Ence Energia y Celulosa : Results 2Q20

1H 2020 Results

18

July 29th, 2020

80 Overall ESG Score

Disclaimer

The information contained in this presentation has been prepared by Ence Energía y Celulosa, S.A. (hereinafter, "Ence").

This presentation includes data relating to future forecasts. Any data included in this presentation which differ from other data based on historical information, including, in a merely expository manner, those which refer to the financial situation of Ence, its business strategy, estimated investments, management plans, and objectives related to future operations, as well as those which include the words "anticipate", "believe", "estimate", "consider", "expect" and other similar expressions, are data related to future situations and therefore have various inherent risks, both known and unknown, and possess an element of uncertainty, which can lead to the situation and results both of Ence and its sector differing significantly from those expressly or implicitly noted in said data relating to future forecasts.

The aforementioned data relating to future forecasts are based on numerous assumptions regarding the current and future business strategy of Ence and the environment in which it expects to be situated in the future. There is a series of important factors which could cause the situation and results of Ence to differ significantly from what is expounded in the data relating to future forecasts, including fluctuation in the price of wood pulp or wood, seasonal variations in business, regulatory changes to the electricity sector, fluctuation in exchange rates, financial risks, strikes or other kinds of action carried out by the employees of Ence, competition and environmental risks, as well as any other factors described in the document. The data relating to future forecasts solely refer to the date of this presentation without Ence being under any obligation to update or revise any of said data, any of the expectations of Ence, any modification to the conditions or circumstances on which the related data are based, or any other information or data included in this presentation.

The information contained in this document has not been verified by independent experts and, therefore, Ence neither implicitly nor explicitly gives any guarantee on the impartiality, precision, completeness or accuracy of the information, opinions and statements expressed herein.

This document does not constitute an offer or invitation to acquire or subscribe to shares, in accordance with the provisions of Royal Legislative Decree 4/2015, of 23 October, approving the consolidated text of the Securities Market Act. Furthermore, this document does not constitute a purchase, sale or swap offer, nor a request for a purchase, sale or swap offer for securities, or a request for any vote or approval in any other jurisdiction.

2

Highlights

Highlights 1H20

Strong operating performance in a low price environment

Effective measures taken against COVID-19 allow Ence to protect its staff and to continue operating

Strong operating improvement in both businesses

Financial results driven by lower pulp and energy prices

Pulp prices remain at their minimum over the last 10 years

+51% liquidity improvement up to €342 Mn

• Effective measures taken since February 24th against COVID-19 have allowed ENCE to protect its staff and to continue operating during the health crisis
• All ENCE's activities have been declared essential according to the Royal Decree 463/2020 approved on March 14th

 Renewable Energy Business:		 Pulp business:
o Sales (MWh): +27% vs. 1H19 (+51% vs. 2Q19)		o Production: +12% vs. 1H19 (+14% vs. 2Q19)
o New biomass plants commissioned on Jan. 31		o Sales (t): +19% vs. 1H19 (+13% vs. 2Q19)
and Mar. 31 2020		o Cash cost: -5% vs. 1H19 (-6% vs. 2Q19 to 375 €/t)
 €27 Mn EBITDA in the Renewable Business:		 €9 Mn EBITDA in the Pulp business:
o +5% vs. 1H19 (+24% vs. 2Q19)		o -87% vs.1H19 (-88% vs. 2Q19)
o Higher energy sales offset a 7% decline in the		o Higher pulp sales and lower cash cost partially
avg. sales price down to its regulatory minimum		offset a 29% decline in the average sales price

• Strong demand for tissue paper and hygiene products in 1H20
• Temporary imbalance resulting from the impact of worldwide lockdown measures on P&W demand in 2Q20
• Pulp producers maintenance shutdowns postponed to 2H20 due to COVID-19
• €342 Mn cash in balance at 30 June 2020 (€234 Mn in the Pulp business and €108 Mn in the Renewable business)
• €540 Mn Net Debt position at 30 June 2020 (€322 Mn in the Pulp business and €218 Mn in the Renewable business)
• Long-termmaturities in both businesses and no covenants in the Pulp business

4

Effective measures taken against COVID-19

Allowed ENCE to protect its staff and to continue operating during the health crisis

