Audit Report on Financial Statements issued by an Independent Auditor

ENAGÁS, S.A. AND SUBSIDIARIES Consolidated Financial Statements and Consolidated Management Report for the year ended December 31, 2021

Ernst & Young, S.L. C/ Raimundo Fernández Villaverde, 65 28003 Madrid

Tel .: 902 365 456 Fax :: 915 727 300 ey.com

AUDIT REPORT ON CONSOLIDATED FINANCIAL STATEMENTS ISSUED BY AN INDEPENDENT AUDITOR

Translation of a report and financial statements originally issued in Spanish. In the event of discrepancy, the Spanish-language version prevails (See Note 5)

To the shareholders of ENAGAS, S.A .:

Audit report on the consolidated financial statements

Opinion

We have audited the consolidated financial statements of ENAGAS, S.A. (the parent) and its subsidiaries (the Group), which comprise the consolidated balance sheet at December 31, 2021, the consolidated income statement, the consolidated statement of other comprehensive income, the consolidated statement of changes in equity, the consolidated cash flow statement, and the notes thereto, for the year then ended.

In our opinion, the accompanying consolidated financial statements give a true and fair view, in all material respects, of consolidated equity and the consolidated financial position of the Group at December 31, 2021 and of its financial performance and its consolidated cash flows, for the year then ended in accordance with International Financial Reporting Standards, as adopted by the European Union (IFRS-EU), and other provisions in the regulatory framework applicable in Spain.

Basis for opinion

We conducted our audit in accordance with prevailing audit regulations in Spain. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

We are independent of the Group in accordance with the ethical requirements, including those related to independence, that are relevant to our audit of the consolidated financial statements in Spain as required by prevailing audit regulations. In this regard, we have not provided non-audit services nor have any situations or circumstances arisen that might have compromised our mandatory independence in a manner prohibited by the aforementioned requirements.

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

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our audit opinion thereon, and we do not provide a separate opinion on these matters.

Recovery of financial assets related to Gasoducto Sur Peruano, S.A.

Description On January 24, 2017, the Directorate General for Hydrocarbons of the Ministry for Energy and Mines terminated the "Improvements to the National Energy Security and Development of the South Peruvian Pipeline" concession agreement and on December 4, 2017, the National Institute for the Defense of Competition and Intellectual Property requested that Gasoducto del Sur Peruano, S.A. file for bankruptcy, as explained in Note 3.3.a to the consolidated financial statements.

The Enagás Group holds financial assets amounting to 275.3 million US dollars relating to the investment in Gasoducto Sur Peruano, S.A. and accounts receivable pertaining to executed guarantees totaling 226.8 million US dollars, interest of 1.9 million US dollars, as well as various invoices for professional services rendered amounting to 7.6 million US dollars. These items represent recorded assets at December 31, 2021 of 433.6 million euros (Note 3.3.a to the accompanying consolidated financial statements).

Due to the termination of the concession contract, the Enagás Group entered into an ongoing dispute with the Peruvian Government related to the recovery of the investment. On July 2, 2018, a request was filed with the ICSID (International Centre for Settlement of Investment Disputes) to initiate arbitration against the Peruvian State regarding its investment in Gasoducto Sur Peruano, S.A. Subsequently, Enagás' claim memorial was submitted to the ICSID, as were the corresponding responses and replies by both the Peruvian government and Enagás. Hearings have been scheduled for September 2022 and it is expected that ICSID will render its final decision by mid 2023.

Given the significance of the amounts involved and the uncertainty regarding the final outcome of the resolution of complex, long-term processes of this type from a legal and economic standpoint, we have determined this to be a key audit matter since, primarily, the Group's legal advisors believe that the estimates made by Enagás' directors may vary in the future.

Our

response Our audit procedures in this regard included, among other, the following:

Understanding the Enagás Group's 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 Enagás with the ICSID and the Peruvian government's and Enagás' various replies, responses, and rejoinders.
Holding meetings with external and independent experts in Peruvian and international law engaged by the Enagás Group.

Reviewing the analysis reports of this matter prepared by various Peruvian and international law experts (bankruptcy, criminal and administrative law, inter alia) and the Enagás Group's internal legal consultants.
Reviewing the Enagás Group's accounting estimate processes used to analyze the recovery of the aforementioned financial assets and the basis for the report prepared by an external accounting expert and the report prepared by an independent expert to determine the net carrying amount of these financial assets that have been included in the dispute filed with the ICSID.
Assessing the financial asset recovery analysis prepared by Enagás Group Management based on various scenarios (sensitivity analysis).
Reviewing the disclosures included in the notes to the accompanying consolidated financial statements in conformity with the applicable financial reporting framework.

Regulatory framework including recognition of income and amounts receivables from the gas system

Description The Enagás Group makes significant estimates when analyzing the impairment of investments accounted for using the equity method, the balance of which at December 31, 2021 amounts to 2,789.7 million euros and contain significant implicit goodwill. The possible loss of value is determined by analyzing the recoverable value of the investment accounted for using the equity method.

The principal figures and the criteria and hypotheses used in the related valuation of these assets are described in Note 1.6 and 2.7 to the consolidated financial statements.

We have determined these estimates and valuations to be a key audit matter since, given the amount of the assets affected, small changes in the hypotheses could have a material impact on the Enagás Group's consolidated financial statements.

Our response

Our audit procedures consisted, among others, the following:

Understanding the Enagás Group's process for assessing the recoverability of these assets and reviewing the design and operating effectiveness and implementation of key controls.
Reviewing, in collaboration with valuation specialists, the reasonableness of the methodology used by Management for preparing the discounted cash flow statements of each investment accounted for using the equity method, focusing particularly on the discount rate and long-term growth rate applied.
Analyzing the financial information projected in the business plan of each investee company by analyzing historical financial information, current market conditions, and expectations regarding their future performance.
Checking the mathematical accuracy of impairment models and reviewing the sensibility analysis performed by the Management.
Reviewing the information disclosed by the Group with respect to these estimates to the accompanying consolidated financial statements in accordance with the applicable financial reporting framework.

Other information: consolidated Management report

Other information refers exclusively to the 2021 consolidated Management report, the preparation of which is the responsibility of the parent company's directors and is not an integral part of the consolidated financial statements.

Our audit opinion on the consolidated financial statements does not cover the consolidated Management report. Our responsibility for the consolidated Management report, in conformity with prevailing audit regulations in Spain, entails:

Checking only that the consolidated non-financial statement and certain information included a. in the Corporate Governance Report and in the Board Remuneration Report, to which the Audit Law refers, was provided as stipulated by applicable regulations and, if not, disclose this fact
b. Assessing and reporting on the consistency of the remaining information included in the consolidated Management report with the consolidated financial statements, based on the knowledge of the Group obtained during the audit, in addition to evaluating and reporting on whether the content and presentation of this part of the consolidated Management report are in conformity with applicable regulations. If, based on the work we have performed, we conclude that there are material misstatements, we are required to disclose this fact.

Based on the work performed, as described above, we have verified that the information referred to in paragraph a) above is provided as stipulated by applicable regulations and that the remaining information contained in the consolidated Management report is consistent with that provided in the 2021 consolidated financial statements and its content and presentation are in conformity with applicable regulations.

