Fiscal Year 2015 Financial Statements and Management s Report together with Independent Auditor s Report.

Transcription

1 Saeta Yield, S.A. Fiscal Year 2015 Financial Statements and Management s Report together with Independent Auditor s Report. Translation of a report and of financial statements originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain. In the event of a discrepancy, the Spanishlanguage version prevails.

2 SAETA YIELD, S.A. BALANCE SHEET AS OF DECEMBER 31 st, 2015 EUROS ASSETS NON CURRENT ASSETS 651,288, ,834,235 Intangible assets (Note 5) 37,199 - Patents, licenses, trademarks and similar rights 4,841 - Computer Software 32,358 - Property, plant and equipment (Note 6) 155,744 - Technical installations and other items 155,744 - Non-current investments in Group companies and Associates (Note 7) 650,878, ,834,235 Equity Instruments 272,551, ,485,904 Non-current loans to group companies (Note 16.2) 378,327, ,348,331 Non-current investments 9,855 - Other Financial assets 9,855 - Deferred Tax Assets (Note 14) 208,055 - CURRENT ASSETS 144,799,357 80,590,802 Trade and other receivables 1,845, ,901 Trade Receivables from related parties (Note 16.2) 601,111 - Trade Receivables from Group companies and Associates (Note 16.2) 791, ,411 Public entities, other (Note 14) 452, ,490 Current investments in Group companies and Associates (Note 7 and 16.2) 105,866,655 79,843,502 Loans to companies 105,866,655 79,843,502 Current Investments (Note 8) 1,034,235 - Debt securities 34,235 - Other financial assets 1,000,000 - Cash and cash equivalents (Note 10) 36,053,047 27,399 TOTAL ASSETS 796,088, ,425,037 Notes 1 to 19 described in the appended Report are a part of the balance statement as of December 31 st,

3 SAETA YIELD, S.A. BALANCE SHEET AS OF DECEMBER 31 st, 2015 EUROS EQUITY AND LIABILITIES EQUITY 787,629, ,113,064 Capital and reserves (Note 11) 787,629, ,113,064 Registered Capital 81,576,928 61,563,010 Share Premium 696,388, ,455,200 Reserves 2,076,632 (95,309) Prior period s profit and loss - (1,091) Profit for the period 7,587,578 2,191,254 CURRENT LIABILITIES 8,459,034 1,311,973 Group companies and Associates, current (Note 12) 2,458, ,144 Group and Associated companies, current (Note 16.2) 2,458, ,144 Trade and other payables (Note 13) 6,000, ,829 Suppliers 494, ,006 Personnel (salaries payable) 522,686 1,762 Public entities, other (Note 14) 4,982,675 23,061 TOTAL EQUITY AND LIABILITIES 796,088, ,425,037 Notes 1 to 19 described in the appended Report are a part of the balance statement on December 31 st,

4 SAETA YIELD, S.A. INCOME STATEMENT FOR THE PERIOD ENDED AS OF DECEMBER 31 st, 2015 CONTINUING OPERATIONS EUROS Revenue (Note 17.1) 12,100,076 2,832,955 Services rendered for Group companies 12,100,076 2,832,955 Other operating income (Note 17.1) 3,886, ,411 Non-trading and other operating income 3,886, ,411 Personnel expenses (Note 17.3) (2,350,983) (20,817) Salaries and wages (1,897,814) (19,262) Social encumbrances (453,169) (1,555) Other operating expenses (Note 17.2) (1,950,808) (347,124) External Services (1,950,808) (347,124) Amortization and depreciation (Notes 5 and 6) (22,017) RESULTS FROM OPERATING ACTIVITIES 11,662,269 2,715,425 Finance income 193, ,938 Other marketable securities and financial instruments 132,284 - Marketable securities and financial instruments from related parties (Note 16.1) 61, ,938 Finance expenses (1,281,178) - Other (Note 10) (1,281,178) - NET FINANCE EXPENSE (1,087,567) 414,938 PROFIT BEFORE INCOME TAX 10,574,702 3,130,363 Income Tax expense (Note 14.3) (2,987,124) (939,109) PROFIT FROM CONTINUING OPERATIONS 7,587,578 2,191,254 PROFIT FOR THE PERIOD 7,587,578 2,191,254 Notes 1 to 19 described in the appended Report are a part of the profit and loss account corresponding to the fiscal year

5 SAETA YIELD, S.A. STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED ON DECEMBER 31 st, 2015 A) STATEMENT OF RECOGNIZED INCOME AND EXPENSE EUROS A) PROFIT FOR THE PERIOD 7,587,578 2,191,254 TOTAL RECOGNIZED INCOME AND EXPENSE 7,587,578 2,191,254 Notes 1 to 19 described in the appended Report are a part of the profit and loss account corresponding to the 2015 fiscal year B) STATEMENT OF TOTAL CHANGES IN EQUITY BALANCE AS OF DECEMBER 31 st, 2013 (*) I. Total recognized income and expenses II. Transactions with equity holders or owners 1. Capital increases (Note 11) Capital Share premium Reserves EUROS Prior periods profit and loss Other equity holder provisions Profit/(loss) for the period TOTAL 3, (1,034) - (57) 1, ,191,254 2,191,254 61,560, ,455, , ,016,344 61,560, ,455, , ,016,344 III. Other changes in equity - - (96,453) (57) 57 (96,453) BALANCE AS OF DECEMBER 31 st 61,563, ,455,200 (96,453) (1,091) 1,144 2,191, ,113,064, 2014 I. Total recognized income and ,587,578 7,587,578 expenses II. Transactions with equity 20,013, ,125,262 (18,222) ,120,958 holders or owners (Note 11) 1. Capital increases 20,013, ,125,262 (18,222) ,120, Distribution of dividends - (35,192,287) (35,192,287) III. Other changes in equity - - 2,190,163 1,091 - (2,191,254) - 81,576, ,388,175 2,075,488-1,144 7,587, ,629,313 (*) Non audited Notes 1 to 19 described in the appended Report are a part of the profit and loss account corresponding to the fiscal year

6 SAETA YIELD, S.A. STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED AS OF DECEMBER 31 st, 2015 EUROS A) CASH FLOWS FROM OPERATING ACTIVITIES 7,424,945 1,843, Profit/(loss) for the period before tax 10,574,702 3,130, Adjustments for: 1,109,584 (2) a) Amortization and depreciation (+) (Notes 5 and 6) 22,017 - b) Proceeds from disposals of Financial instruments - (2) c) Finance income (193,611) - d) Finance expenses 1,281, Changes in operating assets and liabilities (473,488) (348,024) a) Trade and other payables (Note 16.2) (1,142,163) (719,853) b) Trade and other receivables 668, , Other cash flows from operating activities (3,785,853) (939,104) a) Interest paid (Note 10) (1,281,178) - b) Interest received 129,224 - c) Income tax received (paid) (Notes 14.2 and 16.2) (2,557,918) (939,104) d) Other amounts paid (received) (75,982) - B) CASH FLOWS FROM INVESTING ACTIVITIES (166,032,629) (615,677,291) 6. Payments for investments (+) (166,032,629) (615,677,291) a) Group companies and associates (164,817,669) (615,677,291) b) Intangible assets (Note 5) (41,685) - c) Property, plant and equipment (Note 6) (173,275) - d) Other financial assets (Note 8) (1,000,000) - C) CASH FLOWS FROM FINANCING ACTIVITIES 194,633, ,860, Proceeds from and payments for equity instruments 200,120, ,919,890 a) Issue (+): 200,120, ,919,890 - Issue of Equity instruments (Note 11.1) 200,120, ,919, Proceed from and payments for financial liability instruments 29,705, ,145 a) Receivables (+): 30,107, ,145 - Group companies and associates (Note 7.1) 30,107, ,145 b) Redemption and repayment of (-): (402,418) 940,145 - Group companies and associates (Nota 16.2) (402,418) 940, Dividends and interest on other equity instruments paid (35,192,287) - a) Dividends (Note 11.3) (35,192,287) - E) NET INCREASE/DECREASE IN CASH AND CASH EQUIVALENTS 36,025,648 25,977 Cash and cash equivalents at beginning of period 27,399 1,422 Cash and cash equivalents at end of period 36,053,047 27,399 Notes 1 to 19 described in the appended Report are a part of the profit and loss account corresponding to the fiscal year

7 SAETA YIELD, S.A. Report corresponding to the period ended on December 31 st, Activity of the Company Saeta Yield, S.A. (hereinafter, the Company), was incorporated as El Recuenco Eólica, Sociedad Limitada on May 19th, 2009, registered in Madrid s Commercial Registry on volume 26,842, folio 14, page M-483,710, becoming a Corporation (Sociedad Anónima) on October 28th, 2014 and having adopted its current name by agreement of Shareholders General Meeting on November 28th, 2014, having been formalized in public deed dated December 2nd, 2014 and registered in the Commercial Registry on December 24th, 2014 in its 13th recording. The Company headquarters are located in Avenida de Burgos, num. 16D 3 left, Madrid. The corporate purpose developed by the Company according to its articles of association is basically composed by the following tasks: a) Promotion, management, design, construction, operation and maintenance of installations devoted to alternative and renewable energies production. b) Production, sale and/or operation of energy generated by the installations listed on section a) above and, as the case may be, accept legal existing and/or future provisions for alternative and renewable energies production. c) Performance of surveys, consulting, projects, research, management and development services related with the abovementioned activities. d) Management and control of its subsidiaries. The corporate purpose can be fully or partially developed by the Company, directly or indirectly by bearing shares or participations in other companies with identical or similar corporate purpose. Listing specific activities does not assume nor imply, necessarily, the simultaneous exercise of all of them. The Company acts as holding Company, being able for this purpose to constitute or participate, as partner or shareholder, in other companies, regardless of their nature or purpose, even associations and civil companies, by means of subscribing or acquiring and bearing shares or participations, without invading the activities of the Collective Investment Institutions, Companies or Stockbrokers or those other Entities ruled by special laws, as well as establishing its objectives, strategies, priorities, coordinate subsidiaries activities, define financial objectives, control behaviors and financial efficiency and, in general, perform their control and management. The Company operational currency is Euro. Figures on these annual accounts are provided in Euros, unless otherwise specified. At the end of period 2014 the Company belonged to a superior Fiscal Group, subject to the Spanish Tax law in force, whose Core Company was ACS Actividades de Construcción y Servicios, S.A. 6

8 On January 20th, 2015, the General Shareholders Meeting of Saeta Yield SA agreed: (i) the offering of shares equivalent to 51% of the equity of the Company (extendable by a further 5.1% in the course of the exercise of the Greenshoe (over-allotment option) on behalf of the underwriters; (ii) to apply for admission and exchange trading of the shares of the Company on the Stock Exchanges of Madrid, Barcelona, Bilbao and Valencia, and their inclusion in the Exchange Integration System (Sistema de Integración Bursátil or Mercado Continuo) and (iii) to split the shares of the Company in a ratio of ten to one, without altering the amount of share capital. This way, the nominal value of the shares changed from EUR 10 per share to EUR 1 per share. On January 27th, 2015, the General Shareholders Meeting of Saeta Yield SA approved to increase the capital of the Company by EUR 20,014 thousands the issuance of 20,013,918 new shares with EUR 1 par value to be subscribed and paid for Energía y Recursos Ambientales, S.A., subsidiary of the ACS Group. These new shares are to be issued with a premium of 9 per share, equivalent to EUR 180,125 thousands, which was paid on February 12th, This capital stock increase was registered in the Commercial Registry on February 13th, On January 30th, 2015, the CNMV approved the prospectus document for the sale and listing of the shares of the Company. On February 16th, 2015, Saeta Yield S.A. shares were started trading on the Spanish Stock Exchanges from Madrid, Barcelona, Bilbao and Valcencia (the Spanish Stock Exchange Markets ) at a starting price of EUR per share. The initial placement plus the Greenshoe placement offer represented a final placement of 51.78% of the Company shares. On January 21st, 2015, the ACS Group and Global Infrastructure Partners (GIP) reached two agreements under which: (1) GIP will acquire 24% stake in Saeta Yield (once the Greenshoe option s result has been reported); and (2) the ACS Group will sell GIP 49% of a new asset development Company (called Bow Power, S.L.), where certain renewable energy assets are integrated on which Saeta Yield SA holds a right of first offer. These operations were approved by the competent antitrust regulators on April Additionally, on J January 29th, 2015, Saeta Yield and ACS Servicios Comunicaciones y Energía, S.L. (ACS SI) signed an Agreement on Right of First Offer and Call Option under which ACS SI has granted Saeta Yield: (a) a right of first offer on ACS SI and its subsidiaries stakes in energy assets in commercial operation which ACS SI intends to sale in the future; and (b) a call option to purchase three solar thermal generation assets in commercial operation also agreed to become jointly controlled by ACS SI and Yield Saeta from This agreement will be in effect on the date all the established conditions are complied with, and subrogated by Bow Power, S.L. since April 21 st The right of first offer assumes that Saeta Yield receives the right to make a first offer for, if successful, acquiring certain specific assets before December 31 st, 2017 as well as new assets that meet certain characteristics for an initial term of five years extendable if certain milestones are met. This right is not a firm commitment to purchase but only to bid as in case there is no agreement ACS is free to sell to third parties at a higher price offered to Saeta Yield. Regarding the financial information Saeta Yield, as the agreement is a mere right of first offer and involves no firm commitments, it will have no effect until the effective transfer of the assets. As to the option granted by ACS SI to Saeta Yield on their equity and subordinated debt share of three CSP assets should be noted that to the extent that the exercise price of the option is a fixed price, once the agreement enters into force (which is when it will be booked the financial statements), the option will be considered as a derivative. It is registered at fair value. The parties have agreed that the purchase option exercise right is established, based on the fixed enterprise value and not subject to any type of adjustment, in addition to those required to get to the equity value. The option evaluation at each time during its life is made at the fair value, as a difference between the asset value and the option fiscal year price as long as the value is positive. If it was to be negative the option value is null. 7

9 On December 31 st, 2015 the fair value estimation for the above mentioned purchase option has no significant values as a result. According to the above mentioned and once the necessary conditions were met (change of control authorizations and operations authorizations by the competent entity, as well as the success of Saeta going public), on April 23rd, 2015 GIP acquired from Grupo ACS shares representing 24.01% of Saeta Yield, S.A. capital stock and with it the application of the above mentioned agreements. As a result of all of the above, Grupo Saeta Yield no longer belongs to a superior Group since there is not a single shareholder which controls it, becoming the head of a subsidiary companies group, (Note 7), which independently prepares consolidated financial statements. The Board of Directors have prepared the consolidated annual accounts of Saeta Yield, S.A. and subsidiary companies, prepared according to International Financing Reporting Standards adopted by the European Union, which present the following consolidated magnitudes: Thousands of Euros Total Assets 1,651,751 Net Equity: Of the Parent Company 570,506 Of the minority - Turnover Net Amount 218,693 Parent Company fiscal year results 16, Basis of presentation of the annual accounts 2.1) Financial information regulation frame applicable to the Company These annual accounts have been formulated by the Directors of the Company according to financial information regulation frame applicable to the Company, which is established in: a) Trade Code and remaining commercial law. b) General Accounting Ledger approved by Royal Decree 1514/2007 and its Sector Adaptations. c) Mandatory fulfillment laws approved by the Accounting and Account Audit Institute under development of the General Accounting Ledger and complementary regulations. d) Remaining applicable Spanish accounting regulation 2.2) Fair presentation Appended annual accounts have been prepared from the Company s accounting records and are presented according to applicable financial information regulation frame and, specifically, accounting criteria and principles therein in order to provide a truthful image of equity with regard to the Company s results and financial situation in fiscal year Annual accounts on December 31 st, 2015 have been formulated by the Company s Board of Directors and will be presented to the General Shareholders Meeting for its approval considering they will be approved without any modifications. On the other hand, the annual accounts for the year 2014 were formulated by the Board of Directors of the Company on March 26th, 2015, approved by the General Shareholders Meeting as of June, 25th 2015, and submitted to the the Spanish Mercantile Registry. 8

10 2.3) Non-mandatory accounting principles applied Accounting principles and criteria applied on preparation of these annual accounts are those summarized in Note 4 herein. All mandatory accounting principles that have a significant impact on the annual accounts have been applied. 2.4) Critical issues regarding the measurement and estimation of uncertainties During preparation of appended annual accounts, estimates performed by the Company Administrators have been used for quantification of some assets, liabilities, income, expenses and commitments that are registered therein. Basically, these estimates refer to: - The intangible assets and property, plant and equipment assets useful life (Note 4.1 and 4.2). - The fair value of certain financial instruments (Note 4.4). - Evaluation to determine the existence of any deterioration for certain assets (Note 4.7) - Assets return by deferred taxes (Note 4.5). Even though estimates have been performed in relation to the best information available on preparation date of those annual accounts over analyzed facts, it is possible that future events might take place that force to modify them in future fiscal years, which would be made prospectively, recognizing the effects of annual accounts estimate changes. 2.5) Comparative Information The information herein in relation to fiscal year 2014 is presented, for comparison purposes, along with the information of the fiscal year ) Aggregation of items Certain items of balance sheet, profit and loss account, and statement of changes in net equity are presented in groups in order to be more easily understood, although, when significant, disaggregated information has been included on corresponding report notes. 2.7) Items included in several entries During the fiscal year 2015 no items have been registered in twice or more entries of balance sheet. 2.8) Changes in accounting policies During the fiscal year 2015 no significant accounting criteria changes have taken place in relation to criteria applied during the fiscal year ) Correction of errors During appended annual accounts preparation no significant error has been detected which represented the recounted of the amounts in the fiscal year 2014 summarized annual accounts. 9

11 3. Distribution of profit/application of losses The proposal of profit application for fiscal year 2015, formulated by the Company s Board of Directors, is the following: Euros Fiscal year 2015 result 7,587,578 Result application: Legal Reserve 758,758 Voluntary Reserves 6,828, Recognition and measurement standards The main evaluation regulations used by the Company in the formulation of its annual accounts for the fiscal year 2015, according with those established by the regulatory framework for financial reporting in effect, have been the following: 4.1) Intangible assets Industrial property includes the registration of the logo and the brand Saeta Yield. Furthermore, Computer software includes the software tools used for Management. Those facilities will be amortised on a straight-line basis over their estimated useful life, whose investment will provide future profits for the Group, rates based on the following years of estimated useful life: Estimated useful life Industrial Property Computer Software ) Property, plant and equipment Items of property, plant and equipment are carried at cost revalued, less any related accumulated depreciation and impairment losses. Upkeep and maintenance expenses during the period are charged to the Income statement. On the contrary, the costs of expansion, modernization or improvements leading to increased productivity, capacity or efficiency or to a lengthening of the useful life of the assets are capitalized. Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Work performed by the Group on its own property, plant and equipment is recognized at accumulated cost (external costs plus in-house costs, determined on the basis of in-house materials consumption, and the transformation costs allocated using hourly absorption rates similar to those used for the valuation of work performed for third parties). 10

12 The companies depreciate their property, plant and equipment by the straight-line method at annual rates based on the following years of estimated useful life: Estimated useful life Leasehold reforms Furniture Information technology equipment Valuation of depreciation and impairment for property, plant and equipment At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment, non-current assets in projects and intangible assets to determine whether there is any indication that those assets might have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). In the case where the asset itself does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized as income immediately. 4.3) Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the lessee. All other leases are classified as operating leases. Operating leases: Company as a lessor All operating lease costs are recognized in profit or loss in the year in which they are incurred. Any collection or payment which can be made when contracting an operating leasing will be treated as a collection or advanced payment and will be charged to results during the lease period, as the leased asset profits are received or assigned. The minimun rents in terms of operating leases of the Company (office lease, IT equipment, etc ) amount to EUR 72 thousand per year, not existing contingent rents. 11

13 4.4) Financial instruments 4.4.1) Financial assets Financial assets owned by the Company are classified in the following categories: a) Receivable loans and accounts: financial assets originated in the sale of goods or the rendering of services by Company traffic operations, or those that not having a commercial origin are not equity instruments nor derivations and which collections are over a fixed or established amount and are not negotiated in an active market. b) Investments in the net equity of group, associated and multigroup companies: those linked to the Company by a relation of control are considered group companies and associated ones those over which the Company has a significant influence. Additionally, within the multigroup category are those over which, by agreement, a joint control with one or more associates is exerted. c) Held-to-maturity investments: these are non-derivative assets with fixed or determinable payments and fixed maturities, negotiated on an active market, which the Company intends to hold to maturity. Initial value The financial assets are initially registered at the reasonable value of the rendered counter guarantee plus the transactions costs that are directly chargeable. Since January 1st, 2010, in the case of equity investments of group companies which grant control over the subsidiary Company, the paid fees to legal counsel and other professionals related to the acquisition of investments are directly charged to the profit and loss account. Updated value The loans and accounts receivable will be evaluated at their amortized cost. Investments in-group, associated and multigroup companies are evaluated at their cost, reducing, as the case may be, the amount accumulated from the deterioration evaluation corrections. Said corrections are calculated as the difference between their value on the books and the recoverable amount, understanding such as the greater amount between its reasonable value less the sale costs and the current value of future cash flows derived from the investment. Except for better proof of the recoverable amount, it is taken into consideration that the net equity of the participated Company, corrected by the existing surpluses on the evaluation (including the trade fund, if any). At least at the closing of the fiscal year the Company performs a depreciation test for assets that are not registered at their fair value. It is considered there is depreciation objective evidence if the recoverable value of the financial asset is inferior to its value in the books. The recording of this depreciation is charged directly to the profit and loss account when it takes place. Particularly, in relation to corrections of trade receivables provisions, the criteria used by the Company to calculate the corresponding corrections appraisal, if any, takes into account said debts maturity and the debtor solvency. The Group derecognizes a financial asset when it expires or when the rights to the cash flows from the financial asset have been transferred and substantially all the risks and rewards of ownership of the financial asset have been transferred. 12

14 4.4.2) Financial Liabilities Financial liabilities are those debits and accounts receivable that the Company has and that have originated in the purchase of goods and services for traffic operations of the Company, or those that without having a commercial origin, cannot be considered as derived financial instruments. The debits and items to be paid are initially evaluated at the reasonable value of the received counter guaranteed, adjusted by the directly attributable transaction costs. Subsequently, said liabilities are evaluated according to their amortized cost. The Company cancels the financial liabilities when the obligations that generated them cease 4.5) Income Tax Coming into effect on January 1st, 2015, the Company, that until December 31 st, 2014 was a part of the tax consolidation group which header was ACS Actividades de Construcción y Servicios, S.A, pays taxes under a tax consolidation system being the parent Company of the Tax Consolidation Group 485/15, regulated under Chapter VI, Title II of Corporate Income Tax Act. The subsidiaries companies as of December 31 st, 2015 are as follow: - Al - Andalus Wind Power, S.L.U. - La Caldera Energía Burgos, S.L.U. - Parque Eólico Santa Catalina, S.L. U. - Eólica del Guadiana, S.L.U. - Parque Eólico Valcaire, S.L.U. - Parque Eólico Sierra de las Carbas, S.L.U. - Parque Eólico Tesosanto, S.L.U. - Manchasol 2, Central Termosolar Dos, S.L.U. - Extresol 1, S.L.U. - Serrezuela Solar II, S.L.U. Expenses or income due to income tax includes the section related to the income or expenses of the current tax and the section corresponding to the expenses or income by deferred tax. The current tax is the amount that the Company satisfies as a consequence of income tax liquidations related to a fiscal year. Deductions and other tax advantages in the tax quota, excluded from retentions and payments, as well as tax losses compensated in different fiscal years and finally applied to this one, lead to a lower current tax amount. The expenses or the income due to deferred taxes corresponds to the recognition and cancellation of the assets and liabilities due to deferred taxes. These include temporal differences that are identified as those amounts that are considered payable or recoverable derived from the differences between the registered amounts of the assets and liabilities as well as their fiscal value, as well as the negative applicable bases pending compensation and the credits or tax deductions not applied fiscally. Said amounts are registered applying the temporary or loan difference that corresponds to the encumbrance type in which they are expected to be recovered or liquidated. Liabilities due to deferred taxes are recognized for all applicable temporary differences, except those derived from the initial recognition of the trade funds or other assets and liabilities in operation that do not affect the tax or accounting result and is not a combination of businesses. On the other hand, the assets by deferred taxes are only recognized if the Company foresees future positive results from which to benefit fiscally and against to which it can cash them. Assets and liabilities by deferred taxes, originated by operations with direct charges and payments in equity accounts, are also accounted as a counterpart in net equity. Assets are reconsidered at each accounting closing by registered deferred taxes, making the necessary corrections in the measure there are doubts about their future recovery. Likewise, at each closing the non-registered asset and 13

15 liability statements by deferred taxes are subject to recognition in the measure its recovery is likely with future fiscal profits. 4.6) Income and expenses Income and expenses are charged to the fiscal year results in accordance to the accrual criteria, this means, when the real goods and services current takes place, regardless of the moment in which the cash of financial current deriving from them takes place. This income is evaluated at the reasonable value of the received counter guarantee, having deducted discounts and taxes. Interests and dividends derived from holding financial instruments in subsidiary companies are registered within the Turnover Net Amount, since according to the Accounting and Account Auditors Institute gathered under query 2 of BOICAC nº 79 about accounting classification in holding Company's' income and expenses individual accounts which is applied by the GAP approved by RD 1514/2007 and about establishing said entity turnover net amount" it is considered as a shareholding Company. Interest income from financial assets is recognized using the effective interest method and dividend income is recognized when the shareholder's right to receive payment has been established. Interest and dividends from financial assets accrued after the date of acquisition are recognized as income. Interests received from financial assets are recognized using the cash interest type method and the dividends when declaring the right of any shareholder to receive them. In any case, interests and dividends of financial assets accrued after the acquisition time are recognized as income in the profit and loss account. In relation to income for management and administration services of subsidiary companies rendering, these are recognized considering the degree of execution of the rendering on the statement date, as long as said result can be calculated in a reliable manner. The Company accounts its profits at the closing date of the fiscal year they take place. In relation to the foreseeable risks and losses, even possible ones are reordered as soon as they are known. 14

16 4.7) Provisions and contingencies The Board of Directors of the Company makes the following distinctions in the financial statements preparation: a) Allowances: creditor balances that cover current obligations derived from past events, which cancellation could possibly cause a loss of resources, but which are not determined in relation to their amount and/or cancellation time. b) Contingent Liabilities: possible obligations arising as a consequence of past events, which future result is conditioned by the occurrence or non-occurrence of one or more future independent events outside the Company's control. The financial statements gather all provisions pursuant to which the probability of having to attend a liability is greater than not. Contingent liabilities are not registered in the financial statements, but informed about in the report Notes, as long as they are not considered as unprobable. Provisions are assessed at the current value of the best possible assessments for the necessary amount to cancel or transfer the liability, taking into account the information available about its success and consequences and recording adjustments that arise due to the updating of the above mentioned provisions as a financial expenses as is accrued. 4.8) Assets or liabilities of an environmental nature Environmental nature equity elements are those goods used in a lasting manner for the Company activity, which its main purpose is to minimize the environmental impact and the protection or improvement of the environment, including the reduction or elimination of future pollution. The Company activity, due to its nature of holding Company does not have any significant environmental impact. 4.9) Termination benefits Under current labor legislation, the Company is required to pay termination benefits to employees terminated without a just cause. All termination benefit costs which are subject to a reasonable estimation, are recognized in profit or loss in the year in which they are incurred. The Board of Directors of the Company does not emise situations of this nature, therefore there was not any registered provision in the attached balance at the end of period ) Transactions among related parties The Company performs all its operations with related parties at market values. Additionally, the Board of Directors of the Company consider there are no significant risks that might derive in relevant liabilities in future considerations. All transactions have been performed during the ordinary execution of business and correspond to normal transactions of the group s companies. 4.11) Classification of assets and liabilities as current and non-current In the accompanying Financial Statements, assets and liabilities are classified on the basis of their maturity at yearend. Current debts are those due to be settled within twelve months and non-current debts are those due to be settled within more than twelve months. 15

