Annual Report 2021

During 2020 we lived through an unprecedented world-wide situation as a result of the health emergency derived from Covid-19. During 2021, we have suffered many consequences derived from this situation. Nevertheless, in the middle of this convulsive and uncertain context, we have been able to maintain our course and reinforce our operations. We have continued to start up our projects in renewables, and we have also achieved other, strategic, objectives such as opening up the American market, milestones that have beenattained in highly-professional ways. These results demonstrate the resilience of our business model, since, despite the restrictions we have suffered, we have been able to consolidate the growth of our business during this period.

This has been an especially relevant year for the company. The start of operations of 4 of our projects, in addition to those that were already operating, has allowed us to successfully complete the plans established in previous years. We have exceeded our objectives set forth in our COVID RESILIENCE Plan. At the same time, we have achieved the figures promised in the Business Plan presented when we went public in 2017. At the moment, with 6 projects in operation (with an installed power of 125MW), with another 1,000MW under construction, we have become a relevant player in the sector, especially for our multi-technological character and the important resource of our pipeline. In financial year 2021, these projects have led to an EBITDA of almost 40M€ and a net profit of over 10M€. The forecasts for 2022 are even better. Also, I would like to recall the recurrent and predictable nature of our business model, “Develop&Own”, which means that, by retaining 100% of the ownership of our projects, we have guaranteed income for the next 25 years.

We brought forward our plans to operate in the USA, and started up 4 new wind farms in Spain.

Last July, we enjoyed an historic event in the group’s history: Theacquisition of our first international project. Our American subsidiary,Greenalia Solar Power US INC, acquired an American renewable energy generation company with a total capacity of 695MWp of photovoltaic power in RTB (Ready to Build) conditions, thus accelerating the implantation of our business in the USA. This acquisition also contemplates the installation of 170MW of battery storage. With this operation, the company has assured the achievements of the objectives established in its strategic plan, and increased its technological diversity to 5 technologies (Onshore Wind, Offshore Wind, Photovoltaic, Storage and Biomass) in two currencies, the Euro (€) and the dollar (USD). The commitment of the US administration to renewable energy has opened a very attractive panorama in this sector, and we must make the most of it. Apart from this acquisition, the company has submitted new projects there, and continues to study the acquisition of other companies in this sector, in order to advance rapidly in what is now a growth industry in the USA.

I am both satisfied and proud of the positive impact that our company is generating in the local economy and in the transition process towards a decarbonized economy.

On a corporate level, we should note the award, in January, of 135MW of terrestrial wind power in the tenders issued by MITECO (Ministry of Ecological Transition). This figure represents 13.5% of the power allotted by the Ministry to this technology.

Meanwhile, in December, we registered a Program of Green Credits with a value of 100 million Euros in the MARF (Alternative Fixed Income Market) The program has been evaluated by Sustainalytics, aleading agency in sustainability analysis, that has considered that thecompany’s projects can contribute to the process of energy transition in Spain. With this initiative, the second program of Green Credits in the Spanish market, Greenalia has consolidated its position as a pioneering company in the emission of green finance, since all credits issued up till now, the last one for 55 million, issued in December 2020, have been qualified as “green”, with the maximum Standard&Poor’s rating in the sustainability sector. This operation is in addition to the capital increase of 15 million Euros in November (via an accelerated placement procedure in which 4.4% of the company’s capital was subscribed with no discount on the previous day’s price); this demonstrates confidence in the company on the part of investors and the capital markets.

I must also mention the signing, in December, of a pre-contract agreement to supply renewable energy to the Alcoa aluminium plant in San Cibrao (Lugo) for 10 years. This energy will be supplied from wind farms that are under development in the Galician Autonomous Region, mainly in the province of Lugo, where Alcoa’s plant is located. This pre-contract is in line with our commitment to Galician industry, particularly during these moments of price tensions in the electrical market. In Greenalia, we believe that wind power constitutes an opportunity to ensure the medium-term competitiveness of Galician industry via a PPA (Power Purchase Agreement) of this type.

