Good morning, ladies and gentlemen, and welcome to ACCIONA's results presentation for the 2020 financial year. Due to the announcement made yesterday, access to this presentation and the information contained herein is limited to persons who are resident and physically present in Spain and certain authorized persons or resident and physically present in order to jurisdictions outside of the United States, Canada, Australia, South Africa and Japan.

If you are present in the United States, Canada, Australia, South Africa, or Japan or you are present outside of those jurisdictions but are not authorized to access this information pursuant to applicable securities laws, we regret to inform you that due to regulatory restrictions, your access to this presentation is restricted. ACCIONA assumes no responsibility for any violation of applicable law and regulations by any person who gains undue access to the information in this presentation.

Additionally, due to regulatory restrictions, questions for the Q&A session may only be addressed to ACCIONA via e-mail so that they can be vetted by a legal counsel. ACCIONA has made available the following e-mail address for this purpose, [email protected].

If you are connecting via webcast, you can also use the Q&A functionality to send your questions. Please observe the limitation of 2 questions per person.

And we would be grateful if you could be concise. We will do our best to answer those questions, and apologize for any questions that may not be answered due to legal restrictions or lack of time.

Presenting today is José Manuel Entrecanales, our Chairman and CEO; together with Rafael Mateo, CEO of ACCIONA Energia; and José Ángel Tejero, Group CFO. And with that, let me hand the floor to José Manuel.

Thank you.

Thank you, Raimundo. Good morning, ladies and gentlemen.

Let me first stress out that last year, overall, it has been a good year for ACCIONA. Despite annual operating results below pre-COVID expectations, we did manage to achieve most of our key goals as contemplated in our revised outlook, one within the pandemic environment presented at the first quarter results presentation last year.

But even more importantly, ACCIONA's business model has emerged, validated and greatly reinforced, not only proved for the second time in a decade its short-term resilience to unexpected economic crisis, but it also demonstrated the correctness of its strategic focus. A focus that provides significant long-term growth potential Strong attention to sustainability or ESG has finally become the absolute must of any forward-looking company.

More so, fast-growing investor base will absolutely avoid investing in a company that does not maintain clear and ambitious ESG policies while we'll prioritize investments in those that have it. On the operating side, governments are pouring public capital in countercyclical fiscal policies and the economic recovery plans directed towards what we call smart infrastructures.

SMART being an acronym of sustainable, mitigating, adaptive, resilient and transformative infrastructures, ACCIONA's main strategic focus for the past 15 years. These unstoppable megatrends have resulted in record levels of infrastructure backlog and renewable energy pipeline with strong potential for continued growth.

In order to seize this opportunity, we believe increasing the stand-alone visibility of our businesses will lower the cost of capital and strengthen our balance sheet while allowing the market to allocate a value to them more efficiently. These objectives will be best served by listing a pure renewable energy vehicle that will aim to approximately double our current installed capacity by 2025, while staying within reasonable levels of leverage, investment-grade leverage levels.

This will also free up growth capacity in all other strategic sectors, such as infrastructure, water, property or urban mobility. All within the framework of our soon to be presented sustainability master plan, which I believe to be one of the most advancive, comprehensive, innovative and ambitious plans in the market.

It is people-centric, as it has been designed, bottom-up to provide KPIs and measuring tools at an individual level, make employees, beneficiaries and try to give everyone a sense of personal purpose. Our plan is planned positive as it goes beyond neutrality onto positive impact and regeneration as key purposes.

Transitioning from the concept of minimizing footprint to the idea of maximizing handprint as a notion of the necessary push required for regenerative action. It enhances exponential leadership as it provides the means for corporate and individual leadership throughout innovation, transparency and advocacy.

And finally, it helps integrate all of our capabilities for a differential transformational impact. It is in summary an attempt to maintain our leadership and sustainability by going a step further in making it even more an integral part of every business process at an individual and project level.

After 15 years of preparation and fine tuning, we have reached an inflection point where our business model is becoming mainstream. Hence, we believe we will be able to significantly increase growth via access to lower cost of capital and balance sheet deleverage by increasing stand-alone visibility and fostering an efficient valuation of our business by the market.

