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, 2020

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

Tel.: 902 365 456 Fax.: 915 727 300 ev.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 Enagás, S.A. (the parent) and its subsidiaries (the Group), which comprise the consolidated balance sheet at December 31, 2020, 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, 2020 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 1.6 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 quarantees 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, 2020 of 392,4 million euros (Note 3.3.a to the accompanying consolidated financial statements).

Due to the termination of the concession contract, as described in the aforementioned note to the accompanying consolidated financial statements, the Enagás Group has a dispute with the Peruvian Government regarding the recovery of the investment in Gasoducto Sur Peruano. 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. On January 20, 2020, Enagás filed the claim memorial, to which the Peruvian State replied on July 17, 2020. At that time, other phases of the process were initiated until the ICSID resolves the dispute, which is expected to be at the end of the 2022 financial year.

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 the investee Gasoducto Sur Peruano, S.A., as well as the documents included in the claim filed by Enagás with the ICSID and the Peruvian State's reply brief.
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.
✈ 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's main revenues as explained on note 2.1 of the Consolidated Financial Statements, are derived from regasification, storage, and transportation of natural gas that are regulated under the current remuneration framework in force until 2020 and a new framework that will go into effect as of January 1, 2021 until 2026 (both are explained in Appendix III of the accompanying consolidated financial statements). Consequently, the Group's activities are notably affected by local, regional, national, and European regulations.
		The abovementioned factors have caused us to consider this issue a key audit matter.
Our	response Our audit procedures in this regard included, among other, the following:
		* Understanding the Enagas Group's process for recognizing revenue from regulated activities and receivable balances, as well as reviewing the design and operating effectiveness and implementation of key controls.
		* Reviewing prevailing regulations and evaluating the degree of compliance therewith.
		* Analyzing the new tariff framework that will go into effect as of January 1, 2021, and its impact on future revenue, as well as on the recoverability of the value of assets to which it applies.
		Testing revenue recognition, verifying its reasonableness in terms of each year's regulatory developments.
	ﺮﺓ	Verifying the gas system's accounts payable and receivable by examining conclusions and final settlements with the CNMC during the year.
		* Analyzing the recoverability of current and non-current accounts receivable generated from operating the gas system in recent years (commonly referred to as "deficit accounts") based on prevailing requlations.
		3 Reviewing the disclosures included in notes 2.1, 2.2, and appendix III to the accompanying consolidated financial statements in conformity with the applicable financial reporting framework.

Impairment analysis of equity method investments

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, 2020 amounts to 2,658.4 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 2.6 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 2020 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:

a) in the Corporate Governance Report, to which the Audit Law refers, was provided as stipulated by applicable regulations and, if not, disclose this fact.

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Assessing and reporting on the consistency of the remaining information included in the b) 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 2020 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 free 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 regulations 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.

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 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 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 Enagás, S.A. and subsidiaries for the 2020 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 Enagás, S.A. are responsible for submitting the annual financial report for the 2020 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).

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 up, in all material respects, in accordance with the ESEF Regulation.

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 22, 2021.

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.

ERNST & YOUNG, S.L. (Registered in the Official Register of Auditors under No. S0530)

David Ruiz-Roso Moyano (Registered in the Official Register of Auditors under No. 18336)

February 22, 2021

Consolidated Annual Accounts 2020

CONSOLIDATED ANNUAL ACCOUNTS 2020

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 BALANCE SHEET AT DECEMBER 31, 2020	2
		CONSOLIDATED INCOME STATEMENT AT DECEMBER 31, 2020	a
		CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSES	ব
		CONSOLIDATED STATEMENT OF IN EQUITY AT DECEMBER 31, 2020	5
		CONSOLIDATED CASH FLOW STATEMENT AT DECEMBER 31, 2020	6
1.		Group activities and presentation bases	1
1.1	Group activity		8
1.2		Basis of presentation	8
1.3		Consolidation principles	ਰੇ
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		Commitments and guarantees	15
1.10		New accounting standards	17
1.11		Aspects relating to COVID-19	18
2.		Operational performance of the group	19
2.1	Operating profit		20
2.2		Trade and other non-current and current receivables	25
2.3		Trade and other payables	29
2.4		Property, plant, and equipment	29
2.5		Intangible assets	36
2.6		Impairment of non-financial assets	38
2.7		Other current and non-current liabilities	40
2.8		Provisions and contingent liabilities	40
3.		Capital structure, financing and financial result	42
3.1	Equity		43
3.2		Result and variation in minority interests	45
3.3		Financial assets and liabilities	46
3.4	Financial debts		52
3.5		Net financial gain / (loss)	ಲ್ಲಿ ನಿ
3.6		Derivative financial instruments	55
3.7		Financial and capital risk management	57
3.8	Cash flows		ਦੇਰੇ
বঁ		Other Information	61
4.1		Investment properties	61
4.2	Tax situation		61
4.3		Related party transactions and balances	65
4.4		Remuneration to the members of the Board of Directors and Senior Management	67
4.5		Other information concerning the Board of Directors	70
4.6		Other Information	71
4.7		Information by segments	72
4.8	Inventories		74
4.9		Subsequent events	75
5.		Explanation added for translation to English	76
Appendix I.		Subsidiaries at December 31, 2020	777
		Appendix II. Joint ventures, joint operations, and associates	78
		Appendix III. Regulatory framework	83

