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SuStainability and Corporate report

2016

ALTA VELOCIDAD

ÍNDICE1. WHO WE ARE AND WHAT WE DO: OUR ROLE AS KEY ACTOR IN THE SPANISH RAILWAY FIELD ........................................................... 3

1.1. BACKGROUND ................................................................................................................................................................................................................................... 5

1.2. MISSION, VISION AND VALUES .................................................................................................................................................................................................... 6

1.3. BUSINESS MODEL ............................................................................................................................................................................................................................ 7

1.4. ORGANIZATION STRUCTURE ...................................................................................................................................................................................................... 10

2. HOW AND WHY WE DO THINGS: STRATEGIC FOCUS AND VALUE CREATION ........................................................................................ 11

2.1. BUSINESS STRATEGY .....................................................................................................................................................................................................................12

2.2. GOOD GOVERNMENT, ETHICS, TRANSPARENCY AND RISKS MANAGEMENT .................................................................................................................21

2.3. LISTENING TO GROUPS OF INTEREST ....................................................................................................................................................................................... 34

4. ABOUT THIS REPORT .................................................................................................................................................................................90

4.1. SCOPE ................................................................................................................................................................................................................................................91

4.2. INTERNATIONAL STANDARDS ...................................................................................................................................................................................................91

4.3. MATERIALITY ANALYSIS ............................................................................................................................................................................................................91

5. TABLE OF GRI INDICATORS ........................................................................................................................................................................94

3. RESULTS AND IMPACT: IMPROVMENTS IN MANAGEMENT AND MOVILITY ......................................................................................... 39

3.1. EFFICIENCY IN MANAGEMENT OF PUBLIC RESOURCES: ECONOMIC RESUTLS AND GENERATED ECONOMIC VALUE ..........................................40

3.2. IMPROVEMENT OF SERVICE AND OPERATIONS ....................................................................................................................................................................43

3.3. RESPECT FOR THE ENVIRONMENT ..........................................................................................................................................................................................64

3.4. IMPACT ON PEOPLE ....................................................................................................................................................................................................................... 77

33Sustainability and Corporate Government Report

1Our role as key player in the Spanish railway sector

WHO WE ARE AND WHAT WE DO

Sustainability and Corporate Government Report 4

WHO WE ARE AND WHAT WE DO1Adif Alta Velocidad, from now on Adif-AV, is a public business entity depending on the Ministry of Public Works of Spain, that acts as the driver of the railway sector, fostering the railway industry as a means of transport for people and goods and making easier the access to the infrastructure in an equal status.

Adif-AV is looking to boost Spanish railway transportation through the development and management of a safe, effective and sustainable (environmentally, socially and economically) infrastructure system, applying the following quality standards.

COMPETENCIES

◢ Building and managing of part of the high speed railway infrastructures, as well as other infrastructures and functions transferred to it

◢ High speed stations businesses

◢ Telecommunications and energy activities

OBJECTIVES

◢ Achieving that Adif-AV helps meet the public deficit objective

◢ Making Adif-AV keep being the instrument of investment from the Ministry of Public Works.

◢ Getting Adif-AV to permanently face the improvement of the best value for money relationship of its services

Adif-AV acts as the driver of the railway sector through the development and management of a safe, effective and sustainable infrastructures system.


WHO WE ARE AND WHAT WE DO1

1.1 Background

2005

2012

2013

2014

2015

In 2004 the Railway Sector Act entered into force, which meant a complete reorganisation of the railway sector in the state. RENFE started being called Administrador de Infraestructuras Ferroviarias, also integrating GIF (Gestor de Infrastructuras Ferroviarias), and their management and building of railway infrastructures functions were recognized, following what was determined by the Ministry of Public Works. A new public business entity that would be in charge of the railway transport service was created, RENFE Operadora.

In 2013, with the entry into force of Royal Decree act 4/2013, the railway infrastructures and stations that formed the State ownership network and whose management was entrusted to Adif, began being of their own ownership.

Adif and Adif-AV signed agreement through which they entrusted mutually the performance of specific duties.

Through the application of Royal Decree act 22/2012 on the adoption of measures for the rationalisation and restructuring of the railway sector, part of the assets and liabilities and the staff of the public business entity Ferrocarriles de Vía Estrecha (FEVE) were integrated into Adif.

With the entry into force of Royal Decree-act 15/2013, Adif went through a split between Adif and Adif Alta Velocidad (from now on, Adif-AV). As a consequence of this split, Adif became the entity responsible for the construction, maintenance and operation of the conventional network, including the management of the stations and the activities related to heritage and urbanism and logistic services, while Adif-AV took on the responsibility of the construction, maintenance and operation of the high speed network, as well as the activities related to telecommunications, energy and environment (supporting Adif in these activities).

Creation of Adif and Renfe Operadora

Network ownership change

Integration of FEVE Split of Adif and Adif-AV

Adif and Adif-AV agreements



The strategy of Adif-AV includes the definition of where the entity wants to be in the long term as a company (vision), how they are going to reach this goal from a global and strategic point of view ("mission") and what are the values that guide the behaviour of its employees and the business and management decisions. These values, framed within the Social Responsibility, form the essence of the entity of Adif-AV as a company.

Development and management of a system of high performance railway infrastructures that is economically sustainable, safe, effective and of high quality

Getting the market income to cover at least 50% of the costs

• We are committed with safety

• We protect the environment

• We give added value to our groups of interest

• The people that work in Adif-AV, are the main asset of the entity

• We are transparent, rational and effective in the managing of public resources

1.2 Mission, Vision and Values

Mission

Vision Values

During fiscal year 2017 Adif-AV expects to perform a new version of its vision, mission and values



1.3 Business ModelThe main activity developed by Adif-AV is the construction of high speed lines. Also, Adif-AV is responsible for the management of the telecommunications infrastructure, the management of power supply, the counselling and supervision of the actions in the area of environment and energy efficiency for Adif.

Numerous activities related with the competences of Adif-AV are entrusted to Adif through service delivery agreements, such as the management of the systems of the circulation control and the capability of the infrastructures, the maintenance, the citizen protection and security, the management of the passenger stations connected through high speed lines and other specific functions.

CONSTRUCTION

Adif-AV keeps advancing in the works and projects mandated by the Government, uniting the different territories of the Spanish geography through a high performances network.

Currently, the entity is entrusted with the construction of different lines. In 2016, the construction of different high speed lines that will be started in the future such as Madrid-Extermadura, León-Asturias, Zamora-Ourense or Valladolid-Burgos-Vitoria has been advancing.

The development of system ERTMS (European Traffic Management System) in the high speed network (apart from the regular network) has turned Spain into the country with more railway line kilometres with ERTMS in operation. ERTMS is a command and control system for trains intended to make the signalling and the communications between track infrastructure and on board systems to be congruent throughout Europe, getting closer to the inter-operability of the railway circulations between the European Union countries.

OPERATION AND MAINTENANCE

The operation and maintenance activities of the infrastructures owned by Adif-AV are entrusted to Adif through the corresponding agreements.

Among the main operation actions of the high speed network, we must highlight the management of the railway traffic, the calculation of charges for the use of the railway infrastructures, stations and other railway facilities and the operation of the passenger stations, among others.

The maintenance of the high speed infrastructure consists on the operations of conservation, repairing, substitution and technological update of the different elements forming the network.



INTEGRAL SECURITY OF THE RAILWAY SYSTEM

The culture of safety of Adif-AV is based on the assessment of the risks to be capable of applying the preventive, corrective and improvement measures necessary for the minimization of the said risks.

• Protection and safety: Safety in infrastructures and facilities of the company through the implementation of the corresponding systems and protocols in cases of emergency, in collaboration with the competent public entities.

• Safety in railway circulation: Control of the risks inherent to the circulation of the trains, derived from Adif-AV and the Operating Companies' own activity, giving the users trust in the network through which they are travelling..

• Prevention of Occupational Hazards: Commitment with the safety and health of the workers, collaborating with other companies to know and control the risks derived from the interaction with contractors and providers, as well as everyone developing an occasional or long term task for Adif-AV.

TECHNICAL ASSISTANCES AND INTERNATIONAL COLLABORATIONS

The experience of Adif-AV in the construction, operation and maintenance of railway infrastructures under the highest quality and safety standards has placed the entity during these last years as a reference in the field. For this reason, Adif-AV articipates in different international initiatives such as the development of the trans-European railway network and in the development of the international regulation in terms of safety and interoperability, among others.

TELECOMMUNICATIONS AND ENERGY

Adif-AV is responsible for the management of the telecommunications infrastructure, the optic fibre network that extends across the railway lines and which supports the services of the network operation and offers a service to different operators to optimize the excellent capacity of its network.

Also, it is in charge of the management of the supply of electric power consumed by Adif and Adif-AV and of the power for the traction and others consumed by RENFE Operadora. Also, it advises and supervises the actions in terms of energy efficiency of Adif and Adif-AV.

The high speed network of Adif-AV is present in different territories of the Spanish geography and currently has more than 2,500 km of service.



* METRIC TRACK

* HIGH SPEED LINES (1,668 mm)

* HIGH SPEEP LINES (1,435 mm)

STATIONS OWNED ADIF

Categ 2

Categ 1

* IBERIAN TRACK (1,668 mm)

* THIRD TRACK(1,435 mm and 1,668 mm)

* TRACK OWNED ADIF

** TRACK OWNED ADIF ALTAVELOCIDAD

** THIRD TRACK(1,435 mm and 1,668 mm)

** IBERIAN TRACK (1,668 mm)

** HIGH SPEED LINES (1,435 mm)

STATIONSOWNED ADIF ALTA

VELOCIDAD

Other Categ

Categ 1

LFP SA

300

300

300

300160

160

300

300

300300

300300

300

300

300

120300

300

300

250

250

270

270

250

300

300220

255

290

290

300

300

200

200

200

200

200

100

120

120

80

155

90

220

220

200

200

200

105

200

160135

200

160

MAXIMUN SPEEDSxxx Km/h

320345

400465

400465

400460

420460

500520

350380

500520

750750

750750

500550

500550

360400

450550

(Ancho Ibérico)

BASICSPECIAL

MAXIMUM LENGTHOF FREIGHT TRAINS

(meters)

400465

300

400

400

400

400400

400

400

400400

400

400

400400

400

400

400

400

400

400

400

400

400

350

350

190

129195

420

410

400

300

400400

200(Ancho Estándar)

(Ancho Ibérico)

270

(meters)

MAXIMUM LEGTH OFPASSENGERS TRAINS

Villena A.V.

AlbaceteLos Llanos

Requena-Utiel

Cuenca Fernando Zóbel

Calatayud

LleidaPirineus

Alacant Terminal

Valencia Joaquín Sorolla

Castellón de la Plana

Camp Tarragona

Barcelona Sants

Figueres V.

Girona

San Sebastián/

Málaga María Zambrano

ToledoLa Sagra

Puente Genil-Herrera

Granada

Santa Ana

Córdoba

Puertollano

Ciudad Real

Sevilla Santa Justa

Cáceres

Ourense

Zamora

Antequera

Donostia

Segovia Guiomar

Santiago deCompostela

Pontevedra

Vilagarcía de Arousa

ValladolidCampo G.

Zara

goza

Del

icia

s

Madrid ChamartínMadrid Puerta

Atocha

Guadalajara-Yebes

León

Murcia delCarmen

Palencia

Loja

VigoUrzáiz

Villanueva de Cordoba

Bif. Medina

(Bif. Angueira)

Medina AVMedina AV

Valencia Nord

Mérida

Mirabel

Monfragüe

Aljucén

Plasencia

Badajoz

Vandellós

Redondela

La Robla



1.4 Organization Structure

PRESIDENCY

TELECOMMUNICATIONS AND ENERGY

MANAGEMENT

PROJECTS MANAGEMENT

CONSTRUCTION MANAGEMENT

GENERAL MANAGEMENT

TECHNICAL ACTIONS MANAGEMENT

The organization structure of Adif-AV on the 31st of December of 2016 was articulated based on the following chart:

During fiscal year 2017 this chart is expected to go through some changes.


2

Strategic focus and value creation

HOW AND WHY WE DO THINGS

HOW AND WHY WE DO THINGS2


Taking into account the environment in which Adif-AV operates (guidelines defined by the Ministry of Public Works, the economic context and changes in the Spanish railway model), the entity defined in 2013 its business strategy.

In the design and application of the said strategy, Adif-AV has taken into account the anticipation of the different groups of interest that are relevant to the entity, looking to create value for all of them. In this context, the Good Governance, the ethics and the transparency have been acquiring importance during the last years, as well as the adequate management of the risks associated to the activity of Adif-AV.

The environment in which Adif-AV operates marks the strategy and the management priorities of the entity. In this sense, the guidelines established by the Ministry of Public Works, mainly in the Plan of Infrastructures, Transport and Housing (PITVI) and its Strategic Plan, as well as the regulatory framework, are the main levers for the strategy of Adif-AV.

The improvement in the macroeconomic conditions of Spain, with the GDP increase, a positive trend in the labour market and the great tourism numbers of the country, pose good perspectives in the Spanish economic context. Nevertheless, it is still important to deepen in the rationalization of the railway sector in the field of statewide competition, with the purpose of achieving the maximum efficiency in the management of the services and, at the same time, ensuring the budget stability and improving the unfolding of the area.

2.1 Business Strategy

2016 has been the last year of effect of Business Plan 2013-2016 and Adif-AV is ready to deal with a new period of consolidation and expansion in the next years



In 2013 Adif-AV designed its Business Plan for period 2013-2016 taking into account the conditions of its environment and having the vision of getting the commercial income to cover more than half of the costs. For it, three basic priorities were established: getting Adif-AV to help meet the public deficit objective, making the entity keep being the instrument of investment of the Ministry of Public Works and deal permanently with the improvement in the quality/price relation of the services it grants. Additionally, the integrated security is a transversal element that must be considered, in the management carried out by Adif-AV in its three facets (network, business and services management).

Business Plan 2013-2016 includes 7 strategic initiatives and different related strategic actions. To monitor said actions designed for the compliances of the objectives of the Business Plan, Adif-AV has identified a relation of indicators displayed below that have been updated in 2016:

2014 2015 2016Integrated security

Serious train accidents assigned to Adif-AV 0 0 0

Fatal accidents at work in Adif-AV 0 0 0

Degree of compliance of the Action Plan of Self Protection and Emergencies (%)

101.5% 109% 105.2%

Optimization of investments with significant reductions in travelling time

Reduction of travelling times ND 32% until 2015 74%

Increase of trains circulated km (Objective 20%) 4.3% 11,53% 11,9%

Investments level 41.7% executed 64.5% executed 76.7%

Increase of income for fees

Increase of income for fees (millions of euros)56

100% achieved179 desde 2012 508

Management of operation expenses

Reduction of expenses from outside Saving of 66.5 millions of euros Saving of 63.0 millions of euros Saving of 32 millions with respect to 2012

Reduction of materials consumption 100% achieved 100% achieved 100% achieved



2014 2015 2016Optimization of costs for society (low traffic lines)

Optimization of operation expenses ND ND ND

Reduction of energy consumption ND ND ND

Reduction of CO2 emissions ND ND ND

Optimization of costs for society (low traffic lines)

Collection of financial resources 100% achieved 100% achieved 100% achieved

Bonds issuing ND 100% achieved 100% achieved

People management

Reduction of expenses on staff The expense was equalized to the budget in 99%

The expense was equalized to the budget in 100%

ND

Optimization of the commercial management in Adif-AV

Management of income for parking 100% achieved 100% achieved 100% achieved

Management of income for optic fibre 100% achieved 100% achieved 100% achieved

Management of income for publicity ND ND 100% achieved

In general, since 2013 the main management measures have been destined to improve the economic margins, increasing income and reducing costs to get an economically sustainable railway system, but without damaging the current levels of safety and service quality. For this, the efficient management of the public resources, the transparency and the safety have represented the fundamental pillars of management in Adif-AV.

After these last 4 years and after having made a final results report consolidating the achievements at the end of currency of Business Plan 2013-2016, Adif-AV is ready to face a new period of consolidation and expansion. That is why 2017 will be a year for analysis and transformation, to prepare the entity to achieve the new strategic scenario for the following years. The objectives must be destined to the strengthening and improvement in quality of the service and the safety, making Adif-AV an environmentally and economically sustainable entity, being the driver of the economic development of the country and making as many people as possible have a high performance transportation service.

The efficient management of the public resources, the transparency and the safety have represented the main pillars of the management of Adif-AV



Apart from the Business Plan, Adif-AV has an Efficiency Plan with the purpose of identifying annually specific measures to be implemented in the subject of non-productive running costs, for the improvement in the efficiency of the processes and for promotion of the sustainable use of the resources. The Plan for Austerity and Efficiency (PAE) of the Ministry of Public Works constitutes one of the reference frameworks for this plan, so the alignment between both plans is absolute.

