20-11-19: The company releases the explanatory notes to the 30 September 2019 Financial Statements

FOMENTO DE CONSTRUCCIONES Y CONTRATAS, S.A. AND SUBSIDIARIES (CONSOLIDATED GROUP)

CONSOLIDATED GROUP

CONSOLIDATED GROUP

CONSOLIDATED BALANCE SHEET (in thousands of euros)

	A S S E T S	30-09-2019		31-12-2018
	NON-CURRENT ASSETS		7,304,971		6,607,207
	Intangible assets (Note 5)		2,448,048				2,426,380
	Concessions	1,292,132			1,288,804
	Goodwill	1,094,051			1,078,490
	Other intangible assets	61,865			59,086
	Property, plant and equipment (Note 6)
		2,809,731				2,424,018
	Land and buildings	1,058,528			744,262
	Plant and other items of property, plant and equipment	1,751,203			1,679,756
	Investment property
		2,694				2,798
	Investments accounted for by applying the equity
		752,121				763,050
	method (Note 7)
	Non-current financial assets (Note 8)
		619,068				380,552
	Deferred tax assets
		673,309				610,409
	CURRENT ASSETS		3,867,408			3,916,834

Non-current assets held for sale

Inventory

-	-
729,237	691,034

Trade receivables and other accounts receivable
	1,812,094			1,695,798
Customers from sales and services rendered	1,521,209				1,380,930
Other receivables	290,885				314,868
Other current financial assets (Note 8)
	183,304				178,815
Other current assets
	90,526				84,990
Cash and other cash equivalents
	1,052,247				1,266,197
TOTAL ASSETS	11,172,37	9		10,524,04	1

The accompanying Notes 1 to 20 form an integral part of the consolidated interim financial statements as at 30 September 2019.

CONSOLIDATED GROUP

	LIABILITIES AND EQUITY	30-09-2019		31-12-2018
	EQUITY (Note 9)			2,230,357				1,958,775
	Equity attributable to the Parent Company
			1,836,911			1,683,953
	Shareholders' equity	2,211,440				2,016,251
	Capital	392,265				378,826
	Accumulated earnings and other reserves	1,602,220				1,397,579
	Shares and equity interests	(16,068)				(11,723)
	Profit/(loss) for the year attributable to the Parent					251,569
	Company	233,023
	Other equity instruments	-				-
	Valuation adjustments	(374,529)			(332,298)
	Non-controlling interests
			393,446				274,822
	NON-CURRENT LIABILITIES			5,671,322				5,574,710
	Subsidies
			231,258			211,296
	Non-current provisions (Note 10)
			1,106,125				1,161,989
	Non-current financial liabilities (Note 12)
			4,027,794				3,900,432
	Bonds and other marketable securities (Note 11)	1,700,081			1,702,631
	Bank borrowings	1,765,960				1,988,629
	Other financial liabilities	561,753				209,172
	Deferred Tax Liabilities
			153,468				141,088
	Other non-current liabilities
			152,677				159,905
	CURRENT LIABILITIES			3,270,700				2,990,556
	Liabilities related to non-current assets			-				-
	held for sale
	Current provisions (Note 10)
			231,180				209,264
	Current financial liabilities (Note 12)
			777,099			380,902
	Bonds and other marketable securities (Note 11)	316,795			23,308
	Bank borrowings	275,264				211,455
	Other financial liabilities	185,040				146,139
	Trade payables and other accounts payable
			2,262,421				2,400,390
	Suppliers	1,000,964			1,126,368
	Other payables	1,261,457				1,274,022
	TOTAL EQUITY AND LIABILITIES			11,172,379				10,524,041

The accompanying Notes 1 to 20 form an integral part of the consolidated interim financial statements as at 30 September 2019.

CONSOLIDATED GROUP

CONSOLIDATED STATEMENT OF PROFIT AND LOSS (in thousands of euros)

				30-09-2019	30-09-2018
	Turnover
			4,577,894		4,350,812
	Work on the company's own assets			34,212			21,597
	Other operating income			122,281			97,841
	Changes in inventory of finished products and work			19,337			22,423
	in progress
	Supplies				(1,677,823)		(1,573,280)
	Staff expenses			(1,426,939)		(1,381,522)
	Other operating costs			(908,159)		(892,206)
	Fixed asset amortisation and allocation of subsidies for non-financial			(327,730)			(277,450)
	fixed assets and others
	Impairment and gains/(losses) on disposal of fixed assets			5,824		2,799
	Other profits/(losses)			(4,577)		(4,167)
	OPERATING PROFIT/(LOSS)			414,320		366,847
	Finance income			41,053			35,045
	Finance costs	(Note 13)			(149,212)			(214,656)
	Other financial gains/(losses) (Note 13)			12,400			14,068
	FINANCIAL GAINS/(LOSSES)			(95,759)		(165,543)
	Profit/(loss) of companies accounted for using the			67,264			48,420
	equity method (Note 13)
	PROFIT/(LOSS)	BEFORE TAX FROM CONTINUING			385,825			249,724
	OPERATIONS
	Income tax				(97,349)
					(67,003)

PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS

Profit/(loss) for the year from discontinued operations net of tax

CONSOLIDATED PROFIT/(LOSS) FOR THE PERIOD

288,476182,721

−−

288,476182,721

Profit attributable to the Parent Company	233,023				175,967
Profit attributable to non-controlling interests (Note 13)		55,453				6,754
EARNINGS PER SHARE
Basic			0.62			0.50
Diluted			0.62			0.50

The accompanying Notes 1 to 20 form an integral part of the consolidated interim financial statements as at 30 September 2019.

CONSOLIDATED GROUP

CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (in thousands of euros)

			30-09-2019		30-09-2018
	CONSOLIDATED PROFIT/(LOSS) FOR THE PERIOD				288,476						182,721
	Other comprehensive income - Items that are not reclassified				(1,652)						8
	to profit/(loss) for the period
	Actuarial profits and losses (*)			(1,652)				8
	Other comprehensive income - items that can subsequently be
				(28,653)						15,733
	reclassified to profit/(loss) for the period

Financial assets available for sale

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

(26)	(2,040)
-	(2,053)
(26)	13
(17,648)	6,687
(18,849)	4,941
1,201	1,746
17,193	(3,590)
17,308	(3,590)
(115)	-

	Participation in other comprehensive income recognised by
		(31,114)				15,806
	investments in joint ventures and associates
	Valuation gains/(losses)	(52,682)			5,931
	Amounts transferred to the statement of profit and loss	21,568			9,875
	Tax effect					(1,130)
	2,942
	TOTAL COMPREHENSIVE INCOME FOR THE YEAR		258,171				198,462
	Attributable to the Parent Company		192,845				192,483
	Attributable to non-controlling interests		65,326				5,979

The accompanying Notes 1 to 20 form an integral part of the consolidated interim financial statements as at 30 September 2019.

(*) Amounts that under no circumstances will be charged to the statement of profit and loss.

CONSOLIDATED GROUP

CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY (in thousands of euros)

				Shares and	Profit/(loss) for
				equity interests	the year	Other equity			Equity
	Share capital	Share premium	Interim		attributed to the	instruments		Valuation	attributed	Non-controlling	Equity
		and reserves	dividend		Parent Company			adjustments	to the shareholders of	interests
									the Parent Company
Equity as at 31 December 2017	378,826	726,073	(4,427)	118,041	2,590		(357,177)	863,926	74,593	938,519
Impact of first-time application of IFRS 15 and IFRS 9 (Note 2)		(180,937)						55	(180,882)	(1,503)	(182,835)
Equity as at 1 January 2018	378,826	545,136	(4,427)	118,041	2,590		(357,122)	683,044	73,090	756,134
Total income and expenses for the year		109			175,966			16,408	192,483	5,979	198,462
Transactions with shareholders or owners			(4,333)					(4,333)	(5,143)	(9,476)
Capital increases/(reductions)										713	713
Distribution of dividends										(5,856)	(5,856)
Transactions with treasury shares or equity instruments (net)			(4,333)						(4,333)	(4,333)
Other transactions with shareholders or owners
Other changes in equity (Note 9)		848,770			(118,041)			20,998	751,727	179,667	931,394
Equity as at 30 September 2018	378,826	1,394,015	(8,760)	175,966	2,590		(319,716)	1,622,921	253,593	1,876,514
Equity as at 31 December 2018	378,826	1,397,579	(11,723)	251,569			(332,298)	1,683,953	274,822	1,958,775
Impact of first-time application of IFRS 16 (Note 2)		(2,014)							(2,014)		(2,014)
Equity as at 1 January 2019	378,826	1395,565	(11,723)	251,569			(332,298)	1,681,939	274,822	1,956,761
Total income and expenses for the year		(1,214)			233,023			(38,964)	192,845	65,326	258,171
Transactions with shareholders or owners	13,439	(23,083)	(4,345)					(13,989)	(54,023)	(68,012)
Capital increases/(reductions) (Note 9)	13,439	(13,517)							(78)	943	865
Distribution of dividends (Note 9)		(9,566)							(9,566)	(54,966)	(64,532)
Transactions with treasury shares or equity instruments (net)			(4,345)					(4,345)		(4,345)
Other transactions with shareholders or owners
Other changes in equity (Note 9)		230,952			(251,569)			(3,267)	(23,884)	107,321	83,437
Equity as at 30 September 2019	392,265	1,602,220	(16,068)	233,023			(374,529)	1,836,911	393,446	2,230,357

The accompanying Notes 1 to 20 form an integral part of the consolidated interim financial statements as at 30 September 2019.

CONSOLIDATED GROUP

CONSOLIDATED STATEMENT OF CASH FLOW (INDIRECT METHOD) (in thousands of euros)

Profit/(loss) before tax from continuing operations Adjustments to profit/(loss)

Fixed asset amortisation

Other adjustments to profit/(loss) (net)

Changes in working capital

Other cash flows from operating activities

Dividends received

Collections/(payments) of company tax

Other collections/(payments) from operating activities

30-09-2019

385,825

378,359

334,750

43,609

(363,022)

(188,367) 34,676

(113,709) (109,334)

30-09-2018

249,724

460,314

284,972

175,342

(449,010)

(69,353) 21,436

(50,349) (40,440)

	TOTAL CASH FLOWS FROM OPERATING ACTIVITIES	212,795	191,675
	Investment payments				(368,341)				(252,923)
	Group companies, associates and business units	(76,718)					(13,804)
	Property, plant and equipment, intangible assets and investment property	(233,806)				(182,491)
	Other financial assets	(57,817)					(56,628)
	Proceeds from disposals			17,085				36,801
	Group companies, associates and business units	566					6,712
	Property, plant and equipment, intangible assets and investment property	10,338					13,984
	Other financial assets	6,181					16,105
	Other cash flows from investment activities				94,901				(1,644)
	Interest receivable	9,513				11,124
	Other collections/(payments) from investment activities	85,388					(12,768)
	TOTAL CASH FLOWS FROM INVESTMENT ACTIVITIES			(256,355)				(217,766)
	Proceeds from/(payments on) equity instruments			(35,325)				927,049
	Issue/(redemption)	178					178
	(Acquisition)/disposal of treasury shares	(35,503)					926,871

Proceeds from/(payments on) financial liabilities

Issuance

Repayment and amortisation

Dividends payments and payments on equity instrument

Other cash flows from financing activities

Payment of interests

Other collections/(payments) from financing activities

6,310

454,273 (447,963)

(61,130)

(106,457)

(106,540) 83

(752,456)

1,729,591 (2,482,047)

(4,956)

(130,631)

(125,348) (5,283)

	TOTAL CASH FLOWS FROM FINANCING ACTIVITIES			(196,602)				39,006
	EFFECT OF VARIATIONS IN EXCHANGE RATES			26,212				5,029
	NET INCREASE/(DECREASE) IN CASH AND CASH			(213,950)				17,944
	EQUIVALENTS
	Cash and cash equivalents at the start of the period
	1,266,197		1,238,255
	Cash and cash equivalents at the end of the period			1,052,247				1,256,199

The accompanying Notes 1 to 20 form an integral part of the consolidated interim financial statements as at 30 September 2019.

