MANCHASOL 2, CENTRAL TERMOSOLAR DOS, S.L. Abridged Financial Statements for the period ended 31 December 2011

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3 MANCHASOL 2, CENTRAL TERMOSOLAR DOS, S.L. Abridged Financial Statements for the period ended 31 December 2011

4 Manchasol 2, Central Termosolar Dos S.L. ABRIDGED BALANCE SHEET AT 31 DECEMBER 2011 AND 2010 A S S E T S 31/12/ /12/2010 NONCURRENT ASSETS 380,024, ,307,299 Property, plant and equipment (Note 5) 369,182, ,073,478 Noncurrent financial investments 77,100 77,100 Deferred tax assets (Note 12) 10,764,792 5,156,721 CURRENT ASSETS 16,608,260 20,258,710 Inventories 315,650 Trade and other receivables 2,271,476 24,652. Trade and other receivables 32,266. Receivable from Group companies (Note 7) 2,239,210 24,652 Current investments in Group companies and associates 221,614 19,148,446. Loans to Group companies (Note 7) 221,614 19,148,446 Current financial assets 13,187,157 84,267. Other financial assets (Note 6) 13,187,157 84,267 Cash and cash equivalents (Note 8) 612,363 1,001,345 TOTAL ASSETS 396,632, ,566,009 The accompanying Notes 1 to 18 are an integral part of the abridged balance sheet at 31 December

5 Manchasol 2, Central Termosolar Dos S.L. ABRIDGED BALANCE SHEET AT 31 DECEMBER 2011 AND 2010 E Q U I T Y A N D L I A B I L I T I E S 31/12/ /12/2010 EQUITY (8,182,335) 1,150,292 Shareholders' equity (Note 10) 16,935,514 13,182,641. Share capital 17,653,358 13,559,758. Previous years earnings (377,117) (370,098). Profit/(Loss) for the year (340,727) (7,019) Adjustments for changes in value (25,117,849) (12,032,349). Hedging instruments (25,117,849) (12,032,349) NONCURRENT LIABILITIES 375,304, ,946,347 Noncurrent liabilities 313,257, ,201,185. Bank borrowings (Note 11) 277,375, ,012,116. Derivatives (Notes 9 and 11) 35,882,641 17,189,069 Noncurrent payables to Group companies and associates (Note 7) 62,046,733 40,745,162 CURRENT LIABILITIES 29,510,719 41,469,370 Current liabilities 21,556,727 29,796,303. Bank borrowings (Note 11) 21,556,727 29,796,303 Current payables to Group companies and associates (Note 7) 5,474,600 1,622,597 Trade and other payables 2,479,392 10,050,470. Payable to suppliers 153,282. Payable to suppliers Group companies (Note 7) 2,316,489 10,045,717. Sundry accounts payable 2,749. Staff costs 4,060. Other accounts payable to public authorities (Note 12) 5,561 2,004 TOTAL EQUITY AND LIABILITIES 396,632, ,566,009 The accompanying Notes 1 to 18 are an integral part of the abridged balance sheet at 31 December

6 Manchasol 2, Central Termosolar Dos S.L. ABRIDGED BALANCE SHEETS AT 31 DECEMBER 2011 AND CONTINUING OPERATIONS Revenue (Note 15.1) 2,901,704 Capitalised expenses of inhouse work on assets 82,168, ,963,961 Rendering of services 1,874,492 Procurements (Note 15.2) (80,903,847) (116,656,062) Staff costs (Note 15.4) (71,020) (11,951) Other operating expenses (Note 15.3) (5,365,920) (3,302,967) Depreciation and amortisation charge (Note 5) (119,455) OPERATING INCOME 484,125 (7,019) Borrowing costs capitalised to assets 17,983,698 8,228,591 Finance income (Note 15.5) 3, Finance costs (Note 15.5) (18,956,715) (8,229,357) FINANCIAL RESULTS (969,589) PROFIT/(LOSS) BEFORE TAX (485,464) (7,019) Income tax (Note 12) 144,737 PROFIT/(LOSS) FOR THE PERIOD FROM CONTINUING OPERATIONS (340,727) (7,019) PROFIT/(LOSS) FOR THE PERIOD (340,727) (7,019) The accompanying Notes 1 to 18 are an integral part of the abridged income statement for the period ended 31 December

7 Manchasol 2, Central Termosolar Dos S.L. ABRIDGED STATEMENTS OF CHANGES IN EQUITY FOR THE PERIODS ENDED 31 DECEMBER 2011 AND 2010 A) ABRIDGED STATEMENTS OF RECOGNISED INCOME AND EXPENSE FOR 2011 AND /12/ /12/2010 A) PROFIT/(LOSS) PER INCOME STATEMENT (340,727) (7,019) INCOME AND EXPENSE RECOGNISED DIRECTLY IN EQUITY II. Cash flow hedges (21,875,851) (12,814,406) VI. Tax effect 6,562,755 3,844,322 B) TOTAL INCOME AND EXPENSE RECOGNISED DIRECTLY IN EQUITY (15,313,096) (8,970,084) TRANSFERS TO PROFIT OR LOSS IX. Cash flow hedges 3,182,279 1,271,032 XII. Tax effect (954,687) (381,310) C) TOTAL TRANSFERS TO PROFIT OR LOSS 2,227, ,722 TOTAL RECOGNISED INCOME AND EXPENSE (13,426,227) (8,087,381) The accompanying Notes 1 to 18 are an integral part of the abridged statement of changes in equity for the period ended 31 December

