INDEX 1. GENERAL SITUATION 2. EVOLUTION OF THE GROUP 2.1. Economic Numbers 2.2. Commercial Activity 2.2.1. Nuclear Business 2.2.1.1. Replacements Market 2.2.1.2. New Plants 2.2.1.3. Small Modular Reactors 2.2.1.4. Experimental reactors and fusion 2.2.2. Business Developments 2.2.2.1. ATC (Centralised Temporary Storage Facility) 2.2.2.2. Casks (Containers) 2.2.2.3 Racks 2.2.2.4. Laboratories, ITER and Others 2.2.2.5. Dismantling and Waste 2.2.2.6. In-Plant Services 2.2.2.7. Special Projects, tanks and exchanges 2.2.3. Enwesa Operations 2.2.4. WTS 2.3. Program of integral improvement 2.4. Technological innovations and R&D&i 2.5. Human resources and corporate social responsibility 2.5.1. Staff rejuvenation program 2.5.2. Knowledge Management Program 2.5.2.1. Training plan for the direct personnel of the workshop 2.5.2.2. Training plan for the indirect personnel 2.5.3. Integral program for the control and reduction of absenteeism in the factory 2.5.4. Program of contribution to sustainable development 2.5.4.1. Strengthen the equality of treatment and opportunities: Equality Plan 2.5.4.2. Commitment to safety and health of individuals: OHSAS 18001:2007 2.5.4.3. Assistance and contribution to society 2.5.5. Actions to ensure Responsible Company Conduct 2.5.6. Environment 3. BALANCE SHEETS & PROFIT AND LOSS ACCOUNT

3.1. Profit and loss accounts for the year ended 31 december 2015 / 2016 3.2. Ensa and subsidiaries

BOARD OF DIRECTORS

CHAIRMAN D. Eduardo González-Mesones Calderón

DIRECTORS Dª Lucía Picazo Andrés D. Miguel Miranda Pérez D. Jaime Sánchez Mayoral Dª María Elena Pastor Les Dª Belén Roel de Lara D. Germán Rodríguez Somolinos D. Javier Diego Martínez D. Jose Manuel Prieto Barrio Dª Paloma López-Izquierdo Botín

SECRETARY D. Javier Mª Simón Adiego

Avda. Juan Carlos I, 8 39600 Maliaño (Cantabria), España T. +34 942 20 01 01 – F. + 34 942 20 01 48

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PRESIDENT & CEO

Eduardo González-Mesones Calderón SENIOR VICE PRESIDENT MANAGING DIRECTOR

Rafael Triviño Fernández VP AUDITING & CONTROL

Elena Díez Martínez VP BOARD SECRETARY & COUNSEL

Javier Mª Simón Adiego VP NUCLEAR BUSINESS

José M. Zubimendi Alcorta

VP ADMINISTRATION & RESOURCES

Manuel J. Sánchez García VP PROJECTS

Miguel A. Andérez Calera VP OPERATIONS

Alfonso Álvarez-Miranda Morán VP HUMAN RESOURCES & C.S.R. POLICY

Ángel Cosío Gandarillas VP BUSINESS DEVELOPMENT

María E. Vega Antolín

MANAGEMENT

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CHAIRMAN

D. Eduardo González-Mesones Calderón DIRECTORS

D. Eduardo González-Mesones Calderón D. Javier González Martínez D. Rafael Triviño Fernández Dª. Mª. Eugenia Vega Antolín Dª. Elena Díez Martínez SECRETARY

D. Javier Mª Simón Adiego

BOARD OF DIRECTORS

Headquarters: Polígono Industrial Heras nave 136 – 39792 Heras, Cantabria T. 942 253 815 – F. 942 253 851

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GENERAL SITUATION

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According to the data of the WNA (World Nuclear Association) the capacity of global nuclear generation increased slightly during the year 2016, rising from 382.2 GWe in 2015 to the 391.6 GWe achieved in the past year. Ten new reactors went into operation during the past fiscal year, three large projects began their construction and another three facilities closed permanently. At present, China, United Kingdom and India continue being the most attractive markets, due to their nuclear programs as well as their future international expansion. Parallel to this, new initiatives and developments are beginning to emerge that can potentially be interesting in the medium term and that are based on new generation reactors and components. In China, the projects under way continue advancing with new plants being connected to the network, among them the first AP-1000 type reactors from Westinghouse, with the support of the local industry that continues supplying large components.

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On the other hand, CGN (China General Nuclear Power Group) and CNNC (China National Nuclear Corporation) have officially confirmed that they will jointly export the Generation III reactor called Hualong. This reactor has been formally proposed for the United Kingdom (Bradwell). As for the international projects with Chinese financing, the opportunities in Argentina (CNNC) and Romania (CGN) stand out for being the first proposed units with the CANDU design. For Argentina, the SNC-Lavalin group confirms that it has received a pre-project contract from NASA to construct a CANDU in Atucha 3. This six-month contract will allow it to enter in contact with the suppliers and do the preliminary design work, licensing support, etc. In the case of Romania, the government confirms that it is finalising conversations with DGN for units 3 and 4 of Cernavoda (CANDU), although the Romanian government still wants to clarify aspects that could delay the decision.

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The program of the United Kingdom continues to advance in its principal investments, as shown:

Nuclear plant Owner Total Capacity Reactor Design Final Investment Decision

Hinkley Point C EDF Energy/ CGN

3.200 MW 2 X EPR Sep 2016

Wylfa Newydd Horizon Nuclear Power (Hitachi)

2.700 MW 2 X UK ABWR 2019

Oldbury Horizon Nuclear Power (Hitachi)

2.700 MW 2 X UK ABWR Pendiente

Sizewell C EDF Energy/CGN 3.200 MW 2 X EPR Pendiente

Moorside NuGeneration 3.800 MW 3 X AP1000 Pendiente

Bradwell B CGN/ EDF Energy

2.400 MW 2 X Hualong One Pendiente

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EDF continues with the plans for the construction of Hinkley Point and along with CGN they will also propose EPR-type reactors for Sizewell C; while for the Bradwell B location, it is expected that the design will be Chinese. Furthermore, Horizon (Hitachi-GE) continues with its project for Wylfa and an investment decision is expected in 2019. With respect to NuGeneration (Westinghouse), it is estimated that the construction of Moorside (3 plants) will cost between 13 and 16 billion pounds. The company estimates a strike price less than that requested by EDF for Hinkley Point (92.5 pounds) and expects the final investment decision at the beginning of 2019. Parallel to this, the United Kingdom and Japan signed at the government level a MOU to expand the cooperation in the nuclear sector seeking ways to facilitate the financing of the projects. This agreement includes areas such as dismantling and decontamination and it is expected that the agreement will help Hitachi and Toshiba with their plans in the UK (Horizon and NuGeneration, respectively).

