annual accounts for the financial year 2016

Transcription

1 annual accounts for the financial year 2016

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5 Annual accounts and directors report for the financial year 2016 along with the auditor s report on the annual accounts 1. Auditor s report on the annual accounts Annual accounts for the financial year Annual report for the financial year Directors report for the financial year Proposal for the distribution of the result

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7 Fertiberia, S.A. auditor s report on the annual accounts 01 auditor s report on the annual accounts 7

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9 Fertiberia, S.A. auditor s report on the annual accounts 9

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11 Fertiberia, S.A. annual accounts annual accounts

12 Balance sheets at 31 december 2016 and 2015 Stated in thousand euros ASSETS Notes to the Report 31/12/ /12/2015 NON-CURRENT ASSETS 396, ,631 Intangible assets (Note 5) 3 7,751 Property, plant and equipment (Note 6) 148, ,109 Land and buildings 47,360 48,773 Technical installations and other tangible fixed assets 95,519 98,836 Fixed assets in progress and advances 5,585 4,500 Long-term investments in group and associate companies 230, ,732 Equity instruments (Note 7.3) 96, ,911 Loans to companies (Note 7.1.2) 134, ,821 Long-term financial investments (Note 7.1.2) 3,374 3,428 Loans to third parties 2,817 2,854 Other financial assets Deferred taxation assets (Note 11) 14,197 14,611 CURRENT ASSETS 365, ,974 Stocks (Note 8) 50,855 68,692 Trade debtors and other accounts receivable 92,294 91,972 Customers for sales and services (Note 7.1.2) 23,095 24,049 Customers - group and associate companies (Note & 17.1) 57,494 58,980 Sundry debtors (Note 7.1.2) 8,684 6,993 Personnel (Note 7.1.2) Other receivables from Public Administration (Note 11) 2,972 1,911 Current investments in group and associate companies 168, ,095 Equity instruments (Note 7.3) 9,314 11,628 Current liabilities with group and associate companies (Note & 17.1) 1,577 1,504 Other financial assets (Note & 17.1) 157, ,963 Current financial investments Loans to companies (Note 7.1.2) Other financial assets Current time adjustments 4,521 5,967 Cash and other equivalent liquid assets 48,953 90,892 Cash and banks (Note 7.1.1) 48,953 90,892 TOTAL ASSETS 761, ,605 The Company s Annual Accounts, which form a single unit, consist of these Balance Sheets, the attached Profit and Loss Accounts, Statement of Changes in Net Equity, Cash Flow Statements and the attached Annual Report, which consists of 19 Notes. 12

13 Balance sheets at 31 december 2016 and 2015 Stated in thousand euros NET EQUITY AND LIABILITIES Notes to the Report 31/12/ /12/2015 Fertiberia, S.A. annual accounts 2016 NET EQUITY 301, ,574 Shareholders funds (Note 7.4) 302, ,415 Capital 54,452 54,452 Subscribed capital 54,452 54,452 Share issue premium Reserves 283, ,805 Legal and statutory 20,147 20,147 Other Reserves 263, ,658 Negative results from prior years - - Result for the year (35,587) 11,954 Adjustments for value changes (1,140) (1,111) Grants, donations and legacies received (Note 15) NON-CURRENT LIABILITIES 106, ,977 Long-term provisions (Note 12) 41,691 41,975 Environmental actions 41,691 41,975 Long-term liabilities: 50, ,774 Amounts owing to credit entities (Note a) 8, ,463 Creditors under finance leases (Note a) 691 1,013 Derivatives (Note 7.2.2) 1,582 1,544 Other financial liabilities (Note b) 40,353 13,754 Long-term liabilities with group and associate companies (Note 17.1) 12,582 14,782 Deferred taxation liabilities (Note 11) 1,401 1,446 CURRENT LIABILITIES 353, ,054 Short-term provisions (Note 12) 10,103 8,109 Current Liabilities: 199, ,016 Amounts owing to credit entities (Note a) 191, ,670 Creditors under finance leases (Note a) Other financial liabilities (Note b) 7,615 6,983 Current liabilities with group and associate companies (Note & 17.1) 15,195 25,483 Trade creditors and other accounts payable ,724 Suppliers (Note 7.2.1) 44,041 67,503 Suppliers - group and associate companies (Note & 17.1) 61,717 56,908 Sundry creditors (Note 7.2.1) 16,544 14,289 Personnel (salaries outstanding) (Note 7.2.1) Other liabilities with Public Administrations (Note 11) 1,657 1,680 Current time adjustments 4,856 3,722 TOTAL NET EQUITY AND LIABILITIES 761, ,605 The Company s Annual Accounts, which form a single unit, consist of these Balance Sheets, the attached Profit and Loss Accounts, Statement of Changes in Net Equity, Cash Flow Statements and the attached Annual Report, which consists of 19 Notes. 13

14 Profit and loss accounts for the financial years 2016 and 2015 Stated in thousand euros Notes to the Report Net turnover (Note19) 474, ,753 Net sales 474, ,753 Variation in stocks of finished products and work in progress (13.716) 22,410 Company s own work capitalised Supplies (Note 13.a) (310,334) (455,793) Consumption of merchandise (83,566) (126,100) Consumption of raw materials and other consumables (227,139) (329,322) Impairment of goods, raw materials & other supplies 371 (371) Other operating revenues 9,277 2,766 Sundry income and other current income 9,153 2,150 Operating grants transferred to results for the year Personnel expenses (Note 13.b) (52,637) (53,172) Salaries, wages and similar (40,350) (40,714) Social charges (12,287) (12,458) Other operating expenses (122,987) (125,522) External services (112,233) (114,939) Taxes (2,191) (2,474) Other current operating costs (8,563) (8,109) Fixed assets amortisation and depreciation (Notes 5 & 6) (16,222) (17,125) Allocation of grants on non-financial fixed assets and others 7,850 6,964 Fixed asset impairments and results on disposals (Note 13.d) 1,762 (379) Results on disposals and others 1,762 (379) Other results 462 (234) OPERATING RESULT (21,615) 27,688 Financial revenues (Note 13.e) 5,309 9,686 Holdings in equity instruments in group and associate companies ,782 Negotiable securities and financial instruments, group and associate companies Revenues from negotiable securities and other third party financial instruments Financial expenses (Note 13.e) (11,223) (13,524) On amounts owing to group and associate companies (934) (1,872) On amounts owing to third parties (10,289) (11,652) Exchange differences (Note 10) (756) (5,823) Variation in the fair value of financial instruments (Note 7.1.3) - - Impairments and results on disposal of financial instruments (6.978) (4,473) Impairment and losses (Note 7.3) (6,978) (4,473) Results on disposal and others (Notes 7.3 & 7.1.3) - - FINANCIAL RESULT (13,648) (14,134) RESULT BEFORE TAX (35,263) 13,554 Corporate income tax (Note 11) (324) (1,600) RESULT FOR THE YEAR FROM ONGOING OPERATIONS (35,587) 11,954 RESULT FOR THE YEAR (35,587) 11,954 The Company s Annual Accounts, which form a single unit, consist of these Profit and Loss Accounts, the attached Balance Sheets, Statement of Changes in Net Equity, Cash Flow Statements and the attached Annual Report, which consists of 19 Notes. 14

15 Statement of changes in net equity a) Statement of recognised revenues and expenses for the financial years 2016 and 2015 Stated in thousand euros Fertiberia, S.A. annual accounts 2016 RESULT FROM THE PROFIT AND LOSS ACCOUNT (35,587) 11,954 Revenues and expenses allocated directly to net equity On cash flow hedging (1,574) (1,550) Grants 7,755 6,868 Tax effect (1,545) (1,490) TOTAL REVENUES AND EXPENSES ATTRIBUTED DIRECTLY TO NET EQUITY 4,636 3,828 Transfers to the profit and loss account On cash flow hedging 1,534 1,427 Grants (7,850) (6,964) Tax effect 1,578 1,550 TOTAL TRANSFERS TO THE PROFIT AND LOSS ACCOUNT (4,738) (3,987) TOTAL RECOGNISED REVENUES AND EXPENSES (35,689) 11,795 15

16 b) Statement of changes in net equity for the financial years 2016 and 2015 Stated in thousand euros Subscribed share capital Share issue premium Reserves Prior year losses Result for the year Adjustment for value changes Grants Total BALANCE 01/01/ , ,980 (3,705) 5,530 (1,019) ,779 Total recognised revenues and expenses ,954 (92) (67) 11,795 Operations with shareholders or owners - - (20,000) (20,000) Distribution of dividends - - (20,000) (20,000) Other variations in net equity - - 1,825 3,705 (5,530) Distribution of results (note 3) - - 1,825 3,705 (5,530) BALANCE 31/12/ , ,805-11,954 (1,111) ,574 BALANCE 01/01/ , ,805-11,954 (1,111) ,574 Total recognised revenues and expenses (35,587) (29) (73) (35,689) Operations with shareholders or owners Distribution of dividends Other variations in net equity ,954 - (11,954) Distribution of the result (note 3) ,954 - (11,954) BALANCE 31/12/ , ,759 - (35,587) (1,140) ,885 The Company s Annual Accounts, which form a single unit, consist of these Statements of Changes in Net Equity, the attached Balance Sheets, Profit and Loss Accounts, Cash Flow Statements and the attached Annual Report, which consists of 19 Notes. 16

17 Cash flow statements for the financial years 2016 and 2015 Stated in thousand euros CASH FLOWS FROM OPERATING EXPENSES Result for the year before tax (35.263) Adjustments to the result Fixed assets amortisation and depreciation Valuation corrections for impairment Variation of provisions Allocation of grants (7.850) (6.964) Results from fixed assets withdrawals and disposals (1.762) 379 Results from withdrawal and disposal of financial instruments - - Financial revenues (5.310) (9.686) Financial expenses Exchange differences Other revenues and expenses Changes in current capital (6.364) Stocks (23.475) Debtors and other receivables Other current assets (10.297) Creditors and other accounts payable (16.499) (93) Other current liabilities Other non-current financial assets and liabilities 85 (981) Other cash flows from operating activities (6.375) (6.817) Interest payments (11.223) (13.523) Dividend collection Interest collection Collections (payments) for corporation tax - (2.980) Other payments (collections) (462) - Cash flows from operating activities (9.534) CASH FLOWS FROM INVESTING ACTIVITIES Payments for investments (14,011) (22,079) Group and associate companies (180) (13,338) Intangible assets - (1,430) Property, plant and equipment (13,831) (7,298) Other financial assets - (13) Proceeds of divestments 9, Property, plant and equipment 2, Group and associate companies 7,439 - Other financial assets Cash flows from investing activities (4,318) (21,999) CASH FLOWS FROM FINANCING ACTIVITIES Collections and payments for equity instruments (102) (159) Grants, donations and legacies received (73) (67) Adjustments for value changes (29) (92) Collections and payments for financial liability instruments (27,229) (16,231) Amounts owing to credit entities (42,010) (29,176) Amounts owing to group and associate companies (12,488) 8,401 Other liabilities 27,269 4,544 Payments for dividends - (35) Cash flows from financing activities (27,331) (16,425) Effect of exchange rate variations (756) (5,824) NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS (41,939) (10,721) Cash or cash equivalents at the beginning of the year 90, ,613 Cash or cash equivalents at the end of the year 48,953 90,892 Fertiberia, S.A. annual accounts 2016 The Company s Annual Accounts, which form a single unit, consist of these Cash Flow Statements, the attached Balance Sheet, Profit and Loss Accounts, Statement of Changes in Net Equity and the Annual Report, which consists of 19 Notes. 17

18 2.1 Report for the financial year 2016 Note 1. The company s incorporation, business and legal regime a) Incorporation and Registered Office Fertiberia, S.A. (hereinafter Fertiberia, or the Company) is a commercial entity that arose from the merger by absorption of the companies Fertiberia, S.L. and La Industrial Química de Zaragoza, S.A. (Absorbed Companies) by Fesa Fertilizantes Españoles, S.A. (Absorbing Company) as per the merger deed dated 5 June 1997, registered in the Madrid Companies Register on 30 July 1997 The Company has its registered office in Madrid, Torre Espacio, Planta 48 Paseo de la Castellana, 259 D. It was incorporated as a limited company for an indefinite period on 20 July 1996 under the name Cros Fertiberia, S.A., changed on 20 June 1972 to Fosfórico Español, S.A. and on 23 January 1989 to Fesa Fertilizantes Españoles, S.A., finally adopting its current name of Fertiberia, S.A. on 5 June 1997 following the merger process described above. b) Business activity The Company s corporate purpose consists of the manufacture and sale of all classes of chemical products in general, acids, mainly sulphuric and phosphoric, fertilisers and any other products of use in agriculture, as well as all classes of products derived from the above, materials that are directly or indirectly necessary or suitable for their production, conservation and transformation and, in general, the sale of these, as well as any other activity related with the aforementioned corporate purpose c) Legal Regime The Company is governed by its articles of association and by the current Capital Companies Act. Note 2. Bases of presentation of the annual accounts a) True and fair view The have been obtained from the Company s accounting records and have been drawn up in accordance with current company legislation and the regulations established in the General Accounting Plan as approved by Royal Decree 1514/2007 of 16 November, with the application of the amendments introduced by Royal Decree 1159/2010 so as to give a true and a fair view of the Company s net assets, financial situation and results, as well as of the veracity of the flows incorporated in the cash flow statements. The annual accounts have been obtained from the Company s accounting records, as modified in 1996 for the effects of the balance sheet revaluation carried out under the provisions of Royal Decree Law 7/1996 of 7 June and are presented in accordance with the company and accounting legislation in force in Spain. 18

19 Given that the Company s annual accounts are to be integrated into the consolidated annual accounts of the Group headed by Grupo Villar Mir, S.A.U. (GVM), the company is not under the obligation to file consolidated annual accounts. However, the Company has prepared Consolidated Financial Statements under IFRS since the financial year Fertiberia, S.A. annual accounts 2016 b) Accounting Principles Applied The attached Annual Accounts have been drawn up applying the accounting principles laid down in the Commercial Code and in the General Accounting Plan. c) Comparative Information In accordance with company law, the Board of Directors presents, for comparative purposes, for each of the Balance Sheet, Profit and Loss account, Statement of Changes in Net Equity and the Cash Flow Statement for 2016 in addition for the previous financial year. The items for both financial years are comparable and homogenous. d) Presentation of the Annual Accounts In accordance with current legal regulations on accounting matters, the Annual Accounts are stated in thousand euros. e) Changes to accounting criteria No changes have been made to own accounting criteria. f) Responsibility for the information and estimates made The information contained in these annual accounts is the responsibility of the Company s Board of Directors. Estimates have been used in these annual accounts in order to evaluate some of the assets, liabilities, revenues, expenses and commitments that are recorded therein, with these estimates referring basically to the impairment losses on certain assets, the useful lives of non-current assets and the probability of occurrence of provisions. Despite these estimates being made on the basis of the best information available at the date these annual accounts were prepared, it is possible that future events might make it necessary to modify these in coming years 19

20 Note 3. Distribution of results The proposed distribution of the result obtained in the financial year 2016 and 2015, as drawn up by the Directors for submission to the Shareholders General Meeting for its approval is as follows: Thousand euros Basis for Distribution: Profit (Loss) obtained in the year (35,587) 11,954 (35,587) 11,954 Distribution To Voluntary Reserves - 11,954 To prior year losses (35,587) - (35,587) 11,954 Dividends In financial year 2016, no dividend distribution agreement has been made out of reserves. The Extraordinary General Meeting of Shareholders held on 23 December 2015 approved the decision to distribute a dividend of 20,000 thousand euros from reserves as proposed by the Board of Directors in its meeting held on 19 November Likewise it was agreed that the dividend payment that corresponds to the major shareholder Grupo Villar Mir for amount 19,965 thousand euros be carried out by means of compensating existing debit balances between both companies in virtue of the credit line contract, described in note Limitations on the distribution of dividends Under the provisions of current legislation, dividends can only be distributed against the result for the year or freely available reserves if the value of net equity is not, or is not as a consequence of the distribution, lower than the share capital. For these purposes profits directly assigned to net equity may not be distributed Dividends may not be distributed that reduce the amount of available reserves below the total of research and development costs that appear as an asset in the balance sheet. 20

