Independent Audit Report

Transcription

1 2015 Independent Audit Report AHORRO CORPORACIÓN FINANCIERA, S.V. S.A. Annual Accounts and Management Report corresponding to the year ended 31st December 2015

2 INDEPENDENT AUDIT REPORT OF ANNUAL ACCOUNTS Ernst & Young, S.L. Torre Picasso Plaza Pablo Ruiz Picasso, Madrid Tel.: Fax: To the shareholders of AHORRO CORPORACIÓN FINANCIERA, S.V., S.A.: REPORT ON THE ANNUAL ACCOUNTS We have audited the attached Annual Accounts of AHORRO CORPORACIÓN FINANCIERA, S.V., S.A., which comprise the balance sheet at December 31, 2015, the profit and loss account, the statement of changes in equity, the statement of cash flow and the Annual Accounts for the year ended on that date. Liability of directors in relation to the Annual Accounts The directors are responsible for formulating the accompanying Annual Accounts, so that they show a true reflection of the equity, financial situation and the results of AHORRO CORPORACIÓN FINANCIERA, S.V., S.A., in accordance with the regulatory framework of financial information applicable to the entity in Spain, which is identified in Note 2 of the accompanying report, and the internal control deemed necessary to enable the preparation of the Annual Accounts free from substantial inaccuracies due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on the accompanying Annual Accounts based on our audit. We have conducted our audit in accordance with the regulatory standards of the audit practice in force Spain. These regulations require that we comply with ethical requirements and plan and perform the audit in order to obtain reasonable assurance that the Annual Accounts are free of substantial misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Annual Accounts. The procedures selected depend on the auditor's opinion, including the assessment of the risks of substantial inaccuracy in the Annual Accounts due to fraud or error. In making those risk assessments, the auditor considers internal control that is relevant to the formulation by the entity of the Annual Accounts, in order to design audit procedures that are appropriate in terms of the circumstances, and not for the purpose of expressing an opinion on the effectiveness of the internal control of the entity. An audit also includes evaluating the appropriateness of the accounting policies applied and the reasonableness of accounting estimates made by the management, as well as evaluating the overall presentation of the Annual Accounts taken as a whole. We believe that the audit evidence we have obtained provides a sufficient and adequate basis for our audit opinion. 1

3 Opinion In our opinion, the Annual Accounts attached, express in all significant respects, a true and fair image of the equity and of the financial position of AHORRO CORPORACIÓN FINANCIERA, S.V., S.A. at December 31, 2015, and of its results and cash flow corresponding to the fiscal year ended on that date, pursuant to the regulatory financial reporting framework that is applicable and in particular, to the accounting principles and criteria contained therein. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS The attached management report for 2015 contains the explanations that the directors consider relevant to the situation of the company, the evolution of its activities and other matters, and are not an integral part of the Annual Accounts. We have verified that the accounting information contained in the aforementioned management report is consistent with the Annual Accounts for the year Our work as auditors is limited to verifying the management report to the extent mentioned in this paragraph and it does not include the review of information other than that drawn from the accounting records of AHORRO CORPORACIÓN FINANCIERA, S.V., S.A. April 1, Francisco J. Fuentes García 2

4 ANNUAL ACCOUNTS BALANCE SHEET PROFIT AND LOSS ACCOUNTS STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS REPORT 3

5 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Balance Sheet at December 31 ASSETS NOTE Liquid Assets 7 66, ,590, Trading portfolio 8 483,040, ,228, Debt securities 119,524, Capital Instruments 404, , Trading derivatives 363,111, ,821, Other financial assets - - Memorandum: Loaned or as collateral - - Other financial assets at fair value with changes in profit and loss - - Debt securities - - Other capital instruments. - - Other financial assets - - Memorandum: Loaned or as collateral - - Financial assets available for sale 9 8, , Debt securities - - Capital instruments 8, , Memorandum: Loaned or as collateral - - Loan investments ,960, ,425, Loans to financial intermediaries 231,997, ,443, Loans to individuals 4,963, ,981, Other financial assets - - Held-to-maturity investment portfolio - - Memorandum: Loaned or as collateral - - Hedging derivatives Non-current assets held for sale - - Debt securities - - Capital instruments - - Tangible assets - - Miscellaneous - Shareholdings , , Group Companies 556, , Jointly controlled entities - - Associated companies - - Insurance contracts linked to pensions - - Tangible assets , , For own use 559, , Real Estate investments - - Intangible assets 189, , Goodwill - - Other intangible assets , , Tax assets Current - - Deferred - - Other assets 15 3,551, ,055, TOTAL ASSETS 724,934, ,696,

6 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Balance sheet at december 31 LIABILITIES AND EQUITY NOTE Trading portfolio 8 418,263, ,460, Other liabilities at fair value with changes in profit and loss - - Financial liabilities at amortised cost ,613, ,357, Debts with financial intermediaries 197,871, ,694, Debts with individuals 53,742, ,662, Borrowings and subordinated liabilities - - Other financial liabilities - - Hedging derivatives Liabilities associated with non-current assets held for sale - - Provisions 4,278, , Provisions for pensions and similar obligations - - Provisions for taxes and other legal contingencies - - Other provisions 17 4,278, , Tax Liabilities Current - - Deferred - - Other liabilities 15 1,321, ,903, TOTAL LIABILITIES 675,477, ,329, OWN FUNDS 49,456, ,366, Capital ,603, ,603, Subscribed 28,603, ,603, Less: Uncalled capital: - - Issue premium ,913, ,913, Reserves ,849, ,310, Other capital instruments. - - Less: Own securities - - Profit for the year 4 (2,909,612.23) (2,460,708.54) Less: Dividends and remunerations - - VALUATION ADJUSTMENTS Financial assets available for sale - - Cash flow hedges - - Hedges for net investments in foreign businesses - - Currency exchange differences - - Other valuation adjustments - - GRANTS, DONATIONS AND LEGACIES - - TOTAL EQUITY 49,456, ,366, TOTAL LIABILITIES AND EQUITY 724,934, ,696,

7 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Balance Sheet at December 31 MEMORANDUM NOTE Guarantees and securities granted 135,455, ,787, Other contingent liabilities - - Purchase commitment for term securities , ,523, Own stock given as loan - - Disbursements committed due to underwriting - - Financial derivatives 4,836,530, ,367,749, Other financial risk and commitment accounts 6,104, ,040, TOTAL FINANCIAL RISK AND COMMITMENT ACCOUNTS ,978,178, ,655,100, Deposit of securities 13,568,418, ,114,189, Managed portfolios 1,569, Other memoranda accounts 517,365, ,759, TOTAL OTHER MEMORANDA ACCOUNTS ,087,354, ,681,948,

8 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Profit and loss account corresponding to the year ended December 31 NOTE Interest and similar revenues , ,257, Interest and similar charges 19.1 (371,238.98) (735,505.72) INTEREST MARGIN 472, ,522, Return on capital instruments 26, Fees received ,684, ,204, Fees paid (-) 19.1 (8,322,748.35) (4,218,046.04) Financial transactions results (net) ,563, , Trading portfolio 8.3 4,411, , Other financial instruments at fair value with changes in profit and loss - - Financial instruments not measured at fair value with changes in profit and loss 9 152, (3,669.65) Miscellaneous - - Exchange rate differences (net) 66, , Other operating products 23, , Other operating expenses 19.4 (675,039.31) (427,677.84) GROSS MARGIN 23,838, ,789, Personnel expenses 19.2 (19,315,384.30) (16,807,056.33) Overheads 19.3 (9,670,655.06) (10,145,920.61) Depreciation 12 (283,350.77) (333,689.24) Allocations to provisions (net) (3,581,783.26) (120,269.95) Impairment losses on financial assets (net) 4,301, (4,315,650.79) Loan investments ,579, (4,196,825.34) Other financial instruments not measured at fair value with changes in profit and loss 13 (277,847.57) (118,825.45) RESULT OF THE OPERATING ACTIVITY (4,710,619.46) (2,933,200.56) Impairment losses on other assets (net) - - Tangible fixed assets - - Intangible assets - - Remainder - - Profits/(Losses) on disposal of non-current assets held for sale 12, , , Negative difference on business combinations - - Profits/(Losses) on non-current assets held for sale not classified as discontinued operations - - RESULTS BEFORE TAX (3,891,741.02) (2,460,708.54) Tax on profits , RESULT FOR THE YEAR FROM CONTINUING OPERATIONS (2,909,612.23) (2,460,708.54) Result from discontinued operations (net) - - RESULTS FOR THE YEAR (2,909,612.23) (2,460,708.54) EARNINGS PER SHARE Basic - - Diluted - - 7

9 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Statement of Recognised Income and Expenses corresponding to the year ended December A) PROFIT FOR THE YEAR (2,909,612.23) (2,460,708.54) B) OTHER RECOGNISED INCOME/EXPENSES Financial assets available for sale - - a) Gains/(Losses) by valuation 152, (3,669.65) b) Amounts transferred to the profit and loss account (152,341.83) 3, c) Other reclassifications Cash flow hedges - - a) Gains/(Losses) by valuation - - b) Amounts transferred to the profit and loss account - - c) Amounts transferred to initial value of hedged items - - d) Other reclassifications Hedges for net investments in foreign operations - - a) Gains/(Losses) by valuation - - b) Amounts transferred to the profit and loss account - - c) Other reclassifications Exchange rate differences - - a) Gains/(Losses) by valuation - - b) Amounts transferred to the profit and loss account - - c) Other reclassifications Non-current assets held for sale - - a) Gains/(Losses) by valuation - - b) Amounts transferred to the profit and loss account - - c) Other reclassifications Actuarial Gains/(Losses) on pension schemes Remainder of recognised income and expenditure Tax on profits - - TOTAL RECOGNISED INCOME AND EXPENDITURE (A+B) (2,909,612.23) (2,460,708.54) 8

10 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Statement of changes in equity corresponding to the year ended December 31, 2015 TOTAL OWN FUNDS VALUATION ADJUSTMENTS CAPITAL SHARE PREMIUM AND RESERVES (1) OTHER CAPITAL INSTRUMENTS RESULTS FOR THE YEAR TOTAL OWN FUNDS FINANCIAL ASSETS AVAILABLE FOR SALE HEDGES TOTAL ADJUSTMENTS GRANTS, DONATIONS AND LEGACIES TOTAL EQUITY Closing balance at 31/12/ ,603, ,223, (2,460,708.54) 52,366, ,366, Adjustments for changes in accounting criteria Adjustments for errors Adjusted opening balance 28,603, ,223, (2,460,708.54) 52,366, ,366, Total recognised income/(expenditure) (2,909,612.23) (2,909,612.23) (2,909,612.23) Other variations in equity - (2,460,708.54) - 2,460, Capital increase Reductions in capital Conversion of financial liabilities into capital Reclassification of financial liabilities to other Capital instruments Increase of other Capital instruments Distribution of dividends/remunerations to partners (Note 16.1) Transactions with own Capital instruments (net) Transfers between equity items - (2,460,708.54) - 2,460, Increase (decrease) due to business combinations Payments with capital instruments Other increases (decreases) in equity Closing balance at 31/12/ ,603, ,762, (2,909,612.23) 49,456, ,456, (1) The Share Premium and Reserves column, for the purposes of this statement, includes the following headings of equity in the Balance Sheet: Issue premium, Reserves, Other contributions and Less: Dividends 9

11 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Statement of changes in equity corresponding to the year ended December 31, 2014 TOTAL OWN FUNDS VALUATION ADJUSTMENTS CAPITAL SHARE PREMIUM AND RESERVES (1) OTHER CAPITAL INSTRUMENTS RESULTS FOR THE YEAR TOTAL OWN FUNDS FINANCIAL ASSETS AVAILABLE FOR SALE HEDGES TOTAL ADJUST MENTS GRANTS, DONATIONS AND LEGACIES TOTAL EQUITY Closing balance at 31/12/ ,517, ,047, ,178, ,743, ,743, Adjustments for changes in accounting criteria Adjustments for errors Adjusted opening balance 28,517, ,047, ,178, ,743, ,743, Total recognised income/(expenditure) (2,460,708.54) (2,460,708.54) (2,460,708.54) Other variations in equity 86, (8,824,606.59) - (8,178,090.51) (16,916,195.17) (16,916,195.17) Increase in capital 86, , , , Reductions in capital Conversion of financial liabilities into capital Reclassification of financial liabilities to other Capital instruments Increase of other Capital instruments Distribution of dividends/remunerations to partners (Note 16.1) - (17,082,000.00) - - (17,082,000.00) (17,082,000.00) Transactions with own Capital instruments (net) Transfers between equity items - 8,178, (8,178,090.51) Increase (decrease) due to business combinations Payments with capital instruments Other increases (decreases) in equity Closing balance at 31/12/ ,603, ,223, (2,460,708.54) 52,366, ,366, (1) The Share Premium and Reserves column, for the purposes of this statement, includes the following headings of equity in the Balance Sheet: Issue premium, Reserves, Other contributions and Less: Dividends 10

12 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Cash flow statement corresponding to the year ended december 31 NOTE CASH FLOWS FROM OPERATING ACTIVITIES 2,462, (3,050,335.60) Profit for the year (2,909,612.23) (2,460,708.54) Adjustments to obtain cash flows from operating activities (2,260,610.10) 4,404, Depreciation 283, , Net losses on impairment of assets (4,301,962.36) 4,315, Net allocations to risk provisions 3,581, , Profit from the sale of non-financial assets (818,878.44) (382,492.02) Profit on sale of shares - (1.73) Other items (1,004,903.33) 17, Adjusted profit (5,170,222.33) 1,943, Net Increase (decrease) in operating assets (+/-) 61,644, ,444, Loan investments 181,034, ,547, Trading portfolio (119,522,653.51) (55,864,762.82) Other financial assets at fair value with changes in profit and loss - - Financial assets available for sale 309, (96,402.92) Other operating assets (177,150.86) 858, Net Increase (decrease) in operating liabilities (+/-) (53,776,851.02) (31,800,435.23) Financial liabilities at amortised cost (42,772,285.10) (80,677,144.47) Trading portfolio (10,486,908.92) 56,915, Other financial liabilities at fair value with changes in profit and loss - - Other operating liabilities (517,657.00) (8,038,978.03) Proceeds / payments of income tax (234,738.24) (637,710.46) 2. CASH FLOWS FROM INVESTMENT ACTIVITIES 151, (2,543,802.76) Payments (-) (686,735.77) (2,543,802.76) Held-to-maturity investment portfolio - - Shareholdings (456,788.87) (2,196,140.34) Material assets 12.1 (165,888.10) (294,882.88) Intangible assets 12.2 (64,058.80) (52,779.54) Other business units - - Non-current assets and associated liabilities for sale - - Other payments related to investment activities - - Payments received 838, Held-to-maturity investment portfolio - - Shareholdings - - Material assets 7, Intangible assets - - Other business units , Non-current assets and associated liabilities for sale - - Other payments related to investment activities CASH FLOWS FROM FINANCING ACTIVITIES - (16,916,195.46) Payments (-) - - Depreciation equity instruments - Acquisition of own capital instruments - Return and amortisation of debenture stock and other securities - Return and amortisation of subordinated liabilities, loans and other forms of financing received - Payments received - 165, Issuance of equity instruments - - Issuance and sale of own capital instruments - 165, Issuance of debenture stock and other marketable securities - - Issuance of subordinated liabilities, loans and other forms of financing - - Dividends paid and remuneration of other equity instruments (-) (17,082,000.00) 4. Effect of changes in exchange rates on cash and cash equivalents NET INCREASE (DECREASE) IN CASH AND CASH AND CASH EQUIVALENTS ( ) 2,614, (22,510,333.82) Cash and cash equivalents at the beginning of the year 3.v 93,867, ,378, Cash and cash equivalents at the end of the year 3.v 96,482, ,867,

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14 CONTENTS 1. ACTIVITY AND GENERAL INFORMATION 2. BASIS OF PRESENTATION OF ANNUAL ACCOUNTS 3. PRINCIPLES AND VALUATION CRITERIA APPLIED 4. DISTRIBUTION OF PROFITS 5. CAPITAL MANAGEMENT 6. MANAGEMENT OF RISK LINKED TO FINANCIAL INSTRUMENTS 7. LIQUID ASSETS 8. TRADING PORTFOLIO 9. FINANCIAL ASSETS AVAILABLE FOR SALE 10. HEDGING DERIVATIVES 11. CREDIT INVESTMENT 12. TANGIBLE AND INTANGIBLE ASSETS 13. SHARES IN GROUP COMPANIES 14. FINANCIAL LIABILITIES AT AMORTISED COST 15. OTHER ASSETS AND LIABILITIES 16. EQUITY 17. PROVISIONS 18. RISK AND COMMITMENT ACCOUNTS AND MEMORANDUM ACCOUNTS 19. PROFIT AND LOSS ACCOUNT 20. FINANCIAL SITUATION 21. RELATED PARTIES 22. OTHER INFORMATION 23. EVENTS AFTER THE BALANCE SHEET DATE 13

15 AHORRO CORPORACIÓN FINANCIERA, SOCIEDAD DE VALORES, S.A. Year ended December 31, ACTIVITY AND GENERAL INFORMATION 1.1. Name of the company, legal form and address of its registered office Ahorro Corporación Financiera, S.V., S.A. was incorporated for an indefinite period via public deed dated July 7, The Company is registered in the Registry of Securities Companies of the National Securities Market Commission (hereinafter C.N.M.V.) under number 24, and operates through offices opened in Madrid and Barcelona. The Company is a member of the Stock Exchanges of Madrid, Barcelona, Valencia and Bilbao. The Board of Shareholders of the Company, at its meeting held on December 21, 2001, in order to adapt to the provisions of Royal Decree 867/2001 of July 20, agreed to change the name of Ahorro Corporación Financiera, S.V.B., S.A. to Ahorro Corporación Financiera, S.V., S.A. This agreement was notarised via a public document on February 28, The registered office is in Madrid, Paseo de la Castellana, 89, and its corporate purpose is as follows: Investment services in the terms established in Article 63.1 of Law 24/1988 on the Securities Market Law (LMV): a) The reception and transmission of orders from clients in relation to one or more financial instruments. b) The execution of such orders on behalf of clients. c) Independent negotiation. d) The discretionary and individualised management of investment portfolios in accordance with mandates given by clients. e) The placement of financial instruments, whether based on a firm commitment or not. f) The underwriting of an issuance or placement of financial instruments. g) Investment advice. As ancillary services the Company may offer the following, under the terms set forth in Article 63.2 of the Security Markets Law (LMV): a) The custody and administration on behalf of clients of the instruments provided for in Article 2 of the Securities Market Law (LMV). b) The granting of credits or loans to investors to enable them to perform a transaction on one or more instruments provided for in Article 2 of the Securities Market Law (SML), provided that the firm granting the credit or loan is involved in such transaction. c) To advise companies on capital structure, industrial strategy and related matters, and advice and other services in connection with company mergers and acquisitions. 14

16 d) Services related to underwriting issuance transactions or placing of financial instruments. e) The development of investment and financial analysis reports or other forms of general recommendation relating to transactions on financial instruments. f) Foreign exchange services, when they are related to the provision of investment services. In FY 2015 the Company took over a number of distribution agreements between Ahorro Corporación Gestión, SGIIC, S.A. and other foreign management companies. At December 31, 2015 the Company is a distributor of the foreign UCITS included in Annex I. The execution of the activities listed above will be subject to an explicit statement to the CNMV of the intention to perform each of these activities, in general or limited scope, as desired in each case. For these purposes the Company produced the corresponding statement of activities. The Company is, with the following entities, a consolidated group of financial entities, as defined in Royal Decree 1332/2005, of November 11, implementing Law 5/2005 of April 22, on the monitoring of financial conglomerates: Ahorro Corporación S.A. ACF International Inc. Ahorro Corporación Inmuebles, S.A. Vehículo de Tenencia y Gestión 3, S.L. Ahorro Corporación Coinversión, S.C.R., S.A.U. Sistemas de Tesorería, S.L. (previously Indra Sistemas de Tesorería, S.L.) Meldon Inversiones 2008, S.L.U. Red Plural de Cooperativas, S.L. Alfa Meldon, S.L.U. Beta Meldon, S.L.U. Ahorro Corporación, S.A. has been designated by the National Securities Market Commission as an entity obliged to separately formulate the consolidated annual accounts of the Ahorro Corporación Group, which are also subject to an independent audit Preparation of the Annual Accounts The Annual Accounts for FY 2015, which were prepared by the Board of Directors at their meeting on March 14, 2015, are pending approval by the General Shareholders Meeting of the Company. However, the Directors believe that these Annual Accounts will be approved without any modifications. The annual account for 2014 were approved by the General Shareholders Meeting of the Company held on April 29, These accounts were prepared in accordance with the provisions of Circular 7/2008 of 26th November, of the C.N.M.V. 15