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The latest information on Toshiba’s economic situation has generated uncertainty with respect to its continuity, as the owner of Westinghouse, in the market of new nuclear plants. Toshiba has announced the stoppage of its plans for future plants and has launched an internal study to determine the causes that have generated the current situation in the Group. In India, in June 2016 an agreement was signed between Presidents Obama and Narendra Modi so that Westinghouse can supply six plants of AP-1000 technology in the region of Andra Pradesh with the support of the Export-Import Bank. A contract is expected to be formalised in the second half of 2017. On the other hand, EDF is also in the negotiation process to construct up to six EPR reactors in the Jaitapur region. Meanwhile, the traditional program of heavy water plants continues its course in the replacement of components, and the signing of a civil nuclear agreement by the Presidents of Japan and India is highlighted, by which Japan can supply fuel, equipment and technology. It is the first time that Japan signs an agreement with a country that has not ratified the Non-Proliferation Treaty (NPT).

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In a similar context, the Russian program and Rosatom maintain their development and international expansion, especially in the Middle East and Asia. In Europe, their star project continues being the recently achieved project for a plant in Fennovima (Hanhikivi) in Finland. In addition, Russia and Nigeria have signed an agreement to construct plants in the states of Kogi and Akwa Ibom, while Vietnam has proposed its plans for the new (and first) nuclear reactors for Ninh Thuan I. In the USA the uncertainty continues on the new AP-1000 plants in VC Summer and Vogtle 2, with worrying news on the economic deviations. The latest information indicates a high probability of suspending the construction of the two units of VC Summer.

Within the European framework, EDF will present a strategic plan in line with France’s energy plan, which outlines an energy mix where the percentage of nuclear energy of the country will be around 50%. There are “voices” pointing to the difficulties of this objective. On the other hand, several companies have shown interest in the nuclear expansion of the Czech Republic. The State company CEZ requested information in October 2016 to which Rosatom, Westinghouse, EDF, ATMEA (Mitsubishi + Areva), KHNP and DGN have responded. The plans are to construct two new reactors, one in Dukovany and another in Temelin, for which CEZ has created two independent companies. Finally, the Swiss electric companies (Axpo, Alpiq and BKW) will withdraw their requests for a new framework for the construction of plants that they made in 2008, due to the fact that the market has changed drastically and that the decision-making groups are planning a future with alternative energy sources.

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In Saudi Arabia the Energy Minister has announced that it will decide on specific plans for constructing new plants before November 2017. In South Africa, the commitment is maintained for the construction of new reactors, although the government has not defined when it will make the decision. In Iran, the contacts with foreign companies continue, aimed at finding support for its national program. With respect to the reactors of new and experimental design, they currently have an important role in the sector, since they are making significant advances in different fields in several countries. The USA continues financing the companies NuScale, Utah Association and TVA for the development of new components.

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In 2016 the documentation necessary for the NRC to begin the licensing process of the SMR (Small Modular Reactor) of NuScale was submitted. The first manufacturing contracts of these new reactors are expected for mid-2018. For its part, China maintains its actions to construct its HTR reactor in Saudi Arabia, while on the national level SENPEC is supplying the components for one, whose start up is planned for the end of 2017. The United Kingdom also wants to favour the implementation of this type of reactors by means of calls for economic aid in order to develop a British SMR, to which NuScale and Westinghouse, among others, have answered and where Rolls Royce also wants to play a relevant role.

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EVOLUTION OF THE GROUP

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ECONOMIC NUMBERS

The 2016 fiscal year presents the following parameters: The profit and loss account shows a positive result of 479 thousand euros after taxes. The turnover amount has been 82,159 thousand euros, of which 51% were directed to

external markets. The activity has been 349 thousand working hours. The order portfolio of the Group at the end of the year reached the figure of 246,055

thousand euros, allowing the normal activity to be carried out.

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COMMERCIAL ACTIVITY

NUCLEAR BUSINESS

Replacements Market

In the past month of July the three replacement generators and the head of Beaver Valley were delivered to FENOC, contracted from Ensa by Westinghouse, with great satisfaction and congratulations of the client FENOC. Furthermore, after the signing of the contract with Duke Energy in the USA, the manufacturing in ENSA of the RRVCH of Sharon Harris continues.

In the USA, no significant novelties have occurred in the replacement market of large components. Nine plants continue operating with their original generators: Millstone 3 (Dominion), Catawba 2 (Duke Energy), Braidwood 2 (Exelon), Byron 2 (Exelon), Comanche Peak 2 (Luminant), Seabrook (Next Era Energy Resources), Vogtle 1 and Vogtle 2 (Southern Nuclear Operating Co.), Wolf Creek (Wolf Creek Nuclear Operating Corp.) In the medium term, it is expected that these plants will have to renew the Steam Generators, which will mean an opportunity for Ensa.

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In Canada there were no significant novelties, despite the confirmation of OPG (Ontario Power generation) of improvement work for the Darlington 1-4 plant of CANDU design. Replacement work has also begun on the Bruce plant, which was awarded to the Canadian BWXT. In France, the delay of the first phase of the replacement program of the 1300 MWe-type steam generators for the EDF plants has meant a delay in the reception of the first consultations by the usual technologists for the second part of the program. The arrival of the consultation is expected in the second half of 2017 and also the consultation of a set of three additional 900 MWe-type steam generators for EDF plants, and, as a result of the certification problems found in forges produced in France, new opportunities for Ensa could appear. We should point out the reorganisation existing between EDF and Areva, through the decision of the French government, which slows the decision-making that was envisaged. This is conditioning the decision of new opportunities.