21 Note 4. Valuation policies Fertiberia, S.A. annual accounts 2016 The valuation policies used by the Company in drawing up its Annual Accounts for the financial year 2016 are in accordance with those established by the General Accounting Plan and are as follows: a) Intangible asset This heading includes mainly The cost of the right to use the installations for the transfer of water to the Puertollano Industrial Estate from the Jándula and Montoro reservoirs, works undertaken by other companies and acquired by the Company and which was totally depreciated at 31 December 2016 (Note 5). b) Property, plant and equipment Property, plant and equipment are valued at cost price as revalued in accordance with Royal Decree Law 7/1996 of 7 June. Capital gains or net increases in the value resulting from revaluation operations are depreciated on a straight-line basis over the tax periods remaining for the completion of the useful life of the revalued assets. Depreciation of property, plant and equipment is calculated on the straight-line basis in function of the estimated useful lives of the assets. Years of useful life Annual Percentage Buildings 50 2% Technical installations and machinery % - 6% Spare parts for fixed assets % - 6% Other installations % - 10% Other property, plant and equipment % - 10% Upkeep and maintenance costs that do not constitute an improvement to items of property, plant and equipment or extend their useful life, are carried to results in the year in which they are incurred. The equivalent amount for the estimated costs of large repairs, is written off differently to that for the remaining corresponding items, over the period up until the following large repairs. When the large repairs are carried out, the cost is recognised in the accounting value of the fixed asset as a substitution at the same derecognising any amount associated with the previously recorded repairs, which might remain in the carrying value of the aforementioned fixed asset. The net carrying value assimilated with large repairs and included under the Technical Installations and Machinery headings amounts to 5,433 thousand euros (8,333 thousand euros in the previous financial year) and is depreciated over periods of between 3 and 10 years. At the year end the Company carries out a review to determine whether there are indications of value impairment to any item of property, plant or equipment or cash-generating unit, in which case an estimate is made of the recoverable amounts and any necessary value corrections are made. 21

22 c) Financial instruments Financial instruments comprise mainly long-term loans and holdings in group and associate companies. The Company only recognises a financial instrument in its balance sheet when it is converted into an obligatory part of the contract or legal business in question, in accordance with the provisions thereof. The Company determines the classification of its financial assets at the time of their initial recognition and, when this is permitted and appropriate, said classification is re-appraised at each balance sheet date. For the purposes of their measurement, financial instruments are classified into one of the following categories: 1. Loans and receivables and debits and payables. 2. Other financial assets and liabilities at fair value with changes through profit and loss. 3. Investments in the equity of group, associate and multi-group companies. 4. Held-for-trading financial assets Loans and receivables and debits and payables Loans and receivables Classified into this category are: a) Receivables for trade operations: financial assets arising from the sale of goods and the rendering of services for trade operations. b) Receivables for non-trade operations: financial assets that, not being equity instruments or derivatives, are not of trade origin, the collections on which are of a determined or determinable amount and which are not traded on an active market. Not included are those financial assets for which the Company cannot make substantial recovery of the whole initial investment for circumstances other than credit impairment. The latter are classified as available for sale. In line with generalised commercial practice, a part of the sales made by the Company is instrumented through commercial, paper accepted by national customers and through remittances and documentary credits granted by financial entities in the case of foreign customers. In the attached balance sheet, customer balances include discounted commercial paper pending maturity at 31 December 2015 and 2014, the counter-entry for the same amount appearing under the heading for Current liabilities Amounts owing to credit entities. Also, the Group withdraws from its balance sheet the customer balances for the amount of those assignments of receivables in which the Factor assumes the bad debt risk ( non-recourse factoring ). (Note d) The value impairment loss on loans and receivables corresponds to the difference between their carrying amount and the present value of future cash flows that are expected to be generated, as discounted at the effective rate of interest calculated at the time of their initial recognition. The Company follows the criterion of making provisions for bad debts that allow it to cover balances of a certain age, the risks inherent to the evolution of the sector or balances for which circumstances concur that make it reasonable to classify them as doubtful. 22

23 At 31 December 2016 and 2015, the provision for customer bad debts recorded by the Company amounted to 3,950 thousand euros (Note 7.1.2). This provision provides reasonable cover for the losses that might arise from total or partial non-recovery of debts, as estimated on the basis of the individual analysis of each of the outstanding balances receivable at that date. Fertiberia, S.A. annual accounts 2016 Debits and accounts payable Classified into this category are: a) Debits for trade operations: financial liabilities derived from the purchase of goods and services in trade operations. b) Debits for non-trade operations: financial liabilities that, not being derivative instruments, do not have a trade origin. Initially, the financial assets and liabilities included in this category, are measured at their fair value, which is the transaction price and which is equivalent to the fair value of the consideration paid over plus the directly attributable transaction costs. In subsequent valuations both assets and liabilities are measured at their amortised cost. Accrued interest is accounted for in the Profit and Loss Account using the effective interest method. Other financial assets and liabilities at fair value with changes through the Profit and Loss Account Included in this category are the Company s treasury balances, as well as other equivalent liquid assets, corresponding to financial instruments that are convertible into cash with maturity not exceeding three months. Investments in the equity of group and associate companies Holdings in group and associate companies are recorded at their acquisition price or at their net contribution value net of their corresponding depreciation, equivalent, as applicable, to the reduction in assets arising in those holdings. At 31 December 2016, the provisions for holdings in group and associate companies amounted to 91,755 thousand euros (87,091 thousand euros in the previous financial year) (Note 7.3). The amount of the valuation correction is determined as the difference between the carrying value and the recoverable amount, this being understood to be the proportional part of the net worth of the investee entity, as corrected by the latent capital gains in existence at the valuation date and corresponding to identifiable components in the investee company s balance sheet. Held-for-trading financial assets These are those acquired with the purpose of their sale in the short term or which form part of a portfolio of financial instruments managed jointly with the aim of obtaining gains in the short term. Financial assets and liabilities held for trading are measured initially at fair value, which is the transaction price and which is to be equivalent to the fair value of the consideration handed over. Transaction costs that are directly attributable to these are recognised in the Profit and Loss Account for the year. 23

24 In subsequent years they are measured at their fair value, without the deduction of transaction costs that might be incurred in their disposal. Changes arising in the fair value are transferred to the Profit and Loss Account for the financial year. d) Accounting hedges Accounting hedges are considered to be those that were designated as such at the initial moment, with available documentation relating to the hedging and which are considered to be highly effective. A hedging is considered to be highly effective if, at the beginning of and during its life, one can expect prospectively that the changes in fair value or in cash flows for the hedged part that are attributable to the hedged risk will be almost completely compensated by the changes in fair value or in the cash flows from the hedging instrument and that, retrospectively, the hedging results have oscillated within a variation range of eighty to one hundred and twenty-five per cent with respect to the result for the hedged item. These are hedges on exposure to the variation in cash flows that are attributable to a specific risk associated with recognised assets or liabilities or a highly probable foreseeable transaction, provided that this can affect the Profit and Loss Account. The part of the gain or loss on the hedging instrument deemed as effective hedging is recognised temporarily in net equity, being carried to the Profit and Loss Account in the financial year or years in which the forecast hedged operation affects the result, unless the hedging corresponds to a forecast transaction that is ultimately recognised in a non-financial asset or liability, in which case the amounts recorded under net equity are included in the cost of the asset or liability when this is acquired or assumed. e) Stocks Raw and Auxiliary Materials Stocks of raw and auxiliary materials are measured at average purchase price. Spare Parts The stocks of spare parts and other materials for consumption and replacement are measured at the weighted average cost of acquisition. Products in Process, Semi-finished and Finished Products These are measured at costs of production, which include the incorporated raw materials, direct labour, as well as the direct and indirect manufacturing costs, creating, where applicable, a provision for the difference between this value and the net realisable value, whichever is the lower. There was no provision for impairment in this respect at 31 December 2016 and Emission rights of greenhouse gases Emission rights of greenhouse gases assigned by the National Allocation Plan (EUAs), which are valued and charged to results in accordance with the Resolution of 8 February 2006 of the Institute of Accounting and Accounts Audit and the Resolution of May 28, 2013 of the Institute of Accounting and Accounts Audit. 24

25 Emission rights are initially recognized at their acquisition price. In the case of acquired rights without consideration or for an amount substantially lower than their market value, an income directly attributed to net equity is recognized at the beginning of the natural year to which they correspond, which is transferred to the profit and loss account as the allocation is made to expenses for the emissions associated with the rights received without consideration. Fertiberia, S.A. annual accounts 2016 The emission rights are not depreciated. However, they are subject to any necessary impairment corrections. These assets are derecognised on the occasion of their transmission to third parties, delivery or expiration. The emission of greenhouse gases results in the recognition of an expense in the profit and loss account for the financial year and the corresponding provision, since this is an expense for the financial year, clearly specified as to its nature, but which, at the closing date is indeterminate as to its exact amount. This provision is maintained until the company has to cancel the obligation through the delivery of the corresponding rights. The amount of said expenses and the correlative provision, is determined considering that the obligation will be canceled: a) Firstly, by means of allowances received for an allocation under the emissions scheme to which the undertaking or its installations are affected, which shall be allocated to the emissions made in proportion to the total emissions envisaged for the full period for which they have been assigned. The expenditure corresponding to this part of the obligation will be quantified based on the carrying value of the transferred rights. b) Then, by means of the remaining allowances included in the balance sheet of the company. The expenditure corresponding to this part of the obligation will be quantified, generally in accordance with the average price or weighted average cost method of said emission right. c) In the event that the emission of gases entails the need for the Company to acquire or generate emission rights, because the emissions realized exceed those that can be canceled either by the assigned rights that are attributable to those emissions, or by means of the remaining emission rights acquired or generated by the Company, the cost corresponding to the rights deficit is additionally considered. This expense is quantified according to the best possible estimate of the amount necessary to cover the rights deficit. Gas emission costs are included in item 7. Other operating expenses in the profit and loss account, and the related provisions are included under Short-term provisions in Current liabilities. The cancellation of the provision and the withdrawal of intangible assets are made in the following year, when the cancellation of the rights to the corresponding administrative registry is communicated. Greenhouse gas emission allowances acquired for the purpose of sale shall be accounted for in accordance with the criteria set forth in the stock accounting and valuation standard of the General Accounting Plan. When the future use of rights is not determined, at the time of incorporation into the company s equity these are classified as intangible assets. The initial classification will be modified whenever the function that the rights have in the company have changed. Contracts held for the purpose of receiving or delivering emission rights are accounted for using the criteria set forth in the registration and measurement standard for financial instruments. 25

26 Royal Decree 602/2016 of 2 December amending the General Accounting Plan approved by Royal Decree 1514/2007, of 16 November, establishes among other changes in regulations, in its first additional provision the carrying value of greenhouse gas emission allowances accounted for as intangible assets will be reclassified to inventories with effect from 1 January f) Balances and Transactions in Foreign Currency Transactions in foreign currency are accounted for at their equivalent in euros using the rates of exchange in application on the dates on which these are carried out. Exchange differences arising during the year by reason of effective collections and payments are accounted for directly as financial expenses (loss) or revenues (profit). Balances receivable and payable in foreign currencies are measured at the year end in accordance with the rate of exchange in force at the time. The corresponding difference is recorded in the Profit and Loss Account. Bank account balances in foreign currencies are measured at the year end in accordance with the rate of exchange in force at the time. The corresponding difference is recorded in the Profit and Loss Account. Non-trade debtor balances stated in foreign currencies corresponding to the collection rights derived from the debt owed by the Federal Republic of Yugoslavia for the sale of an ammonia plant (Note b) were not measured at the rate of exchange when the corresponding operation took place, but were measured at the rate of exchange in force at the 2002 year end, the year in which it reached an agreement on the refinancing of this debt. g) Classification of Balances According to Due Dates The classification between short and long-term takes into account the expected date for the Company s obligations and rights to fall due, be disposed of or be cancelled. Long-term is considered to be more than twelve months as from the year-end date. h) Corporate income tax The tax effect is recorded in the Profit and Loss Account or directly against Net Equity, depending on where the profits or losses giving rise to the tax are recorded. The tax on profits for each year contains both the current and, if applicable, any deferred tax. The amount for current tax is the amount to be settled by the Company as a consequence of its tax returns. The differences between the carrying amounts of assets and liabilities and their tax base, give rise to the deferred tax asset and liability balances, calculated using the foreseeable rate of tax at the time of reversal and in accordance with the manner in which it is rationally foreseen that the asset or liability is to be recovered or paid. The variations in the financial year in deferred taxation assets or liabilities are recognised in the profit and loss account or directly in net equity, as applicable. Deferred tax assets are only recognised to the extent to which it is probable that the company will have future taxable profits that will allow these assets to be applied. The carrying amounts of recorded deferred tax assets are analysed at each balance sheet date and the necessary adjustments are made to the extent that there exist doubts as to their future tax recoverability. 26

27 Likewise, an evaluation is made every year end of deferred taxation assets not recorded in the balance sheet, with these being recognised if their recovery against future tax profits has become probable. Fertiberia, S.A. annual accounts 2016 i) Revenues and expenses Revenues and expenses are accounted for on the accruals basis, i.e. when the real flow of goods and services they represent takes place, independently of the moment at which the monetary or financial flow derived from these occurs. Revenues from the sale of goods and from the supply of services are measured at the fair value of the consideration, received or receivable, derived from these which, barring evidence to the contrary, is the price agreed for these goods and services, after deducting any discount, price reduction or other similar amounts that the Company might grant, as well as the interest incorporated into the nominal value of the credits. Revenues from the sale of goods are only recognised when each and every one of the following conditions is satisfied: a) The material risks and rewards inherent to ownership of the goods, independently of their legal transfer, have been transferred to the buyer. b) The company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold. c) The amount of the revenues can be measured reliably. d) It is probable that the economic profits or returns derived from the transaction will flow to the Company. e) The costs incurred or to be incurred in respect of the transaction can be reliably measured. The Company follows the criterion of considering the above conditions to be complied with when an order is formalised as firm with the customer and establishing the corresponding safeguard clauses. j) Provisions and contingencies Obligations in existence at the year-end, as a result of past events from which there could derive harm to the Company s net equity and for which the amount and date of cancellation cannot be determined, are recorded in the balance sheet as provisions and are measured using the present value of the best possible estimate of the amount needed to settle the obligation or to transfer it to a third party. Included under this heading are the provisions for liabilities, which includes the estimated amount for meeting probable or certain liabilities arising from litigation in progress, sureties or other similar guarantees. The provision is made when the liability or obligation that determines the indemnity or payment arises. Adjustments arising from the updating of the provision are recorded as financial expenses as they accrue. In the case of provisions with a due date that is less than or equal to one year no type of discount is made, provided that the financial effect is not significant. The Company also discloses information, as applicable, on contingencies that do not give rise to a provision. 27

28 k) Assets of an environmental nature In accordance with the Institute of Accounting and Accounts Audit Resolution dated 25 March 2002, investments of an environmental nature are those that are incorporated into the Company s assets for long-term use in its activity and which have as their main purpose the minimization of the environmental impact and the protection and improvement of the environment, including the reduction or elimination of future contamination from the Company s operation. Also considered as expenses of an environmental nature are those incurred for the prevention, reduction or repair of damage to the environment, understood as being the natural surroundings, as well as those derived from environmental commitments or legal provisions in the field of the environment. l) Grants Non-refundable capital grants, as well as donations and legacies, are valued at the fair value of the amount granted or the good received. Initially, these are allocated directly to net equity and recognised in the Profit and Loss Account in proportion to the depreciation undergone during the period by the assets financed by these grants, unless these are assets not subject to depreciation, in which case they are carried to the result for the year in which their disposal or cancellation occurs. Grants intended for the cancellation of debts are allocated as revenues for the year in which the cancellation occurs, except if these are received in relation with a specific financing, in which case the allocation is made in function of the item financed. Grants of a refundable nature are recorded as long-term debts convertible into grants until they acquire the condition of non-refundable. Operating subsidies are credited to results for the year when they accrue. m) Related party transactions As a general rule, items that are the object of a transaction with related parties are measured initially at their fair value. Where applicable, if the agreed price for an operation differs from its fair value, the difference is recognised having regard to the economic reality of the operation. They are measured subsequently in accordance with the provisions set out in the corresponding rules. 28

