Saeta Yield Winter 2017

Transcription

1 Saeta Yield Winter 2017

2 Saeta Yield is a total return investment opportunity Saeta Yield currently combines: Recurrent and stable cash flows based on resilient regulation and successful operations Attractive valuation based on untapped fundamental value Accretive growth potential based on demonstrated track record and existing liquidity Attractive Dividend Yield Share Price Upside Dividend Per Share Growth 2

3 A robust portfolio of renewable energy assets capable of generating stable cash flows and dividends Robust and diversified portfolio: 1,028 MW in Spain, Uruguay and Portugal Stable cash flows & dividend 539 MW 16 wind farms 250 MW 5 CSP plants 95 MW 2 wind farms Long-life assets: c.18 years of remaining life Fully operational with good performance 100% renewable electricity Diversified Portfolio Hard currency remuneration (Euro and US Dollar) Full service long-term O&M contracts in place (no CAPEX) No corporate tax in Spain until MW 9 wind farms 260m Recurrent EBITDA (1) Mainly Debt Service 75.5m Recurrent CAFD (1) Pay out 80-95% (currently 85%) 64.2m 0.787ps Current Dividend (2) Attractive dividend policy based on a high pay-out ratio of the Recurrent CAFD, quarterly payments and tax-effective distribution of the share premium (3) (1) The data included in these graphs do not constitute any kind of guidance or commitment from the Company. Main hypothesis employed: Reasonable return from the Spanish renewables regulation to 7.4%. Electricity prices as in the regulation, inflation applied afterwards. Reuters Euribor curve, inflation 1.5%, tax rate 25%, 25 years plant operations. RECAFD is calculated as the average of the CAFD in the coming 5 years; Lestenergia net investment of c. 54m ( 104 m of initial equity investment - 50m of recapitalization after refinancing). Cash cost of financing Lestenergia calculated applying a 6.5% avg. cash cost to the net invested figure, coming from a blend of the opportunity cost of the Holdco and the debt service (9.5%) of the proportional funds not yet invested from Serrezuela. The consolidation in the future of new assets will alter significantly these figures. (2) The Board of Directors approves quarterly the shareholder s remuneration policy, the amounts to be distributed based on the remuneration policy, the RECAFD prospects and the pay out decided, and can change any or all of these parameters if needed, specially because of SAY strategical or structural reasons. Currently the implicit parameters are: euros per share, corresponding to a pay out of 85% over the current RECAFD expected by the Company, of 75.5 m and 81,576 million shares outstanding. All these implicit figures are the forecasts by the day of the publication of this document. Therefore, do not constitute a closed commitment from the Company. (3) Spanish tax authorities do not withhold taxes on share premium distributions. SAY currently has c. 600m of outstanding share premium in its equity. 3

4 Predictable and recurrent cash flows Predictable operating cash flows c. 260 RR Long term cash flow profile RR > 75 m Assets showing excellent operating performance Good regulatory scheme (Spain and Portugal) and outstanding PPA (Uruguay) O&M & main expenses under control Stable debt service (interests + principal) c. 180 m Debt service sculpted for slightly decreasing payments Period of stability Tax in Spain Project finance matures Assets end of life No corporate tax in Spain until 2024, c 5 m of tax payments in Portugal and Uruguay CAFD plateau at c. 120m p.a. once debt in the SPVs is fully repaid (1) The data included in these graphs do not constitute any kind of guidance or commitment from the Company. Main hypothesis employed: Reasonable return from the Spanish renewables regulation to 7.4%. Electricity prices as in the regulation, inflation applied afterwards. Reuters Euribor curve, inflation 1.5%, tax rate 25%, 25 years plant operations. RECAFD is calculated as the average of the CAFD in the coming 5 years; Lestenergia net investment of c. 54m ( 104 m of initial equity investment - 50m of recapitalization after refinancing). Cash cost of financing Lestenergia calculated applying a 6.5% avg. cash cost to the net invested figure, coming from a blend of the opportunity cost of the Holdco and the debt service (9.5%) of the proportional funds not yet invested from Serrezuela. The consolidation in the future of new assets will alter significantly these figures. 4

5 Regulatory scheme in Spain is designed to underpin cash flow visibility Market Component Regulated Component Electricity sale at market price Output sold in the wholesale market Price bands defined to limit market risk exposure Remuneration to Operation (1) Payment per MWh produced (up to a maximum hours per year) To recover those operating costs above expected market price Value determined based on standard expenses per technology Remuneration to Investment Capacity payment on top of other components to guarantee a 7.4% pretax return on initial investment CAPEX determined based on standard per technology and year of construction A minimum annual load factor must be meet Regulatory scheme with reduced exposure to market and volumetric risks (1) Remuneration to operation is not applicable to wind assets; (2) Revenues as calculated according to the Spanish regulation standards Spanish 2017 expected revenues (2) Price bands reduce market risk to c. ±3% of total revenues Capacity payment which does not have volumetric risk 55