CONSOLIDATED GROUP

EXPLANATORY NOTES TO THE FINANCIAL STATEMENTS

T A B L E O F C O N T E N T S

1.	Group Activity	1
2.	Bases of presentation of the condensed consolidated financial statements	1
3.	Policies, accounting methods and other information	4

• Accounting policies and methods
• Use of estimates
• Other information

4.	Changes in the scope of consolidation	5
5.	Intangible fixed assets	6
6.	Property, plant and equipment	9

• Details of property, plant and equipment
• Acquisitions and disposals of items of property, plant and equipment
• Commitments for the acquisition of property, plant and equipment

7.	Investments accounted for using the equity method	11
8.	Financial assets	12
9.	Equity	13

• Capital
• Valuation adjustments
• Shares and equity interests

10.	Non-current and current provisions	15
11.	Issues, repurchases or refunds of debt securities	19
12.	Financial liabilities	19
13.	Revenue and expenses	21
14.	Segmented information	22
15.	Guarantees committed to third parties and other contingent liabilities	29
16.	Financial Risks	29
17.	Average workforce of the consolidated Group	30
18.	Remuneration received by directors and executives	30
19.	Transactions with related parties	31
20.	Subsequent events	31

CONSOLIDATED GROUP

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 business activities grouped into the following areas:

Environmental Services. Services related to urban sanitation, industrial waste treatment and energy recovery from waste.

Integrated Water Management. Services relating to the integrated water cycle: collection, purification and distribution of water for human consumption; waste water 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, highways, roads, tunnels, bridges, hydraulic works, ports, airports, housing developments, 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.

Additionally, the FCC Group is present in the Property sector, both through the company F C y C, S.L. Unipersonal, as through its 37.05% holding in Realia Business, S.A., whose main activity is housing development and the office rental market.

International activities account for approximately 45% (45% in September 2018) of the FCC Group's turnover, mainly in Europe, Latin America, the Middle East and the United States.

2. BASES OF PRESENTATION OF THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The condensed consolidated financial statements as at 30 September 2019 have been prepared by applying the International Financial Reporting Standards (IFRS) adapted by the European Union on the closing date, in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of 19 July 19 2002, as well as all its implementing provisions and are presented pursuant to IAS 34 "Interim Financial Information" and the provisions of Royal Decree 1362/2007, of 19 October 19 implementing Law 24/1988, of 28 July, on the Securities Market, in relation to the transparency requirements relating to information on issuers whose securities are admitted for trading on a regulated market in the European Union.

The interim financial information has been prepared to update the contents of the most recent consolidated financial statements prepared by the FCC Group for the year ending 31 December 2018. Consequently, to comprehensively understand the information it contains, we recommend bearing in mind the consolidated financial statements corresponding to 2018, which were approved by the General Shareholders Meeting on 8 May 2019.

The interim financial information comprises the following financial statements: Balance Sheet, Statement of Profit and Loss, Statement of Recognised Income and Expense, Statement of Changes in Total Equity and Statement of Cash Flows. Furthermore, and in accordance with IAS 34 "Interim Financial Information", the explanatory notes required are attached to these financial statements in order to provide information about significant events and transactions to obtain an understanding of the interim period.

Offsetting

1

CONSOLIDATED GROUP

The Group, in accordance with the provisions of IAS 12 "Income Tax", proceeds to offset the deferred tax assets and liabilities corresponding to the tax group of which the Parent Company, Fomento de Construcciones y Contratas, S.A. is the parent company, as it has the legal right to offset them and, in accordance with the Spanish tax regulations, they will be settled for their net amount based on the corresponding time frames. At 30 September, 2019, deferred tax assets and liabilities for the sum of EUR 121,769 thousand (EUR 133,676 thousand at 31 December 31 2018) were presented.

Significant standards and interpretations applied at 30 September 2019

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 low sums of money or duration) 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 obligations that are incurred. The 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. 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 has been calculated taking into account the fact that the Group has availed itself of the option to apply it on a modified retroactive basis, i.e. with the cumulative impact of the first application of the standard as an adjustment to the initial balance sheet at 1 January 2019, charged to reserves without restating the previous year, meaning that the adjustment has only been made for contracts previously classified as operating leases under current regulations prior to 31 December 2018. In this connection, the Group has recognised a financial liability equivalent to the current value of estimated future payments discounted at the incremental rate of debt on the date of first implementation, recognising the corresponding asset as a counterpart, adjusted as appropriate for the fees paid in advance and for the retirement and dismantling provisions made, without the value of the asset exceeding its fair value. For leases previously considered as financial, no adjustment has been made. Furthermore, adhering to the options to which it is entitled, the Group has not applied the standard to low- value assets, or to contracts which mature within 12 months after the date of first-time application.

In calculating the lease liability at 1 January 2019, the Group has applied the incremental rate of debt that, in general, is equivalent to an effective interest rate of 2.45% and, affecting a smaller number of contracts, specific rates depending on the term and country in which company entering into the lease is based.

At 31 December 2018, the operating lease commitments contracted by the Group came to EUR 396 million. The difference between the aforementioned amount and the value of liabilities recognised at 1 January 2019 under IFRS 16, EUR 430 million, can primarily be traced to impacts relating to the extension and cancellation of contracts, as well as the effect of the financial discount of future payments and the existence of low value leases or terms of less than one year.

The impact, broken down by balance sheet heading, of the first-time application of the standard was as follows:

		Balance at 1		Impact of
			first-time	Restated
		January 2019		application of	balance on 1
				IFRS 16	January 2019
Non-current assets	6,607,207	434,721	7,041,928
Intangible fixed assets	2,426,380	-	2,462,380
Property, plant and equipment	2,424,018	428,251	2,852,269
Investment property	2,798	6,470	9,268

2

			CONSOLIDATED GROUP
Investments accounted for using the equity
method	763,050	-	763,050
Non-current financial assets	380,552	-	380,552
Deferred tax assets	610,409	-	610,409
Current assets	3,916,834	(4,468)	3,912,366
Non-current assets held for sale	-	-	-
Inventory	691,034	-	691,034
Trade receivables and other accounts receivable	1,695,798	-	1,695,798
Other current financial assets	178,815	-	178,815
Other current assets	84,990	(4,468)	80,522
Cash and other cash equivalents	1,266,197	-	1,266,197
Total assets	10,524,041	430,253	10,954,294
Equity	1,958,775	(2,014)	1,956,761
Equity attributable to the Parent Company	1,683,953	(2,014)	1,681,939
Non-controlling interests	274,822	-	274,822
Non-current liabilities	5,574,710	388,462	5,963,172
Subsidies	211,296	-	211,296
Non-current provisions	1,161,989	-	1,161,989
Non-current financial liabilities	3,900,432	388,462	4,288,894
Deferred tax liabilities	141,088	-	141,088
Other non-current liabilities	159,905	-	159,905
Current liabilities	2,990,556	43,805	3,034,361
Liabilities related to non-current assets held for
sale	-	-	-
Current provisions	209,264	-	209,264
Current financial liabilities	380,902	43,839	424,741
Trade payables and other accounts payable	2,400,390	-	2,400,390
Total equity and liabilities	10,524,041	430,253	10,954,294

It should be noted that, on 1 January 2018, the Group applied IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments" for the first time. The application of both standards was made recognising the cumulative effect of the first-time application as an adjustment to existing reserves at 1 January 2018.

The impact of the first-time application of IFRS 15 "Revenue from contracts with customers" gave rise to a decrease in reserves totalling EUR 227,634 thousand, primarily as a result of the re-estimation of the revenue previously recognised under IAS 11 "Construction contracts" and IAS 18 "Revenue", which do not comply with the requirements to be recognised as revenue under the new standard as it establishes more restrictive criteria for their recognition due to generally requiring the approval of customers.

In turn, the first-time application of IFRS 9 "Financial instruments" had a positive impact on reserves totalling EUR 46,752 thousand, deriving, on the one hand, from the positive impact of the application of the accounting treatment of non-substantive amendments of financial liabilities in relation to the syndicated loan which can be traced to the refinancing of the syndicated debt of the Parent Company, Fomento de Construcciones y Contratas, and, on the other hand, the negative impact of the application of the financial asset impairment model that the new regulations establish must be estimated based on expected credit loss rather than credit loss incurred, as contemplated in IAS 39 "Financial instruments: recognition and measurement".

3

CONSOLIDATED GROUP

3. ACCOUNTING POLICIES, METHODS AND OTHER INFORMATION

1. Accounting policies and methods

The accounting policies and methods used in the preparation of these condensed consolidated financial statements are the same as those applied in the consolidated financial statements for 2018 (Note 3 of the report on the Group's consolidated financial statements for 2018), with the exception of provisions for leases (Note 3.f) following the application of IFRS 16 from 1 January 2019 onwards (Note 2).

1. Use of estimates

As part of the condensed consolidated financial statements, estimates have occasionally been used to quantify certain assets, liabilities, income, expenses and commitments that are recognised therein, following the same criteria as in the preparation of the consolidated financial statements of the FCC Group for 2018 (Note 3 of the report on the Group's consolidated financial statements for 2018). In terms of corporate tax expenses, it should be noted that for interim periods, in accordance with IAS 34, they are quantified according to the best estimate of the weighted average tax rate that the Group expects to be applied for the entire year.

Based on the evolution of the business and certain improvements in the economic environment in which the Group operates, in the first nine months of 2019 no signs of impairment in the assets involved in continuing activities have been detected, nor have any new risks other than those mentioned in the financial statements for 2018 been identified, including goodwill, so no additional losses have been recognised beyond those accounted for at 31 December 2018.