29 n) Cash flow statements The expressions used in the cash flow statements have the following meanings: Fertiberia, S.A. annual accounts 2016 Cash or Equivalents: cash includes both cash on hand and sight deposits in banks. Cash equivalents are financial instruments that form part of the Company s normal treasury management, are convertible into cash, have initial due dates that are not in excess of three months and are subject to immaterial risks of changes in their value. Cash flows: inflows and outflows of cash or other equivalent resources, these being understood to be investments for a period of less than three months with high liquidity and low risk of alterations to their value. Operating activities: these are the activities that constitute the main source of the Company s ordinary revenues as well as other activities that cannot be classified as investment or financing. Investment activities: those of the acquisition, sale or disposal by other means of long-term assets and other investments not included under cash or cash equivalents. Financing activities: activities that produce changes in the size and composition of the net worth and in liabilities of a financial nature. 29

30 Note 5. Intangible assets The composition and movement on this heading during the financial years 2016 and 2015 are as shown below, in thousands of euros: 31/12/2015 Additions Withdrawals Transfers(*) 31/12/2016 At Cost: Industrial property 2, ,691 Other intangible assets 1,407 - (319) - 1,088 Gas emission units (EUAs) 7, (7,742) - 11,840 - (319) (7,742) 3,779 Accumulated depreciation: Industrial property (2,691) (2,691) Other intangible assets (1,398) (5) (1,085) (4,089) (5) (3,776) Net Intangible Assets 7,751 (5) (1) (7,742) 3 31/12/2014 Additions With-drawals Transfers 31/12/2015 At Cost: Industrial property 2, ,691 Other intangible assets 1, ,407 Gas emission units (EUAs) 6,378 7,582 (5,964) (254) 7,742 Gas emission allowances (CERs) (Note 13) (21) - Emissions reduction units (ERUs) (Note 13) 1,410 - (209) (1,201) - 11,880 7,603 (6,173) (1,470) 11,840 Accumulated depreciation: Industrial property (2,691) (2,691) Other intangible assets (1,390) (8) - - (1,398) (4,081) (8) - - (4,089) Net Intangible Assets 7,799 7,595 (6,173) (1,470) 7,751 * Transfers reflected in financial year 2016 correspond to the reclassification to the heading of stocks, with effect from 1 January 2016, of the balances of emission rights of gases, in accordance with the first additional provision of Royal Decree 602/2016 of 2 December, which amends the General Accounting Plan. Industrial property includes the cost of the right to use the installations for transferring water to the Puertollano Industrial Estate from the Jándula and Montoro reservoirs, undertaken by other companies and from which the Company has acquired this right. This cost was totally depreciated at 31 December 2016 and 31 December

31 Note 6. Property, plant and equipment Fertiberia, S.A. annual accounts 2016 The composition and movement in this heading during the financial years 2016 and 2015 are as shown below, in thousands of euros: 31/12/2015 Additions Withdrawals Transfers 31/12/2016 At Cost: Land and natural resources 6, ,834 Buildings 65,116 - (917) ,529 Technical installations 236,209 - (11,784) 11, ,523 Specific spare parts 12,760 - (130) 20 12,650 Machinery 53, ,507 Tooling 1, ,098 Other installations 29, ,075 30,997 Furniture 1, ,323 Computer equipment equipment 3, ,273 Transport elements 1,158 - (11) 19 1,166 Other property, plant and equipment 9,579 - (1,560) 39 8,058 Advances and fixed assets in progress 4,500 13,797 - (12,712) 5, ,114 13,831 (14,402) - 424,543 Accumulated depreciation: Buildings (23,143) (1,273) (24,002) Technical installations (165,048) (9,135) 11,034 - (163,149) Specific spare parts (11,368) (228) (11,470) Machinery (46,383) (1,169) - - (47,552) Tooling (879) (41) - - (920) Other installations (13,854) (3,705) - - (17,559) Furniture (951) (98) - - (1,049) Computer equipment (2,838) (59) - - (2,897) Transport elements (670) (58) 11 - (717) Other property, plant and equipment (7,871) (451) 1,558 - (6,764) (273,005) (16,217) 13,143 - (276,079) Net Property, Plant and Equipment 152,109 (2,386) (1,259) - 148,464 31

32 31/12/2014 Additions Withdrawals Transfers 31/12/2015 At Cost: Land and natural resources 6, ,800 Buildings 64, ,116 Technical installations 234,062 - (884) 3, ,209 Specific spare parts 12,947 - (271) 84 12,760 Machinery 53, ,448 Tooling 1, ,098 Other installations 27,767 1, ,922 Furniture 1, ,323 Computer equipment equipment 3,206 3 (8) - 3,201 Transport elements 1, ,158 Other property, plant and equipment 9, ,579 Advances and fixed assets in progress 1,474 5,782 - (2,756) 4, ,509 7,298 (1,163) 1, ,114 Accumulated depreciation: Buildings (21,877) (1,266) - - (23,143) Technical installations (155,833) (9,980) (165,048) Specific spare parts (11,069) (299) - - (11,368) Machinery (45,230) (1,153) - - (46,383) Tooling (845) (34) - - (879) Other installations (10,260) (3,594) - - (13,854) Furniture (853) (98) - - (951) Computer equipment (2,783) (60) 5 - (2,838) Transport elements (612) (58) - - (670) Other property, plant and equipment (7,296) (575) - - (7,871) (256,658) (17,117) (273,005) Net Property, Plant and Equipment 160,851 (9,819) (393) 1, ,109 The additions for the financial year 2016 correspond mainly to investments made in production installations for the factories in Avilés amounting to 1,705 thousand euros, in Palos for 5,588 thousand euros and in Puertollano for 5,511 thousand euros. The most significant withdrawals in 2016 relate mainly to production facilities at the Puertollano plant, which were fully depreciated for the amount of 5,070 thousand euros; and to the withdrawal of the MAP and DAP plants of the Huelva factory with a net carrying value at 31 December 2016 of 1,239 thousand euros. The additions for the financial year 2015 corresponded mainly to investments made in production installations for the factories in Huelva amounting to 578 thousand euros, Avilés for 582 thousand euros, Palos for 2,468 thousand euros, Puertollano for 2,998 thousand euros and Sagunto for 383 thousand euros. 32

33 Phosphogypsum pools concession of Huelva The following is of note as regards the concessions granted by the General Directorate for Coasts and used by the Huelva factory for depositing the phosphogypsum generated as a result of the process for manufacturing phosphoric acid: Fertiberia, S.A. annual accounts 2016 In January 2004 the Ministry for the Environment notified Fertiberia of the Ministerial Order of 27 November 2003 declaring said concessions to be expired and alleging certain non-compliance, this being confirmed by the National High Court in June Fertiberia has thus exhausted the judicial routes, as is confirmed by the aforementioned Ruling. Subsequently, the State Attorney s Office requested the provisional enforcement of the Ruling and established a series of measures to be carried out by Fertiberia such as ceasing the tipping, commencing the work on environmental regeneration and the setting-up of a guarantee of 21.9 million euros in respect of the environmental regeneration. As a result of the aforementioned decisions, on 31 December 2010 the Company ceased the production of phosphoric acid and sulphuric acid, with these plants ceasing to operate as a consequence. Since then Fertiberia, S.A. has used the international markets for sourcing the phosphoric acid that is necessary for the production of NPKs, DAP and MAP. In parallel, and in compliance with the above, Fertiberia, S.A. presented the Secretariat for Climate Change a surety bond for an amount of 15,664 thousand euros on 14 July 2011, plus mortgage guarantees on the Villalar and Pancorbo warehouses for amount of 6,236 thousand euros and all valid for five years. Another of the measures adopted by Fertiberia, was to start up the stored water recovery plant as a prior and necessary phase for the replanting and recovery of the zone, which has been developed during previous years. In parallel, advances have been made jointly with the corresponding Administrations in the preparation of a basic engineering project, carried out by the US company ARDAMAN - specialised in pool recovery projects - which has served as the basis for developing the detailed engineering project that has been carried out by EPTISA. Both projects were presented before the National High Court, in November 2014, prior to their presentation to the Central Administration in compliance with the ruling handed down by the National High Court, and to the Autonomous Region Administration, awaiting a ruling on the suitability of the aforementioned project. (Note 11) On 22 April 2015 the Administrative Chamber issued a ruling requesting the presentation by Fertiberia of complementary studies to verify the suitability of the project for closure of the phosphogypsum pools petitioned by the Ministry of Agriculture, Food and the Environment, the Company has present all the required studies at date of formulation of these Annual Accounts. On 8 May 2015 WWF-ADENA submitted a written request to extend the guarantee granted by Fertiberia in quantity and time that assures the correct execution of the environmental regeneration works. By court ruling on 21 July 2015 Fertiberia was required, before 1 December 2015, to guarantee, by any means admitted in law, the execution of the environmental regeneration works for the amount of 65.9 million euros and the completion of these works for the amount presented to the Ministry for the project by Fertiberia. This order was appealed in cassation before the Supreme Court, an appeal that has been declared inadmissible by order dated 17 November However, Fertiberia, S.A. has initiated an incident of request for modification of the amount to be guaranteed. 33

34 Totally depreciated items in use The following is the detail by headings at 31 December 2016 and 2015 of the most significant totally depreciated assets still in use, indicating their cost value, stated in thousand euros: Buildings Technical installations and machinery 21,138 26,208 Machinery Tooling Other installations Furniture Data processing equipment Vehicles Other property, plant and equipment 5,133 6,691 27,823 34,448 Other information Included in the amount accounted for as property, plant and equipment there are assets for a carrying value of 1,558 thousand euros at 31 December 2016 under finance leases (1,866 thousand euros at 31 December 2015). The Company has formalised insurance policies to cover the possible risks to which the various items of its fixed assets are subject, it being understood that these policies provide sufficient cover for the risks to which they are exposed. 34

35 Note 7. Financial instruments 7.1 Financial assets Fertiberia, S.A. annual accounts 2016 The detail of financial assets, except for investments in the equity of group, multi-group and associate companies, which are disclosed in Note 7.3, is as follows: 31/12/ /12/2015 Categories Non-current Current Non-current Current Cash and other equivalent liquid assets (Note 7.1.1) - 48,953-90,892 Loans and receivables (Note 7.1.2) 137, , , , , , , , Cash and other equivalent liquid assets The detail of these assets is as follows, in thousand euros: Cash and Equivalent Assets 31/12/ /12/2015 Current accounts 48,925 90,863 Cash ,953 90,892 The return on these assets is based on variable daily or short-term interest rates. Because of their high liquidity the fair value of these assets coincides with their carrying value. 35

36 7.1.2 Loans and receivables The following is the composition of this heading at 31 December 2016 and 31 December 2015, in thousand euros: 31/12/ /12/2015 Financial assets Long-term Short-term Long-term Short-term Receivables on trade operations Customer - 23,095-24,049 Group company customers (Note 17.1) - 57,494-58,980-80,589-83,029 Receivables for non-trade operations Loans to group companies (Note 17.1) (a) 134, , , ,467 Loans to other companies 1, , Receivables on fixed assets disposals (b) 1, , Loans to personnel Deposits from other companies , , , ,561 Deposits Time deposits Other debtors (c) 8,684-6, , ,294 Total 137, , , ,884 At 31 December 2016 the customers receivables balances includes impairments for insolvency risks for an amount of 3,950 thousand euros (3,950 thousand euros at the previous financial year-end). No valuation corrections were made for impairments to financial assets during the financial years 2016 and a) Long-term loans to group companies On 28 December 2006 the Fertiberia S.A. signed a Current Account Loan with Grupo Villar Mir, S.L. (GVM) to put funds at its disposal that will allow it to meet its treasury requirements up to the amount of the limit drawn down, falling due on 27 December 2016, date on which it will be tacitly extended for additional annual periods if not expressly terminated by the grantor, and with an interest rate of Euribor %, payable annually. At 31 December 2016 this credit line was drawn down by an amount of 131,198 thousand euros (141,771 thousand euros in the previous year), being classified in the long-term assets of the balance sheet as it is estimated that its repayment will not occur during financial year b) Loans for the disposal of fixed assets - Yugoslavia Plant This corresponds to the collection right with Serbia Montenegro for the sale of an ammonia plant in 1978 by a consortium in which the Parent Company had an 80% holding, the plan being for this to be collected in two annual collections up until the financial year Of the original collection rights 95% was insured by CESCE (the Spanish Export Credit Insurance Company) and fully paid by it, applying a rate of exchange of 2,523 US$/EUR. 36

37 As for the part not insured by CESCE (the remaining 5%), which was due and unpaid, when CESCE signed, in 2002, a debt refinancing agreement with the Federal Republic of Yugoslavia, it undertook to pay over this outstanding 5% over the same schedule as that agreed in the refinancing. Fertiberia, S.A. annual accounts 2016 Due date Thousand USA dollars Years 2002 to 2016 (a) 757 Years 2017 to ,151 2,908 (a) 100% collected at 31 December As regards the 95% already collected, CESCE is to pay over the exchange gains arising between the 2,523 US$/EUR and the rate of exchange in force on the dates of effective collection in accordance with the aforementioned refinancing agreement. Where applicable, these collection rights are to be booked as a credit to exceptional results at the time of their collection (see note 12.d). At 31 December 2016 there remained outstanding a balance on this item of 1,051 thousand euros (1,092 thousand euros in the previous financial year). c) Other debtors At 31 December 2016 this heading included an amount of 4,774 thousand euros (4,649 thousand euros at 31 December 2015) as part of a grant approved by the Junta de Andalucía for the ERE (Redundancy procedures) 52/2009, affecting the Huelva factory and which the Company has advanced as guarantee for paying the complementary amounts committed with the affected employees until such time that the Junta de Andalucía pays over the aforementioned grant. At 31 December 2016 the complementary amounts committed with the affected employees and pending payment until the Junta de Andalucia pays over the grant amounts to 141 thousand euros. (276 thousand euros in the previous financial year) Also included under this heading at 31 December 2016 is the amount of 2,209 thousand euros corresponding to the deferred collection for the sale of the Huelva phosphate plant (see note 6). d) Other information on financial assets As indicated in note 4.c the Company withdraws from its balance sheet the customer balances for the amount of those assignments of receivables in which the Factor assumes the bad debt risk ( non-recourse factoring ). At 31 December 2016 the overall amount withdrawn from the balance sheet as a result of these non-recourse factoring operations amounted to 37,206 thousand euros (60,844 thousand euros in the previous financial year). 37

38 There were no impairments to long-term loans with other companies at 31 December 2016 and Categories 31/12/2015 Additions With-drawals Current transfers Accrued interest 31/12/2016 Loans to group companies (Note 17.1) (a) 143,821 38,937 (49,021) ,068 Loans to other companies 1, (21) - 1,415 Receivables on disposal of fixed assets (b) 1, (42) - 1,009 Personnel loans (337) Impositions and others Deposits (17) Total 147,249 39,300 (49,375) (63) , Financial Liabilities The detail of long-term financial liabilities is as follows, in thousand euros: 31/12/ /12/2015 Financial Liabilities Amounts owing to credit entities Derivatives and Others Total Amounts owing to credit entities Derivatives and Others Total Debits and payables (Note 7.2.1) 8,732 40,353 49, ,476 13, ,230 Amounts owing to group companies (Note 17.1) - 12,582 12,582-14,782 14,782 Hedging derivatives (Note 7.2.2) - 1,582 1,582-1,544 1,544 8,732 54,517 63, ,476 30, ,556 The detail of current financial liabilities is as follows, in thousand euros: 31/12/ /12/2015 Financial Liabilities Amounts owing to credit entities Derivatives and Others Total Amounts owing to credit entities Derivatives and others Total Debits and payables (Note 7.2.1) 191, , , , , ,060 Amounts owing to group companies (Note 17.1) - 15,195 15,195-25,483 25, , , , , , ,543 38