Responsibilities of the parent company 's directors and the audit committee for the consolidated financial statements

The directors of the parent company are responsible for the preparation of the accompanying consolidated financial statements so that they give a true and fair view of the equity, financial position and results of the Group, in accordance with IFRS-EU, and other provisions in the regulatory framework applicable to the Group in Spain, and for such internal control as they determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors of the parent company are responsible for assessing the Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The audit committee is responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with prevailing audit regulations in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with prevailing audit requlations in Spain, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group's internal control.
ﻘ Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by Management.

Conclude on the appropriateness of the directors' use of the going concern basis of a accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the ﺔ entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the audit committee of the parent company regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the audit committee of the parent company with a statement that we have complied with relevant ethical requirements, including those related to independence, and to communicate with them all matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the audit committee, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters.

We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.

Report on other legal and regulatory requirements

European single electronic format

We have examined the digital files of the European single electronic format (ESEF) of ENAGAS, S.A. and subsidiaries for the 2021 financial year, which include the XHTML file containing the consolidated financial statements for the year, and the XBRL files as labeled by the entity, which will form part of the annual financial report.

The directors of ENAGAS S.A. are responsible for submitting the annual financial report for the 2021 financial year, in accordance with the formatting and mark-up requirements set out in Delegated Regulation EU 2019/815 of 17 December 2018 of the European Commission (hereinafter referred to as the ESEF Regulation). In this regard, the Annual Directors' Remuneration Report has been incorporated by reference into the consolidated management report.

Our responsibility consists of examining the digital files prepared by the directors of the parent company, in accordance with prevailing audit regulations in Spain. These standards require that we plan and perform our audit procedures to obtain reasonable assurance about whether the contents of the consolidated financial statements included in the aforementioned digital files correspond in their entirety to those of the consolidated financial statements that we have audited, and whether the consolidated financial statements and the aforementioned files have been formatted and marked up, in all material respects, in accordance with the ESEF Requlation.

In our opinion, the digital files examined correspond in their entirety to the audited consolidated financial statements, which are presented and have been marked up, in all material respects, in accordance with the ESEF Regulation.

Additional report to the audit committee

The opinion expressed in this audit report is consistent with the additional report we issued to the audit committee on February 16, 2022.

Term of engagement

The ordinary general shareholders' meeting held on March 29, 2019 appointed us as auditors for three years, commencing on December 31, 2019.

Previously, we were appointed as auditors by the shareholders for 3 years and we have been carrying out the audit of the financial statements continuously since December 31, 2016.

ERNST & YOUNG, S.L. (Registered in the Official Register of Auditors under No. \$0530) Jose Agustín Rico Horajo (Registered in the Official Register of Auditors under No. 21920)

February 16, 2022

CONSOLIDATED ANNUAL ACCOUNTS 2021

Translation of consolidated financial statements originally issued in Spanish and prepared in accordance with International Financial Reporting Standards as adopted by the EU, in conformity with Regulation (EC) No. 1606/ 2002. In the event of a discrepancy, the Spanish-language version prevails.

Consolidated Annual Accounts 2021

ENAGÁS, S.A. AND SUBSIDIARIES

		CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2021	1
		CONSOLIDATED INCOME STATEMENT AT DECEMBER 31, 2021
		CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AS OF
			0
	DECEMBER 31, 2021
		CONSOLIDATED STATEMENT OF TOTAL CHANGES IN EQUITY AT
	DECEMBER 31, 2021
		CONSOLIDATED CASH FLOW STATEMENT AT DECEMBER 31, 2021
l.		Group activities and presentation bases
1.1	Group activity
1.2	Basis of presentation		1
1.3	Consolidation principles		8
1 4		Estimates and accounting judgements made	11
1.5		Changes in the consolidation scope	12
1.6		Investments accounted for using the equity method	13
1.7	Earnings per share		14
1.8		Dividends distributed and proposed	14
1.9 1.10	Commitments and guarantees New accounting standards		15 16
1.11	Aspects relating to COVID-19		17
2.		Operational performance of the group	18
2.1	Operating profit		1 ਰੋ
2.2		Trade and other non-current and current receivables	24
2.3	Trade and other payables		28
2.4		Property, plant, and equipment	25
2.5	Intangible assets		35
2.6		Non-current assets held for sale	37
2.7 2.8		Impairment of non-financial assets Other current and non-current liabilities	38 ਤਰ
2.9		Provisions and contingent liabilities	4 1
s.		Capital structure, financing and financial result	4.6
3.1	Equity		44
3.2		Result and variation in minority interests	46
3.3	Financial assets and liabilities		41
3.4	Financial debts		ട്
3.5	Net financial gain /(loss)		55
3.6		Derivative financial instruments	56
3.7 3.8	Cash flows	Financial and capital risk management	58 60
人 -	Other Information		62
4.1	Investment properties		62
4.2	Tax situation		63
4.3		Related party transactions and balances	61
4 4		Remuneration to the members of the Board of Directors and Senior Management	ਦੇ ਦੇ
4.5		Other information concerning the Board of Directors	72
4 6	Other Information		73
4 7 4.8	Information hv senments Inventories		75 77
4.9	Subsequent events		77
5.		Explanation added for translation to English	77
		Appendix I. Subsidiaries at December 31, 2021	79
		Appendix II.	30

		Appendix III. Regulatory framework	86

ENAGÁS, S.A. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2021

(In thousands of euros)

ASSETS	Notes	1233 2021	12.31.2020
NON-CURRENT ASSETS		7,957,452	7,786,325
Intangible assets	2.5	86,624	74,591
Goodwill		23,203	23,203
Other intangible assets		63,421	51,388
Investment properties	4.1	18,660	19,020
Property, plant, and equipment	2 4	4,428,552	4,430,411
Investments accounted for using the equity method	1.6	2,789,684	2,658,396
Other non-current financial assets	3.3.a	632,621	602,541
Deferred tax assets	4.2 f	1,311	1,366
CURRENT ASSETS		1,916,266	1,222,598
Non-current assets held for sale	2.6	29,669	1,767
Inventories	4.8	26,359	21,368
Trade and other receivables	2.2	382,709	299,073
Current tax assets	4.2.a	12,357	23,492
Other current financial assets	3.3.a	13,466	7,475
Short-term accruals		7,555	5,768
Cash and cash equivalents	3.8.a	1,444,151	863,655
TOTAL ASSETS		9,873,718	9,008,923

EQUITY AND LIABILITIES	Notes	12.31,2021	12.31,2020
EQUITY		3,101,650	3,006,984
SHAREHOLDERS' EQUITY		3,158,421	3,192,745
Subscribed capital	3.1.a	392,985	392,985
Issue premium	3.1.b	465,116	465,116
Reserves	3.1.d	2,080,241	2,074,424
Treasury shares	3.1.c	(12,464)	(12,464)
Profit / (loss) for the year		403,826	444,002
Interim dividend	1.8.a	(177,812)	(175,720)
Other equity instruments	4 4	6,529	4,402
ADJUSTMENTS FOR CHANGES IN VALUE	3.1 e	(72,991)	(202,720)
MINORITY INTERESTS (EXTERNAL PARTNERS)	3.2	16,220	16,959
NON-CURRENT LIABILITIES		5,299,828	5,416,657
Non-current provisions	2.9 a	292,356	253,891
Financial debt and non-current derivatives	3.3.b	4,808,928	4,961,960
Deferred tax liabilities	4.2.f	160,317	160,935
Other non-current liabilities	2.8	38,227	39,871
CURRENT LIABILITIES		1,472,240	585,282
Current provisions	2.9.a	717	2,232
Financial debt and current derivatives	3.3.b	1,056,128	289,104
Trade and other payables	2.3	412,790	291,772
Current tax liabilities	4 2 a	2,605	2,174
TOTAL EQUITY AND LIABILITIES		9,873,718	9,008,923