PEOPLE

• Minimum on-site presence. Progressive return as from June.
• COVID-19Prevention Protocol:
• • Entrance and exit temperature checks
  • Strict personal and general hygiene measures
  • Social distancing and no visits
  • Disinfection every 2 hours
  • Masks and COVID-19 tests

Virus spread avoided in our

workplaces

OPERATIONS

• Implementation of Ence´s COVID-19 Prevention Protocol in all areas, including subcontractors and logistic services
• Adverse scenario analysis and action plans to mitigate risks
• 2 full back-up teams in reserve at home for each plant
• Increased wood / raw material stocks
• Annual maintenance shutdowns delayed to 3Q20

No activity interruptions due to

COVID-19

LIQUIDITY

• Use of the € 70 Mn RCF available in the Pulp business, maturing in May 2023.
• € 67 Mn in long-termback-up credit facilities with no covenants signed in 2Q20
• € 37 Mn capex payments postponed to 2021
• Optimization of factoring and confirming lines

+51% cash in balance

up to €342 Mn on 30 June 2020

All ENCE's activities have been declared essential according to the Royal Decree 463/2020 approved on March 14th

5

Sustainability Plan 2019 - 2023

Highlights 1H20

80 Overall ESG Score

Safe and ecologically efficient operations

Sustainable agro-forestry management

Sustainable products

Commitment to Communities

Waste	Lower water	Industry reference
99% valorised	consumption vs. 2019	Covid-19
AENOR "0 Waste"	Pontevedra: -5%	Prevention
Certification	Navia: -8%	Protocols

85%	Patrimonial area certified FSC®		>99%
Licence code FSC-C099970 /PEFC
80%	Wood inputs certified FSC®		Certified wood and
Licence code FSC-C081854 /PEFC		biomass suppliers
	10%		Development of sustainable
		products with reduced
	of Pulp Sales	environmental footprint and with
	+67% vs. 2019	potential	for plastic substitution
+ €3.2 Mn	The Pontevedra´s annual Social Plan
and other investments in the
		community

-41% vs. 2019	Emissions
< 10 mg /Nm3 in
Odor Impact in
all our biomass
Navia
	plants
>84%	Wood bought from small producers
Implantation of the Decalogue of

biomass sustainability for combustibles

European Ecolabel for primary material for cellulose at Navia and at Pontevedra

Involvement with the local community: the plants received more than 400 organized visits from the local stakeholders in 1Q20, before COVID-19 outbreak.

People and			Gender				+9% Women employed vs. 2019			+7% YoY in 2019
					69% of hires < 30 years are women
Values			0% salary gap						Happy Index
					65% of management hires are women
			97% of votes in favor at the				25%			Women present in
Governance		AGM for approving the new			Increased functions of the			the Board of
	Directors Remuneration			Lead Independent Director	Long-term incentive plan		22% Directors vs. 2017,
			Policy 2020-2022				linked to ESG targets		up to 29%.

6

+51% higher renewable energy sales vs. 2Q19

Despite the difficulties caused by the pandemic

316 MW

Installed capacity

New Biomass Plant CIUDAD REAL 50 MW

31st MARCH

MÉRIDA

20 MW

HUELVA

50 MW

HUELVA

41 MW

New Biomass Plant HUELVA 46 MW

31st JANUARY

HUELVA

46 MW

JAÉN

16 MW

CÓRDOBA

27 MW

CIUDAD REAL

50 MW

CIUDAD REAL

50 MW

CIUDAD REAL

16 MW

7

A regulated business which adds stability to the Group

7% decline in our average sales price compared to a 44% drop in the pool price

Average sales price: Pool price + Ro + Regulatory Collar

(€/MWh)

				-7.1%
			105.5		98.0
			52.3		24.4
								28.4
			57.9
						45.2
			(4.7)
			1H19			1H20
	Average Ro				Ence´s market price		Regulatory collar compensation

• Our renewable energy sales price is supported by its regulatory minimum.
• Ro and regulatory collar applicable during the sanitary crisis will be reviewed, according to Spanish Royal Decree-Law 23/2020.

Return on investment

(€ Mn)

31.7		31.7

1H19

1H20

• The regulated annual return on investment of our power plants was confirmed at 7.4% for 2020 - 2031 by Spanish Royal Decree-Law 17/2019.
• Implies an annual income of € 63 Mn subject to a minimum operation of just 3.000 hours per biomass power plant.

