Sacyr S A : 11 Report on capital increases (scrip dividend)

REPORT OF THE BOARD OF DIRECTORS OF SACYR, S.A. IN RELATION TO THE PROPOSALS TO MAKE TWO CAPITAL INCREASES, CHARGED TO BENEFITS OR RESERVES AND WITH COMMITMENT TO PURCHASE FREE RIGHT OF FIRST CHARGE, REFERRED TO IN TWELFTH POINTSECTIONS 12.1 AND 12.2 OF THE AGENDA OF THE GENERAL MEETING CALLED FOR APRIL 28 AND APRIL 29, 2021, FIRST AND SECOND CALLS, RESPECTIVELY.

The purpose of this report is to justify the two proposed capital increases with a charge to profit or reserves ("script dividend"), which are to be submitted for approval at the General Shareholders Meeting of Sacyr, S.A. (the "Company") under sections 12.1 and

12.2 of item twelve on its agenda, all in accordance with sections 286, 296 and 297.1.a) of the Spanish Corporate Enterprises Act (Ley de Sociedades de Capital).

In order to facilitate the understanding of the transaction behind this proposal, shareholders are first given a description of the purpose and justification for the proposed increases, after referencing the regulatory framework. Below is a description of the main terms of the two capital increases with a charge to profit or reserves that are the subject matter of this report.

1. Regulatory framework

Section 295 of the Corporate Enterprises Act stipulates that share capital may be increased by creating or issuing new shares or by raising the par value of existing shares; in both cases the capital increase may be carried out with a charge to, among others, profits or reserves already recognised in the last approved balance sheet.

Within the regulatory framework for public companies, section 297.1.a) of the Corporate Enterprises Act establishes that the General Meeting, with the requirements established for amending the Bylaws, may delegate to the directors the power to set the date on which the resolution already passed to increase share capital must be carried out and to establish the terms of the increase for all matters not provided for in the General Meeting resolution. The term for the exercise of this delegated power may not exceed one year, except in the case of the conversion of debt instruments into shares. Section 296 of the Corporate Enterprises Act provides that any resolution to increase share capital must be passed by the General Meeting in accordance with the requirements established for amending the Bylaws.

In relation to the requirements established for amending the Bylaws, section 286 of the Corporate Enterprises Act indicates that the directors must draft the entire text of the proposed amendment and, for public companies, a written report justifying the amendments must be drawn up.

This report meets to the above-mentioned requirements.

2. Purpose, justification and structure of the proposal 2.1 Purpose and justification

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In light of the current situation of the capital markets, it is recommended that companies maintain their equity and cash structure; however, this recommendation should not prevent them from meeting one of their main obligations to their shareholders, namely the possibility of remuneration, if they have the means to do so.

The main trends followed in terms of shareholder remuneration by IBEX-35 companies have been implemented in remuneration, flexible dividend or script dividend programmes; these programmes, which are structured through capital increases with a charge to profit or reserves and with commitments by the companies to purchase bonus issue rights, enabled shareholders to be compensated in cash, if they so wished, or to receive company shares with the tax treatment of bonus shares.

With these remuneration plans:

1. Shareholders are remunerated as they may, if considered necessary, sell their bonus issue rights on the market or to the Company itself (which makes a firm commitment to purchase them).
2. It allows for the possibility of maintaining the equity structure (to a greater extent than if dividends were distributed), insofar as there may be shareholders that choose to maintain their interest in the share capital and not sell their bonus issue rights to the Company.

2.2 Structure of the proposal

The two proposals subject to approval at the General Meeting under item twelve (sections 12.1 and 12.2) on the agenda consist of offering the Company's shareholders the option to receive, at their choice, either bonus shares of the Company or an amount in cash.

These offers are structured through two capital increases with a charge to reserves (the "Capital Increases"), which include a commitment by the Company to purchase the resulting bonus issue rights within the framework of the increase.

However, as the two Capital Increases are for the purpose described in section 2.1 above, both may be carried out simultaneously or independently on different dates and the Company may even decide not to carry out one or both, in which case the corresponding Capital Increase would be rendered null and void.

When the Board of Directors (with express powers of delegation) decides to carry out one of the Capital Increases:

1. The Company's shareholders will receive a bonus issue right for each share that they hold. These rights may be traded and, therefore, may be sold under the same terms as the shares from which they derive on the Bilbao, Madrid, Barcelona and Valencia Stock Exchanges, through the Spanish Stock Market Interconnection System, for a period of at least fifteen calendar days, at the end of which the rights will be automatically converted into newly issued shares, which will be allocated to those that held the aforementioned bonus issue rights at that time.
2. In addition, the Company will assume, under the terms indicated below, an irrevocable commitment to purchase the bonus issue rights (only those received free of charge by the Company's shareholders, not in relation to the issue rights purchased or

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otherwise acquired in the market) at a fixed price (the "Purchase Commitment"). This fixed price will be calculated prior to the beginning of the trading period for the bonus issue rights of the Capital Increases in accordance with that indicated in the resolution. The Company therefore guarantees that all shareholders will be able to monetise their rights if they do not wish to receive new shares.

Therefore, when each of the Capital Increases is carried out, the shareholders may choose freely between the following options:

1. Not to sell their bonus issue rights. In this case, at the end of the trading period the shareholder will receive the corresponding number of new bonus shares.
2. To sell all or part of their bonus issue rights to the Company under the Purchase Commitment at a guaranteed fixed price for each Capital Increase. Therefore, the shareholder would choose to monetise their rights.
3. To sell all or part of their bonus issue rights on the market.

In this case, the shareholder would also choose to monetise their rights, although they would not receive a guaranteed fixed price, but rather the consideration for the rights would depend on market conditions in general, and on the share price of the rights in particular.

