INDEPENDENT AUDITOR'S REPORT · PROFIT FOR THE YEAR 138,803 108,155 Profit a tributable to: Equity...

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Transcript of INDEPENDENT AUDITOR'S REPORT · PROFIT FOR THE YEAR 138,803 108,155 Profit a tributable to: Equity...

Page 1: INDEPENDENT AUDITOR'S REPORT · PROFIT FOR THE YEAR 138,803 108,155 Profit a tributable to: Equity holders of the parent company 138,271 107,693 Non -controlling interests 15 532
Page 2: INDEPENDENT AUDITOR'S REPORT · PROFIT FOR THE YEAR 138,803 108,155 Profit a tributable to: Equity holders of the parent company 138,271 107,693 Non -controlling interests 15 532

pwc

INDEPENDENT AUDITOR'S REPORT

To the sole shareholder of Viesgo Holdco, S.A.U., at the request of the Management,

Opinion

We have audited the consolidated financial statements of Viesgo Holdco, S.A.U. (the Parent company) and its subsidiaries (together 'the Group'), which comprise the consolidated statement of financial position as at December 31, 2019, and consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated cash flows statement for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as at December 31, 2019, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the basis of preparation and accounting policies described in note 3.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

We are independent of the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter - Basis of Accounting

We draw attention to note 3 to the consolidated financial statements, which describes the basis of accounting. The financial statements are prepared to assist the Group to meet the requirements of the Global Exchange Market (GEM) of Euronext Dublin. As a result, the consolidated financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter.

Other matters

The accompanying consolidated financial statements have not been prepared under mercantile requirements applicable in Spain and have been audited in accordance with International Standards on Auditing (ISAs), so that this report cannot in any case be understood as an audit report in the terms provided for in the legislation regulating the audit activity in Spain.

· PricewaterhouseCoopers Auditores, S.L., Juan de Herrera, 18, 39002 Santander, Espana

Tel.: +34 942 313 862 / +34 902 021 171, Fax: +34 942 365 606, www.pwc.es

R. M. Madrid. hoja 87.250-1, folio 75, tome 9.267, libro 8.054, secci6n 3• lnscrita en el R.O.A.C. con el numero S0242 - CIF: B-79 031290

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pwc

• Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by management.

• Conclude on the appropriateness of management's use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty existsrelated to events or conditions that may cast significant doubt on the Group's ability to continueas a going concern. If we conclude that a material uncertainty exists, we are required to drawattention in our auditor's report to the related disclosures in the consolidated financialstatements or, if such disclosures are inadequate, to modify our opinion. Our conclusions arebased on the audit evidence obtained up to the date of our auditor's report. However, futureevents or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financialstatements, including the disclosures, and whether the consolidated financial statementsrepresent the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the consolidated financialstatements. We are responsible for the direction, supervision and performance of the Groupaudit. We remain solely responsible for our audit opinion.

We communicate Parent company's directors regarding, among other matters, the planned scope and timing of tbe audit and significant audit findings, including any significant deficiencies in internal control that we id ntify during our audit.

~obeitia

March 18, 2020

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VIESGO HOLDCO, S.A.U. AND SUBSIDIARIES

Consolidated Financial Statements and Consolidated Directors’ Report for the year ended 31 December 2019

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VIESGO HOLDCO, S.A.U. AND SUBSIDIARIES

CONTENT

• Independent auditor´s report

• Consolidated statement of financial position at 31 December 2019

• Consolidated income statement for the year ended 31 December 2019

• Consolidated statement of comprehensive income for the year ended 31 December 2019

• Consolidated statement of changes in equity for the year ended 31 December 2019

• Consolidated statement of cash flow for the year ended 31 December 2019

• Notes to the 2019 consolidated financial statements

• Consolidated Directors’ Report for the year 2019

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VIESGO HOLDCO, S.A.U. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2019 (In Thousand of euros)

ASSETS Note 2019 2018 NON-CURRENT ASSETS 2,557,416 2,498,406

Intangible Assets 6 90,871 86,132 Property, plant and equipment 7 1,220,185 1,236,097 Right of use assets 8 9,450 - Investments accounted for using the equity method 9 42,994 50,962 Financial assets at fair value through profit or loss 10 1,093 1,093 Derivative financial instruments 10,19 307 65 Loans and other receivables 10,11 1,118,720 1,050,732 Deferred tax assets 20 73,796 73,325

CURRENT ASSETS 244,051 149,490

Inventories 12 7,026 6,823 Trade receivables and other receivables 10,11 73,269 62,688 Loans and other receivables 10,11 104,562 72,647 Derivative financial instruments 10,19 4,667 - Current tax assets 20 2,505 2,893 Cash and cash equivalents 13 52,022 4,439

TOTAL ASSETS 2,801,467 2,647,896

The accompanying notes from page 1 to 87 are integr al part of this consolidated financial statements.

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VIESGO HOLDCO, S.A.U. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER 2019 (In Thousand of euros)

EQUITY AND LIABILITIES Note 2019 2018 EQUITY 888,672 850,694

Share Capital 14 15 15 Shareholder contributions 14 694,805 694,805 Interim dividend 14 (95,000) (116,220) Reserves 14 147,297 161,201 Net income for the year attibutable to the company´s equity holders 138,271 107,693 Non-controlling interests 15 3,284 3,200

NON-CURRENT LIABILITIES 1,537,453 1,529,012

Deferred income 16 312,805 320,216 Employee benefit obligations 21 64,110 60,799 Provisions 17 65,627 58,359 Borrowings 10,18 1,052,465 1,052,735 Financial Lease 10,18 8,738 - Derivative financial instruments 10,19 - 3,885 Guarantee deposits received 10,18 21,974 21,860 Deferred tax liabilities 20 11,734 11,158

CURRENT LIABILITIES 375,342 268,190

Trade payable and other payables 10,18 50,585 58,687 Current tax liabilities 20 6,077 4,973 Current Provisions 17 6,142 7,964 Borrowings 10,18 109,077 112,606 Financial Lease 10,18 973 - Loans from related parties 10,18 198,234 69,787 Derivative financial instruments 10,19 179 12,358 Other financial liabilities 10,18 4,075 1,815

TOTAL EQUITY AND LIABILITIES 2,801,467 2,647,896 The accompanying notes from page 1 to 87 are integr al part of this consolidated financial statements.

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VIESGO HOLDCO, S.A.U. AND SUBSIDIARIES CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019 (In Thousand of euros)

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Note 2019 2018 CONTINUING OPERATIONS Revenue 22.1 293,412 290,382

Sales 68,660 62,751 Services 224,752 227,631

Own work capitalised 7 12,101 11,521 Raw materials and consumables (834) (1,048) Other operating income 19 40,032 18,815 Staff costs 22.2 (33,931) (34,815) Other operating expenses 22.3 (66,967) (100,078) Amortisation and depreciation 6, 7,8 (78,274) (73,164) Reversal of provisions 2,887 10,050 Value adjustments on fixed assets (507) 1,247 Net gain from disposal of fixed assets 235 36

OPERATING PROFIT 168,154 122,946 Financ e income 23 35,996 33,548 Finance expense 23 (32,841) (32,333) Net change in fair value of financial instruments t hrough profit or loss 23 256 156 Impairment and result from disposal of financial instrument 23 56 261 NET FINANCIAL INCOME 23 3,467 1,632 Share of net profit of associated accounted for using the equity method 9 3,759 12,229 PROFIT BEFORE INCOME TAX 175,380 136,807

Income tax expense 20 (36,577) (28,652) PROFIT FOR THE YEAR 138,803 108,155 Profit a tributable to: Equity holders of the parent company 138,271 107,693 Non-controlling interests 15 532 462

The accompanying notes from page 1 to 87 are integr al part of this consolidated financial statements.

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VIESGO HOLDCO, S.A.U. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2019 (In Thousand of euros)

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Note 2019 2018 Profit for the year 138,803 108,155 Other comprehensive income/(loss) not be reclassifi ed to profit or loss in subsequent periods Actuarial gains and losses and other adjustments 21 (4,889) 3,977 Income Tax Relating to these Items 1,222 (994) Other comprehensive income/(loss) for the year, net of tax (3,667) 2,983

TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE YEAR 135,136 111,138 Attributable to equity holders of the parent compan y 134,604 110,676 Attributable to non -controlling interests 532 462

The accompanying notes from page 1 to 87 are integr al part of this consolidated financial statements.

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VIESGO HOLDCO, S.A.U. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2019 (In Thousand of euros)

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Equity attributed to the Company’s equity holders

Share Capital

(Note 14.1)

Shareholder contributons (Note 14.2)

Reserves (Note 14.3)

Netincome for the year attibutable to

the company´s equity holders

Interim dividend

(Note 14.4)

Non-controlling interests (Note 15) TOTAL

Balance at 31 December 2017 15 694,805 101,024 135,049 (77,584) 3,038 856,347

Profit/(loss) for the year - - - 107,693 - 462 108,155

Other comprehensive income/(loss) - - 2,983 - - - 2,983

Total comprehensive income/(loss) for the year - - 2,983 107,693 - 462 111,138 Dividend provided for or paid - - - - (116,472) (300) (116,772)

Other movements by perimeter variations - - (19) - - - (19)

Allocation of net result - - 57,213 (135,049) 77,836 - -

Balance at 31 December 2018 15 694,805 161,201 107,693 (116,220) 3,200 850,694

Profit/(loss) for the year - - - 138,271 - 532 138,803

Other comprehensive income/(loss) - - (3,667) - - - (3,667)

Total comprehensive income/(loss) for the year - - (3,667) 138,271 - 532 135,136 Dividend provided for or paid - - (1,675) - (95,000) (448) (97,123)

Other movements by perimeter variations - - (35) - - - (35)

Allocation of net result - - (8,527) (107,693) 116,220 - -

Balance at 31 December 2019 15 694,805 147,297 138,271 (95,000) 3,284 888,672

The accompanying notes from page 1 to 87 are integr al part of this consolidated financial statement.

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VIESGO HOLDCO, S.A.U. AND SUBSIDIARIES CONSOLIDATED STATEMENT CASH FLOW FOR THE YEAR ENDED 31 DECEMBER 2019 (In Thousand of euros)

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Notes 2019 2018 CASH FLOW FROM OPERATING ACTIVITIES

Profit/(l oss) for the year before income tax 175,380 136,807 Adjustments to: 53,348 37,094 Amortisation and depreciation 6,7 78,274 73,164 Impairment adjustments (908) 901 Net variations in provisions (2,683) (9,422) Grants recognized in the income statement (13,930) (13,652) Profit/(loss) on write-offs and disposals of fixed assets (235) (297) Financial income 23 (35,996) (33,548) Financial expenses 23 32,841 32,333 Changes in fair value of financial instruments 23 (256) (156) Share of profits/(losses) of equity method investments, net of dividends (3,759) (12,229) Changes in working capital (37,006) 22,107 Inventories (203) 645 Debtors and other receivables (12,970) 48 Other current assets (4,910) 4,240 Creditors and other payables (7,428) (8,929) Other current liabilities (11,725) 11,797 Other non-current assets and liabilities 230 14,306 Other cash flow from operating activities (50,206) (46,427) Grants and donations 6,114 3,421 Interest paid (28,529) (28,532) Dividends collected - 30 Interest collected 255 72 Corporate income tax (paid)/collected (28,046) (21,418)

CASH FLOW FROM OPERATING ACTIVITIES 141,516 149,581 CASH FLOW FROM INVESTING ACTIVITIES Amounts paid on investments (99,648) (111,379) Intangible assets (10,049) (9,728) Property, plant and equipment (52,285) (53,340) Other financial assets (314) (425) Group companies (37,000) (47,886) Amounts collected from divestments 12,955 10,755 Related parties, net of cash in consolidated companies 12,115 9,950 Property, plant and equipment 481 417 Other financial assets 359 388

CASH FLOW FROM INVESTING ACTIVITIES (86,693) (100,624) CASH FLOW FROM FINANCING ACTIVITIES Collections and payments equity investments - (3) Adquisition of shares from minority shareholders - (3) Collections and payments financial liabilities instruments (3.827) 1,998 Issuance 191 1,998 Other payables 191 1,998 Reimbursement and redemption (4,018) - Financial borrowings (4,018) - Dividends payments and return on other equity in vestments (2,141) (57,567) Dividends (2,141) (57,567) Lease payments subject to IFRS 16 (1,272) -

CASH FLOW FROM FINANCING ACTIVITIES (7,240) (55,572) NET INCREASE / (DECREASE) IN CASH OR CASH EQUIVALENTS 47,583 (6,615) Cash and cash equivalents at beginning of the year 4,439 11,054 Cash and cash equivalents at year end 13 52,022 4,439

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VIESGO HOLDCO, S.A.U. AND ITS SUBSIDIARIES NOTES TO THE 2019 CONSOLIDATED FINANCIAL STATEMENTS (In Thousand of euros)

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1. Group companies 1.1 Parent Company Viesgo Holdco, S.A.U (hereinafter the parent Company), was incorporated by Viesgo Infraestructuras Energéticas,S.L. in Santander on 29 September 2015 as a public liability company for an indefinite period and its registered address for mercantile and tax purposes is located in Santander. The parent Company's corporate purposes are as follows: - The subscription, acquisition, possession and disposal of securities, real estate shares and

securities, the rendering of energy and management, promotion and real estate operation services.

As of December 31, 2019, the Company is integrated into the Viesgo group in Spain, headed by IE2 Inversiones Empresariales Globales, S.L.U. which belongs to Fresco Investments, S.à.r.l. Until 2018, the Group was headed by Viesgo Infraestructuras Energéticos, S.L.U IE2 Inversiones Globales Empresariales, S.L.U, is wholly owned by Fresco Investments, S.à.r.l., a company participated by Macquarie European Infrastructure Fund IV and the Kuwait Investment Authority, is part of the Viesgo Group, which includes companies that primarily engage in the production, distribution and retail of electricity in Spain (thermal and renewable). On 5 November 2015 Viesgo Infraestructuras Energéticas, S.L.U transferred 100% of its shares in IE2 Holdco, S.A., Viesgo Distribución Eléctrica, S.L.U. and Viesgo Renovables, S.L.U. and the Viesgo Holdco S.A.U. subsidiaries described in Note 1.2 through a non-monetary contribution to Viesgo Holdco, S.A.U. The Company is therefore the parent company of a subgroup within the Viesgo Group since 5 November 2015, which includes the Distribution and Renewable businesses and its regulatory framework is related in Note 2. For the purposes of preparing the consolidated financial statements, a group is understood to exist when the parent has one or more subsidiaries over which the parent has control directly or indirectly. The principles applied in the preparation of the Viesgo Holdco Group’s (hereinafter The Group) consolidated financial statements together with the consolidation scope are detailed in Note 5.1.

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VIESGO HOLDCO, S.A.U. AND ITS SUBSIDIARIES NOTES TO THE 2019 CONSOLIDATED FINANCIAL STATEMENTS (In Thousand of euros)

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1.2 Subsidiares Set out below are the details of the groups’ subsidiaries:

Name

% shareholding Consolidation

method Activity Country Auditor %

Nominal Company holding the

interest

31 December 2019 Viesgo Distribución Eléctrica, S.L.U.

100 VIESGO HOLDCO, S.A.U. Full consolidation

Power distribution

Spain PwC

Viesgo Renovables, S.L.U. 100 VIESGO HOLDCO, S.A.U. Full consolidation

Wind power generation

Spain PwC

IE2 Holdco, S.A.U. 100 VIESGO HOLDCO, S.A.U. Full consolidation

Holding Spain PwC

Barras Eléctricas Galaico-Asturianas. S.A.

99.93 VIESGO DISTRIBUCION ELECTRICA, S.L.U.

Full consolidation

Power distribution

Spain PwC

IE2 Portugal, SGPS, S.A. 100 VIESGO RENOVABLES, S.L.U.

Full consolidation

Holding Portugal PwC

Parque Eólico Barlavento, S.A.

89.99 VIESGO RENOVABLES, S.L.U.

Full consolidation

Wind power generation

Portugal PwC

SEE - SUL Energía Eólica SA

100 VIESGO RENOVABLES, S.L.U.

Full consolidation

Wind power generation

Portugal PwC

Eoliser SGPE LDA 100 IE2 PORTUGAL, SGPS, S.A. SEE - SUL ENERGIA EOLICA SA

Full consolidation

Maintenance services

Portugal -

Viesgo Mantenimientos, S.L. 100 VIESGO RENOVABLES, S.L.U.

Full consolidation

Maintenance services

Spain -

Northeolic Montebuño, S.L. (*)

75 VIESGO RENOVABLES, S.L.U.

At cost Wind farm projects

Spain -

(*) Not consolidated as it is not of significant interest for the true and fair view of the consolidated financial statements. Refer to Note 5.1 for the definition of subsidiaries.

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VIESGO HOLDCO, S.A.U. AND ITS SUBSIDIARIES NOTES TO THE 2019 CONSOLIDATED FINANCIAL STATEMENTS (In Thousand of euros)

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Name

% shareholding Consolidation

method Activity Country Auditor %

Nominal Company holding the

interest

31 December 2018 Viesgo Distribución eléctrica, S.L.U.

100 VIESGO HOLDCO, S.A.U. Full consolidation

Power distribution

Spain PwC

Viesgo Renovables, S.L.U. 100 VIESGO HOLDCO, S.A.U. Full consolidation

Wind power generation

Spain PwC

IE2 Holdco, S.A.U. 100 VIESGO HOLDCO, S.A.U. Full consolidation

Holding Spain PwC

Barras Eléctricas Galaico-Asturianas. S.A.

99.92 VIESGO DISTRIBUCION ELECTRICA, S.L.U.

Full consolidation

Power distribution

Spain PwC

IE2 Portugal, SGPS, S.A. 100 VIESGO RENOVABLES, S.L.U.

Full consolidation

Holding Portugal PwC

Parque Eólico Barlavento, S.A.

89.99 VIESGO RENOVABLES, S.L.U.

Full consolidation

Wind power generation

Portugal PwC

SEE - SUL Energía Eólica SA

100 VIESGO RENOVABLES, S.L.U.

Full consolidation

Wind power generation

Portugal PwC

Eoliser SGPE LDA 100 IE2 PORTUGAL, SGPS, S.A. SEE - SUL ENERGIA EOLICA SA

Full consolidation

Maintenance services

Portugal -

Viesgo Mantenimientos, S.L. 100 VIESGO RENOVABLES, S.L.U.

Full consolidation

Maintenance services

Spain -

Northeolic Montebuño, S.L. (*)

75 VIESGO RENOVABLES, S.L.U.

At cost Wind farm projects

Spain -

(*) Not consolidated it is not of significant interest for the true and fair view of the consolidated financial statements. In accordance with Article 155 of the Spanish Companies Act approved by legislative Royal Decree 1/2010 of July 2nd, the Company has reported to all these companies that it owns more than 10% of capital directly or through another subsidiary. All the subsidiaries' financial years end on 31 December. None of the previous companies is a listed entiy. 2 Regulatory framework The reference framework for the electricity sector in Spain is Law 24/2013, of 26 December, on the Electricity Industry, which partly revoked Law 54/1997, of 27 November. This new version of the law, effective since 28 December 2013, arose from the need to adapt the previous Law to the numerous regulatory changes that had taken place in the preceding 15 years and to the new requirements laid down in the structural reform of the electricity sector included in the Recommendation of the Council concerning the Spanish National Reform Plan of 2013. A number of implementing regulations have derived from these laws, including Royal Decree 2019/1997, of 26 December, which organises and regulates the electricity production market, Royal Decree 1955/2000, of 1 December, which regulates transmission, distribution, supply, sale and authorisation procedures for electrical energy facilities, Royal Decree 1048/2013, of 27 December, which lays down the method for calculating distribution remuneration, Royal Decree 216/2014, of 28 March, which lays down the method for calculating voluntary prices for small electricity consumers and the legal contracting regime (amended by Royal Decree 469/2016) and Royal Decree 413/2014, of 6 June, which regulates electrical energy production based on renewable sources, cogeneration and waste.