17 4.12) Statement of cash flows The following terms are used in the statement of cash flows, which were prepared using the indirect method, with the meanings specified: Cash flows: inflows and outflows of cash and cash equivalents, which are short-term, highly liquid investments that are subject to an insignificant risk of changes in value. Operating activities: inflows and outflows of cash flows from the principal revenue-producing activities of the Group companies and other activities that are not investing or financing activities, whose amount is not significant. Investing activities: the acquisition and disposal of current assets and other investments not included in cash and cash equivalents (fixed assets acquisitions). As well as variations of investments in equity instruments and credits granted to group companies (Note 7). Financing activities: activities that result in changes in equity and borrowings. Mainly includes capital increases performed in 2014 and 2015 and dividend payments distributed in 2015 (see Note 11). 5. Intangible Assets The breakdown of this item of the Balance Sheet as of December 31 st, 2015, is as follows: Fiscal year 2015 Cost: Balance as of 31/Dec/2014 Euros Increases Balance as of 31/Dec/2015 Industrial property - 5,280 5,280 Computer Software - 36,405 36,405 Total Cost: - 41,685 41,685 Accumulated Amortization Industrial property - (439) (439) Computer Software - (4,047) (4,047) Total Accumulated Amortization - (4,486) (4,486) Total Net Intangible Assets - 37,199 37,199 The increases in the intangible assets include the registration of the logo and the brand Saeta Yield. As well, software licenses used for Management. 16

18 6. Property, plant and equipment The breakdown of this item of the Balance Sheet as of December 31 st, 2015, is as follows: Fiscal year 2015 Cost: Balance as of 31/Dec/2014 Euros Increases Balance as of 31/Dec/2015 Leasehold reforms - 16,654 16,654 Furniture - 57,192 57,192 Information Technology equipment - 99,429 99,429 Total cost: - 173, ,275 Accumulated Amortization: Leasehold reforms - (2,380) (2,380) Furniture - (4,495) (4,495) Information Technology equipment - (10,656) (10,656) Total Accumulated Amortization: - (17,531) (17,531) Total Net Property, plant and equipment assets: - 155, ,744 The increases of property, plant and equipment assets includes the reforms achieved at the headquarters of the Company, the furniture acquired for this offices and Information technology equipment for Management. There are not fully amortised Property, plant and equipment assets as of December 31 st, The Group has taken out insurance policies to cover the possible risks to which its property, plant and equipment are subject and the claims that might be filed against it for carrying on its business activities. These policies are considered to adequately cover the related risks as of the end of period Non-current investments in Group companies and associates The Non-current investments in Group companies and associates in 2015 and 2014 is as follow: Categories Classes Credits, derivatives and other Financial instruments TOTAL Equity instruments ,551, ,485, ,551, ,485,904 Loans and receivables 378,327, ,348, ,327, ,348,331 Total 378,327, ,348, ,551, ,485, ,878, ,834,235 17

19 The Non-current investments in Group companies and associates in 2015 and 2014 is as follow: Classes Credits, derivatives and other TOTAL Categories Loans and receivables 105,866,655 79,843, ,866,655 79,843,502 Total 105,866,655 79,843, ,866,655 79,843, ) Financial assets movements in group companies The movements registered in the financial year 2015 and 2014 were as follows: Year 2015 Balance as of 31/Dec/2014 Increases Decreases Balance as of 31/Dec/2015 Financial Instruments 108,485, ,065, ,551,059 Group companies non-current equity instruments 108,485, ,065, ,551,059 Group companies credits 507,191,833 12,361,403 (41,716,632) 477,836,604 Group companies credits: 469,163, ,000 (30,307,743) 439,055,393 - Investees 454,530, ,000 (15,675,461) 439,055,393 - Other group s entities 14,632,282 - (14,632,282) - Group companies credits interest: 38,028,697 12,161,403 (11,408,889) 38,781,211 - Acquired 34,780,806 - (11,347,562) 23,433,242 - Accrued 3,247,891 12,161,403 (61,327) 15,347,969 Group companies current accounts - 6,326,977-6,326,977 Other financial assets (Note 16.2) - 30,152-30,152 Total financial assets 615,677, ,783,687 (41,716,632) 756,744,794 Year 2014 Balance as of 31/Dec/2013 Increases Decreases Balance as of 31/Dec/2014 Financial Instruments - 108,485, ,485,904 Group companies non-current equity instruments - 108,485, ,485,904 Group companies credits - 522,348,417 (15,156,584) 507,191,833 Group companies credits: - 473,163,331 (4,000,195) 469,163,136 - Investees - 458,531,049 (4,000,195) 454,530,854 - Other group s entities - 14,632,282-14,632,282 Group companies credits interest: - 49,185,086 (11,156,389) 38,028,697 - Acquired - 45,937,195 (11,156,389) 34,780,804 - Accrued - 3,247,891-3,247,891 Total financial assets - 630,834,321 (15,156,584) 615,677,737 18

20 The recordings under section Shareholders Equity correspond with contributions performed to the following participated companies (Note 9): COMPANY AMOUNT MANCHASOL 2, S.L.U. 65,290,461 EXTRESOL 1, S.L.U. 57,890,168 AL ANDALUS WIND POWER, S.L.U. 31,146,457 P.E. SANTA CATALINA, S.L.U. 8,684,144 EOLICA DEL GUADIANA, S.L.U. 1,053,925 TOTAL 164,065,155 The variations under section Loans to Group companies correspond to: - Early amortization of the described subordinated debt loans accounting for 15,675,461 euros. - Subordinated debt loan subscribed and granted to Energía y Recursos Ambientales, S.A. for an amount of EUR 14,632,282 dated February 13 th, 2015 has been fully amortized. Increases registered in Group Companies credits interests section correspond mainly to subordinate debt loans and shareholders loans interests to Companies of the group (note 17.1). Decreases registered in Group companies credits interest section correspond to interests settlements executed to group companies for a EUR 11,408,889 amount. 7.2) Equity Instruments The net participations detail in Group companies as of December 31 st, 2015 is as follows: The significant information relating to the Group companies and associates at end of period 2015 and 2014 is as follows: Fiscal year 2015 Subgroup % Direct Stake % Indirect Stake Share Capital Profit for the period Operating Net profit activities Euros Hedging transactions Other Equity instruments Total Equity Net Value Cost Extresol 1, S.L.U. 100% 0% 8,918,931 14,052,810 (7,915,434) (22,681,294) 58,521,315 36,843, ,075,464 Manchasol 2 Central Termosolar Dos, S.L.U. 100% 0% 18,671,340 15,951,475 (7,451,111) (24,096,589) 43,481,836 30,605,476 65,291,460 Serrezuela Solar II, S.L.U. 100% 0% 3,006 34,180,135 2,599,065-6,228,219 8,830, Al-Andalus Wind Power, S.L.U. Parque Eólico Santa Catalina, S.L.U. Eólica del Guadiana, S.L.U. Parque Eólico Sierra de las Carbas, S.L.U. Parque Eólico Tesosanto, S.L.U. La Caldera Energía Burgos, S.L.U. Parque Eólico Valcaire, S.L.U. Sistema Eléctrico de Conexión Valcaire, S.L.U. 100% 0% 17,155,410 12,971, ,493 (20,161,600) (7,203,177) -9,508,874 50,850, % 0% 9,604,910 5,222,625 (1,020,432) (9,891,372) (9,013,980) -10,320,874 14,076, % 0% 14,280,000 3,485,462 (77,105) (5,097,247) (8,441,885) 663,763 8,859, % 0% 1,655,801 2,676, ,069 (6,134,934) (1,680,275) -5,920,339 13,475, % 0% 2,078,104 3,228, ,435 (4,844,029) (1,009,079) -3,156,569 9,848, % 0% 1,008,000 1,082,774 (91,750) (2,723,195) (3,243,827) -5,050,772 4,066, % 0% 305,000 1,145, , ,342 1,371,463 6,100 0% 25% 175,200 1,293, ,413 - (335,542) 159,071 - TOTAL 73,855,702 95,289,601 (11,413,236) (95,630,260) 77,703,947 44,516, ,551,059 19

21 All subsidiaries base their activity on energy production, except Sistema Eléctrico de Conexión Valcaire, S.L., whose activity is based on electric installations operation. None of the Group companies is listed in any stock market or has distributed dividends during the financial years 2015 and The Company has not provided guarantees to its subsidiaries. The project financing schemes of the Group Companies with credit entities are non-recourse to Saeta Yield, S.A. The Project finance (non-resource financing) are financing structures applied to projects which are themselves capable of providing sufficient support to the financial entities participating in relation debt payment contracted. Thus each of them are developed through specific companies in which assets are, on the one hand, financed by developer funds provisions, which is limited to a specific amount and on the other, generally at a greater volume, by third party funds as long term debt. The debt services of the above mentioned credits or loans is supported mainly by the project's own cash flows, as well as real guaranties over the project assets. Fiscal year 2014 Euros Subgroup % Direct Stake % Indirect Stake Share Capital Profit for the period Operating activities Net profit Hedging transactions Other Equity instruments Total Equity Net Value Cost Extresol 1, S.L. 100% 0% 8,918,931 12,893,640 5,218,291 (36,670,049) (4,587,105) (27,119,932) 48,185,296 Manchasol 2 Central Termosolar Dos, S.L. Serrezuela Solar II, S.L.U. Al-Andalus Wind Power, S.L. Parque Eólico Santa Catalina, S.L. Eólica del Guadiana, S.L. Parque Eólico Sierra de las Carbas, S.L. Parque Eólico Tesosanto, S.L. La Caldera Energía Burgos, S.L. Parque Eólico Valcaire, S.L. 100% 0% 18,671,340 26,083,139 36,072,599 (34,667,567) (57,881,224) (37,804,852) % 0% 3,006 10,700,540 29,317, (23,093,087) 6,227, % 0% 17,155,410 8,892,184 (954,088) (23,712,986) (37,395,546) (44,907,210) 19,704, % 0% 9,604,910 18,728,346 8,389,968 (12,672,756) (26,088,091) (20,765,969) 5,392, % 0% 14,280,000 18,715,361 10,429,089 (5,773,362) (19,924,899) (989,172) 7,805, % 0% 1,655,801 2,068,428 (549,166) (7,111,234) (1,131,107) (7,135,706) 13,475, % 0% 2,078,104 1,724,337 (665,839) (5,734,844) (343,240) (4,665,819) 9,848, % 0% 1,008, ,822 (428,129) (3,171,310) (2,815,698) (5,407,137) 4,066, % 0% 305,000 1,751, ,072 - (507,730) 705,342 6,100 Sistema Eléctrico de Conexión 0% 25% 175, , ,764 - (343,822) 298,142 - Valcaire, S.L. TOTAL 73,855, ,117,626 88,204,773 (129,514,108) (174,111,549) (141,565,182) 108,485,904 As of December 31 st, 2015, the Company performed an analysis about investment return in group companies equity as well as associated credits with the purpose of verifying if the recoverable amount on said investments is higher to the value registered on the Company books. 20

22 In order to calculate the group companies recoverable amount an analysis has been made in relation to the updated shareholders cash flow referenced to a market rate, based in future detailed projections of subordinated debt repayment and accrued interests, and subisdiaries dividend payments (see Note 4.4.1). Projections include known data (based on the project contracts) as well as hypothesis which are mainly supported by specific studies performed by experts (demand, production, etc.). In particular, final retribution parameters approved by IET 1045/2014 of June 16th have been used, particularly for defining income. Macroeconomic data are likewise projected, interest rates, etc., using data provided by independent expert sources (i.e. Bloomberg). The used average shareholder discount was of 7.0% based on a free risk rate average similar to the 10 years Spanish bond, a market risk premium for the Electricity Sector, an unlevered Company beta equivalent to other similar companies and leverage target of the debt against equity. As of December 31 st, 2015 and 2014, the Company has not registered any evaluation correction due to direct investment in group companies value, nor associated loans, since the recoverable value of investments is greater than the accounting value according to the above. 7.3) Financial assets, except net equity investments in group companies and associates The breakdown of provided loans except equity investments in group companies and associates (Note 16.2) is as follows (in Euros): Classes Credits, derivatives and others Categories Non-current Current Total Loans and receivables 378,327, ,348,331 60,728,315 41,814, ,055, ,163,136 Interests from Group companies and associates Current accounts from Group companies and associates ,781,211 38,028,697 38,781,211 38,028, ,326,977-6,326,977 - Other financial assets ,152-30,152 - Total 378,327, ,348, ,866,655 79,843, ,193, ,191,833 Similarly, the breakdown of the Non-current provided loans maturities at the end of the fiscal years 2015 and 2014 is as follows (in Euros): Fiscal year and rest Total Loans and receivables 41,814,805 23,488, ,304, ,718, ,327,078 Total 41,814,805 23,488, ,304, ,718, ,327,078 21

23 Fiscal year and rest Total Loans and receivables 60,700,000-26,600, ,048, ,348,331 Total 60,700,000-26,600, ,048, ,348,331 The details of Non-current and current loans awarded to the subsidiares by the Parent Company as of 31 st December, 2015, and 31 st December, 2014, are the following (in Euros): Company Loan type Start date Maturity date Interest rate Extresol 1, S.L.U. Subordinated 30/07/ /08/ ,092,948 17,092,948 Sindicated Interest + 2% Extresol 1, S.L.U. Participative 19/06/ /06/2016 6,500,000 6,500,000 Subordinated Interest rate + 2% if Profit Before Tax<0 Subordinated Interest rate + 3% if Profit Before Tax>0 Manchasol 2 Central Termosolar Subordinated 03/04/ /04/2029 3,742,509 3,742,509 Sindicated Interest + 2% II, S.L.U. Manchasol 2 Central Termosolar Participative 19/06/ /06/ ,500,000 24,500,000 Sindicated Interest + 2% II, S.L.U. Serrezuela Solar II, S.L.U. Subordinated 08/07/ /07/ ,304, ,107,468 EURIBOR 12M + 3% Serrezuela Solar II, S.L.U. Participative 02/04/ /04/2018 5,239,019 5,239,019 EURIBOR 12M + 3% Serrezuela Solar II, Undated Participative 29/06/2012 S.L.U. maturity 49,332,882 49,332,882 EURIBOR 12M + 3% Serrezuela Solar II, Undated Participative 29/06/2012 S.L.U. maturity 708, ,726 EURIBOR 12M + 3% Serrezuela Solar II, Undated Participative 11/07/2012 S.L.U. maturity 723, ,718 EURIBOR 12M + 3% Serrezuela Solar II, Undated Participative 08/08/2012 S.L.U. maturity 1,085,000 1,085,000 EURIBOR 12M + 3% Serrezuela Solar II, Undated Participative 02/10/2012 S.L.U. maturity 500, ,000 EURIBOR 12M + 3% Serrezuela Solar II, Undated Participative 31/10/2012 S.L.U. maturity 300, ,000 EURIBOR 12M + 3% Serrezuela Solar II, Undated Participative 15/11/2012 S.L.U. maturity 1,885,000 1,885,000 EURIBOR 12M + 3% Serrezuela Solar II, Undated Participative 22/04/2013 S.L.U. maturity 1,500,000 1,500,000 EURIBOR 12M + 3% Al Andalus Wind Power, S.L.U. Participative 06/04/ /08/ ,333,558 26,333,558 Sindicated Interest + 2% Al Andalus Wind Power, S.L.U. Participative 23/12/ /07/ ,173,547 20,173,547 Sindicated Interest + 2% Sindicated Interest raterate + 2% if Profit Al Andalus Wind Before Tax < 0 euros Participative 08/07/ /12/ ,200,000 12,200,000 Power, S.L.U. Sindicated Interest rate+ 3% if Profit Before Tax >0 euros Al Andalus Wind Power, S.L.U. La Caldera Energía Burgos, S.L.U. La Caldera Energía Burgos, S.L.U. La Caldera Energía Burgos, S.L.U. Participative 19/06/ /06/2016 3,908,315 3,908,315 Sindicated Interest rate+ 2% if Profit Before Tax < 0 euros Sindicated Interest rate+ 3% if Profit Before Tax >0 euros Participative 22/06/ /03/ , ,644 Sindicated Interest rate+ 2% Participative 22/06/ /03/ ,078 77,078 Sindicated Interest rate+ 2% Participative 23/12/ /03/2028 1,738,125 1,738,125 Sindicated Interest rate+ 1% if EBIT < 0 euros Sindicated Interest rate+ 2% if EBIT >0 euros 22

24 Company Loan type Start date Maturity date Interest rate La Caldera Energía Burgos, S.L.U. P.E. Sierra de las Carbas, S.L.U. P.E. Sierra de las Carbas, S.L.U. P.E. Tesosanto, S.L.U. P.E. Tesosanto, S.L.U. P.E. Santa Catalina, S.L.U. P.E. Santa Catalina, S.L.U. P.E. Santa Catalina, S.L.U. Eólica del Guadiana, S.L.U. Eólica del Guadiana, S.L.U. P.E. Valcaire, S.L.U. Participative 23/12/ /03/2028 1,074,078 1,074,078 Participative 21/12/ /03/2028 3,067,868 3,067,868 Participative 21/12/ /03/2028 1,914,288 1,914,288 Participative 21/12/ /03/2028 5,375,014 5,375,014 Sindicated Interest rate+ 1% if EBIT < 0 euros Sindicated Interest rate+ 2% if EBIT >0 euros Sindicated Interest rate+ 1% if EBIT < 0 euros Sindicated Interest rate+ 2% if EBIT >0 euros Sindicated Interest rate+ 1% if EBIT < 0 euros Sindicated Interest rate+ 2% if EBIT >0 euros Sindicated Interest rate+ 1% if EBIT < 0 euros Sindicated Interest rate+ 2% if EBIT >0 euros Participative 21/12/ /03/2028 3,322,993 3,322,993 Sindicated Interest rate+ 2% Participative 19/06/ /04/ ,382,903 24,382,903 Participative 19/06/ /04/ ,431,902 17,431,902 If EBIT less the financial expenses of the main loan less taxes > [(type Project finance + 2%)*participative loan outstanding balance] then the applicable interest rate to the participative is of the type Project finance + 2% If EBIT less the financial expenses of the main loan less taxes [(type Project finance + 2%)*participative loan outstanding balance] then the applicable interest rate to the participative is + 0% If EBIT less the financial expenses of the main loan less taxes > [(type Project finance + 2%)*participative loan outstanding balance] then the applicable interest rate to the participative is of the type Project finance + 2% If EBIT less the financial expenses of the main loan less taxes [(type Project finance + 2%)*participative loan outstanding balance] then the applicable interest rate to the participative is + 0% Subordinated 15/04/ /01/2029 4,999,805 4,999,805 Sindicated Interest rate+ 2% Subordinated 16/02/ /12/ , ,020 Sindicated Interest rate Participative 08/07/ /12/ ,620,000 13,620,000 Participative 29/05/ /05/ ,249,936 19,922,382 Sindicated Interest rate if Profit Before Tax < 0 Sindicated Interest rate + 1% if Profit Before Tax > 0 EURIBOR 6M + 2% if EBIT< 500 thousand euros EURIBOR 6M + 2% + 1% over Net profit if EBIT> EUR 500 thousand Cobra Concesiones, S.L. Subordinated 20/11/ /12/ ,632,346 3,5157% TOTAL 439,055, ,163,136 During the fiscal years 2015 and 2014 there have been accrued interests corresponding to the above described loans for an amount of EUR 12,100,076, according to Company detail provided under note

25 8. Current Financial investments The breakdown of these section as of December 31 st, 2015, is made pursuant to the following details (in euros): Deposits 1,000,000 - Current Interest receivables 34,235 - Total 1,034,235 - Deposits correspond with the non-immediately available contributions registered under section Other net equivalent assets (see Note 10). Current interest receivables correspond to interests accrued by the above mentioned deposits. 9. Information on the nature and risk exposure of financial instruments The Company, due to the activities it performs, is exposed to several financial market risks, which manages by the application of identification, measurement, concentration limitation and supervision systems. The Company s Risk Management Policy establishes and action frame for complete risk management, financial as well as non financial. The main risk management operations are the following: The users or areas that stand closer to the material risk, will be the Responsible of those risks within the business area of the company. Consequently, each business area must identify the risks associated to their functions, and must communicate the identified risks as well as the identified needs to the Monitoring Committee in order to take them into account in the overall risk management framework of the company.. The Monitoring Committee will develop risk management independently. In addition, together with each of the business areas, they will have the responsibility to identify all risks affecting the development of the Saeta Yield Group business. Internal Audit is responsible for performing the supervision of the entire risk management process in an independent manner. The Audit Committee will perform the supervision of the Company financial risk management model. The Appointments and Retributions Committee will perform the Company non-financial risk management model supervision. The financial market risks to which the Company is exposed are mainly interest rate, liquidity and credit risk: a) Interest rate risk: this risk arises from changes in future cash flows from borrowings bearing interest at floating rates as a result of fluctuations in market interest rates Even though the Company is subject to this type of risk, all granted credits and loans are with group companies (see Note 7). Management considers that the impact of this type of risk is not significant due to which it has not been covered. b) Liquidity risk: This risk arises from the timing differences between borrowing requirements for business investment commitments, debt maturities, working capital requirements, etc. and the funds obtained from the conduct of the Company s ordinary operations, different forms of bank financing, capital market transactions and divestments. Sensibility to the liquidity risk is not relevant. The objective is to maintain a balance between the use of funds and the acquired requirements with the credit entities shareholders. 24

26 In February 2015 and at the same time as the Saeta Yield, S.A. initial public offering (Note 11) Grupo ACS performed a capital stock increase of EUR 200 millions, of which a portion was destined to increase Saeta Yield, S.A. treasury level. As of December 31st, 2015 the Company has a financial availability of EUR 116,053,047 (see Note 10), enough for normal activity development. These restructuring reduced payment pending principal from subsidiaries and therefore the debt s total service cost (interests and principal repayment). From the Administrators point of view this better cash generation position, together with the liquidation of balance derived from commercial and tax transactions with related companies (note 20) performed as per Saeta Yield Group leaving control from ACS Group, will result in better fulfillment of companies financial commitments and guarantee the activities normal development in the foreseeable future, as per the business environment expected evolution. In addition, as indicated in Note 10, the Compamy has a total undrawn credit facilities as of December 31, 2015 of EUR 116,053,047, sufficient coverage for current liquidity needs of the Company. c) Credit Risk: In general, the Company holds its cash and cash equivalents at banks with high credit ratings. The main risk associated with customers is due to the concentration of business with Group Companies as a result of its activity In relation to the risk of default of those loans with Group companies, the Company assets its recoverability based on an impairment test performed, at least, once a year (Note 7.1). 10. Cash and cash equivalents The composition of this section on December 31 st, 2015 and 2014, contains the following details (in Euros): Cash 4,203,047 27,399 Other cash equivalents 31,850,000 - Total 36,053,047 27,399 Two current banking deposits, of immediate availability, contracted in the first semester of 2015 for a total amount of EUR 20,000,000 each with the banking entities of IBERCAJA and ABANCA and a fixed annual rate of 0.40% and 0.62% respectively are included as other equivalent net assets. At the end of the fiscal year 2015, partial disposals of the deposit contracted with IBERCAJA have taken place, for an amount of EUR 8,150,000, EUR 1 million about non immediately available contributions classified as current financial assets (see note 8). Dated March 27th, 2015 the Company signed a Credit Revolving Facility for a maximum amount of EUR 80,000,000 with Banco Santander, S.A., Bank of America, National Association, Sucursal en España, Citibank International Limited, Sucursal en España, HSBC Bank PLC, Sucursal en España and Societé Generale Sucursal en España, which has not been drawn on the date these financial statements were prepared. The contract maturity date is March 27th, 2018 and interests accrue biannually at Euribor %. During the fiscal year 2015 this credit has accrued financial interests of EUR 1,281,178. This credit contract together with the cash and other registered deposits mean that as of December 31 st, 2015 the Company has a financial availability of EUR 116,053,

27 11. Net Equity and Own Funds 11.1) Share Capital As of December 31 st, 2014, the Parent s share capital was comprised of 6,156,301 shares, numbered from 1 to 6,156,301 of EUR 10 par value each, which are fully subscribed, paid and registered in the Spanish Mercantile Registry. Dated January 20 th, 2015 the Company Shareholders General Meeting agreed to unfold the face value of each one of the shares comprising the capital stock in a proportion of ten to one, therefore without altering the capital stock amount. In this manner the capital stock is now comprised by 61,563,010 shares of EUR 1 face value each. Subsequently dated January 27 th, 2015, the Shareholders General Meeting approved the increase of the Company capital stock by EUR 20,013,918 by the issuing of 20,013,918 shares of EUR 1 face value each. The shares were issued with a EUR 9 issue premium, this means with a total issue premium of EUR 180,125,262. All issue premium shares were fully paid at the time of their subscription in February 12th, 2015 registered in the Spanish Mercantile Registry on February 13 th, Capital stock increases have represented costs of EUR 18,822. Thus on December 31 st, 2015 the Company s capital stock is comprised by 81,576,928 shares of EUR 1 face value each, all of the same class and series and fully paid, which represents a capital stock of EUR 81,576,928. All of the Saeta Yield, S.A. shares are listed, since February 16th, 2015, in the Spanish Stock Exchanges and are traded in the continuous market. The detail of the share capital as of December 31 st, 2015, and December 31 st, 2014, is as follows: Shares % Capital Shares % Capital Cobra Concesiones, S.L. (*) 19,750, % 4,623, % Cobra Sistemas y Redes, S.A. (**) - - 1,532, % GIP II Helios, S.à.r.l 19,587, % - - Arrowgrass Capital Partners LLP 2,736, % - - Morgan Stanley Investment Management INC 2,449, % Free Float 37,054, % - - Total acciones 81,576, % 6,156, % (*)These companies wholly belong to the ACS SCE Group, which has performed a takeover merger of Urbaenergía, S.L. and Energías y Recursos Ambientales, S.A., dated November 2 nd, 2015, being Cobra Concesiones, S.L. the merging Company (**)These companies wholly belong to the ACS SCE Group. Each share confers the holder the right to cast a vote and all shares grant the same dividend and voting rights. The Group does not have treasury stock. 11.2) Legal reserve Under the Spanish Corporate Act, 10% of net profit must be transferred to the legal reserve until the balance of this reserve reaches 20% of the share capital. The legal reserve can be used to increase capital provided that the remaining reserve balance does not fall below 10% of the increased share capital amount. Otherwise, until the legal reserve exceeds 20% of share capital, it can only be used to offset losses, provided that sufficient other reserves are not available for this purpose. As of December 31 st 2015, the legal reserve reached 1.34%, by an amount of EUR 219,

