AUTONOMY SPAIN REAL ESTATE SOCIMI, S.A. (the Company ...€¦ · Autonomy Spain Real Estate Socimi,...

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September 26, 2017

AUTONOMY SPAIN REAL ESTATE SOCIMI, S.A. (the "Company"), pursuant to the terms set forth in Article 17 of EU Regulation No. 596/2014 with regard to abuse of markets and Article 228 of the Consolidated Text of the Stock Exchange Law, approved by Royal Legislative Decree 4/2015 dated October 23, and other related provisions, as well as Notice 15/2016 of Mercado Alternativo Bursátil ("MAB"), hereby publishes the following:

RELEVANT FACT

Autonomy Spain Real Estate Socimi, S.A. and its subsidiaries published the following financial information for the first half of 2017:

- Limited Review Report on the Interim Consolidated Financial Statements for the six-month

period ending June 30, 2017.

- Interim Consolidated Financial Statements for the six-month period ending June 30, 2017. - Autonomy Spain Real Estate Socimi, S.A.´s selected Financial Information on a stand-alone

basis (Balance Sheet and Profit and Loss Statement) for the six-month period ending June 30, 2017.

Sincerely, Robert Gibbins AUTONOMY SPAIN REAL ESTATE SOCIMI, S.A.

AUTONOMY SPAIN REAL ESTATE SOCIMI, S.A. and Subsidiaries

Interim Consolidated Financial Statements for the six-month periodended 30 June 2017

AUTONOMY SPAIN REAL ESTATE SOCIMI, S.A. ANDSUBSIDIARIES

The accompanying notes form an integral part of the interim consolidated financial statements for the six-month periodended 30 June 2017.

INTERIM CONSOLIDATED BALANCE SHEET AT 30 JUNE 2017 AND 31 DECEMBER 2016(Expressed in euro)

ASSETS Notes30 June

2017

31 December

2016

NON-CURRENT ASSETS 93,126,962 93,222,086

Intangible assets 5 - -

Computer software - -

Property, plant and equipment 6 70,384 27,912

Data-processing equipment 70,384 27,912

Investment property 7 92,318,286 92,680,063

Land 53,773,250 53,773,250

Buildings 38,545,036 38,906,813

Long-term investments 9, 10 738,292 514,111

Other financial assets 738,292 514,111

CURRENT ASSETS 5,280,910 4,860,552

Trade and other receivables 463,458 691,905

Trade receivables for sales and provision of services 9, 10 385,760 508,998

Sundry receivables 9, 10 42,024 130,244

Other amounts receivable from Public Administrations 10, 14.1 35,674 52,663

Short-term financial assets 139,856 334,040

Other financial assets 9, 10 139,856 334,040

Short-term investments in Group companies and associates 9, 10,17 41,056 -

Short-term prepayments and accrued income 3,000 -

Cash and cash equivalents 11 4,633,540 3,834,607

Cash at bank and in hand 4,633,540 3,834,607

TOTAL ASSETS 98,407,872 98,082,638



INTERIM CONSOLIDATED BALANCE SHEET AT 30 JUNE 2017 AND 31 DECEMBER 2016(Expressed in euro)

EQUITY AND LIABILITIES Notes30 June

2017

31 December

2016

EQUITY 57,379,198 57,025,518

SHAREHOLDERS' FUNDS 58,230,443 58,182,087

Capital 12.1 5,059,878 5,059,878

Share premium 12.2 55,695,351 55,695,351

Reserves and prior-year losses 12.3 (2,573,142) (2,968,385)

Profit/(loss) for the year 12.5 48,356 395,243

Measurement adjustments 13 (851,245) (1,156,569)

Hedging transactions (851,245) (1,156,569)

NON-CURRENT LIABILITIES 38,812,140 39,477,930

Long-term payables 9, 13 38,812,140 39,477,930

Bank borrowings 37,095,485 37,458,843

Derivatives 851,245 1,156,569

Other financial liabilities 865,410 862,518

CURRENT LIABILITIES 2,216,534 1,579,190

Short-term payables 9, 13 1,386,384 958,394

Bank borrowings 772,870 447,328


Short-term payables to Group companies and associates 17 - -

Trade and other payables 830,150 620,796

Trade payables 9, 13 525,149 273,776

Accrued wages and salaries 9, 13 60,196 85,000

Other amounts payable to Public Administrations13,

14.1244,805 262,020

TOTAL EQUITY AND LIABILITIES 98,407,872 98,082,638



INTERIM CONSOLIDATED INCOME STATEMENT FOR THE SIX-MONTH PERIODS ENDED 30 JUNE 2017 AND2016(Expressed in euro)

Six-month period ended

INCOME STATEMENT Notes 30 June 2017 30 June 2016

CONTINUING OPERATIONS

Revenue 16.1 2,884,361 2,816,169

Sales 2,884,361 2,816,169

Raw materials and consumables 16.2 (1,203,739) (1,073,512)

Other operating income 32,412 4,275

Staff costs 16.3 (130,761) (113,630)

Wages, salaries and similar remuneration (103,421) (85,812)

Staff welfare expenses (27,340) (27,818)

Other operating expenses 16.4 (498,028) (447,647)

External services (438,843) (394,971)

Taxes (59,185) (52,676)

Depreciation/amortisation of investment property and non-current assets 5, 6, 7 (410,608) (418,972)

OPERATING PROFIT/(LOSS) 673,637 766,683

Financial expenses 16.5 (625,757) (611,328)

On payables to third parties (625,757) (611,328)

Financial income 16.5 488 1,097

On payables to third parties 488 1,097

Exchange differences 16.5 (12) 122

NET FINANCIAL INCOME/(EXPENSE) (625,281) (610,109)

PROFIT/(LOSS) BEFORE INCOME TAX 48,356 156,574

Corporate income tax - -

PROFIT/(LOSS) FOR THE YEAR 48,356 156,574



INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY AT 30 JUNE 2017 AND 30 JUNE 2016(Expressed in euro)

A) INTERIM CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE SIX-MONTHPERIODS ENDED 30 JUNE 2017 AND 2016


Note 30 June 2017 30 June 2016

Results recognised in the consolidated income statement 48,356 156,574

Income and expense attributed directly to equity

On measurement of financial instruments 13 305,324 (964,472)

On cash flow hedges 13 305,324 (964,472)

Total income and expense attributed directly to equity 305,324 (964,472)

TOTAL RECOGNISED INCOME AND EXPENSE 353,680 (807,898)


The accompanying notes form an integral part of the interim consolidated financial statements for the six-month period ended 30 June 2017.

B) INTERIM CONSOLIDATED TOTAL STATEMENT OF RECOGNISED INCOME AND EXPENSE FOR THE SIX-MONTH PERIODS ENDED 30 JUNE 2017 AND 2016(Expressed in euro)

Authorisedcapital

Share

premiumReserves and prior-year

resultsHedging

instrumentsProfit/(loss) for

the yearTOTAL

At 31 December 2015 5,059,878 56,695,351 (2,492,493) (545,510) (475,892) 58,241,334

Consolidated total recognised revenues and expenses - - - (964,472) 156,574 (807,898)Distribution of profit/(loss) for the year - - (475,892) - 475,892 -Distribution of share premium - (1,000,000) - - - (1,000,000)At 30 June 2016 5,059,878 55,695,351 (2,968,385) (1,509,982) 156,574 56,433,436

Authorisedcapital

Share

premiumReserves and prior-year

resultsHedging

instrumentsProfit/(loss) for

the yearTOTAL

At 31 December 2016 5,059,878 55,695,351 (2,968,385) (1,156,569) 395,243 57,025,518

Consolidated total recognised revenues and expenses - - - 305,324 48,356 353,680Distribution of profit/(loss) for the year - - 395,243 - (395,243) -Distribution of share premium - - - - - -At 30 June 2017 5,059,878 55,695,351 (2,573,142) (851,245) 48,356 57,379,198



C) INTERIM CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX-MONTH PERIODS ENDED 30 JUNE2017 AND 2016(Expressed in euro)


Note30 June

2017

30 June

2016

A) CASH FLOWS FROM OPERATING ACTIVITIES

1. Profit/(loss) for the year before tax 48,356 156,574

2. Adjustments to results

a) Depreciation/amortisation of investment property and non-currentassets

5.6, 7 410,608 418,972

b) Impairment adjustments 7 - -

c) Financial expenses 16.5 625,757 611,328

d) Financial income 16.5 (488) (1,097)

e) Gains/(losses) on exchange 12 (122)

f) Other income and expenses - -

3. Changes in working capital

a) Debtors and other receivables 187,391 97,305

b) Other current assets 191,184 (192,334)

c) Creditors and other payables 209,831 273,023

e) Other current liabilities 368,805 46,494

f) Other non-current assets and liabilities (487,147) 84,875

4. Other cash flows from operating activities

a) Interest paid (566,572) (582,508)

5. Cash flows from operating activities 987,737 912,510

B) CASH FLOWS FROM INVESTING ACTIVITIES

6. Amounts paid on investments

b) Property, plant and equipment 6 (42,884) -

c) Investment property 7 (48,420) (122,385)

8. Cash flows from investing activities (91,304) (122,385)

C) CASH FLOWS FROM FINANCING ACTIVITIES

9. Collections and payments equity instruments - -

a) Issuance of equity instruments - -

10. Collections and payments financial liability instruments (97,500) (97,500)

b) Repayment and redemption of:

2. Bank borrowings 13 (97,500) (97,500)

11. Dividend payments and return on other equity instruments - (1,000,000)

b) Return on other equity instruments 17 - (1,000,000)

12. Cash flows from financing activities (97,500) (1,097,500)

D) EFFECT OF EXCHANGE RATE FLUCTUATIONS - -

E) NET INCREASE/DECREASE IN CASH OR CASH EQUIVALENTS 798,933 (307,375)

Cash and cash equivalents at beginning of the year 3,834,607 4,162,572

Cash and cash equivalents at year end 4,633,540 3,855,198

Notes to the accounts of AUTONOMY SPAIN REAL ESTATE SOCIMI, S.A. ANDSUBSIDIARIES

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1. GENERAL INFORMATION

1.1. Parent company

AUTONOMY SPAIN REAL ESTATE SOCIMI, S.A. (Sociedad Unipersonal) or the parent company is a Spanishcompany holding tax code A-86542560, formed for an indefinite period in a deed executed before a Madridnotary on 10 September 2012, number 1,388 of the notary's record; the Company is entered in the MadridMercantile Register, volume 30,234, sheet 204, section eight, page M-544182, entry one.

On 23 December 2013, the parent company moved its registered office to Plaza de la Lealtad 4, Entreplanta,28014 Madrid in a deed authorised by a notary and registered in Madrid.

