Enagas S.A.

Annual / Quarterly Financial Statement • Feb 20, 2024

ANNUAL ACCOUNTS at December 31, 2023

"Translation of financial statements originally issued in Spanish and prepared in accordance with accounting principles generally accepted in Spain. In the event of a discrepancy, the Spanish-language version prevails"

Our
response	Our audit procedures in this regard included, among other, the following:
		Understanding the Enagas, S.A. process for assessing the recoverability of these assets and reviewing the design and operating effectiveness and implementation of key controls.
		Evaluating compliance with the terms and conditions of the contracts and agreements between shareholders of Gasoducto Sur Peruano, S.A.
		Analyzing recent relevant notifications between Peruvian official bodies and Gasoducto Sur Peruano, S.A., as well as the documents included in the claim filed by Enagas with the ICSID and the Peruvian government's and Enagás' various replies, responses, and rejoinders.
		Lolaina mootinga vuse susenes and underse dout more for

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ENAGÁS, S.A.

BALANCE SHEET AT DECEMBER 31, 2023		1
	INCOME STATEMENT AT DECEMBER 31, 2023	3
	STATEMENT OF RECOGNISED INCOME AND EXPENSES AT DECEMBER 31, 2023	4
	STATEMENT OF TOTAL CHANGES IN EQUITY AT DECEMBER 31, 2023	5
	CASH FLOW STATEMENT AT DECEMBER 31, 2023	6
1.	Company activities and presentation bases	7
1.1	Company activity	8
1.2	Presentation bases	8
1.3	Estimates and accounting judgements made	10
1.4	Investments in group and multigroup companies	11
1.5	Dividends distributed and proposed	18
1.6	Commitments and guarantees	18
2.	Operational performance of the company	21
2.1	Operating profit	22
2.2	Trade and other receivables	25
2.3	Trade and other payables	25
2.4	Property, plant, and equipment	27
2.5	Intangible assets	29
2.6	Impairment of non-financial assets	31
2.7	Leases	31
2.8	Provisions and contingent liabilities	32
3.	Capital structure, financing and financial result	34
3.1	Equity	35
3.2	Financial debts	36
3.3	Net financial gain/(loss)	38
3.4	Derivative financial instruments	38
3.5	Financial and capital risk management	38
3.6	Cash and cash equivalents	40
4.	Other Information	41
4.1	Information on other items on the balance sheet	41
4.2	Tax situation	43
4.3	Related party transactions and balances	47
4.4	Remuneration to the members of the Board of Directors and Senior Management	49
4.5	Other information concerning the Board of Directors	53
4.6	Other Information	54
4.7	Subsequent events	54
5.	Explanation added for translation to English	55
	MANAGEMENT REPORT OF ENAGÁS, S.A.	56

Balance sheet at December 31, 2023

(In thousands of euros)

Assets	Notes	12.31.2023	12.31.2022
NON-CURRENT ASSETS		5,571,011	5,620,784
Intangible assets	2.5	24,239	23,425
Research and development		71	110
IT applications		24,168	23,315
Property, plant, and equipment	2.4	19,800	20,910
Land and buildings		13,762	14,160
Technical facilities and other PP&E		4,932	4,754
Prepayments and work in progress		1,106	1,996
Property investments	4.1.a	17,380	17,410
Land		17,380	17,410
Long-term investments in group and multigroup companies	1.4	5,034,663	5,078,089
Equity instruments		5,034,663	5,078,089
Long-term financial investments		458,059	472,117
Loans to third parties		5	11
Other financial assets	1.4.c	458,054	472,106
Deferred tax assets	4.2.g	16,870	8,833
CURRENT ASSETS		236,535	332,320
Non-current assets held for sale	2.4	-	8,882
Inventories	2.3	15,613	1
Raw materials and other procurements		15,613	1
Trade and other receivables		25,722	13,242
Customers		51	-
Customers, Group companies and associates	2.2	13,921	11,143
Other receivables		116	579
Personnel		839	87
Current tax assets	4.2	10,794	280
Other credits with the Public Administrations		1	1,153
Short-term investments in group and multigroup companies	1.4	126,564	235,510
Loans to companies		86,864	100,510
Other financial assets		39,700	135,000
Short-term accruals		2,287	2,749
Cash and cash equivalents	3.6.a	66,349	71,936
Treasury		66,122	71,936
Other cash equivalents		227	-
TOTAL		5,807,546	5,953,104

The accompanying Notes 1 to 5 constitute an integral part of the Balance Sheet at December 31, 2023

Liabilities	Notes	12.31.2023	12.31.2022
EQUITY		2,709,776	2,698,398
SHAREHOLDERS' EQUITY		2,709,776	2,698,398
Capital	3.1.a	392,985	392,985
Subscribed capital		392,985	392,985
Issue premium	3.1.b	465,116	465,116
Issue premium		465,116	465,116
Reserves	3.1.d	1,585,503	1,571,296
Legal and statutory		78,597	78,597
Other reserves		1,506,906	1,492,699
Treasury shares	3.1.c	(15,982)	(18,366)
Profit/(loss) for the year		461,034	463,320
Interim dividend	1.5.a	(181,841)	(179,684)
Other equity instruments		2,961	3,731
NON-CURRENT LIABILITIES		2,732,774	2,459,923
Long-term provisions	2.8.a	7,606	925
Obligations for long-term employee benefits		1,912	925
Other provisions		5,694	-
Long-term debts	3.2.a	63	5
Other financial liabilities		63	5
Long-term debts with group companies and associates	3.2.c	2,723,707	2,457,553
Deferred tax liabilities	4.2.g	1,391	1,430
Long-term accruals		7	10
CURRENT LIABILITIES		364,996	794,783
Other current liabilities		4,385	2,291
Short-term debts	3.2.	5,353	5,938
Debts with credit institutions		86	1,124
Other financial liabilities		5,267	4,814
Short-term debts with group companies and associates	3.2c	290,049	734,107
Trade and other payables	2.3	65,125	52,156
Suppliers		8,816	11,511
Payables to group companies and associates		444	2,085
Other payables		786	7
Personnel		6,998	4,954
Other debts with the Public Administrations		34,799	33,599
Customer advances		13,282	-
Short-term accruals		84	291
TOTAL		5,807,546	5,953,104

The accompanying Notes 1 to 5 constitute an integral part of the Balance Sheet at December 31, 2023

Income Statement at December 31, 2023

(In thousands of euros)

	Notes	12.31.2023	12.31.2022
CONTINUING OPERATIONS		517,734	497,357
Revenue	2.1.a	610,450	612,505
Rendering of services		73,246	73,994
Dividend income from group and multigroup companies		537,204	538,511
Work done by the company for its assets	2.4	175	313
Other operating income		3,127	449
Accessory income and other current management income		3,127	449
Personnel expenses	2.1.b	(48,173)	(54,423)
Wages, salaries and similar		(36,551)	(42,830)
Social contributions		(11,622)	(11,593)
Other operating expenses	2.1.c	(39,996)	(45,903)
External services		(38,802)	(45,533)
Taxes		(1,064)	(338)
Other management expenses		(130)	(32)
Amortisation of fixed assets	2.4 and 2.5	(7,755)	(5,999)
Impairment and gains/(losses) on disposal of assets	2.4 and 4.1.a	(94)	(1,261)
Impairment and gains/(losses) on disposals of financial
instruments	2.1.d	-	(8,324)
OPERATING PROFIT		517,734	497,357
Financial income	3.3	2,364	14,307
From marketable securities and other financial instruments		2,364	14,307
Third parties		2,364	14,307
Financial expenses	3.3	(70,867)	(61,460)
For debts with group companies and associates		(65,424)	(53,544)
For debts with third parties		(5,443)	(7,916)
Exchange differences	3.3 and 4.1.b	(152)	(71)
FINANCIAL RESULT		(68,655)	(47,224)
PROFIT/(LOSS) BEFORE TAX		449,079	450,133
Income tax	4.2.e	11,955	13,187
PROFIT/(LOSS) FOR THE YEAR FROM CONTINUING
OPERATIONS		461,034	463,320
DISCONTINUED OPERATIONS		-	-
PROFIT/(LOSS) FOR THE YEAR		461,034	463,320

The accompanying Notes 1 to 5 constitute an integral part of the Income Statement at December 31, 2023

Statement of Recognised Income and Expenses at December 31, 2023

(In thousands of euros)

	Notes	12.31.2023	12.31.2022
RESULTS TO THE INCOME STATEMENT		461,034	463,320
INCOME AND EXPENSES RECOGNISED DIRECTLY IN EQUITY		-	1,496
From cash flow hedges		-	2,836
For grants, donations and bequests received		-	(841)
Tax effect		-	(499)
AMOUNTS TRANSFERRED TO THE INCOME STATEMENT		-	(2,105)
From cash flow hedges		-	(2,807)
For grants, donations and bequests received		-	-
Tax effect		-	702
TOTAL RECOGNISED INCOME AND EXPENSES		461,034	462,711

The accompanying Notes 1 to 5 constitute an integral part of the Statement of Recognised Income and Expenses at December 31, 2023

Statement of Total Changes in Equity at December 31, 2023

(In thousands of euros)

	Note	Capital	Issue premium and reserves	Treasury shares	Profit/(loss) for the year	Interim dividend	Other equity instruments	Adjustments for changes in value	Grants, donations and bequests	Total Equity
BALANCE ADJUSTED AT THE BEGINNING OF 2022		392,985	2,024,095	(12,464)	457,259	(177,812)	6,529	(22)	631	2,691,201
Total recognised income and expenses		–	–	–	463,320	–	–	22	(631)	462,711
Transactions with shareholders		–	12,217	–	(266,718)	(179,684)	–	–	–	(434,185)
Distribution of dividends	1.5	–	12,217	–	(266,718)	(179,684)	–	–	–	(434,185)
Transactions with shares		–	–	(9,677)	–	–	–	–	–	(9,677)
Other changes in equity		–	100	3,775	(190,541)	177,812	(2,798)	–	–	(11,652)
Payments based on equity instruments	3.1.c	–	100	3,775	–	–	(2,798)	–	–	1,077
Other changes		–	–	–	(190,541)	177,812	–	–	–	(12,729)
BALANCE AT DECEMBER 31, 2022		392,985	2,036,412	(18,366)	463,320	(179,684)	3,731	–	–	2,698,398
BALANCE ADJUSTED AT THE BEGINNING OF 2023		392,985	2,036,412	(18,366)	463,320	(179,684)	3,731	–	–	2,698,398
Total recognised income and expenses		–	–	–	461,034	–	–	–	–	461,034
Transactions with shareholders		–	–	–	(269,627)	(181,841)	–	–	–	(451,468)
Distribution of dividends	1.5	–	–	–	(269,627)	(181,841)	–	–	–	(451,468)
Transactions with treasury shares		–	–	1,011	–	–	–	–	–	1,011
Other changes in equity		–	14,207	1,373	(193,693)	179,684	(770)	–	–	801
Payments based on equity instruments	3.1.c	–	98	1,373	–	–	(770)	–	–	701
Other changes		–	14,109	–	(193,693)	179,684	–	–	–	100
BALANCE AT DECEMBER 31, 2023		392,985	2,050,619	(15,982)	461,034	(181,841)	2,961	–	–	2,709,776

The accompanying Notes 1 to 5 constitute an integral part of the Statement of Total Changes in Equity at December 31, 2023.

Cash Flow Statement at December 31, 2023

(In thousands of euros)

	Notes	12.31.2023	12.31.2022
CASH FLOWS FROM OPERATING ACTIVITIES (I)		569,186	503,344
Profit/(loss) for the year before taxes		449,079	450,133
Adjustments to profit		(461,013)	(479,529)
Amortisation of fixed assets	2.4 and	7,755	5,999
Variation of provisions		677	262
Attribution of grants		(244)	(17)
Gains/losses due to decreases and disposals of assets		64	1,261
Gains/losses due to decreases and disposals of financial instruments		-	(5,740)
Financial income and dividends		(540,314)	(555,546)
Financial expenses	3.3	70,867	61,460
Impairment		30	14,064
Exchange differences		152	71
Other income and expenses		-	(1,343)
Changes in working capital		4,770	5,477
Inventories	2.3	(4,422)	-
Trade and other receivables		1,908	(1,039)
Other current assets		751	(663)
Trade and other payables		7,458	7,052
Other current liabilities		(925)	94
Other non-current assets and liabilities		-	33
Other cash flows from operating activities		576,350	527,263
Interest paid		(57,804)	(57,700)
Dividends received		632,504	533,343
Interest received		2,009	12,738
Income tax paid (received)		(359)	38,882
CASH FLOWS FROM INVESTING ACTIVITIES (II)		32,009	607,290
Payments for investments		(319,015)	(164,915)
Group companies and associates	1.4	(307,353)	(149,145)
Intangible assets and property, plant and equipment	2.4 and	(7,522)	(15,770)
Other financial assets		(4,140)	-
Proceeds from disposals		351,024	772,205
Group companies and associates	1.4	351,000	772,205
Intangible assets and property, plant and equipment		24	-
CASH FLOWS FROM FINANCING ACTIVITIES (III)		(606,776)	(1,183,072)
Proceeds from and payments on equity instruments		759	(8,425)
Acquisition of equity instruments		-	(9,679)
Disposal of equity instruments		759	1,254
Proceeds from and payments on financial liabilities	3.2	(156,067)	(728,245)
- Issue of debts with credit entities		928	28,779
- Issue of debts with group companies and associates		524,950	358,856
- Repayment and amortisation of debts with credit entities		(1,933)	(242,138)
- Repayment and amortisation of debts with group companies and associates		(680,012)	(873,742)
Dividends paid and remuneration on other equity instruments		(451,468)	(446,402)
- Dividends	1.5	(451,468)	(446,402)
EFFECT OF EXCHANGE RATE FLUCTUATIONS (IV)		(6)	(124)
NET INCREASE/DECREASE IN CASH AND EQUIVALENTS (I + II + III + IV)		(5,587)	(72,562)
Cash and cash equivalents at beginning of the year	3.6	71,936	144,498
Cash and cash equivalents at year-end		66,349	71,936

The accompanying Notes 1 to 5 constitute an integral part of the Cash Flow Statement at December 31, 2023

1. Company activities and presentation bases

RELEVANT ASPECTS

Results

• Net profit attributed to the Company decreased by 0.5% with respect to 2022, amounting to 461 million euros.
• Net profit per share amounted to 1.76 euros per share as compared to 1.77 euros per share in 2022.
• The proposed dividend payment per share for 2023 amounts to 1.74 euros per share (1.72 euros per share in 2022) (Note 1.5).
• The Board of Directors proposed the following distribution of net profit corresponding to 2023 for the Parent Company, Enagás, S.A. (Note 1.5):

Negative working capital

• At December 31, 2023 the balance sheet displayed a negative working capital of 128 million euros, which has reduced compared to the previous year mainly due to the new maturity of debts to group companies. However, the Company has been granted undrawn financial availability amounting to 1,559,037 thousands of euros as detailed in Note 3.6 and it therefore does not represent a liquidity risk.

Group activity

• On December 28, 2023, Royal Decree-Law 8/2023 of December 27 was issued, providing that Enagás, as the operator of the natural gas transmission network, may operate as the provisional operator of the hydrogen backbone transmission network.

Investments in group and multigroup companies

• At December 31, 2023 Enagás, S.A. held financial instruments through which it carries out some of its activities.
• During the 2023 financial year, Enagás S.A. has made investments of 305.2 million euros in its subsidiaries (Note 1.4.a).
• In 2023, the Company became a shareholder of the German company Hanseatic Energy Hub after acquiring 10% of its shareholding for 2.1 million euros. This company is building the Stade regasification plant, key to the supply of liquefied natural gas (LNG) in Europe (Note 1.4.a).

Gasoducto Sur Peruano, S.A. ("GSP")

• In relation to the situation of the investment in GSP, as a result of the termination of the concession contract on January 24, 2017, the dispute between the Peruvian State and Enagás regarding the application of the investment recovery mechanism established in the GSP Concession contract continues. In this regard, an international arbitration was initiated in 2018 under the Agreement for the Promotion and Reciprocal Protection of Investments (hereinafter APPRI) Spain-Peru, as detailed in Note 1.4.c submitted to the International Centre for Settlement of Investment Disputes (hereinafter ICSID). This proceeding continues to take its regular course, and once hearings have been held and briefs filed in the second half of 2022, the award is expected. According to the indications of the Arbitration Court, it is at an advanced stage and is expected to be issued during the first half of 2024.
• At December 31, 2023, the total amount to be recovered by GSP amounted to 454,275 thousands of euros (471,401 thousands of euros at December 31, 2022) relating to both the recovery of the financial investment in this company and the credit rights associated with the recovery of the guarantees executed against the Enagás Group as a result of the termination of the concession contract in GSP (Note1.4.c).

1.1 Company activity

Enagás, S.A, a company incorporated in Spain on July 13, 1972 in accordance with the Corporate Enterprises Act, is the parent company of a group of entities including interests in subsidiaries, associated companies, joint operations and joint ventures, which are engaged in various activities and, together with Enagás, S.A., the Enagás Group (hereinafter the Group). Its corporate purpose is the transmission, storage and regasification of natural gas, as well as all related functions with the technical management of the gas system.

a. Corporate purpose

• a. Regasification, basic and secondary transmission as well as storage of natural gas, via the corresponding gas infrastructure or facilities, of its own or of third parties, and also the performance of auxiliary activities or others related to the aforementioned activities.
• b. Design, construction, start up, exploitation, operation, and maintenance of all types of complementary gas infrastructure and facilities, including telecommunications networks, remote control and control of any nature, and electricity networks, whether its own or of third parties.
• c. Development of all functions relating to technical management of the gas system.
• d. Transmission and storage activities for carbon dioxide, hydrogen, biogas, and other energy-related fluids, via the corresponding facilities, of its own or of third parties, as well as the design, construction, start up, exploitation, operation, and maintenance of all types of complementary infrastructure and installations necessary for said activities.
• e. Activities for making use of heat, cold, and energies associated with its main activities or arising from them.
• f. Rendering of services of a diverse nature, among them, engineering, construction, advisory, and consultancy services in connection with the activities relating to its corporate purpose as well as participation in natural gas markets management activities to the extent they are compatible with the activities permitted for the Company by law.

On December 28, 2023, Royal Decree-Law 8/2023 of December 27 was issued, providing that Enagás, as the operator of the natural gas transmission network, may operate as the provisional operator of the hydrogen backbone transmission network.

The above activities can be carried out by Enagás, S.A. itself or through companies with an identical or analogous corporate purpose in which it holds interest, provided they remain within the scope and limitations established by legislation applicable to the hydrocarbons sector. In accordance with said legislation, the activities related to transmission and technical management of the system which are of a regulated nature must be carried out by two subsidiaries entirely owned by Enagás, S.A. (Enagás Transporte, S.A.U. and Enagás GTS, S.A.U., respectively).

Consequently, the corporate purpose includes:

• a. Management of the corporate group comprised of the interest held in share capital of companies belonging to the group.
• b. Rendering of assistance or support services to affiliates, including the provision of appropriate guarantees and reinforcement for them.

b. Other information

Its registered address is located at Paseo de los Olmos, 19, 28005, Madrid. The Articles of Association and other public information about the Company and its Group may be consulted on its web page, www.enagas.es, and at its registered office.

In addition to the operations carried out directly, Enagás, S.A., as the parent company of the Enagás Group and in accordance with current legislation, is obliged to separately prepare consolidated accounts of the Group, which also include interests in subsidiaries, associates, joint operations and joint ventures.

The main figures of the Consolidated Annual Accounts of the Enagás Group for 2023 and 2022 are the following:

	12.31.2023	12.31.2022
Total assets	8,507,270	9,398,577
Equity	2,999,761	3,218,302
Revenue	907,570	957,100
Net profit/(loss)	342,528	375,774

1.2 Basis of presentation

These Annual Accounts have been prepared by the Directors in accordance with the financial information regulatory framework applicable to the Company, which is established in:

• i. Commercial Code and remaining mercantile legislation.
• ii. National Chart of Accounts approved by Royal Decree 1514/2007 of November 16, which since its publication has been amended several times, the latest of which is Royal Decree 1/2021 of January 12, adapting it to the international accounting standards adopted by the European Union as regards accounting for financial instruments and revenue recognition.
• iii. Compulsory regulations approved by the Accounting and Audit Institute, in development of the National Charts of Accounts and its complementary standards.
• iv. The other Spanish accounting regulations to be applied.

In addition, no non-compulsory accounting principles have been applied.

Also, the Directors authorised these Annual Accounts for issue in due consideration of all compulsory accounting principles and standards with a significant effect on the Annual Accounts.

The Annual Accounts of Enagás, S.A. and its Consolidated Group for financial year 2023 were prepared by its Directors at the Board of Directors meeting held on February 19, 2024. The 2022 Annual Accounts of Enagás S.A. and its consolidated Group were approved at the Enagás, S.A. General Shareholders' Meeting held on March 30, 2023 and duly filed at the Madrid Companies Registry.

These Annual Accounts are presented in thousands of euros (unless otherwise stated).

a) Going concern principle

The Annual Accounts of the Company have been prepared on a going concern basis.

At December 31, 2023, the Company has negative working capital in the amount of 128 million euros (462 million euros at December 31, 2022). However, the Company has been granted undrawn financial availability as detailed in (Note 3.6) and it therefore does not represent a liquidity risk.

b) Materiality criteria

The accompanying Annual Accounts do not include the information or disclosures which, not requiring detail due to their qualitative importance, the Group did not consider of material significance or important relative to the concept of materiality as defined in the conceptual framework of the National Charts of Accounts, taking into account the Annual Accounts as a whole.

c) True and fair view

The accompanying Annual Accounts, which were obtained from the Company's accounting records, are presented in accordance with the regulatory financial reporting framework applicable to the Company and, in particular, with the accounting principles and criteria set out therein and, accordingly, provide a true and fair view of the Company's equity, financial position, results of operations, the statement of changes in equity and cash flows during the year.

These Annual Accounts have been prepared by the Directors of the Company and will be submitted for approval by the General Shareholders' Meeting. It is expected that they will be approved without modification.

d) Comparison of information

In compliance with Spanish mercantile law, for comparative purposes for each of the headings presented in the Balance Sheet, the Income Statement, the Statement of Changes in Equity, and the Cash Flow Statement, in addition to the figures for 2023, those of 2022 have been included. The Notes also include quantitative information from the previous year, except when an accounting standard specifically establishes this as unnecessary.

e) Grouping of items

Certain items on the Balance Sheet, the Income Statement, the Statement of Changes in Equity and the Cash Flow Statement are grouped together to make them easier to understand, although when individual data is significant, specific information has been included in the respective Notes to these Annual Accounts.

f) Changes in accounting policies

In 2023 there were no significant changes in accounting policies with respect to those applied in 2022.

g) New standards

New international taxation standard (Pillar Two)

Pillar Two rules shall apply to the Enagás Group, where Enagás S.A. is the parent company. Pillar Two legislation is currently being processed in Spain. According to the provisions of the Preliminary Draft Law published on December 19, 2023, the rule, once approved, will enter into force, in general, with retroactive effect from January 1, 2024, so, as of December 31, 2023, neither the Group nor the Company have any impact related to the rules of Pillar Two on its current tax expense in 2023.

From 2024 onwards, the Group will have to pay a supplementary tax that will tax the profits obtained in any jurisdiction in which it operates in which the effective tax rate, calculated at the jurisdictional level, is lower than the minimum rate of 15%.

The accounting standards that regulate income tax in Spain are Accounting and Valuation Standard (NRV) 13 Income Tax, set out in the National Charts of Accounts (PGC), approved by Royal Decree 1514/2007, of November 16, and the Resolution of February 9, 2016, of the Spanish Institute of Accountants and Auditors (ICAC), which develops the rules for recording, valuation and preparation of the annual accounts for the accounting of income tax (ICAC Resolution on the Tax). These standards have not yet been amended to reflect the temporary exception to the recognition and disclosure of deferred tax assets and liabilities arising from the Pillar Two standard, in line with the amendments included in IAS-EU 12. Although a preliminary analysis has been performed for the Group, which will have to be updated in accordance with the Pillar Two standard in Spain taking into account the existing regulatory framework, an up to date calculation has been made of the minimum complementary tax derived from the application of the Pillar Two standard and, as a result of the aforementioned analysis, all Group entities have an effective tax rate that exceeds 15%. Therefore, according to the estimate made, in 2024, the new global minimum tax should have no impact neither for the Company nor for the companies that comprise the Enagás Group.