8

Renewables pipeline: 405 MW with grid access and locations secured

Awaiting upcoming public auctions of the National Renewable Energy Plan

CIUDAD REAL 50 MW

Biomass

RTB in 3Q21

HUELVA 40 MW

Solar PV

RTB in 4Q21

HUELVA 10 MW

Solar PV

RTB in 3Q21

SEVILLA 90 MW

Solar PV

RTB in 4Q21

RTB = Ready to build

CIUDAD REAL 25 MW

Biomass Hybridization

RTB in 4Q21

CÓRDOBA 50 MW

Biomass

RTB in 1Q22

JAÉN 100 MW

Solar PV

RTB in 3Q21

ALMERÍA 40 MW

Biomass

RTB in 3Q21

National Renewable Energy Plan

2020 - 2030

Solar PV: +30.1 GW

Wind: +22.3 GW

CSP: +5.0 GW

Hydro: +3.5 GW

Biomass: +0.8 GW

Upcoming Auctions Scheme

Spanish Royal Decree-Law 23/2020

• Annual actions 2020 - 2025
• Specific by technology
• Price mechanism: Pay as bid (€/MWh)

9

Strong operating improvements in the Pulp business

12% higher pulp production and 5% lower cash cost in 1H20

Pulp Production (t)		+11.9%	1,025,000
		465,344	520,617
+14.4%
226,182	258,860
2 Q 1 9	2 Q 2 0	1 H 1 9	1 H 2 0	2020 E

Cash Cost breakdown (€/t)

		-5.9%		-4.7%
Overheads	399	375	396	377	375
	41	39
	34	30
	31	31
Commercial and	29	30
logistic costs	116	106	116	112
Conversion costs
	210	206	210	205
Wood cost
	2Q19	2Q20	1H19	1H20	2020 E

Pontevedra biomill

• > 4% production vs. 2Q19
• 20,000 t capacity expansion in 1Q19
• Annual maintenance shutdown delayed to 3Q20 due to COVID-19

Navia biomill

• > 24% production vs. 2Q19
• 80,000 t capacity expansion in 4Q19
• Annual maintenance shutdown delayed to 3Q20 due to COVID-19

19 €/t Cash cost reduction vs. 1H19:

• 9 €/t lower overheads driven by cost savings and higher dilution over sales
• 5 €/t lower wood costs linked to pulp price performance
• 4 €/t lower conversion costs due to fixed costs dilution, lower cost of chemicals and greater energy co-generation contribution
• 1 €/t lower commercial and logistic costs

10

19% higher pulp sales in 1H 2020

Increasing the value of the European market and ENCE's differentiated products

Geographical distribution of sales

Breakdown by end product

Differentiated products

% of pulp sales

% of pulp sales

% of pulp sales

6% Other

Europe 94%

10%

Tissue 57%

27% Specialties

vs. 6% in 2019

vs. 82% in 2019

vs. 58% in 2019

vs. 31% in 2019

9% P&W

vs. 8% in 2019

7% Packaging

Source: Ence 1H20	vs. 3% in 2019	Source: Ence 1H20
Source: Ence 1H20
94% of ENCE´s pulp sales to Spanish and		Ence's differentiated products already
57% of ENCE's pulp sales to the growing	account for 10% of pulp sales.
European markets, where it has strong logistic	tissue and hygiene products segment.	These value-added products are environmentally
and service related competitive advantages.	Strong order backlog for 2020.	friendly and better adapted to replace softwood

pulp in speciality segments.

11

Slight upturn in pulp producer inventories vs. Dec. 2019

Temporary imbalance resulting from worldwide lockdown measures in 2Q20

BHKP and BSKP Demand Evolution (YoY)

000's t

2500

2250				Last 10 years average BHKP: +1.1 Mn t / year										2089
2000
			Last 10 years average BSKP: +0.4 Mn t / year
													1734
1750
1500
1250
																							890
1000												742					595								736	584
750												600
						542
						267
500	170	16	121 253		180			308	319	301					248		208		278		325				154
250		131	57	119	155	143			184 184	135					66
		30														0
0
																														-7
-250															-112					-214						-52
-500																					-304
-750																									-496
-1000																										-808
-1250
																								-1354
			2Q15	3Q15	4Q15	1Q16	2Q16	3Q16	4Q16		1Q17	2Q17	3Q17	4Q17	1Q18	2Q18	3Q18	4Q18	1Q19	2Q19	3Q19		4Q19	1Q20	May.
											Hardwood (BHKP)			Softwood (BSKP)							Apr. y