In March, 2016, the Management Committee of Adif-AV approved the new Efficiency Plan 2016-2018, arranging a chronogram of actions so all the areas of the entity will grant new efficiency measures. This plan contemplates four strategic objectives that summarize the new focus on efficiency for the next years, in the framework of the Business Plan, orienting it towards the generation of value for the groups of interest, and basing in values such as:

◢ Efficiency and effectiveness in the use of the available resources

◢ Transparency, responsibility and integrity in management

◢ Economic sustainability and excellence in management

◢ Growth, creativity, innovation and individual initiative

During 2016, transition period from the previous plan to the new one, the higher amount of measures were concentrated in the improvement of the efficiency of the processes, unlike previous years, which had a higher focus in reduction of running costs. The improvement of the efficiency in the processes is one of the greatest challenges that Adif-AV must face in the next years and the Efficiency Plan will contribute significantly to achieve it. Also, it counts with a Committee of Efficiency that is responsible for identifying, developing and implementing the measures that ensure the compliance of the objectives of the said plan..

With respect to the compliance of the objectives of the plan, 100% of the measures are finished and/or implemented with an economic impact of 6.4 millions of euros. The Efficiency Plan contains 10 measures of 3 types:

Type of measure Total no. measures Real economic impact (€)

Expenses reduction 5 1,423,569

Sustainable use of the resources 1 4,990,000

Improvement in the efficiency of the processes 4 0

Total 10 6,413,569



Apart from the Business Plan and the Efficiency Plan, Adif-AV has a Social Responsibility Plan through which they intend to promote different initiatives with the purpose of maximizing the value that the entity generates inwards and outwards. This way, the said Plan responds, on one hand to the own strategy of Adif-AV, and on the other one, to the anticipation of the different groups of interest with which it is related. For it, it is especially relevant that this commitment is integrated in the whole organization:

◢ It must be present in the whole value chain, reconsidering and giving improvement for all the processes of contracting and relationship with suppliers, production, sales, personnel management, economic management, government of the entity and internal and external communication, among others.

◢ It must consider projects and initiatives aligned with the business that try to give response to the anticipation of the groups of interest of the organization.

◢ It must base the strategic direction of the company in a responsible management with respect to the impacts generated and the sustainability of the company itself.

Adif-AV counts with a Social Responsibility Plan that promotes different initiatives to maximize the value that the entity generates

During 2016 Adif-AV has worked in its new Social Responsibility and Sustainability Plan 2016 to strengthen an ethic and responsible business culture aligning with the public policies in the subject, which is useful to display the values of the entity and improve the response to the anticipation of the groups of interest through specific commitments, objectives and projects.



Taking into account the results of the analysis of materiality performed by Adif-AV and the relevant identified issues, the entity has defined 4 dimensions on which the specific objectives, actions and indicators have been defined:

◢ Good Government Dimension: "We commit to create and apply a government model based on ethics and transparency, a model that fosters the development of responsible leadership and that manages proactively the risks of the entity, while applying rigorously all the necessary internal controls".

◢ Economic Dimension: “We commit to optimize to the maximum the economic resources managed by Adif-AV, rationalizing the expenses, developing more efficient work processes and making sustainable use of the material resources, with the ultimate purpose of permitting the economic viability of the entity and caring for the expectations of the contributor”.

◢ Social Dimension: “We commit with health, safety and welfare of people, both those working in the company and those who may be affected by our activity, contributing this way to unity and social integration”.

◢ Environmental Dimension: “We commit to avoid, mitigate or compensate the environmental impacts that we may produce during the development of our activity, contributing as much as possible to the preservation of the environment and the biodiversity”.

Below, the evolution of the indicators established for the monitoring of the commitments around the 4 dimensions is displayed:

2015 2016DIMENSION 1: Good Government

Nº of agreements signed in force 15 30

Nº of claims due to problems of information or communication 1 1,601 1,620

Nº of notices of breaches in ethics mailbox received annually 0 0

% people who have gone through the Ethics Code course 2 ND 82.32%

Implementation of the an integral risks management system Presented to the Committees of Management of Adif and Adif-AV

Implemented

Monitoring of the integral risks management system In process of development Ongoing

Nº Plans of Individual Development performed / Nº ED people 34.93% 30.77%

Nº ED people participating in development actions / Total Nº of ED 75.82% 75.44%



2015

2015

2016

2016

DIMENSION 2: Economic

DIMENSION 3: Social

Evolution of operation result (thousands of euros) 28,254 14,229

Coverage ratio 3 59.72% 55.47%

% of implemented and finished measures 81% 100%

Productivity Index 4 3.87 3.86

INTERNAL

Number of complaints due to employment discrimination 0 0

% women receiving training 79.37% 81.84%1

% of employees who participated in preventive medicine 24 % 25%

Ratio of working accidents (index of incidence) 5 9.23 0

% of employees of Adif-AV involved and committed with the entity6 94% (valoración 7,87 sobre 10) ND

% of employees satisfied with the company information 7 64% ND



2015 2016EXTERNAL

Nº of actions of the Open Station Program 1 314 314

Km of tracks in disuse given for Green Tracks program - -

Nº of pedestrians ran over - -

Accident rate (trains circulation) - -

Nº of NGOs and institutions with which it collaborates, giving space or other types of non-heritage assets 1

73 73

Yearly loss of profit due to authorization of release with CSR criteria in euros 1 470,77 580,087

% of passenger who access the stations adapted for people with disabilities 90.61% 90.61%

Nº of stations offering the service Dialoga 1 21 21

2015 2016DIMENSIÓN 4: Environmental

Tons of CO2 avoided/year due to reduction in the consumption of energy 17,564 13,895

Number of claims and complaints due to noise 31 (15 of them together for Adif and Adif-AV)

33 (18 of them together for Adif and Adif-AV)

Dangerous residues generated (tons) 4,786 976

Nº certifications 1 1 1

¹ The indicator references Adif and Adif-AV

² The Ethics code course was created at the end of 2016 so there are no data to compare with in 2015. There is the percentage of people who have performed the 2016 course with respect to the whole personnel

³ The coverage ratio establishes a relationship between the costs of production and the sales income

⁴ Nº of employees managed per million Km/Train

⁵ Index of incidence (I.I) = (nº accidents / monthly average of nº of workers) x 100

⁶ The survey of work climate has a biennial nature and last one was performed in 2015



With the purpose of having a specific forum of internal reference in Adif-AV in terms of sustainability, there is a Committee of Social Responsibility and Corporative Reputation that boosts and coordinates the policies and projects related to that subject.

The main functions of this committee are as listed below:

◢ Approving the policies and strategies in terms of Social Responsibility and Sustainability for its further rising to the Management Committee.

◢ Creation of the work teams necessary to carry out projects, especially those that may be transversal to different management areas.

◢ Debating and coordinating the transversal Social Responsibility and Sustainability projects to different areas of the company.

◢ Managing the start-up, monitoring and control of plans and policies (for example, the Social Responsibility and Sustainability Plan).

◢ Proposing new lines of action, objectives or processes for improvement in relation with the performance of Social Responsabiity and Sustainability of Adif-AV.

◢ Analysing the results obtained and implementing solutions to the problems detected in relationship with the development of Adif-AV in Social Responsibility and Sustainability.

In 2017, both Adif and Adif-AV, are expected to make a relevant change in the way they approach and integrate Corporative Responsibility in the strategy and operations of business. Said change consists in articulating the ensemble of its business strategy parting from their Corporative Responsibility and Sustainability Policy, and redefining it, taking into account the social, economic and environmental challenges of the entity, reflected on a global scale in the Sustainable Development Goals, SDGs, of the UN, and on a local scale as needed by its groups of interest and according to the needs of the closest environment. This way, the whole strategy and its deployment on an operation level are structured through work lines and objectives with social, economic and environmental impact, contributing to the aims of the SDGs and to give response to the expectations of the social collectives with which we relate.

Parting from the 17 goals and 169 targets included in the SDGs, the mapping of all the value chain of the company will be carried out, also taking care of the expectations of the groups of interest. This way, the priorities of the areas of management and their objectives will be identified.

To achieve the established goals, it is very important to integrate sustainability within the main activity and the government of the company, as well as the incorporation of sustainable development goals in all the functions of the entity.

The lines of action of the Corporative Responsibility and Sustainability Policy must inspire the business strategy, materializing in strategic work lines oriented to the compliance of acquired commitments, which shall be measurable to be evaluable, through the development of different plans, programs and processes.



As established in Royal Decree-Act 15/2013, on the 31st of December of this year, public business entity Adif-AV was created, through the separation of the branch of activity of construction and administration of the high speed railway infrastructures and other ones attributed to them that were entrusted until that moment to Adif. From that moment on, Adif-AV has the functions established in Act 39/2013 on the Railway Sector and in its development regulations for the infrastructures owned by them.

Adif-AV is configured as a public organism associated to the Ministry of Public Works in accordance with Act 6/1997 on the Organization and Functioning of the General Administration of the State (abolished since the 2nd of October of 2016, through Act 40/2015 from 1st of October, on Judicial Regime of the Public Sector). The entity has own and independent legal personality and full capacity to work to accomplish its purposes and own property.

In the field of contracting, Adif-AV is subject to the regulations established for public administrations on the legislation about public sector contracts for contracts of construction works or modification of railway infrastructures, except for the works of electrification and signalling and maintenance. For property, it is also governed by the Public Administrations Property Act.

The social purpose of Adif-AV determines its main competences, among which the approval of construction projects of high speed railway infrastructures and their operation must be highlighted, as well as the administration of the railway infrastructures of their ownership.

2.2 Good Government, Ethics, Transparency and Risks Management

A) Nature of the entity

The full content of the social purpose of Adif-AV can be consulted in Royal Decree 1044/2013, through which the Statute of Public Business Entity Adif-AV is approved, available in the website www.adifaltavelocidad.es



B) Government Structure

The Management Board is the highest organ of government of Adif-AV and, therefore, it has the widest powers for the administration of the entity, to which corresponds the further direction and management.

To guarantee the highest effectiveness in the compliance of the functions attributed to the Management Board, there are commissions which assume the decision on determinate matters and reinforce the guarantees of objectivity and control in the activity of the Board.

Also, Adif-AV has a Management Committee, being an extra statutory organ for the deliberation and advice to the President.

Commitee of AuditCommittee of monitoring of the Code of Ethics and

Conduct

Committee of Management

Administration Board



C) Management Board

The Statute of Adif-AV establishes that the Administration Board must be formed by a President (which is at the same

time the President of Adif) and by at least nine and as a maximum ten spokespeople, whose appointment and termination correspond to the Minister of Public Works. Also, the Board itself must name a secretary that will go to the reunions with speaking rights but no voting rights, except if he has the condition of spokesperson as well..

On the 31st of December of 2016, the Administration Board was formed by eleven members, its President, the Secretary of the Board and nine spokespeople, from which three were women and eight were men.

The terminations produced under the Board during fiscal year 2016 were the following:

◢ Gonzalo Ferré Moltó (President) (19/11/2016)

◢ Ms. María García Capa (22/07/2016)

MAIN APPLICABLE REGULATIONSThe regulations about incompatibilities and conflicts of interests are gathered mainly in:

◉ Act 53/1984 on incompatibilities of staff serving the Public Administrations

◉ Act 5/2006 regulating the conflicts of interests of the members of the Government and High Positions of the State General Administration

◉ Act 39/2015, from the 1st of October, on the common administrative procedure of the public administrations

◉ Act 7/2007 of the Basic Statute of Public Employees

22%Mujeres en el Consejo

In 2016 the Management Board has met in 11 occasions

Mr.Juan Bravo Rivera (18/11/2016)President

Mr. Benigno Blanco Rodríguez (31/12/2013)Counselor

Mr. Jorge Urrecho Corrales (10/04/2015)Counselor

Ms. Alicia Portas Martínez (09-09-2014)Secretary

Ms. Paloma Iribas Forcat (10/04/2015)Counselor

Mr. Antonio Toscano Jiménez (10/01/2014)Counselor

Mr. Domingo García Díez (28/03/2014)President of the Audit Committee

Mr. Miguel Ángel Cilleros Sánchez (09/05/2014)Counselor

Mr. Miguel Ángel Herrera Chamorro (31/12/2013)Counselor

Ms. Myriam Bonafé Tovar (30/03/2015)Counselor

Mr. Domingo García Díez (28/03/2014)President of the Committee of monitoring of the Code of Ethics and

Conduct

Mr. Jorge Ballesteros Sánchez (31/12/2013)Counselor



CONSTITUCIÓNFor the valid constitution of the Management Board, apart from the President and the Secretary or those replacing them, there must be present or represented, on first call, at least half of the spokespeople and, in the second call, a third part of them. Between the first and the second call at least one hour shall pass.

AGREEMENTS ADOPTIONThe agreement of the Management Board will be taken through absolute majority of votes of its present members.

In case of a tie, the casting vote will be the President's.

REMUNERATIONThe President and the Secretary of the Management Board do not receive any remuneration due to attending the sessions. As disposed in the Resolution of the State Secretary of Budget and Expenditure on the 29th of December of 2015, the payment of compensations for attendance of the members of the Management Board is authorized, having a maximum amount of 11,523.27 €/year for a total of 11 sessions. The amount will be proportionally reduced when the amount of sessions is lower than eleven.

DELEGATION OF VOTEThe spokespeople that excuse their assistance to the sessions of the Board or of the Delegated Commissions may delegate their vote to the President or another member of both organs. The spokespeople of the Board may not have vote abstention in the votings. The delegation of vote will be understood to be for all the matters included in the meeting agenda, except if there is an explicit specification.

MEETINGSAccording to Article 19 of Royal Decree 1044/2013, from the 27th of December, by which the Statute of Adif-AV is approved, the Administration Board will gather, after being summoned and after initiative of its President, or at request of at least, half the spokespeople, as many times as necessary for the development of the functions of the entity. Nevertheless, a minimum of eleven meetings per year is established.

Among the functions assigned to the Management Board, the following must be highlighted:

◢ Determining the structure of the entity, as well as the guidelines for the modification of the staff and the basic remuneration conditions.

◢ Establishing the regulations on operation and adoption of agreement of the Board itself.

◢ Approving the yearly budgets on operation and capital, the multi-year action program and giving them to the Ministry of Public Works.

◢ Approving the Annual Accounts, the management report and the proposal for the application of result.

◢ Authorising the credit operations and the rest of indebtedness operations.



In fiscal year 2016 the Management Board of Adif-AV has met in 11 occasions. During the development of the said reunions, topics such as contract bids, awards and contracts were treated; collaboration agreements and framework agreements; granting of powers and delegation of competences, society and heritage actions; approval of the individual Annual Accounts of ADIF-AV for fiscal year 2015; 1st Modification of the Update Document on the Network Declaration of ADIF-AV 2016; update of the General Internal Functioning Regulations of the Management Board of ADIF-AV; rates of public business entity ADIF-AV for the provision of Complementary Services for fiscal year 2017.

The functioning of the Management Board is regulated according to what is established in the Statute of Public Business Entity Adif-AV, available in www.adifaltavelocidad.es



D) Other internal management organs

The functioning of the Audit Committee is regulated by the functioning regulations approved by the Management Board in the session in which the organ was created (27th of November of 2009).

On the 31st of December of 2016, the Audit Committee was integrated by 3 Adif-AV counsellors (Ms. Paloma Iribas Forcat, Mr. Jorge Ballesteros Sánchez and Mr. Domingo García Díez), who do not have executive functions in the entity and a secretary (Ms. Alicia Portas Martínez). Their members are appointed by the Management Board for a period of 4 years and without prejudice of their possible re-election, and also, among the members, a President is appointed (currently that position is held by Mr. Domingo García Díez)

The Audit Committee exercises functions of supervision of the economic-financial information, as well as information to the Management Board on their actions and on those matters relevant that it may know about.

The business nature, the dimension and the complexity of public business entity Adif-AV encourage the reinforcement of the internal control function with the purpose of the decisions of the Senior Management, the procedures it implements and the controls it establishes, are correctly, systematically and permanently applied. With this purpose, the Management Board of the public business entity of Adif-AV agreed in its meeting from the 5th of March of 2013 to reinforce the function of Internal Audit. Accordingly with the foregoing, the Management Board approved on the 27th of June of 2013, the Statute of Internal Audit f Adif-AV, which gathers the mission, goals, organization, functions and responsibilities of the Internal Audit Management.