ENAGÁS, S.A. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2020

(In thousands of euros)

ASSETS	Notes	12.31.2020	12.31.2019
NON-CURRENT ASSETS		7,786,325	7,446,298
Intangible assets	2.5	74,591	73,671
Goodwill		23,203	25,812
Other intangible assets		51,388	47,859
Investment properties	4.1	19,020	19,610
Property, plant, and equipment	2.4	4,430,411	4,634,920
Investments accounted for using the equity method	1.6	2,658,396	2,109,450
Other non-current financial assets	3.3.a	602,541	605,766
Deferred tax assets	4.2.f	1,366	2,881
CURRENT ASSETS		1,222,598	1,397,926
Non-current assets held for sale		1,767	5,008
Inventories	4.8	21,368	19,683
Trade and other receivables	2.2	299,073	254,002
Current tax assets	4.2.a	23,492	6,761
Other current financial assets	3.3.a	7,475	7,928
Short-term accruals		5,768	5,559
Cash and cash equivalents	3.8.a	863,655	1,098,985
TOTAL ASSETS		9,008,923	8,844,224

EQUITY AND LIABILITIES	Notes	12.31.2020	12.31.2019
EQUITY		3,006,984	3,168,849
SHAREHOLDERS' EQUITY		3,192,745	3,170,142
Subscribed capital	3.1.a	392,985	392,985
Share premium	3.1.b	465,116	465,116
Reserves	3.1.d	2,074,424	2,052,150
Treasury shares	3.1.c	(12,464)	(12,464)
Profit / (loss) for the year		444,002	422,618
Interim dividend	1.8.a	(175,720)	(152,469)
Other equity instruments	4.4	4,402	2,206
ADJUSTMENTS FOR CHANGES IN VALUE	3.1.e	(202,720)	(17,177)
MINORITY INTERESTS (EXTERNAL PARTNERS)	3.2	16,959	15,884
NON-CURRENT LIABILITIES		5,416,657	5,205,162
Non-current provisions	2.8.a	253,891	248,264
Financial debt and non-current derivatives	3.3.b	4,961,960	4,744,257
Deferred tax liabilities	4.2.f	160,935	171,887
Other non-current liabilities	2.7	39,871	40,754
CURRENT LIABILITIES		585,282	470,213
Current provisions	2.8.a	2,232	1,968
Financial debt and current derivatives	3.3.b	289,104	234,109
Trade and other payables	2.3	291,772	212,393
Current tax liabilities	4.2.a	2,174	5,230
Other current liabilities	2.7		16,513
TOTAL EQUITY AND LIABILITIES		9,008,923	8,844,224

The accompanying Notes 1 to 5 constitute an integral part of the Consolidated Balance Sheet at December 31, 2020

ENAGÁS, S.A. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2020

(In thousands of euros)

	Notes	12.31.2020	12.31.2019
Revenue	2.1.a	1,053,604	1,153,103
Income from regulated activities		1,016,275	1,086,633
Income from non-regulated activities		37,329	66,470
Other operating income	2.1.a	30,447	29,631
Personnel expenses	2.1.b	(126,712)	(125,175)
Other operating expenses	2.1.c	(189,218)	(198,337)
Amortisation allowances	2.4 and 2.5	(269,727)	(274,506)
Impairment losses on disposal of fixed assets	2.4, 2.5 and 4.1	(7,557)	(48,316)
Result of investments accounted for using the equity method	1.6	123,737	121,002
OPERATING PROFIT		614,574	657,402
Financial income and similar	3.5	20,564	16,318
Financial expenses and similar	3.5	(107,521)	(133,780)
Exchange differences (net)	3.5	18,134	(1,021)
Change in fair value of financial instruments	3.5	1,144	1,114
FINANCIAL RESULT		(67,679)	(117,369)
PROFIT / (LOSS) BEFORE TAX FROM CONTINUING OPERATIONS		546,895	540,033
Income tax	4.2.C	(101,974)	(112,105)
PROFIT /(LOSS) FOR THE YEAR FROM CONTINUING OPERATIONS		444,921	427,928
Profit attributable to minority interests	3.2	(919)	(5,310)
PROFIT ATTRIBUTABLE TO THE PARENT COMPANY		444,002	422,618
BASIC EARNINGS PER SHARE (in euros)	1.7	1.6980	1.7688
DILUTED EARNINGS PER SHARE (in euros)	1.7	1.6980	1.7683

The accompanying Notes 1 to 5 constitute an integral part of the Consolidated Income Statement at 2020

ENAGÁS, S.A. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE AT DECEMBER 31, 2020

(In thousands of euros)