1.3 Estimates and accounting judgements made

The results and determination of assets and liabilities disclosed in the Annual Accounts are sensitive to the accounting principles and policies, measurement bases and estimates used by the Company's Directors.

In the 2023 Annual Accounts, the Company's Senior Management have occasionally used estimates, subsequently ratified by the Directors, in order to quantify certain assets, liabilities, income, expenses and commitments recognised therein. These estimates basically relate to the following:

• a. The useful life of intangible assets and PP&E (Notes 2.4 and 2.5).
• b. The measurement of assets to determine the possible existence of impairment losses (Notes 1.4.a, 2.6 and 4.1.a).
• c. Provisions of invoices pending formalisation (Notes 2.2 and 2.3).
• d. The calculation of provisions and contingencies (Note 2.8).
• e. The calculation of income tax and deferred tax assets (Note 4.2).
• f. Impairment loss on financial assets measured at amortised cost (Note 1.4).
• g. The fair value of equity instruments granted under the Long-Term Incentive Plan ("ILP") (Note 4.4).

Although these estimates were made on the basis of the best information available at December 31, 2023 regarding the facts analysed, it is possible that future events may require these to be modified (upwards or downwards) in the years ahead. This would be carried out prospectively, recognising the effects of the changes to accounting estimates in the Annual Accounts.

During the twelve-month period ended December 31, 2023, there were no significant changes to the estimates made at 2022 year-end, and thus future periods are also not expected to be affected.

1.4 Investments in group and multigroup companies and other financial investments

Financial assets

Financial assets at cost

The Company includes in this category:

• Investments in the equity of group and multigroup companies are classified as financial assets at cost.
• Any other financial asset that initially should be classified in the fair value portfolio with changes in the income statement when it is not possible to obtain a reliable estimate of its fair value.

Investments included in this category are initially measured at cost, which is the fair value of the consideration given plus directly attributable transaction costs.

In the case of investments in group entities, if an investment existed before the entity was classified as a group entity, jointly controlled entity or associate, the cost of that investment is measured at the carrying amount that the investment should have had immediately before the entity is classified as such.

Subsequent measurement is also at cost, less any the cumulative amount of the impairment valuation adjustments.

Financial assets at amortised cost

The Company classifies a financial asset in this category if the following conditions are met:

• The Company holds the investment under a management model whose objective is to collect the cash flows from the performance of the contract.
• The contractual features of the financial asset give rise to cash flows at specified times that consist solely of the collection of principal and interest on the principal outstanding.

Generally, loans and advances to customers and other debtors are included in this category.

In addition, the Company has equity instruments where it holds the investment in order to receive cash flows from the execution of a contract, through carry-forward tax losses and R&D deductions, and the contractual conditions of the financial asset give rise, on specified dates, to cash flows, consisting of principal and interest payments on the outstanding principal amount.

Financial assets classified in this category are initially measured at fair value, which, until proven otherwise, is assumed to be the transaction price, which is the fair value of the consideration given plus capitalised transaction costs.

Trade receivables maturing in no more than one year and not bearing a contractual interest rate, as well as advances and loans to employees, dividends receivable and disbursements on equity instruments, the amount of which is expected to be received in the short-term, may be measured at their face value when the effect of not discounting the cash flows is not significant.

The amortised cost method is used for subsequent measurement. Accrued interest is recognised in the income statement (financial income) using the effective interest rate method.

Receivables maturing in less than one year which, as described above, are initially measured at nominal value,

will continue to be measured at nominal value, unless they are impaired.

If the contractual cash flows of a financial asset measured at amortised cost change due to financial difficulties of the issuer, the Company generally assesses whether an impairment loss should be recognised.

Derecognition of balance of financial assets

The Company derecognises a financial asset from the balance sheet when:

• The contractual rights to the cash flows from the asset expire. A financial asset is derecognised when it expires and the Company has received the related amount.
• The contractual rights to the cash flows from the financial asset have been transferred. In this case, the financial asset is derecognised when the risks and rewards of ownership have been substantially transferred.

Impairment losses on financial assets

Financial assets at cost

• At the closure of each financial year, or when there are indications of loss of value, the Company analyses the recoverability of the equity investments in group and multigroup companies, in order to verify that the recoverable amount of these investments is greater than the value recognised in the Company's accounting records.
• In order to calculate the recoverable amount of the Group companies, an analysis of the updated cash flows is prepared, based on detailed future projections for these investments.
• The recognition of impairment losses and reversal of impairment losses, if any, are recognised as income or expense in the income statement. The reversal is limited to the carrying amount of the investment that would have been recognised at the reversal date if no impairment loss had been recognised.

Financial assets at amortised cost

• At least at year-end, the Company analyses whether there is objective evidence that the value of a financial asset is impaired as a result of one or more events that occurred after its initial recognition and that cause a reduction or delay in the estimated future cash flows, which may be caused by the debtor's insolvency.
• If such evidence exists, the impairment loss is calculated as the difference between the carrying amount and the present value of future cash flows. This includes, if applicable, those arising from the enforcement of collateral and personal guarantees, which are estimated to be generated, discounted at the effective interest rate calculated at the time of initial recognition. For financial assets at variable interest rates, the effective interest rate applicable at the closing date of the annual accounts is used in accordance with the contractual conditions.
• Impairment losses, as well as their reversal when the amount of such loss decreases due to causes related to a subsequent event, are recognized as an expense or income, respectively, in the income statement. The reversal is limited to the carrying amount of the asset that would have been recognised at the reversal date if no impairment loss had been recognised.

SIGNIFICANT ESTIMATES AND JUDGEMENTS

Impairment of financial assets

• With regard to the impairment test relating to group and multigroup companies, the discount rate applied to Spanish companies in 2023 was between 5% and 7% according to the business that it is allocated to (between 5.5% and 9.5% in 2022). Investments in international companies range from 7.3% to 10.3%, depending on the business and the country in which they operate (6.5% to 9.5% in 2022). The sensitivity analysis of the discount rate of 0.5% and -0.5% carried out at 2023 year-end indicates that the Company shows no sign of significant risks associated with potential reasonable variations. Thus, the Company's Management considers that, within the specified ranges, there would be no changes in the impairment calculation.
• As a substitute for the present value of future cash flows, the Company uses the market value of the instrument, provided that it is sufficiently reliable to be considered representative of the value that could be recovered by the Company.

The breakdown of accounts under the headings "Investments in group and multigroup companies" and "Other financial investments", both short- and long-term at year-end 2023 and 2022 is as follows:

	2023	2022
Long-term investments in group and multigroup companies and other financial investments	5,492,722	5,550,206
Long-term investments in group and multigroup companies (Note 1.4.a)	5,034,663	5,078,089
Equity instruments	5,034,663	5,078,089
Long-term financial investments	458,059	472,117
Loans to third parties	5	11
Other financial assets (Note 1.4.c)	458,054	472,106
Short-term investments in group and multigroup companies and other financial investments	126,564	235,510
Short-term investments in group and multigroup companies (Note 1.4.a)	126,564	235,510
Credits to group companies for tax effect (1) (Note 1.4.b)	86,864	100,510
Dividends receivable (2)	39,700	135,000

(1) As mentioned in Note 4.2.b, Enagás S.A. is the parent company of Tax Consolidation Group 493/12 for corporate income tax, and this amount matches the accounts receivable from the different companies belonging to the group in respect of their contribution to the group's taxable income.

(2) This amount relates mainly to the dividends receivable at December 31, 2023 which were distributed by Enagás Transporte, S.A.U. in 2023 (Note 2.1.a)

a) Equity instruments

		% Stake					Thousands of euros
					Result						Carrying amount
								Dividends		Accumulate
Name / Address / Activity	Direct	Indirec t	Capital	Operating income	Net	Remaining Equity	Total Equity	Received	Cost	d impairment	Total
2023									5,052,914		(18,251) 5,034,663
Enagás Transporte, S.A.U.	100	-	532,089	305,966	248,748	2,204,006	2,984,843	306,400	2,775,311	-	2,775,311
Enagás GTS, S.A.U.	100	-	5,914	609	816	5,595	12,325	-	33,925	-	33,925
Enagás Financiaciones, S.A.U.	100	-	890	67,122	9,144	(698)	9,337	14,325	8,338	-	8,338
Enagás Internacional, S.L.U.	100	-	184,340	157,448	156,827	1,868,326	2,209,493	216,478	2,072,480	-	2,072,480
Enagás Perú SAC	-	100	4,496	(349)	(115)	(3,302)	1,079	-	1	(1)	-
Enagás México S.A. de C.V.	1	99	3,907	(55)	(62)	(3,707)	139	-	89	(89)	-
Enagás Emprende, S.L.U.	100	-	28,904	(2,211)	(1,127)	44,532	72,310	-	96,376	(9,946)	86,430
Enagás Services Solutions, S.L.U.	100	-	9,618	1,143	2,296	14,197	26,110	-	32,104	(8,215)	23,889
Enagás Infraestructuras de Hidrógeno, S.L.U.	100	-	2,838	(2,486)	(1,795)	6,761	7,804	-	9,453	-	9,453
Mibgas Derivatives, S.A.	19	9	500	439	633	65	1,198	-	97	-	97
Enagás Renovable, S.A.	60	-	8,671	(8,085)	(8,544)	22,165	22,292	-	17,419	-	17,419
Estación de Compresión Soto la Marina, S.A.P.I. de C.V.	48	2	10,553	4,749	2,266	7,656	20,476	-	5,147	-	5,147
Hanseatic Energy Hub GMBH	10	-	757	(1,484)	(3,315)	15,216	12,658	-	2,122	-	2,122
Hanseatic Energy Hub Operations	50.1	-	100	-	-	-	100	-	52	-	52
2022									5,096,342		(18,251) 5,078,089
Enagás Transporte, S.A.U.	100		– 532,089	376,835	296,327	2,520,752	3,349,168	432,540	3,076,096	-	3,076,096
Enagás GTS, S.A.U.	100	–	5,914	(21)	(1,243)	6,868	11,539	-	33,956	-	33,956
Enagás Financiaciones, S.A.U.	100	–	890	58,408	9,469	6,269	16,628	5,971	8,315	-	8,315
Enagás Internacional, S.L.U.	100	-	162,692	161,467	149,836	1,797,241	2,109,769	100,000	1,855,990	-	1,855,990
Enagás Perú SAC	-	100	4,496	(162)	(223)	(2,707)	1,566	-	1	(1)	-
Enagás México S.A. de C.V.	1	99	3,779	(840)	(883)	(2,628)	268	-	89	(89)	-
Enagás Emprende, S.L.U.	100	-	22,304	(2,773)	(7,695)	37,593	52,202	-	74,375	(9,946)	64,427
Enagás Services Solutions, S.L.U.	100	-	7,218	(50)	(5,646)	14,242	15,814	-	24,104	(8,215)	15,889
Enagás Infraestructuras de Hidrógeno, S.L.U.	100	-	2,838	194	(145)	6,906	9,599	-	9,453	-	9,453
Mibgas Derivatives, S.A.	19	9	500	198	198	(128)	570	-	97	-	97
Enagás Renovable, S.A.	60	-	4,320		(7,536) (13,059)	14,646	16,218	-	8,719	-	8,719
Estación de Compresión Soto la Marina, S.A.P.I. de C.V.	48	2	10,553	5,419	2,825	8,293	21,671	-	5,147	-	5,147

These Group companies are not listed on the Securities Markets.

In 2023, the main following changes were made to the Company's investments on equity instruments:

Enagás Transporte

In 2023 Enagás Transporte, S.A.U. refunded "Other contributions from shareholders" for a total amount of 351,000 thousands of euros.

Also, on December 19, 2023, the Company made a contribution of funds to Enagás Transporte, S.A.U. amounting to 50,000 thousands of euros as "Other contributions from shareholders".

Enagás Internacional

On April 19, 2023, the Company carried out a capital increase in Enagás Internacional, S.L.U. by issuing 3,267,840 new shares with a nominal value of one euro each, with a total issue premium of 29,411 thousands of euros, through a fully disbursed monetary contribution.

On December 19, 2023, the Company carried out a capital increase by issuing 18,380,000 new shares with a nominal value of one euro each, with a total issue premium of 165,420 thousands of euros, through a fully disbursed monetary contribution.

Enagás Emprende

On June 20, 2023, Enagás Emprende, S.L.U. carried out a capital increase by issuing 2,700,000 new shares with a nominal value of one euro each, with a total issue premium of 6,300 thousands of euros, through a fully disbursed monetary contribution.

On December 11, 2023, Enagás Emprende, S.L.U. carried out a new capital increase by issuing 3,900,000 new shares with a nominal value of one euro each, with a total issue premium of 9,100 thousands of euros, through a fully disbursed monetary contribution.

Enagás Services Solutions

On May 24, 2023, the Company Enagás, S.A. carried out a capital increase in Enagás Services Solutions S.L.U. by issuing 1,200,000 new shares with a nominal value of one euro each, with a total issue premium of 2,800 thousands of euros, through a fully disbursed monetary contribution.

On December 1, 2023, the Company Enagás, S.A. carried out a capital increase in Enagás Services Solutions, S.L.U. by issuing 1,200,000 new shares with a nominal value of one euro each, with a total issue premium of 2,800 thousands of euros, through a fully disbursed monetary contribution.

Enagás Renovable

On April 11, 2023, the Company carried out a capital increase in Enagás Renovable, S.A. amounting to 2,610 thousands of euros with an issue premium of 6,090 thousands of euros through monetary contribution. This capital increase involved the issue of 2,610,000 new shares at a nominal value of one euro each.

Hanseatic Energy Hub GmbH (HEH)

On September 26, 2023, Enagás S.A. closed the acquisition of a 10% stake in the German company Hanseatic Energy Hub GmbH, a company dedicated to storage and regasification in the city of Stade, for 1,684 thousands of euros. In addition, it has capitalised acquisition costs amounting to 350 thousands of euros.

In addition, to finance the construction of the HEH regasification terminal, the Company has made capital increases to its percentage during the months of October and December for a total amount of 88 thousands of euros.

Hanseatic Energy Hub Operation (HEH Opco)

In relation to the above investment, on November 29, 2023, the Company, together with the other HEH shareholders, incorporated the company Hanseatic Energy Hub Operation, which will be the operator of the HEH terminal and in which Enagás S.A. holds a 50.1% stake through a capital increase for a total amount of 52 thousands of euros.

Other transactions.

As a result of the approval of a new cycle of the Long-Term Incentive Plan ("ILP") on March 31, 2022 at the General Shareholders' Meeting of Enagás, S.A. (Note 4.4), in accordance with BOICAC No. 75/2008, query No. 7, the Company increased the value of the equity instruments of each of the subsidiaries with beneficiaries assigned to the Plan, i.e. Enagás Transporte, S.A.U., Enagás Financiaciones, S.A.U., Enagás Internacional, S.L.U., and Enagás Emprende, S.L.U., by a total of 237 thousands of euros in 2023 (496 thousands of euros in 2022). In addition, the Company has reduced the value of the equity instruments of its subsidiaries on the basis of the ILP 2019-2021 (Long-Term Incentive) by 15 thousands of euros for the regularisation of the plan (increase of 230 thousands of euros in 2022). The counterparty of these contributions is included under the heading "Other equity instruments" in equity on the balance sheet at December 31, 2023, as a result of the cost assumed by the Company in each of the aforementioned subsidiaries.

b) Loans to companies

At December 31, 2023 the Company has no loans granted to other group companies, except for the tax cash receivables detailed in Note 4.2.b.

c) Other financial assets

Gasoducto Sur Peruano, S.A.

In relation to the investment in Gasoducto Sur Peruano, S.A. (hereinafter "GSP") as indicated in the Consolidated Annual Accounts of the Enagás Group for 2016, on January 24, 2017 the Directorate General of Hydrocarbons of the Peruvian Government's Ministry of Energy and Mines (hereinafter the "State of Peru") sent an official letter to GSP stating "the termination of the concession agreement owing to causes attributable to the concession holder", in accordance with the terms of Clause 6.7 of the "Improvements to the Energy Security of the Country and the Development of the Gasoducto Sur Peruano" (hereinafter "the Project") concession agreement, because the financial close had not been evidenced within the period established in the agreement (January 23, 2017), and proceeded to the immediate enforcement of the totality of the guarantee for full compliance given by GSP (262.5 million dollars), which in the case of Enagás generated a payment of 65.6 million dollars. Also in January 2017, they paid GSP bank financing sureties to Enagás amounting to 162 million dollars, including both principal and interest pending payment. In December 2017, the process for delivering the Concession Assets held by GSP was substantially completed with the Peruvian State assuming control over them.

As a result of the termination of the concession contract, in accordance with the opinion of external and internal legal advisors, the Peruvian State had the obligation to apply Clause 20 of the Concession Contract, calculating the Net Carrying Amount (hereinafter NCA) of the Concession Assets, calling up to a maximum of three auctions to award the Concession, with the auction result being to pay GSP the NCA. With the amount that GSP would have received for the NCA of the Concession Assets, it would have proceeded to settle its obligations to third parties and, if appropriate, reimburse the capital contributions made by its shareholders.

As a result of inaction by the State of Peru in relation to the aforementioned procedure, on December 19, 2017, Enagás notified the Peruvian State about the existence of a dispute relating to the investment in GSP with a view to reaching an amicable agreement on the terms of Article 9.1 of the Agreement for the Reciprocal Promotion and Protection of APPRI in Spanish signed by the Republic of Peru and the Kingdom of Spain. This notification represented the beginning of the six-month period for direct contact prior to initiating international arbitration in which the APPRI acts as the mechanism for recovering the investment in GSP. Once the required six months of direct contact between Enagás and the Peruvian State had elapsed without it being possible to reach an amicable settlement of this dispute, on July 2, 2018, Enagás filed an application for the initiation of arbitration against the Peruvian State regarding its investment in GSP with the ICSID.

Through this arbitration procedure, it is expected that the Peruvian State will reimburse Enagás for its investment in GSP, this being the mechanism by which the financial assets recorded in the balance sheet would be recovered. Thus, it is expected that the Arbitration Court hearing the arbitration procedure in the ICSID will uphold the arguments of Enagás, issuing an award recognising that the Peruvian State has not protected Enagás' investment under the APPRI and, therefore, it must compensate it by paying it the value of that investment.

With respect to this ICSID arbitration procedure, the Arbitration Court was constituted on July 18, 2019, and Legal Resolution No. 1 was issued on September 24, 2019, establishing the procedural rules that govern the arbitration procedure until the award is handed down.

In accordance with this Resolution, Enagás filed its claim on January 20, 2020, and the Peruvian State replied on July 17, 2020. Subsequently, the documentary exhibition phase took place in which the parties requested each other to provide documents that each of them considered relevant. This was followed by the presentation of the reply by Enagás on May 31, 2021 and the rejoinder by the Peruvian State on October 20, 2021, with Enagás finally presenting its rejoinder on preliminary objections on January 17, 2022. The hearing phase continued in September 2022, with written submissions in November 2022. According to the indications of the Court, it is at an advanced stage and is expected to be issued during the first half of 2024.

Also with regard to the ICSID, on January 21, 2020, Odebrecht filed a request to initiate arbitration against the Republic of Peru to recover its investment in GSP.

Regarding the Enagás' statement of claim, the main argument maintained by Enagás is that, if the Peruvian State had complied with its obligation under the Concession Contract, it would have calculated the NCA and organised the three auctions, which it was obliged to do, to award the Concession, and the proceeds of the auction would have been delivered to GSP, which would have applied the amount delivered to pay its creditors and return the capital to its shareholders. Enagás' claim is based on the fact that the Peruvian State must pay 100% of the NCA to GSP, since on January 24, 2018, one year has passed since the end of the concession contract and in that time there have been no calls for auctions. The absence of an auction means that the legal advisors of Enagás believe that it should be considered that GSP would have received 100% of the NCA because it was deprived of the possibility of receiving it when not even the first auction was convened. Therefore, starting from the NCA considered, a certain payments waterfall would have been applied.

Enagás considers that, taking into account the NCA of the Concession Assets determined by an independent expert, and also taking into account the payment waterfall as per the terms of the insolvency legislation, as well as the contracts between Enagás and the members and creditors of GSP relating to subordination and credit agreements, if the State had satisfied its obligations, and thus paid GSP the amount obtained in the auction, Enagás would have recovered its investment.

With respect to the amount of the NCA, there have been no variations other than the evolution of the exchange rate for certain items in Peruvian soles, maintaining at December 31, 2023 the valuation performed by a firm of independent appraisers hired by Enagás for a total updated value of the NCA of 1,959 million dollars (1,953 million dollars at December 31, 2022).

Taking into account this updated NCA, if the payment waterfall were to be applied to it as per the terms of the insolvency laws, the subordination and the assignment of credit agreements entered into by Enagás and its partners in GSP, the Enagás Group would recover the total value of its investment claim with the ICSID in the amount of 511 million dollars.

In relation to the aforementioned contracts for the subordination of rights and assignment of credits, their effectiveness and form of application has been successively called into question by Enagás' partners in GSP through different arbitration proceedings, with the Peruvian legal advisors considering these agreements to be fully valid and enforceable. Likewise, the INDECOPI authority has recognised the full effectiveness of the aforementioned agreements in GSP's bankruptcy process. In relation to the arbitration proceeding still in process filed by Negocios de Gas, subsidiary from Aenza (formerly Graña y Montero) questioning the legitimacy of Enagás to claim its credits against GSP, on July 13, 2021, Negocios de Gas communicated to the Court its

withdrawal of the claim, thus requesting the end of the arbitration proceeding without the issuance of an award.

As regards the arbitration proceedings against the State of Peru, based on the conclusions determined by Enagás' external and internal legal advisors, the recoverability of the totality of the Enagás Group investment in GSP, consisting of receivables in relation to the aforementioned enforced guarantees to the total of 226.8 million dollars, interests of 1.8 million dollars, various invoices for professional services rendered to the amount of 7.6 million dollars and the share capital contributed to GSP for the amount of 275.3 million dollars, is considered likely.

Regarding the duration of the recovery periods, taking into account the time required to resolve a dispute of this complexity through international arbitration, as well as the timeframes indicated in the aforementioned ICSID Resolution No. 1, the review of the planned proceedings, and the indications of the Court itself, it is considered that the first half of 2024 is the estimated date for obtaining an award in favour of Enagás.

Based on this, the amounts outlined in the preceding paragraph are recorded at their updated value in the Consolidated Balance Sheet dated December 31, 2023 for a total amount of 454,275 thousands of euros (471,401 thousands of euros at December 31, 2022).

Other related matters

On March 12, 2018, Law No. 30737 was published "guaranteeing immediate payment to the Peruvian State to repair civil damage caused by corruption and related crimes". On May 9, 2018, Supreme Decree 096-2018-EF was published, enacting the regulations of the aforementioned law.

In accordance with Article 9 of Law No. 30737, legal persons and legal entities in the form of partnerships, consortiums and joint ventures who may have benefited from the awarding of contracts, or subsequent to it, jointly with persons who have been convicted or who may have acknowledged having committed crimes against the public administration, asset laundering or related crimes, or their equivalents against the State of Peru, in Peru or abroad are classified as Category 2, and therefore fall within its scope of application.

In June 2019, the Peruvian Judiciary approved the Effective Partnership Agreement reached between the Odebrecht Group and the Peruvian Public Prosecutor's Office, and the GSP project was not included as one of the projects affected by corruption-related events. Subsequently, on October 15, 2019, Enagás Internacional received notification from the Peruvian Public Prosecutor's Office informing it of the existence of an extension of this effective partnership agreement with Odebrecht, in which it would be acknowledging that it had made illegal payments - according to the Public Prosecutor's Office - with respect to the GSP project, although there are still no facts known or consistent or proven links between GSP and corruption in the awarding of the project.

With regard to other processes of effective collaboration with other third parties, in the second quarter of 2022, the judicial approval of those relating to José and Hernando Graña took place, with the remaining ones pending approval. From the information contained in the tax record, there is no consistent or proven element linking GSP to corruption in the awarding of the project.