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New Plants

Ensa is alert to the different opportunities that are presented: In the United Kingdom, the Hinckley Point nuclear plant and the NuGen project in Moorside. The nuclear expansion in India, in collaboration with Westinghouse with AP-1000 plants. The decision for the construction of the plants in the second have of 2017 continues to be delayed. The launching of the plants in Argentina and Romania suppose the recording of the commitment to nuclear energy in these countries. The new Argentine government has ratified the planned nuclear plans. The firm decision of Iran on the construction of new plants could spur the decision of Saudi Arabia to do likewise, and open new market possibilities in those countries.

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With respect to the Dominion project for an ESBWR-type plant in North Anna 3 (Virginia) after the certification of the design for use in the USA by the Nuclear Regulatory Commission (NRC) in September 2015 (COL requested from the NRC in December 2013) continues with the elaboration of the design in order to guarantee the economic feasibility of the investment. As for the Fermi-3 project in Detroit, whose decision for the ESBWR design is firm, it continues its progress with a medium-term feasibility horizon. GEH is waiting for the final decision of the electrical companies for the launching of component orders. Meanwhile, the will of the Mexican authorities is trying to be advanced and confirmed for the installation of reactors of its technology in the Central American country. Other markets that in the medium term want to construct new plants include the South African market, where the government plans in the near future to ask for bids from the major technology companies.

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Small Modular Reactors

The modular reactors (SMR) are increasingly seen in more forums as a firm alterative to the construction of large reactors. In the USA, they are also considered as a natural alternative to the coal plants, which are expected to be replaced gradually, and the means for complying with the CO2 emission reduction plans of the country. The United Kingdom has destined an important economic item for the feasibility study and the obtaining of the SMR licences, to which they have turned to NuScale and Westinghouse. TerraPower has announced progress in its design (sodium-cooled rapid reactors) and collaboration agreements with Chinese companies. Finally NuScale, after getting financing from the Department of Energy (DOE), it has announced significant changes in the design with the objective of reducing the cost of its SMR and has closed the year applying for licensing of its reactor from the NRC. Ensa maintains contact with the principal technology firms, carrying out tasks of design documentation review, which could potentially allow supporting them in the feasibility of manufacturing some of their components. It has also collaborated in the development of the new-generation sodium reactors.

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Experimental reactors and fusion

For the French experimental reactor ASTRID, Ensa has finalised the feasibility studies of three components of its reactor (Internal Vessel, IHX, Diagrid), which have been complemented by a contract expansion for feasibility studies (tubing and welding). As for the ITER, we have been awarded by the Ansaldo-Mangiarotti-WalterTosto (AMW) consortium for the supply of some sectors that are part of the main subsets of the vacuum chamber (the reactor). We continue to be alert to new opportunities in this project.

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BUSINESS DEVELOPMENTS

The commercial activity in this area has been very intense, both in the national and in the international markets, mainly focussing on markets with short- and medium-term opportunities.

ATC

During 2016, no new tenders were issued by Enresa for this installation. The notice was recently published on the sentence, favourable for ENRESA, by the Supreme Court regarding the environmental lawsuit presented by the Government of Castilla-La Mancha. This is good news that we believe can help to relaunch the work during the year 2017. In any case, during 2016 Ensa has continued with its strategic plan, aimed at preparing the programs, in order to participate in the opportunities that will be necessary in both alternatives: ATC and/or ATIs in each nuclear plant.

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Casks (Containers)

After obtaining the licence for the Ensa “ENUN32P” cask in 2015 for the storage and loading of PWR-type fuels, for the plants of Trillo, Almaraz, Ascó and Vandellós, in 2016 we can highlight the obtaining of the licence for the transport of low burn-up fuels and progress in the work for developing a methodology for obtaining the transport licences for high burn-up fuel. These tasks are being done jointly with Enusa. With reference to the ENUN24P cask (also affected by the regulation associated to high burn-up), work is being done to obtain the transport licence and it has been submitted for approval both in Spain (CSN) and in China (NNSA). As for the “ENUN52B” cask, Ensa already has the licence for transport and storage, which allows the use of the cask for its loading according to the contractual conditions, at the time that the client considers it appropriate. As for the new cask orders that we had planned for 2016, the award by Enresa of the new ENUN52B casks for Garoña and MPC casks for Ascó has been delayed. As for the design of casks of other companies, the manufacturing of four TN81-type casks continues, which will be used for the transport of the vitrified waste stored in La Hague at the ATC. We have recently finalised the manufacturing of HI-STORM and MPC casks for the ASCO nuclear plant.

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Racks

In the Racks market, we continue with the monitoring of the opportunities in the construction of new nuclear plants, as well as the opportunities of substitution of racks for spent fuels. In this line, the work proceeds for the supply of five new interlock-type racks for it spent fuel facility, KPA in Olkiluoto, which will be delivered in 2017.

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Laboratories, ITER and Others

We continue monitoring very closely the opportunities in ITER, where it can be highlighted that we have received confirmation of the award of two orders, the first for the supply of four tanks for tritiated water and the second for the review of the manufacturability of the TBM system. Furthermore, improving our positioning in the British market, we should note the continued collaboration with the NAMRC (Nuclear Advance Manufacturing Research Centre), which has admitted us as a member of the organisation. . We also maintain close collaboration with TWI (The Welding Institute).

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Dismantling and Waste

In the Zorita Nuclear Plant we continue with the work to decontaminate the parameters, while the obtaining of test pieces from the concrete was finalised in 2016. In Bulgaria we continue the work of dismantling for Kozloduy, where we have already delivered and carried out the commissioning of the new equipment, with very satisfactory results. We should highlight that we have been awarded the work of cutting the control rods for the Cofrentes Nuclear Plant. This offer is based on the technology developed by Ensa for cutting those components under water. As for the development of cutting technology for the segmentation of steam generators, the work has been finalised according to the planned program. Meanwhile, work has begun on the first commercial opportunities.

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In-Plant Services

In the business line of loading casks, in 2016 we carried out the loading of two casks in Ascó and two casks in Trillo. As for the preparation of the loading of new ENUN32P casks, CNAT has awarded us the design and supply of the equipment necessary for preparing the loading in the Almaraz Nuclear Plant, and for the loading in the Trillo Nuclear Plant. In the case of loading the 52B casks for Garoña, the plant continues to wait for a future decision in order to proceed with this work. Apart from the container activity, we have finalised the assembly of shields in Olkiluoto, and the installation of racks in the plant of Catenom, in France.

