Consolidated Annual Report
and Financial Statements
FOR THE YEAR ENDED DECEMBER 31, 2016
Company Registration No. 08818211
Consolidated Annual Report and Financial
Statements
For the year ended 31 December 2016
Atlantica Yield plc
Atlantica Yield plc Consolidated Annual Report and Financial Statements
Strategic Report
Directors’ Report
Director’s Remuneration Report
Directors’ Responsibilities Statement
Independent Auditor’s Report to the Members of Atlantica 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
General information
1.
Adoption of new and revised standards
2.
Significant accounting judgements
3.
Financial information by segment
4.
Changes in the scope of the consolidated financial statements
5.
Profit/(Loss) for the year
6.
Auditor’s remuneration
7.
Staff Costs
8.
Other operating income
9.
Finance income and expenses
10.
11.
Tax
12. Dividends
13. Contracted concessional assets
14.
15.
16. Cash and cash equivalents
17. Corporate debt
18.
19. Grants and other long term payables
20.
21.
22. Notes to the cash flow statement
23.
Financial instruments by category
24. Derivative financial instruments
Financial risk management
25.
Events after the balance sheet date
26.
27. Related party transactions
28. Contingent liabilities
29. Guarantees and commitments
30.
31.
Investments carried under the equity method
Trade and other receivables
Earnings per share
Service concessional arrangements
Trade and other payables
Equity
Project debt
Company Balance Sheet
Company Statement of Change in Equity
Notes to the Company Financial Statements
35
50
52
54
55
58
3
29
56
59
60
129
131
132
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Strategic Report
This Strategic Report has been prepared to provide additional information to shareholders to assess the
Group’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:
(cid:2) Nature of the business.
(cid:2) Business model, strategy and objectives.
(cid:2) Fair review of the business.
(cid:2) Key performance indicators.
(cid:2) Principal risks and uncertainties.
(cid:2) Corporate social responsibility.
(cid:2) Future developments.
(cid:2) Going concern basis.
Nature of the business
Atlantica Yield plc (hereinafter “we”, “our”, the “Company” or “Atlantica Yield”) was registered in
England and Wales, incorporated in Great Britain, 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. At our annual shareholders meeting held in May 2016, we changed our legal name to
Atlantica Yield plc. Our shares are listed on the NASDAQ Global Select Market under the symbol “ABY”.
We are a total return company that owns, manages, and acquires renewable energy, conventional power,
electric transmission lines and water assets, focused on North America (the United States and Mexico),
South America (Peru, Chile, Brazil and Uruguay) and EMEA (Spain, Algeria and South Africa). We intend
to expand, maintaining North America, South America and Europe as our core geographies.
As of December 31, 2016, we own or have interests in 21 assets, comprising 1,442 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
Abengoa Concessoes Brasil Holding S.A. (“ACBH”). ACBH is a subsidiary holding company of Abengoa
engaged in the development, construction, investment and management of contracted concessions in
Brazil, comprised mainly of transmission lines. See Section “Events during the period” for an update on
ACBH investment. All of our assets have contracted revenues (regulated revenues in the case of our
Spanish assets) with low-risk off-takers and collectively have a weighted average remaining contract life of
approximately 21 years as of December 31, 2016. Most of the assets we own have a project-finance
agreement in place.
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 cash available for
distribution and our dividend to shareholders through organic growth and by acquiring new contracted
assets from Abengoa S.A. (“Abengoa”), from third parties and from potential new future sponsors.
We have in place an exclusive agreement with Abengoa, 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
3
Abengoa’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, the Middle East and Asia.
Additionally, we plan to sign similar agreements or enter into partnerships with other developers or asset
owners to acquire assets in operation. We may also invest directly or through investment vehicles with
partners in assets under development or construction, ensuring that such investments are always a small
part of our total investments. Finally, we also expect to acquire assets from third parties leveraging the
local presence and network we have in the geographies and sectors in which we operate.
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 significant 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 Abengoa,
from third parties and from potential new future sponsors.
The address of our registered office is Great West House, GW1, 17th floor, Great West Road, Brentford,
United Kingdom TW8 9DF.
Events during the period
On November 27, 2015, Abengoa, our largest shareholder, filed a communication pursuant to article 5 bis
of the Spanish Insolvency Law 22/2003 with the Mercantile Court of Seville nº 2 which granted Abengoa a
deadline of March 28, 2016 to reach an agreement with its main financial creditors. On March 28, 2016,
Abengoa filed an application for judicial approval of a standstill agreement which had the support of
75.04% of the financial creditors and on April 6, 2016, the judge issued judicial approval and extended the
effects of the stay of the obligations referred to in the standstill agreement until October 28, 2016, to all
creditors. On September 24, 2016, Abengoa announced that it had signed a restructuring agreement with a
group of investors and creditors and opened an accession period for the rest of its creditors. On October 28,
2016, Abengoa filed an application for judicial approval of the restructuring agreement which, according to
the announcement, had received support of 86% of its financial creditors, above the 75% legally required
limit. On November 8, 2016, the judge declared the judicial approval extending the agreement terms to the
rest of the creditors. On November 22, 2016, Abengoa obtained the approval of its shareholders for the
restructuring agreement and measures required to implement its restructuring. On December 16, 2016,
Abengoa obtained the approval of the Chapter 11 plan for its U.S. subsidiaries and on December 20, 2016,
Abengoa announced the insolvency proceeding of Abengoa Mexico. On February 3, 2017, Abengoa
announced they have obtained approval from 94% of its financial creditors after opening an extraordinary
accession period. On February 14, 2017, Abengoa announced that it launched a waiver request in order to
approve certain amendments to the restructuring agreement and opened a voting period ending on February
28, 2017. The implementation of Abengoa’s restructuring is subject to a series of conditions precedent
which have not been fully completed as of the date of this report.
The financing arrangements of some of our project subsidiaries contain cross-default provisions related to
Abengoa, such that debt defaults by Abengoa, subject to certain threshold amounts and/or a restructuring
process, 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. During the year 2016, we have secured waivers or forbearances
for most of the projects which contained these clauses. We still have cross-default provisions in Kaxu and
we are currently in discussions with its project finance lenders to secure a waiver or forbearance. In
addition, the financing agreements of some of the projects contain change of ownership provisions, such
that they require that Abengoa maintains a minimum ownership on Atlantica Yield. During the year 2016,
we have also obtained waivers and forbearances for most of the projects and we are currently in
discussions with the lenders of ACT and Kaxu. In the case of Solana and Mojave, the forbearance we
4
obtained from the U.S. Department of Energy, or the DOE, with respect to these assets covers reductions
of Abengoa’s ownership resulting from (i) a court-ordered or lender-initiated foreclosure pursuant to the
existing pledge over Abengoa’s shares of the Company that occurs prior to March 31, 2017, (ii) a sale or
other disposition at any time pursuant to a bankruptcy proceeding by Abengoa, (iii) changes in the existing
Abengoa pledge structure in connection with Abengoa’s restructuring process, aimed at pledging the
shares under a new holding company structure, and (iv) capital increases by us. In the event of other
reductions of Abengoa’s ownership below the minimum ownership threshold resulting from sales of shares
by Abengoa, DOE remedies will not include debt acceleration, but DOE remedies available would include
limitations on distributions to us from our subsidiaries. In addition, the minimum ownership threshold for
Abengoa in us has been reduced from 35% to 30%. We continue to work on obtaining waivers or
forbearances for Kaxu and ACT.
In addition, on January 29, 2016, Abengoa informed us that several indirect subsidiaries of Abengoa in
Brazil, including ACBH, have initiated an insolvency procedure under Brazilian law (“reorganizaçao
judiciaria”) as a “Pedido de processamento conjunto”, which means the substantial consolidation of the
three main subsidiaries of Abengoa in Brazil, including ACBH. In April 2016, Abengoa presented a
consolidated restructuring plan in the Brazilian Court, including ACBH and two other subsidiaries.
In 2016, we did not receive the expected dividend payments from ACBH and, as included in the
agreements related to the preferred equity investment in ACBH, management has executed our rights in
retaining the dividends payable to Abengoa. In the third quarter of 2016, we signed an agreement with
Abengoa on ACBH preferred equity investment, among other things, with the following main
consequences:
(cid:2)
Abengoa acknowledged it failed to fulfil its obligations under the agreements related to the preferred
equity investment in ACBH and, as a result, we are the legal owner of the dividends we withheld
from Abengoa, amounting to $28.0 million;
(cid:2)
(cid:2)
(cid:2)
Abengoa recognized a non-contingent credit for €300 million (approximately $316 million),
corresponding to the guarantee provided by Abengoa, S.A. regarding the preferred equity investment
in ACBH, subject to restructuring and subject to adjustments for dividends retained after the
agreement. On October 25, 2016, we signed Abengoa’s restructuring agreement and accepted,
subject to implementation of the restructuring, to receive 30% of the amount (approximately $95
million nominal value) of this credit in the form of tradable notes to be issued by Abengoa. Upon
completion of the restructuring, this debt, or Restructured Debt, would have a junior status within
Abengoa’s debt structure post-restructuring. The remaining 70% (approximately $221 million
nominal value) would be received in the form of equity in Abengoa. As of the date of this report,
there is a high degree of uncertainty on the value of this debt and equity;
In order to convert this junior debt into senior debt, Atlantica Yield has agreed, subject to
implementation of the restructuring, to participate in Abengoa’s issuance of asset-backed notes, or
the New Money 1 Tradable Notes, with up to €48 million (approximately $51 million), subject to
scale-back following the allocation process contemplated in Abengoa’s restructuring. In the fourth
quarter of 2016, we have reached an agreement with an investment fund to sell them approximately
50% of the New Money Notes we are assigned, as a result we expect the final investment to be less
than €24 million (approximately $25 million). The New Money 1 Tradable Notes are backed by a
ring-fenced structure including Atlantica Yield’s shares and A3T, a cogeneration plant in Mexico.
The New Money 1 Tradable Notes offer the highest level of seniority in Abengoa’s debt structure
post-restructuring. Upon our purchase of the New Money 1 Tradable Notes, the Restructured Debt
would be converted into senior debt;
Upon receipt of the Restructured Debt and Abengoa equity, we would waive our rights under the
ACBH agreements, including our right to retain the dividends payable to Abengoa.
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
5
America (Peru, Chile, Uruguay and Brazil) and EMEA (Spain, Algeria and South Africa). We intend to
expand, maintaining North America, South America and Europe as our core geographies. Our portfolio
consists of 13 renewable 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 off-takers and collectively have a weighted average remaining contract life of approximately 21 years
as of December 31, 2016.
6
27
23
19
18
17
18
16
24
27
16
18
18
21
21
17
The following table provides an overview of our current assets as of December 31, 2016:
Ownership Location
Arizona
(USA)
100%
Class B(3)
Currency(1)
U.S. dollar
Capacity
(Gross)
Off-taker
Counterparty
Credit
Rating (2)
COD
Contract
Years Left
280 MW
APS
A-/A3/BBB+
4Q 2013
100%
California
(USA)
U.S. dollar
280 MW
PG&E
BBB/Baa1/
A-
4Q 2014
Solaben
1/6(12) ..........
Renewable
(Solar)
100%(19)
Spain
Euro
2x50 MW
70%(5)
Spain
Euro
2x50 MW
74%(7)
Spain
Euro
2x50 MW
100%
Spain
Euro
31 MW
100%
Spain
Euro
2x50 MW
100%
Spain
Euro
2x50 MW
100%
Spain
Euro
3x50 MW
80%(20)
Spain
51%(13)
South Africa
Euro
Rand
1 MW
100 MW
Eskom
100%
Uruguay
U.S. dollar
50 MW
Uruguay
100%
Uruguay
U.S. dollar
50 MW
Uruguay
100%
Mexico
U.S. dollar
300 MW
Pemex
100%
100%
100%
Peru
Peru
Peru
U.S. dollar
362 Miles
U.S. dollar
569 Miles
Peru
Peru
Wholesale market/
Spanish Electric
System
Wholesale market/
Spanish Electric
System
Wholesale market/
Spanish Electric
System
Wholesale market/
Spanish Electric
System
Wholesale market/
Spanish Electric
System
Wholesale market/
Spanish Electric
System
Wholesale market/
Spanish Electric
System
Wholesale market/
Spanish Electric
System
BBB/Baa2/
BBB+
2Q 2012 &
4Q 2012
21 / 20
BBB+/Baa2/
BBB+
2Q 2012 &
4Q 2012
20 / 20
BBB+/Baa2/
BBB+
1Q 2007 &
2Q 2009
15 / 17
BBB+/Baa2/
BBB+
3Q 2011 &
4Q 2011
20 / 20
BBB+/Baa2/
BBB+
2Q 2012 &
3Q2012
21 / 21
BBB+/Baa2/
BBB+
2Q 2010 &
2Q 2010 &
3Q 2010
18 / 18 / 19
3Q 2013
22 / 22
BBB+/Baa2/
BBB+
BBB+/Baa2/
BBB+
BBB-
/Baa2/BBB(14)
BBB-/Baa2/
BBB-(15)
BBB-/Baa2/
BBB-(15)
BBB+/Baa1/
BBB+
BBB+/A3/
BBB+
BBB+/A3/
BBB+
3Q 2006
1Q 2015
2Q 2014
4Q 2014
2Q 2013
1Q 2011
1Q 2014
Assets
Solana ............
Mojave ...........
Solaben 2/3(4) .
Solacor 1/2(6) ..
PS10/20(8) .......
Type
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Helioenergy
1/2(9) ...........
Renewable
(Solar)
Helios 1/2(10) ..
Renewable
(Solar)
Solnova
1/3/4(11) .......
Renewable
(Solar)
Seville PV
Kaxu ..............
Palmatir ..........
Cadonal ..........
ACT ...............
ATN ...............
ATS ...............
ATN2 .............
Quadra 1 ........
Quadra 2 ........
Palmucho .......
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Wind)
Renewable
(Wind)
Conventional
Power
Transmission
Line
Transmission
Line
Transmission
Line
Transmission
Line
Transmission
Line
Transmission
Line
U.S. dollar
81 miles
Las Bambas
Not rated
2Q 2015
100%
Chile
U.S. dollar
43 Miles
Sierra Gorda
Not rated
2Q 2014
100%
Chile
U.S. dollar
38 Miles
Sierra Gorda
Not rated
1Q 2014
100%
Chile
Honaine ..........
Water
25.5%(17)
Algeria
Skikda ............
Water
34.2%(18)
Algeria
U.S. dollar
U.S. dollar
U.S. dollar
6 Miles
Endesa Chile(16)
BBB+/Baa2/
BBB+
4Q 2007
7 M ft3/day
Sonatrach
Not rated
3Q 2012
3.5 M
ft3/day
Sonatrach
Not rated
1Q 2009
__________________
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.
(3) On September 30, 2013, Liberty Interactive Corporation invested $300 million in Class A membership interests in exchange for the right to
receive 61.20% of taxable losses and distributions until such time as Liberty reaches a certain rate of return, or the “Flip Date”, and 22.60%
of taxable losses and distributions thereafter.
Itochu Corporation, a Japanese trading company, holds 30% of the shares in each of Solaben 2 and Solaben 3.
(4) Solaben 2 and Solaben 3 are separate special purpose vehicles with separate agreements, but they are treated as a single platform.
(5)
(6) Solacor 1 and Solacor 2 are separate special purpose vehicles with separate agreements but they are treated as a single platform.
(7)
JGC Corporation, a Japanese engineering company, holds 13% of the shares in each of Solacor 1 and Solacor 2.
(8) 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.
7
(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) Instituto para la Diversificacion y Ahorro de la Energia, or Idea, a Spanish state-owned company holds 20% of the shares in Seville PV.
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 (the United States and
Mexico), South America (Peru, Chile, Brazil and Uruguay) and EMEA (Spain, Algeria and South Africa).
We intend to expand, maintaining North America, South America and Europe as our core geographies.
We intend to grow our business mainly through acquisitions of contracted assets in operation, in the
segments where we are already present, maintaining renewable energy as our main segment and with a
focus in North and South America.
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.
We signed an exclusive agreement with Abengoa, 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 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, the Middle East and Asia.
Additionally, we plan to sign similar agreements or enter into partnerships with other developers or asset
owners to acquire assets in operation. We may also invest directly or through investment vehicles with
partners in assets under development or construction, ensuring that such investments are always a small
part of our total investments. Finally, we also expect to acquire assets from third parties leveraging the
local presence and network we have in the geographies and sectors in which we operate.
With this business model, our objective is to pay a consistent and growing cash dividend to shareholders,
which is sustainable on a long-term basis. We expect to distribute a significant 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.
In general, we intend to use the following investment guidelines in evaluating prospective acquisitions in
order to successfully execute our accretive growth strategy:
(cid:2) High quality off-takers, with long-term contracted revenue, ideally longer than 20 years.
(cid:2) Project financing for each individual project.
(cid:2) Operations and maintenance contract in place at each project.
(cid:2) Management and operational systems and processes at our level.
8
(cid:2) 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,
Colombia and the European Union, as well as selected countries in Africa.
(cid:2) 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.
Our plan for executing this strategy includes the following key components:
(cid:2) 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.
(cid:2) 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.
(cid:2)
(cid:2)
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 Abengoa, from third parties
and from potential new future sponsors. We plan to sign agreements or enter into partnerships with
other developers or asset owners to acquire assets in operation. We may also invest directly or through
investment vehicles with partners a very limited portion of our cash in assets under development. We
also expect to acquire assets from third parties leveraging the local presence and network we have in
the geographies and sectors in which we operate.
(cid:2) Foster a low-risk approach. We intend to maintain, over time, a portfolio of contracted assets with a
low-risk profile due to creditworthy off-take 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.
(cid:2) 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:
(cid:2) Stable and predictable long-term U.S. and international cash flows with attractive tax profiles
(cid:2) Highly diversified portfolio by geography and technology
(cid:2) Strong corporate governance with a majority independent board and an experienced and incentivised
management team
9
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 three first years of operation, we have focused on three priorities:
1. Creating in the case of new assets and reinforcing the processes and systems required to manage and
control our contracted assets internationally.
2. Maximizing performance of our asset portfolio. This is an area where in 2017 we still need to continue
improving the performance of some assets, including Solana and Kaxu.
3. Acquiring and integrating new contracted assets.
During 2016, we have also focused our efforts in eliminating risks associated to our sponsor’s insolvency
process and in becoming an independent company.
In this sense, during 2016 we have built our own back-office independent from Abengoa and we have
separated our IT systems.
In addition, we have obtained waivers and forbearances for most of our projects. Some of our projects
contained cross-default provisions and change of ownership provisions with Abengoa, such that debt
defaults by Abengoa, subject to certain threshold amounts and/or a restructuring process, could trigger
defaults under such project financing arrangements. Some of our projects also included change of
ownership that would be triggered if Abengoa ceases to own at least 35% of Atlantica Yield’s shares.
During the year 2016, after obtaining waivers and forbearances for most of our projects, we are still
working in securing waivers or forbearances for Kaxu for cross-default and change of ownership and ACT
for change of ownership.
In 2016, the Company and its subsidiaries reported revenues of $971.8 million (2015: $790.9 million) and
a loss for the year attributable to the parent company of $4.9 million (2015: loss of $209.0 million).
$ in millions
Revenue
Operating Profit
Profit / (Loss) for the Year
Loss for the Year Attributable to the Parent Company
2016
971.8
402.4
1.6
(4.9)
2015
790.9
344.5
(198.2)
(209.0)
As of 31 December 2016, our cash and cash equivalents at the project company level were 472.6 million as
compared with $469.2 million as of 31 December 2015. In addition, our cash and cash equivalents at the
Atlantica Yield level were $122.2 million as of 31 December 2016 compared with $45.5 million as of 31
December 2015.
We expect our on-going 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,
subject to market conditions. Our financing agreements consist mainly of the project-level financings for
our various assets, the 2019 Notes and the Credit Facility. In addition, on 10 February 2017, we signed a
Note Issuance Facility that we intend to use to repay and cancel Tranche B of our Revolving 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 2016, we paid total dividends of $0.453 per share to our shareholders and from that amount we retained
$19.0 million of the dividend attributable to Abengoa in accordance with the provisions of the agreements
reached with Abengoa in relation to our preferred equity investment in ACBH. In 2015, we paid $1.4292
per share and from that amount we retained $9.0 million of the dividend attributable to Abengoa in
10
accordance with the provisions of the agreements reached with Abengoa in relation to our preferred equity
investment in ACBH.
As previously stated within this Consolidated 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
21 years as of December 31, 2016. To gain an overall fair review of the business we enclose below a
detailed breakdown of our results of operations for the years ended as of December 31, 2016 and 2015:
11
$ in millions
Revenue
Other operating income
Raw materials and consumables used
Employee benefit expenses
Depreciation, amortization and impairment charges
Other operating expenses
Operating profit
Financial income
Financial expense
Net exchange differences
Other financial income/(expense), net
Financial expense, net
Share of profit/(loss) of associates carried under the equity method
Profit/(Loss) before income tax
Income tax
Profit/(Loss) for the year
Profit/(loss) attributable to non-controlling interests
Loss for the year attributable to the parent company
2016
2015
$
$
$
$
$
$
971.8 $
65.5
(26.9)
(14.7)
(332.9)
(260.3)
402.4 $
3.3
(408.0)
(9.6)
8.5
( 405.8) $
6.7
3.3 $
(1.7)
1.6 $
(6.5)
(4.9) $
790.9
68.8
(23.2)
(5.8)
(261.3)
(224.9)
344.5
3.5
(333.9)
3.9
(200.2)
(526.7)
7.8
(174.4)
(23.8)
(198.2)
(10.8)
(209.0)
Revenues
Revenues increased by 22.9% to $971.8 million in the year ended 31 December 2016, compared with
$790.9 million for the year ended 31 December 2015. The increase is largely attributable to the
acquisitions of Helioenergy 1/2, Helios 1/2, Solnova 1/3/4, ATN2 in the second quarter of 2015 as well as
Kaxu and Solaben 1/6 in the third quarter of 2015. Additionally, production at Mojave increased as the
project entered into its second year of operations. These resulted in a net electricity production of 5,503
GWh in operation for the year ended December 31, 2016, compared with 5,001 GWh produced during the
year ended December 31, 2015.