I would also like to thank our Board of Directors for their hard workand dedication. The challenges that we are facing also demand thereinforcement of the organizational structure and of management.The renovation of the Board of Directors is the key to successfullyfacing future growth processes of the company. This includes theappointment as president of Jose María Castellano Rios, with a longbusiness trajectory that we are all aware of, and the appointments ofBeatriz Mato as Executive Director and Pablo Castellano Vazquez asProprietary Director, who reinforce the capacity and the experienceof our management. This tendency also implies the addition of theDirector for Sustainability, represented by Beatriz Mato; as a result, the integration of sustainability into management extends to the top levels of the company.

On the other hand, and although it will be a reference to 2022, I would not wish to omit a mention of our current projects: The EOLO CBT project, with a power of 110MW, is now under construction and will soon export energy. To this, we must add the MISAE II project (Texas, USA), with a power of 695MW and 170MW of battery storage, also in the initial phase of construction.

In previous communications, I informed you that we are working on a new strategic plan. We will present this plan during the second half of this year.

At an organizational level, I am especially proud of the incorporationof new senior talent that will undoubtedly be a fundamental part ofthis new plan. To name but a few: Alberto Expósito, as Development Director of International Business Development, Alberto Ares, as Director of Engineering and Construction, and Pablo Barco, as Director of the Curtis-Teixeiro Biomass Plant, among others. Nor would I wish to forget the approval by the Board of Directors, last December, of a Stock Options Plan aimed at key management personnel. The aim of this plan is to achieve the maximum degree of motivation and loyalty of the personnel involved, and to provide them with an incentive to promote the best results for the company, aligning the interests of these persons with the medium-term benefits of shareholders. The Plan will continue until January 1, 2026, a date that will be used as a point of reference to determine whether the objectives for the use of the options have been achieved. The Plan will be submitted for approval in the next General Shareholders’ Meeting.

As part of our process of improvement and internal professionalisation, this year we have assigned more resources to the areas of Digitalization, Sustainability and Business Development, among others. Proof of this is the signing of the technological alliance with Microsoft, as is also our recognition by SAP, with a prize in the SAP Quality Awards 2021, in the category of Digital Pioneer.

Neither would I wish to leave out our commitment to the environment: this is a fundamental pillar of our strategy and business model. In this regard, I am happy to announce that, in the field of ESG, we present our Sustainability Report for 2021 together with our consolidated annual accounts. In this way, we formally communicate our commitment to contribute to the development of a more egalitarian society, maintaining the company’s commitment to the 17 Sustainable Development Goals (SDG) established in the United Nations Agenda 2030. Therefore, our adhesion to the global compact is a pillar on which to seat our management of sustainable and harmonious growth from the triple ESG perspective (Environmental, Social and Governance), creating an organization that exists within a complex ecosystem and at the same time contributes to its regeneration. As a company closely involved with the communities where we undertake our projects, we support and collaborate with different organizations in projects of interest, participating together in effective strategies to promote inclusion, diversity and equality for vulnerable groups and their access to sports activities.

As I said at the beginning of this letter, 2021 has been a most convulsive year, marked by the consequences of the pandemic and new global conflicts. So, I want to thank the shareholders, institutions, financial entities and all other collaborators that have offered their support to Greenalia during this last year. Now it is time to look toward the future, aiming at recuperation. And along this course, energy transition and digitalization will be the levers that will move this process, greener and more sustainable. We are proud of and, above all, thankful for,the results that we are presenting today, because we know that this encouraging year has been made possible by the efforts of all members of our team, our assessors and the confidence of manysuppliers and clients.

Before I finish, and as every year, I invite you to visit our website (www.greenalia.es) where we not only explain the nature of our business and present our team, but also present news, the evolution of our activities, and relevant events. During 2021, we have also developed our GreenMap, with full, detailed information on each of our projects. You can access it through the following link.

Best wishes to all of you.