We believe this to be a positive outlook that will allow us to return to pre-COVID dividend levels. We will also enhance our strategic focus on sustainability through transversal, route-based, innovative master plan which maximizes impact on SDGs and decarbonization, in particular.

Thank you very much. I now turn over to Rafael Mateo, CEO of ACCIONA Energia.

Thank you for the introduction, and good morning to all. As José Manuel has already mentioned it, and with the intention of seizing the growth opportunities offered by the net-zero transition, ACCIONA Energia is going to conduct a step change in order to capture an exceptional window of opportunity.

I'm sure that most of you are familiar with the company key features and its strong fundamentals to deliver profitable and sustained growth. Our 30 years of experience, our purely renewable portfolio of 10.7 gigawatts of total installed capacity, our smart and conservative commercial policy, our diversification in terms of geographies, technologies, products and off-takers and our ESG credentials make us a very robust platform to deliver profitable growth in the upcoming period.

Our '21 to '25 strategy is targeted to accelerate the growth, and it's founded on solid pillars based on the rapidness of the asset base and the sustainability and stability of our revenues. We focus in our operational excellence and life extension as well as on the expansion of our B2B energy supply business to hedge and secure growth in installed capacity.

Let me focus on our business plan, 2021, 2025, under the IPO scenario. With this plan, ACCIONA Energia intends to be a 20 gigawatt installed capacity company by 2025, for which we will have to grow by 9.3 gigawatts over this period.

To fulfill this target, we have a robust pipeline classified into different categories, depending on the stage of advanced of each project. First of all, we already have 3 gigawatts under construction or secured to start construction in 2021 and 2022.

This is the result of our successful development of commercial activity during 2020 in terms of growth visibility. Among last year's main milestones, we can point out the corporate PPA signed with Amazon in the U.S., that place us as one of their main renewable energy suppliers that will allow us to build almost 900 megawatts peak of solar PV in the market.

Also, the PPA signed with CleanCo in Queensland, Australia, for part of the 1 gigawatts MacIntyre wind complex. We must also highlight the fact that we are back on track in Spain in terms of growth, mainly thanks to the PPA signed with Telefónica and Novartis as well as the 128 megawatts peak of solar PV awarded in the auction that took place in January 2021.

You can find the full breakdown of these 3 gigawatts in the annex. To reach the target, we have 6.3 gigawatts of highly visible pipeline.

In general, we classify projects under this category when land and green access are secured or closely secured. And if we are in advanced discussion with off-takers or with visibility of future our mechanisms.

With all of this, we estimate that we are on track to achieve the target. However, we also have an additional 9.7 gigawatts of advanced development projects.

This generally consist of projects in which one of the critical milestone, land or redux is close to being secured. Both high visible and advanced development categories make up our very mature pipeline, and they combine different off-taker approaches within tariff, public, corporate PPAs or market portfolio management.

Regarding technological and geographical distribution. As you can see on the slide, we will intend to grow around 50-50 solar PV and non-solar wind as the main future growth technology in the sector.

And in terms of geographies, the company will continue to grow in a selective way, prioritizing growth in our 5 main markets: the U.S., Australia, Spain, Chile or Mexico. And incorporating new countries with long-term growth potential within our operational hubs.

If we take a closer look at our expected annual growth, we expect to increase our installed capacity in a very progressive way. The growth for 2021 and 2022 is already secured and we are preparing capability growth at a pace of more than 2 gigawatts per year.

This annual growth perspectives are supported by our know-how in business development. The ACCIONA Energy team has accumulated in-depth knowledge in every development phase of a renewable project and in different regulatory or financial environments.

This will be accompanied by continuous optimization in the supply chain and the construction tandem, reducing the execution times to gain agility and efficiency. Increasing our competitiveness and optimizing all the levelized cost of the energy components, always with intention of maximizing production as we plan to operate our assets for a very long-term.

This long-term vision is that what makes us also look beyond this 2025 plan in order to constantly feed the pipeline. To secure continuous and diversified growth, today, we are also working on additional opportunities through 2030.

These opportunities include early stage project in commercial renewable technology, mostly solar PV and onshore wind, and also the company's preparing opportunities in offshore, biomass or hydro among others. Following ACCIONA's deep vocation for innovative technology solution, the company has been actively building a pipeline of renewable projects with very strong innovative content.