17 1.3. Relevant legislation The activities carried out by the Company are governed by Law 24/1988, of July 28, for the Stock Market, amended by Law 37/1998, of November 16, by Law 44/2002 of November 22 and by Law 26/2003, of July 17, Order ECO/734/2004 of March 11, by Royal Decree 217/2008 of February 15, implementing Law 47/2007 of December 19, on the legal status of investment services companies. The Company is subject to compliance on a basis of a solvency ratio (see Note 5) and the maintenance of a certain minimum liquidity value on customer balances (see Note 6.4). On June 26, 2013 the European Parliament and Council published Regulation (EU) No. 575/2013 on prudential requirements for credit institutions and investment service companies, of obligatory compliance for member states and applicable from January 1, Merger through the absorption of Gesmosa-GBI, A.V., S.A. (merged company) by the Company (merging company) The Boards of Directors of the Company, as the merging company and of the merged company, Gesmosa-GBI, A.V., S.A. formulated and signed the joint merger project on March 27, 2014, which was further approved by the General Shareholders Meeting of the companies participating in the merger, on September 10, 2014, with accounting effect as from January 1, Prior to the approval of the relevant General Meeting dated July 18, 2014, the Honourable Minister of Economy and Competitiveness issued a ministerial order, which was reported to the CNMV by the Department of the Treasury and Financial Policy, dated July 25, 2014, whereby the merger of Gesmosa-GBI, A.V., S.A. by Ahorro Corporación Financiera, S.V., S.A. was authorised. This merger was carried out by the special simplified procedure set out in Article 50 of Law 3/2009 on Structural Modifications of Trading Companies, for which reason it has not been necessary for directors or experts to prepare a joint report on the merger. The minority shareholders of the merged company, in accordance with the provisions of Article 50.1 and related provisions of the Law 3/2009 of April 3, on structural modifications of trading companies and the provisions of the Joint Merger Project, agreed to exercise their right to accept the offer made by the merging company, under which they purchased the shares of minority shareholders at a price of euros per share. Therefore, as a result of the merger, the Company Gesmosa-GBI, A.V., S.A. was terminated and dissolved, without liquidation, all the shares representing the share capital of the merged company being cancelled and redeemed. Furthermore, the total assets of the merged company were transferred en bloc to the merging company, by universal succession, being the merging company subrogated to all rights and obligations of the merged company, without any reservation, exception or limitation. This involves the transfer of ownership of those assets, rights and shares comprising the aforementioned assets of Gesmosa-GBI, A.V., S.A. 2. BASIS OF PRESENTATION OF ANNUAL ACCOUNTS 2.1. Basis of presentation for the Annual Accounts The Company's Annual Accounts are presented following the criteria and formats stipulated by Circular 7/2008 of November 26, of the C.N.M.V. on accounting standards, Annual Accounts and information statements reserved for investment services companies, management companies of collective investment institutions and management companies of venture capital companies (hereinafter Circular 7/2008) so that they present a fair view of the financial situation of the Company at December 31, 2015 and the results of its operations and the changes in equity and cash flows for 16

18 the year then ended. The aforementioned Annual Accounts were prepared based on the accounting records of the Company. Circular 7/2008 aims to amend the accounting system of the entities to which it applies, to adapt to the new accounting framework established in the General Accounting Plan approved by Royal Decree 1514/2007 of November 16. Thus, accounting standards and criteria are established, which, although part of the principles and guidelines of the New General Accounting Plan, adapt this to their own and specific characteristics of investment services companies, management companies of collective investment institutions, and management companies of venture capital entities, allowing for their adequate and effective supervision while ensuring the protection of investors. The accounting principles and standards and assessment criteria set out in Circular 7/2008, summarised in Note 3, have been followed in the preparation of these Annual Accounts. There are no mandatory accounting policies and valuations that, having a significant effect on the Annual Accounts, have not been applied. Changes in accounting policies, either because the rules have changed or because the Directors decide to vary the application criteria retroactively, entail adjusting the amounts of the items affected, using as a balancing item the corresponding equity in the older opening balance sheet on which comparative information is published, as if the new accounting policy had always been applied. No retroactive application of the new criterion is carried out when this is impracticable or the regulation which modifies it stipulates the date from which it must be applied. When errors from previous years are detected which are the result of omissions or inaccuracies, or a failure to use information available in such periods, these errors are corrected by applying the abovementioned rules in case a change takes place in the accounting criteria applied. The figures included in these Annual Accounts are shown in Euros, unless indicated otherwise Use of opinions and estimations in the preparation of the Annual Accounts In preparing the Annual Accounts of the Company the Directors have had to make value judgements, estimations and assumptions that affect the application of accounting policies and the balances of assets, liabilities, income and expenses, as well as the disclosure of contingent liabilities existing at the date these Annual Accounts were issued. Value judgements, estimations and assumptions made are based on historical experience and various other factors that are understood to be reasonable under the circumstances and whose results form the basis to establish the book value of assets and liabilities that are not readily available through other sources. Estimations and assumptions are reviewed on an ongoing basis. However, the inherent uncertainty of estimations and assumptions could result in significant adjustments in the future to the values of the assets and liabilities affected. Value judgements and the most significant estimations used in the preparation of these Annual Accounts relate to: Estimating the recoverability of doubtful debts (Notes 3.i y 6.2) Valuation of financial instruments (Notes 3.h.4 and 6.1) Recovery of deferred tax assets (Note 20) 2.3 Comparison of information In accordance with commercial legislation, the Directors of the Company present, for comparative purposes, with each of the items from the balance sheet, from the profit and loss account, from the recognised income and expenditure statement, from the statement of changes in equity, the cash flow statement and report, together with the figures for 2015, those corresponding to the previous year. In this regard the models for the balance sheet, profit and loss account, recognised income and 17

19 expenditure statement, statement of changes in equity and cash flow statement presented in these Annual Accounts conform to the models contained in Circular 7/2008. According to that established in the single additional provision of the Resolution of January 29, 2016, of the Institute of Accounting and Auditing on the information to be included in the notes to the Annual Accounts in relation to the average payment period to suppliers in business operations, the Company provides in Note 22.7 only the information relating to the financial year, and no comparative information is submitted, thus qualifying these Annual Accounts as initial, this being the sole intention, as regards the application of the principle of uniformity and the comparability requirement. 3. PRINCIPLES AND VALUATION CRITERIA APPLIED The most important accounting principles and criteria that have been applied in preparing these Annual Accounts are summarised below, which meet the requirements of Circular 7/2008: a) Going concern principle The business of the Company and its Group has been affected in recent years by the financial crisis and its impact on the current economy, which has mainly resulted in lower levels of activity in the various businesses and difficult access to funding markets. In this context the company has taken measures in recent years aimed at adapting its capacity to the situation and prospects of the business, with the support to this end of the Group and its shareholders. These measures were supplemented by others aimed at streamlining the structure and balance of the Company and its Group. This restructuring process has been carried out mainly in two areas. First, a plan was launched to divest on non-strategic assets, and second, a very significant reduction in financing needs and operating expenses has been conducted. Within the first bundle of measures, portfolios were materialised, positions were liquidated, and divestment took place in companies and assets that are considered non-strategic for the future development of the company and its group, and the company s headquarters were sold. Additionally, the credit lines were renegotiated and a job reduction programme was launched. All the above was planned and performed in order to allow the Company and its Group to continue trading independently, with a stable capital base. It should also be noted that the Group maintains a level of regulatory capital above the minimum required by applicable legislation. According to the above, the Directors believe that the continuity of operations of the Company is guaranteed because in no case can the activities sold and / or abandoned be considered strategic for the Company and its Group. Consequently, the Directors have prepared these Annual Accounts based on the principle of going concern, trusting that the management of the Company will continue in the future. b) Accrual basis These Annual Accounts, except with regard to the status of cash flows, have been prepared based on the actual flow of goods and services, regardless of the date of payment or collection. c) Principle of prudence For the preparation of estimates and valuations in conditions of uncertainty the Company accounts only for profits obtained until the close of the year. By contrast, in the preparation of these Annual Accounts, all the risks originated in the year or in the previous year are taken into account as soon as 18

20 they are known, without prejudice to their subsequent reflection in other documents forming part of the Annual Accounts, when the liability or expense is generated. d) Compensation of balances Only compensated amongst each other and, consequently, presented on the balance sheet at their net amount, are the debtor and creditor balances arising from transactions in which, contractually or through the operation of a legal regulation, feature the possibility of offsetting and an intention to settle on a net basis or to realise the asset and settle the liability simultaneously. e) Principal of materiality The principle of materiality has been maintained for the preparation of these Annual Accounts, so the Company has chosen to group the items or amounts of a similar nature, provided that their relative importance is not significant. In this way the Company's true and fair view is not altered. f) Foreign Exchange transactions For the purposes of these Annual Accounts the euro has been considered as the presentation and functional currency, foreign currency being understood as any currency other than the euro. On initial recognition, receivables and payables in foreign currency balances have been converted into euros using the cash exchange rate. Subsequent to that time, the following rules for converting balances denominated in foreign currencies into euros apply: The assets and liabilities of a monetary nature are converted into euros using the average official exchange rates as published by the European Central Bank at the date of close of each year. Non-monetary items valued at historic cost are converted at the exchange rate of the acquisition date. Non-monetary items valued at fair value are converted at the exchange rate of the date when the fair value was determined. Income and expenses are converted at the exchange rate on the date of the transaction. Amortisations are converted at the exchange rate applied to the corresponding asset. Exchange rate differences arising on the conversion of foreign currency balances are recorded in the profit and loss account, except for differences arising on non-monetary items valued at fair value whose adjustment to this fair value is recognised in equity up to the time when these are carried out. g) Recognition of income and expenses As a general rule, income is recognised at the fair value of the consideration received or to be received, minus related discounts, rebates and trade discounts. When the cash entry differs in time, the fair value is determined by discounting future cash flows. The recognition of any income in the profit and loss account or equity will be subject to compliance with the following assumptions: The amount can be reliably estimated. It is probable that the entity will receive the economic benefits. The information can be verified. 19

21 When doubts arise about being able to collect an amount previously recognised as income, the amount whose payment is no longer probable, is recorded as an expense and not as a reduction of income. All debt instruments that are individually classified as impaired by the Company, as well as those for which impairment losses have been calculated collectively, due to having amounts overdue by more than three months, have their interest accrual interrupted. Interest and dividends are recognised in the profit and loss account based on the following criteria: Interests use the effective interest rate method for recognition in the profit and loss account. Dividends are recognised when the shareholder's right to receive payment is established. Notwithstanding the foregoing, interest and dividends accrued prior to the date of acquisition of the instrument and pending payment are not part of the acquisition cost and are not recognised as revenue. h) Financial instruments A financial instrument is a contract that gives rise to a financial asset in an entity and, simultaneously, a financial liability or equity instrument in another entity. Financial instruments are recognised in the balance sheet only when the Company becomes a party to the contract in accordance with its specifications. The Company recognises receivables or payables for credits and debits from the date on which the legal right to receive arises, or the legal obligation to pay cash arises, and for financial derivatives from when the trade date arises. Additionally, transactions in the foreign exchange market will be registered on the settlement date, and for financial assets traded on secondary markets in Spain; if they are Capital Instruments they will be recognised on the trade date and, if they are debt securities, on the settlement date. Financial instruments issued by the Company, as well as their components, are classified as financial liabilities at the date of initial recognition, in accordance with their economic substance when this does not coincide with their legal form. Remunerations, changes in book value and the results associated with the repurchase or refinancing of financial liabilities are recognised in the profit and loss account as a financial expense. Likewise, the issue costs of financial liabilities are recorded in the profit and loss account using the effective interest rate method. h.1) Financial assets Financial assets are, among others, the balance in cash, loans to financial intermediaries, loans to individuals, debt securities, Capital Instruments acquired, except those for subsidiaries, jointly controlled entities or associated companies, and derivatives from trading and hedging. The Company classifies its financial assets in the following portfolios for valuation purposes: "Financial assets at fair value with changes in profit and loss." - "Trading portfolio." Financial assets originated or acquired with the intention of realising them in the short-term, or that are part of a portfolio of identified financial instruments and managed together so that there is evidence of recent actions to obtain short-term profit. Part of this portfolio also includes derivative instruments not designated as hedging instruments. 20

22 - "Other assets at fair value with changes in profit and loss". The Company includes hybrid financial instruments in this category, which must be measured at fair value according to Circular 7/2008. "Held-to-maturity investment portfolio." Includes debt securities with fixed maturities, whose future flows are a fixed or determinable amount, and that the Company has the positive intention and demonstrated financial capacity, both initially and at any time thereafter, to hold them to maturity. "Loan investments." Include financial assets that, as they are not traded on an active market or required to be valued at fair value, feature cash flows of a fixed or determinable amount, and which are expected to recover the entire disbursement made by the Company, except for reasons related to the debtor's solvency. This category includes investments in the loan activity to financial intermediaries and loans to individuals. "Financial assets available for sale." This portfolio includes debt securities not classified as investment at maturity or at fair value with changes in profit and loss, capital instruments of entities other than subsidiaries, associates and jointly controlled entities of the Company, as well as shareholdings in investment funds which have not been included in the category of fair value with changes in profit and loss. Upon initial recognition in the balance sheet, financial assets are recorded at fair value. Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in a transaction at arm's length. After their initial recognition, the Company measures all financial assets, including derivatives that are assets, at fair value, without deducting any transaction costs that might be incurred by their sale or other form of disposal, with the following exceptions: Financial assets included in the category of "Loan investments" and "Investment portfolio held to maturity", which will be measured at their amortised cost. Financial assets that are Capital Instruments whose fair value cannot be estimated reliably and derivatives that have those instruments as underlying assets and are settled by their delivery, which are valued at cost. The fair value of a financial instrument is understood as the amount for which this instrument could be bought or sold on a certain date, between two knowledgeable, willing parties in a transaction at arm's length. The amortised cost is the cost of the acquisition of a corrected financial asset or liability (plus or minus, as appropriate) by principal repayments and interest payments, plus or minus, as appropriate, the portion allocated to the profit and loss account using the effective interest rate, of the difference between the initial amount and the redemption value of such financial instruments. In the case of financial assets, the amortised cost also includes corrections to their value motivated by any impairment that may have arisen. The effective interest rate is the rate that exactly matches the initial value of a financial instrument to all its estimated cash flows for all items throughout its residual life. For financial instruments with a fixed interest rate, the effective interest rate coincides with the contractual interest rate established at the time of their acquisition, plus, where appropriate, the fees which, by their nature, can be equated to an interest rate. In financial instruments with variable interest rates, the effective interest rate coincides with the rate of return prevailing in all items until when the first revision of the interest rate of reference is to take place. Financial assets are derecognised from the Company s balance sheet when the contractual rights have expired on cash flows or when they are transferred as long as in the risks and benefits are 21

23 substantially transferred, or, when control of the financial asset is transferred, even if there is no substantial transfer or retention thereof. In the latter case, when control of the asset is not transferred they continue to be recognised for their continued commitment, i.e. an amount equal to the Company's exposure to changes in value of the transferred financial asset. Furthermore, the Company will consider written-off balances as the amount of debt instruments, due or not, for which, after an individual analysis, their recovery is considered remote and will derecognise the asset. Unless proven otherwise, this category will include all debts, except the amounts covered by sufficient effective guarantees, of customers that are declared insolvent, for those that have been declared or are about to be declared in the liquidation phase, or suffer a significant and irrecoverable deterioration in their solvency and balances of operations, classified as doubtful due to arrears greater than 2 years. The book value of financial assets is corrected by the Company with a charge to the profit and loss account when there is objective proof that an impairment loss has been produced (see Note 3.i.) h.2) Financial liabilities Financial liabilities include, among others, debts with financial intermediaries, debts with individuals, trading and hedging derivatives, subordinated liabilities and short positions. Financial liabilities are classified for the purposes of their measurement into the following categories: "Financial liabilities at fair value with changes in the profit and loss account." This item reflects primarily trading derivatives, in addition to the short selling of securities. "Financial liabilities at amortised cost." This category includes financial liabilities not included in the previous category. Upon initial recognition in the balance sheet, financial liabilities are recorded at fair value. After their initial recognition, all financial liabilities of the Company are valued at their amortised cost, except those identified as "Liabilities at fair value with changes in profit and loss." The Company writes off a financial liability when the obligation is extinguished. The difference between the book value of the financial liabilities extinguished and the consideration paid is recognised immediately in the profit and loss account. The securities company maintains credit balances of an instrumental and transitional nature on behalf of private clients in on-demand deposits at financial intermediaries, with express reference to their status as "Customer balances," in compliance with Order 848/2005 of the Ministry of Economy and Finance. h.3) Profits and losses of the financial instruments Profits and losses of financial instruments are recorded depending on the portfolio in which they are classified according to the following criteria: For financial instruments included in the category of fair value through changes in profit and loss, the changes in fair value are recognised directly in the profit and loss account, distinguishing, for instruments other than derivatives, the portion attributable to accrued returns of the instrument, which is recorded as interest or dividends according to their nature, the remainder BEING recorded as income from financial transactions. Interest on financial instruments classified under this category is calculated using the effective interest rate method. For financial instruments measured at amortised cost, fair value changes are recognised when the financial instrument is withdrawn from the balance sheet and, in the case of 22

24 financial assets, when they become impaired. Interest on financial instruments classified under this category is calculated using the effective interest rate method. The following criteria apply for financial assets available for sale: (i) Accrued interest is calculated according to the effective interest method, and, where appropriate, accrued dividends are recognised in the profit and loss account, (ii) Impairment losses are recognised as described in Note 3.i), (iii) Exchange rate differences are recognised in the profit and loss account when dealing with monetary financial assets and temporarily in equity as valuation adjustments, in the case of non-monetary financial assets until they are removed from the balance sheet, at which time these differences will be recognised in the profit and loss account, (iv) Other changes in value are recognised directly in the equity of the Company until the derecognition of a financial asset is derecognised in the balance sheet. h.4) Fair value of financial instruments The most objective and common reference for the fair value of a financial instrument is the price that would be paid for it in an active market. When there is no reference price in an active market for a certain financial instrument, what is used to estimate its fair value is that established in recent transactions involving similar instruments and, failing this, using sufficiently verified valuation models, taking into account the specific features of the instrument to be measured and, particularly, the different types of risk associated with the instrument. The Company considers a market as non-active when the trading volume and number of transactions do not exceed a minimum threshold and must, therefore, be considered unrepresentative. At December 31, 2015 and 2014, the Company has considered, in general, the private fixed-income bond market as non-active. In particular, for debt instruments not quoted in active markets, the Company has used the information available on AIAF panels and distributed through information sharing platforms (Bloomberg, Reuters, etc.) that communicate reference prices built up on the prices or quotations base provided by different contributors. The fair value of financial derivatives traded in organised, transparent and deep markets included in trading portfolios is equal to their daily quoted price and if, for exceptional reasons, their price cannot be on a given date, they are measured using methods similar to those used to measure derivatives not traded on organised markets. The fair value of derivatives not traded on exchanges or traded in shallow or non-transparent organised markets, is equated to the sum of future cash flows arising from the instrument, discounted to the date of measurement ("present value" or "theoretic closing value"), using methods recognised by the financial markets in the valuation process: "Net present value" (NPV), models of pricing options, etc.... including for those uncollateralised positions a spread that reflects the counterparty risk and liquidity of the product. h.5) Reclassification of financial instruments between categories The reclassifications of financial instruments between categories are permitted under certain exceptional circumstances and under the observation of specific rules. In 2015 and 2014, the Company did not make any category reclassifications. i) Impairment of the value of financial assets The book value of financial assets is corrected by the Company with a charge to the profit and loss account when there is objective proof that an impairment loss has occurred. 23