Other operating income
The following table sets forth our other operating income for the years ended December 31, 2016 and
2015:
Other operating income
Grants
Income from various services
Total
Year ended December
31,
2016
2015
$ in millions
59.1
6.4
65.5
67.8
1.0
68.8
Other operating income decreased by 4.8% to $65.5 million for the year ended December 31, 2016,
compared with $68.8 million for the year ended December 31, 2015. The decrease was mainly due to the
decrease in Grants to $59.1 million for the year ended December 31, 2016 from $67.8 million in the same
period of 2015. Income classified as grant represents the financial support provided by the U.S.
Administration to Solana and Mojave and consists of ITC Cash Grants and an implicit grant related to the
below market interest rates of the project loans with the Federal Financing Bank. The decrease relates to
the implicit grant of Mojave and is driven by the October 2015 repayment of the short-term tranche of its
loans. Income from various services for the year ended December 31, 2016 increased compared to the year
ended December 31, 2015 due to the $5.1 million insurance income recorded at Solana.
12
Raw materials and consumables used
Raw materials and consumables used increased by $3.7 million to $26.9 million for the year ended
December 31, 2016, compared with $23.2 million for the year ended December 31, 2015, primarily due to
the higher volume of spare parts and consumables at Solana and raw materials used at the projects acquired
during 2015.
Employee benefits expenses
Employee benefit expenses increased by $9.0 million to $14.8 million for the year ended December 31,
2016, compared with $5.8 million for the year ended December 31, 2015. The increase is mainly due to the
transfer of employees previously employed by subsidiaries of Abengoa who were providing services to
Atlantica Yield under the Support Services Agreement to subsidiaries of Atlantica Yield. The transfer
occurred over the first six months of 2016 and the Support Service Agreement was terminated in the
second quarter of 2016. Additionally, during 2015, Management employees of Atlantica Yield were
transferred to companies within the perimeter of Atlantica Yield and the Executive Services Agreement
was terminated, which has also caused an increase in employee benefits expenses.
Depreciation, amortization and impairment charges
Depreciation, amortization and impairment charges increased by 27.4% to $332.9 million for the year
ended December 31, 2016, compared with $261.3 million for the year ended December 31, 2015. The
increase was largely attributable to the depreciation and amortization expenses of Helios 1/2, Solnova 1/3/4
and Helioenergy 1/2 acquired in the second quarter of 2015 as well as Kaxu and Solaben 1/6 acquired in
the third quarter of 2015. Additionally, in the fourth quarter of 2016, we recognized $20.3 million of
impairment in our wind assets mainly due to lower than expected wind resource in the previous two years
(see Note 13 to our Consolidated Financial Statements).
Other operating expenses
The following table sets forth our other operating expenses for the years ended December 31, 2016 and
2015:
13
Other operating expenses
Leases and fees
Operation and maintenance
Independent professional services
Supplies
Insurance
Levies and duties
Other expenses
Total
Year ended December 31,
2016
2015
$ in
millions
5.3
133.3
30.5
17.2
23.4
44.5
6.2
260.3
% of
$ in
revenue
0.5%
13.7%
3.2%
1.8%
2.4%
4.6%
0.6%
26.8%
millions
3.9
116.5
19.0
18.0
20.2
32.4
14.9
224.9
% of
revenue
0.5%
14.7%
2.4%
2.3%
2.6%
4.1%
1.9%
28.4%
Other operating expenses increased by 15.8% to $260.3 million for the year ended December 31, 2016,
compared with $224.9 million for the year ended December 31, 2015. This was primarily due to the other
operating expenses of the companies acquired in the second and third quarter of 2015. Levies and duties
correspond largely to the electricity tax of our Spanish solar assets and the increase is mainly attributable to
the acquisition of Helios 1/2, Solnova 1/3/4, Helioenergy 1/2 and Solaben 1/6.
We have changed our presentation of “Other operating expenses” to better reflect the nature of our
business and costs. Prior period amounts have been reclassified to conform to the new classification
presented in the table above.
Operating profit/(loss)
As a result of the above factors, operating profit increased by 16.8% to $402.4 million for the year ended
December 31, 2016, compared with $344.5 million for the year ended December 31, 2015.
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,
2016
2015
$ in millions
3.3
(408.0)
(9.6)
8.5
(405.8)
3.5
(333.9)
3.9
(200.2)
(526.7)
Net financial expense decreased to $405.8 million for the year ended December 31, 2016, compared with
$526.7 million for the year ended December 31, 2015, mainly due to the impairment of the preferred
equity investment in ACBH recognized in 2015 partially offset by the increase in the financing expense in
2016. Both effects are analysed below.
Financial expense
The following table sets forth our financial expense for the years ended December 31, 2016 and 2015:
Financial expense
Expenses due to interest:
Loans with credit entities
Other debts
Interest rates losses derivatives: cash flow hedges
Year ended December
31,
2016
2015
$ in millions
(242.9)
(91.0)
(74.1)
(197.9)
(81.9)
(54.1)
14
Total
(408.0)
(333.9)
Financial expense increased by 22.2% to $408.0 million for the year ended December 31, 2016, compared
with $333.9 million for the year ended December 31, 2015. This increase was largely attributable to
interest expenses from loans and credits of the assets acquired in the second (Helios 1/2, Solnova 1/3/4,
Helioenergy 1/2 and ATN2) and third quarter (Kaxu and Solaben 1/2) of 2015. Interest expense also
increased due to the interest corresponding to the Tranche B of the Credit Facility closed on June 26, 2015
and fully drawn in September 2015.
Interest on other debt is primarily interest on the notes issued by ATS, Solaben 1/6 and ATN, and the 2019
Notes, as well as interest related to the investment from Liberty in Solana. The increase is mainly due to
the acquisition of Solaben 1/6 in the third quarter of 2015.
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 Financial Statements. The
increase is principally due to the acquisition of solar assets in Spain that usually hedge interest rate risk
with swaps.
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,
2016
2015
$ in millions
28.0
13.0
(22.1)
(10.4)
8.5
18.4
1.5
(210.4)
(9.7)
(200.2)
Other financial income, net increased to $8.5 million income for the year ended December 31, 2016,
compared with a $200.2 million financial expense, net for the year ended December 31, 2015.
On January 29, 2016, Abengoa informed us that several indirect subsidiaries of Abengoa in Brazil,
including ACBH, initiated an insolvency procedure under Brazilian law (“reorganizaçao judiciaria”),
including ACBH. According to the agreement reached with Abengoa in the third quarter of 2016, they
have acknowledged that Atlantica Yield is the legal owner of the dividends retained from Abengoa
amounting to $28.0 million. As a result, we have recorded $28.0 million in our Consolidated Financial
Statements, in accordance with the accounting treatment given previously to the ACBH dividend.
Additionally, taking into account the agreement signed with Abengoa regarding the ACBH preferred
equity investment, we have performed a valuation of the instrument as of 31 December 2016 using a
probability weighted average method. This valuation method considers the probability of the restructuring
agreement being made effective and has resulted in an impairment of $22.1 million (see Note 23 to the
Annual Consolidated Financial Statements). This impairment is a non-cash item.
The increase in other financial income corresponds principally to $7.7 million of subordinated debt with
the EPC contractor of one of our assets which has been cancelled in the third quarter of 2016 and financial
income from the early payment of payables with Abengoa.
Other financial losses mainly include guarantees and letters of credit, wire transfers and other bank fees
and other minor financial expenses.
Share of profit/(loss) of associates carried under the equity method
Share of profit of associates carried under the equity method decreased to $6.7 million for the year ended
December 31, 2016, compared with a $7.8 million for the year ended December 31, 2015. The decrease is
15
mainly due to the results of Helioenergy 1/2 which were recorded under the equity method from the
acquisition of the initial 29.6% stake in February 2015 until May 2015 when we gained control of the asset
and started consolidating it.
Profit/(loss) before income tax
As a result of the above factors, we reported a profit amounting to $3.3 million for the year ended
December 31, 2016, compared with a loss before income taxes of $174.4 million for the year ended
December 31, 2015.
Income tax
Income tax expense amounted to $1.7 million for the year ended December 31, 2016, compared with an
income tax expense of $23.8 million for the year ended December 31, 2015. In 2016, our effective tax rate
differs from the average nominal tax rate mainly due to a net of different effects. Permanent differences in
some jurisdictions, particularly in Mexico had a positive impact in our income tax expense. This effect was
offset by tax losses for which we did not record a tax credit in some jurisdictions, in accordance with IFRS.
Income tax expense amounted to $23.8 million for the year ended December 31, 2015. Our effective tax
rate differed from the average nominal tax rate mainly due to permanent differences resulting primarily
from inflationary effects in Mexico and incentives related mainly to the tax exemption of ACBH
dividends.
Loss/(profit)) attributable to non-controlling interest
Profit attributable to non-controlling interest decreased by 39.7% to $6.5 million in the year ended
December 31, 2016, compared with $10.8 million in the year ended December 31, 2015 mainly due to
lower results in most of the projects in which we have partners.
Profit/(loss) attributable to the parent company
As a result of the above factors, loss attributable to the parent company decreased to $4.9 million for the
year ended December 31, 2016, compared with a loss attributable to the parent company of $209.0 million
for the year ended December 31, 2015.
The factors affecting our results of operations are:
(cid:2) Regulation
(cid:2) Power purchase agreements and other contracted revenue agreements
(cid:2) Tax incentives in the United States for renewable energy assets
(cid:2) Tax accelerated depreciation for Spanish new assets
(cid:2) Specific corporate income tax rules in Mexico
(cid:2) Capital expenditures
(cid:2)
Interest rates
(cid:2) Exchange rates
In addition, the comparability of our results of operations is affected by the acquisitions we closed during
the year 2015.
With the fleet of assets that we own, we believe that we have 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, third parties or new potential future sponsors.
16
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.
17
Renewable Energy
MW in operation1
GWh produced
Conventional Power
MW in operation1
GWh produced2
Availability (%)3
Electric Transmission
Miles in operation
Availability (%)3
Water
Mft3 in operation
Availability (%)3
As of December, 31
2015
2016
1,442
3,087
300
2,416
99.1%
1,099
100.0%
10.5
101.8%
1,441
2,536
300
2,465
101.7%
1,099
99.9%
10.5
101.5%
____________________________
1 Represents total installed capacity in assets owned at the end of the period, regardless of our percentage of
ownership in each of the assets.
2 Conventional production and availability were impacted by a periodic scheduled major maintenance in February
2016.
3 Availability refers to actual availability divided by contracted availability.
Principal risks and uncertainties
The Company and its underlying assets are subject to a number of risks ranging from operating, regulatory,
financial and connection to Abengoa. 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
Poor performance of assets.
Loss of revenues and cash flows at the
project company
level, which has
subsequent impact on cash returns to
the Company. In addition, we rely on
third parties for the supply of services
and
including
technologically complex equipment.
equipment,
Assessment of change in risk year-
on-year
Operational risks are higher in younger
assets than in more mature ones and
likely to remain similar in the next few
years.
(cid:2) Access to future acquisitions.
(cid:2) Impede our ability to execute our
growth strategy.
(cid:2) In order to grow, we depend on the
availability of low risk contracted
assets with stable cash flows. Given
that we distribute as dividends a
significant portion of the case we
also depend on
generate, we
financing availability
finance
to
growth, including access to capital
markets. During the first half of
2016, access to financing has been
curtailed by market conditions and
other factors.
Mitigation of risk
(cid:2) Dedicated
supervisory
and
management teams.
(cid:2) Reporting and monitoring systems in
place.
(cid:2) Proven technology through years of
experience.
(cid:2) Operation
and
maintenance
contracted with specialists.
(cid:2) Tracked down alternative O&M
opportunities in the market.
(cid:2) Maintain ROFO agreement with
current sponsor.
(cid:2) Seek to sign similar agreements or
enter into partnerships with other
developers or asset owners to acquire
assets.
(cid:2) Pursue
parties.
(cid:2) Dedicated
acquisitions
from
third
supervisory
to
teams
and
locate
management
opportunities within the market.
(cid:2) Regulation -
legal, environmental
and general compliance - of each
asset.
(cid:2) Uncertainty or changes to any such
regulation could adversely affect the
profitability of our current plants and
Although there have been no material
changes for the underlying assets in
2016, there may be risks in the future
due to events during the period, in
(cid:2) Investment grade ratings in most of
our assets.
(cid:2) Strong power purchase agreement or
18
Risk
Impact
Assessment of change in risk year-
on-year
our ability to refinance projects.
particular:
(cid:2) In
the
US,
current
the
administration’s
proposed
environmental and tax policies may
create regulatory uncertainty in the
clean energy sector and may lead to a
reduction or removal of various clean
initiatives
energy programs and
designed to curtail climate change. In
addition,
US
administration has made public
statements regarding reducing the
corporate
limiting
interest expense deductibility.
rate and
current
the
tax
Mitigation of risk
concession contracts in most assets.
(cid:2) Management
and
compliance
teams
tracking down any potential change.
specialized
continuously
(cid:2) Reporting and monitoring system.
(cid:2) Financing
contract.
agreements
in
each
(cid:2) Restrictions to distribute cash out of
(cid:2) Additional risks derived from the
(cid:2) Reporting
and monitoring
of
project companies.
Company’s acquisitions.
covenants in each contract.
(cid:2) In addition, we may be exposed to
political, social and macroeconomic
risks
the United
to
Kingdom’s potential exit from the
European Union.
relating
(cid:2) Declare project finance debt to be
due and payable immediately.
(cid:2) Cross-default provisions and change
of ownership provisions related to
Abengoa (see below).
(cid:2) Connection to Abengoa.
(cid:2) Our reputation is still closely related
to Abengoa’s reputation.
(cid:2) Existing operation and maintenance
agreements, outstanding debt, cross-
minimum
default
provisions,
ownership
existing
provisions,
guarantees and other risks.
(cid:2) Liquidity risk.
(cid:2) Not being able to meet our financial
obligations as they fall due.
(cid:2) Interest rate and foreign currency
exchange rate.
(cid:2) Increases in rates would raise our
project
expenses
finance
companies or corporate level.
at
(cid:2) Cross-default provisions related to
Abengoa could trigger defaults under
project
arrangements
(Kaxu).
financing
in
(cid:2) Change of ownership provisions
related to Abengoa could trigger
financing
defaults under project
case Abengoa
arrangements
ownership
of Atlantica Yield
decreased below the minimum levels
defined in the financing agreements
(ACT, Kaxu and under non-forborne
limited circumstances Solana and
Mojave).
(cid:2) Reputational relation to Abengoa is
lower but it still exists in some areas.
(cid:2) We have set up our own independent
back office and our own IT systems
separate from Abengoa.
three
facility has
We have signed a note issuance facility
for €275 million (approximately $294
million) the proceeds of which, we
intend to use towards repayment and
cancellation of the Tranche B of the
Credit Facility which matures
in
December 2017.
The new note
series
issuance
maturing in 2022 (€92 million), in
2023 (€91.5 million) and 2024 (€91.5
million)
(cid:2) In addition to the existing Currency
entered with
Swap Agreement
from
Abengoa
two
Spanish assets, we
leading
currency options with a
financial
to guarantee
minimum Euro-U.S. dollar exchange
rates
for distributions
institution
signed
(cid:2) No material
the
underlying assets related to interest
rates.
changes
for
(cid:2) Management
compliance
continuously
change.
and
specialized
and
teams
legal
tracking down any
(cid:2) Contingency plan in each key area.
(cid:2) Corporate governance.
(cid:2) New corporate brand and new legal
name.
(cid:2) Cross-default
provisions
expire
progressively over time.
(cid:2) Current discussions with our project
finance lenders.
(cid:2) Processes and systems in place.
(cid:2) Cash in hand.
(cid:2) At least 10% of cash flows generated
by our project companies and
distributed to the holding company
retained.
(cid:2) Possibility to change dividend policy.
(cid:2) Refinancing
bullet-maturity
of
corporate debt
(cid:2) Policy to hedge in order to have a
90% at least of cash flows generated
by our project companies in USD or
hedged to USD.
(cid:2) 91% of our
interest
total
risk
exposure is fixed or hedged.
19
Risk
Impact
(cid:2) Credit risk
(cid:2) Not being able
to collect our
revenues
Assessment of change in risk year-
on-year
(cid:2) We consider the credit risk with
clients limited as our revenues and
other revenue contracted agreements
are with electric utilities and states-
owned entities
Mitigation of risk
(cid:2) 95% of our clients are investment
grade offtakers (based on Moody’s
rating). As of 31 December 2016
and 2015, we did not have trade
receivables outstanding for more than
three months.
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 the environment sectors.
Since its foundation the Company manages a portfolio of renewable, clean conventional (cogeneration
technology) and water assets and transmissions lines. In 2016 we incorporated to our portfolio of
renewable assets a photovoltaic asset, consolidating Atlantica Yield efforts to continue promoting a low-
carbon energy industry and a business model based on a sustainable development. Atlantica Yield intends
to take advantage of favourable trends in the power generation, electric transmission, and water sectors
globally, related to the 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 and South America.
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 milestones and figures for 2016 are:
Management System
We have established a management system that guarantees that the Company complies with regulations in
force and with our policies in each of the markets we operate. In this sense, we measure the environmental
impact of our activities, monitoring, identifying and implementing action plans to reduce that impact at
each of our assets. Every year we set improvement targets in order to achieve higher quality, environmental
standards.
Throughout the year 2016 we have been able to renovate the certifications obtained in 2015 by the
Company regarding the following recognized standards:
(cid:2) ISO 9001: Certification for Quality Management System.
(cid:2) ISO 14001: Certification for Environmental Management System.
(cid:2) OHSAS 18001: Certification for Occupational Health and Safety.
Greenhouse gas emissions
As a Company based in the United Kingdom, Atlantica Yield complies with the requirements from the
Climate Change Act 2008. Companies in compliance with the greenhouse gas reporting regulation, a
requirement contained in this framework law, must report their greenhouse gas emissions. Additionally,
our greenhouse gas emissions management fulfill with the requirements of the Commission Regulation
(EU) No 601/2012.
Our focus in renewables and sustainable technologies allows Atlantica Yield to have greenhouse gas
emissions rates significantly lower than fossil fuels power generators.
20
Emission
Regardin
classified
ns figures on
ng this intern
d our emissio
n this report a
ational stand
ons into 2 gro
are quantifie
dard, which w
oups:
ed and report
was compile
ted according
d according
g to the guid
to the Green
delines of the
n House Gas
4.
e ISO 14064
e
Protocol, we
ns of greenh
house gas fro
om sources th
hat are owne
ed or control
lled by the C
d
Company and
t emissions
of greenhou
use gas from
m consumpti
ion of purch
hased electri
icity, heat o
r
(cid:2) Scope
e 1: Emission
roup.
the Gr
(cid:2) Scope
e 2: Indirect
m.
steam
Scope 3 e
to be repo
total of o
emissions, w
orted accord
ur emissions
which are the
ding to the Un
s, therefore w
e emissions a
nited Kingdo
we do not inc
associated to
om regulatio
clude them in
the supply c
on. Besides, t
n this report.
chain or to tr
they suppose
ransport, are
e a negligible
e not required
d
e
e share of the
The total
reached
taking int
l emissions o
1,724 thousa
to account th
of carbon di
ands of tons
he maturity o
oxide equiva
, a 0.3% low
of the assets i
alent generat
wer than 201
in our portfo
ted by the C
15 values. W
olio.
Company and
We consider
d the Group
it as a notab
during 2016
6
n
ble reduction
Graph 1 s
the previo
shows the to
ously describ
ons of carbon
bed scopes.
n dioxide equ
uivalent gene
erated in 201
5 and 2016,
correspondi
ng to each o
f
Graph
h 1: Greenhous
se Gas emissio
ns breakdown
n by Scope*
* E
Emissions are
considered sin
nce acquisitio
on date of each
h asset and for
r assets that ar
re consolidate
ed.
