QUARTERLY REPORT SEPTEMBER 30, 2016

Transcription

1 QUARTERLY REPORT SEPTEMBER 30, 2016

2 Table of Contents Page Presentation of Financial Information... ii Summary of Financial Information... 1 Business Overview... 3 Factors affecting the comparability of our results of operations... 3 Basis of presentation... 3 Result of Operations... 4 i

3 Presentation of Financial Information Unless otherwise indicated, financial information contained in this report has been prepared in accordance with Spanish GAAP. In this report, the term financial statements refers to the unaudited consolidated financial statements of Grupo Aldesa S.A., and its subsidiaries as of and for the nine month period ended September 30, 2016 included elsewhere herein. The financial information and financial statements included in this report are presented in euro. The financial information included in this report is not intended to comply with the applicable accounting requirements of the U.S. Securities Act and SEC reporting requirements. Compliance with such requirements would require the modification or exclusion of certain information presented in this report and the presentation of certain other information not included in this report. Certain numerical figures set out in this report have been subject to rounding adjustments and, as a result, in certain instances, the sum of the numbers in a column or row in tables may not conform exactly to the total figure given for that column or row or the sum of certain numbers presented as a percentage may not conform exactly to the total percentage given. This report presents financial information relating to our Restricted Group and our Unrestricted Group, as well as financial information on a consolidated basis. Special note regarding non-gaap financial measures Some of the measures used in this report are not measures of financial performance under Spanish GAAP and should not be considered an alternative to operating profit or consolidated profit or any other performance measure derived in accordance with Spanish GAAP or as alternatives to cash flows from operating, investing or financing activities as a measure of our liquidity as derived in accordance with Spanish GAAP. EBITDA, which we define as operating result before impairment of commodities, raw materials and other supplies, losses, impairment and changes in provisions from trade operations, amortization of fixed assets, impairment and profit/(loss) from disposals of fixed assets and other results. We use the term EBITDA both for the Restricted Group and for the Unrestricted Group. Backlog, which we define as the amount of receivables, net of VAT, from contracts signed both for works and services pending completion. We include the receivables from a contract in our Backlog only once the corresponding contract has been signed, using the Contract Value in the relevant contract. The term Backlog relates only to the Restricted Group s activities. Capital expenditures, which we use both for the Restricted Group and the Unrestricted Group. For the Restricted Group, these consist mainly of investments in property, plant and equipment such as machinery. Our capital expenditures for the Unrestricted Group relate to investments in intangible fixed assets, such as the rights to use assets under concession agreements. ii

4 Summary of Financial Information Three months ended on September 30, Percentage change Nine months ended on September 30, Percentage change ( in thousands) Income statement data Net turnover. 200, ,283 (5.2)% 610, ,866 (4.7)% Changes in stocks of finished goods and in the process of manufacture.. (11) (904) (98.7)% 1,271 (1,438) NM Work performed by the company for its assets 1, NM 2,497 1,227 NM Supplies (117,179) (125,824) (6.9)% (363,739) (390,666) (6.9)% Other operating revenue 1,171 2,737 (57.2)% 5,160 6,944 (25.7)% Personnel costs (25,329) (27,488) (7.9)% (81,719) (85,727) (4.7)% Other operating expenses.. (37,596) (39,583) (5.0)% (118,237) (110,997) 6.5% Amortization of fixed assets (7,047) (6,494) 8.5% (25,352) (21,680) 16.9% Registration of non-financial fixed assets subsidies and others % 100% Impairment and profit/(loss) from disposals of fixed assets. (7) 123 NM (136) (85) 60.0% Other results (34.7)% % Operating result.. 15,450 13, % 30,652 38,503 (20.4)% Financial revenue 3,261 3,369 (3.2)% 5,694 7,715 (26.2)% Financial expenses. (11,299) (11,731) (3.7)% (34,851) (39,607) (12.0)% Change in fair value in financial 40 (75) instruments... NM 111 (75) NM Exchange rate differences. (253) (1,964) (87.1)% (1,468) (4,663) (68.5)% Impairment and result through disposal of financial instruments 716 (9) NM 719 (9,195) NM Financial result (7,535) (10,410) (27.6)% (29,795) (45,825) (35.0)% Stake in profit (losses) in equity method companies. (20) 88 NM 2 (58) NM Pre-tax result 7,895 3,562 NM 859 (7,380) NM Profits tax (53) (1,236) (95.7)% (458) 8,845 NM Result of the year 7,842 2,326 NM 401 1,465 (72.6)% ( in thousands) September 30, 2016 December 31, 2015 (audited) September 30, 2015 Balance sheet data Non-current assets.. 686, , ,235 Current assets. 683, , ,777 of which, cash and other equivalent liquid assets 156, , ,631 Total assets.. 1,369,490 1,490,911 1,464,012 Total liabilities.. 1,348,782 1,460,548 1,437,233 Equity. 70,356 72,345 71,661 1

