annual accounts for the financial year...annual accounts for the financial year 2016 13 Fertiberia,...

annual accounts for the financial year 2016

Annual accounts and directors’ report for the financial year 2016 along with the auditor’s report on the annual accounts

1. Auditor’s report on the annual accounts .................................................6

2. Annual accounts for the financial year 2016........................................102.1 Annual report for the financial year 2016 ...........................................................................................................................................18

3. Directors’ report for the financial year 2016 ........................................76

4. Proposal for the distribution of the result 2016 .................................96

6 annual accounts for the financial year 2016

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auditor’s report on theannual accounts

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11annual accounts for the financial year 2016

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annualaccounts 2016

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Balance sheets at 31 december 2016 and 2015

ASSETSNotes

to the Report 31/12/2016 31/12/2015

NON-CURRENT ASSETS 396,533 422,631

Intangible assets (Note 5) 3 7,751

Property, plant and equipment (Note 6) 148,464 152,109

Land and buildings 47,360 48,773

Technical installations and other tangible fixed assets 95,519 98,836

Fixed assets in progress and advances 5,585 4,500

Long-term investments in group and associate companies 230,495 244,732

Equity instruments (Note 7.3) 96,427 100,911

Loans to companies (Note 7.1.2) 134,068 143,821

Long-term financial investments (Note 7.1.2) 3,374 3,428

Loans to third parties 2,817 2,854

Other financial assets 557 574

Deferred taxation assets (Note 11) 14,197 14,611

CURRENT ASSETS 365,432 415,974

Stocks (Note 8) 50,855 68,692

Trade debtors and other accounts receivable 92,294 91,972

Customers for sales and services (Note 7.1.2) 23,095 24,049

Customers - group and associate companies (Note 7.1.2 & 17.1) 57,494 58,980

Sundry debtors (Note 7.1.2) 8,684 6,993

Personnel (Note 7.1.2) 49 39

Other receivables from Public Administration (Note 11) 2,972 1,911

Current investments in group and associate companies 168,150 158,095

Equity instruments (Note 7.3) 9,314 11,628

Current liabilities with group and associate companies (Note 7.1.2 & 17.1) 1,577 1,504

Other financial assets (Note 7.1.2 & 17.1) 157,259 144,963

Current financial investments 659 356

Loans to companies (Note 7.1.2) 58 55


Current time adjustments 4,521 5,967

Cash and other equivalent liquid assets 48,953 90,892

Cash and banks (Note 7.1.1) 48,953 90,892

TOTAL ASSETS 761,965 838,605

The Company’s Annual Accounts, which form a single unit, consist of these Balance Sheets, the attached Profit and Loss Accounts, Statement of Chan-ges in Net Equity, Cash Flow Statements and the attached Annual Report, which consists of 19 Notes.

Stated in thousand euros


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NET EQUITY AND LIABILITIESNotes

to the Report 31/12/2016 31/12/2015

NET EQUITY 301,885 337,574

Shareholders’ funds (Note 7.4) 302,828 338,415

Capital 54,452 54,452

Subscribed capital 54,452 54,452

Share issue premium 204 204

Reserves 283,759 271,805

Legal and statutory 20,147 20,147

Other Reserves 263,612 251,658

Negative results from prior years - -

Result for the year (35,587) 11,954

Adjustments for value changes (1,140) (1,111)

Grants, donations and legacies received (Note 15) 197 270

NON-CURRENT LIABILITIES 106,341 201,977

Long-term provisions (Note 12) 41,691 41,975

Environmental actions 41,691 41,975

Long-term liabilities: 50,667 143,774

Amounts owing to credit entities (Note 7.2.1.a) 8,041 127,463

Creditors under finance leases (Note 7.2.1.a) 691 1,013

Derivatives (Note 7.2.2) 1,582 1,544

Other financial liabilities (Note 7.2.1.b) 40,353 13,754

Long-term liabilities with group and associate companies (Note 17.1) 12,582 14,782

Deferred taxation liabilities (Note 11) 1,401 1,446

CURRENT LIABILITIES 353,739 299,054

Short-term provisions (Note 12) 10,103 8,109

Current Liabilities: 199,382 121,016

Amounts owing to credit entities (Note 7.2.1.a) 191,468 113,670

Creditors under finance leases (Note 7.2.1.a) 299 363

Other financial liabilities (Note 7.2.1.b) 7,615 6,983

Current liabilities with group and associate companies (Note 7.2.1 & 17.1) 15,195 25,483

Trade creditors and other accounts payable 124.203 140,724

Suppliers (Note 7.2.1) 44,041 67,503

Suppliers - group and associate companies (Note 7.2.1 & 17.1) 61,717 56,908

Sundry creditors (Note 7.2.1) 16,544 14,289

Personnel (salaries outstanding) (Note 7.2.1) 244 344

Other liabilities with Public Administrations (Note 11) 1,657 1,680

Current time adjustments 4,856 3,722

TOTAL NET EQUITY AND LIABILITIES 761,965 838,605

The Company’s Annual Accounts, which form a single unit, consist of these Balance Sheets, the attached Profit and Loss Accounts, Statement of Chan-ges in Net Equity, Cash Flow Statements and the attached Annual Report, which consists of 19 Notes.

Balance sheets at 31 december 2016 and 2015Stated in thousand euros


Profit and loss accounts for the financial years 2016 and 2015

Notes

to the Report 2016 2015

Net turnover (Note19) 474,844 647,753

Net sales 474,844 647,753

Variation in stocks of finished products and work in progress (13.716) 22,410

Company’s own work capitalised 86 20

Supplies (Note 13.a) (310,334) (455,793)

Consumption of merchandise (83,566) (126,100)

Consumption of raw materials and other consumables (227,139) (329,322)

Impairment of goods, raw materials & other supplies 371 (371)

Other operating revenues 9,277 2,766

Sundry income and other current income 9,153 2,150

Operating grants transferred to results for the year 124 616

Personnel expenses (Note 13.b) (52,637) (53,172)

Salaries, wages and similar (40,350) (40,714)

Social charges (12,287) (12,458)

Other operating expenses (122,987) (125,522)

External services (112,233) (114,939)

Taxes (2,191) (2,474)

Other current operating costs (8,563) (8,109)

Fixed assets amortisation and depreciation (Notes 5 & 6) (16,222) (17,125)

Allocation of grants on non-financial fixed assets and others 7,850 6,964

Fixed asset impairments and results on disposals (Note 13.d) 1,762 (379)

Results on disposals and others 1,762 (379)

Other results 462 (234)

OPERATING RESULT (21,615) 27,688

Financial revenues (Note 13.e) 5,309 9,686

Holdings in equity instruments in group and associate companies 4.616 8,782

Negotiable securities and financial instruments, group and associate companies 629 853

Revenues from negotiable securities and other third party financial instruments 64 51

Financial expenses (Note 13.e) (11,223) (13,524)

On amounts owing to group and associate companies (934) (1,872)

On amounts owing to third parties (10,289) (11,652)

Exchange differences (Note 10) (756) (5,823)

Variation in the fair value of financial instruments (Note 7.1.3) - -

Impairments and results on disposal of financial instruments (6.978) (4,473)

Impairment and losses (Note 7.3) (6,978) (4,473)

Results on disposal and others (Notes 7.3 & 7.1.3) - -

FINANCIAL RESULT (13,648) (14,134)

RESULT BEFORE TAX (35,263) 13,554

Corporate income tax (Note 11) (324) (1,600)

RESULT FOR THE YEAR FROM ONGOING OPERATIONS (35,587) 11,954

RESULT FOR THE YEAR (35,587) 11,954


The Company’s Annual Accounts, which form a single unit, consist of these Profit and Loss Accounts, the attached Balance Sheets, Statement of Chan-ges in Net Equity, Cash Flow Statements and the attached Annual Report, which consists of 19 Notes.


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Statement of changes in net equity

2016 2015

RESULT FROM THE PROFIT AND LOSS ACCOUNT (35,587) 11,954

Revenues and expenses allocated directly to net equity

On cash flow hedging (1,574) (1,550)

Grants 7,755 6,868

Tax effect (1,545) (1,490)

TOTAL REVENUES AND EXPENSES ATTRIBUTED DIRECTLY TO NET EQUITY 4,636 3,828

Transfers to the profit and loss account

On cash flow hedging 1,534 1,427

Grants (7,850) (6,964)

Tax effect 1,578 1,550

TOTAL TRANSFERS TO THE PROFIT AND LOSS ACCOUNT (4,738) (3,987)

TOTAL RECOGNISED REVENUES AND EXPENSES (35,689) 11,795

a) Statement of recognised revenues and expenses for the financial years 2016 and 2015


b) Statement of changes in net equity for the financial years 2016 and 2015

Subscribed share capital

Share issue premium Reserves

Prior year losses

Result for the year

Adjustment for value changes Grants Total

BALANCE 01/01/2015 54,452 204 289,980 (3,705) 5,530 (1,019) 337 345,779

Total recognised revenues and expenses - - - - 11,954 (92) (67) 11,795

Operations with share-holders or owners - - (20,000) - - - - (20,000)

Distribution of dividends - - (20,000) - - - - (20,000)

Other variations in net equity - - 1,825 3,705 (5,530) - - -

Distribution of results (note 3) - - 1,825 3,705 (5,530) - - -

BALANCE 31/12/2015 54,452 204 271,805 - 11,954 (1,111) 270 337,574

BALANCE 01/01/2016 54,452 204 271,805 - 11,954 (1,111) 270 337,574

Total recognised revenues and expenses - - - - (35,587) (29) (73) (35,689)

Operations with share-holders or owners - - - - - - - -

Distribution of dividends - - - - - - - -

Other variations in net equity - - 11,954 - (11,954) - - -

Distribution of the result (note 3) - - 11,954 - (11,954) - - -

BALANCE 31/12/2016 54,452 204 283,759 - (35,587) (1,140) 197 301,885

The Company’s Annual Accounts, which form a single unit, consist of these Statements of Changes in Net Equity, the attached Balance Sheets, Profit and Loss Accounts, Cash Flow Statements and the attached Annual Report, which consists of 19 Notes.



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Cash flow statements for the financial years 2016 and 2015

2016 2015

CASH FLOWS FROM OPERATING EXPENSES

Result for the year before tax (35.263) 13.554

Adjustments to the result 30.300 33.154Fixed assets amortisation and depreciation 16.222 17.125

Valuation corrections for impairment 6.607 4.844

Variation of provisions 1.850 -

Allocation of grants (7.850) (6.964)

Results from fixed assets withdrawals and disposals (1.762) 379

Results from withdrawal and disposal of financial instruments - -

Financial revenues (5.310) (9.686)

Financial expenses 11.224 13.523

Exchange differences 756 5.824

Other revenues and expenses 8.563 8.109

Changes in current capital 1.804 (6.364)Stocks 25.951 (23.475)

Debtors and other receivables 739 3.651

Other current assets (10.297) 14.131

Creditors and other accounts payable (16.499) (93)

Other current liabilities 1.825 403

Other non-current financial assets and liabilities 85 (981)

Other cash flows from operating activities (6.375) (6.817)Interest payments (11.223) (13.523)

Dividend collection 4.616 8.782

Interest collection 694 904

Collections (payments) for corporation tax - (2.980)

Other payments (collections) (462) -

Cash flows from operating activities (9.534) 33.527

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for investments (14,011) (22,079)

Group and associate companies (180) (13,338)

Intangible assets - (1,430)

Property, plant and equipment (13,831) (7,298)

Other financial assets - (13)

Proceeds of divestments 9,693 80Property, plant and equipment 2,200 14

Group and associate companies 7,439 -


Cash flows from investing activities (4,318) (21,999)

CASH FLOWS FROM FINANCING ACTIVITIES

Collections and payments for equity instruments (102) (159)Grants, donations and legacies received (73) (67)

Adjustments for value changes (29) (92)

Collections and payments for financial liability instruments (27,229) (16,231)Amounts owing to credit entities (42,010) (29,176)

Amounts owing to group and associate companies (12,488) 8,401

Other liabilities 27,269 4,544

Payments for dividends - (35)

Cash flows from financing activities (27,331) (16,425)

Effect of exchange rate variations (756) (5,824)

NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS (41,939) (10,721)Cash or cash equivalents at the beginning of the year 90,892 101,613

Cash or cash equivalents at the end of the year 48,953 90,892

The Company’s Annual Accounts, which form a single unit, consist of these Cash Flow Statements, the attached Balance Sheet, Profit and Loss Ac-counts, Statement of Changes in Net Equity and the Annual Report, which consists of 19 Notes.



2.1 Report for the financial year 2016

Note 1. The company’s incorporation, business and legal regime

a) Incorporation and Registered OfficeFertiberia, S.A. (hereinafter Fertiberia, or the Company) is a commercial entity that arose from the merger by absorp-

tion of the companies Fertiberia, S.L. and La Industrial Química de Zaragoza, S.A. (Absorbed Companies) by Fesa Fer-

tilizantes Españoles, S.A. (Absorbing Company) as per the merger deed dated 5 June 1997, registered in the Madrid

Companies’ Register on 30 July 1997

The Company has its registered office in Madrid, Torre Espacio, Planta 48 – Paseo de la Castellana, 259 D. It was

incorporated as a limited company for an indefinite period on 20 July 1996 under the name “Cros Fertiberia, S.A.”,

changed on 20 June 1972 to “Fosfórico Español, S.A.” and on 23 January 1989 to “Fesa Fertilizantes Españoles, S.A.”,

finally adopting its current name of “Fertiberia, S.A.” on 5 June 1997 following the merger process described above.

b) Business activityThe Company’s corporate purpose consists of the manufacture and sale of all classes of chemical products in general,

acids, mainly sulphuric and phosphoric, fertilisers and any other products of use in agriculture, as well as all classes

of products derived from the above, materials that are directly or indirectly necessary or suitable for their production,

conservation and transformation and, in general, the sale of these, as well as any other activity related with the afo-

rementioned corporate purpose

c) Legal RegimeThe Company is governed by its articles of association and by the current Capital Companies Act.

Note 2. Bases of presentation of the annual accounts

a) True and fair viewThe annual accounts for the financial year 2016 have been obtained from the Company’s accounting records and

have been drawn up in accordance with current company legislation and the regulations established in the General

Accounting Plan as approved by Royal Decree 1514/2007 of 16 November, with the application of the amendments

introduced by Royal Decree 1159/2010 so as to give a true and a fair view of the Company’s net assets, financial

situation and results, as well as of the veracity of the flows incorporated in the cash flow statements.

The annual accounts have been obtained from the Company’s accounting records, as modified in 1996 for the

effects of the balance sheet revaluation carried out under the provisions of Royal Decree Law 7/1996 of 7 June and

are presented in accordance with the company and accounting legislation in force in Spain.


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Given that the Company’s annual accounts are to be integrated into the consolidated annual accounts of the Group

headed by Grupo Villar Mir, S.A.U. (GVM), the company is not under the obligation to file consolidated annual ac-

counts. However, the Company has prepared Consolidated Financial Statements under IFRS since the financial year

2009.

b) Accounting Principles AppliedThe attached Annual Accounts have been drawn up applying the accounting principles laid down in the Commercial

Code and in the General Accounting Plan.

c) Comparative InformationIn accordance with company law, the Board of Directors presents, for comparative purposes, for each of the Balance

Sheet, Profit and Loss account, Statement of Changes in Net Equity and the Cash Flow Statement for 2016 in addition

for the previous financial year. The items for both financial years are comparable and homogenous.

d) Presentation of the Annual AccountsIn accordance with current legal regulations on accounting matters, the Annual Accounts are stated in thousand

euros.

e) Changes to accounting criteriaNo changes have been made to own accounting criteria.

f) Responsibility for the information and estimates madeThe information contained in these annual accounts is the responsibility of the Company’s Board of Directors. Estima-

tes have been used in these annual accounts in order to evaluate some of the assets, liabilities, revenues, expenses

and commitments that are recorded therein, with these estimates referring basically to the impairment losses on

certain assets, the useful lives of non-current assets and the probability of occurrence of provisions.

Despite these estimates being made on the basis of the best information available at the date these annual accounts

were prepared, it is possible that future events might make it necessary to modify these in coming years


Note 3. Distribution of results

The proposed distribution of the result obtained in the financial year 2016 and 2015, as drawn up by the Directors for

submission to the Shareholders’ General Meeting for its approval is as follows:

Thousand euros 2016 2015

Basis for Distribution:

Profit (Loss) obtained in the year (35,587) 11,954

(35,587) 11,954

Distribution

To Voluntary Reserves - 11,954

To prior year losses (35,587) -

(35,587) 11,954

Dividends

In financial year 2016, no dividend distribution agreement has been made out of reserves.

The Extraordinary General Meeting of Shareholders held on 23 December 2015 approved the decision to distribute

a dividend of 20,000 thousand euros from reserves as proposed by the Board of Directors in its meeting held on 19

November 2015. Likewise it was agreed that the dividend payment that corresponds to the major shareholder Gru-

po Villar Mir for amount 19,965 thousand euros be carried out by means of compensating existing debit balances

between both companies in virtue of the credit line contract, described in note 7.1.2.