Producers Inventories BHKP and BSKP

In Days (Quarter average)

65

60					Last 10 years average BHKP: 42 days														59		58
				Last 10 years average BSKP: 30 days														53						54
55
																																															47
50										47																																	44
45
					39		41				41		43					40			38				40		40	41						38			41
40		38													37	37		35														35	36	36								36
																								32			33	34
35							31								31
	29	30	30				28	28	29	29	30	28
30									29
												27
25
20
15
10
		2Q15			3Q15	4Q15			1Q16		2Q16	3Q16	4Q16		1Q17	2Q17	3Q17	4Q17	1Q18	2Q18		3Q18	4Q18	1Q19	2Q19	3Q19	4Q19			1Q20				May.
																	Hardwood (BHKP)			Softwood (BSKP)														Apr. y

Source: Ence, PPPC G-100

Source: Ence, PPPC G-100

Global pulp demand recovered by 8% vs. the first five months of 2019, which were affected by the destocking of pulp in the paper industry. Its restocking in 1Q20 together with higher demand for tissue paper and hygiene products has offset lower demand for P&W papers during the lockdown.

Covid-19 has forced pulp producers to postpone maintenance shutdowns to 2H20. This, together with the impact of lockdown measures in 2Q20 has caused producers inventories to increase in 1H20.

12

Pulp prices in 1H20 remain at their 10-year minimum

Below the free cash flow break-even of most of the industry

	Net BHKP Prices China	Global Market Pulp Industrial Cash Cost Curve (CIF Europe) 1
	$/t	$/Mn t

800

Last 10 years average BHKP: 636 $/t

700

600

500

400

300

200

100

Current Net Price BHKP China 443 $/t

0

Hardwood (BHKP)

Softwood (BSKP)

Mn t

Source: FOEX

Source: Ence, Hawkins Wright

Ence´s expected Free Cash Flow Break Even (Cash Cost + Maintenance Capex + Financial Expenses) of 440 USD/t in 2020

1 Brazil only includes the cost of wood harvesting and transportation plus third party wood purchases. On a like for like basis, Brazilian cash cost would be around 50 US$ / t higher.

13

Pulp demand set to outgrow supply over 2020-24

Average annual pulp demand growth of 1.5 Mn t during the last 10 years

Expected Annual Increase in Global Market Supply and Demand (Mn t)1

Mn t		2020	2021	2020-21	2022	2020-22	2023	2020-23	2024	2020-24
ESTIMATED ANNUAL MARKET PULP DEMAND INCREASE		-1.5	1.5	0.0	1.5	1.5	1.5	3.0	1.5	4.5
ESTIMATED ANNUAL MARKET PULP SUPPLY CHANGE (CONFIRMED)	-0.1	-0.7	-0.8	0.6	-0.2	0.6	0.4	-0.7	-0.3
SUZANO (SALES RECOVERY)	BHKP	0.9		0.9		0.9		0.9		0.9
ARAUCO (VALDIVIA)	BHKP	-0.2	-0.3	-0.5		-0.5		-0.5		-0.5
ARAUCO (HORCONES)	BHKP		0.5	0.5	0.7	1.2		1.2		1.2
UPM (PASO DE LOS TOROS)	BHKP				0.3	0.3	1.5	1.8	0.2	2.0
BRACELL (LENÇOIS PAULISTA)	BHKP / DP				0.5	0.5		0.5		0.5
APRIL (KERINCI)	BHKP	-0.1	-0.2	-0.3	-0.2	-0.5	-0.2	-0.7	-0.2	-0.9
APRIL (RIZHAO)	BHKP	-0.1	-0.2	-0.3	-0.2	-0.5	-0.2	-0.7	-0.2	-0.9
ENCE (NAVIA & PONTEVEDRA)	BHKP	0.1		0.1		0.1		0.1		0.1
MONDI (RUZOMBEROK)	BHKP	0.1	-0.1	0.0		0.0		0.0		0.0
SCA (OSTRAND)	BSKP	0.1		0.1		0.1		0.1		0.1
STORA (ENOCELL)	BSKP	-0.2		-0.2		-0.2		-0.2		-0.2
STORA (OULU)	BSKP		-0.1	-0.1		-0.1		-0.1		-0.1
NORDIC KRAFT (LEBEL-SUR-QUEVILLON)	BSKP	0.1	0.2	0.3		0.3		0.3		0.3
UNEXPECTED & NON COMPETITIVE ANNUAL CAPACITY CLOSURES	-0.8	-0.5	-1.3	-0.5	-1.8	-0.5	-2.3	-0.5	-2.8
SURPLUS / DEFICIT		1.4	-2.2	-0.8	-0.9	-1.7	-0.9	-2.6	-2.2	-4.8