As shown
equivalen
explained
n on the fol
nt tons of Ca
d by the high
lowing grap
arbon Dioxid
her generatio
ph, the rate o
de (“CO2”) p
n from renew
of emissions
per megawa
wables assets
per energy
att hour in 20
s in 2016.
generation h
015 to 0.30 i
has decrease
in 2016. Thi
ed, from 0.34
4
is decrease i
s
2
1
Gr
aph 2: Tons of
f CO2 emission
ns per MWh b
y Scope
90% of the
Around 9
Graph 3.
emissions ge
enerated in
2016 come
from our co
onventional p
power plant
as shown in
n
Graph 3: G
Greenhouse Ga
s emissions bre
eakdown by po
ower technolog
gy
As previ
emission
of CO2 e
ously stated
rate than pu
equivalent sav
d, generating
ure fossil fue
ved to the at
g electricity
els generators
tmosphere co
from renewa
s as shown o
ompared with
able resourc
on Graph 4. T
h a 100% fos
ces allows u
This fact imp
ssil fuels bas
s to have a
plies a total o
sed generatio
much lowe
of 3,036 ton
on.
r
s
2
22
001
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W
M
2
O
C
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f
o
s
n
o
t
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1
01
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000
Scope 1
emissions o
Yield
of Atlantica
issions of a f
Scope 1 em
generator*
g
fossil fuel
*
Source: Avera
Information A
age value of car
Administration
rbon dioxide pr
roduced per kil
owatt-hour for
different sourc
ces. Data from t
y
the U.S. Energy
Graph 4: At
tlantica Yield v
versus Fossil f
fuel generation
n GHG emissio
ons
Human r
rights
We are c
employee
rights, as
Declarati
professio
Universa
the UN a
United N
committed t
es and the re
s set out in t
ion on Fund
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and the Inter
Nations Globa
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est of the peo
the Internati
damental Prin
es of its emp
n of Human R
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al Pact.
g our busine
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Rights and it
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ghts and the
Work. Labour
executives a
as well as by
) on social ri
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pect internati
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are governed
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Atlantica Y
d by the Un
nal Agreemen
ll as the prin
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n
gnized human
rganization´
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Yield and the
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nited Nation
s
y
nts signed by
e
nciples of the
We are fu
committe
policy by
where we
directors
fully aware o
ed to respect
y implement
e are presen
to report any
of the diversi
t and create
ting it into t
nt. Our code
y illegal beha
ity of the loc
value in th
the processe
of conduct
aviour or vio
cal communi
ese local co
es that gover
references t
olations of la
ities where w
ommunities.
rn our busin
the policy, re
aws, rules, re
we operate. I
We are deli
ness activitie
equiring the
gulations.
n this sense,
ivering our h
es in all the
employees,
, we are fully
y
human right
s
geographie
s
d
officers and
Occupat
tional Healt
th and Safet
ty
Atlantica
as a tool
business
encourag
in our ass
for Occup
a Yield and it
to protect th
activity. We
ges a prevent
sets as reflec
pational Hea
ts manageme
he integrity a
e promote d
ive culture in
cted in our co
alth and Safe
ent are comm
and health o
deep capabil
n the operati
orporate heal
ty (OHSAS
mitted to prio
f our employ
ity and a sa
ion and main
lth and safety
18001) obtai
oritize and a
yees, subcon
afe operating
ntenance (“O
y policy. The
ined in 2015
actively prom
ntractors and
g culture acr
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ese efforts re
and success
mote the heal
d partners inv
ross Atlantic
ities of the su
esulted in the
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lth and safety
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ur
volved in ou
d
ca Yield and
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s
n
e certification
ated in 2016.
We activ
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encourag
vely monitor
hout acciden
ge employees
a broad ran
nts, number o
s in our asset
nge of occup
of near miss
ts to continuo
ational healt
ses and drills
ously improv
th and safety
s, not only to
ve on this ma
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atter.
mance indica
ack down thi
s
ators such a
o
is area but to
3
23
Business ethics
Atlantica Yield is building a sustainable and successful business for our customers, colleagues, partners
and investors. We are committed to promote ethical business practice and comply with all relevant laws
and regulations.
Atlantica Yield subscribes and assumes the document issued by the United Nations (UN) 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 businesses.
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 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 the rest of our
stakeholders 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 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 laws that prohibit bribery in order to support global efforts to fight corruption. Specifically, the U.S.
Foreign Corrupt Practices Act (“FCPA”) and the UK Bribery Act 2010 (“UKBA”) make it a criminal
offense for companies as well as their officers, directors, employees, and agents, to pay, promise, offer or
authorize the payment of anything of value to a foreign official, foreign political party, officials of foreign
political parties, candidates for foreign political office or officials of public international organizations for
the purpose of obtaining or retaining business. Similar laws have been, or are being, adopted by other
countries. Payments of this nature are strictly against Atlantica Yield’s policy even if the refusal to make
them may cause Atlantica Yield to lose business.
Furthermore, Atlantica Yield is committed to supporting fair and open securities markets. On this purpose,
Directors, Officers or employees are not permitted to deal on the basis of inside information or engage in
any form of market abuse.
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 Atlantica 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, 2016, we had 166 employees compared to 88 employees as of December 31, 2015.
During 2016, we finished the process of transferring and employing directly our back office personnel to
achieve full autonomy from Abengoa. The number of employees is now aligned with the right-size of our
organization and our business activities. We do not expect significant changes throughout 2017.
The following table shows the number of employees as of December 31, 2016 and 2015 on a consolidated
basis:
Geography
Year ended December
31,
2016
2015
24
EMEA
North America
South America
Corporate
Total
47
26
6
87
166
34
7
6
41
88
Per gender, 1 of our 8-member board of directors, or 13%, 1 of our 8-member senior management team, or
13%, and 66 of 166 employees, or 40% as of 31 December 2016 are women. As of 31 December 2015,
there was 1 woman in our 8-member board, representing 13%, 1 woman in our 7-member senior
management team, representing 14%, and 33 women among our 88 employees, representing 38% of the
Group personnel.
Below is the table of our senior management team:
Name
Position
Year of birth
Santiago Seage
Chief Executive Officer
Francisco Martinez-Davis
Chief Financial Officer
Manuel Silvan
Emiliano Garcia
Antonio Merino
David Esteban
Vice President Taxes, Risk Management and
Compliance
Vice President North America
Vice President South America
Vice President EMEA
Irene M. Hernandez
General Counsel
Stevens C. Moore
Vice President Corporate Strategy and Development
1969
1963
1973
1968
1967
1979
1980
1973
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 carried out
recurrently and are complemented by formal processes to evaluate the performance of each employee.
Atlantica Yield code of conduct
Our Board of Directors has adopted a code of conduct for our employees, officers and directors to govern
their relations with current and potential customers, fellow employees, competitors, government and self-
regulatory agencies, the media, and anyone else with whom the Company has contact.
The Code of Conduct encompasses the high standards of integrity we are committed to upholding. It is
designed to assist everyone in Atlantica Yield in aligning our actions and decisions with our core values.
Atlantica Yield´s Board of Directors monitors the code of conduct and any inquiries about our code of
conduct is addressed to Atlantica Yield’s VP Risks & Compliance department.
Our code of conduct is publicly 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 the Company and the
Group and encourage 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
25
the certification for Occupational Health and Safety (O0048SAS 18001) obtained in 2015 and successfully
renewed in 2016.
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 at our assets to continuously improve on this matter.
Future Developments
As previous described in this Consolidated 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 in the past will facilitate the growth of our cash available for distribution and enable us to
increase our dividend per share over time.
Research and Development
The Group did not engage in any research and development activities during the reported period.
Going Concern Basis
The directors have, at the time of approving the Consolidated 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 Group has a formalised process of budgeting, reporting and review, which provides information to the
directors which is used to ensure the adequacy of resources available for the Group to meet its business
objectives.
As disclosed in Note 17 in our Consolidated Financial Statements, Tranche B of the Credit Facility is
classified as current for $288.3 million as of 31 December 2016 as it matures in December 2017. As a
result, current liabilities in the consolidated statement of financial position are higher than current assets.
Subsequent to year-end, on 10 February 2017, the Company signed a Note Issuance Facility, a senior
secured note facility with a group of funds managed by Westbourne Capital as purchasers of the notes
issued thereunder for a total amount of €275 million (approximately $294 million), with three series of
notes. Series 1 notes for €92 million mature in 2022, series 2 notes for €91.5 million mature in 2023, and
series 3 notes for €91.5 million mature in 2024. Interest on all three series accrues at a rate per annum
equal to the sum of EURIBOR plus 4.90%. The proceeds of the Note Issuance Facility will be used for the
repayment of Tranche B under our Credit Facility, which will be terminated, as well as for general
corporate expenses incurred as part of this transaction. As a result, maturities of the corporate debt have
been extended beyond 2017.
In addition, as of 31 December 2016, the project debt agreements for the projects Kaxu and Cadonal did
not have 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 financial statements.
Maturities according to the terms of the contracts are longer than twelve months and we do not expect the
acceleration of debt to be declared by the credit entities.
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 Group generated $334.4
million from operating activities, invested $26.4 million and used $226.1 million in financing activities.
All of these resulted in a $82.0 million increase on our cash position by the year end, with a closing cash
position of $594.8 million.
The directors believe that this is above the level of cash needed to operate the business for the foreseeable
future and meet the Group’s liabilities as they fall due, as well as being used as a significant part of the
cash required to make future acquisitions.
26
Approval
This Strategic Report was approved by the board and signed on its behalf by Santiago Seage, Chief
Executive Officer on 24th February, 2017.
_________________________
Chief Executive Officer
Santiago Seage
24th February, 2017
27
Directors’ Report
The directors present their Consolidated Annual Report on the affairs of the Company and its subsidiaries,
together with the Consolidated Financial Statements and Auditor’s Report, for the year ended 31 December
2016.
Details of significant events since the balance sheet date are contained in note 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 distribute a quarterly dividend to shareholders. Our board of directors may, by resolution,
amend the cash dividend policy at any time. The determination of the amount of the cash dividends to be
paid to holders of our shares will be made by our board of directors and will depend upon our financial
condition, results of operations, cash flow, long-term prospects and any other matters that our board of
directors deem relevant.
On 8 May 2015, our board of directors approved a quarterly dividend corresponding to the first quarter of
2015 amounting to $0.34 per share, which was paid on 15 June 2015. On 29 July 2015, our board of
directors approved a quarterly dividend corresponding to the second quarter of 2015 amounting to $0.40
per share, which was paid 15 September 2015. On 5 November 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 16 December 2015, and from that amount we retained $9 million from the dividend payable to
Abengoa in accordance with the provisions of the parent support agreement.
In February 2016, taking into consideration the uncertainties resulting from the situation of our sponsor,
the board of directors decided to postpone the decision whether to declare a dividend in respect of the
fourth quarter of 2015 until the second quarter of 2016. In May 2016, considering the uncertainties that
remained in our sponsor's situation, our board of directors decided not to declare a dividend in respect of
the fourth quarter of 2015 and to postpone the decision on whether to declare a dividend in respect of the
first quarter 2016 until we had obtained greater clarity on cross default and change of ownership issues. In
August 2016, based on the secured waivers and forbearances, our board of directors decided to declare a
dividend of $0.145 per share for the first quarter of 2016 and a dividend of $0.145 per share for the second
quarter of 2016, which were paid on 15 September 2016. From that amount, we retained $12.2 million of
the dividend attributable to Abengoa. On 11 November 2016, our board of directors, based on waivers or
forbearances obtained to that date, decided to declare a dividend of $0.163 per share, which was paid on 15
December 2016. From that amount, we retained $6.7 million of the dividend attributable to Abengoa. On
24th February, 2017, our board of directors approved a dividend of $0.25 per share which is expected to be
paid on or about March 15th March, 2017 to shareholders of record on February 28th, 2017.
We intend to distribute a significant portion of our cash available for distribution, less all cash expenses
including corporate debt service and corporate general and administrative expenses and 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 and maintenance among
other factors. Accordingly, during quarters in which our projects generate cash available for distribution in
excess of the amount necessary for us to pay our stated quarterly dividend, we may reserve a portion of the
excess to fund cash distributions in future quarters. In quarters in which we do not generate sufficient cash
available for distribution to fund our stated quarterly cash dividend, if our board of directors so determines,
we may use retained cash flow from other quarters, as well as other sources of cash to pay dividend to our
shareholders.
28
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 shares which carry no right to fixed income. Each share carries the
right to one vote at general meetings of the Company.
On 22 January 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 14 May 2015, Atlantica Yield issued 20,217,260 new shares at $33.14 per share, which was based on a
3% discount compared to prices on 7 May 2015. Abengoa subscribed for 51% of the newly-issued shares
and maintained its previous stake in Atlantica Yield.
On 14 July 2015, Abengoa sold 2,000,000 shares of Atlantica Yield under Rule 144, reducing its stake to
49.1%.
On 5 March 2015, Abengoa sold an aggregate of $279 million of principal amount of exchangeable notes
due 2017, or the Exchangeable Notes. The Exchangeable Notes are exchangeable, at the option of their
holders, for ordinary shares of Atlantica Yield. As of 23 September 2016, the date of the most recent public
information, according to publicly available information, Abengoa had delivered an aggregate of 7,595,639
shares of the Company to holders that exercised their option to exchange Exchangeable Notes. As a result,
Abengoa holds 41.47% of our ordinary shares as of that date. In addition, as of 23 September 2016, there
were 16,475.61 shares of the Company subject to delivery to holders of the Exchangeable Notes upon
exchange of the outstanding Exchangeable Notes.
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:
(cid:2) Daniel Villalba
Director and Chairman of the
Board, independent
Chairman of the Board: appointed 27 November 2015
Director, independent: appointed 13 June 2014
(cid:2) Santiago Seage
Chief Executive Officer
(cid:2) William B. Richardson
(cid:2) Joaquin Fernandez de
Pierola
Director
Director
Appointed 27 November 2015 as Managing Director 1
Appointed 17 December 2013
Appointed 13 June 2014, resigned 11 November 2016
Appointed 11 November 2016
1 Santiago Seage was named Chief Executive Officer by the Shareholders’ Annual Meeting held on 11 May 2016.
Prior to that, he served as the Managing Director.
29
(cid:2) María J. Esteruelas
Director
Appointed 13 June 2014
(cid:2) Eduardo Kausel
(cid:2) Jack Robinson
(cid:2) Enrique Alarcon
(cid:2) Juan del Hoyo
Director, independent
Appointed 13 June 2014
Director, independent
Appointed 13 June 2014
Director, independent
Appointed 13 June 2014
Director, independent
Appointed 13 June 2014
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 has three standing committees which are the Audit Committee, the Nominating and
Corporate Governance Committee and Compensation Committee. The latter two committees replaced the
previous Appointments and Remuneration Committee in February 2016. 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.
Directors’ indemnities
The company has made qualifying third party indemnity provisions for the benefit of its directors which
were made during the year and are in force at the date of this report.
Political contributions
No political donations were made during 2016 nor 2015.
Substantial shareholdings
Name
Ordinary
Shares
Beneficially
Owned
Percentage
5% Beneficial Owners
Abengoa Concessions Investments Limited(1) ...................................................
Jennison Associates LLC(2) ...............................................................................
Prudential Financial,
Inc.(3)…………………………………………………………… ...................
41,557,663
7,597,607
41.47 %
7.58%
7,734,537
7.72%
Appaloosa L.P.(4)
………………………………………………………………………………
…..
5,820,326
5.81%
__________________
Notes:—
(1) This information is based solely on the Schedule 13D filed with the U.S. Securities and Exchange Commission on
September 26, 2016 with by Abengoa, S.A., a corporation incorporated under the laws of Spain. The direct beneficial
30
owner of the shares is Abengoa Concessions Investments Limited. The registered address of Abengoa, S.A. is Campus
Palmas Altas, C/ Energia Solar, 41014, Seville, Spain.
(2) This information is based solely on the Schedule 13G filed with the U.S. Securities and Exchange Commission on
February 2, 2017 by Jennison Associates LLC, or Jennison, a Delaware limited liability company. Prudential
Financial, Inc. indirectly owns 100% of equity interests of Jennison. As a result, Prudential Financial, Inc. may be
deemed to have the power to exercise or to direct the exercise of such voting and/or dispositive power that Jennison
may have with respect to the ordinary shares held in portfolios for which it furnishes investment advice. Jennison does
not file jointly with Prudential, as such, ordinary shares reported on Jennison’s Schedule 13G may be included in the
shares reported on the Schedule 13G filed by Prudential Financial, Inc. The address of Jennison is 466 Lexington
Avenue, New York, New York 10017.
(3) This information is based solely on the Schedule 13G filed with the U.S. Securities and Exchange Commission on
January 30, 2017 by Prudential Financial, Inc., or Prudential, a New Jersey corporation. The shares beneficially
owned by Prudential represent (i) 7,597,607 shares beneficially owned by Jennison Associates LLC and (ii) 136,930
shares beneficially owned by Quantitative Management Associates LLC. Prudential is a parent holding company and
the indirect parent of Jennison Associates LLC and Quantitative Management Associates LLC. The address of
Prudential is 751 Broad Street, Newark, New Jersey 07102-3777.
(4) This information is based solely on the Schedule 13G filed on February 14, 2017 by Appaloosa L.P., or ALP, a
Delaware limited partnership, Appaloosa Investment Limited Partnership I, or AILP, a Delaware limited partnership,
Palomino Master Ltd., a British Virgin Islands company, or Palomino Master, Appaloosa Management L.P., or
AMLP, a Delaware limited partnership, Appaloosa Partners Inc., a Delaware corporation, or API, and David A.
Tepper, or Mr. Tepper. ALP serves as investment adviser to AILP and Palomino Master and may be deemed to
beneficially own 5,820,326 ordinary shares. AILP may be deemed to beneficially own 2,513,197 shares (inclusive of
the shares beneficially owned by ALP). Palomino Master may be deemed to beneficially own 3,307,129 shares
(inclusive of the shares beneficially owned by ALP). AMLP is the general partner of AILP and may be deemed to
beneficially own 2,513,197 shares. API is the general partner of, and Mr. Tepper owns a majority of the limited
partnership interest in, AMLP. API may be deemed to beneficially own 2,513,197 shares. Mr. Tepper is the sole
stockholder and president of API and the controlling stockholder and president of Appaloosa Capital, Inc., or ACI,
and may be deemed to beneficially own 5,820,326 shares. ACI is the general partner of, and Mr. Tepper owns a
majority of the limited partnership interests in, ALP. The business address of ALP is 51 John F. Kennedy Parkway,
Short Hills, New Jersey 07078. The business address of each of AILP and Palomino Master is c/o Appaloosa LP, 51
John F. Kennedy Parkway, Short Hills, New Jersey 07078. The business address of AMLP is Appaloosa Management
L.P., 404 Washington Avenue, Suite 810, Miami, Florida 33139. The business address of each of API and Mr. Tepper
is c/o Appaloosa Management L.P., 404 Washington Avenue, Suite 810, Miami, Florida 33139.
Auditors
Each person who is a director at the date of approval of this Consolidated Annual Report confirms that:
(cid:2) so far as the director is aware, there is no relevant audit information of which the company's auditors are
unaware; and
(cid:2)
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.
Deloitte S.L. and Deloitte LLP have been our principal accountants providing the audit services to the
Company during 2016.
The Audit Committee preselected the Big 4 companies to participate in the audit tender of Atlantica Yield
and its consolidated group for 2017, 2018 and 2019. The preselected audit firm will be proposed in the
forthcoming Annual General Meeting.
Events after the balance sheet date
In February 2017, we signed a letter of intent for the acquisition of a 12.5% interest in a 114-mile
transmission line in the U.S, from Abengoa. The asset will receive a FERC regulated rate of return, and is
currently under development, with COD expected in 2020. We expect our total investment to be up to $10
million in the coming three years including an initial amount invested at cost. We would also gain certain
rights to acquire an additional 12.5% interest in the same project.
31
Additionally, on February 10, 2017, we signed a Note Issuance Facility, a senior secured note facility with
U.S. Bank as agent and a group of funds managed by Westbourne Capital as purchasers of the notes issued
thereunder for a total amount of €275 million (approximately $294 million), with three series of notes.
Series 1 notes for €92 million mature in 2022; series 2 notes for €91.5 million mature in 2023; and series 3
notes for €91.5 million mature in 2024. Interest on all three series accrues at a rate per annum equal to the
sum of EURIBOR plus 4.90%. The proceeds of the Note Issuance Facility will be used for the repayment
and subsequent termination of Tranche B under our Credit Facility. We intend to fully hedge the Note
Issuance Facility with a swap to fix the interest rate as soon as possible after funding of the notes.
On 24th February, 2017, our board of directors approved a dividend of $0.25 per share which is expected to
be paid on or about 15th March, 2017 to shareholders of record on 28th February, 2017.
32
This report was approved by the board of directors on 24th February, 2017 and signed on its behalf by
Santiago Seage, Chief Executive Officer.
_________________________
Chief Executive Officer
Santiago Seage
24th February, 2017
33
Director’s Remuneration Report
Introduction
This report is on the remuneration of the directors of Atlantica Yield for the period to 31 December 2016.
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:
(cid:2)
(cid:2)
(cid:2)
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.
At the commencement of 2016, Atlantica Yield had an Appointments and Remunerations Committee.
Then in February 2016, the board approved the creation of two separate committees instead. One of them,
named the Nominating and Corporate Governance Committee, focuses on nominations and appointments
and the other, named the Compensation Committee, focuses on remunerations.
Statement by the Chair of the Compensation Committee
I am pleased to present the remuneration report for 2016. The constant and transparent dialogue with
shareholders and investors is a vital element in our way of operating and, through this remuneration report,
we aim to increase the awareness of our shareholders of the principles of our remuneration policy,
The Company´s remuneration policy is set in accordance with the applicable law and in accordance with
the Corporate Governance Code, with the aim of attracting and retaining highly skilled professional and
managerial resources and aligning the interests of management with the priority objective of value creation
for the Company and the members of the Company as whole in the medium to long term.
During 2016, the Committee supported the Board of Directors in achieving a far-reaching review of the
Company’s remuneration policy, with particular reference to management´s remuneration. This activity
was guided by the priority objective of reinforcing further the link between remuneration and performance
which would be sustainable over time, consistent with the strategic plan approved by the Board of
Directors in 2016.
During 2016, the Compensation Committee convened three times and among the activities conducted by
the Compensation Committee, it addressed three key objectives:
(cid:3) Periodically reviewing the fixed and variable remuneration for the Chief Executive Officer;
(cid:3) Periodically reviewing the remuneration policy and overall levels of remuneration for the
management team, including the Chief Executive Officer, in accordance with the following
criteria:
o
(cid:2)seeking and alignment between incentives, business performance and creation of value for
shareholders;
o consistency with the principles of the Corporate Governance Code; and
o
retention in the medium to long term of high quality resources for the achievement of
ambitious targets and to face the challenges that the Company will have to face in the
current and future market context.
34
(cid:3) Periodically reviewing the remuneration levels of independent non-executive directors;
(cid:3) Amendment of the Committee’s terms of reference following the implementation of the changes to
the structure of the committees approved by the Board of Directors on February 2016.