25 i.1) Debt instruments There is objective proof of impairment in debt instruments, understood as loans and debt securities, when after their initial recognition there is an event which has a negative impact on their future cash flows. Objective proof of impairment is determined individually for significant debt instruments and individually and collectively for groups of instruments that are not individually significant. In the case of debt instruments measured at amortised cost, the amount of impairment losses is equal to the difference between their book value and the present value of their estimated future cash flows, considering the value or guarantees received, although the Company considers for listed instruments their market value as substitute of the present value of the cash flows, provided that this is sufficiently reliable. The amount of estimated impairment losses is recognised in the profit and loss account using as a counterparty a compensatory item to correct the value of the assets. Future cash flows are calculated taking into account the guarantees, risk types and circumstances in which payments are expected to take place. In the case of "Financial assets available for sale", the amount of impairment losses is equal to the positive difference between their acquisition cost, net of any principal repayment, and their fair value minus any impairment loss previously recognised in the profit and loss account. When there is objective proof that a decline in fair value is due to its impairment, the unrealised losses recognised as "Valuation adjustments" in the "Equity" are recorded immediately in the profit and loss account. The recoveries of impairment losses on debt instruments are recognised in the profit and loss account of the period in which the recovery occurs. To determine impairment losses on these assets, the Company assesses the possible losses as follows: Individually, for all significant assets and for those which not being significant, are not included in homogeneous groups with similar characteristics: age of the overdue amounts, type of guarantee, sector of activity, geographic area, etc. Collectively: The Company groups together those assets that have not been identified individually in homogeneous groups based on the counterparty, sector, transaction status, guarantee, age of amounts due and sets for each group impairment losses that will be the difference between the book value of all financial assets of the Company and the present value of their estimated future cash flows, which will be estimated based on historical loss experience of the Company or other entities operating in the same market, for debt instruments with similar credit risk characteristics to those of the group, after making appropriate adjustments to adjust historical data to current market conditions. i.2) Capital Instruments There is objective proof that Capital Instruments have deteriorated when after their recognition the asset experiences a significant or prolonged decrease below its book value, such that the Company considers that it will not be able to recover its book value, or significant adverse changes have taken place in the technological, market, economic or legal area where the issuer of the instrument operates, which can affect the recovery of the investment. In the case of Capital Instruments measured at fair value and included in the Financial assets available for sale" portfolio, the impairment loss is calculated as the difference between their acquisition cost and fair value less any previously recognised impairment losses. The unrealised losses recognised directly as "Valuation adjustments" in the "Equity" are recorded in the profit and loss account when it is determined that the decrease in fair value is due to their impairment. If 24

26 subsequently all or part of the impairment losses are recovered, their amount is recognised under the heading "Valuation adjustments" of the "Equity". In the case of Capital Instruments measured at cost in the "Financial assets available for sale" portfolio, the impairment loss is calculated as the difference between its book value and the present value of expected future cash flows, updated to the market rate of return for other similar securities. In order to determine the impairment, the equity of the investee company is taken into account, adjusting it for unrealised gains that existed at the date of valuation. These losses are recorded in the profit and loss account directly reducing the equity instrument, but the amount cannot later be retrieved except in the case of sale. j) Accounting hedges The Company uses financial derivatives as part of its strategy to reduce its exposure, mainly to risks of interest rates, and credit and exchange rates, among others. When these transactions meet certain requirements established in the 25th rule of Circular 7/2008 they are considered as "hedging". The Company designates a hedge transaction from its inception and this transaction is documented appropriately, identifying the hedged instrument or instruments, and hedging instrument or instruments, in addition to the nature of the risk being hedged, as well as the criteria or methods followed by the Company to assess the effectiveness of the hedge throughout its duration, dealing with the risk to be hedged. The Company only recognises as hedging transactions those that are considered highly effective throughout their duration. A hedge is considered highly effective if during its expected duration the changes that occur in the fair value or cash flows attributable to the hedged risk in the hedge instrument or financial instruments covered are compensated almost entirely by changes in fair value or in cash flows, as appropriate, of the instrument or hedge instruments. To measure the effectiveness of hedges defined as such, the Company assesses whether, from the beginning and to the end of the defined hedging period, the changes in fair value or in the cash flows of the hedged item that can be expected to be attributable to the hedged risk are almost entirely offset by changes in fair value or cash flows, as appropriate, of the instrument or hedge instruments and, retrospectively, that the result of that hedge has fluctuated within a range of between eighty to one hundred twenty five percent in relation to the results of the hedged item. Hedging transactions performed by the Company are defined as fair value hedges, given that they cover the exposure to changes in fair value of financial assets attributable to a particular risk and provided that they affect the profit and loss. In 2014 and 2015, the Company did not make any hedging transactions. k) Tangible fixed assets Tangible assets include amounts of property, furniture, vehicles, computer equipment and other facilities owned by the Company or acquired under finance leases. Tangible assets are classified according to their destination: plant and equipment for own use and investment properties, and can be reclassified into another category when their use or destination changes. Property and equipment for internal use includes all assets owned or leased that the Company expects to use over more than one financial year for administrative purposes or for the production or supply of goods and services. These assets are initially measured at cost and subsequently at cost less accumulated amortisation and, if any, less the aggregate amount of the valuation adjustments due to recognised impairment. 25

27 The cost of tangible assets includes payments made, both initially at their acquisition or production, and subsequently for expansion, replacement or improvement, when, in both cases, its use entails the probability of obtaining future economic benefits. Also, the initial estimation of the present value of the liabilities undertaken arising from decommissioning, removal and restoration costs and similar, when those obligations result in the recognition of provisions in accordance with the provision valuation standard specified in this report, are part of the tangible fixed assets. The cost of the acquisition or production of tangible assets, net of their residual value, is amortised on a straight-line basis over the estimated useful life of the different assets as follows: YEARS OF USEFUL LIFE AMORTISATION RATES USED Communication equipment % Computer equipment 4 25% Facilities % -10% Furniture and fixtures 10 10% Transport items % -20% Upkeep and maintenance costs that do not increase the useful life of the asset are charged to the profit and loss in the year they are incurred. Borrowing costs incurred before tangible fixed assets are in operating condition from borrowed funds, specific or generic, shall be included as the higher value of the purchase price, provided they are directly attributable and when the period of time to be able to be in operating condition exceeds one year. Tangible assets are derecognised from the balance at the time of their disposal, when it is available, or when permanently withdrawn from use and no more future economic benefits are expected of them. The difference between the amount of the sale and its book value is recognised in the profit and loss account of the period in which the asset is derecognised and is classified as a separate item. The Company periodically reviews the residual values, useful life and depreciation method of the assets, and determines whether there are indications, both internal and external, that a fixed asset may be impaired at the date referred to the Annual Accounts. For those assets identified, the recoverable amount of tangible assets is estimated, understood as the higher between: (i) their fair value minus necessary sales costs and (ii) their value in use. If the recoverable amount, thus determined, is less than the book value, the difference between the two is recognised in the profit and loss account, reducing the book value of the asset to its recoverable amount. l) Intangible assets The Company classifies as intangible assets those which are non-monetary assets and without physical substance, whose probable economic benefits are estimated and whose cost can be reliably estimated. Each intangible fixed asset is examined to decide whether its useful life is finite or indefinite. Intangible assets are initially recognised at cost and subsequently measured at cost less accumulated amortisation and any possible impairment losses. An intangible asset is recognised as such only if it is likely to generate future profits to the Company and its cost can be measured reliably. Intangible fixed assets that have a finite useful life are depreciated systematically according to the estimated useful life of the assets and their residual value. The methods and depreciation periods applied are reviewed at each year end, and if applicable, adjusted prospectively. At least at year end, 26

28 we evaluate if there are any impairment indicators, in which case the recoverable amounts are estimated, carrying out valuation adjustments as necessary. Intangible assets with an indefinite useful life are not amortised and, at least annually, are subject to an analysis of their eventual impairment. Consideration of indefinite useful life of these assets is reviewed annually. The useful life and depreciation rates applied to intangible assets are as follows: YEARS OF USEFUL LIFE AMORTISATION RATES USED Computer software 3 33% The amounts paid for access to the ownership or the right to use computer software are included in the computer software. The maintenance costs of these computer software are recorded directly as expenses in the period in which they occur. m) Fees and trading losses The Company classifies the fees it charges or pays in the following categories: m.1) Fees for services rendered Fees for investment services, complementary activities and other similar activities are recognised in the profit and loss account according to the following criteria: Fees for activities and services during a specified period of time (management of client portfolios, management and administration of CCI, deposit contracts, registration, custody and administration, etc.), renewable or not, shall be charged to the profit and loss account over the period of their execution. Fees for activities and services provided over a non-specific period of time (securitization and placement of issuance contracts, design or advice of transactions and the like, etc.) are recognised in the profit and loss account according to their level of realisation. Fees received for activities and services carried out on a single asset (reception, transmission and settlement of orders, intermediation transactions in the markets, subscription and redemption of CII, etc.) are recognised in the profit and loss account at the time of their execution. m.2) Financial fees These fees, which are an integral part of the effective income or cost of a financial transaction and that are collected or paid in advance, are recognised in the profit and loss account generally over the expected life of the financing, net of related direct costs, as an adjustment to the cost or effective return of the transaction. m.3) Trading losses The Company assumes as trading losses the losses resulting from incidents in negotiating due to differences between the conditions of the orders received from financial intermediaries and those of trading and settlement of transactions carried out. The Company recognises the loss at the time it arises regardless of the time of settlement. 27

29 n) Staff costs and remuneration based on capital instruments n.1) Short-term remunerations These remunerations are valued, without updating, for the amount to be paid for services received, recognised in general as staff costs for the year and a liability accrual account, for the difference between total expenditure and the amount already paid. o) Other long-term remunerations o.1) Long-term remunerations These remunerations are valued, without updating, for the amount to be paid for services received, recognised in general as staff costs for the year and a liability accrual account, for the difference between total expenditure and the amount already paid. o.2) Provisions for pensions and similar obligations In 1994 the Company promoted the Pension Scheme for Employees of Grupo Ahorro Corporación. Said scheme is regulated by Royal Decree 304/2004 of February 20, which approves the Regulation of Pension Schemes and Pension Funds, and its duration is indefinite. The advanced plan covers the following contingencies: Retirement of the participant. Total permanent disability for all work or severe disability. Death of the participant. Retirement benefits shall be charged to the capitalisation fund which is made up of contributions made by the developer (net of insurance premium payments) plus yields (net of expenses) generated by these contributions. Disability benefits or those for death will be partly charged to the capitalisation fund and in part to insurance with an insurance company. In accordance with the rules of the aforementioned pension scheme, the Company makes regular contributions for all employees of the workforce; as in the case of employees who have been there more than or less than two years, equivalent to 2.5% of their annual pensionable salary, or equal to the amount necessary to meet the coverage of the sums insured for their death or disability, respectively. The contributions for 2015 and 2014 amounted to 236,000 and 286,000 euros respectively, amounts that are recognised under "Personnel expenses" in the accompanying profit and loss account. (Note 19.2). On February 20, 2005, new specifications for the pension scheme were set out, through which, in addition to regular contributions, the promoter may make an individual extraordinary contribution for each participant, whose amount shall be determined according to productivity criteria and profits in the financial year, and may not exceed the limits specified in the current regulations. There have been no contributions for this item in the years 2015 and o.3) Severance pay Severance pay is recognised as a provision and as a staff cost only when the Company is demonstrably committed to terminate the bond that unites it with an employee or group of employees before the normal retirement date, or to issue severance pay as a result of an offer made to encourage voluntary redundancy by employees. 28

30 p) Provisions and contingencies The Company differentiates between provisions, liabilities and contingent assets. The former are credit balances covering present obligations at the balance sheet date that arise as a result of past events which could give rise to monetary losses for the entities, which are considered probable in terms of occurrence; certain as to their nature but uncertain as to their amount and/or time of cancellation, while the latter are possible obligations that arise from past events and whose materialisation depends on the occurrence or otherwise of one or more future events independent of the will of the Company. Contingent assets are assets whose existence is conditioned on events occurring or not on which the Company cannot influence and which confirm the origin of the asset. The Company's Annual Accounts include all the significant provisions with respect to which it is estimated that the probability of having to meet the obligation is greater than otherwise, as long as the amount of the obligation can be reliably estimated and it may have an outflow of resources for the entity that incorporate economic benefits. Contingent liabilities and assets are not recognised in the Annual Accounts, but are reported in memorandum accounts. Provisions, which are quantified based on the best information available on the consequences of the event giving rise to them, and are re-estimated at each balance sheet date, are used to meet the specific obligations for which they were originally recognised. They are reversed in whole or in part when such obligations cease to exist or decrease. Under no circumstances are provisions recognised to cover future losses arising from the activities of the entity or to offset future lower profits. In those situations in which they are to receive compensation from a third party at the time of settling the obligation, and provided there are no doubts that the reimbursement will be received, an asset that does not entail a reduction of the amount of the debt is reported. The amount by which the aforementioned asset is registered may not exceed the amount of the liability that is recorded for accounting purposes. Only in those cases where there is a legal or contractual obligation, for which part of the risk has been externalised, and under which the company is not required to respond, has been taken into account in estimating the amount of the provision. q) Tax on profits The expense for tax on profits is determined by the tax payable on taxable income for the year, after taking into account the changes during the year relating to temporary differences, tax credits for deductions and allowances and for negative tax bases. The expense for tax on profits is recognised in the profit and loss account, except when the transaction is recorded directly in equity and in the business combinations in which the deferred tax is recognised as another asset of it. For tax deductions, rebates and credits due to negative tax bases to be effective must comply with the requirements of current legislation. The tax effect of temporary differences is included, where appropriate, in the corresponding items of anticipated or deferred taxes, registered under the headings "Tax assets" and "Tax liabilities" in the attached balance sheet. At least at each close of the balance sheet date the Company reviews the deferred tax and, therefore, the related tax assets and liabilities recorded, making the appropriate valuation adjustments if these deferred taxes are not current or are considered recoverable. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax legislation) approved to date of the balance sheet. 29

31 r) Customer funds outside the balance sheet The funds entrusted by third parties for investment in companies and investment funds, pension funds, and contracts for the management of discretionary portfolios are shown the Company's memorandum accounts at their fair value. Additionally, in the memorandum accounts (see Note 18), assets acquired by third parties, capital debt instruments, derivatives and other financial instruments held on deposit, for which the Company has a responsibility to its customers are registered at fair value. When the market operation so requires it, the company uses global custody accounts (omnibus), on which the entity appears as holder of the position, keeping internal records required to know the breakdown by customer. In determining the fair value of these positions the Company uses quoted market prices obtained from different markets or those supplied by global custodians when it comes to investment fund shares (net asset value). Fees received for the provision of these services are recorded under fees received in the profit and loss account and are listed in Note 19.1 of this Report. s) Investment Guarantee Fund and National Resolution Fund In accordance with the provisions of Royal Decree 948/2001, dated August 3, on compensation schemes for investors, as amended by Law 53/2002 of December 30 on fiscal, administrative and social measures and by Royal Decree 1642/2008, of October 10, by which the guaranteed amounts are changed, the Security Companies must make annual contributions to the Investment Guarantee Fund. The amount that the Company has contributed in 2015 to this Fund amounted to 185,000 euros (199,000 euros in 2014) and is recognised as an expense under "Other operating expenses" (Note 19.4) in the accompanying profit and loss account. Law 11/2015, of June 18, along with its regulatory development through Royal Decree 1012/2015, of November 6, undertook the transposition into Spanish law of Directive 2014/59/EU of May 15. This regulation establishes a new framework for the resolution of credit institutions and companies providing investment services, which is in turn one of the standards that contribute to the establishment of the Single Resolution Mechanism, established by Regulation (EU) No. 806/2014 of July 15, and laying down uniform standards and procedures for the resolution of credit institutions and certain investment services firms in the context of a Single Resolution Mechanism and a Single Resolution Fund. One of the pillars of the new resolution framework is the creation of resolution funds, as financing instruments available to the resolution authorities to effectively undertake the various resolution measures established. At the national level, Law 11/2015 regulates the creation of the National Resolution Fund, whose financial resources must reach, before December 31, 2024, 1% of the amount of guaranteed deposits, by means of contributions made by credit entities and investment services firms established in Spain. The Royal Decree establishes that each year the FROB (Fund for Orderly Bank Restructuring) will determine the financial contributions by entities to FRN, such contributions adjusting to the risk profile of the entity. In 2015 a contribution of 248,000 euros (Note 19.4) was made to FRN, which was registered under Other operating expenses in the profit and loss account. t) Related parties The Company considers Directors, key personnel to the Management and people related, and companies of Grupo Ahorro Corporación as related parties. 30

32 u) Shareholdings This heading includes investments in Group Companies, joint ventures and associates and are stated at cost, minus any impairment loss correction. Group companies are those over which there is control, either by exercising effective control or by agreements with the other shareholders. v) Statement of cash flows For the purpose of preparing the cash flow statement, the Company has considered as cash or cash equivalent the balance held in the Liquid Assets, the deposits on demand with financial intermediaries, and loans to financial intermediaries for internal account transactions pending settlement, netted with financial intermediaries for internal account transactions pending settlement. The breakdown of these items as at December 31, 2015 and 2014 is as follows: THOUSANDS OF Liquid Assets (Note 7) 66 3,591 Demand Deposits (Note 11.1) 96,417 90,277 Cash and cash equivalents 96,483 93, DISTRIBUTION OF PROFITS On January the General Shareholders Meeting of the Company approved allocating to the legal reserve 3,599,990 euros from the voluntary reserves of the Company in order to cover the percentage of legal reserve stipulated by Law. Additionally, on March 28, 2014 the General Shareholders Meeting approved firstly, million euros to be allocated to extraordinary dividends charged to unrestricted reserves; and, secondly, the distribution of unrestricted reserves for compensation of losses from previous years in the amount of million euros. Set out below is the distribution of profit for 2015 that the Board of Directors of the Company shall propose to the General Shareholders Meeting for approval: Profit/(Losses) for the year after Corporation Tax (2,909,612.23) (2,460,708.54) Total distributable (2,909,612.23) (2,460,708.54) To voluntary reserve - - To legal reserve - - To dividends - - To negative results from previous years (2,909,612.23) (2,460,708.54) Total distributed (2,909,612.23) (2,460,708.54) 4.1 Limitations on the distribution of dividends The Company is required to set aside 10% of the year's profits to make up a legal reserve, until this reaches at least 20% of the share capital. Additionally, the Company must provide each year for a restricted reserve equivalent to at least 5% of the goodwill recognised in the balance sheet. 31

33 5. CAPITAL MANAGEMENT The Company actively manages its own resources based on covering the main business risks. The adequacy of its internal resources is monitored in accordance with the rules set out in Regulation (EU) No. 575/2013, of June 26 on prudential requirements for credit institutions and investment companies, of obligatory compliance for member states and applicable from 1st January Management of capital The main objectives of the Company's capital management are to ensure that it complies with its own equity requirements and that it holds a clean capital ratio for developing the business and maximising value for shareholders. The Company manages its equity structure and makes adjustments as needed according to changes in economic conditions and the risks arising from the activities that it has carried out. To maintain or adjust the equity structure the Company may adjust the amount of the dividend payable to shareholders, issuing Capital Instruments, as well as the distribution of reserves. The aforementioned current regulations governs the minimum capital that must be maintained by the Corporate Investment Services, both individually and as a consolidated group, and also the way in which such capital should be determined. The Company s calculable own funds and those required at December 31, 2015, calculated in accordance with Regulation No. 575/2013 and 2014: THOUSANDS OF Computable Capital 40,517 40,517 Computable reserves 8,939 11,849 Intangible assets (189) (157) Second tier equity - - Computable equity 49,267 52,209 Own Funds Resources 16,392 17,945 Surplus of Own Resources 32,875 34, MANAGEMENT OF RISK LINKED TO FINANCIAL INSTRUMENTS The Company has the following areas of control and compliance integrated into the structure of Grupo Ahorro Corporación: Risk control Legal Services and Regulatory Compliance Internal audit Control of Computer Systems In order to carry out their duties the above areas have access to accounting information, management and the risk control of each business unit. Overall, their functions are summarised as: To assess the adequacy and effectiveness of procedures and control mechanisms within the different areas of activity of the Company (including the development of procedures for surprise audits of the activity). 32