8 Manchasol 2, Central Termosolar Dos S.L. ABRIDGED STATEMENTS OF CHANGES IN EQUITY FOR 2011 AND 2010 B) ABRIDGED STATEMENTS OF CHANGES IN TOTAL EQUITY FOR 2011 AND December 2011 Registered share capital Prior years profit/(loss) Profit/(Loss) for the year Adjustments for changes in value Total Beginning balance at 31 December ,559,758 (370,098) (7,019) (12,032,349) 1,150,292 Capital increases (Note 10) 4,093,600 4,093,600 Distribution of 2010 profit/(loss) (7,019) 7,019 Recognised income and expense (340,727) (13,085,500) (13,426,227) Capital increase expenses Balance at 31 December ,653,358 (377,117) (340,727) (25,117,849) (8,182,335) 31 December 2010 Registered share capital Prior years profit/(loss) Profit/(Loss) for the year Adjustments for changes in value Total Beginning balance at 31 December ,284,434 (351,306) (2,853) (3,951,987) (21,712) Capital increases 9,275,324 9,275,324 Distribution of 2009 profit/(loss) (2,853) 2,853 Recognised income and expense (7,019) (8,080,362) (8,087,381) Capital increase expenses (15,939) (15,939) Balance at 31 December ,559,758 (370,098) (7,019) (12,032,349) 1,150,292 The accompanying Notes 1 to 18 are an integral part of the abridged statement of changes in equity for the period ended 31 December

9 MANCHASOL 2, CENTRAL TERMOSOLAR DOS, S.L. Notes to the Abridged Financial Statements for the period ended 31 December Company activities The Company was incorporated on 1 March 2007, as recorded in a public deed executed before Madrid notary Mr. Segismundo Álvarez RoyoVillanova under number 2,328 of his notary record registered in the Mercantile Registry of Madrid in volume 24,098, book 0, page 126, sheet M entry no. 1, with the company name Manchasol 2 Central Termosolar Dos, S.L. (hereinafter, Manchasol 2). The Company's registered office is at C/ Cardenal Marcelo Spínola, 10, Madrid. The Company object is the promotion, management, design, construction, operation and maintenance of facilities engaged in the production of alternative and renewable energies. The production, sale and/or operation of the energy generated by the facilities described above and, where appropriate, avail itself of the current and/or future legislation to promote the production of alternative and renewable energies. The performance of studies, consulting, projects, research and development services related to the aforementioned services. The activities mentioned may be carried out by the Company directly or through its ownership of other companies with an identical or similar company object. The Company's activity consists of construction and subsequent operation of the 50 MW solar thermal plant located in the municipality of Alcázar de San Juan (Ciudad Real). In June 2011 the Company commenced the provisional startup in test mode, feeding off energy in a residual manner. The definitive registration of the plant in the Administrative Registry of Special Regime Production Facilities established in RD 661/2007 was carried out in November 2011 and the acceptance of the works and the entry into service of the solar thermal plant occurred on 27 December The Company's corporate year runs from 1 January to 31 December of each year. The Company belongs to a group of companies (ACS Group) which is managed in accordance with the Group's criteria. Cobra Sistemas y Redes, S.A. is the primary shareholder of the Company which is in turn 100% owned by the ACS Group company Cobra Gestión de Infraestructuras, S.A. Regulatory Framework The Company, due to its own activity, is affected by external factors which influence the evolution of its operations and its earnings. The Company's activities are subject to a wide range of government regulations. Any changes to these regulations could affect activities and earnings. Its electricity production from renewable energies is subject to a comprehensive law on tariffs and other aspects of its activities and earnings. 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 its operations. Also, the current legislative framework governing the tariff review system, including the remuneration of electricity generated, constitutes the main support mechanism for the development of these renewable sources. The Company's electricity generation business is regulated by Spanish Electricity Industry Law 54/1997, of 27 November, and by the subsequent implementing regulations. RD 661/2007, of 25 May, which regulates production of electricity under the special regime (the regime which the Company's facilities qualified for), established two remuneration options: according to the regulated tariff, 6