On 25 September 2013, the parent company changed its name from NESVILLE INVESTMENTS, S.A. (SociedadUnipersonal) to NESVILLE INVESTMENTS SOCIMI, S.A. (Sociedad Unipersonal) in a deed authorised by a notaryand registered in Madrid; on that same date, the parent company availed itself of the regime provided byLaw 11/2009 (26 October) on listed property investment companies ("Sociedades Anónimas Cotizadas deInversión en el Mercado Inmobiliario" or “SOCIMI”), with effect as from 1 January 2013.

On 25 July 2014, the parent company's name was again changed from Nesville Investments SOCIMI, S.A.(Sociedad Unipersonal) to Autonomy Spain Real Estate SOCIMI S.A. (Sociedad Unipersonal) in a public deedexecuted before a notary and entered in the Madrid Mercantile Register.

The parent company files its individual accounts at the Madrid Mercantile Registry and forms the AutonomyGroup together with its subsidiaries (“the Group”).

The parent company has been listed on the Alternative Stock Market since 24 September 2015, when singleshareholder status was lost.

The parent company’s corporate objects are as follows:

a. Acquisition and development of municipal properties for leasing. The development activityincludes the preparation of buildings for use in the terms of Law 37/1992 (28 December) onValue Added Tax.

b. Holding of shares in listed property development companies (“SOCIMI”) or in other entities notresident in Spain having the same corporate purpose as a SOCIMI and subject to a regimesimilar to the regime governing SOCIMIs as regards the mandatory profit distribution policy,whether by law or under their by-laws.


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c. Holding of shares in other resident or non-resident entities the main corporate purpose ofwhich is to acquire municipal property for rent, which are subject to the same regime asSOCIMIs as regards mandatory profit distribution, whether by law or under their by-laws, andwhich fulfil the investment requirements stipulated in Article 3 of Law 11/2009 (26 October)governing SOCIMIs.

d. Holding of shares or interests in Collective Property Investment Institutions regulated by Law35/2003 (4 November) on Collective Investment Institutions.

The currency of the principal economic environment in which the Group operates is the euro, which istherefore its functional currency.

All the amounts included in these notes to the consolidated annual accounts are expressed in euros unlessotherwise stated.

Autonomy Spain Real Estate Socimi, S.A. is the parent of a group of companies, subject to Article 42 of theCode of Commerce and Article 1 of the Regulations on the Preparation of Consolidated Annual Accountsintroduced under Royal Decree-Law 1159/2010 (27 September).

Pursuant to Circular 15/2017 “Information to be supplied by expanding companies and SOCIMIs admitted tolisting on the Alternative Stock Market”, published on 26 July 2017, Appendix I to these interim consolidatedfinancial statements contains the balance sheet and income statement for the six-month period ended 30June 2017 containing prior-year comparative figures.

1.2. Subsidiaries and consolidation scope changes

Subsidiaries are all companies, including special-purpose entities, which are or may be directly or indirectlycontrolled by the Group. Control is understood as the power to direct a business’s financial and operationalpolicy to make a profit from its activities. The existence and effect of potential voting rights that are currentlyexercisable or convertible are considered when assessing whether the Group controls another entity.Subsidiaries are consolidated as from the date on which control is transferred to the Group and de-consolidated as from the date that control is lost.

Set out below are details of the Group's subsidiaries at 30 June 2017 and 2016:

- SURFING MOON INVESTMENTS, S.L. (Sociedad Unipersonal) is a Spanish company holding taxcode B-86534088, incorporated for an indefinite period in a deed authorised by the Madridnotary Mr Miguel Yuste Rojas, substituting for the notary Mr Pablo de la Esperanza Rodríguez,number 5,427 of his record, on 21 August 2012, and corrected by a different deed authorisedby the Madrid notary Mr Pablo de la Esperanza Rodriguez on 6 September 2012, number 5,601of his record, and entered in the Madrid Mercantile Register, volume 30,291, sheet 10, sectioneight, page M-545194, entry one.


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The company's registered office is at Plaza de la Lealtad 4, Entreplanta, 28014, Madrid (Spain).

Its objects encompass the acquisition and development of municipal properties for leasing. Thedevelopment activity includes the preparation of buildings for use in the terms of Law 37/1992(28 December) on Value Added Tax. The company is subject to the regime regulated by Law11/2009 (26 October) on listed property investment companies (“SOCIMI”), both the companyand its single shareholder having availed themselves of this regime on 25 September 2013, witheffect as from 1 January 2013.

- Pallars 193-205, S.L. (Sociedad Unipersonal) is a Spanish company holding tax code B-86578044,formed for an indefinite period in a deed executed before a Madrid notary on 26 October 2012,number 1,653 of the notary's record; the Company is entered in the Madrid MercantileRegister, volume 30,373, sheet 100, section eight, page M-546637, entry one.

Its objects encompass the acquisition and development of municipal properties for leasing. Thedevelopment activity includes the preparation of buildings for use in the terms of Law 37/1992(28 December) on Value Added Tax. The company is subject to the regime regulated by Law11/2009 (26 October) on listed property investment companies (“SOCIMI”), both the companyand its single shareholder having availed themselves of this regime on 25 September 2013, witheffect as from 1 January 2013.

The company's registered office is at Plaza de la Lealtad 4, Entreplanta, 28014, Madrid (Spain).

The companies SURFING MOON INVESTMENTS, S.L. (Sociedad Unipersonal) and PALLARS 193-205, S.L.(Sociedad Unipersonal) were acquired by Autonomy Spain Real Estate SOCIMI, S.A. (Sociedad Unipersonal)on 21 August and 26 October 2012, respectively, having been included in the Group's consolidation scope onthat date. They have the same financial year as the parent company.

The consolidation basis for each company complies with Article 2 of the Standards on the Preparation ofConsolidated Annual Accounts (NOFCAC), as follows:

1. When the parent company is in any of the following situations in relation to another company(subsidiary):

a) The parent company holds a majority of the voting rights.

b) The parent company is empowered to appoint or dismiss the majority of the administrativebody’s members.

c) The parent company may cast, by virtue of the agreements concluded with other shareholders,the majority of the voting rights.


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d) The parent company has appointed, with its votes, the majority of the administrative body’smembers, who hold their positions at the time the consolidated accounts are drawn up and forthe two immediately preceding years. This is assumed to be the case when the majority of themembers of the subsidiary’s administrative body are members of the administrative body orsenior managers of the parent company or any other company controlled by the parentcompany.

2. The parent company holds one half or less than one half of the voting rights, even where it holds fewor no shares in another entity, or where management power has not been specified (special-purposeentities) but it has a share of the entity's risks and rewards or the capacity to participate in its operatingand financial decisions.

At 30 June 2017 and 2016, the following subsidiaries were included in the consolidation scope:

30 June 2017 and 31 December 2016:

NameIncorporation

dateCountry Shareholder Activity

% interestConsol.methodDirect Indirect

Companies controlled

Surfing Moon Investment, S.L.(Sociedad Unipersonal)

21.08.2012 SpainAutonomy SpainReal Estate SOCIMI,S.A.

Acquisition anddevelopment of municipalproperties for leasing

100 - Full

Pallars 193-205, S.L. (SociedadUnipersonal)

26.10.2012 SpainAutonomy SpainReal Estate SOCIMI,S.A.

Acquisition anddevelopment of municipalproperties for leasing

100 - Full

On 10 January 2014, the parent company acquired all the shares (3,000 shares) in Subox Investments, S.L.(Sociedad Unipersonal) from Winterfell Investments, S.A. (related company) for the price of one euro. On thesame date, the parent company acquired all the shares (3,000 shares) in Unicus Investments, S.L. (SociedadUnipersonal) from Winterfell Investments, S.A. (related company) for the price of one euro.

On 29 July 2016, the parent company sold its shares in Subox Investments, S.L.U. and Unicus Investments,S.L.U. to a Group company for €59,180 and €1, respectively. The two shareholdings were recognised at anaggregate €106,489, so the Company made a loss of €47,309. Both companies formed part of theconsolidation scope at 30 June 2016.


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2. BASIS OF PRESENTATION OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

2.1. Reporting regulations applicable to the Group

The interim consolidated financial statements have been prepared on the basis of the companies’ accountingrecords and are presented in compliance with current commercial legislation, the Chart of Accountsintroduced under Royal Decree 1514/2007 and the amendments brought into the Chart of Accounts by RD1159/2010 so as to present fairly the Group’s consolidated equity, consolidated financial situation andconsolidated results, as well as the veracity of the consolidated cash flows in the consolidated cash flowstatement.

The Group is subject to the Spanish Companies Act.

Additionally, on 25 September 2013, the parent company informed the Tax Agency of its decision to opt forthe tax scheme for listed property investment companies (“SOCIMI”), under Law 11/2009 (26 October) andthe amendments introduced by Law 16/2012 (27 December) on SOCIMIs.

Article 3 of Law 11/2009 (26 October) imposes the following requirements on SOCIMIs:

a) They shall have invested at least 80% of the value of their assets in municipal property for leasing, in landto develop such property, provided the development commences within three years as from the acquisitionof the land, and in shareholdings or equity interests in the other entities referred to in Article 2.1 of this Law.

b) At least 80% of the income for each tax period, excluding income from the transfer of the shares orproperties held by the Company in order to pursue its core corporate object, following the end of themaintenance period referred to in the following subsection, shall derive from the leasing of properties andfrom dividends or shares of profits related to the aforementioned investments.

c) The properties forming the Company's assets shall remain leased for at least three years. This period shallinclude the time during which the properties have been available to let, subject to a maximum of one year.

Transitional Provision One of the SOCIMI Law permits the application of the SOCIMI tax scheme in the termsstipulated in Article 8 of that law even if the requirements are not fulfilled when the scheme is initially applied,on the condition that the requirements are met within two years as from the date on which the decision istaken to apply the scheme.

On 24 September 2016, the parent company joined the Alternative Stock Market and the directors thereforeconsider that all the requirements of prevailing legislation have been fulfilled since that date, althoughcompliance is monitored on an ongoing basis.


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2.2. Non-mandatory accounting principles

The parent company’s Board of Directors has prepared these interim consolidated financial statements takinginto consideration all applicable mandatory accounting principles and standards that have a significant effect.No mandatory principle has been omitted.

2.3. Critical measurement issues and estimates of uncertainty

The preparation of the interim consolidated financial statements requires the use by the Group of certainestimates and judgements in relation to the future and that are assessed constantly and are based onhistorical experience and other factors, including expectations of future events considered reasonable in thecurrent circumstances.

The resulting accounting estimates will, by definition, seldom match the related actual results. Estimates andassumptions representing a significant risk of material adjustments to the carrying amounts of assets andliabilities within the next financial year are explained below.