34 To monitor policies and risk control procedures and compliance with risk limits at the end of each day. To prepare proposals and develop internal control and risk control systems. To advise the Company to ensure compliance with current regulations in the development of investment activities and the provisioning of services. To monitor and evaluate compliance with current regulations. To prepare proposals for the Board of Directors of the Company regarding the models and information systems on risks incurred. To report to the Board of Directors of the Company by submitting periodic reports on the level of compliance of the control procedures and on compliance with risk limits. 6.1 Market risk Market risk is the exposure to potential loss from adverse movements in the prices of the securities that make up the portfolio. Among the factors contributing to market risk, changes in interest rates and exchange rates, the price of shares, and volatility of the options should be highlighted because of their impact on the activity carried out by the Company. As described in Note 3, except for financial assets classified under the headings of "Loan investments," and those Capital Instruments whose fair value cannot be reliably measured, or derivative instruments which have as the underlying asset such capital instruments, the Company's financial assets are recorded in the accompanying balance sheet at fair value. Likewise, except for financial liabilities recognised under "Financial liabilities at amortised cost" the other financial liabilities are recorded at their fair value in the accompanying balance sheet. The management of market risk is carried out by Grupo Ahorro Corporación through the establishment of limits by the Executive Committee and the Board of Directors of the Parent Company and the daily calculation of Value at Risk (VaR), supplemented by defining and monitoring other limits (concentration by value and stop-loss, mainly). The VaR estimation is made for a confidence level of 99%, a historical observation period of one year (250 sessions) and a time horizon of the investment of one day. The summary of the monthly evolution of average and maximum daily VaR, incurred during the 2015 and 2014 period, distributed by business areas, is as follows (in thousands of euros): Monthly VaR evolution for the year 2015 VaR Medio Diario Límite (*) ene-15 feb-15 mar-15 abr-15 may-15 jun-15 jul-15 ago-15 sep-15 oct-15 nov-15 dic-15 Medio 2015 Riesgo Renta Variable Riesgo Renta Fija TOTAL VAR AGREGADO % 19% 15% 15% 15% 16% 22% 24% 20% 20% 24% 22% 18% VaR Máximo Diario Límite (*) ene-15 feb-15 mar-15 abr-15 may-15 jun-15 jul-15 ago-15 sep-15 oct-15 nov-15 dic-15 Medio 2015 Contado de Renta Variable Derivados sobre Renta Variable TOTAL VAR AGREGADO % 24% 19% 17% 19% 18% 25% 26% 26% 35% 30% 28% 24% 33

35 Monthly VaR evolution for the year 2014 VaR Medio Diario Límite (*) ene-14 feb-14 mar-14 abr-14 may-14 jun-14 jul-14 ago-14 sep-14 oct-14 nov-14 dic-14 Medio 2014 Contado de Renta Variable Derivados sobre Renta Variable Productos sobre Tipos de Interés TOTAL VAR AGREGADO % 27% 25% 21% 21% 17% 8% 11% 13% 16% 14% 9% 16% VaR Máximo Diario Límite (*) ene-14 feb-14 mar-14 abr-14 may-14 jun-14 jul-14 ago-14 sep-14 oct-14 nov-14 dic-14 Medio 2014 Contado de Renta Variable Derivados sobre Renta Variable Productos sobre Tipos de Interés TOTAL VAR AGREGADO % 40% 27% 24% 31% 20% 13% 13% 26% 17% 17% 13% 22% The detail of the fair value of financial instruments, classified according to the method of valuation applied is indicated below. The three classification levels are: Level 1: Financial instruments whose market value has been obtained from their quoted prices in active markets. Level 2: Financial instruments whose fair value has been calculated using valuation techniques which use reference quotations of similar instruments or inputs based on observable data in the market. The main valuation methods, assumptions and inputs used in estimating the fair value of financial instruments, classified at Level 2 depending on the type of financial instrument, are as follows: Trading derivatives: The fair value of interest rate derivatives has been determined by discounting future cash flows using the implicit curves of the money market and the swap curve. For derivatives on equity instruments or stock indices, the fair value has been obtained using the Montecarlo method or the Black Scholes model. On July 30, 2015 the Company signed an agreement to sell substantially all of its positions in derivatives, subject to compliance with certain conditions. In relation to derivatives with a bank counterparty, the buyer applied to the current value thereof a discount of 1.5 million euros, paid in November 2015, and has recognised them as a lesser value of the derivatives indicated. This loss has been recorded under Result from financial operations (net) trading portfolio in the accompanying profit and loss accounts. The registration of derivatives shall continue in the balance sheet of the Company until the conditions under which all portfolio risks are transferred to the purchasing entity occur. Additionally, a number of discounts applicable to corporate IRS are established in the aforementioned contract. Debt securities: The fair value of debt instruments has been determined based on the price in official markets (Central Annotations Office of the bank of Spain), AIAF panels (banks) or applying prices obtained from information services providers who build their prices based on 34

36 prices reported by contributors, as well as using recently completed sales prices of similar instruments. Loan investments and financial liabilities at amortised cost: These headings list receivables and payables at fixed or variable rates with short-term maturities, so no significant differences between amortised cost and fair value of these receivables and payables are estimated. Level 3: Financial instruments whose fair value has been calculated using valuation techniques in which some of the inputs are not based on observable market data. The models applied in these cases are sufficiently verified by the financial markets, are in common use by the operators of these markets, maximise the use of observable inputs and/or recent transactions, and take into account the specific features of the instrument being valued, and especially the different types of risks associated with the instrument. For the case of derivatives not traded in organised markets, or traded in organised markets but lacking depth or transparency included in this Level 3, such as Corporate IRS, their fair value is determined by discounting the future cash flows of the derivative, discounted at the date of measurement ("present value") and, additionally, in those derivatives not guaranteed by a collateral contract, an adjustment for risk of their own or another credit (CVA and DVA), reflecting the credit risk of the counterpart and liquidity of the product. At December 31, 2015 and 2014, these non-collateralised transactions correspond to long-term swaps with companies for which there are no observable market data, such as rating, the price of CDS etc. To determine CVA adjustments fixed income issues of bodies or entities have been used as a reference, which by their nature, would be equivalent to the counterparts of these transactions. The spreads applied on market interest rates (Euribor) at December 31, 2015 have ranged between 72 and 2,704 basis points (43 and 1,336 basis points in 2014). As noted above, the buyer of corporate IRS has implemented a series of discounts on the current value thereof. In calculating the abovementioned spreads, the Company has considered the most disadvantageous discount for itself. The CVA adjustment at December 31, 2015 and 2014 amounted to and million euros respectively. The impact on the income statement of the CVA adjustment for the year 2015 amounted to million euros of profit (a million euro loss in the year 2014), an effect resulting from recalculating the CVA adjustment at December 31, 2015 and the changes in exposures between the two dates. If an increase or decrease in spread levels on a curve of 5% had been taken into account, the CVA adjustment would have been above 497,000 euros, or less than 517,000 euros, respectively. The breakdown of all financial assets and liabilities classified at different levels of valuation at December 31, 2015 and 2014 are: 35

37 2015 THOUSANDS OF LEVEL 1 LEVEL 2 LEVEL 3 TOTAL BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE Financial assets 119, , , ,389 28,131 28, , ,010 Trading portfolio 119, , , ,420 28,131 28, , ,041 -Debt instruments 119, , , ,525 -Capital Instruments and UCITS Derivatives , ,385 27,726 27, , ,111 Other assets at fair value with changes in profit and loss Loan investments , , , ,961 Financial assets available for sale Debt instruments Capital Instruments and UCITS Held-to-maturity investment portfolio Hedging derivatives Financial liabilities , , , ,877 Trading portfolio and other liabilities at fair value with changes in P&L , , , ,263 -Short selling of debt instruments Short selling of capital instruments Derivatives , , , ,263 Financial liabilities at amortised cost , , , ,614 Hedging derivatives

38 2014 THOUSANDS OF LEVEL 1 LEVEL 2 LEVEL 3 TOTAL BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE BOOK VALUE FAIR VALUE Financial assets 863, ,586 32,233 32, , ,819 Trading portfolio 456, ,995 32,233 32, , ,228 -Debt instruments Capital Instruments and UCITS Derivatives , ,995 31,826 31, , ,821 Other assets at fair value with changes in profit and loss Loan investments , , , ,425 Financial assets available for sale Debt instruments Capital Instruments and UCITS Held-to-maturity investment portfolio Hedging derivatives Financial liabilities , , , ,818 Trading portfolio and other liabilities at fair value with changes in P&L , , , ,460 -Short selling of debt instruments Short selling of capital instruments Derivatives , , , ,460 Financial liabilities at amortised cost , , , ,358 Hedging derivatives

39 6.2 CREDIT RISK Objectives, policies and processes for managing credit risk Credit risk arises from the possibility that losses may be incurred due to breaches of payment obligations by debtors, as well as losses in value as a result of their deteriorating credit quality. In the Company most of the credit risk, also called counterparty risk, is caused by market transactions; which is that assumed with institutions (mainly credit entities) and comes from financial transactions, both in cash, where the amount of risk is comparable to the nominal value of the transaction, such as in derivatives not traded on organised markets whose exposure, in most cases, is less than its nominal value. Management policies for this risk are set by the Board of Directors through the Risk and Strategy Committee. In this way the Board establishes the general principles that define the risk profile of the Company adapted to the activities it carries out. The Company has a procedure for granting and monitoring limits, as well as for approving certain specific transactions with institutions that are not financial institutions. Credit risk is managed through a series of limits according to the probability of default, with a similar criterion for each rating level. In the case of transactions in financial markets, the Company also has contractual rights and compensation agreements ("netting") with most financial counterparties with which derivatives are traded. It is also common practice in the financial market to set "Collateral Programmes" between entities that arrange OTC derivative products. The main reason is to mitigate the credit risk of the counterparty in such derivatives. Currently, there are various collateral agreements for both derivatives ("Collateral Security Agreement") and for repos ("General Master Repurchase Agreement"). In all these agreements only "cash" is accepted as collateral. This avoids there being any valuation adjustments for the guarantee. To ensure the effectiveness of these guarantees, contracts signed with counterparties use ISMA (International Securities Markets Association), ISDA (International Swaps and Derivatives Association) agreements and the annex to ISDA-CSA (ISDA Credit Support Annex) in the context of contracting supported by ISDA. The calculation of the exposure of each transaction takes into account methods based on the market value of transactions and is determined by their credit risk equivalent (REC), as well as their market value or current exposure. The Risk Control Department performs daily monitoring of consumption with each counterparty and checks that they are within authorised limits. Risk measurement and the management of collateral is performed on a daily basis, and the information produced is reported weekly to the Risk Committee, which consists of corporate members in charge of risk management. Furthermore, this Committee is also responsible for establishing and approving specific lines and operations with new counterparties, within the general principles established by the Board of Directors through the Risk and Strategy Committee. Financial assets exposed to credit risk are those which are subsequently shown at their carrying amount: The maximum exposure of the Company to credit risk is as follows: 38

40 DECEMBER 31, 2015 EXPOSED TO CREDIT RISK NOT EXPOSED TO CREDIT RISK TOTAL Financial assets: Trading portfolio 482,635, , ,040, Debt instruments 119,524, ,524, Capital Instruments and UCITS , , Derivatives 363,111, ,111, Other assets at fair value with changes in profit and loss Held-to-maturity investments Loan investments 236,960, ,960, Financial assets available for sale 8, , Debt instruments Capital Instruments and UCITS. - 8, , Hedging derivatives Total financial assets 719,596, , ,010, Guarantees and securities granted 135,455, ,455, Total credit risk 855,052, , ,465, DECEMBER 31, 2014 EXPOSED TO CREDIT RISK NOT EXPOSED TO CREDIT RISK TOTAL Financial assets: Trading portfolio 488,821, , ,228, Debt instruments Capital Instruments and UCITS , , Derivatives 488,821, ,821, Other assets at fair value with changes in profit and loss Held-to-maturity investments Loan investments 406,425, ,425, Financial assets available for sale - 165, , Debt instruments Capital Instruments and UCITS , , Hedging derivatives Total financial assets 895,246, , ,819, Guarantees and securities granted 275,787, ,787, Total credit risk 1,171,034, , ,171,606, Counterparty risks for transactions pending settlement on behalf of clients are managed by following the procedures established for the settlement of transactions. At December 31, 2015 and 2014, the loans and receivables, impaired, had the following breakdown: DECEMBER 31, 2015 COUNTERPARTY DEBT RISK CORRECTION DUE TO IMPAIRMENT NET WORTH Loan investments - Loans to financial intermediaries (Note 11.1) 56, , Loans to individuals (Note 11.2) 9,438, ,438, Total 9,494, ,494,

41 DECEMBER 31, 2014 COUNTERPARTY DEBT RISK CORRECTION DUE TO IMPAIRMENT NET WORTH Loan investments - Loans to financial intermediaries (Note 11.1) 6,148, ,148, Loans to individuals (Note 11.2) 9,452, ,452, Total 15,601, ,601, The breakdown of impaired risks classified by the age of the debt at December 31, 2015 and 2014 is as follows: DECEMBER 31, 2015 COUNTERPARTY LESS THAN 3 MONTHS BETWEE N 3 AND 6 MONTHS BETWEEN 6 AND 12 MONTHS BETWEEN 12 AND 18 MONTHS BETWEEN 18 AND 24 MONTHS OVER 24 MONTHS TOTAL Loan investments - Loans to financial intermediaries 19, , , Loans to individuals 159, ,279, ,438, Total 179, ,315, ,494, DECEMBER 31, 2014 COUNTERPARTY LESS THAN 3 MONTHS BETWEE N 3 AND 6 MONTHS BETWEEN 6 AND 12 MONTHS BETWEEN 12 AND 18 MONTHS BETWEEN 18 AND 24 MONTHS OVER 24 MONTHS TOTAL Loan investments - Loans to financial intermediaries 417, , , , ,308, ,251, ,148, Loans to individuals 173, ,554, ,724, ,452, Total 590, , , ,437, ,308, ,975, ,601, The balance of credit to impaired individuals includes, at December 31, 2015, the amount of million euros, corresponding to the amount receivable from two customers, due to two financial swaps on interest rates with settlements not served at maturity (8.971 million euros at December 31, 2014, corresponding to two swaps whose settlement was not served at maturity). As indicated in Note 11.1 of this report, during 2015, the Company released the provision held for outstanding invoices corresponding to two venture capital companies which at December 31, 2014 were recorded as doubtful debtors, and fully provisioned. The movement of impairment losses for the year 2015 and 2014 are listed in Note Interest rate risk This risk refers to the impact that the changes in the general level of interest rates may have on the profit and loss account (flows of generation of income and expenditure) or on equity. The causes are mismatches in maturities or the repricing of assets and liabilities that produce a different response to changes in the interest rate. 40

42 At December 31, 2015 and 2014 the breakdown of the book value of financial assets and liabilities whose fair value or cash flow was subject to interest rate risk (which are those that have a fixed or variable interest rate) and that are not exposed to that risk, is as follows: DECEMBER 31, 2015 Financial assets: EXPOSED TO INTEREST RISK NOT EXPOSED TO INTEREST RISK TOTAL Trading portfolio 482,635, , ,040, Debt instruments 119,524, ,524, Capital Instruments and UCITS - 404, , Derivatives 363,111, ,111, Other assets at fair value with changes in profit and loss Loan investments 236,960, ,960, Financial assets available for sale - 8, , Debt instruments Capital Instruments and UCITS - 8, , Hedging derivatives Total financial assets 719,596, , ,010, Financial liabilities Trading portfolio 418,263, ,263, Other liabilities at fair value with changes in profit and loss Short selling of debt instruments Short selling of capital instruments Financial liabilities at amortised cost 251,613, ,613, Hedging derivatives Total financial liabilities 669,877, ,877,

43 DECEMBER 31, 2014 Financial assets: EXPOSED TO INTEREST RISK NOT EXPOSED TO INTEREST RISK TOTAL Trading portfolio 488,821, ,228, Debt instruments Capital Instruments and UCITS - 406, , Derivatives 488,821, ,821, Other assets at fair value with changes in profit and loss Loan investments 406,425, ,425, Financial assets available for sale -Debt instruments Capital Instruments and UCITS - 165, , Hedging derivatives Total financial assets 895,246, , ,819, Financial liabilities Trading portfolio 554,460, ,460, Other liabilities at fair value with changes in profit and loss Short selling of debt instruments Short selling of capital instruments Financial liabilities at amortised cost 295,357, ,357, Hedging derivatives Total financial liabilities 849,818, ,818, At December 31, 2015 and 2014, the book value of financial assets, grouped according to review dates for interest rate or maturity date, whichever of them is nearer in time, is as follows: DECEMBER 31, 2015 THOUSANDS OF LESS THAN 1 YEAR BETWEEN 1 AND 2 YEARS BETWEEN 2 AND 3 YEARS BETWEEN 3 AND 4 YEARS MORE THAN 5 YEARS TOTAL Financial assets: Trading portfolio 463,614 9,263 9, , Other assets at fair value with changes in profit and loss Loan investments 236, ,961 Financial assets available for sale Hedging derivatives Total financial assets 700,575 9,263 9, ,597 Financial liabilities Trading portfolio 400,910 8,069 9, ,264 Financial liabilities at amortised cost 251, ,614 Hedging derivatives Total financial liabilities 652,524 8,069 9, ,878 42

44 DECEMBER 31, 2014 LESS THAN 1 YEAR BETWEEN 1 AND 2 YEARS THOUSANDS OF BETWEEN BETWEEN 2 AND 3 3 AND 4 YEARS YEARS MORE THAN 5 YEARS TOTAL Financial assets: Trading portfolio 459,244 14,242 5,269 10, ,821 Other assets at fair value with changes in profit and loss Loan investments 406, ,425 Financial assets available for sale Hedging derivatives Total financial assets 865,669 14,242 5,269 10, ,246 Financial liabilities Trading portfolio 527,607 11,955 5,269 9, ,461 Financial liabilities at amortised cost 295, ,358 Hedging derivatives Total financial liabilities 822,965 11,955 5,269 9, , Liquidity risk This corresponds to the risk associated with the difficulties that can arise to undo or close a position in the market, or have the cash needed to cover cash overdrafts that can be generated at any given time. The Company must cover a liquidity, whereby it shall maintain at all times a level of investment in low risk and high liquidity assets to cover a percentage of enforceable liabilities with a residual term of less than one year, excluding the instrumental and transitional credit accounts open to customers, to be defined by the Ministry of Economy, with a minimum of 10%. In 2015 and 2014 this percentage was 10%, and the calculation made by the Company at year s end is as follows: Liquid Assets 66, ,590, Deposits on demand 96,434, ,432, Net balance securities transactions on own account pending settlement - - Term deposits in financial institutions with maturity <1 month - - Temporary acquisition of assets on own account - 33,819, Marketable debt securities maturing <18 months 119,489, Available unconditioned on demand in credit institutions 3,000, Less: Assigned temporarily 119,440, ,819, Transitory balances of customers 63,770, ,798, Assets related to guarantees - - Total computable assets 35,779, ,225, Minimum assets needed 6,972, ,864, Over coverage 28,806, ,361,

45 The Risk Committee of Ahorro Corporación Financiera, S.V., S.A. performs daily monitoring of the liquidity position, which is defined as the part of the Equity which exceeds the structural investments (tangible assets and investments in associated companies), plus liquid assets (excluding investment of transitory customer balances and including those available in unused credit facilities), minus future commitments. Liquidity management is linked to the prudent control of business growth in volumes of assets for financial transactions. The key is the ability to meet obligations contracted without this meaning that high costs are incurred or there is a loss of profitability. The classification of assets, liabilities, contingent liabilities and those assimilated by contractual maturity in thousands of euros, at December 31, 2015 and 2014 is as follows: DECEMBER 31, 2015 ON DEMAND UP TO 1 MONTH BETWEEN 1 AND 3 MONTHS BETWEEN 3 AND 6 MONTHS BETWEEN 6 AND 12 MONTHS OVER 12 MONTHS UNDETERMINED TOTAL Financial assets: Trading portfolio ,785 1, , , ,041 -Debt instruments , ,525 -capital instruments Derivatives ,785 1,511 29, , ,111 Other assets at fair value with changes in profit and loss Loan investments 236, ,961 Financial assets available for sale Debt securities Capital instruments Hedging derivatives Total financial assets 236, ,785 1, , , ,010 Financial liabilities Trading portfolio ,718 2,223 32, , ,263 Other liabilities at fair value with changes in profit and loss Short selling of C.I Short selling of D.I , , ,614 Financial liabilities at amortised cost Hedging derivatives Total financial liabilities 132, ,783 22,718 2,223 32, , ,877 Gap period 104,787 (119,444) 1,067 (712) 116,416 (52,394) 413 Accumulated gap 104,787 (14,657) (13,590) (14,302) 102,114 49,720 50,133 44

46 DECEMBER 31, 2014 ON DEMAND UP TO 1 MONTH BETWEEN 1 AND 3 MONTHS BETWEEN 3 AND 6 MONTHS BETWEEN 6 AND 12 MONTHS OVER 12 MONTHS UNDETERMINED TOTAL Financial assets: Trading portfolio - 10,835 9, , , ,228 -Debt instruments Capital instruments Derivatives - 10,835 9, , , ,821 Other assets at fair value with changes in profit and loss Loan investments 372,605 33, ,425 Financial assets available for sale Debt securities Capital instruments Hedging derivatives Total financial assets 372,605 44,655 9, , , ,819 Financial liabilities Trading portfolio - 11,129 10,819 1,757 16, , ,461 Other liabilities at fair value with changes in profit and loss Short selling of C.I Short selling of D.I Financial liabilities at amortised cost 261,539 33, ,358 Hedging derivatives Total financial liabilities 261,539 44,948 10,819 1,757 16, , ,819 Gap period 111,066 (293) (1,021) (1,155) (504) (62,666) 573 Accumulated gap 111, , , , ,093 45,427 46,000 The Company presents a negative gap in maturities of less than one year as a result of the acquisition of treasury bills with annual maturity, and its subsequent temporary assignment in less than one month instalments. Given the liquidity of the value, the Company would have no problem in reversing the gap sign immediately. The Company also has credit lines with various credit institutions. The amount available from these lines amounts to 3 million euros (1,000 euros in 2014). The breakdown of the balances available on the credit facility, according to their contractual maturity, classified according to whether there is a firm maturity, or if it includes an automatic renewal clause, is as follows: THOUSANDS OF DECEMBER 31, 2015 UP TO 1 MONTH BETWEEN 1 AND 3 MONTHS BETWEEN 3 AND 6 MONTHS BETWEEN 6 AND 12 MONTHS OVER 12 MONTHS TOTAL Available on credit account Set maturity date Tacit renewal - - 3, ,000 Total - - 3, ,000 45

