Estrategia creativa

At 31 December 2015 and 2014, bank borrowings and senior notes are as indicated below

31/12/2015 31/12/2014 Non-current Senior Notes 832,722 829,458 Syndicated loans 330,914 221,483 Credit lines 22,901 18,663 Other borrowings 161,909 201,492

Finance lease liabilities 229 328

1,348,675 1,271,424 Current

Senior Notes 11,760 11,760

Advanced credit debts 46,139 28,910

Syndicated loans 6,746 88,742

Credit lines 69,475 57,931

Finance lease liabilities 93 90

Other loans 99,750 88,657

233,963 276,090

Total bank borrowings 1,582,638 1,547,514

Except for the senior notes, all borrowings bear interest at Euribor rates and contracted rates are reviewed after periods which do not generally exceed six months. The fair values of current and non-current bank borrowings therefore approximate their carrying amounts.

At 31 December 2015 and 2014, non-current bank borrowings mature as indicated below:

2015 2014 Between 1 and 5 years More than 5 years Total Between 1 and 5 years More than 5 years Total Concept Senior Notes - 832,722 832,722 - 829,458 829,458 Syndicated loans 330,914 - 330,914 221,483 - 221,483 Credit lines 22,901 - 22,901 18,663 - 18,663 Other loans 142,665 19,244 161,909 160,169 41,323 201,492 Finance lease liabilities 170 59 229 261 67 328

Total 496,650 852,025 1,348,675 400,576 870,848 1,271,424

Finance lease liabilities amounts have been discounted to their present value. Future financial charges on finance leases amount 33 thousand euro (2014: 48 thousand euro).

20.1) Syndicated loans

On 12 June 2015 the Group concluded an agreement with several financial institutions regarding the modification and amendment of the terms of several syndicated loans that the Group had up until that date. The new debt facility includes 5 debt tranches with maturity dates that run between 2017 and 2020. The interest rate has been established at Euribor plus a spread ranging between 2.80% and 4.25% per year based on the value of certain ratios. At the end of 2015 the outstanding nominal balance was 332.2 million euro.

This loan is subject to a compliance ratio agreement, which is normal for this type of transaction. At 31 December 2015, Company management understands that full compliance has been obtained with all ratio relating to this agreement.

In June 2011 the Group concluded an agreement for a loan in the nominal amount of 59,500 thousand euro with syndicated banks whose agent entity is EBN Banco de Negocios, S.A. to be used to finance Group projects. In February 2014 the Group reached a novation agreement under which the initial due date of June 2014 was changed to a final due date in June 2017 with half-yearly repayments and the interest rate was established at Euribor plus a spread of between 3.25% and 4% per year (previously Euribor 3.5% per year) based on the value of certain ratios. At the year-end the outstanding nominal balance was 12.8 million euro (2014: 19 million euro).

This loan is subject to a compliance ratio agreement, in line with this type of transaction. At December 31, 2015 Company management understands that the Group is in compliance with ratio relating to this agreement.

20.2) Other borrowings

The following debts are included under this caption:

On 15 February 2012, the Group entered into a new agreement with Corporación Andina de Fomento to obtain a loan with a nominal value of 50 millions US dollar, to finance Group activities; at the year end, the outstanding balance amounts to 37 millions US dollar (2014: 47 millions US dollar). The loan bears interest at the six-monthly Libor rate plus 5.5% per annum, in six-month periods. The final maturity of this loan is February 13, 2022 with 16 semi-annual installments starting on August 2014. In 2015 a series of novation agreements were signed with respect to the original contract, in order to defer the payment of several instalments and to partially modify the ratios.

This loan is subject to a compliance ratio agreement, in line with this type of transaction. At 31 December 2015 Company management understands that the Group is in compliance with ratio relation to this agreement.

On 14 March 2013, the Group concluded a new agreement with Inter-American Development Bank, to grant a loan with a nominal value of 100 million US dollar whose main purpose is the financing of the Group's activities and at the year-end it presents an outstanding balance of 82 million US dollar (2014: 100 million US dollar). This loan bears interest at 6-month Libor plus a spread of 4.38% per year, every six months. This loan matures on 15 February 2020, with 10 half-yearly installments starting on 15 February 2015.

This loan is subject to a compliance ratio agreement, in line with this type of transaction. At 31 December 2015 Company management understands that the Group is in compliance with ratio relation to this agreement.

On 25 April 2013, the Group concluded a new agreement with Corporación Andina de Fomento, to grant a loan with a nominal value of 50 million US dollar whose main purpose is the financing of the Group's activities and at the year-end it presents an outstanding balance of 44 million US dollar (2014: 50 million US dollar). This loan bears interest at 6-month Libor plus a spread of 5.5% per year, every six months. This loan finally matures on 25 April 2023, with 16 half-yearly installments starting on 25 October 2015. In 2015 a series of novation agreements were concluded with respect to the original contract, in order to defer the payment of

This loan is subject to a compliance ratio agreement, in line with this type of transaction. At 31 December 2015 Company management understands that the Group is in compliance with ratio relation to this agreement.