10 unique for all of the programming periods, expressed in euro cents per kilowatthour or selling the electricity freely on the Spanish electricity market supplemented by a premium in euro cents per kilowatthour. In the latter case, a change is introduced consisting of certain floors and ceilings on the sum of the daily market hourly price and a reference premium, such that the premium to be received each hour can be limited based on the aforementioned values. This new system protects the developer when the income arising from the market price is excessively low and eliminates the premium when the market price is high enough to guarantee that their costs will be covered. The facilities which qualify for categories a, b and c of article 2 of Royal Decree 436/2004, of 12 March, which had their definitive entry into service certificate prior to 1 January 2008, may remain in the transitional period. In order to do so the must elect, prior to 1 January 2009, one of the two electricity sale options included in article 22.1 of Royal Decree 436/2004, of 12 March, and may not change their option. In the event that the option selected is the option envisaged in article 22.1, the transitional system will apply for the remainder of the facility's life. In the event that the no change in option is communicated, it will become permanent as of the aforementioned date. Royal Decree 1565/2010, of 19 November, amending Royal Decrees 661/2007, 1578/2008 and 1110/2007 was published in This new law, among other aspects, introduces a new definition of substantial modification and the idea of grouping facilities; sets new requirements with respect to adhesion to control centres and remote reading devices; broadens the obligation to respond to voltage dips to photovoltaic groupings; and modifies the power factor requirements which must be met by the special regime facilities. Likewise, it reduces the premium, based on its classification, provided to the photovoltaic facilities registered after the second call of Specific economic regimes are established for experimental and innovative facilities using wind and solar thermal technologies. Subsequently, Royal Decree 1614/2010, of 7 December, was approved amending certain aspects of facilities which use solar thermal and wind technology and setting a maximum number of equivalent operating hours entitled to a premium in facilities using the aforementioned technologies. Likewise, in accordance therewith, the existing solar thermal facilities are transferred to the tariff system for a period of one year (the situation in which the Company's facility finds itself), the obligation for the new solar thermal facilities under said regime to remain on the market during their first year of operation is established, as well as a 35% reduction of the premium for wind farms which qualify under Royal Decree 661/2007 until The regulatory changes were taken into account in the Company's business plan and, in accordance with the opinion of its director, they do not substantially modify the recoverability of the investments. The business plan includes the ongoing management of the assets and the achievement of profitability within the framework of the indefinite administrative authorisation granted. 2. Basis of presentation of the financial statements 2.1) Regulatory financial reporting framework applicable to the Company These abridged financial statements were prepared by the sole director in accordance with the regulatory financial reporting framework applicable to the Company, which consists of: a) The Spanish Commercial Code and all other Spanish corporate law. b) The Spanish National Chart of Accounts approved by Royal Decree 1514/2007. c) The mandatory rules approved by the Spanish Accounting and Audit Institute in order to implement the Spanish National Chart of Accounts and its supplementary rules. d) All other applicable Spanish accounting legislation. 2.2) Fair presentation The accompanying abridged financial statements, which were prepared based on the accounting records of Manchasol 2 Central Termosolar 2, S.L., are presented in accordance with Royal Decree 1514/2007 approving the Spanish National Chart of Accounts and, accordingly, present fairly the Company's equity, financial position, and results of operations for the corresponding period. 7

11 The abridged financial statements for 31 December 2011 were prepared by the Company's sole director. The abridged financial statements for the year ended 31 December 2010 were approved by the shareholders at the General Meeting held on 16 May At 31 December 2011, the Company has a working capital deficiency of EUR 12,902,458 due to, among other factors, the testing situation and that its effective entry into service did not occur until 27 December The Company's sole director prepared the abridged financial statements in accordance with the going concern principle of accounting since it has the ongoing financial support of the Group to which it belongs in order to meet the obligations it has undertaken so that it may realise its assets and settle its liabilities for the amounts and with the classification reflected in the abridged financial statements. 2.3) Accounting principles applied The principal accounting policies and measurement bases applied in preparing the Company's abridged financial statements are summarised in Note 4. All obligatory accounting principles with a material impact on the abridged financial statements were applied. 2.4) Key issues in relation to the measurement and estimation of uncertainty In preparing the abridged financial statements estimates were made by the Company's sole director in order to quantify certain of the assets, liabilities, income, expenses and obligations reported herein. These estimates relate basically to the following: The useful life and depreciation criteria of the property, plant and equipment (Note 4.1). The assessment of possible impairment losses on certain assets (Note 4.1). The fair value of certain financial instruments (Note 4.3). The recovery of deferred tax assets recognised (Note 4.3) Although these estimates were made on the basis of the best information available at the date of preparation of these financial statements on the events analysed, events that take place in the future might make it necessary to change these estimates in coming years. Changes in accounting estimates would be applied prospectively, recognising the effects of the change in estimates. 2.5) Comparative information The financial statements for 2011 are compared in all respects with the financial statements for ) Grouping of items Certain items in the abridged balance sheet, abridged income statement and abridged statement of changes in equity are grouped together to facilitate their understanding; however, whenever the amounts involved are material, the information is broken down in the related notes to the abridged financial statements. 2.7) Changes in accounting policies In 2011 there were no significant changes in accounting policies with respect to the policies applied in ) Correction of errors No material errors were detected in the preparation of the accompanying abridged financial statements leading to the restatement of the amounts included in the 2010 financial statements. 8