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Special Projects, tanks and exchangers

Ensa maintains an active participation in the fusion platform organised by CIEMAT/FUSION, attending meetings of the Management Council and with attendance in the General Assembly and participation in specific groups on fuel and advanced reactors. In 2016 we have closed a contract with AREVA, for the supply of the embedded tanks.

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ENWESA OPERATIONS

The last quarter of 2016 was characterised by a good work load in the nuclear plans of Vandellós II and Almaraz II, whose stoppages for refueling overlapped in the month of November, with the usual scopes of: opening and closing of the reactor, checking of the main pumps, tasks in steam generators and handling of irradiated fuel This circumstance has generated a high level of activity in various product lines, especially that of nuclear services and that of valve maintenance. It has also supposed an increase in work for the UTE (Joint Venture) ENWESA-NAVEC. The dismantling activity continues in the Zorita installations. The annual maintenance work in ANAV and CTCC Plana del Vent and the maintenance contracts of long duration of the HVAC system in Ascó and those of valve testing support with Ringo were maintained. Regarding the manufacturing area, the most notable work in progress involves: shields of fuel casks, wrapper roof, vane separators and lifting platform (planning and prior documental management phase). The collaboration with Navantia was begun, working on the assembly and welding of ships, in its facilities in Cadiz.

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The assembly of the ventilation system (SVAC) was concluded in the fuel factory of ENUSA, and the activity in the integral maintenance of the facilities of the Saelices mine was maintained. The most notable project carried out in France was the intervention, for inspection of valves, in the nuclear plant of Penly, during various months in summer and winter. In the line of robotisation and automatics, coinciding with the stoppage of several production lines in the automobile sector, the installation of two handling and control systems was performed. At this time there are several projects in different phases of development for NISSAN (Cantabria) and RENAULT (Valladolid) and the design and installation tasks of a robotised cell are being prepared in the factory of Fermacell (Cantabria).

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WTS

The WTS Company, with minority ownership by the Ensa Group with 30%, maintains the evolution of the business during the past fiscal years in: Support Services for the Operation of Nuclear Plants in Almaraz units 1 and 2, Ascó and Vandellós. Engineering Services, different activities in Spanish nuclear plants. Nuclear Services, in the nuclear plants of Ascó, Almaraz 1 and 2. Commercial Support Services, providing commercial support services to different organisations of the Westinghouse Group. The expectations of the national market continue being limited to the maintenance services and improvement of the current operating plants.

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PROGRAM OF INTEGRAL IMPROVEMENT

During the year 2016, the Global Improvement Plan was consolidated as an effective tool for the maintenance and improvement of the level of innovation, technological development and guarantee of improvements in production, achieving the maximum use of financing opportunities and subsidies to R&D&i projects. The Plan was integrated into a single program with all the proposals of improvement in all the areas of the company.

Technological Innovations and R&D&i.

Improvement Plan of Human Resources, Corporate Social Responsibility and Security.

Improvement Plan of Competitiveness.

Improvement Plan of the Information Systems.

Launching of the Intraprenenurship and brainstorming program.

The strategic actions developed during 2016 mainly span the following areas:

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TECHNOLOGICAL INNOVATIONS AND R&D&i

The R&D&I team is composed of different units whose aim is research, development, adaptation and tuning of new technologies applied to the development of new manufacturing processes and to the design of components and services for the nuclear sector. As in previous years, Ensa has continued working according to the Annual Plan of Technological Improvements-2016, managing 100 projects (38 R&D, 62 Innovations), from which strategic projects and developments in priority technologies are given precedence. Along with the CAPA platform for the collection of new development ideas, the use of tools for promoting creativity (Brainstorming, Design Thinking…) and the development of our Intrapreneurship model and space are being assimilated when proposing new technological solutions and improvements in project development.

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We have consolidated our presence in the R&D&i programs of the European Union, managing to consider in our program at the close of 2016 three projects in implementation (TRUSS, COROMA and OPTOSTEEL) and two other proposals pending approval by the commission (MEACTOS and PROVIDENTIA), which improve our participation within the subprograms of H2020: INDUSTRIAL LEADERSHIP; RFCS and EURATOM. In addition, during 2016 a total of 14 new projects were prepared, where five were approved in the presented calls and 11 projects were closed or cancelled. As for our technological partners, the new activities of the program continue increasing the collaborations with the UC (University of Cantabria) and the CTC (Technological Component Centre); and the special attention to the partners in UK and France resulted in consortia with TWI, Nuclear AMRC, Areva and EDF in the approved European projects. In addition, new collaboration activities were begun with WEC (ENUNH Container and GV segmentation) and Areva (Tter. Equipment and European Project MEACTOS).

The actions during the year 2016 have been aimed at improving technologically our processes and means, seeking better return and higher impact in the workshop. The most relevant activities continue being centred in two fields: the welding processes and the non-destructive trials led from the areas of Automatics and Robotics, Welding Development, Inspection and Calculation. The activities of the Business Development Management continue carrying out R&D&i projects in its two areas of Fuel Management and Plant Services.

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The principal projects in R&D&i in which it has been working in 2016 were the following: Development of an Integral Methodology of Control Rod Management and Channels as

radioactive waste (MIGRES). Advanced Technologies of Welding III. Development of Robotised Machines III. Research in emerging ultrasound technologies UT PHASED ARRAY and TOFD for the

application of the manufacturing of nuclear components. New Techniques of welding and support techniques in the nuclear sector. Safe nuclear storage in view of earthquakes (ANSTER). Decontamination of land with Radioactive Isotopes and materials coming from the

demolition of radiological installations (DESTER). Development of an underwater mechanical cutting system in nuclear environments

applied to the Control Rod Segmentation and Fuel Channels in BWR-type Nuclear Plants. Design of a new procedure of horizontal dismantling of steam generators in nuclear

plants.

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Integral development of the welding, inspection and capsule cutting processes in high

radiation areas. Training in Reducing Uncertainty in Structural Safety. (TRUSS). New, more efficient solutions in the design of nuclear fuel casks through compound

materials (SOLECOM). Cognitively enhanced robot for flexible manufacturing of metal and composite parts.

