Naturgy Energy Group S.A.

Management Reports • Jul 28, 2021

Strategic Plan 2021-2025

28 July 2021

Context / New Strategic Plan 2021-2025

New Strategic Plan initially planned for 4Q20

• Agreement to dispose CGE Electricidad in November amid COVID-19 uncertainty recommended postponement
• Ongoing uncertainty during 1H21 around COVID-19 developments
• Increased visibility now allows for a new Strategic Plan to further the Company's transformation started in 2018
• Plan unanimously approved by Board of Directors on 27 July

The Plan strengthens the Company's commitment and alignment with all stakeholders

Naturgy remains committed to continue providing visibility to financial markets, stakeholders and rating agencies

Vision / Strategic pillars

Growth

• Mainly organic, maintaining capital discipline
• Consistent with the energy transition

• Opportunistic asset rotation to accelerate transformation

• Renewables and Networks

• Stable geographies and regulatory frameworks
• Reducing volatility in procurement commitments

ESG

• Embedded at the core
• Aligned with SDGs
• Tangible targets to meet commitments

Best-in-class

relationships

Continuous improvement

Increasing digital footprint

Reinventing customer

• Fueling passion on our employees
• Solidifying core values
• Aligned with stakeholders

Solid pillars to accelerate our transformation

Vision / Key investment objectives

Total Capex

€14.0bn

• Focus on projects with predictable returns
• Financial discipline as a cornerstone
• 80% eligible investments according to Taxonomy

Renewables Networks

• Proven generation technologies
• Focus on attractive geographies
• Commitment to innovation
• Distributed generation
• Biogas and hydrogen

• Sustainable mobility

• Focus on solid frameworks with proactive regulatory management

• Ongoing projects to achieve full automation and remote operation
• Adapting existing infrastructures to play a key role in energy transition

Investments aligned with energy transition

Vision / ESG at the core of our vision

		2020	2025
	Emissions reduction	16%	24%	, ( scopes 1+2+3)1 Reduction of tCO2
Environment	Biodiversity	265	> 350	Projects (#)
Net Zero by 2050
	Enhance diversity	27%	>40%	Women in management positions
Social	Extending ESG throughout supply chain	70%	95%	Suppliers ESG audited
Gender Parity by 2030
	ESG targets as a part of management incentives	3%	10%	Variable pay ESG linked
Governance	Climate change risks and taxonomy reporting	Partial	100%	TCFD & Taxonomy implementation
Management compensation aligned with ESG

Roadmap / Renewables

Roadmap / Renewables

Growth strategy focused on:

Stable geographies Proven technologies

• Low risk and hard currency
• Solid regulatory frameworks
• Long-term visibility

Solar PV, onshore wind and storage 14 GW in operation by 2025 Tangible pipeline with visibility

Customer base as a natural hedge

Balancing risks with new capacity

A defined roadmap for renewables growth

Roadmap / Additional investment opportunities eligible under Next Gen EU program

Sustainable mobility Digitalization

Just Transition

Energy efficiency

Renewable gases

Renewable linked opportunities

Focus on renewable gases €13.8bn €3.0bn

Selected projects: Uses:

Developing renewable gas projects

Target of >1TWh by 2025

La Robla

9,000 Ton/year based on 400MW of solar capacity and 60MW electrolysis (scalable to 200MW)

Meirama

7,500 Ton/year based on 150MW of onshore wind capacity and 50MW electrolysis (scalable to 200MW)

6,3 Network of hydrogen stations

Blending of hydrogen

• Decarbonization and circular economy in Galicia, Asturias, Cantabria, Cataluña, Valencia and Castilla y León
• - Largest hydrogen plant in Spain Blending of hydrogen into existing gas networks with origin certificates
• Export to northern Europe in liquid form
• Mobility and industry
• Port infrastructure
• Green hydrogen supply throughout key Spanish heavy transport routes
• Blending of hydrogen and natural gas into turbines and CHP engines

Taking firm steps in innovation

Roadmap / Networks

Key transformation initiatives Financial estimates

Spain electricity networks

• At the forefront of electricity networks digitalization
• Increasing investment commitments in line with sector requirements

Spain gas networks

• Networks digital transition to ensure best-in-class operations
• Commercial repositioning
• Accelerating contribution to decarbonization

LatAm networks

• Portfolio management
• Investments to guarantee maintenance and safety standards

Regulatory management, digitalization and best-in-class operations to lower risk and increase cash flow predictability

Roadmap / Energy management

Key transformation initiatives Financial estimates

Markets and procurement

• Progressive downsizing of procurement commitments
• Ongoing review and optimization of procurement contracts (oil to hub indexation transition)

International LNG

• Risk management to ensure predictable cash flows
• Downsizing of LNG tanker fleet under time charter
• Exploring value alternatives

Spain thermal generation

• Remote operation and bottom-up process review of CCGT fleet
• Mothballing of non-performing CCGTs
• Working in hybridization alternatives
• Proactive regulatory management (system back-up)

LatAm thermal generation

• Cost and investment efficiency
• New opportunities for excess capacity above PPA
• Exploring value alternatives for Mexico CCGTs

Initiatives to improve competitiveness and reduce risk throughout the portfolio

Roadmap / Supply

Key transformation initiatives Financial estimates

Boost competitiveness

Market repositioning

• Integrated energy offering
• Refocusing of distribution channels strategy including additional third party agreements
• Enhance profitability

Reinvent customer relationships

• Redefined customer service
• Enhanced data analytics and customer segmentation
• Increased loyalty through customer value management
• Accelerate digital transformation
• Transition to a new simpler and integrated digital platform
• Enhanced efficiency in every single operating process

EBITDA (€m) Capex (€m) CAGR 13%

A clear roadmap for growth

Summary / Business overview

Note:

Summary / Dividend policy and capital allocation

Dividend policy

Capital allocation 2021-2025

Sources Cash flow Uses Dividends Debt Capex ~€20bn 5.9 3.2 16.7 14.0 Solid BBB rating throughout the period 1.20 €/share per year To be reassessed in 2023 depending on performance and transformation execution Calendar: • After 1H: 0.30 €/share • After 3Q: 0.40 €/share • After AGM: 0.50 €/share

Sustainable capital allocation

Summary / Key figures (€bn)

Summary / Closing remarks

Strategic Plan 2018-2022

• Simplicity and accountability
• Efficiency
• Non core disposals

• Financial discipline

• Changes in environment

• Energy scenario
• Economic outlook
• Energy transition acceleration
• Regulatory changes
• COVID-19 outbreak

Strategic Plan 2021-2025

• Investment focus
• Renewables and networks
• Financial discipline
• Hard currency markets
• Opportunistic asset rotation
• ESG

Growth to accelerate transformation rebalancing capital allocation

Appendix

20

Appendix / FX and inflation evolution

Source: Forwards, Bloomberg, FMI, EIU and others

Notes:

1. FX variation (2017-2020, 2021-2025) expressed with opposite sign to highlight currency devaluation

2. Inflation is used as a proxy of the tariff index used in each country (ex Brazil IGPM)

Relevant devaluation of LatAm currencies

Appendix / Networks demand evolution

Recovery to levels prior to the COVID-19 crisis does not take place until 2022

1. Demand in Naturgy's gas distributions networks in residential, commercial, NGV and industrial segments

Note:

Appendix / Energy markets evolution

Brent (USD/bbl) Spain Pool price average (EUR/MWh) CO²

(EUR/ton)

Recovery of commodity prices in 2021

Thank you

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