12 3. Allocation of profit/(losses) The allocation of 2011 profit/(loss) proposed by the Company s sole director is as follows: Profit/(Loss) for the year 2011 (340,727) Allocation of profit/(loss): Prior years' losses 340,727 As stated in Note 9, in accordance with the financing agreement entered into with various financial institutions, there are restrictions on the distribution of dividends to the shareholder, unless the conditions established in provision 16, point 4 of the agreement is met. The aforementioned restrictions are: The borrower is up to date with the payment obligations that is has accepted by virtue of the agreement and the remaining financing documents; No cause for early termination has arisen and the distribution to the developers does not give rise to any of the aforementioned events; The first amortisation payment has been made on this credit facility; The debt service reserve fund is fully funded; The debt service coverage ratio is equal to or greater than 1.20 at the time the distribution is made; The amounts to be distributed to the developers do not in any case exceed the balance of the restricted drawdown account; and The plant completion certificate has been issued. 4. Accounting Policies The principal measurement bases used by Manchasol 2 Central Termosolar Dos, S.L. in preparing its financial statements for 2011, in accordance with the Spanish National Chart of Accounts, were as follows: 4.1) Property, plant and equipment Property, plant and equipment are initially recognised at acquisition cost and are subsequently reduced by the related accumulated depreciation and by any impairment losses recognised. Property, plant and equipment upkeep and maintenance expenses are recognised in the income statement for the year in which they are incurred. However, the costs of improvements leading to increased capacity or efficiency or to a lengthening of the useful lives of the assets are capitalised. For noncurrent assets that necessarily take a period of more than twelve months to get ready for their intended use, the capitalised costs include such borrowing costs as might have been incurred before the assets are ready for their intended use and which have been charged by the supplier or relate to loans or other borrowings directly attributable to the acquisition or production of the assets. Capitalised expenses of inhouse work on assets is measured at accumulated cost (external costs plus inhouse costs, determined on the basis of inhouse materials consumption, labour and general manufacturing costs calculated using absorption rates similar to those used for the measurement of inventories). 9

13 The Company depreciates the cost of its property, plant and equipment when the plant enters into service using the straightline method over the years of estimated useful life of the assets, the detail being as follows: Years of Estimated Useful Life Transport equipment 6 Construction and installation work 17 Impairment of property, plant and equipment At the end of each reporting period if there are indications of impairment the Company tests the property, plant and equipment for impairment to determine whether the recoverable amount of the assets has been reduced to below their carrying amount. 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 a pretax 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. If the recoverable amount of an asset (or cashgenerating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cashgenerating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cashgenerating 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 recognised for the asset (cashgenerating unit) in prior years. A reversal of an impairment loss is recognised as income immediately. Taking into account the evolution of energy prices and considering the current regulatory environment described in Note 1, as well as the plant's business plan, the sole director believes that there are no indications of impairment at 31 December ) Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases. 4.3) Financial instruments 4.3.1) Financial assets The financial assets held by the Company are classified in the following categories: a) Loans and receivables: financial assets arising from the sale of goods or the rendering of services in the ordinary course of the Company's business, or financial assets which, not having commercial substance, are not equity instruments or derivatives, have fixed or determinable payments and are not traded in an active market. Interest income is calculated in the year in which it accrues on a time proportion basis. Financial assets are initially recognised at the fair value of the consideration given, plus any directly attributable transaction costs. Subsequently, loans and receivables are measured at amortised cost. The Company derecognises 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 incidental to ownership of the financial asset have been transferred, such as in the case of the outright sale of assets, factoring of trade receivables in which the Company does not retain any credit or interest rate risk, sale of financial assets under 10

14 an agreement to repurchase them at their fair value or the securitisation of financial assets in which the transferor does not retain any subordinated debt, provide any type of guarantee or assume any other type of risk. However, the Company does not derecognise financial assets, and recognises a financial liability for an amount equal to the consideration received, in transfers of financial assets in which substantially all the risks and rewards of ownership are retained, such as in the case of bill discounting, withrecourse factoring, sales of financial assets under an agreement to repurchase them at a fixed price or at the selling price plus interest and the securitisation of financial assets in which the transferor retains a subordinated interest or any other kind of guarantee that absorbs substantially all the expected losses ) Financial liabilities Financial liabilities include accounts payable by the Company that have arisen from the purchase of goods or services in the normal course of the Company s business and those which, not having commercial substance, cannot be classed as derivative financial instruments. Accounts payable are initially recognised at the fair value of the consideration received, adjusted by the directly attributable transaction costs. These liabilities are subsequently measured at amortised cost. Liability derivative financial instruments are measured at fair value, following the same criteria as for financial assets held for trading described in the previous section. The Company derecognises financial liabilities when the obligations giving rise to them cease to exist. Hedging financial instruments The Company uses derivative financial instruments to hedge the risks to which its business activities, operations and future cash flows are exposed. Basically, these risks relate to changes in interest rates. The Company arranges hedging financial instruments in this connection, mainly IRS (Interest Rate Swap). In order for these financial instruments to qualify for hedge accounting, they are initially designated as such and the hedging relationship is documented. Also, the Company verifies, both at inception and periodically over the term of the hedge (at least at the end of each reporting period), that the hedging relationship is effective, i.e. that it is prospectively foreseeable that the changes in the fair value or cash flows of the hedged item (attributable to the hedged risk) will be almost fully offset by those of the hedging instrument and that, retrospectively, the gain or loss on the hedge was within a range of 80125% of the gain or loss on the hedged item. In 2011 and 2010, the Company used only cash flow hedges. In hedges of this nature, the portion of the gain or loss on the hedging instrument that has been determined to be an effective hedge is recognised temporarily in equity and is recognised in the income statement in the same period during which the hedged item affects profit or loss, unless the hedge relates to a forecast transaction that results in the recognition of a nonfinancial asset or a nonfinancial liability, in which case the amounts recognised in equity are included in the initial cost of the asset or liability when it is acquired or assumed. 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 recognised 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 recognised in equity is transferred to net profit or loss for the year. The fair value of the hedging financial instruments used by the Company (interest rate swaps) is calculated by discounting future settlements between fixed and floating interest rates to their present value, in line with implicit market rates, obtained from longterm interest rate swap curves. Implicit volatility is used to calculate the fair values of caps and floors using option valuation models. The derivatives arranged by the Company at 31 December 2011 met all the requirements indicated above to qualify as hedges and, therefore, the changes in the fair value of these derivative financial instruments for the year ended 31 December 2011 were recognised under Valuation adjustments in equity. 11