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VIESGO HOLDCO, S.A.U. AND ITS SUBSIDIARIES NOTES TO THE 2019 CONSOLIDATED FINANCIAL STATEMENTS (In Thousand of euros)

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The Ministry for Ecological Transition and the Demographic Challenge (formerly the Ministry of Energy, Tourism and the Digital Agenda) is responsible for regulating the gas and electricity sectors. The National Commission for Markets and Competition (“CNMC”), is the body created by Act 3/2013 of 4 June, and whose functions and powers have been updated through Royal Decree-Law 1/2019 of 11 January, on urgent measures to adapt its powers to the requirements of European Union law (Directives 2009/72/EC and 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and natural gas). The CNMC combines the functions relating to the proper functioning of markets and sectors previously supervised by the National Energy Commission, the Commission for the Telecommunications Market, the National Competition Commission, the Regulatory Committee for Railways, the National Commission for the Postal Sector, the Commission for Economic Airport Regulation and the State Council for Audio-visual Media, is the regulatory authority entrusted with the task of ensuring effective competition in energy systems and objectivity and transparency in their operations, for the benefit of all parties operating in such systems and consumers. The relevant departments of the Regional Governments have competencies in legislative enactment and regulatory powers. The Nuclear Safety Council exercises specific competencies over the facilities using this technology. In addition, the Technical System Operator, Red Eléctrica de España, S.A.U. (REE), has the principal function of ensuring the proper functioning of the Spanish electricity system and guaranteeing the continuity and security of the electricity supply and the correct coordination of the production and distribution system at all times. It should be noted that Law 24/2013 places a general restriction on shareholdings in REE for any legal or natural person, to the effect that the sum of their direct or indirect interests in this company's capital may not exceed 5% of share capital, nor may they exercise voting rights above 3%. In the case of parties doing business in the electricity sector and individuals or legal entities that, directly or indirectly, hold interests in the capital thereof in excess of 5%, they may not exercise voting rights in the company responsible for the operation of the system in excess of 1%. It should also be noted that Order IET/2209/2014 authorises and designates Red Eléctrica de España, S.A.U. as the manager of the electricity transmission grid in Spain. The electricity sector has the following main features: This is an industry in which regulated and unregulated activities coexist. The regulated activities consist of electricity transmission and distribution, and the non-regulated activities comprise electricity generation and supply. In accordance with Law 17/2007, as from 1 July 2009 tariff supply by distribution companies was eliminated and consumers were required to take part in the liberalised market (although, as indicated below, a voluntary price has been maintained for small consumers, as well as a last-resort tariff for vulnerable consumers and those who, without meeting the requirements for the application of the voluntary small consumer price, are in a transitory situation of not having a supply contract in force with an open market supplier). Royal Decree Law 15/2018 of 5 October, on urgent measures for the energy transition and consumer protection, amends Law 24/2013 on the Electricity Sector, extending the capacities of consumers by allowing them to provide services for recharging electric vehicles. The Iberian Electricity Market (MIBEL) has operated effectively between Spain and Portugal since 1 July 2007, the electricity systems of both countries having been integrated. In terms of income, the electricity system has not been self-sufficient in recent years (until 2014), generating an annual deficit which has been covered by the electricity utilities.

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VIESGO HOLDCO, S.A.U. AND ITS SUBSIDIARIES NOTES TO THE 2019 CONSOLIDATED FINANCIAL STATEMENTS (In Thousand of euros)

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2014 was the first year in which a surplus was made in the electricity system following more than a decade of accumulated deficits, thanks to the comprehensive reform undertaken to put an end to the tariff deficit and achieve economic and financial balance within the system, mainly on the basis of the following legislation: Royal Decree 9/2013, of 12 July, under which urgent measures were taken to guarantee the financial stability of the electricity system, establishes a new remuneration scheme for renewable energy, cogeneration and waste-based generation facilities and a number of other remuneration items relating to energy transmission and distribution. The concept of a reasonable return was introduced with respect to the profitability of projects, based on the average pre-tax yield on 10-year Spanish government bonds in the secondary market, applying an appropriate spread. Other measures were also envisaged aimed at restoring the balance between revenues and costs in the electricity system, such as the requirement that vertically integrated corporations should finance the “rates subsidy”, or the reduction in investment incentives in exchange for the duplication of the period remaining for the receipt of this incentive. Law 24/2013, of 26 November, revoked the previous Law 54/1997, of 27 November, on the Electricity Sector. The governing principle of the electricity system's economic and financial sustainability was introduced, whereby any regulation relating to the sector that entails an increase in costs for the electricity system or a reduction in revenue must also bring an equivalent reduction in other cost items or an equivalent increase in revenue to ensure balance in the system. This principle was reinforced through the introduction of graded restrictions based on the appearance of temporary annual mismatches. For regulated remuneration activities, the law strengthens and clarifies the principles and criteria for establishing the payment systems, which will take into account the costs needed to carry out the activity by an efficient and well-managed company through the application of consistent criteria across Spanish territory. These remuneration schemes allow yields to be obtained which are regarded as reasonable in relation to the business risk involved. Electricity activities are divided into: 1) regulated activities: electricity transmission and distribution; and 2) non-regulated activities: electricity generation and retailing. 1. Regulated activities The pricing and operational system of regulated activities are laid down in the legislation governing the industry, including:

- Need for prior government authorisation: The undertaking of regulated activities requires prior administrative authorisation. In order to obtain this authorisation, the applicant must basically demonstrate its legal, technical and economic capacity to exercise the activity concerned.

- Government-established remuneration: The general guidelines for the remuneration

of these activities are regulated by Royal Decree 1047/2013, of 27 December, for transmission and Royal Decree 1048/2013, of 27 December, for distribution, and aim to ensure a proper remuneration for said activities and the development of networks.

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The general guidelines governing transmission and distribution have been affected by the changes made under Royal Decree Law 13/2012, of 30 March, Royal Decree Law 2/2013, of 1 February, and Royal Decree Law 9/2013, as well as Law 2/2015, of 30 March, on the deindexation of the Spanish economy which was subsequently developed under Royal Decree 1073/2015, which amended certain provisions of the royal decrees concerning remuneration of electricity networks and eliminated certain articles of Royal Decree 1047/2013 and Royal Decree 1048/2013 which established the annual update of unitary values in line with the Consumer Price Index and the Capital Goods Industrial Price Index. As provided for under the aforesaid Royal Decree 1048/2013, every year a Ministerial Order will be approved for each distribution company setting forth the remuneration for electrical distribution companies. The publication in December 2015 of Order IET/2660/2015 (1 December) approving standard facilities and the unitary values of reference for investment, operation and maintenance by fixed asset and the unitary remuneration figures for other regulated tasks to be used when calculating the remuneration to be paid to electricity distribution companies was a milestone in the commencement of the new regulatory period defined by Royal Decree 1048/2013, entailing the abandonment of the transitional remuneration mechanism provided for in Royal Decree Law 9/2013. These rules were effectively implemented through Order IET/980/2016 (10 June) which lay down the remuneration for electricity companies for 2016. The remuneration approved in said Order is effective from 1 January 2016. A separate remuneration was defined for Viesgo Distribución Eléctrica, S.L. and Barras Eléctricas Galaico-Asturianas, S.A. The Orders by which remuneration for 2017, 2018 and 2019 should be fixed have not yet been published according to the deadlines set forth under Royal Decree 1048/2013. In October 2017, the Supreme Court handed down a ruling against Order IET/2660/2015 and there are also several appeals against Order IET/980/2016 of 10 June, which establishes the remuneration of electricity distribution companies for 2016. In 2017, the Ministry commenced an administrative procedure for an ex officio review of the Order referred to above, following a declaration that it might be detrimental to the public interest which could affect the remuneration for the years 2016 and beyond. After the approval of the Royal Decree-Law 1/2019 the CNMC took over the following functions: • Approve the methodology for Access Charges and their values (from 2020). • Define the methodology for the remuneration of the transmission and distribution activity, as

well as the approval of the remuneration values for both activities (from 2020). • Define the methodology on the rate of remuneration for transmission and distribution activity

(from 2020). • Define the network access and connection conditions. • Carry out inspections and define the sanctions that could be arise as a result of these new

powers. These new powers are established by means of 13 regulatory circulars, following the corresponding public consultation processes and in accordance with the energy policy principles defined by the Ministry in Order TEC/406/2019, of 5 April, which establishes energy policy guidelines for the National Commission for Markets and Competition.

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It should be noted that at the date of issue of this report, the following circulars had been published affecting the activity of electricity distribution and transmission: • Circular 2/2019, of 12 November, from the National Commission for Markets and

Competition, spelling out the methodology for calculating the financial remuneration rate for electricity transmission and distribution activities, and regasification, transmission and distribution of natural gas.

This Circular defines the value of the remuneration rate for transmission activity and remuneration to be applied for the second regulatory period (from 2020), which has been defined as having a value of 5.58%. However, exceptionally for the year 2020 the rate will have a value of 6.003% as provided in the last paragraph of Article 8.3 of Royal Decree 1047/2013 of 27 December, so the value of 5.58% will begin to be applied from the year 2021.

• Circular 5/2019, of 5 November, from the National Commission for Markets and Competition,

spelling out the methodology for calculating the remuneration for electricity transmission.

• Circular 6/2019, of 5 November, from the National Commission for Markets and Competition, spelling out the methodology for calculating the remuneration for electricity distribution.

The CNMC Resolution approving, on an individual basis, each distribution company's remuneration in accordance with the remuneration model set forth in the aforementioned Circular 6/2019 is pending publication.

• Circular 7/2019, of 5 December, from the National Commission for Markets and Competition,

which approves the standard installations and the unitary reference values for operation and maintenance by fixed asset element to be used in the calculation of the remuneration of the companies that own electricity transmission facilities

As far as the economic management of the electrical system is concerned, the regulatory framework of the electricity sector in Spain provides for a payment procedure for the redistribution amongst companies in the sector of the net revenue obtained (mainly from access charges) and other costs, so that each company receives the remuneration recognised for its regulated activities. • Specific requirements: The carrying out of the regulated activities is subject to specific

obligations to ensure the development of competition in the retailing stage. The two main obligations in this respect consist of permitting access by third parties to transmission and distribution networks and the obligation to keep regulated and unregulated activities separate.

Law 24/2013 regulates the general principles of access and connection to the transmission and distribution networks, determining the qualifying organisations, technical requirements needed to obtain rights or permits and the grounds for denial of access, as well as the bodies competent to resolve conflicts. Royal Decree 1955/2000 regulates the rights and obligations of each party involved in the system. The owners of the transmission and distribution networks have the right to receive charges in consideration for this access, which are revised annually by ministerial Order. Notwithstanding the above, what is indicated in this Act will be complemented with the provisions of the pertinent Circular of the CNMC defining the conditions of access and connection under the development regulations that the Ministry must establish in this matter.

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The legislation establishes the duty of functional separation, which means not only accounting and legal separation but also the requirement of independent operation of the regulated subsidiary company in relation to the other companies in its group. 1.1 Transmission Transmission activity consists of the transmission of electricity over the interconnected grid made up of the transmission facilities, so it may be supplied to distributors or final consumers, as well as to deal with international exchanges. This activity is carried out by transmission companies, which are responsible for transporting energy and for constructing, handling and maintaining transmission facilities. 1.2. Distribution Distribution consists of moving electrical energy from the transmission grid, or from other distribution networks or from generation facilities connected to the grid, to points of consumption or to other distribution networks in appropriate condition, with the ultimate purpose of supplying energy to consumers. The distribution network is managed by the distribution companies. The distribution activity is carried out by distributors, which are trading companies or cooperative societies of consumers and users whose function is to distribute electrical energy and to construct, maintain and operate distribution facilities designed to carry energy to points of consumption, as well as all other functions referred to in industry legislation. Under certain conditions, Royal Decree Law 15/2018 establishes the possibility that electricity distribution companies may be the last resort holders of electricity recharging infrastructures, although this aspect has yet to be developed for regulatory purposes. Lastly, Royal Decree Law 20/2018 of urgent measures to promote economic competitiveness in the industrial sector and trade in Spain, defines a new figure of manager of closed distribution networks of electrical energy, for supply in industrial activities and small geographical areas. This figure will be implemented within a period of 6 months after its publication. 2. Unregulated activities 2.1. Electricity generation Remuneration for electricity generation includes the following items: a) Electricity traded through the daily and intraday markets which is paid for based on the

equilibrium price between supply and demand in those markets, calculated using the established mechanisms.

b) Electricity bought and sold through bilateral, financial and physical agreements, and

forward contracts on the market, which is remunerated based on the price of transactions completed on those markets.

c) System adjustment services needed to ensure adequate supply to consumers.

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d) Where appropriate, remuneration in the form of a capacity mechanism, which provides the

system with an adequate coverage margin and encourages the availability of manageable power.

e) Where appropriate, additional remuneration for power production in the energy systems in

territories outside mainland Spain.

f) Where appropriate, specific remuneration for electricity production from renewable sources, high efficiency cogeneration and waste.

This market remuneration mechanism is complemented, in the case of thermal production facilities under the former ordinary system, through regulated income to cover the medium-term power availability service defined in Order ITC/3127/2011 (17 November), as well as an investment incentive for combined cycles and environmental investments in coal-fired stations which involve reductions in sulphur dioxide emissions. Order ETU/1133/2017, of 21 November, amending Order IET/2013/2013, of 31 October, regulating the competitive mechanism for assigning the interruptibility demand management service, introduced amendments concerning the provision of the availability service. The Order established a 6-month application period for said availability mechanism (lower than the annual period which had been applied) which ended in June 2018, and which excluded hydroelectrical generation facilities from the scope of application of the availability service. Order TEC/1366/2018, of 20 December, establishing the electricity access charges for 2019, definitively abolished the availability service as it was necessary to review this figure in accordance with the guidelines resulting from the clean energy package. At the end of 2012 Law 15/2012, of 27 December, on tax measures for energy sustainability, was approved. It regulates three new impacts on generation companies: the tax on the value of electricity production, the tax on the production of spent nuclear fuel and radioactive waste resulting from the generation of nuclear electrical energy, and the tax on the storage of spent nuclear fuel and radioactive waste at centralised facilities. It also introduced a fee for the use of mainland waterways for the production of electrical energy and changes the tax rates in force for natural gas and coal, additionally eliminating the exemptions envisaged for energy products used in the production of electrical energy and in the cogeneration of electricity and useful heat. Royal Decree Law 10/2017, adopting urgent measures to offset the effects caused by the drought in certain hydrological basins and amending the consolidated text of the Water Act, increases the rate on the fee for using mainland waterways to produce electricity. Royal Decree-Law 15/2018, of 5 October, on urgent measures for energy transition and consumer protection, partially modifies this fiscal framework by suspending the tax on the value of electricity production (known as the 7%) for 6 months (the last three in 2018 and the first three in 2019). This Royal Decree-Law also modified Law 38/1992, of 28 December, on Excise Duties, introducing an exemption from the Hydrocarbons Tax (green cent) for combined cycles and cogeneration.

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On 23 November 2019, Royal Decree-Law 17/2019 was published, adopting urgent measures for the necessary adaptation of remuneration parameters affecting the electricity system and responding to the process for the termination of activity in thermal generation plants. The purpose of the aforementioned Royal Decree-Law is to approve the rate of return for the second regulatory period (2020-2025), setting it at 7.09%. Exceptionally, for facilities prior to Royal Decree-Law 9/2013, the current rate of 7.398% may be maintained until 2031. However, in order to benefit from this rate of return, which is voluntary, it is necessary to waive arbitration proceedings (and the settlement would have to be adjusted if there has already been compensation). Order TED / 171/2020, of February 24, establishes the remuneration parameters of the type installations applicable to certain installations for the production of electrical energy from renewable energy sources, cogeneration and waste, for the purpose of its application to the regulatory period which has its beginning on January 1, 2020. Furthermore, Additional Provision Twenty-two of the aforementioned Royal Decree-Law 17/2019 amends the Electricity Sector Act 24/2013, establishing that the Ministry for Ecological Transition and Demographic Challenge may regulate procedures and requirements for granting all or part of the evacuation access capacity of the network nodes affected by the closure to new renewable generation facilities, weighing up environmental and social benefits in addition to technical and economic requirements.

It also amends the revised text of the Water Act approved by Royal Legislative Decree 1/2001, of 20 July, to include economic, social and environmental criteria in new concessions over and above the uses provided for in the Hydrological Plan. 2.1.1. Electricity generation from renewable sources, cogeneration and waste The high level of penetration of generation technologies using renewable energy sources, cogeneration and waste included in the so-called special electricity production regime has led to the revision of its specific regulation linked to the power and the technology involved. The current regulation provides for these facilities in a manner analogous to other technologies integrated into the market, which are assessed by reason of the related technology and implications for the system, rather than by power. Law 24/2013, of 26 December, abandoned the distinction between the ordinary and special arrangements, notwithstanding certain specific exceptions. Currently, the remuneration system for renewable energy, cogeneration and waste is based on the market share of these facilities, complementing market revenue with a specific regulated remuneration to allow these technologies to compete on an equal footing with other technologies in the market. This specific complementary remuneration must be sufficient to reach the minimum level necessary to cover the costs which, unlike in conventional technologies, cannot be recovered in the market, and to allow them to obtain an adequate return by reference to the standard facility in each instance. The rate of return for production from renewable energy sources, cogeneration and waste for the first regulatory period was established in Royal Decree-Law 9/2013, of 12 July, which adopted urgent measures to ensure the financial stability of the electricity system, and was set at 7.398%. To calculate the specific remuneration, for a standard facility the revenues from the sale of energy generated calculated at production market price, the average operating costs necessary to carry out the activity and the value of the initial investment in the standard facility are taken into account, for an efficient and well-managed company.

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As already mentioned, with Royal Decree-Law 17/2019 the new rate of return for the second regulatory period (2020-2025) was approved, setting it at 7.09%. Exceptionally, for installations prior to Royal Decree-Law 9/2013, the current rate, 7.398%, may be maintained for two regulatory periods, i.e. until 2031. To benefit from this rate of return, which is voluntary, it is necessary to waive arbitration proceedings (and the settlement would have to be adjusted if there has already been compensation). Lastly, in accordance with the provisions of the Single Additional Provision of Royal Decree-Law 17/2019, the Order on parameters for the second regulatory period has been approved by previously cited TED/171/2020 order. The following regulatory provisions have developed the legal and economic regimes applicable to production technologies for renewable energy sources, cogeneration and waste under the private economic arrangement since the entry into force of Royal Decree-Law 9/2013: Royal Decree 413/2014, of 6 June, regulating production of electrical energy from renewable energy sources, cogeneration and waste, stipulated the methodology of the specific remuneration system which applies to qualifying production facilities from renewable energy sources, high efficiency cogeneration and waste. Order IET/1045/2014 (June 16) approved the remuneration parameters for standard facilities applicable to certain facilities generating electricity from renewable sources, cogeneration and waste. Order ETU/130/2017, of 17 February, updates the remuneration parameters of the standard facilities applicable to certain electrical production facilities based on sources of renewable energy, cogeneration and waste, for the purposes of its application to the regulatory semi-period which begins on 1 January 2017. Royal Decree 413/2014 provided for the possibility of establishing a specific remuneration arrangement through a competitive tender. Implementing the above, Royal Decree 947/2015, of 16 October, provided for the arrangement of auctions for new electricity generation facilities based on biomass in the mainland system and for wind technology facilities, as well as the power quotas for each technology. In addition, Order IET/2212/2015 (23 October) was approved, which regulates the procedure for assigning the specific remuneration arrangements in each tender. On 14 January 2016 the auction was held to determine the percentage reduction in the standard value of the initial investment in the standard facility of reference for new electricity production facilities based on biomass located in the mainland electricity system and for wind technology facilities. In 2017, two auctions were arranged for new renewable facilities: Royal Decree 359/2017, of 31 March, arranged a call to grant a specific remuneration regime to new electrical generation facilities based on sources of renewable energy in the peninsular electrical system, and Order ETU/315/2017, of 6 April, regulated the procedure for assigning the specific remuneration regime. On 17 May, an auction was held in which 3,000 MW of new renewable power was assigned under these new standards.