39 7.2.1 Debits and accounts payable The following is the detail of these at 31 December 2016 and 31 December 2015, in thousand euros: Fertiberia, S.A. annual accounts /12/ /12/2015 Non-Current Current Non-Current Current On trade operations: Suppliers - 44,041-67,503 Suppliers, group companies (Note 17,1) - 61,717-56,908 Creditors - 16,544-14, , ,700 On non-trade operations Amounts owing to credit entities (Note 7,2,1,a) 8, , , ,670 Liabilities for finance leases , , , , ,033 Liabilities with group companies (Note 16,1) 12,582 15,195 14,782 25,483 Fixed assets suppliers - 4,003-4,903 Other liabilities (Note 7,2,1,b) 40,353 3,612 13,754 2,080 40,353 7,615 13,754 6,983 Personnel (salaries outstanding) Total 61, , , ,543 Given the nature of the financial liabilities included in this category, the Company considers that their carrying value constitutes an acceptable approximation to fair value. On 31 December 2016 in the heading Creditors includes an amount of 16,948 thousand euros that is in payment management/confirming with bank entities (29,771 thousand euros at the close of the previous financial year). a) Amounts owing to credit entities The detail for Amounts Owing to Credit Entities at the 2016 and 2015 year-ends is as follows, in thousand euros: 31/12/ /12/2015 Limit Noncurrent Current Total Limit Noncurrent Current Total Loans and long-term leases 142,049 8, , , , ,476 41, ,886 Credit facilities 109,000-64,361 64, ,104-72,274 72,274 Liabilities for discounted paper 12, , , , , , , ,509 39

40 The maturity profile for Amounts Owing to Credit Entities at 31 December 2016 is as indicated below: o + Total Loans and long-term leases 127,117 6,514 1, ,849 Credit facilities 64, ,361 Liabilities for discounted paper ,767 6,514 1, ,499 At financial year-end 2016, all outstanding debt for the syndicated loan was classified in the short-term as a result of the non-compliance with two of the financial ratios established in the obligations of the contract in accordance with the provisions of financial reporting standards applicable. The profile of the maturities of the syndicated loan, taking into account what is indicated in note 16, correspond to the following table: o + Total Syndicated loan 30,000 30,000 58, ,199 30,000 30,000 58, ,199 The maturity profile for Amounts Owing to Credit Entities at 31 December 2015 is as indicated below: o + Total Loans and finance leases 41,410 34,646 34,079 59, ,886 Credit facilities 72, ,274 Liabilities for discounted paper ,033 34,646 34,079 59, ,509 The detail of long-term financial liabilities at 31 December 2016 is as follows, in thousand euros: Initial Amount Reference interest rate Due date Current Non-current Total Syndicated credit facility 180,000 Euribor 24/07/ , ,199 Banco Popular 6,000 Euribor 07/10/2018 3,400 2,547 5,947 BBVA Variable Interest interestvariable 2,188 Euribor 27/12/ BBVA Fixed Interest 2,188 Fixed 27/12/ Targobank 2,000 Euribor 04/12/ ,029 Caixa Geral 5,000 Euribor 27/05/2019 1,748 2,420 4,168 Ibercaja 2,000 Euribor 31/07/ ,304 Liberbank 2,500 Euribor 09/04/ ,192 1,689 Caja España 2,000 Euribor 08/04/2018 1, ,321 Finance leases , ,117 8, ,859 40

41 The detail of long-term financial liabilities at 31 December 2015 is as follows, in thousand euros: Initial Amount Reference interest rate Due date Current Non-current Total Fertiberia, S.A. annual accounts 2016 Syndicated credit facility 180,000 Euribor 24/07/ , , ,494 Banco Popular 15,000 Euribor 10/04/2016 7,469-7,469 BBVA Variable Interest 2,188 Euribor 27/12/ ,444 BBVA Fixed Interest 2,188 Fixed 27/12/ ,094 1,641 Targobank 2,000 Euribor 04/12/ ,026 1,518 Caixa Geral 5,000 Euribor 27/05/ ,141 4,974 Ibercaja 2,000 Euribor 31/07/ ,303 1,793 Liberbank 2,500 Euribor 09/04/ ,690 2,177 Finance leases 363 1,013 1, ,876 41, , ,886 Syndicated Finance On 24 July 2014 Fertiberia signed a new syndicated credit facility for a total amount of up to 180,000 thousand euros (the Long-term Financing ). The loan draw-down coincided with the cancellation of the previous syndicated finance, the previous bilateral loan and a part of the short-term financial liability. Nine financial entities participate in the new facility, with the following being the distribution by tranches: Tranche A for a total maximum amount of 150,000 thousand euros. The purpose of this tranche is the re-financing of the long-term debt, with the Syndicated Loan and the bilateral loan formalised on 9 March 2012 being cancelled. Tranche B for a total maximum amount of 30,000 thousand euros. This was a revolving type tranche, the purpose of which is to cover the Company s general requirements The following are the main characteristics of the Long-term Finance: Interest: the interest rate is linked to EURIBOR plus a differential that is determined annually in line with the (Net Debt/EBITDA) ratio. Maturity date: the planned due date is 24 July Repayment: the planned repayment schedule is as follows: 41

42 Due Tranche A Thousand euros Tranche B January ,000 - July ,000 - January ,000 - July ,000 - January ,000 - July ,000 - January ,000 - July ,000 30,000 The subsidiary companies Agralia Fertilizantes S.L.U., Fertiberia Andalucía, S.A.U., Fertiberia Castilla-León, S.A.U., Fertiberia La Mancha, S.L.U., Química del Estroncio, S.A.U. and Fercampo, S.A., along with Grupo Villar Mir, S.A.U. are guarantors for Fertiberia, S.A. in the aforementioned finance contract. The syndicated credit facility includes a covenant for accrediting compliance with a series of financial ratios, as well as having other clauses that are usual in this type of contract (declarations, guarantees, obligations to take and refrain from actions, causes for early maturity, etc.). At financial year-end 2016, two of these financial ratios have not been complied with, although what is described in note 16 should be taken into account. As a result of this non-compliance at financial year-end 2016, the entire debt was classified in the short-term. Under the obligation established in the financing contract, 30 July 2014 between Fertiberia and the financial entities entered into a tailored (OTC) interest rate swap (IRS) for hedging the interest rates risk associated with the financing, the fixed notional amount being 75,000 thousand euros up until the month of January 2015, and variable as from then until maturity using the repayment curve for both tranches. Interest Rate Hedging (thousand euros) As from Until Notional July 2014 January ,000 January 2015 July ,500 July 2015 January ,000 January 2019 July ,000 42

43 b) Other liabilities for non-trade operations The following is the detail of other liabilities at 31 December 2016 and 31 December 2015, in thousand euros: Fertiberia, S.A. annual accounts /12/ /12/2015 Non-current Current Total Non-current Current Total Ministry of Education and Science CDTI (Centre for Industrial Technological Development) 2, ,620 2, ,904 Ministry for Industry, Tourism and Trade 1, ,700 1, ,836 Ministry of Industry and Energy (a) 28,759-28,759 4,471-4,471 Ministry for Science and Innovation ERE Huelva Other liabilities I.D.A.E. (Institute for the Diversification and Saving of Energy) Deferral of Social Security settlements ERE Cartagena (*) 6,455 1,782 8,237 2, , ,621 1, ,472 40,353 3,612 43,965 13,754 2,080 15,834 The Company has various loans at zero interest rates granted by public administrations; these are accounted for at nominal value as it is estimated that the profit arising on the difference with the corresponding fair values is not representative. (a) In financial year 2016, several loans were formalized with the Ministry of Industry and Energy with a fixed interest rate of 4.09% (b) On 22 November 2013 the Contentious-Administrative Chamber of the Murcia Superior Court of Justice rejected the appeal presented against Judgement no. 24 of 22 February 2013 handed down by the Murcia Contentious-Administrative Court no. 4, becoming firm as stated in the Contentious-Administrative appeal 193/2009, filed against the Resolution of the Murcia Provincial Employment and Social Security Inspection dated 13 October 2008 ruling as null the administrative actions enabling the extinguishing of the labour relationship of the employees affected by the Social Security contributions settlement no , obliging the reinstatement of the situation prior to the extinguishing of the contracts with the existence of the obligation to contribute for this period. The amount derived from the aforementioned assessment amounted to 5,326 thousand euros, which was recorded as an exceptional charge in the financial year During the financial period 2014 the company paid 1,601 thousand euros corresponding to non-deferrable contributions and has requested the deferral of the liability for the remaining contributions. The deferral was conceded by the TGSS on 20 May 2014, establishing a schedule for monthly payments with final due date in May At 31 December 2016 the contributions pending payment amounted to 1,621 thousand euros (2,472 thousand euros at 31 December 2015). The following is the detail of the due dates for Other liabilities, non-trade operations at 31December 2016: Over 5 years Ministry of Education and Science CDTI (Centre for Industrial Technological Development) Ministry for Industry, Tourism and Trade Ministry of Industry and Energy (a) ,108 4,108 19,904 Ministry for Science and Innovation ERE Huelva Other liabilities I.D.A.E. (Institute for the Diversification and Saving of Energy) Deferral of Social Security settlements ERE Cartagena (*) 1,782 1,625 1,366 1,234 1,017 1, ,612 2,898 2,885 6,021 5,672 22,877 43

44 The following is the detail of the due dates for Other liabilities, non-trade operations at 31December 2015: Over 5 years Ministry of Education and Science CDTI Ministry for Industry, Tourism and Trade ,020 Ministry of Industry and Energy ,193 Ministry for Science and Innovation ERE Huelva ERE Huelva I.D.A.E Deferral of Social Security settlements ERE Cartagena Other liabilities ,080 2,134 2,124 1,758 1,654 6, Interest rate hedging derivatives At 31 December 2016 the Company had contracted the following derivatives for cash flow hedging (variable interest rate risk), in thousand euros: Underlying Description of the Hedging/ Negotiation Fair value 31/12/2016 Due date New Syndicated Credit Facility- BBVA Variable to fixed swap (70) 24/07/2019 New Syndicated Credit Facility- Popular Variable to fixed swap (184) 24/07/2019 New Syndicated Credit Facility- Sabadell Variable to fixed swap (106) 24/07/2019 New Syndicated Credit Facility- Santander Variable to fixed swap (220) 24/07/2019 New Syndicated Credit Facility- Bankia Variable to fixed swap (193) 24/07/2019 New Syndicated Credit Facility- Bankinter Variable to fixed swap (171) 24/07/2019 New Syndicated Credit Facility- Caixabank Variable to fixed swap (172) 24/07/2019 New Syndicated Credit Facility- Rabobank Variable to fixed swap (172) 24/07/2019 New Syndicated Credit Facility- HSBC Variable to fixed swap (294) 24/07/2019 (1,582) 44

45 At 31 December 2015 the Company had contracted the following derivatives for cash flow hedging (variable interest rate risk), in thousand euros: Fertiberia, S.A. annual accounts 2016 Underlying Description of the Hedging/ Negotiation Fair value 31/12/2015 Due date New Syndicated Credit Facility- BBVA Variable to fixed swap (69) 24/07/2019 New Syndicated Credit Facility- Popular Variable to fixed swap (180) 24/07/2019 New Syndicated Credit Facility- Sabadell Variable to fixed swap (103) 24/07/2019 New Syndicated Credit Facility- Santander Variable to fixed swap (215) 24/07/2019 New Syndicated Credit Facility- Bankia Variable to fixed swap (188) 24/07/2019 New Syndicated Credit Facility- Bankinter Variable to fixed swap (166) 24/07/2019 New Syndicated Credit Facility- Caixabank Variable to fixed swap (168) 24/07/2019 New Syndicated Credit Facility- Rabobank Variable to fixed swap (169) 24/07/2019 New Syndicated Credit Facility- HSBC Variable to fixed swap (286) 24/07/2019 (1,544) The derivative instruments included in the above tables were tailor designed (OTC) for the loan they are hedging and comply with the requirements detailed in Note 4.d) for consideration as hedging. The main characteristics are described in note a. 45

46 7.3 Group and associate companies The holdings in Group and Associate companies at 31 December 2016 are as follows, in thousand euros: Company % Direct Holding Cost Impairments Net value 31/12/2016 Group companies: Química del Estroncio, S.A. 100% 68,933 (57,857) 11,076 Fertiberia Andalucía, S.A. 100% 11,466 (9,938) 1,528 Fertiberia La Mancha, S.L. 100% 8,477 (6,853) 1,624 Agralia Fertilizantes, S.L. 100% 7,677-7,677 Fertiberia Castilla León S.A. 100% 21,231 (17,092) 4,139 El Bahia Fertilizer, SPA 51% 7,152-7,152 Agronomía Espacio, S.A. 100% Agrokem, S.A. 100% 60 (15) 45 ADP Fertilizantes, S.A. 100% 52,000-52,000 Fercampo, S.A. 100% 8,994-8,994 Fertiberia France, S.A.S. 100% 1,500-1, ,550 (91,755) 95,795 Associate companies: Incro, S.A. 50% 2-2 La Almazara 24% Total 188,182 (91,755) 96,427 Note: in all cases the percentage holdings correspond to the percentages of voting rights held. None of the companies in which the Company has a holding is listed on a Stock Exchange. The summary of the main investee companies net equities as per their annual accounts is as follows at 31 December 2016, in thousand euros: Company Share Capital Reserves Result for the Year Other Net Equity items Total Operating results Group companies: Química del Estroncio, S.A. 11,454 (2,074) (1,564) 449 8,265 (1,972) Fertiberia Castilla León, S.A. 1,458 5,241 (2,560) - 4,139 (2,280) Fertiberia Andalucía, S.A. 2,930 (488) (917) 1 1,526 (1,088) Fertiberia La Mancha, S.L. 1,275 1,535 (1,186) - 1,624 (1,479) Agralia Fertilizantes, S.L. 3,800 5, , ADP Fertilizantes, S.A. (1) 35,050 6, , Fercampo, S.A , , Fertiberia France, S.A.S 706 (939) (3,105) - (3,338) (2,998) 57,499 18,495 (7,971) ,478 (7,401) (1) This corresponds to the Consolidated Net Equity of ADP Fertilizantes. 46

47 The recoverable amount from investments in group and associate companies was obtained from the value of their net worth at the end of each financial year, with the exception of the companies ADP Fertilizantes, S.A., Química del Estroncio, S.A., Fertiberia France, S.A.S. and Fercampo, S.A.U., the recoverable value of which has been estimated using generally accepted valuation techniques. Fertiberia, S.A. annual accounts 2016 The holdings in Group and Associate companies at 31 December 2015 are as follows, in thousand euros: Company % Direct Holding Cost Impairments Net Value 31/12/2015 Group companies: Química del Estroncio, S.A. 100% 68,933 (57,857) 11,076 Fertiberia Andalucía, S.A. 100% 11,466 (9,020) 2,446 Fertiberia La Mancha, S.L. 100% 8,477 (5,667) 2,810 Agralia Fertilizantes, S.L. 100% 7,677-7,677 Fertiberia Castilla León S.A. 100% 21,231 (14,532) 6,699 El Bahia Fertilizer, SPA 51% 7,152-7,152 Agronomía Espacio, S.A. 100% Agrokem, S.A. 100% 60 (15) 45 ADP Fertilizantes, S.A. 100% 52,000-52,000 Fercampo, S.A. 100% 8,994-8,994 Fertiberia France, S.A.S. 100% 1,500-1, ,550 (87,091) 100,459 Associate companies: Incro, S.A. 50% 2-2 La Almazara LA Organic, S.L. 24% Total 188,002 (87,091) 100,911 Note: in all cases the percentage holdings correspond to the percentages of voting rights held. None of the companies in which the Company has a holding is listed on a Stock Exchange. 47