1. Going concern principle

The management of the Parent Company has prepared the interim financial information based on the application of the going concern principle, as it has no reasonable doubts about the Group's ability to adequately finance its operations. Note 16 of these consolidated financial statements summarises the evolution of liquidity risk and mitigating factors.

1. Provisions and contingent liabilities

Notes 19 "Non-current and current provisions" and 26 "Guarantees committed to third parties and other contingent liabilities" of the report on the Group's consolidated financial statements for the year ending 31 December 2018, provide information on provisions and contingent liabilities on that date. The changes seen in the first nine months of 2019 are indicated in Notes 10 and 15.

1. Comparison of information

The information contained in these condensed consolidated financial statements corresponding to the first nine months of 2018 is presented solely and exclusively for the purposes of comparison against the information relating to the nine-month period ending 30 September 2019, while the balance sheet at this date is compared to the figures presented in the consolidated financial statements for 2018.

1. Relative importance

When defining the information to be disclosed in the report on the different items of the financial statements or other matters, the Group, in accordance with IAS 34, has taken into account relative importance in relation to the condensed consolidated financial statements of the first nine months of the year.

1. Consolidated statement of cash flows

The following expressions are used in the consolidated statements of cash flows:

• Cash flowsare the inflows and outflows of cash and cash equivalents.

4

CONSOLIDATED GROUP

-

-

-

Operating activitiesare 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 activities.

Investment activitiesare the acquisition and disposal of long-term assets, as well as other investments not included in cash and cash equivalents.

Financing activitiesare 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 condensed 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.

4. CHANGES IN THE SCOPE OF CONSOLIDATION

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. is now consolidated under the global consolidation method and the holding in Shariket Miyeh Djinet, S.p.a. is now considered a financial asset at fair value. These transactions have resulted in a loss of EUR 6,122 thousand being recognised under "Profits/(losses) of companies accounted for by the equity method" following the allocation of the negative translation differences to profit and loss and the positive impact resulting from the fair value adjustment of shares prior to the transaction. Furthermore, in the Statement of Cash Flows, "Other collections/(payments) from investment activities" includes EUR 43,337 thousand corresponding to the cash that Shariket Tahlya Mostaganem, S.p.a. presented in its balance sheet at the time of the takeover. The impact recognised under "Non-controlling interests" after the takeover of Shariket Tahlya Mostaganem, S.p.a. is described in Note 9.

During April 2019, FCC Aqualia, S.A. acquired a 49% stake in the AquaJerez,, S.L., in which it already held a 51% stake, for the sum of EUR 28,858 thousand. As this transaction involved non-controlling interests, the difference between the acquisition price and the value of the net assets acquired has been recognised directly against equity, representing a loss of EUR 17,311 thousand in reserves on the Group's consolidated financial statements.

In June 2019, FCC Aqualia, S.A. acquired a 100% stake in the French subgroup Services Publics et Industries Environnement, which is dedicated to the management of water supply and sanitation, for the sum of EUR 31,665 thousand. As part of this business combination, a first consolidation difference of EUR 24,234 thousand has been disclosed, of which EUR 11,805 thousand have been allocated to the subgroup's concession-related assets, recognising a remaining goodwill of EUR 12,429 thousand.

On 28 September 2018, the sale of a 49% non-controlling interest in FCC Aqualia, S.A. to the IFM Global Infrastructure fund was finalised for the sum of EUR 1,024 million, received on the same day, with the Group maintaining its controlling interest. The sale was recognised as an equity transaction and had a positive impact on reserves in 2018 of EUR 789,054 thousand given the difference between the sale price and the book value of the stakeholding that was disposed of (Note 9), which has been recognised in the accompanying Statement of Cash Flows against "Proceeds from/(payments on) equity instruments".

Additionally, the sales agreement contemplates certain variable prices that depend on the resolution of contingent procedures relating to FCC Aqualia. 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 significant losses will be incurred and given that their value is considered insignificant in relation to the transaction price.

5

CONSOLIDATED GROUP

As part of the 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. The Group considers that there is no risk of execution of these guarantees on the date that these condensed consolidated financial statements were prepared.

Furthermore, on 9 January 2018, the acquisition of a 49% interest in Aqualia Czech, S.L. and Aqualia Infraestructuras Inzenyring, s.r.o. from MIT Infraestructures Europe, Ltd. was finalised. The cost of the Group increasing its control over the aforementioned companies to 100% was EUR 92,580 thousand. Since the Group already controlled both investee companies, the difference between the acquisition price and the carrying amount of the non-controlling interests acquired gave rise to a negative difference in reserves totalling EUR 59,509 thousand.

5. INTANGIBLE FIXED ASSETS

The net breakdown of intangible fixed assets at 30 September 2019 and 31 December 2018 is as follows:

			Cost		Accumulated		Impairment		Net
				amortisation			Value
30.09.2019
Concessions	2,319,602	(970,565)	(56,905)	1,292,132
Goodwill	1,878,274	-	(784,223)	1,094,051
Other intangible assets	357,632	(281,364)	(14,403)	61,865
			4,555,50	8	(1,251,929	)	(855,531	)	2,448,04	8
31.12.2018
Concessions	2,249,398	(902,183)	(58,411)	1,288,804
Goodwill	1,858,006	-	(779,516)	1,078,490
Other intangible assets	357,148	(283,659)	(14,403)	59,086
			4,464,55	2	(1,185,842	)	(852,330	)	2,426,38	0

6

CONSOLIDATED GROUP

a) Concessions

This heading includes the intangible assets corresponding to the service concession arrangements.

The changes in this heading on the consolidated balance sheet for the first nine months of 2019 and 2018 were as follows:

			Concessions		Accumulated		Impairment
				Amortisation
	Balance at 31/12/18		2,249,398	(902,183)	(58,411)
	Additions or allocations	29,631	(70,287)		-
	Disposals, derecognitions or reductions	(5,710)	4,679	810
	Translation differences	13,217	(604)		-
	Change in scope, transfers and other changes	33,066	(2,170)	696
	Balance at 30/09/19		2,319,602	(970,565)	(56,905)
			Concessions		Accumulated		Impairment
				Amortisation
	Balance at 31/12/17	2,198,754	(804,412)	(59,460)
	Additions or allocations	16,187	(65,538)		-
	Disposals, derecognitions or reductions	(298)	36	702
	Translation differences	12,700	(50)		-
	Change in scope, transfers and other changes	13,914	(11,686)	2,186
	Balance at 30/09/18	2,241,257	(881,650)	(56,572)

b) Goodwill

The changes in this heading on the consolidated balance sheet for the first nine months of 2019 and 2018 are as follows:

Balance at 31/12/18	1,078,490
Translation differences:
ASA Group	(1)
FCC Environment Group (UK)	3,124
Rest	7
Changes in scope and others:
SPI Environement S.A.S. Group (Note 4)	12,429
Rest	2
Balance at 30/09/19	1,094,051

7

CONSOLIDATED GROUP

Balance at 31/12/17	1,083,740
Translation differences:
ASA Group	(57)
FCC Environment Group (UK)	(676)
Rest	(2)
Changes in scope and others:
ASA Group	(1,239)
Impairment Losses
ASA Group	(1,646)
Balance at 30/09/18	1,080,120

The breakdown of goodwill at 30 September 2019 and 31 December 2018 on the accompanying consolidated balance sheet is as follows:

Cementos Portland Valderrivas, S.A. FCC Environment Group (UK) ASA Group

FCC Aqualia, S.A. FCC Ámbito, S.A.

SPI Environement S.A.S. Group

FCC Industrial e Infraestructuras Energéticas, S.L.U. Canteras de Aláiz, S.A.

Cementos Alfa, S.A. Rest

30.09.2019		31.12.2018
509,397		509,397
294,876		291,752
136,792		136,793
82,764		82,764
23,311		23,311
12,429		-
21,499		21,499
4,332		4,332
3,712		3,712
4,939		4,930
1,094,051		1,078,490

The impairment analysis policies applied by the Group to its goodwill are described in Notes 3 b) and 7 of the consolidated financial statements for 2018. Based on the methods used and in accordance with the estimates, projections and valuations available to the Group's management, during the first nine months of 2019, there have been no significant signs of impairment or substantial changes in business conditions that, in the opinion of the directors, would involve additional losses in the value of these assets. Notwithstanding the foregoing, the Group will update its tests at year-end or whenever there is evidence of deterioration in conditions on the markets on which these subgroups operate, and in particular with regard to the test on Cementos Portland Valderrivas, S.A, as it is highly sensitive to changes in terms of expected future growth and EBITDA.

In relation to the FCC Environment (UK) subgroup, the Group believes that, given the slack shown in the impairment test performed in 2018 and that the main assets and liabilities relating to its business are indexed to the same currency (pound), there should be no deterioration as a result of Brexit.

c) Other intangible assets

The changes in this heading on the consolidated balance sheet for the first nine months of 2019 and 2018 were as follows:

8

CONSOLIDATED GROUP

Balance at 31/12/18

Additions or allocations

Disposals, derecognitions or reductions

Translation differences

Change in scope, transfers and other changes

Other intangible			Accumulated			Impairment
assets			Amortisation
357,148		(283,659)			(14,403)
17,762		(13,578)	(2)
(18,017)	17,835			-
192	(169)			-
547	(1,793)	2

Balance at 30/09/19	357,632	(281,364)	(14,403)

Balance at 31/12/17

Additions or allocations

Disposals, derecognitions or reductions

Translation differences

Change in scope, transfers and other changes

Other intangible
Accumulated
	Impairment
assets	Amortisation
340,492		(259,534)	(14,332)
5,509		(15,899)	(115)
(165)		88		44
(453)		429		-
5,804		(3,630)	-

Balance at 30/09/18	351,187	(278,546)	(14,403)

6. PROPERTY, PLANT AND EQUIPMENT

The net breakdown of property, plant and equipment at 30 September 2019 and 31 December 2018 is as follows:

			Cost		Accumulated	Impairment		Net
				amortisation		value
30.09.2019
	Land and buildings	1,595,757		(470,352)	(66,877)	1,058,528
	Land and natural resources	670,599		(150,859)	(50,555)	469,185
	Buildings for own use	925,158		(319,493)	(16,322)	589,343
	Plant and other items of property,	7,627,001		(5,272,478)	(603,320)	1,751,203
	plant and equipment
	Plant	4,729,845		(3,183,227)	(586,440)	960,178
	Machinery and vehicles	2,132,883		(1,593,019)	(14,088)	525,776
	Assets under construction and advances	86,824		⎯	⎯	86,824
	Other property, plant and equipment	677,449		(496,232)	(2,792)	178,425
			9,222,758		(5,742,830)		(670,197)		2,809,731
31.12.2018
	Land and buildings	1,339,247		(528,038)		(66,947)	744,262
	Land and natural resources	646,878		(144,832)		(48,794)	453,252
	Buildings for own use	692,369		(383,206)		(18,153)	291,010
	Plant and other items of property,	7,386,533		(5,109,683)		(597,094)	1,679,756
	plant and equipment
	Plant	4,554,048		(2,952,848)		(580,337)	1,020,863
	Machinery and vehicles	2,082,609		(1,634,885)		(13,981)	433,743
	Assets under construction	63,949		⎯	⎯	63,949
	Other property, plant and equipment	685,927		(521,950)		(2,776)	161,201
			8,725,780		(5,637,721)		(664,041)		2,424,018