28 11.3) Share premium As of December 31 st, 2015, the share premium amounted to EUR 696,388,175. The share premium amount arose as a result of the two share capital increases carried out on 31 st October 2014 for EUR 143,239 thousand and EUR 408,216 thousand, and another capital increase carried out on 12 th February 2015, for EUR 180,125 thousand, being full subscribed and registered. Dated January 27th, 2015, the Shareholders General Meeting approved a dividend distribution to be performed charging the issue premium for an amount of up to EUR 150 million, delegating on the Board of Directors the authority to establish the distribution date and amount until the second half of the year In addition the following dividend payments have been made during the fiscal year 2015 charging it against the share issued premium, since the Spanish Corporate Act does not establish any specific restrictions in relation to the balance availability. - On May 29 th, 2015 the distribution of the quarterly dividend charged against the share premium was made for an amount of EUR per share (equivalent to a total amount of EUR 6,689 thousands), approved by the Board of Directors in March 26 th, 2015, once the dividend distribution authority had been delegated by the Shareholders General Meeting held on January 27 th, On August 28 th, 2015, the distribution of the quarterly dividend charging the issue premium was made for an amount of EUR per share (equivalent to a total amount of EUR 14,251 thousands), approved by the Board of Directors in July 29 th, 2015 once the dividend distribution authority had been delegated by the Shareholders General Meeting held on January 27 th, On November 27 th, 2015 the distribution of the quarterly dividend charging the issue premium was made for an amount of EUR per share (equivalent to a total amount of EUR 14,251 thousands), approved by the Board of Directors in November 5 th, 2015 once the dividend distribution authority had been delegated by the Shareholders General Meeting held on January 27th, Therefore, the total amount of dividends paid during the fiscal year 2015 amounted to EUR 35,192,287, equivalent to EUR , which corresponds with the Company shareholder remuneration policy, established in the initial public offering prospectus of the Saeta Yield, S.A. shares. 12. Current Debts with group companies and associates The section of Debts with group companies, on December 31 st, 2015, reflects an amount of EUR 2,458,202, mainly corresponding to balances pending liquidation of the corporate income tax, since the Company is the parent Company of the Tax Group (Note 16.2). The amount gathered as of December 31 st, 2014, EUR 940,144, corresponds mainly with balances pending liquidation with ACS pursuant to the corporate tax (EUR 537,066) and the Cobra Sistemas y Redes checking account (EUR 403,032), having liquidated both concepts during the fiscal year Trade and other payables The detail of Trade and other payables as of December 31 st, 2015 and December 31 st, 2014: Payables for the rendering of services 494, ,006 Personnel (salaries payable) 522,686 1,762 Public entities, other (Note 14.1) 4,982,675 23,061 Total 6,000, ,829 The payables for the rendering of services balance is mainly comprised by professional services rendering pending invoicing. 27

29 The incentives allocations corresponding to the fiscal year 2015 for an amount of EUR 522,686 are registered in the pending payment remunerations balance. 13.1) Information about the suppliers average payment period In relation with the information required by the Third Additional Prevision of Law 15/2010, of July 5th, (modified through the second Final Provisions Law 31/2014, on December 3 rd ) and prepared according to the Institute of Accounting and Accounts Auditing (ICAC) in January 29th, 2016, about the information to be included in the financial statements report pursuant to the suppliers average payment period in commercial operations. Pursuant to what is allowed in the Single Additional Provision resolution above mentioned, as this is the first fiscal year in which it is applied, there is no comparison information. Performed and pending payments at the statement closing date 2015 Days Suppliers average payment period 39 Paid operations ratio 39 Pending payment operations ratio 20 Amount (euros) Total payments performed 1,872,883 Total pending payments 43,356 In accordance with the calculation of the average payment period to suppliers the commercial operations corresponding to the delivery of the goods or services rendering accrued since the application date of Act 31/2014, of December 3rd have been taken into account, according to the ICAC Resolution. Commercial creditors due to debts with suppliers of goods or services, included in the commercial creditors entry of the balance statement current liabilities are considered as payables for the rendering of services for the sole purposes of providing the information scheduled under this Resolution, including payables for the rendering of services with Group companies and associates. "Average period of payment to suppliers" is understood as the period elapsing between the delivery of the goods or the rendering of the services and the actual payment of the operation. According to law 3/2014 as of December 29 th, that determines measures against late payment in commercial transactions, the maximum legal period becomes of 30 days, except when there is an agreement between the parties with a maximum period of 60 days. 14. Taxation 14.1) Current balances with Public Administrations Tax Receivables and Tax Payables section composition as of December 31 st, 2015 and December 31 st, 2014 is: ASSETS VAT receivables - 16,600 Other taxes receivable 452, , , ,490 28

30 LIABILITIES VAT payables 187,094 - Corporate Income tax payable (Note 14.3) 4,435,100 - Personal Income tax payables 167,688 21,721 Social Security payables 192,793 1,340 4,982,675 23,061 During the fiscal year 2015 the Saeta Yield, S.A. has paid EUR 2,020,852 as advancement for corporate income tax. As it has been pointed out under Note 4.5, Saeta Yield, S.A. acts as Parent Company of the Tax Group and therefore advanced payments performed during the fiscal year 2015 correspond to the amount to be paid by the Tax Group. On December 31 st, 2015, the balance of the section Public Inland Revenue by Corporate income tax payable (EUR 4,435,100) corresponds to the outstanding balance of the fiscal year 2015 Fiscal Group Corporate income tax. 14.2) Accounting results and applicable tax conciliation These conciliation of the accounting result in fiscal years 2015 and 2014 with the corresponding applicable tax base is as follows: 2015 Euros Total Profit before taxes 10,574,702 Non deductible expense (Tax penalties) 4,429 Non deductible financial expense 832,221 Taxable Income 11,411,352 Income tax 28% (3,195,179) Withholdings 1,816,118 Payments on account 2,020,852 Net Corporate Income tax receivable (Fiscal Group) 641, Euros Total Profit before taxes 3,130,363 Taxable Income 3,130,363 Income tax 30% (939,109) Withholdings and payments on account 402,043 Net Corporate Income tax payable to Fiscal Group (Note 16.2) (537,066) In 2014 all Group companies are included in the consolidated tax group headed by ACS, Actividades de Construcción y Servicios, S.A., due to which the net quota was registered as a balance to pay to group companies under section Short term debts with Group and Associated Companies (see Note 16.2). 29

31 With effect in January 1 st, 2015, the Company is no longer part of the above mentioned tax consolidation group and has been appointed as part of the new tax group which number is 485/15. Therefore the consolidated net quota of the fiscal year 2015 has been registered as a payable balance with the Public Inland Revenue as accounting EUR 4,435,100. In addition the quotas to be paid or received of the Tax Group companies has been registered under section Trade Receivables from Group companies and Associates or Short term debts with group companies (see Note 16.2), as accounting EUR 3,856, ) Corporate Income Tax Expense / (Income) Corporate income tax is calculated based on the accounting profit or loss determined by applying generally accepted accounting principles, which does not necessarily coincide with tax result, being this the taxable base amount. The reconciliation of the accounting result and the corporate income tax expense resulting from the application of the standard tax rate in force in Spain is as follows: Profit before taxes 10,574,702 3,130,363 Permanent differences 4,429 - Income Tax 28% (2,962,157) (939,109) Temporary differences - - Adjustment for change in tax rate (24.967) - Total Income Tax Expense (2,987,124) (939,109) 14.4) Registered deffered tax assets The balance detail of this account at the closing of the fiscal years 2015 and 2014 is the following: Temporary differences (advanced taxes) Initial balance at 31/Dec/2014 Increases / decreases Adjustments to income tax Ending balance as of 31/Dec/2015 Net finance costs - 233,022 (24,967) 208,055 Total deferred tax assets - 233,022 (24,967) 208,055 The amount of the timing differences in the deferred tax assets relates to the tax effect of the following items: - Net non-deductible finance expenses for the year based on Royal Decree-Law 12/2012, of March 30 th, which limits the "net finance costs" deduction, in general, to a maximum of 30% of the EBITDA. For these purposes, the law determines "net finance costs" as the excess finance costs with respect to the income arising from the transfer to third parties of equity incurred in the tax period. In any case, up to EUR 1 million in net finance costs for the period, without any limit, are deductible and, accordingly, the companies belonging to the ACS tax group will be able to deduct more of these expenses. The net finance costs which have not been deducted may be deducted in the tax periods which conclude in the immediate and consecutive 18 years, together with those of the corresponding tax period, although the temporary limit disappears with the new Corporation Tax Law. In order to calculate the non-deductible "net finance costs" the financial costs of the subordinated debt in the Companies which belong to the ACS tax group were not taken into account since they are not eliminated on tax consolidation, being adjusted accordingly to the Group s maximum tax deductible rate. Likewise, the amount corresponding to these deferred tax assets was recalculated using a tax rate of 25% which will be applicable from The above mentioned assets by deferred taxes have been registered in the balance statement since the Company Board of Directors considers that, according to the best estimate about the Company future results, according to the Company economic financial model, it is likely that said assets are recovered in the maximum period required by the current normative scheme, which is 10 years. 30

32 14.5) Periods open to inspection Under current legislation, tax returns cannot be deemed definitive until they have been inspected by the tax authorities or the four-year statute of limitations period has elapsed. As of December 31 st, 2015, the Company had the year 2010 and following years open for review by the tax inspection authorities in respect of Corporate Income Tax and year 2011 for other applicable taxes. The Directors of the Company consider that these taxes were calculated correctly and, accordingly, that even if discrepancies arise in the interpretation of the current regulations applicable to the tax treatment of the transactions, the resulting liabilities, if any, would not have material effect on the accompanying annual accounts. Additionally, according to Law 34/2015 dated on September 21 st, that partially modifies the General Tax Law 58/2003 dated on December 17 th, the Tax Administrator has the right to check compensated or pending to be compensated tax bases and quotas as well as applied or pending to be applied tax deductions during a period of 10 years, starting the following day to the last established day to submit the tax statement or self-statement corresponding to the period in which the right to compensate bases and quotas or apply deductions took place. 15. Guarantee commitments to third parties and contingent liabilities As of December 31 st, 2015, the Company has presented a guarantee with third parties regarding the office rental guarantee by an amount of EUR 39,125. As of December 31 st, 2014, the Company has not presented guarantees with third parties in financial entities. 16. Related-party transactions Pursuant to operations with related parties, the information that is detailed is done so by following the criteria established under order EHA/3050/2004, of the Treasury in September 15 th and its application through the Comision Nacional del Mercado de Valores (Spanish Securities and Market Regulator). Below are the operations made by the Company during the fiscal years 2015 and 2014, with related parties making a distinction among significant shareholders, Board of Directors members, Company Directors and other related parties. 31

33 16.1) Related-party transactions Year 2015 Income and expenses Expenses: Main Shareholders Administrators and Board of Directors Personnel and companies of the group Other related parties Personnel expenses (Note 16.3) - (1,188,462) - - Total Expense - (1,188,462) - - Income: Financial Income 61, Cobra Concesiones 61, Revenue: ,100, Extresol , Manchasol ,190, Serrezuela Solar II - - 6,734, Al Andalus Wind Power - - 1,867, PE Santa Catalina , Eólica del Guadiana , PE Tesosanto , PE Sierra Las Carbas , La Caldera Energía Burgos , PE Valcaire ,101 - Management fee - - 2,899, ,702 - Extresol , Manchasol , Serrezuela Solar II , Al Andalus Wind Power , PE Santa Catalina , Eólica del Guadiana , PE Tesosanto , PE Sierra Las Carbas , La Caldera Energía Burgos ,360 - PE Valcaire , Extresol ,234 - Extresol ,234 - Manchasol ,234 Other income 407,682-35, Cobra Concesiones 407, Al Andalus Wind Power - - 7, Serrezuela Solar II , PE Valcaire - - 9,500 - Total Income 469,009-15,034, ,702 32

34 Administrators Personnel and Other Main Other transactions and Board of companies of the related Shareholders Directors group parties Loans net amortization or cancellation (Note 7.3) 14,632,282-15,675,461 - Loan interests liquidation (Note 7.3) 61,327-11,347,562 - Loans net contribution (Note 7.3) ,000 - Year 2014 Income and expenses Expenses: Main Shareholders Administrators and Board of Directors Personnel and companies of the group Other related parties Personnel expenses Total expenses Income: Financial income 414, Cobra Concesiones 414, Management fee , Extresol , Manchasol , Serrezuela Solar II , Al Andalus Wind Power , PE Santa Catalina , Eólica del Guadiana , PE Tesosanto , PE Sierra Las Carbas , La Caldera Energía Burgos - - 6, PE Valcaire - - 5,991 - Financial income from group companies - - 2,832, Extresol , Manchasol , Serrezuela Solar II - - 1,561, Al Andalus Wind Power , PE Santa Catalina , Eólica del Guadiana , PE Tesosanto , PE Sierra Las Carbas , La Caldera Energía Burgos , PE Valcaire ,897 - Other income Total Income 414,938-3,083,366-33

35 Other transactions Main Shareholders Administrators and Board of Directors Personnel and companies of the group Other related parties Loans net amortization and cancellation and leasing contracts (lease holder) 15,378-15,156,584 35,551 Dividends and other distributed profit (3,225) Other operations (451) - - 3, During the fiscal year 2015 interests registered for an amount of EUR 12,100,076 (EUR 2,832,955 in 2014), are registered under section Net turnover amount of the appended profit and loss account (Note 4.6). In addition, commercial operations balances in relation to asset management in the participated companies have been registered, in effect as of December 1st, 2014 for an amount of EUR 2,899,117 (EUR 250,411 in 2014) and commercial operations balances in relation to management contracts in the related companies assets, in effect since May 22 nd, 2015, for an amount of EUR 543,702 (EUR 0 in 2014). During the 2015 fiscal year, commercial operations balances in relation to related company s expenses reinvoicing have been registered for an amount of EUR 407,682 (EUR 0 in 2014). 16.2) Balances with Group companies and associates 2015 Non-current Credits (Note 7.3) Current Credits (Note 7.3) Interests Db (Note 7.3) Income Tax Db (Notes 7.3 & 14.2) Current account Db (Note 7.3) Euros Trade and receivables Other current assets (Note 7.1) Current account Cr Income Tax Cr (Note 14.2) Cobra Instalaciones y Servicios, S.A ,883 29,684 (660) - Extresol 2, S.L , Extresol 3, S.L , Manchasol 1, S.L , Al - Andalus Wind Power, S.L.U. La Caldera Energía Burgos, S.L.U. Parque Eólico Santa Catalina, S.L.U. Eólica del Guadiana, S.L.U. Parque Eólico Valcaire, S.L.U. Parque Eólico Sierra de las Carbas, S.L.U. Parque Eólico Tesosanto, S.L.U. Manchasol 2, Central Termosolar Dos, S.L.U. 46,507,105 16,108,315 8,093,445 1,001, , ,013, ,499-46,814,610-7,270, ,020 13,620,000 2,799, , , (46,692) 437, (1,294,770) 30, ,249, , , , ,982, ,516 28, , ,698, , , (1,116,740) 3,742,509 24,500,000 16,793, ,342-29,948 - (54) - Extresol 1, S.L.U. 17,092,948 6,500,000 1,969, , Serrezuela Solar II, S.L.U. 228,578, ,288 4,469, , Total 378,327,078 60,728,315 38,781,211 6,324,178 2,799 1,392,574 30,152 (714) (2,458,202) 34

36 2014 Non-current Credits Current Credits Interests Db Euros Trade and receivables Current account Db/Cr Income Tax Cr ACS Impuesto Sociedades (537,066) Cobra Instalaciones y Servicios, S.A (403,032) - Energía y recursos Ambientales, S.L. 14,632, ,936 - (46) - Cobra Concesiones, S.L Al - Andalus Wind Power, S.L. 62,615,420-6,225,655 76, La Caldera Energía Burgos, S.L. 3,013,925-95,836 6, Parque Eólico Santa Catalina, S.L. 4,999,805 41,814,805 7,096,144 44, Eólica del Guadiana, S.L. 14,267,020-2,346,662 16, Parque Eólico Valcaire, S.L. 19,922, ,158 5, Parque Eólico Sierra de las Carbas, S.L. 4,982, ,424 11, Parque Eólico Tesosanto, S.L. 8,698, ,578 14, Manchasol 2, Central Termosolar Dos, S.L. 28,242,509-15,602,167 25, Extresol 1, S.L. 23,592,948-1,207,644 25, Serrezuela Solar II, S.L. 242,381,813-4,486,298 25, Total 427,348,331 41,814,805 38,028, ,411 (403,078) (537,066) During the fiscal year 2015 a total of EUR 402,418 has been paid to ACS Group due to amortization of existing checking accounts as of December 31 st, In addition, the pending payment on corporate income tax have been paid, for an amount of EUR 537, ) Remuneration and other benefits of the Board of Directors and Executives As of December 31 st, 2015, the Board of Directors is composed of 9 members (8 men and 1 woman). The Board of Directors, the governing body created in the Saeta Yield S.A. General Shareholders Meeting on January 20 th, 2015, replacing the governing body appointed as of that date: Sole Director. During 2015 any remuneration for salaries, allowances or otherwise accrued by the Board of Directors and Executives was as follows: Salaries Statutory benefits Other Benefit plans Insurance premiums TOTAL Board of Directors 653,708 32,248 64, ,346 Executives 341,116-96, ,116 Total 994,824 32, , ,188,462 During 2014 the Sole Director of the Parent Company had not accrued any remuneration for salaries, allowances or otherwise. In 2014 there was no Executives. 35

37 17. Income and expenses 17.1) Revenue and other operating income The activity performed by the Company is carried out entirely in the domestic market. The distribution of the net turnover amount corresponding to the fiscal years 2015 and 2014, distributed by activities, is as follows: Euros Concept Management fees from group companies (Note 16.1) 2,899, ,411 Financial Income from group companies (Note 16.1) 12,100,076 2,832,955 Rebillings (Note 16.1) 443,182 - Management fees from related parties (Note 16.1) 543,702 - Total 15,986,077 3,083, ) Other operating expenses Other operating expenses detailed in the income statement as of December 31 st, 2015 and 2014 is as follows: Concept Euros Rent and royalties 83,289 - Independent professional services 1,429, ,008 Insurance premiums 264,615 - Banking services 6, Advertising, publicity and public relations 6,579 - Supplies 31,431 - Other services 122,785 - Taxes other than income tax 5,811 - Total 1,950, ,124 Incresases registered in the item Independent professional services mainly correspond to incurred expenses by the Company during the initial public offering. 36

38 17.3) Personnel expenses Personal expenses for the fiscal year of 2015 and 2014 is as follows: Concept Euros Salaries and wages 1,897,814 19,262 Employee benefits expense 446,648 1,555 Other employee benefits expense 6,521 - TOTAL 2,350,983 20,817 Average number of Group employees as of December 31 st, 2015, and December 31 st, 2014 by category, is as follows: Average number of employees as of 31/Dec/2015 Average number of employees as of 31/Dec/2014 Men Women Total Men Women Total Senior executives Line personnel and middle management Clerical staff Manual workers Total The number of Group employees during the fiscal year of 2015 and 2014, by category, is as follows: Average number of employees as of 31/Dec/2015 Average number of employees as of 31/Dec/2014 Men Women Total Women Men Total Senior executives Line personnel and middle management Clerical staff Manual workers Total

39 18. Other information 18.1) Detail of participations in companies with similar activities and own or third party with similar activities carried out by the Board of Directors members. The Spanish Corporation Act Article 229, modified by Act 31/2014, of December 3rd, 2014 establishes that the conflict of interest situations incurred by the administrators will be subject to information within the annual report. At the closing of the 2015, and 2014, fiscal year neither the members of the Saeta Yield, S.A. Board of Directors members nor the people related to them as defined by the Spanish Corporations Act have communicated to the remaining Board of Directors members any direct or indirect conflict of interests situation that they may have with the Company s interest. At the closing of the 2015, and 2014, fiscal year neither the members of the Saeta Yield, S.A. Board of Directors members have communicated shares interest in the capital of companies with equal, analogous or complementary activity that have been communicated to Saeta Yield, S.A. Los cargos o funciones que ocupan los consejeros en sociedades de accionistas significativos y/o entidades de su grupo al 31 de diciembre de 2015 son las siguientes: The positions or obligations performed by the board members of companies that own significant holdings and/or group companies at the closing of the 2015 are the following: Board Member Company Position Dña. Cristina Aldámiz-Echevarría González de Durana D. Juan Cristóbal González Wiedmaier ACS, Actividades de Construcción y Servicios, S.A. Bow Power Energy, S..L. ACS Servicios Comunicaciones y Energía, S.A. Cobra Gestión de Infraestructuras, S.L. CFO and corporate developement Board Member CFO Director Financiero D. Deepak Agrawal Bow Power Energy, S..L. Board Member Extresol-2, S.L. Extresol-3, S.L. Manchasol-1, Central Termosolar Uno, S.L. Board Member Board Member Board Member No share interest with these characteristics were communicated during the fiscal year

40 18.2) Remuneration to auditor During the fiscal year 2015 and 2014, fees for audit services and other services provided by the auditor for the annual accounts of the Group, Deloitte, S.L., and by other companies belonging to the Deloitte network, as well as fees for services billed by the auditors of individual annual accounts of the companies included in the consolidation and associate entities are as follows: 2015 Audit services Euros Other verification services Fiscal advising Other services Deloitte, S.L. 116, ,500-25,000 Total 116, ,500-25, Audit services Euros Other verification services Fiscal advising Other services Deloitte, S.L. 131, Total 131, Events after the balance sheet date The Board of Directors has approved on February 25, 2016, to distribute m ( euros per share) as dividend charged to the share premium. This dividend will be paid on March 3, The 25th of February, 2016, the Board of Directors of Saeta Yield S.A. has agreed to acquire 100% of the shares of Extresol 2 S.L. and Extresol 3, S.L., as well as all the credit rights from the current owners regarding the acquired companies, by virtue of the subordinated debt contracts and the participative loans conceded. These assets were included in the RoFO agreements and Saeta Yield held a call option on them. The amount to be paid for this transaction amounts to 119 million. Conditional upon closing of the aforementioned transaction, the Board of Directors of Saeta Yield has approved a 7.7% dividend increase up to 61.4 m per year. This amount will be paid quarterly, and the first increased payment will be distributed c. 60 days after the close of the first quarter of Both the acquisition and the dividend increase are conditional upon closing a final agreement in a contract to be signed during the month of March

41 MANAGEMENT REPORT Business evolution and Company situation Since October 2014, the Company operates as the parent Company of the Saeta Group, by holding shares in the capital of companies that compose it, and providing management services to the same companies and other related parties. During the fiscal year closed on December 31 st, 2015 the Company registered an amount of EUR 12,100,076 as turnover, obtaining EUR 7,587,578 positive result during the fiscal year. Major Business risks The Company, due to the activities it performs, is exposed to several financial market risks, which it manages by applying identification, measurement, concentration limitation and supervision systems. The Company s Risk Management Policy establishes and action framework for complete risk management, as well as financial and non-financial. The main risk management operations are the following: The users or areas that stand closer to the material risk, will be the Responsible of those risks within the business area of the company. Consequently, each business area must identify the risks associated to their functions, and must communicate the identified risks as well as the identified needs to the Monitoring Committee in order to take them into account in the overall risk management framework of the company.. The Monitoring Committee will develop risk management independently. In addition, together with each of the business areas, they will have the responsibility to identify all risks affecting the development of the Saeta Yield Group business. Internal Audit is responsible for performing the supervision of the entire risk management process in an independent manner. The Audit Committee will perform the supervision of the Company financial risk management model. The Appointments and Retributions Committee will perform the Company non-financial risk management model supervision. The financial market risks that the Company is exposed to are mainly interest rate risk, liquidity risk and credit risk: d) Interest rate risk: this risk arises from changes in future cash flows from bearing borrowings interest at floating rates as a result of fluctuations in market interest rates Even though the Company is subject to this type of risk, all granted credits and loans are with group companies (see Note 7). Management considers that the impact of this type of risk is not significant, and consequently this has not been covered. e) Liquidity risk: This risk arises from the timing differences between borrowing requirements for business investment commitments, debt maturities, working capital requirements, etc. and the funds generated from the Group's ordinary operations, different forms of bank financing, capital market transactions and divestments. Sensitivity to the liquidity risk is not relevant. The objective is to maintain a balance between the use of funds and the acquired requirements with the credit entities shareholders. In February 2015 and at the same time as Saeta Yield, S.A. initial public offering, Grupo ACS performed a capital stock increase of EUR 200 million, of which a portion was destined to increase Saeta Yield, S.A.. 40

42 f) Credit Risk: In general, the Company holds its cash and cash equivalents at banks with high credit ratings. The main risk associated with customers is due to the concentration of customers since the Group's activity In relation to the risk of default of those loans with Group companies, the Company assess its recoverability based on an impairment test performed, at least, once a year (Note 7.1). Research and development related activities During the fiscal year the Company has not destined any of its funds for activities of this type. Treasury stock acquisition During the fiscal year the Company has not acquired treasury stock and there are not treasury stock at the closing of the fiscal year. Environmental information As of December 31 st, 2015 there are neither important assets devoted to environment protection and improvement, nor have relevant expenses been incurred due to this nature during the fiscal year. In view of the business activities carried on by the Company, it does not have any environmental liability, expenses, assets, provisions or contingencies that might be material with respect to the Company s equity, financial position and results. Share capital structure, restrictions and relevant values and shares transferability As of 31 st December 2015, the Parent s share capital was comprised of 81,576,928 shares of EUR 1 par value each, which are fully subscribed, paid and registered in the Spanish Mercantile Registry. All Saeta Yield, S.A. shares are listed, since February 16th, 2015, in the Spanish Stock Exchanges and are found in the continuous market. The detail of the share capital as of 31 st December 2015, is as follows: Shares % Capital Shares % Capital Cobra Concesiones, S.L. (*) 19,750,212 24,211% 4,623,526 75,1% Cobra Sistemas y Redes, S.A. (**) - - 1,532,775 24,9% GIP II Helios, S.à.r.l 19,587,058 24,011% - - Arrowgrass Capital Partners LLP 2,736,090 3,354% - - Morgan Stanley Investment Management INC 2,449,137 3,002% Free Float 37,054,431 45,422% - - Total acciones 81,576, % 6,156, % (*) This Company wholly belongs to Grupo ACS SCE, which has performed a takeover merge of Urbaenergía, S.L. y Energías y Recursos Ambientales, S.A., dated November 2 nd, 2015, being Cobra Concesiones, S.L. the merging company (**) This Company wholly belongs to Grupo ACS SCE. The last change of capital was 27th January There are no restrictions on the transferability of the shares of the Company. 41

43 Results application The results application proposal of the 2015 fiscal year prepared by the Company s Board of Directors and pending approval by the shareholders consists on transferring to: - Legal Reserve 758,758 - Voluntary Reserves 6,828,820 Information about the suppliers average payment period Below is the information required by the Third Additional Prevision of Law 15/2010, of July 5th, (modified through the second Final Provisions Act 31/2014, in December 3rd) and prepared according to the Institute of Accounting and Accounts Auditing (ICAC) in January 29th, 2016, about the information to be included in the financial statements report pursuant to the suppliers average payment period in commercial operations is detailed. Pursuant to what is allowed in the single additional provision of the above mentioned resolution, since this is the first fiscal year in which it is applied, there is no comparison information. Performed and pending payments at the statement closing date 2015 Days Suppliers average payment period 39 Paid operations ratio 39 Pending payment operations ratio 20 Amount (Euro) Total payments performed 1,872,883 Total pending payments 43,356 For the calculation of the average payment period to suppliers the commercial operations corresponding to the delivery of the goods or services rendering accrued since the application date of Act 31/2014, of December 3rd have been taken into account, according to the ICAC Resolution. Commercial creditors due to debts with suppliers of goods or services, included in the commercial creditors entry of the balance statement "Suppliers" and "Suppliers, group companies" of the current liabilities are considered as suppliers for the sole purposes of providing the information scheduled under this Resolution. "Average period of payment to suppliers" is understood as the period elapsing between the delivery of the goods or the rendering of the services and the actual payment of the operation. 42

44 Events after the balance sheet date The Board of Directors has approved on February 25, 2016, to distribute m ( euros per share) as dividend charged to the share premium. This dividend will be paid on March 3, The 25th of February, 2016, the Board of Directors of Saeta Yield S.A. has agreed to acquire 100% of the shares of Extresol 2 S.L. and Extresol 3, S.L., as well as all the credit rights from the current owners regarding the acquired companies, by virtue of the subordinated debt contracts and the participative loans conceded. These assets were included in the RoFO agreements and Saeta Yield held a call option on them. The amount to be paid for this transaction amounts to 119 million. Conditional upon closing of the aforementioned transaction, the Board of Directors of Saeta Yield has approved a 7.7% dividend increase up to 61.4 m per year. This amount will be paid quarterly, and the first increased payment will be distributed c. 60 days after the close of the first quarter of Both the acquisition and the dividend increase are conditional upon closing a final agreement in a contract to be signed during the month of March

45 SAETA YIELD, S.A. The Board of Directors of Saeta Yield, S.A., the 25 of February, 2016, and in accordance with the requirements included in the article 253 of the Ley de Sociedades de Capital and the article 37 of the Código de Comercio, prepared the Individual Financial Statements and Management Report of the fiscal year ending the 31 of December, 2015, constituted by the attached documents preceding this statement, signed by the Secretary of the Board and including the Company s seal. ANNUAL FINANCIAL REPORT STATEMENT OF RESPONSIBILITY The members of the Board of Directors state that, to the best of their knowledge, the individual annual accounts of SAETA YIELD, S.A., for the fiscal year ended on December 31, 2015, issued by the Board of Directors at its meeting of February 25, 2016, and prepared in accordance with applicable accounting standards, present a fair view of assets, financial condition and results of operations of SAETA YIELD, S.A. and that the management reports supplementing the individual consolidated annual accounts contain a fair assessment of the corporate performance and results and the position of SAETA YIELD, S.A, as well as description of the principal risks and uncertainties facing them. Madrid, 25 de febrero de 2016 El Consejo de Administración, D. José Luis Martínez Dalmau D. Honorato López Isla. Consejero Delegado Consejero D. José Andrés Barreiro Hernández D. Daniel B. More Consejero Consejero D. Paul Jeffery D. Cristobal González Wiedmaler Consejero Consejero Dña. Cristina Aldámiz-Echevarría Glez. de Durana Consejera D. Raj Rao Consejero D. Deepak Agrawal Consejero 44

46 Saeta Yield, S.A. and Subsidiaries Consolidated Financial Statements as of December 31 st 2015 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and the Consolidated Director s Report, together with Independent Auditor s Report. Translation of a report and of financial statements originally issued in Spanish based on our work performed in accordance with the audit regulations in force in Spain. In the event of a discrepancy, the Spanish-language version prevails.