Source: ENCE estimates

1. Estimates correspond to the expected increase in supply and demand of market pulp for paper production. It therefore excludes the production of integrated pulp and other pulp grades such as Dissolving Pulp or Fluff. We assume 70% of BRACELL´s project in Sao Paulo will be focused on Dissolving Pulp production.

14

1H 2020 Financial Results

Driven by lower pulp and energy prices

Pulp Business EBITDA (€ Mn)	Renewable Energy Business EBITDA (€ Mn)	Group Net Income (€ Mn)

	-86.7%		+4.7%
67
		26	27
	9
1H19	1H20	1H19	1H20

25

-25

1H19		1H20
		Pulp		Renewable Energy

€9 Mn EBITDA in the Pulp business:

• -87%vs.1H19 driven by a 29% decrease in the average sales price
• Partially offset by a 19% increase in pulp sales and 5% reduction in cash cost

€27 Mn EBITDA in the Renewable business:

• +5% vs. 1H19 driven by 27% higher energy sales
• Offsetting a 7% decline in the average sales price down to its regulatory minimum

Net consolidated result of €-25 Mn following:

• €57 Mn Depreciation and other
• €13 Mn Net financing costs
• + €9 Mn Income tax

15

€29 Mn Normalized FCF and €42 Mn carry-over payments in 1H20

€342 Mn cash in balance, long-term debt maturities and no covenants

Normalized FCF1 (€ Mn)		Strategic Plan Capex (€ Mn)
	-54.2%			-75.8%
69
	172

	29
			42
1H19	1H20	1H19	1H20
Renewable Energy	Pulp	Renewable Energy	Pulp

Net Debt (€ Mn)

	+5.3%
513	540

Lease

contracts

€55 Mn

2019			1H20
Renewable Energy		Pulp	Operating Leases

Normalized Free Cash Flow generation of €29 Mn

Lower EBITDA vs. 1H19 partially offset by:

• Working capital reduction
• Lower taxes

Strategic Plan carry over payments of €42 Mn:

• €31 Mn carry-over payments in the Pulp business from capacity expansions and sustainability improvements in 2019
• €11 Mn carry over payments in the Renewable Energy business from two new biomass plants commissioned in 1Q20 and sustainability improvements

€540Mn Net Debt (+ €27 Mn vs. Dec.19):

• Including €55 Mn related to lease contracts (+ €2 Mn vs. Dec.19)
• €342 Mn cash in balance (+ €116 Mn vs. Dec.19)
• Long-termmaturities in both businesses and covenant free in the Pulp business

1. FCF before Strategic Plan investments, divestments & dividend payment

16

Pontevedra's biomill legal status

The first resolution of the National Court is expected in the coming months

On January 2016 the National Directorate of Coasts granted the extension of Pontevedra´s concession until 2073

• The 1958 biomill's original concession was extended for 60 years (starting November 8th 2013) by the National Directorate of Coasts via a resolution dated January 20th 2016 by virtue of: (i) Law 2/2013, on coastal protection and sustainability and amending the Coastal Act (22/1988); & (ii) General Coast Regulations enacted (Royal Decree 876/2014).

We expect a first resolution from the	 3 appeals presented by Pontevedra's City Council and by two environmental associations to the National Court´s Chamber for
National Court in the coming months	Contentious Administrative Proceedings against the Jan. 20th 2016 resolution.
		 On March 8th 2019, the National Directorate of Coasts accepted all 3 appeals, despite having previously argued at all stages that
The legal case against the extension could	the Ministerial Order Resolution of January 20th 2016 was totally legal.
last for up to 4 years, including appeals to	 On April 10th 2019, the National Court´s Chamber for Contentious Administrative allowed Ence to defend the case.
higher courts	 The court case is now in its final stage. COVID-19 may delay the National Court's first resolution.