The accompanying Notes 1 to 5 constitute an integral part of the Consolidated Balance Sheet at December 31, 2021

ENAGÁS, S.A. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT AT DECEMBER 31, 2021

(In thousands of euros)

	Notes	12.31.2021	12.31.2020
Revenue	2.1.a	975,686	1,053,604
Income from requlated activities		967,607	1,016,275
Income from non-regulated activities		8,079	37,329
Other operating income	2.1.a	15,487	30,447
Personnel expenses	2.1.b	(129,747)	(126,712)
Other operating expenses	2.1.c	(183,672)	(189,218)
Amortisation allowances	2.4 and 2.5	(262,837)	(269,727)
Impairment losses on disposal of fixed assets	2.4, 2.5 and 4.1	5,201	(7,557)
Result of investments accounted for using the equity method	1.6	163,251	123,737
OPERATING PROFIT		583,369	614,574
Financial income and similar	3.5	19,524	20,564
Financial expenses and similar	3.5	(103,009)	(107,521)
Exchange differences (net)	3.5	144	18,134
Change in fair value of financial instruments	3.5	(71)	1,144
FINANCIAL RESULT		(83,412)	(67,679)
PROFIT / (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS		499,957	546,895
Income tax	4.2.c	(95,318)	(101,974)
PROFIT /(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS		404,639	444,921
Profit attributable to minority interests	3.2	(813)	(919)
PROFIT ATTRIBUTABLE TO THE PARENT COMPANY		403,826	444,002
BASIC EARNINGS PER SHARE (in euros)	1.7	1,5443	1.6980
DILUTED EARNINGS PER SHARE (in euros)	1.7	1.5443	1.6980

The accompanying Notes 1 to 5 constitute an integral part of the Consolidated Income Statement at December 31, 2021

ENAGÁS, S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME AS OF DECEMBER 31, 2021

(In thousands of euros)

	Notes	12.31.2021	12.31.2020
CONSOLIDATED PROFIT FOR THE YEAR		404,639	444,921
Attributed to the parent company		403,826	444,002
Attributable to minority interests		813	919
INCOME AND EXPENSES RECOGNISED DIRECTLY IN EQUITY		118,024	(197,396)
From companies accounted for using the full consolidation method		(67,098)	43,518
From cash flow hedges	3.1 e	(6,924)	(31,762)
From translation differences	3.1.e	(61,905)	67,292
Tax effect	3.1 e	1,731	7,988
From companies accounted for using the equity method		184,588	(240,914)
From cash flow hedges	3 1 e	23,741	(27,016)
From translation differences	3.1.e	164,597	(219,334)
Tax effect	3.1 e	(3,750)	5,436
Of equity instruments at fair value, net	3.1.e	534
AMOUNTS TRANSFERRED TO THE INCOME STATEMENT		11,705	11,853
From companies accounted for using the full consolidation method		9,432	9,736
From cash flow hedges	3 1 e	12,576	13,181
Tax effect	3.1 e	(3,144)	(3,445)
From companies accounted for using the equity method		2,273	2,117
From cash flow hedges	3 1 e	3,219	3,060
Tax effect	3 1 e	(946)	(943)
TOTAL OTHER COMPREHENSIVE INCOME		129,729	(185,543)
TOTAL RECOGNISED INCOME AND EXPENSES		534,368	259,378
Attributed to minority interests		813	d19
From attributable to results	3.2	813	dia
Attributed to the parent company		533,555	258,459

The accompanying Notes 1 to 5 constitute an integral part of the Consolidated Statement of Recognised Income and Expenses 31, 2021

IAS 1 requires that items to be reclassified in the Statement are broken down separately from those that will not be reclassified. All of the aforementioned cases are considered susceptible to reclassification in the income statement.

CONSOLIDATED STATEMENT OF TOTAL CHANGES IN EQUITY AT DECEMBER 31, 2021 ENAGÁS, S.A. AND SUBSIDIARIES

(In thousands of euros)

	Share capita (Note 3.1.a)	premium and (Note 3.1.b reserves and Note 3.1.d)	(Note 4.4) Other equity instruments	(Note 3,1.c) Treasury shares	Profit / (loss) for the year	(Note 1.8.a) dividend Interim	for changes in Adjustments (Note 3.1.e) value	interests (Note 3.2) Minority	Total Equity
BALANCE AT DECEMBER 2019 AND AT THE BEGINNING OF 2020	392,985	2,517,266	2,206			(12,464)	(17,177)	15,884	3,168,849
Total recognised income and expenses	l	'	-	l	444,002	l	(185,543)	919	259,378
Transactions with shareholders	l	(7,742)	l	l	(243,287)	(175,720)	l	(2,035)	(428,784)
- Distribution of dividends	-	(7,742)	-	-	(243,287)	(175,720)	l	(2,035)	(428,784)
Other changes in equity	l	30,016	2,196	l	(179,331)	152,469	-	2,191	7,541
- Payments based on equity instruments	-	-	2,196	l	-	-	l	l	2,196
- Transfers between equity items	l	26,862	-	-	(179,331)	152,469	-	-	-
- Differences due to changes in consolidation scope	-	492	l	l	-	l	-	231	723
- Other changes	-	2,662	-	-	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	-	-	1,960	4,622
BALANCE AT DECEMBER 2020 AND AT THE BEGINNING OF 2021	392,985	2,539,540	4,402	(12,464)	444,002	(175,720)	(202,720)	16,959	3,006,984
Total recognised income and expenses	l	l	l	l	403,826	l	129,729	813	534,368
Transactions with shareholders	l	l	l	l	(263,580)	(177,812)	l	(3,559)	(444,951)
- Distribution of dividends		-	-	-	(263,580)	(177,812)	-	(3,559)	(444,951)
Other changes in equity	l	5,817	2,127	l	(180,422)	175,720	l	2,007	5,249
- Payments based on equity instruments	-	-	2,127	-	-	-	-	-	2,127
- Transfers between equity items	-	4,702	-	l	(180,422)	175,720	l	-
- Differences due to changes in consolidation scope	-	(୧୧)	-	-	-	-	-	(223)	(279)
- Other changes		1,171	-	--	------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	—	--	2,230	3,401
BALANCE AT DECEMBER 31, 2021	392,985	2,545,357	6,529	(12,464)	403,826	(177,812)	(72,991)	16,220	3,101,650

The accompanying Notes 1 to 5 constitute an integral part of Total Changes in Equity at December 31, 2021

ENAGÁS, S.A. AND SUBSIDIARIES CONSOLIDATED CASH FLOW STATEMENT AT DECEMBER 31, 2021

(In thousands of euros)