47 Saeta Yield, S.A. and subsidiaries CONSOLIDATED STATEMENT OF FINANCIAL POSITION at December 31, 2015 ASSETS Thousands of euros 31/Dec/2015 Thousands of euros 31/Dec/2014 NON-CURRENT ASSETS 1,407,474 1,494,031 Intangible assets (Note 6) Tangible assets - Property, plant and equipment (Note 7) 10, Non-current assets in projects (Note 8) 1,327,664 1,399,594 Non-current financial assets with Group companies and related parties (Note 20) 1,268 1,492 Non-current financial assets (Note 10) 7,068 7,076 - Equity instruments 6,982 6,982 - Other loans Deferred tax assets (Note 19) 61,175 75,707 CURRENT ASSETS 244, ,725 Inventories Trade and other receivables (Note 11) 56,635 57,923 Other accounts receivable from public authorities (Note 19) 1,389 2,130 Other current financial assets with Group companies and related parties (Note 20) 2,172 83,641 Other current financial assets (Note 10) 45,213 54,412 Cash and cash equivalents (Note 12) 138,415 45,947 TOTAL ASSETS 1,651,751 1,738,756 The accompanying Notes 1 to 24 are part of the consolidated Statement of Financial Position for as of December 31 st

48 Saeta Yield, S.A. and subsidiaries CONSOLIDATED STATEMENT OF FINANCIAL POSITION at December, EQUITY AND LIABILITIES Thousands of euros 31/Dec/2015 Thousands of euros 31/Dec/2014 EQUITY 570, ,639 Share capital (Note 13.a) 81,577 61,563 Share premium (Note 13.c) 696, ,455 Reserves (Notes 13.b y 13.d) (127,884) (163,221) Profit for the period of the Parent (Note 13.f) 16,055 35,356 Adjustments for changes in value (95,630) (129,514) - Hedging instruments (Note 3.e) (95,630) (129,514) EQUITY ATTRIBUTABLE TO THE PARENT 570, ,639 NON-CURRENT LIABILITIES 965,230 1,224,722 Non-current project finance (Note 14) 848,247 1,038,921 Other financial liabilities in Group companies and related parties (Note 20) Derivative financial instruments (Note 17) 80, ,548 Deferred tax liabilities (Note 19) 36,377 40,704 CURRENT LIABILITIES 116, ,395 Current project finance (Note 14) 58,307 64,886 Derivative financial instruments (Note 17) 22,488 28,592 Trade and other payables (Nota 18) 19,322 37,867 Current payables to Group companies and associates (Note 20) ,406 Current tax liabilities (Note 19) 4, Other payables to the public authorities (Note 19) 11,351 10,589 Other current liabilities - 66 TOTAL EQUITY AND LIABILITIES 1,651,751 1,738,756 The accompanying Notes 1 to 24 are part of the consolidated Statement of Financial Position as of December 31 st

49 Saeta Yield, S.A. and subsidiaries CONSOLIDATED INCOME STATEMENT at December, Thousands of euros 31/Dec/2015 Thousands of euros 31/Dec/2014 Revenue (Note 22.a) 218, ,911 Capitalized expenses of in-house work on assets (Note 6) - 1,113 Other operating income 1,913 - Cost of materials used and other external expenses (226) (297) Staff costs (Note 22.d) (2,357) (416) Other operating expenses (Note 22.b) (62,366) (63,912) Depreciation and amortization charge (Notes 6, 7 y 8) (77,198) (75,766) Impairment and gains on disposal of non-current assets (Note 6 and 7) (17,668) 23,947 OPERATING INCOME 96, ,580 Financial income (Note 22.c) 512 1,861 Financial costs (Note 22.c) (75,173) (58,094) FINANCIAL RESULT (74,661) (56,233) Profit/(Loss) of companies accounted for using the equity method (Note 10) - (44) PROFIT/(LOSS) BEFORE TAX 21,466 44,303 Income tax (Note 19) (5,411) (8,947) PROFIT/(LOSS) ATTRIBUTED TO THE PARENT 16,055 35,356 Earnings per share attributable to the parent (Note 3.b) From continuing operations Basic earnings per share ( per share) Diluted earnings per share ( per share) The accompanying Notes 1 to 24I are part of the consolidated Income Statement for the fiscal year

50 Saeta Yield, S.A. and subsidiaries CONSOLIDATED STATEMENT OF CASH FLOWS at December, Thousands of euros Thousands of euros 31/Dec/ /Dec/2014 A) CASH FLOWS FROM OPERATING ACTIVITIES 112,018 29, Profit/(Loss) before tax 21,466 44, Adjustments for: 134, ,052 a) Depreciation and amortization charge (Notes 6, 7 y 8) 77,198 75,766 b) Impairment corrections (17,607) (23,947) c) Finance income (Note 22.c) (512) (1,861) d) Financial costs (Note 22.c) 75,173 58,094 e) Results of companies accounted for using the equity method - 44 f) Impairment and gains or losses on the disposal of non-current assets (61) - 3. Changes in working capital (6,821) (32,126) a) Inventories b) Trade and other receivables 14,827 (26,908) c) Trade and other payables (19,128) 23,799 d) Other current assets and current liabilities (2,679) (29,423) e) Other non-current assets and non-current liabilities (59) - 4. Other cash flows from operating activities (36,819) (90,434) a) Interest paid (43,052) (57,095) b) Income tax recovered (paid) (Note 19) 6,233 (33,339) B) CASH FLOWS FROM INVESTING ACTIVITIES 8,872 (612,704) 5. Acquisitions (736) (616,331) a) Non-current assets in projects (736) (3,377) b) Financial investments - (612,954) 6. Disposals / (Receivables) 9,608 3,627 a) Non-current assets in projects b) Financial investments 9,199 3,627 C) CASH FLOWS FROM FINANCING ACTIVITIES (28,422) 579, Equity instruments proceeds 200, ,954 a) Issue of new Share Capital (Note 13.a) 200, , Liability instruments proceeds 60,415 21,756 a) Group companies and associates 60,415 21, Liability instrument payments (253,765) (55,520) a) Credit institutions (250,439) (55,520) a) Group companies and associates (3,326) Dividend payments (35,192) - a) Dividend (Note 13.c) (35,192) - D) NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 92,468 (3,675) Cash and cash equivalents at beginning of the period 45,947 49,622 Cash and cash equivalents at end of the period 138,415 45,947 The accompanying Notes 1 to 24 are part of the consolidated Statement of Cash Flows for the fiscal year

51 Saeta Yield, S.A. and subsidiaries CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME at December, /Dec/2015 Thousands of euros Total 31/Dec/2014 Thousands of euros Total CONSOLIDATED PROFIT/(LOSS) FOR THE YEAR (I) 16,055 35,356 Income and expense recognized directly in equity - Arising from cash flow hedges (8,633) (72,526) - Tax effect 2,158 12,449 TOTAL INCOME AND EXPENSES DIRECTLY RECOGNIZED IN EQUITY (II) (6,475) (60,077) Income and expenses recognized directly in profit/(loss) - Arising from cash flow hedges (Note 22.c) 56,054 34,594 - Tax effect (15,695) (10,378) TOTAL INCOME AND EXPENSE DIRECTLY RECOGNIZED IN PROFIT/(LOSS) (III) 40,359 24,216 TOTAL COMPREHENSIVE PROFIT/(LOSS) (I+II+III) 49,939 (505) The accompanying Notes 1 to 24 are part of the consolidated Statement of Comprehensive Income for the fiscal year

52 Saeta Yield, S.A. and subsidiaries CONSOLIDATED STATEMENT OF CHANGES IN EQUITY at December, Share capital Share premium Thousands of euros Reserves Profit/(loss) attributable to the parent Adjustme nts for changes in value Balance on January 1, (163,125) - (93,653) (256,775) Recognized income and expense ,356 (35,861) (505) Capital increase 61, ,455 (96) ,919 Balance at December , ,455 (163,221) 35,356 (129,514) 355, recognized income and expense ,055 33,884 49,939 Capital increase (Note 1, 13.a and 13.c) 20, ,125 (19) ,120 Dividend payment (Note 13.c) - (35,192) (35,192) 2014 result allocation ,356 (35,356) - - Balance at December , ,388 (127,884) 16,055 (95,630) 570,506 The accompanying Notes 1 to 24 are part of the consolidated Statement of Changes in Equity for the fiscal year Total - 6 -

53 Saeta Yield, S.A. and subsidiaries Notes to the Consolidated Financial Statements for the year ended on December 31, Group Activity Saeta Yield, S.A. was incorporated as El Recuenco Eólica, Sociedad Limitada on May and registered in the Mercantile Registry of Madrid in volume 26,842, page 14, sheet M It became a public limited liability company on October 28, It adopted its current name by means of a resolution of the General Shareholders Meeting on November 28, 2014, which was formalized into a public deed on December 2, 2014 and registered in the Mercantile Registry on December 24, 2014 under entry no. 13. The Company s registered office is at Avenida de Burgos, nº 16D 3º izquierda de Madrid. Saeta Yield, S.A. is the holding of the group of companies (herein after Saeta or Group) that, at December 31 st 2015, is composed by the following companies: Company Registered Office Ownership % Business activity Saeta Yield, S.A. Madrid, Spain 100% Securities holding company Extresol 1, S.L.U Madrid, Spain 100% Energy production Manchasol 2 Central Termosolar Dos, S.L.U Madrid, Spain 100% Energy production Serrezuela Solar II, S.L.U Badajoz, Spain 100% Energy production Al-Andalus Wind Power, S.L.U Madrid, Spain 100% Energy production Parque Eólico Santa Catalina, S.L.U Valencia, Spain 100% Energy production Eólica del Guadiana, S.L.U Huelva, Spain 100% Energy production Parque Eólico Sierra de las Carbas, S.L.U Madrid, Spain 100% Energy production Parque Eólico Tesosanto, S.L.U Madrid, Spain 100% Energy production La Caldera Energía Burgos, S.L.U Madrid, Spain 100% Energy production Parque Eólico Valcaire, S.L.U Granada, Spain 100% Energy production Sistema Eléctrico de Conexión Valcaire, S.L. Madrid, Spain 25% Operation of electrical facilities Activities carried out by the Parent and its subsidiaries (Saeta Group) are classified into the following categories: 1. Exploitation of renewable and conventional energy generating assets, energy distribution and transport assets. Currently, the main activity is exploitation of operating renewable energy generating assets in operation located in Spain. 2. The performance of studies, consulting, projects, research and development services related to the aforementioned services. 3. The administration, management and control of its investees. The above mentioned activities can be developed by the Group companies, fully or partially indirectly, by the ownership of shares or interests in other companies with identical or similar purposes. At the closing of the fiscal year 2014 fiscal yearthe Parent Company belongs to a superior Group subject to Spanish law, the head of which is ACS, Actividades de Construcción y Servicios, S.A (ACS Group) On January 20, 2015, the General Shareholders Meeting of Saeta Yield SA agreed: (i) the offering of shares equivalent to 51% of the Company s equity (extendable by a further 5.1% in the course of the exercise of the Greenshoe Option (over-allotment option) on behalf of the underwriters; (ii) to apply for admission and exchange trading of the shares of the Company on the Stock Exchanges of Madrid, Barcelona, Bilbao and Valencia, and their inclusion in the Exchange Integration System (Sistema de Integración Bursátil or Mercado Continuo) and (iii) to split the shares of the Company in a ratio of ten to one, without altering the amount of share capital. This way, the nominal value of the shares changed from EUR 10 per share to EUR 1 per share

54 Saeta Yield, S.A. and subsidiaries On January 27, 2015, the Shareholders General Meeting approved to increase the capital of the Parent Company in EUR 20,014 thousand by the issuance of 20,013,918 new shares with EUR 1 par value that were subscribed and entirely paid by Energía y Recursos Ambientales, S.A. (subsidiary of the ACS Group) on February 12, These new shares are to be issued with a premium of EUR 9 per share, equivalent to EUR 180,125 thousand. This capital increase was registered in the Mercantile Registry on February 13, On January 30, 2015, the CNMV approved the prospectus document for the sale and listing of the Company shares. On February 16, 2015, Saeta Yield S.A. shares started trading on the Spanish Stock Exchanges at an initial price of EUR per share. The initial placement offer together with the Greenshoe totalled a final placement of 51.78% of the Company shares. On January 21, 2015, the ACS Group and Global Infrastructure Partners (GIP) reached (subject to the successful public offering project) two agreements under which: (1) GIP will acquire 24% stake in Saeta Yield (once it is known the result of the Greenshoe Option); and (2) the ACS Group will sell GIP 49% of the shares of a new asset development company where certain renewable energy assets are integrated on which Saeta Yield SA will hold a right of first offer and call option. These transactions were approved by the antitrust authorities on April Additionally, on January 29, 2015, Saeta Yield, S.A. and ACS Servicios Comunicaciones y Energía, S.L. (ACS SI) signed an Agreement on Right of First Offer and Call Option under which ACS SI has granted Saeta Yield: (a) a right of first offer on ACS SI and its subsidiaries stakes in energy assets in commercial operation which ACS SI intends to sale in the future; and (b) a call option to purchase three solar thermal generation assets in commercial operation also agreed to become jointly controlled by ACS SI, GIP, and Yield Saeta from This agreement is in effect once the conditions precedent were met (see note 13) According to the above aforementioned, and once met the necessary conditions precedent (change of control consent, antitrust authorities approval as well as the listing of the Company), on April 23, 2015 GIP bought ACS Group shares representing 24.01% of the Saeta Yield, S.A. capital stock and the previously mentioned agreements were enforced. As a consequence of the above explained, the Group Saeta Yield no longer belongs to a superior Group as there is no shareholder having control over it. Regulatory Framework The special regime electricity production business in Spain was regulated by the Spanish Electricity Industry Law 54/1997, of November 27, and by the subsequent implementing regulations which are as follows: - Royal Decree 436/2004, in force since April 1, 2004 to June 1, Royal Decree 661/2007, in force since June 1, 2007, regulated until July 2013 the remuneration framework supporting renewable energies under Special Regime for facilities which were registered in the Preassignment Register before January 28, This Royal Decree established two tariff regimes for solar thermal facilities; the market price option through a representative where upper limits ("caps") and lower limits ("floors") are established at the aggregate price (market price plus premium) applicable to the energy market sales; and the tariff option in which the regulated tariff is received. The facilities may choose the sale option for periods of no less than one year. - Likewise, Royal Decree 661/2007 recognized in its transitional provision one that solar thermal facilities, among others, which started up prior to January have the right to maintain premiums and incentives established under previous regime (RD 436/2004, of 12 March) until December 31, 2012 in the market price sale option. - In addition, Royal Decree 6/2009, of April 30, introduced the pre-assignment system, limiting pre-assigned facilities to amounts and premiums set forth in RD 661/2007, as well as those established going forward once the objectives of the 2020 Renewable Energy Plan are reached. - The objective of Royal Decree 1614/2010, of December 7, was to modify and regulate matters related to electricity production from solar thermal and wind technologies, in a deficit control scenario. The main developments were the establishment of a limit on the equivalent operating hours entitled to a premium for - 8 -

55 Saeta Yield, S.A. and subsidiaries solar thermal and wind power technologies, the obligation of the solar thermal energy industry to sell at a regulated tariff for the 12 months following the entry into force of the RD, or the start-up of the plant, if it were subsequent thereto and a 35% reduction of the premiums for wind power technology qualifying under RD 661/2007 and for the period between the approval of the RD and December On January 28, 2012, Royal Decree-Law 1/2012 (RDL 1/2012) was published in the BOE (Official Gazette of the Spanish State), taking effect on the same day, which eliminated the pre-assignment remuneration process and the economic incentives for new facilities which produce electricity from cogeneration, renewable energy sources and waste. - On December 28, 2012, Law 15/2012, of December 27, on tax measures for energy sustainability was published in the BOE which affected all facilities which produce electricity in Spain since Noteworthy among these measures was the creation of a 7% tax on activities related to the production and incorporation of electricity measured at power station bars in the electric system (mainland, island and non-mainland). Likewise, this law also amended the current economic framework of certain renewable energy facilities excluding from the premium economic regime energy attributable to the use of fuel produced in facilities which use non-consumable renewable energy as a primary source, unless they are hybrid facilities which use nonconsumable and consumable renewable energy sources (in which case the energy attributable to the use of the consumable renewable source could have the right to the premium economic regime), and the Ministry of Industry, Energy and Tourism is responsible for establishing the methodology for calculating the aforementioned energy. - Royal Decree Law 2/2013 on urgent measures for the electricity system and the financial sector establishing certain adjustment to certain electricity industry costs was approved on February 1, Since January 1, 2013 premium of the technologies are set at zero, eliminating the floor and ceiling of the market sale option, and maintaining the tariff sale option. Similarly, it was established that the owners of the facilities had to choose between the sale of energy under the regulated tariff option or the option to sell freely on the market without receiving their premium. Once the option is chosen it is irrevocable. For practical purposes, this RDL lead the Group companies to choose the fixed tariff option from Additionally, this RDL modified the ratio for updating the aforementioned tariffs which is now tied to the underlying inflation rather than the CPI. - On July 12, 2013, Royal Decree-Law 9/2013 was published on urgent measures to guarantee financial stability and sustainability of the electricity system which, among others, affects remuneration regime for facilities which produce electricity from cogeneration, renewable energy sources and waste. This Royal Decree-Law, which entered into force on July 14, 2013, repealed, among others, RDL 661/2007, of May 25, and RDL 6/2009, of April 30, which regulated Group companies electricity production facilities, in accordance with the remuneration framework supporting renewable energies described in the previous paragraphs. This Royal Decree-Law introduces significant changes to the applicable legal and economic framework, is based on the following principles: o o o Remuneration of facilities which produce electricity under the special regime will be determined by: i) sales of energy generated valued at market price and ii) a specific remuneration consisting of a period per unit of installed capacity unit which covers, if necessary, those investment costs of a standard facility which cannot be recovered in the market through energy sales, as well as an operation payment which covers, where applicable, the difference between operating costs and expected revenue from the aforementioned standard facility s participation in the market. In order to calculate the specific remuneration for a standard facility over the course of its regulatory useful life, and based on the activity of an efficient and well-managed company, the following will be taken into account: i) the revenue from the energy sales valued at market production price, ii) the average operating costs necessary to carry out the activity and iii) the initial value of the investment of a standard facility. The remuneration regime established for each standard facility will not exceed the minimum level necessary to cover the costs which allow these facilities to compete on an equal basis in the electricity market and to be able to obtain "reasonable profitability" with regard to each standard facility. This reasonable profitability will be based, before tax, on the average performance in the secondary market of 10-yearr government bonds for the ten years prior to the entry into force of the royal decree-law, plus a margin of 300 basis points which may be revised every six years

56 Saeta Yield, S.A. and subsidiaries o o o In order to calculate the specific remuneration for a standard facility, under no circumstances, costs or investments determined by law or administrative acts which are not applicable throughout the entire Spanish territory will be taken into account. Furthermore, only costs and investments resulting exclusively from electricity production will be taken into account. Royal Decree-Law 9/2013 will enable the revision of the parameters for this remuneration regime every six years. Lastly, the following specifications are established for facilities developed in the island and non-mainland electricity systems: i) exceptionally specific standard facilities may be defined and ii) the remuneration regime for these facilities may include, exceptionally, an incentive for investment and execution during a certain period, when installation entails a significant costs reduction for the aforementioned systems. The bases for this new remuneration framework are contained in article 14 of Spanish Electricity Industry Law 24/2013, of December 26, which also specifies criteria and manner in which the remuneration parameters are to be revised for facilities which produce electricity from renewable energy sources, high-efficiency cogeneration and waste with a specific remuneration regime. Thus, remuneration parameters shall be set for regulatory periods which will be effective for six years. Remuneration parameters may be revised prior to regulatory period commencement. If such revision is not performed, parameters will be understood as extended for the whole next regulatory period. Law 24/2013, of December 26, also establishes that reasonable profitability value for the remainder of the regulatory life will be established by law prior to each regulatory period commencement and that, once recognized, under no circumstances standard facility initial investments and regulatory useful lifes may be revised. In addition, this law sets forth that revenue estimates from the energy sales generated for the remainder of regulatory period will be revised every three years, based on market prices and operating hours forecast. Lastly, it establishes that remuneration on operation values for those technologies which operating costs essentially depend on fuel price will be updated at least on an annual basis. In this connection, in February 2014, a Ministerial Order draft which sets all of above-mentioned parameters necessary to determine the remuneration applicable to renewable energies, cogeneration and waste, was provided to interested parties within the context of the hearing process commenced by the Spanish National Securities Market Commission (Comisión Nacional de los Mercados de la Competencia, CNMC). In practice, the Group companies' facilities are subject to the new remuneration model established by the Spanish Electricity Industry Law and by RDL 9/2013, since the latter's entry into force. Thus, revenue received from energy sales made since July 14, 2013 were settled by means of a payment on account of the remuneration which ultimately applies. On June 11, Royal Decree 413/2014, of June 6, regulating the electricity production activity from renewable energy sources, cogeneration and waste (hereinafter, "RD 413/2014") was published in the BOE. In accordance with its preamble, RD 413/2014 fulfils the mandate contained in Royal Decree-Law 9/2013, of 12 July, adopting urgent measures to guarantee electricity system financial stability ("RD-Law 9/2013") consisting of the government approving a new legal and economic regime for the existing facilities which produce electricity from cogeneration, renewable energy sources and waste. RD 413/2014 develops specific principles on which the new regime applicable to facilities which produce electricity from cogeneration, renewable energy sources and waste must be articulated as established in RD-Law 9/2013 and subsequently included in Spanish Electricity Industry Law 24/2013, of December 26 (Ley 24/2013, de 26 de diciembre, del Sector Eléctrico LSE). The purpose of RD 413/2014 is to regulate the new legal and economic regime for the activity of producing electricity from renewable energy sources, cogeneration and waste for both the existing facilities and those to be developed in the future, thereby replacing the repealed Royal Decree 661/2007, of May 25, and Royal Decree 1578/2008, of September 26. Notwithstanding the foregoing, certain aspects of the aforementioned laws remained in force until the approval of the Ministry of Industry, Energy and Tourism Order IET/1045/2014, of June 16, approving the remuneration parameters for standard facilities applicable to certain facilities which produce electricity from renewable energy sources, cogeneration and waste ("Order IET/1045/2014"). The fundamental change introduced this set of rules, that make up the new regulatory framework, focuses on how to pay for all renewable technologies. While in the former regulatory framework compensation was made on the electricity production from the facilities, also called "Fee- in Tariff" or FiT per MWh generated, the new regulation establishes a new compensation system, that parts from the investment made, and rewards based on the installed capacity of the installation