These projects could represent a total investment of around €7 billion to have access future to the European funds allocated to Spain in response to the coronavirus pandemic. In addition, the company is preparing also new capabilities in green hydrogen, one of the main technological opportunities of the future.

As you may know, ACCIONA Energy is one of the partners in the first Southern European founded hydrogen hub and our pioneer power to green hydrogen project in Mallorca will start construction in 2021 and will consist in solar PV plus 2.5 megawatt electrolyzer. Our ambition was further.

We have just announced the launch of a joint venture with Plug Power, a global leader in hydrogen electrolyzers and fuel cell solutions. It will be our preferred suppliers of electrolyzers technology.

Through this joint venture, we will develop and operate green hydrogen production projects in Iberia. The joint venture will also offer storage and transportation services, initially targeting to the industrial and mobility segments.

And we have set the role of reaching a market share of 20% of the green hydrogen business in Spain and Portugal by 2030. Finally, as well as pursuing all this new opportunity, we will continue to consider additional potential M&A operation that will allow us to secure our growth in the decade.

Before handing over to José Angel Tejero, I'd like to conclude by emphasizing that what we have presented today to you is a growth business plan backed by a high-quality asset base and a robust business model. After a very long trajectory, we believe that we have the solid organizational capabilities and the excellent combination of size and agility to fulfill this growth.

The IPO will allow ACCIONA Energy to lead the multiple opportunities for structural growth that arise on a multi-decade view at the center of the new decarbonized energy model. We are privileged to be in a unique position at the right place and at the right time.

Thank you very much.

Good morning. I would like to start with a review of the key financial highlights for the year 2020.

Overall, revenues fell by 10%, with a decline in energy and infrastructure at similar levels. In Energy, this is a result of the 30% decline in the Spanish power prices due to COVID and the lower regulated income during the 2022 regulatory period in Spain.

The infrastructures, the lower revenues reflect the impact of the pandemic as well as the positive impact we had last year from the SLR settlement. EBITDA fell by 22% to €1,124 million, with the Infrastructures division being the most affected in absolute and relative terms by the disruption caused by the pandemic.

And to a lesser extent, the Energy division through the lower Spanish power prices. We have quantified the impact of COVID before mitigating actions at €796 million at the revenue level and €221 million at the EBITDA level.

As you know, the impact of COVID on our business was most significant in the second quarter, and we have seen systematic recovery month after month. We have been, however, able to act on the debt side, protecting our balance sheet.

Earnings before tax came at €508 million, down 7% year-on-year. Nordics have been contributing negatively to our profit before tax during the first 3 quarters of the year.

But as a result of the impairment test at the year-end, we have reverted €145 million of the impairment undertaken in 2017, giving Nordics a strong outlook. This has resulted in this line, making a positive pretax contribution of €79 million to our P&L in 2020 as a whole.

Earnings before tax also include a capital gain of another €79 million associated to the completion of the sale of the 2 concessions part of the portfolio of Spanish concessions we agreed to sell in December, namely AUVISA and Hospital del Norte. Attributable net profit increased by 8% to €380 million with lower tax charges and minorities.

In terms of investment during the period, net cash outflow for investments, including property development, inventories and cash proceeds from disposals amounted to €526 million relative to €1.2 billion the year before. In addition, we deconsolidated €127 million of debt as a result of the completion of the disposal of the 2 concessions mentioned earlier.

Headline net debt, including IFRS 16, stands at €4.7 billion relative to €5.3 billion a year ago, evidencing our effort to maximize cash flow containing indebtedness levels and avoiding potential increase in net debt-to-EBITDA ratio in this global pandemic year. Despite the 22% decline in EBITDA, our net debt-to-EBITDA ratio stands at 4.21x, well within our revised debt range for the year.

On Slide 19, we include the highlights for our ESG results for the period. We continue to show good progress in terms of emission reduction, CO2 intensity was recovery as well as progress on social performance indicators.

We highlight the indicator related to emissions intensity per unit of revenue, which is, we believe, what investors should focus when constructing their ESG portfolios. It is absolute CO2 emissions where it is most important and then the pace of reduction.