Fair value of investment property

The best evidence of the fair value of investment property in an active market is the price of similar assets.In the absence of such information, the Group or independent valuers contracted for this purpose determinefair value based on a fair value interval. The Group draws on a number of sources to make this judgement,including:

i. Current active market prices of properties of different natures, conditions and locations, adjusted toreflect differences with respect to the Group's own assets.

ii. Recent prices of properties in other less active markets, adjusted to reflect changes in economicconditions since the transaction date.

iii. Discounted cash flows based on estimates derived from the current and projected terms of leasesand, if possible, on evidence of market prices of similar properties in the same location, using discountrates that reflect the uncertainty of time.

Corporate income tax

The Group companies have availed themselves of the scheme provided by Law 11/2009 (26 October) on listedproperty investment companies (SOCIMIs), which in practice entails that they are subject to 0% corporateincome tax, provided certain requirements are met. The directors monitor the fulfilment of legalrequirements to maintain the tax advantages provided; they consider that the requirements will be met inthe terms and periods stipulated and that no corporate income tax income or expense need be recognised.


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2.4. Comparability

The interim consolidated financial statements present, for comparative purposes, for each item in the interimconsolidated balance sheet, interim consolidated income statement, interim consolidated cash flowstatement, interim consolidated statement of changes in equity and notes to the interim consolidatedaccounts, the figures for the six-month period ended 30 June 2016, in addition to the figures for the six-monthperiod ended 30 June 2017.

2.5. Grouping of items

For clarity, the items presented in the interim consolidated balance sheet, interim consolidated incomestatement, interim consolidated statement of changes in equity and interim consolidated cash flowstatement are grouped together and, where necessary, a breakdown is included in the relevant notes to theinterim consolidated accounts.

2.6. Restrictions on the payment of dividends

The Group companies are required to transfer 10% of profits for each year to the legal reserve until thebalance in this reserve reaches at least 20% of share capital. Unless it exceeds 20% of share capital, thebalance in the reserve is not distributable.

Once the conditions laid down in applicable legislation and the by-laws have been met, dividends may onlybe distributed against profit for the year or to freely available reserves if equity is not less or is notconsequently reduced to less than share capital. To this effect, profits allocated directly to equity may not bedistributed directly or indirectly. If there are prior-year losses reducing the Group companies’ equity to lessthan share capital, profits will be used to offset these losses.

2.7. Mandatory distribution of dividends

As a SOCIMI, and pursuant to Article 20 of its by-laws, the parent company and its subsidiaries that comeunder the SOCIMI regime are required to distribute profits obtained for each period as dividends toshareholders, once applicable provisions of commercial legislation are fulfilled, in accordance with Article 6of Law 11/2009 (26 October) on listed property investment companies (SOCIMIs).


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3. ACCOUNTING POLICIES

The main accounting policies applied by the Group to prepare its interim consolidated annual accounts, inaccordance with the Chart of Accounts and the regulations governing the preparation of consolidated annualaccounts, are as follows:

3.1. Subsidiaries

Acquisition of control

The acquisition of control by the parent company (or other Group company) over a subsidiary is a businesscombination recognised using the acquisition method. Under this method, the acquiring entity mustrecognise, at the acquisition date, the identifiable assets acquired and liabilities assumed in the businesscombination and, if applicable, the resulting goodwill or negative difference. Subsidiaries are consolidated asfrom the date on which control is transferred to the Group and are de-consolidated as from the date on whichcontrol ceases.

Acquisition cost is the sum of the fair values, at the acquisition date, of the assets handed over, liabilitiesincurred or assumed and equity instruments issued by the acquiring entity, and the fair value of anycontingent consideration subject to future events or to the fulfilment of certain conditions that must berecognised as an asset or liability, or in equity, depending on its nature.

Costs relating to the issuance of the equity instruments or financial liabilities handed over do not form partof the cost of the business combination and are recognised in accordance with the standards applicable tofinancial instruments (Note 3.7). Fees paid to legal advisors or other professionals involved in the businesscombination are expensed when incurred. Related costs generated internally and any costs that may havebeen incurred by target entity are not included in the cost of the business combination.

The excess, at the acquisition date, of the cost of the business combination over the proportional part of thevalue of the identifiable assets acquired less that of the liabilities assumed, representing the percentageshareholding in the target entity, is recognised as goodwill. In the exceptional event that this amount is higherthan the cost of the business combination, the excess is recognised as income in the income statement.

Step acquisition

When control over a subsidiary is acquired through a number of transactions effected on different dates, thegoodwill (or negative difference) is the difference between the cost of the business combination, plus the fairvalue at the acquisition date of any prior investment of the acquiring entity in the target entity, and the valueof the identifiable assets acquired less that of the liabilities assumed.


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Any gain or loss arising from fair value measurement of the prior shareholding at the date on which controlis obtained is recognised in the income statement. Where the investment was previously recognised at fairvalue, measurement adjustments pending allocation to results for the period are taken to the interimconsolidated income statement.

Consolidation method

The assets, liabilities, revenues, costs, cash flows and other items recognised in the Group companies' annualaccounts are included in the Group's interim consolidated financial statements using the full consolidationmethod. This method requires the following procedures:

a) Time consistency.

The interim consolidated financial statements relate to the same date and period as the interim financialstatements of the companies to be consolidated.

b) Value consistency.

The assets, liabilities, revenues, expenses and other items in the Group companies' interim consolidatedfinancial statements have been measured consistently. Assets, liabilities, revenues and expenses measuredusing methods not consistent with those applied during consolidation have been remeasured and adjustedfor consolidation purposes only.

c) Aggregate figures.

The items recognised in the interim individual financial statements, following consistency adjustments, areaggregated by nature.

d) Investment-equity elimination.

The carrying amounts of the subsidiaries’ equity instruments held directly or indirectly by the parent entityare offset against the proportional part of the equity items of that subsidiary attributable to the shareholding,based generally on values obtained using the acquisition method described previously. In consolidationprocesses following the period in which control is acquired, any excess or shortfall in equity generated by thesubsidiary as from the acquisition date and attributable to the parent entity is presented in the interimconsolidated balance sheet in reserves or in measurement adjustments, depending on its nature. The portionattributable to minority shareholders is recognised in “Non-controlling interests”.


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e) Non-controlling interests.

Non-controlling interests are measured based on the actual share in the subsidiary's equity after the above-mentioned adjustments. Goodwill on consolidation is not attributed to non-controlling interests. The excessof losses attributable to a subsidiary's minority interests and the portion of its equity pertaining to thoseinterests is attributed to minority interests, even where this results in a debtor balance in that account.

The Group has no external shareholders since the subsidiaries are wholly owned by the parent company.

f) Eliminations of intragroup items.

Receivables, payables, revenues, expenses and cash flows between Group companies are entirely eliminated.All gains and losses from intragroup transactions are eliminated and deferred until they are realised vis-à-visnon-Group third parties.

Change in shareholding without loss of control

Once control over a subsidiary is obtained, subsequent operations giving rise to changes in the parent'sshareholding in the subsidiary, without loss of control, are recognised in the interim consolidated financialstatements as dealings in own equity instruments, applying the following rules:

- The amounts of any goodwill or negative difference recognised, or of other assets and liabilitiesrecognised, are not changed;

- Any gain or loss recognised in the interim individual financial statements is eliminated onconsolidation and the reserves of the company whose shareholding is reduced are adjustedaccordingly;

- The items “measurement adjustments" and “grants, donations and bequests” are adjusted toreflect the interest in the subsidiary's capital held by Group companies;

- Non-controlling interests in the subsidiary's equity are recognised based on the percentageshareholdings of non-Group third parties in the subsidiary, once the operation is completed,including the percentage share of goodwill recognised in the consolidated accounts as a resultof the change that has taken place.

- The adjustment resulting from points a), b) and c) above is recognised in reserves.


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Loss of control

When control over a subsidiary is lost, the following rules are applied:

- The gain or loss recognised in the interim individual financial statements is adjusted forconsolidation purposes;

- If the subsidiary acquires jointly-controlled entity or associate status, it is consolidated initiallyusing the equity method, applying on initial measurement the fair value of the shareholdingretained at that date;

- The interest in the subsidiary's equity retained following loss of control that is not included inthe consolidation scope is measured applying the criteria for financial assets, the initial valuebeing the fair value at the date on which the interest is excluded from the consolidation scope;

- An adjustment is recognised in the interim consolidated income statement to reflect non-controlling interests in the revenues and expenses generated by the subsidiary during theperiod to the date of loss of control, and in the transfer to the income statement of therevenues and expenses recognised directly in equity.

3.2. Intangible assets

As a general rule, intangible assets are initially carried at acquisition price or production cost. They aresubsequently measured at cost less related accumulated amortisation and any impairment losses. Intangibleassets are amortised over their estimated useful lives.

The Group recognises as “Computer software” costs incurred to acquire and develop computer programs.Computer software maintenance costs are recognised in the interim income statement for the year in whichthey are incurred. Computer software is amortised on a straight-line basis over 3 years.

3.3. Property, plant and equipment

Property, plant and equipment is initially carried at acquisition price and subsequently reduced byaccumulated depreciation and any impairment losses.

Repair and maintenance costs relating to property, plant and equipment are recorded in the interimconsolidated income statement in the year in which they are incurred. Conversely, amounts invested inimprovements that help to increase the capacity, efficiency or useful life of the assets are recognised as anincrease in their cost.

Computer processing equipment is depreciated on a straight-line basis over five years.


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3.4. Investment property

The interim consolidated balance sheet item “Investment property” reflects the values of land, buildings andother installations and constructions that are owned for leasing.

The properties are carried at cost, which is their acquisition price.

Acquisition price includes, in addition to the amount billed by the seller after deducting any discount orrebate, all directly related additional costs incurred until the property is ready for use.

Subsequently, properties are measured at acquisition price less accumulated depreciation and anycumulative impairment adjustments.

Properties are depreciated on a systematic and reasonable basis in accordance with their useful life andresidual value, taking into consideration the decline in value caused by ordinary wear and tear and includingany technical or commercial obsolescence. As regards the Group’s properties, a 2% depreciation rate isapplied to constructions.

Any changes that may arise in their residual value, useful life or depreciation method applied are recognisedas changes in accounting estimates, unless they are errors.

Investment property maintenance and repair costs that do not improve future cash flows from the cash-generating unit of which they form part, or its useful life, are charged to the expense accounts included inthe interim consolidated income statement for the period in which they are incurred.

3.5. Impairment of intangible assets, PPE and investment property

Assets subject to depreciation/amortisation are tested for impairment whenever events or changes incircumstances indicate that the carrying amount might not be recoverable.