	Notes	12.31.2021	12.31.2020
CONSOLIDATED PROFIT BEFORE TAX		499,957	546,895
Adjustments to consolidated profit		173,809	209,821
Amortisation of fixed assets	2.4 and 2.5	262,837	269,727
Other adjustments to profit		(89,028)	(59,906)
Change in operating working capital		39,474	39,359
Inventories		(4,990)	(1,687)
Trade and other receivables		(85,714)	(37,227)
Other current assets and liabilities		(1,596)	66,459
Other non-current assets and liabilities		(620)	11,763
Trade and other payables		132,394	51
Other cash flows from operating activities		(133,306)	(186,545)
Interest paid		(82,473)	(96,729)
Interest received		13,291	14,964
Income tax receipts (payments)	4.2.c	(64,124)	(104,780)
NET CASH FLOWS FROM OPERATING ACTIVITIES		579,934	609,530
Payments for investments		(114,011)	(867,938)
Subsidiaries and associates	1.6	(10,641)	(785,235)
Fixed assets and real estate investments	2.4 and 2.5	(69,854)	(58,601)
Other financial assets		(33,516)	(24,102)
Proceeds from disposals		54,327	8,732
Subsidiaries and associates		52,093	5,422
Non-current assets held for sale		2,234	3,310
Other cash flows from investing activities		160,268	117,232
Other receipts (payments) from investing activities	1.6	160,268	117,232
NET CASH FLOWS FROM INVESTING ACTIVITIES		100,584	(741,974)
Proceeds from and payments on financial liabilities		377,572	362,986
Issues	3.8.c	3,892,937	6,570,607
Repayment and amortisation	3.8.c	(3,515,365)	(6,207,621)
Other cash flows from investing activities		(36,481)	(37,770)
Other receipts (payments) from financing activities	3.4	(36,481)	(37,770)
Dividends paid	1.8.a	(444,040)	(427,583)
NET CASH FLOWS FROM FINANCING ACTIVITIES		(102,949)	(102,367)
Effect of exchange rate fluctuations		2,927	(519)
TOTAL NET CASH FLOWS		580,496	(235,330)
Cash and cash equivalents at beginning of period		863,655	1,098,985
CASH AND CASH EQUIVALENTS AT END OF PERIOD	3.8.a	1,444,151	863,655

The accompanying Notes 1 to 5 constitute an integral part of the Consolidated Cash Flow Statement at December 31, 2021

1. Group activities and presentation bases

Relevant aspects

Results

The net profit attributed to the parent company amounted to 403,826 thousands of euros (Note 1.7)
· Basic earnings per share and diluted earnings per share at December 31, 2021 were the same and amounted to 1.5443 euros per share. At December 31, 2020, basic earnings per share amounted to 1.6980 euros, which coincided with diluted earnings per share (Note 1.7)
The proposed dividend payment per share for 2021 amounts to 1.70 euros per share (1.68 euros per share in 2020) (Note 1.8)
· The Board of Directors has proposed the following distribution of net profit corresponding to 2021 for the Parent company, Enagás, S.A. (Note 1.8.a):

Working capital

At December 31, 2021 the Consolidated Balance Sheet presents a positive working capital of 444,026 thousands of euros (637,316 thousands of euros at December 31, 2020).

Other information

The Enagás Group invested a net sum of 59,684 thousands of euros during 2021. The most noteworthy transactions are the following:

· Investments were made in regasification, transmission and storage facilities, with the aim of expanding and improving them to adapt to future demand forecasts amounting to 69,854 thousands of euros
o After reaching the Financial Completion Date on March 31, 2021, TAP carried out two capital reductions during the year, resulting in a cash inflow for the Enagás Group of 38.1 million euros (Note 1.6)

Covid-19

. In 2021, both Enagás and its Group companies have operated normally, ensuring continuity of natural gas supply both in Spain and in the countries where these companies operate. This Group's main activity takes place within a stable regulatory framework.
As in 2020, in 2021 there were no significant equity effects as a result of the Covid-19 situation, as detailed in Note 1.11

1-1 Group activity

Enagás, S.A. (hereinafter the Company or the Parent Company), a company incorporated in Spain on July 13, 1972 in accordance with the Spanish Corporate Enterprises Act, is the head of a group of companies (Appendix I and II) that form the Enagás Group (hereinafter the Group or the Enagás Group) and which are engaged in the transmission, storage and regasification of natural gas, as well as the development of all functions related to the technical management of the gas system.

Corporate purpose a)

Regasification, basic and secondary transmission as well as i. 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.
ii. 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.
iii. Development of all functions relating to technical management of the gas system.
iv. 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.
v. Activities for making use of heat, cold, and energies associated with its main activities or arising from them.
vi. Rendering of services of a diverse nature, among them, engineering, construction, advisory, and consultancy

1.2 Basis of presentation

The Consolidated Annual Accounts of the Enagás Group for 2021 were prepared based on the accounting records of the Parent Company and remaining entities comprising the Group, in accordance with International Financial Reporting Standards (hereinafter "IFRS") as adopted by the European Union, in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council.

The Consolidated Annual Accounts have been prepared applying all mandatory accounting principles, standards, and measurement criteria in order to give a true and fair view of the equity and financial position of the Group at December 31, 2021, as well as of the results of its operations, changes in equity, cash flows, and changes in recognised income and expenses, which have arisen in the Group for the year then ended.

The Consolidated Annual Accounts of the Enagás Group for 2021 were authorised for issue by the directors at their Board meeting held on February 14, 2022. The Consolidated Annual Accounts for 2020 were approved by the shareholders of Enagás, S.A. at the General Shareholders' Meeting held on May 27, 2021 and were subsequently filed at the Madrid Companies Registry. The Group's

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.

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:

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

i) Other information

Its registered address is located at Paseo de los Olmos, 19, 28005, Madrid. At its website www.enagas.es and at its registered address, its Articles of Association and other public information on the Company and its Group can be consulted. The name of the Parent Company has not changed with respect to the previous year

Consolidated Annual Accounts and those of each entity belonging to the Group, corresponding to financial year 2021, are pending approval at their respective Ordinary General Shareholders' Meeting. It is expected that they will be approved without modification.

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

Covid-19

Following the recommendations of the European Securities and Markets Authorities (ESMA) regarding the economic situation brought about by Covid-19, specifically the recommendations issued on October 28, 2020 and May 20, 2020, as well as the one issued on October 29, 2021 it should be noted that this situation has not led to any change in the accounting policies of the Enagás Group with respect to those applied in previous financial years.

In order to comply with these recommendations, Note 1.11 below summarises the main aspects of this situation considered by the Enagás Group in relation to the consolidated financial statements of December 31, 2021.

a) Materiality criteria

The accompanying Consolidated Annual Accounts do not include the information or disclosures which the Group did not consider of material significance or important relative to the concept of materiality as defined in the conceptual framework of IFRS, taking into account the Consolidated Annual Accounts as a whole.

1.3 Consolidation principles

The Consolidated Financial Statements include the Financial Statements of the Parent Company, Enagás, S.A., and its subsidiaries, associates, jointly controlled operations and joint ventures at December 31, 2021.

Subsidiaries are considered to be those entities with respect to which the Enagás Group fulfils the following criteria:

· The capacity to use its interest to influence the amount of revenue to be obtained from said subsidiary.
· The Group has power over the affiliate, in so far as a company has rights which permit it to direct relevant activities, understood as those which significantly affect the revenue generated by the subsidiary.
· It maintains exposure or the right to variable revenue arising from its involvement in the subsidiary.

Subsidiaries are consolidated using the full consolidation method.

The share of minority shareholders in the equity and profit of consolidated subsidiaries of the Enagás Group is recognised in "Minority interests (External partners)" under "Equity" in the Consolidated Balance Sheet and "Profit/(loss) attributable to minority interests" in the Consolidated Income Statement, respectively. Subsidiaries are consolidated starting on the acquisition date, i.e., the date on which the Group obtains control, and they continue to be consolidated until such control is lost.