48 The summary of the main investee companies net equities as per their annual accounts is as follows at 31 December 2015, in thousand euros: Company Share Capital Reserves Result for the Year Other Net Equity items Total Operating results Group companies: Química del Estroncio, S.A. 11,454 (1,180) (894) - 9,380 (1,196) Fertiberia Castilla León, S.A. 1,458 7,446 (2,205) - 6,699 (258) Fertiberia Andalucía, S.A. 2,930 (346) (141) - 2,443 (53) Fertiberia La Mancha, S.L. 1,275 1, , Agralia Fertilizantes, S.L. 3,800 4, ,851 1,396 ADP Fertilizantes, S.A. (1) 35,050 5,581 3,100-43,731 9,455 Fercampo, S.A , ,824 1,275 Fertiberia France, S.A.S (939) - (233) (861) 57,499 20, ,505 10,335 (1) This corresponds to the Consolidated Net Equity of ADP Fertilizantes. Summarised below are the registered offices and the activities carried out by the companies in which there are holdings: Company Registered Office Business activities Group companies: Química del Estroncio, S.A. Madrid Manufacture & sales of strontium Fertiberia Andalucía, S.A. Cordoba Fertiliser sales Fertiberia La Mancha, S.L. Cuenca Fertiliser sales Agralia Fertilizantes, S.L. Huesca Manufacture of liquid fertilisers Fertiberia Castilla León S.A. Madrid Sale, warehousing and distribution of fertilisers ADP Fertilizantes, S.A. Lisbon Fertiliser manufacture El Bahia Fertilizer, SPA Algiers Manufacture and sale of ammonia Fercampo, S.A. Malaga Fertiliser sales Fertiberia France, S.A.S. Paris Fertiliser sales The investment in the company El Bahia Fertilizer, SPA corresponds to the initial disbursement equivalent to 25% of the subscribed capital on the incorporation of this company, which plans to build a new ammonia plant in Algeria. During financial year 2016, the only increase in holdings in group and associated companies corresponds to a monetary contribution made in La Almazara - LA Organic, S.L. for the amount of 180 thousand euros. The following were the acquisitions and increases of holdings made during 2015: On 12 February 2015 the Company made a capital increase in the company Química del Estroncio, S.A.U. for an amount of 807 thousand euros with an issue premium of 5,193 thousand euros. On 12 February 2015 the Company made a capital increase in the company Fertiberia Andalucía, S.A. for an amount of 15 thousand euros with an issue premium of 985 thousand euros. On 30 June 2015 the Company made a capital increase in the company Fertiberia France, S.A.S for an amount of 1,463 thousand euros and subsequently made a capital reduction by compensation of losses for an amount of 793 thousand euros. 48

49 No disposals of holdings in group and associate companies were made during 2016 and The following is the detail of the value corrections due to impairments, as well as the provisions and reversals carried out in 2016, in thousand euros: Fertiberia, S.A. annual accounts 2016 Company Cost of investment Impairment corrections 31/12/2015 Charges Reversals Impairment corrections 31/12/2016 Net Value 31/12/2016 Group companies: Química del Estroncio, S.A. 68,933 (57,857) - - (57,857) 11,076 Fertiberia Andalucía, S.A. 11,466 (9,020) (918) - (9,938) 1,528 Fertiberia La Mancha, S.L. 8,477 (5,667) (1,186) - (6,853) 1,624 Agralia Fertilizantes, S.L. 7, ,677 Fertiberia Castilla León S.A. 21,231 (14,532) (2,560) - (17,092) 4,139 El Bahia Fertilizer, SPA 7, ,152 Agronomía Espacio Agrokem, S.A. 60 (15) - - (15) 45 ADP Fertilizantes, S.A. 52, ,000 Fercampo, S.A. 8, ,994 Fertiberia France, S.A.S. 1, , ,550 (87,091) (4,664) - (91,755) 95,795 Associate companies: - Incro, S.A La Almazara Total 188,182 (87,091) (4,664) - (91,755) 96,427 49

50 The following is the detail of the value corrections due to impairments, as well as the provisions and reversals, carried out in the previous financial year, in thousand euros: Company Cost of investment Impairment corrections 31/12/2014 Charges Reversals Impairment corrections 31/12/2015 Net Value 31/12/2015 Group companies: Química del Estroncio, S.A. 68,933 (57,857) - - (57,857) 11,076 Fertiberia Andalucía, S.A. 11,466 (8,877) (143) - (9,020) 2,446 Fertiberia La Mancha, S.L. 8,477 (6,007) (5,667) 2,810 Agralia Fertilizantes, S.L. 7, ,677 Fertiberia Castilla León S.A. 21,231 (12,327) (2,205) - (14,532) 6,699 El Bahia Fertilizer, SPA 7, ,152 Agronomía Espacio Agrokem, S.A. 60 (15) - - (15) 45 ADP Fertilizantes, S.A. 52, ,000 Fercampo, S.A. 8, ,994 Fertiberia France, S.A.S. 1, , ,550 (85,083) (2,348) 340 (87,091) 100,459 Associated Co. Incro, S.A La Almazara LA Organic, S.L Total 188,002 (85,083) (2,348) 340 (87,091) 100,911 The short-term investments in Group Companies at 31 December 2016 were as follows, in thousand euros: Company % Direct Holding Cost Impairments Net Value 31/12/2016 Group companies: OHL, S.A. 0.38% 14,093 (4,779) 9,314 The short-term investments in Group Companies at 31 December 2015 were as follows, in thousand euros: Company % Direct Holding Cost Impairments Net Value 31/12/2015 Group companies: OHL, S.A. 0.38% 14,093 (2,465) 11,628 50

51 The summary of that company s net consolidated net equity at 31 December 2016 and 2015 is shown below, in thousand euros: Fertiberia, S.A. annual accounts 2016 Balance sheet date Share Capital Reserves Other Net Equity items Result for the Year Total Net Equity 31/12/ ,255 3,280,907 (588,135) (432,338) 2,439,689 31/12/ ,255 3,259,050 (446,981) 55,632 3,046,956 On 24 April 2014 the Company formalised a loan contract with Grupo Villar Mir, S.A.U. for the temporary assignment of the 670,543 shares it held in OHL, S.A. The initial due date for the shares loan was 24 July 2014, tacitly renewable for quarterly periods up to a maximum of 5 extensions. On 20 October 2015 the parties agreed to modify the period of validity to one year, until 20 October 2016, tacitly renewable for annual periods up to maximum of three. On 23 October 2015 a capital increase in the company OHL S.A. took place with the issuance of 199,018 thousand new ordinary shares with a nominal value of 0.6 euros with an issue premium of 4.42 euros per share. The Company partially took up said share capital increase, selling a part of the rights at the quoted price of 5.41 euros and exercising the share capital increase for an amount equivalent to the rights sold. This situation has led to an increase in the number of transferred temporary shares to 1,140,082 at 31 December 2015 (670,543 shares at the close of the previous financial year). There were no changes in the number of shares during the 2016 financial year. At the 2016 and 2015 year end the Company made an assessment as whether there was objective evidence of impairment in the value of the OHLS.A. shares taking into consideration its average market price for the last quarter and the consolidated net equity mentioned in the above table, as well as value references published by different market analysts. In the financial years 2016 and 2015, evidence of impairment of these shares is verified. Taking into account the temporary transfer of the shares to GVM and the volatility of the stock market, the value of the net equity attributable to the consolidated of the OHL group was used as a reference for the calculation of the recoverable value. The amount of impairment in 2016 amounts to 2,314 thousand euros (in the previous financial year to 2,465 thousand euros). The market value at 31 December 2016 of these shares was 3.29 euros (at 31 December 2015 these shares were valued at 5.27 euros), while the average price for financial year 2016 was 4.07 euros per share (in the previous financial year it was euros per share). The detail for dividends received during the financial year 2016 and amounting to 4,616 thousand euros; corresponded to 2,416 thousand euro from the company Incros, S.A, and 2,200 thousand euros from the group company ADP Fertilizantes, S.A. Likewise, the detail of the dividends received during financial year 2015 for an amount of 8,782 thousand euros; 2,412 thousand euros corresponded to the associate company Incro, S.A. and 6,370 thousand euros to the group company ADP Fertilizantes S.A. 51

52 7.4 Shareholders Funds Share Capital The share capital at 31 December 2016 and 31 December 2015 stood at 54,452 thousand euros, represented by 22,688,187 shares, each with a nominal value of 2.40 euros, wholly subscribed and paid up, all with the same voting and economic rights. The composition of the shareholding at the date of preparation of these annual accounts is as follows. No. of Shares % Holding Grupo Villar Mir, S.A. (Single Shareholder Company) 22,649, Other shareholders 39, ,688, Legal Reserve Companies are obliged to transfer 10% of the profits for each year to setting up a legal reserve fund until this reaches at least 20% of the share capital. This reserve may not be distributed to members and may only be used to cover the debtor balance on the profit and loss account if there are no other reserves available. Under certain conditions it may also be used to increase the share capital by the amount of this reserve that exceeds 10% of the share capital amount once increased. At 31 December 2016 and 2015 the Legal Reserve was fully provided for. Share issue premium The Capital Companies Act expressly allows for the balance on the share premium account to be used for increasing capital and does not establish any specific restriction with regard to the availability of this balance. Dividends In financial year 2016, there has been no agreement to distribute dividends from reserves. 52

53 Note 8. Stocks Fertiberia, S.A. annual accounts 2016 The details of stocks at 31 December 2016 and 2015 is the following: Financial year 2016 Financial year 2015 Raw materials and other supplies 26,969 39,352 Semi-finished products 3,058 5,012 Finished products 12,567 24,328 CO 2 emission rights (Note 5) 8,261 - Final balance 50,855 68,692 The Company follows the policy of formalizing insurance policies to cover the possible risks to which its stocks are subject. It is established in Royal Decree 602/2016, dated 2 December, amending the General Accounting Plan approved by Royal Decree 1514/2007 of 16 November, among other changes in regulations, in its first additional provision that at the beginning of the first financial year resulting from the application of this Royal Decree, the carrying value of the emission rights of greenhouse gases accounted for as intangible assets will be reclassified to stocks with effect from 1 January a) Emission rights of greenhouse gases During financial year 2016, the Company has received free-of-charge greenhouse gas emission allowances amounting to 964,387 tonnes (982,463 tonnes in the previous financial year), according to the following detail; Factory Tm allocated in 2016 Tm allocated in 2015 Avilés 52,570 53,555 Huelva 11,011 11,218 Palos 518, ,507 Puertollano 296, ,549 Sagunto 85,040 86,634 Total 964, ,463 The charge to the results of the financial year 2016 derived from emissions of greenhouse gases amounted to 8,563 thousand euros (8,109 thousand euros in the previous financial year). Likewise, during financial year 2016, the payment to Company results for the allocation of grants of gas emission rights, which were allocated to them free of charge, amounted to 7,754 thousand euros (6,867 thousand euros in the previous financial year). At 31December 2016, the provision for greenhouse gas emission rights amounts to 8,715 thousand euros (see note 12), of which 962 thousand euros comes from the shortfall in the emission rights of gases that were acquired from third parties. Likewise, at 31 December 2015, the provision for greenhouse gas emission rights amounted to 8,109 thousand euros, of which 1,242 thousand euros came from the shortfall in the gas emission rights that were acquired from third parties. During financial years 2016 and 2015, there were no losses due to impairment of greenhouse gas emission rights 53

54 Note 9. Information on payment deferrals made with suppliers. Third additional provision duty of information under law 15/2010 of 5 july In accordance with Law 15/2010 (modified by Law 31/2014) and the Law 3/2013, modifying Law 3/2004 establishing measures for combating late payments in trade operations, and that determined by the ICAC Resolution in January 2016, the following is stated: Days Days Average payment period to suppliers Ratio of paid operations Ratio of operations awaiting payment Amount (in thousand euros) Amount (in thousand euros) Total payments made 495, ,066 Total payments outstanding 82, ,073 54

55 Note 10. Foreign currencies Fertiberia, S.A. annual accounts 2016 Detailed below are the transactions carried out in foreign currencies during the financial year as well as the assets and liabilities denominated in foreign currencies at 31 December 2016 and 2015: Currency Thousand euros Thousand euros Transactions Purchases USD 150, ,045 Sales USD 42,605 43,685 Assets Investments in group companies Algerian Dinares 7,152 7,152 Debtors USD 2,783 7,376 Cash and other equivalent liquid assets USD 983 8,568 Liabilities Creditors USD 63, ,507 Total exchange differences carried to the profit and loss accounts for the financial years 2016 and 2015 have their origin in financial assets and liabilities corresponding to the categories for loans and receivables and debits and payables and cash and other equivalent assets. The amount of exchange differences recognised in the result by classes of financial instruments at 31 December 2016 and 2015 is as follows, in thousand euros: Settled Pending due date Total Settled Pending due date Total Positive Debtors ,227 Creditors Negative Debtors (625) - (625) (491) (48) (539) Creditors (677) (743) (1,420) (6,510) (1) (6,511) (234) (522) (756) (6,308) 485 (5,823) At 31 December 2016 the Company has contracts with different financial entities for currency hedging arrangements, due date in The fair value of said hedges amounts to 657 thousand euros (204 thousand euros at 31 December 2015). 55

56 Note 11. Tax position The detail of balances with Public Administrations at 31 December 2016 and 31 December 2015 is as follows, in thousand euros: 31/12/ /12/2015 Debtors Creditors Debtors Creditors Non-current: Deferred taxation 14,197 1,401 14,611 1,446 14,197 1,401 14,611 1,446 Current: Tax authorities - debtor for VAT 2,930-1,855 - Social Security bodies (d) Tax authority debtor on capital yields Tax authorities creditor for IRPF Other Public Entities ,972 1,657 1,911 1,680 As from 1 January 1997 the Company ceased being subject to taxation under the individual Corporate Income Tax regime, passing over to the Group Taxation regime within the Tax Group that has Inmobiliaria Espacio, S.A. as its Parent Company. This, however, does not exclude it from the tax obligations derived from the individual regime. In the financial years 2001, 2002, 2003 and 2009 taxation under this regime generated positive results in respect of Corporate Income Tax by reason of the tax losses produced. Under current legislation, taxes are not considered to be definitively settled until such time as the corresponding tax returns have been inspected by the tax authorities or until the four year time bar period expires. At 31 December 2015 the Company had open for inspection by the tax authorities the following financial years and periods : - Financial years 2010 and 2012 for the tax concept; Corporate Tax. - Periods 3 to 12 of financial year 2011 and periods 1 to 12 of financial year 2012 for the tax concept; Value added tax. - Periods 3 to 12 of financial year 2011 and periods 1 to 12 of fiscal year 2012 for the tax concept; Withholdings / Income on account from work and professional activities. During financial year 2016, the aforementioned tax inspection was closed with an inspection report that generated permanent differences in current corporate income tax for a negative amount of 3,198 thousand euros and an expense for an inspection report amounting to 3,191 thousand euros. 56