6 There are solid reasons to maintain the Reasonable Return at 7.4% from 2019 onwards 7.4% Maintain Reasonable Return No deficit expected Update is not mandatory and spread has to be defined Spanish banking system cannot bear a RR reduction 2020 & 2030 renewable targets require proper regulatory signals Networks returns can only be reduced by 50 bps p.a. from 2020 Government will face new lawsuits Variable spread depending on industry conditions (1) 24 months average of the Spanish 10y Bond Reduce Reasonable Return Rates reduction Political pressure to maintain the Reasonable Return (1) The Law 24/2013 says: The remuneration parameters shall be determined taking into account the cyclical situation of the economy, the electricity demand and the adequate profitability for these activities for regulatory periods of six years. These remuneration parameters may be reviewed before the beginning of the regulatory period. In case of failure to carry out this review, it shall be understood as extended for the entire following regulatory period"; Article 14.6: "In order to allow adequate remuneration above a low risk activity, the return rate of the recognized net investment shall be referenced to the performance of the 10-year State Obligations on the secondary market, increased by one appropriate spread. Prior to the 1 st of January of the last year of the regulatory period (2019 in this case), the Energy Ministry will send to the Cabinet the Law Project including the proposed spread, to be approved by the Parliament. 66

7 International diversification in Saeta Yield Economic outlook Investment grade Ranked top 3 in Latam in terms of democracy index, press freedom, low corruption, prosperity, rule of law and economic freedom (1) Leading Latam country in terms of GDP per capita (2) Robust investment grade rating and no default history Regulation / Revenues scheme Inflation adjusted USD PPAs Average 20 remaining years, at USD 76 per MWh (or USD 86 per MWh inflated average) Counterparty: UTE, state owned utility, controls 44% of generation and 100% of transmission and distribution capacity Strategic Fit First step in Uruguay Two additional RoFO Assets: Kiyu (49MW) and Pastorale (49MW) After the RoFO acquisitions, SAY to become the leading private wind operator in Uruguay Recently upgraded to I.G. by S&P Member of the European Union. Economic outlook significantly improving (GDP % (2) ) Budget deficit and electrical market tariff deficit under control Highly ranked in terms of governance and political stability (1), similarly as other European advanced economies Public regulation scheme for the plants: 5 years remaining of feed-in-tariff for c. 106 /MWh + Additional 7 years under a capand-floor scheme between EUR 75 and 99 per MWh Prices are reviewed annually and indexed to CPI Operational and managerial synergies Sizeable portfolio to diversify (both geographically and technologically) Platform to continue consolidating assets in the country (1) Sources: Economist Intelligence Unit, 2015; Transparency International, 2015; Legatum Institute, 2015; World Justice Project, 2016; Reporters w/o Borders, 2016; Heritage Foundation, 2016 (2) Source: IMF 7

8 Leverage risk and regulatory risk are limited Accelerated deleverage profile Regulatory risk is limited Evolution of expected Cash Flows from assets x.x Net Debt-to-EBITDA in a no-growth scenario IPO 2015 Today Dec2019e (1) International 20% International 43% Spain 100% Spain 80% Spain 57% All current existing debt at project level: o c. 75% of debt hedged or fixed o Avge. cost of 4.0% o 14 yrs of average remaining debt life o c.4x EBITDA / Interest paid from year 1 In a no-growth scenario, the portfolio reduces its leverage steadily in a very healthy speed Uruguay & Portugal investments diversify CAFD generation, SAY dependence on Spanish Cash Flows will decrease as it grows For each 50 bp change in RR, net revenues will decrease c. 5m while RECAFD by c. 4m Regulatory review has a limited impact: a) 43% Intl. diversification by 2020 b) CAFD sensibility is lower than believed The data included in these graphs do not constitute any kind of guidance or commitment from the Company. The consolidation in the future of new assets will alter significantly these figures. (1) Data calculated considering an annual equity investment of 150 m per year in international assets, with an average 10% cash yield 8

9 New RECAFD including Lestenergia will stand at 75.5m +18.9% vs. IPO RECAFD of 63.5m 64.2 Recurrent CAFD (1) increase so far in 2017 ( m) (5.2) Net Lestenergia effect + 2.4m 75.5 DPS (2) Pay out 90% 85% % Initial RECAFD 2017 Operational savings Net RECAFD Carapé Extra CAFD due to Manchasol 2 refinancing Previous RECAFD Unlevered RECAFD Lestenergia Cash Cost of financing Lestenergia New RECAFD (1) The data included in these graphs do not constitute any kind of guidance or commitment from the Company. Main hypothesis employed: Reasonable return from the Spanish renewables regulation to 7.4%. Electricity prices as in the regulation, inflation applied afterwards. Reuters Euribor curve, inflation 1.5%, tax rate 25%, 25 years plant operations. RECAFD is calculated as the average of the CAFD in the coming 5 years; Lestenergia net investment of c. 54m ( 104 m of initial equity investment - 50m of recapitalization after refinancing). Cash cost of financing Lestenergia calculated applying a 6.5% avg. cash cost to the net invested figure, coming from a blend of the opportunity cost of the Holdco and the debt service (9.5%) of the proportional funds not yet invested from Serrezuela. The consolidation in the future of new assets will alter significantly these figures. (2) The Board of Directors approves quarterly the shareholder s remuneration policy, the amounts to be distributed based on the remuneration policy, the RECAFD prospects and the pay out decided, and can change any or all of these parameters if needed, specially because of SAY strategical or structural reasons. Currently the implicit parameters are: euros per share, corresponding to a pay out of 85% over the current RECAFD expected by the Company, of 75.5 m and 81,576 million shares outstanding. All these implicit figures are the forecasts by the day of the publication of this document. Therefore, do not constitute a closed commitment from the Company. 9