The financial statements of subsidiaries are prepared for the same reporting period as those of the Parent. With respect to the joint agreements, that is, those by virtue of which the Enagas Group maintains ioint control with one or more other partners, a distinction is made between ioint operations and ioint ventures. Joint control is understood as control shared by virtue of a contractual agreement which requires unanimous consent from all involved parties for decision-making regarding relevant activities.

Thus, joint operations are considered to be those in which, based on a contractual arrangement, a company enjoys the rights to assets and assumes obligations with respect to liabilities. The interest held in joint operations is consolidated using the proportionate consolidation method.

In addition, joint ventures are considered to be those in which, based on a contractual arrangement, a company exercises rights with respect to the net assets of the joint venture. Shareholdings in joint ventures are consolidated using the equity method. In those cases in which the Enagás Group acquires control over companies previously considered as joint ventures, a new estimate is made for the fair value of the interest held previously in equity at the acquisition date, recognising income or losses in the Consolidated Income Statement for the reporting period. Furthermore, associates are considered to be those entities over which the Enagás Group holds significant influence, that is, the power to intervene in decision-making regarding financial policies

b) Comparison of information

The information included in these consolidated notes relating to 2020 is presented solely and exclusively for purposes of comparison with the information relating to 2021.

and operational matters, without attaining full control or joint control. The interest held in associates is consolidated using the equity method.

If appropriate, adjustments are made to the financial statements of subsidiaries, affiliates, joint ventures, and joint operations in order to unify their accounting policies with those of the Enagás Group.

a) Consolidation methods

Consolidation method/Company	Functional currency
Full consolidation
Enagás Transporte, S.A.U.	Euro
Enagás GTS, S.A.U.	Euro
Enagás Internacional, S.L.U.	US dollar
Enagás Financiaciones, S.A.U.	Euro
Enagás U.S.A., L.L.C.	us dollar
Enagás Perú, S.A.C.	us dollar
Enagás México, S.A. de C.V.	US dollar
Enagás Emprende, S.L.U.	Euro
Enagás Chile, Spa.	US dollar
Enagás Transporte del Norte, S.L. (1)	Euro
Infraestructuras del Gas, S.A. (1)	Euro
Enagás Holding USA, S.L.U.	us dollar
Roblasun 1 S.L.U. (1)	Euro
Roblasun 2 S.L.U. (1)	Euro
Roblasun 3 S.L.U. (1)	Euro
Roblasun 4 S.L.U.	Euro
Roblasun 5 S.L.U.	Euro
Roblasun 6 S.L.U.	Euro
Cierzosun 1 S.L.U.	Euro
Cierzosun 2 S.L.U.	Euro
Cierzosun 3 S.L.U.	Euro
Cierzosun 4 S.L.U.	Euro
Windmuse 1 S.L.U.	Euro
Windmusel 2 S.L.U.	Euro
Windmusel 3 S.L.U.	Euro
Enagás Renovable, S.L.U.	Euro
Efficiency for LNG Applications, S.L. (1)	Euro
Hydrogen to Gas, S.L. (1)	Euro
Enagás Services Solutions, S.L.	Euro
Sercomgas Solutions, S.L. (1)	Euro
Bioengas Renovables, S.L.	Euro
Scale Gas Solutions, S.L.	Euro
Enagás Renovable Chile SpA	Chilean Peso
H2Greem Global Solutions, S.L. (1)	Euro
Equity method
Morelos EPC, S.A.P.I. de C.V.,	ાં તે dollar
Gasoducto de Morelos, S.A.P.I. de C.V. (2)	dollar ાં ટે

Consolidation method/Company	Functional currency
Morelos O&M, S.A.P.I. de C.V. (2)	us dollar
Estación de Compresión Soto La Marina, S.A.P.I. de C.V.	US dollar
Compañía Operadora de Gas del Amazonas, S.A.C.	Peruvian Nuevo Sol
Bahía de Bizkaia Gas, S.L.	Euro
Trans Adriatic Pipeline AG	Euro
Terminal de LNG de Altamira, S. de R.L. de C.V.	US dollar
Transportadora de Gas del Perú, S.A.	US dollar
Planta de Regasificación de Sagunto, S.A.	Euro
Iniciativas del Gas, S.L.	Euro
Mibgas	Euro
Tallgrass Energy L.P.	us dollar
Gas to Move Transport Solutions, S.L. ("Llewo")	Euro
Tecgas, Inc.	US dollar
Mibgas Derivatives, S.A.	Euro
Senfluga Energy Infraestructure	Euro
Hellenic Gas Transmission System Operator, S.A.	Euro
Seab Power Ltd.	Sterling pound
Vira Gas Imaging, S.L.	Euro
GNL Quintero, S.A.	us dollar
Alantra Energy Transition, S.A.	Euro
UNUE Gas Renovable, S.L.	Euro
Knutsen Scale Gas, S.L.	Euro
Green Ports Project, S.L.	Euro
Solatom CSP, S.L.	Furo
SUN2HY, S.L.	Euro
The Green Vector, S.L.	Euro
Roblahub, S.L.	Euro
Scale Gas Med Shipping, S.L.U.	Euro
PLATFORMCO HIDROGENO, S.L.	Euro
Power to Green Hydrogen Mallorca, S.L.	Euro
Bioenergía Els Vents, S.L.	Furo
Bioenergía Gas Renovable IV, S.L.	Euro
Bioenergia Gas Renovable V, S.L.	Euro
Axent Infraestructuras de Telecomunicaciones, S.A.	Euro

(1) For these companies the Enagas Group recognises interest corresponding to minority interests under "Minority interests (External partners)" in Equity in the Consolidated Balance Sheet at December 31, 2021

(2) The shareholdings of Gasoducto de Morelos, S.A.P.I. de C.V. and Morelos O&M, S.A.P.I. de C.V. have been reclassified to "Non-Current Assets Held for Sale" as of December 31, 2021 (Note 2.6).

b) Consolidation process

Consolidation of the Enagás Group was carried out in accordance with the following process:

i. Transactions between companies included in the consolidation scope. All balances, transactions, and results between companies consolidated under the full consolidation method were eliminated upon consolidation. For joint operations, the balances, transactions and results of operations with other Group companies were eliminated in the proportion at which they were consolidated. With respect to gains and losses generated through operations among Group companies and companies consolidated under the

equity method, the percentage of interest held by the Group in the latter was eliminated.

ii. Harmonisation of criteria. For affiliates which apply different accounting and measurement criteria to those of the Group, the consolidation process included the corresponding adjustments, provided the effect was significant, with a view to presenting the Consolidated Financial Statements based on harmonised measurement standards.
iii. Translation of Financial Statements denominated in foreign currency. The translation to euros of the Financial Statements of the aforementioned companies in the Enagás Group consolidation process was carried out in accordance with the following procedures:
- · Assets and liabilities of each corresponding balance sheet denominated in foreign currency are translated at the spot rate prevailing at the balance sheet date.
- Income and expense items making up each income statement heading are translated at the average exchange rate for the year in which the related transactions are carried out
- The historical exchange rate for Equity is maintained.
- Exchange gains (losses) arising as a result of net assets are recognised as a separate component of equity under "Adjustments for changes in value" and in the income statement under "Translation differences."