In terms of EU taxonomy for low-carbon activities, this is the second year in a row we publish audited figures for our taxonomy alignment. With 84.6% of CapEx and 84% of EBITDA represented by activities that are significant contributors to the low-carbon economy, comply with basic human labor rights and do not significant harm to other environmental objectives.

During the year, we have protected and continue to protect the health and safety of our employees and contractors in the COVID context and have ensured the continuity of our operations in particular, all the essential infrastructures that we manage. ACCIONA closed 2020 as the leading company in sustainability in our sector.

According to Corporate Sustainability Assessment recently published by S&P Global. As José Manuel mentioned, we have defined a new ambitious sustainability master plan for the period to '25, targeting to doubling our positive impact in 5 years.

In Slide 20, you can find the breakdown of total investment, including the proceeds from disposals. Net ordinary CapEx fell from €1,034 million in '19 to €829 million in 2020, with the majority of CapEx concentrated in the Energy division.

Net investment in the property development activity has fallen and is close to neutral as a result of higher number of units sold. Some moderation in launching new developments in the COVID context as well as 2019 containing the acquisition of the Mesena project.

In terms of disposal proceeds in 2020, these include the cash advance related to the disposal of the Spanish concessions portfolio and the sale of our student housing assets. In addition, the sale of AUVISA and Hospital del Norte has had an additional impact in terms of debt reduction of €127 million corresponding to the project debt we consolidated in our perimeter.

Before COVID, we intended to invest €1.5 billion gross and disposal representing €500 million, including debt attached, leading to €1 billion net. The final outcome has been around €800 million of investment and security disposals worth €515 million.

In Slide 21, we present the movement in net debt during the last 12 months. Operating cash flows of €921 million is marginally better than in 2019 despite the decline in EBITDA.

Working capital has been very positive with a €207 million net inflow relative to €33 million outflow last year. This strong working capital performance is related to the positive contribution of infrastructure activities, including Lendlease Engineering, which brought alone €250 million of advanced payments and generated additional positive working capital during Q4.

We note that the Energy division had negative working capital of just over €90 million related to the regulatory banding mechanism. As we build a regulatory receivable in this context, of a very low power prices in Spain.

Net investment outflow amounted to €526 million, as already discussed. And we had a positive movement in net debt of €280 million from other items, including €395 million of perimeter changes that include the AUVISA concession sold and the data associated with the vehicle that holds debt instrument in SLR concession, for which we have initiated the disposal process and is classified as a held for sale.

In the appendix to this presentation, you can find detailed information on our debt, the good progress that we have made on cost and maturity extension and our excellent liquidity position. Starting with the performance of our different activities, let me start with the Energy business.

Revenues fell by 11% to €1,780 million due to the Spanish generation business, which was affected, as discussed by low power prices and lower regulatory income with production flattish. EBITDA fell by 6.7% to €831 million.

The International business grew by 1.5% in terms of EBITDA despite low output and thanks to new capacity in operation and positive price developments, offset by depreciating currencies. New capacity added €28 million of EBITDA relative to last year.

Spanish generation EBITDA declined by 14% in a challenging environment. Electricity demand in Spain fell by 5% back to 2004 levels and international energy commodity prices declined on average by 30%.

Wholesale prices in Spain fell in turn by around 30% to €48 megawatt hour to €34 megawatt hour resulting in the lowest annual average price in history in the Spanish electricity pool. We also had lower regulatory income as a result of the interim review implemented at the beginning of the year, which reduced our regulated income from €244 million last year to €195 million.

This is due to higher price expectations during the period, considered by the regulatory calculation and higher realized price in the earliest 3-year period, part of which are clawback by the regulator. The regulatory protection mechanism had a positive impact of €79 million in the Spanish generation revenues and our hedging mitigated the fall in the Spanish prices by €35 million as we have hedged around 2 terawatts at €50 megawatt hour.

In Slide 23. You can find a summary of the operating performance of the Infrastructure business.

Revenues and EBITDA fell by 11% and 54%, respectively. Construction reported EBITDA of €50 million, with a large impact from COVID, especially in industrial projects and a tough comparison with 2019 that included as discussed SLR settlement.