5 Three months ended on September 30, Percentage change Nine months ended on September 30, Percentage change ( in thousands) Cash flow data Cash flow from operating activities Cash flow from investment activities Cash flow from financing activities (9,714) 4,109 NM (121,713) (74,331) 63.7% (1,757) (29,634) NM (3,605) (23,639) (84.7)% (12,564) (552) NM 17,125 (4,021) NM ( in thousands) Consolidated financial data Nine months ended on September 30, Percentage change Net turnover 610, ,866 (4.7)% EBITDA (1) 57,410 63,278 (9.3)% Capital expenditures (2). 6,098 20,915 (70.8)% Total financial indebtedness (3) 753, ,974 (2.7)% Total cash and other equivalent liquid assets (4) 156, ,631 (6.1)% ( in thousands) Restricted Group financial data Nine months ended On September 30, Percentage change Restricted Group net turnover. 574, ,797 (3.7)% Restricted Group EBITDA (1). 29,606 28, % Restricted Group capital expenditures (2)... 6,087 20,850 (70.8)% Restricted Group Backlog. 1,405,945 1,432,500 (1.9)% Restricted Group total financial indebtedness (3) 324, , % Restricted Group cash and other equivalent liquid assets (4). 136, ,952 (1.2)% (1) We present EBITDA as further supplemental measures of our performance. EBITDA is defined as operating result before impairment of commodities, raw materials and other supplies, losses, impairment and changes in provisions from trade operations, amortization of fixed assets, impairment and profit/(loss) from disposals of fixed assets and other results. (2) Capital expenditures for the Restricted Group consist mainly of investments in property, plant and equipment such as machinery. Our capital expenditures for the Unrestricted Group relate to investments in intangible fixed assets, such as the rights to use assets under concession agreements. (3) Total financial indebtedness includes mortgage loans, credit lines, finance leases, the Cofides put option and other financial liabilities. Restricted Group total financial indebtedness is the total financial indebtedness of the Restricted Subsidiaries. (4) Total cash and other equivalent liquid assets represent our total cash balances, including cash and other equivalent liquid assets in the Restricted Group and the Unrestricted Group. 2

6 Business Overview We are a specialized infrastructure construction group and rank among the top ten construction groups in Spain and Mexico by net turnover. We are dedicated to the construction of railways, highways, tunnels and landmark buildings. We also undertake industrial activities, which mainly include energy projects, traffic and lighting systems and installations. In addition, we undertake investment activities, mainly involving renewable energy and concessions. We have over 40 years of experience in the construction industry in Spain. Over the past eight years, we have evolved from a local construction company to a diversified international group, expanding in countries presenting opportunities for the execution of landmark projects. As a result we generated approximately 78% of our net turnover in the twelve month period ended September 30, 2016 outside of Spain. We currently have a significant presence in Mexico and Poland, as well as operations in Peru, Guatemala, Romania, India and Noruega. Factors affecting the comparability of our results of operations In 2015, we sold two operating wind farms namely Olivillo (25.5MW) and Roalabota (28.05MW), totally held by Aldesa Eólico Olivillo, S.A.U. (part of the Unrestricted Group). In 2015, this subsidiary accounted 4.1 million in net turnover and 2.7 million of EBITDA for the nine month period ended in September 30, In July 2016, we have sold the concessions for the Torrevilano and Montesclaros schools, institutions which currently provide teaching at all educational stages and have an agreement with the government of the Community of Madrid. In 2016 this subsidiary accounted 3.5 million in net turnover ( 4.1 million in the same period of 2015) and 1.7 million of EBITDA ( 1.6 million in the same period of 2015). As of September 2016, we accounted profit for 0.7 million as a result of the impact of the disposal. Basis of presentation Restricted Group and Unrestricted Group information This report presents financial information relating to the Restricted Group, financial information relating to the Unrestricted Group, as well as financial information on a consolidated basis. Consolidated financial information: Consolidated financial information encompasses both the Restricted Group and the Unrestricted Group. Restricted Group financial information: Restricted Group financial information includes results of operations, assets and liabilities of the Parent Guarantor and our Restricted Subsidiaries (our subsidiaries subject to the Notes covenants). Unrestricted Group financial information: Unrestricted Group financial information includes: i. results of operations, assets and liabilities of our Unrestricted Subsidiaries; and ii. results of operations, assets and liabilities of certain entities in which we own not more than a 50% stake but that we still consolidate under the proportional or the equity method because we either share or do not have control of these entities, including corporate joint ventures and other associates. Entities in the Restricted Group are primarily involved in construction and industrial activities. Entities in the Unrestricted Group are primarily involved in our energy, concessions and real estate activities. 3