(COROMA). Optimizing the toughness of high strength steel weld metal. (OptoSteel). Design of Casks ENUN-32P, ENUN-24P and ENUN-52B. Pre-design of Cask ENUN-61B.

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HUMAN RESOURCES AND CORPORATE SOCIAL RESPONSABILITY

The Ensa Group has been configuring itself for more than four decades as a leading company in the international nuclear panorama that seeks quality but also innovation, paying special attention to its environment.

To continue its policy of openness and consolidation in the international markets and to achieve its goals, it has two basic pillars: its human team and the commitment to innovation and improvement. In order to reinforce both pillars, the company needs to apply the best policies of Personnel Management in order to develop the potentiality of the staff and improve their performance. In this respect, during the year 2016, the following programs have been undertaken:

Staff rejuvenation program

The Ensa Group has been undertaking in recent years actions that optimise the organisation and competitiveness of the company by means of a Staff Rejuvenation Plan with relief contracts. At Ensa, a total of 58 workers have made use of this plan, of which 8 used it in 2016. At Enwesa, a total of 21 workers have used this plan, of which 4 did so in the year 2016.

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Some of our employees gathering a distinction during the 8ª Day of Improvement

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Knowledge Management Program

The Ensa Group sells technology based on a high level of knowledge that guarantees an orderly transition and transfer of knowledge and skills. In this sense, during 2016 it continued carrying out actions aimed at improving the performance or at the acquisition of new abilities and skills of the persons that work in the Ensa Group which qualify them to be able to assume a post of different responsibility. The 2016 Training Plan was designed taking into account the strategic objectives defined in the POA and based on the proposals and priorities received from the different Management Areas. In this regard, the training during the year 2016 has been principally directed towards reinforcing the “Culture of Nuclear Safety and the implementation of the tools for Good Practices (HuP)” with the objective of acting on the individual behaviours as a way to reduce the possibility of errors and, consequently, improve the competitiveness of the company.

From the mentioned specific training program in HuP and Nuclear Safety Culture, 43 training actions have been carried out which have represented a total of 1,180 hours in which all of the staff has participated.

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The Ensa Training Plan for the year 2016 was structured differently depending on the group to which it was directed:

Training in Good Practices and Nuclear Safety Culture (HuP): Reinforcement on HuP tools and

Nuclear Safety Culture. Pre-jobs, Post-jobs and Learned

Lessons. Training in the fulfilment of

procedures and work instructions. Talks on the obtained quality indices

and productivity values. Training aimed at communication of

incidents with operating impact. Communication of the assessment of

incidents in terms of cost and planning.

Multidisciplinary Training: Training in innovation and process

improvement. Specific training for ITER projects,

loading of casks, etc. Consolidation and opening of new

markets (new work processes, designs and procedures, quality codes, etc.).

Training in the realisation of tasks. Specific training in ORP (Occupational

Risk Prevention): handling of mobile lifting platform, handling of large loads, mounting of scaffolding, primary intervention equipment, operation of bridge crane, training on risks of being trapped/crushed, alarm and evacuation equipment, etc.

In all, 125 training actions were given to the direct personnel of the workshop, which supposed 3,686 hours, receiving an average of 24 hours of training per person.

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b.1) TRAINING PLAN FOR THE DIRECT PERSONNEL OF THE WORKSHOP:

b.2) TRAINING PLAN FOR THE INDIRECT PERSONNEL: Training in Good Practices and Nuclear Safety Culture. Intrapreneurship: training actions aimed at encouraging the entrepreneurial activity

among workers which subsequently will result in the development of innovative projects and new business for Ensa. Five training actions were carried out within the Intrapreneurship Plan, having dedicated 324 hours with 59 persons participating.

Brainstorming: training actions aimed at seeking solutions to problems. Some of the areas

that have participated in this methodology were: mechanised, thermal treatments, quality control and assembly. Three training actions were carried out within the Brainstorming Program, having provided 204 hours and the participation of 49 persons.

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Technical Fridays: training oriented to the transfer of internal knowledge and culture of the Group. It deals with training given by the veteran and experienced personnel of the company on Friday afternoons and which is directed mainly at Project Engineers, Project Managers and Quality Engineers with the purpose of reinforcing the knowledge necessary for the performance of their job and homogenising criteria to confront problems.

The courses given on Technical Fridays during the year 2016 were: Risk management of a project; Responsibilities in ORP; Means and software utilities for projects (PLM, etc.), Elaboration of plans and their internal review; and Training in RCC-M manufacture codes. In all, five courses were carried out on the Technical Fridays, of 270 hours and the participation of 163 persons.

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Multidisciplinary Training: Improvement and refresher course in the job (legislative update, languages, etc.), Sustainability and CSR.

In all, the indirect personnel were given 279 training actions, which supposed 9,634 training hours, receiving an average of 34 training hours per person. The overall calculation of the Group of Companies, during the year 2016, was for 51,949 training hours, of which 27,616 hours were directed to training staff and the rest of the training was for third parties (university interns and students of professional training in internships).

Integral program for the control and reduction of absenteeism in the factory The integral program for the control and reduction of absenteeism in the factory contains actions in the area of accidents, illnesses, remunerated leave and improvement of the labour climate.

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During the year 2016 work was carried out on the implementation of the actions contained in the “Zero Accidents Plan” that is aimed at: Creating the necessary conditions for which all the Ensa personnel, or those who work in its subsidiaries, carry out their activity efficiently and without risks, avoiding events and damages that could affect their health and physical well-being. Reinforcing the safety culture by means of the implementation of actions that progressively improve the accident rate trend with the objective of reaching “Zero accidents”, with our action mainly impacting people: “Conduct-based Safety.” In the year 2016, the total index of absenteeism at Ensa was around 3.16 and at Enwesa at 2.73, being, in the case of Ensa, the best rate of its history.

Program of contribution to sustainable development Social Responsibility is a precept included in the corporate and cultural values of the entire organisation and is reflected in the annual plans of the company.