15 4.4) Income tax Tax expense (tax income) comprises current tax expense (current tax income) and deferred tax expense (deferred tax income). The current income tax expense is the amount payable by the Company as a result of income tax settlements for a given year. Tax credits and other tax benefits, excluding tax withholdings and prepayments, and tax loss carryforwards from prior years effectively offset in the current year reduce the current income tax expense. The deferred tax expense or income relates to the recognition and derecognition of deferred tax assets and liabilities. These 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 realised or the liability is settled. Deferred tax liabilities are recognised for all taxable temporary differences, except for those arising from the initial recognition of goodwill or of other assets and liabilities in a transaction that is not a business combination and affects neither accounting profit/(loss) nor taxable profit (tax loss). Deferred tax assets are recognised to the extent that it is considered probable that the Company will have taxable profits in the future against which the deferred tax assets can be utilised. Deferred tax assets and liabilities arising from transactions charged or credited directly to equity are also recognised in equity. The deferred tax assets recognised are reassessed at the end of each reporting period and the appropriate adjustments are made to the extent that there are doubts as to their future recoverability. Also, unrecognised deferred tax assets are reassessed at the end of each reporting period and are recognised to the extent that it has become probable that they will be recovered through future taxable profits. The Company is included in consolidated tax group no. 30/90 headed by ACS Actividades de Construcción y Servicios, S.A., as well as VAT group no. 0194/08 headed by Cobra Gestión de Infraestructuras, S.L.U. 4.5) Income and expense Revenue and expenses are recognised in profit or loss for the year 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 recognised when the significant risks and rewards of ownership of the goods sold have been transferred to the buyer, and the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold. Revenue from the rendering of services is recognised 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 recognised using the effective interest method and dividend income is recognised when the shareholder's right to receive payment has been established. Interest and dividends from financial assets accrued after the date of acquisition are recognised as income. 12

16 4.6) Relatedparty transactions The Company performs all its transactions with related parties on an arm's length basis. Also, the transfer prices are adequately supported and, therefore, the Company s director considers that there are no material risks in this connection that might give rise to significant liabilities in the future. 4.7) Provisions and contingencies When preparing the financial statements the Company's director made a distinction between: a) Provisions: credit balances covering present obligations arising from past events, the settlement of which is likely to cause an outflow of resources, but which are uncertain as to their amount and/or timing. b) Contingent liabilities: possible obligations that arise from past events and whose existence will be confirmed only by the occurrence or nonoccurrence of one or more future events not wholly within the Company's control. The financial statements include all the 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 recognised in the financial statements but rather are disclosed in the notes to the financial statements, unless the possibility of an outflow in settlement is considered to be remote. Provisions are measured at the present value of the best possible estimate of the amount required to settle or transfer the obligation, taking into account the information available on the event and its consequences, recording the adjustments which arise as a result of the update of these provisions as a finance cost as it accrues. 4.8) Current/noncurrent classification Balances are classified as noncurrent and current in the accompanying balance sheet. Current balances include balances which the Company expects to sell, consume, pay or realise during its normal operating cycle. The remaining balances are classified as noncurrent. 5. Property, plant and equipment The breakdown of the balance of this heading in the balance sheets at 31 December 2011 and 2010 is as follows: 13

