Annual Report
and Financial Statements
FOR THE YEAR ENDED DECEMBER 31, 2015
Company Registration nº 08818211
Abengoa Yield Plc
Doing business as Atlantica Yield
Company Registration No. 08818211
Annual Report and Financial Statements
For the year ended 31 December 2015
Abengoa Yield plc (doing business as Atlantica Yield)
1
Abengoa Yield plc Consolidated Annual Report and Financial Statements
General information
Adoption of new and revised standards
Significant accounting policies
Financial information by segment
Changes in the scope of the consolidated financial statements
Loss for the year
Auditor’s remuneration
Staff Costs
Other operating income
Finance income and expenses
Strategic Report
Directors’ Report
Director’s Remuneration Report
Directors’ Responsibilities Statement
Independent auditor’s report to the members of Abengoa Yield plc
Consolidated Income statement
Consolidated statement of other comprehensive income
Consolidated balance sheet
Consolidated Statement of changes in equity
Consolidated cash flow statement
Notes to the consolidated financial statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11. Tax
12. Dividends
13. Contracted concessional assets
14.
15. Trade and other receivables
16. Cash and cash equivalents
17. Corporate debt
18. Project debt
19. Grants and other long term payables
20. Trade and other payables
21.
22. Notes to the cash flow statement
Financial instruments by category
23.
24. Derivative financial instruments
Financial risk management
25.
26.
Events after the balance sheet date
27. Related party transactions
28. Contingent liabilities
29. Guarantees and commitments
30.
31.
Earnings per share
Service concessional arrangements
Investments carried under the equity method
Equity
Company Balance Sheet
Company statement of change in Equity
Notes to the financial statements
3
24
28
39
41
43
44
45
47
50
51
117
119
120
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Strategic Report
This Strategic Report has been prepared solely to provide additional information to shareholders
to assess the company’s strategies and the potential for the strategies to succeed.
The Strategic Report contains certain forward-looking statements. These statements are made by
the directors in good faith based on the information available to them up to the time of their
approval of this report and such statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors, underlying any such forward-
looking information.
The directors, in preparing this Strategic report, have complied with Section 414C of the
Companies Act 2006.
The Strategic Report discusses the following areas:
Nature of the business.
Business model, strategy and objectives.
Fair review of the business.
Key performance indicators.
Principal risks and uncertainties.
Corporate social responsibility.
Future developments.
Going concern basis.
Nature of the business
Abengoa Yield plc (hereinafter “we”, “our”, the “Company” or “Atlantica Yield”) was incorporated
in England and Wales as a private limited company on December 17, 2013 under the name
“Abengoa Yield Limited.” On March 19, 2014, we were re-registered as a public limited company,
under the name “Abengoa Yield plc.” On January 7, 2016, we changed our corporate brand to
Atlantica Yield. Our shares will continue to be listed on the NASDAQ Global Select Market under
the symbol “ABY” and we will change our legal name once approved by the shareholders at our
next annual general meeting, which we expect to hold in May 2016.
We are a total return company that owns, manages, and acquires renewable energy, conventional
power, electric transmission lines and water revenue-generating assets, focused on North
America (the United States and Mexico), South America (Peru, Chile, Brazil and Uruguay) and
EMEA (Spain, Algeria and South Africa).
As of December 31, 2015, we own or have interests in 20 assets, comprising 1,441 MW of
renewable energy generation, 300 MW of conventional power generation, 10.5 M ft3 per day of
water desalination and 1,099 miles of electric transmission lines, as well as an exchangeable
preferred equity investment in ACBH. Each of the assets we own has a project-finance agreement
in place. All of our assets have contracted revenues (regulated revenues in the case of our
Spanish assets) with low-risk offtakers and collectively have a weighted average remaining
contract life of approximately 22 years as of December 31, 2015.
We are focused on high-quality, newly-constructed and long-life facilities with creditworthy
counterparties that we expect will produce stable, long-term cash flows. We will seek to grow our
3
cash available for distribution and our dividend to shareholders through organic growth and by
acquiring new contracted assets from our current sponsor, Abengoa S.A., from third parties and
from potential new future sponsors.
With this business model, our objective is to pay a consistent and growing cash dividend to
shareholders that is sustainable on a long-term basis. We expect to distribute a very high
percentage of our cash available for distribution as cash dividends and we will seek to increase
such cash dividends over time through organic growth and as we acquire assets with
characteristics similar to those in our current portfolio.
The Company creates value for its shareholders by seeking to (i) achieve recurrent and growing
dividends to investors valuing long-term contracted assets and (ii) to grow our cash available for
distribution (“CAFD”) and its cash dividends paid to shareholders by acquiring new contracted
assets from our current sponsor, Abengoa S.A., from third parties and from potential new future
sponsors.
The address of our principal executive offices is Great West House, GW1, 17th floor, Great West
Road, Brentford, United Kingdom TW8 9DF.
Events during the period
On January 22, 2015, Abengoa S.A. closed an underwritten public offering and sale of 10,580,000
of our ordinary shares for total proceeds of $327,980,000 (or $31 per share) before underwriting
fees and expenses. As of the date of this annual report, Abengoa S.A. owns 41.86% of our
ordinary shares.
On February 3, 2015, we completed the acquisition of a 25.5% stake in Honaine and a 34.2%
stake in Skikda, two desalination plants in Algeria with an aggregate capacity of 10.5 M ft3 per
day. On February 23, 2015, we completed the acquisition of a 29.6% stake in Helioenergy 1/2, a
solar power asset in Spain with a capacity of 100 MW. The total purchase price paid for these
assets amounted to $94 million.
On May 13, 2015 and May 14, 2015, we completed the acquisition of Helios 1/2, a 100 MW solar
complex and Solnova 1/3/4, a 150 MW solar complex, each in located in Spain. On May 25, 2015,
we completed the acquisition of the remaining 70.4% stake in Helioenergy 1/2. On July 30, 2015,
we completed the acquisition of Kaxu, a 100 MW solar plant in South Africa. The total purchase
price paid for these assets amounted to $682 million.
On June 25, 2015, we completed the acquisition of ATN2, an 81-mile transmission line in Peru
from Abengoa S.A. and Sigma, a third-party financial investor in the project. On September 30,
2015, we completed the acquisition of Solaben 1/6, a 100 MW solar complex in Spain. On January
7, 2016, we completed the acquisition of a 13% stake in Solacor 1/2, a 100 MW solar complex
where we already owned a 74% stake. The total purchase price paid for these assets amounted to
$378 million.
Asset portfolio
We own a diversified portfolio of contracted assets across the renewable energy, conventional
power, electric transmission line and water sectors in North America (the United States and
Mexico), South America (Peru, Chile, Uruguay and Brazil) and EMEA (Spain, Algeria and South
Africa). We intend to expand to certain countries in the Middle East, maintaining North America,
South America and Europe as our core geographies. Our portfolio consists of 12 renewable
4
energy assets, a natural gas-fired cogeneration facility, several electric transmission lines and
minority stakes in two water desalination plants, all of which are fully operational. All of our assets
have contracted revenues (regulated revenues in the case of our Spanish assets) with low-risk
offtakers and collectively have a weighted average remaining contract life of approximately 22
years as of December 31, 2015.
The following table provides an overview of our current assets as of December 31, 2015:
Currency(1)
Capacity
(Gross)
Offtaker
Counterparty
Credit
Rating (2)
Assets
Type
Renewable
(Solar)
Renewable
Ownership Location
Arizona
(USA)
100%
Class B(3)
California
(USA)
Solana .........................................................................................................................................................................................................................
280 MW
A-/A2/A
APS
U.S. dollar
BBB/Baa1/
Mojave .......................................................................................................................................................................................................................
BBB+
U.S. dollar
280 MW
(Solar)
PG&E
100%
Solaben
BBB/Baa2/
2/3(4) .......................................................................................................................................................................................................................
BBB+
Renewable
(Solar)
2x50 MW
70%(5)
Spain
Euro
Wholesale
market/ Spanish
Electric System
BBB+/Baa2/
Solacor 1/2(6) ............................................................................................................................................................................................................
BBB+
Renewable
(Solar)
2x50 MW
74%(7)
Spain
Euro
Wholesale
market/ Spanish
Electric System
BBB+/Baa2/
PS10/20(8) ..................................................................................................................................................................................................................
BBB+
Renewable
(Solar)
31 MW
100%
Spain
Euro
Wholesale
market/ Spanish
Electric System
Helioenergy
BBB+/Baa2/
1/2(9) .......................................................................................................................................................................................................................
BBB+
Renewable
(Solar)
2x50 MW
100%
Spain
Euro
Wholesale
market/ Spanish
Electric System
BBB+/Baa2/
Helios 1/2(10) .............................................................................................................................................................................................................
BBB+
Renewable
(Solar)
2x50 MW
100%
Spain
Euro
Wholesale
market/ Spanish
Electric System
Solnova
BBB+/Baa2/
1/3/4(11) ..................................................................................................................................................................................................................
BBB+
Renewable
(Solar)
3x50 MW
100%
Spain
Euro
Wholesale
market/ Spanish
Electric System
Solaben
BBB+/Baa2/
1/6(12) ......................................................................................................................................................................................................................
BBB+
Renewable
(Solar)
2x50 MW
Spain
Euro
100%(19)
Wholesale
market/ Spanish
Electric System
Kaxu ............................................................................................................................................................................................................................
100 MW
51%(13)
Eskom
South
Africa
Rand
Palmatir ......................................................................................................................................................................................................................
BBB-(15)
U.S. dollar
Uruguay
50 MW
Uruguay
(Wind)
100%
Cadonal ......................................................................................................................................................................................................................
BBB-(15)
U.S. dollar
Uruguay
50 MW
Uruguay
(Wind)
100%
ACT ..............................................................................................................................................................................................................................
BBB+
U.S. dollar
300 MW
Mexico
Pemex
100%
BBB+/A3/
ATN .............................................................................................................................................................................................................................
BBB+
Transmission
Line
U.S. dollar
362 Miles
100%
Peru
Peru
BBB+/A3/
ATS ..............................................................................................................................................................................................................................
BBB+
Transmission
Line
U.S. dollar
569 Miles
100%
Peru
Peru
ATN2 ...........................................................................................................................................................................................................................
Las Bambas
81 miles
Not rated
100%
Peru
U.S. dollar
BBB-
/Baa2/BBB(14)
BBB-/Baa2/
BBB-/Baa2/
BBB+/Baa1/
Quadra 1 ....................................................................................................................................................................................................................
Sierra Gorda
43 Miles
Not rated
100%
Chile
U.S. dollar
Quadra 2 ....................................................................................................................................................................................................................
Sierra Gorda
38 Miles
Not rated
100%
Chile
U.S. dollar
Palmucho ..................................................................................................................................................................................................................
BBB+
U.S. dollar
6 Miles
100%
Chile
Endesa Chile(16)
BBB+/Baa2/
Honaine .....................................................................................................................................................................................................................
Algeria
Sonatrach
Water
Not rated
25.5%(17)
U.S. dollar
7 M ft3/day
Skikda .........................................................................................................................................................................................................................
Algeria
Sonatrach
Not rated
Water
34.2%(18)
U.S. dollar
3.5 M
ft3/day
Renewable
(Solar)
Renewable
Renewable
Conventional
Power
Transmission
Line
Transmission
Line
Transmission
Line
Transmission
Line
COD
4Q 2013
4Q 2014
Contract
Years Left
28
24
2Q 2012 &
4Q 2012
22 / 21
2Q 2012 &
4Q 2012
21 / 21
1Q 2007 &
2Q 2009
16 / 18
3Q 2011 &
4Q 2011
22 / 22
2Q 2012 &
3Q2012
2Q 2010 &
2Q 2010 &
3Q 2010
21 / 22
19 / 19 / 20
3Q 2013
23 / 23
1Q 2015
2Q 2014
4Q 2014
2Q 2013
1Q 2011
1Q 2014
2Q 2015
2Q 2014
1Q 2014
4Q 2007
3Q 2012
1Q 2009
19
18
19
17
25
28
17
19
19
22
22
18
__________________
Notes:
(1) Certain contracts denominated in U.S. dollars are payable in local currency.
(2) Reflects the counterparty’s issuer credit ratings issued by Standard & Poor’s Ratings Services, or S&P, Moody’s Investors Service Inc., or
Moody’s, and Fitch Ratings Ltd, or Fitch.
5
(3) On September 30, 2013, Liberty Interactive Corporation agreed to invest $300 million in Class A shares of Arizona Solar Holding, the
holding company of Solana, in exchange for a share of the dividends and the taxable loss generated by Solana. See note 1 to our Annual
Consolidated Financial Statements.
(4)
(5)
(6)
(7)
(8)
Solaben 2 and Solaben 3 are separate special purpose vehicles with separate agreements, but they are treated as a single platform.
Itochu Corporation, a Japanese trading company, holds 30% of the shares in each of Solaben 2 and Solaben 3.
Solacor 1 and Solacor 2 are separate special purpose vehicles with separate agreements but they are treated as a single platform.
JGC Corporation, a Japanese engineering company, holds 13% of the shares in each of Solacor 1 and Solacor 2.
PS10 and PS20 are separate special purpose vehicles with separate agreements but they are treated as a single platform.
(9) Helioenergy 1 and Helioenergy 2 are separate special purpose vehicles with separate agreements but they are treated as a single platform.
(10) Helios 1 and Helios 2 are separate special purpose vehicles with separate agreements but they are treated as a single platform.
(11) Solnova 1, Solnova 3 and Solnova 4 are separate special purpose vehicles with separate agreements but they are treated as a single platform.
(12) Solaben 1 and Solaben 6 are separate special purpose vehicles with separate agreements, but they are treated as a single platform.
(13)
Industrial Development Corporation of South Africa owns 29% and Kaxu Community Trust owns 20% of Kaxu.
(14) Refers to the credit rating of the Republic of South Africa.
(15) Refers to the credit rating of Uruguay, as UTE is unrated.
(16) Refers to Empresa Nacional de Electricidad, S.A., or Endesa Chile, which is owned by the Enel Group.
(17) Algerian Energy Company, SPA owns 49% of Honaine and Sadyt owns the remaining 25.5%.
(18) Algerian Energy Company, SPA owns 49% of Skikda and Sadyt owns the remaining 16.8%.
(19) Atlantica Yield has the indirect ownership of 74,99% and the usufruct rights over the economical rights of 25,01% in Solaben 1/6
In addition to the assets listed above, we hold an exchangeable preferred equity investment in
ACBH, a subsidiary holding company of Abengoa S.A. that is engaged in the development,
construction, investment and management of contracted concessions in Brazil, comprised mostly
of transmission lines in various stages of development.
Per clarification, on January 29, 2016, Abengoa S.A. informed us that several of its indirect
subsidiaries of Abengoa in Brazil, including ACBH, have initiated an insolvency procedure under
Brazilian law (“recuperaçao judiciaria”). We are assessing the potential impact of this event
together with external advisors and this analysis is currently ongoing. Given that this process will
likely negatively affect the value of our preferred equity investment and considering the high
degree of uncertainty of its final outcome, we have recorded an impairment of this preferred
equity investment for a total amount of $210 million.
Business model, strategy and objectives
Atlantica Yield is a total return company that owns, manages, and acquires renewable energy,
conventional power, electric transmission lines and water assets, focused on North America,
South America and EMEA.
We are focused on high-quality, newly-constructed and long-life facilities that have contracts
with creditworthy counterparties that we expect will produce stable, long-term cash flows. We will
seek to grow our cash available for distribution and our dividend to shareholders through organic
growth and by acquiring new contracted assets from our current sponsor, Abengoa S.A., from
third parties and from potential new future sponsors.
In this sense, we intend to take advantage of favourable trends in the power generation and
electric transmission sectors globally, including energy scarcity and a focus on the reduction of
carbon emissions. To that end, we believe that our cash flow profile, coupled with our scale,
diversity and low-cost business model, offers us a lower cost of capital than that of a traditional
engineering and construction company or independent power producer and provides us with a
significant competitive advantage with which to execute our growth strategy.
6
We signed an exclusive agreement with Abengoa S.A., which we refer to as the ROFO Agreement,
which provides us with a right of first offer on any proposed sale, transfer or other disposition of
any of Abengoa S.A.’s contracted renewable energy, conventional power, electric transmission or
water assets in operation and located in the United States, Canada, Mexico, Chile, Peru, Uruguay,
Brazil, Colombia and the European Union, as well as four assets in selected countries in Africa and
the Middle East.
Additionally, we plan to sign similar agreements with other developers or asset owners. In
addition, we expect to acquire assets from third parties leveraging the local presence and
network we have in the geographies and sectors in which we operate.
In general, we expect to acquire only assets that are developed and operational. We intend to use
the following investment guidelines in evaluating prospective acquisitions in order to successfully
execute our accretive growth strategy:
High quality offtakers, with long-term contracted revenue, ideally longer than 20 years.
Project financing in place at each project.
Operations and maintenance contract in place at each project.
Management and operational systems and processes at our level.
Focus on regions and countries that provide an optimal balance between growth
opportunities and security and risk considerations, including the United States, Canada,
Mexico, Chile, Peru, Uruguay, Brazil, Colombia and the European Union, as well as selected
countries in Africa and the Middle East.
Preference for U.S. dollar-denominated revenues, in the absence of which, we will implement
a cost-effective, ad-hoc hedging policy that will support stability of cash flows.
With this business model, our objective is to pay a consistent and growing cash dividend to
shareholders that is sustainable on a long-term basis. We expect to distribute a very high
percentage of our cash available for distribution as cash dividends and we will seek to increase
such cash dividends over time through organic growth and as we acquire assets with
characteristics similar to those in our current portfolio.
Based on the acquisition opportunities available to us, we believe that we will have the
opportunity to grow our cash available for distribution in a manner that would allow us to
increase our cash dividends per share over time.
Our primary business strategy is to generate stable cash flows with our portfolio of assets, which
will allow us to grow the cash dividends that we intend to pay to holders of our shares over time
while ensuring the ongoing stability of our business. Our plan for executing this strategy includes
the following key components:
Focus on stable, long-term contracted assets in renewable energy, conventional power
generation and electric transmission lines. We intend to focus on owning and operating these
types of assets, for which we possess deep know-how, extensive experience and proven
systems and management processes, as well as the critical mass to benefit from operating
efficiencies and scale. We expect that this will allow us to maximize value and cash flow
generation going forward. We intend to maintain a diversified portfolio in the future, as we
believe these technologies will undergo significant growth in our targeted geographies.
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Maintain geographic diversification across three principal geographic areas. Our focus on
three main markets, North America, South America and Europe, helps to ensure exposure to
markets in which we believe the renewable energy, conventional power and electric
transmission sectors will continue growing significantly. We believe that a strategic exposure
to international markets will allow us to pursue greater growth opportunities and achieve
higher returns than if we only focus on assets located in the United States.
Increase cash available for distribution by optimizing our existing assets. Some of our assets
are newly operational and we believe that we can increase the cash flow generation of these
assets through further management and optimization initiatives and in some cases through
repowering.
Increase cash available for distribution through the acquisition of new assets in renewable
energy, conventional power and electric transmission. We will seek to grow our cash available
for distribution and our dividend to shareholders by acquiring new contracted assets from our
current sponsor, Abengoa S.A., from third parties and from potential new future sponsors.
Foster a low-risk approach. We intend to maintain, over time, a portfolio of contracted assets
with a low-risk profile due to creditworthy offtake counterparties, long-term contracted
revenues, 90% of cash available for distribution in, indexed or hedged to the U.S. dollar and
proven technologies in which we have deep expertise and significant experience, located in
countries where we believe conditions to be stable and safe. Additionally, our policies and
management systems include thorough risk analysis and risk management processes that we
apply whenever we acquire an asset, and which we review monthly throughout the life of the
asset. Our policy is to insure all of our assets whenever economically feasible.
Maintain financial strength and flexibility. We intend to maintain a solid financial position
through a combination of cash on hand and credit facilities.
Lastly, we believe that we are well positioned to execute our business strategies because of the
following competitive strengths:
Stable and predictable long-term U.S. and international cash flows with attractive tax profiles.
Highly diversified portfolio by geography and technology.
Strong corporate governance with a majority independent board and an experienced and
incentivized management team.
A fair review of the business
The Company is focused on high-quality, newly-constructed and long-life facilities with
creditworthy counterparties that we expect will produce stable, long-term cash flows.
During our two first years of operation, we have focused on three priorities:
1. Creating, in the case of new assets, and reinforcing, in the case of others, the processes and
systems required to manage and control our contracted assets internationally.
2. Bringing into service, ramping up and maximizing performance of our asset portfolio. This is
an area where in 2016 we still need to continue ramping up some of younger assets,
including Solana, Kaxu or Mojave.
3. Acquiring and integrating new contracted assets.
8
In 2015 the Company and its subsidiaries closed with revenues of $790.9 million (2014: $362.7
million) and a loss for the year of $198.2 million (2014: $-29.3 million).
$ in millions
Revenue
Operating Profit
Loss for the Year
2015
790.9
344.5
-198.2
2014
362.7
173.3
-29.3
As of December 31, 2015, our cash and cash equivalents at the project company level were
$469.2 million as compared with $198.7 million as of December 31, 2014. In addition, our cash
and cash equivalents at the Abengoa Yield plc level were $45.5 million as of December 31, 2015
compared with $155.4 million as of December 31, 2014. The losses in 2015 relate mainly to the
impairment of the preferred equity investment on ACBH, as described on page 13.
We expect our ongoing sources of liquidity to include cash on hand, cash generated from our
operations, project debt arrangements, corporate debt and the issuance of additional equity
securities, as appropriate, given market conditions. Our financing agreements consist mainly of
the project-level financings for our various assets, the 2019 Notes and the Credit Facility.
Based on our current level of operations, we believe our cash flow from operations, available cash
and available borrowings under our financing agreements will be adequate to meet our future
liquidity needs for at least the next twelve months.
In 2015, we have paid total dividends of $1.4292 per share (2014: $0.2962 per share) to our
shareholders and from that amount we retained $9 million of the dividend attributable to
Abengoa S.A. in accordance with the provisions of the parent support agreement.
As previously stated within this Annual Report, all of our assets have contracted revenues with
low-risk off-takers and collectively have a weighted average remaining contract life of
approximately 22 years as of December 31, 2015. To gain an overall fair review of the business we
have enclosed a detailed breakdown of our results of operations for the years ended as of
December 31, 2015 and 2014:
9
2015
2014
Revenue
Other operating income
Raw materials and consumables used
Employee benefit expenses
Depreciation, amortization and impairment charges
Other operating expenses
Operating profit/(loss)
Financial income
Financial expense
Net exchange differences
Other financial income/(expense), net
Financial expense, net
$
$
$
790.9 $
68.8
(23.2 )
(5.8 )
(261.3 )
(224.9 )
344.5 $
3.5
(333.9 )
3.9
(200.2 )
(526.7 ) $
Share of profit/(loss) of associates carried under the equity method
$
Loss before income tax
7.8
(174.4 ) $
Income tax
Loss for the year
Profit/(loss) attributable to non-controlling interests
Loss for the year attributable to the parent company
(23.8 )
(198.2 ) $
(10.8 )
(209.0 ) $
$
$
362.7
79.9
(9.4 )
(1.7 )
(125.5 )
(132.7 )
173.3
4.9
(210.3 )
2.1
5.9
(197.4 )
(0.8 )
(24.9 )
(4.4 )
(29.3 )
(2.3 )
(31.6 )
Revenues
Revenues increased by 118.1% to $790.9 million in the year ended December 31, 2015, compared
with $362.7 million for the year ended December 31, 2014. On a constant currency basis, revenue
for the year ended December 31, 2015 would have been $859.4 million, representing an increase
of 136.9% compared to the previous year. The increase is largely attributable to the acquisitions
of Solacor 1/2, PS 10/20 and Cadonal in the fourth quarter of 2014, Skikda in the first quarter of
2015, Helios 1/2, Solnova 1/3/4, Helioenergy 1/2 and ATN2 in the second quarter of 2015 and
Kaxu and Solaben 1/6 in the third quarter of 2015. The commencement of operations of Mojave
in the last quarter of 2014 also contributed to the increase of revenues in the year ended
December 31, 2015 as compared with the year ended December 31, 2014. These resulted in a net
electricity production of 5,001 GWh and 1,099 miles of transmission lines in operation for the year
ended December 31, 2015, compared with 3,376 GWh produced and 1,018 miles of transmission
lines in operation during the year ended December 31, 2014.
Other operating income
The following table sets forth our other operating income for the years ended December 31, 2015
and 2014:
Year ended December
31,
2014
2015
Other operating income
Grants
Income from various services
Income from subcontracted construction services for our assets and concessions
Total
$ in millions
67.8
1.0
—
68.8
35.2
6.1
38.6
79.9
10
Other operating income decreased by 13.8% to $68.8 million for the year ended December 31,
2015, compared with $79.9 million for the year ended December 31, 2014. The decrease was
mainly due to the decrease in income from subcontracted construction services for our assets
and concessions, which decreased from $38.6 million for the year ended December 31, 2014 to
$0 in the year ended December 31, 2015. As certain assets owned by us were under construction
and subcontracted to related parties during 2014, we were required to account for income from
construction services as “other operating income” in accordance with IFRIC 12. The corresponding
costs of construction were recorded within “Other operating expenses.” These amounts reflect
the construction progress of the assets and concessions during 2014. The decrease was primarily
due to the completion of construction of ATS. We do not expect to have any other operating
income from construction activities in future periods.
Income from grants increased from $35.2 million in the year ended December 31, 2014 to $67.8
million in the year ended December 31, 2015. Income classified as grants is related to the
financial support provided by the U.S. Treasury to Solana and Mojave. The increase is due to
grants in respect to Mojave, which is fully consolidated from December 2014 once the asset
reached COD and was recorded under the equity method until that time.
Raw materials and consumables used
Raw materials and consumables used increased by $13.8 million to $23.2 million for the year
ended December 31, 2015, compared with $9.4 million for the year ended December 31, 2014,
primarily due to the increase in raw materials used in Solana, the commencement of operations
of Mojave and the recent acquisition of Skikda in the first quarter of 2015.
Employee benefits expenses
Employee benefit expenses increased by $4.1 million to $5.8 million for the year ended December
31, 2015, compared with $1.7 million for the year ended December 31, 2014. This increase in
expenses was primarily attributable to the fact that during 2015 management employees of
Atlantica Yield, who had been employed by Abengoa S.A. until March 2015 were transferred to
companies within the perimeter of Atlantica Yield and the Executive Services Agreement was
terminated, which has caused an increase in employee benefit expenses. In addition, other
employees previously employed by subsidiaries of Abengoa S.A. who were providing services to
Atlantica Yield under the Support Services Agreement were transferred to subsidiaries of
Atlantica Yield. This increase was partially offset by a decrease in employee benefit expenses in
ATN due to the fact that in April 2014 all ATN employees were transferred to an entity excluded
from the perimeter of Atlantica Yield.
Depreciation, amortization and impairment charges
Depreciation, amortization and impairment charges increased by 108.2% to $261.3 million for the
year ended December 31, 2015, compared with $125.5 million for the year ended December 31,
2014. Depreciation and amortization are recorded from the commencement of operations of the
contracted assets. The net change was largely attributable to the commencement of operations
of Mojave and to the acquisitions of Solacor 1/2, PS 10/20 and Cadonal in the fourth quarter of
2014, Helios 1/2, Solnova 1/3/4 and Helioenergy 1/2 in the second quarter of 2015 and Kaxu and
Solaben 1/6 in the third quarter of 2015.
11
Other operating expenses
The following table sets forth our other operating expenses for the years ended December 31,
2015 and 2014:
Year ended December 31,
2015
2014
Other operating expenses
Leases and fees
Repairs and maintenance
Independent professional services(1)
Supplies
Other external services
Levies and duties
Other expenses
Construction costs
Total
$ in
millions
3.9
24.7
104.6
18.0
24.4
32.4
16.9
—
224.9
% of
revenue
0.5 %
3.1 %
13.2 %
2.3 %
3.1 %
4.1 %
2.1 %
—
28.4 %
$ in
millions
1.8
10.3
38.1
7.7
10.2
14.2
11.8
38.6
132.7
% of
revenue
0.5 %
2.8 %
10.5 %
2.1 %
2.8 %
3.9 %
3.3 %
10.6 %
36.5 %
Notes:
(1)
Includes approximately $3.8 million in the year ended December 31, 2014 of allocated costs and expenses for general and
administrative services provided by Abengoa S.A. prior to our IPO.
Other operating expenses increased by 69.5% to $224.9 million for the year ended December 31,
2015, compared with $132.7 million for the year ended December 31, 2014. This increase in our
operating expenses, other than those related to construction costs, was primarily due to the
acquisitions of Solacor 1/2 in the fourth quarter of 2014, Skikda in the first quarter of 2015, Helios
1/2, Solnova 1/3/4 and Helioenergy 1/2 in the second quarter of 2015 and Kaxu and Solaben 1/6
in the third quarter of 2015. In addition, ACT recorded higher other operating expenses due to
higher operation and maintenance costs in the year ended December 31, 2015 as a result of
scheduled maintenance. The increase is also due to the commencement of operations of Mojave
in the last quarter of 2014. This increase was partially offset by the decrease in construction costs
from $38.6 million for the year ended December 31, 2014 to $0 for the year ended December 31,
2015, due to the completion of construction of ATS, Quadra 1, Quadra 2 and Palmatir.