9

CONSOLIDATED GROUP

The changes in this heading on the consolidated balance sheet for the first nine months of 2019 and 2018 were as follows:

		Land and										Assets under	Rest	Plant and other
			Buildings				Plant		Machinery		property,	items of property,		Accumulated
		natural			Land and buildings				construction			Impairment
			for own use					and vehicles		plant and	plant and		amortisation
		resources								and advances
											equipment	equipment
Balance at 31/12/18	646,878	692,370	1,339,248	4,554,048	2,082,609	63,949	685,927	7,386,533	(5,637,722)	(664,042)
Additions or allocations	746		18,110	18,856	8,175	69,194	44,274	34,167	155,810		(250,727)	(78)
Disposals, derecognitions or						(12,312)							(188,276)
reductions	(889)		(11,423)	(16,595)	(105,570)	(199)	(65,912)	194,973	14
Impact of first-time						361,598							65,670
application of IFRS 16	21,139	340,459	6,421	48,619	10,630	⎯		⎯	⎯
Translation differences	393		3,475	3,868	28,899	11,266	(689)	1,216	40,692	(30,393)	(6,096)
Change in scope, transfers and						(115,501)							166,572
other changes	2,332	(117,833)	148,897	26,765	(31,141)	22,051	(18,961)	5
Balance at 30/09/19	670,599	925,158	1,595,757	4,729,845	2,132,883	86,824	677,449	7,627,001		(5,742,830)	(670,197)

		Land and										Assets under	Rest	Plant and other
			Buildings				Plant		Machinery		property,	items of property,		Accumulated
		natural			Land and buildings				construction			Impairment
			for own use					and vehicles		plant and	plant and		amortisation
		resources								and advances
											equipment	equipment
Balance at 31/12/17	645,161	692,823	1,337,984	4,516,704	2,052,217	49,867	658,251	7,277,039	(5,480,759)	(678,403)
Additions or allocations	2,134	3,348	5,482	20,798	73,677	35,916	24,578	154,969		(202,873)	(1,768)
Disposals, derecognitions or						(4,641)							(54,600)
reductions	(3)		(4,638)	(1,219)	(48,059)	(205)	(5,117)	50,867	237
Translation differences	(397)		(2,816)	(3,213)	(15,513)	(6,196)	(266)	(1,360)	(23,335)	19,596	1,369
Change in scope, transfers and						(5,074)							23,669
other changes	(35)		(5,039)	32,480	10,817	(24,564)	4,936	(27,020)	1
Balance at 30/09/18	646,860	683,678	1,330,538	4,553,250	2,082,456	60,748	681,288	7,377,742		(5,640,189)	(678,564)

10

CONSOLIDATED GROUP

The changes seen in "Change in scope, transfers and other changes" between "Buildings for own use" and "Plant" mainly reflects the reclassification of buildings that are part of complex production facilities such as recycling plants, treatment plants and transfer stations involved in environmental service activities in the United Kingdom, as it is believed that this is a better reflection of the way in which the assets are used.

Acquisitions and disposals of items of property, plant and equipment

The following property, plant and equipment was acquired the first nine months of 2019:

	(Thousands of
	euros)
Land and buildings	18,856
Plant	8,175
Machinery and vehicles	69,194
Other property, plant and equipment	78,441
TOTAL	174,666

And derecognitions due to disposals of these elements were as follows:

	(Thousands of
	euros)
Land and buildings	1,074
Plant	610
Machinery and vehicles	3,277
Other property, plant and equipment	640
TOTAL	5,601

Purchase commitments

In the performance of their activities, Group companies do not have formally arranged purchase commitments involving significant property, plant and equipment at 30 September 2019 or 2018.

7. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

This heading includes the value of investments in companies accounted for under the equity method, which applies to both joint ventures and associates, as well as non-current loans granted to them and the breakdown of which is as follows:

		30.09.2019	31.12.2018
	Joint ventures	182,897	173,489
	Investment value	35,281	34,882
	Loans	147,616	138,607
	Associates	569,224	589,561
	Investment value	408,158	452,853
	Loans	161,066	136,708
		752,121	763,050

11

CONSOLIDATED GROUP

The main changes recognised in the first nine months of 2019 reflect the transaction relating to Shariket Tahlya Mostaganem, S.p.a. and Shariket Miyeh Djinet, S.p.a. (Note 4), which have resulted in a decrease in the heading of EUR 35,222 thousand and EUR 12,704 thousand, respectively. Furthermore, from the loans to associates, worth particular mention is the increase of EUR 26,748 thousand relating to Lostock Sustainable Energy for the development of a thermal recovery plant in Lostock (United Kingdom).

At 30 September, 2019, the value of investments accounted for under the equity method included:

• EUR 277,868 thousand for the stakeholding in Realia Business, S.A.
• EUR 34,922 thousand for the stakeholdings in the concessionary companies in the Integrated Water Management Area.
• EUR 90,548 thousand for stakeholdings in companies in the Environmental Services Area.
• EUR 348,783 thousand for other stakeholdings and loans to companies consolidated under the equity method.

8. FINANCIAL ASSETS

The details of the most significant balances under "Non-Current Financial Assets" and "Other Current Financial Assets" in the accompanying consolidated balance sheet is described in the following headings:

a) Non-current financial assets

Non-current financial assets at 30 September 2019 and 31 December 2018 are distributed as shown below:

Financial

Financial

Financial

assets at fair

Hedging

assets at

assets at

value

derivatives

Total

fair value

amortised

charged to

charged to

cost

profit and

reserves

loss

30.09.2019

Equity instruments

⎯

35,786

⎯

⎯

35,786

⎯

Debt securities

777

⎯

⎯

777

87

Derivatives

⎯

⎯

19

106

Other financial assets

582,399

⎯

⎯

⎯

582,399

583,176

35,786

19

87

619,068

31.12.2018

Equity instruments

⎯

24,660

⎯

⎯

24,660

Debt securities

703

⎯

⎯

⎯

703

Derivatives

⎯

⎯

40

1,265

1,305

Other financial assets

353,884

⎯

⎯

⎯

353,884

354,587

24,660

40

1,265

380,552

"Other non-current financial assets" include the non-current collection rights from concessions, which, at 30 September 2019 came to EUR 426.161 thousand (EUR 199.507 thousand at 31 December 2018), the sums granted to public authorities to refinance debt in water services and urban sanitation activities that accrue interest in line with market conditions, and deposits and bonds that in essence correspond to those made on account of legal or contractual obligations in the performance of the Group companies' activities, such as deposits for electrical connections, for guarantees in the performance of works, for property rental, etc.

The increase seen in the first nine months of 2019 under "Other financial assets" can mainly be attributed to the contribution made to Shariket Tahlya Mostaganem, S.p.a. for the sum of EUR 178.226 thousand, which is now consolidated under the global consolidation method (Note 4). Furthermore, to a lesser extent,

12

CONSOLIDATED GROUP

the increase in non-current collection rights corresponding to waste treatment plants under construction in Guipúzcoa and the United Kingdom is worth note.

b) Other current financial assets

Current financial assets at 30 September 2019 and 31 December 2018 are distributed as shown below:

		Financial assets
	Financial assets at	at fair value
	amortised cost	charged to	Total
		reserves
30.09.2019
Equity instruments	⎯	⎯	⎯
Debt securities	19	⎯	19
Derivatives	⎯	⎯	⎯
Deposits and guarantees	79,499	⎯	79,499
Other financial assets	103,786	⎯	103,786
	183,304	⎯	183,304
31.12.2018
Equity instruments	⎯	⎯	⎯
Debt securities	35	⎯	35
Derivatives	⎯	16	16
Deposits and guarantees	71,535	⎯	71,535
Other financial assets	107,229	⎯	107,229
	178,799	16	178,815

"Other current financial assets" includes current financial investments, made for periods of more than three months in order to cover specific cash flow situations, loans granted to companies accounted under the equity method and financial deposits constituted as part of contractual guarantees.

9. EQUITY

The accompanying Statement of Changes in Total Equity at 30 September 2019 and 2018 shows the evolution of equity attributed to the shareholders of the Parent Company and non-controlling interests in the first nine months of both years.

At the Ordinary General Shareholders' Meeting held on 8 May 2019, the Parent Company of the Group approved the distribution of a flexible dividend (scrip dividend) for a maximum value of EUR 151,530 thousand. Shareholders received the corresponding allocation rights and were able to choose between three options: the sale of rights to FCC for EUR 0.40, transfer of the rights on the market or to refrain from transferring them and receiving new shares released. The exchange ratio was set at one new share for every 28 old shares, reflecting the issuance of a maximum number of new shares released of 13,529,482. For the option of transferring the rights to FCC and of receiving new shares to be economically equivalent for the shareholder, a remuneration mechanism was set up for shareholders who chose to receive new shares with a compensatory dividend in cash.

On 28 May 2019, the negotiation period for the allocation rights ended, with the holders of 99.33% of rights opting to receive new shares. Thus, 13,439,320 new shares have been issued, corresponding to 3.55% of the share capital prior to the increase. The expansion released, charged to reserves, has been registered with the Companies Register on 12 June 2019. In turn, the remuneration mechanism described above has resulted in the disbursement of EUR 8,556 thousand by the Group. The remaining 0.67% have chosen to receive the sum in cash, resulting in an additional cash outflow for the Group of EUR 1,010 thousand.

13

CONSOLIDATED GROUP

At 30 September 2019, under "Distribution of dividends" on the Statement of Changes in Total Equity, a decrease of EUR 44,100 thousand under "Non-controlling interests" is worth particular mention, attributable to the distribution of dividends approved by FCC Aqualia, S.A.

In addition, this can be attributed to the takeover of Shariket Tahlya Mostaganem, S.p.a., (Note 4), which is now consolidated under the global consolidation method when it was previously consolidated under the equity method. This transaction has resulted in the recognition of non-controlling interests of EUR 124,678 thousand. Furthermore, in April 2019, FCC Aqualia, S.A. acquired a 49% share in AquaJerez, S.L., in which it already enjoyed a 51% holding (Note 4). As this transaction involved equity, the difference between the acquisition price and the value of the net assets acquired has been recognised directly against equity, representing a loss of EUR 17,311 thousand in reserves on the consolidated financial statements.