17 2011 Balance at 31/12/2010 Additions or charges for the year Transfers Balance at 31/12/2011 Cost: Land and natural resources 2,722,365 2,722,365 Buildings 366,459, ,459,952 Property, plant and equipment in the (366,459,952) course of construction and advances 276,351,113 90,108,839 Transport equipment 119, ,900 Total cost 279,073,478 90,228, ,302,217 Accumulated depreciation: Buildings (119,294) (119,294) Transport equipment (161) (161) Total accumulated depreciation (119,455) (119,455) Total property, plant and equipment, net 279,073,478 90,109, ,182, Balance at 31/12/2009 Additions or charges for the year Balance at 31/12/2010 Cost: Property, plant and equipment in the course of construction and advances 148,158, ,192, ,351,113 Land and natural resources 2,722,365 2,722,365 Total cost 150,880, ,192, ,073,478 Total property, plant and equipment, net 150,880, ,192, ,073,478 The additions in 2011 correspond to the construction of the solar thermal plant, as well as the workers necessary to prepare the plant for its entry into service and the main subcontractor is Cobra Instalaciones y Servicios, S.A. The plant was in its testing phase between June and December During the testing phase, the Company fed off electricity generating residual income which was recognised under property, plant and equipment, subtracting the cost capitalised for its installation and entry into service. The net capitalised expenses and income in the aforementioned period amounted to EUR 12,594,372. The plant's provisional acceptance occurred on 27 December 2011 after a delay due to technical problems. The sole director considers that the optimal performance level planned in accordance with the business plan will be reached at short term. The Company has capitalised finance costs under "Property, plant and equipment in the course of construction and advances" for EUR 27,642,506 and EUR 9,658,807 in 2011 and 2010, respectively. The Company takes out insurance policies to cover the possible risks to which its property, plant and equipment are subject. At 31 December 2011, the property, plant and equipment were fully insured against these risks. To secure compliance with the obligations arising from the financing agreement described in Note 9, the Company definitively assigned to the lenders all of the collection and other rights and the guarantees arising from the plant construction, operation, maintenance and refurbishment agreements, management and 14

18 administration services, as well as land use and energy sale and purchase agreements and indemnities for the insurance policies taken out by the Company. There are no fully amortised assets under the Company's property, plant and equipment at 31 December 2011 and Operating leases With respect to the land on which the solar thermal plant described in the previous note is located, the Company has entered into a lease which expires on 23 April At 31 December 2011, the future minimum lease payments under the aforementioned noncancellable leases are as follows: 2011 Within one year 338,221 Two to five years 1,229,624 Over five years 6,985,781 Total 8,553, Financial assets Noncurrent In 2011 this heading was comprised of the deposit made by the Company at Banco Sabadell, S.A. in relation to the debt service reserve fund amounting to EUR 13,187,157 in In addition, it includes a guarantee given to Gas Natural for EUR 77,100 in 2011 and This debt service reserve fund will be maintained until all of the payment obligations arising from the financing agreement described in Note 11.1 have been settled. 7. Balances with Group companies and associates The detail of the balances with Group companies and associates at 31 December 2011 and 2010 is as follows: 2011 Subordinated debt Interest Supplier Current account Unregistered share capital (Note 10) Client Income tax VAT Cobra Sistemas y Redes, S.A. (62,046,733) (4,734,140) (738,000) Cobra Gestión de Infraestructuras S.L.U. 51,494 Cobra Instalaciones y Servicios, S.A. (2,293,545) 974 2,239,210 Cobra Concesiones, S.L. (2,460) Centro de Control Villadiego (22,944) ACS Actividades de Construcción y Servicios, S.A. 169,146 Total (62,046,733) (4,734,140) (2,316,489) 974 (740,460) 2,239, ,146 51,494 15

19 2010 Subordinated debt Interest Payable to suppliers Current liabilities Current receivables VAT Income tax Extresol 1, S.L. (10,321) Eyra (3,006) Cobra Instalaciones y Servicios, S.A. (10,045,717) 97,594 ACS Actividades de Construcción y Servicios, S.A. 24,652 Cobra Gestión de Infraestructuras, S.L.U. 19,148,446 Cobra Sistemas y Redes, S.A. (40,745,162) (1,622,597) Total (40,745,162) (1,622,597) (10,045,717) (13,327) 97,594 19,148,446 24,652 On 3 April 2009, Cobra Sistemas y Redes, S.A., granted the Company a subordinated loan for a maximum amount of EUR 56,015,344, and the lender recognised the priority and preference of the financing agreements over this credit facility which accrues the same interest rate as that applied to the syndicated credit facility in the same period. On 29 December 2011, Cobra Sistemas y Redes, S.A. granted the company a novation of the aforementioned subordinated loan, thereby increasing the maximum principal amount to EUR 62,046,733, and tying the interest rate to that of the financing agreement plus a spread of 2%. The subordinated loan principal shall be amortised in the periods and for the amounts established in the syndicated credit facility repayment schedule and must be fully amortised on the final maturity date (29 April 2029), provided that the subordination conditions have been met. At 30 December 2011, the shareholders have stated that they do not require a partial maturity of the subordinated loan over the coming 12 months. The Company maintains its VAT and income tax balances with the Group since it is part of the consolidated tax group. The balances of Payable to suppliers relate to transactions in connection with work performed and services rendered. The current accounts correspond to oneoff cash positions which do not accrue interest. 8. Cash and cash equivalents The breakdown of the balance of this heading in the balance sheets at 31 December 2011 and 2010 is as follows: Item Cash at banks 612,363 1,001,345 Total 612,363 1,001,345 On the date indicated, the entire balance of "Cash at banks" is unrestricted. 9. Derivative financial instruments The Company uses derivative financial instruments to hedge the risks to which its business activities, operations and future cash flows are exposed. Within the framework of the aforementioned transactions, the Company has arranged an "interest rate swap" according to the following breakdown: 16