During the year 2016, the objectives defined for the Chief Executive Officer's variable bonus were met and
the Compensation Committee decided to approve a bonus corresponding to 100% of the potential variable
compensation, which will be payable in 2017. 2015 was the first year when our Chief Executive Officer
was employed by the Company. He did not receive any bonus payments for 2015.
It is proposed to make a change to the remuneration policy as explained below. Consequently, the new
policy will be submitted to shareholders for approval at the 2017 annual general meeting.
The change to the policy relates to certain termination payments to key executives, including the Chief
Executive Officer. In order to protect the Company's know-how and to ensure continuity in terms of
attainment of business objectives, under the new policy, the Company may agree with certain executives
with strategic and key responsibilities in the Company (“Key Managers”), including the Chief Executive
Officer, to make payments for loss of office or employment in addition to the severance payment under the
prevailing labour and legal conditions in their contracts or countries where they are employed if they
should leave (by loss of office or employment) the Company within 2 years of a change in control. The
payment will represent six months of remuneration and will be adjusted to ensure that total payment
including severance payment required under prevailing laws represent at least 12 months of remuneration
(including salary, benefits, long term incentive plans and variable pay), but never more than 24 months of
remuneration, unless required by local law.
A change of control means that a third party or coordinated parties (i) acquire directly or indirectly by any
means a number of shares in the Company which (together with the shares that such party may already
hold in the Company) amount to more than 50% of the share capital of the Company; or (ii) appoint or
have the right to appoint at least half of the members of the Board of Directors of the Company.
No payments will be made to Key Managers for dismissal for breach of contract, breach of fiduciary duties
or gross misconduct, determined (in the event of a dispute) by a court of competent jurisdiction to reach a
final determination.
No other changes are to be made to the remuneration policy.
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.
Atlantica Yield paid remuneration only to independent non-executive directors and executive directors.
Each independent non-executive director received a total annual compensation of $100 thousand
(approximately €90.4 thousand). As the chairman of the board of directors, Mr. Villalba received $135
thousand (approximately €122.0 thousand) per year. Appointees of Abengoa did not receive any
compensation from us.
The total compensation received by our independent non-executive directors and the Chief Executive
Officer/Managing Director from us during 2016 and 2015 is set forth in the table below.
35
Name
Santiago Seage
Daniel Villalba
Jackson Robinson
Enrique Alarcon
Eduardo Kausel
Juan del Hoyo
Total
Name
Santiago Seage
Javier Garoz *
Daniel Villalba
Jackson Robinson
Enrique Alarcon
Eduardo Kausel
Juan del Hoyo
Total
Director’s remuneration as a single figure (2016)
Salary and
fees
€´000
All taxable
benefits
€´000
Annual
bonuses
€´000
LTIP
€´000
505.0
122.0
90.4
90.4
90.4
90.4
988.6
0.1
-
-
-
-
-
0.1
850.0
-
-
-
-
-
850.0
Director’s remuneration as a single figure (2015)
Salary and
fees
€´000
All taxable
benefits
€´000
Annual
bonuses
€´000
LTIP
€´000
151.3
1,289.6
121.8
90.2
90.2
90.2
90.2
1,923.5
0.1
0.1
-
-
-
-
-
0.2
-
-
-
-
-
-
-
-
Pension
€´000
Total for
2016
€´000
Pension
€´000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,355.1
122.0
90.4
90.4
90.4
90.4
1,838.7
Total for
2015
€´000
151.4
1,289.7
121.8
90.2
90.2
90.2
90.2
1,923.6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
*
Includes a €1,189.5 thousand 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.
During the year 2016, the objectives defined for the Chief Executive Officer's variable bonus were met and
the Compensation Committee decided to approve a bonus corresponding to 100% of the potential variable
compensation, which will be payable in 2017. 2015 was the first year when our Chief Executive Officer
was employed by the Company. He did not receive any bonus payments for 2015.
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 serves in the role of the Chief Executive Officer.
Mr. Garoz held the position of the Chief Executive Officer between May and November 2015, when he left
the Company.
Mr. Seage served as a director since our formation in 2014 and was the Chairman from June until
November 2015. Mr. Seage also served as our Chief Executive Officer from our formation until he was
appointed the Chief Executive Officer of Abengoa in May 2015, a capacity, in which he served until 27
November 2015, when he was appointed as our Managing Director. In May 2016, he was appointed as the
Chief Executive Officer again after the approval by the shareholders at the Annual General Meeting.
2015 was the first year when Mr. Seage was employed by the Company. He did not receive or accrue any
bonus payments for 2015. In 2016, he accrued €850 thousand as a bonus payment in accordance with his
services agreement, payable in 2017.
36
Total Shareholder Return and Chief Executive Officer 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 2016 compared with the total shareholder return of the companies
in the Russell 2000 Index. The chart represents the progression of the return, including investment, starting
from the time of the IPO at a 100%-point. In addition, dividends are not assumed to have been re-invested.
We believe the Russell 2000 Index is an adequate benchmark as it represents a broad range of companies
of similar size.
37
TSR is calculated in US dollars.
100%
104.7%
100.2%
95.1%
116.8%
Russell 2000
ABY
72.3%
74.1%
2014*
2015*
2016*
(cid:2)
Period since the IPO (June 2014) until 31 December 2014, 2015 and 2016
The table below shows the 2016 and 2015 total remuneration of the Chief Executive Officer and his
bonuses and LTIP grants expressed as a percentage of the maximum he is likely to be awarded.
Year
Total Pay
(€ 000)
2016
2015
1,355.1
1,440.9*
Bonus
LTIP awards
Percentage of
maximum
100%
-
Amount of
bonus
850
-
Percentage of
maximum
-
-
Value
-
-
*
Includes a €1,189.5 thousand termination payment received by Mr. Garoz after leaving the Company on 25 November 2015.
As previously stated, Mr. Seage occupied the office between January and May 2015, and again since late
November 2015. Meanwhile, Mr. Garoz held that position from May to November 2015, when he left the
Company.
The Chief Executive Officer did not receive any variable remuneration for services provided to the
Company for the year ended 31 December 2015. In 2016, the Company accrued €850 thousand of the
bonus payable to the Chief Executive Officer in 2017, in accordance with his services agreement.
During the year 2016, the objectives defined for the Chief Executive Officer's variable bonus were met and
the Compensation Committee decided to approve a bonus corresponding to 100% of the potential variable
compensation, which will be payable in 2017, since all objectives have been met:
(cid:2) CAFD (cash available for distribution)
(cid:2) Ebitda
(cid:2) Implementing a risk management plan
(cid:2) Obtaining waiver/forbearance for Solana and Mojave
(cid:2) Implement new processes and systems on time
1. Chief Executive Officer Pay vs. Employee Pay
Percentage weight
(50%)
(10%)
(10%)
(10%)
(20%)
The table below sets out the percentage change between the year 2015 and 2016 in salary, benefits and
bonus (determined on the same basis as for the Single Total Figure table) for the Chief Executive
Officer/Managing Director and the average per capita change for employees of the Group as a whole.
38
As of 31 December 2015, we had 88 employees. During the year 2016, in addition to new hires, we
completed the transfer of the staff previously employed by Abengoa’s subsidiaries to our payroll as
part of our separation efforts from Abengoa. As of December 2016, we had 166 employees.
Element of remuneration
Salary
Benefits
Bonus
Percentage change for Chief
Executive Officer
(64.9%)*
0%
n/a
Percentage change for
employees
37.1%**
n/a
n/a
* The salary in 2015 includes the termination payment received by Mr. Garoz after leaving the Company on 25 November
2015.
** The average number of employees was 76 in 2015 and 140 in 2016.
2. Relative Importance of Spend on Pay
The following table sets out the change in overall employee costs, directors’ compensation and
dividends.
€ in million
Spend on pay for all employees of the group
Total remuneration of directors
Dividends paid (*)
(*) Dividend paid does not include amounts retained to Abengoa.
Amount in
2016
13.3
1.9
24.04*
Amount in
2015
5.2
1.9
116.1*
Difference
8.0
-
(89.5)
The Group’s personnel headcount increased from 88 employees as of 31 December 2015 to 166
employees as of 31 December 2016.
Directors’ shareholdings
The following table includes information with respect to beneficial ownership of our ordinary shares as of
the date of this Consolidated 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 2016
Shares
31st December 2015
20,000
60,000
5,412
20,000
60,000
5,281
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
Mr. Garoz was paid, in accordance with his employment contract, a cash termination payment of
€1,189,500, when he left the Company on 25 November 2015.
It is proposed to make a change to the remuneration policy regarding certain termination payments to
key executives, including the Chief Executive Officer. Consequently, the new policy will be
submitted to shareholders for approval at the 2017 annual general meeting.
39
In order to protect the Company's know-how and to ensure continuity in terms of attainment of
business objectives, under the new policy, the Company may agree with certain executives with
strategic and key responsibilities in the Company (“Key Managers”), including the Chief Executive
Officer, to make payments for loss of office or employment in addition to the severance payment
under the prevailing labour and legal conditions in their contracts or countries where they are
employed if they should leave (by loss of office or employment) the Company within 2 years of a
change in control. The payment will represent six months of remuneration and will be adjusted to
ensure that total payment including severance payment required under prevailing laws represent at
least 12 months of remuneration (including salary, benefits, long term incentive plans and variable
pay), but never more than 24 months of remuneration, unless required by local law.
A change of control means that a third party or coordinated parties (i) acquire directly or indirectly by
any means a number of shares in the Company which (together with the shares that such party may
already hold in the Company) amount to more than 50% of the share capital of the Company; or (ii)
appoint or have the right to appoint at least half of the members of the Board of Directors of the
Company.
No payments will be made to Key Managers for dismissal for breach of contract, breach of fiduciary
duties or gross misconduct, determined (in the event of a dispute) by a court of competent jurisdiction
to reach a final determination.
4. Statement of Implementation of Policy in 2016
This section of the Remuneration Report provides a description of the remuneration policies
implemented in 2015,
The targets for bonuses and LTIPs are detailed under the section “The 2016 Remuneration Policy” of
this report.
We expect to obtain approval for this remuneration policy at 2017 Annual Shareholders Meeting.
5. Compensation Committee
The Compensation Committee, which until February 2016 was named the “Appointment and
Remuneration Committee’, was established for the first time by the Board of Directors in 2014.
Committee membership and appointments, its tasks and its operating procedures are regulated by a
specific term of references, which was approved by the Board of Directors and published on the
Company website. Since February 2016, the Compensation Committee is composed of independent
and non-executive directors: Jackson Robinson, Daniel Villalba, Eduardo Kausel and Juan del Hoyo.
The Committee meets as often as necessary to perform its duties. In 2016, the Committee convened on
a total of three (3) times with a member attendance of 100%.
The Committee focused its activities on the following key remuneration topics: (i) periodically
reviewing the remuneration policy implemented in 2016, (ii) reviewing the Company’s 2015 results,
defining 2016 performance targets in connection with the variable remuneration; (iii) amendment of
the Committee’s terms of reference following the implementation of the changes to the structure of
the committees of the board of directors; and (iii) assessing proposals for initiatives to retain
managerial figures.
The Company has used the services of external advisors to determine appropriate compensation levels
according to market practices and data, however the committee did not use the services of any
advisors.
40
6. Voting at the 2016 Annual General Meeting
The Company takes an active interest in voting outcomes. In the event of a substantial vote against a
resolution in relation to director´s remuneration, the Company would seek to understand the reasons
for any such vote and would set out in the following Annual Report any actions in response to it.
At the 2016 Annual General Meeting, votes in relation to the directors’ remuneration policy and the
remuneration report were as follows:
Remuneration Policy
Remuneration Report
(cid:2) Votes for
(cid:2) Votes against
(cid:2) Votes withheld
76,317,399 (97.3%)
149,090 (0.2%)
1,956,413(2.5%)
76,305,144 (97.3%)
2,110,545 (2.7%)
7,213 (0.0%)
The 2017 Remuneration Policy
The current policy was approved at our 2016 Annual General Meeting, held in May 2016. If this
remuneration policy is approved at 2017 Annual General Meeting, the remuneration policy will take effect
from the date of our Annual General Meeting, currently expected to be held in June 2017.
For independent non-executive directors, the Company’s policy is to compensate in cash for the time
dedicated, subject to a maximum total annual compensation for non-executive directors in aggregate of two
million dollars. Once a year, the Compensation 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 compensation. For other non-executive directors, the policy is not to
compensate for the time dedicated.
The Chief Executive Officer 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
remuneration payable
Fixed
monthly
for
Opportunity to join existing
but
plans
without
in
any
remuneration
employees
increase
is
bonus
the end of
paid
Annual
following
the
financial year for performance
over the year. There are no
forfeiture
or
retention
provisions
How does this component
support the company’s
(or group’s) short and
long term objectives?
What is the maximum
that may be paid in
respect of the component?
Framework used to assess
performance
Helps to recruit and retain
executive directors and forms
the basis of a competitive
remuneration package
Maximum amount €700
thousand, maybe increased by
5% per year
Salary levels for peers are
considered
Not applicable
No retention or clawback
Helps to offer a competitive
remuneration
and
align
company’s
objectives
it with
package
200% of base salary
50% of CAFD
10% of EBITDA
40% of other operational or
qualitative objectives
No retention or clawback
Long Term Incentive
Awards
LTIP is paid in early 2019 if
the company achieves its total
shareholder return 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%
Shareholder’s Return (TSR)
Total Annual
of
50% of TSR versus peers
No retention or clawback
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.
41
The annual bonus is a variable cash bonus, based on the objectives described above. Those objectives
include Cash Available for Distribution (CAFD), with a 50% weight for executive directors, and EBITDA,
as these are key financial metrics for our industry sector. Additionally, the annual bonus includes 2-3
objectives that reflect some of the key projects, initiatives or key objectives.
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, as a general rule, within that market practice. Variable
payments are based on a number of specific measurable targets in relation to the measures described
herein, which are 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 within two ranges without
employee consultation.
The Company has a Long-Term Incentive Plan for the period 2016-2019 for the executive team approved
at the 2016 Annual General Meeting. The plan includes:
(cid:2) Approximately 10 executives, including the Chief Executive Officer
(cid:2) Each executive is entitled to the payment of a LTIP cash bonus payable in March 2019 if the Company
achieved its Total Annual Shareholders’ Return (TSR) objectives in the 2016-2019 period. The
committee and the board have considered this metric as the best measure to align management and
shareholders’ interests
(cid:2) An annual bonus is capped at a 50% (a 70% for the Chief Executive Officer) of the total remuneration
received by an executive in the 2016-2018 period
(cid:2) 50% of the LTIP bonus will be based on the Company’s TSR and the other 50% on the relative
performance in terms of TSR versus other yieldcos selected by the committee
(cid:2) In case of change of control, the LTIP becomes due and is calculated based on the offer price or the last
price applied in the TSR, up to and including the change of control
(cid:2) In case of retirement, termination without cause, permanent disability or death, the LTIP is to be pro-
rated for the period until that event and paid out at the end of the plan period once the TSR for the
period is known. If an executive leaves 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.
Total remuneration of the only executive director for a minimum, target and maximum performance in
2017 is presented in the chart below.
42
Chief Ex
xecutive Off
ficer remune
eration poli
icy
The Com
Officer fo
mpensation C
or 2017 from
Committee a
m €550 thous
approved an
sand to €600
increase of
thousand.
f the fixed r
remuneration
n of the Chi
e
ief Executive
Thous
sand euros. 201
17
€1,025
41%
59%
€6
600
10
00%
€1
,450
59%
41%
Min
nimum
Target
Ma
aximum
Salary and be
enefits
Ann
nual bonus
Assumpti
ions made fo
or each scena
ario are as fo
ollows:
(cid:2) Minim
(cid:2) Targe
(cid:2) Maxim
mum: fixed
et:
fixed
mum: fixed
d remuneratio
d remuneratio
d remuneratio
on only
on plus half o
on plus maxi
of maximum
mum annual
l bonus
m annual bonu
us
as it would n
not be paid u
until 2019 and
d is subject t
to targets.
bjectives are
e the followin
ng:
LTIP is n
not included
For 2017
7 the bonus o
CAFD
D
Ebitda
a
Techn
nical improve
ement plan
Waive
er for last ass
sets
Launc
ch new health
h and safety
plan
Imple
ement improv
vement plan
on key proce
esses and sys
stems
Perce
entage weigh
ht
(50%)
(10%)
(15%)
(5%)
(10%)
(10%)
3
43
Approach to recruitment
As previously stated within this report, the recruitment of managers is largely based on the estimates of
two external consultants of the market conditions for similar positions, in terms of fixed and variable
remuneration.
In addition, the remuneration policy reflects the composition of the remuneration package for the
appointment of new executive directors. We expect to offer a competitive fixed remuneration, an annual
bonus not exceeding 200% of the fixed remuneration and a participation in our LTIP plan.
Lastly, whenever needed, the Company can 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 thousand. As a chairman of the board of directors and a chairman of
our audit committee, Mr. Villalba receives an additional $35 thousand per year. Directors representing
Abengoa do not receive any compensation from us.
The stated above remuneration will be offered in recruitment of independent directors.
Policy on payments for loss of office
It is proposed to make a change to the remuneration policy in respect of the policy for loss of office as
explained below. Consequently, the new policy will be submitted to shareholders for approval at the 2017
Annual General Meeting.
The change to the policy relates to certain termination payments to key executives, including the Chief
Executive Officer.
In order to protect the Company's know-how and to ensure continuity in terms of attainment of business
objectives, under the new policy, the Company may agree with certain executives with strategic and key
responsibilities in the Company (“Key Managers”), including the Chief Executive Officer, to make
payments for loss of office or employment in addition to the severance payment under the prevailing
labour and legal conditions in their contracts or countries where they are employed if they should leave (by
loss of office or employment) the Company within 2 years of a change in control. The payment will
represent six months of remuneration and will be adjusted to ensure that total payment including severance
payment required under prevailing laws represent at least 12 months of remuneration (including salary,
benefits, long term incentive plans and variable pay), but never more than 24 months of remuneration,
unless required by local law.
A change of control means that a third party or coordinated parties (i) acquire directly or indirectly by any
means a number of shares in the Company which (together with the shares that such party may already
hold in the Company) amount to more than 50% of the share capital of the Company; or (ii) appoint or
have the right to appoint at least half of the members of the Board of Directors of the Company.
No payments will be made to Key Managers for dismissal for breach of contract, breach of fiduciary duties
or gross misconduct, determined (in the event of a dispute) by a court of competent jurisdiction to reach a
final determination.
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 roles of a similar level of managerial responsibilities and complexity in terms of
fixed and variable remuneration and, based on a performance appraisal, set a target remuneration, as a
general rule, within that market practice.
The annual variable remuneration payment is calculated with reference to the achievement of a number of
specific measurable targets defined at the previous year. Each specific target is measured on a performance
scale of 0%-120%.
44
For the rest of its employees, the Company establishes predefined remuneration ranges for different
positions and reviews each individual remuneration depending on performance appraisal within two ranges
without employee consultation.
The remuneration of all employees, including the members of the management team, may be adjusted
periodically in the framework of the annual salary review process which is carried out for all employees.
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 above 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 June 2017.
Summary of Policy for Non-Executive Directors
Name of component
How does the component support
the company’s objective?
Operation
Maximum
Independent Non-Executive
Directors:
Fees
Attract and retain the high-performing
independent non-executive directors
Reviewed annually by the committee
and board
The lead independent director/chairman
receive additional fees
total
Annual
-
executive directors, in any case, will not
exceed two million dollars
compensation
for
Benefits
Other Non-Executive
Directors:
Fees
Benefits
travel expenses
the
Reasonable
Company’s registered office or venues
for meetings
to
Customary control procedures
Real costs of travel with a maximum of
one million dollars for all directors
Attract and retain the high-performing
non-executive directors
Directors appointed by shareholders
receive no fees
prescribed maximum
No
increase
annual
travel expenses
Reasonable
the
Company’s registered office or venues
for meetings
to
Customary control procedures
Real costs of travel
45
Service Contracts
Mr. Seage has a services contract with Atlantica Yield that includes a 6-month 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.
It is proposed to make a change to the remuneration policy regarding certain termination payments to key
executives, including the Chief Executive Officer, as described in this remuneration policy. Consequently,
the new policy will be submitted to shareholders for approval at the 2017 annual general meeting.
In accordance with the changes proposed and in respect of the executives, the Company may agree with the
executives to make payments for loss of office or employment in addition to the severance payment under
the prevailing labour and legal conditions in theirs contract or countries where they may be employed if
they should leave (by loss of office or employment) the Company within 2 years of a change in control.
The payment will represent six months of remuneration and will be adjusted to ensure that total payment
including severance payment required under prevailing laws represent at least 12 months of remuneration
(including salary, benefits, long term incentive plans and variable pay), but never more than 24 months of
remuneration, unless required by local law.
A change of control means that a third party or coordinated parties (i) acquire directly or indirectly by any
means a number of shares in the Company which (together with the shares that such party may already
hold in the Company) amount to more than 50% of the share capital of the Company; or (ii) appoint or
have the right to appoint at least half of the members of the Board of Directors of the Company.
No payments will be made for dismissal for breach of contract, breach of fiduciary duties or gross
misconduct, determined (in the event of a dispute) by a court of competent jurisdiction to reach a final
determination.
In respect of the Chief Financial Officer and in accordance with his services agreement, he is entitled to a
12-month, or period established by the labour law, compensation if he leaves the Company, voluntarily or
otherwise, 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 be terminated for cause, as defined by applicable law. In
the event of the termination by the Company, each executive director may have an entitlement to
compensation in respect of his statutory rights under the employment protection legislation in the UK,
Spain or elsewhere.
Employee Benefit Trusts
Our policy is not to use any employee trust for share plans.