Operating profit/(loss)
As a result of the above factors, operating profit increased by 98.7% to $344.5 million for the year
ended December 31, 2015, compared with $173.3 million for the year ended December 31, 2014.
Financial income and financial expense
Financial income and financial expense
Financial income
Financial expense
Net exchange differences
Other financial income/(expense), net
Financial expense, net
Year ended December
31,
2014
2015
$ in millions
3.5
(333.9 )
3.9
(200.2 )
(526.7 )
4.9
(210.3 )
2.1
5.9
(197.4 )
12
Net financial expense increased by $329.3 million to $526.7 million for the year ended December
31, 2015, compared with $197.4 million for the year ended December 31, 2014. This increase was
primarily attributable to the increase in other financial income (expense), net, and also due to the
increase in the financial expense, both analysed below. Financial income decreased by 28.5% to
$3.5 million for the year ended December 31, 2015, compared to $4.9 million for the year ended
December 31, 2014, mainly due to lower interest income from short-term financial investments at
the holding level.
Financial expense
The following table sets forth our financial expense for the years ended December 31, 2015 and
2014:
Financial expense
Expenses due to interest:
Loans with credit entities
Other debts
Interest rates losses derivatives: cash flow hedges
Total
Year ended December
31,
2014
2015
$ in millions
(197.9 )
(81.9 )
(54.1 )
(333.9 )
(117.7 )
(61.9 )
(30.7 )
(210.3 )
Financial expense increased by 58.8% to $333.9 million for the year ended December 31, 2015,
compared with $210.3 million for the year ended December 31, 2014. This increase was largely
attributable to interest from loans with credit entities, which increased due to the acquisitions of
Solacor 1/2, PS 10/20 and Cadonal in the fourth quarter of 2014, Skikda in the first quarter of
2015, Helios 1/2, Solnova 1/3/4, Helioenergy 1/2 and ATN2 in the second quarter of 2015 and
Kaxu in the third quarter of 2015. Interest from loans with credit entities also increased due to the
interest accrued on our Credit Facility. Interest from other debts primarily consist of interest on
the 2019 Notes issued in November 2014, notes issued by ATS, ATN and Solaben 1/6, as well as
interest on debt with related parties in 2014, which was capitalized in its majority before our IPO.
Interest on interest-rate derivatives designated as cash flow hedges of $54.1 million in 2015 was
due to transfers from equity to financial expense in accordance with our cash flow hedge
accounting policy, and the increase was mainly due to the acquisition of solar assets in Spain.
Other financial income/(expense), net
Other financial income/(expenses)
Dividend ACBH (Brazil)
Other financial income
Impairment preferred equity investment in ACBH
Other financial losses
Total
Year ended December
31,
2014
2015
$ in millions
18.4
1.5
(210.4 )
(9.7 )
(200.2 )
9.2
0.6
—
(3.9 )
5.9
Other financial expense, net amounted to $200.2 million for the year ended December 31, 2015,
compared with a $5.9 million financial income, net for the year ended December 31, 2014. The
expense recorded in 2015 was largely attributable to the impairment of our preferred equity
13
investment in ACBH. On January 29, 2016, Abengoa S.A. informed us that several indirect
subsidiaries of Abengoa in Brazil, including ACBH, have initiated an insolvency procedure under
Brazilian law (“recuperaçao judiciaria”), as a “Pedido de processamento conjunto”, which means
the substantial consolidation of the three main subsidiaries of Abengoa in Brazil, including ACBH.
Given that this process will likely negatively affect the value of our preferred equity investment
and considering the high degree of uncertainty on its final outcome, we have recorded an
impairment of this preferred equity investment of $210.4 million. In addition, dividends received
from our preferred equity investment in ACBH increase for a total amount of $18.4 million during
the year ended December 31, 2015 compared to $9.2 million received in the year ended
December 31, 2014, as we began to receive this income upon this consummation of our IPO.
Other financial losses mainly include guarantees and letters of credit, wire transfers, other bank
fees and other minor financial expenses.
Share of profit/(loss) of associates carried under the equity method
Share of profit/(loss) of associates carried under the equity method increased from a loss of $0.8
million for the year ended December 31, 2014 to a $7.8 million profit for the year ended
December 31, 2015 mainly due to the acquisition of a 25.5% stake in Honaine and a 29.6% stake
in Helioenergy 1/2 in February 2015. The results of Honaine have been accounted for under the
equity method since the date of its acquisition in February 2015. The results of Helioenergy 1/2
have been recorded under the equity method since the acquisition of the initial 29.6% stake in
February 2015 until we gained control of Helioenergy 1/2 on May 25, 2015 and have been fully
consolidated since that date.
Profit/(loss) before income tax
As a result of the above factors, we reported a loss before income tax amounting to $174.4
million for the year ended December 31, 2015, compared with a loss before income taxes of
$24.9 million for the year ended December 31, 2014. Without considering the impact of the
impairment of our preferred equity investment in ACBH of $210.4 million, profit before income
tax would have amounted to $36.0 million for the year ended December 31, 2015, compared with
a loss before income taxes of $24.9 million for the year ended December 31, 2014.
Income tax
Income tax expense amounted to $23.8 million for the year ended December 31, 2015, compared
with an income tax expense of $4.4 million for the year ended December 31, 2014. Our effective
tax rate differs from the average nominal tax rate mainly due to permanent differences resulting
primarily from inflationary effects in ACT and incentives related mainly to the tax exemption of
ACBH dividends.
Loss/(profit)) attributable to non-controlling interest
Profit attributable to non-controlling interest increased by 360.9% to $10.8 million in the year
ended December 31, 2015, from $2.3 million in the year ended December 31, 2014. This increase
was due to the acquisition of Solacor 1/2 in the fourth quarter of 2014, in which we acquired a
74% stake in 2015, Skikda in the first quarter of 2015, in which we have a 34.2% stake with control
and Kaxu in the third quarter of 2015, in which we have a 51% stake.
14
Profit/(loss) attributable to the parent company
As a result of the above factors, loss attributable to the parent company increased to $209.0
million for the year ended December 31, 2015, compared with a loss attributable to the parent
company of $31.6 million for the year ended December 31, 2014. Without considering the impact
of the impairment of our preferred equity investment in ACBH of $210.4 million, we would have
reported a profit attributable to the parent company in 2015 of $1.4 million for the year ended
December 31, 2015, compared with a loss attributable to the parent company of $31.6 million for
the year ended December 31, 2014.
Per clarification, the factors affecting our results of operations are:
Regulation.
Power purchase agreements and other contracted revenue agreements.
Tax incentives in the United States for renewable energy assets.
Tax accelerated depreciation for Spanish new assets.
Specific corporate income tax rules in Mexico.
Capital expenditures.
Interest rates.
Exchange rates.
Summarizing, with the fleet of assets we own at the end of 2015 we believe that we have
achieved a balanced portfolio in terms of geographies and technologies that provides the
Company the critical mass required to continue capturing opportunities to (i) continue improving
the performance and cash generation of our assets and (ii) continue growing through
acquisitions from Abengoa S.A., third parties or new potential future sponsors.
Key performance indicators
In addition to the factors described above, we closely monitor the following key drivers of our
business sectors’ performance to plan for our needs, and to adjust our expectations, financial
budgets and forecasts appropriately as of the year ended December 31,
Renewable Energy
MW in operation
GWh produced
Conventional Power
MW in operation
GWh produced
Availability (%)
Electric Transmission
Miles in operation
Availability (%)
Water
Mft3 in operation
Availability (%)
2015
2014
1,441
2,536
891
902
300
2,465
101.7 %
300
2,474
101.9 %
1,099
99.9 %
1,018
100.0 %
10.5
101.5 %
—
—
15
MW in operation and Mft3 in operation represent total installed capacity in assets owned at the
end of the period, regardless of the stake in each of the assets.
Principal risks and uncertainties
The Company and its underlying assets are subject to a number of risks ranging from operating,
regulatory, financial and link with Abengoa S.A. The processes and systems implemented have
been designed to mitigate those risks to the extent possible. We include the following table as a
summary of some of those risks and action plans carried out to mitigate them:
Risk
Impact
Assessment of change in risk
year-on-year
Operations in each asset.
Loss of revenues and cash flows at
the project company level, which
has subsequent impact on cash
returns to the Company.
in
Operational risks are higher
in more
younger assets
mature ones and likely to remain
similar in the next few years.
than
Consummate future acquisitions.
Impede our ability to execute our
growth strategy.
Acquisitions throughout 2015 of
from our
operational assets
current Sponsor.
Regulation - legal, environmental
and general compliance - of each
asset.
Uncertainty or changes to any
such regulation could adversely
affect the profitability of our
current plants and our ability to
refinance projects.
No material changes
the
underlying assets. The risk has
the Company
increased
following its acquisitions.
for
for
Mitigation of risk
Dedicated
supervisory
and
management teams.
Reporting
and
monitoring
systems in place.
Proven technology through years
of experience.
Operation
and maintenance
contracted with specialists.
Tracked down alternative O&M
opportunities in the market.
Maintain ROFO agreement with
current sponsor.
Seek for new sponsors.
Dedicated
supervisory
to
teams
and
locate
management
opportunities within the market.
Investment grade ratings in most
of our assets.
Strong
power
or
purchase
concession
agreement
contracts in most assets.
Financing agreements
in each
Restrictions to distribute cash out
Additional risks derived from the
Reporting and monitoring system.
Reporting and monitoring of
contract.
of project companies.
Company’s acquisitions.
covenants in each contract.
Management
and
specialized
compliance teams continuously
tracking down any potential
change.
Declare project finance debt to be
due and payable immediately.
Cross-default provisions related
to Abengoa could trigger defaults
financing
under
arrangements
(Solana, Mojave,
Kaxu and Cadonal).
project
Link with Abengoa.
Our reputation is closely related
to Abengoa’s reputation.
Existing
support
service and
agreements, outstanding debt,
cross-default provision and other
risks.
We have been adversely affected
relationship with
to our
due
Abengoa.
Management
and
specialized
compliance and
teams
continuously tracking down any
change.
legal
Cross-default provisions expire
progressively over time.
Current discussions with our
project finance lenders.
Contingency plan in each key
area.
Corporate governance.
New corporate brand.
16
Risk
Impact
Liquidity risk.
Not being able to meet our
financial obligations as they fall
due.
Assessment of change in risk
year-on-year
No material changes.
Mitigation of risk
Processes and systems in place.
Cash in hand.
At
least 10% of cash
by
flows
generated
project
companies and distributed to the
holding company retained.
our
Possibility to change dividend
policy.
Interest rate and foreign currency
exchange rate.
Increases in rates would raise our
at project
finance expenses
companies or corporate level.
Currency
Swap
Agreement
entered with Abengoa
for
distributions from Spanish assets.
No material changes
underlying assets
interest rates.
for
related
the
to
least of cash
Policy to hedge in order to have a
flows
90% at
generated
project
companies in USD or hedged to
USD.
our
by
86% of our total interest risk
exposure is fixed or hedged.
The directors have considered the Group’s relationship with its shareholder, Abengoa S.A, and the
events that have taken place in the year as discussed in Note 1 to the consolidated financial
statements.
Corporate and social responsibility
Sustainability and health and safety in our business model and activities as key values of
Atlantica Yield
Atlantica Yield creates value for its investors by owning, managing and acquiring a diversified
portfolio of contracted assets in operation in the energy and environment sectors.
As of December 31, 2015 our cash available for distribution comes from renewable assets, clean
conventional (cogeneration technology) and from water desalination. These facts demonstrate
that Atlantica Yield promotes a low-carbon energy production and a business model based on a
sustainable development as we intend to take advantage of favourable trends in the power
generation, electric transmission, and water sectors globally, including energy scarcity and a focus
on the reduction of carbon emissions.
We own a geographically diverse portfolio of assets, with a primary focus on North America,
South America and Europe. Atlantica Yield is committed to create a positive impact in the diverse
local communities where the Company develops its activities. The Company also focuses its
efforts in guaranteeing the integrity and safety of the employees that work and operate in our
facilities.
The main environmental and corporate social responsibility figures and milestones for 2015 are:
Management System
We have established an environmental management system that guarantees that the Company
complies with regulation in force in each of the markets we operate. In this sense, we measure
the environmental impact of our activities, monitoring our water usage, waste, chemical product
management, hazardous materials and emissions, among others, and identify and implement
action plans to reduce that impact at each of our assets.
As a demonstration of the efforts carried out by the Company, throughout 2015 we obtained the
following international recognized standards certifications:
17
ISO 9001: Certification for Quality Management System.
ISO 14001: Certification for Environmental Management System.
OHSAS 18001: Certification for Occupational Health and Safety.
Greenhouse gas emissions
Our focus in renewables and sustainable technologies allows Atlantica Yield to have greenhouse
gas emissions rates significantly lower than fossil fuels power generators.
Emissions figures on this report are quantified and reported according to the guidelines of the
ISO 14064. Regarding this international standard, which was compiled according to the Green
House Gas Protocol, emissions are classified into 3 groups:
Scope 1: Emissions of greenhouse gas from sources that are owned or controlled by the
Company.
Scope 2: Indirect emissions of greenhouse gas from consumption of purchased electricity, heat
or steam.
Scope 3: Other indirect emissions, such as transport-related activities in vehicles not owned or
controlled by the Company, electricity-related activities not covered in Scope 2, outsourced
activities, etc.
The total emissions of carbon dioxide equivalent generated by the Company during 2015
reached 1,806 thousands of tons, a 120% higher than 2014 values. This increase is explained by
the acquisition of new assets throughout 2015 and the higher generation on the youngest assets.
Graphic 1 shows the tons of carbon dioxide equivalent generated both in 2015 and 2014
corresponding to each scope.
e
2
O
C
f
o
s
n
o
t
0
0
0
'
2000
1500
1000
500
0
1,611
790
1,806
819
2014
2015
118
10
77
18
Scope 1
Scope 2
Scope 3
Total
Graphic 1: Greenhouse Gas emissions breakdown by Scope*
* Emissions are considered since .acquisition date of each asset and for assets that are consolidated.
As shown on the following graphic, the rate of emissions rate per energy generation has
decreased significantly, from 0.47 equivalent tons of Carbon Dioxide (“CO2”) per megawatt hour
18
h
W
M
/
2
O
C
f
o
s
n
o
t
0.000
to 0.34 in 2015. This decrease is caused by the higher generation coming from renewables in
2015 thanks to the new acquisitions and to the learning curve in the youngest assets.
0.500
0.45
0.32
0.47
0.34
2014
2015
0.01
0.01
0.01
0.01
Scope 1
Scope 2
Scope 3
Total
Graphic 2: Tons of CO2 emissions per MWh by Scope
Almost 90% of the emissions generated in 2015 come from our conventional power plant as
shown in Graphic 3.
88%
Cogeneration
Others
12%
Graphic 3: Greenhouse Gas emissions breakdown by power technology
As previously stated, generating electricity from renewable resources allows us to have a much
lower emission rate than pure fossil fuels generators as shown on Graphic 3. This fact implies a
total of 2,575 tons of CO2 equivalent saved to the atmosphere compared with a hypothetical
100% fossil fuels based generation.
19
0,84
0,32
h
W
G
/
2
O
C
n
o
t
0
0
0
1.0
0.8
0.6
0.4
0.2
0.0
Scope 1 emissions of Atlantica Yield
Emissions from fossil fuels generation*
* Source: Average value of carbon dioxide produced per kilowatt-hour for different sources (bituminous coal,
subbituminous coal, lignite, natural gas, distillate oil and residual oil. Data from the U.S. Energy Information
Administration
Graphic 4: Atlantica Yield versus Fossil fuel generation GHG emissions
Human rights
We are committed to conducting our business in a manner that respects the rights and dignity of
all people. We respect internationally recognized human rights, as set out in the International Bill
of Human Rights and the International Labour Organization´s Declaration on Fundamental
Principles and Rights at Work. Labor practice at Atlantica Yield and the professional activities of
its employees, directors and executives are governed by the United Nations Universal Declaration
of Human Rights and its protocols, as well as by International Agreements signed by the UN and
the International Labor Organization (ILO) on social rights, as well as the principles of the United
Nations Global Pact.
We are fully aware of the diversity of the local communities where we operate. In this sense, we
are fully committed to respect and create value in these local communities as one of our key
outputs of our business activities. We are delivering our human rights policy by implementing it
into the processes that govern our business activities in all the geographies where we are present.
Our code of conduct references the policy, requiring the employees, officers and directors to
report any illegal behaviour or violations of laws, rules, regulations.
Business ethics
Atlantica Yield and each of its members subscribe and assume the document issued by the
United Nations Convention against Corruption, which was approved by the General Assembly of
the UN on October 31 2003. We have a responsibility to our shareholders and the countries and
communities in which we do business to be ethical and lawful in all our dealings.
We have specific quality norms, which are the result of carrying out activities with knowledge,
common sense, rigor, order and responsibility. Our code of conduct requires the highest
standards for honest and ethical conduct and explicitly states that we do not tolerate bribery and
20
corruption in any of its forms. We also promote and strengthen the measures to prevent and
combat corruption more effectively and efficiently. Our anti-bribery and corruption policy applies
to all Atlantica Yield business.
In accordance with our policies, Atlantica Yield provides to its employees, shareholders and
others a specific channel of communication with management and the governing bodies, that
serves as an instrument to report any suspected or actual irregularities, instances of non-
compliance with the code of conduct, as well as unethical or unlawful behaviour or behaviour
that is against the rules and regulations which govern our company. Our whistleblower disclosure
channel meets the requirements of the Sarbanes Oxley Act.
In addition to the provisions of our code of conduct, the business activities of Atlantica Yield are
governed by the U.S. Foreign Corrupt Practices Act (“FCPA”) and the UK Bribery Act 2010
(“UKBA”).
Employees
Our values and code of conduct set out the expected qualities and actions of all our people. The
honesty, integrity and sound judgment of our employees, officers and directors is essential to
Abengoa Yield's reputation and success. We seek employees who have the right skills and who
understand and embody the values and expected behaviours that guide our business activity.
As of December 31, 2015 we had 88 employees compared to seven employees as of December
31, 2014. During 2015, we finished the process of transferring and employing directly our
executive management team. As a result of the completion of this process, the Executive Services
Agreement between Abengoa S.A. and us was terminated in March 2015. In addition, during 2015
we initiated a process to employ directly personnel that were employed by Abengoa S.A.
subsidiaries in 2014. In 2016, we expect our number of employees to increase aligned with the
right-size of our organization and our business activities.
The following table shows the number of employees as of December 31, 2015 on a consolidated
basis:
Geography
Employees
EMEA
North America
South America
Corporate
Total
34
7
6
41
88
Per gender, 13% of our Board of Directors, 14% of our Senior Management and 38% of the
overall number of employees are women.
Our people
We aim to develop the talents of our workforce. The executive team members hold regular
meetings with employees around the countries in which we operate. Team and one-to one
meetings are complemented by formal processes to evaluate the performance of the employees.
21
Atlantica Yield code of conduct
Our code of conduct is based in our values and states the principles and expectations for
everyone who works at Atlantica Yield.
Our code of conduct governs the actions and working relationships of our employees, officers
and directors with current and potential customers, fellow employees, competitors, government
and self-regulatory agencies, the media, and anyone else with whom Atlantica Yield has contact.
These relationships are essential to the continued success of us.
Atlantica Yield´s Board of Directors monitors the code of conduct and any question and further
information about our code of conduct is directed to Atlantica Yield’s VP Risks & Compliance.
The Code of Conduct is available on our website at www.atlanticayield.com.
Occupational Health and Safety
Atlantica Yield and its management are committed to prioritize and actively promote the health
and safety as a tool to protect the integrity and health of our employees, subcontractors and
partners involved in our business activity. We promote deep capability and a safe operating
culture across Atlantica Yield and encourages a preventive culture in the operation and
maintenance (“O&M”) activities of the subcontractors in our assets as reflected in our corporate
health and safety policy. These efforts resulted in the certification for Occupational Health and
Safety (O0048SAS 18001).
We actively monitor a broad range of occupational health and safety key performance indicators
such as days without accidents, number of near misses and drills, not only to closely track down
this area but to encourage employees in our assets to continuously improve on this matter.
Future Developments
As previous described in this Annual Report, we intend to grow our business primarily through
the improvement of existing assets and the acquisition of contracted power generation assets,
electric transmission lines and other infrastructure assets, which, we believe, along with the
acquisitions carried out throughout 2015 will facilitate the growth of our cash available for
distribution and enable us to increase our dividend per share over time.
Specifically, on January 7, 2016 we completed the acquisition from JGC of a 13% in Solacor 1/2, a
100 MW solar complex in Spain where we already owned a 76% stake.
On January 29, 2016, Abengoa S.A. informed us that several indirect subsidiaries of Abengoa in
Brazil, including ACBH, had initiated an insolvency procedure under Brazilian law (“recuperaçao
judiciaria”). We are assessing the potential impact of this event together with external advisors.
Going Concern Basis
The directors have, at the time of approving the financial statements, a reasonable expectation
that the Company and the Group have adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in
preparing the consolidated financial statements.
The Company’s business activities, together with the factors likely to affect its future
development, performance and position are set out within this report. During the period, the
Company generated $299.6 million from operating activities, invested $929.9 million (of which
22
$834.0 million were acquisitions) and raised $810.9 million from financing activities. All of these
resulted in a $180.6 million increase on our cash position by the year end, with a closing cash
position of $514.7 million. The directors believe that this is above the level of cash needed to
operate the business for the foreseeable future and meet the Company’s liabilities as they fall
due, as well as being used as a significant part of the cash required to make future acquisitions.
Critical accounting policies and estimates
The most critical accounting policies, which reflect significant management estimates and
judgment to determine amounts in the consolidated financial statements, are as follows:
Contracted concessional agreements and PPAs;
Impairment of intangible assets;
Assessment of control;
Derivative financial instruments and fair value estimates; and
Income taxes and recoverable amount of deferred tax assets.
Approval
This Strategic report was approved by the board and signed on its behalf by Santiago Seage,
Managing Director on 15th March, 2016.
_________________________
Managing Director
Santiago Seage
15th March, 2016
23
Directors’ Report
The directors present their annual report on the affairs of the Company, together with the
financial statements and auditor’s report, for the year ended December 31, 2015.
Details of significant events since the balance sheet date are contained in footnote 26 to the
consolidated financial statements. An indication of likely future developments in the business of
the Company is included in the Strategic Report.
Information about the use of financial instruments by the Company is given in note 23 to the
consolidated financial statements.
Dividends
We expect to pay a quarterly dividend on or about the 75 day following the expiration of each
fiscal quarter to our shareholders of record on or about the 60th day following the last day of
such fiscal quarter. However, our board of directors may change our dividend policy at any point
in time or modify the dividend for specific quarters following prevailing conditions. We declared
our first quarterly dividend in November 2014 and paid it on December 15, 2014.
On May 8, 2015, our board of directors approved a quarterly dividend corresponding to the first
quarter of 2015 amounting to $0.34 per share. The dividend was paid on June 15, 2015 to
shareholders of record as of May 29, 2015. On July 29, 2015, our board of directors approved a
quarterly dividend corresponding to the second quarter of 2015 amounting to $0.40 per share.
The dividend was paid September 15, 2015 to shareholders of record as of August 29, 2015. On
November 5, 2015, our board of directors approved a quarterly dividend corresponding to the
third quarter of 2015 amounting to $0.43 per share. The dividend was paid on December 16
2015, to shareholders of record as of November 30, 2015, and from that amount we retained $9
million from the dividend payable to Abengoa S.A. in accordance with the provisions of the
parent support agreement. See “Business Overview—Electric Transmission—Exchangeable
Preferred Equity Investment in Abengoa Concessoes Brasil Holding.” Furthermore, taking into
consideration the uncertainties resulting from the situation of our sponsor, the board of directors
has decided to postpone the decision on the dividend corresponding to the fourth quarter of
2015 until the second quarter of 2016.
We intend to distribute a very high portion of our cash available for distribution as dividend, after
considering the cash available for distribution that we expect our projects will be able to
generate, less reserves for the prudent conduct of our business (including for, among other
things, dividend shortfalls as a result of fluctuations in our cash flows).
Our cash available for distribution is likely to fluctuate from quarter to quarter, in some cases
significantly, as a result of the seasonality of our assets, the terms of our financing arrangements,
maintenance and outage schedules, among other factors.
Capital Structure
Details of the authorised and issued share capital, together with details of the movements in the
Company's issued share capital during the year are shown in note 21 to the consolidated financial
statements. The Company has one class of ordinary share which carry no right to fixed income.
Each share carries the right to one vote at general meetings of the Company.
On January 22, 2015, Abengoa closed an underwritten public offering and sale in the United
States of 10,580,000 of ordinary shares of the Company for total proceeds of $327,980,000 (or
24
$31 per share). As a result of such offering, Abengoa reduced its stake in the Company from
64.3% to 51.1% of its shares.
On May 14, 2015 Atlantica Yield issued 20,217,260 new shares at $33.14 per share, which was
based on a 3% discount versus the May 7, 2015. Abengoa subscribed for 51% of the newly-issued
shares and maintained its previous stake in Atlantica Yield.
On July 14, 2015, Abengoa sold 2,000,000 shares of Atlantica Yield under Rule 144, reducing its
stake to 49.1%.
As of the date hereof, Abengoa has sold 7,197,362 Ordinary Shares to holders that exercised their
option to exchange Exchangeable Notes and Abengoa expects to deliver an additional 359,836
Ordinary Shares on the applicable settlement dates to certain holders of the Exchangeable Notes
that have delivered a notice to exchange. As of December 31, 2015, there were 54,918.73
Ordinary Shares subject to delivery to holders of the Exchangeable Notes upon exchange of the
outstanding Exchangeable Notes. These operations reduced Abengoa’s Stake to 41.86%.
There are no specific restrictions on the size of a holding nor on the transfer of shares, which are
both governed by the general provisions of the Articles of Association and prevailing legislation.
The directors are not aware of any agreements between holders of the Company's shares that
may result in restrictions on the transfer of securities or on voting rights.
The Company participates in no employee share schemes. No person has any special rights of
control over the Company's share capital and all issued shares are fully paid.
With regard to the appointment and replacement of directors, the Company is governed by its
Articles of Association, the SEC listing rules, the UK Companies Act 2006 and related legislation.
The Articles of Association themselves may be amended by special resolution of the shareholders.
The powers of directors are described in the Main Board Terms of Reference, copies of which are
available on request.
Directors
The directors, who served throughout the year since the date indicated, and to the date of this
report, were as follows:
Daniel Villalba
Director and Chairman of
the Board, independent
Chairman of the Board: appointed 27 November
2015
Director, independent: appointed 13 June 2014
Santiago Seage
Managing Director
Appointed 27 November 2015 as M.D.
Appointed 17 December 2013
William B. Richardson
Director
Appointed 13 June 2014
María J. Esteruelas
Director
Appointed 13 June 2014
Eduardo Kausel
Director, independent
Appointed 13 June 2014
Jack Robinson
Director, independent
Appointed 13 June 2014
Enrique Alarcon
Director, independent
Appointed 13 June 2014
Juan del Hoyo
Director, independent
Appointed 13 June 2014
25
Our board of directors is responsible for, among other things, overseeing the conduct of our
business; reviewing and, where appropriate, approving, our long-term strategic, financial and
organizational goals and plans; and reviewing the performance of our chief executive officer and
other members of senior management.
Under English law, the board of directors of an English corporation is responsible for the
management, administration and representation of all matters concerning the relevant business,
subject to the provisions of the relevant constitution, statutes and resolutions adopted at general
shareholder’s meetings by a majority vote of the shareholders. Under English law, the board of
directors may delegate its powers to an executive committee or other delegated committee or to
one or more persons, unless the shareholders, through a meeting, have specifically delegated
certain powers to the board of directors and have not approved the board of director’s
delegation to others.
Currently the Board’s standing committees are the Audit Committee and the Appointments and
Remuneration Committee. Each committee operates under a written charter that sets forth the
purposes, goals and responsibilities of the committee as well as qualifications for committee
membership. Committees report regularly to the full Board with respect to their activities.
In February 2016, the board decided to create two separate committees (Nominating and
Compentation) to replace the existing Appointments and Remunerations Committee.
Directors’ indemnities
The company has made qualifying third party indemnity provisions for the benefit of its directors
which were made during the year and remain in force at the date of this report.
Political contributions
No political donations were made during 2015 nor 2014.
Substantial shareholdings
During the period between 31 December 2015 and as of the date of this report the Company did
not receive any notifications under chapter 5 of the Disclosure and Transparency Rules.
Auditors
Each person who is a director at the date of approval of this annual report confirms that:
so far as the director is aware, there is no relevant audit information of which the company's
auditors are unaware; and
the director has taken all the steps that he/she ought to have taken as a director in order to
make himself/herself aware of any relevant audit information and to establish that the
company's auditors are aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of Section
418 of the Companies Act 2006.
The Audit Committee preselected the Big 4 companies to participate in the audit tender of
Atlantica Yield and its consolidated group for 2016, 2017 and 2018 consolidated and stand-alone
financial statements. The preselected audit firm will be proposed in the forthcoming Annual
General Meeting
26
Events after the balance sheet date
On January 7, 2016, we completed the acquisition from JGC of a 13% in Solacor 1/2, a 100 MW
solar complex in Spain where we already owned a 76% stake.
