Exhibit 99.3

LOGO



---

Papeles Allende, S.L.

Spanish GAAS Independent Auditors Report



---

PLANCONTROL AUDITORES Y CONSULTORES, S.L.

Inscrita en el R.O.A.C. con el numero S1266

Paseo de Sagasta, 43, 4° izda.

Tlno. 976 38 33 11 / Fax 976 25 31 63

50007 ZARAGOZA

Independent Auditors Report

To the
Stockholders of Papeles Allende, S.L.:

We have audited the accompanying balance sheets of Papeles Allende, S.L. (the Company)
as of December 31, 2006, 2005 and 2004, and the related statements of income for the years then ended, all expressed in euros. These financial statements are the responsibility of the Companys management. Our responsibility is to express
an opinion on the financial statements taken as a whole based on our audit.

We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements
present fairly, in all material respects, the financial position of Papeles Allende, S.L. as of December 31, 2006, 2005 and 2004, and the funds obtained and applied by them and the results of their operations for the years then ended, in
conformity with accounting principles generally accepted in Spain.

Accounting principles generally accepted in Spain vary in certain
significant respects from accounting principles generally accepted in the United States of America. The application of the latter would have affected the determination of net income for years ended December 31, 2006, 2005 and 2004, and the
determination of stockholders equity and financial position as of December 31, 2006, 2005 and 2004 to the extent summarized in Note 20.

Zaragoza, 19 July 2007



|                                          |  |     
|----------------------------------------- |  | ----
|                                          |  | LOGO
|Plancontrol Auditores y Consultores, S.L. | 
|LOGO                                      | 
|Manuel Indarte Latorre                    | 



---

LOGO

Papeles Allende, S.L.

Auditors Report

Financial statements for the year ended 31 December 2006 and Management Report



---

LOGO

Translation of a report originally issued in Spanish based on our work performed in accordance with generally accepted
auditing standards in Spain and of financial statements originally issued in Spanish and prepared in accordance with generally accepted accounting principles in Spain (see Note 19). In the event of discrepancy, the Spanish-language version prevails.

AUDITORS REPORT ON FINANCIAL STATEMENTS

To the Shareholders of

Papeles Allende, S.L.

Barcelona

We have audited the financial
statements of Papeles Allende, S.L. comprising the balance sheet at 31 December 2006 and the related income statement and notes to the financial statements for the year then ended. The preparation of these financial statements is the
responsibility of the Companys directors. Our responsibility is to express an opinion on the financial statements taken as a whole based on our audit work performed in accordance with generally accepted auditing standards, which require
examination, by means of selective tests, of the evidence supporting the financial statements and evaluation of their presentation, of the accounting policies applied and of the estimates made. As required by Spanish corporate and commercial law,
for comparison purposes the directors present, in addition to the 2006 figures for each item in the balance sheet, income statement and statement of changes in financial position, the figures for 2005. Our opinion refers only to the 2006 financial
statements. On 31 March 2006, we issued our auditors report on the 2005 financial statements, in which we expressed an unqualified opinion.

In our opinion, the accompanying financial statements for 2006 present fairly, in all material respects, the net worth and financial position of Papeles Allende, S.L. at 31 December 2006 and the results of its
operations and the funds obtained and applied by it in the year then ended, and contain the required information, sufficient for their proper interpretation and comprehension, in conformity with generally accepted accounting principles and standards
applied on a basis consistent with that of the preceding year.

The accompanying directors report for 2006 contains the explanations
which the directors consider appropriate about the Companys situation, the evolution of its business and other matters, but is not an integral part of the financial statements. We have checked that the accounting information in the
directors report is consistent with that contained in the financial statements for 2006. Our work as auditors was confined to checking the directors report with the aforementioned scope, and did not include a review of any information
other than that drawn from the Companys accounting records.



---

LOGO

Translation of financial statements originally issued in Spanish and prepared in accordance with generally
accepted

accounting principles in Spain (see Note 19). In the event of a discrepancy, the Spanish-language version prevails.

PAPELES ALLENDE, S.L.

BALANCE SHEETS AT 31 DECEMBER 2006 AND 2005 AND 2004

(euros)



|                                                     |  |               |  |               |  |              
|---------------------------------------------------- |  | ------------- |  | ------------- |  | -------------
|                                                     |  | 2006          |  | 2005          |  | 2004         
|ASSETS                                               |  |               |  |               |  |              
|FIXED ASSETS:                                        |  |               |  |               |  |              
|Stock-up expense                                     |  |              |  |              |  |             
|Intangible assets                                    |  | 581,890.00    |  | 240,981.00    |  | 141,652.00   
|Property, plant and equipment                        |  | 11,063,297.98 |  | 10,217,816.63 |  | 10,776,519.76
|Long-term investments                                |  | 946,989.31    |  | 887,425.76    |  | 325,660.93   
|                                                     |  |               |  |               |  |              
|Total fixed assets                                   |  | 12,592,177.29 |  | 11,346,223.39 |  | 11,243,832.69
|                                                     |  |               |  |               |  |              
|CURRENT ASSETS:                                      |  |               |  |               |  |              
|Inventories                                          |  | 1,392,206.43  |  | 1,159,237.46  |  | 1,093,267.62 
|Receivables                                          |  | 14,333,253.99 |  | 13,801,494.80 |  | 12,927,938.25
|Short-term investments                               |  | 655,332.99    |  | 4,357,410.62  |  | 1,767,504.97 
|Cash and cash equivalents                            |  | 1,081,341.10  |  | 788,256.93    |  | 1,828,417.46 
|Accruals and deferred income                         |  | 210,621.95    |  | 191,839.93    |  | 200,488.33   
|                                                     |  |               |  |               |  |              
|Total current assets                                 |  | 17,672,756.46 |  | 20,298,239.74 |  | 17,817,616.63
|                                                     |  |               |  |               |  |              
|TOTAL ASSETS                                         |  | 30,264,933.75 |  | 31,644,463.13 |  | 29,061,449.32
|                                                     |  |               |  |               |  |              
|                                                     |  |               | 
|LIABILITIES AND SHAREHOLDERS EQUITY                 |  |               |  |               |  |              
|SHAREHOLDERS EQUITY (Note 10): Issued share capital |  | 10,635,812.86 |  | 10,635,812.86 |  | 10,635,812.86
|Share premium account                                |  | 2,887,278.36  |  | 2,887,278.36  |  | 2,887,278.36 
|Reserves                                             |  | 3,909,177.46  |  | 6,631,105.56  |  | 5,614,303.62 
|Profit for the year                                  |  | 2,194,391.97  |  | 2,042,777.78  |  | 2,016,801.94 
|Interim dividend paid during the year                |  | -1,221,176.47 |  |              |  | -1,000,000.00
|                                                     |  |               |  |               |  |              
|Total shareholders equity                           |  | 18,405,484.18 |  | 22,196,974.56 |  | 20,154,196.78
|                                                     |  |               |  |               |  |              
|DEFERRED INCOME:                                     |  |               |  |               |  |              
|Capital grants                                       |  | 5,067.29      |  |              |  |             
|Foreign exchange gains                               |  | 153.02        |  | 1,272.06      |  | 415.86       
|                                                     |  |               |  |               |  |              
|Total deferred income                                |  | 5,220.31      |  | 1,272.06      |  | 415.85       
|                                                     |  |               |  |               |  |              
|NON-CURRENT LIABILITIES:                             |  |               |  |               |  |              
|Other payables                                       |  |              |  | 9,108.23      |  | 9,108.23     
|                                                     |  |               |  |               |  |              
|CURRENT LIABILITIES:                                 |  |               |  |               |  |              
|Amounts owed to credit institutions                  |  | 767,640.97    |  |              |  | 188,219.29   
|Amounts owed to Group companies and associates       |  | 910,292.02    |  | 456,599.96    |  | 500,913.71   
|Trade payables                                       |  | 8,674,699.53  |  | 7,880,220.64  |  | 7,286,800.55 
|Other non-trade payables                             |  | 1,501,596.74  |  | 1,100,287.68  |  | 918,816.09   
|Accruals and deferred income                         |  |              |  |              |  | 2,978.82     
|                                                     |  |               |  |               |  |              
|Total current liabilities                            |  | 11,854,229.26 |  | 9,437,108.28  |  | 8,897,728.46 
|                                                     |  |               |  |               |  |              
|TOTAL EQUITY AND LIABILITIES                         |  | 30,264,933.75 |  | 31,644,463.13 |  | 29,061,449.32
|                                                     |  |               |  |               |  |              

The accompanying notes 1 to 19 are an integral part of the balance sheet at 31 December 2006.



2



---

LOGO

Translation of financial statements originally issued in Spanish and prepared in accordance with generally
accepted

accounting principles in Spain (see Note 19). In the event of a discrepancy, the Spanish-language version prevails.