57 In accordance with the Corporate Income Tax Law, if, under the applicable rules for determining the tax base, this is negative, with effect for tax periods beginning on 1 January 2015, the negative taxable amount of a tax period can be offset against the positive income generated in the tax periods subsequent to that in which the negative tax base originated without any temporal limitation. This unlimited period also applies to negative tax bases that were outstanding at the beginning of the first tax period beginning on or after 1 January 2015, irrespective of the tax period in which such negative tax bases would have been generated. Fertiberia, S.A. annual accounts 2016 Until financial year 2015, the amount of the compensation with the positive income of the following tax periods was limited to 25% of the tax base prior to the application of the capitalization reserve and to the compensation of the negative tax base itself. In financial year 2016, although initially set at 60% through Royal Decree 3/2016, this limit is set again at 25% of the previous tax base or 1 million euros Corporate income tax The following is the detail of the corporate income tax charge accounted for, in thousand euros: Result for the year before tax (35,263) 13,554 Permanent differences (1) 11,574 (8,240) Timing differences 11,751 3,959 Arising in the year 14,005 5,183 Arising in prior financial years (2,254) (1,224) Tax Base (result for tax purposes) (11,938) 9,273 Tax charge (25%) (2,984) 2,596 Deductions (338) (218) Current tax charge (tax payable) (3,322) 2,378 Prior year tax expenses 71 (338) Deferred tax charge 384 (877) Tax rate adjustments (2) Tax inspection 3,191 - Corporate Income Tax charge expenses 324 1,600 (1) That correspond mainly to, - Exempt dividends received from subsidiaries for a negative amount of 4,616 thousand euros. - Adjustments arising from the closing of the inspection report described above for a negative amount of 3,198 thousand euros. - Positive adjustments arising from the non-deductibility of the accounting impairments provided in 2016 on investments in equity instruments and the reversion in fifth parts of the endowments in financial years prior to 2013 that were considered deductible, according to the modification of the provision Provisional sixteenth of the Corporation Tax Law under Royal Decree Law 3/2016 of 2 December. The total amount amounted to 16,528 thousand euros. (2) As a consequence of the tax reforms approved in Spain in 2014, including the modification to the general tax rate for Corporate Income Tax, this being set at 28% for 2015 and 25% for 2016 and following years, the Company has adjusted the deferred taxation assets and liabilities to the foreseeable rate for recovery. The negative adjustments for this regularisation were recorded under the heading for Tax on profits in the profit and loss account for the financial year 2015 for an amount of 437 thousand euros. 57

58 The movement on deferred taxation generated and cancelled in the financial year 2016 is shown below, in thousand euros: 31/12/2015 To Profit and Loss Account To Net Equity Other variations Transfers Tax rate adjustments 31/12/2016 Deferred taxation assets Hedging derivatives Limit on financial expenses (c) 2,136 2, ,963 Limit on depreciation (b) 2,293 (1,072) ,221 Impairment of investments in the equity of group companies 2,664 (2,664) Impairment metals Sagunto 93 (93) Impairment OHL shares ,194 Replanting for the Huelva Pools (d) 6, ,378 Credit for losses to be compensated ,611 (424) ,197 Deferred taxation liabilities Capital grants 65 - (24) Finance leases Unrestricted depreciation (a) 1,098 (55) ,043 Impairment of investments in the equity of group companies 193 (41) ,446 (40) (24) - 19, 1,401 58

59 The movement on deferred taxation generated and cancelled in the financial year 2015 is shown below, in thousand euros: Fertiberia, S.A. annual accounts /12/2014 To Profit and Loss Account To Net Equity Other variations Transfers Tax rate adjustments 31/12/2015 Deferred taxation assets Hedging derivatives (47) 386 Limit on financial expenses (c) 2,646 (252) (258) 2,136 Limit on depreciation (b) 2,737 (444) ,293 Impairment of investments in the equity of group companies 2, (70) 2,664 Impairment metals Sagunto (11) 93 Impairment OHL shares (74) 616 Replanting for the Huelva Pools (d) 6, ,378 Credit for losses to be compensated , (460) 14,611 Deferred taxation liabilities Capital grants 94 - (29) Finance leases Unrestricted depreciation (a) 1,159 (61) ,098 Impairment of investments in the equity of group companies 271 (55) (23) 193 1,571 (73) (29) - - (23) 1,446 a) In the financial year 2012 the Company opted for what was provided for in the Eleventh Additional Provision of the Corporation Tax Law, Art. 1 four of the Royal Decree Law, 13/2010 making a negative timing adjustment to the accounting result for an amount of 5,050 thousand euros corresponding to the investment in property, plant and equipment in the financial year 2011, depreciation of which commenced in the financial year 2012, reduced by the amount recorded as depreciation for the year. A positive timing adjustment was made in the financial year 2016 for an amount of 220 thousand euros (220 thousand euros at the previous financial year-end). b) In accordance with what is established in Law 16/2012 of 27 December art. 7 depreciation of property, plant and equipment, intangible assets and property investments corresponding to the tax periods starting with the years 2013 and 2014 for those entities that, in themselves, do not meet the requirements set out in sections 1, 2 or 3 of art. 108 of the Consolidated Text of the Corporation Tax Law, a deduction of up to 70 per cent of that which would be tax deductible had the aforementioned percentage not applied in accordance with sections 1 and 4 of article 11 of this Law. The accounting depreciation that is not deductible for tax purposes by virtue of the provisions of this article is to be deducted on a straight-line basis over a period of 10 years or, optionally, over the useful life of the asset as from the first tax period starting within the year In 2016 a negative timing adjustment has been made for 1,661 thousand euros in this respect (In 2015, a negative timing adjustment was made for 1,481 thousand euros in this respect). c) With effect for the tax periods started as from 1 January 2012 the rule is that financial expenses will be deductible up to a limit of 30% of the operating profit for the financial year (Art. 20 of Royal Decree Law 4/2004). Net financial expenses that cannot be deducted may be deducted in the tax periods that conclude within the 18 immediately successive years along with those for the corresponding tax period and up to the previously stated limit. The time limit on deduction was eliminated as from 1 January In the year 2016 a temporary adjustment was made in this concept for the amount of 11,307 thousand euros and in 2015, no temporary adjustment was made for this concept. d) By reason of the execution of the ruling handed down by the National High Court dated 27 November 2004 in the ordinary proceedings /2004 and in compliance with the mandate established therein, Fertiberia, S.A. presented the Construction project for the closing of the phosphogypsum pools located in the municipality of Huelva. In order to cover the additional cost over what was initially forecasted at the date of the ruling, which according to said project presented by Fertiberia S.A. supposes a provision was made in 2014 against reserves for an amount of 25.5 million euros before tax (17.9 million euros after tax). To determine the tax base for corporate income tax, a negative adjustment has been made to the accounting result for the same amount, likewise, a positive adjustment also for the same amount, considering non-deductibility of said amount until the corresponding work to which these provisions correspond has been concluded. e) As a result of the amendments introduced by Royal Decree Law 3/2016 of 2 December which amends the transitory provision sixteen of the Law on Corporate Income Tax, and the amendments to the General Accounting Plan in the Royal Decree 602/2016 the deferred tax assets recorded in prior financial years were cancelled in 2016 amounting to 2,664 thousand euros on the basis of the temporary differences as a result of the different tax and accounting treatment of impairment of portfolio in equity investments in group companies. The Company opted for the Royal Decree Law 7/1996, option on updating balance sheets. The Company opted for the Royal Decree Law 7/1996, option on updating balance sheets. 59

60 Note 12. Provisions and contingencies Provisions The detail and movements on long-term provisions during the financial year 2016 were as follows, in thousand euros: Type of provision Balance at 31/12/2015 Charges Applications Transfers Balance at 31/12/2016 Non-current Environmental actions for restructuring in Huelva (Notes 6 and 14) 41,975 - (284) - 41,691 41,975 - (284) - 41,691 Current Gas emission allowances (Note 5) 8,109 8,563 (7,957) - 8,715 Restructuring provisions (Note 13.b) - 1,850 (462) - 1,388 8,109 10,413 (8,419) - 10,103 Environmental actions for restructuring in Huelva In the financial year 2014 an amount of 25,514 thousand euros was provisioned for meeting the environmental obligations necessary for the recovery of the phosphogypsum pools in Huelva, as per the basic and detailed engineering studies carried out by the companies Ardaman and EPTISA (Note 6). Restructuring provisions In the last quarter of financial year 2016, a light restructuring of the workforce has been addressed, affecting 20 workers, mainly from Head Office, Huelva factory and the Bilbao warehouse, with the aim of adapting the workforce of these centres to requirements. This restructuring was agreed with the unions with the largest representation in the Company. The detail and movements on provisions during the previous financial year were as follows, in thousand euros: Type of provision Non-current Balance at 31/12/2014 Charges Applications Transfers Balance at 31/12/2015 Environmental actions for restructuring in Huelva (Notes 6 and 13) 42,456 - (481) - 41,975 42,456 - (481) - 41,975 Current Gas emission rights (Note 5) 5,964 8,109 (5,964) - 8,109 5,964 8,109 (5,964) - 8,109 60

61 Commitments and guarantees with third parties At 31 December 2016 the Company had formalised guarantees with various credit entities, basically as guarantee for supplies from certain raw materials suppliers for an approximate amount of 29,382 thousand euros (28,842 thousand euros in the previous financial year). Fertiberia, S.A. annual accounts 2016 On 22 December 1999 Fertiberia, S.A. transferred to Inmobiliaria Espacio, S.A. all of its liabilities for participative accounts and credits with the Instituto de Crédito Oficial ( ICO ) (the Official Credit Institute) and other insolvency creditors in the suspension of payments of Fesa Fertilizantes Españoles, S.A., with an amount pending maturity at 31 December 2016 of 118,879 thousand euros (126,775 thousand euros in the previous financial year). The repayment of the debt assumed by Inmobiliaria Espacio, S.A. is to be made under the repayment conditions established for Fertiberia, S.A. Whilst the entities holding the accounts and participative loans did not expressly authorise the assumption of the debt and subrogation by Inmobiliaria Espacio, S.A. in the Fertiberia, S.A. debtor position with these creditors, the latter continues to be jointly and severally liable for the repayment of these participative accounts and loans. Also, on 30 December 2005 Fertiberia, S.A. transferred to Inmobiliaria Espacio, S.A. the whole of the liability that the former held with the ICO for the loans this had with Fesa Fertilizantes Españoles, S.A. and subsidiaries prior to 1995, with the amount pending maturity at 31 December 2016 amounting to 15,805 thousand euros (17,025 thousand euros in the previous financial year). The repayment of this liability assumed by Inmobiliaria Espacio, S.A. is to be carried out under the repayment conditions established for Fertiberia, S.A.. However, it should be stated that until such time that the ICO expressly authorises said assumption and subrogation, Fertiberia, S.A. will continue to be jointly and severally liable for repaying this debt. As regards the financing that Química del Estroncio, S.A., with the Ministerio de Industria, Turismo y Comercio (MI- TyC) (the Ministry of Industry, Tourism and Trade) and SEPI Desarrollo Empresarial, S.A. (SEPIDES), Fertiberia, S.A. has provided deposits and guarantees (both direct and indirect) for an overall joint amount of 455 thousand euros (455 thousand euros in the previous financial year). Contingent assets Fertiberia, S.A. is currently starting a claim against Gas Natural SDG in the civil courts in respect of the amounts paid for gas supplies during the last quarter of This claim is based on the incorrect application by Gas Natural SDG of the regulated prices tariff during this period. The amount claimed represented a contingent revenue at 31 December 2016 in Fertiberia, S.A. of 3,875 thousand euros. The Company, given the regulatory implications of this matter, is trying to amiably come to an understanding without renouncing a claim before the Civil Jurisdiction. 61

62 Note 13. Revenues and expenses a) Supplies This heading in the attached Profit and Loss Account at 31 December 2016 and 2015 is made up of the following, in thousand euros: Consumption of merchandise Purchases of merchandise 83, ,100 83, ,100 Consumption of raw materials and other consumables Purchases of raw materials and other consumables 214, ,387 Variation in the stocks of raw materials and other consumables 12,754 (1,065) 227, ,322 Impairment of merchandise, raw materials and other supplies (371) 371 Totals 310, ,793 The detail of purchase by geographical markets at 31 December 2016 is as follows, in thousand euros: National purchases Intracommunity acquisitions Imports Total Purchases of merchandise 1,971 21,771 59,824 83,566 Purchases of raw materials 131,848 2,307 72, ,953 Purchases of other supplies 7, , ,832 24, , ,951 The detail of purchase by geographical markets at 31 December 2015 is as follows, in thousand euros: National purchases Intracommunity acquisitions Imports Total Purchases of merchandise 1,808 35,841 88, ,100 Purchases of raw materials 165,399 10, , ,430 Purchases of other supplies 7,870 2,087-9, ,077 48, , ,487 62

63 b) Personnel expenses This heading in the attached Profit and Loss Account at 31 December 2016 and 2015 is made up of the following, in thousand euros: Fertiberia, S.A. annual accounts Wages and salaries 38,375 40,431 Indemnities (Note 12) 1, Salaries, wages and similar 40,350 40,714 Employer s Social Security contributions 9,968 9,687 Other social expenses 2,319 2,771 Social charges 12,287 12,458 Personnel expenses 52,637 53,172 c) Operating leases The charge to results for the financial year 2016 in respect of operating leases amounted to 2,168 euros (2,020 thousand euros in the previous financial year). This amount corresponds mainly to the lease of the Company s head offices. Most of the lease contract corresponds to contracts that are renewable annually. d) Result on disposal of assets This heading in the attached Profit and Loss Account at 31 December 2016 and 2015 is made up of the following, in thousand euros: Withdrawal of MAP and DAP plants of Huelva (1,238) - Sale of Sulfuric plant of Huelva 3,000 - Various - (379) 1,762 (379) e) Financial results This heading in the attached Profit and Loss Account at 31 December 2016 and 2015 is made up of the following, in thousand euros: Financial revenues Group companies (note 17.2) Holdings in the capital of group and associate companies (Note 7.3) 4,616 8,782 Other financial revenues ,309 9,686 63

64 Financial expenses Interest on long-term liabilities with credit entities 5,732 7,304 Interest on current liabilities with credit entities 2,635 2,610 Interest on the discounting of commercial paper 1,195 1,682 Interest on liabilities with group companies (Note 17.2) 934 1,872 Interest on liabilities with other companies Other financial expenses ,223 13,524 64

65 Note 14. Environmental information Fertiberia, S.A. annual accounts 2016 Described below are the environmental obligations and contingencies that affect, or could affect in the future, the Company s financial position, as established by the Resolution from the Instituto de Contabilidad y Auditoría de Cuentas (ICAC), dated 25/03/2002 and the General Accounting Plan. The following investments intended for the protection and improvement of the environment were incorporated into fixed assets in the financial years 2016 and 2015, in thousand euros: Technical installations Buildings Other installations ,008 Ordinary expenses incurred in the financial years 2016 and 2015 in respect of the protection and improvement of the environment, such as waste treatment, the control and treatment of atmosphere contaminating emissions and the treatment of liquid effluents were recorded in the Profit and Loss Account by nature, the most significant being the following, in thousand euros: Other operating expenses 4,939 5,188 Supplies 1,059 2,002 Personnel expenses 1,011 1,002 7,009 8,192 Ordinary revenues accounted for in 2016 for this item amounted to 392 thousand euros (279 thousand euros in the previous year). Sundry provisions for environmental actions are recorded under Provisions and Contingencies (Note 12), as described below: Financial year /12/2015 Charges Applications Transfers 31/12/2016 Environmental actions Huelva restructuring (Note 6) (284) Derechos emisión gases (Nota 5) (7.957) ,084 8,563 (8,241) - 50,406 Financial year /12/2014 Charges Applications Transfers 31/12/2015 Environmental actions Huelva restructuring (Note 6) 42,456 - (481) - 41,975 Gases emissions allowances (Note 5) 5,964 8,109 (5,964) - 8,109 48,420 8,109 (6,445) - 50,084 65

66 N 2 O projects In previous financial years investments were made in the nitric acid plants in the Avilés, Puertollano and Sagunto factories within the scope of the Voluntary Projects for the reduction of N 2 O greenhouse effect gases (Note 5). These projects were approved by the Designated National Authority (DNA) on 21 May 2010 and became part of the mechanisms based on Kyoto Protocol projects with Royal Decree 1031/2007 of 20 July developing the participation framework flexibility mechanisms for the Kyoto Protocol. This approval is published in the web page for the UNFCC (United Nations Framework Convention on Climate Change). According to this resolution, the Spanish DNA grants letters of approval to joint application projects in Spain for N 2 O reduction in nitric acid manufacture and the generation of ERUs is to be recognised: For reductions in emissions that are below the benchmark value. From the date of commencement of generation of reductions covered in the first verification report prepared by an Accredited Independent Entity for the Supervision Committee under article 6 of the Kyoto Protocol and up until 31 December The following ERUs corresponding to the N 2 O Project has been paid into Fertiberia s RENADE account up until the current financial year: Avilés: Puertollano: Sagunto: TOTAL 159,156 ERUs 124,797 ERUs 214,818 ERUs 498,771 ERUs In financial year 2015 and since, according to the regulations, from March 2015, the ERUs could not be used, the company proceeded to transfer to the fixed assets the equipment that could be used in the plants in which the investments were made for their value and cost, the total amounted to 1,470 thousand euros (notes 5 and 6). The ERUs that could not be used were exchanged for CER s that have been used to cover emissions in financial year In financial year 2016 the usable ERUs account was zero, so these credits are no longer available. 66