On January 29, 2016, Abengoa S.A. informed us that several indirect subsidiaries of Abengoa in
Brazil, including ACBH, have initiated an insolvency procedure under Brazilian law (“recuperaçao
judiciaria”). We are currently assessing the potential impact of this event together with external
advisors.
This report was approved by the board of directors on 15th March, 2016 and signed on its behalf
by Santiago Seage, Managing Director.
_________________________
Managing Director
Santiago Seage
15th March, 2016
27
Director’s Remuneration Report
Introduction
This report is on the remuneration of the directors of Abengoa Yield Plc for the period to 31
December 2015. It sets out the remuneration policy and remuneration details for the executive
and non-executive directors of the company. It has been prepared in accordance with Schedule 8
of The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations
2008 as amended in August 2013.
The report is split into three main areas:
the statement by the chair of the remuneration committee;
the annual report on remuneration; and
the policy report.
The Companies Act 2006 requires the auditors to report to the shareholders on certain parts of
the Directors’ Remuneration Report and to state whether, in their opinion; those parts of the
report have been properly prepared in accordance with the Regulations. The parts of the annual
report on remuneration that are subject to audit are indicated in that report. The statement by
the chair of the remuneration committee and the policy report are not subject to audit.
Statement by the Chair of the remuneration committee
Abengoa Yield plc had as of 31 December 2015 an Appointments and Remunerations Committee.
In February 2016, the board approved the creation of two separate committees, one focusing on
nominations and appointments and another one focusing on remunerations.
During 2015, the committee met five times and focused on three key objectives:
Supervised the transition of personnel from Abengoa to the Company.
Throughout 2015, we finished the process of transferring and employing directly our
executive management team. As a result of the completion of this process, the Executive
Services Agreement between Abengoa and us was terminated in March 2015. In addition,
during 2015 we initiated a process to employ directly personnel that were employed by
Abengoa subsidiaries in 2014.
Prepared a Succession Plan for the executive management team.
As previously stated, Senior Management was hired in 2015. Shortly thereafter, a Succession
Plan was drafted and agreed.
The succession plan was approved by the appointment and remunerations committee in 2015
and 2016.
Prepared a new version of our remuneration policy.
As of 31 December 2015 we had 88 employees compared to seven employees as of 31
December 2014. This increase required a new remuneration policy that was proposed for
adoption in early 2016. It will be proposed for approval at our next Shareholders Meeting,
which is expected to be held in May 2016.
28
Per clarification, information on Long-Term Incentive Plans (“LTIP”) and bonuses to be applied
in 2016 remuneration’s plan is provided later on within this report.
Annual Report on Remuneration
Single total figure of remuneration for each director
The information provided in this part of the report is subject to audit.
Abengoa Yield Plc only paid remuneration to independent non executive directors, non executive
directors and executive directors. Each independent non executive director receives a total annual
compensation of $100,000 or approximately 90 thousand euros. As chairman of the board of
directors and chairman of our audit committee, Mr. Villalba receives an additional $35,000 per
year. Directors representing Abengoa do not receive any compensation from us.
In 2014, the remuneration was the same but the independent non executive directors served only
during the second half of the year and therefore remuneration was $50,000 or approximately
38,000 euros (using 2014 exchange rate) for independent directors.
The total compensation received by our independent non executive directors, Chief Executive
Officer and Managing Director from us during 2015 and 2014 is set forth in the table below.
Name
Santiago Seage
Javier Garoz **
Daniel Villalba
Jackson Robinson
Enrique Alarcon
Eduardo Kausel
Juan del Hoyo
Director’s remuneration as a single figure (2015)
Salary and
fees
€’000
All taxable
benefits
€’000
Annual
bonuses
€’000
LTIP
€’000
Pension
€’000
0.1
0.1
-
-
-
-
-
-
151.3
1,289.6
121.8
90.2
90.2
90.2
90.2
Total
1,923.5
0.2
Name
Santiago Seage*
Daniel Villalba
Jackson Robinson
Enrique Alarcon
Eduardo Kausel
Juan del Hoyo
Director’s remuneration as a single figure (2014)
Salary and
fees
€’000
All taxable
benefits
€’000
Annual
bonuses
€’000
LTIP
€’000
Pension
€’000
0.1
-
-
-
130.8
50.9
37.7
37.7
37.7
37.7
Total for
2015
€’000
151.4
1289.6
121.8
90.2
90.2
90.2
90.2
1,923.6
Total for
2014
€’000
130.9
50.9
37.7
37.7
37.7
37.7
Total
*
The chief executive officer was employed in 2014 by Abengoa S.A. and therefore received no remuneration directly from the
Company. The table above reflects an estimate of the fixed remuneration he received from Abengoa S.A. for services provided to
332.5
0.1
-
-
-
332.5
29
the Company, based on the time dedicated to the Company. The chief executive officer did not receive any variable remuneration
for services provided to Abengoa Yield for the year ended 31 December 2014.
**
Includes a 1,189.5 thousand euros termination payment received after leaving the Company on 25 November 2015 as per his
employment contract.
Each member of our board of directors will be indemnified for his actions associated with being a
director to the extent permitted by law.
Remuneration of the Chief Executive Officer
The information provided in this part of the report is not subject to audit.
The table enclosed within the “Single total figure of remuneration for each director” sets out the
details for Mr. Seage who is undertaking the role of chief executive officer CEO/Managing
Director.
Mr. Seage served as a director since our formation in 2014 and was Chairman from June until
November 2015. Santiago Seage served as our chief executive officer from our formation until he
was appointed chief executive officer of Abengoa in May 2015, in which capacity he served until
27 November 2015, when he was appointed as our Managing Director.
2015 was the first year when Mr. Seage was employed by the Company. He did not receive any
bonus payments for 2015.
Mr. Garoz held the position of CEO between May and November 2015, when he left the
Company.
Total Shareholder return and CEO pay
The chart below shows the Company’s total shareholder return since June 2014, the date of our
Initial Public Offering (“IPO”), until the end of 2015 compared with the total shareholder return of
the companies in the Russell 2000 Index. The chart represents that return assuming an
investment, represented as 100%, at the time of the IPO. In addition, dividends are not assumed
to have been re-invested.
We believe the Russell 2000 Index is an accurate comparator as it represents a broad range of
companies of similar size.
TSR is calculated in US dollars.
100%
104.4%
95.2%
100.2%
72.3%
Russell 2000
ABY
2014*
2015*
* Period since the IPO (June 2014) until December 31 of 2014 and 2015
30
The table below shows, for 2015 and 2014, the total remuneration of the Company’s
CEO/Managing Director and his bonuses and LTIP grants expressed as a percentage of the
maximum he could have been awarded.
Year
2015
2014
Total Pay
(€ 000)
1,440.9*
130.9
Bonus
LTIP awards
Percentage
of maximum
-
-
Amount of
bonus
-
-
Percentage
of maximum
-
-
Value
-
-
*
Includes a 1,189.5 thousand euros termination payment received by Mr. Garoz after leaving the Company on 25
November 2015.
The chief executive officer did not receive any variable remuneration for services provided to the
Company for the years ended 31 December 2015 and 2014.
As previously stated, Santiago Seage occupied that office between January and May 2015, and
again since late November 2015. Meanwhile, Mr. Garoz held that position between May and
November 2015, when he voluntarily left the Company.
1. CEO pay vs. employee pay
This table sets out the percentage change between the 2014 and 2015 years in salary,
benefits and bonus (determined in the same basis as for the Single Total Figure Table) for the
CEO/Managing Director and the average per capita change for employees of the group as a
whole.
As of 31 December 2014, we had seven employees. During the year 2014, we did not employ
any member of our senior management team. Since 1 February 2015, we have been
transferring and employing directly both our executive management as well as employees
who were in Abengoa’s subsidiaries in 2014.
Element of remuneration
Percentage change for CEO
Salary
Benefits
Bonus
92%*
0%
0%
Percentage change for
employees
251%**
n/a
n/a
* 2015 was the first year when our CEO/Managing Director was employed by the Company. Moreover, the chief
executive officer was employed in 2014 by Abengoa S.A. and therefore received no remuneration directly from
the Company. The percentage of change showed above is an estimate due to the previous facts.
* * This percentage change is a reflection of the Company having seven employees during 2014, and 88 employees
during 2015.
2. Relative importance of spend on pay
The following table sets out the change in overall employee costs, directors’ compensation
and dividends.
€ Million
Spend on pay for all employees of the group
Total remuneration of directors
Dividends
Amount in
2015
5.2
1.9
116.1
Amount in
2014
1.4
0.3
21.4
Difference
3.8
1.6
94.7
31
As previously stated, the Company had seven employees during 2014. The number of
employees increased to 88 during 2015.
Directors Shareholdings
The following table includes information with respect to beneficial ownership of our ordinary
shares as of the date of this annual report by each of our directors and executive officers as well
as their connected persons.
Those not included in the table do not hold shares.
Santiago Seage
Daniel Villalba
Jackson Robinson
Shares
31st December 2015
Shares
31st December 2014
20,000
60,000
5,281
20,000
46,897
-
There have been no changes in the holdings of the directors between the year end and the date
of issuance of this report.
Directors do not hold share options or awards and there are no share ownership requirements
applicable to directors.
3. Termination payments
When he left the Company on 25 November 2015, Mr Garoz was paid, in accordance with his
employment contract, a cash termination payment of €1,189,500.
4. Statement of implementation of policy in 2016
The targets for bonuses and LTI’s are detailed under the section “2016 Remuneration Policy”
of this report.
We have been able to establish key policies and we describe them in the Remuneration
Policy. We expect to obtain approval for our 2016 policy in our next Annual Shareholders
Meeting.
5. Remuneration Committee
The Appointments and Remuneration Committee included during 2015 Manuel Sanchez,
replaced from May 2015 by Santiago Seage, as well as Daniel Villalba and Enrique Alarcon.
During the year, the committee met five times and all directors attended every meeting.
The Company has used the services of external advisors to help to determine appropriate
compensation levels according to market practice and data but the committee did not use
the services of any advisors.
32
6. Voting at 2015 annual general meeting
At the 2015 annual general meeting, votes in relation to the directors’ remuneration policy
and the remuneration report were as follows:
Remuneration policy
Remuneration report
Votes for
Votes against
Votes withheld
62,561,361 (83.8%)
11,997,520 (16.1%)
81,442 (0.1%)
74,576,786 (99.9%)
9,145 (0%)
54,392 (0.1%)
2016 Remuneration Policy
If approved, this policy will take effect from the date of our Annual General Meeting, currently
expected to be held in May 2016.
For independent non-executive directors the Company’s policy is to compensate in cash for the
time dedicated, subject to a maximum of 135 thousand dollars for the chairman or lead
independent director and 100 thousand dollars for directors. Once a year the Appointments and
Remuneration Committee reviews compensation practices for independent non-executive
directors in similar companies and the skills and experience required and may propose an
adjustment in the current compensations. For other non-executive directors the policy is not to
compensate for the time dedicated.
The Managing Director/CEO is currently the only executive director. The policy for the executive
directors is as follows:
Name of
component
Description of
component
Salary/fees
Benefits
Annual bonus
Fixed remuneration payable
monthly
Opportunity to join existing
for employees but
plans
without any
in
remuneration
increase
year
Annual bonus
is paid
following the end of the
financial
for
performance over the year.
50% of any bonus (net of
taxes) must be invested in
no
shares.
are
retention
forfeiture
provisions
There
or
How does this
component support the
company’s (or group’s)
short and long term
objectives?
directors
Helps to recruit and retain
executive
and
the basis of a
forms
remuneration
competitive
package
Helps to offer a competitive
remuneration package and
align
it with company’s
objectives
What is the maximum
that may be paid in
respect of the
component?
Maximum amount 700
thousand euros, maybe
increased by 5% per year
Salary levels for peers are
considered
200% of base salary
Framework used to
assess performance
Not applicable
No retention or clawback
50% CAFD
10% EBITDA
40% other operational or
qualitative objectives
No retention or clawback
Long Term
Incentive Awards
LTI is paid in early 2019 if
the company achieves its
total
return
shareholder
targets
Aligns pay with longer term
returns to shareholders
3 year plan representing a
maximum of 70% of salary
and annual bonus for the
2016-2018 period
50%
Total
Shareholder’s Return (TSR)
Annual
50% TSR versus peers
No retention or clawback
33
Committee discretions
The committee has discretion, consistent with market practice, in respect of, but not limited to
participants, timing of payments, size of the award subject to policy, performance measures and
when dealing with special situations such as change of control or restructuring.
The annual bonus will be a variable cash bonus, based on the objectives described above. Those
objectives will include Cash Available for Distribution (CAFD), with a 50% weight for executive
directors, and EBITDA as these are key financial metrics for a company like us. Additionally, the
bonus will include 2-3 objectives that should reflect some of the key projects, initiatives or key
objectives in each year. The CEO must reinvest 50% of his effective after tax yearly bonus in
Company shares.
For the management team and key personnel our policy is to use two external consultants to
estimate market conditions for similar positions in terms of fixed and variable remuneration and,
based on a performance appraisal, set a target remuneration normally within that market
practice. Variable payments are based on a number of specific measurable targets in relation to
the measures described above and below which will be defined by the remuneration committee
at the beginning of the year. For the rest of its employees the Company establishes predefined
remuneration ranges for different positions and reviews each individual remuneration depending
on performance appraisal and the position within two ranges without employee consultation.
The Company has also launched a long term incentive plan for the period 2016-2019 for the
executive team. The plan includes:
Approximately 10 executives, including the CEO/Managing Director
Each executive would be entitled to the payment of a LTI cash bonus in March 2019 if the
Company has achieved its Total Annual Shareholder’s Return (TSR) objectives in the 2016-2019
period, as the committee and the board have considered that this is the best metric to align
management and shareholders interests
The maximum bonus will be a 50% (70% for the CEO) of the total remuneration received by
the executive in the 2016-2018 period
50% of the LTI bonus will be based on the Company’s TSR and 50% on the relative
performance in terms of TSR versus other yieldcos to be selected by the committee
In case of change of control the LTI would become due and would be calculated using the
offer price or the last price based on TSR up to and including the change of control
In case of retirement, termination without cause, permanent disability or death, the LTI would
be pro-rated for the period until that event and paid out at the end of the plan period once
TSR for the period is known. If the employee left the company for other reasons there would
be no compensation
Executive directors do not receive any pension contributions.
None of the non-executive directors receive bonuses, long-term incentive awards, pension or
other benefits in respect of their services to the Company.
There are no provisions for the recovery of sums paid or the withholding of any sum.
34
Total remuneration of the only executive director for a minimum, target and maximum
performance in 2016 is presented in the chart below.
CEO/Managing Director
Thousand euros. 2016
€1,400
€975
44%
56%
61%
39%
€550
100%
Minumum
Target
Maximum
Salary and benefits
Annual bonus
Assumptions made for each scenario are as follows:
Minimum: fixed remuneration only
Target:
Maximum: fixed remuneration plus maximum annual bonus
fixed remuneration plus half of maximum annual bonus
LTI is not included as it would only be paid in 2019.
Approach to recruitment
As previously stated within this report, the recruitment of managers contains the use of two
external consultants to estimate market conditions for similar positions in terms of fixed and
variable remuneration.
In addition, the 2016 remuneration policy reflects the composition of the remuneration package
for the appointment of new executive directors. We expect to offer a competitive fixed
remuneration, a yearly bonus not exceeding 200% of fixed remuneration and participation in our
LTI plan.
Lastly, whenever needed, the Company will contract a top tier external advisor to hire key
personnel.
As stated in the “Single total figure of remuneration for each director”, each independent director
receives a total annual compensation of $100,000. As chairman of the board of directors and
35
chairman of our audit committee, Mr. Villalba receives an additional $35,000 per year. Directors
representing Abengoa do not receive any compensation from us.
When recruiting independent directors remuneration offered should be the same.
Policy on payments for loss of office
The payments for loss of office are calculated in accordance with the performance during the
period of qualifying service as well as any other circumstance that may be deemed necessary
within the employment contract or local labour law such as bonuses (typically pro-rated for the
period served) or long term incentive plan previously discussed and applying relevant labour
laws. Executive directors have notice periods of 6 months.
Consideration of employee conditions elsewhere
For the management team and key personnel our policy is to use two external consultants to
estimate market conditions for similar positions in terms of fixed and variable remuneration and,
based on a performance appraisal, set a target remuneration normally within that market
practice. Variable payments are based on a number of specific measurable targets defined at the
beginning of the year. For the rest of its employees the Company establishes predefined
remuneration ranges for different positions and reviews each individual remuneration depending
on performance appraisal and the position within two ranges without employee consultation.
The remuneration policy for Executive Directors is designed having regard to the remuneration
policy for employees across the Company. However, there are differences that the Committee
believe are necessary to reflect the different levels of responsibility. The key difference is an
increased emphasis on annual variable bonus and long term compensation for Executive
Directors.
Overall we expect that, following the implementation of our policies, remunerations of the
Company’s employees will increase in line with the market with the exception of individuals that
have been recently promoted or whose remuneration is below market conditions.
Statement of consideration of shareholder views
There are no comments in respect of directors’ remuneration expressed to the Company by
shareholders. The next Annual Shareholders Meeting is expected to be held in May 2016.
36
Summary of Policy for Non-Executive Directors
How does the component
support the company’s
objective?
Name of component
Independent Non-
Executive Directors
Fees
Attract and retain high performing
Operation
Maximum
Reviewed annually by the committee
and board
lead
The
independent
director/chairman receive additional
fees
Annual total compensation for non
executive directors in any case will
not exceed two million dollars
Benefits
Reasonable travel expenses to the
registered office or
Company’s
venues for meetings
Customary control procedures
Real costs of travel with a maximum
of one million dollars for all directors
Other Non-Executive
Directors
Fees
Attract and retain high performing
Directors appointed by shareholders
receive no fees
No prescribed maximum annual
increase
Benefits
Reasonable travel expenses to the
registered office or
Company’s
venues for meetings
Customary control procedures
Real costs of travel
Service Contracts
Mr. Seage has a contract with Abengoa Yield that includes a 6 months’ notice period.
The non-executive directors do not have a service contract and have been elected for a period of
three years starting June 2014.
Payments for loss of office for executive directors or executives would be based on prevailing
labour and legal conditions in their contracts or countries where they are employed. Most of our
executives, including the Managing Director, are entitled to compensation under standard labour
law in Spain. Additionally, the Managing Director and CFO could be entitled to 12 months or
standard labour law compensation if they leave, voluntarily or not, after a change of control. The
Company may lawfully terminate the executive director’s employment without compensation in
circumstances where the employer is entitled to terminate for cause as defined by applicable law.
37
In the event of termination by the Company, each executive director may have an entitlement to
compensation in respect of his statutory rights under employment protection legislation in the
UK, Spain or elsewhere.
Employee Benefit Trusts
The policy is not to use any employee trust for share plans.
Key Management Compensation for 2015
Short-term employee benefits
Post-employment benefits
Other long-term benefits
Termination benefits
Share-based payment
Total
2015
2,851.9
2014
332.5
2,851.9
332.5
Key management includes Directors, CEO/MD, CFO and 5 key executives
Statement of voting at general meeting
The remuneration report will be submitted to the annual shareholder meeting in 2016.
Approval
This report was approved by the board of directors on 15th March, 2016 and signed on its behalf
by Santiago Seage, Managing Director.
_________________________
Managing Director
Santiago Seage
15th March, 2016
38
Directors’ Responsibilities Statement
The directors are responsible for preparing the Annual Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under
that law the directors are required to prepare the group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the International Accounting
Standards Board (IASB) and Article 4 of the IAS Regulation and have elected to prepare the
parent company financial statements in accordance with Financial Reporting Standard 101
Reduced Disclosure Framework. Under company law the directors must not approve the
accounts unless they are satisfied that they give a true and fair view of the state of affairs of the
company and of the profit or loss of the company for that period.
In preparing the parent company financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgments and accounting estimates that are reasonable and prudent;
state whether Financial Reporting Standard 101 Reduced Disclosure Framework has been
followed, subject to any material departures disclosed and explained in the financial
statements;
prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the company will continue in business.
In preparing the group financial statements, International Accounting Standard 1 requires
that directors:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant,
reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in IFRSs are
insufficient to enable users to understand the impact of particular transactions, other events
and conditions on the entity's financial position and financial performance; and
make an assessment of the company's ability to continue as a going concern.
The directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the company’s transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that the financial statements
comply with the Companies Act 2006. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
Responsibility statement
The directors are responsible for the maintenance and integrity of the corporate and financial
information included on the company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
39
We confirm that to the best of our knowledge:
the financial statements, prepared in accordance with the relevant financial reporting framework,
give a true and fair view of the assets, liabilities, financial position and profit or loss of the
company and the undertakings included in the consolidation taken as a whole;
the strategic report includes a fair review of the development and performance of the business
and the position of the company and the undertakings included in the consolidation taken as a
whole, together with a description of the principal risks and uncertainties that they face; and
the annual report and financial statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for shareholders to assess the company’s
performance, business model and strategy.
This responsibility statement was approved by the board of directors on 15th March, 2016 and is
signed on its behalf by:
By order of the Board
_________________________
Managing Director
Santiago Seage
15th March, 2016
___________________________
Chief Financial Officer
Francisco Martinez-Davis
15th March, 2016
40
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF ABENGOA YIELD PLC
We have audited the financial statements of Abengoa Yield plc for the year ended 31 December 2015
which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive
Income, the Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the
Consolidated Cash Flow Statement, the Company Balance Sheet, the Company Statement of Changes
in Equity and the related notes 1 to 31 to the Consolidated financial statements and notes 1 to 8 to the
Company financial statements. The financial reporting framework that has been applied in the
preparation of the group financial statements is applicable law and International Financial Reporting
Standards (IFRSs) as issued by the International Accounting Standards Board (‘IASB’). The financial
reporting framework that has been applied in the preparation of the parent company financial
statements is applicable law and United Kingdom Accounting Standards (United Kingdom Generally
Accepted Accounting Practice), including FRS 101 “Reduced Disclosure Framework”.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors’ Responsibilities Statement, the directors are responsible for
the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements
sufficient to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an assessment of: whether the
accounting policies are appropriate to the group’s and the parent company’s circumstances and have
been consistently applied and adequately disclosed; the reasonableness of significant accounting
estimates made by the directors; and the overall presentation of the financial statements. In addition,
we read all the financial and non-financial information in the annual report to identify material
inconsistencies with the audited financial statements and to identify any information that is apparently
materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the
course of performing the audit. If we become aware of any apparent material misstatements or
inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 31 December 2015 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as
adopted by the European Union;
the parent company financial statements have been properly prepared in accordance with
United Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006; and, as regards the group financial statements, Article 4 of the IAS
Regulation.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 1 to the group financial statements, the group in addition to complying with its
legal obligation to apply IFRSs as adopted by the European Union, has also applied IFRSs as issued
by the International Accounting Standards Board (IASB).
In our opinion the group financial statements comply with IFRSs as issued by the IASB.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion:
•
•
the part of the Directors’ Remuneration Report to be audited has been properly prepared in
accordance with the Companies Act 2006; and
the information given in the Strategic Report and the Directors’ Report for the financial year
for which the financial statements are prepared is consistent with the financial statements;
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires
us to report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the parent company, or returns adequate
for our audit have not been received from branches not visited by us; or
the parent company financial statements and the part of the Directors’ Remuneration Report
to be audited are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
•
• we have not received all the information and explanations we require for our audit.
Makhan Chahal (Senior statutory auditor)
for and on behalf of Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
21 March 2016
Balance Sheet
31 December 2015
Consolidated Income Statement
Amounts in thousands of U.S. dollars
Note (1)
For the twelve-month period ended
December 31,
Revenue
Other operating income
Raw materials and consumables used
Employee benefit expenses
Depreciation, amortization, and impairment charges
Other operating expenses
Operating profit
Finance income
Finance expense
Net exchange gains
Net other finance (expense)/income
Net finance costs
Share of profit/(loss) of associates carried under the equity
9
8
10
10
10
method
Loss before income tax
Income tax
Loss for the year
2015
790,881
68,857
(23,243)
(5,848)
(261,301)
(224,828)
2014
362,693
79,913
(9,462)
(1,664)
(125,480)
(132,657)
344,518
173,343
3,464
(333,921)
3,852
(200,153)
4,911
(210,252)
2,054
5,861
(526,758)
(197,426)
7,844
(769)
(174,396)
(24,852)
11
(23,790)
(4,413)
(198,186)
(29,265)
Profit attributable to non-controlling interests
(10,819)
(2,347)
Loss for the year attributable to owners of the Company
(209,005)
(31,612)
Less: Predecessor Loss prior to Initial Public Offering on June 13,
2014
Net profit/(loss) attributable to Abengoa Yield Plc. Subsequent
to Initial Public Offering
Weighted average number of ordinary shares outstanding
(thousands)
Basic and diluted earnings per share (U.S. dollar per
share)(*)
-
(28,233)
-
(3,379)
92,795
80,000
(2.25)
(0.04)
(*)
Earnings per share have been calculated for the period subsequent to the initial public offering, considering Net
loss attributable to equity holders of Abengoa Yield plc. generated after the initial public offering divided by the
number of shares outstanding.
(1) Notes 1 to 31 are an integral part of the consolidated financial statements
All results are derived from continuing operations.
43
Balance Sheet
31 December 2015
Consolidated Statement of other comprehensive income
Year
ended
2015
Year
ended
2014
Loss for the year
(198,186)
(29,265)
Items that may be reclassified subsequently to profit or
loss:
Cash flow hedges and available for sale financial assets.
Gains / (losses) arising during the year
Less: reclassification adjustments for gains / (losses) transferred
to profit or loss
56
(117,423)
55,841
29,859
Exchange differences on translation of foreign operations
(91,405)
(51,226)
Income tax relating to items that may be reclassified
subsequently to profit or loss
(12,010)
24,515
Other comprehensive loss for the year net of tax
(47,518)
(114,275)
Total comprehensive loss for the year
(245,704)
(143,540)
Total comprehensive loss attributable to:
Owners of the Company
Non-controlling interests
(249,254)
(3,550)
(158,353)
14,813
44
Balance Sheet
31 December 2015
Consolidated Balance Sheet
Amounts in thousands of U.S. dollars
Assets
Non-current assets
Note (1)
As of
December
31, 2015
As of
December 31,
2014
Contracted concessional assets
Investments carried under the equity method
Other receivables accounts
Derivative assets
Financial investments
Deferred tax assets
13
14
23
24
9,300,897
56,181
89,050
4,741
93,791
191,314
6,725,178
5,711
368,964
4,597
373,561
124,210
Total non-current assets
9,642,183
7,228,660
Current assets
Inventories
Trade receivables
Credits and other receivables
Trade and other receivables
Financial investments
Cash and cash equivalents
Total current assets
Total assets
15&23
23
16&23
14,913
126,844
70,464
197,308
221,358
514,712
22,068
78,521
51,175
129,696
229,417
354,154
948,291
735,335
10,590,474
7,963,995
(1) Notes 1 to 31 are an integral part of the consolidated financial statements
45
Balance Sheet
31 December 2015
Consolidated Balance Sheet
Amounts in thousands of U.S. dollars
Note (1)
Equity
Share capital
Parent company reserves
Other reserves
Accumulated currency translation reserve
Retained earnings
Equity attributable to the Company
As of
December
31, 2015
As of
December 31,
2014
10,022
2,313,855
24,831
(109,582)
(356,524)
1,882,602
8,000
1,790,135
(15,539)
(28,963)
(2,031)
1,751,602
Non-controlling interest
140,899
88,029
Total equity
21
2,023,501
1,839,631
Non-current liabilities
Long-term corporate debt
Borrowings
Notes and bonds
Long-term project debt
Grants and other liabilities
Related parties
Derivative liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Short-term corporate debt
Borrowings
Notes and bonds
Short-term project debt
Trade payables and other current liabilities
Income and other tax payables
17
18
19
24
17
18
19
661,341
2,763,814
810,650
3,574,464
1,646,748
126,860
385,095
79,654
376,160
2,970,984
520,893
3,491,877
1,367,601
77,961
168,931
60,818
6,474,162
5,543,348
3,153
1,870,691
25,514
1,896,205
178,217
15,236
2,255
323,250
7,939
331,189
231,132
16,440
Total current liabilities
2,092,811
581,016
Total equity and liabilities
10,590,474
7,963,995
(1) Notes 1 to 31 are an integral part of the consolidated financial statements
46
Balance Sheet
31 December 2015
The consolidated financial statements of Abengoa Yield plc, company registration no. 08818211,
were approved by the board of directors and authorised for issue on 25th February 2016.