PAPELES ALLENDE, S.L.

STATEMENTS OF INCOME

FOR THE YEARS ENDED

31 DECEMBER 2006 AND 2005 AND 2004

(Euros)



|                                                                                      |  |               |  |               |  |              
|------------------------------------------------------------------------------------- |  | ------------- |  | ------------- |  | -------------
|                                                                                      |  | 2006          |  | 2005          |  | 2004         
|DEBIT                                                                                 |  |               |  |               |  |              
|EXPENSES:                                                                             |  |               |  |               |  |              
|Supplies                                                                              |  | 39,298,350.31 |  | 33,023,823.97 |  | 28,544,076.49
|Staff costs                                                                           |  | 7,548,355.54  |  | 6,624,906.48  |  | 5,903,418.10 
|Depreciation and amortisation of fixed assets                                         |  | 2,116,578.18  |  | 2,182,164.00  |  | 2,208,255.77 
|Changes in current asset provisions                                                   |  | 117,562.63    |  | 65,348.79     |  | 97,315.67    
|Other operating expenses                                                              |  | 13,324,862.00 |  | 11,204,850.30 |  | 9,373,848.09 
|OPERATING PROFIT                                                                      |  | 2,931,898.72  |  | 2,687,586.28  |  | 2,651,439.48 
|                                                                                      |  |               |  |               |  |              
|                                                                                      |  | 65,337,607.38 |  | 55,788,679.82 |  | 48,778,353.60
|                                                                                      |  |               |  |               |  |              
|Interest payable and similar charges:                                                 |  |               |  |               |  |              
|For debts to third parties and similar expenses                                       |  | 60,111.64     |  | 30,570.19     |  | 38,566.99    
|Foreign exchange losses                                                               |  | 43,010.52     |  | 8,875.45      |  | 20,286.92    
|                                                                                      |  |               | 
|II. NET FINANCIAL INCOME                                                              |  | 63,046.52     |  |              |  |             
|                                                                                      |  |               |  |               |  |              
|                                                                                      |  | 166,168.68    |  | 39,445.64     |  | 58,853.91    
|                                                                                      |  |               |  |               |  |              
|III. PROFIT ON ORDINARY ACTIVITIES                                                    |  | 2,994,945.24  |  | 2,681,480.24  |  | 2,638,828.35 
|                                                                                      |  |               |  |               |  |              
|Losses on intangible and tangible fixed assets and securities investments             |  | 113,121.92    |  | 62,004.71     |  | 1,835.19     
|Extraordinary expenses                                                                |  | 49,695.93     |  | 73,649.10     |  | 44,915.55    
|Expenses and losses from prior years                                                  |  | 98,101.47     |  | 175,717.95    |  | 67,160.80    
|IV. EXTRAORDINARY PROFIT                                                              |  |              |  | 43,139.54     |  | 31,268.75    
|                                                                                      |  |               |  |               |  |              
|                                                                                      |  | 260,919.32    |  | 354,511.30    |  | 145,180.29   
|                                                                                      |  |               |  |               |  |              
|V. PROFIT BEFORE TAXES                                                                |  | 2,955,902.80  |  | 2,724,619.78  |  | 2,670,097.10 
|Corporate income tax                                                                  |  | 761,510.83    |  | 681,842.00    |  | 653,295.16   
|                                                                                      |  |               |  |               |  |              
|                                                                                      |  |               | 
|VI. PROFIT FOR THE YEAR                                                               |  | 2,194,391.97  |  | 2,042,777.78  |  | 2,016,801.94 
|                                                                                      |  |               |  |               |  |              
|                                                                                      |  |               | 
|CREDIT                                                                                |  |               |  |               |  |              
|INCOME:                                                                               |  |               |  |               |  |              
|Net sales                                                                             |  | 64,985,782.96 |  | 55,527,954.49 |  | 48,534,298.81
|Increase in inventories of finished goods and work in progress                        |  | 185,000.03    |  | 82,128.27     |  | 16,431.13    
|Other operating income                                                                |  | 166,824.39    |  | 178,597.06    |  | 227,623.66   
|                                                                                      |  |               |  |               |  |              
|I. OPERATING LOSS                                                                     |  | 65,337,607.38 |  | 55,788,679.82 |  | 48,778,353.60
|                                                                                      |  |               |  |               |  |              
|Other interest receivable and similar income                                          |  | 161,175.46    |  | 29,993.07     |  | 45,117.85    
|Foreign exchange gains                                                                |  | 4,993.22      |  | 3,346.53      |  | 1,124.93     
|II. NET FINANCIAL LOSS                                                                |  |              |  | 6,106.04      |  | 12,611.13    
|                                                                                      |  |               |  |               |  |              
|                                                                                      |  | 166,168.68    |  | 39,445.64     |  | 58,853.91    
|                                                                                      |  |               |  |               |  |              
|III. LOSS ON ORDINARY ACTIVITIES                                                      |  |              |  |              |  |              
|                                                                                      |  |               |  |               |  |              
|Profit on disposal of intangible and tangible fixed assets and securities investments |  | 28,054.99     |  | 120,298.54    |  | 48,346.66    
|Capital grants and other deferred income transferred to profit or loss (Note 20)      |  | 3,040.37      |  |              |  | 72.06        
|Extraordinary income                                                                  |  | 63,480.98     |  | 63,984.19     |  | 13,613.67    
|Income and profit from prior years                                                    |  | 127,300.54    |  | 170,228.57    |  | 83,147.90    
|                                                                                      |  |               |  |               |  |              
|IV. EXTRAORDINARY LOSS                                                                |  | 39,042.44     |  |              |  |             
|                                                                                      |  |               |  |               |  |              
|                                                                                      |  | 260,919.32    |  | 354,511.30    |  | 145,180.29   
|                                                                                      |  |               |  |               |  |              
|V. LOSS BEFORE TAXES                                                                  |  |              |  |              |  |             
|                                                                                      |  |               |  |               |  |              
|VI. LOSS FOR THE YEAR                                                                 |  |              |  |              |  |             
|                                                                                      |  |               |  |               |  |              

The accompanying notes 1 to 19 are an integral part of the statements of income for the year ended
31 December 2006.



3



---

LOGO

Papeles Allende, S.L.

Notes to the financial statements for the year ended December 2006

1. Company description

PAPELES ALLENDE, S.L. (formerly DESPERDICIOS DE PAPEL, S.L.) was incorporated in Madrid on 13 May 1977. It is registered in the Mercantile Registry
of Madrid in General Volume 4,072, no. 3,882 of section 3, Folio 101, Sheet 37,306. Its tax identification number is B-28479533. On 31 December 1996 it changed its name to Papeles Allende, S.L.

Its registered address is Calle D, 57-59, Poligono Zona Franca, Barcelona.

Its corporate purpose is to:

Recover, classify, process, transform and sell any material from the paper,
cardboard, scrap metal, textile, plastic, glass, wood and waste industries capable of being reused, recycled or incinerated; provide services outside its factories to public or private entities, including transport by road in Company-owned vehicles;
and provide any public service that may be required.

Carry out or supervise waste management activities of any kind involving waste
collection, storage, transport, reuse and disposal, and monitor disposal sites after closure.

Provide public hazardous and non-hazardous
waste transport services, subject to proper authorization.

The Company may carry out some or all of these activities indirectly, through
companies with similar or identical corporate purpose in which it has an ownership interest.

2. Basis of presentation

The financial statements are prepared from the Companys computerised accounting records in accordance with legally established accounting standards,
so as to give a true and fair view of the Companys net assets, financial position and results of operations.

The financial statements
for 2006 are pending approval by the General Meeting of Shareholders. The Companys Board of Directors considers that the financial statements will be ratified without significant changes.

Pursuant to section 2 of article 173 of the Consolidated Text of the Public Limited Companies Act, the company has included among the intangible assets in
the balance sheet Item 9, Investments in leased property, to reflect the significant investments it has made in the leased warehouses in which it carries on its waste recovery business.

Amounts in these financial statements (balance sheet, income statement and notes to the financial statements) are expressed in euros.



4



---

LOGO

3. Appropriation of profit

The board of directors has recommended to the General Meeting of Shareholders that the profit for 2006 be appropriated as follows:



|                      |  |             
|--------------------- |  | ------------
|Item                  |  | Amount      
|Distributable profit  |  |             
|Profit or loss        |  | 2,194,391.97
|                      |  |             
|                      |  | 2,194,391.97
|                      |  |             
|Appropriation         |  |             
|To legal reserve      |  | 219,439.20  
|To voluntary reserves |  | 753,776.30  
|To dividends          |  | 1,221,176.47
|                      |  |             
|                      |  | 2,194,391.97

The total amount allocated to dividends for the year, 1,221,176.47, was paid out as an
interim dividend under a board of directors resolution of 1 December 2006 and is recorded in the balance sheet under heading A-VII, Interim dividend paid during the year, as a deduction from shareholders equity.