7 Results of Operations The following table presents our Net Turnover on a consolidated basis and by jurisdiction, as well as for our Restricted Group and Unrestricted Group, for the periods presented Net Turnover Three months ended on September 30, Nine months ended on September 30, Percent age change Percentage change ( in thousands) Spain... 41,560 64,553 (35.6)% 133, ,412 (32.7)% Mexico ,927 89, % 320, , % Poland... 34,309 36,136 (5.1)% 103, ,496 (12.4)% Peru... 5,537 7,903 (29.9)% 23,187 31,879 (27.3)% Rest of jurisdictions where we operate... 13,874 13, % 29,664 29, % Total Consolidated net turnover , ,283 (5.2)% 610, ,866 (4.7)% Spain... 35,696 57,837 (38.3)% 114, ,768 (33.9)% Mexico ,567 83, % 305, , % Poland... 33,768 35,607 (5.2)% 102, ,868 (12.6)% Peru... 5,537 7,903 (29.9)% 23,187 31,879 (27.3)% Rest of jurisdictions where we operate... 13,874 13, % 29,664 29, % Net turnover for the Restricted Group , ,704 (4.7)% 574, ,797 (3.7)% Net turnover for the Unrestricted Group... 10,765 12,579 (14.4)% 35,829 44,069 (18.7)% Our consolidated net turnover decreased by 30.2 million, or 4.7%, to million for the nine month period ended September 30, 2016, compared to million for the nine month period ended September 30, This decrease was primarily due to a decrease in our consolidated net turnover from Spain, Poland and Peru partially offset by an increase in our net turnover from Mexico. This variation was also due to the impact of exchange rates; such impact would have been 65.0 million of additional net turnover for the nine month period ended September 30, 2016 compared to the same period of Net turnover for the Restricted Group decreased by 21.9 million, or 3.7% to million for the nine month period ended September 30, 2016, compared to million for the nine month period ended September 30, This decrease was due to the same reasons as the decrease in our consolidated net turnover, explained above. This variation was also due to the impact of exchange rates; such impact would have been 62.3 million of additional income for the nine month period ended September 30, 2016 compared to the same period in Net turnover for the Unrestricted Group decreased by 8.2 million or 18.7% to 35.8 million for the nine month period ended September 30, 2016, compared to 44.1 million for the same period in This decrease was mainly due to the effect of the disposal of subsidiary Olivillo (see Factors affecting the comparability of our results of operations ) as well as a lower remuneration coming from our renewable activities in Spain. This decrease was also due to the impact of exchange rates mentioned above; such impact would have result 2.7 million of additional income. In Spain, excluding Olivillo and Schools effect, our consolidated net turnover decreased by 25.5 million or 31.2%, to million for the nine month period ended September 30, 2016 compared to million for the nine month period ended September 30, This decrease was mainly due to the increase of the development of residential building projects where the time to enter full production are slower than in other activities as well as a lower remuneration from our renewable activities as we commented above. 4

8 In Mexico, our consolidated net turnover increased by 57.8 million or 22.0% to million for the nine month period ended September 30, 2016, compared to million for the nine month period ended September 30, This increase was due to a higher level of execution of works, mainly in our contracts coming from our construction activities, relating to civil works. In Poland, our consolidated net turnover decreased by 14.7 million or 12.4% to million for the nine month period ended September 30, 2016, compared to million for the nine month period ended September 30, This decrease was mainly due to the finalization of some industrial projects during the 2015 compensated by the increase of the development of construction projects for the nine month period ended September 30, In Peru, our consolidated net turnover decreased by 8.7 million or 27.3% to 23.2 million for the nine month period ended September 30, 2016 compared to 31.9 million for the nine month period ended September 30, This decrease was due to the fact that certain projects of our backlog were finalized while new projects awarded did not enter to full production for nine month period ended September 30, In the rest of the jurisdictions where we operate, our consolidated net turnover remained relatively stable at 29.7 million for the nine month period ended September 30, 2016 compared to 29.5 million for the same period in Changes in stocks of finished goods and in the process of manufacture Changes in stocks of finished goods and in the process of manufacture increased by 2.7 million from negative 1.4 million for the nine month period ended September 30, 2015 compared to positive 1.3 million for the nine month period ended September 30, This variation was mainly due to an increase of inventories connected with our real estate assets (residential flats) we had held in Spain. Work performed by the company for its assets Work performed by the company for its assets increased by 1.3 million to 2.5 million for the nine month period ended September 30, 2016, compared to 1.2 million for the nine month period ended September 30, This increase was due to the capitalization of costs incurred in the development process of certain projects in Mexico. Supplies Supplies decreased by 26.9 million or 6.9% to million for the nine month period ended September 30, 2016, compared to million for the nine month period ended September 30, This decrease was partially compensated with an increase in other operating expenses as we comment below. Other operating revenue Other operating revenue decreased by 1.8 million or 25.7% to 5.2 million for the nine month period ended September 30, 2016 compared to 6.9 million for the nine month period ended September 30, The most relevant figures accounted in this line in 2015 was connected with the revenues from certain goods that were acquired in advanced by us and later on charged to subcontractors for their use in the installation of the broadband network in our Optical Fiber project. 5

9 Personnel costs Personnel costs decreased by 4 million, or 4.7%, to 81.7 million for the nine month period ended September 30, 2016, compared to 85.7 million for the nine month period ended September 30, This decrease was in line in relation to the production. Other operating expenses Other operating expenses increased by 7.2 million, or 6.5%, to million for the nine month period ended September 30, 2016, compared to million for the nine month period ended September 30, This increase was partially compensated by the decrease in supplies mentioned above as we can see both figures in line in relation to the production. Amortization of fixed assets Amortization of fixed assets on a consolidated basis increased by 3.7 million, or 16.9%, to 25.4 million for the nine month period ended September 30, 2016, compared to 21.7 million for the nine month period ended September 30, This increase was primarily due to the increase of the depreciation of the tunneling machine acquired for the project Tunel Emisor Poniente II in Mexico partially compensated by the effect connected with the disposal of subsidiary Olivillo (see Factors affecting the comparability of our results of operations ). Operating result On a consolidated basis, operating result decreased by 7.9 million or 20.4% to 30.7 million for the nine month period ended September 30, 2016, compared to 38.5 million for the nine month period ended September 30, This decrease was due to the reasons mentioned above. Financial revenues and expenses Net financial expenses decreased by 2.7 million, or 8.6%, to 29.2 million for the nine month period ended September 30, 2016 compared to 31.9 million for the nine month period ended September 30, The decrease was mainly due to an increase in the net financial expenses in our Restricted Group compensated by a decrease in the net financial expenses in our Unrestricted Group. Net financial expenses for the Restricted Group increased by 7.1 million, or 57.1%, to 19.5 million for the nine month period ended September 30, 2016, compared to 12.4 million the nine month period ended September 30, This increase was mainly due to a lower profitability of the financial income as well as the increase in the financial expenses relating to the use of credit lines. 6