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Also, Royal Decree 650/2017, of 16 June, established a quota of 3,000 MW of installed power for new electrical generation facilities based on renewable energy sources in the peninsular electrical system, to which the specific remuneration regime could be applied. Order ETU/615/2017, of 27 June, determined the procedure for assigning the corresponding remuneration parameters, and the other aspects which will be applicable for the quota of 3,000 MW of installed power, called under Royal Decree 650/2017. This quota can be increased under certain conditions, and in the second yearly auction, held on 26 July, 5,037 MW of new renewable facilities were allocated. Tariff deficit 2013 and following years Royal Decree 1054/2014, of 12 December, regulated the procedure for assigning collection rights for the deficit in the electricity system for 2013 and established the method for calculating the interest rate accruing on the collection rights for said deficit and, if appropriate, for the negative temporary mismatches in years following 2013. After 2014, any time lag between revenues and costs in the electricity system resulting from year-end settlements and giving rise to a revenue shortfall, and any temporary variances between revenues and costs in monthly settlements on account of the settlement at the end of each year, are funded by the parties involved in the settlement system in proportion to the remuneration to which they are entitled as a result of the activity they carry out. In the event of mismatch due to an income shortfall in a given year, the amount thereof may not exceed 2% of the estimated system income for that year. In addition, the accumulated debt due to mismatches in previous years may not exceed 5% of the estimated system income for that year. Any applicable tolls or charges will be revised with respect, at least, to a total figure equivalent to the amount by which said limits are exceeded. Without prejudice to the provisions of Law 24/2013, of 26 December, on the Electricity Sector, Royal Decree-Law 15/2018 introduced the possibility of using the surplus generated in previous years to cover temporary mismatches between revenues and system costs in 2018 and 2019. National Energy and Climate Plan From 22 February to 4 April 2019, the Spanish Government launched a public consultation process under the name of the 2019 Strategic Framework on Energy and Climate. The main projects included in this Strategy are: • Proposed Bill on Climate Change and Energy Transition • National Integrated Energy and Climate Plan 2021-2030 (PNIEC). • Fair Transition Strategy. The Climate Change and Energy Transition Bill and the Fair Transition Strategy are the Government's tools for implementing this Strategy. These documents cover questions such as the design of institutional cooperation tools, evaluation and learning tools, integration of different industries, tools for optimizing opportunities for workers and companies. The PNIEC is the national plan which designs the objectives related to the Energy and Climate Strategy. In particular, targets are set for the reduction of carbon emissions, the penetration of renewable energies and aspects related to energy efficiency.

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On 5 April 2019, the Council of State approved the National Energy and Climate Strategy against energy poverty for the period 2019-2020. Some measures indicated in this Strategy were already in force in our regulations, but for other new proposals included in this strategy the regulations will have to be adapted if they are ultimately approved. These new measures include the minimum vital supply, limitations on supply cuts during special weather conditions, availability to consumers of a telephone service by distributors for incidents or free access related to information on the measure. 3 Summary of significant accounting policies The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, except by the adoption of new IFRS-UE, interpretations and amended that came into force on 1 January 2019, as indicated in 3.1.1. 3.1 Basis of preparation and presentation of consolidat ed financial statements The consolidated financial statements at 31 December 2019 of the parent Company and its subsidiaries has been prepared in accordance with International Financial Reporting Standards (IFRS), the International Accouting Standards (IAS) and the Interpretations issued by the Interpretations Committee of the International Financial Reporting Standards (IFRIC) as issued by the International Accounting Standards Board (IASB)adopted by the European Union (the “IFRS-EU”) in order to assist the Group to meet the requirements of the Global Exchange Market (GEM) of Euronext Dublin. The preparation of the financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires that management exercise its judgment in the process of applying the Group's accounting policies. Note 3.3 shows the areas that involve a higher level of judgment or complexity or the areas where the assumptions and estimates are significant for the consolidated financial statements. The figures contained in the documents which make up these consolidated financial statements are expressed in thousands of euros which is the functional currency of the parent company and presentation currency of the consolidated financial statements, unless otherwise indicated. In the preparation of these Consolidated Financial Statements the Group has used the historical cost method, except for derivative financial instruments, which have been measured at fair value, and defined benefit pension plans which have been measured at present value less the fair value of plan assets. The consolidated financial statements for the year ended 31 December 2019 have been issued with the Board of Directors authorization on 11th March 2020 and will be submitted for the consideration of the Sole Shareholder for final approval. Board of Directors considers that the consolidated financial statements for the year ended 31 December 2019 prepared in accordance with IFRS-UE, will be approval by the Sole Shareholder without modifications. The consolidated financial statement for the year ended 31 December 2018 were approved by the Sole Shareholder on April 25, 2019

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3.1.1 New IFRS-EU standards and interpretations ado pted by the Group The EU adopted the following standards which come into force for periods commencing on or after 1 January 2019: • IFRS 16 “Leases” • IFRS 9 (Modification) “Advance payment component with negative compensation”: • IFRIC 23, “Uncertainty about the treatment of income tax”. • IAS 19 (Amendment) “Modification, reduction or liquidation of the plan” • IAS 28 (Amendment) “Long-term interest in associates and joint ventures” • Annual Improvements to IFRS. 2015 – 2017 cycle: Amendments affect IFRS 3, IFRS 11, IAS

12 and IAS 23 The main impacts arising from the adoption of the new IFRS refer essentially to those set out in IFRS 16 “Leases” and are detailed below. The adoption of other standard, amendments and interpretations do not have an impact over these consolidated financial statements. The Group has adopted IFRS 16 retrospectively from 1 January 2019, but has not restated comparative figures for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing standard are therefore recognised in the opening balance sheet on 1 January 2019. New accounting policies for leasing activities The group leases various lands, offices, warehouses, equipment and cars. Rental contracts are typically made for fixed periods but may have extension options. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Until the 2018 financial year, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases were charged to profit or loss on a straight-line basis over the period of the lease. From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments: • fixed payments (including in-substance fixed payments), less any lease incentives receivable • variable lease payment that are based on an index or a rate • amounts expected to be payable by the lessee under residual value guarantees • the exercise price of a purchase option if the lessee is reasonably certain to exercise that

option, and • payments of penalties for terminating the lease, if the lease term reflects the lessee

exercising that option.

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The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising the following: • the amount of the initial measurement of lease liability • any lease payments made at or before the commencement date less any lease incentives

received • any initial direct costs, and • restoration costs. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets mainly comprise IT-equipment. Adjustments recognised on adoption of IFRS 16 On adoption of IFRS 16, the group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 5%. Thousand euros 1

January 2019 Operating lease commitments disclosed as at 31 December 2018 17,575 Other operating lease commitments 1,604 Financial discount effect using the lessee’s incremental borrowing rate of at the date of initial application (4,996) (Less): short-term leases recognised on a straight-line basis as expense (7) (Less): low-value leases recognised on a straight-line basis as expense (64) Add/(less): adjustments as a result of a different treatment of extension and termination options (173) Add/(less): adjustments related to variable payments of contracts (4,081) Lease liability recognised as at 1 January 2019 9,858 Of which are: Current lease liabilities 790 Non-current lease liabilities 9,068 The associated right-of-use were measured at the amount equal to the lease liability. There were no prepaid payment or onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

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The recognised right-of-use assets relate to the following types of assets: Thousand euro 31.12.19 01.01.19 Land and buildings 7,996 8,364 Motor vehicles 1,454 1,494 Total right -of -use assets 9,450 9,858 The change in accounting policy affected the following items in the balance sheet on 1 January 2019: Right-of-use assets 9,858 Deferred tax assets - Borrowings (9,858) Retained earings - In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard: • the use of a single discount rate to a portfolio of leases with reasonably similar

characteristics • the accounting for operating leases with a remaining lease term of less than 12 months as at

1 January 2019 as short-term leases • the exclusion of initial direct costs for the measurement of the right-of-use asset at the date

of initial application, and • the use of hindsight in determining the lease term where the contract contains options to

extend or terminate the lease. 3.1.2 New IFRS standards and interpretations not ye t adopted At the date of signing of these consolidated financial statements, the IASB and the IFRS Interpretations Committee had published the following standards, amendments and interpretations, which are indicated below, and which have not yet been adopted by the European Union. • IFRS 10 (Amendment) and IAS 28 (AMendment) “Sale or contribution of assets between an

investor and its associate or joint venture” • IFRS 17 “Insurance contracts” • IFRS 3 (Amendment) “Definition of a business” • IAS 1(Amendment) and IAS 8 (Amendment) “Definition of material”

The Group considers that if these standards, amendments and interpretations were adopted, it will not have a significant impact on the consolidated financial statements

3.2. Going-concern principle At 31 December 2019 the Group had negative working capital of €131,291 thousand (2018: €118,700 thousand). In the opinion of the parent Company’s Board of Directors, said shortfall in working capital will be covered by the cash generated by the Group’s own activity, and, when applicable, by funding through undrawn credit facilities (Note 24).

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As a result, the members of the parent Company’s Board of Directors have presented these consolidated financial statements on a going concern basis. 3.3 Use of estimates and sources of uncertainly The preparation of the consolidated financial statements requires the use by the Group of certain estimates and judgements in relation to the future and that are assessed constantly and are based on historical experience and other factors, including expectations of future events considered reasonable in the circumstances. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are explained below. Useful lives of property, plant and equipment and intangible assets The Group's management determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and intangible assets taking into account their technical characteristics, the period over which they are expected to generate economic benefits and the applicable legislation. However, the estimates could change significantly as a result of technical innovations, regulatory changes and competitor actions in response to future developments in the sector. The depreciation charge will be increased should useful lives be shorter than previously estimated. Impairment of assets (including Goodwill) The Group verifies annually whether there is an impairment loss in respect of goodwill, in accordance with the accounting policy described in Note 6. The recoverable amounts of cash-generating units (CGUs) have been determined based on value-in-use calculations. These calculations require the use of estimates (Note 6.1). The sensitivity analyses are based on the increased/decreased of the most relevant variables, paying particular attention to situations in which there could be indicators of potential impairment. Income tax and deferred tax assets The legal status of the tax regulations applicable to the Group entails that estimates are employed and the final quantification of tax is uncertain. Tax is calculated based on Management's best estimates, always taking into account prevailing tax legislation and foreseeable legislative changes. The Group assesses the recoverability of deferred income tax assets based on estimates of future taxable profits and on the capacity to generate profits in a period of 10 years during which the deferred income taxes may be deducted. The main assumptions used for the analysis are the same as those indicated in Note 6 used for the impairment analysis of assets. Where the final tax outcome differs from the amounts that were initially recorded, such differences will impact income tax in the period in which such determination is made.

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Pension obligations The present value of retirement pension commitments depends on certain factors that are determined using actuarial assumptions, with the advice of independent actuaries. The assumptions employed to determine the net cost (income) arising from pensions include a discount rate. Any change in these assumptions will have an impact on the carrying amount of pension commitments. The Group determines the appropriate discount rate at each year end. This is the interest rate that must be used to calculate the present value of cash outflow that are expected to be necessary to settle the pension commitments. When determining the appropriate discount rate, the Group takes into account the interest rates on high-quality Company bonds denominated in the currency in which the pensions will be paid, for maturity periods similar to the term of the relevant pension liability. Other key assumptions for retirement pension commitments are based in part on current market conditions. See Note 21 for further information on pension commitments. Other provisions The Group recognizes “Other provisions” in accordance with the accounting policy described in Note 5.18 to these financial statements. As a general rule, liabilities are accounted for when an obligation is likely to give rise to a payment. The Group assesses the amounts to be paid in the future, including any income tax, contractual commitments, outstanding litigation and other liabilities. The estimates are subject to interpretations of current events and circumstances, projections of future events and estimates of the financial effects of those events.

Revenues (income from regulated activities) At the date of drawing up of these financial statements, the Ministerial Orders setting forth the remuneration for 2017, 2018 and 2019 for electrical distribution companies has not yet been approved. For the purposes of the settlement of distribution activities, order ETUU/1282/2017, of 22 December, establishing access tools to electricity for 2019, sets forth that until the remuneration on distribution activity for 2019 is approved, the CNMC will settle the amounts accrued which will be, for each of the distribution companies, the proportional part of the remuneration established in Order IET/980/2016, of 10 June, setting the remuneration of electrical distribution companies for the 2016 year. Once the ministerial remuneration orders for 2017, 2018 and 2019 have been approved, the payment obligations or, as the case may be, the collection rights which arise once they are applied shall be settled against the next settlement carried out by the body in charge of them after the date on which the said orders are approved. These amounts shall be considered as revenue or payable cost of the system for the purposes set forth in the procedure for settling the costs of the electrical system.

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In order to better comprehend the new regulatory model and the investments and costs declared in the 2019 year, the Group has estimated remuneration, incentives and penalties as well as regularisations of 2018, for Viesgo Distribución Eléctrica, S.L.U. of €156,895 thousand and for Barras Eléctricas Galaico-Asturianas, S.A. (Begasa) of €54,487 thousand for 2018. This amount will be adjusted once the appeals lodged against Order IET/980/2016 are resolved and the ex officio review procedure on remuneration initiated by the Ministry of Energy, Tourism and Digital Agenda (now called the Ministry for Ecological Transition) is completed, and once the pertinent Ministerial Order for 2019, 2018 and 2017 has been approved. Although at the drawing up of these accounts, the amounts referring to incentives or penalties set out under Royal Decree 1048/2013, of 27 December, have not been approved, the Group has performed its best possible valuation based on the quality, fraud and losses data up to date. At the date of drawing up of these financial statements, the Group estimates that the definitive value of the calculated remuneration, having included the pertinent incentives or penalties on the reduction of losses will not differ significantly from that considered, and it believes that the aforesaid amount is its best estimate on the distribution remuneration, based on the available information. Settlements in regulated activities The remuneration recognised as revenue for 2019 includes the estimated amount not yet settled by the CNMC for that year, which is provisional until the CNMC carries out the definitive settlement for the year. At 31 December 2019, there is an outstanding net receivable amount of €10,295 thousand referring to outstanding settlements as at 31 december 2019, divided into the headings of “Sundry payables”, for €26,177 thousand, and “Sundry receivables”, for €36,472 thousand, for the estimated amount pending settlement at that date (In 2018 €7,609 thousand of “Sundry payables”, €29,459 thousand of “Sundry receivables” and €21,850 thousand for the estimated amount pending settlement.) 4 Results for the year The proposed distribution of 2019 results, as well as the approved distribution of 2018 results of the group's parent company, are as follows:

Thousand euro 2019 2018 Available for distribution:

Profit for the year 99,321 117,895

99,321 117,895 Application:

Dividend 99,321 117,895 99,321 117,895 In addition, under the resolution adopted by the Board of Directors dated 30 September 2019, an interim dividend for the year 2019 (Note 14.4) was issued to the shareholder of the parent Company for a total amount of €95,000 thousand (1,58€ thousand each stock).

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The proposed distribution of 2018 results was approved by the Sole Shareholder on 22 March 2019 (1,96€ thousand each stock). 5 Accounting policies 5.1 Subsidiares a) Subsidiares Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The acquisition method of accounting is used to account for all business combinations (including those business combinations among entities under common control), regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, liabilities incurred to the former owners of the acquired business, equity interests issued by the Group, fair value of any asset or liability resulting from a contingent consideration arrangement, and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net identifiable assets. Acquisition-related costs are expensed as incurred. The excess of the consideration transferred, amount of any non-controlling interest in the acquired entity, and acquisition-date fair value of any previous equity interest in the acquired entity over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the difference is recognized directly in profit or loss as a bargain purchase. Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions. Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognized in profit or loss. If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in the acquire is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognized in profit or loss. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

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Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of financial position respectively. 5.2 Associates Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under this method, investments are initially recognized at cost, and adjusted thereafter to recognise the Group’s share of the profit or loss of the associate for the period in the income statement. Dividends received or receivable from associates are recognized as a reduction in the carrying amount of the investment. When the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the other entity. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group. 5.3 Intangible assets a) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary, joint arrangements or associates acquired, at the date of acquisition. Goodwill on acquisitions of subsidiaries or joint arrangements is included in Intangible assets while goodwill related to acquisitions of associates is recorded under Investments using the equity method. Goodwill is not amortized and it is tested annually to analyze possible impairment losses. It is recognized in the consolidated statement of financial position at cost value less cumulative impairment losses. Any impairment losses on goodwill cannot be reversed. b) Computer software Costs associated with maintaining software programs are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognized as intangible assets when the following criteria are met: • it is technically feasible to complete the software so that it will be available for use • management intends to complete the software and use or sell it • there is an ability to use or sell the software

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• it can be demonstrated how the software will generate probable future economic benefits • adequate technical, financial and other resources to complete the development and to use or

sell the software are available, and • the expenditure attributable to the software during its development can be reliably measured. Directly attributable costs that are capitalized as part of the software include employee costs and an appropriate portion of relevant overheads. Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is ready for use. These costs are amortized over the assets’ estimated useful lives (five years). c) Research and development Research expenditure and development expenditure that do not meet the criteria in note 5.3.b above are recognized as an expense as incurred. Development costs previously recognized as an expense are not recognized as an asset in a subsequent period. There are no intangible assets with an undefined useful life. d) Concessions Administrative concessions are carried at cost less accumulated amortisation and impairment. Concessions are amortised on a straight-line basis over the term of the concession (refer to Note 6.3 for the repective useful life). 5.4 Property, plant and equipment All property, plant and equipment are recognized at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred. Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term as follows: Useful life Buildings 23-50 years Dispatching and power control centres 10-25 years Plant 14 to 45 years Vehicles 4-5 years Furniture 8-10 years Fixtures, fittings, tools, machinery and equipment 2 to 25 years The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period. Work in progress is not depreciated and is capitalized when the asset is ready for use.