An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverableamount, which is the asset's fair value less the higher of costs to sell and value in use.

The Group commissions an independent expert, CBRE, to determine the value of all its investment propertiesat the end of each quarter. These valuations are carried out in accordance with the RICS Appraisal andValuation Standards published by the UK-based Royal Institution of Chartered Surveyors ("Red Book").


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For the purposes of calculating the value of investment property, the amount that the Group expects torecover through leasing is taken into consideration. With this aim, cash flow projections are employed,applying the best estimate of lease instalments based on expectations for each asset and taking into accountany uncertainty that could reduce cash flows or the discount rate. The value in use of investment propertyneed not be identical to its fair value since value in use relates to specific factors affecting the company,mainly the capacity to impose prices above or below market levels thanks to the acceptance of different risksor the contraction of costs (construction or selling costs, for investment properties in course of construction;refurbishment costs; maintenance costs, etc.) other than the ones applicable to industry companies ingeneral.

Estimated yields depend on the type, age and location of the property. Properties have been appraisedindividually taking into account each lease in force at the year end and any foreseeable leases.

The carrying amount of the Group’s investment properties is adjusted at each year end, recognising anyimpairment loss in order to arrive at the recoverable amount when fair value less costs to sell is below thecarrying amount.

When an impairment loss is reversed, the asset’s carrying amount is increased to the adjusted estimate of itsrecoverable amount, without exceeding the carrying amount that would have been calculated had noimpairment loss been recognised in prior years. The reversal of an impairment loss is recognised in the interimconsolidated income statement.

3.6. Leases

Contracts are classified as finance leases when on the basis of the economic terms it may be inferred that allthe risks and rewards of ownership of the leased asset have been transferred to the lessee. Otherwise, thecontracts are classified as operating leases.

Operating lease

Income and expenses deriving from operating leases are taken to the interim consolidated income statementin the year in which they accrue on a straight-line basis over the estimated lease term.

The acquisition cost of the leased asset is presented in the interim consolidated balance sheet on the basis ofits nature, increased by the amount of directly attributable contractual costs, which are recognised as anexpense over the lease term using the same method applied to recognise lease income.

Any collection or payment that may be made when an operating lease is arranged is treated as an advancecollection or payment and is taken to results over the lease period as the profits from the leased asset areassigned or received.


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3.7. Financial instruments

Recognition

The Group recognises a financial instrument when it becomes party to a contract or legal business inaccordance with the contractual provisions.

Debt instruments are recognised as from the date on which the legal right to receive or obligation to pay casharises. Financial liabilities are recognised on the contract date.

Classification and separation of financial instruments

Financial instruments are classified at the time of initial recognition as a financial asset, a financial liability oran equity instrument, in accordance with the economic substance of the contractual agreement and thedefinitions of financial asset, financial liability or equity instrument.

The Group classifies financial instruments in different categories, taking into account their characteristics andManagement’s intentions at the time of initial recognition.

Netting principles

A financial asset and a financial liability may be netted only when the Group has the enforceable right tooffset the amounts recognised and has the intention to settle the net amount or to realise the asset andcancel the liability simultaneously.

3.7.1. Financial Assets

Classification

The Group’s financial assets are classified in the following categories:

a. Loans and receivables: financial assets arising on the sale of assets or the provision of servicesin relation to the Company’s business operations, or financial assets not arising from businesstransactions that are not equity or derivative instruments, from which collections arise in fixedor determinable amounts, and are not traded in an active market.

b. Other financial assets: these include assets derived from guarantee deposits received underoperating leases. They are equal to between 90% and 100% of the guarantee deposits receivedfrom lessees at fair value.

Initial measurement

In general, financial assets are initially carried at the fair value of the payment made plus directly attributabletransaction costs.


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In the case of equity investments in Group companies affording control over the investee, fees paid to legaladvisors or other professionals related to the acquisition of the investment are taken directly to the interimconsolidated income statement.

Subsequent measurement

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for maturities greater than 12 monthsas from the interim consolidated balance sheet date, which are classified as non-current assets. Loans andreceivables are included in “Loans to companies” and “Trade and other receivables” in the interimconsolidated balance sheet.

Financial assets are initially measured at fair value, including directly attributable transaction costs, and aresubsequently carried at amortised cost. Accrued interest is recognised at the effective interest rate, which isthe discount rate that brings the instrument’s carrying amount into line with all estimated cash flows tomaturity. Trade receivables falling due in less than one year are carried at face value at both initial recognitionand subsequent measurement, provided that the effect of not discounting flows is not significant.

At the year end, at least, the necessary value adjustments are made to account for impairment when thereis objective evidence that all receivables will not be collected.

The amount of the impairment loss is the difference between the asset’s carrying amount and the presentvalue of estimated future cash flows, discounted at the effective interest rate prevailing at the date of initialrecognition. Value adjustments, and reversals, where applicable, are recognised in the interim consolidatedincome statement.

Write-off of financial assets

Financial assets are derecognised when the rights to receive cash flows from the investments have expiredor have been transferred and the Group has transferred substantially all risks and rewards of ownership.

The write-off of a financial asset entails the recognition of a gain or loss in the amount of the differencebetween its carrying amount and the sum of the consideration received, net of transaction costs, includingassets obtained or liabilities assumed and any deferred loss or gain in income and expenses recognised ininterim consolidated equity.

3.7.2. Financial Liabilities

Financial liabilities are the Group's creditors and payables arising from the purchase of goods and services inthe ordinary course of business, or financial liabilities not arising from business transactions that cannot betreated as derivative financial instruments.


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Creditors and payables are initially carried at the fair value of the payment received, adjusted for directlyattributable transaction costs. The liabilities are subsequently measured at amortised cost.

Other financial liabilities include the amount of guarantee deposits received under operating leases,representing 100% of guarantees paid by lessees at fair value.

Derecognition of financial liabilities

The Group writes off a financial liability or part of a financial liability when it has fulfilled the obligationcontained in the liability or is legally released from the basic responsibility contained in the liability, eitherthrough legal proceedings or by the creditor.

3.8 Financial derivatives and hedge accounting

Financial derivatives are measured at fair value at both initial recognition and subsequent measurement.Resulting gains or losses are recognised depending on whether or not the derivative has been designated asa hedging instrument and, if so, on the nature of the hedge item.

Hedging instruments are measured and accounted for by nature insofar as they are not or are no longereffective hedges.

The Group designates a derivative contracted to hedge a specific risk associated with a recognised liability orwith a highly probable forecast transaction as a hedging instrument (cash flow hedge).

The Group documents at inception the relationship between the hedging instruments and hedged items, itsrisk management objectives and its strategy when arranging a number of hedging transactions. The Groupalso documents its assessment, at both inception and on an ongoing basis, of whether the derivatives usedin hedging transactions are highly effective in offsetting changes in the fair value or cash flows of the itemshedged.

The total fair value of a hedging derivative is classified as a non-current asset or liability if the time remainingto maturity of the hedged item is more than 12 months and as a current asset or liability if the time remainingto maturity of the hedged item is less than 12 months.

3.9 Cash and cash equivalents

This interim consolidated balance sheet caption includes cash, bank current accounts, deposits and assetrepos that meet all of the following requirements:

• They are convertible into cash.• On acquisition, they will mature in three months or less.• They are not subject to significant value fluctuation risk.• They form part of the Group’s ordinary cash management policy.


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3.10 Foreign-currency transactions

The Group’s functional currency is the euro. Transactions in currencies other than the euro are thus deemedto be denominated in foreign currency and are recorded at the exchange rates prevailing on the transactiondates.

At the closing date of these interim consolidated financial statements, monetary assets and liabilitiesdenominated in foreign currency are translated applying the exchange rate in force at the interimconsolidated balance sheet date. Gains or losses are taken directly to the interim consolidated incomestatement in the period in which they arise.

3.11 Current and deferred taxes

In accordance with the SOCIMI tax scheme, the Group is subject to 0% corporate income tax.

Pursuant to Article 9.2 of Law 11/2009 (26 October) and the amendments brought in by Law 16/2012 (27December), the Group will be subject to a special 19% tax on gross dividends or shares of profits distributedto shareholders owning 5% or more of the relevant company, where the dividends, for the shareholders, aretax exempt or subject to tax of less than 10% (the amount of tax owed under the Law on Non-Resident IncomeTax will be taken into consideration).

However, that special tax will not be applicable when the dividends or shares of profits are received byentities engaged in holding shares in other SOCIMIs or in other entities not resident in Spain that have thesame corporate object as a SOCIMI and are subject to a tax scheme similar to the SOCIMI scheme as regardsthe obligation, stipulated by law or in the by-laws, to distribute profits to shareholders owning 5% or more ofthe entity’s capital and paying tax of at least 10% on such dividends or shares of profits.

On 25 September 2013, with effect as from 1 January 2013, the parent company and its subsidiaries SurfingMoon Investments, S.L.U. and Pallars 193-205, S.L.U. notified their local Tax Administration State AgencyOffice of the single shareholder's decision to apply the special SOCIMI tax scheme.

3.12 Income and expense

Income and expense are recorded on an accrual basis, i.e. in the period in which the income or expensederiving from the goods or services in question is earned or incurred rather than the period in which the cashis actually received or disbursed.

Sales revenue is recognised at the time the significant risks and rewards inherent in ownership of the assetsold are transferred to the buyer and current management or effective control over the asset does notcontinue.

Lease income is recognised on an accrual basis applying the straight-line method over the lease term.


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Interest received on financial assets is recognised using the effective interest method and dividends arerecognised when the shareholder’s right to receive them is declared. In any event, interest and dividends onfinancial assets accrued after the time of acquisition are recognised as income in the interim consolidatedincome statement.

3.13 Provisions and contingencies

The parent company’s directors have prepared the interim consolidated annual accounts distinguishingbetween:

a. Provisions: creditor balances that cover present obligations deriving from past events, thesettlement of which is likely to trigger an outflow of funds the amount or timing of which cannotbe determined.

b. Contingent liabilities: possible obligations resulting from past events, the future materialisationof which is contingent upon the occurrence or otherwise of one or more future events that arebeyond the Group's control.

These interim consolidated financial statements reflect all provisions in respect of which it is more likely thannot that the obligation will have to be fulfilled. Unless they are deemed to be remote, contingent liabilitiesare not recognised in the interim consolidated financial statements but are reported in the notes to theconsolidated accounts.

Provisions are carried at the present value of the best possible estimate of the amount necessary to settle ortransfer the obligation, taking into account the information available on the event and its consequences. Anyadjustments arising on the updating of such provisions are reflected as a financial expense on an accrual basis.