The creation of the Committee of Monitoring of the Code of Ethics and Conduct of Adif-AV and its functioning regulations were approved in the session of the Management Board celebrated on the 28th of January of 2011, later being modified for their adaptation to the new structure of Adif-AV. This Committee is responsible for the management and control of the compliance of the Code of Ethics and Conduct of Adif-AV.

This Committee is integrated by 10 members, from which 5 of them are counselors of Adif-AV (Mr. Domingo García Díez, as president; and Mr. Benigno Blanco Rodríguez, Mr. Jorge Ballesteros Sánchez, Mr. Antonio Toscano Jiménez, and Mr. Miguel Ángel Cilleros Sánchez, as spokespeople) who do not have executive functions in the entity and 5 of them are manager of Adif-AV (Mr. Cristóbal Pérez Monjardín, Mr. Alberto Reguero Martínez, Mr. Juan Pedro Galiano Serrano and Ms. Sara Ugarte Alonso-Vega, as spokespersons; and Mr. Antonio Benavente Jover, as secretary). Both the President and the spokespersons are appointed and terminated by the Management Board.

The main functions of this Committee are:

◉ Assessing and caring for the compliance of the Code of Ethics and Conduct

◉ Performing yearly monitoring reports on the compliance of the Code

◉ Informing the Management Board about the functioning and compliance of the Code

◉ Performing audits and studies on the effective application and compliance of the Code

◉ Analysing and assessing the reports and cases sent by the Office of Protection of Integrity

◉ Propose modifications to the Code

AUDIT COMMITTEE COMMITTEE OF MONITORING OF THE CODE OF ETHICS AND CONDUCT

2 14 103 533.3% 12.5%

Reunions ReunionsMembers MembersNon-executive counselors

ADIF-AV Managers

Women Women



Also, as the last internal management organ, Adif-AV has a Committee of Management.

The remuneration of the Senior Management staff is adjusted to what is provided in Royal Decree 451/2012, which regulates the remuneration regime of leading managers and directors in the public business sector and other entities, and the development regulations. Likewise, Adif-AV establishes its compensation regime due to termination of staff from Senior Management, as provided in the 8th Additional Provision (Specialities in commercial and senior management contracts of the state public sector) of Royal Decree-Act 3/2012, of urgent measures for the labour reform.

The Committee of Management works as an extra-statutory organ for the deliberation and advice of the President. Therefore, the following functions correspond to him:

◉ Advising the President about matters of his/her competence.

◉ Advising the President about matters which competence corresponds to the Management Board, and which must be subject to his/her approval or knowledge.

◉ Deliberating about whichever other matters convening Adif-AV, which due to initiative of the President or proposal of the members from the Committee of Management, are decided to be included in the meeting agenda.

COMMITTEE OF MANAGEMENT



◉ Integrity in loyal, honest, impartial and good faith actions

◉ Responsibility in diligent, compromised and with public service vocation actions

◉ Knowing and meeting the conduct commitments of the Code and collaborating in its spreading

◉ Being proactive at the time of meeting and making the Code be met

◉ Resorting on the existing mediums (ethics mailbox or hierarchical superior) in case of doubt with respect to the content and interpretation of the Code.

◉ Notifying through the established channels the irregularities or non-compliances that may be known about.

◉ Not justifying an improper conduct due to an order or due to lack of knowledge of the Code, nor inducing to defy it.

Whoever has responsibilities on other people, must actively promote the compliance of the Code in its work teams, giving support and help, and leading by example.

BASIC ETHIC PRINCIPLES OBLIGATIONS AND RESPONSIBILITIES

Adif-AV has a Code of Ethics and Conduct approved by the Management Board which was updating in March of 2015, about the regulation changes in the subject of criminal responsibility and the principles inspired by Act 19/2013 on transparency, access to public information and good government, among other aspects.

The Code has as a purpose formalizing the expected upright, responsible and transparent behaviour patterns of all the people working in Adif-AV, in the daily performance of its duties and its professional relations. The ultimate purpose is guaranteeing the integrity of the behaviour as public employees, according to the ethic values characteristic of a public service. The compliance of the Ethics and Conduct Code is controlled and managed by the Committee of Monitoring of the Ethics Code created for such purpose.

The Code is available both in the intranet of Adif-AV and in its website. Also, with the purpose of all the employees knowing about it and acting according to its principles, all of them have taken an online course on the ethics management model of Adif-AV.

E) Ethics and transparency



The potential non-compliances of the Code can be notified to the entity through the Ethics Mailbox which, handled and managed by the Corporate Responsibility area, acts as the only channel of reception and support. To make easier the communication between Adif-AV, its groups of interest and the society in general, there is apart from an internal mailbox available in the corporate intranet, an external one, available for the public in the website. With the purpose of not having the fear of retaliation acting as a barrier to the complaint, all notifications are admitted for assessment although the complainant is unidentified, as long as these are accompanied by data or evidence justifying the beginning of an investigation.

Adif-AV also counts with an Office of Protection of Integrity composed by five members (the President of the Committee of Monitoring of the Code of Ethics and Conduct and those entitled in Human Resources, Criminal Risks, Corporate Risks and Corporate Social Responsibility). Its purpose is treating the related notifications on the good use of public resources and on the personality and integrity, and deciding about its consistency and credibility. In year 2016, only one notification of the Ethics Code was received.

In the framework of Act 19/2013 on Transparency, Adif-AV keeps a commitment to keep reinforcing the transparency of its activity, according to the best national and international practices. Following this, Adif-AV has the Citizens Portal as a channel through which any interested party may access the public documents of the company. Also, Adif-AV contributes to the Transparency Portal of the Ministry of Public

Works, where information about public organisms, trading companies and foundations can be consulted in relation with different channels (air, road, railway, sea, living and geoinformation).

◉ Compliance of the legislation

◉ Good use of public resources

◉ Professionalism and integrity

◉ Effectiveness and diligence

◉ Good use of information

◉ Decent and respectful treatment of people

◉ Equal treatment to clients and providers

◉ Safeguarding of safety and health

◉ Respect to the environment and the cultural heritage

◉ Safeguarding the reputation of Adif-AV

COMPROMISOS DE CONDUCTA

You can access the Citizen Portal through its corporate website www.adifaltavelocidad.es



Adif-AV is exposed to different risks of financial and operational nature, as a consequence of its activity and the debt acquired to finance it. The entity aspires to manage its risks in a systematic and organized way, incorporating the best practices of the subject. As a consequence, it is intended that risks management holds an important place in the culture and processes of the organization, as well as in the definition and deployment of its strategy. Adif-AV carries out a risks management consisting in identifying relevant risks, evaluating them and designing and implementing measures for its minimization.

In 2016, the very recently designed Integral Risk Management System (SGIR) was started up. Associated to this system, a computer tool was implemented for the representatives of different areas of the entity to provide the precise inputs to be able of performing the monitoring of the main risks. For the informational risks the Financial Information Internal Control System (SCIIF) was launched, which leans on the same tool.

F) Risk management

INTEGRAL RISK MANAGEMENT SYSTEM

In 2016 Adif-AV has started up the Integral Risk Management System with the ultimate goal of generating value for the entity

◉ Independence from the management responsible for SGIR with respect to the business

◉ Participation of senior management, incorporating the management of risks in its decision making

◉ The monitoring is performed in an integrated way, through a corporate organ and with a global reach and it affects the whole activity of the entity

◉ Generation of value through the adequate and effective management of the risks and opportunities associated to them

FUNDAMENTAL PRINCIPLES OF THE INTEGRAL RISK MANAGEMENT SYSTEM



The Risk Management System started up was designed as a cycle, to guarantee its continuous update and currency. The general phases of the said cycle are the following:

The risks map of Adif-AV gathers the main identified main risks which the entity faces to achieve their strategic goals and on which mitigation and management strategies are established. For the creation of the risks map, the senior management identified and assessed in terms of residual risk, through variables of impact reach, probability and exposure, the main risks of each activity area. For those with a higher score, monitoring mechanisms were defined through control activities and indicators.

Communication of the state of risk

control

Documents of the risks

Execution and evaluation

of the controls mitigating them

and monitoring of indicators

Revision and update of the

risks map

Monitoring of the control

plans



◉ Possibility of suffering losses as a consequence of a negative perception of the corporate image by clients, investors or supervisors

Reputational

◉ Non-compliance in the current legislation or impossibility to exercise legal defence

Of Compliance

Financial

Identified Risks

Risk souces

◉ Possibility of suffering losses derived from changes in the business environment, of wrongly taken or incorrectly executed business decisions, or on lack of effective response before the said changes in the environment

These risks affect the high level goals, which are directly related with the strategic lines and which have a very transversal nature for all the entity.

These risks affect the goals linked to financial aspects of the entity.

These are the risks affecting the reliability of supplied information goals

These risks affect the goals related to the compliance of the law and the applicable regulations

These are risks affecting the image of the entity.

◉ Lack of internal control on financial information (SCIIF)

◉ Volatility of the interest rates ◉ Volatility of the equity markets ◉ Increase of the credit spreads ◉ Concentration in a reduced number of issuers ◉ Volatility of the property market

Strategic

Informational

These risks affect the goals linked to the effective and efficient use of the resources..

◉ Failures in processes design ◉ System failures ◉ External fraud ◉ Internal fraud ◉ Inadequate management of knowledge

Operational



Currently, Adif-AV is immersed in the middle of a reorganization process and due to there being a clear will to reinforce the risks management culture and activities, a new direction expressly dedicated to this function will be created. Also, associated to it, new units specialized in the management of specific risks will be born. The Integral Risk Management System will keep being redesigned and updated continuously, in order to guarantee better decision making in order to achieve the strategic goals.

Adif-AV as public business entity is subject to General Budgetary Act 47/2003 and to permanent financial control. Said regulation gives the General Intervention of the State Administration (IGAE) the jurisdiction of the internal control of the economic-financial management of public business entities, executed through Delegated Intervention, and it determines if it performs the audit through its own means or if it will contract the services of another firm to do it. Additionally, the new Act 38/2015, from the 29th of September, on the railway sector, sets the strategy indicating the development, maintenance and renewal of the railway infrastructures integrating the General Interest Railway Network (RFIG).

IGAE issues the audit reports of annual accounts expressing their opinion about if in them there is a faithful reflection of the image of the heritage of the entity, of its financial status, of the results of its operations, of the changes in its net worth and of its cash flows. Since 2011, the Investments Plan of Adif-AV is performed according to what is set by the Investment Annexes attached to the General State Budget, detailing the name of the projects, their cost, the necessary provision, as well as the planning on what is expected to be done in the following 5 years.

CONTROL SYSTEM

Adif-AV is subject to the permanent financial control provided in the General Budgetary Law performed by IGAE, through its Delegated Intervention



On closure of fiscal years, the Financial Information Internal Control System (SCIIF) policy is still pending approval and the responsibilities related are finishing to be decided, with the purpose of providing reasonable safety with respect to the reliability of the financial information of Adif-AV. Adif-AV will have a procedure describing the functioning of this system and specific training will be performed on all the involved staff.

FINANCIAL INFORMATION INTERNAL CONTROL SYSTEM (SCIIF)

On its side, the Court of Audit has the oversight power by its organic law and by the other regulations controlling it. It is the President of Adif-AV who is in charge of formulating the annual accounts that must be given to the Court of Audit in accordance with the budgetary rules, accompanied by the audit report issued by IGAE, as well as the management report and the one expected in art. 129 of the General Budgetary Law in accordance with the budgetary regulations.

Adif-AV looks to base its management on excellence, through the management of a safe, efficient, sustainable from the environmental point of view and with high quality standards infrastructures system, from the social commitment with citizens. To reach that, it takes as the main axis the transparency and dialogue with its Groups of Interest, which are fundamental for the evolution and development of its strategy.

Adif-AV considers as a group of interest any social collective which is or can be affected by the activities of the company, now or in the future, and/or which, legitimately, affects or can affect the activity of the company and, therefore, its results. Among its groups of interest there are the railway companies, the passengers, the citizens, public administrations, the employees, the governments of other countries, the providers, the business partners and allies and society (NGOs, associations, etc.).

2.3 Listening to Groups of Interest

The corporate website, Social Network, Ethics mailbox and the 24H Network Management Centre are the main channels for communication with the groups of interest



In chapter "About this report" the main results of the analysis performed are developed.

Adif-AV is aware of the importance of keeping a close, accessible and transparent relationship with all its groups of interest, so it gives great importance to the active management of its communication channels and to being capable of listening to what its groups of interest request and think about the entity. The query to the groups of interest is performed through satisfaction surveys, sense of belonging surveys and perception studies, among others. As communication channels, there stand out the corporate website (with information relative to the activity, the state of the network and its operation and segmented information for the different groups of interest), social networks, the Ethics mailbox, and the 24H Network Management centre (also known as Info 24), from where all the incidents affecting the railway network 24 hours per day and every day of

the year are managed and coordinated.

Also, during 2016, in the activity of Adif-AV and in its relationship with the different groups of interest, the update of the study of materiality of Adif-AV that was carried out in 2015 and which allowed identifying the aspects of its activity that are more relevant was taken into account. The materiality analysis of Adif-AV was performed taking into account on one side the relevance for the company (possible impact of the aspects considered on the strategy and the goals of the company) and, on the other side, the relevance for the groups of interest (society and prescribers, among others). The fields of study encompassed environmental aspects, Corporate Government, and business and social fields.

Adif-AV expects to revitalize the presence in the Internet in the future, through the development and creation of a new corporate website and strengthening dialogue with the interest groups through social networks.



Apart from those mentioned above, the communication channels established with the different Adif-AV interest groups are the following:

(*) For more information about the relationship with this interest group, see section "Satisfaction of customers"

(**) For more information about the relationship with this interest group, see section "Citizens"

(***) For more information about the relationship with this interest group, see section "Employees

INTEREST GROUP ESTABLISHED CHANNELPublic Administrations

and Investors (Ministry of Development, Administration and

financial organizations)

◉ Continuous communication through the competent bodies (Undersecretary of State, State Secretariat for Infrastructures, etc.)

◉ Follow-up meetings ◉ Collaboration agreements

◉ Sectoral agreements and collaborations ◉ General and European assemblies, international delegations ◉ Specialized events and forums ◉ E-mail or telephone

◉ Corporate portal Inicia ◉ Committees for the representation of Adif-

AV workers ◉ Surveys of work climate and commitment

with Adif-AV

◉ Internal communications ◉ Information about training courses ◉ Lineas Magazine ◉ Suggestions mailbox ◉ Mailbox of initiatives for improvement

◉ Annual reports of Adif-AV and other publications

◉ Permanent information through the media

◉ Communication via email or telephone ◉ Collaboration agreements

◉ Customer Service Offices at the Adif-AV stations (personalized service, claims and suggestions management, etc.)

◉ Annual satisfaction surveys for travelers and tenants of commercial premises located at Adif-AV stations

◉ Information telephones and email ◉ Agreements

◉ Claim mechanisms and suggestions (RECLAMA computer application, claim books, etc.)

◉ Lineas Magazine ◉ Communication mailbox ◉ Social networks ◉ Adif App Channel (real-time information

on network status and schedules)

Suppliers

Employees***

Business partners and associates

External customers (users of the rail system, railway

operators, business customers, governments from other

countries)*

Society (citizens, associations, NGOs, European and

international organizations)**

◉ Communication mailbox ◉ Social networks ◉ Transparency Portal



The relationship between Adif-AV and some of the most important interest groups is summarized below:

PUBLIC ADMINISTRATIONS

Adif-AV is attached to the Ministry of Development that exercises a regulatory and investor role, so the entity is committed to maintaining a continuous relationship based on transparency, through an effective and sustainable management of its activities. The relationship between Adif-AV and the Ministry of Development is established mainly through the Undersecretary of State, the Secretary of State for Infrastructure, Transport and Housing, and especially, with the General Directorate of Railroads. But there is also continuous contact with other entities attached to it, such as Renfe Operadora and with other ministries such as the Ministry of Employment and Social Security and the Ministry of Finance and Public Administrations.

Also, Adif-AV maintains a relationship with regulatory bodies such as the Court of Auditors and the State Public Accounts Department, with whom it establishes a regulated contact according to current regulations, and with other entities such as the Ombudsman (in the treatment and response of complaints filed with this body and analogous institutions of the Autonomous Communities), State Advocacy (for the resolution of consultations and supervision aimed at ensuring compliance with the applicable legal requirements with a unified criterion), certification bodies, the National Institute of Statistics (regularly providing data related to the activity of Adif-AV) or universities and public study centers with which Adif-AV establishes collaboration agreements.

In addition, Adif-AV maintains contact and participates with different entities at an international level:

◉ RNE (RailNet Europe): to collaborate in the planning and management of railway capacity in international corridors and improvement of quality and efficiency oriented to the competitive development of passenger traffic and merchandise on them.