10 Saeta Yield is a total return investment opportunity Saeta Yield currently combines: Recurrent and stable cash flows based on resilient regulation and successful operations Attractive valuation based on untapped fundamental value Accretive growth potential based on demonstrated track record and existing liquidity Attractive Dividend Yield Share Price Upside Dividend Per Share Growth 10 1

11 We believe the value of SAY to be higher than the current market capitalization, based on future cash flows and analyst s cost of equity (1) Total Portfolio CAFD RR + Cash as of Sep 17 minus Lestenergia investment (net 4Q commitments (2) ): 100m SAY Valuation per share: No Growth Scenario 11.0 / ke=9% / ke=7.5% Spain CSP Spain Wind Uruguay Portugal The equity IRRs (Ke) used have been 7.5% (the average of the consensus) and 9% (highest discount rate found) Valuation Date: December 2018 Current market c ps Cash yield (3) 9.5% Dividend yield (3) 8.1% Double digit equity IRR (4) Implicit Reasonable Return (5) 4.5% - 5% 1. The consolidation in the future of new assets will alter significantly these figures. The data included in these graphs do not constitute any kind of guidance or commitment from the company. 2. Cash as of Sept17 minus dividend & debt service commitments, minus the drawn amount o the RCF plus the lestenergia Recap. 3. With a RECAFD of 75.5m and an annualized dividend of p/s. 4. Implicit IRR of investing at current prices and discounting all future equity cash-flows considering a reasonable return of 7.4% (also including the cash in the balance sheet). This do not constitute any kind of guidance or commitment from the company. 5. Using 7.5% cost of equity (average of the consensus) 11

12 Some considerations on Reasonable Return and cost of equity There is a valuation incongruence when assessing regulatory risk Two possible approaches to valuing regulatory risk: High RR Low RR or High Ke Low Ke Wrong approach as regulatory risk is double counted: Low RR High Ke If the regulatory risk is properly addressed, a hypothetical Reasonable Return reduction in should be partially compensated by a lower discount rate The market is currently double counting the regulatory risk: if we consider the current share price and a 7.5% Ke, the implicit reasonable return is already c. 4.5%-5% 12

13 Even in a no-growth scenario, SAY share price should increase in the following years as tail equity cash flows get closer Illustrative of share price Illustrative of the equity value of SAY based on the valuation date at a No-Growth Scenario Total Portfolio CAFD 7.4% RR Spain CSP Spain Wind Uruguay Portugal In terms of value, the annual dividend payments means less than the positive effect of getting closer to the large tail equity cash flows once project debt is fully paid The consolidation in the future of new assets will alter significantly these figures. The data included in these graphs do not constitute any kind of guidance or commitment from the Company. 13

14 Saeta Yield is a total return investment opportunity Saeta Yield currently combines: Recurrent and stable cash flows based on resilient regulation and successful operations Attractive valuation based on untapped fundamental value Accretive growth potential based on demonstrated track record and existing liquidity Attractive Dividend Yield Share Price Upside Dividend Per Share Growth 14 1

15 Saeta growth will combine RoFO and 3 rd party acquisitions RoFO Agreement Attractive pipeline 3 rd Party Acquisitions Demonstrated capabilities Clear Investment Criteria Energy infrastructure assets in operation Value accretive and cash enhancing: targeting double digit equity IRR and cash yield Long term revenue schemes Safe regulations or investment grade PPA offtakers Hard Currencies Europe and certain countries in America: US, Canada, México, Colombia, Peru, Uruguay, Chile Investment in 2017 expected to exceed 2016 figures 15 1

16 Saeta Yield is delivering solid and accretive growth in a challenging environment. Discipline and shareholder value are our priorities RoFO Third Party RoFO Extresol 2 & 3 Carapé I & II Lestenergia E1 E2 E3 >10% Cash Yield Double digit Equity IRR 53m EBITDA (+33%) (1) + 4.7m RECAFD (+7.6%) (1) >10% Cash Yield Double digit Equity IRR c. 22m EBITDA (+14%) (1) + 3.0m RECAFD (+4.8%) (1) >10% Cash Yield Double digit Equity IRR c. 30m EBITDA (+19%) (1) + 2.4m RECAFD (+3.8%) (1) m RECAFD from acquisitions Excellent assets, accretive acquisitions delivering RECAFD growth Double digit equity returns and cash yield achieved in all cases in a yield compression environment Diversified growth: RoFO vs. 3 rd parties, CSP vs. wind, Spain vs. overseas Growth is strengthening the overall portfolio (1) Percentage of increase vs. the IPO EBITDA and RECAFD. The data included in these graphs do not constitute any kind of guidance or commitment from the company