The consideration receivable from a third party when the obligation is settled is recognised as an asset,provided there are no doubts that the consideration will be received, except in the event that there is a legalrelationship through which a part of the risk has been externalised and whereby the Group is not liable; inthis situation, the consideration will be taken into account to estimate the amount of the relevant provision.

3.14 Environmental assets

Expenses relating to the decontamination and restoration of contaminated locations, waste disposal andother expenses deriving from compliance with environmental legislation are reflected as an expense in theyear in which they arise unless they relate to the purchase cost of assets included in the Group’s equity. Nosignificant environmental costs or investments have been incurred or made.


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3.15 Classification of assets and liabilities as current and non-current

Assets and liabilities are presented in the interim consolidated balance sheet as current and non-current. Forsuch purposes, assets and liabilities are classified as current when they relate to the Group’s ordinaryoperating cycle and they are expected to be sold, consumed, realised or settled in the course of that cycle;they differ from the above and are expected to mature, to be sold or to be realised in a maximum of oneyear. They are held for trading or consist of cash and cash equivalents the use of which is not restricted for aperiod of more than one year.

3.16 Related-party transactions

Transactions between Group and related companies, barring transactions that relate to mergers, spin-offsand non-cash contributions of business lines, are recognised at the fair value of the consideration paid orreceived. The difference between that value and the agreed amount is reflected on the basis of the underlyingeconomic substance.

The Group carries out all transactions with related parties at arm's length values.

3.17 Equity

The parent company's share capital consists of ordinary shares.

In the event that the parent company’s treasury shares are acquired, the consideration paid, including anydirectly attributable incremental cost, is deducted from equity until the shares are redeemed, reissued orsold. When treasury shares are subsequently sold or reissued, any amount received is taken to equity net ofdirectly attributable incremental costs.

4. Financial risk management

The Group’s activities are exposed to various financial risks: market risk (including interest rate risk andforeign exchange risk), credit risk and liquidity risk. The Group’s overall risk management program focuses onuncertainty in financial markets and seeks to minimise the potential adverse impact on its financialprofitability.

Risk management is carried out by the Group’s Finance Department, which identifies, evaluates and hedgesfinancial risks in accordance with the policies approved by the Board of Directors. The Board provides overalland area-specific risk management policies for interest rate and liquidity risk.

4.1. Financial risk management

a) Market risk

Market risk relates to possible losses caused by changes in fair values or in future cash flows from financialinstruments due to market price fluctuations. Market risk includes interest rate risk, foreign exchange riskand other price risks.


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Interest rate risk

Interest rate risk arises from possible losses brought about by changes in fair values or in future cash flowsfrom financial instruments due to market interest rates fluctuations. The Group seeks to mitigate interestrate risk by contracting derivative financial instruments.

Foreign exchange risk

The Group has no exposure to foreign exchange risk since transactions are effected in euros, its functionalcurrency.

b) Credit risk

Credit risk is managed at the Group level. The Group defines the risk management and analysis policy to beapplied to new customers before offering them the usual payment periods and terms. Credit risk derivesbasically from guarantees deposited with the relevant entities, trade receivables for sales and services, andsundry receivables. The credit quality that must be observed in customers is established by the Group’s CreditControl Department, based on their financial position, past experience and other factors.

The Group considers that it has no significant credit risk concentration, based on the possible impact ofdefault on its income statement.

c) Liquidity risk

Cash flows are predicted by the Group’s Finance Department. The Group’s forecast cash needs are monitoredto ensure that there is sufficient cash to meet operating needs and sufficient liquidity available at all timesfor the Group to stay within the limits and fulfil the covenants stipulated in financing agreements.

4.2. Fair value estimation

The fair value of financial instruments that are not traded in an active market is determined using valuationtechniques. The Group uses a variety of methods and makes assumptions that are based on market conditionsexisting at each balance sheet date. For long-term debt, listed market prices or agent quotes are employed.Other techniques, such as the discounting of estimated cash flows, are used to determine the fair value ofother financial instruments.

It is assumed that the carrying amounts of trade receivables and payables approximate their fair values. Fairvalue of financial liabilities for financial reporting purposes is estimated by discounting future contractualcash flows at the current market interest rate available to the Group for similar financial instruments.


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5. INTANGIBLE ASSETS

Movements in this interim consolidated balance sheet caption at 30 June 2017 and 30 December 2016 are asfollows:

Balance at 31.12.2016 Additions Balance at 30.06.2017

Cost

Computer software 308 - 308

308 - 308

Amortisation

Computer software (308) - (308)

(308) - (308)

Carrying amount - - -

Euro


Cost

Computer software 308 - 308

308 - 308

Amortisation

Computer software (308) - (308)

(308) - (308)

Carrying amount - - -

At 30 June 2017 and 31 December 2016, fully-amortised intangible assets amount to €308.


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6. PROPERTY, PLANT AND EQUIPMENT


Euro


Cost

Data-processing equipment 33,342 42,884 76,226

33,342 42,884 76,226

Depreciation

Data-processing equipment (5,430) (412) (5,842)

(5,430) (412) (5,842)

Carrying amount 27,912 42,472 70,384

Euro


Cost

Data-processing equipment 5,842 27,500 33,342

5,842 27,500 33,342

Depreciation

Data-processing equipment (3,970) (1,460) (5,430)

(3,970) (1,460) (5,430)

Carrying amount 1,872 26,040 27,912

There are no fully-depreciated property, plant and equipment at 30 June 2017 or 31 December 2016.


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7. INVESTMENT PROPERTY


Euro

Balance at31.12.2016

Additions Disposals TransfersBalance at30.06.2017

Cost

Land 53,773,250 - - - 53,773,250

Buildings 42,073,189 48,419 - - 42,121,608

95,846,439 48,419 - - 95,894,858

Depreciation

Buildings (3,166,376) (410,196) - - (3,576,572)

(3,166,376) (410,196) - - (3,576,572)

Impairment - - - - -

Carrying amount 92,680,063 (361,777) - - 92,318,286

Euro

Balance at31.12.2015

Additions Disposals TransfersBalance at31.12.2016

Cost

Land 53,773,250 - - - 53,773,250

Buildings 41,929,693 143,496 - - 42,073,189

95,702,943 143,496 - - 95,846,439

Depreciation

Buildings (2,315,714) (850,662) - - (3,166,376)

(2,315,714) (850,662) - - (3,166,376)

Impairment - - - - -

Carrying amount 93,387,229 (707,166) - - 92,680,063


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The investment properties included in this interim consolidated balance sheet caption at 30 June 2017 and31 December 2016 relate to rented properties. A breakdown is set out below:

- Building E, Omega Business Park, Alcobendas (Madrid): the Group acquired this property in theOmega business park in Alcobendas, Madrid, under a purchase deed executed on 21 December2012, from the company “Parque Empresarial Omega, S.L. (Sociedad Unipersonal)”.

- Building F, Omega Business Park, Alcobendas (Madrid): the Group acquired this property in theOmega business park in Alcobendas, Madrid, under a purchase deed executed on 21 December2012, from the company “Parque Empresarial Omega, S.L. (Sociedad Unipersonal)”.

- Building located at calle Gran Vía 4, Madrid. Under a purchase deed executed on 28 December2012, the Group acquired the building located at calle Gran Vía 4, with its façade at Calle de laReina 20, Madrid from “NCG Banco S.A.”

- Building C, Omega Business Park, Alcobendas (Madrid): the Group acquired this property in theOmega business park in Alcobendas, Madrid, under a purchase deed executed on 28 February2013, from the company “Parque Empresarial Omega, S.L. (Sociedad Unipersonal)”.

- Building D, Omega Business Park, Alcobendas (Madrid): the Group acquired this property in theOmega business park in Alcobendas, Madrid, under a purchase deed executed on 28 February2013, from the company “Parque Empresarial Omega, S.L. (Sociedad Unipersonal)”.

- Pallars 193-205 building, in Barcelona: the Group acquired the building located at calle Pallars193-205, Barcelona, from the company EOIV PALLARS, S.L., under a purchase deed executedon 10 July 2013.

Occupancy in the Group's portfolio at 30 June 2017 stands at approximately 52.9%, as compared withapproximate occupancy of 45.4% at 31 December 2016.

Additions for the year relate mainly to the renewal of a set of elements forming part of the building.Committed future investments to improve investment properties total approximately €0 thousand.

The Group guaranteed the loan of €39 million granted by Banco de Sabadell, S.A. to the parent company on26 August 2016 under a first-rate, multi-purpose mortgage arrangement covering all its properties.

The Group had its properties appraised by an independent expert in accordance with the RICS Appraisal andValuation Standards published by the UK-based Royal Institution of Chartered Surveyors ("Red Book"). Thegross income capitalisation method was used, applying an estimated market yield to obtain a capital valueafter discounting estimated costs to sell. The value obtained was reviewed by the independent valuer bycomparing it with the result of applying the discounted cash flow method.

The directors consider that there are no signs of impairment of any of the Group’s assets based on theappraisals carried out at 30 June 2017.

The directors consider that the assets recognised in this caption are adequately insured. There are no fully-depreciated assets in this caption.


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8. LEASES

At 30 June 2017 and 31 December 2016, the Group has arranged with its lessees the following minimum leaseinstalments, in accordance with the contracts currently in effect, not taking into account the charging ofcommon expenses, future inflation or future rental reviews under contractually agreed terms, for a total of€17,956,402 (€18,603,072 at 31 December 2016). A breakdown is as follows:

Euro

Minimum operating lease instalments30 June

201731 December

2016

Less than 1 year 4,655,093 4,280,644

Between 1 and 5 years 16,331,059 14,898,853

More than 5 years 1,898,341 1,233,450

Total 22,884,493 20,412,947

9. ANALYSIS OF FINANCIAL INSTRUMENTS

9.1. Analysis by category

Financial Assets

Euro

30 June 2017 31 December 2016

Non-current Current Non-current Current

Loans and receivables

Other financial assets 738,292 139,856 514,111 334,040

Trade and other receivables

Trade receivables for sales and provision of services - 426,816 - 508,998

Other receivables - 42,024 - 130,244

Total financial assets 738,292 608,696 514,111 973,282


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Financial Liabilities

Euro


Non-current Current Non-current Current

Creditors and payables

Other financial liabilities with third parties 38,812,140 1,386,384 39,477,930 958,394

Other financial liabilities Group companies - - - -

Trade and other payables

Suppliers and creditors - 525,149 - 273,776

Other payables - 60,196 - 85,000

Total financial liabilities 38,812,140 1,971,729 39,477,930 1,317,170

9.2. Analysis by maturity date

Financial Assets

Euro

30 June 2017

2017 2018 2019 20202021 andbeyond

TOTAL

Other financial assets 139,856 72,476 75,091 185,400 405,325 878,148

Trade receivables for sales and provision of services 426,816 - - - - 426,816

Sundry receivables 42,024 - - - - 42,024

608,696 72,476 75,091 185,400 405,325 1,346,988

Euro

31 December 2016

2017 2018 2019 20202021 andbeyond

TOTAL

Other financial assets 334,040 140,401 14,531 206,002 153,177 848,151

Trade receivables for sales and provision of services 508,998 - - - - 508,998

Sundry receivables 130,244 - - - - 130,244

973,282 140,401 14,531 206,002 153,177 1,487,393


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Financial Liabilities

Euro

30 June 2017

2017 2018 2019 20202021 andbeyond

TOTAL

Other financial liabilities 613,514 72,476 99,861 216,825 476,248 1,478,924

Long-term bank borrowings 382,870 828,750 1,218,750 2,096,250 35,122,495 39,649,115

Suppliers and creditors 525,149 - - - - 525,149

Other payables 60,196 - - - - 60,196

1,581,729 901,226 1,318,611 2,313,075 35,598,743 41,713,384

The total does not agree with the analysis by category because the loan held by the Company from BancoSabadell was initially recognised at amortised cost and therefore all costs incurred in the arrangement of theloan that were paid when it was granted are netted against the amount owed to the financial institution andare being amortised over the life of the loan. The amount of these expenses pending amortisation at 30 June2017 stands at €929 thousand.