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An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount (note 7). Gains and losses on disposals are determined by comparing the proceeds of the transaction with the carrying amount and are recognized in the consolidated statement of comprehensive income . 5.5 Right-of-use assets The Group recognises a right-of-use asset on the inception date of the lease. The cost of the right-of-use asset includes the initial amount of the lease liability, any initial direct costs, lease payments made before or on the inception date, and any decommissioning costs relating to the asset. Subsequently, the right-of use asset is recognised at cost less accumulated depreciation and any associated impairment provision and is adjusted to reflect any subsequent evaluation or alteration of the lease. The Group applies the exemption for short-term leases (defined as leases with a term of 12 months or less) and leases of low value assets and, in those situations, recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless there is another systematic basis which better represents the timeframe in which the economic benefits of the leased asset are consumed. Depreciation is calculated using the straight-line method to allocate their cost over their estimated useful lives of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the asset for the right of use reflects that the Group expects to exercise a purchase option, the asset related to the right of use is depreciated over the life of the underlying asset. Depreciation commences on the inception date of the lease. 5.6 Borrowing costs General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Other borrowing costs are expensed in the period in which they are incurred. 5.7 Impairment of on non-financial assets

Assets that are subject to depreciation and amortization are tested for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Additionally, goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. An impairment loss is recognized in the consolidated statement of comprehensive income for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. Impairment losses are reversed if any changes have been produced in the estimates used to determine the recoverable value of assets, only to the extent that the carrying amount of the asset, net of depreciation and amortization, does not exceed the fair value that would have been determined if no impairment loss had been recognized

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For the purposes of assessing impairment, both assets and goodwill are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units or “CGUs”). The Group considers value in use as the recoverable amount. The Group’s CGUs have been defined as follows: • Renewables: electricity generation using technologies based on renewable energy sources,

primarily in Spain. Each renewable energy installation is considered a separate CGU. • Electricity distribution: regulated electricity distribution business, primarily in Spain. Refer to note 6 and 7 for the impairment tests carried out in connection with other intangible assets and property, plant and equipment. 5.8 Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less loss allowance. Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 12 months and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method. The Group apply the general model of expected loss for financial assets, with the exception of trade receivables for wich the Group apply simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. Against this background, the Group has considered available historical information such as the history of losses in recent years, clients’ credit risk profiles, and considering the evaluation of potential changes in the risk profile of customers and prospective elements (macroeconomic factors, changes in GDP, interest rates, etc.). 5.9 Investments and other financial assets

Clasification The group classifies its financial assets in the following measurement categories: • those to be measured subsequently at fair value through profit or loss, and

• those to be measured at amortised cost. The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. For assets measured at fair value, gains and losses are recorded in profit or loss.

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The group reclassifies debt investments when and only when its business model for managing those assets changes. Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the group has transferred substantially all the risks and rewards of ownership. Measurement At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are solely payment of principal and interest. Debt instruments Subsequent measurement of debt instruments depends on the group’s business model for managing the asset and the cash flow characteristics of the asset. The categories into which the group classifies its debt instruments are as follows: • Amortised cost: Assets that are held for collection of contractual cash flows where those

cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented as separate line item in the statement of profit or loss.

• FVPL: Assets that do not meet the criteria for amortised cost are measured at FVPL. A gain

or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses) in the period in which it arises.

Impairment The group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables, see 5.8. for further details.

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For all other financial instruments, the Group measures expected credit losses according to a model that reflects a weighted amount based on the probability of loss, by evaluating a series of possible scenarios and taking into consideration the time value of money and the information available at the measurement date on past events, current conditions and forecasts of future economic conditions. The maximum period in which expected credit losses are measured is the maximum contractual period (including extension options) during which the Group is exposed to credit risk. To determine whether a financial asset has experienced a significant deterioration in its credit risk since its initial recognition, or to estimate the expected credit losses over the entire life of the asset, the Group considers all reasonable and sustainable information that is relevant and available without disproportionate effort or cost. This includes both quantitative and qualitative information, based on the Group's or other entities' experience of historical credit losses, and observable market information on the credit risk of the particular financial instrument or similar financial instruments. The Group assumes that the credit risk of a financial asset has increased significantly if the arrears exceed 30 days. It also adopts the presumption of default for a financial asset that is more than 180 days past due, unless there is reasonable and substantiated information demonstrating that the credit may be recovered. The Group considers that a debt instrument has a low risk when its credit rating is classified as at least “investment grade” by one of the most prestigious rating agencies. Broadly speaking, the expected loss calculation is based on three parameters: probability of default (PD), loss given default (LGD) and exposure at default (EAD). 5.10 Cash and cash equivalents For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand which are subject to an insignificant risk of changes in value. 5.11 Inventories Raw materials and stores, are stated at the lower of cost and net realizable value. Cost comprises direct materials, direct labor and an appropriate proportion of variable and fixed overhead expenditure, the latter being allocated on the basis of normal operating capacity. Cost includes the reclassification from equity of any gains or losses on qualifying cash flow hedges relating to purchases of raw material but excludes borrowing costs. Costs are assigned to individual items of inventory on the basis of weighted average costs. Costs of purchased inventory are determined after deducting rebates and discounts. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale. 5.12 Equity Share capital is represented by ordinary shares and classified as equity. Incremental costs directly attributable to the issuance of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

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Dividends on ordinary shares are recognized as a liability deducted from the equity in the period they are approved by the Sole shareholder. 5.13 Financial liabilities a) Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months after the reporting period. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method. b) Borrowings Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting period. Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs. 5.14 Financial derivatives and hedge accounting Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. For the periods presented, the Group did not designate its derivatives as hedging instruments and therefore fair value changes are recognized directly in the income statement and included in other operating income or other operating expenses. When derivatives have not been settled, the net result is recognized in “Other operating income” or “Other expenses”, as applicable. When they are settled, the net result of energy derivatives is recognized in “Raw materials and consumables” or “Sales”, as applicable; and the net result of interest rate derivatives is recognized in “Change in fair value of financial instruments”.

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Derivatives are classified as a non-current asset or liability when the contract's residual maturity exceeds 12 months and as a current asset or liability when residual maturity is less than 12 months. Derivatives embedded in other financial instruments are recognized separately when their characteristics and risks are not closely related to those of the host contracts, provided the entire financial instrument is not carried at fair value; value changes are charged or credited to the income statement. 5.15 Deferred income This caption mainly includes grants received from the government. Grants are recognized at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to profit or loss on a straight-line basis over the expected lives of the related assets. 5.16 Income tax The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognized if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction does not affect neither the accounting nor the taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred tax assets are recognized only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

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Deferred tax liabilities and assets are not recognized for temporary differences between the carrying amount and tax bases of investments in foreign operations where the Group is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively. 5.17 Employee benefits The Group operates various post-employment schemes, including both defined benefit and defined contribution pension plans, as well as other long term benefits and termination benefits. a) Defined benefit pension plans and other post-employment benefits

The liability or asset recognized in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. In countries where there is no deep market in such bonds, the market rates on government bonds are used. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the consolidated statement comprehensive income. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the consolidated statement of changes in equity and in the consolidated statement of financial position. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service costs.

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b) Defined contribution plans For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognized as employee benefit expense when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available. c) Other long-term benefits The liability or asset recognized in the statement of financial position in respect of the length-of-service awards is determined in the same way as the post-employment benefits. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the statement of profit or loss. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the period in which they occur, directly in the consolidated statement of other comprehensive income. Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognized immediately in profit or loss as past service costs. d) Termination benefits Termination benefits are payable when employment is terminated by the Group before the ordinary retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognizes costs for a restructuring that is within the scope of IAS 37 and involves the payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value. 5.18 Provisions and contingent liabilities Provisions for environmental restoration, restructuring costs, regulatory costs and litigation are recognized when the Group has a present legal or constructive obligation as a result of past events, an outflow of funds will probably be necessary to settle the obligation and the amount may be reliably estimated. Provisions are not recognized for future operating losses. Provisions are carried at the present value of forecast payments that are expected to be required to settle the obligation, using a rate before taxes that reflects the current market assessment of the time value of money and the specific risks of the obligation. Adjustments to the provision deriving from restatements are recognized as a financial expense as they accrue.

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The Group is obliged to decommission certain facilities at the end of their useful life. For this purpose, the present value of the cost of these obligations is registered under property, plant and equipment. This estimate is revised annually so that the provision reflects the present value of future decommissioning costs, increasing or decreasing the value of the asset as the case may be. Provisions maturing within one year with no significant financial effect are not discounted. When it is expected that a portion of the payment necessary to settle the provision will be reimbursed by a third party, the reimbursement is recognized as an independent asset, provided that the collection of the reimbursement is practically certain. Contingent liabilities are considered to be potential liabilities deriving from past events, the existence of which is subject to the occurrence of one or more future events that lie outside the Group’s control. These contingent liabilities are not recorded in the consolidated financial statements and they are only disclosed in the Notes to the financial statements, unless it is probable that the use of resources is remote. Contingent assets are not recognized in the consolidated financial statements and are only disclosed when it is probable that an inflow of resources will flow to the Group. . 5.19 Settlements in regulated activities From 1998 on, Royal Decree 2017/1997 regulates the settlements of the regulated activities for the distribution of system income, and which take the form of receivables and payments to be made to other sector companies, so that each company receives the income which is actually recognised for the regulated activities. Under Law 24/2013, applicable laws recover the principles of tariff sufficiency effective from 1 January 2014, so that if a mismatch were to develop due to a shortfall of income in the year, its amount cannot be in excess of 2% of the estimated income of the system for the year. In addition, the accumulated debt due to mismatches in years after 1 January 2014 may not exceed 5% of the estimated system income for that year. Any applicable tolls or charges will be revised with respect, at least, to a total figure equivalent to the amount by which said limits are exceeded. If a negative balance arises in the settlement of regulated activities in a particular year, such mismatches will be borne by all agents in a way that is commensurate with the regulated remuneration which pertains to them. Companies will be entitled to recover the contributions for mismatches in the pertinent settlements 5 years after the year in which they take place, recognising a market interest rate. At the year-end, the definitive settlements of the 2019 year have not yet been published, although such settlements are not expected to include significant deviations as against the estimates made on the date of preparation of this report by the Group for the aforementioned years. 5.20 Revenue recognition Revenue is carried at the fair value of the consideration receivable and represents amounts receivable for goods delivered and services rendered in the ordinary course of the Group’s activities, less returns, discounts and value added tax. The Group recognises revenue when control of a good or service has been transferred to the customer, and on the basis of compliance with performance obligations to customers.

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a) Energy sales Energy sales are recognised when they have been delivered to the customer and the customer has accepted them, even if they have not been billed, or, if applicable, the services have been rendered and the collectability of the respective accounts receivable is reasonably assured. The sales figure for the year includes the estimate of the energy supplied that has yet to be invoiced. Sales are stated net discounts and the transactions between companies in the Group are eliminated. b) Distribution activity The regulatory framework applicable to Spain's electricity sector, provides a settlement procedure for the redistribution of system revenue among the agents involved; payment obligations and debt claims necessary to remunerate regulated activities (transmission, distribution and commercial management by distribution companies) are defined for each agent, as well as system costs, supply diversification and security costs, and other costs related to electricity services. Remuneration for regulated electricity transmission and distribution activities is taken to income based on the amounts allocated in the yearly Ministerial Order and is adjusted to reflect actual data, in the item “Revenue”. At the preparation date of these consolidated financial statements, the definitive settlement for 2019, 2018 and 2017 has not published, but it is not expected to give rise to significant differences with respect to the estimation made. c) Interest income Interest income is recognised using the effective interest method. d) Dividend income Dividend income is recognized in the consolidated income statement when the right to receive the dividends is established. However, if the dividends are paid out of profits generated prior to the acquisition date, they are not recognized as income but as a reduction in the carrying amount of the investment. 5.21 Leases Leases of property, plant and equipment where the Group is the lessee are recognised as right-of-use asset and a lease financial liability (Notes 5.5 and 5.22).

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Lease income from operating leases where the Group is a lessor will be classified as a finance lease when the Group transfers substantially all the risks and rewards incidental to the ownership of an underlying asset to the customer. A lease will be classified as an operating lease if substantially all the risks and rewards incidental to the ownership of an underlying asset are not transferred. − Operating leases: Operating lease payments will be recognised as income in the lessor's income statement on a straight-line basis over the lease term unless another allocation basis reflects, more representatively, the distribution pattern of the benefit gained from the use of the underlying asset. − Finance leases: The Group will recognise in the consolidated balance sheet the assets held under a finance lease as a receivable for an amount equal to the net investment in the lease, using the interest rate implicit in the lease contract for measurement purposes. The lessor will subsequently recognise the financial income over the term of the lease in such a manner as to obtain a constant interest rate in each period on the net investment outstanding under the lease (the leased asset). It will apply the lease payments against the gross investment to reduce both the principal and the accrued financial income. When a contract includes both lease and non-lease components, the Group applies IFRS 15 criteria to allocate the consideration under the contract to each component.

5.22 Lease financial liabilities At the inception date of the lease, the Group recognises the lease liability at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if this cannot be readily determined, the incremental lending rate. The incremental interest rate for financing used by the Group is differentiated based on the portfolio of similar leases, country and contract term. The average weighted incremental interest rate on the date of 2019 is 5%. The lease payments to be made will include fixed payments less any incentives, variables that depend on an index or a rate, and residual value guarantees expected to be incurred, the exercise price of a purchase option if that option is expected to be exercised, and penalty payments for terminating the lease if the lease term reflects that the lessee will exercise an option to terminate the lease. Any other variable payments are excluded from the measurement of the lease liability and right-of-use asset. Subsequently, the lease financial liability will be increased by the interest on the lease liability and reduced by the payments made. The liability will be remeasured if there are changes in the amounts payable and the terms of the lease. 5.23 Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously.

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5.24 Segment reporting The directors have defined operating segments based on and consistently with the information submitted to the Board of Directors of the Group, which is the ultimate decision-making authority. The Board of Directors analyses the business comprising three operating segments: holding, distribution and renewables. 6 Intangible assets Set out below are the movements in the financial statements recorded under Intangible assets:

2019 Goodwill Development Computer software Concessions

Other rights

Intangible assets under constructions Total

COST

Balance at 31.12.2018 41,533 551 83,448 26,041 561 7,754 159,888

Additions - - - - 344 9,705 10,049

Transfers - 49 15,758 - 2,062 (15,807) 2,062

Balance at 31.12.2019 41,533 600 99,206 26,041 2,967 1,652 171,999 ACCUMULATED DEPRECIATION

Balance at 31.12.2018 - (548) (58,545) (13,925) (486) - (73,504)

Additions - (10) (6,146) (1,191) (25) - (7,372)

Balance at 31.12.2019 - (558) (64,691) (15,116) (511) - (80,876)

IMPAIRMENT

Opening balance - - - - - (252) (252)

Closing balance - - - - - (252) (252) Net Balance at 31.12.2019 41,533 42 34,515 10,925 2,456 1,400 90,871

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2018 Goodwill Development Computer software Concessions

Other rights

Intangible assets under constructions Total

COST

Balance at 01.01.2018 41,533 551 74,977 26,018 561 6,495 150,135

Additions - - - - - 9,730 9,730

Transfers - - 8,471 23 - (8,471) 23

Balance at 31.12.2018 41,533 551 83,448 26,041 561 7,754 159,888 ACCUMULATED DEPRECIATION

Balance at 01.01.2018 - (529) (54,333) (12,735) (461) - (68,058)

Additions - (19) (4,212) (1,190) (25) - (5,446)

Balance at 31.12.2018 - (548) (58,545) (13,925) (486) - (73,504)

IMPAIRMENT

Opening balance - - - - - (252) (252)

Closing balance - - - - - (252) (252) Net Balance at 31.12.2018 41,533 3 24,903 12,116 75 7,502 86,132

6.1. Goodwill impairment losses Management monitors goodwill at renewable energy and electricity distribution operating segment level, which is aligned with cash generating units to which goodwill is assigned. Set out below is a summary of the assignment of goodwill to each operating segment: Thousand euro Distribution 21,739 Renewables 19,794 Total 41,533 In order to analyse goodwill impairment, the Group’s management calculated the recoverable amounts based on the CGU impairment test analisys: Distribution The recoverable amount has been determined through a calculation of value-in-use, using cash flow projections based on the budgets approved by Management for the coming 5 years and for subsequent periods the estimated projections are based on the application of the current regulatory framework detailed in Note 2, considering projections during a period in line with the remaining useful life of the assets. The projections included remuneration approved for the years for which the information is available, and estimates of the adjustment in the remuneration according to the draft bill published in December 2019, which establishes the remuneration rates on regulated activities, for subsequent years (Note 2). Additionally, investment plans were taken into consideration reflecting estimated future growth in remuneration and the best estimate available of operating and maintenance costs, ensuring consistency with the remuneration assumed to be receivable each year.

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A pre-tax discount rate of 5,56% (2018: 5.83%) was used in the impairment test. The calculation of the discount rate consists of adding the specific risks affecting the asset or the risk premium for the asset or business in question to the value of money over time or the risk-free rate. The risk-free rate is that applicable to 10-year sovereign debt issues by countries with a credit rating that is similar to Spain with consistent long-term inflation outlooks in accordance with available sources, while the risk premium for the asset relates to the specific risks affecting the asset and the calculation takes into consideration the estimated betas for comparable companies that carry out the same activity. The impairment test performed did not reveal the existence of any impairment. The Group has applied several sensitivity analyses that included reasonable changes in a series of basic assumptions used in the impairment test. - An increase of 100 basis points in the applicable discount rate. - A 10% decline in the estimated regulated remuneration. These sensitivity analyses performed independently for each assumption would not reveal the existence of any impairment. Renewables The recoverable amount has been determined in accordance with value-in-use calculations that Group Management evaluates at the end of each year using cash flow projections based on past results, market outlooks and the budgets approved by Management that cover the useful lives of the projects (CGU). Projections of electricity selling prices were estimated based on third-party studies and investment remuneration has been calculated applying sector regulations published in Order ETU/130/2017 (17 February) and the draft bill which establishes the remuneration rates on regulated activities (Note 2). Additionally, the best estimate available of operating and maintenance costs was taken into consideration, ensuring consistency with the remuneration assumed to be receivable each year. A pre-tax discount rate of 5,86% (2018: 6.11%) was used in the impairment test. The calculation of the discount rate consists of adding the specific risks affecting the asset or the risk premium for the asset or business in question to the value of money over time or the risk-free rate. The risk-free rate is related to the emission of 10-year sovereign debt of countries with credit rating similar to Spain and consistent with the expectations of long-term inflation according to available sources, while the risk premium for the asset relates to the specific risks affecting the asset and the calculation takes into consideration the estimated betas for comparable companies that carry out the same activity. The impairment test performed did not reveal the existence of any impairment of goodwill.

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The Group has applied several sensitivity analyses that included reasonable changes in a series of basic assumptions used in the impairment test. - An increase of 100 basis points in the applicable discount rate. - A 10% increase in operating expenses projected. These sensitivity analyses performed independently for each assumption would not reveal the existence of any material impairment. 6.2. Impairment losses on individual intangible ass ets During the period ended 31 December 2019 and 31 December 2018 no impairment adjustments to individual intangible assets were recognized or reversed. 6.3. Concessions The breakdown is as follows:

Description and use 2019

Thousand euro s Expiration

date Amortisation

date Amortisation Cost Accumulated

amortisation Carrying Amount

Interconnection rights Mallen 2021 10 years (203) 3.022 (2.768) 254 Interconnection rights Hiperion 2036 25 years (134) 3.358 (1.142) 2.216 Interconnection rights La Victoria 2036 25 years (123) 3.002 (1.051) 1.951 Interconnection rights Sierra de Tineo 2034 24 years (136) 3.233 (1.291) 1.942 Interconnection rights Bodenaya and Pico Gallo 2016-2020 6 – 10 years (128) 4.208 (4.156) 52 Interconnection rights Barlavento 2011 – 2023 1 – 14 years (354) 6.694 (3.592) 3.102 Interconnection rights Sul Energía 2014 - 2029 15 – 20 years (47) 920 (521) 399 Land rights 2036 25 years (27) 632 (255) 377 Interconnection rights Matabuey 2046 25 years (39) 972 (340) 632 (1.191) 26.041 (15.116) 10.925

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Description and use 2018

Thousand euro Expiration

date Amortisation

date Amortisation Cost Accumulated

amortisation Carrying Amount

Interconnection rights Mallen 2021 10 years (203) 3,022 (2,565) 457 Interconnection rights Hiperion 2036 25 years (134) 3,358 (1,007) 2,351 Interconnection rights La Victoria 2036 25 years (122) 3,002 (929) 2,073 Interconnection rights Sierra de Tineo 2034 24 years (135) 3,233 (1,156) 2,077 Interconnection rights Bodenaya and Pico Gallo 2016-2020 6 – 10 years (128) 4,208 (4,027) 181 Interconnection rights Barlavento 2024 - 2029 15 – 20 years (355) 6,694 (3,238) 3,456 Interconnection rights Sul Energía 2024 - 2029 15 – 20 years (47) 920 (474) 446 Land rights 2036 25 years (27) 632 (228) 404 Interconnection rights Matabuey 2046 25 years (39) 972 (301) 671 (1,190) 26,041 (13,925) 12,116

At 31 December 2019 the Group has tested the CGUs for impairment as described in Note 5.7. There has been no impairment in respect of concessions at 31 December 2019 and 2018 since, if goodwill has been assigned to the operating segment, impairment will be recognized on the goodwill amount first. 6.4. Intangible assets acquired from Group companie s Investments in intangible assets acquired from group companies and associates during the year ended 31 December 2019 are €727 thousand (2018: €383 thousand), corresponding to computer software. 6.5. Other information At 31 December 2019 and 2018 fully amortised intangible assets with a carrying value of €44,245 thousand are still in use (2018: €43,863 thousand). At 31 December 2019 and 2018 there are no significant intangible assets subject to ownership restrictions or pledged to secure liabilities. The Group has taken out various insurance policies to cover the risks facing its intangible assets. The cover provided by these policies is considered sufficient.