In this regard, no new facts were presented in the arbitration before ICSID, neither in the statement of defence nor in the rejoinder, nor in the hearings held, which demonstrably and irrefutably link the GSP to corruption.

Notwithstanding the above comments on the extension of the initial Effective Collaboration Agreement signed by Odebrecht and the Public Prosecutor of Peru, there have been no significant developments regarding the actions of the Public Prosecutor of Peru on the investigation of Odebrecht's activities in Peru and other investigations carried out by the Special Team of the Peruvian Prosecutor's Office for alleged crimes that could somehow be related to the awarding of the project. In this regard, two investigations are known to be in progress:

• The first one signed with Folder 321-2014, related to aggravated collusion between a former Odebrecht employee and a public official, whose control and clean-up phase has been resumed on June 28, 2019, after the Supreme Court rejected the request of the Ad Hoc Prosecutor's Office of Peru to include one of Odebrecht's subsidiaries as a civil third party. At this stage it is expected that a decision on the opening of the oral proceedings will be taken. Based on the opinions of Enagás external legal advisors for the Peruvian criminal code, the possibility of sentencing Odebrecht's former employee is considered to be remote. In this same case, the preparatory investigative court has declared the incorporation of GSP as a liable third party as wrongful.
• In relation to the second investigation opened, sealed with Folder 12-2017, being that those under investigation include two employees of Enagás and Enagás Internacional, S.L.U., on February 27, 2020, it was decided to move to the preliminary investigation stage. Based on the opinion of our external legal advisors in Peruvian criminal law, it is maintained that to date there is no indication that the investigations could be detrimental to Enagás.

In relation to this second file, on December 30, 2020, the Peruvian Public Prosecutor's Office requested its incorporation as a civil plaintiff in the criminal proceedings in order to request the payment of a possible reparation in the aforementioned proceedings once a final judgement has been handed down, as well as in order to request possible precautionary measures that seek to ensure the eventual reparation, amounting to 1,107 million dollars for the GSP project. After the two previous initial applications were rejected on formal grounds, the last application was admitted on March 28, 2023 and thus the Public Prosecutor's Office was constituted as a civil plaintiff, with Enagás Internacional being incorporated as a civilly liable third party on August 2, 2023. Both proceedings have been contested and have not yet been decided.

The amount will be determined in detail by the criminal judge in charge once the final sentence has been handed down. According to both external and internal lawyers, the amount requested has not been duly supported nor does it comply with the possible civil liability that could be claimed on the basis of the offences referred to in the indictment. An objective reference for the calculation is the one established by Law No. 30737, which assures payment of civil compensation to the Peruvian State.

Considering the very preliminary stage of the criminal process, taking into account the elements of knowledge available to date and based on the conclusions of the specialist local lawyers, it is considered that the probability of the imposition of this compensation in any case does not exceed 50% (possible), and therefore it is not appropriate to register any provision, as it is considered a contingent liability. Likewise, in the event that it could eventually be declared well-founded, and the amount of the compensation could not be reliably estimated, the reference amount to be considered would be between 0 and 242 million dollars.

Moreover, with regard to civil compensation, even without evidence of a criminal conviction or a confession of the commission of crimes, as required under Article 9 of Law No. 30737, on June 28, 2018, the State of Peru classified Enagás Internacional on the "List of Contracts and Subjects of Category 2 indicating the legal person or legal entity included under Section II of Law No. 30737" in relation to the concession contract awarded to GSP. The application of the mentioned standard involves different measures to contribute to the payment of potential civil compensation, such as setting up an escrow account, reporting information, limiting transfers to other countries or preparing a compliance programme.

The total amount of the escrow account that would correspond to Enagás, estimated as 50% of the entire average equity that corresponds to its participation in GSP confirmed with the Ministry of Justice, amounts to 65.5 million dollars, Enagás Internacional having delivered a bank guarantee letter for this amount in August 2023.

The Peruvian State has also affirmed that the measure prohibiting companies included in Category 2 from making transfers outside of Peru, pursuant to Law No. 30737, is applicable. Based on the conclusions of Enagás' external and internal legal advisers, it is maintained that this measure would be applicable to the investment in GSP and should not restrict the dividends received by Enagás Internacional (amounting to 461.2 million dollars) and future dividends from TGP, also considering that this investment is protected by the Legal Stability Agreements in force in Peru, a regulation whose prevalence and application has been formally requested to the Peruvian state.

In order to put into practice the application of these Legal Stability Agreements, direct negotiations with the Peruvian State were initiated on February 24, 2021, followed by the submission by Enagás of a request for international arbitration under the Spanish-Peruvian APPRI on December 23, 2021. In addition, Enagás Internacional has pledged its TGP shares in favour of Enagás Financiaciones, S.A.U. and Enagás, S.A. to guarantee the payment of its present or future obligations and debts.

With respect to this second ICSID arbitration procedure, the Arbitration Court was constituted on December 5, 2022, and Legal Resolution No. 1 was issued on January 26, 2023, establishing the procedural rules that govern the arbitration procedure until the award is handed down. On June 1, 2023, Enagás' statement of claim was filed with ICSID, followed by the statement of defence filed by the Peruvian State on October 6, 2023.

In view of the above, it is still maintained that these regulations do not have a negative effect on the recovery of accounts receivable through the international arbitration process indicated above recorded on the balance sheet at December 31, 2023.

Based on all of the above, the directors of Enagás, in line with the opinion of their external and internal legal advisers, and of an independent expert and independent expert accountant, consider these facts to have no bearing on the estimation for recovery of the investment in the stake in GSP and the previously mentioned receivables to the amount of 454,275 thousands of euros (471,401 thousands of euros at December 31, 2022).

Laika Research, A.I.E.

During 2022, the Company acquired 50% together with Enagás Infraestructuras de Hidrógeno, S.L.U., which acquired the other 50%. of the Economic Interest Grouping Laika Research, A.I.E. (hereinafter "A.I.E."), whose activity is research and development and technological innovation.

This investment is recorded under "Financial assets measured at amortised cost" as the A.I.E.'s activity is directed by another entity not related to the Company, which retains both the majority of the benefits and the risks of the activity, with the Company taking only tax incentives regulated by Spanish legislation. Enagás, S.A. charges the carry-forward tax losses and R&D deductions generated by the A.I.E. against the investments and, as a difference with the debt recorded with the tax authorities, the corresponding income.

In this regard, during 2023 the Company carried out a capital increase in the aforementioned A.I.E., for an amount of 2,451 thousands of euros.

At December 31, 2023 the Company has recognised carryforward tax losses and R&D deductions relating to 2023, derecognising the total investment in the A.I.E. and recognising income of 730 thousands of euros (1,373 thousands of euros at December 31, 2022).(See Notes 4.2 and 2.1).

1.5 Dividends distributed and proposed

a) Proposed distribution of profit attributable to the company

The appropriation of 2023 profit corresponding to the Company proposed by the Board of Directors and which will be submitted for approval by the General Shareholders' Meeting is as follows:

	12.31.2023
Interim	455,359
Voluntary reserves	5,675
TOTAL	461,034

At a meeting held on December 18, 2023, the Board of Directors of Enagás, S.A. agreed to distribute an interim dividend charged against 2023 profit, based on the necessary liquidity statement, expressed in thousands of euros, amounting to 181,841 thousands of euros (0.696 euros gross per share), in accordance with Article 277 of the Spanish Corporate Enterprises Act.

The provisional accounting records prepared by the Company, in accordance with legal requirements and which presented balances sufficient for the distribution of the interim dividend in 2023, were as follows:

Provisional accounting statement at November 30, 2023
Net accounting result	(8,757)
10% legal reserve	-
Interim dividend received from Group companies	468,425
Profit "available" for distribution	459,668
Forecast payment on account	(181,841)
Forecast cash balance for the period from November 30 to December 31
Cash balance	67,833
Projected collection for the period considered	434,735
Credit lines and loans available from financial institutions	1,559,220
Payments projected for the period under consideration (including the payment on account)	(418,276)
Estimated available financing after dividend

The aforementioned interim dividend was paid on December 22, 2023.

distribution 1,643,512

The gross complementary dividend proposed (1.044 euros per share) is subject to approval by the ordinary General Shareholders' Meeting and is not included as a liability in these Annual Accounts. This gross complementary dividend will amount to a maximum of 273,518 thousands of euros.

b) Total dividends paid

In addition to the aforementioned interim dividend for 2023, during 2023 Enagás, S.A. distributed the gross complementary dividend for 2022.

This dividend amounted to 269,627 thousands of euros (1.032 euros per share) and was paid on July 6, 2023.

1.6 Commitments and guarantees

ACCOUNTING POLICIES

• A financial guarantee contract is a contract which requires that the issuer makes specific payments to repay the holder for losses incurred when a specific debtor does not fulfil payment obligations at maturity, in accordance with the original or modified conditions of a debt instrument. The rights and obligations associated with a financial guarantee will be considered as financial assets and financial liabilities. For subsequent valuation, a contract will be recognised as the greater amount of a) the amount resulting from standards relating to provisions or b) accumulated amortisation of the initial measurement and possible accrued income.
• An investment commitment corresponds to that obligation contracted with a related party which can give rise to outflows of funds or other resources in the future. The following is included among these: commitments not recognised in connection with contributing funds or resources as a consequence of incorporation agreements, capital intensive projects carried out by a business combination, commitments not recognised in connection with providing loans or other financial support to the joint venture, or commitments not recognised in connection with acquiring a stake, regardless of whether a specific future event occurs or not

At December 31, 2023 and 2022, the detail of the Company's commitments and guarantees is as follows:

Commitments and	Group and related companies
guarantees	(Note 4.3)	Third parties	Total
2023
Guarantees on financial
debt	4,457,900	-	4,457,900
Guarantees and sureties granted -
Other	44,189	178,193	222,382
Investment
commitments	5,000	—	5,000
Total	4,507,089	178,193	4,685,282
2022
Guarantees on financial
debt	4,992,260	–	4,992,260
Guarantees and sureties granted -
Other	71,674	99,239	170,913
Total	5,063,934	99,239	5,163,173

a) Guarantees for debt with group companies and related entities

	Thousands of euros
	2023	2022
E. Financiaciones debt guarantee	3,180,303	3,657,045
Guarantee on the Enagás Internacional debt	361,484	384,489
Guarantee on the TAP debt	645,000	557,000
Guarantee on the Enagás Holding USA/Enagás USA debt	271,113	393,726
Total	4,457,900	4,992,260

The guarantees outlined above mainly correspond to:

• The guarantees provided by Enagás, S.A. for all the debt of Enagás Financiaciones for both the bond issues and the loans granted by different entities. These secured transactions include the Euro Medium Term Note (EMTN) programme for a maximum amount of 4,000 million euros which was listed on the Luxembourg Stock Exchange in 2012 and renewed on July 27, 2023, as well as the Euro Commercial Paper (ECP) programme for a maximum amount of 1,000 million euros, listed on the Irish Stock Exchange on May 4, 2017, and renewed on July 27, 2023, with no amounts drawn on the latter.

The guarantees provided by Enagás, S.A. for all the debt of Enagás Financiaciones amount to 3,180,303 thousands of euros at December 31, 2023 (3,657,045 thousands of euros at December 31, 2022).

• Guarantees provided by the Company for Enagás Internacional, S.L.U. debt amounting to 361,484 thousands of euros (384,489 thousands of euros at December 31, 2022).
• The guarantees provided by Enagás, S.A. for the debt of Enagás Holding USA, S.L.U., which at December 31, 2023 amounts to 271,113 thousands of euros (393,726 thousands of euros at December 31, 2022).
• It includes the corporate guarantee granted by Enagás, S.A. on behalf of the financial entities of Trans Adriatic Pipeline, AG (TAP), in accordance with the Financing Agreement signed by this company on November 30, 2018. This guarantee basically covers the following items:
  • Principal and interest of the Financing Agreement provided by TAP at any time;
  • Market value of the hedging instrument over the interest rate of the Financing Contract.

TAP reached the "Financial Completion Date" on March 31, 2021, a milestone that allowed the partners to replace the guarantees provided on the company's debt during the construction phase of the infrastructure with a mechanism for shareholder support for the repayment of the TAP loan (Debt Payment Undertaking), which will be in effect until its maturity, and which would be activated in the event of certain extraordinary events.

This support mechanism has been granted jointly by each of TAP's shareholders, so that Enagás would only be liable, in a hypothetical case, for the amount corresponding to it in accordance with its stake in TAP's share capital.

This support mechanism during the operating period is contractually limited by a cap in force throughout the life of the financing arrangement, so that the amounts claimed from Enagás may never exceed a total amount of 903,322 thousands of euros, regardless of the market value of the derivative or any other contingency.

At December 31, 2023, the amount guaranteed by Enagás, S.A. in favour of TAP's creditors amounts to 645,000 thousands of euros after taking into account the 20% stake following the purchase of the additional 4% in 2023 (557,000 thousands of euros at December 31, 2022).

b) Guarantees and sureties granted - Other

Group and related companies

This heading includes the following guarantees and sureties granted to group companies at December 31, 2023:

• Technical guarantees granted to third parties by Enagás Transporte, S.A.U. amounting to 3,712 thousands of euros (3,712 thousands of euros at December 31, 2022), all of which are counter -guaranteed by Enagás, S.A.
• Enagás Renovable, S.A. for 5,450 thousands of euros (5,040 thousands of euros at December 31, 2022), and Efficiency for LNG Applications, S.L. for 24,630 thousands of euros (24,630 thousands of euros at December 31, 2022) related to the projects of these companies, all counter -guaranteed by Enagás, S.A.
• The Company counter -guarantees Enagás Internacional, S.L.U. the bid bond for the port concession in Colombia for the Buenaventura project in the amount of 1,360 thousands of euros (1,412 thousands of euros at December 31, 2022).
• Enagás, S.A. guarantees the hedging transactions arranged by Enagás Internacional, S.L.U. and Enagás Holding USA, S.L.U., the fair value of which amounted to 9,001 thousands of euros at December 31, 2023 (24,130 thousands of euros at December 31, 2022).
• Also, included at December 31, 2022 was the guarantee to Llewo mobility, S.L. for 3,215 thousands of euros counter guaranteed by Enagás S.A., which was cancelled in 2023 when the company was liquidated.
• At December 31, 2022 there were guarantees granted to the Comisión Federal de la Electricidad ("CFE") for the service contract related to the Gasoducto de Morelos project, amounting to 9,378 thousands of euros, which not longer had any effect following the sale of Gasoducto de Morelos in 2023.

Other parties with third parties

This includes technical guarantees provided to third parties by Enagás, S.A. amounting to 178,193 thousands of euros.

c) Investment commitments

Group and related companies

In relation to the Stade (HEH) project, Enagás S.A. maintains investment commitments for an estimated amount of 5,000 thousands of euros until its construction is completed, scheduled for 2027. This commitment corresponds to the disbursements expected to be made by the Company until the start -up of this project, taking into account the forecast for the contracting of long -term debt. The infrastructure projects of the Company's and its subsidiaries are carried out through long -term contracts in which the Group -related project companies participate, where each project specifies the external debt required for their funding, without recourse to the shareholders or with limited recourse to the guarantees granted.

2. Operational performance of the company

RELEVANT ASPECTS

Operating profit

• Operating profit increased by 4% with respect to 2022, amounting to 517,734 thousands of euros (Note 2.1).
• For the financial year 2023, there has been a 11.5% reduction in staff costs, amounting to 48 million euros, when compared to the staff costs of the previous year (2022). Similarly, the external services costs for the same period have decreased by 14%, totalling 38.8 million euros (Note 2.1).

Workforce

• At December 31, 2023, Enagás S.A.'s workforce comprised 338 employees, 183 of whom were women and 155 men. (Note 2.1).

Impairment of assets

• During 2023, the Company has not recorded any impairment of its assets (Note 2.6).

Fixed assets

• The additions to fixed assets during 2023 and 2022 are distributed as follows (Note 2.4):

2.1 Operating profit

ACCOUNTING POLICIES

Recognition of income

The Company follows a process for the accounting recording of revenues derived from contracts with customers, which consists of the following stages:

• 1. Identify the contract with the customer, understood as an agreement between two or more parties that creates enforceable rights and obligations for them.
• 1. Identify the obligation or obligations to be fulfilled in the contract, representative of the commitments to transfer goods or provide services to a customer.
• 1. Determine the transaction price, or contract consideration to which the company expects to be entitled in exchange for the transfer of goods or provision of services committed to the customer.
• 1. Assign the transaction price to the obligations to be fulfilled, which must be based on the individual sales prices of each different goods or service committed to in the contract, or, if applicable, following an estimate of the sales price when this is not independently observable.
• 1. To recognise revenue from ordinary activities when the company fulfils a committed obligation through the transfer of a good or the rendering of a service; fulfilment that takes place when the customer obtains control of that good or service, so that the amount of revenue recognised will be the amount assigned to the fulfilled contractual obligation.

Recognition

The Company recognises revenue from a contract when control over the committed goods or services is transferred to the customer. For each identified performance obligation, the company determines at contract inception whether the obligation incurred will be settled over time or at a point in time.

Revenue from obligations that will be settled over time is recognised by reference to the stage of completion, or progress towards completion, of the contractual obligations, provided the company has reliable information to measure the stage of completion.

To determine the point at which the customer obtains control of the asset, the company considers the following indicators:

• a. The customer assumes the significant risks and rewards of ownership of the asset.
• b. The company transfers physical possession of the asset.
• c. The customer receives the asset in accordance with the contractual specifications.

Valuation

Revenue from the sale of goods and the rendering of services is measured at the monetary amount or, where applicable, the fair value of the consideration received or expected to be received. The consideration is the agreed price for the assets to be transferred to the customer, less: the amount of any discounts, rebates or similar items that the company may grant; and interest included in the nominal amount of the receivables.

Under the accrual basis of accounting, revenue is recognised when control is transferred, regardless of the timing of collection or payment.

The Company recognises other income that does not relate to contracts with customers:

• Dividend income from investments: is recognised when the rights of the shareholders to receive payment have been established. In applying the criteria of the Spanish Accounting and Audit Institute through BOICAC 79, on the classification for accounting purposes in separate financial statements of the income and expenses of holding companies that apply the Spanish National Chart of Accounts, approved by Royal Decree 1514/2007, and on the calculation of the Company's revenue, the dividends and interest on loans received from its affiliates are included as an integral part of the Company's revenue.
• Interest income: is accrued based on a temporary financial criterion, based on the outstanding principal and the applicable effective rate, which is the rate of the estimated future cash flows over the expected life of the asset that is equal to its carrying amount.

Recognition of expenses

• Expenses are recognised in the income statement when there is a decrease in the future economic benefit related to a reduction in an asset or an increase in a liability that can be measured reliably. This means that an expense is recognised simultaneously with the recognition of the increase in the liability or the reduction of the asset.
• An expense is recognised immediately when a payment does not generate future economic benefits or when the prerequisites for capitalisation as an asset are not met.

a) Revenue

The breakdown of revenue by activity is the following:

Services rendered: income from loans to group companies and associates Services rendered to group and multigroup companies Dividend income from group and multigroup companies

The breakdown of revenue in 2023 and 2022 by geographical markets is provided below:

	12.31.2023	12.31.2022
Spain	609,688	611,753
Latin America	762	752
Total	610,450	612,505

Dividend income

In relation to the dividend income of Enagás, S.A. as shareholder. The amount of dividends received in financial year 2023 amounting to 537,204 thousands of euros corresponds to the following distribution of dividends in the year 2023:

• Enagás Transporte, S.A.U. distributed a total of 306,400 thousands of euros in 2023 (432,540 thousands of euros in 2022):
  • A final dividend amounting to 30,000 thousands of euros.
  • An interim dividend of 245,000 thousands of euros charged to 2023 results
  • An extraordinary dividend charged to reserves in the amount of 31,400 thousands of euros.
• Enagás Internacional, S.L.U. distributed a total of 216,478 thousands of euros in 2023 (100,000 thousands of euros in 2022):
  • A final dividend amounting to 32,678 thousands of euros.
  • An interim dividend of 135,000 thousands of euros charged to 2023 results
  • An extraordinary dividend charged to reserves in the amount of 48,800 thousands of euros.

• In 2023, Enagás Financiaciones, S.L.U. distributed a final dividend in the amount of 6,026 thousands of euros, as well as an interim dividend of 8,300 thousands of euros against 2023 results. (5,971 thousands of euros in 2022).

Also, as mentioned in Note 1.4 at December 31, 2023 there are dividends receivable amounting to 39,700 thousands of euros (135,000 thousands of euros at December 31, 2022).

Income from loans to group, multigroup companies and associates

In 2023, the Company had income from loans to group companies and associates amounting to 16 thousands of euros (2,728 thousands of euros in 2022 corresponding to loans granted to Enagás Internacional and Enagás Renovable which matured in 2022).

Income for services rendered to group, multigroup companies and associates

The detail of income from services rendered is as follows:

	12.31.2023	12.31.2022
From customer contracts	72,500	69,892
Other Income	730	1,374
Total	73,230	71,266

Income from customer contracts corresponds to services provided by Enagás, S.A. to its group of affiliates for the rendering of corporate services.

Additionally, the "Other income" heading includes income from the investment in A.I.E. Laika Research in the amount of 730 thousands of euros (see Note 1.4.c).

b) Personnel expenses and social contributions

	12.31.2023	12.31.2022
Wages, salaries and similar	36,551	42,830
Wages and salaries	34,327	33,956
Termination benefits	2,224	8,874
Social contributions	11,622	11,593
- Social Security	5,765	5,329
• Contributions to external pension funds (defined
contribution plan)	870	853
- Senior Managers' Savings Plan Contributions	494	1,667
- Other social contributions	4,493	3,744
Total	48,173	54,423

In 2023, one employee was terminated by mutual agreement. The corresponding expenditure was provisioned for in previous years.

Company contributions to the pension plan amounted to 870 thousands of euros in financial year 2023 (853 thousands of euros in 2022) and are recorded under the heading "Social contributions", included under "Personnel Expenses" of the attached Income Statement. Furthermore, it includes the Senior Managers' Savings Plan in the amount of 494 thousands of euros (1,667 thousands of euros in 2022).

The Company makes contributions, in accordance with the approved pension plan adapted to the provisions of the Spanish Pension Plans and Funds Act, to a defined contribution plan called "Enagás Fondo de Pensiones", whose fund manager is Gestión de Previsión y Pensiones, S.A. and its custodian Banco Bilbao Vizcaya Argentaria, S.A., and which covers the Company's obligations with respect to serving employees. The aforesaid plan recognises certain vested rights for past service and undertakes to make monthly contributions averaging 4.04% of eligible salary (4.06% in 2022). It is a mixed plan covering retirement benefits, disability and death. The total number of people adhered to the plan at December 31, 2023 totalled 336 participants (296 participants at December 31, 2022).

The contributions made by the Company each year in this connection are recognised under "Personnel Expenses" in the Income Statement. At year-end 2023 and 2022, there were no contributions payable in this connection. In addition, the Company has outsourced its pension commitments with its senior managers by means of a mixed group insurance policy for pension commitments, including benefits in the event of survival, death and employment disability.

The average number of employees at Enagás S.A. by professional category is as follows:

At December 31, 2023, the Company's workforce consisted of 338 employees (334 employees in 2022).

The distribution of the professional categories by gender is as follows:

	2023		2022
Categories	Men	Women	Men	Women
Management	44	30	42	29
Technicians	106	123	107	122
Administrative workforce	5	30	3	31
Total	155	183	152	182

"Management" includes Senior Management of Enagás S.A., comprising seven persons (five men and two women) (Note 4.4). During 2023 and 2022, the average number of staff with disabilities greater than or equal to 33% employed by the Company, broken down by categories, is as follows:

	2023	2022
Technicians	1	1
Administrative workforce	2	2
Total	3	3

c) Other operating expenses

	12.31.2023	12.31.2022
External services	38,802	45,533
Taxes	1,064	338
Others	130	32
Total	39,996	45,903

The most significant expenses under the heading "External services" correspond to repair and maintenance services necessary for the provision of services amounting to 12,536 thousands of euros at December 31, 2023 (11,973 thousands of euros at December 31, 2022) as well as for the services of independent professionals for the amount of 6,696 thousands of euros at December 31, 2023 (12,296 thousands of euros at December 31, 2022).

d) Impairment and results on equity instruments

There were no impairments or gains or losses on disposal of investments in 2023.