Concessions increased by 33%. In Q4 this year, we had the positive impact from the start of the Line 6 project in São Paulo, including one-off development fees.

With respect to water revenues, increased by close to 30%, and EBITDA fell by 4.7% as last year still contained €9 million of contribution from ATLL before it was discontinued. All in all, it is a very good result that reflects the increase in activity in our desalination projects, which has not been affected by COVID disruption being -- as they are considered essential services.

Services EBITDA declined by 74% with certain segments such as airport handling, mobility of facility services being very heavily affected by the pandemic. Our Infrastructure project backlog of construction and water projects in Slide 24 has grown by 40% to just over €12 billion.

With a record close of €8 billion of new additions, representing new project awards as well as the Lendlease Engineering deal, which is a true landmark for ACCIONA, establishing the company as a Tier 1 local player in the attractive Australian market. Australia now represents 20% of ACCIONA's project backlog and is our largest infrastructure market and one with a high proportion of collaborative alliance contract.

To conclude the business review, the property development business reported EBITDA of €19 million relative to €20 million last year. The total graph stood at just over €1 billion, representing development with marginal presence of rental assets following the successful disposal strategy carried out in recent years.

The property development business delivered 744 units relative to 512 last year. Bestinver increased its revenues by 16% to €114 million, while its EBITDA grew by just 1% to €63 million.

Average funds under management fell from just over €6 billion last year to €5.7 billion during 2020 with high volatility in the markets due to COVID throughout the period. The average commission fell slightly from €1.59 to €1.50 as a result of a small decline in the weight of equities within the total assets managed.

The decline in average assets under management and management fees was compensated with higher performance fees with the current investment team showing a strong outperformance, particularly in the last quarter of the year. To conclude this presentation, we would like to provide you with some high-level overview of our expectations for '21.

We expect a year of recovery, largely free from COVID impacts even if the environment may not have completely stabilized. We see group EBITDA growing in a range of 10% to 15%.

Total gross CapEx, assuming the successful execution of ACCIONA Energy's IPO could reach up to €2 billion. And in terms of dividends, as José Manuel mentioned, the Board has proposed to reinstate the dividend to levels intended before the pandemic with a dividend of €3.9 per share.

You will recall that the proposed '19 dividend was €3.85 per share, and the Board decided to amend this proposal against the background of the pandemic to €1.925 per share, which was paid last July. And with this, we conclude the presentation.

And if we are ready, we can pass through the Q&A.

Thank you. So we're ready to start the Q&A session that, as we mentioned, it's going to be -- we're receiving questions already via e-mail.

So please bear with us for a couple of minutes, we can gather all the questions, group them, and we'll come back in a second. So please bear with us.

Thank you.

Thank you. So we have received a number of questions that we are grouping.

A number of them or quite a few of them are related to the transaction announced yesterday. So let me start with a common question, which is the -- regarding the IPO, the use of proceeds, the structure, the leverage.

This is a question that Jose Porta from Kepler; Mikel Zabala from Bank of America; Oscar Nájar from Santander and [indiscernible]; and Manuel Palomo from Exane have asked. So use of proceed structure and leverage.

Okay. The most likely structure will technically be a secondary offering, which will take to a capitalization of an important portion of the company loans.

So the proceeds will be used for deleveraging and at holding company level. And hence, leaving the ag business with sufficient spare balance sheet capacity to absorb growth.

All right. We have as well a question from Flora Trindade at Caixa and also from Oscar Nájar, Santander about how the way ACCIONA Energia will finance its operations going forward.

I thought I already answered that one. The way we finance its operations.

I think they're referring whether the company will have access to the capital markets and is on right or not?

Oh, yes, indeed. The company will have access to the capital markets independently.

Thank you. There's also a question about the post IP ownership, long-term commitment to the holding in ACCIONA Energia.

The intention is, of course, to comply with current regulation in terms of minimum 25% IPO level and to retain majority ownership in the listed company in the medium term.

Okay. Moving away from the IPO.

We have a question from Oscar Nájar from Santander about the Hydrogen deal with Plug Power. And in particular, the €2 billion of investment that was mentioned in the press release?