17 Committed to carry on with RoFO dropdowns Current RoFO pipeline MEX Oaxaca 102 MW In Operation URU Kiyu 49 MW COD achieved URU Pastorale (1) 49 MW COD achieved PERU Cajamarca 400 KM COD in 2H17 PERU Marcona (2) 32 MW In Operation PERU Tres Hermanas (2) 97 MW In Operation SPA Manchasol 1 50 MW In Operation PERU HydroManta (1) 20 MW Under Construction Grupo ACS is being successful on its greenfield activity: PV auction in Spain and gas compression project in Mexico (3) (1) Not part of the Initial RoFO Assets. (2) In Marcona and Tres Hermanas, co-shareholders have a right of first refusal, a tag along, a drag along and a call option. ACS SI currently owns a 51% stake in the two wind farms in Peru totaling 129MW (3) ACS S.I. has been recently awarded with 1.5 GW of photovoltaic capacity in the July auction in Spain and has been awarded with a gas compression project in Mexico with a significant expected investment. Saeta Yield has a right of first offer over the equity stake that ACS S.I. will hold over these assets once they start operations. 171

18 Significant liquidity to fund shareholders distributions and additional accretive RoFO and/or third party acquisitions Potential available liquidity of the Company ( m) 136 Plants 114m Cash in the plants will be distributed to the Holdco in the coming months. Most of those funds will be dedicated to pay shareholders distributions in the next 12 months Expected during 1H18 Holdco 22m 14 Pre-agreed (2) Available and undrawn Cash as of Sep-17 (1) Proceeds from leverage in the Valcaire Wind Farm Revolving Credit Facility and bilateral credit lines (3) Proceeds from refinancing Lestenergia Total Holdco potential liquidity to perform acquisitions (4) (1) Not considering the Cash in the DSRA: 79m. (2) According to a terms and conditions pre-agreed with a financial entity (3) The RCF has a maximum available amount of 120 m. Out of those, 70 m were withdrawn last September. Additionally there are 3m of bilateral credit lines. (4) Does not deduct the future payment of distributions. Implicitly, future distributions are to be paid with cash at the plants and future CAFD 18

19 Saeta Yield will continue increasing its DPS through accretive growth 1 2 Multiple funding sources Liquidity & Nondistributed CAFD Valcaire financing DPS 0.43 per share (1) per share (1) per share (1) At least 0.78 per share (1) 3 4 Revolving Credit Facility Debt capacity at HoldCo RECAFD e 2019e 63.5m 64.2m 75.5m (2) At least 75.7m (2) 5 Capital Increase e 2019e Strong and flexible financial position to make accretive acquisitions of additional operating assets, that will crystalize in an attractive DPS growth (1) Actual paid dividend. The Board of Directors approves quarterly the shareholder s remuneration policy, the amounts to be distributed based on the remuneration policy, the RECAFD prospects and the pay out decided, and can change any or all of these parameters if needed, specially because of SAY strategical or structural reasons. Currently the implicit parameters are: euros per share, corresponding to a pay out of 85% over the current RECAFD expected by the Company, of 75.5 m and 81,576 million shares outstanding. All these implicit figures are the forecasts by the day of the publication of this document. Therefore, do not constitute a closed commitment from the Company. (2) The data included in these graphs do not constitute any kind of guidance or commitment from the Company. Main hypothesis employed: Reasonable return from the Spanish renewables regulation to 7.4%. Electricity prices as in the regulation, inflation applied afterwards. Reuters Euribor curve, inflation 1.5%, tax rate 25%, 25 years plant operations. RECAFD is calculated as the average of the CAFD in the coming 5 years; Lestenergia net investment of c. 54m ( 104 m of initial equity investment - 50m of recapitalization after refinancing). Cash cost of financing Lestenergia calculated applying a 6.5% avg. cash cost to the net invested figure, coming from a blend of the opportunity cost of the Holdco and the debt service (9.5%) of the proportional funds not yet invested from Serrezuela. The consolidation in the future of new assets will alter significantly these figures. 19

20 Closing remarks SAY robust business model Quality portfolio of operating assets generating stable and recurrent cash flows Operational excellence, cost control and value hedged by regulation Attractive dividend policy High dividend yield and DPS growth Liquidity to pursue accretive RoFO or third parties growth Achieving double digit equity IRR and cash yields in all acquisitions SAY stock price is trading at attractive levels Implicit cash yield and returns not factoring properly SAY lower risk Sustainable value creation for shareholders >19% YTD stock price increase 1 (1) Considering current share price of 9.70 ps c. 8.1% Dividend Yield 1 c. 12.6% DPS growth since IPO 20 20

21 Recent Performance

22 Summary Good results thanks to growth & high market prices On track to deliver double digit RECAFD growth in 2017 after achieving significant strategic milestones Carapé I & II acquisition: + 3.0m RECAFD Lestenergia acquisition: + 2.4m RECAFD Manchasol 2 refinancing: + 4.6m RECAFD RCF extended, enlarged and improved Annualized DPS 1 increased to euros per share (+3.3%) Available liquidity for additional growth in the coming months (1) The Board of Directors approves quarterly the shareholder s remuneration policy, the amounts distributed, the RECAFD prospects and the pay out definition, and can change any or all of these parameters if needed, specially because of SAY strategical or structural reasons. Currently the implicit parameters are: euros per share, corresponding to a pay out of 85% over the current RECAFD expected by the Company, of 75.5 m and 81,576 million shares outstanding. All these implicit figures are the forecasts by the day of the publication of the document. Therefore, do not constitute a closed commitment from the Company. The last approved distribution by the Board of Directors, the 7 th of November, 2017, supposes a payment of 0.19 euros per share the 29 th of November, 2017 (these are based on a former RECAFD & pay out level). 222