57 Saeta Yield, S.A. and subsidiaries Fiscal year 2015 has been a year of regulatory stability. Developments in regulation to be highlighted is the resolution of 18 December 2015 from the Ministry of Energy, where the criteria are set to participate in the system adjustment services, and certain testing procedures and operating procedures are approved to adapt to the Royal Decree 413/2014. This resolution allows renewable energy to be involved in the electricity setting services market, improving therefore the Group s ability to sell energy in the market. In the case of the solar thermal power plant of Serrezuela Solar II S.L., (which commissioning minute was held in 2014, although the provisional acceptance certificate was obtained in 2013, year in which production was recorded as lower production cost until its commercial operation) it is affected by Royal Decree 1074/2015, of November 27, by which different provisions are amended in the electricity sector. In the article five, amending Royal Decree 413/2014, of June 6, whereby the activity of electricity production is regulated from renewable energy, cogeneration and waste. This change in the wording of RD 413/0214 remedies the regulation error where the facilities put into operation in 2013, and under the original wording of the Eighth Transitional Provision, had to repay all of the premium charged under the old system of remuneration of Royal decree 661/2007, not being entitled to the remuneration specified the new regulatory framework in 2013 (see Note 8). 2. Basis of presentation and basis of consolidation a) Basis of presentation The Consolidated Annual Accounts for the exercise 2015 were prepared by the Board of Directors in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, in conformity with (EC) Regulation no. 1606/2002 of the European Parliament and the Council taking into account all mandatory accounting principles and standards and assessment criteria, so that they present fairly the Saeta Yield Group's consolidated equity and financial position at December 31, 2015 and the results of its operations, the changes in consolidated equity, the consolidated cash flow and changes in incomes and expenses recognized in the Group during the fiscal year Group s configuration was done within the companies under common control reorganization framework performed by ACS Group, by which the Parent Company included participations in the subsidiaries described under Note 1, within the framework of transactions with related parties. The consolidation process was prepared using pre-existent subsidiaries consolidated values at January 1st, fiscal year Consolidated Financial Statements were neither considered as initial annual accounts nor it was applied the acquisition method as they were previously under common control and this was considered as the most proper accounting policy to reflect these transactions in practice and considers this as per the exceptions allowed under IFRS 3 ( pooling of interest predecessor accounting ). Regarding the Consolidated Financial Statements of Saeta Group for 2015, formulated by February 25th, 2016, will be proposed for approval on the General Shareholders Meeting. They were prepared from the accounting records of Saeta Yield, S.A. and the other Group companies, which respective separate financial statements are presented in accordance with local Accounting Standard approved by Royal Decree 1514/2007 (Plan General de Contabilidad). Accordingly, since accounting policies and assessment criteria used in preparing the Group s consolidated annual accounts for the fiscal year 2014 (IFRSs as adopted by the European Union) differ from those used by the Group companies (local standards), required adjustments and reclassifications were made on consolidation to unify the policies and bases used and to make them compliant with International Financial Reporting Standards adopted in the European Union. The Consolidated Financial Statements of 2014, approved by the Annual General Meeting of Saeta Yield S.A. held by Junes 25th, 2015, have been recorded in the Register of Madrid. These Consolidated Financial Statements are presented in Euros (unless otherwise stated) since this is the functional currency of the Group. b) Responsibility for the information and use of estimates The information in these consolidated financial statements is the responsibility of the directors of the Group's Parent. In the consolidated financial statements estimates were occasionally made in order to quantify certain of the assets, liabilities, income, expenses and commitments reported herein. These estimates relate basically to the following

58 Saeta Yield, S.A. and subsidiaries - The useful life of the property, plant and equipment and intangible assets, as well as the non-current assets in projects (Notes 5.a, 5.b and 5.c) - The reasonable value of fixed assets in projects (Note 5.c) - The amount of certain provisions and the probability of occurrence and uncertain amount liabilities or contingent liabilities amount (Note 5.k) - The fair value of certain financial instruments (Note 5.d) - The recovery of the registered deferred tax assets(note 5.h) Although these estimates were made on the basis of the best information available at the date of preparation of these consolidated financial statements on the events analysed, events that take place in the future might make it necessary to change these estimates (upwards or downwards) in coming years, as stablished in the IFRS 8. In the fiscal year of 2015 there have been no significant changes in the estimates made at the closing of the fiscal year c) Variations in the consolidation perimeter During the fiscal year 2015 no change of perimeter variations have been accounted in the consolidation perimeter of Saeta Group. d) Basis of consolidation d.1) Balances and transactions with Group companies and associates In the consolidation process account balances, transactions and results are eliminated when performed between Groups companies. d.2) Subsidiaries and associates The consolidated financial statements include the financial statements of the Parent Company, Saeta Yield S.A., and its associated and affiliated companies by 31st of December Subsidiaries Subsidiaries are defined as companies over which the Group has the capacity to exercise effective control; control is, in general but not exclusively, presumed to exist when the Parent owns directly or indirectly, 50% or more of investee voting power or, even if this percentage is lower or zero, when there are, for example, agreements with other investee s shareholders that provide control to the Group. In accordance with IFRS 10, control is understood as power over the investee, exposure to variable returns, and the ability to use this power to affect the amount of the investor s returns. Subsidiaries financial statements are fully consolidated with those of the Parent. Where necessary, adjustments are made to the subsidiaries financial statements in order to adapt the accounting policies used to those applied by the Group At the time of a subsidiary acquisition, subsidiary assets, liabilities and contingent liabilities are measured at their fair values on the date of acquisition. Any acquisition cost excess with regard to the acquired net assets fair values is recognized as goodwill. Any acquisition cost deficiency in comparison to the acquired net assets fair values (i.e. a discount on acquisition) is credited as a loss on the acquisition date

59 Saeta Yield, S.A. and subsidiaries Results generated by subsidiaries acquired during the fiscal year are consolidated by including in the income statement, generally, in those within the period from acquisition date to the end of the fiscal year. Similarly, the disposed subsidiaries results generated during the year are consolidated by including, exclusively, those from the beginning of the fiscal year to disposal date. Global consolidation has been considered in the companies where effective control is possed: Extresol 1, S.L.U, Manchasol 2 Central Termosolar Dos, S.L.U, Serrezuela Solar II, S.L.U, Al-Andalus Wind Power, S.L.U, Parque Eólico Santa Catalina, S.L.U, Eólica del Guadiana, S.L.U, Parque Eólico Sierra de las Carbas, S.L.U, Parque Eólico Tesosanto, S.L.U, La Caldera Energía Burgos, S.L.U, Parque Eólico Valcaire, S.L.U Investment in associates Associates are companies over which the Group has capacity to exercise significant influence and which are not subsidiaries or interests in joint ventures. Significant influence is generally presumed to exist when the Company holds directly or indirectly 20% or more of the investee s voting power. Investments in associates are accounted for under the equity method and are recognized initially in the acquisition cost. Subsequently, on each reporting date, they are booked at cost, plus the changes in the associate net assets based on the Group's ownership percentage. Acquisition cost excess over the Group's share associate net assets fair value on the date of acquisition is recognized as goodwill. Goodwill relating to an associate is included in the carrying amount of the investment and is not amortized, but will be impaired according to the results of the sensitivity analysis of the impairment test. The profit or loss, net of tax, of associates is included under Profit/(Loss) of Associates in the consolidated income statement to the extent of the Group s ownership percentage. Previously, the appropriate adjustments are made to take into account the amortization of the assets based on their fair value at the date of acquisition. If as a result of losses incurred by an associate its equity is negative, investment should be presented in Group's consolidated Statement of Financial Position with zero value, unless the Group is obliged to give it financial support in which case the corresponding provision for future commitments is recorded The Sistema Eléctrico de Conexión Valcaire, S.L. Company has been consolidated by equity method. The magnitudes of this company are not relevant, and additionally, its participation (EUR 44 thousand) is 100% impaired. These company s main amounts for fiscal years 2015 and 2014 are the following (in thousand Euros): Total Assets 5,082 6,206 Total Equity 159 (160) Year s results e) Error correction In the consolidated financial statements for the fiscal year 2015 the inclusion of error correction has not been necessary. f) Functional currency These consolidated annual accounts for the fiscal year 2015 are presented in euros, since this is the functional currency in Group s operating area. g) Information comparison The information contained in this financial statements, referred to 2014, is presented solely and exclusively for comparison purposes with the information related to the fiscal year

60 Saeta Yield, S.A. and subsidiaries 3. Distribution of Parent Company and Profit per Share results a) Distribution of profit of the Parent Company Profit distribution proposal for the fiscal year 2015, prepared by the Parent Company s Board of Directors, and to be proposed for its approval to the Annual General Shareholders Meeting, is the following: Thousands of euros Value used for distribution: Profit of the Parent Company 7,588 Distribution: Legal Reserve Voluntary Reserve 759 6,829 b) Earnings per share Basic earnings per share The basic profit per share is established dividing the net result attributed to the Group in the period between January 1 and December 31 and the pondered average number of the shares circulating during that period, excluding the average numbered of own shares held during said period. According to this: 31/Dec/ /Dec/2014 Attributed net profit to the Parent Company (thousands of Euros) 16,055 35,356 Average number of outstanding sharers 76,389,772 1,031,983 Basic profit per share (euros) Basic profit per share of the continuing operations (euros) Diluted earnings per share The diluted earnings per share is calculated as the ratio between the net profit of the period attributable to the ordinary shareholders adjusted by the attributable effect to ordinary shares with the dilution effect and the weighted average number of ordinary shares during the period adjusted by the ordinary shares weighted average that would be outstanding if all possible convertible ordinary shares were converted into Company ordinary shares. On December 31st, 2015, the diluted earnings per share is the same that the basic profit per share, since there are no obligations or shares that can be possibly converted into ordinary shares. 4. Accounting Rules and Standards a) Standards, amendments and interpretations coming into force in the current period During the fiscal year of 2015 the following mandatory standards and interpretations came into force and were adopted by the European Union and, where applicable, were used by the Group in the preparation of the present Consolidated Financial Statements

61 Saeta Yield, S.A. and subsidiaries a) New standards, amendments and interpretations of mandatory application in the year starting on January 1, 2015: Approved for their use in the European Union IFRS Interpretations Committee 21 Levies (published in May 2013) Improvements to NIIF Cycle (published on December 2013) Interpretation on when to record the liabilities by taxes or levies of the Administration Amendment of IFRS 3-Business Combinations in the scope in relation to joint ventures amendment to IFRS 13, fair value on the scope of the exception for valuing portfolios and amendment to IAS 40-Investment Property in the interrelation with IFRS 3. Mandatory application fiscal years beginning on or after June 17, January 1, The application of the improvements to the IFRS cycle are prospectively applicable and did not have a material effect in the Consolidated Financial Statements in On the one hand, the Group is applying retroactively since January 1, 2015, the IFRIC 21 which has represented a change in accounting policy for the Group. Among the Group taxes affected by the IFRIC 21 it is necessary to mention IAE, IBI and BICE (Spanish Local Taxes), which previously were accrued during the year following the IFRIC 2 outlines, now they must be recorded in January 1 of the fiscal year in all cases. Nevertheless, due to the nature of this change in the accounting policy it will have no impact in the fiscal year income statement. b) New standards, amendments and interpretations mandatory in subsequent fiscal years to the calendar year that commenced on 1 January 2015 (applicable to 2016 onwards): At the date of the preparation of these consolidated financial statements, the following standards and interpretations had been published by the IASB but had not come into force, either because their application date was after the date of the consolidated financial statements, or because they had not been adopted by the European Union: Amendment of the IAS 19 Contributions of employees to defined rendering plans (published in November 2013) Approved for their use by the European Union The amendment is issued to facilitate the possibility of reducing these contributions from the service cost in the same period in which they are paid if certain requirements are complied with. Mandatory application fiscal years beginning on or after February 1, 2015 (1) 1 The European Union endorsed IFRIC 21 (Bulletin EU June 14, 2014), changing the date of original entry into force established by the IASB (1 January 2014) to 17 June The date of entry into force of this standard IASB was July 1,

62 Saeta Yield, S.A. and subsidiaries Improvements to IFRS Cycle (published on December 2013) Amendment of the IAS 16 and IAS 38 Acceptable depreciation and amortization methods (published in May 2014) Amendment of the IFRS 11 Accounting of the acquisitions and participation in joint operations (published in May 2014) Amendment of IAS 16 and IAS 41: Production Stations (published in June 2014) Improvements to IFRSs Cycle (issued on September 2014) Amendment to IAS 27 equity method in Separate Financial Statements (published on August 2014) Amendments to IAS 1: breakdowns Initiative (December 2014) Minor modifications to a set of rules. Clarifies the acceptable methods of tangible and intangible assets amortization and depreciation, that do not include those based on revenues February 1, 2015 (1) February 1, 2016 Specifies the manner to account the acquisition of a participation in a joint operation which activity constitutes a business. February 1, 2016 The productions stations will be executed at cost, instead of fair value. February 1, 2016 Minor modifications to a set of rules. The equity method in a separate financial statement of an investor is allowed. Various clarifications regarding disclosures (materiality, aggregation, order of the notes, etc.). Not approved yet for their use in the European Union IFRS 15 Income from the contracts with clients (published in May 2014) IFRS 9 Financial Instruments (last step published on July 2014). IFRS 16 Leases (published on January 2016) Amendments to IFRS 10, IFRS 12 and IAS 28: Investment Company (December 2014) Amendments to IFRS 10 and IAS 28 Sale or transfer of assets between an investor and its associate / joint venture (published on September 2014) New standards of recording of income (Replaces the IAS 11, IAS 18, IFRIC 13, IFRIC 15, IFRIC 18 and SIC-31) Replaces the requirements for classification, valuation, recognition and derecognition of financial assets and liabilities, hedge accounting and impairment IAS 39. New lease standard replaces IAS 17. The tenants include all leases on the balance sheet as if they were financed purchases. February 1, 2016 February 1, 2016 February 1, 2016 Mandatory application fiscal years beginning on or after January 1, 2018 January 1, 2019 January 1, 2016 Clarifications on the objection of consolidation of investment companies January 1, 2016 Clarification regarding the result of these transactions whether it is business or assets. No defined date Directors have evaluated the potential impacts of the future application of the European Union approved regulations, and consider that its application will not significantly affect the consolidated Financial Statements. Additionally, as of today, the Group is assessing the impact that the future application of these regulations can have in the consolidated annual accounts once they come into force. 5. Measurement Basis The assessment standards used when preparing Group's consolidated annual accounts, in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, have been as follows: a) Intangible assets Intangible assets are recognized initially at acquisition or production cost and are subsequently measured at cost less any accumulated amortization and any reductions required to reflect accumulated impairment losses. The Group recognizes any impairment loss on the carrying amount of these assets with a charge to "Impairment and

63 Saeta Yield, S.A. and subsidiaries gains on disposal of non-current assets" in the consolidated Income statement. The criteria used to recognize the impairment losses on these assets and, where applicable, any subsequent recovery thereof are similar to those used for property, plant and equipment (Note 5.c.1). Administrative concessions and other rights This heading includes the cost of intangible identifiable rights and assets acquired that will allow future projects to be developed for production facilities and that will be amortized on a straight-line basis over the estimated useful life of these facilities from their entry into services. In addition, these intangible assets are written down and amortized in full when there is deterioration or a loss in value of such assets. Other non-tangible assets This heading includes the acquisition price of the surface rights where particular facilities operated by the Group are located. The aforementioned assets are amortized on a straight-line basis based on their useful life, amounting to 25 years, from their entry into service, since the start of operations of the installation where they are located (the Serrezuela colar thermal plant is located in the municipality of Talarrubias (Badajoz)). Also under this heading are electric power transit easement until its connection with the distribution electric company. Depreciated in its useful life ascending to 25 years. Computer Software Applications The computer software of the Group is amortized according to its useful life, which amounts to 4 years b) Property, plant and equipment Property, plant and equipment acquired for use in the production or supply of goods or services or for administrative purposes are stated in the Statement of Financial Position at the lower of acquisition or production less any accumulated depreciation and less their recoverable amounts. Upkeep and maintenance expenses during the period are charged to the consolidated Income statement. The property, plant and equipment acquired are measured at cost. The costs of expansion, modernization or improvements leading to an increase inproductivity, capacity or efficiency or to a lengthening of the useful life of the assets are capitalized. Work performed by the Group on its own property, plant and equipment is recognized at accumulated cost (external costs plus in-house costs, determined on the basis of in-house materials consumption, and the transformation costs allocated using hourly absorption rates similar to those used for the valuation of work performed for third parties). The companies depreciate their property, plant and equipment by the straight-line method at annual rates based on the following years of estimated useful life: Years of Estimated Useful Life Transport equipment 6 Furniture 5 Information processes equipment 4 Other equipment 5 The Group recognizes any impairment loss on the carrying amount of these assets as indicated in Note 5.c.1 below

64 Saeta Yield, S.A. and subsidiaries c) Non-current assets in projects Non-current assets in projects includes the amount of investments, mainly in energy generation infrastructures which are operated by the Group subsidiaries and which are financed mainly under a project finance structure (nonrecourse financing applied to projects). These financing structures are applied to projects capable in their own right of providing sufficient guarantees to participating financial institutions with regard to the repayment of the funds borrowed to finance them. Each project is performed through specific companies in which the project's assets are financed, on the one hand, through a contribution of funds by developers, which is limited to a given amount, and on the other, generally of a larger amount, through borrowed funds in the form of long-term debt. The debt servicing of these credit facilities or loans is mainly supported by the cash flows generated by the project in the future and by real guarantees on the project assets. Assets in projects are valued at the costs directly allocable to construction incurred through their entry into operation (studies and designs, compulsory purchases, reinstatement of services, project execution, project management and administration expenses, installations and facilities and similar items) and the part relating to other indirectly allocable costs, to the extent that they relate to the construction period. Also included under this heading will be the borrowing costs incurred prior to the entry into operation of the assets arising from external financing thereof, which are recognized as a reduction in financial profit/(loss). Upkeep and maintenance expenses that do not lead to a lengthening of the useful life of the assets or an increase in their production capability are booked as an expense in the period. The costs of expansion, modernization or improvements leading to increased productivity, capacity or efficiency or to a lengthening of the useful lives of the assets are capitalized. The balances of assets removed as a result of modernization or for any other reason are derecognized from the related cost and accumulated amortization accounts. In general, amortization is calculated using the straight-line method, based on assets acquisition cost minus their residual value; the land on which the buildings and other structures stand has an indefinite useful life and, therefore, is not depreciated. The Group depreciates its non-current assets in projects by distributing the cost of the asset over its estimated useful life which is about 25 years for solar thermal facilities and about 20 years for the wind farms. The residual value, useful life and amortization method applied to the companies assets are reviewed periodically to ensure that the amortization method used reflects the pattern in which the economic benefits arising from operating the non-current assets in projects are consumed. At least once every period, companies assess whether there is any indication that an item or group of items of the projects fixed assets is impaired so that, as indicated in Note 5.c.1, an impairment loss can be recognized or reversed in order to adjust the carrying amount of the assets to their value in use. c.1. Impairment of property, plant and equipment, non-current assets in projects and intangible assets At the end of each fiscal year, the Group reviews the carrying amounts of its property, plant and equipment, noncurrent assets in projects and intangible assets to determine whether there is any indication that those assets might have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using an after-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted

65 Saeta Yield, S.A. and subsidiaries If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized as income immediately. Non-current assets associated with projects This heading includes all projects with a limited duration which are classified based on their contractual structure which allows the project costs to be determined with a certain clarity (both in the initial investment phase and the operational phase), and to reasonably forecast the income during their entire life. In order to calculate the value in use of this type of asset, a projection is made of the expected cash flows until the end of the asset's useful life. Therefore, no terminal value is considered. The projections include both known data (based on the project agreements) as well as basic assumptions supported by specific studies carried out by experts (demand, production, etc.). In particular, in order to determine the income, the final remuneration parameters approved by Ministry of Industry, Energy and Tourism Order IET/1045/2014, of 16 June were used (see Note 1). Likewise, macroeconomic data projections are made: inflation, interest rate, etc., using the data provided by independent specialized sources (e.g. Bloomberg). Being assets with a specific financing, the discounted cash flows are those of the project itself. The project's operating cash flows are discounted at a dynamic WACC rate taking into account the characteristics of the financial structure of projects, on which the evolution of the gearing and financial structure varies significantly throughout their useful life. The discount rates used to discount these flows is between a range of 6% and 7% considering dynamic WACC weighted average by years of each asset; The upper limit of the previous interval that generates the dispersion corresponds to less mature projects over which it is applied a higher risk premium to adjust uncertainties that have not been adjusted in the expected future cash flows of these projects (see Note 8). d) Financial instruments d.1) Financial assets Except in the case of financial assets at fair value through profit or loss, financial assets are initially recognized at fair value plus directly attributable transaction costs. The Group classifies its permanent or temporary financial investments, excluding investments in associates and those held for sale, in three categories. In the Consolidated Statement of Financial Position, financial assets maturing within no more than twelve months are classified as current assets and those maturing within more than twelve months as non-current assets. d.1.1) Loans and receivables These are non-derivative financial assets with fixed or determinable payments not traded in an active market. Subsequent to initial recognition, they are measured at "amortized cost" using the "effective interest rate" method. The "amortized cost" is understood to be the initial acquisition cost of a financial asset or liability minus principal repayments, plus or minus the cumulative amortization of any difference between that initial value and the maturity value. In the case of financial assets, amortized cost includes any reductions for impairment. The effective interest rate is the discount rate that exactly matches the net carrying amount of a financial instrument to all its estimated cash flows of all kinds through its residual life. Deposits and guarantees given are recognized at the amount delivered to meet contractual commitments, regarding to water and gas contracts, leases agreements, etc. Period charges for impairment and reversals of impairment losses on financial assets are recognized in the consolidated income statement for the difference between their carrying amount and the present value of the recoverable cash flows

66 Saeta Yield, S.A. and subsidiaries d.1.2) Available-for-sale investments These are non-derivative financial assets designated as available for sale or not specifically classified within any of the previous categories. These relate mainly to investments in the share capital of companies not included in the consolidation scope. Subsequent to their initial recognition, these investments are measured at fair value, except for investments not quoted in an active market whose fair value cannot be estimated reliably, which are measured at cost or a lesser amount if there is evidence of impairment. d.1.3) Cash and cash equivalents This heading includes the cash on hand, in bank current accounts and the deposits and temporary acquisitions of assets which meet all of the following requirements: - They are convertible into cash. - With maturities of three months or less from the acquisition date - They are subject to insignificant risk of changes in value. - They are part of the Company's ordinary cash management policy. When there are restrictions on the availability of the deposits made or current accounts held, the Group's financial assets are classified as "Other current financial assets" in the consolidated financial statement. Derecognition of financial assets The Group derecognizes a financial asset when it expires or when the rights to the cash flows from the financial asset have been transferred and substantially all the risks and rewards of ownership of the financial asset have been transferred, such as in the case of firm asset sales, factoring of trade receivables in which the Group does not retain any credit or interest rate risk. d.2) Financial liabilities d.2.1) Bank borrowings, debt and other securities Interest-bearing bank loans and overdrafts are recognized at the amount received, net of direct issue costs. Borrowing costs, including premiums payable on settlement or redemption and direct issue costs, are recognized in the income statement on an accrual basis using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. In subsequent periods, these obligations are measured at amortized cost using the effective interest method. d.2.2) Financial derivatives Group's activities are exposed to financial risks, mainly of changes in interest rates. In order to cover these exposures, the Group will use interest rate swaps (IRS). Group does not use derivative financial instruments for speculative purposes. Derivatives are recognized at their fair value (see epigraph Procedures for measuring derivatives and the credit risk adjustment ) at the date of the consolidated financial statement. If the value is positive are recorded under Financial instrument receivables and in the Financial instrument payables if these are negative. Variations in fair value are recognized in the Consolidated Income Statement, unless the derivative has been designated and is highly effective as a hedge, in which case it is recognized as follows: Cash flow hedges: these hedges are made to reduce the risk of potential changes in cash flows due to the risk of interest rates associated with long-term floating rate financial liabilities. Changes in the fair value of the derivatives are recognized, in respect of the effective portion of the hedges, in equity under Adjustments for changes in value in the accompanying consolidated Statement of Financial Position. Hedges giving results of between 80% and 125% in the effectiveness test are considered to be effective. The cumulative gain or loss recognized is transferred to the consolidated income statement to the extent

67 Saeta Yield, S.A. and subsidiaries that the underlying has an impact on this account in relation to the hedged risk, and the related effect is deducted from the same heading in the consolidated income statement. At December 31 st, 2015 and 2014 the Group maintains contracted derivative financial instruments within its cash flow coverage strategy associated to project financing. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that time, any cumulative gain or loss on the hedging instrument recognized in equity is retained in equity until the forecast transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognized in equity is transferred to net profit or loss for the year. Group policy on hedging At the inception of the transaction, the Group designates and formally documents the hedging relationship and the objective and strategy for undertaking the hedge. Hedges are only recognized when it is expected, prospectively, to be highly effective from inception of the hedge and in subsequent years to manage to offset the changes in the fair value or cash flows of the hedged risk during the life of the hedge and, retrospectively, that the actual effectiveness of the hedge, which can be reliably calculated, is within a range of % of the results of the hedged item. The Group does not hedge planned financing facilities, but only firm financing commitments. If the cash flows of forecasted transactions were hedged, the Group would assess whether such transactions are highly probable and whether they are exposed to changes in cash flows that might ultimately affect profit of loss for the year. If the cash flow hedge of a firm commitment or forecast transaction results in the recognition of a non-financial asset or a non-financial liability, then, at the time the asset or liability is recognized, the associated gains or losses on the derivative that had previously been recognized in equity are included in the initial measurement of the asset or liability. On the other hand, for hedges that do not result in recognition of an asset or a liability, amounts deferred in equity are recognized in the income statement in the same period as that in which the hedged item affects net profit or loss. Procedures for measuring derivatives and the credit risk adjustment The fair value of the various derivative financial instruments is calculated using techniques widely used in financial markets, i.e., by discounting all of the flows envisaged in each contract on the basis of its characteristics, such as the notional amount and the collection and payment schedule based on spot and futures market conditions at the end of each year. The fair value includes the measurement of the credit risk of the counterparty in the case of the assets or the Group itself in the case of liabilities, in accordance with IFRS 13. The Group measures derivatives not traded on an organized market (OTC) by discounting the expected cash flows and using generally accepted option valuation models based on spot and futures market conditions at the end of each year. The fair value of interest rate swaps is measured by discounting future settlements between fixed and floating interest rates to their present value, in line with implicit market rates, obtained from long-term interest rate swap curves. At December 31, 2014, in order to determine the credit risk adjustment, as indicated in IFRS 13, to the measurement of the derivatives, a technique was used based on calculation through simulations of the total expected exposure (which includes both the current exposure as well as the potential exposure), adjusted by the probability of default over time and the expected loss (or potential loss) assigned to the Company and each of its counterparties. The total expected exposure of the derivatives is obtained using observable market inputs, such as interest rate curves according to market conditions on the measurement date. The inputs applied to obtain internal and counterparty credit risk (determination of the probability of default) are based mainly on applying the Company's own credit spreads or those of comparable companies currently traded on the market (CDS curves)

68 Saeta Yield, S.A. and subsidiaries According to IFRS 13, regarding financial information, the fair value measurements are classified in level 1, 2 or 3, according to the degree in which the applied inputs are observable and its importance for the measurement of the fair value, described as follows: Level 1: The inputs are based on the market prices for comparable items. Level 2: The inputs are based on the market prices for comparable items (of those not included in Level 1), market prices for comparable items on non-active markets, and procedures based on valuation methods where the inputs are observable in the markets or can be confirmed by market data. Level 3: The inputs are not generally observable and, generally are estimations on market behaviors for price determinations for asset and liabilities. The non-observable data used in valuation models are significant in the fair valuations of assets and liabilities. The Group has determined that the majority of the inputs used to measure the derivatives fall within level 2 of the fair value hierarchy, given that the inputs used for the credit risk adjustments fall under level 3, such as credit estimates based on the credit rating or comparable companies to evaluate the probability of the company or the counterparty going bankrupt. The Group evaluated the importance of the credit risk adjustments in the total measurement of derivative financial instruments and concluded that they are not significant. By the 31st of December 2015, the fair value valuations performed on the different derivative financial instruments are included in the level 2 of the fair value hierarchy. d.2.3) Trade and other payables Trade and other payables are not interest bearing and are stated at their nominal value, which does not differ substantially from their fair value. d.2.4) Current/Non-current classification In the accompanying consolidated Statements of Financial Position, assets and liabilities maturing within twelve months are classified as current items and those maturing within more than twelve months are classified as noncurrent items. e) Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership of the leased asset to the lessee. All other leases are classified as operating leases. All of the Group's leases are operating leases. Operating leases: In operating leases, the ownership of the leased asset and substantially all the risks and rewards relating to the leased assets remain with the lessor, who recognizes the assets at their acquisition cost. These assets are depreciated using a policy consistent with the lessor's normal amortization policy for similar items and lease income is recognized in the income statement on a straight-line basis. When the consolidated companies act as the lessee, lease costs, including any incentives granted by the lessor, are recognized as an expense on a straight-line basis. Amounts received and receivable as incentives for the arrangement of operating leases are also allocated on a straight-line basis over the term of the lease. f) Inventories Inventories are measured at the lower of cost and net realizable value. Cost comprises direct materials and, where applicable, direct labor costs and overheads incurred in bringing the inventories to their present location and condition. Trade discounts, rebates and other similar items are deducted in determining the costs of purchase