20 Bank Notional amount Start date Maturity date Fixed rate Calyon 6,802,275 30/12/ /12/ % Caja Madrid 6,802,275 30/12/ /12/ % Banco Popular 6,802,275 30/12/ /12/ % BBVA 9,107,566 30/12/ /12/ % Banco Santander 12,409,390 30/12/ /12/ % Banco Sabadell 6,802,275 30/12/ /12/ % Banesto 6,802,275 30/12/ /12/ % West LB 6,802,275 30/12/ /12/ % Helaba 5,692,309 30/12/ /12/ % Total 68,022,915 The Company met the requirements described in Note on measurement bases in order to classify the financial instruments detailed as hedges. The following table shows the fair value of these hedges at 31 December 2011 and 2010: 2011 Liabilities Calyon 3,587,158 Caja Madrid 3,587,158 Banco Popular 3,587,158 BBVA 4,813,820 Banco Santander 6,544,052 Banco Sabadell 3,587,158 Banesto 3,587,158 West LB 3,587,158 Helaba 3,001,821 Total 35,882, Liabilities Calyon 1,718,605 Cajamadrid 1,718,605 Banco Sabadell 1,718,605 Popular 1,718,605 Banco Santander 3,135,251 Banesto 1,718,604 BBVA 2,304,020 West LB 1,718,604 Helaba 1,438,170 Total 17,189,069 17

21 10. Equity and shareholders equity 10.1) Share capital The share capital at 31 December 2011 and 2010 amounted to EUR 17,653,357 and EUR 13,559,758, respectively, represented by 301 fully subscribed and paid shares of EUR 58,649 par value each at 31 December 2011 and EUR 45,049 par value each at 31 December The Company s shareholders are as follows: Percentage of ownership Cobra Concesiones, S.L. 1% Cobra Sistemas y Redes, S.A. 99% In 2011 the Company's shareholders performed capital increases for a total of EUR 4,834,060. At 31 December 2011, a capital increase amounting to EUR 740,460 recognised under "Current liabilities to Group companies and associates" in the balance sheet is pending registration in the register. Banco Sabadell holds a security interest in the shares representing all of the share capital as a guarantee for the amounts owed in accordance with the financing agreement described in Note 9. Furthermore, in accordance with the conditions established in provision 16, point 4 of the aforementioned financing agreement, there are restrictions on the distribution of dividends to the shareholders. 10.2) Equity situation In accordance with Article 363 of the Spanish Corporate Enterprises Law, the company will be dissolved when losses incurred reduce its equity to less than onehalf of its share capital, unless capital is increased or decreased by a sufficient amount, and provided that the Company does not need to declare insolvency. Pursuant to Article 36 of the Spanish Commercial Code, for the purposes of profit distribution, mandatory capital reduction and mandatory dissolution as a result of losses, equity shall be considered the amount classified as such in the financial statements, plus the uncalled registered share capital, the par value and the share premiums of the registered share capital which is recognised for accounting purposes as a liability. Also for the aforementioned purposes, any adjustments for changes in value arising from cash flow hedges which have not yet been recognised in the income statement shall not be classified as equity. Consequently, the equity which can be calculated for the purposes of the aforementioned articles of the Spanish Corporate Enterprises Law is that shown below. Accordingly, the case dissolution set out in the aforementioned regulations does not apply to the Company at 31 December Equity as per the financial statements at 31/12/2011 (8,182,335) Minus adjustments for changes in value from cash flow hedges 25,117,849 Equity for the purposes of capital reduction and winding up 31/12/ ,935,514 Equity at 31 December 2011 for the calculation stipulated in article 363 of the Corporate Enterprises Law 16,935,514 18

22 11. Noncurrent and Current liabilities 11.1) Noncurrent financial liabilities The detail of NonCurrent liabilities at 31 December 2011 and 2010 is as follows: Classes Noncurrent financial instruments 2011 Categories Bank borrowings Derivatives and other (Note 9) Total Accounts payable 277,375, ,375,156 Derivatives (Note 9) 35,882,641 35,882,641 Total 277,375,156 35,882, ,257,797 Classes Noncurrent financial instruments 2010 Categories Bank borrowings Derivatives and other Total Accounts payable 204,012, ,012,116 Derivatives (Note 9) 17,189,069 17,189,069 Total 204,012,116 17,189, ,201,185 The detail of "Noncurrent bank borrowings at" 31 December 2011 and 2010 is as follows: Item Longterm syndicated credit facility 285,033, ,710,829 Debt arrangement expenses (7,658,697) (7,698,713) TOTAL 277,375, ,012,116 On 3 April 2009, the Company entered into a financing agreement (syndicated credit facility) with a mortgage commitment and a pledge on rights of up to EUR 298,748,500 with Banco Sabadell, (agent bank), Banco Bilbao Vizcaya Argentaria, Banco Español de Crédito, Banco Popular Español, Caja de Ahorros y Monte de Piedad de Madrid, Westlb LB AG, sucursal en España, Calyon, sucursal en España, Landesbank Hessen Thüringen Girozentrale (Helaba) and Banco de Santander to finance the construction and startup of the solar thermal plant. This credit facility accrues interest at a floating rate which is calculated in addition to the reference interest rate (Euribor) plus a spread which varies based on the annual debt service coverage ratio with a final maturity scheduled for In accordance with the financing agreement, in addition to the basic obligation to repay the principal, interest, fees and taxes, the Company undertakes to comply throughout the term of the agreement with the obligations detailed in provision 16. Not to encumber in any way any of the assets or items of its property plant and equipment, either as a w hole or one or various assets. Establish within a period of 12 months from completion of the works the debt service reserve fund. Maintain a gearing ratio of 20/80 19