	Notes	12.31.2020	12.31,2019
CONSOLIDATED PROFIT FOR THE YEAR		444,921	427,928
Attributed to the parent company		444,002	422,618
Attributable to minority interests		ਰੇ 19	5,310
INCOME AND EXPENSES RECOGNISED DIRECTLY IN EQUITY		(197,396)	(28,607)
From companies accounted for using the full consolidation method		43,518	(32,218)
From cash flow hedges	3.1.e	(31,762)	(32,998)
From translation differences	3.1.e	67,292	(7,442)
Tax effect	3.1.e	7,988	8,222
From companies accounted for using the equity method		(240,914)	3,611
From cash flow hedges	3.1.e	(27,016)	(19,893)
From translation differences	3.1.e	(219,334)	20,257
Tax effect	3.1.e	5,436	3,247
AMOUNTS TRANSFERRED TO THE INCOME STATEMENT		11,853	7,710
From companies accounted for using the full consolidation method		9,736	7,766
From cash flow hedges	3.1.e	13,181	10,905
From translation differences	3.1.e		(597)
Tax effect	3.1.e	(3,445)	(2,542)
From companies accounted for using the equity method		2,117	(56)
From cash flow hedges	3.1.e	3,060	(65)
Tax effect	3.1.e	(943)	9
TOTAL RECOGNISED INCOME AND EXPENSES		259,378	407,031
Attributed to minority interests		ਰੇ 19	8,230
From translation differences	3.2		2,920
From attributable to results	3.2	ਰੇ 19	5,310
Attributed to the parent company		258,459	398,801

The accompanying Notes 1 to 5 constitute an integral part of the Consolidated Statement of Recognised Income and Expenses at 2020

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.

ENAGAS, S.A. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF TOTAL CHANGES IN EQUITY AT DECEMBER 31, 2020

(In thousands of euros)

	Share capital (Note 3.1.a)	premium and ( Note 3.1.b reserves and Note Share	Other equity instruments (Note 4.4)	(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	(Note 3.2) interests Minority	Total Equity
BALANCE AT DECEMBER 2018	358,101	2,006,066	6.101	(8,219)	442,626	(145,917)	6,640	373,973	3,039,371
- Adjustments due to initial application of new accounting standards		(30,621)							(30,621)
BALANCE AT BEGINNING OF 2019	358,101	1,975,445	6,101	(8,219)	442,626	(145,917)	6,640	373,973 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------	3,008,750
Total recognised income and expenses		l	-	-	422.618	-	(23,817)	8,230	407,031
Transactions with shareholders	34,884	465.116	ﻨ		(218,697)	(152,469)	-	(836)	127,998
- Capital increases	34,884	465,116 teach and france in the	17	=	一	e program program and the provinsion of the provinsion of the provincial of the provincial and the provincial of the provincial of the provincial of the provincial of the pro	1	11	500,000
- Distribution of dividends		I	-	11	(218,697)	(152,469)	-	(836)	(372,002)
Transactions with treasury shares	I	-	1	(9,876)	1	-	11	1	(9,876)
Other changes in equity	1	76,705	(3,895)	5,631	(223,929)	145,917	-	(365,483)	(365,054)
- Payments based on equity instruments		471	(3,895)	5,631	11	11:01	-		2,207
- Transfers between equity items	1	78.012	1	11	(223,929)	145,917	-	K	-
- Differences due to changes in consolidation scope	1	100		-			-	(365,483)	(365,483)
- Cost of capital increase		(1,331)	11:11 1	1 İ	111	的一次	-	100	(1,331)
- Other changes		(447)	ా	-		1	1	1	(447)
BALANCE AT DECEMBER 2019 AND AT THE BEGINNING OF 2020	392,985	2,517,266	2,206	(12,464)	422,618	(152,469)	(17,177)	15,884	3,168,849
Total recognised income and expenses		-	-	-	444,007	-	(185,543)	919	259,378
Transactions with shareholders	-	(7,742)	-	-	(243,287)	(175,720)	-	(2,035)	(428,784)
- Distribution of dividends		(7,742)	118	l	(243,287)	(175,720)	-	(2,035)	(428,784)
Transactions with treasury shares			11	l	-	-	1	-	-
Other changes in equity	-	30,016	2,196	l	(179,331)	152,469	1	2,191	7,541 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
- Payments based on equity instruments	I		2,196 - 16	l	-	-	-	ly	2,196
- Transfers between equity items		26,862	-	1	(179,331)	152,469	-	11	-
- Differences due to changes in consolidation scope		492	111	1		=	11	231	723
- Other changes		2.662		11	11	11-11	114	1.960	4,622
BALANCE AT DECEMBER 31, 2020	397,985	2,539,540	4,402	(12,464)	444,002	(175,720)	(202,720)	16,959	3,006,984

The accompanying Notes 1 to 5 constitute an integral part of Total Changes in Equity at December 31, 2020

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ENAGÁS, S.A. AND SUBSIDIARIES

CONSOLIDATED CASH FLOW STATEMENT AT DECEMBER 31, 2020

(In thousands of euros)