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7 Property, plant and equipment The breakdown and movements in the items included under property, plant and equipment are as follows:

2019 Land and Buildings

Operating offices and

control centers Plant and

Equipment

Other property plant and

equipment

Under construction

and advances Total

COST

Balance at 31.12.2018 37,461 103,447 2,083,014 15,052 46,234 2,285,208 Additions 52 970 2,885 6 50,819 54,732 Disposals (624) - (84) (21) - (729) Transfers 4,930 6,268 44,401 768 (56,367) - Balance at 31.12.2019 41,819 110,685 2,130,216 15,805 40,686 2,339,211 ACCUMULATED DEPRECIATION Balance at 31.12.2018 (10,737) (57,772) (964,560) (11,063) - (1,044,132) Additions (1,009) (3,492) (64,870) (526) - (69,897) Disposals 423 - 45 21 - 489 Transfers - - - - - - Balance at 31.12.2019 (11,323) (61,264) (1,029,385) (11,568) - (1,113,540) IMPAIRMENT ADJUSTMENTS Balance at 31.12.2018 - - (130) (175) (4,674) (4,979) Additions - - (507) - - (507) Balance at 31.12.2019 - - (637) (175) (4,674) (5,486) Net Balance at 31.12.2019 30,496 49,421 1,100,194 4,062 36,012 1,220,185

2018 Land and Buildings

Operating offices and

control centers Plant and

Equipment

Other property plant and

equipment

Under construction

and advances Total

COST

Balance at 01.01.2018 37,091 89,062 2,140,571 14,333 40,855 2,321,912 Additions - 192 5,877 86 59,075 65,230 Disposals (346) - (101,409) (156) - (101,911) Transfers 716 14,193 37,975 789 (53,696) (23) Balance at 31.12.2018 37,461 103,447 2,083,014 15,052 46,234 2,285,208 ACCUMULATED DEPRECIATION Balance at 01.01.2018 (9,946) (55,274) (1,001,884) (10,724) - (1,077,828) Additions (1,003) (2,498) (63,753) (464) - (67,718) Disposals 212 - 101,055 147 - 101,414 Transfers - - 22 (22) - - Balance at 31.12.2018 (10,737) (57,772) (964,560) (11,063) - (1,044,132) IMPAIRMENT ADJUSTMENTS Opening balance - - (1,397) (175) (4,674) (6,246) Disposals - - 1,267 - - 1,267 Closing balance - - (130) (175) (4,674) (4,979) Net Balance at 31.12.2018 26,724 45,675 1,118,324 3,814 41,560 1,236,097

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Included within additions for the period ended 31 December 2019 is €12,101 thousand arising from the work performed by the company for its fixed assets (2018: €11,521 thousand). In 2018, the Group derecognised from its consolidated statement of financial position items and installations that had been fully depreciated in previous years, since the developments made in its management systems had enabled it to start carrying out this type of action with certainty. Such retirements totalled €100,625 thousand. No signficant derecognised were made in 2019. The additions to property, plant and equipment relate mainly to investments made in the distribution segment. 7.1. Impairment losses The Group carries out impairment tests on its property, plant and equipment for each facility or CGU. This analysis takes into account the tangible and intangible assets associated with each facility. Refer to note 6 for information regarding the methodology, key assumptions and sensitivity analysis in relation to the CGU impairment testing process for renewables and distribution operating segments. 7.2. Other information At 31 December 2019, fully-depreciated buildings with an original cost of €471 thousand are still in use (2018: €471 thousand). The cost of other fully-depreciated property, plant and equipment still in use amounts to €84,876thousand (2018: €84,876 thousand). Grants and donations received during the year in connecion with property, plant and equipment amounted 7,606 (2018: €16,727 thousand) Operating lease expense incurred during 2019 amounts to €600 thousand (2018: €1,357 thousand).

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The Group has arranged minimum instalments under non-cancellable minimum operating leases with lessors for the lease of industrial premises in the municipality of Tineo and the lease of land where the windfarms are located.

Description and use Up to 1 year 1 to 5 years More than 5

years Total Warehouse Tineo 137 549 824 1,510

Land lease Bodenaya 3 14 48 65

Land lease Hiperion 68 271 1,764 2,103

Land lease Mallen 101 404 1,092 1,597

Land lease Matabuey 63 250 795 1,108

Land lease Mingorrubio 141 566 6,466 7,173

Land lease Victoria 221 883 1,325 2,429 Warehouse Santa Comba 22 - - 22 Warehouse / Office Paxareiras 7 - - 7

Land lease BSJ 217 867 1,095 2,179

Land lease EDC 34 136 238 408

Land lease Pico Gallo 70 280 210 560

Land lease IE2 Portugal 36 - - 36

Warehouse Curiscada 22 86 86 194

Land lease others 4 17 54 75 1,146 4,323 13,997 19,466

The Group has taken out a number of insurance policies to cover risks relating to property, plant and equipment. The cover provided by these policies is considered sufficient. 7.3 Property, plant and equipment adquired from Gro up companies Investments in Property, plant and equipment acquired from group companies and associates during the year ended 31 December 2019 are €45 thousand (2018: €31 thousand). 8 Right-of-use assets Movements in 2019 in right-of-use asset accounts and the related accumulated depreciation and provisions are as follows:

Land and Buildings Vehicles Total

First aplication 01.01.2019 8,364 1,494 9,858

Additions 203 382 585

Depreciation (571) (422) (993)

Carrying amount at 31.12.2019 7,996 1,454 9,450

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9 Investments accounted for under equity method Set out below are the details of the Group´s associates:

Name of entity

% interest (1)

2019 2018 Shareholder Method of

Consolidation Activity

Place of business/ country of

incorporation Auditor

Compañía Eólica Aragonesa, S.A.

50 50 Viesgo Renovables, S.L.U.

Equity method Wind power generation

Spain PwC

Elecdey Ascoy, S.A. (2)

19.5 19.5 Viesgo Renovables, S.L.U.

At cost Wind power generation

Spain Others not

PwC Elecdey Carcelen, S.A.

23 23 Viesgo Renovables, S.L.U.

Equity method Wind power generation

Spain Others not

PwC Eólica de Levante, S.L. (2)

25 25 Viesgo Renovables, S.L.U.

At cost Wind power generation

Spain -

Eólica de Sao Juliao LDA

45 45 Viesgo Renovables, S.L.U.

Equity method Wind power generation

Portugal Others not

PwC Eos Pax IIA, S.L. 48.5 48.5 Viesgo Renovables,

S.L.U. Equity method Wind power

generation Spain Others

not PwC

Geólica Magallón, S.L.

36.24 36.24 Viesgo Renovables, S.L.U

Equity method Wind power generation

Spain PwC

Páramo de Poza, S.L. (2)

30 30 Unión de Generadores de Energía, S.L.

At cost Wind power generation

Spain Others not

PwC San Juan de Bargas Eólica, S.L

47.01 47.01 Viesgo Renovables, S.L.U

Equity method Wind power generation

Spain PwC

Unión de Generadores de Energía, S.L.

50 50 Viesgo Renovables, S.L.U

Equity method Wind power generation

Spain -

(1) Represents the parent company’s equity interest in the associate which equals its proportion of voting rights held.

(2) Not consolidated as they are not of significant interest for the true and fair view of the consolidated financial statements. The carrying amount of the Group´s associates is as follows: Thousand euro 2019 2018 Company Eos Pax IIA, S.L. 1,429 2,081 Compañía Eólica Aragonesa, S.A. 31,577 34,663 San Juan de Bargas Eólica, S.L. 4,143 5,641 Geólica Magallón, S.L. 1,768 3,596 Elecdey Carcelen, S.A. 1,874 3,152 Eólica de São Julião LDA 2,201 1,829 Unión de Generadores de Energía, S.L. - - 42,992 50,962 All the Group´s investments are private entities. Therefore, they are not listed companies.

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The rollforward of this line item during the annual period ended 31 December 2019 and 2018 is as follows: Thousand euro 2019 Balance at 1 of January 50,962 Share of profits 3,756 Dividends collected (11,726) Balance at 31 December 42,992 Thousand euro 2018 Balance at 1 of January 48,371 Share of profits 12,229 Dividends collected (9,638) Balance at 31 December 50,962 The share of profit (loss) attributable to equity method investments includes certain adjustments for the standardisation of the Group’s accounting policies.

2019 Eos Pax IIA, S.L.

Compañía Eólica

Aragonesa, S.A.

(CEASA)

San Juan de Bargas Eólica,

S.L. (SJB)

Geólica Magallón

, S.L. (GMII)

Elecdey Carcelen

, S.A.

Eólica de São Julião LDA (ESJ)

Unión de Generadore

s de Energía,

S.L. (UGE) Summarized Balance Sheet Non-current assets 1,676 64,498 9,582 7,163 12,735 9,785 882

Current assets 4,627 7,794 2,528 2,962 2,565 13,513 222

Non-current liabilities (419) (7,067) (646) (705) (5,521) (16,738) (1,063)

Current liabilities (2,937) (2,071) (2,649) (4,541) (1,631) (1,669) (41)

Net assets 2,947 63,154 8,815 4,879 8,148 4,891 -

Reconciliations to carrying amount

Opening Net Assets 4,291 69,326 12,000 9,923 13,704 4,064 -

Profit/(loss) for the year 1,155 - 1,815 2,889 (1,939) 3,827 40

Dividends paid (2,499) (6,172) (5,000) (7,933) (3,617) (3,000) (40)

Closing net assets 2,947 63,154 8,815 4,879 8,148 4,891 -

Group’s share in % 48.50% 50.00% 47.01% 36.24% 23.00% 45.00% 50.00%

Group's share 1,429 31,577 4,144 1,768 1,874 2,201 -

Carrying amount 1,429 31,577 4,144 1,768 1,874 2,201 -

Summary of statement of comprehensive income

Revenue 3,919 19,262 6,321 7,296 5,860 11,514 - Profit/(loss) for the year from continuing operations 1,155 - 1,815 2,889 (1,939) 3,827 40 Profit for the year and other comprehensive income 1,155 - 1,815 2,889 (1,939) 3,827 40

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2018 Eos Pax IIA, S.L.

Compañía Eólica

Aragonesa, S.A.

(CEASA)

San Juan de Bargas Eólica,

S.L. (SJB)

Gea Magallón II, S.L. (GMII)

Elecdey Carcelen

, S.A.

Eólica de São Julião LDA (ESJ)

Unión de Generadore

s de Energía,

S.L. (UGE) Summarized Balance Sheet Non-current assets 2,356 73,416 10,957 9,756 17,181 13,815 1,239 Current assets 2,987 6,113 4,847 7,657 4,034 11,628 239 Non-current liabilities (424) (7,391) (646) (2,198) (4,905) (19,960) (1,467) Current liabilities (628) (2,812) (3,158) (5,298) (2,605) (1,419) (11)

Net assets 4,291 69,326 12,000 9,917 13,705 4,064 -

Reconciliations to carrying amount

Opening Net Assets 4,480 69,676 9,177 8,116 10,300 3,862 - Profit/(loss) for the year 1,911 10,226 5,122 4,291 3,404 3,202 - Dividends paid (2,100) (10,576) (2,299) (2,484) - (3,000) -

Closing net assets 4,291 69,326 12,000 9,923 13,704 4,064 -

Group’s share in % 48.50% 50.00% 47.01% 36.24% 23.00% 45.00% 50.00% Group's share 2,081 34,663 5,641 3,596 3,152 1,829 -

Carrying amount 2,081 34,663 5,641 3,596 3,152 1,829 -

Summary of statement of comprehensive income

Revenue 4,921 19,451 6,385 7,806 6,585 10,335 - Profit/(loss) for the year from continuing operations 1,911 10,226 5,122 4,291 3,404 3,202 - Profit for the year and other comprehensive income 1,911 10,226 5,122 4,291 3,404 3,202 -

There are no investments of less than 20% ownership where it has been concluded that there is significant influence. Nor are there any investments with over 20% ownership where it has been concluded that there is no significant influence.

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10 Financial instruments 10.1. Analysis by category The carrying amount of each category of financial instruments described in the Accounting policies notes for “Financial assets” and “Financial liabilities” is as follows:

Thousand euro 2019 2018

Non-current financial assets: Financial assets at amortised cost :

- Loans to related parties (Note 11, 26.1) 1,099,264 1,030,985 - Loans to third parties (Note 11) 773 820 - Other financial assets (Note 11) 18,683 18,927

Financial assets at fair value through profit or lo ss: - Other financial assets 1,093 1,093 - Derivatives financial instruments (Note 19) 307 65

1,120,120 1,051,890 Current financial assets: Financial assets at amortised cost :

- Trade and other receivables (Note 11) 72,645 60,534 - Trade receivable to related parties ((Note 11, 26.1) 624 2,154 - Loans and otrher financial assets to related parties (Note 11, 26.1) 104,523 72,614 - Deposits and guarantees (Note 11) 39 33 - Cash and cash equivalents (Note 13) 52,022 4,439

Financial assets at fair value through profit or lo ss: - Derivatives financial instruments (Note 19) 4,667 -

234,520 139,774 Total financial assets 1,354,640 1,191,664

Thousand euro 2019 2018

Non-current financial liabilities: At amortised cost :

- Borrowings and other payables (Note 18) 1,083,177 1,074,595

Held for trading: - Derivatives financial instruments (Note 19) - 3,885

1,083,177 1,078,480 Current financial liabilities: At amortised cost:

- Borrowings and other payables (Note 18) 114,125 114,421 - Loans from related parties (Note 26.1) 198,234 69,787 - Trade and other payables (No Public Administrations) 43,584 52,638 - Trade payables to related parties (Note 18, 26.1) 7,001 6,049

Held for trading: - Derivative financial instruments (Note 19) 179 12,358

363,123 255,253 Total Financial Liabilities 1,446,300 1,333,733

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10.2. Classification by maturity date At 31 December 2019 financial instruments having fixed or determinable maturities are shown below by year of maturity: Thousand euro Financial assets

2020 2021 2022 2023 2024 Years

beyond

Total Investments in Group companies and associates:

- Loans to related parties 50,507 - - - - 1,099,264 1,149,771 - Other financial assets 54,016 - - - - - 54,016 104,523 - - - - 1,099,264 1,203,787 Loans to third panties 39 547 124 60 31 11 812 Derivative financial instruments 4,667 (237) 211 333 - - 4,974 Deposits and guarantees - - - - - - - Other financial assets - - - - - 18,683 18,683 Trade and other receivables: - Trade receivables for sales and services 31,690 - - - - - 31,690 - Other receivables 40,816 - - - - - 40,816 72,506 - - - - - 72,506 Cash and cash equivalents 52,022 - - - - - 52,022 Total 181,734 310 335 393 31 1,117,958 1,300,761 The carrying amount of short-term financial assets such as: cash and cash equivalents, trade receivables and other receivables and loans and other receivables are similar to their fair values due to their short-term maturity.

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Thousand euro Financial liabilities

2020 2021 2022 2023 2024 Years

beyond

Total Debts : - Bonds (10,381) - - (497,883) - (554,582) (1,062,846) - Promissory notes (98,050) - - - - - (98,050) - Bank borrowings (646) - - - - - (646) - Finance lease liabilities (973) (816) (593) (550) (484) (6,295) (9,711) - Derivatives (179) - - - - - (179) - Other financial liabilities (4,075) - - - - (21,974) (26,049) (114,304) (816) (593) (498,433) (484) (582,581) (1,197,481) Payables to Group companies and associates

Other payables (198,234) - - - - - (198,234) (198,234) - - - - - (198,234) Loans from related parties:

Trade and other payables

- Trade payables (7,902) - - - - - (7,902) - Other payables (42,683) - - - - - (42,683) (50,585) - - - - - (50,585) Total (363,123) (816) (593) (498,433) (484) (582,581) (1,446,300) The carrying amount of financial liabilities in the short and long term, such as trade payables and other payables, borrowings, loans from related parties and other financial liabilities are similar to their fair values because interest rates of its financing agreements do not differ significantly from the market interest rate that is available to the Group for its similar financial instruments. Other financial instruments do not have an expiration date which may be determined. In addition to the foregoing, there are future interest payments from 2020 onwards that have not been included in the table above referring to the bonds issued whose characteristics are described in note 18.

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10.3. Recognised fair value measurements Fair value hierarchy: Financial assets and liabilities recognized at fair value at 31 December are classified as follows:

2019

Note Level 1 Level 2 Level 3 Total

Financial assets

Derivatives

- Non current 19 307 307

- Current 19 4,667 4,667

Total 4,974 4,974

Financial liabilities

Derivatives

- Current 19 179 179

Total 179 179

2018

Note Level 1 Level 2 Level 3 Total

Financial assets

Derivatives

- Non current 19 - 65 - 65

Total - 65 - 65

Financial liabilities

Derivatives

- Non current 19 - 3,885 - 3,885

- Current 19 - 12,358 - 12,358

Total - 16,243 - 16,243

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There were no transfers between levels during the years 2019 and 2018. An explanation of each level follows is as follows: - Level 1: The fair value of financial instruments traded in active markets (such as publicly

traded derivatives, and trading and available-for-sale securities) is based on quoted market prices at the end of the reporting period. The quoted market price used for financial assets held by the group is the current bid price. These instruments are included in level 1.

- Level 2: The fair value of financial instruments that are not traded in an active market (for

example, over-the-counter derivatives) is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

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- Level 3: If one or more of the significant inputs is not based on observable market data, the

instrument is included in level 3. This is the case for unlisted equity securities. Valuation techniques used to determine fair values: All of the Group’s resulting fair value estimates are included in level 2. The fair value of derivatives is determined based on observable variables in an active market. Specific valuation techniques used include: - the use of quoted market prices or dealer quotes for similar instruments.

- the fair value of interest rate swaps is calculated as the present value of the estimated future

cash flows based on observable yield curves.

- the fair value of forward foreign exchange contracts is determined using forward exchange rates at the consolidated statement of fnancial position date.

- the fair value of commodity prices derivatives is determined using quoted forward price curves at the consolidated statement of financial position date.

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

11 Financial assets at amortised cost This line item breaks down as follows:

Thousand euro

2019 2018 Non-current financial assets: - Loans to Group companies and associates (Note 26.1) 1,099,264 1,030,985 - Loans to third parties 773 820 - Deposits and guarantees 18,683 18,927

1,118,720 1,050,732 Current financial assets: -Trade receivables for sales and provision of services 35,335 37,420 -Trade receivables, Group companies and associates (Note 26.1) 624 2,154 -Sundry receivables 41,370 26,751 -Receivables from employees 154 159 -Loans to group companies and associates (Note 26.1) 50,507 48,705 -Current account with Group companies and associates (Note 26.1) 54,016 23,909 -Deposits and guarantees 39 33 -Impairment provisions (4,977) (6,378)

177,068 132,753

1,295,788 1,183,485 The fair value of trade and other receivables does not differ significantly from their carrying amount.