Below is the provisional cash statement, demonstrating that the Company has sufficient cash to pay the agreed interim dividend. This statement covers a
period of one year from the date of the board resolution.



|                                                                  |  |              |  
|----------------------------------------------------------------- |  | ------------ | -
|Item                                                              |  | Amount       |  
|Cash holdings at the date of the dividend agreement               |  | 2,989,903.00 |  
|Forecasted receipts  forecasted payments over a one-year horizon |  | (576,560.00  | )
|                                                                  |  |              |  
|Forecasted cash balance after one year                            |  | 2,413,343.00 |  
|                                                                  |  |              |  

Both the interim dividend paid and the dividend distribution provided for in the appropriation of
profit for the year meet the requirements and limitations established in the Companys Articles of Association and applicable law.

4.
Accounting policies

The most significant accounting policies used in preparing these financial statements are detailed below:



| | a) | Start-up expenses
| | -- | -----------------

Start-up expenses are
valued at the cost of the goods and services purchased and, in line with the principle of prudent accounting, have been fully depreciated during the year.



| | b) | Intangible assets
| | -- | -----------------

Intangible assets include
computer software, which is valued at cost. The rate of amortisation used is 33%.



5



---

LOGO

In accordance with the rules laid down by the Institute of Accounting and Auditing (ICAC) in its
industry-specific adaptations of the General Chart of Accounts, and the response to Consultation No. 3 in ICAC Gazette (BOICAC) No. 44, the Company recognizes the significant investments it has made in the leased warehouses in which it
carries on its waste recovery business under the heading investments in leased property. These investments are amortised over the lower of the term of the lease agreement, taking into account any extensions thereof, and the useful life of the asset.



| | c) | Property, plant and equipment
| | -- | -----------------------------

Property,
plant and equipment is valued at cost, except for Buildings, which includes a revaluation of 1,643,830.61 resulting from the merger agreed on 31.12.96.

Repairs that do not extend the assets useful life, and maintenance expenses, are expensed as incurred. Costs of renovation, extension or improvement that extend the assets useful life are capitalized.

Depreciation is charged at the rates specified in the tables approved by Royal Decree 177712004/30, of 30 July, increased by the
amount permitted for tax purposes for used goods, where appropriate. The company uses the straight line and the reducing balance methods of depreciation.

The average rates used to calculate the depreciation of property, plant and equipment are as follows:



|                                    |  |                      
|----------------------------------- |  | ---------------------
|Item                                |  | Rate                 
|Buildings                           |  | 2%, 3%, 4% and 5%    
|                                    | 
|Plant and machinery                 |  | 10%, 12%, 14% and 18%
|                                    | 
|Other fixtures, tools and furniture |  | 8%, 10%, 12% and 15% 
|                                    | 
|Other property, plant and equipment |  | 10%, 16%, 18% and 25%



| | d) | Marketable securities and other similar investments
| | -- | ---------------------------------------------------

Investments in Group companies, associates and other companies are valued at cost.

The Company calculates the depreciation of
investments in Group companies and associates based on the realisable value of the investees at year-end, according to the balance sheet for the period or, failing that, the last published balance sheet.

The Short-term securities portfolio account relates to an investment in a mutual fund, which is valued at cost.

Deposits and guarantees given are valued at the cash amount paid as a guarantee for the fulfilment of an obligation. They are classified as current or
non-current according to whether they expire within one year or after one year.



| | e) | Non-trade receivables and payables
| | -- | ----------------------------------

Non-trade receivables are carried at the cash amount granted, while receivables for the sale of fixed assets are carried at the assets selling price.



6



---

LOGO

The Company calculates the corresponding provisions based on the risk of non-payment of the amounts owed.

Non-trade payables are recognised in the balance sheet at their maturity value, while payables for the purchase of fixed assets are
recognised at their nominal value.

Both payables and receivables are classified as current or non-current according to whether they mature
within one year or after one year.



| | f) | lnventories
| | -- | -----------

Inventories are valued as
follows:



| |  |  | Raw Materials: At cost.
| | - |  | -----------------------



| |  |  | Finished goods:
| | - |  | ---------------



| |  |  | Recovered paper: At the average selling price at source during the last month, reduced by 20% to account for profit margin and direct selling costs.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Paper for the converted paper products business: At cost plus the value added by the conversion where appropriate.
| | - |  | ------------------------------------------------------------------------------------------------------------------



| | g) | Grants
| | -- | ------

Capital grants are valued at the
amount awarded and are transferred to profit or loss for the year in proportion to the depreciation charge on the assets financed with the grants.



| | h) | Trade receivables and payables
| | -- | ------------------------------

Short-term
trade receivables and payables are recognised at their nominal value.

The allowance for uncollectible receivables is calculated based on
the uninsured portion of the balance of doubtful accounts at 31 December.



| | i) | Income tax
| | -- | ----------

The corporate income tax expense
recorded in the financial statements for 2006 is 761,510.83. This amount has been calculated by applying a tax rate of 35% to the adjusted accounting profit (accounting profit before taxes, plus or minus any permanent differences) and
subtracting tax deductions in the amount of 12,227.61, and also taking into account a tax decrease of 2,693.54 for the adjustment of tax assets and liabilities to the new tax rate of 32.5% at 31 December.

The only exception to the previous paragraph, as in previous years, is the omission of the temporary difference between accounting and tax criteria for
the amortisation of goodwill, in line with the ICAC Resolution of 9 October 1997.



| | j) | Foreign currency transactions
| | -- | -----------------------------



| | 1. | Inventories
| | -- | -----------

The purchase price is translated into euros
at the exchange rate ruling on the date of purchase.



| | 2. | Receivables and payables
| | -- | ------------------------



7



---

LOGO

Foreign currency transactions are valued at the exchange rate ruling at the time of the transaction.

Realised and unrealised foreign exchange losses are generally transferred to profit or loss. Realised foreign exchange gains are credited
to income, while unrealised gains are not dealt with through the income statement, except when the amount is small.



| | k) | Income and expenses
| | -- | -------------------

Income and expenses are
recognised in the period in which they are earned or incurred, independently of the period in which they are received or paid.

The Company
recognizes only the profits actually realised at year-end, while foreseeable risks and losses, including merely potential losses, are recognized as soon as they become known.

Revenues from sales of goods and services are recorded net of the taxes applicable to such transactions. Discounts included in the invoice are deducted
from the transaction amount, except for cash discounts, which are treated as financial expenses.

The cost of purchases of goods or
services, including transport and tax expenses but excluding deductible VAT paid, is recognised in the carrying amount of the goods or services purchased.

Discounts granted, after the corresponding invoice is issued or received, in respect of faulty goods, failure to meet delivery terms or for other similar reasons, as well as volume discounts, are recorded separately
from the amounts of sales or purchases of goods, or revenues or expenses for services rendered or received.



| | l) | Environment
| | -- | -----------

Costs incurred in environmental
activities aimed at protecting and improving the environment are recognised as an expense in the year in which they are incurred.

When
these costs are associated with the acquisition of new items of property, plant and equipment whose purpose is to protect and improve the environment, they are recognised in the carrying amount of property, plant and equipment.

5. Start-up expenses

The changes in the
Start-up expenses account during 2006 and the balance at year-end are as follows:



|                  |  |                    |  |           |  |              |  |           |  |                   
|----------------- |  | ------------------ |  | --------- |  | ------------ |  | --------- |  | ------------------
|Item              |  | Balance at31.12.05 |  | Increases |  | Amortisation |  | Transfers |  | Balance at31.12.06
|Start-up expenses |  |                    |  | 15,253.50 |  | 32,224.76    |  | 16,971.26 |  |                   