23 9M17: Good results despite one-off events affecting productions 9M17 vs. 9M16 Electricity Output 1,413 GWh -0.8% Spain s average market price 50.3 /MWh +48% Total Revenues 247 m +16% EBITDA 178 m +17% Attributable Net Results 30 m +43% Cash flow operating assets 91 m +47% Dividends Paid 46 m +5% Note: Extresol 2 and 3 were consolidated since March 22 nd, Carapé I and II were consolidated since May 25 th Lestenergia has been consolidated since Sept 29 th This comment applies for the whole presentation. 232

24 Production impacted by the blizzard, lower wind resource and maintenance in CSP. However, fully compensated by acquisitions 9M17 vs. 9M16 electricity production bridge analysis (GWh) 1, % 1,413 (72) Blizzard production reduction (107) Lower wind resource in Spain & CSP maintenance +18 Extresol 2 & Extresol 3 (Production between the 1 st of January and the 22 nd of March, 2016) Carapé I & II (Production since May 26 th, 2017) + Lestenergia (since September 29 th, 2017) 9M16 9M17 SAY insurance procedures have properly mitigated the blizzard event 2016 Feb and Aug were extremely windy months, explaining the wind drop CSP plants have gone through a maintenance program in

25 Revenues grew by 16% backed by the high market prices, increased regulated revenues and the consolidation of new assets ( /MWh) Electricity avg. mkt. price (Spain) ( m) M % M Increased market revenues (higher prices in Spain more than compensate lower production) 9M17 vs. 9M16 revenue bridge analysis ( m) Achieved. mkt. price (14) 48.8 /MWh 47.9 /MWh Price bands mechanism (Market prices above the regulatory bands) (1) +34% vs. 9M16 +64% vs. 9M16 +8 Increased regulated revenues (after the regulatory change for years ) +4 Other revenues (Mostly the insurance compensation from the blizzard) Extresol 2 & Extresol 3 (Production between the 1st of January and the 22nd of Carapé I&II March, 2017) (Contribution since the 26 th of May 2017) + Lestenergia (Contribution since the 29 th of September 2017) +16% 247 9M16 9M17 Forward prices in Spain stand close to 60 per MWh for the rest of 2017 (1) 9M17 includes a 5 m regulatory obligation from price bands mechanism. In 2016 the revenues included an 9 m regulatory right. 252

26 Costs remain under control 9M17 Revenue to EBITDA bridge analysis ( m) (28) (16) (25) (1) 9M16: 152m As % of revenue 59 Revenue Operation & Maintenance Electricity Production Tax Other Plant Expenses HoldCo Net Expenses (1) EBITDA 11% 7% 10% 0% 72% Saeta Yield cost structure promotes long term visibility, supporting the cash flow recurrence of the Company (1) HoldCo expenses net of the revenues received due to management fees charged to Saeta Yield s plants. 262

27 Saeta Yield cash flow from operating assets grew by 47% Change in WK 9M17 EBITDA to Cash Flows bridge analysis ( m) 9M16: EBITDA (92) Debt Service ( 36m interests, 56m principal repayment) +4 Taxes, CAPEX & DSRA (DSRA withdrawal in Uruguay net of blizzard repairs accounted as CAPEX) 62m 91 Cash flow from the operating assets +5% vs. 9M16 (46) Shareholder distributions (4) Serrezuela Debt Service (portion of the debt service not yet diluted in an acquisition) +69 RCF drawn (net of 1m structuring fee) Cash flow from the operating assets is performing well to achieve 2017 targets (1) 73 m in Carapé + 95 m in Lestenergia (168) Carapé & Lestenergia acquisitions (1) (net of the cash consolidated from the plant & subordinated debt cancellation) (59) Change in Cash 272

28 Debt has increased in the period mainly due to the Carapé and Lestenergia acquisitions All debt is non recourse at the plant level except the 70m drawn from the holding s RCF 1,439 (69) +19 Gross and Net Debt ( m) , Net Debt to Annualized EBITDA (1) : 5.6x , Gross Debt 31 Dec 2016 Debt Repayment Interests accrued Carapé debt Manchasol 2 refinancing debt issuance RCF Lestenergia debt Gross Debt 30 Sep 2017 Cash & Cash Equiv (including (2) DSRA) Net Debt 30 Sep 2017 c. 75% of the current debt hedged or fixed; average cost of 4.0% (1) Proforma calculated with the annualized Recurrent EBITDA of Saeta Yield, including the full year contribution of Carapé & Lestenergia. (2) Cash in DSRA: 79m 28

29 Excellent prospects for 2017 cash flow generation (m ) Recurrent figures: Expected EBITDA 2017 (1) Expected CF from Operating Assets 2017 (1) Wholesale market prices c. 6-8 per MWh above the regulated prices (49-51 /MWh vs /MWh) Price bands mechanism generates a regulatory obligation, reducing EBITDA and increasing working capital cash generation CNMC receivables recovery to impact positively on working capital cash flow generation Non-full-year contribution from Carapé assets and Manchasol 2 refinancing (1) This guidance is based current expectations and projections about future events and are inherently uncertain and are subject to risks and assumptions. Both figures include the contribution of the Carape acquisition and the Manchasol 2 refinancing from May 25, These figures also take into consideration a market price forecast (OMIP) for 2017 in between 49 and 51 /MWh. Given the regulatory price bands that work as a hedge to power prices, a future obligation will be recognized by the end of 2017 if prices remain at the expected levels. The Cash Flow from Operating Assets do not include the interest expenses and the debt repayment of the non-invested amount of the Serrezuela Solar financing. 29