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Movements in the provision for impairment losses on trade receivables are as follows:

Thousand euro

2019 2018 Opening balance 6,378 4,800 Net charges for the period/year (1,401) 1,578 Closing balance 4,977 6,378

The aforesaid loss of trade receivables is calculated in accordance with the methodology indicated in Note 5.8. Impairment adjustments to trade receivables are recognized and reversed in Other operating expenses - “Losses, impairment and changes in trade provisions” in the consolidated income statement. Normally the amounts charged against the impairment loss account are eliminated when no further cash is expected to be recovered. The other accounts included in “Trade and other receivables” are not impaired, since they relate mainly to the balances pending regulatory settlements that are considered to have no risk of impairment. There are no significant unprovisioned past-due amounts. The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivable mentioned above. The Group does not hold any guarantee as insurance. Trade receivables Trade receivables includes the amount of invoices receivable for energy sales activities and distribution toll invoicing. They include the estimated amount of revenue to be billed for energy and tolls provided up to 31 December. Deposits and guarantees This mainly reflects long-term guarantees and deposits and relates to the amounts deposited in the relevant "Deposit box" for the guarantees established under current legislation and received from customers at the time they contract electricity supplies. Its balancing entry is reflected under “Non-current other financial liabilities – Guarantee deposits received” (Note 18) on the liability side of the statement of financial position. Deposits are arranged for an indefinite period. Sundry receivables This mainly reflects balances receivable on the settlement of regulated distribution activities (Note 5.19). 12 Inventories Group inventories refer mainly to raw materials and other supplies from the subsidiaries Viesgo Distribución Électrica, S.L.U. and Barras Eléctricas Galaico Asturianas, S.A. There are no firm commitments to buy or sell stocks at 31 December 2019 (equal in 2018).

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At year end the group did not book any impairment (equal in 2018). The Group has taken out several insurance policies covering the risks facing inventories. The cover provided by these policies is considered sufficient. 13 Cash and equivalents For the purposes of the cash flow statement, cash and cash equivalents include:

Thousand euro 2019 2018 Bank current accounts 52,022 4,439 52,022 4,439 There are no restrictions on the availability of these balances. 14 Shareholders funds 14.1. Capital Capital is made up of 60,000 shares with a par value of €1 each. At 31 December 2019 and 2018 an amount of €45 thousand are undisbursed. The single shareholder of the Company is Viesgo Infraestructuras Energéticas, S.L.U. (Note 1). The parent Company shares are not listed on the stock exchange. 14.2. Shareholder contributions Shareholder contributions were received by non-monetary contribution of the shares and loans indicated in Note 1. 14.3. Reserves

2019 2018 Parent company reserves 93,173 113,322

Reserves in consolidated companies 53,786 42,386

Reserves in investments accounted for under equity method 338 5,493

147,297 161,201

14.4 Interim dividend Under the resolution adopted by the Board of Directors dated 30 September 2019, an interim dividend was distributed to the shareholder of the parent Company for a total amount of €95,000 thousand (2018: €116,220 thousand).

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This dividend gave rise to a cash outflow of €0 thousand for the Group. The remainder of the amount distributed was paid by means of a debt offset with Viesgo Infraestructuras Energéticas, S.L.U. and, therefore, for the purposes of presentation in the consolidated cash flow statement it did not give rise to a cash outflow. 15 Non-controlling interests A breakdown and rollforward of this line item by company is as follows:

2019 Parque Eólico

Barlavento, S.A. (PEB) Total Balance at 1 January 201 9 3,200 3,200 Profit for the period 532 532 Dividends (448) (448) Balance at 31 December 201 9 3,284 3,284

2018 Parque Eólico

Barlavento, S.A. (PEB) Total Balance at 1 January 201 8 3,038 3,038 Profit for the period 462 462 Dividends (300) (300) Balance at 31 December 201 8 3,200 3,200 16 Deferred income

Movements in grants are analysed below:

2019

Opening balance Additions

Disposals and

transfers

Transfers to the income statement

Closing balance

Non-repayable grants 297,051 10,279 (3,236) (13,930) 290,164

Related to connection rights 23,165 578 (15) (1,087) 22,641

Total 320,216 10,857 (3,251) (15,017) 312,805

2018

Opening balance Additions

Disposals and

transfers

Transfers to the income statement

Closing balance

Non-repayable grants 294,826 19,363 (3,486) (13,652) 297,051

Related to connection rights 23,393 855 (5) (1,078) 23,165

Total 318,219 20,218 (3,491) (14,730) 320,216

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Non-repayable grants mainly include grants awarded by Regional Authorities for work carried out under quality improvement plans and voltage control plans. Such grants are subject to certain conditions imposed by the grantors mainly in relation to the execution of investments within the envisaged periods. The grants related to Connection rights include, in addition to facilities assigned by third parties, other grants received from third parties to finance fixed assets and amounts related to extension rights. The Group's Directors consider that at the period/year end, such commitments have been met and therefore grants are classified as non-repayable. 17 Provisions and contingencies At 31 December provisions break down as follows:

Thousand euro 2019 2018

Non-current:

Decomissioning 20,968 19,395 Other provisions 44,659 38,964 65,627 58,359

Current:

Other provisions 6,142 7,964 6,142 7,964

Total provisions 71,769 66,323 Other provisions This includes the provisions established to cover obligations deriving from tax claims, environmental litigations and regulatory risks as described in Note 5.18. Specifically, the Provision for litigations includes risks for sundry claims filed against the Group by customers and third parties for sundry damages and regulatory risks. The rollforward in other provisions during the annual period ended 31 December is as follows: 2019 Thousand euro

Non-current Opening balance Additions Disposals Applications

Transfers

Closing balance

Decomissioning (19,395) (1,577) 4 - - (20,968) Other provisions (38,964) (8,042) 1,551 790 6 (44,659) Total (58,359) (9,619) 1,555 790 6 (65,627)

Thousand euro

Current Opening balance Additions Disposals Applications

Transfers

Closing balance

Environmental actions (53) - - - - (53) Other provisions (7,911) (140) 1,410 7 545 (6,089) Total (7,964) (140) 1,410 7 545 (6,142)

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2018 Thousand euro

Non-current Opening balance Additions Disposals Applications

Transfers

Closing balance

Decomissioning (18,635) (764) 4 - - (19,395) Other provisions (40,291) (15,546) 10,383 1,508 4,982 (38,964) Total (58,926) (16,310) 10,387 1,508 4,982 (58,359)

Thousand euro

Current Opening balance Additions Disposals Applications

Transfers

Closing balance

Environmental actions (53) - - - - (53) Other provisions (2,929) - - - (4,982) (7,911) Total (2,982) - - - (4,982) (7,964) As far as non-current provisions are concerned, due to the characteristics of the risk involved, it is not possible to estimate a reasonable payment timeline. Provisions are included to cover the liabilities deriving from dismantling, restoration and other costs related to electricity renewable generation facilities amounting to €13,690 thousand at 31 December 2019 (2018: €12,117 thousand). 18 Borrowings and other payables

2019 2018 Non- current financial liabilities:

Bonds and other marketable securities 1,052,465 1,052,720 Guarantee deposits received 21,974 21,860 Financial lease liabilities 8,738 15

1,083,177 1,074,595 Current financial liabilities:

Bonds and other marketable securities 98,601 102,000 Interest from bonds 10,476 10,491 Sundry payables 40,738 48,590 Other payables to related parties (Note 26.1) 198,234 69,787 Trade payables to related parties (Note 26.1) 7,001 6,049 Fixed asset suppliers 4,075 1,815 Customer paids in advance 308 307 Staff creditors 1,637 2,487 Financial lease liabilities 973 115 Trade payables 901 1,254

362,944 242,895 1,446,121 1,317,490

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Bank borrowings At 31 December 2019 and 2018 there are a RCF (credit facility) fully undrawn totaling €125,000 thousand (2018: €125,000 thousand), and two credit lines fully undrawn totaling €25,000 thousand each (2018: €25,000 thousand each). Bonds and other marketable securities The company IE2 Holdco, S.A. is the issue vehicle for the Group's Euro Medium-Term Note Program secured by Viesgo Holdco, S.A. This program was established on 11 November 2015 and allows for an issue of principal of up to €2,000 million. At 31 December 2015 a total of €500 million in principal was drawn down as a result of an issue that took place on 27 November 2015. The issue is listed on GEM (Irish Stock Exchange), it matures in 2023 and accrues interest at a rate of 2.375%. During 2016, an additional amount of €550 million in principal was drawn down, as a result of an issue that took place on 1 June 2016 and another issue on 28 June 2016. The issue took place and is listed on the GEM (Irish Stock Exchange), it matures in 2026 and accrues an interest rate of 2.875%. At 31 December 2019 there is outstanding interest payable totalling €10,381 thousand classified as Current financial debt (2018: €10,410 thousand). This bond is subject to ratio compliance clauses and therefore the Group is required to attain certain key performance indicators each year. Management believes that there have been no failures to comply with the established ratio conditions or with any other obligations under the program at 31 December 2019. The fair value of that issue at 31 December 2019 is approximately €1,146,255 thousand (2018: €1,090,918 thousand). At 27 September 2017, the company established the Euro Commercial Paper (ECP) programme in the GEM (Irish Stock Exchange), allowing it to draw on a principal of up to €300 million. At 31 December 2019, a total principal of 98 million euros (2018: €102 million) has been drawn, for the different issues made and listed on the GEM (Irish Stock Exchange), maturing between one and twelve months. The Group expects to make further issues on maturity. The ECP accrues an average interest rate of -0.13142% (2018: -0.04266%). At 31 December 2019 and 2018, no outstanding interests have been accrued. Cash flows corresponding to collections/payments from bonds and promissory note issues/ maturities are 383,800 thousand and 387,750 thousand, respectively.

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Sundry payables This heading includes an amount pending settlement from regulated activities of 26,177 thousand euros (29,459 thousand euros in 2018). Guarantee deposits received This relates in full to customer deposits in Viesgo Distribución Electrica, S.L.U. and Barras Eléctricas Galaico Asturianas, S.A. The Group receives deposits from commercial customers under the contracts signed for the service rendered. These deposits are returned on the termination of the contract with each customer (Note 10).

19 Derivatives

Details of the derivative positions at 31 December 2019, classified based on their origin, are as follows: Thousand euro 2019 2018 Assets: Non-current Energy swaps 307 - Interest rate swaps - 65 Current financial assets Energy swaps 4,667 - 4,974 65 Liabilities: Non-current financial liabilities Energy swaps - (3,885) Current Energy swaps - (11,857) Interest rate swaps (179) (501) (179) (16,243) All these financial instruments have been designated as held for trading. The fair values of these financial instruments are reflected as financial assets or liabilities and charged or credited to the income statement as explained in Notes 5.9 and 5.13. The Group has obtained an interest rate derivative agreement as part of the obligations for the notes issued on the GEM (Irish Stock Exchange) described in Note 18. The notional hedged amount is €52,500 thousand at an interest rate of 0.3115% (2018: €52,500 thousand at an interest rate of 0.3115%). During the year the derivative gave rise to an income totalling €256 thousand as a result of its fair value recognition at 31 December 2019 (2018: €156 thousand), which was recorded under the heading "Net change in fair value of financial instrument through profit or loss". The notional amount contracted at 31 December 2019 of electricity swaps totals 65,779 thousand (2018: €86,138 thousand).

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Net profit of €20,716 thousand from fair value changes in unsettled energy swaps, recorded under the heading “Other operating income” (2018: Net loss of €20,986 thousand from fair value changes in unsettled energy swaps recorded under the heading “Other operating expenses”). The settlement of the energy swaps in 2019 entailed an income of €1,130 thousand recorded in Revenue (2018: expense of €7,112 thousand). 20 Taxes 20.1 Tax receivables and payables The detail of the balances relating to tax assets and liabilities is as follows: 2019 2018 Non-current Deferred income tax assets (Note 20.3) 73,796 73,325 Current Other credits with public authorities

Corporate income tax refundable 2,500 2,889 VAT 5 4 2,505 2,893

76,301 76,218 Non-current Deferred income tax liabilities (Note 20.3) 11,734 11,158 Current Other debts with public authorities

Personal income tax 432 462 Corporate income tax 2,195 1,918 VAT 477 278 Social Security 579 549 Other 2,394 1,766

6,077 4,973 17,811 16,131 EI2 Inversiones Globales Empresariales, S.L. is including in the tax group 391/08 for Corporate Income Tax, Viesgo Infraestructuras Energéticas, S.L. is the representive company and comprising the following companies: Companies Companies Viesgo Distribución Eléctrica, S.L.U. Viesgo Europa, S.L.U. Viesgo Producción, S.L.U. Viesgo Renovables, S.L.U. Viesgo Mantenimiento, S.L.U Northeolic Monte Buño, S.L. IE2 Holdco, S.A.U. IE2 Innovación, S.L.U Viesgo Holdco, S.A.U. IE2 Inversiones Globales Empresariales, S.L.U. Barras Eléctricas Galaico Asturianas, S.A.

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Viesgo Infraestructuras Energéticas, S.L. during 2019 is a head company in the VAT Group number 119/11. Since 2020 IE2 Inversiones Globales Empresariales is a head company of VAT Group. The Group records a balance with the parent of the group of entities that apply the special regime for VAT (Viesgo Infraestructuras Energéticas, S.L.) amounting to €1,547 thousand (2018: €1,706 thousand net payable), net receivable on VAT consolidation, and €103,305 thousand payable and €52,672 thousand receivable with Viesgo Infraestructuras Energéticas as the represent at entity of the Tax Consolidation Group (2018: €67,980 thousand payable and €23,909 thousand receivable), net payable on corporate income tax consolidation. These balances are not recognized in the breakdown of debts with the Public Authorities since they relate to the group. €35,250 thousand relates to corporate income tax for 2019 and the remainder to balances outstanding from prior years. Similarly, in 2018 the amount outstanding for corporate income tax for the year was €27,899 thousand, the remaining balance corresponding to previous years. The tax audit referred to the following taxes and periods concluded on July 2019:

Tax Periods Corporate income tax 2012 to 2015 VAT April 2013 to December 2015 Withholdings/Prepayment: Movable capital: April 2013 to December 2015 Withholdings/Prepayment: Income from work April 2013 to December 2015 Withholdings/Prepayment: Property rentals April 2013 to December 2015 Prepayments: Tax on non-residents April 2013 to December 2015 After the conclusion of the referred tax audit, the Group has the following taxes and fiscal years open for inspection:

Tax Periods Corporate income tax From 2016

VAT From 2016 Personal Income Tax From 2016

Other taxes Last 4 years The Group's directors consider that all the aforementioned taxes have been adequately assessed and therefore, in the event of any tax audit no significant amount would arise. No provisions have been established in relation to these inspections. 20.2 Calculation of income tax Corporate income tax expense breaks down as follows:

2019 2018 Current income tax (35,250) (27,899) Deferred income tax (1,327) (753) (36,577) (28,652) Current income tax is calculated using tax rate applicable for each companies considering local regulations. Applicable tax rate for companies domiciled in Spain, where the Group has its main operations, is 25%.

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Reconciliation of income tax expense

2019 2018 Profit/(loss) before income tax expense 175,380 136,807 Tax at the group tax rate of 25% base (43,845) (34,202) Tax effect of amounts which are not deductible (taxable) in calculating tax:

- Non computable income from consolidation adjustments 887 3,057 - Permanent differences 1,957 (990) - Other 4,424 3,483

Income tax expense (36,577) (28,652) Consolidation adjustments relate mainly to the elimination of the results of equity-method companies. Other adjustments include mainly adjustments for the application of the tax consolidation regime and prior years' tax adjustments. 20.3 Deferred tax assets and liabilities A breakdown of and movement in deferred income taxes are as follows:

2019 Opening balance

Income Statement Equity

Closing balance

Deferred tax assets Provision for other liabilities and other 16,294 2,537 - 18,831 Provisions for pensions 42,436 (1,407) 1,222 42,251 Non-deductible depreciation/amortisation 6,305 160 - 6,465 Tax credit for tax-loss carry forward and deductions 8,290 (2,041) - 6,249 73,325 (751) 1,222 73,796 Deferred tax liabilities Reinvestment of capital gains (606) 33 - (573) Accelerated depreciation Royal Decree - Law 3/1993 (5,653) 336 - (5,317) Goodwill (4,175) (219) - (4,394) Other (724) (726) - (1,450) (11,158) (576) - (11,734)

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2018 Opening balance

Income Statement Equity

Closing balance

Deferred tax assets Provision for other liabilities and other 14,993 1,301 - 16,294 Provisions for pensions 43,033 347 (944) 42,436 Non-deductible depreciation/amortisation 7,283 (978) - 6,305 Tax credit for tax-loss carry forward and deductions 8,290 - - 8,290 73,599 670 (944) 73,325 Deferred tax liabilities Reinvestment of capital gains (635) 29 - (606) Accelerated depreciation Royal Decree - Law 3/1993 (5,974) 321 - (5,653) Goodwill (3,126) (1,049) - (4,175) Other - (724) - (724) (9,735) (1,423) - (11,158) In accordance with current legislation, tax losses may be offset for tax purposes against profits presumably arising in future years within the periods established in applicable legislation, where warranted. Deferred income tax assets are recognized for tax loss carryforwards to the extent that the realization of the related tax benefit through future taxable profits is probable. At the end of each year, the Group assesses the deferred tax assets recognized and those not recognized previously in the Viesgo tax group in Spain. This assessment is based on approved budgets and cash flow projections according to which, the deferred income tax assets would be realized within the period prescribed by the accounting and tax rules. On the basis of such assessment, the Group writes off a previously recognized asset if its recovery is no longer probable or reflects a deferred income tax asset not previously recognized provided that the tax Group has future taxable income enabling its application. The Group´s tax loss carry forwards breakdown is as follows: Gross figures Generated before the tax group 10,624 From the tax group 18,342 28,966 Tax losses carried forward generated prior to joining the tax Group can only be offset at the time both the individual companies and the tax Group realise profits. The tax bases pending compensation have no time limit for recovery. The Group considers that there are no doubts as to the recoverability of pension-related temporary differences, since the asset may be converted into a receivable from the Administration in any event, under prevailing tax legislation.

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The Group has deductions pending for application amounting to €15,007 thousand. The generation schedule for these deductions is as follows:

Year generated Amount in thousands of euros

2004 5,821 2005 3 2006 2,857 2007 5 2008 12 2009 13 2010 195 2011 1,001 2012 864 2013 364 2014 828 2015 352 2016 915 2017 1,032 2018 745

15,007 The group also has temporary differences for the deductible limit of financial expenses pending application and not capitalised for the sum of €14,807 thousand. The Group has capitalised in the statement of financial position the amount of tax bases, temporary differences and deductions that are considered recoverable in accordance with the recoverability analysis performed. 21 Non-current employee benefit obligations The breakdown of the amounts recognized on the statement of financial position in respect of long-term employee benefit obligations for the different types of defined benefit commitments which the Group has entered into with employees is as follows: 2019 2018 Defined benefit and contribution plans 531 1,438 Other defined benefit plans 90 80 Energy supply 40,620 38,403 Health care 22,158 20,227 Length- of -service award 711 651 Total non -current provisions 64,110 60,799 Accrued wages and salaries 83 917 Receivables (213) (24) TOTAL 63,980 61,692 The amounts corresponding to the pension obligation and annual cost relate to actuarial valuations carried out by independent actuaries.