10 Non-GAAP measure EBITDA The following table presents our EBITDA on a consolidated basis and by jurisdiction, as well as for our Restricted Group and Unrestricted Group, for the periods presented: Three months ended on September 30, Nine months ended on September 30, ( in thousands) Percentage change Percentage change Spain... 3,843 8,548 (55.0)% 14,687 24,376 (39.7)% Mexico... 17,382 11, % 41,098 30, % Poland ,018 (64.6)% 3,276 7,507 (56.4)% Peru... (1,295) (616) NM (2,878) (360) NM Rest of jurisdictions where we operate... 1,093 (62) NM 1,227 1,736 (29.3)% Consolidated EBITDA... 21,383 20, % 57,410 63,278 (9.3)% Spain... (1,240) 3,402 NM (614) 4,930 NM Mexico... 13,538 6,059 NM 29,708 15, % Poland... (29) 605 NM 2,163 6,111 (64.6)% Peru... (1,295) (616) NM (2,878) (360) NM Rest of jurisdictions where we operate... 1,093 (62) NM 1,227 1,736 (29.3)% EBITDA for the Restricted Group... 12,067 9, % 29,606 28, % EBITDA for the Unrestricted Group... 9,316 10,656 (12.6)% 27,804 35,238 (21.1)% Consolidated EBITDA decreased by 5.9 million, or 9.3%, to 57.4 million for the nine month period ended September 30, 2016, compared to 63.3 million for the nine month period ended September 30, However, excluding the effect of the disposal of the subsidiary Olivillo in June 2015, the EBITDA decreased by 3.3 million for the nine month period ended September 30, This variation was also due to the impact of exchange rates, such impact has would have result 7.1 million of additional EBITDA for the nine month period ended September 30, 2016 compared to the same period in EBITDA for the Restricted Group increased by 1.6 million or 5.6%, to 29.6 million for the nine month period ended September 30, 2016, compared to 28.0 million for the nine month period ended September 30, This increase was mainly due to an increase in Mexico partially offset by a decrease in Spain, Poland and Peru. This variation was also due to the impact of exchange rates, such impact would have been 5.1 million of additional EBITDA for the nine month period ended September 30, 2016 compared to the same period in EBITDA for the Unrestricted Group, decreased by 7.4 million or 21.7% to 27.8 for the nine month period ended September 30, 2016 compared to 35.2 million for the nine month period ended September 30, This variation was due to the same reasons as the decrease in our consolidated net turnover. This variation was also due to the impact of exchange rates mentioned above; such impact would have been 2.1 of additional EBITDA for our Unrestricted Group. 7

11 In Spain, excluding Olivillo and schools effect, consolidated EBITDA decreased by 7.1 million or 32.5% to 14.7 million for the nine month period ended September, 30, 2016 compared to 21.8 million for the nine month period ended September 30, 2015.This decrease was due to same reasons as the decrease in the Net Turnover mentioned above. In Mexico consolidated EBITDA increased by 11.1 million, or 36.9%, to 41.1 million for the nine month period ended September 30, 2016, compared to 30.0 million for the nine month period ended September 30, This increase was due to the increase in the weight of construction activities where margins are traditionally higher. In Poland, consolidated EBITDA decreased by 4.2 million or 56.4% to 3.3 million for the nine month period ended September 30, 2016, compared to 7.5 million for the nine month period ended September 30, This decrease was primarily due to some industrial projects finalized in 2015 with additional level of margins. In Peru, consolidated EBITDA decreased by 2.5 million to negative 2.8 million for the nine month period ended September 30, 2016 compared to negative 0.4 million for the nine month period ended September 30, This decrease was due to the same reasons as the decrease in our Net turnover where it was not possible to fully absorb the structure costs for the nine month period ended September 30, In the rest of the jurisdictions where we operate, consolidated EBITDA remained relatively stable at 1.2 million for the nine month period ended September 30, 2016 compared to 1.7 million for the nine periods ended September 30, Backlog We believe our backlog is an important indicator of the strength of our business, and our ability to generate net turnover in the near to medium term. The following table presents our backlog by jurisdiction as of and for the periods indicated: ( in thousands) September 30, 2016 December 31, 2015 September 30, 2015 Spain , , ,027 Mexico , , ,617 Poland , , ,599 Peru ,823 80,680 89,764 Other... 38,911 43,824 58,493 Total... 1,405,945 1,420,589 1,432,500 Our total backlog as of September 30, 2016 was 1,406 million (representing 1.8 times our net turnover for last twelve months) compared to 1,421 million as of December 31, This decrease was mainly due to the exchange rates effect. 8