	Notes	12.31.2020	12.31.2019
CONSOLIDATED PROFIT BEFORE TAX		546,895	540,033
Adjustments to consolidated profit		209,821	301,618
Amortisation of fixed assets	2.4 and 2.5	269,727	274,506
Other adjustments to profit		(59,906)	27,112
Change in operating working capital		39,359	124,963
Inventories		(1,687)	(1,409)
Trade and other receivables		(37,227)	103,478
Other current assets and liabilities		66,459	21,323
Other non-current assets and liabilities		11,763	27,507
Trade and other payables		51	(25,936)
Other cash flows from operating activities		(186,545)	(204,713)
Interest paid		(96,729)	(119,302)
Interest received		14,964	18,967
Income tax receipts (payments)	4.2.c	(104,780)	(101,665)
Other receipts /(payments)			(2,713)
NET CASH FLOWS FROM OPERATING ACTIVITIES		609,530	761,901
Payments for investments		(867,938)	(783,262)
Subsidiaries and associates	1.6	(785,235)	(727,457)
Fixed assets and real estate investments	2.4 and 2.5	(58,601)	(44,912)
Other financial assets		(24,102)	(10,893)
Proceeds from disposals		8,732	77,042
Subsidiaries and associates		5,422	77,042
Non-current assets held for sale		3,310
Other cash flows from investing activities		117,232	119,404
Other receipts (payments) from investing activities	1.6	117,232	119,404
NET CASH FLOWS FROM INVESTING ACTIVITIES		(741,974)	(586,816)
Proceeds from and payments on equity instruments			492,206
Acquisition of equity instruments	3.1.c		(7,794)
Issue of equity instruments	3.1.a and 3.1.b		500,000
Proceeds from and payments on financial liabilities		362,986	5,844
Issues	3.8.c	6,570,607	5,797,128
Repayment and amortisation	3.8.C	(6,207,621)	(5,791,284)
Other cash flows from investing activities		(37,770)	(33,518)
Other receipts (payments) from financing activities	3.4	(37,770)	(33,518)
Dividends paid	1.8.a	(427,583)	(371,919)
NET CASH FLOWS FROM FINANCING ACTIVITIES		(102,367)	92,613
EFFECT OF CHANGES IN CONSOLIDATION METHOD			(347,050)
Effect of exchange rate fluctuations		(519)	6,794
TOTAL NET CASH FLOWS		(235,330)	(72,558)
Cash and cash equivalents at beginning of period		1,098,985	1,171,543
CASH AND CASH EQUIVALENTS AT END OF PERIOD	3.8.a	863,655	1,098,985

The accompanying Notes 1 to5 constitute an integral part of the Consolidated Cash Flow Statement at 2020

1. Group activities and presentation bases

Relevant aspects

Results

· The net profit attributed to the parent company amounted to 444,002 thousands of euros (Note 1.7).
Basic earnings per share and diluted earnings per share at December 31, 2020 were the same and amounted to 1.6980 euros per share. At December 31, 2019, basic earnings per share amounted to 1.7688 euros, which coincided with diluted earnings per share (Note 1.7).
· The proposed dividend payment per share for 2020 amounts to 1.68 euros per share (1.60 euros per share in 2019) (Note 1.8):
· The Board of Directors has proposed the following appropriation of net profit corresponding to 2020 for the Parent company, Enagás, S.A. (Note 1.8.a):

Covid-19

· During 2020, both Enagás and Its Group companies implemented contingency plans following the start of the Covid-19 pandemic to ensure normal operation and continuity of natural gas supply both in Spain and In the countries where these companies operate.
· The Group's main activity is conducted within a stable regulatory framework and no effects have been identified as a result of Covid-19 that could cause equity losses for the Group in the consolidated annual accounts 2020.
Similarly, as a result of this situation at international level and the global evolution of the Oil & Gas market indices, the income of the international companies in which Enagás has a stake has not been significantly affected.

· As a result of Covid-19, there were no significant equity effects, as detailed in Note 1.11.

Working capital

At December 31, 2020 the Consolidated Balance Sheet presents a positive working capltal of 637,316 thousands of euros (927,713 thousands of euros at December 31, 2019).

Other information

The Enagás Group invested a net sum of 859,206 thousands of euros during 2020. The most noteworthy transactions are the following:

On April 17, 2020, the "Take Private" process of Tallgrass Energy, L.P. was completed, as a result of which Enagás now holds 30.2% of the group's share capital, following the disbursement of 836,300 thousands of dollars (762,839 thousands of euros) in the consortium in which it was participating with Blackstone and GIC (Note 1.5).
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 58,601 thousands of euros.
Capital contributions in Trans Adriatic Pipeline (hereinafter TAP) amounting to 11,743 thousands of euros (Note 1.6). This project began to operate commercially in November 2020.

Group activity 1.1

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)

Reqasification, 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.
il. 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.
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.
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 services in connection with the activities relating to its

1.2 Basis of presentation

The Consolidated Annual Accounts of the Enagás Group for 2020 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, 2020, 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 2020 were authorised for issue by the directors at their Board meeting held on February 22, 2021. The Consolidated Annual Accounts for 2019 were approved by the shareholders of Enagás, S.A. at the General Shareholders' Meeting held on June 30, 2020 and were

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.

b) 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.

subsequently filed at the Madrid Mercantile Registry. The Group's Consolidated Annual Accounts and those of each entity belonging to the Group, corresponding to financial year 2020, 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, 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, 2020.