They were signed on its behalf by:
Managing Director
Santiago Seage
15th March, 2016
47
Statement of changes in equity
Year ended 31 December 2015
Consolidated Statement of changes in equity
Share CapitalParent company reservesOther reservesRetained earnings (b)Accumulated currency translation differencesTotal equity attributable to the CompanyNon-controlling interestTotal equity--(36,600)1,245,5109,0091,217,91969,2791,287,198Profit/(loss) for the six-month period after taxes---(28,233)-(28,233)410(27,823)Change in fair value of cash flow hedges--(59,277)--(59,277)(4,253)(63,530)Currency translation differences----(10,660)(10,660)(4,347)(15,007)Tax effect--17,325--17,3251,27618,601Other comprehensive income--(41,952)-(10,660)(52,612)(7,324)(59,936)Total comprehensive income--(41,952)(28,233)(10,660)(80,845)(6,914)(87,759)Initial Public Offering and Asset Transfer8,0001,813,83178,552(1,195,862)1,651706,172-706,172Balance as of June 30, 2014 (a)8,0001,813,831-21,415-1,843,24662,3651,905,611Profit/(loss) for the six-month period after taxes---(3,379)-(3,379)1937(1,442)Change in fair value of cash flow hedges and available for sale financial assets--(20,236)--(20,236)(3,685)(23,921)Currency translation differences----(28,963)(28,963)(7,256)(36,219)Tax effect--4,697--4,6971,1055,802Other comprehensive income (c)--(15,539)-(28,963)(44,502)(9,836)(54,338)Total comprehensive income--(15,539)(3,379)(28,963)(47,881)(7,899)(55,780)Asset acquisition under the Rofo (d)---(20,067)-(20,067)33,56313,496Dividend distribution-(23,696)---(23,696)-(23,696)Balance as of December 31, 2014 (a)8,0001,790,135(15,539)(2,031)(28,963)1,751,60288,0291,839,631Balance as of January 1, 2015 8,0001,790,135(15,539)(2,031)(28,963)1,751,60288,0291,839,631Profit/(loss) for the year after taxes---(209,005)-(209,005)10,819(198,186)Change in fair value of cash flow hedges and available for sale financial assets-51,215--51,2154,68255,897Currency translation differences----(80,619)(80,619)(10,786)(91,405)Tax effect-(10,845)--(10,845)(1,165)(12,010)Other comprehensive income --40,370-(80,619)(40,249)(7,269)(47,518)Total comprehensive income --40,370(209,005)(80,619)(249,254)3,550(245,704)Asset acquisition under the Rofo (d)---(145,488)-(145,488)57,627(87,861)Dividend distribution-(137,995)---(137,995)(8,307)(146,302)Capital Increase2,022661,715---663,737-663,737Balance as of December 31, 2015 10,0222,313,85524,831(356,524)(109,582)1,882,602140,8992,023,501Amounts in thousands of U.S. dollars
Cash flow statement
31 December 2015
(a) The Consolidated statement of changes in equity for the six-month period ended June 30,
2014 and for the twelve-month period ended December 31, 2014 represents the changes in
the consolidated equity of Abengoa Yield plc and its subsidiaries since January 1, 2014.
(b) The loss for the six-month period after taxes amounting to ($3,379) thousands, includes the
result of the Company after the Initial Public Offering up to the end of December 31 2014.
The loss attributable to the parent company for the twelve-month period ended
December 31, 2014 amounting to ($31,612) thousand is included within Retained Earnings.
(c) These amounts account for the impact in Other comprehensive income of the consolidated
statements for the six-month period ended December 31, 2014.
(d) Fully relates to the impact of acquisitions under common control under the Right of first
offer (´Rofo´) agreement (See Note 5)
(1) Notes 1 to 31 are an integral part of the consolidated financial statements
49
Cash flow statement
31 December 2015
Consolidated Cash flow statement
Amounts in thousands of U.S. dollars
Loss for the year
Non-monetary adjustments
Depreciation, amortization and impairment charges
Finance costs
Fair value (gains)/losses on derivative financial instruments
Shares of (profits)/losses from associates
Income tax
Changes in consolidation and other non-monetary items
Profit for the year adjusted by non-monetary items
Variations in working capital
Inventories
Trade and other receivables
Trade payables and other current liabilities
Financial investments and other current assets/liabilities
Variations in working capital
Income tax received/(paid)
Interest received
Interest paid
Net cash provided by operating activities
Investments in entities under the equity method
Investments in contracted concessional assets
Other non-current assets/liabilities
Acquisitions of subsidiaries
Net cash used in investing activities
Proceeds from Project & Corporate debt
Repayment of Project & Corporate debt
Dividends paid to company´s shareholders
Proceeds from related parties and other
Proceeds from IPO
Proceeds from capital increase
Net cash provided by financing activities
Net increase in cash and cash equivalents
Cash, cash equivalents and bank overdrafts at beginning of the
year
Translation differences cash or cash equivalent
Cash and cash equivalents at end of the year
Note
(1)
13
11
5
15
15
For the year ended
2015
2014
(198,186)
(29,265)
261,301
553,300
(4,292)
(7,844)
23,790
(91,410)
536,659
(1,198)
14,845
9,994
49,420
73,061
522
1,600
(312,357)
299,485
4,417
(106,007)
5,714
(833,974)
(929,850)
459,366
(175,389)
(137,166)
—
—
664,120
810,931
180,566
354,154
(20,008)
514,712
125,480
206,294
2,386
769
4,413
(48,793)
261,284
379
(5,981)
(117,19)
54,810
(67,991)
(428)
256
(149,513)
43,608
(44,524)
(56,960)
(21,339)
(222,345)
(345,168)
1,350,689
(1,665,433)
(23,696)
(39,035)
681,916
—
304,441
2,881
357,664
(6,391)
354,154
(1) Notes 1 to 31 are an integral part of the consolidated financial statements
50
Notes to the consolidated financial statements
31 December 2015
Notes to the consolidated financial statements
1. General information
Abengoa Yield plc. (‘Atlantica Yield’ or the Company) is a company incorporated in the
United Kingdom under the Companies Act. The address of the registered office is Great
West Road, Brentford TW8 9DF, Greater London (United Kingdom). The nature of the
Group’s operations and its principal activities are set out in the strategic report on pages 3
to 15.
These financial statements are presented in US Dollars because that is the primary currency
in which the Group operates. Foreign operations are included in accordance with the
policies set out in note 3.
The sponsor of the Company, Abengoa, has reported that on November 27, 2015, it filed a
communication pursuant to article 5 bis of the Spanish Insolvency Law 22/2003 with the
Mercantile Court of Seville nº 2. The filing by Abengoa was intended to initiate a process to
try to reach an agreement with its main financial creditors, aimed to ensure the right
framework to carry out such negotiations and provide Abengoa with financial stability in the
short and medium term. The Mercantile Court published a decree to admit the filing of the
communication on December 15, 2015 and set a deadline of March 28, 2016 for Abengoa
to reach an agreement with its main financial creditors.
Abengoa reported that on January 25, 2016, its board of directors approved a viability plan
that defined the structure of the future business activity. In accordance with this plan,
Abengoa will negotiate a debt restructuring with its creditors as well as necessary resources
to be able to continue its activity and to operate in a competitive and sustainable manner in
the future.
The financing arrangements of some of the project subsidiaries of the Company (Solana,
Mojave, Kaxu and Cadonal) contain cross-default provisions related to Abengoa, such that
debt defaults by Abengoa, subject to certain threshold amounts, could trigger defaults
under such project financing arrangements. These cross-default provisions expire
progressively over time, remaining in place until the termination of the obligations of
Abengoa under such project financing arrangements. The Company is currently in
discussions with the project finance lenders.
Although the Company does not expect the acceleration of debt to be declared by the
credit entities, the project entities did not have contractually as of December 31, 2015 what
International Accounting Standards define as an unconditional right to defer the settlement
of the debt for at least twelve months after that date, as the cross-default provisions make
that right not totally unconditional, and therefore the debt has been presented as current in
these consolidated financial statements in accordance with International Accounting
Standards 1 (“IAS 1”), “Presentation of Financial Statements”. As a result of this
reclassification, current liabilities in the consolidated statement of financial position are
higher than current assets. In any case, due to the legal nature of the project financing of
the Company in place and pursuant to the laws of each jurisdiction, the lenders of these
agreements would, in any case, have recourse only against the specific project company
51
Notes to the consolidated financial statements
31 December 2015
(pledge over the shares of the special purpose vehicle, pledge over certain credit rights,
mortgage over certain assets in certain jurisdictions, etc.) but do not have any recourse
against Abengoa Yield plc or any other assets of the Company, since there is no further
guarantee provided to the credit entities.
All the project financing arrangements except for ATN, ATS, Skikda and Honaine contain a
covenant that Abengoa must own at least 35% of the Abengoa Yield plc shares. Abengoa
currently owns 41.86% of the ordinary shares of the Company. In connection with various
financing agreements, Abengoa has disclosed that 39,530,843 of its Abengoa Yield plc
shares, representing approximately 39.5% of the outstanding shares of the Company, have
been pledged as collateral. If Abengoa defaults on any of these financing arrangements,
such lenders may foreclose on the pledged shares and, as a result, Abengoa could
eventually own less than 35% of Abengoa Yield plc outstanding shares. As a result, the
Company would be in breach of covenants under the applicable project financing
arrangements. Waivers have been requested to all the parties of these project financing
arrangements containing these covenants. Solaben 1&6 obtained the necessary waivers in
February 2016. Similar waivers related to a minimum percentage of ownership of Abengoa
in the Company have been obtained in the past and therefore the Management of the
Company expects a similar outcome in this instance for the rest of the projects. In any case,
due to the legal nature of the project financing of the Company in place and pursuant to
the laws of each jurisdiction, the lenders of these agreements would have recourse only
against the specific project company but do not have any recourse against Abengoa Yield
plc or any other assets of the Company, since there is no further guarantee provided to the
credit entities.
Both aspects previously explained could have an impact under the terms of the Credit
Facility. The Credit Facility does not include cross-default provisions related to Abengoa.
Nevertheless, the Company is required to comply with (i) a maintenance leverage ratio of
the indebtedness at Abengoa Yield plc level to the cash available for distribution and (ii) an
interest coverage ratio of cash available for distribution to debt service payments. A
potential payment default in several of the project companies or potential restrictions to
distributions from several of the project companies may trigger these covenants. The Credit
Facility also includes a cross-default provision related to a default by the project subsidiaries
of the Company in their financing arrangements, such that a payment default in one or
more of the non-recourse subsidiaries of the Company representing more than 20% of the
cash available for distribution distributed in the previous four fiscal quarters could trigger a
default under the Credit Facility. In the remote scenario where sufficient waivers were not
obtained in due time, the Company would undertake initiatives including, but not limited to,
asset disposals or changes in the dividend policy.
Currently, the Company continues to rely on Abengoa for certain support services as well as
for operation and maintenance services at most of its facilities. The Company is very
advanced in the process of internalizing main support services, has launched a plan to
separate its IT systems and is preparing plans to replace existing operation and
maintenance suppliers if required.
52
Notes to the consolidated financial statements
31 December 2015
On January 29, 2016, Abengoa informed the Company that several indirect subsidiaries of
Abengoa in Brazil, including ACBH, have initiated an insolvency procedure under Brazilian
law (“recuperaçao judiciaria”) as a “Pedido de processamento conjunto”, which means the
substantial consolidation of the three main subsidiaries of Abengoa in Brazil, including
ACBH (see Note 23).
These consolidated financial statements were approved by the Board of Directors on
February 25, 2016. The Board of Directors decided to postpone the decision on the dividend
corresponding to the fourth quarter of 2015 until the second quarter of 2016.
2. Adoption of new and revised Standards
a)
During the year ended December 31, 2015, the Company has not applied in the
preparation of the consolidated financial statements new standards, amendments or
interpretations as none have become effective during the year.
c)
Standards, interpretations and amendments published by the IASB that will be
effective for periods beginning on or after January 1, 2016:
› Annual Improvements to IFRSs 2012-2014 cycles. These improvements are
mandatory for annual periods beginning on or after January 1, 2016 under IFRS-
IASB.
›
›
›
›
›
›
›
IAS 1 (Amendment) ‘Presentation of Financial Statements’. This amendment is
mandatory for annual periods beginning on or after January 1, 2016 under IFRS-
IASB.
IAS 27 (Amendment) ‘Separate financial statements’ regarding the reinstatement of
the equity method as an accounting option in separate financial statements. This
amendment is mandatory for annual periods beginning on or after January 1, 2016
under IFRS-IASB.
IFRS 14 ’Regulatory Deferral Accounts’. This Standard will be effective from
January 1, 2016 under IFRS-IASB.
IFRS 9 ’Financial Instruments’. This Standard will be effective from January 1, 2018
under IFRS-IASB.
IFRS 15 ’Revenues from contracts with Customers’. IFRS 15 is applicable for annual
periods beginning on or after January 1, 2018 under IFRS-IASB.
IAS 16 (Amendment) ’Property, Plant and Equipment’ and IAS 38 ’Intangible
Assets’, regarding acceptable methods of amortization and depreciation. This
amendment is mandatory for annual periods beginning on or after January 1, 2016
under IFRS-IASB.
IFRS 10 (Amendment) ‘Consolidated financial statements, IFRS 12 ‘Disclosure of
interests in Other Entities’ and IAS 28 ‘Investments in associates and joint ventures’
regarding the exemption from consolidation for investment entities. These
amendments are mandatory for annual periods beginning on or after January 1,
2016 under IFRS-IASB.
53
Notes to the consolidated financial statements
31 December 2015
›
IFRS 11 (Amendment) ‘Joint Arrangements’ regarding acquisition of an interest in a
joint operation. This amendment is mandatory for annual periods beginning on or
after January 1, 2016 under IFRS-IASB.
›
›
IAS 16 ‘Property, Plant and Equipment’ and 41 ‘Agriculture’ (Amendment)
regarding bearer plants. These amendments are mandatory for annual periods
beginning on or after January 1, 2016 under IFRS-IASB.
IFRS 16, ‘Leases’. These amendments are mandatory for annual periods beginning
on or after January 1, 2016 under IFRS-IASB.
The Company is currently in the process of evaluating the impact on the financial
statements derived from the application of the new standards and amendments that
will be effective for periods beginning after December 31, 2015.
3. Significant accounting policies
Basis of accounting
The financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRSs) as issued by the IASB, and on a basis consistent with the prior
year.
The financial statements have been prepared on the historical cost basis. Historical cost is
generally based on the fair value of the consideration given in exchange for goods and
services. The principal accounting policies adopted are set out below.
Basis of consolidation
a) Controlled entities
The consolidated financial statements incorporate the financial statements of the Company
and entities controlled by the Company (its subsidiaries) made up to 31 December each
year. Control is achieved when the Company:
has the power over the investee;
is exposed, or has rights, to variable return from its involvement with the investee; and
has the ability to use its power to affects its returns.
The Company reassesses whether or not it controls an investee when facts and
circumstances indicate that there are changes to one or more of the three elements of
control listed above. In order to evaluate the existence of control, we need to distinguish
two independent stages in these projects in terms of decision making process: the
construction phase and the operation phase. In some of these projects such as Solana and
Mojave solar plants in the United States, the Company has concluded that all the relevant
decisions during the construction phase are subject to the approval of the Administration.
As a result, the Company does not have control over these assets during this period and
records these companies as associates under the equity method. Once the Project´s
construction phase is finished, the Company gains control over these companies which are
then fully consolidated.
54
Notes to the consolidated financial statements
31 December 2015
The Company uses the acquisition method to account for business combinations of
companies controlled by a third party. According to this method, identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. Any contingent consideration is
recognized at fair value at the acquisition date and subsequent changes in its fair value are
recognized in accordance with IAS 39 either in profit or loss or as a change to other
comprehensive income. Acquisition related costs are expensed as incurred. The Company
recognizes any non-controlling interest in the acquiree either at fair value or at the
noncontrolling interest’s proportionate share of the acquirer’s net assets on an acquisition
by acquisition basis.
Acquisitions of businesses from Abengoa were previously not considered business
combinations, as Atlantica Yield was a subsidiary controlled of Abengoa. The assets
acquired constituted an acquisition under common control by Abengoa and accordingly,
were recorded using Abengoa’s historical basis in the assets and liabilities of the
Predecessor.
The difference between the cash paid and historical value of the net assets was recorded in
equity. Results of operations of the assets acquired have been recorded in Atlantica Yield’s
consolidated income statement since the date of the acquisition.
All assets and liabilities between entities of the group, equity, income, expenses, and cash
flows relating to transactions between entities of the group are eliminated in full.
b) Investments accounted for under the equity method
An associate is an entity over which the Company has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial
statements using the equity method of accounting. Under the equity method, an
investment in an associate is initially recognized in the statement of financial position at
cost and adjusted thereafter to recognize the Company share of the profit or loss and other
comprehensive income of the associate.
Going concern
The directors have, at the time of approving the financial statements, a reasonable
expectation that the Company and the Group have adequate resources to continue in
operational existence for the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the consolidated financial statements. Further
detail is contained in the Strategic Report on page 22 and note 1 to the consolidated
financial statements.
Critical accounting policies and estimates
55
Notes to the consolidated financial statements
31 December 2015
The most critical accounting policies, which reflect significant management estimates and
judgment to determine amounts in the consolidated financial statements, are as follows:
Contracted concessional agreements and Power Purchase Agreements (‘PPAs’);
Impairment of intangible assets;
Assessment of control;
Derivative financial instruments and fair value estimates; and
Income taxes and recoverable amount of deferred tax assets.
Contracted concessional Assets and price purchase agreements
Contracted concessional assets and price purchase agreements (PPAs) include fixed assets
financed through project debt, related to service concession arrangements recorded in
accordance with IFRIC 12, except for Palmucho, which is recorded in accordance with IAS 17
and PS10/PS20, which are recorded as tangible assets in accordance with IAS 16. The
infrastructures accounted for by the Company as concessions are related to the activities
concerning electric transmission lines, solar electricity generation plants, cogeneration
plants and wind farms.
The useful life of these assets is approximately the same as the length of the concession
arrangement. The infrastructure used in a concession can be classified as an intangible asset
or a financial asset, depending on the nature of the payment entitlements established in the
agreement.
The application of IFRIC 12 requires extensive judgment in relation to, among other factors,
(i) the identification of certain infrastructures and contractual agreements in the scope of
IFRIC 12, (ii) the understanding of the nature of the payments in order to determine the
classification of the infrastructure as a financial asset or as an intangible asset and (iii) the
timing and recognition of the revenue from construction and concessionary activity.
Under the terms of contractual arrangements within the scope of this interpretation, the
operator shall recognize and measure revenue in accordance with IAS 11 and 18 for the
services it performs. If the operator performs more than one service (i.e. construction or
upgrade services and operation services) under a single contract or arrangement,
consideration received or receivable shall be allocated by reference to the relative fair
values of the services delivered, when the amounts are separately identifiable.
Consequently, even though construction is subcontracted to Abengoa, in accordance with
the provisions of IFRIC 12, the Company recognizes and measures revenue and costs for
providing construction services during the period of construction of the infrastructure in
accordance with IAS 11 “Construction Contracts”. Construction revenue is recorded within
“Other operating income” and Construction cost, which is fully contracted with related
parties, is recorded within “Other operating expenses”. This applies in the same way to the
two models.
a) Intangible assets
56
Notes to the consolidated financial statements
31 December 2015
The Company recognizes an intangible asset to the extent that it receives a right to charge
final customers for the use of the infrastructure. This intangible asset is subject to the
provisions of IAS 38 and is amortized linearly, taking into account the estimated period of
commercial operation of the infrastructure which coincides with the concession period.
Once the infrastructure is in operation, the treatment of income and expenses is as follows:
Revenues from the updated annual revenue for the contracted concession, as well as
operations and maintenance services are recognized in each period according to IAS 18
“Revenue”.
Operating and maintenance costs and general overheads and administrative costs are
recorded in accordance with the nature of the cost incurred (amount due) in each
period.
Financing costs are expensed as incurred.
b) Financial assets
The Company recognizes a financial asset when demand risk is assumed by the grantor, to
the extent that the concession holder has an unconditional right to receive payments for
the asset. This asset is recognized at the fair value of the construction services provided,
considering upgrade services in accordance with IAS 11, if any.
The financial asset is subsequently recorded at amortized cost calculated according to the
effective interest method. Revenue from operations and maintenance services is recognized
in each period according to IAS 18 “Revenue”. The remuneration of managing and
operating the asset resulting from the valuation at amortized cost is also recorded in
revenue.
Financing costs are expensed as incurred.
c) Property, plant and equipment
Property, plant and equipment includes property, plant and equipment of companies or
project companies. Property, plant and equipment is measured at historical cost, including
all expenses directly attributable to the acquisition, less depreciation and impairment losses,
with the exception of land, which is presented net of any impairment losses. Once the
infrastructure is in operation, the treatment of income and expenses is the same as the one
described above for intangible assets.
Borrowing costs
Interest costs incurred in the construction of any qualifying asset are capitalized over the
period required to complete and prepare the asset for its intended use. A qualifying asset is
an asset that necessarily takes a substantial period of time to get ready for its internal use
57
Notes to the consolidated financial statements
31 December 2015
or sale, which is considered to be more than one year. Remaining borrowing costs are
expensed in the period in which they are incurred.
Asset impairment
Atlantica Yield reviews its contracted concessional assets to identify any indicators of
impairment at least annually.
The recoverable amount of an asset is the higher of its fair value less costs to sell and its
value in use, defined as the present value of the estimated future cash flows to be
generated by the asset. In the event that the asset does not generate cash flows
independently of other assets, the Company calculates the recoverable amount of the Cash
Generating Unit ‘CGU’) to which the asset belongs. When the carrying amount of the CGU
to which these assets belong is lower than its recoverable amount, the assets are impaired.
Assumptions used to calculate value in use include a discount rate, growth rate and
projections considering real data based in the contracts terms and projected changes in
both selling prices and costs. The discount rate is estimated by Management, to reflect both
changes in the value of money over time and the risks associated with the specific CGU. For
contracted concessional assets, with a defined useful life and with a specific financial
structure, cash flow projections until the end of the project are considered and no terminal
value is assumed.
Contracted concessional assets have a contractual structure that permits the Company to
estimate quite accurately the costs of the project (both in the construction and in the
operations periods) and revenue during the life of the project.
Projections take into account real data based on the contract terms and fundamental
assumptions based on specific reports prepared by experts, assumptions on demand and
assumptions on production. Additionally, assumptions on macro-economic conditions are
taken into account, such as inflation rates, future interest rates, etc. and sensitivity analyses
are performed over all major assumptions which can have a significant impact in the value
of the asset.
Cash flow projections of CGUs are calculated in the functional currency of those CGUs and
are discounted using rates that take into consideration the risk corresponding to each
specific country and currency. Taking into account that in most CGUs the specific financial
structure is linked to the financial structure of the projects that are part of those CGUs, the
discount rate used to calculate the present value of cash-flow projections is based on the
weighted average cost of capital (WACC) for the type of asset, adjusted, if necessary, in
accordance with the business of the specific activity and with the risk associated with the
country where the project is performed.
In any case, sensitivity analyses are performed, especially in relation with the discount rate
used and fair value changes in the main business variables, in order to ensure that possible
58
Notes to the consolidated financial statements
31 December 2015
changes in the estimates of these items do not impact the possible recovery of recognized
assets.
Accordingly, the following table provides a summary of the discount rates used (WACC) and
growth rates to calculate the recoverable amount for CGUs with the operating segment to
which it pertains:
Operating segment
Discount
Growth
Rate
Rate
Europe ...............................................................................................................................
0%
North America ...............................................................................................................
0%
South America ...............................................................................................................
0%
5% - 6%
5% - 6%
3% - 5%
In the event that the recoverable amount of an asset is lower than its carrying amount, an
impairment charge for the difference would be recorded in the income statement under the
item “Depreciation, amortization and impairment charges”. Pursuant to IAS 36, an
impairment loss is recognized if the carrying amount of these assets exceeds the present
value of future cash flows discounted at the initial effective interest rate.
Loans and accounts receivable
Loans and accounts receivable are non-derivative financial assets with fixed or determinable
payments, not listed on an active market. In accordance with IFRIC 12, certain assets under
concessions qualify as financial assets and are recorded as is described in note 13. Pursuant
to IAS 36, an impairment loss is recognized if the carrying amount of these assets exceeds
the present value of future cash flows discounted at the initial effective interest rate. Loans
and accounts receivable are initially recognized at fair value plus transaction costs and are
subsequently measured at amortized cost in accordance with the effective interest rate
method. Interest calculated using the effective interest rate method is recognized under
other financial income within financial income.
59
Notes to the consolidated financial statements
31 December 2015
Derivative financial instruments and hedging activities
Derivatives are recorded at fair value. The Company applies hedge accounting to all
hedging derivatives that qualify to be accounted for as hedges under IFRS-IASB.
When hedge accounting is applied, hedging strategy and risk management objectives are
documented at inception, as well as the relationship between hedging instruments and
hedged items. Effectiveness of the hedging relationship needs to be assessed on an
ongoing basis. Effectiveness tests are performed prospectively and retrospectively at
inception and at each reporting date, following the dollar offset method.
Atlantica Yield applies cash flow hedging. Under this method, the effective portion of
changes in fair value of derivatives designated as cash flow hedges are recorded
temporarily in equity and are subsequently reclassified from equity to profit or loss in the
same period or periods during which the hedged item affects profit or loss. Any ineffective
portion of the hedged transaction is recorded in the consolidated income statement as it
occurs.
When interest rate options are designated as hedging instruments, the intrinsic value and
time value of the financial hedge instrument are separated. Changes in intrinsic value which
are highly effective are recorded in equity and subsequently reclassified from equity to
profit or loss in the same period or periods during which the hedged item affects profit or
loss. Changes in time value are recorded as financial income or expense, together with any
ineffectiveness.
When the hedging instrument matures or is sold, or when it no longer meets the
requirements to apply hedge accounting, accumulated gains and losses recorded in equity
remain as such until the forecast transaction is ultimately recognized in the income
statement. However, if it becomes unlikely that the forecast transaction will actually take
place, the accumulated gains and losses in equity are recognized immediately in the income
statement.
Fair value estimates
Financial instruments measured at fair value are presented in accordance with the following
level classification based on the nature of the inputs used for the calculation of fair value:
Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2: Fair value is measured based on inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices).
Level 3: Fair value is measured based on unobservable inputs for the asset or liability.
60
Notes to the consolidated financial statements
31 December 2015
In the event that prices cannot be observed, the management shall make its best estimate
of the price that the market would otherwise establish based on proprietary internal models
which, in the majority of cases, use data based on observable market parameters as
significant inputs (Level 2) but occasionally use market data that is not observed as
significant inputs (Level 3). Different techniques can be used to make this estimate,
including extrapolation of observable market data. The best indication of the initial fair
value of a financial instrument is the price of the transaction, except when the value of the
instrument can be obtained from other transactions carried out in the market with the same
or similar instruments, or valued using a valuation technique in which the variables used
only include observable market data, mainly interest rates. Differences between the
transaction price and the fair value based on valuation techniques that use data that is not
observed in the market, are not initially recognized in the income statement.
a) Level 2 valuation
All derivatives are classified as level 2. Atlantica Yield derivatives correspond mainly to the
interest rate swaps designated as cash flow hedges.
Description of the valuation method
Interest rate swap valuations are made by valuing the swap part of the contract and valuing
the credit risk. The methodology used by the market and applied by Atlantica Yield to value
interest rate swaps is to discount the expected future cash flows according to the
parameters of the contract. Variable interest rates, which are needed to estimate future cash
flows, are calculated using the curve for the corresponding currency and extracting the
implicit rates for each of the reference dates in the contract. These estimated flows are
discounted with the swap zero curve for the reference period of the contract.
The effect of the credit risk on the valuation of the interest rate swaps depends on the
future settlement. If the settlement is favourable for the Company, the counterparty credit
spread will be incorporated to quantify the probability of default at maturity. If the expected
settlement is negative for the Company, its own credit risk will be applied to the final
settlement. Classic models for valuing interest rate swaps use deterministic valuation of the
future of variable rates, based on future outlooks. When quantifying credit risk, this model is
limited by considering only the risk for the current paying party, ignoring the fact that the
derivative could change sign at maturity. A payer and receiver swaption model is proposed
for these cases. This enables the associated risk in each swap position to be reflected. Thus,
the model shows each agent’s exposure, on each payment date, as the value of entering
into the ‘tail’ of the swap, i.e. the live part of the swap.
61
Notes to the consolidated financial statements
31 December 2015
Variables (Inputs)
Interest rate derivative valuation models use the corresponding interest rate curves for the
relevant currency and underlying reference in order to estimate the future cash flows and to
discount them. Market prices for deposits, futures contracts and interest rate swaps are
used to construct these curves. Interest rate options (caps and floors) also use the volatility
of the reference interest rate curve.
To estimate the credit risk of the counterparty, the credit default swap (CDS) spreads curve
is obtained in the market for important individual issuers. For less liquid issuers, the spreads
curve is estimated using comparable CDSs or based on the country curve. To estimate
proprietary credit risk, prices of debt issues in the market and CDSs for the sector and
geographic location are used.
The fair value of the financial instruments that results from the aforementioned internal
models takes into account, among other factors, the terms and conditions of the contracts
and observable market data, such as interest rates, credit risk and volatility. The valuation
models do not include significant levels of subjectivity, since these methodologies can be
adjusted and calibrated, as appropriate, using the internal calculation of fair value and
subsequently compared to the corresponding actively traded price. However, valuation
adjustments may be necessary when the listed market prices are not available for
comparison purposes.
b) Level 3 valuation
Level 3 includes the preferred equity investment in ACBH.
Fair value of this instrument was calculated by taking as the main reference the value of the
investment, which is obtained by considering expected cash-flows from the preferred equity
instrument discounted at a rate appropriate for the sector in which the Company is
operating. Valuation was obtained from internal models. This valuation could vary where
other models and assumptions made on the principle variables had been used, however the
fair value of the asset as well as the results generated by this financial instrument are
considered reasonable.