12 Liquidity and capital resources This section presents cash flow information and capital expenditure information relating to the Restricted Group, the Unrestricted Group, as well as on a consolidated basis. Historical cash flows Historical cash flows on a consolidated basis The following table illustrates our cash flows on a consolidated basis for the periods and sources indicated: Three months ended on September 30, Percentage change Nine months ended on September 30, Percentage change ( in thousands) Cash flow data Cash flow from operating activities Cash flow from investment activities Cash flow from financing activities (9,714) 4,109 NM (121,713) (74,331) 63.7% (1,757) (29,634) NM (3,605) (23,639) (84.7)% (12,564) (552) NM 17,125 (4,021) NM Cash flow from operating activities Our cash outflow from operating activities for the nine month period ended September 30, 2016 was million, compared to 74.3 million outflow for the nine month period ended June 30, These cash outflows in both periods were primarily due to our Restricted Group ( million for the nine month period ended September 30, 2016 versus 71.5 million in the same period of 2015), as described below. Cash flow from investments activities Our cash outflow from investments activities for the nine month period ended September 30, 2016 was 3.6 million, as compared to cash outflow of 23.6 million for the nine month period ended September 30, The decrease was due to the fact that as of September, 2015 we experienced a cash outflow from our Unrestricted Group as of 12.3 million mainly due to an accounting reclassification of restricted cash as other financial assets in the long term. From our Restricted Group we experienced the outflow of the capex connected with the agreement to acquire an adequate tunneling machine for the project Tunnel Emisor Poniente II in Mexico partially compensated by a cash inflow of 10.5 million as a result of the sale of Olivillo (see Factors affecting the comparability of our results of operations ). Cash flow from financing activities Our cash inflow from financing activities for the nine month period ended September 30, 2016 was 17.1 million, compared to a cash outflow from financing activities for the nine month period ended September 30, 2015 of 4.0 million. This inflow was primarily due to our Restricted Group, as described below, partially compensated by an outflow coming from our Unrestricted Group. 9

13 Historical cash flows in our Restricted Group The following table illustrates our cash flows in the Restricted Group for the periods and sources indicated: Three months ended on September 30, Nine months ended on September 30, ( in thousands) Pre-tax result for the Restricted Group 3,890 4,186 (5,990) (8,187) Adjustments to reconcile pre-tax result to net cash generated by operating activities.. 8,020 5,007 35,596 36,225 Net interest payments. (9,891) (5,828) (23,334) (15,369) Tax payments.. (2,659) (767) (7,395) (5,803) Changes in net operating working capital (15,755) 3,800 (120,308) (78,359) Cash flow from operating activities for the Restricted Group.. (16,395) 6,398 (121,431) (71,493) Cash flow used in investments activities for Restricted Group.. (2,946) (16,623) (8,437) (11,359) Cash flow from financing activities for the Restricted Group. (863) 4,363 38,874 3,064 Cash flow from operating activities in our Restricted Group Cash flow from operating activities in our Restricted Group is significantly impacted by changes in working capital. In the nine month period ended September, 30, 2016, our cash outflow from operating activities in our Restricted Group was million, an increase of 49.9 million compared to the same period of The increase of the working capital was mainly due to 1) higher weight of Net Turnover in Mexico over the total, where we have a lower use of confirming 2) the projects with milestones and the effect of the Exchange Rates. Additionally, the tax payments in the nine month period ended September 30, 2016, was 7.4 million compared to 5.8 million in the same period of The consumption of operating cash from our working capital in the nine month period ended September, 30, 2016, was million compared to 78.4 million in the same period in Cash flow from investments activities in our Restricted Group Our cash outflow from investments activities in our Restricted Group for the nine month period ended September, 30, 2016, was 8.4 million compared to 11.3 million outflow in the same period in In 2016 we experienced an outflow due to recurrent capital expenditures for our construction activity as well as an inflow of 1.5 million connected with the disposal of Schools. In 2015 we accounted an inflow of 10.6 million as a result of the sale of Olivillo mentioned above compensated with the capex connected with the tunneling machine. Cash flow from financing activities in our Restricted Group Our cash inflow from financing activities in our Restricted Group for the nine month period ended September, 30, 2016, was 38.9 million compared to a 3.1 million in the same period of In this period of 2016 we used the outstanding amount under our credit lines while in 2015 we used available cash in our balance sheet to cover the cash outflow from our operating activities. 10

14 Liquidity Our principal source of liquidity is our operating cash flows, which are analyzed above. Our sources of liquidity mainly include our Revolving Credit Facility of 100 million. Our ability to generate cash from our operations depends on our future operating performance, which is in turn dependent, to some extent, on general economic, financial, competitive, market, regulatory and other factors, many of which are beyond our control, as well as other factors discussed in the section entitled Risk factors. Capital expenditures Our capital expenditures in our Restricted Group consist mainly of investments in property, plant and equipment, such as machinery and equipment. Property, plant and equipment are measured at purchase or production cost, net of accrued depreciation and any impairment losses. The cost includes all expenses directly incurred in order to prepare the assets for use, as well as any charges for dismantling and removal needed to restore the site to its original condition. Our capital expenditures in our Unrestricted Group relate to investments in intangible fixed assets, such as the rights to use assets under concession agreements. Nine months ended on September 30, ( in thousands) Restricted Group... 6,087 20,850 Unrestricted Group Total... 6,098 20,915 Contractual obligations Contractual obligations on a consolidated basis The following table summarizes our material contractual obligations on a consolidated basis at September 30, 2016 ( in thousands) Onward Total Notes(1) , ,000 Revolving Credit Facility ,240-40,240 Mortgage Loan ,769 9,756 Finance Leases Credit Lines Indebtedness of our Unrestricted Group(2) ,721 37,618 19, , ,100 Total contractual obligations 15,839 38,686 60, , ,743 (1) Represents principal payments in respect of the Notes. (2) All of the indebtedness of our Unrestricted Group constitutes non-recourse project finance debt. 11