23 Not to incur any other debt other than those mentioned, nor grant loans, guarantees, donations or any other discretional gifts. These obligations were being met at 31 December The investment in the solar thermal plants operated by the Company was financed through a project finance structure. 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 longterm debt. The debt servicing of these credit facilities or loans is supported mainly by the cash flows to be generated by the project in the future and by security interests in the project's assets. The longterm syndicated credit facility shall be amortised in 36 halfyearly instalments coinciding with payment dates in accordance with the following schedule: Annual Percentage to be amortised % ,4238% % % % % % % % % % % % % % % % % % 11.2) Current financial liabilities On 3 April 2009, the Company arranged a credit facility for a maximum amount of EUR 25,000,000 with Banco Sabadell, (agent bank), Banco Bilbao Vizcaya Argentaria, Banco Español de Crédito, Banco Popular Español, Caja de Ahorros y Monte de Piedad de Madrid, Westlb LB AG, sucursal en España, Calyon, sucursal en España, Landesbank HessenThüringen Girozentrale (Helaba) y Banco de Santander in order to pay a portion advance of the VAT owed by the Company as a result of the construction of the plant. On 31 December 2011, the current balance payable for the aforementioned VAT credit facility amounted to EUR 14,200,000. This credit facility matures on 30 April 2012 and accrues interest at a rate of 3.647%. 20

24 The detail of Current liabilities at 2011 and 2010 year end is as follows: 31/12/ /12/2010 Shortterm syndicated credit facility 7,241,066 4,689,172 VAT Credit facility 14,200,000 25,000,000 Interest on main credit facility 36,250 24,435 Interest VAT credit facility 62,715 70,719 Interest on derivatives 16,696 9,120 Other items 2,857 Total 21,556,727 29,796, ) Trade payables Deferred payment to suppliers for commercial transactions In relation to the disclosures required by additional provision three of Law 15/2010, of 5 July, at 31 December 2011, the Company had a balance payable to suppliers that was past due by more than the maximum legal payment period amounting to EUR 1,372,348. This balance relates to suppliers that because of their nature are trade creditors for the supply of goods and services, and therefore, it includes the figures relating to "Sundry accounts payable Payable to suppliers and Payable to suppliers Group companies" under current liabilities in the balance sheet. The maximum legal payment period applicable to the Company according to Law 3/2004, of 29 December, establishing measures combating late payment in commercial transactions and in accordance with the transitional provisions established in Law 15/2010, of 5 July, is 85 days between the entry into force of the law until 31 December The following table includes the volume of payments made during the year and the volume of payments made during the period established under the law. Payments made and payable at the closing date of the balance sheet 31/12/ /12/2010 Amount % Amount % Within maximum legal period 22,056,231 22% 55,996,331 26% Other 75,718,600 78% 158,518,692 74% Total payments in the year 97,774, % 214,515, % Deferred payments which at year end exceed the maximum period 1,372, % 5, % 21

25 12. Tax matters 12.1) Current tax receivables and payables The detail of "Current tax receivables and payables" in the balance sheet at the close of the nine month period ended 31 December 2011 and the year ended 31 December 2010 is as follows: 2011 LIABILITIES Personal income tax withholdings Social security costs 2,173 3,388 Total 5, LIABILITIES Personal income tax withholdings Accrued social security taxes payable 1, Total 2, ) Reconciliation of the accounting profit/(loss) to the taxable base amount The reconciliation of the accounting profit/loss for the periods ended 31 December 2011 and 2010 to the corresponding taxable base amount is as follows: 2011 Total Accounting profit/(loss) for the year before tax (485,464) Taxable base amount (485,464) 2010 Total Accounting profit/(loss) for the year before tax (7,019) Taxable base amount (7,019) 12.3) Reconciliation of accounting profit/(loss) to the income tax expense The income tax expense is calculated on the basis of accounting profit or loss, determined by application of generally accepted accounting principles, which does not necessarily coincide with the taxable profit (tax loss), the latter being understood to be the taxable base amount. The reconciliation of the accounting profit or loss for 2011 and 2010 to the corresponding income tax expense and current income tax is as follows: 22