30 Appendix 9M17 Financial Results

31 9M17 Consolidated Income Statement Income statement ( m) 9M16 9M17 Var.% 3Q16 3Q17 Var.% Total revenues % % Staff costs % % Other operating expenses % % EBITDA % % Depreciation and amortization % % Provisions & impairments n.a n.a. EBIT % % Financial income % n.a. Financial expense % % Fair value variation of financial instruments n.a n.a. Foreign exchange results n.a n.a. Equity method resuts n.a n.a. Profit before tax % % Income tax % % Profit attributable to the parent % % 31 31

32 Consolidated Balance Sheet: Assets Consolidated balance sheet ( m) 31/12/ /09/2017 Var.% Non-current assets 1, , % Intangible assets n.a. Tangible assets 1, , % NC fin. assets with Group companies & rel. parties % Equity method investments n.a. Non-current financial assets % Deferred tax assets % Current assets % Inventories % Trade and other receivables % C fin. assets with Group companies & rel. parties % Short term prepaid accruals n.a. Other current financial assets (incl. DSRA) % Cash and cash equivalents % TOTAL ASSETS 2, , % 32

33 Consolidated Balance Sheet: Equity and Liabilities Consolidated balance sheet ( m) 31/12/ /09/2017 Var.% Equity % Share capital % Share premium % Reserves % Own Shares Profit for the period of the Parent % Adjustments for changes in value Hedging % Non-current liabilities 1, , % Non-current Project finance 1, , % Non-current bank liabilities n.a. Other financial liabilities in Group companies n.a. Non-current derivative financial instruments % Non-current Provisions & Other financial liabilities n.a. Deferred tax liabilities % Current liabilities % Current Project finance % Current derivative financial instruments % Other financial liabilities with Group companies % Trade and other payables % TOTAL EQUITY AND LIABILITIES 2, , % 33

34 9M17 Consolidated Cash Flow Statement Consolidated cash flow statement ( m) 9M17 9M17 Extraord. (1) 9M17 Operating Assets 9M16 9M16 Extraord. (2) 9M16 Operating Assets A) CASH FLOW FROM OPERATING ACTIVITIES EBITDA Changes in operating working capital a) Inventories b) Trade and other receivables c) Trade and other payables d) Other current & non current assets and liabilities Other cash flows from operating activities a) Net Interest collected / (paid) b) Income tax collected / (paid) B) CASH FLOW FROM INVESTING ACTIVITIES Acquisitions Disposals C) CASH FLOW FROM FINANCING ACTIVITIES Equity instruments proceeds Financial liabilities issuance proceeds Financial liabilities amortization payments Distributions to shareholders D) CASH INCREASE / (DECREASE) Cash flow from the operating assets (1) Includes the acquisition of Extresol 2 & 3 and the Serrezuela financing funds disposed (2) Refers to the transactions concurrent with the IPO 34

35 Appendix Other back-up slides

36 Dec 2016 semi period regulation promotes sustainability of the system while guarantees the value of our investment Two main updates (1) (all figures are net of the 7% generation tax): Price Bands Regulatory Right to increase the VNA (2) Higher regulated parameters (Ri and Ro) to partially compensate the lower market price 12m of additional VNA c. +1m p.a. of cash; not revenue (3) To be recovered through the rest of the regulatory life through the Retribution on Investment (Ri) Regulated Revenues increased by c. +10m p.a. to compensate the lower wholesale mkt. prices expected for the following years Regulatory expected price and price bands adjusted for the next 3 yrs according to the forward price: ( /MWh) onwards Prev. regulation price Updated regulation price First Price Band: ±3.43 & Second Price Bands: ±6.86 Retribution on operations (Ro) has been increased in 5m in the CSP portfolio while the Retribution on Investment (Ri) has been increased in 5m in the wind portfolio (1) VNA is the net present value of the pending regulated standard investment to be collected in the remaining regulatory life. (2) All these figures and comments are based on the Ministerial Order published by the Ministry of Energy (ETU/130/2017). Additionally to the main updates described above the steepness coefficient has been adjusted to 85.21% for wind (vs % in the previous semi-period) and for % in CSP (vs % in the previous semi-period) with a close to neutral impact. (3) Revenues have already been accrued but collections are to be collected through out the remaining regulatory life. 36