67 Note 15. Grants, donations and legacies Fertiberia, S.A. annual accounts 2016 The movement on this heading in the attached Balance Sheet during the financial years 2016 and 2015 was as follows: Miles de euros Balance at 31/12/ Additions (net of tax effect) 4,947 Allocation to results (net of tax effect) (5,014) Balance at 31/12/ Additions (net of tax effect) 5,816 Allocation to results (net of tax effect) (5,889) Balance at 31/12/ The grants correspond mainly to the greenhouse gas emission allowances assigned to the Company (Note 8) 67

68 Note 16. Post balance sheet events The Company has submitted to the banking entities participating in the syndicated loan a waiver request for the non-compliance in 2016 of two of the financial ratios established in the financing agreement, being at the date of preparation of these annual accounts in an advanced phase of negotiation, with the objective of establishing the final terms for the granting of the dispensation. In addition to the above, there have been no significant events since 31 December 2016 until the date of preparation of these annual accounts that, if they were affected, would not have been included in them or whose knowledge could be useful to a user of the same. 68

69 Note 17. Related party transactions 17.1 Balances between related parties Fertiberia, S.A. annual accounts 2016 The detail of the balances held with related parties at 31 December 2016 and 2015 is as shown below, in thousand euros: 31/12/ /12/2015 Debtors Creditors Debtors Creditors NON-CURRENT Parent Entity Grupo Villar Mir, S.A.U. (Note 7.1.2) 131, ,771 - Other group companies ADP Fertilizantes, S.A. - 12,582-14,782 La Almazara By Stark, S.L. 2,870-2,050 - Total non-current 134,068 12, ,821 14,782 CURRENT Parent Entity Grupo Villar Mir, S.A.U 14,094-4,984 - Other group companies Fertial, SPA , ,940 Fercampo, S.A. 12, ,082 - OHL, S.A Formula Jet, S.L ADP Fertilizantes, S.A. 2, ,362 Fertiberia la Mancha, S.L. 16, , Fertiberia Andalucía, S.A. 7, , Fertiberia Castilla-León, S.A 7, , Agralia Fertilizantes, S.L. 2, , Intergal Española, S.A. 1, Villar Mir Energía, S.L. - 1, Enérgya VM Generación, S.L. - 14, Codisoil, S.A Enérgya VM Gestión de la Energía, S.L ,365 Fertiberia France S.A.S. 5,751-6,462 - Avalora Tecnología de la Información, S.A Química del Estroncio, S.A On trade operations 57,494 61,717 58,980 56,908 Inmobiliaria Espacio, S.A. 130, ,802 - Química del Estroncio, S.A. 11, ,442 1,525 Agrokem, S.A Agronomía Espacio, S.A Grupo Fertiberia, S.A Fertiberia la Mancha, S.L. 92 3,197-1,672 Fertiberia Castilla-León, S.A 383 1, ,493 Agralia Fertilizantes, S.L. 90 3,122-2,805 Fertiberia Internacional, S.L Intergal Española, S.A Fertiberia France S.A.S. 1,598-1,512 - Fertiberia Andalucía, S.A. - 1,749-1,761 Fercampo, S.A Fertiberia Argelia ADP Fertilizantes, S.A. - 4,811-13,400 On non-trade operations 144,742 15, ,483 25,483 Total current 216,330 76, ,447 82,391 69

70 The debtor balances with ADP Fertilizantes, S.A. Fertiberia Andalucía, S.A., Fertiberia la Mancha, S.L., Agralia Fertilizantes, S.L., Fertiberia Castilla-León, S.A., Fercampo, S.A., Fertiberia France, S.A.S. and Intergal Española, S.A. correspond mostly to current trade operations, which are carried out under normal market conditions. The long-term creditor balance with Fertiberia Castilla-León, S.A. corresponds to Credit Facilities in Current Account granted by it to Fertiberia on 22 on June The credit limit is up to 12,200 thousand euros and the facility is for a period of ten years with an interest rate of Euribor %. The creditor balance with ADP Fertilizantes corresponds to a long-term loan the former granted to Fertiberia on 22 April 2009 for an amount of 20,000 thousand euros. The loan is valid for a period of ten years and carries a rate of interest of Euribor +0.25%. The creditor balance with Fertial, S.P.A. is commercial in nature and corresponds to the purchases of raw materials made by Fertiberia from this related party, said purchases being made under normal market conditions. The debtor balance with Inmobiliaria Espacio, S.A. corresponds mainly to the movements derived from the corporate income tax for 2015 and previous years and other current account movements. The creditor balance with Enérgya VM Gestión de la Energía, S.L. corresponds to electricity supplied to Fertiberia, S.A. under normal market conditions. The current creditor balances with Fertiberia Castilla y León, S.A., Química del Estroncio, S.A., Fertiberia la Mancha, S.L. and Agralía Fertilizantes, S.A. correspond to Treasury Facilities in Current Account granted by these to Fertiberia, S.A. on 1 November The limit on each credit facility is for up to 5,000 thousand euros, the agreement being for one year with tacit agreement for annual renewals, with an interest rate of 5%. The current debtor balance with Grupo Villar Mir, S.A.U. corresponds to interest accrued and not paid on the credit facility in current account described in note a. 70

71 17.2 Related party transactions The main transactions with Group and associate companies in the financial years 2016 and 2015 were as follows, in thousand euros: Fertiberia, S.A. annual accounts SALES AND OTHER OPERATING REVENUES 176, ,836 Parent entity Grupo Villar Mir, S.L. 7,019 1,257 Other group companies ADP Fertilizantes, S.A. 54,433 87,876 Fertiberia La Mancha, S.L. 24,494 34,575 Fercampo, S.A. 28,646 31,788 Agralia Fertilizantes, S.L. 13,189 22,634 Fertiberia Andalucía, S.A. 16,451 23,819 Fertiberia Castilla-León, S.A. 11,230 21,017 Intergal Española, S.A. 5,367 9,143 Fertiberia France, S.A.S. 12,020 21,892 Química del Estroncio, S.A. 3,252 3,533 Fertial, SPA Enérgya VM Generación, S.L Inmobiliaria Espacio, S.A , ,167 Other group companies Fertial, SPA 87, ,964 Enérgya VM Gestión 51,310 71,926 ADP Fertilizantes, S.A. 21,200 32,205 Villar Mir Energía, S.L. 6,334 7,452 Torre Espacio Castellana, S.A. - 1,535 Espacio Information Technology, S.A. 1,339 1,353 Codisoil, S.A Agralia Fertilizantes, S.L Fertiberia La Mancha, S.L Fertiberia Castilla-León, S.A Fertiberia Andalucía, S.A Fercampo, S.A Formula Jet, S.L Química del Estroncio, S.A. 1, Inmobiliaria Espacio, S,A. 4 - Intergal Española, S.A Torre Espacio Gestión, S.A. - 2 Fertiberia France, S.A.S FINANCIAL EXPENSES Other group companies Fertial, SPA 692 1,511 Fertiberia Castilla-León, S.A ADP Fertilizantes, S.A Fertiberia La Mancha, S.L Agralia Fertilizantes, S.L Química del Estroncio, S.A INGRESOS FINANCIEROS: Parent entity Grupo Villar Mir, S.L Other group companies Fertiberia France, S.A.S

72 17.3 Remuneration and other benefits for the Board of Directors and Senior Management During the financial year 2016 the Company paid remuneration to the Administrative Body for a total amount of 195 thousand euros (210 thousand euros in the previous financial year). The remuneration by way of Salaries in the financial year 2016 for members of the Board of Directors and Senior Management amounted to 2,230 thousand euros (3,677 thousand euros in the previous financial year). There were no loans or advances granted to members of the Board of Directors. 1. Other information relating to the Director: The administration body has set up a control and evaluation procedure so that the members of the Board of Directors can provide the Board with the information provided for in Chapter III, Title IV of the Capital Companies Act. - This procedure is currently in force. - The members of the Board of Directors maintain in their registers a record of the request for information and reply obtained in connection with the obligations derived from articles 229, 230 and 231 of the Capital Companies Act. - From the information remitted by the Directors in compliance with the aforementioned articles 229, 230 and 231 of the Capital Companies Act, it can be seen that none of them or any person related to them is in any conflict of interest, direct or indirect, with that of the Company. 72

73 Note 18. Other information Fertiberia, S.A. annual accounts 2016 The average number of persons employed during the financial years 2016 and 2015 was as follows, distributed by categories and gender: Men Women Total average number Men Women Total average number Higher technicians Medium grade technicians Unqualified technicians Administrative staff Operations workers Subordinates Other non-fixed personnel The average number of persons employed during the 2016 financial year, broken down by gender and category with disability greater than or equal to 33%, is as follows: 2016 Men Women Total average number Higher technicians 4-4 Medium grade technicians 1-1 Unqualified technicians Administrative staff Operations workers 8-8 Subordinates Other non-fixed personnel The amount of the fees accrued for audit of the annual accounts and other financial statements corresponding to the financial year ended 31 December 2016 amounted to 109 thousand euros (109 thousand euros in the previous financial year) and 18 thousand euros for other services (18 thousand euros in the previous financial year). 73

74 Note 19. Segmented information The distribution of the net turnover for the Company s ordinary activities for 2016 and 2015 by geographical markets is as shown below, in thousand euros: 2016 % 2015 % Spain 394, , European Union 67, , Rest of the World 12, , , , Practically all of the net turnover corresponds to sales of chemical products for agriculture. 74

75 Fertiberia, S.A. annual accounts

76 76

77 Fertiberia, S.A. directors report directors report

78 Business development and company s position Evolution of the fertilisers market in Spain The financial year 2016 has been characterized by a generalized scenario of low prices of all agricultural products, a decline that reached 19%, maintaining the trend started four years ago, and which is the result of a situation marked by high production less growth in high consumption countries and a context of sharp declines in energy prices and of many products. The FAO Grain Price Index registered a decrease of 9.6% compared to the already very low levels of the previous year, the decline since 2011 being 39%. Vegetable production registered an increase of 8.4% in a year in which the application of fertilizers was conditioned by different factors: The drought and the abnormally high temperatures recorded in the last quarter of 2015 that already affected the sowing and subsistence of winter crops, with irregular application and low utilization of bottom fertilizers. The top-dressing was marked by the continuous rains that made the fertilizing very difficult and, above all, by the persistent drop in cereal prices. The low prices caused a reduction of the irrigated areas planted, and especially in crops of high demand of fertilizers, whose consumption was clearly lower than usual. At the end of the year, sowing and fertilization of autumn and winter cereals took place intermittently, often in drought conditions and with background applications many times lower than usual. The market for simple nitrogen fertilizers was 2.4 million tonnes, compared to 2.7 million tonnes sold in 2015, highlighting the fall in the market for ammonium and calcium ammonium nitrates and, to a lesser extent, for other nitrogenous products. The only exception has been the growth of urea, of 4% with respect to the previous year and that no doubt has replaced other nitrogen fertilizers. The consumption of NPK complex fertilizers was 1.5 million tonnes, 4% lower than that consumed in 2015, while that of ammonium phosphates increased by 14%. In 2017, global fertilizer consumption, according to initial estimates, will decline slightly more than 5%, with a volume of 4.8 million tonnes. The consumption of simple nitrogenous fertilizers would be reduced by 10% whilst complex fertilizers would reduce minimally by 1%. 78

79 Commercial Area Fertiberia s turnover amounted to 475 million euros, representing a significant decrease of 26% compared to financial year million euros corresponded to the domestic market and 150 million euros correspond to exports. Although the volume of sales was slightly higher, namely 1.8%, it is the low level of prices that was the cause of this fall in turnover, which inevitably has had a very negative impact on the results of the Company. Fertiberia, S.A. directors report 2016 In the case of nitrogen fertilizers, in international markets prices fell by around 25%, a decrease that in the market of complex fertilizers NPK, was more moderate, standing at 10%. The volume of fertilizers sold on the domestic market, including special products, amounted to 1.2 million tonnes with a turnover of 237 million euros, 5% lower in terms of volume but up 28.3% in billing. By main product groups, and in the domestic fertilizer market, sales were: 417,000 tonnes of ammonium and calcium nitrates, 169,000 tonnes of urea, 156,000 tonnes of nitrogen solutions 87,000 tonnes of ammonium nitro sulphate. 204,000 tonnes of NPK complex fertilizers According to provisional market figures, Fertiberia would have increased its share in the nitrogen fertilizer market, while it would have remained at the same levels in the case of the NPK complex fertilizer market, despite a year of increased imported product. Sales of industrial products accounted for 34% of the Company s turnover, with a market volume of 736,000 tonnes, and a turnover of 166 million euros. As in the case of fertilizers, the volume sold increased by 5% whilst turnover fell by 24%. 43% of the sales carried out by this division were abroad. In the export markets, 453,000 tonnes of fertilizers have been distributed, highlighting: 322,000 tonnes of calcium ammonium nitrate 71,000 tonnes of ammonium nitro sulphate 31,000 tonnes of urea. The commitment to the internationalization of the business has translated into an increase of exports of 18% compared to 2015, although the turnover has been lower, due to the factors already commented, totaling 77 million euros. Fertiberia maintains a significant presence in the market of the European Union, its main market, but is exploring other complementary markets very strongly, both in the American continent and in Africa. 79

80 Industrial Division The total production reached by Fertiberia S.A. in 2016, excluding subsidiaries, was 2.8 million tonnes, down 4% on the previous year, and 7% less than the amounts originally budgeted. Total production broken down by products was: Real (Tonnes) Ammonia 495,940 Nitric acid 649,600 Ammonium Nitrates 950,190 Urea 345,534 NPK 136,202 Solutions 238,577 Total 2,816,043 The reasons for this decline are mainly found in the plant stoppage at Puertollano at the ammonia and urea plants that lasted 40 days. This stoppage was carried out in order to make an investment in energy efficiency, affecting the ammonia plant. On the other hand, the lower production was motivated, in general terms, for commercial reasons, mainly in the Factories of Avilés and Huelva, in order to regularize the stocks of finished products and thus be able to adapt to the exceptional market situation. The operation of the different production centres, apart from the incidents typical of this type of complex industrial installations, like fertilizer and ammonia production plants, has been positive, with no operational problems to highlight. 80

81 Productions by factories and notable events during the year Avilés Factory Fertiberia, S.A. directors report 2016 Real (tonnes) Nitric acid 170,132 NACs 191,770 NSA 157,935 LNA ,341 The volumes manufactured were 85% of the anticipated quantities, once again as a consequence of the high levels of stocks, which made it necessary to stop a line of nitric acid and the corresponding granulation plant for four months. A new ammonia solution production plant was successfully started in Huelva Factory Real (tonnes) NPKs 136,202 Regarding the Huelva Factory, production was also lower than budgeted, also for market reasons, reaching 56% of this. During the financial year, the production of complex fertilizers with high nitrogen content and the production of new product ranges with poly-sulfates were consolidated with excellent results. Palos Factory Real (tonnes) Ammonia 339,585 Urea 229,528 AdBlue 57,300 Other solutions 5, ,573 The Palos Factory adjusted its production to the needs of the market and to the price of gas, raw material used in the manufacture of ammonia and urea, whose manufacture was maintained throughout the year, exceeding by 4% the programmed production. In 2016 a new urea expedition unit has been started. 81