When disposing of a company whose functional currency is not the euro; or when disposals are carried out as a result of losing control; or result from business combinations with respect to previously held interest, translation differences recognised as a component of equity relating to said investment are recognised in the Consolidated Income Statement as soon as the effect arising from said disposal is recognised.

The exchange rates with respect to the euro of the main currencies used by the Group during 2021 and 2020 were as follows:

Currency	Average exchange rate applicable to the headings of the income statement	Exchange rate applicable to the balance sheet headings (1)
2021
us dollar	1-18439	1.13750
Peruvian Nuevo Sol	4 57274	4 54740
Sterling pound 2020	0.86091	0.83964
us dollar	1.14155	1.222
Peruvian Nuevo Sol	3.95629	4 39215
Sterling pound	0.88937	0.89475

(1) Equity excluded

The effect on the main headings of the Group's Consolidated Financial Statements of applying the translation process to the net assets of companies consolidated using the full consolidation method and whose functional currency is the US dollar is as follows:

2021	Consolidated tota	Contributio n of companies using the euro as functional	Contribution of companies using the US dollar as functional	Amount in US dollars
Fixed assets and investment properties	4,533,836	4,532,870	966	1,099
Other non-current financial assets	632,621	630,391	2,230	2,536
Trade and other receivables	382,709	382,053	୧୮୧	747
Other current financial assets	13,466	1,962	11,504	13,086
Cash and cash equivalents	1,444,151	661,956	782,195	889,747
Financial debt and non-current derivatives	4,808,928	3,795,515	1,013,413	1,152,758
Financial debt and current derivatives	1,056,128	969,311	86,817	98,755
Trade and other payables	412,790	410,612	2,178	2,478

iv. Elimination of dividends. Internal dividends are considered to be those a Group company recognises as income for the vear and that have been distributed by another Group company.

During the consolidation process, dividends received by subsidiaries and joint operations are eliminated by considering them to be reserves of the recipient company, which consequently recognises them under "Reserves". In the case of minority interests in companies consolidated using the full consolidation method, the amount of the dividend corresponding to said minority interests is eliminated from the consolidated equity heading "Minority interests (External partners)".

v. Equity method. The investment is initially recognised at cost and subsequently adjusted by the share corresponding to the investor of the changes in net assets of the affiliate. In addition, dividends received are accounted for as a lower amount under "Investments accounted for using the equity method".

Also, when the associate or joint venture is acquired, any difference between the cost of the investment and the share of the net fair value of the identifiable assets and liabilities of the associate or joint venture is accounted for as follows:

1.4 Estimates and accounting judgements used

In the Group's Consolidated Annual Accounts for 2021, estimates and judgements were occasionally made by the Senior Management of the Group and of the consolidated companies, subsequently ratified by the Directors, in order to quantify certain assets, liabilities, income, expenses, and commitments reported herein. Basically:

Estimates

The useful life of PP&E assets (Note 2.4) .
· Provisions for dismantling/abandonment costs, other provisions and contingent liabilities (Note 2.9)
· The measurement of investments accounted for using the equity method, and non-financial assets to determine the possible existence of impairment losses (Notes 1.6 and 2.7)
The fair value of financial instruments (Notes 3.3 and 3.6)
· Impairment losses on financial assets measured at amortised cost (Notes 2.2 and 3.3)
The calculation of income tax and deferred tax assets (Note 4.2)
· The fair value of equity instruments granted under the Long-Term Incentive Plan (ILP) (Note 3.1.c)
Assumptions on the calculation of the term of lease contracts in application of IFRS 16 (Note 2.4.b)
· Determination of the expected loss associated with receivables (Note 2.2)

Opinions

The recognition of investments accounted for using the equity method (Note 1.6).

Although these estimates were made on the basis of the best information available at December 31, 2021, future events may require these estimates to be modified prospectively in the coming years (upwards or downwards). In accordance with IAS 8, this would be done prospectively, recognising the effects of any change of estimate in the Consolidated Income Statement.

The capital gain related to these companies or joint ventures is included in the carrying amount of the investment. This capital gain cannot be amortised.
· Any excess of the share of the net fair value of the identifiable assets and liabilities over the cost of the investment is included as income to determine the share of profit or loss of the associate or joint venture in the period in which the investment is acquired.

The consolidated profit for the year includes participation in the results of the affiliates under "Results of investments accounted for using the equity method" in the accompanying Consolidated Income Statement. If the participation in losses of an associate or joint venture equals or exceeds participation in said entities, the loss will no longer be recognised under additional losses. Once interest in an entity is reduced to zero, the additional losses will be maintained and a liability will only be recognised to the extent the corresponding entity incurred legal or implicit obligations or made a payment on behalf of an associate or joint venture. If the associate or joint venture subsequently reports profits, the entity will once again recognise its interest only after its participation in said profits equals its participation in unrecognised losses.

1.5 Changes in the consolidation scope

The following changes in the consolidation scope of the Enagás Group occurred during 2021:

	Amount (thousands)				Stake percentage
Entity	In local currency	In euros	At 12,31,2021		At 12,31,2020	Description / Type of control
Gasoducto Al- Ándalus	79	79	l	0/0	66.96%	Once the dissolution and liquidation of both companies had been formalised, both joint operations were
Gasoducto Extremadura	33	33		0/0	51%	removed from the consolidation scope of the Enagas Group.
Gas to Move Transport Solutions, S.L. ("Llewo")	2,255	2,255	67.18	0/0	78.30%	Change in the percentage of ownership interest in this company without a change in the equity method.
SUN2HY, S.L.	350	350	50.00 %		l	Incorporation of this company in which the Enagás Group holds a 50% stake. This affiliate shall be accounted for using the equity method
Bioengás Renovables, S.L.	145	145	100.00 %		92.50%	Acquisition of the non-controlling interest, with no significant effects.
Senfluga 2, S.R.L.	(27)	(25)	l	%	40%	Liquidation of the company, which did not have a significant effect on the Enagás Group's income statement.
Gasoducto de Morelos, S.A.P.I. de CV			50.00 %		50.00 %	Reclassification of the Enagás Group's interest in both companies to Non-Current Assets Held for Sale, until
Morelos O&M, S.A.P.I de C.V.			50.00 %		50.00 %	the effective closing of the transaction, subject to fulfilment of conditions precedent.

Gasoducto Al- Ándalus and Gasoducto Extremadura

On April 14, 2021, the General Shareholders' Meeting of Gasoducto Al-Ándalus, S.A. and Gasoductos Extremadura, S.A. resolved to dissolve and liquidate both companies, following completion of the contracts that comprised their corporate purpose on December 31, 2020, and the initial and final liguidation balance sheets closed at April 14, 2021 were approved.

These settlements did not have a significant effect on the income statement.

SUN2HY, S.L.

On April 7, 2021, the company SUN2HY, S.L. was incorporated, in which the Enagas Group, through its subsidiary Enagas Services Solutions, S.L., holds a 50% stake, together with Repsol. As there is a system of decisions to be taken jointly with the other partner, this holding is now accounted for using the equity method.

The purpose of this company is the development of a new fullscale photoelectrochemical technology that allows the production of green hydrogen, 100% renewable, at a competitive cost from solar energy through a direct process without external electrical input (bias free).