37 Carapé I & II acquisition successfully closed 95MW (1) wind park acquired in Uruguay to a third party seller Attractive price and returns: USD 85m (2) for 100% equity stake. Double digit project equity IRR and cash yield from year one Funded with company resources: Cash at HoldCo (coming from Serrezuela financing). Optimal use of the current liquidity Production 16 Avg. Revenues (4) Avg. EBITDA (4) Unlevered CAFD (5) RECAFD contribution (5) 335 GWh 26 m 22 m 8.2 m 3.0 m Reliable cash-flows: Inflation adjusted USD PPAs with UTE (3) : avge. 21 years starting at USD 76 per MWh (or USD 86 per MWh inflated average) Excellent assets: Recently commissioned, good performance, tier I turbine supplier (Vestas) and attractive wind resource (c. 44% load factor (4) ) First third party & international transaction: demonstrated capability to diversify growth from RoFOs (1) The overall installed capacity is 95 MW to maximize the out for a contracted PPAs for 90MW (2) Equity value of USD 65 m, which has been increased in July up to USD 85 m after the prepayment of the subordinated debt of the company (3) UTE is the state-owned vertically integrated utility company in Uruguay (4) Average of the years 2017, 2018 and 2019 (5) Based on a 5 yrs average using the business plan defined to acquire the Carapé assets (6) All future pay-out ratio and dividend figures included in this document are the forecasts of the management team by the day of the publication of the document. Therefore, do not constitute a closed commitment of payment from the Company and are subject to the final quarterly approvals of the Board of Directors. The Board of Directors will reevaluate quarterly the dividend amount to be paid based on the expected Recurrent CAFD prospects of the company and specific events that might take place in the Company 373

38 Lestenergia contributes to SAY international diversification (1) Attractive price and returns: 104 m for 100% equity stake (equivalent to a 186 m enterprise value). Double digit project equity IRR and cash yield from year one Underleveraged assets with room for refinancing (2) expected by mid 2018 Excellent assets under operation: 144 MW of well maintained WTG and c. 27% average load factor Capacity Production (3) Avg. Revenues (3) Avg. EBITDA (3) Unlevered CAFD (4) 144 MW 330 GWh c. 35 m c. 30 m c. 5.4 m Attractive and safe regulation: feed-in tariff for /MWh + 7 additional years cap & floor scheme between 75 and 99 /MWh. (All prices CPI indexed) Synergies with our Spanish operations First international RoFO transaction To be funded with company resources: Cash at HoldCo and funds from the recently optimized RCF (1) All expected figures are the forecasts of the management team by the day of the publication of the document. Therefore, do not constitute a closed commitment from the Company and are subject to changes once the transaction is closed. (2) SAY is considering a recapitalization/refinancing scenario to raise between 50m and 60m of additional debt in the plants (3) Production, P50 forecast for the coming 10 years, in average. Revenues and EBITDA, expected average of the years 2018, 2019 and 2020 (4) All future RECAFD or dividend figures included in this document are the forecasts of the management team by the day of the publication of the document. Therefore, do not constitute a closed commitment of payment from the Company and are subject to the final quarterly approvals of the Board of Directors. RECAFD post Lestenergia is calculated considering an initial investment of 104 m (as announced) and a recapitalization of 50m - 60m. 383

39 Manchasol 2 has been refinanced Previous Financing Debt remaining amount: 190m Tenor: 11.8 yrs. (Mar 2029) Avg. debt rate 6.3% Distributions: annually IRS: hedged 75% of the debt New financing New amount: 199m (TrancheA 159m + TrancheB 40m) Tenor: T.A.: 15.6 yrs. (Dec 2032) & T.B.: 17.1 yrs (Jun 2034) Avg. debt rate 4.7% Distributions: semi-annually IRS: reshaped to hedge 75% of T.A. Debt Service Calendar Former financing New financing Increased annual RECAFD (+ 4.6m): longer tenor & lower margin Value accretive transaction with no cash equity injection needed 39

40 Saeta Yield Board of Directors approved a new dividend policy, incl. a pay out ratio range between 80-95% of RECAFD YieldCos (1) pay-out ratio targets 80-95% 85% New pay-out 85% c.80% 60% Board of Directors has set the current reference of the pay-out 85% (2) Saeta Yield remains with the largest payout ratio among YieldCo peers More robust dividend policy: After capital increases, SAY can increase the pay out to maintain DPS Use pay-out to proactively confront RECAFD volatility to anchor DPS Saeta Yield is fully aligned with a sustainable and growing DPS Highest Average Lowest YieldCo Peers SAY will retain c. 10 m p.a. to promote further growth or face RECAFD volatility (1) Refers to the 7 main North American comparable YieldCos (2) All future pay-out ratio and dividend figures included in this document are the forecasts of the management team by the day of the publication of the document. Therefore, do not constitute a closed commitment of payment from the Company and are subject to the final quarterly approvals of the Board of Directors. The Board of Directors will reevaluate quarterly the dividend amount to be paid based on the expected Recurrent CAFD prospects of the company and specific events that might take place in the Company. The dividend increase described will be prorated since May 25,

41 The tariff economic balance (the so-called tariff deficit) is the main driver of the electricity regulatory policy Spanish Regulatory Outlook Evolution of the tariff deficit ( m) Real and expected future evolution ( m) Anual surplus Accumulated Anual deficit Net Accum. : c. 30Bn All the regulation in the last decade had one objective: try to control the galloping increase of the tariff deficit. Years 2014 and 2015 where the first years with surplus is also expected to reach a surplus* The government estimates to maintain a surplus until 2022** As long as there is no tariff deficit in the system, there wont be any reason to reduce the costs of the system (i.e. reduce renewables retribution) * The estimation for 2016 is base on the Ministerial order of tariffs for 2017 ** The surpluses for the period are based on a draft Ministerial Order 41