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

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, 2020.

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 Enagás Group maintains joint control with one or more other partners, a distinction is made between joint operations and joint 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

into account the Consolidated Annual Accounts as a whole,

b) Comparison of information

The information included in these consolidated notes relating to 2019 is presented solely and exclusively for purposes of comparison with the information relating to 2020.

power to intervene in decision-making regarding financial policies 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 Enagas Group.

a) Consolidation methods

Full consolidation Enagas 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. നട 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. Euro Euro Roblasun 3 S.L.U. Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro Euro operations) Gasoducto Al-Andalus, S.A. Euro	Consolidation method/Company	Functional currency














	Roblasun 2 S.L.U.

	Roblasun 4 S.L.U.
	Roblasun 5 S.L.U.
	Roblasun 6 S.L.U.
	Cierzosun 1 S.L.U.
	Cierzosun 2 S.L.U.
	Cierzosun 3 S.L.U.
	Cierzosun 4 S.L.U.
	Windmusel 1 S.L.U.
	Windmusel 2 S.L.U.
	Windmusel 3 S.L.U.
	Enagás Renovable, S.L.U.
	Efficiency for LNG Applications, S.L. (1)
	Hydrogen to Gas, S.L. (1)
	Enagas Services Solutions, S.L.
	Sercomgas Solutions, S.L. (1)
	Bioengas Renovables, S.L. (1)
	Smart Energy Assets, S.L. (1)
	Scale Gas Solutions, S.L.
	H2Greem Global Solutions, S.L.
	Proportional integration (joint

Consolidation method/Company	Functional currency
Gasoducto Extremadura, S.A.	Euro
Equity method
Morelos EPC, S.A.P.I. de C.V.,	us dollar
Gasoducto de Morelos, S.A.P.I. de C.V.	US dollar
Morelos O&M, S.A.P.I. de C.V.	US dollar
Estación de Compresión Soto La Marina, S.A.P.I. de C.V.	US dollar
Estación de Compresión Soto La Marina O&M, 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.	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
Senfluga 2, S.R.L.	Euro
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.	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, 2020,

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

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
- · 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 of the main currencies used by Group companies with respect to the euro in 2020 and 2019 are shown below:

Currency	Average exchange rate applicable to the headings of the noome statement	Exchange rate applicable to the balance sheet headings (1)
2020
us dollar	1.14155	1.222
Peruvian Nuevo Sol	3.95629	4.39215
Sterling pound	0.88937	0.89475
2019
US dollar	1.11963	1.12247
Peruvian Nuevo Sol	3.67891 3.71821
Sterling pound	0.84693 0.87732

(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:

2020	Consolidated total	Contribution of companies using the euro as functional currency	Contribution of companies using the US dollar as functional currency	Amount in US dollars
Fixed assets and investment properties	4,524,022	4,523,874	148	181
Other non-current financial assets	602,541	579,875	22,666	27,698
Trade and other receivables	299,073	298,885	188	230
Other current financial assets	7,475	7,475
Cash and cash equivalents	863,655	690,183	173,472	211,983
Financial debt and non-current derivatives	4,961,960	4,503,543	458,417	560,186
Financial debt and current derivatives	289,104	227,396	61,708	75,407
Trade and other payables	291,772	289,427	2,345	2,866

iv. Elimination of dividends. Internal dividends are considered to be those a Group company recognises as income for the year 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)".

1.4 Estimates and accounting judgements used

In the Group's Consolidated Annual Accounts for 2020, estimates and judgements were 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. These estimates and judgements basically relate to:

· The useful life of PP&E assets ( Note 2.4 ).
· Provisions for dismantling/abandonment costs, other provisions and contingent liabilities (Note 2.8).
· The measurement of non-financial assets to determine the possible existence of impairment losses (Note 2.6).
· The recognition of investments accounted for using the equity method (Note 1.6).
· The fair value of financial instruments and financial assets (Notes 3.3 and 3.6).
Impairment losses on financial assets measured at amortised cost (Notes 2.2 and 3.3).

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:

· 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

· 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 maturity of lease contracts in application of IFRS 16 (Note 2.4.b).
· Determination of the expected loss associated with receivables (Note 2.2).

Although these estimates were made on the basis of the best information available at December 31, 2020, future events may require these estimates to be modified 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.