Limitations on the distribution of dividends

Under the provisions of current legislation, dividends can only be distributed against the result for the year or freely

available reserves if the value of net equity is not, or is not as a consequence of the distribution, lower than the share

capital. For these purposes profits directly assigned to net equity may not be distributed

Dividends may not be distributed that reduce the amount of available reserves below the total of research and deve-

lopment costs that appear as an asset in the balance sheet.


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Note 4. Valuation policies

The valuation policies used by the Company in drawing up its Annual Accounts for the financial year 2016 are in

accordance with those established by the General Accounting Plan and are as follows:

a) Intangible assetThis heading includes mainly

• The cost of the right to use the installations for the transfer of water to the Puertollano Industrial Estate from

the Jándula and Montoro reservoirs, works undertaken by other companies and acquired by the Company and

which was totally depreciated at 31 December 2016 (Note 5).

b) Property, plant and equipmentProperty, plant and equipment are valued at cost price as revalued in accordance with Royal Decree Law 7/1996 of 7

June. Capital gains or net increases in the value resulting from revaluation operations are depreciated on a straight-li-

ne basis over the tax periods remaining for the completion of the useful life of the revalued assets.

Depreciation of property, plant and equipment is calculated on the straight-line basis in function of the estimated

useful lives of the assets.

Years of useful life Annual Percentage

Buildings 50 2%

Technical installations and machinery 15-25 4% - 6%

Spare parts for fixed assets 15-25 4% - 6%

Other installations 10-20 5% - 10%

Other property, plant and equipment 10-15 6% - 10%

Upkeep and maintenance costs that do not constitute an improvement to items of property, plant and equipment or

extend their useful life, are carried to results in the year in which they are incurred.

The equivalent amount for the estimated costs of large repairs, is written off differently to that for the remaining

corresponding items, over the period up until the following large repairs. When the large repairs are carried out, the

cost is recognised in the accounting value of the fixed asset as a substitution at the same derecognising any amount

associated with the previously recorded repairs, which might remain in the carrying value of the aforementioned

fixed asset. The net carrying value assimilated with large repairs and included under the Technical Installations and

Machinery headings amounts to 5,433 thousand euros (8,333 thousand euros in the previous financial year) and is

depreciated over periods of between 3 and 10 years.

At the year end the Company carries out a review to determine whether there are indications of value impairment to

any item of property, plant or equipment or cash-generating unit, in which case an estimate is made of the recovera-

ble amounts and any necessary value corrections are made.


c) Financial instrumentsFinancial instruments comprise mainly long-term loans and holdings in group and associate companies.

The Company only recognises a financial instrument in its balance sheet when it is converted into an obligatory part

of the contract or legal business in question, in accordance with the provisions thereof.

The Company determines the classification of its financial assets at the time of their initial recognition and, when this

is permitted and appropriate, said classification is re-appraised at each balance sheet date.

For the purposes of their measurement, financial instruments are classified into one of the following categories:

1. Loans and receivables and debits and payables.

2. Other financial assets and liabilities at fair value with changes through profit and loss.

3. Investments in the equity of group, associate and multi-group companies.

4. Held-for-trading financial assets

Loans and receivables and debits and payables

Loans and receivables

Classified into this category are:

a) Receivables for trade operations: financial assets arising from the sale of goods and the rendering of services for

trade operations.

b) Receivables for non-trade operations: financial assets that, not being equity instruments or derivatives, are not

of trade origin, the collections on which are of a determined or determinable amount and which are not traded

on an active market. Not included are those financial assets for which the Company cannot make substantial

recovery of the whole initial investment for circumstances other than credit impairment. The latter are classified

as available for sale.

In line with generalised commercial practice, a part of the sales made by the Company is instrumented through

commercial, paper accepted by national customers and through remittances and documentary credits granted by

financial entities in the case of foreign customers. In the attached balance sheet, customer balances include discoun-

ted commercial paper pending maturity at 31 December 2015 and 2014, the counter-entry for the same amount

appearing under the heading for “Current liabilities – Amounts owing to credit entities”.

Also, the Group withdraws from its balance sheet the customer balances for the amount of those assignments of

receivables in which the Factor assumes the bad debt risk (“non-recourse factoring”). (Note 7.1.2.d)

The value impairment loss on loans and receivables corresponds to the difference between their carrying amount

and the present value of future cash flows that are expected to be generated, as discounted at the effective rate of

interest calculated at the time of their initial recognition.

The Company follows the criterion of making provisions for bad debts that allow it to cover balances of a certain age,

the risks inherent to the evolution of the sector or balances for which circumstances concur that make it reasonable

to classify them as doubtful.


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At 31 December 2016 and 2015, the provision for customer bad debts recorded by the Company amounted to 3,950

thousand euros (Note 7.1.2). This provision provides reasonable cover for the losses that might arise from total or

partial non-recovery of debts, as estimated on the basis of the individual analysis of each of the outstanding balances

receivable at that date.

Debits and accounts payable

Classified into this category are:

a) Debits for trade operations: financial liabilities derived from the purchase of goods and services in trade opera-

tions.

b) Debits for non-trade operations: financial liabilities that, not being derivative instruments, do not have a trade

origin.

Initially, the financial assets and liabilities included in this category, are measured at their fair value, which is the

transaction price and which is equivalent to the fair value of the consideration paid over plus the directly attributable

transaction costs.

In subsequent valuations both assets and liabilities are measured at their amortised cost. Accrued interest is accoun-

ted for in the Profit and Loss Account using the effective interest method.

Other financial assets and liabilities at fair value with changes through the Profit and Loss Account

Included in this category are the Company’s treasury balances, as well as other equivalent liquid assets, correspon-

ding to financial instruments that are convertible into cash with maturity not exceeding three months.

Investments in the equity of group and associate companies

Holdings in group and associate companies are recorded at their acquisition price or at their net contribution value

net of their corresponding depreciation, equivalent, as applicable, to the reduction in assets arising in those holdings.

At 31 December 2016, the provisions for holdings in group and associate companies amounted to 91,755 thousand

euros (87,091 thousand euros in the previous financial year) (Note 7.3).

The amount of the valuation correction is determined as the difference between the carrying value and the recove-

rable amount, this being understood to be the proportional part of the net worth of the investee entity, as corrected

by the latent capital gains in existence at the valuation date and corresponding to identifiable components in the

investee company’s balance sheet.

Held-for-trading financial assets

These are those acquired with the purpose of their sale in the short term or which form part of a portfolio of financial

instruments managed jointly with the aim of obtaining gains in the short term.

Financial assets and liabilities held for trading are measured initially at fair value, which is the transaction price and

which is to be equivalent to the fair value of the consideration handed over. Transaction costs that are directly attribu-

table to these are recognised in the Profit and Loss Account for the year.


In subsequent years they are measured at their fair value, without the deduction of transaction costs that might

be incurred in their disposal. Changes arising in the fair value are transferred to the Profit and Loss Account for the

financial year.

d) Accounting hedgesAccounting hedges are considered to be those that were designated as such at the initial moment, with available

documentation relating to the hedging and which are considered to be highly effective.

A hedging is considered to be highly effective if, at the beginning of and during its life, one can expect prospectively

that the changes in fair value or in cash flows for the hedged part that are attributable to the hedged risk will be

almost completely compensated by the changes in fair value or in the cash flows from the hedging instrument and

that, retrospectively, the hedging results have oscillated within a variation range of eighty to one hundred and twen-

ty-five per cent with respect to the result for the hedged item.

These are hedges on exposure to the variation in cash flows that are attributable to a specific risk associated with

recognised assets or liabilities or a highly probable foreseeable transaction, provided that this can affect the Profit and

Loss Account.

The part of the gain or loss on the hedging instrument deemed as effective hedging is recognised temporarily in

net equity, being carried to the Profit and Loss Account in the financial year or years in which the forecast hedged

operation affects the result, unless the hedging corresponds to a forecast transaction that is ultimately recognised in

a non-financial asset or liability, in which case the amounts recorded under net equity are included in the cost of the

asset or liability when this is acquired or assumed.

e) StocksRaw and Auxiliary Materials

Stocks of raw and auxiliary materials are measured at average purchase price.

Spare Parts

The stocks of spare parts and other materials for consumption and replacement are measured at the weighted ave-

rage cost of acquisition.

Products in Process, Semi-finished and Finished Products

These are measured at costs of production, which include the incorporated raw materials, direct labour, as well as

the direct and indirect manufacturing costs, creating, where applicable, a provision for the difference between this

value and the net realisable value, whichever is the lower. There was no provision for impairment in this respect at

31 December 2016 and 2015.

Emission rights of greenhouse gases

Emission rights of greenhouse gases assigned by the National Allocation Plan (EUAs), which are valued and charged

to results in accordance with the Resolution of 8 February 2006 of the Institute of Accounting and Accounts Audit

and the Resolution of May 28, 2013 of the Institute of Accounting and Accounts Audit.


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Emission rights are initially recognized at their acquisition price. In the case of acquired rights without consideration

or for an amount substantially lower than their market value, an income directly attributed to net equity is recognized

at the beginning of the natural year to which they correspond, which is transferred to the profit and loss account as

the allocation is made to expenses for the emissions associated with the rights received without consideration.

The emission rights are not depreciated. However, they are subject to any necessary impairment corrections.

These assets are derecognised on the occasion of their transmission to third parties, delivery or expiration.

The emission of greenhouse gases results in the recognition of an expense in the profit and loss account for the fi-

nancial year and the corresponding provision, since this is an expense for the financial year, clearly specified as to its

nature, but which, at the closing date is indeterminate as to its exact amount. This provision is maintained until the

company has to cancel the obligation through the delivery of the corresponding rights.

The amount of said expenses and the correlative provision, is determined considering that the obligation will be

canceled:

a) Firstly, by means of allowances received for an allocation under the emissions scheme to which the undertaking

or its installations are affected, which shall be allocated to the emissions made in proportion to the total emis-

sions envisaged for the full period for which they have been assigned. The expenditure corresponding to this part

of the obligation will be quantified based on the carrying value of the transferred rights.

b) Then, by means of the remaining allowances included in the balance sheet of the company. The expenditure

corresponding to this part of the obligation will be quantified, generally in accordance with the average price or

weighted average cost method of said emission right.

c) In the event that the emission of gases entails the need for the Company to acquire or generate emission rights,

because the emissions realized exceed those that can be canceled either by the assigned rights that are attribu-

table to those emissions, or by means of the remaining emission rights acquired or generated by the Company,

the cost corresponding to the rights deficit is additionally considered. This expense is quantified according to the

best possible estimate of the amount necessary to cover the rights deficit.

Gas emission costs are included in item 7. “Other operating expenses” in the profit and loss account, and the related

provisions are included under “Short-term provisions” in Current liabilities.

The cancellation of the provision and the withdrawal of intangible assets are made in the following year, when the

cancellation of the rights to the corresponding administrative registry is communicated.

Greenhouse gas emission allowances acquired for the purpose of sale shall be accounted for in accordance with the

criteria set forth in the stock accounting and valuation standard of the General Accounting Plan.

When the future use of rights is not determined, at the time of incorporation into the company’s equity these are

classified as intangible assets. The initial classification will be modified whenever the function that the rights have in

the company have changed.

Contracts held for the purpose of receiving or delivering emission rights are accounted for using the criteria set forth

in the registration and measurement standard for financial instruments.


Royal Decree 602/2016 of 2 December amending the General Accounting Plan approved by Royal Decree 1514/2007,

of 16 November, establishes among other changes in regulations, in its first additional provision the carrying value of

greenhouse gas emission allowances accounted for as intangible assets will be reclassified to inventories with effect

from 1 January 2016.

f) Balances and Transactions in Foreign CurrencyTransactions in foreign currency are accounted for at their equivalent in euros using the rates of exchange in applica-

tion on the dates on which these are carried out. Exchange differences arising during the year by reason of effective

collections and payments are accounted for directly as financial expenses (loss) or revenues (profit).

Balances receivable and payable in foreign currencies are measured at the year end in accordance with the rate of

exchange in force at the time. The corresponding difference is recorded in the Profit and Loss Account.

Bank account balances in foreign currencies are measured at the year end in accordance with the rate of exchange in

force at the time. The corresponding difference is recorded in the Profit and Loss Account.

Non-trade debtor balances stated in foreign currencies corresponding to the collection rights derived from the debt

owed by the Federal Republic of Yugoslavia for the sale of an ammonia plant (Note 7.1.2.b) were not measured at the

rate of exchange when the corresponding operation took place, but were measured at the rate of exchange in force

at the 2002 year end, the year in which it reached an agreement on the refinancing of this debt.

g) Classification of Balances According to Due DatesThe classification between short and long-term takes into account the expected date for the Company’s obligations

and rights to fall due, be disposed of or be cancelled. Long-term is considered to be more than twelve months as from

the year-end date.

h) Corporate income taxThe tax effect is recorded in the Profit and Loss Account or directly against Net Equity, depending on where the profits

or losses giving rise to the tax are recorded. The tax on profits for each year contains both the current and, if applica-

ble, any deferred tax.

The amount for current tax is the amount to be settled by the Company as a consequence of its tax returns.

The differences between the carrying amounts of assets and liabilities and their tax base, give rise to the deferred tax

asset and liability balances, calculated using the foreseeable rate of tax at the time of reversal and in accordance with

the manner in which it is rationally foreseen that the asset or liability is to be recovered or paid.

The variations in the financial year in deferred taxation assets or liabilities are recognised in the profit and loss account

or directly in net equity, as applicable.

Deferred tax assets are only recognised to the extent to which it is probable that the company will have future taxable

profits that will allow these assets to be applied.

The carrying amounts of recorded deferred tax assets are analysed at each balance sheet date and the necessary

adjustments are made to the extent that there exist doubts as to their future tax recoverability.


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Likewise, an evaluation is made every year end of deferred taxation assets not recorded in the balance sheet, with

these being recognised if their recovery against future tax profits has become probable.

i) Revenues and expensesRevenues and expenses are accounted for on the accruals basis, i.e. when the real flow of goods and services they re-

present takes place, independently of the moment at which the monetary or financial flow derived from these occurs.

Revenues from the sale of goods and from the supply of services are measured at the fair value of the consideration,

received or receivable, derived from these which, barring evidence to the contrary, is the price agreed for these goods

and services, after deducting any discount, price reduction or other similar amounts that the Company might grant,

as well as the interest incorporated into the nominal value of the credits.

Revenues from the sale of goods are only recognised when each and every one of the following conditions is satisfied:

a) The material risks and rewards inherent to ownership of the goods, independently of their legal transfer, have

been transferred to the buyer.

b) The company retains neither continuing managerial involvement to the degree usually associated with owners-

hip nor effective control over the goods sold.

c) The amount of the revenues can be measured reliably.

d) It is probable that the economic profits or returns derived from the transaction will flow to the Company.

e) The costs incurred or to be incurred in respect of the transaction can be reliably measured.

The Company follows the criterion of considering the above conditions to be complied with when an order is forma-

lised as firm with the customer and establishing the corresponding safeguard clauses.

j) Provisions and contingenciesObligations in existence at the year-end, as a result of past events from which there could derive harm to the Com-

pany’s net equity and for which the amount and date of cancellation cannot be determined, are recorded in the

balance sheet as provisions and are measured using the present value of the best possible estimate of the amount

needed to settle the obligation or to transfer it to a third party.

Included under this heading are the provisions for liabilities, which includes the estimated amount for meeting pro-

bable or certain liabilities arising from litigation in progress, sureties or other similar guarantees. The provision is made

when the liability or obligation that determines the indemnity or payment arises.

Adjustments arising from the updating of the provision are recorded as financial expenses as they accrue. In the case

of provisions with a due date that is less than or equal to one year no type of discount is made, provided that the

financial effect is not significant.

The Company also discloses information, as applicable, on contingencies that do not give rise to a provision.


k) Assets of an environmental natureIn accordance with the Institute of Accounting and Accounts Audit Resolution dated 25 March 2002, investments of

an environmental nature are those that are incorporated into the Company’s assets for long-term use in its activity

and which have as their main purpose the minimization of the environmental impact and the protection and im-

provement of the environment, including the reduction or elimination of future contamination from the Company’s

operation.

Also considered as expenses of an environmental nature are those incurred for the prevention, reduction or repair of

damage to the environment, understood as being the natural surroundings, as well as those derived from environ-

mental commitments or legal provisions in the field of the environment.

l) GrantsNon-refundable capital grants, as well as donations and legacies, are valued at the fair value of the amount granted

or the good received. Initially, these are allocated directly to net equity and recognised in the Profit and Loss Account

in proportion to the depreciation undergone during the period by the assets financed by these grants, unless these

are assets not subject to depreciation, in which case they are carried to the result for the year in which their disposal

or cancellation occurs.

Grants intended for the cancellation of debts are allocated as revenues for the year in which the cancellation occurs,

except if these are received in relation with a specific financing, in which case the allocation is made in function of

the item financed.

Grants of a refundable nature are recorded as long-term debts convertible into grants until they acquire the condition

of non-refundable.

Operating subsidies are credited to results for the year when they accrue.

m) Related party transactionsAs a general rule, items that are the object of a transaction with related parties are measured initially at their fair value.

