, the Group’s Code of Ethics and Conduct establish everyone’s commitment to the envi- ronment and people, respect for rights and dignity, and demonstrating zero tolerance against discrimination for reasons of race, religion or gender. Likewise, the Compli- ance Model ensures that all the Group’s companies and employees are governed in accordance with the prin- ciples established in the Code of Ethics and Conduct, while strengthening internal control so as not to incur in any criminal breach. Financial discipline and management efficiency, with the aim of preserving long-term profitability and sustain- able growth. The FCC Group’s strategy is embodied in a set of actions that seek to improve the capital structure and use of external resources, the generation of cash and the optimisation of financial costs. Proximity and commitment, having local roots in the places where its operations are carried out, allowing it to develop relationships of trust. FCC seeks to create value in the communities where it is present, favouring trans- forming societies into healthy, inclusive and cutting-edge environments. These value creation levers serve to guide the FCC Group’s Sustainability strategy. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 77 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 18 of 20 Strategic vectors of the FCC Group Maintain leadership in key markets The FCC Group focuses its strategy on strengthening its com- petitive position in key markets where it is already present, as well as selective growth in new markets that are attractive and aligned with the company’s corporate and risk culture. Like- wise, promoting sustainable development has been and will continue to be one of the Group’s strategic vectors, promoting the construction and management of sustainable and resilient infrastructures, promoting the circular economy and mitigating the Group’s contribution to climate change. To maintain its leadership position in the countries where it op- erates, FCC focuses its efforts on guaranteeing the quality and continuity of its services, which allows it to retain a competi- tive position in each market. Given the diversity and how they complement each other, the synergies between them help to correctly assess the risks and potential of each project, which translates into a sustained increase in the Group’s international portfolio. Likewise, FCC intends to be a facilitating company for its cus- tomers, establishing long-term relationships, providing guar- antees and the reliability of a big leading company, while also remaining local and focused on each of the regions where it operates. In the Environment area, for example, the strategy in Spain focuses on maintaining its competitiveness and leadership po- sition, combining technical knowledge and developing innova- tive technologies, offering respectful, inclusive and sustainable services. Despite leaving the European Union, the UK remains commit- ted to the EU’s circular economy goals and is pushing for new measures to support plastics recycling by introducing a tax on packaging and supporting measures to reduce CO2 emissions. In Portugal opportunities related to soil decontamination and new urban sanitation contracts stand out, while moderate growth is expected in Central and Eastern Europe, weighed down by the effect of the pandemic. The FCC Group focuses its strategy on strengthening its competitive position in key markets in which it currently operates Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 19 of 20 78 The Water area seeks to maintain its competitive position in end-to-end water management cycle markets in which it has a consolidated presence (such as in Spain, with renewal rates above 90%) and to take advantage of opportunities that arise in this activity. In Europe, countries are expected to restart public tenders to renew water infrastructures (as with Portugal) or by terminating the contractual term of any existing contract (as with France). The Construction area’s strategy focuses on maintaining its presence in countries and markets with a certain stability and through demanding risk management that should provide ac- cess to a selective portfolio of projects that ensure profitability and cash flow generation for the company. It is worth highlight- ing the key position of the company in foreign markets, which accounts for 47% of income, with large projects underway in Riyadh, Lima, Dublin, the Netherlands and Romania, among others. Finally, the Cement area seeks to maintain its competitive po- sition in both operational efficiency and sustainability to remain a benchmark for the sector in the countries where it operates. Given the macroeconomic forecasts and the uncertainty of the epidemiological situation, it is expected that the consumption of the cement market in Spain in 2021 will be between -3% and 3% compared to Tunisia, where consumption will grow by 5%, reducing the impact suffered in 2020. The strategic planning by the Group means it can establishobjectives to be achieved by each area of activity Selective growth in new markets Each FCC Group business detects opportunities of interest in the markets in which it operates, as well as in new markets. The Group’s strategic planning means it can establish objectives to be achieved by each area of activity. These objectives consider market opportunities and the risk appetite deemed acceptable in each country where these opportunities arise. In FCC Medio Ambiente, the inclusion of new technologies will enable us to further consolidate our strength in the markets for waste recycling and valuation in Europe and position our- selves as key players in the circular economy. New European demands with regard to climate change will encourage new services aimed at energy efficiency, urban mobility and smart cities. Internationally, the United States is a market with a high devel- opment potential for FCC, supported by its know-how, experi- ence and the use of the most advanced and efficient technolo- gies in the provision of environmental services. The company is working towards consolidating its presence by growing residen- tial contracts and boosting the commercial collections activity. 2020 was the first year of collections service of Volusia County (Florida) and the largest contract in the country in in the Omaha Country (Nebraska), which will act as a regional base to expand the market in the Midwest. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Strategy and value creation | Response to future challenges | Page 20 of 20 Jointly with the end-to-end water management cycle, Aqualia plans to promote growth via BOT (Build, Operate and Trans- fer) and O&M (Operation and Maintenance) in desalination and treatment in North Africa, Latin America and the Middle East, and will continue to explore possibilities in other countries such as the United States. In this sense, Aqualia will always make full use of its broad experience in the end-to-end water manage- ment cycle in business opportunities that may arise in countries with a stable political and social climate. Internationalisation arrived in 2020 for FCC Construcción af- ter winning contracts in Mexico, Wales, Norway and Chile. In this sense, the development of large infrastructure projects ob- tained between 2018 and 2020 is expected in the coming years as well as the contribution of consolidated markets in Ameri- ca (Canada, USA, Mexico, Chile, Peru, Colombia) and Europe (Netherlands, United Kingdom, Ireland, Norway and Romania). Also noteworthy is the company’s stable presence in recent years in the Middle East. Despite the Cementos Portland Valderrivas Group being aware of possible growth opportunities in new markets, the strategy focuses on consolidating the markets in which it is present. The Group will continue developing its policies to seek efficient and optimal investments, as well as adapting all or- ganisational structures to the situations in the countries where it operates. 79 Contribution to sustainable development Throughout its more than 120-years history, the FCC Group has developed its activity based on fostering long-lasting, transpar- ent and mutually beneficial relationships with the stakeholders with whom it interacts. The Group’s strategy will always be aligned with these commitments, ensuring that the progress of cities guarantees the well-being of citizens and the preservation of the environment. For the FCC Group, the progress of cities must guarantee the well-being of their citizens, respect for human rights and the preservation of the environment. All these years, FCC has been hand-in-hand with the constant evolution and transformation of cities, providing sustainable solutions and launching corporate social responsibility projects and initiatives. As fundamental pillars of its sustainability strategy, the FCC Group has the Corporate Social Responsibility Policy, ap- proved in 2016 by the Board of Directors, and the Fourth CSR Master Plan, that, aligned with the Sustainable Development Goals, has positioned the company as a significant player in social, economic and environmental challenges, focusing its responsible management on 15 action programmes that are structured around three strategic pillars: citizen connection, smart services and exemplary behaviour. Looking towards the new Master Plan, the Group has worked on a materiality study, which has allowed it to identify the most relevant environmental, social and governance issues for FCC, its businesses and its stakeholders. This study will be used as an input into the new strategy, wich will be in effect until 2025 and will allow the main axes on which to work in the short, me- dium and long term to be established, to continue offering the best services to citizens and to contribute to socio-economic development. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 80 4 FCC in 2020 Highlights of the year _ 81 Key figures _ 83 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 81 FCC_Annual Report_2020 | FCC in 2020 | Events of the year | Page 1 of 2 Highlights of the year January March May FCC reaffirms its commitment to the social and economic progress of cities with CSR projects and initiatives and making the sustainability of its business model tangible by supporting SDG 11. FCC Medio Ambiente and the City Council of El Puerto de Santa María, have presented the Chamaeleo Biodiversity Conservation Project, financed by FCC (Cádiz, Spain). FCC Medio Ambiente delivers its 2019 Avanza Awards (Madrid, Spain). The University of Almería (Spain) and Aqualia join forces to research and publish information about the water cycle. Aqualia joins the International Federation of Private Water Operators (Aquafed). FCC Construcción wins the contract for designing and constructing the E6 motorway between Ulsberg and Vindasliene (Norway). FCC Industrial becomes the first “Zero Residue” construction firm (Spain). The FCC Group is at the forefront of the country's social reconstruction after the effects of the COVID-19 pandemic. FCC Medio Ambiente continues to work to ensure essential services during the COVID-19 pandemic (Spain). FCC Medio Ambiente's staff at the University of Zaragoza collaborates in the fight against COVID-19 by making face masks (Zaragoza, Spain). New contract to manage the cleaning and maintenance services for the sewerage network in Zaragoza (Spain). Solidarity, adaptation and service in response to COVID-19. FCC Construcción wins, in cooperation with Carso Infraestructuras y Construcción (CICSA), the contract for the design, construction and maintenance of section 2 Tren Maya (Mexico). The Primary Health Care Authority in Mallorca chooses a health centre, run by FCC Construcción (UBS El Molinar) for its COVID-19 Response Centre (Balearic Islands, Spain). The Life Impacto Cero project, by FCC Construcción, a success story (Spain). The FCC Group launches its new app, FCC360. FCC Environment wins the prestigious 2020 International Safety Award from the British Safety Council (United Kingdom). FCC Environment installs two new electric charging stations in Himberg (Austria). The Badajoz Water Service achieves the maximum rating from the European Benchmarking Cooperation (EBC). Five more years managing the municipal water service in Mula, Murcia (Spain). The Association of Communication Executives (DIRCOM) chooses Aqualia’s CSR Report as one of the three best of the year. FCC Construcción rolls out a series of social and corporate actions to face the health crisis caused by SARS-CoV-2 (COVID-19). 1 2 3 4 5 6 February April June The FCC Group is the first in Spain to adopt a project with Liferay DXP Cloud technology. The Aqualia team receives further information about ethics and integrity. FCC Medio Ambiente renews the contract with Servicios de Txingudi for the cities of Hondarribia and Irún (Guipúzcoa, Spain). The concession holder for the Lima metro in Peru receives the Structured Financing of the Year Award from LatinFinance magazine. New contracts in Aragon (Spain) to provide treatment services to more than 130,000 residents in Aragon. Group Infrastructures End-to-end water managenment cycle Environment Cement The “Refurbishment of Plaza España” project becomes the main municipal construction site on account of its specific nature and urban impact (Madrid, Spain). The occupational insertion project “Expansion and refurbishment of the hospital in Soria” by FCC Construcción, is selected as an example of best practice by the European Commission (Soria, Spain). GCPV continues contributing to the Madrid Skyline, allowing the construction of two very unique and exclusive skyscrapers that will be used for homes (Madrid, Spain). The FCC Group and its various business areas carry out various actions to fight against COVID-19. Madrid's selective collection workers and FCC Medio Ambiente make a donation to Médecins Sans Frontières (MSF) in the fight against the coronavirus (Madrid, Spain). FCC Environmental Services begins operations for Volusia County (Florida, USA). Aqualia named “Best Company in 2019” by readers of iAgua, the leading industry publication in Spain and Latin America. A one-of-a-kind bio-health protocol to combat COVID-19 allows work to resume at the Salitre WWTP in Bogotá (Colombia). FCC Construcción becomes the first construction firm in the world to join the UN's “Sustainable Investments and Finance” group. FCC Construcción makes progress with the construction of hospitals in Soria, Salamanca and San Juan de Dios (Seville, Spain). GCPV supplies the cement to construct the new bridge connecting the M-40 and the M-607, providing the residents of Colmenar Viejo with the necessary infrastructure to connect with the capital (Madrid, Spain). GCPV continues to bring people together, contributing it cement to the construction of the most innovative and durable bridges in the country. Inversora CARSO increases its shareholding in FCC by 15.4%. ACUAES renews its trust in Aqualia to manage its wholesale supply in Zaragoza (Spain). The FCC Group Competencies are presented, the DNA that binds us. FCC Medio Ambiente winner of the OHS ‘Bonus Prevention’ awarded by Mutua Universal (Spain). FCC Medio Ambiente renews the contracts for the waste collection and street cleansing service, and the vehicle-towing service in Oviedo (Spain). Aqualia participates in the presentation of the StepbyWater alliance, an initiative supported by the Spanish government. FCC Construcción wins the “Best Global Projects” award from ENR international magazine for its projects: Panama Metro line 2 (Panama); Improving access to the city of Iquique (Chile); and the El Alamein desalination plant (Egypt). FCC Construcción participates at the event to celebrate the 30th anniversary of the construction of the KIO towers (Madrid, Spain). GCPV donates nappies and baby food to the Alcalá de Guadaíra City Council (Seville, Spain) to meet the needs of the youngest. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 82 FCC_Annual Report_2020 | FCC in 2020 | Events of the year | Page 2 of 2 Play July The FCC Group celebrates its 120-year history. FCC Medio Ambiente grows in the municipal services market in northwestern Spain with the award of the A Coruña street cleansing contract (Spain). FCC Environment awarded the waste collection and street cleansing contract in Vale de Sousa (Portugal). Aqualia completes the integrated cycle with the acquisition of EMSA (Ecosistemas de Morelos) and thus consolidates its presence in Mexico. The new edition of the “Pásate a la e-factura” campaign sees more than 450,000 users signed up to Aqualia's digital billing service. FCC Construcción wins the contract for designing and constructing the new hospital in Jersey. September November The FCC Group launches you_, a new way of being, learning, evolving, innovating, projecting our future. FCC Medio Ambiente pioneer in obtaining the SIGOS certification as a healthy organisation from AENOR in all its branches (Spain). FCC Medio Ambiente renews the waste collection and street cleansing contract in Segovia (Spain) FCC Environmental Services’s Material Recycling Facility at Houston (Texas) honoree by the NWRA as the Best Recycling Facility 2020 of the United States (Texas, USA). The El Alamein plant (Egypt), chosen as one of the three desalination plants of the year at the Global Water Awards. The IFM fund selects two projects submitted by Aqualia for its international environmental and social internship programme. FCC Construcción commissions Line 5 of the Bucharest metro, the first major transport infrastructure opened in Europe following the outbreak of COVID-19 (Romania). FCC Construccións starts work to drill the Ergos tunnel, as part of the “Anillo Insular de Tenerife” project (Tenerife, Spain). FCC Construcción secures various contracts: Nudo Norte (Madrid); improvements to Dic de Recer (seawall) at the Olympic Port in Barcelona; and the construction and maintenance of different rail lines owned by Rodalies de Barcelona (Spain). Through its donations, GCPV supports the purchase of study furniture for the Los Molinos Special Education Centre in Alcalá de Guadaíra (Seville, Spain). FCC Construcción completes work on the first cable-stayed bridge built in California (Los Angeles, USA). RRC receives acknowledgement from the Portuguese Association for Business Ethics (Portugal). From its quarry in Vallcarca (Barcelona, Spain), GCPV sends more than 600,000 tonnes of aggregate to the Port of Tarragona by sea, making the extension of the Balearic Wharf a reality that will serve to generate our trading operations. Collaboration with the Adecco Foundation, donating more than 40,000 euros, to help children of GCPV employees who have some type of disability become integrated into the labour market. Exemplary intervention of FCC Medical Services during the pandemic. FCC Medio Ambiente recognised for second time with the 'Calculo- Reduzco' seal from the Spanish Office for Climate Change for its commitment to reduce the carbon footprint of its activity in 2019 (Spain). FCC Environment renewed the national contract of complex waste management and recycling for 3 years with Hyundai Motors Manufacturing facilities (Czech Republic). The Advisor project, included in the 101 most innovative initiatives in 2020 for combating climate change. Lleida city council (Catalonia, Spain) and Aqualia create a social solidarity fund to guarantee access to water for families at risk of exclusion. FCC Construcción registers its carbon footprint for the eighth time in the Carbon Footprint Registry, offset and absorption projects held by the Ministry for the Ecological Transition and the Demographic Challenge (Spain). 7 8 9 1 0 1 1 1 2 August October December The MIDES project, led by Aqualia, operates the first two desalination plants that are wholly energy self-sufficient in the world, in Dénia (Alicante) and Guía de Isora (Santa Cruz de Tenerife). FCC Construcción becomes the first Spanish construction firm to have a third party verify del the carbon footprint of more than 70% of its domestic and foreign activities. The entry of investment group iCON in the FCC Group's Environmental Services area enhances its leadership position in the United Kingdom. New reverse osmosis leachate treatment plant at Gyal landfill site (Hungary). Group Infrastructures End-to-end water managenment cycle Environment Cement FCC improves energy performance at its Corporate Head Office in Madrid (Spain). FCC Medio Ambiente winner of the Spanish edition of the 2019/2020 EBAE Awards in the Product/Service category for its 100%-electric, industrial chassis-platform for heavy-duty urban service vehicles (Spain). FCC Environment is awarded the waste collection and treatment, and selective collection contract in Bytom (Poland). Recognition of the best preventive culture practices included in Aqualia's contracts. The documentary, Brave Blue World, which features Aqualia’s All-gas project, is available in 191 countries via Netflix. FCC Construcción secures the funding for the project to expand sections 5 and 6 of the A465 dual carriageway in Wales. FCC Construcción receives the 2019 Best Infrastructure Award for the “Variante de Vallirana (B-24)” project (Catalonia, Spain). GCPV manufactures the cement that supports the most demanding architectural works. From its manufacturing plant in El Alto, in Madrid (Spain), it supplies many of its most resistant cements to build Torre Caleid It's not magic, it's you. Launch of the FCC Group corporate video. FCC publishes a book that summarises its 120-year history. FCC Medio Ambiente is awarded the certificate of protocols against COVID-19 from AENOR for its corporate headquarters in Las Tablas (Madrid) and for the Exhibition Centre of Granada (Spain). FCC Environmental Services started operations in Omaha contract (Nebraska, USA). The “Who is behind the water we use at home?” campaign, organised by Aqualia as part of the COVID-19 crisis, is named a winner at the European Excellence Awards (EEA). Aqualia becomes a full member of the UN Global Compact. FCC Costruction, over 12 years committed to equality. We meet with the commitment to reduce CO2 emissions, implementing a new biomass facility at our manufacturing plant in Alcalá de Guadaíra (Seville, Spain). GCPV cements are always present in works with the greatest social impact that improve the development of large cities. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 83 FCC_Annual Report_2020 | FCC in 2020 | Key figures | Page 1 of 5 Key figures Turnover Millions of euros 2020 turnover by activity Gross operating profit (EBITDA) % Millions of euros 5,990 % 2 . 3 + % 8 . 4 + 6,276 6,158 % 9 . 1 - 1,026 1,048 % 1 . 2 + 861 % 6 . 5 + % 1 . 9 1 + 46.9% Environmental Services 26.2% Construction 19.3% Water 6.2% Cement 1.4% Corporate services and adjustments 2018 2019 2020 2018 2019 2020 EBITDA 2020 by activity % 43.0% Environmental Services 27.0% Water 5.1% Construction 13.4% Cement 11.5% Corporate services and others EBITDA margin % 14.4% 16.3% 17.0% Investments Millions of euros 435 % 6 . 0 3 + 547 541 % 7 . 5 2 + % 1 . 1 - 2018 2019 2020 2018 2019 2020 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | FCC in 2020 | Key figures | Page 2 of 5 84 Net financial debt Millions of euros 3,579 % 0 . 3 3 + 2,798 % 8 . 1 2 - 2,691 % 8 . 4 2 - Total assets Millions of euros 10,524 % 4 . 0 - Earnings attributable to the Parent Millions of euros 12,574 % 5 . 9 1 + 12,835 % 1 . 2 + 252 % 6 + 267 262 % 7 . 1 - 2018 2019 2020 2018 2019 2020 2018 2019 2020 Backlog Millions of euros Equity Millions of euros 28,991 31,038 29,412 % 3 . 1 - % 1 . 7 + % 2 . 5 - 1,959 2,474 % 3 . 6 2 + 2,909 % 6 . 7 1 + Financial leverage. Net debt / Total assets % 25.6% 28.5% 21.8% 2018 2019 2020 2018 2019 2020 2018 2019 2020 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 85 FCC_Annual Report_2020 | FCC in 2020 | Key figures | Page 3 of 5 Stock Market Performance 2020 Evolution of the stock market and share price In a year framed by the COVID-19 pandemic, with considerable uncertainty and doubts for investors, it was a year that particu- larly hit the Spanish economy, as it is more dependent than the average on our environment, on activities related to the mobility of people. The arrival of vaccines in the final quarter, and the progress made prior to their arrival, supported a partial but incomplete recovery from the second half of the year with the main world stock market indices performing very differently. At the beginning of the year, on 30 January, the World Health Organization (WHO) declared an international public health emergency. With the markets tumbling in March, with the pan- demic spreading across Europe, the situation recovered to a certain extent throughout the year as progress was found on its possible solution and the impact on the different sectors of the European economy, together with a significant financial aid programme and enhanced liquidity arranged by the ECB (Euro- pean Central Bank) along with other main central banks in the world. In the US, Wall Street reached a record level driven by technol- ogy companies with the Nasdaq Index, leading the advances with more than 43%, followed by the generalist S&P500 with 16.26%. The good performance of technology and pharma- ceutical companies, which benefited from the measures taken to mitigate the effects of the coronavirus, was key to this. This effect was also witnessed in Asia, where the Chinese and Japa- nese markets added 27.2% and 16.0% respectively. In Europe, where the weight of technology and biotechnology is less, the indices lagged behind, with the exception of the Swedish OMX and the German Dax (+5.81% and 3.55% re- spectively), and the Eurostoxx, which fell by 5.14% in the year. In Spain, the IBEX35 finished at the bottom of the major inter- national indices, with a fall of 15.45%. The was marked by the biggest drop in 60 years on 12 March 2020 when it plummeted 14.4%, and also by the best month in its history, in November, after seeing a 25.2% revaluation, but to a great extent it suffered from the impact that measures taken to combat the pandemic globally had on its tourism and associated services activity. For 2021, the International Monetary Fund (IMF) forecasts that global growth will reach 5.5% (in its January 2021 report), down from 5.2% in its October 2020 update, given that the slowdown and impact in 2020 was more tempered than initially expected and is consistent with the expectations of social distancing re- maining even for some months of this year. Given this, and after the slowdown of 2020, the recovery in 2021 would mean the level of world GDP (Gross Domestic Product) closing almost 2% above that of 2019. Furthermore, it is noteworthy that growth forecasts imply wide gaps in output and unemployment rates this year and next, in both advanced and emerging market economies. For the latter, the IMF has forecast a 3.3% fall in 2020 and a growth of 6.0% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | FCC in 2020 | Key figures | Page 4 of 5 86 Share price Trading In this context, FCC’s share performed similarly to that of the domestic market as a whole. The price fell by 16.3%, with a year-end closing price of €8.80/share. The maximum price was €11.96/share on 18 February – before the outbreak of the pandemic – and the minimum was €7.17 on 24 March. FCC ended the year with a market capitalisation of 3,600 million euros. Total trading volume this year was over 19.5 million shares, with a daily average of 76,136 shares; 61% more than in the previ- ous year. However, the brokered volume is conditioned by the 13% free float and by the type of long-term investors, reflecting the profile of the majority shareholder and, therefore, having a low turnover ratio. Variation 10.0% 0.0% -10.0% -20.0% -30.0% -40.0% Volume (shares) 2,000,000 1,600,000 1,200,000 800,000 400,000 0 January February March April May June July August Sept. Oct. Nov. Dec. 2020 % Chg. FCC 6.7% -4.5% -30.8% 16.8% 4.7% -7.4% -13.1% 12.2% -0.9% -10.7% 21.9% -0.6% -16.3% % Chg. Ibex35 -1.9% -6.9% -22.2% 2.0% 2.5% 1.9% -4.9% 1.3% -3.6% -3.9% 25.2% 0.0% -15.5% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | FCC in 2020 | Key figures | Page 5 of 5 Shareholders FCC, S.A.’s shares use the book entry system and are listed on the four Spanish stock exchanges (Madrid, Barcelona, Valencia and Bilbao). According to the information on file in Spanish Na- tional Securities Market Commission (CNMV) records, on the closing date of the year the main shareholders in the company were: Main Shareholders % of Share Capita Control Empresarial de Capitales, S.A. de C.V. Finver Inversiones 2020, S.L.U. William H. Gates III Koplowitz Romero de Juseu, Esther 69.61% 7.00% 5.73% 4.57% 87 Price of shares: maximum, minimum and year end Euros/share Market capitalisation Millions of euros Maximum Minimum Year end 13.40 12.80 11.96 10.36 8.63 7.17 11.70 10.52 8.80 4,432 4,284 % 3 . 3 - % 6 . 5 3 + 3,600 % 0 . 6 1 - 2018 2019 2020 2018 2019 2020 2018 2019 2020 2018 2019 2020 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 88 5 Business lines Environment _ 89 End-to-end water management _ 130 Infrastructure _ 161 Cement _ 186 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment During the financial year 2020, the area’s turnover amounted to €2.89 billion, the gross operating profit amounted to €450.9 million and the profit before tax €155.2 million, 15.61% and 5.37% on turnover respectively. 89 Environment Geographical divisions and sector analysis. Strategy _ 90 Activity map _ 99 Highlights Environment _ 100 Other highlights _ 101 Excellence and sustainability _ 112 Innovation and technology _ 118 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 90 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 1 of 9 Geographical divisions and sector analysis. Strategy For 110 years the Environmental Services area of the FCC Group has provided municipal services and end-to-end waste management, serving in excess of 66 million people in more than 5,000 municipalities. Turnover 2020. Divisions FCC Servicios Medio Ambiente 60.35% Iberia (Spain, Portugal, Ámbito) 20.96% United Kingdom 16.09% CEE Central and Eastern Europe 2.60% USA In 2020 the company operated in a total of 12 countries, pro- viding a range of services which demonstrates its varied ex- perience in the sector: collection, treatment, recycling, energy recovery and disposal of urban solid waste, public street clean- ing, maintenance of sewage systems, ground maintenance, treatment and disposal of industrial waste, and the recovery of contaminated soil. FCC Servicios Medio Ambiente Holding S.A.U., which is the backbone of the Environmental Services activities is structured into four geographical divisions: Iberia: FCC Medio Ambiente (Spain), FCC Environment Portugal and FCC Ámbito (Industrial Waste) United Kingdom: FCC Environment UK Central and Eastern Europe: FCC Environment CEE USA: FCC Environmental Services During the financial year 2020, the area’s turnover amounted to €2.89 billion, a slight decrease (-0.93%) on the previous year, the gross operating profit amounted to €450.9 million and the profit before tax €155.2 million, 15.61% and 5.37% on turn- over respectively. This performance is most remarkable under the very unfavourable socioeconomic circumstances that have been brought about by the worldwide pandemic of COVID-19. This event has affected the development of all economic activi- ties and has highlighted the importance of the services provided by this entity, services that have been graded as essential for citizens, since they must continue to be provided even in the most adverse circumstances and contribute fundamentally to the resilience of a society. Even in adverse conditions, FCC Servicios Medio Ambiente managed 23.6 million tonnes of waste in 2020 and produced nearly 3.3 million tonnes of secondary raw materials (SPM) and refuse-derived fuel (RDF). The company has more than 750 operational waste management facilities, of which more than 200 are environmental complexes dedicated to the treatment and recycling of waste, including 11 waste-to-energy projects with a capacity of 3.2 million tonnes per year and 360 MW of non-fossil electricity. A significant milestone was the entry of the investment group iCON as a minority shareholder in the group of energy recovery companies in the United Kingdom, which strengthens FCC Ser- vicios Medio Ambiente’s leading position in that country. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 91 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 2 of 9 FCC Medio Ambiente Iberia (Spain, Portugal and Ámbito) FCC Medio Ambiente provides environmental services in over 3,600 municipalities in Spain and Portugal (FCC Environment), serving a population of more than 31 million inhabitants through activities including street cleansing, the collection and transport, treatment and disposal of waste, ground maintenance, mainte- nance of sewage systems, beach cleaning, and energy efficien- cy services, among others. During the 2020 financial year, FCC Medio Ambiente Iberia managed 11.2 million tonnes of urban solid waste Turnover 2020. Geographic location Medio Ambiente Spain and Portugal + Ámbito (Industrial Waste) 22.5% Catalonia 19.0% Madrid 2.7% Galicia 2.0% Navarre 11.2% Valencian Community 1.9% Asturias 9.5% Andalusia 1.6% Balearic Islands 7.2% Basque Country 1.6% Portugal 6.1% Aragon 4.4% Canary Islands 4.0% Castilla y León 2.8% Murcia 1.4% Extremadura 0.8% La Rioja 0.8% Castilla-La Mancha 0.7% Cantabria Inhabitants served 2020 FCC Medio Ambiente Iberia 17,534,197 19,148,766 13,444,534 Municipalities served 2020 FCC Medio Ambiente Iberia 2,146 2,547 5,168,457 4,913,043 5,074,279 4,588,220 2,837,553 288 59 122 106 9 95 Waste collection Street cleansing Waste processing Ground maintenance Sewerage Beach cleaning Fountains Cleaning of buildings Waste collection Street cleansing Waste processing Ground maintenance Sewerage Beach cleaning Fountains Cleaning of buildings Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 3 of 9 92 The COVID-19 pandemic has been a worldwide health emer- gency that had a special impact in Spain and Portugal. This extraordinary situation has highlighted the importance of the essential services provided by FCC Medio Ambiente and the commitment of its staff, whose professionalism and dedication have made it possible to maintain excellence and a high level of service. To alleviate the unfavourable socioeconomic situation, the Economic and Social Recovery Funds or Next Generation promoted by the European Union will provide an opportuni- ty for development for many of FCC Medio Ambiente’s client municipalities, to which the firm will bring value and know-how with the mission of addressing a future approach based on ground-breaking and innovative changes that will set the path for growth in the coming years. FCC Medio Ambiente has developed the 2050 Sustainability Strategy, aligned with its business strategy and which repre- sents an ambitious 30-year project, reflecting the company’s commitment to achieving the Sustainable Development Goals (SDG) and facing economic, social and environmental challeng- es on a global scale. The new strategy is a roadmap that inte- grates environmental, social, excellence and good governance commitments that are very demanding and of high added value for the company and the society as a whole. FCC promotes a comprehensive service management model to promote eco- nomically, socially and environmentally sustainable cities, in which policies of equality and social and employment inte- gration of disadvantaged groups are fundamental pillars, as well as innovation projects in Clean Energy Technologies and transformation to the Circular Economy social model. On this line, the prize-winning 100%-electric, industrial chas- sis-platform for Urban Service vehicles, developed by FCC Medio Ambiente, has continued to achieve important awards in 2020, such as the European Business Awards for the Environ- The annual turnover of FCC Medio Ambiente Iberia reached €1.74 billion, an increase of 1.08%. The gross operating profit stood at €265.9 million, with a pre- tax profit of €148.7 million, a very noteworthy performance under the circumstanes of the health emergency ment (EBAE) in the category of Best Product or Service, man- aged in Spain by The Biodiversity Foundation, from the Ministry for Ecological Transition and the Demographic Challenge. Within this framework, the annual turnover of FCC Medio Am- biente Iberia reached €1.74 billion, an increase of 1.08% com- pared to 2019. The gross operating profit stood at €265.9 mil- lion, with a pre-tax profit of €148.7 million, equivalent to 15.26% and 8.53% of the turnover respectively, a very noteworthy per- formance under the circumstances of the health emergency. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 4 of 9 93 FCC Ámbito (Industrial Waste) FCC Ámbito specialises in the integrated management of in- dustrial and commercial waste, recovery of by-products and decontamination of soil. Through innovative solutions for mak- ing the most of the resources contained in the different types of waste, Ámbito has become a strategic partner of industries and businesses which, in line with the circular economy, devel- op their activities ensuring environmental, social and economic sustainability. Overall, it has a total of 39 processing centres across Spain and Portugal, with more than 67 treatment lines that guarantee the performance of the facilities. Internationally, FCC Ámbito has a significant presence in Portugal, where it operates through its subsidiary ECODEAL. Within the Spanish market, throughout 2020, and despite the impact of the pandemic on production and consumption, an increase of industrial and commercial waste management has continued to be observed. This rise has been driven by increased activity in certain industrial sectors which have man- aged to compensate for the decline in others more related to consumption. As a result, FCC Ámbito’s activity shows a slight increase of 6% in tonnes managed. This growth is taking place in a context characterised by the intense competition estab- lished by waste producers themselves and which is facilitated by the absence of subsequent responsibility of the producer when the waste is handed over to an authorised handler. Ámbito’s annual turnover raised by 5.65% on 2019, reaching €129.6 million and the gross operating profit also increased by 21.97% to €31.8 million In Portugal, there has also been an increase of activity with the main recurring customers and a recovery of prices, so that the year closed above forecasts with an increase of 3% in tonnes. In this context, Ámbito’s annual turnover raised by 5.65% on 2019, reaching €129.6 million. The gross operating profit also increased by 21.97% to €31.8 million, equivalent to 24.5% of turnover. Legislative changes coming into force tend to lean towards greater control of waste traceability by regional governments. These changes will undoubtedly benefit waste management companies that have final treatment facilities, such as FCC Ámbito. Along this year the industrial waste activity will continue to focus on the efficiency of operations and growing the activity. The in- corporation of new technologies will allow FCC Ámbito to con- solidate its position in the recycling and value recovery markets as a key circular economy player. Turnover 2020 - Geographic location Ámbito Industrial Waste. Spain and Portugal 19.4% Catalonia 14.2% Aragon 16.3% Portugal 13.3% Madrid 10.0% Basque Country 10.0% Andalusia 6.0% Cantabria 3.2% Asturias 2.2% Castilla y León 1.8% Valencian Community 1.3% La Rioja 0.9% Castilla-La Mancha 0.7% Navarre 0.6% Extremadura Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 5 of 9 FCC Environment UK FCC Environment is one of the leading companies in the United Kingdom for comprehensive waste management and recycling. It is uniquely placed to provide services in an ever-changing waste sector. The business continues to focus on increased recycling volumes and green energy generation in line with gov- ernment policy. The company has invested in a wide range of waste management facilities that aim to minimise the amount of waste disposed of to landfill sites by processing the material to ensure it reaches its full potential as a valuable resource. During 2020, FCC Environment served over 22 million inhab- itants across the whole country, managed in excess of 6 mil- lion tonnes of waste and produced nearly one million tonnes of recyclable material and Refuse-Derived Fuel (RDF). Thanks to its 6 Waste-to-Energy facilities (EfW), FCC has processed 1.5 million tonnes of waste that cannot be recycled and generated 1.17 million MWh of green energy. FCC Environment UK’s annual turnover reached €605.3 million which represents 16.98% of revenue Inhabitants served 2020 FCC Environment UK 19,759,500 1,383,600 812,000 93,000 0 0 0 142,000 Waste collection Street cleansing Waste processing Ground maintenance Sewerage Beach cleaning Fountains Cleaning of buildings 94 With Brexit transition issues already at the forefront of the com- pany’s planning, the business was hit by a global pandemic and has been working hand in hand with the UK Government, as well as municipal and business clients to ensure that the waste and recycling services offered to citizens and industry were maintained. FCC Environment in the UK is proud to have met this challenge in every way. Working hard in the early stages to ensure de UK Government recognized the waste sector as an essential service by des- ignating staff as key workers was vital to business continuity throughout the year including the Household Waste Recycling Centres Service. The first lock down in England and, through- out the year, the closure of leisure and hospitality have had an impact on business waste and recycling volumes, but there has been a commensurate rise in household waste and recycling tonnages. The UK Government has continued to do its groundwork in 2020 to revolutionise the waste management sector within the aim of achieving higher recycling rates and meeting its stated goal of ‘leaving the environment in a better place than we found it´. FCC Environment supports this aim and through the year has continued to work closely with the UK Government to shape policy and, whilst the eventual signing of a Brexit trade deal has not adversely affected the business, the push for greater on-shoring of both recycling and waste processing will drive the UK business planned investment programme to build out ener- gy from waste capacity and, as policy becomes clearer around recycling technologies and methodologies, the company will also address these opportunities In this context, annual turnover reached €605.3 million, with a gross operating profit of €102.8 million, which represents 16.98% of revenue. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 6 of 9 FCC Environment CEE FCC Environment is one the leading global groups in Central and Eastern Europe (CEE) in the comprehensive management of urban solid waste and recovery of renewable energy. It applies innovative systems and the cleanest, most advanced technol- ogies in the provision of quality services that are sustainable on the medium and long term and adapted to customers’ needs. In 2020, the division has been present in 8 countries: Austria, Czech Republic, Slovakia, Hungary, Poland, Romania, Bulgary and Serbia, though Bulgarian activities were sold along the year. Across these countries, nearly 5 million inhabitants in over 1,400 municipalities were served, and in 2020, in excess of 5.5 million tonnes of waste and 680,000 tonnes of recovered mate- rial and Refuse-Derived Fuel (RDF) were managed. 95 Turnover 2020 - Geographic location FCC Environment Central and Eastern Europe 39.73% Czech Republic 29.68% Austria 11.99% Poland 7.30% Slovakia 5.12% Hungary 1.92% Bulgary 1.76% Serbia 2.50% Romania Inhabitants served 2020 FCC Environment CEE 3,081,077 2,840,087 Municipalities served 2020 FCC Environment CEE 1,210 1,155 802,414 528,800 Waste collection Street cleansing Waste processing Ground maintenance Sewerage Beach cleaning Fountains Cleaning of buildings Waste collection Street cleansing Waste processing Ground maintenance Sewerage Beach cleaning Fountains Cleaning of buildings 33,000 0 44,000 227,000 81 44 25 0 2 17 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 7 of 9 96 During 2020, FCC Environment continued with the activities to prepare the CEE countries for the upcoming legal changes in the national waste management legislations due to the circular economy targets from the European Union. In countries where a landfill ban is expected soon or already in place (Czech Re- public, Slovakia and Poland), FCC Environment intensified its efforts to develop waste to energy plants. In countries without landfill ban, the firm strengthened its market position by devel- oping additional landfill capacity. The company will further de- velop the existing business models at every country in order to implement and/or spread selective collection, waste treatment (such as sorting and composting) and recycling. Under these circumstances, the annual turnover was €464.7 million, and the EBITDA reached €73.7 million, an increase of 14.3% on the previous year. The earnings before tax thrived to €19 million, a remarkable performance improvement of 80% compared to 2019. FCC Environment CEE’s annual turnover was €464.7 million and the earnings before tax thrived to €19 million, a remarkable performance improvement of 80% compared to 2019 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 8 of 9 97 FCC Environmental Services USA FCC Environmental Services is one of the top 20 companies in the United States for comprehensive management and re- cycling of solid urban waste. The company operates in the states of Texas, Florida and, since the start of this year’s waste collection contract in Omaha, also in Nebraska. Across these states over 8 million inhabitants are served in 15 locations and, in 2020, 635,000 tonnes of waste and 252,000 tonnes of recy- clable material were managed. Just a few years after the start of the activity in the US, the mar- ket continues to offer important opportunities in the field of the solid waste management, in residential and commercial collec- tion and in the treatment and recycling business. Once again, 2020 has been exceptional with the award of sev- eral long-term contracts (up to 20 years) in some of the main municipalities in Florida (Edgewood, Volusia Facilities) and Ne- braska (Omaha recycling centers). Inhabitants served 2020 FCC Environmental Services USA 3,838,000 4,360,000 0 0 0 0 0 0 Waste collection Street cleansing Waste processing Ground maintenance Sewerage Beach cleaning Fountains Cleaning of buldings FCC Environmental Services USA’s annual turnover reached €75.1 million and gross operating profit grew by 157.42% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 98 FCC_Annual Report_2020 | Business lines | Environment | Geographical divisions and sector analysis. Strategy | Page 9 of 9 FCC Environmental Services successfully completed the start- up of three main contracts (Palm Beach, Volusia and Omaha) awarded to FCC in 2019. The company has also consolidated its commercial business in 2020 and today FCC is present in 7 locations including West Palm Beach, Orlando, Lakeland, Daytona Beach, Houston, Dal- las and Omaha. Houston Recycling Facility, with a treatment capacity of 145,000 tonnes per year, has been honoured as the 2020 Best Recycling Facility in the USA by the National Waste Recycling Association (NWRA). For 2021, FCC Environmental Services strategy is to continue with the consolidation of the collection and post-collection ac- tivities and the development of the commercial business. The company is also analyzing some opportunities of vertical inte- gration, with the incorporation to the business of some post collection activity that will fit in FCC’s long-term strategy. Turnover 2020. Geographic location The growth strategy for the commercial waste business line is threefold. Firstly, to contract front-loading and roll-off services to small, medium and large companies. Secondly, to expand the current customer portfolio and market all the additional services offered by FCC. Third, to sell profitable services by taking ad- vantage of annual and off-cycle price increases. The commer- cial customer line has great growth potential. In these circumstances, annual turnover reached €75.1 million in 2020, an increase of 79.22% over 2019, and will exceed €100 million once the awarded contracts are operating at full capacity. In the year of the COVID-19 pandemic, gross operat- ing profit grew by 157.42%. FCC Environmental Services USA 66.8 4% Florida 30.76% Texas 2.40% Nebraska FCC Environmental Services Activity in 2020 Contract for the transportation of recyclables from Omaha (Nebraska) drop-off points for 5 years Contract to collect waste from public facilities in Volusia County for up to 7 years Contract of Municipal Waste Collection at the City of Edgewood (Florida) for up to 20 years Waste Collection Service starts at Volusia County (Florida) Houston (Texas) Material Recycling Facility named Best Recycling Facility 2020 in the US by NWRA City of Huntsville (Texas) Recyclable Materials Processing Contract Renewal Waste Collection Service starts at the City of Omaha (Nebraska) City of Laporte (Texas) Recyclable Materials Processing Contract Renewal Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Activity in the Environment area Activity in the Environment area 4 3 7 6 8 2 5 99 5 SPAIN FCC Medio Ambiente Spain Elche (Alicante) Waste collection and street cleansing. 255 million euros A Coruña Street cleansing. 105 million euros Oviedo Extension waste collection, selective collecion, and street cleansing. 95.1 million euros Segovia Waste collection, street cleansing and landfill closure. 56 million euros Las Rozas (Madrid) Waste collection, street cleansing and ground maintenance. 47.3 million euros Rubí (Barcelona) Waste collection and street cleansing. 20.9 million euros Roses (Girona) Monforte de Lemos (Lugo) Waste collection and street cleansing. 16.1 million euros Barcelona Removal of graffitis and billboards. 12.5 million euros San Sebastián Beach maintenance. 6.9 million euros Yaiza (Las Palmas) Street cleansing lot 4. 6.5 million euros Madrid Project, works and maintenance of Valdemingómez Landfill Deodorisation System (Lot1). 6.1 million euros Zaragoza Sewage maintenance. 6.1 million euros FCC Ámbito Valencian Community WEEE waste management Waste collection, street cleansing and beach maintenance. 16.1 million euros Alicante Soil decontamination Playa Postiguet 1 1 USA Edgewood (Florida) Waste collection. 10 million euros Omaha (Nebraska) Transportation of all recyclable materials. 2.1 million euros Volusia County (Florida) Collection of Waste from public facilities. 1.3 million euros Huntsville (Texas) Management of recyclable materials Laporte (Texas) Management of recyclable materials 2 PORTUGAL FCC Environment Portugal Valle de Sousa Waste collection and street cleansing. 12.5 million euros 3 ENGLAND Kent 6 POLAND Bytom 7 CZECH REPUBLIC České Budějovice Management 12 Recycling Centers and 3 transfer stations in Mid & East Kent. 46.7 million euros Buckinghamshire Management and treatment of green, food, bulky and wood waste. 30.4 million euros 4 SCOTLAND Drumgray - North Lanarkshire Energy Recovery Centre (DERC). Planning application approved. 292 million euros investment Collection, transport, treatment and selective collection. 15.8 million euros Classification, loading and transport of old landfill waste. 14.6 million euros Zabrze Hyundai Motor Deodorisation of composting plant. 3.2 million euros Managemnet of recyclable and hazardous waste, and treatment of SRM. 6.8 million euros 8 HUNGARY Gyal Reverse osmosis leachate treatment plant Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 100 FCC_Annual Report_2020 | Business lines | Environment | Highlights 2020 Highlights_Environment Services _2020 January March May July September FCC Medio Ambiente and the City Council of El Puerto de Santa María, have presented the Chamaeleo Biodiversity Conservation Project, financed by FCC (Cádiz, Spain) FCC Medio Ambiente delivers its 2019 Avanza Awards (Madrid, Spain) FCC Medio Ambiente continues to work to ensure essential services during the COVID-19 pandemic (Spain) FCC Medio Ambiente's staff at the University of Zaragoza collaborates in the fight against COVID-19 by making face masks (Zaragoza, Spain) FCC Environment wins the prestigious 2020 International Safety Award from the British Safety Council (United Kingdom) FCC Environment installs two new electric charging stations in Himberg (Austria) FCC Medio Ambiente grows in the municipal services market in northwestern Spain with the award of the A Coruña street cleansing contract (Spain) FCC Environment awarded the waste collection and street cleansing contract in Vale de Sousa (Portugal) FCC Medio Ambiente pioneer in obtaining the SIGOS certification as a healthy organisation from AENOR in all its branches (Spain) FCC Medio Ambiente renews the waste collection and street cleansing contract in Segovia (Spain) FCC Environmental Services’s Material Recycling Facility at Houston (Texas) honoree by the NWRA as the Best Recycling Facility 2020 of the United States (Texas, USA). 4 3 5 10 9 11 2 1 6 8 7 November FCC Medio Ambiente recognised for second time with the 'Calculo- Reduzco' seal from the Spanish Office for Climate Change for its commitment to reduce the carbon footprint of its activity in 2019 (Spain) FCC Environment renewed the national contract of complex waste management and recycling for 3 years with Hyundai Motors Manufacturing facilities (Czech Republic) 12 February FCC Medio Ambiente renews the contract with Servicios de Txingudi for the cities of Hondarribia and Irún (Guipúzcoa, Spain) April Madrid's selective collection workers and FCC Medio Ambiente make a donation to Médecins Sans Frontières (MSF) in the fight against the coronavirus (Madrid, Spain) FCC Environmental Services begins operations for Volusia County (Florida, USA) June FCC Medio Ambiente winner of the OHS ‘Bonus Prevention’ awarded by Mutua Universal (Spain) FCC Medio Ambiente renews the contracts for the waste collection and street cleansing service, and the vehicle-towing service in Oviedo (Spain) August The entry of investment group iCON in the FCC Group's Environmental Services area enhances its leadership position in the United Kingdom New reverse osmosis leachate treatment plant at Gyal landfill site (Hungary) October FCC Medio Ambiente winner of the Spanish edition of the 2019/2020 EBAE Awards in the Product/Service category for its 100%-electric, industrial chassis-platform for heavy-duty urban service vehicles (Spain) FCC Environment is awarded the waste collection and treatment, and selective collection contract in Bytom (Poland) December FCC Medio Ambiente is awarded the certificate of protocols against COVID-19 from AENOR for its corporate headquarters in Las Tablas (Madrid) and for the Exhibition Centre of Granada (Spain) FCC Environmental Services started operations in Omaha contract (Nebraska, USA) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 1 of 11 Other highlights 101 First external verification audit of the annual report of the Green Bond of FCC Servicios Medio Ambiente Holding, S.A.U. During 2019, FCC Servicios Medio Ambiente Holding, S.A.U. issued Green Bonds worth €1.1 billion. During 2020, the company DNV GL Business Assurance Es- paña, S.L. (DNV GL) carried out the first external verification audit of the annual report of the Green Bond of FCC Servicios Medio Ambiente Holding, S.A.U., on the use of the resources from the Bond until 31 December 2019. This way, it has verified the financing and refinancing of projects and assets for a total value of €824.01, included in several categories, all of which are eligible (Pollution Prevention and Control, Energy Efficiency, Clean Transportation and Terrestrial and Aquatic Biodiversity Conservation). Therefore, at the end of 2019 €824.01 million of the €1.1 billion initially issued have been accounted for. Distribution of investments in the audit report. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 2 of 11 IBERIA FCC Medio Ambiente Spain 102 Letter of gratitude from the CEO to FCC Medio Ambiente´s employees FCC Medio Ambiente certifies its protocols against COVID-19 with AENOR FCC Medio Ambiente winner of the EBAE Awards 2019/2020 Jordi Payet, Chief Executive Officer (CEO), showed his gratitude and acknowledged the responsibility and the effort that employ- ees have been demonstrating in their daily work, which is para- mount to continue delivering essential services to communities under these difficult circumstances due to the Coronavirus pan- demic. He also highlighted that the activities that the company carries out have always had a high social engagement and, as part of its commitment, FCC joined in 2020 the food fundraising campaign for the Spanish federation of food banks, FESBAL, with the immediate goal that all families have food available at these critical times. FCC Medio Ambiente has received the certificate of protocols against COVID-19 from AENOR for its corporate headquarters in Las Tablas (Madrid) and the Exhibition Centre at Granada. The rigorous evaluation carried out by AENOR assesses as- pects such as risk analysis; health management in the work- place; training, information and communications developed; organisational measures (capacity and distance control) and protection measures (use of personal protection material), the business continuity plan, as well as good cleansing and hygiene practices. This certificate demonstrates that the efforts made and measures adopted by the company to prevent and alleviate the effects of the pandemic comply with current legislation and are aligned with AENOR’s demanding criteria on this area. FCC Medio Ambiente has won the prize at the 2019/2020 Eu- ropean Business Awards for the Environment (EBAE Awards) in the products & services category, for the ie-Urban, a modu- lar, versatile 100%-electric Plug-in Chassis-Platform developed jointly with the Irizar Group. The award ceremony was chaired by His Majesty King Felipe VI, who emphasized in his message that this award shows the commitment of Spanish companies, a fundamental element for development and innovation, in fac- ing the challenge of the ecological transition; as well as the im- portance of companies being able to meet the needs of current generations without compromising the future of upcoming gen- erations. The ie-Urban also won the World Smart City Awards at the Smart City Expo World Congress 2019. Recently, it also became the Ecological Industrial Vehicle of the Year 2021 at the National Transport Awards. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 3 of 11 IBERIA FCC Medio Ambiente Spain 103 Successful implementation of e-mobility technologies in facility management services for the Catalan Health Institute (Barcelona) The Catalan Institute of Health (Institut Català de la Salut) award- ed FCC Medio Ambiente the 2-year facility management contract with a 2-year possible extension. The company’s relationship with this entity dates back to 2007, since then FCC has provided uninterrupted service. At this contract the company is committed to implementing clean technologies, that’s why 22 PHEV units with a Zero Emission Label from the (DGT) (equivalent to MOT) have been set up. In addition to the intelligent electric recharging installations that the company already has in its central base, additional charging points have been installed throughout the working area so that maintenance technicians can optimise their journeys and thus maximise effective working times. FCC Medio Ambiente achieves the ‘Calculo-Reduzco’ seal from the Spanish Office for Climate Change Renewal of the waste collection and street cleansing contract in Segovia FCC Medio Ambiente has achieved for the year 2019 and for the second time the Reduzco (“I reduce”) seal by the Span- ish Office for Climate Change (Oficina Española de Cambio Climático, OECC), as part of the process of registering carbon footprint and CO2 compensation, and absorption projects set up by the Spanish Ministry for Ecological Transition and Demo- graphic Challenge (MITERD). The OECC delivered the Reduzco seal certificate to FCC Medio Ambiente at a ceremony held at the company’s corporate headquarters in Las Tablas (Madrid) on 4th December. This accreditation joins the previous Calculo (‘I calculate’) seal, which since 2013 has endorsed FCC Me- dio Ambiente’s registration in the aforementioned process and which has been maintained ever since. Segovia City Council and FCC Medio Ambiente have signed the renewal contract of municipal solid waste collection and street cleansing services for a 10-year period, which represents an order book value of €56 million. FCC Medio Ambiente’s rela- tionship with the city of Segovia goes back to 1996. To serve the 51,964 inhabitants the service has a fleet of 17 brand new vehicles including 15 Compressed Natural Gas (CNG) lorries. As for the street cleaning service, which covers more than 300 kilometres of streets, the company will have 40 vehicles and specialised machinery. FCC Medio Ambiente will have a staff of 124 employees to carry out the different services. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 4 of 11 IBERIA FCC Medio Ambiente Spain 104 FCC Medio Ambiente pioneer in obtaining AENOR’s certification as a Healthy Organisation in all its locations in Spain FCC Medio Ambiente grows in the municipal services market in northwest Spain with the award of the A Coruña street cleaning contract FCC Medio Ambiente is the first company in its sector in mi- grating to AENOR’s new SIGOS (Healthy Organisation Manage- ment System) model. The wide scope of the certification covers nearly all FCC Environment’s activities in Spain. This distinction highlights all those initiatives that the entity is carrying out in relation to occupational safety, health promotion, sustainabili- ty and social responsibility with the community where it oper- ates, showing its commitment to continuous improvement. The SIGOS model is a very simple tool for its application and inte- gration, and of great effectiveness in the management of safe, healthy, sustainable and committed companies, regardless of their size, industry and geographical location. A Coruña City Council has awarded a joint venture led by FCC Medio Ambiente the new contract of street cleaning for 8 years with an order book value of almost €105 million. In order to serve the more than 245,700 inhabitants and cover 617 kilometres of city streets, the new service will have a fleet of 19 vehicles and specialised machinery, both electric and Compressed Natural Gas (GNC), with “Zero Emission” or “Eco” rating and a total workforce of 209 employees. As new features the service was reinforced in the city´s busiest areas, noise emission has been reduced due to the use of electric machinery and the city’s litter bins were renewed. Renewal of the waste collection and street cleansing service, and the vehicle-towing service in Oviedo Oviedo City Council and FCC Medio Ambiente signed the re- newal of the contract for waste collection and street cleaning for a 5-year period. At the same time, it was carried out the legal extension of the vehicle-towing service contract for the same period. The achievement of both contracts represents an order book value over €102 million. FCC Medio Ambiente’s relation- ship with the city of Oviedo goes back to 1967, and since that year the firm has been providing service continuously. To serve the 220,000 inhabitants, the collection service has a fleet of 43 vehicles, including 31 Compressed Natural Gas (CNG) lorries. As for the street cleaning service, which covers 384 kilometres of streets, the company has a fleet of 104 vehicles and special- ised machinery. To carry out the different services, the compa- ny will have a staff of 367 employees and, as part of its social commitment to inclusion and gender equality, will incorporate a minimum of three women per year into the job pool. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 5 of 11 FCC Environment Portugal FCC Ámbito IBERIA 105 Awarded the waste collection and street cleansing services in the Sousa Valley Renewal of the electrical waste management contract in Valencian Community Soil decontamination works in Postiguet Beach (Alicante) FCC Ámbito has carried out the soil decontamination work at the Postiguet Beach in Alicante in an area affected by hydrocar- bon contamination from an old pipeline that ran along the sea- front, as a result of a storm. The company proceeded to install a barrier to intercept and pump out the contaminating flow, to selectively excavate the affected sand with strong measures to mitigate the effect on the environment and to put in place the clean sand again. These works were carried out at the beginning of the summer season and allowed the beach to maintain its blue flag status and the full recovery of its use in the high season. The City Councils of Felgueiras and Lousada have awarded FCC Environment the contract for the collection and transport of urban waste and street cleansing for a period of 8 years. The total portfolio of the contract represents an order book val- ue over €12.5 million and an investment of almost €2 million. FCC Environment will serve more than 18,000 inhabitants and will operate for the first time in the Intermunicipal Community of Tamega and Sousa, in the north of Portugal. FCC Ámbito renewed its contract with Ambilamp for the man- agement of electrical waste at the region of Valencia for 3 years. The service is provided from the company’s facility in Vall d’Uixó (Castellón) and also includes the collection of lamps and flu- orescent tubes. This service has been delivered continuously since 2016. It is noteworthy Ámbito’s presence in the Waste from Electrical and Electronic Equipment (WEEE) management industry where, through a network of 4 plants, the WEEE is re- covered to recycle the resources it contains. Recovery work continues on the Arganda del Rey lagoon (Madrid) FCC Ámbito has continued working on a pioneering project in Spain to recover a very characteristic and recurrent contamina- tion at European level, such as the “acid tar lagoons” originating as a result of the regeneration processes of used automotive oils existing in the mid-20th century. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 6 of 11 UNITED KINGDOM FCC Environment UK 106 The entry of investment group iCON in the FCC Group’s Environmental Services area enhances its leadership position in the United Kingdom FCC and the investment group, iCON Infrastructure Partners (iCON), have reached an agreement for the latter to acquire 49% of the capital of FCC’s new subsidiary, Green Recovery Projects Limited (GRP). The deal for the stake in the owner of five Energy from Waste plants under FCC’s Environmental services division in the United Kingdom is worth £198 million, giving the compa- ny a total value, including its debt, of £650 million. The conclu- sion of the agreement is subject to the corresponding regulatory approvals. FCC Servicios Medio Ambiente Holding will retain control over the new subsidiary and its full consolidation, in ad- dition to 50% stake in the Mercia incinerator and 40% in the Lostock incinerator. The inclusion of iCON in GRP will help FCC to enhance its leadership position in the waste recovery sector in the United Kingdom and the development of new treatment plants, which are essential in succeeding in the ecological tran- sition and boosting the circular economy. FCC Environment reinforces its presence in the south of United Kingdom with a new contract in Kent FCC Environment signed a new contract for the manage- ment and operation of 12 Household Waste Recycling Cen- tres (HWRC) in the Mid and East Kent area for a 5 year period with a possible 5 year extension. The total order book value is £40 million. The contract started on the 1st November 2020. The company will bring a range of benefits to the contract in- cluding a dedicated haulage fleet and an experienced man- agement team, with extensive knowledge and understanding of operating both haulage and HWRC management. To date, FCC Environment has been present in Kent with the contract for the management of the Pepperhill transfer station and the construction of its HWRC, which began in 2008. The company also owns and operates the Allington Energy from Waste facility (EFW), which services the entire county. Midlothian City Council appoints Swedish energy firm Vattenfall as preferred bidder for long-term joint venture partnership Midlothian City Council, has appointed Swedish state-owned energy company Vattenfall as a leading candidate to become its 50/50 partner to set up an innovative new Energy Services Company (ESCo). The new entity will focus on delivering a wide range of energy projects, the first of which will be an innovative fourth-generation, low-carbon district heating network to the new Shawfair town in the north of the city area, on the outskirts of Edinburgh. The network will benefit from heat supplied by FCC Environment, which operates Edinburgh and Midlothian Councils’ state-of-the-art Energy from Waste facility (EfW) near Millerhill. The EfW is fuelled by waste collected by Midlothian, East Lothian and Edinburgh councils that would otherwise go to landfill. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 7 of 11 UNITED KINGDOM FCC Environment UK 107 New equipment to speed Buckinghamshire´s recycling (England) Planning Application approved for FCC Environment´s new Energy from Waste facility in Drumgray (Scotland) FCC Enviornment has introduced 9 loading machines for Buck- inghamshire County Council’s Household Recycling Centres and 5 new roll-on/off vehicles that will ensure that waste and recycled materials from the centres reach the right destination. The 5 new vehicles will speed the process of getting full skips to compost and recycling destinations or to Greatmoor Energy from Waste facility (EfW) and bring empty skips back. The cost of these new vehicles is £1.8 million, providing an annual saving of £1.2 million across the waste management service. The new vehicles have the latest Euro VI engines with Adblue exhaust systems to make them more efficient and reduce emissions. They are fitted with real-time monitoring systems that allow the County Council to track and improve fuel efficiency. North Lanarkshire Council´s Planning Committee unanimous- ly approve the planning application for the development of the Drumgray Energy Recovery Centre (DERC) near Greengairs. Following the approval, the company will seek to bring the de- velopment of the DERC forward as soon as possible, with an anticipated full-operational date of summer 2024. The DERC, which represents a major investment of over £250 million, will significantly improve the way FCC Environment deals and treats residual waste, in line with the Scottish Gov- ernment strategy and North Lanarkshire Council’s aspirations. Furthermore, the facility has the capability of exporting up to 25.5MW of electricity, as well as the potential of exporting heat to buildings in the local area such as commercial developments, existing and proposed housing developments, schools and hospitals. FCC Environment UK awarded several accolades during the year including the prestigious British Safety Council Sword of Honour 2020 FCC Environment won the prestigious Sword of Honour 2020 from the British Safety Council. The company was one of the only 66 organisations worldwide to achieve this distinction, which is awarded to companies which have demonstrated ex- cellence in the management of health and safety risks. In order to compete for the Sword of Honour, an organisation first have to achieve the maximum five stars in the British Safety Coun- cil´s management Audit Scheme in the period August 2019 to November 2020. It has also demonstrated to an independent panel of experts that it has achieved excellence in their Health and Safety management across the business, from the shop floor to the boardroom. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 8 of 11 CENTRAL AND EASTERN EUROPE FCC Environment CEE 108 Finalisation of the deodorisation System of the composting plant in Zabrze (Poland) Renewal of the operating period for the extension and expansion of the Arad landfill in Romania for 10 years The air deodorisation of the composting plant at the Zabrze environmental complex has been successfully completed. The aim of the investment, which started in September 2018, is that the entire composting process of biodegradable waste generat- ed from municipal waste (which currently takes place partly out- doors), will be carried out in a hermetic hall. The post-process air will be directed to the biofilter, where it will be cleaned and stripped of all harmful substances and prevented from reaching the atmosphere. The value of the investment exceeds €3 million (PLN 15 million). FCC Environment has signed the renewal of the operating con- tract for the extension and expansion of the Arad landfill for a further 10-year term. The contract, which was signed in 2002 for 20 years, will now run until 2032. The company transformed the local open-air landfill into an official regional landfill, and later on started the operation of waste transfer stations and one of the composting plants, all serving the County of Arad. During these years FCC Environment has become one of the most important partners of the local community in waste manage- ment issues and has continuously strengthened its position as an essential partner in the new Integrated Waste Management system of Arad County. FCC Environment Czech Republic renewed for 3 years the contract with Hyundai Motor Manufacturing Czech s.r.o. FCC Environment has renewed for 3 years the contract for the complex waste management of Hyundai Motors Manufacturing Czech s.r.o. across the whole Czech Republic which includes the collection and disposal of all waste, as well as the treatment of recovered raw materials (RWM). Hyundai is one of the leaders in the automotive industry in Czech Republic and has been an FCC Environment client since its establishment in the country in 2008. In 2020 it represented a turnover of more than €2 million. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 9 of 11 CENTRAL AND EASTERN EUROPE FCC Environment CEE 109 Official opening of Biala Landfill in Poland: investment in ecology, health and safety of residents Awarding of the solid urban waste collection and treatment services in Bytom (Poland) New reverse-osmosis leachate treatment plant at Gyál landfill (Hungary) On September 23, the new asbestos landfill was official- ly opened in Biala (Wieluń poviat, Lodz province); a new FCC Environment investment long awaited by the local authorities. Thanks to the new facility it will be possible to store hazardous waste in a completely health safe and environmentally friendly way. The new landfill has a storage basin of more than 2 hec- tares, social rooms, offices, manoeuvring yard and weighbridge with accompanying infrastructure. FCC Environment has exten- sive experience in the field of specialized waste storage and dis- posal of hazardous waste. In Poland it already operates a landfill for hazardous waste, including asbestos, in Radomsko, and is also operating two municipal landfills. This investment solves the problem of illegal asbestos dumping faced by Biala municipality authorities. FCC Environment was awarded the contract for the collection, transportation, treatment and selective collection of solid urban waste of Bytom in the province of Upper Silesia (Poland). The contract also covers the collection of bulky waste and the mu- nicipal recycling centre. The company will also collect construc- tion waste by providing BIG BAG containers and bags. To serve the more than 164,000 inhabitants of this city, the ser- vice will have a staff of approximately 130 people and 27 spe- cialized vehicles for various purposes, such as compactor-col- lectors, open-box vehicles with crane for BIG-BAG containers or vehicles equipped with washing machines. Early 2020, following a trial period when all data were thor- oughly controlled and processes were refined, the two-stage reverse-osmosis plant at Gyál landfill site in Hungary, equipped with ion exchangers, went into full operation. The system has already been working for 1,500 hours and has treated 10,000 liters of leachate, resulting in an economic pro- duction of 4,600 liters of absolutely clean water, which goes into the tank where rainwater is also collected. The purification system is not only environmentally friendly, but also represents an enormous saving in leachate treatment costs, the amount of which is increasing due to the expansion of the landfill’s surface area and the increase in treatment prices of the subcontractors. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 10 of 11 USA FCC Environmental Services 110 Waste Collection contract in the city of Edgewood (Florida) Operations begins for Volusia County (Florida) Waste collection contract for Volusia County municipal facilities (Florida) The city of Edgewood, in Orange County, Florida, awarded FCC Environmental Services the urban solid waste collection contract for a period of up to 20 years and a total backlog of $12 million. This award also includes the franchise to collect all the city´s com- mercial solid waste. As Edgewood is located in Orange County where the company already provides services and has a signifi- cant presence with a large yard and its own Compressed Natural Gas (CNG) station, the fleet for this new contract will share the same depot and will also be gas powered. FCC continues with its commitment to sustainability, with significant environmental advantages and providing important operational synergies to the contract. With this award, FCC Environmental Services consol- idates its presence in the State of Florida, where it already pro- vides collection services to more than one million inhabitants. FCC Environmental Services began operations in Volusia County in April 2020. The new urban solid waste collection contract, which will serve 45,000 households, has a term of 7.5 years, with a possible 7-year extension, and represents a potential book value of up to $90 million. The contract has a staff of 45 employees and a fleet of 35 new Compressed Natural Gas (CNG) vehicles, fuelled through an on-site fuel compressor sys- tem. Volusia represents the fourth FCC Environmental Services’ contract in Florida, the second one operating with CNG vehicles, and is based in Daytona Beach Township. Volusia County, located in the East coast of Florida, has award- ed FCC Environmental Services the contract to collect the solid waste from its public facilities. The contract started on March 1, 2021, and is serviced from FCC’s Daytona Beach yard, which is currently providing residential collection services for Volusia County, with a backlog of more than $77 million. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Other highlights | Page 11 of 11 USA FCC Environmental Services 111 Awarded the contract for the transportation of recyclables in the City of Omaha, Nebraska Commissioning of the service in Omaha Nebraska Renewal of the recyclable management contracts in Huntsville and Laporte (Texas) The city of Omaha (Nebraska) has awarded a new contract to FCC Environmental Services for the transportation of all recycla- ble materials for a period of 5 years and a value of $2.5 million. This contract is additional to the two existing agreements with the City from 2019, one for the 10-year collection of residential solid waste with possible extensions and a backlog up to $560 million; and another for the collection of seasonal yard waste. On 30th November, FCC Environmental Services started de- livering urban solid waste and pruning waste collection, and household recycling centre management in the city of Omaha, Nebraska. The new contract represents an order book value of more than $500 million for a period of up to 20 years. The company will provide the service with a fleet of 69 vehicles powered by Compressed Natural Gas (CNG), with the important benefits of reducing the environmental impact and carbon foot- print in the city. In addition to its important size, the contract has a special strategic importance for FCC, since it will serve as a development pole for its future expansion in the Midwest. FCC Environmental Services has renewed for a year the recycla- ble processing contracts for the cities of Huntsville and Laporte (Texas). The processing of materials will be carried out at the company’s material recycling facility (MRF) in Houston, which has been operating since April 2019 and was honoree by the NWRA as the Best Recycling Facility 2020 of the United States. FCC has processed nearly 200,000 tonnes of materials in its Texas recycling facilities. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Excelence and sustainability | Page 1 of 6 Excelence and sustainability 112 The following graph shows the historical evolution of certifications and accreditations obtained in Spain by FCC Medio Ambiente: Service excellence FCC Medio Ambiente has been helping municipalities for over 110 years with the management of services they offer their cit- izens. The company is aware of the importance these servic- es have for the development of the cities, and this constant concern for customer satisfaction has led it to stablish a com- mitment to excellence which has been certified by entities of recognised prestige outside the organisation. In today’s society it is fundamental to consider not only customers, but all stake- holders, so the company’s commitment to excellence is mani- fested in a Management System that covers other areas, such as caring for the environment, seeking efficiency in services, the health and safety of workers, innovation and, especially, work- ing towards the social and labour integration of the disadvan- taged groups that may be at risk of exclusion. Since 1997 FCC Medio Ambiente has been implementing dif- ferent aspects of the Management System and certifying them with external organisations, whether related to quality and environmental or occupational health and safety procedures, or about energy efficiency, healthy organisation or even tour- ist quality. It was the first company in the sector to obtain the SIGOS Healthy Organisation certificate and its protocols against COVID-19 have recently been certified in accordance with AENOR requirements. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Excelence and sustainability | Page 2 of 6 Milestones in terms of Excellence 113 Ámbito: extension of the EMAS register for the Vall d´Uixò (Castellón) facility, seventh industrial waste treatment plant to achieve this registration. Spain First Company in its sector to obtain the SIGOS (Health Or- ganisation Management System) certificate from AENOR. Spain: certified for the second time with the “Reduzco- Calculo” (I reduce – I calculate) seal by the Spanish Office for Climate Change (Oficina Española de Cambio Climático, OECC) from the Ministry for Ecological Transition and De- mographic Challenge. Achieved the AENOR certification of Protocols against COVID-19. Ámbito: UNE-EN-ISO 9001:2015 certification is achieved for the affiliate company Mediciones Comerciales Ambientales, S.L. incorporating the activity of hazardous and non-hazard- ous waste management as a trader. Sara Afu-Clackett, participant in FCC Environment UK’s ‘Graduates’ programme. United Kingdom FCC Environmental Graduates Programme. Despite the dif- ficulties caused by the pandemic, waste and recycling com- panies, including FCC Environment UK, have once again supported National Apprenticeship Week held from 8-14 February. The programme is designed to give new gradu- ates hands-on experience and training in a range of waste management projects. Each graduate is assigned a mentor to guide them every step of the way and is awarded quali- fications relevant to their specific role, from mechanical and electrical to sustainable resource management and busi- ness administration. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Excelence and sustainability | Page 3 of 6 Sustainability In 2020, the resources invested by FCC Medio Ambiente Ibe- ria for the development and implementation of initiatives whose benefits directly or indirectly reverted to society have resulted in an economic valuation of €2.6 million. According to the classification criteria, 66% of the resources have been dedicated to environmental initiatives and the re- maining 34% to social actions. However, in terms of the dis- tribution of initiatives in numbers, social actions predominate with 62%. 114 Sustainability highlights 2020 During 2020, the following achievements in sustainability should be highlighted: Sustainable activities and projects imply a balance in the economic, social and environmental spheres of the com- pany. To achieve this balance, FCC Medio Ambiente has developed a sustainability strategy with a 2050 horizon, which has recently been presented and will be disseminated externally throughout 2021. In terms of Climate Change, FCC Medio Ambiente achieved an average emission intensity reduction of 5.39% compared to the three-year period 2016-2018, for scopes 1, 2 and 3, on its way to reaching carbon neutrality by 2050. In addition to the aforementioned improvements in the waste treatment facilities, the improvement of the Carbon Footprint is influenced by the increase of more efficient ma- chinery with a total of €3,688,455 invested in electrical machinery compared to the €2,800,000 invested in 2019. In 2020, the coronavirus pandemic and the lockdown has increased the sense of belonging and collaboration. A total of 357 insertions of people at risk of exclusion have tak- en place representing a strong commitment with the local communities affected. From an occupational safety point of view, the accident re- duction plan was implemented with great success in 2020, with a reduction of almost 30% in the frequency rate and almost 20% in the severity rate. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Excelence and sustainability | Page 4 of 6 115 A road map that includes very demanding goals and commitments with a high level of added value for the company and society as a whole 2050 Sustainability strategy During 2020 FCC Medio Ambiente has laid the founda- tions for future business development, establishing its Sustainability Strategy with a vision to 2050 aimed to all activities in Spain and Portugal. It is an ambitious 30- year project, reflecting the company´s commitment to support compliance with the Sustainable Development Goals (SDG) and tackle economic, social and environ- mental challenges on a global scale. Access here the video on FCC Medio Ambiente´s 2050 Sustainability Strategy. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 116 FCC_Annual Report_2020 | Business lines | Environment | Excelence and sustainability | Page 5 of 6 Aligned with the 2030 Agenda: A new strategy to 2050 The new strategy is a roadmap that integrates very demanding environmental, social, excellence and good governance commitments which have high added value for the company and society as a whole. Circular economy and climate protection FCC Medio Ambiente Iberia has continued with the inno- vation projects launched in the area of the circular economy and the use of clean energy, which are described in the cor- responding chapter, and measures have been taken to raise awareness of the need to improve waste treatment facilities through participation in different forums: UNE, Chamber of Commerce, MITERD and the UN’s Global Compact. Achieving carbon neutrality, 100% “ECO” or “Zero emis- sion” vehicle fleet or increasing investment in R&D&I up to 1% of annual revenues, are some of the objectives of the climate protection goals for 2050. Water and biodiversity protection Social and employment objectives FCC Medio Ambiente has set as a key objective to encour- age the rational and efficient consumption of water and to promote the use of water from alternative sources. By 2050, the goal is for 100% of the water used to come from these sources. It therefore promotes the use of reclaimed water and water-saving technologies, mainly in watering parks and gardens and in street washing. The company is known for its involvement in the protection of biodiversity in the urban context through its ground main- tenance activities (3,825 ha of green areas and 786,355 trees managed), as well for beach and coast line cleaning services, which contribute to improving the quality of the Spanish coastline lodging marine fauna. In line with SDG3, SDG5, SDG8 and SDG10, the company makes a series of commitments to employees linked to the generation and retention of talent, diversity and inclusion, equal opportunities and occupational health and safety. The company aims to achieve gender equality by 2050 and will develop the Female Mentoring Program. A reduction of ac- cident rates to 50% is expected by the same date. Excellence and good governance objectives FCC Medio Ambiente, in line with SDG9, SDG11 and SDG12, is a benchmark in terms of the implementation of systematic and homogeneous work guidelines within the organisation, which enable it to make its processes efficient, as indicated in the Excellence section. With regard to good governance, compliance controls fo- cused on the fight against corruption and other crimes, and the encouragement of transparency in the value chain, are maintained and improved. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Excelence and sustainability | Page 6 of 6 Other sustainability milestones 117 FCC Medio Ambiente winner of the EBAE Awards 2019/2020 for its 100%-electric, industrial chassis-platform for urban service vehicles. El Puerto de Santa María City Council and FCC Medio Am- biente presented the Chamaeleo Biodiversity Conservation Project, financed by FCC at the Coto de la Isleta Municipal Environmental Education and Activities Centre (CEAAN). FCC Medio Ambiente selected as one of the “101 Business FCC Medio Ambiente´s ie-Urban wins Spain´s Ecological In- Climate Initiatives” for 2020. dustrial Vehicle of the Year 2021 award. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 1 of 12 118 R&D&I projects have involved an investment of €2.34 million in 2020, a 2.63% increase over 2019 Innovation and technology Despite the complicated year 2020, mainly due to the anoma- lous situation in which companies, suppliers, collaborators, re- search entities and public institutions have been immersed as a result of the COVID-19 pandemic, FCC Medio Ambiente has not stopped working on innovation projects, some of which will come to light in the near future. At national level, a new Spanish Strategy for Science, Tech- nology and Innovation (EECTI) 2021-2027 was approved in 2020, including activities aimed at solving the problems caused by COVID-19 and stresses the importance of consolidating and enhancing science and innovation as a tool for the social, eco- nomic and industrial reconstruction of our country. It should also be noted that in September 2020, the material recycling facility in Houston (Texas), built, financed and man- aged by FCC Environmental Services, and operational since April 2019, has been honoured with the Best American Recy- cling Facility of the Year 2020 award by the NWRA (Nation- al Waste and Recycling Association). FCC already won the same award in 2017 for its facility in Dallas (Texas), allowing it to become the biggest recycling company in Texas. For another year, FCC Medio Ambiente upheld the certification of its R&D&I Management System, in accordance with the UNE 166002 standard. R&D&I projects have involved an investment of €2.34 million in 2020, a 2.63% increase over 2019, and are classified into four knowledge areas: Vehicles, mobile machinery and facilities Management and recycling of waste - Circular Economy Information and Communication Technologies Sustainable development Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 2 of 12 Most significant projects of the R&D&I Management System VEHICLES, MOBILE MACHINERY AND FACILITIES Projects associated with vehicles and mobile machinery During 2020, FCC Medio Ambiente has developed alternative channels and means in order to continue working with its col- laborators and thus be able to launch new research projects, most of which will have real prototypes along 2021. Design and manufacture of a new rear-loading compactor collector, non-existent on the market, of very small dimen- sions, with a 10 m3 double-compartment bodywork with pure electric propulsion and body drive and battery self-re- charging system by Compresses Natural Gas (CNG) engine on a 2.2 metres-wide, special narrow chassis and with a legal payload of over 2 tonnes of waste. Final work on obtaining pure electric chassis, 2 metres wide and 18 tonnes GVW (registrable with 19 tonnes), which is not existing on the market, and whose first prototype will be fitted with a tank for watering and washing streets, pave- ments and pedestrian areas. FCC Medio Ambiente has worked with a European manufacturer of new-generation lithium-ion batteries to install them on this first prototype, and which may also be used in other diverse equipment. Development and start of production of the first unit of a new 2 metres wide, side-loading compactor collector on a com- pressed-natural-gas chassis, also of very small dimension (2 metres wide and a maximum of 7 metres long), which al- lows a legal payload of 5 tonnes of waste and which covers a range of side-loading collectors non existing to date. Development and manufacture of a new vehicle called FASE 3: Unit of very small dimensions for collection in areas of maximum access difficulty on a pure electric chassis, which will incorporate a system of four 240-litre bins for 4 different fractions with a loading and unloading system on the chas- sis platform by means of a set of pulleys and belts for mini- mum operator effort, with a waste hopper for a fifth fraction. 119 FCC Medio Ambiente has also laid the grounds for establishing consortiums with other companies, technological organisations and universities that will enable it to undertake two additional lines of research in 2021, which will be materialised in new pro- jects eligible for public support over the next 3-4 years. The first one is dedicated to street cleansing machinery which, by incor- porating certain automatisms, aims to make the street cleans- ing service cheaper than with current machinery; the second line seeks to take advantage of synergies in the commitment to new and future energy vectors that are completely respectful of the environment, with the ambitious objective of being applied to any equipment or machine that provides urban services. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 3 of 12 120 Drainage system cleaning tank. CNG Station Omaha, Nebraska (USA). Further progress on the EU Project “Assets4rail” by FCC Environment Austria FCC takes place in the 30-month EU research project “Assets4rail” since tend of 2018, to clean drainage systems in railway tunnels without blocking traffic. During this EU project, the “HIPPO 1,500m” system is being developed out of the “HIPPO 600m”, with the aim of extending from 600 to 1,500 metres the advantages of this high-pressure head cleaning system with built-in camera for simultaneous in- spection of 600-metre-long circular tunnel drainage ducts for the Austrian Railway Company (ÖBB). It is intended to reach lengths of up to 3,000 metres. The cleaning system offers the great advantage that tunnel traffic can continue almost uninter- rupted, thus avoiding traffic jams. It also represents a significant cost reduction for customers compared to current cleaning and inspection solutions. Projects associated with facilities New state-of-the-art Compressed Natural Gas Station in Omaha In October 2020, FCC Environmental Services signed a three- year agreement with New York-based compressed natural gas marketer TruStar, which led to the construction of a new, state- of-the-art compressed natural gas (CNG) station in Omaha in just six months. TruStar meets the requirements for the Low Carbon Fuel Stand- ard (LCFS) in California, allowing for a credit in the value of 1 metric tonne of CO2 reduction compared to the baseline CO2 emission. In meeting the Renewable Identification Number (RIN) under the US EPA standards, FCC will receive 5% of the value of all RINs for the life of the TruStar agreement. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 4 of 12 121 MANAGEMENT AND RECYCLING OF WASTE - CIRCULAR ECONOMY Leader in biomethane: Green gas FCC Medio Ambiente commits to turn the “waste treatment centre” into a “biomethane fuel producer” with the capacity to supply all types of vehicles. To do this, it has started research with the development of some projects financed under the EU LIFE programme: LIFE LANDFILL BIOFUEL (LIFE18 ENV/ES/000256: Inte- gral management of the biogas from landfills for use as vehicle fuel) (2019-2022) Project official website: https://www.landfillbiofuel.eu/en/ Project developed by a consortium made up of seven entities (FCC Medio Ambiente as project leader, Sysadvance, Gasnam, Cartif, Seat, Iveco and University of Granada), co-financed by the European LIFE programme and approved in June 2019. The project has a budget of €4.67 million and will last 3.5 years. The Project aims to upgrade landfill biogas to produce biome- thane suitable for vehicle use. The objective is a more efficient management by obtaining biomethane from a native and abun- dant energy source. It is planned to generate enough biomethane to supply annually 93 heavy-duty vehicles and 2,036 light vehicles at the Ecocen- tral Environmental facility, operated by FCC in Granada. Subse- quently, it will be replicated in other facilities in Europe. FCC Medio Ambiente commits to turn the waste treatment centre into a biomethane fuel producer Integral management of the biogas from landfills for use as vehicle fuel. Charging station Himberg (Austria). Installation of two new electric charging stations in Himberg (Austria) In May 2020, FCC Environment installed the first two charging hubs at the base in Himberg, Lower Austria. These two new stations include ‘P30 X 22kW’ charging boxes, mounted on a double bracket, and allow for additional points when needed in the future. Charging stations for electric vehicles are also planned to be introduced at the Linz, Graz and Klagenfurt bas- es in 2021. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 5 of 12 122 Development of circular economy and decarbonisation of transport METHAmorphosis (LIFE 14/CCM/ES/000865: Waste streams treatment for obtaining safe reclaimed water and biomethane for transport sector to mitigate GHG emissions) (2015-2020) LIFE INFUSION (LIFE19 ENV/ES/000283: Intensive treatment of waste effluents and conversion into useful sustainable outputs: biogas, nutrients and water) (2020- 2024) Project official website: https://www.life-methamorphosis.eu/en/home Project official website: https://eurecat.org/en/portfolio-items/life-infusion/ The METHAmorphosis project, funded by the EU’s LIFE pro- gramme, is an example of exploiting synergies in the FCC Group, between FCC Medio Ambiente and Aqualia. The project ended in 2020, reaching all the objectives pursued. Performance tests with biomethane have been successfully carried out on FCC Medio Ambiente waste collection vehicles. The European Com- mission has placed METHAmorphosis as an example of the LIFE programme and appears within the five best policies related to climate change in the EU, which meant a budget of €200 billion along the period 2014-2020. The objective was to develop an innovative process for treat- ing effluents and obtaining biofuel (biomethane) from municipal waste as well as agro-industrial waste. Project developed by a consortium in which FCC Medio Ambi- ente participates through its subsidiary in Ecoparc del Besós, EBESA, together with seven entities (Fundació Eurecat as pro- ject leader, AMB, AMIU, Aqualia, Cogersa, Detricon BVBA, EBE- SA and IRTA), co-financed by the European LIFE programme. It has a budget of €3.12 million and will last 4 years. Once this period is over, two replications will be carried out in Spain. The main objective of LIFE INFUSION is to demonstrate, with a circular economy vision, an innovative scheme for the recovery of resources (biogas, biofertilizers and reclaimed water (RW)) from effluents in municipal management through an almost zero discharge process. Technical tests for using biomethane as fuel in heavy-duty vehicles in METHAmorphosis Project. LIFE Infusion scheme. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 6 of 12 Leading a circular economy for plastic FCC Medio Ambiente’s strategic objective is to avoid landfill dis- posal of plastics contained in urban waste and reduce their pro- cessing by energy recovery, both through the implementation of innovative recycling processes. This new line of research has been under development since 2018 at Ecocentral environmen- tal complex in Granada: Life4Film treatment line in the Ecocentral plant, in Granada (Spain). LIFEPLASMIX (LIFE18 ENV/ES/000045: Plastic Mix Recovery and PP& PS Recycling from Municipal Solid Waste) (2019-2022) LIFE4FILM (LIFE17 ENV/ES/000229 Post-consumption film plastic recycling from municipal solid waste). Spain and Germany (2018 –2021) Project official website: http://lifeplasmix.com/en/plasmix/ Project official website: http://life4film.com/en/4film-en/ Project developed by a consortium led by FCC Medio Ambiente with other seven entities (Stadler, Lindner, Pellenc, Andaltec, Anaip and University of Granada), co-financed by the European LIFE programme and approved in June 2019. The Plasmix Project aims to study the recovery and the flow of the Mix of Plastics from municipal waste, searching for the optimal recovery line for each type of material contained in such flow (PP, EPS, and PVC). It has a budget of €5.33 million and will last 3.5 years. The main objective of LIFE4FILM, a project led by FCC Medio Ambiente, is to avoid landfill or energy recovery of plastic film (LDPE) present in urban waste through an innovative recycling process on a semi-industrial scale using a 10,000 t/year capac- ity recovery line at the Ecocentral plant in Granada, with the aim of demonstrating its profitability and replicability at an European level. The project has a budget of €4.54 million and a term of 2.5 years. Once the project is finished, five replicas will be carried out in other plants in Europe. 123 FCC Medio Ambiente implements innovative recycling processes to avoid landfill disposal of plastics contained in urban waste LIFE4Film scheme. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 124 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 7 of 12 The sustainable path in waste management: optimisation of composting Creation of new by-products and biomaterials SCALIBUR (Scalable Technologies for Bio-Urban Waste INSECTUM: (Recovery of urban by-products and bio- waste through bioconversion with insects to generate innovative products in strategic sectors) Recovery) Project official website: www.scalibur.eu A CIEN (National Business Research Consortium) programme from the CDTI (Centre for the Development of Industrial Tech- nology), led by FCC Medio Ambiente, which involves imple- menting an innovative urban bio-remediation recovery system based on its bioconversion through insects in products with a high added value for the industry (the human food sector, nutraceuticals/pharma, animal feed, fertilisers and chemicals). It proposes feeding insects with organic matter from selective collection, organic matter recovered from MSW and digestate from biomethanation. SCALIBUR is a project from the Horizon 2020 edition, led by ITENE (ES), in which FCC Medio Ambiente and Aqualia partic- ipate as well as various entities from different European Union countries. carry out a comprehensive study on urban waste quality, logis- tics and treatment systems and WWTP sludge to obtain new by-products and biomaterials with a high added value for the chemicals industry. Prototypes will be rolled out in three pilot cities across Europe: Madrid (Spain), Albano Laziale (Italy) and Kozani (Greece) to The project has a budget of €10 million and will last 4 years. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 8 of 12 B-FERST Bio-based fertilising products as the best DEEP PURPLE Domestic Extraction of Emerging Prod- Waste gasification practice for agricultural management sustainability ucts with Purple Phototrophic Bacteria RECYGAS Urban solid waste recovery through the pro- Project official website: www.bferst.eu Project official website: www.deep-purple.eu duction of recycled Syngas 125 Objective: Integrate the recovery of biowaste in agriculture by creating new mineral and organomineral fertilisers as well as developing the corresponding nutrient mixtures for agricultural application. Objective: investigate, at a pilot scale, the integrated application of the most innovative techniques in the management of the dif- ferent effluents generated in an organic-waste treatment facility (digestate, leachate and biogas), by applying purple phototropic bacteria for the recovery of by-products, such as polyhydroxy- alkanoates and hydrogen, single cells, or nitrogen and phos- phorus for its use as fertilisers. Project official website: www.energy.sener/es/proyecto/ recygas-valorizacion-residuos-solidos-urbanos-median- te-gas-reciclado Project subsidized by the Hazitek program of the Basque Gov- ernment, with the support of the European Regional Develop- ment Fund. FCC Medio Ambiente is working on this project in partnership with the companies SENER, Ingeniería y Sistemas, S.A. and ZABALGARBI, S.A. The research centres GAIKER, TECNALIA, Institute of Carbochemistry of CSIC, CENER and Institute of Chemical Technology of the Polytechnic University of Valencia will also participate in this project. Recygas is focused in the investigation of waste gasification and enables the use of clean synthetic gas obtained from the gasification process to start chemical synthesis routes or its use in power generation with high efficiency cycles. The technology incorporated in the project would allow to climb the waste man- agement hierarchy pyramid to improve recycling. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 9 of 12 126 INFORMATION AND COMMUNICATION TECHNOLOGIES VISION Within the framework of providing services to cities it is essential to have ICT (Information and Communication Technology) tools that support the provision of effective, efficient, sustainable and comprehensive services. The agile management of information must be a priority, that’s why it’s necessary to gather the knowledge accumulated in the management of services in order to offer the different agents involved (administration, citizens, companies), the best prac- tices, efficient processes and optimised communications with modern and collaborative tools. It is also needed for managing, through an integrated system, all operational, legal, environmental, resources (material and hu- man), validation and service matters that allow achieving excel- lence in the workplace. FCC Medio Ambiente has developed “VISION – Intelligent plat- form for the provision of citizen services” which allows to meet the objectives described, responding to the current require- ments of our customers and being prepared for the future chal- lenges that appear in the provision of the services. VISION Operational Scheme. Project CURSOR. Drone tests. Recycling construction timber Project CURSOR: Saving lives with drones FCC Environment Austria is participating in this EU project, which runs until the end of August 2022 and aims to optimise search campaigns for people in emergency situations with the latest technology using drones, miniature robots and new types of sensors. FCC provides free of charge wood waste for the search tests of the emergency services, thus supporting ISCC (International Security Competence Center GmbH). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 10 of 12 127 During 2020 technological upgrades were undertaken to en- sure performance, security and business continuity. The incor- poration of processes into the platform went on and innovative solutions for service management were implemented, among them: Hosting of the whole infrastructure of the platform in the AWS cloud with system redundancy to ensure high availa- bility both physically and geographically. Integrating the “Map Server” functionalities in the system, which allows an increased efficiency in the management of geographic information. Deployment of the Occupational Risk Prevention module, fully integrated with the rest of the information in the system, including the preparation of Risk Assessments, which is the central point of the system. Development of a “Facial Recognition” system focused on offering reliable, agile and contact-free identification solu- tions. It has been implemented on a personnel check-in and check-out system. Inclusion of the Environmental Footprint calculation in the platform to provide more information on the company’s sus- tainability system. Incorporation of mobile inspection technology in the sewer- age network. On site street data survey when studying the urban environ- ment as part of the making of a tender proposal. Tax reporting system based on biogas generation data from treatment operations. VISION Software. Map servers. VISION Software. Risks assessment. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 128 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 11 of 12 FCC ONLINE SOLUTIONS: applications that allow cus- tomers the online request of container rentals and col- lection services FCC Environment CEE, aligned with the priorities defined in its 2018 - 2022 strategy, is constantly developing and imple- menting new online solutions and communication channels with its customers. Saving time with simple solutions, flexibility and great customer service - anytime, anywhere - are some of the advantages of the online products offered by the compa- ny. These products demonstrate that new B2C (Business to Consumer) technologies can also be effectively integrated into traditional businesses, such as waste management. During 2020 FCC Environment introduced online new features in Slovakia and the Czech Republic: Odpadonline.sk. Online tool which allows customers to order containers and ensure the safe removal and disposal of their waste with just a few clicks Vylož Smeti (Eslovaquia). App available on Google Play and App Store that offers a digital calendar for tablets and mobiles with the collection dates of the different types of waste and where reminders can be set to notify collections in advance. Naše Popelnice (Chequia). Updating of the portal for the elec- tronic registration of waste container emptying. On this portal, municipalities and citizens can view detailed data and track the waste production and the container emptying, as well as the waste weight of containers. SUSTAINABLE DEVELOPMENT In 2020, the Interreg SUDOE project “KET4F-Gas – Reduction of the Environmental Impact of Fluorinated Gases in the Su- doe Space through Key Enabling Technologies”, in which FCC Ámbito takes part, has continued to be developed. The pro- ject is financed by the European Regional Development Fund through the European programme Interreg Sudoe, and aims to respond to the challenges of climate change in the Sudoe space. The project goal is to investigate alternatives that con- tribute to the reduction of greenhouse gas emissions by de- veloping and improving technologies to recover and replace fluorinated gases. KET4F-Gas Project poster. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 129 FCC_Annual Report_2020 | Business lines | Environment | Innovation and technology | Page 12 of 12 KET4F-Gas is coordinated by Universidade Nova of Lisboa, has a duration of 3 years and an overall funding of €1.7 million. The project is made up to 14 partners and 6 associates, from Spain, France, Portugal and United Arab Emirates, among which are universities, companies, waste and environmental agencies and other public and private entities with the common interest of dealing the Kigali Amendment. FCC Ámbito’s participation in this project reflects its strong commitment to sustainable development and the fight against climate change through innovation, and the firm brings value by offering its extensive experience in residual refrigerants, ac- quired over 22 years in the management of discarded refrig- erators at its plant in Pont de Vilomara (Barcelona). Along this time, nearly 100,000 tonnes of refrigerators have been treated. FCC Ámbito also has an exclusive facility for the reception and reconditioning of gas-containing refuse for its shipment to final management, located in Fustiñana (Navarra). Bici Sendas (Cycle Lane) project Among others, the specific objectives of FCC Ámbito include: FCC Ámbito takes part in the Bici Sendas (Cycle Lane) CIEN project, led by FCC Construcción. The project goal is to de- velop a new generation of cycle lanes that will be sustainable, energy self-sufficient, intelligent, decontaminating, integrated and safe. They will also be modular, produced with sustaina- ble materials and can be custom-designed to integrate various technologies according to the needs to be covered. The Project is expected to last 4 years (2019-2023), and is sup- ported by the most advanced universities and technology cen- tres: CSIC (Consejo Superior de Investigaciones Científicas), University of Zaragoza, UPC (Universitat Politècnica de Catalun- ya), AITIIP, CIMNE (International Centre for Numerical Methods in Engineering), LEITAT and Luraderra. 1 Refuse valorisation: • Select, adapt and characterise refuse with high Si/Al con- tent for their potential incorporation as raw material in an AAM agglomerant. • To study the suitability of different wastes as support mate- rials for the adsorption of hydrocarbons and for the immo- bilisation of micro-organisms. 2 Development or biodecontamination techniques: • Isolating strains of microorganisms from real environment, determining their hydrocarbon degrading capacity, and in- vestigating their immobilisation in the conditioned materials to generate the biomaterial that will be incorporated into the cycle lane modules. 3 Integrating the developed materials with other researched technologies in the project, as a form of a final demonstrator. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle Aqualia provides technical solutions and provides quality services in all phases of the end-to-end water cycle to improve the well- being of the people and the communities where it operates, preserving water resources and the environment and improving management efficiency. 130 End-to-end water management cycle Activity in the Water area _ 139 Highlights in 2020 _ 142 Service excellence _ 143 Innovation and technology _ 154 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle 131 Aqualia is a specialist operator that supports governments and communities, providing efficient solutions to water supply, sanitation and treatment problems. Aqualia provides technical solutions and provides quality servic- es in all phases of the end-to-end water cycle to improve the well-being of the people and the communities where it oper- ates, preserving water resources and the environment and im- proving management efficiency, while using the United Nations Sustainable Development Goals as a benchmark. The rapid urbanisation process in emerging countries, as well as the need to improve the population’s living conditions and optimise a scarce resource during the current climate change, leads governments, regions and industrial corporations to search for specialised operators who can help them provide effective solutions to the water supply, sanitation and treatment problems. Aqualia is one of the main international operators focusing its management on specific business models and geographic ar- eas. It is guided by a growth objective that contains profitability criteria and integrates all the abilities of the value chain in the water cycle: from the design of facilities to the management of large investment projects in water systems. The company provides services in Spain and also operates in- ternationally, with projects in Europe, Latin America, the Middle East and North Africa. Aqualia, which has 9,504 employees and operates in 17 countries, includes Corporate Social Responsi- bility (CSR) as part of its daily operations in an attempt to ensure that the social and environmental aspects of its management is not compromised by its business decisions. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Industry analysis | Page 1 of 7 132 ACUAES renews its trust in Aqualia to manage its wholesale supply in Zaragoza (Spain). Industry analysis End-to-end water management cycle in Spain 2020 in Spain started out with the formation of a new coalition government in Spain, before COVID-19 was officially declared a global pandemic in March, resulting in the population being placed in lockdown and all face-to-face work activities coming to a standstill, with the exception of essential services, for a period of three months. These circumstances saw Aqualia implement the first measures to adapt to the situation at the end of February, with the dual objective of maintaining its business activities without affecting this essential public service and guaranteeing the health and safety of its workers at all times. This resulted in the roll out of successive Contingency Plans, adapted to the situation at any given time. In Spain, there has been no outbreak of COVID-19 at any of Aqualia’s production centres over the course of 2020, and ac- tivities at DWTPs, WWTPs, supply and sanitation networks, laboratories, etc. have continued throughout the crisis. These efforts resulted in the company receiving a letter of thanks from the Minister for the Ecological Transition and the Demographic Challenge for its commitment. These new circumstances required the company to adapt its technological solutions to enable its employees to work from home, enhance stock control for essential products, establish special action measures at sports centres, reinforce remote customer service channels as physical customer service loca- tions were forced to close, in addition to undertaking specific campaigns to communicate with customers and local author- ities, while ensuring compliance with all the necessary health and safety measures. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Industry analysis | Page 2 of 7 133 In terms of tariff billing, the first quarter of the year saw the volume of retail water billed up on the same period in 2019 by 0.7%. However, as lockdown measures were enforced in response to COVID-19, in mid-March retail volumes dropped across all regions by approximately 4,2% for the second quar- ter of the year as a whole. From the third quarter of the year onwards, and the gradual return of economic activity, volumes recovered across all regions, with the exception of the Canary Islands, the Balearic Islands, Costa Brava and the coastal areas of Malaga and Cadiz. In particular, in the Balearic Islands, the fall in billed volume for the year came to 14.9% and in the Canary Islands to 8.8%. At year-end 2020, on a like-for-like basis (without including the new and completed contracts), the billed volume to household customers dropped by 1.2% and the billed amount grew 1.7%. Wholesale billed volumes dropped by 7.9%. The billed volume as a whole (excluding regional fees) fell by 2.4% and the billed volume is down by 1.4% on 2019. In terms of commercial activity, despite the difficulties caused by the pandemic that have resulted in a significant fall in new tenders, the year can be considered successful, with several milestones worth specific mention: The five-year extension of the concession arrangement in the city of Vigo, Aqualia’s biggest contract. The procure- ment volume came to 259 million euros and a plan for in- vesting in service improvements will be prepared for the sum of 40.2 million euros. This success has consolidated Aqualia’s leadership position in the Spanish market. New contract to provide treatment services to more than 130,000 residents in Aragon (Spain). this will allow us to distribute 20 hm3 water per year, across a region that suffers a high level of water stress, providing revenue of 15.9 million euros per year. When it comes to Design and Construction, Aqualia has been awarded the design, construction and operation of the industrial wastewater treatment plant for the petrochemical complex in Tarragona, worth 35.6 million euros. Elsewhere, municipal concession arrangements have been extended and renewed upon their maturity, with a loyalty rate of close to 100% and a portfolio worth more than 338 million euros. As regards institutional and legislative aspects, the Ministry for the Ecological Transition and the Demographic Challenge (MITECO) has focussed its efforts on producing the “Green Book of Water” and approving the National Plans for Adapting to Climate Change and Energy and Climate, both for the 2020- 2030 period, and the publication of the National Water Treat- ment, Sanitation, Efficiency, Savings and Reuse (PLAN DSEAR). Throughout 2020, the Water Urban Cycle Board, on which the Ministry, business associations, trade unions and users are represented, has remained active as the starting point for the future Spanish Observatory of Urban Water. Also worth special mention was Parliament’s decision to suspend the application of the Law on Budget Stability during 2021 and 2022, which will allow town and city councils with a cash surplus to designate surpluses to the undertaking of investments. We expect that this will speed up investments in water resources. The acquisition of desalination plant assets, irrigation pools and the distribution network of Rambla Morales in Almeria. This infrastructure, following the investment in updates and commissioning due to take place in 2021, will allow us to distribute desalinated water to the cities of Almeria and Nijar, and the irrigation associations in the area. At full capacity, In terms of operations, the contracts of the company acquired in 2019, Agua y Gestión C.I., S.A. have now been fully integrated into Aqualia’s territorial and legal structure, with the contracts in San José del Valle (Cádiz) and Huéscar (Granada) having been expanded, meeting the forecasts as regards profitability made at the time of the company’s acquisition. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 134 Likewise, there has been a greater focus on reducing costs linked to customer management through fraud prosecution pol- icies for consumption, the direct debiting of bills and control of bank fees, and the reduction of on-site assistance and moving this to other channels (telephone, social networks and online). In terms of digitalisation, the Dénia and Toledo technology cen- tres have been commissioned, where Aqualia Water Analytics (AWA) is being developed; this integrated digital water service management tool makes it possible to manage incidents, is- sue work orders, manage assets, meters, etc. in an integrated manner and has resulted in a substantial increase in electronic invoices compared to paper invoices. These initiatives have also had an important ecological impact. Aqualia has promoted actions in Spain as a socially commit- ted company, renewing the agreements in place with ACNUR, Caritas and the environment with several initiatives that seek to reduce greenhouse gas emissions, prioritising green energies. Furthermore, Aqualia was a founding member of Step by Wa- ter, as part of its efforts to contribute to UN Sustainable De- velopment Goal (SDG) 11 in relation to Alliances. Federación Española de Municipios (FEMP), MITECO, Coca-Cola, Unilever and other major companies, public sector organisations and NGOs participate in this project. FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Industry analysis | Page 3 of 7 During the state of alarm, subject to different regulations, cut- ting off the supply of water to vulnerable customers who had failed to pay their bills was prohibited, without this having any material impact on Aqualia’s capacity to generate revenue. In October, the government presented the National Recovery, Transformation and Resilience Plan, financed with European funds, valued at 72,000 million euros for the 2021-2023 period. For 2021, the General State Budget (PGE) and the budgets of the autonomous communities of Spain will include items for the value of 34,400 million euros. A Royal-Decree Law was passed approving the implementation of this Plan, with unprecedent- ed public-private collaboration figures. Aqualia and Employers’ Associations (Asociación de Empresas Gestoras de Agua de España (AGA) and Asociación de Empresas Constructoras y Concesionarias de Infraestructuras (SEOPAN)) are working to present cross-cutting proposals (digitalisation and energy effi- ciency), that are either local or regional in nature, that are due to be fine tuned in 2021. During the year, work was done to reinforce the Spanish Asso- ciation of Water Services Management Companies (AGA) and the management of the Spanish Association of Water Supply and Sanitation (AEAS), which include the public and private companies operating in the sector. Amongst other aspects, the objective is to inform society about management compa- nies’ high social commitment, the existence of a very relevant global technological transfer, and the affordability of tariffs for family economies in Spain, which are still low compared to oth- er Organisation for Economic Co-operation and Development (OECD) countries, in particular during the pandemic. In 2020, efforts have been made to inform society about the high level of social commitment of management companies, the existence of a significant technology transfer at a global level and the affordability of tariffs in Spain for household economies In 2020, an amendment to the sectoral collective bargaining agreement in force (2018-2022) was signed with the trade un- ions to set the salary increase for 2021 at 1.5%, down by half on the amount originally agreed in the collective bargaining agree- ment on account of the exceptional circumstances. In the company’s operational management, we must under- score the efforts carried out to reduce costs in 2020, in par- ticular variable costs (energy and procurement of water) with a view to reduce the falling margins associated with the fall in consumption triggered by the pandemic, in particular in coastal areas. This action has helped us to maintain EBITDA ratios in re- lation to turnover at similar percentages as those seen in 2019. In the sports facilities sector, furlough schemes have been rolled out, making it possible to sustain these activities. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 135 In 2020, Aqualia also faced an operational challenge on a European scale on account of the impact of COVID-19 in terms of the end-to-end water management cycle FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Industry analysis | Page 4 of 7 End-to-end water management cycle in International Internationally, Aqualia concentrated its 2020 activity in Europe, the Middle East and North Africa (MENA) and Latin America (LATAM). EUROPE In 2020, Aqualia also faced an operational challenge on a Eu- ropean scale on account of the impact of COVID-19 in terms of the end-to-end water management cycle. Despite the im- pact on non-residential consumption, particularly severe in the Czech Republic, the business maintained very high levels of activity, quality and service continuity. In addition to efforts to manage municipal concession arrangements in the Czech Re- public, Italy and Portugal, work was undertaken to integrate the new business in France and adapt it to Aqualia’s standards, improving the service offered to more than 140,000 residents on behalf of whom we supply water and manage sanitation networks. In addition to the different services that the service acquired in 2019 already offered, new sanitation and water management, operation and renovation contracts have been rolled out in Aqualia’s area of action in the Île de France region. Furthermore, development activities have been launched in oth- er regions of the country, submitting proposals in western and southern France, which will continue into 2021. In 2020 in the Czech Republic, the political and social debate continued as regards public action to guarantee the water sup- ply; this debate has been ongoing for a number of years now as a result of the frequent droughts and flooding experienced in the country, and has been promoted in the political sphere by defenders of the public management of water, who are against operators receiving economic incentives. Meanwhile, the Minis- ter of Finance is promoting the review of the tariff framework for 2022 to 2026, with different areas of the public sector analys- ing proposals. The review is focussed on the maximum growth of the tariff and the accurate calculation of investment needs, regulatory capital and regulatory profit, using the replacement cost. Both Aqualia, through its subsidiary SmVaK, and the association of water operators, are using all the resources at their disposal to monitor and contribute to debates by means of active communication while defending, by means of the ap- propriate channels, the equilibrium in terms of the outcome of the regulatory amendment. During this complex year, SmVaK has submitted bids to several end-to-end water cycle tenders, adding new municipalities in eastern Spain to Aqualia’s existing contract portfolio. In Italy, following the shy opening up of the concession market in 2019 and early 2020 (tenders in Rimini, Piacenza and Reggio Emilia), debate once again ignited about public involvement in the Italian regulator and the tariff structure. The situation stabi- lised following the replacement of the managements of Italy’s regulation agency and the removal of incentives for the most efficient regulators in terms of the acquisition of water, as is the case of Aqualia. In Portugal, although no new municipal concessions have been sent out to tender, given the upcoming local elections, various corporate changes have taken place involving financial inves- tors. The high risk profile assumed by purchases reflects the significant interest in the concession market and the high level of confidence in future opportunities for growth in the country’s water market. The pace at which work is being performed to expand the Glina treatment facilities in Romania, was affected by the restrictions imposed by the authorities in response to COVID-19. Despite this, progress has been made with civil engineering and the pro- curement of equipment to minimise the impact on the works plan. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Industry analysis | Page 5 of 7 The El Alamein plant (Egypt), chosen as one of the three desalination plants of the year at the Global Water Awards. In the Balkans the contracts for the Berane and Pljevlja projects were resolved on grounds attributable to customers; the works in relation to these projects were already complete and the fa- cilities were in operation. Meanwhile, the established dispute resolution and winding up mechanisms were rolled out for both plants. The Prizren project is currently in the testing phase and awaiting provisional acceptance to launch assisted operation. MENA In Algeria, the commissioning of the Mostaganem desalination plant at full capacity was completed following the completion of works for the additional capture of seawater, obtaining provi- sional acceptance. The plant has increased its actual capacity and is protected from the impact of adverse sea conditions. In terms of the operations of the desalination plants, given the huge impact that the pandemic has had, and thanks to the dedication and high level of planning undertaken by the man- agement team at the plants, they have remained at full capac- ity with no major incidents at the Mostaganem and Cap Djinet desalination plants, thus providing an essential service to the local population. 136 In Egypt, Aqualia ended the year having guaranteed the oper- ation of the El Alamein desalination plant, offering a capacity of 150,000 m3 per day, having extended the corresponding con- tract through to 2022. The completion of the El Alamein desalination plant to the cus- tomer’s full satisfaction offers an unrivalled reference for new projects set out in the desalination plan established by the Egyptian government with a view to reducing water stress in the country’s Mediterranean and Red Sea regions. In terms of the completion of the project at the Abu Rawash wastewater treatment plant, despite the impact of the pandem- ic, the pace of work at the plant has remained healthy, and it is due to be commissioned in 2021. In Saudi Arabia, in January Aqualia completed the acquisition of 51% of Qatarat and HAAISCO from the prestigious Saudi group, Alireza. Qatarat is the concession holder for the King Abdulaziz de Jeddah International Airport saltwater desalina- tion plant. HAAISCO, in turn, operates the plant and other im- portant plants in the country, such as the desalination plant at KAUST University. All plants have been running at full capacity to provide these essential services to the population during the pandemic. Furthermore, progress has been made in executing the diver- sion and adaptation works for affected supply and sanitation services on the Riyadh metro, where Aqualia is responsible for the activities to divert services and provide provisional and de- finitive connections for Lines 5 and 6. Over the course of the year, significant commercial efforts have been made to participate in the ambitious desalination pro- gramme organised by the Government, with very competitive bids submitted for different projects. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Industry analysis | Page 6 of 7 137 Likewise, efforts have been dedicated to developing other lines of commercial activity as part of the VISION 2030 programme to improve infrastructures, such as the new wastewater treat- ment projects, contracts for the rehabilitation, operation and maintenance of existing treatment facilities and service provi- sion contracts for end-to-end water management across the country. In the United Arab Emirates, Aqualia MACE has continued to provide the operation and maintenance of the collector net- works, pumping stations and wastewater treatment plants in the geographical areas of Al Ain and Abu Dhabi without inci- dents and at full capacity throughout the pandemic. During 2020 in Oman, Aqualia has continued with the end-to- end management of the cycle in the Sohar port area through its subsidiary Oman Sustainable Water Services (OSWS), without incidents despite the pandemic. One important milestone this year was AENOR’s certification of the asset management sys- tem; very few water management companies in the world have received this certification. In Qatar, work has started to commission the Al Dhakhira wastewater treatment facilities to the north of the country, run by Hyundai, with capacity for 55,000 m3 per day to be operated by Aqualia MACE once the service is definitively commissioned in 2021. Furthermore, a joint venture has been constituted, led by Aqualia and with the participation of prestigious local partners, to develop projects to improve the sewerage, treatment and reuse network, which will provide services to Qatar’s Ministry of Public Works and Sanitation. USA During 2020, Aqualia enhanced its commercial activities in the United States, maintaining its active search for new projects and business opportunities. The main growth opportunities for the company in certain states appear to be water shortages, obsolete water infrastructure, and the scarce penetration of private sector operators in the industry. However, the COVID-19 health crisis, the general elections and the eventful political transition have seen the economy, and in particular projects in relation to water and sanitation, slow down. New legislation in relation to controlling and eliminating emerg- ing contaminants to protect water bodies and surface water represent a business opportunity to be explored in the coming years. LATAM Aqualia purchases Ecosistemas de Morelos (EMSA), enhancing its presence in Mexico. The deficit of water infrastructure and the search for efficien- cy in the existing infrastructure are two factors that enhance Aqualia’s growth possibilities. In 2020, Aqualia has consolidated its presence in Mexico, setting a benchmark in the sector with a very diversified asset portfolio. The experience obtained in the BOT (Build, Operate, Transfer) contracts at the Acueducto II project in Querétaro and Realito in San Luis de Potosí, has provided the company with a basis for proposing similar projects to institutional customers, as the technical and financial skills employed have placed Aqualia in a position of leadership in the country. The Guaymas desalination plant, awarded in 2018 by CEA de Sonora, the implementation of which has had to be pushed back slightly on account of the pandemic, is now practically complete and will be commissioned in 2021. In June, Aqualia acquired 100% of the shares in Ecosistemas de Morelos (EMSA), the purpose of which is the concession of the Cuernavaca WWTP. Thanks to this transaction, Aqualia has completed the cycle of its activities in the country, adding the treatment of wastewater in Cuernavaca, to desalination in Guaymas and the supply of drinking water in Querétaro and San Luis de Potosí. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Industry analysis | Page 7 of 7 “El Salitre” wastewater treatment plant (WWTP) in Colombia. Last June, the takeover of concession holder AQUOS (Realito) was completed by means of the acquisition of an additional shareholding, taking its total holding to 51%. Up until this point, Aqualia had held a minority interest in the company. In Colombia, the construction of the El Salitre WWTP (Waste- water Treatment Plant) in Bogotá continued, with the pandemic having a minimal impact on works thanks to the strict protocols implemented. This series of measures has placed Aqualia at the forefront of health and safety in hydraulic infrastructure works, receiving recognition from public institutions and multilateral banking. In March, it completed the acquisition of 12 municipal con- cessions in the Córdoba region, in addition to the concession awarded in Villa del Rosario in the region of Santander, which was commissioned in May. These projects have helped to con- solidate Aqualia’s presence in the country as an end-to-end management operator. 138 Aqualia continues to pursue business opportunities for the man- agement of end-to-end services in the country’s major munici- palities under concession models. Furthermore, it has detected new opportunities for the design, construction and financing of hydraulic infrastructures to purify wastewater, in addition to new sources of drinking water supply in areas suffering from water stress. In Peru, the government is evaluating the efficiency of its public supply services to allow the entry of private sector companies wherever management indicators are lowest. In 2017, five pri- vate initiatives for the treatment of wastewater were submitted. These were declared relevant in 2018 and are currently in the formulation phase. In 2020, a private initiative was also sub- mitted and declared as being of relevance, for the desalina- tion project in Ilo, which is now in the development phase. At present, Aqualia is analysing different projects both as a service provider for Public Service Companies and as the supplier of financing, design, construction and operation of major hydraulic infrastructures. Aqualia withdrew from the assistance and consultancy contract for the operational and commercial management of IDAAN (Panama) given the amount of time that had elapsed between the award and the comptroller’s endorsement. Staying in Pan- ama, the company also terminated the contract for the 10-year engineering, construction and operation agreement in relation to the Arraiján WWTP in advance, as the customer failed to make payment. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 139 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Activity in the Water area | Page 1 of 3 Activity in the Water area 1 MEXICO Cuernavaca Acquisition of the concession in relation to the wastewater treatment plant (WWTP) in Cuernavaca, Morelos (Mexico). 10 years. 19.2 million euros El Realito (Guanajuato and San Luis de Potosí) Acquisition of an additional 2% in the El Realito concession holder (Aquos), allowing Aqualia to assume control over the concessionaire for a period of 16 years and an estimated turnover of 16 million euros per year. 2 COLOMBIA Acquisition of three end-to-end water cycle management concessions for 12 towns in Córdoba, in the Caribbean region in the country's north. These concessions have been acquired from three companies in the same business group: Aguas del Sinú, which manages the service in seven towns (Santa Cruz de Lorica, Chima, Momil, Purísima, Tuchín, San Antero and San Andrés de Sotavento); Uniaguas, which operates services in five other towns (Cereté, Ciénaga de Oro, Sahagún and San Carlos); and OPSA, which to date had managed the service in Planeta Rica. 19 years. 382.1 million euros 1 2 3 SPAIN Catalonia Tarragona Design, construction and operation of the effluent treatment facilities for the chemical and petrochemical industrial complex in Tarragona on behalf of Aguas Industriales de Tarragona, S.A., for a period of 6.5 years. 35.6 million euros Castile-La Mancha Picadas-Almoguera (Toledo) and Mancomunidad El Girasol and Almoguera-Algodor-Sagra Este (Cuenca) Services for the operation, conservation and maintenance of supply systems in Picadas- Almoguera (Toledo) and Mancomunidad El Girasol and drive systems in Almoguera-Algodor- Sagra Este (Cuenca), for Aguas de Castilla-La Mancha, for a period of 2 years. 17.1 million euros Los Yébenes (Toledo) Water supply service for a period of 17 years. 7.8 million euros 4 5 3 6 Almorox (Toledo) Cuarte de Huerva (Zaragoza) Operation and maintenance of the Almorox wastewater treatment plant, for a period of 10 years. 1.1 million euros Melilla Melilla Works and services to expand the seawater desalination plant in Melilla and operate the plant during the performance of works and its commissioning, on behalf of the Confederación Hidrográfica del Guadalquivir, for a period of 2.25 years. 16.1 million euros Aragon Zaragoza Service for the operation, maintenance and conservation of the wastewater sanitation and treatment system in the River Huerva for Instituto Aragonés del Agua for a period of 3 years. 1.8 million euros Navarre Navarre Performance of minor works, repairs and maintenance of civil engineering in the network of outfalls and wastewater treatment stations for NILSA, for a period of 2 years. 1.6 million euros Balearic Islands Santa Eulària des Riu (Ibiza) Services and minor conservation and repair work for cleaning and maintaining the sewerage and urban drainage systems and network of underground channels in the city of Zaragoza for a period of 2 years. 7 million euros Works corresponding to the regulating reservoir and ancillary infrastructure, for their correct operation and integration into the municipal water network for human consumption in Jesús, Santa Eulària des Riu, for a period of half a year. 1 million euros 4 FRANCE Île de France Contract for the renewal of the drinking water network in the towns of Goussanville and Nord D´Ecoven over a period of one year. 2.2 million euros Bonneuil-en-France Contract for the maintenance, operation and improvement of the water sanitation system in Vaudherland Bonneuil-en-France in the Île de France region, for a period of 4 years. 1.1 million euros Bonneuil-en-France Contracts for the maintenance, operation and control of facilities on behalf of Villa de Sarcelles, SIA de Parmain - Lísle Adam and Communauté Urbaine Grand Paris Sein for a period of 4 years. 0.9 million euros 5 CZECH REPUBLIC Inclusion of the towns of Mošnov (end-to-end cycle), Suchdol (supply) and Písečná, Řepiště and Vratimov (treatment) in the portfolio of our subsidiary SmVaK, for a period of 9 years. 4 million euros 6 SAUDI ARABIA Acquisition of 51% of the share capital in Qatarat Saqia Desalination Co. LTD and Haji Abdullah Alireza & Company Integrated Services Co. LTD (HAAISCO), whose main objective is the operation of a desalination plant to supply water to Jeddah Airport. 9 years. 175.9 million euros Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 140 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Activity in the Water area | Page 2 of 3 Expansions and extensions to already managed contracts in Spain Vigo (Pontevedra) Yecla (Murcia) Zaragoza End-to-end management of the water supply, sewerage and treatment service in the city for a period of 5 years. 259.6 million euros. Mula (Murcia) Management of the water supply service for a period of 5 years. 10.2 million euros. Ibiza (Balearic Islands) Management of the water supply service for a period of 4 years. 4.9 million euros. Ajofrín (Toledo) End-to-end management of the drinking water, sewerage and treatment service for a period of 17 years. 3.7 million euros. Port of Santa María (Cadiz) Management of the water supply and sewerage service for Maintenance, conservation and operation service of the a period of 1 year. 8.9 million euros. WWTP and sewerage for a period of 1 year. 3.5 million euros. San José del Valle (Cadiz) Consorcio de Louro (Pontevedra) Management of the water supply and sanitation service for Management of the urban water cycle for a period of 1 year. a period of 15 years. 5.8 million euros. Redondela (Pontevedra) 3.1 million euros. Alcoi (Alicante) Management of the water supply service for a period of 1 End-to-end management of the water supply, sanitation and treatment service for a period of 2 years. 4 million euros. year. 2.8 million euros. Llucmajor (Balearic Islands) Management of the water supply and sewerage service for a period of 0.5 years. 2.8 million euros. Services to manage ACUAES supply actions in the prov- ince of Zaragoza: Zaragoza and the Ebro and Bajo Ebro Aragonés corridor for a period of 2 years. 2.8 million euros. Costa Brava (Girona) Management of the treatment service through a joint ven- ture for a period of 0.7 years. 2.8 million euros. Rota (Cadiz) Management of the municipal water supply service for a pe- riod of 0.7 years. 2.5 million euros. Güímar (Santa Cruz de Tenerife) Management of the water supply and sanitation service for a period of 1 year. 2.4 million euros. Peñafiel (Valladolid) Management of the drinking water supply, sewerage and maintenance service for the wastewater treatment plant for a period of 5 years. 2.4 million euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 141 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Activity in the Water area | Page 3 of 3 Muro (Balearic Islands) Illescas (Toledo) Alcalá de Henares (Madrid) Public services for household supply and drinking water dis- tribution for a period of 5 years. 2.3 million euros. Management of the water supply and sewerage service for Meco tanks and pumps for a period of 2 years. a period of 1 year. 1.5 million euros. 1.1 million euros. District of Talavera (Toledo) Huéscar (Granada) Alba de Tormes (Salamanca) Management of the wastewater treatment plant for a period Management of the water supply service for a period of 5 of 10 years. 2.3 million euros. Yepes (Toledo) years. 1.3 million euros. Oleiros (La Coruña) Incorporation of a new tank and osmosis plant into the mu- nicipal water supply and sewerage service in the town for a period of 11 years. 2 million euros. Villena (Alicante) Management of public drinking water supply and sewerage service for a period of 1 year. 1.8 million euros. Management of the municipal indoor swimming pools for a period of 1 year. 1.3 million euros. Guía de Isora (Santa Cruz de Tenerife) Service for the operation, maintenance and conservation of infrastructures and facilities in relation to the local seawater desalination system in Fonsalía for a period of 2 years. 1.3 million euros. Castell-Platja d´Aro (Girona) Sonseca (Toledo) Management of the water supply service for a period of half Management of the water supply service for a period of 2 a year. 1.7 million euros. Madrid years. 1.3 million euros. Baix Ebre (Tarragona) Services for the urgent renewal and repair of the supply and regenerated water network of Canal de Isabel II (Lote 9 Red Culebro) for a period of half a year. 1.6 million euros. Management of the public service of sanitation systems in the region of Baix Ebre for a period of half a year. 1.2 million euros. Maintenance, conservation, operation and management of the supply to four municipalities in the province of Toledo (district of Talavera, also known as Sierra de San Vicente: Sartajada, La Iglesuela, Montesclaros and Buenaventura) for a period of 7 years. 1.1 million euros. Burgo de Osma (Soria) Management of the water supply and sanitation service for a period of 2 years. 1 million euros. Incorporated companies “Mar de Alborán” seawater desalination plant (Almeria) At the beginning of the year, Aqualia purchased the Mar de Alborán desalination plant and its ancillary pool and irrigation water distribution network facilities to satisfy the demand of the different irrigation associations in Almeria and Níjar. This sustainable management model will see the desalination plant supplied by solar power generated by a photovoltaic plant. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Events 142 Highlights_End-to-end water management cycle 2020 September November March May July New contract to manage the cleaning and maintenance services for the sewerage network in Zaragoza (Spain). Solidarity, adaptation and service in response to COVID-19. 4 The Badajoz Water Service achieves the maximum rating from the European Benchmarking Cooperation (EBC). Five more years managing the municipal water service in Mula, Murcia (Spain). The Association of Communication Executives (DIRCOM) chooses Aqualia’s CSR Report as one of the three best of the year. Aqualia completes the integrated cycle with the acquisition of EMSA (Ecosistemas de Morelos) and thus consolidates its presence in Mexico. The new edition of the “Pásate a la e-factura” campaign sees more than 450,000 users signed up to Aqualia's digital billing service. 3 5 6 8 7 January The University of Almería (Spain) and Aqualia join forces to research and publish information about the water cycle. Aqualia joins the International Federation of Private Water Operators (Aquafed). 2 1 The El Alamein plant (Egypt), chosen as one of the three desalination plants of the year at the Global Water Awards. The Advisor project, included in the 101 most innovative initiatives in 2020 for combating climate change. The IFM fund selects two projects submitted by Aqualia for its international environmental and social internship programme. Lleida city council (Catalonia, Spain) and Aqualia create a social solidarity fund to guarantee access to water for families at risk of exclusion. 10 9 11 February April June August October New contracts in Aragon (Spain) to provide treatment services to more than 130,000 people. The Aqualia team receives further information about ethics and integrity. Aqualia named “Best Company in 2019” by readers of iAgua, the leading industry publication in Spain and Latin America. A one-of-a-kind bio-health protocol to combat COVID-19 allows work to resume at the Salitre WWTP in Bogotá (Colombia). Aqualia participates in the presentation of the StepbyWater alliance, an initiative supported by the Spanish government. ACUAES renews its trust in Aqualia to manage its wholesale supply in Zaragoza (Spain). The MIDES project, led by Aqualia, operates the first two desalination plants that are wholly energy self-sufficient in the world, in Dénia (Alicante, Spain) and Guía de Isora (Santa Cruz de Tenerife, Spain). Recognition of the best preventive culture practices included in Aqualia's contracts. The documentary, Brave Blue World, which features Aqualia’s All-gas project, is available in 191 countries via Netflix. 12 December The “Who is behind the water we use at home?” campaign, organised by Aqualia as part of the COVID-19 crisis, is named a winner at the European Excellence Awards (EEA). Aqualia becomes a full member of the UN Global Compact. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 1 of 11 Service excellence Customer management It is essential for Aqualia to expand the company’s commitment to society, seeking the goal of excellence in customer service. The company aims to stand out in the market by developing ser- vices adapted to its users’ needs. In 2020, progress continued in terms of gearing the strategy towards end customers, particu- larly focusing on the quality of the channels used to interact with our users, enhancing the investment in technology particularly during this year that has been so hard hit by the pandemic. 143 Customer service channels In 2020, the main management indicators for our aqualiacontact customer service channels are the following: Over-the-phone customer service In 2020, 1,240,219 calls were received by the Customer Service Centre. Given the state of the alarm, the closure of face-to-face customer services and other health measures adopted, the Customer Service Centre received 54% more calls year on year. The specialist service offered by our agents, in addition to the proactive nature and speed with which the customer service is offered in the form of a remote system using the Presence (Evolutio) solution, has made it possible for cus- tomers to receive assistance with no downtime via the dif- ferent customer service and fault reporting channels, such as: the over-the-phone customer service, virtual office, App, twitter and email. Following the closure of Aqualia’s sales offices during the month’s hardest hit by the pandemic, informational SMS messages and emails were sent to all customers to inform them of the range of channels open to them, with the Cus- tomer Service Centre the main channel chosen by our cus- tomers for the purposes of communication. Following the progressive reopening of in-person offices and the end of the state of alarm, social distancing meas- ures, the use of face masks, disinfection of areas, etc. were all implemented. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 2 of 11 Tu factura electrónica juega un papel importante en el medioambiente 144 Pásate a la factura electrónica Llamando al centro de atención al cliente o enviando un email a e-factura@aqualia.es indicando: nombre y apellido del titular, número de contrato, población y el email donde deseas recibir la factura electrónica. Cámbiate a la factura electrónica y podrás consultar, sin coste alguno, tu factura al instante. ODS alineados con esta iniciativa The over-the-phone Customer Service Centre was used to set up an appointment service to prevent waiting times and overcrowding at in-person offices, improving not only the over-the-phone service, but also providing a faster, effective and pleasant service in general with all the health guaran- tees. App for mobile devices E-invoicing In 2020, using the app available to our customers, 62,562 interactions were processed, 50.2% up on 2019, with 20.99% of these regarding modification of details and 64.08% for payments with bank cards. Virtual office: aqualiacontact Twitter @aqualiacontact In 2020, 163,814 interactions were handled, 26% up on 2019. In total, 32.34% interactions were as regards the modification of data, 23.77% electronic invoicing and 19.85% bank card payments. Furthermore, this channel remained active as part of the omnichannel project. Aqualia included Customer Service via Twitter in its list of channels. Through the @aqualiacontact account, messages sent by users are managed and dealt with. SMS messages for notifications of bills and incidents and warnings of failures in networks are also possible. Via twitter, 51.5% more interactions were managed in 2020 compared to 2019. In 2020, 15,277 customers asked to activate the e-invoicing service, up by 85% year on year. The efficiency of all customer relationship channels allows for a very reduced number of claims; 0.41% at December 2020 with an average claim response time of 11 days. The av- erage meter installation time (from request) of five days is also noteworthy. In order to meet the high expectations our customers have of the service offered by Aqualia, we will continue making progress to be able to provide all our customers with a quality omnichan- nel experience when they interact with the company. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 3 of 11 The following objectives have been set for this: Billing and managing collections 1. Integration of all the channels Channels functioning in unison, interrelated in real time. The new project for implementing a Microsoft Dynamics CRM, which will come online in 2021, will enable all the channels to be interrelated in real time with better accessibility, availa- bility and integrity of the information in the interactions. The objective of the project is to have a new customer service module that must be integrated with other systems, such as the Diversa commercial system, which provides sufficient flexibility, guarantees availability and agile and flexible ac- cess to information through guided processes. 2. A better quality and more pleasant experience for customers - Any operation from any channel. - Single processes for every channel. 3. More responsive and capable service - Multi-platform customers. - Use of resources, development of communication skills by channel. The Customer Management department has maintained the same strategic vision in the development of its management tools, mainly with the completion of the implementation of the single billing and debt management tool for non-tariff concepts and the progress of new functions in the Business Intelligence tool for example, which includes meter renewal, fraud, adapting to the debt status procedures and types of customer. Worldwide, on account of the circumstances generated by COVID-19, billing has seen a year on year drop in m3 consump- tion of 2.24%, which has been reflected in a decrease in billing of 0,71%, mainly due to the fall in consumption by non-house- hold consumers (-14.76%) and wholesale water consumption (-7.45%). These impacts have been offset by the 3.22% in- crease in household consumption as a result of the lockdown measures implemented. Furthermore, in response to the pandemic and the closure of in-person offices, the different customer service channels have been reinforced to perform the necessary activities and offer flexible payment options to vulnerable sections of the popula- tion. 145 1. Average collection period and non-payment This has resulted in the continuous improvement of processes, bringing the average collection period in Spain to 2.35 months, maintaining the trend seen in the previous two years. This has been achieved by stepping up the correct management of pay- ments, despite the impact of the pandemic. Average collection period in Spain 5 4 3 2 1 0 4.74 4.14 3.81 3.26 3.16 2.81 2.74 2.34 2.35 2.22 Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 146 In the tariff processes, the structural default has been improv- ing every year, with Spain improving most, and has evolved as follows: Aqualia has maintained the campaign to promote the use of electronic invoicing and to gradually replace as many paper in- voices as possible. This action has allowed for a 20.4% increase in the number of invoices issued electronically compared to the previous year, reaching a global rate of 14.1%, contributing to preserving the environment, with 540,533 customers choosing to receive this type of invoice. The task to minimise the difference between the volume of wa- ter supplied into the network and the actual volume consumed is an essential goal for a company such as Aqualia. To achieve this, in addition to using sophisticated smart network monitor- ing systems and renewing networks that become obsolete to prevent leaks insofar as possible, plans are designed to detect the fraudulent use or actions involving drinking water. In 2020, despite the pandemic, over 7,100 frauds, worth an equivalent consumption amount of 3.7 million euros, were de- tected. In addition to these actions, over 342,000 metering de- vices were renewed in many different contracts. FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 4 of 11 Globally, Aqualia has seen a slight upturn in the average col- lection period on account of the increase in activity in the In- ternational area over the past two years, with the inclusion of the concessions in the regions of Córdoba and Villa del Rosario acquired in Colombia in 2020, the acquisition of Qatarat and HAAISCO (Arabia Saudí) in January 2020 and the takeover and initial consolidation of Acueducto El Realito (Mexico) in June 2020. This figure has also been affected by progress with the works at the Glina WWTP (Romania) and the capitalisation of advances received (EPC) as part of the Abu Rawash WWTP project (Egypt). Average collection period. International area Structural default in Spain 5 4 3 2 1 0 4.42 3.95 3.78 3.3 3.17 2.89 2.94 2.82 2.40 2.10 0.76% 0.74% 0.72% 0.71% 0.69% 0.68% 0.67% 0.78% 0.76% 0.74% 0.72% 0.70% 0.68% 0.66% 0.64% Dec 2011 Dec 2012 Dec 2013 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Dec 2014 Dec 2015 Dec 2016 Dec 2017 Dec 2018 Dec 2019 Dec 2020 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 5 of 11 147 2. Meter Reading Mobility Project In 2019 and 2020, an ambitious project for meter readings was undertaken. The project aims to update the implemented mo- bility solution for taking meter readings, providing it with on- line and offline functions with the current DIVERSA commercial system used at Aqualia. The solution is run on smartphones in order to provide functions related to taking and managing meter readings. With this project, Aqualia aims to improve the current meter reading and management processes, making them efficient in the shortest time possible and with the smallest economic im- pact. The project was developed in 2019, concluding the final user tests with great success in December. The pilot launch, which took place in January 2020, was completed successfully, with the remaining operations being rolled out gradually. Roll out in production Meter reading module project This pilot project was completed satisfactorily in Alcalá de Henares (Madrid). It was then rolled out in Ávila, Salamanca, Lleida, Lliria (Va- lencia), Sant Josep (Balearic Islands), Écija (Seville), Jaén, Sanlúcar de Barrameda (Cádiz) and Mérida with satisfacto- rily results, allowing the mass roll out of the project. As at December 2020, it has been implemented as part of: • 439 services implemented in Spain and 6 in Italy and Por- tugal. • 5,296,171: readings taken to date with the new app. • 20,241: reading routes exported to the app. • 2,589,927: contracts exported to be read on the app. Its roll out is due to be completed in Q1 2021. 3. CRM Microsoft Dynamics The new customer services module uses Microsoft Dynamics CRM 365. This solution provides the customer with a compre- hensive overview, technological innovation and improvements in business processes. The solution includes a new website for customers that will replace the virtual office that is currently in place. The Call Centre and a new virtual office will be implemented for cus- tomers, covering all operations, with the corresponding up- dates to the CRM currently in place. The tests run by the technical and business teams were performed in the final quarter of 2020 with satisfactory re- sults. Developments are due to be completed in February 2021, with tests run in March and April before it is rolled out in May 2021. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 148 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 6 of 11 Data protection In Spain, following the entry into force of Regulation EU 2016/679, the General Data Protection Regulation (GDPR) on 25 May 2018, and the entry into force of Organic Law 3/2018, on the protection of personal data and the guarantee of digi- tal rights (LOPDGDD) on 5 December 2018, Aqualia embarked upon a process of adapting its regulations in relation to data protection. The new developments established in the regulation required data protection amendments to be made across all companies, given that they apply to all the affected areas in relation to the following areas: 1. Employees. 2. Customers. 3. Suppliers. 4. FCC Group’s contractual relations. 5. Public administration contractual relations. 6. Documentation and internal management. 7. Information technology and information security. 8. Technical and organisational measures. As part of the adaptation process, the eprivacy tool has been rolled out. This tool is used to record the data processing ac- tivities of all companies. It features a document and evidence manager, in addition to a risk assessment tool. The tool allows a quarterly risk status report to be generated, in addition to constant improvement assessments following the implementation of corrective and preventive actions. Situación inicial mayo 2018: RIESGOS: PROBABILIDAD Very High - Maximum High - Significant Medium - Limited Low - Insignificant 0 4 132 0 0 171 468 1 0 0 224 0 0 0 0 0 Very low - Insignificant Medium - Limited High - Significant Very High - Maximum IMPACT Status December 2020: RIESGOS: PROBABILIDAD Very High - Maximum High - Significant Medium - Limited Low - Insignificant 0 0 11 124 0 0 98 604 0 0 17 180 0 0 0 0 Very low - Insignificant Medium - Limited High - Significant Very High - Maximum IMPACT The adaptation work started in 2020 is due to continue into 2021: International data transfer project between FCC Group companies. Storage terms project for FCC Group data. Adaptation of Aqualia’s national security framework. Lleida city council (Catalonia, Spain) and Aqualia create a social solidarity fund to guarantee access to water for families at risk of exclusion. Social action Although the capacity to set rates and regulate the services pro- vided in the integral water cycle in Spain lies exclusively with the Administration, at Aqualia we actively promote social action mechanisms in the rates and solidarity funds for underprivileged users. The company has also worked to improve the coordina- tion with the city councils’ social services to protect customers at risk of social exclusion. As an example, within its CSR poli- cy, Aqualia has been renewing its partnership agreement with Caritas Española to support the initiatives of this humanitarian organisation in Spain, since 2015, and with ACNUR since 2019. Furthermore, access to water has been guaranteed for those in vulnerable situations and payment terms have been extended for all customers affected by the pandemic. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 7 of 11 149 Sustainable management Aqualia accepts that it has a role to play in the private sector in terms of achieving the Sustainable Development Goals and this is reflected in its daily commitment to promoting t his cul- ture within the company and amongst its stakeholders. For this reason, in addition to its campaigns to raise awareness of the SDGs, it has identified and prioritised those to which the com- pany contributes as part of its activities and corporate com- mitments. Through active listening, it identifies the importance that stakeholders place on Aqualia’s contribution to the different SDGs and seeks to respond to these expectations by providing appropriate indicators: Priority commitments on account of its activities Corporate commitments 17 1 16 2 15 3 14 13 12 4 5 6 11 7 10 8 9 6.1 Drinking water for all • More than €70,000 in water bills in Cáritas centres. • 191,953 beneficiaries from reduced tariffs, discounts or grants. • Collaborative outlook: dialogue with over 50 national and international sectoral associations. 6.2 Health and hygiene for all • Access to more than 29 million users. • Technological platform to digitalise the end-to-end water cycle, Aqualia LIVE. 6.3 Improve water quality • 1,019,780 water quality investigations. • Volume of treated water returned to its natural environment 687,943,351m3. • 17 current patents for efficient water management. • 21 active projects. 6.4 Increase the efficient use of hydraulic resources 6.5 End-to-end management of water resources and cross-border cooperation • Present in 4 of the 17 countries with extreme water stress: Qatar, Saudi Arabia, United Arab Emirates and Oman. 6.6 Restoring water-related ecosystems • Development of biodiversity projects in facilities in protected areas. • 145 biodiversity spaces identified. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 8 of 11 Likewise, Aqualia continues with its strategy of creating shared value, heeding the expectations of its stakeholders and further developing the tools to know and measure the social and en- vironmental impact, supporting the creation of economic value and increasing the company’s competitiveness (calculating our social and environmental footprint). That is why, in 2020, we have worked on the following aspects: 1. Application of ISO 45001 to Aqualia’s management sys- tem, revising and updating all the procedures and coordi- nating internal and external audit processes (AENOR). 2. Increase in the efficiency of internal audit processes, pub- lishing integrated reports, and external audit processes by collaborating with qualified auditors who perform audits on the Quality, Environmental and Energy Management sys- tems, calculate the carbon footprint and audit occupational health and safety. 3. Certification of asset management under an internation- al agreement, making it possible to increase efficiency and guarantee operations with managed infrastructures. 4. Increase in the scope of the Energy Management and Cli- mate Change strategy. • Monitoring contracts with energy review. 150 • Calculating and verifying the Carbon Footprint of all Aqualia’s activities in Spain and Portugal. • Inclusion in the Carbon Footprint Registry of the OECC (Spanish Climate Change Office) of MITECO (Ministry of Ecological Transition and the Demographic Challenge) for all Aqualia’s activities in Spain. • Review of the Plan to Reduce the Carbon Footprint of Aqualia’s activities. • Verification of the emissions avoided in the CLIMA Project of the OECC (Spanish Climate Change Office) organised by MITECO, approved in 2018, for the use of alternative fuels, which come from the company’s activity, in vehicles. • Monitoring of the project to implement the Energy Man- agement System in all activities in Spain, in compliance with RD 56/2016. 5. Adaptation of the general procedures of the Management System to FCC Group’s Compliance model to respond to the designation of process owners and their corresponding controls. 6. Participation in AENOR meetings and conferences and in AEC (Spanish Quality Association) work groups. 7. Participation in the Circular Economy Commission of the Spanish Chamber of Commerce, where legislative initiatives are analysed and meetings are held with policy makers. In addition to the above, the strategy with the company’s stake- holders has been maintained. This consists of incorporating the treatment of Aqualia’s stakeholders into the Management Sys- tem and the company’s context analysis as a requirement of the new Standards and as support for other Aqualia departments in their daily work (Customers, Compliance, Communication, CSR, HR, etc.). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 9 of 11 151 Energy Management The energy management of production facilities has been a strategic line of action for the company since it was founded, with the optimisation of energy consumption an objective of continuous improvement. Not surprisingly, the calculation of the company’s carbon foot- print in its operations in Spain, verified in accordance with the guidelines of the UNE-ISO 14064 Standard by AENOR, shows that the component with the biggest impact on Aqualia’s car- bon footprint is electricity consumption (Scope 2). To this end, in 2020 several projects were implemented that seek to reduce greenhouse gases (GHGs). The signing of a PPA (Power Purchase Agreement) for 76 gi- gawatts per year of renewable energy (photovoltaic), that came into force in July will help to reduce emissions by 15,200 tonnes of CO2 eq per year. Customer orientation. Listen to their needs, one of the most powerful tools when it comes to continuous improvement. Greenhouse gas emissions 2020 Scope 1 Scope 2 Scope 3 TOTAL t CO2 t CH4 t N2O 7,615.4 94,583.3 13,346.2 115,544.8 2,173.3 0,0 0,0 2,173.3 24.2 0.0 63.3 87.4 GHG 2019 (t CO2e) 74,876.9 94,583.3 30,111.1 199,571.3 % 37.5% 47.4% 15.1% Furthermore, the installation project for 3,2 MW of peak power in the form of solar panels, supplying 26 consumption points, with an annual expected production of 5 gigawatts per year, which translates into a reduction in GHG emissions of 1,000 tonnes of CO2 eq per year. Improvements for reducing energy consumption Since 2016, and every four years, the company submits a set of production facilities that consume more than 85% of the company’s total consumption to energy auditors (in accord- ance with ISO 50001-Energy Management Systems). In order to monitor the improvement opportunities detected in the au- dits, the functional design of a computer tool has been created, which is promoted within the scope of this standard. This tool will be included with Aqualia’s technical analysis/reporting tool (AqualiaRT/AqualiaBI), enabling the activities and results ob- tained to be monitored. In 2020, the Las Tablas office building, home to Aqualia’s head office, received energy management certification. This is ex- pected to optimise the consumption of this building, which, as in the case of other offices, has a much smaller impact on the company’s carbon footprint than the production installations, but which are Aqualia’s showcase for its end customers, to whom we transfer our environmental commitment. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 10 of 11 152 Commitment to smart management Technical management Over the course of 2020, the implementation and development of activities to improve operational management and the roll out of new platforms to standardise technical best practices across the company has continued. Those worth particular mention include: Energy Management Implementation of the monitoring and control platform structured around improvement proposals and goals under different contracts, in relation to energy efficiency, pursuant to ISO 50001-Energy Management Systems. Change in the energy billing control platform, switching from Bempower to the much more powerful Synergica tool, pro- viding more immediate and comprehensive control of ener- gy costs billed by the retailer. Implementation of the SILICE platform for gathering gas production data and the destination of gas at WWTP under management, with a view to centrally declaring data for the payment of Fuel Tax on the tax agency’s platform. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Service excellence | Page 11 of 11 Asset management Technology transfer Work has started to roll out the new Asset Management and Maintenance IT Tool, which will allow for the standardisation of maintenance activities, depending on the size and purpose of the service provided in addition to better centralised control of the inventory of managed assets. This will make it possible not only to obtain information on the status and current value of the inventory, but also develop and plan “Smart” proposals for renovation actions and/or the expansion of the infrastructure operated by the company. Over the course of 2020, a new tool has been launched to complement the work performed by the Innovation department: technology transfer. The main goal is to create products, activities or processes that are exploitable from a commercial perspective (domestic or foreign market) linked to the results of the different projects performed by the Innovation department in addition to propos- ing new lines of technological innovation in line with the internal needs defined or detected by the production line. Technical reporting Accredited laboratories 153 Aqualia has ten accredited laboratories, distributed across Spain, Italy and the Czech Republic In 2020, centralised technical reporting has been available on a monthly basis, encompassing 90% of the company’s operating perimeter. This means that centralised technical data is available each month for all contracts in operation in Europe, Africa and the Middle East. Next year, the goal is to extend the perimeter to 100% of the company’s global operations. The platform used is Aqualia RT/BI, which translates into Span- ish, English, French, Italian, Czech and Arabic. Furthermore, it has the capacity to adapt to any type of technical operation handled by the company, offering a repository with a very high value of technical data to support the company’s technical and economic activities. In relation to Aqualia’s network of accredited laboratories, over the course of 2020, several noteworthy initiatives were under- taken that have made a very clear contribution to these activi- ties performed by the company. Firstly, at the start of the year, accreditation was obtained from ENAC (National Accreditation Institution) for the laboratory in Badajoz, meaning that the company now has six accredited laboratories for analysing water in Spain (Badajoz, Oviedo, Léri- da, Ávila, Jerez de la Frontera and Adeje, in Tenerife). Furthermore, the other five laboratories passed the ENAC au- dit, renewing their certification and achieving an unprecedented expansion in the number of parameters in terms of the activities of these laboratories, 405 additional parameters in different are- as: water consumption and packaging, inland water, swimming pool and marine water. Finally, in December, accreditation was received from Italy’s na- tional authorities (ACREDITA), for Laboratorio di Acque Potabili di San Giuliano located in Italy. The accreditation process is also under way for the drinking water laboratory in Vigo, with its accreditation expected to be confirmed in 2021. This would bring the company’s number of accredited labo- ratories to ten, distributed across Spain, Italy and the Czech Republic. Also worth note are the activities performed by the company in terms of monitoring COVID-19; experts at the company, in co- operation with the CSIC (Spanish Higher Council for Scientific Research), are analysing the wastewater of different towns in Castile-Leon, Galicia and Castile-La Mancha. As part of the same agreement, the company’s staff are receiv- ing training and comparison exercises are being performed for the implementation of a PCR technique to be included in the range of services offered by the laboratory in Oviedo. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Innovation and technology | Page 1 of 7 Innovation and technology Aqualia’s innovation activities are aligned with the European pol- icies for the transition to a circular economy with a zero carbon footprint, for which it seeks to develop new smart management tools and new sustainable services proposals. To this end, the Innovation and Technology Department supports the compa- ny in achieving the United Nations’ Sustainable Development Goals (SDGs) for affordable, high quality water and sanitation services (SDG 6), improving its energy balance (SDG 7) and preventing its impact on the climate (SDG 13) through sustain- able production and consumption (SDG 12). The following table shows the projects carried out in the Inno- vation and Technology department in 2020 (in addition to the completion dates) to strengthen Aqualia’s technological pro- posal across four lines of work: Quality, Ecoefficiency, Smart Management and Sustainability. Work has continued on the other ten projects under way: 1 regional project RIS3 Idepa: Recarbon. 1 Water Joint Project Initiative (ERA-NET) project: MarAdentro. 1 Marie Sklodowska Curie (MSCA) training project: Rewatergy. 2 projects in the Life programme: IntExt and Ulises. 2 Bio-Based Initiative (BBI) projects. B-Ferst and Deep Purple. 3 projects as part of the H2020 programme. Five projects were due to be completed in 2020: Run4Life, Sabana and Scalibur. 2 European projects Life: Methamorphosis and Icirbus4Industries. 1 Interconecta project (ERDF): Advisor (extended until March 2021). 1 regional project RIS3 Idepa: ValorAstur. 1 project as part of the EU’s H2020 framework: Mides. And thanks to the public tenders in 2019, work has started on six new projects: 3 European projects Life: Infusion, Phoenix and Zero Waste Water. 3 projects as part of the EU’s H2020 framework: Rewaise, Sea4Value and Ultimate. 154 Quality LIFE Methamorphosis (2020) Life Zero Waste Water (2024) Life Infusion (2024) Intelligent Management LIFE icirbus4industries (2020) H2020 Run4Life (2021) H2020 Rewaise (2025) Eco-efficiency RIS3 IDEPA Valorastur (2020) H2020 Mides (2020) INTERCONECTA Advisor (2021) WATERWORKS Maradentro (2021) RIS3 IDEPA Recarbon (2021) H2020 Scalibur (2022) H2020 MSCA REWATERGY (2023) H2020 BBI Deep Purple (2023) H2020 BBI B-Ferst (2023) H2020 Sea4Value (2024) H2020 Ultimate (2024) Sustainability H2020 Sabana (2021) Life Ulises (2022) Life IntExt (2023) Life Phoenix (2024) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 155 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Innovation and technology | Page 2 of 7 Projects completed in 2020 The following results have been obtained in the five projects in the final stage in 2020: RIS3 Valorastur: With a view to securing ecoefficient treatment, the RIS-3 programme organised by the Institute for Economic Devel- opment in the Principality of Asturias (IDEPA) has supported Aqualia’s collaboration with two major public firms and an SME, Ramso. The SME supplied new drying equipment to the Grado WWTP to confirm that the material’s calorific val- ues, obtained during preliminary tests, are almost twice the amount required for their energy recovery, making it possi- ble to transform waste into new resources. In collaboration with the Carbon Science and Technology In- stitute (INCAR), that forms part of the Spanish Higher Coun- cil for Scientific Research (CSIC) in Oviedo, new low-cost absorption materials have been developed (less than €500 /t) using dried treatment sludge, activated via pyrolysis. The adsorbents can be used to remove odours or support membrane bioreactor (MBRs). At a MBR plant with a ca- pacity of 15,000 m3/day, 10% energy savings have been projected, and in terms of chemical consumption (with longer filtering periods and 30% less cleaning products), annual operating costs are reduced by approximately €50,000, with a return on investment in the material of just a few months. The project also saw the implementation of the process to optimise the process for removing nutrients at the San Claudio WWTP. The reduction in the cost of electricity, the reduction in the need to purchase iron salts (due to the op- timisation of the biological elimination of phosphorus) and the production of slurries, comes to around €30,000/year, covering the costs of improving automated control in less than a year. Interconecta Advisor: Cofunded by the CDTI (Centre for Industrial Technological Development) with ERDF (European Regional Development Fund) funds, the project has implemented new pre-treat- ment and co-digestion methods for meat waste (Maguisa) at the WWTP managed by Aqualia in Guijuelo, supported by the town hall. The project also benefited from the collabo- ration of AINIA. A new system has also been developed for controlling digesters using LIDAR (Laser Imaging Detection and Ranging) technology to detect foams. The increase in the production of biogas has been har- nessed by an ABAD Bioenergy® system for upgrading bi- omethane, and a dispenser at the WWTP for supplying a specific vehicle followed by EnergyLab, which has now trav- elled 15,000 km. As a result of Covid measures, this project has been extended until March 2021. ADVISOR has been selected as one of the 101 corporate actions of #PorElClima 2020, and its impact on reducing CO2 has been certified by the Carbon Fund for a Sustaina- ble Economy (FES-CO2) as part of the CLIMA Programme organised by the Ministry for the Ecological Transformation and the Demographic Challenge (MITECO). Furthermore, two demo prototypes were installed at the WWTP: • An anaerobic waste treatment reactor with a flow of 250 l/hours using an FBBR bio-electrochemical fluidised bed, developed as part of the Life Answer project under a joint patent with the University of Alcalá de Henares (EP2927196A1) and for which a trademark protection application has been submitted (Elsar: Electro Stimulated Anaerobic Reactor). • Continuous thermal hydrolysis by innovative SME teCH4+ to simply the process and reduce the installation and op- erating costs of the digestion pretreatment. Life Icirbus: Led by Intromac Centro Tecnológico and with six other part- ners in Extremadura, the project has developed a prototype at the waste WWTP in Lobón (Extremadura), managed by Aqualia, to demonstrate the adsorption of metals contained in some treatment slurs by biomass fly ash involving the firm Ence. The process has received protection in the form of a utility model and the treated ash are included as aggregates in construction material, while the odour of waste slurs are reduced and added to a compost used on different crops. Life Methamorphosis: This project is led by Aqualia in cooperation with five oth- er entities (Barcelona Metropolitan Area (AMB), FCC Medio Ambiente, Naturgy, Icaen and SEAT) and has seen two bi- omethane production demo plants set up: • The first, at Ecoparc 2 in Besós (Barcelona), co-managed by FCC Medio Ambiente, integrates three Aqualia patent- ed technologies (AnMBR for anaerobic membrane treat- ment, ELAN for the removal of ammonium, and the wash- ing of biogas ABAD Bioenergy®), to convert leachates generated by the digestion of solid waste in biomethane, used in urban rubbish collection lorries. • The second has seen Naturgy harness slurries and other waste to supply test vehicles, which have travelled more than 150,000 km, before being dismantled and analysed to investigate the impact of biomethane. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Innovation and technology | Page 3 of 7 The MIDES project, led by Aqualia, operates the first two desalination plants that are wholly energy self-sufficient in the world, in Dénia (Alicante, Spain) and Guía de Isora (Santa Cruz de Tenerife, Spain). The continued development of the LIFE Infusion project to prepare the design parameters for future AMB resource recovery projects and to evaluate technologies in Asturias with another waste manager (COGERSA). H2020 Mides: The project, with eleven partners in seven countries, has seen two demonstration units set up at plants managed by Aqualia set up in Dénia (Alicante) and Guía de Isora (Tenerife) in relation to a new green desalination technology, patented jointly by Aqualia and IMDEA Agua. This microbial desalina- 156 tion cell (MDC) reduces the energy cost of desalination by up to ten times compared to traditional inverse seawater osmosis. Instead of electricity, the organic matter of efflu- ents have been used to activate the bacteria that generate a change in power, without the need for any external power, to move salts via ionic exchange membranes while treating the wastewater effluents that serve as power. The project has also contributed to the construction of the desalination innovation centre in Dénia, where a platform has been constructed to assess different pre-treatments, with filtering material and multi-membrane pilots. Furthermore, remineralisation post-treatments and alternative methods of disinfection without the use of hypochlorite are being op- timised. In the search for more efficient membranes, bio- mimetic modules have been installed for the purposes of testing in Santa Cruz de Tenerife, to reduce the nitrates in drinking water, which has been demonstrated as a compet- itive solution compared to conventional options. In addition to the technological development projects, in- vestments have been made in scientific training, participat- ing as an industrial partner in the Rewatergy project under the H2020 Marie Sklodowska Curie programme for aca- demic networks in Europe, headed by Rey Juan Carlos Uni- versity (Madrid). Two researchers have started their PhDs and are due to begin their internships at Aqualia in 2021: • At the University of Cambridge (United Kingdom), focus- sing on the production of hydrogen from the ammonium in wastewater. • At Ulster University (Northern Ireland), developing photo disinfection and electro-disinfection projects to remove micro-contaminants from drinking water and wastewater. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Innovation and technology | Page 4 of 7 Projects due to be completed in 2021 In 2020, another four projects, one as part of the RIS3 pro- gramme organised by IDEPA in Asturias, one by JPI WATER co- funded by the CDTI and two as part of the H2020 programme, are in the final phase of development, and are due to be com- pleted in 2021: RIS3 Re-Carbón Financed by IDEPA using ERDF and led by engineering firm INGEMAS in cooperation with two SMEs (Biesca and InCo), Aqualia supports the MCAT institutes (Microwaves and Car- bons for Technological Applications) at the CSIC’s INCAR (Carbon Science and Technology Institute) and the CTIC (In- formation and Communication Technology Centre Founda- tion) in researching contaminant adsorption methods using regenerated active carbon and biochar. The goal is to obtain an advantageous supply of a sustainable adsorbent for ap- plications in water and gas. In collaboration with the Hidrotec laboratory in Oviedo, ad- vanced micro-contaminant analysis methods are developed to assess the innovative adsorption units using active car- bon optimised using biochar. Its feasibility as method clean- ing biogas is being tested at the Jerez, Chiclana and Lleida WWTPs, in addition to deodourisation at the San Claudio and Luarca WWTPs. The adsorption of micro-contaminants and new sensors that facilitate real-time monitoring at the Grado WWTP and Cabornio DWTP are also being studied. fund WaterWorks2018 programme, with the participation of partners in France, Italy and Sweden. A 400 m2 infiltration system will be constructed at the Medi- na del Campo WWTP (Valladolid), for the advanced treat- ment of purified water and its reuse in the groundwater recharge process. In cooperation with scientific institutes, system simulation and design tools are being developed, optimising the operation and costs to eliminate emerging contaminants, comparing them to those generated by con- ventional tertiary treatments. H2020 Sabana JPI MarAdentro The “Managed Aquifer Recharge: ADrEssiNg The Risks Of regenerated water” project is being led by the Institute of Environmental Diagnostics and Water Studies (IDAEA- CSIC) as part of the European Horizon 2020 ERA-NETs Co- The University of Almeria leads eleven partners from five countries (including the Czech Republic and Hungary) with three major firms: Aqualia, Westphalia (Germany) and the Italian food group Veronesi. The project optimises the pro- duction of new biofertilisers and biostimulating agents using 157 Aqualia aims to transform the way it interacts with its stakeholders as part of its commitment and the co-creation of transformational initiatives algae and work is being completed at the two crop units, adding a further five hectares and the corresponding bio-re- fineries at the WWTPs in Mérida and Hellín (Albacete). H2020 Run4Life Led by Aqualia, this consortium brings together fifteen enti- ties across seven countries at four demo locations (Sneek, in the Netherlands; Ghent, in Belgium; Helsingborg, in Swe- den; and Vigo, in Spain) to investigate new nutrient recovery concepts from separating grey and black water. In Sneek, vacuum toilets, which consume a minimal amount of water have been installed in thirty two homes, facilitating the direct thermophilic digestion of sewage in an innovative bioreactor. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 158 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Innovation and technology | Page 5 of 7 At the customs-free zone in Vigo operates an MBR for grey water in an office building, which are reused by toilets and an AnMBR for sewage to generate bioenergy. Several nu- trient recovery options were tested, followed by advanced oxidation to eliminate virus and emerging contaminants and performing greenhouse crop tests to investigate the quality and safety of the effluents and by-products as fertilisers. A larger installation is being prepared in at the Balaídos industrial estate with effluents produced by Citroën, with FBBR bioelectrochemical technology being assessed (pro- cess patented by Elsar) for the direct treatment of sewage using the inoculum generated by the Guijuelo reactor as a biomass (Salamanca). At the other two demo sites, encompassing hundreds of new apartments in Ghent and Helsingborg, organic kitchen waste was included in addition to the segregation of grey water and sewerage. In 2020, these homes were inhabited and the energy and nutrient recovery services came online. An important part of the project entails dialogue with the users of the new services and by-products to optimise ser- vices and water and energy consumption through the de- centralised management of these systems. H2020 Scalibur This project, led by the Technological Institute of Packaging, Transport and Logistics (ITENE), involving twenty-one part- ners from ten countries, reached the halfway stage in 2020. Since the end of 2018, with a total duration of four years, a focus has been placed on reducing and recovering waste across Europe. With participation from FCC Environment, the project is focussed on improving waste transformation plants in Madrid, Lund (Sweden) and Rome (Italy) to recover resources and foster the circular economy. Along these lines, Aqualia has implemented new sludge treatment processes at WWTP Estiviel (Toledo), with im- provements to thickness (Orege system) and dual diges- tion across two phases, simplifying the stabilisation of muds without the use of heated concrete structures. The project has facilitated the initial innovation activities at SmVaK in the Czech Republic to convert organic matter into by-products and bioenergy. Ongoing projects Another four projects in receipt of H2020 funding, launched in 2019, remained ongoing in 2020, two in relation to BBI (Bio-Based Industries), and two in the LIFE programme: BBI Deep Purple Led by Aqualia and supported by thirteen partners across six countries, the project implements a new biorefining model at a demo scale, which includes purple phototrophic bacteria (PPB) in anaerobic carousels. These bacteria use solar energy to purify non-aerated wastewater and trans- form the organic content of wastewater and urban waste into raw materials for biofuels, plastics, cellulose and new inputs for the chemical and cosmetics industry. Aqualia’s initial prototype is in operation at Toledo-Estiviel, and a demonstration reactor ten times the size of this pro- totype is planned for the Linares WWTP (Jaén). Parallel ac- tivities are also planned for the SmVaK WWTP in the Czech Republic. BBI B-Ferst Led by Fertiberia, and with ten partners across six differ- ent countries, Aqualia is involved in the development of new bio-fertilisers using urban wastewater and by-products from the agri-food industry. It analyses the potential of the raw material recovered in the production of fertilisers in three countries (Spain, Italy and the Czech Republic) and de- velops a struvite precipitation system at the Jerez WWTP (Cádiz), to include recovered phosphorus in a new biological fertiliser demo plant owned by Fertiberia in Huelva. Life IntExt This project, led by Aqualia and supported by the AIMEN and CENTA technological centres and the University of Aarhus, in Denmark, supports SMEs in Germany, Greece and France to optimise low-cost treatment technologies in small towns. The aim is to minimise the cost of energy, the carbon footprint and waste, providing sustainable solutions from an ecological and economic perspective. A platform for demonstrating these technologies at the WWTP in Ta- lavera de la Reina (Toledo), which is run by Aqualia is in the final phases of construction. Life Ulises This project, coordinated by Aqualia. Receives support from three technological centres, CENTA, EnergyLab and CieSol at the University of Almeria. With a view to optimising and transforming conventional WWTPs at “energy gener- ation factories”, eliminating its carbon footprint, anaerobic pre-treatment using the PUSH reactor is being implemented at the WWTP in El Bobar (Almeria), which is run by Aqualia, with two WWTPs in Portugal also subject to assessment. Hydrolysis-based digestion is improved and the biogas har- nessed as a vehicle fuel by means of an ABAD BioEnergy® refining system and a biomethane dispenser. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Innovation and technology | Page 6 of 7 Projects launched in 2020 In 2020, work began on six new European projects, taking the company’s involvement in each of the major European support programmes, Life and H2020, past ten: Life Infusion Once the Life Methamorphosis project came to an end, AMB took the decision to extend the project to prepare de- signs for different resource recovery plants. In collaboration with the EureCat centre for technology and the operator of Ecoparc 2, EBESA, the leachate digestion system will be improved with technology developed by Aqualia, AnMBR and ELAN, adding an ammonium stripping system pro- duced by Belgian firm Detricon. Two waste management firms, Cogersa in Asturias and AMIU in the Genoa region of Italy are responsible for assessing the options for imple- menting the solutions at their plants. Life Phoenix The project, led by Aqualia and supported by CETIM (Mul- ti-sector Technological Research Centre) and CIESOL (Solar Power Research Centre), will optimise tertiary treatment to achieve the most ambitious goals of the new European wa- ter reuse regulation (EU 2020/741). As part of the assess- ment of different effluents, for ADP in Portugal, the Regional Government of Almeria and the Guadalquivir Hydrographic Confederation, three mobile plants have been designed, one with a physical and chemical treatment capacity of 50 m3/hour, one with a filtering capacity of 30 m3/hour and one with an ultrafiltration capacity of 20 m3/hour. 159 Furthermore, European subsidiary Newland Entech has provided an ozone (O3) and ultraviolet UV disinfection mod- ule, and Dutch SME MicroLan is responsible for online mi- crobiological measurements. Life Zero Waste Water The project, led by Aqualia, will demonstrate the combined treatment of urban waste water and the organic part of ur- ban solid waste at the Valdebebas WWTP (Madrid), with Canal Isabel II as its partner using the AnMBR anaerobic reactor, followed by ELAN for water lines, with a capacity of 50 m3/day, facilitating treatment with a neutral carbon foot- print. The use of FORSU at a municipal level and the option of connecting to the sewerage system for transporting the mixture in a unique flow will be subject to assessment. In addition to the University of Valencia (AnMBR) and the University of Santiago (ELAN), Portuguese SME Simbiente is responsible for developing an advanced management system, with Austrian SME VWS (Vienna Water Systems) responsible for the online monitoring of microbiology quality. H2020 Sea4Value Led by technology centre EureCat, with fourteen partners across seven countries, the project focusses on recover- ing resources concentrated brine at seawater desalination plants (SWDP), with basic scientific developments 100% funded by the European Union. At least eight innovative technological solutions are expected to be designed to enrich the most valuable components of seawater (lithium, rubidium and cesium) and the recovery of critical raw mate- rials (magnesium, boron, scandium, gallium, vanadium, indi- um, molybdenum and cobalt) to a level of purity that makes it market exploitation feasible. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 160 Publications and Events In terms of publications and participation at conferences, fol- lowing the delays and cancellations resulting from the restric- tions imposed on account of COVID-19, the Innovation team only participated at half the number of scientific and profession- al conferences than was the case in previous years. However, its work is partially reflected in the documentary “Brave Blue World” (on Netflix: https://www.youtube.com/watch?v=FxZB- 9pRD2Bo) and more than one hundred and fifty press articles, as summarised in the attached table, including on the front page of iAgua | December 2020: Scientific articles Sector press General press International events National events Other Total 2017 2018 2019 2020 11 117 113 33 18 – 13 131 94 24 31 2 12 108 139 24 19 – 5 63 93 14 11 – 292 295 302 186 FCC_Annual Report_2020 | Business lines | End-to-end water management cycle | Innovation and technology | Page 7 of 7 Desalination Innovation Centre in Dénia (Alicante) to recover brines in addition to new desalination methods, involving the solar concentration of brine, selective magnesium precipita- tion, the acquisition of chlorine dioxide and the optimisation of permeated remineralisation with micronised limestone, reducing CO2 consumption, cloudiness and the size of fa- cilities. The roll out of pilot units at different WWTP operat- ed by Aqualia will be assessed, analysing the technical and economic impact. H2020 Ultimate As part of the “Smart Water Economy” initiative, Aqualia is involved in two of the five chosen consortia, which receive up to 15 million euros of support per project. Ultimate, led by Dutch technology centre KWR, will see nine industry and water service synergy demonstrations implemented with 27 partners. At the Mahou WWTP in Lleida, operated by Aqualia, work is underway to prepare the preparation of the FBBR (Elsar) and AnMBR anaerobic reactors at a scale of 20 m3/hour to recover biomethane and power a fuel battery. The codiges- tion of yeast and support to another of Aqualia’s customers, Aitasa, are currently being studied. H2020 Rewaise The Rewaise project has the highest company engagement of the five projects chosen as part of the “Smart Water Economy” initiative, with Aqualia leading 24 partners in- cluding water firms from the United Kingdom (Severn Trent), Sweden (Vasyd) and Poland (AquaNet) in addition to sev- en SMEs to implement new circular economy and digital management solutions at nine “living laboratories” including Aqualia facilities in Badajoz, the Canary Islands, Dénia and Vigo. Rewaise will allow Aqualia’s strategic lines of technological development to be enhanced, via sustainable desalination and new membranes, the recovery of brine materials, the reuse of wastewater and its transformation into energy and by-products, in addition to the simulation of water quality, processes and networks. Patents Four new patents were obtained in 2020: Anaerobic Membrane Reactor (AnMBR, in cooperation with U. Valencia and UPV): • US 10,577,266 granted on 03/03/2020 • EP 3225596 B1 published on 20/05/2020 FBBR Bio-Electrochemical Fluidised Bed Reactor (Elsar, in cooperation with UAH): • EP 2927196 A1 published on 22/04/2020 Photobioreactor with purple bacteria (ADVANSIST, in cooperation with URJC): • EP3546562B1 published on 12/08/2020 Microbian Desalination Cell (MDC, in cooperation with Imdea Agua): • EP 3336064 A1 published on 26/08/2020 These patents form part of Aqualia’s industrial property, with ELAN® (EP 2740713 A1, and its extension EP 3255016 A1), ABAD Bioenergy® (EP 15382087.3) and LEAR algae reactors (EP 2875724 B1 y EP 2712917 B1). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure 161 Infrastructure The construction area of the FCC Group recorded a total order book of 5.16 billion euros. Gross operating profit reached 53.6 million euros and turnover stood at 1.61 billion euros. Industry analysis _ 163 Activity in the Infrastructure area _ 167 Highlights 2020 _ 180 Sustainability and excellence _ 181 Innovation and technology _ 184 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 162 FCC_Annual Report_2020 | Business lines | Infrastructure With cumulative experience of 120 years, the Infrastructure area of the FCC Group is present in 24 countries (Spain, Can- ada, United States, Mexico, Brazil, Colombia, Chile, Peru, Pan- ama, Costa Rica, Dominican Republic, Nicaragua, Guatemala, Romania, United Kingdom, Belgium, Norway, the Netherlands, Ireland, Portugal, Egypt, Saudi Arabia and Qatar) and its activi- ties cover all areas of engineering and construction. It is a leader in implementing transport infrastructure, as well as residential and non-residential construction. FCC Construc- ción is currently the fourth largest construction company in Spain, in terms of contract volume, and in the top 40 in the world according to the ranking by the international magazine, ENR (Engineering News-Record). It has proven track-record in implementing projects under the concession regime, and has a group of companies dedicated to the industrial sector, grouped together under the FCC Industrial brand, as well as other activ- ities related to the construction sector. In 2020, Infrastructure area of the FCC Group recorded an ag- gregate total attributable order book of 5.16 billion euros. The gross operating profit (EBITDA) reached 53.6 million euros and turnover dropped by 6.3% compared to the previous year to 1.62 billion euros. In 2020, the portfolio of international pro- jects dropped by 2.1% and the income from domestic activ- ities increased by 27.6% compared to the previous year, at over 848 million euros. Some activity data Experience and ability More than 700 km of tunnels. More than 8,500 km of roads and motorways. 1,650 bridges. More than 2,600 km of railways, of which 900 km are high speed and 326 km are metro. 48 dams and 76 km of wharfs. More than 4,500,000 m2 of airport runways. More than 2,300,000 m2 of airport terminals. More than 3,000 km of oil and gas pipelines. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Industry analysis | Page 1 of 4 163 The outlook for the construction industry is highly reliant on the potential impact of the Recovery Plan Salamanca Hospital (Spain). Industry analysis Domestic market Spain According to the most recent Euroconstruct report, the con- struction sector in Spain has been no exception, and as has been the case across Europe, work resumed quickly after the restrictions put in place during the first wave of the pandemic. were lifted. The industry shrank by around 12.5% in Spain. The outlook for the construction industry is highly reliant on the potential impact of the Recovery Plan. The lack of a detailed Plan means that 2021 will be too early to estimate its impact, with projected growth in 2022 and 2023 estimated at 3.5% and 3.0%, respec- tively. In terms of activity, the shock suffered by residential construc- tion in 2020 (-13.5%) was slightly higher than the industry av- erage, although stronger growth is forecast for 2021 (+6%). All new-build construction projects are supported by strong pre- sales and developers are capable of withstanding a slowdown in the pace of sales, as there is quite a lot less stock and the industry is not as indebted as it was during the previous crisis. In terms of non-residential construction, no collapse is fore- seen, although signs from the real-estate market are grim as the crisis has resulted in more companies being forced to close. In 2020, production was down by 16.5% and growth is expected to be slow (+2.5% annual average for 2021-23). Finally, in relation to civil engineering, when looking at the se- quence of production in 2020, with a shrinkage of 7%, and ex- pected growth of 6% in 2021, this is the closest to a “V”-shaped recovery possible in the Spanish construction industry. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Industry analysis | Page 2 of 4 164 International market Europe The impact of the first wave of COVID-19 on the European construction industry was significant. The pace of work in the industry has recovered, with the drop in production in 2020 lim- ited to 7.8%. Growth in 2021 is expected to come to 4.1%, although this will tend to slow down somewhat in the medium term (3.4% in 2022 and 2.4% in 2023). Despite this, the new European scenario takes on a clearer “V” shape than was the case six months ago. As losses in 2020 were lower than ex- pected, the industry can aspire to resuming the levels of pro- duction seen in 2019 by 2022. Some key markets like Germany and the United Kingdom will form part of the group of countries with a slower pace of re- covery. Non-residential construction appears to be replicating the pattern seen in the middle of the last decade, when it recovered one to two years after the recovery of residential construction. Therefore, following a drop of 10.3% in 2020 that was practi- cally identical to the drop in residential construction, the new forecast suggests it will virtually stagnate in 2021 (+1.0%). Industrial construction will continue to shrink in 2021 due to the severe setbacks forecast for Germany and Scandinavian countries. Offices and commercial construction will start their recovery in 2021, although at a much slower pace as growth is In Europe, there was a 7.8% drop in production in 2020, with growth of 4.1% forecast for 2021 only expected in half of the countries. If the European economy is capable of putting these exceptional circumstances behind it in 2022, the pace of growth of non-residential property develop- ment would be similar to that of residential construction (+3.2% on average between 2021 and 2023). Civil engineering is the sub-sector that has managed to make it through 2020 relatively unscathed (-3.8%) thanks to several factors: the order book was on the up prior to the outbreak of coronavirus, the consistency provided by large-scale projects and lower levels of disruption, as this work is performed in en- vironments that posed a limited health risk. Furthermore, this sub-sector has the largest projected growth for 2021 (+5.2%), meaning that not only will production recover to 2019 levels, it will also actually see growth of more than 2.0%. Latin America Wastewater treatment plant in Glina (Romania). In 2020, construction in LATAM dropped by 17.3%. Slow pro- gress in the recovery of construction work and the launch of new projects in some countries has been affected by the con- tinuous growth in the number of cases of COVID-19 and the worsening of the economic environment, which continues to hamper the sector’s recovery. Latin America is the region most affected by the coronavirus pandemic. According to the International Monetary Fund (IMF), economic activity in Latin America fell by 8.3% in 2020. In 2021, the economy is expected to recover by 3.6% as external de- mand and internal activity recover. In 2021, it is expected that construction output will recover by up to 0.7%, with Peru and Chile performing strongest, while a very slight improvement is expected in Colombia and Brazil. Construction activity in Argentina and Mexico is expected to continue to fall, although not as drastically as in 2020. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Industry analysis | Page 3 of 4 Grangegorman University, Dublin (Ireland). North America The general impact of COVID-19 on the sector involved a sig- nificant drop in activities in 2020. In 2021, the new infrastruc- ture plan for the United States, involving investments of 2 billion dollars (1.68 billion euros) opened a new window of opportu- nity. The plan includes initiatives including, but not limited to, transport and real-estate infrastructure projects, including the maintenance of highways and bridges, ports and airports, and investments in passenger and freight rail transport. More than 621 billion dollars will be allocated to modernising 32,000 km of highways and motorways, repairing hundreds of bridges and renovating ports and airports. Another 300 billion will be allocated to reactivating the manufacturing industry and 100 billion to improving broadband access in rural areas, in ad- dition to electrical networks and drinking water as part of other investments. Also worth mentioning is the 100,000 million dollar investment in renewable energy with a view to achieving the target of 100% clean energy by 2035. 165 Middle East The COVID-19 pandemic has had a major impact on the pro- jects market in the Middle East. According to recent studies performed and the analysis of trends, construction companies in the Middle East are experiencing shutdowns and delays in the performance of infrastructure projects. One of the consequenc- es is a significant increase in government deficits and national debt across all countries in the Middle East. Although monetary easing and spending will facilitate the potential growth of the infrastructure sector, no definite recovery period has been es- tablished. Investors face a lack of national government financial reserves, the collapse of the travel and tourism industry and the slow- down in demand for property, which, when combined, have led to a lack of liquidity. Australia The Australian government has declared the infrastructure in- dustry as a lever for change in terms of the country’s economic recovery and growth, There is a staunch commitment to speed- ing up infrastructure projects to stimulate economic growth as a result of COVID-19. In 2021, there are plans to make investments worth 7.5 billion Australian dollars (5.3 billion US dollars) in transport infrastruc- ture projects. New South Wales, the most populous state in Australian, will receive 2.7 billion Australian dollars (1.9 billion US dollars) in funding and Victoria, hardest hit by the COVID-19 pandemic, will receive a further 1.1 billion Australian dollars (790.1 million US dollars). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Industry analysis | Page 4 of 4 166 FCC Industrial carries out its activities in various sub-sectors, ranging from manufacturing to operation and maintenance, as well as the design and construction of industrial facilities North Runway. Dublin Airport (Ireland). Industrial activity FCC Industrial carries out its activities in various sub-sectors, ranging from manufacturing to operation and maintenance, as well as the design and construction of industrial facilities. The economic situation in Spain has seen the growth of invest- ment and internal consumption curbed by the pandemic, al- though the 2021-2030 National Integrated Energy and Climate Plan (PNIEC) and the Recovery, Transformation and Resilience Plan are acting as catalysts for the growth of the renewable energy and digitisation and new technology sectors. The increase in uncertainty internationally, different trade rela- tions and the rise in oil prices will have a moderating effect on growth. Internationally, oil prices are affecting large international projects in the oil and gas and fossil-fuel-based power gener- ation sectors, but there is some growth in renewable energies worldwide and, in Europe, in waste recovery, sectors in which FCC Industrial is present as part of the diversification of activi- ties and markets strategy. It is also worth noting that the saturation of industrial invest- ments in the USA and the continued growth of the US econo- my could precipitate a faster than expected increase in interest rates (with a negative effect on emerging markets). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 1 of 13 Activity in the Infrastructure area 167 14 NORUEGA E6 Ulsberg-Vindasliene motorway. 263 million euros 15 ROMANIA Bucharest Metro line 5. 470 million euros Railway lines in Transylvania and new railway awards. 1,480 million euros Design and construction of the wastewater treatment plant and sludge incinerator in Glina, Bucharest. 113 million euros Modernising the take-off and landing runway at Bacau airport. 30 million euros National market 2020 Portfolio of contracts: 1,629.3 million euros Revenue: 848.8 million euros International market 2020 Portfolio of contracts: 3,526.4 million euros Revenue: 762.2 million euros 15 16 17 14 11 10 12 13 1 9 1 SPAIN Remodelling of Santiago Bernabéu in Madrid 6 PANAMA Comprehensive remodelling of Plaza España in Madrid Remodelling of Nudo Norte, in Madrid Club de Mar Palma Mallorca, in the Balearic Islands Closure of the circular road in Tenerife, the Canary Islands Expansion of Section 1 and 2 of the Inter-American Highway to six lanes. 912 million euros Line 2 branch of Panama metro to Tocumen Airport. 81.8 million euros 7 COLOMBIA 10 UNITED KINGDOM 16 EGYPT Section of the A465 dual carriageway. 665 million euros Design of Jersey hospital. 32.8 million euros Abu Rawash wastewater treatment plant in Cairo. 281 million euros 2 USA Guillermo Gaviria Echeverri tunnel. 366.7 million euros 11 IRELAND 17 SAUDI ARABIA Gerald Desmont Bridge in Los Angeles. 739 million euros “El Salitre” wastewater treatment plant. 398 million euros 3 CANADÁ 195 kilometres of Trans-Canadian motorway. 205 million euros (30 years) 8 CHILE Parque Mapocho Río. 55 million euros 4 MEXICO 9 PORTUGAL Buildings of the higher education centre Dublin Institute of Technology (DIT) at the Grangegorman campus (Dublin, Ireland). 220 million euros New “North Runway” at Dublin airport. 130 million euros Remodelling of airport and fire hydrant system in Dublin Airport. 41.5 million euros Samalayuca–Sásabe gas pipeline. 225 million euros Gouvães dam. 17.6 million euros 12 THE NETHERLANDS Tren Maya. Section 2. 637 million euros 5 PERU Line 2 and Line 4 branch of the Lima metro. 3,900 million euros Luis Bivar residential building. 4.8 million euros Modernisation of the railway between Covilhã and Guarda. 61.4 million euros Extension of the A4 motorway in Aguas Santas. 13.4 million euros Section of the Badhoevedorp- Holendrecht A9 motorway. 845 million euros 13 BELGIUM Haren prison. 322 million euros Additional stations on Line 4 of Riyadh Metro. Park and Ride on Line 4. Science Park on Line 5. 612 million euros Lines 4, 5 and 6 of the Riyadh metro. 7,528 million euros Civil Engineering New contracts awarded Industrial Residential construction Non-residential construction In progress Complete Hydraulic works Maintenance 3 2 4 6 7 5 8 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 2 of 13 Remodelling of the Santiago Bernabéu Stadium (Madrid, Spain) Projects in development CONSTRUCTION Residential construction Building at Av. Luis Bivar 91, Lisbon (Portugal). Building at Rua Sousa Martins 21, Lisbon (Portugal). 168 Throughout 2020, the construction area was awarded 23 contracts with an overall contract volume of approximately 1.51 billion euros Construction of 114 homes in Cancelada (Málaga, Spain). Construction of 123 homes in Torremolinos (Málaga, Spain). Construction of 86 homes in Sant Cugat del Vallés (Barcelo- na, Spain). Construction of 68 homes, premises and car parks in Zona Franca 17-25 de Barcelona (Barcelona, Spain). Construction of 84 homes and 126 parking spaces in Sant Joan Despí (Barcelona, Spain). Construction of 108 homes with commercial premises, ga- rage and storage (Valencia, Spain). Construction of 72 homes in Palma de Mallorca (Balearic Construction of 48 homes in San Sebastián de los Reyes, Islands, Spain). Madrid (Spain). Construction of 86 homes, 2 commercial premises and ga- rage in the Ensanche de Vallecas neighbourhood (Madrid, Spain). Construction of 55 homes in Carmona (Seville, Spain). Construction of 132 homes in PAU Ciudad Deportiva FC Barcelona in Sant Joan Despí (Barcelona, Spain). Construction of 60 homes in Hospitalet de Llobregat (Bar- celona, Spain). Construction of 26 homes and parking spaces in Sant Joan Awarded In progress Complete Construction of 104 homes in Torremolinos (Málaga, Spain). Despí (Barcelona, Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 3 of 13 169 Construction of 73 homes “Essència de Sabadell” (Barcelo- na, Spain). Construction of 77 homes, car park and storage at Avenida de Navarra 18, in Badalona (Barcelona, Spain). Non-residential construction Santa Luzia primary school (Elvas, Portugal). Construction and maintenance of deodorising systems at the biomethane production and biogas treatment plants at the Valdemingómez Technology Park (Madrid, Spain). Works at the controlled tailings deposit run by the South Madrid Association, with the expansion of Phase IV, sealing and degasification of Phase III and the expansion of lea- chate processing capacity in the towns of Pinto, Getafe and San Martín de la Vega (Madrid, Spain). Remodelling of the Santiago Bernabéu Stadium (Madrid, Spain). Construction of the Ensanche de Vallecas Municipal Sports Centro de Tratamiento de Residuos en Loeches, Madrid (España). Centre (Madrid, Spain). Lot 4 of the framework agreement for the district of Hor- taleza in the City Council of Madrid (Madrid, Spain). Lot 1 of the framework agreement for subsidiary implemen- tation operations, emergency actions and adoption of secu- rity measures in municipal buildings (Madrid, Spain). Lot 2 of the framework agreement for performing rectifica- tion works on issues in the set of heritage buildings and those subject to any type of use by the Madrid city council (Madrid, Spain). Construction of the Loeches Environmental Recycling Com- Expansion of San Juan de Dios Hospital (Seville, Spain). Expansion of the “Las Marinas” integrated waste process- ing plant in El Campello (Alicante, Spain). Expansion and renovation of Soria hospital (Soria, Spain). plex (Madrid, Spain). Comprehensive renovation of the tourist parador in León Awarded In progress Complete Drafting of project and modification of the Las Dehesas cen- tre at the Valdemingómez Technology Park (Madrid, Spain). Construction of the new Airbus central offices campus in Getafe (Madrid, Spain). (Spain). Construction of Victoria Adrados communal centre, (Sala- manca, Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 4 of 13 170 Connection of Renault Valladolid warehouses (Valladolid, Railways Spain). Salamanca hospital (Salamanca, Spain). Phase 0 of the Master Plan for the A Coruña University Hos- pital Complex (A Coruña, Spain). Construction of the new complex in the Administration Dis- trict of the Generalitat (Barcelona, Spain). Construction of the cold store for CILSA/CAPRABO at the Port of Barcelona (Barcelona, Spain). Construction of the GRIFOLS office building on Avenida Generalitat and connecting underpass to the existing cor- porate building in Sant Cugat del Vallès (Barcelona, Spain). Renovation of the Philosophy and Humanities building of the University of Zaragoza (Zaragoza, Spain). Construction of the Business Creation Centre of the Univer- sity of Alicante (Alicante, Spain). Corporate construction 42 homes in Tres Cantos (Madrid, Spain). 40 homes in Tres Cantos (Madrid, Spain). 116 homes in Alcalá de Henares (Madrid, Spain). 40 homes in Valdebebas, (Madrid, Spain). 144 homes in Arroyofresno (Madrid, Spain). 85 homes in Tres Cantos (Madrid, Spain). 42 homes in Arroyofresno (Madrid, Spain). Rehabilitation of the railway between Pinhão and Tua (Por- tugal) (awarded in 2020). Modernisation of the railway between Covilhã and Guarda (Portugal). Improvement works to subsection 2.3 (Alfarelos/Pampilho- sa) of the North railway line (Portugal). Line 1 railway diversion at the finca Adoc section (Alicante, Spain). Improved accessibility and adaptation to the interchange regulations of Maragall station, (Barcelona, Spain). Line 10 of the Valencia metro, infrastructure of the ramp on Calle Amado Granell – Hermanos Maristas station (Valencia, Spain). Ferrocarriles de la Generalitat Valenciana TRAM network. Lowering and adaptation of the Line 1 and Line 9 platforms and renovation of the sidings and railway installations in Be- nidorm (Alicante, Spain). Track assembly and access (Leon, Spain). Maintenance of the north-east high-speed line. Brihuega and Calatayud bases (Catalonia, Spain). Maintenance of the north-east high-speed line. Montagut, Vilafranca and Sant Feliu bases (Catalonia, Spain). Grangegorman University (Dublin, Ireland). Awarded In progress Complete Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 5 of 13 171 Trackbed works on the Totana-Lorca section of the Mur- cia-Almeria high-speed line (Spain). Works on platforms across Line 12 of the Madrid metro. Hospital de Móstoles-Conservatorio (Spain) (awarded in 2020). Contract for the assembly of the high-speed line between León and Asturias. Section: La Robla-Campomanes (As- turias, Spain). High-speed track assembly contract for the Campobecer- ros-Tabodela section (Galicia, Spain). Contract for the renovation of Ciudad Real-Badajoz track, Cabeza de Buey-Castuera section (Badajoz, Spain). Adaptation of the Sagunto-Teruel-Zaragoza line. Estivella, Teruel, Ferreruelas and Cariñena stations (Spain). Trackbed works on the Nijar-rio Andarax section of the Mur- cia-Almeria high-speed line (Spain). Infrastructure Maintenance and Conventional Network Track for ADIF - Lot 1 Centre (Spain). Covilhã and Guarda railway line (Portugal). Maintenance of the south high-speed line. Hornachuelos Infrastructure Maintenance and Conventional Network (Cordoba) and Antequera (Malaga) bases (Spain). Track for ADIF - Lot 6 South (Spain). Renovation of the Prosperidad station on Line 4 of the Ma- drid Metro (Madrid, Spain). Renovation of the Esperanza station on Line 4 of the Madrid Metro (Madrid, Spain). Renovation of the Arturo Soria station on Line 4 of the Ma- Mediterranean Corridor rail link. Installation of track super- structure between Vandellós and Secuita - Camp Tarragona station (Spain). Rail corridors in Romania. Complete replacements of track devices given the condition of the materials in the southern head of Puerta de Atocha station (Madrid, Spain). Construction of the Vila Franca de Xira connection branch (Portugal). Metro Maintenance. Approximately 50% of the Madrid Met- ro network is currently being maintained (Madrid, Spain). Replacement of the Ciudad Real-Portuguese border con- ventional network bridge (Badajoz, Spain). drid Metro (Madrid, Spain). Accesses to La Sagrera station (Barcelona, Spain). Removal of the level crossing at the entry to Monfragüe lo- Valladolid arterial railway network. East diversion (Spain). cated on the conventional line (Cáceres, Spain). Awarded In progress Complete Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 172 Maritime Expansion of the Port of Playa Blanca, Lanzarote (Canary Islands, Spain). Port Adriano, rehabilitation of the breakwater, Mallorca (Balearic Islands, Spain). Berthing of liquid bulk project on the bottom bank of the South Dock at the Port of Castellón (Castellón, Spain). Expansion of the esplanade on the Poniente Norte pier in the Port of Palma de Mallorca (Balearic Islands, Spain). Baleares wharf at the Port of Tarragona (Tarragona, Spain). Refurbishment of Club de Mar de Mallorca in Palma de Mal- lorca (Balearic Islands, Spain). Expansion of the attached dock at the Port of Barcelona (Barcelona, Spain). Functional improvements to the seawall at the Olympic Port in Barcelona (Barcelona, Spain). FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 6 of 13 Castrovido Dam, Burgos (Spain). Hydraulics Gouvães dam (Vila Pouca de Aguiar, Portugal). Project and adaptation work as part of the National Water Quality Plan WWTP El Endrinal in T.M. Collado Villalba (Ma- drid, Spain). Construction of the Castrovido dam (Burgos, Spain) Heightening of the Yesa dam (Navarre, Spain). Construction of the storm tank for the WWTP Galindo, (Viz- caya, Spain). Work to adapt the WWTP Getafe Sur, (Madrid, Spain). Construction of the Asón general collector. Section: Colin- Construction of a storm reservoir in the area of Arbeyal (Gi- dres-Ampuero, Cantabria (Spain). jón, Spain). Awarded In progress Complete Distribution network works for the Segarra-Garrigues Sys- tem (Lleida, Spain). Distribution network implementation for sector 6 of the Se- garra-Garrigues system in Verdú (Lleida, Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 7 of 13 Roads Connecting road between Mondim de Basto and the EN210 road in Cabeceiras de Basto (Portugal). Extension of the A4 motorway in Aguas Santas (Portugal). Tâmega and Oura bridges (Portugal). Construction on the remodelling of Calle 30 North inter- change (Madrid, Spain). Emergency works: repair and refurbishment of embank- ments in Cartagena (Murcia, Spain). Construction of “Anillo Insular de Tenerife” (Canary Islands, Spain). Construction of the section connecting the C-3223 to Yecla with the N-344 (Murcia, Spain) Expansion of the access routes to El Altet airport (Alicante, Spain). Vallirana tunnel, Catalonia (Spain). Construction of road tunnels in Plaza de les Glòries (Barce- lona, Spain). Jaca-Navarra motorway (A-21). Jaca-Santa Cilia section, Urbanisation Huesca (Spain). Urbanisation of plot T.P.T 10 in “A. R. Nuevo Tres Cantos” (Madrid, Spain). 