GAS TO MOVE TRANSPORT SOLUTIONS, S.L. ("Llewo")

On February 23, 2021, a capital increase was carried out in the affiliate GAS2MOVE, S.L. whereby Grupo Ilunion, S.L. became a shareholder, with the aim of creating a socially and environmentally sustainable logistics operator. This capital increase and change in the percentage of Enagás' shareholding did not entail any change in the method of consolidation of the shareholding, which continues to be by the equity method. It has also changed its trade name to "Llewo".

Gasoducto de Morelos, S.A.P.I. de C.V. and Morelos O&M, S.A.P.I. de C.V.

As explained in Note 2.6 of "Non-Current Assets Held for Sale", the companies Gasoducto de Morelos and Morelos O&M, previously accounted for by the equity method, have been included under this caption.

It is estimated that the definitive closing of the transaction will occur during 2022.

1.6 Investments accounted for using the equity method

Accounting policies

The Group assesses the existence of joint agreements as well as significant influence with respect to associates, taking into account the shareholder agreements which require a scheme of increased majorities for taking relevant decisions.
In order to classify the joint agreements among joint ventures and joint operations, the Group assesses the rights and obligations of the involved parties as well as the remaining circumstances stipulated in said agreements.
The Group presents the profit for the period of the companies accounted for using the equity method as part of the Group's operating profit, since these companies carry out the same activity as the corporate purpose of the Enagás Group described in Note 1.1

Significant estimates and judgements

At year-end, or when there are indications of impairment, the Group analyses the recoverable amounts of investments accounted for under the equity method to determine the possibility of impairment.
In 2021, the final allocation of the purchase prices of the 17.6% interest acquired from Tallgrass Energy, L.P. in 2020 was recorded within the 12-month period from the acquisition date established in accordance with IFRS 3, with no significant variations with respect to December 31, 2020.

Opening	New acquisitions balance (3)	Exits from the perimeter/ Decreases (2)	tions (1)	Reclassifica adjustments year-end	Balance at
2021
2,658,396		10,301
2020
	2,109,450	(1,959)	-	4,367	2,658,396

(1) . "Reclassifications" in 2021 includes redassification of the equity interest of Gasoducto de Morelos O&M, S.A.P.I. de C.V. for 24,153 thousands and 199 thousands of euros, respectively, to "Non-Current Assets Held for Sale" (Note 2.6).

(2) The "Removals from scope/Decrease" caption in 2021 includes mainly the capital reductions in TAP amounting to 38,112 thousands of euros as well as the capital reduction in Estación de Compresión Soto La Marina, S.A.P.I. de C.V. amounting to 1,638 thousands of euros.

(3) · "New acquisitions" in 2020 mainly include the addition of the stake in Tallgrass Energy, anounting to 762,839 thousands of euros as well as contributions to TAP amounting to 11,743 thousands of euros.

The dividends approved during the 2021 and 2020 financial years

were as follows:

	2021	2020
TgP	64,148	59,471
Saggas	20,010	18,850
GNL Quintero	26,383	25,276
BBG	17,500	9,500
Grupo Altamira	2,621	1,567
Senfluga	7,578	3,649
Tallgrass Energy	22,645
Other entities	1,996	1,428
Tota	162,881	119,741

Appendix II to these consolidated annual accounts provides disclosure on data relating to joint ventures, joint operations, and associates of the Enagás Group at December 31, 2021 and December 31, 2020.

The recoverable amount of investments in associates or business combinations is evaluated for each associate or business combination, unless the associate or business combination does not generate cash flows for continuous use which are largely independent of the cash flows arising from other Group assets. Note 2.7 details how the recoverable amount is estimated.

With respect to the impairment analysis for affiliates, the discount rate applied (cost of equity) in 2021 ranged from 5%-9%, depending on the country (5%-9% in 2020). Considering that all the affiliates have been operating normally during 2021 (see Note 1.11), the sensitivity analysis of the discount rate has been performed using a range of +0.5% and -0.5%. No significant associated risks have arisen from this analysis. Thus, the Group

management considers that, within the specified ranges, there would be no changes in the impairment calculation.

1.7 Earnings per share

	2021	2020	Change
Net result of the financial year attributed to the parent company Ithoucande of ouroc	403,826	44,002	(9.0)%
Weighted average number of shares outstanding (thousands of shares)	261,488	261,488	0/0
Basic earnings per share (in euros)	1.5443	1.6980	(9.0)%
Diluted earnings per share (in euros)	1.5443	1.6980	(9.0)%

As there are no potential ordinary shares at December 31, 2021 and December 31, 2020, the basic earnings and the diluted earnings per share are the same.

During financial years 2021 and 2020, there were no transactions involving treasury shares.

1.8 Dividends distributed and proposed

a) Proposed distribution of profit attributable to the parent

The appropriation of 2021 profit corresponding to the parent Enagás, S.A. proposed by the Board of Directors and which will be submitted for approval by the General Shareholders' Meeting is as follows (in thousands of euros):

	2021
Dividends	445,042
Voluntary reserves	12,217
TOTAL	457,259

The dividend is subject to approval by the ordinary General Shareholders' Meeting and is not included as a liability in these Annual Accounts. Thus, this gross complementary dividend will total up to a maximum amount of 267,230 thousands of euros.

At a meeting held on November 22, 2021, the Board of Directors of Enagás, S.A. agreed to distribute an interim dividend charged against 2021 profit, based on the necessary liquidity statement, expressed in thousands of euros, amounting to 177,812 thousands of euros (0.68 euros gross per share), in accordance with Article 277 of the Spanish Corporate Enterprises Act.

The aforementioned interim dividend was paid on December 21, 2021.

The provisional accounting records prepared by the parent of the Group, in accordance with legal requirements and which presented balances sufficient for the distribution of the interim dividend in 2021, were as follows:

Provisional accounting statement at October 31, 2021
Net accounting result	40,115
10% legal reserve	O
Interim dividend received from Group companies	432,600
Profit "available" for distribution	472,715
Forecast interim dividend	(177,812)
Forecast cash balance for the period from October 31 to December 31:
Cash balance	38,521
Projected collection for the period considered	313,972
Credit lines and loans available from financial institutions	1,500,000
Payments projected for the period under consideration (including the interim dividend)	(249,944)
Estimated available financing after dividend distribution	1,602,549

b) Total dividends paid

In addition to the aforementioned interim dividend for 2021, during 2021 Enagás, S.A. distributed the gross complementary and extraordinary dividend for 2020.

This dividend amounted to 263,580 thousands of euros (1.008 euros per share) and was paid on July 8, 2021.

1.9 Commitments and guarantees

Accounting policies

A financial quarantee 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 (IAS 37) or b) accumulated amortisation of the initial measurement and possible accrued income.

Commitments and guarantees	Group Personnel, Companies Entities or (Note 4.3)	Other related parties (Note 4.3)	Third parties	Total
2021
Guarantees for related parties debt	609,205			609,205
Guarantees and sureties granted - Other	9,263		345,896	355,159
Investment commitments			97,529	97,529
2020
Guarantees for related parties debt	622,920			622,920
Guarantees and sureties granted - Other	630	14,699		356,202 371,531
Investment commitments			41,567	41,567

a) Guarantees for related parties debt

The "Guarantees on debt of related parties" heading includes the corporate quarantee granted by Enagás S.A. for financial institutions acquired in the Financing Agreement of November 30, 2018 in the company TAP, through which the following items are basically guaranteed:

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 an

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 on resources as a consequence of incorporation agreements, capital intensive projects carried out by a joint venture, 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.