Trade and other receivables
Trade and other receivables are amounts due from customers for sales in the normal course
of business. They are recognized initially at fair value and subsequently measured at
amortized cost using the effective interest rate method, less allowance for doubtful
accounts.
Trade receivables due in less than one year are carried at their face value at both initial
recognition and subsequent measurement, provided that the effect of not discounting flows
is not significant.
62
Notes to the consolidated financial statements
31 December 2015
An allowance for doubtful accounts is recorded when there is objective evidence that the
Company will not be able to recover all amounts due as per the original terms of the
receivables.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, cash in bank and other highly-liquid
current investments with an original maturity of three months or less which are held for the
purpose of meeting short-term cash commitments.
Grants
Grants are recognized at fair value when it is considered that there is a reasonable
assurance that the grant will be received and that the necessary qualifying conditions, as
agreed with the entity assigning the grant, will be adequately complied with. Grants are
recorded as liabilities in the consolidated statement of financial position and are recognized
in “Other operating income” in the consolidated income statement based on the period
necessary to match them with the costs they intend to compensate. In addition, grants
correspond also to loans with interest rates below market rates, for the initial difference
between the fair value of the loan and the proceeds received.
Loans and borrowings
Loans and borrowings are initially recognized at fair value, net of transaction costs incurred.
Borrowings are subsequently measured at amortized cost and any difference between the
proceeds initially received (net of transaction costs incurred in obtaining such proceeds) and
the repayment value is recognized in the consolidated income statement over the duration
of the borrowing using the effective interest rate method.
Loans with interest rates below market rates are initially recognized at fair value in liabilities
and the difference between proceeds received from the loan and its fair value is initially
recorded within “Grants and Other liabilities” in the consolidated statement of financial
position, and subsequently recorded in “Other operating income” in the consolidated
income statement when the costs financed with the loan are expensed.
Bonds and notes
The Company initially recognizes ordinary notes at fair value, net of issuance costs incurred.
Subsequently, notes are measured at amortized cost until settlement upon maturity. Any
other difference between the proceeds obtained (net of transaction costs) and the
redemption value is recognized in the consolidated income statement over the term of the
debt using the effective interest rate method.
63
Notes to the consolidated financial statements
31 December 2015
Income taxes
Current income tax expense is calculated on the basis of the tax laws in force as of the date
of the consolidated statement of financial position in the countries in which the subsidiaries
and associates operate and generate taxable income.
Deferred income tax is calculated in accordance with the liability method, based upon the
temporary differences arising between the carrying amount of assets and liabilities and their
tax base. Deferred income tax is determined using tax rates and regulations which are
expected to apply at the time when the deferred tax is realized.
Deferred tax assets are recognized only when it is probable that sufficient future taxable
profit will be available to use deferred tax assets.
Trade payables and other liabilities
Trade payables are obligations arising from purchases of goods and services in the ordinary
course of business and are recognized initially at fair value and are subsequently measured
at their amortized cost using the effective interest method. Other liabilities are obligations
not arising in the normal course of business and which are not treated as financing
transactions. Advances received from customers are recognized as “Trade payables and
other current liabilities”.
Foreign currency transactions
The consolidated financial statements are presented in U.S. dollars, which is Atlantica Yield
functional and reporting currency. Financial statements of each subsidiary within the
Company are measured in the currency of the principal economic environment in which the
subsidiary operates, which is the subsidiary’s functional currency.
Transactions denominated in a currency different from the subsidiary’s functional currency
are translated into the subsidiary’s functional currency applying the exchange rates in force
at the time of the transactions. Foreign currency gains and losses that result from the
settlement of these transactions and the translation of monetary assets and liabilities
denominated in foreign currency at the year-end rates are recognized in the consolidated
income statement, unless they are deferred in equity, as occurs with cash flow hedges and
net investment in foreign operations hedges.
Assets and liabilities of subsidiaries with a functional currency different from the Company’s
reporting currency are translated to U.S. dollars at the exchange rate in force at the closing
date of the financial statements. Income and expenses are translated into U.S. dollars using
the average annual exchange rate, which does not differ significantly from using the
exchange rates of the dates of each transaction. The difference between equity translated at
the historical exchange rate and the net financial position that results from translating the
assets and liabilities at the closing rate is recorded in equity under the heading
“Accumulated currency translation differences”. Results of companies carried under the
equity method are translated at the average annual exchange rate.
64
Notes to the consolidated financial statements
31 December 2015
Equity
The Company has recyclable balances in its equity, corresponding mainly to hedge reserves
and translation differences arising from currency conversion in the preparation of these
consolidated financial statements. These balances have been presented separately in Equity.
Non-controlling interest represents interest from other partners in entities included in these
consolidated financial statements which are not fully owned by Atlantica Yield as of the
dates presented. Parent company reserves together with the Share capital represent the
Parent’s net investment in the entities included in these consolidated financial statements.
Provisions and contingencies
Provisions are recognized when:
there is a present obligation, either legal or constructive, as a result of past events;
it is more likely than not that there will be a future outflow of resources to settle the
obligation; and
the amount has been reliably estimated.
Provisions are initially measured at the present value of the expected outflows required to
settle the obligation and subsequently valued at amortized cost following the effective
interest method. The balance of Provisions disclosed in the Notes reflects management’s
best estimate of the potential exposure as of the date of preparation of the consolidated
financial statements.
Contingent liabilities are possible obligations, existing obligations with low probability of a
future outflow of economic resources and existing obligations where the future outflow
cannot be reliably estimated. Contingences are not recognized in the consolidated
statements of financial position unless they have been acquired in a business combination.
Some companies included in the group have dismantling provisions, which are intended to
cover future expenditures related to the dismantlement of the solar plants and it will be
likely to be settled with an outflow of resources in the long term (over 5 years). Such
provisions are accrued when the obligation for dismantling, removing and restoring the site
on which the plant is located, is incurred, which is usually during the construction period.
The provision is measured in accordance with IAS 37, “Provisions, Contingent Liabilities and
Contingent Assets” and is recorded as a liability under the heading “Grants and other
liabilities” of the Financial Statements, and as part of the cost of the plant under the
heading “Contracted concessional assets.”
65
Notes to the consolidated financial statements
31 December 2015
4. Financial information by segment
Atlantica Yield’s segment structure reflects how management currently makes financial decisions
and allocates resources. Its operating segments are based on the following geographies where
the contracted concessional assets are located:
•
•
•
North America
South America
EMEA
Based on the type of business, as of December 31, 2015 the Company had the following business
sectors:
Renewable energy: Renewable energy assets include two Solar plants in the United
States, Solana and Mojave, each with a gross capacity of 280 MW and located in Arizona and
California, respectively. The Company owns seven solar platforms in Spain: Solacor 1 and 2 with a
gross capacity of 100 MW, PS10 and PS20 with a gross capacity of 31 MW, Solaben 2 and 3 with a
gross capacity of 100 MW, Helioenergy 1 and 2 with a gross capacity of 100 MW, Helios 1 and 2
with a gross capacity of 100 MW, Solnova 1, 3 and 4 with a gross capacity of 150 MW and
Solaben 1 and 6 with a gross capacity of 100 MW. The Company also owns a Solar plant in South
Africa, Kaxu with a gross capacity of 100 MW. Additionally, the Company owns two wind farms in
Uruguay, Palmatir and Cadonal, with a gross capacity of 50 MW each.
Conventional power: Conventional power asset consists of ACT, a 300 MW
cogeneration plant in Mexico, which is party to a 20-year take-or-pay contract with Pemex for the
sale of electric power and steam.
Electric transmission lines: Electric transmission assets include (i) three lines in Peru,
ATN, ATS and ATN2, spanning a total of 1,012 miles; and (ii) three lines in Chile, Quadra 1, Quadra
2 and Palmucho, spanning a total of 87 miles. In addition, the Company owns a preferred equity
investment in ACBH, a subsidiary holding company of Abengoa that is engaged in the
development, construction, investment and management of contracted concessions in Brazil,
consisting mostly of electric transmission lines.
Water: Water assets include a minority interest in two desalination plants in Algeria,
Honaine and Skikda with an aggregate capacity of 10.5 M ft3 per day.
66
Notes to the consolidated financial statements
31 December 2015
Atlantica Yield’s Chief Operating Decision Maker (CODM) assesses the performance and
assignment of resources according to the identified operating segments. The CODM considers
the revenues as a measure of the business activity and the Further Adjusted EBITDA as a measure
of the performance of each segment. Further Adjusted EBITDA is calculated as profit/(loss) for the
period attributable to the parent company, after adding back loss/(profit) attributable to non-
controlling interest from continued operations, income tax, share of profit/(loss) of associates
carried under the equity method, finance expense net, depreciation, amortization and impairment
charges of entities included in these consolidated financial statements, and dividends received
from the preferred equity investment in ACBH. In order to assess performance of the business, the
CODM receives reports of each reportable segment using revenues and Further Adjusted EBITDA.
Net interest expense evolution is assessed on a consolidated basis. Financial expense and
amortization are not taken into consideration by the CODM for the allocation of resources.
In the year ended December 31, 2015, Atlantica Yield had three customers with revenues
representing more than 10% of the total revenues, i.e., two in the renewable energy and one in
the conventional power business sectors.
a) The following tables show Revenues and Further Adjusted EBITDA by operating segments
and business sectors for the years 2015 and 2014:
Revenue
Further Adjusted EBITDA
For the twelve-
month period ended December 31,
For the twelve-
month period ended December 31,
Geography
2015
2014
2015
2014
North America
South America
EMEA
Total
328,139
112,480
350,262
195,508
83,592
83,593
279,559
110,905
233,755
175,398
77,188
55,437
790,881
362,693
624,219
308,023
67
Notes to the consolidated financial statements
31 December 2015
Revenue
Further Adjusted EBITDA
For the twelve-
month period ended December 31,
For the twelve-
month period ended December 31,
Geography
2015
2014
2015
2014
Renewable energy
Conventional power
Electric transmission lines
Water
Total
543,012
138,717
86,393
22,759
170,673
118,765
73,255
-
413,933
107,671
89,047
13,568
137,82
101,896
68,307
-
790,881
362,693
624,219
308,023
The reconciliation of segment Further Adjusted EBITDA with the loss attributable to the parent
company is as follows:
For the twelve-
month period ended December
31,
2015
2014
Total segment Further Adjusted EBITDA .......................................................
624,219
(261,301)
Depreciation, amortization, and impairment charges .............................
Financial expense, net ...........................................................................................
(526,758)
Dividend from exchangeable preferred equity
308,023
(125,480)
(197,426)
(18,400)
investment in ACBH .........................................................................................
(9,200)
Share in profits/(losses) associates under the equity
method ..................................................................................................................
7,844
Income tax .................................................................................................................
(23,790)
(10,819)
Profit attributable to non-controlling interests ..........................................
(769)
(4,413)
(2,347)
Loss attributable to the parent company
(209,005)
(31,612)
b) The assets and liabilities by operating segments (and business sector) at the end of 2015 and
2014 are as follows:
68
Notes to the consolidated financial statements
31 December 2015
Assets and liabilities by geography as of December 31, 2015:
North
America
South
America
EMEA
Balance as of
December 31,
2015
Assets allocated
Contracted concessional assets
Investments carried under the equity method
Current financial investments
Cash and cash equivalents (project companies)
Subtotal allocated
Unallocated assets
Other non-current assets
Other current assets (including cash and cash
equivalents at holding company level)
Subtotal unallocated
Total assets
Liabilities allocated
Long-term and short-term project debt
Grants and other liabilities
Subtotal allocated
Unallocated liabilities
Long-term and short-term corporate debt
Other non-current liabilities
Other current liabilities
Subtotal unallocated
Total liabilities
Equity unallocated
Total liabilities and equity unallocated
Total liabilities and equity
4,054,093 1,206,693
-
129,349
136,950
4,040,111
56,181
-
30,036
61,973
290,548
41,525
4,320,392 1,310,191 4,416,876
9,300,897
56,181
221,358
469,023
10,047,459
285,105
257,910
543,015
10,590,474
North
America
South
America
EMEA
Balance as of
December 31,
2015
1,891,597
1,611,724
3,503,321
888,304
799
2,690,769
34,225
889,103 2,724,994
5,470,670
1,646,748
7,117,418
664,494
591,608
193,453
1,449,555
8,566,973
2,023,501
3,473,056
10,590,474
69
Notes to the consolidated financial statements
31 December 2015
Assets and liabilities by geography as of December 31, 2014:
Assets allocated
Contracted concessional assets
Investments carried under the equity method
Current financial investments
Cash and cash equivalents (project companies)
North
America
South
America
EMEA
Balance as of
December
31, 2014
4,185,638
-
175,339
49,030
1,159,652
-
54,012
37,623
1,379,888
5,711
66
112,133
6,725,178
5,711
229,417
198,786
Subtotal allocated
4,410,007
1,251,287
1,497,798
7,159,092
Unallocated assets
Other non-current assets
Other current assets (including cash and cash
equivalents at holding company level)
Subtotal unallocated
Total assets
497,771
307,132
804,903
7,963,995
North
America
South
America
EMEA
Balance as of
December
31, 2014
Liabilities allocated
Long-term and short-term project debt
Grants and other liabilities
Subtotal allocated
Unallocated liabilities
Long-term and short-term corporate debt
Other non-current liabilities
Other current liabilities
Subtotal unallocated
Total liabilities
Equity unallocated
Total liabilities and equity unallocated
Total liabilities and equity
2,121,916
1,354,588
804,460
798
896,690
12,215
3,476,504
805,258
908,905
3,823,066
1,367,601
5,190,667
378,415
307,710
247,572
933,697
6,124,364
1,839,631
2,773,328
7,963,995
70
Notes to the consolidated financial statements
31 December 2015
Assets and liabilities by business sectors as of December 31, 2015:
Assets allocated
Contracted concessional assets
Investments carried under the equity
method
Current financial investments
Cash and cash equivalents (project
companies)
Renewable
energy
Conventiona
l power
Electric
transmissio
n lines
Water
Balance as of
December 31,
2015
7,597,771
649,479
957,235
96,412
9,300,897
14,064
-
-
42,117
14,892
128,999
61,807
15,660
437,455
784
17,755
13,029
56,181
221,358
469,023
Subtotal allocated
8,064,182
779,262
1,036,797
167,218
10,047,459
Unallocated assets
Other non-current assets
Other current assets (including cash
and cash equivalents at holding
company level)
Subtotal unallocated
Total assets
Liabilities allocated
Long-term and short-term project
debt
Grants and other liabilities
Subtotal allocated
Unallocated liabilities
Long-term and short-term
corporate debt
Other non-current liabilities
Other current liabilities
Subtotal unallocated
Total liabilities
Equity unallocated
Total liabilities and equity
unallocated
Total liabilities and equity
285,105
257,910
543,015
10,590,474
Renewable
energy
Convention
al power
Electric
transmission
lines
Water
Balance as of
December
31, 2015
4,108,166
617,082
697,922
47,500
5,470,670
1,646,637
5,754,803
111
-
-
1,646,748
617,193
697,922
47,500
7,117,418
664,494
591,608
193,453
1,449,555
8,566,973
2,023,501
3,473,056
10,590,474
71
Notes to the consolidated financial statements
31 December 2015
Assets and liabilities by business sectors as of December 31, 2014:
Renewable
energy
Conventional
power
Electric
transmission
lines
Balance as of
December 31,
2014
Assets allocated
Contracted concessional assets
Investments carried under the equity method
Current financial investments
Cash and cash equivalents (project companies)
5,178,459
5,711
64,449
156,867
646,842
-
110,959
17,612
Subtotal allocated
5,405,486
646,842
899,877
-
54,009
24,307
978,193
Unallocated assets
Other non-current assets
Other current assets (including cash and cash
equivalents at holding company level)
Subtotal unallocated
Total assets
6,725,178
5,711
229,417
198,786
7,159,092
497,771
307,132
804,903
7,963,995
Renewable
energy
Conventional
power
Electric
transmission
lines
Balance as of
December 31,
2014
Liabilities allocated
Long-term and short-term project debt
Grants and other liabilities
2,579,221
1,367,601
625,135
-
618,710
-
3,823,066
1,367,601
Subtotal allocated
3,946,822
625,135
618,710
5,190,667
Unallocated liabilities
Long-term and short-term corporate debt
Other non-current liabilities
Other current liabilities
Subtotal unallocated
Total liabilities
Equity unallocated
Total liabilities and equity unallocated
Total liabilities and equity
378,415
307,710
247,572
933,697
6,124,364
1,839,631
2,773,328
7,963,995
72
Notes to the consolidated financial statements
31 December 2015
c) The amount of depreciation and amortization expense recognized for the years ended
December 31, 2015 and 2014 are as follows:
Depreciation and amortization by geography
2015
2014
For the twelve-month period
ended December 31,
North America
South America
EMEA
Total
Depreciation and amortization by business
sectors
Renewable energy
Electric transmission lines
Total
(129,091)
(41,274)
(90,936)
(70,777)
(31,990)
(22,713)
(261,301)
(125,480)
For the twelve-month period
ended December 31,
2015
2014
(232,699)
(28,602)
(98,107)
(27,373)
(261,301)
(125,480)
73
Notes to the consolidated financial statements
31 December 2015
5. Changes in the scope of the consolidated financial statements
For the year ended December 31, 2015
On February 3, 2015, the Company completed the acquisition of a 25.5% stake in Honaine and a
34.2% stake in Skikda and on February 23, 2015, the Company completed the acquisition of a
29.6% stake in Helioenergy 1/2. Total purchase price paid for these assets amounted to $94
million.
On May 13, 2015 and May 14, 2015, the Company completed the acquisition of Helios 1/2, a 100
MW solar complex, and Solnova 1/3/4, a 150 MW solar complex, respectively, both in Spain. On
May 25, 2015 the Company completed the acquisition of the remaining 70.4% stake in
Helioenergy 1/2, a 100 MW solar complex in Spain. On July 30, 2015, the Company completed the
acquisition of Kaxu, a 100 MW solar plant in South Africa. Total purchase price paid for these
assets amounted to $682 million.
On June 25, 2015, the Company completed the acquisition of ATN2, an 81-mile transmission line
in Peru. On September 30, 2015, the Company completed the acquisition of Solaben 1/6, a 100
MW solar complex in Spain. The total purchase price paid for these assets amounted to $359
million.
The Company has significant influence over Honaine therefore it is accounted for using the equity
method as per IAS 28 Investments in Associates in these consolidated financial statements.
Under IFRS 10, Consolidated Financial Statements the Company has control over the rest of the
assets acquired during the year 2015 and therefore they are fully consolidated in these
consolidated financial statements. Given that Atlantica Yield was a subsidiary controlled by
Abengoa when these acquisitions were closed, these assets constituted an acquisition under
common control by Abengoa and accordingly, they were recorded using Abengoa’s historical
basis in the assets and liabilities of the predecessor. The difference between the cash paid and
historical value of the net assets was recorded in equity. Results of operations of the assets
acquired have been recorded in Atlantica Yield’s consolidated income statement since the date of
the acquisition.
Impact of changes in the scope in the consolidated financial statements
The amount of assets and liabilities integrated at the effective acquisition date for the aggregated
change in scope is shown in the following table:
74
Notes to the consolidated financial statements
31 December 2015
Concessional assets (Note 13)
Investments carried under the equity method (Note 14)
Deferred tax asset (Note 11)
Other non-current assets
Current assets
Project debt long term (Note 18)
Deferred tax liabilities (Note 11)
Project debt short term (Note 18)
Other current and non-current liabilities
Asset acquisition under Rofo – purchase price
Non-controlling interests
Net result of the asset acquisition
Asset Acquisition under ROFO
Agreement
3,140,457
51,527
107,227
10,137
428,935
(2,087,362 )
(9,589 )
(102,012 )
(491,768 )
(1,135,413 )
(57,627 )
(145,488 )
Had the Asset acquisition under ROFO Agreement performed during 2015 been consolidated
from January 1, 2015, the consolidated statement of comprehensive income would have included
additional revenue of $162 million and additional loss after tax of $25.8 million.
For the year ended December 31, 2014.
Mojave Solar LLC
On December 1, 2014, Mojave Solar, LLC, the Company that holds the assets in Mojave, which was
recorded under the equity method during its construction period, entered into operation and
started to be fully consolidated once control over this company was gained.
The Company reassesses whether or not it controls an investee when facts and circumstances
indicate that there are changes to the elements that determine control (power over the investee,
exposure to variable returns of the investee and ability to use its power to affect its returns). The
Company concluded that during the construction phase of Mojave plant all the relevant decisions
were subject to the control and approval of the Administration. As a result, the Company did not
have control over these assets during this period. IFRS 10 (B80) establishes that control requires a
continuous assessment and that the Company shall reassess if it controls on investee if facts and
circumstances indicate that there are changes to the elements of control. Once the Project´s
construction phase was finished, the decision making process changed such that the Company
makes decisions about the relevant activities of the investee, the investee was controlled and it
started to be fully consolidated.
As during the construction period the assets were included in the investee’s accounts under the
scope of IFRIC 12, the book value of the combined assets and liabilities is the same as its fair
value.
75
Notes to the consolidated financial statements
31 December 2015
First asset acquisition under the ROFO agreement
On September 22, 2014, the Company entered into an agreement with Abengoa, subject to
financing and negotiations of definitive documentation and certain other conditions, to acquire
the First Dropdown Assets. On November 18, 2014, the Company completed the acquisition of
Solacor 1/2 through a 30-year usufruct rights contract over the related shares (which includes the
option to purchase such shares for one euro during a four-year term); on December 4, 2014, the
Company completed the acquisition of PS10/20; and on December 29, 2014, the Company
completed the acquisition of Cadonal. The total aggregate consideration for the First Dropdown
Assets was $312 million. Solacor 1/2 are Solar assets located in Spain with a capacity of 100 MW,
PS 10/20 are Solar assets located in Spain with a capacity of 31 MW and Cadonal is a 50 MW wind
farm located in Uruguay.
Given that Atlantica Yield was a subsidiary controlled by Abengoa when these acquisitions were
closed, the assets acquired constituted an acquisition under common control by Abengoa and
accordingly, were recorded using Abengoa’s historical basis in the assets and liabilities of the
Predecessor. The difference between the cash proceeds and historical value of the net assets was
recorded in equity. Results of operations of the assets acquired have been recorded in Atlantica
Yield’s consolidated income statement since the date of the acquisition.
Impact of changes in the scope in the consolidated financial statements
The amount of assets and liabilities integrated at the effective acquisition date for the aggregated
change in scope is shown in the following table:
Concession assets (Note 13)
Amortization (Note 13)
Deferred tax asset (Note 11)
Other non-current assets
Current assets
Project debt long term (Note 18)
Deferred tax liabilities (Note 11)
Project debt short term (Note 18)
Other current and non-current liabilities
Book value of previously held interest for Mojave (Note 14 )
First asset acquisition under Rofo – purchase price
Non-controlling interests
Net result of the asset acquisition
Total
2,583,946
(108,191 )
20,230
21,837
144,734
(1,401,107 )
(2,526 )
(39,445 )
(468,349 )
(425,368 )
(312,265 )
(33,563 )
(20,067 )
First asset
acquisition under
ROFO Agreement Mojave
1,010,030 1,573,916
—
(108,191 )
—
20,230
20,282
1,555
138,692
6,042
(808,992 )
(592,115 )
—
(2,526 )
(28,284 )
(11,161 )
(354,719 )
(113,630 )
(425,368 )
—
—
(312,265 )
—
(33,563 )
—
(20,067 )
76
Notes to the consolidated financial statements
31 December 2015
Had the first asset acquisition under ROFO Agreement performed during 2014 been consolidated
from January 1, 2014, the consolidated statement of comprehensive income would have included
additional revenue of $97 million and additional profit of $13 million. Mojave Solar LLC impact
would have been nil.
6. Loss for the year
Loss for the year has been arrived at after charging/ (crediting):
Net foreign exchange gains
Depreciation, amortization and impairment charges
Impairment preferred equity investment in ACBH through
finance costs (see Note 23)
Employee benefit expenses
Year
ended
2015
Year
ended
2014
3,852
2,054
(261,301)
(125,480)
(210,435)
-
(5,848)
(1,664)
(473,732) (125,090)
77
Notes to the consolidated financial statements
31 December 2015
7. Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:
Fees payable to the company’s auditor and their associates
for the audit of the company’s annual accounts
791
826
Year
ended
2015
Year
ended
2014
Fees payable to the company’s auditor and their associates
for other services to the group
–The audit of the company’s subsidiaries
Total audit fees
- Audit-related assurance services
- Taxation compliance services
- Other services
Total non-audit fees
488
402
1,279
1,228
619
-
78
697
53
63
176
292
1,976
1,520
Fees payable to Deloitte LLP and their associates for non-audit services to the company are not
required to be disclosed because the consolidated financial statements are required to disclose
such fees on a consolidated basis.
78
Notes to the consolidated financial statements
31 December 2015
8. Staff costs
The average monthly number of employees (including executive directors) was:
Executives
Middle Managers
Engineers and Graduates
Assistants and Profesionals
Interims
Their aggregate remuneration comprised:
Wages and salaries
Social security costs
Other staff costs
9. Other operating income
Other Operating income
2015
2014
Number
Number
9
8
30
10
19
76
7
2
17
3
6
35
Year
ended
2015
Year
ended
2014
(5,251)
(1,576)
(505)
(92)
(72)
(16)
(5,848)
(1,664)
For the twelve-
month period
ended December
31, 2015
For the twelve-
month period
ended December
31, 2014
Grants
Income from various services
Income from subcontracted construction services
for assets and concessions
Total
67,859
998
—
68,857
35,261
6,087
38,565
79,913
As certain assets owned by the Company were under construction and subcontracted to related
parties in 2014, the Company recorded income from construction services as “Other operating
income” in accordance with IFRIC 12. The corresponding costs of construction were recorded
within “Other operating expenses.” These amounts reflect the construction progress of the assets
79
Notes to the consolidated financial statements
31 December 2015
and concessions during this year. There were no plants under construction during 2015.
The increase in grants is related to the ITC cash grant of Mojave, which was received in September
2015 and to the implicit grant recorded for accounting purposes in relation to the FFB Loans in
Solana and Mojave projects with interest rates below market rates (See Note 19).
10. Finance income and expenses
The following table sets forth our financial income and expenses for the years ended December 31, 2015
and 2014:
For the twelve-
month period
ended December
31, 2015
For the twelve-
month period
ended December
31, 2014
Finance income
Interest income from loans and credits
Interest rates benefits derivatives: cash flow hedges
TOTAL
933
2,531
3,464
4,074
836
4,911
Finance expenses
Expenses due to interest:
- Loans from credit entities
- Other debts
Interest rates losses derivatives: cash flow hedges
TOTAL
For the twelve-
month period
ended December
31, 2015
For the twelve-
month period
ended December
31, 2014
(197,929)
(81,853)
(54,139)
(333,921)
(117,743)
(61,814)
(30,695)
(210,252)
Finance expenses increased in 2015 mainly due to the asset acquisitions under the ROFO
Agreement and the interest expense from loans and credits associated with projects that have
entered into operation during 2014. Interest is capitalized for the Company´s intangible
concession assets during the construction period and begins to be expensed upon commercial
operation. Interests from other debts are primarily interest on the notes issued by ATS, ATN,
Abengoa Yield plc and interest related to the investment from Liberty (see Note 19). Losses from
interest rate derivatives designated as cash flow hedges correspond mainly to transfers from
equity to financial expense when the hedged item is impacting the consolidated condensed
income statement.
80
Notes to the consolidated financial statements
31 December 2015
Other finance income / (expenses)
Dividend from ACBH (Brazil)
Other finance income
Impairment preferred equity investment in ACBH (see Note
23)
Other finance losses
TOTAL
For the twelve-
month period
ended
December 31,
2015
For the twelve-
month period
ended December
31, 2014
18,400
1,520
(210,435)
(9,638)
(200,153)
9,200
549
-
(3,888)
5,861
Other finance losses mainly include guarantees and letters of credit, wire transfers and other bank
fees and other minor finance expenses.
11. Tax
All the companies included in the Company file income taxes according to the tax regulations in
force in each country on an individual basis or under consolidation tax regulations.
The consolidated income tax has been calculated as an aggregation of income tax expenses of
each individual company. In order to calculate the taxable income of the consolidated entities
individually, the accounting profit is adjusted for temporary and permanent differences, recording
the corresponding deferred tax assets and liabilities. At each consolidated income statement date,
a current tax asset or liability is recorded, representing income taxes currently refundable or
payable. Deferred income taxes reflect the net tax effects of temporary differences between the
carrying amount of assets and liabilities for financial statement and income tax purposes, as
determined under enacted tax laws and rates.
Income tax payable is the result of applying the applicable tax rate in force to each tax-paying
entity, in accordance with the tax laws in force in the country in which the entity is registered.
Additionally, tax deductions and credits are available to certain entities, primarily relating to inter-
company trades and tax treaties between various countries to prevent double taxation.