Euro

31 December 2016

2017 2018 2019 20202021 andbeyond

TOTAL

Other financial liabilities 511,066 137,122 102,303 227,701 395,394 1,373,586

Long-term bank borrowings 447,328 828,750 1,218,750 2,096,250 35,427,819 40,018,897

Suppliers and creditors 273,776 - - - - 273,776

Other payables 85,000 - - - - 85,000

1,317,170 965,872 1,321,053 2,323,951 35,823,213 41,751,259

The total does not agree with the analysis by category because the loan held by the Company from BancoSabadell was initially recognised at amortised cost and therefore all costs incurred in the arrangement of theloan that were paid when it was granted are netted against the amount owed to the financial institution andare being amortised over the life of the loan. The amount of these expenses pending amortisation at 31December 2016 stands at €956 thousand.


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10. LOANS AND RECEIVABLES

Set out below is a breakdown of loans and receivables at 30 June 2017 and 31 December 2016:

Euro


Long-term loans and receivables:


738,292 514,111

Short-term loans and receivables:

Trade receivables for sales and provision of services 385,760 508,998

Sundry receivables 42,024 130,244

Other amounts receivable from Public Administrations 35,674 52,663


Receivable from related parties 41,056 -

644,370 1,025,945

1,382,662 1,540,056

“Other long- and short-term financial assets” relate to guarantee deposits for offices and garage spaces in thebuildings referred to in Note 7 to these consolidated accounts on investment property.

The carrying amounts of guarantee deposits do not differ significantly from their fair value. Long-termguarantee deposits mature over a similar term to the relevant lease entered into with each lessee.

The item “Other amounts receivable from Public Administrations” records the amount of value added taxdeclared at the end of each period and pending refund by the tax authorities.

The Group's directors have not recognised any provision since loans and receivables are deemed to be fullyrecoverable.

11. CASH AND CASH EQUIVALENTS

Euro


Cash and banks 4,633,540 3,834,607

4,633,540 3,834,607

The Group arranged a pledge on its bank account balances at Banco Sabadell as surety for the loan obtainedfrom that bank on 26 August 2016.


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12. SHAREHOLDERS' FUNDS

12.1 Capital

The parent company was formed on 10 September 2012 with a share capital of €60,000, consisting of 60,000shares with a par value of one euro each, numbered correlatively 1 through 60,000; the shares weresubscribed for and paid up by the single shareholder, Auxadi Servicios de Mediación, S.L. (SociedadUnipersonal), in an amount equal to 25% of the par value of each share (€15,000).

On 30 November 2012, the parent company's single shareholder transferred all the parent company's sharesto Autonomy Real Estate Spain, B.V., a company domiciled in Amsterdam (Netherlands), which became theparent company's new single shareholder.

On 28 December 2012, the single shareholder resolved to increase the parent company's capital by €480,000by creating and issuing 480,000 new registered shares with the same par value (€1 each), numberedcorrelatively 60,001 through 540,000. As a result of the capital increase, the parent company's share capitalstood at €540,000. A share premium of €41,475,000 was paid together with the capital increase.

On 10 June 2013, the single shareholder resolved to increase the parent company's capital by €4,460,000 bycreating and issuing 4,460,000 new registered shares with a par value of one euro each, numberedcorrelatively 540,001 through 5,000,000. A share premium of €10,490,000 was paid together with the capitalincrease.

On 25 August 2013, the single shareholder resolved to increase capital again, by €42,500, creating and issuing42,500 new registered shares with a par value of one euro each, numbered correlatively 5,000,001 through5,042,500; the shares were fully paid up by the Luxembourg company Autonomy Real Estate Spain, S.à.r.l.The parent company thus ceased to be a single shareholder company, Autonomy Real Estate Spain, B.V.holding a 99.16% stake and Autonomy Real Estate Spain, S.à.r.l. a 0.84% stake. A total share premium of€3,357,000 was paid together with the capital increase.

Finally, on 24 September 2013, the dissolution and liquidation of Autonomy Real Estate Spain, B.V. wascompleted. As the Luxembourg company Autonomy Real Estate, S.à.r.l. was in turn the single shareholder ofAutonomy Real Estate Spain, B.V., the Luxembourg company acquired the parent company's shares held byAutonomy Real Estate Spain, B.V., as part of the profits on liquidation (together with other rights andobligations).

On 9 January 2014, the single shareholder resolved to increase capital again, by €17,378, creating and issuing17,378 new registered shares with a par value of one euro each, numbered correlatively 5,042,501 through5,059,878; the shares were fully paid up. A share premium of €1,372,851 was paid together with the capitalincrease.

On 24 September 2015, the parent company was listed on the Alternative Stock Market (“MAB”) andtherefore ceased to be a single shareholder company.


30

At 30 June 2017, the parent company's share capital stands at €5,059,878, consisting of 5,059,878 fullysubscribed and paid up shares with a par value of one euro each, all in the same class.

Companies with a shareholding of 5% or more in the parent company at 30 June 2017 and 31 December 2016are listed below:

30 June 2017Company No. of shares % shareholding

Autonomy Real Estate Spain, S.à.r.l. 4,935,763 97.54708%

31 December 2016Company No. of shares % shareholding

Autonomy Real Estate Spain, S.à.r.l. 5,058,553 99.97381%

In relation to Circular 14/2016 and the “Requirements and procedures applicable to the inclusion andexclusion in the Alternative Stock Market (MAB) of shares issued by expanding companies and listed propertyinvestment companies (SOCIMI)”, in the directors’ opinion, during the first half of 2017, the minimumrequired disclosure was accomplished within the established deadlines and in accordance with therequirements issued by the MAB.

12.2 Share premium

The share premium is freely available for distribution.

On 15 January 2016, the parent company, in a universal general meeting held in Madrid, resolved to pay outa share premium of €1,000,000. This amount was paid out on 18 January 2017.

12.3 ReservesEuro

30 June 201731 December

2016

Parent company reserves

Unrestricted reserves:

Prior-year losses (5,447,602) (4,660,370)

Total parent company reserves 5,447,602 (4,660,370)

Reserves in consolidated companies 2,874,460 1,691,985

TOTAL (2,573,142) (2,968,385)


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12.4 Proposed distribution of results

The proposed distribution of the parent company's results is as follows:

Available for distribution:31 December

2016

Loss for the year (787,232)

Application:

Prior-year losses (787,232)

12.5 Contribution to consolidated results

Set out below are contributions to consolidated results by company:

Individualprofit/(loss)

Consolidation eliminationsand adjustments

Profit/(loss)contributed

Autonomy Spain Real Estate SOCIMI, S.A. 1,263,664 (2,513,479) (1,249,815)

Surfing Moon Investments, S.L.U. 746,415 96,040 842,455

Pallars 193, S.L.U. 431,706 24,010 455,716

2,441,785 (2,393,429) 48,356

13. CREDITORS AND PAYABLES

Creditors and payables as at 30 June 2017 and 31 December 2016 break down as follows:

Euro


Long- term creditors and payables:


Long-term bank borrowings and derivatives 37,946,730 38,615,412

38,812,140 39,477,930

Short-term creditors and payables:

Trade payables 525,149 273,776

Accrued wages and salaries 60,196 85,000

Other amounts payable to Public Administrations (Note 14.1) 244,805 262,020


Short-term bank borrowings 772,870 447,328

2,216,534 1,579,190

41,028,674 41,057,120

At 30 June 2017, the Group records a loan of €39 million from the financial institution Banco de Sabadell, S.A.("Banco Sabadell"), obtained on 26 August 2016. The loan bears ordinary interest at a rate equal to the 12-month Euribor plus a spread of 220 basis points and matures on 26 August 2025. The parent company alsoentered into an interest rate hedging agreement with Banco Sabadell for an amount equal to 75% of the loan


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granted, which expires on 27 February 2023. At 30 June 2017, this derivative is valued at €(851,245)(€(1,156,569) at 31 December 2016). Interest accrued in the first half of 2017 totalled €625,757 (Note 16.5).

The loan is secured as follows: (i) a first-rate, multi-purpose mortgage on the Group’s properties; (ii) first-ratepledge, without transfer of ownership, on receivables under various contracts relating to the Group’sproperties (mainly insurance contracts, leases, project bank accounts and hedges); (iii) commitment to pledgereceivables under any new leases on the Group's properties; (iv) joint and several guarantee depositsfurnished by Surfing Moon and Pallars 193-205; and (v) pledge on all the shares in Surfing Moon and Pallars193-205.

Among other obligations, the Group is required to fulfil a number of loan covenants at the consolidated levelthroughout the loan term.

In the directors’ opinion, the covenants are fulfilled at 30 June 2017 and at the issuance date of these interimconsolidated annual accounts.

Other financial liabilities

Euro


Long-term guarantees received 767,124 520,570

Short-term guarantees received 144,406 328,754

Long-term deposits received 86,158 341,948

Short-term deposits received 481,236 182,312

Total 1,478,924 1,373,584

Guarantees and deposits received relate to the offices and garage spaces referred to in Note 7 on investmentproperty, as well as to additional deposits and guarantees requested from customers.