On 4 December 2014 an agreement was concluded with ING Bank NV branch in Spain, for a loan and a line of credit for a nominal amount of 30 million euro in order to cover corporate financing. Interest for the loan is quarterly payable at the Euribor plus a spread of between 2.75% and 3.25%. At the year-end the outstanding balance was 30 million euro (2014: 20 million euro). This loan is for a term of 2 years after the signing date. This loan is subject to a compliance ratio agreement, in line with this type of transaction. At 31 December 2015 Company management understands that the Group is in compliance with ratio relation to this agreement.

On 16 June 2015 an agreement was signed with Natixis, S.A., branch in Spain, for a loan for a nominal amount of 20 million euro. The interest rate has been established at Euribor plus a spread ranging between 2.80% and 3.25% per year based on the value of certain ratios. At the year-end the outstanding balance was 20 million euro. This loan falls due in June 2017.

This loan is subject to a compliance ratio agreement, in line with this type of transaction. At 31 December 2015 Company management understands that the Group is in compliance with ratio relation to this agreement.

20.3) Credit lines

The Group has contracted multiple credit lines that are generally recognised as short-term balances since maturities are usually annual, although the agreements include automatic renewal clauses. Amounts due after one year are classified as non-current balances. These credit lines are linked to EURIBOR rate with spreads between 2% and 5%.

20.4) Other information

The carrying amount of the Group’s borrowings is denominated in the following currencies:

2015 2014 Non-current Euro 1,191,622 1,108,888 Other currencies 157,053 162,536 1,348,675 1,271,424 Current Euro 173,508 201,857 Other currencies 60,455 74,233 233,963 276,090

Total bank borrowings 1,582,638 1,547,514

At 31 December 2015, the Group has available short-term facilities through credit lines, factoring and other financing facilities amounting 90,610 thousand euro (2014: 211,012 thousand euro).

20.5) Senior notes

During 2014 the Group issued (through its subsidiary Group Isolux Corsán Finance B.V.) 850 million euro of senior unsecured notes with a fixed rate of 6.625%. These notes mature on April 15, 2021. The Original Notes were issued on March 15, 2014 for an amount of 600 million euro, and the Additional Notes on June 26, 2014 for an amount of 250 million euro, all together “the Notes”. The Notes are jointly and severally guaranteed by Group Isolux Corsán, S.A. and certain group subsidiaries. At 31 December 2015 the listed price of these senior notes was 23.49% (2014: 87.21%).

The Group assumed a series of compliance obligations with respect to the senior notes, as is usual in this type of transaction. At 31 December 2015 Management understands that none of those obligations have failed to be met.

21. Deferred income tax

The gross movement of deferred income tax is shown below:

2015 2014 Deferred tax assets Deferred tax liabilities Deferred tax assets Deferred tax liabilities 1 January 288,523 43,171 256,204 24,179

Charge to income statement (Note 28) 53,234 29,371 79,523 22,896 Tax charged to equity (3,816) (384) (1,600) 141

Exit from consolidation scope (368) (354) - -

Effect of tax rate change in Spain in income

statement - - (44,010) (3,962)

Effect of tax rate change in Spain in equity - - (1,594) (83)

31 December 337,573 71,804 288,523 43,171

Deferred tax assets at each year end are as follow:

2015 2014

Tax losses 129,240 106,507

Tax credits pending application 17,955 18,911

Temporary differences 190,378 163,105

Change during 2015 and 2014 in deferred tax assets and liabilities is as follows: Deferred tax assets

Reversals Appropriations

Other

movements Total

At 1 January 2014 256,204

Charged to income statement (11,851) 91,374 - 79,523

Charged to equity (1,636) 36 - (1,600)

Effect of tax rate change in Spain in income statement - - (44,010) (44,010) Effect of tax rate change in Spain in equity - - (1,594) (1,594)

At 31 December 2014 288,523

Charged to income statement (15,165) 68,399 - 53,234

Charged to equity (3,093) (723) - (3,816)

Exit from consolidation scope - - (368) (368)

At 31 December 2015 337,573

Deferred tax liabilities

Reversals Appropriations

Other

movements Total

At 1 January 2014 24,179

Charged to income statement (10,154) 33,050 - 22,896

Charged to equity - 141 - 141

Effect of tax rate change in Spain in income statement - - (3,962) (3,962) Effect of tax rate change in Spain in equity - - (83) (83)

At 31 December 2014 43,171

Charged to income statement (7,491) 36,862 - 29,371

Charged to equity - (384) - (384)

Exit from consolidation scope - - (354) (354)