€130 Mn invested in the biomill since the	 Investments carried out or committed since the extension of the concession for the period of 2016 - 2019 amount to approx. €130
Mn.
extension of the concession in 2016	 In the unlikely event of operations being discontinued, the cash impact would amount to €74 Mn (€43 Mn corresponding to
		dismantling actions, €15 Mn to the cost of staff reductions and €16 Mn to the cancellation of existing contracts).

Given the uncertainty, the Board of Directors decided to concentrate the investments of the Business Plan in Navia's biomill

• Investments of €250 Mn initially planned to increase capacity in Pontevedra will be reallocated to Navia's biomill, in order to double the initially planned swing line by up to 340,000 t of BHKP or 200,000 t of dissolving pulp.

17

1H 2020 Results by Business

Pulp Business

1H 2020 results driven by lower pulp prices

Avg. Net Pulp Price (€/t)

-29.3%

590

418

1H19

1H20

Avg. Cash Cost (€/t)

-4.7%

Pulp Sales Volume (t)

+18.7%

519,820

437,950

1H19

1H20

EBITDA (€ Mn)

-86.7%

86.7% EBITDA decrease vs. 1H19:

• Resulted from the 29% drop in the average sales price.
• Partially offset by 19% higher sales and 5% lower cash cost following the 100,000 t capacity increase carried out in 2019
• Annual maintenance shutdowns delayed to 3Q20 due to COVID-19

396		67
378
			9
1H19	1H20	1H19	1H20

19

Pulp Business

P&L

1H20 P&L Bridge (€ Mn)

€9.5 Mn negative FX hedging

settlements

8.9
(33.8)		(27.5)		(24.3)
	(2.5)			8.0
			(5.4)
			0.5

EBITDA	Depreciation and other	Pontevedra	EBIT	Financial expenses Other financial result	Taxes	Net result
	results on fixed assets	Environmental Pact
		provisions

20

Pulp Business

Cash flow generation

1H20 Cash Flow Bridge (€ Mn)

2019 Strategic Plan

carry over payments

(6.7)

13.2

(2.4)

0.0

1.8

13.1

(30.8)

8.9

EBITDA

Change in

Maintenance

Financial

Taxes

NORMALIZED

Other

Strategic Plan

Divestments

FCF

working capital

CAPEX

charges/payments

FCF

collection/payments

CAPEX

and non-cash

(15.5)

adjustments

0.4

21

Ongoing FX hedging program

To mitigate FX volatility in the Pulp Business

Dollar/Euro Exchange Rate Evolution		Current Hedges

1,40
								Q3 2020: 84% revenues
1,35									Avg. cap: $ 1.20 €
1,30								 Avg. floor: $ 1.14 €
								Q4 2020: 63% revenues
1,25								 Avg. cap: $ 1.19 €
1,20								 Avg. floor: $ 1.13 €
								Q1 2021: 53% revenues
1,15								 Avg. cap: $ 1.17 €
1,10								 Avg. floor: $ 1.09 €
							Q2 2021: 23% revenues
1,05								 Avg. cap: $ 1.17 €
								 Avg. floor: $ 1.10 €
1,00
31-12-13	31-12-14	31-12-15	31-12-16	31-12-17	31-12-18	31-12-19	31-12-20	31-12-21

Ence has secured an average cap of $1.19/€ and an average floor of $1.14/€ for 73% of its dollar exposure in 2H20

Assuming a flat 1.14 $/€ for 2020, full year FX settlements would amount to €10 Mn

22

Pulp Business

High liquidity and long-term financing without covenants

Leverage as of June 30th 2020 (€ Mn)		Debt Maturity Calendar (€ Mn)

Lease	556.0
45.7	234
contracts
			322.1
	Gross debt	Cash	Net debt

€152 Mn Convertible bond 1 €226 Mn Bilateral loans

€62 Mn Public sector financing €70 Mn RCF

€46 Mn IFRS16

	33.8	67.4
23.3	1.9
1.3	2.1	5.8
3.3	59.6
5.3
16.7	28.4
2020	2021	2022

313.8

1.7

70.0

8.1

82.2

117.7

38.7

151.9

39.8

39.2

20232024<

• 234 Mn cash in balance, long-term maturities and no covenants

Financial liability of €45.7 Mn in the Pulp business related to the application of IFRS16 on leases