69 Saeta Yield, S.A. and subsidiaries The cost of inventories is calculated by using the weighted average cost formula. Net realizable value is the estimated selling price less the estimated costs of completion and costs to be incurred in marketing, selling and distribution. The Group assesses the net realizable value of the inventories at year-end and recognizes the appropriate loss if the inventories are overstated. When the circumstances that previously caused the net realizable value of the inventories to decrease no longer exist or when there is clear evidence of an increase in net realizable value because of changed economic circumstances, the amount of the write-down is reversed. g) Termination benefits Under current labor legislation, the companies are required to pay termination benefits to employees terminated without just cause. There are no situations of this nature in these consolidated annual accounts. h) Income tax The current income tax expense is calculated by aggregating the current tax expense arising from the application of the tax rate to the taxable profit (tax loss) for the year, after deducting the tax credits allowable for tax purposes, plus the change in deferred tax assets and liabilities. Deferred tax assets and liabilities include temporary differences measured at the amount expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities and their tax bases, and tax loss and tax credit carryforwards. These amounts are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled. Deferred tax liabilities are recognized for all taxable temporary differences, unless the temporary difference arises from the initial recognition of goodwill or the initial recognition (except in the case of a business combination) of other assets and liabilities in a transaction that affects neither accounting profit/(loss) nor taxable profit/(tax loss). Deferred tax assets are recognized for temporary differences to the extent that it is considered probable that the consolidated companies will have sufficient taxable profits in the future against which the deferred tax asset can be utilized, and the deferred tax assets do not arise from the initial recognition (except in a business combination) of other assets and liabilities in a transaction that affects neither accounting profit/(loss) nor taxable profit/(tax loss). The other deferred tax assets (tax loss and tax credit carry forwards) are only recognized when it is probable that the consolidated companies will have sufficient taxable profits in the future against which they can be utilized. The deferred tax assets and liabilities recognized are reassessed at the end of each reporting period in order to ascertain whether they still exist, and the appropriate adjustments are made on the basis of the findings of the analyses performed regarding deadline and recoverable amounts. It should also be noted that with effect from January 1, 2015, the Company Saeta Yield, SA is the Parent of the new consolidated tax group 485/15 and, therefore, is no longer part of the consolidated tax group to which it belonged in the year 2014, whose head was ACS Actividades de Construccion y Servicios, SA, being subsidiaries of the new tax group the following: - Al - Andalus Wind Power, S.L.U. - La Caldera Energía Burgos, S.L. U. - Parque Eólico Santa Catalina, S.L. U. - Eólica del Guadiana, S.L. U. - Parque Eólico Valcaire, S.L. U. - Parque Eólico Sierra de las Carbas, S.L. U. - Parque Eólico Tesosanto, S.L. U. - Manchasol 2, Central Termosolar Dos, S.L. U. - Extresol 1, S.L.U. - Serrezuela Solar II, S.L.U

70 Saeta Yield, S.A. and subsidiaries i) Income and expense Revenue and expenses are recognized on an accrual basis, i.e. when the actual flow of the related goods and services occurs, regardless of when the resulting monetary or financial flow arises. Revenue is measured at the fair value of the consideration received, net of discounts and taxes. Revenue from sales is recognized when the significant risks and rewards associated with the sold asset are transferred to the purchaser and the asset is no longer managed on a current basis or effective control retained over it. Regarding revenue from the rendering of services is recognized by reference to the stage of completion of the transaction at the end of the reporting period, provided the outcome of the transaction can be estimated reliably. Interest income from financial assets is recognized using the effective interest method and dividend income is recognized when the shareholder's right to receive payment has been established. Interest and dividends from financial assets accrued after the date of acquisition are recognized as income. j) Current/Non-current classification In the accompanying consolidated Statement of Financial Position, balances receivable and payable were classified on the basis of their residual maturity from the statement of financial position date. Balances due to be settled within twelve months are deemed to be current items and those due to be settled within more than twelve months are classified as non-current items. k) Provisions The Group s consolidated financial statements include all the material provisions with respect to which it is considered that it is more likely than not that the obligation will have to be settled. Contingent liabilities are not recognized in the consolidated financial statements, but rather are disclosed, as required by IAS 37. Provisions, which are quantified on the basis of the best information available on the consequences of the event giving rise to them and are reviewed and adjusted at the end of each year, are used to cater for the specific obligations for which they were originally recognized. Provisions are fully or partially reversed when such obligations cease to exist or are reduced, and is applied if the risk occurs. Litigation and/or claims in process At December 31, 2015, certain litigation and claims are in process against the consolidated Group companies arising from the ordinary course of their operations; the risk of these proceedings giving rise to liabilities is considered to be remote and, therefore, no provisions have been recognized in the accompanying Financial Statements in this connection. The main legal and/or administrative proceedings are the following: An administrative proceeding from the City Council of Alcazar de San Juan City Hall against Manchasol 2 Central Termosolar Dos, S.L. for the amount of EUR 3.8 million related to the reviewing of the fulfillment of certain agreements in which the Company was obligated after obtaining a grant during the construction period. No relevant risk is considered as the company believes that it fulfilled the requirements and does not expect possible or anticipated future outcomes. Administrative proceeding from the Customs and Special Taxes Unit (Unidad Especial de Aduanas e Impuestos Especiales) related to the settlement of the electricity tax for the period 2009 to 2012 against Manchasol 2 Central Termosolar Dos, S.L. for a maximum amount of EUR 3.1 million. The proceeding is underway and the Company does not expect significant disbursements because they are their legal advisors believe the risk to be remote. The Group's legal advisers and directors consider that the outcome of litigation and claims will not have a material effect on the consolidated financial statements for the years in which they are settled

71 Saeta Yield, S.A. and subsidiaries l) Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. Investment income earned on the temporary investment of specific borrowings not yet used to acquire qualifying assets is deducted from the borrowing costs eligible for capitalization. All other interest costs are recognized in profit or loss in the year in which they are incurred. m) Consolidated statement of cash flows The following terms are used in the consolidated statement of cash flows, which were prepared using the indirect method, with the meanings specified: Cash flows: inflows and outflows of cash and cash equivalents, which are short-term, highly liquid investments that are subject to an insignificant risk of changes in value. Operating activities: receivables and payables flow originating in Company s common activities, as well as other activities which cannot be classified neither as investment nor as financing and tax payments and collections. Investing activities: the acquisition and disposal of short-term assets and other investments not included in cash and cash equivalents corresponding, mainly to deposits performed in the corresponding banking entities as per reserve funds to debt service required by the subscribed financing agreements. Financing activities: activities that result in changes in equity and borrowings. Including mainly capital increases performed in the fiscal years 2014 and 2015 and payment of dividends in the fiscal year 2015 (see Note 11) as well as payments due to financial agreements depreciation. n) Risk management policy The Group is exposed in the development of its activities to various financial market risks, which manages by applying risk identification, measurement, concentration limitation and supervision. The Risk Management Policy of the Group establishes a framework for action for comprehensive risk management, financial and non-financial. The main functions in risk management are: Those responsible for the risks and execution of the controls will be users or close to the material risk in the company business areas. Accordingly, each business area has the duty to identify the risks associated with the development of its functions, and to inform both the identified risks and the identified needs, in order to take them into account in the overall risk management framework of the company. The Monitoring Committee will develop risk management independently. In addition, along each of the business areas, has the responsibility to identify all risks affecting the business development of the Group Saeta Yield. Internal Audit is responsible for supervising the whole process of risk management independently. The Audit Committee will conduct the supervision of the financial risk management model of the company. The Appointments and Remuneration Committee will perform the supervision of the management model of nonfinancial risks of the company. The Group's risk management is of a preventative nature and is aimed at the medium and long term, taking into account the most probable scenarios with respect to the future changes in the variables affecting each risk. In notes 15 and 16 the management of financial risks and capital management is detailed

72 Saeta Yield, S.A. and subsidiaries o) Related-party transactions The Company performs all its transactions with related parties on an arm's length basis. Also, the Company Directors consider that there are no material risks in this connection that might give rise to significant liabilities in the future. All operations were carried out during the ordinary course of business and related to ordinary operations of the Group companies p) Company actions which impact the environment Any operation, the main aim of which is to prevent, reduce or repair environmental damage is considered to be an environmental activity. Investments made in connection with environmental activities are measured at acquisition cost and are capitalized to non-current assets in the year in which the related expenses are incurred. The costs arising from the business activities aimed at protecting and improving the environment are accounted for as an expense of the year in which they are incurred. The costs incurred on items of property, plant and equipment the purpose of which is to minimize the environmental impact and protect and improve the environment are recognized as an addition to property, plant and equipment. q) Financial instrument disclosures The qualitative and quantitative disclosures relating to financial instruments, risk management and capital management are detailed in the following notes to the consolidated financial statements. Financial asset and liability categories, including derivative financial instruments and accounting policies are detailed in Note 5.d. Classification of the fair value measurements of financial assets in Note 10 and for derivative financial instruments consistent with the hierarchy of fair value established in IFRS 7, in Note 17. (Qualitative and quantitative information) capital disclosure requirements are detailed in Note 16. Quantitative and qualitative accounting and risk management policies are detailed in Note 15. Derivative financial instruments and hedge accounting are detailed in Note 17. Transfers from equity to profit for the year of settlements of hedging derivative financial instrument transactions are detailed in Note 13.d. r) Segment information The activities of the companies under the Saeta Yield Group constitute a single business segment since, on one hand, management and decision-making process are common and, on the other hand, the activities carried out (the generation of electricity through renewable energy sources) and the geographical area (Spain) in which the activities are carried out is common for all companies of the Group

73 Saeta Yield, S.A. and subsidiaries 6. Intangible assets The changes in the fiscal year 2015 and 2014 in Other intangible assets were as follows (in thousands of euros): Fiscal Year 2015 Beginning Balance at 31/Dec/2014 Additions Ending Balance at 31/Dec/2015 Administrative concessions 6,052-6,052 Computer Applications Other intangible assets Total Cost 6, ,262 Computer Applications - (4) (4) Other intangible assets (8) (11) (19) Total accumulated depreciation (8) (15) (23) Impairment losses (6,052) (6,052) Total intangible assets, net Fiscal Year 2014 Begining Balance at 01/Jan/2014 Increases Decreases Ending Balance at 31/Dec/2014 Administrative concessions 6,496 - (444) 6,052 Other intangible assets Total Cost 6,664 - (444) 6,220 Administrative concessions (444) Other intangible assets - (8) - (8) Total accumulated depreciation (444) (8) 444 (8) Impairment losses (6,052) - - (6,052) Total intangible assets, net 168 (8) "Other intangible assets" mainly includes the electricity right of way to the connection with the electricity distributor. There are not intangible assets subject to guarantees nor have any grants been received for the acquisition of the assets recognized. The administrative concessions correspond to the network connection rights, wind studies, licenses and administrative authorizations for the start-up of the Group's wind farms, amounting to EUR 6,113 thousand although at the date of preparation of these consolidated financial statements they have been fully amortized

74 Saeta Yield, S.A. and subsidiaries 7. Tangible Assets Property, plant and equipment The changes in the fiscal year 2015 and 2014 in Other intangible assets were as follows (in thousands of euros): Fiscal Year 2015 Fiscal Year 2014 Beginning Balance 31/Dec/2014 Additions Ending Balance at 31/Dec/2015 Land and buildings 9,856-9,856 Furniture Transport equipment Information Technology equipment Other equipment Total Cost 10, ,322 Furniture (22) (11) (33) Transport equipment (124) (40) (164) Information Technology equipment - (11) (11) Other equipment - (2) (2) Total accumulated depreciation (146) (64) (210) Impairment losses Total net tangible assets - property, plant and equipment 10, ,112 Beginning Balance 01/Jan/2014 Additions Ending Balance at 31/Dec/2014 Land and buildings 9,856-9,856 Furniture Transport equipment Total Cost 10,148-10,148 Furniture (16) (6) (22) Transport equipment (89) (35) (124) Total accumulated depreciation (105) (41) (146) Impairment losses Total net tangible assets - property, plant and equipment 10,043 (41) 10,002 The Group has taken out insurance policies to cover the possible risks to which its property, plant and equipment are subject and the claims that might be filed against it for carrying on its business activities. These policies are considered to adequately cover the related risks. "Land and buildings" include the land on which the Extresol 1 and Manchasol 2 solar thermal plant facilities are located and the lands of the Group's other assets are held under operating leases (see Note 9). There are no items of property, plant and equipment fully depreciated in use or outside of Spanish territory at December 31, At December 31, 2015, there was no indication of any impairment of the Group s property, plant and equipment

75 Saeta Yield, S.A. and subsidiaries 8. Non-current assets in projects The balance of "Non-current assets in projects" in the consolidated Statement of Financial Position at December 31, 2015 and 2014, includes the costs incurred by the fully consolidated companies in the construction, services and power generation centers whose operation forms the subject matter of their respective activities. The aforementioned amounts relate mainly to the property, plant and equipment associated with projects financed through a project finance structure. The changes during the fiscal year of 2015 and 2014 in "Tangible assets - Property, plant and equipment" were: Fiscal Year 2015 Beginning balance (at 31/Dec/2014) Investment (thousands of euros) Accumulate d depreciation Impairment losses Carrying amount 1,886,250 (335,632) (151,024) 1,399,594 Additions or charges (Note 1) (12,418) (77,119) 17,607 (71,930) Ending balance (at 31/Dec/2015) 1,873,832 (412,751) (133,417) 1,327,664 Fiscal Year 2014 Investment (thousands of euros) Accumulated depreciation Impairment losses Carrying amount Beginning balance (at 1/Jan/2014) 1,883,962 (259,915) (174,971) 1,449,076 Additions or charges 2,288 (75,717) 23,947 (49,482) Ending balance (at 31/Dec/2014) 1,886,250 (335,632) (151,024) 1,399,594 All the project investments made by the Group at December (in thousands of Euros) are as follows: Company Extresol I Manchasol II Serrezuela Solar II P.E. Valcaire P.E. Sierra de las Carbas Type of infrastructure Thermal solar power plant Thermal solar power plant Thermal solar power plant Wind Farm Start date of operation December 2009 December 2011 Investment Accumulated amortization Impairment losses Net value 354,343 (79,718) (26,863) 247, ,071 (49,794) (65,615) 252,662 January ,202 (19,536) (25,197) 226,469 November ,626 (3,346) (1,342) 17,938 Wind Farm June ,279 (22,569) - 42,709 P.E. Tesosanto Wind Farm June ,158 (19,584) - 64,575 P.E. La Caldera Wind Farm January ,663 (14,411) - 25,252 Al-Andalus Wind Farm Dec Aug ,000 (147,999) - 247,001 P.E.Santa Catalina Wind Farm January ,081 (37,242) (11,152) 143,687 Eólica del Guadiana Wind Farm may-11 81,409 (18,552) (3,248) 59,609 Total Investment 1,873,832 (412,751) (133,417) 1,327,

76 Saeta Yield, S.A. and subsidiaries Non-current assets in projects relate to the facilities necessary to exploit the solar thermal plants and the wind farms operated by the Group companies. The costs capitalized relate to the costs directly attributable to the project, including studies and projects, engineering work, the obtainment of the necessary permits and advances given to the owners of the affected land. Non-current assets recordings correspond, mainly, to Serrezuela Solar II as per Note 1. The Group companies take out insurance policies to cover the possible risks to which their property, plant and equipment are subject. These policies are considered to adequately cover the related risks. At each reporting date, the Group reviews the carrying amounts of its tangible assets, non-current assets in projects, and intangible assets to determine whether there is any indication that those assets might have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Each asset s recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted, for each asset, to their present value using an after-tax (WACC) discount rate that reflects current market assessments of the time value of money and the risks specific to the asset which have not yet been adjusted in estimated future cash flows. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognized as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset (cashgenerating unit) in prior years. A reversal of an impairment loss is recognized as income immediately. Use value devaluates as per Note Nota 5.c. Fiscal year reversions correspond, specifically, to the change in accounting value (cost) and other adjustments with little significance of specific not very mature plants in initial production stages. In addition, the Group has conducted, in the fiscal year 2015, a sensitivity analysis of the results of the impairment test to changes in the WACC discount rate (considered the most important and sensitive hypotheses to future variations) of 50 basis points, with the following results: - A 0.5% increase in the WACC of each project would imply an additional impairment provision of EUR 24 million, instead of the reversal of EUR 17 million. - A 0.5% decrease in the WACC of each project would imply an additional reversal of the impairment amounting to EUR 32 million. In order to guarantee the compliance with the obligations under the Financing Agreements described in Note 14, certain Group companies have transferred outright to the lenders all the collection and other rights and guarantees deriving from the contracts for the construction work, operation, maintenance and refurbishment of the plants management and administration services, contracts for the use of land, purchase and sale of energy, the compensation payments from the insurance policies arranged, together with the pledge of all of the shares capital of certain Group companies. Also, as of 31 December 2015, EUR 1,083 million are being used to guarantee the financing agreements

77 Saeta Yield, S.A. and subsidiaries 9. Leases With respect to the land on which the Group's solar thermal plants and wind farms are located, except for those mentioned in Note 7, the other Companies have entered into operating leases maturing at long-term. At December 31, 2015 and 2014, the future minimum lease payments under the aforementioned non-cancellable leases (in thousands of euros) are as follows: 31/Dec/ /Dec/2014 In one year 3,639 3,609 Two to five years 14,525 18,164 Over five years 72,644 72,644 Total 90,808 94, Other current and non-current financial assets The detail of Other current and non-current financial assets at December 31, 2015 and 2014 is as follows (in thousands of euros): a) Other non-current financial assets 31/Dec/ /Dec/2014 Equity instruments 6,982 6,982 Deposits and guarantees Total 7,068 7,076 Non-current equity instruments relate mainly to investments in the various group companies in companies in which they participate together with other companies outside the Group, to provide ancillary services to their activities, and on which no influence remains significant. It should also be noted that these companies are mainly nonprofit EIG whose magnitudes are not significant. These equity instruments are valued at historical cost or net book value as they cannot be estimated reliably at fair value, and are detailed as follows: Extresol-1, S.L.U. Serrezuela Solar II, S.L.U. Sistemas de Evacuación Albuera SET Olivenza-Vaguadas 4,726-4,726 Extresol Almacenamiento GNL Evacuación Valdecaballeros - 2,246 2,246 Total 4,736 2,246 6,982 b) Other current financial assets Total By the 31st of December 2015 and 2014 the details on this account are as follows (in thousands of euros): Deposits and guarantees 45,141 54,412 Interest receivable, short term 72 - Total 45,213 54,412 The deposits and guarantees relate, mainly, to the deposits made in the corresponding banks for the debt service reserve fund, required by the underwritten financing agreements (note 14) that must be maintained by the Group companies until the project finance related thereto is cancelled

78 Saeta Yield, S.A. and subsidiaries In the fiscal year 2015 were improved the debt service reserve account by EUR 12,195 thousand, resulting from the amendments to the financing agreements (see Note 14). Additionally, includes EUR 1,000 thousand in 2015 from nonimmediate available deposits, recorded as cash equivalents (Note 12). Interest on short-term receivables correspond to accrued interest on deposits above. The short term interest receivable correspond to the accrued interests from the aforementioned deposits. 11. Trade and other receivables The carrying amount of trade and other receivables as of 31 December 2015 and 2014, does not defer from their fair value, the detail being as follows (in thousands of euros): 31/Dec/ /Dec/2014 Trade receivables for sales and services 29,456 1,715 Trade receivables for amounts to be billed 26,085 56,194 Other receivables from Group companies and related companies (Note 20) 1, Total 56,635 57,923 Trade receivables for amounts to be billed includes: accrued remuneration by the Comisión Nacional del Mercado de la Competencia (CNMC) in the months of November and December and unbilled when dealing with assessments issued by the CNMV and whose average collection period is 60 days, amounting to EUR 23,649 thousand 100% invoiced and 84.08% collected at the date of the preparation of this accounts the difference between the companies compensation approved by the CNMC accrued until October 31, 2015 and the billed amount. This difference was equivalent to 8,68% of the total retribution to the remuneration on investment and the remuneration on operation (the latter only applies to solar thermal power plants), amounting to EUR 18,481 thousand at December 31, 2015, according to the provisions of Law 24/2013 concerning sharing of the electricity market agents in the financing of the temporary imbalances between revenues and costs of the electricity system by the delay in billing for a percentage of the monthly statements. On the date of the preparation of these financial statements the percentage delayed in the billing was equivalent to 15.92% with regard to the remuneration accrued until October 31, The Group considers that the book value of its trade receivables reflect its fair value. 12. Cash and cash equivalents Cash and Cash Equivalents includes the Group's cash and short-term bank deposits. The cash amount accounted by the 31st of December 2015 corresponds to the amounts deposited in current accounts, amounting to EUR 106,565 thousand(eur 45,947 thousand in 2014), being all of them fully available. The carrying amount of these assets reflects their fair value. Current bank deposits correspond to two deposits with full immediate availability contracted in the first half of 2015 for a total amount of EUR 40,000 thousand and an annual fixed rate of 0.62% and 0.40% each. By the end of the 2015 period the account is EUR 20,000 thousand in Abanca and EUR 11,850 thousand in Ibercaja. On March 27, 2015, Saeta Yield, S.A signed a Revolving Credit Facility Agreement for a maximum amount of EUR 80,000 thousand with Banco Santander, S.A, Bank of America, National Association Branch in Spain, Citibank International Limited Branch in Spain, HSBC Bank PLC Branch in Spain and Societe Generale Branch in Spain, which is undrawn at the time of preparation of these Consolidated Financial Statements. The term of the contract is three years and it accrues interest every six months at Euribor plus 275 bp. Agreement due date is March 27, 2018 and interests are accrued biannually at Euribor %

79 Saeta Yield, S.A. and subsidiaries This credit agreement along with cash and other cash equivalents registered assume that the Group as of December 31st, 2015, has financial resources of EUR 218,415 thousand. 13. Equity The composition and movements of the equity of the Group as of December 2015 and 2014 are detailed in the Consolidated Statement of Changes in Equity. a) Share capital On December 31, 2014, the Parent Company share capital was 6,156,301 shares of EUR 10 par value each, numbered from 1 to 6,156,301, which were fully subscribed, paid and recorded in the Mercantile Registry. This represented a share capital of EUR 61,563 thousand. On January 20, 2015 the General Meeting of the Parent Company approved to split the nominal value of each of the shares making up the share capital at the rate of ten to one, without being altered, the total amount of share capital (Note 1). Therefore the share capital happened to be composed of 61,563,010 shares of EUR 1 par value each. Subsequently, on January 27, 2015, the General Meeting approved a capital increase of the Parent Company of EUR 20,014 thousand by issuing 20,013,918 shares of a EUR 1 par value. The shares were issued with a premium of EUR 9 per share, ie with a total share premium of EUR 180,125 thousand. The shares as well as the issue premium were fully paid at the time of their subscription, on February 12, 2015 and recorded on February 13th, Consequently, on December 31st, 2015 the Parent Company share capital was comprised of 81,576,928 shares of EUR 1 par value each, all of the same class and series and fully subscribed and disbursed, which represent a share capital of EUR 81,577 thousand. All the Saeta Yield, S.A. shares are listed, since February 16, 2015, in the Spanish Stock Exchanges and are contracted in the continuous market. The significant shareholders on December 31st, 2015 and 2014 are the following: Shares % Capital Shares % Capital Cobra Concesiones, S.L. (*) 19,750, % 4,623, % Cobra Sistemas y Redes, S.A. (**) - - 1,532, % GIP II Helios, S.à.r.l 19,587, % - - Arrowgrass Capital Partners LLP 2,736, % - - Morgan Stanley Investment Management IINC 2,449, % - - Free Float 37,054, % - - TOTAL 81,576, % 6,156, % (*)This company is owned 100% by Grupo ACS SCE, which has carried out a merger by absorption with Urbaenergía, S.L.; and Energías y Recursos Ambientales, S.A., dated November 2, 2015 being Cobra Concesiones the absorbing company. (**) This company is owned 100% by Grupo ACS SCE. Each share confers the holder the right to cast a vote and all shares grant the same dividend and voting rights. The Group does not hold own shares. b) Legal reserve Under the Consolidated Text of the Spanish Companies Law, 10% of net profit for each year must be transferred to the legal reserve until the balance of this reserve reaches at least 20% of the share capital The legal reserve can be used to increase capital provided that the remaining reserve balance does not fall below 10% of the increased share capital amount. Otherwise, until the legal reserve exceeds 20% of share capital, it can only be used to offset losses, provided that sufficient other reserves are not available for this purpose

80 Saeta Yield, S.A. and subsidiaries At 31 December 2015 the legal reserve of the Group's Parent amounts for 1.34% of the share capital, accounting for EUR 219 thousand. c) Share premium At December 31, 2015, the share premium amounted to EUR 696,388 thousand. The share premium amount arose as a result of the two share capital increases carried out on 31 October 2014 for EUR 143,239 thousand and EUR 408,216 thousand, and the capital increase carried out on February 12, 2015, for an amount of EUR 180,125 thousand, full subscribed and registered. Additionally, during the fiscal year 2015 have been made the following dividend payments charged to the share premium, as the Consolidated Text of the Spanish Companies Law establishes no specific restrictions as to the availability of this balance. - On 29 May 2015 a quarterly dividend distribution was carried out, charged to the share premium, amounting to EUR per share (equivalent to a total amount of EUR 6,690 thousand), approved by the Board of Directors of 26 March 2015, having the capability of distributing dividends delegated by the General Meeting of Shareholders held on January 27, On 28 August 2015 a quarterly dividend distribution was carried out, charged to the share premium, amounting to EUR per share (equivalent to a total amount of EUR 14,251 thousand), approved by the Board of Directors of 29 July 2015, having the capability of distributing dividends delegated by the General Meeting of Shareholders held on January 27, On 27 November 2015 a quarterly dividend distribution was carried out, charged to the share premium, amounting to EUR per share (equivalent to a total amount of EUR 14,251 thousand), approved by the Board of Directors of 5 November 2015, having the capability of distributing dividends delegated by the General Meeting of Shareholders held on January 27, Thus, the total amount of dividends paid during the year 2015 amounted to EUR 35,192 thousand, equivalent to EUR per share, which corresponds to the shareholder remuneration policy of the company, set out in the initial public offering prospectus of Saeta Yield, S.A. d) Hedging instruments This section of the appended Consolidated Summarized Intermediate Financial Statements gathers the net amount of the variations of financial derivatives value assigned as cash flow coverage instruments, net of its tax effect. The changes in Hedging instruments during the fiscal year of 2015 and 2014 were as follows (in thousands of euros): Beginning balance (129,514) (93,653) Income/(expenses) recognized in Equity (6.475) (60,077) Transfers to profit or loss 40,359 24,216 Ending balance (95,630) (129,514) The Group has arranged interest rate hedges for a notional amount of EUR 683,660 thousand as of December 31st, 2015, to finance wind farms and thermosolar plants (see Note 18). They consist of interest rate swaps maturing between 2015 and The value of these financial instruments, net of the tax effect taking into account the new tax rates introduced by Law 27/2014, of 27 November, amounts to negative EUR 78,441 thousand at December 31st, 2015 (negative EUR 129,514 thousand a 31 December 2014). Additionally, is included at December 31, 2015 a net of tax impact amount of EUR 18,309 thousand the accumulated result of derivatives signed by the subsidiary Al Andalus Wind Power, which hedge accounting has been discontinued prospectively in the month of February 2015, as a result of the cancellation of contracts signed to date, without changing the underlying debt, so the transaction remains highly probable (see Note 17). This amount is applied to the income statement as the initially hedged transaction occurs. At December 31, 2015, the impact of the prospective