Where applicable, if the agreed price for an operation differs from its fair value, the difference is recognised having

regard to the economic reality of the operation. They are measured subsequently in accordance with the provisions

set out in the corresponding rules.


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n) Cash flow statements The expressions used in the cash flow statements have the following meanings:

• Cash or Equivalents: cash includes both cash on hand and sight deposits in banks. Cash equivalents are financial

instruments that form part of the Company’s normal treasury management, are convertible into cash, have initial

due dates that are not in excess of three months and are subject to immaterial risks of changes in their value.

• Cash flows: inflows and outflows of cash or other equivalent resources, these being understood to be invest-

ments for a period of less than three months with high liquidity and low risk of alterations to their value.

• Operating activities: these are the activities that constitute the main source of the Company’s ordinary revenues

as well as other activities that cannot be classified as investment or financing.

• Investment activities: those of the acquisition, sale or disposal by other means of long-term assets and other

investments not included under cash or cash equivalents.

• Financing activities: activities that produce changes in the size and composition of the net worth and in liabilities

of a financial nature.


Note 5. Intangible assets

The composition and movement on this heading during the financial years 2016 and 2015 are as shown below, in

thousands of euros:

31/12/2015 Additions Withdrawals Transfers(*) 31/12/2016

At Cost:

Industrial property 2,691 - - - 2,691

Other intangible assets 1,407 - (319) - 1,088

Gas emission units (EUAs) 7,742 - - (7,742) -

11,840 - (319) (7,742) 3,779

Accumulated depreciation:

Industrial property (2,691) - - - (2,691)

Other intangible assets (1,398) (5) 318 - (1,085)

(4,089) (5) 318 - (3,776)

Net Intangible Assets 7,751 (5) (1) (7,742) 3

31/12/2014 Additions With-drawals Transfers 31/12/2015

At Cost:

Industrial property 2,691 - - - 2,691

Other intangible assets 1,401 - - 6 1,407

Gas emission units (EUAs) 6,378 7,582 (5,964) (254) 7,742

Gas emission allowances (CERs) (Note 13) - 21 - (21) -

Emissions reduction units (ERUs) (Note 13) 1,410 - (209) (1,201) -

11,880 7,603 (6,173) (1,470) 11,840


Industrial property (2,691) - - - (2,691)

Other intangible assets (1,390) (8) - - (1,398)

(4,081) (8) - - (4,089)

Net Intangible Assets 7,799 7,595 (6,173) (1,470) 7,751

* Transfers reflected in financial year 2016 correspond to the reclassification to the heading of stocks, with effect from 1 January 2016, of the balances of emission rights of gases, in accordance with the first additional provision of Royal Decree 602/2016 of 2 December, which amends the General Accounting Plan.

Industrial property includes the cost of the right to use the installations for transferring water to the Puertollano

Industrial Estate from the Jándula and Montoro reservoirs, undertaken by other companies and from which the Com-

pany has acquired this right. This cost was totally depreciated at 31 December 2016 and 31 December 2015.


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Note 6. Property, plant and equipment

The composition and movement in this heading during the financial years 2016 and 2015 are as shown below, in

thousands of euros:

31/12/2015 Additions Withdrawals Transfers 31/12/2016

At Cost:

Land and natural resources 6,800 34 - - 6,834

Buildings 65,116 - (917) 330 64,529

Technical installations 236,209 - (11,784) 11,098 235,523

Specific spare parts 12,760 - (130) 20 12,650

Machinery 53,448 - - 59 53,507

Tooling 1,098 - - - 1,098

Other installations 29,922 - - 1,075 30,997

Furniture 1,323 - - - 1,323

Computer equipment equipment 3,201 - - 72 3,273

Transport elements 1,158 - (11) 19 1,166

Other property, plant and equipment 9,579 - (1,560) 39 8,058

Advances and fixed assets in progress 4,500 13,797 - (12,712) 5,585

425,114 13,831 (14,402) - 424,543


Buildings (23,143) (1,273) 414 - (24,002)

Technical installations (165,048) (9,135) 11,034 - (163,149)

Specific spare parts (11,368) (228) 126 - (11,470)

Machinery (46,383) (1,169) - - (47,552)

Tooling (879) (41) - - (920)

Other installations (13,854) (3,705) - - (17,559)

Furniture (951) (98) - - (1,049)

Computer equipment (2,838) (59) - - (2,897)

Transport elements (670) (58) 11 - (717)

Other property, plant and equipment (7,871) (451) 1,558 - (6,764)

(273,005) (16,217) 13,143 - (276,079)

Net Property, Plant and Equipment 152,109 (2,386) (1,259) - 148,464


31/12/2014 Additions Withdrawals Transfers 31/12/2015

At Cost:

Land and natural resources 6,769 31 - - 6,800

Buildings 64,898 - - 218 65,116

Technical installations 234,062 - (884) 3,031 236,209

Specific spare parts 12,947 - (271) 84 12,760

Machinery 53,285 - - 163 53,448

Tooling 1,041 - - 57 1,098

Other installations 27,767 1,482 - 673 29,922

Furniture 1,323 - - - 1,323

Computer equipment equipment 3,206 3 (8) - 3,201

Transport elements 1,158 - - - 1,158

Other property, plant and equipment 9,579 - - - 9,579

Advances and fixed assets in progress 1,474 5,782 - (2,756) 4,500

417,509 7,298 (1,163) 1,470 425,114


Buildings (21,877) (1,266) - - (23,143)

Technical installations (155,833) (9,980) 765 - (165,048)

Specific spare parts (11,069) (299) - - (11,368)

Machinery (45,230) (1,153) - - (46,383)

Tooling (845) (34) - - (879)

Other installations (10,260) (3,594) - - (13,854)

Furniture (853) (98) - - (951)

Computer equipment (2,783) (60) 5 - (2,838)

Transport elements (612) (58) - - (670)

Other property, plant and equipment (7,296) (575) - - (7,871)

(256,658) (17,117) 770 - (273,005)

Net Property, Plant and Equipment 160,851 (9,819) (393) 1,470 152,109

The additions for the financial year 2016 correspond mainly to investments made in production installations for the

factories in Avilés amounting to 1,705 thousand euros, in Palos for 5,588 thousand euros and in Puertollano for 5,511

thousand euros.

The most significant withdrawals in 2016 relate mainly to production facilities at the Puertollano plant, which were

fully depreciated for the amount of 5,070 thousand euros; and to the withdrawal of the MAP and DAP plants of the

Huelva factory with a net carrying value at 31 December 2016 of 1,239 thousand euros.

The additions for the financial year 2015 corresponded mainly to investments made in production installations for

the factories in Huelva amounting to 578 thousand euros, Avilés for 582 thousand euros, Palos for 2,468 thousand

euros, Puertollano for 2,998 thousand euros and Sagunto for 383 thousand euros.


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Phosphogypsum pools concession of Huelva

The following is of note as regards the concessions granted by the General Directorate for Coasts and used by the

Huelva factory for depositing the phosphogypsum generated as a result of the process for manufacturing phosphoric

acid:

• In January 2004 the Ministry for the Environment notified Fertiberia of the Ministerial Order of 27 November

2003 declaring said concessions to be expired and alleging certain non-compliance, this being confirmed by

the National High Court in June 2007. Fertiberia has thus exhausted the judicial routes, as is confirmed by the

aforementioned Ruling. Subsequently, the State Attorney’s Office requested the provisional enforcement of the

Ruling and established a series of measures to be carried out by Fertiberia such as ceasing the tipping, commen-

cing the work on environmental regeneration and the setting-up of a guarantee of 21.9 million euros in respect

of the environmental regeneration.

• As a result of the aforementioned decisions, on 31 December 2010 the Company ceased the production of

phosphoric acid and sulphuric acid, with these plants ceasing to operate as a consequence. Since then Fertiberia,

S.A. has used the international markets for sourcing the phosphoric acid that is necessary for the production of

NPKs, DAP and MAP. In parallel, and in compliance with the above, Fertiberia, S.A. presented the Secretariat for

Climate Change a surety bond for an amount of 15,664 thousand euros on 14 July 2011, plus mortgage gua-

rantees on the Villalar and Pancorbo warehouses for amount of 6,236 thousand euros and all valid for five years.

Another of the measures adopted by Fertiberia, was to start up the stored water recovery plant as a prior and

necessary phase for the replanting and recovery of the zone, which has been developed during previous years.

• In parallel, advances have been made jointly with the corresponding Administrations in the preparation of a ba-

sic engineering project, carried out by the US company ARDAMAN - specialised in pool recovery projects - which

has served as the basis for developing the detailed engineering project that has been carried out by EPTISA.

• Both projects were presented before the National High Court, in November 2014, prior to their presentation to

the Central Administration in compliance with the ruling handed down by the National High Court, and to the

Autonomous Region Administration, awaiting a ruling on the suitability of the aforementioned project. (Note

11)

On 22 April 2015 the Administrative Chamber issued a ruling requesting the presentation by Fertiberia of comple-

mentary studies to verify the suitability of the project for closure of the phosphogypsum pools petitioned by the

Ministry of Agriculture, Food and the Environment, the Company has present all the required studies at date of for-

mulation of these Annual Accounts.

On 8 May 2015 WWF-ADENA submitted a written request to extend the guarantee granted by Fertiberia in quantity

and time that assures the correct execution of the environmental regeneration works.

By court ruling on 21 July 2015 Fertiberia was required, before 1 December 2015, to guarantee, by any means ad-

mitted in law, the execution of the environmental regeneration works for the amount of 65.9 million euros and the

completion of these works for the amount presented to the Ministry for the project by Fertiberia.

This order was appealed in cassation before the Supreme Court, an appeal that has been declared inadmissible by

order dated 17 November 2016. However, Fertiberia, S.A. has initiated an incident of request for modification of the

amount to be guaranteed.


Totally depreciated items in use

The following is the detail by headings at 31 December 2016 and 2015 of the most significant totally depreciated

assets still in use, indicating their cost value, stated in thousand euros:

2016 2015

Buildings 27 24

Technical installations and machinery 21,138 26,208

Machinery 75 75

Tooling 309 309

Other installations 308 308

Furniture 202 202

Data processing equipment 393 393

Vehicles 238 238

Other property, plant and equipment 5,133 6,691

27,823 34,448

Other information

Included in the amount accounted for as property, plant and equipment there are assets for a carrying value of 1,558

thousand euros at 31 December 2016 under finance leases (1,866 thousand euros at 31 December 2015).

The Company has formalised insurance policies to cover the possible risks to which the various items of its fixed assets

are subject, it being understood that these policies provide sufficient cover for the risks to which they are exposed.


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Note 7. Financial instruments

7.1 Financial assetsThe detail of financial assets, except for investments in the equity of group, multi-group and associate companies,

which are disclosed in Note 7.3, is as follows:

31/12/2016 31/12/2015

Categories Non-current Current Non-current Current

Cash and other equivalent liquid assets (Note 7.1.1) - 48,953 - 90,892

Loans and receivables (Note 7.1.2) 137,442 248,817 147,249 236,884

137,442 297,770 147,249 327,776

7.1.1 Cash and other equivalent liquid assets

The detail of these assets is as follows, in thousand euros:

Cash and Equivalent Assets 31/12/2016 31/12/2015

Current accounts 48,925 90,863

Cash 28 29

48,953 90,892

The return on these assets is based on variable daily or short-term interest rates. Because of their high liquidity the fair

value of these assets coincides with their carrying value.


7.1.2 Loans and receivables

The following is the composition of this heading at 31 December 2016 and 31 December 2015, in thousand euros:

31/12/2016 31/12/2015

Financial assets Long-term Short-term Long-term Short-term

Receivables on trade operations

Customer - 23,095 - 24,049

Group company customers (Note 17.1) - 57,494 - 58,980

- 80,589 - 83,029

Receivables for non-trade operations

Loans to group companies (Note 17.1) (a) 134,068 158,836 143,821 146,467

Loans to other companies 1,415 16 1,436 14

Receivables on fixed assets disposals (b) 1,009 42 1,051 41

Loans to personnel 373 49 357 39

Deposits from other companies 20 - 10 -

136,885 158,943 146,675 146,561

Deposits 557 - 574 301

Time deposits - 601

Other debtors (c) 8,684 - 6,993

557 9,285 574 7,294

Total 137,442 248,817 147,249 236,884

At 31 December 2016 the customers receivables balances includes impairments for insolvency risks for an amount

of 3,950 thousand euros (3,950 thousand euros at the previous financial year-end). No valuation corrections were

made for impairments to financial assets during the financial years 2016 and 2015.

a) Long-term loans to group companies

On 28 December 2006 the Fertiberia S.A. signed a Current Account Loan with Grupo Villar Mir, S.L. (GVM) to put

funds at its disposal that will allow it to meet its treasury requirements up to the amount of the limit drawn down, fa-

lling due on 27 December 2016, date on which it will be tacitly extended for additional annual periods if not expressly

terminated by the grantor, and with an interest rate of Euribor + 0.25%, payable annually.

At 31 December 2016 this credit line was drawn down by an amount of 131,198 thousand euros (141,771 thousand

euros in the previous year), being classified in the long-term assets of the balance sheet as it is estimated that its re-

payment will not occur during financial year 2017.

b) Loans for the disposal of fixed assets - Yugoslavia Plant

This corresponds to the collection right with Serbia Montenegro for the sale of an ammonia plant in 1978 by a con-

sortium in which the Parent Company had an 80% holding, the plan being for this to be collected in two annual

collections up until the financial year 2034.

Of the original collection rights 95% was insured by CESCE (the Spanish Export Credit Insurance Company) and fully

paid by it, applying a rate of exchange of 2,523 US$/EUR.


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As for the part not insured by CESCE (the remaining 5%), which was due and unpaid, when CESCE signed, in 2002,

a debt refinancing agreement with the Federal Republic of Yugoslavia, it undertook to pay over this outstanding 5%

over the same schedule as that agreed in the refinancing.

Due date Thousand USA dollars

Years 2002 to 2016 (a) 757

Years 2017 to 2034 2,151

2,908

(a) 100% collected at 31 December 2016.

As regards the 95% already collected, CESCE is to pay over the exchange gains arising between the 2,523 US$/EUR

and the rate of exchange in force on the dates of effective collection in accordance with the aforementioned refinan-

cing agreement. Where applicable, these collection rights are to be booked as a credit to exceptional results at the

time of their collection (see note 12.d).

At 31 December 2016 there remained outstanding a balance on this item of 1,051 thousand euros (1,092 thousand

euros in the previous financial year).

c) Other debtors

At 31 December 2016 this heading included an amount of 4,774 thousand euros (4,649 thousand euros at 31 De-

cember 2015) as part of a grant approved by the Junta de Andalucía for the ERE (Redundancy procedures) 52/2009,

affecting the Huelva factory and which the Company has advanced as guarantee for paying the complementary

amounts committed with the affected employees until such time that the Junta de Andalucía pays over the afore-

mentioned grant.

At 31 December 2016 the complementary amounts committed with the affected employees and pending payment

until the Junta de Andalucia pays over the grant amounts to 141 thousand euros. (276 thousand euros in the pre-

vious financial year)

Also included under this heading at 31 December 2016 is the amount of 2,209 thousand euros corresponding to the

deferred collection for the sale of the Huelva phosphate plant (see note 6).

d) Other information on financial assets

As indicated in note 4.c the Company withdraws from its balance sheet the customer balances for the amount of

those assignments of receivables in which the Factor assumes the bad debt risk (“non-recourse factoring”). At 31

December 2016 the overall amount withdrawn from the balance sheet as a result of these “non-recourse facto-

ring” operations amounted to 37,206 thousand euros (60,844 thousand euros in the previous financial year).


There were no impairments to long-term loans with other companies at 31 December 2016 and 2015.

Categories31/12/2015 Additions With-drawals

Current transfers

Accrued interest 31/12/2016

Loans to group companies (Note 17.1) (a)

143,821 38,937 (49,021) - 331 134,068

Loans to other companies 1,436 - - (21) - 1,415

Receivables on disposal of fixed assets (b)

1,051 - - (42) - 1,009

Personnel loans 357 353 (337) - - 373

Impositions and others 10 10 - - - 20

Deposits 574 - (17) - - 557

Total 147,249 39,300 (49,375) (63) 331 137,442

7.2 Financial LiabilitiesThe detail of long-term financial liabilities is as follows, in thousand euros:

31/12/2016 31/12/2015

Financial Liabilities

Amounts owing

to credit entities

Derivatives and Others Total

Amounts owing

to credit entities


Debits and payables (Note 7.2.1) 8,732 40,353 49,085 128,476 13,754 142,230

Amounts owing to group companies (Note 17.1)

- 12,582 12,582 - 14,782 14,782

Hedging derivatives (Note 7.2.2) - 1,582 1,582 - 1,544 1,544

8,732 54,517 63,249 128,476 30,080 158,556

The detail of current financial liabilities is as follows, in thousand euros:

31/12/2016 31/12/2015

Financial Liabilities

Amounts owing

to credit entities


Amounts owing

to credit entities

Derivatives and others Total

Debits and payables (Note 7.2.1) 191,767 130,161 321,928 114,033 146,027 260,060

Amounts owing to group companies (Note 17.1)

- 15,195 15,195 - 25,483 25,483

191,767 145,356 337,123 114,033 171,510 285,543


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7.2.1 Debits and accounts payable

The following is the detail of these at 31 December 2016 and 31 December 2015, in thousand euros:

31/12/2016 31/12/2015

Non-Current Current Non-Current Current

On trade operations:

Suppliers - 44,041 - 67,503

Suppliers, group companies (Note 17,1) - 61,717 - 56,908

Creditors - 16,544 - 14,289

- 122,302 - 138,700

On non-trade operations

Amounts owing to credit entities (Note 7,2,1,a) 8,041 191,468 127,463 113,670

Liabilities for finance leases 691 299 1,013 363

8,732 191,767 128,476 114,033

Liabilities with group companies (Note 16,1) 12,582 15,195 14,782 25,483

Fixed assets suppliers - 4,003 - 4,903

Other liabilities (Note 7,2,1,b) 40,353 3,612 13,754 2,080

40,353 7,615 13,754 6,983

Personnel (salaries outstanding) - 244 - 344

Total 61,667 337,124 157,012 285,543

Given the nature of the financial liabilities included in this category, the Company considers that their carrying value

constitutes an acceptable approximation to fair value.