47 THOUSANDS OF DECEMBER 31, 2014 UP TO 1 MONTH BETWEEN 1 AND 3 MONTHS BETWEEN 3 AND 6 MONTHS BETWEEN 6 AND 12 MONTHS OVER 12 MONTHS TOTAL Available on credit account Set maturity date Tacit annual renewal Total Transactional risk Transactional risk consists of the risk of losses resulting from a lack of inadequacy or a lack of processes, of staff and of internal systems or due to external events. This definition also includes the so-called technological risk. The Company s transactional risk detection systems are based on the creation of a transactional risk scorecard which identifies factors and analyses scenarios reflecting the business environment in the systems of internal control, for which it sets a periodic system reporting to the management of the business units, Senior Management, and the Board of Directors. 7. LIQUID ASSETS The breakdown of the Liquid Assets" heading in the balance sheet at December 31, 2015 and 2014 is as follows: Savings 13, , Bank of Spain 52, ,582, Total (Note 3.v.) 66, ,590, The balances included under this heading are freely available and are not subject to warranty. 8. TRADING PORTFOLIO (ASSETS AND LIABILITIES) The breakdown of this heading in the balance sheet at December 31, 2015 and 2014 is as follows: ASSETS LIABILITIES ASSETS LIABILITIES Debt securities 119,524, Shares in capital instruments 404, , Trading derivatives 363,111, ,263, ,821, ,460, Total 483,040, ,263, ,228, ,460,

48 8.1 Debt securities At December 31, 2015 and 2014, the breakdown of the balance of this heading, depending on the residence of the issuing sector is as follows: ASSETS LIABILITIES ASSETS LIABILITIES Monetary assets and public debt 119,489, Internal listed portfolio 34, Internal non-listed portfolio External listed portfolio Accrued interest receivable Total 119,524, The Company complements the management of its trading portfolio through the formalisation of forward purchase and sale of securities contracts. The breakdown of the sales and purchase commitments under contract are as follows: PURCHASES SALES PURCHASES SALES Commitments for purchase sale of forward securities Monetary assets and Public debt 41, , ,296, ,215, Other fixed income securities - 5, , , Stocks and shares Total 41, , ,302, ,221, At December 31, 2015 and 2014, commitments to purchase securities and to sell securities of monetary assets and public debt match. 47

49 8.2 Capital instruments The company kept, at December 31, 2015 and 2014, the following breakdown of ownership in capital instruments classified as held for trading: ASSETS LIABILITIES ASSETS LIABILITIES Internal listed equity portfolio - - 1, Internal unlisted equity portfolio 404, , Total 404, , Trading derivatives The Company holds derivative financial instruments, primarily to manage the market risk of trading positions (active and passive). The breakdown of the positions held in the underlying function and the type of contract at December 31, 2015 and 2014 is as follows: ASSETS LIABILITIES ASSETS LIABILITIES Underlying interest rate derivatives 326,575, ,764, ,136, ,899, Financial swaps 326,524, ,665, ,703, ,772, Purchased options 50, , , Sold options , Underlying exchange rate derivatives Futures Underlying capital instrument and indexes derivatives 36,535, ,499, ,684, ,560, Purchased options 36,535, ,684, Sold options - 36,499, ,560, Commitments to forward purchase / sale Futures Total 363,111, ,263, ,821, ,460, The breakdown of the nominals of these positions is listed in Note

50 The breakdown of the results generated by the trading portfolio is as follows: Debt instruments portfolio Profit 62,913, ,470, Loss (61,368,711.20) (356,104,388.91) Subtotal 1,544, ,366, Capital instruments portfolio Profit 832, ,186, Loss (838,466.19) (892,606.14) Subtotal (5,722.69) 294, Financial instruments derivatives portfolio Profit 1,436,129, ,065,457, Loss (1,433,257,473.26) (1,066,512,796.44) Subtotal 2,872, (1,055,764.58) Total 4,411, , FINANCIAL ASSETS AVAILABLE FOR SALE The breakdown of this heading of assets in the balance sheet at December 31, 2015 and 2014 is as follows: Internal listed equity portfolio - - Variable income 165, Listed - - -Not Listed 8, , Total 8, , The breakdown of results generated by financial assets available for sale is as follows: Debt instruments portfolio Profit - - Loss - - Subtotal - - Capital instruments portfolio Profit 152, Loss - (3,669.65) Subtotal 152, (3,669.65) Corrections for hedging transactions - Subtotal 152, (3,669.65) Total 152, (3,669.65) 49

51 9.1 Capital instruments The breakdown of the capital instruments at December 31, 2015 and 2014 is as follows: THOUSANDS OF Company Unlisted Economic Interest Groups - - AC Jessica Andalucía, S.A AC Jessica Fidae, S.L Other 8 9 Total In 2014 the company Naviera Gioconda, A.I.E. was liquidated, not producing significant results for the Company. In 2015 the sale of shares in AC Jessica Andalucia S.A. and AC Jessica Fidae, S.L. took place, at a profit of 152,000 euros (Note 12.2). 10. HEDGING DERIVATIVES In 2015 and 2014 the Company did not make any accounting hedging transactions. 11. CREDIT INVESTMENT The breakdown of this heading of assets in the balance sheet at December 31, 2015 and 2014 is as follows: Loans to financial intermediaries 231,997, ,443, Loans to individuals 4,963, ,981, Total 236,960, ,425, No transfers of assets included under this heading to other financial asset portfolios took place in 2015 and The breakdown by maturity date of these headings, is indicated in Note 6.4 on liquidity risk. 50

52 11.1 Loans to financial intermediaries The breakdown of loans to financial intermediaries at December 31, 2015 and 2014 is as follows: On Demand Deposits (Note 3.v) 96,416, ,277, Receivables from own transactions pending settlement with the Systems Company - - With MEFF - - With Other financial intermediaries Forward deposits 249, ,249, Temporary purchase of assets - 33,819, Other loans 135,313, ,941, Valuation adjustments 18, , Accrued interest receivable 18, , Subtotal 231,997, ,443, Doubtful assets 56, ,148, Valuation adjustments Impairment of credit value with financial intermediaries (56,044.73) (6,148,793.02) Total 231,997, ,443, The item "Other receivables" primarily groups balances given by the Company in respect of collateral required by counterparties for derivative transactions. During FY 2015 the Company reclassified outstanding invoices held with joint venture entities managed by the Company, from doubtful loans to other facilitie, and sold this business line, which has generated a payment schedule that guarantees the invoice payment and recovery of impairment endowed in other years (Note 12.2) Loans to individuals The breakdown of loans to individuals at December 31, 2015 and 2014 is as follows: Loans and advances for securities transactions 4, Other loans and advances 4,959, ,851, Temporary purchase of assets - - Doubtful assets 9,438, ,452, Valuation adjustments Accrued interest receivable - 130, Valuation adjustments for impairment (9,438,517.21) (9,452,435.07) Total 4,963, ,981,

53 The heading Other loans and advances recorded at December 31, 2014 a promissory note issued by Ahorro Corporación S.A., amounting to 10 million euros, maturing on July 28, 2015, and with accrued interest not yet payable of 131,000 euros receivable on the due date of the promissory note. These amounts have been paid by Ahorro Corporación S.A. during the financial year Impairment losses The breakdown of impairment losses accounted at closing of the years 2015 and 2014 for their credit investment is as follows: THOUSANDS OF Opening balance (15,601) (17,232) Provisions charged to results (1,597) (6,200) Recovery of provisions credited to results 6,177 2,004 Applications and uses 1,101 1,486 Miscellaneous 425 4,341 Closing balance (9,495) (15,601) Of which: Depending on the form of its determination: Determined individually (9,495) (15,601) Determined collectively - - At December 31, 2014 the Company holds receivable invoices on the balance sheet corresponding to two private equity firms classified as doubtful, for a total amount of million euros and provisioned at 100%, as it is believed that, according to the terms of the service, this amount will not be recoverable. During FY 2014 the Company recorded an endowment amounting to million euros for said invoices. In 2015, the Company recorded the recovery of the entire amount impaired through the establishment of the payment schedule that guarantees the payment of invoices (Note 11.1). The net amount of both effects was recorded under Impairment losses on financial assets. In 2015, million euros were collected under this category. Similarly, in 2013 a financial swap transaction matured, the offsetting amount of which was not paid. At December 31, 2012 this transaction was valued at zero euros, such that its loss was recorded in previous years. Due to the cancellation of this transaction the Company created a credit right in favour of this counterparty for the amount of million euros, offsetting the provision for impairment of assets account of the balance sheet. In FY 2014 the Company recovered 126,000 euros on that amount, recorded against the caption Impairment losses on financial assets (net) Credit- Investments, without any further movement in 2015, thus remaining at December 31, 2015 and 2014, the amount of million euros pending to be received for this item, although fully provisioned. 52

54 12. TANGIBLE AND INTANGIBLE ASSETS 12.1 TANGIBLE ASSETS The breakdown of this heading in the balance sheet at December 31, 2015 and 2014 is as follows: For own use Furniture, computer equipment, facilities, vehicles and other 559, , Total 559, , There are no significant tangible assets with restrictions on the use or ownership, that are out of order, or that the Company has pledged as collateral for liabilities. At December 31, 2015 and 2014 the Company had no firm commitment to buy or sell significant amounts of tangible assets. For own use The breakdown of this heading in the balance sheet and the movements therein for the years 2015 and 2014 is shown below: THOUSANDS OF YEAR 2015 (THOUSANDS OF ) ADDITIONS DISPOSALS DECEMBER 31, 2015 Cost Furniture, computer equipment, facilities, vehicles and other 12, (125) 12,322 Other tangible fixed assets in progress 38 - (36) 2 Total 12, (161) 12,324 Accumulated depreciation Furniture, computer equipment, facilities, vehicles and other (11,624) (251) 111 (11,764) Net book value THOUSANDS OF YEAR 2014 (THOUSANDS OF ) ADDITIONS(*) DISPOSALS Cost Furniture, computer equipment, facilities, vehicles and other 7,871 4,930 (520) 12,281 Other tangible fixed assets in progress (83) 38 Total 7,871 5,051 (603) 12,319 Accumulated depreciation Furniture, computer equipment, facilities, vehicles and other (7,372) (4,863) 611 (11,624) Net book value (*) Of which million euros in cost and million euros of depreciation correspond to additions due to the merger with Gesmosa-GBI, A.V., S.A. (Note 1.4). 53

55 At December 31, 2015 and 2014 the tangible assets were adequately insured. The fully depreciated fixed assets still in use in the Company at December 31, 2015, amounts to million euros ( million euros in 2014) INTANGIBLE ASSETS The breakdown of this heading in the balance sheet at December 31, 2015 and 2014 is as follows: Other intangible assets Computer software 82, , Other intangible assets 106, , Total 189, , At December 31, 2015 and 2014, all intangible assets of the Company are linked to transactions, and there are no lien or tax burdens on them. The heading "Other intangible assets" includes the amounts paid for the assignment of the client portfolio of Ahorro Corporación Soluciones Inmobiliarias, S.A. in liquidation, to the Company. In the assignment contract Ahorro Corporación Financiera S.V., S.A. is subrogated to the contractual position of Ahorro Corporación Soluciones Inmobiliarias S.A. for all relevant purposes. The Directors of the Company have made an estimation of future investment flows to determine the recoverable value of the investment. According to these forecasts, the Directors consider that it is not necessary to record impairment losses on intangible assets with indefinite useful lives recorded. On March 5, 2015 the Company and its parent company, Ahorro Corporación, S.A. registered into a public document the contract of transfer of the joint venture business related to management, investment and advice on assets related to the infrastructure industry. For this transmission a price of 831,000 euros has been set, which the Company recorded under Gains / (Losses) on disposal of assets not classified as non-current for sale in the accompanying profit and loss account. Also, such contract included the sale agreement of AC Jessica Andalucia S.A., and AC Jessica Fidae, S.A. As a result of this transaction the Company made a profit of 152,000 euros, recorded under Financial instruments not measured at fair value with changes in the Profit and Loss in the accompanying profit and loss accounts (see Note 9). Computer software and other intangible assets The breakdown of this heading in the balance sheet and the movements therein for the years 2015 and 2014 is shown below: 54

56 FISCAL YEAR /12/2014 ADDITIONS DISPOSALS DECEMBER 31, 2015 Cost Computer software 2, ,478 Other intangible assets Total 2, ,584 Accumulated depreciation Computer software (2,363) (32) - (2,395) Other intangible assets (32) Net book value FINANCIAL YEAR ADDITIONS(*) DISPOSALS Cost Computer software 2, ,474 Other intangible assets Total 2, ,520 Accumulated depreciation Computer software (1,925) (438) - (2,363) Other intangible assets Net book value (*) Of which 408,000 euros in cost and 408,000 euros of accumulated depreciation correspond to additions due to the merger with Gesmosa-GBI, A.V., S.A. (Note 1.4). At December 31, 2015 and 2014, the tangible assets were adequately insured. The fully depreciated fixed assets still in use in the Company at December 31, 2015 and 2014 amounts to million euros. 13. SHARES IN GROUP COMPANIES The Company includes in this item 100% of the capital of ACF International Incorporated and 100% of the capital of Vehículo de Tenencia y Gestión 3, S.L.U. In FY 2015 the Company provisioned the amount of 228,000 euros (119,000 euros in 2014), in addition to the provision in prior years for their involvement in ACF International Incorporated, recognised under " Impairment losses of financial assets (net)" in the accompanying profit and loss account. ACF International Incorporated is registered in Boston, Massachusetts (USA). Its corporate activity is stock exchange brokerage, and its most relevant data is as follows: 55

57 THOUSANDS OF Share Capital and Reserves Profit for the year (335) (199) Net book value Book value (net of valuation allowances) Vehículo de Tenencia y Gestión 3, S.L.U. was acquired in June 2011 by the Company for 3,000 euros. Its registered address is Paseo de la Castellana 89, its corporate activity is managing and selling real estate, and its most significant data is as follows: THOUSANDS OF Share Capital and Reserves (6,234) (1,893) Profit for the year (425) (4,341) Net book value (6,659) (6,234) Book value - - In 2011, the Company proceeded to impair its investment in this Company for the amount of 3,000 euros, recognised under "Impairment losses on financial assets (net)" in the profit and loss account at year-end. At December 31, 2015 and 2014, investment is impaired at 100%. 14. FINANCIAL LIABILITIES AT AMORTISED COST The breakdown of this heading of liabilities in the balance sheet at December 31, 2015 and 2014 is as follows: Debts with financial intermediaries 197,871, ,694, Debts with individuals 53,742, ,662, Borrowings and subordinated liabilities - - Total 251,613, ,357, The breakdown by maturity date of these headings is detailed in Note 6.4 on liquidity risk. 56

58 14.1 Debts to financial intermediaries The breakdown of loans to financial intermediaries at December 31, 2015 and 2014 is as follows: Loans and credits 5,680, ,679, Receivables from own transactions pending settlement 1, With the Systems Company 1, With other financial intermediaries Temporary assignment of assets 109,220, ,567, Resident entities 109,220, ,567, Non-Resident entities - - Temporary balances on transactions with securities 14,049, ,365, Other debts 60,230, ,883, Security deposits on transactions 8,635, ,022, Valuation adjustments: (accrued interest receivable) 55, , Total 197,871, ,694, The heading "Loans and Receivables" includes at December 31, 2015 and 2014 the amounts drawn from credit policies granted to the Company. At December 31, 2015 and 2014, none of these loans are due, their maturity date being in In addition, the Company has available credit lines amounting to 3 million euros maturing in 2015 (2014: 1,000 euros). (see note 18.2). The heading "Debts for own transactions pending settlement" includes at December 31, 2015 and 2014, balances pending settlement by stock exchange transactions. The heading "Other debts" and "Deposits in guarantee of transactions" mainly include deposits required from counterparties to guarantee derivative transactions Debts to individuals The breakdown of debts to individuals at December 31, 2015 and 2014 is as follows: Temporary assignment of assets with individual residents 10,220, , Temporary balances on securities transactions Resident 40,928, ,356, Non-residents 4, , Other Debits Resident 2,344, ,922, Non-residents 91, , Security deposits on transactions 152, , Valuation adjustments Accrued interest receivable Total 53,742, ,662, The heading Other Deposits-Resident includes at December 31, 2015, the amount of 522,000 euros (1.366 million euros in 2014) relating to a provision for sales commissions and variable remuneration. At the date of preparation of these Annual Accounts, this provision corresponds to the best estimation of the Company's Directors of the amount that will ultimately be paid. 57

59 15. OTHER ASSETS AND LIABILITIES The breakdown of other assets and liabilities included in the balance sheet at December 31, 2015 and 2014 is as follows: ASSETS LIABILITIES ASSETS LIABILITIES Public administrations - 474, , Other debts non related to securities transactions 3,242, , ,701, , Miscellaneous 309, , , ,204, Total 3,551, ,321, ,055, ,903, In the financial years 2015 and 2014, the heading Other debts not related to transactions with securities of assets corresponds to a loan granted to Vehículo de Tenencia y Gestión 3, S.L.U. in 2010, for a term of one year and automatically renewed for a period of four years in total and extended for one year in the year The loan is linked to the tangible fixed assets of Vehículo de Tenencia y Gestión 3, S.L.U., which became part of their equity through various deeds of assignment in partial payment of debts. In the event of the sale of the property, the borrower is required to make mandatory repayments of the loan for the value granted to each property at the time of incorporation, or the sale price. Additionally, this heading includes a participation loan contract granted to the same vehicle in This contract was renewed in the year 2015, agreeing the transfer of million euros of the loan agreement stated in the preceding paragraph to this participation loan, amounting to million euros. The loan is linked to the tangible fixed assets of Vehículo de Tenencia y Gestión 3, S.L., through various deeds of assignment in partial payment of debts granted in In the event of the sale of the property, the borrower is required to make mandatory repayments of the loan, for the lesser value the two: the value granted to each property at the time of incorporation or the sale price. The loan bears a fixed interest rate of 2% and a variable interest rate that will be the result of applying 10% to the net profit after Company tax. At December 31, 2015 and 2013, these loan transactions have an outstanding capital of and 1.3 million euros (2014: and million euros). At December 31, 2015 these transactions are impaired at million euros (2014: million euros). At year end of 2015, the impairment recognised under the heading Impairment losses of net financial assets in the accompanying profit and loss account for this item amounted to 425,000 euros (2014: million euros). The above transactions generated 205,000 euros (233,000 euros in 2014) collected in Assimilated Interest and Income from the profit and loss account at the end of EQUITY Equity Share capital On November 6, 2014, the General Shareholders Meeting resolved to increase the share capital by the amount of 86, euros by issuing 14,393 new shares at 6.01 euros par value each, plus an 58

60 issue premium of euros per share. Thus, at December 31, 2014 the share capital of the Company is 28,603, euros, represented by 4,759,393 registered shares of 6.01 euros nominal value each, fully subscribed and paid up. These shares have the same voting and economic rights, they are not traded on organised markets, and there are no rights attached to founding parties, bonds, convertible debentures and similar securities or rights. There are no capital instruments whose issue is reserved as a result of the existence of options or contracts for sale of such instruments. The composition of the shareholders of the Company at December 31, 2015 and 2014 is as follows: % Ahorro Corporación, S.A Other shareholders Reserves The breakdown of this item at December 31, 2015 and 2014 is as follows: Issue premium 11,913, ,913, Reserves 14,310, ,310, Legal Reserve 5,703, ,703, Voluntary reserve 8,606, ,606, Results from previous years (2,460,708.54) - Total 23,762, ,223, The Company is required to transfer 10% of profits for each year to the constitution of the legal reserve until it reaches at least 20% of the share capital. This reserve is not distributable to shareholders and may only be used, if no other reserves are available, to offset losses in the profit and loss account. Also, under certain conditions it may be used to increase the share capital. As stated in Note 4 to these Annual Accounts, the General Shareholders Meeting of the Company approved on January 23, 2014, to allocate to legal reserve 3,599,990 euros from the voluntary reserves of the Company to cover the percentage of legal reserve established by Law. Additionally, on March 28, 2014, the General Shareholders Meeting approved the distribution of an extraordinary dividend charged to unrestricted reserves amounting to million euros. Likewise, on the same date, the General Shareholders Meeting approved the distribution of unrestricted reserves to offset losses from previous years amounting to million euros. 59