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Likewise, the ethical and socially responsible action is included in the Corporate Code of Conduct. In this regard, the Ensa Group tries to reinforce a management model that reconciles the economic, social and environmental development favouring the use of quality, equality of opportunities and guaranteeing respect for the environment and the rational use of natural resources. In this way, the Group disseminates its knowledge and the existing best practices, incorporating criteria of respect for human rights, security, health and the environment in the entire cycle of activities, with the objective of preventing damages to persons and property and minimising the impact on the environment and the effects on climate change.

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During the year 2016, the Office of Human Relations and Corporate Social Responsibility has carried out the following actions in the framework of the policies of Social Responsibility: d.1) Strengthen the equality of treatment and opportunities: Equality Plan. It has continued working on the implementation of the measures provided in the Equality Plan signed by the Management and the Works Council on 28 May 2008. On 31 December 2016, it has complied with 92 of the 93 measures included in the Equality Plan, which represents 98.92% compliance. During the year 2016, Ensa has placed special emphasis on the external dissemination of its Equality Plan through participation in talks and forums in which the measures adopted on the subject of Equality have been made known. Furthermore, it has continued to sensitise and make the staff aware of equality, through the publication of campaigns and informative messages. Regarding the most relevant events carried out, the following are highlighted: The Secretary of State of Social Services and Equality has informed favourably on the

“Fifth Annual Report”, corresponding to the year 2015, prepared by Ensa referring to the monitoring of the measures that motivated the obtaining of the distinction “Equality in the Company”.

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Ensa has been distinguished with the “ONCE Solidarity

Prize Cantabria 2016” in its Company category. This distinction recognises and awards the work carried out by the company in its area of influence, procuring the social inclusion of all the citizens, as well as their collaboration with different organisations and special employment centres for the realisation of work in our facilities.

For another year, two “Good Practices of Ensa” have

been winners in the competition carried out by the Network of Enterprises with Distinction of Equality (RED DIE). The two good practices selected were:

• Ensa has designed and prepared an “Action

Protocol for the Prevention of Harassment.”

• Realisation of courses and workshops, that deal specifically with the subject of equality of opportunities and that are directed, in general, to all the personnel of the company and, specifically, to certain collectives, placing special emphasis on training on the principles of non-discrimination and of equality of opportunities to those who had leadership and management responsibilities of teams.”

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These practices were included in the EME collection (Economy Woman Enterprise) coordinated by the Subdirectorate General for Equality in Enterprises and Collective Bargaining, and for the second year it is the only Spanish company with two selected practices. Sending to Global Compact the “Annual Progress Report (COP)” corresponding to the second

year of application of the principles of the Global Compact of the United Nations where they reflect the actions and measures implemented in Ensa related to Human Rights, Labour Laws, the Environment and the Fight against Corruption.

Active participation in the work groups organised by the Network of Companies with

Distinction of Equality “Red DIE”. Information was supplied on good practices carried out in Ensa; it has participated in competitions and surveys, and it has sent information for publication in bulletins and news on equality.

Dissemination of multiple awareness campaigns on subjects of equality: “International

Women’s Day”; “Day against Gender Violence”; “Day of Salary Equality”, etc., as well as campaigns and informative messages making the staff aware of social issues: delivery of toys to disadvantaged children, collection of food, solidarity lids, etc.

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Dissemination on subjects of equality at the external level, participating in forums and sharing experiences with other companies in the region: participation as speakers in the workshop organised by the Chamber of Commerce of Cantabria called “Networking: Equality in Cantabrian Companies”; presentation given by Ensa in the Cantabrian Institute of Safety and Health in the Workplace on good practices implemented in the company on Road Safety and talks given in the University of Cantabria to favour the employability of young people (Talent at Work), etc.

Collaboration with educational centres to promote attitudes of entrepreneurship and to

facilitate employability of young people of the region. Collaboration with the Brotherhood of Blood Donors (number of extractions in our

installations in the year 2016: 70) and with the Spanish Association against Cancer through the dissemination of awareness messages to the staff.

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Construction of a classroom to be used for imparting online training.

Implementation of measures that

improve the accessibility of persons with physical motor disability to Ensa’s facilities.

Celebration of meetings with the

Equality Commission for the purpose of carrying out the monitoring of the actions and proposing new measures for the Equality Plan.

Providing training on the subject of

Equality, increasing the number of persons trained on subjects of Equality. From the entry into force of the Equality Plan, 438 persons have been trained (92.99% of the staff).

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The Ensa Group gives maximum importance to the protection of the physical well-being and health of individuals and to the prevention of any type of risk in the workplace. The company maintains a firm commitment with the integration of preventive actions in all hierarchical levels of the organisation, making all the workers aware of the need to collaborate in the adoption and compliance with the preventive measures: Within the scope of the Improvement Plans, the implementation has continued of the “Zero Accidents Plan”, which for the year 2016 considered 30 action measures of which 27 have been implemented and 3 are in the process of being implemented.

d.2) Commitement to safety and health of individuals: OHSAS 18001:2007.

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From among the implemented measures, the following can be highlighted:

The culture of communicating unsafe acts and conditions and/or proposals for improvement through the installation of a “suggestion box”.

Implementation of the competition “Target:

Zero Accidents” with the aim of recognising and awarding the workers who contribute to promoting a safe way of working.

Implementation of the Record Sheet for the

assembly and installation of scaffolding. Improvement of the professional

qualification in the handling and manipulation of large loads over 20 tons.

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Study of personal protection equipment that minimises overloading parts of the body. Reinforcement of the training of the grinders Study of alternatives to the postures adopted in the execution of tasks that lead to sick

leave Training plan in ORP to teachers in the management of safe work equipment Training on the risk of getting hands trapped Training on the prevention of skeletal muscle disorders Information and awareness with messages of reinforcement in the screens Awareness in responsibilities of ORP to area managers and workshop unit Incorporate ORP factors in the evaluation of the performance of the senior levels, etc.

As a result of the efforts made, Ensa managed to reduce the number of loss time accidents, ending the year with three minor accidents, which represents and an 80% reduction in the accident rate with respect to the previous year. Furthermore, the number of non-loss time accidents experienced a reduction of 65%.

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In addition to the actions contained in the Improvement Plan, during the year 2016, the following actions were carried out during the year 2016: Passing the Maintenance System Audit of management based on OHSAS 18001 (which is

valid until 21 Dec. 2018). Implementation of a new procedure, “PSE-17 Consignment of machines and installations”

with the aim of improving the safety conditions during interventions on equipment and installations. Interlocking, blocking and signalling equipment has been acquired and we have adapted the maintenance software in order to be notified when an action of this type is going to be carried out.