8



---

LOGO

6. Intangible assets

The movements in intangible assets during 2006 and the accumulated amortisation at year-end break down as follows:



| | a) | Intangible assets
| | -- | -----------------



|                                                          |  |               |  |           |  |             |  |            |  |              
|--------------------------------------------------------- |  | ------------- |  | --------- |  | ----------- |  | ---------- |  | -------------
|                                                          |  | Balance at    |  | Movements |  | Balance at 
|Item                                                      |  | 31.12.05      |  | Increases |  | Retirements |  | Transfers  |  | 31.12.06     
|Concessions, patents, licenses, brands and similar assets |  | 5,943.28      |  | 0.00      |  | 0.00        |  | 0.00       |  | 5,943.28     
|Goodwill                                                  |  | 15,865,264.69 |  | 0.00      |  | 0.00        |  | 0.00       |  | 15,865,264.69
|Computer software                                         |  | 87,439.25     |  | 9,530.13  |  | 0.00        |  | 0.00       |  | 96,969.38    
|Investments in leased property                            |  | 282,919.67    |  | 0.00      |  | 70,737.79   |  | 440,223.13 |  | 652,405.01   
|                                                          |  |               |  |           |  |             |  |            |  |              
|Total                                                     |  | 16,241,566.89 |  | 9,530.13  |  | 70,737.79   |  | 440,223.13 |  | 16,620,582.36
|                                                          |  |               |  |           |  |             |  |            |  |              



| | b) | Accumulated depreciation
| | -- | ------------------------



|                                                          |  |               |  |           |  |             |            |           |   |  |              
|--------------------------------------------------------- |  | ------------- |  | --------- |  | ----------- | ---------- | --------- | - |  | -------------
|                                                          |  | Balance at    |  | Movements |  |             | Balance at
|Item                                                      |  | 31.12.05      |  | Increases |  | Retirements |            | Transfers |   |  | 31.12.06     
|Concessions, patents, licenses, brands and similar assets |  | 5,943.28      |  | 0.00      |  | 0.00        |            | 0.00      |   |  | 5,943.28     
|Goodwill                                                  |  | 15,865,264.69 |  | 0.00      |  | 0.00        |            | 0.00      |   |  | 15,865,264.69
|Computer software                                         |  | 70,802.25     |  | 9,640.13  |  | 0.00        |            | 0.00      |   |  | 80,442.38    
|Investments in leased property                            |  | 58,575.67     |  | 57,499.23 |  | 24,072.79   |            | (4,960.10 | ) |  | 87,042.01    
|                                                          |  |               |  |           |  |             |            |           |   |  |              
|Total                                                     |  | 16,000,585.89 |  | 67,139.36 |  | 24,072.79   |            | (4,960.10 | ) |  | 16,038,692.36
|                                                          |  |               |  |           |  |             |            |           |   |  |              



9



---

LOGO

7. Property, plant and equipment

Balance and movements:

The movements in property, plant and equipment during 2006 and the
accumulated depreciation at year-end are detailed below:



| | a) | Property, plant and equipment
| | -- | -----------------------------



|                                                       |  |               |  |              |  |             |            |               |   |  |              
|------------------------------------------------------ |  | ------------- |  | ------------ |  | ----------- | ---------- | ------------- | - |  | -------------
|                                                       |  | Balance at    |  | Movements    |  |             | Balance at
|Item                                                   |  | 31.12.05      |  | Increases    |  | Retirements |            | Transfers     |   |  | 31.12.06     
|Land and buildings                                     |  | 8,342,753.01  |  | 2,007.67     |  | 0.00        |            | 39,052.29     |   |  | 8,383,812.97 
|Plant and machinery                                    |  | 12,048,716.99 |  | 1,165,151.96 |  | 299,902.64  |            | 415,926.85    |   |  | 13,329,893.16
|Other fixtures, tools and furniture                    |  | 2,016,364.70  |  | 156,220.16   |  | 174,562.39  |            | 187,128.91    |   |  | 2,185,151.38 
|Advances on fixed assets and assets under construction |  | 28,702.37     |  | 2,046,396.47 |  | 45,061.45   |            | (1,124,250.79 | ) |  | 905,786.60   
|Other property, plant and equipment                    |  | 2,697,314.23  |  | 119,236.36   |  | 173,276.14  |            | 24,948.35     |   |  | 2,668,222.80 
|                                                       |  |               |  |              |  |             |            |               |   |  |              
|Total                                                  |  | 25,133,851.30 |  | 3,489,012.62 |  | 692,802.62  |            | (457,194.39   | ) |  | 27,472,866.91
|                                                       |  |               |  |              |  |             |            |               |   |  |              



| | b) | Accumulated depreciation
| | -- | ------------------------



|                                    |  |               |  |              |  |             |  |           |  |              
|----------------------------------- |  | ------------- |  | ------------ |  | ----------- |  | --------- |  | -------------
|                                    |  | Balance at    |  | Movements    |  | Balance at 
|Item                                |  | 31.12.05      |  | Increases    |  | Retirements |  | Transfers |  | 31.12.06     
|Buildings                           |  | 2,342,209.75  |  | 266,645.96   |  | 0.00        |  | 0.00      |  | 2,608,855.71 
|Plant and machinery                 |  | 9,021,945.99  |  | 1,320,365.61 |  | 267,114.44  |  | 0.00      |  | 10,075,197.16
|Other fixtures, tools and furniture |  | 1,379,291.70  |  | 215,649.85   |  | 115,854.39  |  | 4,960.10  |  | 1,484,047.26 
|Other property, plant and equipment |  | 2,172,587.23  |  | 240,932.71   |  | 172,051.14  |  | 0.00      |  | 2,241,468.80 
|                                    |  |               |  |              |  |             |  |           |  |              
|Total                               |  | 14,916,034.67 |  | 2,043,594.13 |  | 555,019.97  |  | 4,960.10  |  | 16,409,568.93
|                                    |  |               |  |              |  |             |  |           |  |              

Other information

The Buildings account includes a revaluation of 1,643,830.61 resulting from the merger agreed on 31.12.96.



10



---

LOGO

The net cumulative gain at year-end and the effect of this gain on the depreciation charge for the year are
shown in the following table:



|                                     |  |             
|------------------------------------ |  | ------------
|Item                                 |  | Amount      
|Investment                           |  | 1,643,830.61
|Depreciation expense for the year    |  | 68,383.00   
|Accumulated depreciation at year-end |  | 683,269.61  

Investments in property, plant and equipment purchased from Group companies and associates, and
the associated accumulated amortisation to 31 December 2006, are detailed below:



|                 |  |            |  |                         
|---------------- |  | ---------- |  | ------------------------
|Item             |  | Investment |  | Accumulated depreciation
|Furniture (2005) |  | 450.00     |  | 157.00                  

At year-end 2006, fully depreciated property, plant and equipment in service amounted to
7,040,672.72. Details are given below:



|                                    |  |             
|----------------------------------- |  | ------------
|Item                                |  | Amount      
|Buildings                           |  | 134,960.98  
|Plant and machinery                 |  | 5,050,683.93
|Other fixtures, tools and furniture |  | 659,109.17  
|Other property, plant and equipment |  | 1,195,918.64

Part of the Companys activity is carried out on a site in the Zona Franca area of Barcelona
under a 50-year lease, running from 1970 to 2020, renewable upon expiry. The buildings on the Zona Franca site are depreciated according to the term of the lease of the land on which they are built.

It is the Companys policy to purchase such insurance cover as may be necessary to protect against the risks to which its property, plant and
equipment is exposed.



11



---

LOGO

8. Investments

Balance and movements

The opening and closing balance and the movements in long and short-term investments
during 2006 are



| | a) | Long-term investments
| | -- | ---------------------



|                                                       |  |                     |           |  |             |  |           |                     |            |   |  |            
|------------------------------------------------------ |  | ------------------- | --------- |  | ----------- |  | --------- | ------------------- | ---------- | - |  | -----------
|                                                       |  | Balance at 31.12.05 |           |  | Movements   |  |           | Balance at 31.12.06
|                                                       |  |                     | Increases |  | Retirements |  | Transfers |                     |           
|Investments in Group companies                         |  | 415,378.33          |           |  | 0.00        |  | 0.00      |                     | 0.00       |   |  | 415,378.33 
|                                                       |  |                     |           |  |            
|Investments in associates                              |  | 450,253.03          |           |  | 0.00        |  | 0.00      |                     | 0.00       |   |  | 450,253.03 
|                                                       |  |                     |           |  |            
|Long-term securities portfolio                         |  | 66,111.36           |           |  | 29,991.00   |  | 0.00      |                     | 0.00       |   |  | 96,102.36  
|                                                       |  |                     |           |  |            
|Other loans and advances                               |  | 58,160.83           |           |  | 0.00        |  | 0.00      |                     | (16,951.56 | ) |  | 41, 209.27 
|                                                       |  |                     |           |  |            
|Long-term deposits and guarantees                      |  | 47,775.24           |           |  | 63,457.41   |  | 16,933.30 |                     | 0.00       |   |  | 94,299.35  
|                                                       |  |                     |           |  |            
|Provision for depreciation of investment in associates |  | (150,253.03         | )         |  | 0.00        |  | 0.00      |                     | 0.00       |   |  | (150,253.03
|                                                       |  |                     |           |  |             |  |           |                     |            |   |  |            
|                                                       |  |                     |           |  |            
|Total                                                  |  | 887,425.76          |           |  | 93,448.41   |  | 16,933.30 |                     | (16,951.56 | ) |  | 946,989.31 