Key Management Compensation for 2016
€ in thousands
(cid:2) Short-term employee benefits
(cid:2) Post-employment benefits
(cid:2) Other long-term benefits
(cid:2) Termination benefits
(cid:2) Share-based payment
(cid:2) Total
2016
3,439.8
2015
2,851.9
3,439.8
2,851.9
Key management includes Directors, Chief Executive Officer, CFO and 6 key executives
Statement of Voting at General Meetings
The remuneration report and the remuneration policy will be submitted to the Annual Shareholders’
Meeting in 2017.
46
Approval
This report was approved by the board of directors on 24th February, 2017 and signed on its behalf by
Santiago Seage, Chief Executive Officer.
_________________________
Chief Executive Officer
Santiago Seage
24th February, 2017
47
Directors’ Responsibilities Statement
The directors are responsible for preparing the Consolidated 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:
(cid:2)
select suitable accounting policies and then apply them consistently;
(cid:2) make judgments and accounting estimates that are reasonable and prudent;
(cid:2)
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:
(cid:2)
(cid:2)
o properly select and apply accounting policies;
o present information, including accounting policies, in a manner that provides relevant,
reliable, comparable and understandable information;
o 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
o 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.
We confirm that to the best of our knowledge:
The Consolidated 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 Consolidated 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.
48
This responsibility statement was approved by the board of directors on 24th February, 2017 and is signed
on its behalf by:
By order of the Board
_________________________
_________________________
Chief Executive Officer
Santiago Seage
24th February, 2017
___________________________
___________________________
Chief Financial Officer
Francisco Martinez-Davis
24th February, 2017
49
50
51
Consolidated Income Statement
Amounts in thousands of U.S. dollars
Note (1)
For the year 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 expenses
Net exchange gains/(losses)
Net other finance (expenses)/income
Net finance costs
Share of profit/(loss) of associates carried under the equity
method
Profit/ (Loss) before income tax
Income tax
Profit/ (Loss) for the year
Profit attributable to non-controlling interests
Profit/ (Loss) for the year attributable to owners of the Company
Weighted average number of ordinary shares outstanding (thousands)
Basic and diluted earnings per share (U.S. dollar per share) (*)
4
9
8
13
10
10
10
14
11
30
30
2016
971,797
65,538
(26,919)
(14,736)
(332,925)
(260,318)
2015
790,881
68,857
(23,243)
(5,848)
(261,301)
(224,828)
402,437
344,518
3,298
(408,007)
(9,546)
8,505
3,464
(333,921)
3,852
(200,153)
(405,750)
(526,758)
6,646
3,333
(1,666)
1,667
(6,522)
(4,855)
7,844
(174,396)
(23,790)
(198,186)
(10,819)
(209,005)
100,217
92,795
(0.05)
(2.25)
(*) Earnings per share has been calculated for the period subsequent to the initial public offering, considering Net profit/(loss)
attributable to equity holders of Atlantica 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.
52
Consolidated Statement of other comprehensive income
Amounts in thousands of U.S. dollars
Year
ended
2016
Year
ended
2015
Profit / (Loss) for the year
1,667
(198,186)
Items that may be reclassified subsequently to profit or loss:
Gains / (losses) arising during the year
Less: reclassification adjustments for gains / (losses) transferred to
profit or loss
(37,480)
72,774
56
55,841
Exchange differences on translation of foreign operations
(22,150)
(91,405)
Income tax relating to items that may be reclassified subsequently to
profit or loss
(5,639)
(12,010)
Other comprehensive income/(loss) for the year net of tax
7,505
(47,518)
Total comprehensive income/(loss) for the year
9,172
(245,704)
Total comprehensive income/ (loss) attributable to:
Owners of the Company
Non-controlling interests
(457)
9,629
(249,254)
3,550
53
Consolidated Balance Sheet
Amounts in thousands of U.S. dollars
Assets
Non-current assets
Contracted concessional assets
Investments carried under the equity method
Financial investments
Deferred tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Financial investments
Cash and cash equivalents
Total current assets
Total assets
Equity
Share capital
Parent company reserves
Other reserves
Accumulated currency translation reserve
Retained earnings
Equity attributable to the Company
Non-controlling interests
Total equity
Non-current liabilities
Long-term corporate debt
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
Short-term project debt
Trade payables and other current liabilities
Income and other tax payables
Total current liabilities
Total equity and liabilities
(1) Notes 1 to 31 are an integral part of the consolidated financial statements
Note (1)
As of
December
31, 2016
As of
December 31,
2015
13
14
23&24
11
15&23
23
16&23
8,924,272
55,009
69,773
202,891
9,251,945
15,384
207,621
228,038
594,811
1,045,854
9,300,897
56,181
93,791
191,314
9,642,183
14,913
197,308
221,358
514,712
948,291
10,297,799
10,590,474
21
17
18
19
27
24
11
17
18
20
10,022
2,268,457
52,797
(133,150)
(365,410)
1,836,576
126,395
1,959,111
376,340
4,629,184
1,612,045
101,750
349,266
95,037
7,163,622
291,861
701,283
160,505
21,417
1,175,066
10,022
2,313,855
24,831
(109,582)
(356,524)
1,882,602
140,899
2,023,501
661,341
3,574,464
1,646,748
126,860
385,095
79,654
6,474,162
3,153
1,896,205
178,217
15,236
2,092,811
10,297,799
10,590,474
54
The consolidated financial statements of Atlantica Yield plc, company registration no. 08818211, were
approved by the board of directors and authorised for issue on 24th February, 2017.
They were signed on its behalf by:
Chief Executive Officer
Santiago Seage
24th February, 2017
55
Statement of changes in equity
Year ended 31 December 2016
Consolidated Statement of changes in equity
Amounts in thousands of U.S. dollars
Share
Capital
Parent
company
reserve
Other
reserves
Retained
earnings
Accumulated
currency
translation
differences
Total equity
attributable
to the
Company
Non-
controlling
interest
Total
equity
Balance as of January 1, 2016
10,022
2,313,885
24,831
(356,524)
(109,582)
1,882,602
140,899
2,023,501
Profit/(loss) for the year after taxes
Change in fair value of cash flow hedges
Currency translation differences
Tax effect
Other comprehensive income
Total comprehensive income
Acquisition of non-controlling interest
in Solacor 1&2 (a)
Asset acquisition (Sevilla PV) (a)
Dividend distribution
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(45,398)
-
(4,855)
32,944
-
(4,978)
27,966
-
-
-
-
27,966
(4,855)
-
-
-
(4,031)
-
-
-
-
(4,855)
32,994
6,522
2,350
1,667
35,294
(23,568)
(23,568)
1,418
(22,150)
-
(4,978)
(23,568)
(23,568)
4,398
(457)
(661)
3,107
9,629
(5,639)
7,505
9,172
-
-
-
(4,031)
(15,894)
(19,925)
-
713
713
(45,398)
(8,952)
(54,350)
Balance as of December 31,2016
10,022
2,268,457
52,797
(365,410)
(133,150)
1,832,716
126,395
1,959,111
Balance as of January 1, 2015
8,000
1,790,135
(15,539)
(2,031)
(28,963)
1,751,602
88,029
1,839,631
Profit/(loss) for the year after taxes
Change in fair value of cash flow hedges
Currency translation differences
Tax effect
Other comprehensive income
Total comprehensive income
Asset acquisition under the Rofo (a)
Dividend distribution
Capital Increase
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(137,995)
2,022
661,715
-
(209,005)
51,215
-
(10,845)
40,370
-
-
-
-
-
-
(209,005)
10,819
(198,186)
51,215
4,682
55,897
(80,619)
(80,619)
(10,786)
(91,405)
-
(10,845)
(1,165)
(12,010)
(80,619)
(40,249)
(7,269)
(47,518)
40,370
(209,005)
(80,619)
(249,254)
3,550
(245,704)
-
-
-
(145,488)
-
-
-
-
-
(145,488)
57,627
(87,861)
(137,995)
(8,307)
(146,302)
663,737
-
663,737
Balance as of December 31, 2015
10,022
2,313,885
24,831
(356,524)
(109,582)
1,882,602
140,899
2,023,501
(a)
See Note 5 for further details.
Notes 1 to 31 are an integral part of the consolidated financial statements
(cid:2)
For the year ended
2016
2015
1,667
(198,186)
Cash flow statement
31 December 2016
(cid:2)
Consolidated Cash flow statement
Amounts in thousands of U.S. dollars
Profit/(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 capital increase
Purchase of shares to non-controlling interests
Net cash provided by/(used in) financing activities
Net increase in cash and cash equivalents
Note
(1)
13
11
5
Cash, cash equivalents and bank overdrafts at beginning of the year
16
Translation differences cash or cash equivalent
332,925
397,966
(1,761)
(6,646)
1,666
(59,375)
666,442
(729)
(15,001)
11,422
6,341
2,033
(1,953)
3,342
(335,446)
334,418
4,984
(5,952)
(3,637)
(21,754)
(26,359)
11,113
(182,636)
(35,509)
-
(19,071)
(226,103)
81,956
514,712
(1,857)
Cash and cash equivalents at the end of the year
16
594,811
(1)
Notes 1 to 31 are an integral part of the consolidated financial statements
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
57
Notes to the consolidated financial statements
31 December 2016
Notes to the consolidated financial statements
1. General information
Atlantica Yield plc. (‘Atlantica Yield’ or the Company) is a company incorporated in Great Britain
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 17.
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.
On November 27, 2015 Abengoa, reported that, 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 set a deadline of March 28, 2016 for Abengoa to reach an agreement with its
main financial creditors. On such date, Abengoa filed with the Mercantile Court of Seville nº 2 an
application for the judicial approval (“homologación judicial”) of a standstill agreement which
obtained the support of 75.04 per cent of the financial creditors to which it was addressed. On April 6,
2016, the Judge of the Mercantile Court of Seville nº 2 issued a resolution declaring the judicial
approval (“homologación judicial”) of the standstill agreement and extending the effect of the stay of
the obligations referred to in the standstill agreement until October 28, 2016, to creditors of financial
liabilities who had not signed the agreement or have otherwise expressed their disagreement.
On September 24, 2016, Abengoa announced that it had signed a restructuring agreement with a group
of investors and creditors, which included a commitment from investors and banks to contribute new
money to the company. On the same date, Abengoa opened the accession period for the rest of its
financial creditors. On October 28, 2016, Abengoa announced the filing of the request for judicial
approval (“homologación judicial”) of its restructuring agreement to the Judge of the Mercantile Court
of Seville. According to the announcement, Abengoa had previously obtained approval from creditors
representing 86% of its financial debt, above the 75% limit required by the law. On November 8,
2016, the Judge of the Mercantile Court of Seville declared judicial approval of Abengoa´s
restructuring agreement, extending the terms of the agreement to those creditors who had not approved
the restructuring agreement. On February 3, 2017, Abengoa announced it obtained approval from
creditors representing 94% of its financial debt after the supplemental accession period. The
implementation of Abengoa’s restructuring is subject to a series of conditions precedent. On February
14, 2017, Abengoa announced that it launched a waiver request in order to approve certain
amendments to the restructuring agreement and opened a voting period ending on February 28, 2017
(see note 23).
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 and/or a restructuring process, 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 has signed a forbearance agreement in Solana and Mojave in
December 2016 according to which, such defaults will no longer trigger acceleration remedies or
limitations on distributions remedies in both financing arrangements. In the case of Cadonal, the
waiver obtained is subject to certain conditions. The only project for which waivers or forbearances
have not been obtained yet is Kaxu. The company is currently in discussions with its project finance
58
Notes to the consolidated financial statements
31 December 2016
lenders.
Although the Company does not expect the acceleration of debt to be declared by the credit entities,
Kaxu and Cadonal did not have contractually as of December 31, 2016 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 of Kaxu and Cadonal has been presented as current in these consolidated financial statements
in accordance with International Accounting Standards 1 (“IAS 1”), “Presentation of Financial
Statements”.
As of December 31, 2015, all the project financing arrangements except for ATN, ATS, Skikda and
Honaine contained a change of ownership clause that would be triggered if Abengoa would cease to
own at least 35% of Atlantica Yield´s shares. Based on the most recent public information, Abengoa
currently owns 41.47% of the ordinary shares of the Company. In connection with various financing
agreements, Abengoa has disclosed that as of today, 41,530,843 of Atlantica Yield shares,
representing approximately 41.44% of the outstanding shares of the Company, have been pledged as
collateral. If Abengoa defaults on any of these or future financing arrangements or sell or transfer
enough ABY shares before obtaining the waivers, such lenders may foreclose on the pledged shares
and, as a result, Abengoa could eventually own less than 35% of Atlantica Yield´s outstanding
shares. As a result, the Company would be in breach of covenants under the applicable project
financing arrangements. Additionally, if Abengoa sells, transfers or signs new financing arrangements
considered a transfer of ABY shares, the Company could be as well in breach of covenants under the
applicable project financing arrangements.
During 2016 waivers and forbearances have been obtained for most of our project financing
agreements from all the parties of these project financing arrangements containing the minimum
ownership covenants previously explained (Palmatir, Quadra 1 and Quadra 2, Cadonal, Helioenergy
1&2, Solana, Mojave, Solnova 1, 3&4, Solacor 1&2 and Solaben 2&3). As of this date, waivers or
forbearances are still required for ACT and Kaxu and the Company is working on obtaining them. In
the case of Solana and Mojave, the forbearance agreement signed with the U.S. Department of Energy,
or the DOE, with respect to these assets, covers reductions of Abengoa’s ownership resulting from (i)
a court-ordered or lender-initiated foreclosure pursuant to the existing pledge over Abengoa’s shares
of the Company that occurs prior to March 31, 2017, (ii) a sale or other disposition at any time
pursuant to a bankruptcy proceeding by Abengoa, (iii) changes in the existing Abengoa pledge
structure in connection with Abengoa’s restructuring process, aimed at pledging the shares under a
new holding company structure, and (iv) capital increases by us. In the event of other reductions of
Abengoa’s ownership below the minimum ownership threshold resulting from sales of shares by
Abengoa, DOE remedies will not include debt acceleration, but DOE remedies available would
include limitations on distributions to the Company from its subsidiaries. In addition, the minimum
ownership threshold for Abengoa in the Company has been reduced from 35% to 30%.
In addition, the Credit Facility entered into by the Company on December 3, 2014 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”) 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 Atlantica Yield 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 adversely affect compliance with these
covenants. The Credit Facility also includes a cross-default provision related to a default by the project
59
Notes to the consolidated financial statements
31 December 2016
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. A payment default in several of our project companies or restrictions in
distributions from several of our project companies may trigger these covenants. Considering all the
progress in obtaining waivers and forbearances obtained, the Company considers that scenario as
remote. Additionally, in such remote scenario, the Company would undertake initiatives including, but
not limited to, asset disposals or changes in the dividend policy.
Additionally, on February 10, 2017, the Company signed a Note Issuance Facility, a senior secured
note facility with a group of funds managed by Westbourne Capital as purchasers of the notes issued
thereunder for a total amount of €275 million (approximately $294 million). The proceeds of the Note
Issuance Facility will be used for the repayment of Tranche B under our Credit Facility, which will be
cancelled, as well as for general corporate expenses incurred as part of this transaction.
The Company has significantly reduced the level of services received from Abengoa, terminating the
Support Services Agreement, although it continues to rely on Abengoa for operation and maintenance
services at most of its facilities and for minimum local support services in certain geographies. The
Company has separated its IT systems from Abengoa during 2016 and has prepared plans to replace
existing operation and maintenance suppliers if required.
These consolidated financial statements were approved by the Board of Directors on 24th February
2017.
2. Adoption of new and revised Standards
a) Standards, interpretations and amendments effective from January 1, 2016 under IFRS-IASB,
applied by the Company in the preparation of these consolidated financial statements:
• 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.
• Annual Improvements to IFRSs 2012-2014 cycles.
• IAS 1 (Amendment) ‘Presentation of Financial Statements’ under the disclosure initiative.
• IAS 27 (Amendment) ’Separate financial statements’ regarding the reinstatement of the equity
method as an accounting option in separate financial statements.
• IAS 16 (Amendment) ’Property, Plant and Equipment’ and IAS 38 ’Intangible Assets’,
regarding acceptable methods of amortization and depreciation.
• IFRS 11 (Amendment) ‘Joint Arrangements’ regarding acquisition of an interest in a joint
operation.
• IAS 16 ‘Property, Plant and Equipment’ and 41 ‘Agriculture’ (Amendment) regarding bearer
plants.
The applications of these amendments have not had any material impact on these consolidated
financial statements.
60
Notes to the consolidated financial statements
31 December 2016
b) Standards, interpretations and amendments published by the IASB that will be effective for periods
beginning on or after January 1, 2017:
• IFRS 9 ’Financial Instruments’. This Standard will be effective from January 1, 2018 under
IFRS-IASB, earlier application is permitted.
• IFRS 15 ’Revenues from contracts with Customers’. IFRS 15 is applicable for annual periods
beginning on or after January 1, 2018 under IFRS-IASB, earlier application is permitted.
• IFRS 16 ’Leases’. This Standard is applicable for annual periods beginning on or after January
1, 2019 under IFRS-IASB, earlier application is permitted, but conditioned to the application of
IFRS 15.
• IAS 12 (Amendment) ‘Recognition for Deferred Tax for Unrealised Losses’. This amendment is
mandatory for annual periods beginning on or after January 1, 2017 under IFRS-IASB, earlier
application is permitted.
• IAS 7 (Amendment) ‘Disclosure Initiative’. This amendment is mandatory for annual periods
beginning on or after January 1, 2017 under IFRS-IASB, earlier application is permitted.
• IFRS 15 (Clarifications) ’Revenues from contracts with Customers’. This amendment is
mandatory for annual periods beginning on or after January 1, 2018 under IFRS-IASB, earlier
application is permitted.
• IFRS 2 (Amendment) ‘Classification and Measurement of Share-based Payment Transactions’.
This amendment is mandatory for annual periods beginning on or after January 1, 2018 under
IFRS-IASB, earlier application is permitted.
• IFRS 4 (Amendment). Applying IFRS 9 ‘Financial Instruments’ with IFRS 4 ‘Insurance
Contracts’. This amendment is mandatory for annual periods beginning on or after January 1,
2018 under IFRS-IASB, earlier application is permitted.
• IFRIC Interpretation 22 ’Foreign Currency Transactions and Advance Consideration’,
mandatory for annual periods beginning on or after January 1, 2018 under IFRS-IASB, earlier
application is permitted.
• IAS 40 (Amendment) ’Transfers of Investment Property’. This amendment is mandatory for
annual periods beginning on or after January 1, 2018 under IFRS-IASB, earlier application is
permitted.
The Company does not anticipate any significant impact on the consolidated financial statements
derived from the application of the new standards and amendments that will be effective for annual
periods beginning after December 31, 2016, although it is currently still in process of evaluating such
application.
3. Significant accounting judgements
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.
61
Notes to the consolidated financial statements
31 December 2016
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:
(cid:2) has the power over the investee;
(cid:2)
(cid:2) has the ability to use its power to affects its returns.
is exposed, or has rights, to variable return from its involvement with the investee; and
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.
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.
Abengoa has no control over the Company since December 31, 2015. Therefore, any purchase to
Abengoa is accounted for in the consolidated accounts of Atlantica Yield since December 31, 2015, in
accordance with IFRS 3, Business Combination.
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.
62
Notes to the consolidated financial statements
31 December 2016
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 27.
Critical accounting judgements and estimates
The critical judgements which have been made in the process of applying the accounting policies are
detailed below:
(cid:2) Contracted concessional assets and purchase price agreements
The application of IFRIC 12 requires judgement to (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 as a financial asset or as an intangible asset, and (iii) the timing
and recognition of the revenue for construction and concessional activity.
Key sources of estimation uncertainty
The Group does not have any key assumptions concerning the future, or other key sources of
estimation uncertainty in the reporting period that may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year.
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
International Financial Reporting Interpretations Committee 12 (“IFRIC 12”), except for Palmucho,
which is recorded in accordance with IAS 17 and PS10, PS20 and Seville PV, 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, wind farms and water plants. 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.
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, 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”. This applies in the same way to
the two models.
a) Intangible assets
63
Notes to the consolidated financial statements
31 December 2016
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:
(cid:2) 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”.
(cid:2) 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.
(cid:2) 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 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.
64
Notes to the consolidated financial statements
31 December 2016
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 to the discount rate used and fair
value changes in the main business variables, in order to ensure that possible 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
EMEA ........................................................................ 4% - 6%
North America ........................................................... 4% - 6%
South America ........................................................... 5% - 7%
0%
0%
0%
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
65
Notes to the consolidated financial statements
31 December 2016
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.
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 or the regression method, depending on the type of derivatives and the type of tests performed.
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:
(cid:2) Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.
66
Notes to the consolidated financial statements
31 December 2016
(cid:2) 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).
(cid:2) Level 3: Fair value is measured based on unobservable inputs for the asset or liability.
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
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 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.
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
67
Notes to the consolidated financial statements
31 December 2016
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.
c) Level 3 valuation
Level 3 includes the preferred equity investment in ACBH and the Put/Call option (see Note 23).
Detailed information on fair values is included in Note 23.
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.
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
68
Notes to the consolidated financial statements
31 December 2016
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.
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
69
Notes to the consolidated financial statements
31 December 2016
equity under the heading “Accumulated currency translation differences”. Results of companies
carried under the equity method are translated at the average annual exchange rate.
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:
(cid:2)
(cid:2)
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
(cid:2)
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.”
4. Financial information by segment
Atlantica Yield’s segment structure reflects how management currently makes financial decisions and
allocates resources. Its operating and reportable segments are based on the following geographies
where the contracted concessional assets are located:
•
•
North America
South America
70
Notes to the consolidated financial statements
31 December 2016
•
EMEA
Based on the type of business, as of December 31, 2016 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 eight 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, Solaben 1 and 6 with a gross
capacity of 100 MW and Sevilla PV with a gross capacity of 1 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.