In addition, the amount for 2022 corresponds mainly to impairment losses on Enagás Emprende in the amount of 8,486 thousands of euros and Enagás Services Solutions in the amount of 5,607 thousands of euros. In 2022, this heading also included the capital gains on the sale of the 10% stake in Enagás Renovable amounting to 5,740 thousands of euros (Note 1.4.a).

2.2 Trade and other receivables

ACCOUNTING POLICIES

Contract assets

• Unconditional right to receive the consideration

When the Company has an unconditional right to the consideration, irrespective of the transfer of control of the assets, a receivable is recognised under "Trade and other receivables" in current or non-current assets, depending on its maturity based on the normal operating cycle.

• Entitlement to consideration for transfer of control

When control of a contractual asset is transferred without an unconditional right to revenue, the Company recognises a right to consideration for the transfer of control. This entitlement to consideration for the transfer of control is derecognised when an unconditional right to receive the consideration arises.

These balances, like unconditional rights, are reported under trade receivables. They are classified as current or non-current depending on their maturity.

SIGNIFICANT ESTIMATES AND JUDGEMENTS

• At least at each reporting date the Company performs an impairment test on financial assets not measured at fair value (Note 1.4).

The balance recorded under "Customers, Group companies and associates" at December 31, 2023 and 2022 has the following breakdown (Note 4.3):

	12.31.2023	12.31.2022
Enagás Internacional, S.L.U.	628	84
Enagás GTS, S.A.U.	1,370	1,437
Enagás Transporte, S.A.U.	10,050	7,735
Enagás Services Solutions, S.L.U.	131	1,128
Enagás Emprende, S.L.U.	708	105
Enagás Infraestructuras de
Hidrógeno	887	397
Others	147	257
Total	13,921	11,143

These balances relate mainly to the corporate services rendered by Enagás, S.A., which mature after December 31, 2023.

2.3 Trade and other payables

ACCOUNTING POLICIES

• Generally, Financial liabilities at amortised cost generally include trade payables ("trade payables") and non-trade payables ("other payables").
• These payables are initially recognised at the fair value of the consideration received, adjusted by directly attributable transaction costs. These liabilities are subsequently measured at their amortised cost.
• In accordance with the ICAC Resolution of January 29, 2016, the calculation of the average payment period to suppliers takes into consideration the commercial transactions corresponding to the delivery of goods or rendering of services accrued since the date of the entry into force of Law 31/2014, of December 3.

Trade and other payables

Total	65,125	52,156
Customer advances	13,282	—
Other debts with the Public Administrations (Note 4.2)	34,799	33,599
Personnel	6,998	4,954
Other payables	786	7
Suppliers, group companies and associates	444	2,085
Suppliers	8,816	11,511
Trade and other payables	12.31.2023	12.31.2022

The balance of the "Suppliers" heading corresponds mainly to purchases of materials and services rendered to Enagás, S.A., whose counterpart is recorded in "external services" and "fixed assets" of the income statement and the balance sheet, respectively.

Recorded under the heading "Customer advances" are the charges from Power to Green Hydrogen Mallorca S.L., which pertain to the Mallorca project and the construction of the hydrogen plant and hydrogen station. These assets were reclassified during 2023 from "Non-current assets held for sale" to "Inventories" following the signing of the EPC contract, and additions of 4,422 thousands of euros were recorded, resulting in a balance of 15,613 thousands of euros as of December 31, 2023. The transfer of risks and benefits is expected during 2024, at which time inventories and customer advances relating to the project will be written off.

• Suppliers, for the exclusive purposes of providing the information set forth in this Resolution, are considered to be trade payables owed to suppliers of goods and services included in the items "Suppliers", "Suppliers, group companies and associates" and "Other payables" under current liabilities in the balance sheet.
• "Average payment period to suppliers" is understood to be the time that passes between the delivery of the goods or rendering of the services by the supplier and the material payment for the transaction.
• The maximum payment term applicable to the Company in 2023 under Law 3/2004, of December 29, establishing measures to combat late payments in commercial transactions, is 60 days. In order to obtain the foregoing information, payment obligations that have been the object of withholdings as a result of embargoes, enforcement orders, administrative compensation proceedings, or other similar acts handed down by legal or administrative bodies were excluded.

The "Personnel" heading includes the accrual of the variable remuneration corresponding to the current year, which will be paid during the first quarter of 2024.

Information on the average payment period

Below follows the information required by the Additional provision three of Law 15/2010 of July 5 (amended by Final provision two of Law 31/2014 of December 3) prepared in accordance with the Resolution of the ICAC of January 29, 2016, as well as by Law 18/2022, of September 28, on the creation and growth of companies, together with ICAC Consultation 1-132 of October 2022, regarding information to be included in the notes to the Annual Accounts in relation to the average payment period to suppliers in commercial operations.

Days	2023	2022
Average payment period to suppliers	53	52
Ratio of paid operations	54	53
Ratio of operations pending payment	32	51

Amount	2023	2022
Total payments made	47,039	57,563
Total pending payments	3,400	5,734

Suppliers, for the exclusive purposes of providing the information set forth in this Resolution, are considered to be trade payables owed to suppliers of goods and services included in the items "Payable to suppliers", "Payable to suppliers - Group companies and associates" and "Other payables" under current liabilities in the balance sheet.

"Average payment period to suppliers" is understood to be the time that passes between the delivery of the goods or rendering of the services by the supplier and the material payment for the transaction.

The maximum payment term applicable to the Company in 2023 and 2022 under Law 3/2004, of December 29, establishing measures to combat late payments in commercial transactions, is 60 days. In order to obtain the foregoing information, payment obligations that have been the object of

2.4 Property, plant, and equipment

ACCOUNTING POLICIES

• The cost model is applied, that is, the corresponding assets are measured at acquisition or production cost less the corresponding accumulated amortisation and any impairment losses.
• Acquisition or production cost includes:
• Finance expenses relating to the financing of infrastructure projects accrued only during the construction period, when the building work lasts for more than one year.
• Personnel expenses directly related to work in progress, lowering personnel expenses (Note 2.1).
• The costs of renovation, extension or improvement are incorporated into the asset as the greatest value of the asset exclusively when they imply an increase in its capacity, productivity or prolongation of its useful life, with deduction of the net carrying amount of the substituted goods, if any. Conversely, the periodic expenses of maintenance, conservation and repair are charged to income for the year in which they are incurred.

withholdings as a result of embargoes, enforcement orders, administrative compensation proceedings, or other similar acts handed down by legal or administrative bodies were excluded.

The monetary volume of invoices paid within the deadline established by Law 3/2004 of December 29, amounted to 35,824 thousands of euros, representing 76% of the total monetary volume. In terms of the number of invoices paid, 4,287 invoices were paid within the deadline, representing 79% of the total number of invoices.

• Amortisation entered on a linear basis once the assets are ready for use, in accordance with the following useful lives:

	Annual rate	Useful life (years)
Buildings	3%-2%	33.33-50
Other technical facilities and
machinery	12%-5%	8.33-20
Equipment and tools	30%	3.33
Furniture and
fixtures	10%	10
Information
technology
equipment	25%	4
Transport
equipment	16%	6.25

SIGNIFICANT ESTIMATES AND JUDGEMENTS

• The amortisation of assets recorded as property, plant and equipment follows the straight-line method, applying annual amortisation percentages calculated based on the years of estimated useful life of the respective goods.
• The Directors consider that the carrying amounts of the assets do not exceed the recoverable amounts which result from calculating discounted future cash flows generated by said assets based on foreseen remuneration under current regulations.

			Increases or	Decreases,
	Opening	Inputs or	decreases due	disposals or	Balance at year
2023	balance	provisions	to transfers	reductions	end
Land and buildings	35,417	17	508	-	35,942
Technical facilities and machinery	4,816	78	–	–	4,894
Other facilities, tools, and furniture	37,169	1,367	727	(118)	39,145
Prepayments and work in progress	1,996	387	(1,235)	(42)	1,106
Total cost	79,398	1849	–	(160)	81,087
Land and buildings	(21,257)	(923)	-	-	(22,180)
Technical facilities and machinery	(4,743)	(19)	–	–	(4,762)
Other facilities, tools, and furniture	(32,488)	(1,886)	–	29	(34,345)
Prepayments and work in progress	–	–	–	–	–
Total amortisation	(58,488)	(2,828)	–	29	(61,287)
Land and buildings	14,160	(906)	508	-	13,762
Technical facilities and machinery	73	59	–	–	132
Other facilities, tools, and furniture	4,681	(519)	727	(89)	4,801
Prepayments and work in progress	1,996	387	(1,235)	(42)	1,105
Net Carrying Amount of Property, plant, and equipment	20,910	(979)	–	(131)	19,800

			Increases or	Decreases,
2022	Opening balance	Inputs or provisions	decreases due to transfers	disposals or reductions	Balance at year end
Land and buildings	35,286	143	–	(12)	35,417
Technical facilities and machinery	4,795	21	–	–	4,816
Other facilities, tools, and furniture	35,126	2,043	–	–	37,169
Prepayments and work in progress	7,758	5,428	–	(11,190)	1,996
Total cost	82,965	7,635	–	(11,202)	79,398
Land and buildings	(20,322)	(936)	-	1	(21,257)
Technical facilities and machinery	(4,719)	(24)	–	–	(4,743)
Other facilities, tools, and furniture	(30,922)	(1,566)	–	–	(32,488)
Prepayments and work in progress	–	–	–	–	–
Total amortisation	(55,963)	(2,526)	–	1	(58,488)
Land and buildings	14,964	(793)	–	(11)	14,160
Technical facilities and machinery	76	(3)	–	–	73
Other facilities, tools, and furniture	4,204	477	–	–	4,681
Prepayments and work in progress	7,758	5,428	-	(11,190)	1,996
Net Carrying Amount of Property, plant, and equipment	27,002	5,109	–	(11,201)	20,910

The additions recorded at December 31, 2023 under the heading "Other facilities, tools and furniture" correspond to additions in information processing equipment related to projects for the evolution of the corporate platform and IT infrastructure in the amount of 1,367 thousands of euros.

Transfers of the 2023 financial year correspond to the electronic renovation of the Data Processing network at the Paseo de los Olmos central offices for 727 thousands of euros, and adjustments to the gas analysis laboratory in Zaragoza for 508 thousands of euros.

There are no mortgages or encumbrances of any type on assets recorded as property, plant, and equipment.

It is the Company policy to insure its assets to ensure that there is no significant loss of equity, based on best market practices, given the nature and characteristics of the items of Property, Plant and Equipment.

In addition, the Company has contracted the corresponding insurance policies to cover third party civil liabilities.

Fully depreciated PP&E items recognised by Enagás and still in use at 2023 and 2022 year-end are broken down as follows:

Fully amortised elements

2.5 Intangible assets

ACCOUNTING POLICIES

• As a general rule, intangible assets are initially measured at acquisition or production cost. They are subsequently measured at cost less accumulated amortisation and impairment losses, if any.

Research and development expenses

• Research costs are activated, with 95% of the cost amortised in the first year and the rest in the following year, provided that they are specifically identified by project, their amount can be clearly established and there are well-founded reasons for trusting in the technical success and in economic-commercial profitability of the project.
• Development costs are capitalised by amortising on a straight-line basis over the corresponding useful life, provided they are specifically related to projects, their amounts can be clearly established, and technical success and economic feasibility of the project are reasonably assured.

IT applications

• Acquisition and development costs incurred with respect to basic IT systems used for management are recognised with a charge to "Intangible assets" in the balance sheet. Maintenance costs of IT systems are recognised in the income statement for the year in which they are incurred. They are measured at the amount disbursed for ownership or right-of-use of the IT programmes, as well as their production cost if they are developed by the Company. They are amortised over a period of four years.
• Intangible fixed assets amortised based on their defined service life, if any, which is equivalent to the following amortisation percentages:

Annual rate	Useful life
5%-50%	20-2
20%	5
25%	4

	Opening	Inputs or	Increases or decreases due to	Decreases, disposals or	Balance at
2023	balance	provisions	transfers	reductions	year-end
Research and Development	11,774	188	–	–	11,962
IT applications	139,981	5,553	–	–	145,534
Other intangible assets	6,724	–	–	–	6,724
Total cost	158,479	5,741	–	–	164,220
Research and Development	(11,664)	(227)	-	-	(11,891)
IT applications	(116,666)	(4,700)	–	–	(121,366)
Other intangible assets	(6,724)	-	-	-	(6,724)
Total amortisation	(135,054)	(4,927)	–	–	(139,981)
Research and Development	110	(39)	-	-	71
IT applications	23,315	853	–	–	24,168
Other intangible assets	-	–	–	–	-
Net Carrying Amount Intangible Assets	23,425	814	–	–	24,239

		Inputs or	Increases or decreases due to	Decreases, disposals or	Balance at
2022	Opening balance	provisions	transfers	reductions	year-end
Research and Development	11,576	198	–	–	11,774
IT applications	132,044	7,937	–	–	139,981
Other intangible assets	6,724	–	–	–	6,724
Total cost	150,344	8,135	–	–	158,479
Research and Development	(11,501)	(163)	-	-	(11,664)
IT applications	(113,356)	(3,310)	–	–	(116,666)
Other intangible assets	(6,724)	-	-	-	(6,724)
Total amortisation	(131,581)	(3,473)	–	–	(135,054)
Research and Development	74	36	-	-	110
IT applications	18,689	4,626	–	–	23,315
Other intangible assets	–	–	–	–	-
Net Carrying Amount Intangible Assets	18,763	4,662	–	–	23,425

The additions to "IT applications" in 2023 refer mainly to the following projects:

• IT infrastructure, corporate website and cybersecurity technological developments and services for 2,238 thousands of euros,
• Implementation of the Scada Monarch system to monitor and control Enagás' basic gas pipeline network, in the amount of 1,055 thousands of euros.
• Development of the analytical model Finance UP for 1,019 thousands of euros.

At December 31, 2023 and 2022, the Company had recorded fully amortised intangible assets that remained in use, based on the following detail:

Fully amortised elements

2.6 Impairment of non-financial assets

ACCOUNTING POLICIES

• At each year-end, or when there are indications of impairment, the Group analyses the recoverable amounts to determine the possibility of impairment. This recoverable amount is the greater of the market value minus the cost necessary for its sale and the value in use, understood as the current value of the estimated future cash flows. For the calculation of the recovery value of property, plant, and equipment, the value in use is the criterion used by the Company in most cases.
• In the event that the recoverable amount is lower than the net carrying amount of the asset, the corresponding impairment provision is recorded by the difference, charged to "Impairment and gains/(losses) on disposal of assets" in the attached income statement

SIGNIFICANT ESTIMATES AND JUDGEMENTS

• Determination of impairment losses on non-current assets other than financial assets is based on fulfilment of a series of hypotheses which are described below in this note and are revised annually.
• To estimate value in use, the Company estimates projections regarding future cash flows before taxes based on the most recent budget forecasts approved by the Directors. These budgets use the best available income and costs estimates for each element, using sector forecasts, past experience and future expectations.
• These forecasts cover flows for future years, applying reasonable growth rates that, in any case, from the last year are increasing.
• To calculate the current value, these flows are discounted at a rate, before taxes, which includes the cost of business capital. For its calculation, the current value of money is taken into consideration together with the risk premiums generally used by analysts of the business in question.

At December 31, 2023 no impairments of the Company's existing assets were recorded other than those mentioned in each note to these financial statements. Furthermore, there are no accumulated impairments of non-financial assets.

2.7 Leases

ACCOUNTING POLICIES

• Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards incidental to ownership of the leased asset to the lessee. All other leases are classified as operating leases.

Finance leases

• At December 31, 2023 and 2022 the Company had no finance leases.

Operating leases

• In operating leases in which the Company acts as the lessee, expenses resulting therefrom are charged to income statement for the year in which they are incurred.
• Any proceeds or payments in connection with an operating lease are treated as advance proceeds or payments and recognised in the income statement over the term of the lease as the benefits of the leased asset are received or conceded.

At year-end 2023 and 2022, the Company was committed to the following minimum lease payments, pursuant to ongoing contracts, with no consideration taken of the effects of shared service charges, future CPI increases or future adjustments of contractually agreed rents:

The amount of operating lease payments recognised as an expense in 2023 was 3,733 thousands of euros (3,534 thousands of euros in 2022).

In its position as lessee, the most significant operating leases held by the Company at the end of 2023 and 2022 are the leases on the office buildings held by the Company in Madrid, which expire in 2025 in the case of the Company's head office, for an annual amount of 2,210 thousands of euros, and the rest in 2025 and in 2027 for a total annual amount of 1,196 thousands of euros. In relation to contingent rents, these contracts are referenced to annual increases based on CPI.

Operating leases	Face value
Minimum fees to pay	2023	2022
Less than a year	3,903	3,704
Between one and five years	6,165	9,009
Total	10,068	12,713

In its position as lessor, at year-end 2023 the company maintains the lease of part of its offices which expires in 2027 and whose annual amount is 262 thousands of euros; this represents an amount of 785 thousands of euros to be collected between 1 and 5 years.

2.8 Provisions and contingent liabilities

ACCOUNTING POLICIES

• While drawing up the Company's Annual Accounts, the Directors made a distinction between the following:
• Provisions: Credit balances covering present obligations arising from past events, the settlement of which is likely to cause an outflow of resources, but which are uncertain as to their amount and/or time of settlement.
• Contingent liabilities: Potential obligations that arise from past events and whose future settlement is dependent on the occurrence or non-occurrence of one or more future events that are beyond the control of the Company, and present obligations that arise from past events and for which it is not probable that an outflow of resources will be required to settle them or for which the amount of the obligation cannot be measured with sufficient reliability.
• The annual accounts include all provisions for which it is considered more likely than not that the corresponding obligation will have to be settled. Contingent liabilities are not recognised in the Annual Accounts, but are disclosed in the Notes to the Annual Accounts, unless they are considered to be remote.
• Provisions are measured at the present value of the best possible estimate of the amount required to settle or transfer the obligation, taking into account the information available on the event and its consequences and any adjustments arising from the restatement of these provisions are recognised as finance cost as they are accrued.
• The compensation to be received from a third party when an obligation is settled is recognised as an asset, provided it is certain that reimbursement will be received, unless there is a legal relationship whereby a portion of risk has been externalised as a result of which the Company is not liable, in which case, reimbursement will be taken into consideration in estimating the amount of any provisions.

SIGNIFICANT ESTIMATES AND JUDGEMENTS

• The compensation to be received from a third party when an obligation is settled is recognised as an asset, provided it is certain that reimbursement will be received, unless there is a legal relationship whereby a portion of risk has been externalised as a result of which the Company is not liable, in which case, reimbursement will be taken into consideration in estimating the amount of any provisions. The policy followed with respect to the recognition of provisions for risks and expenses is to recognise the estimated amount required to settle probable or certain liabilities arising from litigation underway, pending indemnities or liabilities, sureties and similar guarantees. They are recognised upon emergence of the liability or obligation determining the indemnity or payment.
• At the end of 2023, in addition to the appeal filed by the Company in relation to the assessments signed in disagreement of the Corporate Income Tax for 2012 to 2015 (Note 4.2), various legal proceedings and claims filed against the Company arising from the normal course of its activities were in progress. Both the legal advisors of the Company and its Directors judge that the conclusion of these procedures and claims will not have a significant effect on the Annual Accounts of the financial years in which they are finalised that have not been recorded or indicated in these Annual Accounts.

a) Provisions

At December 31, 2023, there are no significant contingencies that need to be disclosed in the Company's Annual Accounts.

Non-current provisions	Opening balance	Provisions	Reversals	Short-term reclassifications	Balance at year-end
2023
Personnel remuneration	925	1,078	(91)	-	1,912
Other liabilities	–	5,694	–	–	5,694
Total non-current provisions	925	6,772	(91)	-	7,606
2022
Personnel remuneration	663	1,095	–	(833)	925
Other liabilities	–	–	–	–	–
Total non-current provisions	663	1,095	–	(833)	925

The heading "Personnel remuneration" includes the cash portion of the 2022-2024 Long-Term Incentive Plan to be settled (Note 4.4), which will be paid in 2025 and 2026, as well as the threeyear bonus plan for contribution to results aimed at the remaining personnel of the Company, which will be paid in 2025.

In addition, a tax provision of 5,694 thousands of euros (tax and interest on late payment) has been recorded under "Other liabilities". This provision has its origin in the disputed tax assessments due to the non-acceptance of part of the deduction for technological innovation (TI) applied in the 2012- 2015 financial years.

This risk has been considered likely due to the publication of several rulings by the National High Court, in which the High Court changes the criterion for the classification of software and therefore generally accepts the thesis of the Tax Authority 's IT team with regard to the classification of software for the purposes of applying the deduction for technological innovation.

The Directors of the Company consider that the provisions recognised in the accompanying Balance Sheet for litigation and arbitration risk as well as other risks described in this note are adequate and, in this respect, they do not expect any additional liabilities to arise other than those already recorded. Given the nature of the risks covered by these provisions, it is not possible to determine a reasonably reliable schedule of payment dates, if any.

b) Contingent liabilities

At December 31, 2023, there are no significant contingencies that need to be disclosed in the Company's Annual Accounts in addition to those indicated in Note 1.4.c in relation to the GSP project in Peru.

3. Capital structure, financing and financial result

RELEVANT ASPECTS

Credit rating of the Company

• On December 15, 2023, the credit rating agency Fitch Ratings maintained Enagás' outlook at stable, and placed Enagás' rating at BBB. On December 4, 2023, the credit rating agency Standard & Poor's placed Enagás' credit rating at BBB, with a stable outlook (Note 3.5).

Equity

At December 31, 2023, net equity increased by 11.4 million euros compared to the previous year-end, to a total of 2,710 million euros.

With respect to the Company's share capital, the following should be mentioned:

• The price of the Enagás, S.A. shares amounted to 15.265 euros per share at December 31, 2023.
• A maximum value of 18.515 euros per share for 2023 was reached on June 6.
• No individual or legal entity can invest directly or indirectly in a proportion in excess of 5% of the share capital of Enagás, S.A., nor exercise political rights in this company above 3% (1% for those subjects who, directly or indirectly, perform activities in the gas sector). These restrictions are not applicable to direct or indirect holdings corresponding to the public business sector (Note 3.1).

Financial debt

The average annual interest rate during 2023 for the Company's gross financial debt (considering both debt with credit institutions and Group companies) amounted to 2.4% (1.6% in 2022).

Debt with group companies has been reduced by 179 million euros, improving the company's working capital in line with the previous year.

The main operations for the year were:

• Enagás Financiaciones repaid loans amounting to 678 million euros.
• Enagás Financiaciones granted loans amounting to 525 million euros.

Risk management

• The Company has established a risk control and management model based on the principle of due control, aimed at ensuring the achievement of its objectives in line with the Company's risk tolerance level and the risk appetite approved by the governing bodies, and with a risk profile periodically assessed for all its risks (Note 3.5).

3.1 Equity

a) Share capital

At 2023 and 2022 year-end, the share capital of Enagás S.A. amounted to 392,985 thousands of euros, represented by 261,990,074 shares with a nominal value of 1.5 euros each, fully subscribed, and paid in.

All shares of the parent company Enagás, S.A. are listed on the four official Spanish Stock Exchanges and are traded on the continuous market. At the closing of December 31, 2023, the quoted share price was 15.265 euros, having reached a maximum of 18.515 euros per share on June 6, 2023.

It is worth noting that, subsequent to publication of Additional Provision 31 of Hydrocarbon Sector Law 34/1998, in force since enactment of Law 12/2011, of May 27,"no natural or legal person can participate directly or indirectly in the shareholder structure of Enagás, S.A with a stake exceeding 5% of share capital, nor exercise political rights in said parent company exceeding 3%. These shares cannot be syndicated under any circumstances." Furthermore, "any party operating within the gas sector, including natural persons or legal entities that directly or indirectly own equity holdings in the former of more than 5%, may not exercise voting rights over 1%." These restrictions shall not apply to direct or indirect interests held by public-sector enterprises.