15 In addition to the contractual obligations referred to in the table above, we have the following contractual obligations: Cofides put option: Spain s development finance institution, Compañía Espanola de Financiacion de Desarrollo, Cofides, S.A. (Cofides) holds a put option entitling it to sell 35.37% of its stake in Concesionaria de Autopistas del Sureste, S.A. de C.V., one of our companies. This put option is exercisable as from October 2014 to October 2017 and the value of this put option as of September 30, 2016 was 11.8 million. Confirming (Reverse factoring): We have a number of confirming arrangements in place with Spanish and Mexican banks, whereby suppliers are paid through a facility in advance of the agreed payment terms. As of September 30, 2016, the drawn amount of confirming was million ( million as of September 30, 2015). Hedging arrangements: We are party to various currency hedging arrangements in our Restricted Group. We are also parties to certain interest rate hedging arrangements in our Unrestricted Group. Figures presented in the table above do not include hedging obligations. Contractual obligations of the Restricted Group The following table summarizes our material contractual obligations for the Restricted Group at September 30, 2016, 2018 ( in thousands) Onward Total Notes(1) , ,000 Revolving Credit Facility ,240-40,240 Mortgage Loan ,769 9,756 Finance Leases Credit Line Operating Leases (2) 315 1,259 1,259 18,886 21,719 Total contractual obligations 433 2,304 41, , ,339 (1) Represents principal payments in respect of the Notes. (2) Operating leases correspond to the lease of our headquarters in Madrid by the Restricted Group, from an entity belonging to the Unrestricted Group (Gran Canal Inversiones, S.L.). This lease will be subject to update the figures linked to the consumer price index (CPI) using a minimum reference of 3%. Off-balance sheet arrangements and contingent obligations As of September 30, 2016, we had the following off-balance sheet arrangements and contingent obligations: Non-recourse factoring: We sell certain of our receivables to financial institutions, with no possibility of recourse against us in the event of non-payment by the clients. The majority of our receivables that are the subject of factoring relate to receivables from PSEs. As of September 30, 2016, factoring arrangements amounted to 23.8 million of receivables ( 37.8 million as of September 30, 2015). We do not currently engage in any recourse factoring transactions. Non-recourse sale and purchase of future credit rights: We are party to certain agreements with banks in Spain and Mexico whereby we sell the rights we have from a client to the bank. Sales and purchases of future credit rights, as opposed to factoring, refer to receivables that have not yet accrued. Once the receivables are accrued the client pays the bank directly bypassing us. As of September 30, 2016, we were engaged in the sale of credit rights in México for 87.1 million related to CFE projects ( 46.1 million related to CFE 12

16 Projects as of September 30, 2015) and in Poland for 35.3 million related to PSE project (nil as of September 30, 2015) Operational guarantees and bonds: As of September 30, 2016 we had provided provisional and definitive procurements, guarantees and works tender bonds, down payment bonds, performance bonds and advance payment bonds to PSEs and private entities amounting to an outstanding amount of 763 million ( 694,6 million as of September 2015), all of which was provided by Restricted Group companies. These bonds are essentially provided by banks and insurance companies, their purpose being to guarantee due performance of contracts. Restricted Group guarantees for the benefit of the Unrestricted Group: As part of the operational guarantees and bonds mentioned above, the Restricted Group has granted certain guarantees for the benefit of the Unrestricted Group, including (i) guarantees provided by Aldesa Construcciones, S.A. in an amount of 3.2 million for the dismantling of certain renewable energy projects of our Unrestricted Group at the end of the relevant project, (ii) several guarantees provided by Aldesa Construcciones, S.A. in an amount of 6.7 million in respect of different highway, energy and school projects, and (iii) a guarantee provided by Aldesa Construcciones, S.A. to Autopista de La Mancha Concesionaria Española, S.A. in an amount of up to 1.5 million in connection with our Autopista de la Mancha highway project. Credit risk Credit risk is the risk of financial loss arising from the counterparty s inability to repay or service debt in accordance with the contractual terms. Credit risk includes both the direct risk of default and the risk of a deterioration of credit worthiness, as well as concentration of risks. Since a large proportion of our receivables are with public entities, the credit risk to which we are exposed is limited. In Spain, our credit risk towards public entities has been further mitigated through the enactment of Royal Decree-law 4/2012, of February 24, 2012 and Royal Decree-law 7/2012, or March 9, 2012 which create a public fund for payment of suppliers (also known as Fondo para la Financiación de los Pagos a Proveedores), that enabled distressed public entities to make certain payments which allowed them to reduce their commercial debts with suppliers and has reduced the risk of late payment or non-payment from PSEs. However, we have in recent years experienced, and may in the future experience, delays in payment by public entities. In the rest of jurisdictions, the payment collection conditions are less than a month, so the credit risk to which we are exposed is limited. With respect to private clients, we have implemented risk control policies, which include various evaluations during the contract phase (evaluation and rating of potential clients, minimum payment collection conditions) as well as a periodic review of the overall position and an individual analysis of the most significant exposures. Interest rate risk Our operations require us to incur significant indebtedness and the cost of financing our business is a significant expense. Our interest charges depend on the financing terms established at the beginning of a transaction and subsequent fluctuations in interest rates. 13