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 interests 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. Further Adjusted EBITDA for 2016 includes compensation received from Abengoa in lieu of
ACBH dividends.
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, 2016, Atlantica Yield had two customers with revenues representing
more than 10% of the total revenues, i.e., one in the renewable energy and one in the conventional
power business sectors. In the year ended December 31, 2015, Atlantica Yield had three customers
71
Notes to the consolidated financial statements
31 December 2016
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 2016 and 2015:
Revenue
$’000
Further Adjusted EBITDA
$’000
For the twelve-
month period ended December 31,
For the twelve-
month period ended December 31,
Geography
2016
2015
2016
2015
North America
South America
EMEA
Total
337,061
118,764
515,972
971,797
328,139
112,480
350,262
284,691
124,599
354,020
790,881
763,310
279,559
110,905
233,755
624,219
Revenue
$’000
Further Adjusted EBITDA
$’000
For the twelve-
month period ended December 31,
For the twelve-
month period ended December 31,
Business sector
2016
2015
2016
2015
Renewable energy
Conventional power
Electric transmission
lines
Water
Total
724,325
128,046
95,137
24,288
971,797
543,012
138,717
86,393
22,759
790,881
538,427
106,492
104,795
13,596
763,310
413,933
107,671
89,047
13,568
624,219
The reconciliation of segment Further Adjusted EBITDA with the loss attributable to the parent
company is as follows:
72
Notes to the consolidated financial statements
31 December 2016
For the twelve-
month period ended December 31,
2016
$’000
2015
$’000
Loss attributable to the Company
Profit attributable to non-controlling interests
Income tax
Share of profits/(losses) of associates
Dividend
investment in ACBH
Financial expense, net
Depreciation, amortization, and impairment charges
from exchangeable preferred equity
(4,855)
6,522
1,666
(6,646)
27,948
405,750
332,925
(209,005)
10,819
23,790
(7,844)
18,400
526,758
261,301
Total segment Further Adjusted EBITDA
763,310
624,219
b) The assets and liabilities by operating segments (and business sector) at the end of 2016 and 2015
are as follows:
73
Notes to the consolidated financial statements
31 December 2016
Assets and liabilities by geography as of December 31, 2016:
North
America
South
America
EMEA
Balance as of
December 31,
2016
Assets allocated
Contracted concessional assets
3,920,106
1,144,712
3,859,454
-
136,665
185,970
-
62,215
40,015
55,009
29,158
246,671
4,242,741
1,246,942
4,190,291
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
8,924,272
55,009
228,038
472,656
9,679,975
272,664
345,160
617,824
10,297,799
North
America
South
America
EMEA
Balance as of
December 31,
2016
1,870,861
1,575,303
3,446,164
895,316
1,512
896,828
2,564,290
35,230
2,599,520
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
5,330,467
1,612,045
6,942,512
668,201
546,053
181,922
1,396,176
8,338,688
1,959,111
3,355,287
10,297,799
74
Notes to the consolidated financial statements
31 December 2016
Assets and liabilities by geography as of December 31, 2015:
North
America
South
America
EMEA
Assets allocated
Contracted concessional assets
4,054,093
1,206,693
4,040,111
Investments carried under the equity method
-
Current financial investments
Cash and cash equivalents (project companies)
129,349
136,950
-
61,973
41,525
56,181
30,036
290,548
Balance as of
December 31,
2015
9,300,897
56,181
221,358
469,023
Subtotal allocated
Unallocated assets
Other non-current assets
Other current assets (including cash and cash
equivalents at holding company level)
Subtotal unallocated
Total assets
4,320,392
1,310,191
4,416,876
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
2,690,769
799
34,225
889,103
2,724,994
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
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
75
Notes to the consolidated financial statements
31 December 2016
Assets and liabilities by business sectors as of December 31, 2016:
Renewable
energy
Conventiona
l power
Water
Electric
transmissio
n lines
Balance as of
December 31,
2016
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
liabilities
Total
unallocated
Total liabilities and equity
and
equity
7,255,308
12,953
13,661
420,215
646,927
-
136,644
30,295
929,005
-
62,215
11,357
93,032
42,056
15,518
10,789
8,924,272
55,009
228,038
472,656
7,702,137
813,866
1,002,577
161,395
9,679,975
272,664
345,160
617,824
10,297,799
Renewable
energy
Convention
al power
Electric
Water
transmission
lines
Balance as of
December 31,
2016
3,979,096
1,611,067
5,590,163
598,256
239
598,495
711,517
739
712,256
41,598
-
41,598
5,330,467
1,612,045
6,942,512
668,201
546,053
181,922
1,396,176
8,338,688
1,959,111
3,355,287
10,297,799
76
Notes to the consolidated financial statements
31 December 2016
Assets and liabilities by business sectors as of December 31, 2015:
Renewable
energy
Conventiona
l power
Water
Electric
transmissio
n lines
Balance as of
December 31,
2015
the equity
7,597,771
14,064
649,479
-
957,235
-
(project
14,892
437,455
128,999
784
61,807
17,755
96,412
42,117
15,660
13,029
9,300,897
56,181
221,358
469,023
Assets allocated
Contracted concessional assets
Investments carried under
method
Current financial investments
Cash and cash equivalents
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
liabilities
Total
unallocated
Total liabilities and equity
and
equity
8,064,182
779,262
1,036,797
167,218
10,047,459
285,105
257,910
543,015
10,590,474
Renewable
energy
Convention
al power
Electric
Water
transmission
lines
Balance as of
December 31,
2015
4,108,166
1,646,637
5,754,803
617,082
111
617,193
697,922
-
697,922
47,500
-
47,500
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
77
Notes to the consolidated financial statements
31 December 2016
c) The amount of depreciation, amortization and impairment charges recognized for the
years ended December 31, 2016 and 2015 are as follows:
Depreciation, amortization and impairment by geography
2016
2015
For the twelve-month period
ended December 31,
$’000
North America
South America
EMEA
Total
(129,478)
(62,387)
(141,060)
(332,925)
(129,091)
(41,274)
(90,936)
(261,301)
For the twelve-month period
ended December 31,
$’000
Depreciation, amortization and impairment by business
sectors
2016
2015
Renewable energy
Electric transmission lines
Total
(304,235)
(28,690)
(332,925)
(232,699)
(28,602)
(261,301)
78
Notes to the consolidated financial statements
31 December 2016
5. Changes in the scope of the consolidated financial statements
For the year ended December 31, 2016
On January 7, 2016, the Company closed the acquisition of a 13% stake in Solacor 1/2 from JGC,
which reduced JGC´s ownership in Solacor 1/2 to 13%. The total purchase price for these assets
amounted to $19,923 thousand.
The difference between the amount of Non-Controlling interest representing the 13% interest held by
JGC accounted for in the consolidated accounts at the purchase date, and the purchase price has been
recorded in equity in these consolidated financial statements, pursuant to IFRS 10, Consolidated
Financial Statements.
On August 3, 2016, the Company completed the acquisition of an 80% stake in Seville PV. Total
purchase price paid for this asset amounted to $3,214 thousand. The purchase has been accounted for
in the consolidated accounts of Atlantica Yield, in accordance with IFRS 3, Business Combinations.
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 $94,009 thousand.
In addition, 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 $682,300 thousand.
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 agreed for these assets amounted to $359,104
thousand.
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 had control over the rest of the assets
acquired during the year 2015 and therefore they are fully consolidated in these financial statements.
Given that Atlantica Yield was a subsidiary controlled by Abengoa at the time of acquisition, the
assets acquired 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.
79
Notes to the consolidated financial statements
31 December 2016
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:
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 for the year ended
December 31, 2015
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 $162.9 million and additional loss after tax of $25.8 million.
80
Notes to the consolidated financial statements
31 December 2016
6.
Profit/(loss) for the year
Profit/(loss) for the year has been arrived at after charging/ (crediting):
Year
ended
2016
$’000
Year
ended
2015
$’000
Net foreign exchange gains / (losses)
Depreciation, amortization and impairment charges
Impairment preferred equity investment in ACBH through
finance costs (see Note 23)
Employee benefit / (expenses) (see Note 8)
(9,546)
(332,925)
3,852
(261,301)
(22,076)
(210,435)
(14,736)
(5,848)
(379,283)
(473,732)
81
Notes to the consolidated financial statements
31 December 2016
7. Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:
Year
ended
2016
$’000
Year
ended
2015
$’000
Fees payable to the company’s auditor and their associates for
758
808
the audit of the company’s annual accounts
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
- Other services
Total non-audit fees
798
1,556
118
118
1,674
1,031
1,839
619
78
697
2,536
82
Notes to the consolidated financial statements
31 December 2016
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
Grants
Income
proceeds
Total
from various services and
insurance
2016
Number
2015
Number
16
19
80
6
20
141
9
8
30
10
19
76
Year
ended
2016
$’000
Year
ended
2015
$’000
(13,102)
(1,410)
(224)
(14,736)
(5,251)
(505)
(92)
(5,848)
For the twelve-
month period
ended December
31, 2016
For the twelve-
month period
ended December
31, 2015
$’000
$’000
59,085
6,453
65,538
67,859
998
68,857
Grants primarily relate to the ITC cash grant of Solana and Mojave, and the implicit grant recorded for
accounting purposes in relation to the FFB Loans in Solana and Mojave projects with interest rates
below market rates.
83
Notes to the consolidated financial statements
31 December 2016
10. Finance income and expenses
The following table sets forth our financial income and expenses for the years ended December 31, 2016 and
2015:
For the twelve-
month period ended
December 31, 2016
$’000
For the twelve-
month period
ended December
31, 2015
$’000
Finance income
Interest income from loans and credits
Profit on interest rate derivatives: cash flow hedges
TOTAL
286
3,012
3,298
933
2,531
3,464
Finance expenses
Expenses due to interest:
- Loans from credit entities
- Other debts
Losses on interest rate derivatives: cash flow hedges
TOTAL
For the twelve-
month period ended
December 31, 2016
$’000
For the twelve-
month period
ended December
31, 2015
$’000
(242,919)
(90,995)
(74,093)
(408,007)
(197,929)
(81,853)
(54,139)
(333,921)
Financial expenses increased in 2016 mainly due to the 2015 asset acquisitions under the ROFO
Agreement. Interests from other debts are primarily interest on the notes issued by ATS, ATN, ATN2,
Atlantica Yield, Solaben Luxembourg 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 income
statement.
For the twelve-
month period
For the twelve-
month period
84
Notes to the consolidated financial statements
31 December 2016
Other finance income / (expenses)
Dividend from ACBH (Brazil)
Other finance income
Impairment preferred equity investment in ACBH (see Note 23)
Other finance losses
TOTAL
ended December
31, 2016
$’000
ended December
31, 2015
$’000
27,948
13,027
(22,076)
(10,394)
8,505
18,400
1,520
(210,435)
(9,638)
(200,153)
According to the agreement reached with Abengoa in the third quarter of 2016 (see Note 23), Abengoa
acknowledged that Atlantica Yield is the legal owner of the dividends retained from Abengoa amounting
to $28.0 million. As a result, the Company recorded $28.0 million as Other financial income in
accordance with the accounting treatment given previously to the ACBH dividend.
Other financial income mainly includes the income further to the cancellation of the subordinated debt
Solnova Electricidad S.A. owed to Abener, a subsidiary of Abengoa, and income for discounts received
from Abengoa for the prepayment of payables (see Note 27).
Other finance losses mainly include guarantees and letters of credit, wire transfers and other bank fees
and other minor finance expenses.
Refer to note 27 for further details on the impairment of the preferred equity investment in ACBH.
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.
85
Notes to the consolidated financial statements
31 December 2016
Corporation tax:
Current year
Deferred tax
Year
ended
2016
$’000
Year
ended
2015
$’000
(1,018)
(2,182)
(1,018)
(648)
(2,182)
(21,608)
(1,666)
(23,790)
Taxation is calculated at the rates prevailing in the respective jurisdictions. The tax (charge)/income for
the year can be reconciled to the profit/(loss) in the income statement as follows:
Profit / (Loss) before tax
Tax at the average statutory tax rate of 30% (2015: 30 %)
Tax effect of share of results of associates
Permanent differences
Year
ended
2016
$’000
Year
ended
2015
$’000
3,333
(174,396)
(1,000)
2,110
52,319
2,341
11,121
(19,456)
Incentives, deductions, and tax losses carryforwards
(11,110)
(58,039)
Change in Spanish corporate income tax
Effect of different tax rates of subsidiaries operating in other
jurisdictions
Other non-taxable income/ (expense)
Tax charge for the year
-
884
(4,930)
(2,389)
2,143
550
(1,666)
(23,790)
Permanent differences in 2016 and 2015 are mainly due to ACT (Mexico).
Incentives, deductions, and tax losses carryforwards for the year 2015 included the impact of not
recognizing deferred tax assets on the impairment charge of the preferred equity investment in ACBH
($63.1 million).
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, Kaxu and solar plants in Spain.
The movements in deferred tax assets and liabilities during the years ended December 31, 2016 and
2015 were as follows:
86
Notes to the consolidated financial statements
31 December 2016
At 1 January 2015
Charge / (Credit) to profit or loss
Charge to other comprehensive income
Acquisition of subsidiary
Exchange differences and other
At 1 January 2016
Charge / (Credit) to profit or loss
Charge to other comprehensive income
Acquisition of subsidiary
Exchange differences and other
At 31 December 2016
12. Dividends
63,392
(21,608)
(12,010)
97,638
(15,752)
111,660
(648)
(5,639)
-
2,481
107,854
Amounts recognised as distributions to equity holders in the
period:
(54,350)
(146,302)
Year
ended
2016
$’000
Year
ended
2015
$’000
The dividends indicated above primarily relate to the dividends declared by Atlantica Yield Plc. to its
shareholders. These have been declared as follows:
- On August 3, 2016, the Board of Directors declared a dividend of $0.29 per share
corresponding to $0.145 per share for the first quarter of 2016 and to $0.145 per share for the
second quarter of 2016. The dividend was paid on September 15, 2016. From that amount, the
Company retained $12.2 million of the dividend attributable to Abengoa.
- On November 11, 2016, the Board of Directors declared a dividend of $0.163 per share
corresponding to the third quarter of 2016. The dividend was paid on December 15, 2016.
From that amount, the Company retained $6.6 million of the dividend attributable to Abengoa.
13.
Contracted concessional assets
a) The following table shows the movements of contracted concessional assets included in the
heading “Contracted Concessional assets” for 2016:
2016
87
Notes to the consolidated financial statements
31 December 2016
Cost
At 1 January 2016
Additions
Translation differences
Changes in scope of the consolidated financial statements
Reclassification and other movements
At 31 December 2016
Accumulated amortization losses
At 1 January 2016
Charge
Translation differences
Changes in scope of the consolidated financial statements
At 31 December 2016
Carrying amount
At 1 January 2016
At 31 December 2016
$’000
10,126,023
6,346
(68,199)
5,876
(2,450)
10,067,596
(825,126)
(332,925)
17,108
(2,381)
(1,143,324)
9,300,897
8,924,272
During 2016 contracted concessional assets decreased primarily due to the amortization charge for the
year.
Considering the low level of wind resources recorded since COD in Palmatir and Cadonal projects and
the uncertainty around such level in the future, the Company identified a triggering of impairment
during the year 2016 in compliance with IAS 36, Impairment of Assets. As a result, impairment tests
have been performed resulting in the recording of an impairment loss of $17,229 thousand and $3,101
thousand for Cadonal and Palmatir, respectively, as of December 31, 2016.
The impairment has been recorded within the line “Depreciation, amortization and impairment
charges” of the consolidated income statement, decreasing the amount of “Contracted concessional
assets” pertaining to the Renewable energy sector and South America geography. The recoverable
amount considered is the value in use and amounts to $91,795 thousand and $123,912 thousand for
Cadonal and Palmatir, respectively as of December 31, 2016. A specific discount rate has been used in
each year considering changes in the debt/equity leverage ratio over the useful life of this project,
resulting in the use of a range of discount rates between 6.7% and 7.0% for both projects.
An adverse change in the key assumptions which are individually used for the valuation could lead to
future impairment recognition; especially, a 5% decrease in generation over the entire remaining
useful life (PPA) of the project would generate an additional impairment of approximately $5 million
for Cadonal and $7 for Palmatir. An increase of 50 basis points in the discount rate would lead to an
additional impairment of approximately $3 million for Cadonal and $4 million for Palmatir.
88
Notes to the consolidated financial statements
31 December 2016
In addition, the Company identified a triggering event of impairment for Solana as a result of the
generation of the plant having been lower than expected during its first years of operation. This project
pertains to the Renewable energy sector and North America geography. The Company therefore
performed an impairment test as of December 31, 2016, which resulted in the recoverable amount
(value in use) exceeding the carrying amount of the asset by 3%. To determine the value in use of the
asset, a specific discount rate has been used in each year considering changes in the debt/equity
leverage ratio over the useful life of this project, resulting in the use of a range of discount rates
between 4.1% and 5.1%.
An adverse change in the key assumptions which are individually used for the valuation could lead to
future impairment recognition; especially, a 5% decrease in generation over the entire remaining
useful life (PPA) of the project would generate an impairment of approximately $40 million. An
increase of 50 basis points in the discount rate would lead to an impairment of approximately $30
million.
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.
b) 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
2015
$’000
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
89
Notes to the consolidated financial statements
31 December 2016
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.
14. Investments carried under the equity method
The table below shows the breakdown and the movement of the investments held in associates for
2016 and 2015:
90
Notes to the consolidated financial statements
31 December 2016
Investments in associates
Initial balance
Change in the scope of the consolidated financial statements
Share of profit/(loss)
Dividend distribution
Equity distribution
Currency translation differences
2016
$’000
56,181
-
6,646
(3,954)
(3,099)
(765)
2015
$’000
5,711
51,528
7,844
(4,845)
-
(4,057)
Final balance
55,099
56,181
Details of the Group's associates at the end of the reporting period are as follows:
Name
associate
of
Principal
activity
Place of incorporation and
principal place of business
Proportion
ownership
of
interest / voting rights held by
the Group
Connection
Facilities
Caceres (Spain)
57.16%
57.16%
31/12/2016
31/12/2015
Water plant
Dély Ibrahim (Algeria)
Pretoria (South Africa)
25.50%
50.00%
25.50%
50.00 %
Sevilla (Spain)
40.02%
36.64%
Evacuación
Valdecaballeros
, S.L.
Myah
Bahr
Honaine, S.P.A.
Pectonex, R.F.
Proprietary
Limited
Evacuación
Villanueva del
Rey, S.L
Connection
Facilities
Connection
Facilities
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.
There are no significant movement in the investments held in associates during the year 2016.
The increase in 2015 is mainly due to the entrance of Geida Tlemcem, S.L., which owns 51% of
Honaine desalination plant.
The tables below show a breakdown of stand-alone amounts of assets, revenues and profit and loss as
well as other information of interest for the years 2016 and 2015 for the associated companies:
Company
% Shares Non-
Current
Non-
Current
Revenue
Operating
Net
Investment
91
Notes to the consolidated financial statements
31 December 2016
current
assets
current
liabilities
profit/
profit/
under the
assets
liabilities
(loss)
(loss)
equity
Evacuación Valdecaballeros, S.L.
Myah Bahr Honaine, S.P.A. (*)
Pectonex, R.F. Proprietary Limited
57.16
25.50
50.00
19,283
931
306
532
537
(545)
(565)
202,150
67,120
104,704
14,158
52,770
34,247
14,066
3,730
-
-
1
-
(187)
(187)
method
9,528
42,056
3,425
Evacuación Villanueva del Rey, S.L
40.02
3,251
17
2,118
142
-
31
-
-
As of December 31, 2016
228,684
68,068
107,128
14,833
53,307
33,546
13,314
55,009
% Shares Non-
Current
Non-
Current
Revenue Operating Net
Investment
current
assets
current
liabilities
assets
liabilities
profit/
(loss)
profit/
(loss)
under the
equity
method
Evacuación Valdecaballeros, S.L.
Myah Bahr Honaine, S.P.A. (*)
Pectonex, R.F. Proprietary Limited
57.16
25.50
50.00
Evacuación Villanueva del Rey, S.L
36.64
20,552
2,402
296
580
458
(631)
201,997
73,965
116,610
11,945
52,767
39,336
3,485
3,526
-
100
-
2,467
-
96
-
-
(54)
25
(651)
15,607
(54)
-
10,475
42,117
3,589
-
As of December 31, 2015
229,560
76,467
119,373
12,621
53,225
38,676
14,902
56,181
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. Share of profit of Myah Bahr Honaine S.P.A. included in these
consolidated financial statements amounts to $7,647 thousand in 2016 and $7,821 thousand in 2015.
15. Trade and other receivables
Trade and other receivable as of December 31, 2016 and 2015, consist of the following:
Trade receivables
Tax receivables
Prepayments
Other accounts receivable
Total
Balance as of
December 31,
2016
$’000
Balance as of
December 31,
2015
$’000
151,199
29,705
10,261
16,456
207,621
126,844
42,322
9,168
18,974
197,308
92
Notes to the consolidated financial statements
31 December 2016
As of December 31, 2016 and 2015, the fair value of trade and other receivable accounts does not
differ significantly from its carrying value.