In the Capital Increases, the Company's shareholders may combine any of the alternatives mentioned in paragraphs (a) to (c) above.

It should be noted in this regard that the aforementioned alternatives receive different tax treatment, as described in section 4.

3. Characteristics of the Capital Increases

The Capital Increases have the following basic characteristics:

1. Amount of each Capital Increase, number of shares to be issued and number of bonus issue rights:

The amount of each Capital Increase and the specific number of shares to be issued will be set by the Board (with express powers of delegation), within the maximum limit approved for the Capital Increase. In any case, the maximum nominal amount of each Capital Increase will never exceed €18,000,000 (the "Maximum Amount of each Increase").

The final amount in each Capital Increase will be set by the Board (with express powers of delegation) within the limit of the Maximum Amount of each Increase.

The Maximum Amount of each Increase may be used in full or in part, as decided by the Board.

The shares in each Capital Increase (the "New Shares") will have a par value of one euro (€1) each and will be represented by book entries, whereby Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U. (Iberclear) and other participating entities will account for and register the shares in accordance with

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current regulations at any given time. The New Shares will be issued at par value, without any share premium.

Both the amount of each Capital Increase and the number of New Shares will be made public by means of a communication of relevant information to be sent to the Spanish National Securities Market Commission.

(ii) Incomplete allocation or subscription:

Section 311 of the Corporate Enterprises Act provides for the possibility of an incomplete allocation or subscription in each Capital Increase in the event that the Company, any company in its group or a third party waives all or part of the bonus issue rights it holds when the Capital Increase is carried out, and therefore, if these rights are waived, the share capital will be increased by the corresponding amount.

(iii) Rights of the new shares:

The New Shares in each Capital Increase will be of the same class and series, and carry the same rights as those currently outstanding and will confer on their holders, as from the date of issue, the same rights as the Company's other shares.

(iv) Consideration:

Each Capital Increase will be carried out in full against profit or reserves, as provided for in section 303.1 of the Corporate Enterprises Act, for which purpose the Board of Directors will be empowered (with powers of delegation) to determine the specific profit or reserve accounts or subaccounts against which the increase is to be carried out.

(v) Balance sheet of the transaction:

For the purposes of section 303 of the Corporate Enterprises Act, the Company's annual balance sheet as at 31 December 31, 2020, duly audited, will be considered to be the balance sheet for the purpose of each Capital Increase, and will be submitted for approval at the same Annual General Meeting as that at which the two Capital Increases will be submitted. This balance sheet therefore refers to a date within the six months immediately prior to the Capital Increases.

(vi) Bonus issue rights:

Each of the Company's outstanding shares will grant one bonus issue right.

The number of bonus issue rights necessary to receive one new share in each Capital Increase ("DAG") will be equal to the result of dividing (i) the number of the Company's outstanding shares on the date on which the Board of Directors, with express powers of delegation, resolves to carry out each Capital Increase ("NACirc") by (ii) the number of New Shares to be issued as a result of the corresponding Capital Increase ("NAN"), rounded to the nearest whole number and, if the result is exactly half a whole number, to the next whole number, if the result is not a whole number.

The number of bonus issue rights necessary to receive one New Share for each Capital Increase will be made public by means of a communication of relevant information to be sent to the Spanish National Securities Market Commission.

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If the number of bonus issue rights necessary to receive one New Share (DAG) multiplied by the number of New Shares to be issued (NAN) results in a number less than the number of the Company's outstanding shares on the date on which the Capital Increase in question is carried out (NACirc), the Company (or a Group company that, where applicable, holds shares in the Company) will waive a number of bonus issue rights equal to the difference between the two figures, for the sole purpose of making the number of New Shares a whole number and not a fraction.

both figures, for the exclusive purpose of the number of New Shares being a whole number and not a fraction.

Bonus issue rights will be allocated to those that appear in the share register of Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A. Unipersonal (Iberclear) on the corresponding date in accordance with applicable current law. Bonus issue rights may be traded during the period determined by the Board (with express powers of delegation), with a minimum of fifteen calendar days. During that period, sufficient bonus issue rights may be acquired on the market in the necessary proportion to receive New Shares.

(vii) Irrevocable purchase commitment

When each Capital Increase is carried out, the Company will assume, at the price indicated below, an irrevocable commitment to purchase the bonus issue rights allocated in the corresponding Capital Increase from those who receive the rights free of charge as a result of appearing in the share register of Sociedad de Gestión de los Sistemas de Registro, Compensación y Liquidación de Valores, S.A.U. (Iberclear), on the corresponding date in accordance with the rules for the clearing and settlement of securities that apply at any given time (the "Purchase Commitment").

applicable at any given time (the "Purchase commitment").

The Purchase Commitment will only cover the bonus issue rights received by the Company's shareholders free of charge, not those purchased or otherwise acquired on the market, and will be valid and may be accepted during such time, within the trading period of the rights, as may be determined by the Board (with express powers of delegation).

The Purchase Commitment corresponding to each Capital Increase will be valid and may be accepted during such time that, within the trading period of the rights, is determined by the Board, with express powers of delegation. This period will be made public by means of a communication of relevant information to be sent to the Spanish National Securities Market Commission.

The Company will be authorised to acquire such bonus issue rights, with a maximum limit of the total rights issued in the Capital Increase, and must comply with the legal limits imposed in all cases.

The "Purchase Price" in each Capital Increase will be the fixed price at which the Company will acquire each bonus issue right under the respective Purchase Commitment and will be calculated in accordance with the following formula, rounding the result up to the nearest thousandth of a euro and, in the case of half a thousandth of a euro, to the next thousandth of a euro:

Purchase Price = ((Share price*NACirc) / (NACirc+NAN)) / DAG where

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