82 Puertollano Factory Real (tonnes) Ammonia 156,355 Nitric acid 155,802 Urea 116,006 NAC 23,570 Technical Ammonium Nitrate 48,786 Soluble Ammonium Nitrate 69,110 Nitrogenized solutions 104, ,491 The Puertollano plant has carried out an investment program to improve the energy efficiency of the ammonia plant, which took place during the months of June and July, reducing energy consumption by 6% (both electricity and gas). Work on the ammonia plant forced the urea plant to stop, while the rest of the production units remained in operation throughout the year, producing 6% above the expected volumes. Sagunto Factory Real (tonnes) Nitric acid 323,666 NAC 459,019 Nitrogenized Solutions 59,923 SAM 9,481 LNA 1, ,436 The Sagunto Factory has operated with great regularity throughout the year, producing 8% more than anticipated, surpassing the historical records of production in the plants of nitric acid, solution 20, solution of calcium nitrate, and ammoniac solution. 82

83 Energy and raw material consumptions Fertiberia, S.A. directors report 2016 The net energy consumption for the factories as a whole amounted to: GwH Natural Gas 5, Electricity Total 6, The electricity generated using the thermal energy involved in the processes amounted to Gwh. Energía Eléctrica (Gwh) Avilés Palos 4.20 Sagunto Total The consumption of the main raw materials expressed in thousands of tonnes was as follows: Ammonia Sulfuric acid Nitric acid Phosphoric Acid (P 2 O 5 ) DAP 6.30 Potassium Chloride Ammonium Sulphate Product despatches The amount despatched in the different factories, expressed in thousand tonnes and detailed by type of product was: Solids 1, Ammonia Liquids Total 1,

84 Investments In the course of 2016 ordinary investments were authorised in the factories and logistic warehouses for a value of 29.9 million euros distributed as per the following table. Distribution of investments Euros Productive investments 1,651,900 Environment and Safety 588,775 Replacements 2,081,377 Others 22,782,929 Catalysers 2,853,008 Total 29,957,989 Investments by factory and most significant events: In the factory of Avilés, 50% of the approved budget was destined to productive investments. More than half of the amount approved for this purpose has been directed to the creation and start-up of a new production line of ammoniac solution, 25%, due to the increase in demand for this product as a consequence of the tightening of the emission limits of NOx. On the other hand, the Avilés plant has approved investments to reduce ammoniac emissions, with the installation of a torch in the ammonia terminal. In addition, an investment has been approved that contemplates the carrying out of the change of the southern section of the ammoniac duct. Avilés Approved Productive investments 835,000 Environment and Safety 175,000 Replacements 385,000 Others 295,000 Total 1,690,000 84

85 A productive investment has been approved in the Huelva plant to increase the range of manufacturing formulas, with the aim of producing product ranges with low P 2 O 5 content. Investments have also been approved for the transfer of servers, telephones and cameras to the NPK area, as well as safety investments to meet the requirements demanded by the Port Authority of Huelva (APH). Fertiberia, S.A. directors report 2016 Huelva Approved Productive investments 75,000 Environment and safety 54,000 Replacement - Others 70,000 Total 199,000 Investments have been approved at the Palos plant due to the general shutdown planned for These are investments destined to replace key equipment such as the turbo-compressor group of process air and the turbine of the refrigeration compressor. A surface condenser of the synthesis turbine for the ammonia plant has been acquired, as well as a carbamate condenser for the urea plant and vacuum condenser equipment for the same plant. In addition, during the general shutdown, several boilers will be re-tubbed, as well as an overhaul of the storage tank and the change of the catalysts of the ammonia plant. Palos Approved Environment and Safety 298,100 Replacement 196,453 Others 22,258,880 Catalysers 2,758,000 Total 25,511,433 In Puertollano, productive investments have been approved, such as the improvement of the Nitrogen II cooling tower, reducing the consumption of ammonia by reducing tail gases and increasing the production capacity in the summer months. Puertollano Approved Productive investments 191,900 Environment and Safety 61,675 Replacement 1,239,924 Catalysers 95,008 Total 1,588,507 85

86 As far as the Sagunto plant is concerned, in 2016 investments have been approved mainly aimed at improving the reliability of equipment, both in the electrical substation and in the nitric acid plant. Likewise, the production capacity of calcium nitrate solution has been expanded. Sagunto Approved Productive investments 550,000 Replacement 260,000 Others 120,000 Total 930,000 By the end of financial year 2016, investments in factories had matured for a total amount of 12,711,503 euros, distributed according to the detail of the following table: Thousand euros Head office 112 Commercial network 78 Huelva 176 Palos 924 Avilés 1,699 Sagunto 671 Puertollano 9,052 Total 12,712 86

87 Quality Fertiberia considers quality, not only as a necessary element to compete especially with low cost imports but also as a commitment with agriculture and the general public. Fertiberia, S.A. directors report 2016 Fertiberia develops its policy in this area according to the Quality Management System, based on the International Standard UNE-EN ISO 9001, with the objective of fulfilling the most demanding legal requirements and thus guarantee the full satisfaction of the customer. Being the main objective customer satisfaction, in accordance with the Quality Management System, these are consulted directly to know at all times their level of satisfaction and expectations, in order to make them compatible with the product design. The overall result of the last Customer Satisfaction Index was 80.3%, which is a very satisfactory result. The Quality Management System is audited annually by AENOR (Spanish Association for Standardisation and Certification), which has maintained the Certification in all the production centres. The number of Non-conformities detected in audits continues to decline, reaching satisfactorily low levels. 87

88 Environment Fertiberia carries out its activity in the matter according to a policy of maximum respect for the environment. To this end, Fertiberia assumed as its own the Best Environmental Practices of the sector in all its procedures and processes. The environmental results in 2016 have been fully satisfactory, fully complying all the Company s facilities, with the regulations imposed by each Autonomous Community. The parameters of particulate emissions and N effluents and the level of N 2 O gas emitted by nitric acid plants have been much lower than legally required. During the year, Fertiberia has adapted its environmental policy in accordance with ISO Climate Change In terms of greenhouse gas emissions, Fertiberia was deficient in 30% in reference to CO 2. Fertiberia installations included in the ETSIII regime are the ammonia, nitric acid and boiler plants, so it was necessary to go to the CO 2 market for its acquisition. This situation affects all the ammonia producers in Europe, so that European authorities are studying the introduction of a special treatment for the Fertilizer and Steel sectors. Fertiberia already has available the Carbon Footprint of all its products, made using the calculator developed by the European Fertilizer Producers Association (Fertilizers Europe). Energy Efficiency In 2016 the modification of the ammonia plant in Puertollano ended. This project, financed by the IDAE, has led to a reduction in energy consumption of up to 8% in the case of the ammonia plant, as well as a reduction of more than 30,000 tco 2 / year. In 2017, a similar project will be undertaken at the Palos plant, which will reduce energy consumption by more than 5%. Environmental Investments In addition to the investments made in the factories of Puertollano and the one approved for the factory of Palos that amounts to more than 26 million euros other environmental investments have been made in all the installations, for value of 350,000 euros for the improvement and adaptation of these to the new environmental regulations. 88

89 Safety Fertiberia, S.A. directors report 2016 For another year, the audits carried out show that the Fertiberia Safety Management System works very satisfactorily. The OHSAS Certifications 18001: 2007 have been renewed in all factories. This certification covers aspects such as Occupational Hazard Prevention, Industrial Safety, Transport Safety, Classification and Labeling of Substances and Mixtures, Prevention of Serious Accidents involving Dangerous Goods, etc. In 2016 the factories of Avilés and Puertollano continued to beat records of accident-free days of their own personnel, with 2,643 and 1,312 days, respectively. With regard to auxiliary personnel, the factories in Puertollano and Sagunto also exceeded their own records, with 2,424 and 2,630 days without accidents, respectively. Training Training is a key aspect in raising awareness and motivating staff in the field of safety. A great effort has been made in the training of personnel, especially the Emergency Teams, carrying out about 80 drills and imparting almost 20,000 hours in this area. Accident rates The frequency index, calculated as the number of accidents causing sick leave per million hours worked, was 0.75 for the own staff, significantly improving the one of the year 2015 that was of For the staff of auxiliary companies the index fell from 3.37 to The severity index calculated as the number of days lost per thousand hours worked, stood at Own Personnel Accident Rates The frequency rate calculated as the number of accidents causing sick leave per million hours worked was 5.20 for the own staff and 3.37 for the staff of auxiliary companies, while the calculated severity index as the number of Days lost per thousand hours worked was

90 Results The year 2016 has been a year in which fertilizer prices have reached historical lows of the last 14 years, generating a huge lack of confidence in the sector, resulting in a slight drop in world consumption (for the first time in decades). In Spain, in addition, the situation has been aggravated by very adverse weather conditions, reducing consumption in the national market by 15%. Fertiberia has tackled this adverse context by adjusting sales prices to the market situation with the objective of maintaining market share and has managed with discipline the evolution of working capital reducing production and increasing exports. Likewise, it has implemented a rigorous policy of cost reduction, putting into practice certain divestment plans to protect itself against a possible extension of this scenario. Despite these measures of operational and financial discipline, the results obtained reflect the very difficult market situation in this year 2016: EBITDA was million euros, well below the million euros reached in financial year Operating income (EBIT) was million euros, compared to million euros for financial year The net result for financial year 2016 was a loss of million euros, whereas in the previous financial year this was a positive million euros. The total net bank debt of the Company (net of treasury and IFTs) amounts to million euros. 90

91 Prospects for 2017 Fertiberia, S.A. directors report 2016 Once the financial year 2016 is over, and with a greater perspective regarding the impact of the actions taken, it is possible to verify that: Following a financial year characterized by a continuing downward trend in prices, a turning point has been experienced in the last two months of the year, with increases in fertilizer prices, which has led to an increase in confidence in the sector as to what should be a change of trend. The extraordinary program of cost reduction faced by Fertiberia is being executed with greater speed and success of that initially planned, exceeding the amount of the savings this figure being nine million euros per year. This plan, however, is compatible with the investment agenda in innovation and with the efforts that are carried out in the improvement of the range of products that Fertiberia develops and introduces to the market. In the same way, other ambitious action continues to be carried out, such as the programs aimed at optimizing efficiency, which is already under way, including the project to improve energy efficiency in the factories of Puertollano and Palos, which are giving such good results Although the cost reduction plan has sometimes had a negative impact in the annual accounts for financial year 2016, as in the case of staff reductions, in the medium and long-term it will clearly improve the competitive position of the company for the next few years. Regarding the outlook for 2017, it is expected that the trend begun at the end of 2016 will continue, so that the price recovery is expected to be deeper and faster than the initial estimates anticipated. In short, Fertiberia tackles 2017 with much greater financial strength, greater cost competitiveness, increased market share and a commercial position of equal or greater strength, so the outlook in the market is clearly better than the scenario lived a few months ago. 91

92 Market study and investigation During 2016, we continued to work on the analysis and monitoring of the fertilizer market in Spain, Europe and globally. Likewise, and in order to provide management elements to other areas of the company, the analysis of all the factors directly and indirectly affecting the fertilizer sector has intensified. As far as the normative aspects are concerned, the Ministry of Agriculture and Fisheries, Food and Environment has worked closely with the new European regulations; with the Ministry of Industry, with ANFFE, Fertilizer Europe, as well as representatives in the European Union. The Ministry of Commerce has collaborated on aspects related to tariff policies, trade defense, trade agreements of the European Union and regulatory aspects related to these matters. A permanent contact has also been maintained with those responsible for the Environment and with the Spanish Office for Climate Change, and at the request of the administrations, collaboration with the National Plan for the Renewal of the Agricultural Machinery Park. Fertilizers Europe has actively participated in the Agriculture, Environment, Information, Trade Policy and Antidumping Committees, while with IFA there has been a permanent exchange of information on the demand and supply of fertilizers and on the factors that influence in the sector. There have been actions, both informative and technical, in the field of sustainable fertilization, participating in technical and scientific forums. Fertiberia Chair of Agro-Environmental Studies For ten years now, the Fertiberia Cátedra de Agroenvironmental Studies has promoted collaboration between the Universidad Politécnica de Madrid and Fertiberia on issues related to the entire life cycle of fertilizers, from their design to their application in the field. The activities developed in 2016 have been numerous and are a benchmark in the field of agronomy and university. We highlight the 9th Fertilization Conference for Sustainable Agriculture: Climatic Change and the Agricultural Sector and the Awards for the Best Projects and End-of-Course Work from the UPM and the University Master s Degree from UPM. 92

93 R&D and Agronomic Services In 2016, the Fertiberia Agro-environmental Technologies Centre was consolidated at the University of Seville, a center managed by the Directorate of Agronomic Innovation, which brings together research services and agronomic advice. Fertiberia, S.A. directors report 2016 The Agronomic Laboratory carried out more than 6,000 subscriber analyses and recommendations for customers of Fertiberia and its subsidiaries and provided analytical support to the company s R & D activities. The Agronomic Service continued to advise the farmer on the training and dissemination of the best use of fertilizers to contribute to sustainable agriculture. This year, we have continued to focus on research as an instrument for improving competitiveness through innovation, which is why we have close to 20 collaboration agreements with more than 15 research centers and universities. The R & D Directorate has maintained a broad portfolio of projects aimed at the design and development of advanced fertilizers, and at improving the most efficient management systems. The process of internationalization of R & D, started the previous year with the project H2020 NEWFERT, has been reinforced with the participation of Fertiberia in the project H2020 KARMA. These projects place Fertiberia at the forefront of research for the recovery and valuation of nutrients for its application in the mineral fertilizer industry. The effort that Fertiberia dedicates to research is always carried out with the aim of translating it into innovation. An example of this is the placing in the market of the range of Sulfactive products, which in a single fertilizer, has six fundamental nutrients with high solubility and that are fully assimilated by crops. 93

94 Labour matters The year 2016 has been a year of labour normality. The development of the Partial Retirement Plan in force in the Company will continued until December 2018, incorporating qualified young workers who replace older workers who voluntarily accept the Plan. During 2016, 33 workers have been hired in this type of handover, so that the workforce renewal since 2004, the year in which the Plan was started, already amounts to 66%. It should also be noted that during 2016 an ambitious Training Plan was developed, fundamentally in factories, aimed at optimizing the training of staff in the development of their jobs, as well as improving the personal qualification of the participants. 59,000 training hours have been given, representing an average of 76 hours received per employee. In the last quarter of the year light restructuring of the workforce took place, which has affected 20 workers, mainly from Head office, Huelva factory and the Bilbao warehouse, in order to adjust the headcount to the current needs of these centres. This restructuring has been agreed with the unions with the greatest representation in the company, although, given the number of workers affected, it has not been necessary to process a collective redundancy procedure. Permanent staff as at 31 December 2016 amounted to 789 workers. The distribution, by professional groups, is the following: Management personnel and qualified technicians 28.6% Operations personnel 41.4% Administrative personnel 10.4% Unqualified technicians 19.6% 94

95 Operations with own shares None. Fertiberia, S.A. directors report 2016 Post balance sheet events The Company has submitted to the banking entities participating in the syndicated loan a waiver request for the non-compliance in 2016 of two of the financial ratios established in the financing agreement, being at the date of preparation of these annual accounts in an advanced phase of negotiation, with the objective of establishing the final terms for the granting of the dispensation. In addition to the above, there have been no significant events since 31 December 2016 until the date of preparation of these annual accounts that, if they were affected, would not have been included in them or whose knowledge could be useful to a user of the same. 95

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97 Fertiberia, S.A. proposal for the distribution of the result proposal for the distribution of the result 97

98 Proposal for the distribution of the results from financial year 2016 It is proposed to apply the losses for the year amounting to 35,586, euros to Negative Results for Previous Financial Years. Madrid, 23 March

99 Fertiberia, S.A. proposal for the distribution of the result

100 commercial network north Ctra. Nacional 122, km 405,5 Villalar de los Comuneros Valladolid (Spain) Tel.: south Central-Levante Chemical Park. South Puerto Sagunto Valencia (Spain) Tel.: Andalusia - Extremadura Ctra. Punta del Verde, s/n Seville (Spain) Tel.: Fertiberia, S.A. Torre Espacio P. de la Castellana, 259-D. 48 th floor Madrid (Spain) Tel.: Fax: fertiberia@fertiberia.es fertiberia.com Growing together.