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, 2016 and 2015, are as follows:
Euro
Rand
Other
Total
Balance as of
December 31,
2016
$’000
Balance as of
December 31,
2015
$’000
98,798
12,807
7,151
118,756
74,535
6,208
6,646
87,389
The following table shows the maturity of Trade receivables as of December 31, 2016 and 2015:
Balance as of
December 31,
2016
$’000
Balance as of
December 31,
2015
$’000
151,199
151,199
126,844
126,845
Up to 3 months
Total
16. Cash and cash equivalents
2016
$’000
2015
$’000
Cash and cash equivalents
594,811
514,712
594,811
514,712
The following breakdown shows the main currencies in which cash and cash equivalent balances are
denominated:
US Dollar
Euro
2016
$’000
2015
$’000
343,954
196,382
219,172
251,778
93
Notes to the consolidated financial statements
31 December 2016
Algerian Dinar
South African Rand
Others
10,736
39,689
4,050
13,019
25,962
4,781
594,811
514,712
17. Corporate debt
The breakdown of the corporate debt as of December 31, 2016 and 2015 is as follows:
Non-current
Balance as
of December
31, 2016
$’000
Balance as
of December
31, 2015
$’000
Credit Facilities with financial entities
Notes and Bonds
123,804
252,536
409,665
251,676
Total Non-current
376,340
661,341
94
Notes to the consolidated financial statements
31 December 2016
Current
Credit Facilities with financial entities
Notes and Bonds
Total Current
Balance as of
December 31,
2016
$’000
Balance as of
December 31,
2015
$’000
289,035
2,826
291,861
624
2,529
3,153
The Credit Facility Tranche B is classified as Current for $288,317 thousand as of December 31, 2016
(Non-Current as of December 31, 2015) as it matures in December 2017. As a result of this
reclassification, current liabilities in the consolidated statement of financial position are higher than
current assets.
On February 10, 2017, the Company signed a Note Issuance Facility, a senior secured note facility
with a group of funds managed by Westbourne Capital as purchasers of the notes issued thereunder for
a total amount of €275 million (approximately $294 million), with three series of notes. Series 1 Notes
for €92 million mature in 2022; series 2 notes for €91.5 million mature in 2023; and series 3 notes for
€91.5 million mature in 2024. Interest on all three series accrues at a rate per annum equal to the sum
of 3 month EURIBOR plus 4.90%. The proceeds of the Note Issuance Facility will be used for the
repayment of Tranche B under our Credit Facility, which will be canceled, as well as for general
corporate expenses incurred as part of this transaction. The Company intends to fully hedge the Note
Issuance Facility with a swap to fix the interest rate as soon as possible after funding of the Notes.
Residual Current Corporate debt fully relates to the accrued interest of the Notes and Credit Facility as
of December 31, 2016 and 2015.
The repayment schedule for the Corporate debt at the end of 2016 is as follows:
2019
Credit Facilities with financial entities
Notes and Bonds
2017
289,035
2,826
2018
123,804
—
291,861
123,804
—
252,536
252,536
Total
412,839
255,362
668,201
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
95
Notes to the consolidated financial statements
31 December 2016
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.
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 2016 and 2015 of project debt have been as follows:
96
Notes to the consolidated financial statements
31 December 2016
Project debt -
long term
$’000
Project debt -
short term
$’000
Total
$’000
Balance as of December 31, 2015
3,574,464
1,896,205
5,470,669
Increases
Repayments
Currency translation differences
Reclassifications
Balance as of December 31, 2016
36,842
-
(64,426)
1,082,304
4,629,184
329,434
366,276
(480,969)
(480,969)
38,917
(25,509)
(1,082,304)
-
701,283
5,330,467
Main variations in Project debt during the year 2016 are the result of:
- Net decrease primarily due to repayment of debt; considering interests accrued are offset by a
similar amount of interests paid during the year.
- A reclassification of the entire debt of Solana and Mojave projects from short term to long term
as of December 31, 2016 considering that as a result of the forbearance signed in December, 2016,
Abengoa cross-defaults will no longer trigger acceleration remedies in the Solana or Mojave
financing agreements.
Debts of Kaxu and Cadonal projects remain classified as short term in accordance with
International Accounting Standards 1 (“IAS 1”), “Presentation of Financial Statements” (see below
for details). The waiver of the cross-default provisions related to Abengoa that has been obtained
for Cadonal during 2016 is subject to the completion of certain conditions.
Balance as of December 31, 2014
Increases
Repayments
Currency translation differences
Reclassifications
Changes in the scope of the consolidated financial
statements
Balance as of December 31, 2015
Project debt -
long term
$’000
3,491,877
72,406
-
(201,958)
(1,875,223)
2,087,362
Project debt -
short term
$’000
331,189
370,720
(772,886)
(10,052)
1,875,223
102,012
Total
$’000
3,823,066
443,126
(772,886)
(212,010)
-
2,189,374
3,574,464
1,896,206
5,470,670
During 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;
97
Notes to the consolidated financial statements
31 December 2016
- 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”.
The repayment schedule for Project debt in accordance with the financing arrangements, at the
end of 2016 is as follows and is consistent with the projected cash flows of the related projects.
2017
2018
2019
2020
2021
Subsequent
years
Total
Interest
Repayment
Nominal
repayment
20,775
190,379
209,011
229,090
247,075
261,026
4,173,111
5,330,467
In 2016, the Company refinanced ATN2 debt. In 2015, the Company did not enter into any new
project debt.
Current and non-current loans with credit entities include amounts in foreign currencies for a total of
$2,564,291 thousand as of December 31, 2016 ($2,690,769 thousand as of December 31, 2015).
All of the Company’s financing agreements have a carrying amount close to its fair value.
98
Notes to the consolidated financial statements
31 December 2016
19.
Grants and other long term payables
Balances as of
December 31,
2016
Balances as of
December 31,
2015
$’000
$’000
Grants
Other liabilities
Grant and other non-current liabilities
1,297,755
314,290
1,612,045
1,354,967
291,781
1,646,748
As of December 31, 2016, 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
$803,233 thousand ($835,430 thousand as of December 31, 2015), 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 $492,406 thousand ($517,165 thousand as of
December 31, 2015). 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.
Other liabilities mainly relate 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 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, 2016 and 2015. The non-current portion of the liability is recorded in
Grants and other liabilities for an amount of $263,885 thousand ($247,384 thousand as of December
31, 2015) 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 is then measured at amortized cost in
accordance with the effective interest method.
20. Trade and other payables
99
Notes to the consolidated financial statements
31 December 2016
Item
Trade accounts payable
Down payments from clients
Suppliers of concessional assets current
Liberty (see Note 19)
Other accounts payable
Total
Balance as of December 31,
2016
Balance as of December 31,
2015
$’000
$’000
121,527
6,153
380
21,461
10,984
160,505
110,495
6,398
17,582
21,515
22,227
178,217
Trade accounts payables mainly relate to the operating and maintenance of the plants.
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.
21. Equity
Transactions closed during the year 2015
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
by Atlantica Yield 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%.
Transactions closed during the year 2016 and position as of December 31, 2016
As of December 31, 2016, 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.
As of the date hereof, according to Abengoa´s beneficial ownership reporting, Abengoa has delivered
an aggregate of 7,595,639 Ordinary Shares to holders that exercised their option to exchange the
$279,000 thousand principal amount of exchangeable notes due 2017 issued by Abengoa on March 5,
2015 (the “Exchangeable Notes”) for shares of Atlantica Yield. The Exchangeable Notes are
exchangeable, at the option of their holders, for ordinary shares of Atlantica Yield. These operations
reduced Abengoa´s stake to 41.47% as of December 31, 2016.
Atlantica Yield reserves as of December 31, 2016 are made up of share premium account and
distributable reserves.
Retained earnings include results attributable to Atlantica Yield, the impact of the Asset Transfer in
equity and the impact of the assets acquisition under the ROFO agreement in equity. The Asset
Transfer and the acquisitions under the ROFO agreement were recorded in accordance with the
100
Notes to the consolidated financial statements
31 December 2016
Predecessor accounting principle, given that all these transactions occurred before December 2015,
when Abengoa still had control over Atlantica Yield.
Non-controlling interests fully relate to interests held by JGC in Solacor 1 and Solacor 2, by Idae in
Seville PV, by Itochu Corporation in Solaben 2 and Solaben 3, by Algerian Energy Company, SPA
and Sadyt in Skikda and by Industrial Development Corporation of South Africa (IDC) and Kaxu
Community Trust in Kaxu Solar One (Pty) Ltd.
Dividends declared during the year 2016:
- On August 3, 2016, the Board of Directors declared a dividend of $0.29 per share corresponding
to $0.145 per share for the first quarter of 2016 and to $0.145 per share for the second quarter of
2016. The dividend was paid on September 15, 2016. From that amount, the Company retained
$12.2 million of the dividend attributable to Abengoa;
- On November 11, 2016, the Board of Directors declared a dividend of $0.163 per share
corresponding to the third quarter of 2016. The dividend was paid on December 15, 2016. From
that amount, the Company retained $6.6 million of the dividend attributable to Abengoa.
In addition, as of December 31, 2016, there was no treasury stock and there have been no transactions
with treasury stock during the period then ended.
101
Notes to the consolidated financial statements
31 December 2016
22. Notes to the cash flow statement
Analysis of changes in net debt
January 1, 2016
$’000
Cash Flow
$’000
Non monetary
items
$’000
December 31, 2016
$’000
Cash and bank balances
514,712
81,956
Borrowings
6,135,164
(488,206)
(1,857)
351,710
594,811
5,998,668
Net debt
5,620,452
(570,162)
353,567
5,403,857
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, 2016 and 2015 are as follows:
Category
Notes
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
Loans and
receivables /
payables
$’000
Available for
sale financial
assets
$’000
Hedging
derivatives
$’000
Balance as of
12.31.16
$’000
-
-
263,501
207,621
594,811
1,065,933
668,201
5,330,467
101,750
160,505
-
6,260,923
-
30,488
-
-
-
30,488
-
-
-
-
-
-
3,822
-
-
-
-
3,822
-
-
-
-
349,266
349,266
3,822
30,488
263,501
207,621
594,811
1,100,243
668,201
5,330,467
101,750
160,505
349,266
6,610,189
Derivative assets
Preferred equity in ACBH
Notes
24
Loans and
receivables /
payables
$’000
-
-
Available
for sale
financial
assets
$’000
-
52,564
Hedging
derivatives
$’000
Balance as
of 12.31.15
$’000
4,741
-
4,741
52,564
102
Notes to the consolidated financial statements
31 December 2016
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
16
17
18
27
20
24
257,844
197,308
514,712
969,864
664,494
5,470,670
126,860
178,217
-
6,440,241
-
-
-
52,564
-
-
-
-
-
-
-
-
-
4,741
-
-
-
-
385,095
385,095
257,844
197,308
514,712
1,027,169
664,494
5,470,670
126,860
178,217
385,095
6,825,335
As of December 31, 2016 and 2015, all the financial instruments measured at fair value have been
classified as Level 2, except for the preferred equity investment in ACBH and the Put and Call Option
agreement (see Note 24), classified as Level 3.
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. As
of 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, as installment for the four
quarters at 2016 hasn´t been paid to the Company yet;
- 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.
On January 29, 2016, Abengoa informed the Company that several indirect subsidiaries of Abengoa in
Brazil, including ACBH, initiated an insolvency procedure under Brazilian law (“reorganizaçao
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 recorded
an impairment of this preferred equity investment for a total amount of $210,435 thousand as of
December 31, 2015. The valuation method used to calculate the value on the preferred equity
investment in ACBH as of December 31, 2015 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.
In addition, in the third quarter of 2016, the Company signed an agreement with Abengoa on ACBH
preferred equity investment among other things, with the following main consequences:
- Abengoa acknowledged it failed to fulfill its obligations under the agreements related to the
preferred equity investment in ACBH and, as a result, Atlantica Yield is the legal owner of the
dividends amounting to $28.0 million, that the Company retained from Abengoa;
- Abengoa recognizes a non-contingent credit for an amount of €300 million (approximately
$316 million), corresponding to the guarantee provided by Abengoa, S.A. regarding the
preferred equity investment in ACBH, subject to restructuring and subject to adjustments for
dividends retained after the agreement. On October 25 2016, Atlantica Yield signed
implementation of the
Abengoa’s restructuring agreement and accepted, subject to
103
Notes to the consolidated financial statements
31 December 2016
restructuring, to receive 30% of the amount (approximately $95 million nominal value) in the
form of tradable bonds to be issued by Abengoa. Upon completion of the restructuring, this
debt (“Restructured Debt”) would have a junior status within Abengoa debt structure post
restructuring. The remaining 70% (approximately $221 million) would be received in the form
of equity in Abengoa. As of the date of this report, there is a high degree of uncertainty on the
value of this debt and equity;
-
In order to convert this junior debt into senior debt, Atlantica Yield has agreed, subject to
implementation of the restructuring, to participate in Abengoa’s issuance of asset-backed
notes (the “New Money 1 Tradable Notes”) with up to €48 million (approximately $51
million), subject to scale-back following allocation process contemplated in Abengoa’s
restructuring. In the fourth quarter of 2016, the Company reached an agreement with an
investment fund to sell them approximately 50% of the New Money Tradable Notes that the
Company is assigned, and as a result expects the final investment to be less than €24 million
(approximately $25 million). The New Money 1 Tradable Notes are backed by a ring-fenced
structure including Atlantica Yield’s shares and a cogeneration plant in Mexico (A3T). The
New Money 1 Tradable Notes offer the highest level of seniority in Abengoa’s debt structure
post restructuring. Upon the purchase by the Company of the New Money 1 Tradable Notes,
the Restructured Debt would be converted into senior debt;
- Upon receipt of the Restructured Debt and Abengoa equity, the Company would waive its
rights under the ACBH agreements, including its right to retain the dividends payable to
Abengoa.
Further to this agreement, the Company updated the valuation of the instrument as of December 31,
2016 using a probability weighted method. This valuation method considers the probability of the
restructuring agreement of Abengoa being made effective. The fair value of the instrument as of
December 31, 2016 is the result of estimating the value of the instrument in case the restructuring
agreement is made effective and in case it is not. In case the restructuring agreement is not accepted,
the value of the instrument would remain the same as the one calculated as of December 31, 2015. In
case the restructuring agreements is made effective, value of the instrument has been obtained by
discounting the expected cash-flows from the Restructured Debt (approximately $95 million), using a
discount rate of 25% based on the yields of bonds issued in Spain by comparable companies involved
in a similar restructuring process. Result of this updated valuation is an additional impairment of this
preferred equity investment recorded as of December 31, 2016 for an amount of $22,076 thousand.
An adverse change in the key assumptions which are individually used for the valuation could lead to
future impairment recognition; especially, an increase of 50 basis points in the discount rates used in
the fair value exercise described above would lead to an additional impairment of approximately $1
million.
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,
2016 and 2015 are as follows:
104
Notes to the consolidated financial statements
31 December 2016
Balance as of 12.31.16
Balance as of 12.31.15
Assets
Liabilities
Assets
Liabilities
$’000
$’000
$’000
$’000
Derivatives - cash flow hedge
3,822
349,266
4,741
385,095
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.
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.
On November 7, 2016, the Company entered into a Put and Call option agreement with an investment
fund to sell them approximately 50% of the New Money Tradable Notes that the Company is
assigned. The fair value of the Put and Call agreement has been assumed to be the sum of the intrinsic
value of the options, due to the short time period, 5 days, in which the options can be executed and the
absence of the subjacent volatility. The intrinsic value of the contract is the difference between the
nominal value of the debt and the fair value of the debt. The latter has been estimated by discounting
the projected contractual cash flows using a single discount rate. It has been assumed that the best
estimate of the credit risk profile of the New Money Notes is 18,9% which is the one reflected by the
Lenders in the debt pricing, meaning the Internal Rate of Return (IRR) of the debt cash flows and that
results in a net fair value of the Put and Call option as of December 31, 2016 of 0. Modifying the
assumption of the IRR and considering the yield to maturity of the quoted bonds and different rating
assumptions like a 25,1% discount rate (which would be an approximate discount for CC rated debt)
and a 12,5% discount rate (which would be an approximate discount for CCC rate debt), the fair value
of the Put and Call agreement would result respectively in a derivative liability of $5 million and a
derivative asset of $3.7 million. With this agreement, the objective of the Company is to be able to
obtain liquidity from the New Money. The net price paid to enter into the Put and Call option was 0
(€1 collected for the put and €1 paid for the call) and there will be no cash effect with regards to the
sensibilities discussed.
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.
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%.
105
Notes to the consolidated financial statements
31 December 2016
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, 2016 and 2015.
106
Notes to the consolidated financial statements
31 December 2016
Notionals
Balance as of 12.31.16
Balance as of 12.31.15
Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
Subsequent years
Total
$’000
$’000
Cap
Swap
Cap
Swap
24,261
25,934
27,880
400,239
75,837
199,832
83,897
1,500,789
$
478,314 $ 1,860,355 $
22,320
25,018
26,741
441,766
515,845
72,184
77,193
201,186
1,611,035
$ 1,961,598
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, 2016 and 2015. 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
Balance as of 12.31.16
Balance as of 12.31.15
Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
Subsequent years
Total
$’000
$’000
Cap
Swap
Cap
Swap
250
262
275
3,035
(12,383)
(14,927)
(13,957)
(307,999)
185
201
218
4,137
(15,741)
(16,508)
(16,580)
(336,266)
$
3,822
$ (349,266)
$
4,741 $
(385,095)
During 2016, fair value of derivatives increased mainly due to an increases in the fair value of interest
rate cash-flow hedges resulting from the increase in future interest rates.
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 $72,774 thousand (loss of $55,841 thousand in 2015).
Additionally, the net amount of the time value component of the cash flow derivatives fair value
recognized in the consolidated income statements for the years 2016 and 2015 has been a gain of
$1,694 thousand and $4,234 thousand, respectively.
The after-tax result accumulated in equity in connection with derivatives designated as cash flow hedges
at the years ended December 31, 2016 and 2015, amount to a $52,797 thousand gain and a $24,831
thousand gain 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 Finance
and Compliance Departments, 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
107
Notes to the consolidated financial statements
31 December 2016
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%.
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 the interest rate derivative positions of the Company, the most significant
impacts on these consolidated financial statements are derived from the changes in EURIBOR
or LIBOR, which represent the reference interest rate for the majority of the debt of the
Company. In the event that Euribor and Libor had risen by 25 basis points as of December 31,
2016, with the rest of the variables remaining constant, the effect in the consolidated income
statement would have been a loss of $2,563 thousand (a loss of $1,795 thousand in 2015) and an
increase in hedging reserves of $37,290 thousand ($41,702 thousand in 2015). 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, 2016 and 2015 is provided in
Note 24.
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 (neither as of December 31, 2015).
108
Notes to the consolidated financial statements
31 December 2016
Additionally, to mitigate any potential risk that might arise from the current situation of
Abengoa, the Company signed a currency option with a leading financial institution which
guarantees a minimum Euro-U.S. dollar exchange rate for net distributions expected from
Spanish solar 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 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 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 17 and 18 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
Net debt to equity ratio
Balance as of
December 31,
2016
$’000
Balance as of
December 31,
2015
$’000
5,998,668
594,811
6,135,163
514,712
5,403,857
5,620,451
1,959,111
2,023,501
276%
278%
109
Notes to the consolidated financial statements
31 December 2016
26.
Events after the balance sheet date
On February 10, 2017, the Company signed a Note Issuance Facility, a senior secured note facility
with a group of funds managed by Westbourne Capital as purchasers of the notes issued thereunder for
a total amount of € 275 million (approximately $294 million), with three series of notes. Series 1
Notes for €92 million mature in 2022; series 2 notes for €91.5 million mature in 2023; and series 3
notes for €91.5 million mature in 2024. Interest on all three series accrues at a rate per annum equal to
the sum of 3 month EURIBOR plus 4.90%. The proceeds of the Note Issuance Facility will be used
for the repayment of Tranche B under our Credit Facility, which will be canceled, as well as for
general corporate expenses incurred as part of this transaction. The Company intends to fully hedge
the Note Issuance Facility with a swap to fix the interest rate as soon as possible after funding of the
Notes.
In February 2017, the Company signed a letter of intent for the acquisition of a 12.5% interest in a
114-mile transmission line in the U.S, from Abengoa. The asset will receive a FERC regulated rate of
return, and is currently under development, with COD expected in 2020. The Company expects its
total investment to be up to $10 million in the coming three years including an initial amount invested
at cost. The Company would also gain certain rights to acquire an additional 12.5% interest in the
same project.
On February 24, 2017, the Board of Directors of the Company approved a dividend of $0.25 per share,
which is expected to be paid on or about March 15, 2017.
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 and non-controlling interests, mainly through loan
contracts and advisory services. The transactions were completed at market rates.
Details of balances with related parties as of December 31, 2016 and 2015 are as follows:
Credit receivables (current)
Total current receivables with related parties
Credit receivables (non-current)
Total non-current receivables with related parties
Trade payables (current)
Total current payables with related parties
Balance as of
December 31,
2016
Balance as of
December 31,
2015
$’000
$’000
12,031
12,031
30,505
30,505
61,338
61,338
12,653
12,653
52,774
52,774
73,813
73,813
Credit payables (non-current)
101,750
126,860
110
Notes to the consolidated financial statements
31 December 2016
Total non-current payables with related parties
101,750
126,860
Receivables with related parties primarily correspond to the preferred equity investment in ACBH.
The instrument was impaired and its fair value amounts to $30,488 thousand as of December 31, 2016
($52,565 thousand as of December 31, 2015), classified as non-current (see Note 23).
Trade payables (current) primarily relate to payables for Operation and Maintenance services. 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,
2016 and 2015 have been as follows:
For the twelve-month period
ended December 31,
2016
$’000
-
1,220
2015
$’000
44,260
523
(115,779)
(106,737)
60
(2,460)
1,466
(1,968)
Sales
Services rendered
Services received
Financial income
Financial expenses
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. During 2015 and 2016 the Company has internalized main support
services cancelling the majority of these fees with Abengoa.
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 were properly accounted for as other operating
expenses. The Executive Service Agreement was canceled in February 2015.