Preparation of an improvement study of the power distribution in the Heavy Building, with

the aim of improving the distribution of the different of electrical, gas and air outlets in the Workshop Building.

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The following safety improvements have been undertaken in machines:

Safety improvement in the Innocenti boring machine with the placement of signage and closing of accesses.

Improvement of the safety conditions of

the Stein furnace. We have proceeded to improve the systems with the aim of avoiding thermal contacts, the accessible mobile elements, involuntary activations, falls from heights, etc.

Design and construction of an auxiliary

work platform in the perimeter of the rotating plate in the Innocenti boring machine. This plate facilitates and diminishes the exposure to falls from heights during the positioning and dismantling work.

Design of a work platform in the Bunker

for the realisation of specific tasks in the pieces to be X-rayed with the aim of avoiding risk of falling from heights.

Acquisition of remote controls for cranes to avoid interferences that arose with the controls with cable.

New design of clips for manipulating the

cells that allow doing it with greater stability and therefore greater safety.

Improvement of the safety in the Shunt

machine of the metrology laboratory by means of its being encapsulated.

Placement of new locking pins in the fork

lifts to avoid loss of fingernails. Placement of a new protector in the rolling

rail of the bogies. Improvement of the safety conditions of

the Pellini testing machine, placement of peripheral protection with access to the test element

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Acquisition and improvements in individual and collective protection equipment: anchoring points in Atlas platforms, adjustable lanyards for height work, lower protection against reflections from welding, high visibility clothing for the Metrology section, modification of the design of the lab coats to avoid snagging, protection screen with visor of DIN5 polycarbonate for carrying out tasks of oxygen arc cutting, personalised signage for high-temperature work, increase of evacuation signage, scaffolding, etc., new protection covers for extinguishing elements (extinguishers, extinguishing carts) located outdoors with risk of corrosion, new cable trays of our own design adjusted to our needs. Ergonomic improvements: acquisition of auxiliary lift tables for movements of sacks of flux of 25 kg or more, acquisition of an anti-fatigue rug with the aim of decreasing the physical load of the welding tasks of the cells making up the racks, designing of a clamp with greater length in the handle that provides greater grip with less effort for the worker.

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Hygienic studies: sound-level study of the different work posts exposed to noise, hygienic measurements in the sandblasting area, and hygienic study of chemical agents in the pit of the Innocenti boring machine.

Maintenance of the installations: annual

review of the lifelines, harnesses, preventive checks against legionella, check of the lift elements (slings, straps, shackles, clips, etc.) and check of the detection and extinguishing elements (extinguishers, fire hose cabinets, hydrants, etc.).

Conducting fire drills. Preventive checks against legionella. Campaigns of sensitisation and awareness

of the subject of preventing occupational risks.

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d.3) Assistance and contribution to society. During the year 2016, Ensa has continued with the

scholarship programs to university students, post-graduate students, students of medium and senior training cycles and students of professional training for qualification and obtaining of the professional certification. In this regard, the following collaboration agreements should be highlighted:

Agreement with the Orientation and Employment

Information Centre (COIE) of the University of Cantabria so that the students of different degrees can carry out internships in Ensa. During the year 2016, 20 students carried out the internships in the different areas of the company.

Agreements with professional training centres of the area so

that students of different disciplines (programming of the production in mechanical manufacturing, electro-technical and automated systems, micro computing systems and networks, quality analysis and control laboratory, automatic regulation, welding and boiler making) can be done in the period of internships necessary for the obtaining of the certification. In the year 2016, eight students coming from these centres were accepted.

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Agreement with the Metal Labour Foundation of Cantabria, a collaborating training entity by the Department of Employment and by the Department of Education, so that unemployed workers may carry out internships in companies and obtain in this way professional certification. In the year 2016, one student was accepted from this centre.

Collaboration agreement with Pymetal Cantabria for carrying out non-labour professional

internships for the obtaining of the Professional Certification: "Warehouse Organisation and Management" in collaboration with the Cantabrian Employment Service of the Government of Cantabria. In the year 2016, two students were accepted from this centre.

Collaboration agreement with the CESINE University Centre (a centre attached to the

University of Wales and to the London Metropolitan University) so that the students may carry out internships in Ensa. In the year 2016, two students were accepted from this centre.

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Educational collaboration agreement with the European University of the Atlantic (UNEATLANTICO) for the development of external academic practical programs of university students. In the year 2016, one student from with centre was accepted.

Collaboration agreement with the Valle de Camargo Secondary Education Institute to

promote entrepreneurial attitudes and facilitate employability among the students taking Secondary Education courses.

Collaboration with different educational centres of the region for the realisation of guided

visits to Ensa.

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As in previous years, the company has continued carrying out “Social Programs and Projects of Solidarity” with a marked social character: Periodic collections of blood that are carried out in the factory premises in collaboration

with the Brotherhood of Blood Donors of Cantabria (in the year 2016 two collections were carried out in which 70 donors participated: 14 women and 56 men).

Contracting of incidental services of the company with Special Employment Centres

(garden care, laundry, etc.). After adhesion to the “Solidarity in Enterprises” program, promoted by the Spanish

Association against Cancer (AECC), we tried to make the staff aware of the importance of the cancer prevention. To do this, sensitivity campaigns were disseminated during 2016 with messages of cancer awareness and prevention.

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Campaign for the collection and subsequent recycling of plastic lids whose economic amount is destined to a social cause (contribution in the year 2016: 120 kg, with the accumulated contribution since we began to collect them in the year 2013 being 697 kg).

Furthermore, we continued making the staff aware of the current social subjects,

publishing in the screens of the factory campaigns in this regard: collection of toys for the most disadvantaged boys and girls of Santander, large collection of food organised by the Food Bank of Cantabria, etc.

Actions to ensure Responsible Company Conduct During the fiscal year 2016, the Ensa Group has continued giving special attention to the company action principles and good practices through the following means: Internal Auditing Code and Annual Audit Plan for the Group of Companies, supervised by

the Office of Internal Audits, and approved and ratified by the Management Committee and the Boards of Directors of the companies.