◉ EIM (European Infrastructure Managers): as an association that brings together the most important European infrastructure managers and acts as an interest group before political and legislative decision-making bodies of the European Union and conducts studies in support of the modernization of the railway sector.

◉ ERA (European Railway Agency): for the development of technical specifications aimed at interoperability and security, Adif-AV participates in this development through EIM.

◉ EEIGs (European Economic Interest Groups): for the development of cross-border projects linked to international railway corridors and trans-European transport networks (TEN-T).

◉ PRIME: the platform of European railway managers for the development of the Fourth Railway Package. Adif-AV participates in the development of a system of indicators that allows the monitoring of the main activities and the improvement of the management.



SUPPLIERS

Suppliers are an essential part of the development of Adif-AV's activity and its relationship with them is based on ensuring the maintenance of collaborations and legal security in the concession and the transparency of the contracting process.

The contracting process of suppliers of Adif-AV is established through the contracting policy that includes rigorous selection parameters, and articulates all procurement procedures through a management based on transparency and security, considering all processes and their potential incidents.

For each contracting process, Adif-AV carries out a process of selection of suppliers in which they must prove their business solvency as well as compliance with social and environmental requirements determined for each contracting file.

INVESTORS

After the separation Adif-AV took on the part corresponding to the construction of the new high-speed lines. This activity requires financing, so the trust of the investment community in the entity has become a key factor of sustainability. To achieve this trust, Adif-AV has expanded the financial and non-financial information provided to the market, so that investors can make their investment decision in an informed manner. The entity is visiting the main European markets presenting its business project.

To gain access to financing, the issuance of bonds or the granting of loans, Adif-AV has established a close relationship with Public Administrations and financial institutions, mainly from the European Union, such as the European Investment Bank (EIB), which grants loans for the European Funds.

BUSINESS PARTNERS AND ASSOCIATES

Within this interest group, Adif-AV identifies the subsidiary and investee companies, among which are the integration companies. The management of this interest group is based on its monitoring and coordination of railway integration activities in the cities with the collaboration of other areas of the company. In this way, Adif-AV establishes alliances with external companies and with administrations that are formalized through contracts, collaboration agreements and shareholdings.

In the area of integration companies, and as a result of the entity's effort to adapt to the new strategic framework of the company and the economic environment that demands greater efficiency and transparency in the use of resources, the debt of certain companies has been refinanced, legal, administrative and accounting management has been taken on, as well as the economic and financial monitoring of others which lacked sufficient structure to carry it out, and participatory loans have been negotiated.

The corporate website has a specific section addressed to investors, where you can find the most relevant financial information of the entity, as well as presentations to investors.


3

Improvements in management and mobility

RESULTS AND IMPACTS

RESULTS AND IMPACTS3


Within the framework of the commitments included in the Business Plan and the Code of Conduct and Ethics of Adif-AV, the importance of managing, as a public business entity, public resources under criteria of maximum efficiency and austerity is established, striving for their conservation and obtaining the maximum value for society.

To carry out its activity, the main economic resources of Adif-AV, in accordance with Royal Decree-Law 15/2013 and the Railway Sector Act are, among others, the following:

◢ Asset contributions of the State, which will constitute Adif-AV’s own resources.

◢ Those obtained from the management and exploitation of its assets and from the provision of services to third parties.

◢ Funds of the European Union that may be assigned to it.

◢ Subsidies that, if applicable, may be included in the General State Budgets, as well as current and capital transfers of the General State Administration and other Administrations.

◢ Financial resources from debt operations, whose annual limit will be set in the General Budget Acts of the State for each year.

The main items of expenditure include financial expenses (debt interest) and amortization, those related to the maintenance of the infrastructure under the responsibility of the entity, the purchase of traction energy and personnel expenses.

The result for 2016 reflects losses of 328 million Euros, although it represents an improvement of 9.2% over 2015. The reason for this improvement is basically based on an attenuation in the balance of losses of the financial result, which goes from 390 million in 2015 to 342 million in the current year, offsetting the 50% decrease in the operating result, which derives from a more adjusted balance between income and expenses. Among the main causes for the improvement in the financial result, it is worth mentioning, on the one hand, the 7.2% decrease in financial expenses, due to the reduction of a total of 30 million Euros of interest on late payments linked to financial contracts and the absence of an increase in the indebtedness of the entity due to loans and obligations. On the other hand, there has been a decrease in the allocation of the provision due to the liability that Adif-AV must assume as a consequence of the letters of commitment subscribed at the time with certain companies whose activity is to integrate rail in the cities.

3.1 eFFiCienCy in tHe ManaGeMent oF publiC reSourCeS: eConoMiC reSultS and Generated eConoMiC Value



The result for 2016 has reported losses of 328 million euros, which represents an improvement of 9.2% compared to 2015, mainly due to the improvement in financial results.

2014 2015 2016

Operating income 1,060.83 1,075.33 1,034

Operating expenses 998.05 1,047.08 1,020

Operating income 62.78 28.25 14

Gross operating profit (EBITDA) 265.97 255.51 238

Financial results -272.85 -389.51 -342.38

Profit before taxes -210.07 -361.25 -328

Profit for the financial year -216.54 -361.25 -328

Figures in millions of euros

In April 2016, a new bond issuance was made through private placements, for a nominal amount of 340 million euros. This issuance, like previous ones, was made under the European Medium Term Note (EMTN) program registered in the Dublin Stock Exchange. In this way, the entity reached a volume of 1,190 million euros in bond issues. The conjunction of the evolution of interest rates, the policy of debt renegotiation and the diversification of financing sources, has placed the average interest rate of the Adif-AV liability at 2.25%.

The main revenue sources of Adif-AV are determined by the fees, the supply of energy to operators and rents/services, with no income in 2016 derived from operating subsidies or logistic services. The total volume of royalty revenues in 2016 has reached 507.6 million euros, similar to the 2015 levels (increase of 0.1%). If the breakdown of these revenues is analyzed, it can be seen that revenues from the use of infrastructures have reached 417.5 million euros, decreasing by 0.6% due to a decrease in traffic in the Madrid-Levante and Andalusia links. Revenues from fees for use of stations have reached 90 million euros (3.2% more than in 2015), due to the increase in the use of stations by travelers.



2014 2015 2016

Generated Economic Value* 1,091.2 1,114.9 1,071.8

Distributed Economic Value** 1,084.1 1,153.5 1,358.9

Withheld Economic Value*** 7.11 -38.68 -19.8

Figures in millions of euros

* Generated Economic Value: ordinary + extraordinary income

** Distributed Economic Value: operating costs + financial expenses + taxes

*** Withheld Economic Value: Generated Economic Value - Distributed Economic Value

Production, measured in operated km/train, has increased slightly by 0.3% compared to 2015, since the line connecting Madrid with Valladolid, León, Zamora and Salamanca, launched in the last quarter of the previous year, compensates for the loss of traffic in the links of Madrid with Levante and Andalusia mentioned above. Finally, there has been an increase of 3.4% in the number of travelers who used the stations owned by Adif-AV. Regarding other income, 267.5 million euros have been paid for traction energy supply to operators, which represents a decrease of 11.5% over the previous year. Likewise, revenues from rentals, services and others have fallen by 12.5%, from 161.9 million in 2015 to 143.9 in 2016.

Depreciation expenses in 2016 were 321.9 million, while personnel expenses amounted to 15.1 million. With regard to operating expenses, the purchase of traction energy stands out, which in 2016 represented 243.4 million euros, 9.1% less than in 2015. Expenditures associated with infrastructure conservation and repair activities have reached 240.8 million, reaching figures similar to those of the previous year.



In order to carry out its construction, maintenance and exploitation activities, Adif-AV has a specialized work team with extensive experience, as well as the necessary technical means to comply with the requirements of the transport operators in its entire area of influence. In this context, the commitment of Adif-AV lies in:

◢ Ensure traffic safety in coordination with other entities that have experience in security matters.

◢ Apply efficiency and sustainability criteria from the economic and environmental points of view in the construction and maintenance of railway infrastructures, to always guarantee customers the highest degree of safety, reliability and availability.

◢ Optimize the quality of the service by ensuring the quality and reliability of projects and supplies, while minimizing the maintenance cost and life cycle of the facilities.

◢ Guarantee the availability of infrastructure and provide railway operators with the maximum reliability of the facilities.

◢ Apply criteria of quality, safety and respect for the environment with the employees and workers of the entity.

◢ Encourage development of technology to manage railway tracks, both in new construction and in existing ones

◢ Guarantee the reliability and availability of the facilities and protection infrastructure of the level crossings, verifying the correct state of conservation of the same and planning actions to undertake short, medium and long term on them.

These activities have certifications in accordance with the main standards of quality, environment and occupational safety, so that they are aligned with their commitment to society.

3.2 Improvement of Service and Operations

A) Activities for the construction, maintenance and operation of the railway infrastructure



MAIN ACTIVITIES OF CONSTRUCTION OF HIGH-SPEED LINES AND IMPROVEMENT OF INFRASTRUCTURES

◉ Platform execution works (HSL Madrid-Extremadura, HSL Antequera-Granada, HSL Madrid - Galicia, HSL León-Asturias, Monforte del Cid-Murcia section, Madrid-Levante HSL), among others.

◉ Installation of acoustic protection screens (Plasencia-Badajoz section, HSL Madrid-Extremadura, Vigo-Santiago section, Atlantic High-Speed Axis), among others.

◉ Track assembly (HSL Olmedo-Zamora-Lubián-Ourense, HSL Vandellós-Tarragona Area, HSL Valladolid-Burgos-Vitoria), among others.

◉ Execution of works in stations (Station of Elche, HSL Madrid-Levante, Stations of Cambrils, L'Hospitalet del'l Infant and Montroig del Camp, HSL Vandellós-Tarragona Area).

During the more than 20 years of history of high speed in Spain, one of the most modern and advanced railways in the world has been developed. This infrastructure has generated development, improving the structure of the country and the quality of life of the people.

At present, the activity of construction of new lines has been conditioned by the economic situation, and some projects have been revised and resized to adapt them to the new needs of the population. The strategy of Adif-AV, adapted to the Spanish situation, has allowed to continue with the objectives of structuring the territory and social cohesion taking advantage of the European funds given to the projects currently in execution, and allowing their completion.

Regarding construction Adif-AV has invested 1,092 million euros in 2016.

CONSTRUCTION

551.43 Annual amount tendered

Annual amount awarded

592.27millions of euros

millions of euros



In the maintenance of the infrastructures owned by Adif-AV, the entity focuses its resources, both human and technical, on the activities that provide the greatest value, optimizing preventive maintenance, managing more efficiently the inspection activities and reducing incidents. All this makes it possible to offer to transport operators the maximum availability of railway installations.

The exploitation and maintenance activities of the infrastructures owned by Adif-AV are entrusted to Adif through the appropriate agreements. Adif maintains and operates the more than 3,000 km of high-speed rail lines on which an average of 696 trains run. In addition, Adif is entrusted with the maintenance of the stations, both those corresponding to the conventional network and those belonging to high speed.

MAINTENANCE

MAIN COMMUNICATION ACTIVITIES

◉ Implementation of the renewal of the fiber optic network in 9 sections.

Adif manages and maintains a rail network of more than 3,000 km through which an average of 696 trains circulate daily.

240.83

Total expenditure incurred in maintaining the

conventional network

Expenditure incurred in maintenance of the

conventional network per km

76.55

millions of euros

thousands of euros / km



MAIN SAFETY ACTIVITIES

◉ Realization in 2016 of 934 inspections in structures, 586 in excavations and clearings and 40 in tunnels.

◉ Control of the vegetation present in the margins and platforms of the roads as a fire prevention measure, with an expenditure of 1.1 million euros and 940 liters of used herbicides. An area of 53,553,302 sq. mt. has been treated.

MAIN ENERGY ACTIVITIES

◉ Connection for the supply of mobile substations

◉ Revision of 71 conventional network traction substations and verification of their operation and control of protections.

◉ Visual and thermographic inspection of the contact airline in 522 km of the local network.

◉ 13,665 km of geometric auscultation of overhead contact line.

◉ 198 compliance inspections of substations regulations.

◉ 970 km of inspections of high voltage lines.

◉ Implementation of the new management application of Preventive Maintenance of LAC throughout the territory.

◉ Drafting of a new Work Instruction for defect management and revision of 13 others.



Regarding the exploitation of the infrastructures owned by Adif-AV, Adif is the entity in charge of network traffic management, allocating the capacity to the railway companies and other candidates, directing and coordinating the traffic and programming and verifying the facilitiat present, Adif-AV has the following resources for the planning and management of rail traffic:

◉ 1 department of allocation of capacity

◉ 20 Regulation and Control Centers (16 of them in the conventional network and 4 in the high-speed network)

◉ 1 H24 Network Management Center

◉ Circulation offices

◉ Itinerant Circulation Services (ICS/SIC)

EXPLOITATION

264.41 Expenditure in operation of the

conventional network

Expenditure in operation of the conventional

network

84.05millions of euros

thousand 9 ofeuros /km

This center is configured as a multidisciplinary center of management in the field of railway traffic, acting and coordinating the operational areas of the company transversally and sharing in real time, 24 hours a day, information, processes and actions both preventive and corrective to be adopted in each case. Its main mission is the prompt resolution of the contingencies that may arise, so that the Daily Transportation Plan is fulfilled.

H24 has programs specifically developed for the control of circulation. Among them, the DaVinci system stands out, considered one of the most advanced railway traffic management systems in the world, which allows an integral management of the high-speed network with the maximum coordination of all the subsystems that participate in the operation of the railway network.

H24 NETWORK MANAGEMENT

Station



2014 2015 2016

High speed network length 2,830.0 3,756 3,146.2

High speed network with traffic control 2,262.6 2,530.8 2,533.6

2014 2015 2016

Circulations (average daily number of trains) 673 678 696

Circulations (total) 245,747 247,532 254,725

km-Train (daily average) 154,906 152,612 152,331

km-Train (total) 56,540,539 55,703,257 55,753,271

The allocation of the capacity to railway companies and the management of the circulation of their trains, 24 hours a day, 365 days a year, are aimed at satisfying the needs of these companies, applying a non-discriminatory treatment and guaranteeing the safe circulation of the trains with criteria of optimum use of the railway network.

The network length managed by Adif-AV is summarized as follows:

During 2016, there was a slightly positive evolution in the increase in traffic managed by Adif-AV.



The management of the stations is a fundamental element in the development of rail transport, since it is through these infrastructures that Adif-AV completes the quality service to travelers, railway operators and commercial operators. The design, construction, maintenance and operation of railway stations is carried out with criteria of integral sustainability (innovation, safety, efficiency, intermodality, accessibility, etc.) contemplating the entire life cycle of these infrastructures and the provision of services with high quality standards, taking into account:

EXPLOITATION

◉ A correct sizing of the facilities (cleaning, maintenance, conservation, air conditioning, etc.).

◉ The creation of secure environments.

◉ A commercial offer adapted to the needs of customers and the city.

◉ Adequate information related to the station and the services offered in it, in Spanish and, where appropriate, in the co-official languages of the respective Autonomous Communities.

In 2016 Adif-AV has managed 42 stations. The main activities carried out in relation to the management of these stations are the following:

◉ Expansion of the departure lounge at the Barcelona-Sants station

◉ Installation of outlets and renovation of the subway access to commuter trains at the Madrid-Chamartin station.

In the continuous process of improving accessibility in stations, in 2016 it was possible for 91.11% of passengers to use accessible Adif-AV stations.

In the quality surveys conducted in 2016 about the services provided in the high-speed and conventional SE stations, an overall rating of 7.61 out of 10 was obtained, significantly improving the valuation of the previous year.



Safety, understood in its broadest scope, is one of the pillars on which Adif-AV bases its activity and decision-making. Its management aims to minimize the possible risks, in order to guarantee the continuity of the activity, achieving a high level of safety in it.

In this way, the culture of integral safety is understood in a transversal sense to the activity and to all the subjects that are related to it and includes the management of safety in the infrastructures managed by the entity, safety in railway operations that run on these, as well as the safeguarding of the safety of own and external workers that maintain labor relations of any kind with Adif-AV.

To achieve safety management with a comprehensive approach, the entity has worked to ensure that safety and risk management are part of all the entity's processes and that they are adapted to the environment and factors that may affect it.

B) Commitment to people: safety as a key factor

PROTECTION AND SAFETY Safety in infrastructures and facilities of the entity through timely emergency systems and protocols executed in collaboration with the competent public entities.

PREVENTION OF OCCUPATIONAL HAZARDSCommitment to the safety and health of own or third-party workers in the performance of their activity for Adif-AV.