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21.1 Defined benefit plans The main defined benefit arrangements in place in the group are the following: a) Post-employment benefits

• Defined benefit plan Mainly retirement benefits granted to retirees as well as to a small group of active employees. These benefits are insured.

• Retirement award A lump-sum is paid upon retirement. This benefit is insured. • Post-retirement health care Private medical insurance is provided to current pensioners and to active employees when they retire. Annual premiums are paid by the Group to an insurer. • Post-retirement death cover Life insurance is provided to current pensioners and to active employees when they retire. The Group has signed a whole-life insurance. • Post-retirement energy supply Free electricity supply is provided to current pensioners and to active employees when they retire. This benefit is not externally funded. • Post-retirement accommodation allowance Free holiday accommodation in pre-established venues provided to current pensioners and to active employees when they retire. This benefit is not externally funded. • Post-retirement school aid allowance Under certain predefined circumstances the Group pays a school fee allowance to current pensioners and to active employees when they retire. This benefit is not externally funded. • Pre-retirement benefits Benefits granted to pre-retirees corresponding to arrangements signed off with the Works Council are insured.

b) Other long term benefits

• Length-of-service award Employees are entitled to three monthly payments after 25 and 40 years of service. This benefit is not externally funded.

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Pension liabilities corresponding to the defined benefit obligations: 2019 2018

Defined benefit obligation (215,056) (204,051)

Plan assets 151,077 142,359

Closing balance (63,979) (61,692)

Movements in the defined benefit obligation during the period: 2019 2018

Defined benefit obligation beginning of the year (204,051) (215,571)

Service cost (706) (719)

Interest cost (3,380) (3,314)

Remeasurements - Actuarial gains / (losses)

P&L charge 174 (246)

Equity charge (17,343) (1,305)

Benefit payments 10,250 17,104

Defined benefit obligation end of the year (215,056) (204,051)

Movements in the plan assets during the year: 2019 2018

Plan assets beginning of the year 142,359 148,395

Expected return on assets 2,321 2,233

Remeasurements - Actuarial gains / (losses)

P&L charge - -

Equity charge 12,454 5,282

Benefit payments / contributions (6,057) (13,551)

Plan assets end of the year 151,077 142,359

The main assumptions used in the actuarial valuations to determine the pension provision as at 31 December 2019 and 2018 are the following: Defined benefit plans

FY Discount rate CPI/Salary growth Survival tables

2019 1.50%-0.01% 1.50% GKMF-95 /PERF2000 P

2018 1.84% - 1.71% 1.50% GKMF-95 /PERF2000 P

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Post-retirement death cover

FY Discount rate CPI/Salary growth Survival tables

2019 0.10% – 1.20% 1.60% - 2.00% GKMF-95 /PERF2000 P

2018 1.66% 1.70% - 2.00% GKMF-95 /PERF2000 P

Retirement award

FY Discount rate CPI/Salary growth Survival tables

2019 0.70% 1.60% - 2.00% GKMF-95 /PERF2000 P

2018 1.28% 1.70% - 2.00% GKMF-95 /PERF2000 P

Pre-retirement benefits

FY Discount rate CPI/Salary growth Survival tables

2019 1.0%-0.02% 1.60% - 2.00% GKMF-95 /PERF2000 P

2018 1.76% - 0.39% 1.70% - 2.00% GKMF-95 /PERF2000 P

Other benefits

2019 Discount Rate CPI/Salary

growth Survival tables Post-retirement energy supply 1.40% 1.60% - 2.00% GKMF-95 /PERF2000 P

Post-retirement health care 1.40% 1.60% - 2.00% GKMF-95 /PERF2000 P

Length-of service award 0.50% 1.60% - 2.00% GKMF-95 /PERF2000 P

2018 Discount Rate CPI/Salary

growth Survival tables Post-retirement energy supply 1.76% 1.70% - 2.0% GKMF-95 /PERF2000 P

Post-retirement health care 1.73% 1.70% - 2.0% GKMF-95 /PERF2000 P

Length-of service award 0.96% 1.70% - 2.0% GKMF-95 /PERF2000 P The sensitivity analysis on the pension obligation due to variations in the main assumptions is as follows:

Increase/decrease in discount rate (bass points) Effect on present value of

obligation +0.5 (5,051)

-0.5 4,513

All the plan assets correspond to insurance policies.

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21.2 Defined contribution plans Employees joining after 31 December 1993 are covered by a defined contribution scheme which is separate from the Social Security. Defined contribution commitments are channelled through the Viesgo Group's Employment Pension Plan and were transferred out in previous years. In 2019 the Group made the relevant contribution to the external fund amounting to €721 thousand (2018: €712 thousand). Similarly, serving employees hired before 31 December 1993 are also covered by a defined contribution plan. Contributions to this plan in the present year amount to €2,211 thousand (2018: €2.228 thousand). 22 Income and expenses 22.1. Revenue All sales for the periods are made in the European Union. Revenue from the Group’s ordinary activities is analysed geographically as follows: %

Market 2019 2018 Spain 94.18 94.35 Portugal 5.82 5.65

100 100 Revenue is also analysed by activity category as follows:

2019 2018 Energy sales 67,370 69,474 Energy Swaps 1,130 (7,112) Other sales 159 390 Discount of sales 614 69 Revenue from electricity distribution activities 211,697 215,210 Provision of electricity and distribution services 11,824 11,681 Maintenance and management of wind farms 618 670 293,412 290,382 22.2. Staff costs The breakdown of this line item in the income statement is as follows:

2019 2018 Wages, salaries and similar remuneration 21,735 21,890 Employer’s Social Security contributions 5,662 5,411 Contributions to pension funds 2,954 2,941 Other welfare expenses 2,395 2,360 Provision pensions and similar obligations 803 922 Provisions 204 628 Compensation staff 178 663 Total staff costs 33,931 34,815

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At 31 December 2019 Wages, salaries and similar include restructuring costs amounting to €4 thousand (2018: €1,152 thousand). The average number of employees during the period in the companies included in the consolidated financial statements is as follows:

Average number of employees 2019 2018

Management 5 6 Qualified personel 80 79 Universitary graduates (3 year degree) 69 70 Proffesional training graduates an other personel 239 243 393 398 At the period end the distribution by gender of the employees in the companies included in the consolidated financial statements is as follows:

Number of employees 2019 Men Women Total

Management 4 1 5 Qualified personel 55 25 80 Universitary graduates (3 year degree) 60 9 69 Proffesional training graduates an other personel 210 27 237 Total 329 62 391

Number of employees 2018 Men Women Total

Management 4 1 5 Qualified personel 54 25 79 Universitary graduates (3 year degree) 61 9 70 Proffesional training graduates an other personel 216 26 242 Total 335 61 396 The average number of employees by the Company, with greater than or equal to 33% disability category is as follows:

Number of employees 2019 2018

Universitary graduates (3 year degree) 1 1 Proffesional training graduates an other personel 2 2 3 3

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22.3 Other operating expenses The breakdown of this line item in the income statement is as follows: 2019 2018 Repair and maintenance 10,061 10,151 Independent professional services 4,027 4,876 Leases and royalties 1,285 2,737 Insurance premiums 2,005 1,824 Supplies 638 638 Banking and similar services 260 196 Advertising and public relations 208 137 Transportation 38 21 Other services 31,663 30,227 Taxes 9,926 12,074 Losses, impairments and change in trade provisions (1,359) 2,148 Fair value changes in energy swaps - 20,986 Other expenses 8,215 14,063 66,967 100,078 The account other services mainly relates to administration services provided by the Group holding, Viesgo Infraestructuras Energéticas, S.L. amounted in €22,255 thousand (2018: €20,647 thousand). 23 Financial results

2019 2018 Financial income:

From investments in financial instruments - 30 Marketable securities and other financial instruments 35,996 33,518

35,996 33,548 Financial expenses Payables to third parties (27,417) (28,255) Restatement of provisions (5,424) (4,078)

(32,841) (32,333)

Impairment and result from disposal of financial in struments 56 261 Change in fair value of financial instruments 256 156

Financial results 3,467 1,632 Financial income on marketable securities and other financial instruments mainly includes financial income from loans to related parties and returns on assets associated with long-term employee benefit plans.

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24 Financial risk management 24.1 Financial risk factors The risk management function within the Group is carried out in respect of financial risks. Financial risks are risks arising from financial instruments to which the Group is exposed during or at the end of the reporting period. Financial risk comprises market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The primary objectives of the financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits. Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of Managers and/or the Board of Directors of the Viesgo Group. Group Treasury identifies and evaluates financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk and investing excess liquidity. Key financial risk management reports are produced monthly on a Group level and provided to the key management personnel of the Group. 1. Market risk Market risk relates to possible losses brought by changes in the fair value or in the future cash flows from a financial instrument due to changes in market prices. Market risk for the Group comprises interest rate risk and price risk. (i) Interest Rate Risk Interest rate risk arises from possible losses brought about by changes in the fair value or changes in future cash flows from a financial instrument due to changes in market interest rates. The Group’s exposure to interest rate fluctuations is mainly due to current and non-current floating-rate loans and credit lines bearing an interest rate linked to the Euribor. The group manages his exposure to interest rate risk as follows:

- The Group has interest rate swaps to manage exposure to interest rate fluctuations.

- The purpose of interest rate risk management is to balance floating and fixed borrowings in order to reduce financial debt costs of the Group within the established risk parameters.

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If as of December 31, 2019, the EURIBOR had strengthened/weakened by 0,5%, with all other variables held constant, the post-tax profit for the year would have been higher/lower by €450 thousand (€510 thousand in 2018), mainly as a result of exchange gains/losses for cash and cash equivalents and trade receivables and other receivables To hedge the risk of changes in interest rates, the Group has arranged a derivative that partially hedges these changes in relation to the promissory notes debt disclosed in note 18. The special features of this derivative are described in note 19. The sensitivity of the Group’s profit or loss to fluctuation in interest rates for the years presented is not material. (ii) Price risk Part of the Group's revenues is exposed to price risk arising from changes in electricity prices. To manage its price risk arising from electricity, the Group hedges a part of its exposure under a hedging agreement with third parties whereby the difference between the market price and the agreed price is paid to or by the Group. Such derivatives are only used for economic hedging purposes and not as speculative investments. For accounting purposes, these derivatives are classified as ‘financial assets at fair value through profit or loss’ and “held for trading” (note 5.14). The sensitivity of the fair value of the commodities’ derivatives to changes in the market prices on the Group´s consolidated profit or loss before income taxes (in million Euros) is as follows:

2019 2018 Increase in the sale price of electricity by 10%* (6,08) (10,6) Decrease in the sale price of electricity by 10%* 6,08 10,6

* Holding all other variables constant 2. Credit Risk Credit risk arises from possible losses caused by the failure of the Group’s counterparties to fulfill contractual obligations, i.e. the possible non-recovery of financial assets in the amounts recognized and within the established time frame. At 31 December 2019 and 2018 the Group does not have significant concentrations of credit risk. For banks and financial institutions, only independently rated parties with a low risk rating are accepted. Counterparties in cash transactions are limited to first-rate financial credit institutions. Most of the accounts receivable have a high credit rating, according to the valuations of the Group, based on the solvency analysis and payment habits of each customer. As of 31 December 2019 and and 2018, there are no significant trade receivables more than 30 days past due. Receivables are stated on the consolidated statement of financial position net of provisions for bad debts, estimated by the Group on the basis of the ageing of the debt and past experience in accordance with the prior segregation of customer portfolios and the current economic environment (refer to note 9). The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history of these other classes, it is expected that these amounts will be received when due. The Group does not hold any collateral in relation to these receivables.

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Investments in Group debt at amortised cost relate mainly to loans to related parties. Management considers these investments to be of low credit risk and therefore no value adjustments have been recognised for these assets (Note 24.2). The Group's exposure to credit risk, distinguishing by type of financial instrument, and the impairment registered at 31 December 2019 for each of them, are as follows:

Total Financial Assets Credit risk

(probabili ty of default ) Gross balance Impairment

Non current <1% 19.416* -

Current <8% 77.522 (4.977) *Value impairments not considered given the counterparties' high credit ratings.

3. Liquidity Risk The Group has liquidity policies that ensure compliance with its payment commitments, diversifying the coverage of financing needs and debt maturities. A prudent management of the liquidity risk includes maintaining sufficient cash and realisable assets and sufficient fund available to cover credit obligations. Liquidity risk is the possibility that the Group might not have liquid funds, or access to them, in a sufficient amount and at an adequate cost to meet its payment obligations at all times. The Group’s objective is to ensure that the necessary liquid funds are available. Available cash resources at 31 December 2019, in addition to cash balances, are analysed below based by their liquidity source: In Thousand of euros Availability 2019

Undrawn credit facilities 1,302

Total

The Group has still an undrawn amount of €1,302 million at 31 December 2019 that can be further called in capital markets (refer to note 14) (2018: €1,152 million). The breakdown of the maturities of the Group's financial liabilities at 31 December 2019 and 2018 are disclosed in note 10.2. In view of these financing sources, liquidity risk is deemed to be covered. 24.2 Capital management The Group’s objective of capital management is to ensure a financial structure that can optimize capital cost and maintain a solid financial position and maintain an optimal capital structure at a competitive cost to cover financing needs.

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The Group monitors capital on the basis of the following gearing ratio: net debt divided by total equity including non-controlling interests plus net debt. Total debt refers to total borrowings, both current and non-current. The ratio at 31 December 2019 and 2018 were as follows:

2019 2018 Total debt 1,369,487 1,235,128 (Cash and cash equivalents) (52,022) (4,439) Net debt 1,317,465 1,230,689 Total equity 888,672 850,694 Net debt to equity ratio 67% 69%

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt, refer to note 14.4. for further information on dividends. 25 Contingencies 25.1 Contingent liabilities There are no contingent liabilities in 2019 and 2018 26 Balances and transactions with related parties 26.1 Period-end balances arising from sales/purchas es of goods/services

2019 Current loans

Trade receivable

Non-current loan s

Current payables Suppliers

Viesgo Infraestructuras Energéticas, S.L. 103,997 158 1,099,264 (198,234) (7,036) Viesgo Europa, S.L. - (24) - - - Eos Pax IIA, S.L. - 87 - - - Compañía Eólica Aragonesa, S.A. - 42 - - - Elecdey Carcelen, S.A. 526 - - - - Eólica de Sao Juliao LDA - 347 - - 35 Unión de Generadores de Energía, S.L. - - - - - Northeolic Montebuño, S.L. - - - - - San Juan de Bargas Eólica, S.L. - 10 - - - Geólica Magallón, S.L. - 4 - -

104,523 624 1,099,264 (198,234) (7,001)

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Trade receivables from related parties derive from sales transactions and fall due two months after the date of sale. Accounts receivable are not insured and do not bear any interest. Suppliers with related parties arise from purchase transactions and fall due in two months after the date of purchase. Accounts payable do not bear any interest. Non-current loans This heading records the balance of the loan granted to from Viesgo Infraestructuras Energéticas, S.L in the amount of €1,099,263 thousand (2018: €1,030,675thousand). This loan accrues interest at an annual rate of 3%, the agreement was concluded on 27 November 2015 and it falls due on 25 March 2030. For the purposes of assessing the expected loss on loans to related entities, the Group applies the general expected loss model for financial assets (Note 5.9). The general model requires the recording of the expected loss resulting from a non-payment event over the next 12 months or, during the life of the contract depending on the way the credit risk changes from the date of its initial recognition on the statement of financial position. The Group does not consider that there has been a significant increase in the credit risk of these financial assets and therefore does not recognise any impairment of these loans Current loans At 31 December 2019, there is an outstanding debt of €48,507 thousand from a contract signed on 23 October 2017 with Viesgo Infraestructuras Energéticas, S.A. to be used for financing with a maturity date of 30 April 2019, and at an interest rate of 2% (2017: €48,000 thousand from a contract signed on 12 December 2017 with Viesgo Infraestructuras Energéticas, S.A. to be used for financing with a maturity date of 30 April 2018, and at an interest rate of 0.479%). Includes the fiscal current account balance with Viesgo Infraestructuras Energéticas, S.A. indicated in Note 10 for the amount of €54,016 thousand (2018: €23,963 thousand).

2018 Current loans

Trade receivable

Non-current loan s

Current payables Suppliers

Viesgo Infraestructuras Energéticas, S.L. 72,096 546 1,030,675 (69,787) (6,078)

Viesgo Europa, S.L. - 1,216 - - -

Eos Pax IIA, S.L. - 65 - - -

Compañía Eólica Aragonesa, S.A. - 104 - - -

Elecdey Carcelen, S.A. 518 - - - -

Eólica de Sao Juliao LDA - 206 - - 29

Unión de Generadores de Energía, S.L. - - 273 - -

Northeolic Montebuño, S.L. - - 37 - -

San Juan de Bargas Eólica, S.L. - 11 - - -

Geólica Magallón, S.L. - 6 - - -

72,614 2,154 1,030,985 (69,787) (6,049)

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Current payables Includes the fiscal current account balance with Viesgo Infraestructuras Energéticas, S.A. for the amount of €103,102 thousand (2018: €69,687 thousand). Dividend pending to be paid €95,000 thousand. A Group asset suppliers €132 thousand (2018: €100 thousand).

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26.2 Transactions A breakdown is as follows:

2019 Services Other operating income Financial income Services received Viesgo Infraestructuras Energéticas, S.L. - 131 33,382 (24,665)

Viesgo Europa, S.L. - 54 - -

Eos Pax IIA, S.L. 560 - - -

Compañía Eólica Aragonesa, S.A. - 386 - -

Elecdey Carcelen, S.A. - - 9 -

Eólica de Sao Juliao LDA - 1,269 - -

Unión de Generadores de Energía, S.L. - - 18 -

Northeolic Montebuño, S.L. - - 9 -

San Juan de Bargas Eólica, S.L. 58 55 - -

Geólica Magallón, S.L. - 65 - -

TOTAL 618 1,960 33,418 (24,665)

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2018 Sales Serv ices

Other operating income

Financial income

Services received Staff costs

Other operating expenses

Viesgo Infraestructuras Energéticas, S.L. - - 166 31,173 (22,909) - -

Viesgo Europa, S.L. - - 1,216 - - - -

Viesgo Generación, S.L. (5,485) 313 28 - - - (14,852)

Viesgo Energía, S.L. 42,944 59,129 217 - (75) (632) (5,147)

Viesgo Comercializadora de Referencia, S.L. - 34,764 - - - - 28

Eos Pax IIA, S.L. - 614 - - - - -

Compañía Eólica Aragonesa, S.A. - - 384 - - - -

Elecdey Carcelen, S.A. - - - 8 - - -

Eólica de Sao Juliao LDA - - 1,368 - - - -

Unión de Generadores de Energía, S.L. - - - 18 - - -

Elecdey Ascoy S.A. - - - 30 - - -

Northeolic Montebuño, S.L. - - - 10 - - -

San Juan de Bargas Eólica, S.L. - 57 55 - - - -

Geólica Magallón, S.L. - - 72 - - - -

TOTAL 37,459 94,877 3,506 31,239 (22,984) (632) (19,971)

The main transactions correspond to the provision of services through charging commercial companies and selling electricity to Viesgo Energía, S.L.

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27 Directors’ and Senior Management 27.1 Board of Directors a) Composition

The Board of Directors of the parent company is formed by 4 directors. All of them are men.

b) Board of Directors remuneration.