81
Notes to the consolidated financial statements
31 December 2015
Corporation tax:
Current year
Deferred tax
Year
ended
2015
Year
ended
2014
(2,182)
(1,075)
(2,182)
(21,608)
(1,075)
(3,338)
(23,790)
(4,413)
Taxation is calculated at the rates prevailing in the respective jurisdictions. The tax charge /
income for the year can be reconciled to the loss in the income statement as follows:
Loss before tax
Tax at the average statutory tax rate of 30% (2014: 30 %)
Tax effect of share of results of associates
Permanent differences
Incentives, deductions, and tax losses carryforwards
Change in Spanish corporate income tax
Effect of different tax rates of subsidiaries operating in other jurisdictions
Other non taxable income/ (expense)
Year
ended
2015
Year
ended
2014
(174,396)
(24,852)
52,319
2,341
7,456
(231)
(19,456)
(4,587)
(58,039)
884
(2,389)
(249)
1,608
(76)
550
(8,334)
Tax charge for the year
(23,790)
(4,413)
Permanent differences are mainly due to inflationary effects in ACT (Mexico). Incentives,
deductions, and tax losses carryforwards include the impact of not recognizing deferred tax
assets on the impairment charge of the preferred equity investment in ACBH ($63.1 million).
On November 28, 2014, certain laws were published in the official state gazette (BOE) to
reform the Spanish tax system which include changing the general tax rate to 28% in 2015
and to 25% in 2016 (from 30% in 2014), among other measures. The impact of the change
in the new income tax rate has resulted in a $0.9 million reduction in the deferred income
tax expense recorded in the profit and loss statement in 2015 ($1.6 million in 2014).
82
Notes to the consolidated financial statements
31 December 2015
In relation to tax loss carryforwards and deductions pending to be used recorded as
deferred tax assets, the entities evaluate its recoverability projecting forecasted taxable
income for the upcoming years and taking into account their tax planning strategy.
Deferred tax liabilities reversals are also considered in these projections, as well as any
limitation established by tax regulations in force in each tax jurisdiction. Most of the tax
credits for net operating loss carryforwards correspond to Solana, Mojave, Peru and solar
plants in Spain.
The movements in deferred tax assets and liabilities during the years ended December 31,
2015 and 2014 were as follows:
At 1 January 2014
Charge to profit or loss
Charge to other comprehensive income
Acquisition of subsidiary
Exchange differences and other
At 1 January 2015
Charge/(credit) to profit or loss
Charge to other comprehensive income
Acquisition of subsidiary
Exchange differences and other
At 31 December 2015
12. Dividends
30,945
(3,338)
16,404
17,704
1,677
63,392
(21,608)
(12,010)
97,638
(15,752)
111,660
Amounts recognised as distributions to equity holders
in the period:
(146,302)
(23,696)
Year
ended
2015
Year
ended
2014
83
Notes to the consolidated financial statements
31 December 2015
The dividends indicated above primarily relate to the dividends declared by Abengoa Yield Plc. to
its shareholders. These have been declared as follows:
February 23, 2015, the Board of Directors of the Company declared a quarterly dividend
corresponding to the fourth quarter of 2014 amounting to $0.2592 per share. The dividend was
paid on March 16, 2015. On May 8, 2015, the Board of Directors of the Company declared a
quarterly dividend corresponding to the first quarter of 2015 amounting to $0.34 per share. The
dividend was paid on June 15, 2015. On July 29, 2015, the Board of Directors of the Company
declared a quarterly dividend corresponding to the second quarter of 2015 amounting to $0.40
per share. The dividend was paid on September 15, 2015. On November 5, 2015, the Board of
Directors of the Company declared a quarterly dividend corresponding to the third quarter of
2015 amounting to $0.43 per share. The dividend was paid on December 16, 2015, except for $9
million corresponding to Abengoa which were retained under the parent support agreement.
13. Contracted concessional assets
a) The following table shows the movements of contracted concessional assets included in
the heading “Contracted Concessional assets” for 2015:
Cost
At 1 January 2015
Additions
Translation differences
Changes in scope of the consolidated financial statements
Reclassification and other movements
At 31 December 2015
Accumulated amortization losses
At 1 January 2015
Charge
Translation differences
Changes in scope of the consolidated financial statements
At 31 December 2015
Carrying amount
At 1 January 2015
At 31 December 2015
84
2015
7,025,576
13,426
(326,557)
3,430,362
(16,784)
10,126,023
(300,398)
(261,301)
26,478
(289,905)
(825,126)
6,725,178
9,300,897
Notes to the consolidated financial statements
31 December 2015
During 2015 contracted concessional assets increased mainly due to the asset acquisition under
Rofo agreement ($3,140 million).
No losses from impairment of ‘Contracted concessional assets’ were recorded during 2015.
The decrease included in “Reclassification and other movements” is mainly due to the
reclassification from the long to the short term, of the current portion of the contracted
concessional financial assets.
Contracted concessional assets include fixed assets financed through project debt, related to
service concession arrangements recorded in accordance with IFRIC 12, except for Palmucho,
which is recorded in accordance with IAS 17, and PS10&20, which are recorded as property plant
and equipment in accordance with IAS 16. As of December 31, 2015, contracted concessional
financial assets amount to $933,949 thousand ($750,546 thousand as of December 31, 2014).
b) The following table shows the movements of contracted concessional assets included in
the heading ‘Contracted Concessional assets for 2014:
Cost
At 1 January 2014
Additions
Translation differences
Changes in scope of the consolidated financial statements
Reclassification and other movements
At 31 December 2014
Accumulated amortization losses
At 1 January 2014
Charge
Translation differences
Changes in scope of the consolidated financial statements
At 31 December 2014
Carrying amount
At 1 January 2014
At 31 December 2014
2014
4,492,286
50,799
(86,095)
2,583,946
(15,360)
7,025,576
(74,166)
(125,480)
7,439
(108,191)
(300,398)
4,418,120
6,725,178
During 2014 contracted concessional assets increased mainly due to the first asset acquisition
under Rofo ($1,010 million) and the full consolidation of Mojave Solar LLC ($1,574 million), once
control over the company was gained with the entry into operation of the plant.
85
Notes to the consolidated financial statements
31 December 2015
In addition, contracted concessional assets increased due to the construction of contracted
concessions which have entered into operation in 2014, mainly electric transmission lines in Peru,
Palmatir and Quadra 2. No losses from impairment of ‘Contracted concessional assets in projects’
were recorded during 2014.
The decrease included in “Reclassification and other movements” is mainly due to the
reclassification from the long to the short term, of the current portion of the contracted
concessional financial assets.
14. Investments carried under the equity method
The table below shows the breakdown and the movement of the investments held in associates
for 2015 and 2014:
Investments in associates
2015
2014
Initial balance
Capital contributions
5,711
387,324
-
44,524
Change in the scope of the consolidated financial statements
51,528
(425,368)
Share of profit/(loss)
Dividend distribution
Currency translation differences
7,844
(4,845)
(4,057)
(769)
-
-
Final balance
56,181
5,711
Details of the Group's associates at the end of the reporting period are as follows:
Name of associate
Principal
activity
Place of incorporation
and principal place of
business
Proportion of ownership interest /
voting rights held by the Group
31/12/2015
31/12/2014
Evacuación
Valdecaballeros,
S.L.
Myah Bahr
Honaine, S.P.A.
Pectonex, R.F.
Proprietary Limited
Connection
Facilities
Connection
Facilities
Connection
Facilities
Caceres (Spain)
57.12%
28.56 %
Madrid (Spain)
25.50%
Pretoria (South Africa)
50.00 %
-
-
86
Notes to the consolidated financial statements
31 December 2015
All of the above associates are accounted for using the equity method in these consolidated
financial statements as set out in the group’s accounting policies in note 3.
The increase in 2015 is mainly due to the entrance of Geida Tlemcem, S.L., which owns 51% of
Honaine desalination plant. Investment carried under the equity method also increased for the
investment held by Kaxu Solar One (Pty) Ltd. in Pectonex, R.F. and the investment held by
Solaben 1&6 in Evacuación Valdecaballeros, S.L.
The decrease in 2014 is due to the entity Mojave Solar, LLC, which was fully consolidated since the
plant entered into operation in December 2014.
The tables below show a breakdown of assets, revenues and profit and loss as well as other
information of interest for the years 2015 and 2014 for the associated companies:
Non-
Current
Non-
Current
Operating
Net
Investment
current
assets
current
liabilities
profit/
profit/
under the
Company
% Shares
assets
liabilities
Revenue
(loss)
(loss)
equity
method
Evacuación Valdecaballeros, S.L.
57.12
20,765
2,102
295
322
604
(689)
(534)
10,475
Myah Bahr Honaine, S.P.A. (*)
25.50
201,997
73,965
116,610
11,945
52,767
39,336
15,607
42,117
Pectonex, R.F. Proprietary Limited
50.00
3,776
-
- - -
(189)
(189)
3,589
As of December 31, 2015
226,538
76,067
116,905
12,267
53,371
38,458
14,884
56,181
Non-
Current
Non-
Current
Operating
Net
Investment
current
assets
current
liabilities
profit/
profit/
under the
% Shares
assets
liabilities
Revenue
(loss)
(loss)
equity
method
Evacuacion Valdecaballeros, S.L.
28.56
24,513
2,137
310
1,108
536
(868 )
(651 )
5,711
As of December 31, 2014
24,513
2,137
310
1,108
536
(868 )
(651 )
5,711
None of the associated companies referred to above is a listed company.
(*) Myah Bahr Honaine, S.P.A., the project entity, is 51% owned by Geida Tlemcen, S.L. which is accounted for
using the equity method in these consolidated statements.
87
Notes to the consolidated financial statements
31 December 2015
15. Trade and other receivables
Trade and other receivable as of December 31, 2015 and 2014, consist of the following:
Trade receivables
Tax receivables
Other accounts receivable
Total
Balance as
of December
31, 2015
Balance as
of December
31, 2014
126,844
42,322
28,142
197,308
78,521
36,080
15,095
129,696
As of December 31, 2015 and 2014, the fair value of trade and other receivable accounts does not
differ significantly from its carrying value. The increase in trade and other receivables is primarily
due to the asset acquisition under Rofo Agreement.
The Group has not provided for these debtors as there are all considered to be fully recoverable.
Trade receivables according to foreign currency as of December 31, 2015 and 2014, are as follows:
Euro
Rand
Other
Total
Balance as
of December
31, 2015
74,535
6,208
6,646
87,389
Balance as
of December
31, 2014
45,435
-
7,714
53,149
The following table shows the maturity of Trade receivables as of December 31, 2015 and 2014:
Up to 3 months
Total
Balance as of
December
31, 2015
Balance as of
December
31, 2014
126,844
126,845
78,521
78,521
88
Notes to the consolidated financial statements
31 December 2015
16. Cash and cash equivalents
Cash and cash equivalents
Bank deposits
2015
2014
514,712
350,854
-
3,300
514,712
354,154
The following breakdown shows the main currencies in which cash and cash equivalent
balances are denominated:
US Dollar
Euro
Peruvian Sol
Chilean Peso
South African Rand
Others
2015
2014
219,172
226,225
251,778
113,948
1,553
3,057
25,962
13,190
7,840
6,099
-
41
514,712
354,154
17. Corporate debt
The breakdown of the corporate debt as of December 31, 2015 and 2014 is as follows:
Non-current
Balance as
of
December
31, 2015
Balance as
of
December
31, 2014
Credit Facilities with financial entities
Notes and Bonds
409,665
251,676
123,400
252,760
Total Non-current
661,341
376,160
89
Notes to the consolidated financial statements
31 December 2015
Current
Balance as
of
December
31, 2015
Balance as
of
December
31, 2014
Credit Facilities with financial entities
Notes and Bonds
624
2,529
103
2,152
Total Current
3,153
2,255
Current corporate debt fully relates to the accrued interest of the Notes and Credit Facility as of
December 31, 2015 and 2014.
The repayment schedule for the Corporate debt at the end of 2015 is as follows:
2016
2017
2018
2019
Total
Credit Facilities with financial entities
624
286,484
123,181
—
Notes and Bonds
2,529
—
—
251,676
410,289
254,205
3,153
286,484
123,181
251,676
664,494
On November 17, 2014, the Company issued the Senior Notes due 2019 in an aggregate
principal amount of $255,000 thousand (the “2019 Notes”). The 2019 Notes accrue annual
interest of 7.00% payable semi-annually beginning on May 15, 2015 until their maturity date of
November 15, 2019.
On December 3, 2014, the Company entered into a credit facility of up to $125,000 thousand
with Banco Santander, S.A., Bank of America, N.A., Citigroup Global Markets Limited, HSBC
Bank plc and RBC Capital Markets, as joint lead arrangers and joint bookrunners (the “Credit
Facility”). On December 22, 2014, the Company drew down $125,000 thousand under the
Credit Facility. Loans under the Credit Facility accrue interest at a rate per annum equal to: (A)
for Eurodollar rate loans, LIBOR plus 2.75% and (B) for base rate loans, the highest of (i) the
rate per annum equal to the weighted average of the rates on overnight U.S. Federal funds
transactions with members of the U.S. Federal Reserve System arranged by U.S. Federal funds
brokers on such day plus 1/2 of 1.00%, (ii) the U.S. prime rate and (iii) LIBOR plus 1.00%, in any
case, plus 1.75%. Loans under the Credit Facility will mature on the fourth anniversary of the
closing date of the Credit Facility. Loans prepaid by the Company under the Credit Facility may
be reborrowed. The Credit Facility is secured by pledges of the shares of the guarantors which
the Company owns.
90
Notes to the consolidated financial statements
31 December 2015
On June 26, 2015, the Company increased its existing $125 million Credit Facility with a
revolver tranche B for an amount of $290,000 thousand (the “Credit Facility Tranche B). On
September 9, 2015, Credit Facility Tranche B was fully drawn down and the proceeds were used
for the acquisition of Solaben 1/6. Loans under the Tranche B Facility accrue interest at a rate
per annum equal to: (A) for Eurodollar rate loans, LIBOR plus 2.50% and (B) for base rate loans,
1.50%. Loans under the Credit Facility Tranche B will mature in December 2017. Tranche B of
the Credit Facility was signed for a total amount of $290 million with Bank of America, N.A., as
global coordinator and documentation agent and Barclays Bank plc and UBS AG, London
Branch as joint lead arrangers and joint bookrunners.
18. Project debt
The main purpose of the Company is the long-term ownership and management of contracted
concessional assets, such as renewable energy, conventional power and electric transmission
line assets, which are financed through project debt. This note shows the project debt linked to
the contracted concessional assets included in note 13 of these consolidated financial
statements.
Project debt is generally used to finance contracted assets, exclusively using as guarantee the
assets and cash flows of the company or group of companies carrying out the activities
financed. In most of the cases, the assets and/or contracts are set up as guarantee to ensure
the repayment of the related financing.
Compared with corporate debt, project debt has certain key advantages, including a greater
leverage period permitted and a clearly defined risk profile.
The movements for 2015 and 2014 of project debt have been as follows:
Project debt -
long term
Project debt -
short term
Total
Balance as of December 31, 2014
3,491,877
331,189
3,823,066
Increases
Repayments
72,406
-
370,720
443,126
(772,886)
(772,886)
Currency translation differences
(201,958)
(10,052)
(212,010)
Reclassifications
(1,875,223)
1,875,223
-
Changes in the scope of the consolidated financial statements
2,087,362
102,012
2,189,374
Balance as of December 31, 2015
3,574,464
1,896,206
5,470,670
91
Notes to the consolidated financial statements
31 December 2015
The increase in Project debt – short term is the result of:
- A decrease for the repayment of the short term tranche of the loan with the federal
financing Bank by Mojave Solar LLC debt amounting to $334 million on October 2015;
- A reclassification of the entire debt of Solana, Mojave, Kaxu and Cadonal projects from long
term to short term as of December 31, 2015 as a result of the cross-default provisions
related to Abengoa further to the Insolvency Proceeding filed by Abengoa on November
25, 2015. Although the Company does not expect the acceleration of debt to be declared by
the credit entities, the project entities did not have contractually as of December 31, 2015
an unconditional right to defer the settlement of the debt for at least twelve months after
that date, and therefore the debt has been presented as current in these consolidated
financial statements in accordance with International Accounting Standards 1 (“IAS 1”),
“Presentation of Financial Statements”.
Balance as of December 31, 2013
Increases
Repayments
Currency translation differences
Reclassifications
Changes in the scope of the consolidated financial
statements
2,842,338
501,335
(896,848)
(65,036)
(291,019)
1,401,107
Project debt -
long term
Project debt -
short term
Total
2,894,650
590,725
52,312
89,390
(139,086)
(1,035,934)
(1,891)
291,019
(66,927)
-
39,445
1,440,552
Balance as of December 31, 2014
3,491,877
331,189
3,823,066
During 2014, the increase in Project debt was mainly due to the ATS bond issuance of $ 432
million on April 8, 2014, at a fixed coupon and with semi-annual amortization until April
2043, to refinance its then existing project finance debt. In addition, Project debt increased
due to the full consolidation of Mojave Solar, LLC, and increase of $820 million resulting
from the business combination of the plant in December 2014 and to the First asset
acquisition under the Rofo agreement which represented an increase of $620 million.
The decrease was mainly due to the repayment of the short term tranche of the loan with
the Federal Financing Bank by Arizona Solar One debt amounting to $451.3 million and to
the repayment of the former project finance debt of ATS $333 million, both in April 2014.
Reclassifications from long term to short term primarily relates to the Short term tranche of
the loan with the Federal Financing Bank due by Mojave in December 2014.
The repayment schedule for Project debt in accordance with the financing arrangements, at
the end of 2015 is as follows and is consistent with the projected cash flows of the related
projects.
92
Notes to the consolidated financial statements
31 December 2015
2016
Interest
Repayment
Nominal
repayment
2017
2018
2019
2020
Subsequent
years
Total
20,716
175,011
191,030
209,612
229,949
247,902
4,396,449
5,470,670
The company did not enter into any new project debt in 2015. In 2014 the only new project
debt was ATS for $432 million.
Current and non-current loans with credit entities include amounts in foreign currencies for
a total of $2,960,769 thousand as of December 31.2015 ($896,690 thousand as of December
31, 2014).
All of the Company’s financing agreements have a carrying amount close to its fair value.
19.
Grants and other long term payables
Balances as of
December 31,
2015
Balances as of
December 31,
2014
Grants ................................................................................................
Other liabilities ...............................................................................
Deferred Income ...........................................................................
1,354,967
291,781
—
1,043,837
259,364
64,400
Grant and other non-current liabilities ..........................................................................................
1,646,748
1,367,601
As of December 31, 2015, the amount recorded in Grants corresponds mainly to the ITC Grant
awarded by the U.S. Department of the Treasury for Solana and Mojave for a total amount of
$834 million, which was mainly used to fully repay the Solana and Mojave short-term tranche of
the loan with the Federal Financing Bank. The amount recorded in Grants as a liability is
progressively recorded as other income over the useful life of the asset.
The remaining balance of the “Grants” account corresponds to loans with interest rates below
market rates for Solana and Mojave for a total amount of $517 million ($549 million as of
December 31, 2014). Loans with the Federal Financing Bank guaranteed by the Department of
Energy for these projects bear interest at a rate below market rates for these types of projects and
terms. The difference between proceeds received from these loans and its fair value, is initially
recorded as “Grants” in the consolidated statement of financial position, and subsequently
recorded in “Other operating income” starting at the entry into operation of the plants. The
increase in Grants was primarily due to the ITC Grant receivable recognized for the Mojave project
for $360 million.
Other liabilities mainly relates to the investment from Liberty Interactive Corporation (‘Liberty’)
made on October 2, 2013 for an amount of $300 million. The investment was made in class A
93
Notes to the consolidated financial statements
31 December 2015
shares of Arizona Solar Holding, the holding of Solana Solar plant in the United States. Such
investment was made in a tax equity partnership which permits the partners to have certain tax
benefits such as accelerated depreciation and ITC.
According to the stipulations of IAS 32 and in spite of the fact that the investment of Liberty
Interactive Corporation (‘Liberty’) is in shares, it does not qualify as equity and has been classified
as a liability as of December 31, 2015 and 2014, the non-current portion of the liability is recorded
in Grants and other liabilities for an amount of $247 million and its current portion is recorded in
other current liabilities for the remaining amount (see Note 20). This liability has been initially
valued at fair value, calculated as the present value of expected cash-flows during the useful life
of the concession, and will be measured at amortized cost in accordance with the effective
interest method.
Deferred income as of December 31, 2014 corresponded to the long-term portion of the deferred
income from the dividend receivable from the preferred equity investment in ACBH (See Note 23).
20. Trade and other payables
Item
Trade accounts payable.......................................
Down payments from clients ............................
Deferred Income ....................................................
Suppliers of concessional assets current ......
Liberty (see Note 19) ............................................
Other accounts payable ......................................
Total
Balance as of December 31,
2015
Balance as of December 31,
2014
110,495
6,398
—
17,582
21,515
22,227
178,217
54,074
5,274
18,400
81,052
63,652
8,680
231,132
Decrease in Suppliers of concessional assets primarily relates to Mojave, which COD took place on
December 1, 2014. Trade accounts payables mainly relate to the operating and maintenance of
the plants and its increase is primarily due to asset acquisitions under the ROFO Agreement.
Deferred income as of December 31, 2014 corresponded to the short-term portion of the
deferred income related to the dividend receivable from the preferred equity investment in ACBH
(see Note 23).
Nominal values of Trade payable and other current liabilities are considered to approximately
equal to fair values and the effect of discounting them is not significant.
94
Notes to the consolidated financial statements
31 December 2015
21. Equity
As of December 31, 2015, the share capital of the Company amounts to $10,021,726 represented
by 100,217,260 ordinary shares completely subscribed and disbursed with a nominal value of
$0.10 each, all in the same class and series. Each share grants one voting right.
On June 18, 2014 Atlantica Yield closed its initial public offering issuing 24,850,000 ordinary
shares. The shares were offered at a price of $29 per share and as a result the Company raised
$720,650 thousand of gross proceeds. The Company recorded $2,485 thousand as Share Capital
and $682,810 thousand as Additional Paid in Capital, included in the Parent company reserves of
the consolidated statement of financial position as of December 31, 2015, corresponding to the
total net proceeds of the offering. The underwriters further purchased 3,727,500 additional shares
from the selling shareholder, a subsidiary wholly owned by Abengoa, at the public offering price
less fees and commissions to cover over-allotments (“greenshoe”) driving the total proceeds of
the offering to $828,748 thousand.
Atlantica Yield’s shares began trading on the NASDAQ Global Select Market under the symbol
“ABY” on June 13, 2014.
On January 22, 2015, Abengoa closed an underwritten public offering and sale in the United
States of 10,580,000 of ordinary shares of the Company for total proceeds of $327,980,000 (or
$31 per share). As a result of such offering, Abengoa reduced its stake in the Company from
64.3% to 51.1% of its shares.
On May 14, 2015 Atlantica Yield issued 20,217,260 new shares at $33.14 per share, which was
based on a 3% discount versus the May 7, 2015 closing price. Abengoa subscribed for 51% of the
newly-issued shares and maintained its previous stake in Atlantica Yield. The proceeds were
primarily used to finance asset acquisitions in May and June 2015.
On July 14, 2015, Abengoa sold 2,000,000 shares of Atlantica Yield under Rule 144, reducing its
stake to 49.1%.
As of the date hereof, Abengoa has delivered an aggregate of 7,197,362 Ordinary Shares to
holders that exercised their option to exchange Exchangeable Notes and Abengoa expects to
deliver an additional 359,836 Ordinary Shares on the applicable settlement dates to certain
holders of the Exchangeable Notes that have delivered a notice to exchange. As of December 31,
2015, there were 54,918.73 Ordinary Shares subject to delivery to holders of the Exchangeable
Notes upon exchange of the outstanding Exchangeable Notes. These operations reduced
Abengoa´s Stake to 41.86%.
On February 23, 2015, the Board of Directors of the Company declared a quarterly dividend
corresponding to the fourth quarter of 2014 amounting to $0.2592 per share. The dividend was
paid on March 16, 2015. On May 8, 2015, the Board of Directors of the Company declared a
quarterly dividend corresponding to the first quarter of 2015 amounting to $0.34 per share. The
dividend was paid on June 15, 2015. On July 29, 2015, the Board of Directors of the Company
declared a quarterly dividend corresponding to the second quarter of 2015 amounting to $0.40
95
Notes to the consolidated financial statements
31 December 2015
per share. The dividend was paid on September 15, 2015. On November 5, 2015, the Board of
Directors of the Company declared a quarterly dividend corresponding to the third quarter of
2015 amounting to $0.43 per share. The dividend was paid on December 16, 2015 except for $9
million corresponding to Abengoa which were retained under the parent support agreement.
Parent company reserves as of December 31, 2015 are made up of share premium account and
distributable reserves.
Other reserves primarily represent the cumulative amount of gains and losses on hedging
instruments deemed effective in cash flow hedges. The cumulative deferred gain or loss on the
hedging instrument is recognised in profit or loss only when the hedged transaction impacts the
profit or loss, or is included as a basis adjustment to the non-financial hedged item, consistent
with the applicable accounting policy.
Accumulated Currency translation differences primarily relate to the translation of the net assets
of the Group’s foreign operations, which relate to subsidiaries only, from their functional currency
into the parent’s functional currency, being Usd, which are recognised directly in the translation
reserve.
Retained earnings include results attributable to the Parent company and impact of the Asset
Transfer of the assets acquisition under the ROFO agreement in equity recorded in accordance
with the Predecessor accounting principle.
Non-controlling interests fully relate to interests held by JGC Corporation in Solacor 1 and Solacor
2, by Itochu Corporation in Solaben 2 and Solaben 3, Algerian Energy Company, SPA and Sadyt
for Skikdad and Honaine and Industrial Development Corporation of South Africa (IDC) and Kaxu
Community Trust in Kaxu Solar One (Pty) Ltd.
In addition, as of December 31, 2015, there was no treasury stock and there have been no
transactions with treasury stock during the period then ended.
96
Notes to the consolidated financial statements
31 December 2015
22. Notes to the cash flow statement
Analysis of changes in net debt
January 1, 2015
Cash Flow
Acquisitions
December 31, 2015
Cash and bank
balances
354,154
(85,011)
245,569
514,712
Borrowings
4,201,481
(255,691)
2,189,374
6,135,164
Net debt
3,847,327
(170,680)
1,943,805
5,620,452
23. Financial instruments by category
Financial instruments are primarily deposits, derivatives, trade and other receivables and loans.
Financial instruments by category (current and non-current), reconciled with the statement of
financial position as of December 31, 2015 and 2014 are as follows:
Category
Notes
Loans and
receivables /
payables
Available for
sale financial
assets
Hedging
derivatives
Balance as of
12.31.15
Derivative assets
Preferred equity in ACBH
Other financial accounts
receivables
Trade and other receivables
Cash and cash equivalents
Total financial assets
Corporate debt
Project debt
Related parties
Trade and other current liabilities
Derivative liabilities
Total financial liabilities
24
16
17
18
27
20
24
-
-
257,844
197,308
514,712
-
52,564
4,741
-
-
-
-
-
-
-
4,741
52,564
257,844
197,308
514,712
969,864
52,564
4,741
1,027,169
-
-
-
-
-
-
-
-
-
-
385,095
664,494
5,470,670
126,860
178,217
385,095
385,094
6,825,335
664,494
5,470,670
126,860
178,217
-
6,440,240
97
Notes to the consolidated financial statements
31 December 2015
Notes
Loans and
receivables /
payables
Available for
sale financial
assets
Hedging
derivatives
Balance as
of 12.31.14
Derivative assets
Preferred equity in ACBH
Financial accounts receivables
Trade and other receivables
Cash and cash equivalents
Total financial assets
Corporate debt
Project debt
Related parties
Trade and other current liabilities
Derivative liabilities
Total financial liabilities
24
16
17
18
27
20
24
-
-
335,381
129,696
354,154
819,231
378,415
3,823,066
77,961
231,132
-
4,510,575
-
263,000
-
-
-
263,000
-
-
-
-
-
-
4,597
-
-
-
-
4,597
-
-
-
-
168,931
168,931
4,597
263,000
335,381
129,696
354,154
1,086,828
378,415
3,823,066
77,961
231,132
168,931
4,679,505
As of December 31, 2015 and 2014, all the financial instruments measured at fair value have been
classified as Level 2, except for the preferred equity investment in ACBH, classified as Level 3. The
movement in the period relates to the impairment described in the below.
The preferred equity investment in ACBH is an available for sale financial asset that gives the
following rights:
•
•
During the five-year period commencing on July 1, 2014, Atlantica Yield has the right to
receive, in four quarterly installments, a preferred dividend of $18,400 thousand per year.
Until December 31, 2015, the Company received the dividend corresponding to 1.5 years
and the portion corresponding to 3.5 years is pending to be received;
Following the initial five-year period, Atlantica Yield has the option to (i) remain as preferred
equity holder receiving the first $18,400 thousand in dividends per year that ACBH is able to
distribute or (ii) exchange the preferred equity for ordinary shares of specific project
companies owned by ACBH.
Given that Atlantica Yield has a right to receive a quarterly dividend from July 2014 and for the
following five years; the Company initially recorded an account receivable corresponding to the
present value of the dividend receivable in the first five years, with a credit to deferred income, in
“Grants and other liabilities”. Income was recorded progressively from July 2014, as dividend was
collected.
The valuation method used to calculate the initial fair value of the preferred equity investment in
ACBH was discounting the $18.4 million annual dividend, using a discount rate of 7%.