61 16.2 Valuation adjustments At December 31, 2015 and 2014, this section of the balance sheet does not have any balance. The movements under this heading of the balance sheet are included in the Statement of Income and Expenses recognised in the Equity. 17. PROVISIONS The breakdown of provisions at December 31, 2013 and 2014 is as follows: Provisions for contingencies 4,278, , Total 4,278, , During FY 2015 the Company recorded a provision to meet liabilities arising from the employment reduction process carried out in the year 2015 amounting to 3.17 million euros. Also, for those employment relationship splitting processes pending completion at December 31, 2015, the Company recorded a provision amounting to 577,000 euros. During FY 2014 the Company included 358,000 euros for this item, originated by the merger with Gesmosa-GBI, AV, S.A. (Note 1.4). 18. RISK AND COMMITMENT ACCOUNTS AND MEMORANDA ACCOUNTS 18.1 Financial risk and commitment accounts The breakdown shown in these accounts as at December 31, 2015 and 2014 is as follows: Guarantees and securities granted 135,455, ,787, Purchase commitment for securities (Note 8.1) 87, ,523, Own stock given as loan - - Financial derivatives 4,836,530, ,367,749, Other financial risk and commitment accounts 6,104, ,040, Total financial risk and commitment accounts 4,978,178, ,655,100, The guarantees and securities given are listed as follows: 60

62 Shareholding in the collective bond by the market 8,760, ,230, Assets affected by own or third party guarantees 126,565, ,266, Risks from derivatives contracted by third parties - - Miscellaneous 130, , Total 135,455, ,787, The heading "Shareholding in collective bond market" includes the amount of the mandatory guarantee that Securities agencies and services firms have to provide by law before the Stock Market and Financial Markets, Sociedad Holding de Mercados y Sistemas Financieros, S.A., for their operations in the securities markets. This bond is set monthly by the Securities Clearing and Settlement Service depending on the amount of transactions performed by the Company on the Stock Exchange. The item "Assets assigned to own and third party guarantees" includes mainly balances deposited as collateral as security, mainly for transactions with derivatives. The aforementioned assets are mainly included under "Loans and Receivables" on the asset in the balance sheet. Financial derivatives The item financial derivative shows the following breakdown: Forward contracts on financial assets - - Financial futures on securities and interest rates - 749, Other interest rate transactions Financial swaps 4,525,539, ,848,435, Other contracts with options 10,889, ,537, Financial futures on currencies - 299, Options on securities and indexes 296,954, ,893, Interest rate options 3,147, ,835, Total 4,836,530, ,367,749, The balance of "Other interest rate transactions" consists mainly of swaps. The breakdown of these swaps, depending on whether they are managed transactions (collated transactions as a whole) or whether they are mediated transactions (transactions that collate with each other), is as follows: PURCHASES SALES TOTAL PURCHASES SALES TOTAL Managed Swaps 1,554,681, ,599,938, ,154,620, ,107,699, ,070,918, ,178,618, Intermediated Swaps 695,686, ,232, ,370,918, ,766, ,050, ,669,816, Total 2,250,368, ,275,170, ,525,539, ,949,466, ,898,969, ,848,435,

63 At December 31, 2015 and 2014, there are no transactions assigned to hedging relationships. The breakdown of notionals contracted in the rest of transactions with current derivatives at December 31, 2015 and 2014 is as follows: THOUSANDS OF ORGANISED MARKETS OUTSIDE ORGANISED MARKETS (OTC) TOTAL ORGANISED MARKETS OUTSIDE ORGANISED MARKETS (OTC) TOTAL Forward contracts on financial assets purchased sold Forex trading purchased sold Financial futures on securities and interest rates purchased sold Financial futures on currencies purchased sold Options on securities or indices - 296, , , ,893.- purchased - 147, , , ,773.- Issued - 149, , , ,120 Interest rate options - 3,147 3,147-59,835 59,835.- purchased ,177 31,177.- sold - 2,198 2,198-28,658 28, , , , , Other memoranda accounts The breakdown shown in these accounts is as follows: Available unconditioned on demand in credit institutions 3,000, Client orders to purchase securities pending settlement 35,815, ,752, Client orders to sell securities pending settlement 36,954, ,454, Deposits of financial instruments (market value) 13,568,418, ,114,189, Own and third party financial instruments held by other entities (market value) 371,736, ,112, Third-party securities loans - - Managed portfolios 1,569, Regularised assets in suspense 69,858, ,858, Guarantees received from customers on personal loans - - Other memoranda accounts - 13,580, Total other memoranda accounts 14,087,354, ,681,948,

64 The item "Regularised assets in suspense" includes the amount of million euros relating mainly to derivative transactions impaired at 100% by the Company in 2009, and in 2010 they were written off in the balance sheet. On February 13, 2015, the Company proceeded with the disposal of the entire balance of Other memorandum accounts". This account included a warrant, which was not paid by one client. On this date, the Company signed a credit assignment contract for this transaction with Barclays Bank PLC, for which it has received 541,000 euros, recognised under the heading Gains / (losses) on the disposal of assets for sale not classified as non-current for the year The breakdown of customer orders pending settlement at December 31, 2015 and 2014 correspond to transactions pending settlement on stock exchanges and other markets and their breakdown is as follows: PURCHASES SALES PURCHASES SALES With the Systems Company 1,113, ,107, ,090, ,946, With MEFF 761, , , , With other financial intermediaries 33,940, ,783, ,551, ,505, Total 35,815, ,954, ,752, ,454, Share deposits show the following composition: Instruments deposited in the entity itself 13,568,418, ,114,189, Own securities 441, ,406, Third party securities 13,567,977, ,103,782, Of which in global custody accounts 1,000,031, Securities received from another depository entity - - Instruments deposited in other entities 371,736, ,112, Own securities - - Third party securities 371,736, ,112, Total 13,940,155, ,511,301, The item "Instruments deposited in the Entity itself" includes mainly own deposited securities or of customers held by Ahorro Corporación Financiera, S.V., S.A., as a member of registration and deposit systems (Iberclear, for fixed income transactions bonds and domestic equities and MEFF for derivatives traded on national markets). Thus, under this heading are included the deposit of securities owned by the Fund for Orderly Bank Restructuring (FROB) amounting to billion euros in 2015 ( billion euros in 2014). In addition to that indicated in the preceding paragraphs, the aforementioned heading shows at December 31, 2015, unlisted securities in six financial entities and one non-financial institutions 63

65 amounting to billion euros arising from accounting service provided by the Company throughout 2014, therefore not being securities deposited in the entity. (2014: billion euros). The heading Instruments deposited in other Entities includes the remaining securities that are redeposited in other entities acting as sub-custodians (Euroclear (AA+) for fixed income and international equities, Goldman Sachs International (A), BNP Paribas (AA) and Citibank (A+) for international equities, Credit Suisse Securities (Europe) Limited (Group C. Suisse A+) for derivatives traded in international markets and CECA for domestic equity). In each system or sub-custodian, either individual accounts are held for each holder, or global accounts ("omnibus") where there is separation between the own account (when there are positions in the name of the Company) and the global account of third parties. In view of the Directors of the Company, the securities listed on global custody accounts, as they are entered in accounts specifically called customer accounts, and with the latter having been informed of their use, are restricted assets for the customers and will not be part of the assets with which the Company should meet its liabilities or commitments. However, these assets are exposed to counterparty risk of global custodians. At December 31, 2015, the Company held 18 third-party portfolio management contracts. During the year 2014 there was no such contract. 19. PROFIT AND LOSS ACCOUNT 19.1 Interest and similar income, interest expenses and similar charges, income from capital instruments, net trading income and net impairment losses on financial assets The composition of these headings in the profit and loss account for fiscal years 2015 and 2014 is as follows: Interest and similar income from financial assets Financial intermediaries: Forward deposits 1, Temporary acquisition of assets 5, , Remainder 502, ,504, Individuals 126, , Monetary assets and public debt 1, Other fixed income securities , Foreign fixed income portfolio Dividends from shares and holdings 26, Other interest and income 204, , , ,257,

66 Interest and similar expenses from financial liabilities Financial intermediaries: 358, , Deposits 126, , Temporary assignment of assets 11, , Remainder 221, , Individual residents 12, , Temporary assignment of assets 5, , Remainder 7, Rectification of costs due to hedging transactions - - Total 371, , The breakdown of the results generated by financial transactions is as follows: PROFIT LOSS PROFIT LOSS Monetary assets and public debt 14,207, (13,204,447.92) 16,802, (15,995,046.54) Other fixed income securities from internal portfolio 1,558, (1,540,692.20) 4,138, (4,120,257.76) Other fixed income securities from external portfolio 47,122, (45,952,433.87) 336,503, (335,468,886.11) Stocks and shares internal portfolio 958, (813,333.64) 1,168, (866,351.83) Stocks and shares external portfolio 26, (25,132.55) 17, (29,923.96) Trading derivatives 1,436,129, (1,433,257,473.26) 1,065,457, (1,066,512,796.44) Forward contracts 58, (108,838.01) 122, (65,796.73) Futures 8,087, (8,059,245.72) 6,317, (6,362,925.38) Financial swaps 1,060,274, (1,057,260,349.82) 735,853, (736,223,154.05) Options 367,709, (367,829,039.71) 323,163, (323,860,920.28) Net Diff. sale. Fixed income securities overdrawn and borrowed 24, (671,137.21) 26, (520,198.50) Net diff. in sale of shares and holdings overdrawn and borrowed Rectification of results due to hedging transactions Other gains and losses Total 1,500,028, (1,495,464,650.65) 1,424,114, (1,423,513,461.14) The composition of "Fees" headings in the profit and loss account for fiscal years 2015 and 2014 is as follows: 65

67 Fees received Processing and execution of customer orders for securities trading 15,905, ,119, In official secondary markets 11,480, ,104, In other national markets 51, , In foreign markets 4,374, ,886, Insurance and placement of orders 13, ,934, Placement 13, ,764, Insurance - 169, CII marketing 6,147, , Deposit and book entry of securities 189, , Investment advice 50, ,192, Intermediation in derivative instruments 1,066, ,711, Fees for investment reporting and financial analysis 277, , Other fees 4,034, ,748, Total 27,684, ,204, Fees paid Transactions with securities 2,336, ,948, Transactions with derivative instruments 273, , Fees paid to markets and clearing and settlement systems 293, , Guarantees relating to a group deposit in the market 109, , Fees paid to representatives and other entities 4,469, Other fees 840, , Total 8,322, ,218, As indicated in Note 1.1, during the year the Company subrogated to the contracts held by Ahorro Corporación Gestión, SGIIC, S.A. with several management companies for the marketing of foreign funds. As a result of this activity, the Company has made a profit of million euros included under Fees received in the profit and loss account, and it has also recorded an expense for fees paid to sub-marketer amounting to 4.47 million euros recorded under Fees paid in the accompanying profit and loss account. Trading losses are included under the heading Other fees. In the year 2015, 12,000 euros were recorded for this item, and in 2014, zero. These losses correspond mainly to incidents with retail customers. 66

68 19.2 Staff costs The composition of staff costs for 2015 and 2014 is as follows: Salaries and bonuses 10,459, ,273, Contributions to social security 1,892, ,052, Endowment to external pension funds 236, , Severance pay 6,352, , Training costs 18, , Other company expenditure 357, ,625.4 Total 19,315, ,807, During fiscal year 2015, the Company recorded compensations outlined in the employment reduction process carried out in 2015 amounting to million euros. The number of employees at year-end is as follows: MALES FEMALES MALES FEMALES Managers and Technical Staff Administrative staff The average number of staff employed during the year was as follows: Managers and Technical Staff Administrative staff With regard to members of the Board of Directors, at year-end 2015 it includes 1 woman and 3 men (2014: 4 men) 67

69 19.3 Overheads The breakdown of overhead for the years 2015 and 2014 is as follows: Overheads Rental of property and facilities 782, ,207, Communications 2,162, , Computer systems 1,407, ,241, Supplies 14, , Maintenance and repairs 496, , Advertising and publicity 129, , Representation and travel 301, , Outsourced administrative services 108, , Other independent professional services 241, , Contributions and taxes 1,543, ,597, Other expenses 2,482, ,091, Total 9,670, ,145, The relevant item under Other expenses includes the impact of the expenditure by the central services of the parent company (1.483 and million euros in the years 2015 and 2014, respectively). In 2015 the financial information services expenditure under the heading Other expenses was reclassified as "Communications". In 2015 these services amounted to million euros (2014: million euros) Other operating expenses The composition of other operating costs for 2015 and 2014 is as follows: Other operating expenses (Note 3.s) Investment Guarantee Fund contributions 185, , Other concepts 489, , Total 675, , The heading Other items includes in 2015 the annual contribution to the National Resolution Fund, established in the year 2015 pursuant to Law 11/2015 of June 18, for the amount of 248,000 euros (Note 3.5). This heading also includes the fees paid to the CNMV for its supervisory role of the entity. 68

70 20. FINANCIAL SITUATION The Company is part of a Group, whose parent company is Ahorro Corporación, S.A., which is taxed under the Corporate Tax consolidation regime. The Company is open to tax inspection for the last four years for the items of Corporation Tax, Income Tax for Individuals and Value Added Tax. According to current legislation, tax returns cannot be considered definitive until they have been inspected by the tax authorities or the relevant limitation period has elapsed. Due to different interpretations that can be made to the applicable tax regulations and the results that could arise from other tax inspections, there are contingent tax liabilities that cannot be objectively quantified. However, it is estimated that in the event the aforementioned possible contingent liabilities were to become effective, they would not significantly affect the image of the equity and financial position of the Company. In 2010 the Company was under the tax consolidation regime for VAT at the basic level, as provided by Law 36/2006 of November 29, amending Law 37/1992 of December 28, on Value Added Tax. On December 17, 2010 the Board of Directors of the Company approved that the Company, as of January 1, 2011, would be under the special system for advanced level groups of entities, together with the parent company Ahorro Corporación S.A. and other subsidiaries that meet the specific legal requirements. The reconciliation between the accounting profit, before tax and taxable Corporation tax, and the calculations made by the Company in respect of the aforementioned tax at December 31, 2015 are as follows: THOUSANDS OF INCREASE DECREASE BALANCE Year's accounting profit after (2,910) Corporate Tax Corporation tax (982) Permanent differences due to tax consolidation - (15) (15) Permanent differences Adjusted accounting profit (3,514) Temporary differences - Incurred in the financial year 3,830-3,830 - Incurred in previous years - (2,121) (2,121) Taxable base of the year (1,805) Permanent differences due to tax consolidation - Application of negative tax bases - Total - 69

71 THOUSANDS OF TAX TAX ACCRUED PAYABLE Payment (28%) - On adjusted accounting profit (984) - - On taxable base - - Deductions - For investments Other - - Other (foreign corporation tax) 2 - Company tax (982) - Withholdings and payments on account 36 Total 36 The reconciliation between the accounting profit, before tax and taxable Corporation tax, and the calculations made by the Company in respect of the aforementioned tax at December 31, 2014 are as follows: THOUSANDS OF INCREASE DECREASE BALANCE Year's accounting profit after (2,461) Corporate Tax Permanent differences 4,454-4,454 Adjusted accounting profit 1,993 Temporary differences - Incurred in the financial year Incurred in previous years - (1,502) (1,502) Taxable base of the year 710 Permanent differences due to tax consolidation 5 Application of negative tax bases (715) Total - THOUSANDS OF TAX ACCRUED TAX PAYABLE Payment (30%) - On adjusted accounting profit On taxable base - - Deductions For investments Other Other (foreign corporation tax) - - Company tax - - Withholdings and payments on account (499) Total (499) 70

72 The General Shareholders Meeting of the Company at its meeting held on April 25, 2002, agreed to apply the joint tax consolidation regime together with Ahorro Corporación, S.A. and other Companies of the fiscal Group that meet the specific legal requirements, indefinitely, during FY 2002 and subsequent tax periods, while the requirements of current legislation are met and while their application is not waived. The balance payable is recorded under "Other debts" as part of the balances with Related Parties (Note 21). At December 31, 2015 and 2014, the Company had not recorded tax assets or liabilities. The Directors decided not to register the tax credits and deferred tax assets arising as a result of trading losses for 2012, although they considered the continuity of operations to be assured. However, uncertainties about the business and industry resulted in the conclusion that the circumstances required by accounting regulations for registration in this fiscal year were not met. The negative Taxable base of the Company for 2015 pending offset in future years amounts to million euros. 21. RELATED PARTIES At December 31, 2015 and 2014, balances and transactions between the Company and related parties are as follows: ASSETS LIABILITIES ASSETS LIABILITIES Loans to financial intermediaries , Loans to individuals 4,534, ,606, Debt securities Capital securities 556, , Accruals , Other assets 3,114, ,539, Debts with financial intermediaries ,905, Debts with individuals - 11,017, , Subordinated liabilities Other liabilities - 7, ,205, ,024, ,806, ,651, DEBIT CREDIT DEBIT CREDIT Interest and charges 12, , Interest and revenues - 348, , Fees received - 399, , Fees paid 338, , Profit / loss on financial investments Loss / Recovery on impairment of value of financial assets 703, ,460, Overheads 3,038, ,277, Other losses Other benefits ,092, , ,078, ,383,

73 The Company considers the members of the Board of Directors of the Company as key Management staff. The total remuneration earned for the year 2015 amounted to 306, euros (439, euros in 2014). No advances or loans were granted to members of the Board of Directors. The contributions of the Company to pensions and life insurance for members of the Board of Directors in 2015 amounted to 9, (15, euros in 2014). 22. OTHER INFORMATION 22.1 Environmental activity Given the activity in which the Company is engaged, it has no liabilities, expenses, assets, provisions or contingencies of an environmental nature that might be significant in relation to the assets, financial position and results thereof. Therefore, no specific breakdowns are included in this Annual Accounts report with respect to information regarding environmental issues. Also during these years, the Company has no Greenhouse gas emissions allowances Balances and abandoned deposits At December 31, 2015 and 2013 there are no accounts opened by customers which have not been used by any of their owners, in exercising their right of ownership, in the last 20 years and revealing a state of abandonment in accordance with the provisions of Law 33/ Information on Directors (Article 229) According to the information required by Article 229 of Royal Legislative Decree 1/2010 of July 2, approving the revised text of the Capital Companies Law, it is announced that the Directors of the Company do not have any conflicts of interest for Directors under said article at December 31, List of Agents At December 31, 2015 and 2014, the Company has no registered agents in the National Securities Market Commission (C.N.M.V.) 22.5 Customer Service Article 17 of Order ECO / 734/2004 of March 11, of the Ministry of Economy establishes the obligation for customer care departments and services and, where appropriate, ombudsmen, of financial institutions, to annually submit to the board a report explaining the development of their role during the previous year. The Board of Directors of the Company, at its meeting held on January 22, 2003, appointed the Corporate Legal Department of Grupo Ahorro Corporación as the department responsible for carrying out the functions of the Service for customer complaints in the Company. On December 28, 2004 the Rules for Customer Protection of the Ahorro Corporación Group were included in the registers of the National Securities Market Commission (C.N.M.V.) 72

74 In 2015 the Customer Service Department of the Group informed the Board of Directors that during the year it had received three claims, which have been solved, of which two were decided against and one was upheld. The CNMV made an inquiry requesting information, which resulted in there not having been any wrongdoing by the Company. In 2014 the Customer Service Department of the Group informed the Board of Directors that during the year it had not received any claims, nor had there been inquiries from the CNMV regarding the claims made by those customers Audit fees Regardless of the date of invoice, the fees paid for the accounts audit of financial year 2015 amounted to 75,000 euros (2014: 75,000 euros for fees paid for the audit and 4,000 euros for accounting review work). Additionally, other work was done, the fees of which amounted to 30,000 euros (30,000 euros in 2014). In 2015 no further services were provided by the accounts auditor or by other companies that are part of the same international network, other than those mentioned above Information on deferred payments to suppliers According to that established in the single additional provision of the Resolution of January 29, 2016, of the Institute of Accounting and Auditing, on the information to be included in the notes to the Annual Accounts in relation to the average payment period to suppliers in business operations, no comparative information is submitted, as the Annual Accounts for 2015 qualify as initial for the sole purpose hereof, as regards the application of the principle of uniformity and the comparability requirement. The information relating to the average payment period to suppliers is as follows: (Days) Average payment period to suppliers 23 Ratio of transactions paid 22 Ratio of transactions pending payment 40 (Thousands of euros) Total payments made in thousands of euros 14,492 Total payments pending in thousands of euros EVENTS AFTER THE BALANCE SHEET DATE On July 30, 2015 the Company signed an agreement to sell substantially all of its positions in derivatives, subject to compliance with certain conditions (Note 6.1). On the date of preparation of the Annual Accounts, the sale agreement was not fully implemented. On March 1, 2016, the Company signed an extension of that agreement with expiry date March 31, Since the closing of the fiscal year and until the date of preparation by the Board of Directors of the Company of its Annual Accounts, no significant event has occurred that should be included in the accompanying Annual Accounts for them to properly show a true and fair view of the assets, financial position, results and cash flows of the Company. 73