From the changes seen on 30 September, 2018, the first-time application of IFRS 9 and IFRS 15 on 1 January 2018, which resulted in a decrease in reserves of EUR 180,882 thousand (Note 2), is worth particular mention. Also, on 9 January 2018, the acquisition of a 49% stakeholding in the non-controlling interests of Aqualia Czech, S.L. and Aqualia Infraestructuras Inzenyring, s.r.o. was completed. This transaction resulted in a decrease in consolidation reserves of EUR 59,509 thousand, an increase in valuation adjustments of EUR 9,148 thousand and a decrease in non-controlling interests of EUR 42,139 thousand. Finally, in

September 2018, the sale of 49% of the capital of FCC Aqualia, S.A. to the IFM Global Infrastructure fund was completed for the sum of EUR 1,024 million (Note 4). This sale was considered an equity transaction, resulting in an increase in reserves of EUR 789,054 thousand, an increase in valuation adjustments of EUR 10,818 thousand and an increase in non-controlling interests of EUR 222,167 thousand.

I. Equity attributable to the Parent Company

1. Capital

The share capital of Fomento de Construcciones y Contratas, S,A. is represented by 392,264,826 ordinary shares represented through book entries with a nominal value of EUR 1 each.

All shares are fully subscribed and paid and carry the same rights.

The shares representing the share capital of Fomento de Construcciones y Contratas, S.A.

are admitted to official trading on the four Spanish exchanges (Madrid, Barcelona, Bilbao and Valencia) through the stock exchange interconnection system (Continuous Market).

In relation to the share capital owned by other companies, directly or through their subsidiaries,when they account for more than 10%, according to the information provided, Inversora Carso S.A. de C.V., a company controlled by the Slim family, directly and indirectly holds, on the reporting date, a 61.13% stakeholding. Furthermore, Samede Inversiones 2010, S.L. has an indirect shareholding of 15.44% and Nueva Samede 2016 S.L.U. has a direct shareholding of 4.53%; both of these two companies are controlled by Ms Esther Koplowitz Romero de Juseu (100%).

On 17 May 2018, the controlling shareholder of FCC, Inversora Carso, S.A. de C.V. acquired all the debt of Dominum Dirección y Gestión, S.L. from different financial institutions (owned in full by Samede Inversiones 2010, S.L.); the guarantees involved include a pledge on FCC shares representing 15.43% of its share capital. This transaction did not affect the percentage of voting rights attributable to Inversora Carso S.A. de C.V.

1. Valuation adjustments

The most significant changes reflected in consolidated equity at 30 September 2019, are as follows:

• Translation differences

14

CONSOLIDATED GROUP

Translation differences in the first nine months of 2019 have increased by EUR 10,141 thousand.

• Cash flow hedges

The changes in the fair value of the derivative hedging instruments in the first nine months of 2019 represent a decrease of EUR 52,307 thousand.

1. Shares and equity interests

This heading includes the Parent Company shares owned by this or other Group companies valued at the cost of acquisition.

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.

At 30 September 2019, Fomento de Construcciones y Contratas, S.A. owned 1,250,837 treasury shares representing 0.32% of share capital, amounting to EUR 16,068 thousand (823,430 treasury shares representing 0.22% of share capital, for the sum of EUR 11,723 thousand at 31 December 2018).

10. NON-CURRENT AND CURRENT PROVISIONS

The breakdown of provisions at 30 September 2019 and 31 December 2018 is as follows:

		30.09.2019		31.12.2018
Non-current			1,106,125	1,161,989
Liabilities for long-term employee benefits	19,167			23,171
Dismantling, removal and restoration of fixed assets	96,560			98,807
Environmental actions	244,860			237,829
Litigation	167,589			168,459
Contractual and legal guarantees and obligations	71,563			58,656
Actions to improve or expand the capacity of concessions	144,497			139,256
Other provisions for risks and expenses		361,889			435,811
Current			231,180	209,264
Close-outs and losses on construction contracts	209,391			193,273
Other current provisions	21,789			15,991

As indicated in the 2018 Report, 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. Based on the estimates made concerning their final outcome, they are not expected to have a significant impact on the Group's equity.

In June 2017, the Tax Authorities initiated state aid recovery proceedings, as a result of Decision 2015/314/EU of the European Commission, of 15 October 2014, on the State aid implemented by Spain Scheme for the tax amortisation of financial goodwill for foreign shareholding acquisitions. The purpose of these proceedings is adjust the tax incentives applied by the Group in previous years, as a result of the acquisition of the Alpine, FCC Environment (formerly WRG Group) and FCC CEE (formerly ASA Group) Groups.

15

CONSOLIDATED GROUP

In May 2019, the Tax Authority proceeded with a settlement on these grounds for the sum of EUR 110.9 million, which has now been paid. At the same time, the Tax Authority has recognised tax credits for tax loss carryforwards, given that had the adjustments not been made, the tax loss carryforwards for certain previous years would have been higher, coming to the amount of EUR 63.2 million. As a result of this adjustment, the Group has recognises financial expenses of EUR 18.8 million, an application of provisions provided to cover the risk amounting to EUR 20.2 million and has reversed deferred taxes of EUR 8.7 million. FCC, S.A. has filed an appeal against the tax settlement handed down. The Group, in the opinion of its legal advisors, believes it is likely that the amounts already paid as part of these recovery proceedings will be returned.

In relation to the provisions and risks arising from the winding up of the Alpine Group, during the first nine months of 2019, the changes seen in terms of the amount reported in the Group's 2018 Financial Statements cannot be considered significant.

In 2006, the Group acquired an absolute majority in Alpine Holding GmbH, hereinafter AH, and thereby, indirectly in its operating subsidiary, Alpine Bau GmbH, hereinafter AB.

On 19 June 2013, AB initiated insolvency proceedings before the Commercial Court of Vienna with a recovery proposal for under receivership. Once the official receiver found that the recovery proposal was unfeasible, he ruled, and the court decreed, that the company should be declared bankruptcy and wound up the company, going into receivership on 25 June 2013. As a result of AB's bankruptcy, its Parent Company, AH filed bankruptcy proceedings before the Commercial Court, asking to be declared bankrupt on 28 June 2013; this application was granted on 2 July 2013.

The direct consequence of both receivership proceedings on the subsidiaries of FCC Construcción, S.A., is that it loses control over the Alpine Group, affecting 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 current share in the estate amounts to 13%.

In September 2014, BDO Financial Advisory Services GmbH issued, at the request of the bankruptcy administrations of AH and AB, a report stating that AB was insolvent as early as October 2010.

In July 2015, the Court responsible for AB's bankruptcy proceedings agreed to the request of the Administrator 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, based on the report of BDO, a company in which he is a partner, reached the same conclusions, that AB had been insolvent since October 2010. Faced with these conclusions reached by the Administrators and used in various court proceedings, other expert reports were prepared as part of the range of proceedings, including the report by Mr. Konecny for the Anti-Corruption Prosecutor's Office, AKKT for Banks, Rohatschek for Deloitte Audit Wirtschaftsprüfungs GmbH and E&Y for FCC, all of which challenge the conclusions reached by BDO/Schima. In particular, in 2017, the prosecutor's expert, a Doctor of Law and an Audit Expert, issued his fourth and final report. The expert reports concluded that (i) it cannot be guaranteed that there had been any fraud in the individual financial statements of AB and AH and consolidated financial statements of AH and (ii) the ultimate insolvency date of AB and AH was set as 18 June 2013.

In 2010, 2011 and 2012, AH issued three bonds for a combined nominal value of EUR 290 million, which were admitted for trading on the Luxembourg and Vienna stock exchanges. AH, as the issuer of the bonds, as well its directors and members of its supervisory board, may be held liable before the bondholders for claims of damages if the final decision declares that the information contained in the corresponding issue prospectus was incorrect or incomplete or underpinned by false data.

The complaint filed by a bondholder before the Central Prosecutor's Office for Economic Crimes and Corruption (Wirtschafts- und Korruptions-Staatsanwaltschaft) immediately after both companies were declared bankrupt, prompted the initiation of criminal proceedings in July 2013. Around 480 private prosecutions were filed, mainly by bondholders (Privatbeteiligte), claiming damages of EUR 378 million plus legal interest.

16

CONSOLIDATED GROUP

Prior to 15 May 2018, when the Prosecutor's Office decided to archive the previous proceedings, it was investigating more than 25 natural and legal persons in relation to the commission of crimes related to the bankruptcy of the Alpine Group, specifically alleged bankruptcy-related crimes and fraudulent accounting in the financial statements of the Alpine Group.

Pursuant to the provisions on the criminal liability of legal persons in Austrian criminal law (Verbandsverantwortlichkeitsgesetz), if a court hands down a final ruling against the Parent Companies of AB and AH holding them criminally responsible, considering them de facto directors, the former bondholders or other affected creditors could file claims for damages against Fomento de Construcciones y Contratas, S.A. or FCC Construcción, S.A., under the aforementioned "Schutzgesetze" protection standards. Furthermore, should any of the Group's companies be held criminally liable, they would be banned from participating in public tenders in Austria. In this connection, it should be noted that in the first nine months of 2018, the Prosecutor filed open criminal proceedings against FCC and others, although some private prosecutions have asked for cases to be reopened, which the Prosecutor's Office has opposed, claiming, in addition to the statue of limitations, that none of the requests to reopen cases is covered by any legally established assumptions, as the only purpose of these requests is to seek an assessment of the evidence that is more in line with their particular interests in the cause.

In July 2019, the Vienna High Court rejected the suits filed by the bondholders and other private prosecution, meaning that the preliminary proceedings in the framework of the investigation into the commission of any crime in the bankruptcy of the Alpine Group have been definitively been archived, as the aforementioned ruling by the Vienna High Court of Justice is final.

As a result of this bankruptcy process, at 30 September 2019, the Group has recognised provisions in relation to the Alpine subgroup for the sum of EUR136,275 thousand to cover the risks and liabilities arising from the bankruptcies of AH and AB. The breakdown of the aforementioned provisions is as follows:

Appeal against the sale of Alpine Energie	95,264
Guarantees committed and accounts receivable for Alpine	41,011
works
Total	136,275

The provisions set aside for the appeal against the sale of Alpine Energie Holding AG for EUR 95,264 thousand covers the risk relating to the retroactive suit filed by the administrator of AB on 11 June 2014, against the Group's Parent Company, Promotion de Construcciones y Contratas, S.A. and two of its subsidiaries: Asesoría Financiera y de Gestión, S.A. and BVEFTDOMINTAENA Beteiligunsgverwaltung GmbH.

FCC Construcción, S.A. awarded corporate guarantees for AB and other operating subsidiaries of AB to tender for and/or successfully bid for works; five years after it was declared bankrupt, the risk of these guarantees being enforced has been mitigated. Furthermore, in the normal course of operations, the Group generated accounts receivable from the Alpine Group, which, as a result of the bankruptcy proceedings, are unlikely to be collected. To cover both risks, the Group has set aside provisions under liabilities on the balance sheet for EUR 41,011 thousand.