On 31 December 2016 in the heading “Creditors” includes an amount of 16,948 thousand euros that is in payment

management/confirming with bank entities (29,771 thousand euros at the close of the previous financial year).

a) Amounts owing to credit entities

The detail for Amounts Owing to Credit Entities at the 2016 and 2015 year-ends is as follows, in thousand euros:

31/12/2016 31/12/2015

LimitNon-

current Current Total LimitNon-

current Current Total

Loans and long-term leases 142,049 8,732 127,117 135,849 169,886 128,476 41,410 169,886

Credit facilities 109,000 - 64,361 64,361 137,104 - 72,274 72,274

Liabilities for discounted paper 12,500 - 289 289 18,000 - 349 349

8,732 191,767 200,499 128,476 114,033 242,509


The maturity profile for Amounts Owing to Credit Entities at 31 December 2016 is as indicated below:

2017 2018 2019 2020 2021 o + Total

Loans and long-term leases 127,117 6,514 1,990 231 135,849

Credit facilities 64,361 - - - - 64,361

Liabilities for discounted paper 289 - - - - 289

191,767 6,514 1,990 231 - 200,499

At financial year-end 2016, all outstanding debt for the syndicated loan was classified in the short-term as a result of

the non-compliance with two of the financial ratios established in the obligations of the contract in accordance with

the provisions of financial reporting standards applicable. The profile of the maturities of the syndicated loan, taking

into account what is indicated in note 16, correspond to the following table:

2017 2018 2019 2020 2021 o + Total

Syndicated loan 30,000 30,000 58,199 - - 118,199

30,000 30,000 58,199 - - 118,199

The maturity profile for Amounts Owing to Credit Entities at 31 December 2015 is as indicated below:

2016 2017 2018 2019 2020 o + Total

Loans and finance leases 41,410 34,646 34,079 59,492 259 169,886

Credit facilities 72,274 - - - - 72,274

Liabilities for discounted paper 349 - - - - 349

114,033 34,646 34,079 59,492 259 242,509

The detail of long-term financial liabilities at 31 December 2016 is as follows, in thousand euros:

Initial

AmountReference

interest rate Due date Current Non-current Total

Syndicated credit facility 180,000 Euribor 24/07/2019 118,199 - 118,199

Banco Popular 6,000 Euribor 07/10/2018 3,400 2,547 5,947

BBVA Variable Interest interestvariable

2,188 Euribor 27/12/2017 722 - 722

BBVA Fixed Interest 2,188 Fixed 27/12/2018 240 240 480

Targobank 2,000 Euribor 04/12/2018 509 520 1,029

Caixa Geral 5,000 Euribor 27/05/2019 1,748 2,420 4,168

Ibercaja 2,000 Euribor 31/07/2019 498 806 1,304

Liberbank 2,500 Euribor 09/04/2020 497 1,192 1,689

Caja España 2,000 Euribor 08/04/2018 1,005 316 1,321

Finance leases 299 691 990

203,876 127,117 8,732 135,859


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The detail of long-term financial liabilities at 31 December 2015 is as follows, in thousand euros:

Initial

AmountReference

interest rate Due date Current Non-current Total

Syndicated credit facility 180,000 Euribor 24/07/2019 30,000 117,494 147,494

Banco Popular 15,000 Euribor 10/04/2016 7,469 - 7,469

BBVA Variable Interest 2,188 Euribor 27/12/2017 729 715 1,444

BBVA Fixed Interest 2,188 Fixed 27/12/2018 547 1,094 1,641

Targobank 2,000 Euribor 04/12/2018 492 1,026 1,518

Caixa Geral 5,000 Euribor 27/05/2019 833 4,141 4,974

Ibercaja 2,000 Euribor 31/07/2019 490 1,303 1,793

Liberbank 2,500 Euribor 09/04/2020 487 1,690 2,177

Finance leases 363 1,013 1,376

210,876 41,410 128,476 169,886

Syndicated Finance

On 24 July 2014 Fertiberia signed a new syndicated credit facility for a total amount of up to 180,000 thousand euros

(the “Long-term Financing”). The loan draw-down coincided with the cancellation of the previous syndicated finan-

ce, the previous bilateral loan and a part of the short-term financial liability. Nine financial entities participate in the

new facility, with the following being the distribution by tranches:

• Tranche A for a total maximum amount of 150,000 thousand euros. The purpose of this tranche is the re-finan-

cing of the long-term debt, with the Syndicated Loan and the bilateral loan formalised on 9 March 2012 being

cancelled.

• Tranche B for a total maximum amount of 30,000 thousand euros. This was a revolving type tranche, the purpose

of which is to cover the Company’s general requirements

The following are the main characteristics of the Long-term Finance:

• Interest: the interest rate is linked to EURIBOR plus a differential that is determined annually in line with the (Net

Debt/EBITDA) ratio.

• Maturity date: the planned due date is 24 July 2019.

• Repayment: the planned repayment schedule is as follows:


Due Thousand euros

Tranche A Tranche B

January 2016 15,000 -

July 2016 15,000 -

January 2017 15,000 -

July 2017 15,000 -

January 2018 15,000 -

July 2018 15,000 -

January 2019 15,000 -

July 2019 15,000 30,000

The subsidiary companies Agralia Fertilizantes S.L.U., Fertiberia Andalucía, S.A.U., Fertiberia Castilla-León, S.A.U., Fer-

tiberia La Mancha, S.L.U., Química del Estroncio, S.A.U. and Fercampo, S.A., along with Grupo Villar Mir, S.A.U. are

guarantors for Fertiberia, S.A. in the aforementioned finance contract.

The syndicated credit facility includes a covenant for accrediting compliance with a series of financial ratios, as well as

having other clauses that are usual in this type of contract (declarations, guarantees, obligations to take and refrain

from actions, causes for early maturity, etc.). At financial year-end 2016, two of these financial ratios have not been

complied with, although what is described in note 16 should be taken into account. As a result of this non-complian-

ce at financial year-end 2016, the entire debt was classified in the short-term.

Under the obligation established in the financing contract, 30 July 2014 between Fertiberia and the financial entities

entered into a tailored (OTC) interest rate swap (IRS) for hedging the interest rates risk associated with the financing,

the fixed notional amount being 75,000 thousand euros up until the month of January 2015, and variable as from

then until maturity using the repayment curve for both tranches.

Interest Rate Hedging (thousand euros)

As from Until Notional

July 2014 January 2015 75,000

January 2015 July 2015 67,500

July 2015 January 2019 60,000

January 2019 July 2019 45,000


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b) Other liabilities for non-trade operations

The following is the detail of other liabilities at 31 December 2016 and 31 December 2015, in thousand euros:

31/12/2016 31/12/2015

Non-current Current Total Non-current Current Total

Ministry of Education and Science - 34 34 34 34 68

CDTI (Centre for Industrial Technological

Development)2,245 375 2,620 2,529 375 2,904

Ministry for Industry, Tourism and Trade 1,530 170 1,700 1,700 136 1,836

Ministry of Industry and Energy (a) 28,759 - 28,759 4,471 - 4,471

Ministry for Science and Innovation 623 61 684 685 30 715

ERE Huelva 2013 - 78 78 - 98 98

Other liabilities - 232 232 - 204 204

I.D.A.E. (Institute for the Diversification and Saving

of Energy)6,455 1,782 8,237 2,661 405 3,066

Deferral of Social Security settlements ERE Cartagena (*)

741 880 1,621 1,674 798 2,472

40,353 3,612 43,965 13,754 2,080 15,834

The Company has various loans at zero interest rates granted by public administrations; these are accounted for at nominal

value as it is estimated that the profit arising on the difference with the corresponding fair values is not representative.

(a) In financial year 2016, several loans were formalized with the Ministry of Industry and Energy with a fixed interest rate of 4.09%

(b) On 22 November 2013 the Contentious-Administrative Chamber of the Murcia Superior Court of Justice rejected the appeal presented against Judge-ment no. 24 of 22 February 2013 handed down by the Murcia Contentious-Administrative Court no. 4, becoming firm as stated in the Contentious-Ad-ministrative appeal 193/2009, filed against the Resolution of the Murcia Provincial Employment and Social Security Inspection dated 13 October 2008 ruling as null the administrative actions enabling the extinguishing of the labour relationship of the employees affected by the Social Security contri-butions settlement no. 302008008000859, obliging the reinstatement of the situation prior to the extinguishing of the contracts with the existence of the obligation to contribute for this period. The amount derived from the aforementioned assessment amounted to 5,326 thousand euros, which was recorded as an exceptional charge in the financial year 2013. During the financial period 2014 the company paid 1,601 thousand euros corresponding to non-deferrable contributions and has requested the deferral of the liability for the remaining contributions. The deferral was conceded by the TGSS on 20 May 2014, establishing a schedule for monthly payments with final due date in May 2019. At 31 December 2016 the contributions pending payment amounted to 1,621 thousand euros (2,472 thousand euros at 31 December 2015).

The following is the detail of the due dates for “Other liabilities, non-trade operations” at 31December 2016:

2017 2018 2019 2020 2021 Over 5 years

Ministry of Education and Science 34 - - - - -

CDTI (Centre for Industrial Technological

Development)375 472 420 419 287 647

Ministry for Industry, Tourism and Trade 170 170 170 170 170 850

Ministry of Industry and Energy (a) - - 639 4,108 4,108 19,904


ERE Huelva 2013 78 - - - - -

Other liabilities 232 - - - - -

I.D.A.E. (Institute for the Diversification and Saving

of Energy)1,782 1,625 1,366 1,234 1,017 1,213

Deferral of Social Security settlements ERE Cartagena (*)

880 541 200 - - -

3,612 2,898 2,885 6,021 5,672 22,877


The following is the detail of the due dates for “Other liabilities, non-trade operations” at 31December 2015:

2016 2017 2018 2019 2020 Over 5 years

Ministry of Education and Science 34 34 - - - -

CDTI 375 375 472 420 407 855

Ministry for Industry, Tourism and Trade 136 170 170 170 170 1,020

Ministry of Industry and Energy - - - 639 639 3,193


ERE Huelva 2009 - - - - - -

ERE Huelva 2013 98 - - - - -

I.D.A.E. 405 657 555 439 347 663

Deferral of Social Security settlements ERE Cartagena

798 837 837 - - -

Other liabilities 204 - - - - -

2,080 2,134 2,124 1,758 1,654 6,084

7.2.2 Interest rate hedging derivatives

At 31 December 2016 the Company had contracted the following derivatives for cash flow hedging (variable interest

rate risk), in thousand euros:

UnderlyingDescription of the

Hedging/ Negotiation Fair value 31/12/2016 Due date

New Syndicated Credit Facility- BBVA Variable to fixed swap (70) 24/07/2019

New Syndicated Credit Facility- Popular Variable to fixed swap (184) 24/07/2019

New Syndicated Credit Facility- Sabadell Variable to fixed swap (106) 24/07/2019

New Syndicated Credit Facility- Santander Variable to fixed swap (220) 24/07/2019

New Syndicated Credit Facility- Bankia Variable to fixed swap (193) 24/07/2019

New Syndicated Credit Facility- Bankinter Variable to fixed swap (171) 24/07/2019

New Syndicated Credit Facility- Caixabank Variable to fixed swap (172) 24/07/2019

New Syndicated Credit Facility- Rabobank Variable to fixed swap (172) 24/07/2019

New Syndicated Credit Facility- HSBC Variable to fixed swap (294) 24/07/2019

(1,582)


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At 31 December 2015 the Company had contracted the following derivatives for cash flow hedging (variable interest

rate risk), in thousand euros:

UnderlyingDescription of the

Hedging/ Negotiation Fair value 31/12/2015 Due date

New Syndicated Credit Facility- BBVA Variable to fixed swap (69) 24/07/2019

New Syndicated Credit Facility- Popular Variable to fixed swap (180) 24/07/2019

New Syndicated Credit Facility- Sabadell Variable to fixed swap (103) 24/07/2019

New Syndicated Credit Facility- Santander Variable to fixed swap (215) 24/07/2019

New Syndicated Credit Facility- Bankia Variable to fixed swap (188) 24/07/2019

New Syndicated Credit Facility- Bankinter Variable to fixed swap (166) 24/07/2019

New Syndicated Credit Facility- Caixabank Variable to fixed swap (168) 24/07/2019

New Syndicated Credit Facility- Rabobank Variable to fixed swap (169) 24/07/2019

New Syndicated Credit Facility- HSBC Variable to fixed swap (286) 24/07/2019

(1,544)

The derivative instruments included in the above tables were tailor designed (OTC) for the loan they are hedging

and comply with the requirements detailed in Note 4.d) for consideration as hedging. The main characteristics are

described in note 7.2.1.a.


7.3 Group and associate companiesThe holdings in Group and Associate companies at 31 December 2016 are as follows, in thousand euros:

Company % Direct Holding Cost ImpairmentsNet value

31/12/2016

Group companies:

Química del Estroncio, S.A. 100% 68,933 (57,857) 11,076

Fertiberia Andalucía, S.A. 100% 11,466 (9,938) 1,528

Fertiberia La Mancha, S.L. 100% 8,477 (6,853) 1,624

Agralia Fertilizantes, S.L. 100% 7,677 - 7,677

Fertiberia Castilla – León S.A. 100% 21,231 (17,092) 4,139

El Bahia Fertilizer, SPA 51% 7,152 - 7,152

Agronomía Espacio, S.A. 100% 60 - 60

Agrokem, S.A. 100% 60 (15) 45

ADP Fertilizantes, S.A. 100% 52,000 - 52,000

Fercampo, S.A. 100% 8,994 - 8,994

Fertiberia France, S.A.S. 100% 1,500 - 1,500

187,550 (91,755) 95,795

Associate companies:

Incro, S.A. 50% 2 - 2

La Almazara 24% 630 - 630

632 - 632

Total 188,182 (91,755) 96,427

Note: in all cases the percentage holdings correspond to the percentages of voting rights held.

None of the companies in which the Company has a holding is listed on a Stock Exchange.

The summary of the main investee companies’ net equities as per their annual accounts is as follows at 31 December

2016, in thousand euros:

Company Share Capital ReservesResult for the

YearOther Net Equity

items TotalOperating

results

Group companies:

Química del Estroncio, S.A. 11,454 (2,074) (1,564) 449 8,265 (1,972)

Fertiberia Castilla–León, S.A. 1,458 5,241 (2,560) - 4,139 (2,280)

Fertiberia Andalucía, S.A. 2,930 (488) (917) 1 1,526 (1,088)

Fertiberia La Mancha, S.L. 1,275 1,535 (1,186) - 1,624 (1,479)

Agralia Fertilizantes, S.L. 3,800 5,045 592 5 9,442 832

ADP Fertilizantes, S.A. (1) 35,050 6,177 583 - 41,810 788

Fercampo, S.A. 826 3,998 186 - 5,010 796

Fertiberia France, S.A.S 706 (939) (3,105) - (3,338) (2,998)

57,499 18,495 (7,971) 455 68,478 (7,401)

(1) This corresponds to the Consolidated Net Equity of ADP Fertilizantes.


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The recoverable amount from investments in group and associate companies was obtained from the value of their

net worth at the end of each financial year, with the exception of the companies ADP Fertilizantes, S.A., Química del

Estroncio, S.A., Fertiberia France, S.A.S. and Fercampo, S.A.U., the recoverable value of which has been estimated

using generally accepted valuation techniques.

The holdings in Group and Associate companies at 31 December 2015 are as follows, in thousand euros:

Company % Direct Holding Cost ImpairmentsNet Value

31/12/2015

Group companies:

Química del Estroncio, S.A. 100% 68,933 (57,857) 11,076

Fertiberia Andalucía, S.A. 100% 11,466 (9,020) 2,446

Fertiberia La Mancha, S.L. 100% 8,477 (5,667) 2,810

Agralia Fertilizantes, S.L. 100% 7,677 - 7,677

Fertiberia Castilla – León S.A. 100% 21,231 (14,532) 6,699

El Bahia Fertilizer, SPA 51% 7,152 - 7,152

Agronomía Espacio, S.A. 100% 60 - 60

Agrokem, S.A. 100% 60 (15) 45

ADP Fertilizantes, S.A. 100% 52,000 - 52,000

Fercampo, S.A. 100% 8,994 - 8,994

Fertiberia France, S.A.S. 100% 1,500 - 1,500

187,550 (87,091) 100,459

Associate companies:

Incro, S.A. 50% 2 - 2

La Almazara – LA Organic, S.L. 24% 450 - 450

452 - 452

Total 188,002 (87,091) 100,911

Note: in all cases the percentage holdings correspond to the percentages of voting rights held.