75 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU FT Global Bond Euro N EUR FF Multi Asset Strategic Fund E EUR PF Absolute Return Glob Diversified R EU SISF Euro Short Term Bond B EUR SISF US Large Cap Euro B EUR SISF Emerging Europe B EUR FT Mutual Beacon Fund N EUR FT Mutual European Fund N EUR FF America Fund E EUR FF America Fund A EUR FF America Fund A Acc Usd USD FF America Fund A EUR FF America Fund A Acc HEDG EUR FF American Growth Fund E ACC EUR FF European Larger Companies Fund E EUR FF Emerging Markets Fund E EUR FF Euro Blue Chip Fund E EUR FF European Growth Fund E ACC EUR FF European Dynamic Growth E EUR FF European Dynamic Growth A EUR FF European Smaller Companies Fund E EUR FF Global Financial Services Fund E EUR FF India Focus Fund A EUR FF Global Property Fund E ACC EUR FF Global Property Fund A ACC USD FF Global Health Care Fund E EUR FF Greater China Fund E EUR FF Iberia Fund E EUR FF Iberia Fund A Acc Eur EUR FF Global Industrials Fund E EUR FF Euro Bond Fund E EUR FF Japan Fund E EUR FF Emerging Market Debt Fund E ACC EUR FF Latin America Fund E EUR FF European Fund E ACC EUR FF South East Asia Fund E EUR FF Global Technology Fund E EUR FF Global Telecommunications Fund E EUR FF World Fund E EUR Parvest Diversified Dynamic N Acc EUR Parvest Bond World Emerging N Acc USD 74

76 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU Parvest Bond Euro Government N Acc EUR Parvest Equity High Dividend Europe N Ac Parvest Equity Europe Mid Cap N Acc EUR Parvest Convertible Bond Europe N Acc EU Parvest Flexible Bond Europe Corpor N Ac Parvest Money Market Euro C Acc EUR Parvest Equity Japan N JPY Parvest Equity Japan Small Cap N Acc JPY Parvest Equity Latin America N Acc USD Parvest Bond Euro Medium Term N Acc EUR Parvest Money Market USD N Acc USD Parvest Bond USD Government N Acc USD Parvest Equity USA N Acc USD JPM US Select Equity Fund D USD JPM Japan Select Equity Fund D JPY JPM US Bond Fund D USD JPM Global High Yield Bond Fund D EUR JPM Glob Capital Appreciat Fund D EUR JPM Global Conservative Balanced D EUR JPM Global Balanced (EUR) Fund D EUR JPM Global Balanced (EUR) Fund D USD JPM America Equity Fund D USD JPM America Equity Fund D EUR JPM China Fund D USD JPM Eastern Europe Equity Fund D EUR JPM Emerging Markets Equity Fund D USD JPM Euroland Equity Fund D EUR JPM Europe Equity Fund D EUR JPM Turkey Equity Fund D EUR JPM Europe Small Cap Fund D EUR JPM Europe Strategic Growth Fund D EUR JPM Europe Strategic Value Fund D EUR JPM Europe Technology Fund D EUR JPM Germany Equity Fund D EUR JPM Global Dynamic Fund D USD JPM India Fund D USD JPM Japan Equity Fund D USD JPM US Aggregate Bond Fund D USD JPM US Strategic Value Fund D USD Parvest Equity Australia N Acc AUD JPM Global Unconstrained Equi Fund D Hed JPM Europe Strategic Dividend Fund D EUR JPM Global Focus Fund D EUR JPM Global Natural Resources Fund D EUR JPM Russia Fund D USD PF Biotech HR EUR PF Biotech R EUR FF European High Yield Fund E EUR FF European High Yield Fund E MDIST EUR PF HEALTH HR EUR PF HEALTH I USD 75

77 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU PF HEALTH R Acc EUR PF HEALTH P Eur EUR Parvest Bond Euro Corporate N Acc EUR PF Water R EUR PF Water P Dis EUR JPM Singapore Fund D USD JPM Europe Dynamic EUR Fund D EUR FF European High Yield Fund A EUR FF European High Yield Fund A EUR FF Euro Balanced Fund A EUR FF PS Moderate Growth Fund A EUR Amundi Funds Absolute Volatility AR FE E JPM Global Convertibles D EUR JPM Global Convertibles A EUR FF Global Focus Fund E EUR PF Japanese Equity Selection HR EUR SISF BRIC B EUR Parvest Flexible Bond World C Acc USD Parvest Equity Japan C Acc JPY Parvest Bond USD Government C Acc USD Parvest Money Market USD C Acc USD Parvest Equity USA C Acc USD Parvest Equity Australia C Acc AUD Parvest Equity Latin America C Acc USD FF Target 2020 A EUR Parvest Bond Euro Inflation-Linked N Acc FT European Total Return N EUR FF Italy Fund Acc E ACC EUR FF Italy Fund Acc A EUR EUR FF Emerging Europe,Middle East&Afri E EU FF Euro Corporate Bond Fund A EUR FF Euro Short Term Bond E Acc EUR FF Euro Short Term Bond A Acc EUR FF Euro Short Term Bond Y Acc EUR FF China Focus Fund A EUR FF Fast Europe E EUR FF Multi Asset Strategic Defensive E ACC FF Multi Asset Strategic Defensive A EUR FF Nordic Fund A Acc SEK FF China Consumer Fund A EUR FF Switzerland Fund A Acc CHF FF Global Consumer Industries Fund E EUR FF Global Consumer Industries Fund E Hed FF GLOBAL MULTI ASSET INCOME FUND N QINC Fidelity Funds-Asian High Yield F A EUR SISF Euro Liquidity B EUR SISF China Opportunities B USD SISF US Dollar Bond B USD SISF US Small & Mid Cap Equity B EUR SISF Strategic Bond B EUR SISF Global Inflation Linked Bond B EUR 76

78 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU SISF Middle East B EUR SISF European Equity Alpha B EUR SISF US Dollar Bond B EUR SISF US Large Cap B EUR SISF Euro Corporate Bond B EUR SISF Japanese Equity Euro Hedged B EUR SISF Euro Bond B ACC EUR SISF Euro Bond A Acc EUR SISF Global High Yield B Acc Hedg EUR SISF Global Emerg Market Opportunit B Ac Sisf Hong Kong Equity B HKD SISF Swiss S&M Cap Equity B CHF SISF Global Corporate Bond B Hedged EUR SISF Global Corporate Bond A ACC USD SISF Global Corporate Bond B Acc USD SISF Euro Government Bond B EUR SISF Euro Government Bond A Acc EUR SISF European Smaller Companies B EUR SISF European Dividend Maximiser B EUR SISF European Dividend Maximiser A Dist. Schroder Asian Opportunities A Acc USD Schroder Asian Opportunities B Acc EUR Schroder Asian Opportunities A Acc EUR SISF Frontier Mkts Equity B USD Schroder Int. Selection Fund B CHF SISF GLOBAL MULTI-ASSET INCOME A Dist EU SISF QEP Global Quality B Acc EUR SISF Japanese Opportunities A Acc USD Schroder Int. Selection Fund A EUR Parvest Equity BRIC N Acc USD Parvest Equity Brazil N Acc USD Parvest Bond Euro Short Term N Acc EUR Parvest Step 90 Euro C Acc EUR Parvest Conve Bond Europe Small Cap C Ac Parvest Conve Bond Europe Small Cap N Ac Parvest Equity Europe Small Cap C Acc EU Parvest Equity Europe Small Cap N Acc EU Parvest Multi-Strategy Low Vol(USD) C Ac Parvest Eq Best Select Asia ex-jap C EUR Parvest Eq Best Select Asia ex-jap N EUR Parvest Equity Best Selection Euro C EUR Parvest Equity Best Selection Euro N EUR Parvest Equity Best Select Europe N EUR Parvest Equity Best Select Europe C EUR Parvest Equity China N USD Parvest Equity Europe Emerging N EUR Parvest World Commodities CH EUR Parvest Equity Europe Growth C EUR Parvest Equity India N USD Parvest Equity Turkey N EUR Parvest Equity USA Small Cap N USD 77

79 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU FR FR LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU Parvest Equity World Emerging C USD Parvest Equity World Emerging N USD Parvest Equity World Energy N EUR Parvest Equity World Low Volatility C US Parvest Equity World Technology N USD Parvest Equity World Health Care C EUR Parvest N EUR Parvest Flexible Multi-Asset N EUR EUR Parworld ETF Flex TrackerAllocation N EU BNP Paribas Insticash GBP T1 GBP Amundi Funds Equity Latin America SU USD Amundi Funds Absol Volat Euro Equit H EU Amundi Funds Absol Volat Euro Equit SE E Amundi Funds Absol Volat Euro Equit IE E Amundi Funds Absol Volat Euro Equit AE E Amundi Funds Absol Volat Euro Equit FE E Amundi Funds Global Bond SU USD Amundi Funds Abso Volat World Equit SC U Amundi Funds Abso Volat World Equit H US Amundi Funds Equity Glob Gold Mines AU U Amundi Funds Cash Euro FE EUR Amundi Funds Equity US Concent Core FU U Amundi Funds Bond US Oppo Core Plus FHE Amundi Funds Cash USD FU USD Amundi Funds Convertible Europe FE Acc E Amundi Funds Convertible Europe AE EUR Amundi Funds Bond Global FU USD Amundi Funds Equity MENA FHE C EUR Amundi Funds Absol.Bond & Currencie FE A Amundi Funds Bond Global Aggregate FHE E Amundi Funds Bond Global Corporate FU-C Amundi Credit 1-3 Euro P EUR Amundi Oblig Internationales I EUR First Eagle Amundi International AU USD First Eagle Amundi International FU USD First Eagle Amundi International AHE EUR First Eagle Amundi International FHE EUR First Eagle Amundi International AHG GBP PF Premium Brands R EUR PF Premium Brands P CAP EUR PF Security R EUR PF Clean Energy R EUR PF Emerging Markets HR EUR PF Emerging Local Currency Debt R EUR PF Short Mid-Term Bonds R EUR PF Sovereign Short Term Money Mark R USD PF Government Bonds R Acc USD PF Global Megatrend Selection R EUR PF Global Megatrend Selection HP Eur EUR PF Global Megatrend Selection P Acc EUR PF Global Emerging Debt HR EUR 78

80 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU PF Global Emerging Debt HP EUR PF Asian Local Currency Debt R EUR PF Emerging Market Index R USD Pictet Russian Equities R EUR Pictet Usd Index R USD PF Digital Communication P USD PF Digital Communication R ACC EUR PF Digital Communication P Acc EUR PF Eur Short Term High Yield P EUR PF Eur Short Term High Yield I EUR PF Eur Short Term High Yield R EUR FT Mutual European Fund A EUR FT Mutual Beacon Fund N EUR FT Mutual Beacon Fund N USD FT Emerging Markets N EUR FT Global Bond Fund N Hedged EUR FT Global Bond Fund N EUR FT Global Bond Fund N USD FT Global Bond Fund A ACC EUR FT Global Bond Fund N USD FT Mutual Global Discovery N Hedged EUR FT Mutual Global Discovery A USD FT Mutual Global Discovery N EUR FT Global Total Return Fund N Hedged EUR FT Global Total Return Fund N (ACC) EUR FT Global Total Return Fund N Acc USD FT US Opportunities Fund N EUR FT US Opportunities Fund N-H1 EUR FT US Opportunities Fund N Acc USD FT US Opportunities Fund A EUR FT European Small-Mid Cap Growth N EUR FT US Equity N EUR FT US Equity N Acc USD FT US Equity A(Acc) USD USD FT Asian Growth N EUR FT US Focus Fund A USD FT European Growth N EUR FT India Fund N Acc EUR FT India Fund N Acc USD FT India Fund A ACC EUR FT Technology Fund N EUR FT Technology Fund N USD FT Technology Fund A EUR FT US Small-Mid Cap Growth Fund N Acc US FT Natural Resources Fund N ACC EUR FT Biotechnology Discovery Fun A USD FT Biotechnology Discovery Fun N USD Franklin Templeton Mena Fund N EUR FT Global Growth Fund A Acc GBP JPM US Select Equity Fund D EUR JPM Income Opportunity D Hedged EUR 79

81 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU JPM Global Income D EUR JPM Global Income D EUR JPM Global Income A EUR JPM Global Income D HEDGED USD JPM Global Income A DIV Euro EUR JPM US Strategic Value Fund D EUR JPM Euro Money Market D EUR JPM Emerging Markets Equity D EUR JPM Euro Government Bond D EUR JPM Global Corporate Bond D Acc EUR JPM Global Corporate Bond D Hed Dur EUR JPM Global Goverment Short Duration D AC JPM Highbridge US Steep Fund D USD JPM Emerging Markets Local Currency D EU JPM Highbridge Europe Steep D Acc EUR JPM Highbridge Europe Steep A Acc EUR JPMorgan US Equity Plus Fund D USD JPM Global Government Bond D EUR JPM Global Healthcare D USD JPM Asia Pacific Strategic Equity D USD JPM Africa Equity. D Acc USD JPM Europe Equity Plus D Euro Acc EUR JPM Europe Equity Plus D Acc Hgd USD JPMorgan Global Capital D ACC EUR JPMorgan Japan Equity D Acc EUR JPMorgan Japan Equity A Acc EUR JPMorgan Global Macro Opport. A Acc EUR JPM Euro Liquidity D EUR JPM US Dollar Treasury Liquidity D USD JPM Sterling Liquidity D Acc GBP Invesco European Growth Equity E EUR Invesco Pan European Structured Equ E EU Invesco Pan European Structured Equ A EU Invesco Pan European Equity E EUR Invesco Pan European Equity A EUR Invesco Pan European Equity A Dist USD Invesco India Equity E EUR Invesco Asia Infrastructure E EUR Invesco Energy E EUR Invesco Greater China Equity E EUR Invesco USD Reserve A Usd USD Invesco US Structure Equity Fund E EUR Invesco European Bond E EUR Invesco Global Bond E EUR Invesco Euro Corporate Bond Fund E EUR Invesco Euro Corporate Bond Fund A ACC E Invesco Global Structured Equity E EUR Invesco Asia Consumer Demand E Acc EUR Invesco Asia Consumer Demand A Acc USD Invesco Balanced Risk Allocation E EUR Invesco Pan European High Income A Acc E 80

82 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU IE00B0H1QB84 IE00B6T7FR51 IE00B0H1Q962 IE00B0H1QC91 IE LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU Invesco Pan European High Income E EUR Invesco Pan European High Income A Dist Invesco Euro Short Term Bond A Acc EUR Invesco Euro Short Term Bond E EUR Invesco Euro Short Term Bond C Acc EUR Invesco Global Equity Income Fund E Acc Invesco Global Equity Income Fund A Hgd Invesco Gb Inv.Grade Corp.Bond Fd A Dist Invesco Global Total Return E EUR Invesco Global Total Return A EUR Dist E Invesco Global Total Return A EUR Acc EU Invesco Pan European Equity Income A Acc Invesco Japanese Equity Core E EUR Invesco Japanese Equity Core Fund A Hedg Invesco Asian Equity Fund E EUR Invesco UK Equity Fund E EUR Invesco PRC Equity A USD BGF Emerging Markets E EUR BGF Euro Markets E EUR BGF Global Allocation E Hedged EUR BGF Global Allocation E EUR BGF Global Allocation E Acc USD BGF World Gold E EUR BGF World Gold E Hedged EUR BGF World Mining E EUR BGF World Mining E Hedged EUR BGF New Energy E EUR BGF Global High Yield Bond E HEDGED EUR BGF Global High Yield Bond E USD BGF World Energy E EUR BGF US Opportunities E Acc EUR BGF Japan Flexible Equity E2 EUR BGF World Healthscience E2 EUR BGF World Healthscience E2 USD BGF World Healthscience A2 ACC USD BGF Euro Short Duration Bond A2 EUR BGF Euro Short Duration Bond E2 EUR BGF Euro Short Duration Bond A4RF Dist G BGF Continental European Flexible E EUR BGF European E EUR BGF Global Small Cap Fund E EUR BGF US Basic Value Fund E EUR BGF US Dollar Short Duration Bond E Acc BGF US Dollar Short Duration Bond E EUR BGF US Dollar High Yield Bond E USD BGF US Dollar High Yield Bond E EUR BGF European Special Situations E EUR BGF European Special Situations A EUR BGF World Financials Fund E EUR BSF European Absolute Return A2 EUR BSF European Absolute Return E2 Acc EUR BSF European Credit Strategies H2 EUR BSF European Opport Ext Str E2 EUR BSF European Opport Ext Str A4 Dist GBP 81

83 ANNEX I LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU DE LU LU DE LU LU LU LU DE000DWS1UL0 DE LU LU LU LU LU IE IE IE IE IE00B23S7K36 IE BSF Fixed Income Strategies E2 EU E2 EUR BGF Global Eq Income E2 EUR BGF European Value Fund E USD BGF European Value Fund E2 EUR BGF Asian Dragon A2 Acc GBP BGF Euro Bond E2 EUR BGF European Equity Income Fund Acc E2 E BGF European Equity Income Fund Acc A4G Bgf Global Convermment Bond E2 USD Bgf Global Convermment Bond E2 Hedged EU BGF US Dollar Core Bond E2 USD BGF Fixed Income Gbl Opportunities E USD BGF Global Multi Asset Income E EUR BGF Euro Corporate Bond A2 Eur EUR BGF Euro Corporate Bond E2 Acc EUR BGF Pacific Equity A2 Acc GBP BGF FLEXIBLE MULTI-ASSET HEDGED E2 E USD Deutsche Inv.I Glob.Emerg.Mark.Eq. NC EU Deutsche Invest I Global Agribusine NC E Deutsche Inv.I.Gold and Prec.Met.Eq NC E Deutsche Invest Convertibles NC EUR Deutsche Invest I Short Duration Cr NC E Deutsche Invest I Top Asia NC EUR Deutsche Invest I Global Infrastruc NC E Deutsche Invest I Global Thematic NC EUR Deutsche Invest I Euro Bonds(Premiu NC E Deutsche Invest I Euro Bonds (Short NC E Deutsche Invest I Africa NC Acc EUR Deutsche Invest I Top Dividend NC Acc EU Deutsche Invest I Top Dividend LC Acc EU Deutsche Inv.I Asian Small Mid Caps NC E Deutsche Inv.I Emerg Markets Corpor NCH Deutsche Invest I Euro Corporate Bo NC E Deutsche Invest I Brazilian Equitie Acc Deutsche Inv.I Gl.Commodities Blend NC E Deutsche Invest I LC ACC EUR DWS Aktien Strategie Deutschland - EUR DWS Russia - EUR DWS Institutional Money Plus - USD DWS Deutschland - EUR DWS Concept Kaldemorgen FC Acc EUR DWS Concept Kaldemorgen LC EUR DWS Concept Kaldemorgen NC Acc EUR DB Portfolio Euro Liquidity Acc EUR DWS Covered Bond Fund LC EUR DWS Biotech Typ 0 ACC EUR DWS Multi Opportunities NC Acc EUR Deutsche Invest II Top Dividend NC Acc E DWS Concept Dje Alpha Renten Global LC A BNPPL1 Bond Euro Premium N Acc EUR BNPPL1 Bond Europe Plus C Acc EUR BNY Mellon Asia Equity Fund A EUR BNY Mellon Global Opportunities A EUR BNY Mellon Global Bond A EUR BNY Mellon Global Bond A USD BNY Mellon Brazil Equity A EUR BNY Mellon Euroland Bond A EUR 82