SAFETY IN CIRCULATIONManagement of risks related to the circulation of trains, developed by Adif-AV and the operating companies.

Adif is entrusted with the safety management of Adif-AV according to the corresponding.

PROTECTION AND SAFETY

The objective of the safety area is to direct, coordinate and organize human and technical resources to preserve the facilities and infrastructure of the entity and the safety of people and goods, direct civil protection policy and control compliance with current regulations in the matter.

With all this, we seek to achieve a response system that is capable of absorbing the impact of a threat, without losing operational capacity. In the current scenario, where the terrorist threat is a matter of maximum concern, it is necessary to collaborate and involve all actors in the adoption of concrete measures of prevention, protection and response, extending and developing a culture of safety throughout the company.

In 2016, 239 courses and 81 drills have been performed.



Throughout 2016 various actions have been carried out, achieving important goals in the three operational areas:

◉ Filing of 189 administrative complaints and 298 criminal complaints

◉ Realization of 887 safety inspections and 100 extraordinary operations

◉ 1,586 relief interventions for people

◉ 284 assistance interventions for accident victims

◉ Recovery of 2,429 lost objects

◉ Commissioning of 25 protection and safety facilities

◉ Analysis of 20 teams in Validation Laboratory

◉ 16 Self-protection Plans carried out

◉ Execution of 51 drills

◉ Execution of 74 inspections of protection facilities and means

Safety

Technical area

Self-protection and

emergencies

SAFETY IN CIRCULATION

The establishment of a single European railway area and the changes being experienced by the railway sector with numerous railway companies providing their services operating on the network, require from all players maximum efforts to maintain and, whenever possible, improve the levels of safety.

In order to make use of the railway facilities under the most demanding quality standards, safe and effective, Adif-AV has a Traffic Safety Management System (TSMS/SGSC), in order to guarantee, within the scope of its jurisdiction, that the railway system complies with the safety objectives, complies with safety standards and requirements set out in the technical specifications for interoperability and technical specifications for approval.



In addition, it implements an Annual Traffic Safety Plan (ATSP/PASC), with which Adif-AV contributes to avoid accidents and incidents, develop the actions of the Adif-AV Business Plan, detect and correct the non-regulatory actions, incorrect operations, unsafe practices and possible anomalies in the condition of the facilities, as well as determining the annual level of accident rate, helping in the continuous improvement of safety levels in the network.

The actions included in this plan are the following:

The absolute evolution of the accident rate in the period 2008-2016 has experienced a very significant downward trend, decreasing the accident rate by 15.5%

Adif-AV carries out inspections on railway infrastructures to ensure safety and conservation in good condition for their exploitation.

In 2016, 414 inspections of railway infrastructures were carried out to ensure their good state of conservation and traffic safety, of which 79 correspond to operational audits and 123 alcohol and drug controls. These figures exceed those anticipated at the beginning of the year.

These actions allow to detect risks and anomalies, as well as to eliminate erroneous practices in safety operations.

Monitoring allows to verify the compliance with traffic regulations in the conversations recorded in the command posts and in other operation centers, and to adopt the necessary corrective and preventive measures. In 2016, 400 monitorings took place, which represents 99.75% compliance with the provisions.

Safety visits are aimed at reducing risk situations caused by non-compliance with processes and tasks related to circulation. In 2016, 230 visits were carried out, the same as the objective foreseen at the beginning of the year, so the degree of compliance has been 100%.

DETECTION ACTIONS

PREVENTIVE SAFETY ACTIONS



In 2016, 1,028 personnel ratings were issued related to safety activities of Adif-AV and external companies, according to the requirements established in current regulations. In addition, 720 applicants have been evaluated during the year to obtain ratings.

PROMOTION OF THE CULTURE OF SAFETY IN CIRCULATION

In 2016 there were no accidents. Adif-AV certifies its safety facilities according to the requirements of the Ministry of Development. In 2016, 4 safety certificates were granted.

It is important to highlight that Adif-AV is present and actively participates in various national and international forums in which it shares its experience in the field of Traffic Safety.

Adif-AV has different bodies through which the staff and their representatives participate in the management of Traffic Safety: General Commission, Territorial Commissions, Sectoral Technical Commissions and Expert Commissions (Commission of Cargo Prescriptions and Exceptional Transports). In 2016, these bodies have met 52 times.

PREVENTION OF OCCUPATIONAL HAZARDS

Adif-AV has a Prevention Plan that allows compliance with current legislation on the subject and promotes the continuous improvement of actions, always with the aim of achieving zero accidents. This plan establishes the organizational structure, responsibilities, practices, procedures, processes and resources necessary to carry out an effective implementation of the Occupational Risk Prevention Management System in the organization.



Within the framework of the Zero Accident Plan, in 2016, 543 hours of training on Occupational Risk Prevention were given

This plan has included the following actions for 2016:

◢ Specific training in occupational risk prevention: In 2016, 543 hours of training were given.

◢ Internal audits program: In 2016, 2 audits of Adif-AV assets were carried out.

◢ Operational risk assessment and control: The objective of the 2016 Preventive Activity Planning was to inspect 100% of the work centers between risk assessments. In 2016, 94 risk assessments and 60 inspections were carried out.

In 2016 there were no accidents at work.

2014 2015 2016

Number of accidents 1 2 0

Incidence rate * 4.50 9.23 0

Severity index ** 0.00 0.06 0

* The incidence rate is calculated based on the number of accidents with leave in relation to the total number of average workers of the organization.** The severity index is the number of days not worked due to accidents with leave in relation to the total number of hours worked by workers of the organization.

As for the idle days and absenteeism rates, both have decreased compared to the previous year.

2014 2015 2016

Idle days rate (IDR) * 5.26 5.74 4.81

Absenteeism Rate (AR) ** 2.60 3.83 3.20

* The idle days rate is the result of the total number of idle days in the number of hours worked * 200,000.** The absenteeism rate is the total number of idle days due to absence during the period between the total number of days worked by the total.

In Adif-AV, after the union elections were held in 2015, the Occupational Health and Safety Commission of Adif-AV was constituted. This Commission is the highest level participatory body on issues of safety, hygiene and occupational health, from which the guidelines in these matters emanate. In addition, the Provincial Health and Safety Committee of Madrid of Adif-AV was established in 2015. Between the two committees, a total of 8 meetings have been held in 2016.

During the year various preventive medicine and vaccination campaigns were carried out, with a total of 54 preventive medicine campaigns and 21 vaccinations. In addition, 22 medical surveillance surveys have been carried out, controlling 59 specific risk factors.



Since the beginning of its activity, Adif-AV has opted for innovation and research as dynamic elements of knowledge and technological development of the scientific-technical community and fundamental aspect to achieve operational excellence. The activity of Adif-AV works as a catalyst and driver of the activity in the field of R+D+i.

The effort of Adif-AV in the innovative activity is evidenced by the number of projects it develops, by its economic volume and by the tractive effort and technological transfer that it carries out. The activity of Adif-AV in this area is part of its 2014-2016 R+D+i Strategy, with influences from other references such as the Spanish Strategy for Sustainable Mobility, the PITVI, the Horizon 2020 Program, the Transport White Book and the Rail Roadmap 2050 of the European Rail Research Advisory Council (ERRAC), among others. The areas of action defined in this strategy are the following:

◉ Development and innovation in railway technologies of interest to Adif and Adif-AV through the execution of projects, mainly projects in collaboration with companies, technology centers and universities.

◉ Transfer of the results to both organizations.

◉ Protection of results.

◉ Management of industrial and intellectual property of Adif and Adif-AV.

◉ Enhancement of the internationalization of the activity through participation in the European initiative Shift2Rail (Horizon 2020 Program), through the Spanish public consortium Renfe-Adif promoted by the Ministry of Development and participation in other proposals and calls of the Horizon 2020 Program.

Among the objectives that Adif and Adif-AV pursue through R+D+i are the following:

◉ Look for solutions to improve the capacity of the tracks

◉ Achieving an optimal balance between economic, social and environmental dimensions for the achievement of a more sustainable railway infrastructure.

C) Promotion of innovation and research in the railway sector

During 2016, Adif and Adif-AV have developed a total of 20 R+D+i projects



R+D+i MANAGEMENT ◉ Adif takes on the work of R+D+i of Adif-AV, taking into account their interests in the matter.

◉ Adif understands R+D+I as a decentralized process (it can be carried out by different units independently) and open (it usually involves other agents such as technology providers, universities, technology centers and public institutions).

◉ Adif has a R+D+i management system that is certified according to the UNE 166002 standard since 2008, which allows it to carry out activities in a coordinated and structured manner, and systematize and standardize the criteria.

◉ To optimize the appropriate framework for the development of projects, Adif has the necessary tools, resources and structures, sharing best practices at the executive level, and monitoring the different actions and R+D+i projects.

◉ In order for the results of the projects undertaken to become a source of economic, social and environmental value generation, Adif strengthens the processes of technology transfer, having an effective industrial and intellectual protection policy.

Projects and

signaling

Completed projects

Platform and track

Energy

Energy

Active control, command

Rolling material / Goods

Command control and signaling

8

13

4

2

1

During 2016, Adif and Adif-AV have developed a total of 17 projects, of which 2 have been completed



ASSET MANAGEMENT ENGINEERINGAdif has an Asset Management System based on the ISO 55000 standard and its monitoring and control enables to integrate the information of the different railway assets of the network managed by the entity. The platform that allows this control to be carried out is currently implemented in the conventional network.

RECOGNITION

In 2016 the GIM project "ACLOUD", based on the implementation of Cloud Computing technology in Adif, obtained the prize in the "Key Results" category in the 8th Participation and Value Creation Contest.

Among the agreements with companies signed in 2016 for the development of R+D+i activities, we should highlight those established with Deimos Space (Elecnor Group), Cetren, TJ2HB, FCC Construcción, Alstom or Indra, among others.

In 2016, several projects aimed at the digitalization of processes in the maintenance of infrastructure were initiated, including:

DYNAFREIGHT PROJECT:

The DYNAFREIGHT project (Innovative technical solutions for improved train DYNAmics and operation of longer FREIGHt Trains) is associated with the Shift2Rail Innovation Program 2 (IP2).

The objective of the project is to investigate in the area of new technologies to develop smarter freight trains with longer lengths. For this, a new generation of locomotives will be designed and their interaction with the infrastructure and the traction of long trains (1500 meters) will be analyzed.

VITE PROJECT:

The VITE (Virtualization of the testing environment) project is also associated with the Shift2Rail Innovation Program 2 (IP2) program.

The objective of the project is to investigate and develop new testing procedures of the ERTMS system in accredited laboratories, so that in the future the whole approval process can be carried out in this type of facilities, minimizing or even eliminating the need to carry out ERTMS tests on track.



INTANGIBLE ASSETS AND TECHNOLOGICAL TRANSFER

In order to ensure that R&D&I projects have sufficient autonomy and strength to become valuable tools for business growth, it is essential to have an adequate industrial and intellectual protection strategy. In order to increase the efficiency in the development of R&D&I projects and achieve significant economic, environmental and social returns from its execution, Adif-AV enhances the technology transfer processes through the following continuous improvement activities:

◢ Protection of industrial and intellectual property.

◢ R+D+i management and auditing system.

◢ Technological surveillance activity, communication, dissemination and training in the field of R+D+i.

◢ Administration and guaranteed resource management: budget compliance, objectives, deadlines and sustainability of the organization for R+D+i.

◢ Preparation of agreements and collaboration agreements in the field of R+D+i.

◢ Control of the participation of people in R+D+i in national and international work groups.

◢ Preparation of commercial collaboration agreements and technology transfer agreements (exploitation licenses) of the products owned by Adif.

During 2016, an industrial and intellectual property portfolio comprised of 24 patents was managed, 13 of them with several international extensions, 8 utility models, 4 designs, 30 national brands, 6 community and 3 international brands, 16 software applications and 17 records of manuals and standards.

One of the objectives being the transfer of knowledge to the productive sector, as of December 31, 2016, 15 technology transfer agreements and licenses for manufacturing and commercial exploitation have been kept alive, which have meant for Adif more than 95,000 euros of income in the form of royalties.

In 2016, a portfolio with 24 patents was managed and there are 15 technology transfer agreements and manufacturing licenses



R+D+I INFRASTRUCTURES

The execution of numerous projects in the railway field requires installation and testing on track. For this reason, Adif-av has a set of experimental facilities that serve as a platform to check the technical validity of the new developments, equipped with the necessary basic infrastructure and the precise controlled environments to be able to carry out tests in safe conditions.

In this sense, the Railway Technology Center of Malaga (CTF) stands out, considered a benchmark in technological innovation. Located in the Technological Park of Andalusia in Malaga, it concentrates the effort and the innovative activity of Adif-AV, directing, planning and implementing the actions in the field of research, development and innovation in the railway field. With this center, Adif-AV aims to reinforce the position of the Spanish railway system as a benchmark for the technological, European and global vanguard.

In 2016, the CTF has encouraged the holding of monthly meetings with collaborating companies with a continuous presence in its facilities (Abengoa, Indra, Siemens or Ferrovial, among others), to create a cluster and renew the agreements signed.

The CTF has 5 laboratories:

◉ Laboratory GSM-R and ERTMS.

◉ Accessible Station Laboratory

◉ TIC Laboratory

◉ Rigid catenary laboratory

◉ Electromagnetic compatibility laboratory

Among the initiatives carried out by the laboratories, it is worth highlighting the use of the "Rigid Catenary Test Bank" (RCTB/BECC) for various internal and external projects.

In addition, Adif-AV has other facilities such as:

◉ Test in Track Center (Brihuega, Guadalajara)

◉ Institute of Applied Magnetism (Las Rozas, Madrid), managed together with the Complutense University of Madrid

◉ Energy Laboratory (Madrid)



The guidelines established by the Ministry of Public Works define the objectives and goals to be achieved, as well as the quality levels that Adif-AV must meet in the provision of the service. In addition, quality represents one of the main expectations of Adif-AV's interest groups, so it is important to offer a good level of service in terms of travel time, safety and reliability

D) Quality in infrastructure management

Adif-AV has a Management System based on compliance with the requirements of international standards ISO, UNE and EFQM, as well as legal advice.

Adif-AV bases its management on the EFQM model of Excellence in Business Management, in which the entity has the highest level of recognition with the +500 gold seal of excellence, which makes Adif the first European railway administrator in obtaining this seal and in the first Spanish public company in its degree of importance and size in achieving a score of over 500.

Currently the priority of Adif-AV is to renew the certificates it has in force, as well as to adapt its management system to the new requirements of the reference regulations.

During 2016 the actions related to different standards and certifications have been maintained, such as those of the Quality Management Systems according to the UNE-EN ISO 9001 standard, of information security according to the UNE-ISO / IEC 27001 standard, of safety and occupational health according to OHSAS 18001 or R+D+i according to ISO 166002.

A special mention is required by the certification of the environmental management system in the environmental area of works, the only one in existence with these characteristics in all railway administrations.

MANAGEMENT SYSTEM

STANDARDIZATION



As a "driving machine" in the different management systems, Adif-AV has a participation tool for its employees to be individually or collectively involved in the continuous improvement and innovation of the Management System. There are Initiative and Improvement Groups (IIG/GIM) and Initiative and Improvement Teams (IIT/EIM), which allow channeling knowledge, creativity, experience and commitment, with the ultimate goal of increasing efficiency, competitiveness and profitability.

This participative mechanism has meant in 2016 the creation of 21 entrepreneurial proposals for improvement of management or processes, with a percentage of employee participation of 1.54% of the total of the organization. 37% of these proposals have been implemented.

PARTICIPATION

Adif-AVworks, as part of its daily management, to meet service needs and to maintain collaborative relationships with its customers. In addition to users of the rail system, among its external customers, Adif-AV has railway operators, customers of companies and merchants, and governments of other countries.

Adif-AV has different channels through which it maintains a continuous and updated communication with its users and other external clients. The most used channel is its corporate website, in which it makes all the information of the entity available to all interest groups. Additionally, and as more direct contact channels, there are Customer Service Offices, email and telephone.

Depending on the type of client concerned, Adif-AV polls its opinion in different ways and establishes mechanisms to improve the service:

E) Customer satisfaction

STATION TRAVELERS:

◢ Annual satisfaction surveys: The last survey conducted (November 2016). Shows a global rating of 7.61 over 10. Adif-AV carries out a continuous process of improving the stations in different aspects in order to offer the traveler a better service. In this way we work to improve the accessibility of the stations, to expand the waiting and boarding room, to improve access or underground passages or to enhance information through the installation of Aena information monitors.



RAILWAY OPERATORS:

◢ Regular contact: Adif-AV seeks to know first hand their opinions and expectations and identify opportunities for improvement that favor the development of the business.