42 Regulation update calendar Spanish Regulatory Outlook Can be updated? Period Semi-Period Periodicity Every 6 years (current 14-19) Every 3 years (current 17-19) Ri & Ro Load Factor Future market prices Price bands Standard operating expenses (and only if inflation is significantly different to 1%) Reasonable Return CAPEX Regulatory life 42

43 The YieldCo paradox: Low Risk Cash Flows plus Growth Excellent Assets Stable Cash Flows High Dividend Strong Sponsor (or outsanding M&A Team) Sustained Accretive Growth CAFD Growth DPS Growth Capital Increases Share Price Premium Intended delivery: Attractive riskadjusted total return 43

44 O&M Saeta, ACS & GIP will form a value generating partnership Virtuous circle with benefits for all parties Accretive growth visibility for Saeta Yield ACS reinforces its strategy on the concessional business while focusing on its traditional EPC business Global agreement: Bow Power to develop new projects Quicker rotation of new Bow Power assets EPC and ample room for value creation EXPLOITATION DEVELOPMENT Development Cost of capital Asset transactions Sponsor Value Creation Yieldco Cost of capital Saeta Yield Value Creation Long Term Win-Win Relationship Strong corporate governance Value creation thanks to proper risk allocation 444

45 Shareholding structure ~24.6% 24.4% ~51.0% Free Float ACS SI 100% ~51% ~49% ROFO Agreement ROFO & Call Option Agreement Bow Power (including Initial ROFO assets) Exclusivity to develop future renewable assets worldwide 45

46 Independent: 4 Independent management team combined with a strong corporate governance Independent and experienced management team Directly employed management team Full incentive based on Saeta Yield performance Extensive industry experience Majority of independent Board members For related-parties decisions, ACS and GIP directors will abstain from voting RoFO acquisition O&M contract GIP: 2 Experienced and International Independent Board Members Jose Barreiro Hernandez (former Managing Director at BBVA) Daniel B. More (former Managing Director at Morgan Stanley) Paul Jeffery (former Head of European Power, Utilities and Infrastructure at Barclays Capital) 4 th director to be appointed shortly Transitional Services Agreement Any other future related party decision Proper balance between an independent Saeta Yield and the sponsors maintaining a significant shareholding 46

47 Disclaimer This presentation has been prepared by Saeta Yield, S.A. (the Company ) and comprises the slides for a presentation concerning equity story of the Company, which have not been audited and, consequently, the financials figures are subject to change. This document does not constitute or form part of, and should not be construed as, an offer or invitation to acquire or subscribe, or a recommendation regarding, any securities of the Company nor should it or any part of it form the basis of or be relied on in connection with any purchase of securities of the Company according to the Spanish Securities Market Act ( Ley 24/1988, de 28 de julio, del Mercado de Valores ), the Royal Decree 5/2005 ( Real Decreto-Ley 5/2005, de 11 de marzo ) and/or the Royal Decree 1310/2005 ( Real Decreto 1310/2005, de 4 de noviembre ) and its implementing regulations. In addition, this document does not constitute or form part of, and should not be construed as, an offer or invitation to acquire or subscribe, or a recommendation regarding, any securities of the Company nor should it or any part of it form the basis of or be relied on in connection with any purchase of securities of the Company in any other jurisdiction. Nothing in this document shall be deemed to be binding against, or to create any obligations or commitment on the Company. The information contained in this presentation does not purport to be comprehensive. None the Company, or their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to the truth, fullness, accuracy or completeness of the information in this presentation (or whether any information has been omitted from the presentation) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation includes forward-looking statements, which are based on current expectations and projections about future events. These forward-looking statements, as well as those included in any other information discussed at the presentation to which this document relates, are inherently uncertain and are subject to risks and assumptions about the Company and its subsidiaries and investments, including, among other things, the development of its business, trends in its operating industry, and future capital expenditures and acquisitions, that could cause actual results to differ materially from forecasted financial information. In light of these risks, uncertainties and assumptions, the events in the forward-looking statements may not occur. No representation or warranty is made that any forward-looking statement will come to pass. No one undertakes to publicly update or revise any such forwardlooking statement. Accordingly, there can be no assurance that the forecasted financial information is indicative of the future performance or that actual results will not differ materially from those presented in the forecasted financial information. Certain financial and statistical information contained in this document is subject to rounding adjustments. Accordingly, any discrepancies between the totals and the sums of the amounts listed are due to rounding. All dividend related matters are dependent on the dividend policy of the Company. All annualized dividend figures included in this presentation do not constitute a commitment of payment from the company, and are calculated as an implicit annual dividend, using the most recent quarterly dividend approved & announced by the Board of Directors, non prorated, multiplied by four. The information and opinions contained in this presentation are provided as at the date of the presentation and are subject to change. In giving this presentation none the Company or any of its respective directors, officers, employees, agents, affiliates or advisers, undertakes any obligation to amend, correct or update this presentation or to provide the recipient with access to any additional information that may arise in connection with it. By attending the presentation to which the information contained herein relates and/or by accepting this presentation you will be taken to have represented, warranted and undertaken that you are you have read and agree to comply with the contents of this disclaimer. 47