Audit Commissions within the Boards of Directors of the companies. Corporate Code of Conduct for the companies, supervised and approved by the

Management and Administration Bodies of the Group. Corporate statutes according to the regulations in force on the subject of companies.

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Internal Regulations of the Board of Directors of the companies of the Group, formulated

and supervised by the internal legal counselling body of the companies and by their respective Boards of Directors.

Crime Prevention Plan of the Ensa Group in which the directives of behaviour susceptible to

sanctions are defined, so that they may serve as help so that both employees and managers may know and comply with the applicable rules, as well as knowing how to identify and correct, where applicable, any conduct that they consider to be against the principles of the Plan. The Crime Prevention Plan imposes certain obligations on the employees of Ensa, which have to be followed along with those established in the Corporate Code of Conduct.

Sending to Global Compact the "Annual Progress Report (COP)" corresponding to the

second year of application of the principles of the Global Compact of the United Nations where the actions and measures implemented in Ensa related to Human Rights, Labour Rules, the Environment and the Fight against corruption are reflected.

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Environment

The protection of the environment is one of the governing principles of the company actions of the Ensa Group. For this reason the company has a system of environmental management rules and procedures for identifying and minimising the different environmental risks and the potential impacts that its activity may cause with respect to the singular environment in which the factory is located. The Group is committed to the development and technological innovation also in environmental subjects, seeking an effective and sustainable use of the resources and a minimisation of generated waste. These concepts are always present in the new development but also in its search for technological improvement of the existing processes.

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In this line, the Group focusses its efforts in four areas: Improvement of the processes for the reduction of generated waste, favouring the

realisation so that it reduces the consumption of the materials used and it minimises the quantity of generated waste. In this line, important actions have been carried out in the mechanised processes that have supposed a reduction of the consumption of coolant fluids and the hazardous waste generated, by means of increasing the useful life of these substances.

Studies for the substitution of hazardous materials used by others that are less dangers or

more effective. Reduction of energy consumption by means of the application of rational protocols of use

of the equipment and the design of preventive maintenance programs of the installations where large amounts of energy are consumed. Work is also done on the application of more effective and sustainable technologies for the lighting of productive areas, with this being one of the areas with the largest consumption of electricity of our activity.

Application of BATS (Best Available Techniques) in the purification of atmospheric

pollutants, as is the case of the sandblasting installation, where, thanks to the technological improvement, a very significant improvement has been achieved in the emission parameters, being much below the emission limits that are marked by the legislation.

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The most significant systems, equipment and installations of the Group used for environmental activities are: warehouses of hazardous products, waste facilities and environmental management equipment with an accounting value of 828 thousand euros and accumulated amortisation of 482 thousand euros. In December, the follow-up audit of the certification of the Environmental Management System implemented in Ensa, certified according to the UNE-EN ISO 14001:2004 Standard by AENOR, was successfully passed. In the year 2016 a total of 173 tons of hazardous waste was generated compared to the 119 tons generated in 2015. Nonetheless, 92 tons corresponded to the waste generated in the excavation operations and repair of filtrations of lubricant and they can be considered of extraordinary and one-time generation. Therefore, if we consider only the waste generated in the usual operation of our activities and processes, it is reduced by approximately 30%. The hazardous waste management expense in 2016 was 22 thousand euros, compared to 24 of the previous year. As for the non-hazardous waste, 428 tons were generated, compared to the 513 tons generated in 2015. A lower amount of waste from welding and from wood was generated. The cost of the non-hazardous waste management, which includes the waste facility equipment, supposed in 2016 an expense of 29 thousand euros, compared to 35 thousand of the previous year.

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The internal waste management cost, of both hazardous and non-hazardous materials, in addition to the maintenance of the waste facility, as well as the maintenance of the ISO 14001 environmental management system and the management of the regulatory and documental aspects was 83 thousand euros, compared to the 92 thousand euros spent in 2015. In 2016 specialised advice was contracted for the realisation of the energy audit in compliance with the Directive 2012/27/EU and Royal Decree 56/2016, the environmental risk evaluation according to Law 26/2007 and the Royal Decrees 183/2015 and 2090/2009, and the study of the elimination of hydrazine from the effluents. These services have supposed a cost of 16 thousand euros. The conducted energy audit has given positive results, having identified important foci for the reduction of electrical power consumption. The reduction of the power consumption has been one of the lines of work to which more importance has been given in recent years, with actions such as the change of the production lamps for low-consumption systems based on the LED technology.

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We have also collaborated with the University of Cantabria in a project to locate filtrations in the rainwater collectors, repair them and decontaminate the area, which has supposed an expense of 16 thousand euros. With this operation, we managed to adapt the waste water parameters of a rainwater collector to the requirements for dumping at sea. The actions related to the cleaning of the residual water and rainwater pipes supposed a cost of 4 thousand euros. As for the emission of pollutants to the atmosphere, the maintenance plans of the purification equipment of the sandblasting installation and of the burners of the thermal treatment furnaces have continued. The cost of these operations was reduced from 9 thousand euros spent in 2015 to 8 thousand in 2016.

The regulatory inspection activities in matters of atmospheric emissions and dumping control has supposed an expense of 6 thousand euros, while the expense in sundry supplies such as containers and packages for the handling and transport of waste and signage was a thousand euros. Therefore, the expenses of the Ensa Group in environmental activities of the year 2016 were 224 thousand euros compared to the 216 thousand euros of 2015. In 2016, no investment was made in environmental material, while in 2015 investments were made in the amount of 17 thousand euros. From the year 2001, Ensa has a building for the storage of hazardous products. The investment made was of 173 thousand euros and for the realisation of this investment, a subsidy was received from the Autonomous Region of Cantabria in the amount of 61 thousand euros. As of today’s date, the investment is fully amortised and the subsidy of capital recognised in its entirety in the income statement.

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Therefore, the effort carried out during the year 2016 in environmental matters has continued to be focussed on ensuring compliance with the legal requirements and the activities to prevent environmental impacts.

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BALANCE SHEETS & PROFIT AND LOSS ACCOUNT

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PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31

DECEMBER 2015 / 2016

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ENSA AND SUBSIDIARIES

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78

79

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