ACCIONA Spain investors day

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ACCIONA is facing regulatory, operational and business growth model challenges affecting its core divisions but it also has significant growth opportunities in key sectors where it is a global leader -7 renewables and infrastructure. The company is implementing a comprehensive Action Plan to address challenges and prepare the company to embark in a new growth stage.

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<p>2014.01.15 ACCIONA - Spain Investor Day_V6 [Modo de compatibilidad]</p> <p>1Juan Muro-LaraChief Corporate Developmentand IR Officer</p> <p>15th January 2014, Madrid2ACCIONA faces challenges </p> <p> Regulatory: major retroactive changes -7 significant impact so far and uncertainty about ongoing Reform</p> <p> Operational: related to the business cycle</p> <p> but also significant growth opportunities in its core businesses</p> <p>The company is implementing a far-reaching Action Plan in order to respond to these challenges, transform the group, and position it for future growth</p> <p>Significant progress has already been made and there are additional developments underwayACCIONAs transformation31. Overview of ACCIONA4Listed company based in Spain IBEX 35</p> <p>~2.4bn market capitalisation1; EV of ~9.8bnA global leader in Renewable Energy, Infrastructures and Water Sustainable development as cornerstone of the business~45% of its revenues in 2013E from international markets Family-owned company: ~60% Entrecanales familiesOverview of ACCIONAACCIONA in a nutshell1As of 31/12/2013 (41.77)5EnergyInfrastruct.11%Water4%ServiceOthersEBITDA 2013E: 1.3bnGeneration assets: 8.5GW7.1GW wind 0.9GW hydro 0.4GW solar 0.1GW otherInfrastructure Construction Engineering ConcessionsWaterD&amp;C O&amp;MServices Airport handling Facility services Forwarding Urban servicesOthers Asset manager Real Estate Shipping companyWineryEBITDA contribution Analyst consensus as of 8/01/2014 Analyst consensus76%8%ACCIONA GroupCurrent structure1%Infrastructure, Water &amp; Service16%#3globalrenewableoperator5.9bnbacklog11bnbacklogInternationalserviceAssetman.:8bnAUMLeaderinkeytechnologies75%civilworks&gt;70mpeopleacrosstheproviderRealEstate:1.5bnGAVVerticallyintegrated52%internationalglobebenefitfromitsIntegratedofferofancillaryShippingco.:+2.5mWithglobalpresence22concessions,1.8bnactivitiesservicespassengersOver20yearsofexperiencecapitalinvested15,000employeesWinery:1.5hawineyards62. Challenges, Opportunitiesand Action PlanCurrent challengesACCIONA is currently facing challenges affecting its core businessesChallengesRegulatoryOperationalSpanish electricity sector reformExposure to the business cycleGrowth modelA new paradigm for credit markets7OpportunitiesACCIONA is a global leader in its core businesses and can contribute to addressing global challengesEconomic growth as legitimate global aspiration Urbanization and population growthThe need for a sustainable energy model Global infrastructures deficit</p> <p>Water stress</p> <p>These long-term trends present a huge business opportunity</p> <p>US$57Tr of investment to 2030 to satisfy demand for infrastructures, of which:Energy -7 US$ 12TrRoads, Rail, Ports, Airports -7 US$24TrWater -7 US$12TrSource: HIS, OECD, GWI, IEA, McKinsey8Action PlanWhat we aim to achieveThe Action Plan aims to achieve the following:</p> <p> Mitigate significant impact of regulatory changes affecting the Spanish renewable energy portfolio</p> <p> Financial deleveraging and access to a wider range of sources of capital</p> <p> Transformation of the growth model:</p> <p>Focus on ACCIONAs core competences as developer of infrastructures -7 increased separation of developer &amp; operator from LT owner/financier</p> <p>Less capital-intensive growth and less reliant on bank debt</p> <p>Access to new sources of long-term capital via private partnerships / transactions (pension funds, sovereign funds, infra funds, insurance)9103. Detail on the delivery of the Action PlanACCIONA has a Plan and is deliveringDividend 2013 interim dividend canceled -7 unprecedentedACCIONA is taking determined actions as a response to the challenges facedCapex Significant short term capex reduction -7 9M13 capex 48%Costs Significant cost reduction plan being implemented in Energy, Infrastructure &amp; Other Activ. More initiatives under considerationStrategic / Financial measuresDisposals Plan to dispose 0.5-1.0bn worth of assets in 2013-14Reorganisation Divisional reorganisation</p> <p> Senior management changes12Dividend / Capex / CostsCapexDividendInterim dividend cancelled</p> <p>Unprecedented decision in the recent history of the company</p> <p>Reflects prudent financial management in the light of the impact of negative regulatory changes already suffered since Jan. 2013, as well as the high uncertainty regarding additional impacts derived from the new legislation underwayCost reduction plan</p> <p>Significant cost reductions already implemented in Infrastructure and Trasmediterrnea</p> <p>Cost reduction being implemented in the Energy division -7 on track. Est. 35-40m/pa</p> <p>Synergies to arise from structure simplification -7 Infr./Water/Serv. divisions</p> <p>Further cost reduction initiatives under considerationSignificant short-term capex reduction</p> <p>Execution of committed investments only</p> <p>2013-2014 target implies ~50% reduction vs previous investment plan</p> <p>9M13 capex down -48% vs 9M12CostsInterim dividend cancelled[?]Dividend distributed the following year against the results of the year shown in the table12Asset disposalsAsset disposals October13: Disposal of Korea renewable assets:Capacity sold: 64MW EV: 114m (Inc. Net Debt of 20m)</p> <p> Agust13: Disposal of Royal Jubilee Hospital concession in Canada</p> <p> December13: Disposal of Real Estate rental asset</p> <p>ACCIONA is also working in other disposals in addition to the ~370m worth of disposals sold in 2013</p> <p>Rotation of non-strategic assets</p> <p>Incorporation of financial partners in core businesses -7 less capital-intensive growth Deleveraging</p> <p> Rotation of non-strategic assets</p> <p> Incorporation of financial partners in core businesses -7 less capital-intensive growth</p> <p> December13: Disposal of Germany renewable assets:Rationale18 wind farms totaling 150.3MW</p> <p>EV: 157m (Incl. Net Debt of 85m)Average weighted life: 8 years</p> <p>EV/EBITDA: 10x12ACCIONA is also going through a deep business reorganisationCorporate measures New CFO, Carlos Arilla, appointed in September 2013</p> <p> Luis Castilla (previous Chairman of Water) to take control of the newly formed division Infrastructure / Water / ServiceGroup structure Infrastructure, Water and Service divisions under joint management</p> <p> Structure simplification</p> <p>2 main operational areas:</p> <p>Energy</p> <p>Infrastructure / Water / Service</p> <p>Other activitiesManagement12ReorganisationConclusionsACCIONA is facing regulatory, operational and business growth model challenges affecting its core divisions</p> <p> but it also has significant growth opportunities in key sectors where it is a global leader -7 renewables and infrastructure</p> <p>The company is implementing a comprehensive Action Plan to address challenges and prepare the company to embark in a new growth stage:Interim dividend cancellation, capex reduction, cost cutting, assets disposals, partnerships, group reorganisationAction Plan on track -7 Disposals to date worth ~370m1216Juan Muro-LaraChief Corporate Developmentand IR Officer</p> <p>15th January 2014, Madrid</p>