None of the companies in which the Company has a holding is listed on a Stock Exchange.


The summary of the main investee companies’ net equities as per their annual accounts is as follows at 31 December

2015, in thousand euros:

Company Share Capital ReservesResult for the

YearOther Net

Equity items TotalOperating

results

Group companies:

Química del Estroncio, S.A. 11,454 (1,180) (894) - 9,380 (1,196)

Fertiberia Castilla–León, S.A. 1,458 7,446 (2,205) - 6,699 (258)

Fertiberia Andalucía, S.A. 2,930 (346) (141) - 2,443 (53)

Fertiberia La Mancha, S.L. 1,275 1,195 340 - 2,810 577

Agralia Fertilizantes, S.L. 3,800 4,111 934 6 8,851 1,396

ADP Fertilizantes, S.A. (1) 35,050 5,581 3,100 - 43,731 9,455

Fercampo, S.A. 826 3,367 631 - 4,824 1,275

Fertiberia France, S.A.S 706 - (939) - (233) (861)

57,499 20,174 826 6 78,505 10,335

(1) This corresponds to the Consolidated Net Equity of ADP Fertilizantes.

Summarised below are the registered offices and the activities carried out by the companies in which there are hol-

dings:

Company Registered Office Business activities

Group companies:

Química del Estroncio, S.A. Madrid Manufacture & sales of strontium

Fertiberia Andalucía, S.A. Cordoba Fertiliser sales

Fertiberia La Mancha, S.L. Cuenca Fertiliser sales

Agralia Fertilizantes, S.L. Huesca Manufacture of liquid fertilisers

Fertiberia Castilla – León S.A. Madrid Sale, warehousing and distribution of fertilisers

ADP Fertilizantes, S.A. Lisbon Fertiliser manufacture

El Bahia Fertilizer, SPA Algiers Manufacture and sale of ammonia

Fercampo, S.A. Malaga Fertiliser sales

Fertiberia France, S.A.S. Paris Fertiliser sales

The investment in the company El Bahia Fertilizer, SPA corresponds to the initial disbursement equivalent to 25% of

the subscribed capital on the incorporation of this company, which plans to build a new ammonia plant in Algeria.

During financial year 2016, the only increase in holdings in group and associated companies corresponds to a mone-

tary contribution made in La Almazara - LA Organic, S.L. for the amount of 180 thousand euros.

The following were the acquisitions and increases of holdings made during 2015:

• On 12 February 2015 the Company made a capital increase in the company Química del Estroncio, S.A.U. for an

amount of 807 thousand euros with an issue premium of 5,193 thousand euros.

• On 12 February 2015 the Company made a capital increase in the company Fertiberia Andalucía, S.A. for an

amount of 15 thousand euros with an issue premium of 985 thousand euros.

• On 30 June 2015 the Company made a capital increase in the company Fertiberia France, S.A.S for an amount of

1,463 thousand euros and subsequently made a capital reduction by compensation of losses for an amount of

793 thousand euros.


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No disposals of holdings in group and associate companies were made during 2016 and 2015.

The following is the detail of the value corrections due to impairments, as well as the provisions and reversals carried

out in 2016, in thousand euros:

CompanyCost of

investment

Impairment corrections

31/12/2015 Charges Reversals


31/12/2016Net Value

31/12/2016

Group companies:

Química del Estroncio, S.A. 68,933 (57,857) - - (57,857) 11,076

Fertiberia Andalucía, S.A. 11,466 (9,020) (918) - (9,938) 1,528

Fertiberia La Mancha, S.L. 8,477 (5,667) (1,186) - (6,853) 1,624

Agralia Fertilizantes, S.L. 7,677 - - - - 7,677

Fertiberia Castilla – León S.A. 21,231 (14,532) (2,560) - (17,092) 4,139

El Bahia Fertilizer, SPA 7,152 - - - - 7,152

Agronomía Espacio 60 - - - - 60

Agrokem, S.A. 60 (15) - - (15) 45

ADP Fertilizantes, S.A. 52,000 - - - - 52,000

Fercampo, S.A. 8,994 - - - - 8,994

Fertiberia France, S.A.S. 1,500 - - - - 1,500

187,550 (87,091) (4,664) - (91,755) 95,795

Associate companies: -

Incro, S.A. 2 - - - - 2

La Almazara 630 - - - - 630

632 - - - - 632

Total 188,182 (87,091) (4,664) - (91,755) 96,427


The following is the detail of the value corrections due to impairments, as well as the provisions and reversals, carried

out in the previous financial year, in thousand euros:

CompanyCost of invest-

ment


31/12/2014 Charges Reversals


31/12/2015Net Value

31/12/2015

Group companies:

Química del Estroncio, S.A. 68,933 (57,857) - - (57,857) 11,076

Fertiberia Andalucía, S.A. 11,466 (8,877) (143) - (9,020) 2,446

Fertiberia La Mancha, S.L. 8,477 (6,007) - 340 (5,667) 2,810

Agralia Fertilizantes, S.L. 7,677 - - - - 7,677

Fertiberia Castilla – León S.A. 21,231 (12,327) (2,205) - (14,532) 6,699

El Bahia Fertilizer, SPA 7,152 - - - - 7,152

Agronomía Espacio 60 - - - - 60

Agrokem, S.A. 60 (15) - - (15) 45

ADP Fertilizantes, S.A. 52,000 - - - - 52,000

Fercampo, S.A. 8,994 - - - - 8,994

Fertiberia France, S.A.S. 1,500 - - - - 1,500

187,550 (85,083) (2,348) 340 (87,091) 100,459

Associated Co.

Incro, S.A. 2 - - - - 2

La Almazara – LA Organic, S.L. 450 - - - - 450

452 - - - - 452

Total 188,002 (85,083) (2,348) 340 (87,091) 100,911

The short-term investments in Group Companies at 31 December 2016 were as follows, in thousand euros:

Company % Direct Holding Cost Impairments Net Value 31/12/2016

Group companies:

OHL, S.A. 0.38% 14,093 (4,779) 9,314

The short-term investments in Group Companies at 31 December 2015 were as follows, in thousand euros:

Company % Direct Holding Cost Impairments Net Value 31/12/2015

Group companies:

OHL, S.A. 0.38% 14,093 (2,465) 11,628


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The summary of that company’s net consolidated net equity at 31 December 2016 and 2015 is shown below, in

thousand euros:

Balance sheet date Share Capital ReservesOther Net Equity

items Result for the Year Total Net Equity

31/12/2016 179,255 3,280,907 (588,135) (432,338) 2,439,689

31/12/2015 179,255 3,259,050 (446,981) 55,632 3,046,956

On 24 April 2014 the Company formalised a loan contract with Grupo Villar Mir, S.A.U. for the temporary assignment

of the 670,543 shares it held in OHL, S.A. The initial due date for the shares loan was 24 July 2014, tacitly renewable

for quarterly periods up to a maximum of 5 extensions. On 20 October 2015 the parties agreed to modify the period

of validity to one year, until 20 October 2016, tacitly renewable for annual periods up to maximum of three.

On 23 October 2015 a capital increase in the company OHL S.A. took place with the issuance of 199,018 thousand

new ordinary shares with a nominal value of 0.6 euros with an issue premium of 4.42 euros per share. The Company

partially took up said share capital increase, selling a part of the rights at the quoted price of 5.41 euros and exercising

the share capital increase for an amount equivalent to the rights sold. This situation has led to an increase in the num-

ber of transferred temporary shares to 1,140,082 at 31 December 2015 (670,543 shares at the close of the previous

financial year). There were no changes in the number of shares during the 2016 financial year.

At the 2016 and 2015 year end the Company made an assessment as whether there was objective evidence of im-

pairment in the value of the OHLS.A. shares taking into consideration its average market price for the last quarter and

the consolidated net equity mentioned in the above table, as well as value references published by different market

analysts.

In the financial years 2016 and 2015, evidence of impairment of these shares is verified. Taking into account the tem-

porary transfer of the shares to GVM and the volatility of the stock market, the value of the net equity attributable to

the consolidated of the OHL group was used as a reference for the calculation of the recoverable value. The amount

of impairment in 2016 amounts to 2,314 thousand euros (in the previous financial year to 2,465 thousand euros).

The market value at 31 December 2016 of these shares was 3.29 euros (at 31 December 2015 these shares were va-

lued at 5.27 euros), while the average price for financial year 2016 was 4.07 euros per share (in the previous financial

year it was 15.17 euros per share).

The detail for dividends received during the financial year 2016 and amounting to 4,616 thousand euros; correspon-

ded to 2,416 thousand euro from the company Incros, S.A, and 2,200 thousand euros from the group company ADP

Fertilizantes, S.A. Likewise, the detail of the dividends received during financial year 2015 for an amount of 8,782

thousand euros; 2,412 thousand euros corresponded to the associate company Incro, S.A. and 6,370 thousand euros

to the group company ADP Fertilizantes S.A.


7.4 Shareholders’ FundsShare Capital

The share capital at 31 December 2016 and 31 December 2015 stood at 54,452 thousand euros, represented by

22,688,187 shares, each with a nominal value of 2.40 euros, wholly subscribed and paid up, all with the same voting

and economic rights.

The composition of the shareholding at the date of preparation of these annual accounts is as follows.

No. of Shares % Holding

Grupo Villar Mir, S.A. (Single Sharehol-der Company)

22,649,112 99.83

Other shareholders 39,075 0.17

22,688,187 100

Legal Reserve

Companies are obliged to transfer 10% of the profits for each year to setting up a legal reserve fund until this reaches

at least 20% of the share capital. This reserve may not be distributed to members and may only be used to cover the

debtor balance on the profit and loss account if there are no other reserves available. Under certain conditions it may

also be used to increase the share capital by the amount of this reserve that exceeds 10% of the share capital amount

once increased.

At 31 December 2016 and 2015 the Legal Reserve was fully provided for.

Share issue premium

The Capital Companies Act expressly allows for the balance on the share premium account to be used for increasing

capital and does not establish any specific restriction with regard to the availability of this balance.

Dividends

In financial year 2016, there has been no agreement to distribute dividends from reserves.


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Note 8. Stocks

The details of stocks at 31 December 2016 and 2015 is the following:

Financial year 2016 Financial year 2015

Raw materials and other supplies 26,969 39,352

Semi-finished products 3,058 5,012

Finished products 12,567 24,328

CO2 emission rights (Note 5) 8,261 -

Final balance 50,855 68,692

The Company follows the policy of formalizing insurance policies to cover the possible risks to which its stocks are sub-

ject.

It is established in Royal Decree 602/2016, dated 2 December, amending the General Accounting Plan approved by

Royal Decree 1514/2007 of 16 November, among other changes in regulations, in its first additional provision that

at the beginning of the first financial year resulting from the application of this Royal Decree, the carrying value of the

emission rights of greenhouse gases accounted for as intangible assets will be reclassified to stocks with effect from 1

January 2016.

a) Emission rights of greenhouse gases

During financial year 2016, the Company has received free-of-charge greenhouse gas emission allowances amounting

to 964,387 tonnes (982,463 tonnes in the previous financial year), according to the following detail;

Factory Tm allocated in 2016 Tm allocated in 2015

Avilés 52,570 53,555

Huelva 11,011 11,218

Palos 518,783 528,507

Puertollano 296,983 302,549

Sagunto 85,040 86,634

Total 964,387 982,463

The charge to the results of the financial year 2016 derived from emissions of greenhouse gases amounted to 8,563

thousand euros (8,109 thousand euros in the previous financial year). Likewise, during financial year 2016, the payment

to Company results for the allocation of grants of gas emission rights, which were allocated to them free of charge,

amounted to 7,754 thousand euros (6,867 thousand euros in the previous financial year).

At 31December 2016, the provision for “greenhouse gas emission rights” amounts to 8,715 thousand euros (see note

12), of which 962 thousand euros comes from the shortfall in the emission rights of gases that were acquired from

third parties. Likewise, at 31 December 2015, the provision for “greenhouse gas emission rights” amounted to 8,109

thousand euros, of which 1,242 thousand euros came from the shortfall in the gas emission rights that were acquired

from third parties.

During financial years 2016 and 2015, there were no losses due to impairment of greenhouse gas emission rights


Note 9. Information on payment deferrals made with suppliers. Third additional provision “duty of information” under law 15/2010 of 5 july

In accordance with Law 15/2010 (modified by Law 31/2014) and the Law 3/2013, modifying Law 3/2004 establi-

shing measures for combating late payments in trade operations, and that determined by the ICAC Resolution in

January 2016, the following is stated:

2016 2015

Days Days

Average payment period to suppliers 69 53

Ratio of paid operations 68 50

Ratio of operations awaiting payment 77 67

Amount (in thousand

euros)

Amount(in thousand

euros)

Total payments made 495,314 554,066

Total payments outstanding 82,089 100,073


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Note 10. Foreign currencies

Detailed below are the transactions carried out in foreign currencies during the financial year as well as the assets and

liabilities denominated in foreign currencies at 31 December 2016 and 2015:

2016 2015

Currency Thousand euros Thousand euros

Transactions

Purchases USD 150,300 262,045Sales USD 42,605 43,685

Assets

Investments in group companies Algerian Dinares 7,152 7,152Debtors USD 2,783 7,376Cash and other equivalent liquid assets USD 983 8,568

Liabilities

Creditors USD 63,878 101,507

Total exchange differences carried to the profit and loss accounts for the financial years 2016 and 2015 have their

origin in financial assets and liabilities corresponding to the categories for “loans and receivables” and “debits and

payables” and “cash and other equivalent assets”.

The amount of exchange differences recognised in the result by classes of financial instruments at 31 December 2016

and 2015 is as follows, in thousand euros:

2016 2015

Settled Pending due date Total Settled Pending due date Total

Positive

Debtors 704 216 920 693 534 1,227

Creditors 364 5 369 - - -

Negative

Debtors (625) - (625) (491) (48) (539)

Creditors (677) (743) (1,420) (6,510) (1) (6,511)

(234) (522) (756) (6,308) 485 (5,823)

At 31 December 2016 the Company has contracts with different financial entities for currency hedging arrange-

ments, due date in 2017. The fair value of said hedges amounts to 657 thousand euros (204 thousand euros at 31

December 2015).


Note 11. Tax position

The detail of balances with Public Administrations at 31 December 2016 and 31 December 2015 is as follows, in

thousand euros:

31/12/2016 31/12/2015

Debtors Creditors Debtors Creditors

Non-current:

Deferred taxation 14,197 1,401 14,611 1,446

14,197 1,401 14,611 1,446

Current:

Tax authorities - debtor for VAT 2,930 - 1,855 -

Social Security bodies (d) 30 949 41 944

Tax authority debtor on capital yields 12 - 15 -

Tax authorities creditor for IRPF 668 - 623

Other Public Entities 40 - 113

2,972 1,657 1,911 1,680

As from 1 January 1997 the Company ceased being subject to taxation under the individual Corporate Income Tax

regime, passing over to the Group Taxation regime within the Tax Group that has “Inmobiliaria Espacio, S.A.” as its

Parent Company. This, however, does not exclude it from the tax obligations derived from the individual regime.

In the financial years 2001, 2002, 2003 and 2009 taxation under this regime generated positive results in respect of

Corporate Income Tax by reason of the tax losses produced.

Under current legislation, taxes are not considered to be definitively settled until such time as the corresponding tax

returns have been inspected by the tax authorities or until the four year time bar period expires.

At 31 December 2015 the Company had open for inspection by the tax authorities the following financial years and

periods :

- Financial years 2010 and 2012 for the tax concept; Corporate Tax.

- Periods 3 to 12 of financial year 2011 and periods 1 to 12 of financial year 2012 for the tax concept; Value added

tax.

- Periods 3 to 12 of financial year 2011 and periods 1 to 12 of fiscal year 2012 for the tax concept; Withholdings /

Income on account from work and professional activities.

During financial year 2016, the aforementioned tax inspection was closed with an inspection report that generated

permanent differences in current corporate income tax for a negative amount of 3,198 thousand euros and an ex-

pense for an inspection report amounting to 3,191 thousand euros.


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In accordance with the Corporate Income Tax Law, if, under the applicable rules for determining the tax base, this is

negative, with effect for tax periods beginning on 1 January 2015, the negative taxable amount of a tax period can

be offset against the positive income generated in the tax periods subsequent to that in which the negative tax base

originated without any temporal limitation. This unlimited period also applies to negative tax bases that were outs-

tanding at the beginning of the first tax period beginning on or after 1 January 2015, irrespective of the tax period in

which such negative tax bases would have been generated.