173 Sanitation network, transformation centre and reflection centre at the U.Z.P. 2.04 Los Berrocales (Madrid, Spain). N-340 road from Cádiz and Gibraltar to Barcelona via Mala- ga. Vallirana bypass section (Barcelona, Spain). Awarded In progress Complete Urbanisation of stage 1 of U.Z.P. 2.04 Los Berrocales (Ma- Urbanisation of the new roundabout in Vara del Rey drid, Spain). (Logroño, Spain). Remodelling of Plaza de España and its surroundings (Ma- Urbanisation of U.A. 78 of PGOUM in Sabadell (Barcelona, drid, Spain). Spain). Renovation of the La Gavia park Phase II (Madrid, Spain). Urbanisation of A.P.E. 027 Nuevo Mahou-Calderón (Madrid, Spain). Urbanisation of the C. Leonardo da Vinci, Miquel Romeu, Av. Carrilet and Ctra. del Mig in Hospitalet de Llobregat (Bar- celona, Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 8 of 13 Dublin Airport Fuel Farm (Ireland). Industrial Electrical installations (Dominican Republic). Maintenance of Iberdrola electrical networks (Spain). Electromechanical installations Riyadh metro (Saudi Arabia). Maintenance for Cedinsa in Catalonia (Spain). 174 Overhead electrification in accesses to La Sagrera, Barcelo- na (Spain). Maintenance contracts for electrical networks in different provinces across Spain. Electromechanical installations at the provincial headquar- ters of Spain’s postal service (Seville, Spain). Photovoltaic installations in Adeje and Chafira, Tenerife (Ca- nary Island, Spain). Maintenance of thermosolar power plants (Spain). Espejo photovoltaic farm (Córdoba, Spain). Francisco Pizarro 590 MWp photovoltaic farm (Cáceres, Spain). Refurbishment of the Maragall metro station in Barcelona (Spain). Repair of the pump station in Fuente Álamo (Murcia, Spain). Refurbishment project for Córdoba prison (Spain). Maintenance at Hotel Silken in Seville (Spain). Air conditioning/heating installations at Hospital del Sur, Tenerife (Canary Islands, Spain). Maintenance of Madrid Este installations (Spain). Maintenance of the data processing centre (DPC), Murcia Maintenance of tunnels in Madeira (Portugal). 100 MW photovoltaic farm in Puertollano (Ciudad Real, (Spain). Samalayuca-Sasabe gas pipeline (Mexico). Storage of fuel at Dublin Airport (Ireland). Awarded In progress Complete Spain). Electromechanical installations for the hospital in Salaman- 50 MW photovoltaic farm in Barcience, Bargas (Toledo, ca (Spain). Spain). Maintenance of air conditioning/heating installations at Hos- Energy efficiency and lighting contracts across different cit- pital Candelaria (Spain). ies in Spain. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 9 of 13 175 Lines 4-5-6 of Riyadh Metro (Saudi Arabia). Line 2 and branch line 4 of Lima Metro (Peru). Maintenance of tunnels in Figueras, Catalonia (Spain). MAINTENANCE AND CONSERVATION Maintenance of Hospital Campus de la Salud in Granada (Spain). Maintenance of Army installations - SUIGEPIR. Maintenance of Teatro Real in Madrid (Spain). Road maintenance and conservation Maintenance of roads for city councils Conservation of high capacity roads in Gran Canaria (Ca- Maintenance of roads in Huelva (Spain). Maintenance of the Directorate General of Traffic (DGT) nary Islands, Spain). school in Mérida (Badajoz, Spain). Intercom Renfe suburban stations (Spain). Maintenance of Line 9 of Barcelona metro (Spain). Data processing centre (DPC) in Torija (Guadalajara, Spain). Awarded In progress Complete Assistance with roadways, ordinary maintenance, works and installations on the E-15/AP-7 Mediterranean motor- way between Almussafes and Sant Joan d’Alacant (Spain). Conservation and operation of roads in Sector V-08. Prov- ince of Valencia (Spain). Provision of services as part of 20 conservation contracts for different authorities: Ministry of Transport, Mobility and the Urban Agenda, Regional Government of Extremadura, Guipuzkoa Provincial Council, Palencia Provincial Council, SEITT and AUCONSA. Maintenance of transport systems Maintenance of the Zaragoza and Murcia trams (Spain). Maintenance of overhead lines, substations and train sta- tions for Ferrocarriles de Generalitat Valencia, in Alicante province (Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 10 of 13 176 Hydraulic infrastructure maintenance Environmental restoration Operation, maintenance and conservation of the Cancho del Fresno, Ruecas, Sierra Brava, Gargáligas, Cubilar, Azud de Ruecas, Alcollarín and Búrdalo dams (Spain). Construction of the O’Donnell green belt. Phase V for Ma- drid City Council (Madrid, Spain). Operation, maintenance and conservation of dams in zone 3 of the middle basin of the River Guadiana (Spain). Environmental services Provision of the service contract to optimise the functioning, updating, maintenance and joint operation of automatic hy- drological data systems and flow volume measurement sta- tion control networks for the Júcar River Authority (Spain). Emergency work to repair the damage suffered by infra- structures, rivers and riverbeds in the Segura River Authority (Spain). Management of emergency and forest fire services Prevention and extinction of forest fires in the eastern part of the Community of Madrid (Spain). Fire prevention for the Provincial Fire Brigade of the Region of Castellón (Spain). Control of vegetation in the area surrounding the overhead electrical lines in western and southern Madrid for Iberdrola (Spain). Management of recycling points in National Heritage histor- ical gardens (Spain). Reforestation plan for the Riofrío forest in San Ildefonso, Madrid (Spain). Conservation of River Manzanares where it passes through the municipality of Madrid (Spain). Environmental conservation of La Herrería Forest in the mu- nicipality of El Escorial (Madrid) for National Heritage (Spain). Conservation and cleaning of Bosquesur, for the Communi- ty of Madrid (Spain). Conservation of the vegetation on the banks of ADIF lines in central and southern Spain. Yesa dam, Navarre (Spain). Awarded In progress Complete Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 11 of 13 177 PREFABRICATED CONSTRUCTION Supplies for hydraulic conduits Concrete pipes with sheet metal sleeves: Execution of works included in the comprehensive project to modernise the hydraulic infrastructure owned by Co- munidad de Regantes Santa Cruz de Alcolea de Cinca, in Huesca (Spain). Execution of works to modernise the Canal de Pinyana irri- gation system in Lleida (Spain). Burying the overhead section of Coll de Balaguer in Tarrag- Comunidad de Regantes de Sodeto in Huesca (Spain). Glass-Fibre Reinforced Pipes (GRP) ona (Spain). Regulator basin and transport line for the irrigation area owned by Comunidad de Regantes de Almacellas in Lleida (Spain). Irrigation of Sector XI of Canal de Monegros, Comunidad de Modernisation of irrigation in Sector VII of the Páramo Bajo Regantes de Orillena in Huesca (Spain). irrigation area (Spain). Direct connection channel in Huelva (Spain). More than 31 kilometres of concrete pipe with steel jacket. 17.76 kilometres of glass-fibre reinforced pipes (GRP). 55,800 concrete sleepers of various types. More than 3,700 metres pre-stressed pre-fabricated sheets for tracks without ballast. Project to modernise the irrigation used by Comunidad de Regantes La Campaña in Castejón del Puente, Huesca (Spain). Replacement of pipes in Villagonzalo, Salamanca (Spain). Renovation of the sump at Cuesta de Valderremata in Valdemoro, Madrid (Spain). Updated project for the irrigation pumping station and net- work for Sector XV of Subzona de Payuelos, irrigation area of the Riaño, León and Valladolid dam (Spain). Supplies for railway contracts Assembly of the La Robla–Campomanes line, Asturias (Spain). Integration of the León railway and connection lines, León (Spain). Awarded In progress Complete Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 178 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 12 of 13 CORPORATE IMAGE CONCESSIONS Implementation of a new corporate image for Renault Eu- rope in Spain, Portugal and Italy. As a result of the different measures implemented to reduce mobility, there has been an impact on concessions relating to: Supply of the new Nissan logo for Europe. Implementation of the image restyling project for Nissan Eu- rope in dealerships in Spain, Italy and Portugal. New brand image for YAMAHA Europe for its network of “Marine” dealers in Europe. Supply of all image elements for BP service stations across Europe. Supply and installation of indoor furnishings for Fiat dealer- ships across Europe. Involvement in the development of prototypes for KIA’s new logo. Supply and installation of corporate image elements for KIA in Spain. Supply and installation of corporate image elements for Alfa Romeo, Fiat, Jeep and Abarth dealers in Spain, Portugal, France, Italy, Germany, Poland and the Czech Republic, in- cluding indoor image elements for electric vehicle dealers. Supply of anti-COVID protection screens. • Urban public transport, including the tram systems in Mur- cia and Zaragoza, where there has been a significant reduc- tion in the number of passengers (over 45%) despite service levels being maintained to guarantee social distancing. • Road transport, including the Cedinsa, Ibiza-San Antonio motorway and Conquense motorway concessions, which have seen volumes of traffic fall by between 22% and 38% due to the mobility restrictions imposed by the authorities. • Lease of office spaces, as is the case of WTCB and Urbic- sa, where buildings and their facilities have been adapted to guarantee social distancing and tenants have been offered maximum options to ensure that any impact on their activi- ties is limited as far as possible. • Maintenance of health centres, including health centres in Mallorca, in the Balearic Islands, where all staff have stepped up their commitment and joined forces with the health au- thorities to offer residents the best possible service. • Construction concessions, such as the Lima metro (Peru) or Haren prison (Brussels), where, given the number of work- ers involved in construction, very significant measures have been taken to prevent COVID infections. Awarded In progress Complete Line 2 and branch line 4 of Lima Metro (Peru). Roads Conquense motorway, Spain (100% FCC): the average daily intensity of the motorway in 2020 was 16,497 vehi- cles, down by 38.89% in light vehicles and 7.10% in heavy vehicles compared to the previous year. Ibiza - San Antonio motorway, Spain (50% FCC): the av- erage daily intensity of the motorway in 2020 was 26,740 vehicles, down by 28.94% in light vehicles and 28.30% in heavy vehicles compared to the previous year. Cedinsa Eix Llobregat, Spain (51% FCC): the average dai- ly intensity in 2020 was 16,369 vehicles, down by 24.4% in light vehicles and 11.3% in heavy vehicles compared to the previous year. Cedinsa d’Aro, Spain (51% FCC): the average daily inten- sity in 2020 was 22,854 vehicles, down by 24.4% in light vehicles and 17.4% in heavy vehicles compared to the pre- vious year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Activities in the infrastructure area | Page 13 of 13 179 Zaragoza tramway (16.60% FCC): in 2020, there were 15,743,237 ticket validations which represents a drop in demand of 45.48% compared to the previous year. Lima Metro Line 2, Peru (18.25% FCC): design, financing, construction, electromechanical equipping, systems equip- ment and provision of rolling stock, operation and mainte- nance for a period of 35 years on a payment for availability basis. Social Health Centres in Mallorca, Balearic Islands, Spain (82.5% FCC): 2020 was the tenth year of operation, with 83,945 people and 187 consulting rooms in its area of influence. Urbicsa (29% FCC), Barcelona, Spain: 2020 is the thir- teenth year of operation, with occupancy in offices and rent- al premises at 94.12%. World Trade Centre Barcelona, S.A., Spain (24% FCC): In 2020, occupancy was 93.3% in premises and offices. Haren Prison, Belgium (15% FCC): this contract covers the design, construction and maintenance for 25 years on a payment for availability basis of a new prison complex in Haren, near Brussels. Gerald Desmond Bridge, Los Angeles (USA). Cedinsa Ter, Spain (51% FCC): the average daily intensi- ty of the motorway in 2020 was 21,303 vehicles, down by 22.7% in light vehicles and 6.2% in heavy vehicles com- pared to the previous year. Cedinsa Eix Transversal, Spain (51% FCC): the average daily intensity in 2020 was 13,098 vehicles, down by 25.9% in light vehicles and 7.6% in heavy vehicles compared to the previous year. Underwater tunnel in Coatzacoalcos, Mexico (26% FCC): the concession lasts for 30 years. The design and delivery of the underwater tunnel is the first construction of this type in Mexico and also the first in Latin America. Mersey Bridge in Liverpool, United Kingdom (25% FCC): contract for the design, construction, financing, mainte- nance and operation, on a payment for availability basis. The bridge, opened in October 2017, serves some 80,000 vehicles per day. A-465 Heads of the Valleys dual carriageway: in October, the sum of 720 million euros was formally secured as part of the contract for the construction, financing, maintenance and operation of the expansion of the 17.3-km stretch of the A-465 dual carriageway between Dowlais Top and Hirwaun in Wales. The construction phase has now begun. Metro and tramways Murcia tramway, Spain (50% FCC): in 2020, there were 2,920,330 ticket validations which represents a drop in de- mand of 46.12% compared to the previous year. Ports Line 9 of the Barcelona Metro, Spain (49% FCC): 2020 is the fifth year of being open to the public and the service has worked normally. Torredembarra Port: concession for a marina in Torredem- barra. FCC also has a minority stake in two tramways in Barcelona (Tranvía Metropolità del Besòs and Tranvía Metropolità). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 180 FCC_Annual Report_2020 | Business lines | Infrastructure | Highlights 2020 Highlights_Infrastructure_2020 January March May July September FCC Construcción wins the contract for designing and constructing the E6 motorway between Ulsberg and Vindasliene (Norway). FCC Industrial becomes the first “Zero Residue” construction firm (Spain). FCC Construcción wins, in cooperation with Carso Infraestructuras y Construcción (CICSA), the contract for the design, construction and maintenance of section 2 Tren Maya (Mexico). The Primary Health Care Authority in Mallorca chooses a health centre, run by FCC Construcción (UBS El Molinar) for its COVID-19 Response Centre (Balearic Islands, Spain). FCC Construcción rolls out a series of social and corporate actions to face the health crisis caused by SARS-CoV-2 (COVID-19). FCC Construcción wins the contract for designing and constructing the new hospital in Jersey. The Life Impacto Cero project, by FCC Construcción, a success story (Spain). 4 3 5 2 1 6 8 7 FCC Construcción commissions Line 5 of the Bucharest metro, the first major transport infrastructure opened in Europe following the outbreak of COVID-19 (Romania). FCC Construccións starts work to drill the Ergos tunnel, as part of the “Anillo Insular de Tenerife” project (Tenerife, Spain). FCC Construcción secures various contracts: Nudo Norte (Madrid); improvements to Dic de Recer (seawall) at the Olympic Port in Barcelona; and the construction and maintenance of different rail lines owned by Rodalies de Barcelona (Spain). 10 9 11 November FCC Construcción registers its carbon footprint for the eighth time in the Carbon Footprint Registry, offset and absorption projects held by the Ministry for the Ecological Transition and the Demographic Challenge (Spain). FCC Construcción completes work on the first cable-stayed bridge built in California (Los Angeles, USA). RRC receives acknowledgement from the Portuguese Association for Business Ethics (Portugal). 12 February April The concession holder for the Lima metro in Peru receives the Structured Financing of the Year Award from LatinFinance magazine. The “Refurbishment of Plaza España” project becomes the main municipal construction site on account of its specific nature and urban impact (Madrid, Spain). The occupational insertion project “Expansion and refurbishment of the hospital in Soria” by FCC Construcción, is selected as an example of best practice by the European Commission (Soria, Spain). FCC Construcción becomes the first construction firm in the world to join the UN's “Sustainable Investments and Finance” group. FCC Construcción makes progress with the construction of hospitals in Soria, Salamanca and San Juan de Dios (Seville, Spain). June FCC Construcción wins the “Best Global Projects” award from ENR international magazine for its projects: Panama Metro line 2 (Panama); Improving access to the city of Iquique (Chile); and the El Alamein desalination plant (Egypt). FCC Construcción participates at the event to celebrate the 30th anniversary of the construction of the KIO towers (Madrid, Spain). August October December FCC Construcción becomes the first Spanish construction firm to have a third party verify del the carbon footprint of more than 70% of its domestic and foreign activities. FCC Construcción secures the funding for the project to expand sections 5 and 6 of the A465 dual carriageway in Wales. FCC Construcción receives the 2019 Best Infrastructure Award for the “Variante de Vallirana (B-24)” project (Catalonia, Spain). FCC Costruction, over 12 years committed to equality. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Sustainability and quality | Page 1 of 3 Sustainability and quality Sustainability 181 Aligned with the SDGs Sustainable construction We are aware of the importance of complying with the United Nations 2030 Agenda to eradicate poverty and promote sus- tainable and equal development in the period 2016-2030. FCC Construcción has integrated the Sustainable Development Goals (SDG) into its activities and model for creating value. A balance has been struck between the material aspects of the organisation and the SDGs. Likewise, the 2017-2020 Manage- ment Objectives for the Management and Sustainability System are linked to the SDGs. We would like to highlight the CEO of FCC Construcción’s com- mitment to the SDGs, which we understand to be a new, unit- ed and responsible approach from which companies can, and should, contribute to the creation of a more sustainable world and the dissemination and training of employees on SDGs with training sessions, courses and awareness campaigns. In 2020, seven training initiatives were organised and we have participat- ed in the #ApoyamoslosODS campaign. FCC Construcción believes that the achievements reached and processes developed should be the normal behaviour and part of the culture of the construction sector worldwide and that it should provide the community with the knowledge and criteria acquired which is why it participates and leads multiple fo- rums and national and international technical committees. Some of the most relevant organisations with which FCC Con- strucción partners in setting sustainability criteria related to construction are: the International Standardization Technical Committee ISO/TC59/SC17 “Sustainability in Building Con- struction”, the European Committee CEN TC350 “Sustainability of Construction Works “, the International Technical Committee ISO/TC207” Environmental Management “, the Scientific-Tech- nical Association of Structural Concrete, the Technical Asso- ciation of Ports and Coasts-PIANC, the National and Interna- tional Committee of Large Dams (ICOLD and SPANCOLD), the Corporate Responsibility Committee of the EIC or the SEOPAN Quality, Environment and R&D Committees, among others. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Sustainability and quality | Page 2 of 3 182 Environmental management Commitment to climate change Circular economy FCC Construcción has an Environmental Management System, certified according to ISO 14001, covering almost 100% of its activity. The company has also implemented a Best Practices® system, on top of legislative or contractual requirements or those from any other source, and actions that guarantee improved environ- mental results. The system is made up of a series of measures performed voluntarily by the FCC Construcción projects, so that these measures establish more ambitious environmental objec- tives than those established by the applicable environmental legislation or the requirements of customers or third parties. The application of these best practices aims to prevent or minimise the environmental impacts of the projects. At FCC Construcción, the circular economy represents a fun- damental strategy for reducing the impact of our activity on the environment, improving the efficiency of productive activities, extending the life and optimising the use of the resources we use and minimising the waste we generate. In 2017, FCC Construcción structured its progress towards the circular economy around the Ellen MacArthur Foundation’s Re- SOLVE framework and in 2018 it signed up to the Pact for a Circular Economy, promoted by the Spanish Ministries of Envi- ronment and Economy. In 2019, the subsidiary FCC Industrial was the first construction firm to obtain certification of its “Zero Waste” from the waste management traceability system, which guarantees the recovery of at least 90% of the waste generated as part of a project, and, therefore, avoiding it ultimately being taken to a landfill. We are aware of the importance of integrating climate change management into our activity; for this reason, as the leading Construction Company in Spain, we have been verifying our Greenhouse Gas (GHG) emissions since 2010. In addition, since 2012, FCC Construcción has held the AENOR “Environ- ment CO2 verified” carbon footprint certificate. We were the first construction company to register their carbon footprint in the “Carbon Footprint Registry, offset and absorption projects” at the Ministry for Ecological Transition and the Demographic Challenge, which has given us the “calculate and reduce” stamp in recent years. In 2017, we published a strategy to combat climate change and started to implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) working group at the Financial Stability Board. One of FCC Construcción’s 2017-2020 Management Objec- tives is to extend the verification of the greenhouse gas (GHG) emissions inventory to international level, so that 100% of the activity would be verified under Standard ISO 14064-1:2012 in 2020. In order to meet this objective, in 2020, AENOR verified the greenhouse gas emissions produced across 12 countries in 2019, accounting for 70% of the FCC Construcción activity in that year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Sustainability and quality | Page 3 of 3 Quality 183 Service excellence Customer satisfaction Awards in 2020 The participation of FCC Construcción in any infrastructure pro- ject involves offering a company with 120 years’ experience in the sector, with great technical ability, and a firm commitment: to efficiently overcome challenges. This all comes with absolute respect for the environment, while promoting development and innovation through the use of the best construction techniques. FCC Construcción’s priority is to meet the needs of its cli- ents, with the commitment to fulfil their requirements with quality guaranteed. The main objective is excellence in the per- formance of the work by providing personalised attention and ongoing dedication, always focusing on fulfilling their expecta- tions. In its work, FCC Construcción creates value for society and for its shareholders, providing the management and services required to design, build and operate infrastructure and services that efficiently, sustainably and safely contribute to the well-be- ing of people. In this respect, the company contributes solu- tions aimed at improving society, sustainable development and the well-being of people. Clients assess FCC Construcción’s activity every year. In all the surveys combined, the most valued attributes are the profes- sional abilities of the construction team, consideration of customers’ instructions and the ability to deal with prob- lems and unexpected events that arise in the project. These ratings remain high, year after year, and confirm our expecta- tions. In line with its objective of continuous improvement, to get rec- ognition by stakeholders and give greater confidence to its cli- ents, FCC Construcción has its system certificated for almost 100% of its business. These excellent results enable us to state that the stringency and quality of FCC Construcción are factors that set us apart from the competition. Follow this link to see the awards received in 2020. Management pioneers The Management and Sustainability System at FCC Con- strucción is a dynamic system that constantly adapts to the new challenges and processes required by the market. FCC Construcción has always stood out as a pioneer in the imple- mentation of the latest developments and management sys- tems, and is the only ISO 44001 certified company in Spain for the management of collaborative business relationships. In order to demonstrate compliance to third parties and great- er transparency in its management, the company has its Man- agement and Sustainability System certified by an accredited external agency. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 184 FCC_Annual Report_2020 | Business lines | Infrastructure | Innovation and technology | Page 1 of 2 Innovation and technology FCC Construcción promotes an active technological develop- ment policy, with a firm commitment to research, sustainability and contribution to the quality of life of society as a differentiat- ing factor in the current, highly competitive and internationalised market. The development and use of innovative technologies to carry out the works additionally involves an intrinsic added value for the company. Nationally, during 2020, work has been done mainly on the following projects: As part of its activity, FCC Construcción and its investee com- panies develop projects in conjunction with other companies in the industry, often with technology-driven SMEs, which makes it possible to perform open innovation projects with a partici- pation in the value chain and, occasionally, on a horizontal co- operation basis. Some of the projects are also carried out in consortia with Public Authorities, such as the European LIFE “Impacto Cero” project, “Development and demonstration of an anti-bird strike tubular screen for High Speed Rail lines”, with the participation of the Spanish Railway Infrastructure Manager (Adif), or the BICISENDAS “Sustainable, energetically self-suf- ficient, smart, anti-pollution, integrated and safe bicycle lane” project, where actions are taken with different city councils to roll out this pilot bicycle lane project. Internationally, FCC Construcción has worked on the follow- ing project: Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Infrastructure | Innovation and technology | Page 2 of 2 FCC Construcción, due to its solid position in the market and having a competitive advantage in the sector, uses the different available mechanisms to protect industrial and intellectual prop- erty in the processes it deems strategic. 185 In 2020, the protection was performed in the following processes: New corporate headquarters “Campus Airbus Futura”, in Getafe (Madrid, Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Cement The Cementos Portland Valderrivas Group is a Spanish Multinational firm leader in the production of cement, concrete, aggregates and mortars that uses the most advanced technologies in all its production processes. 186 Cement Our products _ 188 Industry analysis _ 189 Relevant events in 2020 _ 190 Group activities by country and business line _ 191 Environment and research and development activities _ 194 Service excellence _ 196 Performance in 2020 _ 197 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Cement Concrete at Punta del Moral, Ayamonte (Huelva, Spain). 187 The Company supplies its products in Spain from its seven cement factories and exports products to the international market The Cementos Portland Valderrivas Group (GCPV) is a multi- national Spanish firm that is a leader in the production of ce- ment, concrete, aggregates and mortar. It employs the most advanced technologies in its production processes to achieve cost efficiency and comply with environmental standards, priz- ing Corporate Social Responsibility in all its undertakings. It has seven strategically located cement factories in Spain that serve the entire mainland, supplying international markets in the form of exports. It is also a leader in the cement industry in Tunisia, where it operates a cement factory with a capacity of 2 million tonnes, making it the biggest cement plant in the country. In the Unit- ed Kingdom, it operates through two import terminals, Dragon Portland and Dragon Alfa. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 188 FCC_Annual Report_2020 | Business lines | Cement | Our products Our products Cement Concrete Aggregates Portland cement is obtained by mixing, in the correct propor- tions, raw materials, finely grinding them and heating them until they start to merge, creating clinker. This process is performed in rotary kilns. When the clinker cools, it is mixed with a small amount of gyp- sum that regulates the setting process, and after grinding it, Portland cement is obtained, thus rounding off the production process. The different qualities of cement are obtained by adding materi- als such as limestone, fly ash, pozzolans, etc. to obtain specific characteristics for their use. Concrete is a calcareous conglomerate generally used as a structural element in construction; it is obtained by mixing ma- terials like cement, aggregates and other additives with water, in the correct proportions, depending on the purpose for which the concrete is to be used and the environmental conditions in the place where it is to be employed. Mortar This is a mix of conglomerate, sand and additives used in con- struction either to hold elements together or on top of a base layer, to cover, waterproof or finish construction works. Aggregates are defined as mineral materials, inert solids that, at the appropriate grain size and with the appropriate charac- teristics, and pursuant to regulatory specifications, are used to manufacture resistant artificial products by adding hydraulic conglomerates or bituminous binders. They are used in a variety of materials: concretes, road surfac- es, breakwaters, raw material for industry (cement, filters, mi- cronized grades, etc.), asphalt binders, etc. Aggregates are obtained by means of mechanical extraction from sand and gravel, without consolidation, or by blasting and crushing in relation to consolidated rocks. These materials are transported to plants to be classified, washed and stored. 2019-2022 Strategy of the Cementos Portland Valderrivas Group Ensuring profitable growth and ongoing improvement, applying cost restraint policies and taking advantage of future market opportunities.. Contributing to the circular economy, harnessing the use of alternative fuels. Participating in the organic growth of the cement business in Spain by continuing with the exercise launched in 2014. Focusing the sales policy on improving the sale price of our products. Maximising clinker and cement exports. Control Room at the Mataporquera factory in Santander (Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Cement | Industry analysis 189 Industry analysis Spain The Bank of Spain estimated a contraction of 11% in the Span- ish economy for 2020. In the first quarter, it contracted by 5.2%, followed by 18.5% in the second quarter, rebounding by 16.7% in the third quarter. During the final quarter of the year, it con- tracted by 0.8% on account of the second wave of COVID-19. The economic outlook is conditioned by the epidemiological sit- uation and, although progress in obtaining vaccines are serving to soothe concerns, the uncertainty about when the pandemic will be completely behind us persists. The Bank of Spain, in its intermediate scenario, estimates that the Spanish economy will grow by 6.8% in 2021 and 4.2% in 2022, with unemployment rates of 18.3% and 15.6%, respectively. It is not expected to return to pre-COVID levels until 2023. According to the Spanish Association of Construction Compa- nies and Infrastructure Concessionaires (SEOPAN), in 2020, the volume of calls for tender dropped by 30% compared to 2019. Building permits fell by 15% and public procurement is expect- ed to fall by 42% in 2021. Conveyor belt Cement factory in Enfhida (Tunisia). These falls have had a negative impact on cement consump- tion, which closed 2020 at 13.29 million tonnes, 9.7% down on 2019, according to provisional data published by Oficemen, the sector’s representative. Tunisia Furthermore, total exports (cement and clinker) came to 5.99 million tonnes, down by 3.4% year on year. Despite closing in the red, consumption in Spain was slightly better than expected at the start of the pandemic. For 2021, the sector’s represent- ative estimated that the slowdown would persist, ranging from between -3% to 3%. Tunisia, in 2020, the domestic market contracted to around 5.8 million tonnes, down by 10% on 2019. For 2021, growth of 5% has been forecast for the domestic market to 6.1 million tonnes. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 190 FCC_Annual Report_2020 | Business lines | Cement | Relevant events in 2020 Relevant events in 2020 During 2020, the following relevant events took place, which had an impact on the Group’s financial statements: On 29 July 2020, a guarantee ratification and renewal agreement was signed, setting out a new repayment calen- dar for the original syndicated loan agreement dated 29 July 2016, to extend the last instalment payable on 29 July 2021 by one year, i.e., to 29 July 2022, and adapt the covenants for the one-year extension. At the same time as the senior loan agreement was renewed, an amendment has been signed to the agreement dated 29 July 2016, as part of which its maturity was pushed back by one year, with the term set at 78 months from the date of the contract, i.e. 29 January 2023. Cement mill. Alcalá de Guadaíra factory, Seville (Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 191 FCC_Annual Report_2020 | Business lines | Cement | Group activities by country and business line | Page 1 of 3 Group activities by country and business line Group Sales The volume of cement and clinker sold in 2020 reached 5.4 million tonnes, 10% down on 2019. In Spain, 4 million tonnes were sold, and 1.2 million were sold in Tunisia. CEMENT (t M) CONCRETE (m3 k) AGGREGATE (t k) MORTAR (t k) -0.6 (-10%) 6.0 5.4 -8 (-3%) 283 275 +130 (+10%) 1440 1310 +50 (+18%) 334 284 2019 2020 2019 2020 2019 2020 2019 2020 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Cement | Group activities by country and business line | Page 2 of 3 Distribution of activity by country 192 2020 62% Spain 15% Tunisia 14% United Kingdom 9% Others 2019 60% Spain 14% Tunisia 13% United Kingdom 13% Others In 2020, international sales accounted for almost 37.8% of billing, the same as the previous year Distribution of activity by businesses 2020 90% Cement 10% C, M, A 2019 91% Cement 9% C, M, A The product mix has remained very stable compared to the previous year. The cement business accounts for 90.2% of revenues Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 193 FCC_Annual Report_2020 | Business lines | Cement | Group activities by country and business line | Page 3 of 3 Revenue Gross profit/(loss) from operations Cash flow Revenue in 2020 decreased by 8% on 2019, coming to 382.6 million euros. This can be attributed to the decrease in volumes billed to local markets in Spain and Tunisia, mainly in March and April, as a result of the lockdown measures applied during these months, and the reduction in exports seen from both markets. In Spain, turnover in the domestic market fell by 4.6% to 237.9 million euros. In the local Tunisia market, turnover fell by 2.5% to 57.9 million euros. In both markets, the favourable evolution of prices has partially offset the reduction in demand in the do- mestic market caused by the pandemic. Cement and clinker export revenue in 2020 was down by 17.6% in Spain and 44% in Tunisia on 2019. The Group’s EBITDA came to 139.9 million euros, up by 61.9% year on year, mainly thanks to the income obtained on the sale of greenhouse gas emission rights for the sum of 58.9 million euros in 2020 compared to 5.6 million in 2019. Gross profit/(loss) from operations, without considering the CO2 income remained similar to the figures seen the previous year, coming to 80.9 million euros compared to 80.6 million in 2019, up by 0.4%. The negative impact of lower sales has been offset with lower costs of electricity and fuels and staff and mainte- nance cost optimisation measures. Net cash flow generated by operations came to 143.7 million euros in 2020, 122.8% up on the previous year, on account of the sale of CO2 rights and the positive performance of working capital. The investing cash flow was down 10.2 million euros, primarily due to the investments made by the Group for production and environmental improvements in Spain and Tunisia. Thanks to the positive cash evolution, during 2020 119.2 million euros of syndicated debt was repaid, having voluntarily repaid 108.2 million euros in advance on account of the repayments scheduled for 2021 and the final instalment of the loan. At 31 December 2020, the net debt with third parties stood at 174.5 million euros. Quarry of Vallcarca, Barcelona (Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 194 FCC_Annual Report_2020 | Business lines | Cement | Environment and research and development activities | Page 1 of 2 Environment and research and development activities Environment. Climate change action plan Panoramic view of the El Alto factory, Madrid (Spain). Following the 2015 Paris Agreement, which represented a his- toric milestone in the global fight against climate change, sig- natories committed to developing measures to contain the in- crease in the Earth’s temperature. At the end of 2019, the EU presented the European Green Deal, which proposes a new strategy for achieving a prosperous and fair society, based on an efficiency economy in terms of the consumption of resources and sets 2050 as the target for achieving climate neutrality. Fur- thermore, the Government of Spain has prepared the Integrat- ed National Energy and Climate Plan, which proposes specific objectives to reduce greenhouse gas emissions. The Spanish cement industry, through Oficemen, is able to con- tribute to the national climate neutrality targets and has created roadmaps for decreasing CO2 emissions with a view to achiev- ing this goal of climate neutrality by 2050. Cementos Portland Valderrivas, as an important part of the in- dustry in the countries in which it operates, assumes the fight against climate change as one of its main challenges in the coming years and through strategic sectoral lines and performs specific actions to reduce greenhouse gases. These measures are implemented bearing in mind the actual context of each facility, their technological, human and financial resources, the applicable legislation and the expectations of the interested parties. To improve the environmental and climate in- dicators, the following lines of action are implemented: Circular economy. Increasing the recovery of material and energy, enhancing the use of demineralised raw materials, recoverable waste fuels and biomass. Greenhouse gas emissions. Decrease of emission factors in the demineralisation of raw materials and the oxidation of alternative fuels. Increase in energy efficiency. Optimisation of the fuel mix, expert systems in the production process and transition to- wards LED light technology. Increase in the renewable energy mix. Projects for install- ing solar power plants and/or wind farms and increase in the consumption of plant biomass in the production of clinker. During 2020, the Group’s factories in Spain have used approx- imately 188,000 tonnes of alternative fuel containing biomass, 1% up on the absolute value recorded in 2019; however, there was a notable increase in mass replacement year on year, when the production of clinker was much higher. The same year, progress has been made on restoring the Group’s quarries, proceeding with morphological repairs, plant- ing or revegetation of quarried surfaces. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Cement | Environment and research and development activities | Page 2 of 2 Research and development In 2020, Cementos Portland Valderrivas continued to partici- pate in the European R&D project in which it is a key partner, known as “BioRECO2Ver-Horizonte 2020”. In 2019, GCPV made its main contribution, characterised emis- sions gases, captured them on site and the shipment of them to its partners, LTU and Enobraq. The purpose of this project is to obtain alternative processes for the production of certain chemical projects on a commercial scale (such as isobutene and lactic acid) in a more sustainable manner by capturing industrial CO2 emissions. The end goal is to use this industrial CO2 as a raw material and stop depending on fossil resources to create these products. Part of the gases captured are currently being held at the El Alto factory in Madrid in case further tests, analysis, etc. are required. The project experienced a significant delay on account of the impact of the COVID-19 crisis. Despite this, the work performed by our partners has resulted in progress been made towards the goals proposed: The preliminary results demonstrate that LTU has at least two mutants with 50% more residual activity in terms of the selected combustion gas inhibitors. They are currently being expanded and sequenced. Tests have been performed to produce lactate from CO2 and H2 with Cupriavidus necator and isobutene by a Clostridium strain. Other lines of research involve developing Thermotoga strains to produce lactate from CO2. A fermenter is being developed with a view to improving the supply of gas through high pressure and thus recover isobutene in situ. Quality control laboratory, Olazagutía (Navarre, Spain). 195 In 2020, investments have continued to be made to improve energy efficiency Technological innovation The Cementos Portland Valderrivas Group conceives techno- logical innovation as the introduction of new products, services, new processes and supply channels, in addition to the opti- misation of industrial organisation focussing on our customers and all our stakeholders. Innovation is a core part of the company’s competitiveness, allowing it to improve, renew itself and expand the range of products and services offered, the production processes and management of the organisation as a whole. Over the course of 2020, investments have continued to be made to improve energy efficiency and to optimise the use of fuels with a smaller carbon footprint, in collaboration with a Eu- ropean R&D project, which studies alternative processes to the production of specific chemical products at a commercial scale using CO2 made in the clinker kilns. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Cement | Service excellence Service excellence The success of the Cementos Portland Valderrivas Group would not have been possible without its customers. The ser- vice orientation and quality of our products is a direct result of a management approach that is clearly oriented towards the satisfaction of all those who have deposited their trust in the Group. With them, we have achieved our biggest milestones, develop- ing products that are of a progressively higher quality, ensuring the growth and development of advanced societies. Biomass installation. Alcalá de Guadaíra factory, Seville (Spain). 196 The Group’s human resources aim to continue providing a pro- fessional response to the new challenges on the horizon. A per- sonalised service, a dedication to making improvements, high quality targets and environmental responsibility have made the Group a leader in the markets in which it operates. In all these markets, the most important construction firms have made the Cementos Portland Valderrivas Group their trusted partner and at the same time, caring for the distribution work, the Group’s products reach anybody in any part of the territory. Whoever places their trust in this Group knows that it guaran- tees a cordial service based on mutual trust and the pursuit of shared objectives. Some of our services are: 1. Technical sales assistance service for advice and technical support. 2. Delivery of product at destination. 3. Possibility of loading in the production centre. 4. 24 hour loading card. 5. Urgent incident care. 6. Digital management channel for customers, to deal with ad- ministrative, sales and technical documentation. 7. Safety assessment service. 8. Foreign trade service. Conscious of what each customer means to us, we maintain constant communication with them, creating lasting relation- ships based on trust and professionalism. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Business lines | Cement | Performance in 2020 | Page 1 of 2 Performance in 2020 Human Resources 197 Group and workers’ representatives have started to work on the 2nd Equality Plan, adapting it to the regulations in force Throughout 2020, the Group has responded to the emergency situation caused by COVID-19 at all work centres, promoting and adapting different types of shifts to ensure the compatibility of employees’ health and safety with the production needs to meet the variable nature of demand. The total number of Group employees, at 31 December 2020, stood at 1,034, down by 4.6 on 2019, mainly due to partial re- tirements during previous periods, that became full retirements during the year. Furthermore, the Group and workers’ representatives have started to work on the 2nd Equality Plan, adapting it to the reg- ulations in force and guaranteeing equal treatment and oppor- tunities between men and women in the workplace. Spain During 2020, the workforce in Spain came to 785 employees. New recruits during the year made use of the different contract options provided for by law and to overcome absenteeism and the production needs of work centres. Tunisia In 2020, the workforce dropped by 24 employees with total headcounts of 220 people at 31st of December. With a view to containing costs and modernising processes, certain positions were wound up and adjustments made. Precalciner tower. El Alto factory, Madrid (Spain). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 198 FCC_Annual Report_2020 | Business lines | Cement | Performance in 2020 | Page 2 of 2 Equality Health and Safety During 2020, the Cementos Portland Valderrivas Group, in cooperation with the legal representatives of workers, started work on the 2nd Equality Plan. The CPV Group’s Occupational Health and Safety Policy is based on the fundamental principle of ensuring its employees enjoy healthy and safe working conditions. The Group launched its equality strategy in 2009, signing its 1st Equality Plan, and since then it has strived to achieve more equal conditions for its employees. The tool that effectively integrates security into all our operations is the Health and Safety Management System, with all our ce- ment factories ISO 45001-certified by an external party. As part of the preparation of this new Plan, the parties are agree- ing new, improved measures based on the new regulations that have arisen in recent years, such as Organic Law 3/2007 of 22 March and more recently, Royal-Decree Law 6/2019 on urgent measures for guaranteeing equal treatment and opportunities between women and men in the workplace. The most significant points, on which this new version is based, are those affecting: selection and recruitment, professional cat- egory, training, promotions, working conditions, joint exercise of rights to a personal, family and work life, remuneration, sexual and gender-based harassment prevention protocol, communi- cation and awareness raising. In terms of accident rates, the accident frequency rate resulting in leave in 2020 was 5.25, 26.47% down year on year and be- low the average for the past five years (5.79). Training In terms of training, in 2020, 7,454 hours of training were im- parted at the Group, of which 51% corresponded to occupa- tional health and safety actions. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 199 A 1 Financial Statements Consolidated Group _ 200 Fomento de Construcciones y Contratas, S.A. _ 390 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements 200 Consolidated Group Consolidated Balance Sheet _ 201 Consolidated profit and loss statement _ 203 Consolidated statements of recognised income and expenditure _ 204 Total statement of changes in the consolidated equity _ 205 Statement of consolidated cash flows (indirect method) _ 206 Notes to the consolidated financial statements _ 208 Management report _ 349 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 201 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Consolidated Balance Sheet | Page 1 of 2 Consolidated Balance Sheet FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 (in thousands of euros) ASSETS NON-CURRENT ASSETS Intangible assets (Note 7) Concessions (Notes 7 and 11) Goodwill Other intangible fixed and non-current assets Property, plant and equipment (Note 8) Land and buildings Plant and other items of property, plant and equipment Real Estate Investments (Note 9) Investments accounted for using the equity method (Note 12) Non-current financial assets (Note 14) Deferred tax assets (Note 24) CURRENT ASSETS Non-current assets held for sale (Note 4) Inventories (Nota 15) Trade and other receivables (Note 16) Trade receivables for sales and services Other receivables Current tax assets (Note 24) Other current financial assets (Note 14) Other current assets (Note 16) Cash and cash equivalents (Note 17) TOTAL ASSETS 31/12/2020 31/12/2019 1,378,160 1,007,015 52,684 1,016,848 1,793,351 1,651,094 287,122 101,235 7,130,413 2,437,859 2,810,199 – 722,786 580,874 578,695 5,704,189 1,392,268 765,604 2,039,451 228,652 56,105 1,222,109 12,834,602 2,374,620 1,023,511 60,267 1,056,501 1,807,391 1,504,799 259,343 72,664 8,529,551 3,458,398 2,863,892 2,635 741,524 863,163 599,939 4,044,589 – 728,812 1,836,806 189,566 70,861 1,218,544 12,574,140 The accompanying notes 1 to 33 and annexes I to V form an integral part of the consolidated financial statements, together with the 2020 consolidated income statement. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Consolidated Balance Sheet | Page 2 of 2 Consolidated Balance Sheet FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 (in thousands of euros) 202 LIABILITIES AND EQUITY EQUITY (Note 18) Equity attributable to the Parent Company Shareholders’ equity Capital Accumulated earnings and other reserves Shares and equity interests Profit for the year attributable to the Parent Company Valuation adjustments Non-controlling interests NON-CURRENT LIABILITIES Grants Non-current provisions (Note 19) Non-current financial liabilities (Note 20) Debt instruments and other marketable securities Bank borrowings Other financial liabilities Deferred tax liabilities (Note 24) Other non-current liabilities (Note 21) CURRENT LIABILITIES Liabilities related to non-current assets held for sale (Note 4) Current provisions (Note 19) Current financial liabilities (Note 20) Debt instruments and other marketable securities Bank borrowings Other financial liabilities Trade and other accounts payable (Note 22) Suppliers Other payables Current tax liabilities (Note 24) TOTAL EQUITY AND LIABILITIES 31/12/2020 31/12/2019 2,564,012 409,107 1,910,738 (18,012) 262,179 (275,699) 2,780,935 607,599 588,754 449,346 212,421 212,676 1,055,643 1,209,150 8,939 7,130,413 2,288,313 620,381 5,531,296 192,961 1,064,384 3,977,288 148,794 147,869 4,394,612 1,051,285 195,152 874,443 2,273,732 8,529,551 1,951,262 522,497 6,797,228 333,802 1,130,199 5,030,270 142,311 160,646 3,303,153 – 249,581 683,611 2,369,961 2,244,185 392,265 1,601,284 (16,068) 266,704 (292,923) 2,800,345 1,319,267 910,658 324,604 155,400 203,607 1,157,753 1,197,257 14,951 12,834,602 12,574,140 The accompanying notes 1 to 33 and annexes I to V form an integral part of the consolidated financial statements, together with the 2020 consolidated income statement. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Consolidated profit and loss statement Consolidated profit and loss statement FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 (in thousands of euros) Net business turnover (Note 27) Work on the company's own assets Other operating income (Note 27) Changes in inventories of finished goods and work in progress Procurements (Note 27) Staff costs (Note 27) Other operating expenses Depreciation of fixed assets and allocation of grants for non-financial and other assets (Notes 7, 8 and 9) Impairment and gains/(losses) on disposal of non-current assets (Note 27) Other gains/(losses) OPERATING PROFIT/(LOSS) Finance income (Note 27) Finance costs (Note 27) Other financial gains/(losses) (Note 27) FINANCIAL PROFIT/(LOSS) Profit/(losses) of companies accounted for by the equity method (Note 27) PROFIT/(LOSS) BEFORE TAX FROM CONTINUING OPERATIONS Income tax (Note 24) PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS CONSOLIDATED PROFIT/(LOSS) FOR THE PERIOD Profit attributable to the Parent Company Profit attributable to non-controlling interests (Note 18) EARNINGS PER SHARE (Note 18) Basic Diluted The accompanying notes 1 to 33 and annexes I to V form an integral part of the consolidated financial statements, together with the 2020 consolidated income statement. 203 31/12/2020 31/12/2019 6,158,023 33,857 293,305 15,230 (2,300,242) (1,971,110) (1,181,564) (477,342) 6,870 (4,287) 572,740 33,470 (187,429) (51,057) (205,016) 62,149 429,873 (86,273) 343,600 343,600 262,179 81,421 0.66 0.66 6,276,231 49,846 214,327 14,408 (2,339,562) (1,925,734) (1,263,713) (449,109) (59,764) (5,316) 511,614 51,067 (195,787) 1,455 (143,265) 120,641 488,990 (149,066) 339,924 339,924 266,704 73,220 0.69 0.69 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 204 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Consolidated statements of recognised income and expenditure Consolidated statements of recognised income and expenditure FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 (in thousands of euros) 31/12/2020 31/12/2019 CONSOLIDATED PROFIT/(LOSS) FOR THE PERIOD Other comprehensive income - Items that are not reclassified to profit/(loss) for the period Actuarial profits and losses (*) Tax effect Other comprehensive income - items that can subsequently be reclassified to profit/(loss) for the period Financial assets at fair value with changes in other comprehensive income Valuation gains/(losses) Amounts transferred to the statement of profit and loss Cash flow hedges Valuation gains/(losses) Amounts transferred to the statement of profit and loss Translation differences Valuation gains/(losses) Amounts transferred to the statement of profit and loss Participation in other comprehensive profit recognised by investments in joint ventures and associates Valuation gains/(losses) Amounts transferred to the statement of profit and loss Tax effect TOTAL COMPREHENSIVE INCOME FOR THE YEAR Attributable to the Parent Company Attributable to non-controlling interests – 17 (30,907) 16,149 (79,350) 1,096 (6,926) 15,878 343,600 (2,992) (4,102) 1,110 (72,541) 17 (14,758) (78,254) 8,952 11,502 268,067 218,605 49,462 339,924 (3,997) (4,722) 725 49,665 (21) 2,627 30,636 25,641 (9,218) 385,592 306,897 78,695 – (21) 123 2,504 30,752 (116) (39,742) 65,383 Las notas 1 a 33 y los anexos I a V adjuntos forman parte integrante de los estados financieros consolidados, conformando junto con éstos las cuentas anuales consolidadas correspondientes al ejercicio 2020. (*) Importes que en ningún caso se imputarán a la cuenta de pérdidas y ganancias. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Total statement of changes in the consolidated equity Total statement of changes in the consolidated equity FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 (in thousands of euros) Share capital (Note 18.a) Share premium and reserves (Note 18.b) Interim dividend Shares and equity interests (Note 18.c) Profit/(loss) for the year attributed to the Parent Company Other equity instruments Valuation adjustments (Note 18.d) Equity attributable to shareholders of the Parent Company (Note 1) Non- controlling interests (Note 18.II) Total Equity 205 Equity as of 31 December 2018 378,826 1,397,579 IFRS 16 transition impact (2,014) Equity as of 1 January 2019 378,826 1,395,565 – – Total income and expenses for the year Transactions with shareholders or owners Capital increases/(reductions) Distribution of dividends Transactions with treasury shares or equity instruments (net) 13,439 13,439 (3,499) (23,083) (13,517) (9,566) (11,723) (4,345) (4,345) Other changes in equity (Note 18) 232,301 Equity as of 31 December 2019 392,265 1,601,284 – (16,068) Total income and expenses for the year Transactions with shareholders or owners Capital increases/(reductions) Distribution of dividends Transactions with treasury shares or equity instruments (net) Other changes in equity (Note 18) 16,842 16,842 (1,988) (29,357) (16,921) (12,436) 340,799 (1,944) (1,944) (11,723) 251,569 251,569 266,704 (251,569) 266,704 262,179 – – (332,298) 1,683,953 274,822 1,958,775 (2,014) (2,014) (332,298) 1,681,939 274,822 1,956,761 43,692 306,897 (13,989) (78) (9,566) (4,345) 78,695 385,592 (61,372) (75,361) 1,198 1,120 (62,570) (72,136) (4,345) (4,317) (23,585) 230,352 206,767 – (292,923) 1,951,262 522,497 2,473,759 (41,586) 218,605 (14,459) (79) (12,436) (1,944) 49,462 268,067 (40,917) (55,376) 366 287 (41,283) (53,719) (1,944) Equity as of 31 December 2020 409,107 1,910,738 – (18,012) 262,179 – (275,699) 2,288,313 620,381 2,908,694 The accompanying notes 1 to 33 and annexes I to V form an integral part of the consolidated financial statements, together with the 2020 consolidated income statement. (266,704) 58,810 132,905 89,339 222,244 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 206 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Statement of consolidated cash flows (indirect method) | Page 1 of 2 Statement of consolidated cash flows (indirect method) FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 (in thousands of euros) 31/12/2020 31/12/2019 Profit/(loss) before tax from continuing operations Adjustments to profit or loss Depreciation of fixed assets (Notes 7, 8 and 9) Impairment of goodwill and fixed assets (Notes 7, 8 and 27) Other adjustments to profit (net) (Note 27) Changes in working capital (Note 16) Other cash flows from operating activities Dividends received Income tax refunded/paid) Other collections/(payments) from operating activities TOTAL CASH FLOWS FROM OPERATING ACTIVITIES Investment payments Group companies, associates and business units Property, plant and equipment, intangible assets and real estate investments (Notes 7, 8 and 9) Other financial assets Proceeds from disposals Group companies, associates and business units Property, plant and equipment, intangible assets and real estate investments (Notes 7, 8 and 9) Other financial assets Other cash flows from investment activities Interest received Other collections/(payments) from investment activities TOTAL CASH FLOWS FROM INVESTMENT ACTIVITIES 488,907 6,870 154,136 35,665 (96,734) (111,583) (95,672) (407,933) (37,670) 6,214 20,223 49,483 13,675 50,132 429,873 649,913 (302,060) (172,652) 605,074 (541,275) 75,920 63,807 488,990 587,725 (183,323) (262,842) 630,550 (546,575) 28,463 158,877 457,724 (59,764) 189,765 57,373 (172,951) (147,264) (144,299) (328,415) (73,861) 1,141 18,326 8,996 13,114 145,763 (401,548) (359,235) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 207 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Statement of consolidated cash flows (indirect method) | Page 2 of 2 Statement of consolidated cash flows (indirect method) FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 (in thousands of euros) Proceeds and (payments) from equity instruments (Note 18) Issue/(redemption) (Acquisition)/disposal of treasury shares Proceeds from (payments on) financial liabilities (Note 20) Issuance Repayment and amortisation Dividends paid and payments on equity instruments (Note 6) Other cash flows from financing activities Interest paid Other collections/(payments) from financing activities TOTAL CASH FLOWS FROM FINANCING ACTIVITIES EFFECT OF VARIATIONS IN EXCHANGE RATES NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at the start of the period (Note 17) Cash and cash equivalents at the end of the period (Note 17) 31/12/2020 31/12/2019 22 186,352 1,689,907 (1,832,546) (151,370) 5,841 425 (43,040) 2,263,951 (2,361,387) (136,840) 2,745 186,374 (142,639) (36,643) (145,529) (138,437) (61,524) 3,565 1,218,544 1,222,109 (42,615) (97,436) (71,589) (134,095) (345,735) 26,767 (47,653) 1,266,197 1,218,544 The accompanying notes 1 to 33 and annexes I to V form an integral part of the consolidated financial statements, together with the 2020 consolidated income statement. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 208 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 1 of 141 Notes to the consolidated financial statements FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 1 2 3 4 5 6 7 8 9 Group activity Basis of presentation and basis of consolidation of the consolidated income statement Accounting policies Non-current assets held for sale and liabilities related to non-current assets held for sale and discontinued operations Changes in the scope of consolidation Distribution of profit Intangible assets Property, plant and equipment Real estate investment 10 Leases 11 Service concession arrangements 12 13 Investments accounted for using the equity method Joint agreements. jointly controlled operations 14 Non-current financial assets and other current financial assets 15 Inventories 16 Commercial debtors, other accounts receivable and other current assets 17 Cash and cash equivalents 18 Equity 19 Non-current and current provisions 20 Non-current and current financial liabilities 21 Other non-current liabilities _ 209 _ 209 _ 213 _ 223 _ 225 _ 230 _ 231 _ 237 _ 240 _ 240 _ 242 _ 246 _ 253 _ 254 _ 256 _ 258 _ 259 _ 260 _ 266 _ 270 _ 278 22 Trade and other accounts payable 23 Derivative financial instruments 24 Tax matters 25 Pension plans and similar obligations 26 Guarantee commitments to third parties and other contingent liabilities Income and expenditure Information by activity segments 27 28 29 Environmental information 30 31 32 Financial risk management policies Information on transactions with related parties Fees paid to auditors 33 Events after the closing date Annex I Fully consolidated subsidiaries Annex II Companies jointly controlled with third parties outside the Group (consolidated using the equity method) Annex III Associates consolidated using the equity method Annex IV Changes in the scope of consolidation Annex V Temporary Joint Ventures and other contracts _ 278 _ 279 _ 283 _ 287 _ 290 _ 291 _ 294 _ 304 _ 306 _ 313 _ 316 _ 316 _ 317 _ 329 _ 332 _ 337 jointly managed with third parties outside the Group _ 338 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 209 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 2 of 141 1. Group activity The FCC Group comprises the Parent Company, Fomento de Construcciones y Contratas, S.A., and a group of investee companies located both in Spain and abroad that perform different busi- ness activities grouped into the following areas: 2. Basis of presentation and basis of consolidation of the consolidated income statement − Environmental Services. Services related to urban sanitation, industrial waste treatment, including both the construction and operation of treatment plants, and the energy recovery of waste. This includes concession agreements related to environmental services. a) Basis of presentation − Integrated Water Management. Services relating to the integrated water cycle: collection, purification and distribution of water for human consumption; sewage collection, filtration and purification; design, construction, operation and maintenance of water infrastructure for mu- nicipal, industrial, agricultural services etc. Concession agreements related to the integral wa- ter cycle are also included. The accompanying financial statements and the notes thereto that comprise this Report and which make up these consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) adopted by the European Union at the closing date, in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 2002, and all the implementing provisions and interpretations. − Construction. Specialised in the construction of infrastructure, buildings and similar facilities: motorways, highways, roads, tunnels, bridges, hydraulic works, ports, airports, housing de- velopments, housing, non-residential building, lighting, industrial climate control installations, environmental restoration, etc. − Cement. Dedicated to the operation of quarries and mineral deposits, production of cement, lime, plaster and prefabricated by-products, as well as the production of concrete. − Concessions. Mainly includes concession agreements related to the operation of highways, tunnels and other similar infrastructures. Additionally, the FCC Group is present in the Real Estate sector, mainly in the promotion of hous- ing and office rental through the company F-C y C, SL Unipersonal, which holds a 37.40% stake in Realia Business, SA. Its international activities account for approximately 40% (45% in 2019) of the FCC Group’s turn- over, mainly in Europe, Latin America, the Middle East and the United States of America. The 2020 consolidated financial statements of the FCC Group have been formulated by the Board of Directors of Fomento de Construcciones y Contratas, S.A. and will be presented for ap- proval by the General Shareholders’ Meeting. However, no amendments are expected as a result of the fulfilment of said requirement. The 2019 consolidated financial statements were approved by the General Shareholders’ Meeting of Fomento de Construcciones y Contratas, S.A., held on 2 June 2020. These consolidated financial statements of the FCC Group show the faithful image of the equity and the financial situation as of 31 December 2020 and 2019, as well as the results of the oper- ations, changes in equity and consolidated cash flows that occurred in the Group during those years. The consolidated financial statements of the FCC Group have been prepared from the account- ing records of Fomento de Construcciones y Contratas, S.A. and its investee companies. These records, in accordance with the procedures and operating systems established in the Group, justify and support the consolidated financial statements prepared in accordance with current international accounting regulations. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 210 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 3 of 141 In order to uniformly present the various items composing these consolidated financial state- ments, accounting standardisation criteria were applied to the individual financial statements of the companies included in the scope of consolidation. In 2020 and 2019, the reporting date of the financial statements of the companies included in the scope of consolidation was the same as that of the Parent, i.e. 31 December. Significant rules and interpretations applied in 2020 The standards that entered into force in 2020 that have already been adopted by the European Union and which have been used by the Group, if applicable, were as follows: The consolidated financial statements are expressed in thousands of euros. New standards, amendments and interpretations: Mandatory Application to the FCC Group Reclassifications made In 2020 and 2019, there were no other significant reclassifications. Rules and interpretations issued but not in force At the date of preparation of these notes to the financial statements, the most significant stand- ards and interpretations that had been published by the International Accounting Standards Board (IASB) during the year, but which had not yet entered into force, either because their effec- tive date is subsequent to the date of the consolidated financial statements or because they had yet to be endorsed by the European Union, are as follows: Not adopted by the European Union IFRS 17 Amendments to IAS 1 Amendments to IFRS 3, IAS 16, IAS 37 and updates 2018-2020 Mandatory Application to the FCC Group Insurance contracts Classification of liabilities as current and non-current 1 January 2023 1 January 2023 Various standards 1 January 2022 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Reference interest rate reform - phase 2 1 January 2021 Amendment to IFRS 4 Amendment to IFRS 16 IFRS 9 deferral COVID-19-related rent reductions 1 January 2021 1 January 2021 The Group generally does not expect the application of these standards to have a significant impact on its financial statements. Approved for use in the European Union Amendment to IFRS 3 Business combinations 1 January 2020 Amendments to IFRS 9, IAS 39 and IFRS 7 Reference interest rate reform - phase 1 1 January 2020 Amendments to IAS 1 and IAS 8 Definition of materiality 1 January 2020 Amendments to references to the IFRS Conceptual Framework Various standards 1 January 2020 The application of the previous rules has not had a significant impact. For the first time, on 1 January 2019 the Group applied IFRS 16 “Leases”, which indicates that for the lessor, all leases (except for certain exceptions involving small sums of money or short du- rations) require the accounting of a material asset by right in use, and a liability for the future pay- ment obligations that are incurred. The liability must be booked at the present value of the future cash flows for each lease and the asset in an equivalent amount, adjusted for any advance pay- ment made. Subsequently, the right in use is systematically amortised and the financial expenses associated with the equivalent liability are recognised pursuant to the amortised cost method. The first implementation of the aforementioned standard was calculated taking into account that the Group availed itself of the option of applying it retroactively modified, that is, with the cumu- lative impact of the first application of the standard as an adjustment to the initial balance as of 1 January 2019, charged to reserves without the restatement for the year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 4 of 141 The impact, broken down by balance sheet headings, of the first-time application of the standard was as follows: Balance at 1 January 2019 Impact of first- time application of IFRS 16 Restated balance at 1 January 2019 Non-current assets Intangible assets Property, plant and equipment Real Estate investments Investments accounted for using the equity method Non-current financial assets Deferred tax assets Current assets Inventory Trade and other accounts receivable Other current financial assets Other current assets Cash and other cash equivalents 6,607,207 2,426,380 2,424,018 2,798 763,050 380,552 610,409 3,916,834 691,034 1,695,798 178,815 84,990 1,266,197 434,721 – 434,721 – – – – 7,041,928 2,426,380 2,858,739 2,798 763,050 380,552 610,409 Non-controlling interests Non-current liabilities Grants Non-current provisions Non-current financial liabilities Deferred tax liabilities (4,468) 3,912,366 Other non-current liabilities – – – (4,468) 691,034 1,695,798 178,815 80,522 – 1,266,197 Current liabilities Current provisions Current financial liabilities Trade payables and other accounts payable Equity Balance at 1 January 2019 1,958,775 Equity attributable to the Parent Company 1,683,953 211 Impact of first- time application of IFRS 16 Restated balance at 1 January 2019 (2,014) (2,014) – 1,956,761 1,681,939 274,822 388,462 5,963,172 – – 388,462 – – 211,296 1,161,989 4,288,894 141,088 159,905 274,822 5,574,710 211,296 1,161,989 3,900,432 141,088 159,905 2,990,556 43,805 3,034,361 209,264 380,902 2,400,390 – 43,805 209,264 424,707 – 2,400,390 Total assets 10,524,041 430,253 10,954,294 Total equity and liabilities 10,524,041 430,253 10,954,294 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 212 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 5 of 141 b) Basis of consolidation Subsidiaries under the heading “Investments accounted for using the equity method”. These companies’ par- ticipation in the net income of the business year is included under the heading “Profit/(loss) of enti- ties valued using the equity method” of the accompanying consolidated profit and loss statement. The consolidation is carried out using the global integration method for the subsidiaries indicated in Annex I, in which Fomento de Construcciones y Contratas, S.A. exercises control, that is, when it has the power to direct its relevant activities, it is exposed to variable returns as a result of its participation in the investee and has the ability to exercise said power to influence its own returns, directly or through other companies controlled by it. The value of the participation of non-controlling shareholders in equity is presented under the heading “Non-controlling interests” on the liability side of the accompanying consolidated balance sheet and the participation in the profit/(loss) is presented under the heading “Profit/(loss) attrib- uted to non-controlling interests” on the accompanying consolidated profit and loss statement. The joint operations, mainly in the Construction and Environmental Services activities that mostly take the form of temporary joint ventures and other similar entities, have been integrated in the attached consolidated accounts based on the percentage of participation in assets, liabilities, income and expenses derived from the operations carried out by them, eliminating the reciprocal balances in assets and liabilities, as well as the income and expenses not incurred against third parties. Annex II lists the business jointly controlled with third parties outside the Group and Annex V lists the joint operations carried out with third parties outside the Group, mainly through temporary joint ventures and other entities with similar characteristics. Where appropriate, goodwill is determined in accordance with the provisions of Note 3.b) of this Report. Associates Joint agreements The Group develops joint agreements through participation in joint ventures jointly controlled by one of more of the FCC Group companies with other companies outside the Group (note 12), as well as through participation in joint operations, temporary joint ventures and other similar entities (note 13). The Group applies its professional judgement to evaluate its rights and obligations over joint agreements taking into account the financial structure and legal form of the agreement, the terms agreed by the parties and other relevant facts and circumstances to evaluate the type of joint agreement. Once such an analysis has been carried out, two types of joint agreements are dis- tinguished: a) Joint operation: When the parties hold rights over the assets and obligations over the liabili- ties. b) Joint business: When the parties hold only rights over the net assets. In accordance with IFRS 11 “Joint agreements”, participations in joint ventures are integrated ac- cording to the equity method and are included in the accompanying consolidated balance sheet The companies listed in Annex III, in which Fomento de Construcciones y Contratas, S.A. does not exercise control but has significant influence, are included in the accompanying consolidated balance sheet under the heading “Investments accounted for by applying the equity method”, integrated using said method. These companies’ contribution to the net income of the business year is included under the heading “Profit/(loss) of entities valued using the equity method” of the accompanying consolidated profit and loss statement. Transactions between Group companies In transactions between consolidated companies, the profit/(loss) of internal operations are elimi- nated, being deferred until they are made against third parties outside the Group. This elimination does not apply in the “Concession agreements” since the result is considered to be realised against third parties (Note 3.a). Group work on its own fixed and non-current assets is measured at production cost, eliminating the intra-group profit/(loss). Reciprocal credits and debits have been eliminated from the consolidated financial statement, as well as internal income and expenses from the collection of the subsidiaries that are consolidated. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 213 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 6 of 141 Changes in the scope of consolidation Annex IV shows the changes made in 2020 in all consolidated companies using global integra- tion and the equity method. The profit/(loss) of these companies are included in the consolidated profit and loss statement as from the effective acquisition date or until the effective disposal or derecognition date, as appropriate. The heading “Change in scope” in the corresponding notes to this Report shows the effect of the additions and derecognitions of companies from the scope of consolidation. Additionally, Note 5 of this Report “Changes in the scope of consolidation”, shows the most significant inputs and outputs of said scope. 3. Accounting policies The accounting policies applied to the consolidated financial statements of the FCC Group are detailed below: a) Service Concession Arrangements Concession contracts involve agreements between a granting public entity and FCC Group com- panies to provide public services such as water distribution, filtration and sewage treatment, landfill management, motorways and tunnels, etc. by operating the infrastructure. Meanwhile, revenue from providing the service may be received directly from the users or, sometimes, through the concession grantor itself, which regulates the prices for providing the service. The concession right generally means that the concession operator has an exclusive right to provide the service under the concession for a given period of time, after which the infrastructure assigned to the concession required to provide the service is returned to the concession grantor, generally for no consideration. Concession contracts are required to provide for the management or operation of this infrastructure Likewise, a common characteristic is the existence of obligations to acquire or build all the items required to provide the concession service over the contract term. When the above conditions are met, said concession contracts are registered by the provisions of IFRIC 12 “Service Concession Arrangement”. In general, we must highlight two clearly differenti- ated phases, the first one in which the concessionaire provides construction or improvement ser- vices that are recognised according to the degree of progress, with a counterpart in an intangible or financial asset, and a second phase in which a series of maintenance or operation services are provided for the aforementioned infrastructure. In both cases, income is recognised in accord- ance with the provisions of IFRS 15 “Ordinary income from contracts with customers” (note 3.r). An intangible asset is recognised when the demand risk is borne by the concessionaire and a financial asset is recognised when the demand risk is borne by the concession grantor, since the concessionaire has an unconditional contractual right to receive the proceeds of the construction or upgrade services. These assets also include the amounts paid in relation to the fees for the award of the concessions. There may be mixed situations in which the demand risk is shared between the concessionaire and the grantor. For concessions classified as intangible assets, provisions for dismantling, removal or restoration and any steps to improve and increase capacity, the revenue from which is envisaged in the initial contract, are capitalised at the start of the concession and the amortisation of these assets and the discounting of such provisions are recognised in profit or loss Also, provisions to replace and repair the infrastructure are systematically recognised in profit or loss as the obligation is incurred. Borrowing costs attributable to infrastructure financing are recognised as an expense in the pe- riod, capitalising, only in the intangible asset model, those that accrue during the construction phase and until the related infrastructure is put to use. The amortisation of these intangible assets is carried out according to the consumption pattern, understanding as such the performance and best estimation of the production units in each of the different activities. The quantitatively most important concession businesses in the Group are located in concession activities, mainly toll roads and motorways, which are amortised according to traffic, and in the water supply and sanitation activity, which amortises assets based on con- sumption of water that, in general, is constant over time due, on the one hand, to its reduction as a result of water saving policies and, on the other hand, to its increase by the growth in pop- ulation. The amortisation is completed in the concession period, which is generally between 25 and 50 years. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 214 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 7 of 141 Concession arrangements recognised as financial assets are measured at the fair value of the construction or upgrade services rendered. Under the amortised cost method, the corresponding income is allocated to profit or loss as revenue, in accordance with the effective interest rate aris- ing from the expected flow of receipts and payments from the concession. Finance costs arising from the financing of these assets are classified under “Finance costs” in the consolidated profit and loss statement. As stated above, for the provision of maintenance or operating services, income and expenses are allocated to profit/(loss) in accordance with IFRS 15 “Ordinary income from contracts with clients”. b) Business combinations and goodwill The assets and liabilities of the companies and subgroups over which control is acquired are rec- ognised in the consolidated balance sheet at their fair value together with the related deferred tax- es. However, in accordance with regulations, the initial measurement of the assets and liabilities and their allocation to the various headings may be reviewed within the twelve months following the acquisition date, should it be necessary to consider new data. The date of inclusion in the scope of consolidation is the date on which effective control of the company is obtained, which normally coincides with the acquisition date. Goodwill is recognised as the positive difference between (a) the sum of the fair value of the con- sideration transferred as a result of the acquired interest, the amount of the non-controlling inter- ests and the fair value at the date on which control over these interests is acquired when control is obtained in stages, and (b) the fair value of identifiable assets and liabilities. In general, non-controlling interests are valued by the proportional part of the fair value in the assets and liabilities of the acquired company. If control over a business combination is achieved in stages, the difference between the fair value at the time control over the preceding interest is obtained and the carrying amount of that interest is recognised in profit/(loss). Once control is obtained over an investee, and until that control is lost, the difference between the amount of any additional equity interest acquired or sold and its carrying amount is accounted for in equity. Goodwill is not amortised. However, it is tested for impairment at least at each balance sheet date, in order to recognise it at the lower of its recoverable value, estimated on the basis of ex- pected cash flows, or acquisition cost, less any prior years’ impairment losses. The accounting policies used to determine impairment are detailed in section e) of this note. c) Intangible assets Except as indicated in the two previous sections of this note regarding the agreements for the concession of services and goodwill, the other intangible assets contained in the accompanying financial statements are valued at their acquisition cost. These intangible assets include invest- ments related to operating contracts and licenses, rights to build and software applications. Such registered intangible assets have a finite useful life. Amortisation is carried out during its useful life, which is generally between 20 and 35 years, that is, the period during which it is esti- mated that they will generate income, using the linear method, except when the application of the consumption pattern reflects its depreciation more faithfully. Software applications are generally amortised within a period of 5 to 10 years. d) Property, Plant and equipment and real estate investments Property, plant and equipment and real estate investments are recorded at their cost price (up- dated, where appropriate, with various legal provisions prior to the date of transition to IFRS), less accumulated depreciation and any loss due to impairment of recognised value. The cost of those assets includes the estimated present value of their dismantling or the withdrawal of the affected items and, in those cases in which they have been acquired through business contributions as stated in section b) of this note, they are initially recognised at their fair value on the acquisition date. The work carried out by the Group for its fixed and non-current assets is valued at production cost. Conservation and maintenance expenses that do not involve an extension of the useful life or productive capacity of the corresponding assets are charged to the profit/(loss) of the year in which they are incurred. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 215 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 8 of 141 When the construction and commissioning of fixed and non-current assets require a period of long construction, the interests derived from their financing accrued during said period are acti- vated. Companies depreciate their fixed and non-current assets following the linear method, distributing the cost thereof between the following years of estimated useful life: Real estate investments Natural resources and buildings Plant, machinery and transport items Furniture and tools Other fixed and non-current assets 75 25-50 5-30 7-12 5-10 However, some contracts may have terms shorter than the useful life of the related fixed and non-current assets, in which case they are depreciated over the term of the contract. The residual value, useful life and depreciation method applied to the Group’s assets are re- viewed periodically to ensure that the depreciation method used reflects the pattern in which the revenue deriving from operating the property, plant and equipment and real estate investments is obtained. This review is carried out through an in situ evaluation and technical analysis, taking into account their current conditions and estimating the remaining useful life of each asset based on their ability to continue providing the functionalities for which they were defined. Subsequently, these internal analyses are compared against third parties outside the Group, such as manufac- turers, installers, etc. to ratify them. At least at the end of each reporting period, the companies periodically determine whether there is any indication that an item or group of items of fixed and non-current assets is impaired so that if applicable, as indicates in section e) of this note, an impairment loss, or the reversal of such losses, can be recognised or reversed in order to adjust the book value of the assets to their value in use. Under no circumstances do reversals exceed all prior impairment recognised. e) Impairment of intangible assets, property and real estate investments Intangible assets with finite useful lives and property, plant and equipment items and real estate investments are tested for impairment when there is any indication that the assets might have become impaired, in order to adjust their net carrying amount to their value in use (if this is lower). The Group uses both internal and external sources of information to assess possible signs of im- pairment. External sources include market value decreases beyond the passage of time or normal use or possible adverse future changes in the legal, economic or technological environment that could reveal a loss of the recoverable value of its assets. The Group internally assesses whether there has been a physical deterioration or obsolescence of the assets, if the future situation itself may produce a change in the expected use of the asset, for example if the asset is expected to be idle for a significant period of time or due to restructuring plans or if it is detected that the return on the asset is worse than expected. Goodwill and intangible assets with indefinite useful lives must be tested for impairment at least once a year in order to recognise possible impairment losses. Impairment losses recognised in prior years on assets other than goodwill may be reversed if the estimates used in the impairment test show a recovery in the value of these assets. The carrying amount of the assets whose recoverable amount increases must in no case exceed the carrying amount that would have been determined had no impairment loss been recognised in prior years. The recognition or reversal of impairment losses on assets are charged or credited to income under “Impairment and results obtained on the disposal of assets”. To calculate the recoverable amount of the assets subject to impairment tests, the present value of the net cash flows originating from the Cash Generating Units (CGUs) associated therewith was estimated, except those flows related with payments or collections on lending operations and corporation tax payments, together with those that arise from future improvements or refur- bishments envisaged for the assets belonging to such Cash Generating Units. To discount cash flows, a pre-tax discount rate was used, which includes the current market assessments of the time value of money and the risks specific to each Cash Generating Unit. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 216 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 9 of 141 The estimated cash flows are obtained from the projections made by the Directorate of each of the CGUs that generally use periods of five years, except when the business characteristics ad- vise longer periods and that include growth rates supported by the different approved business plans, whose review is carried out periodically, generally considering zero growth rates for those periods beyond the years projected in the aforementioned plans. Also, it is necessary to indicate that sensitivity analyses are performed to assess the growth of income, operating margins, and discount rates, in order to foresee the impact of future changes in these variables. Cash flows from CGUs located abroad are calculated in the functional currency used by those cash generating units and they are updated using discount rates that take into consideration the risk premium relating to each currency. The present value of the net cash flows obtained in this manner are translated at the year-end exchange rate for each currency. conditions compared to market conditions in case of an extension, if the lessee has incurred sig- nificant costs in adapting the underlying asset to its needs that it must reapply in case of contract- ing a new lease, any possible costs for the termination of the contract in case it is not extended or the importance of the asset to the lessee, especially If it is a specialised asset that is not readily available on the market. Furthermore, the background in terms of the period of use in the past of certain assets is also taken into account. Subsequently, during the term of the lease contract, the right of use is systematically amortised and the financial expenses associated with the affected liability are recorded applying the amor- tised cost method. When the Group acts as the lessor, income and expenses arising from operating lease agree- ments are charged to the profit and loss statement during the year they are accrued. f) Leasing As indicated in Note 2.a, as a result of the application of IFRS 16 “Leases”, as at 1 January 2019 all lease operations (with certain exceptions for small amounts or short durations) in which the Group acts as the lessee, require the accounting of an asset corresponding to the right in use, fundamentally recognised by nature as a material asset, and a liability for the future payment ob- ligations that are incurred. This liability is recognised at the present value of the future cash flows for each lease and the asset in an equivalent amount, adjusted for any early payment made. A contract contains a lease when the lessor transfers control of an identifiable underlying asset for a certain period of time in exchange for a consideration. An asset is identifiable when it is explicitly specified in the contract or implicitly when it is made available to the customer. However, if the supplier has the right to replace the asset during the period of use, that is, when it has alternative assets and can economically benefit from such substitution, the asset is not considered identifia- ble and therefore the contract will not contain a lease. To estimate the duration of the contract, extensions that are reasonably expected to occur and the period in which the lessee does not expect to terminate the contract (when they have the power to do so) are considered, without exclusively taking into account the minimum term es- tablished in the contract, as the term during which the lessee expects to continue using the un- derlying asset, depending on its particular circumstances, is estimated. To determine whether an extension is expected to take place, the economic incentives that the lessee may have to extend the contract are taken into account, considering factors such as the existence of advantageous g) Investments accounted for using the equity method The participation in joint ventures and associates is initially recognised at acquisition cost and is subsequently revalued to take into account the share with the profit/(loss) of these companies not distributed in the form of dividends. Also, the value of the investment is adjusted to reflect the proportion of the changes in these companies’ equity that were not recognised in their profit or loss. These include the conversion differences and the adjustments caused by changes in the fair value of financial derivatives of cash flow hedges acquired by the companies themselves. They undergo an impairment test as long as there are indications of impairment that may reveal a decrease in the recoverable value below the carrying amount of the investment, using both internal and external sources. h) Financial assets Financial assets are initially recorded at fair value, which is generally the same as their acquisition cost, adjusted for the operation costs directly attributable to it, except in the case of financial as- sets at fair value with changes in profit/(loss) that are attributed to that year’s profit/(loss). All acquisitions and sales of financial assets are recorded at the date of contracting the operation. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 217 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 10 of 141 The Group manages its financial assets in order to obtain its contractual cash flows, so it values them according to the amortised cost method, that is, initial cost less principal charges plus ac- crued income based on its effective interest rate pending collection, adjusted for any recognised impairment loss. The effective interest rate consists of the rate that equals the initial cost of the total cash flows estimated for all the items throughout the remaining life of the investment. As an exception to the above, it should be noted that the Group values certain financial assets at fair value in the following cases: – Financial assets at fair value with changes in profit/(loss): This category includes derivatives that do not meet the conditions to be considered as hedging, financial assets that other standards establish must be valued at fair value charged to profit/(loss), such as contingent considerations in business combinations and financial assets that, if valued differently, would generate an accounting asymmetry. – Financial assets at fair value with changes in other comprehensive income: The Group values its interests in companies in which it does not have control, joint control or exert significant influence at fair value charged to reserves. Financial assets at fair value have been recorded at fair value at the closing date of the financial statements. Fair value is understood as the value by which a financial instrument could be ex- changed between informed and experienced parties in a free transaction (independent between third parties). In the case of financial assets at fair value with changes in the profit/(loss), the profits or losses re- sulting from the change in fair value are attributed to the net profit/(loss) of the year, while financial assets at fair value with changes in other comprehensive income are attributed to equity, until the asset is disposed of, at which time the profit previously accumulated in equity will be included in that year’s profit/(loss). In assets that are valued at amortised cost, an impairment loss is recorded if, on the closing date of the financial statements, it is determined that credit losses will be incurred throughout their en- tire life. That is, impairment losses are recorded immediately when there is credit risk. Credit risk is understood as the risk of one of the parties to the financial instrument causing a financial loss to the other party if it breaches an obligation. Trade receivables arising in the Group’s normal business activities are stated at their nominal val- ue, given that they generally mature within twelve months, adjusted by any expected credit losses over the course of their lives. Accounts receivable with maturities greater than twelve months are valued at their current value. The Group, based on the short-term cash flow needs, transfers credit from customers to financial entities. The amount of these credit assignments is reported in Note 16.a). These operations ac- crue interest under usual market conditions and the collection management is still carried out by the Group companies, although the costs associated with such management are residual. To the extent that the risks and rewards inherent to the accounts receivable are substantially transmitted through these sales and assignments of collection rights, as well as the control over them, without there being any repurchase agreements signed between the Group companies and the credit institutions that have acquired the assets and that they can freely dispose of said acquired assets without the Group companies being able to limit the aforementioned right in any way, the aforementioned sales and assignments are posted as “without recourse”. Consequently, in accordance with the criteria established by IFRS, balances receivable from debtors assigned or sold under the conditions indicated are written off in the consolidated balance sheet. i) Inventory Inventory is valued at the average acquisition price or the average production cost, applying the necessary value corrections to adapt these values to the net realisable value if it were lower. The Group’s real estate activity includes land and plots, as well as ongoing developments and finished properties that are held for sale or for integration into a real estate development. Land and plots are valued at their acquisition price, plus any urbanisation costs and other expenses related to their purchase (property transfer tax, registration fees etc.) and the financial costs of their financing during execution of the works, or their recoverable amount if this is less. Ongoing developments are the costs incurred in real estate development, or part thereof, whose construction has not been completed at the end of the business year. The cost of completed real estate developments is classified as finished products. Collection rights arising from a service concession arrangement are valued according to the crite- ria indicated in section a) of this note. Impairment of land and plots, ongoing real estate developments and finished products is record- ed when their net realisable value is lower than their book value (note 15). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 218 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 11 of 141 The goods received through credit collection in exchange for work executed or to be executed are valued at the lowest amount from between the amount that was registered for the credit cor- responding to the goods received, or the cost of production or net realisable value. j) Foreign currency j.1) Conversion differences k) Equity instruments Equity or capital instruments are recorded for the amount received, net of direct issuance costs. The treasury shares acquired by the Parent Company during the year are recognised at the value of the consideration given, as a decrease in equity. Any gains or losses on the purchase, sale, issue or redemption of own equity instruments are recognised directly in equity and never in the profit and loss statement. In general, the financial statements of foreign operations denominated in currencies other than the euro have been translated to euros, with the exception of: l) Grants – Share capital and reserves, which were converted at historical exchange rates. Grants are recognised according to their nature. – The profit and loss statement items of foreign operations that were converted at the average exchange rates for the period. l.1) Capital grants Conversion differences for the foreign companies from the consolidation scope, generated by the application of the year-end exchange rate method, are included in the equity of the attached consolidated balance sheet, as shown in the attached statement of changes in the equity. Capital grants are those that involve the acquisition or construction of assets. These grants are measured at the amount received or the fair value of the asset received; they are recognised as deferred income on the liability side of the accompanying consolidated balance sheet and are taken to income as the asset or assets to which they relate are depreciated. j.2) Exchange differences l.2) Operating grants The balances of accounts receivable and payable from monetary items in foreign currency are valued in euros by applying the exchange rates in force at the date of the consolidated balance sheet, allocating the differences that are generated to profit/(loss), except as regarding advances, which, when considered non-monetary items, are kept converted at the exchange rate that exist- ed at the time of the transaction. The differences resulting from fluctuations in exchange rates between the date on which the col- lection or payment was made and the date on which the transactions took place or their value was discounted are allocated to profit or loss. Meanwhile, the exchange differences that occur in relation to the financing of investments in foreign companies, with both the investment and the financing being registered in the same currency, are directly recognised in equity as conversion differences that offset the effect of the difference in conversion to euros of the foreign company. Operating grants are those other than those defined above that do not relate directly to an asset or group of assets. Operating income is considered the amount received at the time of its con- cession, except if it is granted to finance specific expenses, in which case its allocation to profit/ (loss) will be made as those expenses accrue. m) Provisions The Group companies recognise provisions on the liability side of the accompanying consolidated balance sheet for present obligations arising from past events for which the companies consider it probable that there will be an outflow of funds to settle them on maturity. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 219 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 12 of 141 These provisions are recognised when the related obligation arises and the amount recognised is the best estimate, at the date of the accompanying financial statements, of the present value of the future expenditure required to settle the obligation. The change in the year relating to the discount to present value has an impact on financial profit/(loss). Provisions for dismantling, removal or restoration and environmental provisions are recognised by increasing the value of the related asset by the present value of the expenses that will be incurred when operation of the asset ceases. Profit or loss is affected when the asset concerned is de- preciated as described in previous sections of this Note and by the discounted present value as described in the preceding paragraph. In addition, some Group companies provide provisions for restructuring costs when there is a detailed formal plan for such restructuring that has been communicated to the affected parties. As at 31 December 2020 no liabilities of a substantial amount have been recognised for this item. Provisions are classified as current or non-current in the accompanying consolidated balance sheet on the basis of the estimated maturity date of the obligation covered by them, and non-cur- rent provisions are considered to be those whose estimated maturity date exceeds the normal operating cycle of the activity giving rise to the provision. n) Financial liabilities Financial liabilities are initially recognised at the fair value of the consideration received, adjusted by the directly attributable transaction costs. Subsequently, these liabilities are measured at their amortised cost. Borrowing costs are recognised on an accrual basis in the profit and loss statement using the effective interest method and are added to the amount of the instrument to the extent that they are not settled in the year in which they arise. Bank borrowings and other current and non-current financial liabilities maturing within no more than twelve months from the balance sheet date are classified as current liabilities and those ma- turing within more than twelve months as non-current liabilities. o) Financial derivatives and hedge accounting A financial derivative is a financial instrument or another type of contract whose value varies in re- sponse to changes in certain variables, such as an interest rate, financial instrument price, foreign exchange rate, credit rating or credit index or any other variable that may not be financial. Apart from giving rise to gains or losses, financial derivatives may, under certain conditions, fully or partially offset foreign currency or interest rate risks or risks relating to the value associated with balances and transactions. Hedges are accounted for as follows: – Cash flow hedges: in hedges of this type, the changes in value of the hedging instrument are recognised provisionally under equity, and are taken to income when the hedged item mate- rialises. – Fair value hedges: in this case, changes in the value of the hedging instrument are recognised in income by offsetting changes in the fair value of the hedged item. – Hedges of a net investment in a foreign operation: this type of hedges are aimed at covering foreign currency risk and are treated as cash flow hedges. IFRS 9 “Financial Instruments” states that an effectiveness test must be performed, consisting of a qualitative assessment of the financial derivative to determine whether it can be considered to be a hedging instrument and, therefore, effective. The qualitative requirements that must be met are as follows: – Formal designation and documentation, at inception of the hedge, of the hedging relationship and the entity’s risk management objective and strategy for undertaking the hedge. – Documentation identifying the hedged item, the hedging instrument and the nature of the risk being hedged. – The effectiveness requirements must be met. This means that there is a financial relationship between the hedged item and the hedging instrument such that both generally move in oppo- site directions upon the occurrence of the hedged risk. Credit risk must not have a dominant effect on the changes in the value of the hedged items and the hedging ratio must be equiv- alent to the percentage of the exposure to the covered risk. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 220 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 13 of 141 The hedge is considered to be fully effective provided that the qualitative effectiveness test shows that it complies with those criteria. If not, the hedge would cease to be treated as a hedge and the hedge relationship would cease, recognising the derivative at its fair value through changes in profit or loss. Changes in the fair value of financial derivatives that do not qualify for hedge accounting are rec- ognised in the consolidated income statement as they arise. The value is calculated using defined methods and techniques based on observable market in- puts, such as: A quantitative analysis that will determine how the instruments are recognised takes place af- ter their effectiveness has been assessed. This quantitative analysis consists of a retrospective portion for purely accounting purposes and another prospective portion intended to analyse any possible future deviations relating to the hedge. The retrospective assessment analysis is adapted to the type of the hedge and the nature of the instruments used, and all of the financial derivatives contracted by the Group consist of cash flow hedges (Note 23): – In the case of interest rate swaps (IRSs) in Cash flow hedges, the Group charges a variable rate equal to that of the hedged borrowings and pays a fixed rate, since the objective is to re- duce the variability of the borrowing costs, the effectiveness test determines whether changes in the fair value of the IRS cash flows offset changes in the fair value of the hedged risk. The hypothetical derivative method is used for accounting purposes when performing the quantitative assessment of effectiveness, which establishes that the company will recognise in equity the lower of the absolute change in the value of the hypothetical derivative (hedged position) and the change in the value of the contracted derivative. The difference between the value of the recognised change in equity and the fair value of the derivative on the date of the effectiveness test will be considered to be the ineffective portion and it will be directly recorded in the income statement. A distinction must be made between the designated portion and the non-designated portion of cash flow hedges in which the derivative hedge instrument is an option or a forward and not an IRS: • The treatment of the designated portion will be similar to that indicated for IRSs. • The fair value of the non-designated portion (forward points or the temporary value of the options) will be recognised in other comprehensive income when related to the hedged portion and will be accumulated in a separate component of equity. This amount will be re- classified from the separate component of equity to the income statement for the period as a reclassification adjustment in the same period or periods in which the expected future cash flow hedges affect results for the period (for example, when a planned sale takes place). – The interest rate swaps were measured by discounting all the flows envisaged in each contract on the basis of its characteristics, such as the notional amount and the collection and pay- ment schedule. This measurement was made using the zero-coupon rate curve determined by employing a bootstrapping process for the deposits and swaps traded at any given time. This zero-coupon rate curve was used to obtain the discount factors for the measurements, which were made assuming the absence of arbitrage opportunity (AAO). When there were caps and floors or combinations thereof, on occasions conditional upon special conditions being met, the interest rates used were the same as those used for the swaps, although in order to introduce the component of randomness in the exercise of the options, the generally accepted Black - Scholes model was used. – The methodology used in the case of a cash flow hedge derivative associated with inflation is very similar to that used for interest rate swaps. Expected inflation is estimated based on ob- served inflation and is embedded in the swamps indexed to the ex-tobacco European inflation rate used in the market, and translated to the Spanish rate using a convergence adjustment. Furthermore, a sensitivity test is carried out on the derivatives and net financial debt in order to be able to analyse the effect that a possible fluctuation in interest rates might have on the Group’s accounts, given different interest rate increase and decrease scenarios at year-end (Note 30). Note 23 to this Report provides details of the financial derivatives that the Group has arranged and other matters related thereto. p) Corporation Tax The expense for corporation tax is calculated on the basis of the consolidated profit before tax, increased or decreased, as appropriate, by the permanent differences between taxable profit and accounting profit/(loss). The corresponding tax rate based on the legislation applicable to each country is applied to this adjusted accounting profit. The tax relief and tax credits earned in the year are deducted and the positive or negative differences between the estimated tax charge calculated for the prior year’s accounting close and the subsequent tax settlement at the payment date are added to or deducted from the resulting tax charge. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 221 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 14 of 141 The temporary differences between accounting profit/(loss) and taxable profit for Income >Tax purposes, together with the differences between the book values of assets and liabilities recog- nised in the consolidated balance sheet and their tax bases, give rise to deferred taxes that are recognised as non-current assets and liabilities. These amounts are measured at the tax rates that are expected to apply in the years in which they will foreseeably be reversed, without per- forming financial discounting at any time. The Group activates deferred asset taxes corresponding to temporary differences and negative tax bases to be offset, except in cases where there are reasonable doubts about their future recovery. q) Pension commitments The Group companies have certain specific cases related to pension plans and similar obligations that are developed in note 25 of this Report. r) Operating income and expenses Revenue is recognised when the control of the good or service is transferred to the customer, in general, only when there is approval from the customer applying a homogeneous method to contracts of a similar nature. Revenues are valued at the expected amount of the consideration that is to be received that can be estimated reliably and that is not expected to be reversed in the future. After analysing its portfolio of contracts, the Group has concluded that, except in very specific cases, there is no more than one performance obligation in the contracts being executed, since either integration services are provided for the different activities carried out, or because they are highly interrelated. As regards variable consideration, only one income is recognised for the value, and it is highly probable that it will not suffer significant reversion when the uncertainty about it is subsequently resolved. Also, in the case that the contracts include price revision clauses, the income that repre- sents the best estimate of the amount to be charged in the future and under the same probability criteria mentioned for the variable consideration is recorded. In general, the Group has not identified significant financial components in its contracts with cus- tomers. The financial component is only separated from the consideration to be received and the corresponding financial income is recorded in those contracts in which the time between when a service is provided or a good is delivered and when the payment is received is greater than twelve months. In the construction activity, performance obligations are paid over time, so revenue is recognised using a product-based method, i.e. that is in-line with the degree of progress criterion. Only in- come that is protected by a main contract signed with the property and in modifications thereto approved by it is recognised. If the modification is approved without the amount being fixed, the income is only estimated as a variable consideration when the criteria of probability and significant non-reversal mentioned above are met. Budgeted losses are recognised as profit/(loss) for the year. Meanwhile, in this activity the costs are recognised in accounts according to their accrual. The costs for obtaining the contract, mainly related to the study and preparation of the project, are not activated as they cannot be considered as incremental, since they are incurred regardless of whether the contract is finally obtained or not. Two main costs for fulfilling the contract can be distinguished: engineering and study costs and those related to general and specific facilities (mainly accessory facilities such as concrete plants, auxiliary works or building booths necessary to provide the services). The main contracts in which the aforementioned expenses are incurred are of the design and construction type, in which the remuneration to be received for the work to be carried out in engineering and studies and those of the benefit is identified by separate work units of construction services. Therefore, in general, the expenses derived from engineering and studies are not activated and are recognised in accordance with their accrual as services are ren- dered. Costs related to the general and specific facilities are recorded as expenses according to the degree of progress when a separate works unit with its corresponding remuneration is identi- fied in the contract, and assets are only activated within the heading when the contract does not identify them separately, and profit/(loss) is charged together with the rest of the contract costs using the aforementioned degree of progress. In the service provision activities, which are mainly carried out in the Environmental Services and Integral Water Management services, revenues and expenses are allocated based on the accrual criterion, that is, when the actual flow of goods and services that they represent occur, regardless of when the monetary or financial flow derived from them occurs. These are performance obliga- tions that are satisfied over time as the customer receives and consumes the profits at the same time as the service is provided. Consequently, revenue is recognised by measuring the value of the services actually provided to the customer using a product-based method. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 222 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 15 of 141 Regarding the delivery of goods activities that the Group mainly carries out in the Cement seg- ment and in the Real estate activity, revenues are only recognised when the goods have been delivered and their property has been transferred to the customer, as they are performance obli- gations that are satisfied at a specific moment of time. In the aforementioned activities (other than construction), the costs of obtaining the contract are not incremental, so they are not activated and are recognised based on their accrual. Meanwhile, no relevant contract fulfilment costs are incurred and are therefore recorded as operating expens- es in general. – Operating activities are the activities that constitute the main source of the company’s ordinary income, as well as other activities that cannot be classified as investment or financing activi- ties. Among the operating cash flows, it is worth highlighting the heading “Other adjustments to profit/(loss)” which basically includes items that are included in the Profit/(Loss) Before Tax but have no impact on the change in cash, as well as items that are already included in other headings of the Cash Flow Statement according to their nature. – Investment activities are the acquisition and disposal of long-term assets, as well as other investments not included in cash and cash equivalents. In relation to the service concession arrangements, it must be noted that the Group recognises the interest deriving from collection rights under the financial model as revenue, since the value of that financial asset includes the construction, upkeep and maintenance services that are identical, from an operating standpoint, to those set out in the intangible model and, consequently, it is con- sidered that since both models are related to the company’s operating activity, the faithful image is best represented by encompassing the income derived from the financial asset as belonging to the operation (Note 3.a). – Financing activities are the activities that generate changes in the size and composition of own capital and loans taken by out the company. For the purposes of preparing the consolidated statements of cash flows, the “cash and cash equivalents” have been considered as cash and on-demand bank deposits, as well as those short-term, highly liquid investments, which are easily convertible into specific amounts of cash, subject to an insignificant risk of changes in their value. Also recognised as operating profit/(loss) are those produced in the disposals of shares in subsid- iaries when it implies the loss of control over them. u) Use of estimates s) Related-party transactions The Group performs all of its transactions with related parties on an arm’s length basis. Note 31 of this Report details the main transactions with significant shareholders of the Parent Company, with administrators and senior executives, between companies or Group entities and with companies invested in by shareholders of the Group. t) Consolidated statement of cash flows The FCC Group prepares its statement of cash flows in accordance with IAS 7 “Statement of cash flows” following the indirect method, using the expressions below in the following ways: – Cash flows are the inflows and outflows of cash and cash equivalents. In preparing these 2020 and 2019 Group consolidated financial statements, estimates were made to quantify certain assets, liabilities, revenues, expenses and obligations recognised there- in. These estimates relate essentially to the following: – Impairment losses on certain assets (Notes 7, 8, 9, 12 and 14) – Goodwill measurement (Note 7) – The recoverability of the work executed pending certification (notes 3.r and 16) – The recoverability of deferred tax assets (Note 24) – The amount of certain provisions and, in particular, those related to claims and litigation and the losses budgeted in construction contracts (note 19) – The useful life of the property, plant and equipment as well as intangible assets and real estate investments (notes 7, 8 and 9). – The determination of the recoverable amount of inventory (note 15) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 223 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 16 of 141 – The assumptions used in the actuarial calculation of liabilities and commitments for post-em- ployment compensation (notes 19 and 25) – The market value of derivatives (Note 23) – Cost of business combinations (note 5) Although these estimates have been made based on the best information available at the date of preparing these consolidated financial statements on the events analysed, it is possible that events that may take place in the future may require them to be modified (upwards or downwards) in future years, which would be done prospectively, recognising the effects of the change in esti- mate in the corresponding future financial statements. IFRS 7 “Financial instruments: information to be disclosed” requires that the fair value valuations of financial instruments, both assets and liabilities, be classified according to the relevance of the variables used in the valuation, establishing the following hierarchy: – Level 1: quoted prices (unadjusted) in active markets for identical instruments. – Level 2: inputs other than prices quoted that are observable for the financial instrument, either directly (i.e., as prices) or indirectly (i.e., derived from prices) – Level 3: data for the financial instrument that are not based on observable market data. Almost all of the Group’s financial assets and liabilities, which are valued at fair value, are level 2. v) Non-current assets and related liabilities held for sale Assets and liabilities whose book value is recovered through a sale transaction and not through continued use are classified as non-current assets held for sale and liabilities related to non-cur- rent assets held for sale. This condition is considered fulfilled only when the sale is highly probable and the asset is available for immediate sale in its current state and it is estimated that it will be completed within a period of one year from the classification date. Non-current assets and related liabilities classified as held for sale are valued at the lower of their book value and fair value less expected selling costs. 4. Non-current assets held for sale and liabilities related to non-current assets held for sale and discontinued operations Assets with sale plans that also meet the requirements established in International Financial Re- porting Standard 5 “Non-current assets held for sale and discontinued operations” have been reclassified (Note 3.v). On 3 October 2020, FCC agreed to sell its entire stake in three concessions located in Spain to a non-Group company, Vauban Infrastructure Partners, within its policy of rotation and selective development of projects in this activity. Specifically, the agreement signed involves the transfer of 51% in the Cedinsa Group, a controlled company that manages the concession of four highways in Catalonia, 49% in Concessió Estacions Aeroport L9, SA (consolidated by the equity method), concessionaire of section 1 of line 9 of the Barcelona metro and 29% in Urbs Iudex et Causidicus, SA (consolidated by the equity method), which is operated by Ciudad de la Justicia, also in Bar- celona. The price to be paid by Vauban for all of FCC’s stakes in these concessions amounts to 409.3 million euros. Closure of the agreement is pending the usual authorisations in this type of transactions, not forthcoming at the date of formulation of these consolidated annual accounts. Assets held for sale, deducted from liabilities, have been appraised at book value as this is less than the expected amount for their sale, net of selling costs. The following sections detail the main headings that constitute the results, cash flows and the balance sheet, corresponding to the assets and liabilities held for sale. The sale of these compa- nies does not imply the discontinuation of the FCC Group’s concessions activity, which is why the results continue to be presented by their nature in the consolidated income statement. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 224 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 17 of 141 Profit and Loss Account Cash flow statement The breakdown by nature of the profit after tax of the companies whose assets and liabilities have been reclassified as assets and liabilities held for sale is as follows: The statement of cash flows corresponding to companies whose assets and liabilities have been reclassified as assets and liabilities held for sale is as follows: 2020 Revenue Operating expenses Operating Profit/(Loss) Profit/(loss) before tax from continuing operations Income tax Profit/(loss) for the year from continuing operations Profit attributable to the parent company Profit/(loss) attributable to non- controlling interests Total 92,913 (47,951) 44,962 Cedinsa Group 92,913 (47,951) 44,962 Concessió Estacions Aeroport L9, S.A. Urbs Iudex et Causidicus, S.A. 2020 Profit/(loss) before tax from continuing operations – – – – – – Adjustments to profit or loss Changes in working capital Other cash flows from operating activities Cash flow from business activities 34,524 19,518 12,789 2,217 (5,523) 29,001 (5,523) 13,995 Investment payments – – Divestment receipts 12,789 2,217 Other cash flows from investing activities 24,390 9,384 12,789 2,217 4,611 4,611 – – Cash flow from investment activities Proceeds from and payments for equity instruments Proceeds from (payments on) financial liabilities Other flows from financing activities Cash flows for financial activities Total cash flows Cedinsa Group 19,518 65,535 13,211 (10,222) 88,042 (8,616) 6,058 – (2,558) – (26,771) (61,871) (88,642) (3,158) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 225 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 18 of 141 Balance sheet. Headings of non-current assets and liabilities held for sale 5. Changes in the scope of consolidation The different assets and liabilities reclassified as held for sale under the respective headings of the attached balance sheet are detailed below: The main changes experienced in the scope of consolidation in 2020 are the following: 2020 Total Cedinsa Group Concessió Estacions Aeroport L9, S.A. Urbs Iudex et Causidicus, S.A. a) Business combinations FCC Aqualia, S.A. has acquired control of the following businesses by acquiring the stakes de- tailed below: Intangible assets 1,016,607 1,016,607 Property, plant and equipment 651 651 – – – – Non-current financial assets 305,541 234,152 70,249 1,140 Deferred tax assets Current assets 14,638 54,831 14,638 54,831 – – – – – – Non-current assets held for sale 1,392,268 1,320,879 70,249 1,140 Non-current financial liabilities Rest of non-current liabilities Current financial liabilities Rest of current liabilities 848,499 848,499 159,404 159,404 31,771 11,611 31,771 11,611 Liabilities relating to assets held for sale 1,051,285 1,051,285 – – – – – – – – – – In January 2020, a 51% stake in Qatarat Saqia Desalination Company Ltd., the concession- aire of the Jeddah International Airport desalination plant, amounting to 12,914 thousand euros, acquiring control. The amount paid is recorded in the attached statement of cash flows under the heading “Payments for investments”. In June 2020, an additional 2% stake in Aquos El Realito, SA de CV, the company that owns the operation of a water treatment plant in San Luis de Potosí, for an amount of 355 thousand euros, where it previously held 49%, consolidated by the equity method, reaching a 51% stake and control. Consequently, Aquos el Realito, SA de CV has become fully consolidated, which has led to the recording of 8,671 thousand euros under the heading “Minority interests” (Note 18) in the attached consolidated balance sheet. As a result of the transaction, a posi- tive impact has been recorded in the heading “Profit of entities valued by the equity method” amounting to 635 thousand euros due to the fair value of the equity investments prior to the operation, and the application of valuation adjustments to results (Note 27). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 226 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 19 of 141 The composition of the balance sheets for business combinations is detailed below: 2020 Non-current assets Intangible assets Property, plant and equipment Investments accounted for using the equity method Non-current financial assets Deferred tax assets Current assets Inventory Trade and other accounts receivable Other current financial assets Other current assets Cash and other cash equivalents Total assets Equity Non-current liabilities Grants Non-current provisions Non-current financial liabilities Deferred tax liabilities Other non-current liabilities Current liabilities Current provisions Current financial liabilities Trade payables and other accounts payable Total equity and liabilities Qatarat Saqia Desalination Company Ltd. Aquos el Realito, S.A. de C.V. 54,097 53,906 191 – – – 16,565 17 10,189 – – 6,359 70,662 25,321 38,110 – 64 35,730 2,316 – 7,231 – 5,018 2,213 70,662 76,181 24,645 8 – 51,071 457 15,160 – 3,128 4,823 – 7,209 91,341 17,697 65,616 – – 53,603 12,013 – 8,028 – 3,643 4,385 91,341 As a result of the aforementioned business combinations, the fair value of the acquired assets has been determined, as all of these companies operate concessions, the fair value of the conces- sion-based assets has been determined applying the discount at a market rate for the cash flows estimated during the time horizon of the concessions currently in force. These flows have been estimated internally based on the Group’s past experience, based, as applicable, on the Financial and Economic Plans of the concessions, applying the assumptions and appropriate macroeco- nomic variables in each case. The following table shows the amounts allocated to assets and liabilities to reflect their fair value on the takeover date: 2020 Intangible assets Property, plant and equipment Non-current financial assets Total assignments to assets Non-current liabilities (deferred tax liabilities) Total assignments to liabilities Total net assignments Qatarat Saqia Desalination Company Ltd. Aquos el Realito, S.A. de C.V. 11,578 9,522 – – 11,578 2,316 2,316 9,262 – – 9,522 2,857 2,857 6,665 The reconciliation between the consideration transferred for each of the above business com- binations, the value of non-controlling interests recognised and the fair value of the net assets acquired are provided below: 2020 Acquisition value Fair value Minority interests acquired Fair value previous interest - Fair value net assets Goodwill Qatarat Saqia Desalination Company Ltd. Aquos el Realito, S.A. de C.V. 12,914 12,407 – 355 8,671 8,671 (25,321) (17,697) 0 0 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 20 of 141 If the above companies had been consolidated since 1 January 2020, the ordinary income and profit/(loss) they would have contributed would have been as follows: to adjust them should more relevant and comprehensive information be obtained at a later date. In 2019 it should be noted that the following business combinations were carried out: 227 2020 Revenue Other income Operating Profit/(Loss) Profit/(loss) before tax from continuing operations Profit attributable to the parent company Non-controlling interests Qatarat Saqia Desalination Company Ltd. Aquos el Realito, S.A. de C.V. – 15,817 – 4,928 6,692 703 2,001 8,577 – 3,881 1,192 363 1,226 If the above companies had been consolidated since 1 January 2020, the ordinary income and profit/(loss) they would have contributed would have been as follows: – 2020 Revenue Other income Operating Profit/(Loss) Profit/(loss) before tax from continuing operations Profit attributable to the parent company Non-controlling interests Qatarat Saqia Desalination Company Ltd. Aquos el Realito, S.A. de C.V. 15,817 – 4,928 6,692 703 2,001 14,325 – 3,902 (16) 39 111 In any case, these initial estimates are provisional and the Group has a period of one year in which In January 2019, two partner agreements were signed in relation to the consolidated that, until then, had been consolidated under the equity method - Shariket Tahlya Mostaganem, S.p.a. and Shariket Miyeh Djinet, S.p.a. - under which the Group now holds control over the former and no longer has a significant influence on the latter. As a result, Shariket Tahlya Mostaganem, S.p.a. was fully consolidated and the holding in Shariket Miyeh Djinet, S.p.a. was considered a financial asset at fair value. These transactions resulted in a net loss of 6,122 thousand euros being recognised under “Profits/(losses) of companies accounted for by the equity method” fol- lowing the allocation of the negative translation differences accumulated in equity to profit and loss and the positive impact resulting from the fair value adjustment of shares prior to the trans- action. Furthermore, “Other collections/(payments) from investment activities” in the Statement of Cash Flows includes 43,337 thousand euros corresponding to the cash that Shariket Tahlya Mostaganem, S.p.a. presented in its balance sheet at the time of the takeover. This operation led to the recognition of 136,998 thousand euros under the heading “Non-controlling interests” (Note 18). In June 2019 FCC Aqualia, S.A. acquired 100% of the French subgroup Services Publics et Industries Environnement, dedicated to the management of water supply and sanitation for the sum of 31,665 thousand euros, with the impact registered under “Payments for investments “on the accompanying Statement of Cash Flows. As part of this business combination, a first consolidation difference of 24,234 thousand euros was disclosed, which was fully allocated to the subgroup’s concession assets. – In November 2019 FCC Construcción, S.A. acquired an additional 17% of the share capital of Cedinsa Concessionària, S.A., in which it previously held significant influence, for an amount of 57,955 thousand euros, of which it previously held 34%, recording the disbursement under the heading “Payments for investments” in the attached Statement of Cash Flows. As a result of the aforementioned operation and the agreement of partners that was signed, the Group took control, and thus pursuant to regulations it has registered a positive result of 36,588 thousand euros under the heading “Profit/(loss) of companies accounted for using the equity method”, as a consequence, on the one hand, of the fair value of the participation that it previously held, with income of 78,647 thousand euros and, on the other hand, of the allocation to profit/(loss) of the corresponding valuation adjustments to the participation of 34% prior to the business combination, which led to the posting of a loss of 42,059 thousand euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 228 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 21 of 141 The composition of the balance sheets drawn up by the business combinations in 2019 is de- tailed below: 2019 Non-current assets Intangible assets Property, plant and equipment Investments accounted for using the equity method Non-current financial assets Deferred tax assets Current assets Inventory Trade and other accounts receivable Other current financial assets Other current assets Cash and other cash equivalents Cedinsa Group Shariket Tahlya Mostaganem, S.p.a Services Publics et Industries Environnement 1,377,700 1,058,395 535 – 232,451 86,319 105,724 – 29,748 15,789 692 59,495 175,152 – 92 – 175,060 – 62,622 229 18,955 – 101 43,337 36,132 32,051 4,081 – – – 28,008 509 13,683 4,029 329 9,458 Total assets 1,483,424 237,774 64,140 2019 Equity Cedinsa Group Shariket Tahlya Mostaganem, S.p.a Services Publics et Industries Environnement 281,723 167,362 31,655 Non-current liabilities 1,134,890 53,519 9,932 Grants Non-current provisions Non-current financial liabilities Deferred tax liabilities Other non-current liabilities Current liabilities Current provisions Current financial liabilities Trade payables and other accounts payable 67,710 52,590 907,710 106,880 – 66,811 49,574 10,166 7,071 – 82 52,773 664 – 16,893 10,255 40 6,598 Total equity and liabilities 1,483,424 237,774 317 850 578 8,187 – 22,553 – 149 22,404 64,140 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 22 of 141 229 As a result of the aforementioned business combinations, the fair value of the acquired assets was determined, as all of these companies operate concessions, and the fair value of the con- cession-based assets was determined applying the discount at a market rate for the cash flows estimated during the time horizon of the concessions currently in force. These flows were estimat- ed internally based on the Group’s past experience, based, as applicable, on the Financial and Economic Plans of the concessions, applying the assumptions and appropriate macroeconomic variables in each case. The following table shows the amounts allocated to assets and liabilities to reflect their fair value on the takeover date: The reconciliation between the consideration transferred for each of the above business com- binations, the value of non-controlling interests recognised and the fair value of the net assets acquired are provided below: 2019 Acquisition value Cedinsa Group Shariket Tahlya Mostaganem, S.p.a Services Publics et Industries Environnement Fair value Minority interests acquired Fair value previous interest - Fair value net assets Shariket Tahlya Mostaganem, S.p.a Services Publics et Industries Environnement – 31,655 124,687 42,675 (167,362) – – (31,655) Cedinsa Group 57,955 119,450 104,318 (281,723) 31,953 Goodwill – – – 2019 Intangible assets Property, plant and equipment Non-current financial assets Total assignments to assets Non-current liabilities (deferred tax liabilities) Total assignments to liabilities 261,622 – 28,501 290,123 63,044 63,044 – – 29,232 29,232 – – – – 31,953 8,187 8,187 Total net assignments 227,079 29,232 23,766 The previously listed business combinations have contributed ordinary income and profit/(loss) to the following accompanying consolidated profit and loss statement: 2019 Revenue Other income Operating Profit/(Loss) Profit/(loss) before tax from continuing operations Shariket Tahlya Mostaganem, S.p.a Services Publics et Industries Environnement 31,357 – 15,441 11,798 11 1,768 Cedinsa Group 14,600 649 4,911 (879) 14,007 1,771 Profit attributable to the parent company Non-controlling interests (377) (362) 3,572 10,435 925 – Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 230 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 23 of 141 If the above companies had been consolidated since 1 January 2019, the ordinary income and profit/(loss) they would have contributed would be as follows: 2019 Revenue Other income Operating Profit/(Loss) Profit/(loss) before tax from continuing operations Shariket Tahlya Mostaganem, S.p.a Services Publics et Industries Environnement 31,357 – 15,441 19,027 310 2,260 Cedinsa Group 135,160 1,942 54,450 17,184 14,007 2,267 Profit attributable to the parent company Non-controlling interests 6,419 6,168 3,572 1,123 10,435 – b) Other changes in scope In July 2020, FCC Medio Ambiente Reino Unido, SL agreed to sell to Icon Infrastructure Part- ners a minority percentage of 49% of the capital of its new subsidiary Green Recovery Projects Limited, which owns five energy recovery plants (incinerators) after the corporate reorganisation undertaken by the Environment area in the United Kingdom. The transaction was completed in November for an amount of 188,403 thousand euros, which have been recorded under the heading “(Acquisition) / disposal of own securities” in the attached Statement of Cash Flows. As control has not been lost, the operation has been recorded as an equity operation and has led to the recording of 60,718 thousand euros under the heading “Minority interests” and 74,215 thousand euros in reserves, as a result of the difference between the price of sale and the value of the minority interests registered. Additionally, the valuation adjustments have increased by 55,300 thousand euros, as the proportional part has been attributed to minority interests of the aforementioned adjustments prior to the sale (Note 18). During April 2019, FCC Aqualia, S.A. acquired a 49% interest in the subsidiary AquaJerez, S.L., in which it already held a 51% interest, for the sum of 55,557 thousand euros, 28,858 thousand euros as a payment for shares and 26,699 thousand euros as a payment for participatory loans held by the seller. As this transaction involved non-controlling interests, the difference between the acquisition price and the value of the net assets acquired was recognised directly against equity, entailing a decrease of 17,311 thousand euros in reserves in the Group’s consolidated financial statements (Note 18), having recognised the cash outflow under the heading “Proceeds from/ (payments on) equity instruments” for the part corresponding to the shares and under the heading “Proceeds from/(payments on) financial liabilities” for the part corresponding to the participatory loans acquired from the accompanying Statement of Cash Flows. 6. Distribution of profit Fomento de Construcciones y Contratas, S.A. distributed a flexible dividend (scrip dividend) dur- ing financial years 2020 and 2019, which led to a cash outflow of 12,436 thousand euros (9,566 thousand euros in financial year 2019) and the delivery of 16,841,792 shares (13,439,320 shares in fiscal year 2019) (Note 18). Additionally, certain subsidiaries with minority partners have distrib- uted dividends. The following table shows the dividends paid to its shareholders by the Group companies as of 31 December 2020 and 2019: Shareholders of Fomento de Construcciones y Contratas, S.A. Other non-controlling shareholders of other companies 2020 12,436 24,207 36,643 2019 9,566 62,023 71,589 The decrease in “Other minority shareholders of the rest of the companies” is mainly attributable to the company FCC Aqualia, S.A. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 24 of 141 7. Intangible assets a) Concessions The changes in this heading of the consolidated balance sheet in 2020 and 2019 were as follows: 231 The net breakdown of intangible assets at 31 December 2020 and 2019 is as follows: Cost Accumulated amortisation Impairment Net Value Balance at 31/12/18 2020 Concessions (Note 11) 2,549,048 (1,115,658) (55,230) 1,378,160 Goodwill 1,854,133 – (847,118) 1,007,015 Other intangible assets 360,060 (292,218) (15,158) 52,684 4,763,241 (1,407,876) (917,506) 2,437,859 2019 Concessions (Note 11) 3,680,629 (1,249,755) (56,254) 2,374,620 Goodwill 1,893,895 – (870,384) 1,023,511 Other intangible assets 359,776 (285,106) (14,403) 60,267 Additions or allocations Disposals, derecognitions or reductions Translation differences Change in scope, transfers and other changes Balance at 31/12/19 Additions or allocations Disposals, derecognitions or reductions Translation differences Change in scope, transfers and other changes Concessions 2,249,398 34,255 (8,614) 22,806 Accumulated Depreciation Impairment (902,183) (100,204) 7,216 (1,309) (58,411) – 1,080 – 1,077 1,382,784 (253,275) 3,680,629 (1,249,755) (56,254) 106,578 (29,368) (61,806) (137,591) 6,901 7,219 (1,146,985) 257,568 (97) 1,121 – – 5,934,300 (1,534,861) (941,041) 3,458,398 Balance at 31/12/20 2,549,048 (1,115,658) (55,230) This heading includes the intangible assets corresponding to the service concession arrange- ments (Note 11). The most significant entries in the 2020 financial year correspond, within the Environmental Ser- vices segment, to the ongoing projects carried out by the company Ecoparque Mancomunidad del Este SA for an amount of 52,226 thousand euros (17,215 thousand euros in the 2019 financial year) and the company FCC Environmental Services Texas Llc. for an amount of 21,608 thousand euros and, within the Integrated Water Management segment, to the company Aqualia Latino- américa, SA for an amount of 13,584 thousand euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 25 of 141 232 The “changes in the scope, transfers and other movements” in the service concession agree- ments for fiscal year 2020 include a decrease due to the transfer to assets held for sale by the Cedinsa subgroup (Note 4) for the amount of 1,308,452 thousand euros gross and 291,847 thousand of euros of accumulated depreciation, and an increase due to the acquisition of the company Qatarat Saqia Desalination Company Ltd. for an amount of 76,514 thousand euros gross and 22,608 thousand euros of accumulated depreciation (Notes 5 and 12). The movements of goodwill in the attached consolidated balance sheet in 2020 and 2019 were as follows: Balance at 31/12/18 1,078,490 Exchange differences, change in consolidation scope and others: FCC Environment Group (UK) 14,993 39 15,032 The “changes in scope, transfers and other movements” in 2019 include mainly 1,308,395 thou- sand euros gross and 250,000 thousand euros of accumulated amortisation as a result of the takeover of the Cedinsa subgroup (Notes 5 and 12). Rest Impairment losses: The inputs and derecognitions leading to cash movements are recorded in the accompanying statement of cash flows as “Payments due to investments” and “Collection due to divestments” of “Property, plant and equipment, intangible assets and real estate investments”, respectively. In 2020, no interest was capitalised (381 thousand euros in 2019) and total capitalised interest amounted to 43,848 thousand euros (43,540 thousand euros in 2019). b) Goodwill The breakdown of goodwill in the accompanying consolidated balance sheet at 31 December 2020 and 2019 was as follows: Cementos Portland Valderrivas, S.A. FCC Environment Group (UK) A,S,A, Group FCC Aqualia, S.A, FCC Ámbito, S.A, FCC Industrial e Infraestructuras Energéticas, S.L.U. Canteras de Aláiz, S.A. Cementos Alfa, S.A Rest 2020 439,386 290,290 136,793 82,764 23,311 21,499 4,332 3,712 4,928 2019 439,386 306,745 136,793 82,764 23,311 21,499 4,332 3,712 4,969 1,007,015 1,023,511 Grupo Cementos Portland Valderrivas (note 27) (70,011) (70,011) Balance at 31/12/19 Exchange differences, change in consolidation scope and others: FCC Environment Group (UK) Rest Balance at 31/12/20 (16,455) (41) 1,023,511 (16,496) 1,007,015 The heading “Changes in the scope, translation differences and other movements” during 2020 addresses the effect of the depreciation of the pound sterling against the euro (appreciation of the pound in 2019). The impairment analysis policies applied by the Group to its goodwill are described in Note 3.b). In accordance with the methods used and in accordance with the estimates, projections and valuations available to the Group’s Management, the existence of additional losses in value is not apparent. The most significant aspects of the estimates made and the sensitivity analysis in the impairment tests of goodwill were as follows. It should be noted that in the preparation of the following impairment tests, cash flows were esti- mated based on the best estimates of the Group’s Management and that upward or downward changes in the key assumptions contemplated, both in the discount rate and in the operating margins, among other factors, may affect the recoverable amount of the cash generating unit considered. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 233 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 26 of 141 Cementos Portland Valderrivas The goodwill consists of two separately identifiable goodwills recorded in the individual books of Cementos Portland Valderrivas, S.A.: – One originating from the merger by absorption of the parent of the Corporación Uniland group and some of its subsidiaries for an amount of 325,881 thousand euros, – 113,505 thousand euros corresponding to the cash generating unit (CGU) constituted by the Alcalá de Guadaira factory. The main hypotheses used in each of the impairment tests of the two previous CGUs are de- scribed below: 1) Corporación Uniland The stake in Uniland was acquired in several stages between 2006 and 2013, up to 100% of the stake for a total amount of 1,898,973 thousand euros. In 2011 there was an impairment of goodwill associated with previous purchases for the amount of 239,026 thousand euros, as a result of the strong contraction of the market in the cement sector, which was not expected to recover in the short or medium term. In 2016 there was an additional impairment of 187,191 thousand euros and in 2019 the impairment test was updated considering the slower growth rate in cement consumption derived largely from the slowdown in the real estate market, as a result of which future forecasts were adjusted to an evolution of demand that included uncertainty scenarios, with an additional impairment booked of 70,011 thousand euros. During this fiscal year, the Group has proceeded to re-evaluate its analyses considering the cur- rent circumstances of the markets and the situation derived from the global pandemic, which inevitably impact the projected cash flows. In any case, although the good performance of the CGU’s activity in the year should be considered and, in accordance with the forecasts, in particu- lar, growth in the second half of the year was somewhat slower, but with EBITDA with growth in line with the estimates used in the impairment test carried out in 2019. As a result of the analysis carried out, in 2020 there was no impairment. The key hypotheses used in this test are detailed below. Firstly, based on the historical information of the last 50 years in the cement industry, it is consid- ered that the term that best reflects the life cycle of the cement market is ten years, a period used in the projections made. Since Uniland operates in two clearly different geographic markets, various pre-tax discount rates have been used to assess flows from different countries. A pre-tax discount rate of 7.12% has been used to evaluate goodwill from flows in Spain, and 15.93% for flows from Tunisia. It should be noted that the flows for Spain represent a substantial part of the total contemplated in the test. The Group bases its cash flow forecasts on historical data and on both internal future forecasts and future forecasts by external sectoral bodies. In the short term, the income forecasts consid- ered in the impairment test are made according to estimates of cement consumption by Ofice- men, the employer association of the sector, and internal estimates. For the medium and long term, the projections are prepared according to external projections of macroeconomic data on inflation and GDP (Bank of Spain, Funcas, Statista etc.) and historical trends. According to information from Oficemen, the employer’s association of the cement sector in Spain, cement consumption in 2020 closed at 13.29 million tons, 9.7% less than in 2019, impact- ed by the COVID-19 crisis. The sector ended the year with figures still above those experienced during the worst years of the crisis, between 2013 and 2017. On the other hand, total exports (cement and clinker) have reached 5.99 million tons, which represents a decrease of 3.4% com- pared to the previous year. Despite a negative closure, consumption in Spain has been better than expected at the beginning of the pandemic. For 2021, the management association estimates that the slowdown will continue, moving in a range from -3% to 3%. In this context, in 2020 the Company updated the flows of its “Business Plan” for the period 2021- 2030 that serves as the basis for calculating the impairment tests, considering the uncertainties derived from Covid-19, which has inevitably meant a decrease in the flows forecast for the first projected years (in line with Oficemen’s forecasts detailed above), for a subsequent recovery in the last years estimated. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 234 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 27 of 141 For the Spanish market, the residual value assumed in the flow projections is calculated based on consumption considered sustainable, which is around 20-25 million tons, with no growth in perpetuity. The main inputs used for the determination of this consumption range are consistent with historical and expected series of relative weights of public works on GDP in Spain, as well as with the forecasts of the number of approvals for new housing that have been considered as standardised levels according to different sector reports. The cyclical nature of the sector is con- sidered in this value, assuming that this level of long-term sustainable consumption would be the average of one cycle, in which the years of higher consumption would be offset by those with a lower consumption. The sustainable residual value considered is the average of the values of the last five years of the projections. For the Tunisian market, in the year 2021 it is estimated that the national cement market will be at 6.1 million tons, recovering part of the fall that it experienced in 2020 as a result of the Covid-19 crisis, and it now stands at -10.2% compared to 2019. The strategy focuses on volume growth in the domestic market and the consolidation of the price increases made in recent years. The costs are estimated based on the expected inflation, the performance expectations of the price of fuels and the electricity market, and the strategy of increasing the energy recovery of alternative fuels. The change of the working capital contemplated in the analysis for each year remains stable in its calculation mode, being linked to the general performance of the unit analysed. The performance of investments is also linked to general developments in the activity analysed, with higher levels of investments supported by the improvement of flows in the projected years. The value of the investments reflected in the perpetuity rate shows the value that the company estimates should be the objective of investments to be made in order to maintain the productive activity at the required sustainable level. The main variables used in the test are the following: − Discount period of joint flows for Uniland Spain and Tunisia: 2021 to 2030 − Discount rate before taxes: 7.12% (Spain) and 15.93% (Tunisia) − Growth in perpetuity: 0% − Residual value on the recoverable amount of the CGU as a whole: 49.3% − Excess of fair value over book value: 20,627 thousand euros − Compound annual growth rate Cement Market Spain (without CO2), terminal value for fiscal year 2021: • National market turnover: 6.3% • Export market turnover: -6.8% • Gross Operating Profit: 9.4% − Compound annual growth rate (in dinars) Tunisia Cement Market, terminal value over fiscal year 2020: • National market turnover: 7.9% • Export market turnover: 3.9% • Gross Operating Profit: 7.4% The result of this test is sensitive to changes in the key hypotheses; a 10% increase in projected flows would result in an excess over the value of approximately 91,457 thousand euros and a 10% decrease would result in an additional impairment of around 50,202 thousand euros. Like- wise, a 10% increase in the discount rate considered would mean an additional impairment of around 51,103 thousand euros and a 10% decrease in the excess of the value of approximately 108,376 thousand euros. However, the Management of the Parent Company considers that development of the Group and its businesses in recent periods allow them to conclude that the scales of achievement of the objectives contemplated in the test are within a reasonable degree of sensitivity that enable them not to identify any impairment in the 2020 financial year. 2) Alcalá de Guadaíra The cement demand forecasts and the sector expectations, at the national level, described above for the Corporación Uniland goodwill are equally applicable to Cementos Atlántico. The Alcalá de Guadaíra factory continues to benefit from its geographical location to offset the decrease in the volume of the national market with a greater volume of exports. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 235 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 28 of 141 The main variables used in the test are the following: − Discount of flows period: 2021 to 2030 − Discount rate before taxes: 7.04% − Growth in perpetuity: 0% − Residual value on recoverable amount of the CGU: 62% − Excess of fair value over book value: 40,336 thousand euros − Compound annual growth rate (without CO2), terminal value over fiscal year 2020: • Total revenue: 4.46% • Gross Operating Profit: 15.1% The Cementos Atlántico goodwill test can take a pre-tax discount rate of up to approximately 11.83%. Meanwhile, it would support an annual drop in cash flows of approximately 33% com- pared to projected flows. Based on the foregoing, the company considers that the excess of the impairment test allows deviations significant enough to not give rise to any value impairments of CGU assets. FCC Environment group (UK) before WRG group The FCC Group acquired 100% of the stake in the FCC Environment (UK) group in 2006 for an investment cost of 1,693,532 thousand euros in 2006. From the moment of its acquisition, the Group considers the FCC Environment (UK) subgroup as a single cash generating unit (CGU), with the goodwill recorded in the balance sheet associated exclusively with such CGU. It should be noted that in 2012 there was an impairment of goodwill amounting to 190,229 thou- sand euros as a result of the decrease in cash flows of its activities due to changes in its calendar and amount. On the other hand, in 2013 there was an additional impairment of goodwill amount- ing to 236,345 thousand euros, mainly as a result of the decrease in the volume of tons treated in landfills. Finally, in 2014 there was an impairment of the items of property, plant and equipment affected by landfill activity amounting to 649,681 thousand euros. After the writedowns made and the changes derived from the profits/(losses) and equity move- ments of FCC Environment (UK), the consolidated book value at 31 December 2020 amounts to 697,725 thousand euros (557,040 thousand euros at 31 December 2019). After the restructuring of the activity carried out in previous years, FCC Environment (UK) has reached a path of continued profitability, earning steady returns both in 2019 and in 2020. It should be noted that during the 2020 financial year, as a consequence of the internal reorgan- isation and the creation of the new subsidiary Green Recovery Projects Limited, prior to the sale of 49% (Note 5), various companies were transferred to the latter, mainly the companies that managed the Allington and Eastcroft incinerators, and so the composition of the CGU has varied compared to the previous year. The cash flows considered in the impairment test take into account the current status of the CGU, making the best estimates of future flows based on the mix of activities expected in the future. The relative weight of the different activities will vary as other waste treatment alternatives are promot- ed, mainly recycling and recovery, which is currently being carried out by the subgroup, offsetting the progressive abandonment of landfill activity. The main hypotheses used contemplate an increase in income in a range of approximately 5-15% during the 2021-2024 period, highlighting a growth of 12.3% in 2021 in expectation of a recovery of pre-Covid 19 volumes, and 15.2% in 2024, the latter mainly as a consequence of the start of the contract for the Lostock energy recovery plant, currently under construction, which is now fully operational. The gross operating margin has evolved from 17.4% in 2021 to around 12.5% in the last three years, considering more conservative market hypotheses in recent periods, as they are more difficult to predict. The pre-tax discount rate used was 7.02% with a 10-year time line used from estimates given the structural characteristics of the business and the long useful life of the assets. A growth rate of 1% has been considered in the calculation of perpetual income, which represents 63.5% of the total recoverable value. The result of the test renders an excess of the recoverable value over the book value of the cash generating unit of 428,722 thousand euros, supporting an increase of 1,200 basis points without incurring impairment. A 10% decrease in the current value of cash flows would reduce the excess to 373,065 thousand euros. If a zero growth rate had been considered, the aforementioned excess would have decreased to 378,332 thousand euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 29 of 141 236 Pursuant to Note 3.e) of these financial statements, the general criterion is not to consider per- petual income growth rates, but in the case of the FCC Environment (UK) subgroup, given the transformation in the mix of activities, it was considered that a growth rate of 1% more faithfully reflects the reality of the business within the framework of the change that is taking place in the United Kingdom in waste treatment activity, with a drastic drop in waste management in landfills and an increase in alternative waste treatment activities that are expected to be sustained over an extended period of time. Also, given the slack time shown in the impairment test, and given that the main assets and liabil- ities of the business are referenced in the same currency (pound sterling), no impairment should arise as a result of the potential UK exit process from the European Union, Brexit (Note 30.h). c) Other intangible assets The changes in this heading of the consolidated balance sheet in 2020 and 2019 were as follows: Other intangible assets Accumulated Depreciation Impairment Net value Balance at 31/12/18 357,148 (283,659) (14,403) 59,086 Additions or allocations Disposals, derecognitions or reductions Translation differences Change in scope, transfers and other changes 20,970 (19,677) 459 876 (18,173) 19,440 (409) (2,305) (2) 2,522 – (2,520) Balance at 31/12/19 359,776 (285,106) (14,403) Additions or allocations Disposals, derecognitions or reductions Translation differences Change in scope, transfers and other changes 12,363 (13,188) (1,767) 2,876 (20,021) 10,544 1,085 1,280 (756) – 1 – 2,795 2,285 50 (3,949) 60,267 (8,414) (2,644) (681) 4,156 Balance at 31/12/20 360,060 (292,218) (15,158) 52,684 This heading mainly includes: – amounts paid to public or private entities as a fee for the award of contracts that do not have the classification of concessions, within the scope of IFRIC12 “Service concession arrange- ments”, mainly from the Environmental Services area, – the amounts recorded in the initial recognition of certain business combinations representative of concepts such as customer portfolios and contracts in force at the time of purchase, – quarry mining rights for the Cement area and – software applications. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 237 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 30 of 141 8. Property, plant and equipment The net detail of property, plant and equipment at 31 December 2020 and 2019 is as follows: Cost Accumulated amortisation Impairment Net value Cost Accumulated amortisation Impairment Net value 2020 2019 Land and buildings 1,616,955 (534,345) (65,762) 1,016,848 Land and buildings 1,607,091 (483,755) (66,835) 1,056,501 Land and natural resources 683,055 (163,737) Buildings for own use 933,900 (370,608) (50,816) (14,946) 468,502 548,346 Land and natural resources 677,323 (154,057) Buildings for own use 929,768 (329,698) (50,552) (16,283) 472,714 583,787 Plant and other items of property, plant and equipment 7,795,156 (5,396,157) (605,648) 1,793,351 Plant and other items of property, plant and equipment 7,804,524 (5,358,461) (638,672) 1,807,391 Plant 4,721,372 (3,241,318) (568,532) 911,522 Plant 4,844,195 (3,251,438) (621,335) 971,422 Machinery and vehicles 2,215,724 (1,628,062) (33,720) 553,942 Machinery and vehicles 2,176,843 (1,609,165) (14,276) 553,402 In-progress tangible assets and advances 109,411 – – 109,411 In-progress tangible assets and advances 87,257 – – 87,257 Other PP&E 748,649 (526,777) (3,396) 218,476 Other PP&E 696,229 (497,858) (3,061) 195,310 9,412,111 (5,930,502) (671,410) 2,810,199 9,411,615 (5,842,216) (705,507) 2,863,892 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 31 of 141 Los movimientos de las diversas partidas del inmovilizado habidas en los ejercicios 2020 y 2019 han sido los siguientes: 238 Land and natural resources Buildings for own use Land and buildings Technical Facilities Advances and fixed and non-current assets under construction Machinery and vehicles Plant and other items of property, plant and equipment Other PP&E Accumulated Depreciation Impairment 646,878 692,369 1,339,247 4,554,048 2,082,609 63,949 685,927 7,386,533 (5,637,721) (664,041) Balance at 31/12/18 Additions or allocations Disposals, derecognitions or reductions 3,735 (913) 27,860 (18,779) First application IFRS16 (Note 2,a) 21,139 346,929 Translation differences Change in scope, transfers and other changes 1,716 4,768 10,646 (129,257) (124,489) 31,595 (19,692) 368,068 12,362 19,848 (18,976) 6,421 130,209 152,645 105,078 69,966 (135,687) 48,619 18,873 57,351 (78) 10,630 (746) (56,464) 59,406 (82,789) – 138 33,547 254,298 (342,435) (10,982) (237,530) 240,916 65,670 148,474 187,079 – (94,054) (8,922) 14 – (29,049) (1,449) Balance at 31/12/19 Additions or allocations Disposals, derecognitions or reductions Translation differences Change in scope, transfers and other changes 677,323 929,768 1,607,091 4,844,195 2,176,843 87,257 696,229 7,804,524 (5,842,216) (705,507) 10,161 (868) (2,730) (831) 33,457 (23,020) (9,242) 2,937 43,618 (23,888) (11,972) 2,106 37,974 (26,960) (171,391) 37,554 166,278 130,049 (131,939) (33,076) (32,022) (2,258) 36,564 (72,561) 68,607 (35,099) (3,628) 22,540 402,908 (330,085) (227,074) (209,299) 24,097 102,289 123,588 15,922 (7,170) 12,377 32,679 (3,789) Balance at 31/12/20 683,055 933,900 1,616,955 4,721,372 2,215,724 109,411 748,649 7,795,156 (5,930,502) (671,410) As significant “Inputs” for the year 2020, it is worth highlighting the investments made for the development of the Environmental Services activity contracts, mainly in different companies that carry out their activity in the United States for a total amount of 110,602 thousand euros, in FCC Medioambiente, SA (Spain) for the amount of 76,877 thousand euros (86,459 thousand euros in the 2019 financial year), in the FCC Environment Group (UK) for the amount of 28,932 thousand euros (35,821 thousand euros in the 2019 financial year) and in FCC Environment CEE (Central Europe) for an amount of 40,249 thousand euros (38,820 thousand euros in the 2019 financial year), as well as those carried out in Integral Water Management activity, mainly in the company Servicios Hídricos Agricultura y Ciudad, SLU (Spain) for the amount of 55,984 euros and in Sm- Vak (Czech Republic) for the amount of 25,266 thousand euros (25,940 thousand euros in the 2019 financial year). “Disposals, derecognitions or reductions” include disposals and derecognition of inventory cor- responding to assets that, in general, are almost fully amortised due to having exhausted their useful life. The inputs and derecognitions that have led to a cash outflow or entry are recorded in the ac- companying statement of cash flows as “Payments due to investments” and “Collection due to divestments” of “Property, plant and equipment, intangible assets and real estate investments”, respectively. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 239 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 32 of 141 No interest was capitalised in 2020 and 2019 and the total interest capitalised at source as of 31 December 2020 amounts to 29,076 thousand euros (30,363 thousand euros in 2019). Restrictions on title to assets As at 31 December 2020, in property, plant and equipment, 11,565 thousand euros (9,322 thou- sand euros as at 31 December 2019) has been charged as income from capital grants. The Group companies take out the insurance policies they consider necessary to cover the possi- ble risks to which their property, plant and equipment is subject. At year-end, the Parent Company estimates that there is no hedging deficit related to said risks. The gross amount of fully depreciated property, plant and equipment used in production due to being in a good state of use totals 3,145,430 thousand euros at 31 December 2020 (3,123,585 thousand euros at 31 December 2019). The property, plant and equipment net of depreciation on the attached consolidated balance sheet located outside the Spanish territory amount to 1,383,491 thousand euros at 31 December 2020 (1,345,898 thousand euros at 31 December 2019). Of the total property, plant and equipment on the consolidated balance sheet, at 31 December 2020, 804,584 thousand euros (934,164 thousand euros at 31 December 2019) are subject to ownership restrictions according to the following detail: Cost Accumulated amortisation Impairment Net value 2020 Buildings, plants and equipment 1,443,430 Other property, plant and equipment 163,104 (631,338) (106,795) (3,762) _ 808,330 56,309 1,606,534 (738,133) (3,762) 864,639 2019 Buildings, plants and equipment 1,437,128 Other property, plant and equipment 174,337 (573,345) (103,956) 1,611,465 (677,301) _ _ _ 863,783 70,381 934,164 The restrictions on ownership of these assets originate from the lease agreements that are ex- plained in note 10 of this Report, as well as for those assets related to the exploitation of certain concession contracts to which IFRIC 12 does not apply. “Concession agreements” (note 3.a). Purchase commitments In carrying out their activities, the Group companies have formalised acquisition commitments in property, plant and equipment that, as at 31 December 2020, amount to 4,873 thousand euros (18,963 thousand euros at 31 December 2019). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 33 of 141 9. Real estate investments 10. Leases 240 During the financial year 2020, the company FCC Inmobilien Holding GmbH sold an office build- ing and a site in Germany for 3,950 thousand euros, the net book value of which was 2,582 thousand euros at the time of the sale, generating capital gains of 1,368 thousand euros, booked under “Impairment and results from disposals of fixed assets” (Note 27). The inputs and derecognitions leading to cash movements are recorded in the accompanying statement of cash flows as “Payments due to investments” and “Collections due to divestments” of “Property, plant and equipment, intangible assets and real estate investments”, respectively. At the end of the 2020 and 2019 business years, the Group had no firm commitments to acquire or construct any real estate investments. The Group applied IFRS 16 “Leases” for the first time on 1 January 2019, with the option of ap- plying it with modified retroactive character, that is, with cumulative impact of the first application of the standard as an adjustment to the initial balance charged to reserves as at 1 January 2019. In its position as lessee, the Group has signed lease contracts for different kinds of underlying assets, mainly machinery in the Construction activity and technical facilities and constructions for its own use in all the activities that the Group develops. Contracts in previous years included those pertaining to the Group’s Central Services buildings, the lease contract for the office block in Las Tablas (Madrid), valid from 23 November 2012 and for 18 years, extendable at the option of the FCC Group in two periods of five years each, with an annual income that can be updated annually according to the CPI index. The contract signed in 2011 for the buildings located in Federico Salmón 13, Madrid and Balmes 36, Barcelona, for a minimum rental period of 30 years, extendable at the option of the Group in two periods of 5 years, each one with an annual rent that can be updated annually according to the CPI, with a purchase option in favour of Fomento de Construcciones y Contratas, SA, only exercisable at the end of the rental period for the fair value or the amount of the sale updated by the CPI, if this is higher. In general, the leases signed by the Group do not include variable payments, there are only claus- es for updating the rent in certain contracts, mainly based on inflation. In some cases, the afore- mentioned contracts present restrictions of use, the most common being those that limit the use of the underlying assets to geographical areas or their use as an office or premises for productive use. Lease contracts do not include significant residual value guarantee clauses. The Group determines the duration of the contracts by estimating the period during which the entity estimates that it will continue to use the underlying asset in accordance with its particular circumstances to cover any extensions that are reasonably expected. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 241 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 34 of 141 The carrying amount of right-of-use assets amounted to 480,544 thousand euros at 31 Decem- ber 2020 (496,774 thousand euros at 31 December 2019). Below is a detail of the book value, the additions and amortisations during the year by classes of underlying asset: tached statement of consolidated cash flows. The details for maturities of non-current liabilities for leases are shown below: Cost Accumulated amortisation Net value Additions Amortisation charge 2020 Land and buildings 414,088 (72,571) 341,517 22,501 (33,694) Land and natural resources 30,263 (5,304) 24,959 3,632 Buildings for own use 383,825 (67,267) 316,558 18,869 (2,995) (30,699) Plant and other items of property, plant and equipment 393,055 (254,028) 139,027 56,694 (33,224) Plant 5,794 (2,154) 3,640 80 Machinery and vehicles 330,174 (214,389) 115,785 48,478 Other PP&E 57,087 (37,485) 19,602 8,136 (1,180) (23,240) (8,804) 807,143 (326,599) 480,544 79,195 (66,918) The amount of lease liabilities recognised amounts to 445,086 thousand euros as of 31 De- cember 2020 (484,376 thousand euros as of 31 December 2019), of which 68,599 thousand euros (78,985 thousand euros as of 31 December 2019) are classified as current in the attached consolidated balance sheet, due to their maturity within the next twelve months (Note 20). Lease liabilities generated an interest charge of 12,645 thousand euros at 31 December 2020 (13,016 thousand euros at 31 December 2019). Lease payments during the year stood at 96,658 thou- sand euros at 31 December 2020 (89,130 thousand euros at 31 December 2019), posted under “Proceeds and (payments) from financial liability instruments” and “Interest payments” in the at- 2022 2023 2024 2025 2026 and beyond Total 2020 Liabilities for non-current leases 45,955 25,580 28,470 24,639 251,843 376,487 Certain contracts are excluded from the application of the aforementioned IFRS 16, mainly either because they are low value assets or because their duration is less than twelve months (note 3.f) and is recorded as an expense under the heading “Other operating income/(losses)” in the accompanying consolidated profit and loss statement, with the amount during the year being as follows: Low value assets Leases with term less than 12 months 2020 2,115 73,677 75,792 In the lessor position, the Group recognises operating income amounting to 3,081 thousand eu- ros (9,212 thousand euros at 31 December 2019). The decrease between the two years is mainly due to the decrease of 8,636 thousand euros in the income obtained from rental of machinery by FCC Construcción América in Central America. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 35 of 141 11. Service concession arrangements Intangible assets (Note 7) Financial assets (Note 14) Joint concessionary businesses Associated concessionary companies Total investment 242 This Note presents an overview of all the Group’s investments in concession businesses, which are recognised in various headings under “Assets” in the accompanying consolidated balance sheet. 2020 Water services 1,710,822 223,303 The following table presents the total amount of the assets held under service concession ar- rangements by the Group companies, which are recognised under “Intangible assets”, “Non-cur- rent financial assets”, “Other current financial assets” and “Investments accounted for using the equity method” (for both joint ventures and associates) in the accompanying consolidated bal- ance sheet at 31 December 2020 and 2019. Motorways and tunnels Environment and Others TOTAL Amortisation Impairment 2019 378,515 0 27,454 8,204 46,343 2,007,922 0 386,719 459,711 227,216 43,222 28,801 758,950 2,549,048 450,519 78,880 75,144 3,153,591 (1,115,658) (55,230) – – – – – – (1,115,658) (55,230) 1,378,160 450,519 78,880 75,144 1,982,703 Water services 1,551,666 189,302 1,717,215 126,651 29,157 7,291 54,228 1,824,353 – 1,851,157 Motorways and tunnels Environment and Others TOTAL Amortisation Impairment 411,748 282,292 66,449 76,062 836,551 3,680,629 598,245 102,897 130,290 4,512,061 (1,249,755) (56,254) – – – – – – (1,249,755) (56,254) 2,374,620 598,245 102,897 130,290 3,206,052 The table above shows that in the year 2020 the decrease in the columns of “Intangible assets” of 1,016,606 thousand euros, in “Financial assets” of 131,017 thousand euros and in “Associated companies concessionaire” of 71,334 thousand euros can be largely explained by the transfer to assets held for sale by the subgroup Cedinsa, Concessió Estacions Aeroport L9, SA and Urbs Iudex et Causidicus, SA. (note 4). Conversely, “Intangible assets” increased by 23,984 thousand euros and “Financial assets” by 55,534 thousand euros, attributable to Aquos el Realito, SA de CV, the operator of a water treatment plant in San Luis de Potosí, now fully consolidated (Note 5). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 36 of 141 Below are details of the main concessions included in the previous categories with their main characteristics: Water services 774.358 223.303 Net book value as at 31 December 2020 Intangible assets Financial assets Granting entity Collection mechanism 243 Jerez de la Frontera (Cádiz - Spain) Jeddah desalination plant (Saudi Arabia) Caltanissetta (Italy) Santander (Cantabria, Spain) Lleida (Spain) Adeje (Tenerife, Spain) Badajoz (Spain) Acueducto Realito (Mexico) Oviedo (Asturias, Spain) Mostaganem Desalination Plant (Algeria) Guaymas Desalination Plant (Mexico) Other contracts Motorways and tunnels Coatzacoalcos submerged tunnel (Mexico) Conquense motorway (Spain) Environment and others Buckinghamshire plant (United Kingdom) Loeches Plant (Alcalá de Henares, Spain) Campello Plant (Alicante, Spain) Edinburgh Plant (United Kingdom) Granada plant (Granada, Spain) Houston recycling plant (United States) Gipuzkoa II plant RE3 plant (United Kingdom) Manises Plant (Valencia, Spain) Wrexham I plant (United Kingdom) Wrexham II plant (United Kingdom) Other contracts FCC Group Total 70,483 46,432 43,596 35,514 34,828 33,684 25,241 23,984 21,143 – – 439,453 252,851 197,735 55,116 350,951 140,283 78,336 35,147 22,314 22,167 20,086 – – – – – 32,618 1,378,160 142,275 19,083 6,411 – – 227,216 8,830 – – – – – – – – – City Council of Jerez de la Frontera. User based on consumption General Authority of Civil Aviation (Saudi Arabia) User based on consumption Consorzio Ambito Territoriale Ottimale Santander City Council Lleida City Council Adeje City Council Badajoz City Council User based on consumption User based on consumption User based on consumption User based on consumption User based on consumption 55,534 State Water Commission (Mexico) Mixed model – Oviedo City Council Algerian Energie Company S.p.a. State Water Commission User based on consumption Cubic meters with guaranteed minimum Cubic meters with guaranteed minimum Government of the State of Veracruz Ministry for Economic Development Direct toll paid by the user Shadow toll Buckinghamshire County Council Commonwealth of the East Fixed amount plus variable amount per ton According to tons treated Plan Zonal XV Consortium of the Community of Valencia According to tons treated 90,969 City of Edinburgh and Midlothian Council Variable per ton with guaranteed minimum Provincial council of Granada City of Houston Gipuzkoa Waste Consortium According to tons treated Fixed amount plus variable amount per ton Variable per ton with guaranteed minimum Councils of Reading, Bracknell Forest and Workingham Fixed amount plus variable amount per ton Metropolitan Entity for Waste Treatment Fixed amount plus variable amount per ton Wrexham County Borough Council Wrexham County Borough Council Fixed amount plus variable amount per ton Fixed amount plus variable amount per ton – – 29,376 28,947 21,624 20,920 17,571 8,979 450,519 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 244 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 37 of 141 Net book value as at 31 December 2019 Intangible assets Financial assets Granting entity Collection mechanism Water services Jerez de la Frontera (Cádiz - Spain) Caltanissetta (Italy) Adeje (Tenerife, Spain) Santander (Cantabria, Spain) Lleida (Spain) Badajoz (Spain) Oviedo (Asturias, Spain) Vigo (Pontevedra, Spain) Mostaganem Desalination Plant (Algeria) Guaymas Desalination Plant (Mexico) Other contracts Motorways and tunnels Cedinsa Eix Transversal (Spain) Cedinsa C17 (Spain) Cedinsa Eix Llobregat (Spain) Submerged tunnel of Coatzacoalcos (Mexico) Cedinsa C35 (Spain) Conquense motorway (Spain) Other Buckinghamshire plant (United Kingdom) Campello Plant (Alicante, Spain) Loeches Plant (Alcalá de Henares, Spain) Edinburgh Plant (United Kingdom) Houston recycling plant (United States) Granada plant (Granada, Spain) RE3 plant (United Kingdom) Gipuzkoa II plant Manises Plant (Valencia, Spain) Wrexham I plant (United Kingdom) Wrexham II plant (United Kingdom) Other contracts FCC Group Total 713,116 74,569 42,003 40,157 38,979 36,876 26,304 21,966 7,567 – – 424,695 1,344,346 456,084 283,246 243,446 230,731 68,028 62,811 317,158 154,147 29,762 26,110 24,589 24,113 23,294 – – – – – 35,143 2,374,620 189,302 – – – – – – – – 176,392 12,910 – 126,651 126,651 – – – – – 282,292 9,359 – – 140,812 – – 31,660 30,653 22,870 22,735 18,981 5,222 598,245 City Council of Jerez de la Frontera Consorzio Ambito Territoriale Ottimale Adeje City Council Santander City Council Lleida City Council Badajoz City Council Oviedo City Council Vigo City Council Algerian Energie Company S.p.a. State Water Commission Generalitat de Catalunya Generalitat de Catalunya Generalitat de Catalunya Government of the State of Veracruz Generalitat de Catalunya Ministry for Economic Development User based on consumption User based on consumption User based on consumption User based on consumption User based on consumption User based on consumption User based on consumption User based on consumption Cubic meters with guaranteed minimum Cubic meters with guaranteed minimum Shadow toll with guaranteed minimum Shadow toll Shadow toll Direct toll paid by the user Shadow toll Shadow toll Buckinghamshire County Council Plan Zonal XV Consortium of the Community of Valencia Commonwealth of the East City of Edinburgh and Midlothian Council City of Houston Provincial council of Granada Councils of Reading, Bracknell Forest and Workingham Gipuzkoa Waste Consortium Metropolitan Entity for Waste Treatment Wrexham County Borough Council Wrexham County Borough Council Fixed amount plus variable amount per ton According to tons treated According to tons treated Variable per ton with guaranteed minimum Fixed amount plus variable amount per ton According to tons treated Fixed amount plus variable amount per ton Variable per ton with guaranteed minimum Fixed amount plus variable amount per ton Fixed amount plus variable amount per ton Fixed amount plus variable amount per ton Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 38 of 141 245 The water services business is characterised by having a very high number of contracts, and the most significant are listed in the preceding table. The contracts primarily cover integral water cycles from capture, transport, treatment and distribution to urban centres through the use of dis- tribution networks and a complex water treatment facilities to make the water potable, including the capture and purification of wastewater. Covers the construction and maintenance of water and sewerage networks and desalinisation, treatment and purification plants. Generally, billing is carried out based on the use of the service by the subscribers, so that, in most cases, cash flows depend on the consumption of water that, in general, has shown to be constant over time. However, the contracts normally include regular rate review clauses to ensure the recoverability of the investment made by the concessionaire. These clauses establish the future rates based on consumption in previous periods and other variables such as inflation. Concession companies build or receive the right to use distribution and sewerage networks in order to carry out their businesses, in addition to the complex facilities necessary to treat and purify drinking water. The concession terms for these types of infrastructures cover different periods up to a maximum of 75 years and then the facilities revert to the granting entity at the end of the concession without any further compensation being received. Most proceeds received from practically all of the contracts that are fully consolidated depends on the use of the service, therefore meaning that the amounts are variable, demand risk is borne by the concession company and the contracts are recognised as intangible assets. However, in exceptional cases, mainly in the case of desalination plants, the charge is received based on the cubic meters actually desalted, guaranteeing the grantor a minimum insured level regardless of volume, so these guaranteed amounts are classified as financial assets as they hedge the fair value of construction services. The main activity of the concessions belonging to the motorway and tunnel activity include the management, promotion, development and exploitation of land transport infrastructure, mainly motorways and toll tunnels. It includes both the construction and the subsequent conservation and maintenance of the aforementioned infrastructures over a long concession period that can range from 25 to 75 years. Billing is usually based on traffic intensity, both by charging tolls to vehicles directly, and by shadow toll, so cash flows are variable in relation to the aforementioned traffic intensity, generally observing an increasing trend as the concession period progresses, which is why, when the concessionaire bears the demand risk, they are recorded as intangible assets. The contracts generally include both the construction or improvement of the infrastruc- ture for which the concessionaire receives a right of use, as well as the provision of maintenance services, reversing the infrastructure at the end of the useful life to the grantor, generally without receiving compensation. In certain cases there are offsetting mechanisms, such as an extension of the concession period or an increase in the toll price, so as to ensure a minimum return to the concessionaire. “Miscellaneous” activity mainly includes contracts related to the construction, operation and maintenance of waste treatment facilities, in Spain, the United Kingdom and the United States. The contracts incorporate price revision clauses based on different variables, such as inflation, energy costs or salary costs. Contracts were analysed to classify concessions as intangible or financial assets to determine which part of the contract bears the demand risk. Those contracts in which the billing is determined solely on the basis of the fixed charge and a variable amount depending on the tons treated, given that the latter is residual and the cost of construction ser- vices is substantially offset by the fixed charge, the concession as a whole has been considered as a financial asset, except in the case of the Buckinghamshire and Edinburgh plants (both in the United Kingdom), in which the intangible component is significant and is therefore recorded as mixed models. Likewise, it should be noted that in accordance with the concession contracts, the concession- aires in which the Group is an investee are obliged to acquire or build items of property, plant and equipment for the amount of 91,292 thousand euros as of 31 December 2020 (137,216 thou- sand euros as of 31 December 2019). Finally, in 2020 the recoverable value of the main concession assets was reappraised. As a result of the analysis carried out, there was no need to record impairment since a substantial part of the concession assets are related to the water and environment businesses, activities that in general have been considered “essential” in the different jurisdictions, proving particularly resilient to the impact of the pandemic. Additionally, a large portion of the portfolio of concession assets corresponds to contracts not subject to demand risk, which significantly reduces the risk of im- pairment. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 39 of 141 246 12. Investments accounted for using the equity method This heading includes the value of investments in companies accounted for under the equity method, as well as non-current loans granted to them, as indicated in Note 2.b), which applies to both joint ventures and associates, the breakdown of which is as follows: Joint ventures Investment value Loans Associates Investment value Loans 2020 181,937 40,842 141,095 540,849 382,126 158,723 722,786 2019 185,432 38,141 147,291 556,092 390,841 165,251 741,524 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 40 of 141 a) Joint ventures The breakdown of this heading by company is presented in Annex II of these financial statements, which lists the joint ventures. The transactions for 2020 and 2019 by items are as follows: Balance at Results for the year 31.12.2019 (Note 27.g) Distributed Dividends Changes in the fair value of financial instruments allocated to reserves Acquisitions Conversion differences and other movements Orasqualia for the Development of the Waste Treatment Plant S.A.E. 1 1,735 1,143 Sociedad Concesionaria Tranvía de Murcia, S.A. Mercia Waste Management Ltd. Zabalgarbi, S.A. Atlas Gestión Medioambiental, S.A. Empresa Municipal de Aguas de Benalmádena, S.A. Ibisan Sociedad Concesionaria, S.A. Constructora Nuevo Necaxa Tihuatlán S.A. de C.V. OHL CO Canada & FCC Canada Ltd. Individual North Tunnels Canada Inc. FM Green Power Investments, S.L. Ecoparc del Besós, S.A. Rest Total joint ventures – – (2,602) (3,000) (2,876) (346) – – – – 1,323 4,307 2,637 751 273 544 (1,565) (32) (12) 22,329 (26,410) 2,782 3,689 (1,834) (2,464) 185,432 38,169 (39,532) 40,745 10,682 17,234 11,933 5,700 7,291 – – 6,978 17,074 6,638 49,422 – – – (811) – (89) 369 – – – 3,022 217 (376) 2,332 – – – – – – – – – – – – – – (899) – (605) – – – – 5,974 (2,317) 120 447 – (990) 1,730 247 Change in credits granted Balance at 31.12.2020 (2) 11,977 1,154 – – – (778) – (4,409) 2,349 (7,086) – – 2,578 (6,194) 43,222 11,782 16,060 9,808 4,760 8,204 – – – 16,462 – 51,859 181,937 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 248 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 41 of 141 Balance at 31.12.2018 Results for the year (Note 27.g) Distributed Dividends Changes in the fair value of financial instruments allocated to reserves Acquisitions Conversion differences and other movements Orasqualia for the Development of the Waste Treatment Plant S.A.E. Sociedad Concesionaria Tranvía de Murcia, S.A. Mercia Waste Management Ltd. Zabalgarbi, S.A. Atlas Gestión Medioambiental, S.A. Empresa Municipal de Aguas de Benalmádena, S.A. Ibisan Sociedad Concesionaria, S.A. Constructora Nuevo Necaxa Tihuatlán S.A. de C.V. OHL CO Canada & FCC Canada Ltd. Individual North Tunnels Canada Inc. FM Green Power Investments, S.L. Rest Total joint ventures 9,631 698 38,467 17,881 16,298 11,935 6,523 8,123 – – 6,526 7,228 50,877 173,489 1,184 3,835 3,051 1,221 435 1,478 21 969 2 15,050 3,871 31,815 – – (12,063) (3,000) (1,224) (400) (2,550) – – – – (2,825) (22,062) – – – 885 – (84) 240 – – – (5,203) 682 (3,480) – – – – – – – – – – – – – 1,401 – 1,029 – 1 (1) – (2,106) (5,015) (115) (1) 1,793 (3,014) Change in credits granted Balance at 31.12.2019 5 11,735 1,094 – – – (773) – 2,085 4,046 565 – 1,662 8,684 40,745 10,682 17,234 11,933 5,700 7,291 – – 6,978 17,074 56,060 185,432 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 42 of 141 249 Below are the main figures from the financial statements of joint ventures in proportion to the shareholding as at 31 December 2020 and 2019. Non-current assets Current assets Non-current liabilities Current liabilities Results Revenue Operating profit/(loss) Profit/(loss) before tax Profit attributable to the Parent Company 2020 2019 783,948 223,706 669,463 311,268 819,733 239,963 725,384 334,989 247,455 289,253 44,069 44,078 38,169 62,742 36,753 31,815 The main activities carried out by joint ventures are the exploitation of concessions, such as motorways, concessions related to the integral water cycle and urban sanitation, tunnels and passenger transport activities. In relation to joint ventures with third parties outside the FCC Group, it should be noted that guar- antees have been provided for an amount of 19,885 thousand euros (8,458 thousand euros in 2019), mostly for public bodies and private customers to guarantee the successful execution of the contracts of the different activities of the Group. There are no relevant commitments or other significant contingent liabilities in relation to joint ventures. In general, joint ventures that the Group consolidates using the equity method take the legal form of public limited or limited companies, and therefore, being joint ventures, the distribution of funds to their respective parent companies requires an agreement with the other partners who hold joint control in accordance with the mechanisms established by their corporate agreements. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 250 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 43 of 141 b) Associates The breakdown of this heading by companies is presented in Annex III of these financial accounts, which lists the associates. The transactions for 2020 and 2019 by items are as follows: Grupo Realia Business Concessió Estacions Aeroport L9, S.A. Metro de Lima Línea 2, S.A. Aquos El Realito, S.A. de C.V. Suministro de Agua de Querétaro, S.A. de C.V. Aguas del Puerto Empresa Municipal, S.A. Lázaro Echevarría, S.A. Tirme Group A.S.A. Group Hormigones y Áridos del Pirineo Aragonés, S.A. Aigües del Segarra Garrigues, S.A. N6 (Construction) Limited Giant Cement Holding Constructora Terminal Valle de México Aigües del Vendrell FCC Group PFI Holdings Urbs Iudex et Causidicus, S.A. Rest Total associates Balance at 31.12.2019 Results for the year (Note 27.g) Distributed Dividends Changes in the fair value of financial instruments allocated to reserves Acquisitions Conversion differences and other movements 276,540 63,127 25,704 14,483 10,376 14,548 8,041 7,423 6,264 5,886 6,905 1,035 13,661 8,915 5,302 34,326 – 53,556 556,092 2,872 12,789 2,882 (835) 1,349 (385) 164 2,486 1,293 54 277 – (3,737) 474 19 (1,339) 2,217 2,765 – (4,844) – – (1,171) (164) (196) (3,127) (1,067) – – – – (9,146) – – – (808) 23,345 (20,523) 262 (4,140) – – – 365 56 – 16 – – – 1,124 – (13) – 2,110 20 (200) – – – – – – – – – – – – – – – 14,834 – 2 (1,570) (9,927) (2,371) (6,664) (1,419) – – – (197) – – – (1,075) 178 – (525) (4,327) 1,724 14,836 (26,173) Change in credits granted Balance at 31.12.2020 – 278,104 (57,005) – – 26,215 (6,984) – (1,135) – – – – – – – – (1) – 9,135 13,229 8,065 6,782 6,309 5,940 7,182 1,035 9,973 421 5,307 35,481 82,777 – 23,116 (6,528) – 80,375 540,849 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 44 of 141 Grupo Realia Business Concessió Estacions Aeroport L9, S.A. Cleon, S.A. Shariket Tahlya Miyah Mostaganem SPA (note 4) Cedinsa Group (note 4) Metro de Lima Línea 2, S,A, Aquos El Realito, S.A. de C.V. Suministro de Agua de Querétaro, S.A. de C.V. Aguas del Puerto Empresa Municipal, S.A. Shariket Miyeh Ras Djinet SPA (note 4) Lázaro Echevarría, S.A. Tirme Group A.S.A. Group Hormigones y Áridos del Pirineo Aragonés, S.A. Aigües del Segarra Garrigues, S.A. N6 (Construction) Limited Giant Cement Holding Constructora Terminal Valle de México Aigües del Vendrell FCC Group PFI Holdings Rest Total associates Distributed Dividends hanges in the fair value of financial instruments allocated to reserves Acquisitions Conversion differences and other movements Change in credits granted Balance at 31.12.2018 272,493 66,793 Results for the year (Note 27.g) 8,058 12,449 – 35,222 31,625 23,297 13,198 9,991 14,637 12,704 8,449 6,630 6,422 5,980 6,587 1,034 24,212 3,505 – – 46,782 589,561 – – 7,755 1,966 487 1,316 (201) – (341) 4,123 1,989 (48) 317 – (10,983) 13,126 13 (298) 7,403 – (5,226) – – (1,504) (10,889) – – (6,460) (7,249) – – (1,505) – – – (3,326) (1,990) (45) – – – (7,751) – – (1,439) – – – 462 – (68) – (41) – – – (72) – (2) – (1,294) (20,657) – – – – – – – – – – – – – – – – – – 492 3,471 771 4,734 (2,507) – – (35,222) (25,671) 441 404 574 – (12,704) 1 (4) (116) (1) 1 1 504 35 – 6,624 2,162 – – – – – – 394 – (350) – – – – – – – – – 4,799 24,529 (829) In the financial year 2020, “Translation differences and other movements” shows a decrease of 9,927 thousand euros and 4,327 thousand euros due to the transfer to non-current assets held for the sale of the companies Concessió Estacions Aeroport L9, SA and Urbs Iudex et Causidi- cus, SA, respectively (Note 4) and a decrease of 6,664 thousand euros as a consequence of the takeover of Aquos El Realito, SA de CV. (note 5). Likewise, “Variation of loans granted” shows a decrease of 57,005 thousand euros in Concessió Estacions Aeroport L9, SA due to the afore- mentioned transfer to non-current assets held for sale (Note 4). 47,131 (27,742) (65,478) 28,543 556,092 251 Balance at 31.12.2019 276,540 63,127 – – – 25,704 14,483 10,376 14,548 – 8,041 7,423 6,264 5,886 6,905 1,035 13,661 8,915 5,302 34,326 53,556 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 45 of 141 252 December 2020 and 2019 by relevance and once standardised to comply with the accounting policies applied by the Group, to which the equity method has been applied: In 2019, “Conversion differences and other movements” shows a decrease of 25,671 thousand euros in the Cedinsa group as a result of its takeover (Note 5), and decreases of 35,222 thou- sand euros and 12,704 thousand euros, respectively, of Shariket Tahlya Mostaganem, S.p.a. and Shariket Miyeh Djinet, S.p.a. under the partner agreements whereby the former was fully consol- idated after the takeover, and the latter was posted as a financial asset at fair value after the loss of significant influence (Note 5). The assets, liabilities, turnover and profit/(loss) for 2020 and 2019 are presented below, in propor- tion to the shareholding in the capital of each associate. Non-current assets Current assets Non-current liabilities Current liabilities Revenue Operating profit/(loss) Profit/(loss) before tax Profit attributable to the Parent Company 580,197 540,230 Equity 2020 2019 1,376,407 1,514,972 1,312,770 1,363,696 270,310 290,542 420,691 84,191 43,360 23,344 473,334 116,380 67,179 47,131 Regarding the 37.40% stake in the Realia Business group, it should be noted that the stake val- ue based on the stock market price as of 31 December 2020 amounted to 206,269 thousand euros, lower than its book value of 278,104 thousand euros as of 31 December 2020 (276,540 thousand euros as of 31 December 2019) and that both in the current year and in the previous year, no dividends were distributed. However, it is considered that the recoverable value is higher than its accounting value, as there are latent capital gains in real estate assets, supported by third-party valuations. Below is the condensed financial information of the Realia group at 31 Non-current assets Current assets Cash and equivalents Other current assets TOTAL ASSETS Equity Parent Company Capital Reserves Own Shares Profit/(Loss) Parent Company Valuation adjustments Non-controlling interests Non-current liabilities Non-current financial liabilities Other non-current liabilities Current liabilities Current financial liabilities Other current liabilities TOTAL LIABILITIES Balance Sheet 2020 2019 1,013,251 1,009,857 440,637 74,822 365,815 459,373 75,895 383,478 1,453,888 1,469,230 792,233 676,035 196,864 480,813 (7,526) 7,694 (1,810) 116,197 576,696 533,602 43,094 84,959 47,278 37,681 797,326 671,926 196,864 459,153 (3,277) 21,675 (2,490) 125,401 600,508 566,441 34,067 71,396 34,715 36,681 1,453,888 1,469,230 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 253 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 46 of 141 Revenue Other income Operating expenses Depreciation of fixed and non-current assets Other operating income/(losses) Operating profit/(loss) Financial income Finance cost Miscellaneous financial results Financial Profit/(Loss) Profit/(loss) of equity-accounted affiliates Net income from impairment of fixed and non-current assets Profit/(loss) before tax from continuing operations Income tax Profit/(loss) for the year from continuing operations Profit/(loss) from interrupted operations PROFIT/(LOSS) FOR THE YEAR Profit/(Loss) Parent Company Profit/(loss) non-controlling interests Income statement 2020 85,893 18,543 (66,655) (12,441) (2,979) 22,361 10,609 (15,741) 524 (4,608) 813 0 18,566 (4,005) 14,562 – 14,562 7,692 6,869 2019 76,104 18,805 (35,975) (12,151) 5,458 52,241 1,188 (15,633) 970 (13,475) 1,702 0 40,468 (10,527) 29,941 – 29,941 21,676 8,265 It should be noted that adjustments were made to the previous financial statements of the Realia group for the purpose of standardisation in order to apply the equity method and record it in the consolidated financial statements, since said group applies the option allowed in IAS 40 “Real es- tate investments” to value its real estate assets at fair value, an accounting policy that the Group does not apply. 13. Joint agreements. Jointly controlled operations As indicated in Note 2.b) section “Joint agreements”, the Group companies carry out part of their activity by participating in contracts that are jointly operated with other partners outside the Group, mainly through temporary mergers of companies and other similar entities. These con- tracts were added proportionally to the accompanying financial statements. Below are the key figures of the jointly operated contracts that are included in the different head- ings of the accompanying balance sheet and consolidated income statement, in proportion to their participation, as at 31 December 2020 and 2019. Non-current assets Current assets Non-current liabilities Current liabilities Results Revenue Gross Operating Profit Net operating profit 2020 208,784 1,206,073 67,603 2019 214,777 1,367,070 70,787 1,354,315 1,445,679 1,194,580 1,501,259 48,541 18,406 126,331 98,249 Contracts managed through temporary joint ventures, joint ventures and other entities with similar characteristics imply that shareholders must share the joint responsibility for the activity carried out. In relation to contracts managed jointly with third parties outside the Group, it should be noted that guarantees have been provided for an amount of 1,551,830 thousand euros (1,393,614 thousand euros in 2019), mostly before public bodies and private customers, to ensure the suc- cessful completion of urban sanitation works and contracts. The joint ventures do not have relevant property, plant and equipment acquisition commitments. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 254 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 47 of 141 14. Non-current financial assets and other current financial assets Financial assets at amortised cost Financial assets at fair value charged to reserves Financial assets at fair value charged to profit and loss Hedging derivatives Total There are no “Non-current financial assets” or “Other significant non-current financial assets” in default. The most significant items in the attached consolidated balance sheet of the aforemen- tioned headings present the following breakdown: a) Non-current financial assets 2019 Equity instruments Derivatives – – Collection rights concession arrangements 566,917 Deposits and guarantees 166,116 35,711 – – Non-current financial assets at 31 December 2020 and 2019 are distributed as shown below: Other financial assets 93,920 468 826,953 36,179 – 9 – – 9 – 22 – – 22 35,711 31 566,917 166,116 94,388 863,163 Financial assets at amortised cost Financial assets at fair value charged to reserves Financial assets at fair value charged to profit and loss Hedging derivatives Total 2020 Equity instruments Derivatives Collection rights concession arrangements Deposits and guarantees Other financial assets – – 397,267 62,115 86,743 34,640 – – – – 546,125 34,640 – 5 – – – 5 – 104 – – – 34,640 109 397,267 62,115 86,743 104 580,874 In 2020, the decrease in “Collection rights from concession agreements” was 131,106 thousand euros due to the transfer to non-current assets held for sale by the Cedinsa Group (Note 4). Likewise, the decrease in “Deposits and bonds” mainly concerns the transfer to non-current as- sets held for sale of the collection right derived from grants issued, not yet collected, correspond- ing to the Cedinsa subgroup for the amount of 103,136 thousand euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 255 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 48 of 141 The breakdown of the “Equity instruments” heading at 31 December 2020 and 2019 is detailed below: The due dates for “Deposits and bonds”, “Collection rights of concession agreements” and “Other financial assets” are as follows: % Effective ownership Fair value 2022 2023 2024 2025 2026 and beyond Total 2020 Participations equal to or greater than 5%: Shariket Miyeh Djinet, S.p.a (note 4) Cafasso Consortium, N.V. Vertederos de Residuos, S.A. Consorcio Traza, S.A. Rest Participations below 5%: Rest 2019 Participations equal to or greater than 5%: Shariket Miyeh Djinet, S.p.a (note 4) Cafasso Consortium, N.V. Vertederos de Residuos, S.A. Consorcio Traza, S.A. Rest Participations below 5%: Rest 13.01% 15.00% 16.03% 16.60% 13.01% 15.00% 16.03% 16.60% 10,400 8,777 8,764 3,628 1,959 1,112 34,640 11,142 8,777 8,764 3,629 2,296 1,103 35,711 Deposits and guarantees 2,815 370 441 902 57,587 62,115 Collection rights concession agreement (notes 3.a) and 11) Non-commercial loans and other financial assets 28,534 28,269 28,906 29,412 282,146 397,267 6,949 7,595 4,660 4,642 62,897 86,743 38,298 36,234 34,007 34,956 402,630 546,125 Non-commercial loans mainly include the amounts granted to public entities for debt refinancing, mainly in the water services activity, that accrue interest in accordance with market conditions. There were no events during the year that suggests uncertainty regarding the recovery of these loans. The deposits and guarantees basically correspond to those made by legal or contractual obliga- tions in the development of the activities of the Group companies, such as deposits for electrical connections, for the guarantee in the execution of works, for rental of real estate, etc. b) Other current financial assets This heading of the attached consolidated balance sheet includes the financial deposits consti- tuted by contractual guarantees, the collection rights derived from concessionary financial assets (Note 11) maturing within less than twelve months, current financial investments made for more than three months to meet certain specific treasury situations, credits granted to companies ac- counted for using the equity method and loans to current third parties. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 256 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 49 of 141 The details of “Other Current Financial Assets” at 31 December 2020 and 2019 is as follows: 15. Inventories Financial assets at amortised cost The breakdown of “Inventory net of impairment” at 31 December 2020 and 2019 was as follows: 2020 Collection rights concession arrangements Deposits and guarantees Other financial assets 2019 Collection rights concession arrangements Deposits and guarantees Other financial assets 53,252 56,879 118,521 228,652 31,329 80,836 77,401 189,566 Other financial assets mainly include current loans granted and other accounts receivable from joint ventures and associates for the amount of 20,427 thousand euros (20,938 thousand euros in 2019), current loans to third parties for 30,477 thousand euros (29,711 thousand euros in 2019) and deposits in credit institutions amounting to 35,417 thousand euros (18,197 thousand euros in 2019). The average rate of return obtained by these items is in market returns according to the term of each investment. Real estate Raw materials and other supplies Construction Cement Integrated Water Management Environmental Services Concessions Corporation Finished goods Advances 2020 2019 452,633 225,880 365,415 220,409 102,914 71,236 22,474 27,907 197 1,152 87,117 77,421 28,123 26,258 196 1,294 14,813 72,278 765,604 18,009 124,979 728,812 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 50 of 141 257 The Group used an independent third party (GESVALT) to estimate the fair value of the main as- sets that comprise its real estate portfolio. The valuations were made following the criteria of IVSC (International Valuation Standards Committee). The Dynamic Residual, comparison and cash flow discount methods were applied as the best approximation of the value. These fair values are ex- tremely sensitive to stress situations or needs to make the asset liquid in a shorter period than that of the appraisal. In particular, there was a decrease in the value of the Group’s main real estate assets, although this did not lead to any significant impairments, since there was some slack in the valuations of previous years. In financial year 2020, the total accumulated balance of impairments in real estate stocks amounts to 174,795 thousand euros. There are no significant commitments to purchase real estate assets at year-end. The “Raw materials and other supplies” include facilities necessary for the execution of works pending incorporation, building materials and storage elements, spare parts, fuel and other ma- terials necessary in the development of activities. The “Real estate” item includes plots for real estate development. Likewise, “Real estate” in pro- duction is also registered under production, for which there are sales commitments for a final value of delivery to customers of 51,021 thousand euros (42,505 thousand euros in 2019). The advances that some customers have paid on behalf of the aforementioned “Real Estate” are guaranteed by insurance contracts or bank guarantees, in accordance with the requirements established by the regulations in force. Below is the breakdown of the main real estate products: Estates and promotions Tres Cantos (Madrid) 200,366 121,439 2020 2019 Estates and promotions Arroyo Fresno (Madrid) Estates and promotions Sant Joan Despí (Barcelona) Estates and promotions Badalona (Barcelona) Viviendas Pino Montano (Sevilla) Finca Las Mercedes (Madrid) Other properties and developments 59,406 66,889 35,804 6,956 7,016 76,196 53,052 46,576 35,171 8,150 7,016 94,011 452,633 365,415 The increases observed in the table above with respect to the year 2020 are due to new ongoing developments and the materialisation of commitments to purchase plots during the year. The real estate inventory is valued at their acquisition or production cost, corrected where appro- priate to the market value when this is lower, mainly based on the references of the end market, by calculating the residual value of the land compared to the existing market value in the location in which it is located and, where appropriate, when purchase offers have been received, the price of such offers has been used for their valuation. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 258 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 51 of 141 16. Commercial debtors, other accounts receivables and other current assets a) Trade receivables for sales and services This heading of the attached consolidated balance sheet includes the value of the production and services rendered pending collection, valued as indicated in note 3.r), which provide the various Group activities and which are the basis of the operating profit/(loss). The following is the breakdown of “Receivables external to the Group” at 31 December 2020 and 2019: Progress billings receivable and trade receivables for sales Completed output pending certification Warranty retainers Production billed to associated and jointly controlled companies Trade receivables for sales and services Advances received for orders (Note 22) 2020 2019 934,499 589,130 67,336 60,129 799,543 572,461 72,793 60,002 1,651,094 1,504,799 (403,626) (380,695) Total trade receivables for sales and services 1,247,468 1,124,104 The total amount corresponds to the net balance of receivables having considered the corrections for insolvency risk amounting to 246,764 thousand euros (258,919 thousand euros as of 31 De- cember 2019) and deducting the item of advances received for orders listed under the heading “Trade payables and other accounts payable” of the liability side of the accompanying consoli- dated balance sheet. This item also includes the certified amounts of advances for various items, regardless of whether or not they have been paid. The loans for commercial operations in default are as follows: Construction Environmental Services Water Corporation TOTAL 2020 51,739 276,540 113,744 111 2019 55,481 270,222 64,888 166 442,134 390,757 Balances are considered to be in default when their due date has passed and they have not been paid by the counterpart. However, it must be taken into account that given the different charac- teristics of the different sectors in which the FCC Group operates, although certain assets are in default, there is no risk of default, since most of its clients are public clients, in which only delays in collections can occur, as it is entitled to claim the corresponding delay payment surcharges. “Certified production pending collection and trade receivables” mainly includes the amount of the certifications issued to customers for works executed in the Construction segment in the amount of 341,737 thousand euros (249,646 thousand euros at 31 December 2019) and services provid- ed by other segments in the amount of 592,762 thousand euros (549,897 thousand euros as of 31 December 2019), pending collection at the date of the consolidated balance sheet. In general, there are no disputes in relation to the above. The difference between the amount of progress recorded at the origin of each of the works and contracts in progress, valued according to the criteria set out in note 3.r), and the amount certi- fied to date from the consolidated financial statement is collected as “Completed output pending certification”. The “Completed output pending certification” section includes work executed pending certifi- cation corresponding to the construction contracts executed by the Group for the amount of 298,199 thousand euros (249,468 thousand euros at 31 December 2019). The aforementioned balance mainly includes the differences between the completed output, valued at the sale price, and the certification made to date under the current contract for the amount of 274,844 thousand euros (238,783 thousand euros as of 31 December 2019); that is, output recognised according to the degree of progress that originates in differences between the time at which the output of the work is executed, covered by the contract signed with the customer and approved by the latter, and the time at which the latter certifies it. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 52 of 141 259 “Executed production pending certification” includes services provided in the Environment and Water activities that are billed more than once a month, basically corresponding to the work car- ried out as part of normal activity for the amount of 232,455 thousand euros (240,438 thousand euros as of 31 December 2019). The amount of the transfer of customer loans to financial institutions without the possibility of re- course against the Group companies in the event of default amounts to 111,103 thousand euros at year-end (261,105 thousand euros at 31 December 2019). The impact on cash flows of loan assignments is reflected in the “Changes in working capital” heading of the Statement of Cash Flows. This amount has been reduced from the “Progress billings receivable and trade receiva- bles for sales”. The variation between the two years is due to the decrease in transfers without recourse of Environment activity in the amount of 155,035 thousand euros arising from financial optimisation policies (Note 20). b) Other receivables The breakdown of the “Other receivables” at 31 December 2020 and 2019 was as follows: Euro Pound sterling United States dollar Algerian dinar Czech koruna Romanian leu Public Administrations - VAT receivable (Note 24) Public Administrations - Other taxes payable (Note 24) Other receivables Advances and credits to staff Total other receivables c) Other current assets 2020 2019 Other European currencies 108,169 61,896 115,496 1,561 287,122 87,291 54,892 114,941 2,219 259,343 Latin America (various currencies) Rest Total This heading mainly includes amounts disbursed by the Group in relation to certain contracts for the provision of services, which have not yet been recorded as expenses in the attached financial statement as they had not accrued at the close of these Financial Statements. 17. Cash and cash equivalents This heading includes the Group’s cash flow, as well as bank deposits and taxes with an initial due date of three months or earlier. These balances were remunerated at market interest rates in both 2020 and 2019. The breakdown by currency of the cash and cash equivalents position for 2020 and 2019 is as follows: 2020 2019 754,035 185,751 95,609 27,317 22,322 21,532 1,320 61,544 52,679 708,399 138,408 161,967 51,949 24,771 27,037 1,853 27,645 76,515 1,222,109 1,218,544 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 260 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 53 of 141 18. Equity The accompanying Statement of Changes in Total Equity at 31 December 2020 and 2019 shows the evolution of equity attributed to the shareholders of the Parent Company and non-controlling interests in the respective years. The Ordinary General Shareholders’ Meeting held on 2 June 2020 resolved to distribute a scrip dividend by issuing new ordinary shares with a par value of 1 euro each, without a share premium, of the same class and series as the existing shares in circulation. This resolution also included an offer by the company to acquire the free allocation rights at a guaranteed price. At its meeting on 8 June 2020, following the General Shareholders’ Meeting, the Board of Di- rectors of Fomento de Construcciones y Contratas, S.A. resolved to execute the scrip dividend distribution resolution adopted by the Shareholders’ Meeting, the most significant characteristics of which are described below: – Maximum value of the scrip dividend: 156,905,930.40 euros, equivalent to 0.40 euros per share. – Shareholders received the corresponding allocation rights and could choose between three options: receiving the new shares released, transferring their rights in the market or selling their rights to the company for the guaranteed price of 0.40 euro per share. – The number of free allotment rights required to receive a new share was set at 23. Sharehold- ers who chose this option also received a compensatory cash dividend of 0.624 euro for each new bonus share received, to make this financially equivalent to transferring their rights to the company. – At the end of the trading period for the free allocation rights on 22 June 2020, holders of 387,361,229 (98.75%) rights had chosen to receive new shares, while shareholders holding 4,903,597 rights opted to accept the company’s offer to acquire their rights at the guaran- teed price. Accordingly, a total of 16,841,792 bonus shares with a nominal value of 1 euro were issued, representing 4.29% of the share capital prior to the increase. The compensation mechanism described in the previous paragraph led to a Group disbursement of 10,475 thousand euros on 8 July 2020. The remaining 1.25% chose to collect in cash, which meant an additional cash outflow for the Group of 1,961 thousand euros, an amount that was paid on 24 June 2020. – On 2 July 2020, the public deed to increase the Company’s paid-up capital with a charge to voluntary reserves was registered at the Barcelona Mercantile Registry. In addition, the Ordinary General Shareholders’ Meeting held on 8 May 2019 resolved to distribute a scrip dividend, as follows: – Maximum value of the scrip dividend: 151,530,202.40 euros, equivalent to 0.40 euros per share. – Shareholders received the corresponding allocation rights and could choose between three options: receiving the new shares released, transferring their rights in the market or selling their rights to the company for the guaranteed price of 0.40 euro per share. – The number of free allotment rights required to receive a new share was set at 28. Sharehold- ers who chose this option also received a compensatory cash dividend of 0.638 euros for each new bonus share received, to make this financially equivalent to transferring their rights to the company. – At the end of the trading period for the free allocation rights on 28 May 2019, holders of 376,300,974 (99.33%) rights had chosen to receive new shares, while shareholders holding 2,524,532 rights had opted to accept the company’s offer to acquire their rights at the guar- anteed price. Pursuant to the foregoing, a total of 13,439,320 bonus shares with a nominal value of 1 euro were issued, representing 3.55% of the share capital prior to the increase. On 29 June 2020, the investee company FCC Aqualia, S.A. acquired an additional 2% stake in Aquos el Realito, SA de CV, in which it previously held 49% and was consolidated by the equity method, giving the Group a 51% stake (Note 5). The aforementioned acquisition allowed Aquos el Realito, SA de CV to be controlled and fully consolidated, with 8,671 thousand euros posted under “Minority interests” in the attached consolidated balance sheet. In July 2020, FCC Medio Ambiente UK, SL agreed to sell Icon Infrastructure Partners a minority percentage of 49% of the capital of its subsidiary Green Recovery Projects Limited (Note 5). The operation posted 60,718 thousand euros under “Minority interests” and 74,215 thousand euros in reserves. Valuation adjustments increased by 55,300 thousand euros as the proportional part of the aforementioned adjustments prior to the sale was attributed to minority interests. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 54 of 141 261 At 31 December 2019, “Distribution of dividends” on the Statement of Changes in Total Equity showed a decrease of 44,100 thousand euros under “Non-controlling interests”, attributable to the distribution of dividends approved by FCC Aqualia, S.A. The takeover of Shariket Tahlya Mostaganem, S.p.a. and the Cedinsa group (Notes 5, 12 and 27) took place in 2019, occasioning a switch to full consolidation instead of the equity method in the past. These operations booked non-controlling interests in the amounts of 136,998 and 111,727 thousand euros respectively. Furthermore, in April 2019, FCC Aqualia, S.A. acquired a 49% share in AquaJerez, S.L., over which it already had control with a 51% holding (note 5). As this transac- tion involved equity, the difference between the acquisition price and the value of the net assets acquired was recognised directly against equity, representing a loss of 17,311 thousand euros in reserves in the consolidated financial statements. The rest of the “Other changes in equity” in the attached Statement of Total Changes in Equity basically includes the distribution of the results obtained by the Group in the previous year. I. Equity attributable to the Parent Company a) Capital The share capital of Fomento de Construcciones y Contratas, S,A. comprises 409,106,618 ordi- nary shares represented through book entries with a nominal value of 1 euro each. All shares are fully subscribed and paid and carry the same rights. The securities representing the share capital of Fomento de Construcciones y Contratas, S.A. are admitted to official listing on the four Spanish stock exchanges (Madrid, Barcelona, Bilbao and Valencia) via Spain’s Continuous Market. On 10 June 2020, Samede Inversiones 2010, SL, controlled 100% by Ms. Esther Koplowitz Romero de Juseu, transferred the 100% stake that it held in Dominum Dirección y Gestión, SL, which in turn owns FCC shares representing 15.43% of the capital, to Control Empresarial de Capitales, SA de CV. On 27 November 2020, Dominum Dirección y Gestión, S.L. transferred shares in FCC represent- ing 7% of its share capital to Finver Inversiones 2020, S.L.U. Following the aforementioned changes, in relation to the part of the capital held by other com- panies, directly or through its subsidiary companies, when it is more than 10%, according to the information provided, the company Control Empresarial de Capitales, S.A. de C.V. (acquiring company of Inversora Carso, S.A. de C.V.), controlled by the Slim family, holds 69.61% directly and indirectly, at the date on which these statements were drawn up. Furthermore, as indicated in the previous paragraph, the company Finver Inversiones 2020, S.L.U., 100% owned by In- mobiliaria AEG, S.A. de C.V., which in turn is controlled by Carlos Slim Helú, has a 7% holding. Finally, the company Nueva Samede Inversiones 2016, S.L.U. has a direct holding of 4.536% of the capital. Esther Koplowitz Romero de Juseu also holds 133,269 direct shares in Fomento de Construcciones y Contratas, S.A. b) Accumulated earnings and other reserves The composition of this heading of the accompanying consolidated balance sheet as at 31 De- cember 2020 and 2019 is as follows: Reserves of the Parent Consolidation reserves 2020 2019 1,441,078 1,230,126 469,660 371,158 1,910,738 1,601,284 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 262 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 55 of 141 b.1) Reserves of the Parent Reserve for redeemed capital This corresponds to the series of reserves set up by Fomento de Construcciones y Contratas, S.A., parent of the Group, mainly based on retained profits and capital gains and, where appro- priate, in compliance with the different applicable legal provisions. The breakdown at 31 December 2020 and 2019 is as follows: This reserve includes the nominal value of the amortised treasury shares in 2002 and 2008 charged to available reserves, in accordance with the provisions of article 335.c of the Spanish Corporate Enterprises Act. The reserve for amortised capital is unavailable, other than with the same requirements as for capital reduction. Share premium Legal reserve Reserve for redeemed capital Voluntary reserves 2020 2019 1,673,477 1,673,477 78,453 6,034 75,765 6,034 Reserves for which there is no type of limitation or restriction on their availability, freely constituted through profits and capital gains of the Parent Company once the distribution of dividends has been applied and the provision to legal reserve or other unavailable reserves in accordance with the current legislation. Voluntary reserves and losses from previous years (316,886) (525,150) b.2) Consolidation reserves 1,441,078 1,230,126 Share premium The Spanish Corporate Enterprises Act, as amended, expressly permits the use of the share premium account balance to increase capital and does not establish any specific restrictions as to its use for other purposes. Legal reserve This heading of the accompanying consolidated balance sheet includes the consolidated re- serves generated in each of the areas of activity. Also, in accordance with IFRS 10 “Consolidated financial statements”, those derived from changes in the shareholding of Group companies are included as long as control is maintained, for the difference between the amount of the purchase or additional sale and the book amount of the interest. Meanwhile, in accordance with IAS 19 “Employee benefits”, this section includes the actuarial profit and loss of pension plans and other social security benefits. The breakdown of this item as at 31 December 2020 and 2019 is as follows: In accordance with the Spanish Corporate Enterprises Act, as amended, 10% of net profit for each year must be transferred to the legal reserve until the balance of this reserve reaches at least 20% of the share capital. The legal reserve cannot be distributed to shareholders except in the event of liquidation. The legal reserve may be used to increase capital provided that the remaining reserve balance is greater than 10% of the increased capital. Otherwise, until it exceeds 20% of share capital and provided there are no sufficient available reserves, the legal reserve may only be used to offset losses. As a result of the capital increase arising from the scrip dividend mentioned at the start of this note, the Board of Fomento de Construcciones y Contratas, S.A. decided to provide an additional amount of 3,368 thousand euros as legal reserve in the distribution of 2020 profit. Environment Water Construction Cement Corporation 2020 2019 130,288 145,213 29,715 36,416 128,028 469,660 147,827 86,704 83,579 36,119 16,929 371,158 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 263 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 56 of 141 c) Shares and equity interests d) Valuation adjustments This heading includes the Parent Company shares owned by this or other Group companies valued at the cost of acquisition. The breakdown of this accompanying consolidated heading at 31 December 2020 and 2019 was as follows: The Board of Directors and the subsidiaries are authorised by the General Shareholders’ Meeting of Fomento de Construcciones y Contratas, S.A. to buy back treasury shares within the limits and pursuant to the requirements set out in Article 144 et seq. of the Capital Companies Law. Changes in the fair value of financial instruments The movement and balance of treasury shares at 31 December are set out below: Translation differences 2020 2019 (125,966) (149,733) (275,699) (123,851) (169,072) (292,923) Balance at 31 December 2018 Acquisitions Balance at 31 December 2019 Acquisitions Balance at 31 December 2020 (11,723) (4,345) (16,068) (1,944) (18,012) d.1) Changes in the fair value of financial instruments: Changes in the fair value of taxes of financial assets at fair value with changes in other compre- hensive income (Note 14) and of cash flow hedging derivatives (Note 23) are included in this heading. 2020 2019 Number of shares Amount Number of shares Amount Fomento de Construcciones y Contratas, S.A. 1,544,773 (18,012) 1,250,837 (16,068) TOTAL 1,544,773 (18,012) 1,250,837 (16,068) As at 31 December 2020, the shares of the Parent Company, owned by it or by subsidiaries, represent 0.38% of the capital stock (0.32% as of 31 December 2019). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 57 of 141 264 The breakdown of the adjustments due to a change in the fair value of the financial instruments as at 31 December 2020 and 2019 is as follows: 2020 2019 7,785 7,739 d.2) Conversion differences The detail of the amounts included under this heading for each of the most significant companies at 31 December 2020 and 2019 is as follows: 2020 2019 Financial assets at fair value with changes in other comprehensive income Vertederos de Residuos, S.A. Rest Financial derivatives 7,657 128 7,657 82 European Union: FCC Environment Group (UK) (133,751) (131,590) Green Recovery Group (Note 5) Concessió Estacions Aeroport L9, S.A. (Note 4) (83,369) Cedinsa Group (note 4) Urbs Iudex et Causidicus, S.A. (Note 4) FCC Group - PFI Holdings Green Recovery Group Ibisan Sociedad Concesionaria, S.A. FM Green Power Investments, S.L, Rest 8,054 (29,749) (9,479) (7,236) (2,429) (2,181) (7,362) (79,230) 6,555 (31,934) (9,004) – (2,798) (5,203) (9,976) (125,966) (123,851) Egypt Environmental Services, S.A.E. Rest Tunisia (55,100) (52,281) (3,453) Dragon Alfa Cement Limited Rest (15,091) (125,925) United States of America: FCC Group Construcción de América 11,911 Giant Cement Holding, Inc. Rest Egypt: Orasqualia Devel. Waste T.P. S.A.E. (2,526) (6,354) (6,380) (3,764) (2,725) 3,031 (12,869) (143,381) – (3,152) (3,946) 6,924 (1,458) 890 (5,921) (3,664) (1,537) (150,479) 6,356 (11,122) Societé des Ciments d’Enfidha (25,927) (24,769) Rest Latin America: FCC Group Construcción de América Rest Other Currencies Rest (833) (26,760) (844) (25,613) 2,790 9,366 12,156 3,443 3,238 6,681 634 634 5,105 5,105 (149,733) (169,072) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 58 of 141 265 The main change in this heading in 2020 was due to the sale of 49% of the subsidiary Green Recovery Projects Limited, which led to an increase in translation differences for an amount of 47,938 thousand euros as the part proportional to minority interests (Note 5). The net investment before deducting non-controlling interests in currencies other than the euro (converted to euros in accordance with note 3.j), grouped by geographic markets is as follows: United Kingdom Algeria Latin America Czech Republic United States of America Rest e) Earnings per share 2020 287,053 146,935 124,810 70,126 67,082 109,425 805,431 2019 301,710 185,222 104,967 71,012 56,570 148,975 868,456 The basic earnings per share is obtained as a quotient between the profit/(loss) attributed to the Parent Company and the weighted average of ordinary shares outstanding during the year, the result per share being 0.66 euros in 2020 (0.69 euros in 2019). II. Non-controlling interests The balance of this heading in the accompanying consolidated balance sheet reflects the propor- tional part of the equity and the profit or loss for the year after tax of those companies in which the Group’s non-controlling shareholders have ownership interests. The breakdown of the balance of non-controlling interests of the main companies at the close of 2020 and 2019 is as follows: 2020 FCC Aqualia Group Cedinsa Group Green Recovery Group (Note 5) Cementos Portland Valderrivas Group Rest 2019 Equity Capital Reserves Results Total 71,050 283,182 67,884 118,912 (14,260) 5 1,869 6,844 59,175 17,955 (5,772) 4,611 306 2,370 6,250 422,116 109,263 59,486 22,194 7,322 198,680 340,280 81,421 620,381 71,050 246,028 67,003 118,912 2,145 5,701 (6,824) 19,486 (7,221) (361) 1,348 5,230 384,081 111,727 22,979 3,710 197,808 251,469 73,220 522,497 Profit/(loss) Attributed profit/(loss) parent Outstanding shares Weighted average shares Earnings per share (in euros) 2020 2019 FCC Aqualia Group Cedinsa Group 262,179 266,704 Cementos Portland Valderrivas Group Rest 399,978,217 385,001,230 0.66 0.69 As at 31 December 2020 the Group has not issued any kind of instruments that can be converted to shares, so the diluted earnings per share coincide with the basic earnings per share. The main variation in this heading is due to the sale of 49% of the capital of the subsidiary Green Recovery Projects Limited mentioned above (Note 5). In 2019, Shariket Tahlya Mostaganem, S.p.a and the Cedinsa group were taken over, leading to the recognition of minority interests in the amounts of 136,998 and 111,727 thousand euros respectively. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 59 of 141 19. Non-current and current provisions The changes in the provisions heading in 2020 and 2019 were as follows: 266 The detail of the provisions at 31 December 2020 and 2019 is as follows: Non-current 1,064,384 1,130,199 2020 2019 Liabilities for long-term employee benefits Dismantling, removal and restoration of fixed assets Environmental actions Litigation 24,347 98,496 261,913 53,548 Contractual and legal guarantees and obligations 70,769 Actions to improve or expand the capacity of concessions 167,280 Other provisions for risks and expenses 388,031 21,649 100,250 256,547 164,727 66,149 194,172 326,705 Non-current provisions Current provisions Balance at 31/12/2018 1,161,989 209,264 Asset withdrawal or dismantling expenses Change of obligations for employee benefits for actuarial profits and losses Actions to improve or expand the capacity of concessions Endowments/(Reversals) Applications (payments) Change of scope, conversion differences and other movements 8,952 4,262 10,993 16,740 (116,886) 44,149 – – – 65,567 (55,862) 30,612 Balance at 31/12/2019 1,130,199 249,581 Asset withdrawal or dismantling expenses Change of obligations for employee benefits for actuarial profits and losses Current 195,152 249,581 Actions to improve or expand the capacity of concessions Close-outs and losses on construction contracts 175,456 Other provisions 19,696 226,898 22,683 Endowments/(Reversals) Applications (payments) Change of scope, conversion differences and other movements 11,180 4,889 34,442 86,053 (111,568) (90,811) – – – (4,943) (46,699) (2,787) Balance at 31/12/2020 1,064,384 195,152 Within the “allocations (reversals)” item, the allocations for environmental actions for 35,844 thou- sand euros (35,324 thousand euros as at 31 December 2019) are noteworthy, as well as provi- sions for future replacement actions or major repairs in concessions for 23,485 thousand euros (19,199 thousand euros as at December 2019). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 267 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 60 of 141 December 2019) for environmental actions, and for replacement actions and major repairs in con- cessions, respectively, which affects the “Other receipts/(payments) of operating activities” in the Consolidated Statement of Cash Flows. Moreover, 12,419 thousand euros (14,044 thousand euros as of 31 December 2019), and 9,112 thousand euros (10,027 thousand euros as of 31 December 2019) are included for action to improve or expand capacity in concessions, and provisions for the dismantling and removal of fixed assets, respectively. These amounts have an impact on the “Payments for investments of property, plant and equipment, intangible assets and real estate in- vestments” heading of the Consolidated Statement of Cash Flows. The movement of current provisions is mainly due to losses from works in the Construction activity. The heading “Changes in scope, translation differences and other movements” includes 59,716 thousand euros as a result of the transfer to non-current liabilities held for sale of provisions belong- ing to the Cedinsa subgroup (Note 4). The provisions contained in the accompanying consolidated balance sheet are considered to hedge liabilities that may arise in the development of the various activities of the Group. Liabilities for long-term employee benefits The non-current provisions of the accompanying consolidated balance sheet include those that cover the commitments of the Group companies in matters of pensions and similar obligations, such as medical and life insurance, as indicated in note 25. Dismantling, removal and restoration of fixed assets The “Expenses for the withdrawal or dismantling of assets” item includes the counterpart of the highest asset value corresponding to the updated value of the expenses that will be incurred at the time the asset stops being used. Actions to improve or expand the capacity in concessions The “Actions to improve or expand the capacity of concessions” item includes both the counter- part of the highest value of fixed and non-current assets corresponding to the updated value of the actions on the infrastructure that the concessionaire will carry out during the concession pe- riod for improvements and capacity expansion, as well as the cost of future replacement actions or major repairs in concessions of the intangible model. The schedule of expected payments at 31 December 2020, as a result of the obligations covered by non-current provisions, is as follows: Environmental actions Liabilities for long-term employee benefits Dismantling, removal and restoration of fixed assets Environmental actions Litigation Contractual and legal guarantees and obligations Actions to improve or expand the capacity of concessions 3,466 68,413 46,279 35,695 46,404 84,723 Up to 5 years More than 5 years 20,881 30,083 Total 24,347 98,496 215,634 261,913 17,853 24,365 82,557 53,548 70,769 167,280 The FCC Group develops an environmental policy based not only on strict compliance with cur- rent legislation on the improvement and protection of the environment, but also through the es- tablishment of preventive planning and analysis and minimisation of the environmental impact of the activities the Group carries out. The Management of the FCC Group considers that the contingencies relating to the protection and improvement of the environment at 31 December 2020, would not have a significant impact on the accompanying consolidated financial statements, which include provisions to cover the probable environmental risks that may arise. Note 29 to these notes to the consolidated financial statements, which is devoted to information on the environment, complements the foregoing in relation to environmental provisions. Other provisions for risks and expenses 242,555 145,476 388,031 Provisions for litigation 527,535 536,849 1,064,384 Provisions for litigation cover the contingencies of the FCC Aqualia Group companies acting as defendants in certain proceedings in relation to the liability inherent to the business activities car- ried on by them. Any litigation, which may be significant in number according to estimates made on its final outcome, is not expected to have an impact on the Group’s equity. Appeal proceedings against the sale of Alpine Energie Holding AG terminated in March 2020. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 268 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 61 of 141 Contractual and legal guarantees and obligations This heading includes the provisions to cover the expenses arising from contractual and legal obligations of a non-environmental nature. Provision for settlement and loss of works Relating to the losses budgeted for in works in accordance with the valuation principles set forth in note 3.r) and to the expenses derived from the time they are completed until they are paid in full, systematically determined according to a percentage of the value of the output throughout the execution of the works according to the experience in the construction activity. Other provisions for risks and expenses This heading includes those items not included in the previous denominations, including certain provisions related to Alpine for 24,384 thousand euros, which are discussed in greater detail in the following paragraphs. The amount of the Other provisions for risks and expenses not related to Alpine covers various risks arising from the Group’s activity to which it is exposed in the normal course of its business, mainly construction defects or discrepancies in the services provided for the amount of 194,964 thousand euros (149,419 thousand euros as at December 2019), as well as tax claims amounting to 28,874 thousand euros (14,707 thousand euros as at December 2019). Part of these risks are covered by insurance contracts and the corresponding provision is provided for uninsured amounts. It also includes provisions resulting from recognising additional losses above the initial value of the investment in associates after incurring legal or implicit obligations in relation to the investment in the associate, for an amount of 33,933 thousand euros (48,277 thousand euros at December 2019), with the remaining provisions being less relevant and related to the normal operation of the Group. In relation to the provisions and risks arising from the winding up of the Alpine Group, 2020 saw no significant changes in terms of the amount reported in the Group’s 2019 Financial Statements. In 2006, the FCC Group acquired an absolute majority in Alpine Holding GmbH, hereinafter AH, and thereby, indirectly in its operating subsidiary, Alpine Bau GmbH, hereinafter AB. Seven years later, on 19 June 2013, AB filed for insolvency before the Commercial Court of Vienna, but after the unfeasibility of the reorganisation proposal was established, the insolvency administrator filed for, and the court decreed, the bankruptcy, closure and liquidation of the company, and liquidation of the company commenced on 25 June 2013. As a consequence of the bankruptcy of AB, its parent company, AH filed for bankruptcy before the Commercial Court on 2 July 2013, declaring AH’s bankruptcy and liquidation. As a result of both bankruptcies, FCC Construcción, S.A. loses control over the Alpine Group, thereby interrupting consolidation. On the reporting date, the administrators recognised liabilities of approximately EUR 1,669 million in AB and EUR 550 million in AH as part of the corresponding receivership proceedings. The current share in the AB bankruptcy assets amounts to 15%, whereas in AH’s bankruptcy the bankruptcy administrator has not been able to estimate or determine the share. Immediately after the bankruptcy of both companies, in July 2013 a bondholder filed a complaint with the Central Public Prosecutor’s Office for Economic Crimes and Corruption (Wirtschafts- und Korruptions-Staatsanwaltschaft). This not only gave rise to the opening of criminal proceedings in July 2013 (for alleged fraud, criminal bankruptcy, and concealment of assets) in which some 480 private prosecutions, mainly relating to bondholders, (Privatbeteiligte) were filed, alleging damages totalling 378 million euros plus legal interest, but also other proceedings brought by the insolvency administrators against the auditors, against FCC Construcción S. A. and against various executives and proceedings brought by the bondholders against the banks mediating in the acquisition of bonds. In 2010, 2011 and 2012, AH carried out three bond issues admitted for trading on the Luxembourg and Vienna stock exchanges for a combined nominal value of 290 million euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 269 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 62 of 141 In the context of all these legal proceedings, various reports were issued in order to determine the date on which AB and AH were presumed bankrupt. Therefore, in September 2014, the firm BDO Financial Advisory Services GmbH issued a report at the request of the insolvency admin- istrators of AH and AB, according to which AB had been in insolvency at least since October 2010. Subsequently, in July 2015, the court dealing with AB’s bankruptcy granted the insolvency administrator’s request to commission a report to determine the date on which AB was deemed to be in a situation of over-indebtedness with insolvency relevance. The expert appointed was Mr Schima who, on the basis of the report of BDO, a firm of which he was still a partner at the date of the report, came to the same conclusions, stating that AB had been insolvent since October 2010. Contrary to these conclusions maintained by the bankruptcy administrators and used in various legal proceedings, other expert reports were issued in the various proceedings, such as that of Mr Konecny for the Anti-Corruption Prosecutor’s Office, that of AKKT for the Banks, Ms Ponesch Urbanek as an expert witness in the lawsuit brought by the banks against the Austrian tax authorities for the loans given to Alpine under State guarantee, Mr Wundsam as court expert in the proceedings brought by the bankruptcy administrator against Deloitte Audit Wirtschafts- prüfungs GmbH, Mr Rohatschek for this company and E&Y for FCC, all of which differ from the conclusions reached by BDO/Schima. In particular, in 2017, the anti-corruption prosecutor’s expert, a Doctor of Law and an Audit Ex- pert, issued his fourth and final report. The expert’s reports concluded that (i) there had been no concealment of assets; (ii) it could not be said that there had been fraud in the individual financial statements of AB and AH and the consolidated financial statements of AH; and (iii) the date of definitive insolvency of AB and AH was 18 June 2013. Together with the 3 reports that preceded it, this report contributed to a large extent to the dismissal of the criminal proceedings opened by the Anti-Corruption Prosecutor’s Office. In July 2019, the Vienna Supreme Court of Justice dismissed in their entirety the various appeals lodged by bondholders and other private prosecutors against the closure of the preliminary pro- ceedings. During the refinancing of the Alpine Group between October 2012 and June 2013, FCC Con- strucción, S.A. provided corporate guarantees to enable AB and certain of its operating subsidi- ary companies to bid for and/or be awarded work contracts. As of 31 December 2020, provision for this item amounted to 24,384 thousand euros. Between the bankruptcy of AH and AB and the date on which these financial statements were issued, a number of proceedings were instigated against the Group and directors of AH and AB. As at 31 December 2020, two sets of commercial proceedings and one set of employment pro- ceedings were still in progress, affecting FCC either directly or indirectly: 1) In April 2015, the bankruptcy administrator of Alpine Holding GmbH filed a claim for 186 million euros against FCC Construcción, S.A. and other ex-executive of AB, considering that these parties should compensate Alpine Holding GmbH for the amounts collected through two bond issues in 2011 and 2012 that were allegedly provided by this company for its subsidiary, Alpine Bau GmbH, without the necessary guarantees and complying with a “mandate-order” from FCC Construcción S.A. On 31 July 2018, the ruling dismissing the claim was handed down and the claimant ordered to pay the costs. The bankruptcy administrator filed an appeal for procedural defects in September 2018, which was challenged by FCC Construcción S.A. in October 2018. 2) In April 2019, the Provincial Court of Vienna handed down a decision in which it upheld the procedural defect in the taking of testimony given by the claimant, and ordered the remand of the proceedings with the indication that said testimony be taken and that a judgment be handed down in accordance with the result. In May 2019, FCC lodged an appeal against this ruling at the Supreme Court, which confirmed in April 2020 the need to return the case files to the Court of First Instance so that the witness evidence could be taken in person before the Judge of First Instance. These witness statements have been scheduled for June 2021, unless developments in the pandemic caused by Covid-19 make transfers and courtroom proceedings inadvisable. 3) In April 2017, a Group company, Asesoría Financiera y de Gestión S.A. was notified of a suit in which the bankruptcy administrator made a joint and several claim against the former finance director at Alpine Bau GmbH and against Asesoría Financiera y de Gestión S.A. for the payment of 19 million euros for the alleged violation of corporate and bankruptcy law, considering that Alpine Bau GmbH, on making a deposit at Asesoría Financiera y de Gestión S.A., allegedly made payments charged against equity, considered to be a capital refund, and therefore prohibited by law. The proceedings are still at the evidence phase, and the court expert has issued his report according to which the deposit and the factoring transactions between subsidiary companies of AB and Asesoría Financiera y de Gestión S.A. would not have had any adverse impact on AB. This report is currently being examined by the parties. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 270 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 63 of 141 Also in April 2017, a former FCC employee and former executive at AH and AB was notified of a claim filed by the insolvency administrator of Alpine Bau GmbH in the Social Claims Court for 72 million euros. The plaintiff argues that this amount represents the damage to the bank- ruptcy assets caused by the alleged delay in initiating insolvency proceedings. A hypothetical conviction of the administrator could in a remote scenario raise a subsidiary liability of the FCC Group pursuant to the explanation in Note 26 on contingent liabilities. In relation to these disputes, the FCC Group and its legal advisors do not believe there will be any future outflows of cash prior to the issuance of the financial statements; therefore, no provisions have been set aside, as the Group believes that they represent contingent liabilities (Note 26). 20. Non-current and current financial liabilities The general policy of the FCC Group is to provide all companies with the most adequate financing for the normal development of their activity. Whenever the financial operation so requires, and following a hedging criterion for economic and accounting purposes, the Group contracts interest rate risk hedging operations according to the type and structuring of each operation (Note 23). In certain financings, and especially in structured financing without recourse, the funder includes a contractual clause stating that there must be some type of interest rate coverage, studying the best hedging instrument according to the profile of the cash flows presented by the project, as well as the debt repayment schedule. a) Non-current and current obligations and loans The breakdown of the issues of current obligations and loans is as follows: 2020 FCC Aqualia, S.A. Non-current Current Total 1,350,000 15,301 1,365,301 FCC Servicios Medio Ambiente Holding, S.A.U. 1,094,868 123,107 1,217,975 Fomento de Construcciones y Contratas, S.A. – 302,300 Smvak FCC Medio Ambiente Reino Unido 205,830 130,237 2,460 6,178 302,300 208,290 136,415 2,780,935 449,346 3,230,281 2019 FCC Aqualia, S.A. FCC Servicios Medio Ambiente Holding, S.A.U. 1,350,000 1,093,658 15,227 1,365,227 1,042 1,094,700 Fomento de Construcciones y Contratas, S.A. – 300,000 Smvak FCC Medio Ambiente Reino Unido 212,537 144,150 2,541 5,794 300,000 215,078 149,944 2,800,345 324,604 3,124,949 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 271 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 64 of 141 The details of the non-current and current obligations and loans formalised by the Group are detailed below: • On 8 June 2017, FCC Aqualia, S.A. successfully completed two simple bond issues. One for 700 million euros, with an annual remuneration of 1.413% and due in 2022, and the second for 650 million euros, with an annual remuneration of 2.629% and due in 2027. Both issues have the following guarantees: – Pledge on 100% of the shares of Tratamiento Industrial de Aguas, S.A., Conservación y Sistemas, S.A., Sociedad Española de Aguas Filtradas, S.A., Depurplan 11, S.A. and Aigues de Vallirana, S.A. Unipersonal, and 97% of the shares of Entemanser, SA. – Pledge on 100% of the shareholdings of Infraestructura y Distribución General del Agua, S.L., Empresa Gestora de Aguas Linenses, S.L., Aguas de las Galeras, S.L., Hidrotec Tecnología del Agua, S.L. and on 51% of Aqualia Czech, S.L. – Pledge on 98% of the shares of Acque di Caltanisseta S.p.A., pending formalisation to extend the pledge to 99.5%; and on 100% of Aqualia Mexico, SA de CV. – Pledge on the collection rights over certain accounts. The issuance and circulation of both bonds took place on 8 June 2017, being admitted to trading in the unregulated market (Global Exchange Market) of the Irish Stock Exchange, and with an investment grade rating from the Fitch rating agency. This rating was ratified on 17 September 2020, with an upward review of its outlook from Stable to Positive. The balance as of 31 December 2020 for this item amounts to 1,365,301 thousand euros (1,365,227 thousand euros in 2019), including 15,301 thousand euros for accrued and un- paid interest (15,227 thousand euros in 2019). At 31 December 2020, the 700 million euro bond was listed at 101.556% and the 650 million euros bond was listed at 109.341%. • On 4 December 2019, FCC Servicios Medioambiente Holding S.A.U., successfully com- pleted two simple bond issues. One for 600 million euros, with an annual remuneration of 0.815% and due in 2023, and the second for 500 million euros, with an annual remuneration of 1.661% and due in 2026. Both issues have the personal guarantee of FCC Medio Ambiente, S.A.U. and FCC Ámbito, S.A.U. Both bonds were issued and circulated in December 2019, and they were admitted to trading in the unregulated market (Global Exchange Market) of the Irish Stock Exchange, with an investment grade rating from the Fitch rating agency. This rating was ratified on 3 December 2020, with a stable outlook. Both issues have an opinion by an independent institution, CICERO Shades of Green, stating that the governance procedures of the Company were rated as “Good” and the Bond issues were rated as “Light Green” issues. On the anniversary of the issue, November 2020, certifi- cation body DNV GL confirmed that some 75% of the total funds obtained had already been applied to eligible and sustainable environmental projects. The balance as of 31 December 2020 for this item amounts to 1,096,075 thousand euros (1,094,700 thousand euros in 2019), including 1,207 thousand euros for accrued and unpaid interest (1,042 thousand euros in 2019). At 31 December 2020, the 600 million euro bond was listed at 102.082% and the 500 million euros bond was listed at 105.227%. Likewise, in July 2020 FCC Servicios Medioambiente Holding, S.A.U. registered a promissory note programme - Euro Commercial Paper Programme (ECP) - on the Irish stock market (Euronext Dublin) in the amount of 300 million euros, at a fixed interest rate and maximum maturity one year, which allows issuance with maturities of between 1 and 364 days from the date of issue, in order to meet the financial needs of the area. At 31 December 2020 the outstanding balance on this programme was 121.9 million euros, with maturities ranging from 3 to 5 months. • Fomento de Construcciones y Contratas, S.A. has had a promissory note programme, Euro Commercial Paper Programme (ECP), registered since November 2018 on the Irish stock ex- change (Euronext Dublin) for a maximum amount of 600 million euros as at December 2020, at a fixed interest rate and with a maximum maturity of one year, which allows issuance with maturities of between 1 and 364 days from the date of issue, in order to meet general financial need of major Group companies. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 272 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 65 of 141 As of 31 December 2020, the outstanding balance was 302,300 thousand euros (300,000 thousand euros at 31 December 2019), distributed between different maturity terms, from 2.5 to 6 months. b) Non-current and current bank borrowings The breakdown at 31 December 2020 and 2019 is as follows: • Severomoravské Vodovody a Kanalizace Ostrava, A.S. (Smvak) issued a local bond in July 2015 to repay another one issued in 2005, with its main characteristics being a fixed rate, a term of 7 years and for an amount of 5,400,000 thousand CZK, with a coupon of 2.625% and with an investment grade rating from the Fitch rating agency. 2020 The balance at 31 December 2020 covered by this item amounts to 208,290 thousand euros (as of 31 December 2019 it was 215,078 thousand euros), including 2,460 thousand euros of accrued and unpaid interest (2,541 thousand euros in 2019). The price of these obligations as of 31 December 2020 was 99.354%. There is no collateral for this issue. • In the context of the Azincourt refinancing process carried out in June 2018, FCC Medio Am- biente Reino Unido issued debt in the total amount of 145,000 thousand pounds sterling in two institutional tranches, both structured through the issuance of Private Placement bonds. Credits and loans Debts without recourse to the parent Debts with limited recourse for project financing FCC Medio Ambiente Reino Unido Aquajerez Rest One of the tranches for 135,000 thousand pounds with a fixed rate of 3.98% and the other tranche for 10,000 thousand pounds with a fixed rate of 4.145%, both due on 17 June 2038. 5,136 thousand pounds were repaid in 2020. 2019 Non-current Current Total 20,011 204,697 382,891 156,079 19,690 176,090 224,387 36,652 419,543 178,886 52,946 151,059 10,516 4,730 21,406 189,402 57,676 172,465 607,599 212,421 820,020 The guarantees of this issue are detailed in section 3. of this note. The balance as of 31 December 2020 for this item amounts to 136,415 thousand euros (149,944 thousand euros in 2019). Credits and loans Debts without recourse to the parent Debts with limited recourse for project financing 61,679 379,343 878,245 27,196 42,058 86,146 88,875 421,401 964,391 Cedinsa Group FCC Medio Ambiente Reino Unido Rest 533,925 198,263 146,057 21,143 53,663 11,340 555,068 251,926 157,397 1,319,267 155,400 1,474,667 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 273 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 66 of 141 The previous table shows three different Debt groups: 1. Credits and loans In December 2019, Fomento de Construcciones y Contratas, S.A. made a voluntary early repay- ment of all syndicated financing signed in 2018 in the amount of 1.2 billion euros. This repayment was made using a large part of the funds obtained from the issuance of FCC Servicios Medioam- biente Holding S.A.U. bonds explained in the previous section, along with funds from new bilateral lines signed up. This operation enabled FCC to successfully complete a debt reduction and financial reorganisa- tion process initiated five years ago, with which it has achieved a much more solid and efficient capital structure, with amounts, terms and financing costs in line with the nature of its different business areas (Note 30). As of 31 December 2020, as in 2019, this section mainly includes the financing facilities of FCC, SA in the form of credit policies and bilateral loans signed in the amount of 648.5 million (500 million euros at 31 December 2019) with different local financial institutions. At 31 December 2020, the balance drawn down from these loans was 175 million euros (87 million euros at 31 December 2019). 2. Debts without recourse to the parent Item that mainly incorporates the financing corresponding to the Cementos Portland Valderrivas (CPV) group. CPV financing is implemented in a senior financing contract for an original amount of approxi- mately 455.7 million euros, which includes partial maturities and a final maturity of five years (July 2021). On 29 July 2020, a contract for the novation and ratification of guarantees was signed in which a new repayment schedule was included to extend the last instalment payable on 29 July 2021, i.e. to 29 July 2022, and adapt the financial covenants. The interest rate applicable to this loan is Euribor plus a differential of 2.43%, with the possibility of reduction depending on the performance of the leverage. During the financial year 2020, debt was repaid in advance voluntarily for a total amount of 119.2 million euros, 108.2 million euros on account of the repayment instalments planned for the finan- cial year 2021 and the final instalment. As of 31 December 2020, the entire debt balance had been classified as non-current and the total outstanding balance of this loan amounts to 115.5 million euros (234.7 million euros as of 31 December 2019). This financing requires compliance with a series of financial ratios until its maturity. As of 31 De- cember 2020, the required ratios were met, and since the Gross Debt Financing / EBITDA Ratio is less than 2x, the interest rate margin in 2021 will fall from 2.43% to 2% per year. CPV also has a subordinated financing contract for an original amount of 79.5 million euros, ma- turing 6 months after the expiry of the senior financing contract. On 29 July 2020, in parallel to signature of the novation of the senior financing contract, a modifying agreement was signed to the agreement signed on 29 July 2016, in which the extension of maturity was agreed, setting it at 78 months from the date of the contract, that is, as of 29 January 2023. At 31 December 2020 and 2019, the outstanding balance of this loan is 70.4 million euros. As at 31 December 2020, the guarantees granted in relation to said financing only affect shares of CPV Group investees. The rest of the debt in this section is accounted for by the debt of the Water area and the Services area, mainly from the FCC Environment CEE subgroup. Additionally, at 31 December 2020 FCC Medio Ambiente SAU and the FCC Environment CEE subgroup held signed and undrawn credit agreements in the amounts of 323.5 and 32.9 million euros, respectively. 3. Debts with limited recourse for project financing Covering all financings that are only guaranteed by the project itself and by its cash generation capacity, which will bear the total payment of the debt service and which, under no circumstance, will be guaranteed by the Fomento de Construcciones y Contratas, S.A. parent company or any other company of the FCC Group. As of 31 December 2020, this section does not include the Cedinsa Group’s debt, which as of 31 December 2019 amounted to 555,068 thousand euros, as a result of its transfer to non-current assets held for sale (Note 4). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 67 of 141 274 • FCC Medio Ambiente Reino Unido. The full debt of Azincourt Investment, S.L. was repaid in 2019 (a company wholly owned by FCC, SA, and in turn holding 100% of the shares of FCC Environment UK). The company currently has a revolving line of credit in the amount of 30 million pounds, not drawn down as at 31 December 2020. In 2018, FCC Energy Ltd, whose assets are the Eastcroft and Allington incinerators, issued debt in the amount of 207.4 million pounds. This debt has a term of 20 years (maturing on 17 June 2038) and three different tranches, two institutional for an initial total amount of 145 million pounds described in section a) of this note, and a commercial tranche of 62.4 million pounds. The interest rate of the commercial tranche is a variable rate hedged with an ex- change of interest that makes it fixed plus an upward margin of up to 2.75% during the life of the project. 2.2 million pounds were repaid from commercial tranche in 2020. Being project funding, the financing of FCC Energy includes the standard guarantees for this type of financing, such as the pledging of the company’s shares and the rest of its assets, which include the companies that operate the two waste incineration plants. • In October 2016, FCC Environment signed a 142 million pound contract to design, finance, build and operate the Millerhill Recycling and Energy Recovery Centre (RERC) in Midlothian, located on the outskirts of Edinburgh. The plant originally had two syndicated loans, one amounting to 75.71 million pounds, repayable in August 2042, and another for 36.9 million pounds which came due in May 2020. The margins of the loan due to be repaid in 2042 range from 3% to 3.5%. At the end of 2020, the debt drawn down from the project was 72.8 million pounds corresponding to the syndicated loan due to be repaid in 2042. By way of a summary of the foregoing, at 31 December 2020, of the total FCC Medio Ambi- ente Reino Unido debt with credit institutions, FCC Energy Ltd accounts for 58.8 million euros, and FCC E&M (Edinburgh) for 80.0 million euros; the rest of the debt with limited resource for project financing, up to the total amount of 189.4 million euros, corresponds to the debt of other companies that make up the FCC Group in the United Kingdom. • The financing of Aquajerez, SL was signed in 2016 and amounted to 40 million euros, with a term of 15 years with semi-annual repayments from January 2017. During 2019 FCC Aqualia, S.A., which already held 51% of this company, acquired the remaining 49% and pro- ceeded to extend the initial credit to 65 million euros. As of 31 December 31 2020, this debt amounts to 57.7 million euros (61.9 million in 2019). This financing is associated with a mandatory interest rate hedging of 15 years on 70% of the nominal, as shown in note 23 of derivative financial instruments. This hedging was also renewed in line with the credit increase. “Rest of Debts with limited recourse for project financing” includes companies with project financing from the Water areas - Aquos El Realito, SA de CV with 40.3 million euros; Servicios Medioambientales, Gipuzkoa Ingurumena Bi, S.A. with 24.5 million euros; and Concessions, Autovía Conquense, SA with 26.9 million euros. As at 31 December 2020 there have been no breaches of financial ratios associated with project financing debts, and they are not expected to be defaulted during 2021. The guarantees granted on these loans are real and are based on the financed assets that repay the debt with own flows, without additional guarantees granted by the Parent Company to pledge the shares in the vehicle companies that own the aforementioned financial assets that may have been granted. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 68 of 141 The breakdown of the debts with credit institutions by currency and amounts available at 31 De- cember 2020 and 2019 is as follows: c) Other non-current financial liabilities 275 Euros US dollars Pounds Sterling Czech koruna Rest Total Non-current 175,227 206,877 851 507 – – – 12 176,090 8,741 8,263 224,388 Lease debt (Note 10) Third party financial debts outside the group Derivative financial liabilities (Note 23) Deposits and guarantees received 128,376 – 189,402 – 101,765 419,543 Other concepts 2020 2019 376,487 115,374 38,504 41,990 16,399 588,754 405,391 282,887 168,171 39,788 14,421 910,658 510,480 1,358 189,402 8,741 110,040 820,021 2020 Credits and loans Debt without recourse to the parent Debts with limited recourse for project financing 2019 The decrease in “Third party financial debts outside the group” at 31 December 2020 is mainly due to the transfer to non-current liabilities held for the sale of the financial debt of the Cedinsa Group companies with the Generalitat de Catalunya, in the amount of 206,466 thousand euros as of 31 December 2019 (Note 4). “Derivative financial liabilities” mainly include financial derivatives for risk hedging, mainly interest rate swaps. The decrease with respect to the previous period is noteworthy as the derivatives of the Cedinsa Group are not incorporated as a consequence of the aforementioned transfer to non-current liabilities held for sale (Notes 4 and 23). Credits and loans 87,252 1,623 Debt without recourse to the parent 341,256 – – – – – 88,875 7,206 72,939 421,401 Debts with limited recourse for project financing 695,428 – 251,926 – 17,037 964,391 1,123,936 1,623 251,926 7,206 89,976 1,474,667 Credits and loans in US dollars mainly finance assets in the Construction and Services area; those contracted in sterling correspond to the asset financing of FCC Medio Ambiente UK; those con- tracted in CZK finance the operations of FCC Environment CEE in the Czech Republic; and in the rest of currencies, the financing of Aquos El Realito, SA de CV in Mexican pesos for an amount of 40,309 thousand and Shariket Tahlya Mostaganem, S.p.A. in Algerian dinars for the amount of 32,903 thousand euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 276 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 69 of 141 d) Other current financial liabilities e) Schedule of expected due dates Current Lease debt (Note 10) Interim dividend payable Third party financial debts outside the group Suppliers of fixed assets and bills payable Debts with associated companies and joint ventures Derivative financial liabilities (Note 23) Deposits and guarantees received Other concepts 2020 2019 The schedule of expected due date of debts with credit institutions, obligations and loans and other non-current financial liabilities, is as follows: 68,599 18,457 22,008 35,002 4,120 5 60,772 3,713 78,985 1,536 24,987 31,332 4,366 3,033 53,456 5,912 2022 2023 2024 2025 2026 and beyond Total 911,407 618,999 6,679 7,175 1,236,675 2,780,935 186,201 119,395 36,593 27,066 238,344 607,599 2020 Debt instruments and other marketable securities Non-current bank borrowings Other financial liabilities 72,170 40,317 36,983 39,701 399,583 588,754 212,676 203,607 1,169,778 778,711 80,255 73,942 1,874,602 3,977,288 “Guarantees and deposits received” includes the advance payment received for the agreement to sell the shareholding in Concesionaria Túnel de Coatzacoalcos, S.A. for 48,396 thousand euros in both years, owned by a company linked to the majority shareholder of the Parent Company. The sale is subject to conditions precedent, not fulfilled at the date of formulation of these con- solidated annual accounts. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 277 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 70 of 141 f) Changes in financial liabilities that affect cash flows from financing activities Below are details of the changes in non-current and current financial liabilities, differentiating those that affected cash flows from financing activities in the Statement of Cash Flows from the remain- ing changes: Balance at 1 January 2020 Cash flows from financing activities Exchange differences Change in fair value Change consolidation method Other changes Balance at 31 December 2020 With no impact on cash flows Non-current Debt instruments and other marketable securities Bank borrowings Other financial liabilities Current Debt instruments and other marketable securities Bank borrowings Other financial liabilities 5,030,270 2,800,345 1,319,267 910,658 683,611 324,604 155,400 203,607 (68,305) 1,425 (96,469) 26,739 (219,865) 64,981 (109,815) (175,031) (60,635) (22,177) (32,695) (5,763) (7,675) (703) (3,454) (3,518) 31,320 153,446 (1,108,808) – – 31,320 223 – – 223 7,732 75,144 70,570 23,216 311 132 22,773 (6,390) (657,648) (444,770) 394,933 60,153 170,158 164,622 3,977,288 2,780,935 607,599 588,754 874,443 449,346 212,421 212,676 Balance at 1 January 2019 Cash flows from financing activities Exchange differences Change in fair value Change consolidation method Other changes Balance at 31 December 2019 With no impact on cash flows Non-current 3,900,432 Debt instruments and other marketable securities 1,702,631 Bank borrowings Other financial liabilities Corrientes Obligaciones y otros valores negociables Deudas con entidades de crédito Otros pasivos financieros 1,988,629 209,172 380,902 23,308 211,455 146,139 1,297,983 1,092,639 172,347 32,997 (1,529,516) 255,211 (1,592,587) (192,139) 22,309 9,981 17,328 (5,000) 5,253 318 958 3,977 13,372 – – 13,372 11,123 – – 11,123 961,856 – 592,864 368,992 32,142 – 20,277 11,865 (1,165,682) (4,906) (1,451,901) 291,125 1,783,707 45,767 1,515,297 222,642 5,030,270 2,800,345 1,319,267 910,658 683,611 324,604 155,400 203,607 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 71 of 141 In 2020, the decrease in “Other movements” mainly addresses the transfer to non-current liabil- ities held for sale of the Cedinsa subgroup (Note 4) in the amount of 861,282 thousand euros. 22. Trade and other accounts payable 278 In 2019, “Change consolidation method” shows 918,137 thousand euros contributed by the Cedinsa Group and 52,805 thousand euros contributed by Shariket Tahlya Miyah Mostaganem, S.p.A. as a result of the full consolidation method implemented after the takeover (Note 4). In addition, “Other movements” shows the debt arising as a result of the first application of IFRS 16 “Leases” for an amount of 388,462 thousand euros in “Other non-current financial liabilities” and 43,805 thousand euros in “Other current financial liabilities” (Notes 2, 3 and 10). 21. Other non-current liabilities This heading mainly includes the performance obligations under the Buckinghamshire plant con- cession (Note 11) arising from the collection of the intangible component according to the condi- tions established in the contract for the amount of 118,375 thousand euros at 31 December 2020 (128,806 thousand euros at 31 December 2019). The breakdown of the “Trade and other accounts payable” heading in the liability side of the bal- ance sheet as at 31 December 2020 and 2019 is as follows: Suppliers Current tax liabilities (Note 24) Other payables to Public Administrations (Note 24) Customer advances (Note 16) Remuneration payable Other payables 2020 2019 1,055,643 1,157,753 8,939 316,883 403,626 69,841 418,800 14,951 287,993 380,695 71,970 456,598 2,273,732 2,369,960 With regard to the Spanish Institute of Accounting and Accounts Auditing (ICAC) Resolution of 29 January 2016, issued in compliance with the mandate of the Second Additional Provision of Law 31/2014, of 3 December, which amends the Third Additional Provision of Law 15/2010, of 5 July, establishing measures to combat late payment in commercial transactions, in 2019 the Group op- erated primarily in Spanish territory with public clients including the central government, regional government, local corporations and other public bodies, which settle their payment obligations in periods exceeding the statutory limit in Public Sector Contract legislation, and in Law 3/2004, of 29 December 2004, establishing measures to combat late payment in commercial transactions. It should be noted that the provisions of section 5 of article 228 of the current Consolidated Text of the Public Sector Contract Law (CTPSCL) apply to the works and supplies derived from contracts signed by the Group with the different Public Administrations. Due to such circumstances and in order to adapt the Group’s financial policy to reasonable effi- ciency levels, the usual payment periods to suppliers were maintained in 2020 in the sectors in which the Group operates. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 72 of 141 279 The Group’s payment policy to suppliers, indicated in the foregoing two paragraphs, hence finds support in: a) Payments to suppliers under agreements entered into by the Group with the public authorities, pursuant to article 228.5 of the CTPSCL, and b) Payments to remaining suppliers un- der the Second transitional provision of Law 15/2010, and, where appropriate, that provided for in article 9 of Law 3/2004, which excludes from the abusive nature the “deferral of the payment for objective reasons” taking into consideration, in both cases a) and b) the usual payment period in the sectors in which the Group operates. The Group also acknowledges and pays suppliers, always by mutual agreement, any late-pay- ment interest agreed in the contracts, providing negotiable payment methods accompanied by exchange procedures. Such agreements, aside from being expressly provided for, as mentioned, in the CTPSCL, are admissible under Directive 2011/7/EU, of 16 February, of the European Par- liament and the Council. The Group has also entered into confirming line and similar contracts with different financial in- stitutions to facilitate early payment to suppliers. In accordance with these contracts, a supplier may exercise its collection rights against the Group companies or entities and obtain the invoiced amount, less the financial costs for discount and fees applied by those entities and, in some cases, amounts withheld as guarantee. The total amount of the lines contracted stood at 91,583 thousand euros at 31 December 2020 (90,525 thousand euros at 31 December 2019), and the balance available was 7,830 thousand euros at 31 December 2020 (29,454 thousand euros at 31 December 2019). The above-mentioned contracts do not modify the main payment conditions (interest rate, deadline or amount), so they are classified as commercial liabilities. In compliance with the aforementioned Resolution, a table is set out below with information on the average payment period to suppliers for companies located in Spain, for those commercial operations accrued from the date of entry into force of the aforementioned Law 31/2014, i.e. 24 December 2014: Average payment period to suppliers Ratio of paid operations/transactions Ratio of operations/transactions pending payment Total payments made Total payments pending 2020 Días 104 97 126 2019 Días 101 94 124 Amount 1,429,479 445,894 Amount 1,600,334 446,476 23. Derivative financial instruments In general, financial derivatives entered into by the FCC Group receive the accounting treatment provided for in the regulations for accounting hedges set forth in note 3) of this Report, that is, they are operations that hedge real positions. The main financial risk hedged by the FCC Group through derivative instruments relates to the fluctuations in floating interest rates to which Group company financing is tied. At 31 December 2020, the fully consolidated FCC Group companies had entered into hedging operations with derivative instruments in the overall notional amount of 335,672 thousand euros (807,271 thousand euros at 31 December 2019), mainly materialised in interest rate swaps (IRS), where Group companies pay fixed rates and receive floating rates. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 280 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 73 of 141 Below is a breakdown of the hedges and their fair value for companies consolidated by global integration: Companies consolidated by global integration FCC Medio Ambiente S.A.U. RE3 Ltd. FCC Energy Ltd. FCC Wrexham PFI Ltd. FCC Wrexham PFI (Phase II) Ltd. FCC (E&M) Ltd. Integraciones Ambientales de Cantabria, S.A. Aquajerez Gipuzkoa Ingurumena Qatarat Aquos El Realito S.A. de C.V Cedinsa Eix. Llobregat Cedinsa Eix. Transversal Cedinsa d’Aro Total global integration Derived type Hedging type % hedge Notional 31.12.20 Notional 31.12.19 Valuation at 31.12.20 Appreciation at 31/12/19 Due date IRS IRS Option IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS IRS FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE FE 57% 22% 57% 82% 100% 100% 95% 50% 50% 50% 50% 50% 50% 75% 70% 30% 38% 38% 100% 100% 100% 100% 70% 80% 85% 8,211 3,448 8,211 18,721 9,681 60,446 17,508 7,254 7,254 40,826 40,826 3,830 22,708 18,145 9,378 9,378 11,610 480 4,816 32,941 335,672 9,185 3,582 9,185 21,415 10,646 66,450 19,538 8,226 8,226 21,336 21,336 44,495 44,495 5,926 24,175 19,761 9,715 9,715 117,013 301,271 31,580 807,271 (770) (68) 108 (4,136) (1,179) (7,476) (5,250) (998) (1,004) (4,385) (4,475) (158) (1,143) (503) (956) (950) (790) (6) (206) (3,847) (1,002) 02/04/2024 (81) 31 (4,406) (748) (4,765) (5,402) (859) (867) 28 28 (2,064) (2,186) (339) (721) (91) (668) (642) (37,113) (99,078) (10,065) 02/04/2024 02/04/2024 30/09/2029 17/06/2038 17/06/2038 30/09/2032 30/09/2032 30/09/2032 06/05/2020 06/05/2020 06/05/2042 06/05/2042 31/12/2022 15/07/2031 15/07/2031 30/06/2034 30/06/2034 07/06/2026 25/03/2021 28/11/2024 22/01/2025 01/05/2033 30/10/2033 01/05/2033 (38,192) (171,010) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 74 of 141 281 At 31 December 2020, this section does not include derivatives of the Cedinsa subgroup compa- nies whose assets and liabilities have been transferred and held for sale (Note 4). It also shows the maturities of the notional amount for the hedging operations entered into as at 31 December 2020 and broken down in the previous table: Companies consolidated by global integration 2021 2022 2023 2024 2025 and beyond 23,759 23,786 22,571 33,724 231,831 At 31 December 2020, the total notional hedging of companies consolidated by the equity meth- od amounted to 186,256 thousand euros (623,984 thousand euros at 31 December 2019) and fair value was (24,874) thousand euros - (175,222) thousand euros at 31 December 2019. The derivatives of the concessionaires detailed in Note 4 are not included in this section. At 31 December 2020, the hedging of derivatives of companies whose assets and liabilities have been transferred as held for sale (Note 4) had a total notional of 844,043 thousand euros and a fair value of (294,109) thousand euros. The details of the hedges and their fair value are presented below: Cedinsa Eix. Llobregat Cedinsa Eix. Transversal Cedinsa d’Aro Total integración global Urbs Iudex et Causidicus, S.A. Concessió Estacions Aeroport L9 Total método de la participación Derived type Hedging type % hedge Notional 31.12.20 Notional 31.12.19 Valuation at 31.12.20 Appreciation at 31/12/19 Due date IRS IRS IRS IRS IRS EF EF FE EF EF 70% 80% 85% 100% Various 114,730 291,800 30,943 437,473 59,432 347,138 406,570 117,013 301,271 31,580 449,864 61,676 353,728 415,404 (36,561) (96,946) (9,777) (143,284) (39,666) (111,159) (37,113) (99,079) (10,065) (146,257) 01/05/2033 30/10/2033 01/05/2033 (42,579) 30/12/2033 (105,640) 23/12/2033 (150,825) (148,219) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 282 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 75 of 141 The following table details the financial derivatives that companies consolidated using global in- tegration have entered into for hedging purposes, but which cannot be considered as such for accounting purposes: Derived type Hedging type Notional 31.12.20 Notional 31.12.19 Appreciation at 31.12.20 Appreciation at 31.12.19 Due date Fully consolidated companies FCC Environment CEE GmbH Total global integration FX SWAP ESP 19,938 19,938 13,255 13,255 (208) (208) (312) (312) 22/11/2023 Below are the maturities of the notional amount of those derivatives that do not meet the hedging conditions: Notional maturity 2021 2022 2023 2024 2025 and beyond Companies consolidated by global integration 16,160 – – 3,778 – Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 283 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 76 of 141 The following table provides a reconciliation of the change in the valuation of the derivatives, differ- entiating hedging from speculative and identifying those amounts that have been recorded in the attached consolidated income statement and those that have been recorded in “Other compre- hensive income” of the consolidated statement of recognised income and expense: Balance at 1 January 2019 Profit/loss from valuation of reserves Profit/loss from valuation of results Transfers to the profit and loss statement Inefficiency of the hedging Other changes Balance at 31 December 2019 (171,010) (312) (30,907) – – 175 16,149 – – – 147,576 (71) (38,192) (208) Balance at 1 January 2018 Profit/loss from valuation of reserves Profit/loss from valuation of results Transfers to the profit and loss statement Inefficiency of the hedging Other changes Balance at 31 December 2018 (13,204) (3,150) 123 – – (62) 2,504 – (4,331) – (156,102) 2,900 (171,010) (312) 2020 Hedging Speculative 2019 Hedging Speculative “Other movements” for fiscal year 2020 basically includes the reclassification to liabilities held for sale of the Cedinsa subgroup (Note 4). out Water and Environmental Services in the United Kingdom and the FCC Environment Group in Austria also pay taxes in their own consolidated tax group. 24. Tax matters This Note describes the headings in the accompanying consolidated income statement relating to the tax obligations of each of the Group companies, such as deferred tax assets and liabilities, tax receivables and payables and the corporation tax expense. In accordance with file 18/89, the Parent Company of the FCC Group is subject to the Corpora- tion Tax consolidation regime, with all the companies that meet the requirements established by the tax legislation being integrated into said regime. In addition, part of the subsidiaries that carry In May 2019, the tax authorities completed a procedure to recover state aid, arising from Euro- pean Commission Decision 2015/314/EU, of 15 October 2014, relating to the tax amortisation of financial goodwill from the indirect acquisition of foreign holdings. This procedure aims to adjust the tax incentives applied by the company and FCC Group in prior years as a result of the acqui- sition of the Alpine, FCC Environment (formerly the WRG Group) and FCC CEE (formerly the ASA Group) Groups. The Tax Administration filed a claim against the Group in 2019 for a total amount (tax portion and late payment interest) of 111 million euros. FCC has settled this tax debt but has also filed an economic-administrative appeal against it, which is pending resolution. The Group, in accordance with the opinion of its legal advisors, considers it probable that the amounts already paid under such recovery procedure will be returned. Within the framework of this procedure, the Tax Administration has recognised a negative tax base in favour of the FCC Group that has generated an activated tax credit for the amount of 63.2 million euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 284 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 77 of 141 In June 2020, the Tax Administration announced that corporation tax checks were to be carried out on the tax group headed by FCC, SA between 2015 and 2017, on VAT from June 2016 to December 2017 for FCC, S.A., FCC Construcción, FCC Aqualia, FCC Industrial e Infraestructuras Energéticas and Cementos Portland Valderrivas, and withholdings/payments on account for work income and professional income corresponding to the period from June 2016 to December 2017 for FCC, S.A., FCC Construcción and FCC Aqualia, and between January and December 2017 in the case of Cementos Portland Valderrivas. In relation to the business years and taxes open for inspection, contingent tax liabilities could arise, the amount of which cannot be objectively quantified at present as the proceedings are at a very early stage. However, Group management considers that the liabilities resulting from this situation would not have a significant effect on the Group’s equity. a) Deferred tax assets and liabilities Deferred tax assets are mainly due to provision made, losses and impairment of assets held for sale, non-deductible financial expenses that will be tax-deductible against the Corporation Tax base in future years, deductions and tax bases pending application/offsetting, and differences between accounting and tax depreciation. Specifically, the FCC Group has recorded deferred tax assets corresponding to the negative tax bases and deductions pending application, considering that there are no doubts about their re- coverability, for an amount of 345,095 thousand euros (330,152 thousand euros at 31 December 2019). The increase in tax credits for tax loss carryforwards and deductions pending application, compared to 2019, is mainly due to a higher activation of tax loss carryforwards and deductions pending application in tax group 18/89 (FCC). The Group Management has evaluated the recoverability of deferred tax assets by estimating future tax bases, concluding that there is no doubt surrounding their payment. The estimates used to assess the recoverability of deferred tax assets are based on the estimate of future taxable bases, based on the year’s consolidated accounting result before the estimated tax from continuing operations, to which the corresponding permanent and temporary differences that are expected to take place each year have been adjusted. Pursuant to profit projections, it has been estimated that there will be sufficient positive tax bases to substantially absorb both the tax loss carryforwards recognised in the balance sheet and the deferred tax assets within an estimated period of around fourteen years. The deferred tax liabilities recorded by the group mainly originate from: – The differences between the tax and accounting valuation due to the fair value of assets de- rived from the corporate acquisitions in the different segments of the Group’s activity, as indi- cated in notes 3.b). In general, these liabilities will not entail any future cash outflows because they revert at the same rate as the amortisation of revalued assets. – From the tax amortisation of leasing contracts and that of certain items of property, plant and equipment under accelerated tax amortisation plans, and from the unrestricted amortisation on the investments made, which allows them to be fully amortised as long as certain require- ments are fulfilled. – From the profits of temporary joint ventures that will be included in the tax base of the following year’s Corporation Tax. The Group, pursuant to the provisions of IAS 12 “Corporation Tax”, has offset the deferred tax assets and liabilities corresponding to the entities, which, in line with the applicable tax legislation, have the legal right to offset these assets and liabilities and will be settled for their net amount based on the corresponding time frames. At 31 December 2020, deferred tax assets and lia- bilities were offset in the amount of 123,695 thousand euros (202,427 thousand euros at 31 December 2019). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 78 of 141 The following table shows the breakdown of the main deferred tax assets and liabilities prior to offsetting: Below are the expected maturity dates of the deferred taxes: 285 ASSETS 2020 2019 Tax Group Spain Rest TOTAL Tax Group Spain Rest TOTAL Provisions and impairments 119,011 40,219 159,230 134,897 49,739 184,636 Tax loss carryforwards 332,327 12,768 345,095 316,989 13,163 330,152 Non-deductible financial expense 21,817 5,626 27,443 51,239 72,293 123,532 Pension plans 455 2,214 2,669 459 1,375 1,834 Amortisation/depreciation differences Other Total 12,514 9,822 22,336 13,405 8,124 21,529 112,002 33,615 145,617 107,910 32,773 140,683 598,126 104,264 702,390 624,899 177,467 802,366 2020 2019 Tax Group Spain Rest TOTAL Tax Group Spain Rest TOTAL 60,907 68,524 129,431 62,402 136,605 199,007 1,698 89,242 90,940 5,514 75,555 81,069 11,914 6,332 18,246 11,302 5,371 16,673 LIABILITIES Fair value assets from allocation of acquisition differences (IFRS 3) Accelerated amortisation/ depreciation Profit/(loss) Temporary Joint Ventures Tax impairment of goodwill Deferred tax of conversion differences 2021 2022 2023 2024 2025 and beyond Total Assets Liabilities 67,374 19,936 71,600 21,606 57,760 16,647 50,846 17,211 454,810 702,390 197,088 272,488 The Group has tax credits corresponding to negative tax bases (NTBs), which have not been activated in the financial statements on the basis of a prudent criterion, for the amount of 183.3 million euros. The estimated due date of the tax credits for non-activated NTBs is as follows: Maturity time frame From 2021 to 2025 From 2026 to 2030 From 2031 onwards No maturity Tax credits (millions of euros) 33.5 19.6 45.1 85.1 183.3 Meanwhile, the Group has non-activated tax credits corresponding to tax deductions that have been accredited and are pending application for a total amount of 9.6 million euros. b) Public administrations The breakdown at 31 December 2020 and 2019 of the current assets and liabilities included under the “Public administrations” heading is as follows: 1,175 – – – 1,175 3,342 – – – – 3,342 – Current assets Financial leasing 4,837 1,993 6,830 4,889 2,026 6,915 Other Total 19,667 6,199 25,866 24,852 12,881 37,733 100,198 172,290 272,488 112,301 232,438 344,739 Value Added Tax receivable (Note 16) Current tax Other tax items (Note 16) 2020 108,169 101,235 61,896 271,300 2019 87,291 72,664 54,892 214,847 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 79 of 141 286 Current liabilities Value Added Tax payable (Note 22) Current tax (Note 22) 2020 2019 93,616 8,939 69,518 14,951 Social Security payable and other tax items (note 22) 223,268 218,475 Deferrals 257 84 326,080 303,028 c) Corporation tax expense The corporation tax expense incurred in the year amounted to 86,273 thousand euros (149,067 thousand euros in 2019), as detailed in the accompanying consolidated income statement. Below is the reconciliation between expense and accrued tax payment: 2020 2019 Consolidated accounting profit for the year before taxes from continuing activities Permanent differences Adjusted consolidated accounting profit/(loss) of continuing activities Temporary differences – Arising in the year – Arising in prior years Profit/(loss) directly attributed to Equity Consolidated tax base of continuing activities (taxable profit/(loss) Additions 74,606 Reductions (123,814) 179,277 112,651 (96,207) (286,239) 429.873 (49,208) 380,665 83,070 (173,588) 290,147 Additions 164,964 Reductions (210,375) 176,825 113,617 (94,345) (355,745) 488.990 (45,411) 443,579 82,480 (242,128) 283,931 From the previous table, given the magnitude of the amounts, it should be noted that the tax base is the best estimate available at the date of preparing the accounts. The final amount to be paid will be determined in the tax settlement that will be carried out in 2021, so the final settlement may vary as explained in note 3.p) of this Report. In 2019, permanent differences, as increases, include the amount of the impairment recorded in the Uniland goodwill (note 7) amounting to 70,011 thousand euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 287 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 80 of 141 Below is the reconciliation of the expense for corporation tax: 25. Pension plans and similar obligations Adjusted consolidated accounting profit/(loss) of continuing activities Profit tax Tax credits and tax relief Other adjustments Corporation tax 2020 2019 380,665 443,579 (95,802) (108,952) 3,585 5,944 1,490 (41,604) (86,273) (149,066) In 2020 the assets and liabilities of the Cedinsa group were reclassified as non-current assets held for sale and liabilities related to non-current assets held for sale respectively (Note 4), contributing to the attached income statement a result before tax of 19,518 thousand euros, and a tax on profits of (5,523) thousand euros. The main components of the corporation tax, distinguishing between the current tax, i.e. tax cor- responding to the current year and the deferred tax, the latter understood as the impact on profit/ (loss) of the origination or reversal of temporary differences that affect the amount of deferred tax assets or liabilities recognised in the balance sheet, is as follows: The Spanish Group companies have not generally established any pension plans to supplement the social security pension plans. However, under the Consolidated Pension Plans and Pension Funds Law, in those specific cases in which similar obligations exist, the companies externalise pension and similar obligations to its employees. The Parent Company has taken out insurance to cover death, permanent employment disability, retirement bonuses and pensions and other concepts for some executive directors and company officers. The contingencies that might give rise to compensation include the termination of the employment relationship for any of the following reasons: a) Unilateral decision of the company. b) Dissolution or disappearance of the Parent for any reason, including mergers or disposals. c) Death or permanent disability. d) Other causes of physical or legal incapacitation. e) Substantial modification of professional conditions. Current tax Deferred taxes Corporation tax 2020 (71,412) (14,861) (86,273) 2019 (78,019) (71,047) (149,066) f) Termination after reaching the age of 60, at the request of the officer and in agreement with the company. g) Termination after reaching the age of 65 at the officer’s sole discretion. No new contributions were made in the form of premiums for this insurance in 2020 and 2019, and 3,459 thousand euros were received in 2019 in the form of rebates on premiums previously paid. As at 31 December 2020, the fair value of the premiums provided covers all the actuarial obligations entered into. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 288 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 81 of 141 In accordance with article 38.5 of the Bylaws, Fomento de Construcciones y Contratas, S.A. holds a civil liability insurance that covers Directors and Managers. This is a collective policy cov- ering all the Group’s executives, and in 2020 a premium of 1,474 thousand euros was paid over (489 thousand euros in 2019). Fomento de Construcciones y Contratas, S.A. has taken out an accident insurance policy for its directors, encompassing both the exercise of their functions and their private life, comprising coverage in the event of death, total and absolute permanent incapacity and severe disability. The premium paid in the year amounts to 6 thousand euros (7 thousand euros in 2019). Certain foreign companies belonging to the Group assumed the commitment of supplementing the retirement and other similar commitments of its employees through defined benefit plans. Independent actuarial experts measured the commitments accrued and, where appropriate, the assets used, through generally accepted actuarial methods and techniques included, where ap- propriate, in the accompanying consolidated balance sheet under the “Non-current provisions” heading within “Non-current employee benefit obligations”, in line with the criteria set forth by IFRSs (Note 19). The main benefits referred to in the preceding paragraph are the following: – The companies in the FCC Environment (UK) group that are resident in the United Kingdom incorporate the benefits undertaken with their employees, represented by assets, in the ac- companying consolidated balance sheet in accordance with the plans to pay the benefits, whose fair value amounts to 62,478 thousand euros (59,501 thousand euros as of 31 Decem- ber 2019), with an actuarial value of the accrued obligations amounting to 70,758 thousand euros (64,939 thousand euros as of 31 December 2019). The net difference represents a liability of 8,280 thousand euros (5,438 thousand euros as of 31 December 2019), which has been included in the accompanying consolidated balance sheet as non-current provisions. The “Staff expenses” heading of the accompanying consolidated profit and loss statement includes a cost of 420 thousand euros (367 thousand euros as of 31 December 2019) for the net difference between the cost of services and returns on assets affected by the plan. The average actuarial rate used was 1.5% (2.0% in 2019). – In 2019, Telford & Wrekin Services, Ltd., resident in the United Kingdom, settled the pension plan that it had committed to in order to complement the retirement benefits of its employees. In accordance with current international accounting regulations, the result of this settlement must be recorded in the profit and loss statement, which meant recognising income of 6,730 thousand euros. The year’s movement of the obligations and assets associated with pension plans and similar obligations is detailed below: 2020 Actual performance of the current value of the obligation FCC Environment Group (UK) Telford & Wrekin Services Balances of obligations at the beginning of the year Cost of services for the current year Interest costs Contributions of the participants Actuarial profits/losses Exchange differences Benefits paid during the year Cost of past services Settlements Balance obligations at end of year 64,939 201 1,210 17 9,669 (3,484) – 25 (1,819) 70,758 Actual performance of the fair value of affected assets – FCC Environment Group (UK) Telford & Wrekin Services Affected active balances at the beginning of the year 59,501 Expected return on assets Actuarial profits/losses Exchange differences Contributions made by the employer Contributions made by the participant Benefits paid Settlements Balance of affected assets at the end of the year 1,116 5,202 (3,192) 1,754 16 (1,919) – 62,478 – Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 82 of 141 Actual performance of the current value of the obligation Actual performance of the fair value of affected assets 289 Grupo FCC Environment (UK) Telford & Wrekin Services FCC Environment Group (UK) Telford & Wrekin Services 8,280 – Affected active balances at the beginning of the year 51,825 26,359 Net balance obligations less affected assets t the end of the year 2019 Actual performance of the current value of the obligation Balances of obligations at the beginning of the year 55,369 31,525 FCC Environment Group (UK) Telford & Wrekin Services Cost of services for the current year Interest costs Contributions of the participants Actuarial profits/losses Exchange differences Benefits paid during the year Settlements Balance obligations at end of year 174 1,663 19 6,837 2,846 (1,969) – 64,939 107 231 22 2,498 1,620 (270) (35,733) – Expected return on assets Actuarial profits/losses Exchange differences Contributions made by the employer Contributions made by the participant Benefits paid Settlements Balance of affected assets at the end of the year 1,566 3,631 2,663 1,861 19 (2,064) – 59,501 193 1,025 1,355 – 22 (272) (28,682) – Reconciliation of the actual performance of the obligation less the affected assets and the balances effectively recognised in the balance sheet Saldo neto obligaciones menos activos afectos al final del ejercicio Grupo FCC Environment (UK) Telford &Wrekin Services 5,438 – Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 290 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 83 of 141 26. Guarantee commitments to third parties and other contingent liabilities At 31 December 2020, the Group incurred contingent liabilities, mainly guarantees to third parties, mostly before public bodies and private clients, to secure the correct performance of the urban sanitation works and contracts, for 3,833,058 thousand euros (3,941,877 thousand euros at 31 December 2019). Additionally, the Group has granted letters of indemnity to certain directors with management and administration duties at subsidiaries, without the any risks for which provisions should be set aside identified during the preparation of these financial statements. Such letters of indemnity are a common practice in multinational companies that expatriate employees due to their double status as company employees and executives of the subsidiary, and are of subsidiary execution in the event that the respective directors’ policies do not fully cover the contingency. Letters of indemnity were granted to five executives in relation to the businesses that were maintained by the Group in Alpine. Fomento de Construcciones y Contratas, S.A. and the Group’s subsidiaries are defendants in litigation concerning liability for different activities carried out by the Group in the performance of contracts awarded and for which provisions have been set aside (Note 19). These lawsuits, which in number may be significant, are for insignificant amounts when considered on a one-by-one basis. Therefore, give proven experience and existing provisions, the resulting liabilities would not significantly affect the Group’s assets. The possible financial effects of the main contingent liabilities derived from the bankruptcy of the Alpine subgroup would be the cash outflows indicated in the respective lawsuits detailed in Note 19 of this report. On 15 January 2015, the Competition Chamber of the National Markets and Competition Com- mission issued a decision on file S/0429/12, for an alleged violation of Article 1 of Law 15/2007 on the Defence of Competition. This ruling affects various companies and associations in the waste sector, including Fomento de Construcciones y Contratas, S.A. and other companies that also belong to FCC Group. The Group has filed an administrative appeal before the Spanish National Appellate Court. At the end of January 2018, notification was received of the decisions handed down by the Spanish National Appellate Court, upholding the administrative appeals filed by Gestión y Valorización Integral del Centro S.L. and BETEARTE, both FCC Group investees, against the CNMV ruling imposing various penalties for alleged collusive practices. In both de- cisions, the argument put forward by these companies that no single, on-going breach existed was upheld. In April 2018, we were notified of the agreement initiating new legal proceedings for the same conduct investigated in the previous proceedings forming the scope of the upholding decision, commencing an 18-month examining period. In September 2019, an agreement was issued suspending these legal proceedings until the National Court’s decision on appeals filed by other companies that had been penalised. In April 2019, the National Court issued a judgment in relation to the price of EUR 6 per share applied in the takeover bid made in 2017 by Fomento de Construcciones y Contratas, S.A. for Cementos Portland Valderrivas, S.A., with the National Securities Market Commission (CNMV) asking for the price to be recalculated. This ruling was appealed by the Group and also by the CNMV, as it did not agree with the contents. In November 2020, the Supreme Court issued a ruling, now firm, favourable to FCC and the CNMV, revoking the ruling of the National Court and validating the processing of the takeover bid and the price set. As a result of an internal investigation in May 2019 in application of its compliance policy and regulations, the Group has become aware of the existence of payments between 2010 and 2014 amounting to USD 82 million that might not be justified and may therefore be illegal. These acts were uncovered as a result of application of the procedures in the FCC Group’s compliance rules. The company has informed prosecutors in Spain and Panama about these acts, and has been providing the utmost cooperation since then to clarify what happened, applying the “zero toler- ance” anti-corruption principle that permeates FCC’s entire Compliance System. In the context of this cooperation, on 29 October 2019, the National Court’s Central Court of Instruction No. 2 resolved to investigate FCC Construcción, S.A. and two of its subsidiaries, FCC Construcción América, S.A. and Construcciones Hospitalarias, S.A. in the context of Preliminary Measures 34/2017. Proceedings are still ongoing and it is not yet possible to determine whether charges will eventually be filed against these companies, and, if so, what their scope will be. These actions may therefore have a financial impact, although we do not have the information needed to qualify this impact. Additionally, the 2018 agreement for the sale of the 49% FCC Aqualia holding envisages certain variable prices that depend on the resolution of contingent proceedings. The Group, therefore, has not recognised any asset given its contingent nature; likewise, it has not recognised any liability for claims that may arise against its interests, as it is not considered probable that signifi- cant losses will be incurred and given that their value is considered insignificant in relation to the transaction price. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 84 of 141 291 Also, as part of the aforementioned sales transaction, FCC Topco S.a.r.l. and its subsidiary FCC Midco, S.A. were constituted, contributing shares representing 10% of the Group’s shares in FCC Aqualia to the latter. These shares have been pledged as a guarantee of certain obligations assumed by the Group before FCC Aqualia, mainly in relation to the repayment of the loan that the latter has granted to the Parent Company of the Group for the amount of 806,479 thousand euros. At the date of authorisation for issue of these financial statements, the Group believes that there is no risk that these guarantees will be enforced. The Group is involved in other lawsuits and legal procedures aside from those already described that it considers will not generate significant cash outflows. The shareholding of Group companies in jointly controlled operations managed through joint ven- tures, joint ownership, participation accounts and other entities of similar legal characteristics means that participants must share joint and several liability with respect to the activity carried on (note 13). In relation to the guarantees received, it should be noted, in general, that the Group only receives guarantees in relation to amounts paid as advances for the purchase of highly specialised equip- ment that has been ordered, mainly in the Construction and Water segments, for a non-significant amount as a whole. The Group has not obtained any significant assets as a result of the guaran- tees enforced in its favour or released. 27. Income and expenditure a) Operating income The Group records operating income under the “Revenue” heading, including revenue from interest on the collection rights of the concessions financial model under IFRIC 12 for 38,269 thousand eu- ros at 31 December 2020 (33,200 thousand euros at 31 December 2019), except for work carried out for own fixed and non-current assets and other operating income. Note 28 “Information by activity segments” shows the contribution of the activity areas to the con- solidated revenue. Operating income from performance obligations met or partially met in previous years was recog- nised in 2020 for 35,327 thousand euros (55,795 thousand euros at 31 December 2019), mainly in the Construction segment. In 2020, 229,065 thousand euros (156,342 thousand euros at 31 December 2019) were recog- nised as revenue, previously recorded as advance payments made by clients and work certified in advance (Notes 16 and 22) that were included as liabilities under “Trade and other accounts payable”, mainly in the Construction segment. The breakdown of the other operating income for 2020 and 2019 is as follows: Income from sundry services CO2 emission rights (Note 29) Reimbursement from insurance compensation Grants related to income Other income 2020 115,526 58,909 6,782 18,130 93,958 2019 85,255 5,776 5,742 21,424 96,130 293,305 214,327 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 292 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 85 of 141 “Income from sundry services” mainly includes additional services derived from construction con- tracts or provision of services not included in the main contracts and income derived from the provision of technical assistance to entities accounted for using the equity method. The “Other income” heading mainly includes income from leases when the Group acts as lessor in operating leases and provision excesses. c) Staff costs Below is a breakdown of staff expenses for 2020 and 2019: At the end of 2020, the Group has outstanding execution obligations, mainly from the provision of services in the Environmental Services segment, and derived from construction contracts, mainly in the Construction and Water segments, for 14,434,994 thousand euros expected to be recog- nised as income according to the following schedule: Wages and salaries Social security contributions Other staff costs 2020 2019 1,498,269 1,477,635 432,248 40,593 423,082 25,017 1,971,110 1,925,734 up to 1 year 2 to 5 years more than 5 years Total Environmental Services 1,310,559 3,619,584 4,254,122 9,184,265 Construction 1,602,978 3,552,796 Integrated Water Management 81,844 13,111 – – 5,155,774 94,955 Information regarding the number of employees and their distribution by functional levels and gen- der is provided in the Statement of Non-Financial Information that forms part of the Management Report that accompanies these financial statements. d) Impairment and gains/(losses) on disposal of fixed and non-current 2,995,381 7,185,491 4,254,122 14,434,994 assets b) Procurements The breakdown of the balance of the impairments and profit/(loss) due to the disposal of fixed and non- current assets in 2020 and 2019 is as follows: The breakdown of the balance of supplies and other external expenses as at 31 December 2020 and 2019 is as follows: Subcontracting and work performed by other companies Purchases and procurements 2020 2019 1,397,896 902,346 1,313,848 1,025,714 2,300,242 2,339,562 Impairment of the commercial fund (note 7) Depreciation and amortisation of other property, plant and equipment and intangible assets (endowment) / reversal (notes 7 and 8) Profit/(loss) from disposals of other tangible and intangible assets Other concepts 2020 2019 – 3,955 2,357 558 6,870 (70,011) 4,325 5,571 351 (59,764) Impairment of the goodwill of Corporación Uniland was booked in the amount of 70,011 thousand euros in 2019 (Note 7). The amount of this heading is shown in the accompanying consolidated statement of cash flows under the heading “Other adjustments of profit/(loss) (net)”. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 293 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 86 of 141 e) Financial income and finance cost f) Other financial profit/(loss) The breakdown of the financial income, according to the assets that generate said income, in 2020 and 2019 is as follows: The breakdown of other financial expenses in 2020 and 2019 is as follows: Financial assets at fair value with changes in other comprehensive income Financial assets at amortised cost Other financial income 2020 325 16,430 16,715 33,470 2019 4,693 15,670 30,704 51,067 Change in fair value of current financial instruments Exchange differences Impairment and profits/losses on disposal of financial Instruments 2020 175 (51,259) 27 2019 (10.051) 14,814 (3,308) (51,057) 1,455 “Other financial income” mainly includes the impact of financial costs agreed in relation to the deferred payment for work in the Construction segment in the amount of 6,316 thousand euros (22,067 thousand euros at 31 December 2019) and late-payment interest concerning conces- sionaires in the Cedinsa subgroup, in the amount of 3,070 thousand euros. The breakdown of financial expenses in 2020 and 2019 is as follows: Debt instruments and other marketable securities Credits and loans Debts with limited recourse for project financing Creditors from leases Assignment of credits Financial update of provisions and other liabilities Other financial expenses 2020 53,761 41,689 24,869 12,644 9,691 23,704 21,071 2019 39,800 46,804 18,946 13,037 27,519 20,101 29,580 187,429 195,787 The decrease in exchange differences is mainly due to devaluation of the US dollar and the Mex- ican peso. The amount of this heading is shown in the accompanying consolidated statement of cash flows under the heading “Other adjustments of profit/(loss) (net)”. g) Profits/(losses) of companies accounted for by the equity method The breakdown for this heading is as follows: 2020 2019 Profits/(losses) for the year (Note 13) 61,514 78,946 Joint ventures Associates Profits/(losses) on disposals and others 38,169 23,345 31,815 47,131 635 62,149 41,695 120,641 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 87 of 141 294 The line “Profit from disposals and others” includes, in the year 2020, a positive result of 635 thousand euros from the takeover of the company Aquos El Realito, SA de CV (Notes 5 and 12), due to the fair value of the stake prior to control and due to the allocation of the results of the valuation adjustments. In 2019 this line mainly includes the profit from the takeover of the Cedinsa subgroup (Notes 5 and 12) for a positive amount of 36,588 thousand euros from the recognition at fair value of the shareholding prior to the takeover and from the allocation to results of the valuation adjustments of derivative financial instruments recorded at the date of the takeover. It also includes the operation carried out in Shariket Tahlya Mostaganem, S.p.a. and Shariket Miyeh Djinet, S.p.a. by virtue of which they ceased to be consolidated under the equity method (Notes 5 and 12), which had a negative impact of 6,122 thousand euros due to the fair value of the share- holding prior to the change in consolidation method and for the allocation to results of valuation adjustments due to conversion differences (Note 18). h) Profit/(loss) attributable to non-controlling interests At 31 December 2020, the result attributed to minority interests amounted to 81,421 thousand euros, mainly due to the amount corresponding to the 49% held by the minority shareholder of the Aqualia subgroup, a segment that contributed 67,883 thousand euros at 31 December 2020 (66,966 thousand euros at 31 December 2019) (Note 28). 28. Information by activity segments a) Segmentos de actividad The activity segments presented coincide with the business areas, as described in Note 1. The information for each segment, reflected in the tables presented below, has been prepared in line with the management criteria established internally by the Group’s management, which are consistent with the accounting policies adopted to prepare and present the Group’s consolidated financial statements. The “Corporation” column includes the activity of the functional areas that carry out operational support tasks and the exploitation of the aforementioned companies whose management is not attached to any of the business areas, and which primarily carry on real estate business. “Eliminations” includes the elimination of operations between different activity segments. Income statement by segments In particular, the information reflected in the following tables includes, as profit/(loss) for 2020 and 2019: – All operating income and expenses of subsidiaries and joint management contracts that cor- respond to the activities carried out by the segment. – Interest income and expenses generated on the segment’s assets and liabilities, dividends and profits and losses on the sale of the segment’s financial investments. – The share in the profits/(losses) of the companies accounted for under the equity method. – Corporation tax payable corresponding to the transactions carried out by each segment. – “Contribution to the profit/(loss) of the FCC Group” contains the contribution of each area to the equity attributed to the shareholders of Fomento de Construcciones y Contratas, S.A. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 88 of 141 295 Total Group Environmental Services Integrated Water Management Construction Cement Concessions Corporation Eliminations 2020 Revenue 6,158,023 2,888,150 1,188,348 1,610,990 From external customers 6,158,023 2,882,658 1,182,248 1,552,026 From transactions with other segments Other income From external customers From transactions with other segments Operating expenses Amortisation of fixed assets and allocation of grants for non- financial and other assets Other operating income/(losses) Operating Profit/(Loss) Percentage of turnover Financial income Finance cost Miscellaneous financial results Profit/(loss) companies accounted for using the equity method Profit/(loss) before tax from continuing operations Income tax Profit/(loss) for the year from continuing operations Consolidated profit/(loss) for the year Non-controlling interests Profit attributable to the parent company Contribution to the profit/(loss) of the FCC Group – 327,161 327,161 – 5,492 91,180 89,983 1,197 (5,437,685) (2,528,479) (477,342) (233,826) 2,583 (1,368) 572,740 215,657 9,30% 33,471 (187,430) (51,057) 62,149 429,873 (86,273) 343,600 343,600 81,421 262,179 262,179 7,47% 3,403 (74,457) (4,478) 15,045 155,170 (27,859) 127,311 127,311 6,148 121,163 121,163 6,100 60,833 59,871 962 (966,252) (117,776) 2,257 167,410 14,09% 37,940 (47,405) (2,525) 1,707 157,127 (33,338) 123,789 123,789 67,883 55,906 55,906 58,964 189,726 73,214 116,512 (1,747,133) (34,718) 2,071 20,936 1,30% 24,075 (23,011) (42,819) 922 (19,897) 1,261 (18,636) (18,636) 481 (19,117) (19,117) 382,639 376,232 6,407 64,717 64,679 38 (307,503) (32,929) (116) 106,808 27,91% 705 (10,069) (1,368) (2,607) 93,469 (21,858) 71,611 71,611 2,370 69,241 69,241 123,532 123,532 – 10,911 10,909 2 (39,812) (39,069) (166) 55,396 44,84% 10,685 (33,969) 88 20,573 52,773 (9,186) 43,587 43,587 4,539 39,048 39,048 98,355 41,327 57,028 64,821 28,505 36,316 (137,527) (19,205) 9 6,453 6,56% 163,122 (53,154) 71,678 26,510 (133,991) – (133,991) (155,027) – (155,027) 289,021 181 (104) 80 (0,06%) (206,459) 54,635 (71,633) (1) 214,609 (223,378) 4,751 219,360 219,360 – 219,360 219,360 (44) (223,422) (223,422) – (223,422) (223,422) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 296 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 89 of 141 2019 Revenue From external customers From transactions with other segments Other income From external customers From transactions with other segments Operating expenses Amortisation of fixed assets and allocation of grants for non- financial and other assets Other operating income/(losses) Operating Profit/(Loss) Percentage of turnover Financial income Finance cost Miscellaneous financial results Profit/(loss) companies accounted for using the equity method Profit/(loss) before tax from continuing operations Income tax Profit/(loss) for the year from continuing operations Consolidated profit/(loss) for the year Non-controlling interests Profit attributable to the parent company Contribution to the profit/(loss) of the FCC Group Total Group Environmental Services 6,276,231 2,915,243 6,276,231 2,907,665 – 264,173 264,173 – 7,578 88,188 87,453 735 (5,514,601) (2,510,885) (449,109) (237,365) Integrated Water Management 1,186,881 1,181,117 5,764 60,440 60,110 330 (965,600) (106,360) (65,080) 511,614 8,15% 51,067 (195,787) 1,455 120,641 488,990 (149,066) 339,924 339,924 73,220 266,704 266,704 3,286 258,467 8,87% 6,573 (78,795) (2,992) 17,719 200,972 (40,152) 160,820 160,820 4,785 156,035 156,035 4,885 180,246 15,19% 37,579 (45,800) 289 (2,625) 169,689 (46,149) 123,540 123,540 66,996 56,544 56,544 Construction Cement Concessions Corporation Eliminations 1,719,330 1,666,761 52,569 97,210 90,098 7,112 (1,716,345) (33,327) 10,481 77,349 4,50% 26,300 (26,428) 10,442 17,919 105,582 (35,078) 70,504 70,504 560 69,944 69,944 413,213 405,829 7,384 15,214 15,141 73 (342,048) (35,357) (71,040) (20,018) (4,84%) 2,013 (11,391) 885 (10,098) (38,609) (7,049) (45,658) (45,658) 1,355 (47,013) (47,013) 49,818 49,818 – 6,627 6,627 – (24,603) (16,902) (2,921) 12,019 24,13% 7,026 (10,314) 98 64,250 73,079 (3,706) 69,373 69,373 (476) 69,849 69,849 66,357 65,041 1,316 92,123 4,744 87,379 (124,042) (20,103) – 14,335 21,60% 72,969 (80,949) 213,228 33,413 252,996 (17,221) 235,775 235,775 – 235,775 235,775 (74,611) – (74,611) (95,629) – (95,629) 168,922 305 (9,771) (10,784) 14,45% (101,393) 57,890 (220,495) 63 (274,719) 289 (274,430) (274,430) – (274,430) (274,430) The contribution of the “Corporation” segment to the results of the FCC Group mainly includes the billing of the support services provided to the rest of the Group’s activities under “Other op- erating income”, the impairment of the investments on the parent companies’ shares from the other segments, as well as dividends distributed by group companies that are subsidiaries of the Group’s parent company, the financial expenses billed by other group companies as a result of intra-group loans granted to the parent company by other subsidiaries and the financial income billed to other group companies as a result of intra-group loans granted by the parent company to other subsidiaries. All these concepts, as transactions with Group companies, are eliminated as shown under “Eliminations”. Likewise, the “Corporation” segment includes the financial expenses for debts with credit institutions detailed in note 20. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 90 of 141 297 Property, plant and equipment 2,810,199 1,493,773 Balance sheet by segments 2020 ASSETS Non-current assets Intangible assets Additions Additions Real Estate investments Additions Investments accounted for using the equity method Non-current financial assets Deferred tax assets Current assets Non-current assets held for sale Inventory Trade and other receivables Other current financial assets Other current assets Cash and other cash equivalents Total Group Environmental Services Integrated Water Management Construction Cement Concessions Corporation Eliminations 2,792,235 2,541,973 7,130,413 2,437,859 118,940 836,432 87,847 646,492 242,515 – 42 – – 870,909 28,670 456,512 116,383 – 42 953,282 77,945 34 137,603 31,019 – – 1,082,897 448,025 448 527,285 14,018 – – 388,476 253,633 73 45 19 – – 4,210,876 (4,839,326) 7,254 1,868 213,258 242,538 – – (56,339) – (18,277) – – – 722,786 163,983 68,269 37,860 35,514 111,913 304,472 775 580,874 578,695 5,704,189 1,392,268 765,604 2,039,451 228,652 56,105 1,222,109 223,597 74,450 1,304,234 – 31,442 841,458 74,420 32,989 323,925 1,115,194 31,089 901,513 – 37,449 283,234 90,251 4,458 486,121 329,324 370,550 1,391,258 – 172,914 751,333 125,655 19,261 322,095 7,545 64,528 185,434 – 82,262 79,992 5,442 1,973 15,765 14,800 8,085 1,472,069 1,392,268 205 11,624 2,165 86 65,721 3,555,700 (4,665,286) 130,192 768,784 – 446,701 120,828 195,435 (2,662) 8,482 (100,199) (319,103) – (5,369) (49,018) (264,716) – – Total assets 12,834,602 4,096,469 3,443,486 2,344,540 1,268,331 1,860,545 4,979,660 (5,158,429) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 91 of 141 298 2020 LIABILITIES Equity Non-current liabilities Subsidies Non-current provisions Non-current financial liabilities Deferred tax liabilities Other non-current liabilities Current liabilities Liabilities related to non-current assets held for sale Current provisions Current financial liabilities Trade and other payables Internal relations Total liabilities Total Group Environmental Services Integrated Water Management Construction Cement Concessions Corporation Eliminations 2,908,694 5,531,296 192,961 1,064,384 3,977,288 148,794 147,869 4,394,612 1,051,285 195,152 874,443 2,273,732 – 456,785 2,749,342 4,243 466,145 726,720 2,048,129 44,364 140,026 2,023,120 1,812,827 796,793 275,622 – 234,302 21,599 19,721 – 47,148 3,764 668,637 1,272,125 – – 13,274 99,975 169,393 39,261 555,388 1,063,471 – – 876,661 300,127 100 28,321 197,507 74,199 – 91,543 – 3,081 19,593 68,869 – 464,401 260,504 144,253 39,099 77,137 15 – 1,135,640 1,051,285 1,431 76,337 6,587 – 2,841,248 (3,253,914) 1,482,490 (1,584,918) – 156,491 1 – 1,325,594 (1,480,496) 405 – (104,423) – 655,922 (319,597) – 3,073 606,875 56,354 (10,380) – – (244,292) (74,981) (324) 111,729 144,105 890,342 – 4,900 276,694 598,044 10,704 12,834,602 4,096,469 3,443,486 2,344,540 1,268,331 1,860,545 4,979,660 (5,158,429) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 92 of 141 299 Property, plant and equipment 2,863,892 1,524,556 2019 ASSETS Non-current assets Intangible assets Additions Additions Real Estate investments Additions Investments accounted for using the equity method Non-current financial assets Deferred tax assets Current assets Non-current assets held for sale Inventory Trade and other receivables Other current financial assets Other current assets Cash and other cash equivalents Total Group Environmental Services Integrated Water Management Construction Cement Concessions Corporation Eliminations 2,815,460 2,461,787 8,529,551 3,458,398 55,225 827,011 35,668 285,894 2,635 – 191,821 – – 808,476 15,394 428,160 49,916 – – 902,785 77,991 92 154,194 32,192 2,635 – 1,112,526 447,815 41 547,783 8,198 – – 1,754,581 1,345,127 1 894 462 – 3,669,047 (4,186,635) 8,317 4,029 226,762 3,305 – – (56,339) – (18,457) – – – 741,524 116,737 87,620 48,315 37,160 146,186 306,119 (613) 863,163 599,939 278,390 68,766 4,044,589 1,166,465 – 728,812 1,836,806 189,566 70,861 1,218,544 – 31,326 713,641 93,596 35,048 292,854 1,108,482 29,049 815,865 – 52,969 266,741 69,654 4,976 421,525 259,228 360,422 1,432,640 – 201,943 700,215 125,497 30,049 374,936 7,843 71,925 199,282 – 89,175 80,910 12,599 937 15,661 248,930 13,444 147,828 202 41,112 8,299 522 97,693 2,959,543 (3,999,253) 168,306 529,079 – 359,505 100,611 53,759 (671) 15,875 (111,973) (246,570) – (6,308) (66,424) (173,838) – – Total assets 12,574,140 3,981,925 3,277,652 2,335,425 1,311,808 1,902,409 4,198,126 (4,433,205) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 93 of 141 300 Total Group Environmental Services Integrated Water Management Construction Cement Concessions Corporation Eliminations 2019 LIABILITIES Equity Non-current liabilities Subsidies Non-current provisions Non-current financial liabilities Deferred tax liabilities Other non-current liabilities Current liabilities Liabilities related to non-current assets held for sale Current provisions Current financial liabilities Trade and other payables Internal relations Total liabilities 2,473,759 6,797,228 333,802 1,130,199 5,030,270 142,311 160,646 3,303,153 – 249,581 683,611 2,369,961 – 339,032 640,964 2,717,785 1,995,178 4,421 456,747 55,870 124,996 1,974,923 1,776,700 33,662 3,950 744,462 250,207 – 206,756 25,108 18,343 – 808,630 408,568 111 27,825 305,157 75,475 – 444,123 1,358,569 273,400 111,674 973,480 15 – 2,234,155 1,515,372 190,578 (2,737,607) (1,448,451) (190,578) 1,318,345 (1,116,144) 6,448 1 – (31,546) (110,183) – 641,510 1,340,756 94,610 99,717 448,599 (247,147) – – – 18,335 50,724 214,451 26,668 572,451 1,110,251 – (10,614) 6,590 18,191 69,829 – 2,207 79,138 11,632 6,740 – 3,711 466,200 61,183 (82,495) – 1 (173,628) (74,400) 880 124,998 156,696 925,108 – 4,286 216,318 619,015 85,489 12,574,140 3,981,925 3,277,652 2,335,425 1,311,808 1,902,409 4,198,126 (4,433,205) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 301 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 94 of 141 Cash flows by segment 2020 Operating activities Investment activities Financing activities Other cash flows Cash flows for the year 2019 Operating activities Investment activities Financing activities Other cash flows Cash flows for the year Total Group Environmental Services Integrated Water Management Construction Cement Concessions Corporation Eliminations 605,074 (401,548) (138,437) (61,524) 3,565 630,550 (359,235) (345,735) 26,767 (47,653) 265,338 (221,009) (6,151) (7,107) 31,071 454,027 (256,060) (116,981) 7,391 88,377 223,652 (75,839) (83,484) 268 64,597 206,722 (33,096) (190,857) 2,353 (14,878) (53,175) 19,926 (4,273) (15,319) (52,841) (154,077) 122,857 (59,894) 16,158 (74,956) 136,557 (3,658) (132,192) (603) 104 75,069 (18,457) (57,251) 377 (262) 117,457 (18,111) (92,506) (38,813) (31,973) 55,047 6,545 (13,517) 269 48,344 179,146 (221,634) 35,045 50 (7,393) (263,901) 118,777 145,124 – – 42,359 (48,597) 1,066,023 (1,247,047) (1,202,879) 1,295,644 219 (94,278) – – Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 302 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 95 of 141 b) Activities and investments by geographic markets The Group performs approximately 40% of its activity abroad (45% in 2019). Revenue made abroad by the Group companies for 2020 and 2019 is distributed among the following markets: 2020 United Kingdom Czech Republic Rest of Europe and Others US and Canada Latin America Middle East and Africa 2019 United Kingdom Czech Republic Rest of Europe and Others US and Canada Latin America Middle East and Africa Total Group Environmental Services Integrated Water Management Construction Cement Concessions Corporation Eliminations 668,618 285,251 802,884 84,999 176,598 467,404 605,328 184,605 307,285 75,133 – – 2,485,754 1,172,351 735,049 286,787 733,555 89,545 388,894 576,850 682,025 185,420 304,155 41,921 – 63 2,810,680 1,213,584 – 100,644 83,322 – 57,256 162,809 404,031 – 101,312 81,618 – 86,360 113,232 382,522 10,651 2 379,110 9,866 116,292 246,231 762,152 77 55 312,842 38,636 300,868 401,546 52,639 – 27,803 – 941 63,369 144,752 52,947 – 25,253 8,988 9,223 67,363 1,054,024 163,774 – – – – 2,055 – 2,055 – – – – 2,308 – 2,308 – – 5,845 – – – 5,845 – – 9,770 – – – – – (481) – 54 (5,005) (5,432) – – (83) – (9,865) (5,354) 9,770 (15,302) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 303 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 96 of 141 The following items included in the accompanying financial statements are shown below by ge- ographical areas: Total Group Spain United Kingdom Czech Republic Rest of Europe and Others United States of America and Canada Latin America Middle East and Africa 2020 ASSETS Intangible assets Property, plant and equipment Real Estate investments Deferred tax assets 2,437,859 2,810,199 – 1,398,446 1,426,708 – 578,695 522,830 2019 ASSETS Intangible assets Property, plant and equipment Real Estate investments Deferred tax assets 3,458,398 2,863,892 2,635 599,939 2,481,538 1,517,994 – 546,022 462,520 619,374 – 25,076 495,659 664,105 – 21,368 2,111 298,248 – 4,251 1,894 301,007 – 4,050 251,362 307,572 – 14,990 260,058 310,370 2,635 13,594 22,603 122,881 – – 306 18,575 – 1,683 254,385 16,867 – 8,460 218,942 29,378 – 10,109 46,432 18,549 – 3,088 1 22,463 – 3,113 The table above shows a decrease in “Intangible assets” in Spain, mainly the transfer to non-cur- rent assets held for sale in relation to the Cedinsa subgroup (Note 4). c) Personnel The average number of people employed in 2020 and 2019 by business areas is as follows: Environmental Services Integrated Water Management Construction Cement Concessions Corporation 2020 40,362 10,296 7,936 1,049 158 328 2019 39,657 8,487 8,906 1,076 28 278 60,129 58,432 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 304 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 97 of 141 29. Environmental information During the meeting held on 3 June 2009, the FCC Board of Directors approved the Environmental Policy of the FCC Group, which responded to the initial objectives of the Corporate Responsibility Master Plan reinforcing the socially responsible commitment in the FCC Group strategy, which is very involved in environmental services. The FCC Group carries out its activities on the basis of business commitment and responsibility, compliance with applicable legal requirements, respect for the relationship with its stakeholders and its ambition to generate wealth and social well-being. Aware of the importance of preserving the environment and using available resources responsibly, and in line with its vocation to serve through activities with a clear environmental focus, the FCC Group promotes and enhances the following principles, on which its contribution to sustainable development is based, throughout the organisation: Continuous improvement Promote environmental excellence by establishing objectives for the continuous improvement of performance, minimising the negative impacts of the FCC Group’s processes, products and services, and enhancing the positive impacts. Monitoring and control Establish environmental indicator management systems for the operational control of process- es, which provide the necessary knowledge for the monitoring, evaluation, decision-making and communication of the FCC Group’s environmental performance and compliance with the com- mitments undertaken. Climate change and pollution prevention Lead the fight against climate change through the implementation of processes with lower green- house gas emissions, and by promoting energy efficiency and renewable energies. Preventing pollution and protecting the natural environment through the responsible management and consumption of natural resources and by minimising the impact of emissions, discharges and waste generated and managed by the FCC Group’s activities. Observation of the environment and innovation Identify the risks and opportunities of activities in the face of the changing landscape of the en- vironment in order, among other things, to promote innovation and the application of new tech- nologies, as well as the generation of synergies between the various activities of the FCC Group. Life cycle of products and services Enhance environmental considerations in business planning, procurement of materials and equip- ment, and relations with suppliers and contractors. The necessary participation of all parties Promote the knowledge and application of environmental principles among employees and other stakeholders. Share experience in the most excellent practices with the different agents in order to promote alternative solutions to those currently in place, which contribute to the achievement of a sustain- able environment. This Environmental Policy is materialised through the implementation of quality management and environmental management systems, as well as follow-up audits, which accredit the FCC Group’s performance in this area. Regarding the management of environmental risks, the Group has im- plemented environmental management systems certified under the ISO 14001 standards, which focus on: a) Compliance with applicable regulations and the achievement of environmental objectives that exceed external requirements. b) The reduction of environmental impacts through proper planning. c) The continuous analysis of risks and possible improvements. The basic tool to prevent this risk is the environmental plan that each operational unit must pre- pare and which consists of: a) The identification of environmental aspects and applicable legislation. b) Impact evaluation criteria. c) The measures to be taken. d) A system for measuring the objectives achieved. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 305 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 98 of 141 The very nature of the activity of the Environmental Services area is aimed at the protection and conservation of the environment, not only through productive activity (waste collection, road cleaning, operation and control of landfills, sewer cleaning, treatment and disposal of industrial waste, etc.), but also for the development of this activity through the use of production techniques and systems aimed at reducing environmental impact even more meticulously than required by the regulations on these matters. The development of the production activity of the Environmental Services area requires the use of buildings, technical installations and specialised machinery that are efficient in protecting and conserving the environment. At 31 December 2020, the acquisition cost of the productive fixed and non-current assets, net of depreciation, of the Environmental Services area amounted to 2,330,205 thousand euros (2,351,566 thousand euros at 31 December 2019). Environmen- tal provisions, mainly for landfill sealing and closing costs, amount to 396,384 thousand euros (393,715 thousand euros as of 31 December 2019). The activities performed by Aqualia are directly tied to environmental protection, since the nexus of its operations is, in collaboration with different public authorities, the efficient management of the end-to-end water cycle and the search for guarantees to provide water resources that enable the sustainable growth of the towns in which it provides its services. One of the fundamental ob- jectives of FCC Aqualia is the continuous improvement through an Integrated Management Sys- tem, which includes both the quality management of processes, products and services, and envi- ronmental management. The main actions carried out are: Water quality control in both collection and distribution, 24-hour service 365 days a year making it possible to fix faults in distribution networks in the shortest possible time, with the consequent saving of water, optimisation of elec- tricity consumption, the elimination of environmental impacts caused by wastewater discharges and the management of energy efficiency in order to reduce the carbon footprint. Cement companies have fixed and non-current assets for filtering gases that are discharged into the atmosphere, in addition to meeting the commitments made in the environmental recovery of depleted quarries and applying technologies that contribute to the efficient environmental man- agement of processes. At year-end, the Cementos Portland Valderrivas group held investments related to the environ- mental activity recorded in “Intangible assets” and “Property, plant and equipment” for a total amount of 137,178 thousand euros (135,831 thousand euros in 2019), and amortisation/depre- ciation was 98,447 thousand euros (93,440 thousand euros in 2019). Likewise, in 2020 it incurred expenses to guarantee protection and improvement of the environment in the amount of 2,437 thousand euros (2,920 thousand euros in 2019), booked as “Other operating expenses” on the accompanying profit and loss statement. For the cement activity, the Group receives free CO2 emission rights in accordance with the corre- sponding national allocation plans. In this regard, it should be noted that in 2020, emission rights equivalent to 5,200 thousand tons per year were received (3,686 thousand tons per year in 2019), corresponding to the companies Cementos Portland Valderrivas, S.A. and Cementos Alfa, S.A. The “Operating Income” heading of the accompanying consolidated profit and loss statement includes the income obtained from the sales of greenhouse gas rights in 2020 for an amount of 58,909 thousand euros (5,776 thousand euros in 2019). The Construction area adopts environmental practices in the execution of the works that allow for a respectful action with the environment, minimising its environmental impact by reducing the emission of dust into the atmosphere, controlling the level of noise and vibrations, controlling water discharges with special emphasis on the treatment of fluids generated by the works, the maximum reduction of waste generation, the protection of the biological diversity of animals and plants, protection of the urban environment due to occupation, pollution or loss of soils and the development of specific training programmes for technicians involved in the process of making decisions with an environmental impact, as well as the implementation of an “Environmental per- formance code” that establishes the requirements for subcontractors and suppliers regarding the protection and defence of the environment. Nor is it considered that there are no significant contingencies related to the protection and im- provement of the environment as of 31 December 2020 that may have a significant impact on the accompanying financial statements. For more information on the provisions of this note, the reader should refer to the Statement of Non-Financial Information the Group publishes annually, among other channels, on the web page www.fcc.es. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 99 of 141 30. Financial risk management policies Proof of the foregoing are the extensions made in 2014 for 1,000,000 thousand euros and in 2016 for 709,519 thousand euros, both aimed at strengthening the capital structure of the Company. 306 The concept of financial risk refers to the changes in the financial instruments arranged by the Group as a result of political, market and other factors and the repercussion thereof on the finan- cial statements. The risk management philosophy of the Group is consistent with their business strategy, and seeks to achieve maximum efficiency and solvency at all times. To this end, strict financial risk management and control criteria have been established, identifying, measuring, ana- lysing and controlling the risks incurred in the Group’s operations. The risk policy has been inte- grated into the Group’s organisation in the appropriate manner. In view of the Group’s activities and the transactions through which it carries on its business, it is currently exposed to the following financial risks: a) Capital risk l To manage capital, the main objective of the Group is to reinforce its financial-equity structure, in order to improve the balance between borrowed funds and shareholders’ equity, and the Group endeavours to reduce the cost of capital and, in turn, to preserve its solvency status, in order to continue managing its activities and to maximise shareholder value, not only at Group level, but also at the level of the parent, Fomento de Construcciones y Contratas, S.A. The fundamental basis that the Group considers as capital is found in the Equity of the Balance Sheet, which, for the purposes of its management and follow-up, excludes both the “Changes in the fair value of financial instruments” items and the “Conversion differences” item. The first of these headings is discarded for management purposes as it is considered within the interest rate management, being the result of the valuation of the instruments that transform the debt from a variable rate to a fixed rate. Conversion differences, meanwhile, are managed within the exchange rate risk. Given the sector in which it operates, the Group is not subject to external capital requirements, although this does not prevent the frequent monitoring of equity to guarantee a financial structure based on compliance with the prevailing regulations of the countries in which it operates, also analysing the capital structure of each of the subsidiaries to enable an adequate distribution be- tween debt and capital. As described in Note 20 on Non-current and current financial liabilities, two simple bonds were issued in December 2019 by FCC Servicios Medioambiente Holding, S.A.U. in the amount of 1.1 billion euros. In July 2020, FCC Servicios Medioambiente Holding, S.A.U. registered 300 million euros on a promissory note programme - Euro Commercial Paper Programme (ECP) - on the Irish stock market, and since November 2018 Fomento de Construcciones y Contratas, SA has op- erated a promissory note programme - Euro Commercial Paper Programme (ECP) - in the same market in the amount of 600 million euros. The balance drawn at 31 December 2020 amounts to 302 million euros. In 2020 new financing facilities were also taken out in the form of lines of credit and bilateral loans. Likewise, during fiscal year 2020, Cementos Portland Valderrivas SA repaid total debt of 119.2 million euros, of which 108.2 million euros were repaid voluntarily through the repayment instal- ments for the year 2021 and the final payment. Additionally, a contract for the novation and ratifi- cation of guarantees was signed in which a new repayment schedule was included to extend the last instalment payable on 29 July 2021, for an additional year, i.e. to 29 July 2022, and adapt the financial covenants for the extra year. These operations have made it possible to complete the process of debt reduction and financial reorganisation initiated five years ago and to continue with the policy of diversifying financing sources; all this contributing to achieving a much more stable and efficient capital structure, with amounts, terms and financing costs suitable according to the nature of the different business areas. The General Finance Department, which is responsible for the management of financial risks, regularly reviews the debt-equity ratio and compliance with financing covenants, together with the capital structure of the subsidiaries. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 307 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 100 of 141 b) The FCC Group is exposed to currency exchange risk Below is a summarised table of the sensitivity to changes in exchange rate conversion for the two main currencies in which the Group operates (Note 18): A noteworthy consequence of FCC Group’s positioning in international markets is the expo- sure resulting from net positions in foreign currencies against the euro or in one foreign currency against another when the investment and financing of an activity cannot be arranged in the same currency. Although the benchmark currency in which the Group mainly operates is the euro, the Group also holds financial assets and liabilities accounted for in currencies other than the euro. Exchange rate risk is mainly found in debt denominated in foreign currency, except when this entails a natural hedge of the assets financed since they are denominated in the same currency, in investments in international markets, and in collections and payments in currencies other than the euro. The following shows the composition by currencies of the Group’s gross debt: CONSOLIDATED (thousands of euros) Euro Dollar Pound Czech Koruna Rest of Europe non-euro Latin America Rest TOTAL Gross debt 3,495,272 34,670 364,911 216,329 9,283 69,862 58,199 4,248,527 Financial assets (854,559) (108,364) (217,134) (43,048) (27,904) (79,320) (120,433) (1,450,761) Total consolidated net indebtedness % Net Debt of the total 2,640,714 (73,693) 147,777 173,281 (18,621) (9,458) (62,234) 2,797,766 94.4% (2.6%) 5.3% 6.2% (0.7%) (0.3%) (2.2%) 100.0% Note 17 of these Financial Statements breaks down the Cash and Equivalents by currency, show- ing how 61.7% are denominated in euros (58.1% as of 31 December 2019). The Group’s general policy is to mitigate the adverse effect that exposure to the different for- eign currencies could have on its financial statements as much as possible, with regard to both transactional and purely equity-related movements. The Group therefore manages the effect that foreign currency risk can have on the balance sheet and the income statement. Pound sterling US Dollar Algerian dinar Czech koruna Total Pound sterling US Dollar Algerian dinar Czech koruna Total + 10% Profit and Loss Net Equity 33 (2,489) 1,353 1,703 600 28.739 4,219 16,046 8,716 57,720 - 10% Profit and Loss Net Equity (33) 2,489 (1,353) (1,703) (600) (28,739) (4,219) (16,046) (8,716) (57,720) The impact on the pound sterling is mainly due to the conversion of the net assets corresponding to the investment held in the FCC Medio Ambiente Reino Unido subgroup. c) The FCC Group is exposed to interest rate risk The FCC Group is exposed to interest rate fluctuations due to the fact that the Group’s financial policy aims to ensure that its current financial assets and debt are partially tied to variable interest rates. The benchmark interest rate for the Group’s debt arranged with credit entities in euros is mainly the Euribor. Any increase in interest rates could give rise to an increase in the Group’s financing costs associ- ated with its borrowings at variable interest rates, and could also increase the cost of refinancing the borrowings and the issue of new debt. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 308 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 101 of 141 In order to ensure a position that is in the best interests of the Group, an interest rate risk manage- ment policy is actively implemented, with on-going monitoring of markets and assuming different positions depending primarily on the asset financed. In addition, within the framework of the policy for managing this risk carried out by the Group, fixed-rate debt issuance operations have been carried out in capital markets together with interest rate hedges and fixed-rate financing, totalling 88.7% of the Group’s total gross debt at the end of the year, including hedging on structured project financing. The following table shows a breakdown of the gross debt of the FCC Group as well as the hedged debt, either because it is a fixed rate debt or through derivatives: Total Gross External Debt Hedging and Financing at fixed rate at 31,12,20 Total variable rate debt Ratio: Variable-rate debt / Gross External Debt at 31.12.20 11.3% Total Group Construction 4,248,527 (3,766,822) 481,705 20,614 (1,425) 19,189 Environmental Services 1,722,880 (1,675,326) 47,554 Cement 189,549 (4,136) 185,413 Integrated Water Management Concessions Corporation 1,749,585 (1,681,468) 68,117 81,731 (74,930) 6,801 484,168 (329,539) 154,630 11.3% 93.1% 2.8% 97.8% 3.9% 8.3% 31.9% The table below summarises the effect on the Group’s profit and loss statement of the changes in the interest rate curve with respect to gross debt, excluding fixed rate debt associated with hedging arrangements: Impact on profit or loss Gross indebtedness +25 pb 1,248 +50 pb 2,496 +100 pb 4,992 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 309 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 102 of 141 d) Solvency risk At 31 December 2020, the net financial indebtedness of the FCC Group contained in the attached balance sheet amounted to 2,797,766 thousand euros as shown in the following table: Bank borrowings Debt instruments and other loans Other interest-bearing financial debt Current financial assets Treasury and cash equivalents Net interest-bearing debt Net debts with limited recourse Net indebtedness with recourse 2020 820,021 3,230,281 198,225 (228,652) 2019 1,474,667 3,124,950 387,238 (189,566) (1,222,109) (1,218,544) 2,797,766 3,578,745 (2,696,161) (3,591,450) 101,605 (12,705) The decrease in net financial indebtedness as well as in net debt with limited recourse, is mainly motivated by the held-for-sale classification of the Cedinsa group (Note 4) and by repayments made by the Cementos Portland Valderrivas group in 2020 (Note 20). e) The FCC Group is exposed to liquidity risk The Group carries out its operations in industrial sectors that require a high level of financing, and has so far obtained adequate financing to carry out its operations. However, the Group cannot guarantee that these circumstances relating to obtaining financing will continue in the future. The ability of the FCC Group to obtain financing depends on many factors, a lot of which are be- yond their control, such as general economic conditions, the availability of funds in financial insti- tutions, the depth and availability of the capital markets and the monetary policy of the markets in which they operate. Adverse effects in debt and capital markets may hinder or prevent adequate financing being available to perform the Group’s activities. Historically, the Group has always been able to renew its loan arrangements, and it expects to continue doing so in the coming twelve months. However, FCC Group’s ability to renew its financ- ing depends on various factors, many of which are outside the control of the Group, such as gen- eral economic conditions, the availability of funds for loans from private investors and financial in- stitutions, and the monetary policy of the markets in which it operates. Negative conditions in debt markets could hinder or prevent Group’s capacity to renew its financing. Therefore, the Group cannot guarantee its ability to renew credit agreements and bond issues under economically at- tractive terms. The inability to renew said financing or to secure it under acceptable terms could have a negative impact on the Group’s liquidity and its ability to meet the working capital needs. To adequately manage this risk, the Group performs exhaustive monitoring of the repayment dates of all credit facilities of each Group company, in order to conclude all renewals in the best market conditions sufficiently in advance, analysing the suitability of the funding and studying alternatives if the conditions are unfavourable on a case-by-case basis. The Group is also present in several markets, which facilitates obtaining credit facilities and mitigating liquidity risk. At 31 December 2020, the Group had the following schedule of maturities of external gross debt, which amounts to 705,194 thousand euros for 2021: 2021 2022 2023 2024 and beyond TOTAL 705.194 1.133.860 760.588 1.648.884 4.248.527 A significant part of gross financial debt, 3,743,745 thousand euros, has no recourse to the Par- ent Company, with debt in the Integral Water Management segment in the amount of 1,749,585 thousand euros, and in the Environmental Services segment in the amount of 1,722,880 thou- sand euros as of 31 December 2020. At 31 December 2020, the Group had working capital of 1,309,577 thousand euros (741,436 thousand euros at 31 December 2019). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 310 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 103 of 141 In order to manage liquidity risk, at 31 December 2020, the Group had 863.2 million euros in un- drawn bilateral financing lines, and 1,155,738 thousand euros in cash, in addition to the following current financial assets and cash equivalents, whose maturities are shown below: Thousands of euros Amount 1-3 months 3-6 months 6-9 months 9-12 months To mitigate the market risks inherent to each line of business, the Group maintains a diversified position among businesses related to the construction and management of infrastructure, provi- sion of environmental services and others. In the area of geographical diversification, in 2020 the weight of the external activity has been 40% of total sales, with special importance in the activities of Environmental Services and Infrastructure Construction. Otros activos financieros corrientes 228,652 43,472 25,311 13,360 146,510 g) Credit risk Thousands of euros Amount 1 month 1-2 months 2-3 months Equivalentes de tesorería 66,371 275 0 66,096 f) Concentration risk This is risk arising from the concentration of lending transactions with common characteristics, and it is distributed as follows: • Funding sources: In order to diversify this risk, the Group works with a large number of nation- al and international financial institutions and capital markets to obtain financing. • Markets/geography (domestic, foreign): The Group operates in a wide variety of national and international markets, with the debt mainly concentrated in euros and the rest in various inter- national markets, with different currencies. The provision of services or the acceptance of client engagements, whose financial solvency was not guaranteed at the acceptance date, situations not known or unable to be assessed by the Group and unforeseen circumstances arising during the provision of the service or the execution of the engagement that could affect the client’s financial position could generate a payment risk with respect to the amounts owed. The Group request commercial reports and assess the financial solvency of clients before doing business and perform on-going monitoring, and have put in place a procedure to be adopted in the event of insolvency. In the case of public-sector clients, the Group does not accept engage- ments that do not have an assigned budget and financial approval. Offers that exceed a certain payment period must be authorised by the Finance Division. Likewise, on-going monitoring is performed of debt delinquency in various management committees. The maximum level of exposure to credit risk has been calculated, with the breakdown of the amount as at 31 December 2020 as shown in the following table: • Products: The Group uses various financial products: loans, credit facilities, obligations, syn- Financial credits granted dicated loans, assignments and discounting, etc. Trade and other receivables (Note 16) • Currency: The Group is financed through many different currencies according to the country Derivative financial assets (note 23) of the investment. The Group’s strategic planning process identifies the objectives to be attained in each of the ar- eas of activity, based on the improvements to be implemented, the market opportunities and the level of risk deemed acceptable. This process serves as a base for preparing operating plans that specify the goals to be reached each year. Cash and cash equivalents (Note 17) Guarantees granted (Note 26) TOTAL 955,601 2,039,451 108 1,222,109 3,873,617 8,090,886 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 311 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 104 of 141 In general, the Group does not have collateral guarantees or improvements to reduce credit risk or for financial credits or accounts receivable from traffic. Although it should be noted that bonds are requested from subscribers in the case of certain contracts of the Water activity, mostly con- cessions affecting IFRIC 12, there are also offsetting mechanisms in certain contracts, mostly concessions affecting IFRIC 12 in Water, Environmental Services and Corporation activities, mak- ing it possible to guarantee the recovery of loans granted to finance early initial fees or investment plans. In terms of credit quality, the Group applies its best criteria to impair financial assets that are ex- pected to incur credit losses throughout their life (Note 3.h). The Group regularly analyses chang- es in the public ratings of the entities to which it is exposed. Below are the amounts (in thousands of euros) obtained in relation to the derivatives in force at the end of the year with an impact on equity, after applying, if applicable, the shareholding. Impact on Equity: Global consolidation Equity method Activities held for sale (Note 4) Hedging derivatives +25 pb +50 pb +100pb 5,135 5,030 15,237 10,134 9,793 30,366 19,747 18,703 60,000 In 2020, despite the impact of Covid-19, there was no significant increase in insolvency risk, and the FCC Group kept the average collection periods in line with past experience. h) Brexit risk Risk hedging financial derivatives In general, financial derivatives entered into by the FCC Group receive the accounting treatment provided for in the regulations for accounting hedges set forth in these financial statements. The main financial risk hedged by the FCC Group through derivative instruments relates to the fluctu- ations in floating interest rates to which Group company financing is tied. The financial derivatives are measured by experts on the subject using generally accepted methods and techniques. These experts were independent from the Group and the entities financing it. Sensitivity analyses are carried out periodically with the objective of observing the effect of a pos- sible change in interest rates on the Group’s accounts. A simulation was carried out, proposing three bullish scenarios of the basic Euro interest rate curve, coming in at around -0.3% in the medium/long term as at 31 December 2020, assuming an increase of 25 bp, 50 bp and 100 bp.. The activity that the Group carries out in the United Kingdom is basically concentrated in the En- vironmental Services business area, mainly through the shareholding in the FCC Medio Ambiente Reino Unido subgroup dedicated to the treatment, disposal and collection of waste, as well as to the management of waste recovery and incineration plants. Additionally, although to a lesser extent, the Group maintains a presence in the country through the export of cement and con- struction projects. At year-end, the Group posted 668,018 thousand euros in turnover (Note 28) and held total assets of 712,455 thousand euros in the United Kingdom. Net investment held in pounds amounted to 287,053 thousand euros (Note 18.d). The following is a sensitivity analysis that reflects the possible impact on the Group’s results and equity in the event the exchange rate of the pound against the euro increases or decreases by 10%: + 10% - 10% Profit and Loss Statement Net Equity 33 (33) 28,739 (28,739) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 312 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 105 of 141 The gross financial debt held in pounds amounts to 364.9 million euros as at 31 December 2020 and is concentrated in the aforementioned FCC Medio Ambiente Reino Unido subgroup, con- sisting of various loans and project financing bonds at a fixed or variable rate hedged by hedging derivatives that make them fixed at a weighted average rate of 4.5%. Below is a summarised table with the effect that the changes in the interest rate curve of the debt denominated in pounds over gross indebtedness would have on the profit and loss statement of the FCC Group once the debt associated with hedging contracts has been excluded (in thousands of euros): In this regard, as shown in the attached consolidated income statement, the Group maintained a positive “Operating Income” of 572,740 thousand euros, 9.3% of net turnover. “Cash flows from operational activities” amounted to 605,074 thousand euros as can be seen in the attached consolidated statement of cash flows. In terms of liquidity, as specified in this note and in Note 20 “Non-current and current financial liabilities”, despite the disruption in financial markets, the Group has embarked upon some new lines of financing, ensuring a comfortable financial position against potential liquidity tensions. Impact on profit or loss (12) -25 pb Gross indebtedness +25 pb 12 +50 pb 24 +100 pb 47 Exposure to Brexit is mitigated by the natural hedge of keeping assets and liabilities in the same currency. At the date on which these financial statements were drawn up, the activities carried out by the Group showed favourable returns. i) Covid-19 risk The Covid-19 pandemic has had a series of impacts on the accompanying consolidated financial statements both in operational and liquidity terms, which has also led to an update of the main estimates that affect the half-yearly financial statements. In operational terms, the impact of the Covid-19 crisis on the FCC Group was limited, since the Water and Environment areas, which represent the most substantial part of the Group’s revenues and earnings, include activities that the various national authorities have considered essential without significant interruptions in activity or loss of profitability in most of the assets. In relation to other activities, such as Construction, which has a smaller weighting in the Group’s total ac- tivity, the pandemic has led to the temporary interruption of part of the backlog of construction contracts in progress as well as, where applicable, some inefficiencies in the supply chain, cir- cumstances that inevitably have an impact on project costs as well as on project delivery times. Measures have been adopted to adapt costs to the new levels of activity and to date practically all has been resumed, so no significant non-provisioned impairment is expected. The Cement area performed well, especially during the second half of the year, with some slowdown in growth, but contributing positive EBITDA with no deviations from the pre-Covid estimates. As a result of the situation created by the Covid-19 crisis, the Group proceeded to conduct an analysis with regard to the main estimates that affect the accompanying consolidated financial statements: • Goodwill: The Group updated the various impairment tests for goodwill items posted without significant impacts, given the good performance of the units concerned, mainly Environment and Cement. Note 7 includes additional disclosures for this concept. • Rest of fixed assets. The recoverable value of the main fixed assets that could show signs of impairment has been reviewed and, in particular, of those associated with the concession businesses (Notes 7, 8 and 9). • Financial instruments: The recoverable value of the main financial instruments has been re- viewed, with special attention paid to investments accounted for applying the equity method (Note 12). • Furthermore, with regard to trade receivables, no significant payment default problems were identified. There are no unimpaired doubtful material trade receivables. The collection periods are in line with previous years. • Deferred tax assets: The assumptions (both in operational and tax terms) regarding the re- coverability of these assets, contemplated in December 2019, have been updated, with the result that under the same criteria used on that date, the impact of Covid-19 does not involve a reversal of the assets for deferred tax or a significant modification of recovery periods. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 106 of 141 313 • Provisions: The level of provision (Note 19) is considered suitable to cover all risks considered probable. • Appraisal of real estate assets: “Inventories” includes real estate assets whose net book value amounts to 452,633 thousand euros (Note 15). In this regard, during the year the fair value estimates of some of the main real estate assets were updated through an independent third party. Although a decrease in value was identified compared to December 2019, there was no need to record significant impairments because excesses were sufficient. • Recognition of income in construction contracts: The Group reassessed its forecast results in the Construction segment at conservative ranges in the light of current circumstances. In this sense, provisions make it possible to cover the risks associated with average scenarios, in the context of current uncertainty. In any case, it should be noted that the Group has not registered unapproved income derived from cost overruns, delays or claims on third parties as a result of the situation caused by Covid-19, which has caused, in many geographic regions, inefficiencies and delays, with the consequent impact in terms of profitability. Due to all of the above and taking into account the limited impact, the measures taken to guaran- tee the assets and liquidity gaps, the Group prepared the financial statements as per the principle of a going concern, since the continuity of the Group is not in doubt. 31. Information on transactions with related parties a) Transactions with directors of the Parent Company and senior executives of the Group The amounts accrued for fixed and variable remuneration received by the Directors of Fomento de Construcciones y Contratas, S.A. in 2020 and 2019, to be paid by the latter or any of the Group companies, jointly managed or associated, are as follows: Fixed remuneration Other payments 2020 525 1,420 1,945 2019 525 1,308 1,833 The senior executives listed below, who are not members of the Board of Directors, received total remuneration of 1,832 thousand euros (1,819 thousand euros in 2019). 2020 Marcos Bada Gutiérrez Felipe B. García Pérez Miguel A. Martínez Parra Félix Parra Mediavilla 2019 Marcos Bada Gutiérrez Felipe B. García Pérez Miguel A. Martínez Parra Félix Parra Mediavilla General manager of Internal Audit General Secretary Managing Director of Administration and Finance Managing Director of FCC Aqualia General manager of Internal Audit General Secretary Managing Director of Administration and Finance Managing Director of FCC Aqualia Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 107 of 141 314 Note 25 “Pension plans and similar obligations” describes the insurance taken out in favour of certain executive directors and senior managers. Details of Board members who hold posts at companies in which Fomento de Construcciones y Contratas, S.A. has a direct or indirect ownership interest were as follows: Name or corporate name of the director Company name of the Group entity EAC INVERSIONES CORPORATIVAS, S.L. CEMENTOS PORTLAND VALDERRIVAS, S.A. Position CHAIR REALIA BUSINESS, S.A. DIRECTOR PABLO COLIO ABRIL INMOBILIARIA AEG, S.A. DE C.V. CEMENTOS PORTLAND VALDERRIVAS, S.A. DIRECTOR GERARDO KURI KAUFMANN CEMENTOS PORTLAND CHIEF EXECUTIVE OFFICER VALDERRIVAS, S.A. REALIA BUSINESS, S.A. CHIEF EXECUTIVE OFFICER JUAN RODRÍGUEZ TORRES CEMENTOS PORTLAND VALDERRIVAS, S.A. DIRECTOR FCC AQUALIA, S.A. DIRECTOR REALIA BUSINESS, S.A. NON-EXECUTIVE CHAIRMAN ÁLVARO VÁZQUEZ DE LAPUERTA CEMENTOS PORTLAND VALDERRIVAS, S.A. DIRECTOR ALEJANDRO ABOUMRAD GONZÁLEZ CEMENTOS PORTLAND VALDERRIVAS, S.A. REPRESENTATIVE OF THE DIRECTOR INMOBILIARIA AEG, S.A. DE C.V. FCC AQUALIA, S.A. DIRECTOR AND CHAIRMAN OF THE BOARD OF DIRECTORS FCC SERVICIOS MEDIO AMBIENTE HOLDING, S.A.U. CHAIRMAN Name or corporate name of the director Company name of the Group entity Position ANTONIO GÓMEZ GARCÍA FCC AMÉRICAS, S.A. DE C.V. FCC MEDIO AMBIENTE, S.A.U. FCC AQUALIA, S.A. ALTERNATE DIRECTOR CHAIRMAN MEMBER OF THE BOARD, MEMBER OF THE AUDIT AND CONTROL COMMITTEE, OF THE INVESTMENT COMMITTEE, AND OF THE DELEGATED REGULATORY COMPLIANCE COMMITTEE FCC CONSTRUCCIÓN, S.A. CHAIRMAN FCC ENVIRONMENT (UK) LIMITED DIRECTOR FCC MEDIO AMBIENTE REINO UNIDO S.L.U. FCC SERVICIOS MEDIO AMBIENTE HOLDING, S.A.U. FCC CONCESIONES, S.A.U. GUZMAN ENERGY O&M, S.L. DEPUTY CHAIRMAN DEPUTY CHAIRMAN CHAIRMAN CHAIRMAN FCC AUSTRIA ABFALL SERVICE AG MEMBER OF THE SUPERVISORY BOARD These directors hold posts or exercise functions and/or hold ownership interests of less than 0.01% in any case in other FCC Group companies, in which Fomento de Construcciones y Con- tratas, S.A. holds the majority of the voting rights, directly or indirectly. In 2020, no significant transactions were performed entailing a transfer of assets or liabilities be- tween Group companies and their executives and directors. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 315 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 108 of 141 b) Situations of conflicts of interest No conflict of interests have been directly or indirectly declared in the interest of Fomento de Construcciones y Contratas, S.A., in accordance with applicable regulations (Article 229 of the Spanish Corporate Enterprises Act), without prejudice to the operations of Fomento de Construc- ciones y Contratas, S.A. with its related parties reflected in this report or, as the case may be, of the agreements related to remuneration or appointment of positions. In this regard, when specific conflicts of interest have taken place with certain directors, they have been resolved in accord- ance with the procedure stipulated in the Board of Directors’ Rules, with the directors involved abstaining from the corresponding debates and votes. c) Operations between Group companies or entities There are numerous transactions between Group companies that are part of their routine busi- ness and that, in any case, are eliminated in the process of preparing the consolidated financial statements. The turnover of the attached consolidated income statement includes 180,131 thousand euros (277,375 thousand euros in 2019) from Group companies billing associates and joint ventures. Likewise, purchases made from associates and joint ventures amounting to 22,714 thousand euros (15,878 thousand euros in 2019) are also included in the Group’s consolidated financial statements d) Transactions with other related parties During the year, a number of transactions were approved involving companies in which share- holders of Fomento de Construcciones y Contratas, S.A. own equity interests, the most signifi- cant of which were as follows: – Execution of construction and service contracts by FCC Construcción, S.A. and FCC Indus- trial e Infraestructuras Energéticas, S.A.U. relating to companies in the Realia subgroup, as follows: Corporate name of the significant shareholder Corporate name of the group company 2020 2019 Realia Business, S.A. FCC Construcción, S.A. Realia Patrimonio, S.L.U. FCC Industrial e Infraestructuras Energéticas S.A.U. 23,911 1,397 Valaise S.L.U. FCC Construcción, S.A. 12,373 1,209 4,899 25,308 18,481 – Agreements between FC y C, S.L. Unipersonal and Realia Business, S.A. for the management and marketing of three real estate developments: Plot “10B” in Badalona, Barcelona, for the construction of 141 collective dwellings available for resale and parking spaces; Plot “RCL 1B” in Tres Cantos, Madrid, for the construction of 85 collective dwellings available for resale and parking spaces: Parce-la “RLU 2ª” in Tres Cantos, Madrid, for the construction of 30 single-family homes, for a total amount of 1,954 thousand euros. Signature by FC y C, SL Un- ipersonal and Realia Business, S.A. of the following exclusive marketing contracts: Plot RU2A in Tres Cantos (marketing of 30 single-family dwellings), Plot RC1B in Tres Cantos (marketing of 85 dwellings available for resale), Plot 10 in Badalona (marketing of 141 collective dwellings available for resale), Plot in Arroyo Fresno, Madrid (marketing of 144 collective dwellings avail- able for resale), Plot in Arroyo Fresno, Madrid (marketing of 42 single-family dwellings), Plot in El Berzal (marketing of 40 single-family dwellings). – Service provision agreements between FCC Industrial e Infraestructuras Energéticas, S.A.U. and Realia Patrimonio, S.L.U. for annual preventive maintenance of generator units in build- ings: Offices on Calle Acanto 22 and 4 units in office buildings at Avda. Del Sur del Aero- puerto de Barajas, 28, 30, 32 and 34 in Madrid (Eisenhower Business Center in Madrid) for an amount of 3 thousand euros, basic annual preventive maintenance of the equipment of the Uninterruptible Power Supply of the buildings: Offices at Paseo de la Castellana 216 in Madrid; Offices on Calle Acanto 22, and 2 units in office buildings on Avda. Del Sur del Aero- puerto de Barajas, 28 and 34, Madrid, for an amount of 2 thousand euros. – Service provision agreement between Fomento de Construcciones y Contratas, S.A. with Vilafulder Corporate Group, S.L.U. for a total annual amount of 338 thousand euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 316 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 109 of 141 – Service provision contract between Cementos Portland Valderrivas, S.A. and Mr Gerardo Kuri Kaufmann, for an amount of 175 thousand euros. 32. Fees paid to auditors – In the framework of the debt refinancing associated with the Spanish activities of the Cemen- tos Portland Valderrivas Group in 2016, a subordinated loan agreement was entered into with Banco Inbursa, S.A., Institución de Banca Múltiple, with carrying amount at 31 December 2020 of 69,857 thousand euros. The finance costs incurred in the year totalled 2,076 thou- sand euros. – Financing provided by the financial group Inbursa for FCC Construcción, S.A. for Line 2 of the Panama Metro, through the acquisition of construction certificates, amounting to 3,818 thousand euros. Furthermore, other transactions are carried out under market conditions, mainly telephone and internet access services, with parties related to the majority shareholder for a non-significant amount. e) Mechanisms established to detect, determine and resolve possible conflicts of interests between the parent and/or its Group and its directors, executives or significant shareholders FCC Group has established specific mechanisms to detect, determine and resolve any possible conflicts of interest between the Group companies and their directors, executives and significant shareholders, as indicated in article 20 and thereafter of the Board of Directors’ Rules. Fees for audit services accrued in 2020 and 2019 relating to audit services and other verification services, as well as other professional services, provided to the different Group companies and joint management that comprise the FCC Group by the main auditor and other auditors partici- pating in the audit of the different Group companies, and by associated entities, both in Spain and abroad, are shown in the following table: Audit services Other assurance services Total audit and related services Tax advisory services Other services Total professional services 2020 Principal auditor Other auditors 3,386 261 718 1,220 Total 4,104 1,481 2019 Principal auditor Other auditors 3,477 522 599 571 Total 4,076 1,093 3,647 1,938 5,585 3,999 1,170 5,169 – 20 20 1,887 610 2,497 1,887 630 2,517 – – – 1,466 1,527 2,993 1,466 1,527 2,993 3,667 4,435 8,102 3,999 4,163 8,162 33. Events after the closing date There have been no significant events between the end of the year and the date of preparation of these financial statements. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 317 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 110 of 141 Annex I Fully consolidated subsidiaries Company Registered office % Effective ownership Auditor SERVICIOS MEDIOAMBIENTALES Alfonso Benítez, S.A. Aparcamientos Concertados, S.A. Armigesa, S.A. Azincourt Investment, S.L. Beootpad d.o.o. Beograd Castellana de Servicios, S.A. Compañía Catalana de Servicios, S.A. Corporación Inmobiliaria Ibérica, S.A. Ecoactiva de Medio Ambiente, S.A. Federico Salmón, 13 – Madrid Av. Aiguera, 1 – Benidorm (Alicante) Paseo de Extremadura s/n – Armilla (Granada) Federico Salmón, 13 – Madrid Serbia Federico Salmón, 13 – Madrid Balmes, 36 – Barcelona Av. Camino de Santiago, 40 – Madrid Ctra. Puebla Albortón a Zaragoza Km. 25– Zaragoza Ecodeal-Gestao Integral de Residuos Industriais, S.A. Ecogenesis Societe Anonime Rendering of Cleansing and Waste Management Services Portugal Greece Ecoparque Mancomunidad del Este, S.A. Egypt Environmental Services, S.A.E. Federico Salmón, 13 – Madrid Egypt Empresa Comarcal de Serveis Mediambientals del Baix Penedés – ECOBP, S.L. Plaça del Centre, 5 – El Vendrell (Tarragona) Enviropower Investments Limited Europea de Tratamiento de Residuos Industriales, S.A. FCC Ámbito, S.A. Unipersonal FCC Environment Portugal, S.A. FCC Environment Services (UK) Limited FCC Environmental Services Florida Llc. FCC Environmental Services Nebraska Llc. FCC Environmental Services Texas Llc. United Kingdom Federico Salmón, 13 – Madrid Federico Salmón, 13 – Madrid Portugal United Kingdom USA USA USA Deloitte Deloitte Deloitte Deloitte Deloitte Capital Auditors Deloitte Deloitte Deloitte Deloitte 100.00 100.00 51.00 100.00 100.00 100.00 100.00 100.00 60.00 53.62 51.00 100.00 100.00 66.60 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 318 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 111 of 141 Company FCC Environmental Services (USA) Llc. FCC Equal CEE, S.L. FCC Equal CEE Andalucía, S.L. FCC Equal CEE C. Valenciana, S.L. FCC Equal CEE Murcia, S.L. FCC Medio Ambiente, S.A. FCC Medio Ambiente Reino Unido, S.L.Unipersonal FCC Servicios Medio Ambiente Holding, S.A.U. Gamasur Campo de Gibraltar, S.L. Gandia Serveis Urbans, S.A. Geneus Canarias, S.L. Registered office USA Federico Salmón, 13 – Madrid Av. Molière, 36 – Málaga Riu Magre, 6 P.I. Patada del Cid – Quart de Poblet (Valencia) Luis Pasteur, 8 – Cartagena (Murcia) Federico Salmón, 13 – Madrid Av. Camino de Santiago, 40 – Madrid Federico Salmón, 13 – Madrid Antigua Ctra. de Jimena de la Frontera, s/n – Los Barrios (Cádiz) Llanterners, 6 – Gandia (Valencia) Electricista, 2. U.I. de Salinetas – Telde (Las Palmas) Gestió i Recuperació de Terrenys, S.A. Unipersonal Balmes, 36 Entresuelo – Barcelona Gipuzkoa Ingurumena BI, S.A. Polígono Industrial Zubiondo Par A.5. – Hernani (Gipuzkoa) Golrib, Soluções de Valorização de Residuos Lda. FCC Group - CEE .A.S.A. Hódmezövásárhely Köztisztasági Kft ASMJ s.r.o. FCC Abfall Service Betriebs GmbH FCC Austria Abfall Service AG FCC BEC s.r.o. FCC Bratislava s.r.o. FCC Centrum Nonprofit Kft. FCC Ceska Republika s.r.o. FCC Ceské Budêjovice s.r.o. FCC Dacice s.r.o. FCC Eko d.o.o. FCC EKO Polska sp. z.o.o. FCC Eko-Radomsko sp. z.o.o. Portugal Austria Austria Czech Republic Slovakia Hungary Czech Republic Czech Republic Czech Republic Serbia Poland Poland Polonia Polonia % Effective ownership Auditor 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 85.00 95.00 100.00 80.00 82.00 55.00 61.83 51.00 100.00 100.00 100.00 100.00 100.00 100.00 75.00 60.00 100.00 100.00 100.00 Deloitte Deloitte Vaciero Auditores Centium Ernst & Young Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 112 of 141 Company Registered office FCC Entsorga Entsorgungs GmbH & Co. Nfg KG FCC Environment CEE GmbH FCC Environment Romania S.R.L. FCC Freistadt Abfall Service GmbH FCC Halbenrain Abfall Service GmbH & Co. Nfg KG FCC HP s.r.o. FCC Industrieviertel Abfall Service GmbH & Co. Nfg KG FCC Inerta Engineering & Consulting GmbH FCC Kikinda d.o.o. FCC Liberec s.r.o. FCC Litovel s.r.o. FCC Lublienec sp. z.o.o. FCC Magyarorzág Kft FCC Mostviertel Abfall Service GmbH FCC Neratovice s.r.o. FCC Neunkirchen Abfall Service GmbH FCC Podhale sp. z.o.o. FCC Prostejov s.r.o. FCC Regios AS FCC Slovensko s.r.o. FCC Tarnobrzeg.sp. z.o.o. FCC Textil2Use GmbH FCC Trnava s.r.o. FCC Uhy s.r.o. FCC Únanov s.r.o. FCC Vrbak d.o.o. FCC Wiener Neustadt Abfall Service GmbH FCC Zabcice s.r.o. Austria Austria Romania Austria Austria Czech Republic Austria Austria Serbia Czech Republic Czech Republic Poland Hungary Austria Czech Republic Austria Poland Czech Republic Czech Republic Slovakia Poland Austria Slovakia Czech Republic Czech Republic Serbia Austria Czech Republic 319 % Effective ownership 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 80.00 55.00 49.00 61.97 100.00 100.00 100.00 100.00 100.00 75.00 99.99 100.00 59.72 100.00 50.00 100.00 66.00 51.00 100.00 80.00 Auditor Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 113 of 141 320 Company Registered office FCC Zabovresky s.r.o. FCC Zisterdorf Abfall Service GmbH FCC Znojmo s.r.o. FCC Zohor.s.r.o. Miejskie Przedsiebiorstwo Gospodarki Komunalnej sp. z.o.o. Obsed a.s. Quail spol. s.r.o. Siewierskie Przedsiebiorstwo Gospodarki Komunalnej sp. z.o.o. FCC Environment Group (UK) 3C Holding Limited 3C Waste Limited Allington O & M Services Limited Allington Waste Company Limited Anti-Waste (Restoration) Limited Anti-Waste Limited Arnold Waste Disposal Limited BDR Property Limited BDR Waste Disposal Limited Darrington Quarries Limited Derbyshire Waste Limited East Waste Limited FCC Environment (Berkshire) Ltd. FCC Environment (UK) Limited FCC Environment Limited FCC Environment Lostock Limited FCC Environmental Services Limited FCC Recycling (UK) Limited FCC Waste Services (UK) Limited Czech Republic Austria Czech Republic Slovakia Poland Czech Republic Czech Republic Poland United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom % Effective ownership 89.00 100.00 49.66 85.00 80.00 100.00 100.00 60.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 80.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Auditor Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 114 of 141 321 Company Finstop Limited Focsa Services (UK) Limited Hykeham O&M Services Limited Integrated Waste Management Limited Landfill Management Limited Lincwaste Limited Norfolk Waste Limited Pennine Waste Management Limited T Shooter Limited Waste Recovery Limited Waste Recycling Group (Central) Limited Waste Recycling Group (Scotland) Limited Waste Recycling Group (UK) Limited Waste Recycling Group (Yorkshire) Limited Wastenotts O & M Services Limited Welbeck Waste Management Limited WRG (Midlands) Limited WRG (Northern) Limited WRG Acquisitions 2 Limited WRG Environmental Limited WRG Waste Services Limited FCC Group - PFI Holdings FCC Lostock Holdings Limited FCC PFI Holdings Limited FCC Wrexham PFI Holdings Limited FCC Wrexham PFI Limited FCC Wrexham PFI (Phase II Holding) Ltd. FCC Wrexham PFI (Phase II) Ltd. Registered office United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom % Effective ownership Auditor 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 115 of 141 322 Company RE3 Holding Limited RE3 Limited Green Recovery Group FCC (E&M) Holdings Ltd. FCC (E&M) Ltd. FCC Buckinghamshire Holdings Limited FCC Buckinghamshire Limited FCC Buckinghamshire (Support Services) Limited FCC Energy Holdings Ltd FCC Energy Limited FCC Environment (Lincolnshire) Ltd. FCC Environment Developments Ltd. Green Energy Finance Solutions Ltd Green Recovery Projects Ltd Kent Energy Limited Kent Enviropower Limited Wastenotts (Reclamation) Limited Integraciones Ambientales de Cantabria, S.A. International Services Inc., S.A. Unipersonal Jaime Franquesa, S.A. Jaume Oro, S.L. Limpieza e Higiene de Cartagena, S.A. Limpiezas Urbanas de Mallorca, S.A. Registered office United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom United Kingdom Monte de Carceña Cr CA-924 Pk 3,280 – Castañeda (Cantabria) Av. Camino de Santiago, 40 – Madrid P.I. Zona Franca Sector B calle D 49 – Barcelona Av. del Bosc, s/n P.I. Hostal Nou – Bellpuig (Lleida) Luis Pasteur, 8 – Cartagena (Murcia) Ctra. Santa Margalida-Can Picafort – Santa Margalida (Balearic Islands) Manipulación y Recuperación MAREPA, S.A. Av. San Martín de Valdeiglesias, 22 – Alcorcón (Madrid) Recuperació de Pedreres, S.L. Serveis Municipals de Neteja de Girona, S.A. Balmes, 36 Entresuelo – Barcelona Pl. del Vi, 1 - Gerona % Effective ownership 100.00 100.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 90.00 100.00 100.00 100.00 90.00 100.00 100.00 80.00 75.00 Auditor Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Cataudit Auditors Associats Servicio de Recogida y Gestión de Residuos Sólidos Urbanos del Consorcio Vega Sierra Elvira, S.A. Antonio Huertas Remigio, 9 – Maracena (Granada) 60.00 Capital Auditors Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 323 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 116 of 141 Company Registered office Servicios de Levante, S.A. Servicios Especiales de Limpieza, S.A. Sistemas y Vehículos de Alta Tecnología, S.A. Camino Pla de Museros, s/n – Almazora (Castellón) Federico Salmón, 13 – Madrid Federico Salmón, 13 – Madrid Societat Municipal Mediambiental d’Igualada, S.L. Pl. de l’Ajuntament, 1 – Igualada (Barcelona) Telford & Wrekin Services Limited United Kingdom Tratamientos y Recuperaciones Industriales, S.A. Balmes, 36 Entresuelo – Barcelona Valoración y Tratamiento de Residuos Urbanos, S.A. Riu Magre, 6 – P.I. Patada del Cid – Quart de Poblet (Valencia) % Effective ownership 100.00 100.00 100.00 65.91 100.00 75.00 80.00 Auditor Deloitte Deloitte Deloitte Vaciero Auditores Deloitte Capital Auditors Valorización y Tratamiento de Residuos, S.A. Alameda de Mazarredo, 15-4º A – Bilbao (Vizcaya) 100.00 Centium AQUALIA Abrantaqua – Serviço de Aguas Residuais Urbanas do Municipio De Abrantes, S.A. Portugal Acque di Caltanissetta, S.p.a. Agua y Gestión del Ciclo Integral, S.L.U. Aguas de Alcázar Empresa Mixta, S.A. Aguas de las Galeras, S.L. Aigües de Vallirana, S.A. Unipersonal Aqua Campiña, S.A. Aquaelvas – Aguas de Elvas, S.A. Aquafundalia – Agua do Fundäo, S.A. Aquajerez, S.L. Aqualia Czech, S.L. Aqualia Desalación Guaymas, S.A. de C.V. Aqualia France Aqualia Infraestructuras d.o.o. Beograd-Vracar Aqualia Infraestructuras d.o.o. Mostar Aqualia Infraestructuras Inzenyring, s.r.o. Aqualia Infraestructuras Montenegro (AIM) d.o.o. Niksic Aqualia Infraestructuras Pristina LLC. Italy Av. Diego Martínez Barrio, 4 – Seville Rondilla Cruz Verde, 1 – Alcázar de San Juan (Ciudad Real) Av. Camino de Santiago, 40 – Madrid Conca de Tremp, 14 – Vallirana (Barcelona) Blas Infante, 6 – Écija (Seville) Portugal Portugal Cristalería, 24 – Cádiz Av. Camino de Santiago, 40 – Madrid Mexico France Serbia Bosnia-Herzegovina Czech Republic Montenegro Kosovo Oliveira, Reis & Asociados Deloitte Capital Auditors Centium Auditores Deloitte Deloitte Ernst & Young Deloitte Deloitte SNR Audit ABC AUDIT, sro 30.60 50.22 51.00 26.71 51.00 51.00 45.90 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 51.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 117 of 141 Company Aqualia Intech, S.A. Aqualia Latinoamérica, S.A. Registered office Av. Camino de Santiago, 40 – Madrid Colombia Aqualia Mace Contracting, Operation & General Maintenance LLC. United Arab Emirates Aqualia Mace Qatar Aqualia México, S.A. de C.V. Aqualia New Europe B.V. Aqualia Portugal, S.A. Aqualia Villa del Rosario, SA Aquamaior – Aguas de Campo Maior, S.A. Aquos El Realito, S.A. de C.V. C.E.G. S.P.A. Simplifiée Cartagua, Aguas do Cartaxo, S.A. Compañía Onubense de Aguas, S.A. Conservación y Sistemas, S.A. Depurplan 11, S.A. Ecosistema de Morelos S.A. de C.V. Empresa Gestora de Aguas Linenses, S.A. Qatar Mexico Netherlands Portugal Colombia Portugal Mexico France Portugal Av. Martín Alonso Pinzón, 8 – Huelva Federico Salmón, 13 – Madrid Madre Rafols, 2 – Zaragoza Mexico Federico Salmón, 13 – Madrid Empresa Mixta de Conservación de la Estación Depuradora de Aguas Residuales de Butarque, S.A. Princesa, 3 – Madrid Entemanser, S.A. FCC Aqualia, S.A. FCC Aqualia América, S.A.U. FCC Aqualia U.S.A. Corp Flores, Rebollo y Morales, S.L. H.A.A. & CO. Integrated Services Hidrotec Tecnología del Agua, S.L. Unipersonal Castillo, 13 – Adeje (Santa Cruz de Tenerife) Av. Camino de Santiago, 40 – Madrid Uruguay, 11 – Vigo (Pontevedra) USA Urbanización Las Buganvillas, 4 – Vera (Almería) Saudi Arabia Pincel, 25 – Seville Infraestructuras y Distribución General de Aguas, S.L.U. La Presa, 14 – Adeje (Santa Cruz de Tenerife) 324 % Effective ownership 51.00 51.00 26.01 26.01 51.00 51.00 51.00 51.00 51.00 26.01 51.00 30.60 30.60 51.00 51.00 51.00 51.00 35.70 49.47 51.00 51.00 51.00 30.60 26.01 51.00 51.00 Auditor Deloitte Sn Audit And Consulting Colombia Sas Deloitte Mazars Deloitte RSM Ernst & Young Sn Audit And Consulting Colombia Sas Deloitte Deloitte México SNR Audit Oliveira, Reis & Asociados Deloitte Capital Auditors Deloitte Deloitte Berkowitz Pollack Brant Ernst & Young Deloitte Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 325 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 118 of 141 Company Qatarat Saquia Desalination Registered office Saudi Arabia Servicios Hídricos Agricultura y Ciudad, S.L.U. Alfonso XIII – Sabadell (Barcelona) Severomoravske Vodovody a Kanalizace Ostrava, a.s. Shariket Tahlya Miyah Mostaganem, S.P.A. Sociedad Española de Aguas Filtradas, S.A. Sociedad Ibérica del Agua, S.A. Unipersonal Societè des Eaux de Fin d'Oise, S.A.S. Tratamiento Industrial de Aguas, S.A. Vodotech, spol. s.r.o. Water Sur, S.L. CONSTRUCTION ACE Scutmadeira Sistemas de Gestao e Controlo de Tràfego Agregados y Materiales de Panamá, S.A. Áridos de Melo, S.L. Colombiana de Infraestructuras, S.A.S. Concesiones Viales S. de R.L. de C.V. Concretos Estructurales, S.A. Conservial Infraestructuras, S.L. Consorcio FCC Iquique Ltda. Construcción Infraestructuras y Filiales de México, S.A. de C.V. Construcciones Hospitalarias, S.A. Constructora Meco-Caabsa, S.A. de C.V. Constructora Túnel de Coatzacoalcos, S.A. de C.V. Contratas y Ventas, S.A. Corporación M&S de Nicaragua, S.A. Desarrollo y Construcción DEYCO CRCA, S.A. Edificadora MSG, S.A. (Panama) Czech Republic Algeria Jacometrezo, 4 – Madrid Federico Salmón, 13 – Madrid France Federico Salmón, 13 – Madrid Czech Republic Urbanización Las Buganvillas, 4 – Vera (Almería) Portugal Panama Finca la Barca y el Ballestar, s/n – Barajas de Melo (Cuenca) Colombia Mexico Nicaragua Federico Salmón, 13 – Madrid Chile Mexico Panama El Salvador Mexico Av. de Santander, 3 1º – Oviedo (Asturias) Nicaragua Costa Rica Panama % Effective ownership Auditor Ernst & Young Deloitte Samir Hadj Ali Deloitte SNR Audit Deloitte CMC Audit s.r.o. Deloitte Capital Auditors ASTAF Auditores y Consultores Deloitte Deloitte Deloitte 26.01 51.00 51.00 13.01 51.00 51.00 51.00 51.00 51.00 30.60 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 52.00 100.00 60.00 55.60 100.00 100.00 100.00 100.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 119 of 141 Company Registered office % Effective ownership Auditor 326 Edificadora MSG, S.A. de C.V. (El Salvador) Edificadora MSG, S.A. de C.V. (Nicaragua) FCC Américas, S.A. de C.V. FCC Américas Colombia, S.A.S. FCC Américas Panamá, S.A. FCC Colombia, S.A.S. FCC Construcción, S.A. FCC Construcción América, S.A. FCC Construcción Chile, SPA FCC Construcción Costa Rica, S.A. FCC Construcción de México, S.A. de C.V. FCC Construcción Perú, S.A.C. FCC Constructii Romania, S.A. FCC Construction Australia Pty Ltd FCC Construction Inc. FCC Construction International B.V. FCC Construction Ireland DAC El Salvador Nicaragua Mexico Colombia Panama Colombia Balmes, 36 – Barcelona Costa Rica Chile Costa Rica Mexico Peru Romania Australia USA Netherlands Ireland FCC Construction Northern Ireland Limited United Kingdom FCC Construçoes do Brasil Ltda. FCC Edificadora CR, S.A. FCC Electromechanical LLC. FCC Elliott Construction Limited FCC Industrial de Panamá, S.A. Brazil Costa Rica Saudi Arabia Ireland Panama FCC Industrial e Infraestructuras Energéticas, S.A. Unipersonal Av. Camino de Santiago, 40 – Madrid FCC Industrial Perú, S.A. FCC Industrial UK Limited FCC Inmobilien Holding GmbH FCC Servicios Industriales y Energéticos México, S.A. de C.V. Peru United Kingdom Germany Mexico 100.00 100.00 50.00 50.00 50.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 Deloitte Deloitte ASTAF Auditores y Consultores Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Ernst & Young Deloitte Deloitte Deloitte Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 120 of 141 327 Company Registered office FCC Soluciones de Seguridad y Control, S.L. Federico Salmón, 13 – Madrid Fomento de Construcciones Colombianas, S.A.S. Fomento de Construcciones y Contratas Canadá Ltd. Colombia Canada Guzmán Energy O&M, S.L. Av. Camino de Santiago, 40 – Madrid Impulsora de Proyectos Proserme, S.A. de C.V. Mexico Mantenimiento de Infraestructuras, S.A. Federico Salmón, 13 2a planta – Madrid Meco Santa Fe Limited Megaplás, S.A. Unipersonal Megaplás Italia, S.p.A. Participaciones Teide, S.A. Prefabricados Delta, S.A. Unipersonal Ramalho Rosa Cobetar Sociedade de Construçoes, S.A. Servicios Dos Reis, S.A. de C.V. CEMENT Áridos de Navarra, S.A. Canteras de Alaiz, S.A. Carbocem, S.A. Cementos Alfa, S.A. Cementos Portland Valderrivas, S.A. Dragon Alfa Cement Limited Dragon Portland Limited Prebesec Mallorca, S.A. Select Beton, S.A. Société des Ciments d’Enfidha Tratamiento Escombros Almoguera S.L. Uniland Acquisition Corporation Uniland International B.V. Uniland Trading B.V. Belize Hilanderas, 4-14 – La Poveda – Arganda del Rey (Madrid) Italy Av. Camino de Santiago, 40 – Madrid Federico Salmón, 13 – Madrid Portugal Mexico Estella, 6, Pamplona (Navarra) Dormilatería, 72 – Pamplona (Navarre) María Tubau, 9 – 4 planta – Madrid María Tubau, 9 – 4 planta – Madrid Dormilatería, 72 – Pamplona (Navarre) United Kingdom United Kingdom Conradors (P.I. Marratxi) - Marratxi (Balearic Islands) Tunisia Tunisia María Tubau, 9 - 4 planta - Madrid USA Netherlands Netherlands % Effective ownership Auditor 100.00 100.00 100.00 52.13 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 65.47 69.46 69.15 87.35 99.20 87.35 99.20 67.77 87.13 87.16 50.62 99.20 99.20 99.20 Deloitte Deloitte Deloitte Collegio Sindicale Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte - Guellaty Deloitte - Guellaty Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 121 of 141 Company OTHER ACTIVITIES Asesoría Financiera y de Gestión, S.A. Autovía Conquense, S.A. Bvefdomintaena Beteiligungsverwaltung GmbH Cemark - Mobiliario Urbano e Publicidade, S.A. Concesionaria Atención Primaria, S.A. Registered office Federico Salmón, 13 – Madrid Av. Camino de Santiago, 40 – Madrid Austria Portugal Gremi de Sabaters, 21 (Loc. A. 15.2) - Palma de Mallorca (Balearic Islands) Concesionaria Túnel de Coatzacoalcos, S.A. de C.V. Mexico Costa Verde Habitat, S.L. FC y C, S.L. Unipersonal FCC Concesiones, S.A. Unipersonal FCC Concesiones de Infraestructuras, S.L. FCC Midco, S.A. FCC Topco, S.A.R.L. FCC Versia, S.A. Fedemes, S.L. Per Gestora, S.L. PPP Infraestructure Investments B.V. Vela Boravica Koncern d.o.o. Av. Camino de Santiago, 40 – Madrid Federico Salmón, 13 – Madrid Federico Salmón, 13 – Madrid Av. Camino de Santiago, 40 – Madrid Luxembourg Luxembourg Av. Camino de Santiago, 40 – Madrid Federico Salmón, 13 – Madrid Federico Salmón, 13 – Madrid Países Bajos Croacia Vialia Sociedad Gestora de Concesiones de Infraestructuras, S.L. Av. Camino de Santiago, 40 – Madrid Grupo Cedinsa Concessionària Cedinsa Concessionària, S.A. Cedinsa Conservació, S.L. Unipersonal Av. Josep Tarradellas, 38 – Barcelona Ctra. C-16 – Puig-Reig (Barcelona) Cedinsa d’Aro Concessionària de la Generalitat de Catalunya, S.A.Unipersonal Av. Josep Tarradellas, 38 – Barcelona Cedinsa Eix Llobregat Concessionària de la Generalitat de Catalunya, S.A.Unipersonal Cedinsa Eix Transversal Concessionària de la Generalitat de Catalunya, S.A.Unipersonal Av. Josep Tarradellas, 38 – Barcelona Av. Josep Tarradellas, 38 – Barcelona Cedinsa Ter Concessionària de la Generalitat de Catalunya, S.A.Unipersonal Av. Josep Tarradellas, 38 – Barcelona 328 % Effective ownership Auditor 100.00 100.00 100.00 100.00 82.50 85.60 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 51.00 51.00 51.00 51.00 Deloitte PricewaterhouseCoopers Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte 51.00 Deloitte 51.00 Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 329 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 122 of 141 Annex II Companies jointly controlled with third parties outside the Group (consolidated using the equity method) Company Registered office 2020 2019 % Effective ownership Auditor Carrying amount of the backlog ENVIRONMENTAL SERVICES Atlas Gestión Medioambiental. S.A. Beacon Waste Limited Ecoparc del Besós. S.A. Ecoserveis Urbans de Figueres. S.L. Electrorecycling. S.A. Viriato. 47 – Barcelona United Kingdom Av. Torre d'en Mateu. P.I. Can Salvatella s/n – Barcelona Av. de les Alegries. s/n – Lloret de Mar (Gerona) Ctra. BV – 1224 Km. 6.750 – El Pont de Vilomara i Rocafort (Barcelona) Empresa Mixta de Limpieza de la Villa de Torrox. S.A. Plaza de la Constitución. 1 – Torrox (Málaga) Empresa Mixta de Medio Ambiente de Rincón de la Victoria. S.A. Barrio Las Zorreras. 8 – Rincón de la Victoria (Málaga) Fisersa Ecoserveis. S.A. Alemanya. 5 – Figueres (Gerona) Gestión y Valorización Integral del Centro. S.L. De la Tecnología. 2. P.I. Los Olivos – Getafe (Madrid) Ingeniería Urbana. S.A. Calle l esquina calle 3. P.I. Pla de la Vallonga – Alicante Mediaciones Comerciales Ambientales. S.L. Av. Barcelona. 109. P.5 – Sant Joan Despí (Barcelona) Mercia Waste Management Ltd. United Kingdom Palacio de Exposiciones y Congresos de Granada. S.A. Paseo del Violón. s/n – Granada Pilagest. S.L. Reciclado de Componentes Electrónicos. S.A. Ctra. BV – 1224 Km. 6.750 – El Pont de Vilomara i Rocafort (Barcelona) Calle El Matorral (Parque Actividades Medioambientales) – Aznalcóllar (Sevilla) Servicios de Limpieza Integral de Málaga III. S.A. Camino Medioambiental (Ed. Limasa). 23–Málaga Servicios Urbanos de Málaga. S.A. Av. Camino de Santiago. 40 – Madrid 9,808 1,250 7,803 138 1,284 360 316 165 322 4,210 359 11,781 (1,969) 211 1,924 − 3,216 11,933 1,361 6,638 153 1,294 400 275 164 476 4,261 793 10,682 (1,850) 212 2,125 1,965 668 50.00 50.00 49.00 50.00 33.34 50.00 50.00 36.36 50.00 35.00 50.00 50.00 50.00 50.00 Ernst & Young Deloitte Castellà Auditors Consultors S.L.P. Audinfor Audinfor Audinfor Auditoria i Control Auditors S.L.P. Deloitte Deloitte Deloitte Hispanobelga Econo- mistas Auditores. S.L.P. 37.50 KPMG 26.01 51.00 PricewaterhouseCoopers Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 123 of 141 Company Severn Waste Services Limited Registered office United Kingdom Tratamiento Industrial de Residuos Sólidos. S.A. Rambla Cataluña. 91 – Barcelona Carrying amount of the backlog 2020 199 1,580 2019 209 1,119 % Effective ownership 50.00 33.33 Auditor Deloitte Castellà Auditors Consultors. S.L.P. 330 Camino Artigabidea. 10 – Bilbao (Vizcaya) 16,060 17,234 30.00 KPMG Zabalgarbi. S.A. AQUALIA Aguas de Langreo, S.L. Aguas de Narixa, S.A. Aigües de Girona, Salt i Sarrià del Ter, S.A. Alonso del Riesgo, 3 – Langreo (Asturias) Málaga, 11 – Nerja (Málaga) Ciutadans, 11 – Gerona Compañía de Servicios Medioambientales do Atlántico, S.A. Estrada de Cedeira Km. 1 – Narón (La Coruña) Constructora de Infraestructura de Agua de Querétaro, S.A. de C.V. Mexico Empresa Municipal de Aguas de Benalmádena EMABESA, S.A. Explanada de Tivoli, s/n – Arroyo de la Miel (Málaga) Girona, S.A. Travesía del Carril, 2 – Gerona HA Proyectos Especiales Hidráulicos S. de R.L. de C.V. Orasqualia Construction, S.A.E. Mexico Egypt Orasqualia for the Development of the Waste Water Treatment Plant S.A.E. Egypt Orasqualia Operation and Maintenance, S.A.E. CONSTRUCTION Administración y Servicios Grupo Zapotillo, S.A. de C.V. Altos del Javier, S.A. Consorcio Tramo Dos S.A. DE C.V. Construcciones Olabarri, S.L. Egypt Mexico Panama Mexico Ripa, 1 – Bilbao (Vizcaya) Constructora de Infraestructura de Agua de Querétaro, S.A. de C.V. Constructora Durango Mazatlán, S.A. de C.V. Constructora Nuevo Necaxa Tihuatlán, S.A. de C.V. Constructores del Zapotillo, S.A. de C.V. Ctra. Cabo San Lucas San José, S.A. de C.V. Mexico Mexico Mexico Mexico Mexico − 909 237 162 296 (2,996) 1,584 1,701 992 (100) 11,943 1,130 108 − 8 5,734 − 1,403 (29,993) 1,114 − − 885 722 162 302 (2,995) 1,745 1,672 1,132 (110) 11,700 1,797 143 − − 5,521 − 1,613 (34,403) 1,528 − 24.99 25.50 13.71 24.99 12.50 25.50 17.14 25.25 25.50 25.50 25.50 50.00 50.00 50.00 49.00 24.50 51.00 40.00 50.00 50.00 Capital Auditors and Consultants. S.L. Cataudit Auditors Associats. S.L. Audinfor Deloitte Audinfor Cataudit Auditors Associats. S.L. Grant Thornton SC KPMG Deloitte Deloitte Charman Auditores Deloitte Deloitte Grant Thornton Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 331 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 124 of 141 Company Dragados FCC Canada Inc. Registered office Canada Elaboración de Cajones Pretensados, S.L. Av. Camino de Santiago, 40 – Madrid Integral Management Future Renewables, S.L. A Condomiña, s/n – Ortoño (La Coruña) North Tunnels Canada Inc. OHL Co Canada & FCC Canada Ltd. Partnership Canada Canada Operaciones y Servicios para la Industria de la Construcción, S.A. de C.V. Mexico Servicios Empresariales Durango-Mazatlán, S.A. de C.V. Mexico Carrying amount of the backlog 2020 − 2 3,488 (1,674) (65,044) − 119 2019 (862) 2 3,257 (1,782) (62,695) − 136 % Effective ownership Auditor Deloitte 50.00 50.00 50.00 50.00 50.00 50.00 51.00 CEMENT Pedrera de l’Ordal, S.L. OTHER ACTIVITIES Ibisan Sociedad Concesionaria, S.A Ctra. N 340 km. 1229.5 - Subirats (Barcelona) 3,243 2,706 49.50 Deloitte Av. Isidor Macabich, s / n. Sant Rafel de Sa Creu (Balearic Islands) 8,204 7,291 50.00 Deloitte MDM-Teide, S.A. Panama Sociedad Concesionaria Tranvía de Murcia, S.A. Paseo de la Ladera, 79– Murcia Teide-MDM Quadrat, S.A. Grupo FM Green Power Investments Enestar Villena. S.A. Panama Maestro Chanzá, 3 – Villena (Alicante) Estructuras Energéticas Generales. S.A. Unipersonal Paseo de la Castellana, 91 planta 11 – Madrid Ethern Electric Power. S.A. FM Green Power Investments. S.L. Guzmán Energía. S.L. Helios Patrimonial 1. S.L. Unipersonal Helios Patrimonial 2. S.L. Unipersonal Olivento. S.L. Unipersonal Paseo de la Castellana, 91 planta 11 – Madrid Paseo de la Castellana, 91 planta 11 – Madrid Portada, 11 – Palma del Río (Córdoba) Paseo de la Castellana, 91 planta 11 – Madrid Paseo de la Castellana, 91 planta 11 – Madrid Paseo de la Castellana, 91 planta 11 – Madrid 161 22,572 60 16,462 175 21,248 65 17,074 − − − − − − − − − − − − − − − − 50.00 50.00 50.00 49.00 49.00 49.00 49.00 49.00 34.30 49.00 49.00 49.00 Deloitte Ernst & Young Ernst & Young Ernst & Young Ernst & Young Ernst & Young Ernst & Young Ernst & Young TOTAL VALUE OF CONSOLIDATED COMPANIES USING THE EQUITY METHOD (JOINT VENTURES) 40,842 38,141 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 332 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 125 of 141 Annex III Associates (consolidated using the equity method) Company Registered office ENVIRONMENTAL SERVICES Aprochim Getesarp Rymoil, S.A. Aragonesa de Gestión de Residuos, S.A. P.I. Logrezana s/n– Carreño (Asturias) Paseo María Agustín, 36 – Zaragoza Aragonesa de Tratamientos Medioambientales XXI, S.A. Ctra. Castellón Km. 58 – Zaragoza Betearte, S.A.U. Cr. BI – 3342 pk 38 Alto de Areitio – Mallabia (Vizcaya) Gestión Integral de Residuos Sólidos, S.A. Serrans, 12 – 14 Ent. 1 – Valencia Giref Generación Renovable FCC Group - CEE A.K.S.D. Városgazdálkodási Korlátolt FT ASTV s.r.o. FCC + NHSZ Környezetvédelmi HKft FCC Hlohovec s.r.o. Huber Abfallservice Verwaltungs GmbH Huber Entsorgungs GmbH Nfg KG Killer GmbH Killer GmbH & Co KG Recopap s.r.o. FCC Group - PFI Holdings CI III Lostock Efw Limited Lostock Power Limited Lostock Sustainable Energy Pedro Lafayo, 6 - Ibiza Hungary Czech Republic Hungary Slovakia Austria Austria Austria Austria Slovakia United Kingdom United Kingdom United Kingdom United Kingdom Carrying amount of the backlog 2020 2019 % Effective ownership Auditor 1,117 12 609 (91) 5,298 − 6,310 − − − − − − − − − 1,016 15 611 (376) 5,208 − 6,264 − − − − − − − − − 22,766 9,797 − − − − − − 32.17 12.00 33.00 33.33 49.00 20.00 25.50 49.00 50.00 50.00 49.00 49.00 50.00 50.00 50.00 40.00 40.00 40.00 CGM Auditores, S.L.y Villalba, Envid y Cia. Auditores, S.L.P. DULA Auditores, S.L.P. Interauditor Interauditor ConVisio ConVisio Rittmann Rittmann Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 126 of 141 Company Tirme Group Balear de Trituracions, S.L. Mac Insular, S.L. Mac Insular Segunda, S.L. Tirme, S.A. Sogecar, S.A. AQUALIA Aguas de Archidona, S.L. Aguas de Denia, S.A. Aguas de Guadix, S.A. Aguas de Priego, S.L. Registered office Cr. de Sóller Km. 8,2 – Palma de Mallorca (Balearic islands) P.I. Ses Veles, (Cl. Romaní), 2 – Bunyola (Balearic islands) Cr. de Sóller Km. 8,2 – Palma de Mallorca (Balearic islands) Ctra. Soller Km. 8,2 Camino de Son Reus – Palma de Mallorca (Balearic islands) Polígono Torrelarragoiti – Zamudio (Vizcaya) Pz. Ochavada, 1 – Archidona (Málaga) Pedro Esteve, 17– Denia (Alicante) Plaza Constitución, 1– Guadix (Granada) Plaza Constitución, 3 – Priego de Córdoba (Córdoba) Aguas del Puerto Empresa Municipal, S.A. Aurora, 1 – El Puerto de Santa María (Cádiz) Aigües de Blanes, S.A. Canigó, 5 – Blanes (Gerona) Aigües del Segarra Garrigues, S.A. C/ Mas d’en Colom, 14 – Tárrega (Lleida) Aigües del Vendrell, S.A. Aquos El Realito, S.A. de C.V. Codeur, S.A. Vella, 1 – El Vendrell (Tarragona) Mexico Mayor, 22 – Vera (Almería) Concesionaria de Desalación de Ibiza, S.A. Rotonda de Santa Eulalia, s/n – Ibiza (Balearic Islands) Constructora de Infraestructuras de Aguas de Potosí, S.A. de C.V. Mexico EMANAGUA Empresa Mixta Municipal de Aguas de Nijar, S.A. Plaza de la Glorieta, 1 – Nijar (Almería) Empresa Mixta de Aguas de Ubrique, S.A. Empresa Mixta de Aguas de Jodar, S.A. Juzgado, s/n – Ubrique (Cádiz) Pz. España, 1 – Jodar (Jaén) Empresa Municipal de Aguas de Algeciras, S.A. Av. Virgen del Carmen – Algeciras (Cádiz) Empresa Municipal de Aguas de Linares, S.A. Cid Campeador, 7 – Linares (Jaén) − − − − 499 62 440 179 (33) 3,910 38 − 509 − 6,560 1,208 (5,396) 320 77 13 153 198 Carrying amount of the backlog 2020 6,783 2019 7,423 333 % Effective ownership Auditor 20.00 14.00 Deloitte 15.00 20.00 Deloitte − − − − 482 30.00 75 408 161 (16) 4,094 68 − 503 7,499 6,504 1,243 (5,395) 356 88 6 151 279 24.48 16.83 20.40 24.99 24.98 8.40 0.52 24.99 24.99 13.26 25.50 12.50 24.99 24.99 24.99 24.99 Centium Auditores Audinfor Audinfor Cd Auditors Auditoria I Consulting SL Deloitte Gm Auditors SL Deloitte México BDO Auditores Centium Auditores Deloitte Centium Auditores Next Auditores y Consultores 24.99 Centium Auditores Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 334 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 127 of 141 Company Registered office Empresa Municipal de Aguas de Toxiria, S.A. Plaza de la Constitución – Torredonjimeno (Jaén) Nueva Sociedad de Aguas de Ibiza, S.A. Omán Sustainable Water Services SAOC Operadora El Realito, S.A. de C.V. Prestadora de Servicios Acueducto El Realito, S.A. de C.V. Av. Bartolomé Roselló, 18 - Ibiza (Balearic Islands) Oman Mexico Mexico Proveïments d’Aigua, S.A. Astúries, 13 - Gerona Sera Q A Duitama E.S.P., S.A. Suministro de Aguas de Querétaro, S.A. de C.V. CONSTRUCTION Agrenic Complejo Industrial Nindiri, S.A. Aigües del Segarra Garrigues, S.A. Cafig Constructores, S.A. de C.V. Construcciones y Pavimentos, S.A. Constructora de Infraestructuras de Aguas de Potosí, S.A. de C.V. Constructora San José - Caldera CSJC, S.A. Constructora San José - San Ramón SJSR, S.A. Constructora Terminal Valle de México, S.A. de C.V. Desarrollo Cuajimalpa, S.A. de C.V. Efi Túneles Necaxa, S.A. de C.V. FCC Tarrio TX-1 Construçao Ltda M50 (D&C) Limited N6 (Construction) Limited Prestadora de Servicios Acueducto El Realito, S.A. de C.V. Promvias XXI, S.A. Roadbridge FCC JV Limited Servicios CTVM, S.A. de C.V. Serv. Terminal Valle de México, S.A. de C.V. Colombia Mexico Nicaragua C/ Mas d’en Colom, 14 – Tárrega (Lleida) Mexico Panama Mexico Costa Rica Costa Rica Mexico Mexico Mexico Brazil Ireland Ireland Mexico Anglesola, 6 - Barcelona Ireland Mexico Mexico Carrying amount of the backlog 2020 92 83 953 278 1 603 8 9,136 2,194 7,193 3,518 4 (4) (1,548) (60) 422 6 319 − 2019 68 65 1,030 316 1 571 13 10,376 2,108 6,905 3,391 4 (4) (1,683) (63) 8,915 7 379 - (3,273) (38,413) (3,273) (38,413) 1 1 951 2 32 1 1 143 2 27 % Effective ownership Auditor 24.99 20.40 24.99 7.65 12.50 7.71 15.61 25.51 50.00 24.68 45.00 50.00 24.50 50.00 50.00 14.28 25.00 45.00 70.00 42.50 42.50 24.50 25.00 50.00 14.28 14.28 Centium Auditores Ernst & Young Antoni Riera Economistes Auditors Deloitte Mexico Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Deloitte Mazars Deloitte Deloitte Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 128 of 141 335 Hormigones en Masa de Valtierra, S.A. Ctra. Cadreita Km. 1 - Valtierra (Navarra) Hormigones Galizano, S.A. Ctra. Nacional, 634 - Ambrosero - Barcena de Cicero (Cantabria) Hormigones Reinares, S.A. Pintor Murillo, s/n - Calahorra (La Rioja) Hormigones y Áridos del Pirineo Aragonés, S.A. Ctra. Nacional, 260 Km. 516,5- Sabiñánigo (Huesca) Company CEMENT Aplicaciones Minerales, S.A. Canteras y Hormigones VRE, S.A. Hormigones Castro, S.A. Hormigones de la Jacetania, S.A. Hormigones del Baztán, S.L. Hormigones Delfín, S.A. Lázaro Echevarría, S.A. Navarra de Transportes, S.A. Novhorvi, S.A. Portcemen, S.A. Terminal Cimentier de Gabes-Gie Vescem-LID, S.L. Giant Group Coastal Cement Corporation Dragon Energy LLC. Dragon Products Company Inc. Giant Cement Company Giant Cement Holding Inc. Giant Cement NC Inc. Giant Cement Virginia Inc. Registered office Carrying amount of the backlog 2020 2019 % Effective ownership Auditor Camino Fuente Herrero - Cueva Cardiel (Burgos) Berroa (P.I. La Estrella) - Tanojar (Navarra) Ctra. Nacional 634 - Ambrosero - Barcena de Cicero (Cantabria) Llano de la Victoria – Jaca (Huesca) Berroa (P.I. La Estrella) - Tanojar (Navarra) Venta Blanca - Peralta (Navarra) 504 (370) 303 1,327 414 857 2,369 146 833 5,941 8,065 525 125 654 (389) 317 − 408 666 2,356 150 713 5,886 8,041 565 134 1,230 35 27 34.29 49.60 34.94 62.00 49.60 49.60 39.68 43.68 49.60 49.60 27.78 33.06 33.06 32.99 29.05 24.75 44.64 44.64 44.64 44.64 44.64 44.64 44.64 KPMG KPMG KPMG KPMG Ernst & Young Deloitte P.I. Isasia- Alsasua (Navarra) C/Circunvalación Inguraketa s/n - Olazagutia (Navarra) Portal de Gamarra, 25 - Vitoria -Gasteiz (Alava) Muelle Contradique Sur-Puerto Barcelona - Barcelona 1,195 Tunisia Valencia, 245 - Barcelona 33 27 USA USA USA USA USA USA USA 9,973 13,661 − − − − − − − − − − − − − − Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 336 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 129 of 141 Company Registered office Carrying amount of the backlog 2020 2019 % Effective ownership Auditor Giant Resource Recovery Inc. Giant Resource Recovery - Arvonia Inc. Giant Resource Recovery - Attalla Inc. Giant Resource Recovery - Harleyville, Inc. Giant Resource Recovery - Sumter Inc. Keystone Cement Company Sechem Inc. OTHER ACTIVITIES Concessió Estacions Aeroport L9, S.A. Future Valleys Project Co. Limited Las Palmeras de Garrucha, S.L. Metro de Lima Línea 2, S.A. Sigenera, S.L. USA USA USA USA USA USA USA Av. Carrilet, 3 Edificio D – L’Hospitalet de Llobregat (Barcelona) United Kingdom Mayor, 19 – Garrucha (Almería) Peru Av. Linares Rivas, 1 – La Coruña World Trade Center Barcelona, S.A. de S.M.E. Moll Barcelona (Ed. Este), s/n – Barcelona Grupo Realia Business As Cancelas Siglo XXI, S.L. Boane 2003, S.A. Unipersonal Guillena Golf, S.L. Unipersonal Hermanos Revilla, S.A. Av. Camino de Santiago, 40 – Madrid Paseo de la Castellana, 41 – Madrid Paseo de la Castellana, 216 – Madrid Paseo de la Castellana, 41 – Madrid Inversiones Inmobiliarias Rústicas y Urbanas 2000, S.L. Ayala, 3 – Madrid Planigesa, S.A. Realia Business, S.A. Realia Contesti, S.R.L. Realia Patrimonio, S.L.U. Av. Camino de Santiago, 40– Madrid Av. Camino de Santiago, 40 – Madrid Romania Av. Camino de Santiago, 40 – Madrid − − − − − − − − − 44.64 44.64 44.64 44.64 44.64 44.64 44.64 − − − − − − − − 6,122 49.00 Deloitte 13 971 26,215 380 10,137 278,103 − 975 25,704 376 9,319 276,540 − − − − − − − − − − − − − − − − − − 42.50 20.00 18.25 37.40 24.01 37.40 18.70 18.25 37.40 18.25 12.48 28.42 37.40 37.40 37.40 Ernst & Young Ernst & Young Ernst & Young Ernst & Young Ernst & Young Ernst & Young TOTAL VALUE OF CONSOLIDATED COMPANIES USING HE EQUITY METHOD (ASSOCIATED COMPANIES) 382,126 390,841 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 130 of 141 Annex IV Changes in the scope of consolidation 337 ADDITIONS Company FULLY CONSOLIDATED Aqualia Latinoamérica, S.A. Aqualia Portugal, S.A. Aqualia Villa del Rosario, SA Ecosistema de Morelos S.A. de C.V. FCC Concesiones, S.A. Unipersonal FCC Construction Australia Pty Ltd FCC Energy Holdings Ltd Green Energy Finance Solutions Ltd Green Recovery Projects Ltd H.A.A. & CO. Integrated Services Registered office Company Registered office DERECOGNITIONS Colombia Portugal Colombia Mexico Federico Salmón, 13 – Madrid Australia United Kingdom United Kingdom United Kingdom Saudi Arabia FULLY CONSOLIDATED Ecoeffect DZZD-Consortium (2) Ekostone Áridos Siderúrgicos, S.L. (3) FCC Bulgaria E.O.O.D. (2) RSUO Dobritch (2) Tema Concesionaria, S.A. (3) Bulgaria Superpuerto – Dique de Poniente. Punta Lucero, 5 – Ziérbana (Vizcaya) Bulgaria Bulgaria Porto Pi, 8– Palma de Mallorca (Balearic Islands) Zona Verde – Promoçao e Marketing Limitada (4) Portugal JOINT VENTURES Servicios de Limpieza Integral de Málaga III, S.A. (5) Camino Medioambiental (Ed. Limasa), 23–Málaga CHANGES IN THE SCOPE OF CONSOLIDATION Miejskie Przedsiebiorstwo Gospodarki Komunalnej sp. z.o.o. Poland Qatarat Saquia Desalination Saudi Arabia Siewierskie Przedsiebiorstwo Gospodarki Komunalnej sp. z.o.o. Poland JOINT VENTURES Consorcio Tramo Dos S.A. DE C.V. Mexico Company Change in the consolidation method (current method) Change in the consolidation method (previous method) ASSOCIATES Future Valleys Project Co. Limited United Kingdom Hormigones de la Jacetania, S.A. Equity method (associate) Fully consolidated Aquos El Realito, S.A. de C.V. Fully consolidated Equity method (associate) (1) Derecognition due to a merger with FCC Aqualia, S.A. (2) Derecognition due to disposal (3) Derecognition due to liquidation (4) Derecognition due to merger with Cemark - Mobiliario Urbano e Publicidade, S.A. (5) Derecognition due to remunicipalisation of the service Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 131 of 141 Annex V Joint ventures, economic interest groups and other enterprises jointly managed with third parties outside the Group Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 338 ENVIRONMENTAL SERVICES Puerto JV Absa JV - Perica Absa – Perica II JV A Coruña Limpieza JV Aeropuerto VI JV Agarbi JV Agarbi Bi JV Agarbi Interiores JV Aizmendi JV Akei JV Alcantarillado Melilla JV Alella JV Alumbrado Tias JV Arazuri 2016 JV Arazuri 2020 JV Arcos JV Artigas JV ARUCAS II JV Bailin Etapa 2 JV Baix Ebre-Montsià JV Berango JV 50.00 60.00 60.00 70.00 50.00 60.00 60.00 60.00 60.00 60.00 50.00 50.00 67.00 50.00 50.00 51.00 60.00 70.00 60.00 60.00 60.00 Bilboko Saneamendu JV Bilboko Saneamendu Bi JV Bilketa 2017 JV Biocompost de Álava JV Bizkaiako Hondartzak JV Boadilla JV Cabrera de Mar JV Cana Putxa JV Carma JV Castellana – Po JV Cgr Guipuzcoa JV Chipiona JV CMG2 Lanak JV CMG2 Kudeaketa JV Contenedores las Palmas JV Contenedores Madrid JV Contenedores Madrid 2 JV CTR - Vallès JV Ctr. de lalt Empordà JV Cua JV Donostiako Garbiketa JV Dos Aguas JV 50.00 50.00 60.00 50.00 50.00 50.00 50.00 20.00 50.00 50.00 35.14 50.00 82.00 82.00 30.00 38.25 36.50 20.00 45.00 50.00 70.00 35.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 132 of 141 339 Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 Eco A Coruña JV Ecogondomar JV Ecoparque Cáceres JV Ecourense JV Efic. Energ. Puerto del Rosario JV Energía Solar Onda JV Enllumenat Sabadell JV Envases Ligeros Málaga JV Epeleko Konposta JV Epeleko Planta JV Epremasa Provincial JV Eretza JV Es Vedra JV Etxebarri JV FCC - Ers Los Palacios JV FCC – Hijos de Moreno, S.A. JV FCC Perica I JV FCC - SuFI Majadahonda JV FCC-Mcc Santiago del Teide JV F.L.F. La Plana JV F.S.S. JV Fuentes las Palmas JV Gestió Integral de Runes del Papiol JV Gestión Instalación III JV Giref JV Goierri Garbia JV Guipuzkoako Hondartzak 2020 JV 85.00 70.00 50.00 50.00 60.00 25.00 50.00 50.00 60.00 35.00 55.00 70.00 25.00 60.00 50.00 50.00 60.00 50.00 80.00 47.00 99.00 25.00 40.00 34.99 20.00 60.00 60.00 Guipuzkoako Portuak 2019 JV Icat Lote 7 JV Icat Lote 11 JV Icat Lote 15 JV Icat Lote 20 and 22 JV Bilbao Interiors JV Bilbao Interiors II JV Jardineras 2019 JV Jardines Mogán JV Jardines Pto del Rosario JV Jard. Universitat Jaume I JV Jerez JV Jundiz II JV Kimaketak JV Kimaketak Hiru JV Kimeketak Bi JV la Lloma del Birlet JV Lagunas II JV Lagunas de Arganda JV Las Caldas Golf JV Legio VII JV Lekeitioko Mantenimendua JV Lezo Garbiketa 2018 JV Limpieza Santa Coloma JV Limpieza y RSU Lezo JV Logroño Limpio JV Luze Vigo JV 40.00 50.00 50.00 50.00 70.00 80.00 70.00 60.00 51.00 78.00 50.00 80.00 51.00 50.00 50.00 50.00 80.00 33.34 50.00 50.00 50.00 60.00 55.00 50.00 55.00 50.00 40.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 133 of 141 340 Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 LV RSU Vitoria-Gasteiz JV LV y RSU Arucas JV LV Zumaia JV LV Zumarraga JV Mant. Edificios Valencia JV Manteniment Lot 12 JV Mantenimiento Reg Cornellà JV Mantenimiento Breña Alta JV Marepa – Carpa Pamplona JV Melilla JV Mnto. Mediterranea FCC JV Mnto. Edifici Mossos Esquadra Muérdago JV Muskiz JV Neteja Illes Balears JV Onda Exploitation JV Pájara JV Pamplona JV Parla JV Parques Infantiles LP JV Pasaia JV Pasaiako Portua BI JV Piscina Cubierta Paiporta JV Plan Residuos JV Planta Estabilizac. Tudela JV Planta Rsi Tudela JV Planta Transferencia FTV 2 JV 60.00 70.00 60.00 60.00 55.00 75.00 60.00 50.00 50.00 50.00 50.00 70.00 60.00 60.00 50.00 33.33 70.00 80.00 50.00 50.00 70.00 55.00 90.00 47.50 55.00 60.00 70.00 Planta Tr. Fuerteventura JV Planta Tratamiento Valladolid JV Platges Vinarós JV Playas Gipuzkoa JV Playas Gipuzkoa II JV Playas Gipuzkoa III JV Poniente Almeriense JV Portmany JV Puerto II JV Puerto de Pasaia JV Puerto de Pto del Rosario JV RBU Els Ports JV RBU Villa-Real JV Recollida Segrià JV Reg Cornellà JV Residencia JV Residuos 3 Zonas Navarra JV RSU Bilbao II JV RSU Chipiona JV RSU Inca JV RSU LV S. Bme. Tirajana JV RSU Málaga JV RSU Sestao JV RSU Tolosaldea JV S.U. Alicante JV S.U. Benicassim S.U. Bilbao 70.00 90.00 50.00 55.00 55.00 55.00 50.00 50.00 70.00 55.00 70.00 50.00 47.00 60.00 60.00 50.00 60.00 60.00 50.00 80.00 50.00 50.00 60.00 60.00 33.33 35.00 60.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 134 of 141 341 S.U. Oropesa del Mar Saneamiento Urbano Castellón JV Saneamiento Vitoria-Gasteiz JV Sanejament Cellera de Ter JV San Miguel-Anaka JV SAV – FCC Tratamientos JV Seguretat Urbicsa JV Selectiva Urola Kosta II 2017 JV Selectiva las Palmas JV Selectiva Sanlucar JV Selectiva San Marcos II JV Selectiva Urola Kosta JV Sellado Vertedero Logroño JV Solares Ceuta JV Son Espases JV Tolosako Garbiketa JV Tolosako Garbiketa 2020 JV Tolosaldea RSU 2018 JV Transp. y Elim. RSU JV Transporte RSU JV Txingudiko Garbiketa JV Urola Erdia JV Urretxu Garbiketa JV Urretxu y Zumarraga JV Vertedero Gardelegui III JV Vertresa JV Vidrio Melilla JV Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 35.00 65.00 60.00 50.00 50.00 35.00 60.00 60.00 55.00 50.00 63.00 60.00 50.00 50.00 50.00 40.00 40.00 60.00 33.33 33.33 73.00 60.00 60.00 65.00 70.00 10.00 50.00 Vigo Recicla JV Vilomara II JV Vinaroz JV Zamora Limpia JV Zaragoza Delicias JV Zarauzko Garbieta JV Zumaia JV Zurita II JV AQUALIA A.I.E. Costa Brava Abastament Aqualia-Sorea A.I.E. Itam Delta de la Tordera A.I.E. Sorea Aqualia Abastament en Alta Costa Brava Empresa Mixta, S.A. Aguas y Servicios de la Costa Tropical de Granada, A.I.E. Empresa Mixta d’Aigües de la Costa Brava, S.A. Empresa Mixta de Aguas y Servicios, S.A. Gestión de Servicios Hidráulicos de Ciudad Real, A.I.E. Consortium O&M Alamein Abastecimiento Picadas Almoguera JV Abu Rawash Construccion JV Agua Santo Domingo JV Aguas Alcalá JV Aguas del Doramás JV Alkhorayef-FCC Aqualia JV Expansion SWDP Melilla JV 70.00 33.33 50.00 30.00 51.00 60.00 60.00 50.00 50.00 50.00 37.50 26.00 51.00 25.01 41.25 75.00 65.00 95.00 50.00 70.00 50.00 50.00 51.00 50.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 135 of 141 342 Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 Badajoz Zona Este JV Badajoz Zona Oeste JV Calle Cruz JV Cap Djinet JV Cons. Gestor Ptar Salitre JV Costa Tropical JV Costa Tropical II JV Costa Tropical III JV Depuración Poniente Almeriense JV Edar A Guarda 2013 JV Edar Baeza JV Edar Gijón JV Edar Tablada JV Explotación Itam Tordera JV Gestión Cangas JV Groupement Solidaire Jerba JV Guadiana Pueblonuevo JV Hidc - Hidr. – Inv Do Centr. Ace JV Ibiza JV Idam San Antoni JV Idam Sant Antoni II JV SWDP Santa Eulalia JV UTE Idga Saneca Infilco JV Louro JV Mostaganem JV Obra Edar Argamasilla de Calatrava JV 50.00 50.00 80.00 50.00 30.00 51.00 51.00 51.00 75.00 50.00 50.00 60.00 50.00 50.00 70.00 50.00 51.00 50.00 50.00 50.00 50.00 50.00 70.00 50.00 65.00 50.00 70.00 OYM CAP Djinet JV OYM Mostaganem JV Ptar Ambato JV Puebla Reina JV SCC Sice JV SEAFSA Lanzarote JV Sentinas JV TSE Riad JV Vigo Piscinas JV Zafra JV CONSTRUCTION ACE Caet Xxi Construçoes ACE Ribeiradio-Ermida Consorcio Cobra – FCC Industrial Consorcio FCC Construcción-Ferrovial Agroman Ltda. Fast Consortium Limited LLC ACP du Port de la Condamine Asoc. Astaldi-FCC-Salcef-Thales, Lot 2 A Asoc. Astaldi-FCC-Salcef-Thales, Lot 2 B Asoc. FCC Azvi Straco S. Atel-Micasasa Asocierea FCC-Astaldi-Convensa, Tronson 3 Associate FCC Azvi S. Sighisoara - Atel Astaldi - FCC JV Atraque Ribera Fondo CS Ute BSV Mersey Joint Venture Uninc 50.00 50.00 60.00 65.00 50.00 60.00 50.00 51.00 50.00 65.00 50.00 55.00 43.00 50.00 35.92 45.00 49.50 49.50 55.00 50.50 55.00 50.00 50.00 50.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 136 of 141 343 Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 CJV-UJV Consorcio Antioquía al Mar Consorcio Centenario de Panamá Sociedad Accidental Consorcio Chicago II Consorcio CJV Constructor Metro Lima Consorcio Epc Metro Lima Consorcio FCC Americas Consorcio FCC-FI Consorcio FCC – Corredor de las Playas Consorcio FCC – Corredor de las Playas II Consorcio FCC-JJC (Puerto Callao) Consorcio FCC Meco Santa Fe de Costa Rica Consorcio Ica – FCC – Meco Pac-4 Consorcio Línea 2 Consorcio Línea 2 Ramal Consorcio Línea Uno Consorcio M&S Santa Fe Mca Consorcio Nueva Esperanza Consorcio Remos Fase I Fast 5 – U.J.V. FCC - Yuksel – Archidoron – Petroserv J.V. Groupement FCC - Ingenium J.V. Asocierea Arad-Timisoara FCC-Astaldi J.V. Astaldi-FCC-UTI-Activ. Magistrala J.V. Bypass Constata J.V. Centure Otopeni Overpass J.V Estension of Line 2 to Antohoupoli 35.92 40.00 50.00 60.00 25.50 18.25 50.00 50.00 51.00 51.00 50.00 50.00 43.00 40.00 40.00 45.00 50.00 63.00 60.00 28.25 50.00 93.00 50.00 37.00 50.00 40.00 50.01 J.V. FCC, Hochtief Un Acb – Aeropuerto Riga J.V. SFI Leasing Company Merseylink Civil Contractors J.V. Metro Bucarest J.V. RokFCC JV Shimmick Co. Inc. FCC Co. Impregilo Spa JV Sisk FCC Gg Ppp Thv Cafasso Construction TJV-UJV 2nd Phase Sphinx Dam JV Accesos a La Estación de La Sagrera JV Acceso Norte A Vigo Nueva Estación JV Acceso Puerto Seco Monforte JV Adif Bancada 2018 JV Adolfo Suárez Airport JV Aeropuerto de Castellón JV Alameda de Cervantes en Lorca JV Alta Capacidad 2020 JV Alumbrado Alameda JV Anaga JV Andenes L1-L9 Tram Benidorm JV Aparatos Atocha JV Arroyo del Fresno JV Aucosta Conservación JV Auditorio de Lugo JV Autovía A-33 Jumilla JV Autovía el Batán – Coria JV 36.00 30.00 33.33 47.50 80.00 30.00 50.00 50.00 16.16 35.00 37.50 50.00 50.00 50.00 50.00 50.00 60.00 50.00 20.00 33.33 65.00 39.97 50.00 50.00 50.00 65.00 50.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 137 of 141 344 Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 Autopista Cartagena – Vera JV Ave Alcántara-Garrovillas JV Ave Eje Sur JV Ave Girona JV Ave Maside JV Avenoreste1 JV Avenoreste2 JV Badajoz Sur JV Barbados JV Barcience JV Belltall JV Bergara Antzuola JV Boetticher Clima JV Boetticher Electricidad JV Boquilla Sur Túnel Vigo – Das Maceira JV Bombeo Fuente Alamo JV Brazatortas JV C&F Jamaica JV Cáceres Norte JV Cáceres Plasencia JV Calders-Vilaseca JV Campo Gibraltar JV Canal Principal de Orbigo JV Cárcel Marcos Paz JV Carretera Ibiza - San Antonio JV Castuera JV Catlántico JV 50.00 85.00 25.00 40.00 67.00 25.00 25.00 50.00 50.00 50.00 40.00 50.00 50.00 50.00 50.00 60.00 33.34 50.00 50.00 50.00 20.00 80.00 50.00 35.00 50.00 33.34 25.00 Cecoex JV Centro Salud Tui JV Chuac JV Cierre Anillo Insular Tfe JV Circuito JV Circunvalación Lucentum JV Ciutat de la Justícia JV Conexión Corredor Mediterráneo JV Conexión Molinar JV Conservacion Ex-A1 JV Conservación Malpartida JV Conservacion Plasencia JV Construcción Tranvía Zaragoza JV Control Mogán JV Club de Mar Mallorca JV Creaa JV Suministros Puente Río Ozama JV Deancentro JV Dean Plasencia JV Deansur JV Desaladora Bajo Almanzora JV Desarrollo Puerto de Avilés Fase I JV Desdoblamiento C.V. – 309 en Sagunto JV Dique Este JV Dique Torres JV Districte Administratiu Lot 2 JV Donostialdea 2014 JV 20.00 50.00 50.00 85.00 70.00 50.00 30.00 40.00 70.00 50.00 50.00 50.00 50.00 33.33 70.00 50.00 50.00 60.00 60.00 60.00 60.00 80.00 50.00 35.00 27.00 99.99 60.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 138 of 141 345 Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 Donostialdea 2018 JV Drenajes Adamuz JV Duplicacion Calzada N-338 JV Edificio Terminal JV Efw South Humber JV Electrification La Sagrera JV Encauzamiento Barranco de Fraga JV ErtMS Rodalíes Bcn JV Esclusa Sevilla JV Estación Girona JV Estacions Line 9 JV Estacions Terrassa JV Ezkio Itsaso JV Facultad de Filosofía JV Fase II Pabellón Reyno de Navarra JV FCC Industrial - Aton JV FCCi-Orbe JV F.I.F. GNL FB 301/2 JV Fgv Linea 9 Calp-Teulada JV Fuente de Cantos JV Galindo - Beurko JV Gc – 1 Puerto de Rico – Mogán JV Girona Norte II JV Girona Norte 2014 JV Goián JV Granadilla II JV Guadarrama 3 JV 60.00 33.33 60.00 40.00 50.00 50.00 60.00 22.00 70.00 40.00 33.00 36.00 40.00 60.00 50.00 90.00 70.00 35.96 62.50 50.00 60.00 40.00 70.00 70.00 70.00 50.00 33.33 Guadarrama 4 JV Helios I JV Helios 2 JV Hospital Alcázar JV Hospital Campus de la Salud JV Hospital de Cartagena JV Hospital del Sur, Segunda Fase JV Hospital FCC - Vvo JV Hospital Norte Tenerife JV Hospital Son Dureta JV Hospital Universitario de Murcia JV Lecisa-FCC / Cpd de Consell Mallorca JV Lecisa-FCC/Interfonia En Estaciones JV Impermeabilización Túnel Pajares Norte JV Instalaciones Madrid Este JV Instalaciones Metro Málaga JV Instalaciones Urbanas Este JV Juan Grande JV La Aldea JV La Robla JV Línea 2 JV Línea 9 JV Llovio 2012 JV Lot 2 Pmi Bcn JV Lot 3 Pmi Bcn JV Lot 5 Glories JV M-407 JV 33.33 74.50 74.50 60.00 80.00 70.00 40.00 80.00 80.00 33.00 50.00 50.00 50.00 50.00 46.25 54.00 50.00 50.00 35.00 30.00 50.00 33.00 70.00 80.00 80.00 37.50 50.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 136 of 141 346 Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 Madrid Sevilla Ave JV Manteniment Rondes 2012 JV Mantenimiento Aranjuez II JV Mantenimiento Aranjuez III JV Mantenimiento Córdoba JV Mantenimiento Córdoba II JV Mantenimiento Júcar JV Mantenimiento Sistemas Metro Málaga JV Mantenimiento Tdm 2018 JV Mantenimiento Tranvía Zaragoza JV Mantenimiento Vía Aranjuez JV Maquinaria Pesada 2015 JV Medinaceli JV Mejora Estructuras Mora JV Metro Línea 12 JV Metro Málaga JV Metro Madrid JV Miv Centro JV Miv Sur JV MOLL ADOSSAT 3ª FASE JV Monforte JV Mora - Calatrava JV Muelle Baleares JV Muelle de la Química JV Muelle Poniente Norte de Pto Palma JV Murcia JV Mursiya Mantenimiento JV 60.00 70.00 76.00 76.00 49.00 49.00 50.00 35.00 50.00 50.00 50.00 50.00 22.40 39.97 95.00 36.00 70.00 19.00 27.00 37.50 24.00 39.97 70.00 70.00 75.00 40.00 85.00 Nave Frío Cilsa JV Nudo de Mollet JV Nuevo Estadio Vcf JV Nuevo Hospital de Cáceres JV Nuevo Puerto de Igoumenitza JV Operadora Termosolar Guzmán JV Osorno 2019 JV Pabellón Arena JV Pabellón Reyno de Navarra JV Pago de Enmedio JV Palacio de Congresos de León JV Parque Tecnológico JV Pasaia Berri JV Pasaia Berri Instalaciones JV Pedralba - Ourense JV Pizarro JV Pla de Na Tesa JV Plataforma Tpte Pbco Castellón JV Plataforma Tte.Pub. Tramo I Columbretes JV Pola de Lena JV Polígono Bobes JV Pont de Candi JV Presa Enciso JV Presas Itoiz JV Prevención Incendios Patrimonio JV Prim Barrio San Anton – Elche JV Proser – Geocontrol JV 50.00 50.00 49.00 50.00 50.00 67.50 60.00 50.00 50.00 75.00 50.00 60.00 50.00 80.00 75.00 99.00 70.00 55.00 55.00 70.00 50.00 75.00 50.00 33.00 20.00 80.00 60.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 140 of 141 347 Proportional integration at 31 December 2020 Proportional integration at 31 December 2020 Proser – Geocontrol II JV Psir Castro Urdiales JV Puente del Rey JV Puente Río Ozama (Dfc-Cocimar) JV Puerto de Granadilla JV Port of Laredo JV Puertollano JV Radiales JV Red Arterial Palencia Fase I JV Reforma Plaza España JV Regadíos Río Flumen JV Rehabilitación Parque la Gavia JV Ruta Nacional Haití JV Sagunto JV Saneamiento Arco Sur JV Saneamiento de Villaviciosa JV Santa Maria D’oló-Gurb JV Sector M-5 2012 JV Serv. Energ. Piscina Cub. S. Caballo JV Sica JV Sica II JV Simulator APBA JV Sotiello JV Ssaa Ap - 7 JV Tarragona Litoral JV TF-5 2ª FASE JV Tindaya JV 62.00 50.00 33.33 35.00 50.00 50.00 50.00 35.00 80.00 80.00 60.00 75.00 55.00 60.00 56.50 80.00 60.00 70.00 50.00 60.00 50.00 50.00 50.00 50.00 70.00 70.00 50.00 Torquemada JV Torre Don Jimeno JV TS Villena JV Túnel Aeroport JV Túnel Aeroport II JV Túnel Atocha Chamartín JV Túnel C.E.L.A. JV Túnel de Pajares 1 JV Túnel Fira JV Tunnel La Aldea JV Túneles Bolaños JV Túneles de Barajas JV Túneles de Guadarrama JV Túneles de Sorbes JV Ue 1 Arroyo del Fresno JV Ue 2 Arroyo del Fresno JV Unquera – Pendueles JV Urbanització Girona JV Urbanización Parc Sagunt JV Urbanizacion Vara del Rey JV Urbanización Via Parque Tramo Av. Carb.-P JV Valdeviviendas II JV Vandellós JV Variante Mancha Real JV Velódromo JV Vertedero Castañeda JV Vía Pajares JV 50.00 50.00 88.00 49.00 49.00 40.00 50.00 50.00 49.00 50.00 47.50 50.00 33.33 67.00 50.00 50.00 80.00 40.00 50.00 57.50 60.00 33.33 24.00 67.00 60.00 62.50 50.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Notes to the consolidated financial statements | Page 141 of 141 348 Viaductos Prefabricados Metro Riyad JV Vigo-Das Maceiras JV Vilariño (Via izquierda) JV Villar - Plasencia JV Yeltes JV Yesa JV OTHER ACTIVITIES F C y C Harri Iparra JV Mel 9 JV Operación Tranvía de Murcia JV Sagunto Parcela M17-3 JV Proportional integration at 31 December 2020 50.00 50.00 90.00 70.00 75.00 33.33 50.00 49.00 50.00 50.00 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 349 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 1 of 41 Management report FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES at 31 December 2020 1 2 3 4 5 6 7 8 9 Status of the entity Business performance and results Liquidity and capital resources Major risks and uncertainties Acquisition and disposal of own shares Significant events occurring after the end of the year Outlook R&D+I activities Other relevant information. share performance and other information 10 Definition of alternative performance measures according to ESMA regulations (2015/1415en) _ 350 _ 353 _ 372 _ 373 _ 374 _ 374 _ 374 _ 376 _ 382 _ 383 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 350 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 2 of 41 1. Status of the entity The Administration area directs the administrative management of the FCC Group and has the following duties, among others, in relation to Information Systems and Internal Control: 1.1. Status of the entity: organisational structure and decision- making process in management The organisational structure of the FCC Group is based on a first level made up of areas, which are divided into two large groups: operational and functional. The operating areas include all those activities related to the productive line. The FCC Group has the following operating areas, as discussed in greater detail in Note 1 of the notes to the consoli- dated financial statements and in Section 2.1. of the Non-Financial Information Statement: i. Environmental Services. ii. End-to-End Water Management. iii. Construction. iv. Cement Business. v. Concessions. Each of these operating areas is headed by one or more specialised companies which, depen- ding on FCC, encompass the Group’s activities. In addition, there are the functional areas, which carry out support tasks for the operational ones: 1) Administration and Finance: lthe Administration and Finance Division comprises the Admi- nistration, Information Technologies, Finance, Communication, Purchasing and Human Re- sources areas. i. General accounting. ii. Accounting standardisation. iii. Consolidation. iv. Tax advice. v. Tax procedures. vi. Tax compliance. vii. Administrative procedures. 2) Internal Audit and Risk Management: its objective is to provide the Audit and Control Com- mittee and Senior Management with an independent and objective opinion on the Group’s ability to achieve its objectives through a systematic and methodological approach for the assessment, management and effectiveness of internal control and risk management proces- ses, assessing the effectiveness and reasonableness of the internal control systems, as well as the functioning of processes according to the procedures, proposing improvements and providing methodological support to the Division in the process of identifying the main risks that affect activities and supervising the actions for their management. 3) General Secretary: reporting directly to the Group’s CEO, its main duty is to support the management of the Group, as well as management support for the heads of the other areas of FCC, by providing the services detailed in the corresponding sections of the divisions and departments that make up the Group, which are promoted and supervised by the General Secretary. It is made up of the following areas: Legal Advice Department, Quality Management, Corpo- rate Security and General Services and Corporate Responsibility. The areas, on a second level, can be divided into Sectors, the operational ones, and Divisions, the functional ones, establishing areas that allow greater specialisation when considered ne- cessary. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 351 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 3 of 41 The structure of the main decision-making bodies is set out below: Environmental Services • Board of Directors: is the body that holds the broadest powers, without any limitation, except those that are expressly reserved, by the Spanish Corporate Enterprises Act or the Articles of Association, for the jurisdiction of the General Shareholders’ Meeting. • Audit And Control Committee: its main function is to support the Board of Directors in its supervisory duties by periodically reviewing the process for preparing economic and finan- cial information, its internal controls and the independence of the external auditor. • Appointments and Remuneration Committee: supports the Board of Directors in relation to proposals for the appointment, re-election, ratification and removal of Directors, establi- shes and controls the policy for the remuneration of the company’s Directors and senior managers and the fulfilment of their duties by Directors, particularly in relation to situations of conflict of interest and related-party transactions. • Managing Committee: each of the business units has a Managing Committee with similar duties. Further information on the duties of the FCC Group’s decision-making bodies is provided in Section 1 of the Internal Financial Reporting Control System (IFRS) and in Section 2.3 of the Non-Financial Information Statement. 1.2. Status of the entity: Business model and company strategy FCC is one of the leading European groups specialising in the environment, water, infrastructure development and management, with a presence in over 30 countries worldwide and nearly 40.3% of its turnover generated in international markets, mainly Europe (28.5%), the Middle East (4.7%), Latin America (2.8%), North Africa (2.8%) and the United States (1.3%). The Environmental Services area has a strong presence in Spain, having maintained a leadership position in the provision of urban environmental services for over 110 years. At a national level, FCC provides environmental services in municipalities and bodies in all the autonomous communities, serving a population of over 22 million inhabitants. Waste collection and street cleaning are two of the most important services in this sector, representing 64% of revenue. They are followed, in order of importance, by disposal of wastes with 14%, cleaning and maintenance of buildings, parks and gardens and, to a lesser extent, sewage. In terms of client types, more than 86% of the activity is carried out with public clients. The Covid-19 pandemic has had a very limited impact on the business in 2020, since most of its services are classified as “essential”, with the focus mainly being on specific problems of falls in tonnage. Nonetheless, the COV-2020/0173 certification of action protocols, for our activities to help reduce the spread of Covid-19, has been obtained as a reinforcement measure. We have also been awarded the seal of the Ministry for Ecological Transition and Demographic Challenge’s (MITECO) “Register of carbon footprint, offsetting and CO2 absorption projects”. The international business is mainly conducted in the United Kingdom, Central Europe and the USA. For years, the Group has held a leadership position in the United Kingdom and Central European markets in the integrated management of municipal solid wastes, as well as in the provision of a wide range of environmental services. The various services provided in this sector include treatment and recycling, disposal, waste collection and the generation of renewable ener- gy. With a growing emphasis on treatment, recycling and renewable energy generation activities and a gradual reduction of disposal in controlled landfills. In Central and Eastern Europe, FCC provides services to a population of 4.8 million inhabitants, 1,360 municipalities and almost 55,000 industrial clients. The range of services provided and the geographical dispersion is very diverse and balanced. It includes municipal and industrial collec- tion, mechanical and biological treatment, incineration, landfill, street cleaning, snow clearance, recycling, outsourcing, building cleaning, soil decontamination works, etc. This broad diversifi- cation ensures a large degree of business stability and is one of the reasons why the economic impact of Covid-19 on the organisation has not been so pronounced. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 352 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 4 of 41 The Environmental Services area also specialises in the integrated management of industrial and commercial waste, the recovery of by-products and soil decontamination, through the FCC Ám- bito brand, which encompasses a group of companies with a wide network of management and revaluation facilities. All of this enables proper waste management, ensuring the protection of the environment and people’s health. In 2020, this activity represented just over 7% of all activity. At an international level, the growth in the US stands out, where urban solid waste collection, management and treatment activities are carried out. This was the first year of activity in the co- llection service of Volusia County (Florida) in Daytona Beach, and the one of the largest contract in the country in Omaha (Nebraska) that will also act as a regional base to open up the Mid-West market. Despite the delay that Covid-19 has caused in the bidding processes, in the last quarter of 2020 a resumption of these processes has already been noticed and it is expected that in 2021 there will be a continuation in the growth of the business, the backlog and the geographical ex- pansion. FCC Environmental Services has managed to position itself, in a very short time, as one of the main operators in the US, where it already serves more than 8 million people. As it has already done for a number of years now, the strategy in Spain will focus on maintaining competitiveness and a leadership position, combining technical knowledge and the development of innovative technologies, offering respectful, inclusive and sustainable services (combating cli- mate change and reducing the carbon footprint). The incorporation of new technologies will enable the company to gain a foothold in the waste recycling and revaluation markets in Europe and to position itself as a key player in the circular economy. As far as the United States is concerned, in the coming years the consolidation of the company’s presence will continue through growth in more residential contracts and the streng- thening of commercial collection activity. In general, there is a broad commitment to climate change, for example with the issuance of green bonds to finance the operation and acquisition of assets developed with the activity. End-to-End Water Management FCC Aqualia serves over 23 million users and provides services in over 1,100 municipalities in 21 countries, offering the market all the solutions for the needs of public and private entities and organisations in all stages of the end-to-end water cycle and for all uses: human, agricultural or industrial. FCC Aqualia’s activity focuses on concessions and services, including distribution network con- cessions, BOT (“Build-Operate-Transfer”), operation and maintenance services and irrigation, as well as technology and network activities, including EPC (“Engineering-Procurement-Construc- tion”) contracts and industrial water treatment activities. In 2020 the market in Spain represents 66% of revenue. The impact of the pandemic has led to a 2.4% drop in the volumes of water billed and 1.4% in the amounts, with particular incidence in tourist and coastal areas. The reduction in the volume of consumption has been partially offset by an improvement in Operation and Maintenance (O&M) activities, efficiency improvements in operations and a greater volume of execution of various works related to concession contracts. In the public sector, there is still a low level of bidding for hydraulic infrastructure concessions, which increases the deficit in the renovation and expansion of existing infrastructure. Despite this, tenders have been won and contracts have been extended for the end-to-end cycle concessions; such as that in Vigo, FCC Aqualia’s largest contract. The contract renewal loyalty rate remains at very high levels (close to 100%) in those municipalities where it operates In addition, Aqualia has worked hard to expand its presence in the O&M and facilities market (WWTP, DWTP, desalination and network management). The international market reached a turnover of 34%. FCC Aqualia focuses its activity in Europe, North Africa, the Middle East and the Americas, with ongoing contracts in more than 15 countries at present. The year 2020 also presented an operational challenge for Aqualia throughout Europe due to the impact of Covid-19 on end-to-end water cycle management. Despite the impact on non-residen- tial consumption, which was more marked in the Czech Republic, the business remained at very high levels in terms of activity, quality and continuity of service. In addition to the management of the municipal concession services in the Czech Republic, Italy and Portugal, works were also carried out to integrate the new business in France. FCC Aqualia seeks to maintain its competitive position in those comprehensive water mana- gement markets where it has an established presence (Europe) and to take advantage of the opportunities that arise in this activity. In other expanding markets, it plans to boost growth via BOT and O&M (North Africa, Latin America and the Middle East), along with comprehensive cycle management, while the study of possibilities in others (such as the USA) will continue. In addition, FCC Aqualia will use its extensive experience in comprehensive water cycle management for business opportunities in countries with a stable political and social balance. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 353 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 5 of 41 Construction FCC Construcción focuses its activity on the design, development and construction of large civil, industrial and building infrastructure projects. The presence in public works of complex elements such as railways, tunnels and bridges stands out, which together with those involving installation and industrial maintenance, form a large part of the activity. 2. Business performance and results 2.1. Operating performance Its teams have the experience, technical training and innovation to participate in the entire project value chain, from the definition and design, to its complete execution and subsequent operation. 2.1.1. Significant events In 2020, 47% of the total income comes from abroad, namely the execution of large infrastructure works such as lines 4, 5 and 6 of the Riyadh Metro, Haren prison complex (Belgium), line 2 of the Lima Metro, Grangegorman University (Dublin-Ireland), the A-9 motorway Badhoevedorp-Holen- drecht (Netherlands), the Bacau airport runway (Romania) and the Gurasada-Simeria railway line (Romania) – Sectors 2a, 2b and 3. Highlights in the 2020 business year, were the awarded contracts for the design, construction and maintenance of section 2 of the Maya Train (Mexico) for an amount of 339.2 million euros, the extension of the A-465 motorway in Wales (UK) for an amount of 667 million euros, the design and construction of the E-6 Ulsberg-Vidasliene motorway (Norway) for an amount of 238.8 million euros, as well as the construction of the Mapocho Río Park (Chile) for an amount of 53.8 million euros. Cement The FCC Group carries out its cement activity through the Cementos Portland Valderrivas Group. Its main activity is the manufacturing of cement, which in 2020 accounted for approximately 91% of the Group’s total income. The remaining percentage was contributed by the concrete, mortar and aggregates businesses. In terms of geographical diversification, by 2020, 38% of income came from international markets. The Cementos Portland Valderrivas Group is present in Spain, Tunisia and the United Kingdom. In addition, the Group also exports from these three countries to Africa, Europe and America. The Cementos Portland Valderrivas Group has a leading position both in its main market, Spain, and in the Tunisian market. The main objective of the Cementos Portland Valderrivas Group is to maintain a competitive edge both regarding costs and in the markets in which it operates, seeking to remain a leader in the sector in all the countries in which it is present. FCC Medio Ambiente is the most highly rated company for the Barcelona cleaning and collection contract Last October, FCC Medio Ambiente was the highest-rated company in terms of technical criteria in the tender for the cleaning and waste collection for the city of Barcelona. In this tender, the ie-Ur- ban, a new internally developed, 100% electric, modular chassis-platform electric collection truck, played a key role in the proposal to enhance urban sustainability and minimise environmental im- pact. If this award is confirmed, the contract will represent more than 800 million euros in revenues not included in the backlog at the end of 2020. FCC Aqualia renews several end-to-end water cycle contracts in Spain Among the various renewals obtained, last December the municipality of Vigo approved the con- cession to FCC Aqualia of a five-year extension of the supply and sanitation management con- tract, for 259.6 million euros. This expansion is linked to the implementation of an investment plan that will improve the current high levels of service. In addition, all the renewals obtained have allowed us to enjoy a good loyalty rate in 2020, which remains at very high levels (close to 100%). The operational stability of this area resulted in a “positive” annual credit rating perspective on behalf of Fitchratings, obtained last July. FCC Construcción will build a new hospital in the United Kingdom for 590 million euros Last September, a consortium in which FCC Construcción participates was awarded the contract for the design and construction of a new hospital in Jersey. The design is valued at 26.4 million euros and the execution period will be one and a half years. The construction phase will then begin, valued at a further 550 million euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 354 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 6 of 41 Among other important projects, the company was awarded the E6 motorway in Norway for 238.8 million euros, which includes the design and construction of a new 25-kilometre section of the E6 motorway, with an execution period of 47 months. Special mention should go to the award this year of the design, construction and maintenance of section 2 of the Maya Train (Mexico), jointly with Carso Infraestructuras y Construcción. The project consists of a 200-kilometre section valued at close to 700 million euros with an execution period of 28 months to which a further five years of maintenance has been added. FCC Medio Ambiente finalises the entry of a minority financial partner in the UK Last July, an agreement was reached with the investment group Icon Infrastructure Partners for the purchase of 49% of the capital of the new subsidiary company Green Recovery Projects Limited (GRP), header and owner of five energy recovery plants (“EfW”) of FCC Medio Ambiente subsidiary in the United Kingdom (located in Kent, Nottinghamshire, Buckinghamshire, Edinburgh and Lincolnshire), for an amount totalling 198 million pounds sterling. This meant an enterprise value of the company, at 100%, of 650 million pounds including its debt. The transaction was completed last November. The head of the area, FCC Servicios Medio Ambiente Holding, maintains control of GRP and its global consolidation, as well as a 50% stake in the incinerator in Mercia and a 40% stake in the one in Lostock. FCC as licensee for the construction and operation of a motorway in the United Kingdom FCC, through its company FCC Concesiones, has been selected for the extension of the A465 motorway in Wales (United Kingdom). FCC is part of the Future Valleys consortium along with other local and international partners in the project, which will be developed under the PPP mo- del. The project is key to improving connectivity and development in the region and has a planned investment of more than 600 million euros. FCC has agreed to the sale of certain infrastructure concessions for more than 400 million euros On 3 October, FCC agreed to sell its entire stake in three concessions located in Spain to Vau- ban Infrastructure Partners, within its policy of rotation and selective development of projects in this activity. These three concessions are included in the portfolio of the FCC Group, which has a stake in 14 transport infrastructure concessions. When signed, the agreement will mean the transfer of 51% in the Cedinsa Group, which manages the concession of four dual carriageways in Catalonia, 49% in Ceal 9, the concessionaire of the stations on section 1 of line 9 of the Barce- lona Metro, and 29% in Urbicsa, the operator for the Ciudad de Justicia (City of Justice), also in Barcelona. The price to be paid by Vauban for all of FCC’s stakes in these concessions amounts to 409.3 million euros, enabling the deconsolidation of 690.7 million euros of net financial debt at the close of the third quarter and will improve the Group’s treasury position. The closure of the agreement is pending obtaining the usual authorisations for this type of transaction. 2.1.2. Executive Summary • In 2020 as a whole, the FCC Group achieved 6.158 million euros in revenues, 1.9% lower than in 2019. This sustained level of revenues was supported by the good performance of the Utilities activities (Environment and Water), thanks to their being considered essential services, which alleviated the decline in the Construction and Cement areas, which were affected by the restrictions taken by the government since last March to combat the health crisis. This is in addition to a higher contribution of revenues in Concessions due to the change in the consolidation method of the concession company Cedinsa. • Gross operating profit increased by 2.1%, reaching 1.047.5 million euros. This increase is due to the higher contribution in the Concessions area, together with the increase in profits from the sale of surplus emission rights in the Cement area, which offset the fall in Construction. Adjusted for the sale of CO2 rights, Ebitda for the business year was only 3.1% lower than the previous year. • Attributable net income reached 262.2 million euros, 1.7% lower than the previous business year. Again, as throughout the business year, it includes the differential behaviour of the ex- change differences recorded, -51.3 million euros this year compared with a positive contribu- tion of 14.8 million euros in 2019. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 7 of 41 • The Group’s financial debt fell by 21.8% compared to the end of the previous year, mainly due to the exclusion of the debt linked to the transport infrastructure concession assets, the sale of which was agreed last October, from the GRP minority stake sale in UK, and the early partial repayment of the debt linked to the Cement area. As a result, the net financial debt balance amounted to 2.797.8 million euros in December 2020. 2.1.3. Summary by business area Area Dec. 20 Dec. 19 Chg. (%) % s/ 20 % s/ 19 (Millions of Euros) REVENUE BY BUSINESS AREA 355 • Net assets increased substantially by 17.6% to 2.908.7 million euros at business year-end, thanks to the stability of net profit and the very high percentage of shareholders who once again chose to reinvest their annual scrip dividend in new shares in the entity. • At the end of December 2020, the Group’s revenue portfolio stood at 29.411.7 million euros, which still does not include significant contracts provisionally awarded mainly in the Environ- ment area. Environment Water Construction Cement Concessions 2,888.2 2,915.2 1,188.3 1,186.9 1,611.0 1,719.3 -0.9% 0.1% -6.3% -7.4% 382.6 123.5 413.2 49.8 148.0% Corporate serv. and others (35.6) (8.2) n/a 46.9% 19.3% 26.2% 6.2% 2.0% -0.6% 46.4% 18.9% 27.4% 6.6% 0.8% -0.1% KEY FIGURES (Millions of Euros) Total 6,158.0 6,276.2 -1.9% 100.0% 100.0% Net turnover (NT) Gross Operating Profit (EBITDA) EBITDA Margin Net Operating Profit (EBIT) EBIT Margin Income attributable to the parent company Equity Net financial debt Backlog Dec. 20 Dec. 19 Var. (%) 6,158.0 1,047.5 17.0% 572.7 9.3% 262.2 2,908.7 2,797.8 6,276.2 1,025.8 16.3% 511.6 8.2% 266.7 2,473.8 3,578.7 29,411.7 31,038.4 -1.9% 2.1% 0.7 p.p 11.9% 1.1 p.p -1.7% 17.6% -21.8% -5.2% REVENUE BY GEOGRAPHICAL AREA Spain 3,672.3 3,465.6 Rest of Europe and Others United Kingdom Middle East & Africa Czech Republic Latin America and USA 803.0 668.6 467.4 285.2 261.5 733.9 734.9 576.8 286.8 478.2 6.0% 9.4% -9.0% -19.0% -0.6% -45.3% 59.6% 13.0% 10.9% 7.6% 4.6% 4.2% 55.2% 11.7% 11.7% 9.2% 4.6% 7.6% Total 6,158.0 6,276.2 -1.9% 100.0% 100.0% EBITDA Environment Water Construction Cement Concessions Corporate serv. and others 450.9 282.9 53.6 139.9 94.6 25.6 492.5 281.7 100.2 86.4 31.8 33.2 -8.4% 0.4% -46.5% 61.9% 197.2% -22.9% 43.0% 27.0% 5.1% 13.4% 9.0% 2.4% 48.0% 27.5% 9.8% 8.4% 3.1% 3.2% Total 1,047.5 1,025.8 2.1% 100.0% 100.0% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 8 of 41 (Millions of Euros) 2.1.4. Income Statement 356 Area Dec. 20 Dec. 19 Chg. (%) % s/ 20 % s/ 19 OPERATING PROFIT/(LOSS) Environment Water Construction Cement Concessions Corporate serv. and others 215.7 167.4 20.9 106.8 55.4 6.5 258.5 180.2 77.3 (20.0) 12.0 3.6 -16.6% -7.1% -73.0% n/a n/a 80.6% 37.7% 29.2% 3.6% 18.6% 9.7% 1.1% 50.5% 35.2% 15.1% -3.9% 2.3% 0.7% Total 572.7 511.6 11.9% 100.0% 100.0% 101.6 (12.8) -893.7% 3.6% -0.4% 1,330.2 1,332.2 1,177.6 1,214.5 0.0 173.7 14.7 0.0 293.0 751.8 -0.2% -3.0% n/a -40.7% -98.0% 47.5% 42.1% 0.0% 6.2% 0.5% 37.2% 33.9% 0.0% 8.2% 21.0% 2,797.8 3,578.7 -21.8% 100.0% 100.0% Net turnover (NT) Gross Operating Profit (EBITDA) EBITDA Margin (Millions of Euros) Dec. 20 Dec. 19 Chg. (%) 6,158.0 1,047.5 17.0% 6,276.2 1,025.8 -1.9% 2.1% 16.3% 0.7 p,p Provision for amortisation of fixed and non-current assets (488.9) (458.4) 6.7% Other operating income Net Operating Profit (EBIT) EBIT margin Financial income Miscellaneous financial results P/L of companies accounted for by the equity method Profit/(loss) before tax from continuing activities Company tax on profits Income from continuing operations Net Income Non-controlling interests Income attributable to the parent company 2.1.4.1. Net Revenue 14.1 572.7 9.3% (55.8) -125.3% 511.6 8.2% 11.9% 1.1 p,p (154.0) (144.7) 6.4% (51.1) 1.5 -3506.7% 62.1 429.9 120.6 489.0 -48.5% -12.1% (86.3) (149.1) -42.1% 343.6 343.6 (81.4) 262.2 339.9 339.9 (73.2) 266.7 1.1% 1.1% 11.2% -1.7% 9,184.3 10,366.2 -11.4% 15,025.9 15,018.3 5,155.8 5,623.2 45.7 30.7 0.1% -8.3% 49.0% 31.2% 51.1% 17.5% 0.2% 33.4% 48.4% 18.1% 0.1% 29,411.7 31,038.4 -5.2% 100.0% 100.0% Consolidated Group income amounted to 6.158 million euros for the entire year, 1.9% lower than in the previous year. All activities reflect, to a varying degree, the measures decreed by govern- ments since the middle of last March in most of the countries in which the Group operates to ad- dress the health crisis caused by COVID-19. However, the Concessions area recorded an increa- se in its contribution as a result of the acquisition of a majority in the Cedinsa group in November last year, together with very stable performance experienced in the Water and Environment areas due to its clear nature as an essential service for its customers. NET FINANCIAL DEBT With Recourse Without Recourse Environment Water Construction Cement Concessions Total BACKLOG Environment Water Construction Real Estate Total Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 357 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 9 of 41 According to the different business areas, the largest contributor, Environment, has enjoyed sus- tained performance levels, recording a slight contraction in revenues of 0.9%, centred on the impact of lower volumes in the waste treatment area in the United Kingdom. This, however, is combined with the good performance in the waste collection, treatment and street cleaning acti- vity in most geographical areas, with a greater contribution from the USA. Revenues in the Water area remained stable, with an increase of 0.1%, due to the greater contri- bution of the new concession contracts incorporated abroad, which compensated for the lower activity in Technology and Networks due to the slower pace of execution of construction projects, also mainly in the international area. In Construction, turnover declined by 6.3%, due to delays and project stoppages caused by strict lockdown measures, mainly in Latin America and the Middle East. In Spain and Europe, a higher level of activity in new contracts remained stable, which largely made it possible to compensate for the stoppage intervals registered in the year in this geographical area. By business area in Spain, revenues increased their contribution by 6% to 3.672.3 million euros. Environment had an increase of 0.8%, due to stability in the municipal waste management cycle as a whole, which compensated for the decrease in non-essential urban services in certain pe- riods due to the measures taken by the government to combat the pandemic. Water recorded a 2.5% decline due to a slight reduction in amounts invoiced as a result of a drop in activity in non-residential customers, together with lower contribution from Technology and Networks associated with concessions. The Construction area rose by a remarkable 27.6%, where the good pace in the development of projects awarded in the previous year allowed it to overcome the effect of the reduced activity recorded between March and May. Similarly, the Cement area, which was affected in the same period by the restriction measures, leading to a decrease in the amounts invoiced, partially recovered its pace of activity, with a drop of 4.6% for the year as a whole. Lastly, it is worth mentioning the increase in the contribution of the Concessions area, up to 121.5 million euros, due to the effect of incorporating the Cedinsa subgroup into the scope using the full consolidation method. Likewise, in the Cement area, revenues decreased by 7.4%, due to lower volumes shipped in the local markets of Spain and Tunisia, mainly in the months of March and April, which was partially offset by the recovery recorded in the last months of the year. Revenue Breakdown by Geographical Area Spain Rest of Europe and Others United Kingdom Middle East & Africa Czech Republic Latin America and USA Total Dec. 20 3,672.3 Dec. 19 3,465.6 803.0 668.6 467.4 285.2 261.5 733.9 734.9 576.8 286.8 478.2 6,158.0 6,276.2 (Millions of Euros) Chg. (%) 6.0% 9.4% -9.0% -19.0% -0.6% -45.3% -1.9% In the other regions, within the EU, there was a 9.4% increase in Rest of Europe and Others to 803 million euros, due to the higher contribution in Construction of a new contract in the Netherlands and the contribution of Aqualia France acquired in June 2019, together with very stable perfor- mance in the Central European countries in which the Environment area operates. In the Czech Republic, there was a small reduction of 0.6% due to a fall in the exchange rate during the period (-2.9%), with very stable operating conditions both for Environment and Water. In the United Kingdom, revenues generated mostly in the Environment area fell by 9% to 668.6 million euros, due to lower volumes in the tertiary waste treatment and reduction business, linked to lockdown measures due to the health crisis and a lower contribution from the Edinburgh treat- ment and recovery plant following the completion of its construction phase in the middle of the previous year. The Middle East and Africa area saw its revenues reduced by 19%, mainly due to the effect of the strict lockdown measures in those countries where the Construction area operates. This was mainly in Saudi Arabia, and which mitigated a higher activity in the Water area, both due to the contribution of two companies acquired in Saudi Arabia and to the increased activity in Techno- logy and Networks. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 358 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 10 of 41 Revenues in Latin America and the US dropped by 45.3%, due to the slower pace of project execution in both Construction and Water, again as a result of the effect of the strict lockdown measures implemented to tackle the pandemic. However, in the United States, revenues, con- centrated in the Environment area, increased significantly due to the entry into operation of new contracts in Florida for municipal waste collection services, an essential service activity that avoi- ded the effects caused by lockdowns and their impact on certain economic activities. % Revenue by Geographical Area 59.6% Spain 10.9% UK 13.1% Rest of Europe & Other 7.6% Middle East & Africa 4.2% Latin America & USA 4.6% Czech Republic The Water area reached 282.9 million euros, similar to that generated in the previous year, su- pported by an increased contribution of the concessions and services activity due to the incor- poration of new contracts which offset the reduced contribution of the Technology and Networks activity. Overall, the operating margin remained at a similar level (23.8% for the year). In Concessions, the differential contribution from the Cedinsa concession group, which amounted to 75.3 million euros, drove up EBITDA to 94.6 million euros. This is compared to 31.8 million euros in the previous year, when it only contributed to profit for two months. Meanwhile, the Construction area suffered more strongly from the impact of the aforementioned general restriction measures. So it totalled 53.6 million euros, compared to 100.2 million euros in the previous year, mainly as a result of a downturn in activity in some countries in the international area and the cost structure associated with the projects, with a 3.3% reduction in margins in the year. In Cement, it is worth mentioning the contribution from the sale of CO2 rights, totalling 58.9 million euros compared to 5.8 million euros in the previous year. This, together with a significant drop in the cost of energy, led to a remarkable 61.9% increase in Ebitda for the period. % EBITDA by Business Area 2.1.4.2. Gross Operating Profit (EBITDA) The Gross Operating Profit for the year was 1.047.5 million euros, an increase of 2.1% compared to the previous year. This increase is largely down to the combination of the higher result from the sale of emission rights in the Cement area together with the increased contribution from the Concessions area and the sustained performance of the Water area. By business area, the most noteworthy developments have been: Environment decreased by 8.4% to 450.9 million euros, due to lower volumes in treatment plants and waste reduction, mainly in the United Kingdom, together with the lower price of generated electricity and other by-products and higher expenses associated with scheduled maintenance shutdowns and extraordinary repairs. 43.0% Environment 27.0% Water 13.4% Cement 5.1% Constrution 9.0% Concessions 2.5% Corporate Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 359 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 11 of 41 As a result of the performance in several utilities areas, Environment and Water (together with Concessions) maintained a high contribution to operating profit reaching 79.1% for the period, compared to 20.9% from those linked to demand for the construction of infrastructure, building and other activities. 2.1.4.3. Net Operating Profit (EBIT) Net operating profit amounted to 572.7 million euros, 11.9% more than in the previous year. Ebit reflects the effect of the development of the gross operating profit together with two components. Firstly, the higher provision for amortisation corresponding to the transport concession assets assigned to the operating activity following their entry into consolidation at the end of 2019, as well as a contribution from other operating income of 14.1 million euros this year compared to -55.8 million euros the previous year due to the impairment of 70 million euros that was made to the value of goodwill of the cement activity in 2019. 2.1.4.4. Earnings before Taxes (EBT) from continuing operations Profit before tax for continued activities stood at 429.9 million euros, 12.1% down on 2019, due to the fact that positive developments in operational processes were accompanied by a sustained negative impact on the exchange rate in 2020 compared to the positive contribution it made in the previous year. In addition, lower profits were generated by companies accounted for using the equity method, due to the change in the consolidation method of the Cedinsa subgroup mentioned above. 2.1.4.4.1. Financial income The financial result amounted to -154 million euros, compared to -144.7 million euros in the previous business year. The increase is mainly due to higher project finance expenses in the Concessions area of the Cedinsa subgroup, since its entry into consolidation in November 2019. 2.1.4.4.2. Miscellaneous financial results This epigraph includes an amount of -51.1 million euros this year, compared with -1.5 million euros last year. The difference is mainly due to the impact from developments in the exchange rate for certain currencies, with negative exchange differences amounting to -51.3 million euros recorded in this year compared to +14.8 million euros recorded for the previous year. 2.1.4.4.3. Profit/(loss) of equity-accounted affiliates The contribution from co-managed and investee companies amounted to 62.1 million euros, compared to 120.6 million euros the previous business year. This is mainly due to the effect of the change to full consolidation of the Cedinsa subgroup, mentioned above, and the decreased contribution due to the completion of certain projects in Construction. 2.1.4.5. Income attributable to the parent company The net attributable profit for the year was 262.2 million euros, a slight decrease o f 1.7% com- pared to 2019. This profit is accounted for by the contribution to EBT from the following items: A corporate income tax expense of -86.3 million euros, in line with the profit before tax obtained, together with profit attributable to minority shareholders of 81.4 million euros compared to 73.2 million euros the previous year, mainly concentrated in the Water area (with 67.9 million euros) and largely reflecting the participation of a minority shareholder in this area. 2.1.4.6. Profit and loss statement figures on a pro rata basis A continuación se presentan las magnitudes más relevantes de la cuenta de pérdidas y ganan- The most significant figures in the income statement, calculated on the basis of the percentage of effective shareholding in each of the subsidiaries, joint ventures and associates, are as follows. Net turnover (NT) Gross Operating Profit (EBITDA) EBITDA Margin Net Operating Profit (EBIT) EBIT margin Income attributable to the parent company Dec. 20 6,132.6 1,032.7 16.8% 567.7 9.3% 262.2 Dec. 19 6,368.5 1,132.4 17.8% 597.4 9.4% 266.7 Chg. (%) -3.7% -8.8% -0.9 p.p -5.0% -0.1 ,.p -1.7% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 12 of 41 2.1.5. Balance Sheet 2.1.5.1. Investments accounted for using the equity method 360 Intangible fixed and non-current assets fixed and non-current assets/Property, Plant and Equipment Equity-accounted affiliates Non-current financial assets Deferred tax assets and other non-current assets Non-current assets Non-current assets held for sale* Inventory Trade and other receivables Other current financial assets Cash and cash equivalents Current assets TOTAL ASSETS Non-controlling interests Equity Subsidies Non-current provisions Long-term financial debt Other non-current financial liabilities Deferred tax liabilities and other non-current liabilities Non-current liabilities Liabilities relating to non-current assets held for sale* Current provisions Short-term financial debt Other current financial liabilities Trade and other payables Current liabilities TOTAL LIABILITIES * See epigraph 5.2 2,437.9 2,810.2 722.8 580.9 578.7 7,130.4 1,392.3 765.6 Dec. 20 Dec. 19 (Millions of Euros) Chg. (Mn€) (1,020.5) (56.3) (18.7) (282.3) (21.2) 3,458.4 2,866.5 741.5 863.2 599.9 8,529.6 (1,399.2) 0.0 1,392.3 728.8 2,095.6 1,907.7 228.7 1,222.1 5,704.2 189.6 1,218.5 4,044.6 36.8 187.9 39.1 3.6 1,659.6 12,834.6 12,574.1 260.5 337.0 97.9 434.9 (140.8) (65.8) (905.4) (147.6) (6.3) 620.4 522.5 2,908.7 2,473.8 333.8 1,130.2 4,448.7 581.6 303.0 193.0 1,064.4 3,543.3 434.0 296.7 5,531.3 1,051.3 195.2 705.2 169.2 2,273.7 4,394.6 6,797.2 (1,265.9) 0.0 1,051.3 249.6 538.2 145.4 2,370.0 3,303.2 (54.4) 167.0 23.8 (96.3) 1,091.4 12,834.6 12,574.1 260.5 Equity attributable to shareholders of the parent company 2,288.3 1,951.3 The epigraph entitled investments accounted for using the equity method amounted to 722.8 million euros at the end of the year, with the following breakdown of the most significant invest- ments in equity: 1) 278.1 million euros for the 36.9% stake in Realia. 2) 74.3 million euros for participation in various transport infrastructure and equipment conces- sions. 3) 102.3 million euros for the stake in companies in the Environment area (recycling and munici- pal services, mainly in Spain and the United Kingdom). 4) 35.2 million euros for stakes in companies in the Water area, largely concessionary companies managing services abroad (North Africa and Mexico). 5) 35.5 million euros from the subsidiaries of the parent company in the Cement area. This epigraph also includes a further 197.4 million euros for the remaining investments in own funds for other participations together with loans granted to subsidiaries. 2.1.5.2. Assets held for sale This epigraph is included in current assets, for an amount of 1.392.3 million euros, with its corres- ponding counterpart in liabilities, all of the assets corresponding to certain participations in the concessions activity whose sale was agreed in the third quarter of the business year and until it leaves the consolidated perimeter when the transaction is closed. 2.1.5.3. ECash, cash equivalents and available lines of credit The balance for the Cash and cash equivalents epigraph amounted to 1.222.1 million euros as at the end of the business year, with 72.9% for companies and non-recourse perimeters and the remaining 27.1% for the Group’s parent company and its recourse perimeter. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 13 of 41 The cash balance has remained very stable and in line with the previous year, so that together with the available lines of credit, at business year-end the FCC Group had: 2.1.5.5. Financial debt 1) In the recourse perimeter, cash and equivalents of 330.6 million euros and lines of credit of 473.4 million euros, totalling 804 million euros. 2) In the non-recourse perimeters, cash and equivalents of 891.5 million euros and lines of credit of 389.8 million euros, totalling 1.281.3 million euros. This took the FCC Group’s total for cash, cash equivalents and available lines of credit at the end of the business year to 2.085.3 million euros, compared to a total short-term financial debt (maturing before 12 months) at the same date amounting to 705.2 million euros. This represents a volume of three times the amount of existing maturities until 31 December 2021. Epigraph 5.5 details the nature and amounts of short-term financial debt for a better understan- ding of the Group’s financial position in the short term. 2.1.5.4. Equity Equity at business year-end amounted to 2.908.7 million euros, compared with 2.473.8 million euros at the end of the previous business year. This substantial increase is mainly due to the con- tribution of net attributable profit of 262.2 million euros achieved in the year and to a lesser extent to the increase in non-controlling interests up to 620.4 million euros. Bank borrowings Debt instruments and other loans Payables due to financial leases Other financial liabilities Gross Financial Debt Treasury and other current financial assets Net Financial Debt Net financial debt with recourse Net financial debt without recourse 361 Dec. 20 Dec. 19 Chg. (Mn€) (Mililons of Euros 820.0 3,230.3 50.2 148.0 4,248.5 (1,450.7) 2,797.8 101.6 2,696.2 1,474.7 3,125.0 63.8 323.4 4,986.9 (1,408.2) 3,578.7 -12.8 3,591.5 (654.7) 105.3 (13.6) (175.4) (738.4) (42.5) (780.9) 114.4 (895.3) With regard to gross financial debt, 16.6% has short-term maturity, equivalent to 705.2 million eu- ros. 449.4 million of these relates to marketable securities, largely commercial paper issued on the Irish Stock Exchange by the Group’s parent company and the Environment area. A further 212.4 million euros is due to various credit lines with banks, including both bilateral corporate financing and non-recourse projects, and another 43.4 million euros of financial debt with third parties. Almost all of the net financial debt is without recourse and is allocated to business areas, totalling 2.696.2 million euros at the end of the business year. The parent company had a net debt position of 101.6 million euros, only 3.6% of the Group’s total. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 362 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 14 of 41 Breakdown of Net Financial Debt without recourse by Business Area 2.1.6. Cash Flow 49.3% Environment 43.7% Water 0.6% Concessions 6.4% Cement Net financial debt without recourse to the Group’s parent company is structured as follows: (i) The Water area accounts for of 1.177.6 million euros, of which, in addition to corporate bond financing in the parent company, another 189.9 million euros correspond to the Czech Republic business, and the rest to various concessions of the end-to-end water cycle; (ii) the Cement area accounts for 173.7 million euros; (iii) the Environment area accounts for 1.330.2 million, most of which corresponds to long-term bonds issued at the end of 2019 by the area’s parent company, another 167.2 million euros correspond to the activity in the United Kingdom, and the rest, 55 million euros, to financing three waste processing and recycling plant projects in Spain; (iv) 14.7 million euros is accounted for by the concessions area, after deconsolidation amounting to 698.5 million euros, corresponding to the Cedinsa concessionary group’s project debt. 2.1.5.6. Other current and non-current financial liabilities The epigraph of other current and non-current financial liabilities totals 603.2 million euros at the end of the business year. Its balance mainly includes the item suppliers of fixed and non-current assets for operating leases amounting to 394.9 million euros. It also includes other liabilities that are not financial liabilities, such as those associated with hedging derivatives, suppliers of fixed and non-current assets, guarantees and deposits received. (Millions of Euros) Dec. 20 Dec. 19 Chg. (%) Gross Operating Profit (EBITDA) 1,047.5 1,025.8 (Increase)/decrease in working capital Corporate income tax (paid)/received Other operating cash flow Operating cash flow Investment payments Divestment receipts Other investing cash flows Investing cash flow Interest paid (Payment)/receipt of financial liabilities Other financing cash flow Financing cash flow Exchange differences, change in consolidation scope, etc. Increase/(decrease) in cash and cash equivalents 2.1.6.1. Operating cash flow (302.0) (96.7) (43.7) 605.1 (541.2) 75.9 63.8 (401.5) (151.4) (142.6) 155.6 (138.4) (61.5) 3.6 (183.3) (173.0) (39.0) 630.5 (546.6) 28.5 158.9 (359.2) (136.8) (97.4) (111.5) (345.7) 26.8 (47.7) 2.1% 64.8% -44.1% 12.1% -4.0% -1.0% 166.3% -59.8% 11.8% 10.7% 46.4% n/a -60.0% n/a n/a The operating cash flow generated during the business year amounted to 605.1 million euros, 4% less than in the previous business year. Operating working capital was up 302 million euros compared to 183.3 million in the last business year, largely due to the elimination of the balance of non-recourse loan assignments in the Environment area in order to optimise the financial cost. The epigraph collections/(payment) of company tax shows an outflow of 96.7 million euros com- pared to 173 million euros at the end of the previous business year. This difference was due to the payment of 92.1 million euros in the previous year to adjust the tax incentives applied by the Group in previous business years. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 363 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 15 of 41 The epigraph other operating cash flow includes an outflow of 43.7 million euros compared to 39 million euros the previous business year, due to the application of provisions mainly in the Cons- truction and Environment area. 2.1.6.2. Investing cash flow The investment cash flow represents an application of 401.5 million euros compared to 359.2 million euros in the previous business year. In the Environment area, in Spain, the investment for the construction of the Loeches treatment plant in Madrid, for an amount of 54.6 million euros, stands out. In the international area, among the most significant investments is the one made in the United Kingdom for the development of the Lostock energy recovery plant for 49.4 million euros. In the USA, the investment in the contract for the collection of municipal solid wastes in Omaha, Nebraska, worth 34 million euros, is also worth mentioning. In the Water area, of particular note are the payments for investments corresponding to the ac- quisition in Saudi Arabia of 51% of the companies Qatarat and Haaisco, for a combined amount of 16.1 million euros, as well as the payment of 14.1 million euros for the acquisition of three end- to-end water cycle companies in the region of Córdoba, in the north of Colombia. In Spain, 23 million euros were invested in the Rambla Morales desalination plant in Almería. Proceeds from disposals amounted to 75.9 million euros compared to 28.5 million euros the previous business year, including 30.8 million euros corresponding to the sale of 49% of the long- term loan of the Edinburgh incineration plant to the investment group Icon, once the sale of 49% of the capital of the new subsidiary company Green Recovery Projects Limited to this group had been completed. The breakdown of net investments by business area, excluding other cash flows from investment activities, in terms of payments and receipts, is as follows: Dec. 20 Dec. 19 Chg. (Mn€) (Millions of Euros) Environment Water Construction Cement Concessions Corporate serv. etc. & adjustments (283.1) (134.1) (7.6) (10.4) (24.9) (5.2) (301.2) (124.5) 30.5 (8.3) (59.0) (55.6) Net investments (Payments - Receipts) (465.3) (518.1) 18.1 (9.6) (38.1) (2.1) 34.1 50.4 52.8 The epigraph other investment flows includes an inflow of 63.8 million euros at the end of the year, where the most important item in the Environment area is the collection of the concession right for the Edinburgh incineration plant for an amount of 42.3 million euros, which has been applied in its entirety to reduce its financial debt. To this we must add movements for smaller amounts in loans to third parties and investee companies. 2.1.6.3. Financing cash flow The consolidated cash flow from financing throughout the year represents an application of 138.4 million euros compared to 345.7 million euros in the previous business year. The interest payment item shows an outflow of 151.4 million euros, mainly concentrated in the Environment, Water and Concessions areas. The epigraph Proceeds from/(payments on) financial liabilities includes an application of 142.6 million euros in the year, compared to 97.4 million euros in the previous year. The most significant item was the decrease in the financial debt of the Cement area, entirely without recourse to the Group’s parent company, amounting to 118.5 million euros, of which 108 million euros corres- pond to the early partial repayment of the main credit facility for the area. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 364 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 16 of 41 Other financing cash flows amounted to an inflow of 155.6 million euros compared with an out- flow of 111.5 million euros the previous business year. The most significant item was the payment of the sale of a minority stake to a financial partner of 49% of the capital of the new subsidiary Green Recovery Projects Limited, head of five energy recovery plants of the Environment subsi- diary in the UK, for 188.4 million euros. Lastly, it is worth mentioning the payment of dividends to shareholders of the Group’s parent company and minority third parties amounting to 36.6 million euros. 2.1.6.4. Exchange differences, change in consolidation scope, etc This epigraph recorded an application of 61.5 million euros and includes two main items. Firstly, the transfer of the cash of the concession subgroup Cedinsa for 38.1 million euros to the epigraph “assets held for sale”, following the sale agreement reached in the fourth quarter of the year and until its exit from the consolidated scope at the close of the transaction. This is in addition to the effect on cash of the variation in the exchange rate of various currencies against the euro, mainly concentrated in the Construction area. 2.1.6.5. Change in cash and cash equivalents As a result of the development of the different components of the cash flow, FCC Group’s cash position closed with an increase of 3.6 million euros compared to the end of the previous period, reaching a balance of 1.222.1 million euros at the end of the business year. 2.1.7. Analysis by business área 2.1.7.1. Environment The Environment division contributed 43% of the Group’s EBITDA in 2020. Some 79.9% of its ac- tivity is focused on the provision of essential waste collection, treatment and disposal services, as well as street cleaning. The remaining 20.1% corresponds to other types of urban environmental activities, such as the conservation of green areas or sewage systems. In Spain, the management of municipal wastes and street cleaning are the most important activi- ties, while in the United Kingdom the focus is on the processing, retrieval and disposal of munici- pal wastes. In central Europe, mainly Austria and the Czech Republic, FCC is present right across the waste management chain (collection, processing and disposal). FCC’s activities in the USA include both the collection and comprehensive retrieval of municipal wastes. 2.1.7.1.1. Earnings Turnover Waste collection and street cleaning Waste processing Other services EBITDA EBITDA Margin EBIT EBIT margin Dec. 20 2,888.2 1,428.6 879.0 580.6 450.9 15.6% 215.7 7.5% (Millions of Euros) Dec. 19 2,915.2 1,379.7 960.1 575.4 492.5 16.9% 258.5 8.9% Chg. (%) -0.9% 3.5% -8.4% 0.9% -8.4% -1.3 p.p -16.6% -1.4 p.p Turnover for the Environment area remained at similar levels to the last business year and amoun- ted to 2.888.2 million euros in the period. The waste collection and street cleaning activity increa- sed by 3.5% to 1.428.6 million euros, where a greater contribution from the USA after the entry into operation of new contracts stands out, together with very stable performance in all other regions. Waste treatment activity declined by 8.4% to 879 million euros, because of a lower contribution in the United Kingdom due to the decreased volume of treatment activity of private customers, as well as a reduced contribution from the development of new plants, together with good perfor- mance in Spain and Central Europe. Breakdown of revenue by geographical area (Millions of Euros) Spain United Kingdom Central Europe US and others Total Dec. 20 1,715.8 605.3 464.6 102.5 Dec. 19 1,701.7 682.0 466.9 64.6 2,888.2 2,915.2 Chg. (%) 0.8% -11.2% -0.5% 58.6% -0.9% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 365 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 17 of 41 By geographical area, revenues in Spain increased by 0.8% compared to the previous business year to 1.715.8 million euros, due to stability in municipal waste collection and street cleaning activities deemed to be essential. This is together with higher revenues linked to the development phase of treatment plants that have offset the decrease in non-essential municipal services due to the measures taken by the government to combat the pandemic during the first half of the business year. In the United Kingdom, turnover decreased by 11.2% to 605.3 million euros, due to lower volu- mes in the waste treatment and reduction activity, concentrated in tertiary clients and the decrea- sed contribution of the treatment and recovery plant in Edinburgh, following the completion of the construction phase and the start of the operational phase since mid last year (which resulted in a reduction of 25.7 million euros). In Central Europe, revenues remained stable at 464.6 million euros, where the increase in acti- vity in Poland has almost entirely offset lower levels of activity in countries such as Bulgaria and Slovakia. Lastly, turnover in the USA and other markets increased by a remarkable 58.6% due to a greater contribution from the Palm Beach and Volusia contracts, both in Florida. The net operating profit (EBIT) decreased by 16.6% over the previous year to 215.7 million euros, thanks to the development of the different components mentioned in the Ebitda. Breakdown of Backlogs by Geographical Area (Millions of Euros) Spain International Total Dec. 20 4,872.2 4,312.1 Dec. 19 5,354.5 5,011.7 9,184.3 10,366.2 Chg. (%) -9.0% -14.0% -11.4% At the end of December, the backlog for the area fell by 11.4% to 9.184.3 million euros. In Spain, it amounts to 4.872.2 million, where a significant number of contracts are still being extended, although an increase in bidding activity is now being noted. The awarding of the eight-year urban sanitation contract for Barcelona is worth mentioning, with an estimated value of more than 800 million euros, after FCC Medioambiente was deemed the entity with the best technical qualification. In the international area, the backlog declined 14%, largely due to the depreciation of sterling and the dollar against the euro at the end of the business year. Breakdown of Revenue by Geographical Area 2.1.7.1.2. Financial Debt 59.4% Spain 21.0% UK 16.1% Central Europe 3.5% USA & Others Gross operating profit (EBITDA) decreased by 8.4% to 450.9 million euros, caused by the deve- lopments in revenue described above together with decreased performance in the incineration plants in the United Kingdom due to shutdowns scheduled in their maintenance together with extraordinary repairs. Net Financial Debt without recourse (Millions of Euros) Dec. 20 1,330.2 Dec. 19 1,332.2 Chg. (Mn€) (2.0) There was no appreciable variation to Net financial debt without recourse to the header at the end of the business year. The main balance corresponds to the issue of two green bonds in the amount of 600 million euros and 500 million euros by the parent company in the fourth quarter of 2019 and that have obtained confirmation of its investment grade in its annual revision. Of the rest, 167.2 million euros correspond to activity in the United Kingdom together with another 55 million euros mainly linked to funding of three waste treatment and recycling plant projects in Spain. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 366 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 18 of 41 2.1.7.2. End-to-End Water Management Breakdown of revenue by geographical area (Millions of Euros) The Water area contributed 27% of FCC Group EBITDA in the period. 85.6% of its activity is focu- sed on public service concession management related to the end-to-end water cycle (collection, treatment, storage and distribution) and the operation of different types of water infrastructures; the remaining 14.4% corresponds to Technology and Networks, which is responsible for the design, engineering and equipment of hydraulic infrastructures, related to a great extent to the development of new concessions and ancillary works for operations. In Spain the area serves over 13 million inhabitants in more than 850 municipalities. In Central Europe, it serves 1.3 million users, mainly in the Czech Republic, while in the rest of the continent it is present in Italy, Portugal and France. In Latin America, the Middle East and Africa it is present through the design, equipping and operation of processing plants. All in all, the Water area provi- des supply and/or sanitation services to more than 25 million inhabitants. 2.1.7.2.1. Earnings Turnover Concessions and services Technology and networks EBITDA EBITDA Margin EBIT EBIT margin Dec. 20 1,188.3 1,016.6 171.7 282.9 23.8% 167.4 14.1% (Millions of Euros) Dec. 19 1,186.9 982.2 204.7 281.7 23.7% 180.2 15.2% Chg. (%) 0.1% 3.5% -16.1% 0.4% 0.1 p.p -7.1% -1.1 p.p Revenues remained stable and reached 1.188.3 million euros. The Concessions and Services business increased by 3.5% year-on-year to 1.016.6 million euros, due to the increased contri- bution of activity and contracts in France, Colombia and Saudi Arabia and despite the decrease in consumption in Spain due to the impact of the pandemic. However, Technology and Networks decreased by 16.1%, due to the slower pace of execution of both construction projects associa- ted with national concessions and international projects Spain Middle East, Africa and Others Central Europe Rest of Europe (France, Portugal and Italy) Latin America Total Dec. 20 Dec. 19 Chg. (%) 784.3 163.1 105.0 78.5 57.4 804.4 113.3 111.7 71.2 86.3 1,188.3 1,186.9 -2.5% 44.0% -6.0% 10.3% -33.5% 0.1% By geographic area, revenues in Spain amounted to 784.3 million euros, 2.5% less than at the end of the previous business year, due to a decrease in amounts invoiced to non-domestic cus- tomers and in tourist areas, together with the entry into operation of new contracts, such as the peripheral sewerage contract in Madrid. Technology and Networks has experienced lower activity due to the slower pace of execution of some projects associated with concessions. In the international arena, in the Middle East, Africa and Others, revenues increased by an outs- tanding 44% to 163.1 million euros, due both to the good pace of execution in the construction of a wastewater treatment plant in Egypt, and to the increase in concession activity resulting from the contribution of the companies acquired in Saudi Arabia during the business year. Central Europe saw its revenues fall by 6% to 105 million euros, mainly due to the reduced activity of Technology and Networks regarding the completion of projects in Montenegro and Serbia. End-to-end cycle activity in the Czech Republic remained stable due to an update in rates that largely offset the slight fall in consumption caused by the health crisis. In the Rest of Europe, revenues increased by 10.3% to 78.5 million euros as a result of the contribution by the company Aqualia France acquired in June 2019, which compensated for a downturn in infrastructure activity in the Caltanisetta concession in Italy. In Latin America, revenues fell by 33.5% to 57.4 million euros, due to the completion or slower pace of construction of plants in Ecuador and Colombia, which were not offset by the contribution of new contracts, such as in Mexico. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 19 of 41 Breakdown of Revenue by Geographical Area 2.1.7.2.2. Financial Debt 367 66.0% Spain 13.8% M. East, Africa & Others 8.8% Central Europe 4.8% Latin America 6.6% Rest of Europe Gross operating profit (EBITDA) slightly increased by 0.4% and totalled 282.9 million euros, where the incorporation of new contracts in concessions and services helped to offset the aforemen- tioned decrease in volumes and activity in Technology and Networks, due to the interruption and delay in the progress of some projects due to the health crisis. The margin, at 23.8%, remained stable compared to 2019. The net operating profit (EBIT) decreased 7.1% compared to the previous business year, to 167.4 million euros, mainly due to the increase in the amortisation provision allocated due to an increase in the asset base and new areas of operations. 2.1.7.3.1 Earnings Turnover EBITDA Breakdown of Backlogs by Geographical Area Spain International Total Dec. 20 7,224.7 7,801.2 Dec. 19 7,813.1 7,205.2 15,025.9 15,018.3 (Millions of Euros) EBITDA Margin Chg. (%) EBIT EBIT margin -7.5% 8.3% 0.1% Figures for the backlog were similar to those to December of the previous year, totalling 15.025.9 million euros, due to new contracts in the international area, mainly in Colombia, Mexico, Saudi Arabia and Qatar, which compensated for the downturn in Spain, caused by delays in the renewal of some contracts. Net Financial Debt without recourse (Millions of Euros) Dec. 20 1,177.6 Dec. 19 1,214.5 Chg. (Mn€) (36.9) Net financial debt, entirely without recourse to the Group’s parent company, decreased by 36.9 million euros compared to December the previous year, totalling 1.177.6 million euros. Most of the debt balance is for long-term bonds issued by the area’s parent company, with a gross balance of 1.346.4 million euros. 2.1.7.3. Construction The Construction area contributed 5.1% of the Group’s EBITDA in the business year. Activities were focused on the design and construction of large civil engineering, industrial and complex building works. Special mention should go to participation in major works like railways, tunnels, bridges and football stadiums that constituted a major part of the activity. Dec. 20 1,611.0 53.6 3.3% 20.9 1.3% (Millions of Euros) Dec. 19 1,719.3 100.2 5.8% 77.3 4.5% Chg. (%) -6.3% -46.5% -2.5 p.p -73.0% -3.2 p.p The area’s revenues decreased by 6.3% to 1.611 million euros due to the slower pace of execu- tion and the suspension that temporarily affected some ongoing projects, mainly in Latin America and the Middle East. This could not be fully offset by a higher volume of activity linked to contracts won and developed in Europe, which overall experienced a lower level of disruptions during the business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 368 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 20 of 41 Breakdown of revenue by geographical area (Millions of Euros) Breakdown of revenue by geographical area Spain Europe and others Middle East and Africa Latin America and USA Total Dec. 20 Dec. 19 Chg. (%) 848.8 390.0 246.2 126.0 665.3 313.1 401.5 339.4 1,611.0 1,719.3 27.6% 24.5% -38.7% -62.9% -6.3% By geographical area, in Spain turnover increased by 27.6% to 848.8 million euros, due to the good pace sustained in the development of projects. The most significant of these is the remo- delling of the Santiago Bernabéu football stadium, as well as in other minor projects recently awarded, which to a large extent compensated for the effects of the temporary measures taken to suspend the activity in its planned course of development. Similarly, in Europe and other markets, turnover grew by 24.5% over the previous business year to 390 million euros, thanks to increased activity in new projects started in EU countries, including the A-9 motorway in the Netherlands, the A-6 in Norway, the modernisation of the Bacau airport runway in Romania and the pace of progress in the development of the Haren prison complex in Belgium. In the Middle East and Africa, revenues decreased by 38.7% to 246.2 million euros, mainly due to the lower activity registered in the construction of the Riyadh metro in Saudi Arabia as a result of the strict lockdown measures decreed because of the pandemic together with the high degree of progress of the work as a whole. 52.7% Spain 15.3% Middle E. & Africa 24.2% Europe & Others 7.8% Latin America & USA The gross operating profit (EBITDA) decreased by 46.5% compared to the previous business year and amounts to 53.6 million euros. This development is the result of the combined effect in the international area of higher provisions, as a preventive measure, as well as higher costs, all in an environment marked by a temporary slowdown in activity stemming from the exceptional situa- tion created by the health emergency measures. However, the higher level of activity executed in Europe mitigated this impact and the operating margin was 3.3%. Net operating profit stands at 20.9 million euros compared to 77.3 million euros for the previous year, reflecting developments already commented on at the gross operating income level. Breakdown of Backlogs by Geographical Area (Millions of Euros) In Latin America and the USA, turnover fell by 62.9% at business year-end, mainly due to the lower contribution from the completion of Line 2 of the Panamá Metro and the Gerald Desmond Bridge in Los Angeles (USA), together with the slowdown in the development of other projects underway in various countries, due to the strict lockdown measures decreed in these countries. Spain International Total Dec. 20 1,628.4 3,527.4 5,155.8 Dec. 19 2,010.3 3,612.9 5,623.2 Chg. (%) -19.0% -2.4% -8.3% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 21 of 41 The area’s income backlog decreased 8.3% at the end of December compared to the previous business year, to 5.155.8 million euros. In Spain, it fell to 1.628.4 million euros, as a good pace in terms of project progress was not matched by the addition of new contracts in a business year that saw a low level of public tenders. In the international area, the backlog decreased by 2.4%, mainly due to the decline in the contract of the “Ciudad de la Salud” Health Centre in Panama, together with a reduction in the scope of works on other projects, which was largely offset by other contracts obtained in Europe and Mexico. 2.1.7.4.1. Earnings Turnover Cement Other EBITDA Breakdown of the Backlog by Activity Segment Civil engineering works Building Industrial Projects Total Dec. 20 4,121.5 695.0 339.3 5,155.8 Dec. 19 3,991.6 1,251.6 380.0 5,623.2 3.3% -44.5% -10.7% -8.3% (Millions of Euros) EBITDA Margin Chg. (%) EBIT EBIT margin By type of activity, the civil engineering works backlog accounted for 80% of the total and increased by 3.3%, due to new contracts in the international area, mainly in Europe, which offset the low public tenders in Spain, reaching 4.121.5 million euros. Building activity declined significantly, due both to the aforementioned adjustment in the Panama backlog and to the aforementioned drop in activity as a result of the health crisis. 2.1.7.4. Cement The Cement area contributed 13.4% of the FCC Group’s EBITDA in the business year. This activi- ty was undertaken by the CPV Group, which focusses on the manufacturing cement and by-pro- ducts, with 7 main production centres in Spain and 1 in Tunisia, in addition to a minority stake of 44.6% in Giant Cement, which operates a number of factories on the east coast of the USA. 369 Dec. 20 Dec. 19 Chg. (%) (Millions of Euros) 382.6 345.2 37.4 139.9 36.6% 106.8 27.9% 413.2 374.5 38.7 86.4 20.9% (20.0) -4.8% -7.4% -7.8% -3.4% 61.9% 15.7 p.p n/a 32.8 p.p Revenues for the area decreased by 7.4% to 382.6 million euros compared to December of the previous year, due to a decrease in volumes invoiced in local markets in Spain and Tunisia, as a consequence of the lockdown measures applied due to the pandemic, as well as a drop in exports from both markets. Breakdown of revenue by geographical area (Millions of Euros) Spain Tunisia Miscellaneous (exports) Total Dec. 20 Dec. 19 Chg. (%) 237.9 57.8 87.0 382.6 249.4 57.9 105.9 413.2 -4.6% -0.2% -17.9% -7.4% By geographic area, revenues in Spain declined by 4.6% to 237.9 million euros, as the lockdown measures decreed due to the pandemic caused a decrease in volumes in the first half of the year, which was mitigated by good price performance. It should be noted that in the second half of the year there was a progressive recovery of activity with a more stable performance in terms of demand. In the Tunisian local market, revenues remained stable at 57.8 million euros, where the decrease in volumes was offset by both price increases and the appreciation of the Tunisian dinar. Similarly, there was a progressive improvement in activity levels in the second part of the business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 370 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 22 of 41 Export earnings fell by 17.9% amounting to 87 million euros due to a decrease in shipments made both from Spain and from Tunisia. Breakdown of revenue by geographical area 62.2% Spain 15.1% Tunisia 22.7% Others The gross profit income increased by a remarkable 61.9% to 139.9 million euros, due to two main factors. The sale of CO2 rights amounted to 58.9 million euros in the business year, compared to 5.8 million euros the previous year, and the aforementioned drop in volumes and revenues was offset by the fall in energy prices, both for fuels and electricity. Therefore, without taking into ac- count the CO2 component in both business years, Ebitda would have improved slightly by 0.4% in 2020 compared to the previous business year. The net operating profit amounted to 106.8 million euros, as a result of the aforementioned deve- lopment of the gross operating profit. 2.1.7.4.2. Financial Debt Net financial debt without recourse (Millions of Euros) Dec. 20 173.7 Dec. 19 Chg. (Mn€) 293.0 -119.3 2.1.7.5. Concessions As a result of a sale agreement reached in October 2020 and in accordance with accounting standards (IFRS 5), the assets and liabilities relating to the investees to be transferred from the concession activity have been classified as held for sale in the FCC Group’s balance sheet. The consolidation method is maintained in the income statement in the same way, until the operation is closed and the shares transferred. The Concessions area accounts for 9% of the Group’s EBITDA in the year as a whole. Its activi- ties focussed on the development, operation and maintenance of transport and non-residential infrastructures. At the close of the business year, the Cedinsa subgroup maintained its contribu- tion to turnover, which together with other smaller entities represents a total of 18 concessionary companies in the portfolio and with different degrees of participation. 2.1.7.5.1. Earnings Turnover EBITDA EBITDA Margin EBIT EBIT margin Dec. 20 Dec. 19 Chg. (%) (Millions of Euros) 123.5 94.6 76.6% 55.4 44.8% 49.8 31.8 63.9% 12.0 24.1% 148.0% 197.2% 12.7 p.p n/a 20.8 p.p The area’s revenues were 123.5 million euros this business year, as compared to 49.8 million eu- ros for the first half of the previous business year. This change is mainly due to the contribution of the Cedinsa subgroup, after acquiring control of the majority of its capital in November 2019 and incorporating it since then through full consolidation. Breakdown of revenue by geographical area (Millions of Euros) Net financial debt, entirely without recourse to the Group’s parent company, decreased signifi- cantly by 119.3 million euros to 173.7 million euros, of which 108 million euros correspond to the early partial repayment of the area’s main credit facility, which has no significant ordinary maturity until 2022. Spain Mexico Total Dec. 20 Dec. 19 Chg. (%) 121.5 2.1 123.5 47.5 2.3 49.8 155.7% -11.3% 148.0% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 371 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 23 of 41 By geographical area, almost all of the revenues are concentrated in Spain, revenues totalling 121.5 million euros, 76.5% of which was contributed by the Cedinsa subgroup. The Coatza- coalcos Tunnel concession in Mexico remains practically unchanged compared to the previous business year and its contribution reflects the depreciation effect of the Mexican peso during this period (-12.1%). Breakdown of revenue by geographical area 98.3% Spain 1.7% Mexico Gross operating income totalled 94.63 million euros, 79.6% corresponding to the Cedinsa con- cession group. 2.1.7.5.2. Financial Debt Dec. 20 Dec. 19 Chg. (Mn€) (Millions of Euros) Net financial debt without recourse 14.7 751.8 -737.1 At the end of last December, consolidated net financial debt had suffered a substantial reduction to 14.7 million euros compared to the balance at the end of 2019. This was due to the afore- mentioned effect from the application of accounting regulations, which after the sale agreement reached by various concessionary companies led to the reclassification of its gross financial debt under the single epigraph of liabilities held for sale amounting to 736.6 million euros. 2.2. Business performance. Environment The information relating to the FCC Group’s environmental policy is set out in greater detail in note 30 to the consolidated financial statements and in section 7 of the Non-Financial Information Statement. The FCC Group carries out its activities on the basis of business commitment and responsibility, compliance with applicable legal requirements, respect for the relationship with its stakeholders and its ambition to generate wealth and social well-being. Aware of the importance to the FCC Group of preserving the environment and using available resources responsibly, and in line with its vocation to serve through activities with a clear envi- ronmental focus, the FCC Group promotes and enhances the following principles, on which its contribution to sustainable development is based, throughout the organisation: • Continuous improvement: Promote environmental excellence by establishing objectives for the continuous improvement of performance, minimising the negative impacts of the FCC Group’s processes, products and services, and enhancing the positive impacts. • Monitoring and control: establish environmental indicator management systems for the ope- rational control of processes, which provide the necessary knowledge for the monitoring, eva- luation, decision-making and communication of the FCC Group’s environmental performance and compliance with the commitments undertaken. • Climate change and pollution prevention: Lead the fight against climate change through the implementation of processes with lower greenhouse gas emissions, and by promoting energy efficiency and renewable energies. Preventing pollution and protecting the natural environ- ment through the responsible management and consumption of natural resources and by minimising the impact of emissions, discharges and waste generated and managed by the FCC Group’s activities. • Observation of the environment and innovation: To identify the risks and opportunities of acti- vities in the face of the changing landscape of the environment in order, among other things, to promote innovation and the application of new technologies, as well as the generation of synergies between the various activities of the FCC Group. • Life cycle of products and services: enhancing environmental considerations in business plan- ning, procurement of materials and equipment, and relations with suppliers and contractors. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 24 of 41 • The necessary participation of all parties: promote the knowledge and application of environ- mental principles among employees and other stakeholders. To share experience of the best practices with the different agents in order to promote alternative solutions to those currently in place, which contribute to the achievement of a sustainable environment. 2.3. Business performance. Personnel Details are attached of the FCC Group’s staff at year-end, by business area: In order to improve the Group’s liquidity position, active collection management is carried out with customers to ensure that they meet their payment commitments. To ensure liquidity and meet all payment commitments arising from the business, the Group has cash flows as shown in the balance sheet (see note 17 to the consolidated financial statements) and detailed financing (see note 20 to the consolidated financial statements). Note 30 to the consolidated financial statements sets forth the policy implemented by the FCC Group to manage liquidity risk and the factors mitigating said risk. 372 Spain Abroad Total %/Total Capital resources Areas 2020 Environment Water Management Construction Cement Concessions Central Services and Others 33,206 6,675 3,944 785 154 306 7,126 3,849 3,379 251 71 0 40,332 10,524 7,323 1,036 225 306 68% 18% 12% 2% 0% 1% TOTAL 45,070 14,676 59,746 100% 3. Liquidity and capital resources Liquidity In order to optimise its financial position, the FCC Group maintains a proactive liquidity manage- ment policy with daily cash monitoring and forecasts. The FCC Group covers its liquidity needs through the cash flows generated by the businesses and through the financial agreements reached. The Group manages its capital to ensure that its member companies will be able to continue as profitable and solvent businesses. As part of its capital management operations, the Group obtains financing through a wide range of financial products. During the 2019 business year, two simple bonds were issued by FCC Servicios Medioambiente Holding, S.A.U. for an amount of 1,100 million euros; FCC Aqualia, S.A. had previously done the same in 2017. In November 2018, FCC, S.A. registered a 300 million euros promissory notes programme, which was subsequently expanded to 600 million euros in March 2019. In 2019, new funding facilities were arranged in the form of credit facilities and bilateral loans. In 2020, FCC Servicios Medioam- biente Holding, S.A.U., also registered a 300 million euros promissory notes programme. Likewise, in 2020, Cementos Portland Valderrivas, S.A. repaid debt of 119 million euros, of which 108 million euros were voluntarily repaid (note 20 of Non-current and current financial liabilities of the notes to the 2020 financial statements). These operations have made it possible to complete the process of debt reduction and financial reorganisation initiated five years ago and to continue with the policy of diversifying financing sources; all this contributing to achieving a much more stable and efficient capital structure, with amounts, terms and financing costs suitable according to the nature of the different business areas. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 25 of 41 In order to optimise the cost of capital resources, the FCC Group maintains an active policy of interest rate risk management, constantly monitoring the market and taking different positions depending mainly on the assets financed. 4. Major risks and uncertainties The performance of interest rates in recent years is shown below. 373 3.00% 2.70% 2.40% 2.10% 1.80% 1.50% 1.20% 0.90% 0.60% 0.30% 0.00% -0.60% Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 Sep.19 Dec.19 Jan.20 Feb.20 Mar.20 Apr.20 May.20 Jun.20 Jul. 20Aug. 20 Sep.20 Oct.20 Nov.20 Dec.20 EURIB 6M GBP-LIBOR 6M USD-LIBOR 6M This section is discussed in greater detail in note 30 to the consolidated financial statements. 4.1. Risk Management Policy and System The FCC Group Risk Management Model has been designed with the aim of identifying and assessing the potential risks that could affect the Group’s different units, as well as establishing mechanisms incorporated into the organisation’s processes that make it possible to manage risks within the accepted levels, providing the Board of Directors and Senior Management with reaso- nable assurance regarding the achievement of the main objectives defined. This Model applies to all FCC Group companies, as well as to those affiliates where FCC has effective control, promo- ting the development of work frameworks that enable suitable risk control and management in those companies where effective control is not available. This model is essentially based on the integration of a risk-opportunity vision and the assignment of responsibilities that, together with the segregation of duties, enable the follow-up and control of risks, consolidating a suitable control environment. The activities included in the FCC Group’s Risk Management Model include the assessment of risks, including tax risks, in terms of impact and probability of occurrence, giving rise to Risk Maps, and subsequently the establishment of prevention and control activities to mitigate the effect of such risks. In addition, this Model includes the establishment of reporting flows and communication mechanisms at different levels, which allow both decision-making and its review and continuous improvement. The system covers the risk scenarios considered, which have been classified into four groups: Operational, Compliance, Strategic and Financial. The risk management duties and responsibilities at the different levels of the organisation are detailed in section E on the Risk Management and Control System of the Annual Corporate Go- vernance Report. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 374 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 26 of 41 4.2. Major risks and uncertainties The FCC Group operates worldwide and in different sectors and, therefore, its activities are sub- ject to a variety of environmental, socio-economic environments and regulatory frameworks, as well as to different risks inherent to its operations and risks arising from the complexity of the projects in which it participates, which could affect the achievement of its objectives. Details of the main strategic, operational and compliance risks that could affect the Group’s ac- tivities, as well as a description of the systems used to manage and monitor them, can be found in section E of the Annual Corporate Governance Report, as well as in section 6.2 of the Non-Fi- nancial Information Statement. With regard to financial risks, which are considered to be the changes in the financial instruments arranged by the FCC Group due to political, market and other factors, and their repercussions on the financial statements, the risk management philosophy is consistent with the business strate- gy, seeking maximum efficiency and solvency at all times. To this end, strict financial risk control and management criteria have been established, consisting of identifying, measuring, analysing and controlling the risks incurred by the Group’s operations, with the risk policy being correctly integrated into the Group’s organisation. The financial risks to which the Group is exposed are dis- cussed in greater detail in note 30 to the consolidated financial statements, in section E of the An- nual Corporate Governance Report and in section 6.2 of the Non-Financial Information Statement In addition, the FCC Group is also subject to certain risks relating to environmental and social issues, the management of which is described in greater detail in sections 6.2 and 7 of the Non-Financial Information Statement. 5. Acquisition and disposal of own shares 6. Significant events occurring after the end of the year There have been no significant events between the end of the year and the date of preparation of these financial statements. 7. Outlook The outlook for the performance of FCC Group’s main business areas in 2021 is given below. Environmental Services In the countries where it operates, the sector is undergoing a major process of transformation, due to the environmental requirements of each country deriving from the European Directives (new opportunities based on the ambitious targets set by the European Union in relation to the circular economy and climate change). The new services will focus on energy efficiency, urban mobility and smart cities. In Spain, moderate growth is expected in the start up of operations of the disposal facilities that were under construction and the initial operation of newly awarded contracts. No significant chan- ges are expected in the domestic market, the aim being focused on gradually replacing the linear production model with circular models (Plan PEMAR 2016-2022, España Circular 2030 [State Waste Framework Plan for Spain’s Circular Economy]). At 31 December 2020, the FCC Group owned, directly and indirectly, a total of 1,544,773 shares of FCC S.A. (0.38% of the company’s capital stock). In Portugal, business opportunities related to soil decontamination activities and new urban sani- tation contracts stand out. Transactions involving the acquisition and disposal of own shares during the year are detailed in note 18 to the consolidated financial statements. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 375 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 27 of 41 In the United Kingdom in 2020, the economic forecasts for 2021 are marked by the impact of its departure from the EU and the effects of the Covid-19 pandemic, which will continue to weigh down its performance during the first half of 2021. To respond to this uncertainty, the UK Govern- ment has announced an extension of financial aid until at least March 2021. In the environmental area, once its membership of the EU ends, the UK will nevertheless remain committed to the EU’s circular economy objectives and recycling goals, therefore no sudden changes are expected. Additionally, the Government is promoting new measures to encourage the recycling of plastics with the introduction of a tax on packaging and supporting measures to reduce CO 2 emissions. The sector, strongly conditioned by environmental legislation, will continue to await legislative developments in these aspects. In the short term, the market for recycled products has become more restrictive, prioritising quality and experiencing price volatility; the export of refuse-derived fuel (RDF) to Europe will be affected by trade barriers and by the development of new treatment plants, a process in which our division in the United Kingdom is already involved, continuing with its production strategy of energy through waste treatment. Moderate organic growth is expected in Central and Eastern Europe. Although the economic indicators show significant growth compared to 2020, a lower budget allocation is expected in many municipalities (in activities such as street cleaning, gardening, pruning, winter services) due to the need to allocate funds to other activities due to Covid-19. The start of several major soil decontamination projects will probably also be delayed for the same reason. Similarly, many businesses will suffer the financial consequences of the end of public aid and it is very likely that normal economic activity will not restart again until the second semester since, even with the exis- tence of vaccines, the logistical challenge of their application will probably include new periods of restrictions in almost all territories. In relation to the implementation of the business model, Austria is a mature and fully developed market while the other three most important countries, the Czech Republic, Slovakia and Po- land, must gradually transform their business model, reducing volumes in landfills and increasing treatment and recycling activities in order to adapt to European Union directives. In principle, this process is more medium term (2026-2030) but, given that the obtaining of permits and the final construction of treatment plants or incinerators is long term, various projects that could be started in the short term have already begun to be analysed. As far as the USA is concerned, it represents a market with high development potential for a com- pany with the know-how, experience and use of the most advanced and efficient technologies in providing quality environmental services, as FCC has. End-to-End Water Management Expectations for 2021 are for a growing recovery in the levels of activity that have been affected by the Covid-19 pandemic, mainly in regions where demand is more closely linked to tourism and second homes. In this regard, we expect a recovery from the second half of the 2021 business year, which will be reinforced by the new contracts added to the scope during 2020, as well as by the maintenance of the high contract renewal rates that Aqualia consistently achieves at their expiration. This increase in revenues will lead to an improvement in profits, reinforced by the continuation of cost optimisation actions and operational optimisation measures in the contracts included in the management scope. In Spain in the area of Service concessions for the End-to-end Water Cycle, for 2021 it is worth mentioning the expectation of maintaining similar renewal rates to those of 2020, exceeding 90%, although many new contracting opportunities are not expected due market apathy. With regard to Europe, in Portugal, prospects of a slight reactivation of the concession business is expected after the legislative elections held in 2019 and based on the high budget deficit of the Municipalities and the need for infrastructure investment. Similarly, a further increase in the growth of operation and maintenance contracts is expected to be promoted by the public companies belonging to Aguas de Portugal. It is expected that the proper authorities will continue with the search for solutions to the management of sludge from the country’s wastewater treatment plants. In France new tenders are expected for the assignment of public services due to the termination of the contractual deadline for some of the existing contracts in the country. In Saudi Arabia the process of modernisation and provision of the country’s hydraulic infras- tructures will continue, promoted by the Government in the Vision 2030 programme, by means of public-private collaboration. The infrastructure concession contracts tendered in 2020 will be definitively awarded and the bid for new BOT projects in the field of desalination and purification is expected to take place. Bids for operation and maintenance contracts for water and sanitation services in the six regions into which the Saudi kingdom has been divided will also begin. In 2021, Aqualia will consolidate the operation of the new sanitation contract for Abu Dhabi and that for the WWTP in Al Dhakira, in Qatar. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 376 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 28 of 41 In LATAM, the construction phase of the Guaymas SWDP (Sonora, Mexico), will be completed, giving way to a 20-year period of operation, and of the PTAR Salitre (Colombia). In both countries, new concessions for desalination hydraulic infrastructure will be tendered in the states of Baja California and Sonora and for purification within the Bogotá river decontamination programme. Finally, in Peru the preparation of the significant private initiatives declared in favour of Aqualia will continue (5 treatment plants and 1 desalination plant) and in the USA, there will be a presentation of the projects currently under study to their corresponding clients under the formula of “unsolicited proposals”, for their evaluation and, if accepted, for subsequent execution. According to the Association of Infrastructure Contractors and Concessionaires (Seopan), it is es- timated that public contracting fell by 39.7% in 2020. According to Oficemen, the trend in cement market consumption in 2021 will be in range of between -3.0% and 3%. In Tunisia, growth of 5%, up to 6.1 million tonnes, is estimated in the domestic market for 2021, after the strong contraction suffered in 2020 where it fell by 10% to around 5.8 million tonnes. In this context, the Cementos Portland Valderrivas Group will continue to develop its cost con- tainment and investment optimisation policies and to adapt all its organisational structures to the reality of the various markets in which it operates, with the aim of improving the generation of resources. Construction In the international market, FCC focuses on countries and markets with a stable presence and on the execution of projects with guaranteed financing. 8. R&D+I activities The search for contracts in the domestic and international markets is one of the Group’s objec- tives, although this is done through demanding risk management that must provide access to a selective backlog of projects that ensure the company’s profitability and cash flow generation. Taking into account the above, it is estimated that in 2021, the turnover obtained in Spain will remain similar to that obtained in 2020. The FCC Group’s R&D&I activities in 2020 have resulted in more than 40 projects. These projects seek to respond to the challenges of each business area while maintaining overall coordination between the different business areas of the FCC Group. The activities of the different Business areas and the main projects developed throughout 2020 are detailed below. Cement The Bank of Spain forecasts a fall of 11% in the Spanish economy for 2020, demonstrating its permeability to major international crises. The economic outlook is conditioned by how the situa- tion with the virus evolves and although the progress in obtaining vaccines significantly reduces the unknowns, uncertainty remains about when the pandemic will be completely overcome. The Bank of Spain in its intermediate scenario forecasts that the Spanish economy will grow by 6.8% in 2021 and 4.2% in 2022 with unemployment rates of 18.3% and 15.6%, respectively. The Spa- nish economy will not recover its pre-pandemic levels until 2023. Environmental services In the environmental services activity, we have continued with the development of projects started in previous years, such as: • VISION. • BICISENDAS. • INSECTUM. • H2020 SCALABLE TECHNOLOGIES FOR BIO-URBAN WASTE RECOVERY (SCALI- BUR). • LIFE 4 FILM. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 377 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 29 of 41 In addition, new ones have been launched during 2020, which are summarised below: End-to-end Water Management • DEEP-PURPLE: it consists of the conversion of complex molecules present in the organic matter of urban solid waste into sustainable materials and products in bio-refineries through the metabolism of the “Purple Photosynthetic Bacteria”. Thermal hydrolysis is used to extract the organic matter from the separate collection and incorporate it into the liquid phase. • RECYGAS: it delves into the research of waste gasification and enables the use of clean syn- thetic gas obtained from the gasification process to initiate chemical synthesis routes (whose products would no longer have the status of waste) or its use in high-efficiency electricity generation cycles. The technology that the project incorporates would allow it to climb up the waste management hierarchy towards recycling. • B-FERTS: the main aim is to integrate the revaluation of bio-waste in agriculture by creating new value chains of bio-based circular economy, coming from municipal solid wastes and the agricultural industrial sector and aimed at the production of mineral and organo-mineral fertilisers, developing the nutrient mixes suitable for their application. Its aim is to change the traditional value chain of fertiliser production and evolve from a linear manufacturing system to a lean manufacturing system, based on a circular economy that will be developed in B-FERST. • LIFE-PLASMIX: the main objective is the practical demonstration on a semi-industrial scale of an innovative recovery and recycling process of the MIX fraction of MSW, the revaluation of polypropylene (PP) and polystyrene (PS) in the form of high quality pellets ready to be used in the manufacture of new products, such as packaging. • LIFE- LANDFILL BIOFUEL: this project pursues the technical demonstration of a profitable system for the production of vehicular biomethane from landfill biomethane through the imple- mentation of new techniques for the exploitation of landfill cells and the use of an innovative upgrading technique that combines filtering with membranes and the PSA vacuum adsorption system. This holistic approach implies the revaluation of landfill biogas as an alternative fuel for light and heavy lorries, carrying out break-in tests on them. FCC Aqualia’s innovation activity is in line with European policies for the transition to a circu- lar economy with a zero carbon footprint, seeking the development of new smart management tools and new proposals for sustainable services. In this way, the Department of Innovation and Technology (DIT) supports the company in achieving the United Nations Sustainable Develop- ment Goals (SDGs), towards an affordable and high quality water and sanitation service (SDG 6), optimising its energy balance (SDG 7) and avoiding its impact on the climate (SDG 13) through sustainable production and consumption (SDG 12). The projects developed by the DIT during 2020 seek to strengthen FCC Aqualia’s technological proposal in four lines of work: Quality, Eco-Efficiency, Smart Management and Sustainability. The major projects in 2020 are listed below: • RIS3 VALORASTUR: with the aim of achieving eco-efficient wastewater treatment, the RIS-3 programme of the Institute of Economic Development of the Principality of Asturias (IDEPA) has supported FCC Aqualia’s collaboration with two large public companies and the SME Ramso. Together with the Institute of Carbon Science and Technology (INCAR - part of the Spanish National Research Council (CSIC) in Oviedo), new low-cost adsorption materials (at less than €500/t) have been developed from dried sewage sludge, with activation by pyrolysis. The project also implemented the optimisation of the nutrient removal process at the San Claudio WWTP. The reduction in electricity costs, in the minimisation of the purchase of iron salts (by optimising the biological elimination of phosphorus), and in mud production, is close to 30k €/year, which means that the costs of improving the automated control system can be amortised in less than a year. • INTERCONECTA ADVISOR: co-financed by the CDTI with FEDER funds, the project has implemented new pre-treatment and co-digestion methodologies for meat waste (Maguisa) at the WWTP managed by FCC Aqualia in Guijuelo, supported by municipality and with the co- llaboration of AINIA. A new digester control system based on LIDAR (Laser Imaging Detection and Ranging) technology is also being developed to detect foams. ADVISOR has been selected as one of 101 business actions of the 2020 #PorElClima (For The Climate) community, and its CO2 reduction impact has been certified by the Carbon Fund for a Sustainable Economy (FES-CO2) of the CLIMA Programme of the Ministry for the Ecolo- gical Transition (Miteco). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 378 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 30 of 41 • LIFE ICIRBUS: led by the Intromac technology centre and with six other partners from Extre- madura, the project has developed a prototype at the wastewater treatment plant in Lobón (Extremadura), managed by FCC Aqualia, to demonstrate the adsorption of metals contained in some wastewater treatment plant sludge by biomass fly ashes from the company ENCE. The process was protected with a utility model, and the treated ashes are integrated as ag- gregates in building materials, while the residual sludge reduces its odours, and is added to a compost that was used for different crops. • LIFE METHAMORPHOSIS: as part of this project led by FCC Aqualia, together with five other entities (Área Metropolitana de Barcelona AMB, FCC Medio Ambiente, Naturgy, Icaen and SEAT), two biomethane production demonstration plants were implemented. Development continues with the LIFE Infusion project to prepare design parameters for future AMB resource recovery plants, and to evaluate technologies in Asturias with another waste management contractor (Cogersa). • H2020 MIDES: the project, with eleven partners from seven countries, has led to the setting up of two demonstration units of a new biological desalination technology, patented by FCC Aqualia and IMDEA Agua, in plants operated by FCC Aqualia in Dénia/Alicante and Guía de Isora/Tenerife. This microbial desalination cell (MDC) reduces the energy cost of desalination by up to ten times compared to traditional seawater reverse osmosis. Instead of electrical energy, residual organic matter from effluents is used to activate bacteria that generate a difference in power without external energy input, to move salts through ion exchange mem- branes, at the same time as the treatment of wastewater effluent that serves as fuel. The project has also contributed to the construction of the Desalination Innovation Centre in Denia, where a platform has been built to evaluate various pre-treatments, with multi-mem- brane and media filtration pilots. In addition, re-mineralisation post-treatments and alternative disinfection methods without resorting to hypochlorite are optimised. • RIS3 RE-CARBÓN: financed by IDEPA with FEDER funds, and led by the engineering com- pany INGEMAS with two SMEs (Biesca and InCo), Aqualia supports the MCAT institutes (Microwaves and Carbons for Technological Applications) of the INCAR (Institute of Carbon Science and Technology) of the CSIC and the CTIC (Information and Communication Tech- nology Centre Foundation) in the investigation of methods of adsorption of pollutants by re- generated activated carbon and biochar. The aim is the cost-effective supply of a sustainable adsorbent for water or gas applications. The feasibility of cleaning biogas at the Jerez, Chiclana and Lleida WWTPs and deodorisation at the San Claudio and Luarca WWTPs is being tested. The adsorption of micro-pollutants and new sensors that allow real-time monitoring at the Grado WWTP and the Cabornio DWTP are also being studied. • JPI MARADENTRO: the project “Managed Aquifer Recharge: Addressing The Risks of Re- generated Water” is led by the Institute of Environmental Assessment and Water Research in the European Horizon 2020 ERA-NETs Cofund WaterWorks2018 programme, with the participation of partners in France, Italy and Sweden. A 400 m2 infiltration system will be built at the Medina del Campo WWTP for the advanced treatment of treated water and its reuse in recharging aquifers. With the scientific institutes, system design and simulation tools will be developed, optimising the operation and costs of processing contaminant removal compared to conventional tertiary treatment. • H2020 SABANA: the University of Almeria leads eleven partners from five countries (inclu- ding the Czech Republic and Hungary) with three large companies: FCC Aqualia, Westfalia (Germany) and the Italian food group Veronesi. The project optimises the production of new biofertilisers and bio-stimulants from algae, and work is nearing completion on two cultivation units totalling five hectares and corresponding bio-refineries at the WWTPs of Mérida and Hellín (Albacete). • H2020 RUN4LIFE: led by FCC Aqualia, a consortium of fifteen entities in seven countries implements in four demonstration sites (Sneek/Netherlands, Ghent/Belgium, Helsing-borg/ Sweden and Vigo/Spain) new concepts of nutrient retrieval from the separation of grey and black waters. In Vigo’s Free Trade Zone, FCC Aqualia operates an MBR in an office building for grey waters, which is reused in the toilets, and an AnMBR in black waters to produce bioenergy. Various nutrient recovery options are tested, followed by advanced oxidation to remove viruses and processing contaminants, and by evaluating the quality and safety of effluents and by-pro- ducts as fertilisers through greenhouse cultivation trials. A larger installation is being prepared at the Balaídos industrial estate with effluent from Ci- troën, and the bioelectrochemical FBBR technology (Elsar patented process) is being eva- luated for the direct treatment of sewage, using the inoculum from the Guijuelo reactor as biomass. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 379 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 31 of 41 An important part of the project is the dialogue with the users of new services and by-pro- ducts to optimise services and water and energy consumption through decentralised mana- gement of these systems and to assess the effect of new fertilisers. • H2020 SCALIBUR: the project led by the Itene technology centre and involving twenty-one partners from ten countries, reached its halfway point in 2020. Since the end of 2018 and with a duration of four years, it has focused on waste reduction and recovery on a European scale. With the participation of FCC Medio Ambiente, the project focuses on improvements to waste processing plants in Madrid, Lund (Sweden) and Rome (Italy) to recover resources and promote the circular economy. Within this framework, Aqualia has implemented new sludge treatments at the Estiviel WWTP (Toledo), with improvements in thickening (Orege system) and dual digestion in two stages, and simplifying mud stabilisation without heated concrete structures. The project has facilita- ted initial innovation activities at SmVaK in the Czech Republic, to convert organic matter into by-products and bioenergy. • BBI DEEP PURPLE: led by FCC Aqualia and supported by thirteen partners from six coun- tries, the project implements on a demonstration scale a new bio-refinery model, which inte- grates purple phototrophic bacteria (PPB) in anaerobic carrousel-type systems. These bacte- ria use solar energy to treat wastewater without aeration, and transform the organic content of wastewater and municipal wastes into raw materials for biofuels, plastics, cellulose and new base materials in the chemical and cosmetics industry. A first FCC Aqualia prototype is operating at Toledo-Estiviel, and a demonstration reactor 10 times larger is planned for the Linares WWTP. Parallel activities are also being prepared at the SmVaK WWTP in the Czech Republic. • BBI B-FERST: with Fertiberia as the leader, and with ten partners from six different coun- tries, FCC Aqualia is involved in the development of new biofertilisers from urban wastewater and by-products from agri-food industries. The potential of recovered raw materials in the production of fertilisers in three countries (Spain, Italy and the Czech Republic) is analysed, and a struvite precipitation system is developed at the Jerez WWTP to incorporate recovered phosphorus in a new Fertiberia bio-based fertiliser demonstration plant in Huelva. • LIFE INTEXT: the project is led by FCC Aqualia, with the AIMEN and CENTA technology cen- tres and the Aarhus University in Denmark supporting SMEs in Germany, Greece and France to optimise low-cost wastewater treatment technologies in small towns. The aim is to mini- mise energy costs, carbon footprint and waste, and to provide ecologically and economically sustainable solutions. The construction of a demonstration platform for these technologies at the Talavera WWTP operated by FCC Aqualia is in its final phase. • LIFE ULISES: the project coordinated by FCC Aqualia is supported by three technology cen- tres, CENTA, EnergyLab and CieSol of the University of Almeria. To optimise and transform conventional WWTPs into “energy production factories”, eliminating their carbon footprint, anaerobic pretreatment with the PUSH reactor is being implemented at the El Bobar WWTP in Almeria, operated by Aqualia, which is also being evaluated at two WWTPs in Portugal. Di- gestion is improved by hydrolysis and biogas is used as a vehicle fuel with an ABAD BioEnergy refining system and a biomethane dispenser. • LIFE INFUSION: after the completion of the Life Methamorphosis project, the Barcelona Me- tropolitan Area wanted to extend the project to prepare the designs for several new resource recovery plants. Together with the EureCat technology centre and the operator of Ecoparc2, EBESA, the leachate digestion system will be optimised with FCC Aqualia, AnMBR and ELAN technologies, with the addition of an ammonia stripping system from the Belgian SME Detri- con. Two waste management entities, Cogersa in Asturias and AMIU in the region of Genoa/ Italy are also participating to evaluate the options for implementing the solutions in their plants. • LIFE PHOENIX: the project, led by FCC Aqualia and supported by the technology centres CETIM and CIESOL, will optimise tertiary treatment to achieve the most ambitious aims of the new European regulation on water reuse (EU 2020/741). In order to evaluate various effluents, from ADP in Portugal, the Almeria Provincial Council and the Guadalquivir Hydrographic Con- federation, three mobile plants have been designed, a 50 m3/h physical-chemical treatment plant, a 30 m3/h filtration plant and a 20 m3/h ultrafiltration plant. • LIFE ZERO WASTE WATER: the project, led by FCC Aqualia, will demonstrate at the Valde- bebas WWTP, with Canal Isabel II as a partner, the combined treatment of Urban Wastewater and of Organic Fraction of Municipal Solid Waste (OFMSW) with the AnMBR anaerobic reac- tor, followed by ELAN in the water line, for 50 m3/d, allowing water treatment with a neutral carbon footprint. The management of OFMSW at a municipal level and the possibility of con- nection with the sewer system for the transport of the mixture in a single stream. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 380 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 32 of 41 • H2020 SEA4VALUE: led by the EureCat technology centre, and with 14 partners from seven countries, the project focuses on recovering resources from concentrated brine in seawater desalination plants (SWDPs), with basic scientific developments funded 100% by the EU. At its Desalination Innovation Centre in Denia, FCC Aqualia will continue to develop solutions for the revaluation of brine and new desalination methods, with solar concentration of brine, selective precipitation of magnesium, obtaining chlorine dioxide, and optimisation of the re- mineralisation of permeate with micronised calcite, reducing CO2 consumption, turbidity and the size of the installation. The implementation of pilot units in the various WWTPs operated by FCC Aqualia will be evaluated, with an analysis of the technical and economic impact. • H2020 ULTIMATE: in the “Smart Water Economy” call for proposals, FCC Aqualia participa- tes in two of the five selected consortia, which receive up to 15 million euros of support per project. In Ultimate, led by the Dutch technology centre KWR, nine demonstrations of syner- gies between water utilities and industries are implemented with 27 partners. At the Mahou WWTP in Lleida, operated by FCC Aqualia, the comparison of the FBBR (Elsar) and AnMBR anaerobic reactors at a 20 m3/h scale is being prepared to recover biomethane and power a fuel cell. The co-digestion of yeast is also being studied, as well as support for FCC Aqualia’s other client partner, Aitasa. • H2020 REWAISE: the Rewaise project has the largest business participation of the five pro- jects selected in the “Smart Water Economy” call for proposals, and FCC Aqualia leads the twenty-four partners including water companies from the UK (Severn Trent), Sweden (Vasyd) and Poland (AquaNet) and 7 SMEs to implement new circular economy and digital mana- gement solutions in nine “living labs” including FCC Aqualia’s implementations in Badajoz, Canary Islands, Denia and Vigo. Construction FCC Construcción promotes an active policy of technological development, constantly bringing innovation to its projects, with a strong commitment to research and development, sustainability and contribution to the quality of life of society as competitive factors. This innovation policy is coordinated with all other business areas of the FCC Group. The development and use of innovative technologies to carry out the works is an important con- tribution to added value and is a differentiating factor in today’s highly competitive and internatio- nalised market. The three types of projects developed by FCC Construcción and its investee companies are: internal projects, projects with other companies in the FCC Group and projects in collaboration with other companies in the sector or other related sectors, often with technology-based SMEs, which enables open innovation projects to be carried out with the participation of the value chain and occasionally in horizontal cooperation. In addition, the presence of universities and technology centres is essential in almost all projects. Some of the projects are carried out in a consortium formed with Public Administrations, as is the case of the European Project LIFE ZERO IMPACT, Development and demonstration of an anti-bird strike tubular screen for High Speed Rail lines, in which the Administrator of Railway Infrastructures (Adif) participates. The projects highlighted in 2020 are listed below: • ZERO IMPACT: the aim here is the development of a bird anti-collision screen, with a design based on free-standing tubes. Rewaise reinforces FCC Aqualia’s strategic lines of technological development, with sustai- nable desalination and new membranes, the recovery of materials from brine, the reuse of wastewater and its transformation into energy and by-products, and the simulation of water quality, processes and networks. In addition, in 2020, four new patents were granted. The first one related to the Anaerobic Mem- brane Reactor. The second was granted for the Bio-electrochemical Fluidised Bed. The third on a Photobioreactor with purple bacteria and finally the fourth on the Microbial Desalination Cell. • ROBIM: project within the CIEN programme financed by CDTI (Centre for the Development of Industrial Technology) the objective of which is autonomous robotics for the inspection and evaluation of existing buildings with BIM integration, with the development of an automated, active and multidisciplinary technology for the inspection, evaluation and diagnosis of the composition and state of conservation and energy efficiency of the enclosures of the building assets, which facilitates obtaining accurate and sufficiently detailed information on the cons- truction systems and pathologies as well as an in-depth analysis of the building. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 381 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 33 of 41 • PWDRON: project financed by CDTI (Centre for the Development of Industrial Technology), the objective of which is the development of a centralised system for the automated moni- toring of the execution of infrastructures in linear civil engineering works, using drones with advanced technological features, as well as the development of a new technological platform for the exchange, processing and distribution of data in BIM. • REFORM2: project presented with the help of the Catalan Waste Agency and whose objec- tive is the recovery of by-product (of 0/6 porphyry, a by-product that originates from the ge- neration of ballast and gravel) from quarry extraction through its incorporation into thermoset and thermoplastic matrices for different applications. • STARPORTS: project of the INNTERCONECTA programme (Canary Islands) of CDTI, which will develop a Distributed Wireless System of monitoring, prevention and action for Coastal Management. It consists of the development of a smart platform capable of providing detailed information on the state of any maritime infrastructure in real time. It is also intended to deve- lop advanced sensor networks that can be integrated within the same infrastructure and allow significant and reliable data on the state of the infrastructure to be obtained. • RESALTO: project financed by CDTI with the aim of researching and developing sustainable road elements for speed reduction. Three main objectives are investigated; power generation, safety signalling and environmental connectivity. • BIMCHECK: innovation project approved by CDTI consisting of the implementation of a se- cure and automated technological management environment based on BIM and Blockchain for FCCCO’s quality processes. • SAFETY 4D: project financed by CDTI and the objective of which is to develop an advanced and high performance process for occupational hazard prevention in construction with the implementation of the BIM methodology. • BICI SENDAS: project within the 2018 CIEN programme from CDTI, the aim of which is the development of a sustainable, energy self-sufficient, intelligent, decontaminating, integrated and safe cycle lane. • ONLYBIM: a Project of the IDEPA of the Principality of Asturias regional programme, the aim of which is the development of a module for the design and execution of Non-Lineal Works under BIM methodology • POTAMIDES: MATINSA project and approved by CDTI whose objective is the development of a new technologically advanced universal tool that allows the decision-making in the com- prehensive management of the hydraulic public domain at a hydrographic basin level, with the purpose of optimising the availability and quality of the resource guaranteeing the satisfaction of demands. • PIELSEN: belonging to the Challenges-Partnership programme, seeks to create a homoe- ostatic 3D wrap-around architecture to create intelligent adaptive sensitive skin on Building Facades. • SAFE: project of the Challenges-Partnership programme, where the objective is the Develop- ment of an Autonomous System for Anchoring Structures in Maritime Construction Work. This smart system makes it possible to reduce dependence on human resources, minimise risk, maximise efficiency and increase the safety of field manoeuvres. • GAUDI: project approved in the call for projects in collaboration with CDTI and consisting of the development of a Knowledge Management platform based on Artificial Intelligence algori- thms and Content Curation techniques. FCC Construcción participates in many European and national R&D organisations that share the objective of coordinating the company’s role as a driving force for research, development and technological innovation in the building area, in accordance with the proposals of the European Union’s current H2020 programme. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 34 of 41 Cement 9. Other relevant information. In 2020, Cementos Portland Valderrivas Group continued its collaboration in the European R&D project, BIORECO2VER, in which it is a leading partner. Share performance and other information This project aims to obtain alternative processes for the production, on a commercial scale, of certain chemical products (like isobutene or lactic acid) in a more sustainable way from the cap- ture of industrial CO2 emissions. 9.1. Share Data 382 The ultimate goal is to use this industrial CO2 as a raw material and stop depending on fossil resources for the manufacture of these products. In 2019, Cementos Portland Valderrivas Group made its main contribution, the characterisation of the emission gases, capturing them “in situ” and sending them to its partners, LTU and Enobraq. Currently, part of the captured gases remain in custody at the El Alto factory in case new tests, analysis, etc., are necessary. Attached is a table detailing the performance of FCC’s shares during the year compared to the previous year. Jan. – Dec. 2020 Jan. – Dec. 2019 10.52 Closing price (€) Change in the period Maximum (€) Minimum (€) Average daily trading (nº of shares) Average daily trading (million euro) Capitalisation at end of period (million euro) 8.80 -16.3% 11.96 7.17 74,593 0.7 3,600 10.52 -3.4% 12.80 10.36 46,163 0.5 4,127 No. of shares circulating at closure 409,106,618 392,264,826 9.2. Dividends The Company’s Board of Directors resolved to execute the decision adopted at FCC’s General Shareholders’ Meeting on 2 June 2020, under item six on the Agenda, to distribute a scrip divi- dend. On 24 June, a cash payment of 0.40 euros gross per share was made to those sharehol- ders who requested it. On 2 July, the bonus issue of 16.841,792 shares was registered, bringing the capital stock to 409.106,618 shares, which were listed on 10 July 2020. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 383 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 35 of 41 10. Definition of alternative performance measures according to ESMA regulations (2015/1415en) Ebitda We define EBITDA as earnings from continuing operations before tax, results of companies ac- counted for using the equity method, financial result, depreciation and amortisation charges, im- pairment, gains or losses on disposals of non-current assets, subsidies, net changes in provisions and other non-recurring revenues and expenses. The reconciliation of EBITDA to the income statement headings is as follows: Operating profit/(loss) Depreciation of fixed and non-current assets and allocation of grants for non-financial fixed and non-current assets, and other assets Impairment and gains/(losses) on disposal of fixed and non-current assets Other gains/(losses) EBITDA Ebit Dec. 2020 Dec. 2019 572.7 477.3 (6.9) 4.4 1,047.5 511.6 449.1 59.8 5.3 1,025.8 This corresponds to the operating profit/(loss) in the consolidated income statement presented in the accompanying consolidated financial statements. Backlog As at any given date, the backlog reflects pending production, that is, amounts under contracts or customer orders, net of taxes on production, less any amounts under those contracts or orders that have already been recognised as revenue. We value pending production according to the expected number of units at current prices as at the date of calculation. We include in backlog only amounts to which clients are obligated by a signed contract or firm order. In the Environment area, we recognise the backlog for our waste management contracts only when the relevant contract grants us exclusivity in the geographical area where the plant, landfill or other facility is located. In our Water business area, we calculate initial backlog on the basis of the same long-term volume estimates that serve as the basis for our contracts with customers and for the tariffs set in those contracts. In our Construction business area, we recognise the backlog only when we have a signed con- tract with, or a firm order from, the end customer. Once we have included a contract in our backlog, the value of pending production under that contract remains in backlog until fulfilled or cancelled. However, we do adjust the values of orders in the backlog as needed to reflect price and schedule changes that are agreed with clients. For example, after the date of calculation, a price may increase or decrease as a result of changes in contractual production due to additional works to be performed. Due to a number of possible factors, we could fail to realise as revenue part or all of our calculated backlog with regard to a given contract or order. Our backlog is subject to adjustments and project cancellations and is, therefore, an uncertain indicator of future earnings. In the Real Estate area, the FCC Group calculates the backlog as the amount of the collection corresponding to the sales of homes pending completion at year-end. Net financial debt Como deuda financiera neta se considera el total de la deuda financiera bruta (corriente y no corriente), menos los activos financieros corrientes, la tesorería y otros activos financieros corrien- tes. El cálculo de la deuda neta se facilita en la nota 29 de la Memoria consolidada. The FCC Group uses backlog as an extra accounting measure in certain areas of our businesses. We calculate the backlog for our Environment, Water and Construction business areas because these businesses are characterised by medium- and long-term contracts. Because of its typically short-term purchase cycle, we do not calculate backlog for our Cement business area. Voluntary turnover rate Ratio of voluntary departures during the year to staff. Both voluntary departures and leaves of absence are considered to be low. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 36 of 41 384 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 37 of 41 385 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 38 of 41 386 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 39 of 41 387 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 40 of 41 388 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Consolidated Group | Management report | Page 41 of 41 389 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements 390 Fomento de Construcciones y Contratas, S.A. Balance sheet at closure of the 2020 _ 391 Income statements corresponding to the business _ 393 Statement of changes in net equity for business _ 394 Cash flow statement for the business _ 396 Notes to the financial statements at 2020 year-end _ 398 Management Report _ 444 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 391 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Balance sheet at closure of the 2020 | Page 1 of 2 Balance sheet at closure of the 2020 FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. at 31 December 2020 (in thousands of euros) ASSETS NON-CURRENT ASSETS Intangible assets (Note 5) Property, plant and equipment (Note 6) Land and buildings Other intangible assets Long-term investments in Group and associates (Notes 9.a and 19.b) Equity instruments Loans to companies Long-term financial investments (Note 8.a) Deferred tax assets (Note 16) CURRENT ASSETS Inventories Commercial debtors and other receivables Trade receivables for sales and services (Note 10) Clients, Group companies and associates (Note 19.b) Receivables from the public administrations (Note 16) Other loans Short-term investments in Group and associates (Notes 9.b and 19.b) Short-term financial investments (Note 8.b) Cash and other cash equivalents TOTAL ASSETS 31/12/2020 31/12/2019 3.430.846 3.320.421 11,811 18,438 2,936,096 379,683 2,126 17,419 78,620 254 7,198 30,249 3,315,779 22,950 54,670 257,961 364 98,419 149,785 1,166 8,227 3,688,807 11,870 91,005 2,775,433 283,581 10,283 33,925 66,258 2,489 34,452 102,875 3,059,014 23,161 100,919 168,096 537 112,955 42,968 1,173 10,463 3,488,517 Notes 1 to 22 and the attached annexes I to III form an integral part of the financial statements and, together with these, make up the financial statements for the 2020 business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 392 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Balance sheet at closure of the 2020 | Page 2 of 2 Balance sheet at closure of the 2020 FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. at 31 December 2020 (in thousands of euros) EQUITY AND LIABILITIES EQUITY (Note 11) Shareholders’ equity Capital Issued capital Share premium Reserves Shares and equity interests Accumulated losses Profit/(loss) for the year NON-CURRENT LIABILITIES Long-term provisions (Note 12) Non-current payables (Note 13) Bank borrowings Other financial liabilities Long-term payables to Group and associated companies (Note 9.c) Deferred tax liabilities (Note 16) CURRENT LIABILITIES Short-term provisions Current payables (Note 13) Debt instruments and other marketable securities Bank borrowings Other financial liabilities Short-term payables to Group companies and associates (Notes 9.d and 19.b) Trade and other payables Suppliers Suppliers, Group companies and associates (Note 19.b) Other payables to public administrations (Note 16) Other payables TOTAL EQUITY AND LIABILITIES 31/12/2020 31/12/2019 2,084,142 2,084,142 409,107 1,673,477 2,161,520 (18,012) (2,392,774) 250,824 985,512 137,849 40,799 806,479 385 619,153 1,623 464,343 127,631 25,556 409,107 20,000 20,799 302,300 155,228 6,815 4,713 2,736 720 17,387 1,847,777 1,847,777 392,265 1,673,477 1,949,424 (16,068) (2,392,774) 241,453 1,080,136 182,740 88,269 806,485 2,642 560,604 1,675 342,625 188,687 27,617 392,265 61,667 26,602 300,000 25,528 17,097 4,048 3,393 1,332 18,844 3,688,807 3,488,517 Notes 1 to 22 and the attached annexes I to III form an integral part of the financial statements and, together with these, make up the financial statements for the 2020 business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 393 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Income statements corresponding to the business Income statements corresponding to the business FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. at 31 December 2020 (in thousands of euros) 31/12/2020 31/12/2019 CONTINUING OPERATIONS Revenue (Note 18) Trade receivables for sales and services Income from interests in Group companies and associates (Note 19.a) Financial income from marketable securities and other financial instruments in Group companies and associates (Notes 18 and 19.a) Procurements Other operating income Staff expenses (Note 18) Other operating expenses Fixed and non-current asset amortisation and allocation of subsidies (Notes 5 and 6) Provision surpluses (Note 12) OPERATING PROFIT/(LOSS) Financial income (Note 18) Interests in equity instruments in third parties From marketable securities and other financial instruments of third parties Financial expenses Payables to Group companies and associates (Note 19.a) On payables to third parties Interest cost relating to provisions Change in fair value of financial instruments (Note 18) Exchange differences Impairment losses and gains/(losses) on disposal of financial instruments (Note 9) FINANCIAL PROFIT/(LOSS) PROFIT/(LOSS) BEFORE TAX CORPORATION TAX (Note 16) PROFIT/(LOSS) FOR THE BUSINESS YEAR FROM CONTINUING OPERATIONS PROFIT/(LOSS) FOR THE BUSINESS YEAR 336.576 74,465 254,353 7,758 (5,689) 37,969 (33,902) (59,056) (8,629) 25,989 293,258 226 29 197 (34,641) (29,319) (4,819) (503) − (4,640) 4,600 (34,455) 258,803 (7,979) 250,824 250.824 170.426 84,007 64,534 21,885 (12,168) 41,428 (32,850) (69,590) (13,546) 1 83,701 1,281 29 1,252 (78,755) (31,090) (43,371) (4,294) (7,067) 1,405 230,461 147,325 231,026 10,427 241,453 241.453 Notes 1 to 22 and the attached annexes I to III form an integral part of the financial statements and, together with these, make up the financial statements for the 2020 business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 394 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Statement of changes in net equity for business | Page 1 of 2 Statement of changes in net equity for business FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. at 31 December 2020 (in thousands of euros) A) Acknowledged income statement Statement of profit and loss Income and expenses recognised directly in equity Write-offs to profit and loss statement TOTAL RECOGNISED INCOME AND EXPENDITURE 31/12/2020 250,824 − − 31/12/2019 241,453 − − 250,824 241,453 Notes 1 to 22 and the attached annexes I to III form an integral part of the financial statements and, together with these, make up the financial statements for the 2020 business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 395 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Statement of changes in net equity for business | Page of 2 Statement of changes in net equity for business FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. at 31 December 2020 (in thousands of euros) B) Statement of changes in equity Equity as at 31 December 2018 378,826 1,673,477 1,140,784 (11,723) (2,392,774) 831,723 6,843 524 1,627,680 Capital stock (Note 11.a) Share premium (Note 11.b) Reserves (Note 11.c) Own shares (Note 11.d) Accumulated losses Profit/(loss) for the year Valuation adjustments Grants Equity Total recognised income and expenditure Transactions with partners or owners Capital increases (Notes 3 and 11) Distribution of dividends (Note 11) Transactions with shares or equity interests (net) Other changes in net equity 13,439 13,439 (23,083) (13,517) (9,566) 831,723 (4,345) (4,345) 241,453 (831,723) (6,843) (524) Equity as at 31 December 2019 392,265 1,673,477 1,949,424 (16,068) (2,392,774) 241,453 Total recognised income and expenditure Transactions with partners or owners Capital increases (Notes 3 and 11) Distribution of dividends (Note 11) Transactions with shares or equity interests (net) Other changes in net equity (Note 3) 16,842 16,842 (29,357) (16,921) (12,436) 241,453 (1,944) (1,944) 250,824 (241,453) 241,453 (13,989) (78) (9,566) (4,345) (7,367) 1,847,777 250,824 (14,459) (79) (12,436) (1,944) Equity as at 31 December 2020 409,107 1,673,477 2,161,520 (18,012) (2,392,774) 250,824 2,084,142 Notes 1 to 22 and the attached annexes I to III form an integral part of the financial statements and, together with these, make up the financial statements for the 2020 business year. In particular, note 11 “Net equity” contains further details on this statement. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Cash flow statement for the business | Page 1 of 2 Cash flow statement for the business FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. at 31 December 2020 (in thousands of euros) 396 Profit/(loss) for the year before tax Adjustments to profit/(loss) Depreciation and amortisation (Notes 5 and 6) Impairment loss allowances (Note 9) Changes in provisions (Note 12) Financial income (Note 18) Financial expenses Exchange differences Change in fair value of financial instruments Other income and expenses Changes in working capital Trade and other receivables Trade and other payables Miscellaneous current assets and liabilities Other cash flows from operating activities Interest paid Interest and dividend collections Corporation tax refunded/(paid) (Note 16.i) Other collections and payments 31/12/2020 31/12/2019 258,803 (240,202) 231,026 (212,458) 8,629 (4,140) (23,806) (262,337) 34,642 4,640 – 2,170 2,136 (365) 1,922 (33,834) 230,470 33,031 (23,807) 13,546 (230,348) 7,688 (87,700) 78,754 (1,405) 7,067 (60) (19,753) 15,064 (77) (72,408) 78,830 (72,649) (5,384) 3,693 205,860 (4,766) (71,611) TOTAL CASH FLOWS FROM OPERATING ACTIVITIES 228,154 (57,809) Notes 1 to and the attached annexes I to III form an integral part of the financial statements and, together with these, make up the financial statements for the 2020 business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Cash flow statement for the business | Page 2 of 2 397 Cash flow statement for the business FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. a 31 de diciembre de 2020 (en miles de euros) Payments due to investments Group companies and associates (Note 9) Intangible fixed and non-current asset and property, plant and equipment (Notes 5 and 6) Other financial assets Proceeds from disposals Group companies and associates (Note 9) Intangible fixed and non-current asset and property, plant and equipment (Notes 5 and 6) Other financial assets TOTAL CASH FLOWS FROM INVESTMENT ACTIVITIES Proceeds and payments from equity instruments Issuance of equity instruments (Note 11) Acquisition of equity instruments (Note 11.d) Proceeds from (payments on) financial liabilities (Note 13) Issuance of: Debt instruments and other marketable securities Bank borrowings Payables to Group and associated companies Other payables Repayment and amortisation of: Debt instruments and other marketable securities Bank borrowings Payables to Group and associated companies Other payables Dividend payments (Note 11) TOTAL CASH FLOWS FROM FINANCING ACTIVITIES Effect of changes in exchange rates NET INCREASE/(DECREASE) IN CASH OR CASH EQUIVALENTS Cash and cash equivalents at the start of the period Cash and cash equivalents at the end of the period 31/12/2020 31/12/2019 (221.003) (141.233) (214.749) (6.222) (32) 4.519 769 226 (79) (1.944) 780.100 173.320 49.728 1 (777.800) (85.173) (134.956) (4.647) (118.114) (22.849) (270) 1.060.970 172 1.371 (78) (4.345) 939.000 189.140 47.140 2 (639.000) (1.324.136) (117.054) (4.410) 5.514 (215.489) (2.023) 573 (12.436) (13.886) (1.015) (2.236) 10.463 8.227 1.062.513 921.280 (4.423) (909.318) (9.565) (923.306) 612 (59.223) 69.686 10.463 Notes 1 to and the attached annexes I to III form an integral part of the financial statements and, together with these, make up the financial statements for the 2020 business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 398 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 1 of 46 Notes to the financial statements at 2020 year-end FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. a 31 de diciembre de 2020 (en miles de euros) 1 2 3 4 5 6 7 8 9 Company activity Basis of presentation of the financial statements Distribution of profit Recognition and measurement standards Intangible assets Property, plant and equipment Leases Current and non-current financial assets Investments and payables to Group companies and associates 10 Trade receivables for sales and services 11 Equity 12 Long-term provisions 13 Non-current and current payables _ 399 _ 400 _ 402 _ 402 _ 408 _ 409 _ 411 _ 412 _ 413 _ 418 _ 418 _ 421 _ 423 14 15 Trade payables Information on the nature and level of risk of financial instruments 16 Deferred taxes and tax matters 17 Third party guarantees and other contingent liabilities 18 Revenue and expenses 19 Transactions and balances with related parties 20 Environmental information 21 Other information 22 Events after the reporting period Annex I: Group companies Annex II: Temporary joint ventures Annex III: Associates and jointly controlled companies _ 424 _ 424 _ 428 _ 432 _ 433 _ 434 _ 438 _ 438 _ 439 _ 440 _ 442 _ 443 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 2 of 46 399 1. Company activity Fomento de Construcciones y Contratas S.A., is a company constituted in Spain in accordance with the Spanish Limited Liability Companies Law. It is the holding company of FCC Group, which comprises a wide range of Spanish and foreign subsidiaries and associates performing a range of business activities, grouped into the following areas: – Environmental Services. Services related to the collection and processing of solid waste and sanitation of public roads and drainage, the treatment of industrial waste, including both the construction and operation of plants, and energy recovery from waste. – Integrated Water Management. Services relating to the integrated water cycle: collection, purification and distribution of water for human consumption; wastewater collection, filtration and purification; design, construction, operation and maintenance of water infrastructure for municipal, industrial, agricultural services, etc. – Construction. Specialising in infrastructure, building and related sectors: motorways, hi- ghways, roads, tunnels, bridges, hydraulic works, ports, airports, urban developments, hou- sing, non-residential building, lighting, industrial climate control installations, environmental restoration, etc. – Cement. Operation of quarries and mineral sites, the manufacturing of cement, limestone, plaster and derivate pre-manufactured products and the production of concrete. – Concessions. Mainly focusing on operation of contracts classified as concession arrange- ments, particularly motorways, tunnels and a wide range of other infrastructure. – Real Estate. Its main activity is focused on housing development and the office rental market, both nationally and internationally. Its registered office is at C/Balmes 36, Barcelona. In the 2019 business year, the Company made a contribution to the subsidiary company FCC Medio Ambiente, S.A. of essential assets (spinoff) and as part of the corporate reorganisation within the Group of the Environmental Services activity (note 9). The beneficiary company su- brogated the position of Fomento de Construcciones y Contratas, S.A. in relation to all of the assets, rights, actions, obligations, holdings, responsibilities and charges relating to the spun off assets and liabilities by universal succession. FCC Group undertook this operation to streamline its organisational structure by organising the entire environmental services business line under an independent entity to optimise commercial, business and financial risk management through greater specialisation and a sharper individual focus. The spinoff took effect for accounting purposes on 1 January 2019, and therefore the spinoff balance sheet included in this transaction was that closed at 31 December 2018, with the net value of the equity divested amounting to 475,291 thousand euros. There was no effect on the consolidated financial statements of the FCC Group, since the beneficiary company is 100% ow- ned directly and indirectly by Fomento de Construcciones y Contratas, S.A. Details of the spinoff, including the proportional integration of the spun off joint ventures, was as follows: Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 400 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 3 of 46 ASSETS NON-CURRENT ASSETS Intangible fixed and non-current asset and property, plant and equipment (Notes 5 and 6) Non-current investments in Group companies and associates Rest of non-current assets CURRENT ASSETS Commercial debtors and other receivables Rest of current assets TOTAL ASSETS (A) LIABILITIES NON-CURRENT LIABILITIES Long-term provisions Rest of non-current liabilities CURRENT LIABILITIES Current payables Trade and other payables Rest of current liabilities TOTAL LIABILITIES (B) DIVESTED NET ASSETS (A-B) Valuation adjustments and grants received CAPITAL INCREASE IN BENEFICIARY COMPANY 578,168 383,455 139,631 55,082 466,941 406,661 60,280 1,045,109 129,762 69,449 60,313 432,689 124,972 239,266 68,451 562,451 482,658 7,367 475,291 Subsequently, a corporate reorganisation was carried out within the environmental services area through the incorporation of a holding company, FCC Servicios Medio Ambiente Holding, S.A.U., which is 100% owned by Fomento de Construcciones y Contratas, S.A., to which the holding previously held in FCC Medio Ambiente, S.A., the company that benefited from the spinoff, was transferred (note 9). In the corresponding notes of these notes to the financial statements, the most significant chan- ges in the 2019 business year related to the above will be indicated under the epigraph “Spinoff of environmental activities”. 2. Basis of presentation of the financial statements These financial statements were prepared from the accounting records of Fomento de Construc- ciones y Contratas, S.A. and of the joint ventures in which it is involved, pursuant to the Code of Commerce, Legislative Royal Decree 1/2010, of 2 July, approving the Consolidated Spanish Limi- ted Liability Companies Law and the amendments introduced by Law 31/2014, of 3 December, and Royal Decree 1514/2007, which introduced the Spanish General Chart of Accounts, together with its amendment, incorporated by Royal Decree 602/2016, of 2 December. The accounting policies and standards contained in the regulatory amendments of Royal Decree 1159/2010, of 17 September, and sector plans, including Order EHA/3362/2010, enacting the accounting plan of public infrastructure concessionary companies, and all applicable obligatory standards, resolutions and recommendations of the Spanish Accounting and Audit Institute (ICAC) have also been included. Accordingly, these financial statements present a fair view the company’s equity, financial position, results and cash flows in the corresponding business year. In particular, it should be noted that as a result of the publication in 2009 by the ICAC of a con- sultation relating to the accounting recognition of income from holding companies, “Income from investments in Group companies and associates” and “Finance income from marketable secu- rities and other financial instruments of Group companies and associates” are recognised under “Revenue” in the accompanying income statement. These financial statements, which have been prepared by the Company’s Board of Directors, will be submitted for approval by Annual Shareholders’ Meeting, and it is deemed that they will be approved without any modification. The 2019 financial statements were approved by the share- holders at the Annual General Meeting held on 2 June 2020. The financial statements are expressed in thousands of euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 401 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 4 of 46 Joint ventures and similar entities Going concern The balance sheets, income statements, statements of changes in equity and cash flow state- ments of the joint ventures in which the company participates were incorporated by the propor- tional consolidation method, based on the shareholding of each joint venture. The joint ventures were included through adjustments to unify the accounting period and the valuation methods, together with the reconciliations and reclassifications required and the appro- priate eliminations, both of the asset and liability balances and of the reciprocal revenue and expenses. In the notes to the financial statements, the corresponding amounts are broken down when they are significant. The balance sheet and income statement include the balance sheet aggregates at the sharehol- ding in the joint ventures shown below: Revenue Operating profit/(loss) Non-current assets Current assets Non-current liabilities Current liabilities 2020 53 11 28 2,939 2 2,946 2019 1,864 68 29 2,915 2 2,869 The joint ventures and shareholdings are listed in Annex II. Grouping of epigraphs Certain balance sheet, income statement and cash flow statement epigraphs have been grouped together so that they may be more easily understood; in any event, all significant information is broken down separately in the corresponding notes to the financial statements. At 31 December 2020, the Company has a negative working capital of 361,192 thousand euros, mainly as a result of the following debts: (i) with its subsidiary companies (127,631 thousand eu- ros), (ii) from the issue of a Euro Commercial Paper Programme (ECP) on the Irish stock exchange (Euronext Dublin) for 302,300 thousand euros and (iii) relating to bank financing (credit facilities and others) of the Company (155,228 thousand euros). Despite this, the directors of Fomento de Construcciones y Contratas, S.A. prepare these financial statements on a going concern basis as there are no doubts as to the ability of the Group of companies, of which the Company is the parent, to continue to generate funds from its operations (consolidated operating profit of 572,740 thousand euros and cash position of 1,222,109 thousand euros). This is in addition to the ability to finance itself in the event of working capital requirements, as the promissory note issue programme (ECP) was extended to 600,000 thousand euros in March 2019, of which only the aforementioned 302,300 thousand euros have been drawn. This is further bolstered by the confidence deriving from the renewal of bank credit facilities granted amounting to 537,500 thousand euros, of which only 114,054 thousand euros had been drawn as at 31 December. The company also has the capital and financial support of its equity holders. Consolidated financial statements Fomento de Construcciones y Contratas, S.A. is the head of a group of companies forming FCC Group, so its directors are obliged to prepare separate consolidated financial statements. These consolidated financial statements were prepared in accordance with International Financial Re- porting Standards (IFRS-EU), as set forth in Regulation (EC) No. 1606/2002 of the European Par- liament and of the Council of 19 July 2002 and all enacting provisions and interpretations. These 2020 consolidated financial statements of FCC Group, which have been prepared by its directors, will likewise be submitted for approval at the General Shareholders’ Meeting. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 402 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 5 of 46 The consolidated financial statements of Fomento de Construcciones y Contratas, S.A., prepa- red in accordance with International Financial Reporting Standards (IFRS) show a total volume of assets amounting to 12,835 million euros (12,574 million euros at 31 December 2019) and net equity attributable to the company’s shareholders of 2,288 million euros (1,951 million euros at 31 December 2019). Likewise, consolidated sales amount to 6,158 million euros (6,276 million euros at 31 December 2019). Lastly, attributable consolidated profit was 262 million euros (267 million euros at 31 December 2019). 4. Recognition and measurement standards The main recognition and measurement bases used by the company in the preparation of the 2020 financial statements, in accordance with the Spanish General Chart of Accounts, were as follows: Restatements a) Intangible assets No restatements were made in the current financial statements. a.1) Concession arrangements 3. Distribution of profit The Board of Directors of Fomento de Construcciones y Contratas, S.A. decided to make the mandatory allocation of profit to the legal reserve in the amount of 3,368 thousand euros, alloca- ting the remaining profit for 2020 of 247,456 thousand euros to retained earnings; accordingly, it was not proposed to distribute or apply this profit to any other account. In the 2019 business year, the Company made a profit of 241,453 thousand euros, broken down as follows: 2,688 thousand euros to the legal reserve and 238,765 thousand euros to voluntary reserves. After the preparation of these financial statement, the Ordinary General Shareholders’ Meeting approved the distribution of a scrip dividend with an impact on voluntary reserves of 29,357 thousand euros (note 11). Concession arrangements are recognised pursuant to Order EHA/3362/2010, approving the ru- les for adapting the Spanish General Chart of Accounts to public infrastructure concessionary companies. The Company has assets classified as concession agreements corresponding to assets from contracts operated jointly through temporary joint ventures, all of which are intangible assets under the intangible asset model, given that the demand risk is assumed by the concessionary company and this company does not have an unconditional entitlement to receive anything from the granting authority. a.2) Other intangible assets The remaining intangible assets, basically software applications, are recognised at their acquisi- tion or production cost And, subsequently, at cost less any accumulated amortisation and any accumulated impairment losses. At year-end, no signs of losses in value were identified in any of the company’s intangible assets related with this epigraph. Maintenance costs are recognised in the income statement for the period in which they are in- curred. Generally, intangible assets are amortised over their useful lives on a straight-line basis. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 403 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 6 of 46 b) Property, plant and equipment c) Impairment of intangible assets and property, plant and equipment Items of property, plant and equipment are measured initially at acquisition or production cost when the company has performed in-house work on its non-current assets, and are subsequently carried net of accumulated depreciation and any impairment losses. Upkeep and maintenance costs relating to property, plant and equipment are taken to the income statement in the business year in which they are incurred. However, the costs of improvements leading to increased capaci- ty or efficiency or to a lengthening of the useful lives of the assets are capitalised. For property, plant and equipment that necessarily takes a period of more than twelve months to get ready for their intended use, the capitalised costs include such borrowing costs as might have been incurred before the assets are ready for their intended use and which have been charged by the supplier or relate to loans or other specific-purpose or general purpose borrowings directly attributable to the acquisition or manufacturing of the assets. The company’s in-house work on property, plant and equipment is recorded at the accumulated cost resulting from external costs, in-house costs determined on the basis of the in-house con- sumption of materials, direct labour costs and general manufacturing overheads. All of the company’s intangible assets and property, plant and equipment have a finite useful life and it therefore performs impairment tests to estimate the possible existence of losses that cause their recoverable amount to fall below their carrying amount. Recoverable amount is determined as the greater of fair value less costs to sell and value in use. To calculate the recoverable amount of assets subject to impairment tests, the present value of the net cash flows originating from the associated cash-generating units (CGUs) is estimated, and a pre-tax discount rate is used to discount cash flows; this discount rate includes the current mar- ket assessments of the time value of money and the risks specific to each cash-generating unit. Where an impairment loss on the assets is subsequently reversed, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, up to the limit of the carrying amount that would have been determined had no impairment loss been recognised in prior business years. The reversal of an impairment loss is recognised as income in the income statement. The company depreciates essentially all of its property, plant and equipment on a straight-line basis, using annual rates based on the years of estimated useful life of the assets, as follows: d) Leases Buildings and other constructions Technical installations and machinery Other installations, tools and furniture Other property, plant and equipment Years of estimated useful life 25 – 50 5 – 15 8 – 12 4 – 10 Leases are classified as finance leases whenever the terms of the lease transfer substantially all of the risks and rewards incidental to ownership of the leased asset to the lessee. Other leases are classified as operating leases. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 404 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 7 of 46 d.1) Finance leases e) Financial instruments Fomento de Construcciones y Contratas, S.A., has finance lease contracts for cleaning and was- te collection contracts in the USA. With regard to these contracts that could not be transferred in the spinoff carried out in 2019 (note 1), a negotiation process was initiated with the various awar- ding administrations to change the ownership of the contracts to the various American 100%-ow- ned subsidiary companies of the FCC Group. At year-end almost all of these contracts had been transferred and with them all the associated assets and liabilities. However, in some cases it has not been possible to transfer the lease debt. In these cases, sublease agreements have been signed between the Company and the subsidiary companies so that these companies bear the actual payment for the assets. For this reason, in the balance sheet of Fomento de Construc- ciones y Contratas, S.A., the debt with the company that owns the assets under finance leases appears, together with a credit with the corresponding American subsidiary company to which the actual assets have been subleased under the lease agreement, which are recognised in the balance sheet of the subsidiary company that receives the profits and assumes the risks deriving from their use. d.2) Operating leases e.1) Financial assets Classification The financial assets held by the Company are classified in the following categories: – Loans and receivables: Loans and receivables: financial assets arising on the sale of goods or the rendering of services in the course of the company’s trade operations, or financial assets that are neither equity instruments nor derivatives, not arising on trade transactions, with fixed or determinable payments, and which are not traded in an active market. – Equity investments in Group companies, associates and jointly controlled companies: Group companies are deemed to be those related to the company as a result of a control relationship and associates are companies over which the company exercises significant influence. Jointly controlled entities include companies over which joint control is exercised with one or more partners through an agreement. When the company acts as lessee, it recognises the expenses from operating leases in profit or loss in the business year in which they accrue. – Financial assets available for sale: debt securities and equity instruments of other companies that are not classified in any of the previous categories. When the company acts as lessor, revenue and expenses from operating leases are recognised in profit or loss in the year in which they accrue. The acquisition cost of the leased asset is presented in the balance sheet in accordance with the nature of the asset, increased by the amount of the in- vestments arising from the directly attributable lease arrangements, which are expensed over the term of such arrangements, using the same method as applied for recognition of lease income. Any collection or payment that may arise when an operating lease is concluded is treated as a collection or prepayment that is allocated to profit or loss over the leasing term as the benefits of the leased asset are transferred or received. Initial recognition Financial assets are initially recognised at the fair value of consideration given, plus the directly attributable transaction costs, except in the case of assets held for trading and investments in Group companies granting control, the costs of which are taken directly to the income statement. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 405 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 8 of 46 Subsequent measurement – Loans and accounts receivable are measured at their amortised cost. – Investments in Group companies, associates and jointly controlled companies are measured at cost, deducting any accumulated impairment losses. The impairment loss is measured as the difference between the carrying amount and the recoverable amount. The recoverable amount is the higher of fair value less costs to sell and the present value of the future cash flows from the investment. The investee’s equity is taken into consideration, consolidated where appropriate, corrected for any unrealised gains at the measurement date, including any goodwill, unless better evidence of the recoverable amount of the investment is available. – Available-for-sale financial assets are measured at fair value. Fair value net gains and losses are recognised in equity until the asset is disposed of, at which point the cumulative gains or losses previously recognised in equity are taken to the income statement, or until it is deter- mined that they have become impaired, in which case, once the pre-existing profit previously recognised in equity has been written off, such assets are taken to profit or loss. At least at the end of each reporting period, the company books the related impairment loss allowances for financial assets that are not carried at fair value when there is objective evidence of impairment if this value is lower than its carrying amount, in which case, the impairment is recog- nised in the income statement. In particular, the company calculates impairment loss allowances for trade and other receivables by carrying out a case-by-case analysis of the insolvency risk of each account receivable. Borrowing costs are recognised on an accrual basis in the income statement using the effective interest method and are added to the amount of the instrument to the extent that they are not settled in the year in which they arise. Bank borrowings and other current and non-current financial liabilities maturing within no more than twelve months from the balance sheet date are classified as current liabilities and those ma- turing within more than twelve months as non-current liabilities. The Company derecognises financial liabilities when the obligations giving rise to them are extin- guished. e.3) Equity instruments An equity instrument represents a residual interest in the company’s equity after deducting all of its liabilities from its assets, and the securities issued are recognised in equity at the amount received, after deducting the issue charges, net of taxes. Own shares acquired by the company during the business year are recognised at the value of the consideration paid and are deducted directly from equity. Any gains or losses on the purchase, sale, issue or redemption of own equity instruments are recognised directly in equity and never in the income statement. f) Inventories The Company derecognises financial assets when the rights to the cash flows from the financial asset expire or have been transferred and substantially all the risks and rewards of ownership have been transferred. Inventories are stated at the lower of acquisition or production cost or net realisable value. Trade discounts, rebates, other similar items and interest included in the nominal amount for the paya- bles are deducted when determining the acquisition cost. e.2) Financial liabilities Financial liabilities are those payables and accounts payable that the Company has and that have resulted from the purchase of goods and services as a result of the Company’s trade transactions, or those that, without having a commercial origin, cannot be considered as financial instruments. Production cost includes the costs of direct materials and, where applicable, direct labour costs and manufacturing overheads incurred. Net realisable value represents the estimated selling price less all estimated costs of completion and the costs to be incurred in the marketing, sale and distribution of the product. Accounts payable are initially measured at the fair value of the consideration received. These financial liabilities are subsequently measured at amortised cost. The Company posts impairment allowances, recognising an expense in the income statement when the purchase price or production cost of inventories exceeds the net realisable value. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 406 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 9 of 46 g) Foreign currency transactions i) Revenue and expenses The Company’s functional currency is the euro. Consequently, transactions in other currencies are considered to be denominated in foreign currency and are translated at the exchange rates prevailing at the transaction date. Income and expenses are allocated on an accrual basis, i.e. when the actual flow of goods and services they represent takes place, regardless of when the resulting monetary or financial flow oc- curs. Revenue is measured at the fair value of the consideration received, less discounts and tax. At each reporting date, monetary assets and liabilities denominated in foreign currencies are translated to euros at the closing exchange rate. Obvious profits or losses are directly recorded in the profit and loss account the business year they occur. h) Corporation tax The expense for corporation tax is calculated on the basis of profit before tax, increased or de- creased, as appropriate, by the permanent differences between taxable profit and accounting profit. The corresponding tax rate based on the applicable legislation is applied to this adjusted accounting profit. The tax relief and tax credits earned in the year are deducted and the positive or negative differences between the estimated tax charge calculated for the prior year’s accounting close and the subsequent tax settlement at the payment date are added to or deducted from the resulting tax charge. The temporary differences between accounting profit and taxable profit for corporate income tax purposes, together with the differences between the carrying amounts of assets and liabilities re- cognised in the balance sheet and their tax bases, give rise to deferred taxes that are recognised as non-current assets and liabilities. These amounts are measured at the tax rates that are expec- ted to apply in the business years in which they will foreseeably be reversed, without performing financial discounting at any time. The company capitalises deferred tax assets corresponding to temporary differences and tax losses pending offset, except in cases in which reasonable doubts exist regarding their future recovery or such recovery extends over a period exceeding ten years. Interest received on financial assets is recognised using the effective interest method, while divi- dends are recognised when the shareholder’s right to receive payment has been established. In any case, interest and dividends on financial assets accrued subsequent to acquisition are recor- ded as income in the profit and loss account. In keeping with the accounting principle of prudence, the company only recognises realised in- come at year-end, whereas foreseeable contingencies and losses, including possible losses, are booked as soon as they become known, through the posting of the appropriate provisions. j) Provisions and contingencies The company recognises provisions on the liability side of the accompanying balance sheet for present obligations arising from past events for which the company considers it probable that there will be an outflow of funds to settle them on maturity These provisions are recognised when the related obligation arises and the amount recognised is the best estimate, at the date of the accompanying financial statements, of the present value of the future expenditure required to settle the obligation. The change in the year relating to the discount to present value has an impact on financial profit/(loss). Provisions are classified as current or non-current in the accompanying balance sheet on the ba- sis of the estimated maturity date of the obligation covered by them, and non-current provisions are considered to be those whose estimated maturity date exceeds the average cycle of the activity giving rise to the provision. Contingent liabilities resulting from possible obligations that might arise from past events, whose existence will be confirmed only by the occurrence or non-occurrence of one or more future events not wholly within the control of the company are not recognised in the financial statements, as the probability that such obligation will have to be met is remote. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 407 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 10 of 46 k) Capital assets of an environmental nature m) Use of estimates As indicated in Note 1, following the spinoff of its environmental activities in the 2019 business year, the company is now practically a holding company and the parent company of the FCC Group. It therefore has hardly any assets of an environmental nature on its balance sheet. In the preparation of these financial statements, estimates were made by the company’s directors to measure certain of the assets, liabilities, income, expenses and obligations reported herein. These estimates relate basically to the following: l) Pension and similar obligations The Company has not established any pension plans to supplement the social security pension plans. Under the Consolidated Pension Plans and Pension Funds Law, in those specific cases in which similar obligations exist, the company outsources its commitments to its employees in this area. The company has taken out insurance to cover death, permanent employment disability, reti- rement bonuses and pensions and other concepts for some executive directors and company officers. Specifically, the contingencies giving rise to compensation are those involving the termi- nation of the employment relationship for any of the following reasons: – The recoverability of deferred tax assets (notes 4.h and 16). – The recoverability of investments in Group companies and associates, and loans and receiva- bles with these, as well as financial assets with third parties (notes 4.e, 8 and 9). – The measurement of possible impairment losses on certain assets (notes 4.c, 5 and 6). – The useful life of property, plant and equipment and intangible assets (notes 4.a and 4.b). – The calculation of certain provisions (notes 4.j and 12). Although these estimates were drawn up on the basis of the best information available as at 31 December 2020, future events may require adjustments in coming years, where appropriate to be made in advance. – Unilateral decision of the company. – Dissolution or disappearance of the Parent company for any reason, including mergers or n) Related-party transactions disposals. – Death or permanent disability. – Other causes of physical or legal incapacitation. – Substantial modification of professional conditions. The company carries out all transactions with related parties at arm’s length. Note 19 “Related party transactions and balances” to these financial statements details the main transactions with the company’s significant shareholders, its directors and senior executives, and between Group companies or entities. – Termination after reaching the age of 60, at the request of the officer and in agreement with the company. ñ) Cash flow statement – Termination after reaching the age of 65 at the officer’s sole discretion. The following terms are used in the statement of cash flows with the meanings specified: Contributions made by the company are recognised under “Staff expenses” in the income sta- tement. – Cash flows: cash entries and withdrawals and their equivalents. – Cash flows from operating activities: payments and collections from the company’s principal revenue-producing activities and other activities that are not classified as investing or financing activities. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 11 of 46 408 – Cash flows used in investing activities: payments and collections resulting from purchases and divestments of non-current assets. – Cash flows from financing activities: payments and collections from the placement and settle- ment of financial liabilities, equity instruments and dividends. 5. Intangible assets Changes in this epigraph in the accompanying balance sheet in the 2020 and 2019 business years were as follows: Concession agreements Software applications Other intangible assets Accumulated amortisation Total Balance at 31/12/18 137,375 49,772 37,850 (117,655) 107,342 — — 3,973 (733) 1,189 — (3,937) 733 1,225 — (137,322) (3,309) (36,690) 79,017 (98,304) Receipts or endowments Release, removals and transfers "Divestment of environmental activities" (Note 1) Transfers (Note 6) Balance at 31.12.19 24,113 24,166 97 — (21) 49,800 2,349 (41,863) 24,189 34,452 (1,213) (26,041) Receipts or endowments — Release, removals and transfers (24,113) 1,875 (160) (168) (2,170) (2,920) 402 Balance at 31.12.20 53 51,515 11 (44,381) 7,198 The epigraph “Concession agreements” included the assets related to the waste collection busi- ness in Houston (USA) amounting to 24,096 thousand euros. The contract associated with this asset has been assigned, with the consent of the assigning body, to the subsidiary company FCC Environmental Services Texas LLC (note 6) in 2020, which has been subrogated to the rights and obligations under it. Subsequently, Fomento de Construcciones y Contratas, S.A. and the aforementioned company agreed to purchase and sell the assets linked to the contract. This transaction has not generated any capital gains in the income statement. The balance for “Software applications” relates mainly to implementation, development and im- provement costs for the corporate information system, and costs related to information techno- logy infrastructure. The detail of intangible assets and of the related accumulated amortisation at 31 December 2020 and 2019 is as follows: 2020 Concession agreements Software applications Other intangible fixed and non-current assets 2019 Concession agreements Software applications Other intangible fixed and non-current assets Cost 53 51,515 11 Accumulated amortisation (26) (44,344) (11) Net 27 7,171 — 51,579 (44,381) 7,198 24,166 49,800 2,349 (24) (41,526) (313) 24,142 8,274 2,036 76,315 (41,863) 34,452 With regard to net intangible assets, only 28 thousand euros (29 thousand euros at 31 December 2019) relate to assets arising from arrangements operated jointly through joint ventures. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 12 of 46 409 All intangible assets at year-end were used in production processes; however, some such intan- gible assets, basically software applications, had been fully amortised, in the amount of 39,431 thousand euros (31,464 thousand euros at 31 December 2019). The amount corresponding to joint ventures was insignificant. At 31 December 2020, the company did not own any significant intangible assets pledged as security or purchase commitments of a significant amount. 6. Property, plant and equipment Changes in this epigraph in the accompanying balance sheet in the 2020 and 2019 business years were as follows: Other intangible assets Land and buildings Technical installations and other PP&E Advance payments and PP&E under construction Accumulated amortisation Impairment Total Balance at 31/12/18 101,595 1,007,273 Receipts or endowments Release, removals and transfers "Divestment of environmental activities" (Note 1) Transfers (Note 5) Balance at 31.12.19 Receipts or endowments Release, removals and transfers Transfers Balance at 31.12.20 57 — (81,351) (2,397) 17,904 206 (267) — 17,843 38,093 (11,799) (908,620) (4,453) 120,494 12,652 (100,815) 2,070 34,401 22,300 2,883 — (7,816) (17,367) — 2,203 — (2,070) 133 (744,563) (5,145) (10,102) 11,651 712,579 — (30,435) (5,733) 19,128 — (17,040) — — 57 — (5,088) — — — (5,088) 381,460 30,931 (148) (285,151) (24,217) 102,875 9,328 (81,954) — 30,249 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 13 of 46 410 In the spinoff process carried out in 2019 (note 1), there were a number of cleaning and waste collection contracts in the USA that could not be transferred. With regard to these contracts, a negotiation process was initiated with the various awarding authorities to obtain a change of ownership of the contracts to various American subsidiary companies of the FCC Group. In the 2020 business year, almost all of these authorisations have been obtained and, as a result, the Company and the aforementioned subsidiary companies have agreed to purchase and sell the assets linked to the contracts, and these transactions have not generated any capital gains in the income statement. This accounted for the major part of the write-off of fixed and non-current assets in the 2020 business year for a net amount of 81,954 thousand euros. With regard to the 2019 business year, the additions of 37,708 thousand euros relating to the aforementioned con- tracts in the USA are worth mentioning. The detail of property, plant and equipment and of the related accumulated depreciation at 31 December 2020 and 2019 is as follows: Cost Accumulated amortisation Impairment Net The company owns buildings, whose value separated from the net depreciation of said buildings and the value of land, at year-end, was as follows: Land Buildings 2020 10,500 1,311 11,811 2019 10,293 1,577 11,870 At the end of the 2020 and 2019 business years there are no significant assets from contracts operated jointly through joint ventures. In the 2020 and 2019 business years, the company had not capitalised any finance costs under “Property, plant and equipment”. It did not have any significant commitments to acquire property, plant and equipment. It also has no assets subject to significant ownership restrictions. Most of the items of property, plant and equipment, at the closing date, are used in the various production processes. Part of said property, plant and equipment, however is fully depreciated, amounting to 2,677 thousand euros (1,569 thousand euros at 31 December 2019). 17,843 34,401 133 (944) (5,088) (16,096) — — — 11,811 18,305 133 The Company takes out insurance policies to cover the possible risks to which its property, plant and equipment are subject. At year-end, all items of property, plant and equipment had been fully insured against these risks. 52,377 (17,040) (5,088) 30,249 2020 Land and buildings Technical installations and other PP&E Advance payments and PP&E under construction 2019 Land and buildings 17,904 (946) (5,088) Technical installations and other PP&E 120,494 (29,489) — 11,870 91,005 138,398 (30,435) (5,088) 102,875 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 411 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 14 of 46 7. Leases a) Finance leases As explained in note 4.d.1, the company has transferred the finance leases signed with com- panies engaged in this activity, which could not be transferred to the aforementioned subsidiary companies, to American subsidiary companies of the FCC Group through sublease contracts. The debt with the company owning the leased assets, recognised under “Other non-current and current financial liabilities”, is associated with receivables from the aforementioned subsidiary companies and the actual leasing assets assigned to the contract are recognised in the subsidiary company’s balance sheet. Note 13.b provides information on the balance and maturity of finance lease payables. b) Operating lease The amount recognised in the 2020 business year for operating lease expenses totalled 11,068 thousand euros (12,064 thousand euros at 31 December 2019). Noteworthy among the operating lease arrangements signed by Fomento de Construcciones y Contratas, S.A., due to their size, were those relating to FCC Group’s corporate headquarters: – Office building in Las Tablas, Madrid. On 19 December 2010, the owner and the company signed a lease agreement on this buil- ding, with the rental arrangement beginning, once the building had been completed, on 23 November 2012. This arrangement has an 18-year term, extendable at the company’s discre- tion by two periods of five years each, with annual rent adjusted annually in line with the CPI. On 21 September 2018, a non-extinguishing modifying Addendum to the original agreement was signed with the new owner, “Las Tablas 40 Madrid, S.L.U.”. The modified terms and con- ditions mainly lead to a 5.6% reduction in rent and the possibility of sub-letting to third parties without the consent of the owner, provided that certain requirements are met. – Office buildings at Federico Salmón 13, Madrid and Balmes 36, Barcelona. On 29 December 2011, the owners of these buildings and Fomento de Construcciones y Contratas, S.A. had signed two lease agreements for them, for a minimum committed period of 30 years, extendable, at the company’s discretion, by two periods of five years each, with initial annual rent adjustable in line with the CPI. These buildings were transferred by the com- pany to their current owner through a sale and leaseback arrangement. The owners, in turn, granted a purchase option to Fomento de Construcciones y Contratas, S.A., which can only be exercised at the end of the lease period, at fair value or at the amount of the sale adjusted by the CPI, if this is higher. On 1 June 2016, the company ceded its contractual position to Fedemes, S.L., wholly owned by it, which signed sub-lease agreements with the FCC Group companies that occupied the buildings, including Fomento de Construcciones y Contratas, S.A., with the same duration conditions as the original arrangement as indicated previously. At year-end, there were non-cancellable future payment commitments amounting to 148,037 thousand euros (159,411 thousand euros in 2019). Details, by maturity, of the non-cancellable future minimum payments at 31 December 2020 and 2019 were as follows: Up to one year Between one and five years After five years 2020 10,413 40,494 97,130 148,037 2019 10,835 41,901 106,675 159,411 As the lessor, when it is the holder of the lease arrangements, the company invoices FCC Group investees based on the use they make of such arrangements, recognising such revenue as operating income. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 412 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 15 of 46 8. Current and non-current financial assets Loans and receivables The breakdown, by maturity, of loans and receivables is as follows: a) Long-term financial investments 2022 2023 2024 2025 2026 and beyond Total The balance of “Non-current financial assets” at 2020 and 2019 year-end is as follows: Loans and receivables 11 — — — 22,828 22,839 2020 Loans and receivables Available-for-sale assets 2019 Loans and receivables Available-for-sale assets Equity instruments Loans to third parties Other financial assets Total — 111 111 — 117 117 1,488 — 1,488 1,488 — 1,488 21,351 — 21,351 21,556 — 21,556 22,839 111 22,950 23,044 117 23,161 The most significant amount recognised under “Loans and receivables” was the 17,555 thousand euro escrow deposit in relation to the sale of Global Vía Infraestructuras, S.A., formalised in the 2016 business year, the maturity of which was “2026 and beyond” in view of its indeterminate na- ture, since it was tied to the release of the collateral provided by the aforementioned company to third parties to meet financial commitments. This heading also includes guarantees and deposits for legal or contractual obligations in the development of the company’s activities. Available-for-sale assets Virtually all of this corresponds to a 15.71% holding in the company Port Torredembarra S.A. for a value of 110 thousand euros (116 thousand euros at 31 December 2019). b) Short-term financial investments The amount shown under this epigraph corresponds to guarantees and deposits for legal or contractual obligations. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 16 of 46 413 9. Investments and payables to Group companies and associates a) Non-current investments in Group companies and associates The detail of the non-current investments in Group companies and associates at 31 December 2020 and 2019 is as follows: 2020 Equity instruments in Group companies 4,129,025 (1,214,136) 2,914,889 Cost Accumulated impairment Total Equity instruments of associates Loans to Group companies Loans to associates 2019 261,834 416,868 24 (240,627) 21,207 (37,209) 379,659 — 24 4,807,751 (1,491,972) 3,315,779 Equity instruments in Group companies 3,715,699 (1,220,103) 2,495,596 Equity instruments of associates Loans to Group companies Loans to associates 519,851 320,411 27 (240,014) (36,857) — 279,837 283,554 27 4,555,988 (1,496,974) 3,059,014 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 414 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 17 of 46 Details of changes in these epigraphs is as follows: Equity instruments of Group companies Equity instruments of associates Loans to Group companies Loans to associates Impairment Total Saldo a 31.12.18 Receipts or endowments Disposals and reversals “Divestment of environmental activities” (Note 1) Transfers Balance at 31.12.19 Receipts or endowments Disposals and reversals Transfers Balance at 31.12.20 5,221,459 739,260 (2,283,029) (61,991) 100,000 3,715,699 135,126 — 278,200 4,129,025 539,805 — — (19,954) — 519,851 20,183 — (278,200) 261,834 552,112 1,337,058 (1,386,792) (81,967) (100,000) 320,411 96,457 — — 416,868 841 28 — (842) — 27 — (3) — 24 (3,053,003) (45,787) 1,576,693 25,123 — (1,496,974) (66,631) 71,633 — 3,261,214 2,030,559 (2,093,128) (139,631) — 3,059,014 463,335 (206,570) — (1,491,972) 3,315,779 Spinoff of environmental activities In the 2019 business year, the changes in equity instruments, loans to companies and impairment were particularly significant, derived from the corporate reorganisation in the environmental servi- ces area (note 1) and detailed below: – Subscription of new shares in FCC Medio Ambiente, S.A. for a value of 475,291 thousand euros in consideration for the spinoff of the environmental services activity. – Sale to FCC Servicios Medio Ambiente Holding, S.A.U. of 99.99% of FCC Medio Ambiente, S.A. for an amount of 510,393 thousand euros, generating a credit right. – Assignment to FCC Servicios Medio Ambiente Holding, S.A.U. of the debtor position in the loan of 136,606 thousand euros held by the company with FCC Medio Ambiente, S.A. – Contribution of 14,530 thousand euros to FCC Servicios Medio Ambiente Holding, S.A.U.. to offset losses. – As a result of the capitalisation of part of the credits generated in the operations indicated in the previous points, the Company subscribed new shares in FCC Servicios Medio Ambiente Holding, S.A.U. for a value of 200,571 thousand euros (115,101 thousand euros and 85,470 thousand euros corresponding to the sale and assignment of credits to FCC Servicios Medio Ambiente Holding, S.A.U., respectively), by capitalisation through the offseting of credits. – Sale to FCC Servicios Medio Ambiente Holding, S.A.U. of 94.48% and to International Ser- vices Inc., S.A. of 5.5% of FCC Austria Abfall Service AG for 219,034 and 12,751 thousand euros respectively, generating credit rights for Fomento de Construcciones y Contratas, S.A. with the purchasing companies. The company’s credit right for the company International Ser- vices Inc. SA, together with a loan for 5,000 thousand euros extended to FCC Austria Abfall Service AG was subsequently assigned to FCC Servicios Medio Ambiente Holding, S.A.U. – Assignment to FCC Servicios Medio Ambiente Holding, S.A.U. of the debtor position in the 8,000 thousand euro principal loan between the company and FCC Environment CEE Gmbh (the lender). The amount assigned was 8,999 thousand euros, including accrued and unpaid interest. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 415 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 18 of 46 – Sale to FCC Medio Ambiente Reino Unido, S.L.U. of 100% of the companies FCC PFI Hol- dings Limited, Enviropower Investments Limited, Azincourt Investment, S.L.U., for a total pri- ce of 245,576 thousand euros, generating a credit right for the Company. – Assignment to FCC Medio Ambiente UK, S.L.U. of credit rights totalling 333,735 thousand euros with the companies FCC PFI Holdings Limited, Azincourt Investment, S.L.U., FCC Re- cycling (UK) Limited, FCC Lostock Holdings Limited and Enviropower Investments Limited. – Assignment to FCC Servicios Medio Ambiente Holding, S.A.U. of a credit right for the amount of 579,311 thousand euros in relation to FCC Medio Ambiente UK, S.L.U., arising from the sale of shares and assignments of credits detailed in the previous two points. – Assignment to FCC Servicios Medio Ambiente Holding, S.A.U. of a credit right amounting to 44,646 thousand euros in relation to FCC Ámbito, S.A.U. – Granting of a 275,376 thousand euro subordinated loan to FCC Servicios Medio Ambiente Holding, S.A.U. – Contribution to strengthen the equity of FC y C, S.L.U. and FCC Construcción, S.A. of 98,914 and 24,024 thousand euros, respectively. With regard to the 2019 business year, in addition to the reorganisation operations in the en- vironmental services area described above, the following significant changes took place: – Subscription of shares in the capital increase by Cementos Portland Valderrivas, S.A., as compensation for the 100,000 thousand euro subordinated loan granted by the company. – Acquisition of shares in FC y C, S.L. (Unipersonal) belonging to FCC Construcción, S.A. for the amount of 48,780 thousand euros. Details by company of the “Investments in Group companies and associates” headings are pre- sented in Annexes I and III, respectively, indicating the following details for each company in which direct ownership interests are held: name, registered office, activity, share of capital directly or indirectly owned, amount of equity (capital, reserves and others), profit or loss, dividends received and whether the company is listed on the stock market, together with its carrying amount. – Repayment of the 1,020,000 thousand euro debt that FCC Servicios Medio Ambiente Hol- ding, S.A.U. had to the company (excluding the subordinated loan mentioned in the previous point), which originated mainly from the corporate restructuring operations mentioned in the previous points. This was repaid with funds from the issuance of two bonds by FCC Servicios Medio Ambiente Holding, S.A.U. for a total amount of 1,100,000 thousand euros (Note 13.b). Equity instruments of associates The following significant changes occurred in the 2020 business year – Increase of the holding in Realia Business, S.A. (from 34.40% to 36.98%) as a result of the following acquisitions from other FCC Group companies: Equity instruments in Group companiesupo • 2.22% owned by Asesoría Financiera y de Gestión, S.L.U. for 17,024 thousand euros. The following significant changes occurred in the 2020 business year: • 0.36% owned by Per Gestora, SLU for 2,776 thousand euros. – Purchase from Per Gestora, S.L.U., 100% owned, of: • 56.16% of Asesoría Financiera y de Gestión, S.A. for 11,002 thousand euros, thereby rea- ching a 100% holding. • 7.33% of Fedemes, S.L. for 1,018 thousand euros, which also represents a 100% holding. – Subscription of the capital increase of FC y C, S.L.U. by means of a non-monetary contri- bution consisting of a 36.98% holding in the capital stock of the associated company Realia Business, S.A., valued in the balance sheet at 278,200 thousand euros. – Derecognition of the entire backlog of Realia Business, S.A., representing 36.98% of its capi- tal stock, contributed to the capital increase of the 100% owned subsidiary company FC y C, S.L.U., as mentioned in the previous point. – Purchase of 50% of Sigenera S.L. from Per Gestora, S.L.U. Sole-shareholder company for 377 thousand euros. The changes in 2019 corresponds to the spinoff of activity (Note 1). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 416 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 19 of 46 Long-term loans to Group companies The most significant balances were as follows: FCC Servicios Medio Ambiente Holding S.A.U. FCC Versia, S.A.U FCC Environmental Services Florida, LLC Rest GROSS TOTAL Impairment: FCC Versia, S.A.U. NET TOTAL 2020 352,619 45,000 19,107 142 2019 275,376 45,000 — 35 416,868 320,411 (37,209) 379,659 (36,857) 283,554 The following are noteworthy with regard to the balance at 31 December 2020: – Loans granted to FCC Servicios Medio Ambiente Holding, S.A.U. for a total of 352,619 thou- sand euros. • Subordinated loan for a nominal value of 275,376 thousand euros granted in 2019 in con- nection with the corporate restructuring operations in the environmental services area dis- cussed at the beginning of this note. As at 31 December 2020, the closing balance inclu- ding interest is 282,261 thousand euros. • Subordinated loan of 69,827 thousand euros, generated in the 2020 business year from the transfer of assets from contracts in the USA (notes 5 and 6). FCC Servicios Medio Ambiente Holding, S.A.U. has been subrogated to the debtor position that the American subsidiary companies had with Fomento de Construcciones y Contratas, S.A. for the aforementioned transfer. Both loans have a final maturity of 2034, no partial repayments and a fixed interest rate of 2.5% p.a., which will be capitalised. Any amount, whether interest or principal, to be collected by the lender will be subordinated to the full repayment of the bonds issued by the borrower (note 13). – Participating loan of 45,000 thousand euros to FCC Versia, S.A., due to transformation of an ordinary loan on 25 November 2015. The initial maturity, 31 January 2018, could be tacitly extended for successive additional two-year periods, provided that neither of the parties sta- ted their wish to terminate it at least two months in advance Since neither of the parties did this, its current maturity date is 31 January 2022. It is therefore classified under non-current assets in the balance sheet. The fixed interest rate is 1%. The interest rate also has a variable part calculated based on indicators of the borrower’s profitability. The total maximum interest rate (fixed + variable) has a ceiling and will not exceed 10%. At year-end, interest of 450 thou- sand euros had accrued (the same as at 31 December 2019). This loan suffered impairment of 37,209 thousand euros at 31 December 2020 (36,857 thousand euros at 31 December 2019). Impairment The following significant changes have taken place: – Reversal of the impairment of the holding in Cementos Portland Valderrivas, S.A. amounting to 67,833 thousand euros, mainly due to the Cementos Group’s results for the period. In 2019, 45,250 thousand euros were provided for the decrease in equity due to the impairment of Uniland’s commercial fund. – Reversal of the impairment of the investment in FCC Construcción, S.A. amounting to 3,798 thousand euros in the 2020 business year (reversal of 165,704 thousand euros in 2019), due to the earnings for the period, among other factors. – – – Impairment of Per Gestora, S.L.U.’s holding of 64,960 thousand euros in 2020 (reversal of 991 thousand euros in 2019), due to the distribution of voluntary reserves in the company in 2020. Impairment of FM Green Power Investments, S.L. amounting to 612 thousand euros (reversal of 9,847 thousand euros in 2019). In 2019 reversal of the impairment of FCC Servicios Medio Ambiente Holding, S.A.U. amoun- ting to 85,863 thousand euros. – The most significant events in 2019 in relation to the corporate reorganisation of environmen- tal services include the derecognition of the impairment on the holding in Azincourt Invest- ment, S.L.U., amounting to 1,300,109 thousand euros, and the derecognition of impairment of credits in FCC Medio Ambiente Holding SAU for 14,180 thousand euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 417 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 20 of 46 b) Current investments in Group companies and associates This section includes mainly the loans and other non-trade credits granted to Group compa- nies and associates, among others, in line with certain specific cash situations, as well as other temporary financial assets, measured at the lower of cost or market value, increased by interest earned at a market rate. It also includes the balances generated by tax effects with the subsidiary companies in the tax consolidation Group, as well as outstanding dividends. The most significant balances in this regard were as follows: – Payment of annual interest when the borrower and its subsidiary companies, excluding the FCC Aqualia subgroup, hold “available cash” at 30 September which is not less than the amount of the accrued interest. Any unpaid matured interest will be capitalised and accrue interest, as regulated in article 317 of the Code of Commerce. – Collateral: the guarantees mentioned in note 17 continued to be granted. The aforementioned loan has accrued interest of 29,107 thousand euros in the business year (29,028 thousand euros at 31 December 2019). FCC Servicios Medio Ambiente Holding S.A.U. FM Green Power Investments, S.L. FC y C, S.L.U. FCC Concesiones e Infraestructuras, S.L.U. Fedemes, S.L.U. Cementos Portland Valderrivas, S.A. Rest 2020 43,236 26,411 23,113 22,824 13,724 11,533 8,944 2019 21,727 — 11,461 — 6,247 400 3,133 149,785 42,968 c) Non-current payables to Group companies and associates The balance at 31 December 2020 corresponded completely to the loan extended by FCC Aqua- lia, S.A. (806,479 thousand euros) to the company, with the following characteristics: – Loan amount: 806,479 thousand euros. – Maturity: 28 September 2048. – – Interest periods: annual periods, except the final period which will end on 28 September 2048. Interest rate: 3.55%. d) Current payables to Group companies and associates Payables to Group and associated companies include loans received by the Company which are remunerated at market prices, as well as the balances generated by the tax effect with the sub- sidiary companies of the tax consolidation Group. The most significant balances on the liabilities side of the accompanying balance sheet are as follows: FCC Construcción, S.A. Fedemes, S.L.U. Asesoría Financiera y de Gestión, S.A.U. FC y C, S.L.U. Cementos Portland Valderrivas, S.A. Per Gestora Inmobiliaria, S.L.U. Rest 2020 39,172 34,674 17,750 15,815 4,354 61 15,805 127,631 2019 23,636 25,453 57,159 14,211 11,112 50,413 6,703 188,687 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 418 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 21 of 46 10. Trade receivables for sales and services 11. Equity The breakdown of this epigraph in the accompanying balance sheet includes the value of the company’s sales and services, as follows. Outstanding Invoiced Production Production not yet invoiced Trade receivables for sales and services Customer advance payments Total net customer balance 2020 1,357 769 2,126 — 2,126 2019 6,222 4,061 10,283 — 10,283 The Ordinary General Shareholders’ Meeting held on 2 June 2020 resolved to distribute a scrip dividend by issuing new ordinary shares with a nominal value of 1 euro each, without a share premium, of the same class and series as the shares already in circulation. This resolution also included an offer by the company to acquire the free allocation rights at a guaranteed price. At its meeting on 2 June 2020, following the General Shareholders’ Meeting, the Board of Di- rectors of Fomento de Construcciones y Contratas, S.A. resolved to execute the scrip dividend distribution resolution adopted by the Shareholders’ Meeting, the most significant characteristics of which are described below: – Maximum value of the scrip dividend: 156,905,930.40 euros, equivalent to 0.40 euros per share. The total shown corresponds to the net balance of trade receivables, net of the item “Custo- mer advance payments” included under the epigraphs “Other payables” and “Trade and other non-current accounts payable” on the liabilities side of the accompanying balance sheet. – Shareholders received the corresponding allocation rights and could choose between three options: receiving the new shares released, transferring their rights in the market or selling their rights to the company for the guaranteed price of 0.40 euros per share. The decrease in the balance between business years is almost entirely due to the transfer of the US contracts to American subsidiary companies (notes 5 and 6). Of the total net trade receivables balance, 7 thousand euros (190 thousand euros at 31 Decem- ber 2019) relate to balances arising from arrangements operated jointly through joint ventures. The company did not have a significant volume of commercial operations in default that were not provisioned at 31 December 2020 and 2019. The company considers all balances overdue that have not been paid by the counterparty to be in default. – The number of free allotment rights required to receive a new share was set at 23. Sharehol- ders who chose this option also received a compensatory cash dividend of 0,624 euros for each new bonus share received, to make this financially equivalent to transferring their rights to the company. – At the end of the trading period for the free allocation rights on 22 June 2020, holders of 387,361,229 (98.75%) rights had chosen to receive new shares, while shareholders holding 4,903,597 rights had opted to accept the company’s offer to acquire their rights at the gua- ranteed price. Accordingly, the final number of 1 euro bonus shares issued was 16,841,792 shares, corresponding to 4.29% of the capital stock prior to the increase, resulting in a cash outflow for the compensatory dividend, as well as for the rights acquired by the Company of 12,436 thousand euros. – On 2 July 2020, the public deed to increase the Company’s paid-up capital with a charge to voluntary reserves was registered at the Barcelona Mercantile Registry. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 419 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 22 of 46 In addition, at the Ordinary General Shareholders’ Meeting held on 8 May 2019 a decision was taken to distribute a scrip dividend, with the following characteristics: a) Capital – Maximum value of the scrip dividend: 151,530,202.40 euros, equivalent to 0.40 euros per share. – Shareholders received the corresponding allocation rights and could choose between three options: receiving the new shares released, transferring their rights in the market or selling their rights to the company for the guaranteed price of 0.40 euros per share. – The number of free allotment rights required to receive a new share was set at 28. Sharehol- ders who chose this option also received a compensatory cash dividend of 0,638 euros for each new bonus share received, to make this financially equivalent to transferring their rights to the company. – At the end of the trading period for the free allocation rights on 28 May 2019, holders of 376,300,974 (99.33%) rights had chosen to receive new shares, while shareholders holding 2,524,532 rights had opted to accept the company’s offer to acquire their rights at the gua- ranteed price. Accordingly, a total of 13,439,320 bonus shares with a nominal value of 1 euro were issued, representing 3.55% of the capital stock prior to the increase. The following table shows the effect of distribution of the scrip dividend on the equity of Fomento de Construcciones y Contratas, S.A. in both business years: Capital stock increase Capital stock Capital stock increase Costs, net of tax Acquisition rights at guaranteed price Compensatory dividend Voluntary reserves Change in equity 2020 2019 16,842 16,842 (16,842) (79) (1,961) (10,475) (29,357) (12,515) 13,439 13,439 (13,439) (78) (1,010) (8,556) (23,083) (9,644) The capital of Fomento de Construcciones y Contratas, S,A. comprises 409,106,618 ordinary shares represented through book entries with a nominal value of 1 euro each. All shares are fully subscribed and paid and carry the same rights. The securities representing the capital stock of Fomento de Construcciones y Contratas, S.A. are admitted to official listing on the four Spanish stock exchanges (Madrid, Barcelona, Bilbao and Valencia) via Spain’s Continuous Market. On 10 June 2020, Samede Inversiones 2010, S.L., a company 100% owned by Esther Koplowitz Romero de Juseu, transferred the 100% holding it held in Dominum Dirección y Gestión, S.L., which in turn held shares in Fomento de Construcciones y Contratas, S.A. representing 15.43% of the capital stock at that date, to Control Empresarial de Capitales, S.A. de C.V. On 27 November 2020, Dominum Dirección y Gestión, S.L. transferred shares in FCC represen- ting 7% of its capital stock to Finver Inversiones 2020, S.L.U. Following the aforementioned changes, in relation to the part of the capital held by other com- panies, directly or through its subsidiary companies, when it is more than 10%, according to the information provided, the company Control Empresarial de Capitales, S.A. de C.V. (acquiring company of Inversora Carso, S.A. de C.V.), controlled by the Slim family, holds 69.61% directly and indirectly, at the date of preparation of these statements. Furthermore, as indicated in the previous paragraph, the company Finver Inversiones 2020, S.L.U., 100% owned by Inmobiliaria AEG, S.A. de C.V., which in turn is controlled by Carlos Slim Helú, has a 7% holding. Finally, the company Nueva Samede Inversiones 2016, S.L.U. has a direct holding of 4,536% of the capital. Esther Koplowitz Romero de Juseu also holds 133,269 direct shares in Fomento de Construc- ciones y Contratas, S.A. b) Share premium The Spanish Limited Liability Companies Law, as amended, expressly permits the use of the sha- re premium account balance to increase capital and does not establish any specific restrictions as to its use for other purposes. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 23 of 46 c) Reserves d) Own shares El desglose de este epígrafe para los ejercicios 2020 y 2019 es el siguiente: Movements in the “Own shares” heading in the 2020 and 2019 business years were as follows: 420 Legal reserve Other reserves 2020 78,453 2019 75,765 Balance at 31 December 2018 Sales 2,083,067 1,873,659 Acquisitions 2,161,520 1,949,424 Balance at 31 December 2019 In accordance with the Spanish Limited Liability Companies Law, as amended, 10% of net profit for each business year must be transferred to the legal reserve until the balance of this reserve reaches at least 20% of the capital stock. The legal reserve cannot be distributed to shareholders except in the event of liquidation. The legal reserve may be used to increase capital provided that the remaining reserve balance is greater than 10% of the increased capital. Otherwise, until it exceeds 20% of capital stock and provided there are no sufficient available reserves, the legal reserve may only be used to offset losses. Noteworthy under “Other reserves” were restricted reserves amounting to 6,034 thousand euros, equivalent to the nominal value of the own shares redeemed in the 2002 and 2008 business years which, pursuant to article 335.c of the Spanish Limited Liability Companies Law, is restricted, except with the same requirements as for the capital reduction. Sales Acquisitions Balance at 31 December 2020 Details of own shares at 31 December 2020 and 2019 were as follows: 2020 2019 Number of shares Amount Number of shares 1,250,837 At 31 December 2020, the company’s shares represented 0.38% of the capital stock (0.32% at 31 December 2019). (11,723) — (4,345) (16,068) — (1,944) (18,012) Amount (16,068) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 421 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 24 of 46 12. Long-term provisions The changes in the business year were as follows: Procedures related to infrastructure Litigation Liabilities and contingencies Contractual and legal guarantees and obligations Rest Total 35,383 93,169 76,325 48,325 9,712 262,914 — — 3,015 6,813 — (20,813) — — 1,402 11,230 (1,142) (21,955) (35,383) (166) — (29,170) (4,730) (69,449) — — — — 96,018 62,325 19,155 5,242 182,740 503 52,164 (96,521) (1,693) — — 1,072 6,243 (146) (51,134) — 112,526 19,155 6,168 137,849 Balance at 31/12/18 Provisions Applications/ reversals “Divestment of environmental activities” (Note 1) Balance at 31.12.19 Provisions Applications/ reversals Balance at 31.12.20 Provisions for procedures related to infrastructure This provision relates to infrastructure that was linked to the environmental services activity that was spun off in 2019 (note 1). Provisions for litigation These provisions cover the company’s risks as the defendant in certain disputes relating to liabi- lities arising from its activities. The amount shown at 31 December 2019 corresponds in full to the challenged proceedings for the sale of Alpine Energie, which was closed in May 2020. The following paragraphs discuss the situation in more detail with the bankruptcy process of the Alpine subgroup, which is legally de- pendent on FCC Construcción, S.A. In 2006, the FCC Group acquired an absolute majority in Alpine Holding GmbH, hereinafter AH, and thereby, indirectly in its operating subsidiary company, Alpine Bau GmbH, hereinafter AB. Se- ven years later, on 19 June 2013, AB filed for insolvency before the Commercial Court of Vienna, but after the unfeasibility of the reorganisation proposal was established, the insolvency adminis- trator filed for, and the court decreed, the bankruptcy, closure and liquidation of the company. On 25 June 2013, the liquidation of the company was initiated. As a consequence of the bankruptcy of AB, its parent company, AH filed for bankruptcy before the Commercial Court on 2 July 2013, which declared the bankruptcy and liquidation of AH. As a result of both bankruptcies, FCC Construcción, S.A. loses control over the Alpine Group, interrupting its consolidation. On the reporting date, the administrators recognised liabilities of approximately EUR 1,669 million in AB and EUR 550 million in AH as part of the corresponding receivership proceedings. The share of the bankrupt estate in AB currently amounts to 15% whereas for AH’s bankruptcy, the bankruptcy administrator has not been able to estimate and determine the share. Immediately after the bankruptcy of both companies, in July 2013, a bondholder filed a complaint with the Central Public Prosecutor’s Office for Economic Crimes and Corruption (Wirtschafts- und Korruptions-Staatsanwaltschaft). This not only gave rise to the opening of criminal proceedings in July 2013 (for alleged fraud, criminal act of bankruptcy, and concealment of assets) in which some 480 private prosecutions, mainly relating to bondholders, (Privatbeteiligte) were filed, alle- ging damages totalling 378 million euros plus legal interest, but also other proceedings brought by the insolvency administrators against the auditors, against FCC Construcción S. A. and against various executives and proceedings brought by the bondholders against the banks mediating in the acquisition of bonds. In 2010, 2011 and 2012, AH carried out three issues of bonds admitted to trading on the Luxembourg and Vienna stock exchanges for a combined nominal value of 290 million euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 422 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 25 of 46 In the context of all these legal proceedings, various reports were issued in order to determine the date on which AB and AH were presumed bankrupt. Therefore, in September 2014, the firm BDO Financial Advisory Services GmbH issued a report at the request of the insolvency administrators of AH and AB, according to which AB had been insolvent since at least October 2010. Subse- quently, in July 2015, the court dealing with AB’s bankruptcy granted the insolvency administra- tor’s request to commission the preparation of a report to determine the date on which it should be understood that AB became over-indebted. The expert appointed was Mr Schima who, on the basis of the report from BDO, a firm of which he was still a partner at the date of the report, came to the same conclusions, stating that AB would have been insolvent since October 2010. Contrary to these conclusions maintained by the bankruptcy administrators and used in various legal proceedings, other expert reports were issued in the various proceedings, such as that of Mr Konecny for the Public Prosecutor’s Office for Combating Economic Crimes and Corruption, that of AKKT for the Banks, Ms Ponesch Urbanek as an expert witness in the lawsuit brought by the banks against the Austrian tax authorities for the loans given to Alpine under State guarantee, Mr Wundsam as court expert in the proceedings brought by the bankruptcy administrator against Deloitte Audit Wirtschaftsprüfungs GmbH, Mr Rohatschek for this company and E&Y for FCC, all of which differ from the conclusions reached by BDO/Schima. In particular, in 2017, the anti-corruption prosecutor’s expert, a Doctor of Law and an Audit Ex- pert, issued his fourth and final report. The expert’s reports concluded that (i) there had been no concealment of assets; (ii) it could not be said that there had been fraud in the individual financial statements of AB and AH and the consolidated financial statements of AH; and (iii) the date of definitive date of insolvency of AB and AH was 18 June 2013. Together with the 3 reports that preceded it, this report contributed to a large extent to the dismissal of the criminal proceedings opened by the Public Prosecutor’s Office for Combating Economic Crimes and Corruption. In July 2019, the Vienna Supreme Court of Justice dismissed in their entirety the various appeals lodged by bondholders and other private prosecutors against the termination of the preliminary proceedings. During the refinancing of the Alpine Group between October 2012 and June 2013, FCC Construc- ción, S.A. provided corporate guarantees to enable AB and a selection of its operating subsidiary companies to bid for and/or be awarded construction work. At 31 December 2020, the amount provisioned for these items in FCC Construcción, S.A. amounts to 24,384 thousand euros. Since AH and AB were declared bankrupt up until the preparation of financial statements for the 2020 business year, a number of proceedings were instigated the Group and directors of AH and AB. As at 31 December 2020, two (2) commercial proceedings and one (1) set of labour procee- dings are still in progress, insofar as FCC may be directly or indirectly affected: 1. In April 2015, the administrator of Alpine Holding GmbH filed a claim for 186 million euros against FCC Construcción, S.A. and other ex-executive of AB considering that these parties should compensate Alpine Holding GmbH for the amounts collected through two issues of bonds in 2011 and 2012 that were allegedly provided by this company to its subsidiary com- pany, Alpine Bau GmbH, without the necessary guarantees and complying with a “manda- te-order” from FCC Construcción S.A. On 31 July 2018, the ruling dismissing the claim was handed down and the claimant ordered to pay the costs. The bankruptcy administrator filed an appeal for procedural defects in September 2018, which was challenged by FCC Cons- trucción S.A. in October 2018. 2. In April 2019, the Provincial Court of Vienna handed down a decision in which it upheld the procedural defect in the taking of testimony given by the claimant, referring the cases back to the courts with the indication that said testimony be taken and that a judgment be handed down in accordance with the result. In May 2019, FCC lodged an appeal against this ruling before the Supreme Court, which confirmed in April 2020 the need to return the proceedings to the Court of First Instance so that the testimony could be taken in person before the Judge of First Instance. This testimony has been scheduled for June 2021, unless the development of the pandemic caused by COVID-19 makes transportation and courtroom proceedings inadvisable. 3. In April 2017, a Group company, Asesoría Financiera y de Gestión, S.A. was notified of a suit in which the bankruptcy administrator made a joint and several claim against the former finance director at Alpine Bau GmbH and against Asesoría Financiera y de Gestión S.A. for the payment of 19 million euros for the alleged violation of corporate and bankruptcy law, considering that Alpine Bau GmbH, on making a deposit at Asesoría Financiera y de Gestión S.A., allegedly made payments charged against equity, considered to be a capital refund, and therefore prohibited by law The proceedings are still at the evidentiary phase, the court expert having issued his report according to which the deposit and the factoring transactions between subsidiary companies of AB and Asesoría Financiera y de Gestión S.A. would not have caused any damage to AB. This report is currently being examined by the parties. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 423 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 26 of 46 Also in April 2017, a former FCC employee and former executive at AH and AB was notified of a claim filed by the insolvency administrator of Alpine Bau GmbH in the Labour Court for 72 million euros. The claimant argues that this amount represents the damage to the bankruptcy estate caused by the alleged delay in initiating insolvency proceedings. A hypothetical con- viction of the administrator could in a remote scenario involve a subsidiary liability for the FCC Group, given that letters of indemnity were granted to certain executives with management and administration duties. In terms of these disputes, the FCC Group and its legal advisors do not believe there will be any future outflows of cash or prior to the issuance of the financial statements; therefore, no provisions have been set aside, as the Group believes that they represent contingent liabilities. Provision for third-party liability This item includes the risks arising for the company in the performance of its activities that are not included in other categories. These include the risks arising from international expansion, as well as tax risks. In the 2019 business year, the company applied provisions amounting to 20,186 thousand euros as part of the procedure initiated by the tax authorities for the recovery of state aid through the adjustment of the tax incentives applied by the FCC Group in previous years related to the tax amortisation of financial goodwill from the acquisitions of foreign shareholdings resulting from the indirect acquisition of shares (Note 16.g). Provisions for guarantees and contractual and legal obligations 13. Non-current and current payables The balance of “Non-current payables” and “Current payables” was as follows: 2020 Debt instruments and other marketable securities Bank borrowings Finance lease payables (Note 7.a) Other financial liabilities 2019 Debt instruments and other marketable securities Bank borrowings Finance lease payables (Note 7.a) Other financial liabilities Long-term Short-term — 20,000 19,215 1,584 40,799 — 61,667 24,650 1,952 88,269 302,300 155,228 4,774 2,041 464,343 300,000 25,528 10,429 6,668 342,625 This heading includes the provisions to cover the expenses arising from contractual and legal obligations of a non-environmental nature. Details of “Non-current payables”, by maturity, are as follows: Other provisions This heading includes the items not classified in the foregoing accounts, such as provisions to cover environmental risks and risks arising from its procedures as the insurer itself. Bank borrowings Finance lease payables Other financial liabilities Maturity 2022 20,000 4,902 640 25,542 2023 — 5,032 366 5,398 2024 — 7,341 366 7,707 2025 — 1,940 212 2,152 2026 and beyond — — — — Total 20,000 19,215 1,584 40,799 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 424 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 27 of 46 a) Bonds and other current marketable securities 14. Trade payables Fomento de Construcciones y Contratas, S.A has had a promissory note programme, Euro Com- mercial Paper Programme (ECP), registered since November 2018 on the Irish stock exchange (Euronext Dublin) for a maximum amount of 600 million euros as at December 2020, at a fixed interest rate and with a maximum maturity of one year, which allows issuance with maturities of between 1 and 364 days from the date of issue, in order to meet general financial needs. As at 31 December 2020 the outstanding amount is 302,300 thousand euros spread over diffe- rent maturities, from 2.5 to 6 months. In relation to the Spanish Accounting and Audit Institute (ICAC) Resolution dated 29 January 2016, enacted in compliance with the Second final provision of Law 31/2014, of 3 December, which amends the Third additional provision of Law 15/2010, of 5 July, stipulating measures to combat late payment in commercial transactions, the following table provides information on the average payment period to suppliers for commercial transactions arranged since the date of entry into force of Law 31/2014, i.e. 24 December 2014: b) Non-current and current bank borrowings All of the syndicated financing arranged in 2018, amounting to 1,200 million euros, was repaid early and in full on 5 December 2019. This repayment was largely financed with the funds obtained from the issuance of bonds in the investee company FCC Servicios Medioambiente Holding, S.A.U. (note 9.a) and funds from new bilateral facilities arranged. This enabled Fomento de Construcciones y Contratas, S.A. and the FCC Group to successfully complete the debt reduction and financial reorganisation process initiated six years ago, resulting in a much more robust and efficient capital structure, with amounts, maturities and financing costs appropriate to the nature of its business areas. At 31 December 2020, this epigraph mainly includes financing facilities in the form of credit fa- cilities and bilateral loans with a maximum limit of 648.5 million euros with a number of financial institutions. At 31 December 2020, the drawn down balance of this financing amounts to 175 million euros. Average payment period to suppliers Ratio of paid operations/transactions Ratio of operations/transactions pending payment Total payments made Total payments pending 2020 Days 56 55 64 Amount 59,408 6,453 2019 Days 50 54 31 Amount 49,496 8,915 15. Information on the nature and level of risk of financial instruments The concept of financial risk refers to changes in the financial instruments arranged by Fomento de Construcciones y Contratas, S.A., as a result of political, market and other factors and their impact on the financial statements. The risk management philosophy of the company and of FCC Group is consistent with their business strategy, and seeks to achieve maximum efficiency and solvency at all times. To this end, strict financial risk management and control criteria have been established, consisting of identifying, measuring, analysing and controlling the risks incurred in the Group’s operations. The risk policy has been integrated into the Group’s organisation in the appropriate manner. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 425 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 28 of 46 In view of the company’s activities and the transactions through which it carries on its business, it is currently exposed to the following financial risks: b) Foreign currency risk a) Capital risk To manage capital, the main objective of the company and of FCC Group is to reinforce its finan- cial-equity structure, in order to improve the balance between borrowed funds and shareholders’ equity, and the Group endeavours to reduce the cost of capital and, in turn, to preserve its solven- cy status, in order to continue managing its activities and to maximise shareholder value, not only at Group level, but also at the level of the parent, Fomento de Construcciones y Contratas, S.A. The essential base considered by the company to be capital is recognised under “Equity” in the balance sheet. Given the sector in which they operate, the company and the Group are not subject to external capital requirements, although this does not prevent the frequent monitoring of equity to guarantee a financial structure based on compliance with the prevailing regulations of the countries in which it operates, also analysing the capital structure of each of the subsidiary companies to enable an adequate distribution between debt and capital. Proof of the foregoing are the extensions made in 2014 for 1,000,000 thousand euros and in 2016 for 709,519 thousand euros, both aimed at strengthening the capital structure of the Company. In addition, in December 2019, two straight bonds were issued by the investee company FCC Servicios Medioambiente Holding, S.A.U. for 1,100 million euros. The resulting funds were mainly used for the voluntary early repayment of the syndicated financing of Fomento de Construcciones y Contratas, S.A., amounting to 1,200 million euros, arranged in September 2018. In Novem- ber 2018, the company registered a 300 million euro promissory notes programme, which was subsequently expanded to 600 million euros in March 2019 (Note 13.a). In 2020, new funding facilities were arranged in the form of credit facilities and bilateral loans (Note 13.b). These operations have enabled completion of the debt reduction and financial reorganisation process initiated five years ago and continuation of the policy of diversifying sources of funding. These measures have contributed to achieving a much more robust and efficient capital structure, with suitable volumes, terms and financing costs for the nature of the FCC Group. The General Finance Department, which is responsible for the management of financial risks, regularly reviews the debt-equity ratio and compliance with financing covenants, together with the capital structure of the subsidiary companies. A noteworthy consequence of FCC Group’s positioning in international markets is the exposu- re resulting from net positions in foreign currencies against the euro or in one foreign currency against another when the investment and financing of an activity cannot be arranged in the same currency. Although the benchmark currency in which the company and FCC Group mainly operate is the euro, they also hold financial assets and liabilities accounted for in currencies other than the euro. Exchange rate risk is primarily located in borrowings denominated in foreign currencies, invest- ments in international markets and payments received in currencies other than the euro. FCC Group’s general policy is to mitigate the adverse effect on its financial statements of ex- posure to foreign currencies as much as possible, with regard to both transactional and purely equity-related movements. The Group therefore manages the effect that foreign currency risk can have on the balance sheet and the income statement. c) Interest rate risk Fomento de Construcciones y Contratas, S.A. and FCC Group are exposed to interest rate fluc- tuations due to the fact that the Group’s financial policy aims to ensure that its current financial assets and debt are partially tied to variable interest rates. The benchmark interest rate for debt arranged with credit entities in euros is mainly the Euribor. Any increase in interest rates could give rise to an increase in financing costs associated with its borrowings at variable interest rates, and could also increase the cost of refinancing the bo- rrowings and the issue of new debt. In order to ensure a position that is in the best interests of the company and of FCC Group, an interest rate risk management policy is actively implemented, with on-going monitoring of markets and assuming different positions depending primarily on the asset financed. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 426 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 29 of 46 The table below summarises the effect on the Company’s income statement of increases in the interest rate curve with regard to gross debt: e) Liquidity risk Impact on profit or loss d) Solvency risk +25 pb 575 +50 pb 1.150 +100 pb 2.299 The most suitable ratio for measuring solvency and debt repayment ability is Net debt/Ebitda. The following table shows the development of the net financial indebtedness shown in the ac- companying balance sheet. Bank borrowings (note 13) Debt instruments and other marketable securities (Note 13) Financial payables to Group and associated companies (notes 9.c and 9.d) Other interest-bearing financial debt (note 13) Financial loans with Group and associated companies (note 9.b) Other current financial assets (note 8.b) Treasury and cash equivalents 2020 2019 175,228 302,300 886,640 25,679 (120,759) (1,166) (8,227) 87,194 300,000 971,965 41,415 (29,086) (1,172) (10,463) 1,259,695 1,359,853 Fomento de Construcciones y Contratas, S.A. performs its business in industrial sectors requiring a high level of financing, having so far obtained adequate financing for its operations. However, the company cannot guarantee that these circumstances relating to obtaining financing will con- tinue in the future. The ability of the company and of FCC Group to obtain new financing lines depends on many factors, a lot of which are beyond their control, such as general economic conditions, the availa- bility of funds in financial institutions and the monetary policy of the markets in which they opera- te. Adverse effects in debt and capital markets may hinder or prevent adequate financing being available to develop the company’s activities Historically, FCC Group has always been able to renew its loan arrangements, and it expects to continue doing so in the coming twelve months. However, FCC Group’s ability to renew loan arrangements depends on various factors, many of which are outside the control of FCC Group, such as general economic conditions, the availability of funds for loans from private investors and financial institutions, and the monetary policy of the markets in which it operates. Negative conditions in debt markets could hinder or prevent FCC Group’s capacity to renew its financing. Accordingly, FCC Group cannot guarantee its ability to renew its loan arrangements on econo- mically attractive terms. The inability to renew such loans or to ensure adequate financing under acceptable terms may have a negative impact on the liquidity of Fomento de Construcciones y Contratas, S.A. and its Group companies, and on its ability to meet its working capital needs. To adequately manage this risk, the Group performs exhaustive monitoring of the repayment da- tes of all loans and credit facilities of each Group company, in order to conclude all renewals in the best market conditions sufficiently in advance, analysing the suitability of the funding and studying alternatives if the conditions are unfavourable on a case-by-case basis. The Group is also present in several markets, which facilitates obtaining credit facilities and mitigating liquidity risk. Notes 2 and 13 provide additional disclosures in relation to the Group’s liquidity position. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 427 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 30 of 46 f) Concentration risk g) COVID-19 risk The risk arising from the concentration of lending transactions with common characteristics is distributed as follows: – Funding sources: in order to diversify this risk, the company and FCC Group work with a large number of Spanish and foreign financial entities to obtain funds. – Markets/geography (domestic, foreign): The Company and the FCC Group have a significant position in the domestic market, so the debt is mainly concentrated in euros. – Products: the company uses various financial products, such as loans, credit facilities, pro- missory notes, syndicated loans, assignments and discounting. FCC Group’s strategic planning process identifies the objectives to be attained in each of the areas of activity, based on the improvements to be implemented, the market opportunities and the level of risk deemed acceptable. This process serves as a base for preparing operating plans that specify the goals to be reached each business year. Credit risk The provision of services or the acceptance of client engagements, whose financial solvency was not guaranteed at the acceptance date, situations not known or unable to be assessed and unforeseen circumstances arising during the provision of the service or the execution of the enga- gement that could affect the client’s financial position could generate a payment risk with respect to the amounts owed. The company and FCC Group request commercial reports and assess the financial solvency of clients before doing business and perform on-going monitoring, and have put in place a procedu- re to be adopted in the event of insolvency. In the case of public-sector clients, the Group does not accept engagements that do not have an assigned budget and financial approval. Offers that exceed a certain payment period must be authorised by the Finance Division. Likewise, on-going monitoring is performed of debt delinquency in various managing committees. With regard to credit ratings, the Company and the FCC Group apply its best judgement to impair financial assets on which it expects to incur credit losses over their entire lives. The Group regu- larly analyses changes in the public ratings of the entities to which it is exposed. The COVID-19 pandemic has had a series of impacts on the financial statements of the Company and the FCC Group, both in terms of operations and liquidity, which has also led to the updating of the main estimates affecting them. In operational terms, the impact of the COVID-19 crisis on the FCC Group has been limited, given that the Water and Environment areas, which represent the most substantial part of the Group’s revenues and earnings, include activities that the various national authorities have con- sidered essential without significant interruptions in activity or loss of profitability for most of the assets. In relation to other activities, such as Construction, which has a smaller weighting in the Group’s total activity, the pandemic has led to the temporary interruption of part of the backlog of construction contracts in progress as well as, where applicable, some inefficiencies in the supply chain, circumstances that inevitably have an impact on project costs as well as on project delivery times. Measures have been taken to adapt costs to the new levels of activity and to date virtually all activity has resumed, so no significant non-provisioned impairment losses are expected. The Cement division performed well, especially in the second half of the business year, with a certain slowdown in growth, but contributing positive EBITDA. In terms of liquidity, new financing lines have been closed, securing its financial position against possible liquidity tensions. Notes 2 and 13 incorporate additional disclosures on this issue. The Company and the FCC Group, in light of the situation created by the COVID-19 crisis, have carried out an analysis of the main estimates affecting the individual and consolidated financial statements. In relation to the estimates affecting the individual financial statements (note 4.m), the notes to these financial statements detail the effects in terms of impairments and provisions that the COVID-19 crisis has had on the financial information for the 2020 business year. Taking into account the limited impact, the measures to secure the assets undertaken as well as the existing liquidity gaps, these individual financial statements have been prepared on a going concern basis, since the continuity of the company is not in doubt. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 31 of 46 428 16. Deferred taxes and tax matters a) Balances with public administrations and deferred taxes The management of Fomento de Construcciones y Contratas, S.A., the parent of the Tax Group 18/89 (Note 16.h), has assessed the recoverability of deferred tax assets by estimating future tax bases relating to the aforementioned Group, concluding that no doubts exist with respect to their recovery in a period not exceeding ten years. The projections used are based on the Group’s estimated “Consolidated accounting profit for the year before tax from continuing operations”, adjusting for the related permanent and temporary differences expected to arise each year. The projections show increased profit, as a result of continuing the measures taken to reduce costs and the reinforcement of the Group’s financial structure, which have enabled a reduction in finan- cial debt and lower interest rates, resulting in a significant reduction in finance costs. a.1) Tax receivables Non-current Deferred tax assets Current Current tax assets Other receivables from the public administrations 2020 2019 a.2) Payable balances 54,670 54,670 77,946 674 78,620 Non-current Deferred tax liabilities Current Other government/public administration credits/loans: Withholdings VAT and other indirect taxes Social Security bodies Other concepts 2020 2019 385 385 251 138 330 1 720 2,642 2,642 249 230 851 2 1,332 100,919 100,919 65,385 873 66,258 2019 63,180 17,228 18,978 1,533 100,919 The breakdown of the “Deferred tax assets” heading is as follows: Capitalisation of tax loss carryforwards Non-deductible provisions Non-deductible finance costs Rest 2020 48,719 4,432 — 1,519 54,670 The “Capitalisation of tax loss carryforwards” item mainly arises from the state aid recovery pro- cedure mentioned in section g of this note. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 429 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 32 of 46 a.3) Changes in deferred tax assets and liabilities b) Reconciliation of accounting profit and taxable income Movements in deferred tax assets and liabilities in the 2020 and 2019 business years were as follows: The reconciliation between accounting profit and the taxable income for corporate income tax purposes is as follows: Taxable temporary differences Balance at 31/12/18 Originating in previous business years Other adjustments Balance at 31.12.19 Arising in prior years (note 16.b) Other adjustments Balance at 31.12.20 Temporary differences arising in the balance sheet Balance at 31/12/18 Other adjustments Balance at 31.12.19 Other adjustments Balance at 31.12.20 Deferred tax assets Deferred tax liabilities 72,160 (17,230) 45,989 100,919 (24,827) (21,422) 54,670 271 (271) – – – 27,620 – (24,978) 2,642 – (2,257) 385 103 (103) – – – Total balance at 31.12.20 54,670 385 “Other adjustments” in the 2020 business year mainly include the allocation to FCC Construcción, S.A. of the part of the tax credit corresponding to this company that arose in 2019 as a result of the events and circumstances described in section g) of this note. Accounting profit/ (loss) before tax for the year 2020 2019 258,803 231,026 Permanent differences 76,002 (341,628) (265,626) 60,116 (342,420) (282,304) Additions Reductions Additions Reductions Adjusted accounting profit/(loss) Temporary differences – Arising in prior years (note 16.a) Tax base (taxable profit/(loss) (6,823) (51,278) – (99,306) (99,306) – (68,920) (68,920) (106,129) (120,198) Noteworthy in the table above were the permanent differences relating to both business years. which basically arise from: – Impairment on investments of the Tax Group 18/89 and at the remaining investees (note 9). – The exemption to avoid the double taxation of dividends. Corporation Tax Law 27/2014, of 27 November, applicable from 2015, eliminated the tax credit for double taxation of dividends, replacing it with the aforementioned exemption (note 19.a). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 33 of 46 c) Tax recognised in equity f) Tax loss carryforwards and unused tax credits The taxes recognised in equity at year-end 2020 and 2019 were not significant. At year-end, the company had tax loss carryforwards from prior years pending offset amounting to 306,788 thousand euros, as a member of Tax Group 18/89, detailed as follows, by year: 430 d) Reconciliation of accounting profit to the corporate income tax expense The reconciliation of accounting profit to the corporate income tax expense was as follows: Adjusted accounting profit/(loss) Corporate income tax charge Other adjustments Corporate income tax expense/(income) 2020 (6,823) (1,706) 9,685 7,979 2019 (51,278) (12,820) 2,393 (10,427) “Other adjustments” in the 2020 business year basically include the adjustment made to reverse non-activated deferred tax assets in prior years, together with the non-capitalisation of prepaid taxes and negative taxable amounts in the business year. e) Breakdown of the corporate income tax expense Deductions Reinvestment R+D+I Activities The breakdown of Corporate Income Tax expense for the 2020 and 2019 business years was as follows: Internal double taxation relief Rest Current tax Deferred tax Total tax expense 2020 2019 (21,582) 29,561 7,979 (22,573) 12,146 (10,427) 2013 2014 2016 2019 Total Amount 194,998 47,860 58,389 5,541 306,788 The company has only recognised a deferred tax asset for the tax loss carryforwards from 2013 (section g) of this same note). The company also has non-activated unused tax credits pending application from previous years amounting to 8,728 thousand euros. The breakdown is as follows: Application deadline 15 years 18 years Indefinite 15 years Amount 4,668 2,197 770 1,093 8,728 The company also has a potential uncapitalised tax asset, totalling 333 million euros, correspon- ding to the impairment test performed in prior years on its holding in Azincourt, S.L., the holding company for the shares of the British company FCC Environment (UK). The impairment, which was not deemed to be deductible from the taxable income for corporate income tax purposes, amounted to 1,333 million euros. This amount could be deducted for tax purposes in the future, in the event that Azincourt Investment, S.L. is wound up. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 431 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 34 of 46 g) Financial years pending verification and inspection actions Fomento de Construcciones y Contratas, S.A. has all the business years not yet statute-barred open for review by the tax authorities for the taxes applicable to them. In June 2020, the tax au- thorities notified the start of corporate income tax audits of the tax group headed by Fomento de Construcciones y Contratas, S.A., 2015 to 2017, the VAT corresponding to the period from June 2016 to December 2017 of Fomento de Construcciones y Contratas, S.A., FCC Construcción, S.A., FCC Aqualia, S.A., FCC Industrial e Infraestructuras Energéticas, S.A. and Cementos Port- land Valderrivas, S.A., as well as withholdings/payments on account for employment income and income from professional services for the period from June 2016 to December 2017 of Fomento de Construcciones y Contratas, S.A., FCC Construcción, S.A. and FCC Aqualia, S.A. and for the period from January to December 2017 for Cementos Portland Valderrivas, S.A. In relation to the business years and taxes open to inspection, contingent tax liabilities could arise, the amount of which cannot be objectively quantified at present as the proceedings are at a very early stage. However, Group management considers that the liabilities resulting from this situation would not have a significant effect on the Group’s equity. In May 2019, the tax authorities completed a procedure to recover state aid, arising from Euro- pean Commission Decision 2015/314/EU, of 15 October 2014, relating to the tax amortisation of financial goodwill from the indirect acquisition of foreign holdings. This procedure aims to adjust the tax incentives applied by the company and FCC Group in prior business years as a result of the acquisition of the Alpine, FCC Environment (formerly the WRG Group) and FCC CEE (formerly the ASA Group) Groups. The tax authorities filed a claim in 2019 for a total of 111 million euros, that included 19 million euros in interest, from Fomento de Construcciones y Contratas, S.A., parent company of the FCC Group (Note 18). Of the remaining 63 million euros, negative taxable amounts arising from the adjustment made by the tax authorities were capitalised (49 million euros in Fomento de Construcciones y Contratas, S.A. and the remainder in the Group company FCC Construcción, S.A. following the allocation made in 2020 as indicated in section a) of this note), deferred tax liabilities were reversed amounting to 9 million euros and a provision of 20 million euros was applied at the end of 2018 (note 12). The company has settled this tax debt but has also filed an economic-administrative appeal against it, which is pending resolution. The legal advisors of Fomento de Construcciones y Contratas, S.A. consider it likely that the amounts already paid in this recovery procedure will be returned. In addition, within the framework of this procedure and as indicated above, the tax authorities have recognised tax credits in favour of the FCC Group amounting to 63.2 million euros (see section f) of this note). In relation to the rest of the business years and taxes open for review, as a result of the criteria that the tax authorities may adopt in the interpretation of the tax regulations, the outcome of the inspections currently under way, or those that may be performed in the future for the years open for review, could generate contingent tax liabilities whose amount cannot currently be quantified objectively. However, Group management considers that the liabilities resulting from this situation would not have a significant effect on the Group’s equity. h) Tax Group In accordance with file 18/89, as the parent, Fomento de Construcciones y Contratas, S.A. files consolidated income tax returns, including all the Group companies that comply with the require- ments of the tax legislation. i) Other tax information The following table includes the details of the “Corporation tax refunded/(paid)” heading in the statement of cash flows for the 2020 and 2019 business years. Collections from/payments to Group companies for prior years' corporation tax charge and corporation tax prepayments in the year Prior years' corporation tax Prepayments Recovery procedure for state aid Withholdings and other 2020 2019 44,448 25,183 29,558 (40,766) — (209) 33,031 32,277 (38,008) (92,034) (67) (72,649) Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 432 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 35 of 46 17. Guarantee commitments to third parties and other contingent liabilities At 31 December 2020, Fomento de Construcciones y Contratas, S.A. provided guarantees visà- vis public bodies and private clients, mainly to secure the proper performance of the services under contracts in the United States of America, for 20,924 thousand euros (31,588 thousand euros at 31 December 2019). The decrease in the business year is mainly due to the transfer of part of the guarantees for certain contracts transferred to the American subsidiary companies (notes 5 and 6). Also, at year-end, the company had provided securities and guarantees to third parties with res- pect to certain Group companies, totalling 83,816 thousand euros (237,148 thousand euros at 31 December 2019), essentially companies belonging to the Environmental Services division. The decrease in the business year is due to the transfer of guarantees to companies in the aforemen- tioned activity, as a result of the spinoff process that took place in 2019 and that is discussed in note 1. Fomento de Construcciones y Contratas, S.A. has also appeared as the respondent in some lawsuits. However, the company’s directors consider that the resulting liabilities would not have a material effect on the company’s equity. The possible financial effects of the main contingent liabilities derived from the bankruptcy of the Alpine subgroup would be the cash outflows indicated in the respective lawsuits detailed in Note 12 of this report, a risk not considered likely. In addition to the disputes related with Alpine, on 15 January 2015 the Competition Chamber of the Spanish National Markets and Competition Commission handed down a ruling with respect to proceedings S/0429/12, for an alleged breach of article 1 of Law 15/2007 on the Defence of Competition. This ruling affects various companies and associations in the waste sector, including Fomento de Construcciones y Contratas, S.A. and other companies that also belong to FCC Group. The Group has filed an administrative appeal before the Spanish National Appellate Court. At the end of January 2018, notification was received of the decisions handed down by the Spa- nish National Appellate Court, upholding the administrative appeals filed by Gestión y Valorización Integral del Centro S.L. and BETEARTE, both FCC Group investees, against the CNMV ruling imposing various penalties for alleged collusive practices. In both decisions, the argument put forward by these companies that no single, on-going breach existed was upheld. In April 2018, we were notified of the agreement initiating new legal proceedings for the same conduct inves- tigated in the previous proceedings forming the scope of the upholding decision, commencing an 18-month examining period. In September 2019, an agreement was issued suspending these legal proceedings until the National Court’s decision on appeals filed by other companies that had been penalised. In April 2019, the National Court issued a judgment in relation to the price of EUR 6 per share applied in the takeover bid made in 2017 by Fomento de Construcciones y Contratas, S.A. for Cementos Portland Valderrivas, S.A., with the National Securities Market Commission (CNMV) asking for the price to be recalculated. The aforementioned ruling was appealed by the Company and also by the CNMV, as it did not agree with the outcome. In November 2020, the Supreme Court ruled in favour of Fomento de Construcciones y Contratas, S.A. and the CNMV, overturning the ruling of the Spanish National Court and validating the takeover bid procedure and the price set. As a result of an internal investigation in May 2019 in application of its compliance policy and regulations, the Group has become aware of the existence of payments between 2010 and 2014 initially estimated at 82 million dollars that might not be justified and may therefore be illegal. These acts were uncovered as a result of application of the procedures in the FCC Group’s compliance rules. The company has informed prosecutors in Spain and Panama about these acts, and has been providing the utmost cooperation since then to clarify what happened, applying the “zero tolerance” principle for corruption that permeates the entire FCC Compliance System. In the context of this cooperation, on 29 October 2019, the National Court’s Central Court of Instruction No. 2 resolved to investigate FCC Construcción, S.A. and two of its subsidiary com- panies, FCC Construcción América, S.A. and Construcciones Hospitalarias, S.A. in the context of Preliminary Measures 34/2017. Proceedings are still ongoing and it is not yet possible to de- termine at this stage whether charges will eventually be filed against these companies, and, if so, what their scope will be. These actions may therefore have a financial impact, although we do not have the information needed to qualify this impact. Additionally, the 2018 agreement for the sale of the FCC Aqualia holding envisages certain varia- ble prices that depend on the resolution of contingent procedures. Accordingly, the company did not recognise any assets due to their contingent nature, nor has it recognised liabilities for claims that may arise against their interests, since it was not considered probable that material losses would occur and given their insignificant amount with respect to the transaction price. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 36 of 46 433 This sale led to the formation of the companies FCC Topco, s.a.r.l. and its subsidiary company FCC Midco, S.A., with the latter having received securities representing 10% of the shares of FCC Aqualia, which is owned by the company. These shares are pledged to secure certain obligations to FCC Aqualia, primarily the repayment of the 806,479 thousand euro loan that the latter exten- ded to Fomento de Construcciones y Contratas, S.A. (note 9.c). At the date of authorisation for issue of these financial statements, the company believes that there is no risk that these guaran- tees will be enforced. The company is involved in other lawsuits and legal procedures aside from those already des- cribed that it considers will not generate significant cash outflows. The company’s stake in joint operations managed through joint ventures, joint ownership, partici- pation accounts and other similar arrangements means that participants share joint and several liability for the activities performed. Details of “Staff expenses” are shown below: Wages and salaries Labour costs 2020 28,051 5,851 33,902 2019 29,840 3,010 32,850 “Finance income from marketable securities and other financial instruments of Group companies and associates” includes the accrued interest arising from the financing granted to investees (Note 9), including most notably: The company has not obtained any significant assets as a result of the guarantees enforced in its favour or released. FCC Servicios Medio Ambiente Holding S.A.U. 18. Revenue and expenses FCC Versia, S.A.U. Azincourt Investments, S.L.U. FCC Medio Ambiente, S.A. Grupo FCC-PFI Holding Enviropower Investments, Limited In addition to sales and services, revenue includes dividends and accrued interest arising from finance extended to investees (Note 2). Rest 2020 6,898 450 — — — — 410 7,758 2019 7,186 793 4,540 3,965 2,526 1,957 918 21,885 Of the total for “Sales and services”, 17,388 thousand euros corresponds to contracts for envi- ronmental services located abroad, specifically in the USA (37,159 thousand euros at 31 Decem- ber 2019), the contracts for which could not be transferred in the spinoff as their legal ownership was retained by Fomento de Construcciones y Contratas, S.A. (note 1). With regard to these contracts, on 25 September 2019, the company and FCC Medio Ambiente, S.A. signed an agreement for the assignment of economic rights and obligations to FCC MA, which was novated on 1 October. This agreement will remain in force until the effective transfer of the contracts once authorisations are obtained from the granting authorities, which occurred in 2020 (notes 5 and 6). The rest of the amount classified as sales and services relate to the invoicing of management support services provided to other Group companies. Additionally, in 2019 “Financial expenses for loans with third parties” includes 18,837 thousand euros in delay payment surcharges related to the state aid recovery procedure (Note 16.g). Finally, in 2019, there was a loss of 8,280 thousand euros under the epigraph “Change in the fair value of financial instruments” due to an adjustment to the sale price of the company FCC Global Insurance Services, S.A. in 2009. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 434 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 37 of 46 19. Transactions and balances with related parties b) Balances with related parties The detail of the balances with related parties at year-end was as follows: a) Transactions with related parties 2020 Details of transactions with related parties in the 2020 and 2019 business years are as follows: Current investments (note 9.b) 2020 Provision of services Receipt of services Dividends Financial expenses Financial income 2019 Provision of services Receipt of services Dividends Financial expenses Financial income (wholly owned) Group Companies Joint ventures Associates Total 93,676 11,721 226,941 29,319 7,758 83,218 14,570 53,761 31,085 21,885 304 — 26,410 — — 311 — 9,368 5 — 137 157 1,002 — — 83 162 1,405 — — 94,117 11,878 254,353 29,319 7,758 83,612 14,732 64,534 31,090 21,885 In addition to the above, during the 2020 business year the Company has sold certain intangible assets and property, plant and equipment to various subsidiary companies of the FCC Group located in the USA, as indicated in notes 5 and 6. Long-term financial investments (note 9.a) Current payables (note 9.c) Non-current payables (note 9.d) Trade receivables Trade payables 2019 Current investments (note 9.b) Long-term financial investments (note 9.a) Current payables (note 9.c) Non-current payables (note 9.d) Trade receivables Trade payables (wholly owned) Group Companies Joint ventures Associates Total 123,374 3,294,548 127,628 806,479 17,341 2,736 42,968 2,779,150 188,685 806,485 33,854 3,391 26,411 16,463 — 149,785 4,768 3,315,779 2 — 50 — — 1 — 28 — 127,631 806,479 17,419 2,736 — 42,968 17,075 262,789 3,059,014 2 — 52 1 — — 19 1 188,687 806,485 33,925 3,393 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 435 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 38 of 46 The details of trade receivables from and trade payables to Group companies and associates are as follows: 2020-2019 Company Receivables Payable Receivables Payable 2020 2019 FCC Medio Ambiente, S.A. FCC Aqualia, S.A. Hidrotec Tecnología del Agua, S.L.U. Fedemes, S.L.U. FCC Construcción, S.A. FCC Environmental Services (USA) Llc. Rest 10,466 3,243 1,382 614 181 — 1,533 17,419 394 91 3 725 27 1,004 492 2,736 10,834 1,987 3,149 1,840 1,235 15,667 — 1,200 33,925 188 5 912 105 — 196 3,393 c) Transactions with directors of the company and senior executives of the Group The directors of Fomento de Construcciones y Contratas, S.A. accrued the following amounts at the company, in thousands of euros: Fixed remuneration Other payments 2020 525 1,147 1,672 2019 525 1,041 1,566 The senior executives listed below, who are not members of the Board of Directors, received total remuneration of 1,832 thousand euros (1,819 thousand euros in the 2019 business years). Marcos Bada Gutierrez Felipe B. García Pérez Miguel A. Martínez Parra Félix Parra Mediavilla General manager of Internal Audit General Secretary Managing Director of Administration and Finance General Manager of FCC Aqualia The company had previously taken out insurance and paid a premium to settle contingencies related to the death, permanent employment disability, retirement bonuses and other items for certain executive directors and officers of Fomento de Construcciones y Contratas, S.A. (Note 4.l). No new contributions were made in the form of premiums for this insurance in the 2020 and 2019 business years, while in the 2019 business year, 3,459 thousand euros in revenue was received in the form of rebates on previously paid premiums. Under article 38.5 of the Articles of Association, the company has taken out a third-party liability insurance policy covering directors and executives. This is a collective policy covering all the Group’s executives, with a premium of 1,474 thousand euros being paid in 2020. The company has taken out an accident insurance policy for its directors, encompassing both the exercise of their functions and their private life, comprising coverage in the event of death, total and absolute permanent incapacity and severe disability. The premium paid in the business year amounted to 6 thousand euros. Except as indicated in the preceding paragraphs, no other remuneration, advance payments, loans or guarantees were granted to the Board of Directors, nor were any obligations assumed in terms of pensions and life insurance policies by current and former members of the Board of Directors. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 39 of 46 Details of Board members who hold posts at companies in which Fomento de Construcciones y Contratas, S.A. has a direct or indirect ownership interest were as follows: Name or corporate name of the director Company name of the Group entity EAC INVERSIONES CORPORATIVAS, S.L. CEMENTOS PORTLAND VALDERRIVAS, S.A. Position CHAIRMAN Name or corporate name of the director Company name of the Group entity Position MR ANTONIO GÓMEZ GARCÍA FCC AMERICAS, S.A. DE CV ALTERNATE DIRECTOR 436 REALIA BUSINESS, S.A. DIRECTOR MR PABLO COLIO ABRIL FCC AQUALIA, S.A. INMOBILIARIA AEG, S.A. DE C.V. CEMENTOS PORTLAND VALDERRIVAS, S.A. DIRECTOR MR GERARDO KURI KAUFMANN CEMENTOS PORTLAND VALDERRIVAS, S.A. CHIEF EXECUTIVE OFFICER REALIA BUSINESS, S.A. CHIEF EXECUTIVE OFFICER MR JUAN RODRÍGUEZ TORRES CEMENTOS PORTLAND VALDERRIVAS, S.A. DIRECTOR FCC AQUALIA, S.A. DIRECTOR REALIA BUSINESS, S.A. NON-EXECUTIVE CHAIRMAN MR ÁLVARO VÁZQUEZ DE LAPUERTA CEMENTOS PORTLAND VALDERRIVAS, S.A. DIRECTOR MR ALEJANDRO ABOUMRAD GONZÁLEZ CEMENTOS PORTLAND VALDERRIVAS, S.A. FCC AQUALIA, S.A. FCC SERVICIOS MEDIOAMBIENTALES HOLDING, S.A.U. REPRESENTATIVE OF THE DIRECTOR INMOBILIARIA AEG, SA DE CV DIRECTOR AND CHAIRMAN OF THE BOARD OF DIRECTORS CHAIRMAN BOARD MEMBER, MEMBER OF THE AUDIT AND CONTROL COMMITTEE, MEMBER OF THE INVESTMENT COMMITTEE AND MEMBER OF THE REGULATORY COMPLIANCE COMMITTEE FCC CONSTRUCCIÓN, S.A. CHAIRMAN FCC ENVIRONMENT (UK) LIMITED FCC MEDIO AMBIENTE REINO UNIDO, S.L.U. DIRECTOR DEPUTY CHAIRMAN FCC MEDIO AMBIENTE, S.A. CHAIRMAN FCC SERVICIOS MEDIO AMBIENTE HOLDING, S.A.U. DEPUTY CHAIRMAN FCC CONCESIONES, S.A.U. CHAIRMAN GUZMAN ENERGY O&M, S.L. CHAIRMAN FCC AUSTRIA ABFALL SERVICE AG MEMBER OF THE SUPERVISORY BOARD These directors hold posts or exercise functions and/or hold ownership interests of less than 0.01% in any case in other FCC Group companies, in which Fomento de Construcciones y Con- tratas, S.A. holds the majority of the voting rights, directly or indirectly. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 437 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 40 of 46 d) Situations of conflicts of interest No direct or indirect conflicts of interest arose in respect of the company’s activities, under the applicable regulations (article 229 of the Spanish Limited Liability Companies Law), without preju- dice to the company’s transactions with its related parties set forth in these notes to the financial statements or, where appropriate, agreements related to remuneration matters or appointments. In this regard, when specific conflicts of interest have taken place with certain directors, they have been resolved in accordance with the procedure stipulated in the Board of Directors’ Rules, with the directors involved abstaining from the corresponding debates and votes. e) Transactions with related parties During the business year, a number of transactions took place involving companies in which shareholders of Fomento de Construcciones y Contratas, S.A. own equity interests, the most significant of which were as follows: – Execution of construction and service contracts by FCC Construcción, S.A. and FCC Indus- trial e Infraestructuras Energéticas, S.A.U. relating to companies in the Realia subgroup, as follows: Corporate name of the significant shareholder Corporate name of the Group company Realia Business, S.A. FCC Construcción, S.A. Realia Patrimonio, S.L.U. FCC Industrial e Infraestructuras Energéticas S.A.U. Valaise S.L.U. FCC Construcción, S.A. 2020 23,911 1,397 — 25,308 2019 12,373 1,209 4,899 18,481 – Agreements between FC y C, S.L. Unipersonal and Realia Business, S.A. for the management and marketing of three real estate developments: Plot “10B” in Badalona, Barcelona, for the construction of 141 collective dwellings available for resale and parking spaces; Plot “RCL 1B” in Tres Cantos, Madrid, for the construction of 85 collective dwellings available for resale and parking spaces: Plot “RLU 2ª” in Tres Cantos, Madrid, for the construction of 30 single-family homes, for a total amount of 1,954 thousand euros. Signing between FC y C, S.L. Uniper- sonal and Realia Business, S.A. of the following exclusive marketing contracts: Plot RU2A in Tres Cantos (marketing of 30 single-family dwellings), Plot RC1B in Tres Cantos (marketing of 85 dwellings available for resale), Plot 10 in Badalona (marketing of 141 collective dwellings available for resale), Plot in Arroyo Fresno, Madrid (marketing of 144 collective dwellings avai- lable for resale), Plot in Arroyo Fresno, Madrid (marketing of 42 single-family dwellings), Plot in El Berzal (marketing of 40 single-family dwellings). – Service provision agreements between FCC Industrial e Infraestructuras Energéticas, S.A.U. and Realia Patrimonio, S.L.U. for annual preventive maintenance of generator sets in buil- dings: Offices on Calle Acanto 22 and 4 units in office buildings at Avda. Del Sur del Aero- puerto de Barajas, 28, 30, 32 and 34 in Madrid (Eisenhower Business Center in Madrid) for an amount of 3 thousand euros, basic annual preventive maintenance of the equipment of the Uninterruptible Power Supply of the buildings: Offices at Paseo de la Castellana 216 in Madrid; Offices on Calle Acanto 22, and 2 units in office buildings on Avda. Del Sur del Aero- puerto de Barajas, 28 and 34, Madrid, for an amount of 2 thousand euros. – Service provision agreement between Fomento de Construcciones y Contratas, S.A. with Vilafulder Corporate Group, S.L.U. for a total annual amount of 338 thousand euros. – Service provision contract between Cementos Portland Valderrivas, S.A. and Mr Gerardo Kuri Kaufmann, for an amount of 175 thousand euros. – In the framework of the debt refinancing associated with the Spanish activities of the Cemen- tos Portland Valderrivas Group in 2016, a subordinated loan agreement was entered into with Banco Inbursa, S.A., Institución de Banca Múltiple, with carrying amount at 31 December 2020 of 69,857 thousand euros. The finance costs incurred in the business year totalled 2,076 thousand euros. – Financing provided by the financial group Inbursa to FCC Construcción, S.A. for line 2 of the Panama underground, through the acquisition of construction certificates, amounting to 3,818 thousand euros. Furthermore, other transactions are carried out under market conditions, mainly telephone and internet access services, with parties related to the majority shareholder for a non-significant amount. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 438 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 41 of 46 f) Mechanisms established to detect, determine and resolve possible conflicts of interests between the parent and/or its Group and its directors, executives or significant shareholders 21. Other information FCC Group has established specific mechanisms to determine and resolve any possible conflicts of interest between the Group companies and their directors, executives and significant sharehol- ders, as indicated in article 20 and thereafter of the Board of Directors’ Rules. a) Personnel The average number of people employed by the company in the 2020 and 2019 business years was as follows: 20. Environmental information As indicated in Note 1 to these financial statements, Fomento de Construcciones y Contratas, S.A. is the parent of FCC Group, which carries out diverse activities that, due to their characteris- tics, specifically focus on controlling environmental impact. These aspects are described in detail in the “Corporate Social Responsibility” document published annually by the Group through va- rious channels, including the www.fcc.es website. Readers are advised to refer to this information as the best representation of this Note. Directors and managers Managers Technicians Clerical Staff Sundry trades 2020 2019 62 36 140 53 4 295 62 35 131 56 3 287 The table below details the average number of people with a disability of 33% or more in 2020 and 2019, pursuant to Royal Decree 602/2016, of 2 December, which introduced new disclosure requirements for companies’ financial statements: Technicians Clerical Staff Sundry trades 2020 2019 2 2 1 5 2 1 — 3 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 42 of 46 The numbers of employees, directors and senior executives at the company at 31 December 2020 and 2019, broken down by gender, were as follows: b) Remuneration to auditors 439 Men Women Total The fees incurred for auditing and other professional services provided to the company by the principal auditor, Deloitte, S.L., and other participating auditors in 2020 and 2019 are as follows: 2020 Directors Senior executives Directors and managers Managers Technicians Clerical Staff Sundry trades 2019 Directors Senior executives Directors and managers Managers Technicians Clerical Staff Sundry trades 10 4 37 22 65 16 2 4 — 17 11 63 36 2 156 133 14 4 54 33 128 52 4 289 Men Women Total 10 4 39 23 71 18 3 4 — 17 13 71 33 — 168 138 14 4 56 36 142 51 3 306 2020 2019 Principle auditor Other auditors Total Principle auditor Other auditors Total Audit services Other assurance services Total audit and related services Tax advisory services Other services Total professional services TOTAL 252 22 274 – – – 274 – – – 8 143 151 151 252 22 274 8– 143 151 425 181 359 540 – – – – 81 81 – 519 519 181 440 621 – 519 519 540 600 1,140 22. Subsequent events As of the date of preparation of these financial statements, no matters of a nature that could mo- dify them or be the subject of additional information to that included in them had been disclosed. The average number of employees, directors and senior executives of the company, distributed by men and women, was as shown below in the 2020 and 2019 business years: Men Women 2020 2019 170 137 307 162 137 299 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 43 of 46 440 Annex I Group companies Company Assets Impairment Holding % Book value Asesoría Financiera y de Gestión, S.A.U. Federico Salmón, 13 - Madrid -Holding company- Bvefdomintaena Beteiligungsverwaltung GmbH Nottendorfer, 11 – Viena (Austria) -Instrumental- Cementos Portland Valderrivas, S.A. Dormilatería, 72 – Pamplona -Cement- Egypt Environment Services SAE El Cairo – Egipto -Urban sanitation- FCC Aqualia, S.A. Federico Salmón, 13 – Madrid -Water management- FCC Concesiones, S.A.U. Avenida Camino de Santiago, 40 – Madrid -Holding company- FCC Concesiones de Infraestructuras, S.L.U. Avenida Camino de Santiago, 40 – Madrid -Concessions- FCC Construcción, S.A. Balmes, 36 – Barcelona -Construction- FCC Servicios Medioambiente Holding, S.A.U. Federico Salmón.13 - Madrid -Environmental Services- 14,010 – 100 185 185 100 1,016,869 164,977 99.21 7,760 3,277 91,115 61 3 – 2 – dir. 97.00 indt. 3.00 dir. 41.00 indt. 10.00 100 100 1,752,075 911,525 100 Capital Reserves 6,843 12,749 35 (1,584) Profit/(loss) for the 2020 business year Other net equity line items Operating profit or loss Continuing operations – – 526 (3,831) – (396) 233,955 359,302 14,290 38,223 486 Dividends received – – – 805 36,400 (Leg)(*) 3,942 – (5,211) (Leg)(*) (3,146) (Leg)(*) 145,000 325,871 8,289 66,570 112,365 – – – – 3 3 __ (1) 220,000 396,180 – – – – (2) (2) 1,819 1,371 18,618 (12,661) (508) 170,034 300,964 – 100 160,000 10,000 39,892 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 441 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 44 of 46 Company FCC TopCo S.à.r.l 48, Boulevard Grande-Duchesse Charlotte Luxembourg -Holding company- FCC Versia, S.A.U Avenida Camino de Santiago, 40 – Madrid -Management company FC y C, S.L.U. Federico Salmón, 13 – Madrid -Real estate- Fedemes, S.L.U. Federico Salmón, 13 – Madrid -Real estate- Per Gestora, S.L.U. Federico Salmón, 13 – Madrid -Instrumental- TOTAL (*) (Leg): Egyptian pounds. Book value Assets Impairment Holding % 22,263 85 100 62,624 62,624 100 777,761 11,782 – – 100 100 Dividends received – – – – Capital Reserves 50 22,154 120 (36,977) 44,613 587,119 10,301 11,440 71,553 71,461 100 66,136 60 (488) Profit/(loss) for the 2020 business year Other net equity line items Operating profit or loss Continuing operations – – – – – (21) (26) (12) (352) (3,780) (13,471) 1,981 1,502 (7) 520 4,129,025 1,214,136 226,941 NOTE: During the business year, the company made the required notifications, pursuant to Art. 155 of the Consolidated Text of the Capital Companies Act, to the acquired companies where it directly or indirectly holds more than 10%. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 45 of 46 Annex II Temporary joint ventures 442 ALCANTARILLADO MADRID LOTE D AQUALIA-FCC-VIGO BOMBEO ZONA SUR CANGAS DE MORRAZO CENTRO DEPORTIVO GRANADILLA DE ABONA CONSERVACION GETAFE CUERVA WWTP REINOSA WWTP SAN VICENTE DE LA BARQUERA WWTP FCC – ACISA - AUDING LOTE 4 CULEBRO A MANCOMUNIDAD DE ORBIGO NIGRAN PERIFÉRICO LOTE 3 REDONDELA SANTOMERA Holding % 0,01 0.01 1.00 0.01 1.00 1.00 5.00 1.00 1.00 45.00 1.00 1.00 1.00 50.00 0.01 0.01 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Notes to the financial statements | Page 46 of 46 Annex III Associates and jointly controlled companies Company Book value Assets Impairment Holding % FM Green Power Investments, S.L. Paseo de la Castellana, 91 – Madrid -Energy- Sigenera, S.L. Avenida Linares Rivas, 1 bajo – La Coruña -Management Company- Suministros de Agua de Queretaro S.A. de C.V. Santiago de Queretaro (Mexico) -Water management- 257,090 240,627 377 4,367 – – Dividends received Capital Reserves 26,410 54,482 37,345 – 433 321 49 50 dir. 24.00 indt. 2.00 1,002 347,214 (Pm)(*) 407,072 (Pm)(*) 443 Other net equity line items Profit/(loss) for the 2020 business year Operating profit or loss Continuing operations – – – 62 6 62 7 235,506 (Pm)(*) 127,310 (Pm)(*) TOTAL 261,834 240,627 27,412 (*) (Pm): Mexican pesos. NOTE: During the business year, the company made the required notifications, pursuant to Art. 155 of the Consolidated Text of the Capital Companies Act, to the acquired companies where it directly or indirectly holds more than 10%. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 444 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 1 of 40 Management report FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. at 31 December 2020 1 2 3 4 5 6 7 8 9 Status of the entity Business performance and results Liquidity and capital resources Major risks and uncertainties Acquisition and disposal of own shares Significant events occurring after the end of the year Outlook R&D+I Activities Other relevant information. share performance and other information 10 Definition of alternative performance measures according to ESMA Regulations (2015/1415en) _ 445 _ 448 _ 467 _ 468 _ 469 _ 469 _ 469 _ 471 _ 477 _ 478 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 445 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 2 of 40 1. Status of the entity Fomento de Construcciones y Contratas, S.A. is the Parent Company of the FCC Group and holds direct or indirect ownership of the interests in the Group’s business and activity areas. Therefore, to provide information on the economic, financial, social and environmental events that occurred during the year and place them in their proper context, the FCC Group’s Consolidated Management Report, which includes the consolidated Statement of Non-Financial Information, is reproduced below. The company’s non-financial information can be found in the aforementioned report. 1.1. Status of the entity: Organisational structure and decision- making process in management The organisational structure of the FCC Group is based on a first level made up of areas, which are divided into two large groups: operational and functional. The operating areas include all those activities related to the productive line. The FCC Group has the following operating areas, as discussed in greater detail in Note 1 of the notes to the consoli- dated financial statements and in Section 2.1. of the Non-Financial Information Statement: i. Environmental Services ii. End-to-End Water Management iii. Construction iv. Cement Business v. Concessions Each of these operating areas is headed by one or more specialised companies which, depen- ding on FCC, encompass the Group’s activities. In addition, there are the functional areas, which carry out support tasks for the operational ones: 1) Administration and Finance: : the Administration and Finance Division comprises the Ad- ministration, Information Technologies, Finance, Communication, Purchasing and Human Re- sources areas. The Administration area directs the administrative management of the FCC Group and has the following duties, among others, in relation to Information Systems and Internal Control vi. General accounting vii. Accounting standardisation viii. Consolidation ix. Tax advice x. Tax procedures xi Tax compliance xii. Administrative procedures 2) Internal Audit and Risk Management: ts objective is to provide the Audit and Control Com- mittee and Senior Management with an independent and objective opinion on the Group’s ability to achieve its objectives through a systematic and methodological approach for the assessment, management and effectiveness of internal control and risk management proces- ses, assessing the effectiveness and reasonableness of the internal control systems, as well as the functioning of processes according to the procedures, proposing improvements and providing methodol ogical support to the Division in the process of identifying the main risks that affect activities and supervising the actions for their management. 3) General Secretary: reporting directly to the Group’s CEO, its main duty is to support the management of the Group, as well as management support for the heads of the other areas of FCC, by providing the services detailed in the corresponding sections of the divisions and departments that make up the Group, which are promoted and supervised by the General Secretary. It is made up of the following areas: Legal Advice Department, Quality Management, Corpo- rate Security and General Services and Corporate Responsibility. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 446 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 3 of 40 The areas, on a second level, can be divided into Sectors, the operational ones, and Divisions, the functional ones, establishing areas that allow greater specialisation when considered ne- cessary. The structure of the main decision-making bodies is set out below: • Board of Directors: is the body that holds the broadest powers, without any limitation, except those that are expressly reserved, by the Spanish Corporate Enterprises Act or the Articles of Association, for the jurisdiction of the General Shareholders’ Meeting. • Audit And Control Committee: its main function is to support the Board of Directors in its supervisory duties by periodically reviewing the process for preparing economic and finan- cial information, its internal controls and the independence of the external auditor. • Appointments and Remuneration Committee: supports the Board of Directors in relation to proposals for the appointment, re-election, ratification and removal of Directors, establi- shes and controls the policy for the remuneration of the company’s Directors and senior managers and the fulfilment of their duties by Directors, particularly in relation to situations of conflict of interest and related-party transactions. • Managing Committee: each of the business units has a Managing Committee with similar duties. Further information on the duties of the FCC Group’s decision-making bodies is provided in Section 1 of the Internal Financial Reporting Control System (IFRS) and in Section 2.3 of the Non-Financial Information Statement. 1.2. Status of the entity: Business model and company strategy FCC is one of the leading European groups specialising in the environment, water, infrastructu- re development and management, with a presence in over 30 countries worldwide and nearly 40.3% of its turnover generated in international markets, mainly Europe (28.5%), the Middle East (4.7%), Latin America (2.8%), North Africa (2.8%) and the United States (1.3%). Environmental Services The Environmental Services area has a strong presence in Spain, having maintained a leadership position in the provision of urban environmental services for over 110 years. At a national level, FCC provides environmental services in municipalities and bodies in all the autonomous communities, serving a population of over 22 million inhabitants. Waste collection and street cleaning are two of the most important services in this sector, representing 64% of revenue. They are followed, in order of importance, by disposal of wastes with 14%, cleaning and maintenance of buildings, parks and gardens and, to a lesser extent, sewage. In terms of client types, more than 86% of the activity is carried out with public clients. The COVID-19 pandemic has had a very limited impact on the business in 2020, since most of its services are classified as “essential”, with the focus mainly being on specific problems of falls in tonnage. Nonetheless, the COV-2020/0173 certification of action protocols, for our activities to help reduce the spread of COVID-19, has been obtained as a reinforcement measure. We have also been awarded the seal of the Ministry for Ecological Transition and Demographic Challenge’s (MITECO) “Register of carbon footprint, offsetting and CO2 absorption projects”. The international business is mainly conducted in the United Kingdom, Central Europe and the USA. For years, the Group has held a leadership position in the United Kingdom and Central European markets in the integrated management of municipal solid wastes, as well as in the provision of a wide range of environmental services. The various services provided in this sector include treatment and recycling, disposal, waste collection and the generation of renewable ener- gy. With a growing emphasis on treatment, recycling and renewable energy generation activities and a gradual reduction of disposal in controlled landfills. In Central and Eastern Europe, FCC provides services to a population of 4.8 million inhabitants, 1,360 municipalities and almost 55,000 industrial clients. The range of services provided and the geographical dispersion is very diverse and balanced. It includes municipal and industrial collec- tion, mechanical and biological treatment, incineration, landfill, street cleaning, snow clearance, recycling, outsourcing, building cleaning, soil decontamination works, etc. This broad diversifi- cation ensures a large degree of business stability and is one of the reasons why the economic impact of COVID-19 on the organisation has not been so pronounced. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 447 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 4 of 40 The Environmental Services area also specialises in the integrated management of industrial and commercial waste, the recovery of by-products and soil decontamination, through the FCC Ám- bito brand, which encompasses a group of companies with a wide network of management and revaluation facilities. All of this enables proper waste management, ensuring the protection of the environment and people’s health. In 2020, this activity represented just over 7% of all activity. At an international level, the growth in the US stands out, where urban solid waste collection, management and treatment activities are carried out. This was the first year of activity in the co- llection service of Volusia County (Florida) in Daytona Beach, and the one of the largest contract in the country in Omaha (Nebraska) that will also act as a regional base to open up the Mid-West market. Despite the delay that COVID-19 has caused in the bidding processes, in the last quarter of 2020 a resumption of these processes has already been noticed and it is expected that in 2021 there will be a continuation in the growth of the business, the backlog and the geographical ex- pansion. FCC Environmental Services has managed to position itself, in a very short time, as one of the main operators in the US, where it already serves more than 8 million people. As it has already done for a number of years now, the strategy in Spain will focus on maintaining competitiveness and a leadership position, combining technical knowledge and the development of innovative technologies, offering respectful, inclusive and sustainable services (combating cli- mate change and reducing the carbon footprint). The incorporation of new technologies will enable the company to gain a foothold in the waste recycling and revaluation markets in Europe and to position itself as a key player in the circular economy. As far as the United States is concerned, in the coming years the consolidation of the company’s presence will continue through growth in more residential contracts and the streng- thening of commercial collection activity. In general, there is a broad commitment to climate change, for example with the issuance of green bonds to finance the operation and acquisition of assets developed with the activity. End-to-End Water Management FCC Aqualia serves over 23 million users and provides services in over 1,100 municipalities in 21 countries, offering the market all the solutions for the needs of public and private entities and organisations in all stages of the end-to-end water cycle and for all uses: human, agricultural or industrial. FCC Aqualia’s activity focuses on concessions and services, including distribution network con- cessions, BOT (“Build-Operate-Transfer”), operation and maintenance services and irrigation, as well as technology and network activities, including EPC (“Engineering-Procurement-Construc- tion”) contracts and industrial water treatment activities. In 2020 the market in Spain represents 66% of revenue. The impact of the pandemic has led to a 2.4% drop in the volumes of water billed and 1.4% in the amounts, with particular incidence in tourist and coastal areas. The reduction in the volume of consumption has been partially offset by an improvement in Operation and Maintenance (O&M) activities, efficiency improvements in operations and a greater volume of execution of various works related to concession contracts. In the public sector, there is still a low level of bidding for hydraulic infrastructure concessions, which increases the deficit in the renovation and expansion of existing infrastructure. Despite this, tenders have been won and contracts have been extended for the end-to-end cycle concessions; such as that in Vigo, FCC Aqualia’s largest contract. The contract renewal loyalty rate remains at very high levels (close to 100%) in those municipalities where it operates In addition, Aqualia has worked hard to expand its presence in the O&M and facilities market (WWTP, DWTP, desalination and network management). The international market reached a turnover of 34%. FCC Aqualia focuses its activity in Europe, North Africa, the Middle East and the Americas, with ongoing contracts in more than 15 countries at present. The year 2020 also presented an operational challenge for Aqualia throughout Europe due to the impact of COVID-19 on end-to-end water cycle management. Despite the impact on non-resi- dential consumption, which was more marked in the Czech Republic, the business remained at very high levels in terms of activity, quality and continuity of service. In addition to the management of the municipal concession services in the Czech Republic, Italy and Portugal, works were also carried out to integrate the new business in France. FCC Aqualia seeks to maintain its competitive position in those comprehensive water mana- gement markets where it has an established presence (Europe) and to take advantage of the opportunities that arise in this activity. In other expanding markets, it plans to boost growth via BOT and O&M (North Africa, Latin America and the Middle East), along with comprehensive cycle management, while the study of possibilities in others (such as the USA) will continue. In addition, FCC Aqualia will use its extensive experience in comprehensive water cycle management for business opportunities in countries with a stable political and social balance. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 448 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 5 of 40 Construction FCC Construcción focuses its activity on the design, development and construction of large civil, industrial and building infrastructure projects. The presence in public works of complex elements such as railways, tunnels and bridges stands out, which together with those involving installation and industrial maintenance, form a large part of the activity. 2. Business performance and results 2.1. Operating performance Its teams have the experience, technical training and innovation to participate in the entire project value chain, from the definition and design, to its complete execution and subsequent operation. 2.1.1. Significant events In 2020, 47% of the total income comes from abroad, namely the execution of large infrastructure works such as lines 4, 5 and 6 of the Riyadh Metro, Haren prison complex (Belgium), line 2 of the Lima Metro, Grangegorman University (Dublin-Ireland), the A-9 motorway Badhoevedorp-Holen- drecht (Netherlands), the Bacau airport runway (Romania) and the Gurasada-Simeria railway line (Romania) – Sectors 2a, 2b and 3. Highlights in the 2020 business year, were the awarded contracts for the design, construction and maintenance of section 2 of the Maya Train (Mexico) for an amount of 339.2 million euros, the extension of the A-465 motorway in Wales (UK) for an amount of 667 million euros, the design and construction of the E-6 Ulsberg-Vidasliene motorway (Norway) for an amount of 238.8 million euros, as well as the construction of the Mapocho Río Park (Chile) for an amount of 53.8 million euros. Cement The FCC Group carries out its cement activity through the Cementos Portland Valderrivas Group. Its main activity is the manufacturing of cement, which in 2020 accounted for approximately 91% of the Group’s total income. The remaining percentage was contributed by the concrete, mortar and aggregates businesses. In terms of geographical diversification, by 2020, 38% of income came from international markets. The Cementos Portland Valderrivas Group is present in Spain, Tunisia and the United Kingdom. In addition, the Group also exports from these three countries to Africa, Europe and America. The Cementos Portland Valderrivas Group has a leading position both in its main market, Spain, and in the Tunisian market. The main objective of the Cementos Portland Valderrivas Group is to maintain a competitive edge both regarding costs and in the markets in which it operates, seeking to remain a leader in the sector in all the countries in which it is present. FCC Medio Ambiente is the most highly rated company for the Barcelona cleaning and collection contract Last October, FCC Medio Ambiente was the highest-rated company in terms of technical criteria in the tender for the cleaning and waste collection for the city of Barcelona. In this tender, the ie-Urban, a new internally developed, 100% electric, modular chassis-platform electric collection truck, played a key role in the proposal to enhance urban sustainability and minimise environmen- tal impact. If this award is confirmed, the contract will represent more than 800 million euros in revenues not included in the backlog at the end of 2020. FCC Aqualia renews several end-to-end water cycle contracts in Spain Among the various renewals obtained, last December the municipality of Vigo approved the con- cession to FCC Aqualia of a five-year extension of the supply and sanitation management con- tract, for 259.6 million euros. This expansion is linked to the implementation of an investment plan that will improve the current high levels of service. In addition, all the renewals obtained have allowed us to enjoy a good loyalty rate in 2020, which remains at very high levels (close to 100%). The operational stability of this area resulted in a “positive” annual credit rating perspective on behalf of Fitchratings, obtained last July. FCC Construcción will build a new hospital in the United Kingdom for 590 million euros Last September, a consortium in which FCC Construcción participates was awarded the contract for the design and construction of a new hospital in Jersey. The design is valued at 26.4 million euros and the execution period will be one and a half years. The construction phase will then begin, valued at a further 550 million euros. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 449 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 6 of 40 Among other important projects, the company was awarded the E6 motorway in Norway for 238.8 million euros, which includes the design and construction of a new 25-kilometre section of the E6 motorway, with an execution period of 47 months. Special mention should go to the award this year of the design, construction and maintenance of section 2 of the Maya Train (Mexico), jointly with Carso Infraestructuras y Construcción. The project consists of a 200-kilometre section valued at close to 700 million euros with an execution period of 28 months to which a further five years of maintenance has been added. a stake in 14 transport infrastructure concessions. When signed, the agreement will mean the transfer of 51% in the Cedinsa Group, which manages the concession of four dual carriageways in Catalonia, 49% in Ceal 9, the concessionaire of the stations on section 1 of line 9 of the Barce- lona Metro, and 29% in Urbicsa, the operator for the Ciudad de Justicia (City of Justice), also in Barcelona. The price to be paid by Vauban for all of FCC’s stakes in these concessions amounts to 409.3 million euros, enabling the deconsolidation of 690.7 million euros of net financial debt at the close of the third quarter and will improve the Group’s treasury position. The closure of the agreement is pending obtaining the usual authorisations for this type of transaction. FCC Medio Ambiente finalises the entry of a minority financial partner in the UK Last July, an agreement was reached with the investment group Icon Infrastructure Partners for the purchase of 49% of the capital of the new subsidiary company Green Recovery Projects Limited (GRP), header and owner of five energy recovery plants (“EfW”) of FCC Medio Ambiente subsidiary in the United Kingdom (located in Kent, Nottinghamshire, Buckinghamshire, Edinburgh and Lincolnshire), for an amount totalling 198 million pounds sterling. This meant an enterprise value of the company, at 100%, of 650 million pounds including its debt. The transaction was completed last November. The head of the area, FCC Servicios Medio Ambiente Holding, maintains control of GRP and its global consolidation, as well as a 50% stake in the incinerator in Mercia and a 40% stake in the one in Lostock. FCC as licensee for the construction and operation of a motorway in the United Kingdom FCC, through its company FCC Concesiones, has been selected for the extension of the A465 motorway in Wales (United Kingdom). FCC is part of the Future Valleys consortium along with other local and international partners in the project, which will be developed under the PPP mo- del. The project is key to improving connectivity and development in the region and has a planned investment of more than 600 million euros. FCC has agreed to the sale of certain infrastructure concessions for more than 400 million euros On 3 October, FCC agreed to sell its entire stake in three concessions located in Spain to Vau- ban Infrastructure Partners, within its policy of rotation and selective development of projects in this activity. These three concessions are included in the portfolio of the FCC Group, which has 2.1.2. Executive Summary • In 2020 as a whole, the FCC Group achieved 6.158 million euros in revenues, 1.9% lower than in 2019. This sustained level of revenues was supported by the good performance of the Utilities activities (Environment and Water), thanks to their being considered essential services, which alleviated the decline in the Construction and Cement areas, which were affected by the restrictions taken by the government since last March to combat the health crisis. This is in addition to a higher contribution of revenues in Concessions due to the change in the consolidation method of the concession company Cedinsa. • Gross operating profit increased by 2.1%, reaching 1.047.5 million euros. This increase is due to the higher contribution in the Concessions area, together with the increase in profits from the sale of surplus emission rights in the Cement area, which offset the fall in Construction. Adjusted for the sale of CO2 rights, Ebitda for the business year was only 3.1% lower than the previous year. • Attributable net income reached 262.2 million euros, 1.7% lower than the previous business year. Again, as throughout the business year, it includes the differential behaviour of the ex- change differences recorded, -51.3 million euros this year compared with a positive contribu- tion of 14.8 million euros in 2019. • The Group’s financial debt fell by 21.8% compared to the end of the previous year, mainly due to the exclusion of the debt linked to the transport infrastructure concession assets, the sale of which was agreed last October, from the GRP minority stake sale in UK, and the early partial repayment of the debt linked to the Cement area. As a result, the net financial debt balance amounted to 2.797.8 million euros in December 2020. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 7 of 40 450 • Net assets increased substantially by 17.6% to 2.908.7 million euros at business year-end, thanks to the stability of net profit and the very high percentage of shareholders who once again chose to reinvest their annual scrip dividend in new shares in the entity. • At the end of December 2020, the Group’s revenue portfolio stood at 29.411.7 million euros, which still does not include significant contracts provisionally awarded mainly in the Environ- ment area. KEY FIGURES (Millions of Euros) Net turnover (NT) Gross Operating Profit (EBITDA) EBITDA Margin Net Operating Profit (EBIT) EBIT Margin Income attributable to the parent company Equity Net financial debt Backlog Dec. 20 Dec. 19 Chg. (%) 6,158.0 1,047.5 17.0% 572.7 9.3% 262.2 2,908.7 2,797.8 6,276.2 1,025.8 16.3% 511.6 8.2% 266.7 2,473.8 3,578.7 29,411.7 31,038.4 -1.9% 2.1% 0.7 p.p 11.9% 1.1 p.p -1.7% 17.6% -21.8% -5.2% 2.1.3. Summary by business area Area Dec. 20 Dec. 19 Chg. (%) % s/ 20 % s/ 19 (Millions of Euros) REVENUE BY BUSINESS AREA Environment Water Construction Cement Concessions 2,888.2 2,915.2 1,188.3 1,186.9 1,611.0 1,719.3 -0.9% 0.1% -6.3% -7.4% 382.6 123.5 413.2 49.8 148.0% Corporate serv. and others (35.6) (8.2) n/a 46.9% 19.3% 26.2% 6.2% 2.0% -0.6% 46.4% 18.9% 27.4% 6.6% 0.8% -0.1% Total 6,158.0 6,276.2 -1.9% 100.0% 100.0% REVENUE BY GEOGRAPHICAL AREA Spain 3,672.3 3,465.6 Rest of Europe and Others United Kingdom Middle East & Africa Czech Republic Latin America and USA Total EBITDA Environment Water Construction Cement Concessions Corporate serv. and others 803.0 668.6 467.4 285.2 261.5 733.9 734.9 576.8 286.8 478.2 6.0% 9.4% -9.0% -19.0% -0.6% -45.3% 59.6% 13.0% 10.9% 7.6% 4.6% 4.2% 55.2% 11.7% 11.7% 9.2% 4.6% 7.6% 6,158.0 6,276.2 -1.9% 100.0% 100.0% 450.9 282.9 53.6 139.9 94.6 25.6 492.5 281.7 100.2 86.4 31.8 33.2 -8.4% 0.4% -46.5% 61.9% 197.2% -22.9% 43.0% 27.0% 5.1% 13.4% 9.0% 2.4% 48.0% 27.5% 9.8% 8.4% 3.1% 3.2% Total 1,047.5 1,025.8 2.1% 100.0% 100.0% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 8 of 40 (Millions of Euros) 2.1.4. Income Statement 451 Area Dec. 20 Dec. 19 Chg. (%) % s/ 20 % s/ 19 OPERATING PROFIT/(LOSS) Environment Water Construction Cement Concessions Corporate serv. and others 215.7 167.4 20.9 106.8 55.4 6.5 258.5 180.2 77.3 (20.0) 12.0 3.6 -16.6% -7.1% -73.0% n/a n/a 80.6% 37.7% 29.2% 3.6% 18.6% 9.7% 1.1% 50.5% 35.2% 15.1% -3.9% 2.3% 0.7% Total 572.7 511.6 11.9% 100.0% 100.0% 101.6 (12.8) -893.7% 3.6% -0.4% 1,330.2 1,332.2 1,177.6 1,214.5 0.0 173.7 14.7 0.0 293.0 751.8 -0.2% -3.0% n/a -40.7% -98.0% 47.5% 42.1% 0.0% 6.2% 0.5% 37.2% 33.9% 0.0% 8.2% 21.0% 2,797.8 3,578.7 -21.8% 100.0% 100.0% Net turnover (NT) Gross Operating Profit (EBITDA) EBITDA Margin (Millions of Euros) Dec. 20 Dec. 19 Chg. (%) 6,158.0 1,047.5 17.0% 6,276.2 1,025.8 -1.9% 2.1% 16.3% 0.7 p.p Provision for amortisation of fixed and non-current assets (488.9) (458.4) 6.7% Other operating income Net Operating Profit (EBIT) EBIT margin Financial income Miscellaneous financial results P/L of companies accounted for by the equity method Profit/(loss) before tax from continuing activities Company tax on profits Income from continuing operations Net Income Non-controlling interests Income attributable to the parent company 2.1.4.1. Net Revenue 14.1 572.7 9.3% (55.8) -125.3% 511.6 8.2% 11.9% 1.1 p.p (154.0) (144.7) 6.4% (51.1) 1.5 -3506.7% 62.1 429.9 120.6 489.0 -48.5% -12.1% (86.3) (149.1) -42.1% 343.6 343.6 (81.4) 262.2 339.9 339.9 (73.2) 266.7 1.1% 1.1% 11.2% -1.7% 9,184.3 10,366.2 -11.4% 15,025.9 15,018.3 5,155.8 5,623.2 45.7 30.7 29,411.7 31,038.4 0.1% -8.3% 49.0% -5.2% 31.2% 51.1% 17.5% 0.2% 33.4% 48.4% 18.1% 0.1% 100.0% 100.0% Consolidated Group income amounted to 6.158 million euros for the entire year, 1.9% lower than in the previous year. All activities reflect, to a varying degree, the measures decreed by govern- ments since the middle of last March in most of the countries in which the Group operates to ad- dress the health crisis caused by COVID-19. However, the Concessions area recorded an increa- se in its contribution as a result of the acquisition of a majority in the Cedinsa group in November last year, together with very stable performance experienced in the Water and Environment areas due to its clear nature as an essential service for its customers. NET FINANCIAL DEBT With Recourse Without Recourse Environment Water Construction Cement Concessions Total BACKLOG Environment Water Construction Real Estate Total Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 452 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 9 of 40 According to the different business areas, the largest contributor, Environment, has enjoyed sus- tained performance levels, recording a slight contraction in revenues of 0.9%, centred on the impact of lower volumes in the waste treatment area in the United Kingdom. This, however, is combined with the good performance in the waste collection, treatment and street cleaning acti- vity in most geographical areas, with a greater contribution from the USA. Revenues in the Water area remained stable, with an increase of 0.1%, due to the greater contri- bution of the new concession contracts incorporated abroad, which compensated for the lower activity in Technology and Networks due to the slower pace of execution of construction projects, also mainly in the international area. In Construction, turnover declined by 6.3%, due to delays and project stoppages caused by strict lockdown measures, mainly in Latin America and the Middle East. In Spain and Europe, a higher level of activity in new contracts remained stable, which largely made it possible to compensate for the stoppage intervals registered in the year in this geographical area. By business area in Spain, revenues increased their contribution by 6% to 3.672.3 million euros. Environment had an increase of 0.8%, due to stability in the municipal waste management cycle as a whole, which compensated for the decrease in non-essential urban services in certain pe- riods due to the measures taken by the government to combat the pandemic. Water recorded a 2.5% decline due to a slight reduction in amounts invoiced as a result of a drop in activity in non-residential customers, together with lower contribution from Technology and Networks associated with concessions. The Construction area rose by a remarkable 27.6%, where the good pace in the development of projects awarded in the previous year allowed it to overcome the effect of the reduced activity recorded between March and May. Similarly, the Cement area, which was affected in the same period by the restriction measures, leading to a decrease in the amounts invoiced, partially recovered its pace of activity, with a drop of 4.6% for the year as a whole. Lastly, it is worth mentioning the increase in the contribution of the Concessions area, up to 121.5 million euros, due to the effect of incorporating the Cedinsa subgroup into the scope using the full consolidation method. Likewise, in the Cement area, revenues decreased by 7.4%, due to lower volumes shipped in the local markets of Spain and Tunisia, mainly in the months of March and April, which was partially offset by the recovery recorded in the last months of the year. Revenue Breakdown by Geographical Area Spain Rest of Europe and Others United Kingdom Middle East & Africa Czech Republic Latin America and USA Total Dec. 20 3,672.3 Dec. 19 3,465.6 803.0 668.6 467.4 285.2 261.5 733.9 734.9 576.8 286.8 478.2 6,158.0 6,276.2 (Millions of Euros) Chg. (%) 6.0% 9.4% -9.0% -19.0% -0.6% -45.3% -1.9% In the Czech Republic, there was a small reduction of 0.6% due to a fall in the exchange rate during the period (-2.9%), with very stable operating conditions both for Environment and Water. In the United Kingdom, revenues generated mostly in the Environment area fell by 9% to 668.6 million euros, due to lower volumes in the tertiary waste treatment and reduction business, linked to lockdown measures due to the health crisis and a lower contribution from the Edinburgh treat- ment and recovery plant following the completion of its construction phase in the middle of the previous year. The Middle East and Africa area saw its revenues reduced by 19%, mainly due to the effect of the strict lockdown measures in those countries where the Construction area operates. This was mainly in Saudi Arabia, and which mitigated a higher activity in the Water area, both due to the contribution of two companies acquired in Saudi Arabia and to the increased activity in Techno- logy and Networks. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 453 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 10 of 40 Revenues in Latin America and the US dropped by 45.3%, due to the slower pace of project execution in both Construction and Water, again as a result of the effect of the strict lockdown measures implemented to tackle the pandemic. However, in the United States, revenues, con- centrated in the Environment area, increased significantly due to the entry into operation of new contracts in Florida for municipal waste collection services, an essential service activity that avoi- ded the effects caused by lockdowns and their impact on certain economic activities. % Revenue by Geographical Area 59.6% Spain 10.9% UK 13.1% Rest of Europe & Other 7.6% Middle East & Africa 4.2% Latin America & USA 4.6% Czech Republic 2.1.4.2. Gross Operating Profit (EBITDA)) The Gross Operating Profit for the year was 1.047.5 million euros, an increase of 2.1% compared to the previous year. This increase is largely down to the combination of the higher result from the sale of emission rights in the Cement area together with the increased contribution from the Concessions area and the sustained performance of the Water area. By business area, the most noteworthy developments have been: Environment decreased by 8.4% to 450.9 million euros, due to lower volumes in treatment plants and waste reduction, mainly in the United Kingdom, together with the lower price of generated electricity and other by-products and higher expenses associated with scheduled maintenance shutdowns and extraordinary repairs. The Water area reached 282.9 million euros, similar to that generated in the previous year, su- pported by an increased contribution of the concessions and services activity due to the incor- poration of new contracts which offset the reduced contribution of the Technology and Networks activity. Overall, the operating margin remained at a similar level (23.8% for the year). In Concessions, the differential contribution from the Cedinsa concession group, which amounted to 75.3 million euros, drove up EBITDA to 94.6 million euros. This is compared to 31.8 million euros in the previous year, when it only contributed to profit for two months. Meanwhile, the Construction area suffered more strongly from the impact of the aforementioned general restriction measures. So it totalled 53.6 million euros, compared to 100.2 million euros in the previous year, mainly as a result of a downturn in activity in some countries in the international area and the cost structure associated with the projects, with a 3.3% reduction in margins in the year. In Cement, it is worth mentioning the contribution from the sale of CO2 rights, totalling 58.9 million euros compared to 5.8 million euros in the previous year. This, together with a significant drop in the cost of energy, led to a remarkable 61.9% increase in Ebitda for the period. % EBITDA by Business Area 43.0% Environment 27.0% Water 13.4% Cement 5.1% Constrution 9.0% Concessions 2.5% Corporate As a result of the performance in several utilities areas, Environment and Water (together with Concessions) maintained a high contribution to operating profit reaching 79.1% for the period, compared to 20.9% from those linked to demand for the construction of infrastructure, building and other activities. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 454 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 11 of 40 2.1.4.3. Net Operating Profit (EBIT) 2.1.4.4.3. Profit/(loss) of equity-accounted affiliates Net operating profit amounted to 572.7 million euros, 11.9% more than in the previous year. Ebit reflects the effect of the development of the gross operating profit together with two components. Firstly, the higher provision for amortisation corresponding to the transport concession assets assigned to the operating activity following their entry into consolidation at the end of 2019, as well as a contribution from other operating income of 14.1 million euros this year compared to -55.8 million euros the previous year due to the impairment of 70 million euros that was made to the value of goodwill of the cement activity in 2019. 2.1.4.4. Earnings before Taxes (EBT) from continuing operations Profit before tax for continued activities stood at 429.9 million euros, 12.1% down on 2019, due to the fact that positive developments in operational processes were accompanied by a sustained negative impact on the exchange rate in 2020 compared to the positive contribution it made in the previous year. In addition, lower profits were generated by companies accounted for using the equity method, due to the change in the consolidation method of the Cedinsa subgroup mentioned above. 2.1.4.4.1. Financial income The financial result amounted to -154 million euros, compared to -144.7 million euros in the previous business year. The increase is mainly due to higher project finance expenses in the Concessions area of the Cedinsa subgroup, since its entry into consolidation in November 2019. 2.1.4.4.2. Miscellaneous financial results This epigraph includes an amount of -51.1 million euros this year, compared with -1.5 million euros last year. The difference is mainly due to the impact from developments in the exchange rate for certain currencies, with negative exchange differences amounting to -51.3 million euros recorded in this year compared to +14.8 million euros recorded for the previous year. The contribution from co-managed and investee companies amounted to 62.1 million euros, compared to 120.6 million euros the previous business year. This is mainly due to the effect of the change to full consolidation of the Cedinsa subgroup, mentioned above, and the decreased contribution due to the completion of certain projects in Construction. 2.1.4.5. Income attributable to the parent company The net attributable profit for the year was 262.2 million euros, a slight decrease of 1.7% com- pared to 2019. This profit is accounted for by the contribution to EBT from the following items: A corporate income tax expense of -86.3 million euros, in line with the profit before tax obtained, together with profit attributable to minority shareholders of 81.4 million euros compared to 73.2 million euros the previous year, mainly concentrated in the Water area (with 67.9 million euros) and largely reflecting the participation of a minority shareholder in this area. 2.1.4.6. Profit and loss statement figures on a pro rata basis The most significant figures in the income statement, calculated on the basis of the percentage of effective shareholding in each of the subsidiaries, joint ventures and associates, are as follows. Net turnover (NT) Gross Operating Profit (EBITDA) EBITDA Margin Net Operating Profit (EBIT) EBIT margin Income attributable to the parent company Dec. 20 6,132.6 1,032.7 16.8% 567.7 9.3% 262.2 Dec. 19 6,368.5 1,132.4 17.8% 597.4 9.4% 266.7 Chg. (%) -3.7% -8.8% -0.9 p.p -5.0% -0.1 p.p -1.7% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 12 of 40 2.1.5. Balance Sheet 2.1.5.1. Investments accounted for using the equity method 455 Intangible fixed and non-current assets fixed and non-current assets/Property, Plant and Equipment Equity-accounted affiliates Non-current financial assets Deferred tax assets and other non-current assets Non-current assets Non-current assets held for sale* Inventory Trade and other receivables Other current financial assets Cash and cash equivalents Current assets TOTAL ASSETS (Millions of Euros) Dec. 20 Dec. 19 Chg. (Mn€) 2,437.9 2,810.2 722.8 580.9 578.7 7,130.4 1,392.3 765.6 3,458.4 2,866.5 741.5 863.2 599.9 (1,020.5) (56.3) (18.7) (282.3) (21.2) 8,529.6 (1,399.2) 0.0 1,392.3 728.8 2,095.6 1,907.7 228.7 1,222.1 5,704.2 189.6 1,218.5 4,044.6 36.8 187.9 39.1 3.6 1,659.6 12,834.6 12,574.1 260.5 Equity attributable to shareholders of the parent company 2,288.3 1,951.3 Non-controlling interests Equity Subsidies Non-current provisions Long-term financial debt Other non-current financial liabilities Deferred tax liabilities and other non-current liabilities Non-current liabilities Liabilities relating to non-current assets held for sale* Current provisions Short-term financial debt Other current financial liabilities Trade and other payables Current liabilities TOTAL LIABILITIES * See epigraph 5.2 337.0 97.9 434.9 (140.8) (65.8) (905.4) (147.6) (6.3) 620.4 522.5 2,908.7 2,473.8 333.8 1,130.2 4,448.7 581.6 303.0 193.0 1,064.4 3,543.3 434.0 296.7 5,531.3 1,051.3 195.2 705.2 169.2 2,273.7 4,394.6 6,797.2 (1,265.9) 0.0 1,051.3 249.6 538.2 145.4 2,370.0 3,303.2 (54.4) 167.0 23.8 (96.3) 1,091.4 12,834.6 12,574.1 260.5 The epigraph entitled investments accounted for using the equity method amounted to 722.8 million euros at the end of the year, with the following breakdown of the most significant invest- ments in equity: 1) 278.1 million euros for the 36.9% stake in Realia. 2) 74.3 million euros for participation in various transport infrastructure and equipment conces- sions. 3) 102.3 million euros for the stake in companies in the Environment area (recycling and munici- pal services, mainly in Spain and the United Kingdom). 4) 35.2 million euros for stakes in companies in the Water area, largely concessionary companies managing services abroad (North Africa and Mexico). 5) 35.5 million euros from the subsidiaries of the parent company in the Cement area. This epigraph also includes a further 197.4 million euros for the remaining investments in own funds for other participations together with loans granted to subsidiaries. 2.1.5.2. Assets held for sale This epigraph is included in current assets, for an amount of 1.392.3 million euros, with its corres- ponding counterpart in liabilities, all of the assets corresponding to certain participations in the concessions activity whose sale was agreed in the third quarter of the business year and until it leaves the consolidated perimeter when the transaction is closed. 2.1.5.3. Cash, cash equivalents and available lines of credit The balance for the Cash and cash equivalents epigraph amounted to 1.222.1 million euros as at the end of the business year, with 72.9% for companies and non-recourse perimeters and the remaining 27.1% for the Group’s parent company and its recourse perimeter. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 456 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 13 of 40 The cash balance has remained very stable and in line with the previous year, so that together with the available lines of credit, at business year-end the FCC Group had: 2.1.5.5. Financial debt 1) In the recourse perimeter, cash and equivalents of 330.6 million euros and lines of credit of 473.4 million euros, totalling 804 million euros. 2) In the non-recourse perimeters, cash and equivalents of 891.5 million euros and lines of credit of 389.8 million euros, totalling 1.281.3 million euros. This took the FCC Group’s total for cash, cash equivalents and available lines of credit at the end of the business year to 2.085.3 million euros, compared to a total short-term financial debt (maturing before 12 months) at the same date amounting to 705.2 million euros. This represents a volume of three times the amount of existing maturities until 31 December 2021. Epigraph 5.5 details the nature and amounts of short-term financial debt for a better understan- ding of the Group’s financial position in the short term. 2.1.5.4. Equity Equity at business year-end amounted to 2.908.7 million euros, compared with 2.473.8 million euros at the end of the previous business year. This substantial increase is mainly due to the con- tribution of net attributable profit of 262.2 million euros achieved in the year and to a lesser extent to the increase in non-controlling interests up to 620.4 million euros. Bank borrowings Debt instruments and other loans Payables due to financial leases Other financial liabilities Gross Financial Debt Treasury and other current financial assets Net Financial Debt Net financial debt with recourse Net financial debt without recourse Dec. 20 Dec. 19 Chg. (Mn€) (Millions of Euros) 820.0 3,230.3 50.2 148.0 4,248.5 (1,450.7) 2,797.8 101.6 2,696.2 1,474.7 3,125.0 63.8 323.4 4,986.9 (1,408.2) 3,578.7 -12.8 3,591.5 (654.7) 105.3 (13.6) (175.4) (738.4) (42.5) (780.9) 114.4 (895.3) With regard to gross financial debt, 16.6% has short-term maturity, equivalent to 705.2 million eu- ros. 449.4 million of these relates to marketable securities, largely commercial paper issued on the Irish Stock Exchange by the Group’s parent company and the Environment area. A further 212.4 million euros is due to various credit lines with banks, including both bilateral corporate financing and non-recourse projects, and another 43.4 million euros of financial debt with third parties. Almost all of the net financial debt is without recourse and is allocated to business areas, totalling 2.696.2 million euros at the end of the business year. The parent company had a net debt position of 101.6 million euros, only 3.6% of the Group’s total. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 457 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 14 of 40 Breakdown of Net Financial Debt without recourse by Business Area 2.1.6. Cash Flow 49.3% Environment 43.7% Water 0.6% Concessions 6.4% Cement Net financial debt without recourse to the Group’s parent company is structured as follows: (i) The Water area accounts for of 1.177.6 million euros, of which, in addition to corporate bond financing in the parent company, another 189.9 million euros correspond to the Czech Republic business, and the rest to various concessions of the end-to-end water cycle; (ii) the Cement area accounts for 173.7 million euros; (iii) the Environment area accounts for 1.330.2 million, most of which corresponds to long-term bonds issued at the end of 2019 by the area’s parent company, another 167.2 million euros correspond to the activity in the United Kingdom, and the rest, 55 million euros, to financing three waste processing and recycling plant projects in Spain; (iv) 14.7 million euros is accounted for by the concessions area, after deconsolidation amounting to 698.5 million euros, corresponding to the Cedinsa concessionary group’s project debt. (Millions of Euros) Dec. 20 Dec. 19 Chg. (%) Gross Operating Profit (EBITDA) 1,047.5 1,025.8 (Increase)/decrease in working capital Corporate income tax (paid)/received Other operating cash flow Operating cash flow Investment payments Divestment receipts Other investing cash flows Investing cash flow Interest paid (Payment)/receipt of financial liabilities Other financing cash flow Financing cash flow Exchange differences, change in consolidation scope, etc. Increase/(decrease) in cash and cash equivalents (302.0) (96.7) (43.7) 605.1 (541.2) 75.9 63.8 (401.5) (151.4) (142.6) 155.6 (138.4) (61.5) 3.6 (183.3) (173.0) (39.0) 630.5 (546.6) 28.5 158.9 (359.2) (136.8) (97.4) (111.5) (345.7) 26.8 (47.7) 2.1% 64.8% -44.1% 12.1% -4.0% -1.0% 166.3% -59.8% 11.8% 10.7% 46.4% n/a -60.0% n/a n/a 2.1.5.6. Other current and non-current financial liabilities 2.1.6.1. Operating cash flow The epigraph of other current and non-current financial liabilities totals 603.2 million euros at the end of the business year. Its balance mainly includes the item suppliers of fixed and non-current assets for operating leases amounting to 394.9 million euros. It also includes other liabilities that are not financial liabilities, such as those associated with hedging derivatives, suppliers of fixed and non-current assets, guarantees and deposits received. The operating cash flow generated during the business year amounted to 605.1 million euros, 4% less than in the previous business year. Operating working capital was up 302 million euros compared to 183.3 million in the last business year, largely due to the elimination of the balance of non-recourse loan assignments in the Environment area in order to optimise the financial cost. The epigraph collections/(payment) of company tax shows an outflow of 96.7 million euros com- pared to 173 million euros at the end of the previous business year. This difference was due to the payment of 92.1 million euros in the previous year to adjust the tax incentives applied by the Group in previous business years. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 15 of 40 The epigraph other operating cash flow includes an outflow of 43.7 million euros compared to 39 million euros the previous business year, due to the application of provisions mainly in the Cons- truction and Environment area. The breakdown of net investments by business area, excluding other cash flows from investment activities, in terms of payments and receipts, is as follows: 458 2.1.6.2. Investing cash flow The investment cash flow represents an application of 401.5 million euros compared to 359.2 million euros in the previous business year. In the Environment area, in Spain, the investment for the construction of the Loeches treatment plant in Madrid, for an amount of 54.6 million euros, stands out. In the international area, among the most significant investments is the one made in the United Kingdom for the development of the Lostock energy recovery plant for 49.4 million euros. In the USA, the investment in the contract for the collection of municipal solid wastes in Omaha, Nebraska, worth 34 million euros, is also worth mentioning. In the Water area, of particular note are the payments for investments corresponding to the ac- quisition in Saudi Arabia of 51% of the companies Qatarat and Haaisco, for a combined amount of 16.1 million euros, as well as the payment of 14.1 million euros for the acquisition of three end- to-end water cycle companies in the region of Córdoba, in the north of Colombia. In Spain, 23 million euros were invested in the Rambla Morales desalination plant in Almería. Proceeds from disposals amounted to 75.9 million euros compared to 28.5 million euros the previous business year, including 30.8 million euros corresponding to the sale of 49% of the long- term loan of the Edinburgh incineration plant to the investment group iCON, once the sale of 49% of the capital of the new subsidiary company Green Recovery Projects Limited to this group had been completed. Dec. 20 Dec. 19 Chg. (Mn€) (Millions of Euros) Environment Water Construction Cement Concessions Corporate serv. etc. & adjustments (283.1) (134.1) (7.6) (10.4) (24.9) (5.2) (301.2) (124.5) 30.5 (8.3) (59.0) (55.6) Net investments (Payments - Receipts) (465.3) (518.1) 18.1 (9.6) (38.1) (2.1) 34.1 50.4 52.8 The epigraph other investment flows includes an inflow of 63.8 million euros at the end of the year, where the most important item in the Environment area is the collection of the concession right for the Edinburgh incineration plant for an amount of 42.3 million euros, which has been applied in its entirety to reduce its financial debt. To this we must add movements for smaller amounts in loans to third parties and investee companies. 2.1.6.3. Financing cash flow The consolidated cash flow from financing throughout the year represents an application of 138.4 million euros compared to 345.7 million euros in the previous business year. The interest payment item shows an outflow of 151.4 million euros, mainly concentrated in the Environment, Water and Concessions areas. The epigraph Proceeds from/(payments on) financial liabilities includes an application of 142.6 million euros in the year, compared to 97.4 million euros in the previous year. The most significant item was the decrease in the financial debt of the Cement area, entirely without recourse to the Group’s parent company, amounting to 118.5 million euros, of which 108 million euros corres- pond to the early partial repayment of the main credit facility for the area. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 459 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 16 of 40 Other financing cash flows amounted to an inflow of 155.6 million euros compared with an out- flow of 111.5 million euros the previous business year. The most significant item was the payment of the sale of a minority stake to a financial partner of 49% of the capital of the new subsidiary Green Recovery Projects Limited, head of five energy recovery plants of the Environment subsi- diary in the UK, for 188.4 million euros. Lastly, it is worth mentioning the payment of dividends to shareholders of the Group’s parent company and minority third parties amounting to 36.6 million euros. 2.1.6.4. Exchange differences, change in consolidation scope, etc This epigraph recorded an application of 61.5 million euros and includes two main items. Firstly, the transfer of the cash of the concession subgroup Cedinsa for 38.1 million euros to the epigraph “assets held for sale”, following the sale agreement reached in the fourth quarter of the year and until its exit from the consolidated scope at the close of the transaction. This is in addition to the effect on cash of the variation in the exchange rate of various currencies against the euro, mainly concentrated in the Construction area. 2.1.6.5. Change in cash and cash equivalents As a result of the development of the different components of the cash flow, FCC Group’s cash position closed with an increase of 3.6 million euros compared to the end of the previous period, reaching a balance of 1.222.1 million euros at the end of the business year. 2.1.7. Analysis by business área 2.1.7.1. Environment The Environment division contributed 43% of the Group’s EBITDA in 2020. Some 79.9% of its ac- tivity is focused on the provision of essential waste collection, treatment and disposal services, as well as street cleaning. The remaining 20.1% corresponds to other types of urban environmental activities, such as the conservation of green areas or sewage systems. In Spain, the management of municipal wastes and street cleaning are the most important activi- ties, while in the United Kingdom the focus is on the processing, retrieval and disposal of munici- pal wastes. In central Europe, mainly Austria and the Czech Republic, FCC is present right across the waste management chain (collection, processing and disposal). FCC’s activities in the USA include both the collection and comprehensive retrieval of municipal wastes. 2.1.7.1.1. Earnings Turnover Waste collection and street cleaning Waste processing Other services EBITDA EBITDA Margin EBIT EBIT margin Dec. 20 2,888.2 1,428.6 879.0 580.6 450.9 15.6% 215.7 7.5% (Millions of Euros) Dec. 19 2,915.2 1,379.7 960.1 575.4 492.5 16.9% 258.5 8.9% Chg. (%) -0.9% 3.5% -8.4% 0.9% -8.4% -1.3 p.p -16.6% -1.4 p.p Turnover for the Environment area remained at similar levels to the last business year and amoun- ted to 2.888.2 million euros in the period. The waste collection and street cleaning activity increa- sed by 3.5% to 1.428.6 million euros, where a greater contribution from the USA after the entry into operation of new contracts stands out, together with very stable performance in all other regions. Waste treatment activity declined by 8.4% to 879 million euros, because of a lower contribution in the United Kingdom due to the decreased volume of treatment activity of private customers, as well as a reduced contribution from the development of new plants, together with good perfor- mance in Spain and Central Europe. Breakdown of revenue by geographical area (Millions of Euros) Spain United Kingdom Central Europe US and others Total Dec. 20 1,715.8 605.3 464.6 102.5 Dec. 19 1,701.7 682.0 466.9 64.6 2,888.2 2,915.2 Chg. (%) 0.8% -11.2% -0.5% 58.6% -0.9% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 460 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 17 of 40 By geographical area, revenues in Spain increased by 0.8% compared to the previous business year to 1.715.8 million euros, due to stability in municipal waste collection and street cleaning activities deemed to be essential. This is together with higher revenues linked to the development phase of treatment plants that have offset the decrease in non-essential municipal services due to the measures taken by the government to combat the pandemic during the first half of the business year. In the United Kingdom, turnover decreased by 11.2% to 605.3 million euros, due to lower volu- mes in the waste treatment and reduction activity, concentrated in tertiary clients and the decrea- sed contribution of the treatment and recovery plant in Edinburgh, following the completion of the construction phase and the start of the operational phase since mid last year (which resulted in a reduction of 25.7 million euros). In Central Europe, revenues remained stable at 464.6 million euros, where the increase in acti- vity in Poland has almost entirely offset lower levels of activity in countries such as Bulgaria and Slovakia. Lastly, turnover in the USA and other markets increased by a remarkable 58.6% due to a greater contribution from the Palm Beach and Volusia contracts, both in Florida. The net operating profit (EBIT) decreased by 16.6% over the previous year to 215.7 million euros, thanks to the development of the different components mentioned in the Ebitda. Breakdown of Backlogs by Geographical Area (Millions of Euros) Spain International Total Dec. 20 4,872.2 4,312.1 Dec. 19 5,354.5 5,011.7 9,184.3 10,366.2 Chg. (%) -9.0% -14.0% -11.4% At the end of December, the backlog for the area fell by 11.4% to 9.184.3 million euros. In Spain, it amounts to 4.872.2 million, where a significant number of contracts are still being extended, although an increase in bidding activity is now being noted. The awarding of the eight-year urban sanitation contract for Barcelona is worth mentioning, with an estimated value of more than 800 million euros, after FCC Medio Ambiente was deemed the entity with the best technical qualifica- tion. In the international area, the backlog declined 14%, largely due to the depreciation of sterling and the dollar against the euro at the end of the business year. Breakdown of Revenue by Geographical Area 2.1.7.1.2. Financial Debt 59.4% Spain 21.0% UK 16.1% Central Europe 3.5% USA & Others Net Financial Debt without recourse (Millions of Euros) Dec. 20 1,330.2 Dec. 19 1,332.2 Chg. (Mn€) (2.0) There was no appreciable variation to Net financial debt without recourse to the header at the end of the business year. The main balance corresponds to the issue of two green bonds in the amount of 600 million euros and 500 million euros by the parent company in the fourth quarter of 2019 and that have obtained confirmation of its investment grade in its annual revision. Of the rest, 167.2 million euros correspond to activity in the United Kingdom together with another 55 million euros mainly linked to funding of three waste treatment and recycling plant projects in Spain. Gross operating profit (EBITDA) decreased by 8.4% to 450.9 million euros, caused by the deve- lopments in revenue described above together with decreased performance in the incineration plants in the United Kingdom due to shutdowns scheduled in their maintenance together with extraordinary repairs. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 461 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 18 of 40 2.1.7.2. End-to-End Water Management Breakdown of revenue by geographical area (Millions of Euros) The Water area contributed 27% of FCC Group EBITDA in the period. 85.6% of its activity is focu- sed on public service concession management related to the end-to-end water cycle (collection, treatment, storage and distribution) and the operation of different types of water infrastructures; the remaining 14.4% corresponds to Technology and Networks, which is responsible for the design, engineering and equipment of hydraulic infrastructures, related to a great extent to the development of new concessions and ancillary works for operations. In Spain the area serves over 13 million inhabitants in more than 850 municipalities. In Central Europe, it serves 1.3 million users, mainly in the Czech Republic, while in the rest of the continent it is present in Italy, Portugal and France. In Latin America, the Middle East and Africa it is present through the design, equipping and operation of processing plants. All in all, the Water area provi- des supply and/or sanitation services to more than 25 million inhabitants. 2.1.7.2.1. Earnings Turnover Concessions and services Technology and networks Ebitda EBITDA Margin EBIT EBIT margin Dec. 20 1,188.3 1,016.6 171.7 282.9 23.8% 167.4 14.1% (Millions of Euros) Dec. 19 1,186.9 982.2 204.7 281.7 23.7% 180.2 15.2% Chf. (%) 0.1% 3.5% -16.1% 0.4% 0.1 p.p -7.1% -1.1 p.p Revenues remained stable and reached 1.188.3 million euros. The Concessions and Services business increased by 3.5% year-on-year to 1.016.6 million euros, due to the increased contri- bution of activity and contracts in France, Colombia and Saudi Arabia and despite the decrease in consumption in Spain due to the impact of the pandemic. However, Technology and Networks decreased by 16.1%, due to the slower pace of execution of both construction projects associa- ted with national concessions and international projects. Spain Middle East, Africa and Others Central Europe Rest of Europe (France, Portugal and Italy) Latin America Total Dec. 20 Dec. 19 Chg. (%) 784.3 163.1 105.0 78.5 57.4 804.4 113.3 111.7 71.2 86.3 1,188.3 1,186.9 -2.5% 44.0% -6.0% 10.3% -33.5% 0.1% By geographic area, revenues in Spain amounted to 784.3 million euros, 2.5% less than at the end of the previous business year, due to a decrease in amounts invoiced to non-domestic cus- tomers and in tourist areas, together with the entry into operation of new contracts, such as the peripheral sewerage contract in Madrid. Technology and Networks has experienced lower activity due to the slower pace of execution of some projects associated with concessions. In the international arena, in the Middle East, Africa and Others, revenues increased by an outs- tanding 44% to 163.1 million euros, due both to the good pace of execution in the construction of a wastewater treatment plant in Egypt, and to the increase in concession activity resulting from the contribution of the companies acquired in Saudi Arabia during the business year. Central Europe saw its revenues fall by 6% to 105 million euros, mainly due to the reduced activity of Technology and Networks regarding the completion of projects in Montenegro and Serbia. End-to-end cycle activity in the Czech Republic remained stable due to an update in rates that largely offset the slight fall in consumption caused by the health crisis. In the Rest of Europe, revenues increased by 10.3% to 78.5 million euros as a result of the contribution by the company Aqualia France acquired in June 2019, which compensated for a downturn in infrastructure activity in the Caltanisetta concession in Italy. In Latin America, revenues fell by 33.5% to 57.4 million euros, due to the completion or slower pace of construction of plants in Ecuador and Colombia, which were not offset by the contribution of new contracts, such as in Mexico. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 462 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 19 of 40 Breakdown of Revenue by Geographical Area 2.1.7.2.2. Financial Debt 66.0% Spain 13.8% M. East, Africa & Others 8.8% Central Europe 4.8% Latin America 6.6% Rest of Europe Gross operating profit (EBITDA) slightly increased by 0.4% and totalled 282.9 million euros, where the incorporation of new contracts in concessions and services helped to offset the aforemen- tioned decrease in volumes and activity in Technology and Networks, due to the interruption and delay in the progress of some projects due to the health crisis. The margin, at 23.8%, remained stable compared to 2019. The net operating profit (EBIT) decreased 7.1% compared to the previous business year, to 167.4 million euros, mainly due to the increase in the amortisation provision allocated due to an increase in the asset base and new areas of operations.. Breakdown of Backlogs by Geographical Area (Millions of Euros) Spain International Total Dec. 20 7,224.7 7,801.2 Dec. 19 7,813.1 7,205.2 15,025.9 15,018.3 Chg. (%) -7.5% 8.3% 0.1% Figures for the backlog were similar to those to December of the previous year, totalling 15.025.9 million euros, due to new contracts in the international area, mainly in Colombia, Mexico, Saudi Arabia and Qatar, which compensated for the downturn in Spain, caused by delays in the renewal of some contracts. Net Financial Debt without recourse (Millions of Euros) Dec. 20 1,177.6 Dec. 19 1,214.5 Chg. (Mn€) (36.9) Net financial debt, entirely without recourse to the Group’s parent company, decreased by 36.9 million euros compared to December the previous year, totalling 1.177.6 million euros. Most of the debt balance is for long-term bonds issued by the area’s parent company, with a gross balance of 1.346.4 million euros. 2.1.7.3. Construction The Construction area contributed 5.1% of the Group’s EBITDA in the business year. Activities were focused on the design and construction of large civil engineering, industrial and complex building works. Special mention should go to participation in major works like railways, tunnels, bridges and football stadiums that constituted a major part of the activity. 2.1.7.3.1 Earnings Turnover EBITDA EBITDA Margin EBIT EBIT margin Dec. 20 1,611.0 53.6 3.3% 20.9 1.3% (Millions of Euros) Dec. 19 1,719.3 100.2 5.8% 77.3 4.5% Chg. (%) -6.3% -46.5% -2.5 p.p -73.0% -3.2 p.p The area’s revenues decreased by 6.3% to 1.611 million euros due to the slower pace of execu- tion and the suspension that temporarily affected some ongoing projects, mainly in Latin America and the Middle East. This could not be fully offset by a higher volume of activity linked to contracts won and developed in Europe, which overall experienced a lower level of disruptions during the business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 20 of 40 Breakdown of Revenue by Geographical Area (Millions of Euros) Breakdown of revenue by geographical area 463 Spain Europe and others Middle East and Africa Latin America and USA Total Dec. 20 Dec. 19 Chg. (%) 848.8 390.0 246.2 126.0 665.3 313.1 401.5 339.4 1.611.0 1.719.3 27.6% 24.5% -38.7% -62.9% -6.3% By geographical area, in Spain turnover increased by 27.6% to 848.8 million euros, due to the good pace sustained in the development of projects. The most significant of these is the remo- delling of the Santiago Bernabéu football stadium, as well as in other minor projects recently awarded, which to a large extent compensated for the effects of the temporary measures taken to suspend the activity in its planned course of development. Similarly, in Europe and other markets, turnover grew by 24.5% over the previous business year to 390 million euros, thanks to increased activity in new projects started in EU countries, including the A-9 motorway in the Netherlands, the A-6 in Norway, the modernisation of the Bacau airport runway in Romania and the pace of progress in the development of the Haren prison complex in Belgium. In the Middle East and Africa, revenues decreased by 38.7% to 246.2 million euros, mainly due to the lower activity registered in the construction of the Riyadh metro in Saudi Arabia as a result of the strict lockdown measures decreed because of the pandemic together with the high degree of progress of the work as a whole. In Latin America and the USA, turnover fell by 62.9% at business year-end, mainly due to the lower contribution from the completion of Line 2 of the Panamá Metro and the Gerald Desmond Bridge in Los Angeles (USA), together with the slowdown in the development of other projects underway in various countries, due to the strict lockdown measures decreed in these countries. Spain International Total 52.7% Spain 15.3% Middle E. & Africa 24.2% Europe & Others 7.8% Latin America & USA The gross operating profit (EBITDA) decreased by 46.5% compared to the previous business year and amounts to 53.6 million euros. This development is the result of the combined effect in the international area of higher provisions, as a preventive measure, as well as higher costs, all in an environment marked by a temporary slowdown in activity stemming from the exceptional situa- tion created by the health emergency measures. However, the higher level of activity executed in Europe mitigated this impact and the operating margin was 3.3%. Net operating profit stands at 20.9 million euros compared to 77.3 million euros for the previous year, reflecting developments already commented on at the gross operating income level. Breakdown of Backlogs by Geographical Area (Millions of Euros) Dec. 20 1,628.4 3,527.4 5,155.8 Dec. 19 2,010.3 3,612.9 5,623.2 Chg. (%) -19.0% -2.4% -8.3% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 464 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 21 of 40 The area’s income backlog decreased 8.3% at the end of December compared to the previous business year, to 5.155.8 million euros. In Spain, it fell to 1.628.4 million euros, as a good pace in terms of project progress was not matched by the addition of new contracts in a business year that saw a low level of public tenders. In the international area, the backlog decreased by 2.4%, mainly due to the decline in the contract of the “Ciudad de la Salud” Health Centre in Panama, together with a reduction in the scope of works on other projects, which was largely offset by other contracts obtained in Europe and Mexico. Breakdown of the Backlog by Activity Segment (Millions of Euros) Civil engineering works Building Industrial Projects Total Dec. 20 4,121.5 695.0 339.3 5,155.8 Dec. 19 3,991.6 1,251.6 380.0 5,623.2 Chg. (%) 3.3% -44.5% -10.7% -8.3% By type of activity, the civil engineering works backlog accounted for 80% of the total and increa- sed by 3.3%, due to new contracts in the international area, mainly in Europe, which offset the low public tenders in Spain, reaching 4.121.5 million euros. Building activity declined significantly, due both to the aforementioned adjustment in the Panama backlog and to the aforementioned drop in activity as a result of the health crisis. 2.1.7.4. Cement The Cement area contributed 13.4% of the FCC Group’s EBITDA in the business year. This activi- ty was undertaken by the CPV Group, which focusses on the manufacturing cement and by-pro- ducts, with 7 main production centres in Spain and 1 in Tunisia, in addition to a minority stake of 44.6% in Giant Cement, which operates a number of factories on the east coast of the USA. 2.1.7.4.1. Earnings Turnover Cement Other EBITDA EBITDA Margin EBIT EBIT margin Dec. 20 Dec. 19 Chg. (%) (Millions of Euros) 382.6 345.2 37.4 139.9 36.6% 106.8 27.9% 413.2 374.5 38.7 86.4 20.9% (20.0) -4.8% -7.4% -7.8% -3.4% 61.9% 15.7 p.p n/a 32.8 p.p Revenues for the area decreased by 7.4% to 382.6 million euros compared to December of the previous year, due to a decrease in volumes invoiced in local markets in Spain and Tunisia, as a consequence of the lockdown measures applied due to the pandemic, as well as a drop in exports from both markets. Breakdown of revenue by geographical area (Millions of Euros) Spain Tunisia Miscellaneous (exports) Total Dec. 20 Dec. 19 Chg. (%) 237.9 57.8 87.0 382.6 249.4 57.9 105.9 413.2 -4.6% -0.2% -17.9% -7.4% By geographic area, revenues in Spain declined by 4.6% to 237.9 million euros, as the lockdown measures decreed due to the pandemic caused a decrease in volumes in the first half of the year, which was mitigated by good price performance. It should be noted that in the second half of the year there was a progressive recovery of activity with a more stable performance in terms of demand. In the Tunisian local market, revenues remained stable at 57.8 million euros, where the decrease in volumes was offset by both price increases and the appreciation of the Tunisian dinar. Similarly, there was a progressive improvement in activity levels in the second part of the business year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 465 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 22 of 40 Export earnings fell by 17.9% amounting to 87 million euros due to a decrease in shipments made both from Spain and from Tunisia. Breakdown of revenue by geographical area 62.2% Spain 15.1% Tunisia 22.7% Others The gross profit income increased by a remarkable 61.9% to 139.9 million euros, due to two main factors. The sale of CO2 rights amounted to 58.9 million euros in the business year, compared to 5.8 million euros the previous year, and the aforementioned drop in volumes and revenues was offset by the fall in energy prices, both for fuels and electricity. Therefore, without taking into ac- count the COs component in both business years, Ebitda would have improved slightly by 0.4% in 2020 compared to the previous business year. The net operating profit amounted to 106.8 million euros, as a result of the aforementioned deve- lopment of the gross operating profit. 2.1.7.4.2. Financial Debt Deuda financiera neta sin recurso (Millions of Euros) Dec. 20 173,7 Dec. 19 Chg. (Mn€) 293,0 -119,3 2.1.7.5. Concessions As a result of a sale agreement reached in October 2020 and in accordance with accounting standards (IFRS 5), the assets and liabilities relating to the investees to be transferred from the concession activity have been classified as held for sale in the FCC Group’s balance sheet. The consolidation method is maintained in the income statement in the same way, until the operation is closed and the shares transferred. The Concessions area accounts for 9% of the Group’s EBITDA in the year as a whole. Its activi- ties focussed on the development, operation and maintenance of transport and non-residential infrastructures. At the close of the business year, the Cedinsa subgroup maintained its contribu- tion to turnover, which together with other smaller entities represents a total of 18 concessionary companies in the portfolio and with different degrees of participation. 2.1.7.5.1. Earnings Turnover EBITDA EBITDA Margin EBIT EBIT margin Dec. 20 Dec. 19 Chg. (%) (Millions of Euros) 123.5 94.6 76.6% 55.4 44.8% 49.8 31.8 63.9% 12.0 24.1% 148.0% 197.2% 12.7 p.p n/a 20.8 p.p The area’s revenues were 123.5 million euros this business year, as compared to 49.8 million eu- ros for the first half of the previous business year. This change is mainly due to the contribution of the Cedinsa subgroup, after acquiring control of the majority of its capital in November 2019 and incorporating it since then through full consolidation. Breakdown of revenue by geographical area (Millions of Euros) Net financial debt, entirely without recourse to the Group’s parent company, decreased signifi- cantly by 119.3 million euros to 173.7 million euros, of which 108 million euros correspond to the early partial repayment of the area’s main credit facility, which has no significant ordinary maturity until 2022. Spain Mexico Total Dec. 20 Dec. 19 Chg. (%) 121.5 2.1 123.5 47.5 2.3 49.8 155.7% -11.3% 148.0% Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 466 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 23 of 40 By geographical area, almost all of the revenues are concentrated in Spain, revenues totalling 121.5 million euros, 76.5% of which was contributed by the Cedinsa subgroup. The Coatza- coalcos Tunnel concession in Mexico remains practically unchanged compared to the previous business year and its contribution reflects the depreciation effect of the Mexican peso during this period (-12.1%). Breakdown of revenue by geographical area 98.3% Spain 1.7% Mexico Gross operating income totalled 94.63 million euros, 79.6% corresponding to the Cedinsa con- cession group. 2.1.7.5.2. Financial Debt Dec. 20 Dec. 19 Chg. (Mn€) (Millions of Euros) Net financial debt without recourse 14.7 751.8 -737.1 At the end of last December, consolidated net financial debt had suffered a substantial reduction to 14.7 million euros compared to the balance at the end of 2019. This was due to the afore- mentioned effect from the application of accounting regulations, which after the sale agreement reached by various concessionary companies led to the reclassification of its gross financial debt under the single epigraph of liabilities held for sale amounting to 736.6 million euros. 2.2. Business performance. Environment The information relating to the FCC Group’s environmental policy is set out in greater detail in note 30 to the consolidated financial statements and in section 7 of the Non-Financial Information Statement. The FCC Group carries out its activities on the basis of business commitment and responsibility, compliance with applicable legal requirements, respect for the relationship with its stakeholders and its ambition to generate wealth and social well-being. Aware of the importance to the FCC Group of preserving the environment and using available resources responsibly, and in line with its vocation to serve through activities with a clear envi- ronmental focus, the FCC Group promotes and enhances the following principles, on which its contribution to sustainable development is based, throughout the organisation: • Continuous improvement: Promote environmental excellence by establishing objectives for the continuous improvement of performance, minimising the negative impacts of the FCC Group’s processes, products and services, and enhancing the positive impacts. • Monitoring and control: establish environmental indicator management systems for the ope- rational control of processes, which provide the necessary knowledge for the monitoring, eva- luation, decision-making and communication of the FCC Group’s environmental performance and compliance with the commitments undertaken. • Climate change and pollution prevention: Lead the fight against climate change through the implementation of processes with lower greenhouse gas emissions, and by promoting energy efficiency and renewable energies. Preventing pollution and protecting the natural environ- ment through the responsible management and consumption of natural resources and by minimising the impact of emissions, discharges and waste generated and managed by the FCC Group’s activities. • Observation of the environment and innovation: To identify the risks and opportunities of acti- vities in the face of the changing landscape of the environment in order, among other things, to promote innovation and the application of new technologies, as well as the generation of synergies between the various activities of the FCC Group. • Life cycle of products and services: enhancing environmental considerations in business plan- ning, procurement of materials and equipment, and relations with suppliers and contractors. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 24 of 40 • The necessary participation of all parties: promote the knowledge and application of environ- mental principles among employees and other stakeholders. To share experience of the best practices with the different agents in order to promote alternative solutions to those currently in place, which contribute to the achievement of a sustainable environment. 2.3. Business performance. Personnel Details are attached of the FCC Group’s staff at year-end, by business area: In order to improve the Group’s liquidity position, active collection management is carried out with customers to ensure that they meet their payment commitments. To ensure liquidity and meet all payment commitments arising from the business, the Group has cash flows as shown in the balance sheet (see note 17 to the consolidated financial statements) and detailed financing (see note 20 to the consolidated financial statements). Note 30 to the consolidated financial statements sets forth the policy implemented by the FCC Group to manage liquidity risk and the factors mitigating said risk. 467 Spain Abroad Total % s/Total Capital resources Areas 2020 Environment Water Management Construction Cement Concessions Central Services and Others 33,206 6,675 3,944 785 154 306 7,126 3,849 3,379 251 71 0 40,332 10,524 7,323 1,036 225 306 68% 18% 12% 2% 0% 1% TOTAL 45,070 14,676 59,746 100% 3. Liquidity and capital resources Liquidity In order to optimise its financial position, the FCC Group maintains a proactive liquidity manage- ment policy with daily cash monitoring and forecasts. The FCC Group covers its liquidity needs through the cash flows generated by the businesses and through the financial agreements reached. The Group manages its capital to ensure that its member companies will be able to continue as profitable and solvent businesses. As part of its capital management operations, the Group obtains financing through a wide range of financial products. During the 2019 business year, two simple bonds were issued by FCC Servicios Medioambiente Holding, S.A.U. for an amount of 1,100 million euros; FCC Aqualia, S.A. had previously done the same in 2017. In November 2018, FCC, S.A. registered a 300 million euros promissory notes programme, which was subsequently expanded to 600 million euros in March 2019. In 2019, new funding facilities were arranged in the form of credit facilities and bilateral loans. In 2020, FCC Servicios Medioam- biente Holding, S.A.U., also registered a 300 million euros promissory notes programme. Likewise, in 2020, Cementos Portland Valderrivas, S.A. repaid debt of 119 million euros, of which 108 million euros were voluntarily repaid (note 20 of Non-current and current financial liabilities of the notes to the 2020 financial statements). These operations have made it possible to complete the process of debt reduction and financial reorganisation initiated five years ago and to continue with the policy of diversifying financing sources; all this contributing to achieving a much more stable and efficient capital structure, with amounts, terms and financing costs suitable according to the nature of the different business areas. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 25 of 40 In order to optimise the cost of capital resources, the FCC Group maintains an active policy of interest rate risk management, constantly monitoring the market and taking different positions depending mainly on the assets financed. 4. Major risks and uncertainties The performance of interest rates in recent years is shown below. 468 3.00% 2.70% 2.40% 2.10% 1.80% 1.50% 1.20% 0.90% 0.60% 0.30% 0.00% -0.60% Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 Dec.18 Mar.19 Jun.19 Sep.19 Dec.19 Jan.20 Feb.20 Mar.20 Apr.20 May.20 Jun.20 Jul. 20Aug. 20 Sep.20 Oct.20 Nov.20 Dec.20 EURIB 6M GBP-LIBOR 6M USD-LIBOR 6M This section is discussed in greater detail in note 30 to the consolidated financial statements. 4.1. Risk Management Policy and System The FCC Group Risk Management Model has been designed with the aim of identifying and assessing the potential risks that could affect the Group’s different units, as well as establishing mechanisms incorporated into the organisation’s processes that make it possible to manage risks within the accepted levels, providing the Board of Directors and Senior Management with reaso- nable assurance regarding the achievement of the main objectives defined. This Model applies to all FCC Group companies, as well as to those affiliates where FCC has effective control, promo- ting the development of work frameworks that enable suitable risk control and management in those companies where effective control is not available. This model is essentially based on the integration of a risk-opportunity vision and the assignment of responsibilities that, together with the segregation of duties, enable the follow-up and control of risks, consolidating a suitable control environment. The activities included in the FCC Group’s Risk Management Model include the assessment of risks, including tax risks, in terms of impact and probability of occurrence, giving rise to Risk Maps, and subsequently the establishment of prevention and control activities to mitigate the effect of such risks. In addition, this Model includes the establishment of reporting flows and communication mechanisms at different levels, which allow both decision-making and its review and continuous improvement. The system covers the risk scenarios considered, which have been classified into four groups: Operational, Compliance, Strategic and Financial. The risk management duties and responsibilities at the different levels of the organisation are detailed in section E on the Risk Management and Control System of the Annual Corporate Go- vernance Report. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 469 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 26 of 40 4.2. Major risks and uncertainties The FCC Group operates worldwide and in different sectors and, therefore, its activities are sub- ject to a variety of environmental, socio-economic environments and regulatory frameworks, as well as to different risks inherent to its operations and risks arising from the complexity of the projects in which it participates, which could affect the achievement of its objectives. Details of the main strategic, operational and compliance risks that could affect the Group’s ac- tivities, as well as a description of the systems used to manage and monitor them, can be found in section E of the Annual Corporate Governance Report, as well as in section 6.2 of the Non-Fi- nancial Information Statement. With regard to financial risks, which are considered to be the changes in the financial instruments arranged by the FCC Group due to political, market and other factors, and their repercussions on the financial statements, the risk management philosophy is consistent with the business strate- gy, seeking maximum efficiency and solvency at all times. To this end, strict financial risk control and management criteria have been established, consisting of identifying, measuring, analysing and controlling the risks incurred by the Group’s operations, with the risk policy being correctly integrated into the Group’s organisation. The financial risks to which the Group is exposed are dis- cussed in greater detail in note 30 to the consolidated financial statements, in section E of the An- nual Corporate Governance Report and in section 6.2 of the Non-Financial Information Statement In addition, the FCC Group is also subject to certain risks relating to environmental and social issues, the management of which is described in greater detail in sections 6.2 and 7 of the Non-Financial Information Statement. 5. Acquisition and disposal of own shares 6. Significant events occurring after the end of the year There have been no significant events between the end of the year and the date of preparation of these financial statements. 7. Outlook The outlook for the performance of FCC Group’s main business areas in 2021 is given below. Environmental Services In the countries where it operates, the sector is undergoing a major process of transformation, due to the environmental requirements of each country deriving from the European Directives (new opportunities based on the ambitious targets set by the European Union in relation to the circular economy and climate change). The new services will focus on energy efficiency, urban mobility and smart cities. In Spain, moderate growth is expected in the start up of operations of the disposal facilities that were under construction and the initial operation of newly awarded contracts. No significant chan- ges are expected in the domestic market, the aim being focused on gradually replacing the linear production model with circular models (Plan PEMAR 2016-2022, España Circular 2030 [State Waste Framework Plan for Spain’s Circular Economy]). At 31 December 2020, the FCC Group owned, directly and indirectly, a total of 1,544,773 shares of FCC S.A. (0.38% of the company’s capital stock). In Portugal, business opportunities related to soil decontamination activities and new urban sani- tation contracts stand out. Transactions involving the acquisition and disposal of own shares during the year are detailed in note 18 to the consolidated financial statements. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 470 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 27 of 40 In the United Kingdom in 2020, the economic forecasts for 2021 are marked by the impact of its departure from the EU and the effects of the COVID-19 pandemic, which will continue to weigh down its performance during the first half of 2021. To respond to this uncertainty, the UK Govern- ment has announced an extension of financial aid until at least March 2021. In the environmental area, once its membership of the EU ends, the UK will nevertheless remain committed to the EU’s circular economy objectives and recycling goals, therefore no sudden changes are expected. Additionally, the Government is promoting new measures to encourage the recycling of plastics with the introduction of a tax on packaging and supporting measures to reduce CO 2 emissions. The sector, strongly conditioned by environmental legislation, will continue to await legislative developments in these aspects. In the short term, the market for recycled products has become more restrictive, prioritising quality and experiencing price volatility; the export of refuse-derived fuel (RDF) to Europe will be affected by trade barriers and by the development of new treatment plants, a process in which our division in the United Kingdom is already involved, continuing with its production strategy of energy through waste treatment. Moderate organic growth is expected in Central and Eastern Europe. Although the economic indicators show significant growth compared to 2020, a lower budget allocation is expected in many municipalities (in activities such as street cleaning, gardening, pruning, winter services) due to the need to allocate funds to other activities due to COVID-19. The start of several major soil decontamination projects will probably also be delayed for the same reason. Similarly, many businesses will suffer the financial consequences of the end of public aid and it is very likely that normal economic activity will not restart again until the second semester since, even with the exis- tence of vaccines, the logistical challenge of their application will probably include new periods of restrictions in almost all territories. In relation to the implementation of the business model, Austria is a mature and fully developed market while the other three most important countries, the Czech Republic, Slovakia and Po- land, must gradually transform their business model, reducing volumes in landfills and increasing treatment and recycling activities in order to adapt to European Union directives. In principle, this process is more medium term (2026-2030) but, given that the obtaining of permits and the final construction of treatment plants or incinerators is long term, various projects that could be started in the short term have already begun to be analysed. As far as the USA is concerned, it represents a market with high development potential for a com- pany with the know-how, experience and use of the most advanced and efficient technologies in providing quality environmental services, as FCC has. End-to-End Water Management homes. In this regard, we expect a recovery from the second half of the 2021 business year, which will be reinforced by the new contracts added to the scope during 2020, as well as by the maintenance of the high contract renewal rates that Aqualia consistently achieves at their expira- tion. This increase in revenues will lead to an improvement in profits, reinforced by the continua- tion of cost optimisation actions and operational optimisation measures in the contracts included in the management scope In Spain in the area of Service concessions for the End-to-end Water Cycle, for 2021 it is worth mentioning the expectation of maintaining similar renewal rates to those of 2020, exceeding 90%, although many new contracting opportunities are not expected due market apathy. With regard to Europe, in Portugal, prospects of a slight reactivation of the concession business is expected after the legislative elections held in 2019 and based on the high budget deficit of the Municipalities and the need for infrastructure investment. Similarly, a further increase in the growth of operation and maintenance contracts is expected to be promoted by the public companies belonging to Aguas de Portugal. It is expected that the proper authorities will continue with the search for solutions to the management of sludge from the country’s wastewater treatment plants. In France new tenders are expected for the assignment of public services due to the termination of the contractual deadline for some of the existing contracts in the country. In Saudi Arabia the process of modernisation and provision of the country’s hydraulic infras- tructures will continue, promoted by the Government in the Vision 2030 programme, by means of public-private collaboration. The infrastructure concession contracts tendered in 2020 will be definitively awarded and the bid for new BOT projects in the field of desalination and purification is expected to take place. Bids for operation and maintenance contracts for water and sanitation services in the six regions into which the Saudi kingdom has been divided will also begin. In 2021, Aqualia will consolidate the operation of the new sanitation contract for Abu Dhabi and that for the WWTP in Al Dhakira, in Qatar. In LATAM, the construction phase of the Guaymas SWDP (Sonora, Mexico), will be completed, giving way to a 20-year period of operation, and of the PTAR Salitre (Colombia). In both countries, new concessions for desalination hydraulic infrastructure will be tendered in the states of Baja California and Sonora and for purification within the Bogotá river decontamination programme. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 471 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 28 of 40 Finally, in Peru the preparation of the significant private initiatives declared in favour of Aqualia will continue (5 treatment plants and 1 desalination plant) and in the USA, there will be a presentation of the projects currently under study to their corresponding clients under the formula of “unsolici- ted proposals”, for their evaluation and, if accepted, for subsequent execution. Construction In the international market, FCC focuses on countries and markets with a stable presence and on the execution of projects with guaranteed financing. The search for contracts in the domestic and international markets is one of the Group’s objec- tives, although this is done through demanding risk management that must provide access to a selective backlog of projects that ensure the company’s profitability and cash flow generation. Taking into account the above, it is estimated that in 2021, the turnover obtained in Spain will remain similar to that obtained in 2020. In the foreign market, it is estimated that turnover in 2021 will be similar to that obtained in 2020, with the development of large infrastructure works obtained between 2018 and 2020 and the contribution of markets in America (Central America, Mexico, Chile, Peru, Colombia), the Middle East (Saudi Arabia) and Europe (the Netherlands, the United Kingdom, Norway and Romania). Cement The Bank of Spain forecasts a fall of 11% in the Spanish economy for 2020, demonstrating its permeability to major international crises. The economic outlook is conditioned by how the situa- tion with the virus evolves and although the progress in obtaining vaccines significantly reduces the unknowns, uncertainty remains about when the pandemic will be completely overcome. The Bank of Spain in its intermediate scenario forecasts that the Spanish economy will grow by 6.8% in 2021 and 4.2% in 2022 with unemployment rates of 18.3% and 15.6%, respectively. The Spa- nish economy will not recover its pre-pandemic levels until 2023. According to the Association of Infrastructure Contractors and Concessionaires (Seopan), it is es- timated that public contracting fell by 39.7% in 2020. According to Oficemen, the trend in cement market consumption in 2021 will be in range of between -3.0% and 3%. In Tunisia, growth of 5%, up to 6.1 million tonnes, is estimated in the domestic market for 2021, after the strong contraction suffered in 2020 where it fell by 10% to around 5.8 million tonnes. In this context, the Cementos Portland Valderrivas Group will continue to develop its cost con- tainment and investment optimisation policies and to adapt all its organisational structures to the reality of the various markets in which it operates, with the aim of improving the generation of resources. 8 R&D+I activities The FCC Group’s R&D&I activities in 2020 have resulted in more than 40 projects. These projects seek to respond to the challenges of each business area while maintaining overall coordination between the different business areas of the FCC Group. The activities of the different Business areas and the main projects developed throughout 2020 are detailed below. Environmental services In the environmental services activity, we have continued with the development of projects started in previous years, such as: • VISION. • BICISENDAS. • INSECTUM. • H2020 SCALABLE TECHNOLOGIES FOR BIO-URBAN WASTE RECOVERY (SCALIBUR). • LIFE 4 FILM. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 472 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 29 of 40 In addition, new ones have been launched during 2020, which are summarised below: End-to-end water management • DEEP-PURPLE: it consists of the conversion of complex molecules present in the organic matter of urban solid waste into sustainable materials and products in bio-refineries through the metabolism of the “Purple Photosynthetic Bacteria”. Thermal hydrolysis is used to extract the organic matter from the separate collection and incorporate it into the liquid phase. • RECYGAS: it delves into the research of waste gasification and enables the use of clean syn- thetic gas obtained from the gasification process to initiate chemical synthesis routes (whose products would no longer have the status of waste) or its use in high-efficiency electricity generation cycles. The technology that the project incorporates would allow it to climb up the waste management hierarchy towards recycling. • B-FERTS: the main aim is to integrate the revaluation of bio-waste in agriculture by creating new value chains of bio-based circular economy, coming from municipal solid wastes and the agricultural industrial sector and aimed at the production of mineral and organo-mineral fertilisers, developing the nutrient mixes suitable for their application. Its aim is to change the traditional value chain of fertiliser production and evolve from a linear manufacturing system to a lean manufacturing system, based on a circular economy that will be developed in B-FERST. • LIFE-PLASMIX: the main objective is the practical demonstration on a semi-industrial scale of an innovative recovery and recycling process of the MIX fraction of MSW, the revaluation of polypropylene (PP) and polystyrene (PS) in the form of high quality pellets ready to be used in the manufacture of new products, such as packaging. • LIFE- LANDFILL BIOFUEL: this project pursues the technical demonstration of a profitable system for the production of vehicular biomethane from landfill biomethane through the imple- mentation of new techniques for the exploitation of landfill cells and the use of an innovative upgrading technique that combines filtering with membranes and the PSA vacuum adsorption system. This holistic approach implies the revaluation of landfill biogas as an alternative fuel for light and heavy lorries, carrying out break-in tests on them. FCC Aqualia’s innovation activity is in line with European policies for the transition to a circu- lar economy with a zero carbon footprint, seeking the development of new smart management tools and new proposals for sustainable services. In this way, the Department of Innovation and Technology (DIT) supports the company in achieving the United Nations Sustainable Develop- ment Goals (SDGs), towards an affordable and high quality water and sanitation service (SDG 6), optimising its energy balance (SDG 7) and avoiding its impact on the climate (SDG 13) through sustainable production and consumption (SDG 12). The projects developed by the DIT during 2020 seek to strengthen FCC Aqualia’s technological proposal in four lines of work: Quality, Eco-Efficiency, Smart Management and Sustainability. The major projects in 2020 are listed below: • RIS3 VALORASTUR: with the aim of achieving eco-efficient wastewater treatment, the RIS-3 programme of the Institute of Economic Development of the Principality of Asturias (IDEPA) has supported FCC Aqualia’s collaboration with two large public companies and the SME Ramso. Together with the Institute of Carbon Science and Technology (INCAR - part of the Spanish National Research Council (CSIC) in Oviedo), new low-cost adsorption materials (at less than €500/t) have been developed from dried sewage sludge, with activation by pyrolysis. The project also implemented the optimisation of the nutrient removal process at the San Claudio WWTP. The reduction in electricity costs, in the minimisation of the purchase of iron salts (by optimising the biological elimination of phosphorus), and in mud production, is close to 30k €/year, which means that the costs of improving the automated control system can be amortised in less than a year. • INTERCONECTA ADVISOR: co-financed by the CDTI with FEDER funds, the project has implemented new pre-treatment and co-digestion methodologies for meat waste (Maguisa) at the WWTP managed by FCC Aqualia in Guijuelo, supported by municipality and with the co- llaboration of AINIA. A new digester control system based on LIDAR (Laser Imaging Detection and Ranging) technology is also being developed to detect foams. ADVISOR has been selected as one of 101 business actions of the 2020 #PorElClima (For The Climate) community, and its CO2 reduction impact has been certified by the Carbon Fund for a Sustainable Economy (FES-CO2) of the CLIMA Programme of the Ministry for the Ecolo- gical Transition (Miteco). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 473 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 30 of 40 • LIFE ICIRBUS: led by the Intromac technology centre and with six other partners from Extre- madura, the project has developed a prototype at the wastewater treatment plant in Lobón (Extremadura), managed by FCC Aqualia, to demonstrate the adsorption of metals contained in some wastewater treatment plant sludge by biomass fly ashes from the company ENCE. The process was protected with a utility model, and the treated ashes are integrated as ag- gregates in building materials, while the residual sludge reduces its odours, and is added to a compost that was used for different crops. • LIFE METHAMORPHOSIS: as part of this project led by FCC Aqualia, together with five other entities (Área Metropolitana de Barcelona AMB, FCC Medio Ambiente, Naturgy, Icaen and SEAT), two biomethane production demonstration plants were implemented. Development continues with the LIFE Infusion project to prepare design parameters for future AMB resource recovery plants, and to evaluate technologies in Asturias with another waste management contractor (Cogersa). • H2020 MIDES: the project, with eleven partners from seven countries, has led to the setting up of two demonstration units of a new biological desalination technology, patented by FCC Aqualia and IMDEA Agua, in plants operated by FCC Aqualia in Dénia/Alicante and Guía de Isora/Tenerife. This microbial desalination cell (MDC) reduces the energy cost of desalination by up to ten times compared to traditional seawater reverse osmosis. Instead of electrical energy, residual organic matter from effluents is used to activate bacteria that generate a difference in power without external energy input, to move salts through ion exchange mem- branes, at the same time as the treatment of wastewater effluent that serves as fuel. The project has also contributed to the construction of the Desalination Innovation Centre in Dénia, where a platform has been built to evaluate various pre-treatments, with multi-mem- brane and media filtration pilots. In addition, re-mineralisation post-treatments and alternative disinfection methods without resorting to hypochlorite are optimised. • RIS3 RE-CARBÓN: financed by IDEPA with FEDER funds, and led by the engineering com- pany INGEMAS with two SMEs (Biesca and InCo), Aqualia supports the MCAT institutes (Microwaves and Carbons for Technological Applications) of the INCAR (Institute of Carbon Science and Technology) of the CSIC and the CTIC (Information and Communication Tech- nology Centre Foundation) in the investigation of methods of adsorption of pollutants by re- generated activated carbon and biochar. The aim is the cost-effective supply of a sustainable adsorbent for water or gas applications. The feasibility of cleaning biogas at the Jerez, Chiclana and Lleida WWTPs and deodorisation at the San Claudio and Luarca WWTPs is being tested. The adsorption of micro-pollutants and new sensors that allow real-time monitoring at the Grado WWTP and the Cabornio DWTP are also being studied. • JPI MARADENTRO: the project “Managed Aquifer Recharge: Addressing The Risks of Re- generated Water” is led by the Institute of Environmental Assessment and Water Research in the European Horizon 2020 ERA-NETs Cofund WaterWorks2018 programme, with the participation of partners in France, Italy and Sweden. A 400 m2 infiltration system will be built at the Medina del Campo WWTP for the advanced treatment of treated water and its reuse in recharging aquifers. With the scientific institutes, system design and simulation tools will be developed, optimising the operation and costs of processing contaminant removal compared to conventional tertiary treatment. • H2020 SABANA: the University of Almeria leads eleven partners from five countries (inclu- ding the Czech Republic and Hungary) with three large companies: FCC Aqualia, Westfalia (Germany) and the Italian food group Veronesi. The project optimises the production of new biofertilisers and bio-stimulants from algae, and work is nearing completion on two cultivation units to talling five hectares and corresponding bio-refineries at the WWTPs of Mérida and Hellín (Albacete). • H2020 RUN4LIFE: led by FCC Aqualia, a consortium of fifteen entities in seven countries implements in four demonstration sites (Sneek/Netherlands, Ghent/Belgium, Helsing-borg/ Sweden and Vigo/Spain) new concepts of nutrient retrieval from the separation of grey and black waters. In Vigo’s Free Trade Zone, FCC Aqualia operates an MBR in an office building for grey waters, which is reused in the toilets, and an AnMBR in black waters to produce bioenergy. Various nutrient recovery options are tested, followed by advanced oxidation to remove viruses and processing contaminants, and by evaluating the quality and safety of effluents and by-pro- ducts as fertilisers through greenhouse cultivation trials. A larger installation is being prepared at the Balaídos industrial estate with effluent from Ci- troën, and the bioelectrochemical FBBR technology (Elsar patented process) is being eva- luated for the direct treatment of sewage, using the inoculum from the Guijuelo reactor as biomass. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 474 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 31 of 40 An important part of the project is the dialogue with the users of new services and by-pro- ducts to optimise services and water and energy consumption through decentralised mana- gement of these systems and to assess the effect of new fertilisers. • H2020 SCALIBUR: the project led by the Itene technology centre and involving twenty-one partners from ten countries, reached its halfway point in 2020. Since the end of 2018 and with a duration of four years, it has focused on waste reduction and recovery on a European scale. With the participation of FCC Medio Ambiente, the project focuses on improvements to waste processing plants in Madrid, Lund (Sweden) and Rome (Italy) to recover resources and promote the circular economy. Within this framework, Aqualia has implemented new sludge treatments at the Estiviel WWTP (Toledo), with improvements in thickening (Orege system) and dual digestion in two stages, and simplifying mud stabilisation without heated concrete structures. The project has facilita- ted initial innovation activities at SmVaK in the Czech Republic, to convert organic matter into by-products and bioenergy. • BBI DEEP PURPLE: led by FCC Aqualia and supported by thirteen partners from six coun- tries, the project implements on a demonstration scale a new bio-refinery model, which inte- grates purple phototrophic bacteria (PPB) in anaerobic carrousel-type systems. These bacte- ria use solar energy to treat wastewater without aeration, and transform the organic content of wastewater and municipal wastes into raw materials for biofuels, plastics, cellulose and new base materials in the chemical and cosmetics industry. A first FCC Aqualia prototype is operating at Toledo-Estiviel, and a demonstration reactor 10 times larger is planned for the Linares WWTP. Parallel activities are also being prepared at the SmVaK WWTP in the Czech Republic. • BBI B-FERST: with Fertiberia as the leader, and with ten partners from six different coun- tries, FCC Aqualia is involved in the development of new biofertilisers from urban wastewater and by-products from agri-food industries. The potential of recovered raw materials in the production of fertilisers in three countries (Spain, Italy and the Czech Republic) is analysed, and a struvite precipitation system is developed at the Jerez WWTP to incorporate recovered phosphorus in a new Fertiberia bio-based fertiliser demonstration plant in Huelva. • LIFE INTEXT: the project is led by FCC Aqualia, with the AIMEN and CENTA technology cen- tres and the Aarhus University in Denmark supporting SMEs in Germany, Greece and France to optimise low-cost wastewater treatment technologies in small towns. The aim is to mini- mise energy costs, carbon footprint and waste, and to provide ecologically and economically sustainable solutions. The construction of a demonstration platform for these technologies at the Talavera WWTP operated by FCC Aqualia is in its final phase. • LIFE ULISES: the project coordinated by FCC Aqualia is supported by three technology cen- tres, CENTA, EnergyLab and CieSol of the University of Almeria. To optimise and transform conventional WWTPs into “energy production factories”, eliminating their carbon footprint, anaerobic pretreatment with the PUSH reactor is being implemented at the El Bobar WWTP in Almeria, operated by Aqualia, which is also being evaluated at two WWTPs in Portugal. Di- gestion is improved by hydrolysis and biogas is used as a vehicle fuel with an ABAD BioEnergy refining system and a biomethane dispenser. • LIFE INFUSION: after the completion of the Life Methamorphosis project, the Barcelona Me- tropolitan area wanted to extend the project to prepare the designs for several new resource recovery plants. Together with the EureCat technology centre and the operator of Ecoparc2, EBESA, the leachate digestion system will be optimised with FCC Aqualia, AnMBR and ELAN technologies, with the addition of an ammonia stripping system from the Belgian SME Detri- con. Two waste management entities, Cogersa in Asturias and AMIU in the region of Genoa/ Italy are also participating to evaluate the options for implementing the solutions in their plants. • LIFE PHOENIX: the project, led by FCC Aqualia and supported by the technology centres CETIM and CIESOL, will optimise tertiary treatment to achieve the most ambitious aims of the new European regulation on water reuse (EU 2020/741). In order to evaluate various effluents, from ADP in Portugal, the Almeria Provincial Council and the Guadalquivir Hydrographic Con- federation, three mobile plants have been designed, a 50 m3/h physical-chemical treatment plant, a 30 m3/h filtration plant and a 20 m3/h ultrafiltration plant. • LIFE ZERO WASTE WATER: the project, led by FCC Aqualia, will demonstrate at the Valde- bebas WWTP, with Canal Isabel II as a partner, the combined treatment of Urban Wastewater and of Organic Fraction of Municipal Solid Waste (OFMSW) with the AnMBR anaerobic reac- tor, followed by ELAN in the water line, for 50 m3/d, allowing water treatment with a neutral carbon footprint. The management of OFMSW at a municipal level and the possibility of con- nection with the sewer system for the transport of the mixture in a single stream. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 475 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 32 of 40 • H2020 SEA4VALUE: led by the EureCat technology centre, and with 14 partners from seven countries, the project focuses on recovering resources from concentrated brine in seawater desalination plants (SWDPs), with basic scientific developments funded 100% by the EU. At its Desalination Innovation Centre in Dénia, FCC Aqualia will continue to develop solutions for the revaluation of brine and new desalination methods, with solar concentration of brine, selective precipitation of magnesium, obtaining chlorine dioxide, and optimisation of the re- mineralisation of permeate with micronised calcite, reducing CO2 consumption, turbidity and the size of the installation. The implementation of pilot units in the various WWTPs operated by FCC Aqualia will be evaluated, with an analysis of the technical and economic impact. • H2020 ULTIMATE: in the “Smart Water Economy” call for proposals, FCC Aqualia participa- tes in two of the five selected consortia, which receive up to 15 million euros of support per project. In Ultimate, led by the Dutch technology centre KWR, nine demonstrations of syner- gies between water utilities and industries are implemented with 27 partners. At the Mahou WWTP in Lleida, operated by FCC Aqualia, the comparison of the FBBR (Elsar) and AnMBR anaerobic reactors at a 20 m3/h scale is being prepared to recover biomethane and power a fuel cell. The co-digestion of yeast is also being studied, as well as support for FCC Aqualia’s other client partner, Aitasa. • H2020 REWAISE: the Rewaise project has the largest business participation of the five pro- jects selected in the “Smart Water Economy” call for proposals, and FCC Aqualia leads the twenty-four partners including water companies from the UK (Severn Trent), Sweden (Vasyd) and Poland (AquaNet) and 7 SMEs to implement new circular economy and digital mana- gement solutions in nine “living labs” including FCC Aqualia’s implementations in Badajoz, Canary Islands, Dénia and Vigo. Construction FCC Construcción promotes an active policy of technological development, constantly bringing innovation to its projects, with a strong commitment to research and development, sustainability and contribution to the quality of life of society as competitive factors. This innovation policy is coordinated with all other business areas of the FCC Group. The development and use of innovative technologies to carry out the works is an important con- tribution to added value and is a differentiating factor in today’s highly competitive and internatio- nalised market. The three types of projects developed by FCC Construcción and its investee companies are: internal projects, projects with other companies in the FCC Group and projects in collaboration with other companies in the sector or other related sectors, often with technology-based SMEs, which enables open innovation projects to be carried out with the participation of the value chain and occasionally in horizontal cooperation. In addition, the presence of universities and technology centres is essential in almost all projects. Some of the projects are carried out in a consortium formed with Public Administrations, as is the case of the European Project LIFE ZERO IMPACT, Development and demonstration of an anti-bird strike tubular screen for High Speed Rail lines, in which the Administrator of Railway In- frastructures (Adif) participates. The projects highlighted in 2020 are listed below: • IMPACTO CERO: the aim here is the development of a bird anti-collision screen, with a de- sign based on free-standing tubes. Rewaise reinforces FCC Aqualia’s strategic lines of technological development, with sustai- nable desalination and new membranes, the recovery of materials from brine, the reuse of wastewater and its transformation into energy and by-products, and the simulation of water quality, processes and networks. In addition, in 2020, four new patents were granted. The first one related to the Anaerobic Mem- brane Reactor. The second was granted for the Bio-electrochemical Fluidised Bed. The third on a Photobioreactor with purple bacteria and finally the fourth on the Microbial Desalination Cell. • ROBIM: project within the CIEN programme financed by CDTI (Centre for the Development of Industrial Technology) the objective of which is autonomous robotics for the inspection and evaluation of existing buildings with BIM integration, with the development of an automated, active and multidisciplinary technology for the inspection, evaluation and diagnosis of the composition and state of conservation and energy efficiency of the enclosures of the building assets, which facilitates obtaining accurate and sufficiently detailed information on the cons- truction systems and pathologies as well as an in-depth analysis of the building. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 476 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 33 of 40 • PWDRON: project financed by CDTI (Centre for the Development of Industrial Technology), the objective of which is the development of a centralised system for the automated moni- toring of the execution of infrastructures in linear civil engineering works, using drones with advanced technological features, as well as the development of a new technological platform for the exchange, processing and distribution of data in BIM. • REFORM2: project presented with the help of the Catalan Waste Agency and whose objec- tive is the recovery of by-product (of 0/6 porphyry, a by-product that originates from the ge- neration of ballast and gravel) from quarry extraction through its incorporation into thermoset and thermoplastic matrices for different applications. • STARPORTS: project of the INNTERCONECTA programme (Canary Islands) of CDTI, which will develop a Distributed Wireless System of monitoring, prevention and action for Coastal Management. It consists of the development of a smart platform capable of providing detailed information on the state of any maritime infrastructure in real time. It is also intended to deve- lop advanced sensor networks that can be integrated within the same infrastructure and allow significant and reliable data on the state of the infrastructure to be obtained. • RESALTO: project financed by CDTI with the aim of researching and developing sustainable road elements for speed reduction. Three main objectives are investigated; power generation, safety signalling and environmental connectivity. • BIMCHECK: innovation project approved by CDTI consisting of the implementation of a se- cure and automated technological management environment based on BIM and Blockchain for FCCCO’s quality processes. • SAFETY 4D: project financed by CDTI and the objective of which is to develop an advanced and high performance process for occupational hazard prevention in construction with the implementation of the BIM methodology. • BICI SENDAS: project within the 2018 CIEN programme from CDTI, the aim of which is the development of a sustainable, energy self-sufficient, intelligent, decontaminating, integrated and safe cycle lane. • ONLYBIM: a project of the IDEPA of the Principality of Asturias regional programme, the aim of which is the development of a module for the design and execution of Non-Lineal Works under BIM methodology • POTAMIDES: MATINSA project and approved by CDTI whose objective is the development of a new technologically advanced universal tool that allows the decision-making in the com- prehensive management of the hydraulic public domain at a hydrographic basin level, with the purpose of optimising the availability and quality of the resource guaranteeing the satisfaction of demands. • PIELSEN: belonging to the Challenges-Partnership programme, seeks to create a homoe- ostatic 3D wrap-around architecture to create intelligent adaptive sensitive skin on Building Facades. • SAFE: project of the Challenges-Partnership programme, where the objective is the Develop- ment of an Autonomous System for Anchoring Structures in Maritime Construction Work. This smart system makes it possible to reduce dependence on human resources, minimise risk, maximise efficiency and increase the safety of field manoeuvres. • GAUDI: project approved in the call for projects in collaboration with CDTI and consisting of the development of a Knowledge Management platform based on Artificial Intelligence algori- thms and Content Curation techniques. FCC Construcción participates in many European and national R&D organisations that share the objective of coordinating the company’s role as a driving force for research, development and technological innovation in the building area, in accordance with the proposals of the European Union’s current H2020 programme. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 34 of 40 Cement 9. Other relevant information. In 2020, Cementos Portland Valderrivas Group continued its collaboration in the European R&D project, BIORECO2VER, in which it is a leading partner. Share performance and other information This project aims to obtain alternative processes for the production, on a commercial scale, of certain chemical products (like isobutene or lactic acid) in a more sustainable way from the cap- ture of industrial CO2 emissions. 9.1. Share Data 477 The ultimate goal is to use this industrial CO2 as a raw material and stop depending on fossil resources for the manufacture of these products. In 2019, Cementos Portland Valderrivas Group made its main contribution, the characterisation of the emission gases, capturing them “in situ” and sending them to its partners, LTU and Enobraq. Currently, part of the captured gases remain in custody at the El Alto factory in case new tests, analysis, etc., are necessary. Attached is a table detailing the performance of FCC’s shares during the year compared to the previous year. Closing price (€) Change in the period Maximum (€) Minimum (€) Average daily trading (nº of shares) Average daily trading (million euro) Capitalisation at end of period (million euro) Jan. – Dec. 2020 Jan. – Dec. 2019 8.80 -16.3% 11.96 7.17 74,593 0.7 3,600 10.52 -3.4% 12.80 10.36 46,163 0.5 4,127 No. of shares circulating at closure 409,106,618 392,264,826 9.2. Dividends The Company’s Board of Directors resolved to execute the decision adopted at FCC’s General Shareholders’ Meeting on 2 June 2020, under item six on the Agenda, to distribute a scrip divi- dend. On 24 June, a cash payment of 0.40 euros gross per share was made to those sharehol- ders who requested it. On 2 July, the bonus issue of 16.841,792 shares was registered, bringing the capital stock to 409.106,618 shares, which were listed on 10 July 2020. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 478 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 35 of 40 10. Definition of alternative performance measures according to ESMA regulations (2015/1415en) Ebitda We define EBITDA as earnings from continuing operations before tax, results of companies ac- counted for using the equity method, financial result, depreciation and amortisation charges, im- pairment, gains or losses on disposals of non-current assets, subsidies, net changes in provisions and other non-recurring revenues and expenses. The reconciliation of EBITDA to the income statement headings is as follows: Operating profit/(loss) Depreciation of fixed and non-current assets and allocation of grants for non-financial fixed and non-current assets, and other assets Impairment and gains/(losses) on disposal of fixed and non-current assets Other gains/(losses) EBITDA Ebit Dec 2020 Dec 2019 572,7 477.3 (6.9) 4.4 1,047,5 511,6 449.1 59,8 5,3 1,025.8 This corresponds to the operating profit/(loss) in the consolidated income statement presented in the accompanying consolidated financial statements. Backlog As at any given date, the backlog reflects pending production, that is, amounts under contracts or customer orders, net of taxes on production, less any amounts under those contracts or orders that have already been recognised as revenue. We value pending production according to the expected number of units at current prices as at the date of calculation. We include in backlog only amounts to which clients are obligated by a signed contract or firm order. In the Environment area, we recognise the backlog for our waste management contracts only when the relevant contract grants us exclusivity in the geographical area where the plant, landfill or other facility is located. In our Water business area, we calculate initial backlog on the basis of the same long-term volume estimates that serve as the basis for our contracts with customers and for the tariffs set in those contracts. In our Construction business area, we recognise the backlog only when we have a signed con- tract with, or a firm order from, the end customer. Once we have included a contract in our backlog, the value of pending production under that contract remains in backlog until fulfilled or cancelled. However, we do adjust the values of orders in the backlog as needed to reflect price and schedule changes that are agreed with clients. For example, after the date of calculation, a price may increase or decrease as a result of changes in contractual production due to additional works to be performed. Due to a number of possible factors, we could fail to realise as revenue part or all of our calculated backlog with regard to a given contract or order. Our backlog is subject to adjustments and project cancellations and is, therefore, an uncertain indicator of future earnings. In the Real Estate area, the FCC Group calculates the backlog as the amount of the collection corresponding to the sales of homes pending completion at year-end. Net financial debt Net financial debt is defined as total gross financial debt (current and non-current) less current financial assets, cash and other current financial assets. The calculation of net debt is provided in note 29 to the consolidated financial statements. The FCC Group uses backlog as an extra accounting measure in certain areas of our businesses. We calculate the backlog for our Environment, Water and Construction business areas because these businesses are characterised by medium- and long-term contracts. Because of its typically short-term purchase cycle, we do not calculate backlog for our Cement business area. Voluntary turnover rate Ratio of voluntary departures during the year to staff. Both voluntary departures and leaves of absence are considered to be low. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 36 of 40 479 Fomento de Construcciones y Contratas, S.A. Financial Statements for the year ended 31 December 2020 and Directors' Report, together with Independent Auditor's Report Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain. In the event of a discrepancy, the Spanish-language version prevails. Deloitte, S.L. Plaza Pablo Ruiz Picasso, 1 Torre Picasso 28020 Madrid España Tel: +34 915 14 50 00 www.deloitte.es Translation of a report originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain. In the event of a discrepancy, the Spanish-language version prevails. INDEPENDENT AUDITOR'S REPORT ON FINANCIAL STATEMENTS To the Shareholders of Fomento de Construcciones y Contratas, S.A., Report on the Financial Statements Opinion We have audited the financial statements of Fomento de Construcciones y Contratas, S.A. (the Company), which comprise the balance sheet as at 31 December 2020, and the statement of profit or loss, statement of changes in equity, statement of cash flows and notes to the financial statements for the year then ended. In our opinion, the accompanying financial statements present fairly, in all material respects, the equity and financial position of the Company as at 31 December 2020, and its results and its cash flows for the year then ended in accordance with the regulatory financial reporting framework applicable to the Company (identified in Note 2 to the financial statements) and, in particular, with the accounting principles and rules contained therein. Basis for Opinion We conducted our audit in accordance with the audit regulations in force in Spain. Our responsibilities under those regulations are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with the ethical requirements, including those pertaining to independence, that are relevant to our audit of the financial statements in Spain pursuant to the audit regulations in force. In this regard, we have not provided any services other than those relating to the audit of financial statements and there have not been any situations or circumstances that, in accordance with the aforementioned audit regulations, might have affected the requisite independence in such a way as to compromise our independence. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Deloitte, S.L. Inscrita en el Registro Mercantil de Madrid, tomo 13.650, sección 8ª, folio 188, hoja M-54414, inscripción 96ª. C.I.F.: B-79104469 Domicilio social: Plaza Pablo Ruiz Picasso, 1, Torre Picasso, 28020, Madrid. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 37 of 40 480 Impairment of ownership interests in Group companies and associates Recoverability of deferred tax assets Description Procedures applied in the audit Description Procedures applied in the audit The Company has ownership interests in the share capital of Group companies and associates, the carrying amount of which at 31 December 2020 was EUR 2,936 million net of accumulated impairment losses. The determination of the recoverable amount of the Company's ownership interests requires the use of significant judgements and estimates by management, with regard to both the method for determining the recoverable amount (equity adjusted by the unrealised gains existing at the date of measurement or, where appropriate, discounted cash flows), and the consideration of the key assumptions established for each method in question. The aforementioned matters, and the significance of the ownership interests held, led us to determine the situation described to be a key matter in our audit. Our audit procedures included, among others, obtaining and analysing the recoverability tests conducted by Company management on the ownership interests, and verifying the clerical accuracy thereof and the appropriateness of the valuation method used in relation to the investment held. Also, we analysed the recovery assumptions used by management and the consistency thereof with the historical data on the investees. In addition, we reviewed the sensitivity analyses of the key assumptions identified. Lastly, we focused our work on reviewing the disclosures made by the Company in relation to these investments. Notes 4-e.1 and 9 to the financial statements contain the disclosures relating to these matters required by the applicable accounting regulations. The Company’s balance sheet as at 31 December 2020 includes deferred tax assets of EUR 55 million, which must be considered in the context of the tax group headed by the Company. At year-end, Company management prepares financial models to assess the recoverability of the deferred tax assets, taking into account the applicable regulatory framework and the most recent business plans approved for the various entities forming part of the consolidated tax group, in addition to the estimated reversal periods for the temporary differences recognised in the balance sheet. We identified this matter as key in our audit, since the preparation of these models requires a significant level of judgement, basically in connection with the projections of business performance and the estimation of the reversal periods for the temporary differences recognised, which affect the assessment of the recoverability of the deferred tax assets recognised in the balance sheet. Our audit procedures to address this matter included, among others, the performance of tests on the design and implementation of the relevant controls that mitigate the risks associated with the process of assessing the recoverability of deferred tax assets, as well as verification that the aforementioned controls operate effectively. In addition, we performed substantive tests based on the obtainment of the financial models prepared by the Company to assess the recoverability of the deferred tax assets and the supporting documentation used as the basis for their preparation. We reviewed the financial models obtained, analysing, among other matters, the consistency of the pre-tax profits projected for the coming years with the historical and actual data for the current year. Also, we analysed the estimated reversal periods for the temporary differences recognised in the balance sheet and involved our internal tax experts in analysing the complex estimates that might affect income tax for the current year. Notes 4-h and 16 to the accompanying financial statements contain the disclosures relating to the Company’s deferred taxes. - 2 - - 3 - Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 38 of 40 481 Provisions and contingent liabilities relating to Alpine Description Procedures applied in the audit As a result of the process of liquidating the Alpine Group that started in 2013, a series of lawsuits were initiated against the FCC Group headed by the Company, some of which are for a significant amount. Company management has to assess whether these claims constitute contingent liabilities or whether, on the other hand, a provision should be recognised in the balance sheet. This was a key matter in our audit, since this assessment requires Company management to make significant judgements, especially regarding the probability of there being an outflow of resources in the future or the possibility of measuring the amount of the obligation reliably. These judgements and estimates are made by Company management based on the opinions of the internal legal advisory department and its external legal counsel, and are submitted to controls designed to ensure the consistency and reasonableness of the criteria applied. Our audit procedures included, among others, the review of the evolution of each of the lawsuits affecting the Company as a result of the liquidation of the Alpine Group. To this end, we obtained confirmations from its internal and external legal counsel in order to analyse the current status of the proceedings in progress and discussed with Company management its assessment of the related risk, classifying the risk as "remote", "possible" or "probable". Also, we evaluated whether the Company's disclosures in the financial statements in relation to the claims currently in progress were adequate, in accordance with the applicable regulatory framework, and checked whether the details thereof were consistent with the evidence gathered in the course of our tests. Notes 4-j, 12 and 17 to the accompanying financial statements contain the detail of the provisions and disclosures regarding the contingent liabilities relating to the claims associated with Alpine. - 4 - Other Information: Directors' Report The other information comprises only the directors’ report for 2020, the preparation of which is the responsibility of the Company’s directors and which does not form part of the financial statements. Our audit opinion on the financial statements does not cover the directors’ report. Our responsibility relating to the directors’ report, in accordance with the audit regulations in force, consists of: a) Solely checking that the non-financial information statement and certain information included in the Annual Corporate Governance Report, to which the Spanish Audit Law refers, have been furnished as provided for in the applicable legislation and, if this is not the case, reporting this fact. b) Evaluating and reporting on whether the other information included in the directors’ report is consistent with the financial statements, based on the knowledge of the entity obtained in the audit of those financial statements, as well as evaluating and reporting on whether the content and presentation of this section of the directors’ report are in conformity with the applicable regulations. If, based on the work we have performed, we conclude that there are material misstatements, we are required to report that fact. Based on the work performed, as described above, we observed that the information described in section a) above was furnished as provided for in the applicable legislation and that the other information in the directors’ report was consistent with that contained in the financial statements for 2020 and its content and presentation were in conformity with the applicable regulations. Responsibilities of the Directors and of the Audit and Control Committee for the Financial Statements The directors are responsible for preparing the accompanying financial statements so that they present fairly the Company's equity, financial position and results in accordance with the regulatory financial reporting framework applicable to the Company in Spain, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. The audit and control committee is responsible for overseeing the process involved in the preparation and presentation of the financial statements. - 5 - Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 39 of 40 482 Auditor's Responsibilities for the Audit of the Financial Statements Additional Report to the Audit and Control Committee The opinion expressed in this report is consistent with the content of our additional report to the Company's audit and control committee dated 25 February 2021. Engagement Period The Annual General Meeting held on 8 May 2019 appointed us as auditors for a period of one year from the year ended 31 December 2019. Previously, we were designated pursuant to a resolution of the General Meeting for the period of one year and have been auditing the financial statements uninterruptedly since the year ended 31 December 1990, taking into account the content of Article 17.8 of Regulation (EU) No 537/2014 on specific requirements regarding statutory audit of public-interest entities. DELOITTE, S.L. Registered in ROAC under no. S0692 Raquel Martínez Armendáriz Registered in ROAC under no. 20755 25 February 2021 Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the audit regulations in force in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. A further description of our responsibilities for the audit of the financial statements is included in the Appendix to this auditor's report. This description forms part of our auditor's report. Report on Other Legal and Regulatory Requirements European Single Electronic Format We have examined the digital file in European Single Electronic Format (ESEF) of Fomento de Construcciones y Contratas, S.A. for 2020, which comprises an XHTML file including the financial statements for 2020, which will form part of the annual financial report. The directors of Fomento de Construcciones y Contratas, S.A. are responsible for presenting the annual financial report for 2020 in accordance with the format requirements established in Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 (“ESEF Regulation”). In this regard, the Annual Corporate Governance Report was incorporated by reference in the directors’ report. Our responsibility is to examine the digital file prepared by the Company’s directors, in accordance with the audit regulations in force in Spain. Those regulations require that we plan and perform our audit procedures in order to ascertain whether the content of the financial statements included in the aforementioned file corresponds in full to that of the financial statements that we have audited, and whether those financial statements were formatted, in all material respects, in accordance with the requirements established in the ESEF Regulation. In our opinion, the digital file examined corresponds in full to the audited financial statements, and these are presented, in all material respects, in accordance with the requirements established in the ESEF Regulation. - 6 - - 7 - Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Financial Statements | Fomento de Construcciones y Contratas, S.A. | Management report | Page 40 of 40 483 We also provide the entity's audit and control committee with a statement that we have complied with relevant ethical requirements, including those regarding independence, and we have communicated with it to report on all matters that may reasonably be thought to jeopardise our independence, and where applicable, on the related safeguards. From the matters communicated with the entity's audit and control committee, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter. Appendix to our auditor’s report Further to the information contained in our auditor’s report, in this Appendix we include our responsibilities in relation to the audit of the financial statements. Auditor's Responsibilities for the Audit of the Financial Statements As part of an audit in accordance with the audit regulations in force in Spain, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the use by the directors of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the entity's audit and control committee regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. - 8 - - 9 - Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 484 A 2 FCC Group 2020 Sustainability Report FCC Group non-financial information report, in compliance with Law 11/2018 on non-financial information and diversity Letter from the CEO_ 485 The FCC Group: more than 120 years at the service of society _ 487 The context of the FCC Group in 2020 _ 499 Sustainability in FCC’s business model _ 505 FCC, committed to dialogue _ 520 Ethics and integrity at the FCC Group _ 527 Respect for the environment at FCC _ 537 Committed to the FCC Group Human Resources team _ 561 FCC and its commitment to society _ 582 FCC’s commitment to its clients and suppliers _ 590 The FCC Group: innovation for sustainable development _ 595 Annexes _ 599 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Letter from de CEO | Page 1 of 2 FCC’s future commenced 120 years ago 485 Pablo Colio Abril CEO of the FCC Group As CEO, it is an honour to provide you with the consolidated Sustainability Report of the FCC Group as an international ref- erence company in Citizen Services, corresponding to 2020, which is part of the Directors’ Report included with the Financial Statements, authorised for issue by FCC’s Board of Directors. This pandemic era has coincided with the 120th anniversary of our company showing, once again, our ability to resist and adapt to all types of contingencies, thanks to that human and technological experience that we have accumulated for more than a century. Allow me to begin these lines by recalling that with this 2020 edition we are celebrating the XV anniversary of that first FCC Group social responsibility report published in 2005, demon- strating our Group’s commitment to the transparency and com- munication of our performance in social, environmental and good governance matters. We are all aware that the Sustainability Report that I present to you is encompassed within an unprecedented global context, marked by the health and socioeconomic crisis derived from COVID-19, which continues to be one of the greatest challeng- es, not only of our business journey as Group, but of global society as a whole. Together we have demonstrated, once again, that we are ca- pable of successfully facing any challenge on a global scale, lending our human and service capital to the needs of the cities in which we operate. This is only possible with the dedication and loyalty of our teams,which have always been distinguished by their commitment, high level of professionalism and excel- lent customer service. Throughout 2020, we have maintained and strengthened essential citizen services in the communities in which we operate, at a time that has been critical for the well-being of citizens and for the viability of the cities them- selves. Thanks to the almost 60,000 people that make up the FCC Group, we have established ourselves as a world benchmark in the area of environmental services, end-to-end water man- agement and infrastructures, obtaining a total turnover of 6,158 million euros in 2020. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 486 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Letter from de CEO | Page 2 of 2 Our international presence, in more than 30 countries, in whose markets we have obtained 40.37% of revenues in the last year, guarantee the globality and expansion that we have experi- enced as a centenary group. Likewise, our balanced and diversified business model, sup- ported by committed and consolidated shareholder support, has placed us on the path of profitable and sustainable growth and has allowed us to fulfil our commitment to offer a global service to the citizen, along with our cooperation in the consol- idation of socially integrated cities. In our 120-year history, the responsibility to improve people’s well-being and respond successfully and effectively to urban challenges has characterized us from day one: demograph- ic, economic, environmental and social changes, in search of greater daily sustainability. We are living in a time in which it is urgent to review the growth models of the past, to embark on a new phase of prosperi- ty, more sustainable and inclusive, which allows us to act with greater coordination and effectiveness in the face of these glob- al challenges. We have a decade ahead of us to materialise the 2030 Agenda, through the attainment of the Sustainable Development Goals (SDGs), which guide the efforts of the public and private sectors to respond to the main global challenges. Let no one doubt that, as a benchmark company in citizen services, we will continue to contribute to maintaining and consolidating the sustainable de- velopment of the societies in which we operate, promoting the contribution to the SDGs through our strategy and responsible management. To this end, we have renewed our commitment to the United Nations Global Compact and its ten principles, an initiative of which we have been a part for more than 10 years. In this direction, our stakeholders will find in this 2020 Sustain- ability Report, the social, environmental and good governance performance of the FCC Group, which will allow them to un- derstand how we integrate care for the environment, respect for people and integrity into our business model through our Compliance Model, at the top of which is our Code of Ethics and Conduct updated in 2018 by the FCC Group’s Board of Directors. The content of the Report has been prepared in accordance with the main international sustainability standards, such as the Global Reporting Initiative (GRI) framework, after having carried out a prior exhaustive analysis of the Group’s materiality. Throughout the 2020 business year, we have led various mile- stones in the area of sustainability, foreseen in the latest 2018- 2020 CSR Master Plan approved by the Board, the implemen- tation of which is detailed in full in this Report. Lastly, rest assured that we will continue working every day to offer innovative, global and social impact solutions that allow the efficient management of resources and the improvement of infrastructures, helping to increase the quality of life of citizens and reinforce the sustainable progress of society. We face the coming years with great optimism, as I trust in our solid experience to build a business future, according to the bril- liant socially responsible record that precedes us and that, with total security, will ensure that we overcome this hard time that we have had to live. I have no doubt that our culture of constant innovation and our commitment to integrity and rigor with social welfare, will allow us to consolidate ourselves at the forefront of the development of the communities of tomorrow and to continue to be an inter- national benchmark group in the provision of Citizen Services. We have an added advantage - that for the last 120 years we have been building FCC’s future day by day. Pablo Colio Abril CEO of the FCC Group Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 487 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 1 of 12 The FCC Group: more than 120 years at the service of society FCC, creating sustainable cities The FCC Group is currently one of the international benchmark groups in the provision of citizen services, with activity in nearly 30 countries. Since its inception, and given the type of activities that it carries out, the company has worked to improve peo- ple’s quality of life, promote the well-being of the communities in which it operates and to promote their socioeconomic de- velopment. The following are the FCC Group’s main activities: Environment • Waste collection. • Urban solid waste treatment and recycling. • Ground maintenance. • Maintenance of sewerage networks. • Recovery of contaminated soils. • Street cleaning. Cement • Cement. • Trading. • Other businesses (concrete, aggregates and mortars). Construction • Civil works. • Construction. • Infraestructure maintenance. • Industrial. • Concessions. • Prefabricated construction. • Brand image. Water • Design, construction and financing of water infrastructures. • Operation, maintenance and technical assistance services. • Comprehensive management of public services. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 2 of 12 The FCC Group’s vision provides a purpose for the entire com- pany, guiding the Group’s actions and allowing the establish- ment of a goal shared by all members of the organisation. Thus, a transversal culture is consolidated which, regardless of the different business lines, is applied in the performance of its ac- tivities, contributing to the economic, social and environmental development of society as a whole. Through its constant work and its business strategy, the FCC Group has managed to position itself as one of the most im- portant citizen services groups on an international scale. Thus, the Group strives to offer global and innovative solutions for the efficient management of resources and the improvement of in- frastructures, thus contributing to the sustainable progress of society. 488 FCC celebrates 120 years of history The mission, values, vision and business model of the FCC Group have been forged since its foundation in 1900. The effort, dedication, and technical and human quality of the people who, at some point, have worked and continue to work for this Group, has made it possible to build its history and its great achievements throughout all these years, be- coming a world leader in the field of environmental services, end-to-end water management, infrastructures and the ce- ment sector. For the FCC Group, the beginning of the last century fo- cused on the construction of cities, playing a fundamental role in improving social well-being, through waste, water and sanitation management. Over the years, the natural leap was to favour the connection between these cities, begin- ning the construction of kilometres of highways, railway and underground lines, at the same time as the management and cleaning of parks and gardens began to be assumed. During the 70s and 80s, work began in the international are- na, while the importance of rationalising water management was valued. Since then, FCC has continued to adapt to so- cial demands and new trends, betting on the conservation of the environment in all its projects, always with the aim of improving the well-being of citizens. In recent years, the entry of the new reference sharehold- er into the company has meant a change in the cycle in the financial, operational and governance spheres. Thus, through a solid financial structure, the company faces the coming years with great optimism, based on pillars that are persistent enough that the future is as bright as the past. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 3 of 12 489 Transversal model of value creation Urban areas are undergoing a profound transformation, which means responding to a series of global social and environ- mental challenges. Population growth, the scarcity of natural resources, climate change or the existence of social and eco- nomic inequalities are some of the challenges that these types of environments will have to adapt to. In response to these challenges, the FCC Group’s business model, so closely linked to the development of cities, promotes innovative and cross-cutting solutions to contribute to the resil- ience and sustainability of urban environments. In this regard, to promote the sustainable evolution of cities and position itself at the forefront of its competitive environment, the FCC Group has developed its cross-cutting value creation model. This model, shared by all the Group’s businesses, is based on: Being an operator with vast experience in this business, with differentiated technical specialisation, capable of lead- ing large consortiums in complex projects. Having a highly specialised and committed team of people, whose priorities include the protection of safety and health. Having local roots in the places where it undertakes its op- erations. This makes it an essential part of the communities in which it operates, allowing the development of trusting relationships. Having a solid international position with broad develop- ment prospects in markets with great opportunities. In this way, the FCC Group is aware that the creation of the cit- ies of the future is a challenge that requires the joint efforts of its different businesses, seeking synergies and finding sustainable, innovative and efficient solutions that generate a real impact on society. FCC Medio Ambiente Environmental services Cementos Portland Valderrivas Sustainable and efficiente infrastructure Aqualia End-to-end water management FCC Construcción A business model at the forefront in creating the cities Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 4 of 12 Our mission, vision and values This philosophy, transferred from Senior Management to all em- ployees, is common to all companies, establishing a guide that should orientate the actions of all staff towards the vision’s joint goal. Furthermore, it involves compliance with the strictest pa- rameters of operational excellence and ethical principles, thus ensuring the long-term sustainability of the FCC Group. 490 These principles are included in the Group’s Code of Ethics and Conduct, which guarantees the responsible management of FCC’s activity with the different stakeholders, ensuring compli- ance and ethical behaviour. In addition to the Code, the FCC Group has other control tools, initiatives, due diligence proce- dures and certain Compliance policies that guarantee complete and effective management, with the Compliance Committee be- ing the internal body responsible for overseeing the monitoring of these policies. The FCC Group’s mission as a supplier of Citizen Services is to efficiently and sustainably design, perform and manage envi- ronmental services, end-to-end water management and large infrastructure construction projects to improve the lives of cit- izens. In accordance with its vision for the future, the FCC Group is working towards becoming an international benchmark for Citi- zen Services offering global, innovative solutions for the efficient management of resources and the improvement of infrastruc- tures, contributing to improving the quality of life of citizens and the sustainable progress of society as a whole. The FCC Group contributes, through the different sectors in which it is present (environmental services, infrastructures and the end-to-end management of the water cycle) to the trans- formation of the cities and municipalities in which it operates, thus promoting social welfare and sustainable development. Its values define the identity and culture of the FCC Group, and constitute the basis of the ethical behaviour that should guide the actions of the Group. Honesty and respect We want to be recognised for honest and honourable behaviour, worthy of the trust of collaborators, clients and suppliers as long-term and leading partners 3 2 4 Our values 1 5 Well-being and community development Aware of the value that our services bring to society, we are committed to the protection of the natural environment, the development and well-being of communities Loyalty and commitment We favour diversity, promote professional development and recognise merit ant creativity as a stimulus to productivity and progress Results-driven We pursue the improvement and achievement of goals, to make FCC a leader in profitability and competitiveness Rigour and professionalism We work with exemplarity and a service-minded approach, developin our capabilities to look for efficient and innovate solutions Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 5 of 12 Corporate governance model 491 The Spanish National Securities Market Commission (CNMV) includes in its “Code of good governance for listed companies” a series of recommendations for the business sector in line with the best international corporate governance practices. Aware of the importance of corporate governance in the organisation’s performance, the FCC Group fully or partially complies with 86.44% of the applicable recommendations. In addition, in order to provide greater details on the company’s corporate governance practices, the FCC Group prepares the “Annual Corporate Governance Report” and the “Annual Re- muneration Report” on an annual basis, following the reporting guide of the CNMV. Both reports are available on the Group’s corporate website. Governance Structure As can be observed in the following diagram, the General Share- holders’ Meeting is the Company’s overriding decision-making body, specifying its competences in the Regulations of the FCC’s General Shareholders’ Meeting. For its part, and for matters that are not attributed to the General Shareholders’ Meeting, the Board of Directors has the highest powers and faculties to manage, direct, administer and repre- sent the Company. This, in turn, has set up three commissions for more effective management and supervision: The Executive Committee, the Audit and Control Committee and the Appoint- ments and Remuneration Committee. General Shareholders’ Meeting It is governed by the provisisions of the Law, the Company’s Baylaws, and the Regulations laid down by the General Meeting.There is a guarantee of equal treatment for all shareholders in terms of information participation and the right to vote at the General Meeting. Board of Directors It is responsible for the management and representation of the FCC Group. It is the body responsible for the supervision and control of the company’s management, entrusted to the CEO and Senio Management. Executive Committee Audit and Control Committee Permanently delegated body, designated by the Board of Directors, which in turn defines the responsibilities that are attributable to it, as well as the Directors who are members of ti. It is responsible for taking decisions with regard to FCC Group Investments, access to credit, loans, guarantee, lines of collateral and other financial instruments. It supports the Board by reviewing the preparation of economic-financial and non-financial information, the internal control and independence of the external auditor. Its members need to have technical knowledge of the Group’s activity sectors. Furthemore, at least one of the members must have suitable knowledge of accounting and/or auditing. Appointments and Remuneration Committee It is the body responsible for: information, advising and proposals regarding the appointment, re-election, ratification and dismissal of directors, remuneration of the directors and senior executives of the FCC Group, as well as the control of possible conflicts of interest and related operations, without prejudice to any other functions, whatever their nature, attributed by Law, the Company’s Bylaws or the Regulations of the Board of Directors. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 6 of 12 Below is the composition of the Board of Directors and its Committees: Executive Committee Audit Committee Appointments and Remunerations Committee How it works 492 Esther Alcocer Koplowitz(1) Chairwoman (Proprietary) Esther Koplowitz Romero de Juseu(2) Deputy Chairwoman (Proprietary) Pablo Colio Abril CEO Alicia Alcocer Koplowitz(3) Proprietary Carmen Alcocer Koplowitz(4) Proprietary Gerardo Kuri Kaufmann Executive Álvaro Vázquez de Lapuerta Independent Carlos Slim Helú(5) Proprietary Alejandro Aboumrad González Proprietary C Alfonso Salem Slim Proprietary Juan Rodríguez Torres Proprietary Antonio Gómez García Proprietary Manuel Gil Madrigal Independent Henri Proglio Independent The Board of Directors’ Regulations establish that it must meet as often as necessary to effectively carry out its functions and, at least once a quarter, or whenever the interest of FCC requires it. The company’s Articles of Association also stipulate that “The Board of Directors shall meet at least once a quarter, and when- ever agreed by the President, or whoever is acting as such, or when requested by the Executive Committee or at least one third of the members of the Board.” During the 2020 business year, the Board met nine times, with an average attendance of 90.48%, thus complying with the aforementioned requirements. C C C: Committee President (1) Representing Dominum Desga, S.A. (2) Representing Samede Inversiones 2010, S.L.U. (3) Representing EAC Inversiones Corporativas, S.L. (4) Representing Dominum Dirección y Gestión, S.A. (5) Representing Inmobiliaria AEG, S.A. de CV. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 7 of 12 493 Remuneration of the Administrators Pursuant to the Articles of Association, the remuneration sys- tem applicable to the directors must be aimed at promoting the long-term profitability and sustainability of the Company and incorporate the necessary precautions to avoid excessive risk taking and the rewarding of unfavourable results. Thus, as is reflected in article 38.7 of the Company’s Articles of Association, and in article 28.2 of the Board of Directors’ Reg- ulations, the remuneration of the directors must be in accord- ance with the importance of society, the economic situation and the market standards of comparable companies. For its part, the General Shareholders’ Meeting is in charge of agreeing on said remuneration considering the functions and responsibilities of each member. Aside from fixed remuneration, allowances are also awarded for personal attendance at meet- ings of the Board and internal Committees that are convened during the year, as well as another variable amount for executive directors depending on compliance with social objectives. For further information on FCC’s Remuneration Policy, as well as on remuneration accrued by each of the directors, the Annu- al Remuneration Report can be consulted, available on the FCC Group’s corporate website. Principles and criteria for setting remunerations Relationship with the market standards and the economic position of the company Motivation and retention of the most qualified professionals Remuneration linked to attendance at meetings Promotion of long-term profitability and sustainability Transparency Link with professional performance and qualifications Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 494 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 8 of 12 Diversity in the Board of Directors Gender diversity on the Board of Directors Diversity is an essential principle for all FCC Group employees, including its governing bodies. For this reason, the functions of the Appointments and Remuneration Committee include ensur- ing that the selection processes favour diversity of gender, ex- perience and knowledge, and that they do not present implicit bias that could lead to any type of discrimination. Hence, the percentage of female directors on the FCC Board of Directors at 31 December 2020 was 28.57 percent. Regarding other diversity indicators with respect to FCC’s gov- erning bodies, on the Board of Directors, 50% of the members are of Spanish nationality and the other 50% are of other na- tionalities (Mexico and France). The following is a graphic rep- resentation of the Board’s composition: 14 directors 71% men 29% women FCC Board of Directors Nationalities of the Board of Directors 64% Propietary 22% Independent 14% Executives 50% Spanish 50% Foreign Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 9 of 12 The FCC Group in figures 2020 has been a challenge for the whole of society. The COVID- 19 pandemic has completely changed the global landscape, forcing a rapid adaptation of all companies to face the new challenges that have emerged. However, FCC has continued to organise and participate in a large number of social, environ- mental and good governance (ESG) projects, supporting the sustainable development of the communities in which it partic- ipates, creating employment and promoting economic growth. In order to respond to new needs, many of the initiatives have focused on health security and economic recovery as a result of the crisis. Innovation projects that seek to improve the quality of life of all the people who receive FCC products or services, as well as of the communities in which it operates, have not been neglected either. Some of the Group’s initiatives and recognition in 2020 were as follows: 495 January March May July FCC Indrutrial becomes the first construction company to obtain a “Zero Waste”certifica- te awarded by AENOR. Aqualia achieves total energy autonomy for two desalination plants. FCC Medio Ambiente receives the Gold Medal of Merit from the Las Palmas de Gran Canaria Fire Brigade for its collaboration in extinguishing the fire that devastated the island in 2019. 4 3 5 Aqualia reopens its customer services offices, applying all the necessary safety protocols. FCC Medio Ambient is shortlisted for the European Business Awards for the Environment (EBAE) for its sustainable mobility Project. FCC participates in FORUM, a virtual meeting to promote a new vision and strategy for the future after the 2020 crisis. 2 1 6 8 7 September FCC Construcción becomes the first Spanish construction company to verify its carbon footprint in 70% of its activities worldwide. FCC participates in the #SupporttheSDG campaign, celebrating the fifth anniversary of its aproval. 10 November FCC Group celebrates International Day for Tolerance, International Day for the Elimination of Violenve against Women and World Science Day for Peace and Development. The FCC Group updates its Harassment Prevention and Eradication Protocol. 9 11 12 April June February FCC migrates all its websites to a Liferay DXP Cloud technology environment, Improving efficiency and data management. The FCC Group launches a charity campaign for food Banks,”No home without food” and joins the campaign ot the Ministry of Equality “We are with you; we will stop gender violence together”. The FCC Group Collaborates with the Ministry of Foreign Affairs in the preparation of the report: Contribution of Spanish companies to sustainable development in Latin America. Cementos Portland Valderrivas begins its process for using biomass as a fuel. August FCC celebrates its 120th anniversary of incorporation at the services of the people. The FCC Group contributes to the country’s social reconstrution after the impact of the COVID-19 pandemic. October Cementos Portland Valderrivas renews its EMAS Eco-Management and Audit Scheme registration for the eleventh year. The FCC Group celebrates the International Day of Climate Action on 24 October. The FCC Group celebrates World Cities Day by demonstrating its commitment to the social and economic progress of cities. December FCC Medio Ambiente certifies its protocols against COVID-19 with AENOR. FCC Construcción signs its III Equality Plan. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 10 of 12 496 In order to contribute to the Group’s commitments in terms of transparency and accountability, the direct economic value generated and distributed by the Group in all the countries in which it operates is reported below, following the international reporting standard Global Reporting Initiative (GRI). Economic value generated and distributed (thousands of euros) Economic value generated Turnover Other income Economic value distributed Operating costs Employee cost Capital suppliers Taxes Community Economic value retained 6,484,798 6,158,023 326,775 5,766,796 3,466,576 1,971,110 238,513 86,273 4,324 718,002 FCC holds its 2020 General Shareholders Meeting The FCC Group’s General Shareholders’ Meeting was held in June 2020 with the aim of analysing the results of the 2019 business year and approving the financial statements, directors’ reports, as well as the distribution of the flexible dividend. In accordance with Law 11/2018, the report on non-financial information was presented as a separate item on the agenda, for approval by the General Shareholders’ Meeting. Due to the COVID-19 pandemic, the event took place electronically in line with the recom- mendations of the CNMV, the WHO and the relevant au- thorities. The Board was chaired by Esther Alcocer Koplowitz, president of FCC, and Pablo Colio Abril, CEO, who high- lighted and expressed their gratitude for the important work that FCC professionals have carried out during the pandemic, leading essential services. During the seminar, emphasis was placed on the great effort made in recent years to renew the FCC Group, adapting to new trends and needs, and managing to enter the path of profitability and sustainability. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 497 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 11 of 12 Environment area The Environmental Services area of the FCC Group has been providing municipal services and end-to-end waste manage- ment for over a hundred years and serves almost 60 million people in nearly 5,000 municipalities. The company operates in a total of 12 countries providing a va- riety of services that reflect its extensive experience in the sec- tor, including: collection, processing, recycling, energy recovery and disposal of municipal solid waste; cleaning of public roads; maintenance of sewage networks; maintenance and protection of green areas; processing and disposal of industrial waste; and recovery of contaminated land. The Environment area is made up of four geographical divisions: Iberia: FCC Medio Ambiente Spain (Including the industrial waste business) and FCC Environment Portugal United Kingdom: FCC Environment UK Central and Eastern Europe: FCC Environment CEE United States: FCC Environmental Services In 2020, the area’s turnover reached 2,900 million euros, which represents a reduction of just 0.9% compared to 2019, with a Pre-Tax Income of 155.2 million euros, equivalent to 5.4% of the turnover, a noteworthy performance taking into account the dif- ficult socioeconomic circumstances caused by the COVID-19 pandemic in 2020. Contracting stood at 2,108.8 million euros, which places portfolio volume at 9,184.3 million euros. The Environment area annually manages about 25 million tons of waste and produces about 3.5 million tons of secondary raw materials (SRM) and refuse-derived fuel (RDF). The company has approximately 700 waste management operations facilities, of which about 200 are environmental complexes dedicated to processing and recycling waste, including 11 waste energy re- cycling projects with a capacity of 3.2 million tons per year and 360 MW of non-fossil fuel electricity. Aqualia Aqualia is the water management company owned by the citi- zen services group FCC (51%) and by IFM Investors (49%). The company is Europe’s fourth largest private water company in terms of population served and ranks amongst the top ten worldwide Global Water Intelligence (August 2019). It currently provides services to over 25 million users(1) in 17 countries: Algeria, Saudi Arabia, Colombia, Chile, Ecuador, Egypt, United Arab Emirates, Spain, France, Italy, Mexico, Oman, Portugal, Qatar, Czech Republic, Romania and Tunisia. The company reported 1,188 million euros of revenue in 2020, with an order back log of nearly 15,000 million euros. Aqualia is a benchmark in the sector and stands at the van- guard as a specialised, transparent and innovative entity. We have reached this position thanks to the commitment and ex- tensive experience of our team of professionals who are con- stantly striving to improve efficiency in production processes and optimise resources, while placing citizens clearly at the core of our actions and policies. This work approach and the continuous progress in innova- tion and in the use of new technologies have enabled us to bolster the company’s leadership in the Spanish market and make headway in this regard in international markets, based on an ambitious but moderate strategy defined to consolidate the company’s international presence. Sustainable development has a distinctively intrinsic role in Aqualia’s business model: combining the generation of social benefits with a fair profit yield from activities puts the company in a privileged situation in the water management sector. Aqualia’s commitment and responsibility vis-à-vis the munici- palities in which it carries out its activities go beyond merely rendering a service: Aqualia has always sought to contribute to improving the well-being of people, particularly the most vulner- able groups. Aqualia assumes the role played by the private sector to achieve Sustainable Development Goals and shows this in its daily commitment to promoting this culture within the compa- ny and amongst its stakeholders. For this reason, as well as promoting campaigns to publicise the SDGs, it has identified and prioritised those to which the company contributes through its activity and its corporate commitments. And, through ac- tive listening, it knows the importance that stakeholders give to Aqualia’s contribution to the different SDGs. (1) Global Water Interlligence, The world’s top 50 private water operators, 2019. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: 120 years at the service of society | Page 12 of 12 498 Cementos Portland Valderrivas The cement activity of the FCC Group is undertaken by Cemen- tos Portland Valderrivas, S.A. and subsidiaries, whose business line is mainly the manufacture of cement, which accounted for more than 90.23% of total revenues in 2020. The remaining percentage for this business model (9.77%) involved concrete, aggregates and mortar. In the last business year, taking the geographical diversification of the company into account, more than 29% of revenues came from Tunisia and the United Kingdom. However, the Group’s in- ternational presence is not limited to these countries because it also exports to North Africa, Central America and several coun- tries in Europe. The company’s operating structure is based on the cycle for the cement business. The consists of the extraction of raw materials (aggregates), the process for manufacturing clinker, cement, concrete, dry mortar and special products, and final distribution. Cementos Portland Valderrivas is the largest cement group in Spain by productive capacity and directly or indirectly owns production centres in a number of regions in the country: Can- tabria, Basque Country, Navarra, La Rioja, Castile-León, Ma- drid, Aragon, Andalusia and Catalonia. Its products are distrib- uted in all 17 Autonomous Regions. FCC Construcción The FCC Group’s construction business has more than 120 years’ experience and it has a presence in a total of 26 coun- tries. It is a benchmark in the management and execution of civil works (roads, railways, airports, hydraulic and maritime works, tunnels, bridges, underground networks, treatment plants) and building construction (residential and non-residential: hospitals, football stadiums, museums, offices) and its activities cover all areas of engineering and construction. During the 2020 business year, the construction area recorded a total aggregate attributable backlog of 5,155.8 million euros. Gross earnings (EBITDA) reached 53.6 million euros and rev- enue dropped by 6.3% over the previous year and stood at 1,611 million euros. In 2020, the international project backlog decreased by 2.1% and the income from domestic activity in- creased by 27.6% compared to the previou s year, standing at over 848 million euros. It is currently the fourth most important construction company in Spain and is one of the top 40 in the world. It has proven experience in undertaking projects under concession and it has a group of companies dedicated to the industrial sector and grouped under the FCC Industrial brand, as well as other activ- ities relating to the construction sector (Matinsa, Megaplas and Delta Prefabricados). Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The context of the FCC Group in 2020 | Page 1 of 6 The context of the FCC Group in 2020 499 FCC and global challenges In turn, unstoppable technological development is allowing the emergence of new techniques and tools, at the service of companies and society, applicable to all sectors of activity. Technology helps to respond to the different global challenges that we currently face, and will be key in future urban develop- ment. Among others, these innovations have enabled a rapid response to the pandemic, and allow the development of new, more efficient processes with less environmental impact, con- tributing to the fight against climate change and enabling the application of a circular economy model. For the FCC Group, it is essential to analyse the socioeconomic context on the performance of its activity, and based on this study, the company has identified six interconnected global trends, which have a direct impact on its business model and its main stakeholders. During its 120-year history, the FCC Group has shown that it knows how to adapt to its environment, offering the citizen services that society requires at all times. Along these lines, in order to meet social expectations and effectively overcome the challenges that it faces, the Group constantly analyses trends that may affect its business, as well as the way it relates to its different stakeholders. Over time, the FCC Group has contributed to the development of cities that, according to forecasts, will continue to expand even more in the future. The Group firmly believes that this growth must be carried out in a sustainable way, limiting the impact of these areas on their surroundings and adapting them to the risks of the future. Through its commitment to the circu- lar economy, the company aims to help limit the environmental impact of cities, while also contributing to the fight against cli- mate change and promoting the sustainable consumption of resources. In 2020, urban environments have not been immune to the ef- fects of the pandemic caused by COVID-19. Its citizens have suffered an event that has had, on a global scale, the great- est health, economic and social impact in recent decades. COVID-19 has affected cities and their inhabitants, transform- ing, among other factors, relationships, consumption habits and mobility patterns. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The context of the FCC Group in 2020 | Page 2 of 6 500 Expansion of cities and sustainable urbanisation Currently, 4,200 million people, 55% of the world’s population, live in cities, and this percentage is expected to continue to in- crease. By 2050, cities are expected to host 68% of the world’s population, which means that 1.2 million km2 will be urbanised in the next three decades.(2) The increase in population and its settlement in urban centres means that the towns are transformed into cities, which will ex- pand geographically, increasing their population density. This represents new challenges for the FCC Group with regard to land and natural resource management so that cities continue to be functional, which will require the optimisation of resources and infrastructures, in the short, medium and long term.(3) The expansion of cities will require a huge investment in infra- structure in the coming decades, which should allow the main- tenance of large urban centres. In this context, social demands are increasing for this urbanisation to be sustainable. The sustainability of construction, both of buildings and of in- frastructures, mainly concerns the technological field, and the choice of materials to be used on site. For the FCC Group, constant innovation in the use of primary and recycled materials means an increase in efficiency and a reduction of construction costs. The Life Cycle Analysis of the civil works elements paves the way as a fundamental factor to consider, both when building new infrastructures and when adapting existing infrastructure.(4) The FCC Group faces this expansive trend in cities by betting on the development of Smart Cities and sustainable urban ac- cessibility, minimising the environmental impact of its processes and services. Sustainable use of natural resources In the last twenty years, the material footprint or, what is the same, the amount of raw material necessary to satisfy basic needs has increased continuously throughout the world. This indicator measures the pressure that economic development exerts on the environment, consumption and production of natural resources. A clear example of the challenges that we face due to the unsustainable use of resources can be found in water management, since it is estimated that, if not addressed correctly, the scarcity of water itself could involve the displace- ment of around 700 million people by 2030.(5) The circular economy model is a way to protect natural resourc- es, making a more efficient use of them, also trying to reinforce awareness of current consumption patterns. This model, driv- en by the public and private environment and widely accepted by society, also contributes to the fight against climate change and, at the same time, allows the generation of new jobs. The efficient and responsible management of urban solid waste (USW) and the reuse of water are some of the global priorities of the 2030 Agenda, in which the FCC Group has specialised business lines. Regarding waste management, the Environment area carries out different R&D&i projects to extend the life cycle of resources, supports public initiatives to promote the transi- tion towards a circular economy model and raises the aware- ness of its collaborators in environmental matters. For its part, Aqualia, specialised in the management of the end- to-end water cycle, is committed to continuous investment in innovative projects that allow it to detect new opportunities and implement more efficient processes. This, together with the commitment to the recovery of residual water, allows this re- source to be used more efficiently, reducing water stress. (2) Source: World Bank. (3) Source: Cities in the World, OECD Urban Studies. (4) Source: World Cities Report 2020, UN Habitat. (5) The Sustainable Development Goals Report 2020, United Nations. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The context of the FCC Group in 2020 | Page 3 of 6 Climate change The fight against climate change is one of the greatest challeng- es on a global scale. The impacts derived from this phenome- non include changes in weather patterns, as well as a greater probability of extreme events, such as floods or droughts, in different regions of the world. According to the World Economic Forum, this phenomenon is considered to be one of the most significant risks, taking into account both its impact and the probability of occurrence. The transition to a low-carbon economy is high on the public sector agenda, a transition in which the private sector plays a key role in setting emission reduction targets. This will be a particularly relevant challenge for urban areas, since, according to the United Nations, cities consume 78% of the world’s energy, producing more than 60% of greenhouse gas emissions. In this scenario, the International Energy Agency estimates that reducing these emissions into the atmosphere will involve significant investments over a long period of time. For the FCC Group, it is a priority to contribute to reducing the effects of global warming, which is why it has its own specific strategy in the matter of Climate Change, and directs its efforts at progressively implementing the ISO 50001 Standard on en- ergy efficiency and the commitment to clean energy and the control of GHG emissions. 501 COVID-19 The pandemic caused by the COVID-19 disease has generated an unprecedented impact on society and the world economy, affecting different sectors and geographies across the board. Managing it has meant a response and involvement at all levels and from all areas political, health, legal, social and business. The FCC Group, aware of the importance of its activity for the proper functioning of urban areas and to minimise the impact on the well-being of citizens, has continued to provide the re- quired services even in the most critical moments of the crisis. In addition, aligned with the policies, practices and recommen- dations in the fight against the spread of the disease, it has contributed through its services, to promoting greater hygiene in public spaces in cities and in detecting the presence of the virus in urban wastewater, which allows earlier detection of in- fections. The pandemic has increased the urgency when facing some sanitary and urban challenges, such as the distribution of pub- lic space, the recreation of people and housing and sanitation conditions. These new challenges motivate the FCC Group to maintain its work approach towards improving citizen well-be- ing and towards increasing people’s health and safety. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The context of the FCC Group in 2020 | Page 4 of 6 502 The FCC Group contributes to the country’s social reconstruction after the impact of the COVID-19 pandemic The FCC Group has actively collaborated, through all its business areas, in different social initiatives, in an exercise of solidarity and responsibility, where its own collaborators have also participated, positioning itself as a significant player at the forefront of the country’s social reconstruction. In line with the social commitment that characterizes the Group, a solidarity campaign has been carried out in favour of food banks, under the “No home without food” initiative, in collaboration with the La Caixa Foundation and Caixa- Bank, with the aim of to help the most vulnerable families affected by the crisis caused by COVID-19. Staff solidarity that has materialised in the form of dona- tions, together with the company’s economic contribu- tion, added a total of 131,000 euros to this campaign, an amount that has been allocated to the 54 Food Banks in Spain, so that they could buy supplies and satisfy the social demand of the most disadvantaged families. FCC joins Madrid Future, an initiative to promote social and economic recovery in the capital after the health crisis FCC has joined Madrid Future, the new non-profit associa- tion founded as a result of the health crisis, with the aim of promoting and encouraging projects aimed at the social and economic reactivation of Madrid, due to the effects of the COVID-19 pandemic. Within the framework of this social initiative, it is expected that projects in the area of sustainability and digital trans- formation will be developed around three fundamental axes: Spanish language and culture, health and well-being, and sport. About 30 large companies and entities have signed the as- sociation’s charter, as well as its status, in a collaborative project that generates hope for the economic and social re- covery of the city. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The context of the FCC Group in 2020 | Page 5 of 6 The FCC Group responds to the COVID-19 in a cross-cutting way through its different business areas Since the beginning of the COVID-19 pandemic, the FCC Group has carried out various actions to ensure the operation of its business, with many of its main activities being key and essential, such as: street cleaning, waste collection, infrastruc- ture maintenance and end-to-end water cycle management. In accordance with its different business lines and to mitigate the effects of the health crisis, the following actions have been carried out: Environment business: to maintain basic services for the cities, this line of business has reinforced the means of protecting its workers in order to carry out their essential tasks. Among them, priority has been given to disinfection with flushers, hydro-cleaning vehicles or fumigators, and selfless work has been carried out such as the disinfection of town halls or other public buildings that lacked resourc- es. 503 Aqualia: to guarantee the continuity of an essential ser- vice such as the management of the end-to-end water cy- cle, Aqualia has immediately reinforced its protocols with the ultimate aim of protecting its employees and custom- ers. In addition, among other actions, all planned water cuts have been suspended, guaranteeing the supply of water to all homes. Construction business: to cover the demand of patients in the midst of the COVID-19 crisis, FCC Construcción has fitted out some health units of the hospital projects it executes. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The context of the FCC Group in 2020 | Page 6 of 6 504 The support of the private sector is essential in the development of social action initiatives that contribute and promote equal op- portunities, favour inclusion and provide responses to the needs of vulnerable groups, at risk or in a situation of social exclusion. FCC’s commitment to social equality materialises every year through participation in initiatives together with NGOs and col- laborating entities of the Group, through participation in differ- ent social projects, which improve the employability of people, promoting educational plans and training, fostering the labour insertion of different groups and the development of communi- ties and social inclusion. These initiatives, which reflect the FCC Group’s commitment to local communities, stakeholders and society as a whole, are aligned with its principles on equality, diversity and inclusion, and its commitment to a diverse work environment, in which the talent of each person is valued, regardless of their race, gender, age or other factors. This diversity, both within the staff and on the Board of Directors, is a reality that more and more investors are turning their attention to. The Group values diversity, in a broad sense (age, race, nation- ality, religion, culture, etc.), including the you_diverse initiative within its talent strategy. Technological development The technological revolution is a fact that is observed in the day- to-day life of cities. Big Data, Internet of Things (IoT) or Block- chain systems are placed at the service of cities to completely modify the existing infrastructure. The digitisation of key sys- tems for cities, in which the FCC Group participates, represents a turn of the page in the way of managing urban resources. The digitisation of cities implies a structural modification of the citizen’s relationship with their environment, from their con- sumption patterns to the form in which they do business. This transformation reaffirms the empowerment of citizens and con- tributes to their greater involvement in decision-making, which indirectly affects the development of the cities in which they live. The citizen is, after all, the greatest resource of cities, since they propose new ideas of innovation and act as the drivers of the city. Citizens are increasingly demanding, requiring more quality in- formation on the different products and services offered, taking advantage of interconnectivity and easy access to smart devic- es. To respond to this need, the Group has set up a compre- hensive multichannel service that establishes its own real-time information follow-up systems and even participates in round tables to detect its stakeholders’ possible expectations. The FCC Group, aware of the importance of being at the fore- front, annually invests resources in the development of R&D& i projects, with the aim of being a benchmark in new technolo- gies and thus offering continuous improvements to citizens that have an impact on their quality of life. Inequalityand social exclusion Despite the economic and social progress of the last decades, there is, more and more, a greater disparity in the distribution of wealth. With each generation, the income and opportunity gap is more pronounced and, due to the crisis resulting from COVID-19, existing inequalities within and between countries have increased. The pandemic is particularly affecting the most vulnerable groups, and is making it difficult for certain sectors of the population to access education.(6) (6) The Sustainable Development Goals Report 2020, United Nations. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 1 of 15 Sustainability in FCC’s business model 505 Since the founding of the FCC Group, the social and economic development of cities has enabled the business to progress. FCC considers that the role of sustainability will be fundamental to ensure that the cities of the future can face the main global challenges, such as climate change, population growth, poverty and equal opportunities, among others. For the FCC Group, the progress of cities must guarantee the well-being of their citizens, respect for human rights and the preservation of the environment. Throughout its history, FCC has accompanied the constant evolution and transformation of cities, providing sustainable solutions and launching projects and initiatives in the area of corporate social responsibility. In this sense, in 2005 the Group’s Board of Directors decid- ed to publish the first CSR and sustainability report, informing stakeholders of FCC’s involvement with people’s well-being and respect for the environment, and thereby reflecting their socially responsible actions. This initiative was subsequently replicated by all the Group companies, with each business publishing its CSR report on a regular basis. In 2020, the health crisis has posed a new challenge for the functioning of cities. New needs have emerged to prevent the spread of COVID-19, such as greater hygiene measures in public spaces, while it was necessary to maintain basic servic- es. The FCC Group, aware of the importance of its role in the well-being of citizens, has focused its efforts on continuing with its business activities, such as supplying water to the population or urban cleaning tasks, among others. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 2 of 15 506 The FCC Group’s CSR policy Throughout its history, the development of the FCC Group’s activity has been based on fostering long-lasting, transparent and mutually beneficial relationships with the stakeholders with which it interacts. Through its Corporate Social Responsibility Policy (hereinafter, CSR Policy), approved in 2016 by the Board of Directors, the Group includes all its commitments related to integrity and business ethics, respect for the environment and the contribution of value to society. CSR policy governance FCC’s Board of Directors is the body responsible for ensuring compliance with the Group’s CSR Policy, through the Executive Committee, thus aligning itself with recommendations 53 and 54 of the CNMV’s Code of Good Governance. There are also Corporate Responsibility or Sustainability com- mittees in the different business divisions, which act as those responsible for the development, implementation and compli- ance with the CSR Policy in each unit. For its part, integrated within the General Secretariat, is the Compliance and Corporate Responsibility Department, which develops the results monitoring systems, related to the social responsibility practices of the FCC Group, identifying the asso- ciated risks, designing the strategy for its control, and coordi- nating the FCC Corporate Responsibility Committee. The following graph represents the structure for responsibilities in matters of Corporate Social Responsibility, attributable to each of the governing bodies involved: Board of Directors Executive Coomittee Regular monitoring of CSR perfomance CR Committee Aqualia CSR Committee FCC Medio Ambiente Sustainability Committee FCC Construcción Sustainability Committee CPV CSR Commitee Sustainability Report (presented to the AGM annually) CSR Master Plan Compliance and RC Directorate included in General Secretariat Proposal for CSR Master Plan Development of follow-up systems Development of CSR Policy Identification of CSR risks and oportunities Coodination of the FCC Response Committee Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 3 of 15 Principles of action Quality and innovation Management efficiency 507 In accordance with the CSR Policy, the principles of action that guide the behaviour of the FCC Group are: Both FCC and all of its collaborators continually strive to identify, satisfy and even anticipate the needs of their cus- tomers (internal and external), being aware of the conse- quences of their actions and decisions. In addition, innovation and improvement is continuous within the different business lines. The FCC Group always prioritises simplicity and austerity, facilitating the attainment of its business objectives while striving to optimise the use of resources and cash. Likewise, it protects and optimises the use of resources that are more difficult to measure, such as the structure and management systems of the company, its knowledge and experiences, its brand and the relationships that the company maintains with its external stakeholders (clients, suppliers, etc.). Integrity in its actions Proximity and commitment FCC’s Code of Ethics and Conduct aims to encourage all individuals linked to any FCC Group company to be orient- ed by guidelines requiring the highest level of commitment to comply with legislation, regulations, contracts, proce- dures and ethical principles. The Code enacts, in a practical fashion, the values shared at the FCC Group, strengthening the commitment to peo- ple, respecting their rights and dignity, and demonstrat- ing zero tolerance towards discrimination based on race, religion or gender. The FCC Group is also committed to respecting the environment, acting under the principles of precaution and efficiency in the use of natural resources and to biodiversity. The FCC Group’s social responsibility is understood as a business management model that pursues not only the creation of value added for the shareholder, but also a joint effort with the communities to promote their well-being and development, transforming them into smarter, more inclu- sive and cleaner environments. The FCC Group is committed to the priority objective of achieving the employment well-being of its employees, also promoting their professional development. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 4 of 15 The CSR Master Plan CSR 2020 MASTER PLAN 508 In November 2017 the FCC Group’s Board of Directors ap- proved its IV CSR Master Plan 2018-2020, the result of an in- depth analysis of the sustainability needs and trends detected by the Group in the medium and long term, and in compliance with the CSR Policy approved in 2016. The CSR Master Plan, aligned with the Sustainable Develop- ment Goals, has positioned the company as a leading player in social, economic and environmental challenges, focusing its responsible management on 15 action programmes that are structured around three strategic pillars: connecting with citi- zens, smart services and exemplary conduct. The FCC Group’s CSR Action Plan was concluded during this business year after three years of intense work in which out- standing efforts were made to meet the expectations and de- mands of stakeholders, to respond to the global challenges of sustainable development and to contribute to fulfilling the Unit- ed Nations 2030 Agenda. The backbone that supports the responsible management of the FCC Group, through its three strategic pillars, contributes in a cross-cutting manner to bring to fruition its vision, improving the lives of citizens and the sustainable progress of society. Smart Services FCC is a leader in designing the sustainable cities of the future FCC Connected FCC ia a catalyst for citizens to play a leading role in a sustainable city. FCC Ethics FCC is an example of authenticity in its commitment. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 509 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 5 of 15 Below are details of some of the FCC Group’s sustainability initiatives during its 2018-2020 Master Plan, as well as some outstanding projects for the 2020 financial year. Axis I. Connecting with citizens: Citizens as protagonists of sustainable cities The FCC Group is aware that to respond to the challenges posed by cities in the XXI century and to promote sustainable development, it is necessary to understand and analyse the real expectations of citizens. For this reason, the company, through its different lines of business, promotes constant dialogue and active listening. Likewise, with the aim of maximising the positive social impact on the communities in which it operates, the FCC Group pro- motes intelligent and inclusive progress in cities, launching vari- ous actions and promoting social dialogue with administrations in urban centres, to meet the needs of stakeholders at all times. In this regard, to respond to the social demands of citizens in this area, the FCC Group implements initiatives encompassing the following lines of action: FCC + Action: the objective of this line of action is based on providing a coordinated and aligned response in those places in which the company detects an accentuated so- cial need that has not yet been met. In this regard, each business line implements social action projects, through collaborations with non-profit organisations and solidarity actions, with the aim of contributing to improve people’s quality of life. The FCC Group has contributed in a coordinated manner to improving the living conditions of the most vulnerable groups through training programs for women, volunteer activities or social and labour insertion projects. Like- wise, alliances have been established through collabora- tion agreements with non-profit entities such as Caritas, ACNUR or the Spanish Red Cross, to cover the social needs in the different communities in which it operates. FCC Educates: the FCC Group, aware of the technical knowledge and capacities of its professionals, tries to pro- mote and provide, through this axis, training programmes to society, to bring about the company’s internal strengths. Throughout the implementation of the Master Plan, FCC has improved knowledge management and contributed to education, providing social value through its own collab- orators. As examples of initiatives, it is worth highlighting the creation of web portals to raise awareness about the use of water, to the participation of professionals in national and international forums and conferences on CSR matters, in working groups, as well as in professional training pro- grammes and partnership agreements with schools and universities. FCC + Action FCC “Gives away kilos of generosity” to the Pan y Peces Foundation For yet another year, and in line with the solidarity intrinsic to FCC’s business, a collaboration campaign was launched together with the Pan y Peces Foundation under the slogan ‘Give kilos of generosity’, during the Christmas holidays. Thanks to the initiative and generosity of FCC employees, the solidarity campaign amassed personal hygiene prod- ucts, non-perishable food and Christmas sweets and toys for the most vulnerable families. FCC Educates Aqualia and the University of Almería sign an agreement approving the “Aqualia of the End-to-End Water Cycle” Chair In 2020, as part of the FCC Group’s collaboration in envi- ronmental education, the “Aqualia of the End-to-End Water Cycle” Chair was approved, in which joint research will be carried out to apply solar energy in the different processes of the end-to-end water cycle. The Chair’s work team will be made up of both University teaching staff and Aqualia repre- sentatives from different areas, including the Department of Innovation and Technology. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 510 2025 city Aqualia, building the circular economy master plan for Castilla-La Mancha Aqualia is collaborating with the Castilla-La Mancha Com- munity Council to implement the circular economy mas- ter plan for the region. Within this context, the Castilla-La Mancha Sustainable Development Department counted on Aqualia to participate in the Technology and Circular Econ- omy conference, at which the company had the opportuni- ty to present its strategy and projects in this area. During this conference, the solutions implemented by the company in Spain were also described. In this regard, since 2015, Aqualia has implemented twelve innovative initiatives in the region, thus contributing to the design of the cities of the future. FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 6 of 15 City 2025: in this pillar, the company works as a facilitator of dialogue between the different stakeholders to build, in a collaborative way, a sustainable, inclusive and humane city. To this end, the company participates and collaborates with different municipalities in defining the Vision of the sus- tainable city, by organising roundtables in which the main urban challenges are addressed. During the years of the Master Plan, work has been carried out on roundtables, debates, expert panels, conferences and informative breakfasts, with the aim of promoting so- cial dialogue between stakeholders, making them partic- ipate in the sustainable challenges of cities of the future: such as sustainable mobility, the need for new and resilient infrastructures, efficient water and waste management or the humanisation of cities. Measurement of the socioeconomic impact: it is essen- tial for the company to ascertain and measure the scope of the social, economic and environmental impact of its activ- ity, to improve two-way communication with stakeholders and to adapt the message to each of them, allowing value added to be contributed to Group projects and proposals. In this regard, the FCC Group has worked with public, pri- vate and third sector entities in projects to measure the socio-economic, climate or social responsibility impact. In addition, metrics have been developed internally to cate- gorise projects and environmental risks and opportunities have been identified. Measurement of the socioeconomic impact The FCC Group collaborates with the Ministry of Foreign Affairs in the preparation of the Report: Contribution of Spanish companies to sustainable development in Latin America The FCC Group has participated in the Contribu- tion Report of companies to sustainable develop- ment in Latin America, prepared by the General Directorate of Economic Diplomacy (Secretary of State for Global Spain), in collaboration with sixteen other Spanish companies present in Latin America. With the aim of analysing the contribution of these companies to sustainable development in Latin America, the report reviews the main projects and most outstanding programmes in the area of ESG (environmental, social and good governance), as well as an analysis of the challenges and perspec- tives of Spanish companies in terms of sustainabil- ity in the coming years. With the inclusion of the private sector on the 2030 Agenda, and, consequently, of the FCC Group, more and more stakeholders are echoing the main social responsibility initiatives of companies. Along these lines, the Report refers to the Group’s good practices in relation to its environmental manage- ment, the incorporation of the circular economy in its business model or the environmental aware- ness that it tries to transmit to its workers. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 7 of 15 FCC plan for a circular economy The Deep Purple project, turning urban waste into valuable resources One of the many projects in which FCC partic- ipates is Deep Purple. Coordinated by Aqualia, with the participation of FCC Medio Ambiente, and financed by the public-private association Bio-Based Industries (BBI JV), it investigates, on a pilot scale, the application of innovative tech- niques in the management of effluents to recov- er by-products. Urban waters present valuable components such as cellulose and other nutri- ents that can serve as raw materials for numer- ous applications. The by-products obtained from the Deep Purple Project can be used both as fer- tilisers, as construction materials, bioplastics and cosmetic products. Axis II. Smart services: Designing the sustainable cities of the future The FCC Group, in its commitment to continuous improvement both in its internal processes and in the offering of its services, works on the implementation of innovative initiatives, projects and procedures in order to design sustainable solutions in its three business areas: end-to-end management of the water cycle, infrastructure development and environmental services. From the design, execution, operation and maintenance phas- es, the company works on the creation of new capacities to address global warming, waste management, water supply or the preservation of the environment, among others. FCC plan for a circular economy: circularity is inherent to the FCC Group’s business model, mainly at Aqualia and the Environment area, as the company contributes through the end-to-end water cycle and waste treatment respectively, to the transition to a circular production model. By applying continuous innovation in its processes, the company could position itself as a benchmark in this matter, which is in- creasingly in demand by society as a whole. Since the implementation of the Master Plan, the company has worked from its different business lines in the transition to a circular production model, leading European projects, participating in conferences and work groups of this na- ture, optimising the consumption of resources through in- novative processes or by certifying its waste management systems. 511 Climate change and eco-efficiency: aware of the en- vironmental impact of its activity on its surroundings, the company has a 2050 Climate Change Strategy which, aligned with its commitment to reduce emissions, defines the climate goals for each business line and their different measurement indicators. The FCC Group works to mitigate its impact on the nat- ural and urban environment. For this reason, during its sustainability journey, the company has launched various initiatives such as: the Group’s 2050 Climate Change Strat- egy, the promotion of electric vehicles, the development of R&D&i projects or the registration of the carbon footprint by business line. In addition, environmental training sessions have been promoted for employees and their participation in working groups on innovation and climate change has been encouraged. Climate change and eco-efficiency FCC Construcción, the first Spanish construction company to verify its carbon footprint in 70% of its activities Since 2010, FCC Construcción has a Climate Change Strategy, and annually prepares and verifies its emissions reports. Within the framework of this strategy, FCC Con- strucción has expanded the scope of the verification of emissions derived from its activity. During the 2020 busi- ness year, the CO2 emissions reports of 12 countries in which the company operates have been verified, which represents 70% of its national and international activities carried out in 2019. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 8 of 15 512 Response to water stress: the FCC Group is aware of the increasingly accentuated scarcity of natural resources, including water. In this regard, water stress has a direct im- pact on the development of communities, so its effective management is especially significant for the Group as it is a leading supplier in the management of the integral water cycle. In order to reduce water stress in the communities in which it operates, the FCC Group, through the water business, has implemented processes to minimise its consumption, promoting the reuse of this scarce resource. Likewise, in recent years, the company has launched various public awareness campaigns on the responsible use of water and it has participated in various sectoral actions. In this re- gard, Aqualia’s efforts to achieve greater efficiency in the consumption of water resources, through better use of wastewater, are also noteworthy, such as the H2020 Run- 4life project. Protecting biodiversity: the activities carried out by the company through its different business lines directly and indirectly affect the natural environment. To mitigate this im- pact and promote biodiversity conservation, the company establishes alliances, develops ecosystem protection pro- jects and maps areas of interest for biodiversity, etc. The FCC Group’s commitment to protecting and caring for biodiversity has led the company to implement, within the framework of its CSR Master Plan, the following initiatives: collaboration with public entities to recover the population of certain endangered species, identification of protected areas in operational perimeters, environmental awareness campaigns or innovative projects to maintain the balance between the urban environment and its co-existing spe- cies. FCC InnovaRSC: the FCC Group carries out cross-cutting innovation projects in each of its business areas and at the Group level, which contributes to generating a competitive advantage and being more efficient in its processes. In this regard, sustainable innovation has become a common commitment for the company. The R&D&i efforts and investment by the FCC Group during the years of the Master Plan show its commitment to con- tribute to the creation of the sustainable cities of the future. In this regard, the company has participated in different sustainable innovation working groups and has motivated its employees to develop innovative solutions through its Avanza Awards. Protecting biodiversity FCC Construcción adapts the facade of a building for the nesting of swifts In line with its commitment to the SDGs and, spe- cifically, to biodiversity (SDG 15, life of terrestri- al ecosystems), FCC Construcción adapted the facades of the IES María Espinalt, in collabora- tion with the Barcelona City Council to protect the swifts in their migratory passage through the region. For this, items that facilitate the nesting of these birds were incorporated, taking into ac- count the location of the building, since it is lo- cated in an area of migratory transit during the spring season. FCC Medio Ambiente Iberia will hand over its Avanza Awards The Avanza Awards were devised to channel all know-how in the area of innovation of FCC employees, and to rec- ognise their effort and willingness to participate through initiatives that materialise in improvements to increase the company’s competitiveness. Thus, for yet another year, FCC Medio Ambiente Iberia celebrated the delivery of the II edition of the Avanza Awards, in which six projects were awarded in the categories of Social Initiatives, Quality Im- provement, Respect for the Environment and Innovative Solutions. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 9 of 15 513 Axis III. Exemplary conduct: Cross-cutting ethical commitment The FCC Group’s Code of Ethics is the company’s starting point in terms of integrity, to work with the highest standards of con- duct with stakeholders and society as a whole. Internally, we are working to strengthen the control and supervision systems to be a benchmark company in this area, prioritizing the health and safety of employees and integrating the ESG (environmental, social and good governance) commitments in the value chain. FCC Culture: employees are the main intangible asset of the FCC Group. For this reason, the company works to consolidate and promote a solid corporate culture that covers each business line, to turn employees into brand ambassadors and increase, at the same time, their pride of belonging. The FCC Group’s corporate culture reflects the company’s cross-cutting and aligned commitment to the mission, vi- sion and values, contributing to its exemplary performance motivated by various training programmes in all geogra- phies. Likewise, the company has worked on the revision of the Code of Ethics and Conduct and the Criminal Preven- tion Manual. A corporate Compliance Committee has been set up and internal controls and tools have been designed for their management and certification. Responsible procurement: the company applies social, environmental and good governance criteria in its supply chain, in its firm commitment to introduce sustainability in the processes of contracting goods and services, through its commitment to responsible purchasing. In order to comply with this action plan, the FCC Group has reviewed its Purchasing Manual and approved the Supplier Approval Procedure, for which a CSR questionnaire and the parameterisation of the tool have been prepared. Fur- thermore, compliance controls have been designed and clauses have been introduced in the general conditions of all the Group’s contracts in matters of ethics, anti-corrup- tion and compliance with the Global Compact. FCC culture FCC360, the new internal communication application of the FCC Group The FCC Group has launched its new FCC360 App, rein- forcing its firm commitment to innovation and new tech- nologies. One more step to enrich internal communication between work teams and promote corporate culture at mainstream level, in each business line. The FCC360 application allows you to optimise and stream- line many common management processes and keep all your employees informed and connected. Likewise, the application serves employees as a means to internalise and share the corporate culture of the organisation, through a deeper understanding of the mission, vision and values. For the first time in FCC’s history, the company is able to connect all employees online, sharing initiatives, challeng- ing projects and, ultimately, the future path of the organi- sation. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 10 of 15 514 XHumanRights: the FCC Group promotes respect for hu- man rights in all the communities in which it operates, pro- moting a quality, respectful and dignified work environment through training actions and internal awareness of employ- ees, prevention mechanisms and the approval of human rights policies. The route that the FCC Group has taken in this matter has mainly consisted of the following activities: an analysis of the impact of the company’s activity on human rights has been carried out, which has been approved and dissemi- nated internally and included in the Compliance Model and in the Code of Ethics and Conduct of the FCC Group. In addition, to detect possible abuses in this matter, an inter- nal complaints mailbox has been set up. Talent2: skills + leadership: the professional development of employees at the FCC Group is essential to achieve greater productivity, obtain better results in the medium and long term and optimise the company’s efficiency. The FCC Group, in its commitment to talent management, en- courages the growth of its employees according to their needs and skills. To contribute to the professional development of its em- ployees, the FCC Group promotes transformational lead- ership. To this end, the FCC Campus has been launched, which has four corporate schools: speed, values, digital and compliance have been defined as competences at mainstream level, applicable to all Group employees. Talent2: skills + leadership The FCC Group promotes the training of its employees in all professional categories In the last year, the FCC Group has launched some in- itiatives in the area of training and leadership among its different professional categories. In this regard, it is worth highlighting the III Edition of the International Programme for Young Talents in the Construction area or the imple- mentation of pilot programmes for Mentoring and Col- lective Coaching to improve team management and the integration of different generations. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 11 of 15 515 Diversity and equality: for the company, attracting and retaining talent are fundamental aspects both internally and externally. For this reason, the FCC Group works to offer employment, promotion and remuneration opportunities under equal conditions for all its employees, promoting equality and diversity in all its activities, through various specific action plans. Throughout the course of its Master Plan and to respond to this action plan, the FCC Group has launched projects in three areas of action: 1) Equality. Communication campaigns on equality mat- ters; renewal of the “Equality at the company” emblem and the signing of new Equality Plans. 2) Diversity. Compliance with the “Principles for the em- powerment of women” of the Global Compact; renew- al of the Diversity Charter; collaboration with non-profit organisations such as the ONCE-Incorpora Foundation for the employment of groups at risk of social exclusion; accessibility measures at the Las Tablas headquarters. 3) Gender violence. Commitment of the FCC Group against gender violence through collaboration agree- ments with the ONCE-Incorpora Foundation, the Integra Foundation or the Red Cross, to promote the labour in- sertion of female victims of gender violence. Diversity and Equality The FCC Group has updated its “Harassment Prevention and Eradication Protocol” The FCC Board of Directors, in order to reinforce its com- mitment to the principles set out in the Code of Ethics and Conduct and in its Compliance Model, approved a new version of the “Harassment Prevention and Eradication Protocol”, extending the responsibility and ethical conduct to all the people who work at the Group. Thus, to promote a fair and diverse work environment, the protocol contemplates, among other aspects, certain measures, the most noteworthy of which were as follows: not tolerate any conduct that involves discrimination, promote a culture of respect and awareness campaigns against harassment, offer specific training in this regard, ensure the agility of complaint mechanisms, adopt discipli- nary measures and guarantee the labour rights and social protection of female victims. In this regard, the FCC Group undertakes to avoid any con- duct that may generate an intimidating or hostile work envi- ronment for employees, establishing procedures for action against harassment, guaranteeing the maximum confiden- tiality of the process and the prohibition of retaliation in this regard. Code of Ethics and Conduct V ersion Approv ed by the FCC Group Board of Directors on 10 September 2019 Copyright 2018. All rights reserved. FCC | Code of Ethics and Conduct 1 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 12 of 15 Health and Safety comes first: the FCC Group works to disseminate a culture of prevention of occupational risks, health, safety and the well-being of employees at the company, to position itself as a leading player in this area. To do this, improvement plans are imple- mented and health and safety policies are reviewed, which allow us to visualise the performance of FCC as a healthy company. Health and safety is a matter of global relevance for the FCC Group. The activities that have marked the posi- tioning of the company with the well-being of its collabo- rators during the implementation of the Master Plan are based on: updating the FCC Group’s Risk Prevention Policy; the creation of the Live Healthy Project and the ISO 45001 Certification on Health and Safety Manage- ment Systems in the different areas. The FCC Group holds the Sustainability Conference with the objective set in the new ESG 2025 Master Plan The FCC Group Sustainability Conference, which took place on 28 October, was held with the aim of setting out the sustainable roadmap to be followed by the company in line with the new Master Plan. During the seminar, the importance that ESG (en- vironmental, social and good governance) aspects have acquired in recent years, and their trend to become a fundamental piece of its business mod- el, was highlighted. Likewise, a review was made of the main milestones of the FCC Group and the route towards sustainability from 2005 to now. Once the respective presentations had been com- pleted, the sustainability managers of each busi- ness line of the company participated in a dialogue table to establish jointly and in a coordinated man- ner the pillars of the Group’s next Master Plan, aligned with the SDGs and aimed at satisfying the demands and expectations of its stakeholders. 516 Next steps in the sustainable path of the FCC Group: towards the ESG 2025 Master Plan With the aim of ensuring the FCC Group’s sustainable commitment in the coming years, the company held a Sustainability Conference in which all business lines participated, to jointly define the new ESG 2025 Master Plan: In this regard, the exhaustive materiality study carried out in a main- stream manner will be the starting point for the definition of the new ESG 2025 Master Plan, allowing the main axes on which to work to be established in the short, medium and long term, to continue offering the best services to citizens and contribute to socio-economic devel- opment. Health and Safety comes first FCC Medio Ambiente Iberia receives the AENOR certificate of protocols against COVID-19 The company has certified its protocols with AENOR with re- spect to COVID-19 at its corporate headquarters in Las Tablas (Madrid). The awarding of this certificate constitutes significant recognition, not only of the company’s commitment to the safety of its employees in matters of prevention and hygiene, but also of the effectiveness of the measures applied in the workplace in the context of the international health crisis. It also highlights the effort made by the entity to comply with current legislation. As assessment was made of occupational health management; training and communication in this matter; organisational and protection measures, as well as the business continuity plan, among others. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 13 of 15 517 The FCC Group’s track record in CSR matters highlights the link between the SDGs and the company’s strategy, which has internalised the commitments to the 2030 Agenda, integrating them into its business model. At the Group level, the company contributes across the board to the following Sustainable De- velopment Goals: FCC’S Contribution to the attainment of sustainable development goals Since its approval in 2015, the Sustainable Development Goals (SDGs) have marked the 2030 Agenda, involving the collabora- tion of both the public and private sectors. These 17 objectives, made up of 169 specific goals, seek to guide global efforts to solve the main challenges, such as the eradication of poverty, the protection of the planet and the design of cities, among others. With a decade to go, the SDGs are increasingly present in today’s society, bringing together the efforts of governments, companies and individuals, requiring urgent action to make this roadmap a reality. Aware of the importance of achieving the SDGs, the FCC Group is firmly committed to complying with the 2030 Agenda, ex- pressing this commitment in the development and implemen- tation of its Corporate Social Responsibility Policy. The compa- ny actively participates in contributing to this global roadmap, therefore, both the FCC Group’s CSR programmes and its 2020 CSR Master Plan are aligned with the 17 SDGs. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 518 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 14 of 15 Taking into account the different sectors in which it operates, the FCC Group’s contribution to the SDGs is detailed below, broken down by each of the business lines. Contribution to the FCC Group's Sustainable Development Goals by business Aqualia, by providing water and sanitation management services, allows citizens to enjoy healthy conditions, helping to avoid infections and the spread of diseases. The Environment area, has a Special Employment Centre (FCC Equal) that helps people with disabilities to integrate and access employment. Aqualia's activity generates solutions to water supply, sanitation and purification needs. Therefore, it is aimed at facilitating and improving access to water and the quality of this resource, working to improve the efficiency of water resources. For its part, the Construction business also contributes to achieving this objective, through the construction of infrastructures dedicated to water management. The Construction business develops energy efficient facilities, and contributes to the provision of energy services through the construction of infrastructures. The Environment area, together with the rest of the Group's business lines, generate employment for tens of thousands of people, thus contributing to economic development in the areas in which they operate. The Environment area, constantly applies technological innovations that allow it to optimise waste management, making the most of it. The Construction business invests annually in research, considering it a fundamental axis to build and develop sustainable infrastructures. For its part, Aqualia tries to improve the end-to-end management of water resources through the application of innovative technologies. Therefore, it considers that innovation is the basis for improving the efficiency and reliability of its processes, while guaranteeing the highest quality of service. Cementos Portland Valderrivas uses and applies the best available techniques, promoting digital transformation and exploring the application of technologies that allow it to manufacture resilient and sustainable products. Aqualia, through its activity, contributes to ensuring access to basic services such as water and sanitation. The Construction business contributes, from its activity, to the development of more sustainable and resilient cities and communities that can face global challenges. Regarding Cementos Portland Valderrivas, the company is constantly researching solutions that allow it to reduce water and energy consumption at its facilities, using waste as raw materials or as fuels. The activity of the Environment area contributes directly to achieving this objective, through the recovery of waste, turning it into resources that can be used. In addition, the company carries out different initiatives to achieve a more efficient use of natural resources. In relation to Aqualia, different actions are carried out to allow efficient use of water resources, as well as to promote the reuse of waste water, applying circular economy techniques. The Construction business applies circular economy techniques, promoting the responsible corporate management of resources and waste. As for Cementos Portland Valderrivas, the company encourages the efficient use of natural resources by replacing them with industrial by-products and, in addition, it uses alternative fuels such as biomass. The Construction area promotes a business model and the performance of energy efficient activities to adapt to an economy with low carbon emissions. For its part, Cementos Portland Valderrivas collaborates with its stakeholders to seek innovative solutions that reduce CO2 emissions derived from its activity. These emissions are continuously monitored and, on an annual basis, the company establishes targets for their reduction. To promote the continuous improvement of its processes, Aqualia frequently collabo- rates with universities and research centres, developing technology that can be applied worldwide. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Sustainability in FCC’s business model | Page 15 of 15 The FCC Group joins the #SupporttheSDG campaign on the 5th anniversary of its approval by the United Nations In line with FCC’s commitment to the Sustainable Development Goals, and on the occasion of the 5th anniversary of the approv- al of the 2030 Agenda, the FCC Group has participated in the #SupporttheSDG campaign, promoted by the Spanish Global Compact Network to promote the enactment of the United Na- tions 2030 Agenda from the private sector. Some of the projects that participate in the promotion and development of the SDGs carried out during 2020 are: Environment business - Innovation: ie-urban project The Environment area makes a strategic commitment to tech- nological innovation through the launch of a new 100% elec- tric collection vehicle designed to improve safety and reduce emissions, thus increasing its useful life. Thanks to this initiative, among many others, the Environment area contributes to SDG 9 (Industry, innovation and infrastructure), 11 (Sustainable cities and communities), 12 (Responsible consumption and produc- tion) and 13 (Climate Action). Aqualia - Development of Local Communities Aqualia, in line with the Group’s commitment to contribute to the communities in which it operates, works to improve and expand the capacity and efficiency of a Wastewater Treatment Plant in Colombia, one of the largest wastewater sanitation projects re- siduals that have been implemented in the country. The new infrastructure will bring with it a significant social, environmental and economic impact in the area, contributing to SDG 6 (Clean water and sanitation) and 17 (Partnerships for the goals). Construction business - Sustainable Leadership FCC Construcción participates significantly in various working groups aimed at developing sustainable construction stand- ards, allowing the company to keep abreast of the latest trends and contribute in parallel to their development and dissemina- tion. Along these lines, FCC Construcción chairs those work commissions related to the establishment of sustainability prin- ciples and aspects for their evaluation in civil works. Thanks to this effort, we are working towards the fulfilment of SDG 9 (In- dustry, innovation and infrastructure), 11 (Sustainable cities and communities), 12 (Responsible consumption and production), 13 (Climate action) and 17 (Partnerships for the goals). Cementos Portland Valderrivas - Energy efficiency Cementos Portland Valderrivas, in its pledge for a circular econ- omy, began to work on energy recovery in the production of cement. The objective is to replace fossil fuels with energy ob- tained from biomass, allowing GHG emissions to be reduced by 40%. These actions would contribute directly to SDG 12 (Responsible Consumption and Production) and 13 (Climate Action). 519 FCC Construcción is the first construction company in the world to join the UN’s “Sustainable Finance and Investments” group FCC Construcción, the first construction com- pany present in the CFO Taskforce led by the Global Compact network, has participated in the publication of the principles for the integra- tion of sustainable investments and finance. This working group was founded in 2019 with the purpose of addressing the challenge of sustainability and the attainment of the Sus- tainable Development Goals (SDGs). Its main mission is to create an efficient market for investments and capital flows in the SDGs, guiding companies to align their sustainable development commitments with financing strategies that generate a real impact on the SDGs. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 520 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC, committed to dialogue | Page 1 of 7 FCC, committed to dialogue The FCC Group is aware of the importance of its stakeholders for the normal operation of its activity. For this reason, all the Group’s businesses promote a fluid and transparent relationship with its stakeholders based, in turn, on a constant dialogue. Furthermore, for each of its businesses, the FCC Group iden- tifies the most relevant matters, taking into account both the expectations of its stakeholders and the organisation’s objec- tives. For the Group, the definition of materiality is a strategic issue, which is why, in 2020, an exhaustive update of this study has been carried out, which will constitute one of the bases on which the future CSR Master Plan will be designed. Fostering dialogue: Stakeholder communication channels As established in its vision, the FCC Group focuses its efforts on improving the quality of life of citizens, contributing to the sustainable progress of society. In this way, the Group’s activi- ty generates impacts on the communities in which it operates, and the different FCC businesses, in order to make its objec- tives and commitments reality, and in line with its principles of professionalism and honesty, it establishes channels of commu- nication and dialogue with its different stakeholders, which al- low the company to meet and respond to social, environmental and good governance demands. In 2006, the FCC Group, since the preparation of its first ma- teriality analysis, and in accordance with the approval of its first Master Plan 2007-2008, worked on the identification of the dif- ferent stakeholders to ascertain their needs and expectations. In the identification process, all those internal or external stake- holders that impact or are impacted by the Group’s activity were considered. The following graph shows the list of stakeholders identified as a result of said analysis, as well as the main dia- logue tools that have been established therewith. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC, committed to dialogue | Page 2 of 7 FCC's stakeholders and tools for dialogue 521 Customers Satisfaction surveys. UNE ISO 9001 certified business lines to guarantee the best quality products and services. Different channels for dialogue based on business area. Partners Communication channels are established with other companies in the sector. They highlight the figure of the interlocutor, the collaboration agreements, alliances, sponsorship, business forums, symposia and publications. Communities FCC's various business areas promote dialogue with local communities to understand their expectations and maximise the social benefits created by its projects. Public administrations and regulators Voluntary participation in sectoral self-regulation and legislation development initiatives. Suppliers and contractors Information and awareness raising sessions. Obligatory compliance with FCC's Code of Ethics and Conduct. Commitment to comply with the ten Principles of the UN Global Compact. Shareholders and investors Shareholders' office. Corporate website with information relating to economic performance. Employees FCC one – Corporate intranet. Periodic in-person meetings on information of interest. Employee portal. Somos FCC: quarterly online magazine. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC, committed to dialogue | Page 3 of 7 The FCC Group establishes a continuous dialogue with its stakeholders, through a wide number of communication chan- nels, among which the following stand out: FCC One, the main internal communication channel for employees available in the FCC360 application; Sustainability and environmental commu- nication reports, to present the Group’s ESG performance; di- rect dialogue with clients; satisfaction surveys; web pages and social networks such as Linkedin, Instagram or Youtube; pres- ence at fairs, forums and conferences to share expertise and collaboration with sector associations, educational and profes- sional entities. To achieve the objectives and commitments, each business area establishes different channels adapted to its needs and peculiarities in the relationship and response to stakeholders. At the Environment area, activities must connect with the real needs of citizens and, for this, we try to maintain a constant di- alogue that helps them to ascertain their different expectations at all times. The different departments and business offices that make up FCC Medio Ambiente Iberia have specific identification mecha- nisms and communication channels through which they inter- act with the organisation’s stakeholders. In the UK, communications with local communities are man- aged at each location, depending on the circumstances of each one. Regular meetings with the communities are held at all land- fill facilities and power plants. Likewise, FCC Environmental Services maintains a fluid rela- tionship with the representatives of the contracts and with the members of the service areas, organising meetings with them on a routine basis; For its part, FCC Environment CEE uses dif- ferent channels to communicate with local communities, such as social networks, local press, etc. 522 Aqualia developed a strategic materiality at the end of 2019, reviewing its brand purpose, identifying the strategic lines for re- sponsible business, and determining the communication guide- lines for each of its stakeholders. This process has involved ac- tively listening to more than 18,000 people who are part of the company’s stakeholders. The Construction business identifies and evaluates, for all its projects and centres, the environmental and social aspects that may be relevant to local communities. Based on this evaluation, a programme of actions is established, and environmental con- trol measures are communicated to stakeholders. During the execution of the works, the company involves the lo- cal community by establishing communication channels, on the one hand, so that they can transmit complaints and claims, and on the other, to be able to inform them about the progress of the project and about the measures adopted to minimise pos- sible adverse impacts. In this way, participation processes are developed that reflect the needs and concerns of stakeholders, increasing their influence in decision-making related to projects. Cementos Portland Valderrivas considers that the legitimacy of its activity is based on trust and the quality of the relationships maintained with the local communities in which the company is a member. For this reason, communication and dialogue chan- nels are maintained with institutions, social players and local groups, such as company publications, participation in semi- nars or participation in colloquia and interviews, among others. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 523 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC, committed to dialogue | Page 4 of 7 FCC Group materiality study In 2020, the FCC Group carried out an exhaustive update of the previous materiality study, in order to identify the most rel- evant social, environmental and governance issues for each of its business lines (Environment, Aqualia, Construction and Cementos Portland Valderrivas). This identification of the main non-financial matters fulfils a double function, since it allows the definition of the contents of this report in accordance with the indications of the Global Reporting Initiative (GRI) while, at the same time, serving as support for the definition of the future Master Plan of the FCC Group. In order to reflect in greater de- tail the priorities of each of the FCC Group’s business lines, this update has involved the redefinition of the matters evaluated with respect to the previous study, which have gone from 12 to a total of 23. These matters are aligned with the main sustain- ability reporting frameworks, as well as with the legal require- ments to which the FCC Group is subject. This study has incorporated, through a documentary analysis, information related to the following stakeholders: investors, competitors, industry associations, clients7 and society. Like- wise, internally, the management team of each of the business- es has been involved, as well as mainstream Central Services departments. The results of this study reflect the most important issues for the Group’s stakeholders and those with the greatest significance and impact on each of the FCC Group’s business lines. In the case of Aqualia, a specific materiality analysis has been conducted, and its results have been adapted to the is- sues identified at FCC Group level. For the rest of the business lines, the study has been structured in the following phases: External assessment: To determine the significance that stakeholders grant to the issues, information on competi- tors, main industrial associations, ratings and ESG invest- ment analysts has been analysed for each of the business lines, together with the information available from business customers of Construction, press and social networks, as well as the material matters identified by SASB and GRI. (7) The information available from clients has only corresponded to the Construction area. Internal assessment: The significance and impact of the issues on the different business lines of the FCC Group have been established. This phase has involved, through inter- views and the launching of questionnaires, members of the Management Committee of the different lines of business, as well as a selection of executives from Central Services, with a cross-cutting vision of the FCC Group. In addition to assessing the double materiality of the impacts of each ESG issue, the presence of said issues in the strategy of each business and the selection of the three most relevant issues according to the perception of the respondents were tak- en into account. To identify future engagement areas, work was also performed to identify the medium-term trend (3-5 years) and the current performance of the Group in such ESG matters. Determination of material matters: Once the previous phases have been completed, each of the stakeholders has been weighted, taking into account the significance of the information analysed. Subsequently, the results of the internal and external evaluations have been added, de- termining the material issues, and the materiality matrices have been designed for each business line. These matri- ces represent, on the vertical axis, the importance given by the company’s stakeholders and, on the horizontal axis, the relevance and impact on the different lines of business. Material matters are understood as those that exceed the average score on both axes. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC, committed to dialogue | Page 5 of 7 The following table shows the correspondence of material matters for each of the businesses: Material matters for business Environment Water Construction Cement Ethics, integrity, compliance and good governance 524 Risk control and management systems Quality of service and client satisfaction Innovation and digital transformation Cybersecurity and data protection Fiscal transparency and tax contribution Pollution prevention Circular economy and waste Management of water resources Material consumption Energy consumption and energy efficiency Climate change Biodiversity Food waste Attracting and retaining talent Professional training and development Diversity, equality and inclusion Health, safety and well-being Contribution and social commitment Human rights promotion and respect Relationship with local communities Liability to contractors Sustainable supply chain Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC, committed to dialogue | Page 6 of 7 525 The materiality matrices for each of the FCC Group’s business lines are shown below, framing the material issues in the high- lighted tables. As can be seen from the results of the study, for the Environ- ment area, the most important issue for stakeholders is ethics, integrity, compliance and good governance. Internally, the issue with the most relevance and impact is innovation, a cross-cut- ting issue that makes it possible to address other company challenges, such as the fight against climate change and the transition towards a circular economy. With regard to employ- ment matters, the importance of health and safety, as well as the management of the Environment area staff, stands out. For the Construction business, the most important issue for stakeholders is ethics, integrity, compliance and good govern- ance, also being the one that has the most relevance and im- pact on this line of business. For stakeholders, the fight against climate change constitutes a work priority, while internally the significance and impact of the health and safety of workers should be stressed, given the activity that is carried out. Also noteworthy is the importance of innovation- and risk manage- ment-related issues, which contribute across the board to the attainment of the Construction business’s objectives. Aqualia’s stakeholders consider material consumption, climate change and pollution prevention to be the most important is- sues. Internally, it highlights the importance given to the safety and health of workers, as well as to the management of water resources, closely linked to the company’s activity. It is worth noting the importance, both internally and for stakeholders, of the social contribution initiatives carried out by Aqualia. For Cementos Portland Valderrivas’s stakeholders, climate change is the most relevant issue, while internally the impor- tance of ethics, integrity, compliance and good governance should be highlighted. More than half of the material issues are related to the environment, which highlights the importance of environmental management for this line of business of the FCC Group. With regard to employment matters, the importance of the health and safety of employees is especially significant. As can be seen in the matrices, some material issues are iden- tified across the FCC Group, regardless of the business line evaluated: Ethics, integrity, compliance and good governance. Health, safety and well-being. Circular economy and waste. Additionally, it is necessary to highlight the importance that some environmental issues, such as energy and climate change, have had for the FCC Group’s stakeholders. These matters have been considered to be of significance regardless of the activity carried out by the different business lines For its part, the internal relevance of the issues varies between the FCC Group’s business lines, since the study reflects the different nature of the activities of each of them. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC, committed to dialogue | Page 7 of 7 Environment Aqualia 526 e c n a v e e r l a n r e t x E e c n a v e e r l a n r e t x E 100 80 60 40 20 0 100 80 60 40 20 0 20 40 60 80 100 Internal significance Construction 20 40 60 80 100 Internal significance e c n a v e e r l a n r e t x E e c n a v e e r l a n r e t x E 100 80 60 40 20 0 100 80 60 40 20 0 20 40 60 80 100 Internal significance Cementos Portland Valderrivas 20 40 60 80 100 Internal significance Food waste Material consumption Management of wáter resources Biodiversity Energy consumption and energy efficiency Pollution prevention Climate change Cicular economy and waste Fiscal transparency and tax contribution Cybersecurity and data protection Quality of service and client satisfaction Risk control and management system Innovation and digital transformation Ethics, integrity, compliance and good governation Liability to contractors Sustainable supply chain Contribution and social commitment Relationship with local communities Human rights promotion and respect Professional training and development Diversity, equalty and inclusión Attracting and retaining talent Health, safety and well-being Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 527 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 1 of 10 Ethics and integrity at the FCC Group Compliance and due diligence The FCC Group has a Compliance Model, whose review pro- cess began in 2018, to prevent conduct that may lead to the commission of crimes, and which comprises the following reg- ulatory block: During 2020, the most significant actions carried out regarding this FCC Group Compliance Model, aimed at establishing an ethical and compliance culture that guarantees due diligence, have consisted of: Through its Compliance Model, the FCC Group guarantees that all the companies and employees of the company are governed in accordance with the principles established in the Code of Ethics and Conduct, at the same time strengthening internal control so as not to commit any criminal breach. Code of ethics and conduct. Criminal Offence Prevention Manual. Anti-corruption policy. Review and update of the criminal risk map, fo- cused on risk assessment following the impact of COVID-19. Approval of new regulatory developments. Partner relationship policy in the area of Compli- Review of the design of controls in the area of inter- ance. national anti-corruption. Investigation and response procedure. Procedure for the Whistleblowing Channel. Human Rights Policy. Compliance Committee Regulations. Agent policy. Gift policy. FCC Group participation policy in bidding pro- cesses for goods or services. Harassment Prevention and Eradication Protocol. Deployment of the International Compliance Model at Cementos Portland Valderrivas, and progress in its implementation for the international subsidiaries of the Environmental activities and Aqualia. Coordination of the supervision of the Compliance Model by Internal Audit. Performance of two self-assessments and certifica- tions in the compliance tool. Design and launch of new online training, related to the Code of Ethics and Conduct, and in the area of Criminal Prevention. Definition, together with the Group’s Purchasing De- partment, of the supplier approval procedure. Performance of 195 third-party due diligence evalua- tions. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 528 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 2 of 10 To ensure the proper functioning of the Model, the Compliance Committee is the Group’s Criminal Prevention body, with au- tonomous powers of initiative and control. Currently, it is com- posed of: The Corporate Compliance Officer (president) The Legal Advice Department General Manager (voting member) The Human Resources Director (voting member) Additionally, for the cases in which their participation is required to carry out the investigations, the Internal Audit managing di- rector participates as a member with an attendance and voting right. Lastly, and as guests, the Compliance Officers of the busi- nesses (FCC Medio Ambiente, Aqualia, FCC Construcción and Cementos Portland Valderrivas) also attend. Compliance Committee Meetings During the 2020 business year, and in order to fulfil the tasks and powers designated by the Compliance Committee, 11 or- dinary meetings were held, plus seven extraordinary sessions. Twelve annual meetings could not be held since the March ses- sion had to be postponed due to the COVID-19 pandemic. FCC Group Ethics Channel The FCC Group has numerous effective reporting mechanisms, which allow workers and other stakeholders to report events if breaches are detected. These mechanisms are essential to be able to guarantee compliance with the Code of Ethics and Conduct, as well as the regulations that derive from it. In 2020, online training on the Code of Ethics and Conduct continued, with a total of 419 employees completely said train- ing successfully. In this way, since its launch in 2019, 7,998 employees have taken this course, with a completion rate of 88%. Additionally, by including this training in the company’s Welcome pack, 1,229 new hires have successfully completed this course. During the business year 2020, a total of 117 notifications were received by the FCC Group’s Ethical Channel, through the cor- porate intranet, email, or post office box, 34 notifications more than in 2019, mostly of an employment nature. In addition, during 2020, five online training courses on Compli- ance were given through Campus FCC, the Group’s new train- ing platform, with 18,321 students finishing the programme, representing a total of 11,633 hours of training. At the closing date of this report, a total of 101 notifications had been resolved, 86.3% of the notifications received, the remain- der being processed or investigated with a resolution expected in the first quarter of 2021. Training and dissemination of the Compliance Model The FCC Group carries out different training and communica- tion programmes on the Code of Ethics and Conduct, and the policies and procedures that enact it, to foster employee com- mitment and performance, in accordance with the company’s ethical principles. In this regard, in 2020, two especially significant projects have been carried out. Firstly, the online training course on the Code has been translated and adapted into six new languages (Ger- man, Czech, Slovakian, French, Portuguese and Romanian), allowing the scope of this initiative to be expanded internation- ally. Secondly, in Spain, the “Compliance coffee” project has been launched, to train and raise the awareness of employees, through sketches and audio-visual content, on the acceptance of gifts, conflicts of interest and the proper use of the company’s assets. With respect to the publication of the Compliance Model, the entire regulatory blockis available to the whole workforce on the corporate intranet, and both the FCC Group’s Code of Ethics and Conduct and the Compliance policies are available to the public through the corporate website. Compliance Model Certifications To guarantee the operation and effectiveness of the Compliance Model, those responsible for the controls designed to prevent criminal risks must carry out a semi-annual self-assessment. Hence, certification is provided that the controls performed have been executed and documented, reporting any changes to them. During 2020, two certifications of the Compliance Model were provided through the Group’s tool, evaluating around 3,000 controls in both cases. Based on these evaluations, corrective measures are applied, which allows the Model to continue to be improved. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 3 of 10 529 Due diligence with Human Rights FCC fully rejects child labour, forced labour and work in painful, extreme, subhuman or degrading conditions while, at the same time, guaranteeing freedom of association and collective bar- gaining, as well as the rights of ethnic minorities and indigenous peoples in all areas in which the Group operates. The FCC Group guarantees, within its catchment area, respect for human rights and public freedom, based on the legal frame- work of each country. This responsibility, in accordance with the provisions of the Code of Ethics and Conduct, is transmitted to all company employees, who must comply with these principles at all times. The company’s commitment to human rights is further rein- forced by the FCC Group’s compliance with the main interna- tional frameworks, such as the United Nations Global Compact, the Universal Declaration of Human Rights Framework, the Declaration of the Rights of the Child, the different ILO conven- tions and other agreements of the International Federation of Construction and Wood Workers (BWINT). In 2020, no complaints were received regarding the violation of human rights. The FCC Group approved the “Harassment Prevention and Eradication Protocol” In order to reinforce its commitment to the prin- ciples set out in the Code of Ethics and Conduct and in its Compliance Model, FCC’s Board of Directors approved the “Harassment Preven- tion and Eradication Protocol”. Thus, to promote a fair diverse work environment, the protocol contemplates, among other aspects, certain measures, the most noteworthy of which were as follows: not tolerate any conduct that involves discrimination, promote a culture of respect and awareness campaigns against harassment, offer specific training in this regard, ensure the agili- ty of complaint mechanisms, adopt disciplinary measures and guarantee the labour rights and social protection of female victims. Alliance to achieve the universal right to water and sanitation in Europe The United Nations General Assembly has recognised, since 2010, the Human Right to Water and Sanitation and, since 2015, the Right to Sanitation independently. For this reason, Aqualia, together with other European organisations, com- panies and institutions, has participated in the issuance of a joint declaration, calling on the EU institutions to consider water and sanitation as a human right within the European legislative system, thus guaranteeing these services for all citizens. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 530 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 4 of 10 Due diligence with bribery and corruption Additionally, the FCC Group has other policies related to the fight against corruption and bribery: Regarding the procedures related to the control of bribery and corruption, the following are worthy of mention: Agent Policy, which establishes the general principles that should govern the relationship between the FCC Group and any agent or business developer, in order to guarantee their compliance with ethical principles in line with those of the FCC Group. Gift Policy, which establishes the principles relating to the making or acceptance of gifts and hospitalities, guarantee- ing that they are always made in a transparent and occa- sional way. At FCC, we adopt zero tolerance against corruption and bribery, thereby promoting a culture to tackle it. The prevention and mit- igation of crimes related to corruption, bribery, influence ped- dling, fraud, money laundering and swindling is a priority for the Group. Given the possible crimes to be avoided, a risk event is associated in which it could materialise, designing the neces- sary processes and controls to guarantee regulatory compli- ance. Through its Compliance Model, the FCC Group guarantees compliance with the laws and regulations in the places in which it operates, generating trust among its customers, sharehold- ers, employees and business partners. The Code of Ethics and Conduct constitutes the basis of the Compliance Model, although it is supported by the approval of various policies that enact it. One of the complementary policies to the Code is the Anti-Corruption Policy, which includes the following principles: Compliance with legality and ethical values. Zero tolerance against bribery and corruption practices. Property surveillance and data confidentiality. Rigour in control, reliability and transparency. Prevention of money laundering and transparent communication. Extension of commitment to partners in the busi- ness. Promotion of continuous education on ethics and compliance. Transparent relationship with the community. Conflicts of interest. Control applied to sponsorships and donations, through a request to be reviewed and approved by the Corporate Communication Department. The employee selection procedure based on a skills system to ensure transparency and equality in all se- lection processes. The annual training plan in matters of criminal pre- vention and anti-corruption. The approval of travel and representation expenses. The Purchasing Manual and the procedure for the communication and approval of the purchase re- quired. The reconciliation of bank statements for the detec- tion of outstanding or unreasonable movements. The management of the legal representatives for each company. The Due Diligence required before recruiting certain partners and agents. When assessing exposure to crimes related to anti-corruption, analyses have been carried out in operations for all the coun- tries in which the Group operates. In this way, the matrix of risks and controls in anti-corruption matters has been implemented in Spain and in most foreign geographies. Finally, given the significance of this subject, specific training on corruption prevention has been devised, aligned with the principles established in the Code of Ethics and Conduct and in the Anti-Corruption Policy. This training, launched in February 2020, has been successfully completed by 3,200 FCC Group employees. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 5 of 10 531 Measures to fight money laundering During the process of preparing the crime, risk and control ma- trices, a series of risk events have been identified for the Group in the area of money laundering: non-compliance in the review of control and identification procedures for clients indicated in the Law on the Prevention of Money Laundering (LPBC in Spanish), non-compliance with obligations regarding informa- tion collected in the application of the LPBC and the non-ap- plication of the established internal control measures for those subject to the LPBC. Transparency and accountability In tax matters, the company complies with the Tax Authority’s Code of Good Tax Practices, which establishes the principles of transparency and mutual trust, as well as good faith and loyalty between the parties, guaranteeing a more effective relationship without legal uncertainty. Additionally, to minimise the risks derived from tax breaches, FCC has its own Code of Tax Conduct, which is mandatory for all persons linked to any Group company. This document, in line with the values established in the Code of Ethics and Conduct, establishes the basic principles of the FCC Group in tax mat- ters, including compliance with the applicable tax regulations, respect for the “Framework Regulation on the Control of the Tax Area”, and ensuring that senior management reviews significant decisions on tax matters and the promotion of transparency. Annex IV shows the details of the profit after tax and the income tax paid by country in 2020 in those countries in which FCC has a presence, together with the public subsidies received. For each of these risk events, a series of controls have been planned, aimed at guaranteeing regulatory compliance by the FCC Group. In this regard, the following procedures have been established to control this area: Including a Money Laundering Prevention clause in real estate promotion marketing contracts. The review of contracts for sale of goods, lease and lease with option to purchase. The review of legal representatives for the revoca- tion of powers for those who have left the compa- ny. The existence of an internal advisory and whis- tle-blower line. A Money Laundering Prevention Manual. Creation of a body for the supervision and moni- toring of money laundering preventive measures. The identification of the parties concerned in a real estate asset, in order to assess the opera- tion’s risk. Training employees on Money Laundering. As a result of its efforts in this area, the FCC Group has not received any money laundering complaints. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 6 of 10 532 Risk management at the FCC Group The FCC Group has a Risk Management Model that is designed to identify and assess the potential risks that could affect the Group’s different units. Mechanisms have also been included in the organisation processes that enable risks to managed and kept within acceptable levels, providing the Board of Directors and Senior Management with reasonable security with regard to the achievement of the main objectives defined. The Model is applied to all FCC Group companies, as well as to those affil- iates where FCC has effective control, promoting the develop- ment of work frameworks that enable suitable risk control and management in those companies where effective control is not available. The Risk Management Model is based on the integration of a risk-opportunity vision and the assignment of responsibilities that, together with the segregation of duties, enable the fol- low-up and control of risks, consolidating a suitable control en- vironment. To achieve this, a three-tier system of risk manage- ment and internal control was established, the first two located in the business units and the third in the corporate areas. The main risk scenarios can be grouped into four categories: operational, compliance, strategic and financial. First level Third level Located in the business unit's operating lines, that act as risk generators and have the res- ponsibility for managing, monitoring and suita- bly reporting the risk generated, including tax risk. Also located in the business units, it consists of support, control and supervision teams, ensuring effective control and suitable risk management, including tax. Within this level, the management area of each business unit is responsible for the implementation of the Risk Management Model, including those risks related to finan- cial information. The Business Compliance Officer assists the Cor- porate Compliance Officer in the dissemination of the Criminal Pre- vention Model, in the identification of risks and in the definition, and proposes action plans, within its scope, in cases where breaches or inefficiencies in the functioning of controls have been detected, submitting these proposals to the Corporate Compliance Officer. Second level Consisting of corporate duties that report to Senior Management and/or to the Audit and Control Committee. The following are within this level: • Tax Division: responsible for defining the tax policies, procedures and criteria applica- ble to the FCC Group • Corporate Compliance Officer: duties include the implementation of the Criminal Pre- vention Model, the identification of risks in this area, and the definition and follow-up of the corresponding controls, as well as the management of the Whistleblowing Channel and proposals for action plans in cases of non-compliance o inefficiency in the operation of the controls. • Risk Management Function: responsible for coordinating the Risk Management Model, defining a has-methodology for identifying, assessing and reporting risks, pro- viding support to those responsible for its implementation. • Internal Audit Function: as the final control, it is responsible for assessing whether the policies, methods an procedures are suitable and for verifying their effective implemen- tation. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 533 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 7 of 10 OPERATIONAL RISKS Termination or unilateral modification of a contract contractual issues and legal disputes Uncertainty in pricing and optimisation of the supply chain, raw materials, energy and outsourced services - Unilateral termination of contracts - Price fluctuations Risks associated with digital transformation - Lack of updating in related matters, at both a human and infrastructure level - Related economic losses - Difficulties in optiminsing the supply of godos - Disruptions in operations - Costly legal or arbitration proceedings - Discrepancies in the interpretation of contractual requirements Project rescheduling - Lack of land availability - Delays in obtaining licences and services - Impact on the Group’s results Cyber attacks Labour conflict - Non-compliance with labour legislation in the various countries in which the Group operates - Conflicts that harm the company’s productive - Effects on tangible and intangible - Assets Prolonged interniption of operations - Uncontrolled access to sensitive information - Information and data leakage and/or hijacking capacity Heath and safety risks - Health and/or environmental restrictions - Reputational problems - Supply chain disruption Loss of human capital Risks arising from links with third parties - Adverse project circumstances - Reputational and/or economic problems - Setbacks in ongoing projects - Impact on project development - Changes in project outcomes - Health crises, incidents and/or accidents in the course of their activity - Damage to operations Environmental damage - Damage in the form of spills, emissions, etc. - Impact on project and contract development Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 534 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 8 of 10 COMPLIANCE RISKS Regulatory or contractual non-compliance Non-Compliance with the Code of Ethics - Occasional non-compliance with regulatory - Potential non-compliance with regulations aspects - Difficulties in complying with contractual requirements - Legal, economic and reputational damage STRATEGIC RISKS Regulatory changes and political, financial and socio- economic instability in countries and/or regions Loss of market share Cut in investment and demand forecasts - Difficulty in developing competitive and cost- - Negative impacts on projects - Decreased business opportunities effective bids - Related economic imbalances and problems - Fall in project profitability - Entry of new competitors - Regulatory and/or trade barriers Global climate or health crises, natural disasters and regional armed conflicts - Restrictions for environmental or health reasons - Loss of market share - Affect on towns and territories in which activities are carried out - Decrease in demand for goods and services - Decrease in activity level and operations - Damage to built infrastructure - Increased costs due to ecological and/or health transition policies - Obstruction of mobility - Interruption in the supply chain of goods and services Damage to reputational image - Reputational impact - Loss of projects - Economic damage to the different business lines Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 535 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 9 of 10 FINANCIAL RISKS Credit risk and liquidity risk Impairment of the commercial fund Fluctuation of exchange rates - Customer credit risk exposure - Liquidity line setbacks Restricted access to financial markets - Losses and/or adjustments to goodwill on the - Debt denominated in foreign currency balance sheet - Impact on the FCC Group’s financial results - Loss of investment in international markets - Payment received in currencies other than the euro - Difficulty in obtaining or renewing funding - Increased requirements or guarantees requested by financiers - Impacts on the viability of economic models supporting the repayment of funds - Loss of business opportunities - Effect on the normal course of business Recoverability of deferred tax assets - Lack of recoverability of deferred taxes due to the cyclical nature of the Tax Group’s profit - Lack of recoverability of deferred taxes due to changes in corporate income tax in Spain Fluctuation of interest rates - Increase in financial costs linked to variable interest rates - Increase in debt refinancing costs - New debt issuance Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Ethics and integrity at the FCC Group | Page 10 of 10 536 Both the FCC Group’s Risk Management Model and its Com- pliance Model establish comprehensive frameworks to identify, assess and manage risks in their respective areas of application. Once the risks have been identified and prioritised, it is expected to establish control mechanisms through the Risk and Control Matrices that will include key controls aimed at preventing and/ or mitigating the risks and the definition of persons in charge of these control activities. For those risks that exceed the ac- cepted level of risk or when non-compliances or inefficiencies are detected in the operation of the controls, specific Action Plans will be established taking into account their operational viability, their possible effects, as well as the cost-profit ratio of implementation. The Risk Management Model is supervised by the Business Di- visions with the support of the Risk Management area, while the Ethics and Compliance programmes are supervised by the Compliance Committee, chaired by the Corporate Compliance Officer with the support of the Compliance Officers of the busi- nesses, following the certification of controls and processes by their owners. For more information, see the FCC Group Annual Corporate Governance Report for 2020. In 2020, the following risks have materialised: Reduced activity as a result of measures de- creed to curb the COVID-19 health crisis. Inefficiencies in the supply chains of goods and services and in the mobility of human resources assigned to projects. Rescheduling of certain projects, especially in the infrastructure area. Contract and legal disputes. Fluctuations in the exchange rates of the curren- cies in which the Group operates. New regulatory framework following the UK’s exit from the EU. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 1 of 24 Respect for the environment at FCC Care and protection of the environment Throughout its 120-year history, the FCC Group has contrib- uted, through its various business lines, to the transformation of cities. Two of its business lines, the Environment area and Aqualia, have worked to provide citizens with a cleaner and more liveable environment, while preserving the value of natural resources such as water or biodiversity. For its part, the Group’s Construction and Cement area has designed the infrastructures of today and tomorrow, seeking to optimise resources, mini- mise the waste generated and protect the environment. In short, the Group has generated solutions that promote urban resilience, improving people’s quality of life and continually striv- ing to reduce the current and foreseeable effects that its activity may have on the environment, ensuring environmental protec- tion and care. Each of the Group’s business lines continuously analyses its activities and processes to identify and manage the possible environmental impacts caused by them. The FCC Group Environmental Management System One of FCC’s priority objectives is the implementation of an En- vironmental Management System that is certified in accordance with internationally accepted regulations, such as the UNE-EN ISO 14001:2015 standard (hereinafter, ISO 14001), the Europe- an EMAS Regulation (“Eco-Management and Audit Scheme”) or the UNE-EN ISO 50001:2018 regulation (hereinafter, ISO 50001) for energy management systems, among others. These certificates allow the Group’s activities to be performed in line with the highest environmental management quality stand- ards. In 2020, the percentage of certified activity stood at 83%. 537 The following graph shows the trend in the percentage of certi- fied activity at the Group in the last three years: FCC activity with environmental certification (%) 88 86.8 82.7 2018 2019 2020 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 538 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 2 of 24 By type of certification, all FCC Group businesses have Environ- mental Management Systems certified in accordance with the ISO 14001 Standard. Certification under said standard guar- antees the correct management of significant environmental aspects, compliance with legislation and the establishment of a commitment to continuous improvement. With regard to the Environment area, it has ISO 14001 certifica- tion in a total of ten countries and ISO 50001 certification in five countries. These certifications cover most of the area’s activity in Spain, Portugal, the United Kingdom and central Europe (Slo- vakia, Hungary, Poland, Czech Republic, Poland, Romania and Serbia). As in the cement business, FCC Medio Ambiente Iberia companies are certified and registered in the EMAS. For its part, Aqualia has ISO 14001 and ISO 50001 environ- mental certification. Throughout 2020, the Aguas de Guadix of Aqualia facilities have been certified under ISO 14001. In the Construction area, for example, the certification incorpo- rates a total of 24 countries. Other companies in the area such as FCC Industrial, Matinsa, Megaplas and Prefabricados Delta have environmental certification under ISO 14001 at centres lo- cated in Spain. Lastly, Cementos Portland Valderrivas in Spain has ISO 14001 certification covering the activity of 75% of its cement factories. In the same manner, the same percentage of cement facto- ries are certified and registered at EMAS, a voluntary tool de- signed by the European Commission for the registration and public recognition of those companies and organisations that have implemented an environmental management system that allows them to evaluate, manage and minimise their environ- mental impacts. has its carbon footprint certified under the ISO 14064 Stand- ard, while FCC Construcción carried out the verification under the same standard in 2020 at most of its centres. In this re- gard, FCC Construcción verified the emissions corresponding to the previous year at the centres located in Spain, Portugal, Romania, United Kingdom, Nicaragua, Costa Rica, Panama, El Salvador, Mexico, Colombia, Chile and Peru, which represent 53.8% of the revenue and 67.3% of the GHG emissions of the area in said year. Furthermore, in 2020, FCC Industrial renewed the “Zero Waste” certificate granted by AENOR. FCC Group environmental policy In 2009, the FCC Group, through the Board of Directors, ap- proved its Environmental Policy, a policy applicable to all Group companies. The Policy is an integral part of the Environmental Management System and establishes the principles in the area of environmental conservation and the use of natural resources that each of the Group’s businesses must follow. The policy establishes the following commitments: Control and monitoring of significant environmental impacts. Pollution prevention, adaptation and mitigation of climate change. Observation of the environment and innovation. Consideration of the life cycle of its products and Each business line may establish its own environmental policies that reflect the specific characteristics of the activities that it carries out, provided that they incorporate the principles and commitments established in the Group’s Environmental Policy. The commitments that every environmental policy must con- template are the protection of the environment, compliance with legal requirements, the promotion of continuous improvement of environmental performance, establishing additional commit- ments in each of the businesses: At the Environment area, FCC Medio Ambiente Iberia also has an Integrated Policy that incorporates principles of ac- tion on health and safety in the workplace, a healthy work environment and interaction with the environment. The pol- icy focuses on the promotion of R&D&i and energy efficien- cy, the use of renewable energies, the reduction of pollution and Greenhouse Gas emissions. At an international level, the activity in the Environment area in the United Kingdom has specific environmental commitments and in the envi- ronmentally certified countries at FCC Environment CEE, locally adapted environmental policies are in place. Aqualia has an integrated Management System, whose scope includes quality management, the competence of testing laboratories, environmental and energy manage- ment, occupational health and well-being and information security. The Integrated Policy incorporates, among oth- ers, principles of action to ensure the achievement of the Sustainable Development Goals, the quality of treated and distributed water and, at environmental level, principles that reduce the consumption of resources, improve the man- agement of biodiversity and of Aqualia’s energy and climate performance. Taking into account other environmental certifications, Aqualia services. Commitment to continuous improvement. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 3 of 24 539 The Construcción area has an Integrated Policy that ad- ditionally incorporates the analysis of environmental inci- dents, the involvement of interested parties and the estab- lishment of a plan to reduce the significant impacts of the activities of the works and the company’s centres. Cementos Portland Valderrivas has its own environmen- tal policy that incorporates commitments related to its ac- tivity, such as reducing wastewater discharges, minimising waste, prioritising energy recovery, or restoring any adverse impact caused by extraction activities. The management of environmental aspects and impacts within the Group Taking into account the heterogeneity of the activities carried out by the Group with its four business lines, the environmental aspects and impacts derived from the activities carried out are different and, therefore, must be managed taking into account the specific features of each one of them. In general, each of the company’s business lines monitors each of the processes, trying to identify, evaluate and manage the impacts produced, to adopt the necessary practices to mini- mise them. In this regard, FCC Medio Ambiente Iberia has procedures to identify and assess environmental aspects that could cause an impact on its surroundings. The main environmental aspects identified are related to the consumption of resources, waste management, noise, discharges and emissions into the atmos- phere. For all aspects, actions are established focused on the elimination or mitigation of the associated impacts, whether on the environment or the health and safety of workers. FCC Environment UK, in addition to the review of environmental aspects at operational level, carries out an annual review of the aspects and impacts at corporate level. For its part, the activity in the Environment area in the United States, despite not hav- ing a certified management system, directs its actions to the periodic maintenance of equipment, the inspection of facilities and the training of its collaborators in spill prevention and the management of emergency situations. In the case of Aqualia, the environmental impact of its activity is related mainly with the consumption of reagents, the generation of hazardous and non-hazardous waste and energy consump- tion. The main actions of the company are aimed at the search for energy efficiency and the use of reagents, including improve- ments in the precision of measurements, calculations of the en- ergy performance of pumps, optimisation and improvement of processes, facilities and production equipment, optimisation of the purchase of energy, etc. In the Construction business, environmental management fo- cuses on identifying the environmental aspects likely to cause an impact during the project, and on determining their prob- ability of occurrence. In this regard, a series of guidelines are established to direct efforts towards those aspects that may entail a more intense impact. There are certain environmental aspects that are considered to be significant throughout the Construction area, such as those linked to the generation of waste, the consumption of resources and the generation of noise and vibrations. Specifically for FCC Construcción’s activity, the main environmental aspects would be the effects on the territory, largely due to movements on and offsite due to the work itself or the fall of granular material during transportation, as well as dust emissions into the atmosphere. With regard to the Group company Matinsa, the environmental aspects related to atmospheric emissions, from the fuel con- sumption of vehicles and machinery have been identified as the most significant. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 4 of 24 To limit the impact on the environment, Construction estab- lishes a process to identify, assess and manage environmental risks associated with infrastructures, pledging on innovation to address these risks. Simultaneously and with the same objec- tive, the area focuses its efforts on adequate management and on the minimisation and reuse of the waste generated. For the activity of Cementos Portland Valderrivas in Spain and Tunisia, the identification of environmental aspects is based on an analysis of the processes, facilities and products likely to generate environmental impacts with a life cycle approach. This objective and quantitative analysis takes into account the possible interactions of the Cement business activity with the environment, considering the different operating conditions that may arise: normal and abnormal circumstances, as well as po- tential accidental or emergency situations. The most significant environmental issues identified for the Ce- ment business are related to the extraction of natural resources from quarries to obtain raw materials, the emission of green- house gases (GHG), particles and polluting gases NOX and SO2 or the consumption of fossil fuels and electrical energy. Other significant issues are also identified, such as the genera- tion of noise and hazardous and non-hazardous waste and the consumption of water. Cementos Portland Valderrivas’ response focuses on mitigating greenhouse gas emissions through the use of decarbonated materials to replace virgin raw materials, the use of alternative fuels such as biomass instead of fossil fuels or the energy re- covery of waste whose initial destination would have been its deposit at a landfill. Application of the precautionary principle and resources dedicated to the prevention of environmental risks At FCC, the precautionary principle is applied through the de- sign and implementation of its Group Environmental Risk Man- agement Model, as well as through risk prevention activities in each of the businesses. The FCC Group’s environmental risk management model has several independent management levels to achieve greater effi- ciency in the Group’s risk management. In the event of detect- ing a threat or risk that may affect the environment or health, regardless of scientific uncertainty, the Group takes the appro- priate proactive measures to prevent possible damage. In this regard, the FCC Construcción System of Good Environ- mental Practices® stands out, its own model, a pioneer in the sector since 2009, which allows the establishment of preven- tive measures in a proactive way in each company project. To enhance the positive impact of FCC Construcción on the en- vironment, this System defines a set of environmental actions based on the initial identification of the environmental aspects that may impact the project, the assessment of its potential magnitude and its risk of occurrence. In this way, by directing efforts to aspects with a greater impact, this System allows more demanding environmental objectives to be defined than those established by legislation or by customer requirements, bringing about the company’s commitment to minimise its en- vironmental impact. 540 In the case of FCC Medio Ambiente Iberia, the international standards on which the company’s environmental management systems are based are an instrument to prevent environmental damage in itself. Hence, the requirements under which these standards are governed, which are implemented in the organ- isation’s management, are endowed with a preventive nature that is consistent with risk management. In turn, this risk man- agement is aimed at product and service conformity, so the im- plementation of these management systems involves the appli- cation of the precautionary principle. Risks are considered and managed in each modification to the system, endeavouring to prevent them from appearing, and at the same time evaluating their probability of occurrence and their consequences. This is how serious or irreversible damage to the environment is avoid- ed, imposing preventive measures to those projects or events in which there is no certainty regarding the effect that an activity may have on natural resources. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 541 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 5 of 24 Similarly, regardless of whether or not they have a certified En- vironmental Management System, the Environment area ap- plies the precautionary principle in all the countries in which it operates. For example, FCC Environmental Services (USA) implements preventive measures to reduce the probability of occurrence of environmental risks, as well as those related to the health and safety of its employees. For its part, some examples of preventive measures by Aqualia would be the establishment of chlorine gas leak detection sys- tems or the correct storage of chemicals and hazardous waste. These, according to the application regulation, must be cov- ered, identified, with protective buckets and absorbents, to be used in a possible spillage. Monetary resources dedicated to environmental risk prevention (€) (8) Resources dedicated to the prevention of envirnonmental risks (€) 2019 2020 Cementos Portland Valderrivas 3,687,187 4,088,682 Construction Area Environment Area Total 22,357,762 21,443,566 4,552,007 18,211,325 30,596,956 43,743,573 Cementos Portland Valderrivas applies the precautionary princi- ple by establishing a series of preventive measures to minimise the risks of damage to the environment. The main measures carried out in the cement business include the installation of particle filters in kilns and mills, water purification systems, ad- equate waste storage or techniques to reduce the emission of greenhouse gases, among others. This amount includes 24 million euros invested in the renewal of the fleet of vehicles and more efficient machinery, 6.8 million eu- ros for environmental consulting, 3 million euros in R&D projects related to environmental improvement and more than 300 thou- sand euros in environmental certifications. More than 8 million euros have also been earmarked to other expenses and invest- ments aimed at environmental protection and improvement. The establishment of measures to identify and mitigate the impact of environmental risks involves, annually, significant in- vestments by FCC Group companies. Accordingly, in 2020, the FCC Group dedicated more than 43 million euros to environ- mental risk prevention, as shown below. The increase in the amount allocated to the prevention of en- vironmental risks with respect to 2019 is motivated by an im- provement in the compilation of information from FCC Medio Ambiente Iberia that has allowed the incorporation of invest- ment into energy efficiency measures, environmental consulting expenses or annual expense certification. Monetary resources broken down by type are detailed below. Moreover, over 200 Group professionals work full or part time in environmental management and nearly 23,000 hours of envi- ronmental training have been provided. (8) The investment for the prevention of environmental risks is not provided by Aqualia as it does not have homogeneous and disaggregated information on said investments. 55% Annual investment in renewal of the vechicle fleet and more energy-efficient machinery (hybridor renwable) 1% Annual investment in energy efficient measures 8% Investments in R&D projects related to environmental improvement/environmental impact reduction 1% Annual environmental certification costs (ISO 14001 ISO 50001, EMAS, etc.) 16% Environmental consulting expenses 19% Other expenses and investments relating to environmental protection and improvement Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 542 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 6 of 24 Number of FCC Group provisions and guarantees for environmental risks All FCC Group companies have a general third-party liability pol- icy to cover accidents, damage or risks caused in the form of accidental contamination of the environment. The Group also holds an environmental third-party liability policy that ensures coverage for to 60 million euros in case of accidents and acci- dental contamination. Both policies have global coverage, and this can be complemented with policies contracted locally by each of the businesses. In 2019, in order to comply with the obligations expressed in Law 26/2007 of 23 October on Environmental Responsibility, FCC Medio Ambiente Iberia analysed specific environmental risks related to treatment plants and landfills. As a result of this process, none of the 33 facilities analysed has had to establish a financial guarantee. Additionally, the activities of the Environment area in the Unit- ed States, the United Kingdom, Slovakia, the Czech Republic, Romania and Serbia have specific guarantees through policies contracted to cover environmental risks. In this sense, Cementos Portland Valderrivas has a policy that covers, for its cement business, up to 15 million euros per claim and 30 million euros for accidental contamination. Regarding environmental provisions, the Group has a provision of 12.43 million euros provisioned in the Cementos Portland Valderrivas division. For their part, FCC Medio Ambiente, FCC Construcción and Aqualia do not have specific provisions to deal with environmental contingencies, as the existence of sig- nificant eventualities in the matter is not considered. FCC’S contribution to the circular economy The circular economy for the FCC Group To make its vision reality, offering innovative solutions that con- tribute to sustainable progress, the FCC Group has designed a roadmap, integrating the circular economy into its business strategy. For FCC, the circular economy constitutes an opportunity to expand its contribution to sustainable development, while al- lowing the adaptation and resilience necessary for mitigation and adaptation to climate change. For this reason, circularity is integrated into two of its business lines, the Environment area and Aqualia, specialising in waste and water management, re- spectively. Regarding its Construction and Cement businesses, the integration of the circular economy allows it to broaden its horizon of contribution, helping it to advance towards a more sustainable economic model. To formalise its pledge to circularity as a means to progress in sustainable development and in mitigating the effects associ- ated with climate change, in 2017, the FCC Group signed the Pact for a circular economy, promoted by the Spanish Govern- ment’s Ministry of Agriculture and Fisheries, Food and Environ- ment in conjunction with the Ministry of Economy, Industry and Competitiveness. This initiative aims to involve all signatories in the transition towards a new economic model that is more sus- tainable and environmentally friendly. To promote the FCC Group’s positioning in the circular econo- my model, a preliminary analysis of the European Union’s pack- age of measures was carried out and monitored by the Group’s business lines. Through the development of master or business sustainability plans, the lines of work and the roadmap have been formulated in the area of reduction, reuse and recovery, leading to a reduction in their environmental impact. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 543 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 7 of 24 Taking into account the different nature of FCC’s business activ- ities, this application of a model based on the circular economy is carried out in different ways: The Environment area’s activity is based on waste man- agement, carrying out a treatment of urban and industrial waste and, therefore, promoting circularity from its collec- tion and recycling activities to their recovery. Likewise, re- duction measures are established within the facilities and contracts generated, establishing waste minimisation plans in some of their contracts. Environment area, pledging for the circular economy, tries to convert waste into resourc- es, optimising its use. In this regard, this business encour- ages research and technological application, through the implementation of various innovative projects. Some of these projects are Life Methamorphosis, regarding the use of biomethane production from waste treatment plants, Life4Film, whose objective is to avoid incineration and the dumping of plastic film waste or Deep Purple, a pilot project in the management of the effluents generated at the organ- ic waste treatment facility. On an international scale, other examples of initiatives would be the energy use of waste at the UK facilities, the application of robotics to improve the classification of waste at the FCC Environmental Services facility in Houston or the creation of a reuse centre, in the city of Trnava, Slovakia. For its part, Aqualia’s business model incorporates the concept of circular economy, by providing catchment, treatment, storage, distribution, sanitation and purifica- tion services, including the reuse and reinsertion of water into the natural cycle. Additionally, and to reduce negative impacts on the environment, the water resources used in operations are purified, eliminating waste and guarantee- ing the best conditions when returning said resources to the environment. In this way, and given the scarcity of this resource, Aqualia plays a fundamental role in the use and sustainable management of water. With regard to the Construction business, the main con- tribution in the field of circular economy is based on the commitment to innovation, promoting the use of new sus- tainable and reusable materials. In this context, FCC Con- strucción has a circular economy strategy based on six areas of action defined by the ReSOLVE framework. This framework encourages the identification of business op- portunities linked to the transition process towards a cir- cular economy as a production model. Among the specific measures that FCC Construcción has carried out would be the reuse of inerts from other works, effluents and wastewater from processes or removed topsoil. Likewise, the use of recoverable elements is maximised, such as re- movable walls or the use of portable treatment plants for their use in different projects, as well as the use of recycled materials. Additionally, FCC Construcción promotes digiti- sation as a key element in its strategy to reduce resource consumption, through the application of the Building Infor- mation Modelling (BIM) research line. This line, promoted by FCC Construcción and developed several years ago, encourages the reduction and responsible consumption of natural resources. Lastly, the Cement business applies circular economy tech- niques by implementing energy and waste material recovery strategies, in order to improve production efficiency and the sustainability of its activities. Also, to avoid the extraction of mineral resources, Cementos Portland Valderrivas uses secondary raw materials during different phases of the production process, thus re-using resources from other in- dustries, such as ashes, slag, construction and demolition waste, sludge from papermaking processes, etc. Cementos Portland Valderrivas also replaces fossil fuels with alternative fuels, such as unused tyres, meat meal, sludge, vegetable oil extract and other plant biomass materials, etc. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 8 of 24 544 The activity in the Environment area, contributing to the circular economy of plastic One of the main objectives of the Environment area is the im- plementation of innovative recycling processes, which make it possible to avoid landfill disposal and the energy recovery of plastics present in urban waste. For this reason, the area leads two projects co-financed within the EU’s LIFE programme, located in the Ecocentral waste treatment plant in Granada: Plasmix: This programme aims to optimise the recovery of certain plastics present in municipal waste, such as polypropylene, polystyrene and expanded polystyrene. Avoiding their incineration and landfill, these materials will be recycled into high-quality granules, which can be used in new products, including food packaging. Life4Film: The objective of this project is to implement an innovative recycling process, aimed at avoiding incin- eration and the dispatch to landfills of plastic film (LDPE) present in urban waste. By installing a 10,000t/year re- covery line, the aim is to demonstrate the profitability of the system and the possibility of replicating it at Europe- an level. Life Infusion, turning leachate treatment plants into production and resource recovery factories Through EBESA, FCC Medio Ambiente participates in the Life Infusion project, the objective of which is to convert leachate treatment plants into factories for the production and recovery of valuable resources, such as biomethane and bio-based fertilizers. This project, co-financed by the European LIFE programme and approved in 2020, is the continuation of the Life Meth- amorphosis project, in which FCC Medio Ambiente also participated. Life Infusion aims to demonstrate the economic, technical and environmental feasibility of recovering high-value re- sources from municipal wastewater. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 9 of 24 Reduction of waste generated Responsible waste management is a particularly relevant issue for the Group, given the nature and activities carried out by its business lines. Through the circular economy, the FCC Group promotes the reduction of its own waste, carrying on its activity while, at the same time, promoting social, economic and envi- ronmental sustainability. In this vein, the nature of the company’s activities is inspired by the principles of the circular economy, its maxim being ‘closing the life cycle’ of resources, guaranteeing their subsequent incorporation into the production process. Below are the variations(9) in the total waste generated, as well as a breakdown by each FCC Group business line. The de- crease in waste generated in 2020 is mainly due to project phases with less waste generation in the Construction area. In 2019, the generation of waste in this area was especially signifi- cant, as a result of the commencement of several projects that, in their initial phases, involve a greater movement of earth and generate a greater volume of inert waste. Likewise, the impact of COVID-19 on the normal performance of activities has been reflected in most of the environmental indicators. Development of total waste generated (T) (T) 4,078,233 3,211,360 2,323,266 (9) The waste generated in 2019 has been recalculated due to a review in the reporting criteria. (10) The waste admitted at centres that is kept stored on the site prior to treatment is not considered in the calculation. 2018 2019 2020 545 Regarding the destination of waste, approximately 52%(10) of the waste that is generated is recycled, reused, composted or energetically recovered. Breakdown of waste generated by destination (T) Non-hazardous waste Reuse Recycling Compost Recovery, including energy recovery Incineration (mass burning) Landfill On-site storage Other Hazardous waste Reuse Recycling Compost Recovery, including energy recovery Incineration (mass burning) Landfill On-site storage Other 33,486 632,969 41,219 236,767 23,493 800,329 213,998 96,472 23 153,485 7 1,579 254 73,978 513 14,694 2,323,266 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 10 of 24 Most of the waste generated originates from the Construction area and is non-hazardous, as shown in the following tables: Distribution of total waste generated List of hazardous and non-hazardous waste generated (%) (%) Environment Area 14.6 Construction Area 12.9 Cementos Portland Valderrivas 23.4% Aqualia 0.3% Cementos Portland Valderrivas Aqualia 51.1% Construction Area 25.1% Environment Area 2.8 1.1 85.4 87.1 97.2 98.9 546 FCC Industrial, the first construction company to obtain a “Zero Waste” certificate In the Construction business, FCC Industrial has be- come the first construction company to obtain the “Zero Waste” certificate, granted by AENOR. This cer- tificate determines the existence of an internal tracea- bility system in waste management, guaranteeing its recovery and therefore avoiding the deposit of waste in a landfill. The pilot project in which this initiative has been ap- plied, in Guadalajara (Spain), led to the recovery of 99.99% of the waste generated in building, industrial and civil engineering works. To achieve this, the com- pany has carried out a detailed study of the fractions of waste generated, redesigning its procedures to cor- rectly manage them. To implement this system, FCC Industrial has required the deployment of training programmes in waste man- agement for all the personnel involved, a correct sepa- ration of waste at source and the use of large-volume containers. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 11 of 24 The management of waste by the activity of Environment area FCC, through its Environmental Servicess activity, is one of the leading companies in the collection, treatment and recovery of urban and industrial waste. The objective of this area is to treat waste as a resource, reusing and recycling it as far as possible, and taking advantage of the energy value in waste, when this is feasible. FCC collects both urban and industrial waste in thousands of municipalities, including the world’s most important cities, reaching approximately nine million tons per year. Depending on the needs of each city and industry, we employ different collection systems, each with vehicles and containers chosen to maximise efficiency and minimise inconvenience for citizens and companies. Furthermore, FCC has hundreds of national and international treatment, recycling and disposal centres that manage more than 17 million tons of waste per year. This waste is treated through thermal processes, composting, biomethanisation, re- cycling, incineration, controlled sanitary landfills and tips, com- bining multiple technologies to ensure the most thorough use. With regard to the recovery of waste, a strategic activity that makes it possible to reduce landfill disposal, FCC has special- ised facilities in the United Kingdom, Austria and Spain. Waste collected (T) Municipal waste Hazardous industrial waste Non-hazardous industrial waste Other waste (hazardous and non-hazardous) TOTAL Waste admitted at FCC centres (T) Municipal waste Hazardous industrial waste Non-hazardous industrial waste TOTAL Treatment of hazardous waste Hazardous waste (T) Recovery Stabilisation/Landfill Transferred to end manager/other destinations Other destinations TOTAL Treatment of non-hazardous waste The tons of waste collected, admitted and treated throughout 2020 are detailed below. Non-hazardous waste (T) Recovery Controlled landfill disposal/stabilisation Transferred to end manager Other destinations TOTAL 547 2020 6,058,676 453,365 2,470,360 5,529 8,987,930 2020 7,123,021 667,166 9,699,244 17,489,432 2020 278,641 510,275 37,368 20,923 847,206 2020 3,729,815 9,895,784 2,644,518 42,971 16,313,089 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 12 of 24 548 Efficient use of resources Due to the growing demand for natural resources globally, the FCC Group bases its strategy on their efficient management. In this regard, each of the Group’s businesses implements a series of specific measures to minimise the impact of the activities car- ried out, establishing protocols to protect the natural resources necessary to perform its activities. Damage to the environment, together with the possible scenar- io involving the depletion of resources, has propelled the FCC Group to implement increasingly more efficient management models that are compatible with sustainable development, and which reflect the company’s solid commitment to environmental conservation and to the circular economy. Water consumption and management within the Group Forecasts of change in the distribution of rainfall mean that wa- ter resources may be scarce in many places. The FCC Group works to ensure efficient water management in each of its activ- ities, taking into account the water infrastructure and availability in the area. The FCC Group puts into practice all the available mechanisms to ensure the most efficient management of this resource pos- sible, guaranteeing compliance with the territorial limits of urban water consumption, applicable to each business line. The following table shows the trend in total water extraction over the last three business years at the FCC Group. The increase in water extraction registered in 2020 is due to the extended scope of the information reported, since FCC Envi- ronment UK has been able to collect information from a greater number of locations compared to previous years. As can be seen in the following figure, and taking into account the extraction of water by business, 94% of water consump- tion11 corresponds to Environment area. Water abstraction (m3) Distribution of water consumption (%) 13,016,152.0 13,848,749.4 14,579,492.7 5.0% Cementos Portland Valderrivas 6.6% Construction Area 93.7% Environment Area (11) This is not considered to be consumption by Aqualia because the water monitored by the company is the water managed at its facilities. On the other hand, the Construction business does not have systems to measure the consumption of rainwater or from desalination plants, as this consumption is residual compared to the rest. 2018 2019 2020 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 13 of 24 The FCC Group’s businesses favour the rational and efficient consumption of this resource, carrying out different measures to optimise it. Aware of the weight it has on the Group’s total consumption, the Environment area is committed to the use of technologies and equipment that allow greater efficiency in the use of water, both during the provision of its services and at its facilities. Like- wise, the rational use of this resource is encouraged among op- erating personnel, and the use of water from alternative sources is promoted. Regarding this last point, it is worth noting, in the United Kingdom, the project for the collection of rainwater in the Harborough contract, which allowed the capture of 11,000 litres of water in 2020. For their part, all the companies in the Construction business work to guarantee a rational consumption of this resource, bet- ting on the awareness of their collaborators to recall the impor- tance of making a sustainable use of water. At the same time, in 2020, Cementos Portland Valderrivas continued to work on the 549 optimisation of water consumption by making improvements to the water networks at the facilities to reduce losses caused by breakages in old or damaged pipes. Aqualia, specialised in the design and construction of all types of hydraulic infrastructures, efficiently manages the end-to-end water cycle, to guarantee the optimisation of public and private resources and promote the sustainable development of com- munities. By managing each of the phases that make up the end-to-end water cycle, Aqualia controls the process in detail, which in- cludes the collection, treatment and purification, distribution and collection of urban water, and its subsequent purification for its return to the natural environment in optimal conditions, providing a comprehensive service to consumers. DRINKING WATER TREATMENT Aqualia designs and builds drinking water treatment sta- tions, using a wide variety of technologies, depending on the quality of the source water, to ensure the maxi- mum guarantees in terms of drinking water. In 2020, Aqualia treated 643.4 million m3 of water. END-TO-END WATER CYCLE INDUSTRY The main figures related to the end-to-end management of wa- ter by Aqualia are shown below: DESALINATION REUSE To face the challenge posed by the scarcity of water, Aqualia offers complete water desalination solutions to the industry, to generate a greater quantity of water re- sources. Aqualia designs and desalination plants for seawater and brac- kish water, including pum- ping and sewerage plants. builds PURIFICATION Aqualia has extensive experien- ce in the design and construc- tion of wastewater treatment plants with mostly domestic po- llution, currently purifying the wa- ters produced by millions of in- habitants. In 2020, Aqualia puri- fied about 665 million m3 of water. Aqualia has plants that treat the water after it is purified to improve its physical and sani- tary This characteristics. water, more than 15.6 million m3 in 2020, is intended to irri- gate parks, gardens or golf courses, clean roads, rechar- ge aquifers or recover ecologi- cal flows in degraded river courses. Aqualia provides all kinds of water solutions for the industrial sector and its processes. Hence, it has numerous facilities in operation and offers the right type of supply for each case, both turnkey plants, as well as the supply of equipment accompanied by the technical assistance required. Natural capital: input (m3) Drinking water produced Treated water Raw water purchased Total water consumed in the purification and desalination processes 2020 643,416,868 665,830,462 201,161,827 174,980,591 Amount of water distributed 666,335,239 Re-use of WWTP outlet water (m3) Total volume of water treated in WWTP Volume of water reused % total re-used 2020 682,243,654 15,632,168 2.3% Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 550 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 14 of 24 Consumption of raw materials Some of the activities carried out by the FCC Group involve a necessary consumption of raw materials. For this reason, the management of these types of resources is a priority issue, and the Group encourages their optimisation to ensure their respon- sible use, taking into account the specificities of each business. Aqualia mainly consumes reagents used in water management during the purification process. In line with the limitations es- tablished by the regulation, the treatment plants have analytical control procedures for the process, guaranteeing a minimum and necessary consumption of this type of products. Regarding the amount of raw materials reflected in the previ- ous table, it should be noted that in the Construction area, the consumption of land and gravel increased very considerably in 2020, mainly due to the progress of the large projects com- menced in 2018 and 2019. The activity of FCC Construcción, in addition to land occupa- tion, involves the movement of large volumes of land for execu- tion. To reduce the consumption of land, the company imple- ments different actions, such as the use, as backfill in the work itself, of the material extracted in the clearing of cuttings and embankments. In this way, it is possible to reduce the volume of material loans required compared with the volume initially planned in the project. Because of the very nature of its activity, Cementos Portland Valderrivas is a large consumer of natural raw materials. This is why it has an Environmental Policy to promote the sustainability of natural resources, by introducing the circular economy princi- ple and promoting the use of alternative raw materials and fuels. Simultaneously, and promoting the responsible consumption of natural resources, the company’s activity allows significant waste recycling from other industries. Through the recovery of materials, obtained from waste and by-products, natural raw materials are replaced, saving non-renewable natural resources and thus avoiding the impact of their exploitation on the natural environment. In this regard, the main alternative raw materials consumed by the Cement business include fly ash, blast fur- nace slag, foundation sands, paper mill carbonates, industrial sludge, concrete remains, olive stones, recycled fuel oil and re- covered hydrocarbon. The activity of Environment area works to reduce the use of non-renewable natural resources, reusing the materials con- tained in the waste as secondary raw materials in the produc- tion cycle, provided that people’s health and the protection of the environment are guaranteed. In this regard, the use, at var- ious facilities managed by FCC Medio Ambiente Iberia, of re- cycled materials to replace raw materials is worthy of mention. In addition to raw materials, each of the FCC Group businesses consumes other types of materials associated with the activity that it carries out. The consumption of raw materials, process materials, lubri- cants and reagents, semi-finished products and container and packaging materials throughout 2020 is detailed below. Materials used (T) 2020 Raw materials (metals, minerals, wood, etc.) 41,396,446 Process materials, lubricants and reagents Semi-finished products Container and packaging material (paper, cardboard, plastics) TOTAL 96,849 3,726,276 8,671 45,228,241 FCC Construcción announces the incorporation of Blockchain technology through the BIMCheck project FCC Construcción has notified its stakeholders of its par- ticipation in the creation of BIMCheck, a platform whose main objective is to improve the company’s productivity through the automation of quality control and manage- ment processes. The application allows the improvement of the traceability of the materials and the documentary control of the works. It has been applied in a pilot building project in 85 homes in Tres Cantos (Spain), constituting the first experience worldwide that combines the applica- tion of BIM and Blockchain in a project. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 551 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 15 of 24 Energy consumption Both energy efficiency and the substitution of fossil fuels with renewable energy sources are fundamental points to turn FCC into a more sustainable business. Aware of this, the Group in- cludes the implementation of these measures in its business model as part of its strategy. The FCC Group, through its business lines, carries out different measures to increase the energy efficiency of the organisation. In this way, both the Environment area and Aqualia have an Energy Management System certified in accordance with the ISO 50001 Standard, which implies the establishment of energy efficiency objectives and measures. In addition, FCC’s businesses work on improving the energy ef- ficiency of its facilities and processes, through different projects, such as the replacement of luminaires with LED technology, the renewal of equipment, training in efficient driving or the installa- tion of presence detectors, among others. It should be noted that FCC Medio Ambiente received a prize in the 2019/2020 edition of the European Business Environmental Awards (EBAE Awards), for a project aimed at implementing affordable electric mobility in urban services. In this way, FCC Medio Ambiente Iberia has been working throughout 2020 on the adaptation of this technology, which entails enormous envi- ronmental benefits, such as the reduction of polluting emissions and noise, the reduction of the carbon footprint and the maxi- misation of energy efficiency. The Group’s energy consumption in the last three years is shown below, reflecting the company’s efforts in this area: Direct and indirect energy consumption (GJ) 43,456,989 48,431,483 43,103,946 Other examples of the FCC Group’s commitment to the use of renewable energies would be the project to install photovoltaic solar energy at 26 Aqualia consumption points, which repre- sents an expected annual production of 5GWh (18GJ) per year; the PPA (Power Purchase Agreement) for this business line, which aims to acquire 76GW per year of renewable energy for the next 10 years; or the use of landfill gas to generate electricity and hot water, by FCC Environmental Services in the United Kingdom and Hungary. The consumption of renewable energy in the last three years is shown below: Renewable energy consumption 2018 2019 2020 10,786,857.0 13,107,941.6 11,606,735.8 The decrease in energy consumption compared to 2019 is mo- tivated by the effects of the pandemic on the normal develop- ment of the activity, mainly in the Cement area. Furthermore, the FCC Group’s business lines endeavour to use an increasing percentage of energy from alternative sources in their processes. In this connection, the efforts of Cementos Portland Valderrivas to replace fossil fuels with alternative fuels, such as biomass, in processes requiring a high energy con- sumption, such as the manufacture of cement, are worthy of mention. 2018 2019 2020 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 16 of 24 w Aqualia, researching for the future of desalination Aqualia leads the MIDES project, which has achieved total energy autonomy for two desalination plants, in Racons (Ali- cante) and in Fonsalía (Santa Cruz de Tenerife). and the supply of drinking water from salt water, exploiting the synergies between both processes, achieving autonomy in energy terms. Over five years it has gone from a small laboratory cell, which could treat a few millilitres of water a day, to the present, where almost 4 m3 is being desalinated daily, enough to supply 25 people at each plant. This project provides a solution, simul- taneously and sustainably, to the purification of wastewater Thanks to the development and start-up of these projects, Aqualia contributes to defining the future of desalination plants, contributing at the same time to sustainable develop- ment, by integrating the fight against climate change and cir- cular economy criteria at these types of facilities. 552 Cementos Portland Valderrivas is committed to using renewable energy for cement production and renews its EMAS Environmental Management and Audit System Cementos Portland Valderrivas began, at its facilities in Al- calá de Guadaira, the largest cement manufacturing centre in Andalusia, the transition to the use of biomass as fuel. This energy source, widely used in the production of re- newable energy, will reduce its greenhouse gas emissions by up to 40%. In addition, Cementos Portland Valderrivas maintains a very demanding environmental policy, and its factory in Alcalá de Guadaira has renewed for the eleventh year its regis- tration in the EMAS Environmental Management and Audit System, a voluntary EU mechanism that identifies and val- ues companies committed to the environment and to com- pliance with current legislation. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 553 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 17 of 24 FCC, facing the climate change challenge Climate change is one of the greatest threats of our century, ac- cording to experts. According to the Global Risks Report of the World Economic Forum, published in 2021, the influence of en- vironmental risks remains, confirming the trend of recent years. In a context marked by climate uncertainty, those entities ca- pable of reacting and anticipating possible risks related to cli- mate change and the environment are particularly important. The FCC Group is aware, taking into account the opinion of experts and international trends, that the sustainable develop- ment of cities entails responding to great challenges, among which is the fight against climate change. In line with its mission, the Group promotes the development of innovative solutions to transform the present and future of cities, bringing about the sustainability of its business model. In this vein, the FCC Group, in line with its commitment to inte- grate climate change management at all its operational levels, as well as in each of its business lines, has taken into account the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) established by the Financial Sta- bility Board (FSB), in relation to the disclosure of climate-re- lated information. These recommendations are structured in four blocks: governance model, strategy, risk management and metrics and objectives, with the ultimate aim of making investors and other stakeholders aware of the management and integration of risks and opportunities derived from climate change in their business model. Governance model Stakeholders are increasingly demanding the greater involve- ment of companies to promote more ambitious policies that allow the impacts and risks derived from their activities to be managed, including non-financial issues that directly affect the natural environment, such as those related to climate change. The FCC Group, as a world benchmark in citizen services, spe- cialised in the end-to-end management of water, environmental services and the infrastructure sector, is aware of the important role it plays in this task. For this reason, the company has an across-the-board governance model for all ESG aspects, in- cluding climate change management, as explained in section The Group’s CSR Policy. Strategy In accordance with the values of integrity, transparency and professionalism that characterise the FCC Group, the company tries to inform its stakeholders, including investors, about the effect of climate change on the organisation’s different lines of business, strategy and financial planning. Monitoring Comunication Reduction Pillars of the Climate Change strategy Innovation Adaptation The company is aware that its main activities as a business, such as cement production or waste management, among oth- ers, involve the emission of greenhouse gases. With the aim of reducing these emissions to the maximum, the FCC Group has a Climate Change Strategy, which establishes the strategic lines and the roadmap until 2050, defining quantitative objectives and selecting KPIs for monitoring and reporting. This Strategy is based on the following pillars: Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 554 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 18 of 24 Monitoring: despite the Group’s long journey to measure the carbon footprint, the objective of this pillar is to ad- vance in the improvement and scope of the quantification of greenhouse gas emissions. Reduction: based on the information obtained, reduction goals and actions are envisaged to attain these objectives. In this connection, the FCC Group devotes numerous ef- forts to the development of products and services with a lower environmental impact. Adaptation: the activities of the Group and its clients are exposed to the impacts derived from climate change, in- cluding both physical risks and the risks of transition to a low-carbon economy. The former include impacts derived from extreme weather events, for example, while the latter comprise regulatory changes that may occur in the future. Innovation: the new challenges that arise on a global scale will require the Group to be able to adapt to the new en- vironment. In this way, FCC must develop innovations that allow it to reduce its environmental impact and to help its clients in the transition to a low-carbon economy. Communication: the FCC Group must maintain a trans- parent and open relationship with its stakeholders, re- porting on the objectives set, the actions carried out and other initiatives that contribute to the fight against climate change. In this way, FCC has been able to consider the impact that is- sues related to climate change have on its business and strat- egy, specifically on its products and services, its value chain, adaptation and mitigation activities, investment in research and development and company operations. The impact that issues related to climate change have on its business and strategy Products and services Research and development (R&D&i) In this regard, for example, the impact of climate change has led to the development of innovative and more sustain- able initiatives that have made it possible to provide more efficient products and services in each business line, in- corporating circular economy projects and mitigating, on a parallel basis, the effects of their activities on the environ- ment. Likewise, in this strategy, the FCC Group has a pillar related to innovation applicable to each of the business lines in a cross-cutting manner, the objective of which is to design new products that are more efficient and less dependent on coal, based mainly on continuous improvement and on the circular economy as priority axes, in the design, execu- tion, operation and maintenance phases. Value chain Continuing Risks associated with climate change, as well as ESG de- mands, have prompted the company to expand the scope of social and environmental criteria in its value chain. To this end, during the 2020 business year, the Purchasing Manual has been reviewed and the supplier approval pro- cedure has been authorised, which includes financial and non-financial aspects. Adaptation and mitigation The company, aware that its main activities, such as ce- ment production or waste management, among others, generate greenhouse gases, has incorporated two fun- damental lines of action into its Climate Change Strategy that focus on mitigation and adaptation, to reduce these emissions, and include technical, management and energy consumption improvements. Taking into account the possible climatic impacts derived from global warming in the company’s operations, the FCC Group focuses its efforts on being part of the solu- tion, maintaining its leadership in the management of the end-to-end water cycle, environmental services and infra- structure development and management and promoting synergies between the different business lines, to enhance profitability, mitigate climate events across the board and promote the Group’s sustainable development. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 555 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 19 of 24 Risk management Metrics and objectives The FCC Group is aware that its business lines are exposed to risks derived from climate change, therefore different action plans are implemented at the organisation based on the ac- tivity carried out by each of them. In addition, depending on the trends and performance of each sector, each business line annually identifies the possible opportunities derived from cli- mate change, such as, for example, the integration of the circu- lar economy into its operations, with significant savings and a reduction in GHG emissions. Climate-related risks and opportunities are included within the FCC Group’s Risk Management Model, as well as any other type of risk that may affect FCC. In this way, its periodic evalua- tion is guaranteed, together with the establishment of appropri- ate controls for its prevention and detection. The main risks related to climate change identified by the FCC Group include exposure to extreme weather events, water scar- city, the establishment of new limits on GHG emissions or the appearance of new regulations regarding the energy recovery of waste or the energy certification of buildings, among others. However, the FCC Group also considers that the transition to- wards a low-carbon economy implies the emergence of new needs in urban environments. As a result of its efforts in inno- vation and in mitigating its environmental impact, FCC is posi- tioned as a leading player to respond to these needs, contrib- uting to the sustainable development of the cities of the future. In the FCC Group’s desire to advance in measuring the impact of the Group’s activities, one of the fundamental pillars is the an- nual calculation of the carbon footprint of each business line. To contemplate the particularities derived from the different activi- ties carried out, each of them has developed its own methodol- ogies, always endorsed by the Spanish Climate Change Office. Next, the greenhouse gas emissions of the FCC Group are de- tailed, including scopes 1 and 2. For their calculation, different methodologies have been used for each activity sector of the Group, all of them aligned with the GHG Protocol. FCC Group direct and indirect GHG emissions (tCO2e) 731,600 7.870,743 604,073 6,900,204 768,792 5,165,274 2018 2019 2020 Indirect (scope 2) GHG emissions t eq CO2 Direct (scpote 1) GHG emissions t eq CO2 Additionally, the FCC Group’s direct biogenic GHG emissions amounted to 2,006,143 tCO2 in 2020. The decrease in GHG emissions with respect to 2019, like that indicated with respect to energy consumption, is motivated by the effects of the pan- demic on the normal performance of activities, mainly in the Cement area. As part of its Climate Change Strategy, in 2019, the FCC Group approved the objectives to be met by the 2050 horizon. In this way, based on the individual objectives of the different busi- nesses, the FCC Group has established two different emission reduction targets, differentiating between Cementos Portland Valderrivas and the rest of the Group’s business lines. This is so due to the peculiar characteristics of the cement sector, in which most of the emissions are linked to its own activity, with no possibility of reduction if not due to lower production. The Group’s GHG emission reduction targets are detailed be- low, including scopes 1 and 2, and excluding the cement busi- ness. For these objectives, 2017 is taken as the base year: Year 2030 2040 2050 Group Objective (without cement) -10% -15% -20% Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 556 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 20 of 24 For Cementos Portland Valderrivas, the following objectives have been established, in terms of emissions intensity: Year 2030 2040 2050 Cementos Portland Valderrivas target (kg CO2/T Clinker) 768 754 740 To measure the degree of attainment of the FCC Group with regard to the goals described, a series of indicators have been defined for each of the business lines that make up the Group, as well as a series of intermediate objectives, calculated based on the year 2017. Aqualia continues its innovation process by creating new solutions to fight climate change The ABAD Bioenergy technology, patented by Aqualia, is a comprehensive biogas cleaning, improvement and purifi- cation system that allows a higher quality of biomethane to be obtained at a lower price. Aqualia has 4 treatment plants with this technology installed, so it obtains enough biom- ethane to supply 200 vehicles. The ABAD programme, which began in 2018 and will run until 2026, has been se- lected in 2020 for the Climate Project call. Thanks to its operation, the Ministry for Ecological Transition has certi- fied and subsidised 100% of the tons of CO2 avoided by Aqualia during 2018. The Run4Life project, led by Aqualia, proposes a wastewa- ter treatment system that does not require a connection to sewerage networks, re-using 100% of grey water. In 2020, after its application for two years in the Porto do Molle Busi- ness Centre, the results have been presented for this pro- ject, which is being developed on a large scale in Europe. FCC Environment UK, supporting its clients towards a zero carbon footprint FCC Environment UK offers innovative waste management solutions to more than 60 local authorities, to support them in their transition towards carbon neutrality. For this, it is necessary to carry out initiatives in addition to recycling practices, which contribute to the fight against climate change. An example is the use of fully electric vehicles for waste col- lection in both urban and rural areas. Given the thousands of kilometres of waste disposal routes across the UK, the switch to electric mobility could have a major impact by helping to reduce emissions from its customers, supporting their transition towards a zero-carbon footprint. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 21 of 24 557 The minimisation of pollution The FCC Group, in accordance with its environmental commit- ment, aims to reduce polluting atmospheric emissions (mainly NOX, SOX and particles) associated with its business activities. These emissions, which do not contribute to climate change, are not related to GHG emissions, which are detailed in the pre- vious section of this report. In this regard, activities at the facilities of certain of the Group’s business lines have fixed source emission limit values, mainly. This is the case of Cementos Portland Valderrivas, as well as the industrial waste management activity of FCC Medio Ambi- ente Iberia or certain facilities of FCC Environment UK. In these cases, to control pollutant emissions, the facilities have gas purification and filtering systems, among others, using different techniques depending on the characteristics of the pollutant generating process. The main atmospheric emissions by type of pollutant are de- tailed below: Atmospheric emissions (T) Aqualia Cementos Portland Valderrivas Construction Area Environment Area NOx SOx Persistent organic pollutants (POPs) Volatile Organic Compounds (VOCs) Particles (MP) HCL HF Emissions of ozone-depleting substances (ODS) 72 5,988 0 – – – – – 1 717 0 144 125 8 1 – 437 6 – 21 1,264 – – – 5,303 495 0 142 53 54 1 – Total 11,801 1,218 0 306 1,443 62 2 1 With regard to NOx, SOx and particles, the main emissions resulting from the activities, the proportion existing in each of them is detailed below: Emissions of NOx, SOx and Particles (T) 82% NOx 8% SOx 10% Particles Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 22 of 24 558 These NOx, SOx and particle emissions are in line with the infor- mation provided in previous years, without detecting significant variations. The rest of the atmospheric emissions have been compiled for the first time in this report. The specific measures adopted in each Group business with regard to atmospheric emissions vary significantly depending on the activity carried out: At Cementos Portland Valderrivas, cement manufac- turing produces significant emissions into the atmosphere from Clinker furnaces. To ensure strict compliance with the emission limits, sleeve and electrostatic filters are installed to reduce concentrations in channelled sources. Other measures include the installation of filters in the transport and transfer of powder materials, the use of closed stor- age, wind-proofing screens, the irrigation of tracks and the use of sweepers and vacuum vehicles to avoid widespread emissions. The Construction business, for its part, establishes pre- ventive measures, ranging from the roof of the trucks that transport powdery material, to the use of pipelines to trans- port debris from a height. Additionally, other measures are established, such as the irrigation of roads and stockpiles or the use of machinery with a humidifier system to reduce the emissions derived from drilling. The Environment business is committed to favouring the active degasification of the landfills it manages. In the case of landfills, the pertinent measures are established to con- trol widespread emissions, especially in the transport of powdery material. With the aim of minimising said emis- sions derived from transport vehicles and machinery inside the facility, it is guaranteed that the particles deposited on the roads are not dispersed, necessary cleaning is carried out or accumulations of dust are removed, among other measures. Additionally, in relation to spillages, the preventive measures taken by the FCC Group include, among others, the installation of water purification systems, complying, in any case, with reg- ulatory inspections; the neutralisation of effluents with basic pH or the placement of containment elements near water bodies. In relation to noise pollution and in order to avoid a direct impact on communities, the FCC Group ensures that local regulations on noise are respected, carrying out different types of actions, such as the installation of acoustic screens at Construction and Cement businesses, the performance of tasks at times that minimise the impact and the use, as far as possible, of more modern and silent machinery. Then, with the aim minimising the impact from light pollution, some FCC Group businesses took different measures, such as the installation of timers and presence detection systems, or the use of directional light, which illuminates only the area required without impacting the environment. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 559 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 23 of 24 Protecting biodiversity The activities undertaken by the company require a certain use of natural resources, a fact that may have an impact on the eco- systems and the species that live in them. For this reason, the different businesses that make up the Group should guarantee the care, preservation and restoration of biodiversity in those areas where the company operates. The following table shows the surface area in hectares of vul- nerable protected areas, together with the affected surface are- as restored by the Group in the last three years. Measures taken to preserve or restore biodiversity Protection of vulnerable areas (ha) 2018 534 2019 1,127 2020 1,142 Restored affected areas (ha) 544 604 700 As can be seen, there is an ongoing increase in the number of vulnerable areas protected in 2020 compared to previous years. Given the different nature of the activities undertaken by the FCC Group’s businesses, their impacts on biodiversity vary widely, as do the measures taken to protect them: At Cementos Portland Valderrivas, the impact on bio- diversity consists of the exploitation of natural resources in quarries for the supply of raw materials. To be able to measure this impact, an assessment is made of the effect on the landscape that involves observing the exploited sur- face compared to the restored surface. Restoration work in all the quarries during the last year consisted of morpho- logical repair and revegetation of the exploited area. This involved applying suitable sowing and planting techniques, and using native species adapted to the particular condi- tions of the soil and the climate in the region, such as holm oaks, pine trees, broom and others. The Construction business has an impact on biodiversity inherent to its activity, since works may be located on land adjacent to or within protected areas. With regard to this, during the execution of the works the most valuable areas are protected, physically delimiting them, and it is important to use existing roads rather than opening new roads. Also, when the works are finished the affected areas are restored by cleaning and removing elements, de-compacting the land and adapting it morphologically to the environment, and finally planting trees and shrubs. With regard to the Environment business, the company operates in natural environments where biodiversity is pres- ent, and the company’s activity contributes to its preser- vation, through maintenance and protection services for parks and gardens, cleaning services for beaches, and specific initiatives developed in waste treatment and dis- posal installations. Landfills are also usually restored with different plant species, which is very beneficial and includes the stabilisation of the waste mass and the reduction of odours. Globally, 145 of Aqualia’s 6,881 installations are located in areas with a potential impact on biodiversity. For the correct management of these impacts, all the information on this type of installations is included in the company’s management system, as well as on any incidents that may have occurred. in 2020 there were 7 incidents with a slight impact on biodiversity and occurring as a result of waste- water discharges, of which 3 occurred in protected areas. Additionally, and to achieve its environmental objectives, Aqualia is undertaking a number of projects for the recov- ery of ecosystems. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 560 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Respect for the environment at FCC | Page 24 of 24 However, the FCC Group’s commitment to biodiversity is not limited to mitigating the impacts that its activities may cause. In this regard, a number of initiatives deserve special mention, including collaboration with nature protection groups for the maintenance and control of biodiversity in quarries outside op- erations; actions such as the physical protection of specimens, relocation of plant and animal species, all undertaken by FCC Construcción; and the involvement of FCC Medio Ambiente Iberia in environmental awareness initiatives, such as collabo- ration with the SeoBird Life non-profit organisation. The follow- ing table details the number of construction jobs and the area affected for those that are located in areas with some type of official biodiversity protection status. Protected vulnerable areas and affected areas Location in natural protected areas or with a high biodiversity value Location where the landscape is catalogued as significant Impact on a natural watercourse in a protected area Impact on a natural watercourse in areas with a high biodiversity value Impact on watercourses of high or significant value for local or indigenous communities Impact on catalogued or protected flora Impact on catalogued or protected fauna Number of installations Surface area (ha) 154 8 2 5 9 13 12 835 955 12 848 878 1,459 1,394 FCC Environment UK to relocate voles to the Greengairs landfill As part of its restoration project at the Greengairs landfill (Scotland), FCC Environ- ment UK will relocate colonies of voles to a new location. Voles are an endangered species in the United Kingdom, so their protection is a priority and their habitats are protected. For their relocation, a customised habitat with 425 metres of water banks was designed in advance, leaving these rodents enough land to dig, shelter and breed. The habitat also includes open water channels to give them access to food sourc- es. The transfer will take place once there is enough vegetation in the area, and this event will provide an opportunity to check their health, weight, sex and probability of reproduction. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 561 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 1 of 21 Committed to the FCC Group human resources team The DNA of the human resources team in the FCC Group The FCC Group considers its human resources team a strate- gic asset, and therefore, the management of human resources and labour relations in the companies within the FCC Group is governed by the following principles: a Respect for human and labour rights recognised in nation- al and international legislation, for diversity, equal opportu- nities and non-discrimination. f A work environment in the Group that is safe and healthy and that promotes physical and psychological well-being in the workforce and its areas of influence. b The design of a value offer that favours the selection, con- tracting and retention of talent in all the countries in which the Group operates, always with respect for the specific nature of both the area and of each business area. c The proposal to guarantee the training and ongoing devel- opment of its workforce worldwide, in line with the needs of each business. g We need to be immersed in the digital transformation process to be able to add value to the FCC Group, lead- ing analysis and adaptation to the changes involved in a connected society, social networks, big data, machine learning, communication channels, the internet of things, etc. We also need to provide suitable data processing that enables the optimisation and management of processes, and analysis to make it easier to take the most appropriate decisions in Human Resources Management. d A remuneration system that enables the attraction and re- tention of the best professionals and that aligns its objec- tives with those of the Group. e A suitable labour relations framework and dialogue mech- anisms for adapting the organisation to business and so- cial requirements, promoting business competitiveness and efficiency. h Encourage transparency and communication, generating channels of dialogue and communication between the Group’s different professionals by means of specialised work committees, surveys, the corporate website, and the Group’s different intranets. i Alignment of the professionals with the Group’s strategic objectives, always acting in an exemplary manner in ac- cordance with the Code of Ethics and Conduct, the princi- ples, values and other established standards. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 2 of 21 562 The people in the centre: you_ People are a priority for FCC. For this reason, in 2020 “you_” was founded, the FCC Group brand in Human Resources Man- agement. “you_” sums up the essence of who we are. It is our new way of being, of doing, of growing, of innovating, of feeling and of planning our future. With regard to “you_”, a series of projects have been initiated in the FCC Group that include a number of initiatives linked to the Group’s outlook and values, including the following: you_diverse: diversity is part of FCC’s talent strategy (age, race, nationality, religion, culture, etc.) and we are commit- ted to it in each phase of the professional cycle. you_health: culture of a healthy lifestyle, fostering an or- ganisation supported and represented by healthier, happi- er, more capable and more accomplished people. you_digital, which consists of a collection of training ac- tions linked to the optimisation of processes and the digital transformation of those working for the FCC Group. By the peopleand for the people Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 563 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 3 of 21 Human capital profile Diversity in the workforce Distribution of the workforce by sex Distribution by age range A total of 59,747 people work in the FCC Group. The distribu- tion by gender and age range at the end of the business year is shown in the following tables. FCC also operates in over 30 countries. The distribution of the workforce in each of these countries and by geographical area is detailed in Annex II as follows: Distribution of the workforce by geographic area 22.3% 77.7% men Spain 75.44% Rest of E.U. 10.58% Rest of world 10.76% USA and Canadá 0.98% Latin America 2.24% < 35 years old 1,850 6,788 7,501 35-54 years old 24,043 >54 years old 15,570 3,995 Female Male Workforce by business area 67% Environmental Services 18% Aqualia 12% Construction 2% Cement 1% Central Services Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Reportwomen 564 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 4 of 21 Organisational structure Appreciation of job positions Recruitment and dismissals The FCC Group understands that it is essential to have a suitable, coherent organisation based on the strategy of each business area and its operational requirements, which enables a clear, sim- plified vision of the organisational structure, and which clarifies the distribution of responsibilities among the job positions and profiles required in each case. The organisation enables the management of people in areas such as selection, functional mobility, training and the assess- ment of different job positions. In the 2020 business year, FCC was completing the process of reviewing its organisational structure to adapt it to the current context. This involved an analysis of both the organisational level and the family, mission and duties of each job position within the organisation. The above-mentioned review gave the following result for distri- bution by gender and functional level at the close of 2020: The FCC Group is currently developing a methodology for the appreciation of work positions that will make it possible not only to adapt work positions to the strategy and production for each area, but also to express the Group’s commitment to the crite- ria of suitability, totality and objectivity, making it easier both to improve the allocation of duties, the distribution of works and to defend the principle of equality. The corresponding employment contracts were formalised in accordance with the most suitable modality. This depended on the specific needs for each of the activities undertaken in the different business areas. Of the total workforce, 43,028 people have an indefinite con- tract and 16,719 a temporary contract. It should be pointed out that a large number of the above-mentioned temporary con- tracts enjoy very stable employment if we take into account that many contracts are assigned in sectors in which there is an obligation for contractual subrogation. Also, 7,997 people have a part-time contract and 51,750 have a full-time contract. The data by gender are as follows: Distribution by gender and functional level Workforce by gender and type of contract Workforce by gender and type of working day DIrectors and Managers 82 437 Supervisors Technicians Clerical Staff Sundry trades 551 ,067 1,660 3,898 1,975 1,004 9,078 Female Male 32,975 10,053 13,426 Male Female 3,293 42,271 Mal Female 9,479 4,130 3,867 37,995 Open-ended Temporary Full-time Part-time Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 565 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 5 of 21 The annual average amounts to a total of 60,127 contracts of which 42,962 correspond to indefinite contracts (10,010 wom- en and 32,952 men), while 17,165 contracts are temporary contracts (3,112 women and 14,053 men). Of this annual average, 7,831 contracts are part-time (of which 3,614 correspond to women and 4,217 to men), while 52,296 are full-time (9,508 women and 42,788 men). The following table is a breakdown of the annual average by type of contract, type of working day and age range: Average by type of contract and age range Average by type of working day and age range 25,220 Open-ended Temporary 29,922 Full-time Part-time 5,730 4,593 13,149 13,391 8,302 8,983 3,133 3,601 2,890 1,340 < 35 years old 35-54 years old > 54 years old < 35 years old 35-54 years old > 54 years old Por otro lado, y en cuanto a la distribución por nivel funcional: Average by type of contract and functional level DIrectors and Managers 544 5 Supervisors Technicians Clerical Staff 3.238 538 4.403 994 2.272 598 Sundry trades 15.030 Open-ended Temporary 32.505 With regard to the calculation of the average by type of con- tract, type of working day, age range and functional level, active workers in the month were counted, taking as a reference the twelve months corresponding to the 2020 business year. Average by type of working day and functional level DIrectors and Managers 542 8 Supervisors Technicians Clerical Staff 3,616 159 5,143 255 2,695 175 Sundry trades 7,234 Full-time Part-time 40,300 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 6 of 21 566 In 2020 dismissals for the entire FCC Group, classified by gen- der, age and functional level, were as follows: No. of dismissals by gender 2020 Commitment to talent Responsible leadership Managing by skills The FCC Group has opted for management by skills, promoting talent and the continuous development of professionals. These are transversal skills regardless of the position occupied and this to the extent that at FCC it is not only important what ob- jectives are met but also how they are met. The six transversal skills applicable throughout the FCC Group and that will be applied in key processes such as selection and training, are detailed as follows: 156 Women 532 Men No. of dismissals by age range 2020 143 368 177 <35 years 35- 54 years > 54 years No. of dismissals by functional level 2020 24 63 Directors and Managers Supervisors 114 Technicians 37 450 Administrative Clerks Sundry trades In the FCC Group, both the CEO and the rest of the managers do not only need to be managers of objectives and results, but also leaders in people management. In this regard, a training plan is being developed for the entire management team, focused on the levers of self-awareness, responsible leadership, personal inspiration, the promotion of talent and innovation. At an international level, training actions were also designed and implemented in 2020 aimed at management personnel. Focus on Results Client Oriented Flexibility Teamwork Comunication Alignement In the 2021 business year, a training plan for the skills model will be launched, focusing on the levers of self-knowledge and awareness, interpersonal skills and a strategic and systemic outlook. In the FCC Group, the focus on results is an essential part of the skills and values that guide the performance of our employees. In this regard, meeting objectives (budgets, deadlines, projects, etc.) is essential. In the Group there is a culture of dialogue with employees with regard to their performance at work. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 7 of 21 567 During 2020, a total of 693 internal mobility processes were published through the Epreselec tool. Join FCC The long-term success of the Group depends on our ability to attract, motivate and develop people, and for this reason, the following commitments are made in this regard: Applying the principle of equal opportunities and non-dis- crimination to any selection, promotion or mobility process, taking the aptitude, achievements, worth and personal and professional capacity of the candidates as the criteria dur- ing the objective selection process. Anyone joining any company in the FCC Group will need to participate in the corresponding selection process, en- suring that the candidate meets the conditions of suitabil- ity defined for the position, going through the phases and passing the tests that are part of the corresponding selec- tion process. Prioritising internal promotion for vacancies before recruit- ing other professionals externally in order to offer oppor- tunities for our employees to grow and develop, providing they have the professional profile defined for the vacancy in question. Ensuring that new recruits receive a Welcome Programme with a training itinerary that favours rapid integration into the position and the company. In the 2021 business year the programme opens with on boarding on Campus with this in mind. In accordance with the FCC Group’s principles and val- ues, there should be promotion of young people’s access to their first job through programmes and other agree- ments. Preference should also be given to groups at risk of exclusion and those with different capabilities. Training programmes for new talent developed by the company’s different business lines are also of special interest. These include: – The III International Programme for Young Talent in the Construction area with training aimed at fostering the de- velopment of recent graduates to enable easy coverage of the positions in the company’s international projects. 2020 saw the participation of 8 young talents. – Collaboration agreement with the EOI (School of Indus- trial Organisation) signed by Aqualia in 2016. In 2020 the company recruited 3 people as interns in the Engineering and Water Master course. – As part of its ongoing commitment to young talent, in 2020 FCC participated in SONDERSLAND, the largest meeting of young talent in the world. Guaranteeing absolute confidentiality of the process for all candidates and respect for and observance of data protec- tion regulations at all times. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 568 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 8 of 21 New ways of learning The data with regard to hours of training in Spain by functional level and business area are as follows: Directors and Managers Supervisors Technicians Clerical Staff Sundry trades Total National Environmental Services Water Management Construction Cement Central Services 5,686 4,890 1,944 339 2,077 Subtotal for Spain 14,936 International Environmental Services Water Management Construction Cement 946 2,246 International Subtotal 3,192 32,828 17,035 11,588 833 1,284 63,568 11,216 2,949 524 14,689 33,064 9,750 36,004 1,943 6,439 87,200 12,399 16,734 1,521 646 31,301 Total 18,128 78,257 118,501 18,364 132,096 222,038 6,386 4,016 674 2,516 9,890 26,522 2,264 53 47,951 80,074 6,054 12,369 31,955 170,826 368,485 7,788 3,237 741 212 11,978 43,933 106,222 1,639 937 36 138,571 23,856 6,147 1,418 108,833 169,992 279,659 538,477 One of the essential features of global talent management is the promotion of training and professional development, which in the FCC Group is undertaken in accordance with the following inspirational principles: The implementation of training programmes and plans adapted to the different groups and that favour profession- al development for good performance of the job position. Combining the use of different methodologies for making the best use of time and scope (online, face-to-face, virtual face-to-face and blended learning). FCC is at the forefront in the most advanced training man- agement tools. An example of the importance of online training is CAMPUS, the FCC University, a challenge that the company has been facing for a number of years and that has been successfully met. Campus consists of sever- al schools, and due to their transversal nature, the following deserve special mention: Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 569 FCC maintains its commitment to the Diversity Charter in Spain, in recognition of its equality policies, its commitement to social inclusion and to becoming a diverse and socially responsible company FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 9 of 21 Diversity and equality Experiencing diversity first-hand FCC is projected as a Group that is committed to diversity, with services provided by a total of 59,747 workers of 120 nation- alities. To promote this and make it our driving force, our work is based on three essential pillars: Gender: The aim is to achieve the best gender balance and possibilities for professional development in the Group’s different departments and roles, with powerful training pro- grammes in female leadership, and participation in external initiatives. Personnel with disabilities: a prominent feature is the Group’s deep awareness for including people with disabili- ties, with a number of inclusion programmes for this group to increase the variety of talents in our teams. Generational: there is promotion of inclusion and cooper- ation between the different generations that coexist in each Company, with consolidation of the subsequent incorpora- tion of young talent into the Group. In 2020, a number of pilot schemes were implemented for collective Mentoring and Coaching programmes to meet the challenge of team management and the integration of different generations. Special mention should also go to the transversal training given in the following subjects, in line with our culture for values, innovation and excellence: Diversity and DisABILITY 1,505 people Office 365 tools 3,283 people Comunication in remote work 1,062 people Anti-corruption 3,177 people Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 10 of 21 570 Gender equality The principle of equal opportunities is for FCC an inalienable commitment to act included in the Code of Ethics and Conduct and in each of the Company’s Equality Plans affecting practi- cally 100% of the workforce in Spain, regardless of whether or not there is a legal obligation. However, special mention should go to the existence of an Equality Plan in force in the United Kingdom. In 2020, actions in the field of equality included the signing by FCC Construcción of the III Equality Plan, extending the ongo- ing commitment to equality demonstrated by the more than 12 years which have elapsed since the First Plan signed. Finally, four of the Group’s main companies have been recog- nised and periodically renew the Seal of Excellence in Equality, awarded to the company by the Ministry with the portfolio for Equality. Promotion of women to management positions As a result of the FCC Group’s firm convic- tion in favour of the promotion of women, at the end of 2020 the percentage of women occupying management positions reached 15.80% of the total number of positions of these characteristics. The FCC Group develops and participates in training programmes aimed at creating an enriching work environment, free from dis- crimination and favouring diversity, with spe- cial mention for the following two training and development initiatives for women in manage- ment positions. Specifically, in 2020 FCC celebrated Inter- national Women’s Day with a firm commit- ment to gender-free talent, to diversity and to equality within the FCC Group. Iniciatives that encourage collaboration and the development of female talent Development programme Designed for women with high potential at the “Escuela de Organización Industrial” (EOI). In 2020, 9 women participated, bringing the total to 76 women from the different business since 2015. Proyect promociona Specialises in preparing women to access senior management positions and boards of directors (CEOE-ESADE). In 2020, 2 women participated anda total of 16 since 2014. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 11 of 21 571 Non-discrimination and the prevention of harassment Furthermore, as a complement to the whistleblower channel included in the Code of Ethics and Conduct, the Group has a Protocol for the Prevention and Eradication of Harassment that was reviewed and approved in 2020, and aims to prevent, re- solve and penalise cases of workplace, sexual or gender-based harassment, thus reflecting the FCC Group’s commitment to non-toleration of the abuse of authority or any type of harass- ment. The protocol is binding and includes a declaration of principles, the definition of harassment, the procedure for action against harassment, a guarantee of confidentiality throughout the pro- cess and the prohibition of retaliation. In 2020, training was provided through Campus and involved a total of 6,013 workers in Spain. Inclusion and non-discrimination Commitment against gender violence Disability The FCC Group is especially committed to combatting gender violence in all its dimensions, based on two essential principles of action: zero tolerance of gender violence and support for the social and professional integration of its victims. To achieve this, the company closely collaborates with the net- work of “Companies for a Society Free of Gender Violence” in the dissemination and promotion of awareness, as well as sup- porting job insertion for women suffering from its after-effects. FCC’s commitment to diversity and workplace inclusion for this group involves a number of actions and management strate- gies, including the following: It also collaborates with a number of foundations and entities to promote labour insertion and the integration of victims, such as the Incorpora Foundation (La Caixa), the Adecco Foundation, the Once Foundation and the Red Cross. Direct contracting and through specialised entities Promoting purchases and contracting of servies with Special Employment Centres This year FCC joined the campaign promoted by the Ministry of Equality against gender violence in the face of the COVID-19 crisis: “We are with you, we will put a stop to gender violence together”, is an inescapable commitment to support actions aimed at raising awareness about the need to eradicate these acts of violence and to alleviate the impact they have on the victims. FCC also participated in one of the conferences organised by the Once Foundation Programme, specifically, the “Women On VG mode” Project for women with disabilities who are victims of gender violence. As it does every year on 25 November, the FCC Group made an appeal both inside and outside the company by launching information and awareness actions in the work centres to re- mind everyone that the company remains firmly in favour of the eradication of this type of violence. Supporting education and entrepreneurship programmes Working of the accesibility of our buildings, adapting their spaces and making them suitable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 572 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 12 of 21 The high number of workers with recognised disabilities in the FCC Group, amounting to 1,440 in Spain, 160 more than in the 2019 business year, shows that there has been continuous growth over the last 3 years as can be seen in the following: As for the rest of the countries, because the concept of disabil- ity is not homogeneous and because there are legal restrictions in force in some countries that prohibit employers from access- ing such information, no data can be extrapolated. The Group actively collaborates with specialist organisations that assess the management of recruitment and labour support for people with disabilities. The main organisations with which there is collaboration in Spain are the following: FCC is also a member of the National Advisory Council for the Responsible Inserta Forum of the ONCE Foundation that met this year, with the aim of drawing up an Inclusive Reconstruction Pact, given the new social and economic challenges arising for Companies as a result of COVID-19, which pursues sustainable and inclusive reconstruction “leaving no one behind”. Developments in the number of workers with disabilities in Spain INSERTA PROGRAMME INCORPORA FOUND FAMILY PLAN DOWN SYNDROME RECYCLE LIVES 1,135 1,280 1,440 2018 2019 2020 ONCE FOUNDATION LA CAIXA ADECCO FOUNDATION ECOEMBES FCC supports a number of projects and promotes social and labour inclusion through workshops, training courses and other actions such as awareness campaigns. Environmental services maintain a collaboration agreement with Incorpora for the insertion of those groups with the greatest difficulties in labour insertion. An action programme with a presence in Construcción, CPV and Aqualia, focused on increasing the autonomy, integration and subsequent insertion in the labour market of disabled family members. Aqualia has an agreement with the foundation for the incorporation of workers with intellectual disabilities into its workforce. Environmental Services have been collaborating with the insertion programme for people disconnected from the world of work (social sustainahility). Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 13 of 21 573 Accessibility FCC is aware that accessibility is a key factor for the social in- clusion of people with disabilities. Therefore, each year one of the Company’s main challenges focuses on designing solutions that favour the creation of a work environment free of obstacles and barriers to guarantee the full participation and integration of all the Group’s employees with disabilities. FCC is working on a number of lines that are expected to mate- rialise as a Universal Accessibility Management System and the award of UNE 170001 certification that certifies that the com- pany guarantees universally accessible access and services in its buildings. In this regard, in the 2020 business year new improvements were made in terms of accessibility in several of the FCC fa- cilities, as well as making workers aware of the scope of the concept of Universal Design as a strategic factor and of the principles on which the concept of “Design for All” is based. With this in mind FCC participated in a training action entitled “An introduction to universal accessibility and design for all”. (12) Including variable remuneration, allowances, indemnity and payments to long-term savings pension systems. Salary system FCC works in a wide variety of productive sectors (construc- tion, water, cement, concessions, services, real estate) in OVER 40 countries and in general, the remuneration of its workers is subject to the applicable collective agreements (in the case of Spain there were over 900 collective agreements with different scopes in 2020). The FCC Group remunerates employees in accordance with criteria such as sector and geographical competitiveness, inter- nal equity and the level of responsibility. Average salaries are shown in Annex II. for the management Average salary12 team stands at 113,100.13 euros, broken down by gender as follows: (i) aver- age salary for women: 82,970.03 euros, and (ii) average salary for men: 118,480.51 euros. The management team includes both senior management (re- porting directly to the Managing Director) and those who hold management and responsible positions within the FCC Group. With regard to the average salary for directors, the information is included in the Annual Remuneration Report, section C. Detail of the individual remuneration corresponding to each of the di- rectors published each year on the company’s website (https:// www.fcc.es/informe-anual-sobre-remuneraciones). The total remuneration received by the 14 members of the board of di- rectors throughout 2020 was 1,833 thousand euros. The FCC Group is also working on and developing the neces- sary tools to comply with the legal provisions governing the reg- istration and auditing of remunerations, as well as the Group’s firm commitment to equal opportunities so that they will effec- tively comply with the principle of transparency with regard to remuneration. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 574 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 14 of 21 Wage gap FCC’s remuneration management is based on the criteria of ob- jectivity, external competitiveness and internal equity. FCC does not differentiate by gender, so remuneration is equitably based on the level of contribution to the business (functional level) and responsibility and value in each job. In Spain, FCC has developed a salary analysis methodology based on best practices that enables us to make a granular identification of any possible cases of remuneration inequality between women and men. This year, all business areas have been included in the calcula- tion of the wage gap: Central Services, Cement, Construction, Water Management and Environmental Services. In Spain, two types of wage gap, adjusted and gross, are taken into account for calculation. The adjusted wage gap The adjusted wage gap is calculated by taking into account all those aspects that compare men and women in a similar situation. In addition to the gender of the employees, this comparison takes into account some of the key factors relating to remuneration for the position (functional level, seniority, applicable collective agreement). Gross wage gap Gross wage gap is calculated by obtaining the percentage difference between the average total salary for men and women. This data omits key factors when making the comparison, such as functional level, seniority and the applicable col- lective agreement. In any case, it should be pointed out that the percentage differ- ence does not imply the existence of gender-based remunera- tion discrimination, since factors that fall outside the Company’s scope of action and that contribute significantly to increasing gender-based remuneration inequality may be involved, such as the masculinisation of the majority of the sectors in which the Group’s activity is undertaken, working conditions arising from cases of subrogation, individual performance, economic crises, the political situation, socio-cultural reasons, academic training, experience in the position held, etc. With regard to the salary gap in the rest of the countries in which FCC operates, in most of them there is no definition nor is there a specific concept of the gap. However, in the United Kingdom there is consolidated legislation regarding the wage gap, and the two companies in the Environment area have a wage gap of 9.96% (in favour of women) and 0.26% respectively. 2020 adjusted wage gap 5.85% 2020 gross wage gap 18.62% Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 15 of 21 575 Work organisation The organisation of working time in the different companies in the FCC Group responds to the productive requirements for each activity, in accordance with the standards and rules appli- cable in each sector and location. To guarantee the well-being of its employees, the FCC Group considers that the proper management of work organisation is essential and a number of initiatives have been taken to achieve this aim. Of the different actions taken, the Group makes spe- cial mention of work-life balance, flexibility, co-responsibility and disconnection, all adapted to the different organisational and productive realities and requirements for each centre, function and activity. Here are some of them: In Aqualia, the certification awarded by AENOR for a Family Re- sponsible Company was maintained for continuing to promote measures with the aim of achieving balance between the per- sonal and professional life of its employees. Digital disconnection In 2019, FCC proceeded to approve the Policy for the Use of Technological Means applicable throughout the Group, and continues to implement it in the international area. It involves the recognition and guarantee of working people’s right to dig- ital disconnection, adapted to the nature and characteristics of each job position. In 2020, a training action was undertaken to publicise the rules regarding the use of technological means and the responsible use of the equipment that the company makes available to its employees. This training was completed by 8,781 employees throughout the Group. The Group also took training and awareness-raising actions on the reasonable use of technological tools, promoting digital disconnection to achieve better organisation of working time in order to respect personal and family life. This training was un- dertaken by 1,430 employees throughout the Group. Of the different actions taken, the Group makes special mention of work-life balance, flexibility, co-responsibility and disconnection Flexible working arrangements Extension in reserving the position: leave of absence Flexibility in taking holidays WORK-LIFE BALANCE Complement to paternity/ maternity leave Improved birth, sickness and death leave Continuous working day, summer periods and Fridays Baby nursing leave, reduction of working hours and leave of absence Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 16 of 21 576 Social relationships FCC understands that social dialogue and direct communi- cation with its workers, their legal representatives, unions and other social agents are required to create a bond with its em- ployees, for the purpose of encouraging new agreements to be signed as a result of collective bargaining, and that different processes of a collective nature need to be established that involve transparency, the creation of follow-up committees and providing employees and their representatives with all the nec- essary information. In 2020, the areas had a presence at a large number of bar- gaining tables for collective and work centre agreements, and they actively participated in collective bargaining for the sector. The company is also a member of the international Construc- tion and Wood Workers (BWI) collective that covers all civil-en- gineering works in the sectors in which it operates. As for the percentage of workers covered by collective agree- ments, this varies depending on applicable legislation, the exist- ence of collective agreements and even worker representation. In any case a commitment was made to comply with all appli- cable legislation and/or collective regulations. The percentage of workers covered by Collective Bargaining Agreements in the different countries where the FCC Group has a presence is broken down in Annex II. More than 800 collective bargaining agreements in Spain Participation in sector bargaining tables in all areas and in Cement work centres Fluid dialog with trade unions and worker Special mention should be made of occupational health and safety in collective agreements In a great number of collective agreements that are applicable in Spain, there is special mention for occupational health and safety in its broadest sense. Specific preventive measures such as personal protective equipment for use in emergency situations and work in- volving special risks. The following are the clauses most frequently included in col- lective agreements signed with regard to occupational health and safety: Communication and dialogue with prevention services. Health surveillance aspects: regular medical check-ups. Existence of prevention plans: risk assessment and techni- cal-preventive action. Allusions to continuous improvement in the general condi- tions in work centres. Rules regarding workers’ rights: participation, training and information. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 17 of 21 577 Safety health and well-being Strategy and Culture FCC has established a strategy with regard to the safety, health and well-being of its workforce and other stakeholders, such as contractors and suppliers, based on its policy in this field approved in 2019 by the Board of Directors. Strengthening the preventive culture and the promotion of health is one of the company’s main lines of action. This objective is supported by a number of factors including the process of con- tinuous improvement in the health and safety management sys- tems, certification in all areas and countries in accordance with recognised international standards such as ISO 45001. This in- volves the certified coverage of over 95% of the total workforce. Real integration of risk prevention in all processes ornd with all stakeholders. Adaptation, follow-up and certification of standards. Promotion of health and healthy work environments as an individual and collective value, from both a physical and an emotional perspective. Control and guarantee of legal compliance and with internal regulations. Maintenance of a continuous improvement cycle based on participation. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 578 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 18 of 21 Developments in the main indexes Developments in Accident Rate Indexes Throughout 2020, there were 1,776 work accidents involving sick leave in the FCC Group. In Spain, a total of 1,495 work accidents with sick leave were registered, of which 1,113 were men and 246 women. A significant fact is that in 2020 the global accident frequency index fell by more than 28%, standing at 17.07. The severity index also decreased by 26%, standing at 0.67. With the aim of meeting the FCC Group’s “0 accidents” objective, each busi- ness area establishes annual targets for reducing accident rates at a global level and by geographical area. Details of developments in the main accident13 rate and absen- teeism rates are as follows: Table of Contents Frequency Severity Accident Rate Indexes by geographical location 2019 2020 17.07 0.67 2018 24.08 0.82 2019 23.98 0.91 2020 Scope Spain Global Acc. Freq. Severity Acc. Freq. Severity 32.06 23.98 1.27 0.91 22.93 17.07 0.97 0.67 Accident Rate Indexes by gender in Spain 2019 2020 Gender Acc. Freq. Severity Incidence Acc. Freq. Severity Incidence Women Men 25.58 33.52 0.74 0.9 3.5 4.94 16.57 25.97 0.84 1 Indexes for absenteeism, occupational accidents and common illness Type Work Accident Comm. Illness Fatal occupational accidents Type FCC Subcontractor Professional occupational illness by gender Gender Women Men (13) The frequency and severity rates are calculated on 1,000,000 and 1,000 hours worked respectively. 2.26 3.76 2020 0.44 4.05 2018 0.54 7 2019 0.71 5.63 2018 2019 2020 4 4 0 2 3 1 2019 2020 9 3 5 6 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 19 of 21 579 Healthy Living constitues our brand, our motto and our commitment to personal, collective and individual well-being. Within the framework og the Be Aqualia project, Aqualia has launched an initiative linked to psychosocial risk with the provision of an emotional health self-assessment programme and free psychosocial assistance. Healthy Living Project Participation and influence Throughout 2020 in the Environment area, the Healthy Com- pany Management System (SIGES in Spanish) migrated to the new Healthy Organisation Management System (SIGOS in Spanish), and were awarded the corresponding certification from AENOR. Management undertaken included numerous programmes on a healthy lifestyle, alcoholism, the fight against hypertension, healthy eating and the fight against a sedentary lifestyle, heart-healthy habits, physical activity, giving up smok- ing and emotional well-being. In 2020 in the Cement area, health promotion actions contin- ued with the development of specific campaigns on sleep hab- its, emotionally coping with COVID-19 and road safety, the latter focused on the consumption of alcohol, weather conditions and cycling. As in previous years, FCC Construcción prepared and pub- lished a document in 2020 with the best health and safety prac- tices specific to the construction activity, as well as others of a general nature, relating to measures against COVID-19. In Aqualia a specific channel was launched for Health and Well-Being that will serve as a channel of communication in this field with all workers throughout the company. In 2020, the following options were implemented: A system for the instan- taneous reporting of incidents or dangers, recommendations against COVID-19 and videos with warm-up and stretching ex- ercises depending on the job position. FCC’s different business areas have participatory bodies that comply with legal requirements at local level, such as the Health and Safety Committees whose function is to channel consulta- tions and the collaboration of workers in this field. The company has several communication channels where workers can report dangers or situations where there is occu- pational hazard. This can also be done through their represent- atives in this field and there is also a whistleblower channel that can be anonymous if the person affected so wishes. It consists of an ad hoc form that can be filled in online and sent by e-mail or by post. Externally, FCC Construcción is a member of the Seopan, and Aecom associations and organisations such as CNSST, CNC, AEC, AENOR on the Health and Safety Committee, and is also represented in the Spanish Association for Quality, via the vice-presidency of the Health and Safety Committee. FCC Con- strucción represents construction companies in Europe (FIEC) chairing the Social Dialogue Table and is also a member of the Encord platform, the European platform for construction com- panies. FCC Medio Ambiente collaborates with the National Institute for Occupational Health and Safety (INSST in Spanish) through the Spanish Network of Healthy Companies. It also participates in the Spanish Association for Quality (AEC in Spanish) of which it is a member company, with active participation in Health and Well-Being forums and in working groups. Since 2020 it has also been a participant in “Forética”, in the Health and Sustain- ability Action Group. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 580 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 20 of 21 COVID-19 In view of developments in the situation with regard to the health crisis in China and its initial impact on the European continent, in the first quarter of 2020 the FCC Group set up a Crisis Com- mittee, consisting of the company’s first executive level, to adopt agile and effective measures in this regard. It has mainly been responsible for: Guiding and directing the Business Continuity Committees set up in each area of the FCC Group. Dictating the policies and protocols for mitigating the im- pact caused by the COVID-19 pandemic, as well as dis- seminating general measures for the prevention of conta- gion and the protection of workers. Following-up and controlling developments regarding coro- navirus and workers in isolation as a measure to prevent contagion. In its worth highlighting the essential role played by the FCC Group’s Medi- cal Services. They have carried out an enormous amount of work in providing advice and support in the detection and management of the risks derived from the virus in orden to protect the health of all workers. Without this, it would be difficult to image the activity continuing in such exceptional circumstances. Within the abundant documentation and processes developed to deal with the extraordinary situation resulting from the pan- demic, there should be special mention for the action protocols at both Corporate and Area level, and that are the focal point for instructions, communications and the definition of the pre- ventive measures to be adopted in this situation, always based on the criteria established at all times by the Health Authority. In this regard it should be taken into account that a large part of the activity undertaken by the Group is considered to be an essential service under the different regulations adopted, which means that a majority of workers has remained at work provid- ing services to citizens during the entire period of lockdown, doing so with commitment and dedication and their profession- alism has been publicly acknowledged by different entities. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Committed to the FCC Group human resources team | Page 21 of 21 Following on from the above, from the point of view of the pro- vision of services by workers, the need to activate labour meas- ures was restricted to specific cases. As a result of the health containment measures arising from COVID-19, the Group launched a contingency mobility plan that enabled working remotely. And finally, in line with FCC’s Live Healthy strategy, and as a consequence of the pandemic caused by COVID-19, numer- ous technological resources were generated to provide different initiatives in an online format in the new work contexts: 581 Training activities and health recommendations for remote work Workshops on emotional well-being, stress management and mindfulness Healthy eating works hops Resources and publications on healthy habits Physical activity promotion workshops Health and safety recommendations and guidelines for COVID-19, inside and outside workplaces Internal magazine “The positive window” with interesting content, practices and advice on health, cooking, culture, sport, etc. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC and its commitment to society | Page 1 of 8 FCC and its commitment to society 582 The FCC Group, as a provider of citizen services, works for development and social well-being. This is included in the Code of Ethics and Conduct under the principle of “Well-Being and Development in Cities”. This principle serves as the basis for collaborators in all business lines to understand and resolve the expectations and needs of the communities in which the FCC Group undertakes its activity. This connection with local com- munities fosters the trust that society places in the Group and gives the organisation a leading role in the sustainable develop- ment of cities. With the aim of being a key player in sustainable progress, the FCC Group incorporates social action into its business strategy, thus contributing to the creation of employment and wealth in the communities in which it operates. At the same time, the company encourages its collaborators to participate in volun- teer activities that have a direct and positive impact on the com- munities, generating pride of belonging and contributing social value. The social activity undertaken by the FCC Group with the local community is part of a collection of initiatives whose ultimate aim is to promote the welfare of the beneficiaries, covering two areas of action, both internally, by means of actions aimed at employees, as well as externally, by means of support projects for the local community. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 583 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC and its commitment to society | Page 2 of 8 Social initiatives with employees in the FCC Group This collection of social initiatives undertaken by the FCC Group at an internal level has a positive social impact on employees, improving relationships between the different teams and de- partments and increasing their pride of belonging. At an internal level, projects are directed towards the Group’s own employees and are a reflection of FCC’s commitment to its human capital via the social and labour integration of vul- nerable groups, support for family members of employees, respect for the environment through environmental awareness programmes and the promotion of a spirit of solidarity with col- laborators. Environmental awareness of employees The FCC Group’s responsibility with sustainable development and the protection of the environment is inherent in its busi- ness model, especially with regard to environmental and water services. However, its commitment is not based solely on mit- igating the environmental impact arising from its activities, but on using environmental awareness to build a culture based on respect for the environment, with the aim of guaranteeing the resilience of the cities of the future. The FCC Group makes training, awareness-raising and volun- teering actions in matters of environmental education availa- ble to the workforce. The company also produces an internal Group newsletter, which acts as a communication channel to highlight the importance to employees of those environmental projects promoted by the Group, enabling the dissemination of good practices to each business line and making their imple- mentation possible at a transversal level. The company developed the FCC plan for a circular economy within the framework of the 2020 CSR Master Plan, establish- ing the commitment and that of its employees to the care and protection of the environment. This Plan contains a line of edu- cation and awareness aimed at collaborators with regard to the circular economy, with the aim of accelerating the transition to a new, more sustainable and profitable model and positioning the company as a benchmark in the fight against climate change, especially with regard to its response to water stress and the protection of biodiversity. It should be specially noted that Aqualia participated in the Net- flix documentary “Brave Blue World” through All-Gas, a project in which the company and its partners produce biofuels from algae, thus contributing to the environmental awareness of the type of audience than can be expected for a platform that is a leader in audio-visual content. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC and its commitment to society | Page 3 of 8 584 FCC collaborates with the Melior Foundation in its campaign to collect textbooks and school material For the second year in a row FCC collaborated with the Melior Foundation in the “Not without my textbooks” sol- idarity campaign, with the aim of collecting books and school material amongst its collaborators for the neediest families with school-age children. This initiative, within the framework of the Group’s social responsibility policy, managed to collect approximately a thousand books for an unprecedented “back to school” campaign affected by the COVID-19 health crisis. Solidarity in FCC With the aim of strengthening the commitment of its employees to social causes and giving them an opportunity to dedicate their time to the most vulnerable groups, the FCC Group en- courages their participation in solidarity and volunteering activi- ties. This is how the company promotes the progress of society, within the framework of socially responsible commitment and thanks to the proactivity, energy and spirit of solidarity of its workers. With this in mind, during the last business year, FCC employees participated in a number of solidarity actions, thus contributing to building a corporate citizenship culture within the Group and supporting FCC’s mission to create social value and contribute to the well-being of people. These actions are based on the open social dialogue that the company maintains with public and private institutions, social entities and associations that are part of its environment, directing efforts in the local areas clos- est to the communities in which it operates. FCC Environment CEE in Poland, supported by the social voca- tion of its employees, collaborated in solidarity actions, involv- ing its teams in the #gaszynchallenge campaign, to contribute to the well-being of hospitalised children through donations to foundations and through entertaining children’s and collabora- tive games. Last but not least, the campaign once again deserves special mention, together with the Pan y Peces Foundation under the slogan ‘Give away kilos of generosity’. Thanks to the initiative and generosity of FCC employees, the solidarity campaign col- lected personal hygiene products, non-perishable food, Christ- mas sweets and toys at Christmas time for the most vulnerable families. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC and its commitment to society | Page 4 of 8 585 FCC Group social initiatives within the community Actions within in the community enable an assessment of the FCC Group’s social and environmental impact, to provide ac- cess to basic services and promote education. They have a direct impact on social progress and an improvement in the quality of life of citizens. The FCC Group makes its commitment to local communities a reality by undertaking projects based on 4 social axes that extend right across the company: Integration of vulnerable groups. Social inclusion and access to services. Value creation in the communities. Assessment of the social and environmental impact of op- erations. Cooperation in education and environmental awareness. ACTIONS IN THE COMMUNITY Integration of vulnerable groups, social inclusion and access to essential services Value creabon in the communities Assessment of the social and environmental impact of operations Coopration in education and Environmental Awareness Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 586 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC and its commitment to society | Page 5 of 8 Integration of vulnerable groups In 2008, the FCC Group signed a collaboration agreement with the Adecco Foundation with the aim of promoting the social and labour integration of people with disabilities. As a result of this, each year family members of company employees with disabilities can access leisure activities, training, job orientation actions and employment itineraries to enable their future incor- poration into the professional world. With this in mind, work is being done on the development of skills and social attitudes, as well as on taking part in leisure activities to stimulate their cognitive, physical and emotional development. In line with labour integration, in 2010 the ONCE Foundation and the FCC Group signed the Inserta Agreement for the first time, with the aim of filling new job positions in the company by hiring people with disabilities. This collaboration agreement was renewed and this has led a total of 425 people being contract- ed since the beginning of the collaboration. The FCC Group also continues to be committed to the employment of young people (under 30 years of age) with disabilities, maintaining col- laboration with the “Never Give Up Plan”, and is a member of the Socially Responsible Public Contracting Forum (Forum with R). FCC is currently a partner in the ONCE Foundation “Inserta Responsable” Forum, as a member of the National Advisory Council. FCC Group’s commitment to the social and labour integration of different vulnerable groups is clearly demonstrated in the dif- ferent projects launched by the different business lines. A total of 252 people with disabilities were recruited in FCC Me- dio Ambiente Iberia in the 2020 business year and there were a total of 204 new recruits via the Incorpora-La Caixa Foundation. At the national level, the Environmental Services business col- laborated with a number of foundations and non-profit organi- sations, with the aim of promoting diversity, social inclusion and improving the quality of life of groups at risk of exclusion. Aqualia was responsible for organising Diversity Week, taking a number of initiatives under the slogan #PorLaInclusiónJuga- mosTodos (WeAreAllPlayingForInclusion), with the aim of rais- ing awareness and involving all employees to help improve the quality of life of these groups. At FCC Construcción the commitment to the strategy of di- versity and inclusion is clearly demonstrated in the collaboration with Adecco Foundation’s “La Diversidad Suma” (A Plus for Di- versity) initiative, by raising awareness among professionals in this area, and integrating people with disabilities into the com- pany. Social inclusion and access to services The FCC Group’s business model and the activities favour ac- cess to essential services, such as electricity, drinking water and sanitation, enabling the economic and social development of the communities in which it operates. Aqualia provides a vital service for communities by guarantee- ing universal and equitable accessibility to a resource as essen- tial as water. With the emergence of the health crisis resulting from COVID-19, Aqualia focussed its efforts on continuing to provide services relating to the management of the end-to-end water cycle, as well as on continuing to maintain its social initi- atives with people at risk of social exclusion to make sure that nobody is left behind. The activities of the Construction area are contributing to the sustainable development of the communities in which it oper- ates, through improved access to essential services and the construction of water infrastructures, buildings, and communi- cation routes. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 587 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC and its commitment to society | Page 6 of 8 Value creation in the communities The services and infrastructures provided by the FCC Group contribute to the creation of value in the communities in which it operates and have a positive impact on their socio-economic development. As a result of the contracting processes for local suppliers and subcontractors, the FCC Group also contributes to the creation of jobs, growth and prosperity in its environment. In 2020, FCC Medio Ambiente Iberia made a collaboration of 2.7 million euros to the development and implementation of so- cial and environmental initiatives. With regard to suppliers, the company also made sure that they were mostly local or from municipalities near to where the company operates. In Austria, FCC Environmental Services developed a pilot pro- ject at its headquarters to promote the use of regional products. In this way, the company reduces the environmental impact of the products for daily use, while contributing to the develop- ment of local communities, promoting the indirect creation of jobs. A prominent feature of the company’s commitment to society is the over one hundred cultural, sporting and environmental collaboration events that reflect the company’s efforts to be rec- ognised as an agent for change and involvement in the territory by establishing a relationship with citizens to create a more eq- uitable society. The Construction business has integrated the SDGs into its activity and into its value creation model in order to promote the socio-economic growth of society. The main contribution of this business to progress in the communities is through the creation of direct and indirect employment. With this in mind, the Con- struction business prioritises the contracting of local suppliers, which account for more than 90% of the contracts made. To contribute to community development, Cementos Portland Valderrivas tries to guarantee equal opportunities in its suppli- er selection processes, based on an objective bidding process and the transparency of the process. Assessment of the social and environmental impact of operations The FCC Group is aware that its activities generate an impact on the environment and on the communities in which it oper- ates. For this reason, the company is working to try to foster the positive impacts, while reducing the effect of the possible negative impacts that may arise. Specifically in FCC Construcción, a series of metrics have been established to assess the social and environmental sustainability of projects at the bidding stage. These metrics assess applica- ble aspects in projects with regard to sustainability, where early identification enables the risk to be defined as high, average or minimal. Works which may involve local communities being af- fected by the development of a project are also identified. In this regard, the main impacts on the communities involve expro- priation, the occupation of agricultural land, effluent discharge into water channels, noise generation, dust emissions, vibra- tion, damage to flora and fauna, relocation of local residents or disruption to local tourist activity. Once this study has been made, taking into account both the assessment metrics and any possible impact on the environ- ment, FCC Construcción implements different actions and plans to improve the social conditions of the local communities on which an impact may be caused, taking into account the specific features of each project and geographical area. FCC Communities Foundation, in the United Kingdom The FCC Communities Foundation is a non-profit organi- sation founded in 1997, whose aim is to allocate funds to projects. FCC Environment UK uses this organisation to make contributions to projects with a social impact, related to biodiversity and in the area of heritage protection, thus contributing to community development. In the 2020 business year, the entity managed to donate more than 6.1 million pounds to a total of 134 projects un- dertaken in the United Kingdom. The FCC Communities Foundation is currently contributing and channelling funds to two programmes: FCC Community Action Fund, for financing projects in England. FCC Scottish Action Plan, for requests from Scotland. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 588 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC and its commitment to society | Page 7 of 8 Cooperation in education and environmental awareness The FCC Group is working together with different educational institutions, specifically in the field of cooperation, to promote issues such as environmental protection and the social, cultural and sustainable development of cities. One of FCC Construcción’s main lines of contribution to the community is cooperation in education through partnerships with educational institutions, as well as by participating in edu- cational events and one-off forums. Within the Environment area, several countries have undertak- en environmental education programmes, including Slovakia, with the participation of FCC Environment CEE in “Smietko”, an educational project aimed at collecting paper and education in environmental affairs, which saw the participation of over 50 primary schools from a number of the country’s regions, and in which the company collaborated with school and municipal representatives. In this regard, Aqualia has undertaken a number of initiatives in the field of education and environmental awareness, highlight- ing a campaign to disseminate its educational platforms with the dual objective of raising awareness among children of the value of water and helping parents to reconcile remote working in full confinement. Visits to the aqualiaeduca.com online chan- nel increased by over 112%, which goes to verify its consolida- tion as a source of educational consultation not only in Spain, but also internationally. Aqualia undertook environmental awareness actions such as the delivery of 215,000 comics to children in 800 education- al centres, with the aim of raising children’s awareness of the end-to-end water cycle and the SDGs. In 2020 the company also launched an educational video entitled “The Sustainable Development Goals as they have never been explained to you”, which aimed to bring the SDGs closer to all audiences, and which had nearly 85,000 views. Aqualia, a main player in the StepbyWater alliance Aqualia participates in the StepbyWater alliance supported by the Government of Spain, the Spanish Federation of Municipalities and Prov- inces (FEMP in Spanish) and other private organ- isations with the aim of addressing responsible water management and thus collaborating in compliance with SDG 6 (Clean water and sani- tation). With this in mind, a number of suprana- tional initiatives have been promoted, such as the Decade of Action for Water, and Climate Summit Agreements, with the aim of positioning itself as a leading player in achieving sustainable water management. Another line of action involves establishing the participation of the organisations involved in StepbyWater in European innovation projects, sharing their knowledge and experience with re- gard to water management. Towards a more sustainable waste management model in the United Kingdom FCC Environment UK contributed to the report entitled “No Time to Waste: Resources, recovery & the road to net-zero “, which highlights the importance and benefits of obtain- ing energy from waste. According to this report, allocating the 27.5 million tons of non-recyclable waste to the pro- duction of green energy is better both for the economy and for the environment than current methods, which involve exporting this waste or allocating it to landfills. This has led to a proposal for a more sustainable waste management system. FCC Environment UK is one of the largest producers of energy from waste in the United Kingdom, it considers that this type of practice has the potential to supply hundreds of thousands of homes and businesses in this country. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 589 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC and its commitment to society | Page 8 of 8 The FCC Group’s socio-economic contribution to sustainable development The tertiary sector, NGOs and non-profit associations and or- ganisations now require more than ever the joint collaboration of society, companies, administrations and the public sector. They should create alliances and invest their time and efforts in making this type of entity more resilient as they are an essential part of making the world more just and equitable for all. In this context, the FCC Group is aware of the many social and economic demands that exist in the societies in which it op- erates, mainly those made by non-profit entities, which work every day for the well-being of those who are most vulnera- ble. In addition to promoting sustainable development through its own activities arising in the different lines of business, the company also makes monetary contributions to these types of social entities for them to be able to meet the socio-econom- ic requirements of the most disadvantaged communities and groups. For this purpose, in the last business year and taking the conse- quences of the pandemic at a social level into account, the FCC Group allocated a total amount of 4 million euros by means of contributions and donations to non-profit organisations, foun- dations and associations. At the same time in the United King- dom, more than 6.1 million pounds were donated via the FCC Communities Foundation in 2020. The following is a breakdown of the contributions made: • Spanish Association for Desalination and Re-use (AEDyR). • Spanish Urban Water Supply Services Association (AGA). • Spanish Capital Goods Manufacturers Association (SERC- The FCC Group's contribution in 2020 OBE). • Infrastructure Construction and Concessionary Company Association (SEOPAN). 1,025,289 Donations to • National Association of Water and Sanitation Utilities in Mex- non-profit organisations and foundations ico (ANEAS). • Water Environment Federation (WEF). 1,384,406 Sponsorships • CEMBUREAU European Association of Cement Manufac- 1,443,666 Contributions to associations 154,843 Other contributions These contributions reinforce the Group’s commitment to the 2030 Agenda and enable the company to actively contribute to the achieving the SDGs related to economic progress, the reduction of inequalities and the social development of commu- nities in the present and in the future. The main associations in which the FCC Group participates, na- tionally and internationally, are the following: turers. • ANEFHOP National Association of Prepared Concrete Man- ufacturers. • CIMENT CATALÁ Cement manufacturers Association in Catalonia. • Spanish Institute of Cement and its Applications. • GREMI D’ARIDS Association of Catalan companies dedi- cated to the extraction and treatment of aggregates. • CEMA State labour foundation for cement and the environ- ment. • FLACEMA Andalusian Cement and Environment Labour Foundation. • Association of Public Cleaning Companies (ASELIP). • OFICEMEN Spanish Cement Manufacturers Association. • Spanish Association of Parks and Gardens Companies • European Construction Industry Federation. (ASEJA). • Spanish Association of Waste Management Contractors (ASEGRE). • International association with Aquafed. • Spanish Technological Platform for Water Supply and Sani- tation Association (AEAS). • Spanish Quality Association (AEC in Spanish). • AECOM Association of Infrastructure Construction and Concessionary Companies. • National Construction Confederation (CNC.) • European Construction Technology Platform (ECTP). Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC’s commitment to its clients and suppliers | Page 1 of 5 FCC’s commitment to its clients and suppliers 590 FCC’S commitment to its clients The FCC Group’s clients are the focus of its activity. This com- mitment, reflected in the Code of Ethics and Conduct and shared by all the organisation’s personnel, involves the FCC Group striving to get to know the client, providing products and services in accordance with their needs, and making their satisfaction a priority. In this way, the Group aims to maintain long-lasting relationships, based on mutual trust, honesty, professional responsibility and value contribution. This is the perspective through which the FCC Group aims to achieve ex- cellence in service, seeking to offer the highest quality, and con- tributing differential value compared with competitors. Due to the wide variety of goods and services offered, the type of clients is different for each of the FCC Group’s business lines. In FCC Environmental Services, clients are public and private entities that entrust the company with services in- cluding the management of urban and building cleaning, the maintenance of sewage networks and waste manage- ment. Aqualia manages the end-to-end water cycle, so its clients vary depending on the service offered, the company’s main activity focussing on the supply of clean water for all users. FCC Construcción is responsible for the execution of civil engineering and building works, which means that it has a wide range of clients, both in the public and private sectors. The business of Cementos Portland Valderrivas involves the manufacture and sale of cement and its derivatives, so there is a direct relationship with the client. For this reason, special emphasis is placed on commercial and sales work, as well as ensuring that the product that goes on the mar- ket is of the highest quality and respects all safety stand- ards. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC’s commitment to its clients and suppliers | Page 2 of 5 Client and user health and safety The commitments made by the Environment area with re- gard to its clients are based on guaranteeing the provision of the contracted services in accordance with the commitments made, those established by the organisation and any legal re- quirements that affect the activities undertaken. By complying regulations, the safety and health of end users is guaranteed, ensuring that services are provided in the safest way possible. It should also be noted that FCC Environment UK has software that enables the recording, investigation and resolution of inci- dents relating to the health and safety of clients and users. Aqualia, the health and safety of consumers is guaranteed through a comprehensive quality control system for treated wa- ter. In 2020, a total of 1,688,087 verifications were made in the European countries where Aqualia is active and non-fulfilment was detected in 1,196 cases. The company also has eight lab- oratories to assess water quality, within the Aqualia LAB net- work, having been granted accreditation in 2020 in accordance with the UNE-EN ISO/IEC 17025 standard for the Badajoz lab- oratory to conduct tests in the environmental field. Following FCC Construcción’s policy, the companies in this business pay special attention to customer relationship man- agement, while at the same time having the utmost respect and consideration for the affected communities, indigenous peoples and cultural heritage. In all cases the safety and health of users is guaranteed through compliance with the legal requirements in the construction area that are applicable to each element, whether in the construction or maintenance phase. Both FCC Construcción and FCC Industrial have a certified Information Security Management System based on the ISO 27001 stand- ard whose purpose is to guarantee the availability, confidential- ity and integrity of information in the exercise of their activities. In undertaking its activities, Cementos Portland Valderrivas has management systems that ensure the quality of its prod- ucts, guaranteeing the safety and health of end-clients and complying with all legal requirements. The company evaluates 100% of the impacts on the health and safety of its products and services in accordance with the legislation in each country for the purpose of making improvements throughout their life cycle. All products are also labelled in accordance with Europe- an regulations, and are registered with the National Institute of Toxicology and Forensic Sciences. Management of Claims and Complaints In the management of claims and complaints, each of the Group’s businesses has specific tools and procedures to suita- bly handle correspondence with clients and users. FCC Medio Ambiente Iberia’s integrated management system includes a procedure that establishes the methodology for the management of claims and complaints. These are registered and processed via the VISIÓN computer programme. In this re- gard, FCC Medio Ambiente Iberia received about 1,700 claims and complaints from clients in 2020, of which over 90% were resolved. FCC Environmental Services has a reporting system that re- cords complaints from clients and assigns those who will be responsible for their resolution. In FCC Environment CEE, the registration and management of 591 claims and complaints is undertaken at country level, establish- ing specific procedures for each. At a consolidated level, in FCC Environment CEE, the resolution and management of claims in the Group has risen to a total of 7,871. In the case of Aqualia, throughout 2020 it received at a national and international level (Czech Republic, Italy, France, Colombia and Portugal) 16,180 claims and complaints from clients and users. In the Construction area they have a management system to attend to requests received. This tool enables actions to be monitored, improvement plans to be identified and follow-up verified. Throughout 2020, the company received a total of 105 claims and complaints, 80% of which had been resolved by the end of the business year. ln Cement, the activity in Spain and Tunisia is certified under the ISO 9001 Standard, with specific requirements for handling these claims and complaints. The company has a consultation procedure through which a total of 15 claims and complaints were received during the last business year, of which 100% were managed and 60% resolved. In this regard, at a national level, the company’s aim is to receive less than one claim or complaint for every 50,000 tons sold. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC’s commitment to its clients and suppliers | Page 3 of 5 Customer service and satisfaction Clients have been the basis of the Group’s success throughout its 120-year history. The Group’s journey in all these years re- flects the importance of understanding the needs of clients and listening to their concerns in order to be able to adapt quickly and appropriately to a changing environment. Each business has different tools for customer service, as well as for measuring satisfaction so as to be able to assess how we are perceived by those we serve. This is especially the case for Aqualia, a Group activity that, given the importance and heterogeneity of its clients and users, seeks to offer a hands-on, personalised customer service that enables it to provide solutions quickly, simply and effectively. Aqualia has a number of customer-service channels, including: Customer service by telephone. In 2020 the Customer Service Centre received 1,240,216 telephone calls. Virtual office, aqualiacontact. In 2020, 163,814 interac- tions were managed, including 32.34% for the modification of data, 23.77% for electronic invoicing and 19.85% for payment via bank card. Application for mobile devices. In 2020 a total of 62,562 interactions were managed via the APP made available to our clients, with 20.99% involving the modification of data and 64.08% payment via bank card. Twitter @aqualiacontact. Messages sent by users are handled and managed through the @aqualiacontact ac- count. SMS messages are also managed for the notifica- tion of invoices with incidents and warnings regarding net- work breakdowns. It should be noted that Aqualia made 6,287 surveys of aquali- acontact user clients in 2020 obtaining an index of satisfaction that was 96.80% positive. The company also received 3,325 replies to a survey sent spe- cifically to end and institutional clients, obtaining a rating be- tween good and excellent in 82% of the surveys. The Environment area in Spain and Portugal sent out a total of 854 surveys throughout the business year. Of the surveys received, 81% of clients rated the company’s work as satisfac- tory or very satisfactory. The industrial waste activity in the area made a client satisfaction study by sending out a Satisfaction Questionnaire and received a very favourable average score of 8.6 out of 10. In most of the countries where FCC Environment CEE operates, client satisfaction surveys were also made in 2020: In Austria, the company obtained an increase of 5 percent- age points in average client satisfaction, after sending out 2,886 surveys. Of the 149 surveys received in Slovakia, almost 90% showed “very good” or “excellent” results. With regard to Hungary, due to the health crisis, in this busi- ness year only a small number of voluntary opinions were collected and analysed. Due to the epidemic, Poland did not receive any satisfac- tion surveys this year as they are usually handed out in cus- tomer service offices. In the Czech Republic, 143 surveys were received and the result was “excellent” in 97.5% of the cases. 592 In the Construction business there is a position called the cli- ent’s interlocutor, who is responsible for dealing with any sug- gestions received, processing any issues raised, managing col- laboration, and notifying any actions to be taken. Final surveys of the works are also made, in which clients evalu- ate the service received. Most of the clients surveyed were very satisfied with the performance of the companies in the Con- struction business, and confirmed that they would contract ser- vices with them again. In this regard, a total of 350 surveys were sent out in the last business year, of which 88.6% returned a rating of “excellent”. At a general level, the aspects best valued by clients included the works team’s capabilities and technical knowledge, their availability to meet the client’s needs, and their ability to resolve unforeseen issues. In the case of Cementos Portland Valderrivas, the company maintains suitable, ongoing customer service through different communication channels. Special mention should go to the Digital Channel for clients that is accessible via the corporate website, and direct customer service provided by the commer- cial team. With the aim of determining the degree of client satis- faction, the company sent out a total of 1,008 quality surveys to end customers in 2020, obtaining an average rating of 4.11 out of 5 in the product, services, degree of trust and digital-com- mercial services categories. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC’s commitment to its clients and suppliers | Page 4 of 5 FCC’S commitment to its suppliers 593 FCC is also working continuously on the application and inclu- sion of sustainability criteria in its purchasing processes and services provided, including binding ethical, social and environ- mental issues with regard to sustainability. The FCC Code of Ethics and Conduct also includes the basic principles that all partners, collaborators and suppliers have to respect: These principles state that business partners should: Clearly reject corruption, bribery and fraud and be seen to behave ethically in all their business relationships. Defend and protect human rights and essential labour rights recognised internationally in the Universal Decla- ration of Human Rights, as well as the Agreements and Declaration of the International Labour Organisation (ILO) relating to the principles and essential rights of workers. Show a high level of commitment to compliance with occu- pational health and safety standards, guaranteeing a safe and healthy work environment. Establish sustainable environmental management that respects the environment in all their activities, not only in terms of compliance with legislation, but also when under- taking activities in order to minimise negative environmental impacts. In 2019 the ethical clauses in the General Conditions for Contracting that suppliers have to accept were reformulat- ed, including references to a declaration that the supplier fully understands the content and scope of the new FCC Group An- ti-Corruption Policy. The FCC Group also has a Purchasing Manual that is based on three key principles: transparency, competitiveness and ob- jectivity. With a view to promoting stable and lasting business relationships, FCC aims to implement balanced and beneficial collaboration frameworks with suppliers, contractors, partners and collaborators. In 2020, the FCC Group updated the Purchasing Manual within the framework of the CSR Master Plan. In this context, work was undertaken to analyse and update the map of environmen- tal, social and governance risks for suppliers and contractors, taking into account issues such as: Identification of potential risks regarding sustainability. Inclusion of sustainability criteria in the definition of a critical supplier. Strengthening the monitoring and control system for those suppliers presenting the highest risk. The Group also worked on the supplier official approval process by updating the Supplier Management procedure. The aim of the present procedure is to establish a unique methodology to standardise suppliers in the Purchasing Department’s database, as well as to define a unique methodology for their assessment. For the FCC Group, control of the value chain is critical and the success of the company depends on managing it correct- ly. Suppliers and contractors are a very significant stakeholder group given their size: in Spain alone, the Group established business relationships with more than 32,500 suppliers in 2020. Proof of the Group’s commitment to local suppliers in Spain is that 98.7% of its suppliers are Spanish and 97.9% of the vol- ume of purchases was contracted with them. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | FCC’s commitment to its clients and suppliers | Page 5 of 5 The official approval process is based on a risk analysis based in accordance with the information provided by the supplier and from a subsequent analysis, that leads to a final resolution on official approval by FCC. For a supplier to be officially approved, they should first register on the Group’s corporate platform and answer a series of ques- tionnaires which include sustainability issues. The following are some of these issues: Signing an affidavit with regard to anti-corruption. References to documentation relating to the identifica- tion, risk assessment and certifications of the Anti-Brib- ery and Compliance systems implemented in the com- pany. Certifications and information relating to the Quality and Environmental Management systems established in the company. Information relating to the Prevention of Risks at Work System. Information regarding customer service and satisfac- tion, as well as process control, official approval and assessment of suppliers. Workforce data, including diversity indicators such as the percentage of women, average age and average seniority of workers. Information on the promotion of Corporate Social Re- sponsibility in the company, including, where applica- ble, a declaration of respect for human rights, anti-dis- crimination policies, adherence to the United Nations Global Compact, certifications of the ethical/social management system, sanctions or judicial processes for violation of human rights, communication of the sus- tainability policy, assessment of employee satisfaction and conciliation policies. Information regarding regulatory compliance, including references to their own Code of Ethics, acceptance of the FCC Group’s Code of Ethics, information on the criminal prevention model, the reporting channel, the existence of a Compliance Officer, the policies for the prevention of money laundering and financing of terror- ism, as well as any possible sanctions or convictions for corruption, bribery or influence peddling. 594 Once the questionnaires have been filled in, the responses are weighted using a points system that categorises the level of risk, assigning a degree of compliance between “A” and “D”, with “A” being the level with the highest compliance. This score is notified to the supplier once it has been approved through an official approval certificate together with recommendations for improving the score, where this is of interest. During the 2020 business year, a total of 382 suppliers com- pleted the official approval process. Looking ahead to 2021, the Group aims to officially approve 100% of the suppliers assigned in the purchasing processes initiated throughout the year, as well as 80% of the suppliers that represent the top 20% of ex- penses incurred during the business year. In the event that a supplier is classified as high risk (D), a process of Due Diligence for third parties will be undertaken to analyse in detail any possible risks that may materialise should a commer- cial relationship be established with this provider. Depending on the results obtained in Due Diligence, the official approval of the supplier by the Purchasing Department will be accepted or rejected. Of all the suppliers submitted to the official approval process in 2020, none had any features that resulted in them being categorised as high-risk suppliers. There is regular assessment of suppliers that involves sending satisfaction assessment surveys to the corresponding areas within the Group. The result of these assessments is useful for negotiations, decision-making in future assignments or even to decide whether to maintain or cancel official approval. With the aim of keeping the system constantly updated, the assessment questionnaire is resent regularly and at different intervals after the contract has been awarded, provided it is still in force. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: innovation for sustainable development | Page 1 of 4 The FCC Group: innovation for sustainable development 595 Since it was founded in 1900, the FCC Group has always considered innovation as a priority, adapting to different tech- nological developments to provide services with the highest standards of technical excellence. From building cities at the beginning of the century, to the development of motorways and railway and metro lines, park management and water distribu- tion over the following decades, FCC has always participated in the development of state-of-the-art infrastructures and services within its sector. This ongoing effort to innovate on the part of the Group has enabled FCC to enjoy a journey lasting more than 120 years. The search for innovation is part of the history and way of life in the FCC Group and can be seen in the numerous initiatives in which the different lines of business participate. The FCC Group is aware that the future must be linked to sus- tainable development, so each business is looking for inno- vative solutions so as to be able to minimise their impact on the environment and increase the efficiency of their processes. These solutions are aimed at meeting global challenges, like the fight against climate change and transition to a circular econo- my model, all of which will affect the global agenda in the com- ing years. FCC Environmental is committed to technological innovation in order to improve the well-being of citizens and make cities increasingly sustainable. Its R&D&I projects focus on five main areas: e-mobility, machinery, circular economy, sustainable de- velopment and “VISION” and Information and Communication Technologies. In this way, the activities of FCC Environmental Services include electric sweepers, advanced urban pruning systems, and innovative projects such as, for example, Life- 4Film, aimed at avoiding incineration and sending plastic film to landfills, and Insectum, that aims to improve the revaluation of wastes by using insects. In this regard, Aqualia is now considered to be as an avant-gar- de entity, a benchmark in the sector as a result of continuous progress in innovation and in the use of new technologies. The company has developed an R&D&i strategy, both in the produc- tion processes and in the optimal use of resources, assuming its responsibility to society and the environment and improving the quality of life of citizens, including vulnerable groups. Aqualia’s innovation projects are based on identifying opportunities in issues such as quality, sustainability, smart management and eco-efficiency in which the whole workforce participates. With the aim of providing projects with better resources, the compa- ny also participates in European, national and regional R&D&I programmes relating to water management and that are co-fi- nanced by the Spanish Administration or the European Union (FP7, LIFE, H2020, Eco-Innovation, etc.). The Group’s construction area also actively promotes innova- tion through its main activities, as it is aware of the importance for the company as a differentiating factor in a highly compet- itive market. The innovation projects in the FCC Group’s con- struction area are aligned with its R&D&i policy, with efforts fo- cussed on providing added value in terms of sustainability. As a complement to this and with the aim of ensuring the maximum guarantees for quality and safety, the Group’s construction area uses modern and innovative machinery in its operations, result- ing in a reduction of atmospheric emissions and impact from noise and an increase in energy efficiency. The Cement business is committed every year to applying R&D&i processes involving research and development for new products, and there is great awareness of social demands in environmental matters. With the aim of adapting to the chang- ing context and guaranteeing the competitiveness of its activi- ties in the market, the company is working for the technological innovation of products and materials to extend the useful life of infrastructures. Meanwhile, the Cement business is apply- ing innovative techniques involving alternative manufacturing processes and eco-efficient materials to make progress in the sustainable construction of cities. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: innovation for sustainable development | Page 2 of 4 596 Artificial Intelligence, the key to optimising electricity costs in the cement sector The cost of electricity cost in a cement works represents about 37 percent of variable costs, so energy efficiency is a key competitive factor for this industry. In Spain, the cement industry also faces reduced energy replacement rates, a new scenario for the CO2 Emissions Trading System, and the cost of electricity is higher than the Euro- pean average. This need has led to a collaboration agreement between the University of Seville and Flacema, with the participation of a number of companies in the cement sector operating in Andalusia, such as Cementos Portland Valderrivas. In this context, an industrial research process will be launched, with the aim of developing a digital tool to opti- mise electricity costs. This tool will include neural networks, genetic algorithms and other Artificial Intelligence tools and will enable the former to lay the ground for the mathematical theories while the latter will see an improvement in competitiveness. Life Phoenix, the project led by Aqualia for the regeneration of wastewater and the treatment of microplastics Within a context of ecological crisis and water stress arising from the effects of climate change, the re-use of water is vital- ly important so as to be able to face the challenges presented by food production and water policy in the European Union. Faced with this scenario, Aqualia will be the entity responsi- ble for leading the European Life Phoenix innovation project for the next four years. This project is a challenge that will address the problems arising from the re-use of wastewater, as well as the threat posed by emerging pollutants and mi- croplastics. The project lies within the framework of the European LIFE programme and has a budget of more than three million euros. It seeks to transform the use of wastewater into an element of high added value to be re-used for irrigation in the agricultural sector, in compliance with the current Euro- pean directive. The project lies within the framework of the European LIFE programme and has a budget of more than three million euros. It seeks to transform the use of wastewater into an element of high added value to be re-used for irrigation in the agricultural sector, in compliance with the current Euro- pean directive. AWA: water measurement for smart management Industry 4.0 is already a new reality in the business of end-to- end water management, and it has accelerated digitisation and the adoption of new technologies in industrial processes. As a result of this, Aqualia uses the Aqualia Water Analytics (AWA) platform for the smart, more efficient management of the end-to-end water cycle and has completely transformed the way it operates. AWA is an analytical tool that provides the company with transversal analysis of the end-to-end water cycle, and it covers the complete data cycle from abstraction onwards. The technological environment was designed under the principle of creating solutions adapt- ed to each process and specific needs “Any solution does not have to be the best solution”. With regard to security, it is about generating a framework of trust, complying at all times with cybersecurity policies. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: innovation for sustainable development | Page 3 of 4 597 The FCC Group, innovating to contribute to sustainable mobility Both Aqualia and FCC Environmental participated in the Methamorphosis project, co-financed by the European LIFE program, and which ended in 2020. This project is an example of the synergies existing within the FCC Group, and aimed at developing a new system for the treatment of effluents and obtaining biofuel (biomethane) from municipal and agro-industrial waste. As a result of this project, two prototypes were built: UMBRELLA (FCC Medio Ambiente and Aqualia - Besòs Ecopark Municipal Wastes Plant): This prototype aims to use organic waste from water treatment to generate biogas. METHAGRO (Porgaporcs - Ecobiogas agro-industrial waste plant): This prototype focuses on obtaining bio- gas from organic waste from the Porgaporcs agri-food plant. FCC also plays a leading role in the LIFE Landfill Biofuel project, in collaboration with six other organisations. This project aims to obtain and produce biomethane suitable to be used by vehicles from the enrichment of biogas from landfills. Once completed, the intention is to reproduce this project in other FCC landfills in Europe, thus contributing to the use of biomethane as an energy alternative. Smart platform for the provision of services to citizens ICT technologies (Information and Communication Technologies) are increasingly important in the provi- sion of truly smart services in cities and urban centres. Administración Administration Companies Citizens In order to provide effective, efficient, sustainable and comprehensive services, systems need to be in place that enable the capitalisation of best practices in processes and communications, also providing all agents (administration, citizens and companies) with collaborative tools that enable the management of in- formation for optimal service provision. With this in mind, FCC Medio Ambiente Iberia de- veloped the VISION platform, a tool that integrates all aspects of FCC Medio Ambiente Iberia’s manage- ment in the same environment, sharing information, processes, validations and services that facilitate pro- gress towards excellence. With the deployment of VISIÓN in all contracts, the tool enables all departments to work together to de- sign and maintain a unified and updated work envi- ronment. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | The FCC Group: innovation for sustainable development | Page 4 of 4 598 FCC Environment CEE, innovating for the citizens of Slovakia FCC Environment CEE has developed a new applica- tion available in Slovakia, for the purpose of notifying users when the different types of waste will be col- lected. This practical tool will modernise the municipal waste collection system in Slovakia, which was previ- ously managed by printed calendars in which citizens had to verify and review the timetable for taking out their waste to be collected. The Vylož Smeti app: FCC, which has been available since 1 December 2020, enables users to access the collection calendar, simply by showing their address on their tablet or mobile phone. In line with the FCC Group’s strategy in the field of digitization, FCC Environment CEE in Slovakia has also developed the online tool OdpadOnline.sk. With this tool it takes users 5 minutes to request a contain- er and ensure the safe disposal of their waste. Gaudí Project, a new platform for knowledge management in the construction sector Gaudí project, a new platform for knowledge management in the construction sector The Gaudí project, executed by FCC Construcción and Vass, and financed by the Centre for Industrial Technological Development, the European Regional Development Fund (ERDF) and the Ministry of Science and Innovation, aims to create a platform for the management of knowledge in the field of construction. This platform will enable the acquisition, storage, processing and dissemination of know-how in construction companies. By developing Artificial Intelligence, Machine Learning and Deep Learning algorithms, this platform will also enable the capture, storage, processing and dissemination of informa- tion through a shared platform. This project will create a new Knowledge Management model for the construction sector, based on the study of the business processes established in the Management Systems in the companies participating, taking traditional knowledge processes into account (creation, storage and retrieval, transfer and application). Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 599 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex I: about this report | Page 1 of 3 Annexes Annex I: about this report Regulatory Context This Sustainability Report provides information on the manage- ment of key aspects (environmental, social and governance) for the company and its businesses in the period between 1 Janu- ary and 31 December 202014. The dissemination of non-financial information or that relating to corporate social responsibility contributes towards the meas- urement, monitoring and management of the performance of companies and their impact on society, and constitutes a com- mon practice within the FCC Group. The information on FCC’s ethical, environmental and social performance was prepared in accordance with the Exhaustive option in the GRI Standards (Global Reporting Initiative). The FCC Group also includes in this Report the non-financial information requested by Law 11/2018, of 28 December, on non-financial information and diversity. This Report, therefore, is a constituent part of the FCC Group’s Consolidated Man- agement Report, corresponding to the 2020 business year, be- tween 1 January and 31 December 2020. Throughout this document, information is provided on environ- mental and social issues, respect for human rights and the fight against corruption and bribery, as well as information on the Group’s employees. Principles for preparing the Report In the preparation of this Report, the FCC Group followed the principles of the Global Reporting Initiative for the preparation of reports: Inclusion of stakeholders, context of sustainability, material value and comprehensiveness. To identify material issues, FCC updated its materiality study for 2020, described in point correspondent of this report and taking the company’s main stakeholders into account. In the event that any indicator is not material for the Group or for any of its businesses, this will be expressly stated in the text. The scope of the material topics and their coverage was developed sufficiently to reflect significant economic, environmental and social impacts and to enable stakeholders to assess FCC’s per- formance in 2020. The Group also took care to ensure the quality of the document, respecting the following principles: accuracy, balance, clarity, comparability, reliability and timeliness. To ensure the reliability of the information, the Group verified its Sustainability Report independently. A guarantee report that includes the objectives and scope of the process, as well as review procedures used and their conclusions, is attached as an annex to this report. Scope The scope of the information provided in this report corre- sponds to the integration perimeter used for the financial con- solidation of Fomento de Construcciones y Contratas, S.A. and subsidiaries, taking into account the data for 100% of the sub- sidiaries over which management is controlled, regardless of the shareholding. The list of FCC Group companies as at 31 December 2020, and a description of each one, appear in the annexes to the annual accounts. (14) Due to the impossibility of providing year-end data, Aqualia reports non-financial information related to environmental issues for the period from 1 December 2019 to 30 November 2020. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex I: about this report | Page 2 of 3 600 The FCC Group, distinguished by its geographical and activity diversity, is working to extend the scope of the information to all the companies that make up the group. However, the follow- ing is a list of companies excluded from this scope for which non-financial information for the 2020 business year has not been included: Business Excluded from the Scope Environment Area Construction Area Cementos Portland Valderrivas Other activities FCC Abfall Service Betriebs GmbH, FCC Centrum Nonprofit Kft., FCC Magyarorzág Kft, FCC EKO Polska sp. z.o.o., FCC EKO Polska sp. z.o.o., FCC Environment Romania S.R.L. ACE Scutmadeira Sistemas de Gestao e Controlo de Tràfego, Áridos de Melo, S.L., Colombiana de Infraestructuras, S.A.S., Concesiones Viales S. de R.L. de C.V., Concretos Estructurales, S.A., Conservial Infraestructuras, S.L., Consorcio FCC Iquique Ltda., Construcción Infraestructuras y Filiales de México, S.A. de C.V., Construcciones Hospitalarias, S.A., Constructora Meco-Caabsa, S.A. de C.V., Constructora Túnel de Coatzacoalcos, S.A. de C.V., Desarrollo y Construcción Deyco CRCA, S.A., Edificadora MSG, S.A. (Panama), Edificadora MSG, S.A. de C.V. (El Salvador), Edificadora MSG, SA de C.V. (Nicaragua), FCC Américas, S.A. de C.V., FCC Américas Colombia, S.A., FCC Américas Panamá, S.A., FCC Colombia, S.A.S., FCC Construcción Costa Rica, S.A., FCC Construcción de México, S.A. de C.V., FCC Construcción Perú, S.A.C., FCC Construçoes do Brasil Ltda., FCC Constructii Romania, S.A., FCC Construcción International B.V., FCC Construcción Northern Ireland Limited, FCC Edificadora CR, S.A., FCC Electromechanical Llc., FCC Elliott Construction Limited, FCC Industrial de Panamá, S.A., FCC Industrial Perú, S.A., FCC Industrial UK Limited, FCC Inmobilien Holding GMbH, FCC Servicios Industriales y Energéticos México, S.A. de C.V., FCC Soluciones de Seguridad y Control, S.L., Fomento de Construcciones Colombianas, S.A.S., Fomento de Construcciones y Contratas Canadá Ltd., Impulsora de Proyectos Proserme, S.A. de C.V., Meco Santa Fe Limited, Megaplás Italia, S.p.A., Participaciones Teide, S.A., Servicios Dos Reis, S.A. de C.V., FCC Construcción Australia Pty Ltd. Canteras de Alaiz, S.A., Carbocem, S.A., Dragon Alfa Cement Limited, Dragon Portland Limited, Hormigones de la Jacetania, S.A., Prebesec Mallorca, S.A., Uniland Acquisition Corporation, Uniland International B.V., Uniland Trading B.V., Áridos de Navarra, S.A., Pedrera de l’Ordal, S.L., Tratamiento Escombros Almoguera S.L. Autovía Conquense, S.A., Bvefdomintaena Beteiligungsverwaltung GmbH, Cemark - Mobiliario Urbano e Publicidade, S.A., Concesionaria Atención Primaria, S.A., Concesionaria Túnel de, Coatzacoalcos, S.A. de C.V., Costa Verde Habitat, S.L., F-C y C, S.L. Unipersonal, FCC Concesiones, S.A. Unipersonal, FCC Concesiones de Infraestructuras, S.L., Geneus Canarias, S.L., PPP Infraestructure Investments B.V., Per Gestora, S.L., Vela Boravica Koncern d.o.o., Vialia Sociedad Gestora de Concesiones de Infraestructuras, S.L., Grupo Cedinsa Concessionària, Cedinsa Concessionària, S.A., Cedinsa Conservació, S.L. Unipersonal, Cedinsa d’Aro Concessionària de la Generalitat de Catalunya, S.A.Unipersonal, Cedinsa Eix Llobregat Concessionària de la Generalitat de Catalunya, S.A.Unipersonal, Cedinsa Eix Transversal Concessionària de la Generalitat de Catalunya, S.A.Unipersonal, Cedinsa Ter Concessionària de la Generalitat de Catalunya, S.A.Unipersonal. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 601 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex I: about this report | Page 3 of 3 The non-inclusion of non-financial information on these compa- nies is due to the fact that most of them are inactive or being wound up, holding companies, companies without productive activity or incorporated during the second half of the business year. The FCC Group’s non-financial reporting procedure allows those companies incorporated in the second half of the busi- ness year to make non-financial reporting on a voluntary basis, in order to have a reasonable amount of time to adapt to the management systems implemented in the Group. However, if the information is available, it is included in the data provided by each business line. Despite the above-mentioned corporate exclusions, the non-fi- nancial information presented in this Report covers between 90 and 95% of the FCC Group’s turnover, unless expressly indicat- ed below, guaranteeing a true image of the company’s non-fi- nancial performance. With regard to specific indicators, in addition to what is express- ly indicated throughout the document in other sections, those excluded from the scope of environmental indicators are de- tailed below: Indicator Excluded from the Scope Monetary resources dedicated to the prevention of environmental risks Aqualia Atmospheric emissions Prefabricados Delta (COVs), Megaplas (NOx, Sox) Water discharges Generated waste Water consumption Energy consumption Direct GHG emissions Indirect GHG Emissions Aqualia15 FCC Construcción (Saudi Arabia) FCC Construcción (Saudi Arabia) FCC Construcción (Saudi Arabia), FCC Environmental Services FCC Construcción (Saudi Arabia) FCC Construcción (Saudi Arabia), FCC Environmental Services This year, basic environmental indicators for the two corporate headquarters of the FCC Group in Madrid (energy consump- tion, water consumption, waste generated and GHG emissions) were included for the first time. These indicators, with a very low weighting with regard to the FCC Group, are the significant for the environmental management of both centres. With regard to the exclusions from scope in the specific indi- cators mentioned above, these omissions are justified due to the impossibility of providing exhaustive and good quality infor- mation as at the closing date for the submission of this report. With regard to the above-mentioned omissions concerning the FCC Group’s turnover, Aqualia contributes 19.3%, FCC Con- strucción (Saudi Arabia) 2.8% and FCC Environmental Services 1.2%. The rest of the omissions mentioned do not in any case exceed 1% of the Group’s turnover. (15) Since Aqualia’s activity is to manage the end-to-end water cycle, the amounts of water discharged as a result of the purification and reuse processes are shown in the section “Water consumption and management at the Group”. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex II: tables relating to social and personnel affairs | Page 1 of 6 Annex II: tables relating to social and personnel affairs 602 Developments in the distribution of the workforce by gender (31/12) Developments in the distribution of the workforce by age range and gender (31/12) Men Women Total 2019 77.8% 22.2% 100% 2020 77.7% 22.3% 100% < 35 years 35-54 years > 54 years Subtotal Total 2019 2020 Men 8,413 26,945 10,789 46,147 Women 1,876 8,180 3,111 13,167 Men 6,788 24,043 15,570 46,401 Women 1,850 7,501 3,995 13,346 59,314 59,747 Developments in the distribution of the workforce by business area (Percentage) Developments in the distribution of the workforce by functional level and gender (31/12) Environmental Services Water Management Construction Cement Central Services Total 2019 67% 16% 14% 2% 1% 2020 67% 18% 12% 2% 1% 100% 100% Directors and Managers Supervisors Technicians Administrative Clerks Sundry trades Subtotal Total 2019 2020 Men Women 475 3,233 3,545 1,074 37,820 46,147 90 610 1,629 1,805 9,033 13,167 Men 437 3,067 3,898 1,004 37,995 46,401 Women 82 551 1,660 1,975 9,078 13,346 59.314 59.747 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex II: tables relating to social and personnel affairs | Page 2 of 6 Developments in the distribution of the workforce by country gender (31/12) No. of new contracts by gender, age and functional level: 603 Countries Spain Czech Republic United Kingdom Romania Austria Poland Portugal Slovakia Italy Hungary Serbia USA Panama Colombia Egypt Tunisia Saudi Arabia United Arab Emirates Rest of the World Total Men 33,584 2,161 2,045 556 530 382 373 361 207 127 100 372 484 240 1,025 239 2,294 326 741 2019 Women 10,781 655 348 144 162 94 88 93 37 52 34 50 88 51 3 19 195 6 267 Total 44,365 2,816 2,393 700 692 476 461 454 244 179 134 422 572 291 1,028 258 2,489 332 1,008 Men 33,956 2,196 2,152 554 532 423 443 323 217 132 94 501 266 666 1,340 215 1,684 307 401 2020 Women 11,115 648 350 134 165 108 95 91 35 51 36 76 42 147 3 17 134 5 94 Total 45,071 2,844 2,502 687 697 531 538 414 252 183 130 577 308 813 1,343 232 1,818 312 495 46,147 13,167 59,314 46,401 13,346 59,747 No. of new contracts by gender Men Women Total No. of new contracts by age and gender Hombre Mujer < 35 years 35-54 years > 54 years Total 2,766 3,847 1,090 7,703 894 1,365 281 2020 7,703 2,540 10,243 Total 3,660 5,212 1,371 2,540 10,243 No. of new contracts by functional level and gender Directors and Managers Supervisors Technicians Administrative Clerks Sundry Trades Total Men Women Total 11 203 789 122 6,578 7,703 3 73 185 218 14 276 974 340 2,061 2,540 8,639 10,243 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex II: tables relating to social and personnel affairs | Page 3 of 6 Developments in the number of workers by type of con- tract and gender Developments in the number of workers by type of work- ing day and gender Annual average by contract and age range 2019 2020 2019 2020 2019 2020 604 Men Women Men Women Men Women Men Women Open-ended 32,214 10,165 32,975 10,053 13,933 3,002 13,426 3,293 46,147 13,167 46,401 13,346 Full-time Part-time Subtotal 41,908 4,239 9,420 3,747 42,271 4,130 9,479 3,867 46,147 13,167 46,401 13,346 59,314 59,747 Total 59,314 59,747 Temporary Subtotal Total Open- ended 4,603 26,236 10,375 41,214 Temporary 5,895 8,967 3,001 Open- ended 4,593 25,220 13,149 Temporary 5,730 8,302 3,133 17,864 42,962 17,165 < 35 years 35-54 years > 54 years Subtotal Total 59,078 60,127 Annual average for contract and gender Average by type of contract and functional level 2019 2020 2019 2020 Open- ended Temporary Open- ended Temporary 31,599 14,719 32,952 14,053 9,615 3,144 10,010 3,112 41,214 17,864 42,962 17,165 59,078 60,127 Men Women Subtotal Total Open- ended 565 3,339 3,858 2,081 Temporary 4 608 1,013 758 Open- ended 544 3,238 4,403 2,272 Temporary 5 538 994 598 Directors and Managers Supervisors Technicians Administrative Clerks Sundry trades 31,372 15,480 32,505 15,030 Subtotal 41,215 17,863 42,962 17,165 Total 59.078 60.127 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 605 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex II: tables relating to social and personnel affairs | Page 4 of 6 Annual average for working hours and gender Average by type of working day and functional level Developments in dismissals by functional level 2019 2020 2019 2020 2019 2020 Full-time Part-time Full-time Part-time Full-time Part-time Full-time Part-time Men Women Subtotal Total 41,947 9,296 51,243 4,372 3,463 7,835 42,788 9,508 52,296 4,217 3,614 7,831 59,078 60,127 Directors and Managers Supervisors Technicians Administrative Clerks Sundry trades Subtotal Total 565 4 542 3,780 4,607 2,666 167 264 173 3,616 5,143 2,695 8 159 255 175 39,625 51,243 7,227 7,835 40,300 52,296 7,234 7,831 59,078 60,127 Directors and Managers Supervisors Technicians Administrative Clerks Sundry trades Total 13 37 107 46 612 815 24 63 114 37 450 688 Annual average by working hours and age range Developments in dismissals by gender Developments in the wage gap in Spain 2019 2020 Full-time Part-time Parcial Full-time Part-time < 35 years 9,128 35-54 years 31,406 > 54 years Subtotal 10,709 51,243 1,370 3,797 2,667 7,835 8,983 29,922 13,391 52,296 1,340 3,601 2,890 7,831 Total 59,078 60,127 Men Women Total 2019 2020 662 153 815 532 156 688 Adjusted wage gap Gross wage gap 2019 6.59% 2020 5.85% 17.42% 18.62% Developments in dismissals by age range < 35 years 35-54 years > 54 years Total 2019 2020 260 427 128 815 143 368 177 688 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex II: tables relating to social and personnel affairs | Page 5 of 6 Average salaries by functional level and gender Spain: 606 Men Directors and Managers Supervisors Technicians Clerical Staff Sundry Trades Women Directors and Managers Supervisors Technicians Clerical Staff Sundry Trades International Saudi Arabia Colombia Egypt 2019 2020 Total Average Remuneration Total Average Remuneration Under 35 years old From 35 to 54 years old Over 54 Under 35 years old From 35 to 54 years old Over 54 60,375.36 € 29,251.61 € 28,498.51 € 23,867.52 € 23,989.51 € 53,855.97 € 26,886.49 € 24,391.86 € 20,873.69 € 19,211.29 € 107,200.54 € 147,318.51 € 45,086.22 € 43,127.14 € 30,319.11 € 26,342.57 € 87,100.64 € 36,604.46 € 35,679.30 € 25,063.85 € 19,991.23 € 50,693.67 € 51,944.87 € 36,504.92 € 27,694.37 € 83,920.64 € 39,305.68 € 42,562.62 € 27,821.19 € 19,138.44 € 55,734.89 € 30,498.07 € 28,316.74 € 22,343.23 € 23,277.26 € – 27,810.07 € 25,128.80 € 21,872.00 € 18,850.39 € 99,168.29 € 45,952.00 € 42,163.90 € 29,502.52 € 27,232.33 € 85,111.11 € 38,705.44 € 36,154.10 € 26,135.65 € 20,263.39 € 136,326.39 € 53,031.57 € 50,197.31 € 35,470.45 € 29,484.30 € 70,589.89 € 40,878.50 € 40,968.08 € 28,782.08 € 20,392.96 € Men Women 57,384.35 SAR 52,712.74 SAR 24,544,260.05 COP 31,347,442.47 COP 120,620.20 EGP 160,272.00 EGP United Arab Emirates 34,139.27 AED 51,600.00 AED Italy Panama Portugal 27,859.81 EUR 31,812.75 EUR 18,472.29 USD 26,093.70 USD 22,892.88 EUR 28,468.91 EUR Czech Republic 419,010.66 CZK 378,919.91 CZK Tunisia 55,218.81 TND 48,780.97 TND FCC defined a remuneration policy for each of the countries in which it operates, so the aggregate average remuneration for which the remuneration data for those countries in which we are established is added, it is not representative of the remunera- tion management undertaken in each of the business units and countries in which FCC operates. The information required to provide breakdowns by professional classification and age range is currently not available. In this regard, the FCC Group is working to be able to provide this information. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex II: tables relating to social and personnel affairs | Page 6 of 6 Percentage of workers covered by collective agreement by country Parental Leave (Spain) 607 No. of employees entitled to paternity/maternity leave No. of employees who took paternity/ maternity leave No. of employees who returned to work after paternity/maternity leave ended Men 803 803 757 Women 173 173 169 Countries Saudi Arabia Algeria Australia Austria Belgium Brazil Bulgaria Canada Chile Colombia Costa Rica Ecuador USA Egypt El Salvador United Arab Emirates Slovakia Spain France Guatemala Holland Total % of workers covered by collective agreement Countries Total % of workers covered by collective agreement 2019 0% – – 6% – – 0% – 0% 0% – – 0% – – 0% 36.83% 100% 100% – – 2020 0% 93.44% 0% 0.10% 100% 100% 0% 0% 0% 0% 0% 0% 14.37% 0% 0% 0% Hungary Ireland Italy Kosovo Mexico Montenegro Nicaragua Norway Oman Panama Peru Poland Portugal Qatar United Kingdom Czech Republic 33.73% Dominican Republic 100% 100% 0% 100% Romania Serbia Tunisia 2019 0% – 100% – 0% – – – 0% 30.45% – 25% 48.26% – 7.13% 36.58% – 22.85% 10.56% 100% 2020 0% 0% 100% 0% 0% 0% 0% 0% 0% 65.55% 0% 20% 13.85% 16.07% 7.10% 36.38% 100% 20.52% 13.86% 100% (*) In 2020 all countries and all areas where the FCC Group operates were included. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex III: tables relating to environmental issues | Page 1 of 3 Annex III: tables relating to environmental issues 608 Noncompliance with environmental laws and regulations (307-1) Noncompliance with environmental laws and regulations Total monetary value of fines (€) Total number of non-monetary sanctions (No.) Cases subject to mechanisms for the resolution of law suits (No.) 2020 304,256 23 53 Spills (306-3) and discharges (303-4) Import, export and transport of waste (306-4) Import of waste (T) Amount of imported hazardous waste Exported hazardous waste (T) Amount of exported hazardous waste Transported hazardous waste (T) Amount of hazardous waste transported to other countries 2020 54,685 2020 666 2020 57 Derrames Total no. of significant spills (no.) Total volume of significant spills (m3) Water discharges by destination (m3) Surface water Groundwater Sea water Third party water (total): municipal network and treatment plants Third-party water transferred for use by other organisations (where applicable) TOTAL 2020 18 23 2020 1,954,567 75,832 62,170 1,481,451 – 3.574.020 Total water discharges for fresh water or other waters (m3) 2020 Fresh water (total dissolved solids ≤ 1000 mg/l) 1,508,526 Other waters (total dissolved solids> 1000 mg/l) Not typified TOTAL Water discharges in areas under water stress (m3) Fresh water (total dissolved solids ≤ 1000 mg/l) Other waters (total dissolved solids> 1000 mg/l) TOTAL 117,439 1,948,056 3,574,020 2020 592,343 100 592.443 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex III: tables relating to environmental issues | Page 2 of 3 Water abstraction (303-3) Consumption of materials (301-1) (301-2) (301-3) 609 Water abstraction (m3) 2020 Materials used (T) Municipal water supply or by other water companies Surface waters (wetlands, rivers, lakes, captured rainwater and other water streams) 9,521,108 850,832 Raw materials (metals, minerals, wood, etc.) Process materials, lubricants and reagents Groundwater 1,992,512 Semi-finished products Rainwater captured and stored by the organisation 218,934 Container and packaging material (paper, cardboard, plastics) Water recycled or re-used 1,996,106 TOTAL TOTAL 14,579,493 Origin of the materials used (T) Renovable* 2020 Recycled consumables (T) 41,396,446 Recycled/re-used materials Retrieved packaging products and materials (T) Packaging products and materials collected, re-used or recycled at the end of their useful life Packaging products/material sold in the period 96,849 3,726,276 8,671 45,228,241 Non renovable** 2020 10,121,571 2020 1,356 1,336,408 Water abstraction from areas WITH water stress (m3) 2020 Municipal water supply or by other water companies 5,681,748 Surface waters (wetlands, rivers, lakes, and other water streams) Groundwater Rainwater captured and stored by the organisation Water recycled or re-used TOTAL 470,964 620,075 3,515 1,895,215 8,671,517 Water abstraction by water type (m3) 2020 Fresh water (total dissolved solids ≤ 1000 mg/l) 14,579,493 Other waters (total dissolved solids> 1000 mg/l) – TOTAL 14,579,493 Raw materials (metals, minerals, wood, etc.) Process materials, lubricants and reagents Semi-finished products Container and packaging material (paper, cardboard, plastics) 257,475 41,138,971 191 96,658 – 3,726,276 4,327 4,343 TOTAL 261,993 44,966,248 (*) Renewable: materials from abundant resources that are quickly replenished through ecological cycles or agricultural processes, so that they remain available for future generations. For example, wood and biomass. (**) Non-renewable: Resource that is not renewed within short periods of time, for example; minerals, metals, oil, gas and coal. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex III: tables relating to environmental issues | Page 3 of 3 Consumption of renewable fuels in fixed sources and mobile sources under operational control (GJ) Biogas burned in boilers without electricity generation Consumption of self-produced renewable energy (GJ) 2020 549,888 From wind turbines From photovoltaic panels Biogas burned in engines or turbines with electricity generation 1,086,822 Waste (biomass fraction) Biomethane Landfill gas Biomass TOTAL 8,487,487 549 4,552 1,364,247 11,493,546 TOTAL Indirect energy consumption (GJ) Indirect non-renewable consumption Indirect renewable consumption TOTAL Energy consumption outside the organisation (GJ)16 Purchased items and services Activities relating to fuel and energy that are not included in scope 1 and 2 Business travel TOTAL Energy consumption (302-1) (302-2) Consumption of fossil fuels in fixed sources and mobile sources under operational control (GJ) Petrol Diesel/Diesel oil Boiler oil (Diesel C) Fuel Oil LPG (Liquefied Petroleum Gas) Natural gas Compressed natural gas (CNG) Kerosene Coal (domestic) Propane Waste (fossil fraction) Butane Conventional fossil fuels in clinker kilns Alternative fossil fuels in clinker kilns TOTAL GJ 97,236 3,766,750 18,320 8,954 2,094 118,346 473,421 662 1,082 3,439 7,207,458 15 12,214,421 1,509,222 25.421.421 (16) This energy consumption is only calculated at FCC Construcción, Cementos Portland Valderrivas and FCC Environment UK. 610 2020 255 753 1,009 2020 6,075,789 112,181 6,187,970 2020 318,186 6,701 9,069 333,955 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex IV: tax information 611 Annex IV: tax information Profits by country and tax paid on profits Pre-Tax Profit 2020 (thousands of €) Tax paid on 2020 profit (thousands of €) 1,236.05 11,398.51 26,090.55 0.00 -751.22 9,478.00 1,093.00 -0.15 -2,164.77 1,192.00 -2,398.11 -1,965.52 154.87 -1,987.39 178.24 8,022.55 377.49 6,687.52 2,446.89 136.42 0.06 0.10 49.28 -21.13 404.56 155.55 705.34 120.54 Germany (*) Saudi Arabia Algeria Argentina (*) Austria Australia Belgium Bosnia and Herzegovina (*) Brazil Bulgaria Canada (*) Chile Colombia Costa Rica (*) Croatia (*) Ecuador Egypt El Salvador (*) Countries that did not report any taxes. This was due to one or more of the following reasons: accumulated losses, negative results, negative tax bases from previous business years, profit was very small or Corporate Income Tax was not payable on profit in the country in question. Pre-Tax Profit 2020 (thousands of €) Tax paid on 2020 profit (thousands of €) Pre-Tax Profit 2020 (thousands of €) Tax paid on 2020 profit (thousands of €) United Arab Emirates (*) Slovakia Spain United States (*) Finland (*) France Greece (*) Guatemala Haiti (*) Honduras (*) Hungary Ireland (*) Italy Latvia (*) Luxembourg (*) Morocco Mexico Montenegro (*) Nicaragua Norway Oman (*) Netherlands (*) Panama Peru Poland 2,785.33 2,599.00 390,710.12 -28,859.51 -43.00 3,383.60 0.00 355.54 1,188.00 -21.50 2,971.00 -11,584.78 4,292.56 -51.00 -46.82 -1,455.00 -223.04 -362.37 604.78 234.00 256.19 1,183.31 -36,065.71 10,206.12 3,355.00 952.57 73,172.30 317.29 6.58 86.47 1766.30 0.28 7,271.02 34.50 9,252.40 769.44 -14.40 Portugal Qatar United Kingdom Czech Republic Dominican Republic (*) Romania Serbia Sweden (*) Tunisia Uruguay (*) TOTAL 2,275.60 7,367.00 -1,622.80 23,476.43 803.00 -13,302.04 649.44 -8.00 14,540.62 328.28 1,892.09 282.99 2,452.49 5,135.23 194.84 12.26 5,848.86 429,873.45 120,118.61 Public grants received (thousands of €) Construction Environmental Services Water Cement Concessions Real Estate Central Services TOTAL 2018 2019 – 3,137 11,397 135 4,772 – – 3,726 10,725 – 4,610 – – 2020 – 3,997 8,418 – 7,154 – – 19,441 19,061 19,569 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 612 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 1 of 13 Annex V: GRI content table The following is the table of contents for GRI content. It shows general GRI 102 content, as well as each of the material issues identified in any of the FCC Group businesses, along with de- tails of the corresponding GRI thematic standards. For each of the issues considered in the materiality analysis, the businesses in which they are material are identified (Environment, Water, Construction and Cement). For example, the issue regarding relationship with local communities is material for the Construc- tion area. The thematic GRI standards were selected taking into account the definition of each of the material issues for the FCC Group. Since this Report was prepared in accordance with the exhaus- tive option of Global Reporting Initiative, it responds to all the content that is part of the selected standards. Content and materiality of the issues by business Report section/Direct response GRI 101: Fundamentals 2016 General content GRI 102: Contenidos Generales 2016 102-1 Name of the organisation Fomento de Construcciones y Contratas, S.A. and subsidiaries. 102-2 Activities, brands, products, and services FCC, creating sustainable cities. 102-3 Location of headquarters 102-4 Location of operations 102-5 Ownership and legal form 102-6 Markets served 102-7 Size of the organisation Av. Del Camino de Santiago 40, 28050 Madrid, Spain. FCC, creating sustainable cities. Corporate Governance Report, section A. Ownership structure. FCC, creating sustainable cities. FCC’s commitment to its clients. FCC, creating sustainable cities. The FCC Group in figures. Annex II: Tables relating to social and personnel affairs. 102-8 Information on employees and other workers Annex II: Tables relating to social and personnel affairs. 102-9 Supply chain 102-10 Significant changes in the organisation and its supply chain FCC's commitment to its suppliers. Letter from the CEO. The FCC Group in figures. Page number Omission – Not applicable 487-489 Not applicable – Not applicable 487-489 Not applicable – 487-489; 590-592 487-489; 495-498; 602-607 602-607 593-594 485-486; 495-498 Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 102-11 Precautionary principle or approach The management of environmental aspects and impacts within the Group. 539-542 Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 613 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 2 of 13 Content and materiality of the issues by business Report section/Direct response 102-12 External initiatives The CSR Master Plan. Due diligence with Human Rights. Accountability and transparency. The circular economy for the FCC Group. 102-13 Membership of associations The FCC Group’s socio-economic contribution to sustainable development. 102-14 Statement from senior executives responsible for decision-making Letter from the CEO. 102-15 Key impacts, risks and opportunities Risk management in the FCC Group. 102-16 Values, principles, standards and rules of conduct 102-17 Mechanisms for advising and ethical concerns 102-18 Governance structure 102-19 Delegating authority Our mission, vision and values. Compliance and due diligence. Governance structure. CSR Policy Governance. 102-20 Executive-level responsibility for economic, environmental and social issues. CSR Policy Governance. Page number 508; 529; 531; 542-544 589 485-486 532-536 490 527-531 491-492 506 506 Omission Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 102-21 Consulting stakeholders on economic, environmental and social issues. FCC, committed to dialogue. 520-522 Not applicable 102-22 Composition of the highest governance body and its committees Governance structure. Diversity on the Board of Directors. 102-23 President of the highest governance body Corporate Governance Report, section C. Structure of the company’s administration. 102-24 Nominating and selecting the highest governance body 102-25 Conflicts of interest Corporate Governance Report, section C. Structure of the company’s administration Diversity on the Board of Directors. Corporate Governance Report, section D. Related transactions and intra-group transactions. 102-26 Role of the senior governing body in setting objectives, values and strategy CSR Policy Governance. 102-27 Collective knowledge of the highest governance body CSR Policy Governance. 102-28 Assessing the highest governance body’s performance Corporate Governance Report, section C. Structure of the company's administration. 491-492; 494 – 494 – 506 506 – Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 102-29 Identifying and managing economic, environmental and social impacts Risk management in the FCC Group. 532-536 Not applicable 102-30 Effectiveness of risk management processes Corporate Governance Report, section E. Risk control and management systems. – Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 614 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 3 of 13 Content and materiality of the issues by business Report section/Direct response 102-31 Assessment of economic, environmental and social issues Corporate Governance Report, section E. Risk control and management systems. 102-32 Highest governance body’s role in the preparation of sustainability reports CSR Policy Governance. 102-33 Reporting critical concerns 102-34 Nature and total number of critical concerns 102-35 Remuneration policies 102-36 Process for determining remuneration 102-37 Stakeholders’ involvement in remuneration 102-38 Ratio of total annual salary Compliance and due diligence. Compliance and due diligence. Administrators' Remuneration. Administrators' Remuneration. Administrators' Remuneration. No information is provided. 102-39 Percentage increase ratio of the total annual salary No information is provided. 102-40 List of stakeholder groups 102-41 Collective bargaining agreements 102-42 Identifying and selecting stakeholders 102-43 Approach to stakeholder engagement 102-44 Key topics and concerns raised Fostering dialogue: Main stakeholder reporting channels. Annex II: Tables relating to social and personnel affairs. FCC Group Materiality Study. FCC Group Materiality Study. FCC Group Materiality Study. 102-45 Entities included in the consolidated financial statements Annex I: About this report. 102-46 Defining report content and coverage of the topic 102-47 List of material topics 102-48 Restatements of information 102-49 Changes in the preparation of reports 102-50 Period covered in the report 102-51 Date of latest report 102-52 Report preparation cycle FCC Group Materiality Study. FCC Group Materiality Study. Reduction of waste generated. FCC Group Materiality Study. Annex I: About this report. 2017 Annual 102-53 Contact points for questions regarding the report rcorporativa@fcc.es 102-54 Declaration of having prepared the report in accordance with GRI Standards Annex I: About this report. 102-55 GRI content table 102-56 External verification Annex IV: GRI content table. Independent verification report attached. Page number – 506 527-531 527-531 493 493 493 – – 520-522 602-607 523-526 523-526 523-526 599-601 523-526 523-526 545-546 523-526 599-601 – – – Omission Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Confidential information. Confidential information. Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 599-601 Not applicable 611 – Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 4 of 13 Content and materiality of the issues by business Report section/Direct response Ethics, integrity, compliance and good governance Environment, Water, Construction and Cement GRI 103: 2016 management approach 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 307: Environmental compliance 2016 Corporate Governance Model. Compliance and due diligence. Corporate Governance Model. Compliance and due diligence. Corporate Governance Model. Compliance and due diligence. 615 Page number Omission 491-494; 527-531 491-494; 527-531 491-494; 527-531 Not applicable Not applicable Not applicable 307-1 Noncompliance with environmental laws and regulations Annex III: Tables relating to environmental issues. 608-610 Not applicable GRI 419: Socio-economic compliance 2016 419-1 Noncompliance with laws and regulations in the social and economic area In 2020, FCC Construcción received a fine in this area amounting to 5.5 million dollars. – Not applicable GRI 205: Anti-corruption 2016 205-1 Transactions assessed for risks relating to corruption Compliance and due diligence. 205-2 Reporting and training with regard to anti-corruption policies and procedures Compliance and due diligence. 527-531 527-531 205-3 Confirmed incidents of corruption and actions taken There is no record of confirmed cases of corruption in the FCC Group throughout 2020. – Not applicable Not applicable Not applicable Risk control and management systems Environment, Construction and Cement GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach Risk management in the FCC Group. Risk management in the FCC Group. Risk management in the FCC Group. 532-536 532-536 532-536 Not applicable Not applicable Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 5 of 13 Content and materiality of the issues by business Report section/Direct response Quality of service and client satisfaction Environment and Construction GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 416: Client health and safety FCC's commitment to its clients. FCC's commitment to its clients. FCC's commitment to its clients. 616 Page number Omission 590-592 590-592 590-592 Not applicable Not applicable Not applicable 416-1 Assessment of the health and safety impacts of the product and service categories FCC’s commitment to its clients. 590-592 Not applicable 416-2 Incidents of noncompliance concerning the health and safety impacts of products and services No cases of significant non-compliance were detected regarding the impacts on the health and safety of products and services. – Not applicable Innovation and digital transformation Environment and Construction GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage The FCC Group: Innovation for sustainable development. 103-2 The management approach and what it consists of The FCC Group: Innovation for sustainable development. 103-3 Assessment of the management approach The FCC Group: Innovation for sustainable development. 595-598 595-598 595-598 Not applicable Not applicable Not applicable Fiscal transparency and tax contribution Water GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach The FCC Group in figures. Accountability and transparency. The FCC Group in figures. Accountability and transparency The FCC Group in figures. Accountability and transparency 495-498 Not applicable 495-498 Not applicable 495-498 Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 617 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 6 of 13 Content and materiality of the issues by business Report section/Direct response GRI 201: Economic performance 201-1 Direct economic value generated and distributed The FCC Group in figures. 201-2 Financial implications and other risks and opportunities due to climate change Risk management in the FCC Group. Risk management. 201-3 Defined benefit plan obligations and otherretirement plans Both Cementos Portland Valderrivas and some of the FCC Environmental Services contracts have this type of benefit. In the rest of the organisation, there is no company Pension Plan, there is a Retirement Savings Insurance. Page number Omission 495-498 Not applicable 532-536; 555 Not applicable – Not applicable 201-4 Government financial assistance received Annex IV: Tax information 611 Not applicable Pollution prevention Environment and Cement GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 303: Water and effluents 2018 303-4 Water discharges GRI 305: Emissions 2016 Pollution management. Pollution management. Pollution management. 557-558 557-558 557-558 Not applicable Not applicable Not applicable Annex III: Tables relating to environmental issues 608-610 Not applicable 305-6 Emissions of ozone-depleting substances (ODS). 305-7 Nitrogen oxides (NOx), sulphur oxides (SOx) and other significant atmospheric emissions. Pollution management. Pollution management. 557-558 557-558 Not applicable Not applicable GRI 306: Effluents and waste 2016 306-3 Significant spills Circular economy and waste Environment, Water, Construction and Cement GRI 103: Management approach 2016 Annex III: Tables relating to environmental issues. 608-610 Not applicable 103-1 Explanation of the material issue and its coverage FCC’s contribution to the circular economy. 103-2 The management approach and what it consists of FCC’s contribution to the circular economy. 103-3 Assessment of the management approach FCC’s contribution to the circular economy. 542-547 542-547 542-547 Not applicable Not applicable Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 7 of 13 Content and materiality of the issues by business Report section/Direct response Page number Omission 618 GRI 306: Effluents and waste 2016 306-2 Waste by type and disposal method GRI 306: Effluents and waste 2016 306-4 Transport of hazardous wastes Management of water resources Water GRI 103: Management approach 2016 FCC’s contribution to the circular economy. 542-547 Not applicable Annex III: Tables relating to environmental issues 608-610 Not applicable 103-1 Explanation of the material issue and its coverage Water consumption and management within the Group. 103-2 The management approach and what it consists of Water consumption and management within the Group. 103-3 Assessment of the management approach Water consumption and management within the Group. GRI 303: Water and effluents 2018 303-1 Interaction with water as a shared resource Water consumption and management within the Group. 303-2 Management of impacts related to water discharges Water consumption and management within the Group. 303-3 Water abstraction 303-5 Water consumption Consumption of materials Water and Construction GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 301: Materials 301-1 Materials used by weight or volume 301-2 Recycled consumables Annex III: Tables relating to environmental issues Water consumption is obtained from the difference between abstracted water and discharged water, this is 11 million m3. Consumption of raw materials. Consumption of raw materials. Consumption of raw materials. Consumption of raw materials. Annex III: Tables relating to environmental issues. 301-3 Products re-used and their packaging materials Annex III: Tables relating to environmental issues. 548-549 548-549 548-549 548-549 548-549 608-610 – 550 550 550 550 608-610 608-610 Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 8 of 13 Content and materiality of the issues by business Report section/Direct response Energy consumption and energy efficiency Water and Cement GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 302: Energy 2016 302-1 Energy consumption within the organisation 302-2 Energy consumption outside the organisation 302-3 Energy intensity 302-4 Reduction of energy consumption Energy consumption. Energy consumption. Energy consumption. Annex III: Tables relating to environmental issues. Annex III: Tables relating to environmental issues. 717 GJ/collaborator (average workforce). Each of the FCC Group areas undertakes initiatives in favour of saving energy and using it efficiently with different results. For example, the replacement of lamps with more energy efficient models has led to a saving of 587,000 kWh in Cementos Portland Valderrivas and 5,000 kWh in Matinsa. 619 Page number Omission 551-552 551-552 551-552 608-610 608-610 – – Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable 302-5 Reducción de los requerimientos energéticos de productos y servicios Energy consumption. 551-552 Not applicable Climate change Environment, Construction and Cement GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage FCC, facing the challenge of climate change. 103-2 The management approach and what it consists of FCC, facing the challenge of climate change. 103-3 Assessment of the management approach FCC, facing the challenge of climate change. GRI 305: Emissions 2016 305-1 Direct GHG emissions (scope 1) 305-2 Indirect GHG emissions when generating energy (scope 2) 305-3 Other indirect GHG emissions (scope 3) Metrics and objectives. Metrics and objectives. With regard to indirect Scope 3 emissions, as one of its objectives in the Climate Change Strategy, the company is working every year to quantify them in all its businesses, in order to establish specific action plans for their reduction. Despite the fact that some areas calculate these Scope 3 emissions, work is underway to standardise calculation criteria throughout the Group. 553-556 553-556 553-556 555-556 555-556 – Not applicable Not applicable Not applicable Not applicable Not applicable Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 9 of 13 Content and materiality of the issues by business Report section/Direct response 305-4 GHG emissions intensity 305-5 Reduction of GHG emissions Attracting and retaining talent Environment and Construction GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 401: Employment 2016 125 tCO2e GJ/collaborator (Scopes 1 + 2 and average workforce). Distintas iniciativas de reducción de emisiones de GEI han tenido como resultado evitar 21.000 tCO2e en Aqualia y 18.000 tCO2e en el área de Construcción en 2020. Commitment to talent. Salary system. Work organisation. Social relations. Commitment to talent. Salary system. Work organisation. Social relations. Commitment to talent. Salary system. Work organisation. Social relations. 401-1 Employee recruitment and staff turnover Annex II: Tables relating to social and personnel affairs. 401-2 Benefits provided to full-time employees that are not available for temporary or part-time employees Generally speaking, there are no benefits provided for full-time employees that are not available for part-time or temporary employees. 620 Page number Omission – – Not applicable Not applicable Not applicable Not applicable Not applicable 566-569; 573-574; 575; 576 566-569; 573-574; 575; 576 566-569; 573-574; 575; 576 602-607 Not applicable – Not applicable 401-3 Parental leave GRI 402: Employee-company relations 402-1 Minimum notice to be given regarding operational changes Annex II: Tables relating to social and personnel affairs. 602-607 Not applicable The notice to be given for operational changes varies depending on the country and the applicable regulations, as well as the significance of these changes. These usually vary between one week and 30 days. – Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 10 of 13 Content and materiality of the issues by business Report section/Direct response Professional training and development Professional training and development Construction GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 404: Training and teaching 2016 Managing by skills. New ways of learning. Managing by skills. New ways of learning. Managing by skills. New ways of learning. 404-1 Average hours of training per year per employee New ways of learning. 404-2 Programmes for improving employee aptitudes and transition aid programmes Managing by skills. New ways of learning. 404-3 Percentage of employees receiving regular performance and career development assessment The percentage of employees receiving regular performance and career development assessment is not available. Diversity, equality and inclusion Water GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 405: Diversity and equal opportunities 2016 405-1 Diversity in governing bodies and employees Diversity and equality. Diversity and equality. Diversity and equality. Diversity in the Board of Directors. Annex II: Tables relating to social and personnel affairs. 405-2 Ratio for basic salary and remuneration for women vs men Salary system. 621 Page number Omission 566; 568-569 566; 568-569 566; 568-569 568-569 566; 568-569 – Not applicable Not applicable Not applicable Not applicable Not applicable Information not available. 569-573 569-573 569-573 494; 602-607 573-574 Not applicable Not applicable Not applicable Not applicable Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 622 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 11 of 13 Content and materiality of the issues by business Report section/Direct response GRI 406: Non-discrimination 406-1 Cases of discrimination and corrective actions taken Safety, health and well-being Environment, Water, Construction and Cement GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 403: Occupational health and safety 2018 Reports of a labour nature received on the Ethics Channel are processed and investigated in accordance with the Whistleblowing Channel Procedure in the Group’s Compliance Model, and use the Protocol for the prevention and eradication of harassment, and the Code of Ethics and Conduct as a reference. In 2020 no reports were received that concluded in the existence of discrimination. Safety, health and well-being. Safety, health and well-being. Safety, health and well-being. 403-1 Occupational health and safety management system Strategy and Culture. 403-2 Hazard identification, risk assessment and the investigation of incidents Participation and influence. 403-3 Occupational health services Participation and influence. 403-4 Worker participation, consultation and communication on occupational health and safety 403-5 Training of workers on health and safety at work Numerous health and safety committees have been set up in the company in accordance with legal requirements, including joint bodies between the company and workers’ representatives to inform, communicate, treat and follow up the preventive activity arising from the implementation of the management systems. The latter also provide for the existence of similar bodies in those cases where it is not legally required. The management systems define the training to be received in accordance with the different profiles in matters of health and safety, which results in the detection of training needs and requirements annually, which in turn and once approved is reflected in the corresponding training plans. The essential features are as follows: Preventive training for the job position, training courses (to undertake responsibilities defined in the system) and technical training (for prevention technicians and those with basic or intermediate training in the performance of preventive duties). Page number Omission – Not applicable 577-579 577-579 577-579 Not applicable Not applicable Not applicable 577 579 579 – Not applicable Not applicable Not applicable Not applicable – Not applicable 403-6 Promoting the health of workers Healthy Living Project. 579 Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 12 of 13 Content and materiality of the issues by business Report section/Direct response 403-8 Workers covered by a management system for health and safety at work Healthy Living Project. Developments in the main indexes. The most common accident in the FCC Group is related to injuries to the musculoskeletal system. Developments in the main indexes. The vast majority of occupational illness is related to problems with the musculoskeletal system. 623 Page number 579 578 Omission Not applicable Not applicable 578 Not applicable 403-9 Work-related injuries 403-10 Occupational illness and diseases Contribution and social commitment Water GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 204: Procurement practices 2016 FCC and its commitment to society. FCC and its commitment to society. FCC and its commitment to society. 582-589 582-589 582-589 Not applicable Not applicable Not applicable 204-1 Proportion of spending on local suppliers FCC’s commitment to its suppliers. 593-594 Not applicable Promotion of and respect for human rights Water and Construction GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage 103-2 The management approach and what it consists of 103-3 Assessment of the management approach GRI 407: Freedom of association and collective bargaining Due diligence with Human Rights. Due diligence with Human Rights. Due diligence with Human Rights. Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk Compliance and due diligence. GRI 408: Child labour 529 529 529 Not applicable Not applicable Not applicable 527-531 Not applicable 408-1 Operations and suppliers considered to involve significant risk of child labour Compliance and due diligence. 527-531 Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 624 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex V: GRI content table | Page 13 of 13 Content and materiality of the issues by business Report section/Direct response GRI 409: Forced or compulsory labour 409-1 Operations and suppliers considered to involve significant risk of forced or compulsory labour Compliance and due diligence. GRI 411: Rights of indigenous peoples Page number Omission 527-531 Not applicable 411-1 Incidents of violations involving rights of indigenous peoples In 2020, no reports were received regarding violations of the rights of indigenous peoples. – Not applicable GRI 412: Human rights assessment 412-1 Operations subject to human rights reviews or impact assessment Compliance and due diligence. 412-2 Employee training on human rights policies and procedures Compliance and due diligence. 412-3 Significant investment agreements and contracts that include human rights clauses or are subject to human rights assessment Compliance and due diligence. Relationship with local communities Construction GRI 103: Management approach 2016 103-1 Explanation of the material issue and its coverage Fostering dialogue: Main stakeholder reporting channels. 103-2 The management approach and what it consists of Fostering dialogue: Main stakeholder reporting channels. 103-3 Assessment of the management approach Fostering dialogue: Main stakeholder reporting channels. GRI 413: Local communities 413-1 Operations with local community engagement, impact assessments and development programmes. Within the framework of the assessments made on the management systems for each of the businesses, possible impacts on local communities are taken into consideration before work starts on the operations. This analysis includes the participation of local communities in the process. 413-2 Operations with significant actual or potential negative impacts on local communities No operations with significant actual or potential negative impacts on local communities were detected. 527-531 527-531 527-531 Not applicable Not applicable Not applicable 520-522 520-522 520-522 Not applicable Not applicable Not applicable – – Not applicable Not applicable Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 1 of 9 Annex VI: table of indicators law 11/2018 625 Law 11/18 Requirement GENERAL INFORMATION Business model Brief description of the group business model (including business environment, organisation and structure) Geographical presence Organisation's objectives and strategies Reacted GRI standard Page number 102-1 Name of the organisation. 102-2 Activities, brands, products and services. 102-5 Ownership and legal status. 102-7 Size of the organisation. 102-18 Governance structure. 102-22 Members of the senior governing body and its committees. 102-23 President of the senior governing body. 102-45 Entities included in consolidated financial statements 102-3 Location of headquarters. 102-4 Location of operations. 102-6 Markets served. 102-26 Role of the senior governing body in setting objectives, values and strategy 491-498; 599-601; 612 497-498; 612 487-490 499-504 Main factors and trends that may affect future growth and development 103-2 The management approach and what it consists of Company policies A description of the policies applied by the group regarding these issues [environmental and social issues, respect for human rights and the fight against corruption and bribery, those relating to personnel, including measures adopted, where applicable, to promote the principle of equal treatment and opportunities for women and men, non-discrimination and the inclusion of persons with disabilities and universal accessibility] Risk management 103-2 The management approach and what it consists of Refers throughout the document. The main risks relating to these issues [environmental and social issues, respect for human rights and the fight against corruption and bribery, those relating to personnel, including measures adopted, where applicable, to promote the principle of equal treatment and opportunities for women and men, non-discrimination and the inclusion of persons with disabilities and universal accessibility] 102-15 Main impacts, risks and opportunities. 102-29 Identification and management of economic, environmental and social impacts. 102-30 Effectiveness of risk management processes. 102-31 Appraisal of economic, environmental and social issues. 532-536; 613 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 626 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 2 of 9 Law 11/18 Requirement Other Reacted GRI standard Page number Mention in the report of the national, European and international reporting framework used for the selection of key indicators for the non-financial results included in each of the sections 102-54 Declaration of having prepared the report in accordance with GRI Standards. 599 1. ENVIRONMENTAL ISSUES Detailed general information On current and foreseeable effects of the company's activities on the environment and, where applicable, health and safety 103: Management Approach. On environmental assessment and certification procedures On resources dedicated to the prevention of environmental risks 103: Management Approach. 103: Management Approach. On the application of the precautionary principle 102-11 Precautionary principle or approach. On the amount of provisions and guarantees for environmental risks 307-1 Noncompliance with environmental laws and regulations. 539-540 537-538 542 540-541 542 Pollution Measures to prevent, reduce or repair carbon emissions that seriously affect the environment (also includes noise and light pollution) 305-6 Emissions of substances that deplete the ozone layer (ODS). 305-7 Nitrogen oxides (NOX), sulphur oxides (SOX) and other significant air emissions. 303-4 Water discharges. 306-3 Significant spills. 557-558; 608 With regard to noise pollution, the FCC Group received four sanctions in 2020. Circular economy, waste prevention and management Measures for prevention, recycling, re-use, other forms of retrieval and disposal of waste Actions to combat food waste 301-2 Recycled inputs. 306-2 Waste by type and disposal method. 103: Management Approach. 542-547; 609-610 Due to the type of activity undertaken by the FCC Group, this has not been identified as a material issue. Nevertheless, in those Group centres that have a dining room for employees, the external company providing the service takes measures to optimise estimates for requirement and reduce food waste. Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 627 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 3 of 9 Law 11/18 Requirement Sustainable use of resources Water consumption and water supply in accordance with local limitations Reacted GRI standard Page number 303-1 Interaction with water as a shared resource. 303-2 Management of impacts related to water discharges. 303-3 Water abstraction. 303-5 Water consumption. 548-549; 609; 618 Raw material consumption and measures taken to improve the efficiency of its use 301-1 Materials used by weight or volume. Direct and indirect energy consumption Measures taken to improve energy efficiency Use of renewable energy Climate change Important elements of greenhouse gas emissions generated as a result of the company's activities, including the use of the goods and services it produces Measures taken to adapt to the consequences of climate change 302-1 Energy consumption within the organisation. 302-4 Reduction of energy consumption. 302-5 Reduction of energy requirements for products and services. 302-1 Energy consumption within the organisation. 305-1 Direct GHG emissions (scope 1). 305-2 Indirect GHG emissions when generating energy (scope 2). Recommendations from the Task Force on Climate-Related Financial Disclosures (TFCD). 201-2 Financial implications and other risks and opportunities due to climate change. Recommendations from the Task Force on Climate-Related Financial Disclosures (TFCD). 550; 609 551-552; 610 551-552; 519 551-552; 610 555-556 553-554 Reduction goals established voluntarily in the medium and long term to reduce greenhouse gas emissions and the measures adopted for this purpose. 305-5 Reduction of GHG emissions. Recommendations from the Task Force on Climate-Related Financial Disclosures (TFCD). 555-556; 619-620 Protecting biodiversity Measures taken to preserve or restore biodiversity 103: Management Approach. 559-560 Impacts caused by activities or operations in protected areas 304-2: Significant impacts of activities, products and services on biodiversity. 560 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 628 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 4 of 9 Law 11/18 Requirement Reacted GRI standard Page number 2. SOCIAL AND PERSONNEL AFFAIRS Employment Total number and distribution of employees by gender, age, country and professional classification 102-8 Information on employees and other workers. 405-1 Diversity in governing bodies and employees. 563-566; 603-606 Total number and distribution of employment contract modalities Annual average for indefinite, temporary and part-time contracts by gender, age and professional classification Number of dismissals by gender, age and professional classification; 401-1 Employee recruitment and staff turnover. Average remuneration and developments separated by gender, age and professional classification or equal value; 102-35 Remuneration policies. 102-36 Processes to determine remuneration. 103: Management Approach. 566; 603-605 606 Salary gap, remuneration for the same job position or the average within the company 405-2 Ratio for basic salary and remuneration for women vs men 573-574; 606 Average remuneration for directors and managers, including variable income, allowances, compensation, contributions to long-term savings systems and any other income broken down by gender 102-38 Ratio of total annual salary Implementation of work disconnection policies 103: Management Approach. Employees with disabilities Work organisation Organisation of working time Hours lost through absenteeism 405-1 Diversity in governing bodies and employees. 103: Management Approach. 403-2 Types of injury and the frequency rate of accidents, occupational illness, days lost, absenteeism and the number of fatalities relating to accidents at work or occupational illness. Measures aimed at facilitating work-life balance and encouraging the co-responsibility of both parents 401-3 Parental leave. 103: Management Approach. Health and safety Occupational health and safety conditions 403-1 Occupational health and safety management system. 403-2 Hazard identification, risk assessment and the investigation of incidents. Work-related accidents, particularly their frequency and severity by gender 403-9: Work-related injuries. Occupational illness by gender 403-10: Occupational illness and diseases. 573-574 575 572 575-576 578 575-576; 607 577; 579-581 578 578 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 629 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 5 of 9 Law 11/18 Requirement Social relationships Reacted GRI standard Page number Organisation of social dialogue, including procedures for informing and consulting personnel and negotiating with them 402-1 Minimum notice to be given regarding operational changes. 576; 620 Percentage of employees covered by collective agreement by country 102-41 Collective bargaining agreements. Balance of collective agreements, particularly in the field of health and safety at work 403-4 Worker participation, consultation and communication on occupational health and safety. 607 577; 622 Training Policies implemented in the field of training 404-2 Programmes for improving employee aptitudes and transition aid programmes. 566-569 Total number of hours of training by professional category 404-1 Average hours of training per year per employee. Accessibility Universal accessibility for people with disabilities 405-1 Diversity in governing bodies and employees. Equality Measures taken to promote equal treatment and opportunities for women and men Equality plans (Chapter III of Organic Law 3/2007 of 22 March for the effective equality of women and men), measures adopted to promote employment, protocols against gender bullying and prejudice; integration and universal accessibility for people with disabilities 103: Management Approach. 405-1 Diversity in governing bodies and employees. 103: Management Approach. 405-1 Diversity in governing bodies and employees. 568 573 569 570 Policy against all types of discrimination and, where applicable, for diversity management 406-1 Cases of discrimination and corrective actions taken. 571; 621 3. NFORMATION ON RESPECT FOR HUMAN RIGHTS Application of due diligence procedures in human rights matters Prevention of risks of violation of human rights and, where applicable, measures to mitigate, manage and repair possible abuses committed Cases reported involving violation of human rights 102-16 Values, principles, standards and norms of conduct. 02-17 Advisory mechanisms and ethical concerns. 412-2 Training of employees in human rights policies and procedures. 527-529 412-1 Operations subject to human rights reviews or impact assessment. 528-529 102-17 Mechanisms for advising and ethical concerns. 06-1 Cases of discrimination and corrective actions taken. 528-529; 623-624 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 630 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 6 of 9 Law 11/18 Requirement Reacted GRI standard Page number Promotion of and compliance with the provisions of the essential ILO agreements relating to respect for freedom of association and the right to collective bargaining 412-1: Operations subject to human rights reviews or impact assessment. 529 Elimination of discrimination in employment and occupation Elimination of forced or compulsory labour Effective abolition of child labour 4. INFORMATION CONCERNING THE FIGHT AGAINST BRIBERY AND CORRUPTION Measures taken to prevent bribery and corruption Measures to fight money laundering 102-16 Values, principles, standards and norms of conduct. 102-17 Advisory mechanisms and ethical concerns. 205-1 Operations assessed for corruption-related risks. 205-2 Communication and training on anti-corruption policies and procedures. 205-3 Cases of corruption confirmed and measures taken. 102-16 Values, principles, standards and norms of conduct. 102-17 Advisory mechanisms and ethical concerns. Contributions to foundations and non-profit organisations 102-13 Membership of associations. 530-531; 615 531 589 5. INFORMATION ABOUT THE COMPANY The company’s commitments to sustainable development Impact of the company's activity on employment and local development Impact of the company's activity on local populations and on the territory Relationships maintained with those playing a role in local communities and how dialogue is established with them 413-1 Operations with local community participation, impact assessments and development programmes. 413-2 Operations with significant real or potential negative impacts on local communities. 413-1 Operations with local community participation, impact assessments and development programmes. 413-2 Operations with significant real or potential negative impacts on local communities. 587-589; 624 584-585; 624 102-43 Approach to stakeholder participation. 413-1 Operations with local community participation, impact assessments and development programmes. 520-522; 624 Partnership and sponsorship actions 102-12 External initiatives. 590 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report 631 FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 7 of 9 Law 11/18 Requirement Subcontracting and suppliers Reacted GRI standard Page number Inclusion in purchase policy of social, gender equality and environmental issues 103: Management Approach. In relationships with suppliers and subcontractors, taking their social and environmental responsibility into account 103: Management Approach. Supervisory systems, audits and their results 103: Management Approach. 593-594 593-594 The Group has not currently implemented a supervision or auditing system for suppliers and contractors on social, environmental or gender equality issues. This system is expected to be developed in the coming business years. Consumers Measures for the health and safety of consumers Claim systems Complaints received and their resolution Tax information Profits obtained country by country Corporate income tax paid on profit Public grants received 416-1 Assessment of the health and safety impacts of the product and service categories. 103: Management Approach. 103: Management Approach. 103: Management Approach. 103: Management Approach. 201-4 Government financial assistance received. 591 591 592 611 611 611 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 8 of 9 632 FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. 1994/0241/VNOF-2021 ▪▪ 1994/0241/VNOF-2021 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 | FCC Group 2020 Sustainability Report | Annex VI: table of indicators law 11/2018 | Page 9 of 9 633 ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ ▪▪ 1994/0241/VNOF-2021 1994/0241/VNOF-2021 Business linesFinancial StatementsFCC Group Sustainability Report12345A1A2A3Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Annual CorporateGovernance Report FCC_Annual Report_2020 634 A 3 Annual Corporate Governance Report End date business year in question: 2020 CIF (Tax ID): A-28037224 Corporate Name: Fomento de Construcciones y Contratas, S.A. Registered address: C/ Balmes, 36. 08007 Barcelona Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 635 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 1 of 101 A. Ownership structure A.2 List the direct and indirect holders of significant shares as at the reporting date, excluding directors: A.1 Fill in the following table about the Company’s capital stock: Date of most recent change Capital stock (€) Number of shares Number of voting rights 09-07-2020 409,106,618 409,106,618 409,106,618 Remarks Name or corporate name of the shareholder % voting rights attributed to the shares % voting rights through financial instruments Direct Indirect Direct Indirect Gates III, William H. - 5.736 Control Empresarial de Capitales S.A. de C.V. Nueva Samede 2016, S.L.U. Esther Koplowitz Romero de Juseu 61.157 12.993 4.536 - 0.033 4.537 Carlos Slim Helú - 7.000 - - - - - - - - - - Total % of voting rights 5.736 74.150 4.536 4.570 7.000 Indicate whether there are different share classes with different associated rights: Yes No Remarks Class - Number of shares Face value per share Number of voting rights per share Rights and obligations conferred - - - - Remarks Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 2 of 101 List of indirect holdings: Indicate the most significant changes in the shareholding structure during the business year: 636 Most significant changes On 10 June 2020, Esther Koplowitz Romero de Juseu cancelled, on maturity, all of its debt for a total amount of 843.4 million euros, which had 60.54 million FCC shares as its guarantee. Following this agreement, Inversora Carso’s shareholding in FCC is 76.6%, while Esther Koplowitz holds a 4.6% shareholding and retains four seats on the Board of Directors. On 15 December 2020, Control Empresarial de Capitales, S.A. de C.V. acquires Inversora Carso, S.A. de C.V. Finver Inversiones 2020, S.L.U buys 7% from Control Empresarial de Capitales, S.A. de C.V. of FCC. Finver Inversiones 2020, S.L.U. is 100% owned by Inmobiliaria AEG, S.A. de C.V, which in turn is controlled by Carlos Slim Helú. Name or corporate name of the indirect shareholder Name or corporate name of the direct shareholder % voting rights attributed to the shares % voting rights through financial instruments Total % of voting rights Gates III, William H. Gates III, William H. Cascade Investment, LLC. Bill & Melinda Gates Fundation Trust Control Empresarial de Capitales, S.A. de C.V. Dominum Dirección y Gestión, S.A. Esther Koplowitz Romero de Juseu Nueva Samede 2016, S.L.U. Carlos Slim Helú Finver Inversiones 2020, S.L.U 3.986 1.750 8.456 4.536 7.000 - - - - - 3.986 1.750 8.456 4.536 7.000 Remarks Regarding the position of CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. (CEC): Regarding the holdings through intermediaries (i) 18,558,896 shares in Fomento de Construc- ciones y Contratas S.A. (“FCC”) owned by Nuevas Samede 2016 S.L.U. representing 4.536% of FCC’s capital stock, this is hereby is stated for the exclusive purposes of art. 24.2.B of RD 1362/2007. In spite of this, CEC does not hold any right to vote on this 4.536%. Therefore, CEC holds directly and indirectly, only 69.61% of FCC’s voting rights. Concerning the position of ESTHER KOPLOWITZ ROMERO DE JUSEU: Esther Koplowitz Romero de Juseu directly controls 0.033% of FCC and 4.537% indirectly through Nueva Samede 2016, S.L.U., Dominum Desga, S.A. and Ejecución y Organización de Recursos, S.L. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 637 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 3 of 101 A.3 Fill in the following tables on the members of the Company’s Board of Directors, who have voting rights through their shares in the Company: Remarks Name or corporate name of the director % voting rights attributed to the shares % voting rights through financial instruments Direct Indirect Direct Indirect Aboumrad González, Alejandro 0.074 Colio Abril, Pablo 0.007 Dominum Desga, S.A. 0.000 Dominum Dirección y Gestión, S.A. EAC Inversiones Corporativas, S.L. 8.456 0.000 - - - - - Gil Madrigal, Manuel 0.000 0.008 Inmobiliaria AEG, S.A. de C.V. Kuri Kaufman, Gerardo Proglio, Henri Rodriguez Torres, Juan Samede Inversiones 2010, S.L.U. Vazquez Lapuerta, Álvaro Gómez García, Antonio 0.000 0.067 0.001 0.077 0.000 0.001 0.005 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - % voting rights that can be transferred through financial instruments Direct Indirect - - - - - - - - - - - - - - - - - - - - - - - - - - Total % of voting rights 0.074 0.007 0.000 8.456 0.000 0.008 0.000 0.067 0.001 0.077 0.000 0.001 0.005 Total % of voting rights held by the Board of Directors 8.696 List of indirect holdings: Name or corporate name of the director Gil Madrigal, Manuel Name or corporate name of the direct shareholder Tasmania Inmuebles, S.L. % voting rights attributed to the shares % voting rights through financial instruments Total % of voting rights % voting rights that can be transferred through financial instruments 0.008 - 0.008 - Remarks A.4 Indicate, as applicable, the family, commercial, contractual or corporate relations between the holders of significant shares, insofar as that they are known by the company, unless they are immaterial or are part of ordinary commercial traffic, with the exception of those reported in section A.6: Related name or company name Type of relationship Brief description - - - Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 4 of 101 A.5 Indicate, as the case may be, the commercial, contractual or corporate relations be- tween the holders of significant shares, and the company and/or its group, unless they are immaterial or are part of ordinary commercial traffic: Related name or company name FCC Construcción y Carso Infraestructura y Construcción S.A.B. de C.V. Type of relationship Brief description Corporate Collaboration agreement to jointly undertake projects in the Americas, excluding the United Mexican States, through the constitution of a special purpose vehicle (SPV): “FCC Américas”. A.6 Describe the relationships, unless they are immaterial to the two parties, between significant shareholders or parties represented on the Board and directors, or their representatives, in the case of corporate directors. Explain, as applicable, how significant shareholders are represented. Specifically, indicate the directors appointed on behalf of significant shareholders whose appointment was promoted by significant shareholders, or who were linked to significant shareholders and/ or entities in their group, specifying the nature of these relationships. In particular, include the existence, identity and position of Board members, or representatives of directors, of the listed company, who are, in turn, members of the governing body, or their represent- atives, in companies that hold significant holdings in the listed company or in entities of the group of these significant shareholders. 638 Name or company name of the director or representative Name or corporate name of the related significant shareholder Corporate name of the company of the significant shareholder group Alejandro Aboumrad González Control Empresarial de Capitales, S.A. de C.V. Several subsidiaries of the shareholder Antonio Gómez García Control Empresarial de Capitales, S.A. de C.V. Grupo Carso SAB de C.V. Relationship description/ position Administrator Alternate Director and General Manager. Grupo Frisco SAB de CV Director Grupo Elementia SAB de CV Gerardo Kuri Control Empresarial de Capitales, S.A. de C.V. Several subsidiaries of the shareholder Juan Rodríguez Torres Control Empresarial de Capitales, S.A. de C.V. Minera Frisco Telesites Carso Infraestructura y Construcción S.A.B. de C.V. (CICSA) Alfonso Salem Slim Control Empresarial de Capitales, S.A. de C.V. Several subsidiaries of the shareholder Director Director Director Non-executive chairman Director Managing director and/ or director of various subsidiary companies of the aforementioned company. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 639 A.7 Indicate whether the Company has been informed of shareholders’ agreements that affect it as established in Articles 530 and 531 of the Spanish Corporate En- terprises Act. If applicable, briefly describe them and list the shareholders affected by the agreement: Yes No Participants of the shareholders' agreement % of capital stock affected Brief description of the agreement Esther Koplowitz Romero de Juseu and Control Empresarial de Capitales, S.A. de C.V. Control Empresarial de Capitales, S.A. de C.V., Nueva Samede 2016, S.L.U., Inversora Carso S.A. de C.V. and Esther Koplowitz Romero de Juseu 50.16 72.36 Relevant fact of 27/11/2014 (see note) Relevant fact of 05/02/2016 (see note) End date of the agreement, if applicable Open-ended Open-ended FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 5 of 101 Name or company name of the director or representative Name or corporate name of the related significant shareholder Corporate name of the company of the significant shareholder group Relationship description/ position Pablo Colio Abril Control Empresarial de Capitales, S.A. de C.V. Carso Infraestructura y Construcción S.A.B. de C.V. (CICSA) Cafig Constructores, S.A. de C.V. Constructora Terminal Valle de México, S.A. de C.V. Servicios Terminal Valle de México, S.A. de C.V. Servicios CTVM, S.A. de C.V. Finver Inversiones 2020, S.L. Soinmob Inmobiliaria Española Dominium Dirección y Gestión, S.A. Director Director Director Director Director Director Director Director Inmobiliaria AEG, S.A. de CV Control Empresarial de Capitales, S.A. de C.V. Samede Inversiones 2010, S.L., Nueva Samede 2016, S.L.U. EAC Inversiones Corporativas, S.L. Nueva Samede 2016, S.L.U. Dominum Dirección y Gestión, S.A. Nueva Samede 2016, S.L.U. Dominum Desga, S.A. Nueva Samede 2016, S.L.U. - - - - - Remarks - - - - - Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 6 of 101 640 Remarks Remarks Relevant Fact of 27/11/2014: FCC’s controlling shareholder reported that negotiations with Con- trol Empresarial de Capitales S.A. de C.V., a company owned by Inmobiliaria Carso S.A. de C.V., which in turn is controlled by the Slim family, have been successfully completed. Relevant Fact of 05/02/2016: For the purposes of continuing with the recapitalisation process of Fomento de Construcciones y Contratas, S.A. (“FCC” or the “Company”) through a new capital increase of €709,518,762 announced by the Company on 17 December 2015 (the “New Capital Increase”), the Company has been informed that, Esther Koplowitz Romero de Juseu (“EK”) (and the companies related to her, Dominum Direccion y Gestión, S.A. (“Dominum”) and Nueva Sa- mede 2016, S.L.U. (“Nueva Samede”)) have entered into a non-extinguishing modifying novation contract with Inversora Carso S.A. de C.V. (“I. Carso”) and its subsidiary Control Empresarial de Capitales, S.A. de C.V. (“CEC”) of the Investment Agreement signed on 27 November 2014 (the “Novation of the Investment Agreement”). The Investment Agreement was included in the relevant fact published on 27 November 2014 and subsequently deposited in the Companies Register of Barcelona. The main aspects of the Novation of the Investment Agreement are to establish the terms and conditions for: (a) the incorporation of Nueva Samede into the Novation as a future shareholder of FCC following the New Capital Increase, (b) the continuation of the FCC recapitalisation process through the New Capital Increase regulating the subscription commitment of both I. Carso as Nueva Samede and (c) the modification of certain provisions regarding Corporate Governance, the share transfer system as well as the removal of the provision regarding the maximum participation of the parties in the Company’s capital shares. Indicate whether the Company is aware of the existence of coordinated actions between its shareholders. If applicable, describe them briefly: If there has been any change or termination of these agreements or coordinated actions during the year, expressly indicate: A.8 Indicate whether there is any natural or legal person who exercises or may exercise control over the Company pursuant to Article 5 of the Securities Market Law. If applicable, identify this person: Yes No Name or corporate name Control Empresarial de Capitales, S.A. de C.V. Remarks Yes No A.9 Fill in the following tables about the company’s treasury shares: Participants of coordinated action % of capital stock affected Brief description of the coordinated action End date of the coordinated action, if applicable - - - - At year-end: Number of direct shares Number of indirect shares (*) Total % of capital stock 1,544,773 - Remarks 0.378 (*) Through: Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 641 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 7 of 101 Name or company name of the direct holder of the shareholding - Total: Number of direct shares - Remarks Explain any significant changes during the year: Explain the significant changes A.10 Describe the conditions and term of the current mandate of the Shareholders’ Meeting to the Board of Directors to issue, repurchase or transfer own shares. Ordinary General Meeting Resolution of 28 June 2018 (item seven on the agenda): Fomento de Construcciones y Contratas, S.A. was authorised, as were the Group companies meet- ing any of the circumstances set out under Article 42.1 of the Code of Commerce, to proceed with the derivative acquisition of own shares, through purchase and sale transactions swaps or any others allowed by law, at the price resulting from their stock market price on the day of acquisition, falling between the maximum and minimum values listed below: The maximum value shall be calculated by increasing the maximum price for the three months prior to the moment at which the acquisition takes place by 20 percent. The minimum value shall be calculated by deducting 20 percent from the minimum price for the three months prior to the moment at which the acquisition takes place. In light of this authorisation, the Board, the Executive Committee and the Chief Executive Officer may, interchangeably, acquire their own shares, under the terms provided for in Article 146 of the Spanish Corporate Enterprises Act. The Board of Directors, the Executive Committee and the Chief Executive Officer may also, inter- changeably, allocate all or part of their own shares acquired as part of the execution of remuneration schemes that seek or involve the delivery of shares or option rights over shares, pursuant to the provisions of Article 146.1 of the Spanish Corporate Enterprises Act. This authorisation is granted for the maximum period legally permitted, pursuant to the limit of the capital stock applicable according to the regulations in force at the time of acquisition. The acquisition of shares, which shall be fully paid up, must allow FCC Group companies, who, as applicable, have acquired them, to set aside provisions for the restricted reserve set out in Article 148.c) of the Spanish Corporate Enterprises Act. This authorisation voids the authorisation approved by the Board on 23 May 2013. A.11 Estimated floating capital. Estimated floating capital % 12.74 Remarks A.12 Indicate whether there are any restrictions (statutory, legislative or of any kind) on the transferability of securities and/or any restrictions on the right to vote. Specifically state whether there are any type of restrictions that may make it difficult to as- sume control of the Company through the acquisition of its shares on the market, as well as those prior authorisation or communication systems that, concerning the acquisition or transfer of the Company’s financial instruments, are applicable on account of sector regulations. Yes No Description of the restrictions - Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 8 of 101 A.13 Indicate whether the General Meeting has agreed to adopt neutralisation measures against a takeover bid under the provisions of Law 6/2007. Yes No If applicable, explain the approved measures and the terms in which the restrictions will be deemed ineffective: Explain the measures approved and the terms under which ineffectiveness will occur A.14 Indicate whether the company has issued securities that are not traded on a regu- lated market in the European Union. Yes No If applicable, indicate the different classes of shares and, for each class of shares, the corresponding rights and obligations. Indicate the different classes of shares - Note: On 8 July 2020, FCC Servicios Medio Ambiente Holding, S.A.U., a company 100% owned by FCC, issued a Euro-Commercial Paper Programme (ECP) promissory note programme for a maximum amount of 300 million euros with the following characteristics: 1. Issuer: FCC Servicios Medio Ambiente Holding, S.A.U. 2. Maximum value of the programme: €300 million. 3. Stock Market: Main Securities Market of the Irish Stock Exchange (Euronext Dublin). 4. Programme Dealers: Banca March, Bred Banque Populaire, Société Générale and Crédit Agricole. 642 On 27 November 2019, it was reported as a relevant fact that FCC Servicios Medio Ambiente Holding, S.A.U., a company fully owned by FCC, approved the issuance of two simple bond (the “Bonds”) as part of an agreement taken by the Board of Directors on 13 November 2019. The Com- pany successfully completed the pricing of the two Bond issues, amounting to €600 million paying annual interest of 0.815% and maturing in 2023; and the amount of €500 million, paying annual interest of 1.661% and maturing in 2026, respectively. On 21 March 2019, FCC approved the extension of the Euro-Commercial Paper Programme (ECP) promissory note programme amount limit from 300 million euros to a maximum amount of 600 mil- lion euros, with the following characteristics: 1. Issuer: Fomento de Construcciones y Contratas, S.A. 2. Maximum value of the programme: €300 million. €600 million. 3. Stock Market: Main Securities Market of the Irish Stock Exchange (Euronext Dublin). 4. Programme Dealers: Bankia, S.A. and Banco Sabadell, S.A., Santander and Banca March. On 16 November 2018, FCC reported the registration of a Euro-Commercial Paper Program (ECP) for a maximum amount of €300 million with the following characteristics as relevant fact number 271621: 1. Issuer: Fomento de Construcciones y Contratas, S.A. 2. Maximum value of the program: €300 million. 3. Stock Market: Main Securities Market of the Irish Stock Exchange (Euronext Dublin). 4. Program Dealers: Bankia, S.A. and Banco Sabadell, S.A. On 1 June 2017, it was reported as relevant fact and as a continuation to relevant facts Nos. 249540 and 252375, the pricing of two single bond issues by FCC Aqualia, S.A. (subsidiary of Fomento de Construcciones y Contratas, S.A.), for the sum of €700,000,000 paying annual interest of 1.413% and maturing in 2022 and for the sum of €650,000,000, paying annual interest of 2.629% and ma- turing in 2027, respectively. Both issues were secured against specific assets of the FCC Aqualia Group. Upon approval and registration of the corresponding prospectus, the Bonds were accepted to trading on the unregulated market (Global Exchange Market) of the Irish Stock Exchange. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 9 of 101 B. General shareholders’ meeting B.1 Indicate and, where appropriate, describe, whether there are differences with the system of minimum quorums provided for in the Spanish Corporate Enterprises Act (LSC) with respect to the quorum of the General Meeting of Shareholders. Yes No % quorum other than the figure established in Art. 193 Spanish Corporate Enterprises Act for general situations % quorum other than the figure established in Art. 194 Spanish Corporate Enterprises Act for the special cases set out in Art. 194 of the Spanish Corporate Enterprises Act Quorum required at 1st call Quorum required at 2nd call 50.00% 45.00% 50.00% 45.00% 643 Description of the differences Consolidated Text of the Corporate Bylaws. Resulting text approved by the Ordinary Gen- eral Meeting of 2 June 2020 and registered in the Barcelona Mercantile Registry in July 2020. Art. 17. - Constitution of the Meeting 1. The Ordinary or Extraordinary General Shareholders’ Meeting shall be validly constituted, at the first call, when the shareholders present or represented account for at least fifty percent (50%) of the subscribed capital with the right to vote; and at the second call, the constitution of the Meeting shall be valid when the shareholders present or represented account for at least forty-five percent (45%) of the subscribed capital with the right to vote. Exceptions to the fore- going are those cases in which, in accordance with the items included on the Agenda, it is not legally possible to require a higher percentage of capital for the General Meeting to be validly constituted than what is established by the applicable regulations. 2. Likewise, the percentages mentioned in the previous paragraph shall also be those applicable so that the Ordinary and Extraordinary General Meeting can validly resolve on the issue of bonds which, in accordance with the regulations applicable at any given time, are within the powers of the General Meeting, the increase or reduction of capital, the transformation, merger or spin-off of the Company, the general assignment of assets and liabilities, the suppression or removal of the right of first refusal on new shares, the transfer of address abroad and, in general, any modification of the Articles of Association. 3. If, to validly adopt an agreement with respect to any, or several, items on the agenda of the Gen- eral Shareholders’ Meeting, pursuant to the applicable legal or statutory regulations, a certain percentage of the capital stock must be in attendance and this percentage is not reached, or the consent of the specific shareholders affected is required and they are not present or repre- sented, the General Shareholders’ Meeting shall be limited to discussing and deciding on items on the agenda that do not require the attendance of this percentage of the capital stock or the aforementioned shareholders. B.2 Indicate and, where appropriate, describe whether there are differences with the system provided for in the Spanish Corporate Enterprises Act (LSC) for the adoption of corporate resolutions: Yes No Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 10 of 101 Describe the differences from the system provided for in the LSC. 644 In particular, the issuance of shares or bonds or securities convertible into shares with the exclusion of the first right of refusal in favour of the shareholders of the Company shall be approved when more than fifty percent (50%) of the subscribed capital stock present or represented with voting rights vote in favour”. Super majority other than the figure established in Article 201.2 LSC for the hypotheses provided for in 194.1 LSC Other cases of super majority Therefore, the Company’s internal rules do not contain any provisions relating to the modification of the Bylaws, other than those provided for by Law. % established by the entity for the adoption of resolutions 50.01% 0.00% Describe the differences Consolidated Text of the Corporate Bylaws approved at the Ordinary General Meeting on 2 June 2020 and registered with the Mercantile Registry of Barcelona in June 2020. Art. 26. - Deliberations. Adoption of resolutions. Proceedings 3 […] In particular, the issuance of shares or bonds or securities convertible into shares with the exclusion of the first right of refusal in favour of the shareholders of the Company shall be approved when more than fifty percent (50%) of the subscribed capital stock present or represented with voting rights vote in favour. Note: 50.01% is calculated against the subscribed capital stock with voting rights. B.3 Indicate the rules applicable to the modification of the Company’s Bylaws. In par- ticular, indicate the majorities required to modify the Bylaws, as well as, where ap- plicable, the rules in place to protect the rights of shareholders in the modification of the Bylaws. Pursuant to article 26, section 3, of the Consolidated Text of the Corporate Bylaws approved at the General Shareholders’ Meeting of 2 June 2020 and registered in the Barcelona Mercantile Registry in June 2020, the following is established: “Art. 26. - Deliberations. Adoption of resolutions. Proceedings […] 3. Resolutions shall be adopted by a simple majority of the votes of the shareholders present or rep- resented at the Meeting. A resolution shall be deemed adopted when it obtains more votes in favour than against the capital present or represented, except in cases where the Act or these Articles of Association require a qualified majority. B.4 Indicate the attendance details at the general meetings held in the year to which this report refers and those in the preceding years: Date of the general meeting 2-06-2020 Of which, Floating capital: % attendance in person 0.205% 0.096% % by proxy 61.760% 9.732% 8-05-2019 20.082% 70.735% Of which, Floating capital: 0.115% 9.223% 28-06-2018 20.119% 69.418% Of which, Floating capital: 0.062% 8.307% 28-06-2017 20.261% 68.631% Of which, Floating capital: 0.238% 7.520% Attendance details % remote voting Electronic voting 0.005% 0.005% 0.004% 0.004% 0.001% 0.001% 0.004% 0.004% Other Total 28.170% 90.140% 0.007% 9.840% 0.005% 0.005% 0.003% 0.003% 0.030% 0.030% 90.826% 9.347% 89.541% 8.373% 88.926% 7.792% Remarks Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 645 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 11 of 101 B.5 Indicate whether there have been any items on the agenda at general meetings held during the business year that, for any reason, have not been approved by shareholders. Explanation of the resolutions that must be submitted to the General Shareholders’ Meeting, other than those established by Law Decisions not provided for by Law, and which, according to the Corporate Bylaws, must be taken by the General Meeting, are as follows: Yes No Article 14 of the Bylaws, sections e), f), l) and o): Items on the agenda that have not been approved % vote against (*) (*) If the non-approval of the item can be traced to a cause other than a vote against, an explanation shall be provided in the text section and in the “% vote against” column, “N/A” shall be inserted. “e) The issuance or creation of new classes or series of shares.” “f) The issuance of bonds and other securities that, pursuant to the applicable regulations at any time, are the responsibility of the General Shareholders’ Meeting and the delegation to the Board of Directors of the power to issue them.” “l) Transactions whose effect is equivalent to the winding up of the Company.” “o) The authorisation to acquire own shares within the legal limits.” B.6 Indicate whether there are any statutory restrictions that establish a minimum number of shares necessary to attend the General Shareholders’ Meeting, or to vote remotely: B.8 Indicate the address and manner of accessing the company’s website for infor- mation on Corporate Governance and other information on general shareholders’ meetings that must be made available to shareholders on the Company’s website. Yes No Number of shares required to attend the General Shareholders' Meeting Number of shares required to vote remotely Remarks B.7 Indicate whether it has been established that certain resolutions, other than those established by law, involving an acquisition, disposal, contribution of essential as- sets to another company or other similar corporate transactions, must be submit- ted for approval by the General Shareholders’ Meeting. Yes No The FCC website (www.fcc.es) has a section dedicated to Corporate Governance, accessible from the home page, through the “Shareholders and investors” and “Responsibility and Sustainability” sections. This website contains information regarding the Company’s regulations on Corporate Gov- ernance, governing bodies, annual Corporate Governance and remuneration reports, shareholders’ meetings, shareholder agreements, and Ethics and Integrity. Furthermore, using these tabs, under the heading “General Shareholders’ Meeting”, shareholders can access information on electronic voting and the electronic forum of shareholders, pursuant to the provisions of Article 539.2 of the consolidated text of the Spanish Corporate Enterprises Act. The website is just two clicks from the home page. Its contents are structured and hierarchised, under quick access headings and all its pages can be printed out. The pages of this website have been developed pursuant to Level AA of UNE Standard 139803:2012, which, in turn, is based on the W3C 2.0 Web Content Accessibility Guidelines. All Priority 1 and Priority 2 requirements have been checked by expert accessibility analysts using manual accessibility analyses, complemented by different semi-automatic tools, user agents and technical aids. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 12 of 101 C. Structure of the company’s administration Name or corporate 646 C.1 Board of Directors C.1.1 Maximum and minimum number of directors provided for the Bylaws and the num- ber defined by the General Shareholders’ Meeting: Maximum number of directors Minimum number of directors Number of directors defined by the Shareholders' Meeting 15 9 14 Remarks C.1.2 Fill in the following table with Board members: Name or corporate name of the Represent- Director Position on First appoint- Last appoint- Election director ative category the Board ment date ment date procedure Date of birth Proprietary Chairwoman 27-09-2000 02-06-2020 General 10/11/1970 Sharehold- ers’ Meeting Resolution Proprietary Deputy 13-04-2015 08-05-2019 General 10/08/1950 Sharehold- ers’ Meeting Resolution Dominum Desga, S.A Esther Alcocer Koplowitz Samede Inversiones 2010, S.L.U. Esther Koplowitz Romero de Juseu Pablo Colio Abril Chairwoman Executive Chief Executive Officer name of the Represent- Director Position on First appoint- Last appoint- Election director ative category the Board ment date ment date procedure Date of birth Alejandro Aboumrad González Proprietary Vice chairman 13-01-2015 08-05-2019 General 26/02/1980 Sharehold- ers’ Meeting Resolution Dominum Dirección y Gestión, S.A. Carmen Alcocer Koplowitz EAC inversiones corporativas Alicia Alcocer Koplowitz Manuel Gil Madrigal Antonio Gómez García Inmobiliaria AEG, S.A. de CV Carlos Slim Helú Gerardo Kuri Kaufmann Proprietary Director 26-10-2004 08-05-2019 General 01/01/1974 Sharehold- ers’ Meeting Resolution Proprietary Director 30-03-1999 28-06-2017 General 10/10/1971 Sharehold- ers’ Meeting Resolution Independent Director 27-02-2015 08-05-2019 General 1/05/1960 Sharehold- ers’ Meeting Resolution Proprietary Director 29-06-2016 02-06-2020 General 21/02/1961 Sharehold- ers’ Meeting Resolution Proprietary Director 13-01-2015 08-05-2019 General 28/01/1940 Sharehold- ers’ Meeting Resolution Executive Director 13-01-2015 08-05-2019 General 17/12/1983 Sharehold- ers’ Meeting Resolution Henri Proglio Independent Director 27-02-2015 08-05-2019 General 29/06/1949 Sharehold- ers’ Meeting Resolution 12-09-2017 28-06-2018 General 8/06/1968 Sharehold- ers’ Meeting Resolution Juan Rodríguez Torres Proprietary Director 7-10-2015 02-06-2020 General 5/08/1939 Sharehold- ers’ Meeting Resolution Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 13 of 101 Name or corporate C.1.3 Fill in the following tables on the Board members and their different categories: name of the Represent- Director Position on First appoint- Last appoint- Election director ative category the Board ment date ment date procedure Date of birth EXECUTIVE DIRECTORS 647 Alfonso Salem Slim Álvaro Vázquez de Lapuerta Proprietary Director 29-06-2016 02-06-2020 Acuerdo 3/11/1961 Junta General Accionistas Independent Director 27-02-2015 08-05-2019 Acuerdo 30/04/1957 Name or corporate name of the director Pablo Colio Abril Junta General Accionistas Total number of directors 14 Indicate any departures, either by resignation or through an agreement reached by the general meeting, that have occurred on the Board of Directors during the reporting pe- riod: Name or corporate name of the director Category of the director at the time of departure Date of most recent appointment Departure date Special commissions of which he/ she was a member Indicate whether the departure occurred before the end of the term - - - - - - Cause of departure, if before the end of the term of office and other remarks; information on whether the director has sent a letter to the other members of the board and, regarding depar- tures of non-executive directors, an explanation or the opinion of the director who has been dismissed by the general meeting Position in the company's organisational chart CEO of FCC, Chairman of FCC Construcción, Chairman of FCC Medio Ambiente, Deputy Chairman of FCC Servicios Medioambientales Holding, S.A.U and Deputy Chairman of FCC Medio Ambiente Reino Unido S.L.U. Profile Architect, graduating from the Higher Techni- cal School of Madrid. He has spent most of his professional career at FCC, a company to which he has dedicated more than 25 years. Within the Group, he has been responsible for the international expansion of the Industrial area. Positions he has previously held include Managing Director of FCC Construcción and Managing Director of FCC Industrial. He is the CEO of the FCC Group and a mem- ber of its Executive Committee, functions that he combines with those of the Chairman of FCC Construcción, Chairman of FCC Medio Ambiente and Deputy Chairman of FCC Servi- cios Medioambiental Holding, S.A. He is also a director of the Mexican firm Carso Infrae- structuras y Construcción (CICSA). Industrial Engineer graduate from the Univer- sity of Anáhuac (Mexico). From 2008 to 2010, he served as purchasing director at Carso In- fraestructuras y Construcción, S.A.B. de C.V. From the incorporation of Inmuebles Carso, S.A.B de C.V., he has been in charge of its General Management. He is a member of the board of directors of Minera Frisco SAB. de C.V., Elementia, S.A., Philip Morris Méxi- co, S.A. de C.V. and Inmuebles Carso, S.A.B de C.V. He is the CEO of Cementos Portland Valderrivas, S.A. and Realia Business, S.A. Gerardo Kuri Kaufmann CEO of Cementos Portland Valderrivas and Realia Business Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 14 of 101 Total number of executive directors % of the total Board 2 14.29 Remarks EXTERNAL PROPRIETARY DIRECTORS Name or corporate name of the director Dominum Desga, S.A. (Represented by Esther Alcocer Koplowitz) Name or corporate name of the significant shareholder that he/ she represents or that has proposed his/her appointment Profile Dominum Dirección y Gestión, S.A. Degree in Law, she has completed the Senior Business Management Program (PADE) at the IESE in Madrid. Since January 2013, she has served as Chairwoman of the FCC Group, a member of its Executive Committee and the Appointments and Remuneration Committee. She is also a director at Cementos Portland Valderrivas, on behalf of EAC Medio Ambiente, S.L., Realia, on behalf of EAC Inversiones Corporativos, S.L., and CaixaBank-Ban- ca Privada. The representatives of Dominum Desga, S.A., Samede Inversiones 2010, S.L.U., Dominum Direction and Man- agement, S.A. and EAC Inversiones Corporativas, S.L. maintain a parent-subsidiary relationship. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). 648 Name or corporate name of the significant shareholder that he/ she represents or that has proposed his/her appointment Dominum Dirección y Gestión, S.A. Name or corporate name of the director Samede Inversiones 2010, S.L.U (Represented by Esther Koplowitz Romero de Juseu) Profile Shareholder in FCC, S.A. through Dominum Dirección y Gestión, S.A. she is a member of the Board of Directors of FCC, S.A., and the company’s Deputy Chairwoman. She is also a director at FCC Environment. She holds a degree in Philosophy and Arts from the Uni- versity of Madrid; she has developed her business expe- rience in the international field as a Director of Veolia and Vivendi. She is founder and chairwoman of the Esther Koplowitz Foundation. Among other acknowledgements, she has been awarded: the Grand Cross of Civil Merit, the Gold Medal of the Region of Madrid, the Gold Medal and the title of Academic of Honour of the Royal Academy of His- tory, the distinction of Honorary Citizen by the Valencia City Council, the City of Barcelona Coat of Arms, the Business Leader of the Year award, granted by the Spanish Cham- ber of Commerce in the USA, the Blanquerna Prize of the Generalitat of Catalonia, Madrid Grand Cross of Health- care, the Gold and Diamond Insignia of the Police Orphans Foundation, Légion d’Honneur of the French Republic and The Grand Cross of the Civil Order of Environmental Merit, awarded by the Spanish Council of Ministers. The representatives of Dominum Desga, S.A., Samede Inversiones 2010, S.L.U., Dominum Direction and Man- agement, S.A. and EAC Inversiones Corporativas, S.L. maintain a parent-subsidiary relationship. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 15 of 101 649 Name or corporate name of the significant shareholder that he/ she represents or that has proposed his/her appointment Control Empresarial de Capitales, S.A. de C.V. Name or corporate name of the director Alejandro Aboumrad González Profile Industrial Engineer graduate from the University of Anáhu- ac (Mexico). He has worked in subsidiaries and compa- nies related to Grupo Carso during the last 15 years, of which five years he worked at Grupo Financiero Inbursa in the area of Project Evaluation and Risk Assessment. He is member of the board of directors of Inmuebles Carso, S.A.B. of C.V. and Minera Frisco, S.A.B. of C.V., holding the post of General Manager with the latter. He is a director at Cementos Portland Valderrivas, S.A. on behalf of Inmo- biliaria AEG, S.A. de C.V., and Chairman of the Board of Directors of FCC Aqualia, Chairman of FCC Servicios Me- dioambiental Holding, S.A.U and Deputy Chairman of the Board of FCC and Chairman of its Executive Committee. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). Dominum Dirección y Gestión, S.A. (Represented by Carmen Alcocer Koplowitz) Dominum Dirección y Gestión, S.A. Graduate in Law from the Francisco de Vitoria University of Madrid. She is a director at FCC, S.A. She is a director at B-1998, S.L. and sits on the Board of Directors of Cementos Portland Valderrivas, S.A., on be- half of Meliloto, S.L. She is a board member of the Esther Koplowitz Foundation. The representatives of Dominum Desga, S.A., Samede Inversiones 2010, S.L.U., Dominum Direction and Man- agement, S.A. and EAC Inversiones Corporativas, S.L. maintain a parent-subsidiary relationship. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). Name or corporate name of the significant shareholder that he/ she represents or that has proposed his/her appointment Dominum Dirección y Gestión, S.A. Name or corporate name of the director EAC Inversiones Corporativas, S.L. (Represented by Alicia Alcocer Koplowitz) Antonio Gómez García Control Empresarial de Capitales, S.A. de C.V. Profile A Law graduate, she started her professional career at Banco Zaragozano, where she worked for four years in the Finance Department, at the bank’s treasury desk and served as a director. She is a director at FCC and a member of its Executive Committee. In turn, she is chairwoman of Cementos Portland Valderrivas, S.A. and a member of its Executive Committee and its Appointments and Remuneration Com- mittee. She is a member of the Innovation Committee, under the Secretary of State for Science, Technology, and Innova- tion. She is also a member of the Board of the Esther Koplowitz Foundation and the Valderrivas Foundation. The representatives of Dominum Desga, S.A., Samede Inversiones 2010, S.L.U., Dominum Direction and Man- agement, S.A. and EAC Inversiones Corporativas, S.L. maintain a parent-subsidiary relationship. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). He is a graduate in Industrial Engineering from the Univer- sidad Iberoamericana. He has been Managing Director of Grupo Porcelanite, S.A. de C.V., of US Commercial Corp., S.A.B. de C.V., and currently holds the position of Manag- ing Director of Grupo Carso, S.A.B. de C.V. He is a director of Grupo Frisco S.A.B. de C.V., and a director of Grupo Elementia S.A.B. de C.V. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 16 of 101 Name or corporate name of the significant shareholder that he/ she represents or that has proposed his/her appointment Control Empresarial de Capitales, S.A. de C.V. Name or corporate name of the director Inmobiliaria AEG, S.A. de CV (Represented by Carlos Slim Helú) Profile Civil Engineer from the National Autonomous University of Mexico (UNAM). Founder of Grupo Carso, S.A.B. de C.V., América Móvil, Grupo Financiero Inbursa, and Inversora bursátil. He is the owner of Teléfonos de México (Telmex). He has been Vice-President of the Mexican Stock Ex- change and President of the Mexican Association of Bro- kerage Houses. He was the first Chairman of the Latin American Commit- tee of the New York Stock Exchange Board of Directors. He is currently Chairman of the Board of Directors of Car- so Infraestructuras y Construcción (CICSA), Minera Frisco and President of Fundación Carlos Slim de la Educación, A.C. and Fundación Telmex, A.C. In addition, he is a mem- ber of the Board of Directors of Inmuebles Carso and IDE- AL. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). Name or corporate name of the significant shareholder that he/ she represents or that has proposed his/her appointment Control Empresarial de Capitales, S.A. de C.V. Name or corporate name of the director Juan Rodríguez Torres Alfonso Salem Slim Control Empresarial de Capitales, S.A. de C.V. 650 Profile Civil Engineer from the Autonomous University of Mexi- co. He has a full Master’s degree in Operational Planning and Research from UNAM. He has also completed ad- ministration studies at IPADE and obtained a diploma in prestressed concrete in Paris. He founded the Mexican Business Generation Association. He has been Produc- tion Manager and Controller of Preesforzados Mexicanos, S.A. de ICA, and Managing Director of Domit Group in the footwear sector. He is currently a director of Minera Frisco, S.A.B. de S.A. de CV. and of Carso Infraestructura y Construcción, S.A.B. de C.V. (CICSA) and non-executive chairman of Telesites. He is a director of Cementos Portland Valderrivas, S.A., representing Inmuebles Inseo, S.A. de C.V., a director of FCC Aqualia and non-executive chairman of Realia. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). He graduated in Civil Engineering from University of An- ahuac in the class of 80-84. Throughout his profession- al career, Salem Slim has performed the role of assistant director of Expansion at Sanborns Hermanos; director of Shopping Centres at Grupo CARSO; director of Real-Es- tate at INBURSA; Managing Director of Hoteles Calinda, Managing Director of Grupo PC Constructores; Managing Director of IDEAL, and he is currently Deputy Chairman of the Board of Directors of IDEAL and Chairman of the Board of Directors and Managing Director of Inmuebles CARSO. He is also a member of the Board of Directors of Grupo CARSO; IDEAL; CICSA; Carso Real Estate; Gigante Grupo Inmobiliario; ELEMENTIA and Gas Natural Fenosa. (See Section A.6 of this Report for a description of the re- lationships between the director and the significant share- holders). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 651 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 17 of 101 Total number of proprietary directors % of the total Board 9 64.29 Remarks Remarks INDEPENDENT EXTERNAL DIRECTORS Name or corporate name of the director Manuel Gil Madrigal Henri Proglio Álvaro Vázquez de Lapuerta Profile He holds a degree in Law and Business Sciences (E-3) by ICADE and is a founding partner of the company Tasmania Gestión. In 2000 he was also founder of the financial company N+1 and has been a board member of Ezentis, Funespaña, General de Alquiler de Maquinaria (GAM) and Campofrío, among other companies. During his career he has also been director of Capital Markets for AB Asesores Bursátiles, partner of Morgan Stanley and auditor of Arthur Andersen. A graduate of the Higher School of Business Administration (HEC) in Paris. He is currently a director of Natixis Banque and of Dassault Avi- ation. He has also served as Chairman of the energy giant Électricité de France (2009-2014) and Veolia Environnement (2003-2009), as well as a board member of FCC, Lagardère Group and Vinci, among other companies. He holds a degree in Law and Business Studies (E-3) by ICADE and is currently a partner of the firms Akiba Partners and Meridia Capital Partners. He was General Manager for Spain and Portugal at Dresdner Kleinwort, and CEO and head of Investor Relations at securities firm BBVA Bolsa. Previously he held various positions at JP Morgan in Mex- ico, New York, London and Madrid. Total number of independent directors % total of the Board 3 21.43 Indicate whether any director qualified as independent receives any amounts or benefits for any concept other than director remuneration from the company or its group, or main- tains or has maintained, during the last tax year, a business relationship with the company or with any company in its group, either in its own name or as a significant shareholder, director or senior manager of an entity with which he/she maintains or has maintained this relationship. None As applicable, a reasoned statement by the Board shall be included providing the reasons why it believes that this director can perform his/her duties as an independent director. Name or corporate name of the director Description of the relationship Reasoned statement OTHER EXTERNAL DIRECTORS The other external directors shall be identified and the reasons they cannot be considered proprietary or independent and their relationships, whether with the Company, its direc- tors, or its shareholders, shall be detailed: Company, executive or shareholder with whom he/ she maintains a relationship Profile Name or corporate name of the director Reasons Total number of other external directors % total of the Board Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 652 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 18 of 101 Remarks Indicate the changes to the category of each director that, as appropriate, have occurred during the period: Name or corporate name of the director Change date Previous category Current category - - - - Remarks C.1.4 Fill in the following table with information regarding the number of female di- rectors at the end of the past 4 business years, as well as the category of these female directors: Number of female directors % of the total number of directors for each category Business year t Business year t-1 Business year t-2 Business year t-3 Business year t Business year t-1 Business year t-2 Business year t-3 Executive Proprietary Independent Other External Total: 0 4 0 0 4 0 4 0 0 4 0 4 0 0 4 0 4 0 0 4 0 0 44.44 44.44 0 0 0 0 0 40 0 0 0 40 0 0 28.57 28.57 26.66 26.66 Remarks C.1.5 Indicate whether the company has diversity policies in place in relation to the company’s Board of Directors in terms of issues including age, gender, disability, or professional training and experience. SMEs, pursuant to the definition contained in the Account Audit Law, shall report, as a minimum, the policy established in relation to gender diversity. Yes No Partial policies If so, describe these diversity policies, their objectives, the measures and the way in which they were applied and their results during the business year. The specific measures adopted by the Board of Directors and the Appointments and Remuneration Committee to achieve a balanced and diverse presence of directors shall also be indicated. In case the company has no diversity policy in place, explain the reasons for this. Description of the policies, objectives, measures and manner in which they have been applied, as well as the results obtained Article 38.4.h of the Rules of the Board establishes, in accordance with the duties of the Appoint- ments and Remuneration Committee, the following: “Assist the Board in its role of ensuring that the selection procedures of its members favour diversity of gender, experience and knowledge and do not suffer from implicit biases that may imply any discrimination and, in particular, that facili- tate the selection of female Directors, so that the Company deliberately seeks and includes among the potential candidates, women who meet the intended professional profile, with the Board hav- ing to explain, where applicable, through the Annual Corporate Governance Report, the reason for the scant or non-existent number of female Directors and the initiatives taken to correct this situation. For the purposes of the foregoing, it must establish a representation objective for the less represented gender in the Board of Directors and prepare guidelines on how to achieve this aim”. In 2019, FCC renewed its commitment to the Diversity Charter for the period 2019-2021, a vol- untary code for the promotion of the core Equality principles. The initiative, promoted by the Directorate of Justice at the European Commission as part of the development of its anti-dis- crimination policies, contemplates the implementation of inclusion policies and non-discrimination programmes at signatory companies. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 653 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 19 of 101 C.1.6 Explain the measures that, where appropriate, the Appointments Committee may have agreed to ensure the selection procedures do not suffer from implicit biases that prevent the selection of female directors, and to ensure the company delib- erately seeks and includes among the potential candidates, women who meet the professional profile sought and make it possible to achieve a balanced presence of women and men. Also indicate whether these measures include encouraging the company to have a significant number of female senior executives: Explanation of the measures Article 38.4.h of the Rules of the Board establishes, in accordance with the duties of the Appoint- ments and Remuneration Committee, the following: “Assist the Board in its role of ensuring that the selection procedures of its members favour diversity of gender, experience and knowledge and do not suffer from implicit biases that may imply any discrimination and, in particular, that facilitate the selection of female Directors, so that the Company deliberately seeks and includes among the potential candidates, women who meet the intended professional profile, with the Board having to explain, where applicable, through the Annual Corporate Governance Report, the reason for the scant or non-existent number of female Directors and the initiatives taken to correct this situation. For the purposes of the foregoing, it must establish a representation objective for the less represented gender in the Board of Directors and prepare guidelines on how to achieve this objective”. The Appointments and Remuneration Committee has not established, to date, specific additional measures to those contained in Article 38.4.h of the Board’s Regulation, nor objectives other than those pertaining to the current situation. The percentage of female directors (4) on the Board of Directors is 28.57 percent. C.1.7 Explain the conclusions of the Appointments Committee on the verification of compliance with the director selection policy. And in particular, on how this policy promotes the objective that in 2020, female directors will account for at least 30% of the total members of the Board of Directors. At the General Shareholders’ Meeting of 28 June 2016, four new directors were appointed at the proposal of the controlling shareholder, Inversora Carso, in use of the powers granted in the share- holder agreement of 25 February 2016. The mandates of two other directors were also renewed at the aforementioned meeting. On 12 September 2017, the Board of Directors appointed Pablo Colio Abril as CEO by co-option. Subsequently, on 28 June 2018, the General Shareholders’ Meeting agreed to appoint Pablo Colio Abril, a member of the Board of Directors, as an executive director. In all six cases, the Appointments and Remuneration Committee issued a favourable report to the Board of Directors on the suitability of the directors. To this end, the Appointments and Remuneration Committee has not established, to date, objectives other than those pertaining to the current situation or additional measures to those contained in Article 38.4.h of the Board’s Regulation. As at 31 December 2020, the representation of female directors on the Board of Directors of FCC, came to 28.57 percent, with Esther Alcocer Koplowitz serving as its non-executive Chairwoman. C.1.8 Explain, where appropriate, the reasons that proprietary directors have been ap- pointed at the request of shareholders whose shareholding is less than 3% of capital stock: When, despite the measures adopted, as applicable, the number of female directors or senior executives is low or zero, explain the reasons that justify this: Name or corporate name of the shareholder Justification - - Explanation of the reasons In the 2020 business year, no vacancy has been filled in any senior management position in the FCC Group, which is why it has not been feasible to hire or appoint any senior executives. Indicate whether formal requests for presence on the Board from shareholders whose shareholding is equal to or greater than that of others, at whose request proprietary di- rectors have been appointed, have not been met. If applicable, explain the reasons that they have not been addressed: Yes No Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 20 of 101 Name or corporate name of the shareholder Explanation C.1.9 Indicate, whether any powers have been delegated by the Board of Directors to directors or Board Committees and what these entail: Name or company name of the director or committee Brief description Pablo Colio Abril All except those that are non-delegable C.1.10 Identify, as the case may be, the members of the Board that assume the positions of administrators, representatives of administrators or directors at other compa- nies that are part of the listed Company’s group: Name or corporate name of the director Corporate name of the Group company EAC, Inversiones Corporativas, S.L. Cementos Portland Valderrivas S.A. Position Chairmanship Inmobiliaria AEG, S.A. de C.V. Cementos Portland Valderrivas Director Entrusted with executive functions? No No Gerardo Kuri Kaufmann Cementos Portland Valderrivas Chief Executive Officer Yes Juan Rodríguez Torres Cementos Portland Director Valderrivas FCC Aqualia Álvaro Vázquez de Lapuerta Cementos Portland Valderrivas Director Director Alejandro Aboumrad González Cementos Portland Valderrivas, S.A. Representative of Inmobiliaria AEG, S.A. FCC Aqualia, S.A. FCC Servicios Medioambientales Holding S.A.U Director and Chairman of the Board of Directors Chairman No No No No No Yes 654 Entrusted with executive functions? No No Yes Yes Yes Yes Yes Yes Yes No Name or corporate name of the director Corporate name of the Group company Position Antonio Gómez García FCC Américas Alternate director Pablo Colio Abril FCC Aqualia, S.A. Board Member, Member of the Audit And Control Committee, Member of the Investment Committee and Member of the Regulatory Compliance Committee. FCC Construcción, S.A. Chairman FCC Environment (UK) limited FCC Medio Ambiente Reino Unido, S.L.U FCC Medio Ambiente, S.A.U FCC Servicios Medioambientales Holding, S.A.U FCC Concesiones, S.A.U Guzman Energy O&M, S.L. Administrator Vice chairman Chairman Vice chairman Chairman Chairman FCC Austria Abfall Service AG Member of the Supervisory Board Remarks Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 655 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 21 of 101 C.1.11 If applicable, list the directors or representatives of corporate directors of your Company, who are members of the Board of Directors or representatives of corporate directors of other companies listed on official securities markets other than your Group, of which the Company has been informed: Name or corporate name of the director Corporate name of the listed company EAC Inversiones Corporativas, S.L. (represented by Esther Alcocer Koplowitz) Realia Business Position Director Gerardo Kuri Kaufmann Realia Business Chief Executive Officer Manuel Gil Madrigal Barón de Ley, S.A. External director-other Juan Rodríguez Torres Realia Business Non-executive chairman C.1.13 Indicate the amounts of the following concepts relating to the global remuneration of the Board of Directors: Remuneration accrued during the business year in favour of the Board of Directors (thousands of euros) Amount of rights accrued by current directors for pension benefits (thousands of euros) Amount of rights accrued by former directors for pension benefits (thousands of euros) 1,945 0 3,151 Remarks - Remarks C.1.14 Identify members of senior management who are not executive directors, and in- dicate the total remuneration accrued in their favour during the business year: C.1.12 Indicate and, if applicable, explain whether the Company has established rules on the maxi- mum number of Boards of Directors on which its directors may sit, identifying, where appro- priate, where this provision is regulated: Yes No Explanation of the rules and identification of the document where this is regulated Name or corporate name Position(s) Marcos Bada Gutiérrez Felipe B. García Pérez Miguel Ángel Martínez Parra Managing Director of Internal Audit General secretary Managing Director of Administration and Finance Félix Parra Mediavilla Managing Director of Aqualia Number of women in senior management 0 Position(s) Percentage of total members of senior management 0% - Total Senior Management remuneration (thousands of euros) 1,831.73 Remarks - Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 22 of 101 C.1.15 Indicate whether there has been any change in the Board’s regulation during the business year: Yes No Description of the changes The Regulations of the Board of Directors were updated as a result of the amendment of Article 28 of the Corporate Bylaws agreed by the Ordinary General Meeting on 2 June 2020, setting the minimum number of members of the Board of Directors at nine (9) and the maximum at fifteen (15), with the General Shareholders’ Meeting being responsible for determining the specific number of its members. The minimum and maximum number determined in the Bylaws, set at the aforementioned meet- ing, establishes that the number of members of the Company’s Board of Directors must be four- teen (14) As a consequence of the above, the Board Resolution 26/2020, with a favourable report by the Audit and Control Committee, amended article 5 of the Board Regulations, setting the number of members of the Board of Directors of the company at 14, with said article being worded as follows: “Article 5. Quantitative composition: The Board of Directors will have fourteen (14) mem- bers”. C.1.16 Indicate the procedures for the selection, appointment, re-election and removal of directors. List the competent bodies, the procedures to be followed and the criteria to be used in each of the procedures: The General Shareholders’ Meeting is responsible for the appointment and removal of directors. Di- rectors may be re-elected indefinitely, one or more times, for maximum periods of four years (Article 30.3 of the Bylaws). Pursuant to Article 29.4 of the Bylaws, in its proposals for the appointment, re-election, ratification or removal of directors submitted to the General Shareholders’ Meeting and in the appointment decisions adopted by the Board in the use of its legally attributed powers of co-option, the Board of Directors shall follow the criteria and guidelines established in this regard in the Rules of the Board of Directors. Chapter IV of the Rules of the Board on the “Appointment and Removal of Directors” regulate these cases: Article 16. Appointment, ratification or re-election of directors. 1. Proposals for the appointment or re-election of directors submitted by the Board of Directors for consideration by the General 656 Shareholders’ Meeting and the appointment decisions adopted by the Board in the use of its legally attributed powers of co-option, shall fall on persons of recognised prestige, solvency, technical com- petence and experience, and shall be approved by the Board at the proposal of the Appointments and Remuneration Committee, in the case of independent directors, and after a report from the Appointments and Remuneration Committee, in the case of other directors. 2. All proposals shall be accompanied by a justifying report from the Board assessing the competence, experience and mer- its of the proposed candidate, which shall be attached to the minutes of the General Shareholders’ Meeting or the Board meeting. 3. If a legal person is appointed as a Director, it shall be required to appoint one natural person to permanently exercise the corresponding duties, who shall be subject to the requirements of prestige, solvency, technical competence and experience and the system of prohibitions and incompatibilities indicated in these Rules and the duties of the Director established in these Rules shall be enforceable in a personal capacity. Corporate directors cannot revoke the appointment of a representative until they designate a replacement. Likewise, the proposed rep- resentation by a natural person shall be subject to a report by the Appointments and Remuneration Committee. 4. From the moment at which the announcement of the General Shareholders’ Meeting is published, the Board of Directors shall publish, on its website, the following information on the persons proposed for the appointment or ratification as Directors and, where appropriate, on the natural person representing the corporate director: (i) their professional and biographical profile; (ii) other Boards of Directors on which they sit, whether they are listed companies or not; (iii) indication of the category of director to which they belong as appropriate, indicating, in the case of proprietary directors, the shareholder promoting their appointment, re-election or ratification or with whom they have ties; (iv) date of their initial appointment as a director at the Company, as well as subsequent ap- pointments; (v) shares in the Company and derivative financial instruments whose underlying objects are shares in the Company, held by the director who is being ratified or re-elected or the candidate nominated to occupy the position for the first time. This information shall be kept up to date; and (vi) the reports and proposals from the competent bodies in each case. 5. The secretary of the Board of Directors shall provide each new director with a copy of the Bylaws, of these Rules, of the FCC Group’s Code of Ethics, of the Internal Code of Conduct for the Stock Market, the latest individual and consolidated annual accounts and management reports, approved by the General Sharehold- ers’ Meeting, the corresponding audit reports and the latest financial and economic information submitted to the markets. They shall also be provided with the identification of the current account auditors and their representatives. 6. Each director shall sign a document confirming receipt of this documentation, that they are aware of its contents and that they faithfully fulfil their duties as a direc- tor. 7. The Company shall establish orientation programmes that provide new directors with fast and sufficient knowledge of the Company and its Group as well as the Corporate Governance rules, in addition to imparting knowledge refresher courses when the circumstances so require. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 23 of 101 Article 17. Duration of the position 1. Directors shall serve in their post during the term established in the Bylaws. 2. Directors appointed by co-option shall hold their position until the date on which the first General Shareholders’ Meeting is held. Furthermore, if the vacancy arises once the General Shareholders’ Meeting has been called and before it is held, the Board of Directors may appoint a director until the next General Sharehold- ers’ Meeting is held. 3. A director whose mandate is coming to an end or who, for any other reason, ceases to hold office, may not provide services at a competitor of FCC for a period of two (2) years. 4. The Board of Directors, if deemed appropriate, may dispense with this obligation or shorten its duration. Article 18. Re-election of directors In addition to satisfying the established requirements in terms of appointments established in Article 16 above, prior to any re-election of directors that is submitted to the General Shareholders’ Meet- ing, the Appointments and Remuneration Committee must issue a report in which the quality of work and dedication to the position of the proposed directors during the previous term. Article 19. Departure of directors. 1. Directors shall step down from their posts when the period for which they were appointed comes to an end or when the General Shareholders’ Meeting decides so in the use of its legally and stat- utorily conferred powers. 2. Directors shall make their position available to the Board of Directors and formalise, if the Board deems appropriate, their resignation in the following cases: a) When they step down from their positions, posts or functions to which their appointment as executive directors was associated. b) In the case of proprietary directors, when the shareholder at whose request they were appointed transfers their entire shareholding in FCC or reduces their shareholding to a level that requires the reduction of the number of proprietary directors. c) When they are affected by any of the cases of incompatibility or prohibition provided by Law. d) When approved by at least two thirds (2/3) of the members of the Board: - if, having infringed their obligations as directors, they are seriously reprimanded by the Board, at the proposal or subject to a report by the Appointments and Remuneration Committee, or - when their permanence on the Board may place the credit and reputation of the Company at risk. In this regard, the directors must inform the Board of criminal cases in which they are named as defendants and the subsequent legal proceedings. In any case, if any Director is prosecuted or tried for any of the corporate crimes established in Article 213 of the Spanish Corporate Enterprises Act, the Board shall examine the case as soon as possible and, based on the specific circumstances, decide whether the director should submit his resignation or not, providing a reasoned account of this in the Annual Corporate Governance Report. 3. In the event that a natural person representing a corporate director is affected by any of the cases provided for in the previous section, this person shall be disqualified from exercising this representation. 4. The Board of Directors may not propose the removal of any independent director before the end of the statutory period for which they were appointed, unless there is just cause, identified by the Board following in a report from the Appointments and Remuneration Committee. In particular, it shall be understood that there is just cause when the Director had breached the duties inherent to their po- sition or incurred in any of the circumstances described in Article 6.2.a) of these Regulations, which 657 prevent their appointment as an independent director. The removal of independent directors may also be proposed as a result of takeovers, mergers or similar corporate transactions that involve a change in the capital structure of the Company, when these changes in the structure of the Board are attributable to the proportionality of the number of proprietary directors and independent directors in relation to the capital represented by the proprietary directors and the remainder of the capital stock. 5. When either by resignation or for any other reason, a director steps down from his/her post before the end of the corresponding term, an explanation shall be provided in writing sent to all the members of the Board, notwithstanding his/her resignation being communicated as a relevant fact and the reason for the resignation being reported in the Annual Corporate Governance Report. In particular, if the resignation of the Director is due to the fact that the Board has taken significant or repeated decisions, concerning which the director has made serious reservations and as a conse- quence of which, he/she decides to resign, in the letter of resignation addressed to other members, this circumstance shall be expressly stated. C.1.17 Explain the extent to which the annual assessment of the Board has resulted in significant changes to your internal organisation and the procedures applicable to your activities: In 2020, no shortcomings have been detected that make an action plan necessary. Description modifications Describe the assessment process and the areas assessed by the Board of Directors assisted, where appropriate, by an external consultant, regarding the functioning and composition of the Board and its committees and any other area or aspect that has been subject to assessment. The Board of Directors of Fomento de Construcciones y Contratas, S.A. (hereinafter, the Compa- ny) issued a report assessing the quality and efficiency of its functioning, and the functioning of its Committees, during the 2020 business year, with a view to complying with the duties imposed by Article 34.9 of the Rules of the Board of Directors, through which recommendation 36 of the Code of Good Governance for Listed Companies published by the CNMV on 18 February 2015, Article 529 nonies of the Spanish Corporate Enterprises Act and the instructions of Technical Guide 3/2017 of the CNMV published in June 2017 was introduced. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 24 of 101 The report was examined and approved by the Company’s Board of Directors, which in accordance with the aforementioned Article 34.9 of the Regulations of the Board is the body responsible for assessing the quality and efficiency of its own functioning, at its meeting on 19 January 2021. In pre- paring the report, all the members of the Board of Directors were involved and actively participated, taking into consideration the comments, assessments, opinions and suggestions expressed as part of this process by all of them. For the 2020 financial report, the self-assessment process was performed assessing the different aspects that affect the functioning, efficiency and quality of the actions taken and decisions made by the Board of Directors, as well as the contribution of its members to the exercise of the duties and achievement of the aims assigned to the Board. Furthermore, the respect and compliance by the Board of Directors and its members for the statu- tory precepts, the Rules of the Board of Directors and, in general, the rules of Good Governance of Listed Companies have been taken into account. C.1.18 Breakdown, for business years in which the assessment has been aided by an external consultant, of the business relationships that the consultant or any com- pany in its Group maintains with the Company or any company in its Group. The information and advice of the internal services of the Company has been provided, without such advice being received from external consultants. C.1.19 Indicate the cases in which directors are required to resign. Consolidated text of the Regulation of the Board of Directors following the modifications of 2 June 2020 and registered in the Mercantile Registry on 13 November 2020). Article 19. Departure of directors 1. Directors shall step down from their posts when the period for which they were appointed comes to an end or when the General Shareholders’ Meeting decides so in the use of its legally and statutorily conferred powers. 2. Directors shall make their position available to the Board of Directors and formalise, if the Board deems appropriate, their resignation in the following cases: a) hen they step down from their positions, posts or functions to which their appointment as executive directors was associated. b) In the case of proprietary directors, when the shareholder at whose request they were ap- pointed transfers their entire shareholding in FCC or reduces their shareholding to a level that requires the reduction of the number of proprietary directors. 658 c) When they are affected by any of the cases of incompatibility or prohibition provided by Law. d) When approved by at least two thirds (2/3) of the members of the Board: - if, having infringed their obligations as directors, they are seriously reprimanded by the Board, at the proposal or subject to a report by the Appointments and Remuneration Committee, or - when their permanence on the Board may place the credit and reputation of the Company at risk. In this regard, the directors must inform the Board of criminal cases in which they are named as defendants and the subsequent legal proceedings. In any case, if any director is prosecuted or tried for any of the corporate crimes established in Article 213 of the Spanish Corporate Enterprises Act, the Board shall examine the case as soon as possible and, based on the specific circumstances, decide whether the director should submit his resignation or not, providing a reasoned account of this in the Annual Corporate Governance Report. 3. In the event that a natural person representing a corporate director is affected by any of the cases provided for in the previous section, this person shall be disqualified from exercising this representation. 4. The Board of Directors may not propose the removal of any independent director before the end of the statutory period for which they were appointed, unless there is just cause, identified by the Board following in a report from the Appointments and Remuneration Committee. In particular, it shall be understood that there is just cause when the director had breached the duties inherent to their position or incurred in any of the circumstances described in Article 6.2.a) of these Regu- lations, which prevent their appointment as an independent director. The removal of independent directors may also be proposed as a result of takeovers, mergers or similar corporate transac- tions that involve a change in the capital structure of the Company, when these changes in the structure of the Board are attributable to the proportionality of the number of proprietary directors and independent directors in relation to the capital represented by the proprietary directors and the remainder of the capital stock. 5. When either by resignation or for any other reason, a director steps down from his/her post before the end of the corresponding term, an explanation shall be provided in writing sent to all the mem- bers of the Board, notwithstanding his/her resignation being communicated as a relevant fact and the reason for the resignation being reported in the Annual Corporate Governance Report. In particular, if the resignation of the Director is due to the fact that the Board has taken significant or repeated decisions, concerning which the Director has made serious reservations and as a consequence of which, he/she decides to resign, in the letter of resignation addressed to other members, this circumstance shall be expressly stated. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 659 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 25 of 101 C.1.20 Are super majorities, other than those provided for by law, required for any type of decision? C.1.23 Indicate if the Bylaws or rules of the Board establish a limit on mandates or other more stringent requirements in addition to those legally provided for independent directors, with the exception of those established in the regulations: Yes No If applicable, describe the differences. Description of the differences - Yes No Additional requirements and/or maximum number of mandates. C.1.21 Explain whether there are specific requirements, other than those applicable to all directors, to be appointed as Chairman of the Board of Directors. Yes No C.1.24 Indicate whether the Bylaws or rules of the Board of Directors establish specific rules for the delegation of the votes of directors to other directors, the applicable procedure and, in particular, the maximum number of delegations that may be made to the same director, as well as if any limits have been established on the categories to which it is possible to delegate, beyond the limits imposed by the legislation. As applicable, describe these rules briefly. Description of the requirements There are no formal procedures for the delegation of votes on the Board of Directors. C.1.22 Indicate whether the bylaws or the rules of the board establish a limit on the age of directors: Yes No Age limit Chairman Chief Executive Officer Director Remarks C.1.25 Indicate the number of meetings held by the Board of Directors during the busi- ness year. Furthermore, indicate, where appropriate, the times that the Board has met without the presence of the Chairman. In this calculation, proxies granted with specific instructions shall be considered as attendance. Number of Board meetings Number of Board meetings without the Chairman's attendance 9 0 Remarks Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 660 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 26 of 101 Indicate the number of meetings held by the coordinating director with other directors, without the attendance or representation of any executive director: Number of meetings - In terms of the number of meetings held, only face-to-face attendance has been taken into account, since no proxies were made with specific instructions. Remarks Remarks the Board for preparation have been certified previously: C.1.27 Indicate whether the individual and consolidated annual accounts submitted to Indicate the number of meetings held by the different Board Committees during the busi- ness year: Number of executive committee meetings Number of audit committee meetings Number of appointments and remuneration committee meetings Number of committee meetings ______ 8 8 7 - Yes No Identify, where appropriate, the person(s) who has/have certified the company’s individual and consolidated annual accounts for their preparation by the Board: Name Pablo Colio Abril Miguel Martínez Parra Juan José Drago Masiá Position Chief Executive Officer Managing Director of Administration and Finance Managing Director of Administration Remarks Remarks C.1.26 Indicate the number of meetings held by the Board of Directors during the year and the attendance details of its members: Number of meetings at which at least 80% of directors were in attendance % of face-to-face attendance divided by total votes during the business year Number of meetings with the face-to-face attendance, or proxies made with specific instructions, of all directors % of votes cast with face-to-face attendance and proxies made with specific instructions, divided by total votes during the business year 9 90.48% 0 90.48% C.1.28 Explain the mechanisms, if any, established by the Board of Directors to ensure that the financial statements submitted by the Board of Directors to the general shareholders’ meeting are drawn up in accordance with accounting regulations. The duties of the Audit and Control Committee include, but are not limited to, reviewing the preparation of the financial and economic information that FCC Group publishes pe- riodically. This duty acquires special relevance in the case of annual information, in such a way that, prior to the preparation of the annual accounts by the Board of Directors, the Audit and Control Committee examines these accounts extensively and requests the external auditor’s participation on the Committee to present the conclusions of its review work. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 27 of 101 Thus, once prepared by the Board, the external auditor’s report will not contain any res- ervations. C.1.29 Does the secretary of the Board have director status? Yes No If the secretary does not have director status, fill in the following table: Name or corporate name of the secretary Francisco Vicent Chuliá Representative _ Remarks C.1.30 Indicate the specific mechanisms established by the Company to preserve the independence of the external auditors, as well as, if applicable, the mechanisms to preserve the independence of financial analysts, investment banks and rating agencies, including how they have implemented the legal provisions in practice. To this end, Article 37. 5 of the Rules of the Board states that “The primary duty of the Audit and Control Committee shall be to support the Board of Directors in its oversight tasks, by periodically reviewing, among others, the process of preparing financial and economic information., its internal controls and the independence of the external auditor. In particular, by way of example, and without prejudice to other tasks entrusted to it by the Board of Directors, the Audit and Control Committee shall be responsible for: a) Informing the General Shareholders’ Meeting about the issues raised in relation to the matters within its remit and, in particular, the outcome of the audit, explaining how it has contributed to the integrity of the financial information and the role that the Committee has played in that process. b) Serve as a channel of communication between the Board of Directors and the Company’s external auditor, assessing the results of each audit. The external auditor shall also: (i) submit proposals for the selection, appointment, re-election and replacement of the account auditor to the Board of Directors, assuming responsibility for the selection process, pursuant to the provisions of EU regulations, as well as the conditions under which they were contracted; (ii) regularly gather infor- mation from the external auditor on the audit plan and the results of its performance, in addition 661 to maintaining its independence in the performance of its duties and verifying that Senior Man- agement takes its recommendations into account; (iii) discuss the significant weaknesses of the internal control system detected in the development of the audit with the Company’s external auditor, without compromising its independence. To this end, and where appropriate, the Audit and Control Committee may submit recommendations or proposals to the Board of Directors and the corresponding monitoring period. (iv) establish the appropriate relationships with the Ex- ternal Auditor to receive information on issues that may pose a threat to their independence, for consideration by the Committee, and any other relating to the process of performing Accounts Audits and, where appropriate, the authorisation of services other than those prohibited, under the terms provided for in the regulations governing Account Auditing activities on the system of independence, as well as any other communications provided for in the Account Auditing legisla- tion and in the audit regulations; (v) ensure the independence of the external auditor, establishing, in particular, appropriate measures: 1) so that the contracting of advisory and consulting services with the auditor or companies in its Group does not pose a risk to its independence, to which end the Committee shall request and receive from the auditor each year a declaration of its independ- ence in relation to the Company or entities linked to it directly or indirectly, as well as the detailed, individual information of any type of additional services provided and the corresponding fees re- ceived from these entities by the external auditor or by the persons or entities linked to it, pursuant to the provisions of the regulatory regulations on Account Auditing activities, and 2) so that the Company can communicate the change in auditor as a relevant fact to the CNMV and accompany this communication with a statement on any possible disagreements with the outgoing auditor and, as applicable, their nature, and in case of the resignation of the external auditor, examine the underlying circumstances; and (vi) encourage the Company’s auditor to assume responsibility for audits of other Group companies. c) Each year, prior to the issuance of the account auditing report, issue a report that expresses an opinion on whether the independence of the auditors or audit firms has been compromised. This report shall contain, in any case, a reasoned assessment on the provision of each and every one of the additional services referred to in section b)v)1) above, taken individually and as a whole, other than the legal audit and in relation to the system of independence or the regulations governing the account auditing activities. d) The supervision of the Company’s Internal Audit services that ensure the proper functioning of the information and internal control systems, with the person responsible for the Internal Audit function being required to present his/her annual work plan to the Committee and directly inform this body of any incidents that occur in the performance of his/her duties and submit a report on his/her activities at the end of each year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 662 C.1.31 Indicate whether during the business year, the Company has changed its external auditor. If applicable, identify the incoming and outgoing auditor: Yes No Outgoing auditor Incoming auditor The General Shareholders’ Meeting approved at its meeting of 2 June 2020, at the proposal of the Board of Directors, the appointment of Ernst&Young, S.L. as auditors of FCC and its consolidated group for the business years 2021, 2022 and 2023. Remarks If there have been disagreements with the outgoing auditor, explain the nature of these: Yes No Explanation of disagreements C.1.32 Indicate whether the audit firm performs other work for the Company and/or its Group other than those inherent to audits and, in that case, state the fees received for this work and the percentage they represent of the fees billed to the Company and/or its Group: Yes No FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 28 of 101 e) Supervise and analyse the effectiveness of the Company’s internal control and of the risk control and management policy approved by the Board of Directors, ensuring that it identifies, as a min- imum: (i) the different types of risks faced by the Company, including financial or economic risks, contingent liabilities and other off-balance sheet risks; (ii) the determination of the level of risk that the Company considers acceptable; (iii) the measures planned to mitigate the impact of the risks identified, should they materialise; and (iv) the information and internal control systems that will be used to control and manage the aforementioned risks, including contingent liabilities or off-bal- ance sheet risks, and submit this to the Board for approval. f) Supervise the process of preparing and presenting individual and consolidated annual accounts and management reports, and the periodic financial information that is disclosed to the markets, and submit recommendations or proposals to the Board of Directors with a view to safeguarding their integrity; ensuring compliance with the legal requirements and the correct application of gen- erally accepted accounting principles, informing the Board of Directors, before the adoption by the latter of the following resolutions: (i) financial information that, given its status as a listed company, the Company is required to publish periodically, ensuring that the interim accounts are prepared using the same accounting criteria as annual accounts and, to that end, consider the suitability of a limited review of the Company’s external auditor; and (ii) the creation or acquisition of interests in special purpose entities or those registered in countries or territories that are considered tax ha- vens, as well as any other transactions or operations of a similar nature that, given their complexity, could undermine the transparency of the FCC Group. g) In relation to information and internal control systems: (i) supervise the preparation process and the integrity of the Company’s financial information and, where appropriate, the Group’s financial information, ensuring compliance with regulatory requirements, the adequate definition of the con- solidation perimeter and the correct application of accounting criteria; (ii) periodically supervise the internal control and risk management systems, including tax risks, ensuring that the main risks are properly identified, managed and disclosed; (iii) ensure the independence and effectiveness of the Internal Audit function, proposing the selection, appointment, re-election and removal of the head of the Internal Audit service, as well as the budget of this service, receiving periodic information about its activities and verifying that Senior Management takes into account the conclusions and recommendations in its reports; periodically receive information from the Response Committee and the Management Control and Risk Management Division, respectively, on the performance of their activities and the operation of internal controls; and (v) ensure that internal codes of conduct and corporate governance rules comply with regulatory requirements and are appropriate for the Company, in addition to reviewing compliance, by people affected by these codes and rules of governance, of their obligations to inform the Company. h) Issue the reports and proposals requested by the Board of Directors or by the Chairman of the Board of Directors and those deemed appropriate in the proper performance of their duties and, in particular, (i) issue a report on the proposed modification of this Regulation, pursuant to the provisions of Article 4.3; (ii) make decisions in relation to the requests for information that directors, pursuant to the provisions of Article 26.3 of these Rules, submit before this Committee; and (iii) request, where appropriate, the inclusion of items on the agenda of Board meetings under the conditions and deadlines provided for in Article 34.3 of these Rules.” Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 663 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 29 of 101 Company Group companies Value of work other than audits (thousands of euros) Value of work other than audits/Value of audit works (in %) 0 0.00 20 0.57 Total 20 0.53 Number of business years audited by the current audit firm/Number of business years that the Company or its Group have been audited (in %) Individual 61.29% Consolidated 61.29% Remarks The Company and the FCC Group has been audited by Deloitte, S.L. since 2002. Previously, starting in 1990, the Company and the Group was audited by Arthur Andersen, a firm that disappeared worldwide in 2002, becoming part of Deloitte. Remarks C.1.33 Indicate whether the audit report of the previous year’s annual accounts includes reservations or qualifications. As applicable, indicate the reasons given to share- holders at the General Shareholders’ Meeting by the Chairman of the Audit Com- mittee to explain the content and scope of these reservations or qualifications. C.1.35 Indicate and, as applicable, describe if there is a procedure for directors to receive the necessary information to prepare meetings with administrative bodies with sufficient time: Yes No Explanation of reasons and direct link to the document made available to shareholders at the time of the call in relation to this matter C.1.34 Indicate the number of business years that the current audit firm has been con- tinuously auditing the Company’s individual and/or consolidated financial state- ments. Furthermore, indicate the percentage that the number of years audited by the current audit firm accounts for in terms of the total number of years in which the annual accounts have been audited: Number of uninterrupted business years 19 19 Individual Consolidated Yes No Describe the procedure Rules of the Board of Directors. Article 26. Information and inspection powers “1. In the performance of their duties, every director has the duty to demand and the right to ob- tain from the Company, the adequate and necessary information that will allow them to fulfil their obligations concerning all aspects of FCC and its subsidiaries and investees, whether national or foreign. To this end, they may examine the documentation deemed necessary, make contact with those responsible for the affected departments and visit the corresponding facilities. 2. To refrain from disturbing the ordinary management of the FCC Group, the exercise of the powers of information shall be channelled through the Chairman, who shall respond to the director’s re- quests, directly providing the information or offering the details of the corresponding contacts at the corresponding organisational level. 3. If the request for information is denied, delayed or incor- rectly responded to, the requesting director may repeat their request before the Audit and Control Committee, and, once the Chairman and the requesting director have provided their reasons, this Committee shall decide how to proceed for the purposes mentioned above. 4. The requested information may only be denied when, in the opinion of the Chairman and the Audit and Control Committee, it is unnecessary or harmful to the Company’s corporate interests. This refusal shall not apply when the request has been supported by the absolute majority of the Board members”. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 664 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 30 of 101 C.1.36 Indicate whether the company has established rules obliging requiring directors to disclose and, where appropriate, to resign when situations arise that affect them, whether or not this is related to their actions in the company itself, which could be harmful to the credit and reputation of the company: Yes No Explain the rules Rules of the Board of Directors. Article 25. Information duties of Directors. Directors shall inform the FCC Appointments and Remuneration Committee, through the Corpo- rate Responsibility Department or any other that may replace it, of the following points: d) Legal, administrative or other claims that, given their importance, could seriously affect the reputation of FCC. e) In general, any circumstance or situation that may be relevant to their performance as an FCC Director. Article 19. Departure of the Director. 1. Directors shall step down from their posts when the period for which they were appointed comes to an end or when the General Shareholders’ Meeting decides so in the use of its legally and statutorily conferred powers. 2. Directors shall make their position available to the Board of Directors and formalise, if the Board deems appropriate, their resignation in the following cases: a) When they step down from their positions, posts or functions to which their appointment as executive directors was associat- ed. b) In the case of proprietary directors, when the shareholder at whose request they were appointed transfers their entire shareholding in FCC or 18 reduces their shareholding to a level that requires the reduction of the number of proprietary directors. c) When they are affected by any of the cases of incompatibility or prohibition provided by Law. d) When approved by at least two thirds (2/3) of the members of the Board: - if, having infringed their obligations as directors, they are seriously reprimanded by the Board, at the proposal or subject to a report by the Appointments and Remuneration Committee, or - when their permanence on the Board may place the credit and reputation of the Company at risk. In this regard, the directors must inform the Board of criminal cases in which they are named as defendants and the subsequent legal proceedings. In any case, if any Director is prosecuted or tried for any of the corporate crimes established in Article 213 of the Spanish Corporate Enterprises Act, the Board shall examine the case as soon as possible and, based on the specific circumstances, decide whether the director should submit his resignation or not, providing a reasoned account of this in the Annual Corporate Governance Report. Explain the rules 3. In the event that a natural person representing a corporate director is affected by any of the cases provided for in the previous section, this person shall be disqualified from exercising this representation. 4. The Board of Directors may not propose the removal of any independent director before the end of the statutory period for which they were appointed, unless there is just cause, identified by the Board following in a report from the Appointments and Remuneration Committee. In particular, it shall be understood that there is just cause when the director had breached the duties inherent to their position or incurred in any of the circumstances described in Article 6.2.a) of these Regulations, which prevent their appointment as an independent director. The removal of independent directors may also be proposed as a result of takeovers, mergers or similar corporate transactions that involve a change in the capital structure of the Company, when these changes in the structure of the Board are attributable to the proportionality of the number of proprietary directors and independent directors in relation to the capital represented by the proprietary directors and the remainder of the capital stock. 5. When either by resignation or for any other reason, a director steps down from his/her post before the end of the corresponding term, an explanation shall be provided in writing sent to all the members of the Board, notwithstanding his/her resignation being communicated as a relevant fact and the reason for the resignation being reported in the Annual Corporate Gov- ernance Report. In particular, if the resignation of the director is due to the fact that the Board has taken significant or repeated decisions, concerning which the director has made serious reservations and as a consequence of which, he/she decides to resign, in the letter of resigna- tion addressed to other members, this circumstance shall be expressly stated”. C.1.37 Indicate, unless special circumstances have arisen which have been recorded in the minutes, whether the board has been informed or has otherwise become aware of any situation affecting a director, whether or not this is related to his or her performance in the company itself, which could be harmful to the credit and reputation of the company: Yes No Director's name Nature of the situation Remarks Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 665 27 July, the National Securities Market Commission communicated, through a relevant fact, that the takeover proposed by Control Empresarial de Capitales, S.A. de C.V. involving 100% of the capital stock of Fomento de Construcciones y Contratas, S.A., had been accepted for 97,211,135 shares representing 48.30% of the shares included in the bid and 25.66% of the capital stock of Fomento de Construcciones y Contratas, S.A. On 3 December 2020, the CNMV was informed by means of a Notification of Major Holdings of the reverse merger by absorption dated 30 June 2020, through which Inversora Carso, S.A. de C.V. is acquired by Control Empresarial de Capitales, S.A. de C.V. (CEC). CEC controls 100% of Dominum Dirección y Gestión, S.A. On 3 December 2020, the CNMV was informed by means of a Notification of Major Holdings that the company Nueva Samede 2016, S.L.U. is 100% controlled by Esther Koplowitz Romero de Juseu. On 3 December 2020, by means of a Notification of Major Holdings to the CNMV, it was reported that Esther Koplowitz Romero de Juseu directly controls 0.033% of FCC and 4.536% of FCC indi- rectly through Nueva Samede 2016, S.L.U. On 15 December 2020, the CNMV was informed by means of a Notification of Major Holdings that Finver Inversiones 2020, S.L.U. indirectly owns 7% of FCC. This company is 100% owned by Inmo- biliaria AEG, S.A. de C.V. which in turn is controlled by Carlos Slim Helú. C.1.39 Identify individually, when referring to directors, and on an aggregate basis for other cases and indicate, in detail, the agreements between the Company and its administrative and management positions or employees concerning compensation, guarantee or shield clauses, when they resign or are dismissed improperly or if the contractual relationship comes to an end as a result of a takeover bid or other transactions. FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 31 of 101 In the above case, indicate whether the Board of Directors has examined the case. If the answer is yes, state the reasons why, in light of the specific circumstances, it has taken any action, such as opening an internal investigation, requesting the resignation of the director or proposing the director’s dismissal. Also indicate whether the board’s decision has been subject to a report from the appoint- ments committee. Yes No Decision taken/action performed Reasoned explanation C.1.38 Detail the significant agreements that the Company has entered into and that come into force, are modified or terminated in the event that control of the Com- pany is handed over following a takeover, and their effects. On 5 February 2016, Nueva Samede 2016, S.L.U. (hereinafter “Nueva Samede”) and I. Carso (here- inafter “I. Carso”) entered into an options contract to buy shares in Fomento de Construcciones y Contratas, S.A. (hereinafter, “FCC”) before Madrid Notary Jaime Recarte Casanova, recorded un- der his notary protocol No. 285 (“Purchase Option”), by virtue of which Nueva Samede irrevocably granted I. Carso an option to purchase 9,454,167 ordinary shares of FCC, representing 2.496% of its capital stock and of which Nueva Samede is the proprietor after the subscribing and paying in of the capital increase of FCC as entered on record in the Barcelona Mercantile Registry on 4 March 2016 (the “Affected Shares”). It is hereby stated for the record that the Affected Shares form part of the 7.028% of FCC’s capital stock owned by Nueva Samede which are attributed to I. Carso for the exclusive purposes of article 5.1.d of the Royal Decree regulating takeover bids and over which I. Carso has no direct or indirect voting rights. In relation to the foregoing, as at 22 July 2016, I. Carso exercised the Purchase Option held over all the Shares Affected and effective 14 June 2016. However, the formal arrangement of the exercise of the Purchase Option was subject to the condition precedent which, cumulatively, results in the following: (i) the authorisation by the National Securities Market Commission of the Bid submitted by CEC, approved on 29 June 2016, and (ii) the presence on the FCC Board of Directors of a majority of directors appointed at the request of I. Carso and/or CEC or any company associated with I. Carso (the, “Condition Precedent”), which was fulfilled following the appointments of Miguel Martin- ez Parra, Alfonso Salem Slim, Antonio Gomez García, and Carlos Manuel Jarque Uribe on 28 June 2016. As at 22 July 2016, pursuant to the provisions of Article 36 of Royal Decree 1066/2007, of Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 32 of 101 Number of beneficiaries 2 Type of beneficiary Description of the agreement 666 Type of beneficiary Description of the agreement Chief Executive Officer And if the contractual relationship is terminated at the will of the CEO for any of the following causes: General Secretary - Substantial changes in working conditions that are notoriously detri- mental to his professional training, that are detrimental to his dignity, or that are decided with serious transgression of good faith, by the Company. - Failure to pay for three consecutive months or six alternate months, or continued delay in the payment of the remuneration agreed under the contract. - Succession of a company or significant change in ownership of the same, which has the effect of a renewal of its governing bodies or the content of its main activity, provided that the termination occurs within three months of the occurrence of such changes. - Any other serious breach of the contractual obligations by the Com- pany, with the exception of force majeure budgets, in which the pay- ment of compensation shall not be applicable. As in the case of free and unilateral termination from the Company, he will have the right to receive compensation resulting from the sum of the following two items: a The amount resulting from the termination of the employment rela- tionship that the CEO previously held with FCC Construcción or with any other company of the FCC Group using 12 September 2017 as the calculation date (and in accordance with the applicable regula- tions on that date). The amount resulting from multiplying 7 days wages by the number of years that have elapsed from 12 September 2017 until the contract expires. Concerning the general secretary, an executive director up until 13 January 2015, the Company, having received authorisation from the Executive Committee, took out and paid up the insurance premium to cover the payment of contingencies relating to death, permanent incapacity for work, retirement pensions and benefits or other con- cepts to be paid, in addition to others, to certain executive directors and executives. Specifically, the contingencies giving rise to compensation are those involving the termination of the employment relationship for any of the following reasons: a) Unilateral decision of the Company. b) Winding up or disappearance of the Parent Company for any rea- son, including a merger or spin-off. c) Death or permanent disability. d) Other causes of physical disability or legal incapacitation. e) Substantial modification of professional conditions. f) Resignation, having reached the age of 60, at the request of the executive and with the agreement of the Company. g) Resignation, having reached the age of 65, by unilateral decision of the executive. As at 31 December 2020, the Secretary General is entitled to a net amount equivalent to 3.5 times his annual gross remuneration. Indicate whether, beyond the assumptions provided for in the regulations, these con- tracts must be communicated and/or approved by the corresponding bodies of Com- pany or its Group. If so, specify the procedures, expected cases and the nature of the bodies responsible for their approval or communication: Body authorising the clauses X Board of Directors General Shareholders' Meeting Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 667 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 33 of 101 Is the General Shareholders’ Meeting aware of the clauses? YES X NO Remarks Remarks C.2 Board Committees C.2.1 Provide details of all the Board Committees, their members and the proportion of executive, proprietary, independent and other external directors who serve on them: EXECUTIVE COMMITTEE Name Alejandro Aboumrad González Position Chairman Dominum Desga, S.A. (representada por Esther Alcocer Koplowitz) Voting member EAC Inversiones Corporativas, S.L. (representada por Alicia Alcocer Koplowitz) Voting member Category External proprietary director External proprietary director External proprietary director Gerardo Kuri Kaufmann Juan Rodríguez Torres Pablo Colio Abril % of executive directors % of proprietary directors % of independent directors % of other external directors Voting member Executive director Voting member External proprietary director Voting member Executive director 33.33 66.67 0 0 Explain the functions delegated or attributed to this Committee other than those already described in section C.1.10, and describe the procedures and rules for its organisation and functioning. For each of these functions, indicate its most important actions during the year and how it have exercised each of the functions attributed in practice, whether by law, in the Bylaws or in other corporate agreements. Rules of the Board of Directors. Article 36. The Executive Committee. 1. The Board may permanently delegate all its powers to the Executive Committee, with the excep- tion of those whose competence is reserved by Law, the Bylaws or these Rules. In particular, the Executive Committee shall be responsible, unless otherwise provided for in the delegation of powers granted by the Board, to rule on matters of investments, divestments, credits, loans, guarantees or deposits or any other financial facility, when the unit amount of which does not exceed the fig- ure established in Article 7.2.o). Furthermore, the Executive Committee may exercise, for reasons of urgency, the powers attributed to the Board of Directors, in accordance with Article 8 of these Rules. 2. The Board of Directors, pursuant to a report issued by the Appointments and Remuner- ation Committee, shall appoint the directors to serve on the Executive Committee, ensuring that the shareholding structure in the different director categories is similar to that of the Board itself. Its Secretary shall be the Secretary to the Board of Directors. 3. The Executive Committee shall consist of a minimum of four (4) and a maximum of ten (10) members. 4. The members of the Executive Committee shall step down from their posts when they step down in their capacity as Director or when the Board so agrees. Vacancies that occur shall be filled as soon as possible by the Board of Directors. 5. The Chairman of the Executive Committee shall be appointed from among its mem- bers by the Committee itself. In the absence or if it is impossible for the Chairman of the Executive Committee to attend a meeting, or if this position has been vacated, the corresponding functions shall be exercised by the member elected to this post by the majority of those in attendance at the meeting. 6. The Executive Committee shall hold ordinary meetings each month in which the Board of Directors is not due to hold a meeting, excluding the month of August, and may meet on an extraor- dinary basis whenever required on account of the company’s corporate interests. 7. The Executive Committee shall be called to meet by its Chairman, at his/her own initiative or at the request of at least two (2) of its members, by letter, telegram, email or fax, addressed to each of the Committee’s members at least forty-eight (48) hours in advance of the date of the meeting; however, it may be called 24 (twenty-four) hours in advance of the date and time of the meeting on urgent grounds, in which case, the agenda of the meeting shall be limited to the urgent items on which grounds it was called. Along with the announcement of each meeting, the corresponding documentation will be sent to the members of the Executive Committee so that they can form an opinion and cast their Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 34 of 101 vote. 8. In the absence or if it is impossible for the Chairman of the Executive Committee to attend a meeting, or if this position has been vacated, the meeting may be called by the member of the Com- mittee who has served in his/her position the longest and, in the event of a tie, the oldest in age. For legal persons, the age of the natural person representing the company shall be taken into account for this purpose. 9. Meetings shall be held at the registered office or at any place designated by the Chairman as indicated in the announcement. 10. The Executive Committee shall be validly consti- tuted when at least a majority of its members are in attendance, counting those present and those represented. Those absence may be represented by another member of the Executive Committee. In any case, non-executive Directors may only be represented by another non-executive Director. 11. Deliberations shall be guided by the Chairman, who shall hand the floor over to attendees who ask to speak. 12. Resolutions shall be adopted by an absolute majority of the Committee’s members. In case of a tie, the matter shall be submitted to the Board of Directors, to which end the members of the Executive Committee shall ask for it to meet pursuant to the provisions of Article 34 of these Rules, unless it was already due to meet in the following thirty (30) calendar days, in which case the Committee will ask the Chairman of the Board to include the items resulting in a tie on the agenda of the meeting. 13. The Executive Committee, through its Chairman, shall inform the Board of the matters discussed and the resolutions adopted by the Committee, sending a copy of the meeting minutes to all directors. At a meeting held on 19 January 2021, a report was issued on the functioning of the Committee and the performance of its duties in 2020, concluding that the Executive Committee responsibly as- sumes and performs the duties and powers delegated to it by the Board of Directors, diligently and effectively handling the Company’s affairs that require constant attention and monitoring. Regarding the most important actions carried out by the aforementioned Committee, worth note is that the Committee has met eight times over the course of the 2020 business year, and with the appropriate frequency to perform its duties. A total of 37 resolutions have been adopted during these meetings, which have dealt with the approval of the Self-Assessment Report of the Executive Committee for the 2019 business year and authorisations for: the incorporation of new companies, dissolution and liquidation of other companies, the sale of certain companies and acquisition of others, sale of shares at public auction, capital increases and reductions, opening and closing of branches, and offsetting losses, among other matters. 668 AUDIT AND CONTROL COMMITTEE Name Manuel Gil Madrigal Juan Rodriguez Torres Henri Proglio Position Chairman Category Independent director Voting member External proprietary director Voting member Independent director Álvaro Vázquez de Lapuerta Voting member Independent director % of proprietary directors % of independent directors % of other external directors 25 75 0 Remarks Explain the duties, including, where appropriate, those in addition to those defined by law, which are attributed to this Committee, and describe the procedures and rules for its organisation and functioning. For each of these functions, indicate its most important ac- tions during the year and how it have exercised each of the functions attributed in practice, whether by law, in the Bylaws or in other corporate agreements. Rules of the Board of Directors. Article 37. Audit and Control Committee 1. The Board of Directors at FCC shall establish a permanent Audit and Control Committee, with- out executive functions and with powers of information, advice and proposal within its scope of action, consisting of a minimum of three (3) and a maximum of six (6) directors who shall be appointed by the Board of Directors taking into account their knowledge and experience in ac- counting, auditing or risk management matters. All its members shall be non-executive directors and a majority shall be independent, with the Committee itself choosing its Chairman, and op- tionally a Deputy Chairman, from among the independent directors sitting on the Committee. The mandate of the members of the Committee shall not exceed their mandate as directors, without prejudice to them being re-elected indefinitely, insofar as they remain directors. Notwithstanding the foregoing, the term of office of the Chairman and Deputy Chairman, as the case may be, may not exceed four (4) years or their terms as members of the Committee, and may be re-elected after at least one year has elapsed since the end of their term. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 35 of 101 2. At least one of the independent members of the Audit and Control Committee shall be appointed taking into account their knowledge and experience in accounting, auditing or both. As a whole, the members of the Committee shall have relevant technical knowledge in relation to the activity sector of the Company. 3. The Audit and Control Committee shall regulate its own functioning in accordance with the Bylaws and these Regulations. Voting members who have held the position of Chairman may not return to that position until at least one year has elapsed since the end of their term. The Audit and Control Committee shall appoint a secretary, and as applicable a deputy secretary, who shall not be a member of the Committee, who shall assist the Chairman and ensure the proper functioning of the Committee, taking care to accurately reflect the progress of meetings the nature of deliber- ations and the resolutions adopted in the minutes. From each meeting, the secretary or whoever exercises their duties shall prepare the minutes, which shall be signed by the members of the Committee who have attended the meeting. 4. The Audit and Control Committee shall be validly constituted when the majority of its members are in attendance, whether in person or represented, adopting its resolutions by an absolute majority of its members present or represented; in case of a tie, the Chairman shall cast the deciding vote. 5. The primary function of the Audit and Control Committee shall be to support the Board of Di- rectors in its oversight tasks, by periodically reviewing, among others, the process of preparing financial and economic information, its internal controls and the independence of the external auditor In particular, by way of example, and without prejudice to other tasks entrusted to it by the Board of Directors, the Audit and Control Committee shall be responsible for: a) Inform the General Shareholders’ Meeting about the issues raised in relation to the matters with- in its remit and, in particular, the outcome of the audit, explaining how it has contributed to the integrity of the financial information and the role that the Committee has played in that process. b) Serve as a channel of communication between the Board of Directors and the Company’s external auditor, assessing the results of each audit. The external auditor shall also: (i) submit proposals for the selection, appointment, re-election and replacement of the account auditor to the Board of Directors, assuming responsibility for the selection process, pursuant to the provisions of EU regulations, as well as the conditions under which they were contracted; (ii) regularly gather information from the external auditor on the audit plan and the results of its performance, in addition to maintaining its independence in the performance of its duties and verifying that Senior Management takes its recommendations into account; (iii) discuss the significant weaknesses of the internal control system detected in the development of the audit with the Company’s external auditor, without compromising its independence. To this end, and where appropriate, the Audit and Control Committee may submit recommendations or proposals to the Board of Directors and the corresponding monitoring period. (iv) establish the appropriate relationships with the external auditor to receive information on issues that may pose a threat to their independence, for consideration by the Committee, and any other relat- ing to the process of performing accounts audits and, where appropriate, the authorisation of services other than those prohibited, under the terms provided for in the regulations governing 669 account auditing activities on the system of independence, as well as any other communica- tions provided for in the account auditing legislation and in the audit regulations; (v) ensure the independence of the external auditor, establishing, in particular, appropriate measures: 1) so that the contracting of advisory and consulting services with the auditor or companies in its Group does not pose a risk to its independence, to which end the Committee shall request and receive from the auditor each year a declaration of its independence in relation to the Company or entities linked to it directly or indirectly, as well as the detailed, individual information of any type of additional services provided and the corresponding fees received from these entities by the external auditor or by the persons or entities linked to it, pursuant to the provisions of the regulatory regulations on account auditing activities, and 2) so that the Company can commu- nicate the change in auditor as a relevant fact to the CNMV and accompany this communica- tion with a statement on any possible disagreements with the outgoing auditor and, as applica- ble, their nature, and in case of the resignation of the external auditor, examine the underlying circumstances; and (vi) encourage the Company’s auditor to assume responsibility for audits of other Group companies. c) Each year, prior to the issuance of the account auditing report, issue a report that expresses an opinion on whether the independence of the auditors or audit firms has been compromised. This report shall contain, in any case, a reasoned assessment on the provision of each and every one of the additional services referred to in section b)v)1) above, taken individually and as a whole, other than the legal audit and in relation to the system of independence or the regulations governing the account auditing activities. d) The supervision of the Company’s Internal Audit services that ensure the proper functioning of the information and internal control systems, with the person responsible for the Internal Audit function being required to present his/her annual work plan to the Committee and directly inform this body of any incidents that occur in the performance of his/her duties and submit a report on his/ her activities at the end of each year. e) Supervise and analyse the effectiveness of the Com- pany’s internal control and of the risk control and management policy approved by the Board of Directors, ensuring that it identifies, as a minimum: (i) the different types of risks faced by the Company, including financial or economic risks, contingent liabilities and other off-balance sheet risks; (ii) the determination of the level of risk that the Company considers acceptable; (iii) the measures planned to mitigate the impact of the risks identified, should they materialise; and (iv) the information and internal control systems that will be used to control and manage the aforementioned risks, including contingent liabilities or off-balance sheet risks, and submit this to the Board for approval. f) Supervise the process of preparing and presenting individual and consolidated annual accounts and management reports, and the periodic financial information that is disclosed to the markets, and submit recommendations or proposals to the Board of Directors with a view to safeguarding their integrity; ensuring compliance with the legal require- ments and the correct application of generally accepted accounting principles, informing the Board of Directors, before the adoption by the latter of the following resolutions: (i) financial information that, given its status as a listed company, the Company is required to publish peri- odically, ensuring that the interim accounts are prepared using the same accounting criteria as annual accounts and, to that end, consider the suitability of a limited review of the Company’s external auditor; and (ii) the creation or acquisition of interests in special purpose entities or Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 36 of 101 670 those registered in countries or territories that are considered tax havens, as well as any other transactions or operations of a similar nature that, given their complexity, could undermine the transparency of the FCC Group. g) In relation to information and internal control systems: (i) supervise the preparation process and the integrity of the Company’s financial information and, where appropriate, the Group’s financial information, ensuring compliance with regulatory requirements, the adequate definition of the consolidation perimeter and the correct application of accounting criteria; (ii) periodically supervise the internal control and risk management sys- tems, including tax risks, ensuring that the main risks are properly identified, managed and dis- closed; (iii) ensure the independence and effectiveness of the Internal Audit function, proposing the selection, appointment, re-election and removal of the head of the Internal Audit service, as well as the budget of this service, receiving periodic information about its activities and veri- fying that Senior Management takes into account the conclusions and recommendations in its reports; periodically receive information from the Response Committee and the Management Control and Risk Management Division, respectively, on the performance of their activities and the operation of internal controls; and (v) ensure that internal codes of conduct and corporate governance rules comply with regulatory requirements and are appropriate for the Company, in addition to reviewing compliance, by people affected by these codes and rules of governance, of their obligations to inform the Company. h) Issue the reports and proposals requested by the Board of Directors or by the Chairman of the Board of Directors and those deemed appropriate in the proper performance of their duties and, in particular, (i) issue a report on the proposed modification of this Regulation, pursuant to the provisions of Article 4.3; (ii) make decisions in relation to the requests for information that directors, pursuant to the provisions of Article 26.3 of these Rules, submit before this Committee; and (iii) request, where appropriate, the inclusion of items on the agenda of Board meetings under the conditions and deadlines provided for in Article 34.3 of these Rules. 6. The Audit and Control Committee shall have access to the information and documentation re- quired for the exercise of its functions and may seek the 41 advice of external professionals who, in the capacity of advisors and up to a maximum of two (2) for each member of the Committee, they believe appropriate, to which end the provisions of Articles 27.3 and 35.4 of these Regula- tions shall apply. These advisors shall attend meetings with the right to speak but not to vote. 7. The Audit and Control Committee shall meet at least once per quarter and, in addition, every time its Chairman calls a meeting, or at the request of two (2) of its members. Each year, the Commit- tee shall draw up an action plan for the year to be reported to the Board of Directors, as well as a report on its activity during the year, which will serve as the basis for the evaluation that the Board of Directors will carry out. In the absence or if it is impossible for the Chairman of the Audit and Control Committee to attend a meeting, or if this position has been vacated, the meeting may be called by the member of the Committee who has served in his/her position the longest and, in the event of a tie, the oldest in age. For legal persons, the age of the natural person representing the company shall be taken into account for this purpose. 8. Deliberations shall be guided by the Chairman, who shall hand the floor over to attendees who ask to speak. In the absence or if it is impossible for the Chairman of the Audit and Control Com- mittee to attend a meeting, or if this position has been vacated, the corresponding functions shall be exercised by the member elected to this post by the majority of those in attendance at the meeting. 9. Any member of the management team and the staff of the FCC Group shall be obliged to attend Committee meetings and to provide their collaboration and access to the information available to them when so required; to this end, the provisions of Article 35.6 of these Rules shall apply. The same shall be required of the Company’s Accounts Auditors. 10. Any aspects not expressly regulated in this Article regarding the functioning of the Audit and Control Committee, shall be regulated by the Audit and Control Committee itself. Over the course of 2020, in the performance of said powers, the Committee has performed, by way of example, the following duties: – Serve as a channel of communication between the Board of Directors and the Company’s external auditor, assessing the results of each audit, as well as submitting proposals for the selection, appointment, re-election and replacement of the account Auditor, assuming re- sponsibility for the selection process, pursuant to the provisions of EU regulations, as well as the conditions under which they were contracted. – Discuss the significant weaknesses of the internal control system detected in the develop- ment of the audit with the Company’s external auditor, without compromising its independ- ence Receive information from the external Auditor on issues that may pose a threat to their independence and, where appropriate, the authorisation of services other than those prohib- ited, under the terms provided for in the regulations governing account auditing activities on the system of independence. – Ensure the independence of the external Auditor, establishing the corresponding measures to this end. – Inform the General Shareholders’ Meeting about the issues raised in relation to the matters within its remit and, in particular, the outcome of the audit, explaining how it has contributed to the integrity of the financial information and the role that the Committee has played in that process. – Each year, prior to the issuance of the account auditing report, issue a report that expresses an opinion on whether the independence of the auditors or audit firms has been compro- mised. This report shall contain, in any case, a reasoned assessment on the provision of each and every one of the additional services referred to in Article 37.5 section b)v)1) of the Rules of the Board, taken individually and as a whole, other than the legal audit and in relation to the system of independence or the regulations governing the account auditing activities. Supervise the Company’s internal audit services, as well as its control and risk management policy, reviewing the identification of the most relevant risks and the adoption of the necessary measures to mitigate their impact. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 671 – Report favourably to the Board on the FCC Non-Financial Information report for the 2019 business year. – Report favourably on the changes in the Compliance Model, as well as the approval of the modification of the FCC Group’s Protocol for the prevention and eradication of harassment (workplace and sexual). – Approve the FCC Group Safety and Crisis Management Regulations. The appointment of its members: FCC General Secretary, FCC Managing Director of Administration and Finance, FCC Director of Security and FCC Director of Human Resources. The first manager of the business affected by the incident will also be a member of this Committee, if applicable. To propose Mr Alejandro Aboumrad González as Liaison Director of the Safety and Crisis Com- mittee with the Board of Directors. On 19 January 2021, the Audit and Control Committee issued its report on its activities and opera- tions throughout 2020, for assessment by the Board. Therefore, during 2020, the Audit and Control Committee reached a total of 14 resolutions in its eight meetings, which dealt with the approval of the self-assessment report on the functioning of the Com- mittee for 2019 business year, the approval of the report on the independence of the auditors for the 2019 business year, providing favourable information to the Board on: the Annual Corporate Gov- ernance Report, the preparation of the Financial Statements, the Non-Financial Information Report, the approval of the FCC Group’s Bidding Policy, the approval of the FCC Group’s Safety and Crisis Management Regulations, the distribution of dividends, the changes in the regulatory section of the Compliance Model, the modification of the Board Regulations, as well as the process of preparing the different financial and management information reports for the 2020 business year. Based on the foregoing, it can be concluded that the Audit and Control Committee assumes and efficiently and diligently complies with the powers attributed to it in the Company’s different corporate texts. FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 37 of 101 – Supervise the process of preparing and submitting individual and consolidated financial state- ments and management reports, and the financial information that is regularly disclosed to the markets, and submit recommendations or proposals to the Board of Directors with a view to safeguarding their integrity; ensuring compliance with the legal requirements and the correct application of generally accepted accounting principles. – Report favourably on the process of preparing the individual and consolidated annual ac- counts and management reports for 2019, and that they have been prepared in compliance with the legal requirements and applying generally accepted accounting principles. – Report favourably on the 2019 Annual Corporate Governance Report. – Supervise the Company’s compliance with the internal codes of conduct and the Corporate Governance rules. – Report favourably on the adequacy of the information contained in the “Interim Statement”, referring to the first and third quarters of 2020, in accordance with the provisions of article 20, section 1, of Royal Decree 1362/2007, of 19 October, and the provisions that develop it, recommending its approval by the Board of Directors and its submission to the CMNV and Stock Exchanges. – Report, globally, on communications through the “Internal Communication Channel” and the actions carried out to this end. An internal whistleblowing channel and procedure is in place that allows employees and third parties to send their questions and report irregular behaviours confidentially. – Propose the appointment of Ernst & Young, S.L. as the account auditors for FCC and its con- solidated group for the 2021, 2022 and 2023 business years to the FCC Board of Directors, for its submission to the Ordinary General Shareholders’ Meeting. – In relation to the proposal of a flexible dividend (scrip dividend) before the FCC Board of Direc- tors, for submission to the Ordinary General Shareholders’ Meeting. The review performed by members of the Committee of the shareholder remuneration mechanism has been particularly important, ensuring the economic equivalence of the options of (i) transferring free allocation rights to FCC under the Purchase Commitment and (ii) receiving this amount in New Shares, that is, without any of these options being promoted or penalised in economic terms. – Approve, pursuant to the provisions of Article 34.9 of the Rules of the Board, the self-as- sessment report on the functioning of the FCC Audit and Control Committee during the 2019 business year, to be submitted to the Board of Directors. – Report favourably to the Board on the approval of the FCC Group’s Bidding Policy. – Report favourably on the adequacy of the information contained in the financial statements of the first half of 2020 (“Abridged financial statements” and “Interim Management Report”) in terms of the provisions of Article 11 et seq. of Royal Decree 1362/2007, of 19 October, and its implementing provisions. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 38 of 101 Identify the members of the Audit Committee that have been appointed taking into ac- count their knowledge and experience in accounting, auditing or both, and report on the date on which the Chairman of this Committee was appointed to the position. Names of directors with experience Manuel Gil Madrigal Date of appointment of the Chairman to the position The chairman of this Committee is Manuel Gil Madrigal, appointed on 8 May 2019. Remarks APPOINTMENTS AND REMUNERATION COMMITTEE Name Position Category Álvaro Vázquez de Lapuerta Chairman Independent director Dominum Desga, S.A. represented by Esther Alcocer Koplowitz Voting member External proprietary director Juan Rodríguez Torres Manuel Gil Madrigal Voting member External proprietary director Voting member Independent director % of proprietary directors % of independent directors % of other external directors 50 50 0 Remarks 672 Explain the duties, including, where appropriate, those in addition to those defined by law, which are attributed to this Committee, and describe the procedures and rules for its organisation and functioning. For each of these functions, indicate its most important ac- tions during the business year and how it have exercised each of the functions attributed in practice, whether by law, in the Bylaws or in other corporate agreements. Rules of the Board of Directors. Article 38. Appointments and Remuneration Committee 1. The Board of Directors of FCC shall constitute a permanent Appointments and Remuneration Committee without executive functions and with powers of information, advice and proposal within its scope of action, which will be composed of a minimum of four (4) and a maximum of six (6) directors, appointed by the Board of Directors, consisting exclusively of non-executive di- rectors, of which at least two (2) must be independent directors and two (2) proprietary directors. The Committee shall appoint the Chairman from among its independent members. The mandate of the members of the Appointments and Remuneration Committee shall not exceed their man- date as directors, without prejudice to them being re-elected indefinitely, insofar as they remain directors. 2. The Appointments and Remuneration Committee shall regulate its own functioning in accordance with the Bylaws and these Regulations. The Committee shall appoint a secretary who shall not be a member of the Committee, who shall assist the Chairman and ensure the proper function- ing of the Committee, taking care to accurately reflect the progress of meetings, the nature of deliberations and the resolutions adopted in the minutes, which shall be signed by the members of the Committee attending the meeting in question. The members of the Appointments and Remuneration Committee shall step down from their posts when they do so in their capacity as directors or when the Board of Directors so agrees. 3. The Appointments and Remuneration Committee shall be validly constituted when the majority of its members are in attendance, whether in person or represented, adopting its resolutions by an absolute majority of its members present or represented; in case of a tie, the Chairman shall cast the deciding vote. 4. The Appointments and Remuneration shall have the powers of information, assessment and proposal within its powers, corresponding to it, in addition to the functions established by law, the Company Bylaws or in accordance with these Rules, the following: a) Evaluate the necessary skills, knowledge and experience in the Board of Directors. For this purpose, it will define the functions and skills necessary in the candidates who must fill each vacancy and will evaluate the time and dedication required so that they can effectively carry out their duties. Any Director may request the Appointments and Remuneration Committee to take into consideration, if it considers them suitable, potential candidates to fill the vacancies of Director. b) Examine and organise the succession of the Chairman and the CEO and, where appropriate, make proposals to the Board of Directors so that said succession occurs in an orderly and planned manner. c) Submit to the Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 39 of 101 673 Board of Directors proposals for the appointment and re-election of independent Directors for ap- pointment by co-option or for submission for a decision by of the General Shareholders Meeting, as well as proposals for the re-election or removal of said Directors by the General Shareholders Meeting. d) Report on the proposals for appointment and re-election of the remaining Directors for their appointment by co-optation or for submission for a decision by the General Shareholders Meeting, as well as the proposals for their re-election or removal by the General Shareholders Meeting. e) Report on the proposals for the appointment and removal of senior executives and the basic conditions of their contracts, which the CEO proposes to the Board, proposing the persons or positions that should be considered senior executives of the Company, in addition to those provided for in Article 2.2 of these Rules and preparing the proposals for reprimands referred to its Article 19.2.d). Likewise, it will previously report on appointments for the holding of positions or posts that have an annual remuneration equal to or higher than the figure established by the Committee itself in each case, which must be reported to the Board of Directors. f) Propose to the Board of Directors the remuneration policy of the Directors and of the general directors or of those who carry out their senior management duties under the direct authority of the Board, the Executive Committee or the Chief Executive Officer, as well as the individual remuneration and the remaining contractual conditions of executive Directors, ensuring their observance. Likewise, inform and make proposals about the incentive plans of a multi-year nature that affect the Com- pany’s senior executives and in particular, those that may be established in relation to the value of the shares. Likewise, to propose to the Board of Directors the distribution among the Directors of the remuneration derived from their status as Directors agreed by the General Shareholders Meeting, in accordance with the provisions of the Company Bylaws and in this Regulation. g) Prepare and keep a record of the situations of directors and senior managers at FCC. h) Assist the Board in its role of ensuring that the selection procedures of its members favour the diver- sity of gender, experience and knowledge and do not suffer from implicit biases that may imply any discrimination and, in particular, that facilitate the selection of female Directors, so that the Company deliberately seeks and includes among the potential candidates, women who meet the intended professional profile, with the Board having to explain, if applicable, through the Annual Corporate Governance Report, the reason for the scant or non-existent number of female Direc- tors and the initiatives taken to correct this situation. For the purposes of the foregoing, it must establish a representation objective for the less represented gender in the Board of Directors and prepare guidelines on how to achieve this objective. i) Report on the proposed appointment of the members of the Committees of the Board of Directors. j) Report the appointment and removal of the Secretary of the Board. k) Verify the classification of the Directors as established in Article 6.3. l) Report, in advance, to the Board of Directors on all the matters provided in the Law, the Company Bylaws and these Rules and, in particular, related-party transactions. m) Receive and keep a register of situations referred to in section g) above and the personal information provided by the directors, as established in Article 25 of these Rules n) Request, where appropriate, the inclusion of items on the agenda of Board meetings under the conditions and deadlines provided for in Article 34.3 of these Rules. In the case of matters relating to the executive directors and senior executives, the Appointments and Remuneration Committee will consult the Chairman and the Company’s CEO. 5. The Appointments and Remuneration Committee shall regulate its own functioning in all matters not provided for in the Bylaws and in these Rules. 6. The Appointments and Remuneration Committee shall have access to the information and doc- umentation necessary for the performance of its duties. The members of the Appointments and Remuneration Committee may be assisted, at Committee meetings, by the persons who, in their capacity of advisors and up to a maximum of two (2) for each Committee member, they deem appropriate. These advisors shall attend meetings with the right to speak, but not vote and the provisions of Article 27 of these Rules shall apply. 7. The Committee shall meet with the established frequency and each time a meeting is called by the Chairman or requested by two (2) of its members and at least once a quarter. Each year, the Committee shall draw up an action plan for the year to be reported to the Board, as well as a report on its activity during the year, which will serve as the basis for the evaluation that the Board of Directors will carry out. 8. In the absence or if it is impossible for the Chairman of the Appointments and Remuneration Committee to attend a meeting, or if this position has been vacated, the meeting may be called by the member of the Committee who has served in his/her position the longest and, in the event of a tie, the oldest in age. For legal persons, the age of the natural person representing the com- pany shall be taken into account for this purpose. 9. Deliberations shall be guided by the Chairman, who shall hand the floor over to attendees who ask to speak. 10. In the absence or if it is impossible for the Chairman of the Appointments and Remuneration Committee to attend a meeting, or if this position has been vacated, the corresponding functions shall be exercised by the member elected to this post by the majority of those in attendance at the meeting. The Appointments and Remuneration Committee of Fomento de Construcciones y Contratas, S.A. has issued a report on its functioning and the performance of its duties at its meeting of 19 January 2021. As a result of the assessment process that the Committee performed on its own functioning, positive conclusions were reached, both in terms of its composition and internal organisation and the exer- cise of the powers assigned to it. During 2020, it exercised, among others, the following competences: – Assess skills, knowledge and experience necessary in the Board are evaluated, defining the nec- essary candidate functions and qualifications that each vacancy should entail, and assessing the time and dedication needed to discharge their duties properly. – Report on the proposal for the appointment and re-election of directors and members of the Committees of the Board of Directors, as well as the proposed representatives of corporate directors. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 40 of 101 674 – Ensure compliance with the remuneration policy established by the Group, proposing the remu- neration policy for directors and senior managers to the Board of Directors, in addition to the basic conditions of senior managers’ contracts. – Approve the content of the documents named: Appointments and Remuneration Committee Re- port on the Chairman of the Board of Directors and Appointments and Remuneration Committee Report on the CEO, for assessment by the Board of Directors in terms of the performance of their duties during the 2020 business year, submitted to the Board of Directors for this body to perform the assessment referred to in Article 34.9 of its Regulations. – Approve the Report on the functioning of the Appointments and Remuneration Committee during the 2020 business year, as well as the Report ratifying the current categories (proprietary, inde- pendent or executive) of the members of the Board. – Report on the appointment of Senior Managers and other positions that fall within the first three levels, in addition to those with remuneration equal to or greater than €75,000. – Propose the Annual Report on the remuneration of the Directors at Fomento de Construcciones y Contratas, S.A., corresponding to the 2020 business year to the Board of Directors, for its subsequent submission at the Ordinary General Shareholders’ Meeting. – Approve the Report containing the proposed statutory remuneration of the Board for the 2020 business year. – Report on the critical aspects relating to the general salary policy for the 2020 business year at the FCC Group. – Propose the remuneration policy for executive directors, the terms and conditions of the CEO’s contract and ensure compliance with the company’s remuneration policy to the Board of Direc- tors. During the seven meetings held by this Committee in the 2020 business year, a total of 16 resolutions were reached, which have addressed: the approval of the Report on the functioning of the Appointments and Remuneration Committee during the 2019 business year, the report ratifying the categories of directors, the Report of the Appointments and Remuneration Committee on the Chairman of the Board of Directors, the Report of the Appointments and Remuneration Committee on the CEO, as well as the implementation of the 2019 Variable Remuneration Plan and approval of the 2020 Plan. A favourable report has also been issued on: the 2020 Salary Policy, the 2019 Annual Report on the Remuneration of FCC Directors, on proposed appointments of directors and on various contractual transactions. Based on the foregoing, it can be concluded that the Appointments and Remuneration Committee assumes and efficiently and diligently complies with the powers attributed to it in the Company’s different corporate texts. C.2.2 Fill in the following table with information regarding the number of female direc- tors that sit on the Committees of the Board of Directors at the end of the last four years: Number of female directors Business year t Number % Business year t-1 Number % Business year t-2 Number % Business year t-3 Number % Executive Committee 33.33% (2) 33.33% (2) 33.33% (2) 33.33% (2) Audit Committee Appointments and Remuneration Committee 0% (0) 25% (1) 0% (0) 25% (1) 0% (0) 25% (1) 0% (0) 25% (1) Remarks C.2.3 Indicate, where appropriate, the existence of Rules applicable to Committees of the Board, their location for the purposes of consultation, and any modifications made during the business year. In turn, indicate whether an annual report on the activities of each committee has been prepared voluntarily. • Rules of the FCC Group Board of Directors (Chapter IX. Board Committees). • Reports of the Commissions to assess their functioning in 2020. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 675 Amount (thou- sands of euros) 1,954 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 41 of 101 D. Transactions with related parties and intra-group transactions Name or corporate name of the significant shareholder Name or company name of the company or group entity Nature of the relationship Transaction type D.1 Explain, as appropriate, the procedure and competent bodies for the approval of transactions with related parties and intra-group transactions. Procedure for confirming approval of related transactions Article 24 of FCC’s Regulations of the Board of Directors states that: Transactions with significant shareholders “1. The Board of Directors shall approve, upon a report from the Appointments and Remuneration Committee, any transaction performed by the Company or its Group companies with holders, whether individually or jointly, of a significant shareholding, including shareholders represented on the Board of Directors of the Company or other Group companies or with persons associated with them or their directors. The directors representing or associated with the affected shareholders shall refrain from participating in the deliberation and voting process concerning the resolution in question. 2. Only transactions that simultaneously satisfy the three characteristics indicated in section 6 of the previous Article with respect to the transactions made by the Company with its directors or persons associated with them shall be exempted from this approval”. D.2 Describe significant transactions based their amount or relevance on account of their subject matter performed between the company or Group companies and sig- nificant shareholders in the company: Realia Business, S.A. FC y C, S.L. Unipersonal Contractual Management and marketing of three property developments: Plot “10B” in Badalona, Barcelona, (141 collective dwellings available for resale and parking spaces); Plot “RCL 1B” in Tres Cantos, Ma- drid, (85 collective dwellings avail- able for resale and parking spac- es): Plot “RLU 2ª” in Tres Cantos, Madrid (30 single-family homes) Realia Business, S.A. FCC Construcción, S.A. Contractual Construction contracts 23,911 Realia Business, S.A. FC y C, S.L. Unipersonal Contractual - Exclusive marketing: Plot RU2A in Tres Cantos (marketing of 30 sin- gle-family dwellings), Plot RC1B in Tres Cantos (marketing of 85 dwellings available for resale), Plot 10A in Badalona (marketing of 141 collective dwellings available for resale), Plot in Arroyo Fresno, Ma- drid (marketing of 144 collective dwellings available for resale), Plot in Arroyo Fresno, Madrid (market- ing of 42 single-family dwellings), Plot in El Berzal (marketing of 40 single-family dwellings). Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 42 of 101 676 Name or corporate name of the significant shareholder Realia Patrimonio, S.L.U. Name or company name of the company or group entity FCC Industrial e Infraestructuras Energéticas S.A.U. FCC Industrial e Infraestructuras Energéticas S.A.U. Cementos Portland Valderrivas Realia Patrimonio, S.L.U. Banco Inbursa, S.A. Banco Inbursa, S.A. Amount (thou- sands of euros) 5 Nature of the relationship Transaction type Contractual Annual preventive maintenance of generator sets in the buildings: Offices on Calle Acanto 22 and 4 units in office buildings at Avda. Del Sur del Aeropuerto de Bara- jas, 28, 30, 32 and 34 in Madrid (Eisenhower Business Center in Madrid), basic annual preventive maintenance of the equipment of the Uninterruptible Power Supply of the buildings: Offices at Paseo de la Castellana 216, Madrid; offic- es at Calle Acanto 22, and 2 units in office buildings at Avda. del Sur del Aeropuerto de Barajas, 28 and 34, Madrid. Contractual Service provision contract 1,397 Contractual Accrual interest on subordinated 2,076 financing. FCC Construcción, S.A. Contractual Acquisition of certificates pertain- ing to works on Metro line 2 in Panama 3,818 D.3 Describe the significant transactions based their amount or relevance on account of their subject matter performed between the company or Group companies and company directors or executives: Name or company name of directors or executives Name or company name of the related party Alejandro Aboumrad González FCC Relationship Director Nature of the transaction Provision of services Gerardo Kuri Kaufmann Cementos Portland Valderrivas Chief Executive Officer Provision of services Amount (thousands of euros) 338 175 Remarks - D.4 Provide details of the significant operations carried out by the company with oth- er companies belonging to the same Group, provided they are not eliminated in the process of preparing consolidated financial statements and are not part of the Company’s routine business in terms of its purpose and conditions. In any case, any intra-group transactions carried out with companies established in coun- tries or territories that are considered a tax haven shall be reported: Corporate name of the Group company Brief description of the transaction Amount (thousands of euros) - - - Remarks Remarks There are numerous transactions between Group companies that are part of their routine busi- ness and that, in any case, are eliminated in the process of preparing the consolidated financial statements. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 677 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 43 of 101 D.5 Describe the significant transactions carried out between the Company or Group Companies and other related parties, which have not been reported on in the above sections. Corporate name of the related party Brief description of the transaction Amount (thousands of euros) - - - Remarks D.6 Describe the mechanisms established to detect, determine and resolve possible conflicts of interests between the Company and/or its Group and its directors, ex- ecutives or significant shareholders. Article 23 of the Rules of the Board of Directors states that: 1. As part of his/her duty to avoid the conflicts of interests indicated in section 2.e) of the preced- ing article, the Director shall refrain from: a) Undertaking transactions with the Company or with Group Companies, except in the case of ordinary transactions, carried out under standard con- ditions for customers and of limited relevance, including those for which information is not neces- sary to express the true image of equity, of the financial situation and the results of the Company. b) Using the name of the Company or invoking his/her status as a director to unduly influence the execution of private transactions. c) Making use of social assets, including confidential informa- tion on the Company, for private purposes. d) Taking advantage of the Company’s business op- portunities. e) Obtaining advantages or remuneration from third parties other than the Company and its Group associated with the performance of their duties, unless they are a mere courtesy. f) Performing activities on their own account or on behalf of others that involve effective compe- tition, whether current or potential, with the Company or that, in any other way, place them in a permanent conflict with the interests of the Company. 2. The above provisions shall also apply in the event that the beneficiary of the prohibited acts or activities is a person linked to the director. 3. In any case, directors shall notify the Board of Directors, through the Corporate Responsibility Department or any other department that may replace it, with sufficient notice, of any direct or indirect conflict of interests that they or persons linked to them may have with the interests of the Company or those of the group of companies that comprise the FCC Group or its related companies. 4. The Company may waive the prohibitions contained in this article in unique cases, allowing the director or related person to perform a specific transaction with the Company, the use of certain social assets, the use of a specific business opportunity, obtaining an advantage or remuneration from a third party. 5. This authorisation shall be agreed by the General Shareholders’ Meeting when the intention is to waive the prohibition on obtaining an advantage or remuneration from third parties, involves a transaction worth more than ten percent (10%) of the Company’s social assets or concerns the obligation to not compete with the Company. In the latter case, the waiver may only be offered in the event that the Company is expected to suffer no damages or that the damages will be offset by the advantages expected to be obtained from the waiver, and the waiver shall be granted by express and separate consent of the General Shareholders’ Meeting. 6. In the other cases to which the prohibitions in this article apply, authorisation may also be granted by the Board of Directors, subject to a favourable report from the Appointments and Remuner- ation Committee, provided that the independence of the members granting this authorisation is guaranteed with respect to the relieved director or the related person. In addition, it will be necessary to ensure that the authorised transaction protects social assets from harm or, where appropriate, they are undertaken subject to market conditions, and the transparency of the pro- cess. The affected directors or those representing or associated with the affected shareholders shall refrain from participating in the deliberation and voting process concerning the resolution in question. Only transactions that simultaneously meet the three (3) following characteristics shall be exempted from the authorisation required from the Board of Directors referred to in the paragraph above: a) that are undertaken as part of contracts whose conditions are standardised and are applied en masse to a high number of customers; b) that are executed at generally es- tablished prices or tariffs by those who act as suppliers of the asset or service in question; and c) that its value does not exceed one percent (1%) of the Company’s annual income. 7. In any case, conflicts of interest incurred by the directors shall be included in the report, under the terms established by Law. 8. For the purposes of this provision, related persons are understood as those included in the Span- ish Corporate Enterprises Act. D.7 Indicate whether the company is controlled by another entity within the meaning of Article 42 of the Commercial Code, whether listed or not, and has, directly or through its subsidiary companies, business dealings with that entity or any of its subsidiary companies (other than those of the listed company) or engages in activ- ities related to any of their subsidiary companies. Yes No Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 678 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 44 of 101 There is a collaboration agreement between FCC Construcción (FCC Group) and Carso Infrae- structuras S.A.B de CV (a company related to Control Empresarial de Capitales) to jointly under- take projects in the Americas (excluding the United Mexican States), through a special purpose vehicle (SPV) “FCC Américas”. Indicate whether the respective areas of activity and any business relationships between the listed company or its subsidiary companies and the parent company or its subsidiary companies have been accurately publicly disclosed: Yes No Report on the respective areas of activity and any business relationships between the listed company or its subsidiary companies and the parent company or its subsidiary companies, and identify where these aspects have been publicly disclosed Collaboration agreement between FCC Construcción (FCC Group) and Carso Infraestructuras (a company related to Control Empresarial de Capitales) to jointly undertake construction projects in the Americas (excluding the United Mexican States), through a special purpose vehicle (SPV) “FCC Américas”. These aspects have not been publicly disclosed. Identify the mechanisms planned to resolve possible conflicts of interests between the parent company of the listed company and the other Group companies: Mechanisms to resolve potential conflicts of interests A joint executive committee has been set up for the company FCC Américas to resolve any disputes that may arise. Regarding the FCC’s Board of Directors, for the adoption of resolutions in view of the tender for a project in the Americas, directors with a potential conflict of interest abstained. E. Risk control and management systems E.1 Explain the scope of the Company’s Risk Control and Management System, includ- ing those of a fiscal nature. The FCC Group Risk Management Model has been designed with the aim of identifying and assessing the potential risks that could affect the Group’s different units, as well as establishing mechanisms incorporated into the organisation’s processes that make it possible to manage risks within the accepted levels, providing the Board of Directors and Senior Management with reasonable assurance regarding the achievement of the main objectives defined. This Model applies to all FCC Group companies, as well as to those affiliates where FCC has effective control, promoting the development of work frameworks that enable suitable risk control and management in those companies where effective control is not available. This model is essentially based on the integration of a risk-opportunity vision and the assignment of responsibilities that, together with the segregation of duties, enable the follow-up and control of risks, consolidating a suitable control environment. The activities included in the FCC Group’s Risk Management Model include the assess- ment of risks, including tax risks, in terms of impact and probability of occurrence, giving rise to Risk Maps, and subsequently the establishment of prevention and control activities to mitigate the effect of such risks. In addition, this Model includes the establishment of reporting flows and communication mechanisms at different levels, which allow both de- cision-making and its review and continuous improvement. The FCC Group also has a Criminal Prevention Model, developed, among other aspects, through a specific matrix of risks and controls. Its integration into the organisation’s pro- cesses contributes to strengthening the control environment. This is in addition to a Tax Code of Conduct and a Tax Control Framework Standard, in which the process of identi- fying and assessing tax risks and assigning responsibilities for both the management and reporting of these risks is implemented. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 679 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 45 of 101 E.2 Identify the bodies at the Company responsible for the development and execution of the Risk Management System, including the tax risk management system. cases where breaches or inefficiencies in the functioning of controls have been detected, submitting these proposals to the Corporate Compliance Officer. The Board of Directors is responsible for approving the FCC Group control and risk man- agement policy, identifying the main risks identified by the company and implementing and monitoring the appropriate internal control and information systems, with a view to ensur- ing both the future viability and competitiveness of the Group, adopting the most relevant resolutions to implement them in the best possible way. Furthermore, it is the responsibility of the Audit and Control Committee to supervise and analyse the effectiveness of the internal control and risk control and management policy, ensuring that it identifies: – The different types of risks to which the Group is exposed, including financial or eco- nomic risks, contingent liabilities and other off-balance sheet risks. – The definition of the level of risk that the Group considers acceptable. – The measures planned to mitigate the impact of the risks identified, should they mate- rialise. – The information and internal control systems that will be used to control and manage the aforementioned risks, including contingent liabilities or off-balance sheet risks, and submit them to the Board for approval. In this connection, the FCC Group Risk Management Model is based on the establish- ment of three levels of risk management and internal control, the first two residing with the business units and the third with the corporate areas. The first level is assumed by the operating lines of the business unit, which act as risk generators and have the responsibility of managing, monitoring and adequately reporting the risk generated, including tax risk. The second level, also assumed by the business units, consists of support, control and supervision teams, ensuring effective control and adequate risk management, including tax. Within this level, the management area of each business unit is responsible for the implementation of the Risk Management Model, including those risks related to financial information. The Business Compliance Officer assists the Corporate Compliance Officer in the dissemination of the Criminal Prevention Model, in the identification of risks and in the definition and monitoring of controls, and proposes action plans, within its scope, in The third level consists of corporate areas that report to Senior Management and/or to the Audit and Control Committee. This third level encompasses the Tax Division, respon- sible for the definition of tax policies, procedures and criteria generally applied to the FCC Group and the Corporate Compliance Officer, whose duties include the implementation of the Crime Prevention Model, the identification of risks in this area, and the definition and follow-up of the relevant controls, as well as the management of the Whistleblowing Channel and the proposal of action plans in cases in which breaches or inefficiencies have been detected in the operation of the controls. The Internal Audit and Risk Manage- ment areas, which report to the Audit and Control Committee, are also part of this third level. The Risk Management area is responsible for coordinating the Risk Management Model, defining a baseline methodology for identifying, assessing and reporting risks, providing support to those responsible for its implementation, and the Internal Audit area, in its capacity as the final level of control, ensures that the policies, methods and proce- dures are adequate and verifies their effective implementation. E.3 Indicate the main risks, including tax risks and the extent to which those involving corruption are significant (the latter being understood within the scope of Royal Decree Law 18/2017), which may affect the achievement of business objectives. Below, details are provided of the main risk scenarios, grouped by categories: strategic, operational, compliance and financial. Strategic Risks Regulatory changes and political and socio-economic instability in countries and/ or regions. Possible regulatory changes in social, tariff, commercial, labour, corporate, health, environmental and tax matters, etc., as well as changes in the public models for the development and management of environmental services, the end-to-end water cy- cle and infrastructures, or periods of economic, political or social instability in countries/ regions in which the FCC Group operates or could operate, may lead to a reduction in business opportunities or a decline in the profitability of projects. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 46 of 101 Global climate or health crises, natural disasters and regional armed conflicts. Short- and medium-term climate disruptions, extreme weather phenomena, epidemics and pandemics, armed conflicts or terrorist activities that would affect the areas and ter- ritories in which the FCC Group operates and, consequently, the demand for goods and services, the operations and level of activity, and the infrastructures built and operated by the group. In addition, costs could increase due to ecological transition policies or health constraints, and mobility and optimisation of supply chains for goods and services could be hampered, affecting the achievement of the group’s objectives. Cut in investment and demand forecasts. A decline in GDP in the countries in which the group operates, the increase in public and private debt and changes in the forecasts and investment priorities of current and potential customers may have different negative impacts on the FCC Group. Furthermore, the revenues the Business Areas for Environ- mental Services, Water, Concessions and Real Estate are, to some extent, dependent on the level of demand, which is subject to change as a result of conditions beyond the control of the FCC Group. Loss of market share. The FCC Group works in highly competitive markets. Any difficul- ty in developing competitive and profitable bids, as well as the entry of new competitors in mature markets or regulatory and commercial barriers or restrictions for environmental or health reasons, could lead to a loss of market share. Damage to reputational image. The FCC Group may be involved in certain internal or external circumstances that could adversely affect its reputational image and conse- quently its business. Operational Risks Termination or unilateral modification of a contract, contractual issues and legal disputes. Clients may unilaterally modify or terminate certain contracts before their com- plete execution. The compensation that the FCC Group would receive in these cases may not be sufficient to cover the damages caused and, in addition, the FCC Group may need to resort to legal or arbitration procedures to collect it, thus increasing costs and delaying the actual receipt of the compensation. Furthermore, different interpretations of contractual and regulatory requirements may lead to discrepancies that could have an impact on the outcome of the projects. 680 Project reprogramming. A situation of political and/or financial economic instability in certain markets in which the FCC Group operates, together with other circumstances outside FCC’s control, such as the lack of availability of land for infrastructure projects, or a delay in obtaining licences, health or environmental restrictions, disruption of the supply chain for goods and services or other things, could lead to the rescheduling of projects underway with an impact on their results. Risks arising from links with third parties. The FCC Group could undertake its busi- ness activities jointly with public authorities or private entities through different forms of association. However, adverse circumstances in the project, or in a partner’s economic or reputational situation, could lead to a situation that could adversely affect the FCC Group. Uncertainty in pricing and optimisation of the supply chain, raw materials, energy and outsourced services. In the course of its activities, the FCC Group consumes con- siderable volumes of raw materials and energy, as well as working with a great number of subcontractors and manufacturers. Changing economic, environmental, health and reg- ulatory conditions could lead to price fluctuations and difficulties in optimising the supply of goods and services, which could affect the FCC Group’s results. Labour conflict. Some of FCC Group’s activities are labour intensive, with considerable geographical diversity (each with their respective labour laws), that for different reasons could lead to conflicts that will would the company’s productive capacity and reputation. Loss of human capital. The success of the FCC Group’s business operations depends largely on key personnel with technical and managerial experience, so a substantial loss of such personnel could affect the completion and results of certain projects. Risks associated with digitisation. Increased digitisation of operations and the rise of remote working could lead to disruptions in an ever-changing environment with continu- ous innovation. Cyber attacks. The existence of threats of a cybernetic nature could affect tangible and intangible assets and lead to prolonged interruption, uncontrolled access and information and data leaks and/or hijacking. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 47 of 101 681 Health and safety risks. One of the FCC Group’s priority aims is to perform its activities with a high level of health and safety for all personnel, and to comply strictly with legal reg- ulations in the field, which is reflected in the Prevention of Risks at Work Policy approved by the Board of Directors. Even so, the FCC Group could be affected by the health crisis and incidents or accidents in the development of its activity that could harm and interfere with operations. Environmental damage. CC’s environmental commitment is mirrored in the Group’s En- vironmental Policy approved by the Board of Directors. The Group has environmental management systems in place, implemented in projects and contracts that are audited and certified in accordance with the UNE-EN-ISO 14001 Standard. However, due to the nature of the Group’s activities, there may be circumstances under which damage may occur in the form of spills, emissions, etc., that have an impact on projects and contracts. Compliance Risks Regulatory or contractual non-compliance. The FCC Group’s operations should re- spect all applicable regulations and these will vary from one jurisdiction to another and even from one municipality to another, as well as being subject to modifications. However, under certain circumstances, there may be short-term non-compliance with regulations, especially in the phase of adaptation to new legislation that could be enacted. Also, in certain projects it may be difficult to comply with all contractual requirements. Non-Compliance with the Code of Ethics. The FCC Group has a Code of Ethics and Conduct, a Manual for Criminal Prevention and, among others, Anti-Corruption, Human Rights, Tenders, Agents, Gifts and partner relationship Policies regarding Compliance that have been approved by the Board of Directors, as well as a protocol for the preven- tion and eradication of bullying, all of which are binding on anyone linked to any company in the FCC Group. The high level body entrusted with promoting and supervising the Compliance Model is the Compliance Committee, chaired by the Corporate Compliance Officer. Nevertheless, in the course of operations and relationships with clients, partners and suppliers, situations could arise that could lead to potential non-compliance with these regulations, resulting in legal, economic and reputational damages for the Group. Financial Risks Credit risk and liquidity risk. Both risks are mainly attributable to accounts receivable and are therefore related to the Group’s exposure to the credit risk of its clients and the liquidity lines available to them. The Group monitors the credit quality of its clients, the liquidity and financing lines for each of the companies to mitigate this risk. Restricted access to financial markets. In specific circumstances, there may be some difficulty in obtaining or renewing corporate financing or for the execution of certain pro- jects, due to situations of general instability that cause temporary disruption for the capital markets, requirements or guarantees requested by financiers, as well as the viability of the economic models that justify the repayment of funds. All this could affect regular funding, normal business, or result in the loss of business opportunities. Impairment of the commercial fund. The FCC Group’s commercial fund has a sig- nificant positive balance. FCC cannot guarantee that the Group will not incur losses/ adjustments as a result of impairment of the commercial account or any other of the Group’s material assets. If this should occur it could significantly affect the FCC Group’s economic result. Recoverability of deferred tax assets. At a consolidated level in the FCC Group there is a certain volume of deferred taxes, mostly corresponding to the Spanish tax group. Their recoverability could be affected by the cyclical nature of the Fiscal Group’s profit, or by future changes in tax rates, especially corporate tax in Spain. Fluctuation of exchange rates. Exchange rate risk is primarily located in borrowings denominated in foreign currencies, investments in international markets and payments received in currencies other than the euro. Fluctuation of interest rates. The purpose of the Group’s financial policy is to make sure that exposure of its debt is partially linked to variable interest rates. Any increase in interest rates could give rise to an increase in the FCC Groups’s financial costs associated with borrowings at variable interest rates and could also increase the cost of refinancing the FCC Groups’s borrowings and the issue of new debt. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 682 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 48 of 101 E.4 Identify whether the entity has risk tolerance levels, including for tax risk. – Inefficiencies in the supply chains of goods and services and in the mobility of According to the Risk Management Model, the level of tolerance to risk assumed by the FCC Group shall be dynamic over time, and shall vary depending on internal and/or ex- ternal factors. It shall be defined by the Board of Directors and aligned with the strategy. The elements that shall define the risk appetite of the FCC Group are as follows: human resources assigned to projects FCC has contracts in various countries around the world and optimises its supplies and work teams globally. Restrictions on the mobility of people, goods and services decreed by various countries for health reasons during 2020 have altered the logistics planned for certain projects carried out by the group. – A general profile of medium-to-low and predictable risk, based on a diversified busi- – Rescheduling of certain projects, especially in the infrastructure area ness model. – A stable and recurring policy for the generation of income. – Intense participation of Senior Management that guarantees a culture of risk manage- ment focused on the protection and assurance of an adequate return on capital. – A management model that ensures a global and interrelated vision of all risks, as part of a robust risk control environment, with responsibilities at different levels. – The undertaking of its activity based on a behavioural model that protects the interests of its clients and shareholders. – Zero tolerance against bribery and corruption. – Concerning tax risk, the Tax Control Framework Standard defines the general tax risk management policy and the levels of tax risk that can be assumed. E.5 Indicate the risks, including tax risks, that have materialised during the business year. In 2020, the following risks have materialised: – Reduced activity as a result of measures decreed to curb the COVID-19 health crisis Despite the fact that the group’s main activities are the provision of services classified as essential, such as waste management, water supply, urban sanitation and infra- structure management, and the stability of demand for these services, the measures decreed for health reasons due to the pandemic declared by the WHO have had some impact on activity levels. Various operational, technical and design circumstances, the availability of work are- as, contractual interpretation, and especially the measures decreed to deal with the COVID-19 pandemic declared by the WHO, have made it necessary to reschedule certain projects. The FCC Group carries out various initiatives, such as including con- tractual clauses that allow the costs arising from said rescheduling to be passed on, in addition to an active commercial relationship with the client in search of satisfactory solutions for both parties. The year’s economic environment, however, has entailed added difficulties for negotiations in this area. – Contract and legal disputes The high number of contracts with customers, suppliers and partners, as well as the possible requirements of authorities in different jurisdictions, means that the FCC Group is a party to civil, employment, criminal, arbitration, administrative, regulatory and similar proceedings that arise during the course of its ordinary business. – Changes in exchange rates of currencies with which the Group operates The volatility in the different currencies that affect the FCC Group’s businesses con- tinued this business year, with the devaluation of the US dollar and the Mexican peso having a significant impact. FCC Group’s general policy is to mitigate the adverse ef- fect on its financial statements of exposure to foreign currencies as much as possible, with regard to both transactional and purely equity-related movements. Therefore, the FCC Group manages the exchange rate risk that may affect both the Balance Sheet and the Income Statement, through natural coverage whenever possible, or by con- tracting different financial instruments. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 683 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 49 of 101 - New regulatory framework following the UK’s exit from the EU Following the entry into force of the United Kingdom’s Withdrawal Agreement from the European Union, the FCC Group continues to monitor the potential effects on its businesses, especially in the Environmental Services area, and has developed plans to adapt to possible changes. E.6 Explain the response and supervision plans for the company’s main risks, including tax risks, as well as the procedures followed by the company to ensure that the Board of Directors responds to any new challenges that arise. Both the FCC Group ‘s Risk Management Model and its Compliance Model establish comprehensive frameworks for the identification, assessment and management of risks in their respective fields of application. Once the risks have been identified and prioritized, it is expected to establish control mechanisms through the Risk and Control Matrices that will include key controls aimed at preventing and/or mitigating the risks and the definition of persons in charge of these control activities. For those risks that exceed the accepted level of risk or when non-fulfil- ment or inefficiencies are detected in the operation of the controls, specific Action Plans will be established taking into account their operational viability, their possible effects, as well as the cost-profit ratio of implementation. The supervision of the Risk Management Model is carried out by the Business Divisions with the support of the Risk Management area, while supervision of the Ethics and Com- pliance programmes is carried out by the Compliance Committee, chaired by the Corpo- rate Compliance Officer with the support of the Compliance Officers of the businesses, following certification of controls and processes by their owners. In light of potential political and socio-economic uncertainties, and especially in light of the increase in national deficits and public debt, the FCC Group will continue to focus on consolidating its diversified international positioning, maintaining its market share in mature markets, and on seeking new formulas for public-private partnerships for the development of the end-to-end water cycle, environmental services and infrastructures, included in medium and long-term contracts. Faced with risks caused by climate and health crises, the FCC Group maintains its posi- tion as a leading provider of services classified as essential, such as waste collection and treatment and street cleaning, the end-to-end water cycle service and the management and maintenance of transport infrastructures, which are business areas with low flexibil- ity in demand and stable and predictable medium- and long-term cash flows. FCC has created its own strategy to adapt to climate change in Horizon 2050 that integrates all its business lines, and which is aimed at mitigating the risks associated with climate change by taking advantage of the business opportunities it represents, based on five pillars: communication with stakeholders, reduction of carbon footprint, innovation in products and services integrating their businesses in the circular and low-carbon economy, moni- toring of emissions and adaptation to regulatory changes. In relation to the risk of termination or modification of contracts and the rescheduling of projects, the FCC Group continuously monitors contractual contingencies, the planning and budgeting of operations and pursues an active negotiation policy. Furthermore, the FCC Group monitors its key suppliers to avoid the risks of inefficiencies in the supply chain, both due to financial difficulties of suppliers and supply problems and stock depletion owing to alterations in the production chain and in the normal transit of goods due to the impact of restrictions for health or regulatory reasons. To mitigate risks involving the uncertainty and volatility of the prices of raw materials, energy and subcon- tracted services, before which purchasing procedures are applied preventively, also using deviation analysis as an indicator to detect deviations. FCC’s business units also have quality assurance, environmental management and oc- cupational risk prevention systems, certified in accordance with international standards. Some of these units are part of the European Commission’s Eco-Management and Audit Scheme, which is all designed to address these types of operational and compliance risks. With regard to the risk of vulnerability to natural disasters, in addition to implementing different preventive actions, the FCC Group’s policy sets to take out the necessary in- surance policies to cover the possible risks to which the various elements of its property, plant and equipment and the activities carried out are subject. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 50 of 101 To address the risks related to cyber attacks and information security, the FCC Group has an operational unit responsible for preventing, detecting, analysing and mitigating factors related to security events, such as intrusion, attacks, etc., as well as an Informa- tion Security Management System designed in line with international standards, and that has received third party certification for certain business areas. The FCC Group also has an internal policy for complying with the requirements of the data protection regulations, in addition to those responsible for this function both in the business units and at a cor- porate level. In terms of other compliance risks, the FCC Group has a Code of Ethics and Conduct, which aims to ensure all persons linked to any FCC Group company are guided by the strictest behavioural guidelines in compliance with laws, regulations, contracts, proce- dures and ethical principles, being binding on all these persons. The FCC Group’s Com- pliance Model also has, among other elements, documented policies on relationships with partners in matters of compliance, anti-corruption, agents, gifts and tenders, and is complemented by a Criminal Prevention Manual, compliance committee regulations, and documented procedures for investigation and response and the Whistleblowing Channel, as well as other procedures that further develop the different principles of action included in the Code of Ethics and Conduct. Regarding financial risks, they are controlled by specialist departments at the business units, together with the General Administration and Finance Division, whose tasks include reaching decisions on risk transfer mechanisms (insurance), covering interest rate varia- tions, and managing asset risks. 684 F. Internal risk control and management systems in relation to the financial information reporting process (IFRS) Describe the mechanisms that make up the risk management and control systems in relation to the process of reporting your institution’s financial information (IFRS). F.1 Institution’s control environment. State, indicating their main characteristics, at least: F.1.1. The bodies and/or areas responsible for: (i) the existence and maintenance of adequate and effective IFRS; (ii) its implementation; and (iii) its supervision. The Internal Financial Reporting Control System (hereinafter IFRS) shall provide the Audit and Control Committee and Senior Management with reasonable assurance about the reliability of the financial information submitted for approval to the Board and that is peri- odically disclosed to regulators and the market. The bodies and areas at the FCC Group responsible for ensuring the existence, mainte- nance, implementation and supervision of an adequate and effective IFRS, as well as the responsibilities attributed to these bodies are as follows: Board of Directors. The duties of this Governing Body include: – Ultimate responsibility for the approval of the Risk Control and Management Policy, including tax risks, identifying the main risks faced by the Company and implementing and monitoring the appropriate internal control and information systems, as well as the supervision of internal information and control systems. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 51 of 101 685 – Defining the information and communication policies with shareholders, markets and public opinion, ensuring the quality of the information provided, approving the financial information that, due to its listed status, the Company must publish periodically. Audit and Control Committee. In relation to the Information and Internal Control Systems, the Audit and Control Com- mittee is responsible for: – Periodically reviewing, among other aspects, the process of preparing economic-fi- nancial information, its internal controls and the independence of the external auditor. – The supervision of the Company’s Internal Audit services that ensure the proper func- tioning of the information and internal control systems, with the person responsible for the Internal Audit function being required to present his or her annual work plan to the Committee and directly inform this body of any incidents that occur in the performance of his/her duties and submit a report on his or her activities at the end of each business year. – The supervision and analysis of the effectiveness of the Company’s internal control and of the risk control and management policy approved by the Board of Directors, ensuring that it identifies, as a minimum: • The different types of risks to which the Group is exposed, including financial or economic risks, contingent liabilities and other off-balance sheet risks. • Setting the level of risk that the Company considers acceptable. • The measures planned to mitigate the impact of the risks identified, should they materialise. • The information and internal control systems that will be used to control and man- age the aforementioned risks, including contingent liabilities or off-balance sheet risks. – The supervision of the preparation process and the integrity of the financial information related to the Company and its Group, reviewing compliance with regulatory require- ments, the adequate definition of the consolidation perimeter and the correct applica- tion of accounting criteria. – The supervision of the process of preparing and submitting individual and consolidat- ed annual accounts and management reports, and the periodic financial information that is disseminated to the markets, ensuring compliance with the legal requirements and the correct application of generally accepted accounting principles, informing the Board of Directors of the financial information that, given its status as a listed company, the Company is required to publish periodically. – The supervision of the auditor and his/her independence, including the reception of reports and the authorisation of certain services that could pose a threat to his/her independence. – The supervision of the proper functioning and effectiveness of the Crime Prevention Model. Senior Management. The Senior Management of each of the units is ultimately responsible for the implemen- tation of the Risk Management and Internal Control Model; its duties include the imple- mentation of an effective and efficient control system for risks, including those associated with financial information. General Administration and Finance Division. The General Administration and Finance Division performs its duties in the areas of Ad- ministration, Information Systems and Technologies, Finance, Purchasing and Human Resources. The Administration area directs the administrative management of the FCC Group and has the following duties, among others, in relation to Information Systems and Internal Control: general accounting, accounts standardisation, consolidation, tax advice, and tax procedures, tax compliance and the management of administrative procedures. The Finance area, in relation to the Information and Internal Control Systems, its aims and actions are structured around financing the Group’s activities, the management of its debt and financial risks, the optimisation of the treasury and financial assets, financial manage- ment and control, the management of markets and CNMV, the analysis and financing of investments, the management, monitoring and control of guarantees and collateral, the management of insurance and industrial and property risks and management control. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 52 of 101 The Information Systems and Technologies area of the FCC Group ensures that adequate technological support is provided to the Group’s management processes, optimising the level of service provided to users, and ensuring the confidentiality and integrity of in- formation systems. Reporting to this area, the FCC Group has an Information Security Department responsible for defining, and implementing internal controls to verify proper compliance with corporate information security policies, including those that support the processes of preparing and publishing financial information, and that assume responsibil- ity for data protection matters. General Internal Audit and Risk Management Division. Its objective is to provide the Audit and Control Committee and Senior Management with an independent and objective opinion on the Group’s ability to achieve its objectives through a systematic and methodological approach for the assessment, management and effectiveness of internal control and risk management processes, assessing the ef- fectiveness and reasonableness of the internal control systems, as well as the functioning of processes according to the procedures, proposing improvements and providing meth- odological support to the Division in the process of identifying the main risks that affect activities and supervising the actions for their management. The responsibilities in relation to the Financial Information Control Systems of the General Internal Audit and Risk Management Division include the supervision of the process of preparing and submitting the Group’s financial information before it is issued to the mar- ket, as well as contributing, together with the other areas involved, the development of internal controls by monitoring compliance with the policies, standards, procedures and activities that constitute the internal control model to ensure the correct management and reduction of risks, issuing recommendations for their improvement. Its responsibilities also include the supervision of projects and processes, performing a risk identification and an assessment of the control environment. Compliance Committee. This high-level internal management committee, with autonomous initiative and control powers entrusted by the Board of Directors, through its Audit and Control Committee, is responsible for promoting a culture of ethics throughout the Organisation and ensuring both internal and external regulatory compliance. Its duties and competencies include the monitoring and supervision of ethics and compliance programmes, as well as the Code of Ethics and Conduct, existing policies, rules, procedures and controls aimed, 686 among other objectives, at preventing unlawful conduct. It is chaired by the Corporate Compliance Officer. F.1.2. Whether the following elements are in place, especially in relation to the process of preparing financial information: • Departments and/or mechanisms in charge of: (i) designing and reviewing the organisational structure; (ii) of clearly defining the lines of responsibility and au- thority, with an adequate distribution of tasks and functions; and (iii) ensuring there are sufficient procedures for its correct dissemination throughout the insti- tution. The highest authority for the design and review of the organisational structure as well as the definition of the lines of responsibility and authority is the CEO, appointed by the Board of Directors. Each Corporate or Business Division must define the organisational structure and the lines of responsibility of its management. The process of determining the organisational structure is regulated by section 10 of the Group’s General Standards Manual, which regulates the bodies that directly report to the Board of Directors, the distribution of the Group’s management duties, and the appoint- ment of managerial positions. The first-level organisational structure is available on the corporate intranet, with the dif- ferent business units having their own organisational structures associated with specific projects and contracts. The Appointments and Remuneration Committee is responsible for examining and or- ganising the succession of the Chairman of the Board of Directors and the CEO of the Company and, where appropriate, making proposals to the Board of Directors for this succession to take place in an orderly and planned manner. This is in addition to report- ing on proposals for the appointment and dismissal of senior executives and the basic conditions of their contracts. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 53 of 101 Among its specific responsibilities in terms of the Internal Financial Reporting Control System, the Administration area of the General Administration and Finance Division is responsible for the assumption of high-level executive functions in the management of the IFRS, the execution of control activities relating to the consolidation subprocess and the normalisation of the processes relating to the preparation of the information. The Risk Management areas responsibilities include methodological support in the identification of risks and controls in the process of preparing financial information. Finally, the Internal Audit area supervises the process of preparing and submitting the Group’s financial infor- mation before it is issued to the market. • Code of conduct, approval body, degree of dissemination and awareness, prin- ciples and values included (indicating whether there are specific mentions to the register of operations and preparation of financial information), body in charge of analysing non-fulfilment and proposing corrective actions and sanctions. The Board of Directors, as a non-delegable power, is responsible for approving the FCC Group’s Regulations or Internal Codes of Conduct. The Audit and Control Committee, in accordance with the aforementioned Regulations, is responsible for ensuring that the Internal Codes of Conduct and the Corporate Governance Rules comply with the regu- latory requirements and are adequate for the Company, as well as reviewing compliance by those affected by these codes and rules of governance with their duties to inform the Company. The FCC Group has a Code of Ethics and Conduct, the last update of which was ap- proved by the Board of Directors in September 2019, which aims to ensure all persons linked to any FCC Group company, regardless of the type of contract applicable to their employment relationship, position or geographical area in which they perform their work, are guided by the strictest behavioural guidelines in compliance with laws, regulations, contracts, procedures and ethical principles, being binding on all these persons. This Code is published both on the corporate intranet, as well as the Group’s website, in 14 languages, where it can be read, performing awareness raising and communication campaigns and encouraging employees’ compliance through different internal means, in both physical and electronic formats, with a view to strengthening the personal commit- ment of employees to the company’s ethical compliance system. Likewise, training on the Code of Ethics and Conduct, and on its implementing policies and procedures, is a key as- pect, present in the annual training plans of the FCC Group and its subsidiary companies. 687 In line with previous business years, in 2020 various training activities were carried out on the Code of Ethics and Conduct, mainly online, through the company’s new training platform “FCC Campus”, due to the social and health crisis affected all the Group’s regions due to COVID-19 since March. Specifically, during the business year, five new online training courses were provided as part of the FCC Campus Compliance and Values schools: training on the Code of Eth- ics and Conduct; Anti-Corruption training; training on the use of technological resourc- es; training on workplace and sexual harassment; and training on bidding processes, in order to ensure alignment with the Code of Ethics and Conduct. A total of 18,321 FCC Group students successfully completed these ethics training courses in 2020, amounting to 11,633 hours of training. Among the principles of action included in this Code are respect for the law and ethical values, zero tolerance for bribery and corruption, the prevention of money laundering and financing terrorist activities, protection of free competition and good practices in the mar- ket, ethical behaviour on the stock market, avoidance of conflicts of interest, rigour in the control, reliability and transparency of information, protection of the Group’s reputation and image, the efficient and safe use of the company’s resources and assets, the monitoring of property and the confidentiality of data and information, a customer orientation, the prioritisation of people’s health and safety, the promotion of diversity and fair treatment, the commitment to our environment, a transparent relationship with the community and extending the commitment to ethics and compliance to business partners. The FCC Group’s Compliance Model has, among others, documented policies on rela- tionships with partners in matters of compliance, anti-corruption, Human Rights, agents, gifts and tenders, and is complemented by a Criminal Prevention Manual, Compliance Committee regulations, and documented procedures for investigation and response and the Whistleblowing Channel, as well as other procedures that further develop the different principles of action included in the Code of Ethics and Conduct. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 54 of 101 Regarding the registration of transactions and the preparation of financial information, the current Code of Ethics and Conduct, under “Rigour in control, reliability and transparency”, specifies “The information of the FCC Group must be prepared with the maximum relia- bility, complying with the applicable regulations and company rules and be duly guarded and conserved”, stating that the process of accounting, registering and adequately and comprehensively documenting all transactions, income and expenses, at the time they occur, should be monitored without omitting, hiding or altering any data or information, so that the accounting and operational records faithfully reflect reality and can be verified by the control areas and by internal and external auditors. Failure to follow these premises could be considered to be fraud. The circumvention of the company’s internal controls will be grounds for sanction”. In addition, the FCC Group has a Tax Code of Conduct, which also includes a commitment to transparent behaviour in tax matters and an Internal Code of Conduct in the area of the FCC Group’s Securities Market. The Board of Directors has entrusted the Compliance Committee with the task of pro- moting an ethical culture throughout the organisation, ensuring both internal and external regulatory compliance. Its main duties and competencies include the management of the Whistleblowing Channel and the surveillance and supervision of ethics and compliance programmes, as well as the Code of Ethics and Conduct, and of policies, rules, proce- dures and controls. The Corporate Compliance Officer is the Chairman of the Compliance Committee and informs this Committee, at least monthly, about the performance of its duties and the level of regulatory compliance. Furthermore, each of the Group’s businesses has its own Business Compliance Officer, who assists the Corporate Compliance Officer in the implementation of the Crime Preven- tion Model, in the identification of risks, in the definition and monitoring of controls and in the handling of complaints and investigations relating to crimes and reported breaches of the Code of Ethics and Conduct. Furthermore, the Business Compliance Committees have been set up as a Crime Prevention body that supports, in this connection, both the Board of Directors or the equivalent decision-making body and the Corporate Compliance Committee itself. 688 • Whistleblowing channel, which allows for the reporting to the audit committee of irregularities of a financial and accounting nature, in addition to possible breach- es of the code of conduct and irregular activities in the organisation, stating, if applicable, whether it is confidential in nature and whether it allows for anony- mous reporting, respecting the rights of the complainant and the reported party. The FCC Group has a Whistleblowing Channel, through which it is possible to confiden- tially report activities and behaviours that may involve a breach of any of the aspects of the Code of Ethics and Conduct, including potential irregularities that could have criminal consequences. Communications can be made in three ways: – Via the corporate intranet. – Sending an email to a specific email address. – Sending a letter addressed to a specific post box. All communications are received and analysed confidentially by the Compliance Commit- tee, and a clear protocol will apply to them comprehensively, so as to respond to them and handle them in an organised fashion. The management of the Whistleblowing Chan- nel is regulated in the Whistleblowing Channel Procedure. The guidelines, procedures, tools and mechanisms for managing the different types of investigations within Com- pliance Model Monitoring are governed by the Investigation and Response Procedure, which guarantees the rights of the parties. The functioning of the Whistleblowing Channel is described in the Whistleblowing Chan- nel Procedure, available on the corporate intranet, in the “Policies, procedures and man- uals” section, as well as in the Code of Ethics and Conduct itself, which specifies the obligation of all persons linked to FCC Group companies to report any breach of the Code of Ethics and Conduct of which they become aware. In accordance with current data protection regulations, notifications through the Whistle- blowing Channel can be either identified or anonymous, bearing in mind, in any case, that the system established guarantees the confidentiality of the complainant and takes into account the principle of non-retaliation against the person who has made a complaint. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 55 of 101 • Training and periodic update programmes for staff involved in the preparation and review of financial information, as well as in the assessment of the IFRS, covering at least accounting standards, audits, internal control and risk man- agement. Training plans, both for the business units and at a Corporate level, include different training actions focussing on the acquisition, updating and recycling of economic-finan- cial, regulatory, control and risk management knowledge, as well as other regulatory and business aspects, knowledge of which is necessary for the proper preparation and su- pervision of the Group’s financial information. During 2020, 16,082 hours of specific train- ing were provided on these subjects, among which the following training actions stand out: development of accounting treatments in International Financial Reporting Stand- ards, investment analysis and financial modelling, reporting and budget control in project management, taxation, analysis of financial projections, asset and project financing, data protection, etc. F.2 Assessment of financial information risks Report, at least: F.2.1. The main characteristics of the risk identification process, including error or fraud, in terms of: • Whether the process exists and is documented. The FCC Group Risk Management Model establishes a comprehensive framework for the identification, assessment and management of risks at all levels of the organisation, assigning responsibilities in different areas and levels of the Organisation. Based on a cross-cutting risk matrix, the business units identify and assess the different risks, in terms of probability of occurrence and impact. This risk matrix includes risks relating to errors in the preparation of financial information under different perspectives. Section E of this Annual Corporate Governance Report details the activities, responsibili- ties and functioning of the FCC Group Risk Management Model. 689 • Whether the process encompasses all the financial information objectives (ex- istence and occurrence; integrity; appreciation; presentation, breakdown and comparability; and rights and obligations),whether it is updated and how often. The FCC Group’s Risk Matrix contemplates, from different perspectives, risks related to the most relevant financial information objectives. On the one hand, as part of Operational and Financial Risks, different aspects relating to the analysis, monitoring and efficiency in the management of different financial information are considered. As part of Compli- ance Risks, the repercussions of non-compliance with the regulatory requirements in accounting, commercial and corporate matters are contemplated. The risk of fraud is contemplated in the Crime Prevention Model. Finally, as part of Reporting Risks, several risks relating to shortcomings in reporting models and systems are considered, including but not limited to aspects of reliability, timeliness and transparency. Both the identification process and the risk assessment process include periodic up- dates, taking into account both business needs and external factors. In addition, there are regular reports on the most significant risks of the different business units as well as the corporate functions. • The existence of a consolidation perimeter identification process, taking into account, among other aspects, the possible existence of complex corporate structures or special purpose entities. Each of the areas into which the FCC Group is organised is responsible for maintaining and updating the consolidation perimeter corresponding to its area of activity. Docu- mented procedures are also in place for the reporting of consolidated economic and financial information to the Administration Area, for the creation of consolidation perime- ters and the execution of the consolidation process. The Accounting Consolidation and Standardisation Department carries out accounting standardisation duties to ensure that the accounting reflection of operations is correct and uniform in all the companies that make up the FCC Group and carries out the consolidation process to obtain the Group’s consolidated financial statements. Additionally, periodic controls are performed on the correct accounting treatment of companies that make up the consolidation perimeter. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 56 of 101 • Whether the process takes into account the effects of other types of risks (op- erational, technological, financial, legal, reputational, environmental, etc.) to the extent that they affect the financial statements. The FCC Group’s Risk Matrix includes different operational, technological, information security, financial, legal, environmental and reputational risks, in addition to others, which are divided into the following five broad categories: strategic, operational, compliance, financial and reporting risks. These risks are valued considering their potential impact on the financial statements should they materialise. • Which governing body at the entity supervises the process. The Audit and Control Committee is responsible for the regular supervision of the inter- nal control and risk management systems, including tax risks, so that the main risks are properly identified, managed and disclosed. This is with the support of the Internal Audit function in the review of controls, the General Administration and Finance Department and the Corporate Compliance Officer, whose responsibilities include the review of risk maps and controls related to the Criminal Prevention Model. In addition, the business unit managements also supervise the risk identification process, their main duties and responsibilities being the implementation of the Risk Management Model, the analysis and monitoring of risks, the design of alert indicators and communi- cation with the Risk Management function. F.3 Control activities Report, indicating their main characteristics, whether at least the following are in place: 690 F.3.1. Procedures for reviewing and authorising the financial information and description of the IFRS, to be disclosed to the securities markets, indicating those in charge of them, as well as descriptive documentation concerning the flows of activities and controls (including those relating to fraud risk) of the different types of transac- tions that may materially affect the financial statements, including the year-end accounting procedure and the specific review of the relevant resolutions, esti- mates, measurements and projections. The high-level functions regarding the Internal Financial Reporting Control System are assumed by the General Administration and Finance Division of the FCC Group, which certifies the consolidated accounts in terms of their integrity and accuracy, with the ap- proval of the CEO. The conclusions of the internal control assessment performed by the external auditor as part of the audit of accounts, together with the supervision performed by the General Internal Audit and Risk Management Division, are submitted to the Audit and Control Committee as part of reports containing the recommendations considered necessary. Finally, the favourable report of the Audit and Control Committee is a preliminary step as part of the preparation of the Annual Accounts and the Management Report by the Board of Directors. In addition, as part of the process of disclosing financial information to the securities mar- kets, either quarterly or on an exceptional basis, or when a relevant fact is issued, those responsible for each area review the information reported for the purposes of consolida- tion. This information is consolidated by the Group’s General Administration and Finance Division, which performs specific control activities as part of the year-end accounting process to ensure the reliability of this information. The Internal Audit area supervises the process of preparing and submitting the Group’s financial information before it is issued to the market. Additionally, the specific review of the relevant resolutions, estimates, measurements and projections to quantify certain assets, liabilities, income, expenses and commitments re- corded and/or broken down in the Annual Accounts, is also carried out by the General Administration and Finance Division with support from the other divisions. Hypotheses and estimates based on the evolution of the business are reviewed and analysed in co- operation with the corresponding Business Divisions. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 57 of 101 For each of the business units, as well as for corporate services, the FCC Group has a series of controls to regulate, supervise and monitor, among other aspects, business management processes, the aim of which is to prevent and detect breaches of the FCC Group’s policies and procedures and potential fraud risk situations. In addition to the bases established in Articles 10, 11 and 14 of the Rules of the Board of Directors, which describe the specific duties relating to the Annual Accounts, the Man- agement Report and the relationship with the securities market, the FCC Group has defined procedures in place on year-end and maintenance processes concerning the ac- counts plan, including procedures to ensure the correct identification of the consolidation perimeter. Specifically, the Economic-Financial Manual covers the accounting treatment of the different types of processes and transactions that may affect Financial Statements (accounting, tax, insurance, treasury, etc.), and includes a series of rules that make it possible to obtain information of an economic-financial nature in a standardised manner, including procedures to make economic and financial information available to the Ad- ministration and IT areas, obtain consolidated information, tax reporting, submission of financial statements, accounting, transactions with related parties, etc. F.3.2. Internal control policies and procedures on information systems (among others, on access security, change control, their operation, operational continuity and segre- gation of duties) that support the institution’s relevant processes in relation to the preparation and publication of financial information. FCC has an Information Security Policy in place that defines the company’s information security model, the regulatory body, organisation and responsibilities when it comes to the security, classification of information, the information security areas, the risk analysis model and the information auditing procedure. Internal control policies and procedures on information systems cover all the Group’s information management processes, in- cluding the processes for preparing and publishing financial information. Certain part of the activities performed by Infrastructure (construction and Industrial) and Water have an international certified ISO-27001 Information Security Management System. Worth particular mention from among the Information Security System documentation are the specific rules on database security, encryption, access control, equipment con- figuration control, mobile device security, backup copies, incident management, systems laboratories, networks, password security, privacy, security in developments, documents 691 and outsourcing services to external companies, physical security, roles and responsi- bilities in information security, return of technological resources and compliance with the requirements of the General Data Protection Regulation. This is in addition to the Policy for the Use of Technology and the Information Management Policy. These regulations are published on the corporate intranet. In addition, the Information Technology area has procedures in place for managing the life cycle of user access, managing changes to platforms and systems and managing security incidents and breaches. Information and application security is monitored continuously through an SOC (Security Operations Centre) service, and periodic internal reviews of the computer control envi- ronment are also performed. In addition, the Centre of Expertise that provides the support and maintenance service to the FCC Group’s ERP has obtained the SAP “Customer Center of Expertise Primary Certification” certificate. Lastly, in order to ensure a suitable separation of duties in the entity’s important processes in relation to the preparation and publication of financial information, the FCC Group has various tools, including role matrices and approval work flows. F.3.3. Internal control policies and procedures aimed at supervising the management of activities outsourced to third parties, as well as those aspects of assessments calculations or measurements entrusted to independent experts, which may ma- terially affect the financial statements. The FCC Group’s Purchasing Regulations include a specific procedure for supplier man- agement, applicable to all subcontracted activities that regulates official approval and evaluation processes, among other matters. The Purchasing Manual, which was updated in July 2020, describes these processes. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 692 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 58 of 101 With respect to the significant activities outsourced with an impact on the financial state- ments, the FCC Group has outsourced the provision of management services for its IT and telecommunications infrastructures, as well as support for the main corporate applications. The Information Systems and Technologies Division has a standard that defines the security criteria in terms of outsourcing to external companies, and specific procedures for the control of outsourced services through the contractual regulation of the following aspects: – Governance mechanisms and service monitoring – Audits, inspections and service reviews – Service level management – Monitoring and control of services performed by third parties that affect ISO 27001 certifications The main outsourced activities relating to the execution or processing of transactions reflected in the Group’s Financial Statements are the measurement of derivative financial products, the performance of actuarial calculations and the appraisal of certain fixed as- sets. These activities are controlled by the Administration and Finance Division. The economic information prepared in certain projects by business partners is supervised by the FCC Group’s management teams for standardisation prior to consolidation in ac- cordance with the guidelines of the procedures on the economic and financial reporting system and forms part of the auditable environment within the annual audit plans and the scope of consolidation. F.4 Information and communication Report, indicating their main characteristics, whether at least the following are in place: F.4.1. A specific area in charge of defining, keeping accounting policies up to date (ac- counting policies area or department) and resolving queries or conflicts concerning their interpretation, maintaining fluid communication with those responsible for operations across the organisation, as well as an up-to-date accounts policy man- ual communicated across the units through which the company operates. Responsibility for the application of the accounting policies at the FCC Group is central- ised through the General Administration and Finance Division, to which the Accounting Consolidation and Standardisation Department and Administrative Coordination Depart- ment and Administrative Procedures and Tax Division report. These departments are responsible for functions including but not limited to: – Defining the Group’s accounting policies and incorporating them in the Financial Eco- nomic Manual. – Issuing the accounting regulations applicable to the Group. – Resolving queries or conflicts concerning the interpretation or application of the Group’s accounting policies to any company included in the perimeter and specifying, clarifying or extending the instructions and regulations issued. – Analysing single operations and transactions carried out or that the Group plans to carry out with a view to ensuring their adequate accounting treatment in line with the Group’s accounting policies. – Interpretation of new developments in accounting regulations and their consistent ap- plication in all the companies that form part of the Group. – Resolution of tax queries and incidents and preparation of tax returns and compliance with other tax obligations. The Financial and Economic Manual that includes the accounting regulations is available on the Group’s Intranet. It is updated and maintained by the different departments under the General Administration and Finance Division. The FCC Group also has a Tax Code and a Tax Control Framework Standard. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 693 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 59 of 101 F.4.2. Mechanisms for obtaining and preparing financial information in homogeneous for- mats, for application and use by all units of the company or Group, which support the main financial statements and notes, as well as the information provided on the IFRS. F.5 Supervision of the system’s functioning State, indicating their main characteristics, at least: The FCC Group has implemented SAP environment tools for the consolidation of the economic-financial information used to respond to the reporting needs of its financial statements. This tool makes it possible to centralise a significant part of the information corresponding to the accounting of the individual financial statements of the Group’s subsidiaries in a single system. The system is centrally managed and uses a single ac- count plan. Through this tool, the General Administration and Finance Department col- lects comprehensive information about the FCC Group as a whole, from both Spanish and foreign companies. The accounting policies, procedures and internal rules relating to year-end, reporting and consolidation processes are described in the Group’s Financial and Economic Manual, in addition to detailing the information that must be provided for the consolidation process and defining both the reporting deadlines and the base documents and forms to provide this information. This Manual also includes procedures for obtaining the consolidated in- formation in SAP FC (creation of consolidation perimeters, execution of the consolidation process, controls, etc.) and for all reporting phases, as well as other procedures relating to the processes of applications in the SAP FC environment. In addition, at year-end and with a view to publishing the annual financial report, the Administration area of the General Administration and Finance Department sends the year-end plan, including a series of instructions, to those responsible for providing the corresponding financial information. The Administrative Coordination Department, speci- fies, clarifies or extends these instructions when required. The consolidated accounts follow the guidelines set out in the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS). With a view to guaranteeing a homogeneous accounting process, the FCC Group has developed a corporate chart of accounts that is also included in the Financial and Economic Manual. In 2020, in order to comply with ESEF regulations, the IT tools for XBRL tagging of the Consolidated Financial Statements and Notes to the Financial Statements have been adapted with the aim of publishing these statements in XHTML format. F.5.1. The IFRS supervision activities performed by the audit committee and whether the company has an internal audit area responsible, in addition to other aspects, for supporting the committee in its work to supervise the internal control system, including the IFRS. Furthermore, the scope of the IFRS assessment carried out during the year and the procedure through which the person in charge of carrying out the assessment will communicate the corresponding results shall be indicated, whether the company has an action plan detailing the possible corrective meas- ures, and whether their impact on financial information has been considered. The Audit and Control Committee performs the following activities: – Inform the General Shareholders’ Meeting about the issues raised in relation to the matters within its remit and, in particular, the outcome of the audit, explaining how it has contributed to the integrity of the financial information and the role that the Com- mittee has played in that process. – Serve as a channel of communication between the Board of Directors and the external auditor at the Company, assessing the outcome of each audit and ensuring his/her independence. – The supervision of the Company’s Internal Audit services to ensure the proper func- tioning of the information and internal control systems, with the person responsible for the Internal Audit function being required to present his/her annual work plan to the Committee and directly inform this body of any incidents that occur in the performance of his/her duties and submit a report on his/her activities at the end of each year. – Supervise and analyse the effectiveness of internal control at the Company and the Risk Control and Management Policy approved by the Board of Directors. – Supervise the process of preparing and submitting the financial statements and man- agement reports, both individual and consolidated, and the periodic financial informa- tion disclosed to the markets, ensuring compliance with legal requirements and the correct application of generally accepted accounting principles. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 694 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 60 of 101 – Periodically supervise the Internal Control and Risk Management Systems, including tax risks, so that the main risks are properly identified, managed and made known. The Internal Audit area forms part of the General Internal Audit and Risk Management Division. Its core mission is to facilitate the Audit and Control Committee in the fulfilment of its duties and responsibilities, acting with total independence from management areas, as it functionally reports to the Audit and Control Committee. Among its responsibilities and competencies relating to IFRS are: – Collaborating in the supervision of the process for preparing and submitting the – Collaborating in the supervision of the individual and consolidated financial statements of FCC, S.A., as well as the six-monthly financial statements reviewed by the external auditor. – Collaborating in the supervision of financial and corporate information sent to regula- tors and markets and supervised by the Audit and Control Committee: • Annual financial report. • Management reports. Group’s financial information before it is issued to the market. • Six-monthly financial report. – Contributing, together with the other areas involved, to the development of internal control by monitoring compliance with the policies, standards, procedures and ac- tivities that constitute the internal control model to reduce risks, issuing improvement recommendations. – Supervising projects and processes, carrying out a risk identification and an assess- ment of the control environment. – Act as a third line of defence, conducting reviews of the Compliance Model. – Performing the internal investigations designated by the Compliance Committee. The outcome of the reviews performed by the Internal Audit area and the incidents de- tected are communicated by the General Internal Audit and Risk Management Division to the Audit and Control Committee. The Audit and Control Committee is responsible for supervising the work carried out by the Audit and Risk Management Division, as well as for approving and monitoring the Annual Activity Plan. During 2020, the following tasks relating to the management and control of risks and the supervision of the Group’s Financial Information were carried out by different areas: – Review of significant applications in the field of the FCC Group’s Information Technol- ogies, as well as certain aspects of physical and logical security. – Monitoring of internal control weaknesses detected during both the Internal and Exter- nal Audit of the IT area. • Quarterly reports. • Annual Corporate Governance Report. – Review of the control environment in relation to the prevention of money laundering and terrorist financing. – Pre-approval of services other than audit services provided by audit firms, collaborat- ing with the Audit and Control Committee in its work of monitoring the independence of the external auditor. – Audit of key processes, works and projects/contracts focussing, in addition to other aspects, on reviewing financial information and contractual risks. – Audit of procedures for sampling in certain business areas and reviewing support pro- cesses in certain business areas. – Supervision of the FCC Group Criminal Compliance Model. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 61 of 101 F.5.2. Whether a discussion procedure is in place, whereby the account auditor (pursuant to the provisions of the NTA), the internal audit area and other experts can inform Senior Management and the Audit Committee or the company’s administrators of significant internal control shortcomings identified during the review of the fi- nancial statements or those entrusted to them. Furthermore, indicate whether an action plan is in place that seeks to correct or mitigate the shortcomings identified. The General Internal Audit and Risk Management Division at the FCC Group periodically informs the Audit and Control Committee of the significant internal control shortcom- ings identified during the performance of its work, indicating the recommendations to be implemented to properly correct them. The Audit and Control Committee also receives presentations performed by the General Administration and Finance Division and the Compliance Officer, as well as the different corporate areas in relation to risks that have materialised. 695 The Rules of the Board of Directors at the FCC Group establish that it is the responsibility of the Audit and Control Committee to serve as a channel of communication between the Board of Directors and the Company’s external auditor, assessing the results and discussing the significant shortcomings in the Control System Internal detected during the performance of the audit. The Group’s auditor has direct access to the Group’s Senior Management, holding reg- ular meetings, both to obtain information required for the performance of his/her work, and to communicate the control shortcomings detected. External auditors submit the conclusions of their reviews to the Audit and Control Committee, detailing the internal control shortcomings identified in the performance of their review of the Group’s financial statements, including any aspect they deem relevant. In 2020, the External Auditor at- tended five Audit and Control Committee meetings, presenting five reports. Furthermore, the Regulations of the Internal Audit area at the FCC Group indicate that the Audit and Control Committee shall be made aware, through the General Internal Audit and Risk Management Division, among others, of the most relevant aspects in relation to: relationships with external auditors, the outcome of the supervision of the reliability and integrity of the financial and management information of Group companies before being issued to the market, the fulfilment of internal and external regulatory requirements, the functioning of the internal control systems, and the development and functioning of risk management systems. In addition, the Regulations of the Internal Audit area at the FCC Group establish that the Audit and Control Committee will be supported by the General Internal Audit and Risk Management Division in fulfilling its responsibilities and competences, without prejudice to the support or assistance received from other areas. The Internal Audit area performs monitoring processes on accounting information (individual and consolidated), manage- ment reports and financial information that is periodically disclosed to the markets. F.6 Other relevant information N/A F.7 External auditor’s report Report on: F.7.1. Whether the IFRS information sent to the markets has been submitted to review by the external auditor, in which case, the company should attach the corresponding report as an appendix. Otherwise, the reasons for not doing so shall be indicated. The information contained here on the Internal Financial Reporting Control System has been submitted to review by the external auditor, whose report is attached as an appen- dix to this document. The review has been based on the “Action Guidelines and Report- ing Model for the auditor regarding information relating to the Internal Financial Reporting Control System of listed companies” published by the CNMV in 2013. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 696 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 62 of 101 G. Degree of compliance with corporate governance recommendations Indicate the degree of compliance at the company with the recommendations of the Code of Good Governance of Listed Companies. In the event that any recommendation is not followed or is only partially followed, a de- tailed explanation of the reasons for this shall be included, so that shareholders, investors and the market in general have sufficient information to assess the company’s behaviour. General explanations shall not be acceptable. 1. The Bylaws of listed companies do not limit the maximum number of votes that can be cast by the same shareholder, nor contain other restrictions that make it difficult to take control of the company by acquiring its shares on the market. Compliant Explain 2. Where the listed company is controlled, within the meaning established by Ar- ticle 42 of the Commercial Code, by another entity, whether listed or not, and has, directly or through its subsidiary companies, business dealings with that entity or any of its subsidiary companies (other than those of the listed compa- ny) or engages in activities related to those of any of them, it should accurately publicly disclose the following: a) The respective areas of activity and any business relationships between, the listed company or its subsidiary companies and the parent company or its subsidiary companies. b) The proposed mechanisms for resolving any conflicts of interests that may arise. Compliant Partially compliant Explain Not applicable 3. During the ordinary general shareholders’ meeting, in addition to the dissem- ination in writing of the annual corporate governance report, the Chairman of the Board of Directors verbally informs shareholders, in sufficient detail, of the most relevant aspects of the Company’s Corporate Governance and, in particu- lar: a) Of the changes that have occurred since the previous Ordinary General Shareholders’ Meeting. b) Of the specific reasons that the company does not follow any of the rec- ommendations in the Corporate Governance Code and, as applicable, any alternative rules that apply in this regard. Compliant Partially compliant Explain The Company believes that the provisions of the company’s corporate governance information to shareholders in the specific report prepared to this end is sufficient; this report accompanies the information made available before the Meeting is held. In this connection, the announcement of the General Shareholders’ Meeting is ex- pressly indicated in the “Right to Information” section that all shareholders are entitled to obtain from the Company, for consideration at its registered office or for immediate dispatch free of charge, including the Annual Corporate Governance Report, which is submitted to shareholders for approval as part of the Management Report. This Report can be consulted on the Company’s website and in the corporate gov- ernance section. 4. The company defines and promotes a policy regarding communication and contact with shareholders, institutional investors in the framework of their in- volvement in the company, as well as with voting advisors that fully complies with the standards in force to combat market abuse and addresses sharehold- ers in the same position equally. The company publishes this policy on its web- site, including information related to the way in which it has been implemented and identifying the points of contact or persons responsible for carrying it out. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 63 of 101 697 And, notwithstanding the legal obligations to disclose inside information and other types of regulated information, the company should also have a general policy regarding the communication of economic-financial, non-financial and corporate information through the channels it deems appropriate (media, social networks or other channels) that helps to maximise the dissemination and qual- ity of the information available to the market, investors and other stakeholders. Compliant Partially compliant Explain The company has drafted its Policy on Communication and Contacts with Share- holders, Institutional Investors, Analysts, Voting Advisors and Credit Rating Agencies, which the Board of Directors plans to approve in the 2021 business year. 5. The Board of Directors does not submit a proposal for the delegation of powers to issue convertible shares or securities excluding the pre-emptive subscription right, for an amount greater than 20% of the capital at the time of delegation, to the General Shareholders’ Meeting. When the Board of Directors approves any issuance of shares or convertible securities excluding the pre-emptive subscription right, the company immedi- ately publishes the reports on said exclusion to which trade legislation refers on its website. Compliant Partially compliant Explain 6. The listed companies that prepare the reports mentioned below, whether they are mandatory or voluntary, publish them on their website well in advance of the Ordinary General Shareholders’ Meeting, even when their dissemination is not mandatory: a) Report on the independence of the auditor. b) Reports on the functioning of the audit committee and the appointments Compliant Partially compliant Explain The company approves the self-assessment reports corresponding to the Audit and Control Committee and the Appointments and Remuneration Committee at the first Board meeting of the business year. These reports are not published when the company considers that information is already provided to this end in Section C.2.1 on the IAGC Board of Directors commit- tees, which is available on the Group’s corporate website. The approval of transactions with related parties lies with the Appointments and Re- muneration Committee responsible for this specific function. Also in Section D2 of the IAGC, the significant transactions that have taken place during the year are listed. 7. The Company broadcasts General Shareholders’ Meetings live, on its website. And that the company has mechanisms that enable proxy voting and voting by remote means and even, in the case of large-cap companies and to the extent appropriate, attendance and active participation at the General Meeting. Compliant Partially compliant Explain 8. The audit committee should ensure that the financial statements submitted by the Board of Directors to the general shareholders’ meeting are drawn up in accordance with accounting standards. In those cases in which the auditor has included an exception in the audit report, the chairman of the audit committee should clearly explain at the general meeting the audit committee’s opinion on its content and scope, and a summary of said opinion should be made available to shareholders at the time of publication of the notice of call to the meeting, together with the rest of the board’s proposals. and remuneration committee. Compliant Partially compliant Explain c) Report of the audit committee on related transactions. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 64 of 101 698 9. The Company publishes on its website, on a permanent basis, the requirements and procedures that it shall accept to demonstrate ownership of shares, the right to attend the general shareholders meeting and the exercise or delegation of the right to vote. These requirements and procedures promote the attendance and exercise of shareholders’ rights and are applied in a non-discriminatory manner. Compliant Partially compliant Explain 10. When a legitimate shareholder has exercised, before the General Shareholders’ Meeting is held, the right to add to the agenda or submit new resolutions, the Company: a) Immediately disseminates these additional items and new resolutions pro- posed. b) Discloses the attendance card template or vote delegation form or distance voting form with the necessary modifications so that the new items on the agenda and alternative resolution proposals can be voted on under the same terms as those proposed by the Board of Directors. c) Submits all the alternative points or proposals to a vote and apply the same voting rules as applied to those prepared by the Board of Directors, includ- ing, in particular, assumptions or deductions on the meaning of the vote. d) After the General Shareholders’ Meeting, communicate the breakdown of the vote on these additional items or alternative proposals. 11. If the company plans to pay out attendance premiums to the General Share- holders Meeting, a general policy on these premiums is established in advance and this policy is stable. Compliant Partially compliant Explain Not applicable 12. The Board of Directors performs its functions with unity of purpose and inde- pendence of judgment, treats all shareholders in the same position in the same way and is guided by the social interest, understood as the achievement of a profitable and sustainable business in the long term, which promotes its conti- nuity and maximisation of the economic value of the company. And in the pursuit of social interests, in addition to respect for the laws and regulations and conduct based on good faith, ethics and respect for commonly accepted uses and good practices, the company seeks to reconcile its own social interest with, as appropriate, the legitimate interests of its employees, its suppliers, its customers and those of the other stakeholders that may be affected, as well as the impact of the company’s activities on the community as a whole and on the environment. Compliant Partially compliant Explain 13. The Board of Directors is the correct size to ensure it is effective and participa- tive, meaning it is advisable to have between five and fifteen members. Compliant Explain Compliant Partially compliant Explain Not applicable 14. The Board of Directors should adopt a policy aimed at encouraging a suitable Two different systems are used, for practical reasons, to count votes, all pursuant to the provisions of Article 20 of the Rules of the General Shareholders’ Meeting, although the Chairman of the Board, in each specific case, may decide to apply the same counting system (Art. 20, section 4 of the Rules of the General Meeting). composition for the Board of Directors and it should: a) be specific and verifiable; b) ensure that proposed appointments and re-elections are based on a prelimi- nary analysis of the powers required by the Board of Directors; and Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 65 of 101 c) promote the diversity of knowledge, experience, age and gender. For these purposes, measures that encourage the company to have a significant number of female senior executives are considered to be conducive to gender diversity. The result of the preliminary analysis of powers required by the Board of Direc- tors is included in the explanatory report issued by the Appointments Commit- tee that is published when the General Shareholders Meeting is called and to which the ratification, appointment or re-election of each director is submitted. The Appointments Committee will verify compliance with this policy and will be informed in the Annual Corporate Governance Report. Compliant Partially compliant Explain 15. Proprietary and independent directors represent a large majority of the Board of Directors and that the number of executive directors is the minimum necessary, taking into account the complexity of the corporate group and the shareholding of the executive directors in the Company’s capital. And that the number of female directors should account for at least 40% of the members of the Board of Directors by the end of 2022 and beyond, but no less than 30% before then. Compliant Partially compliant Explain With regard to the percentage of female directors, the FCC’s Board of Directors has four female directors out of a total of 14, entailing a percentage of 28.57. 16. The percentage of proprietary directors compared to the total of non-executive directors is no greater than the proportion between the capital of the Company represented by these directors and other capital. 699 This criteria may be relaxed: a) At companies with a high capitalisation with few shareholdings considered significant by law. b) For companies in which there is a large number of shareholders represented on the Board of Directors who have no links to one another. Compliant Explain 17. The number of independent directors represents at least half the total number of directors. However, when the company is not highly capitalised or when, even if it is, one shareholder or more shareholders are acting together, controlling more than 30% of the share capital, the number of independent directors represents at least one third of the total number of directors. Compliant Explain On its Board of Directors, FCC has three independent directors out of a total of four- teen members, representing 21 percent of the total number of directors. FCC believes that this percentage does not require an increase in the number of independent directors, considering the Company’s very concentrated shareholding structure and the effective role of the three independent directors. 18. Companies publish the following information about directors on their website, and keep it up to date: a) Professional and biographical profile. b) Other boards of directors to which they belong, whether at listed companies or not, and the other paid activities they perform, regardless of their nature. c) Indication of the category of Director to which they belong, indicating, in the case of proprietary directors, the shareholder they represent or with whom they have links. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 66 of 101 d) Date of their first appointment as a Director of the Company, as well as sub- sequent re-elections. e) Shares in the company, and options on them, that they own. Compliant Partially compliant Explain The company makes available on its website the professional and biographical profile, other boards of directors to which the directors belong, the director’s category, the date of his or her first appointment and the shares in the company, without consid- ering it necessary, for the time being, to disclose other remunerated activities carried out by the director, whatever their nature. 19. The Annual Corporate Governance Report, after a check performed by the Ap- pointments Committee, explains the reasons that proprietary directors have been appointed at the request of shareholders whose shareholding is less than 3% of the capital stock; and it explains the reasons that formal requests for presence on the Board from shareholders whose shareholding is equal to or greater than that of others, at whose request proprietary directors have been appointed, have not been met. Compliant Partially compliant Explain Not applicable 20. Proprietary directors submit their resignation when the shareholder they rep- resent fully transfers their shareholding. They also do so, in the corresponding number, when said shareholder reduces their shareholding to a level that re- quires a reduction in the number of their proprietary directors. Compliant Partially compliant Explain Not applicable 700 21. The Board of Directors does not propose the removal of any independent direc- tor before the end of the statutory period for which they were appointed, unless there is just cause, identified by the Board following in a report from the Ap- pointments and Remuneration Committee. In particular, it shall be considered that there is just cause when the director first occupies new positions or con- tracts new obligations that prevent him/her from dedicating the necessary time to the performance of the duties assigned to the position of director, breaches the duties inherent to the position in question or incurs in any of the circum- stances resulting in him/her losing his/her status as an independent director, pursuant to the provisions of the applicable legislation. The removal of independent directors may also be proposed as a result of take- overs, mergers or other similar corporate transactions that involve a change in the capital structure of the company, when these changes in the structure of the Board of Directors can be attributed to the criteria of proportionality indicated in recommendation 16. Compliant Explain 22. Companies should establish rules requiring directors to report and, where ap- propriate, resign when situations arise affecting them, whether or not this is re- lated to their actions in the company itself, which could be harmful to the credit and reputation of the company. This is in addition to the specific requirement of informing the Board of Directors of any criminal proceedings in which they are under investigation, as well as the progress of any such proceedings. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 701 And, notwithstanding the fact that all the above is disclosed in the annual cor- porate governance report, to the extent that it is relevant for investors, the com- pany should announce the departure as soon as possible, including a sufficient mention of the reasons or circumstances provided by the director. Compliant Partially compliant Explain Not applicable 25. The Appointments Committee ensures that non-executive directors have suffi- cient time available for the proper performance of their duties. And the Rules of the Board establish the maximum number of Boards on which its directors may serve. Compliant Partially compliant Explain In Article 21.4 of the Rules of the Board, the Company establishes that “Directors must inform the Appointments and Remuneration Committee of their other profes- sional obligations, should they could interfere with their dedication of the position, and the Board shall establish, at the proposal of the Appointments and Remuneration Committee, the number of Boards on which directors may serve”. Since the aforementioned Committee has not stipulated this number to date, the Company believes that it is partially compliant with the recommendation. The Company, for the time being, has not set the maximum number of Boards to which each director may belong, since the dedication of the directors to the company has proven to be adequate, without it being necessary, therefore, to define a number. FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 67 of 101 And, having been informed of or otherwise having become aware of any of the situations mentioned in the previous paragraph, the board should examine the case as soon as possible. It should also, in view of the specific circumstanc- es, decide, after a report from the appointments and remuneration committee, whether or not to adopt any measures, such as opening an internal investiga- tion, requesting the resignation of the director or proposing his or her dismissal. And to report on the matter in the annual corporate governance report, unless there are special circumstances justifying this, which should be recorded in the minutes. This is notwithstanding the information that the company must dis- close, where appropriate, at the time of adopting the corresponding measures. Compliant Partially compliant Explain 23. All directors clearly express their opposition when they consider that any pro- posed decision submitted to the Board of Directors may be contrary to the corporate interest. The same applies, in a special way, to independents and other directors who are not affected by any potential conflict of interests, in the case of decisions that may harm shareholders not represented on the Board of Directors. When the Board of Directors adopts significant or repeated decisions about which the director would have made reservations, he/she shall draw the neces- sary conclusions and, if he chooses to resign, explain his/her reasons for doing so in the letter indicated in the following recommendation. This recommendation also applies to the secretary of the Board of Directors, even if he/she does not have the status of a director. Compliant Partially compliant Explain Not applicable 24. When, either by resignation or by resolution of the general meeting, a director steps down before the end of their term of office, they should sufficiently ex- plain the reasons for their departure or, in the case of non-executive directors, their views on the reasons for the board’s decision to dismiss them, in a letter sent to all members of the Board of Directors. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 702 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 68 of 101 26. The Board of Directors meets with the necessary frequency to perform its du- ties effectively and, at least, eight times a year, following the programme of dates and matters established at the beginning of the year, with each director allowed to individually propose other items on the agenda not initially provided for. Compliant Partially compliant Explain When, exceptionally, for reasons of urgency, the Chairman wishes to submit decisions or resolutions that do not appear on the agenda for approval by the Board of Directors, the prior and express consent of the majority of the direc- tors present shall be required, duly reflected in the minutes. Compliant Partially compliant Explain 27. The absence of directors is limited to indispensable cases and quantified in the Annual Corporate Governance Report. And should such absences occur, the directors appoint a proxy with instructions. 32. Directors are periodically informed of changes in the shareholding structure and of the opinion that significant shareholders, investors and rating agencies have about the company and its Group. Compliant Partially compliant Explain Compliant Partially compliant Explain 33. The Chairman, as the person responsible for the effective functioning of the Board of Directors, in addition to exercising the duties assigned to him by Law and in the Bylaws, prepares and submits a programme of dates and matters to be discussed to the Board of Directors; organises and coordinates the periodic assessment of the Board, as well as, where appropriate, the company’s Chief Executive; is responsible for the direction of the Board and the effectiveness of its functioning; ensures that sufficient discussion time is devoted to strategic issues, and agrees and reviews knowledge refresher programmes for each di- rector, when the circumstances so advise. Compliant Partially compliant Explain 28. When the directors or the secretary express concern about any proposal or, in the case of directors, about the progress of the company and these concerns are not resolved by the Board of Directors, at the request of the person express- ing them, these shall be recorded in the minutes. Compliant Partially compliant Explain Not applicable 29. The Company establishes the appropriate channels so that directors can obtain the necessary advice for them to perform their duties, including, if the circum- stances so require, external advice charged to the company. Compliant Partially compliant Explain 30. Regardless of the knowledge required by directors in the exercise of their du- ties, the companies also offer the directors knowledge refresher programmes when the circumstances so advise. Compliant Explain Not applicable 31. The agenda of meetings clearly indicates the points on which the Board of Di- rectors must adopt a decision or resolution so that the directors can study or collect, in advance, the information necessary for its adoption. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 69 of 101 703 34. When there is a coordinating director, the Bylaws or the Rules of the Board of Directors, in addition to the powers that correspond to him by Law, assign the following powers thereto: preside over the Board of Directors in the absence of the Chairman and Deputy Chairman, as applicable; echoes the concerns of non-executive directors; maintains contact with investors and shareholders to obtain their points of view to form an opinion on their concerns, particularly in relation to the corporate governance of the company; and coordinates the Chairman’s succession plan. Compliant Partially compliant Explain Not applicable 35. The secretary of the Board of Directors ensures that the Board of Directors takes into account the recommendations on good governance contained in the Code of Good Governance applicable to company in its actions and decisions. Compliant Explain 36. The Board of Directors assesses, once a year, and adopts, where appropriate, an action plan that corrects any shortcomings detected regarding: a) The quality and efficiency of the functioning of the Board of Directors. b) The functioning and composition of its committees. c) Diversity in the composition and powers of the Board of Directors. d) The performance of the Chairman of the Board of Directors and the Chief Executive of the company. Every three years, the Board of Directors will be assisted by an external con- sultant in performing the assessment, whose independence shall be verified by the Appointments Committee. The business relationships that the consultant or any company in its group may have with the company or any Group company shall be broken down in the Annual Corporate Governance Report. The process and the areas assessed shall be described in the Annual Corporate Governance Report. Compliant Partially compliant Explain The Board of Directors internally performs the annual assessment of the efficiency of its functioning, its committees, as well as that of the Chairman of the Board of Direc- tors (non-executive) and the CEO. The Company believes that the conclusions drawn during the internal assessment make it possible to sufficiently correct any shortcomings detected or improvements in the functions assigned to the Board. The assessment with the help of an external consultant has been carried out twice in the past. The Board shall assess the suitability of requesting such external assistance each business year. 37. When there is an executive committee, at least two non-executive directors should sit on it, at least one of whom should be independent and its secretary should be the secretary of the Board of Directors. e) The performance and contribution of each director, paying particular atten- Compliant Partially compliant Explain Not applicable tion to those responsible for the different Board Committees. To perform the assessment of the different committees, the report submitted to the Board of Directors will be used, and for the Board assessment, the report submitted to the Appointments Committee. The secretary of the Executive Committee is the same as the secretary to the Board. However, in the composition of this committee, there are no independent directors, whereas there are three such directors on the Board. All decisions taken by the Executive Committee are reported to the Board. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 704 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 70 of 101 On this Committee, independent directors may request as many clarifications or com- ments as they deem appropriate. 42. In addition to those provided by law, the Audit Committee assumes responsibil- ity for the following functions: Given the continuous control that the Board exercises over the Executive Commit- tee, it has not been considered necessary to include independent directors on this Committee. 38. The Board of Directors is always aware of the matters discussed and the deci- sions taken by the Executive Committee and that all the members of the Board of Directors receive a copy of the minutes of the Executive Committee meet- ings. Compliant Partially compliant Explain Not applicable 39. Members of the Audit Committee as a whole, and especially its Chairman, are appointed taking into account their knowledge and experience in accounting, auditing and risk management matters, both financial and non-financial. Compliant Partially compliant Explain 40. Under the supervision of the Audit Committee, there is a unit that assumes the internal audit function ensuring the proper functioning of the information and internal control systems, which functionally reports to the non-executive Chair- man of the Board or the Audit Committee. Compliant Partially compliant Explain 41. The head of the unit responsible for the internal audit function should present the annual work plan to the audit committee for approval by the committee or the board, report directly to it on its implementation, including any incidents and limitations on scope arising in the course of its implementation, the results and follow-up of its recommendations, and submit an activities report to it at the end of each business year. Compliant Partially compliant Explain Not applicable 1. In relation to information and internal control systems: a) Supervise and assess the preparation process and the integrity of finan- cial and non-financial information, as well as the control and manage- ment systems for financial and non-financial risks relating to the com- pany and, if applicable, the group, including operational, technological, legal, social, environmental, political, reputational and corruption-related risks, reviewing compliance with regulatory requirements, the adequate definition of the scope of consolidation and the correct application of accounting criteria. b) Ensure the independence of the Internal Audit function; propose the selection, appointment and removal of the head of the Internal Audit service, as well as the budget of this service; approving or proposing approval to the Board of the annual internal audit orientation and work plan, making sure that its activity is mainly focused on relevant risks (including reputational risks); receive periodic information about its ac- tivities; and verify that Senior Management takes into account the con- clusions and recommendations in its reports. c) Establish and supervise a mechanism that allows employees and other persons related to the company, such as directors, shareholders, sup- pliers, contractors or subcontractors, to report potentially significant irregularities, including financial, accounting or any other irregularities related to the company that they become aware of within the company or its group. This mechanism must guarantee confidentiality and, in any case, provide for scenarios where communications can be made anony- mously, respecting the rights of the complainant and the reported party. d) Generally ensure that the policies and systems in place for internal con- trol are effectively implemented in practice. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 71 of 101 705 2. In relation to the external auditor: a) In case of the resignation of the external auditor, examine the circum- stances that may have led to this. b) Ensure that the remuneration of the external auditor for his/her work does not compromise his/her quality or independence. c) Ensure that the company communicates any change in auditor through the CNMV and accompanies this with a statement about the possible existence of disagreements with the departing auditor and, if there were any disagreements, the nature of them. d) Ensure that the external auditor holds an annual meeting with the Board of Directors to inform them about the work undertaken and the develop- ment of the accounting and risk situation at the company. e) Ensure that the company and the external auditor respect the rules in force on the provision of services other than auditing services, the limits on the concentration of the auditor’s business and, in general, the other rules applicable to the auditor’s independence. Compliant Partially compliant Explain The meeting referred to in section 2.d) of this recommendation is not held, since this responsibility is delegated in full to the Audit and Control Committee, and the external auditor is responsible for presenting this information to the members of the Board. 43. The Audit Committee may summon any employee or manager at the company, 44. The Audit Committee is informed about the structural and corporate modifica- tions that the company plans to perform for its analysis and preliminary report to the Board of Directors on its economic conditions and its accounting impact and, especially, where appropriate, on the proposed exchange ratio. Compliant Partially compliant Explain Not applicable To date, all directors at the company, including independent directors, have voted in favour of the transactions referred to in this recommendation, meaning that the step previous to those before the Audit and Control Committee is not considered neces- sary. In any case, on the Board of Directors, members of the Audit and Control Committee may present their reflections and opinions, which will be taken into account by the Board at the time of making a decision. 45. The risk control and management policy identifies or determines at least: a) The different types of risk, both financial and non-financial, (including opera- tional, technological, legal, social, environmental, political and reputational, including those related to corruption) that the company faces, including fi- nancial or economic, contingent liabilities and other off-balance-sheet risks. b) A tiered risk management and control model, including a specialised risk committee where sectoral rules require this or where the company deems it appropriate. c) The level of risk that the Company considers acceptable. and even arrange for them to appear without any other manager present. d) The measures planned to mitigate the impact of the risks identified, should Compliant Partially compliant Explain they materialise. e) The information and internal control systems that will be used to control and manage the aforementioned risks, including contingent liabilities or off-bal- ance sheet risks. Compliant Partially compliant Explain Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 72 of 101 706 46. Under the direct supervision of the Audit Committee or, where appropriate, a specialised committee of the Board of Directors, there is an internal risk control and management function performed by an internal unit or department at the company that has been expressly attributed the following functions: a) Ensure the proper functioning of the control and risk management systems and, in particular, that all important risks affecting the Company are properly identified, managed, and quantified. b) Actively participate in the preparation of the risk strategy and in the impor- tant decisions about its management. c) Ensure that control and risk management systems adequately mitigate risks within the framework of the policy defined by the Board of Directors. Compliant Partially compliant Explain 47. The members of the Appointments and Remuneration Committee, or of the Ap- pointments Committee and the Remuneration Committee, if they are separate, should be appointed ensuring that they have the knowledge, skills and experi- ence suitable for the duties they are called upon to perform and the majority of the members should be independent directors. 48. Large-cap companies should have a separate appointments committee and a separate remuneration committee. Compliant Explain Not applicable The two recommended committees are integrated into a single appointments and remuneration committee, as the Board of Directors believes that the combination of the two facilitates the carrying out of the duties assigned to them. 49. The Appointments Committee should consult with the Chairman of the Board of Directors and the CEO of the Company, especially on matters relating to ex- ecutive directors. And any director may request the consideration of potential candidates to fill vacancies of Director from the Appointments Committee, if it finds them suita- ble in its opinion. Compliant Partially compliant Explain 50. The Remuneration Committee should carry out its duties independently and, in addition to the duties assigned by law, should have the following responsibili- ties: Compliant Partially compliant Explain a) To propose to the Board of Directors the basic conditions of senior manage- The Appointments and Remuneration Committee is currently made up of two propri- etary and two independent directors, one of whom is the Chairman. FCC believes that the make up of the Appointments and Remuneration Committee, with two independent members out of a total of four, one of whom is also the Chair- man, sufficiently guarantees the proper functioning of this Committee”. ment contracts. b) To verify compliance with the remuneration policy established by the com- pany. c) To regularly review the remuneration policy applied to directors and senior executives, including the share based remuneration systems and their ap- plication, and ensure that their individual remuneration is in line with that paid to the other directors and senior executives at the Company. d) To ensure that any conflicts of interest do not undermine the independence of the external advice provided to the committee. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 73 of 101 707 e) To verify the information on directors’ and senior executives’ remuneration contained in the various corporate documents, including the annual direc- tors remuneration report. Compliant Partially compliant Explain 51. The remuneration committee should consult with the company’s chairman and CEO, especially on matters relating to executive directors and senior execu- tives. 53. Supervision of compliance with the company’s environmental, social and cor- porate governance policies and rules, as well as internal codes of conduct, should be entrusted to one or more committees of the Board of Directors, which may be the audit committee, the appointments committee, a committee specialising in sustainability or corporate social responsibility or any other spe- cialised committee that the Board of Directors, in the exercise of its powers of self-organisation, has decided to set up. Such a committee should be formed solely of non-executive directors, the majority of whom should be independent, and should be specifically attributed at least the duties indicated in the follow- ing recommendation. Compliant Partially compliant Explain Compliant Partially compliant Explain 52. The rules governing the composition and operation of the supervision and con- trol committees should be set out in the regulations of the Board of Directors and be consistent with those applicable to the legally obligatory committees in accordance with the above recommendations, including: a) They should be composed exclusively of non-executive directors, with a majority of independent directors. b) Their chairmen should be independent directors. c) The Board of Directors should appoint the members of these committees, bearing in mind the knowledge, skills and experience of the directors and the duties of each committee, and should discuss their proposals and re- ports; and to report, at the first plenary session of the Board of Directors after its meetings, on its activity and should be accountable for the work carried out. d) The committees may seek external advice, when they consider it necessary for the carrying out of their duties. e) Minutes should be taken of their meetings and made available to all direc- tors. Compliant Partially compliant Explain Not applicable Although in the operations of the Board of Directors these skills are dealt with in the agenda of its committees, some of the duties indicated in the Recommendation are not formally attributed to one of its committees by the Regulations of the Board of Directors. 54. The minimal duties referred to in the above recommendation are as follows: a) Overseeing compliance with the company’s corporate governance rules and internal codes of conduct, and ensuring that the corporate culture is aligned with its purpose and values. b) Overseeing the implementation of the general policy on economic-finan- cial, non-financial and corporate reporting as well as communication with shareholders and investors, proxy advisors and other stakeholders. The way in which the institution communicates and interacts with small and me- dium-sized shareholders will also be monitored. c) Regular evaluation and review of the Company’s corporate governance sys- tem and environmental and social policy, in order for them to fulfil their aim of promoting the corporate interest and taking into account, as appropriate, the legitimate interests of other stakeholders. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 74 of 101 708 d) Ensuring that the company’s environmental and social practices are in line with the established strategy and policy. e) The supervision and evaluation of the processes of relationship with the different stakeholders. Compliant Partially compliant Explain 55. Sustainability policies on environmental and social issues should at least iden- tify and include: a) The principles, commitments, objectives and strategy with regard to share- holders, employees, customers, suppliers, social issues, environment, di- versity, accountability, respect for human rights and prevention of corrup- tion and other unlawful actions. b) Methods or systems for monitoring compliance with policies, associated risks and their management. 57. Variable remuneration linked to the company’s performance and personal per- formance, as well as compensation in the form of shares, options or rights to shares or instruments linked to the value of the share and long-term savings schemes such as pension plans, retirement systems or other social welfare systems, should be exclusively limited to executive directors. The delivery of shares may be considered as remuneration to non-executive directors when it is subject to their remaining on the board. The foregoing shall not apply to the shares that the director needs to sell, if any, to meet the costs related to their acquisition. Compliant Partially compliant Explain 58. In the case of variable remuneration, remuneration policies should include the necessary technical limits and precautions to ensure that said remuneration is related to the professional performance of its beneficiaries and is not simply a result of general market or sector trends or other similar circumstances. c) Mechanisms for monitoring non-financial risk, including those related to And, in particular, that the variable components of remuneration: ethical and business conduct issues. d) Channels of communication, participation and dialogue with stakeholders. e) Responsible communication practices that avoid the manipulation of infor- mation and protect integrity and honour. Compliant Partially compliant Explain 56. Directors’ remuneration should be sufficient to attract and retain directors with the desired profile and to reward the dedication, qualifications and responsibil- ity required for the position, but should not be so high as to compromise the independent judgement of non-executive directors. Compliant Explain i. Should be linked to performance criteria that are predetermined and meas- urable, and these criteria should take into account the risk assumed in order to obtain a result. ii. Should promote the sustainability of the company and include non-finan- cial criteria that are appropriate for the creation of long-term value, such as compliance with the company’s internal rules and procedures and its policies for risk control and management. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 75 of 101 709 iii. Should be designed on the basis of a balance between the achievement of short-, medium- and long-term objectives, allowing performance to be re- warded for continued achievement over a period of time sufficient to assess their contribution to sustainable value creation, so that the elements used to measure that performance do not revolve solely around one-off, occasional or extraordinary events. Compliant Partially compliant Explain Not applicable 59. The payment of variable components of remuneration is subject to sufficient verification that the performance or other conditions set out above have been effectively met. Entities shall include in the annual directors’ remuneration re- port the criteria as to the time required and methods for such verification de- pending on the nature and characteristics of each variable component. In addition, entities should consider the establishment of a malus clause based on the deferral for a sufficient period of time of the payment of a part of the variable components that can lead to their total or partial loss should an event occur prior to the time of payment that makes this advisable. Compliant Partially compliant Explain Not applicable The CEO’s variable is related to EBITDA, operating cash flow and individual objec- tives. This variable is approved once the Board of Directors has drawn up the ac- counts and approved the financial objectives. 60. Remuneration related to the Company’s profit and loss should take into ac- count any qualifications in the external auditor’s report that reduce said profit and loss. 61. A significant percentage of the variable remuneration of executive directors should be linked to the delivery of shares or financial instruments tied to their value. Compliant Partially compliant Explain Not applicable The FCC Group’s remuneration policy does not include the delivery of shares or finan- cial instruments linked to their value to its executive directors, as this is considered more appropriate. 62. Once the shares, options or financial instruments corresponding to the remu- neration systems have been attributed, executive directors may not transfer ownership or exercise them until at least three years have passed. An exception is made where the director has, at the time of the transfer or exercise, a net economic exposure to share price changes of a market value equivalent to an amount of at least twice his or her annual fixed remuneration through the ownership of shares, options or other financial instruments. The above will not apply to shares that the director needs to dispose of in order to meet the costs related to their acquisition or, after a favourable assessment from the appointments and remuneration committee, to address extraordinary situations that so require it. Compliant Partially compliant Explain Not applicable 63. Contractual agreements should include a clause allowing the company to claim reimbursement of the variable components of remuneration when the payment has not been in accordance with the performance conditions or when they have been paid on the basis of data which is subsequently proven to be inaccurate. Compliant Partially compliant Explain Not applicable Compliant Partially compliant Explain Not applicable Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 76 of 101 Variable remuneration is approved by the Board of Directors once the parameters to which it is tied have been verified. It has not been considered necessary, both be- cause of the volume of the remuneration and the time at which it is paid, to establish additional precautions. 64. Severance payments of payments for contract termination should not exceed a set amount equivalent to two years’ total annual remuneration and should not be paid until the company has been able to verify that the director has met the criteria or conditions established for their receipt. For the purposes of this recommendation, termination or contractual termina- tion payments include any payments that accrue or are payable as a result of or in connection with the termination of the director’s contractual relationship with the company, including amounts not previously vested in long-term savings schemes and amounts paid under post-contractual non-compete agreements. Compliant Partially compliant Explain Not applicable 710 H. Other information of interest 1. If there are any relevant aspects of Corporate Governance in the Company or in the Group Entities that have not been included in the other sections of this report, but that are necessary to include in order to obtain more complete and detailed information on the governance structure and practices in the entity or its group, please briefly describe them. 2. This section may also include any other information, clarification or detail related to the previous sections of the report insofar as they are relevant and not repetitive. Specifically, it shall indicate whether the company is subject to legislation other than Spanish legislation on corporate governance and, if so, include any information that it is obliged to provide that is different from that required in this report. 3. The Company may also indicate whether it has voluntarily adhered to other interna- tional, sectoral or other codes of ethical principles or good practice. If applicable, the code in question and the date of adhesion shall be specified. In particular, it will mention whether it has adhered to the Code of Good Tax Practices of 20 July 2010. VOLUNTARY ADHERENCE TO CODES OR GOOD PRACTICES: Since 2018, FCC has had a new Code of Ethics and Conduct approved by its Board of Directors. Likewise, in 2018, the Board of Directors approved a regulatory section on Compliance and a Group-wide risk control system. In 2019, the Board of Directors slight- ly updated the Group’s Code of Ethics and Conduct. The FCC Group provides its employees with a whistleblowing channel for reporting pos- sible breaches of its Code of Ethics and Conduct and criminal offences. FCC has been a member of the United Nations Global Compact since 7 May 2007. Regarding tax matters, on 28 July 2010 the Board of Directors of FCC adopted the deci- sion to adhere to the Code of Good Tax Practices, thereby effectively complying with the obligations arising from it each year. Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 711 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 77 of 101 This annual corporate governance report was approved by the company’s Board of Di- rectors at its meeting on 25 February 2021. Indicate whether any directors voted against or abstained from voting on the approval of this Report. Yes No Name or company name of the director who voted against the approval of this report Reasons (against, abstention, non- attendance) Explain the reasons Remarks Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 78 of 101 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 712 ISSUER IDENTIFICATION DETAILS End date of the reference year: 31/12/2020 CIF (Tax ID): A-28037224 Corporate name: FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. Registered address: BALMES, 36 BARCELONA A. OWNERSHIP STRUCTURE A.1. Fill in the following table about the Company's capital stock: Date of most recent change Capital stock (€) Number of shares Number of voting rights 09/07/2020 409,106,618.00 409,106,618 409,106,618 Indicate whether there are different share classes with different associated rights: [ ] [ √ ] YES No A.2. List the direct and indirect holders of significant shares as at the reporting date, excluding directors: Name or corporate name of the shareholder ESTHER KOPLOWITZ ROMERO DE JUSEU WILLIAM H. GATES III CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. CARLOS SLIM HELÚ NUEVA SAMEDE 2016, S.L.U. List of indirect holdings: % voting rights attributed to the shares % voting rights through financial instruments Direct Indirect Direct Indirect Total % of voting rights 0.03 4.54 0.00 0.00 0.00 5.74 0.00 0.00 4.57 5.74 61.16 12.99 0.00 0.00 74.15 0.00 4.54 7.00 0.00 0.00 0.00 0.00 0.00 7.00 4.54 Name or corporate name of the indirect shareholder Name or corporate name of the direct shareholder % voting rights attributed to the shares % voting rights through financial instruments Total % of voting rights ESTHER KOPLOWITZ ROMERO DE JUSEU NUEVA SAMEDE 2016, S.L.U. 4.54 0.00 4.54 1 / 44 2 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 79 of 101 713 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES Name or corporate name of the indirect shareholder Name or corporate name of the direct shareholder % voting rights attributed to the shares % voting rights through financial instruments Total % of voting rights WILLIAM H. GATES III WILLIAM H. GATES III BILL & MELINDA GATES FOUNDATION TRUST CASCADE INVESTMENT, LLC. CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. DOMINUM DIRECCION Y GESTION, S.A. CARLOS SLIM HELÚ FINVER INVERSIONES 2020, S.L.U 1.75 3.99 8.46 7.00 0.00 0.00 0.00 0.00 1.75 3.99 8.46 7.00 Name or corporate name of the director % voting rights attributed to the shares % voting rights through financial instruments Total % of voting rights % voting rights that can be transferred through financial instruments Direct Indirect Direct Indirect Direct Indirect MANUEL GIL MADRIGAL 0.00 0.01 0.00 0.00 0.01 0.00 0.00 ANTONIO GÓMEZ GARCIA 0.01 0.00 0.00 0.00 0.01 0.00 0.00 SAMEDE INVERSIONES 2010, S.L.U DOMINUM DIRECCION Y GESTION, S.A. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8.46 0.00 0.00 0.00 8.46 0.00 0.00 Total % of voting rights held by the Board of Directors 8.70 A.3. Fill in the following tables on the members of the Company's Board of Directors, who have voting rights through their shares in the Company: List of indirect holdings: Name or corporate name of the director % voting rights attributed to the shares % voting rights through financial instruments Total % of voting rights % voting rights that can be transferred through financial instruments Direct Indirect Direct Indirect Direct Indirect 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 HENRI PROGLIO DOMINUM DESGA, S.A. E.A.C. INVERSIONES CORPORATIVAS, S.L. INMOBILIARIA AEG, S.A. DE C.V. Name or corporate name of the director Name or corporate name of the direct shareholder % voting rights attributed to the shares % voting rights through financial instruments Total % of voting rights % voting rights that can be transferred through financial instruments MANUEL GIL MADRIGAL TASMANIA INMUEBLES, S.L. 0.01 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 A.7. Indicate whether the Company has been informed of shareholders' agreements that affect it as established in Articles 530 and 531 of the Spanish Corporate Enterprises Act. If applicable, briefly describe them and list the shareholders affected by the agreement: PABLO COLIO ABRIL 0.01 0.00 0.00 0.00 0.01 0.00 0.00 [ √ ] ] [ Yes No ALEJANDRO ABOUMRAD GONZÁLEZ 0.07 0.00 0.00 0.00 0.07 0.00 0.00 Participants of the shareholders' agreement % of capital stock affected Brief description of the agreement End date of the agreement, if applicable GERARDO KURI KAUFMANN 0.01 0.00 0.00 0.00 0.01 0.00 0.00 JUAN RODRÍGUEZ TORRES 0.08 0.00 0.00 0.00 0.08 0.00 0.00 ÁLVARO VÁZQUEZ LAPUERTA 0.00 0.00 0.00 0.00 0.00 0.00 0.00 ESTHER KOPLOWITZ ROMERO DE JUSEU, INVERSORA CARSO S.A. DE C.V., NUEVA SAMEDE 2016, S.L.U., CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. 72.36 Relevant Fact of 05/02/2016 Indefinite 3 / 44 4 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 80 of 101 714 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES Participants of the shareholders' agreement % of capital stock affected Brief description of the agreement End date of the agreement, if applicable ESTHER KOPLOWITZ ROMERO DE JUSEU, CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. 50.16 Relevant fact of 27/11/2014 Indefinite Indicate whether the Company is aware of the existence of coordinated actions between its shareholders. If applicable, describe them briefly: [ ] [ √ ] Yes No A.8. Indicate whether there is any natural or legal person who exercises or may exercise control over the Company pursuant to Article 5 of the Securities Market Law. If applicable, identify this person: [ √ ] ] [ YES No CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. Name or corporate name A.9. Fill in the following tables about the company's treasury shares: At year-end: Number of direct shares Number of indirect shares(*) Total % of capital stock 1,544,733 0.38 (*) Through: Name or company name of the direct holder of the shareholding Number of direct shares No data A.11. Estimated floating capital: Estimated floating capital % 12.74 A.14. Indicate whether the company has issued securities that are not traded on a regulated market in the European Union. [ √ ] ] [ Yes No B. GENERAL SHAREHOLDERS' MEETING B.4. Indicate the attendance details at the general meetings of shareholders' held in the business year to which this report refers and those in the two preceding business years: Date of the general meeting % attendance in person % by proxy Attendance details % remote voting Electronic voting other Total 28/06/2017 Of which, Floating capital: 28/06/2018 Of which, Floating capital: 08/05/2019 Of which, Floating capital: 02/06/2020 Of which, Floating capital: 20.26 0.24 20.12 0.06 20.08 0.12 0.21 0.10 68.63 7.52 69.42 8.31 70.74 9.22 61.76 9.73 0.00 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.03 0.03 0.00 0.00 0.01 0.01 28.17 0.01 88.92 7.79 89.54 8.37 90.83 9.35 90.15 9.85 B.5. Indicate whether there have been any items on the agenda at general meetings held during the business year that, for any reason, have not been approved by shareholders. [ ] [ √ ] Yes No B.6. Indicate whether there are any statutory restrictions that establish a minimum number of shares necessary to attend the general shareholders' meeting, or to vote remotely: [ ] [ √ ] Yes No 5 / 44 6 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 81 of 101 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 715 C. STRUCTURE OF THE COMPANY'S ADMINISTRATION C.1. Board of Directors C.1.1 Maximum and minimum number of directors provided for the Bylaws and the number defined by the general shareholders' meeting: Maximum number of directors Minimum number of directors Number of directors defined by the shareholders' meeting 15 9 14 C.1.2 Fill in the following table with Board members: Name or corporate name of the director Representative Director category Position on the Board First appointment date Last appointment date Election procedure HENRI PROGLIO Independent DIRECTOR 27/02/2015 08/05/2019 DOMINUM DESGA, S.A. ESTHER ALCOCER KOPLOWITZ. Proprietary CHAIRMAN 27/09/2000 02/06/2020 E.A.C. INVERSIONES CORPORATIVAS, S.L. ALICIA ALCOCER KOPLOWITZ Proprietary DIRECTOR 30/03/1999 28/06/2017 INMOBILIARIA AEG, S.A. DE C.V. CARLOS SLIM HELÚ Proprietary DIRECTOR 13/01/2015 08/05/2019 PABLO COLIO ABRIL Executive CHIEF EXECUTIVE OFFICER 12/09/2017 28/06/2018 ALEJANDRO ABOUMRAD GONZÁLEZ Proprietary VICE CHAIRMAN 13/01/2015 08/05/2019 GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION 7 / 44 Representative Director category Position on the Board First appointment date Last appointment date Election procedure Name or corporate name of the director GERARDO KURI KAUFMANN JUAN RODRÍGUEZ TORRES ÁLVARO VÁZQUEZ LAPUERTA MANUEL GIL MADRIGAL ALFONSO SALEM SLIM ANTONIO GÓMEZ GARCIA Executive DIRECTOR 13/01/2015 08/05/2019 Proprietary DIRECTOR 07/10/2015 02/06/2020 Independent DIRECTOR 27/02/2015 08/05/2019 Independent DIRECTOR 27/02/2015 08/05/2019 Proprietary DIRECTOR 29/06/2016 02/06/2020 Proprietary DIRECTOR 29/06/2016 02/06/2020 SAMEDE INVERSIONES 2010, S.L.U ESTHER KOPLOWITZ ROMERO DE JUSEU DOMINUM DIRECCION Y GESTION, S.A. CARMEN ALCOCER KOPLOWITZ Proprietary 1ST DEPUTY CHAIRMAN 13/04/2015 08/05/2019 Proprietary DIRECTOR 26/10/2004 08/05/2019 Total number of directors 14 GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION GENERAL SHAREHOLDERS' MEETING RESOLUTION 8 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 82 of 101 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 716 Indicate any departures, either by resignation or through an agreement reached by the general meeting, that have occurred on the Board of Directors during the reporting period: Name or corporate name of the director Category of the director at the time of departure Date of most recent appointment Cancellation date Special commissions of which he/she was a member Indicate whether the departure occurred before the end of the term No data C.1.3 Fill in the following tables on the Board members and their different categories: Name or corporate name of the director Position in the company's organisation chart EXECUTIVE DIRECTORS Profile PABLO COLIO ABRIL Chief Executive Officer of FCC GERARDO KURI KAUFMANN Chief Executive Officer of Cementos Portland Valderrivas Architect, graduating from the Higher Technical School of Madrid. He has spent most of his professional career at FCC, a company to which he has dedicated more than 25 years. Within the Group, he has been responsible for the international expansion of the Industrial area. Positions he has previously held include Managing Director of FCC Construcción and Managing Director of FCC Industrial. He is the CEO of the FCC Group and a member of its Executive Committee, functions that he combines with those of the Chairman of FCC Construcción, Chairman of FCC Medio Ambiente and Deputy Chairman of FCC Servicios Medioambiental Holding, S.A. He is also a director of the Mexican firm Carso Infraestructuras y Construcción (CICSA). Industrial Engineer graduate from the University of Anáhuac (Mexico). From 2008 to 2010, he served as purchasing director at Carso Infraestructuras y Construcción, S.A.B. de C.V. From the incorporation of Inmuebles Carso, S.A.B de C.V., he has been in charge of its General Management. He is a member of the board of directors of Minera Frisco SAB. de C.V., Elementia, S.A., Philip Morris México, S.A. de C.V. and Inmuebles Carso, S.A.B de C.V. He is the CEO of Cementos Portland Valderrivas, S.A. and Realia Business, S.A. EXTERNAL PROPRIETARY DIRECTORS Name or corporate name of the director Name or corporate name of the significant shareholder that he/she represents or that has proposed his/her appointment Profile DOMINUM DESGA, S.A. DOMINUM DIRECCION Y GESTION, S.A. E.A.C. INVERSIONES CORPORATIVAS, S.L. DOMINUM DIRECCION Y GESTION, S.A. Degree in Law, she has completed the Senior Business Management Program (PADE) at the IESE in Madrid. Since January 2013, she has served as Chairwoman of the FCC Group, a member of its Executive Committee and the Appointments and Remuneration Committee. She is also a director at Cementos Portland Valderrivas, on behalf of EAC Medio Ambiente, S.L., Realia, on behalf of EAC Inversiones Corporativos, S.L., and CaixaBank-Banca Privada. The representatives of Dominum Desga, S.A., Samede Inversiones 2010, S.L.U., Dominum Direction and Management, S.A. and EAC Inversiones Corporativas, S.L. maintain a parent-subsidiary relationship. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). A Law graduate, she started her professional career at Banco Zaragozano, where she worked for four years in the Finance Department, at the bank's treasury desk and served as a director. She is a director at FCC and a member of its Executive Committee. In turn, she is chairwoman of Cementos Portland Valderrivas, S.A. and a member of its Executive Committee and its Appointments and Remuneration Committee. She is a member of the Innovation Committee, under the Secretary of State for Science, Technology, and Innovation. She is also a member of the Board of the Esther Koplowitz Foundation and the Valderrivas Foundation. The representatives of Dominum Desga, S.A., Samede Inversiones 2010, S.L.U., Dominum Direction and Management, S.A. and EAC Inversiones Corporativas, S.L. maintain a parent-subsidiary relationship. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). Civil Engineer from the National Autonomous University of Mexico (UNAM). Founder of Grupo Carso, S.A.B. de C.V., América Móvil, Grupo Financiero Inbursa, and Inversora bursátil. He is the owner of Teléfonos de México (Telmex). He has been Vice-President of the Mexican Stock Exchange and President of the Mexican Association of Brokerage Houses. He was the first Chairman of the Latin American Committee of the New York Stock Exchange Board of Directors. He is currently Chairman of the Board of Directors of Carso Infraestructuras y Construcción (CICSA), Minera Frisco and President of Fundación Carlos Slim de la Educación, A.C. and Fundación Telmex, A.C. In addition, he is a member of the Board of Directors of Inmuebles Carso and IDEAL. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). Total number of executive directors % of the total Board 2 14.29 INMOBILIARIA AEG, S.A. DE C.V. CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. 9 / 44 10 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 83 of 101 717 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES EXTERNAL PROPRIETARY DIRECTORS EXTERNAL PROPRIETARY DIRECTORS Name or corporate name of the director Name or corporate name of the significant shareholder that he/she represents or that has proposed his/her appointment Profile ALEJANDRO ABOUMRAD GONZÁLEZ CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. JUAN RODRÍGUEZ TORRES CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. ALFONSO SALEM SLIM CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. Industrial Engineer graduate from the University of Anáhuac (Mexico). He has worked in subsidiaries and companies related to Grupo Carso during the last 15 years, of which five years he worked at Grupo Financiero Inbursa in the area of Project Evaluation and Risk Assessment. He is member of the board of directors of Inmuebles Carso, S.A.B. of C.V. and Minera Frisco, S.A.B. of C.V., holding the post of General Manager with the latter. He is a director at Cementos Portland Valderrivas, S.A. on behalf of Inmobiliaria AEG, S.A. de C.V., and Chairman of the Board of Directors of FCC Aqualia, Chairman of FCC Servicios Medioambiental Holding, S.A.U and Deputy Chairman of the Board of FCC and Chairman of its Executive Committee. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). Civil Engineer from the Autonomous University of Mexico. He has a full Master's degree in Operational Planning and Research from UNAM. He has also completed administration studies at IPADE and obtained a diploma in prestressed concrete in Paris. He founded the Mexican Business Generation Association. He has been Production Manager and Controller of Preesforzados Mexicanos, S.A. de ICA, and Managing Director of Domit Group in the footwear sector. He is currently a director of Minera Frisco, S.A.B. de S.A. de CV. and of Carso Infraestructura y Construcción, S.A.B. de C.V. (CICSA) and non-executive chairman of Telesites. He is a director of Cementos Portland Valderrivas, S.A., representing Inmuebles Inseo, S.A. de C.V., a director of FCC Aqualia and non-executive chairman of Realia. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). He graduated in Civil Engineering from University of Anahuac in the class of 80-84. Throughout his professional career, Salem Slim has performed the role of Deputy Manager of Expansion at Sanborns Hermanos; director of Shopping Centres at Grupo CARSO; director of Real-Estate at INBURSA; managing director of Hoteles Calinda, managing director of Grupo PC Constructores; managing director of IDEAL, and he is currently deputy chairman of the Board of Directors of IDEAL and chairman of the Board of Directors and managing director of Inmuebles CARSO. He is also a member of the Board of Directors of Grupo CARSO; IDEAL; CICSA; Carso Real Estate; Gigante Grupo Inmobiliario; ELEMENTIA and Gas Natural Fenosa. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). Name or corporate name of the director Name or corporate name of the significant shareholder that he/she represents or that has proposed his/her appointment ANTONIO GÓMEZ GARCIA CONTROL EMPRESARIAL DE CAPITALES, S.A. DE C.V. SAMEDE INVERSIONES 2010, S.L.U DOMINUM DIRECCION Y GESTION, S.A. DOMINUM DIRECCION Y GESTION, S.A. DOMINUM DIRECCION Y GESTION, S.A. Profile He is a graduate in Industrial Engineering from the Universidad Iberoamericana. He has been Managing Director of Grupo Porcelanite, S.A. de C.V., of US Commercial Corp., S.A.B. de C.V., and currently holds the position of Managing Director of Grupo Carso, S.A.B. de C.V. He is a director of Grupo Frisco S.A.B. de C.V., and a director of Grupo Elementia S.A.B. de C.V. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). Shareholder in FCC, S.A. through Dominum Dirección y Gestión, S.A. she is a member of the Board of Directors of FCC, S.A., and the company's Deputy Chairwoman. She is also a director at FCC Environment. She holds a degree in Philosophy and Arts from the University of Madrid; she has developed her business experience in the international field as a Director of Veolia and Vivendi. She is founder and chairwoman of the Esther Koplowitz Foundation. Among other acknowledgements, she has been awarded: the Grand Cross of Civil Merit, the Gold Medal of the Region of Madrid, the Gold Medal and the title of Academic of Honour of the Royal Academy of History, the distinction of Honorary Citizen by the Valencia City Council, the City of Barcelona Coat of Arms, the Business Leader of the Year award, granted by the Spanish Chamber of Commerce in the USA, the Blanquerna Prize of the Generalitat of Catalonia, Madrid Grand Cross of Healthcare, the Gold and Diamond Insignia of the Police Orphans Foundation, Légion d’Honneur of the French Republic and The Grand Cross of the Civil Order of Environmental Merit, awarded by the Spanish Council of Ministers. The representatives of Dominum Desga, S.A., Samede Inversiones 2010, S.L.U., Dominum Direction and Management, S.A. and EAC Inversiones Corporativas, S.L. maintain a parent-subsidiary relationship. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). Graduate in Law from the Francisco de Vitoria University of Madrid. She is a director at FCC, S.A. She is a director at B-1998, S.L. and sits on the Board of Directors of Cementos Portland Valderrivas, S.A., representing Meliloto, S.L. She is a board member of the Esther Koplowitz Foundation. The representatives of Dominum Desga, S.A., Samede Inversiones 2010, S.L.U., Dominum Direction and Management, S.A. and EAC Inversiones Corporativas, S.L. maintain a parent-subsidiary relationship. (See Section A.6 of this Report for a description of the relationships between the director and the significant shareholders). Total number of proprietary directors % of the total Board 9 64.29 11 / 44 12 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 84 of 101 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 718 Name or corporate name of the director INDEPENDENT EXTERNAL DIRECTORS Profile HENRI PROGLIO A graduate of the Higher School of Business Administration (HEC) in Paris. He is currently a director of Natixis Banque and of Dassault Aviation. He has also served as Chairman of the energy giant Électricité de France (2009-2014) and Veolia Environnement (2003-2009), as well as a board member of FCC, Lagardère Group and Vinci, among other companies. ÁLVARO VÁZQUEZ LAPUERTA He holds a degree in Law and Business Studies (E-3) by ICADE and is currently a partner of the firms Akiba Partners and Meridia Capital Partners. He was Managing Director for Spain and Portugal at Dresdner Kleinwort, and CEO and head of Investor Relations at securities firm BBVA Bolsa. Previously he held various positions at JP Morgan in Mexico, New York, London and Madrid. MANUEL GIL MADRIGAL He holds a degree in Law and Business Sciences (E-3) by ICADE and is a founding partner of the company Tasmania Gestión. In 2000 he was also founder of the financial company N+1 and has been a board member of Ezentis, Funespaña, General de Alquiler de Maquinaria (GAM) and Campofrío, among other companies. During his career he has also been director of Capital Markets for AB Asesores Bursátiles, partner of Morgan Stanley and auditor of Arthur Andersen. Total number of independent directors % of the total Board 3 21.43 Indicate whether any director qualified as independent receives any amounts or benefits for any concept other than director remuneration from the company or its group, or maintains or has maintained, during the last business year, a business relationship with the company or with any company in its group, either in its own name or as a significant shareholder, director or senior manager of an entity with which he/she maintains or has maintained this relationship. As applicable, a reasoned statement by the Board shall be included providing the reasons why it believes that this director can perform his/her duties as an independent director. Name or corporate name of the director No data Description of the relationship Reasoned statement The other external directors shall be identified and the reasons they cannot be considered proprietary or independent and their relationships, whether with the Company, its directors, or its shareholders, shall be detailed: OTHER EXTERNAL DIRECTORS Name or corporate name of the director Reasons No data Total number of other external directors % of the total Board N/A N/A Company, executive or shareholder with whom he/she maintains a relationship Profile Indicate the changes to the category of each director that, as appropriate, have occurred during the period: Name or corporate name of the director No data Change date Previous category Current category C.1.4 Fill in the following table with information regarding the number of female directors at the end of the past 4 business years, as well as the category of these female directors: Number of female directors % of the total number of directors for each category 2020 2019 2018 2017 2020 2019 2018 2017 Executive Proprietary 4 4 4 4 Independent Other External 0.00 44.44 0.00 0.00 0.00 44.44 0.00 0.00 0.00 40.00 0.00 0.00 0.00 40.00 0.00 0.00 13 / 44 14 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 85 of 101 719 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES Number of female directors % of the total number of directors for each category Total Senior Management remuneration (thousands of euros) 1,831 2020 2019 2018 2017 2020 2019 2018 2017 C.1.15 Indicate whether there has been any change in the Board's regulation during the business year: Total 4 4 4 4 28.57 28.57 26.66 26.66 C.1.11 If applicable, list the directors or representatives of corporate directors of your Company, who are members of the Board of Directors or representatives of corporate directors of other companies listed on regulated markets other than your Group, of which the Company has been informed: Name or corporate name of the director Corporate name of the listed company Position E.A.C. INVERSIONES CORPORATIVAS, S.L. Realia Business, S.A. DIRECTOR GERARDO KURI KAUFMANN JUAN RODRÍGUEZ TORRES MANUEL GIL MADRIGAL Realia Business, S.A. Realia Business, S.A. Barón de Ley, S.A. CHIEF EXECUTIVE OFFICER CHAIRMAN DIRECTOR [ √ ] ] [ Yes No C.1.21 Explain whether there are specific requirements, other than those applicable to all directors, to be appointed as Chairman of the Board of Directors. [ ] [ √ ] Yes No C.1.23 Indicate if the Bylaws or rules of the Board establish a limit on mandates or other more stringent requirements in addition to those legally provided for independent directors, with the exception of those established in the regulations: [ ] [ √ ] Yes No C.1.12 Indicate and, if applicable, explain whether the company has established rules on the maximum number of Boards of Directors on which its directors may sit, identifying, where appropriate, where this provision is regulated: C.1.25 Indicate the number of meetings held by the Board of Directors during the business year. Furthermore, indicate, where appropriate, the times that the Board has met without the presence of the Chairman. In this calculation, proxies granted with specific instructions shall be considered as attendance. ] [ [ √ ] Yes No C.1.13 Indicate the amounts of the following concepts relating to the global remuneration of the Board of Directors: Remuneration accrued during the business year in favour of the Board of Directors (thousands of euros) 1,945 Amount of rights accrued by current directors for pension benefits (thousands of euros) Amount of rights accrued by former directors for pension benefits (thousands of euros) 3,151 C.1.14 Identify members of senior management who are not executive directors, and indicate the total remuneration accrued in their favour during the business year: Name or corporate name Position(s) FELIPE BERNABÉ GARCÍA PÉREZ General Secretary MIGUEL MARTINEZ PARRA Managing Director of Administration and Finance FELIX PARRA MEDIAVILLA Managing Director of Aqualia MARCOS BADA GUTIÉRREZ Managing Director of Internal Audit Number of women in senior management Percentage of total members of senior management 0.00 Number of Board meetings Number of Board meetings without the Chairman's attendance 9 0 Indicate the number of meetings held by the coordinating director with other directors, without the attendance or representation of any executive director: Number of meetings 0 Indicate the number of meetings held by the different Board Committees during the business year: Number of Audit and Control Committee meetings Number of Appointments and Remuneration Committee meetings Number of Executive Committee meetings 8 7 8 15 / 44 16 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 86 of 101 720 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES C.1.26 Indicate the number of meetings held by the Board of Directors during the business year and the attendance details of its C.1.31 Indicate whether during the business year, the Company has changed its external auditor. If applicable, identify the members: Number of meetings at which at least 80% of directors were in attendance % of face-to-face attendance divided by total votes during the business year Number of meetings with the face-to- face attendance, or proxies made with specific instructions, of all directors % of votes cast with face-to-face attendance and proxies made with specific instructions, divided by total votes during the business year 9 90.48 90.48 C.1.27 Indicate whether the individual and consolidated financial statements submitted to the board for preparation have been certified previously: [ √ ] ] [ Yes No Identify, where appropriate, the person(s) who has/have certified the company's individual and consolidated financial statements for their preparation by the Board: Name JUAN JOSÉ DRAGO MASÍA Position Managing Director of Administration PABLO COLIO ABRIL Chief Executive Officer MIGUEL MARTINEZ PARRA Managing Director of Administration and Finance C.1.29 Does the secretary of the Board have director status? ] [ [ √ ] Yes No If the secretary does not have director status, fill in the following table: Name or corporate name of the secretary Representative FRANCISCO VICENT CHULIA incoming and outgoing auditor: Yes No If there have been disagreements with the outgoing auditor, explain the nature of these: Yes No [ ] [ √ ] ] [ [ √ ] C.1.32 Indicate whether the audit firm performs other work for the Company and/or its Group other than those inherent to audits and, in that case, state the fees received for this work and the percentage that the aforementioned amount represents of the fees billed for audit work to the Company and/or its group: [ ] [ √ ] Yes No C.1.33 Indicate whether the audit report of the previous business year's financial statements includes qualifications. As applicable, indicate the reasons given to shareholders at the General Shareholders' Meeting by the Chairman of the Audit Committee to explain the content and scope of these qualifications. [ ] [ √ ] Yes No C.1.34 Indicate the number of business years that the current audit firm has been continuously auditing the Company's individual and/or consolidated financial statements. Furthermore, indicate the percentage that the number of business years audited by the current audit firm accounts for in terms of the total number of business years in which the financial statements have been audited: Number of uninterrupted business years 19 19 Individual Consolidated Number of business years audited by the current audit firm/Number of business years that the Company or its Group have been audited (in %) Individual Consolidated 61.29 61.29 C.1.35 Indicate and, as applicable, describe if there is a procedure for directors to receive the necessary information to prepare meetings with administrative bodies with sufficient time: [ √ ] ] [ Yes No Describe the procedure Rules of the Board of Directors. Article 26. Information and inspection powers “1. In the performance of their duties, every director has the duty to demand and the right to obtain from the Company, the adequate and necessary information that will allow them to fulfil their obligations concerning all aspects of FCC and its subsidiaries and investees, whether national or foreign. To this end, they may examine the documentation deemed necessary, make contact with those responsible for the affected departments and visit the corresponding facilities. 2. To refrain from disturbing the ordinary 17 / 44 18 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 87 of 101 721 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES management of the FCC Group, the exercise of the powers of information shall be channelled through the Chairman, who shall respond to the director's requests, directly providing the information or offering the details of the corresponding contacts at the corresponding organisational level. 3. If the request for information is denied, delayed or incorrectly responded to, the requesting director may repeat their request before the Audit and Control Committee, and, once the Chairman and the requesting director have provided their reasons, this Committee shall decide how to proceed for the purposes mentioned above. 4. The requested information may only be denied when, in the opinion of the Chairman and the Audit and Control Committee, it is unnecessary or harmful to the Company's corporate interests. This refusal shall not apply when the request has been supported by the absolute majority of the Board members". C.1.39 Identify individually, when referring to directors, and on an aggregate basis for other cases and indicate, in detail, the agreements between the Company and its administrative and management positions or employees concerning compensation, guarantee or shield clauses, when they resign or are dismissed improperly or if the contractual relationship comes to an end as a result of a takeover bid or other transactions. Number of beneficiaries Type of beneficiary 2 Description of the agreement CEO and General Secretary CHIEF EXECUTIVE OFFICER: And if the contractual relationship is terminated at the will of the CEO for any of the following causes: - Substantial changes in working conditions that are notoriously detrimental to his professional training, that are detrimental to his dignity, or that are decided with serious transgression of good faith, by the company. - Failure to pay for three consecutive months or six alternate months, or continued delay in the payment of the remuneration agreed under the contract. - Succession of a company or significant change in ownership of the same, which has the effect of a renewal of its governing bodies or the content of its main activity, provided that the termination occurs within three months of the occurrence of such changes. - Any other serious breach of the contractual obligations by the Company, with the exception of force majeure budgets, in which the payment of compensation shall not be applicable. As in the case of free and unilateral termination from the Company, he will have the right to receive compensation resulting from the sum of the following two items: a) The amount resulting from the termination of the employment relationship that the CEO previously held with FCC Construcción or with any other company of the FCC Group using 12 September 2017 as the calculation date (and in accordance with the applicable regulations on that date). The amount resulting from multiplying 7 days wages by the number of years that have elapsed from 12 September 2017 until the contract expires. GENERAL SECRETARY: Concerning the general secretary, an executive director up until 13 January 2015, the Company, having received authorisation from the Executive Committee, took out and paid up the insurance premium to cover the payment of contingencies relating to death, permanent incapacity for work, retirement pensions and benefits or other concepts to be paid, in addition to others, to certain executive directors and executives. Specifically, the contingencies giving rise to compensation are those involving the termination of the employment relationship for any of the following reasons: a) Unilateral decision of the Company. b) Winding up or disappearance of the parent Company for any reason, including merger or spinoff. c) Death or permanent disability. d) Other causes of physical or legal incapacitation. e) Substantial modification of professional conditions. f) Resignation, having reached the age of 60, at the request of the executive and with the agreement of the Company. g) Resignation, having reached the age of 65, at the executive's sole discretion. As at 31 December 2020, the General Secretary is entitled to a net amount equivalent to 3.5 times his annual gross remuneration. approved by the corresponding bodies of company or its group. If so, specify the procedures, expected cases and the nature of the bodies responsible for their approval or communication: Board of Directors General Shareholders' Meeting Body authorising the clauses Is the General Shareholders' Meeting aware of the clauses? C.2. Board of Directors Committees √ Yes √ No C.2.1 Provide details of all the Board of Directors Committees, their members and the proportion of executive, proprietary, independent and other external directors who serve on them: Audit and Control Committee Name Position Category HENRI PROGLIO JUAN RODRÍGUEZ TORRES ÁLVARO VÁZQUEZ LAPUERTA MANUEL GIL MADRIGAL VOTING MEMBER Independent VOTING MEMBER Proprietary VOTING MEMBER Independent CHAIRMAN Independent % of executive directors % of proprietary directors % of independent directors % other external directors 0.00 25.00 75.00 0.00 Explain the duties, including, where appropriate, those in addition to those defined by law, which are attributed to this committee, and describe the procedures and rules for its organisation and functioning. For each of these functions, indicate its most important actions during the business year and how it have exercised each of the functions attributed in practice, whether by law, in the Bylaws or in other corporate agreements. Identify the director members of the audit committee that have been appointed taking into account their knowledge and experience in accounting, auditing or both, and report on the date on which the Chairman of this Committee was appointed to the position. Names of directors with experience MANUEL GIL MADRIGAL Date of appointment of the Chairman to the position 08/05/2019 Indicate whether, beyond the assumptions provided for in the regulations, these contracts must be communicated and/or 19 / 44 20 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 88 of 101 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 722 C.2.2 Fill in the following table with information regarding the number of female directors who sit on the Committees of the Board of Directors at the end of the last four business years: Number of female directors 2020 2019 2018 2017 Number % Number % Number % Number % 0 1 2 0.00 25.00 33.33 0 1 2 0.00 25.00 33.33 0 1 2 0.00 25.00 33.33 0 1 2 0.00 25.00 33.33 Audit and Control Committee Appointments and Remuneration Committee Executive Committee Appointments and Remuneration Committee Name Position Category DOMINUM DESGA, S.A. JUAN RODRÍGUEZ TORRES ÁLVARO VÁZQUEZ LAPUERTA MANUEL GIL MADRIGAL VOTING MEMBER VOTING MEMBER CHAIRMAN Proprietary Proprietary Independent VOTING MEMBER Independent % of executive directors % of proprietary directors % of independent directors % other external directors 0.00 50.00 50.00 0.00 Explain the duties, including, where appropriate, those in addition to those defined by law, which are attributed to this committee, and describe the procedures and rules for its organisation and functioning. For each of these functions, indicate its most important actions during the business year and how it have exercised each of the functions attributed in practice, whether by law, in the Bylaws or in other corporate agreements. Name Position Category Executive Committee DOMINUM DESGA, S.A. E.A.C. INVERSIONES CORPORATIVAS, S.L. PABLO COLIO ABRIL VOTING MEMBER VOTING MEMBER Proprietary Proprietary VOTING MEMBER Executive ALEJANDRO ABOUMRAD GONZÁLEZ CHAIRMAN Proprietary GERARDO KURI KAUFMANN JUAN RODRÍGUEZ TORRES VOTING MEMBER Executive VOTING MEMBER Proprietary % of executive directors % of proprietary directors % of independent directors % other external directors 33.33 66.67 0.00 0.00 Explain the functions delegated or attributed to this Committee other than those already described in section C.1.9, and describe the procedures and rules for its organisation and functioning. For each of these functions, indicate its most important actions during the business year and how it have exercised each of the functions attributed in practice, whether by law, in the Bylaws or in other corporate agreements. 21 / 44 22 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 89 of 101 723 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES D. TRANSACTIONS WITH RELATED PARTIES AND INTRA-GROUP TRANSACTIONS D.2. Describe significant transactions based their amount or relevance on account of their subject matter performed between the company or Group companies and significant shareholders in the company: Name or corporate name of the significant shareholder Name or company name of the company or group entity Nature of the relationship Transaction type Amount (thousands of euros) REALIA BUSINESS, S.A. FC y C, S.L. Unipersonal Contractual Receipt of services REALIA BUSINESS, S.A. FCC Construcción, S.A. Contractual Provision of services REALIA BUSINESS, S.A. FC y C, S.L. Unipersonal Contractual Receipt of services BANCO INBURSA, S.A. Cementos Portland Valderrivas, S.A. Contractual Interest charged BANCO INBURSA, S.A. FCC Construcción, S.A. Contractual Financing agreements: other REALIA PATRIMONIO, S.L.U REALIA PATRIMONIO, S.L.U FCC Industrial e Infraestructuras Energéticas S.A.U. FCC Industrial e Infraestructuras Energéticas S.A.U. Contractual Provision of services Contractual Provision of services 1,954 23,911 2,076 3,818 1,397 5 D.3. Describe the significant transactions based their amount or relevance on account of their subject matter performed between the company or group companies and company directors or executives: D.4. Provide details of the significant operations carried out by the company with other companies belonging to the same Group, provided they are not eliminated in the process of preparing consolidated financial statements and are not part of the Company's routine business in terms of its purpose and conditions. In any case, any intra-group transactions carried out with companies established in countries or territories that are considered a tax haven shall be reported: of Corporate name the Group company No data Brief description of the transaction Amount (thousands of euros) N/A D.5. Describe the significant transactions carried out between the Company or Group Companies and other related parties, which have not been reported on in the above epigraphs. Corporate name of the related party No data Brief description of the transaction Amount (thousands of euros) N/A Relationship Nature of the transaction Amount (thousands of euros) Name or company of directors or name executives Name or company name of the company or group entity ALEJANDRO ABOUMRAD GONZÁLEZ FOMENTO DE CONSTRUCCIONES Y CONTRATAS SA Director Provision of services GERARDO KURI KAUFMANN CEMENTOS PORTLAND VALDERRIVAS SA Chief Executive Officer Provision of services 338 175 23 / 44 24 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 90 of 101 724 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES G. DEGREE OF COMPLIANCE WITH CORPORATE GOVERNANCE RECOMMENDATIONS Indicate the degree of compliance at the company with the recommendations of the Code of Good Governance of Listed Companies. In the event that any recommendation is not followed or is only partially followed, a detailed explanation of the reasons for this shall be included, so that shareholders, investors and the market in general have sufficient information to assess the company's behaviour. General explanations shall not be acceptable. 1. The Bylaws of listed companies do not limit the maximum number of votes that can be cast by the same shareholder, nor contain other restrictions that make it difficult to take control of the company by acquiring its shares on the market. Compliant [X] Explain [ ] 2. Where the listed company is controlled, within the meaning of Article 42 of the Commercial Code, by another entity, whether listed or not, and has, directly or through its subsidiary companies, business dealings with that entity or any of its subsidiary companies (other than those of the listed company) or engages in activities related to those of any of them, it should accurately publicly disclose the following: a) The respective areas of activity and any business relationships between, the listed company or its subsidiary companies and the parent company or its subsidiary companies. b) The proposed mechanisms for resolving any conflicts of interests that may arise. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] 3. During the ordinary general shareholders' meeting, in addition to the dissemination in writing of the annual corporate governance report, the Chairman of the Board of Directors verbally informs shareholders, in sufficient detail, of the most relevant aspects of the company's corporate governance and, in particular: a) b) Of the changes that have occurred since the previous ordinary general shareholders' meeting. Of the specific reasons that the company does not follow any of the recommendations in the Corporate Governance Code and, as applicable, any alternative rules that apply in this regard. Compliant [ ] Partially compliant [ ] Explain [ X ] The Company believes that the provisions of the company's corporate governance information to shareholders in the specific report prepared to this end is sufficient; this report accompanies the information made available before the Meeting is held. In this connection, the announcement of the General Shareholders' Meeting is expressly indicated in the "Right to Information" section that all shareholders are entitled to obtain from the Company, for consideration at its registered office shareholders for approval as part of the Management Report. This Report can be consulted on the Company's website and in the corporate governance section. or for immediate dispatch free of charge, including the Annual Corporate Governance Report, which is submitted to 4. The company defines and promotes a policy regarding communication and contact with shareholders, institutional investors in the framework of their involvement in the company, as well as with voting advisors that fully complies with the standards in force to combat market abuse and addresses shareholders in the same position equally. The company publishes this policy on its website, including information related to the way in which it has been implemented and identifying the points of contact or persons responsible for carrying it out. And, notwithstanding the legal obligations to disclose inside information and other types of regulated information, the company should also have a general policy regarding the communication of economic-financial, non-financial and corporate information through the channels it deems appropriate (media, social networks or other channels) that helps to maximise the dissemination and quality of the information available to the market, investors and other stakeholders. Compliant [ ] Partially compliant [ ] Explain [ X ] The company has drafted its Policy on Communication and Contacts with Shareholders, Institutional Investors, Analysts, Voting Advisors and Credit Rating Agencies, which the Board of Directors plans to approve in the 2021 business year. 5. The Board of Directors does not submit a proposal for the delegation of powers to issue convertible shares or securities excluding the pre-emptive subscription right, for an amount greater than 20% of the capital at the time of delegation, to the General Shareholders' Meeting. When the Board of Directors approves any issuance of shares or convertible securities excluding the pre-emptive subscription right, the company immediately publishes the reports on said exclusion to which trade legislation refers on its website. Compliant [X] Partially compliant [ ] Explain [ ] 6. The listed companies that prepare the reports mentioned below, whether they are mandatory or voluntary, publish them on their website well in advance of the Ordinary General Shareholders' Meeting, even when their dissemination is not mandatory: a) b) c) Report on the independence of the auditor. Reports on the functioning of the audit committee and the appointments and remuneration committee. Report of the audit committee on related transactions. Compliant [ ] Partially compliant [ X ] Explain [ ] The Company approves the self-assessment reports corresponding to the Audit and Control Committee and the Appointments and Remuneration Committee at the first Board meeting of the business year. These reports are not published when the company considers that information is already provided to this end in Section C.2.1 on the IAGC Board of Directors committees, which is available on the Group's corporate website. The approval of transactions with related parties lies with the Appointments and Remuneration Committee responsible for this specific function. Also in Section D2 of the IAGC, the significant transactions that have taken place during the business year are listed. 25 / 44 26 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 91 of 101 725 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 7. The Company broadcasts General Shareholders' Meetings live, on its website. Two different systems are used, for practical reasons, to count votes, all pursuant to the provisions of Article 20 the Chairman of the Board, in each specific case, may decide to apply the same counting system (Art. 20, section 4 of the Rules of the General Meeting). of the Rules of the General Shareholders' Meeting, although And that the company has mechanisms that enable proxy voting and voting by remote means and even, in the case of large- cap companies and to the extent appropriate, attendance and active participation at the General Meeting. Compliant [X] Partially compliant [ ] Explain [ ] 8. The audit committee should ensure that the financial statements submitted by the Board of Directors to the general shareholders' meeting are drawn up in accordance with accounting standards. In those cases in which the auditor has included an exception in the audit report, the chairman of the audit committee should clearly explain at the general meeting the audit on its content and scope, and a summary of said opinion should be made available to shareholders at the time of publication of the notice of call to the meeting, together with the rest of the board's proposals. committee's opinion Compliant [X] Partially compliant [ ] Explain [ ] 9. The Company publishes on its website, on a permanent basis, the requirements and procedures that it shall accept to demonstrate ownership of shares, the right to attend the general shareholders meeting and the exercise or delegation of the right to vote. These requirements and procedures promote the attendance and exercise of shareholders' rights and are applied in a non-discriminatory manner. Compliant [X] Partially compliant [ ] Explain [ ] 10. When a legitimate shareholder has exercised, before the General Shareholders' Meeting is held, the right to add to the agenda or submit new resolutions, the Company: a) b) c) d) Immediately disseminates these additional items and new resolutions proposed. Discloses the attendance card template or vote delegation form or distance voting form with the necessary modifications so that the new items on the agenda and alternative resolution proposals can be voted on under the same terms as those proposed by the Board of Directors. Submits all the alternative points or proposals to a vote and apply the same voting rules as applied to those prepared by the Board of Directors, including, in particular, assumptions or deductions on the meaning of the vote. After the General Shareholders' Meeting, communicate the breakdown of the vote on these additional items or alternative proposals. Compliant [ ] Partially compliant [ X ] Explain [ ] Not applicable [ ] 11. If the company plans to pay out attendance premiums to the General Shareholders Meeting, a general policy on these premiums is established in advance and this policy is stable. Compliant [ ] Partially compliant [ ] Explain [ ] Not applicable [ X ] 12. The Board of Directors performs its functions with unity of purpose and independence of judgment, treats all shareholders in the same position in the same way and is guided by the social interest, understood as the achievement of a profitable and sustainable business in the long term, which promotes its continuity and maximisation of the economic value of the company. And in the pursuit of social interests, in addition to respect for the laws and regulations and conduct based on good faith, ethics and with, as appropriate, respect for commonly accepted uses and good practices, the company seeks to reconcile its own social interest the legitimate interests of its employees, its suppliers, its customers and those of the other stakeholders that may be affected, as well as the impact of the company's activities on the community as a whole and on the environment. Compliant [X] Partially compliant [ ] Explain [ ] 13. The Board of Directors is the correct size to ensure it is effective and participative, meaning it is advisable to have between five and fifteen members. Compliant [X] Explain [ ] 27 / 44 28 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 92 of 101 726 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 14. The Board of Directors should adopt a policy aimed at encouraging a suitable composition for the Board of Directors and it 17. The number of independent directors represents at least half the total number of directors. should: a) b) c) Is specific and verifiable. ensure that proposed appointments and re-elections are based on a preliminary analysis of the powers required by the Board of Directors; and promote the diversity of knowledge, experience, age and gender. For these purposes, measures that encourage the company to have a significant number of female senior managers are considered to be conducive to gender diversity. The result of the preliminary analysis of powers required by the Board of Directors is included in the explanatory report issued by the Appointments Committee that is published when the General Shareholders Meeting is called and to which the ratification, appointment or re-election of each director is submitted. The Appointments Committee will verify compliance with this policy and will be informed in the Annual Corporate Governance Report. Compliant [X] Partially compliant [ ] Explain [ ] 15. Proprietary and independent directors represent a large majority of the Board of Directors and that the number of executive directors is the minimum necessary, taking into account the complexity of the corporate group and the shareholding of the executive directors in the Company's capital. And that the number of female directors should account for at least 40% of the members of the Board of Directors by the end of 2022 and beyond, but no less than 30% before then. Compliant [ ] Partially compliant [ X ] Explain [ ] With regard to the percentage of female directors, the FCC's Board of Directors has four female directors out of a total of 14, giving a percentage of 28.57. 16. The percentage of proprietary directors compared to the total of non-executive directors is no greater than the proportion between the capital of the Company represented by these directors and other capital. This criteria may be relaxed: a) b) At companies with a high capitalisation with few shareholdings considered significant by law. For companies in which there is a large number of shareholders represented on the Board of Directors who have no links to one another. Compliant [X] Explain [ ] However, when the company is not highly capitalised or when, even if it is, one shareholder or more shareholders are acting together, controlling more than 30% of the share capital, the number of independent directors represents at least one third of the total number of directors. Compliant [ ] Explain [ X ] On its Board of Directors, FCC has three independent directors out of a total of fourteen members, representing 21 percent of the total number of directors. FCC believes that this percentage does not require an increase in the number of independent directors, considering the Company's very concentrated shareholding structure and the effective role of the three independent directors. 18. Companies publish the following information about directors on their website, and keep it up to date: a) b) c) d) e) Professional and biographical profile. Other Boards of Directors to which they belong, whether at listed companies or not, and the other paid activities they perform, regardless of their nature. Indication of the category of Director to which they belong, indicating, in the case of proprietary directors, the shareholder they represent or with whom they have links. Date of their first appointment as a Director of the Company, as well as subsequent re-elections. Shares in the company, and options on them, that they own. Compliant [ ] Partially compliant [ X ] Explain [ ] The company makes available on its website the professional and biographical profile, other boards of directors to which the directors belong, the director's category, the date of his or her first appointment and the shares in the company, without considering it necessary, for the time being, to publicise other remunerated activities carried out by the director, whatever their nature. 19. The annual corporate governance report, after a check performed by the Appointments Committee, explains the reasons that proprietary directors have been appointed at the request of shareholders whose shareholding is less than 3% of the capital stock; and it explains the reasons that formal requests for presence on the Board from shareholders whose shareholding is equal to or greater than that of others, at whose request proprietary directors have been appointed, have not been met. Compliant [ ] Partially compliant [ ] Explain [ ] Not applicable [ X ] 29 / 44 30 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 93 of 101 727 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 20. Proprietary directors submit their resignation when the shareholder they represent fully transfers their shareholding. They also 23. All directors clearly express their opposition when they consider that any proposed decision submitted to the Board of Directors may do so, in the corresponding number, when said shareholder reduces their shareholding to a level that requires a reduction in the number of their proprietary directors. be contrary to the corporate interest. The same applies, in a special way, to independents and other directors who are not affected by any potential conflict of interests, in the case of decisions that may harm shareholders not represented on the Board of Directors. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] 21. The Board of Directors does not propose the removal of any independent director before the end of the statutory period for which they were appointed, unless there is just cause, identified by the Board following in a report from the Appointments and Remuneration Committee. In particular, it shall be considered that there is just cause when the director first occupies new positions or contracts new obligations that prevent him/her from dedicating the necessary time to the performance of the duties assigned to the position of director, breaches the duties inherent to the position in question or incurs in any of the circumstances resulting in him/her losing his/her status as an independent director, pursuant to the provisions of the applicable legislation. The removal of independent directors may also be proposed as a result of takeovers, mergers or other similar corporate transactions that involve a change in the capital structure of the company, when these changes in the structure of the Board of Directors can be attributed to the criteria of proportionality indicated in recommendation 16. Compliant [X] Explain [ ] 22. Companies should establish rules requiring directors to report and, where appropriate, resign when situations arise affecting them, whether or not this is related to their actions in the company itself, which could be harmful to the credit and reputation of the company. This is in addition to the specific requirement of informing the Board of Directors of any criminal proceedings in which they are under investigation, as well as the progress of any such proceedings. And, having been informed of or otherwise having become aware of any of the situations mentioned in the previous paragraph, the board should examine the case as soon as possible. It should also, in view of the specific circumstances, decide, after a report from the appointments and remuneration committee, whether or not to adopt any measures, such as opening an internal investigation, requesting the resignation of the director or proposing his or her dismissal. And to report on the matter in the annual corporate governance report, unless there are special circumstances justifying this, which should be recorded in the minutes. This is notwithstanding the information that the company must disclose, where appropriate, at the time of adopting the corresponding measures. Compliant [X] Partially compliant [ ] Explain [ ] When the Board of Directors adopts significant or repeated decisions about which the director would have made reservations, he/she shall draw the necessary conclusions and, if he chooses to resign, explain his/her reasons for doing so in the letter indicated in the following recommendation. This recommendation also applies to the secretary of the Board of Directors, even if he/she does not have the status of a director. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] 24. When, either by resignation or by resolution of the general meeting, a director resigns before the end of their term of office, they should sufficiently explain the reasons for their resignation or, in the case of non-executive directors, their views on the reasons for the board's decision to remove them, in a letter sent to all members of the Board of Directors. And, notwithstanding the fact that all the above is disclosed in the annual corporate governance report, to the extent that it is relevant for investors, the company should publish the resignation as soon as possible, including a sufficient reference to the reasons or circumstances provided by the director. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] 25. The Appointments Committee ensures that non-executive directors have sufficient time available for the proper performance of their duties. And the Rules of the Board establish the maximum number of Boards on which its directors may serve. Compliant [ ] Partially compliant [ X ] Explain [ ] In Article 21.4 of the Rules of the Board of Directors, the Company establishes that "Directors must inform the Appointments and Remuneration Committee of their other professional obligations, should they could interfere with their dedication of the position, and the Board shall establish, at the proposal of the Appointments and Remuneration Committee, the number of Boards of Directors on which directors may serve". Since the aforementioned Committee has not stipulated this number to date, the Company believes that it is partially compliant with the recommendation. The Company, for the time being, has not set the maximum number of Boards to which each director may belong, since the dedication of the directors to the company has proven to be adequate, without it being necessary, therefore, to define a number. 31 / 44 32 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 94 of 101 728 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 26. The Board of Directors meets with the necessary frequency to perform its duties effectively and, at least, eight times a year, following the programme of dates and matters established at the beginning of the business year, with each director allowed to individually propose other items on the agenda not initially provided for. Compliant [X] Partially compliant [ ] Explain [ ] 27. The absence of directors is limited to indispensable cases and quantified in the annual corporate governance report. And should such absences occur, the directors appoint a proxy with instructions. Compliant [X] Partially compliant [ ] Explain [ ] 28. When the directors or the secretary express concern about any proposal or, in the case of directors, about the progress of the company and these concerns are not resolved by the Board of Directors, at the request of the person expressing them, these shall be recorded in the minutes. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] 29. The Company establishes the appropriate channels so that directors can obtain the necessary advice for them to perform their duties, including, if the circumstances so require, external advice charged to the company. Compliant [X] Partially compliant [ ] Explain [ ] 30. Regardless of the knowledge required by directors in the exercise of their duties, the companies also offer the directors knowledge refresher programmes when the circumstances so advise. Compliant [X] Explain [ ] Not applicable [ ] 31. The agenda of meetings clearly indicates the points on which the Board of Directors must adopt a decision or resolution so that the directors can study or collect, in advance, the information necessary for its adoption. When, exceptionally, for reasons of urgency, the Chairman wishes to submit decisions or resolutions that do not appear on the agenda for approval by the Board of Directors, the prior and express consent of the majority of the directors present shall be required, duly reflected in the minutes. Compliant [X] Partially compliant [ ] Explain [ ] 32. Directors are periodically informed of changes in the shareholding structure and of the opinion that significant shareholders, investors and rating agencies have about the company and its Group. Compliant [X] Partially compliant [ ] Explain [ ] 33. The chairman, as the person responsible for the effective functioning of the Board of Directors, in addition to exercising the duties assigned to him by law and in the bylaws, prepares and submits a programme of dates and matters to be discussed to the Board of Directors; organises and coordinates the periodic assessment of the board, as well as, where appropriate, the company's chief executive; is responsible for the direction of the board and the effectiveness of its functioning; ensures that sufficient discussion time is devoted to strategic issues, and agrees and reviews knowledge refresher programmes for each director, when the circumstances so advise. Compliant [X] Partially compliant [ ] Explain [ ] 34. When there is a coordinating director, the Bylaws or the Rules of the Board of Directors, in addition to the powers that correspond to him by Law, assign the following powers thereto: preside over the Board of Directors in the absence of the Chairman and Deputy Chairman, as applicable; echoes the concerns of non-executive directors; maintains contact with investors and shareholders to obtain their points of view to form an opinion on their concerns, particularly in relation to the corporate governance of the company; and coordinates the Chairman's succession plan. Compliant [ ] Partially compliant [ ] Explain [ ] Not applicable [ X ] 35. The secretary of the Board of Directors ensures that the Board of Directors takes into account the recommendations on good governance contained in the Code of Good Governance applicable to company in its actions and decisions. Compliant [X] Explain [ ] 33 / 44 34 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 95 of 101 729 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 36. The Board of Directors assesses, once a year, and adopts, where appropriate, an action plan that corrects any shortcomings 39. Members of the Audit Committee as a whole, and especially its Chairman, are appointed taking into account their knowledge and detected regarding: experience in accounting, auditing and risk management matters, both financial and non-financial. The quality and efficiency of the functioning of the Board of Directors. Compliant [X] Partially compliant [ ] Explain [ ] 40. Under the supervision of the Audit Committee, there is a unit that assumes the internal audit function ensuring the proper functioning of the information and internal control systems, which functionally reports to the non-executive Chairman of the Board or the Audit Committee. Compliant [X] Partially compliant [ ] Explain [ ] 41. The head of the unit responsible for the internal audit function should submit the annual work plan to the audit committee for approval by the committee or the board, report directly to it on its implementation, including any incidents and limitations on scope arising in the course of its implementation, the results and follow-up of its recommendations, and submit an activities report to it at the end of each business year. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] a) b) c) d) e) The functioning and composition of its committees. Diversity in the composition and powers of the Board of Directors. The performance of the Chairman of the Board of Directors and the Chief Executive of the company. The performance and contribution of each director, paying particular attention to those responsible for the different Board Committees. To perform the assessment of the different committees, the report submitted to the Board of Directors will be used, and for the Board assessment, the report submitted to the Appointments Committee. Every three years, the Board of Directors will be assisted by an external consultant in performing the assessment, whose independence shall be verified by the Appointments Committee. The business relationships that the consultant or any company in its group may have with the company or any Group company shall be broken down in the Annual Corporate Governance Report. The process and the areas assessed shall be described in the Annual Corporate Governance Report. Compliant [ ] Partially compliant [ X ] Explain [ ] The Board of Directors internally performs the annual assessment of the efficiency of its functioning, its committees, as well as that of the Chairman of the Board of Directors (non-executive) and the CEO. The Company believes that the conclusions drawn during the internal assessment make it possible to sufficiently correct any shortcomings detected or improvements in the functions assigned to the Board. The assessment with the help of an external consultant has been carried out twice in the past. The Board shall assess the suitability of requesting such external assistance each business year. 37. When there is an executive committee, at least two non-executive directors should sit on it, at least one of whom should be independent and its secretary should be the secretary of the Board of Directors. Compliant [ ] Partially compliant [ X ] Explain [ ] Not applicable [ ] The secretary of the Executive Committee is the same as the secretary to the Board. However, in the composition of this committee, there are no independent directors, whereas there are three such directors on the Board. All decisions taken by the Executive Committee are reported to the Board. On this Committee, independent directors may request as many clarifications or comments as they deem appropriate. Given the continuous control that the Board exercises over the Executive Committee, it has not been considered necessary to include independent directors on this Committee. 38. The Board of Directors is always aware of the matters discussed and the decisions taken by the Executive Committee and that all the members of the Board of Directors receive a copy of the minutes of the Executive Committee meetings. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] 35 / 44 36 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 96 of 101 730 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 42. In addition to those provided by law, the Audit Committee assumes responsibility for the following functions: The meeting referred to in section 2.d) of this recommendation is not held, since this responsibility is delegated in full to the Audit and Control Committee, and the external auditor is responsible for presenting this information to the members of the Board. 1. In relation to information and internal control systems: a) b) c) Supervise and assess the preparation process and the integrity of financial and non-financial information, as well as the control and management systems for financial and non-financial risks relating to the company and, where applicable, the group, including operational, technological, legal, social, environmental, political, reputational and corruption-related risks, reviewing compliance with regulatory requirements, the adequate definition of the scope of consolidation and the correct application of accounting criteria. Ensure the independence of the Internal Audit function; propose the selection, appointment and removal of the head of the Internal Audit service, as well as the budget of this service; approving or proposing approval to the Board of the annual internal audit orientation and work plan, making sure that its activity is mainly focused on relevant risks (including reputational risks); receive periodic information about its activities; and verify that Senior Management takes into account the conclusions and recommendations in its reports. Establish and supervise a mechanism that allows employees and other persons related to the company, such as directors, shareholders, suppliers, contractors or subcontractors, to report potentially significant irregularities, including financial, accounting or any other irregularities related to the company that they notice within the company or its group. This mechanism must guarantee confidentiality and, in any case, provide for cases in which communications can be made anonymously, respecting the rights of the complainant and the reported. d) Generally ensure that the policies and systems in place for internal control are effectively implemented in practice. 2. In relation to the external auditor: a) In case of the resignation of the external auditor, examine the circumstances that may have led to this. b) c) d) e) Ensure that the remuneration of the external auditor for his/her work does not compromise his/her quality or independence. Ensure that the company communicates any change in auditor through the CNMV and accompanies this with a statement about the possible existence of disagreements with the departing auditor and, if there were any disagreements, the nature of them. Ensure that the external auditor holds an annual meeting with the Board of Directors to inform them about the work undertaken and the evolution of the accounting and risk situation at the company. Ensure that the company and the external auditor respect the rules in force on the provision of services other than auditing services, the limits on the concentration of the auditor's business and, in general, the other rules applicable to the auditor's independence. Compliant [ ] Partially compliant [ X ] Explain [ ] 43. The Audit Committee may summon any employee or manager at the company, and even arrange for them to appear without any other manager present. Compliant [X] Partially compliant [ ] Explain [ ] 44. The Audit Committee is informed about the structural and corporate modifications that the company plans to perform for its analysis and preliminary report to the Board of Directors on its economic conditions and its accounting impact and, especially, where appropriate, on the proposed exchange ratio. Compliant [ ] Partially compliant [ ] Explain [ X ] Not applicable [ ] To date, all directors at the company, including independent directors, have voted in favour of the transactions referred to in this recommendation, meaning that the step previous to those before the Audit and Control Committee is not considered necessary. In any case, on the Board of Directors, members of the Audit and Control Committee may present their reflections and opinions, which will be taken into account by the Board at the time of making a decision. 45. The risk control and management policy identifies or determines at least: a) b) c) d) e) The different types of risk, both financial and non-financial, (including operational, technological, legal, social, environmental, political and reputational, including those related to corruption) that the company faces, including financial or economic, contingent liabilities and other off-balance-sheet risks. A tiered risk management and control model, including a specialised risk committee where sectoral rules require this or where the company deems it appropriate. The level of risk that the Company considers acceptable. The measures planned to mitigate the impact of the risks identified, should they materialise. The information and internal control systems that will be used to control and manage the aforementioned risks, including contingent liabilities or off-balance sheet risks. Compliant [X] Partially compliant [ ] Explain [ ] 37 / 44 38 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 97 of 101 731 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 46. Under the direct supervision of the Audit Committee or, where appropriate, a specialised committee of the Board of Directors, there is an internal risk control and management function performed by an internal unit or department at the company that has been expressly attributed the following functions: a) b) c) Ensure the proper functioning of the control and risk management systems and, in particular, that all important risks affecting the Company are properly identified, managed, and quantified. Actively participate in the preparation of the risk strategy and in the important decisions about its management. Ensure that control and risk management systems adequately mitigate risks within the framework of the policy defined by the Board of Directors. Compliant [X] Partially compliant [ ] Explain [ ] 47. The members of the Appointments and Remuneration Committee, or of the Appointments Committee and the Remuneration Committee, if they are separate, should be appointed ensuring that they have the knowledge, skills and experience suitable for the duties they are called upon to perform and the majority of the members should be independent directors. Compliant [ ] Partially compliant [ X ] Explain [ ] The Appointments and Remuneration Committee is currently made up of two proprietary and two independent directors, one of whom is the Chairman. FCC believes that the make up of the Appointments and Remuneration Committee, with two independent members out of a total of four, sufficiently guarantees the proper functioning of this Committee". one of whom is also the Chairman, 50. The Remuneration Committee should carry out its duties independently and, in addition to the duties assigned by law, should have the following responsibilities: a) b) c) d) e) To propose to the Board of Directors the basic conditions of senior management contracts. To verify compliance with the remuneration policy established by the company. To regularly review the remuneration policy applied to directors and senior executives, including the share based remuneration systems and their application, and ensure that their individual remuneration is in line with that paid to the other directors and senior executives at the Company. To ensure that any conflicts of interest do not undermine the independence of the external advice provided to the committee. To verify the information on directors' and senior executives' remuneration contained in the various corporate documents, including the annual directors remuneration report. Compliant [X] Partially compliant [ ] Explain [ ] 51. The remuneration committee should consult with the company's chairman and CEO, especially on matters relating to executive directors and senior executives. Compliant [X] Partially compliant [ ] Explain [ ] 48. Large-cap companies should have a separate appointments committee and a separate remuneration committee. Compliant [ ] Explain [ X ] Not applicable [ ] 52. The rules governing the composition and operation of the supervision and control committees should be set out in the regulations of the Board of Directors and be consistent with those applicable to the legally obligatory committees in accordance with the above recommendations, including: The two recommended committees are integrated into a single appointments and remuneration committee, as the Board of Directors believes that the combination of the two facilitates the carrying out of the duties assigned to them. 49. The Appointments Committee should consult with the Chairman of the Board of Directors and the CEO of the Company, especially on matters relating to executive directors. And any director may request the consideration of potential candidates to fill vacancies of Director from the Appointments Committee, if it finds them suitable in its opinion. Compliant [X] Partially compliant [ ] Explain [ ] a) b) c) d) e) They should be composed exclusively of non-executive directors, with a majority of independent directors. Their chairmen should be independent directors. The Board of Directors should appoint the members of these committees, bearing in mind the knowledge, skills and experience of the directors and the duties of each committee, and should discuss their proposals and reports; and to report, at the first plenary session of the Board of Directors after its meetings, on its activity and should be accountable for the work carried out. The committees may seek external advice, when they consider it necessary for the carrying out of their duties. Minutes should be taken of their meetings and made available to all directors. Compliant [ ] Partially compliant [ ] Explain [ ] Not applicable [ X ] 39 / 44 40 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 98 of 101 732 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 53. Supervision of compliance with the company's environmental, social and corporate governance policies and rules, as well as internal codes of conduct, should be entrusted to one or more committees of the Board of Directors, which may be the audit committee, the appointments committee, a committee specialising in sustainability or corporate social responsibility or any other specialised committee that the Board of Directors, in the exercise of its powers of self-organisation, has decided to set up. Such a committee should be composed solely of non-executive directors, the majority of whom should be independent, and should be specifically attributed the minimum functions indicated in the following recommendation. Compliant [ ] Partially compliant [ X ] Explain [ ] Although in the operations of the Board of Directors these skills are dealt with in the agenda of its committees, some of the duties indicated in the Recommendation are not formally attributed to one of its committees by the Regulations of the Board of Directors. 55. Sustainability policies on environmental and social issues should at least identify and include: a) b) c) d) e) The principles, commitments, objectives and strategy with regard to shareholders, employees, customers, suppliers, social issues, environment, diversity, accountability, respect for human rights and prevention of corruption and other unlawful actions. Methods or systems for monitoring compliance with policies, associated risks and their management. Mechanisms for monitoring non-financial risk, including those related to ethical and business conduct issues. Channels of communication, participation and dialogue with stakeholders. Responsible communication practices that avoid the manipulation of information and protect integrity and honour. 54. The minimum duties referred to in the above recommendation are as follows: Compliant [X] Partially compliant [ ] Explain [ ] a) b) c) d) e) Overseeing compliance with the company's corporate governance rules and internal codes of conduct, and ensuring that the corporate culture is aligned with its purpose and values. Overseeing the implementation of the general policy on economic-financial, non-financial and corporate reporting as well as communication with shareholders and investors, proxy advisors and other stakeholders. The way in which the institution communicates and interacts with small and medium-sized shareholders will also be monitored. Regular evaluation and review of the Company's corporate governance system and environmental and social for them to fulfil their aim of promoting the corporate interest of other stakeholders. and taking into account, as appropriate, the legitimate interests policy, in order Monitoring that the company's environmental and social practices are in line with the strategy and policy. The supervision and evaluation of the processes of relationship with the different stakeholders. Compliant [X] Partially compliant [ ] Explain [ ] 56. Directors' remuneration should be sufficient to attract and retain directors with the desired profile and to reward the dedication, qualifications and responsibility required for the position, but should not be so high as to compromise the independent judgement of non-executive directors. Compliant [X] Explain [ ] 57. Variable remuneration linked to the company's performance and personal performance, as well as compensation in the form of shares, options or rights to shares or instruments linked to the value of the share and long-term savings schemes such as pension plans, retirement systems or other social welfare systems, should be exclusively limited to executive directors. The delivery of shares may be considered as remuneration to non-executive directors when it is subject to their remaining on the board. The foregoing shall not apply to the shares that the director needs to sell, if any, to meet the costs related to their acquisition. Compliant [X] Partially compliant [ ] Explain [ ] 41 / 44 42 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 99 of 101 733 ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES ANNUAL CORPORATE GOVERNANCE REPORT OF LISTED PUBLIC LIMITED COMPANIES 58. In the case of variable remuneration, remuneration policies should include the necessary technical limits and precautions to ensure that said remuneration is related to the professional performance of its beneficiaries and is not simply a result of general market or sector trends or other similar circumstances. And, in particular, that the variable components of remuneration: a) b) c) Should be linked to performance criteria that are predetermined and measurable, and these criteria should take into account the risk assumed in order to obtain a result. Should promote the sustainability of the company and include non-financial criteria that are appropriate for the creation of long-term value, such as compliance with the company's internal rules and procedures and its policies for risk control and management. Should be designed on the basis of a balance between the achievement of short-, medium- and long-term objectives, allowing performance to be rewarded for continued achievement over a period of time sufficient to assess their contribution to sustainable value creation, so that the elements used to measure that performance do not revolve solely around one-off, occasional or extraordinary events. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] 59. The payment of variable components of remuneration is subject to sufficient verification that the performance or other conditions set out above have been effectively met. Entities shall include in the annual directors' remuneration report the criteria as to the time required and methods for such verification depending on the nature and characteristics of each variable component. In addition, institutions should consider the establishment of a malus clause based on the deferral for a sufficient period of time of the payment of a part of the variable components that entails their total or partial loss should an event occur prior to the time of payment that makes it advisable to do so. Compliant [ ] Partially compliant [ ] Explain [ X ] Not applicable [ ] The CEO's variable is related to EBITDA, operating cash flow and individual objectives. This variable is approved once the Board of Directors has drawn up the accounts and approved the financial objectives. 60. Remuneration related to the Company's profit and loss should take into account any qualifications in the external auditor's report that reduce said profit and loss. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] 61. A significant percentage of the variable remuneration of executive directors should be linked to the delivery of shares or financial instruments tied to their value. Compliant [ ] Partially compliant [ ] Explain [ X ] Not applicable [ ] The FCC Group's remuneration policy does not include the delivery of shares or financial instruments linked to their value to its executive directors, as this is considered more appropriate. 62. Once the shares, options or financial instruments corresponding to the remuneration systems have been attributed, executive directors may not transfer ownership or exercise them until at least three years have elapsed. An exception is made where the director has, at the time of the transfer or exercise, a net economic exposure to share price changes of a market value equivalent to an amount of at least twice his or her annual fixed remuneration through the ownership of shares, options or other financial instruments. The above will not apply to shares that the director needs to dispose of in order to meet the costs related to their acquisition or, after a favourable assessment from the appointments and remuneration committee, to address extraordinary situations that so require it. Compliant [ ] Partially compliant [ ] Explain [ ] Not applicable [ X ] 63. Contractual agreements should include a clause allowing the company to claim reimbursement of the variable components of remuneration when the payment has not been in accordance with the performance conditions or when they have been paid on the basis of data which is subsequently proven to be inaccurate. Compliant [ ] Partially compliant [ ] Explain [ X ] Not applicable [ ] Variable remuneration is approved by the Board of Directors once the parameters to which it is tied have been verified. It has not been considered necessary, both because of the volume of the remuneration and the time at which it is paid, to establish additional precautions. 64. Severance payments of payments for contract termination should not exceed a set amount equivalent to two years' total annual remuneration and should not be paid until the company has been able to verify that the director has met the criteria or conditions established for their receipt. For the purposes of this recommendation, termination or contractual termination payments include any payments that accrue or are payable as a result of or in connection with the termination of the director's contractual relationship with the company, including amounts not previously vested in long-term savings schemes and amounts paid under post-contractual non-compete agreements. Compliant [X] Partially compliant [ ] Explain [ ] Not applicable [ ] Indicate whether any directors voted against or abstained from voting on the approval of this Report. [ ] [ √ ] Yes No I hereby declare that the data included in this statistical annex match and are consistent with the descriptions and data included in the annual corporate governance report published by the Company. 43 / 44 44 / 44 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 100 of 101 734 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 FCC_Annual Report_2020 | Annual Corporate Governance Report | Page 101 of 101 735 Letter from the Chairpersonand the CEOCorporategovernance and ethicsStrategyand value creationFCC in 2020Business linesFinancial StatementsFCC Group Sustainability ReportAnnual CorporateGovernance Report12345A1A2A3 www.fcc.es
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