17 Currency risk We generated approximately 78% of our net turnover in 2016 outside of Spain. Our net turnover is generated in the following currencies: Euro, Mexican peso, Polish zloty, United States dollar, Peruvian sol, Romanian Leu, Indian rupee and Norwegian Krone. We try to limit our currency exposure by matching the currency of our cost base with the currency of our collection. In case of misalignment, we enter into hedging agreements to mitigate the effect of exchange rate fluctuations. Hedging is generally performed by the use of forwards. We do not have an overall hedging policy but decide from project to project whether to enter into hedging arrangements. We cannot hedge our exposure in the time period between when we make a bid for a contract and the time when we are awarded such contract, and we also cannot hedge our currency exposure with respect to our final result of operations in a given country, and as our result our exposure during that period is even more pronounced. Further, changes in foreign currency exchange rates can potentially affect the value of our foreign assets, revenue, liabilities and cost when translated and reported in euro. In general, we do not necessarily hedge against the translational effect of foreign exchange fluctuations in our Financial Statements. 14

18 Grupo Aldesa, S.A. And Subsidiaries Quarterly report September 30, 2016

19 GRUPO ALDESA, S.A. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET ENDED SEPTEMBER , DECEMBER AND SEPTEMBER (Thousands of Euros) ASSETS (*) (*) NET WORTH AND LIABILITIES (*) (*) NON-CURRENT ASSETS NET WORTH Intangible fixed assets EQUITY Research and Development Capital Concessions, patents and trade marks Issued capital Intangible assets, concession agreements Share premium Intangible assets, concession agreements, deferred financial charge Reserves and results from previous years IT Applications Non-distributable reserves Other intangible fixed assets Distributable reserves Consolidated companies goodwill Reserves in companies consolidated by full consolidation Property, Plant and Equipment Reserves in companies accounted in equity method (134) (190) (156) Land and buildings Profits and losses attributable to the Parent Company (215) Technical installations and other tangible fixed assets Consolidated losses and profits (loss) Fixed assets in progress and advances Profits and losses attributed to outside interests (616) 557 (45) Real estate investments OUTSIDE INTERESTS (569) (1.127) (1.389) Land ADJUSTMENTS THROUGH CHANGES IN VALUE- (49.079) (40.855) (43.493) Buildings Hedging operations (22.384) (23.360) (25.550) Investments in related companies Translation differences (26.695) (17.495) (17.943) Long-term financial investments Equity instruments NON-CURRENT LIABILITIES Long term loans to third parties Long-term provisions Other financial assets Provisions for staff retributions Assets through deferred tax Other provisions Long-term debtors Long-term debts Debts with credit institutions Creditors through long-term financial leasing Debentures and other tradeable securities Debts with credit institutions through project finance Debentures and other tradeable securities through project finance Credit facilities Other long-term debts Derivatives project finance CURRENT ASSETS Other financial liabilities Stock Deferred tax liabilities Commercial Long-term accruals/deferrals Land and construction materials Finished products CURRENT LIABILITIES By-products, waste and recovered materials Short-term provisions Advances to suppliers Current financial liabilities Trade and other receivables Current debts with credit institutions Clients through sales and services provided Creditors through short-term financial leasing Sundry debtors Debentures and other tradeable securities Personnel Transferable mortgage loans Current tax asset Debts with credit institutions through project finance Other credits with Public Authorities Debentures and other tradeable securities through project finance Investments in related companies Derivatives Loans to companies Derivatives project finance Short-term financial investments Other financial liabilities Equity instruments Trade and other payables Loans to related companies Suppliers Derivatives Sundry creditors Other financial assets Personnel Short-term accruals and deferrals Liabilities through current tax Cash and other equivalent liquid assets Other debts with Public Authorities Cash Client advances Other equivalent liquid assets Short-term accruals and deferrals TOTAL ASSETS TOTAL NET EQUITY AND LIABILITIES (*) Unaudited Information.

20 GRUPO ALDESA, S.A. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT NINE MONTHS PERIOD ENDED 30 SEPTEMBER 2016 AND 2015 (Thousands of Euros) 2016 (*) 2015 (*) ONGOING OPERATIONS Net turnover Sales Service provision Changes in stocks of finished goods and in the process of manufacture (1.438) Work performed by the company for its assets Total Income Supplies ( ) ( ) Goods consumed (2.107) Raw materials and other materials consumed ( ) ( ) Work performed for other companies ( ) ( ) Other operating revenue Accessory and other operating revenues Operating subsidies incorporated in result for the financial year Personnel costs (81.719) (85.727) Wages, salaries and related costs (65.981) (68.623) Social Charges (15.738) (17.104) Other operating expenses ( ) ( ) External services ( ) (90.948) Taxes (4.101) (7.414) Losses, impairment and changes in provisions from trade operations (1.285) (3.069) Other operating expenses (935) (9.566) Amortisation of fixed assets (25.352) (21.680) Imputation of fixed assets, non-financial and other subsidies Impairment and profit/(loss) from disposals of fixed assets (136) (85) Results from sales and others (136) (85) Other results OPERATING RESULT Financial revenue Tradeable securities and other financial instruments In third parties Financial Expenses (34.851) (39.607) Through debts with third parties (34.851) (39.607) Change in fair value in financial instruments 111 (75) Tradeable portfolio and others 111 (75) Exchange rate differences (1.468) (4.663) Impairment and result through disposal of financial instruments 719 (9.195) Results from sales and others 719 (9.195) FINANCIAL RESULT (29.795) (45.825) Stake in profits (losses) in equity-method companies 2 (58) PRE-TAX RESULT 859 (7.380) Profits Tax (458) RESULT FOR FINANCIAL YEAR FROM ONGOING OPERATIONS RESULT OF THE YEAR Profit allocated to the Parent Company (215) Profit allocated to outside interests (*) Unaudited Information.