Until financial year 2015, the amount of the compensation with the positive income of the following tax periods was

limited to 25% of the tax base prior to the application of the capitalization reserve and to the compensation of the

negative tax base itself. In financial year 2016, although initially set at 60% through Royal Decree 3/2016, this limit is

set again at 25% of the previous tax base or 1 million euros

Corporate income tax

The following is the detail of the corporate income tax charge accounted for, in thousand euros:

2016 2015

Result for the year before tax (35,263) 13,554

Permanent differences (1) 11,574 (8,240)

Timing differences 11,751 3,959

Arising in the year 14,005 5,183

Arising in prior financial years (2,254) (1,224)

Tax Base (result for tax purposes) (11,938) 9,273

Tax charge (25%) (2,984) 2,596

Deductions (338) (218)

Current tax charge (tax payable) (3,322) 2,378

Prior year tax expenses 71 (338)

Deferred tax charge 384 (877)

Tax rate adjustments (2) - 437

Tax inspection 3,191 -

Corporate Income Tax charge expenses 324 1,600

(1) That correspond mainly to,

- Exempt dividends received from subsidiaries for a negative amount of 4,616 thousand euros.

- Adjustments arising from the closing of the inspection report described above for a negative amount of 3,198 thousand euros.

- Positive adjustments arising from the non-deductibility of the accounting impairments provided in 2016 on investments in equity instruments and

the reversion in fifth parts of the endowments in financial years prior to 2013 that were considered deductible, according to the modification of the

provision Provisional sixteenth of the Corporation Tax Law under Royal Decree Law 3/2016 of 2 December. The total amount amounted to 16,528

thousand euros.

(2) As a consequence of the tax reforms approved in Spain in 2014, including the modification to the general tax rate for Corporate Income Tax, this

being set at 28% for 2015 and 25% for 2016 and following years, the Company has adjusted the deferred taxation assets and liabilities to the fore-

seeable rate for recovery. The negative adjustments for this regularisation were recorded under the heading for “Tax on profits” in the profit and loss

account for the financial year 2015 for an amount of 437 thousand euros.


The movement on deferred taxation generated and cancelled in the financial year 2016 is shown below, in thousand

euros:

31/12/2015To Profit and Loss Account

To Net Equity

Other variations Transfers

Tax rate adjustments 31/12/2016

Deferred taxation assets

Hedging derivatives 386 - 10 - - - 396

Limit on financial expenses (c) 2,136 2,827 - - - - 4,963

Limit on depreciation (b) 2,293 (1,072) - - - - 1,221

Impairment of investments in the equity of group companies

2,664 (2,664) - - - - -

Impairment metals Sagunto 93 (93) - - - - -

Impairment OHL shares 616 578 - - - - 1,194

Replanting for the Huelva Pools (d) 6,378 - - - - - 6,378

Credit for losses to be compensated 45 - - - - - 45

14,611 (424) 10 - - - 14,197

Deferred taxation liabilities

Capital grants 65 - (24) - - - 41

Finance leases 90 56 - - 19 - 165

Unrestricted depreciation (a) 1,098 (55) - - - - 1,043


193 (41) - - - - 152

1,446 (40) (24) - 19 , 1,401


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The movement on deferred taxation generated and cancelled in the financial year 2015 is shown below, in thousand

euros:

31/12/2014To Profit and Loss Account

To Net Equity

Other variations Transfers

Tax rate adjustments 31/12/2015

Deferred taxation assets

Hedging derivatives 397 - 36 - - (47) 386

Limit on financial expenses (c) 2,646 (252) - - - (258) 2,136

Limit on depreciation (b) 2,737 (444) - - - 2,293


2,078 656 - - - (70) 2,664

Impairment metals Sagunto - 104 - - - (11) 93

Impairment OHL shares - 690 - - - (74) 616

Replanting for the Huelva Pools (d) 6,378 - - - - - 6,378

Credit for losses to be compensated - - - 45 - - 45

14,236 754 36 45 - (460) 14,611

Deferred taxation liabilities

Capital grants 94 - (29) - - - 65

Finance leases 47 43 - - - - 90

Unrestricted depreciation (a) 1,159 (61) - - - - 1,098


271 (55) - - - (23) 193

1,571 (73) (29) - - (23) 1,446

a) In the financial year 2012 the Company opted for what was provided for in the Eleventh Additional Provision of the Corporation Tax Law, Art. 1 four of the Royal Decree Law, 13/2010 making a negative timing adjustment to the accounting result for an amount of 5,050 thousand euros correspon-ding to the investment in property, plant and equipment in the financial year 2011, depreciation of which commenced in the financial year 2012, reduced by the amount recorded as depreciation for the year. A positive timing adjustment was made in the financial year 2016 for an amount of 220 thousand euros (220 thousand euros at the previous financial year-end).

b) In accordance with what is established in Law 16/2012 of 27 December art. 7 depreciation of property, plant and equipment, intangible assets and property investments corresponding to the tax periods starting with the years 2013 and 2014 for those entities that, in themselves, do not meet the requirements set out in sections 1, 2 or 3 of art. 108 of the Consolidated Text of the Corporation Tax Law, a deduction of up to 70 per cent of that which would be tax deductible had the aforementioned percentage not applied in accordance with sections 1 and 4 of article 11 of this Law. The accounting depreciation that is not deductible for tax purposes by virtue of the provisions of this article is to be deducted on a straight-line basis over a period of 10 years or, optionally, over the useful life of the asset as from the first tax period starting within the year 2015. In 2016 a negative timing adjustment has been made for 1,661 thousand euros in this respect (In 2015, a negative timing adjustment was made for 1,481 thousand euros in this respect).

c) With effect for the tax periods started as from 1 January 2012 the rule is that financial expenses will be deductible up to a limit of 30% of the opera-ting profit for the financial year (Art. 20 of Royal Decree Law 4/2004). Net financial expenses that cannot be deducted may be deducted in the tax periods that conclude within the 18 immediately successive years along with those for the corresponding tax period and up to the previously stated limit. The time limit on deduction was eliminated as from 1 January 2015. In the year 2016 a temporary adjustment was made in this concept for the amount of 11,307 thousand euros and in 2015, no temporary adjustment was made for this concept.

d) By reason of the execution of the ruling handed down by the National High Court dated 27 November 2004 in the ordinary proceedings 0000563/2004 and in compliance with the mandate established therein, Fertiberia, S.A. presented the “Construction project for the closing of the phosphogypsum pools located in the municipality of Huelva”. In order to cover the additional cost over what was initially forecasted at the date of the ruling, which according to said project presented by Fertiberia S.A. supposes a provision was made in 2014 against reserves for an amount of 25.5 million euros before tax (17.9 million euros after tax). To determine the tax base for corporate income tax, a negative adjustment has been made to the accounting result for the same amount, likewise, a positive adjustment also for the same amount, considering non-deductibility of said amount until the corresponding work to which these provisions correspond has been concluded.

e) As a result of the amendments introduced by Royal Decree Law 3/2016 of 2 December which amends the transitory provision sixteen of the Law on Corporate Income Tax, and the amendments to the General Accounting Plan in the Royal Decree 602/2016 the deferred tax assets recorded in prior financial years were cancelled in 2016 amounting to 2,664 thousand euros on the basis of the temporary differences as a result of the different tax and accounting treatment of impairment of portfolio in equity investments in group companies. The Company opted for the Royal Decree Law 7/1996, option on updating balance sheets.

The Company opted for the Royal Decree Law 7/1996, option on updating balance sheets.


Note 12. Provisions and contingencies

ProvisionsThe detail and movements on long-term provisions during the financial year 2016 were as follows, in thousand euros:

Type of provisionBalance at

31/12/2015 Charges Applications TransfersBalance at

31/12/2016

Non-current

Environmental actions for restructuring in Huelva (Notes 6 and 14)

41,975 - (284) - 41,691

41,975 - (284) - 41,691

Current

Gas emission allowances (Note 5) 8,109 8,563 (7,957) - 8,715

Restructuring provisions (Note 13.b) - 1,850 (462) - 1,388

8,109 10,413 (8,419) - 10,103

Environmental actions for restructuring in Huelva

In the financial year 2014 an amount of 25,514 thousand euros was provisioned for meeting the environmental obli-

gations necessary for the recovery of the phosphogypsum pools in Huelva, as per the basic and detailed engineering

studies carried out by the companies Ardaman and EPTISA (Note 6).

Restructuring provisions

In the last quarter of financial year 2016, a light restructuring of the workforce has been addressed, affecting 20 wor-

kers, mainly from Head Office, Huelva factory and the Bilbao warehouse, with the aim of adapting the workforce of

these centres to requirements. This restructuring was agreed with the unions with the largest representation in the

Company.

The detail and movements on provisions during the previous financial year were as follows, in thousand euros:

Type of provisionBalance at

31/12/2014 Charges Applications TransfersBalance at

31/12/2015

Non-current

Environmental actions for restructuring in Huelva (Notes 6 and 13)

42,456 - (481) - 41,975

42,456 - (481) - 41,975

Current

Gas emission rights (Note 5) 5,964 8,109 (5,964) - 8,109

5,964 8,109 (5,964) - 8,109


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Commitments and guarantees with third partiesAt 31 December 2016 the Company had formalised guarantees with various credit entities, basically as guarantee for

supplies from certain raw materials suppliers for an approximate amount of 29,382 thousand euros (28,842 thou-

sand euros in the previous financial year).

On 22 December 1999 Fertiberia, S.A. transferred to Inmobiliaria Espacio, S.A. all of its liabilities for participative ac-

counts and credits with the Instituto de Crédito Oficial (“ICO”) (the Official Credit Institute) and other insolvency

creditors in the suspension of payments of Fesa Fertilizantes Españoles, S.A., with an amount pending maturity at 31

December 2016 of 118,879 thousand euros (126,775 thousand euros in the previous financial year). The repayment

of the debt assumed by Inmobiliaria Espacio, S.A. is to be made under the repayment conditions established for

Fertiberia, S.A.

Whilst the entities holding the accounts and participative loans did not expressly authorise the assumption of the

debt and subrogation by Inmobiliaria Espacio, S.A. in the Fertiberia, S.A. debtor position with these creditors, the

latter continues to be jointly and severally liable for the repayment of these participative accounts and loans.

Also, on 30 December 2005 Fertiberia, S.A. transferred to Inmobiliaria Espacio, S.A. the whole of the liability that the

former held with the ICO for the loans this had with Fesa Fertilizantes Españoles, S.A. and subsidiaries prior to 1995,

with the amount pending maturity at 31 December 2016 amounting to 15,805 thousand euros (17,025 thousand

euros in the previous financial year). The repayment of this liability assumed by Inmobiliaria Espacio, S.A. is to be ca-

rried out under the repayment conditions established for Fertiberia, S.A.. However, it should be stated that until such

time that the ICO expressly authorises said assumption and subrogation, Fertiberia, S.A. will continue to be jointly and

severally liable for repaying this debt.

As regards the financing that Química del Estroncio, S.A., with the Ministerio de Industria, Turismo y Comercio (MI-

TyC) (the Ministry of Industry, Tourism and Trade) and SEPI Desarrollo Empresarial, S.A. (SEPIDES), Fertiberia, S.A. has

provided deposits and guarantees (both direct and indirect) for an overall joint amount of 455 thousand euros (455

thousand euros in the previous financial year).

Contingent assets

Fertiberia, S.A. is currently starting a claim against Gas Natural SDG in the civil courts in respect of the amounts paid

for gas supplies during the last quarter of 2007. This claim is based on the incorrect application by Gas Natural SDG of

the regulated prices tariff during this period. The amount claimed represented a contingent revenue at 31 December

2016 in Fertiberia, S.A. of 3,875 thousand euros. The Company, given the regulatory implications of this matter, is

trying to amiably come to an understanding without renouncing a claim before the Civil Jurisdiction.


Note 13. Revenues and expenses

a) SuppliesThis heading in the attached Profit and Loss Account at 31 December 2016 and 2015 is made up of the following, in

thousand euros:

2016 2015

Consumption of merchandise

Purchases of merchandise 83,566 126,100

83,566 126,100

Consumption of raw materials and other consumables

Purchases of raw materials and other consumables 214,385 330,387

Variation in the stocks of raw materials and other consumables 12,754 (1,065)

227,139 329,322

Impairment of merchandise, raw materials and other supplies (371) 371

Totals 310,334 455,793

The detail of purchase by geographical markets at 31 December 2016 is as follows, in thousand euros:

National purchases Intracommunity

acquisitions Imports Total

Purchases of merchandise 1,971 21,771 59,824 83,566

Purchases of raw materials 131,848 2,307 72,798 206,953

Purchases of other supplies 7,013 419 - 7,432

140,832 24,497 132,622 297,951

The detail of purchase by geographical markets at 31 December 2015 is as follows, in thousand euros:

National purchases Intracommunity

acquisitions Imports Total

Purchases of merchandise 1,808 35,841 88,451 126,100

Purchases of raw materials 165,399 10,692 144,339 320,430

Purchases of other supplies 7,870 2,087 - 9,957

175,077 48,620 232,790 456,487


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b) Personnel expensesThis heading in the attached Profit and Loss Account at 31 December 2016 and 2015 is made up of the following, in

thousand euros:

2016 2015

Wages and salaries 38,375 40,431

Indemnities (Note 12) 1,975 283

Salaries, wages and similar 40,350 40,714

Employer’s Social Security contributions 9,968 9,687

Other social expenses 2,319 2,771

Social charges 12,287 12,458

Personnel expenses 52,637 53,172

c) Operating leasesThe charge to results for the financial year 2016 in respect of operating leases amounted to 2,168 euros (2,020

thousand euros in the previous financial year). This amount corresponds mainly to the lease of the Company’s head

offices. Most of the lease contract corresponds to contracts that are renewable annually.

d) Result on disposal of assetsThis heading in the attached Profit and Loss Account at 31 December 2016 and 2015 is made up of the following, in

thousand euros:

2016 2015

Withdrawal of MAP and DAP plants of Huelva (1,238) -

Sale of Sulfuric plant of Huelva 3,000 -

Various - (379)

1,762 (379)

e) Financial resultsThis heading in the attached Profit and Loss Account at 31 December 2016 and 2015 is made up of the following, in

thousand euros:

2016 2015

Financial revenues

Group companies (note 17.2) 629 853

Holdings in the capital of group and associate companies (Note 7.3) 4,616 8,782

Other financial revenues 64 51

5,309 9,686


2016 2015

Financial expenses

Interest on long-term liabilities with credit entities 5,732 7,304

Interest on current liabilities with credit entities 2,635 2,610

Interest on the discounting of commercial paper 1,195 1,682

Interest on liabilities with group companies (Note 17.2) 934 1,872

Interest on liabilities with other companies 442 54

Other financial expenses 285 2

11,223 13,524


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Note 14. Environmental information

Described below are the environmental obligations and contingencies that affect, or could affect in the future, the

Company’s financial position, as established by the Resolution from the Instituto de Contabilidad y Auditoría de

Cuentas (ICAC), dated 25/03/2002 and the General Accounting Plan.

The following investments intended for the protection and improvement of the environment were incorporated into

fixed assets in the financial years 2016 and 2015, in thousand euros:

2016 2015

Technical installations 334 724

Buildings 275 37

Other installations 41 247

650 1,008

Ordinary expenses incurred in the financial years 2016 and 2015 in respect of the protection and improvement of the

environment, such as waste treatment, the control and treatment of atmosphere contaminating emissions and the

treatment of liquid effluents were recorded in the Profit and Loss Account by nature, the most significant being the

following, in thousand euros:

2016 2015

Other operating expenses 4,939 5,188

Supplies 1,059 2,002

Personnel expenses 1,011 1,002

7,009 8,192

Ordinary revenues accounted for in 2016 for this item amounted to 392 thousand euros (279 thousand euros in the

previous year).

Sundry provisions for environmental actions are recorded under Provisions and Contingencies (Note 12), as described

below:

Financial year 2016 31/12/2015 Charges Applications Transfers 31/12/2016

Environmental actions Huelva restruc-turing (Note 6)

41.975 - (284) - 41.691

Derechos emisión gases (Nota 5) 8.109 8.563 (7.957) - 8.715

50,084 8,563 (8,241) - 50,406

Financial year 2015 31/12/2014 Charges Applications Transfers 31/12/2015

Environmental actions Huelva restructuring (Note 6)

42,456 - (481) - 41,975

Gases emissions allowances (Note 5) 5,964 8,109 (5,964) - 8,109

48,420 8,109 (6,445) - 50,084


N2O projects

In previous financial years investments were made in the nitric acid plants in the Avilés, Puertollano and Sagunto

factories within the scope of the “Voluntary Projects for the reduction of N2O greenhouse effect gases” (Note 5).

These projects were approved by the Designated National Authority (DNA) on 21 May 2010 and became part of the

mechanisms based on Kyoto Protocol projects with Royal Decree 1031/2007 of 20 July developing the participation

framework flexibility mechanisms for the Kyoto Protocol. This approval is published in the web page for the UNFCC

(United Nations Framework Convention on Climate Change).

According to this resolution, the Spanish “DNA” grants letters of approval to joint application projects in Spain for N2O

reduction in nitric acid manufacture and the generation of ERUs is to be recognised:

• For reductions in emissions that are below the benchmark value.