During the year 2015 and 2016, some employees of Abengoa delivering services under the Support
Services Agreement have been transferred to entities within the consolidation perimeter of Atlantica
Yield and the Support Services Agreement has been cancelled. In addition, some external employees
were hired. This resulted in the Company increasing its own employee benefit expenses as shown on
the face of the consolidated income statement for the years 2015 and 2016.
The figures detailed in the table above do not include the following financial income recorded in these
consolidated financial statements for the twelve-month period ended December 31, 2016 and resulting
from the agreement signed with Abengoa in the third quarter of 2016 (see Note 23): compensation
received from Abengoa in lieu of dividends from ACBH for $28.0 million, income for the cancellation
of the subordinated debt Solnova Electricidad S.A. owed to Abener for $7.6 million and income of
$1.7 million for discounts received from Abengoa for the prepayment of payables.
111
Notes to the consolidated financial statements
31 December 2016
In addition, Abengoa maintains a number of obligations under EPC, O&M and other contracts, as well
as indemnities covering certain potential risks. Additionally, Abengoa represented that as of the date
of the accession to the restructuring agreement Atlantica Yield would not be a guarantor of any
obligation of Abengoa with respect to third parties and agreed to indemnify the Company for any
penalty claimed by third parties resulting from any breach in such representations.
Finally, the Company entered into a financial support agreement on June 13, 2014 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, 2016, 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:
2016
$’000
2015
$’000
Salaries, fees, bonuses and benefits in kind
2,034
2,133
2,034
2,133
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 35 to 49.
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 2016.
29.
Guarantees and commitments
Third-party guarantees
At the close of 2016 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
$27,163 thousand attributed to operations of technical nature ($27,638 thousand as of December 31,
2015).
112
Notes to the consolidated financial statements
31 December 2016
Contractual obligations
The following table shows the breakdown of the third-party commitments and contractual obligations
as of December 31, 2016 and 2015:
2016
$’000
Total
2017
2018 and
2019
2020 and
2021
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
668,201 291,861 376,340
—
4,498,930 183,929 388,679 459,361
831,538 27,225 49,422 48,740
2,894,146 136,032 263,398 246,904
—
3,466,961
706,151
2,247,812
3,356,750 332,408 617,852 543,927
1,862,563
2015
$’000
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
664,494
3,153 409,665 251,677
4,634,505 170,213 356,328 430,153
836,164 25,514 44,314 47,699
4,158,576 169,951 320,287 344,338
3,761,305 338,543 667,427 594,263
—
3,677,812
718,638
3,323,999
2,161,072
*According to contracted maturities.
30. Earnings per share
Basic earnings per share for the year 2016 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.
113
Notes to the consolidated financial statements
31 December 2016
Item
For the twelve-month
period ended December 31,
2016
$’000
For the twelve-month
period ended December 31,
2015
$’000
Loss from continuing operations
attributable to Atlantica Yield Plc.
Profit/(loss) from discontinuing
operations attributable to Atlantica
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
(4,855)
(209,005)
-
100,217
92,795
(0.05)
-
(0.05)
(2.25)
-
(2.25)
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.
114
Notes to the consolidated financial statements
31 December 2016
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.
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 Concentrating 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 50 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 February 2012 and the
second one, Solacor 2, was reached in March 2012. JGC Corporation holds 13% 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
115
Notes to the consolidated financial statements
31 December 2016
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.
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, ACT Energy Mexico 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)
the approximately 356 miles, 220kV line from Carhuamayo-Paragsha-Conococha-Kiman-Ayllu-
Cajamarca Norte;
(ii) the 4.3 miles, 138kV link between the existing Huallanca substation and Kiman Ayllu
substations;
(iii) the 1.9 miles, 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.
116
Notes to the consolidated financial statements
31 December 2016
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
ABY 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:
one 500kV electric transmission line and two short 220kV electric transmission lines, which are
(i)
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 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-miles transmission line project and Tranmisora
Baquedano, or Quadra 2, is a 32-miles 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.
117
Notes to the consolidated financial statements
31 December 2016
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 2011. 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.
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
118
Notes to the consolidated financial statements
31 December 2016
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 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 25-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
119
Notes to the consolidated financial statements
31 December 2016
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 25-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:
(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 May 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
120
Notes to the consolidated financial statements
31 December 2016
with protects us from potential devaluation over the long term. Being the project COD February 2015,
the PPA expires on February 2035.
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.
121
Company balance sheet
31 December 2016
Amounts in thousands of U.S. dollars
Fixed assets
Tangible assets
Investments in subsidiaries
Amounts owed by group undertakings
Current assets
Trade and other receivables
Amounts owed by group undertakings
Short-term financial investments
Derivatives assets
Cash and bank balances
Total assets
Creditors: Amounts falling due within one year
Trade and other payables
Amounts owed to group undertakings
Borrowings
Derivatives liabilities
Net current assets/(liabilities)
Total assets less current liabilities
Creditors: Amounts falling due after more than one year
Borrowings
Amounts owed to group undertakings
Derivatives liabilities
Total liabilities
Net assets
(1) Notes 1 to 7 are an integral part of the financial statements
Capital and Reserves
Share capital
Share premium account
Distributable reserves
Other Reserves
Retained earnings
Shareholders’ funds
Notes (1)
2016
2015
3
4
4
6
4
5
5
4
7
110
2,035,598
704,916
2,740,624
2,032
15,795
5,000
999
122,154
145,980
135
2,014,487
822,263
2,836,885
296
173
5,000
-
45,487
50,956
2,886,604
2,887,841
7,949
9,704
291,861
-
309,514
(163,534)
17,328
9,214
3,152
95
29,789
21,167
2,577,090
2,858,052
376,340
44,983
2,347
423,670
733,184
661,341
26,917
11,773
700,031
729,820
2,153,420
2,158,021
2016
2015
10,022
1,981,881
286,576
13,879
(138,938)
10,022
1,981,881
331,974
4,345
(170,201)
2,153,420
2,158,021
122
Company balance sheet
31 December 2016
(1) Notes 1 to 7 are an integral part of the financial statements
The Company recorded a profit after tax of $31.3 million for the period ended 31 December 2016 (2015:
loss after tax of $219.6 million).
The financial statements of Atlantica Yield plc, company registration no. 08818211, were approved by the
board of directors and authorised for issue on 24th February 2017. They were signed on its behalf by:
Chief Executive Officer
Santiago Seage
24th February, 2017
123
Statement of changes in equity
31 December 2016
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
Balance at 1 January 2015
8,000
1,313,903
476,233
49,414
Loss for the year
Issue of share capital and share
premium
Dividends
Change in fair value of cash flow
hedges (net of deferred taxation)
Balance at 31 December 2015
-
-
-
(219,615)
2,022
667,978
-
-
-
-
(6,264)
(137,995)
-
-
-
-
10,022
1,981,881
331,974
(170,201)
-
-
-
-
4,345
4,345
Profit for the year
Dividends
Change in fair value of cash flow
hedges (net of deferred taxation)
Balance at 31 December 2016
-
-
-
-
-
-
-
(45,398)
31,263
-
-
-
-
-
9,534
10,022
1,981,881
286,576
(138,938)
13,879
2,153,420
1,847,550
(219,615)
663,736
(137,995)
4,345
2,158,021
31,263
-
9,534
Notes to the Company financial statements
31 December 2016
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.
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 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:
(cid:2)
(cid:2) Derivative financial instruments and fair value estimates.
Impairment of investments; and
2.
Profit/(Loss) 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 profit for the financial year ended
31 December 2016 of $31.3 million (2015: loss of $219.6 million).
The auditor’s remuneration for audit and other services is disclosed in note 7 to the consolidated
125
Notes to the Company financial statements
31 December 2016
financial statements.
3.
Investments in subsidiaries
Details of the Company’s subsidiaries at 31 December 2016 are as follows:
Name
Place of
incorporation and
principal place of
business
Proportion
of
ownership
interest
Proportion
of voting
power held
Registered office
%
%
Palmucho, S.A. Chile
100.00%
100.00%
ABY Servicios Corporativos, S.L.
Spain
99.99%
99.99%
Transmisora Baquedano, S.A.
Chile
100.00%
100.00%
Transmisora Mejillones, S.A.
Chile
100.00%
100.00%
ASUSHI Inc.
USA
100.00%
100.00%
ACT Holdings, S.A. de C.V.
Mexico
99.99%
99.99%
ABY Concessions Perú, S.A.
ABY
S.L.U.
Concessions
Infrastructure,
ASHUSA Inc
Peru
Spain
USA
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
Mojave Solar, Llc
ASO Holdings Company, LLC
Arizona Solar One, LLC (USA)
ATN, S.A.
ABY Transmisión Sur, S.A.
Peru
USA
USA
USA
USA
Peru
Peru
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.98%
99.98%
99.99%
99.99%
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
C/ Energía Solar nº 1
41014, Sevilla (Spain)
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Avda. Jaime Balmes, 11, Piso 10,
Torre C, Fracción C, Oficina
1001, Col. Los Morales Polanco,
11510, Ciudad de México
Av. Canaval y Moreyra, 562, San
Isidro, Lima
C/ Energía Solar nº 1
41014, Sevilla (Spain)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Office 103 Ancorley Building;
45Scott Street
Upington
8801 (South Africa)
Av. Canaval y Moreyra, 562, San
Isidro, Lima
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Av. Canaval y Moreyra, 562, San
Isidro, Lima
Av. Canaval y Moreyra, 562, San
Isidro, Lima
126
Notes to the Company financial statements
31 December 2016
ACT Energy Mexico, S.A. de C.V.
Mexico
99.98%
99.98%
Kaxu Solar One (Pty) Ltd
South Africa
51.00%
51.00%
Sanlucar Solar, S.A.
Solar Processes, S.A.
Palmatir, S.A
Cadonal, S.A.
Spain
Spain
100.00%
100.00%
100.00%
100.00%
Uruguay
100.00%
100.00%
Uruguay
100.00%
100.00%
Holding Eólica, S.A.
Uruguay
100.00%
100.00%
Ecija Solar Inversiones, S.A.
Spain
100.00%
100.00%
Helioenergy Electricidad Uno, S.A.
Spain
100.00%
100.00%
Helioenergy Electricidad, Dos, S.A.
Spain
100.00%
100.00%
Carpio Solar Inversiones, S.A.
Solacor Electricidad Uno, S.A.
Solacor Electricidad Dos, S.A.
Spain
Spain
Spain
100.00%
100.00%
87.00%
87.00%
87.00%
87.00%
Logrosán Solar Inversiones, S.A.
Spain
100.00%
100.00%
Solaben Electricidad Dos, S.A.
Spain
70.00%
70.00%
Solaben Electricidad Tres, S.A.
Spain
70.00%
70.00%
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.
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%
Solnova Electricidad Tres, S.A.
Spain
100.00%
100.00%
Solnova Electricidad Cuatro, S.A.
Spain
100.00%
100.00%
Logrosan Solar Inversiones Dos, S.L. Spain
100.00%
100.00%
Solaben Luxembourg S.A.
Luxembourg
100.00%
100.00%
Avda. Jaime Balmes, 11, Piso 10,
Torre C, Fracción C, Oficina
1001, Col. Los Morales Polanco,
11510, Ciudad de México
Office 103 Ancorley Building;
45Scott Street
Upington
8801 (South Africa)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
Avda. Uruguay, 1283,
Montevideo
Avda. Uruguay, 1283,
Montevideo
Avda. Uruguay, 1283,
Montevideo
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosán (Cáceres, Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosán (Cáceres, Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
6, rue Eugène RuppertL-2453
Luxembourg
127
Notes to the Company financial statements
31 December 2016
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.
Spain
100.00%
100.00%
Solaben Electricidad Seis, S.A.
Spain
100.00%
100.00%
Geida Tlemcen, S.L.
Spain
50.00%
50.00%
Myah Bahr Honaine, S.P.A.
Algeria
25.50%
25.50%
Geida Skikda, S.L.
Aguas de Skikda, S.P.A.
Spain
Algeria
67.00%
67.00%
34.17%
34.17%
ABY Infrastructures USA, LLC.
USA
100.00%
100.00%
Fotovoltaica Solar Sevilla, S.A.
Spain
80.00%
80.00%
RRHH Servicios Corporativos
Mexico
100.00%
100.00%
ABY Infraestructuras, S.L.
Spain
100.00%
100.00%
6, rue Eugène RuppertL-2453
Luxembourg
6, rue Eugène RuppertL-2453
Luxembourg
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosán (Cáceres, Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosán (Cáceres, Spain)
Francisco Silvela, 42 - 4th Floor,
28028 Madrid
162 Bois des Cars III
DelyIbrahim — Alger - Algerie
Paseo de la Castellana 83-85,
28046 Madrid (Spain)
162 Bois des Cars III
DelyIbrahim — Alger - Algerie
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
C/ Energía Solar nº 1
41014, Sevilla (Spain)
Avda. Jaime Balmes, 11, Piso 10,
Torre C, Fracción C, Oficina
1001, Col. Los Morales Polanco,
11510, Ciudad de México
C/ Energía Solar nº 1
41014, Sevilla (Spain)
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 2016, the
carrying value of the direct investments was as follows:
2016
$’000
2015
$’000
128
Notes to the Company financial statements
31 December 2016
Palmucho, S.A.
ABY Servicios Corporativos, S.L.
Transmisora Baquedano, S.A.
Transmisora Mejillones, S.A.
ASHUSHI Inc.
ACT Holdings, S.A. de C.V.
ABY Concessions Perú, S.A.
ABY Concessions Infrastructure, S.L.U.
ASHUSA, Inc
ATN, S.A. (*)
ABY Transmisión Sur, S.A. (*)
ABY South Africa (Pty) Ltd (*)
ATN 2, S.A.
ABY Infrastructure USA, Llc.
-
5,483
-
-
317,950
98,543
261,920
887,039
380,193
1,006
10,564
56,998
15,897
5
-
5,483
-
-
317,950
98,543
261,920
868,281
380,193
1,044
18,727
46,449
15,897
-
Total investments in subsidiaries
2,035,598
2,014,487
(*) Includes 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.
Movements in the carrying value of investments during the years 2016 and 2015 were as follows:
As at 1st January 2016
Increase
As at 31st December 2016
As at 1st January 2015
Acquisitions
Capital reduction
As at 31st December 2015
$ ´000
2,014,487
21,111
2,035,598
$ ´000
1,392,481
647,074
(25,068)
2,014,487
The increase in 2016 primarily relates to a capital increase in ABY Concessions Infrastructure,
S.L.U. in January 2016 for $19 million.
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 in 2015 and 2016 were as follows:
129
Notes to the Company financial statements
31 December 2016
ATN 2, S.A
ABY South Africa (Pty) Ltd
25/06/2015 Purchase
30/07/2015 Purchase
Acquisition date Acquisition method
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.
130
Notes to the Company financial statements
31 December 2016
4.
Amounts owed by/to group undertakings
Non-current receivables from group companies
Preferred equity investment in ACBH
2016
$’000
2015
$’000
674,427
30,489
769,698
52,565
Non-current amounts owed by group undertakings
704,916
822,263
Current amounts owed by group undertakings
Total amounts owed by group undertakings
15,795
173
720,711
822,436
Current amounts owed to group undertakings
Non-Current amounts owed to group undertakings
9,704
44,983
9,214
26,917
Total amounts owed to group undertakings
54,687
36,131
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. As of 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, as installment for the four quarters at 2016
hasn´t been paid to the Company yet;
• 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.
On January 29, 2016, Abengoa informed the Company that several indirect subsidiaries of Abengoa
in Brazil, including ACBH, initiated an insolvency procedure under Brazilian law (“reorganizaçao
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
recorded an impairment of this preferred equity investment for a total amount of $210,435 thousand
as of December 31, 2015. The valuation method used to calculate the value on the preferred equity
investment in ACBH as of December 31, 2015 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.
In addition, in the third quarter of 2016, the Company signed an agreement with Abengoa on ACBH
preferred equity investment among other things, with the following main consequences:
131
Notes to the Company financial statements
31 December 2016
(cid:2)
Abengoa acknowledged it failed to fulfill its obligations under the agreements related to the
preferred equity investment in ACBH and, as a result, Atlantica Yield is the legal owner of the
dividends amounting to $28.0 million, that the Company retained from Abengoa;
(cid:2)
Abengoa recognizes a non-contingent credit for an amount of €300 million (approximately
$316 million), corresponding to the guarantee provided by Abengoa, S.A. regarding the preferred
equity investment in ACBH, subject to restructuring and subject to adjustments for dividends
retained after the agreement. On October 25 2016, Atlantica Yield signed Abengoa’s restructuring
agreement and accepted, subject to implementation of the restructuring, to receive 30% of the
amount (approximately $95 million nominal value) in the form of tradable bonds to be issued by
Abengoa. Upon completion of the restructuring, this debt (“Restructured Debt”) would have a junior
status within Abengoa debt structure post restructuring. The remaining 70% (approximately $221
million) would be received in the form of equity in Abengoa. As of the date of this report, there is a
high degree of uncertainty on the value of this debt and equity;
(cid:2)
In order to convert this junior debt into senior debt, Atlantica Yield has agreed, subject to
implementation of the restructuring, to participate in Abengoa’s issuance of asset-backed notes (the
“New Money 1 Tradable Notes”) with up to €48 million (approximately $51 million), subject to
scale-back following allocation process contemplated in Abengoa’s restructuring. In the fourth
quarter of 2016, the Company reached an agreement with an investment fund to sell them
approximately 50% of the New Money Tradable Notes that the Company is assigned, and as a result
expects the final investment to be less than €24 million (approximately $25 million). The New
Money 1 Tradable Notes are backed by a ring-fenced structure including Atlantica Yield’s shares
and a cogeneration plant in Mexico (A3T). The New Money 1 Tradable Notes offer the highest level
of seniority in Abengoa’s debt structure post restructuring. Upon the purchase by the Company of
the New Money 1 Tradable Notes, the Restructured Debt would be converted into senior debt;
Upon receipt of the Restructured Debt and Abengoa equity, the Company would waive its
(cid:2)
rights under the ACBH agreements, including its right to retain the dividends payable to Abengoa.
Further to this agreement, the Company updated the valuation of the instrument as of December 31,
2016 using a probability weighted method. This valuation method considers the probability of the
restructuring agreement of Abengoa being made effective. The fair value of the instrument as of
December 31, 2016 is the result of estimating the value of the instrument in case the restructuring
agreement is made effective and in case it is not. In case the restructuring agreement is not accepted,
the value of the instrument would remain the same as the one calculated as of December 31, 2015. In
case the restructuring agreements is made effective, value of the instrument has been obtained by
discounting the expected cash-flows from the Restructured Debt (approximately $95 million), using
a discount rate of 25% based on the yields of bonds issued in Spain by comparable companies
involved in a similar restructuring process. Result of this updated valuation is an additional
impairment of this preferred equity investment recorded as of December 31, 2016 for an amount of
$22,076 thousand.
An adverse change in the key assumptions which are individually used for the valuation could lead
to future impairment recognition; especially, an increase of 50 basis points in the discount rates used
in the fair value exercise described above would lead to an additional impairment of approximately
$1 million.
132
Notes to the Company financial statements
31 December 2016
As at 31 December 2016, the detail of the non-current amounts owed by group undertakings was as
follows:
ATN, S.A..
ABY Concessions Infrastructure, S.L.U.
Carpio Solar Inversiones, S.A.
ABY 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.
ASUSHA, Inc.
ABY Servicios Corporativos, S.L.
Other
2016
$’000
2015
$’000
4,905
326,841
59,115
47,855
5,577
4,860
58,859
31,090
11,645
62,652
5,038
44,540
9,081
2,369
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
Amounts owed by group undertakings
674,427
769,698
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.
ABY 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.
ASUSHI 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 2024
As at 31 December 2016, the amounts owed to group undertakings primarily relate to ACT Energy
Mexico, S.A. de C.V. for $45 million ($24 million as at 31 December 2015).
As at 31 December 2016, Trade and other receivables primarily relate to corporate fees the Company
invoices to its subsidiaries.
133
Notes to the Company financial statements
31 December 2016
5.
Borrowings
As at 31 December 2016, the details of the amounts owed to group undertakings was as follow:
Secured borrowing at amortised cost
Bonds
Borrowings
Total borrowings
Amount due for settlement within 12 months
Amount due for settlement after 12 months
2016
$’000
2015
$’000
255,362
412,839
254,205
410,288
668,201
664,493
291,861
3,152
376,340
661,341
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.
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 book-runners (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 re-borrowed. 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.
134
Notes to the Company financial statements
31 December 2016
On February 10, 2017, the Company signed a Note Issuance Facility, a senior secured note facility with
a group of funds managed by Westbourne Capital as purchasers of the notes issued thereunder for a total
amount of € 275 million (approximately $294 million), with three series of notes. Series 1 Notes for €92
million mature in 2022; series 2 notes for €91.5 million mature in 2023; and series 3 notes for €91.5
million mature in 2024. Interest on all three series accrues at a rate per annum equal to the sum of 3
month EURIBOR plus 4.90%. The proceeds of the Note Issuance Facility will be used for the
repayment of Tranche B under our Credit Facility, which will be canceled, as well as for general
corporate expenses incurred as part of this transaction. The Company intends to fully hedge the Note
Issuance Facility with a swap to fix the interest rate as soon as possible after funding of the Notes.
6. Trade and other payables
As at 31 December 2016, Trade and other payables primarily relate to independent professional
services.
7. Retained earnings
Retained earnings
Balance at 1 January 2016
Net profit for the year
Balance at 31 December 2016
Retained earnings
Balance at 1 January 2015
Net loss for the year
Balance at 31 December 2015
$’000
(170,201)
31,263
(138,938)
49,414
(219,615)
(170,201)
135