21 GRUPO ALDESA, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 A) CONSOLIDATED STATEMENT OF RECOGNISED REVENUE AND EXPENDITURE (Thousands of Euros) Financial Year Financial Year 2016 (*) 2015 (*) RESULT OF INCOME STATEMENT (I) Revenue and expenditure directly attributed to net worth - Through cash-flow hedges (3.334) Through translation differences (9.200) (2.983) - Tax effect 834 (1.532) TOTAL INCOME AND EXPENSES RECORDED DIRECTLY AS NET EQUITY (II) (11.700) Sums transferred to the profit and loss account - Through cash-flow hedges Tax effect (1.159) (2.208) TOTAL TRANSFERS TO PROFIT AND LOSS ACCOUNT (III) TOTAL RECOGNISED INCOME AND EXPENSES (I+II+III) (7.823) Total revenue and expenses attributed to the Parent Company (8.439) Total revenue and expenses attributed to outside interests (*) Unaudited Information.

22 GRUPO ALDESA, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 B) CONSOLIDATED OVERALL STATEMENT OF CHANGES IN NET WORTH (Thousands of Euros) Issued Capital Share premium Parent Company Reserves Subsidiaries Reserves Result for the financial year Outside Interests Adjustments for changes in value Translation Difference TOTAL BALANCE AT THE END OF YEAR (19.049) (1.549) (36.769) (14.960) Total recognised income and expenses (2.983) Operations with shareholders - Distribution of results (20.817) Other movements CLOSING BALANCE AT SEPTEMBER 30, 2015 (*) (1.389) (25.550) (17.943) BALANCE AT THE END OF YEAR (1.127) (23.360) (17.495) Total recognised income and expenses (215) (9.200) (7.823) Operations with shareholders - Distribution of results (1.033) (2.591) Other movements (1.774) - (58) - - (1.832) CLOSING BALANCE AT SEPTEMBER 30, 2016 (*) (215) (569) (22.384) (26.695) (*) Unaudited Information.

23 GRUPO ALDESA, S.A. AND SUBSIDIARIES CONSOLIDATED CASH-FLOW STATEMENT CORRESPONDING TO NINE MONTHS PERIOD ENDED SEPTEMBER 30, 2016 AND 2015 (Thousand of Euros) 2016 (*) 2015 (*) CASH FLOW FROM OPERATING ACTIVITIES (I) ( ) (74.331) Result for financial year before tax 859 (7.380) Adjustments to the result: Amortisation of fixed assets Changes in fair value in financial instruments (111) - - Value corrections from impairment Changes in provisions (1.314) - - Grants recognised in the income statement (429) - - Results from deregistration and sales of fixed assets Results from deregistration and sales of financial investments (719) Financial Income (5.694) (7.715) - Financial expenses Exchange rate differences Results of companies by equity method (3) 58 - Other results (2.497) - Changes in working capital ( ) (82.561) - Stock (10.232) Debtors and other accounts receivable (48.980) (82.146) - Other current assets and current liabilities 236 (3.279) - Creditors and other accounts payable (58.223) (15.430) - Current and non-current provisions (2.952) Other non-current assets and liabilities (99) (95) Other cash flows from operating activities (55.960) (55.032) - Interest payments (52.981) (56.296) - Interest received Receipts (payments) through taxation of profits (8.399) (6.451) CASH FLOW FROM INVESTMENTS ACTIVITIES (II) (3.605) (23.639) Payments through investments (9.668) (35.381) - Intangible fixed assets (1.962) (1.888) - Property, plant and equipment (4.136) (19.027) - Related companies (117) - - Other assets (3.453) (14.466) Sums received through divestitures Property, plant and equipment Related companies Investment property Other assets CASH FLOW FROM FINANCING ACTIVITIES (III) (4.021) Sums received and paid through financial liability instruments (4.021) - Issuance (Return) of debts with credit institutions (1.306) - Issuance (Return) of debts with credit institutions through financial leasing (35) (429) - Issuance (Return) of debentures and other tradeable securities (20.239) - - Issuance (Return) of debts with credit institutions through project finance (2.601) (7.365) - Issuance (Return) of Other debts (555) - - Other non-current liabilities (23) EFFECT OF EXCHANGE RATE VARIATIONS (IV) (4.308) CASH AND EQUIVALENTS NET INCREASE/REDUCTION (I+II+III+IV) (99.974) ( ) Cash or cash equivalents at the beginning of the year Cash or cash equivalents at the end of the year (*) Unaudited Information.