13.1. Information on the deferral of payments to suppliers.

There follows a breakdown of the information required by Final Provision Two of Law 31/2014 (3 December),prepared in accordance with the Ruling issued by the Spanish Institute of Accounting and Auditing (ICAC) on29 January 2016:


Days Days

Average supplier payment period 15.80 12.07

Ratio of settled transactions 15.92 12.09

Ratio of transactions pending payment 0.16 1.36

Amount (euro) Amount (euro)

Total payments made 1,541,215.46 3,030,394

Total payments outstanding 11,707.25 5,999

“Average supplier payment period” refers to the period that elapses from the invoice date to actualsettlement of the transaction, as may be understood from the ICAC Ruling.


33

The average supplier payment period is calculated as a quotient in which the numerator is the sum of theratio of settled transactions multiplied by the total amount of payments made plus the ratio of transactionspending payment multiplied by the total amount of payments outstanding, and the denominator is the totalamount of payments made and payments outstanding.

The ratio of settled transactions is calculated as a quotient in which the numerator is the sum of amountspaid multiplied by the number of payment days (calendar days from the start of the period to actual payment)and the denominator is the total amount of payments made.

The ratio of transactions pending payment is calculated as a quotient in which the numerator is the sum ofamounts pending payment multiplied by the number of days pending payment (calendar days from the startof the period to day on which the annual accounts are closed) and the denominator is the total amount ofpayments outstanding.

In accordance with Article 3 of the ICAC's Ruling of 29 January 2016, the amount of transactions accruedbefore Law 31/2014 (3 December) came into force has not been considered.

The legal maximum payment period applicable to the Company under Law 11/2013 (26 July) is 30 days, unlessthe parties agree on a different period, which may not exceed 30 days.


34

14. PUBLIC ADMINISTRATIONS AND TAX SITUATION

14.1 Current balances with Public Administrations

A breakdown of current balances with Public Administrations is as follows:

Euro


Assets

Value added tax and similar 35,674 52,663

35,674 52,663

Liabilities

Value added tax and similar 225,030 233,961

Social Security contributions 4,265 5,325

Withholdings 15,510 22,734

244,805 262,020

14.2 Calculation of income tax

Set out below is the reconciliation of income and expenses for the year with the income tax assessment base:

Euro

30 June 2017

Increases Decreases Total

Net income/(expense) for the year - - 48,356

Corporate income tax - - -

Profit/(loss) before tax - - -

Temporary differences:

- arising during the year - - -

- arising in prior years - - -

Consolidation adjustments 2,393,429 - 2,393,429

Tax base (taxable income) 2,393,429 - 2,441,785

Euro

31 December 2016

Increases Decreases Total

Net income/(expense) for the year - - 395,243

Corporate income tax - - -

Profit/(loss) before tax - - -

Temporary differences:

- arising during the year 194,942 - 194,942

- arising in prior years - - -

Consolidation adjustments 2,270,219 - 2,270,219

Tax base (taxable income) 2,465,161 - 2,860,404

The increases in temporary differences relate to the limit on the deductibility of financial expenses of theindividual companies included in the consolidation scope.


35

Consolidation adjustments consist mainly of dividends received by Autonomy Spain Real Estate Socimi, S.A.from its investees Surfing Moon Investments, S.L.U. and Pallars 193-205, S.L.U. (Note 15c).

In accordance with the SOCIMI scheme, the parent company does not recognise any income in respect oftemporary differences.

The sum of the Group companies' cumulative individual tax losses is €5,263,035 at 30 June 2017 (€5,263,035at 31 December 2016), as reflected in each individual calculation.

14.3 Years open to inspection and tax inspections

In accordance with current legislation, tax assessments may not be considered definitive until the returnsfiled have been inspected by the tax authorities or the four-year limitation period has ended. At 30 June 2017,the Group is open to inspection for all periods since it was incorporated. The parent company’s directorsconsider that the relevant tax returns were filed correctly and therefore, even in the event that itsinterpretation of prevailing regulations on the tax treatment of transactions is questioned, any resultingliabilities will not significantly affect the accompanying consolidated annual accounts.

15. REPORTING REQUIREMENTS APPLICABLE TO A SOCIMI. LAW 11/2009

The following information is provided in conformity with Law 11/2009 on listed property investmentcompanies ("SOCIMI"):

a) Reserves arising in periods prior to the application of the tax scheme provided by Law 11/2009, as amendedby Law 16/2012 (27 December).

The reserves arising in periods in which the tax scheme provided by Law 11/2009, as amended by Law16/2012 (27 December), was not applied are the result of losses posted in 2012 by the company Pallars 193-205, S.L.U. (€581).

b) Reserves arising in periods in which the tax scheme provided by Law 11/2009, as amended by Law 16/2012(27 December), was applied.

Company Type of reserve Amount Tax rate

Autonomy Spain Real Estate Socimi, S.A. Losses (5,447,602) 0%

Surfing Moon Investments, S.L.U. Legal reserve 155,653 0%

Surfing Moon Investments, S.L.U. Other reserves 335,112 0%

Pallars 193-205, S.L.U. Legal reserve 41,927 0%

Pallars 193-205, S.L.U. Losses (51,662) 0%

TOTAL (4,966,572)


36

c) Dividends paid out of profits for each period in which the special tax scheme has been applicable,distinguishing the part that derives from income subject to the 0% tax rate, or the 19% tax rate, in respect ofwhich the general tax rate has been paid, if applicable.

Year Company Dividend Tax rateDistribution

resolution date

2013 Surfing Moon Investments, S.L.U. 600,000 0% 16/05/20142014 Surfing Moon Investments, S.L.U. 1,142,499 0% 20/04/20152014 Pallars 193-205, S.L.U. 548,934 0% 20/04/20152015 Surfing Moon Investments, S.L.U. 1,324,445 0% 04/04/20162015 Pallars 193-205, S.L.U. 145,775 0% 04/04/20162016 Surfing Moon Investments, S.L.U. 800,000 0% 15/11/20162017 Pallars 193-205, S.L.U. 829,529 0% 04/04/20172017 Surfing Moon Investments, S.L.U. 1,563,900 0% 04/04/2017

6,955,082

d) If dividends have been charged to reserves, indication of the periods in which the reserve applied wasgenerated and whether the reserve was taxed at 0%, 19% or the general rate.

On 15 January 2017, the parent company, in a universal general meeting held in Madrid, resolved to pay outa share premium of €1,000,000.

e) Dates of the resolution to pay out the dividends referred to in letters (c) and (d) above.

See previous point.

f) Acquisition date of leased properties and of shareholdings in entities referred to in Article 2.1 of this Law.

Properties:

Company Property LocationAcquisition

date

Autonomy Spain Real Estate Socimi, S.A. Gran Vía 4 Calle Gran Vía 4, 28013, Madrid 28/12/2012

Autonomy Spain Real Estate Socimi, S.A. Omega E Av. de Barajas 32, 28108, Alcobendas 21/12/2012*

Autonomy Spain Real Estate Socimi, S.A. Omega F Av. de Barajas 32, 28108, Alcobendas 21/12/2012*

Surfing Moon Investments, S.L.U. Omega C Av. de Barajas 32, 28108, Alcobendas 28/02/2013

Surfing Moon Investments, S.L.U. Omega D Av. de Barajas 32, 28108, Alcobendas 28/02/2013

Pallars 193-205, S.L.U. Pallars 193-205 Calle Pallars 193-205, 08005, Barcelona 10/07/2013

* This is the date on which the Company's single shareholder acquired both properties. As indicated in Note7, on 1 December 2016 the single shareholder (Autonomy Spain Real Estate SOCIMI, S.A.) increased SurfingMoon Investments, S.L.U. ’s capital through a non-cash contribution of both properties.


37

Shareholdings:

Company % interest Acquisition date

Surfing Moon Investments, S.L.U. 100% 21/08/2012

Pallars 193-205, S.L.U. 100% 26/10/2012

g) Identification of assets included in the 80% referred to in Article 3.1 of this Law.

The assets indicated in letter f.

h) Reserves for periods in which the special tax regime has been applicable and that have been utilised duringthe tax period, other than for distribution or to offset losses, stating the period in which the reserves weregenerated.

Not applicable.

16. INCOME AND EXPENSES

16.1 Revenue

Set out below is a breakdown of revenue for the six-month periods ended 30 June 2017 and 2016:

Euro

30 June 2017 30 June 2016

Lease revenue and recharged expenses 2,884,361 2,816,169

Total 2,884,361 2,816,169

This income relates to the office and garage space leases described in Note 7.

16.2 Raw materials and consumables

In this item, the Group recognises all expenses incurred to lease the buildings owned, which form part of itscore business.


38

16.3 Staff costs

Set out below is a breakdown of this interim consolidated income statement caption for the six-monthperiods ended 30 June 2017 and 2016:

Euro

30 June 2017 30 June 2016

Wages and salaries 103,421 85,812

Social Security contributions 26,009 26,457

Other staff welfare expenses 1,331 1,361

Termination benefits - -

Total 130,761 113,630

The average number of Group employees at 30 June 2017 and at end-2016 is set out below:

No. of employees

Category 30 June 201731 December

2016

Senior management - -

Technical personnel and middle management 3 4

Administrative personnel - -

Workers - -

Total 3 4

Set out below is the gender distribution by category at 30 June 2017 and at end-2016:

No. of employees


Category Men Women Men Women

Senior management - - - -

Technical personnel and middlemanagement

3 - 4 -

Administrative personnel - - - -

Workers - - - -

Senior management - - - -

Total 3 - 4 -


39

16.4 Other operating expenses


Euro

30 June 2017 30 June 2016

Rent and royalties 29,227 33,701

Repairs and maintenance - 1,086

Independent professional services 306,095 269,793

Transport 929 636

Insurance premiums 48,185 24,927

Banking and similar services 6,766 9,747

Advertising, publicity and public relations 6,456 193

Other expenses 41,184 54,888

Other taxes 59,186 52,676

Total 498,028 447,647

The item “Independent professional services” includes the Group's audit costs. Fees totalling €28,000 accruedto the Group companies' auditors (PricewaterhouseCoopers Auditores, S.L.) in the first half of 2017 (€29,250during the first six months of 2016).