1. €152 Mn accounted as gross debt and €8 Mn accounted as equity as of June 30th 2020, according to IAS 32

23

Renewable Energy Business

Higher contribution of new biomass power plants offset lower electricity prices

Energy Volume (MWh)	Average sale price (€/MWh)

	+27.0%				-7.1%
		612,945	1	3.8
482,652			101.7	98.0
1H19		1H20		1H19	1H20
Revenues (€ Mn)			EBITDA (€ Mn)
	+18.7%				+4.7%
		4.1	2		26.9
				25.7
		56.0
49.1
31.7		31.7
1H19		1H20		1H19	1H20
Ri	Pool + Collar + Ro	Capitalized

4.7% EBITDA increase was driven by:

• 27.0% higher energy sales from new biomass power plants commissioned in 1Q20
• Which has offset a 7.1% decline in the average sale price, down to its regulatory minimum

1 Note that the average sale price of 101.7 €/MWh in 1H19 included an adjustment of 3.8 €/MWh related to the temporary suspension of the electricity generation tax in 1Q19 and the attendant adjustment to the plants Ro with no effect on EBITDA. Comparable sale price decline would have been 7.1% or 7.5 €/MWh.

2 1H20 revenues include € 4.1 Mn from the energy sales of the new biomass plants during their testing phase in 1Q20, which have been capitalized together with their corresponding expenses, neutralizing their impact in EBITDA

24

Renewable Energy Business

P&L
			1H20 P&L Bridge (€ Mn)
	(22.1)
26.9
		4.7	(7.7)
				0.8	(2.2)	(0.7)	(2.9)
EBITDA	Depreciation and	EBIT	Financial Expenses	Taxes	Net profit	Minorities	Net Attributable Profit
	others

25

Renewable Energy Business

Cash flow generation

1H20 Cash Flow Bridge (€ Mn)

	(2.4)				€15 Mn non cash income	Strategic Plan
				carry-over payments 1
		(2.4)			related to the Regulatory Collar
			(7.3)
26.9				1.0
						(10.3)
					15.7
							(8.5)	(5.3)
EBITDA	Change in working	Maintenance	Interest payment	Taxes	Normalized Free	Other collection /	Strategic Plan	FCF
	capital	CAPEX			Cash Flow	payments and non	CAPEX
						cash adjustments

1. Strategic Plan Capex excludes the contribution of the remaining pulp business assets in Huelva valued at € 26.9 Mn in 1Q20, with no impact on the Group's consolidated cash flow.

26

Renewable Energy Business

Long-term green financing and high liquidity

	Leverage as of June 30th 2020 (€ Mn)
Lease	326.6	Leverage:
8.9	4.1 x
contracts	108.3

Debt Maturity Calendar (€ Mn)

€97 Mn solar thermal plant project financing €220 Mn Energy parent corporate financing

217.9

€20 Mn RCF - Fully available

€9 Mn IFRS 16

209.1

7.2

70.0

Gross debt

Cash

Net debt

14.5	34.8	34.5	33.5	132.0
	0.7	0.3	0.3
0.4
7.9	7.1	8.2
4.0
26.2	27.0	24.9
10.1
2020	2021	2022	2023	2024<

Energy business leverage at 4.1x Net Debt / LTM EBITDA as of June 2020

Financial liability of €8.9 Mn in the Renewable Energy business related to the application of IFRS16 on leases

27

Closing Remarks

Closing Remarks

Strong operating improvement in 1H20 despite COVID-19

 Effective measures taken since February 24th against COVID-19 allow ENCE to keep its people safe and to continue operating during the health crisis

 Strong operating improvement in the Pulp business following the 100,000 t capacity increase carried out in 2019

 Annual maintenance shutdowns in both biomills delayed to 3Q20 due to COVID - 19

2020 Expected Pulp production (t)	2020 Expected Cash Cost (€/t)	2020 FX average floor ($/€)
1,025,000 (+13% vs. 2019)	375 (-6% vs. 2019)	1,15

 +51% renewable energy sales growth vs. 2Q19 following the commissioning of two new biomass plants in 1Q20