On January 29, 2016, Abengoa informed the Company that several indirect subsidiaries of
Abengoa in Brazil, including ACBH, have initiated an insolvency procedure under Brazilian law
(“recuperaçao judiciaria”). The Company is currently assessing the potential impact of this event
98
Notes to the consolidated financial statements
31 December 2015
together with external advisors. Given that this process will likely negatively affect the value of the
preferred equity investment and considering the high degree of uncertainty on its final outcome,
the Company has recorded an impairment of this preferred equity investment for a total amount
of $210 million. This amount has been recorded in “Other financial income/(expense), net” in the
consolidated income statement for the year ended December 31, 2015. The valuation method
used to calculate the value on the preferred equity investment in ACBH has been discounting the
originally expected cash-flows from the instrument using a discount rate of 35%, based on the
yields of bonds issued in Brazil by comparable companies with a rating indicating distress. The
residual value of the instrument reflects its value in use.
In addition, the Company de-recognised the account receivable corresponding to the dividend
receivable in the remaining 3.5 years, amounting to $64.4 million, with a corresponding debit to
the deferred income recorded in “Grants and other liabilities”.
Other financial accounts receivables include the short-term portion of contracted concessional
assets (see Note 13).
24. Derivative financial instruments
The breakdowns of the fair value amount of the derivative financial instruments as of
December 31, 2015 and 2014 are as follows:
Balance as of 12.31.15
Balance as of 12.31.14
Assets
Liabilities
Assets
Liabilities
Derivatives - cash flow hedge
4,741
385,095
4,597
168,931
The derivatives are primarily interest rate cash-flow hedges. All are classified as non-current assets
or non-current liabilities, as they hedge long-term financing agreements. All derivatives are
classified as Level 2 (see Note 3).
On May 12, 2015, the Company entered into a currency swap agreement with Abengoa which
provides for a fixed exchange rate for the cash available for distribution from the Company’s
Spanish assets. The distributions from the Spanish assets are paid in euros and the currency swap
agreement provides for a fixed exchange rate at which euros will be converted into U.S. dollars.
The currency swap agreement has a five-year term, and is valued by comparing the contracted
exchange rate and the future exchange rate in the valuation scenario at the maturities dates. The
instrument is valued by calculating the cash flow that would be obtained or paid by theoretically
closing out the position and then discounting that amount.
As stated in Note 25 to these consolidated financial statements, the general policy is to hedge
variable interest rates of financing agreements purchasing call options (caps) in exchange of a
premium to fix the maximum interest rate cost and contracting floating to fixed interest rate
swaps.
99
Notes to the consolidated financial statements
31 December 2015
As a result, the notional amounts hedged, strikes contracted and maturities, depending on the
characteristics of the debt on which the interest rate risk is being hedged, can be diverse:
•
•
Project debt in Euros: the Company hedge between 75% and 100% of the notional amount,
maturities until 2030 and average guaranteed interest rates of between 3.20 % and 4.87%.
Project debt in U.S. dollars: the Company hedge between 75% and 100% of the notional
amount, including maturities until 2043 and average guaranteed interest rates of between
2.52% and 6.88%.
The table below shows a breakdown of the maturities of notional amounts of interest rate
derivatives designated as cash flow hedges as of December 31, 2015 and 2014.
Notionals
Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
Subsequent years
Total
Balance as of 12.31.15
Balance as of 12.31.14
Cap
Swap
Cap
Swap
22,320
25,018
26,741
441,766
72,184
77,193
201,186
1,611,035
18,505
19,833
21,333
245,797
28,122
39,923
41,135
751,350
$ 515,845 $ 1,961,598 $ 305,468 $ 860,530
The table below shows a breakdown of the maturity of the fair values of interest rate derivatives
designated as cash flow hedges as of December 31, 2015 and 2014. The net position of the fair
value of caps and swaps for each year end reconciles with the net position of derivative assets
and derivative liabilities in the consolidated statement of financial position:
Fair value
Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
Subsequent years
Total
Balance as of 12.31.15
Balance as of 12.31.14
Cap
Swap
Cap
Swap
185
201
218
4,137
(15,741)
(16,508)
(16,580)
(336,266)
170
185
202
4,040
(5,388)
(7,110)
(7,320)
(149,113)
$ 4,741
(385,095) $ 4,597
(168,931)
Derivative liabilities included in these consolidated financial statements increase is primarily due
to the asset acquisition under the ROFO Agreement.
The net amount of the fair value of interest rate derivatives designated as cash flow hedges
transferred to the consolidated income statement is a loss of $55,841 thousand (loss of $27,473
100
Notes to the consolidated financial statements
31 December 2015
thousand in 2014). Additionally, the net amount of the time value component of the cash flow
derivatives fair value recognized in the consolidated income statement for the year 2015 and the
consolidated income statement for the year 2014 has been a gain of $4,234 thousand and a loss
of $2,386 thousand respectively.
The after-tax result accumulated in equity in connection with derivatives designated as cash flow
hedges at the years ended December 31, 2015 and 2014, amounts to a $24,831 thousand
gain and a $15,539 thousand loss respectively.
25. Financial risk management
Atlantica Yield’s activities are exposed to various financial risks: market risk (including currency
risk and interest rate risk), credit risk and liquidity risk. Risk is managed by the Company’s Risk
Management and Finance Department, which are responsible for identifying and evaluating
financial risks quantifying them by project, region and company, in accordance with mandatory
internal management rules. Written internal policies exist for global risk management, as well as
for specific areas of risk. In addition, there are official written management regulations regarding
key controls and control procedures for each company and the implementation of these controls
is monitored through internal audit procedures.
a) Market risk
The Company is exposed to market risk, such as movement in foreign exchange rates and
interest rates. All of these market risks arise in the normal course of business and we do not
carry out speculative operations. For the purpose of managing these risks, we use a series of
swaps and options on interest rates. None of the derivative contracts signed has an
unlimited loss exposure.
b)
Interest rate risk
Interest rate risk arises when the Company’s activities are exposed to changes in interest
rates, which arises from financial liabilities at variable interest rates. The main interest rate
exposure for the Company relates to the variable interest rate with reference to the Libor
and Euribor. To minimize the interest rate risk, the Company primarily uses interest rate
swaps and interest rate options (caps), which, in exchange for a fee, offer protection against
an increase in interest rates. The Company does not use derivatives for speculative
purposes.
As a result, the notional amounts hedged, strikes contracted and maturities, depending on
the characteristics of the debt on which the interest rate risk is being hedged, are very
diverse, including the following:
1. Project debt in U.S. dollars: between 75% and 100% of the notional amount, maturities
until 2043 average guaranteed interest rates of between 2.52% and 6.88%.
101
Notes to the consolidated financial statements
31 December 2015
2. Project debt in euro: between 75% and 100% of the notional amount, maturities until
2030 and average guaranteed interest rates of between 3.20% and 4.87%.
In connection with our interest rate derivative positions, the most significant impacts on our
consolidated financial statements are derived from the changes in EURIBOR or LIBOR, which
represent the reference interest rate for the majority of our debt. In the event that Euribor
and Libor had risen by 25 basis points as of December 31, 2014, with the rest of the
variables remaining constant, the effect in the consolidated income statement would have
been a loss of $ 1,795 thousand (a loss of $ 271 thousand in 2014) and an increase in
hedging reserves of $41,702 thousand ($24,177 thousand in 2014).. The increase in hedging
reserves would be mainly due to an increase in the fair value of interest rate swaps
designated as hedges.
A breakdown of the interest rates derivatives as of December 31, 2015 and 2014 is provided
in Note 23.
c) Currency risk
The main cash flows in the entities included in these consolidated financial statements are
cash collections arising from long-term contracts with clients and debt payments arising
from project finance repayment. Given that financing of the projects is always closed in the
same currency in which the contract with client is signed, a natural hedge exists for the main
operations of the Company.
In relation to the Spanish solar plants, on May 12, 2015, the Company entered into a
currency swap agreement with Abengoa which provides for a fixed exchange rate for the
cash available for distribution from the Company’s Spanish assets. The distributions from
the Spanish assets are paid in euros and the currency swap agreement provides for a fixed
exchange rate at which euros will be converted into U.S. dollars. Therefore, in the event that
the exchange rate of the Euro had risen by 10% against the US Dollar as of December 31,
2015, with the rest of the variables remaining constant, there would not be any effect in the
cash received from these assets.
d) Credit risk
The company considers that it has a limited credit risk with clients as revenues derive from
power purchase agreements with electric utilities and state-owned entities. The Company
has investment grade offtakers in all the assets except for Quadra 1&2, ATN2, Skikda and
Honaine, which represent a very low percentage of the cash available for distribution on a
run-rate basis.
e) Liquidity risk
Atlantica Yield’s liquidity and financing policy is intended to ensure that the Company
maintains sufficient funds to meet our financial obligations as they fall due. Project finance
borrowing permits the Company to finance the project through project debt and thereby
insulate the rest of its assets from such credit exposure. The Company incurs in project-
finance debt on a project-by-project basis. The repayment profile of each project is
established on the basis of the projected cash flow generation of the business. This ensures
102
Notes to the consolidated financial statements
31 December 2015
that sufficient financing is available to meet deadlines and maturities, which mitigates the
liquidity risk significantly.
f) Capital risk management
The group manages its capital to ensure that entities in the group will be able to continue
as a going concern while maximising the return to shareholders through the optimisation of
the debt and equity balance. The capital structure of the Company consists of net debt
(borrowings disclosed in note 16 and 17 after deducting cash and bank balances) and
equity of the group (comprising issued capital, reserves and retained earnings). The board
of directors review the capital structure on a regular basis. As part of this review, the
committee considers the cost of capital and the risks associated with each class of capital.
Gearing ratio
The gearing ratio at the year end is as follows:
Debt
Cash and cash equivalents
Net Debt
Equity
Balance as of
December 31,
2015
Balance as of
December 31,
2014
6,135,163
4,201,481
514,712
354,154
5,620,451
3,847,327
2,023,501
1,839,631
Net debt to equity ratio
278%
209%
26.
Events after the balance sheet date
On January 7, 2016, the Company closed the acquisition of 13% of the shares of Solacor 1/2
from JGC Corporation, who reduced their ownership in Solacor 1/2 to 13%.
On January 29, 2016, Abengoa informed the Company that several indirect subsidiaries of
Abengoa in Brazil, including ACBH, have initiated an insolvency procedure under Brazilian law
(“recuperaçao judiciaria”). The Company is currently assessing the potential impact of this event
together with external advisors (See Note 1).
103
Notes to the consolidated financial statements
31 December 2015
27.
Related party transactions
During the normal course of business, the Company has historically conducted operations with
related parties consisting mainly of Abengoa´s subsidiaries, mainly through loan contracts and
advisory services. The transactions were completed at market rates.
During the period prior to the initial public offering, certain consolidated entities entered into
one-year contractual arrangements with Abengoa from which the Company received certain
administrative services. Such services included general services related to supporting functions
such as financing, human resources management, and administration. The fee incurred by the
operating companies was based on anticipated annual sales.
In addition, other operating expenses included in 2014 an allocation of certain general and
administrative services provided by Abengoa. Allocated costs included general and administrative
costs deemed allocable to the Company. Measurement of allocated costs was based principally
on time devoted to the Company by employees of Abengoa. The Company believed that
including the allocated costs, the combined statements of operations included a reasonable
estimate of actual costs incurred to operate the business.
At the date of the initial offering, the Company entered into a series of agreements to receive
management, general and administrative services from Abengoa (the Support Services
Agreement and Executive Service Agreement), and corresponding fees have been properly
accounted for as other operating expenses from this date onwards. The Executive Service
Agreement was canceled in February 2015. During the year 2015 some employees of Abengoa
delivering services under the Support Services Agreement have been transferred to entities within
the consolidation perimeter of Atlantica Yield.
Main part of the project entities included in these consolidated financial statements receives
operation and maintenance services from related parties. Furthermore, some of these entities
received engineering, procurement, construction services from related parties for those
concessions which were still under construction during the year 2014.
Details of balances with related parties as of December 31, 2015 and 2014 are as follows:
Balance as of
December 31,
2015
Balance as of
December 31,
2014
12,653
12,653
52,774
52,774
29,876
29,876
327,400
327,400
Credit receivables (current)
Total current receivables with related parties
Credit receivables (non-current)
Total non-current receivables with related parties
104
Notes to the consolidated financial statements
31 December 2015
Trade payables (current)
Total current payables with related parties
Trade payables (non- current)
Credit payables (non-current)
Total non-current payables with related parties
73,813
73,813
-
126,860
126,860
104,556
104,556
21,685
56,276
77,961
Receivables with related parties primarily corresponded to the preferred equity investment in
ACBH and its corresponding dividend as of December 31, 2014, for $327, 400 thousand as non-
current and $18,400 thousand as current. The instrument was impaired and its fair value amounts
to $52,565 thousand as of December 31, 2015, classified as non-current.
Credit payables (non-current) primarily relate to payables of projects companies with partners
accounted for as non-controlling interests in these consolidated financial statements.
The transactions carried out by entities included in these consolidated financial statements with
Abengoa and with subsidiaries of Abengoa not included in the consolidated group during the
twelve-month periods ended December 31, 2015 and 2014 have been as follows:
Sales
Construction costs
Services rendered
Services received
Financial income
Financial expenses
For the twelve-month
period ended December 31,
2015
2014
44,260
25,673
-
(38,565)
523
2,343
(106,737)
(41,961)
1,466
(1,968)
4,415
(9,544)
Services received include operation and maintenance services received by some plants, the fee
incurred by some plants under the services agreement with Abengoa, and general and
administrative services as explained above. Sales relate to sale of energy by Spanish Solar plants,
which were sometimes made through an Abengoa´s company acting as an agent for the plant.
This service provided by Abengoa was canceled in December 2015. Financial expenses during the
twelve-month periods ended December 2014 primarily relate to interest expenses on debt with
related parties that were capitalized prior to the IPO.
105
Notes to the consolidated financial statements
31 December 2015
Construction costs include construction work subcontracted to Abengoa for the construction of
the assets, which is recorded in these consolidated financial statements due to the fact that
contracted concessional assets are included in the consolidated financial statements during the
construction phase, according to IFRIC 12.
In addition, the Company entered into a Financial Support Agreement under which Abengoa
agreed to facilitate a new $50,000 thousand revolving credit line and maintain any guarantees
and letters of credit that have been provided by it on behalf of or for the benefit of Atlantica Yield
and its affiliates for a period of five years. As of December 31, 2015, the total amount of the credit
line has remained undrawn since the IPO.
Aggregate directors’ remuneration
The total amounts for directors’ remuneration in accordance with Schedule 5 of the
Accounting Regulations were as follows:
2015
2014
Salaries, fees, bonuses and benefits in kind
2,133
442
2,133
442
The directors received no other benefits in respect of their services to the company,
including any share option or pension schemes. Further
information about the
remuneration of individual directors is provided in the audited part of the Directors’
Remuneration Report on pages 28 to 38.
28.
Contingent liabilities
Contingent liabilities are possible obligations, existing obligations with low probability of a
future outflow of economic resources and existing obligations where the future outflow
cannot be reliably estimated. The Company had no contingent liabilities as of 31 December
2015.
29.
Guarantees and commitments
Third-party guarantees
At the close of 2014 the overall sum of Bank Bond and Surety Insurance directly deposited
by the Company as a guarantee to third parties (clients, financial entities and other third
parties) amounted to $27,638 thousand attributed to operations of technical nature
($17,573 thousand as of December 31, 2014).
Contractual obligations
106
Notes to the consolidated financial statements
31 December 2015
The following table shows the breakdown of the third-party commitments and contractual
obligations as of December 31, 2015 and 2014:
2015
Total
2016
2017 and
2018
2019 and
2020
Subsequent
Corporate debt
Loans with credit institutions (project debt)*
Notes and bonds (project debt)
Purchase commitments
Accrued interest estimate during the useful life
of loans*
*
According to contracted maturities.
664,494
4,634,505
836,164
4,158,576
3,153
170,213
25,514
169,951
409,665
356,328
44,314
320,287
251,677
—
430,153 3,677,812
718,638
344,338 3,323,999
47,699
3,761,305
338,543
667,427
594,263 2,161,072
2014
Total
2015
Subsequent
378,415
Corporate debt
—
Loans with credit institutions (project debt) 3,294,234 323,250 209,039 244,986 2,516,959
Notes and bonds (project debt)
498,045
79,509 148,357 152,256 1,432,958
Purchase commitments
Accrued interest estimate during the
useful life of loans
2,233,750 180,756 350,553 308,430 1,394,011
528,832
1,813,080
13,585
2,255
9,263
7,939
2016 and
2017
2018 and
2019
— 376,160
30. Earnings per share
Basic earnings per share for the year 2015 has been calculated by dividing the Loss
attributable to equity holders of the company by the number of shares outstanding. Diluted
earnings per share equals basic earnings per share for the period presented. Basic earnings
per share is only presented for periods subsequent to the initial public offering.
Item
Loss from continuing operations attributable to
Abengoa Yield Plc.
Profit/(loss) from discontinuing operations
attributable to Abengoa Yield Plc.
Average number of ordinary shares
outstanding (thousands) - basic and
diluted
Earnings per share from continuing operations
(US dollar per share) - basic and diluted
Earnings per share from discontinuing
operations (US dollar per share) - basic and
diluted
Earnings per share from profit for the period
(US dollar per share) - basic and diluted
For the twelve-month
period ended December 31,
2015
Period from July 1, 2014,
to December 31, 2014
(209,005 )
-
92,795
(2.25 )
-
(2.25 )
(3,379 )
-
80,000
(0.04 )
-
(0.04 )
107
Notes to the consolidated financial statements
31 December 2015
31.
Service concessional arrangements
Below is a description of the concessional arrangements of the Atlantica Yield group.
Solana
Solana is a 250 MW net (280 MW gross) solar electric generation facility located in
Maricopa County, Arizona, approximately 70 miles southwest of Phoenix. Arizona Solar One
LLC, or Arizona Solar, owns the Solana project. Solana includes a 22-mile 230kV
transmission line and a molten salt thermal energy storage system. The construction of
Solana commenced in December 2010 and Solana reached COD on 9 October, 2013.
Solana has a 30-year, PPA with Arizona Public Service, or APS, approved by the Arizona
Corporation Commission (ACC). The PPA provides for the sale of electricity at a fixed price
per MWh with annual increases of 1.84% per year. The PPA includes limitations on the
amount and condition of the energy that is received by APS with minimum and maximum
thresholds for delivery capacity that must not be breached.
Mojave
Mojave is a 250 MW net (280 MW gross) solar electric generation facility located in San
Bernardino County, California, approximately 100 miles northeast of Los Angeles. Abengoa
commenced construction of Mojave in September 2011 and Mojave reached COD on 1
December 2014.
Mojave has a 25-year, PPA with Pacific Gas & Electric Company, or PG&E, approved by the
California Public Utilities Commission (CPUC). The PPA will begin on COD. The PPA provides
for the sale of electricity at a fixed base price per MWh without any indexation mechanism,
including limitations on the amount and condition of the energy that is received by PG&E
with minimum and maximum thresholds for delivery capacity that must not be breached.
Palmatir
Palmatir is an on-shore wind farm facility in Uruguay with nominal installed capacity of 50
MW. Palmatir has 25 wind turbines and each turbine has a nominal capacity of 2 MW. UTE
(Administracion Nacional de Usinas y Transmisiones Electricas), Uruguay’s state-owned
electricity company, has agreed to purchase all energy produced by Palmatir pursuant to a
20-year PPA.
Palmatir reached COD in May 2014. The wind farm is located in Tacuarembo, 170 miles
north of the city of Montevideo.
Palmatir signed a PPA with UTE on 14 September, 2011 for 100% of the electricity
produced, approved by URSEA (Unidad Reguladora de Servicos de Energia y Agua). UTE will
pay a fixed-price tariff per MWh under the PPA, which is denominated in U.S. dollars and
will be partially adjusted in January of each year according to a formula based on inflation.
108
Notes to the consolidated financial statements
31 December 2015
Cadonal
Cadonal is an on-shore wind farm facility in Uruguay with nominal installed capacity of 50
MW. Cadonal has 25 wind turbines and each turbine has a nominal capacity of 2 MW each.
UTE (Administraction Nacional de Usinas y Trasmisiones Electricas), Uruguay´s state-owned
electricity company, has agreed to purchase all energy produced by Cadonal pursuant to a
20-year PPA.
Cadonal reached COD in December 2014. The wind farm is located in Flores, 105 miles
north of the city of Montevideo.
Cadonal signed a PPA with UTE on 28 December 2012 for 100% of the electricity produced,
approved by URSEA (Unidad Reguladora de Servicios de Energia y Agua). UTE will pay a
fixed tariff under the PPA per MWh under the PPA, which is denominated in U.S. dollars and
will be adjusted every January considering both US and Uruguay´s inflation indexes and the
exchange rate between Uruguayan pesos and U.S. dollars.
Solaben 2 & 3
Solaben 2 and 3 are two 50 MW solar power facilities located in Spain. Solaben 2 reached
COD in June 2012 and Solaben 3 reached COD in October 2012. Solaben Electricidad Dos,
S.A., or SE2, owns Solaben 2 and Solaben Electricidad Tres, S.A., or SE3, owns Solaben 3.
Renewable energy plants in Spain, like Solaben 2 and Solaben 3, are regulated through a
series of laws which guarantee the owners of the plants a reasonable remuneration for their
investments. Solaben 2 and 3 sell the power they produce into the wholesale electricity
market, where offer and demand are matched and the pool price is determined, and also
receive additional payments from the Comision Nacional de los Mercados y de la
Competencia, or CNMC, the Spanish state-owned regulator.
Solacor 1 & 2
The Solacor 1 and Solacor 2 are two 100 MW Concentrating Solar Power facilities and are
part of Abengoa’s El Carpio Solar Complex, located in the municipality of El Carpio, Spain.
The Carpio Solar Complex consists in a conventional parabolic trough Concentrating Solar
Power system to generate electricity. Abengoa commenced construction of Solacor 1 and
Solacor 2 in September 2010. The COD was reached in two phases, the first one, Solacor 1,
was reached in January 2012 and the second one, Solacor 2, was reached in March 2012.
JGC Corporation holds 26% of Solacor 1 & Solacor 2, a Japanese engineering company.
Renewable energy plants in Spain, like Solacor 1 and Solacor 2, are regulated by the
Government through a series of laws and rulings which guarantee the owners of the plants
a reasonable remuneration for their investments. Solacor 1 and Solacor 2 sell the power
they produce into the wholesale electricity market, where offer and demand are matched
and the pool price is determined, and also receive additional payments from the Comision
Nacional de los Mercados y de la Competencia, or CNMC, the Spanish state-owned
regulator.
109
Notes to the consolidated financial statements
31 December 2015
ACT
The ACT plant is a gas-fired cogeneration facility with a rated capacity of approximately 300
MW and between 550 and 800 metric tons per hour of steam. The plant includes a
substation and an approximately 52 mile and 115-kilowatt transmission line.
On 18 September 2009, Abengoa Cogeneracion Tabasco entered into the Pemex
Conversion Services Agreement, or the Pemex CSA, with Petroleos Mexicanos, or Pemex.
Pemex is a state-owned oil and gas company supervised by the Comision Reguladora de
Energía (CRE), the Mexican state agency that regulates the energy industry. The Pemex CSA
has a term of 20 years from the in-service date and will expire on 31 March 2033.
According to the Pemex CSA, ACT must provide, in exchange for a fixed price with
escalation adjustments, services including the supply and transformation of natural gas and
water into thermal energy and electricity. Part of the electricity is to be supplied directly to a
Pemex facility nearby, allowing the Comision Federal de Electricidad (CFE) to supply less
electricity to that facility. Approximately 90% of the electricity must be injected into the
Mexican electricity network to be used by retail and industrial end customers of CFE in the
region. Pemex is then entitled to receive an equivalent amount of energy in more than
1,000 of their facilities in other parts of the country from CFE, following an adjustment
mechanism under the supervision of CFE.
The Pemex CSA is denominated in U.S. dollars. The price is a fixed tariff and will be adjusted
annually, part of it according to inflation and part according to a mechanism agreed in the
contract that on average over the life of the contract reflects expected inflation. The
components of the price structure and yearly adjustment mechanisms were prepared by
Pemex and provided to bidders as part of the request for proposal documents.
ATN
ATN, or the ATN Project, in Peru is part of the SGT (Sistema Garantizado de Transmision),
which includes all transmission line concessions allocated by a bidding process by the
government and is comprised of the following facilities:
(i)
(ii)
the approximately 356 mile, 220kV line from Carhuamayo-Paragsha-Conococha-
Kiman-Ayllu-Cajamarca Norte;
the 4.3 mile, 138kV link between the existing Huallanca substation and Kiman Ayllu
substations;
(iii)
the 1.9 mile, 138kV link between the 138kV Carhuamayo substation and the 220kV
Carhuamayo substation;
(iv)
the new Conococha and Kiman Ayllu substations; and
(v)
the expansion of the Cajamarca Norte, 220kV Carhuamayo, 138kV Carhuamayo and
220kV Paragsha substations.
110
Notes to the consolidated financial statements
31 December 2015
Pursuant to the initial concession agreement, the Ministry of Energy, on behalf of the
Peruvian Government, granted ATN a concession to construct, develop, own, operate and
maintain the ATN Project. The initial concession agreement became effective on 22 May
2008 and will expire 30 years after COD of the first tranche of the line, which took place in
January 2011. ATN is obliged to provide the service of transmission of electric energy
through the operation and maintenance of the electric transmission line, according to the
terms of the contract and the applicable law.
The laws and regulations of Peru establish the key parameters of the concession contract,
the price indexation mechanism, the rights and obligations of the operator and the
procedures that have to be followed in order to fix the applicable tariff, which occurs
through a regulated bidding process. Once the bidding process is complete and the
operator is granted the concession, the pricing of the power transmission service is
established in the concession agreement. ATN has a 30-year concession agreement with a
fixed-price tariff base denominated in U.S. dollars that is adjusted annually after COD of
each line, in accordance with the U.S. Finished Goods Less Food and Energy Index published
by the U.S. Department of Labor.
ATS
The Abengoa Transmision Sur, or ATS Project, in Peru is part of the Guaranteed
Transmission System, or (Sistema Garantizado de Transmisión) which
includes all
transmission line concessions allocated by a bidding process by the government, and is
comprised of:
(i)
one 500kV electric transmission line and two short 220kV electric transmission lines,
which are linked to existing substations;
(ii)
three new 500kV substations; and
(iii)
three existing substations (two existing 220kV substations and one existing 550/220kV
substation), through the development of new transformers, line reactors, series
reactive compensation and shunt reactions in some substations.
Pursuant to the initial concession agreement, the Ministry of Energy, on behalf of the
Peruvian Government, granted ATS a concession to construct, develop, own, operate and
maintain the ATS Project. The initial concession agreement became effective on 22 July
2010 and will expire 30 years after COD, which took place in January 2014. ATS is obliged to
provide the service of transmission of electric energy through the operation and
maintenance of the electric transmission line, according to the terms of the contract and the
applicable law.
The laws and regulations of Peru establish the key parameters of the concession contract,
the price indexation mechanism, the rights and obligations of the operator and the
procedure that has to be followed in order to fix the applicable tariff, which occurs through
a regulated bidding process. Once the bidding process is complete and the operator is
granted the concession, the pricing of the power transmission service is established in the
concession agreement. ATS has a 30-year concession agreement with fixed-price tariff base
denominated in U.S. dollars that is adjusted annually after COD of each line, in accordance
111
Notes to the consolidated financial statements
31 December 2015
with the U.S. Finished Goods Less Food and Energy Index published by the U.S. Department
of Labor.
Quadra 1 & Quadra 2
Transmisora Mejillones, or Quadra 1, is a 49-mile transmission line project and Tranmisora
Baquedano, or Quadra 2, is a 32-mile transmission line project, each connected to the Sierra
Gorda substations.
Both projects have concession agreements with Sierra Gorda SCM. The agreements are
denominated in U.S. dollars and are indexed mainly to CPI. The concession agreements
each have a 21-year term that began on COD, which took place in April 2014 and March
2014 for Quadra 1 and Quadra 2, respectively.
Quadra 1 and Quadra 2 belong to the Northern Interconnected System (SING), one of the
two interconnected systems into which the Chilean electricity market is divided and
structured for both technical and regulatory purposes.
As part of the SING, Quadra 1 and Quadra 2 and the service they provide are regulated by
several regulatory bodies, in particular: the Superintendent’s office of Electricity and Fuels
(Superintendencia de Electricidad y Combustibles, SEC), the Economic Local Dispatch Center
(Centro de Despacho Economico de Cargas, CDEC), the National Board of Energy (Comision
Nacional de Energia, CNE) and the National Environmental Board (Comision Nacional de
Medio Ambiente, CONAMA) and other environmental regulatory bodies.
In all these concession arrangements, the operator has all the rights necessary to manage,
operate and maintain the assets and the obligation to provide the services defined above,
which are clearly defined in each concession contract and in the applicable regulations in
each country.
Helioenergy 1&2
The Helioenergy 1/2 project is located in Ecija, Spain. Abengoa started the construction of
Helioenergy in 2010, and reached COD in 2012. Since COD, the projects have obtained
good generation results achieving systematically year after year results aligned or above the
target productions defined.
Helioenergy relies on a Conventional parabolic trough Concentrating Solar Power system to
generate electricity. Helioenergy evacuates its electricity through an aerial underground line
220 kV from the substation of the plant to a 220 kV line that ends in SET Villanueva del Rey
(owned by Red Eléctrica de España), where the connection point of the plant is located.