16.5 Net financial income/(expense)


Euro

30 June 2017 30 June 2016

Financial expenses: (625,757) (611,328)

On payables to third parties (625,757) (611,328)

Exchange differences (12) 122

Financial income: 488 1,097

On payables to third parties 488 1,097

Net financial income/(expense) (625,281) (610,109)


40

17. TRANSACTIONS AND BALANCES WITH RELATED PARTIES

Set out below is a breakdown of balances and the main transactions completed with Group companies andassociates during the six-month periods ended 30 June 2017 and 2016:

30 June 2017 30 June 2016

Servicesprovided

Currentbalances

Servicesprovided

Currentbalances

Autonomy Real Estate Spain, S.à.r.l. - - - -

Other Group companies 58,250 41,056 66,507 66,507

Total 58,250 41,056 66,507 66,507

17.1 Directors’ and senior management remuneration

On 22 June 2015, the Company's sole administrator (to that date, Auxadi Servicios de Mediación, S.L.,represented by Ms. María Lorena Salamanca Cuevas) was replaced by the following appointees, who wereregistered in a deed executed before the Madrid notary Ms. María del Rosario de Miguel Roses under number1,405 of her protocol and entered in the Madrid Mercantile Register. The Company accepted the soleadministrator's resignation, modified the administrative body and appointed the following persons to theoffices stated below:

- Mr. Robert Charles Gibbins. Chairman and CEO.- Mr. David Ventoso Rañón. Vice Chairman and Board director.- Auxadi Servicios de Mediación, S.L.U. Board director. Represented by Mr. Víctor Salamanca Cuevas.- Mr. Alfonso Benavides Grases. Non-voting Secretary.- Mr. Andrés Berral Zurita. Non-voting Vice-secretary.

On 11 October 2016, the Board of Directors accepted the resignation of the non-voting Secretary Mr. AlfonsoBenavides Grases and on the same day appointed his replacement, Mr. Carlos Portocarrero de las HerasEscámez. The Board of Directors therefore comprises the following persons, holding the following offices:

- Mr. Robert Charles Gibbins. Chairman and CEO.- Mr. David Ventoso Rañón. Vice Chairman and Board director.- Auxadi Servicios de Mediación, S.L.U. Board director. Represented by Mr. Víctor Salamanca Cuevas.- Mr. Carlos Portocarrero de las Heras Escámez. Non-voting Secretary.- Mr. Andrés Berral Zurita. Non-voting Vice-secretary.

During the six-month period ended 30 June 2017, a total of €88 thousand accrued to the directors in respectsalaries, per diems and other remuneration.

During the six-month period ended 30 June 2016, the amount of €100 thousand accrued to the directors inrespect salaries, per diems and other remuneration.


41

At 30 June 2017 and 31 December 2016, there are no personnel classed as senior management in accordancewith the following definition:

i) Performance of functions related to the company's general objectives: Plans, directs andcontrols the company's activities, directly or indirectly.

ii) Performs his or her functions independently and with full responsibility limited only by thecriteria of and direct instructions from the legal owner(s) of the company or higher governingor administrative bodies representing the owner(s).

iii) Key planning, management and control decisions, as well as decisions affecting economic andstrategic policies, are taken by the Board of Directors.

17.2 Breakdown of director’s shareholdings in companies engaged in similar activities and performanceof similar activities by directors for their own account or for the account of third parties

Article 229 of the Spanish Companies Act, introduced under Royal Decree-Law 1/2010 (2 July), imposes oncompany directors the duty to inform the Board of Directors or, failing this, the administrators or, in the caseof a sole administrator, the General Meeting of any direct or indirect conflict of interest with the Group.

The directors must also report any direct or indirect interests held by them or their related parties in thecapital of companies engaged in activities that are the same as or similar or complementary to the corporateobjects, in addition to any offices or functions held or performed in such companies.

Pursuant to Article 229 of Royal Decree-Law 1/2010 (2 July) approving the revised Spanish Companies Act, at30 June 2017, based on information available on the companies and provided by the directors and theirrelated parties, there are no direct or indirect conflicts of interest with the Group companies.

18. ENVIRONMENTAL INFORMATION AND GREENHOUSE GAS EMISSION ALLOWANCES

In view of the Group's activities, there are no environmental liabilities, expenses, assets, provisions orcontingencies that could be significant with respect to its equity, financial situation and results. For thisreason, no specific breakdowns are provided in these notes to the annual accounts regarding environmentalinformation.


42

19. SEGMENT REPORTING

The Group's financial information by operating segment (in this case, by geographic location of the assets,since the Group has only one activity) for the six-month periods ended 30 June 2017 and 2016 is analysedbelow:

At 30 June 2017:Segments

Items Madrid Barcelona Total

Revenue:

Sales 1,819,987 1,064,374 2,884,361

Raw materials and consumables (747,838) (455,901) (1,203,739)

Other operating income 1,000 31,412 32,412

Staff costs (130,761) - (130,761)

Other operating expenses (429,436) (68,592) (498,028)

Depreciation/amortisation of investment property and non-current assets

(294,992) (115,616) (410,608)

OPERATING PROFIT/(LOSS) 217,960 455,677 673,637

Financial income 449 39 488

Financial expenses (625,757) - (625,757)

Exchange differences (12) - (12)

NET FINANCIAL INCOME/(EXPENSE) (625,320) 39 (625,281)

PROFIT/(LOSS) BEFORE INCOME TAX (407,360) 455,716 48,356

Segment assets 79,981,468 18,426,404 98,407,872

Segment liabilities 40,269,609 759,065 41,028,674


43

At 30 June 2016:

Segments

Items Madrid Barcelona Total

Revenue:

Sales 1,883,917 932,252 2,816,169

Raw materials and consumables (734,812) (338,700) (1,073,512)

Other operating income 4,275 - 4,275

Staff costs (113,630) - (113,630)

Other operating expenses (391,554) (56,093) (447,647)

Depreciation/amortisation of investment property and non-current assets

(303,685) (115,287) (418,972)

OPERATING PROFIT/(LOSS) 344,511 422,172 766,683

Financial income 1,066 31 1,097

Financial expenses (611,238) - (611,328)

Exchange differences 122 - 122

NET FINANCIAL INCOME/(EXPENSE) (610,140) 31 (610,109)

PROFIT/(LOSS) BEFORE INCOME TAX (265,629) 422,203 156,574

Segment assets 80,074,183 17,997,703 98,071,886

Segment liabilities 41,013,191 625,259 41,638,450

20. EVENTS AFTER THE REPORTING DATE

There have been no relevant events since the end of the six-month period ended 30 June 2017 that couldaffect the Interim Consolidated Financial Statements for the six-month period ended 30 June 2017.

44

AUTHORISATION FOR ISSUE OF THE INTERIM CONSOLIDATED FINANCIAL STATEMENTSFOR THE SIX-MONTH PERIOD ENDED 30 JUNE 2017

On 26 September 2017, in accordance with Article 253 of the Spanish Companies Act and Article 37 of the Codeof Commerce, the Board of Directors of Autonomy Spain Real Estate Socimi, S.A. hereby issues the InterimConsolidated Annual Accounts for the six-month period ended 30 June 2017.

Madrid, 26 September 2017

Robert Charles Gibbins

Chairman and Board director

David Ventoso Rañón

Vice-Chairman and Board director

Auxadi Servicios de Mediación, S.L.

Board director

Acting through its legal representative.

45

AUTONOMY SPAIN REAL ESTATE SOCIMI, S.A.

APPENDIX I


Interim balance sheet at 30 June 2017 and 31 December 2016.

Income statement for the six-month periods ended 30 June 2017 and 2016.

46


INTERIM BALANCE SHEET AT 30 JUNE 2017 AND 31 DECEMBER 2016

(Expressed in euro)

ASSETS

30 June

2017

31 December

2016

NON-CURRENT ASSETS 91,720,059 91,671,144

Property, plant and equipment - 412

Data-processing equipment - 412

Investment property 19,932,223 19,913,594

Land 17,508,006 17,508,006

Buildings 2,424,217 2,405,588

Long-term investments in Group companies and associates 71,753,138 71,753,138

Equity instruments 71,753,138 71,753,138

Long-term investments 34,698 4,000


CURRENT ASSETS 3,065,399 1,798,572

Trade and other receivables 55,752 104,339

Sundry receivables 20,078 51,676

Other amounts receivable from Public Administrations 35,674 52,663

Short-term investments in Group companies and associates 186,316 -

Other financial assets 186,316 -

Short-term financial assets 13,896 45,690


Short-term prepayments and accrued income 3,000 -

Cash and cash equivalents 2,806,435 1,648,543

Cash at bank and in hand 2,806,435 1,648,543

TOTAL ASSETS 94,785,458 93,469,716

47


INTERIM BALANCE SHEET AT 30 JUNE 2017 AND 31 DECEMBER 2016

(Expressed in euro)

EQUITY AND LIABILITIES

30 June

2017

31 December

2016

EQUITY 55,720,047 54,151,058

SHAREHOLDERS' FUNDS 56,571,292 55,307,627

Capital 5,059,878 5,059,878

Share premium 55,695,351 55,695,351

Prior-year losses (5,447,602) (4,660,370)

Profit/(loss) for the year 1,263,665 (787,232)

Measurement adjustments (851,245) (1,156,569)

Hedging transactions (851,245) (1,156,569)

NON-CURRENT LIABILITIES 37,946,730 38,615,412

Long-term payables 37,946,730 38,615,412

Bank borrowings 37,095,485 37,458,843

Derivatives 851,245 1,156,569

CURRENT LIABILITIES 1,118,681 703,246

Short-term payables 773,504 448,962

Bank borrowings 772,870 447,328

Other financial liabilities 634 1,634

Trade and other payables 345,177 254,284

Trade payables 252,187 141,853

Accrued wages and salaries 60,196 85,000

Other amounts payable to Public Administrations 32,794 27,431

TOTAL EQUITY AND LIABILITIES 94,785,458 93,469,716

48


INTERIM INCOME STATEMENT FOR THE SIX-MONTH PERIODS ENDED 30 JUNE 2017 AND 2016

(Expressed in euro) FY30 June

201730 June

2016

CONTINUING OPERATIONSRevenue 2,513,479 1,619,471

Sales - 2,377Services provided 120,050 146,874Income from shareholdings and interests in Group companies 2,393,429 1,470,220Raw materials and consumables (132,914) (408,911)Other operating income 1,000 2,675Staff costs (130,761) (113,630)Wages, salaries and similar remuneration (103,421) (85,812)Staff welfare expenses (27,340) (27,818)Other operating expenses (334,998) (343,517)External services (309,816) (317,826)Taxes (25,182) (25,691)Depreciation/amortisation of non-current assets and investment property (26,783) (119,073)Impairment and profit/(loss) on fixed asset disposals - -Impairment and losses - -OPERATING PROFIT/(LOSS) 1,889,023 637,015

Financial income 411 917From third parties 411 917Financial expenses (625,757) (611,328)On payables to third parties (625,757) (611,328)Exchange differences (12) 122Impairment and results on disposals of financial instruments - -NET FINANCIAL INCOME/(EXPENSE) (625,358) (610,289)PROFIT/(LOSS) BEFORE INCOME TAX 1,263,665 26,726

Corporate income tax - -PROFIT/(LOSS) FOR THE YEAR 1,263,665 26,726

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