1.5 Changes in the consolidation scope

The following changes in the consolidation scope of the Enagás Group occurred during 2020:

	Amount (thousands)		Stake percentage
Entity	In local currency	In euros	At 12.31.2020	Previous	Description / Type of control
Prairie Group / / Tallgrass Energy LP (1)	836,300	762,839	30.2 0/0	28.4% // 12.6%	Additional acquisition of an ownership interest in this corporate structure, which involves no change in the significant influence that the Enagas Group has in this investment, and the investment was accounted for using the equity method (see explanation below).
Unue Gas Renovable, S.L.	1,060	1,060	49 %		Incorporation of this company in which the Enagas Group holds a 49% stake. This affiliate will be accounted for using the equity method.
Senfluga, S.R.L.	(3,688)	(3,310)	18%	20%	Disposal of 2% of the interest in Senfluga, S.R.L. No change in the situation of significant influence.
Gas to Move Transport Solutions, S.L.	197	197	78.3%	74.8%	Acquisition of a 3.5% stake by Enagás Emprende, S.L.U. in the company. The situation remains that based on the shareholders' agreements, given that reinforced majorities are required for important decisions, both financial and operational, the equity method continues to be applied.
H2Greem Global Solutions, S.L.	175	175	99,5%		Incorporation of the company by Enagas Emprende, S.L.U. The corporate purpose is to promote the development, manufacture and marketing of hydrogen generators by electrolysis.
KNUTSEN SCALE GAS S.L.	502	502	50%		Subscription of the company's capital increase and integration through the equity method.
Senfluga 2, S.R.L.	27	25	40%		Incorporation of the company and integration through the equity method.
Terminal de Valparaiso, SpA				100%	Dissolution of the company with no impact on the consolidated balance sheet or income statement.

(1) Praire Group includes the Enagás Group's stake in the various of the consortium for the investment in Tallgrass Energy LR, the structure of which has been simplified as follows.

Tallgrass Energy LP ("Tallgrass")

On April 17, 2020, Enagás, together with Blackstone Infrastructure, GIC, NPS, USS and other partners, completed the "Take Private" process of TGE launched on December 16, 2019, once this process had been approved by the General Shareholders' Meeting of TGE and other conditions usual in this type of process had been obtained. With the completion of this agreement, both Enagás and its partners have acquired TGE's listed class "A" shares, of which they were not yet owners. Upon completion of this acquisition, TGE was delisted from the New York Stock Exchange.

Thus, Enagás has increased its stake to 30.2% of TGE, through the disbursement of 836,300 thousands of dollars (762,839 thousands of euros at the time of the transaction) in the intermediate corporate structure ("Prairie Group") through which the aforementioned Partners carried out their acquisition.

In connection with this process, the intermediate corporate structure has been simplified, and the Enagás Group is now a direct shareholder of TGE, through Enagás USA, LLC and Enagás Holding USA, SLU. This simplification process had no effect on the Enagás Group's balance sheet or income statement at 2020 yearend.

Unue Gas Renovable, S.L.

In September 2020 the Enagás Group set up Unue Gas Renovables, S.L. together with another partner, in which it holds a 49% stake. 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 corporate purpose of this company is the construction of a biogas plant to produce and inject approximately 20 GWh of biomethane per year. This gas is obtained through the anaerobic decomposition of biodegradable organic waste previously treated by means of "upgrading" (technological refining process).

Senfluga, S.R.L.

On January 13, 2020, once the conditions precedent had been met, the transaction whereby Damco Energy, S.A. became a shareholder of Senfluga Energy Infrastructure Holdings, S.A. with a 10% stake, 2% of which was acquired from Enagás for 3,310 thousands of euros, was completed and at the end of 2019 it was recognised under "Non-Current Assets Held for Sale". At 2020 year-end, there were no significant effects on the income statement from this transaction.

Knutsen Scale Gas, S.L.

On August 7, 2020, through a capital increase, the Enagás Group subscribed to 50% of Knutsen through Scale Gas Solutions, S.L.

for 502 thousands of euros. As there is a system of declsions to be taken jointly with the TSII partner, this stake is accounted for using the equity method. The corporate purpose of this company is to carry out LNG supply activities in Spanish ports.

Terminal de Valparaíso, SpA

On August 5, 2020, Terminal de Valparaíso SpA was dissolved after the expiration of its corporate purpose. All the company's assets and liabilities at that date were included in the financial statements of its sole shareholder Enagás Chile SpA, with no impact on the consolldated balance sheet or income statement at the end of 2020.

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 ioint 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.

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.
As the corresponding 12-month deadline subsequent to acquisition has not yet elapsed, established under IFRS 3, the accounting for the acquisition of a stake and the allocation of the price of Tallgrass for the operation described in Note 1.5 is currently being reviewed, though no significant changes are expected. In addition, the final allocation of the purchase price for the 12.6% stake acquired in 2019 was recorded in 2020, with no significant changes compared to December 31, 2019.

Opening balance	New acquisitions / Increases (1)	Change in consolidation method	Dividends	Profit / (loss) for the year	Translation differences	Hedging transactions	Exits from the perimeter/ Decreases	Other adjustments (2)	Balance at year-end
2020
2,109,450	781,339		(119,741)	123,737	(219,334)	(19,463)	(1,959)	4,367	2,658,396
2019
1,028,555	742,141	362,981	(125,710)	121,002	20,256	(16,701)	(11,569)	(11,505)	2,109,450

(1) "New acquisitions" in 2020 mainly includes the andition of the stake in Tallgrass Energy, in the amount of 762,839 thousands of euros (Note 1-5) as well as contributions to TAP in the amount of 11,743 thousands of euros.