| | b) | Short-term investments
| | -- | ----------------------



|                                    |  |                     |           |  |              |  |                     |  |           |  |            |  
|----------------------------------- |  | ------------------- | --------- |  | ------------ |  | ------------------- |  | --------- |  | ---------- | -
|                                    |  | Balance at 31.12.05 |           |  | Movements    |  | Balance at 31.12.06 | 
|                                    |  |                     | Increases |  | Retirements  |  | Transfers           | 
|Short-term loans to Group companies |  | 0.00                |           |  | 5,131.90     |  | 5,131.90            |  | 0.00      |  | 0.00       |  
|                                    |  |                     |           |  |             
|Short-term securities portfolio     |  | 4,200,000.00        |           |  | 2,711,702.78 |  | 6,305,008.57        |  | 0.00      |  | 606,694.21 |  
|                                    |  |                     |           |  |             
|Other loans and advances            |  | 162,966.44          |           |  | 131,507.55   |  | 257,230.95          |  | 16,951.56 |  | 54,194.60  |  
|                                    |  |                     |           |  |             
|Long-term deposits and guarantees   |  | 150.25              |           |  | 21,736.16    |  | 21,736.16           |  | 0.00      |  | 150.25     |  
|                                    |  |                     |           |  |             
|Provisions for short-term loans     |  | (5,706.07           | )         |  | 0.00         |  | 0.00                |  | 0.00      |  | (5,706.07  | )
|                                    |  |                     |           |  |              |  |                     |  |           |  |            |  
|                                    |  |                     |           |  |             
|Total                               |  | 4,357,410.62        |           |  | 2,870,078.39 |  | 6,589,107.58        |  | 16,951.56 |  | 655,332.99 |  



12



---

LOGO

Information about Group companies and associates

investments in Group companies and associates: for commercial reasons, it is considered that
disclosure of this information in these notes might seriously damage the Companys interests. Therefore, in accordance with article 200, 2aof the Implementing Regulations of the Public Limited Company Act, this information is omitted.

Other information

At year-end, Other loans and advances, non-current, totalled 41,209.27. This amount
corresponds entirely to credit extended upon disposal of fixed assets. The loans have the following maturities:



|                         |  |           |  |           |  |         
|------------------------ |  | --------- |  | --------- |  | --------
|Item                     |  | 2008      |  | 2009      |  | 2010    
|Other loans and advances |  | 16,951.56 |  | 17,406.35 |  | 6,851.36

Two loans for the disposal of fixed assets in the initial amount of 92,471.48 have been
granted under a purchase and sale agreement by instalments, with a retention of title clause until the full amount agreed upon is received.

The average return on the short-term securities portfolio was 2.87%.

The long-term deposits and guarantees have no fixed maturity
date.

9. Inventories

The
Inventories account breaks down as follows:



|                                 |  |             
|-------------------------------- |  | ------------
|Item                             |  | Amount      
|Raw materials and other supplies |  | 109,984.79  
|Finished goods                   |  | 1,183,638.55
|Advances                         |  | 98,583.09   
|                                 |  |             
|Total                            |  | 1,392,206.43
|                                 |  |             



13



---

LOGO

10. Shareholders equity

Balance and movements



|                                               |  |                     |           |               |   |           |                     |           |               |   |  |               |  
|---------------------------------------------- |  | ------------------- | --------- | ------------- | - | --------- | ------------------- | --------- | ------------- | - |  | ------------- | -
|                                               |  | Balance at 31.12.05 |           | Movement      |   |           | Balance at 31.12.06 |          
|                                               |  |                     | Increases |               |   | Decreases |                     | Transfers |               |  
|Share capital                                  |  | 10,635,812.86       |           | 0.00          |   |           | 0.00                |           | 0.00          |   |  | 10,635,812.86 |  
|                                               |  |                     |           |               |  
|Share premium account                          |  | 2,887,278.36        |           | 0.00          |   |           | 0.00                |           | 0.00          |   |  | 2,887,278.36  |  
|                                               |  |                     |           |               |  
|Legal reserve                                  |  | 1,695,621.16        |           | 0.00          |   |           | 0.00                |           | 204,277.78    |   |  | 1,899,898.94  |  
|                                               |  |                     |           |               |  
|Differences on translation of capital to euros |  | 214.21              |           | 0.00          |   |           | 0.00                |           | 0.00          |   |  | 214.21        |  
|                                               |  |                     |           |               |  
|Voluntary reserves                             |  | 4,935,270.19        |           | 0.00          |   |           | 4,764,705.88        |           | 1,838,500.00  |   |  | 2,009,064.31  |  
|                                               |  |                     |           |               |  
|Profit or loss                                 |  | 2,042,777.78        |           | 2,194,391.97  |   |           | 0.00                |           | (2,042,777.78 | ) |  | 2,194,391.97  |  
|                                               |  |                     |           |               |  
|Interim dividend paid during the year          |  | 0.00                |           | (1,221,176.47 | ) |           | 0.00                |           | 0.00          |   |  | (1,221,176.47 | )
|                                               |  |                     |           |               |   |           |                     |           |               |   |  |               |  
|                                               |  |                     |           |               |  
|Total                                          |  | 22,196,974.56       |           | 973,215.50    |   |           | 4,764,705.88        |           | 0.00          |   |  | 18,405,484.18 |  

Other information

The companys share capital amounts to 10,635,812.86, divided into 1,769,686 indivisible and aggregable participation units numbered 1 to
1,769,686 inclusive, with a par value of 6.01 per unit. All units are issued and fully paid.

The share capital is owned directly
by two companies. One owns 85% and the other, 15%.

On 16 January 2006, the General Meeting approved the distribution of a dividend of
1,235,294.12 from voluntary reserves. And on 11 July 2006, the General Meeting approved the distribution of a dividend of 3,529,411.76 from voluntary reserves

11. Grants

During the year, the Company received 10,810.00 in subsidies for the
acquisition of positioning systems. A total of 5,742.71 of capital grants has been amortised to the income statement, of which 2,702.34 is recorded as income from previous years.

The Company has met all the conditions to be eligible for these grants.



14



---

LOGO

12. Non-trade payables

Breakdown

Item E.III.1 on the liabilities side of the balance sheet, amounting to 397,288.56,
reflects amounts owed for purchases and services received from Group companies, without there being any loan or interest payable.

Item
E.III.2 on the liabilities side of the balance sheet, amounting to 513,003.46, reflects amounts owed for purchases and services received from Group companies, associated without there being any loan or interest payable.

Item E.V.3 on the liabilities side of the balance sheet, amounting to 619,405.26, reflects short-term debts to suppliers of fixed assets.

Other information

At
31 December 2006 the limit on the bill discounting facility granted by banks was 2,103,552.10 and the amount of credit drawn was 767,640.97.

At 31 December 2006 the Company had no debts secured by collateral.

13. Tax matters

A reconciliation of accounting profit for 2006 to taxable income is provided below:



|                                |  |            |  |            |  |              |  
|------------------------------- |  | ---------- |  | ---------- |  | ------------ | -
|Item                            |  | Increases  |  | Decreases  |  | Amount       |  
|Accounting profit for the year  |  |            |  |            |  | 2,194,391.97 |  
|                                |  |            | 
|Corporate income tax            |  | 761,510.83 |  | 0.00       |  | 761,510.83   |  
|                                |  |            | 
|Permanent differences           |  | 6,724.50   |  | 20,043.29  |  | (13,318.79   | )
|                                |  |            | 
|Temporary differences           |  | 88,591.99  |  | 739,598.55 |  | (651,006.56  | )
|                                |  |            | 
|to) Arising in the current year |  | 88,591.99  |  | 0.00       |  |              |  
|                                |  |            | 
|b) Arising in prior years       |  | 0.00       |  | 739,598.55 |  |              |  
|                                |  |            |  |            |  |              |  
|Taxable income                  |  |            |  |            |  | 2,291,577.45 |  
|                                |  |            |  |            |  |              |  



15



---

LOGO

Other information

On 31 December 1996 a merger agreement was signed between: Desperdicios de Papel, S.L. as acquirer and Papeles Allende, S.A., Papeles Barcelona, S.A. and Inversiones PGA, S.A. as acquirees.

For accounting purposes the merger date, and the date from which the acquirees were understood to be operated by the acquirer, was 1 January 1997.
Information about the merger is disclosed in the notes to the financial statements for 1997, as required under article 93 of Royal Decree-Law 4/2004, of 5 March, enacting the Consolidated Text of the Corporate Tax Act.

All the Companys tax returns that have not been inspected and for which the statutory limit for tax assessments has not expired remain open to
inspection by the tax authorities.