No remuneration has accrued to the members of the Board of Directors or Senior Management at 31 December 2019 and 31 December 2018. At 31 December 2019 and 2018 the Group has no obligations in respect of retirement pension plans or life insurance plans with the current members of the Board of Directors or Senior Management and nor has it entered into any obligations on their behalf in respect of guarantees. c) Advances and loans to the members of the Board of Directors At 31 December 2019 and 2018 no advances or loans have been granted to the members of the Board of Directors. d) Directors’ conflicts of interest As part of their duty to avoid conflicts with the parent's interests, it is reported that during the period the directors who have held positions in the Board of Directors have discharged the obligations envisaged in Article 228 of the Spanish Companies Act. Additionally, these directors and parties related to them have not come under the provisions of conflicts of interest in Article 229 of this law, except where the pertinent authorisation was obtained. 27.2 Senior Management The Company consider Senior Management to those people who performed the functions related with the general objectives of the Company, such as planning, directing and controlling, carrying out their functions independently and at full responsibility, limited only by criteria and instructions of the Company legal owners or the governing and administration bodies that represent these holders. Base on the strategic decisions and business operations instructed and controlled by the Group and the Senior Management of Viesgo Infraestructuras Energéticas, S.L., the Company does not have in its workforce any employee who may be considered as Senior Management under the definition set previously. 28 Other information 28.1 Guarantees funished to third parties Guarantees committed with third parties relate to the guarantees provided by financial institutions amounting to €19,980 thousand at 31 December 2019 (2018: €21,460 thousand).

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28.2 Auditors’ fees The audit fees accrued at 31 December 2019 by PricewaterhouseCoopers Auditores, S.L. for audit and other verification services totalled €197 thousand (2018: €232 thousand). There have been €57 thousand (2018: €56 thousand) of fees accrued at 31 December 2019 as a result of other services provided to the Group than the audit. In 2019, no fees were paid to other companies which form part of the auditor's same network (2018: €0 thousand). 28.3 Environmental information Environmental activity refers to any transaction, the main purpose of which is to minimise damage to the environment or enhance environmental protection efforts. The Group made investments in relation to the environment amounting to €876 thousand (2018: €777 thousand) at 31 December 2019. At 31 December 2019 accumulated depreciation on environmental investments totalled €684 thousand (2018: €589 thousand). Possible contingencies, indemnities and other environmental risks that could be incurred by the Group are adequately covered by third-party liability insurance. 28.4 Events after the reporting date There is not any significant event that would affect these consolidated financial statements after the period end date. 28.5 Segment reporting The Group’s operating segments are as follows: a. Renewables: Includes electricity generation through technologies using renewable energy

sources. b. Electricity distribution: Includes the regulated electricity distribution business. c. Holding: includes the activity of the parent company and the subsidiary IE2 Holdco, S.A. as

holding companies.

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The breakdown of the Group’s financial information by operating segments is as follows:

2019

CONTINUING OPERATIONS Distribution Renewables Holding Adjustments Consolidated Group Revenue 224,242 69,217 131,411 (131,458) 293,412

Own work capitalised 12,100 1 - - 12,101

Raw materials and consumables 42 (922) - 46 (834)

Other operating income 16,684 23,348 - - 40,032

Staff costs (30,965) (2,966) - - (33,931)

Other operating expenses (49,127) (17,650) (190) - (66,967)

Amortisation and depreciation (57,189) (21,085) - - (78,274)

Reversal of provisions 2,887 - - - 2,887

Impairment and gain/(loss) on fixed asset disposals 235 (507) - - (272)

OPERATING PROFIT/(LOSS) 118,909 49,436 131,221 (131,412) 168,154

Financial income 2,512 41 29,884 3,559 35,996

Financial expenses (5,204) (1,387) (58,030) 31,780 (32,841)

Net change in fair value of financial instruments through profit or loss - - 256 - 256

Impairment and result on disposal of financial instruments - 56 - - 56

NET FINANCIAL INCOME/(EXPENSE) (2,692) (1,290) (27,890) 35,339 3,467

Share of profits/(losses) of equity method investments - 3,759 - - 3,759

PROFIT/(LOSS) BEFORE INCOME TAX 116,217 51,905 103,331 (96,073) 175,380

Corporate income tax (25,200) (9,562) (1,815) - (36,577)

PROFIT/(LOSS) FOR THE PERIOD 91,017 42,343 101,516 (96,073) 138,803

Profit/(loss) attributable to non-controlling interests - (532) - - (532)

RESULT FOR THE PERIOD 91,017 41,811 101,516 (96,073) 138,271

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2019 Distribution Renewables Holding Adjustments Consolidated Group

Segment assets 1,320,880 332,163 3,270,081 (2,121,657) 2,801,467

Segment liabilities 864,997 70,694 2,327,310 (1,350,206) 1,912,795

Net cash flow from activities:

Operation 128,313 43,240 (30,039) - 141,514

Investment (60,324) 10,632 (37,000) - (86,692)

Financing (38,814) (36,505) 68,080 - (7,239)

Acquisitions of non-current assets (61,142) (1,506) (37,000) - (99,648)

The Group has a broad customer base and there are only four customers that in the annual period ended 31 December 2019 individually were billed more than 10% of revenue.

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2018

CONTINUING OPERATIONS Distribution Renewables Holding Adjustments Consolidated Group Revenue 227,090 63,335 149,576 (149,619) 290,382

Own work capitalised 11,400 121 - - 11,521

Raw materials and consumables (141) (950) - 43 (1,048)

Other operating income 15,466 3,349 - - 18,815

Staff costs (31,793) (3,022) - - (34,815)

Other operating expenses (60,142) (39,741) (195) - (100,078)

Amortisation and depreciation (52,688) (20,476) - - (73,164)

Reversal of provisions 10,050 - - - 10,050

Impairment and gain/(loss) on fixed asset disposals 20 1,263 - - 1,283

OPERATING PROFIT/(LOSS) 119,262 3,879 149,381 (149,576) 122,946

Financial income 2,251 71 29,913 1,313 33,548

Financial expenses (5,224) (1,078) (58,074) 32,043 (32,333)

Net change in fair value of financial instruments through profit or loss - - 156 - 156

Impairment and result on disposal of financial instruments - 261 - - 261

NET FINANCIAL INCOME/(EXPENSE) (2,973) (746) (28,005) 33,356 1,632

Share of profits/(losses) of equity method investments - 12,229 - - 12,229

PROFIT/(LOSS) BEFORE INCOME TAX 116,289 15,362 121,376 (116,220) 136,807

Corporate income tax (24,343) (3,020) (1,289) - (28,652)

PROFIT/(LOSS) FOR THE PERIOD 91,946 12,342 120,087 (116,220) 108,155

Profit/(loss) attributable to non-controlling interests - (462) - - (462)

RESULT FOR THE PERIOD 91,946 11,880 120,087 (116,220) 107,693

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2018 Distribution Renewables Holding Adjustments Consolidated Group

Segment assets 1,245,103 327,075 3,177,048 (2,101,330) 2,647,896

Segment liabilities 787,263 102,891 2,236,927 (1,329,879) 1,797,202

Net cash flow from activities:

Operation 143,483 35,653 (29,555) - 149,581

Investment (61,602) 8,861 - - (52,741)

Financing (86,560) (44,923) 28,028 - (103,455)

Acquisitions of non-current assets (62,378) (1,115) - - (63,493)

The Group has a broad customer base and there are only four customers that in the annual period ended 31 December 2019 individually were billed more than 10% of revenue (2018: four customers).

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1

The Viesgo Group originates after the purchase by the Australian fund Macquarie and the Kuwaiti firm Wren House of the assets of the German group E.ON in the Iberian Peninsula grouped as E.ON Spain, on March 25, 2015. Subsequently, on June 9, 2015 the Group was renamed Viesgo, recalling the centenary origin of the original company: “Electra de Viesgo". This company subsequently passed through different properties and denominations. Viesgo HoldCo, S.A. was incorporated on 5 November 2015 as the parent of the Sub-group which covers all the regulated businesses. In turn, the company IE2 HoldCo S.A. was created, also as a subsidiary of Viesgo HoldCo, S.A. The reason why this company was created, as was the case for its subordinate IE2 HoldCo. S.A.U., was to refinance debt. Through IE2 HoldCo. S.A.U., bonds have been issued in the amount of €1,050 million, while through Viesgo HoldCo, S.A bonds have been issued amounting to €98 million in favourable conditions. From then on, Viesgo Infraestructuras Energéticas, S.L., the parent of the holding company, owns 100% of Viesgo HoldCo, S.L which forms a Sub-group with its subsidiaries Viesgo Renovables, S.L. (with its investees), IE2 HoldCo. S.A.U. and Viesgo Distribución Eléctrica, S.L.U., which in turn owns 99.93% of Barras Eléctricas Galaico-Asturianas, S.A. The headquarters of HoldCo, S.A. are located in Santander (Cantabria), Calle Isabel Torres, 25. The Sub-group carries out regulated activities. These activities are carried out both in Spain and Portugal. In the latter country limited, these activities are currently limited to generation through renewable technologies. This set of activities is mainly carried out directly through Viesgo companies, but also (in the business of renewable generation) through participation in other companies. Due to the characteristics of the activities, the Viesgo Group is organized in different companies focused on the different business units and technologies. Thus we can specifically distinguish for this sub-Group: - Power Distribution Business : regulated activity with distribution networks in the regions of

Cantabria, Asturias, Palencia, Burgos and Lugo. It is managed by the company Viesgo Distribución Eléctrica, S.L.U. and its subsidiary (99.93%) in Galicia, Barras Eléctricas Galaico-Asturianas, S.A. (BEGASA).

- Renewables business: Development and investment directly or through subsidiaries, in projects of power generation, as well as the operation of renewable technology power facilities. In Viesgo this activity is managed by the company Viesgo Renovables, S.L.U. with its 17 subsidiaries or associates in Spain and in Portugal.

- Funding: This is not a pure business unit, but with the incorporation of companies Viesgo Holdco, S.A.U. and IE2 Holdco, S.A.U., the group ensures funding sources on favourable terms.

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Thus, the Sub-group's structure is:

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Significant events in the year 2019: - The sub-consolidated company Holdco has maintained the financing structure without

significant long-term changes. There have been no new Bond issues. - In the Distribution business the following events and performances are noteworthy in 2019:

i. We obtained a record high figure for employee health and safety in 2019 (LTIF 1.9). On

31 December 2019 we had been between a 0-2 band for 38 months.

ii. The Quality of Supply for the entire group in 2019 continues to improve: TIEPI 32.2 (down 14.13% on 2018).

iii. Steady improvement in facility maintenance is one of the key factors behind these good

quality of supply levels. During 2019 the number of compliant installations at year-end stands at between 97.7% and 100%, improving by between +0.3% and +1.1% depending on the type of facility. The introduction of new technologies and maintenance methodologies, such as predictive models, maintenance optimisation through criticality matrices or analysis of assets with LIDAR technology, have played a key role in this improvement.

iv. The remote management system, whose mass deployment was completed in 2014, has been successfully integrated into the operating processes of the company. At 2019 year-end, 99.6% of the meters up to 15 kW of contracted power were electronic. In December 2019, the number of customers billed with an hourly load curve was 91.74% of the total number of type 5 customers. In parallel, the Company launched new initiatives to exploit the features of this system: automation tasks on equipment, use of information to process improvement, etc.

v. The group's distributed energy demand decreased by2.3% compared to 2018—the

provisional data on changes in demand in Spain reflect a decrease of 3%.

vi. By detecting non-technical losses, the Group managed to recover energy of 15 GWh over the year.

vii. In 2019, claims by the end customer group stood at an average of 1,029 claims per

month, 1% lower than the previous year. viii. Over the course of the year, 58.42% of the interactions with the company were carried

out through the distributor's website, which was launched last year.

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ix. A total of 96%of billing was on time (regulatory deadline).

x. The 2019 Investment Plan has been executed as planned, with gross investment (gross

cash capex) totalling 60.8 million euros.

xi. These are some of the investments commissioned in 2019:

- New operational building and network control centre at PCTCAN: o In operation since December, it houses approximately 100 Operation and

Maintenance people, and the recently inaugurated new Grid Control Centre, which is the spearhead for operational efficiency.

- New El Puerto 55/12 kV 20 MVA substation, and 55 and 12 kV underground feed lines

from Cacicedo and Nueva Montaña substations.

- New 55/12 kV 12 MVA transformer at the Escobedo 55/12 kV substation, replacing the existing 6 MVA one.

- New 55 kV position at El Bosque substation, and retrofitting of the 12 kV park.

- New 132 kV position at Boimente substation, for the interconnection of new wind power for a value of 25 MVA.

- Two new 30 kV positions at the Reinosa substation for supply to local industries.

- LAT Ludrio - Meira

- More than 20 new automated PP, included in the Grid Automation Plan. Administrative authorisations have also been obtained for the execution of the following projects:

- Retrofitting of the Santa Cruz de Mieres 132/30/12 kV substation.

- New 132 kV positions at the Ludrio and San Cibrao substations, and double circuit overhead line at 132 kV interconnection.

- New 55 kV interconnection between Treto and Cicero substations with Ambrosero substation, by means of two 55 kV circuits.

- New 132 kV position at Mataporquera substation, for the interconnection of new wind power.

- Retrofit of Arbón 132 kV substation

- New transformer at Doiras substation 132/20 kV 20 MVA.

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- Retrofit of the 132 kV Pico Gallo - Arbón - Doiras overhead line.

- Modernisation of the 132 kV Salime substation.

- Adaptation of the 30 and 12 kV parks in the Mieres Industrial Estate and construction of

a new 30 kV line position.

- New 55 kV Solvay substation and 12 kV auxiliary service line.

- New 30 kV Penouta-San Luis underground line.

- Over 30 new automation projects for PPs, included in the Grid Automation Plan.

The network automation plan was launched in 2017, and is being rolled out according to the planned schedule. The main objectives of this plan are to improve the quality of supply and to improve operational efficiency. The following indicators should be highlighted: the power recovered by remote control after a supply interruption was 88%and the number of operations carried out by remote control at medium voltage was 96%. The main actions within this plan are the automation of the control elements of the medium-voltage network, the renewal of automation devices of the high-voltage network, the progressive integration of monitoring of the low-voltage network in the control centre and the improvement of telecommunications technologies. It is important to note that the new Port 55/12 kV substation and its 55 kV interconnection lines with Cacicedo and Nueva Montaña, and 12 kV with the urban network of the southern area of Santander, have been commissioned ahead of schedule; so this infrastructure is already in operation. Lastly, the new PCTCAN operational work centre and control centre in Santander has been occupied and put into operation, after obtaining all the necessary authorisations as planned.

NATIONAL ENERGY SCENARIO Demand registered an accumulated decrease of 1.7% during 2019, compared to the increase of 0.1% in the same period of 2018. The development of the electricity sector in 2019 in terms of production and consumption of electricity in Spain has also been influenced by the following factors: - Decreased production by ordinary regime utilities of 4.39%, reaching 143.9 TWh. - This year the electricity price on the production market decreased 16.8% against the

previous year, reaching an average price of €47.71 / MWh against € 57.29 /Mwh the previous year.

- Increased production by Special Regime utilities of 7.05%, reaching 103 TWh. Special

regime represents 41.71 % of total production.

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KEY DATA Operating profit in 2019 was €168,154 thousand (€122,946 thousand in 2018). Net profit in 2019 was €138,271 thousand (€107,693 thousand in 2018). Investments made in the year 2019 were €64,781 thousand, mainly aimed at improving facilities.

The consolidated revenue for the year has been of €293,412 thousand (€290,382 thousand in 2018). The average workforce in 2019 was 393 employees (398 in 2018). FORECAST PERFORMANCE These facts and the favourable forecasts of their evolution throughout the year 2020, suggest a positive performance by the HoldCo subconsolidated company, which is adapting its structures and its material and human resources to new market needs. USE OF FINANCIAL INSTRUMENTS The Sub-group’s risk management policies are stipulated by Management in coordination with the Group’s directors. Based on these policies, Viesgo has established a number of procedures and controls to identify, measure and management business risks using financial instruments. Through operations with financial instruments, the Sub-group is exposed to credit, market and liquidity risk. Credit risk Credit risk arises from possible losses caused by the failure on the part of the Sub-group’s counterparties to fulfil contractual obligations, i.e. the possible non-recovery of financial assets in the amounts recognised and within the established time frame. As far as Renewables Activity is concerned, credit risk is mainly originated by operating activities, which consist basically of sales and purchases in the electricity market, operating through the OMIE and the MEFF. Collections periods with these bodies are one week and 15 days, respectively. Given the market’s nature and functioning, no measures are deemed necessary to mitigate collection risk. In Distribution Activity, the Company's credit risk arises basically from its operating activities. Since 1 July 2009, Viesgo Distribución Eléctrica, S.L. and Barras Eléctricas Galaico-Asturianas, S.A. (BEGASA) ceased to be the customer supply companies, invoicing tolls to the various marketing companies such that an invoice continues to be issued for each supply but payment is made by the relevant marketing company and therefore a high percentage of the sub-group's customers have high credit ratings.

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VIESGO HOLDCO, S.A.U. AND ITS SUBSIDIARIES CONSOLIDATED DIRECTORS’ REPORT FOR THE YEAR 2019 (Thousand euro)

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The payment period and the various actions are regulated by Article 4 Royal Decree 1164/2001, which, in turn, is based on Royal Decree 1955/2000, although they depend on the information exchange processes between the distribution and marketing companies. Details of all payables and their age are prepared on a monthly basis by each marketing company so that they may be appropriately monitored. During the years for which information is presented no credit limit was exceeded and management did not expect any losses to arise due to any failure to comply on the part of any of the indicated counterparties. Market risk Market risk relates to possible losses brought about by changes in the fair value or in the future cash flows from a financial instrument due to changes in market prices. Market risk refers to interest rate risk. Interest rate risk arises from possible losses brought about by changes in the fair value of or future cash flows from a financial instrument due to changes in market interest rates. The Sub-group’s exposure to interest rate fluctuations is due mainly to short- and non-current, floating-rate loans and credit lines bearing an interest rate linked to the Euribor. As the Sub-group is mainly funded by companies of the Viesgo Group, the view is taken that interest rate fluctuations can be absorbed by the Company, since they generate a balance payable to other Group companies from which financial support is received. However, a portion of this interest rate risk arises on external debt from the issue of promissory notes (currently €98 million in Viesgo Holdco, S.A.). This risk is limited by an interest rate swap which lasts until 2020. Liquidity Risk Liquidity risk is the possibility that the Sub-Group might not have liquid funds, or access to them, in a sufficient amount and at an adequate cost to meet its payment obligations at all times. The Sub-Group's objective is to have the necessary liquid means available. To this end, the Viesgo Group has several intercompany loans between Group companies. The parent of the Viesgo Infraestructuras Energéticas Group has obtained financing (in addition to the inter-company loans) totalling €28,790 thousand at from the group shareholder Fresco Investments Sarl. In order to obtain external financing in favourable conditions, the Viesgo Group incorporated the company Viesgo Holdco, S.A., which is a subsidiary of Viesgo Infraestructuras Energéticas, S.L., and which from the time it was created has been a subholding of the regulated companies (which includes Viesgo Distribución Eléctrica, S.L.). In turn, this subholding includes the company IE2 HoldingCo, S.A. These two companies fund the entire Sub-group of regulated companies (by intragroup loans with the parent of the subholding). Through IE2, bonds of €1,050 million have been issued, and through the Subholding promissory notes of €98 million have been issued in favourable conditions. A revolving facility of €125 million is in place which is currently not being used, and two credit facilities each with €12.5, neither of which is currently drawn.

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In view of these financing sources, liquidity risk is deemed to be covered. OTHER The Sub-group has not carried out research and development projects during the year ended on 31 December 2019. During the part of the fiscal year now ending, the Sub-Group has not acquired own shares, even temporarily. No relevant events have taken place between the year end and the present date that the Company considers could significantly affect these annual accounts.

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