At December 31, 2023 and 2022 the most significant shareholdings in the share capital of Enagás, S.A. were as follows (from the information published by the National Securities Market Commission (CNMV) (1) at December 31, 2023):

	Investment in share capital (%)
Company	12.31.2023	12.31.2022
Sociedad Estatal de Participaciones Industriales	5.000	5.000
Partler 2006 S.L.	5.000	5.000
Bank of America Corporation	3.614	3.614
BlackRock Inc.	5.422	4.988
State Street Corporation	-	3.008
Mubadala Investment Company PJSC	3.103	3.103

(1) The information obtained from the CNMV was based on the last notification that each entity thus obliged must send to said body, in connection with the stipulations of Royal Decree 1362/2007, of October 19 and Circular 2/2007, of December 19.

b) Issue premium

At December 31, 2023 and 2022 the Company's issue premium amounted to 465,116 thousands of euros.

The Consolidated Text of the Corporate Enterprises Act expressly permits the use of the issue premium account balance to increase capital and does not establish any specific restrictions as to its use.

c) Treasury shares

At December 31, 2023 the Company held 723,579 treasury shares, representing 0.28% of total shares of Enagás S.A. This is in line with the framework of the "Temporary Treasury Share Buy-Back Scheme", whose exclusive aim was to meet the obligations of delivering shares to the Executive Director and members of the Enagás Group management team under the current remuneration scheme according to the terms and conditions of the 2022-2024 Long-Term Incentive Plan (ILP) and the Remuneration Policy approved at the General Shareholders' Meeting held on March 31, 2022. The shares were purchased in compliance with the conditions set out in Article 5 of Regulation EC/2273/2003 and subject to the terms authorised at the General Shareholders' Meeting held on March 31, 2022. Management of the Temporary Treasury Share Buy-Back Scheme was entrusted to Banco Bilbao Vizcaya Argentaria (BBVA), which carried out the transaction on behalf of Enagás, S.A. independently and without exercising influence on the process (Note 4.4).

During the period from January 1, 2023 to December 31, 2023, the following movements in treasury shares have taken place:

No. of shares as at January 1, 2023	No. of shares acquired new target	No. of shares implemented for the target	No. of shares as at December 31, 2023
821,375	—	(97,796)	723,579

d) Reserves

The Corporate Enterprises Act stipulates that 10% of profit for the year must be transferred to the legal reserve until it represents at least 20% of share capital. During 2023 no legal reserve has been recorded as it has been fully constituted as of December 31, 2023 for a total amount of 78,597 thousands of euros.

The legal reserve can be used to increase capital by the amount exceeding 10% of the new capital after the increase. Except for this purpose, until the legal reserve exceeds the limit of 20% of capital, it can only be used to compensate losses provided there are no other reserves available.

3.2 Financial debts

ACCOUNTING POLICIES

The Company classifies all financial liabilities in the following category:

Financial liabilities classified in this category are initially measured at fair value, which, until proven otherwise, is assumed to be the transaction price, which is the fair value of the consideration received plus transaction costs.

The amortised cost method is used for subsequent measurement. Accrued interest is recognised in the income statement (financial expenses) using the effective interest rate method.

Derecognition of financial liabilities

The Company derecognises a previously recognised financial liability when any of the following circumstances arise:

• The obligation has been extinguished because payment has been made to the creditor to cancel the debt, or because the debtor is legally released from any responsibility for the liability.

• The Company's own financial liabilities are acquired, even when it is the intention to repositioning them in the future.
• There is an exchange of debt instruments between a lender and a borrower, provided that they have substantially different terms, and the new financial liability that arises is recognised; similarly, a substantial modification of the current terms of a financial liability is recorded, as indicated for debt restructuring.

The accounting for the derecognition of a financial liability is as follows: the difference between the carrying amount of the financial liability (or part thereof that has been derecognised) and the consideration paid, including attributable transaction costs, and which also includes any asset transferred other than cash or liability assumed, is recognised in the income statement for the year in which it occurs.

Categories	Amortised cost		Total
Class	2023	2022	2023	2022
Other financial liabilities	63	5	63	5
Total long-term debts	63	5	63	5
Financial debts with credit institutions	—	1,000	—	1,000
Debt arrangement expenses and accrued interest payable	86	124	86	124
Creditors and other financial liabilities	5,267	4,814	5,267	4,814
Total short-term debts	5,353	5,938	5,354	5,938
Total debts	5,416	5,943	5,416	5,943

a. Long-term financial liabilities

At December 31, 2023, the Company had undrawn credit lines granted up to a limit of 1,559,037 thousands of euros (in 2022 these undrawn credit lines had a limit of 1,715,689 thousands of euros) (Note 3.6). Along these lines, a sustainable syndicated credit line amounting to 1,550,000 thousands of euros is included, the price of which is linked to the reduction of CO2 emissions. This line is participated by 12 national and international financial institutions and was renewed on December 22, 2023 until January 2029.

In the opinion of the Directors, this situation allows for sufficient funding to meet possible liquidity requirements in the shortterm considering its current obligations.

The average rate of gross debt (considering debt with credit institutions and group companies) in 2023 was 2.4% (1.6% in 2022).

The Directors of the Company estimate that the fair value of the bank debts contracted at December 31, 2023 and December 31, 2022 does not differ significantly from their carrying amounts.

b. Short-term financial liabilities

The changes in 2023 in the heading "Short-term debt" mainly relate to the maturity of the loan with the ICO in the amount of 1,000 thousands of euros in July 2023. Also, on December 4, 2023, a loan granted during the year amounting to 930 thousands of euros with BBVA matured.

c. Debts with group companies

	Long-term		Short-term
	2023	2022	2023	2022
Enagás Financiaciones, S.A.U.	2,477,917	2,202,496	69,490	508,098
Enagás Internacional, S.L.U.	245,790	255,057	215,169	219,455
Enagás Emprende, S.L.U.	–	–	2,076	744
Enagás Infraestructuras de Hidrógeno, S.L.U.	–	–	2,756	4,112
Enagás Services Solutions, S.L.U.	–	–	–	39
Scale Gas Solutions, S.L.	–	–	169	411
Enagás GTS, S.A.U.	–	–	338	676
Other	–	–	51	572
Total	2,723,707 2,457,553		290,049	734,107

The average rate for 2023 for loans with group companies was 2.3% (1.6% for 2022).

The main changes in Debts with Group Companies included the following:

• Credit granted by Enagás Financiaciones, S.A.U., maturing in 2028, and drawn down during financial year 2023 in the amount of 524,950 thousands of euros.
• Repayment of a credit granted by Enagás Financiaciones, S.A.U. amounting to 678,142 thousands of euros
• With respect to the account payable to Enagás Internacional for the recovery of the value of the share capital invested by it in GSP, since Enagás, S.A. is the holder of the loans assigned by the Odebrecht Group that will enable the recovery of the investment in the share capital of GSP, it represents a liability in the balance sheet of 245,790 thousands of euros as of December 31, 2023 (255,057 thousands of euros at December 31, 2022), considering the effect of the financial restatement corresponding to an obtaining award period estimated at the first half of 2024 (Note 1.4.c).
• The heading "Short-term debts from group companies and multi-group" at year-end 2023 and 2022 mainly includes:
• The balance of interest and short-term loans granted by Enagás Financiaciones, S.A.U. to Enagás, S.A. for a total of 64,912 thousands of euros.
• The balance of interest and short-term loans granted by Enagás Internacional S.L.U. to Enagás, S.A. for a total of 215,092 thousands of euros.
• As the parent company of Tax Consolidation Group 493/12 for corporate income tax, Enagás S.A. has amounts pending payment to some group companies amounting to 10,046 thousands of euros (25,154 thousands of euros in 2022), mainly related to the amounts pending payment to Enagás Financiaciones, S.A.U., Enagás Emprende, S.L.U. and Enagás Infraestructuras de Hidrógeno, S.L.U. in the amounts of 4,578, 2,076 and 2,756 thousands of euros, respectively (14,416, 744 and 4,112 thousands of euros, respectively, at December 31, 2022). Once the definitive declaration of the 2022 Corporate Tax has been presented in 2023, Enagás, S.A. paid the Corporate Tax account payable to the corresponding group companies belonging to the Tax Consolidation Group, in the amount of 25,136 thousands of euros (30,103 thousands of euros in 2022 for the 2021 Corporate Tax) (Note 4.2.a).

The Directors of the Company estimate that the fair value of the bank debts with group companies contracted at December 31, 2023 and December 31, 2022 does not differ significantly from their carrying amounts.

The breakdown by maturity is as follows:

						Valuation adjustments
					2028 and	and/or other
2023	2024	2025	2026	2027	later years	transaction costs	Total
Loans and payables	290,049	416,810	51,742	51,742	2,203,413	-	3,013,756
Total	290,049	416,810	51,742	51,742	2,203,413	-	3,013,756

						Valuation adjustments and/or
					2027 and	other transaction
2022	2023	2024	2025	2026	later years	costs	Total
Loans and payables	734,107	306,799	171,019	51,742	1,931,606	(3,613)	3,191,660
Total	734,107	306,799	171,019	51,742	1,931,606	(3,613)	3,191,660

3.3 Net financial gain/(loss)

	2023	2022
Financial income	2,364	14,307
Financial income	2,364	14,307
Financial expenses and similar	(1827)	(6,453)
Loan interest	(69,040)	(55,007)
Financial expenses	(70,867)	(61,460)
Exchange differences	(152)	(71)
Net financial gain (loss)	(68,655)	(47,224)

It should be noted that expenses for interest on loans were calculated by using the effective interest rate method.

The change in the heading "Loan interest" during 2023 compared to the previous year mainly relates to:

• Increase of 18,094 thousands of euros in interest on debts with group companies due to the increase in loans granted by Enagás Financiaciones, S.A.U. to the Company.
• Decrease of 4,092 thousands of euros in interest with credit institutions due to the maturity at the end of 2022 of the loans with credit institutions and credits.

At December 31, 2023, in accordance with the provisions of Note 1.4.c, and given that the date of obtaining the award has been considered the first half of 2024. based on the indications of the court itself, there has been no effect of financial updating in the income statement (the net effect in 2022 was an income of 5,283 thousands of euros).

3.4 Derivative financial instruments

The Company does not hold derivative financial instruments. On December 28, 2022, the derivative financial instrument (Interest Swap Rate) contracted by the company in 2021 expired and no similar instruments were arranged in 2023.

3.5 Financial and capital risk management

a) Qualitative information

The Company Enagás, S.A. is exposed to various risks intrinsic to the sector, markets in which it operates and the activities it performs, which, should they materialise, could prevent it from achieving its objectives and executing its strategies successfully.

The Company has established a risk control and management model based on the principle of due control, aimed at ensuring the achievement of its objectives in line with the Company's risk tolerance level and the risk appetite approved by the governing bodies, and with a risk profile periodically assessed for all its risks. The particularities of the model are set out in section IV. Risk management of the Company's Management Report.

The main financial risks to which the Company is exposed are as follows.

Credit risk

Credit risk relates to the possible losses arising from the nonpayment of monetary or quantifiable obligations of a counterparty to which the Company has granted net credit which is pending settlement or collection.

The credit risk associated with receivables from its business activity is historically very limited since the Company operates mainly with Group companies (Note 3.2.c).

The Company is also exposed to the risk of its counterparties not complying with obligations in connection with placement of surplus cash balances. To mitigate this risk, these operations are carried out in a diversified way over highly solvent entities.

Interest rate risk

Interest rate fluctuations affect the fair value of those assets and liabilities that accrue interest at fixed rates and the future cash flows from assets and liabilities that accrue interest at floating rates.

The objective of interest rate risk management is to create a balanced debt structure that minimises finance costs over a multi-year period while also reducing volatility in the income statement.

Based on the Enagás S.A. estimates and debt structure targets, hedges are put in place using derivatives that reduce these risks.

At December 31, 2023, the Company has no derivative financial instruments (Note 3.4).

Exchange rate risk

Changes in exchange rates may affect credit positions denominated in foreign currency. The Company manages exchange rate risk through natural hedges, which consist of contracting financial instruments in the same currency in which the investment is made (Note 4.1.b).

At December 31, 2023, the Company has no derivative financial instruments.

Liquidity risk

Liquidity risk arises as a consequence of differences in the amounts or payment and collection dates relating to the different assets and liabilities of the Company.

The liquidity policy followed by the Company is oriented towards ensuring that all short-term payment commitments acquired are fully met without having to secure funds under burdensome terms. For this purpose, different management measures are taken such as maintenance of credit facilities ensuring flexibility, sufficient amounts and sufficient maturities, diversified sourcing for financing needs via access to different markets and geographical areas, as well as the diversification of maturities in debt issued.

Although the Company has negative working capital, it has available financial facilities (see Notes 3.2 and 3.6.b), which are sufficient to meet the Company's current liabilities.

Tax risk

The Company is exposed to possible modifications in tax regulatory frameworks and uncertainty relating to different possible interpretations of prevailing tax legislation, potentially leading to negative effects on results.

The Company has a Board-approved tax strategy, which includes the action policies governing compliance with its tax obligations, attempting to avoid risks and tax inefficiencies.

Other risks

Enagás is exposed to cross-cutting risks which do not correspond to a single risk category but may be correlated with several of them. These are the risks related to the three pillars of sustainability: Environmental, Social and Governance (ESG). Environmental, Social and Governance - ESG.

In the context of ESG risks, Enagás is exposed to certain risks arising from climate change. These risks are managed and assessed in an integrated manner within the risk management model described in the Management Report. Risks are identified and quantified which arise from factors such as political and regulatory measures to promote the use of renewable energy, natural disasters or adverse weather conditions, the volume of CO2 emissions and prices, and reputational risks (for more details on climate change risks, see chapter 'Climate action and energy efficiency' of the Consolidated Management Report).

The impact of climate-related risks and how management assesses these risks to incorporate them into the judgements, estimates and uncertainties that affect the financial statements of the Group are described in Note 4.6.a.

Given the dynamic nature of the business and its risks, and despite having a risk control and management system that responds to the best international recommendations and practices, it is not possible to guarantee that some risk is not identified in the risk inventory of the Company.

b) Quantitative information

Interest rate risk

	12.31.2023	12.31.2022
Percentage of financial debt
tracking protected rates	26%	40%

Taking into account these percentages of financial debt at fixed rates, and after performing a sensitivity analysis using a range of +0.25/-0.10% percentage points changes in market interest rates, the Company considers that, according to its estimates, the impact on results of such variations on finance costs relating to variable rate debt could change as follows:

	Interest rate change
		2023		2022
	25 bps	-10 bps	25 bps	-10 bps
Change in finance
costs	5,222	(2,089)	4,479	(1,792)

c) Capital management

The Company carries out capital management at corporate level and its objectives are to ensure financial stability and obtain sufficient financing for investments, optimising the cost of capital in order to maximise the value created for the shareholder while maintaining its commitment to solvency.

The Company uses the level of consolidated leverage as an indicator for monitoring its financial position and managing capital, which is defined as the quotient resulting from dividing net consolidated assets (understood to be the sum of net financial debt and consolidated equity) by net consolidated financial debt.

Financial net debt and leverage of the Enagás Group at December 31, 2023 and 2022 was as follows (consolidated figures):

	2023	2022
Debts with credit institutions	1,460,774	1,690,600
Debentures and other marketable securities	2,345,387	2,736,574
Loans from the General Secretariat of Industry, the General Secretariat of Energy, Oman Oil and ERDF E4E	815	1,112
Finance leases (IFRS 16)	379,015	399,903
Others	(135)	—
Gross financial debt	4,185,856	4,828,189
Cash and cash equivalents		(838,483) (1,359,284)
Net financial debt	3,347,373	3,468,905

	2023	2022
		3,347,373 3,468,905
Net financial debt
		2,968,155 3,076,477
Shareholders' equity
Financial leverage	53.0 %	53.0 %

In this way, Enagás, S.A. has shown its financial robustness as confirmed by different rating agencies.

On December 15, 2023, the credit rating agency Fitch Ratings maintained Enagás' outlook at stable, and placed Enagás' rating at BBB. On December 4, 2023, the credit rating agency Standard & Poor's placed Enagás' credit rating at BBB, with a stable outlook.

3.6 Cash and cash equivalents

ACCOUNTING POLICIES

• Liquid financial assets, deposits and liquid financial investments that may be transformed into a determinable amount of cash in the short-term, and whose risk of changes in value is immaterial, are considered cash equivalents.

a) Cash and cash equivalents

	2023	2022
Treasury	66,122	71,936
Cash equivalents	227	—
Total	66,349	71,936

Generally, the banked cash accrues interest at rates similar to daily market rates. The deposits maturing in the short-term are easily convertible into cash, and accrue interest at the going market rates. There are no significant restrictions on the availability of cash.

Under "Other cash equivalents", the Company has recorded interest on interest-bearing current accounts receivable amounting to 227 thousands of euros.

b) Available funds

In order to guarantee liquidity, Enagás has arranged loans and credit lines which it has not drawn down. Thus, liquidity available to the Company is broken down as follows:

Total	1,625,386	1,787,625
Other available funds (Note 3.2)	1,559,037	1,715,689
Cash and cash equivalents	66,349	71,936
	2023	2022

In the opinion of the Directors of the Company, this situation allows for sufficient funding to meet possible liquidity requirements in the short-term considering its current obligations.

4. Other information

RELEVANT ASPECTS

Property investments

• Enagás, S.A. has a plot of land located at km. 18 of the A-6 motorway in Las Rozas (Madrid) classified as investment property since it is maintained to obtain a surplus value in its sale.
• The market valuation of this plot at December 31, 2023 was 17.38 million euros. This valuation was made by an independent expert in accordance with the Regulations of the Royal Institution of Chartered Surveyors (Note 4.1.a).

Remuneration for Board of Directors and Senior Management

• Remunerations to the Board of Directors, without taking into account insurance premiums, have amounted to 5,022 thousands of euros (Note 4.4).
• Compensation to senior management, excluding pension plans and insurance premiums, amounted to 3,574 thousands of euros (Note 4.4).

4.1 Information on other items on the balance sheet

ACCOUNTING POLICIES

Property investments

• The cost model is applied for measuring investment property, that is, the corresponding assets are measured at acquisition cost less the corresponding accumulated depreciation and any impairment losses. However, as one plot of land is not currently in use, it was measured at its recoverable amount, calculated as the fair value less the necessary costs for its sale.

Items in foreign currency

• The Company's functional currency is the euro. Consequently, transactions in currencies other than the euro are considered to be foreign currency transactions and are recognised by applying the prevailing exchange rates at the dates of the operations.
• At the end of each reporting period, monetary assets and liabilities denominated in foreign currencies are translated to euros at the prevailing rates. Any gains or losses arising are taken directly to the income statement for the year in which they arise.

SIGNIFICANT ESTIMATES AND JUDGEMENTS

• The market appraisal was performed by the independent expert in accordance with the Governing Rules of the Royal Institution of Chartered Surveyors (RICS), set out in the so-called "Red Book" - RICS Valuation - Professional Standards, January 2014. Said market valuations defined by RICS are internationally recognised by advisers and accountants providing services for investors and corporations that own investment properties, as well as by The European Group of Valuers (TEGoVA) and The International Valuation Standards Committee (IVSC).

a) Property investments

	Balance at December 31, 2021	Impairment allowances 2022	Balance at December 31, 2022	Impairment allowances 2023	Balance at December 31, 2023
Cost	47,211	–	47,211	–	47,211
Impairment	(28,551)	(1,250)	(29,801)	(30)	(29,831)
Carrying amount	18,660	(1,250)	17,410	(30)	17,380

• Corresponds entirely to a plot of land located at km 18 of the A-6 motorway in Las Rozas (Madrid), held to obtain a surplus value in its sale as a result of future increases in the market price. At December 31, 2023, Jones Lang LaSalle España, S.A. issued a valuation report, which concluded that the recoverable amount of the plot at that date amounted to 17,380 thousands of euros (17,410 thousands of euros at December 31, 2022).

It is worth noting that the independent expert's report did not include any scope limitations with respect to the conclusions reached.

• There are no mortgages or encumbrances of any type on real estate investments.
• It is Company policy to insure its assets to ensure that there is no significant loss of equity, based on best market practices, given the nature and characteristics of the investment properties. In addition, the Company has contracted the corresponding insurance policies to cover third party Civil Liabilities.

b) Items in foreign currency

The detail of the most significant foreign currency balances valued at the year-end exchange rate is as follows:

	2023	2022
Long-term credits ESG (Note 1.4.c)	454,275	471,401
Debts with Group Companies (Note 3.2.b)	460,881	469,760
Other short-term financial liabilities	4,385	4,551

The amount of exchange gains (losses) recognised in profit/(loss) for the year by financial instrument classes is as follows:

	For Transactions Settled in the Year		For Balances Pending Settlement			Total
	2023	2022	2023	2022	2023	2022
Debts with group companies	9	–	17,608	(15,515)	17,617	(15,515)
Debts with credit institutions	–	(12,112)	–	–	–	(12,112)
Long-term loans and others	(5)	(841)	(17,763)	28,397	(17,768)	27,556
Total	4	(12,953)	(155)	12,882	(151)	(71)

As indicated in Note 3.5, the Company has liabilities and assets items in dollars whose variations are netted by a natural hedge, which do not cause a significant difference in the income statement.

4.2 Tax situation

ACCOUNTING POLICIES

• The income tax payable or receivable comprises the current tax payable or receivable and the deferred tax income or expense.
• Current tax is the amount paid by the Company in settlement of income tax during a particular year. Tax credits and other tax benefits applied to the taxable profit, excluding withholdings, prepayments and carry forwards tax losses effectively offset during the year, are deducted from the current tax.
• Deferred tax expense or income relates to the recognition and derecognition of deferred tax assets and liabilities. These include the temporary differences measured as the amount expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities and their tax value, as well carry-forward tax losses pending payment and credits for tax deductions not applied fiscally. These amounts are measured by applying the tax rate to the corresponding temporary differences or tax credits at which they are expected to be recovered or settled.
• Deferred tax liabilities are recognised for all taxable temporary differences, with the exception of those arising from initial recognition of goodwill or from other assets and liabilities in a transaction that does not affect taxable profit or accounting profit and is not a business combination.
• Deferred tax assets are only recognised to the extent that it is considered likely the Company will have sufficient taxable profit in the future against which the deferred tax assets can be offset.
• Deferred tax assets and liabilities arising from items directly charged or credited to equity accounts are also recognised with a charge or credit, respectively, to equity.
• The deferred tax assets recognised are reassessed at the end of each reporting period and the appropriate adjustments are made where there are doubts as to their future recoverability. Deferred tax assets not recognised on the balance sheet are also reassessed at the end of each reporting period and are recognised where it has become highly probable that they will be recovered through future taxable profits.

SIGNIFICANT ESTIMATES AND JUDGEMENTS

• In accordance with prevailing legislation in Spain, tax returns cannot be considered final until they have been inspected by the tax authorities or until the four-year inspection period has elapsed.
• The Directors consider that the tax returns for the aforementioned taxes have been filed correctly and, therefore, even in the event of discrepancies in the interpretation of prevailing tax legislation with respect to the treatment applied, the resulting potential tax liabilities, if any, would not have a material impact on the accompanying Annual Accounts.
• The deferred tax assets were recognised in the balance sheet as the Directors believe, based on the best estimate of future profits and reversals of deductible temporary differences, that it is probable that these assets will be recovered.

a) Balances with the Public Administrations

	2023	2022
Debit balances
Current tax assets	10,794	280
Other receivables from the Public Administrations	1	1,153
Accounts payable by the Tax Authorities for VAT	1	1,153
Credit balances
Other debts with the Public Administrations	34,799	33,599
Accounts payable to the Tax Authorities for withholdings	33,854	33,194
Accounts payable to the Tax Authorities for VAT	393	–
Social Security agencies creditors	552	405

During 2023, Enagás, S.A. paid 76,210 thousands of euros for settling 2023 Corporate Income Tax (57,955 thousands of euros in 2022), corresponding to the Tax Group of which Enagás, S.A acts as the Parent Company.

At December 31, 2023, the balance of the heading Current tax assets corresponds to the account receivable for the Corporate Income Tax Group for 2023 in the amount of 10,794 thousands of euros (280 thousands of euros at December 31, 2022). Following the filing of the 2022 corporate income tax, the final amount was a payable amounting to 2,191 thousands of euros, which was paid on July 25, 2023.