Under current tax law, tax returns cannot be considered definitive until they have been verified by the
tax authorities or the statutory limit for assessments has expired.

In the opinion of the Companys management, there are no material
contingencies that might arise from inspection of the years liable to audit.

The corporate income tax expense recorded in the financial
statements for 2006 is 761,510.83. This amount has been calculated by applying a tax rate of 35% to the adjusted accounting profit (accounting profit before taxes, plus or minus any permanent differences) and subtracting tax deductions in the
amount of 12,227.61, and also taking into account a tax decrease of 2,693.54 to reflect the adjustment of deferred tax assets and liabilities to the tax rate of 32.5% at 31 December.

The only exception to the previous paragraph, as in previous years, is the omission of the temporary difference between accounting and tax criteria for
the amortisation of goodwill, in line with the ICAC Resolution of 9 October 1997.

The movements in deferred income tax assets during
2006 are shown below:



|                                                                    |  |           |  
|------------------------------------------------------------------- |  | --------- | -
|Item                                                                |  | Amount    |  
|                                                                    | 
|Pending recovery at the start of the year                           |  | 6,702.42  |  
|                                                                    | 
|Deferred tax assets recognised in 2006                              |  | 31,007.20 |  
|                                                                    | 
|Deferred tax assets from previous years recovered in 2006           |  | 0.00      |  
|                                                                    | 
|Adjustment of deferred tax assets to account for change in tax rate |  | (2,693.54 | )
|                                                                    | 
|Pending recovery at the end of the year                             |  | 35,016.08 |  



16



---

LOGO

The movements in deferred tax liabilities during 2006 are shown below:



|                                                                 |  |       
|---------------------------------------------------------------- |  | ------
|Item                                                             |  | Amount
|Pending settlement at the start of the year                      |  | 0.00  
|                                                                 | 
|Deferred tax liabilities recognised in 2006                      |  | 0.00  
|                                                                 | 
|Deferred tax liabilities from previous years settled during 2006 |  | 0.00  
|                                                                 | 
|Pending settlement at the end of the year                        |  | 0,00  

In 2006 the Company claimed tax deductions amounting to 12,227.61 from total corporate
income tax due. This amount breaks down as follows:



|                                                |  |          
|----------------------------------------------- |  | ---------
|Item                                            |  | Amount   
|Training expenses                               |  | 6,306.02 
|                                                | 
|Investments aimed at protecting the environment |  | 1,045.66 
|                                                | 
|Reinvestment                                    |  | 3,761.37 
|                                                | 
|Positioning systems for industrial vehicles     |  | 1,114.56 
|                                                | 
|Total                                           |  | 12,227.61

The Company has no unused corporate income tax incentives.

The Company has no unused tax losses from previous years.

As of year-end the Company had paid 663,764.14 in corporate income tax through interim payments and withholdings.

Reinvestment of extraordinary profit at 31 December 2006 (Art. 42, TRLIS): The Company claimed the deduction for reinvestment on extraordinary profit for 2006. In accordance with article 42.8 of Royal Decree-Law
4/2004 of 5 March, enacting the Consolidated Text of the Corporate Tax Act, the date and amount of the deduction for reinvestment are as shown below:



|                             |  |                               |  |                                      
|---------------------------- |  | ----------------------------- |  | -------------------------------------
|Year in which the gain arose |  | Income eligible for deduction |  | Date on which the gain was reinvested
|2006                         |  | 18,806.87                     |  | 2006                                 



17



---

LOGO

The Company claimed the deduction for reinvestment on extraordinary profit for 2005. In accordance with
article 42.8 of Royal Decree-Law 4/2004 of 5 March, enacting the Consolidated Text of the Corporate Tax Act, the date and amount of the deduction for reinvestment are as shown below:



|                              |  |                               |  |                                      
|----------------------------- |  | ----------------------------- |  | -------------------------------------
|Years in which the gain arose |  | Income eligible for deduction |  | Date on which the gain was reinvested
|2005                          |  | 5,866.89                      |  | 2005                                 

The Company claimed the deduction for reinvestment on extraordinary profit for 2004. In accordance
with Article 42.8 of Royal Decree-Law 4/2004 of 5 March, enacting the Consolidated Text of the Corporate Tax Act the date and amount of the deduction for reinvestment are as shown below:



|                             |  |                               |  |                                      
|---------------------------- |  | ----------------------------- |  | -------------------------------------
|Year in which the gain arose |  | Income eligible for deduction |  | Date on which the gain was reinvested
|2004                         |  | 39,641.33                     |  | 2004                                 

In 2003, deferred amounts from 2001 pending reinvestment were deducted under transitional
provision 38 of Law 24/2001, given that the reinvestment occurred in that year. In accordance with article 36.8 ter. of the Corporate Tax Act (now article 42.8 of Royal Decree-Law 4/2004, of 5 March, enacting the Consolidated Text of the
Corporate Tax Act), the date and amount of the deduction for reinvestment are as shown below:



|                             |  |                               |  |                                      
|---------------------------- |  | ----------------------------- |  | -------------------------------------
|Year in which the gain arose |  | Income eligible for deduction |  | Date on which the gain was reinvested
|2001                         |  | 73,639.09                     |  | 2003                                 

The Company claimed the deduction for reinvestment on extraordinary profit for 2003. In accordance
with the article 36.8 ter. of the Corporate Tax Act (now article 42.8 of Royal Decree-Law 4/2004), the date and amount of the deduction for reinvestment are as shown below:



|                             |  |                               |  |                                      
|---------------------------- |  | ----------------------------- |  | -------------------------------------
|Year in which the gain arose |  | Income eligible for deduction |  | Date on which the gain was reinvested
|2003                         |  | 123,670.95                    |  | 2003                                 

In accordance with the ICAC Resolution of 9 October 1997 and based on the principle of
prudent valuation, the Company,

.. did not record any tax credit in previous years.

As of 31 December 2006 the Company had no deferred income tax assets due to the temporary difference between accounting and tax criteria for the
amortisation of goodwill. Deferred income tax assets have been treated as follows:

.. in previous years the Company did not recognise
deferred income tax assets arising in the years to 2000 in the cumulative amount of 1,854,107.36 (35% of 5,297,449.60) due to the temporary difference between accounting and tax criteria for the amortisation of goodwill.

.. in previous years the Company did not recognise the decrease in deferred income tax assets arising in the years to 2001, 2002, 2003, 2004 and 2005 in
the cumulative amount of 1,595,247.89 (35% of 4,557,851.05) due to the decrease of the temporary difference between accounting and tax criteria for the amortisation of goodwill.



18



---

LOGO

The Company has not recognised deferred income tax assets arising in 2006 in the amount of 258,859.47
(35% of 739,598.55) due to the decrease of the temporary difference between accounting and tax criteria for the amortisation of goodwill.

In 1996, aprovision was recorded for the depreciation of the goodwill in Desperdicios de Papel, S.L. in the amount of 3,818,252.53, which for corporate income tax purposes was considered a permanent gain, as did
not classify as a tax-deductible expense under article 12 of Royal Decree-Law 4/2004, of 5 March, enacting the Consolidated Text of the Corporate Tax Act. In 2006, 20,043.29 of said amount has been recorded as a permanent
loss, leaving 3,798,209.24 outstanding for future periods.

14. Guarantees issued on behalf of third parties and other contingent liabilities

At 31 December 2006, the Company has not issued any guarantees to official bodies or raw materials suppliers on behalf of
third parties.

15. Income and expenses

Breakdown

Item 2.b on the debit side of the income statement, Consumption of raw materials and other
consumables, breaks down as follows:



|                                                           |  |               |  
|---------------------------------------------------------- |  | ------------- | -
|Item                                                       |  | Amount        |  
|Purchases of raw materials and other consumables           |  | 39,351,333.85 |  
|                                                           | 
|Returns of purchased goods and similar transactions        |  | (663,679.60   | )
|                                                           | 
|Change in inventory of raw materials and other consumables |  | (16,838.03    | )
|                                                           |  |               |  
|                                                           | 
|Total                                                      |  | 38,670,816.17 |  

Item 3.b on the debit side of the income statement, Employee welfare expenses,
breaks down as follows:



|                                               |  |             
|---------------------------------------------- |  | ------------
|Item                                           |  | Amount      
|Social security paid by the Company            |  | 1,659,474.66
|                                               | 
|Contributions to complementary pension systems |  | 5,895.07    
|                                               | 
|Other employee welfare expenses                |  | 312,877.60  
|                                               |  |             
|                                               | 
|Total                                          |  | 1,978,247.33



19



---

LOGO

Item 5.b on the debit side of the income statement, Change in allowance for and losses on
uncollectible receivables, breaks down as follows:



|                                                        |  |            |  
|------------------------------------------------------- |  | ---------- | -
|Item                                                    |  | Amount     |  
|Losses on uncollectible trade receivables               |  | 2,050.04   |  
|                                                        | 
|Addition to the allowance for uncollectible receivables |  | 145,579.18 |  
|                                                        | 
|Allowance to collectible receivables used               |  | (30,066.59 | )
|                                                        |  |            |  
|Total                                                   |  | 117,562.63 |  

Other information

Details of transactions with Group companies and associates during 2006 are given below:



|                                                   |  |                 |  |             
|-------------------------------------------------- |  | --------------- |  | ------------
|Item                                               |  | Group companies |  | Associates  
|Purchases, returns of purchased goods, and rebates |  | 1,874,572.80    |  | 2,561,288.46
|                                                   |  |                
|Sales, returns of goods sold, and rebates          |  | 18,344,019.74   |  | 207,022.61  
|                                                   |  |                
|Services provided                                  |  | 87,382.41       |  | 475.64      
|                                                   |  |                
|Services received                                  |  | 936,730.52      |  | 8,270.21    
|                                                   |  |                
|Dividends distributed                              |  | 5,088,000.00    |  | 0.00        

The Company has made foreign currency purchases in the amount of 1,092,951.53, received
services in the amount of 6,741.02 and made foreign currency sales in the amount of 1,034,365.45.