The dividends approved during the 2020 and 2019 financial years were as follows:

	2020	2019
TgP	59,471	59,798
Saggas	18,850	25,883
GNL Quintero	25,276	22,436
BBG	9,500	12,500
Grupo Altamira	1,567	2,359
Morelos EPC		1,470
Senfluga	3,649
Other entities	1,428	1,264
Total	119,741	125,710

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, 2020 and December 31, 2019.

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 2.6 details how the recoverable amount is estimated.

With respect to the impairment analysis for affiliates, the discount rate applied (cost of equity) in 2020 ranged from 5-9%, depending on the country (5-8% in 2019). Considering that all the affiliates have been operating normally during 2020 (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

	2020	2019	Change
Net result of the financial year attributed to the parent company (thousands of euros)	44,002	422,618	5.1 %
Weighted average number of shares outstanding (thousands of shares)	261,488	238,928	9.4 %
Basic earnings per share (in euros)	1.6980	1.7688	-4.0 %
Diluted earnings per share (in euros)	1.6980	1.7688	-4.0%

As there are no potential ordinary shares at December 31, 2020 and December 31, 2019, the basic earnings and the diluted earnings per share are the same.

For the calculation of the weighted average number of shares in circulation for the 2019 financial year, both the shares delivered under the previous ILP 2016-2018; the shares acquired related to the new ILP 2019-2021; and the new shares in circulation that were issued in the capital increase explained in Note 3.1.c, were considered for the days that they were effectively in circulation during 2019.

During financial year 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 2020 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):

	2020
Dividends	439,806
Voluntary reserves	824
TOTAL	440,630

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 264,086 thousands of euros.

At a meeting held on November 23, 2020, the Board of Directors of Enagás, S.A. agreed to distribute an interim dividend charged against 2020 profit, based on the necessary liquidity statement, expressed in thousands of euros, amounting to 175,720 thousands of euros (0.672 euros gross per share), in accordance with Article 277 of the Spanish Corporate Enterprises Act.

The aforementioned interim dividend was paid on December 23, 2020.

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 2020, were as follows:

Provisional accounting statement at October 31, 2020
Net accounting result	15,750
10% legal reserve	0
Interim dividend received from Group companies	440,253
Profit "available" for distribution	456,003
Forecast interim dividend	-175,720
Forecast cash balance for the period from October 31 to December 31:
Cash balance	52,679
Projected collection for the period considered	458,748
Credit lines and loans available from financial institutions	1,500,000
Payments projected for the period under consideration (including the interim dividend)	-290,117
Estimated available financing before dividend distribution	1,721,310

b) Total dividends paid

In addition to the aforementioned interim dividend for 2020, during 2020 Enagás, S.A. distributed the gross complementary and extraordinary dividend for 2019.

This dividend amounted to 251,029 thousands of euros (0.96 euros per share) and was paid on July 9, 2020.

1.9 Commitments and guarantees

Accounting policies

A financial quarantee contract is a contract which requires ه 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.
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 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.

Commitments and guarantees	Group Personnel, Companies or Entities (Note 4.3)	Other related parties (Note 4.3)	Third parties	Total
2020
Guarantees for related parties	622,920	I	I	622,920
Guarantees and sureties granted - Other	630	14,699	356,202	371,531
Investment commitments			41,567	41,567
2019
Guarantees for related parties	522,952			522,952
Guarantees and sureties	29,154	23,333	379,033	431,520
Investment commitments	765,974		38,072	804,046

a) Guarantees for related parties debt

The "Guarantees on debt of related parties" heading includes the corporate guarantee 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.

The corporate guarantee has been granted by each TAP shareholder jointly, so that Enagás would only be held liable, in a hypothetical case, for the amount corresponding to its participation in the capital of TAP.

At December 31, 2020 the amount guaranteed by Enagás, S.A. to the creditors of TAP amounted to 622,920 thousands of euros (522,952 thousands of euros at December 31, 2019). The increase was due to the higher degree of disposal of the TAP loan as well as the development of the market value of the financial instrument for interest rate hedging contracted in the previous year.

This guarantee will be released subject to the fulfilment of certain conditions agreed with TAP's creditors, mainly related to the startup of the project.

After the release of the guarantee and until the maturity of the financing, there will also be a shareholder support mechanism for the repayment of the TAP loan by means of capital contributions (Debt Payment Undertaking), which will be activated were certain extraordinary events to happen.

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.

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, 2020 include the financial sureties granted to third parties by Gas to Move Transport Solutions, S.L. in the amount of 630 thousands of euros, counter-guaranteed by Enagás, S.A. (877 thousands of euros at December 31, 2019).
· At December 31, 2019 this heading included a guarantee related to the investment commitment in Tallgrass Energy, L.P. explained in section c) below, as well as in Note 1.5, which, having been fulfilled, is no longer in force.