81 Saeta Yield, S.A. and subsidiaries discontinuation for the months February to December in the income statement has resulted in the recording of financial expenses amounting to EUR 5,936 thousand (Note 22.c). e) Net profit attributable to the Parent The contribution of each consolidated company to December 31, 2015 and 2014 profit (loss) was as follows (in thousands of euros): Company Total consolidated profit/(loss) 2014 Total consolidated profit/(loss) 2015 Saeta Yield (7,434) 624 Extresol-1 S.L.U. (6,825) 10,069 Manchasol 2 Central Termosolar Dos S.L.U. (5,939) 4,995 Serrezuela Solar II, S.L.U. 28,637 (833) Parque Eólico Valcaire, S.L.U P. E. Sierra de las Carbas S.L.U. 1, P.E.Tesosanto S.L.U. 1,620 (52) La Caldera Energía Burgos, S.L.U. 377 (182) Al-Andalus Wind Power S.L.U. 3,483 2,254 Parque Eólico Santa Catalina S.L.U. (426) 7,621 Eólica del Guadiana, S.L.U ,237 Total 16,055 35, Current and non-current project finance At December 31, 2015 and 2014, the Group had been granted the following loans (in thousands of euros): 31/Dec/ /Dec/2014 Current Non-current Current Non-current Project financing 56, ,417 58,927 1,048,212 Loan arrangement costs - (8,170) - (9,291) Unmatured interest payable 1,664-5,959 - Total 58, ,247 64,886 1,038,921 The detail, by maturity, of the non-current non-recourse Project Finance at December 31, 2015 is as follows: Maturity Project Finance , , , and subsequent years 676,473 Total 856,

82 Saeta Yield, S.A. and subsidiaries The detail of the gross financial indebtedness of the financing of each Company, detailing maturities and conditions at December 31st, 2015 is as follows: Company Contracting Date Maturity Conditions Outstanding (in thousands of euros) Current Noncurrent Extresol I July 2007 June 2029 EUR6M +1.05%* 9, , ,609 Manchasol II April 2009 March 2029 EUR6M +3.10%* 9, , ,512 Al-Andalus July 2007 July 2027 EUR6M +0.80%** 18, , ,097 P.E. Santa Catalina August 2008 June 2028 EUR6M +1.30%** 7, , ,781 Eólica del Guadiana February 2010 December2027 EUR6M +3.00%** 2,702 45,215 47,917 P.E. Sierra de las Carbas December 2007 December2027 EUR6M +0.80%** 3,033 42,348 45,381 P.E. Tesosanto December 2007 December2027 EUR6M +0.80%** 4,044 54,596 58,640 La Caldera Energía Burgos December 2007 December2027 EUR6M +0.80%** 1,754 26,369 28,123 Total Total 56, , ,060 * These financings will apply different spreads based on the coverage ratio of debt service in the previous year. ** These financings will apply different spreads for several periods of years from the start of operation. With the exception of Eólica del Guadiana that changes period and spread in the sixth year, the rest of the wind farms change in the fifteenth year. On December 31, 2015 and 2014, the entire bank borrowings are comprised of the amount of the financing associated with the projects listed in Note 8. These amounts are increased by the accrued interest payable and reduced by the debt arrangement expenses. These financing structures are applied to projects capable in their own right of providing sufficient guarantees to the participating financial institutions with regard to the repayment of the funds borrowed to finance them. The project's assets are financed, on the one hand, through a contribution of funds by the developers, which is limited to a given amount, and on the other, generally of a larger amount, through borrowed funds in the form of long-term debt. The debt servicing of these loans is supported by the cash flows to be generated by the project in the future and by security interests in the project's assets. The payment obligations arising from these financing agreements are no recourse to shareholders, and bear a market interest rate. The Group companies' financing agreements include a series of obligations which must be fulfilled during the terms thereof and which are mainly the following: Extresol I: o o o Not to dispose, encumber or transfer in any way the rights or assets for a cumulative amount greater than EUR 600,000 at 2006 values (according to the acquisition's carrying amount). Establish within a period of twelve months from completion of the works the debt service reserve fund. The DSCR is greater than 1 in any given year and it is not less than 1.05 in two consecutive years. o The gearing ratio is greater than 10/90. Not to incur any other debt other than those mentioned, nor grant loans, guarantees, donations or any other discretional gifts

83 Saeta Yield, S.A. and subsidiaries Manchasol 2: o o Not to encumber in any way any of the assets or items of its property plant and equipment, either as a whole or one or various assets. Establish within a period of twelve months from completion of the works the debt service reserve fund. o Maintain a gearing ratio of 20/80. o o Not to incur any other debt other than those mentioned, nor grant loans, guarantees, donations or any other discretional gifts. Not have a debt service coverage ratio below 1.05 during two consecutive years or below 1.00 in any year. Al-Andalus: o Not to dispose, sell, mortgage or encumber in any other way any of the assets or items of its property plant and equipment, either as a whole or one or various assets, for an amount greater than EUR 500,000 (according to the acquisition's carrying amount) throughout the term of this agreement. o o Maintain a senior debt/equity ratio equal to or less than 85 per cent throughout the term of the loan. Maintain a DSCR greater than 1.05x. P.E. Santa Catalina: o o o Not to encumber in any way any of the assets or items of its property plant and equipment, either as a whole or one or various assets, for an amount greater than EUR 500,000. Maintain a senior debt/equity ratio equal to or less than 80 per cent throughout the term of the credit facility. Not to incur any other debt other than those mentioned, nor grant loans, guarantees, donations or any other discretional gifts. Eólica del Guadiana: o o Maintain a credit facility/equity ratio of no more than 32.9/67.1 per cent. Not have a debt service cover ratio below 1.10 during the life of the credit facility. Tesosanto, Sierra de las Carbas y La Caldera: o o o Not to dispose, sell, mortgage or encumber in any other way any of the assets or items of its property plant and equipment, either as a whole or one or various assets, for an amount greater than EUR 500,000 (according to the acquisition's carrying amount) throughout the term of this agreement. Maintain a senior debt/equity ratio equal to or less than 90 per cent throughout the term of the loan. Not have a debt service coverage ratio below 1.05 during two consecutive years or below 1.03 in any year. As of today s date, the entire financial and non-financial covenants established in the financing agreements have been met, and these financial commitments are not expected to be breached in the future. Within the financial covenants established in the financing agreements there are restrictions on the distribution of dividends

84 Saeta Yield, S.A. and subsidiaries The main variations performed in the Financing Agreements in the fiscal year 2015 has been the following: - On February 18, 2015, Extresol 1 has performed an early amortization of the debt with credit entities for an amount of EUR 79,000 thousand, adjusting proportionally the notional of the hedging contracts to keep complying with the established in the strategy and hedging relationships definition of the Company. All other terms (maturity, payment schedule and interest rates) of the Financing Agreement have not been modified, only has been scaled down the amount of each of the quotas. This advanced amortization has caused derivative breakup fees for an amount of EUR 14,633 thousand recorded under the section Financial expenses of the Summarized Consolidated Results Statement (see Note 22.c). - On February 18, 2015, Manchasol 2 has performed an early amortization of the debt with credit entities for an amount of EUR 54,500 thousand, adjusting proportionally the notional of the hedging contracts to keep complying with the established in the strategy and hedging relationships definition of the Company. All other terms (maturity, payment schedule and interest rates) of the Financing Agreement have not been modified, only has been scaled down the amount of each of the quotas. This advanced amortization has caused derivative breakup fees for an amount of EUR 10,070 thousand recorded under the section Financial expenses of the Summarized Consolidated Results Statement (see Note 22.c). - On February 18, 2015, Sociedad Parque Eólico Santa Catalina has performed an early amortization of the debt with credit entities for an amount of EUR 7,400 thousand, adjusting proportionally the notional of the hedging contracts to keep complying with the established in the strategy and hedging relationships definition of the Company. All other terms (maturity, payment schedule and interest rates) of the Financing Agreement have not been modified, only has been scaled down the amount of each of the quotas. This advanced amortization has caused breakup fees for an amount of EUR 1,256 thousand recorded under the section Financial expenses of the Summarized Consolidated Income Statement (see Note 22.c). - On December 22, 2015, the company Serrezuela Solar subscribed a contract for the financing (project finance) with Banco Santander (Agent Bank) and Societe Generale, BNP Paribas Fortis SA / NV and Credit Agricole Corporate and Investment Bank, Branch and Societe Generale, Branch in Spain amounting to EUR 135 million, and with the European Investment Bank for an amount of EUR 50 million. These loans bear a floating interest rate, calculated as an addition to the reference interest rate (Euribor) a spread of 1.75% growing over the agreement duration, and 0.58% respectively, having agreed a final maturity in This financing agreement has commitments to be fulfilled similar to the aforementioned ones. By December 31, 2015 no amount has been drawn. 15. Financial risk management In view of its business activities, the Group is exposed to various financial market risks, arising mainly from the ordinary course of its operations. The market risks include mainly interest rate, liquidity and credit risk. Interest rate risk This risk arises from changes in future cash flows from borrowings bearing interest at floating rates as a result of fluctuations in market interest rates. The objective of the management of this risk is to mitigate the impact on the cost of the debt arising from fluctuations in interest rates. For this purpose financial derivatives which guarantee fixed interest rates or rates with a narrow range of fluctuation are arranged for a substantial portion of the borrowings that may be affected by this risk. The Group mitigates interest rate risk by arranging hedges, as disclosed in Note

85 Saeta Yield, S.A. and subsidiaries The sensibility of the Profit and the Equity of the Group related to variations in the interest rate, considering the hedging instruments, is the following (in thousands of Euro): Change in interest rate Effect on profit Effect on Net Equity (basis points) (before tax) (after tax) 31/Dec/ ,434 (25) (209) (9,093) Liquidity risk This risk arises from the timing differences between borrowing requirements for business investment commitments, debt maturities, working capital requirements, etc. and the funds obtained from the conduct of the Group's ordinary operations, different forms of bank financing, capital market transactions and divestments. The objective is to ensure a balance in relation to flexibility, term and conditions of the credit facilities arranged on the basis of the projected short-, medium- and long-term financing needs. The Directors believe the Group s sensitivity to liquidity risk is scantly material at December 31st, Simultaneously with Saeta Yield, S.A. public share offering, ACS Group an issue premium capital increase for 200 million Euros, which, mostly, was used to reduce the principal of the debt associated to financing some projects as well as restructuring associate coverage derived from financial instruments (see Note 14). These restructuring reduced payment pending principal and therefore the debt s total service cost (interests and principal repayment). From the Administrators point of view this better cash generation position, together with the liquidation of balance derived from commercial and tax transactions with related companies (note 20) performed as per Saeta Yield Group leaving control from ACS Group, will result in better fulfillment of companies financial commitments and guarantee the activities normal development in the foreseeable future, as per the business environment expected evolution. In addition, as indicated in Note 12, the Group has a total undrawn credit facilities as of December 31, 2015 of EUR 218,415 thousand, sufficient coverage for current liquidity needs of the Group. Credit risk In general, the Company holds its cash and cash equivalents at banks with high credit ratings. The main risk associated with customers is due to the concentration of customers since the Group's activity, the generation of electricity from renewable energy sources, is regulated by the Ministry of Industry and Tourism. Credit risk is considered to be low since the two Saeta Yield s main counterparties nowadays are: (i) the Iberian Electricity Market Operation (OMIE) that has a flawless payment history and; (ii) the Spanish Electricity Tariff, which, once the regulatory reform was concluded, is demonstrating to have solvent and balanced economics Electricity Market Price risk The remuneration of facilities which produce electricity under the special regime will be determined by: i) the sale of energy generated valued at market price and ii) a specific remuneration consisting of a period per unit of installed power which covers, where appropriate, if necessary, the investment costs of a standard facility which cannot be recovered in the market through the sale of energy, as well as a period for the operation which covers, where applicable, the difference between the operating costs and the revenue from the aforementioned standard facility's participation in the market; thus, the risk of long-term variations are noticeably reduced as a whole. Regulatory change The activities of the Group companies are subject to a wide range of government regulations. Any changes to these regulations could affect activities and earnings (see Note 1). Its electricity production from renewable energies is subject to a comprehensive law on tariffs and other aspects of its activities in Spain. The introduction of new laws or regulations, or the amendment of existing laws and regulations, could have an adverse or positive effect on the business activities and the results of operations. Also, the current legislative framework governing the tariff review system, including the remuneration of electricity

86 Saeta Yield, S.A. and subsidiaries generated, constitutes the main support mechanism for the development of these renewable sources. Other external factors with an impact on the Company's business activities The activities of the Companies are influenced by weather, an external factor which may adversely affect its operations, results and financial situation. 16. Capital management The objectives of capital management at the Group are to maintain an optimum financial and net worth structure to reduce the cost of capital and at the same time to safeguard the Group s ability to continue operating with sufficiently sound debt/equity ratios. The capital structure is controlled basically through the debt/equity ratio, calculated as net financial debt divided by equity. Below the ratio of indebtedness detailed at 31 December 2015 and 2014: 31/Dec/ /Dec/ Other financial liabilities ,472 - Other current financial assets and cash (185,800) (184,000) + Net project financing debt 1,009,648 1,276,947 Net debt 823,960 1,108,419 Equity 570, ,639 Leverage % % Within other financial assets and cash are included current financial assets with related companies. Likewise, as Net project financing debt are included the assessment of coverage derived associated to financial debt. The Board of Directors of the Parent Company considers that the leverage ratio at December 31, 2015 was adequate, taking into account the unique nature of the assets that form part of the Group, assets financed under a project financing arrangement that are very long-term financing structures that apply to projects that are capable of providing sufficient support by themselves to participating financial institutions with regard to the reimbursement of debts assumed to carry the projects out, and whose debt servicing is backed by the cash flows that the project itself will generate in the future, as well as by collateral on the project assets. 17. Derivative financial instruments The activities carried out by the Group are exposed to financing risks and, more specifically, interest rate risk. In order to reduce the impact of these risks and in accordance with its risk management policy, the Group has arranged various financial derivatives, which have long-term maturities. Approximately 75% of the Group's external bank borrowings is hedged by the aforementioned financial derivatives in order to mitigate the interest rate risk, being the contracted dividends interest rate swaps at market conditions. The Group uses derivatives to hedge cash flows, complying with the requirements over the assessment regulations to be able to classify the financial instruments as a hedge. In this regard the changes in the fair value of the derivatives are registered in the section over which said coverage is effective net of its tax effect; under section Adjustments by value changes of the Equity (see Note 13.d). The accumulated profit or loss under each section is transferred to the consolidated income statement in relation to the development of the hedged risk

87 Saeta Yield, S.A. and subsidiaries The following table shows the fair value of these hedges at December 31, 2015 (in thousands of euros): Reasonable value of the cash flows hedges (interest rate) 31/Dec/2015 Account 31/Dec/2014 Noncurrent Noncurrent Account 80,606 22, ,548 28,592 Total 80,606 22, ,548 28,592 These instruments are compensated and settled by differences, being the Group s risk derived from the net position of the instruments and not the amount contracted. Group companies interest rate hedges details, at December 31st 2015 are: Exchange flows Disposal Company Acquisition Date Maturity Floating rate Fixed rate Notional Fair value Extresol I July 2007 December 2022 EUR6M +1.05%* 50% 4.64% / 50% 4.078% (30.242) Manchasol II April 2009 December 2022 EUR6M +3.10%* % (32.129) Al-Andalus July 2007 July 2019 EUR6M +0.80%** 0.50% (2.469) P.E. Santa Catalina August 2008 June 2021 EUR6M +1.30%** 3.850% (13.188) Eólica del Guadiana February 2010 December 2023 EUR6M +3.00%** 3.780% (6.796) P.E. Sierra de las Carbas December 2007 Jun Jun EUR6M +0.80%** 50% 4.456% / 50% 3.76% (8.180) P.E. Tesosanto December 2007 Jun Jun EUR6M +0.80%** 50% 4.456% / 50% 3.70% (6.459) La Caldera Energ. Burgos December 2007 Jun Jun EUR6M +0.80%** 50% 4.456% / 50% 3.76% (3.630) Total 683,660 (103,094) * This project financing applies different interest rates depending on the covenant rate of the debt service the previous year. ** These project financings apply different interest rates which apply in different periods from the start date of operation. Except Eólica del Guadiana which changes on the sixth year, the other wind farms changes on the fifteenth year. The detail, by maturity, of the notional amounts of the aforementioned hedging instruments, on the basis of the nature of the contracts, and which were measured taking into account that set forth in Note 5.d.2.2: Fiscal Year 2015: Thousands of euros Notional value Total y sig. Gross fair value Values 683,660 40,210 44,730 44,628 40, ,348 82, ,908 (103,094) Fiscal Year 2014: Thousands of euros Notional value Total and rest Gross fair value Values 829,344 57,725 33,492 48,792 50, ,732 62, ,480 (173,140) During the year 2015 there have been changes in the derivatives and financing agreements, described in Note 14 (notional reduction by the same percentage that the debt of the hedged item), which has led to break-upcosts for EUR thousand. For these changes, it is determined that there has been no discontinuation of the remaining coverage ratio, and have been revised the hedging relationships, being all effective. Rupture costs are recorded under "Financial expenses" in the Consolidated Income Statement (see Note 22.c) and the change in the valuation of outstanding derivatives have been recorded against equity

88 Saeta Yield, S.A. and subsidiaries In addition, on February 18, 2015, the Company Al Andalus Wind Power has made an early termination of derivatives, contracting new derivatives with the same entities to reduce the fixed cost of interest from 4.784% to 0.5% and incurring a settlement and payment amounting to EUR 30,348 thousand. The underlying item (debt) has not been subject to modification. As indicated by IFRS 39, the entity will discontinue prospectively the hedge accounting if: a) the hedging instrument expires, it was sold, terminated or exercised. b) the hedge no longer meets the requirements of the standard for hedge accounting. c) the entity revokes the designation. In which case the amounts that would have been recognized in equity are reclassified to profit or loss in the same year or in the periods during which the cash flows provided initially designated as hedged item affects profit or loss (i.e., when the accrual of interest on the debt hedged takes place). In this case, given the nature of the operation, the Group has determined the existence of a prospective discontinuation in the relationship of the existing coverage, giving up of the existing valuation of the derivative recorded as "Financial Instrument Payables" on the date of cancellation of the contracts, and interrupting the coverage prospectively, keeping in equity the value changes recognized to the discontinuance date (EUR 22,583 thousand). In 2015 this has been registered an amount of EUR 5,936 thousand under "financial expenses" in the Consolidated Income Statement (EUR 4,274 thousand after deducting the tax impact) corresponding to the allocation to profit or for the year 2015 (see Note 22.c). Subsequently, has been identified a new hedging relationship for new contracts, registering its value as "Financial Instrument Payables" and value changes in equity. As stated in Note 1, by 29 January 2015, Saeta Yield and ACS Servicios Comunicaciones y Energía, S.L. (ACS SI) a Right of first offer agreement and purchase option. The right of first offer means that the society Saeta receives the right to make a first bid, if successful, to acquire certain assets established in the contract before December 31, 2017 as well as new assets that meet certain characteristics for an initial period of five years may be extended if certain milestones are met. This right is not a firm commitment to purchase but only an offer for the parties since there can be no agreement on the conditions, in which case ACS is free to sell to third parties at a higher price to the one offered to Saeta. Regarding the financial information of Saeta, that agreement, since it is merely a right of first offer and does not involve firm commitments, have no effect until the effective transfer of the assets is done. As for the option granted by ACS SI to Saeta on its participation in the share capital and subordinated debt of certain assets, it should be noted that to the extent that the exercise price of the option is a fixed price for each year the option is considered a financial derivative instrument that is recorded at its "fair value". The parties have agreed that the exercise price of the option is determined based on the enterprise value fixed and not subject to any adjustment. The valuation of the option at every moment of its life is done at fair value, as the difference between the asset value and the exercise price of the option, provided that the value is positive. If it is negative, the value of the option is zero. The estimated fair value of the purchase option by 31 December 2015 amounts to no significant values. 18. Trade and other payables The detail of Trade and other payables at December 31, 2015 and 2014 (in thousands of euros): 31/Dec/ /Dec/2014 Trade payables 11,882 18,510 Trade payables to Group companies and associates (Note 20) 5,592 14,453 Pending payment remunerations Customer advances 1,265 4,904 Total 19,322 37,

89 Saeta Yield, S.A. and subsidiaries Disclosures on deferred payments to suppliers Third Additional Provision. Third Additional Provision. Duty of Disclosure of Law 15/2010, of July 5 Herein is included the Disposición adicional tercera of the law 15/2010, of 5 July (modified through the Disposición final segunda of the law 31/2014, of 3 December) prepared according to the recommendation of the Instituto de Contabilidad y Auditoría de Cuentas (ICAC) by 29th of January 2016, on the information to be incorporated in the Financial Statements regarding the average payment period to suppliers in commercial transactions. According to the aforementioned law, being 2015 the first exercise of application of the law, no comparative information is presented: 2015 Days Average payment period to suppliers 64 Ratio: paid transactions 66 Ratio: pending payment transacitons 32 Amount (Thousand euros) Total payments performed 57,528 Total pending payments 3,753 According to the ICAC resolution, to calculate the average payment period to suppliers, the commercial transactions considered are those accrued from the put in force of the law 31/2014 of 3 December carried out in Spain. Are considered suppliers, only to provide information as stated in the law, to those commercial debtors from goods and services included in the account Trade Payables in the current liabilities of the consolidated financial statement. Average payment period to suppliers stands for the period that goes from the exchange of goods or the provision of services by the supplier, and the payment of the transaction. 19. Tax Matters Tax Receivables and Tax Payables section composition at December 31, 2015 and 2014 (in thousands of euros) is: 31/Dec/ /Dec/2014 Withholdings and prepayments - 1,225 VAT refundable 1, TOTAL ASSETS 1,389 2,130 Income tax payable 4, Tax payables 6,389 5,084 VAT payable 4,602 5,496 Accrued social security taxes payable Income tax payable TOTAL EQUITY AND LIABILITIES 15,786 11,578 The heading of Tax payables, mainly, collected tax on the value of the production of electricity. Income tax is calculated based on the accounting profit or loss determined by applying generally accepted accounting principles, which does not necessarily coincide with the taxable base amount. As a result of loss of control in of Saeta Yield by the ACS Group in the IPO process indicated in Note 1, the companies included in the Tax Group 30/99 of which the parent company is ACS Actividades de Construcción y Servicios, SA, have ceased to belong to it

90 Saeta Yield, S.A. and subsidiaries During the year 2014 all Group companies were included in the indicated consolidated tax group., except for La Caldera Energía, SL, Tesosanto, S.L. and Sierra de las Carbas, S.L., so the net amount was recorded as an account payable to related parties under "Current liabilities of the Group and related companies" (Note 20). Effective January 1, 2015 the Group has ceased to form part of the previous consolidated tax group and has formed a new consolidated tax group whose number is 485/15. During the year 2015 have been paid EUR 2,021 thousand on account for corporation tax, all from the consolidated tax group, resulting in a fee to be collected to the consolidated tax group of EUR 5,076 thousand. a) Reconciliation of accounting result and income tax expense The reconciliation of the accounting result and the income tax expense resulting from the application of the standard tax rate in force in Spain is as follows (in thousand euros): 31/Dec/ /Dec/2014 Consolidated profit before tax 21,466 44,303 Permanent differences 139 Tax at a 28% (30% rate in 2014) 6,050 13,291 Deferred Tax adjustments due to changes in the tax rate (189) (4,336) Tax adjustments Fiscal Year (205) Tax adjustments Other fiscal years (450) 197 Total tax under the profit and loss statement (5,411) 8,947 The breakdown of income tax expense is as follows (in thousands euros): Current tax: 31/Dec/ /Dec/2014 From continuing operations (10,549) 19,244 From discontinued operations - - Deferred tax: From continuing operations 5,138 (10,289) From discontinued operations - - Other adjustments (8) Total tax (5,411) 8,947 As a result of the entry into force of Income Tax Law 27/2014, of November 27, which amends, among other items, tax rates to be applied as from beginning January 1, 2015, the Group has recalculated its deferred tax assets and liabilities applying new tax rates introduced by the aforementioned law. This resulted in 2014 in a decrease in deferred tax assets arising, mainly, from non-operating losses (NOLs) and non-deductible financial expenses since they exceed established regulatory limits and in the deferred tax liabilities arising from the accelerated depreciation applied at Extresol 1, S.L.U. and Al-Andalus Wind Power, S.L.U. in an amount of EUR 4,336 thousand (EUR 102 thousand in 2015)

91 Saeta Yield, S.A. and subsidiaries b) Reconciliation of accounting result and taxable income The reconciliation of the accounting result and the taxable income for the fiscal year 2015 and 2014 (in thousand euros) is: 31/Dec/ /Dec/2014 Consolidated profit before tax 21,466 44,303 Permanent differences Losses accounted for using the equity method - (44) Temporary differences (non-deductible financial costs) 28,545 7,693 Temporary differences (non-deductible depreciation) (5,091) 26,174 Temporary differences (accelerated depreciation) (2,015) 12,463 Compensation for Tax losses (10,761) - Taxable income 32,283 90,589 c) Reconciliation of taxable income and tax The reconciliation between the base of the income tax and the tax payable to the the tax group for the financial year 2015 is as follows: Consolidated profit before tax 32,283 Tax at a 28% (30% rate in 2014) 9,039 Deductions (102) Witholdings (2,481) Prepayments (2,021) Tax payable by Tax Group 4,435 d) Deferred tax assets and liabilities The detail of the main deferred tax assets and liabilities recognized by the Group and of the changes therein in the fiscal year of 2015 and 2014 is as follows (in thousands of euros): Thousands of euros 31/Dec/ /12/2014 Assets Financial instruments qualified as hedges 31,876 43,508 Tax loss carryforwards 2,853 3,698 Limitation on depreciation deductions 13,746 17,584 Limitations on net financial expenses deductions 12,700 5,917 TOTAL ASSETS 61,175 75,707 Liabilities Unrestricted depreciation 36,377 40,704 The amount of the timing differences in the deferred tax assets relates to the tax effect of the following items: - Valuation of derivative hedging at the end based on the new tax rate of 25%. - Tax loss carry forwards relate to the tax effect of prior years' losses of companies that either do not form part of the ACS tax group or did not yet form part of the group when they were generated. - Net non-deductible finance expenses for the year based on Royal Decree-Law 12/2012, of March 30, which limits the "net finance costs" deduction, in general, to a maximum of 30% of the "operating profit for the year". For these purposes, the law determines "net finance costs" as the excess finance costs with respect to the income arising from the transfer to third parties of equity incurred in the tax period. In any case, will be deductible without limit, net financial expenses of the tax period in the amount of up to EUR 1 million. The net finance costs which have not been deducted may be deducted in the tax periods which conclude in the