• From the date of commencement of generation of reductions covered in the first verification report prepared by

an Accredited Independent Entity for the Supervision Committee under article 6 of the Kyoto Protocol and up

until 31 December 2012”.

The following ERUs corresponding to the N2O Project has been paid into Fertiberia’s RENADE account up until the

current financial year:

• Avilés: 159,156 ERUs

• Puertollano: 124,797 ERUs

• Sagunto: 214,818 ERUs

• TOTAL 498,771 ERUs

In financial year 2015 and since, according to the regulations, from March 2015, the ERUs could not be used, the

company proceeded to transfer to the fixed assets the equipment that could be used in the plants in which the in-

vestments were made for their value and cost, the total amounted to 1,470 thousand euros (notes 5 and 6).

The ERUs that could not be used were exchanged for CER’s that have been used to cover emissions in financial year

2015.

In financial year 2016 the usable ERUs account was zero, so these credits are no longer available.


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Note 15. Grants, donations and legacies

The movement on this heading in the attached Balance Sheet during the financial years 2016 and 2015 was as fo-

llows:

Miles de euros

Balance at 31/12/2014 337

Additions (net of tax effect) 4,947

Allocation to results (net of tax effect) (5,014)

Balance at 31/12/2015 270

Additions (net of tax effect) 5,816

Allocation to results (net of tax effect) (5,889)

Balance at 31/12/2016 197

The grants correspond mainly to the greenhouse gas emission allowances assigned to the Company (Note 8)


Note 16. Post balance sheet events

The Company has submitted to the banking entities participating in the syndicated loan a waiver request for the

non-compliance in 2016 of two of the financial ratios established in the financing agreement, being at the date of

preparation of these annual accounts in an advanced phase of negotiation, with the objective of establishing the

final terms for the granting of the dispensation.

In addition to the above, there have been no significant events since 31 December 2016 until the date of preparation

of these annual accounts that, if they were affected, would not have been included in them or whose knowledge

could be useful to a user of the same.


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Note 17. Related party transactions

17.1 Balances between related partiesThe detail of the balances held with related parties at 31 December 2016 and 2015 is as shown below, in thousand

euros:

31/12/2016 31/12/2015

Debtors Creditors Debtors Creditors

NON-CURRENT

Parent Entity

Grupo Villar Mir, S.A.U. (Note 7.1.2) 131,198 - 141,771 -

Other group companies

ADP Fertilizantes, S.A. - 12,582 - 14,782

La Almazara By Stark, S.L. 2,870 - 2,050 -

Total non-current 134,068 12,582 143,821 14,782

CURRENT

Parent Entity

Grupo Villar Mir, S.A.U 14,094 - 4,984 -


Fertial, SPA 418 45,273 208 38,940

Fercampo, S.A. 12,486 5 9,082 -

OHL, S.A. - 1 - -

Formula Jet, S.L. - - 22

ADP Fertilizantes, S.A. 2,466 629 969 2,362

Fertiberia la Mancha, S.L. 16,350 75 17,183 61

Fertiberia Andalucía, S.A. 7,214 63 7,078 69

Fertiberia Castilla-León, S.A 7,664 80 12,128 21

Agralia Fertilizantes, S.L. 2,900 36 5,496 92

Intergal Española , S.A. 1,972 32 17

Villar Mir Energía, S.L. - 1,333 - 859

Enérgya VM Generación, S.L. - 14,151 46 -

Codisoil, S.A. - - - 83

Enérgya VM Gestión de la Energía, S.L. 13 - - 14,365

Fertiberia France S.A.S. 5,751 - 6,462 -

Avalora Tecnología de la Información, S.A. - 22 - 17

Química del Estroncio, S.A. 260 49 296 -

On trade operations 57,494 61,717 58,980 56,908

Inmobiliaria Espacio, S.A. 130,726 - 130,802 -

Química del Estroncio, S.A. 11,697 5 8,442 1,525

Agrokem, S.A. 6 - 6 -

Agronomía Espacio, S.A. 7 - 7 -

Grupo Fertiberia, S.A. 133 - 133 -

Fertiberia la Mancha, S.L. 92 3,197 - 1,672

Fertiberia Castilla-León, S.A 383 1,787 551 3,493

Agralia Fertilizantes, S.L. 90 3,122 - 2,805

Fertiberia Internacional, S.L. 2 - 4 -

Intergal Española , S.A. - 524 26 -

Fertiberia France S.A.S. 1,598 - 1,512 -

Fertiberia Andalucía, S.A. - 1,749 - 1,761

Fercampo, S.A. 7 - - 827

Fertiberia Argelia 1 - - -

ADP Fertilizantes, S.A. - 4,811 - 13,400

On non-trade operations 144,742 15,195 141,483 25,483

Total current 216,330 76,912 205,447 82,391


The debtor balances with ADP Fertilizantes, S.A. Fertiberia Andalucía, S.A., Fertiberia la Mancha, S.L., Agralia Fertilizan-

tes, S.L., Fertiberia Castilla-León, S.A., Fercampo, S.A., Fertiberia France, S.A.S. and Intergal Española, S.A. correspond

mostly to current trade operations, which are carried out under normal market conditions.

The long-term creditor balance with Fertiberia Castilla-León, S.A. corresponds to Credit Facilities in Current Account

granted by it to Fertiberia on 22 on June 2007. The credit limit is up to 12,200 thousand euros and the facility is for a

period of ten years with an interest rate of Euribor + 0.25%.

The creditor balance with ADP Fertilizantes corresponds to a long-term loan the former granted to Fertiberia on 22

April 2009 for an amount of 20,000 thousand euros. The loan is valid for a period of ten years and carries a rate of

interest of Euribor +0.25%.

The creditor balance with Fertial, S.P.A. is commercial in nature and corresponds to the purchases of raw materials

made by Fertiberia from this related party, said purchases being made under normal market conditions.

The debtor balance with Inmobiliaria Espacio, S.A. corresponds mainly to the movements derived from the corporate

income tax for 2015 and previous years and other current account movements.

The creditor balance with Enérgya VM Gestión de la Energía, S.L. corresponds to electricity supplied to Fertiberia, S.A.

under normal market conditions.

The current creditor balances with Fertiberia Castilla y León, S.A., Química del Estroncio, S.A., Fertiberia la Mancha, S.L.

and Agralía Fertilizantes, S.A. correspond to Treasury Facilities in Current Account granted by these to Fertiberia, S.A.

on 1 November 2013. The limit on each credit facility is for up to 5,000 thousand euros, the agreement being for one

year with tacit agreement for annual renewals, with an interest rate of 5%.

The current debtor balance with Grupo Villar Mir, S.A.U. corresponds to interest accrued and not paid on the credit

facility in current account described in note 7.1.2.a.


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17.2 Related party transactions The main transactions with Group and associate companies in the financial years 2016 and 2015 were as follows, in

thousand euros:

2016 2015

SALES AND OTHER OPERATING REVENUES 176,489 257,836

Parent entity

Grupo Villar Mir, S.L. 7,019 1,257


ADP Fertilizantes, S.A. 54,433 87,876

Fertiberia La Mancha, S.L. 24,494 34,575

Fercampo, S.A. 28,646 31,788

Agralia Fertilizantes, S.L. 13,189 22,634

Fertiberia Andalucía, S.A. 16,451 23,819

Fertiberia Castilla-León, S.A. 11,230 21,017

Intergal Española, S.A. 5,367 9,143

Fertiberia France, S.A.S. 12,020 21,892

Química del Estroncio, S.A. 3,252 3,533

Fertial, SPA 194 97

Enérgya VM Generación, S.L. 134 147

Inmobiliaria Espacio, S.A. 60 58

171,735 255,167


Fertial, SPA 87,688 137,964

Enérgya VM Gestión 51,310 71,926

ADP Fertilizantes, S.A. 21,200 32,205

Villar Mir Energía, S.L. 6,334 7,452

Torre Espacio Castellana, S.A. - 1,535

Espacio Information Technology, S.A. 1,339 1,353

Codisoil, S.A. - 787

Agralia Fertilizantes, S.L. 389 649

Fertiberia La Mancha, S.L. 541 301

Fertiberia Castilla-León, S.A. 251 82

Fertiberia Andalucía, S.A. 475 425

Fercampo, S.A. 179 52

Formula Jet, S.L. 249 334

Química del Estroncio, S.A. 1,083 81

Inmobiliaria Espacio, S,A. 4 -

Intergal Española, S.A. 4 19

Torre Espacio Gestión, S.A. - 2

Fertiberia France, S.A.S. 689 -

FINANCIAL EXPENSES 934 1.872


Fertial, SPA 692 1,511

Fertiberia Castilla-León, S.A. 68 136

ADP Fertilizantes, S.A. 40 41

Fertiberia La Mancha, S.L. 18 39

Agralia Fertilizantes, S.L. 61 47

Química del Estroncio, S.A. 55 98

INGRESOS FINANCIEROS: 629 853

Parent entity

Grupo Villar Mir, S.L. 552 853


Fertiberia France, S.A.S. 77 -


17.3 Remuneration and other benefits for the Board of Directors and Senior Management

During the financial year 2016 the Company paid remuneration to the Administrative Body for a total amount of 195

thousand euros (210 thousand euros in the previous financial year).

The remuneration by way of Salaries in the financial year 2016 for members of the Board of Directors and Senior Ma-

nagement amounted to 2,230 thousand euros (3,677 thousand euros in the previous financial year).

There were no loans or advances granted to members of the Board of Directors.

1. Other information relating to the Director: The administration body has set up a control and evaluation proce-

dure so that the members of the Board of Directors can provide the Board with the information provided for in

Chapter III, Title IV of the Capital Companies Act.

- This procedure is currently in force.

- The members of the Board of Directors maintain in their registers a record of the request for information and

reply obtained in connection with the obligations derived from articles 229, 230 and 231 of the Capital Com-

panies Act.

- From the information remitted by the Directors in compliance with the aforementioned articles 229, 230 and

231 of the Capital Companies Act, it can be seen that none of them or any person related to them is in any

conflict of interest, direct or indirect, with that of the Company.


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Note 18. Other information

The average number of persons employed during the financial years 2016 and 2015 was as follows, distributed by

categories and gender:

2016 2015

Men WomenTotal average

number Men WomenTotal average

number

Higher technicians 119 30 149 122 23 145

Medium grade technicians 60 16 76 60 17 77

Unqualified technicians 143 14 157 150 12 162

Administrative staff 35 52 87 37 52 89

Operations workers 310 17 327 313 12 325

Subordinates 2 - 2 4 - 4

Other non-fixed personnel 13 9 22 20 4 24

682 138 820 706 120 826

The average number of persons employed during the 2016 financial year, broken down by gender and category with

disability greater than or equal to 33%, is as follows:

2016

Men WomenTotal average

number

Higher technicians 4 - 4

Medium grade technicians 1 - 1

Unqualified technicians 3 1 4

Administrative staff 3 1 4

Operations workers 8 - 8

Subordinates - - -

Other non-fixed personnel - - -

19 2 21

The amount of the fees accrued for audit of the annual accounts and other financial statements corresponding to

the financial year ended 31 December 2016 amounted to 109 thousand euros (109 thousand euros in the previous

financial year) and 18 thousand euros for other services (18 thousand euros in the previous financial year).


Note 19. Segmented information

The distribution of the net turnover for the Company’s ordinary activities for 2016 and 2015 by geographical markets

is as shown below, in thousand euros:

2016 % 2015 %

Spain 394,927 83 438,709 68

European Union 67,580 14 186,204 29

Rest of the World 12,337 3 22,840 3

474,844 100 647,753 100

Practically all of the net turnover corresponds to sales of chemical products for agriculture.


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directors’ report 2016

03


Business development and company’s position

Evolution of the fertilisers market in Spain

The financial year 2016 has been characterized by a generalized scenario of low prices of all agricultural products, a

decline that reached 19%, maintaining the trend started four years ago, and which is the result of a situation marked

by high production less growth in high consumption countries and a context of sharp declines in energy prices and

of many products.

The FAO Grain Price Index registered a decrease of 9.6% compared to the already very low levels of the previous year,

the decline since 2011 being 39%.

Vegetable production registered an increase of 8.4% in a year in which the application of fertilizers was conditioned

by different factors:

• The drought and the abnormally high temperatures recorded in the last quarter of 2015 that already affected the

sowing and subsistence of winter crops, with irregular application and low utilization of bottom fertilizers.

• The top-dressing was marked by the continuous rains that made the fertilizing very difficult and, above all, by the

persistent drop in cereal prices.

• The low prices caused a reduction of the irrigated areas planted, and especially in crops of high demand of ferti-

lizers, whose consumption was clearly lower than usual.

• At the end of the year, sowing and fertilization of autumn and winter cereals took place intermittently, often in

drought conditions and with background applications many times lower than usual.

• The market for simple nitrogen fertilizers was 2.4 million tonnes, compared to 2.7 million tonnes sold in 2015,

highlighting the fall in the market for ammonium and calcium ammonium nitrates and, to a lesser extent, for

other nitrogenous products. The only exception has been the growth of urea, of 4% with respect to the previous

year and that no doubt has replaced other nitrogen fertilizers.

• The consumption of NPK complex fertilizers was 1.5 million tonnes, 4% lower than that consumed in 2015,

while that of ammonium phosphates increased by 14%.

• In 2017, global fertilizer consumption, according to initial estimates, will decline slightly more than 5%, with a

volume of 4.8 million tonnes. The consumption of simple nitrogenous fertilizers would be reduced by 10% whi-

lst complex fertilizers would reduce minimally by 1%.

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Commercial AreaFertiberia’s turnover amounted to 475 million euros, representing a significant decrease of 26% compared to finan-

cial year 2015. 325 million euros corresponded to the domestic market and 150 million euros correspond to exports.

Although the volume of sales was slightly higher, namely 1.8%, it is the low level of prices that was the cause of this

fall in turnover, which inevitably has had a very negative impact on the results of the Company.

In the case of nitrogen fertilizers, in international markets prices fell by around 25%, a decrease that in the market of

complex fertilizers NPK, was more moderate, standing at 10%.

The volume of fertilizers sold on the domestic market, including special products, amounted to 1.2 million tonnes

with a turnover of 237 million euros, 5% lower in terms of volume but up 28.3% in billing.

By main product groups, and in the domestic fertilizer market, sales were:

• 417,000 tonnes of ammonium and calcium nitrates,

• 169,000 tonnes of urea,

• 156,000 tonnes of nitrogen solutions

• 87,000 tonnes of ammonium nitro sulphate.

• 204,000 tonnes of NPK complex fertilizers

According to provisional market figures, Fertiberia would have increased its share in the nitrogen fertilizer market,

while it would have remained at the same levels in the case of the NPK complex fertilizer market, despite a year of

increased imported product.

Sales of industrial products accounted for 34% of the Company’s turnover, with a market volume of 736,000 tonnes,

and a turnover of 166 million euros. As in the case of fertilizers, the volume sold increased by 5% whilst turnover fell

by 24%. 43% of the sales carried out by this division were abroad.

In the export markets, 453,000 tonnes of fertilizers have been distributed, highlighting:

• 322,000 tonnes of calcium ammonium nitrate

• 71,000 tonnes of ammonium nitro sulphate

• 31,000 tonnes of urea.

The commitment to the internationalization of the business has translated into an increase of exports of 18% compa-

red to 2015, although the turnover has been lower, due to the factors already commented, totaling 77 million euros.

Fertiberia maintains a significant presence in the market of the European Union, its main market, but is exploring

other complementary markets very strongly, both in the American continent and in Africa.


Industrial DivisionThe total production reached by Fertiberia S.A. in 2016, excluding subsidiaries, was 2.8 million tonnes, down 4% on

the previous year, and 7% less than the amounts originally budgeted.

Total production broken down by products was:

Real (Tonnes)

Ammonia 495,940

Nitric acid 649,600

Ammonium Nitrates 950,190

Urea 345,534

NPK 136,202

Solutions 238,577

Total 2,816,043

The reasons for this decline are mainly found in the plant stoppage at Puertollano at the ammonia and urea plants

that lasted 40 days. This stoppage was carried out in order to make an investment in energy efficiency, affecting the

ammonia plant. On the other hand, the lower production was motivated, in general terms, for commercial reasons,

mainly in the Factories of Avilés and Huelva, in order to regularize the stocks of finished products and thus be able to

adapt to the exceptional market situation.

The operation of the different production centres, apart from the incidents typical of this type of complex industrial

installations, like fertilizer and ammonia production plants, has been positive, with no operational problems to hi-

ghlight.

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Productions by factories and notable events during the year

Avilés Factory

Real (tonnes)

Nitric acid 170,132

NACs 191,770

NSA 157,935

LNA 504

520,341

The volumes manufactured were 85% of the anticipated quantities, once again as a consequence of the high levels

of stocks, which made it necessary to stop a line of nitric acid and the corresponding granulation plant for four mon-

ths. A new ammonia solution production plant was successfully started in 2016.

Huelva Factory

Real (tonnes)

NPKs 136,202

Regarding the Huelva Factory, production was also lower than budgeted, also for market reasons, reaching 56% of

this. During the financial year, the production of complex fertilizers with high nitrogen content and the production of

new product ranges with poly-sulfates were consolidated with excellent results.

