Dividend Policy of Grupo Saeta Yield

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Dwayne Clark
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of Grupo Saeta Yield (English translation for information purposes only, in the event of any discrepancy between English and Spanish, Spanish version shall

1 of Grupo Saeta Yield (English translation for information purposes only, in the event of any discrepancy between English and Spanish, Spanish version shall prevail) Rev. Date Description Development Review Approval 0 30/1/2015 Initial document Board of Directors 1 9/5/2017 Update 1 APL JLMD Board of Directors 2 Page 1 of 5

2 INDEX 1. OBJETO ÁMBITO DE APLICACIÓN... Error! Marcador no definido. 3. POLÍTICA... Error! Marcador no definido. Page 2 of 5

3 1. OBJECT The Board of Directors of Saeta Yield S.A. has the responsibility to approve the dividend policy of the Company, which has to include the following concepts: The periodicity and the type of dividend payments The pay-out ratio The dividend calculation system The RECAFD definition The definition of other various considerations related to the policy 2. SCOPE OF APPLICATION This policy is of application to all the dividend payments of the Group. 3. POLICY Saeta Yield expects to pay a quarterly dividend, on or about the 60th day following the expiration of each fiscal quarter, to its shareholders of record on the date to be announced through a relevant fact disclosure (hecho relevante). Saeta Yield targets a payout ratio between 80% and 95% of the cash available for distribution that the Company expects its portfolio of projects will be able to generate on a recurrent basis (net of cash flows not related with the ordinary evolution of the business) identified as RECAFD or Recurrent CAFD. The RECAFD will be calculated, based on the Company s best understanding and forecast, as the average cash flow available for distribution (CAFD) for the following 5 years. The cash flow available for distribution (CAFD) refers to consolidated net cash provided by operating activities; minus (or plus) deposits (or withdrawals) into (from) debt service reserve accounts required by project financing arrangements; minus cash distributions paid to non-controlling interests in our Asset Companies, if any; plus cash dividends from unconsolidated affiliates, if any; minus scheduled project-level and other debt service payments in accordance with the related borrowing arrangements; minus nonexpansionary capital expenditures, if any; and minus expansionary OPEX, if any. CAFD is a non-gaap financial measure that is not required by, or presented in accordance Page 3 of 5

4 with, IFRS-EU. The Company believes that the RECAFD is useful to investors in evaluating its ability to pay dividends. In order to maximize cash extraction from plants and optimize the cash distribution to shareholders, Saeta Yield will use all available tools under the law to rise cash payments from the Asset Companies to Saeta Yield: a combination of (a) interest payments and principal repayments of the subordinated loans and participated loans; (b) the dividend payments from the Asset Companies; and/or (c) the creation of restricted loans between the Asset Companies and Saeta Yield. The Company s capacity to rise cash from the Asset Companies and to distribute dividends to its shareholders may be restricted under general Spanish corporate law rules. Saeta Yield targets to recurrently make distributions out of the existing share premium ( 637 million as of December 31, 2016). The share premium is a freely distributable reserve. It is the intention of the Company to make distributions to shareholders preferably out of share premium, if available, given that such distributions are, as of the publication of this policy, not subject to Spanish withholding tax. Saeta Yield intends to grow its business through the acquisition of operational projects, which should facilitate the growth of its profits and recurrent cash available for distribution, after financing expenses related to acquisitions, as applicable, and enable the Company to increase its dividend per share over time. The determination of the amount of cash dividends to be paid to holders of Saeta Yield s Shares will be made by the board of directors, and will depend upon the Company s financial condition, results of operations, cash flow, long-term prospects and any other matters that the Company deem relevant. The cash dividend policy of Saeta Yield reflects the belief of the board of directors that the shareholders will be better served by redistributing most of the cash that the Company expects to receive from its Asset Companies. In addition, by retaining an amount of its expected recurrent cash available for distribution, determined by the board of directors, the Company will be able to address volatility and seasonality of cash flows, and/or potential new acquisitions that will drive its future dividend paying capacity. Saeta Yield s board of directors may review and amend the cash dividend policy at any time. Page 4 of 5

5 Saeta Yield s cash available for distribution is likely to fluctuate from quarter to quarter, in some cases significantly, as a result of the seasonality of production of its assets, the volatility of the electricity market prices, the terms of its financing arrangements, the maintenance and outage schedules and the seasonality of the incentive payments received from the Spanish regulation, among other factors. Accordingly, during quarters in which Saeta Yield s portfolio generates cash available for distribution in excess of the amount necessary for the Company to pay its stated quarterly dividend, it may reserve a portion of the excess to fund cash distributions in future quarters. In quarters in which the Company does not generate sufficient cash available for distribution to fund its stated quarterly cash dividend, it may use retained cash flow from other quarters, as well as other sources of cash, such as net cash provided by financing activities, or, if applicable, borrowings under current or future credit facilities, to pay dividends to its shareholders. Page 5 of 5

English Version 6M17 INTERMEDIATE MANAGEMENT REPORT (JANUARY JUNE)

English Version 6M17 INTERMEDIATE MANAGEMENT REPORT (JANUARY JUNE) September 19 th, 2017 Table of Contents 1. Summary of the period...3 2. Significant events...4 3. Relevant events occurred after the period...5