Other related parties

· Technical guarantees granted by the related party Banco Santander to third parties in the amount of 6,411 thousands of euros (6,411 thousands of euros in 2019) to cover certain responsibilities which may arise during execution of the contracts constituting the activity of the Enagas Group.
· Guarantees granted by the related party Banco Santander 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 8,183 thousands of euros and 105 thousands of euros, respectively (8,909 thousands of euros and 8,013 thousands of euros respectively at December 31, 2019).

Third parties

The following items, mainly, are included:

· Financial guarantees granted by financial entities to cover the loans granted by the European Investment Bank to Enagás Financiaciones, S.A.U. in the amount of 256,667 thousands of euros (280,000 thousands of euros in 2019).
· Technical guarantees granted by financial entities to third parties in the amount of 79,724 thousands of euros (73,095 thousands of euros in 2019) 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 18,000 thousands of euros (24,000 thousands of euros in 2019).
· 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 552 thousands of euros (601 thousands of euros at December 31, 2019).
· In addition, there is an insurance policy with as bid bond for the port concession in Colombia for the Buenaventura project amounting to 1,259 thousands of euros (1,336 thousands of euros at December 31, 2019).

No guarantees had been granted with respect to tender processes at December 31, 2020 and at December 31, 2019.

c) Investment commitments

The following items are included:

The Enagás Group has no investment commitments relating to the TAP project, once this affiliate started to operate in November 2020 (20,924 thousands of euros at December 31, 2019).
· The Enagás Group has firm investment commitments in Economic Interest Groupings (EIG) amounting to 41,567 thousands of euros, to be disbursed during 2021 and later years (38,072 thousands of euros at December 31, 2019).
· At December 31, 2019, certain investment commitments corresponding to the TAP project and the Take Private process of Tallgrass Energy, L.P. were included, which have materialised as explained in Note 1.5 in the case of Tallgrass Energy, L.P.

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, 2019, as they came into force on January 1, 2020 are the following:

Standards	Content	Mandatory application for periods beginning on or after:
Amendments to IFRS 9, IAS 39 and IFRS 7	Phase 1 of the Reference Rate Reform	January 1, 2020

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

As a result of the ongoing reform of the reference rates by the monetary authorities, on January 15, 2020 the amendment to certain requirements for hedging relationships was published in the Official Journal of the European Union so that entities can continue to apply hedge accounting on the assumption that the reference rate of interest on which the cash flows of the hedging instruments and the hedged items are based will not be affected by the uncertainties generated by the Reference Rate Reform.

In accordance with the amendment to "IFRS 7 Financial Instruments: Disclosures", in relation to the hedging relationships established by Enagás, described in Note 3.6. the Company is participating in working groups and monitoring the aforementioned reform process now in its second phase, in order to verify whether any contractual amendment should be made as a result of the reform. It is expected that the derivative financial instruments held by Enagás will continue to qualify and maintain the hedging relationship in accordance with the risk policy described in Note 3.7.

b) Standards not effective for the current financial year

The Group intends to adopt the standards, and amendments thereof issued by the IASB that are not mandatory in the European Union at the date these Consolidated Annual Accounts were prepared when they become effective, where applicable. 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:
Amendments to IFRS 9, IAS 39 and IFRS 7: Reference rate reform	Phase 2 of the benchmarks reform	Annual periods beginning on January 1, 2021
Amendment to IAS 1	Classification of Liabilities as Current or Non-Current and Deferral of the validity date	January 1, 2023

1.11 Aspects relating to COVID-19

During the overall adverse economic situation 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, as indicated in ESMA's recommendations, the going concern principle has continued to be fully applied in the formulation of the 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 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. Nor has the performance of gas demand during 2020 had a significant negative effect on the revenue and sales recorded by the Enagás Group.

Likewise, the effects derived from this situation at international level as well as the global evolution of the Oil & Gas market indices have not significantly affected the income of the international companies in which it has investments.

With regard to liquidity, as indicated in Note 3.8, the Group has solid liquidity and availability amounting to 2,473,009 thousands of euros at December 31, 2020. Related to the above, on February 9, 2021, the credit rating agency Standard & Poor's maintained the Group's rating at BBB+, putting it on a negative outlook. On December 30, 2020, the credit rating agency Fitch Ratings maintained the Group's credit rating at BBB+, putting it on a negative outlook.

Thus, the Group's liquidity risk management strategy reported in Note 3.7 was not affected by the general economic situation caused by Covid-19. Similarly, the credit or exchange rate risk policies have not changed from those applied in previous years (Note 3.7).

Since this general economic situation is deemed an adverse circumstance likely to be considered as an indication of impairment, the Group's analyses did not disclose any impairment to be recorded for financial assets and non-financial assets in accordance with IAS 36 and IFRS 9 (Notes 1.6, 2.6 and 3.3.a), respectively, considering the evolution of the discount rates made in 2020.

The Group has thus performed the asset impairment tests and no significant negative impacts have arisen from this analysis.

Finally, there were no significant extraordinary expenses relating to this situation or provisions or contingent liabilities included in the Enagás Group's consolidated financial statements at December 31, 2020.

Based on the Group's analysis, no impact was evidenced by the Covid-19 situation that needed to be recorded at December 31, 2020.