Additionally, Enagás, S.A. acts as the Parent Company of the Tax Group as indicated in Note 4.2.b. For these purposes, the Company has debit and credit balances for Corporate Income Tax with the different subsidiaries of the Tax Group. Accordingly, as indicated in Note 3.2.c, during 2023 the Company settled with the other companies of the Tax Group their respective balances corresponding to the 2022 Corporate Income Tax.

Specifically, it has collected the amount of 103,178 thousands of euros, an amount that was mainly part of the balance recorded at year-end 2022 under group companies and multi-group short-term loans (Note 1.4) and paid the amount of 25,136 thousands of euros, an amount that was mainly part of the balances recorded at year-end 2022 under short-term debt to group companies and multi-group (Note 3.2.c).

b) Tax returns

Enagás S.A. has been the parent company of the Tax Consolidation Group 493/12 for Corporate Income tax from January 1, 2013, comprising the following subsidiaries at December 31, 2023:

• Enagás Transporte, S.A.U.
• Enagás GTS, S.A.U.
• Enagás Internacional, S.L.U.
• Enagás Financiaciones, S.A.U.
• Enagás Emprende S.L.U.
• Scale Gas Solutions, S.L.
• Efficiency for LNG Applications, S.L.
• Infraestructuras del gas, S.A.
• Enagás Services Solutions, S.L.U.
• Enagás Holding USA, S.L.U.
• Sercomgas Solutions, S.L.
• Infraestructuras de Hidrógeno S.LU.
• Musel Energy Hub S.L. (joined the Group after its incorporation on March 23, 2023)

This involves the joint calculation of the Group's tax result, as well as the deductions and bonuses from the payment. Furthermore, the corporate income tax is calculated on the basis of the Group's accounting profit/loss determined by application of generally accepted accounting principles, which does not necessarily coincide with the Group's taxable profit/tax loss.

c) Reconciliation of accounting result and taxable income

	Income statement
		2023			2022
	Increases	Decreases	Total	Increases	Decreases	Total
Accounting profit before tax	449,079	-	449,079	450,133	–	450,133
Permanent differences:	1,388	(516,489)	(515,101)	15,846	(524,094)	(508,248)
Donations	411	–	411	604	–	604
Dividend exemption (1)	–	(510,343)	(510,343)	–	(517,038)	(517,038)
Impairment of investments	–	–	–	14,094	(30)	14,064
Others	977	(6,146)	(5,169)	1,148	(7,026)	(5,878)
Temporary differences:	3,309	(3,984)	(675)	11,162	(13,121)	(1,959)
With origin in the financial year:
Provision for personnel remuneration	3,079	–	3,079	3,493	–	3,493
Others	183	(42)	141	1,406	–	1,406
With origin in previous financial years:
Amortisation deduction limit R.D.L. 16/2012	–	(981)	(981)	–	(981)	(981)
Accelerated amortisation Law 4/2008, 13/2010	47	–	47	47	–	47
Provision for personnel remuneration	–	(2,961)	(2,961)	–	(5,853)	(5,853)
Other (2)	-	-	-	6,216	(6,287)	(71)
Taxable income	453,776	(520,473)	(66,697)	477,141	(537,215)	(60,074)

(1) In accordance with prevailing regulations, from January 1, 2021, the tax exemption for dividends and capital gains related to shareholdings in resident and nonresident companies will be only 95% of the amount of such shareholdings.

(2) This heading mainly includes the financial restatement of accounts receivable from GSP and the financial restatement of accounts payable to Enagás Internacional. No adjustment for this item was made in 2023 (Note 3.3).

d) Tax recognised in equity

During the course of the financial year 2023, no taxes have been recorded in equity, with no amounts in the value adjustments as at December 31, 2023.

e) Reconciliation between the accounting result and the corporate income tax

	2023	2022
Accounting profit before tax	449,079	450,133
Rate at 25%	112,270	112,533
Impact of permanent differences	(128,775)	(127,062)
Deductions:	(2,670)	(2,663)
For amortisation deduction limit	(49)	(49)
For double taxation	(785)	–
For investment in R&D&I expenses	(1,692)	(2,403)
For donations	(144)	(211)
Adjustments to income tax rate	7,220	4,005
Total expense / (income) for tax recognised in the Income Statement	(11,955)	(13,187)

As indicated in Note 1.2. g, on January 1, 2024, the Pillar Two standard setting a minimum effective tax rate will come into force. In this respect, no changes in the effective rate of the Company and the Group are expected for the financial year 2024.

f) Years to be audited

In conformity with current legislation, tax returns cannot be considered final until they have been inspected by the tax authorities or until the four-year inspection period has elapsed. In 2021, Enagás, S.A. was notified of the rejection of the Central Economic Administrative Court (hereinafter TEAC), in relation to the claims filed in relation to the assessments signed in disagreement of the Corporate Income Tax for 2012 to 2015. During the 2022 financial year, a lawsuit was filed in the National High Court against the decisions of the TEAC, pending resolution at the date of formulation of the accompanying Annual Accounts.

In accordance with what is mentioned in Note 2.8, during the 2023 financial year a provision for this concept amounting to 5,694 thousands of euros has been made, which includes both fees and interest on late payment.

The appeal is expected to be resolved in more than one year.

The Directors consider that all taxes mentioned have been duly paid so that even in the event of discrepancies in the interpretation of prevailing tax legislation with respect to the treatment applied to transactions, the resulting potential tax liabilities, if any, would not have a material impact on the accompanying Annual Accounts.

Likewise, at 2023 year-end, the years 2020 to 2023 are pending audit for the taxes applicable to the company, with the exemption of corporate income tax, which is pending audit for the years 2019 to 2023.

g) Deferred tax assets and liabilities

	2023	2022
Deferred tax assets:
Temporary differences (prepaid taxes):	8,484	8,735
Provision for remuneration (1)	5,977	5,989
Amortisation deduction limit R.D.L. 16/2012 (2)	245	491
Others (3)	2,262	2,255
Carry-forward tax losses (4)	8,337	—
Deductions pending and others (5)	49	98
Total deferred tax assets	16,870	8,833
Deferred tax liabilities:
Accelerated amortisation (6)	(160)	(172)
Engineering services margin	(918)	(945)
Others (3)	(313)	(313)
Total deferred tax liabilities	(1,391)	(1,430)

(1) These temporary differences include, inter alia, personnel expenses resulting from the Long-Term Incentive Plan, recorded in this financial year which, pursuant to Article 14 of the Corporate Income Tax Law (hereinafter LIS), will be deductible at the time of delivery or payment, so in 2023 they gave rise to a deferred tax asset. In addition, during 2023, part of the outstanding deferred tax asset associated with the settlement of the 2019-2021 long-term incentive has been reversed.

(2) Arises from the limitation to tax deductible amortisation with respect to the Corporate Income Tax for the years 2013 and 2014. This amortisation is deductible from financial year 2015 following the straight method over a period of 10 years or optionally during the useful life of the asset. To this end, the Company decided to apply the deferred tax asset using the straight line method over a period of 10 years.

(3) Other items include timing differences arising from the recognition of the impairment of investment property which generates a deferred tax asset and the effect of the discounting to present value of accounts receivable and payable associated with GSP (Note 4.1) which generates a deferred tax asset and a deferred tax liability, respectively.

(4) This heading includes the deferred tax asset corresponding to the limitation of 50% of the tax losses not offset by Enagás S.A. in the Tax Group in 2023, in accordance with the nineteenth Additional Provision of the LIS. This asset will be reversed on a straight-line basis over a period of ten years from 2024.

(5) In addition, it includes the deduction to be applied from 2015 in accordance with the thirty-seventh transitory provision of Law 27/2014, by virtue of which those contributors for whom limited amortisation was applicable in 2013 and 2014 will have the right to a 5% deduction of the tax base with respect to the amounts included in the taxable income for the corresponding period.

(6) Arising from application of accelerated amortisation of certain assets for tax purposes during the period 2009-2012.

The Company does not hold any deferred tax assets that are not recognised in the accompanying Balance Sheet.

4.3 Related party transactions and balances

ACCOUNTING POLICIES

• In addition to subsidiaries, associates, and multigroup companies, the Company's "related parties" are considered to be its "key management personnel" (members of the Board of Directors and senior managers, along with their close relatives), and the entities over which key management personnel may exercise significant influence or control.
• The Company carries out all its transactions with related parties at market values and the corresponding remuneration in kind has been assigned. Transfer prices are adequately supported and consequently the Company's Directors consider that no significant risks exist in this respect from which significant liabilities could arise in the future.

	Directors and
	Senior Managers	Other Group	Multigroup and	Other related
Income and expenses	Note 4.4	companies	associates	parties	Total
2023
Expenses:
Financial expenses	–	65,424	–	–	65,424
Services received	–	177	–	–	177
Other expenses	9,615	–	–	–	9,615
Total expenses	9,615	65,601	–	–	75,216
Income (Note 2.1.a)
Loan income	–	–	16	–	16
Dividends received	–	537,204	–	–	537,204
Rendering of services	–	72,225	275	730	73,230
Other income	–	2,564	–	–	2,564
Total income	–	611,993	291	730	613,014
2022
Expenses:
Financial expenses	–	53,544	–	–	53,544
Services received	–	89	59	–	148
Other expenses	8,645	–	–	–	8,645
Total expenses	8,645	53,633	59	–	62,337
Income (Note 2.1.a)
Loan income	–	2,728	–	11,499	14,227
Dividends received	–	538,511	–	–	538,511
Rendering of services	–	68,142	1,750	1,374	71,266
Other income	–	–	22	–	22
Total income	–	609,381	1,772	12,873	624,026

	Significant	Other Group	Joint Ventures and
Other transactions	shareholders	companies	Associates	Total
2023
Guarantees for related parties debt	—	3,812,900	645,000	4,457,900
Guarantees and sureties granted -
Other	—	38,739	5,450	44,189
Investment commitments	—	—	5,000	5,000
Dividends and other earnings
distributed	100,613	—	—	100,613
2022
Guarantees for related parties debt	—	4,435,260	557,000	4,992,260
Guarantees and sureties granted -
Other	—	57,135	14,539	71,674
Investment commitments	—	—	—	—
Dividends and other earnings
distributed	106,321	—	—	106,321

The balances with related-parties on the balance sheet is as follows:

	Other Group	Joint Ventures and
	companies	Associates	Other related parties	Total
Balances 2023
Long-term equity instruments (Note 1.4)	5,009,826	24,837	–	5,034,663
Other financial assets (Note 1.4)		–	454,275	454,275
Credit for corporate income tax short
term Tax Consolidation Group (Note 1.4)	86,864	–	–	86,864
Dividends receivable (Note 1.4)	39,700	–	–	39,700
Trade receivables (Note 2.2)	13,921	–	–	13,921
Long-term debts (Note 3.2)	2,723,707	–	–	2,723,707
Short-term debts (Note 3.2)	280,003	–	–	280,003
Debt for corporate income tax Short-term
Tax Consolidation Group (Note 3.2)	10,046	–	–	10,046
Trade payables (Note 2.3)	358	86	–	444
Balances 2022
Long-term equity instruments (Note 1.4)	5,064,126	13,963	–	5,078,089
Other financial assets (Note 1.4)	–	–	471,401	471,401
Credit for corporate income tax short
term Tax Consolidation Group (Note 1.4)	100,510	–	–	100,510
Dividends receivable (Note 1.4)	135,000	–	–	135,000
Trade receivables (Note 2.2)	11,068	75	–	11,143
Long-term debts (Note 3.2)	2,457,553	–	–	2,457,553
Short-term debts (Note 3.2)	708,953	–	–	708,953
Debt for corporate income tax Short-term
Tax Consolidation Group (Note 3.2)	25,154	–	–	25,154
Trade payables (Note 2.3)	334	1,751	–	2,085

4.4 Remuneration for the Board of Directors and Senior Management

ACCOUNTING POLICIES

Share-based payments

• The Company classifies its share-based settlement plan for executive directors and senior management according to the manner of settling the transaction:
• With Company shares: Personnel expense is determined based on the fair value of the shares to be delivered at the grant date, taking into account the degree to which the objectives relating to said plan have been fulfilled. This expense is recognised over the stipulated period during which employee services are rendered with a credit to "Other equity instruments" in the accompanying balance sheet.
• In cash: Personnel expense is determined based on the fair value of the liability at the date recognition requirements are met. Personnel expenses are registered as the services rendered in the period stipulated and are entered in "Long-term provisions", until it is estimated that they will be settled within less than one year, at which time the associated provision is reclassified to the Personnel heading under "Trade and other payables" of the liability of the accompanying Balance Sheet. The liability is subsequently measured at fair value at each balance sheet date, up to and including the settlement date, with changes in fair value recognised in the Income Statement.
• The Company used the Monte-Carlo model to evaluate this programme. The fair value of the equity instruments at the granting date is adjusted to include the market conditions relating to this plan. Likewise, the Company takes into account the fact that the dividends accrued during the plan period are not paid to the beneficiaries as they do not become shareholders of the Company until the plan has effectively been settled.

SIGNIFICANT ESTIMATES AND JUDGEMENTS

• The Regulation establishes a period of time required for the consolidation of the remuneration, which has been considered a condition of service, and therefore taken into account together with the target measurement period (January 1, 2022 to December 31, 2024) when estimating the fair value of the equity instruments granted, as well as an additional deferral period. In this regard, the aforementioned service condition is based on the obligation for the beneficiaries to continue providing their services to the Company until the first payment date (set at four months from the end of the target measurement period to receive 50% of the incentive), and an additional period of one year from that last date to receive the remaining 50%).
• In the case of the share-based payment plan component, the Company accrues the estimated fair value of the cash-settled amount over the term of the plan (January 1, 2022 to December 31, 2024) and the service conditions established for the period of time required for the consolidation of the remuneration.

					Insurance
Remuneration received	Salaries	Per diems	Other items Pension plans			premiums Termination benefits
2023
Board of Directors	2,533	2,400	89	—	73	—
Senior Management	3,380	—	194	45	57	—
Total	5,913	2,400	283	45	130	—
2022
Board of Directors	2,645	2,382	92	—	44	1,630
Senior Management	3,257	—	138	55	32	1,934
Total	5,902	2,382	230	55	76	3,564

The remuneration of the members of the Board of Directors for their Board membership and those corresponding to the Chairman and the Chief Executive Officer for the exercise of their non-executive and executive functions, respectively, during 2023 have been approved in detail by the General Shareholders' Meeting held on May 27, 2021 as part of the "Directors' Remuneration Policy for 2022, 2023 and 2024", approved as Item 10 of the Agenda and amended by the General Shareholders' Meeting held on March 31, 2022, as Item 8 of the Agenda.

The Company has outsourced its pension commitments with its Directors by means of a mixed group insurance policy for pension commitments, including benefits in the event of survival, death and employment disability. The Chairman was part of the group covered by this policy and of the total premium paid for this during 2022, 62 thousands of euros corresponded to him. The Director does not have a pension commitment instrument, as he does not have an employment relationship with the company, but rather a commercial relationship. The Chief Executive Officer maintains an assimilated individual savings insurance at a cost of 222 thousands of euros.

The members of the Senior Management also form part of the group insured under the mixed group insurance policy for pension commitments. The total premium paid for the same during the financial year amounts to 560 thousands of euros.

The former executive director (Mr Antonio Llardén Carratalá) was beneficiary of the 2019-2021 Long-Term Incentive Plan approved by the General Shareholders' Meeting on March 29, 2019 as Item 8 of the Agenda. During 2023, the aforementioned incentive was paid out under the terms established by the General Shareholders' Meeting. As a result of this settlement, a total of 27,398 gross shares (valued at 502 thousands of euros) were delivered to the former executive director, which he will not be able to sell within two years.

Members of Senior Management (members of the Management Committee) were equally beneficiaries of the 2019-2021 long-term incentive plan. In the terms approved at the General Shareholders' Meeting, in the settlement of this incentive in the 2023 financial year, 21,937 gross shares and a cash incentive amount of 153 thousands of euros corresponded to them.

The Chief Executive Officer is beneficiary of the 2022-2024 Long-Term Incentive Plan approved by the General Shareholders' Meeting on March 31, 2022 as Item 9 of the Agenda. In said meeting, a total of 96,970 rights relating to shares were assigned to him. These rights do not entail the acquisition of shares for the time being, since the termination of the programme and the right to accrue the final incentive, which depends on the degree of achievement of the programme's objectives, will be generated within thirty days following the approval of the 2024 annual accounts by the General Shareholders' Meeting to be held in 2025.

Members of Senior Management (members of the Executive Committee) are equally beneficiaries of the 2022-2024 Long-Term Incentive Plan. As approved at the General Shareholders' Meeting, the Board has assigned them a total of 122,143 rights relating to shares as well as an incentive in cash amounting to approximately 590 thousands of euros. These rights do not entail the acquisition of shares for the time being, since the termination of the programme and the right to accrue the final incentive, which depends on the degree of achievement of the programme's objectives, will be generated within thirty days following the approval of the 2024 annual accounts by the General Shareholders' Meeting to be held in 2025.

The aforementioned remuneration, broken down for each member of the Board of Directors, without taking into account insurance premiums, is as follows:

Board members	2023	2022
Mr Antonio Llardén Carratalá (Executive Chairman) (1)	730	1,594
Mr Arturo Gonzalo Aizpiri (Chief Executive Officer) (2) (4)	2,152	969
Sociedad Estatal de Participaciones Industriales (Proprietary Director) (3)	160	160
Mr José Blanco López (Independent Director) (3)	160	160
Ms Ana Palacio Vallelersundi (Independent Leading Director) (3)	190	190
Mr José Montilla Aguilera (Independent Director) (3)	175	175
Mr Cristóbal José Gallego Castillo (Independent Director) (3)	160	160
Ms Eva Patricia Úrbez Sanz (Independent Director) (3)	160	160
Mr Santiago Ferrer Costa (Proprietary Director) (3)	160	160
Ms Natalia Fabra Portela (Independent Director) (3)	160	160
Ms María Teresa Arcos Sánchez (Independent Director) (3)	175	170
Mr David Sandalow (Independent Director) (3) (4)	160	114
Ms Clara García Fernández-Muro (Independent Director) (3) (4)	160	113
Ms María Teresa Costa Campi (Independent Director) (3) (4)	160	114
Mr Manuel Gabriel González Ramos (Independent Director) (3) (4)	160	113
Mr Marcelino Oreja Arburúa (former Chief Executive Officer) (3) (4)	–	431
Mr Ignacio Grangel Vicente (Independent Director) (3) (4)	–	44
Mr Gonzalo Solana González (Independent Director) (3) (4)	–	44
Mr Antonio Hernández Mancha (Independent Director) (3) (4)	–	44
Ms Isabel Tocino Biscarolasaga (Independent Director) (3) (4)	–	44
Total	5,022	5,119

(1) The remuneration of the Executive Chairman for the exercise of his executive duties during 2022 was approved in detail by the General Shareholders' Meeting held on May 27, 2021 as part of the "Directors' Remuneration Policy for the 2022, 2023 and 2024 financial years" as approved as Item 10 of the Agenda as amended by the General Shareholders' Meeting held on March 31, 2022 under Item 8 of the Agenda to cover his remuneration as non-executive Chairman as from that date. In 2023, the Chairman obtained a fixed remuneration of 600 thousands of euros. He also obtained remuneration for membership of the Board amounting to 130 thousands of euros, making a total of 730 thousands of euros and he also maintains an individual savings insurance at a cost of 62 thousands of euros.

• (2) The remuneration of the Chief Executive Officer for the 2023 financial year has been approved in detail by the General Shareholders' Meeting held on May 27, 2021 as part of the "Directors' Remuneration Policy for the 2022, 2023 and 2024 financial years", approved as Item 10 of the Agenda and amended by the General Shareholders' Meeting held on March 31, 2022, as Item 8 of the Agenda. During financial year 2023, he obtained fixed remuneration of 1,000 thousands of euros and variable remuneration of 583 thousands of euros. In addition, he obtained remuneration in the amount of 130 thousands of euros for Board membership, as well as other remuneration in kind amounting to 89 thousands of euros (the changes in remuneration in kind with respect to previous years are exclusively a result of measurement differences without there having been any additional items included in the remuneration). Additionally, the Company has implemented an ILP 2022-2024 of which the current CEO is a beneficiary and whose liquidation will take place starting in 2025, in the terms explained in this report. During the year 2023, the CEO has earned 350 thousand euros for this concept. Thus, the combined amounts totalled 2,152 thousands of euros. In addition, he was also the beneficiary of a life insurance policy with a premium of 73 thousands of euros for the year. The Chief Executive Officer is a beneficiary of the 2022-2024 Long-Term Incentive Plan approved at the General Shareholders' Meeting held on March 31, 2022. Item 9 of its Agenda states that the meeting assigned him a total of 96,970 performance shares or rights relating to shares. These rights do not entail the acquisition of shares for the time being, since the right to accrue the final incentive, which depends on the degree of achievement of the programme's targets will be generated within thirty (30) days following the approval of the 2024 annual accounts by the General Shareholders' Meeting to be held in 2025. In addition, the CEO maintains an individual savings insurance at a cost of 222 thousands of euros.
• (3) The remuneration for these Directors relating to Board and committee membership was approved in detail by the General Shareholders' Meeting on March 31, 2022 as part of the proposal to modify the "Directors' Remuneration Policy for the 2022, 2023, and 2024 financial years".
• (4) On February 21, 2022 the Board of Directors co-opted Mr Arturo Gonzalo Aizpiri as Executive Director to fill the vacancy caused by the resignation of the former Chief Executive Officer, Mr Marcelino Oreja Arburúa, on that date. On March 31, 2022, Mr Antonio Hernández Mancha, Mr Gonzalo Solana González, Mr Ignacio Grangel Vicente and Ms Isabel Tocino Biscarolasaga stepped down from their posts, while Mr David Sandalow, Mr Manuel González Ramos, Ms Clara García Fernández-Muro and Ms María Teresa Costa Campi were appointed as new Directors.

Share-based payments

As reported in the Annual Accounts since 2019, on March 29, 2019, the General Shareholders' Meeting of the Parent of the group, Enagás S.A,. approved a Long-Term Incentive Plan ("ILP") aimed at the then Executive Directors and senior management of the Company and its Group, with a view to maximising motivation and loyalty as well as promoting the good results achieved by the Enagás Group, aligning its interests with the long-term value of shareholders. In this regard, and as previously reported, 50% of the outstanding amount of the aforementioned programme has been settled during the first half of 2023.

On March 31, 2022, the Enagás, S.A. General Shareholders' Meeting approved the 2022-2024 Long-Term Incentive Plan (ILP) aimed at the Executive Director, and at the members of the Executive Committee and the senior management of the Company and its Group. The objective of the Plan is to (i) encourage the sustainable achievement of the objectives of the Company's Strategic Plan, (ii) give the opportunity to share the creation of value with participants, (iii) foster a sense of belonging to the Company and shared destiny, (iv) be competitive, and (v) align with the requirements of institutional investors, proxy advisors, and best Good Corporate Governance practices and, especially, those resulting from the recommendations of the CNMV's new Good Governance Code.

The Plan consists of an extraordinary mixed multi-year incentive which will permit the beneficiaries to receive, after a certain period of time, a bonus payable in (i) Enagás, S.A. shares and (ii) cash, provided that certain strategic objectives of the Company are met.

With respect to the portion payable in shares, a maximum of 679,907 shares are deliverable, all of which will come from the Company's treasury shares. Furthermore, the beneficiaries of the plan are not guaranteed any minimum value for the assigned shares. The cash part of the Plan is limited to an estimated payment of approximately 3.3 million euros should all the objectives be fully met.

This plan is aimed at persons who, due to their level of responsibility on their position in the Enagás Group, contribute decisively to achieving the Company's objectives. The Plan initially designated 53 beneficiaries, notwithstanding the possibility that new recruitments due to mobility or professional level changes may include new beneficiaries during the measurement period.