◢ Biennial satisfaction studies about the services provided to them.

MERCHANTS:

◢ Annual satisfaction surveys: in the last sample of 111 surveys, an average assessment of the station of 7.1 over 10 was obtained and of 7 over 10 in the commercial area.

◢ Specific email for each station

◢ Biennial satisfaction surveys to commercial tenants: the last sample of 259 surveys showed an average assessment of the station of 5.95 over 10 and an average valuation of the commercial area of 5.85 over 10.

◢ Creation of specific profiles for each establishment in social networks (Facebook, Instagram and Twitter). Through these profiles that the merchants themselves can promote their contents and their products.

◢ Annual award for the best establishment with station mark or Vialia

Adif-AV has a claims and suggestions service that facilitates communication with customers to meet their expectations and detect areas for improvement in management and correct treatment. For the management of all the files, a computer application called RECLAMA is used. The answers provided to users are made in print to their postal address or via email. Additionally, in the stations themselves, citizens have complaint books available where they can manifest their complaints.

In 2016, 7,318 claims corresponding to Adif stations and Adif-AV stations were resolved and 309 suggestions and 151 congratulations were received. The complaints and suggestions received are detailed below:



COMPLAINTS

Regarding the complaints in the passenger stations owned by Adif and Adif-AV, in 2016 there was a decrease of 3.2% compared to the previous year, corresponding to the sale in stations the highest number of complaints.

SUGGESTIONS

On the other hand, the total of suggestions received in the passenger stations owned by Adif and Adif-AV in the year 2015 has decreased by 6.6%, with facilities and access, equipment and sales at stations the categories that have received the most suggestions. This information allows Adif-AV to identify possible aspects to improve to achieve a greater degree of user satisfaction.

Complaints received at passenger stations

Suggestions received at passenger stations

8,329

422

7,557

331

7,318

309

2014

2014

2015

2015

2016

2016



In the 2013-2016 Business Plan Adif-AV establishes its Mission, Vision and Values, and reflects the need to develop a more integrated network tailored to the needs of citizens, introducing criteria for reducing energy consumption and CO2 emissions to offer a sustainable service to society and its new generations.

On the other hand, within the Social Responsibility and Sustainability Plan, Adif-AV establishes its commitment to the environment through the following objectives:

◢ Improve the environmental integration of infrastructures

◢ Improve the contribution to the fight against climate change and the efficient management of the resources we consume

◢ Ensure compliance with environmental legislation and extend awareness to third parties

◢ Improve protection of biodiversity

In addition, Adif-AV through its Environmental Policy, approved by the President of Adif and Adif-AV in 2016, and the Code of Ethics and Conduct integrates environmental criteria to its management, complying with current legislation and carrying it one step further.

Protection of the environment has become a priority for Adif-AV and is a very important part of the technical and economic effort that is being made, to adapt its management and its rail services to the new needs and demands with environmental quality and excellence criteria.

3.3 Respect to the environment

Among the values of Adif-AV, protection of the environment stands out



After the separation into Adif and Adif-AV, the management of the different environmental aspects in Adif-AV became dependent on the Deputy Directorate of Technical Actions. This task entailed the provision of the following services by Adif-AV to Adif:

◢ Advice on energy efficiency

◢ Support in environmental technical actions

◢ Management of electrical energy (uses other than traction)

The implementation of the global environmental policy of Adif and Adif-AV is coordinated, directed and supervised at the corporate and project level by the Environment Area Management for both entities, ensuring that the projects and works are adequate from the point of view of environmental protection. It is also responsible for the promotion of certified environmental

management systems, maintenance of open channels of communication and information with institutions and the public and ensuring compliance with applicable environmental regulations.

Adif-AV has the General Procedure for the Management and Coordination of Environmental Activities, which sets the internal executive protocol for environmental management, so as to optimize resources, reduce risks and define action guidelines.

With the aim of promoting continuous improvement in the environmental management of the entity, Adif-AV bases its environmental management year after year on the requirements established in the ISO 14001 standard.

A) Environmental management



PURCHASES Adif-AV incorporates requirements for compliance with environmental aspects in its contracting process, either through the specifications, bidding or as contractual clauses. The Environment Area Management proposes environmental clauses to the Purchasing Department which are to be included, more or less demanding depending on factors such as demands of society, market trends, or the environmental impact of the activities or services to be contracted or acquired.

ENVIRONMENTAL COMPLAINTS PROCEDUREWithin the framework of its management system, Adif-AV has a specific channel to receive, document and respond to complaints received in relation to the environmental impacts of the organization.

In 2016, Adif-AV received 33 environmental complaints, mainly related to noise.

ENVIRONMENTAL MONITORING IN WORKSTo comply with the requirements of the EIS and to prevent the potential environmental repercussions of the works, Adif-AV follows a strict environmental monitoring system. Through a system of basic indicators and key indicators of environmental integration, the environmental performance and the degree of compliance with the established environmental objectives are evaluated.

ENVIRONMENTAL INTEGRATION OF PROJECTSThe approval of railway projects entrusted to Adif that must be submitted to the Environmental Impact Statement (EIS) includes the possibility of supervision and rethinking them, and where appropriate, certifying compliance with the corresponding EIS. To guarantee this approval and compliance, Adif-AV produces two essential documents that establish the necessary requirements: Project Adequacy Report and Certificate of Adaptation of the Project to the EIS, in the case of platform construction projects.

In reference to the more specific environmental management carried out by Adif at the process level, the following actions should be highlighted:



With the firm commitment to act in accordance with the protection of the environment, Adif-AV carries out various actions and participates in different voluntary initiatives with third parties to promote respect for the natural environment and minimize the environmental impacts derived from its activity.

The main actions aimed at the protection of natural resources in the surroundings of the railway infrastructures that it constructs, maintains and exploits are the following:

◢ Environmental adaptation of the layout: adjustment of the layout to achieve greater adaptation to the morphology of the land, less land occupation and reduction of the impact of archaeological sites and habitats with high archaeological value.

◢ Fauna passages and corridors: creation of pathways that allow the mobility of animals through railway infrastructures, such as tunnels and viaducts in 19% of the new lines.

◢ Bird anti-collision screens: installation of screens for avoiding the collision of birds with the catenaries or with the trains.

◢ Enclosure and fauna escape devices: installation of systems that allow the mobility of animals.

◢ Drainage and rough ramps: ramps with rough concrete at certain points of the work to facilitate the escape of small animals to the outside.

◢ Restoration: initiatives to restore soil and land affected by railway installations with the aim of favoring the implementation and progressive development of the plant species of the area, as well as promoting the ecological recovery of the land.

Adif-AV also participates in other initiatives to raise awareness, knowledge and restoration of the natural environment. Among the most significant developed in 2016 include:

◢ Participation as coordinator in the Life Project called "Development and demonstration of an anti-bird strike tubular screen for High Speed Rail Lines", whose main objective is to reduce the impact of high-speed lines on birdlife.

◢ The analysis of the results of the follow-up studies on the status and effectiveness of the corrective measures constructed for the fauna in the Levante lines (sections Albacete-Alicante and Barcelona-French border).

◢ Participation with the staff of the Territorial Environment Service of Zamora of the Junta de Castilla y León in a series of actions aimed at re-establishing and reinforcing the populations of river mussels (Margaritifera margaritifera) in the Fluvial Sites of Community Interest (CILs/LICs) in the northeast of the province.

B) Voluntary initiatives



The commitment to the environment acquired by Adif-AV directly affects its environmental management and, therefore, its results in environmental terms. Adif-AV aims to minimize, as far as possible, the consumption of the resources necessary for the development of its activity, and the impact of its activities on the environment. Next, we address aspects related to the consumption of energy, water, materials, emissions to the atmosphere, soil contamination, waste management and other potential negative impacts.

C) Environmental performance

The main energy consumption of Adif-AV comes from the consumption of electricity, diesel and natural gas used in heating, sanitary hot water and cogeneration..

ENERGY CONSUMPTION

Type of energy 2014 2015 2016

Electric E. (kWh/year) 130,320,904 9,146,095 140,945,767

Diesel fuel (lt/year) 705,737 663,401 394,178

Biodiesel (lt/year) ND ND ND

Gasolines (lt/year) ND ND 63

AutoGas (lt/year) ND ND ND

Natural Gas (mt3/year) 512,533 925,535 992,444

In Adif, the final energy intensity in 2016 was 4.98 MJ/km-train, which, although it represents a slight decrease (2.5%) with respect to 2014 (5.11 MJ/km-train), reflects a very high dependence on energy.

During 2016, the implementation of the 2014-2020 Adif Savings and Energy Efficiency Master Plan continued, arising from the revision and updating of the previous 2009-2014 Plan.

In the period 2014-2016, the final energy intensity has increased by 6.8%, reaching 10.04 MJ/km-train in 2016, reflecting a very high dependence on energy.

Since the implementation of the Plan in 2009 and until 2016, cumulative saving values of 30,130,689 €, 427.10 Gwhequiv and 88,353 tonCO2 have been recorded.



During 2016, the implementation of the 2014-2020 Adif-AV Energy Saving and Efficiency Master Plan continued, arising from the revision and updating of the previous 2009-2014 Plan.

The general objective of the Plan is to make Adif-AV a benchmark in savings and efficient energy management both in the rail sector and at the national level. For this, a quantitative objective of an annual saving of 106.81 GWhev for the 2020 horizon is established.

In order to achieve this objective, the Plan is structured around 4 specific objectives, 12 lines of action and a set of technical, management and implementation measures for renewable energy generation systems. These measures focus on different areas: insulation, air conditioning, fuel, electricity, lighting, traction, etc.

Thus, at the close of 2016, a total of 117 measures were implemented in Adif-AV, at a cost of € 5,861,373, which resulted in annual savings of 79.37 GWhev/year, € 4,948,175/year and 13,896 tonCO2/year.

In 2016, the highest consumption of materials recorded was that of railway materials used in the maintenance activity of the network, with significant consumption of ballast, mainly, and some track.

The ballast, with a consumption of 387,275 tons, in 2016, which represented more than 99% of the rail material used in the maintenance of the infrastructures, is obtained from quarries approved by Adif-AV that have the relevant Environmental Impact Studies. and Restoration Plans.

MATERIALS CONSUMPTION



HERBICIDES CONSUMPTION

Periodically carrying out treatments with herbicides to avoid the growth of herbaceous plants within the infrastructure and venues of Adif-AV and with the purpose to avoid circulation issues and lower the risk of fires at the margin of the track.

MATERIAL CONSUMPTION IN THE CONSTRUCTION OF NEW HIGH SPEED LINES

2014 2015 2016

Rail (t) 37,024 43,603 12,356

Concrete sleepers (t) 228,814 522,968* 94,488*

Balast (t) 485,333 1,114,658 387,275

Covering (t) 0 0 0

Total material ferroviario (t) 591,001 1,315,148 428,157

*Approximately considering that the medium weight of the concrete sleepers is of 300 Kg.

WATER CONSUMPTION

The public water supply nets are main water harvesting sources for Adif-AV. The water is mainly used with sanitary purposes and for cleaning the venues.

2014 2015 2016

Wather consumption* (m³) 81,676 98,417 93,600



EMISSIONS

Adif-AV complies with the regulations in force that establish the parameters related to emissions to the atmosphere. The emissions generated by the activity of Adif-AV are indirect emissions (originated by the production of electric energy) and direct emissions ( from the consumption of diesel oil and natural gas coming from the traction motor, machinery used and the vehicle fleet).

In 2015 the main source of emissions of greenhouse gases (GHGs) came from the consumption of electric energy (88,7% of the total) during activities of Adif-AV . 99.6% of the sulphur oxide emissions is produced in this stations.

As far as direct emissions are related, the main source of emissions corresponds to the maintenance, shunting and auxiliary operations activities. With regards to ozone depleting substances, chlorofluorocarbons (CFCs) and hydro chlorofluorocarbons (HCFCs), Adif-AV complies with the regulations in force related to their use in the registered cooling and refrigeration equipments in all of the Adif-AV stations.

Final energy intensity (in t of CO2-equivalent/millions of Km per managed train)

725

577.3661.1

2015 20162014

*Comments: ◉ Relation between the emissions GHGs due to the activities of Adif-AV ( including indirect ones due to the

consumption of the registered electric energy consumption) and the managed km of train traffic.

◉ The data of year 2014 and 2015 have been revised in relation to those published in the Environmental Memoire of 2015..



CARBON FOOTPRINT

The calculation of the carbon footprint is a tool which allows to know the emission of greenhouse gases (GHGs)to the atmosphere associated to the activities developed by the corporation. The following scopes have been taken into account to determine it in the case of Adif-AV:

◢ Scope 1. Direct emissions of (GHGs): those coming from the boilers consumption of diesel oil, from the traction motor material and the machinery used for the maintenance of the railway, shunting and auxiliary operations as well as due to the use of the vehicle fleet.

◢ Scope 2. Indirect emissions of (GHGs) originated by the production of the electric energy acquired and consumed by Adif-AV.

The following table shows the equivalent emissions of CO2 (ton/year) for each of the foregoing scopes between years 2014-2016:

The carbon footprint registered in 2016 has meant a reduction of almost a 9% in comparison to 2015. It is therefore seen a change with respect to the previous year, for in 2015 an increase could be seen with respect to 2014 due to the increase in the consumption of electric energy.

The previous table also shows the contribution to the scope of the carbon footprint by Adif-AV , proving that the associated emissions to the consumed electric energy are the main source of emissions (around the 89%) while the 11% left corresponds to direct emissions:

2014 2015 2016

tCO2equiv % tCO2equiv % tCO2equiv %

Scope 1 Combustion plants 2,270.11 10.89% 2,211.84 11.07% 2,346.45 12.50%

Railway meters, shunting and auxiliary operations

1,545.51 7.41% 1,557.87 7.80% 1,756.71 9.35%

Vehícles 177.99 0.85% 32.64 0.16% 53.00 0.28%

Sum of Scope 1 3,993.61 12.24% 19,985.37 9.42% 4,156.16 11.28%

Scope 2 Electric energy consumption 28,646.21 87.76% 36,583.40 90.58% 32,703.01 88.72%

Total 32,639.82 100% 40,385.75 100% 36,859.17 100%



Scopes of the carbon footprint

Scope 2Scope 1

90.58

87.76888.72

9.4211.2812.24

2014 2015 2016

WASTE MANAGEMENT

Waste is mainly produced by the activities carried out in the travelers' stations, in the construction and maintenance of the High Speed Railway infrastructures. The type of waste generated, according to Act 22/2011 about waste and contaminated soil is: domestic, commercial, industrial and dangerous waste.

During year 2016, a total 976 kilos of dangerous waste was generated in stations managed by Adif-AV . The waste mainly corresponds to waste from electric and electronic equipment, batteries and accumulators.

The intensity of dangerous waste produced (in kg of dangerous waste produced/ millions of km-train managed), due to the activities of Adif-AV , is an eco-efficiency indicator that measures the dependency between the growth of the activity and the production of DW. In year 2016, the production of dangerous waste reached the amount of 17.5kg/ million km-train.

At a corporate level Adif-AV counts with a dangerous waste management system which has an Integrated Management Manual and its corresponding procedures.



Total of dangerous waste produced Intensity of the production of waste*

Total of dangerous waste produced during maintenance and exploitation of the infrastructures(t)

Intensity in the production of dangerous waste (kg of waste/ million k -managed train)

4,786

9761.2

20.4

85.9

17.5

2016 20162014 20142015 2015

* Relation between the amount of dangerous waste due to activities of Adif-AV and the km-train traffic managed.

Commercial and domestic wastes are mainly produced at the Adif-AV stations as consequence of the transit of travelers within the existing commercial and hospitality activities taking place in the establishments. This waste is usually removed by the cleaning public services or those of garbage collection, reason for which the final destination is unknown.

Due to the collection of this waste, in year 2016, more than 234,000€ were paid for the fee of garbage collection.

SPILLAGE

About spillage, the most significant come from the use of public toilets in stations. In those stations with a relevant amount of traffic, the sanitary waste water is discharged into the public sewerage system in order to be treated in the appropriate Wastewater Treatment Plants (WWTP). Nonetheless, at the conventional network stations, it is still working on substituting the cesspits for connections to the network.



SOIL

NOISE

As usual as it is within the execution of high speed line projects, Adif-AV keeps in mind all the necessary aspects to avoid soil contamination where ever the works are being performed. Nonetheless, in some occasions, the soil may be affected due to several reasons. During 2016 there were no records of this type ofincidents the works of Adif-AV .