At 31 December 2015 71,804

Deferred tax assets / (liabilities) charged to equity during the year are as follows:

2015 2014

Fair value reserves in equity:

Reserve for hedging transactions (3,432) (1,125) (3,432) (1,125)

Deferred tax assets and liabilities arising from temporary differences are analysed below:

2015 2014

Deferred tax assets

Arising from provisions 45,444 49,653

Arising from non-current assets 3,074 3,682

Arising from financial derivatives measurement 4,413 8,229 Arising from deductible financial expense (Royal Decree-Law 12/2012) 108,695 72,404

Arising from other items 28,752 29,137

Total 190,378 163,105

Deferred tax liabilities

Arising from financial derivatives measurement - (504) Arising from non-current assets (19,676) (15,659) Arising from trade and other receivables (52,128) (27,008)

Total (71,804) (43,171)

At 31 December 2015 the Group has recognized tax credits with respect to tax losses from some subsidiaries in the amounts detailed below:

Generation Spain Brazil Argentina

Other countries Total 2009 1,779 - - - 1,779 2010 9,152 - - 1,584 10,736 2011 9,074 5,071 - - 14,145 2012 31,194 - - - 31,194 2013 20,853 50 - 492 21,395 2014 - 3,945 3,473 1,655 9,073 2015 21,613 6,519 - 12,786 40,918 93,665 15,585 3,473 16,517 129,240

Tax credits for losses carried forward in Argentina expire in 5 years time since the date of creation. In Spain due to the law amendment detailed below, the application of the tax credits becomes unlimited. In Brazil the compensation period is unlimited.

Deferred tax assets for tax credits in respect of tax losses available for offset and tax-loss carryforwards are recognized insofar as the existence of the relevant tax benefit through future taxable profits is likely. Most tax loss carryforwards relate to companies that are part of the consolidated tax group in Spain. Management has performed an analysis to determine the amount of credits to be activated, considering that it is likely that tax revenues will be generated in the future to offset these tax loss carryforwards (along with other net tax assets related to the tax group). Among other things, management's analysis took the following aspects into account: generation of future tax revenues according to the business plans of the member companies of the tax group, the existence of past tax losses that are not expected to be repeated in the future (e.g., related to the impairment of certain assets), the reorganisation measures implemented to adapt the structure to the current business volume in Spain, and the implementation of tax optimisation measures to offset the inefficiencies that have arisen in recent years as a result of the rapid international expansion of the Group's operations and the changes in Spanish tax laws.

A new Corporate Tax Law 27/2014 was enacted on 28 November, introducing a gradual reduction in the general tax rates from 30% in 2014 to 25% in 2016, the elimination of the time limit on offsetting tax losses and limits on the deductibility of losses associated with the assets. The impact of this policy change on the tax

were passed on Personal Income Tax and Value Added Tax, respectively. These laws did not have a significant impact on the Group's financial statements as of the closing date.

22. Provisions for other liabilities and charges

22.1. Provisions for other liabilities and charges – Non-current Provisions for project completion Provisions for litigation and other Decommising provisions Total Balance at 1 January 2014 13,748 30,084 2,219 46,051 Reversals /Applications (2,303) (17,721) - (20,024) Appropriations 842 16,238 99 17,179 Balance at 31 December 2014 12,287 28,601 2,318 43,206 Reversals /Applications (587) (5,383) - (5,970) Appropriations 1,854 624 99 2,577 Balance at 31 December 2015 13,554 23,842 2,417 39,813

Provisions for project completion and guarantees

The balance in this account relates to projects that are completed or substantially completed and consists of the Group’s estimate of probable costs to be incurred prior to final acceptance by the customer. Additional customer claims not subject to objective quantification at consolidated annual accounts preparation date could arise, although Management understands no significant loss over provisioned amounts will arise.

Provisions for litigation and other

This balance relates to provisions set up to cover other liabilities and charges related or not related to litigation, including tax or other contingencies for which the Group considered a provision should be posted. In the opinion of the directors and legal counsel, the lawsuits in question are not likely to generate significant losses above the amounts provisioned.

Decommissioning provisions

Based upon technical studies, the Group has estimated the current cost of decommissioning central solar installations as well as biodiesel plants that have assets assigned to projects, booking these estimates as a higher asset value and amortizing it over its useful life, which in most cases is similar to the useful life of the lease agreements of the land where the solar plants and the biodiesel plants are located.

22.2. Provisions for other liabilities and charges – Current

The balances included in this item, totalling 43,897 thousand euro (2014: 73,559 thousand euro), related to the Construction Division and the Engineering Division and mainly consist of provisions for project completion costs and other items. “Change in trade provisions” in the income statement registers net allocations made to provisions for other liabilities and current expenses.

23. Revenue / Sales and Materials consumed and other external costs