84 ANNEX I IE IE IE00B4Z6HC18 IE00B06YC548 IE00B3SFH735 IE00B3T5WH77 IE00B6VXJV34 IE00B706BP88 IE00B11XZB05 IE00B11XYW43 IE00B11XZ764 IE00B5B5L056 IE00B5ZW6Z28 IE00B11XZ434 IE00B3K7XK29 IE00B11XYY66 IE00B11XZ103 IE00B11XZ327 IE00B1Z6D669 IE00B84J9L26 IE00B8N0MW85 IE00B3QDMK77 IE00B46MFP70 IE00BFRSV973 LU LU FR IE00B1CD3T35 LU LU LU LU LU LU FR FR FR FR FR FR FR LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU LU BNY Mellon S&P 500 Index Tracker A EUR BNY Mellon Glob Emerg Mark Equit Va A EU BNY Mellon Global Real Return Acc A Acc BNY Mellon Emerging Markets Debt A EUR BNY Mellon Absolute Return Equity R Acc BNY Mellon Absolute Return Equity R Hedg BNY Mellon Absolute Return Bond R EUR BNY Mellon Absolute Return Bond S EUR Pimco Total Return Bond E EUR Pimco GIS Emerging Markets Bond E HEDGED Pimco High Yield Bond Fund E Hedged EUR Pimco Unconstrained Bond Fund E Acc Hedg Pimco Emerging Local Bond E Acc EUR Pimco Global Invest Grade Credit E EUR Pimco Global Invest Grade Credit E Acc U Pimco Euro Bond Fund E EUR Pimco Global Bond Fund E EUR Pimco Global High Yield Bond Fund E EUR Pimco Diversified Income Fund E EUR Pimco Income Fund E Hedged EUR Pimco Income Fund E Hgd.Dis EUR Pimco Euro Income Bond Fund E Retail EUR Pimco Euro Income Bond Fund E DISTRIB EU Pimco Capital Securities Fund E EUR HEDG Allianz Europe Equity Growth CT EUR Allianz European Equity Dividend C Acc E CPR Silver Age E Acc EUR Allianz US Equity CT EUR Allianz Europe Equity Growth A EUR Carmignac Commodities A EUR Carmignac Emerging Patrimoine E EUR Carmignac Emerging Patrimoine A EUR Carmignac Capital Plus A EUR Carmignac Capital Plus A Hedged, USD Carmignac Emergents Acc EUR Carmignac Securite Acc Acc EUR Carmignac Securite Acc A CHF Carmignac Investissement E Acc EUR Carmignac Investissement A Acc EUR Carmignac Patrimoine E Acc EUR Carmignac Patrimoine A Acc EUR Robeco Global Consumer Trends Equit D EU Robeco Global Consumer Trends Equit M EU Robeco US Large Cap Equities D EUR EUR Robeco US Large Cap Equities DH EUR Robeco US Large Cap Equities D USD Robeco BP Global Premium Equities D EUR Robeco BP Global Premium Equities D Acc Robeco Us Select Opport. Equities D Acc Robeco Euro Government Bond DH EUR Acc E Rbc Emerging Conservative Equities D Acc Rbc European Conservative Equities d Acc Robeco Global Conservative Equities D Ac Pioneer Funds US Fundamental Growth C Ac Pioneer Funds US Fundamental Growth C Ac Pioneer Funds US Fundamental Growth A EU Pioneer Funds Strategic Income C Acc EUR 83

85 ANNEX I LU LU LU LU LU LU LU GB GB GB00B0BHJH99 LU LU GB GB GB00B1Z68494 GB00B4X3NX75 GB00B1VMCY93 GB00B4WS3X34 GB00B1VMD022 GB00B933FW56 GB00B56H1S45 GB00B96BHM03 GB00B39R2S49 GB00B39R2V77 GB00B94CTF25 GB00B78PH718 GB00BBCR3390 GB00BBCR3283 LU GB GB00B0WGW982 GB00B1Z2NR59 GB00B53CDN14 GB00B3B0FD70 GB00B3L0ZS29 GB00B3D8PZ13 GB00B42R2118 GB00B0H6D894 Pioneer Funds Strategic Income A Acc EUR Pioneer Euro Corporate Short Term E ACC Pioneer Funds Emerging Market Bond C EUR Pioneer Funds Europ. Equity Target C DIS Pioneer Funds Europ. Equity Target A DIS Pioneer Funds U.S. High Yield C Acc EUR Pioneer Funds Strategic Income C C ACC E M&G Asian Fund A Acc EUR M&G Japan Smaller Companies A Acc EUR M&G North American Value Fund Euro A EUR PF JAPANESE EQUITY OPPORTUNITIES A EUR Pictet Short Term Emerging Corp.B. I USD M&G European Corporate Bond Fund A Acc E M&G European High Yield Bond A Acc EUR M&G Global Convertibles Fund A EUR M&G Global Convertibles Fund AH EUR M&G Optimal Income Fund A-H EUR M&G Optimal Income Fund A-H USD M&G Optimal Income Fund C H ACC EUR M&G Optimal Income Fund A-H Distr EUR M&G Dynamic Allocation Fund A Acc EUR M&G Dynamic Allocation Fund A Dist EUR M&G Global Dividend A EUR M&G Global Dividend A USD M&G Global Dividend Euro A EUR M&G Global Macro Bond A EUR M&G Income Allocation Fund EUR A EUR M&G Income Allocation Fund A Acc EUR EdR Global Healthcare R Eur EUR Threadneedle European Select Ret Ne R EU Threadneedle American Retail Net EU E EU Threadneedle Global Equity Income R R EU Threadneedle UK Absolute Alpha R EUR Threadneedle Global Extended Alpha R EUR THREADNEEDLE CREDIT OPPORTUNITIES R EUR THREADNEEDLE CREDIT OPPORTUNITIES I Acc Threadneedle Europ.High Yield Bond RGA A Threadneedle Investment Funds RNI Dist E 84

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87 1. ECONOMIC ENVIRONMENT a. ECONOMIC ENVIRONMENT AND FINANCIAL MARKETS 2015 b. PROSPECTS FOR THE FINANCIAL YEAR 2016 c. DEVELOPMENTS OF THE FINANCIAL SECTOR d. REGULATORY ENVIRONMENT 2. KEY FIGURES FOR THE YEAR STRATEGIC BASIS FOR THE PERIOD a. GROUP RESIZING PLAN i. Divestments ii. Corporate structure iii. Steering system iv. Corporate values b. MAIN BUSINESS LINES i. Description of the main business lines ii. Objectives of the strategic plan iii. Progress and results of the period c. ADJUSTMENT PLAN 4. SHAREHOLDER REMUNERATION 5. RISK MANAGEMENT POLICY 6. HUMAN RESOURCES INFORMATION 86

88 1. ECONOMIC ENVIRONMENT a. Economic environment and financial markets 2015 Global economic activity slowed down in 2015 and the most advanced economies, which had still not overcome the effects of the Great Recession, were not able to offset the slowdown in emerging economies (global growth 3.1% vs. 3.4% in 2014). Emerging economies unevenly suffered the impact of falling commodity prices, economic slowdown and change in the production system in China, as well as the appreciation of the US dollar. Russia was one of the hardest hit, given its status as an oil-producing country, and due to external financial constraints, while in Latin America the suffering of Brazil can be highlighted, weighed down by commodity prices and the domestic political crisis. Among the most favoured, India stands out, taking advantage of its status as an oil importing country, while China, despite benefiting from the falls in oil prices, slowed its growth, but with a greater contribution by the service sector. Throughout 2015, the economic recovery was strengthened in the more advanced economies, the USA and the UK of particular note, which maintained a solid, albeit moderate, pace of growth. The context of economic growth encouraged the Federal Reserve to begin normalising its monetary policy, after years of expansion, and although the appreciation of its currency and market turbulence delayed the schedule, it raised their benchmark interest rates by 25 bp by the end of the year. The divergent monetary policy has been one of the main focuses of attention in developed economies, the Federal Reserve seeking the normalisation of interest rates and the European Central Bank being in a monetary expansion phase. In the Eurozone economic growth accelerated, but inflation expectations remained at very low levels. The growth drops in the early stages of 2015 led the ECB to reduce its benchmark interest rates again, and to implement new quantitative easing measures. However, in an environment of falling oil prices, weak economic growth, and turmoil in financial markets, inflation expectations were maintained throughout 2015 at extraordinarily low levels. Spain in 2015, with an economic growth of 3.2%, far exceeded the average of the Eurozone countries, favoured by major tailwinds, including the improvement in financial conditions, tax relief and the depreciation of the euro, which will continue to bolster exports. 125 Developments in financial markets in enero febrero marzo abril mayo junio julio agosto septiembre octubre noviembre diciembre S&P 500 Euro STOXX Ibex 35 Brent EURUSD Source: FactSet and Estrategia ACF 87

89 Financial markets in 2015 reflected the global economic and monetary divergence, with moderate losses in US equities and the sharp falls in Brazil or China of special note, compared to solid increases in the Eurozone, which were forged in the early months of the year. Equities went through very different phases in 2015, with the first three months being globally positive, consolidating in the next three, followed by a sharp deterioration after the summer. The main adverse references were Greece, oil prices and fears of global economic slowdown, with China in the spotlight. Spain, after the summer, and despite the strength of its economic growth, stood out with a decline in equities, due to political uncertainty and increased exposure to Latin America, with Brazil being at the epicentre of fears. Greece was another great hindrance, as it brought to the fore the difficulties experienced by the common European project. However, the quantitative expansion of the ECB held much of the impact on sovereign risk premia on the periphery, even in the tensest moments of the renegotiations of the Greek bailout. Another major source of instability for the markets was the price of oil, which fell throughout the year more than 47% against the average of 2014, ranking for the first time since 2008 below 40USD / barrel. b. Economic and financial outlook for 2016 Global financial markets started out in 2016 exhibiting great volatility, the first weeks showing a remarkable growth of risk aversion. Equities fell sharply, the Ibex to 19% and the Euro Stoxx Banks sectoral (February 11) to no less than 30%. Speculative yields on corporate debt soared (CDS X-Over Europe Index rose from 172 bp to 314 bp), while the higher-quality sovereign bonds were reduced strongly (64 bp in T Bond and 46 bp in the Bund). The dollar tended to appreciate against emerging currencies, but much more against the euro, and especially against the yen. Several factors favoured such a deterioration of the outlook, among which we can highlight sharp falls in oil prices (the Brent by 25% until January 20,) which fuelled the deflationary threat, the fear of a global economic stagnation and deflation, favoured by oil prices themselves, the unexpected depreciation of the yuan, weak economic data in China and the USA, the growing difficulties of emerging economies (falling commodity prices, depreciation of currencies and risk of default of corporate debt), and fear of insolvency in the banking sector, especially in Europe (exposure to the energy sector, loss of margins in an environment of deflationary threats and negative interest rates), also disrupted by the political difficulties in Spain and Portugal, the threat of British Brexit and the refugee crisis. However, there are reasons to believe that we have seen some overreaction by the markets, and not just because since mid-february risky assets have clearly recovered. The main consideration is that the movements of the first weeks of the year seem to have gone far beyond what the fundamentals required. This is partly explained bytechnical factors, such as the sale of assets by sovereign funds in oil-producing countries, or VaR funds that were forced to limit their losses at the beginning of the year, but it is important to note that global economic indicators remain compatible at least with maintaining moderate growth rates in In the case of the Eurozone, it seems reasonable to think that the 1.5% growth will be repeated and in Spain political uncertainty should not prevent growth above 2.5%. It is also important to consider the foreseeable future impacts on the economy and on the markets of moderately favourable developments in oil prices, which will foreseeably have a positive impact on risk assets. Monetary policy and possible alternatives will also be the focus of financial markets. In particular, it is expected that the divergence will be extended between the policies of the Fed and the three major central banks: the ECB, Bank of Japan and Bank of China. Despite the market uncertainty, we believe that the Fed is likely to raise rates again at least once or twice, while the other three banks will increase their expansionary measures. 88

90 Together, and beyond potential political (the electoral process in the US, political uncertainty in Spain, risk of Brexit) and geopolitical risks, we are harbouring, for the rest of the year, recovery expectations in equities, more clearly for Europe (and Spain) than for USA, a certain normalisation of yields on public debt, with more pronounced recoveries in the USA, a reduction of peripheral sovereign premiums, and a moderate appreciation of the dollar against most currencies. c. Developments in the financial sector In 2015, the financial system operated in a challenging environment in Europe, with an intense and demanding regulatory and supervisory agenda, and in a context of extraordinarily low interest rates. The turmoil experienced in the financial markets after the summer and into the early months of 2016, and weak economic growth, were additional negative factors. On the positive side, despite the adverse scenario, in 2015 financial institutions continued to strengthen their capital ratios and clean up their balance sheets, with significant reductions in nonperforming loans and provisions. The creation of the MUS (Single Monitoring Mechanism) in late 2014 has allowed the ECB to assume the overall supervision of European banks (129 most significant groups under direct supervision) encouraging transparency and strengthening integration through greater harmonisation. This work continued to progress in 2015, and in 2016 it launched the single resolution mechanism, following the process towards the Banking Union. Ahorro Corporación Financiera S.V., S.A. is part of this mechanism contributing to the National Resolution Fund. Managing to sustain profitability in an environment of weak growth and low interest rates is now the main challenge for European banks and, in particular, for Spanish banks. In particular, the financial market environment has not been conducive to intermediation activity, especially in the field of fixed income. The main determinants were: a) the Greek crisis and its potential contagion to the outskirts of Europe; b) the various elections in Spain; c) the monetary policy of the European Central Bank, which had taken short-term interest rates to negative levels d) the entry into force of the single monitoring mechanism (MUS), with the remaining uncertainty about its treatment for purposes of solvency regulations in public debt positions. Trading on the Spanish Stock Exchange (SIBE) grew by 8.8% in 2015 (although in the last three months of the year, there was a near 20% decline over the previous year). In 2015, ACF intermediation in this market grew by 11.2% overall, and 23% year-on-year in the last 3 months. The result was moderate growth in market share in 2015, up to 1.58% and a two-position improvement in the ranking among market members. As regards Fixed Income activity, the trading volume (Source Bank of Spain) in Spanish public debt fell in 2015 by 21.3% in held-to-maturity transactions and by 42.8% in double transactions. In both types of transactions the ACF market share (between mediators) increased slightly, 5 pp, to 26.4% in held-to-maturity transactions, and 3 pp, to 24.9% in double transactions. Finally, trading in private fixed income in the AIAF market decreased by 53.1% in d. Regulatory environment Probably the most significant regulatory item in 2015, which will continue in force in 2016, is the Reform in the Clearing, Settlement and Registry system, which in the case of the equity market will probably enter into force in April of 2016 (2017 for fixed income). Ahorro Corporación Financiera S.V., S.A. has announced its intention to be an Individual Clearing Member of the Central Counterpart Clearing House of the Spanish market and a participant in Iberclear. This commitment to creating value for our customers is reinforced by strong capitalisation and the stability of the available liquidity. 89

91 2. KEY FIGURES FOR 2015 In FY 2015 Ahorro Corporación Financiera S.V., S.A. had a loss of 2.91 million euros due to the restructuring and downsizing plan carried out by the Ahorro Corporación Group, aimed at allowing for a solid equity base and generous levels of liquidity, in order to be able to work on achieving goals of sustainable profitability over time. In 2015 the Company managed to consolidate a sufficient level of liquidity for the normal operations of a securities company, in addition to having short-term credit lines with first tier banks. Thus, at the end of 2015 the heading loans, which stands at 5.6 million euros, corresponds exclusively with shortterm credit facilities granted to the Company, to contribute with greater operational capacity in the markets. The Company has solvency levels well above regulatory requirements. The solvency ratio stood at 24% at the end of 2015, compared to 23.3% in 2014, with an excess of 32.8 million in internal resources over the required amount. Thus, the main changes in the profit and loss account for 2015 regarding the profit and loss account for the year 2014 are as follows: The net interest income showed a significant drop in relation to 2015 ( 0.5 MM versus 1.5 MM), mainly due to the fall in the volume of deposits delivered by the Company as collateral, required by counterparties for derivative transactions, and to the decrease in interest rates in 2015, which reduced the remuneration of deposits. Net fees fell in 2015 by 28% (from 27 million to 19.4 million) due to the decline in activity and loss of net fees provided in 2014 by some of the business lines that were sold in this financial year. Significant increase in Trading results, going from 0.6 million in 2014 to 4.6 million euros in 2015, driven by the recovery of the adjustment value by CVA in the Company derivatives (3.3 million euros). All this resulted in the Gross Margin going from 28.8 million in 2014 to 23.8 million euros in Personnel expenses increased by 2.51 million euros, while compensation expenses amounted to 6.35 million euros. So, excluding this exceptional expense, there were savings of 4 million euros, despite the fact that not all improvements resulting from the adjustment were seen, as they materialised in the second half of the year. With regards to overheads, it did increased slightly due to certain expenses related with the resizing process. However, the expenditure figures are expected to improve in the coming year, once we see the improvements resulting from the restructuring. 3. STRATEGIC BASES FOR THE PERIOD a. Grupo Ahorro Corporación Resizing Plan The Group s Board of Directors, with the support of the executive team, in mid 2014 launched an action plan aimed at a resizing of the Group to enable it to achieve a sustainable profit in the best interest of its shareholders, employees, customers and suppliers. This plan consisted of different phases, which should follow one another in time: divestment; strategic definition; adjustment plan. Below is a brief description of each of these phases and their impact on the year

92 i. Divestments 2015 has represented a transitional period for the company, characterised until October by a process of disinvestment and adjustment. First, we identified the businesses and Group companies that were deemed as non-strategic in the new stage, but which could continue their activity outside the Group. This led to the sale process thereof. As part of this process all asset management businesses were sold (management of securitization funds, management of UCITS and management of venture capital companies). In addition, the divestment of real estate assets was undertaken in order to provide sufficient liquidity levels and stable solvency to ensure the continuity of strategic activities. The sale of real estate assets yielded for the year 2015 a net income (after advisors and expenses) of 56.2 million euros. The divestment of asset management companies and businesses yielded a net profit (after advisors and expenses) of 2.2 million euros. Finally, we are working on the divestment of the trading derivatives portfolio. The first part of assignments or terminations of derivative transactions took place during the last quarter of 2015, and the transfer of most of the transactions that make up the portfolio is expected to be executed in the first quarter of This transaction made it possible to reduce in 2015 the number of derivatives in the trading portfolio in the balance by 125 million euros, and that of other loans, within loans to financial intermediaries, byapproximately 117 million for the lower contribution of collateral as security. Once completed, it will have a very significant effect on the balance of ACF and on the consolidated balance sheet, which will decrease substantially. In addition, the transfer of these transactions will have a positive effect on liquidity, due to the effect of the release of other guarantees. Also, this portfolio generated a positive result for FY 2015 due to a positive valuation adjustment, calculated according to the same parameters used in previous years and which are explained in note 6.1 of the Report. In parallel, we identified the Core businesses of the company and produced an income statement for those activities separately from those undergoing restructuring and divestiture. Thus, from the second half of 2015, the Group has been able to devote its efforts to relaunching its main business lines. The following paragraph b shows a more detailed description of the Core activities and their development during

93 Corporate structure The corporate structure of the Group was simplified in Additionally, in 2016 this structure is expected to be simplified even further. This chart reflects the changes made: The companies marked in red have gone into liquidation, except for Ahorro Corporación Inmuebles, S.A., which will be acquired by Ahorro Corporación, S.A. The companies marked in blue will make up Grupo Ahorro Corporación at the end of 2016 (1) On January 15, 2016, Ahorro Corporación Financiera, S.V., S.A. became 100% the property of Grupo Ahorro Corporación (AC % and ACI %) (2) Following the liquidation of AC Participación en Infraestructuras, S.L., Ahorro Corporación has come a participant in the Venture Capital Fund Ahorro Corporación Infraestructuras, F.C.R. with a percentage of 2.05% of the equity of the fund. ii. Steering system The Board of Directors of Ahorro Corporación, S.A., the parent company of the Group, is responsible for defining a corporate steering system to ensure the effective and prudent management of the Group, including an appropriate segregation of duties in the organisation and the prevention of conflicts of interest. The Board of Directors of the Group is the head of the strategic definition and coordination of the Group companies, along with other Committees with information, advice and proposal functions to the Board of Directors. In particular, it will be responsible for providing the Group with the necessary means for the development of its business in compliance with applicable regulations and for establishing the general strategies of the Group, to which the CEO shall subordinate his/her performance at all times, or, where appropriate, the General Manager and the Directors of subsidiary companies. It shall report to the General Shareholders Meeting of the Group under the terms provided in the Capital Companies Law. This body is composed of qualified persons of recognised integrity and extensive experience. The Board of Directors is governed by the regulations in force, by the Articles of Association of each company, and by its Standards (available on the Intranet), establishing its organisation and operation. 92