The targets determined to evaluate the achievement of the Enagás S.A. Long-Term Incentive Plan are as follows:

• Accumulated results corresponding to the Funds for Operations ("FFO") of the Enagás Group. This metric shows the financial soundness and net profit growth, which are the cornerstones of the Strategic Plan. This takes into account both the EBITDA of the regulated business and the dividends received from the subsidiaries that are not controlled by Enagás. It is a benchmark indicator for investors. Fulfilling this objective will satisfy the Company forecasts for the distribution of Group, investment and debt amortisation dividends. It accounts for 20% of the total targets.

• Accumulated cash flows received from international affiliates and other businesses ("Dividend"). This shows the focus on international growth and a realistic and profitable investment plan as the cornerstones of the Strategic Plan. It measures the profitability of the international business compared with the annual remuneration objective which measures the year's international investment volume. It accounts for 20% of the total targets.
• Total shareholder return ("TSR"). To ensure appropriate, competitive shareholder remuneration. It takes into account share performance and the dividend policy. This objective comprises two components, each with a relative importance of 12.5% of the total objectives:
  • a) Absolute TSR: measured as acquisition of a target share price in 2024. The target price has been established by investing estimated share dividends and is based on profitability and market parameters.
  • b) Relative TSR: this is measured with respect to the Peer Group of fifteen companies.
• The Company's commitment to long-term sustainable value creation ("Sustainability"). The target will have five indicators:
  • Decarbonisation
    • Reduction of CO2 emissions in line with the decarbonisation pathway (emissions 2024 vs. emissions 2021). It accounts for 6% of the total objectives.
    • Investment in renewable gases: 2022-2024 investment associated with the adaptation of infrastructure for the transmission of renewable gases and the development of infrastructure dedicated to the transmission and storage of renewable gases. It accounts for 6% of the total objectives.

◦ Diversity and inclusion:

• Percentage of female members on the Board of Directors. It accounts for 2% of the total objectives.
• Percentage of women in managerial and premanagerial positions. It accounts for 3% of the total objectives.
• Percentage of promotions which involve women in managerial and pre-managerial positions. It accounts for 3% of the total objectives.
• Digitalisation of the company. The target will consist of 2 indicators:
  • Implementation of the Digital Transformation Strategy and improvement of the associated indicators.
  • Strengthening the positioning of Enagás' digital assets in the company's strategic areas.

It accounts for 15% of the total objectives (7.5% for each indicator respectively).

Regarding the measurement period, although it will occur during the period from January 1, 2022 to December 31, 2024, its settlement will take place on the following dates:

• a. The beneficiary will receive 50% of the incentive within thirty (30) days following approval of the 2024 annual accounts by the General Shareholders' Meeting. This 50% will apply to the assets part of the incentive as well as the cash part of the incentive;
• a. The beneficiary will receive the remaining 50% of the incentive once a period of one year has elapsed from the first payment date.

In this regard, and since the Enagás S.A. ILP Regulation establishes the obligation for the beneficiaries to continue to provide their services to the Company until the first payment date in order to receive 50% of the incentive, and until the second payment date in order to receive the remaining 50%, the Company accrues the estimated fair value of the equity instruments granted taking account both of the target measurement period (January 1, 2022 to December 31, 2024) and the service conditions established for the period required to consolidate the remuneration.

As established in BOICAC No. 75/2008, query No. 7, the part settled through shares of Enagás, S.A. is considered a sharebased payment transaction that can be settled in equity instruments, and, accordingly, the fair value of the services received, as consideration for the equity instruments granted, is included in the Income Statement at December 31, 2023, under the heading "Personnel Expenses", in the amount of 1,204 thousands of euros (1,023 thousands of euros at December 31, 2022), with a credit to "Other Equity Instruments" of the Balance Sheet net equity.

The breakdown and fair value of the shares at the granting date of the ILP of the Enagás Group are as follows:

	ILP 2022-2024
Total shares at the concession date (1)	679,907
Fair value of the equity instruments at the granting date (EUR)	20.15
Dividend yield	7.94%
Expected volatility	26.15
Discount rate	0.48%

(1) This number of shares reflects the maximum number of shares to be delivered under the plan, and includes both the possibility of achieving the maximum degree of fulfilment of objectives established in the plan (125%), as well as the possibility that new hiring, staff mobility, or changes in professional levels, lead to the inclusion of new beneficiaries during the measurement period.

With respect to that part of the bonus payable in cash, the Company recognised the rendering of services corresponding to this plan as personnel expenses amounting to 359 thousands of euros (317 thousands of euros at December 31, 2022) with a credit to "Provisions" under non-current liabilities in the accompanying Balance Sheet. As in the case of the

share-based payment plan component, the Company accrues the estimated fair value of the cash-settled amount over the term of the plan (from January 1, 2022 to December 31, 2024) and the service conditions established for the period of time required for the consolidation of the remuneration.

As for the measurement period, although it will take place during the period from January 1, 2022 to December 31, 2024, it will be settled on the basis of the payment dates set out in the Regulation.

4.5 Other information concerning the Board of Directors

The information included below as required by Article 229 and subsequent of the Spanish Corporate Enterprises Act was prepared considering that they are companies with similar or complementary activities to those carried out by Enagás, that is, natural gas transmission, regasification, distribution, and commercialisation activities regulated by Law 31/1198 of the Hydrocarbons Sector.

At December 31, 2023 and December 31, 2022, there were no holdings in the share capital of companies with the same, similar or complementary type of activity reported to the Company by the Directors.

The positions or functions of the Company's Board members in other companies with the same, similar or complementary activities, as communicated to Enagás, S.A. at December 31, 2023 and 2022, are the following:

Director	Company	Positions
2023
Arturo Gonzalo Aizpiri	Enagás Transporte del Norte, S.L.	Chairman
Arturo Gonzalo Aizpiri	Tallgrass Energy G.P.	Director
Director	Company	Positions
2022
Arturo Gonzalo	Enagás Transporte
Aizpiri	del Norte, S.L.	Chairman

There are no activities of the same, similar or complementary nature to those carried out by Enagás which are performed by its Board members, on their own behalf or on behalf of third parties, not included in the above section.

At 2023 year-end, neither the members of the Board of Directors of the Company nor any parties related to them had notified the remaining Board members of any conflicts of interest, direct or indirect, with those of the Company.

4.6 Other information

a) Environmental information

The Company Enagás S.A., as head of the Enagás Group, carries out the activities for protection of the environment and biodiversity, energy efficiency, reduction in emissions, and the responsible consumption of resources as part of its environmental management in order to mitigate the impact of its activities.

The Company has integrated protection of the environment into its policy and strategic programmes by implementing an Environmental Management System developed and certified in accordance with the requisites of standard UNE EN ISO 14001, which guarantees compliance with applicable environmental legislation and continuous improvement of its environmental behaviour.

In 2023, the certifying company AENOR'S issued the corresponding audit report on the environmental management system with favourable results, concluding that the system's maturity and degree of development ensure continuous improvement for the company in this field.

Furthermore, in 2023, as part of Enagás' adherence to the Circular Economy Pact, it obtained Zero Waste Certification, issued by AENOR, thus ensuring the organised management of waste generated at the facilities in order to reintroduce these into the value chain.

The Company Enagás S.A. makes ongoing efforts to identify, characterise, and minimise the environmental impact of its activities and facilities, evaluating the related risks and strengthening eco-efficiency, responsible management of waste and discharges, minimising the impact in terms of emissions and climate change.

The Company incorporates environmental criteria in its relationship with suppliers and contractors, as well as in connection with decision-making with respect to the awarding of contracts for the provision of services and products.

During 2023, Enagás S.A. did not carry out environmental actions recognised as investments under assets in the balance sheet. During financial year 2022, this amount was 23 thousands of euros. The Company also assumed environmental expenses amounting to 381 thousands of euros in 2023, recognised under "Other operating expenses" (534 thousands of euros in 2022).

The company has arranged sufficient civil liability insurance to meet any possible contingencies, compensation and other risks of an environmental nature which it might incur.

Enagás S.A. did not receive any subsidy or additional income in 2023 or 2022 as a result of its activities relating to the environment.

b) Audit fees

"Other operating expenses" include the fees for audit and nonaudit services provided by the auditor of the Company, Ernst & Young, S.L., or by a company belonging to the same group or related to the auditor, broken down as follows:

	2023	2022
	Services rendered by the accounts auditor and related	Services rendered by the accounts auditor and related
Categories	companies	companies
Audit services (1)	795	837
Other assurance services (2)	153	153
Total audit and related services	948	990
Total professional services	948	990

(1) Audit services: This heading includes services rendered for the performance of statutory audits of the Enagás, S.A. Annual Accounts and the limited review work performed with respect to the Interim and Quarterly Financial Statements as well as the Certification of the Internal Control over Financial Reporting (ICFR) System.

(2) Other audit-related assurance services: This heading includes the engagements relating to the Annual Corporate Governance Report, and the review of non-financial information included in the Management Report, and also the report on agreed ICFR procedures.

4.7 Subsequent events

On January 15, 2024, the Company cancelled a credit line in the amount of 10,000 thousands of dollars.

No other events have occurred that significantly affect the results of the Company or its equity.

5. Explanation added for translation to English

These Financial Statements are presented on the basis of the regulatory financial reporting framework applicable to the Company in Spain (see Note 1.2). Certain accounting practises applied by the Company that conform to other generally accepted accounting principles and rules.

These Financial Statements are a translation of financial statements originally issued in Spanish and prepared in accordance with accounting principles generally accepted in Spain. In the event of a discrepancy, the Spanish-language version prevails.

Management Report of Enagás, S.A.

The wording provided by Law 11/2018, of December 28, to Article 262.5 of the consolidated text of the Corporate Enterprises Act, relating to the management report, indicates that a company dependent on a group will be exempt from the obligation established in this section if the company and its dependents, if any, are included in the consolidated management report of another company, prepared in accordance with the content established in this article.

Based on the above, Enagás, S.A. makes use of this exemption, including non-financial information in the consolidated management report of Enagás, S.A. and Dependent Companies prepared in accordance with said regulations and which will be filed with the Commercial Registry of Madrid.

I.- Enagás S.A. situation

Business model

Enagás, S.A., a midstream company with almost 50 years of experience and independent European TSO (Transmission System Operator) through Enagás GTS, S.A.U., is an international reference in the development and maintenance of gas infrastructure and in the operation and management of gas networks.

Also, on December 28, 2023, Royal Decree-Law 8/2023 of December 27 was issued, providing that Enagás, as the operator of the natural gas transmission network, may operate as the provisional operator of the hydrogen backbone transmission network.

The company has built the main infrastructure for the Spanish Gas System, turning it into a model of security and diversification of supply.

Energy infrastructures are a core element in the energy transition towards decarbonisation. In addition, natural gas and renewable gases are of great importance in the medium to long term, as they allow to introduce efficient industrial technologies that improve the intensity of energy use and industry competitiveness, generating direct and indirect employment.

The Company's strategy has a clear purpose: to contribute to security of supply and decarbonisation, creating value, working towards sustainable and profitable growth and focusing on Spain and Europe.

At Enagás, we want to actively contribute to the energy transition process, promoting the integration of renewable gases in the Spanish and European Gas System.

In November 2023, the European Commission adopted the Delegated Act on Projects of Common Interest (PCI). This includes the H2med corridor, the first axes of the associated Spanish Hydrogen Backbone Network and two underground hydrogen storage facilities. Their inclusion on the list of PCIs, which will be submitted to the European Parliament and Council for approval in early 2024, represents an important step forward in the promotion of these projects.

Government structure

General Shareholders' Meeting

The General Shareholders' Meeting is the highest body representing shareholders.

Enagás S.A. has a free float of 90%, one of the highest on the Spanish continuous market.

Enagás S.A. applies a proprietary separation model, which establishes the maximum limit of ownership by any shareholder at 5%, with a limitation on the voting rights of 1% for agents in the gas sector and 3% for the rest of shareholders. These limitations do not apply to direct or indirect interest held by the public corporate sector.

Board of Directors

The Board of Directors of Enagás, S.A. is made up of 15 members with a percentage of independence of 73.3%.

In 2023, and in line with its commitment to promote gender diversity and the recommendations of the National Securities Market Commission (CNMV), 40% of the Enagás' Board are women, thus meeting the target of having 40% women on the Board by 2024 included in the 2022-2024 Long-Term Incentive Plan.

Operation and probable evolution

Enagás, S.A., as head of the Enagás Group, will guarantee the proper functioning of the Spanish Gas System, and will ensure security of supply by facilitating competition in a transparent and non-discriminatory manner. Likewise, it will optimise the operation of the Spanish Gas System by coordinating the different agents and proposing measures to improve its operation. It will continue to develop the transmission network and manage its infrastructures in a safe, efficient, profitable way with a commitment to protecting the environment. All this will be achieved in collaboration with the regulators, thus providing service quality to its customers, creating value for its shareholders and contributing to the sustainable development of the Company.

In Spain, the 2021-2026 regulatory framework is stable and transparent, and establishes a period of six-years without intermediate revision. This framework supports climate and energy targets by establishing incentives to keep the Gas system infrastructure available, and to fulfil the role assigned by the Spanish National Integrated Energy and Climate Plan for natural gas and renewable gases in the energy transition process. This shows that the use of existing gas infrastructure is essential if advances are to be made in energy transition at the lowest cost.

In 2023, very significant regulatory actions were taken to accelerate the energy transition and highlight the key role of Enagás' infrastructures for Europe's energy security, which will serve to maintain regulatory stability and anticipate the new energy model: agreement of the final texts of the European Directive and Regulation on the internal markets for natural gas, renewable gases and hydrogen. In this regard, Enagás, as the operator of the natural gas transmission network, may operate as the provisional operator of the hydrogen backbone transmission network.

In 2023, gas demand reached 325.4 TWh, 10.7% lower than in 2022. In 2023, commercial availability was at 100% and technical availability was at 99.24% (in 2022, 100% and 99.72 %, respectively).

II. Evolution and results

Economic dimension

Good Governance

Enagás, S.A. has a Sustainability and Good Governance policy which reflects the importance of good governance for the generation of value by the company.

Financial and operational excellence

Principal Economic Results

The Company's net profit amounted to 461 million euros, 0.4% lower than 2022. In 2023, investments worth 317.3 million euros were made.

The dividend per share in 2023 increased by 1% over the previous year, reaching 1.74 euros per share. Enagás, S.A. closed 2023 at 15.265 euros per share.

The share capital of Enagás, S.A. at December 31, 2023 was 392.9 million euros, with 261.9 million shares.

On December 15, 2023, the credit rating agency Fitch Ratings maintained Enagás' outlook at stable, and placed Enagás' rating at BBB. On December 4, 2023, the credit rating agency Standard & Poor's placed Enagás' credit rating at BBB, with a stable outlook (Note 3.5).

Enagás S.A. has been listed on the Dow Jones Sustainability Index since 2008, with a rating of 85 points in 2023. In 2023, it was also placed on the 'A List' of leading companies in climate change management.

Social dimension

People

Enagás, S.A., as a certified Top Employer company, offers stable and quality employment with high percentages of permanent and full-time employment contracts, totalling (100%) and (96.15%), respectively. In addition, the commitments acquired by Enagás, S.A. in its Management of Human Resources policy, together with the measures and actions implemented, translate into high levels of employee satisfaction and motivation, as reflected in low staff turnover (7.1% voluntary turnover) and the results obtained in the workplace climate survey.

Enagás S.A. has an integrated talent management model to promote the achievement of the Company's strategic objectives and plans through four principles: To attract the best talent to Enagás, to know our internal talent, to continuously train our professionals and to develop and retain internal talent.

Enagás promotes a culture that ensures a diverse and inclusive environment, and fosters a working environment in which trust and mutual respect prevail and where integration and recognition of individual merit are hallmarks of the Company, placing its Diversity and Inclusion Master Plan as the basis for its strategy To achieve this commitment, Enagás, S.A. has continued to implement different initiatives in 2023 in the different areas of its diversity and inclusion strategy: gender, functional, generational, cultural, thought and LGTBIQ+.

As part of the Global Listening Strategy, in 2023 Enagás defined the action plan derived from the 2022 climate survey and launched a survey focused on the evaluation of work-life balance measures and another internal survey to monitor the results of the previous year's survey.

Health and safety

The global security approach of Enagás S.A. is based on the integration of the safety and health culture into the environment, people, facilities and information, through the involvement of leaders and the development of a model of health and security behaviours.

The Enagás Occupational Risk Prevention Management System, certified according to ISO 45001 (100% of activities), has procedures and standards for the identification and evaluation of risks, as well as for the notification of accidents.

Enagás, S.A. is also certified as a Healthy Company in accordance with the World Health Organisation protocol and has certified its information security management system in accordance with the ISO 27001 standard.

Ethical compliance and Human Rights

Enagás, S.A. has established a set of policies, standards and procedures which are integral to the company's ethics and integrity system. The Code of Ethics, updated in 2023, is the framework that sets out the principles of action necessary to promote ethics and integrity, as well as a culture of compliance.

The Enagás S.A. Ethics Channel is a platform for consulting doubts and notifying irregularities or breaches of the Code of Ethics and is managed by the company's Ethical Compliance Committee.

The Enagás, S.A. Compliance Management System, is the main tool for ensuring ethics and integrity in the performance of Enagás S.A. activities. This Management System is being coordinated around the Compliance Policy and its associated standards and procedures. Furthermore, under the Compliance Management System, Enagás, S.A. has a Crime Prevention Model that is the essential core of the company's criminal compliance. It also has a Corruption Prevention Model and an Antitrust Model.

In 2023, Enagás, S.A. certified its Corruption Prevention Model, based on ISO 37001

Community outreach

Relations with local communities are of importance to the company, since our activities impact the areas in which we operate. They encourage competitiveness in the industry, enhance energy supply security, contribute to decarbonisation and create direct and indirect employment.

The target of Enagás, S.A.'s social investment is to contribute to security of supply and decarbonisation, promoting a just energy transition through socio-economic development projects and initiatives throughout the country. Through dialogue and collaboration with stakeholders, the positive social impact of the Company's initiatives is maximised, whether through volunteering, sponsorships, patronage or donations.

In 2023, the total amount of this social investment reached 1.7 million euros. The distribution of this investment is mainly in initiatives aligned with the business and social investment.

Supply chain

Supply chain management is an increasingly critical point in the company's management. An adequate management of the supply chain allows us to identify and manage regulatory, operational, and reputational and sustainability risks, as well as take advantage of opportunities for collaboration and the creation of shared value.

In order to work with Enagás S.A., the suppliers must go through a rigorous approval process. They must meet, among others, the following approval requirements:

• Have the capacity and resources to meet technical, quality, environmental and safety requirements, and upholding thereof over an extended period of time.

• Respect the principles of the United Nations Global Compact and the Universal Declaration of Human Rights.
• Acceptance of the Enagás Code of Ethics.
• Hold certifications relating to quality, environmental matters, and occupational risk prevention for suppliers of certain product or service families.

The Company's average payment period for its suppliers is 53 days.

Environmental aspects

Activities to improve energy efficiency, reduce greenhouse gas emissions, protect the environment and biodiversity and the responsible consumption of resources are essential elements of Enagás, S.A.'s environmental management to mitigate the impact of its activities on the environment.

Climate action and energy efficiency

Improved energy efficiency and lower greenhouse gas emissions are major factors in reinforcing the vital role that natural gas will play in a low-carbon economy.

Enagás, S.A. is increasing its commitment to the fight against climate change every year through its management and continuous improvement model, based on public commitment and target setting, emission reduction and compensation measures as well as the reporting of our performance and results, following TCFD recommendations (Task Force on Climate-related Financial Disclosures).

Enagás is committed to achieving carbon neutrality by 2040. To this end, it has outlined a decarbonisation pathway with emission reduction targets (2026, 2030 ad 2040) aligned with the 1.5ºC temperature increase scenario:

Natural capital and biodiversity management

Managing natural capital and biodiversity is a key aspect for Enagás. The control and minimisation of our impacts on the environment also produces direct internal benefits by improving the use of resources, ensuring the sustainability of our business and generating confidence in our stakeholders.

Enagás S.A. undertakes its environmental commitments (as reflected in the Health & Safety, Environment and Quality Policy) through the Environmental Management System and 100% of its activity is certified in accordance with ISO 14001 standard.

III. Liquidity and capital resources

The Group's net debt at December 31, 2023 amounted to 3,347,373 thousands of euros.

IV. Risk management

The Company Enagás, S.A. is exposed to various risks intrinsic to the sector, markets in which it operates and the activities it performs, which, should they materialise, could prevent it from achieving its objectives and executing its strategies successfully.

The Company has established a risk control and management model based on the principle of due control, aimed at ensuring the achievement of its objectives in line with the Company's risk tolerance level and the risk appetite approved by the governing bodies, and with a risk profile periodically assessed for all its risks. This model allows it to adapt to the complexity of its business activity in a globalised competitive environment, in a complex economic context, where the materialisation of a risk is more rapid and with an evident contagion effect.

This model is based on the following aspects:

• The establishment of a risk appetite framework, which sets out the levels of risk that the company considers acceptable. These risk levels are consistent with the Strategic Plan, with the business targets established, with the market context in which the company's activities are carried out, with the risk indicators identified and with the thresholds and tolerance limits associated with each type of risk.
• The general consideration of certain types of risks (financial and non-financial) to which the Enagás Group is exposed.
• The segregation and independence of the functions of risk control and management at the company, aligned with the "three lines of defence" model.
• The assignment to the Governing Bodies in matters of risk management (the Audit and Compliance Committee of the Board of Directors and the Executive Committee) of overseeing the level of risk of the company, ensuring that it remains within the levels that can be assumed.
• The development of the Risk Control and Management Policy through the General Risk Control and Management Regulations, procedures and methodological manuals with operational instructions, as well as other general regulations.
• The transparency of information supplied to third parties, to guarantee its reliability and accuracy.

The integral analysis of all risks allows the appropriate control and management thereof, an understanding of the relationships between them and facilitates their joint assessment. This is accomplished by taking into account the differences of each type of risk in terms of its nature, handling capacity, risk measurement tools, etc.

The risk control and management function is articulated around three lines of defence, with differentiated roles and responsibilities, as follows:

• First line of defence: made up from the organisational units which assume the risks in the ordinary course of their activities. They are the owners of the risks and are responsible for identifying and measuring their respective risk exposure.

• Second line of defence: the Risk Department, in charge mainly of ensuring that the risk control and management system works correctly, defining the regulatory framework and approach, and performing periodic monitoring and overall control of the company's risks.
• Third line of defence: the Internal Audit Department, in charge of supervising the efficiency of the risk controls in place.

The Governing Bodies responsible for risk control and management are the following:

• Board of Directors: responsible for approving the risk control and management policy. Other responsibilities with respect to risks are delegated in the Audit and Compliance Committee.
• Audit and Compliance Committee: the main function is to ensure the independence of the risk control and management function, supervise the efficacy of the risk control and management systems as well as evaluating the Group's risk exposure (identification, measurement, and establishment of management measures).
• Executive committee: responsible for approving the general risk framework, defining the company's strategy and risk appetite, and monitoring the company's risk level.

The main risks associated with the business activities of Enagás S.A. are classified as follows:

1. Strategic and business risks

These are risks which are inherent to the gas sector and are linked to potential losses of value or results derived from external factors, strategic uncertainties, economic cycles, changes to the environment (inflation), changes to patterns of demand, competition and market structure or changes to the regulatory framework, as well as those derived from taking the incorrect decisions in relation to business plans and company strategies.

The activities carried out by the Company are notably affected by current regulations (local, regional, national and supranational). Any change in that legislation could negatively affect profits and the value of the company.

Of particular importance in this type of risk is the regulatory risk related to the remuneration framework and, therefore, to the regulated income from operations, as well as other risks related to the change of certain market factors that are not included in the aforementioned regulation. Also, there are uncertainties related to the deployment of renewable gases in the company and its future role in the energy sector. Regarding this last point, the delay or failure to develop the growth projects envisaged in the company's Strategic Plan for the medium and long term could have a negative impact on the company's results and its obligations to shareholders (mainly those projects related to hydrogen development).

The Company's results may also be affected by legal risk, which arises from uncertainties arising from differing interpretations of contracts, laws or regulations between the Company and third parties, as well as the outcome of ongoing legal or arbitration proceedings that may be decided in favour of or against the Company.

The Company Enagás S.A. has implemented measures to control and manage its strategic and business risk within acceptable risk levels, consisting in the continuous supervision of risks in connection with regulatory changes, market conditions, competition, business plans, strategic decisionmaking, etc. as well as management measures to contain risk at acceptable levels.