Since AH and AB were declared bankrupt up until the preparation of these consolidated financial statements, the following suits have been filed against the Group and directors of AH and AB:

• Preliminary proceedings 19 St 43/13y-1 filed before the Prosecutor's Office for Economic Crimes and Corruption:
• • These proceedings initiated in July 2013 following the complaint filed by a bondholder against five directors of Alpine Holding GmbH (all directors at the time the bonds were issued and insolvency proceedings were initiated) were the basis for investigations by the aforementioned Prosecutor's

17

CONSOLIDATED GROUP

Office for Economic Crimes and Corruption, who ruled to archive them in May 2018, confirming the decision to archive in final ruling of the Superior Court of Justice of Vienna in July 2019.

• Civil and Commercial Proceedings
• • Retroactive suit filed by the administrator of Alpine Bau GmbH on 11 June 2014 against FCC and two subsidiaries from its scope of consolidation, Asesoría Financiera y de Gestión, SA and BVEFDOMINTAENA Beteiligungsverwaltung GmbH, as jointly liable parties, challenging the sale of the shares in Alpine Energie Holding AG to the latter of the two subsidiaries. The administrator is not seeking the repayment of the estate by Alpine Energie Holding AG, but the payment of EUR 75 million plus interest. The proceedings are still in the evidence phase.
  • In April 2015, the administrator of Alpine Holding GmbH filed a claim for EUR 186 million against FCC Construcción, S.A. considering that the company should compensate Alpine Holding GmbH for the amounts collected through two bond issues in 2011 and 2012 that were allegedly provided by this company to its subsidiary, Alpine Bau GmbH, without the necessary guarantees and without doubt under the mandate of 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 administrator filed an appeal due to procedural defects in September 2018, which was challenged by FCC Construcción S.A. in October 2018. In April, the Provincial Court of Vienna issued a ruling confirming the procedural defects, referring the cases back to the courts for witness evidence to be taken and for a ruling to be handed down accordingly. FCC filed an appeal against this ruling in May 2019 before the Supreme Court.
  • In April 2017, a Group company, Asesoría Financiera y de Gestión S.A. was informed of a lawsuit in which the administrator jointly sought the payment of EUR 19 million from the former CFO of Alpine Bau GmbH and Asesoría Financiera y de Gestión S.A. for alleged breach of corporate law and insolvency rules, in the belief that Alpine Bau GmbH, by constituting a deposit in Asesoría Financiera y de Gestión S.A. would have made payments from its own funds, amounting to a capital return, which is prohibited by law. The proceedings are still in the evidentiary phase, and a court expert has been appointed.
  • Likewise, in April 2017, a former FCC employee and former director of AH and AB was notified of a lawsuit filed by the administrator of Alpine Bau GmbH for the sum of EUR 72 million for alleged damages to the estate resulting from the alleged delay in initiating insolvency proceedings.

The accompanying consolidated financial statements include the provisions mentioned above to cover the probable risks relating to any of these lawsuits. In terms of the other disputes, the Group and its legal advisors do not believe there will be any future outflows of cash or prior to the issuance of the next report; therefore, no provisions have been set aside, as the Group believes that they represent contingent liabilities (Note 15).

11. ISSUES, REPURCHASES OR REFUNDS OF DEBT SECURITIES

Below, details of the issuance of debt securities can be consulted:

	Balance	Issues		Amortisation		Balance
	01.01.2019			and others		30.09.2019
Debt securities issued within the EU
(Notes 12.a and 12.b)	1,725,939	700,326	(409,389)	2,016,876
Debt securities issued outside the EU	−	−	−	−
	1,725,939		700,326		(409,389)		2,016,876

18

								CONSOLIDATED GROUP
			Balance	Issues		Amortisation	Balance
			01.01.2018			and others	30.09.2018
	Debt securities issued within the EU
	(Notes 12.a and 12.b)	1,609,155	158,573	(15,264)	1,752,464
	Debt securities issued outside the EU	−	−	−	−
			1,609,155		158,573		(15,264)	1,752,464

Issues in the first nine months of 2019 reflect the successive issuances of promissory notes on the Irish Stock Exchange (Note 12). "Amortisation and others" includes depreciation relating to the aforementioned issues for the sum of EUR 396 million, translation differences and interest accrued.

The amount shown under issues in the first nine months of 2018 was mainly on account of the placement of bonds by FCC Energy Ltd as part of the refinancing of debt of Azincourt Investment, S.L. (Note 12).

12. FINANCIAL LIABILITIES

The Parent Company of the Group has issued a series of promissory notes on the Irish Stock Exchange, with a maximum maturity of one year, as indicated in Note 33 of the Consolidated Financial Statements for 2018, which allows for issuances with maturities of between 1 and 364 days from the date of issue. The maximum initial amount recognised was EUR 300 million, which was increased to EUR 600 million last March. The balance drawn down on the reporting date was EUR 300 million, at different maturities, from 3 to 9 months. This financial facility allows for greater diversification in the company's sources of financing at more attractive interest rates and a more efficient management of available liquidity (Note 11).

On 28 September, 2018, the sum of EUR 2,014 million was repaid early, representing the entire principal and accrued interest pending payment on that date, corresponding to the syndicated financing agreement that came into force on 26 June 26, following its renewal in subsequent years. The amortisation was performed using part of the funds raised from the sale of a 49% non-controlling interest in FCC Aqualia to the IFM Global Infrastructure fund for EUR 1,024 million (Note 5 of the 2018 Consolidated Report), and with the funds from a new syndicated financing agreement, for the sum of EUR 1,200 million, resulting in the full repayment of the financing.

In the first nine months of 2018, the debt of Azincourt Investment, S.L. was refinanced for the sum of EUR

270.2 million. To this end, the decision was taken to issue debt against two assets (Allington and Eastcroft incinerator plants) and use those funds to reduce Azincourt's debt. The new debt was structured over a period of 20 years (due 17 June 2038) with three different tranches: two institutional and one commercial. Two for GBP 135 million and GBP 10 million, structured through a private placement (Note 12) and the third, commercial, for GBP 62.4 million.

There are no current or anticipated breaches that could lead to the early maturity of the Group's main financing agreements.

Of the Group's total financial liabilities (non-current and current), EUR 2,723 million are without recourse to the Parent Company (Note 16). The details of the most significant balances under "Non-Current Financial Liabilities" and "Other Current Financial Liabilities" in the accompanying consolidated balance sheet is described in the following headings:

1. Non-currentfinancial liabilities

Non-current financial liabilities at 30 September 2019 and 31 December 2018 are distributed as shown below:

19

CONSOLIDATED GROUP

		Financial liabilities		Financial liabilities at	Hedging
			fair value charged to
		at amortised cost		derivatives
			profit and loss		Total
30.09.2019
Bank borrowings	1,765,960		−	−	1,765,960
Bonds and other marketable securities	1,700,081		−	−	1,700,081
Derivatives		−	340	29,661	30,001
Other financial liabilities	531,752		−	−	531,752
		3,997,793		340	29,661		4,027,794
31.12.2018
Bank borrowings	1,988,629		−	−	1,988,629
Bonds and other marketable securities	1,702,631		−	−	1,702,631
Derivatives		−	3,132	11,977	15,109
Other financial liabilities	194,063		−	−	194,063
		3,885,323		3,132	11,977		3,900,432

The decrease in "Bank borrowings" in 2019 is mainly due to the amortisation of EUR 131,000 thousand of tranche B (revolving) of the syndicated loan taken out by the Parent Company using funds obtained from the issuance of the promissory note programme indicated above. The aforementioned tranche B (revolving) is fully available as of the date of these interim financial statements. Additionally, this sum is increased by the addition of the debt corresponding to Shariket Tahlya Mostaganem, S.p.a. for the sum of EUR 49,047 thousand as it is now consolidated under the global consolidation method (Note 4) and the contracting of additional financing

by AquaJerez, S.L. for the sum of EUR 29,549 thousand. Finally, transfers have been made to current financial liabilities for the sums to be amortised over the next twelve months; worth particular note are the EUR 120,000 thousand relating to tranche A of the syndicated loan taken out by the Parent Company.

"Other financial liabilities" mainly includes the debt generated by the lease agreements that, following the first-time application of IFRS 16 (Note 2), comes to EUR 399,615 at 30 September 2019. Furthermore, this includes financial debts with external third parties and the bonds and deposits received.

1. Current financial liabilities

Current financial liabilities at 30 September 2019 and 31 December 2018 are distributed as shown below:

		Financial liabilities at		Financial liabilities at	Hedging
			fair value charged to
		amortised cost		derivatives
			profit and loss		Total
30.09.2019
Bank borrowings	275,264		−	−	275,264
Bonds and other marketable securities	316,795		−	−	316,795
Derivatives		−	115	2,499	2,614
Other financial liabilities	178,021	4,405	−	182,426
		770,080		4,520	2,499		777,099
31.12.2018
Bank borrowings	211,455		−	−	211,455
Bonds and other marketable securities	23,308		−	−	23,308
Derivatives		−	163	2,402	2,565
Other financial liabilities	143,574		−	−	143,574
		378,337		163	2,402		380,902
						20

CONSOLIDATED GROUP

The change in "Debts with credit institutions" mainly reflects the transfers indicated in Note 12.a and the amortisation of credit assignments with the Inbursa Group indicated in Note 19.

The increase in "Bonds and other marketable securities" is mainly due to the aforementioned issuance of promissory notes on the Irish Stock Exchange (Note 11).

"Other financial liabilities" includes the debt deriving from the lease agreements maturing in less than twelve months after the first application of IFRS 16 (Note 2) for the sum of EUR 67,173 thousand on 30 September 2019.

13. REVENUE AND EXPENSES

Worth particular mention in terms of the sections that make up the accompanying Consolidated Statement of Profit and Loss:

a) Finance costs

In the first nine months of 2019, there has been a significant reduction in finance costs attributable, on the one hand, to the refinancing of the corporate debt carried out at the end of the third quarter of 2018 following the sale of the 49% stake in the capital of FCC Aqualia, S.A. (Note 4) and, on the other, to the recognition in the third quarter of 2018 of a finance cost coming to EUR 59,282 thousand for the allocation to profit/(loss) of the impact yet to be applied on the maturity date of the first-time application of IFRS 9 (Note 2.a) following the cancellation of the syndicated loan.

21

CONSOLIDATED GROUP

b) Other financial gains/(losses)

In the first nine months of 2019, positive exchange differences for the sum of EUR 23,711 thousand (11,123 thousand at 30 September 2018) were worth particular note.

c) Profits/(losses) of companies accounted for by the equity method

In the first nine months of the year, Shariket Tahlya Mostaganem, S.p.a. and Shariket Miyeh Djinet, S.p.a. ceased being consolidated under the equity method (Note 4), which has had a negative impact of EUR 6,122 thousand due to the fair value of the stakeholding prior to the change in consolidation method (income of EUR 5,891 thousand) and for the allocation to results of valuation adjustments (expense of EUR 12,013 thousand). Additionally, the Energy division recorded gains of EUR 18,763 thousand.

In the first nine months of 2018, the gains of EUR 8,816 thousand recognised by North Tunnels Canada Inc. and OHL Co. Canada & FCC Canada Ltd. Partnership under this heading, mainly as a result of the settlement of the work on the Toronto metro system, are worth particular mention.

d) Profit/(loss) attributable to non-controlling interests

In the first nine of 2019, the profit/(loss) attributed to non-controlling interests came to EUR 55,453 thousand, mainly corresponding to the amount generated by the 2018 sale of the 49% stakeholding in the Aqualia subgroup (Note 4). The amount contributed by the aforementioned segment comes to EUR49,725 thousand as at 30 September 2019 (Note 14).

14. SEGMENTED INFORMATION a) Activity segments

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 condensed consolidated interim financial statements.

"Corporation" includes the financial activity resulting from the Group's centralised management of cash, as well as the operations of companies that do not belong to any of the business areas mentioned above.

"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 the segment in the first nine months of 2019 and 2018:

• All operating income and expenses of subsidiaries and joint management contracts that correspond 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.
• Income 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.

22

CONSOLIDATED GROUP

					Environmental		Integrated									Eliminations
			Total Group			Water		Construction		Cement		Corporation
				Services
						Management
30.09.2019
Turnover	4,577,894	2,168,528	881,180	1,218,601	315,768	49,391		(55,574)
	External customers	4,577,894	2,163,799	877,462	1,177,694	310,393	49,391			-
	Transactions with other segments	--	4,729	3,718	40,907	5,375		-	(55,574)
Other income	156,493	45,661	33,088	64,760	12,786	44,281		(44,083)
	External customers	156,493	45,041	32,895	58,250	12,729	6,092			-
	Transactions with other segments		-	620	193	6,510	57	38,189		(44,083)
Operating expenses	(3,993,584)	(1,854,536)	(707,246)	(1,209,667)	(261,833)	(59,111)		98,809
Fixed asset amortisation and allocation of	(327,730)	(180,825)	(79,532)	(19,210)	(25,824)	(22,458)		119
	subsidies for non-financial fixed assets and others
Other operating income/(losses)	1,247	523	3,820	525	(1,023)	(2,599)		1
Operating Profit/(Loss)	414,320	179,351	131,310	55,009	39,874	9,504		(728)

Percentage of turnover

Finance income Finance costs

Other financial gains/(losses)

Profit/(loss) companies accounted for using the equity method

9.05%	8.27%	14.90%	4.51%	12.63%	19.24%	1.31%
41,053	5,172	27,820	22,579	1,774	71,898	(88,190)
(149,212)	(57,549)	(31,311)	(22,391)	(8,693)	(71,535)	42,267
12,400	(2,769)	623	21,717	998	(8,171)	2
67,264	12,549	(3,386)	16,603	(9,085)	50,537	46

Profit/(loss) before tax from continuing operations	385.825	136,754	125,056	93,517	24,868	52,233	(46,603)
Income tax	(97,349)	(23,939)	(33,471)	(23,206)	(5,958)	(10,956)	181

Profit/(loss) for the year from continuing operations

Profit/(loss) for the year from discontinued operations, net of taxes

Consolidated profit/(loss) for the year

Non-controlling interests

288,476	112,815	91,585	70,311	18,910	41,277	(46,422)
-	-	-	-	-	-	-
288,476	112,815	91,585	70,311	18,910	41,277	(46,422)
55,453	4,229	49,725	215	1,536	(252)	-

Profit attributable to the Parent Company	233,023	108,586	41,860	70,096	17,374	41,529	(46,422)

23

												CONSOLIDATED GROUP
						Environmental		Integrated								Eliminations
				Total Group			Water		Construction		Cement		Corporation
					Services
							Management
30.09.2018
	Turnover	4,350,812	2,095,669	825,998		1,140,909	277,164	39,929	(28,857)
		External customers	4,350,812	2,090,268	822,741		1,123,629	274,263	39,911	-
		Transactions with other segments		-	5,401	3,257		17,280	2,901	18		(28,857)
	Other income	119,438	35,785	29,866		34,435	16,056	35,343	(32,047)
		External customers	119,438	35,526	29,482		30,344	16,045	8,041	-
		Transactions with other segments		-	259		384		4,091	11		27,302	(32,047)
	Operating expenses	(3,824,585)	(1,807,046)	(669,758)	(1,132,043)	(235,807)	(40,674)	60,743
	Fixed asset amortisation and allocation of
	subsidies for non-financial fixed assets and others	(277,450)	(159,062)	(67,242)	(11,775)	(26,318)	(13,190)	137
	Other operating income/(losses)	(1,368)	(6,030)	1,540		3,933	(155)		(655)	(1)
	Operating Profit/(Loss)	366,847	159,316	120,404	35,459	30,940	20,753	(25)
	Percentage of turnover	8.43%		7.60%		14.58%	3.11%	11.16%	51.97%	0.09%
	Finance income	35,045	3,955	20,842		20,969	309		29,054	(40,084)
	Finance costs	(214,656)	(60,007)	(31,043)	(19,039)	(10,736)	(133,914)	40,083
	Other financial gains/(losses)	14,068	(751)		(272)		15,992	(947)		913,192	(913,146)
	Profit/(loss) companies accounted for using the equity method	48,420	12,689	6,241	14,584	(8,653)	23,509	50
	Profit/(loss) before tax from continuing operations	249,724	115,202	116,172	67,965	10,913	852,594	(912,122)
	Income tax	(67,003)	(23,109)	(25,301)	(16,122)	(2,107)		(329)		(35)

Profit/(loss) for the year from continuing operations

Profit/(loss) for the year from discontinued operations, net of taxes

Consolidated profit/(loss) for the year

Non-controlling interests

Profit attributable to the Parent Company

182,721	92,093	90,871	51,843	8,806	852,265	(912,157)
-		-		-		-		-		-		-
182,721	92,093	90,871	51,843	8,806	852,265	(912,157)
6,754	2,205	2,946	152	925	526		-
175,967	89,888	87,925	51,691	7,881	851,739	(912,157)

24

CONSOLIDATED GROUP

The contribution to the profit/(loss) of the FCC Group by "Corporation" mainly includes dividends distributed by Group companies in which the Parent Company retains an interest and the finance income billed to other Group companies as a result of the intra-Group loans granted by the Parent Company to other investee companies. All these concepts, as transactions with Group companies, are eliminated as shown under "Eliminations". Furthermore, "Corporation" includes finance costs for bank borrowings, mainly relating to the syndicated debt held by Fomento de Construcciones y Contratas, S.A., in addition to the profits obtained by the Group as part of activities other than those that make up its main segments.

Balance sheet by segments

Below is the balance sheet by segments at 30 September 2019 and 31 December 2018:

25

								CONSOLIDATED GROUP
				Total		Environmental		Integrated
						Water	Construction		Cement				Corporation		Eliminations
				Group		Services
						Management
	30.09.2019
	A S S E T S
	Non-current assets	7,304,971	2,730,735	2,482,661	858,182		1,201,055		3,483,589	(3,451,251)
	Intangible fixed assets	2,448,048	784,792	818,681	78,031		517,902		304,981	(56,339)
	Additions	47,392		29,438	14,196	78		-	3,680	-
	Property, plant and equipment	2,809,731	1,486,626	412,163	143,926		555,473		230,185	(18,642)
	Additions	174,665		126,227	28,903	11,488		5,353		2,694	-
	Investment property	2,694		-		-	2,694		-			-	-
	Additions		-	-		-	-	-			-	-
	Investments accounted for by applying the equity	752,121		110,720	88,879	55,473		38,199		459,004	(154)
	method
	Non-current financial assets	619,068		264,013	1,110,574	211,273		7,936		2,279,829	(3,254,557)
	Deferred tax assets	673,309		84,584	52,364	366,785		81,545		209,590	(121,559)
	Current assets	3,867,408	1,181,191	815,049	1,334,184		202,065		559,506	(224,587)
	Non-current assets held for sale		-	-		-	-	-			-	-
	Inventory	729,237		28,775	54,569	193,781		83,283		375,627	(6,798)
	Trade receivables and other accounts receivable	1,812,094	772,195	298,771	645,850		92,906		63,185	(60,813)
	Other current financial assets	183,304		131,184	77,256	99,866		6,098		25,876	(156,976)
	Other current assets	90,526		50,753	5,006	33,348		942		477		-
	Cash and other cash equivalents	1,052,247	198,284	379,447	361,339		18,836		94,341	-
	Total assets		11,172,379		3,911,926		3,297,710	2,192,366		1,403,120			4,043,095		(3,675,838)
	L I A B I L I T I E S
	Equity	2,230,357	584,189	601,811	747,931		873,221		1,596,377	(2,173,172)
	Non-current liabilities	5,671,322	1,524,536	2,020,993	286,410		429,546		2,687,516	(1,277,679)
	Subsidies	231,258		4,482	57,060	-	165		169,551	-
	Non-current provisions	1,106,125	443,483	129,038	241,813		28,935		262,856	-
	Non-current financial liabilities	4,027,794	805,991	1,781,491	21,634		323,480		2,246,828	(1,151,630)
	Deferred tax liabilities	153,468		121,901	49,406	22,963		76,966		8,281	(126,049)
	Other non-current liabilities	152,677		148,679	3,998
	Current liabilities	3,270,700	1,803,201	674,906	1,158,025		100,353		(240,798)	(224,987)
	Liabilities related to non-current assets		-	-		-	-	-			-	-
		held for sale															-
	Current provisions	231,180		3,918	19,880	196,183		5,826		5,373
	Current financial liabilities	777,099		195,133	49,461	21,952		17,961		651,172	(158,580)
	Trade payables and other accounts payable	2,262,421	592,111	605,565	989,867		76,566		64,480	(66,168)
	Internal relations		-	1,012,039		-	(49,977)		-	(961,823)	(239)
	Total liabilities		11,172,379		3,911,926		3,297,710	2,192,366		1,403,120			4,043,095		(3,675,838)

26

								CONSOLIDATED GROUP
				Total		Environmental		Integrated
						Water	Construction		Cement				Corporation		Eliminations
				Group		Services
						Management
	31.12.2018
	A S S E T S
	Non-current assets	6,607,207	2,517,297	2,252,350	822,028		1,219,871	3,241,936	(3,446,275)
	Intangible fixed assets	2,426,380	769,673		813,028	78,111		518,215	303,693	(56,340)
	Additions	37,495		16,882		18,143	64		328		2,078	-
	Property, plant and equipment	2,424,018	1,374,051	338,467	127,100		563,050	38,587	(17,237)
	Additions	263,092		200,745		31,485	19,516		8,125	3,221	-
	Investment property	2,798		-	-	2,798		-			-	-
	Additions	42		42		-	-	-			-	-
	Investments accounted for by applying the equity	763,050		85,745		132,440	38,583		46,726	458,862	694
	method
	Non-current financial assets	380,552		221,652		916,647	195,625		7,684	2,278,660	(3,239,716)
	Deferred tax assets	610,409		66,176		51,768	379,811		84,196	162,134	(133,676)
	Current assets	3,916,834	1,093,864	731,590	1,507,812	173,560	663,361	(253,353)
	Non-current assets held for sale		-	-	-	-	-			-	-
	Inventory	691,034		29,995		50,984	176,169		73,649	366,625	(6,388)
	Trade receivables and other accounts receivable	1,695,798	717,056		207,666	633,482		79,633	101,418	(43,457)
	Other current financial assets	178,815		109,588		31,846	202,337		3,099	35,453	(203,508)
	Other current assets	84,990		32,748		4,692	45,932		1,255	363		-
	Cash and other cash equivalents	1,266,197	204,477		436,402	449,892		15,924	159,502	-
	Total assets		10,524,041		3,611,161		2,983,940	2,329,840		1,393,431			3,905,297		(3,699,628)
	L I A B I L I T I E S
	Equity	1,958,775	477,529		507,326	662,577		752,294	1,631,630	(2,072,581)
	Non-current liabilities	5,574,710	1,443,268	1,884,873	322,382		544,447	2,750,830	(1,371,090)
	Subsidies	211,296		4,934		41,919	-	287		164,156	-
	Non-current provisions	1,161,989	449,439		125,380	264,535		34,320	288,316	(1)
	Non-current financial liabilities	3,900,432	708,239		1,666,381	32,279		432,078	2,294,559	(1,233,104)
	Deferred tax liabilities	141,088		124,888		47,056	25,568		77,762	3,799	(137,985)
	Other non-current liabilities	159,905		155,768		4,137	-	-			-	-
	Current liabilities	2,990,556	1,690,364	591,741	1,344,881	96,690	(477,163)	(255,957)
	Liabilities related to non-current assets		-	-	-	-	-			-	-
		held for sale
	Current provisions	209,264		6,686		13,340	175,107		8,052	6,079	-
	Current financial liabilities	380,902		232,406		46,060	36,750		24,979	247,634	(206,927)
	Trade payables and other accounts payable	2,400,390	616,360		530,807	1,182,983	63,659	55,981	(49,400)
	Internal relations		-	834,912		1,534	(49,959)		-	(786,857)	370
	Total liabilities		10,524,041		3,611,161		2,983,940	2,329,840		1,393,431			3,905,297		(3,699,628)

27

CONSOLIDATED GROUP

Cash flows by segment

					Environme		Integrated
			Total			Water											Eliminations
				ntal				Construction			Cement		Corporation
			Group			Managem
					Services		ent
30.09.2019
Operating activities	212,795	205,491	148,382	(206,331)	50,095		61,146	(45,988)
Investment activities	(256,355)	(245,435)	(29,884)	98,090	(8,388)	56,522	(127,260)
Financing activities	(196,602)	32,218	(178,181)	(1,628)	(39,175)	(183,084)	173,248
Other cash flows	26,212	1,533	2,727	21,316	381			255	-
Cash flows for the year	(213,950)	(6,193)	(56,956)	(88,553)	2,913		(65,161)	-
30.09.2018
Operating activities	191,675	177,842	161,817	(167,665)	43,004		7,535	(30,858)
Investment activities	(217,766)	(173,856)	72,058	17,267		(5,007)	937,366	(1,065,594)
Financing activities	39,006	54,898	(121,159)	(5,722)	65,620		(1,050,891)	1,096,260
Other cash flows	5,029	387	(195)		5,062		(249)			64	(40)
Cash flows for the year	17,944	59,271	112,521	(151,058)	103,368		(105,926)	(232)

b) Activities by geographic markets

The Group performs 45% of its activity abroad (45% in the first months of 2018).

The net turnover made abroad by Group companies at 30 September 2019 and 30 September 2018 cam be distributed among the following markets:

							Integrated
			Total		Environmental		Water	Construction		Cement		Corporation		Eliminations
				Services		Managemen
							t
30.09.2019
	United Kingdom	556,982		516,963		-	78		39,941		-	-
	Middle East and
	Africa	437,087	62		82,547	309,956		48,044	-	(3,522)
	Rest of Europe and
	Others	497,643	225,668	59,258	186,360	19,291	7,116	(50)
	Latin America	312,889	-	62,909	247,183		9,218	1,679	(8,100)
	Czech Republic	212,969		138,053		74,907	9		-	-	-
	USA and Canada	62,459	26,274		-	27,196		8,988		-	1
		2,080,029	907,020	279,621	770,782		125,482	8,795	(11,671)
30.09.2018
	United Kingdom	563,107		537,219		-	463		25,425		-	-
	Middle East and
	Africa	470,435	6,498	77,253	332,253		56,656	-	(2,225)
	Rest of Europe and
	Others	368,628	205,762	48,097	90,263	18,164	6,903	(561)
	Latin America	281,693	-	29,400	247,062		4,759	1,495	(1,023)
	Czech Republic	207,894		135,569		72,325	-	-	-	-
	USA and Canada	57,324	22,646		-	30,390		4,288		-	-
		1,949,081	907,694	227,075	700,431		109,292	8,398	(3,809)

28

CONSOLIDATED GROUP

15. GUARANTEE COMMITMENTS TO THIRD PARTIES AND OTHER CONTINGENT LIABILITIES

At 30 September 2019, the Group had provided guarantees to third parties, mostly before public bodies and private clients, to secure the correct performance of the urban sanitation works and contracts, for EUR 3,841,626 thousand (EUR 3,866,462 thousand at 31 December 2018).

FCC Construcción, S.A. is collaborating voluntarily with the competent authorities in a research process being undertaken in relation to various construction projects executed in Panama, between 2010 and 2014. No material impacts have been estimated in this connection.

In April 2018, 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 judgment has been appealed by the Group, as it disagrees with the valuation criteria applied and that the CNMV approved the price. It should be noted that the CNMV has also filed an appeal. The Group believes that it is improbable that significant additional disbursements will be caused by this judgment, which is why the attached Financial Statements at 30 September 2019 do not include provisions in this connection.

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 consolidated interim financial statements.

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 10). 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 main contingent liabilities deriving from the bankruptcy process of the Alpine Group are described in depth in Note 10 of these financial statements.

The stakeholding of Group companies in jointly controlled operations managed through joint ventures, 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.

16. FINANCIAL RISKS

The concept of financial risk refers to the variation to which, on account of market, political and other factors, the financial instruments contracted by the Group are exposed, and their impact on maximising the financial resources available, obtaining necessary financing at a reasonable cost, and its impact on the financial statements. These aspects are described in depth in Note 30 of the Consolidated Report for the 2018 Financial Statements.

In terms of liquidity risk, at 30 September 2019, the Group had positive working capital of EUR 597 million (EUR 926 million at 30 September 2018).

A significant part of the gross financial debt, amounting to EUR 2,723 million is without recourse to the Parent Company. The financial debt of the Integral Water Management and Environmental Services Areas is worth particular note, for the sum of EUR 1,709 million and EUR 597 million respectively, with the remainder of the debt without recourse attributable to the Cement segment.

29

CONSOLIDATED GROUP

During the first nine months of 2019, promissory notes was issued on the Irish Stock Exchange (Note 12), continuing with the diversification of the sources of financing that the Group has been performing in recent years.

Furthermore, at 30 September 2019, the Group has cash and cash equivalents amounting to EUR 1,052 million and short-term financial investments available for EUR 183 million (see Note 8.b).

Some of the Group's activities are subject to a certain seasonality, so it is not possible to extrapolate the entire year based on the first nine months of the year. Seasonality is more pronounced in cash generation, which is usually higher in the second half of the year.

17. AVERAGE WORKFORCE OF THE CONSOLIDATED GROUP

The average number of employees at the Group during the period running from 1 January 2019 to 30 September 2019, divided between men and women, is as follows:

	30.09.2019	30.09.2018
Men	45,800	46,548
Women	12,631	12,273
	58,431	58,821

18. REMUNERATION RECEIVED BY DIRECTORS AND EXECUTIVES:

The directors and executives at Fomento de Construcciones y Contratas, S.A. have received the following sums, in thousands of euros:

Directors:

	30.09.2019	30.09.2018
For sitting on the Board	445	530
Salaries	385	256
Variable remuneration	186	165
Other payments	387	387
	1,403	1,338

Executives:

	30.09.2019	30.09.2018
Remuneration received	1,454	2,001

30

CONSOLIDATED GROUP

19. TRANSACTIONS WITH RELATED PARTIES

During the first nine months of 2019, the Group amortised all the loan assignments with the Inbursa Group which, at year-end 2018, amounted to EUR 122 million (Note 12).

In relation to the subordinated loan signed by Cementos Portland Valderrivas with Banco Inbursa, S.A. last year, during the first nine months of 2018, interest amounting to EUR 1,548 thousand has been accrued, having paid EUR 1,032 thousand at the close of these interim financial statements.

During the first nine months of 2019, the following agreements were entered into between F C y C, S.L. Unipersonal and the Realia groupfor the management and marketing of the following property developments:

• El Bercial, Getafe, Madrid (40 homes and parking spaces).
• Plot 10A in Badalona, Barcelona (134 mass homes and parking spaces).
• Plots RCL 3A and 3B in Arroyo Fresno, Madrid (144 mass homes and parking spaces).
• Plot RUL 1B in Arroyo Fresno, Madrid (42 single-family homes).

The following agreements have also been entered into:

• Construction agreements between FCC Construcción, S.A. and the Realia Group for the plots in Valdebebas, Madrid (40 homes, storage rooms, garages, commercial premises and swimming pool) and Parque Ensanche, Alcalá de Henares (116 homes, storage rooms, garages and commercial premises).
• Sale between FC y C, S.L. Unipersonal and the Realia Group involving two plots in Tres Cantos.

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.

20. SUBSEQUENT EVENTS

The Group has signed a contract for the acquisition of a 17% stake in Cedinsa Concessionària, S.A. for the sum of EUR 58 million, the transaction is subject to compliance with certain suspensive clauses. Once the transaction is completed, the Group will hold a 51% interest in said investee company.

Furthermore, the segregation of the Environmental Services activity carried out by the Group's Parent Company to FCC Medio Ambiente, S.A. was registered in the Companies Registry of Madrid and Barcelona, taking legal effect on October 1. For accounting purposes, this operation takes effect on 1 January 2019 and has no impact on the consolidated financial statements, as the FCC Medio Ambiente, S.A., is 100% owned by the Group's Parent Company.

There have been no other significant events between the closing date and the date on which these consolidated interim financial statements were prepared.

31