One of the mayor environmental impacts of the railway activity of Adif is related to the acoustic contamination. The main emission source of noise comes from the trains circulation, the exploitation of the infrastructure and the railway venues managed by Adif-AV . In compliance with the regulations about noise and the norms of the Ministry of Development during 2016 Adif-AV has continued with the second development phase of the Strategic Noise Maps and the Action Plans of the main railway axis (those with more than 30,000 circulations/year and with a total length of 1,456 km as result of combination Adif - Adif-AV ), corresponding to 437.15 km of the high speed network. During 2016 the works of the strategic noise maps were finished, and were submitted to the formality of public information on the 6th of October of 2016, and the Action Plans were started and will be finished during the first semester of 2017.

The action Plans include correcting measures to reduce noise emission (by installing acoustic screens) from the source to avoid propagation media.

BIODIVERSITY

In the field of environmental management, Adif-AV considers the protection of biodiversity as a priority, mainly due to the high use of the floor by the network as well as due to the venues managed by Adif. The railway network in action has a total length of 3,146 km, being the surface used of approximately 10,070 ha, with an estimated affected area of 29,263 ha.

According to the data from 2005, the last year with information available, an 11.11% of the total length of the railway network managed by Adif and Adif-AV was affecting Natural Protected Areas and others with some kind of environmental protection norm.

To comply with the regulations in force and in order to manage the environmental impacts of the activity of Adif-AV in relation to biodiversity, the entity makes sure that the construction projects and the activity comply with the scheduled days, requirements and environmental demands. In 2016, 199 environmental supervision reports were developed within



the project stages and certificates and reports of adaption to the DEI were obtained for 34 construction works of Adif-AV . In addition, since year 2005 a procedure for the follow-up and tracking of environmental management was carried out in the construction works to evaluate the adoption of the provisions of the Environmental Criteria Protocol and the achievement of the established environmental goals, also useful to ensure compliance with the requirements set by the DEI and to foresee the potential environmental repercussion.

In addition, Adif-AV carries out initiatives to foresee impacts, such as the contained in its Plan of fire prevention on the railway and its proximities, which is written in accordance with the fire prevention regulations, or undersigning cooperation agreements with the Autonomous Communities to develop joint prevention actions, and if required, with fire extinction in areas located close to the railway network. In 2016, the actions regarding this matter were defined within the Plan about fire prevention and combating forest fires during year 2016. Some of the measures and actions kept in mind in this plan is the application of preventive measures such as the regular revision of brakes of trains and the combustion engines of the locomotives, vigilance over the construction works of the railway that can cause ignition sources, especially in tracks that run through forestry areas with high fire risk.

Thanks to this actions, during period 2014-2016 there were no records about any fire in the margins of the high speed lines of Adif-AV

2014 2015 2016

Expenses of fire prevention (€)*

8,338,397 2,611,469 2,833,756

Fires 0 0 0

ENVIRONMENTAL EXPENSES AND INVESTMENTS

Pursuing environmental management excellence, Adif-AV makes an investment effort for this matter as part of keeping an environmental commitment. The investments and environmental expenses of Adif during 2016, excluding the construction works, have risen to numbers that overcome the 6 million and 2 million euros, respectively.

2014 2015 2016 (**)

Exploitation expenses (thousands of euros) 442 2,972 2,783

Investment (excluding construction works) (thousands of euros)

3,233 2,297 6,107

** Provisional data



3.4 Impact on people

A) Employees

When focusing on compliance with the strategic goals defined by Adif-AV, managing people is one of the core elements of the activity of the entity. With around 215 employees, Adif-AV considers the satisfaction, productivity, talent, and participation as keys to comply with the mission, vision and Plan of the Company 2013-2016.

In 2016 Adif-AV (HSL)5 employees, keeping stability during the last financial years.

99.5% of the employees have a permanent contract and work full-time.

Around a 12% of the personnel belongs to operational staff or middle management, being the 88% of the structure made by management and support.

The rate of women in the different categories is of an average of 28.4% of the structure of support and a 24.76% of the management structure.

Employees >50 years

Desglose de la plantilla por edad

Employees 30-50 years

Men Women

4694

60 15

When distributing the staff by age, the majority of the employees are people between 30 and 50 years. (61,5% of the total), being 48 years the average age of the employees of A Adif-AV (HSL).

75

140

Staff brake-down by sex

MujeresHombres

154

156153

63 6163

2014

215

219

216

2015 2016



WORKING RELATIONSHIPS

The I Collective Bargaining Agreement of Adif and Adif-AV was signed in may 2016, and it is foreseen to be in force until December 2017 with the possibility of extending it for another year. The Agreement gives coverage to a 51,63% of the employees of the entity. This agreement proposes the following measures:

◢ The design of a new professional pattern to be developed while the agreement is still in force.

◢ Commitment to simplify and update labor standards.

◢ Foreseen measures of part-time retirement, to address the problem of the ageing of the staff.

◢ Express commitment with the Conduct and Ethic Code of the entity.

◢ Internationalization measures, improving the treatment to expatriate personnel.

◢ Agreement to develop a new Equality Plan.

Adif-AV has different representation models for the employees through which they take part in the decision making of the entity:

◢ Workers Committees and Personnel Representatives: This committees attend bimonthly meetings with the Management, during which the matters regarding their area are dealt with.

◢ Health and Safety General Committee: It is the highest level participating body as far as prevention of occupational risk is related, to which are linked the rest of the health and safety committees and from which the guidelines stem and.

◢ Commission for Social Policy and Equality: This commission manages and follows up the social aid fund, proposes action measures and follows up the indicators of equal opportunities and discrimination. In the last quarter of the year it was agreed on the new treatment of the ex-tratia aids and the first steps towards the II equality Plan were taken.

◢ Commission for Labor Disputes: This commission mediates or solves conflicts of interpretation or application of the Collective Bargaining Agreement or before the notice of a strike call.

The I Colliective Bargaining Agreement of Adif y Adif-AV was signed May 2016



PERSONNEL SELECTION

The personnel selection processes of Adif-AV are established within the labor regulations for the personnel to which the Collective Bargaining Agreement affects.

4 incorporations to Adif-AV have taken place in 2016. The rotation index has been of 2.1%.

Men Women

Off work*

Employees 30-50 years 1 3

Employees >50 years 1 0

Total 5

* The off work total number includes the employees which became part of the staff of Adif-AV in 2016 and have stopped working for the company during 2016.

In relation to equal opportunities and diversity, both aspects have always been taken into account in the management of personnel of Adif-AV . In 2008 a report was submitted with a first diagnose about the equal opportunities between men and women of the entity, which lead to the development of the Equality Plan. Its validity was initially foreseen until the 31 of December of 2012, it was extended until the expiration of the Collective Bargaining Agreement of Adif, establishing actions and indicators that allowed its follow-up and update. Currently a diagnose on the equality situation is being developed which will lead to a II Equality Plan including a survey to know about the employees' point of view on this matter.

As main evidences and results we would like to emphasize:

◢ The boards that solve the official announcement of admission and internal mobility in relation to the personnel selection as answer to the principle of balanced presence of men and women.

◢ The Mix Commission of Equal Opportunities approved by unanimity a action Protocol for situations of sexual harassment and moral harassment which has been incorporated to the II Collective Bargaining Agreement along with the Equality Plan.



TALENT MANAGEMENT AND PROFESSIONAL DEVELOPMENT

The success of the activity developed by Adif-AV mainly depends on the employees performance, and this depends on their satisfaction and motivation. In 2016, as extension and complement to the actions already started to answer successfully to the set goals by the Digital Transformation Plan of the General Administration of the State and its public organizations (PTDAGE), The Model of Management by Competencies has been revised, adapting its catalogue performances to those demanded by this new scenery.

◢ With respect to protection against gender violence, aside from the provisions foreseen under Organic Law 1/2004 about working schedule, leave, suspension or expiry of the work contract and absence to put into practice the protection or the right to integrated social aid, the employees of Adif-AV have the right to a series of additional measures, that are made official in the Collective Bargaining Agreement, in relation to aspects such as the working schedule, mobility or leave amongst others.

During year 2016 The Mix Commission has not detected cases of discrimination.



NEW CATALOGUE OF COMPETENCIESThe new catalogue of competencies has a similar structure to the previous, which is in force since year 2006, but which has been updated by introduction concepts associated to digital transformation: agility, flexibility, collaboration and cooperation, efficiency, transparency, participation, speed, etc. This way the expected attitude is made official and it is provided a homogeneous frame as well as the necessary systematic practices to increase the strengtHS and alleviate the weaknesses in this new scenery.

The new catalogue is articulated around 4 dimensions:

◉ Knowledge: the need to acquire it, maintain it, generate it and share it, taking advantage of the possibilities offered by the Technologies of Information and Communication. (TICs).

◉ Results: this dimension is built around the competitivity and sustainability.

◉ People: is articulated around the environment of the capability to manage diversity, that is becoming broader, and the talent that is becoming more complex.

◉ Culture: the capacity to adapt oneself to a permanent and accelerated transformation, the commitment to assume it and transmit it with enthusiasm and commitment.



The new Evaluation of Performance 360, carried out in accordance with the new Catalogue of Competencies is the first test that allows each employee to configure the most adequate plan of individual development for each case. In 2016 In 2016 the Average Global Performance of Adif-AV was of 84.6% and 98 evaluations of employees were carried out, the equivalent ot 46% of the staff.

On the other side, in 2016 the Model of Integrated Management by Goals (MIMG) has still been applied, which contributes to improve transparency and favors the development and display of the goals of the company and of area to all the personnel submitted to the Goals System, thus generating a higher commitment of the personnel with the key goals of the entity.

The Top Management is directly involved in the development of the goals of the company, and all of them are managed with a fully transparent form for the evaluator and the person under evaluation. In 2016 Adif-AV had a grade of goal achievement of 97.86%, according to the evaluation of a total of 184 persons, which represents an 85.6% of the staff.

Due to the evaluation of performance and the Model of Integrated Management by Goals two outstanding actions have been carried out:

◢ Deepening in the implementation of the Management Development Community, integrated within the platform "Conecta 3.0" that generates its own content related with the development of competencies and fosters the exchange of expertise and collective intelligence of the organization.

◢ The development of the monthly newsletter named “La marmita” (the marmite), which is received by all the community members via email and which includes the key novelties of the blog. Until 2016, 43 editions have been published with more than 300 entries on the blog and 180 shared files.

In line with the results obtained from the performance evaluation and along 2016 different initiatives and programs have been started which encourage learning, motivation and recognition.



COACHING BY PARES An innovative practice for talent development oriented to strengthen learning between colleagues, based on cooperation, trust and horizontality, contributing to value the management experience and skills.

The program started in 2015 and continued through 2016 through the Coaching Community, taking part up to 28 members of the management structure.

ADIF AS FIRST PERSONIInitiative designed to deepen and publicize the different managing processes of the company through micro-videos. 34 videos have been recorded since 2014.

BILLBOARD FOR SUCCESSInitiative designed to spread through the whole of the organization the offer of videos for informal learning, encouraging motivation and recognition through a competition.

HIGH IMPACT PRESENTATIONSProgram designed to increase the ability to connect with the public in events, presentations and meetings, by monologues which include humorous touches.

SUCCESS EXPERIENCEProgram launched in 2014 and continued during the last years and which contributes to understand the talent of the persons of the organization.

Since it was launched, the participants selected, told and recorded a total of 134 success experiences. (circumstances or professional events lived by each of them that ended with a result of success), enhancing the transfer of knowledge and good practices.

Training in Adif-AV is a support activity focused on the achievement of goals in each area. The main objective of Adif-AV in relation to training is to enhance the personal and professional development of the employees, in a manner that contributes to an excellent performance of the entity. The training, in addition to orientating their efficiency in the processes and optimizing the results, gives relevance to the involvement of the workers with the key values of the entity, such as innovation, constant improvement, excellence, social liability and sustainability, amongst others.

TRAINING



In 2016 16,128 hours of training have been provided which mean 75 hours per employee a year

The identification of the training needs is carried out conjointly by the areas of activity and the legal representatives of the workers. Focusing on the identified needs a Yearly Training Plan is designed, which plans, details and designs the training initiatives to be addressed during that period.

During 2016 an specific Training Plan has been approved for the personnel of Adif-AV which has been fully complied with finally meaning 16,128 hours provided translating into 75 hours per employee a year.

To efficiently manage the Training Plan, Adif-AV makes use of various systems and computer applications which are connected to a net that introduce constant improvements. In addition, new methodologies and tools are used to turn the training process into more efficient, such as simulators, conferences and TV-learning . Around 50% of the training is developed by face-to-face methodologies through different platforms, such as the Virtual Training Center (VTC), the Virtual Classroom, Videoconference System and the TV training Portal, amongst others.

82.2

80.8

75

17,496

17,993

16,128

2014 2015 2016

Number of hours of training

Average number of hours of training per employee and year



The training is addressed to all the professional groups of the entity. Broadly speaking the training themes are divided in three big blocks:

◢ Comprehensive safety (safety in circulation, health and prevention of occupational risks, protection and security and environmental safety), which represents a 40% of the hours of the Training. In 2016 a total of 1,535 hours were provided to the 139 pupils. The most relevant programs have been the Plan on Safety and the training on the New Regulations of Railway Traffic.

◢ Infrastructure and systems ((maintenance and development of the infrastructures, Research + Development + Innovation , Computing), which means another 40% of the hours. In 2016 a total of 10,765 hours were provided to 334 pupils.

◢ Management and competencies (process management, personal skills, quality, Corporate Social Responsibilities, languages, etc) which translates into the 20% left of hours of the Training Plan, A total of 3,828 hours have been provided to 485 pupils, outstanding mainly the training on "Conduct and Ethics Code".

During 2016, 227,799.33€ have been invested on training.

INCENTIVES AND SOCIAL BENEFITS

In addition to the variable remuneration based on the achievement of different goals by the employees (personal transversal, of contribution to the team and from the catalogue of competencies), Adif-AV places at the disposal of its workers a wide range of social benefits to improve working and personal life, by offering workers non retributive benefits or social benefits such as:

◢ Medical check-ups, campaigns on preventive medicine, aids for extra medical expenses, allowances for temporary inability as complement to those from the Social Security, aids against dug dependency and alcoholism, vaccination campaigns, etc.

◢ Life insurance.

◢ Transport cards with zero fare for regional and short distance trains, and of a special fare in other lines and HS.



◢ Aids for disabled children .

◢ Death allowances

◢ Advances.

◢ Advocacy.

◢ Foster care and guardianship of elderly disabled, facto couples: have the same rights as the legal couples independently from their sexual orientation.

◢ Psychological assistance .

◢ Adapting to a different position due to the loss of faculties.

◢ Mobility to meet with spouse or facto partner.

◢ Facilities or discounts on services.

◢ Training Center CFV for employees and families.

In addition to the previous measures, after undersigning the I Collective Bargaining Agreement of Adif and Adif-AV , the aids regime for children with intellectual disability and some for medical expenses have been improved.

Men Women Total

Employees which have accepted parental 10 6 16

On the other side, it is relevant to outstand that those employees making use ot the right to parental leave, a 100% of them return to their possition once the permit comes to an end.



Within the Equality Plan are established the offered and promoted initiatives in relation to personal and working reconciliation of the employees of Adif-AV The main objectives of this plan are:

◢ To progress in the equality of treatment and opportunities between men and women.

◢ To cancel possible discriminations due to sex.

◢ To promote equal value of men and women in all environments, as well as the cancelation of stereotypes.

The existing conciliation measures in Adif-AV are collected within its working regulations and all workers can consult the basic content in the "Portal Inicia".

WORKLIFE RECONCILIATION

RECONCILIATION MEASURES ཞ Flexible working hours

ཞ Reduction in working hours

ཞ Part-time work

ཞ Reduction in working hours due to legal guardianship and special workdays

ཞ Licenses

ཞ Compensated absences

ཞ Non compensated absences

ཞ Voluntary redundancy

ཞ Tele training



B) Citizens

Adif-AV is conscious about the impact of its activity over the communities where it is being developed. Reason for which it considers as a priority for its management to know about the expectations and needs of the society. Through the development of its own activity and the initiatives of social nature, Adif-AV works on improving the life of citizens, as well as on compliance with the expectations set on a public entity by achieving its objectives of financial, environmental and social sustainability, and the transparency in the management of its activities. Part of the challenge of Adif-AV is to guarantee and strengthen a management model based on ethics, equality and responsibility before those groups with which it keeps relation and works.

Adif-AV has a commitment with transparency of information, pursuing to keep a fluid, friendly and permanent relationship with society. With this purpose a series of communication channels and activities are established and coordinated which have as objective to publicize the activities of the entity.