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, 2021 the amount guaranteed by Enagás, S.A. to the creditors of TAP amounted to 609,205 thousands of euros (622,920 thousands of euros at December 31, 2020).

b) Guarantees and sureties granted - Others

The following items are included:

Group Personnel, Companies or Entities

· Guarantees and sureties granted to group companies at December 31, 2021 include the financial sureties granted to third parties by Gas to Move Transport Solutions. S.L. in the amount of 359 thousands of euros, counter-quaranteed by Enagás, S.A. (630 thousands of euros at December 31, 2020).
· Guarantees granted before the Federal Electricity Commission ("FEC") in connection with the service contracts relating to the Gasoducto de Morelos and Estación de Compresión Soto La Marina projects in the amount of 8,791 thousands of euros and 113 thousands of euros, respectively (8,183 thousands of euros and 105 thousands of euros respectively at December 31, 2020 within the heading "Other related parties", see Note 4.3).

Other related parties

In 2020 there were guarantees with other related parties amounting to 14,699 thousands of euros. In accordance with the new regulations approved in 2021 and the CNMV's interpretation criteria, which render ineffective the criteria previously established by Order EHA/3050/2004, Banco Santander is no longer a related party. Accordingly, in 2021 the amounts corresponding to these

quarantees have been reclassified to "Individuals, Companies or Group Entities" and "Third Parties".

Third parties

The following items, mainly, are included:

· Financial quarantees granted by financial entities to cover the loans granted by the European Investment Bank to Enagás Financiaciones, S.A.U. in the amount of 233,333 thousands of euros (256,667 thousands of euros in 2020).
Technical guarantees granted by financial entities to third parties in the amount of 100,802 thousands of euros (79,724 thousands of euros in 2020) to cover certain responsibilities which may arise during the execution of the contracts constituting the activity of the Enagás Group.
· Guarantee of access to the electricity transmission grid, granted by Enagás Renovable, S.L.U. amounting to 9,360 thousands of euros (18,000 thousands of euros in 2020).
Financial guarantee granted by financial institutions as collateral for a loan granted by CDTI to Enagás Services Solutions (SUN2H) in the amount of 193 thousands of euros.
· Guarantee granted by Enagás Internacional S.L.U. covering its obligations in the contract with Sound Energy Morocco for the development of a project in Morocco, amounting to 593 thousands of euros (552 thousands of euros at December 31, 2020).
. In addition, there is an insurance policy with as bid bond for the port concession in Colombia for the Buenaventura project amounting to 1,319 thousands of euros (1,259 thousands of euros at December 31, 2020).

No quarantees had been granted with respect to tender processes at December 31, 2021 and at December 31, 2020.

c) Investment commitments

The following items are included:

The Enagás Group has firm investment commitments in Economic Interest Groupings (EIG) amounting to 36,529 thousands of euros, to be disbursed during 2022 and later years (41,567 thousands of euros at December 31, 2020).
In 2021, the Group entered into the corresponding Subscription Agreements for its participation in two investment funds, which represent an investment commitment of approximately 61,000 thousands of euros for the Enagás Group: (i) KLIMA Energy Transition Fund, in May 2021, with an estimated capital of 150 million euros, which seeks investment opportunities through the acquisition of minority stakes in companies with high growth potential in energy transition sectors such as green hydrogen, biogas, energy efficiency, batteries, sustainable transport or digitisation of electricity grids; and (ii) Clean H2 Infra Fund, in December 2021, with an estimated capital of 1,800 million euros, which aims to develop the green hydrogen infrastructure sector and have a positive impact on the use and development of hydrogen transport networks.

The Directors consider that no additional significant liabilities will arise in connection with the transactions disclosed in this note other than those already recognised in the accompanying Consolidated Balance Sheet.

1.10 New accounting standards

a) Standards in force for the current financial year

The accounting policies used in the preparation of these Consolidated Annual Accounts, other than those applied in the Consolidated Annual Accounts for the year ended December 31, 2020, as they came into force on January 1, 2021 are the following:

Approved for use in the European Union
Standards	Content	Mandatory application for periods beginning on or after:
Amendment to IAS 16	Covid-19-related rent reductions	June 1, 2020
Amendments to IFRS 9, IAS 39 and IFRS 7	Phase 2 of the Reference Interest Rate Reform	January 1, 2021

Amendments to IFRS 9, IAS 39 and IFRS 7: Reference rate reform

As a result of the ongoing reform of benchmarks by monetary authorities, amendments to the accounting rules were published in the Official Journal of the European Union on January 15, 2020 to facilitate mechanisms to enable companies to adjust to the transition to the new benchmarks. On January 14, 2021, amendments related to the second phase of the Reform were published in the Official Journal of the European Union.

The Group has implemented these changes in accordance with the regulations. However, due to the exemptions allowed in the Phase 2 amendments, the Group has decided not to restate the comparative information for earlier periods.

The Finance Department continues to participate in working groups and monitor the process of interest rate reform (with a special focus on LIBOR USD) in order to adapt financial contracts accordingly. In this respect, financial contracts are adapted to the interest rate reforms that come into force on January 1, 2022.

With respect to the hedging relationships established by Enagás, described in Note 3.6, the derivative financial instruments held by Enagás continue to qualify as such and the hedging relationship is maintained in accordance with the risk policy described in Note 3.7.

b) Standards not effective for the current financial year

The Group has not applied in advance the standards, interpretations and amendments to the standards approved by the European Union that have not entered into force at the date of

these Consolidated Annual Accounts. Based on the analysis conducted to date, the Group believes that their first-time application will not have a material impact on the Consolidated Annual Accounts and highlights the following standards:

Approved for use in the European Union Standards	Content	Mandatory application for periods beginning on or after:
Amendment to IAS 16	Covid-19-related rent reductions beyond June 30, 2021	April 1, 2021
Amendments to IFRS 3, IAS 16 and IFRS 37	Annual improvements to the 2018-2020 Standards	January 1, 2022

1.11 Aspects relating to COVID-19

During the overall adverse economic situation of the previous year caused by the Covid-19 pandemic, both Enagás and its Group companies implemented contingency plans to ensure normal operation and continuity of natural gas supply both in Spain and in all the countries where these companies operate. Thus, during 2021, the going concern principle has continued to be fully applied in the preparation of these consolidated annual accounts.

With regard to the Enagás Group's main activity relating to the operation and maintenance of the Spanish gas system, it should be noted that this takes place within a stable regulatory framework and in 2021, as in the previous year, no effects or changes have been identified as a result of the situation caused by Covid-19 that could lead to capital losses for the Group. Neither the behaviour of gas demand nor the Oil & Gas market indexes have had a significant effect on the revenues recorded by the Enagás Group.

With regard to the liquidity situation, as indicated in Note 3.8, the Group has a solid liquidity situation and liquid assets of 3,299,544 thousands of euros at December 31, 2021 (2,473,009 thousands of euros at December 31, 2020), thus maintaining the liquidity strategy and the credit and exchange rate risk policies. During the 2021 financial year, as in the 2020 financial year, there have been no impairment of financial assets or non-financial assets, as well as no significant extraordinary expenses corresponding to this situation or provisions or contingent liabilities that have been included in the consolidated financial statements of the Enagás Group as of December 31, 2021.

Based on the Group's analysis, no impact was evidenced by the Covid-19 situation that needed to be recorded at December 31, 2021.