92 Saeta Yield, S.A. and subsidiaries immediate and consecutive 18 years, together with those of the corresponding tax period, although the temporary limit disappears with the new Corporation Tax Law. - Non-deductible depreciation expenses for the year: in accordance with the change implemented by Law 16/2012 effective for tax periods beginning in 2013 and 2014, the accounting amortization and depreciation of property, plant and equipment, intangible assets and real estate investments may only be deducted up to 70% of the amount which would have been deductible for tax purposes in accordance with sections 1 and 4 of article 11 of the Consolidated Text of the Spanish Income Tax Law (TRLIS). Accounting amortization not deductible for tax purposes resulting from the application of this limitation is not considered impairment, and has started to deduct from the first fiscal year, which began on January 1, 2015, in a linear manner over a period of 10 years. Likewise, the amount corresponding to these deferred tax assets was not recalculated using a tax rate of 25% as in the thirty-seventh transitional provision of deduction for reversal of temporary measures under the Income Tax Law 27/2014 says that companies are entitled to a deduction for the full amount of 5% of the amounts making up the base tax resulting from the depreciation deducted, no provision was not included in this connection in these accounts. The amount recorded under Deferred tax liabilities (EUR 36,247 thousand as of December 2015 and 40,704 thousand euros 31 to December 31, 2014) corresponds to 30% of the tax amortization in addition to the accounting of the companies Extresol 1, S, L.U. and Al Andalus Wind Power, S.L.U., as well as the accelerated depreciation applied in the fiscal year 2015 in Tesosanto, S.L.U. and Serrezuela Solar II, S.LU., based on what is established in the eleventh additional provision of the Royal Legislative Decree 4/2009, of 5 March, approving the revised text of the corporate Tax Law that approves how accelerated depreciation is regulated for investments in new property, plant and equipment referred to economic activities. The above mentioned assets by deferred taxes have been registered in the balance statement since the Company Board of Directors considers that, according to the best estimate about the Company future results, according to the Company economic financial model, it is likely that said assets are recovered in the maximum period required by the current normative scheme. Outstanding exercises and tax audits Under legislation in force, taxes cannot be considered definitive until returns have been inspected by the tax authorities or certain period has elapsed. At the closing of year ended on December 31, 2015, the Group has open to inspection the last four years for all applicable taxes, except for corporate tax that is under inspection from 2010 onwards, as part of ACS Tax Group prescription is pending from 2006 onwards. Company Directors consider mentioned taxes has been appropriately settled and, even in case of dispute on applicable regulations interpretation of the by the tax treatment given to certain transactions, the resulting liabilities, if realized, would not affect significantly the annual accounts for the year ended December 31, 2015, which does not include any provision for this item. Additionally, under Law 34/2015, of September 21st, partially modifying Law 58/2003, of December 17, General Tax Law it is established that the Administration s right to initiate the verification procedure regarding compensated or pending compensation or applied or pending application deductions on basis or quotas, will prescribed ten years after the day following the one in which the established regulation period to file the declaration or self liquidation corresponding to the fiscal year or fiscal period in which the right to generate such basis or quotas or to apply said deductions ends. 20. Balances and transactions with related parties Below are the operations performed by the Group during fiscal years 2015 and fiscal year2014, with related parties distinguishing between significant shareholders, Board of Directors Members, company Managers and other related parties

93 Saeta Yield, S.A. and subsidiaries a) Related Parties Fiscal Year 2015: Income and expenses Euros Supplies and other external expenses Financial income (Note 22.c) Centro de Control Villadiego, S.L Cobra Instalaciones y Servicios, S.A. 15,586 - Cobra Concesiones, S.L. 7, Cobra Sistemas y Redes, S.L Sistema de Conexión Valcaire, S.L Eyra Instalaciones y Servicios, S.L Infraestructuras Energéticas Castellanas, S.L Total 25, Other operations Net amortization or repayment of credits Adquired Obligations Euros Dividends and other profit distributions Other transactions Cobra Concesiones, S.L.(*) 14,892 - (8,520) 408 Extresol 2, S.L Extresol 3, S.L Manchasol 1, Central Termosolar Uno, S.L Cobra Instalaciones y Servicios, S.A. 9,534 7, Cobra Sistemas y Redes, S.L. 35, Cobra Gestión de Infraestructuras, S.A.U. - (1,900) - - Global Infrastructure Partners - - (8,450) - Total 59,978 5,363 (16,970) 1,913 (*) Cobra Concesiones, S.L. merged by absorbition with Urbaenergía, S.L. and Energías y Recursos Ambientales, S.A., on 2 November Fiscal Year 2014: Other operating expenses Financial expenses Financial income Cobra Instalaciones y Servicios S.A. 9, Cobra Sistemas y Redes, S.A ,108 Energías y Recursos Ambientales S.A. 6, Sertego Servicios Medioambientales, S.L Moncobra, S.A Centro de Control Villadiego, S.L Infraestructuras E. Castellanas, S.L. 1, Urbaenergía S.L. 5, TOTAL 24, ,523 b) Balances with related parties 2015 LT Loans Receivables from Group companies Short-term loans to Group Euros LT payables to Group companies ST payables to Group companies Trade payables to Group

94 Saeta Yield, S.A. and subsidiaries and associates (Note 11) companies companies (Note 18) Cobra Instalaciones y ,980 - (2,622) Servicios, S.A. SEC Valcaire (112) - Cobra Concesiones, S.L (2,559) Centro de Control Villadiego, S.L. Infraestructuras Energéticas Castellanas, S.L. Eyra Instalaciones y Servicios, S.L (45) (293) (73) Manchasol 1, S.L Extresol 2, S.L Extresol 3, S.L Comunidad de vertidos M1 y M Total ,094 2,172 - (112) (5,592) LT loans Receivabl es from Group companie s and associates (Note 11) The amount relating to long-term loans to associates corresponds to a participating loan granted by Parque Eólico Valcaire to SEC Valcaire, which accrues interest at a fixed Euribor rate plus a 1% spread and at a 5% variable rate, in the event the Company makes a profit. This loan matures in December Among the other financial assets are included, at December 31, 2014, mainly the credits granted by Extresol 1 to Cobra systems and networks amounting to EUR 32,397 thousand s (including outstanding accrued interest payment amounting to EUR 3,154 thousand) and the Parent Company to Energía y Recursos Medioambientales amounting to EUR 14,632 thousand (including outstanding accrued interest payments amounting to EUR 746 thousand). These loans have been settled in the year 2015, being pending an amount to collect with Cobra Instalaciones y Servicios, S.A. The balance of short term debts at December 31, 2014 mainly corresponded to unpaid balances by the Group companies to related entities for tax concepts, mainly on Corporate tax, that have been settled in the year The balance of trade payables includes, among others, the debt held by the Group companies for the contracts of operation and maintenance of solar power plants and wind farms signed with companies related to ACS Group. 21. Guarantee commitments to third parties and contingent liabilities Short-term loans to Group companie s LT payables to Group compani es ST payables to Group companie s Trade payables to Group companies (Note 18) 2014 SEC Valcaire 1, Cobra Gestión de Infraestructuras, S.A.U (1,900) - Cobra Instalaciones y Servicios S.A ,712 - (13,506) (10,444) Cobra Sistemas y Redes S.A , (37) Energías y Recursos Ambientales S.A , (464) Centro de Control Villadiego S.L (212) Infraestructuras Energéticas Castellanas, S.L (294) Urbaenergía S.L (549) - (3,002) TOTAL 1, ,641 (549) (15,406) (14,453) The Group had provided third parties with the following bank guarantees, mainly to secure certain ordinary business transactions (in thousands euros):

95 Saeta Yield, S.A. and subsidiaries 31/Dec/ /Dec/2014 Banco Espíritu Santo Banco Popular Banco Sabadell Banco Valencia 1, Banco Santander 2,246 2,057 Bankia 1,081 2,147 Kutxabank Caixabank 1, TOTAL 6,692 6,031 Guarantees in force at December 31, 2015 are not expected to give rise to any liabilities other than those recognized in the accompanying consolidated annual accounts at the aforementioned date. 22. Revenue and expense a) Revenue Sales fully correspond to electricity generated in Spanish territory which is billed mainly to Comisión Nacional de la Energía, S.A. and to Comisión Nacional de los Mercados y la Competencia (CNMC, the Spanish National Securities Market and Competition Commission). The breakdown by type of technology is: Thousands of euros 31/Dec/2015 Thousands of euros 31/Dec/2014 Solar thermal plants 118, ,688 Wind farms 100,236 97,223 Total revenue 218, ,911 b) Other operating expenses Other operating expenses detail in the consolidated income statement at December 31, 2015 and 2014 is as follows: Thousands of euros 31/Dec/2015 Thousands of euros 31/Dec/2014 Research and development expenditure 11 1,183 Rent and royalties (Note 9) 4,946 5,661 Independent professional services 1,994 2,878 Transport Insurance premiums 2,917 2,306 Banking services Supplies 4,520 4,297 Advertising and public relations 7 - Other services 29,227 26,842 Taxes other than income tax 18,602 20,584 Total 62,366 63,912 The Group recognizes gas, electricity and nitrogen expenses necessary for solar thermal plants and wind farms operation under "Supplies". "Other taxes" includes, mainly, the 7% tax on energy production. "Other services" includes the amount corresponding to solar thermal plants and wind farms operation and maintenance expenses according to contracts with related companies described in Note 20 for an amount of 24,523 thousand Euros in

96 Saeta Yield, S.A. and subsidiaries c) Finance income and finance costs Financial income includes, mainly, the interest accrued from the loans granted to related parties, canceled in February 2015, by an amount of EUR 202 thousand (see Note 20) and the interest generated by current bank deposits amounting to EUR 117 thousand. The following items are recognized under "financial costs" (in thousands of euros): d) Staff costs Interest on loans to Group companies and related parties 31/Dec/ /Dec/ Interest on principal credit facility 16,922 22,699 Interest on hedges 24,159 34,594 Debt arrangement expenses 1, Other financial expenses Derivative rupture costs (Notes 17) 25,959 - Prospective coverage application (Note 17) 5,936 - Total 75,173 58,094 "Staff costs" (in thousands of euros) for the fiscal year of 2015 and 2014 is as follows: 31/Dec/ /Dec/2014 Wages and salaries 1, Social security costs Total 2, Average number of Group employees at December 31, 2015 and 2014, by category, is as follows: Average number of people at 12/31/2015 Average number of people at 12/31/2014 Men Women Total Men Women Total High management Line personnel and middle management Clerical staff Manual workers Total The number of Group employees during the fiscal year of 2015 y 2014, by category, is as follows: Number of people at 12/31/2015 Number of people at 12/31/2014 Men Women Total Men Women Total High management Line personnel and middle management Clerical staff Manual workers Total

97 Saeta Yield, S.A. and subsidiaries e) Remuneration to auditor During the fiscal year 2015 and 2014, fees for audit services and other services provided by the auditor for the consolidated annual accounts of the Group, Deloitte, S.L., and by other companies belonging to the Deloitte network, as well as fees for services billed by the auditors of individual annual accounts of the companies included in the consolidation and associate entities are as follows: Fiscal Year 2015: Services Provided by Deloitte other companies belonging to the Deloitte network Other Auditors Audit services Other verification services Total audit and related services Other services 25 - Total services Fiscal Year 2014: Services Provided by Deloitte other companies belonging to the Deloitte network Other Auditors Audit services Other verification services 4 - Total audit and related services Other services - - Total services Board of Directors and Top Management a) Remuneration and other benefits to the Board of Directors and Executives At December 31, 2015 the Board of Directors consists of nine directors (8 men and 1 woman). The Board of Directors, was appointed at the General Shareholders' Meeting of January 20, 2015 being the board in 2014 Single Administered. During the year 2015 the members of the Board of Saeta Yield, S.A. have received the following remuneration: Salaries By-laws attention Other concepts Pension plans Insurance premiums TOTAL Board of directors Furthermore, the Parent Company has not granted any loans, advances or has incurred obligations in respect of pensions, life insurance with its Board members, except for the Chief Executive Officer, in his role as executive director with which it has contracted obligations for life insurance premium which amounts to 31 December 2015 to EUR 1 thousand. Nor have been incurred obligations for pensions or payment of life insurance premiums in respect of current and former members of the Board of Directors, except for those indicated above

98 Saeta Yield, S.A. and subsidiaries b) Top Management compensation At December 31, 2015 Top Management, which are not in turn executive directors is made up of three directors (2 males and 1 female) and the internal auditor (1 woman). During the 2015 year the remuneration received by top management were as follows: Salaries By-laws Other concepts Pension Plans Insurance Premiums TOTAL Top Management Total remuneration for the senior executives of the Group, who are not executive directors amounted in 2015 to 354 thousand Euros. c) Detail of participations in companies with similar activities and own or third party with similar activities carried out by the Board of Directors members. The Spanish Corporation Act Article 229, modified by Act 31/2014, of December 3rd, 2014 establishes that the conflict of interest situations incurred by the administrators will be subject to information within the annual report. At the closing of the 2015, and 2014, fiscal year neither the members of the Saeta Yield, S.A. Board of Directors members nor the people related to them as defined by the Spanish Corporations Act have communicated to the remaining Board of Directors members any direct or indirect conflict of interests situation that they may have with the Company s interest. At the closing of the 2015, and 2014, fiscal year neither the members of the Saeta Yield, S.A. Board of Directors members have communicated shares interest in the capital of companies with equal, analogous or complementary activity that have been communicated to Saeta Yield, S.A. Los cargos o funciones que ocupan los consejeros en sociedades de accionistas significativos y/o entidades de su grupo al 31 de diciembre de 2015 son las siguientes: The positions or obligations performed by the board members of companies that own significant holdings and/or group companies at the closing of the 2015 are the following: Board Member Company Position Dña. Cristina Aldámiz-Echevarría González de Durana D. Juan Cristóbal González Wiedmaier ACS, Actividades de Construcción y Servicios, S.A. Bow Power Energy, S..L. ACS Servicios Comunicaciones y Energía, S.A. Cobra Gestión de Infraestructuras, S.L. CFO and corporate developement Board Member CFO Director Financiero D. Deepak Agrawal Bow Power Energy, S..L. Board Member Extresol-2, S.L. Extresol-3, S.L. Manchasol-1, Central Termosolar Uno, S.L. Board Member Board Member Board Member No share interest with these characteristics were communicated during the fiscal year

99 Saeta Yield, S.A. and subsidiaries 24. Subsequent events The 29th of January, 2016, Serrezuela Solar has performed the first disposal from the financing signed the 22nd of December, 2015, for 3,700 thousand euros, out of which 2,700 thousand euros have been disposed at 1.75% and 1,000 thousand euros at 1.813%, interest rates to be maintained up to the 30th of June, Additionally, the 2nd of February, 2016, Serrezuela Solar, as part of the financing scheme previously mentioned, has signed hedging agreements in relationship with the hedging derivatives for the interest rate swaps, with the following entities: Banco Santander (Agent Bank), Societe Generale, BNP Paribas Fortis, S.A./ N.V and Credit Agricole Corporate and Investment Bank, Spanish Branch. Serrezuela Solar covers a part of the interest rate risk of the loans signed through interest rate swaps. The Board of Directors has approved on February 25, 2016, to distribute m ( euros per share) as dividend charged to the share premium. This dividend will be paid on March 3, The 25th of February, 2016, the Board of Directors of Saeta Yield S.A. has agreed to acquire 100% of the shares of Extresol 2 S.L. and Extresol 3, S.L., as well as all the credit rights from the current owners regarding the acquired companies, by virtue of the subordinated debt contracts and the participative loans conceded. These assets were included in the RoFO agreements and Saeta Yield held a call option on them. The amount to be paid for this transaction amounts to 119 million. Conditional upon closing of the aforementioned transaction, the Board of Directors of Saeta Yield has approved a 7.7% dividend increase up to 61.4 m per year. This amount will be paid quarterly, and the first increased payment will be distributed c. 60 days after the close of the first quarter of Both the acquisition and the dividend increase are conditional upon closing a final agreement in a contract to be signed during the month of March

100 Consolidated Management Report of Grupo Saeta Yield corresponding to the fiscal year Summary of the fiscal year The information in this report is based on consolidated figures of Saeta Yield, S.A. 1 and its subsidiaries, and is presented according to management criteria. Note: Translation of this report has been based on a document originally written in Spanish. In event of discrepancy, the Spanish language version prevails Main figures Units Var.% Installed capacity MW % Electricity output GWh 1,516 1, % Average Market price /MWh % Total Revenues m % EBITDA m % Margin 70.2% 70.6% +0.3 p.p Comparable Net Profit m % CAFD Ordinary Actv. m 74.0 Dividends paid m 35.2 Per share per sh Total net debt (vs. Dec14) m 1, % Saeta Yield portfolio by the end of the period remains at 689 MW of installed capacity. In 2015 electricity produced showed a 10% decrease compared to the same period from last year, after a 14% less wind production compared to a very windy 2014 and a significant reduction of the wind resource in the last quarter of CSP output showed a 1% growth. In terms of revenues, the production drop was more than compensated by the market price increase, which shows a 20% growth. This was explained because of the electricity demand increase, especially after the very high summer temperatures in 2015, and a lower wind and hydro production in the Iberian Electricity Market compared to Comparable net profit accounted for 26 m, showing a 42% growth compared to last year. This figure does not include in 2014 nor in 2015 the provisions and impairment reversions, nor in 2015 the negative financial result of the IRS derivatives restructuring held during IPO in February, which reduced the cost of debt c.100 b.p. Attributable Net profit amounts to 16 m including the extraordinary effects aforementioned. In 2015 the company paid 35 m of dividends 2, equivalent to 0.43 euros per share 3. Saeta Yield net debt decreased by 28% compared to December 2014 thanks to the capitalization and intragroup settlements concurrent with the IPO 4. The current net debt is equivalent to a Net Debt to EBITDA 2014 ratio of 4.6x. From the financing of Serrezuela, signed in December 2015, no funds were disposed by the end of the period. 1 Operational data and the Consolidated Financial Statements as of December 31, 2014 has been defined as if the subsidiaries were considered to be part of the new Group from the start of the fiscal year In line with the commitment acquired in the prospectus related with the offering of the ordinary shares of Saeta Yield to distribute 57m in 2015 and The first quarter dividend has been adjusted pro-rata according to the trading days. 3 Based on Saeta Yield, S.A. s shares currently outstanding: 81,576,928 4 Further detail is provided in the prospectus related with the offering of the ordinary shares of Saeta Yield approved by the CNMV on January 30,

101 Management Report Significant Events On January 20, 2015, the governing body of the Company was changed to a Board of Directors, consisting of a total of 5 members. On the same date, the General Shareholders Meeting of Saeta Yield, S.A. agreed to: (i) the offering of shares equivalent to 51% of the Company's equity (extendable by a further 5.1% in the course of the exercise of the Greenshoe or over-allotment option); (ii) apply for admission and exchange trading of the shares of the Company on the Spanish Stock Exchanges, and their inclusion in the Exchange Integration System (Sistema de Integración Bursátil or Mercado Continuo) and (iii) split the shares of the Company in a ratio of ten to one, without altering the amount of share capital. This allowed for the nominal value of the shares to be changed from 10 euros per share to 1 euro per share. On January 27, 2015, the General Shareholders Meeting approved to increase the number of directors of the Board of the Company to 9 with the subsequent appointment of 4 new members, and increase the capital of the Company by 20.0 m with the issuance of 20,013,918 new shares with 1 par value subscribed and paid for Energía y Recursos Ambientales, S.A. These new shares were issued with a premium of 9 per share, equivalent to 180.1m. The disbursement of this capital increase was made on February 12, The total number of shares after the capital increase was set at 81,576,928. This capital increase, together with the settlement of all the intragroup accounts (between ACS Group subsidiaries and Saeta Yield) concurrent with the Offering, has been used to: o o o o Reduce the outstanding debt associated to Extresol 1 by 79 m, Manchasol 2 by 55 m, and Santa Catalina by 7 m; Diminish the notional value of derivative contracts linked to the financing of the previous assets in order to maintain a 75% hedging of the overall outstanding debt; Reduce the interest rate to 0.5% of derivative contracts linked to the Al Andalus debt, with an associated expense of 30 m; Increase Saeta Yield, S.A. and its subsidiaries' cash. On January 21, 2015, the ACS Group and Global Infrastructure Partners (GIP) reached (subject to the successful public offering project) two agreements under which: (1) GIP will acquire 24% stake in Saeta Yield (once it is know the result of the greenshoe option); and (2) the ACS Group will sell GIP 49% of the shares of a new asset development company where certain renewable energy assets are integrated on which Saeta Yield SA will hold a right of first offer and call option. These transactions were approved by the antitrust authorities on April On January 29, 2015, Saeta Yield and ACS Servicios Comunicaciones y Energía, S.L. (ACS SI) signed a Right of First Offer and Call Option Agreement under which ACS SI granted Saeta Yield: (a) a right of first offer on ACS SI and its subsidiaries stakes in energy assets in commercial operation which ACS SI intends to sale in the future; and (b) a call option to purchase three solar thermal generation assets, currently in commercial operation, as well as a co-control clause between ACS SI and Saeta Yield. The new asset development company owned by the ACS Group and GIP - afterwards explained - will adhere itself to the Right of First Offer and Call Option Agreement. The right of first offer assumes that Saeta Yield, S.A. receives the right to make a first offer for, if successful, acquiring certain specific assets before December 31, 2017 as well as new assets that meet certain characteristics for an initial term of five years extendable if specific milestones are met. This right is not a firm commitment to purchase but a right of Saeta Yield to bid. In the case where no agreement is reached, ACS SI cannot sell these assets to third parties unless it is at a higher price than the one offered to Saeta Yield. On February 16, 2015, Saeta Yield S.A. shares started trading on the Spanish Stock Exchanges at a starting price of per share, representing an initial market capitalization of m. According to the provisions in the Prospectus, from the date of admission to trading Saeta Yield's shares inclusive (February 16, 2015) until February 23, 2015, BofA Merrill Lynch conducted the stabilization operations in accordance with the provisions of the Commission Regulation (EC) No 2273/2003, with a view to supporting the market price of the shares of Saeta Yield. BofA Merrill Lynch, as stabilizing manager, repurchased 3,525,000 shares 55

102 Management Report 2015 of Saeta Yield in the name of Energía y Recursos Ambientales, S.A. At the end of the underwriting period (March 18, 2015), BofA Merrill Lynch, on behalf of the other Underwriters of the Offering, exercised the Greenshoe option to purchase the other 635,424 shares of Saeta Yield, S.A. On March 27, 2015, Saeta Yield, S.A. arranged a 80 m unsecured Revolving Credit Facility with a 3 year term under a Club Deal which involved five financial institutions. On April 23, 2015, the SPA signed on January 20, 2015, between Global Infrastructure Partners (GIP) and ACS came into force. It contained two relevant agreements: o o GIP to acquired 24.01% of Saeta Yield s share capital, while Energía y Recursos Ambientales S.A. (belonging to the ACS Group) will keep 24.21%. As a consequence of this acquisition, clause 6 of the SPA describing their shareholder agreements - relative to Saeta Yield S.A. has come into force. ACS has sold GIP 49% of a new asset development company where certain renewable energy assets have been integrated on which Saeta Yield, S.A. holds a right of first offer. The shareholder structure of Saeta Yield after this transaction, and coincident with the year end position, is the following: o Energía y Recursos Ambientales, S.A. (ACS Group) 24.21% o Global Infrastructure Partners (GIP) 24.01% o Other shareholders (free float) 51.78% On June 25, 2015, Saeta Yield held its first General Meeting of Shareholders approving the previous year s accounts, the profit to be applied to Saeta Yield, S.A., the management conducted by the Board of Directors and the ratification of the new Directors when GIP entered the shareholders base of the Company. The company distributed dividends charged to the share premium amounting to: o o o 1 st payment of 2015: 6.69 m (equivalent to per share) 5 on May 29, 2015, (as approved by the Board of Directors on March 26, 2015). 2 nd payment of 2015: 14.25m ( per share) on August 29, 2015, (as approved by the Board of Directors on July 29, 2015). 3 rd payment of 2015: 14.25m ( per share) on November 27, 2015, (as approved by the Board of Directors on November 5, 2015). The 22nd of December, 2015, Serrezuela Solar II S.L., 100% subsidiary of Saeta Yield, arranged a project finance agreement for a total of 185 m. This financing is composed of two tranches: one agreed with four financial institutions for 135 m at a variable interest rate; and a second agreed with the European Investment Bank for 50 m at a fixed interest rate. The maturity of both tranches is December 30, Saeta Yield S.A. will have the flexibility to dispose for these funds until June By the end of the period no funds were disposed out of this agreement. 5 This amount of EUR per share corresponds to the shareholder s remuneration policy set in the Prospectus of the offering of the shares of Saeta Yield, S.A. approved by the CNMV on January 30, 2015, whereby the Company agreed to pay a dividend of at least EUR 57 million in 2015 and 2016, being the first payment of 2015 on a pro-rata basis to the number of days elapsed from the settlement date of the offering until the end of the first quarter. 56

103 Management Report Consolidated Income Statement Income statement ( m) Var.% 4Q14 4Q15 Var.% Total Revenues % % Staff costs n.s n.s. Other operating expenses % % EBITDA % % Depreciation and amortization % % Provisions & Impairments n.a n.a. EBIT % % Financial income % % Financial expense % % Profit before tax % % Income tax n.s n.s. Profit attributable to the parent % % 3.1. Revenues Saeta Yield achieved revenues of 221 m, with wind assets contributing with 46% of revenues and solar thermal assets with 54%. Revenues for 2015 have been higher than those from the same period last year mainly due to the effect of higher electricity prices, which compensated the lower production in the period. Saeta Yield has produced 1,367 GWh of electricity, showing a 10% decrease compared to Main operational figures Breakdown by technology Var Var. Installed capacity (MW) % % Electricity output (GWh) 1, % % Market Price ( per MWh) % % Steepness 79.1% 89.1% p.p 107.7% 103.3% -4.4 p.p Achieved Price ( per MWh) % % Wind CSP Wind assets achieved a production of 946 GWh with an average availability of 98.3%. Output was slightly below planned and below 2014 due to a lower wind resource, especially in the last quarter of Solar thermal assets achieved a production of 421 GWh, with a performance ratio of 113.3% 6. In this case irradiation and electricity output have been slightly higher than expected and those of the previous year. 6 The performance ratio measures the real production of the plants vs. the theoretical production based on existing weather conditions. 57