Details of the distribution
of the Companys net sales by business line and geographical market are omitted in these notes to the financial statements as disclosure would be commercially and competitively damaging to the Company.

The average number of employees during 2006, by job category, was as follows:



|                     |  |       
|-------------------- |  | ------
|Job category         |  | Number
|Senior managers      |  | 10.49 
|                     | 
|Middle managers      |  | 15.96 
|                     | 
|Technical staff      |  | 25.97 
|                     | 
|Administrative staff |  | 20.28 
|                     | 
|Labourers            |  | 130.83
|                     |  |       
|Total                |  | 203.53
|                     |  |       

The fees invoiced to Papeles Allende, S.L. during 2006 for the auditing of the financial
statements amounted to 18,972.00.

Extraordinary expenses in the amount of 27,291.78 relate mainly to accidents during the year.

Extraordinary income in the amount of 49,633.32 relates to rectifications of balances with third parties.



20



---

LOGO

Expenses and losses from previous years in the amount of 75,095.12 and income and profit from previous
years totaling 113,947.96 relate mainly to rectifications and adjustments for differences in forecasts.

16. Environmental information

Environmental assets and associated accumulated depreciation at 31 December 2006 are as follows:



|                    |  |                        |  |                                    
|------------------- |  | ---------------------- |  | -----------------------------------
|Item                |  | Investment at 31.12.06 |  | Accumulated depreciationat 31.12.06
|Transport equipment |  | 1,105,128.76           |  | 885,534.76                         

Expenses incurred in the year for the purpose of protecting and improving the environment are
detailed below:



|          |  |       
|--------- |  | ------
|Item      |  | Amount
|ISO 14001 |  | 735.00

The Company has no revenues or liabilities deriving from environmental activities.

17. Other information

The Company is exempt
from the requirement to prepare consolidated financial statements, as it satisfies the conditions established in article 9 of Royal Decree 1815/91, of 20 December. The Company belongs to the ARAGOCIAS, S.A. group, whose registered address is in
Zaragoza.

The Company has not paid any amounts to directors in the form of salaries, fees or other remuneration.

It has not granted any advances or loans to directors

The Company has no pension or life insurance obligations towards its directors.

The present value of the Companys
obligations to its employees is covered by an insurance policy.

18. Post-balance sheet events

There have been no post-balance sheet events important enough to alter the information provided in the financial statements and management report for
2006.



21



---

LOGO

19. Cash Flows statements for the years ended 31 december 2006 and 2005 and 2004



|                                             |  |              |  |              |  |              |  |                                                                           |      |              |      |              |      |             
|-------------------------------------------- |  | ------------ |  | ------------ |  | ------------ |  | ------------------------------------------------------------------------- | ---- | ------------ | ---- | ------------ | ---- | ------------
|                                             |  | Euros        |  | SOURCES      |  | Euros       
|APPLICATION                                  |  | 2006         |  | 2005         |  | 2004         |  |                                                                           | 2006 |              | 2005 |              | 2004
|Start-up and debt arrangement expenses       |  | 32,224.76    |  | 11,546.93    |  | 4,327.18     |  | Cash generated from operations                                            |      | 4,397,209.91 |      | 4,166,647.95 |      | 4,181,279.71
|Fixed asset acquisitions:                    |  |              |  |              |  |              |  | Capital grants                                                            |      | 10,810.00    |      |             |      |             
|-Intangible assets                           |  | 468,073.26   |  | 147,493.12   |  | 11,729.74    |  | Fixed asset disposals                                                     |      | 107,467.12   |      | 321,169.32   |      | 73,224.13   
|-Property, plant and equipment               |  | 2,992,398.95 |  | 1,826,625.31 |  | 1,530,187.77 |  |                                                                           |      |              |      |              |      |             
|- Long-term investments                      |  | 93,448.41    |  | 609,910.83   |  | 9,793.95     |  | Prepayment or reclassification of investmentsfrom long-term to short-term |      | 16,951.56    |      | 48,148.00    |      | 40,480.56   
|Dividends                                    |  | 5,985,882.35 |  |             |  | 1,000,000.00 |  |                                                                           |      |              |      |              |      |             
|                                             |  |              |  |              |  |              |  | Change in short-term deferred income                                      |      |             |      | 856.21       |      | 415.85      
|Change in short-term deferred income         |  | 3,015.12     |  |             |  | 187,859.23   |  |                                                                           |      |              |      |              |      |             
|TOTAL APPLICATIONS                           |  | 9,676,042.85 |  | 2,595,676.19 |  | 2,743,897.87 |  | TOTAL SOURCES                                                             |      | 4,632,438.69 |      | 4,536,819.48 |      | 4,295,400.25
|                                             |  |              |  |              |  |              |  |                                                                           |      |              |      |              |      |             
|EXCESS OF SOURCES OVERAPPLICATIONS (INCREASE |  |              |  |              |  |              |  | EXCESS OF APPLICATIONS OVERSOURCES (DECREASE                              |      |              |      |              |      |             
|IN WORKING CAPITAL)                          |  |             |  | 1,941,243.29 |  | 1,561,602.38 |  | IN WORKING CAPITAL)                                                       |      | 6,042,604.26 |      |             |      |            
|                                             |  |              |  |              |  |              |  |                                                                           |      |              |      |              |      |             
|TOTAL                                        |  | 9,576,042.95 |  | 4,536,819.48 |  | 4,296,400.26 |  | TOTAL                                                                     |      | 9,676,042.86 |      | 4,536,819.48 |      | 4,296,400.25
|                                             |  |              |  |              |  |              |  |                                                                           |      |              |      |              |      |             



22



---

LOGO

The changes in working capital are summarized below:

The reconciliation of profit to cash generated from operations is as follows:



|                                                                                   |  |             
|---------------------------------------------------------------------------------- |  | ------------
|                                                                                   |  | Amount      
|Accounting profit for 2006                                                         |  | 2,194,391.97
|Start-up and debt arrangement expenses                                             |  | 32,224.76   
|Provision for amortisation of intangible assets                                    |  | 67,139.36   
|Provision for depreciation of property, plant and equipment                        |  | 2,017,214.06
|Correction of prior-period depreciation errors                                     |  | 5,280.79    
|Lose on disposal of tangible and intangible fixed assets and long-term investments |  | 113,121.92  
|Correction of long-term guarantees                                                 |  | 1,634.75    
|Gain on disposal of fixed assets                                                   |  | 28,054.99   
|Capital grants transferred to profit                                               |  | 5,742.71    
|                                                                                   |  |             
|Cash generated from operations                                                     |  | 4,397,209.91

19. Explanation added for translation to English

These financial statements are presented on the basis of accounting principles generally accepted in Spain. Certain accounting practices applied by the
Company that conform with generally accepted accounting principles in Spain may not conform with generally accepted accounting principles in other countries.