Amongst the main social initiatives the following deserve to be highlighted:

OPEN STATIONIn line with the objective of Adif-AV (HSL) to optimize the external social impact in local environments, this program was designed as an integral project that allows to corrdinate and develop cultural, social and environmental initiatives in railway stations managed by Adif, always under criteria of Sustainability and Social Liability and without commercial purposes. Ultimately, this program offers open spaces to the citizens.

In 2016 314 activities have been carried out in 73 different stations with a potential audience of 6.8 million people. The average rating has been of an 8.5. The program has three main axis of action which gather the main activities developed.



DIALOG SERVICEThis service is addressed to deaf people with hearing impairment to facilitate the communication and access to the service information of the station. 'DIALOGA' is mainly a service of video interpretation of the Spanish sign language at the Attention to Client Offices and a service of megaphone of the station which is represented by text on the information screens.

The information screens transmit in sign language the most relevant incidents, emergency situations and other general information. Also, a telephone information service and text communication for mobile devices is al so available.

At Adif's corporate webpage you can consult the stations of Adif-AV with adapted services and facilities to the needs of deaf people with hearing impairment.

# YOCRUZOSEGURO (I CROSS SAFELY)Linked to the relevant financial effort made by Adif-AV to increase safety by removing level crossings , making closures and building underground crossings, it was also considered as necessary to develop a preventive work to train citizens on railway track safety, for in Spain an average of 40 people die yearly run over on the railway tracks. This is how the pilot project "#YoCruzoSeguro" (I cross safely) was born, and has received the technical assistance of the Spanish Railway Foundation.

During the first stages of the project similar initiatives were submitted to study and carried out around the world and an statistical analysis about the history of accidents was made. It was followed to design materials such as posters, brochures, educational material adapted for schools, and educational workshops where carried out.

Up to date, 84 students, 45 teachers and 16 adults have taken part in the workshops. Also, lectures have been given to 11 key agents and 13 representatives of district councils. To all this, it is to add the campaign developed in different municipalities with the placement of posters and the distribution of brochures in stores and public spaces.

AUDIO GUIDE SERVICEWithin the project 'UBICA', during October 2013 the Audio Guide Service was installed in the stations 'Madrid Chamartín' and 'Madrid Puerta de Atocha'. This service provides people visually disabled autonomous access to the station. facilitating mobility by obtaining the reproduction of audio files structured in sections and chapters (information on access, space distribution, location of the main services of the station, walk paths from the Interactive Information, Spots to the Attention to Client, Information a Ticket Selling booths , to the Aid Service Atendo, toilets, lanes and exists of the station).

The audio guides are available in Spanish and can be plaid or downloaded from the webpage of Adif-AV as well as reproduced from the Interactive Information Spots in the stations.


4 ABOUT THIS REPORT

ABOUT THIS REPORT4


4.1 SCope

4.2 international StandardS

4.3 analiSyS oF Materiality

Since 2006, "Administrador de Infraestructuras Ferroviarias" (Adif) has developed its Sustainability Report with the aim to transmit its vision, strategy, and its performance on Corporate Social Liability. In 2014 both entities developed, for the first time, their reports independently. In the memoire of 2016 Adif-AV has reported about its commitments and its performance at financial and non-financial level form the 1st of January of 2016 until de 31st of December of the same year..

The memoire includes the activity of Adif-AV in those countries where it performs. Most of the information it contains is about Adif-AV exclusively, but in some cases it includes information about Adif due to not having available separate information about certain aspects of the management.

The report within has been developed in accordance with the established guidelines in the Guide for the development of the memoire of sustainability version 4 of the Global Reporting Initiative (Principles and basic content and Application Manual). In 2016 Adif-AV decided to develop a report in accordance with the option of essential agreement, at least reporting about one indicator of the aspects considered as relevant by the company. The selection of relevant aspects has been made based on the results of the materiality analysis

En 2016 Adif-AV ha decidido elaborar su informe de acuerdo a la opción de conformidad esencial, reportando al menos un indicador de los aspectos considerados relevantes para la compañía. La selección de aspectos relevantes se ha llevado a cabo en base a los resultados del análisis de materialidad, updated to develop this report and explained below.

The table of contents and the table of contents and table of GRI indicators of the memoire are indicated the pages , coverage of the requirements, management focuses and indicators. In case of omission of the performance central indicators, the reason for omission is explained.

Deserves highlighting that Adif-AV has developed its Environmental 2016 according to the option of comprehensive agreement of GRI G4, which can be consulted at the corporate web page of Adif-AV .

To develop the report of 2015, Adif-AV carried out a materiality analysis that has been updated to make the report within, For this update, Adif-AV has identified a relation of matters by analyzing different sources of information (reporting standards, analyzing press and reports from companies of the sector). This matters have afterwards been evaluated depending of the relevance for the company, through a survey filled by employees and depending on the relevance for the groups of interest (using an quantitative analysis as starting point).

ABOUT THIS REPORT4


◉ Health and safety of custommers

◉ Adif's indicator

◉ Anti - corruption

◉ Financial performance

◉ Indicator of Adif-AV

◉ External Innitiaves

◉ Labeling of products and services

Comprehensive safety (protection and safety, safety

in traffic and cibersecurity)

Management of railway infrastructures

(construction, maintenance and exploitation)

Corruption prevention

Investment

Construction of new lines

Technological development, innovation and digitalization

service quality and client satifaction

RELEVANT ASPECTS FOR ADIF G4 ASPECTS

As result of the evaluation of the relevance of the different aspects, those which are relevant for Adif-AV have been identified. The table bellow shows the relation between the different aspects and those taken into consideration for version G4 of the Guide to develop the Sustainability Memoire of the Global Reporting Initiative:

ABOUT THIS REPORT4



5 TABLE OF INDICATORS GRI

TABLE OF INDICATORS GRI5


INDICATOR REFERENCE PAGE

G4-1 Statement of the main responsible for the decisions of the organization. Letter from the President

G4-3 Name of the organization. About this report 4, 91

G4-4 Main brands, products and services. Bussiness model 7-9

G4-5 Location of the main headquarters of the organization. C/. Sor Ángela de la Cruz, 3 - 3º 28020 - Madrid

G4-6 Countries where the organization performs. Bussiness model 8-9

G4-7 Nature of the property regime and legal form. Bussiness model 4, 91

G4-8 Markets served. Bussiness model 7-9

G4-9 Size of the organization. Effiency inthe management of public resources. Improvement of services and operations. Employees

40-42, 43-49, 77

G4-10 Main features of the staff. Employees 77-87

G4-11 Percentage of employees covered by collective bargaining agreements. Employees 78

G4-12 Description about the supply chain of the organization. Listening to groups of interest 34-38

G4-13 Relevant changes during the period being reported. There have been no relevant changes in the organization, during the term covered by the memoire.

Relevant changes in the organization are notified within the corresponding pre-notice terms specified in the agreement.

G4-14 Coverage of the precaution principle. Respect towards the environment. 65-76

G4-15 Letters, principles and other external initiatives of financial, environmental and social nature that the organization subscribes or has adopted.

Listening to groups of interest. 36-38

G4-16 Associations and organization for national or international promotion to which the organization belongs.

Listening to groups of interest. 36-38

G4-17 List of entities that appear in the consolidated financial statements of the organization. About this report. 91

G4-18 Processes for the development of the memoire. About this report. 91-93

G4-19 List of material aspects identified during the process of defining the content of the memoire. About this report. 92-93

BASIC CONTENTS




G4-20 Coverage of each material aspect of the organization. The aspects reported make reference to the activities developed by the entity and to the possible direct impacts derived from them.

G4-21 Limit of each material aspect outside the organization . Look at G4-20.

G4-22 Consequences derived from the information expressions of previous memoirs and reasons. About this report. 91-93

G4-23 Significant changes in scope and coverage of each aspect with respect to previous memoirs. About this report. 91

G4-24 List of groups of interest linked to the organization. Listen to groups of interest. 36

G4-25 Criteria used to choose the groups of interest to work with. Listen to groups of interest. 34-38

G4-26 Participation of the groups of interest. Listen to groups of interest. 34-38

G4-27 Arising key matters and issued due to the groups of interest and the evaluation carried out by the organization.

Listen to groups of interest. 34-38

G4-28 Term object of the memoire. About this report. 91

G4-29 Last date of the memoire. 2015

G4-30 Timing to present the memoire. Yearly

G4-31 Contact point to solve doubts that may arise about the contact of the memoire. [email protected]

G4-32 Agreement option chosen by the organization. About this report. 91

G4-33 External verification of the memoire. The report within has been verified by a third party.

G4-34 Governing structure of the organization. Good governing, Ethic, Transparency and Risk Management.

21-34

G4-56 Values, principles, standards and regulations of the organization. Mission, vision and values. 6


G4-EC1 Direct financial value produced and distributed. Efficient management of public resources. 42

G4-EC4 Financial aids granted by entities of the government. Efficient management of public resources. 40-42

INDICATORS OF FINANCIAL PERFORMANCE




G4-EN1 Materials used by weight and volume. 69-70

G4-EN2 Percentage of materials used that are recycled materials. The consumption of sleepers and ballast coming from recycled materials is of a 0%.

The track suppliers do not provide information about the recycled materials used in the

production of steel.

G4-EN3 Internal energy consumption. 68-69

G4-EN4 External energy consumption. 68-69

G4-EN5 Energy intensity. 68-69

G4-EN6 Reduction of the energy consumption. 69

G4-EN7 Reduction of the energy requirements of products and services. 68-69

G4-EN8 Total water collection depending on each source. 70

G4-EN9 Water sources significantly affected due to water collection. 70

G4-EN10 Total percentage and volume of recycled and reused water. Environmental Memoire 2016

G4-EN11 Own operational premises, rented, adjacent and managed that contain or are located in protected areas and non protected areas considered of great value for biodiversity.

75-76

G4-EN12 Description of the most significant impacts on biodiversity of protected areas or areas of a high vale in terms of biological biodiversity and not protected from the activities products and services.

75-76

G4-EN13 Protected or restored habitats. 75

G4-EN14 Number of species included in the red list of the IUCN and in national conservational lists and whose habitats are in affected areas by the operations, according to the level of risk of extinction of the specie.

Environmental Memoire 2016

G4-EN15 Direct emission of gasses with a greenhouse effect (scope 1). 72-73

G4-EN16 Direct emission of gasses with a greenhouse effect due to energy production (scope 2). 72-73

G4-EN17 Other direct emission of gasses with a greenhouse effect (scope 3). 72-73

G4-EN18 Intensity of the emission of gasses with a greenhouse effect. 72-73

G4-EN19 Reduction of the emission of gasses with a greenhouse effect. 72-73

INDICATORS FOR ENVIRONMENTAL PERFORMANCE*




G4-EN20 Emission of ozone-depleting substances. Environmental Memoire 2016

G4-EN21 NOx, SOx and emission of other substances significant for the atmosphere. Environmental Memoire 2016

G4-EN22 Total spillage of wais water according to nature and destination. Environmental Memoire 2016

G4-EN23 Total weight of waste according to type and treatment method. 73-74

G4-EN24 Number and total volume of significant spills. 73-74

G4-EN25 Weight of waste transported, imported, exported or treated that are considered as dangerous according to annex i, ii, iii y viii of the Basel Convention 2, and percentage of transported waste at internationally

73-74

G4-EN26 Identification, size, protection status and value in terms of biodiversity of the water mass and related habitats significantly affected by waste and run-off coming from the organization

74

G4-EN27 Mitigation of the environmental impact of products and services 64-67, 76

G4-EN28 Percentage of products sold and packaging material recovered at the end of the useful life divided by category of product.


G4-EN29 Monetary value of the most significant fines and non monetary sanctions due to non compliance with regulations and environmental rulings.

In 2016 Adif-AV has not received sanctions nor significant fines derived from non compliance with legislation or regulations related to the

environment.

G4-EN30 Significant environmental impacts due to the transport of products, goods and materials used for the activities of the organization, as well as the transport of people.

68-76

G4-EN31 Brake-down of environmental investment and expenses. 76

G4-EN32 Percentage of new suppliers selected according to environmental criteria. Environmental Memoire 2016

G4-EN33 Current and potential relevant environmental impacts in the supply chain and measures taken.


G4-EN34 Number of lodged environmental claims that have been addresses and solved formally. In 2016 Adif-AV has not received any relevant claims related to the environment.

* All indicators reported in the table are also reported in the environmental Memoire of 2016 (aside from the indicators corresponding to the option of comprehensive agreement).




G4-LA1 Number and recruitment rate and average rotation of employees broken-down by age, sex and region.

Employees 77-80

G4-LA2 Social benefits for full-time employees that are not offered to temporary or part-time, staff, broken down according to relevant activity locations.

Personnel covered by the Collective Bairgaining Agreement.

G4-LA3 Return-to-work index and retention-index after paternity or maternity leave, broken-down by sex.

Employees 77-87

G4-LA5 Percentage of staff represented by official co-joint health and safety committees for employees, established to help control and assess about working health and safety programs.

Employees 77-87

G4-LA6 Indicate type of injury, index of accidents with injuries, rate of professional illnesses, proportion of lost days, absence rate and mortal victims due to work and in relation to the whole of the workers (that is to say, the employees and the workers recruited) broken-down by sex and region.

Employees 77-87

G4-LA7 Workers with a job that has a high level or risk of illness. High risks of professional illness due to the activity of Adif-AV have not been identified.

G4-LA8 Matters related to health and security covered by official agreements with the unions. Employees 78

G4-LA9 Average of yearly training hours per employee, broken-down by sex and professional group. Employees 83-85

G4-LA10 Type and scope of the programs about capacity management and constant training that promotes the employability of workers and helps them to manage the end of their professional career.

Employees 80-83

G4-LA11 Employee's percentage receiving habitual evaluations about performance and professional development, broken-down by sex and professional group.

Employees 82

G4-LA12 Composition of the governing bodies and brake-down of the staff by professional category and sex, age, belonging to a minority, and other diversity indicators

Good governing, Ethic, Transparency and Risk Management, Employees.

21-34, 77

G4-LA13 Relation between the base salary of men with the one of women, broken down by professional group and activity locations of relevance.

La relación es 1:1.

G4-LA16 Number or received claims about working practices, addressed and solved formally In 2016 there has been no registered claims about working practices.

INDICATORS ABOUT ETHICS AND WORKING PRACTICES




G4-HR3 Number of discrimination cases and measures taken. In 2016 there has been no registrations about discrimination with regards to human rights.

G4-HR4 Identifying centers and significant suppliers where the freedom of assembly and the right to make use of collective bargaining agreements may be infringed or threatened, measures taken in defense of this rights.

In 2016 no centers or significant suppliers where the freedom of assembly and the right to make use of collective bargaining agreements may be infringed or threatened.

G4-HR12 Number of claims about human rights being lodged, addressed and solved formally. In 2016 there has been no registration of claims about human rights.

INDICATORS ABOUT HUMAN RIGHTS


G4-SO1 Percentage of centers where there have been carried out development programs, impact evaluations and participation of the local community.

Listen to groups of interest 34-38

G4-SO2 Operational centers with relevant probable or real negative effects, on the local communities, the impact and location.

In 2016 have not been identified any relevant negative impacts on local communities.

G4-SO6 Value of the political or in-kind contributions made per country and receiver. In 2016 have not been made any political contributions.

G4-SO7 Number of claims received about unfair competition, monopoly practices or against free competition and the final out-come.

In 2016 have not been registered any claims about unfair competition, monopoly practices or against free competition.

G4-SO8 Monetary value of the most significant fines and non monetary sanctions due to non compliance with regulations and norms.

In 2016 Adif-AV has not received sanctions nor significant fines derived from non compliance with regulations or norms.

G4-SO11 Total number of claims r about social impact that have been received, addressed and solved formally.

In 2016 have not been registered any claims about social impact.

PERFORMANCE INDICATORS OF THE COMPANY




G4-PR1 Percentage of categories of relevant products and services submitted to evaluation with the purpose to promote improvements.

The management of the railway infrastructure is carried out according to demanding safety criteria.See chapter " Commitment of people: safety as key factor".

G4-PR5 Result of surveys or main results obtained to measure customer satisfaction. Listen to groups of interest. 61-62

G4-PR7 Number of cases on non compliance with regulations or voluntary codes related to the market presence.

In 2016 there have been no cases registered about non compliance with regulations or voluntary codes related to the market presence.

G4-PR8 Number of claims based on breach of privacy or flight of customers data. Customer satisfaction. 62-63

G4-PR9 Monetary value of the most significant fines a due to non compliance with regulations and norms related to supply or use of products or services.

In 2016 Adif-AV has not received sanctions nor significant fines derived from non compliance with regulations or norms related to supply or use of products or services..

INDICATORS ABOUT PRODUCT-LIABILITY