Rafael will take this question.

Okay. Thank you.

For us, the green hydrogen opportunity has not been considered in our economics in the business plan that we presented to 2025, but we consider the green hydrogen as a great opportunity, and we are going to be prepared for that. We are very committed to driving the creation of the green hydrogen ecosystem and our joint venture with Plug Power is a very relevant milestone to improve our position in the domestic market hydrogen have.

In terms of potential investment, we consider that reaching 20% of the market share in the Iberian market. We could invest in the decade, something around €2 billion, including the green electricity required to supply the electrolyzers and also included the electrolyzers technology.

Thank you. We have received a question from Alberto Gandolfi at Goldman Sachs.

Could you please talk about the returns you're targeting in wind and solar. It says that we have been talking about a certain spread over the cost of capital of each individual asset until now?

We can't -- I think, from a legal standpoint, we can't make any statements going forward, but I will talk about our policies to date has been to maintain a 200 -- between 200 and 300 basis points over adjusted weighted average cost of capital as a minimum return in our projects.

Another question related to ACCIONA Energia. So it's in Spanish.

So it says whether we have the right size, so sizing dimension of our teams within ACCIONA Energia for this increase in our growth going forward?

Rafael, why don't you take that question, please.

Yes, we have the team. We have the capabilities.

So I'm very confident in the challenge, and we will reinforce the team when appropriate. But yes, we have.

Thank you.

Also related to the IPO, Mikel Zabala from Bank of America and [indiscernible] from [indiscernible]. This is similar to some of the questions we've asked already, but is asking specifically about the target leverage of ACCIONA Energia.

To the extent that I can answer that question, I will say that target leverage will be consistent with an investment-grade credit profile. The final picture will obviously depend on the price and size of the transaction.

So it can't be said at this time, but the objective is a capital structure fit to comfortably support the growth plans of ACCIONA Energia and ACCIONA Madrid.

Okay. There's a question from Exane, talking about the results of the Spanish auctions recently.

Okay. In the Spanish auction, as you know, we were awarded a 128-megawatt peak in solar PV technology.

The results for us were satisfactory because we were offering and awarding a price of €25.04 per megawatt or that was higher-priced than the average price of this technology in the auction.

Okay. Also questions from RBC and Kepler about the Texas exposure.

They mentioned [indiscernible] today at the market really talking about -- sorry, apologies, I didn't have the mic on. Their questions address to Rafael, with respect to our Texas exposure.

Our RWE, apparently has issued a press release this morning about mid-triple-digit hit from the Texas power price spike, and they would like to know our exposure and the situation for us there.

Okay. Thank you.

As you know, the situation in Texas is very complex because there's very low -- extreme low temperatures in this winter. We're operating there at 3 wind farms, San Roman, La Chalupa and Palmas Altas, 3 of them are operating and making a very positive contribution to the stability of the systems.

And we are applying also there our conservative commercial policy in order to mitigate any potential risks. We are not expecting any negative impact, maybe we're expecting a positive impact.

There are questions as well about the dividend policy, financial dividend policy of ACCIONA Energia post IPO.

There's a little I can say on this topic as it is -- as we have consistently repeated a forward-looking assessment. But let me say that will be consistent with market practice, bearing in mind growth profile and the objective of investment-grade credit profile.

Okay. Let me see what's left.

Some of the questions are -- we cannot answer because of regulatory restrictions, at least we cannot answer them at this time. So anyway we'll -- let us give a further minute to see if there's anything else arriving, and I will be back.

Just final remarks. Okay.

José Manuel, if you're okay, I think we'll leave it there, and we'll continue to answer some questions that we are allowed in the light of regulatory restrictions by the Investor Relations team the rest of the day and next week.

Yes, Raimundo. Thank you very much, everyone, for attending this results presentation.

I want to reiterate our apologies for not having been able to answer many of the questions in a more explicit and direct way as has been the norm in the past. But as you all are aware, the prospectus limitations are very strict, and we have to be observant of -- and not put at any risk whatsoever, the effectiveness of our efforts in this project.

Thank you very much, everyone, and we will be able -- we will be in touch in the future as usual. Thank you very much.