23



---

LOGO

20. Net income and Shareholders equity reconciliation to US GAAS and US cash flow statement



|        |  |                     
|------- |  | --------------------
|COMPANY |  | PAPELES ALLENDE S.L.



|                                                  |  |            |  |                     |  |            |  |            |  |            |  |           
|------------------------------------------------- |  | ---------- |  | ------------------- |  | ---------- |  | ---------- |  | ---------- |  | ----------
|                                                  |  | NET INCOME |  | SHAREHOLDERS EQUITY
|                                                  |  | YEAR ENDED |  | YEAR ENDED         
|INCOME STATEMENT                                  |  | 12/31/2006 |  | 12/31/2005          |  | 12/31/2004 |  | 12/31/2006 |  | 12/31/2005 |  | 12/31/2004
|NET INCOME SHOWN IN THE FINANCIAL STATEMENTS      |  | 2,194,392  |  | 2,042,778           |  | 2,016,802  |  | 18,405,484 |  | 22,196,975 |  | 20,154,197
|                                                  |  |            |  |                     |  |           
|ITEMS HAVING EFFECT OF INCREASING REPORTED INCOME |  |            |  |                     |  |            |  |            |  |            |  |           
|GOODWILL AMORTIZATION                             |  | 0          |  | 0                   |  | 0          |  | 0          |  | 0          |  | 0         
|POSITIVE EXCHANGE ADJUSTMENTS                     |  | 153        |  | 1,272               |  | 416        |  | 153        |  | 1,272      |  | 416       

ITEMS HAVING EFFECT OF DECREASING REPORTED INCOME



|                                |  |           |  |           |  |           |  |            |  |            |  |           
|------------------------------- |  | --------- |  | --------- |  | --------- |  | ---------- |  | ---------- |  | ----------
|TAX ADJUSTMENT OF ABOVE         |  | -54       |  | -445      |  | -146      |  | -54        |  | -445       |  | -146      
|                                |  |           |  |           |  |           |  |            |  |            |  |           
|NET INCOME ACCORDING TO US GAAP |  | 2,194,491 |  | 2,043,605 |  | 2,017,072 |  | 18,405,584 |  | 22,197,801 |  | 20,154,467
|                                |  |           |  |           |  |           |  |            |  |            |  |           

UNDER SPANISH GAAP POSITIVE EXCHANGE ADJUSTMENTS ARE REGISTED TO THE BALANCE SHEET



24



---

LOGO

PAPELES ALLENDE S.L.

CONSOLIDATED STATEMENTS OF CASH FLOWS

IN EUROS



|                                                                                   |  |                   |  |            |  |            
|---------------------------------------------------------------------------------- |  | ----------------- |  | ---------- |  | -----------
|                                                                                   |  | FOR THE 12 MONTHS
|                                                                                   |  | 12/31/2006        |  | 12/31/2005 |  | 12/31/2004 
|OPERATING ACTIVITIES:                                                              |  |                   |  |            |  |            
|Net earnings:                                                                      |  | 2,194,491         |  | 2,043,605  |  | 2,017,072  
|Adjustment to reconcile net earnings to net cash provided by operating activities: |  |                   |  |            |  |            
|Loss on sales of marketable securities                                             |  |                   |  |            |  |            
|Depreciation of property, plant and equipment                                      |  | 2,022,495         |  | 2,122,453  |  | 2,191,671  
|Amortization of other assets                                                       |  | 67,139            |  | 48164      |  | 15,063     
|(Gain) loss on sale of property, plant and equipment                               |  | 85,067            |  | -58294     |  | -46,511    
|Advances to & investments in subsidiaries                                          |  |                   |  |            |  |            
|Equity in net earnings                                                             |  |                   |  |            |  |            
|Deferred income taxes                                                              |  |                   |  |            |  |            
|Changes in assets and liabilities excluding the effects of acquisitions:           |  |                   |  |            |  |            
|Decrease/(increase) in marketable securities                                       |  |                   |  |            |  |            
|Decrease/(increase) in accounts receivable                                         |  | -531,759          |  | -873,557   |  | -136,628   
|Decrease/(increase) in inventories                                                 |  | -232,969          |  | -65,970    |  | -76,325    
|Decrease/(increase) in other current assets                                        |  | 3,702,078         |  | -2,589,905 |  | -1,572,296 
|Decrease/(increase) in intercompany activities-us                                  |  | 0                 |  | 0          |  |            
|Decrease/(increase) in other assets                                                |  | -20,416           |  | 8,648      |  | 5,611      
|Decrease/(increase) in Goodwill/Step Up for Additional purchase price              |  | 0                 |  | 0          |  |            
|lncrease/(decrease) in accounts payable and accrued expenses                       |  | 2,417,274         |  | 539,409    |  | -450,406   
|lncrease/(decrease) in other liabilities                                           |  | 0                 |  | 0          |  |            
|                                                                                   |  |                   |  |            |  |            
|Net cash provided by operating activities                                          |  | 9,703,400         |  | 1,174,554  |  | 1,947,252  
|                                                                                   |  |                   |  |            |  |            
|CASH FLOWS FROM INVESTING ACTIVITIES:                                              |  |                   |  |            |  |            
|Proceeds from sale of PPE                                                          |  | 99,381            |  | 321169     |  | 73,224     
|Proceeds from sale of marketable securities                                        |  | 25,038            |  | 48146      |  | 40,481     
|Business acquisitions net of cash acquired                                         |  |                   |  |            |  |            
|Capital expenditures                                                               |  | -3,455,404        |  | -2524218   |  | -1,541,918 
|FINANCIAL INVESTMENTS                                                              |  | -93,448           |  | -59811     |  | -9,794     
|Proceeds from sale of property, plant and equipment                                |  |                   |  |            |  |            
|DIVIDENDS                                                                          |  | -5,985,882        |  |            |  | -1 ,000,000
|Decrease/(increase) in restricted cash                                             |  |                   |  |            |  |            
|                                                                                   |  |                   |  |            |  |            
|Net cash used in investing activities                                              |  | -9,410,316        |  | -2,214,714 |  | -2,438,007 
|                                                                                   |  |                   |  |            |  |            
|CASH FLOWS FROM FINANCING ACTIVITIES:                                              |  |                   |  |            |  |            
|Repayment of long-term debt                                                        |  |                   |  |            |  |            
|Proceeds from long-term debt                                                       |  |                   |  |            |  |            
|Deferred Financing Fees                                                            |  |                   |  |            |  |            
|Purchase of treasury stock                                                         |  |                   |  |            |  |            
|                                                                                   |  |                   |  |            |  |            
|Net cash used in financing activities                                              |  | 0                 |  | 0          |  | 0          
|                                                                                   |  |                   |  |            |  |            
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                               |  | 293,084           |  | -1,040,160 |  | -490,755   
|CASH AND CASH EQUIVALENTS, beginning of period                                     |  | 788,257           |  | 1,828,417  |  | 2,319,172  
|                                                                                   |  |                   |  |            |  |            
|CASH AND CASH EQUIVALENTS, end of period                                           |  | 1,081,341         |  | 788,257    |  | 1,828,417  
|                                                                                   |  |                   |  |            |  |            



25



---

LOGO

Translation of a report originally issued in Spanish. In the event of a discrepancy, the Spanish-language version prevails.

Papeles Allende, S.L.

Management Report

3 December 2006

Dear Shareholders,

In compliance with legal requirements, we present the following information about the Companys progress.



|1. | BUSINESS REVIEW AND FINANCIAL POSITION OF THE COMPANY IN 2006
|-- | -------------------------------------------------------------

Net
turnover rose 17%, from 55,527,954.49 in 2005 to 64,985,782.96 in 2006.

Operating profit increased from 2,687,586.28 to
2,931,898.72.

The financial result went from a loss of 6,106.04 in 2005 to a profit of 63,046.52 in 2006.

Profit on ordinary activities increased from 2,681,480.24 to 2,994,945.24.

Extraordinary profit or loss went from a profit of 43,139.54 in 2005 to a loss of 39,042.44 in 2006.

Profit
before tax increased from 2,724,619.78 to 2,955,902.80.

Profit after tax increased from 2,042,777.78 to 2,194,391.97.

The Companys financial position at 31 December remains as stable as in previous years, further strengthened by recent years profits.



26



---

LOGO

The following environmental matters deserve mention:

At year-end, the Company has environmental assets in the amount of 1,105,128.76, with accumulated depreciation of 885,534.76.

The Companys expenses arising from environmental activities during the year amount to 735.00.

The Company has no revenues or liabilities deriving from environmental activities.

The average number of employees during 2006 was 203.35, of which 187.69 were permanent and 15.66 temporary.



|2. | MAIN RISKS AND UNCERTAINTIES FACING THE COMPANY
|-- | -----------------------------------------------

The Company faces
no specific risks or uncertainties, apart from those arising from industry competition.



|3. | OUTLOOK FOR 2007
|-- | ----------------

The Company expects to maintain a rate of growth
slightly above the industry average.



|4. | POST-BALANCE SHEET EVENTS
|-- | -------------------------

No event has occurred that might
significantly alter the information available at the balance sheet date.



|5. | OWN SHARES
|-- | ----------

The Company does not hold any own shares.

The Company has not traded in its own shares.



|6. | RESEARCH AND DEVELOPMENT
|-- | ------------------------

The Company did not engage in any
specific research and development activities during 2006.



27