Palos Factory

Real (tonnes)

Ammonia 339,585

Urea 229,528

AdBlue 57,300

Other solutions 5,160

631,573

The Palos Factory adjusted its production to the needs of the market and to the price of gas, raw material used in the

manufacture of ammonia and urea, whose manufacture was maintained throughout the year, exceeding by 4% the

programmed production. In 2016 a new urea expedition unit has been started.


Puertollano Factory

Real (tonnes)

Ammonia 156,355

Nitric acid 155,802

Urea 116,006

NAC 23,570

Technical Ammonium Nitrate 48,786

Soluble Ammonium Nitrate 69,110

Nitrogenized solutions 104,862

674,491

The Puertollano plant has carried out an investment program to improve the energy efficiency of the ammonia plant,

which took place during the months of June and July, reducing energy consumption by 6% (both electricity and gas).

Work on the ammonia plant forced the urea plant to stop, while the rest of the production units remained in opera-

tion throughout the year, producing 6% above the expected volumes.

Sagunto Factory

Real (tonnes)

Nitric acid 323,666

NAC 459,019

Nitrogenized Solutions 59,923

SAM 9,481

LNA 1,347

853,436

The Sagunto Factory has operated with great regularity throughout the year, producing 8% more than anticipated,

surpassing the historical records of production in the plants of nitric acid, solution 20, solution of calcium nitrate, and

ammoniac solution.

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Energy and raw material consumptions

The net energy consumption for the factories as a whole amounted to:

GwH

Natural Gas 5,796.28

Electricity 226.49

Total 6,022.77

The electricity generated using the thermal energy involved in the processes amounted to 60.828 Gwh.

Energía Eléctrica (Gwh)

Avilés 18.49

Palos 4.20

Sagunto 38.14

Total 60.83

The consumption of the main raw materials expressed in thousands of tonnes was as follows:

Ammonia 630.45

Sulfuric acid 76.93

Nitric acid 629.55

Phosphoric Acid (P2O5) 16.80

DAP 6.30

Potassium Chloride 29.56

Ammonium Sulphate 38.08

Product despatches

The amount despatched in the different factories, expressed in thousand tonnes and detailed by type of product was:

Solids 1,480.22

Ammonia 206.98

Liquids 265.53

Total 1,952.73


Investments In the course of 2016 ordinary investments were authorised in the factories and logistic warehouses for a value of

29.9 million euros distributed as per the following table.

Distribution of investments

Euros

Productive investments 1,651,900

Environment and Safety 588,775

Replacements 2,081,377

Others 22,782,929

Catalysers 2,853,008

Total 29,957,989

Investments by factory and most significant events:

In the factory of Avilés, 50% of the approved budget was destined to productive investments. More than half of

the amount approved for this purpose has been directed to the creation and start-up of a new production line of

ammoniac solution, 25%, due to the increase in demand for this product as a consequence of the tightening of the

emission limits of NOx.

On the other hand, the Avilés plant has approved investments to reduce ammoniac emissions, with the installation of

a torch in the ammonia terminal. In addition, an investment has been approved that contemplates the carrying out

of the change of the southern section of the ammoniac duct.

Avilés Approved

Productive investments 835,000


Replacements 385,000

Others 295,000

Total 1,690,000

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A productive investment has been approved in the Huelva plant to increase the range of manufacturing formulas,

with the aim of producing product ranges with low P2O5 content. Investments have also been approved for the

transfer of servers, telephones and cameras to the NPK area, as well as safety investments to meet the requirements

demanded by the Port Authority of Huelva (APH).

Huelva Approved


Environment and safety 54,000

Replacement -

Others 70,000

Total 199,000

Investments have been approved at the Palos plant due to the general shutdown planned for 2017. These are invest-

ments destined to replace key equipment such as the turbo-compressor group of process air and the turbine of the

refrigeration compressor. A surface condenser of the synthesis turbine for the ammonia plant has been acquired, as

well as a carbamate condenser for the urea plant and vacuum condenser equipment for the same plant. In addition,

during the general shutdown, several boilers will be re-tubbed, as well as an overhaul of the storage tank and the

change of the catalysts of the ammonia plant.

Palos Approved


Replacement 196,453

Others 22,258,880

Catalysers 2,758,000

Total 25,511,433

In Puertollano, productive investments have been approved, such as the improvement of the Nitrogen II cooling

tower, reducing the consumption of ammonia by reducing tail gases and increasing the production capacity in the

summer months.

Puertollano Approved



Replacement 1,239,924

Catalysers 95,008

Total 1,588,507


As far as the Sagunto plant is concerned, in 2016 investments have been approved mainly aimed at improving the

reliability of equipment, both in the electrical substation and in the nitric acid plant.

Likewise, the production capacity of calcium nitrate solution has been expanded.

Sagunto Approved


Replacement 260,000

Others 120,000

Total 930,000

By the end of financial year 2016, investments in factories had matured for a total amount of 12,711,503 euros, dis-

tributed according to the detail of the following table:

Thousand euros

Head office 112

Commercial network 78

Huelva 176

Palos 924

Avilés 1,699

Sagunto 671

Puertollano 9,052

Total 12,712

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QualityFertiberia considers quality, not only as a necessary element to compete especially with low cost imports but also as

a commitment with agriculture and the general public.

Fertiberia develops its policy in this area according to the Quality Management System, based on the International

Standard UNE-EN ISO 9001, with the objective of fulfilling the most demanding legal requirements and thus guaran-

tee the full satisfaction of the customer.

Being the main objective customer satisfaction, in accordance with the Quality Management System, these are con-

sulted directly to know at all times their level of satisfaction and expectations, in order to make them compatible with

the product design. The overall result of the last Customer Satisfaction Index was 80.3%, which is a very satisfactory

result.

The Quality Management System is audited annually by AENOR (Spanish Association for Standardisation and Cer-

tification), which has maintained the Certification in all the production centres. The number of Non-conformities

detected in audits continues to decline, reaching satisfactorily low levels.


Environment

Fertiberia carries out its activity in the matter according to a policy of maximum respect for the environment. To this

end, Fertiberia assumed as its own the “Best Environmental Practices” of the sector in all its procedures and processes.

The environmental results in 2016 have been fully satisfactory, fully complying all the Company’s facilities, with the

regulations imposed by each Autonomous Community.

The parameters of particulate emissions and N effluents and the level of N2O gas emitted by nitric acid plants have

been much lower than legally required. During the year, Fertiberia has adapted its environmental policy in accordan-

ce with ISO 14001.

Climate Change

In terms of greenhouse gas emissions, Fertiberia was deficient in 30% in reference to CO2. Fertiberia installations

included in the ETSIII regime are the ammonia, nitric acid and boiler plants, so it was necessary to go to the CO2

market for its acquisition. This situation affects all the ammonia producers in Europe, so that European authorities are

studying the introduction of a special treatment for the Fertilizer and Steel sectors.

Fertiberia already has available the “Carbon Footprint” of all its products, made using the calculator developed by the

European Fertilizer Producers Association (Fertilizers Europe).

Energy Efficiency

In 2016 the modification of the ammonia plant in Puertollano ended. This project, financed by the IDAE, has led to a

reduction in energy consumption of up to 8% in the case of the ammonia plant, as well as a reduction of more than

30,000 tCO2/ year.

In 2017, a similar project will be undertaken at the Palos plant, which will reduce energy consumption by more than

5%.

Environmental Investments

In addition to the investments made in the factories of Puertollano and the one approved for the factory of Palos that

amounts to more than 26 million euros other environmental investments have been made in all the installations, for

value of 350,000 euros for the improvement and adaptation of these to the new environmental regulations.

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Safety

For another year, the audits carried out show that the Fertiberia Safety Management System works very satisfactorily.

The OHSAS Certifications 18001: 2007 have been renewed in all factories. This certification covers aspects such as

Occupational Hazard Prevention, Industrial Safety, Transport Safety, Classification and Labeling of Substances and

Mixtures, Prevention of Serious Accidents involving Dangerous Goods, etc.

In 2016 the factories of Avilés and Puertollano continued to beat records of “accident-free days” of their own per-

sonnel, with 2,643 and 1,312 days, respectively. With regard to auxiliary personnel, the factories in Puertollano and

Sagunto also exceeded their own records, with 2,424 and 2,630 days without accidents, respectively.

Training

Training is a key aspect in raising awareness and motivating staff in the field of safety. A great effort has been made in

the training of personnel, especially the “Emergency Teams”, carrying out about 80 drills and imparting almost 20,000

hours in this area.

Accident rates

The frequency index, calculated as the number of accidents causing sick leave per million hours worked, was 0.75 for

the own staff, significantly improving the one of the year 2015 that was of 5.20. For the staff of auxiliary companies

the index fell from 3.37 to 2.12. The severity index calculated as the number of days lost per thousand hours worked,

stood at 0.26.

Own Personnel Accident Rates

The frequency rate calculated as the number of accidents causing sick leave per million hours worked was 5.20 for

the own staff and 3.37 for the staff of auxiliary companies, while the calculated severity index as the number of Days

lost per thousand hours worked was 0.23.


ResultsThe year 2016 has been a year in which fertilizer prices have reached historical lows of the last 14 years, generating

a huge lack of confidence in the sector, resulting in a slight drop in world consumption (for the first time in decades).

In Spain, in addition, the situation has been aggravated by very adverse weather conditions, reducing consumption

in the national market by 15%.

Fertiberia has tackled this adverse context by adjusting sales prices to the market situation with the objective of

maintaining market share and has managed with discipline the evolution of working capital reducing production

and increasing exports. Likewise, it has implemented a rigorous policy of cost reduction, putting into practice certain

divestment plans to protect itself against a possible extension of this scenario. Despite these measures of operational

and financial discipline, the results obtained reflect the very difficult market situation in this year 2016:

• EBITDA was -5.39 million euros, well below the 44.81 million euros reached in financial year 2015.

• Operating income (EBIT) was -21.62 million euros, compared to 27.69 million euros for financial year 2015.

• The net result for financial year 2016 was a loss of -35.59 million euros, whereas in the previous financial year this

was a positive 11.95 million euros.

• The total net bank debt of the Company (net of treasury and IFTs) amounts to 150.55 million euros.

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Prospects for 2017

Once the financial year 2016 is over, and with a greater perspective regarding the impact of the actions taken, it is

possible to verify that:

• Following a financial year characterized by a continuing downward trend in prices, a turning point has been

experienced in the last two months of the year, with increases in fertilizer prices, which has led to an increase in

confidence in the sector as to what should be a change of trend.

• The extraordinary program of cost reduction faced by Fertiberia is being executed with greater speed and suc-

cess of that initially planned, exceeding the amount of the savings this figure being nine million euros per year.

This plan, however, is compatible with the investment agenda in innovation and with the efforts that are carried

out in the improvement of the range of products that Fertiberia develops and introduces to the market. In the

same way, other ambitious action continues to be carried out, such as the programs aimed at optimizing efficien-

cy, which is already under way, including the project to improve energy efficiency in the factories of Puertollano

and Palos, which are giving such good results

Although the cost reduction plan has sometimes had a negative impact in the annual accounts for financial year

2016, as in the case of staff reductions, in the medium and long-term it will clearly improve the competitive position

of the company for the next few years.

Regarding the outlook for 2017, it is expected that the trend begun at the end of 2016 will continue, so that the price

recovery is expected to be deeper and faster than the initial estimates anticipated.

In short, Fertiberia tackles 2017 with much greater financial strength, greater cost competitiveness, increased market

share and a commercial position of equal or greater strength, so the outlook in the market is clearly better than the

scenario lived a few months ago.


Market study and investigationDuring 2016, we continued to work on the analysis and monitoring of the fertilizer market in Spain, Europe and glo-

bally. Likewise, and in order to provide management elements to other areas of the company, the analysis of all the

factors directly and indirectly affecting the fertilizer sector has intensified.

As far as the normative aspects are concerned, the Ministry of Agriculture and Fisheries, Food and Environment has

worked closely with the new European regulations; with the Ministry of Industry, with ANFFE, Fertilizer Europe, as well

as representatives in the European Union.

The Ministry of Commerce has collaborated on aspects related to tariff policies, trade defense, trade agreements of

the European Union and regulatory aspects related to these matters.

A permanent contact has also been maintained with those responsible for the Environment and with the Spanish

Office for Climate Change, and at the request of the administrations, collaboration with the National Plan for the

Renewal of the Agricultural Machinery Park.

Fertilizers Europe has actively participated in the Agriculture, Environment, Information, Trade Policy and Antidum-

ping Committees, while with IFA there has been a permanent exchange of information on the demand and supply

of fertilizers and on the factors that influence in the sector.

There have been actions, both informative and technical, in the field of sustainable fertilization, participating in tech-

nical and scientific forums.

Fertiberia Chair of Agro-Environmental Studies

For ten years now, the Fertiberia Cátedra de Agroenvironmental Studies has promoted collaboration between the

Universidad Politécnica de Madrid and Fertiberia on issues related to the entire life cycle of fertilizers, from their de-

sign to their application in the field.

The activities developed in 2016 have been numerous and are a benchmark in the field of agronomy and university.

We highlight the 9th Fertilization Conference for Sustainable Agriculture: “Climatic Change and the Agricultural Sec-

tor” and the Awards for the Best Projects and End-of-Course Work from the UPM and the University Master’s Degree

from UPM.

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R&D and Agronomic ServicesIn 2016, the “Fertiberia Agro-environmental Technologies Centre” was consolidated at the University of Seville, a

center managed by the Directorate of Agronomic Innovation, which brings together research services and agronomic

advice.

The Agronomic Laboratory carried out more than 6,000 subscriber analyses and recommendations for customers of

Fertiberia and its subsidiaries and provided analytical support to the company’s R & D activities.

The Agronomic Service continued to advise the farmer on the training and dissemination of the best use of fertilizers

to contribute to sustainable agriculture.

This year, we have continued to focus on research as an instrument for improving competitiveness through innova-

tion, which is why we have close to 20 collaboration agreements with more than 15 research centers and universities.

The R & D Directorate has maintained a broad portfolio of projects aimed at the design and development of advan-

ced fertilizers, and at improving the most efficient management systems.

The process of internationalization of R & D, started the previous year with the project H2020 NEWFERT, has been

reinforced with the participation of Fertiberia in the project H2020 KARMA. These projects place Fertiberia at the

forefront of research for the recovery and valuation of nutrients for its application in the mineral fertilizer industry.

The effort that Fertiberia dedicates to research is always carried out with the aim of translating it into innovation.

An example of this is the placing in the market of the range of Sulfactive products, which in a single fertilizer, has six

fundamental nutrients with high solubility and that are fully assimilated by crops.


Labour matters

The year 2016 has been a year of labour normality. The development of the Partial Retirement Plan in force in the

Company will continued until December 2018, incorporating qualified young workers who replace older workers

who voluntarily accept the Plan. During 2016, 33 workers have been hired in this type of handover, so that the work-

force renewal since 2004, the year in which the Plan was started, already amounts to 66%.

It should also be noted that during 2016 an ambitious Training Plan was developed, fundamentally in factories, aimed

at optimizing the training of staff in the development of their jobs, as well as improving the personal qualification of

the participants. 59,000 training hours have been given, representing an average of 76 hours received per employee.

In the last quarter of the year light restructuring of the workforce took place, which has affected 20 workers, mainly

from Head office, Huelva factory and the Bilbao warehouse, in order to adjust the headcount to the current needs of

these centres. This restructuring has been agreed with the unions with the greatest representation in the company,

although, given the number of workers affected, it has not been necessary to process a collective redundancy pro-

cedure.

Permanent staff as at 31 December 2016 amounted to 789 workers. The distribution, by professional groups, is the

following:

Management personnel and qualified technicians 28.6%

Operations personnel 41.4%

Administrative personnel 10.4%

Unqualified technicians 19.6%

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Operations with own sharesNone.

Post balance sheet events

The Company has submitted to the banking entities participating in the syndicated loan a waiver request for the

non-compliance in 2016 of two of the financial ratios established in the financing agreement, being at the date of

preparation of these annual accounts in an advanced phase of negotiation, with the objective of establishing the

final terms for the granting of the dispensation.

In addition to the above, there have been no significant events since 31 December 2016 until the date of preparation

of these annual accounts that, if they were affected, would not have been included in them or whose knowledge

could be useful to a user of the same.

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proposal for the distribution of the result

04


Proposal for the distribution of the results from financial year 2016

It is proposed to apply the losses for the year amounting to 35,586,675.88 euros to Negative Results for Previous

Financial Years.

Madrid, 23 March 2017

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commercial networknorth

Ctra. Nacional 122, km 405,5Villalar de los Comuneros 47111 Valladolid (Spain)

Tel.: +34 983 10 84 91

southCentral-Levante

Chemical Park. SouthPuerto Sagunto

46520 Valencia (Spain)Tel.: +34 962 69 91 48

Andalusia - ExtremaduraCtra. Punta del Verde, s/n

41012 Seville (Spain)Tel.: +34 954 23 58 88

Fertiberia, S.A.Torre EspacioP. de la Castellana, 259-D. 48th floor28046 Madrid (Spain)Tel.: +34 91 586 62 00Fax: +34 91 586 62 [email protected]

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