Renewable energy plants in Spain, like Helionergy 1 and Helionergy 2, are regulated by the
Government through a series of laws and rulings which guarantee the owners of the plants
a reasonable remuneration for their investments. Helionergy 1 and Helionergy 2 sell the
power they produce into the wholesale electricity market, where offer and demand are
matched and the pool price is determined, and also receive additional payments from the
Comision Nacional de los Mercados y de la Competencia, or CNMC, the Spanish state-
owned regulator.
112
Notes to the consolidated financial statements
31 December 2015
Helios 1&2
The Helios 1/2 project is a 100 MW Concentrating Solar Power facility known as Plataforma
Solar Castilla la Mancha, located in the municipality of Arenas de San Juan, Puerto Lápice
and Villarta de San Juan, Spain. Helios 1 COD was reached in 2Q 2012, Helios 2 COD was
reached in 3Q 2012. Since COD, the projects have obtained good generation results aligned
or above the production targets.
Helios 1/2 relies on a Conventional parabolic trough Concentrating Solar Power system to
generate electricity. The technology is identical to the one used at Solaben 2/3 and Solacor
1/2.
Renewable energy plants in Spain, like Helios 1 and Helios 2, are regulated by the
Government through a series of laws and rulings which guarantee the owners of the plants
a reasonable remuneration for their investments. Helios 1 and Helios 2 sell the power they
produce into the wholesale electricity market, where offer and demand are matched and
the pool price is determined, and also receive additional payments from the Comision
Nacional de los Mercados y de la Competencia, or CNMC, the Spanish state-owned
regulator.
Solnova 1, 3&4
The Solnova 1/3/4 project is a 150 MW Concentrating Solar Power facility, part of the
Sanlucar Solar Platform, located in the municipality of Sanlucar la Mayor, Spain. Solnova 1
COD was reached in 2Q 2010, Solnova 3 COD was reached in 2Q 2010 and Solnova 4 COD
was reached in 3Q 2010. Since COD, the projects have obtained good generation results
achieving results aligned with the target production numbers.
Solnova 1/3/4 relies on a Conventional parabolic trough Concentrating Solar Power system
to generate electricity. The technology is identical to the one used at Solaben 2/3 and
Solacor 1/2, projects already owned by us.
Solnova 1/3/4 evacuates its electricity through an aerial-underground line 66 kV from the
substation of the plant to a 220 kV line that ends in SET Casaquemada, where the
connection point of the plant is located.
Renewable energy plants in Spain, like Solnova 1, Solnova 3 and Solnova 4, are regulated by
the Government through a series of laws and rulings which guarantee the owners of the
plants a reasonable remuneration for their investments. Solnova 1, Solnova 3 and Solnova 4
sell the power they produce into the wholesale electricity market, where offer and demand
are matched and the pool price is determined, and also receive additional payments from
the Comision Nacional de los Mercados y de la Competencia, or CNMC, the Spanish state-
owned regulator
Honaine
The Honaine project is a water desalination plant located in Taffsout, Algeria, near three
important cities: Oran, to the northeast, and Sidi Bel Abbés and Tlemcen, to the southeast.
Myah Bahr Honaine Spa, or MBH, is the vehicle incorporated in Algeria for the purposes of
owning the Honaine project. Algerian Energy Company, SPA, or AEC, owns 49% and
113
Notes to the consolidated financial statements
31 December 2015
Sociedad Anonima Depuracion y Tratamientos, or Sadyt, a subsidiary of Sacyr, S.A., owns
the remaining 25.5% of the Honaine project.
AEC is the Algerian agency in charge of delivering Algeria’s large-scale desalination
program. It is a joint venture set up in 2001 between the national oil and gas company,
Sonatrach, and the national gas and electricity company, Sonelgaz. Each of Sonatrach and
Sonelgaz owns 50% of AEC.
The technology selected for the Honaine plant is currently the most commonly used in this
kind of project. It consists of desalination using membranes by reverse osmosis. Honaine
has a capacity of seven M ft3 per day of desalinated water and it is under operation since
July 2012. The project represents approximately 9.0% of Algeria’s total desalination capacity
and serves a population of 1.0 million.
The water purchase agreement is a U.S. dollar indexed 30-year take-or-pay contract with
Sonatrach / Algérienne des Eaux, or ADE. The tariff structure is based upon plant capacity
and water production, covering variable cost (water cost plus electricity cost). Tariffs are
adjusted monthly based on the indexation mechanisms that include local inflation, U.S.
inflation and the exchange rate between the U.S. dollar and local currency.
Skikda
The Skikda project is a water desalination plant located in Skikda, Algeria. Skikda is located
510 km east of Alger. Aguas de Skikda, or ADS, is the vehicle incorporated in Algeria for the
purposes of owning the Skikda project. AEC owns 49% and Sadyt owns the remaining
16.83% of the Skikda project.
AEC is the Algerian agency in charge of delivering Algeria’s large-scale desalination
program. It is a joint venture set up in 2001 between the national oil and gas company,
Sonatrach, and the national gas and electricity company, Sonelgaz. Each of Sonatrach and
Sonelgaz owns 50% of AEC.
The technology selected for the Skikda plant is currently the most commonly used in this
kind of project. It consists of the use of membranes to obtain desalinated water by reverse
osmosis. Skikda has a capacity of 3.5 M ft3 per day of desalinated water and is in operation
since February 2009. The project represents approximately 4.5% of Algeria’s total
desalination capacity and serves a population of 0.5 million.
The water purchase agreement is a U.S. dollar indexed 30-year take-or-pay contract with
Sonatrach / ADE. The tariff structure is based upon plant capacity and water production,
covering variable cost (water cost plus electricity cost). Tariffs are adjusted monthly based
on the indexation mechanisms that include local inflation, U.S. inflation and the exchange
rate between the U.S. dollar and local currency.
ATN 2
ATN 2, in Peru, is part of the Complementary Transmission System, or Sistema
Complementario de Transmision, SCT, and is comprised of the following facilities:
114
Notes to the consolidated financial statements
31 December 2015
(i) The approximately 130km, 220kV line from SE Cotaruse to Las Bambas;
(ii) The connection to the gate of Las Bambas Substation
(iii) The expansion of the Cotaruse 220kV substation (works assigned to Consorcio
Transmantaro)
The Client is Las Bambas Mining Company, a company owned by a partnership conformed
by a subsidiary of China Minmetals Corporation (62.5%), a wholly owned subsidiary of
Guoxin International Investment Co. Ltd (22.5%) and CITIC Metal Co. Ltd (15.0%). China
Minmetals Corporation is the fifth largest metals company included in the Fortune Global
500 list.
Abengoa started the permitting phase of ATN2 Project on May 2011; construction is already
completed and completed formalities for COD during July 2015.
The ATN2 Project has a 18-year contract period, after that, ATN2 assets will remain as
property of the SPV and therefore it is likely a new contract could be negotiated. The ATN2
Project has a fixed-price tariff base denominated in U.S. dollars, partially adjusted annually
in accordance with the U.S. Finished Goods Less Food and Energy Index as published by the
U.S. Department of Labor. Our receipt of the tariff base is independent from the effective
utilization of the transmission lines and substations related to the ATN2 Project. The tariff
base is intended to provide the ATN2 Project with consistent and predictable monthly
revenues sufficient to cover the ATN2 Project’s operating costs and debt service and to earn
an equity return. Peruvian law requires the existence of a definitive concession agreement
to perform electricity transmission activities where the transmission facilities cross public
land or land owned by third parties. On May 31, 2014, the Ministry of Energy granted the
project a definitive concession agreement to the transmission lines of the ATN2 Project.
Kaxu
Kaxu Solar One, or Kaxu, is a 100MW solar Conventional Parabolic Trough Project located in
Paulpatus in the Nothern Cape Province of South Africa, approximately 30 km north east of
the small town of Pofadder. Atlantica Yield, though Abengoa Solar South Africa (Pty) Ltd.,
owns 51% of the Kaxu Project. The Project Company, named Kaxu Solar One (Pty) Ltd., is
owned by a consortium composed by Abengoa Solar South Africa (51%), Industrial
Development Corporation of South Africa (29%) & Kaxu Community Trust (20%).
The project reached COD in February 2015.
Kaxu has a 20-year PPA with Eskom SOC Ltd., or Eskom, under a take or pay contract for the
purchase of electricity up to the contracted capacity from the facility. Eskom purchases all
the output of the Kaxu Plant under a fixed price formula in local currency subject to
indexation to local inflation with protects us from potential devaluation over the long term.
Being the project COD February 2015, the PPA expires on February 2035.
115
Notes to the consolidated financial statements
31 December 2015
Solaben 1&6
The Solaben is a 100MW Concetrated Solar Power facility part of the Extremadura Solar
Platform, located in the municipality of Logrosán, Spain. Solaben 1/6 COD was reached in
3Q 2013. Since COD, the projects have obtained good generation aligned with the target
production figures.
Solaben 1&6 relies on a Conventional Parabolic through Concentrating Solar Power system
to generate electricity. The technology is identical to the one used at Solaben 2/3 and
Solacor 1/2 projects.
Renewable energy plants in Spain, like Solaben 1 and Solaben 6, are regulated by the
Government through a series of laws and rulings which guarantee the owners of the plants
a reasonable remuneration for their investments. Solaben 1 and Solaben 6 sell the power
they produce into the wholesale electricity market, where offer and demand are matched
and the pool price is determined, and also receive additional payments from the Comision
Nacional de los Mercados y de la Competencia, or CNMC, the Spanish state-owned
regulator.
116
Company balance sheet
31 December 2015
Amounts in thousands of U.S. dollars
Fixed assets
Tangible assets
Investments in subsidiaries
Amounts owed by group undertakings
Deferred tax asset
Current assets
Trade and other receivables
Amounts owed by group undertakings
Short-term financial investments
Cash and bank balances
Total assets
Creditors: Amounts falling due within one year
Trade and other payables
Amounts owed to group undertakings
Borrowings
Derivative liabilities
Net current assets
Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Borrowings
Deferred revenue
Amounts owed to group undertakings
Derivative liabilities
Total liabilities
Net assets
(1) Notes 1 to 8 are an integral part of the financial statements
(*) See Note 2 for further details
117
Notes (1)
4
5
5
7
5
6
6
7
5
(*)
Restated
2014
2015
135
2,014,487
822,263
-
-
1,392,481
735,302
209
2,836,885
2,127,992
296
173
5,000
45,487
1,250
25,485
-
155,367
50,956
182,102
2,887,841
2,310,094
17,328
9,214
3,152
95
19,558
172
2,255
-
29,789
21,985
21,167
160,117
661,341
-
26,917
11,773
376,159
64,400
-
-
700,031
440,559
729,820
462,544
2,158,021
1,847,550
Company balance sheet
31 December 2015
Capital and Reserves
Share capital
Share premium account
Distributable reserves
Other Reserves
Retained earnings
Shareholders’ funds
2015
(*)
Restated
2014
10,022
1,981,881
331,974
4,345
(170,201)
8,000
1,313,903
476,233
-
49,414
2,158,021
1,847,550
8
(1) Notes 1 to 8 are an integral part of the financial statements
(*) See Note 2 for further details
The financial statements of Abengoa Yield plc, company registration no. 08818211, were
approved by the board of directors and authorised for issue on 25th February 2016. They were
signed on its behalf by:
Managing Director
Santiago Seage
15th March, 2016
118
Company balance sheet
31 December 2015
Company Statement of changes in equity
Amounts in thousands of U.S. dollars
Share
Capital
Share
Premium
Account
Distributable
Reserves
Retained
earnings
Other
Reserves
Total
Shareholder´s
funds
-
-
-
-
-
-
-
-
-
8,414
1,821,903
(71)
-
(23,696)
1,806,550
41,000
Balance at 1 January 2014
Profit for the year
Issue of share capital and
share premium
IPO transaction costs
Reduction of share premium
Dividends
-
-
-
-
8,000
1,813,903
-
-
-
-
(500,000)
-
-
-
-
(71)
500,000
(23,696)
-
8,414
-
-
-
-
Balance at 31 December
2014
Adjustment to the 2014
accounts (*)
Restated Balance at 31
December 2014 (*)
8,000
1,313,903
476,233
8,414
-
-
-
41,000
8,000
1,313,903
476,233
49,414
-
1,847,55
Loss for the year
-
-
-
(219,615)
Issue of share capital and
share premium
Dividends
Change in fair value of cash
flow hedges (net of deferred
taxation)
2,022
667,978
(6,264)
-
-
-
-
(137,995)
-
-
-
-
-
-
-
(219,615)
663,736
(137,995)
4,345
4,345
Balance at 31 December 2015 10,022
1,981,881
331,974
(170,201)
4,345
2,158,021
(*) See Note 2 for further details.
119
Company balance sheet
31 December 2015
Notes to the Company financial statements
1.
Significant accounting policies
The separate financial statements of the company are presented as required by the
Companies Act 2006. The company meets the definition of a qualifying entity under FRS
100 (Financial Reporting Standard 100) issued by the Financial Reporting Council.
Accordingly, in the year ended 31 December 2015 the company has decided to adopt FRS
101 and undergone transition from reporting under IFRSs EU to FRS 101 as issued by the
Financial Reporting Council. Accordingly, the financial statements have therefore been
prepared in accordance with FRS 101 (Financial Reporting Standard 101) ‘Reduced
Disclosure Framework’ as issued by the Financial Reporting Council. This transition is not
considered to have had a material effect on the financial statements.
As permitted by FRS 101, the company has taken advantage of the disclosure exemptions
available under that standard in relation to share-based payment, financial instruments,
capital management, presentation of comparative information in respect of certain assets,
presentation of a cash-flow statement and certain related party transactions.
Where required, equivalent disclosures are given in the consolidated financial statements.
The financial statements have been prepared on the historical cost basis except for the re
measurement of certain financial instruments to fair value. The principal accounting policies
adopted are the same as those set out in note 3 to the consolidated financial statements
except as noted below.
Investments in subsidiaries and impairment
Investments in subsidiaries are stated at cost less, where appropriate, provisions for
impairment.
At each balance sheet date, the Company reviews the carrying amounts of its investments
to determine whether there is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of the asset is estimated to
determine the extent of the impairment loss (if any).
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 pre-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.
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
recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset 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
120
Company balance sheet
31 December 2015
had no impairment loss been recognised for the asset in prior years. A reversal of an
impairment loss is recognised immediately in profit or loss.
Critical accounting policies and estimates
The most critical accounting policies, which reflect significant management estimates and
judgement to determine amounts in the Company’s financial statements, are as follows:
Impairment of investments; and
Derivative financial instruments and fair value estimates
2.
Restatement of prior year accounts
On December 31, 2014 Abengoa Solar Holdings USA Inc. declared a US$ 41,000 thousand
dividend to Abengoa Yield Plc.
This transaction was erroneously not considered in the 2014 financial statements of
Abengoa Yield Plc., and therefore comparatives figures of these 2015 financial statements
have been restated.
Financial Statement line items which have been restated are as follows:
Financial Statements line item
2014
Adjustment
Restated 2014
Non-current Amounts owed by group
undertakings
694,302
41,000
735,302
Retained earnings
8,414
41,000
49,414
3.
Profit for the year
As permitted by section 408 of the Companies Act 2006 the company has elected not to
present its own profit and loss account for the year. The company reported a loss for the
financial year ended 31 December 2015 of $219,615k (Restated 2014: profit of $49,414k).
The auditor’s remuneration for audit and other services is disclosed in note 7 to the
consolidated financial statements.
121
Company balance sheet
31 December 2015
4.
Investments in subsidiaries
Details of the Company’s subsidiaries at 31 December 2015 are as follows:
Name
Place of
incoporation
and principal
place of
business
Proportion
of
ownership
interest
%
Proportio
n of
voting
power
held
%
Palmucho, S.A.
ABY Servicios Corporativos, S.L.
Transmisora Baquedano, S.A.
Transmisora Mejillones, S.A.
Abengoa Solar US Holdings Inc.
ACT Holdings, S.A. de C.V.
ABY Concessions Perú, S.A.
ABY Concessions Infrastructure, S.L.U.
Abengoa Solar Holdings USA Inc
Chile
Spain
Chile
Chile
USA
Mexico
Peru
Spain
USA
100.00%
100.00%
99.99%
99.99%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.99%
99.99%
99.99%
99.99%
99.99%
99.99%
100.00%
100.00%
ABY South Africa (Pty) Ltd
South Africa
100.00%
100.00%
ATN 2, S.A.
Mojave Solar Holdings, Llc (USA)
Mojave Solar, Llc (USA)
ASO Holdings Company, LLC
Arizona Solar One, LLC (USA)
ATN, S.A.
Abengoa Transmisión Sur, S.A.
ACT Energy Mexico, S.A. de C.V.
Kaxu Solar One (Pty) Ltd
Sanlucar Solar, S.A.
Solar Processes, S.A.
Palmatir, S.A
Cadonal, S.A.
Holding Eólica, S.A.
Ecija Solar Inversiones, S.A.
Helioenergy Electricidad Uno, S.A.
Helioenergy Electricidad, Dos, S.A.
Carpio Solar Inversiones, S.A.
Solacor Electricidad Uno, S.A.
Solacor Electricidad Dos, S.A.
Logrosán Solar Inversiones, S.A.
Solaben Electricidad Dos, S.A.
Peru
USA
USA
USA
USA
Peru
Peru
Mexico
South Africa
Spain
Spain
Uruguay
Uruguay
Uruguay
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.98%
99.99%
99.98%
51.00%
99.98%
99.99%
99.98%
51.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
74.00%
74.00%
74.00%
74.00%
100.00%
100.00%
70.00%
70.00%
122
Company balance sheet
31 December 2015
Solaben Electricidad Tres, S.A.
Hypesol Energy Holding, S.L.
Helios I Hyperion Energy Investments, S.L.
Helios II Hyperion Energy Investments, S.L.
Solnova Solar Inversiones, S.A.
Solnova Electricidad Uno, S.A.
Solnova Electricidad Tres, S.A.
Solnova Electricidad Cuatro, S.A.
Logrosan Solar Inversiones Dos, S.L.
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
70.00%
70.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Solaben Luxemburg S.A.
Luxembourg
100.00%
100.00%
Logrosan Equity Investment S.a.r.l.
Luxembourg
100.00%
100.00%
Extremadura Equity Investment S.a.r.l.
Luxembourg
100.00%
100.00%
Solaben Electricidad Uno, S.A.
Solaben Electricidad Seis, S.A.
Geida Tlemcen, S.L.
Myah Bahr Honaine, S.P.A.
Geida Skikda, S.L.
Aguas de Skikda, S.P.A.
Spain
Spain
Spain
Algeria
Spain
Algeria
100.00%
100.00%
100.00%
100.00%
50.00%
25.50%
67.00%
34.17%
50.00%
25.50%
67.00%
34.17%
The investments in subsidiaries are all stated at cost. Information on the investments
acquired in the year is disclosed in Note 5 in the consolidated financial statements. As of 31
December 2015, the carrying value of the direct investments was as follows:
Palmucho, S.A.
ABY Servicios Corporativos, S.L.
Transmisora Baquedano, S.A.
Transmisora Mejillones, S.A.
Abengoa Solar US Holdings Inc.
ACT Holdings, S.A. de C.V.
ABY Concessions Perú, S.A.
ABY Concessions Infrastructure, S.L.U.
Abengoa Solar Holdings USA Inc
ATN, S.A. (*)
Abengoa Transmisión Sur, S.A. (*)
ABY South Africa (Pty) Ltd
ATN 2, S.A.
2015
2014
-
5,483
-
-
317,950
98,543
261,920
868,281
380,193
1,044
18,727
46,449
15,897
-
73
-
-
317,950
72,095
258,795
363,375
380,193
-
-
-
-
Total investments in subsidiaries
2,014,487 1,392,481
(*) Interest free loans accounted for at amortized cost (classified as amounts owed by group undertakings, see
note 5) and initial difference with nominal value of the loans accounted for as capital contribution in accordance
with IAS 39.
123
Company balance sheet
31 December 2015
Movements in the carrying value of investments during the years 2015 and 2014 were as
follows:
As at 1st January 2014
Acquisitions
As at 1st January 2015
Acquisitions
Capital reduction
As at 31st December 2015
US$ ´000
-
1,392,481
1,392,481
647,074
(25,068)
2,014,487
The capital reduction in 2015 primarily relates to a capital reduction carried out in ACT
Holding, S.A. de C.V. in April 2015 for $22 Million and in May 2015 for $3 Million.
The date and method of the acquisition of each subsidiary during the period were as
follows:
Acquisition date Acquisition method
Palmucho, S.A.
ABY Servicios Corporativos, S.L..
Transmisora Baquedano, S.A.
Transmisora Mejillones, S.A.
Abengoa Solar US Holdings Inc.
ACT Holdings, S.A. de C.V.
ABY Concessions Perú, S.A.
ABY Concessions Infrastructure, S.L.U.
Abengoa Solar Holdings USA Inc
ATN 2, S.A
ABY South Africa (Pty) Ltd
(*) Contribution through issue of shares
13/06/2014
23/12/2014 Purchase
14/04/2014 Purchase
14/04/2014 Purchase
13/06/2014
13/06/2014
13/06/2014
13/06/2014
13/06/2014
25/06/2015 Purchase
30/07/2015 Purchase
(*) Contribution through issue of shares
(*) Contribution through issue of shares
(*) Contribution through issue of shares
(*) Contribution through issue of shares
(*) Contribution through issue of shares
(*) Prior to the initial public offering of Abengoa Yield Plc., Abengoa contributed, through a series of
transactions, which we refer to collectively as the “Asset Transfer,” a series of concessional assets described
in the Strategic Report on pages 3 to 6, certain holding companies and the preferred equity investment in
ACBH.
On June 25, 2015, the Company completed the acquisition of ATN2 an 81 miles transmission line in Peru
from Abengoa and Sigma, a third-party financial investor in the project and on July 30, 2015, the Company
completed the acquisition of Kaxu a 100 MW solar plant in South Africa.
124
Company balance sheet
31 December 2015
5.
Amounts owed by/to group undertakings
Non-current receivables from group companies
Preferred equity investment in ACBH
2015
Restated
2014
769,698
52,565
472,302
263,000
Non-current amounts owed by group undertakings
822,263
735,302
Current amounts owed by group undertakings
173
25,485
Total amounts owed by group undertakings
822,436
760,787
The preferred equity investment in ACBH is an available for sale financial asset that gives
the following rights:
During the five-year period commencing on July 1, 2014, Atlantica Yield has the right
•
to receive, in four quarterly installments, a preferred dividend of $18,400 thousand per year.
Until December 31, 2015, the Company received the dividend corresponding to 1.5 years
and the portion corresponding to 3.5 years is pending to be received;
Following the initial five-year period, Atlantica Yield has the option to (i) remain as
•
preferred equity holder receiving the first $18,400 thousand in dividends per year that
ACBH is able to distribute or (ii) exchange the preferred equity for ordinary shares of
specific project companies owned by ACBH.
Given that Atlantica Yield has a right to receive a quarterly dividend from July 2014 and for
the following five years, the Company initially recorded an account receivable
corresponding to the present value of the dividend receivable in the first five years, with a
credit to deferred income. Income was recorded progressively from July 2014, as dividend
was collected. The long-term portion of the account receivable was included in non-current
receivables from group companies s set out below.
125
Company balance sheet
31 December 2015
On January 29, 2016, Abengoa informed the Company that several indirect subsidiaries of
Abengoa in Brazil, including ACBH, have initiated an insolvency procedure under Brazilian
law (“recuperaçao judiciaria”). The Company is currently assessing the potential impact of
this event together with external advisors. Given that this process will likely negatively affect
the value of the preferred equity investment and considering the high degree of
uncertainty on its final outcome, the Company has recorded an impairment of this
preferred equity investment for a total amount of $210 million.
In addition, the Company de-recognised the account receivable corresponding to the
dividend receivable in the remaining 3.5 years, amounting to $64.4 million, with a
corresponding debit to the deferred income.
As at 31 December 2015, the detail of the amounts owed by group undertakings was as
follows:
ATN, S.A..
ABY Concessions Infrastructure, S.L.U.
Abengoa Concessões Brasil Holding, S.A.
Carpio Solar Inversiones, S.A.
Abengoa Transmisión Sur, S.A.
Logrosán Solar Inversiones, S.A.
ACT Holdings, S.A. de C.V.
Ecija Solar Inversiones, S.A.
Solnova Solar Inversiones, S.A.
Hypesol Energy Holding, S.L.
ABY South Africa (Pty) Ltd.
ATN 2, S.A.
Abengoa Solar US Holdings Inc.
Other
Restated
2014
2015
6,641
315,443
-
73,688
54,033
21,821
4,861
75,381
51,773
22,503
59,562
34,430
43,419
6,143
21,932
43,035
64,400
116,472
84,764
42,807
51,448
-
-
-
-
-
41,000
6,444
Amounts owed by group undertakings
769,698
472,302
126
Company balance sheet
31 December 2015
The principal features of the main loans to subsidiary undertakings are as follows:
ATN, S.A..
ABY Concessions Infrastructure, S.L.
Carpio Solar Inversiones, S.A.
Abengoa Transmisión Sur, S.A.
Logrosán Solar Inversiones, S.A
Ecija Solar Inversiones, S.A.
Solnova Solar Inversiones, S.A.
Hypesol Energy Holding, S.L.
ATN 2, S.A.
ABY South Africa (Pty) Ltd.
Abengoa Solar US Holdings Inc.
Interest Rate
Maturity
0%
7%
2.5% to Euribor 12 months
0%
2.5% to Euribor 12 months
4.25% to Euribor 12 months
4.25% to Euribor 12 months
4.5% to Euribor 12 months
8.96%
-
5.9%
Not applicable
Not applicable
31 July 2031
Not applicable
15 December 2030
Not applicable
Not applicable
Not applicable
Not applicable
Not applicable
31 December 2017
As at 31 December 2015, the amounts owed to group undertakings primarily relate to ACT
Energy Mexico, S.A. de C.V. for $24 million.
6.
Borrowings
As at 31 December 2015, the details of the amounts owed to group undertakings was as
follow:
Secured borrowing at amortised cost
Bonds
Borrowings
Total borrowings
2015
2014
410,288
254,205
254,912
123,502
664,493
378,414
Amount due for settlement within 12 months
3,152
2,255
Amount due for settlement after 12 months
661,341
376,159
The principal features of the borrowings and bonds are as follows:
On November 17, 2014, the Company issued the Senior Notes due 2019 in an aggregate
principal amount of $255,000 thousand (the “2019 Notes”). The 2019 Notes accrue annual
interest of 7.00% payable semi-annually beginning on May 15, 2015 until their maturity date of
November 15, 2019.
127
Company balance sheet
31 December 2015
On December 3, 2014, the Company entered into a credit facility of up to $125,000 thousand
with Banco Santander, S.A., Bank of America, N.A., Citigroup Global Markets Limited, HSBC
Bank plc and RBC Capital Markets, as joint lead arrangers and joint bookrunners (the “Credit
Facility”). On December 22, 2014, the Company drew down $125,000 thousand under the
Credit Facility. Loans under the Credit Facility accrue interest at a rate per annum equal to: (A)
for Eurodollar rate loans, LIBOR plus 2.75% and (B) for base rate loans, the highest of (i) the
rate per annum equal to the weighted average of the rates on overnight U.S. Federal funds
transactions with members of the U.S. Federal Reserve System arranged by U.S. Federal funds
brokers on such day plus 1/2 of 1.00%, (ii) the U.S. prime rate and (iii) LIBOR plus 1.00%, in any
case, plus 1.75%. Loans under the Credit Facility will mature on the fourth anniversary of the
closing date of the Credit Facility. Loans prepaid by the Company under the Credit Facility may
be reborrowed. The Credit Facility is secured by pledges of the shares of the guarantors which
the Company owns.
On June 26, 2015, the Company increased its existing $125 million Credit Facility with a
revolver tranche B for an amount of $290,000 thousand (the “Credit Facility Tranche B). On
September 9, 2015, Credit Facility Tranche B was fully drawn down and the proceeds were
used for the acquisition of Solaben 1/6. Loans under the Tranche B Facility accrue interest at a
rate per annum equal to: (A) for Eurodollar rate loans, LIBOR plus 2.50% and (B) for base rate
loans, 1.50%. Loans under the Credit Facility Tranche B will mature in December 2017. Tranche
B of the Credit Facility was signed for a total amount of $290 million with Bank of America,
N.A., as global coordinator and documentation agent and Barclays Bank plc and UBS AG,
London Branch as joint lead arrangers and joint bookrunners.
7. Trade and other payables
Deferred income (current)
Other payables (current)
Total current payables excluding borrowings
Deferred income (non – current)
Total non-current payables excluding
borrowings
2015
2014
-
17,328
18,400
1,158
17,328
19,558
-
-
64,400
64,400
Deferred income current and non-current fully related to the preferred dividend of $18,400
thousand per year that the Company has the right to receive for the upcoming five years
commencing on 1 July 2014 from Abengoa Concessões Brasil Holding, S.A. (see Note 5).
128
Company balance sheet
31 December 2015
8.
Retained earnings
Retained earnings
Balance at 1 January 2014
Net profit for the year
Balance at 31 December 2014
Adjustment to the 2014 accounts
Restated Balance at 31 December 2014
Net loss for the year
Balance at 31 December 2015
-
8,414
8,414
41,000
49,414
(219,615)
(170,201)
129