2020 Expected Energy sales (Mwh)

1,400,000 (+34% vs. 2019)

• Annual return on investment amounts to € 63 Mn, subject to a minimum operation of 3.000 hours per power plant
• Renewables pipeline of 405 MW, with grid access and locations secured, awaiting for the upcoming public auctions of the National Renewable Energy Plan

29

Alternative Performance Measures (APMs)

Pg.1

Ence presents its results in accordance with generally accepted accounting principles, specifically IFRS. In addition, its quarterly earnings report provides certain other complementary metrics that are not defined or specified in IFRS and are used by management to track the company's performance. The alternative performance measures (APMs) used in this presentation are defined, reconciled and explained in the corresponding quarterly earnings report publicly available through the investor section of our web page www.ence.es.

CASH COST

The production cost per ton of pulp produced, or cash cost, is the key measure used by management to measure its efficiency as a pulp maker.

Cash cost includes all of the expenses incurred to produce pulp: timber, conversion costs, corporate overhead, sales and marketing expenses and logistics costs. It excludes fixed- asset depreciation and forest depletion charges, impairment charges and gains/losses on non-current assets, finance costs/income, income tax and certain operating expenses which management deems to be non-recurring, such as ad-hoc consultancy projects, Ence's long-term remuneration plan, the termination benefits agreed with staff or certain social expenses.

As a result, the difference between the average sales price and the cash cost applied to the total sales volume in tons yields a figure that is a very close proxy for the EBITDA generated by the Pulp business.

EBITDA

EBITDA is a measure of operating profit before depreciation, amortization and forestry depletion charges, non-current asset impairment charges, gains or losses on non-current assets and specific non-ordinary income and expenses unrelated to the ordinary operating activities of the company, which alter their comparability in different periods.

EBITDA is a measure used by the Ence´s management to compare the ordinary results of the company over time. It provides an initial approximation of the cash generated by the company's ordinary operating activities, before interest and tax payments, and is a measure that is widely used in the capital markets to compare the earnings performances of different companies.

NORMALISED FREE CASH FLOW

Ence reports normalised free cash flow within the cash flow metrics for each of its two business units in its quarterly earnings report. Normalised FCF is the sum of EBITDA, the change in working capital, maintenance capital expenditure, net interest payments and income tax payments.

30

Alternative Performance Measures (APMs)

Pg.2

Normalised free cash flow provides a proxy for the cash generated by the company's operating activities before collection of proceeds from asset sales; this cash represents the amount available for investments other than maintenance capex, for shareholder remuneration and for debt repayment.

MAINTENANCE, EFFICIENCY & GROWTH AND SUSTAINABILITY CAPEX

Ence provides the breakdown of its capital expenditure and related cash outflows for each of its business units in its quarterly earnings report, distinguishing between maintenance, efficiency & growth and sustainability capex.

Maintenance capex are recurring investments designed to maintain the capacity and productivity of the company's assets. Efficiency & growth capex, meanwhile, are investments designed to increase these assets' capacity and productivity. Lastly, sustainability capex covers investments made to enhance quality standards, occupational health and safety, to improve the environment and to prevent contamination.

Ence's 2019-2023 Business Plan includes a schedule of the amounts it expects to invest annually in efficiency & growth and sustainability capex in order to attain the strategic targets set. The disclosure of capex cash flows broken down by area of investment facilitates oversight of the execution of the published 2016-2020 Business Plan.

FREE CASH FLOW

Ence reports free cash flow as the sum of its net cash flows from operating activities and its net cash flows from the investing activities of its quarterly earnings report.

Free cash flow provides information about the cash generated by the Group's operating activities that is left over after its investing activities for the remuneration of shareholders and repayment of debt.

NET DEBT

The borrowings recognized on the balance sheet, as detailed in its quarterly earnings report, include bonds and other marketable securities, bank borrowings and other financial liabilities. They do not however include the measurement of financial derivatives.

Net debt is calculated as the difference between current and non-current borrowings on the liability side of the balance sheet and the sum of cash and cash equivalents and short- term financial investments on the asset side.

Net debt provides a proxy for the company's indebtedness and is a metric that is widely used in the capital markets to compare the financial position of different companies.

31

80 Overall ESG Score

Delivering value Delivering commitments