2. Operational and technological risks

Operation of the Enagás S.A. infrastructures may give rise to losses of value or earnings resulting from inadequate processes, failures of physical equipment and computer systems, human error or other external factors. This type of risk can in turn be classified as an industrial infrastructure risk (related to the nature of the fluids under management), risks associated with infrastructure maintenance, logistical and commercial processes, as well as other risks associated with corporate processes. As well as the risks related to the guarantee of supply to the Spanish Gas System due to the unavailability of gas at source.

The main operational and technological risks to which the Company is exposed are:

• Industrial risks, referring to potential incidents that may occur during the operation of transmission infrastructures, regasification plants, and underground storage facilities. These incidents can result in deviations from projected forecasts or, in some cases, significant damages. They are very often conditioned by the nature of the fluid under management. But in others, they may arise from technical failures or natural disasters or adverse weather conditions, sabotage or terrorist acts, to a lesser extent.
• Cybersecurity, in the different guises it may present itself (economic fraud, espionage, sabotage, activism and terrorism in the form of cyberattacks).
• Unavailability of gas at source: Interruption of supply in the Spanish Gas System due to unavailability of gas at source (sabotage, geopolitical decisions, among others).

The Company Enagás S.A. identifies the activities relating to management and control which can provide an adequate and appropriate response to these risks. Among the control activities thus defined there are emergency plans, maintenance plans, control and alerting systems, training and skill upgrading for staff, application of certain internal policies and procedures, defining quality indicators, establishing limits, and quality certifications and audits, prevention and environment, etc. which allow the Group to minimise the probability of these risks occurring. To mitigate the negative economic impact that the materialisation of any of these risks may have on Enagás S.A., a series of insurance policies have been arranged.

Some of these risks could affect the reliability of the financial information prepared and reported by Enagás, S.A. An Internal Control over Financial Reporting (ICFR) system was implemented to control these types of risk, the details of which can be consulted in the Corporate Governance Report.

3. Credit and counterparty risks

Credit and counterparty risk relates to the possible losses arising from the non-compliance of monetary or quantifiable obligations of a counterparty to which the Company has granted net credit which is pending settlement or collection.

The counterparty risk includes the potential breach of obligations acquired by a counterparty in commercial agreements that are generally established in the long-term.

Enagás, S.A. monitors in detail this type of risk, which is particularly relevant in the current economic context. The activities carried out include analysing the risk level and monitoring the credit quality of counterparties, regulatory proposals to compensate Enagás S.A. for any possible failure to comply with payment obligations on the part of shippers (an activity that takes place in a regulated environment), request for guarantees, etc.

However, regulations have been developed establishing standards for managing guarantees in the Spanish gas system and which oblige shippers to provide guarantees for: (i) contracting capacity in infrastructure with regulated third-party access and international connections, (ii) settlement of imbalances; and (iii) participation in the organised gas market.

The measures for managing credit risk involving financial assets include the placement of cash at highly-solvent entities, based on the credit ratings provided by the agencies with the highest international prestige. Likewise, interest rate and exchange rate derivatives are contracted with financial entities with the same credit profile.

The regulated nature of Enagás S.A. business activity does not allow an active customer concentration risk management policy to be established.

Information concerning counterparty risk management is disclosed in Note 3.5 of the Annual Accounts.

4. Financial and fiscal risks

Enagás S.A. is subject to the risks deriving from the volatility of interest and exchange rates, as well as movements in other financial variables that could affect the Company's liquidity.

Enagás S.A. maintains a liquidity policy that is consistent in terms of contracting credit facilities that are unconditionally available and temporary financial investments in an amount sufficient to cover the projected needs over a given period of time.

It should also be noted that the promotion of sustainable finance by regulators and investors (EU Taxonomy, EIB investment policy, Green Deal, among others) could affect the company's financing conditions in the medium and long term, which could in turn affect the Company's credit rating. The company monitors sustainable finance regulations, maintains contact with investment entities, financing and rating agencies, among other measures, to mitigate the possible impact.

With respect to tax risk, the Company is exposed to possible modifications in tax regulatory frameworks and uncertainty relating to different possible interpretations of prevailing tax legislation, potentially leading to negative effects on results.

The financial risk management policy is described in Note 3.5 of the Annual Accounts.

5. Reputational risks

Reputational risk refers to any action, event or circumstance that could have a harmful effect on the Company's reputation among its stakeholders.

Enagás, S.A. has implemented a self-assessment reputational risk procedure which uses qualitative measurement techniques. This process considers the potential reputational impact of any of the risks listed in the current inventory, as well as those strictly reputational events arising from the action, interest or judgement of a third party.

6. Compliance risk and model

The Company is exposed to compliance risk, which comprises the cost associated with potential penalties for

non-compliance with laws and legislation, or sanctions resulting from the materialisation of operational events, improper business practices or non-compliance with internal company policies and procedures.

The Company may also be affected by risks of corruption, antitrust and internal and/or external fraud.

7. Criminal liability risks

This includes the offences that give rise to criminal liability of the company (as a legal entity) for acts or omissions committed by its directors, officers or employees in the exercise of their functions and for the direct or indirect benefit of the company, as established by the applicable criminal law.

The reforms of the criminal codes of some of the countries in which the company operates (including Spain) establish the criminal liability of legal persons only for certain types of criminal offences, known as "catalogue of offences".

To prevent this risk from materialising, the Enagás Group has developed a Crime Prevention Model in accordance with the requirements established in the Spanish Criminal Code, implementing the measures necessary to prevent the commission of crimes in its business environment and thus exempt the company from criminal liability.

8. Environmental, Social and Governance (ESG) Risks

The types of risks detailed above can also be classified according to each of the three pillars of sustainability (Environmental, Social and Governance). This is a category of risks transversal to the others previously identified, which groups together the different types of risks identified according to their effect on the material issues identified by the company from the sustainability point of view.

The material issues that have been identified, and therefore into which the risk typologies have been classified, include: People and Local Communities, Health and Safety, Governance, Ethics and Integrity, Climate Change, Natural Capital, Supply Chain, Operational and Financial Excellence and Affiliates Relations.

With regard to climate change risks, the Company manages and assesses these risks in an integrated manner in the risk control and management model described in the Management Report.

Risks are identified and quantified which arise from factors such as political and regulatory measures to promote the use of renewable energy, natural disasters or adverse weather conditions, compliance with CO2 emission reduction targets and reputational risks, among others.

The impact of climate-related risks and how management assesses these risks to incorporate them into the judgements, estimates and uncertainties that affect the financial statements of the Group are described in Note 4.6.a. Regarding climate change risk, further details are included in the Group's Management Report chapter on Climate action and energy efficiency.

9. Other risks

Given the dynamic nature of the business and its risks, and despite having a risk control and management system that responds to the best international recommendations and practices, it is not possible to guarantee that some risk is not identified in the risk inventory of the Company.

V. Subsequent events

On January 15, 2024, the Company cancelled a credit line in the amount of 10,000 thousands of dollars.

No other events have occurred that significantly affect the results of the Company or its equity.

VI. Research and Development activities

The technological innovation actions carried out by Enagás, S.A. and its Group in 2023 were mainly aimed at the technological development in the field of energy transformation towards the use of renewable gases, mainly hydrogen, as well as energy efficiency.

1. Evolution of gas infrastructure

Enagás S.A. is aware of the wide diversity of scenarios and solutions that the energy sector could develop in the future in a broad sense. It thus assists with the actions carried out in different areas of the holding company to anticipate events and adapt to the far-reaching changes that are bound to arrive in the future.

In the field of R&D&I, the different complementary and/or alternative technologies to natural gas are analysed, which could also make use of part or all of the gas infrastructure for their potential development and implementation. This includes the following: pure hydrogen as the most relevant, as well as hydrogen carriers, mixtures of hydrogen with natural gas in certain percentages; biomethane; synthetic natural gas (obtained from CO2 and H2).

In particular, Enagás, together with 7 other companies and 3 research centres have continued developing the GreenH2Pipes project, whose goals include acquiring first-hand knowledge regarding the suitability of existing gas transmission infrastructures for use with 100% hydrogen as well as hydrogen and natural gas mixtures. This project includes, among other activities, the construction of a hydrogen test ring in Zaragoza (as part of the HyLoop+ project).

Enagás has also continued its participation in the international HYREADY consortium (which includes 24 partners, mostly TSOs and DSOs from Europe, Asia, Canada and the United States), whose main objective is to put into practice the knowledge acquired in R&D projects and activities through recommendations and guidelines for adapting natural gas infrastructures to hydrogen injection.

Also, during 2023, numerous projects have been initiated for the development of gas infrastructures in response to emerging energy carriers. On the one hand, the HYSTORENEW project, in collaboration with other Spanish companies, is studying the application of new satellite surveillance technologies for application to new infrastructures, as well as the developments needed to build and/or adapt infrastructures to hydrogen transmission.

Also along these lines, work is being carried out on the European SHIMMER project, financed by the Clean Hydrogen Partnership programme, which will integrate everything that has been developed in recent years in relation to the transmission of hydrogen and natural gas mixtures.

Underground natural gas storage facilities have also been the subject of R&D&I projects to analyse their suitability for future hydrogen storage, assessing the associated risk as a preliminary phase to determine the necessary corrective/mitigation actions.

2. Measurement and analysis of natural gas and hydrogen

Enagás, S.A., as the parent company of the Enagás Group, continues to equip itself with the best available techniques to reduce the level of uncertainty in the measurement of the energy contained in natural gas, both in the liquid state (LNG) and in the gaseous state (NG), at the points at which it is received or delivered to third parties. During the current year 2023, this innovative effort has manifested through various studies and actions, with the particular standout of: the effect of gas quality on measurement differences, which studies how the heterogeneity of the composition of natural gas can affect the losses of the Basic Gas Pipeline Network, and which extends to hydrogen in the activities carried out within the framework of The Next Pangea project.

Regarding the measurement of renewable gases, Enagás has made further progress with its partners in the European DECARB project, funded by the EMPIR programme (European Metrology Programme for Innovation and Research). The project proposes the development of metrology for flow measurement, quality analysis, physical properties measurement and leak detection, which are necessary to facilitate the decarbonisation of the gas grid through the transmission of pure hydrogen, as well as mixed with natural gas and biomethane. Enagás' activities have focused on testing leak detection instruments (8) on the test bench of the Metrology and Innovation Centre.

In addition, and within the scope of the GreenH2Pipes project, Enagás has acquired analysis equipment in 2023 to measure the quality of hydrogen produced by electrolysis. The aim is to identify impurities that may accompany the hydrogen produced by a new electrolyser manufactured with national technology developed within the project. Research is also being carried out in the GreenH2Pipes and The Next Pangea projects on H2 separation/purification systems.

Continuing along the same line of research, the Enagás Central Laboratory, as part of the APIX project and in collaboration with the company of the same name, has conducted a comprehensive evaluation of its equipment's performance in determining the primary components and impurities of biomethane throughout 2023.

Also in 2023, the THOTH2 project has started, between Enagás and 12 other European partners, with funding from the Clean Hydrogen Partnership programme. The project will develop new validated methodologies, protocols and facilities for testing the metrological performance and durability of existing measuring instruments in the gas network when operating with pure hydrogen as well as NG:H2 mixtures.

The basic engineering of the calibration bench for natural gas, hydrogen and mixtures of both, HyLoop+, has also been carried out. The possibility of building a primary volume measurement standard associated with this facility to calibrate the standard meters and reduce the measurement uncertainty of the calibration bench and the existing high-pressure laboratory (LACAP) is also under study.

3. Operational safety

Throughout 2023, the line of research into the safety of Enagás' gas pipelines and other facilities continued. To this end, participation in different international joint projects has been maintained, which has also confirmed that the level of security of the Enagás facilities is adequate and is in line with that of other foreign companies with similar characteristics.

Work was continued to update and add new functionalities to the tools developed to meet the needs of different areas of the Company both in the design of new facilities and in the operation of existing ones.

The OPTHYCS project, led by Enagás and with European funding from the Clean Hydrogen Partnership, began in 2023. The project will develop new sensor technologies for hydrogen leak detection, sensors based on fibre optic technologies, which will lead to an increase in the safety level of hydrogen applications, from production to storage and distribution, both in new infrastructures working with pure hydrogen and in reused natural gas facilities and pipelines, contributing to a safe and economically viable implementation of hydrogen production, transmission and storage processes.

4. Materials and equipment

In 2023, Enagás S.A., as the parent company of the Enagás Group, has continued with the mechanical characterisation tests on materials, an R&D&I project in collaboration with UPM, which is providing key information to determine the suitability of the existing gas transmission network for conversion to hydrogen transmission. The methodology and acceptance criteria for assessing anomalies detected in gas pipelines running on hydrogen are also being developed and can be used to extend the useful life of infrastructures.

Based on the experience and knowledge gained through participation in various technical works of European bodies and major research and technology associations (European Standardisation Technical Committees CEN, GERG, EPRG, MARCOGAZ, H2GAR, etc.), Enagás has developed and/or updated a series of important specifications and technical requirements applicable to the materials and equipment with which it designs, builds and operates its facilities, reflecting at all times the state of the art and ensuring that the best alternatives are chosen to optimise the total cost (CAPEX + OPEX) of these facilities for the Company, without compromising the level of safety.

Within the framework of the FEM analysis of flanged elements project, the tightness of different types of flanged joints, representative of Enagás' infrastructures, in facilities that can operate in hydrogen service, has been assessed by means of a combination of stress and finite element analysis (FEM). Enagás has thus been able to acquire know-how and incorporate its own criteria, applicable to design and construction phases, in flanged connections (for example, establishing required tightening torques, calculated leakage rates, most appropriate types of joints, alignment tolerances, etc.) to ensure that there are no (or negligible) hydrogen leaks in this type of connection.

In the Hytap stopple (hot taps) project, in collaboration with other European companies, procedures, best practices and establishment of safe environments have been developed for carrying out hot tapping and isolation (stopple) of pipelines in the presence of hydrogen. The practices developed were experimentally tested in a 20" pipe section, pressurised to 67 bar with hydrogen.

5. Efficiency

Energy efficiency:

During 2023 Enagás, S.A., as the parent company of the Enagás Group, has continued its efforts, on the one hand, to reduce the energy consumption of its facilities and, on the other hand, to raise the level of energy it produces for selfconsumption or export.

The objectives of reducing energy consumption and emissions have been achieved through the PEERE (Energy Efficiency and Emissions Reduction Plan). Firstly, through the reduction of primary energy consumption for the company's own operations, secondly, the reduction of emissions derived from the operation and, finally, the improvement in the management of fugitive emissions.

With the aim of reducing primary energy consumption and greenhouse gas emissions, in 2023 the projects to replace two natural gas-powered turbocompressors with electricallypowered motor compressors continued, one at the Almendralejo compressor station and the other at the Coreses compressor station, after reaching the milestone of placing the motor compressors in their respective locations. Work has also continued on the replacement of turbocompressors with motor compressors in the wells of the Aurín field of the Serrablo underground storage. In compliance with the Enagás Transporte S.A.U. Electrification Plan, the design and engineering for the replacement of six turbocompressors has begun, with the aim of being commissioned between 2026 and 2028. Solar energy production plants for self-consumption have also been commissioned at some Enagás facilities, such as the Metrology and Innovation Centre (70 kWp).

With regard to consumption reduction in its facilities, it is mainly focused on the optimisation of its processes, to minimise the energy needs of these processes, and in the modification or replacement of their equipment, to improve their unit performance.

In the area of methane emissions detection and mitigation, Enagás has spearheaded an innovation project on the use of various novel technologies and their implementation to improve the accuracy of methane emissions quantification at its facilities. The project has been developed in the framework of the European partnership GERG (European Gas Research Group) and the results of this project will contribute to achieving the objective of the Global Methane Pledge and obtaining the "Gold standard" of OGMP 2.0, a voluntary initiative coordinated by the United Nations Environment Programme. The project is coordinated by Enagás, with the participation of 13 other European gas infrastructure operators and gas associations. The phase developed during this 2023 is based on the study of the harmonisation of results from different methodologies to increase the accuracy of the reported data, a requirement to obtain the maximum level of reporting in OGMP. Specifically, a benchmarking exercise was carried out to identify the emissions produced by the different analysis systems installed in the infrastructures. In this way, emissions and some practises to eliminate/reduce them could be identified. It is being investigated how the project can be extended to test the effectiveness of new technologies to eliminate emissions.

Another strategic project is the collaboration with SATLANTIS in the development of innovative technology for the detection and quantification of GHG emissions by satellite. In 2023, tests were carried out at Enagás Transporte facilities, technical and business support has been provided and the first satellite (part of a constellation under development), GEISAT-p, specifically developed for detection and quantification of methane emissions, was launched.

In the field of energy efficiency, the company E4efficiency, which emerged from the Enagás intrapreneurship programme, and in which Enagás Emprende has a stake, thanks to its patent on the "System and process for the recovery of cold from LNG in regasification plants", has begun construction of the ecological cold project at the Barcelona plant together with Veolia and Ecoenergies.

Technical efficiency

The development of the "Simulation Hub" project was completed in 2023. This project has enabled the development of a tool to trace the concentrations of hydrogen mixtures and to accurately predict potential concentrations under varied operating conditions. This ability is essential to ensure that the maximum allowable hydrogen concentrations are respected.

The production of renewable hydrogen and its injection into the gas grid, either in blending or as a pure compound, involves a coupling of the gas and electricity sectors and where operational, regulatory and market conditions affect these plants in such a way as to make it difficult to optimise their benefits. In this area, within the scope of the GreenH2Pipes project, the behaviour of the different subsystems involved in these plants is analysed so that their optimisation, a multivariable non-linear problem, can be solved in real time. Harnessing the power of artificial intelligence (AI) and modelling, the aim is to establish the basis for the development of digital twins to accurately predict the generation, storage and transmission of green hydrogen by pipeline.

6. Renewable gases

In the field of renewable gases, in addition to the aforementioned technological tests for the transformation of our networks to hydrogen, Enagás has continued to work on various projects aimed at developing innovative technologies for hydrogen production, other than water electrolysis technology, which will make it possible to recover waste or take advantage of the direct source of solar energy with the potential to reduce the production costs expected to be obtained in large-scale projects.

The HacDos project, started in 2022, is a Spanish consortium to develop a photocatalytic technology to produce green hydrogen from wastewater. The pilot project aims to demonstrate both the technical feasibility of photocatalysis for the production of hydrogen from wastewater and solar energy and the maximum hydrogen production through a technoeconomic and market analysis aimed at the possible establishment of a spin-off.

Metharen is a European project formed by 17 European companies, launched in 2022, which consists of the production of synthetic methane from biogenic Co2, green hydrogen (produced by SOEC electrolyser) and waste gasification from an existing biogas plant that would eventually be injected into the grid. The pilot is being carried out in an existing biogas plant in northern Italy.

Hyeld is a European project consisting of 12 companies, launched at the end of 2023, which develops the conversion of waste into green hydrogen. It includes several innovative technologies: Process design for waste heat utilisation, a Water-Gas-Shift (WGS) membrane reactor, low pressure metal hydride storage technology and a digital twin to develop new digital optimisation tools and models for waste to hydrogen plants.

7.Digitisation

A carbon footprint digitisation pilot was launched in 2023. The digitisation of sustainability indicators is crucial to meet the stringent requirements of new European regulations, which place growing emphasis on non-financial information and which require robustness, traceability, and high-quality data. In addition, it will generate efficiencies in different areas, improve the quality of data analysed and reported, and support the company's decarbonisation goals.

Sercomgas, a subsidiary of Enagás Emprende, was created in 2018 with the aim of providing operational back-office services to shippers, traders and qualified gas consumers, facilitating access to new customers and the development of the Spanish gas hub concept in accordance with Enagás' strategy. Also aligned with our sustainability objectives, in 2023, in addition to facilitating the obtaining and management of Guarantees of Origin (GoO) and Proof of Sustainability (PoS) of gas from renewable sources for the agents participating in these systems, it has evolved its back-office logistics management software called Mercurio, which has been tested in more than 50 customers. This software enables gas shippers to operate their service end-to-end, offering a flexible, scalable and immediately deployable cloud solution.

VII. Acquisition and sale of treasury shares

At December 31, 2023 the Company held 723,579 treasury shares, representing 0.28% of total shares of Enagás S.A. This is in line with the framework of the "Temporary Treasury Share Buy-Back Scheme", whose exclusive aim was to meet the obligations of delivering shares to the Executive Director and members of the Enagás Group management team under the current remuneration scheme according to the terms and conditions of the 2022-2024 Long-Term Incentive Plan (ILP) and the Remuneration Policy approved at the General Shareholders' Meeting held on March 31, 2022. The shares were purchased in compliance with the conditions set out in Article 5 of Regulation EC/2273/2003 and subject to the terms authorised at the General Shareholders' Meeting held on March 31, 2022. Management of the Temporary Treasury Share Buy-Back Scheme was entrusted to Banco Bilbao Vizcaya Argentaria (BBVA), which carried out the transaction on behalf of Enagás, S.A. independently and without exercising influence on the process (Note 4.4).

VIII. Annual Corporate Governance Report

The Annual Corporate Governance Report for the 2023 financial year forms part of the Consolidated Management Report in accordance with article 49.4 of the Commercial Code. This document can be consulted from the publication of these accounts on the company's corporate website www.enagas.es and on the CNMV website www.cnmv.es.

On February 19, 2024, the Board of Directors of Enagás, S.A. prepared the Annual Accounts and Management Report for the year ended December 31, 2023, consisting of the accompanying documents attached hereto, in accordance with the provisions of Article 253 of the Corporate Enterprises Act and Article 37 of the Code of Commerce, and remaining applicable standards.

In accordance with the provisions of Article 262.5 of the Consolidated Text of the Corporate Enterprises Act and the reference contained in the Management Report of the company Enagás, S.A. corresponding to the year ended December 31, 2023, Enagás, S.A., as the parent company of the Enagás Group, includes the Non-Financial Information Statement in the Consolidated Management Report of Enagás, pursuant to the provisions of Law 11/2018 governing non-financial and diversity reporting.

DECLARATION OF RESPONSIBILITY: For the purposes of Article 99.2 of Law 6/2023, of March 17, on Securities Market and Investment Services, the directors state that, to the best of their knowledge the Annual Accounts, prepared in accordance with applicable accounting principles, provide a true and fair view of the equity, financial position and results of the Company and that the Management Report includes a fair analysis of the performance and results of the businesses and the situation of the Company, together with the description of the main risks and uncertainties faced. They additionally state that, to the best of their knowledge, the directors not signing below did not express dissent with respect to the Annual Accounts or the Management Report.

Chairman: Chief Executive Officer:

Mr Antonio Llardén Carratalá (Signed the original in Spanish) Mr Arturo Gonzalo Aizpiri (Signed the original in Spanish) Directors: Sociedad Estatal de Participaciones Industriales-SEPI Mr José Montilla Aguilera (Represented by Mr Bartolomé Lora Toro) (Signed the original in Spanish) (Signed the original in Spanish) Ms Ana Palacio Vallelersundi (Signed the original in Spanish) Ms María Teresa Arcos Sánchez (Signed the original in Spanish) Ms Eva Patricia Úrbez Sanz (Signed the original in Spanish) Ms Natalia Fabra Portela (Signed the original in Spanish) Mr Santiago Ferrer Costa (Signed the original in Spanish) Ms Clara Belén García Fernández-Muro (Signed the original in Spanish) Mr David Sandalow (Signed the original in Spanish) Mr José Blanco Lopez (Signed the original in Spanish) Ms María Teresa Costa Campi (Signed the original in Spanish) Mr Manuel Gabriel González Ramos (Signed the original in Spanish)

Mr Cristóbal José Gallego Castillo (Signed the original in Spanish)

DILIGENCE to record that, in accordance with the call of the Board of Directors, having been held at the registered office, allowing the directors to participate telematically, the individual Annual Accounts and Management Report of Enagás, S. A. for the 2023 financial year have been drawn up with the agreement of all members of the Board of Directors, which is certified by the Secretary of the Board with his signature below, and with the signatures of those Directors who have physically participated in the Board of Directors.

Electronic signature of the Secretary to the Board: