Annual Report 2020 1 Group operating KPIs* In TEUR +/ - compared 2016 2017 2018 2019 2020 to previous year Revenue 141,783 222,432 248,785 273,822 292,300 7% Operating EBITDA 106,064 166,768 186,890 217,626 224,819 3% Operating EBIT 61,589 100,387 113,682 132,229 132,158 0% Operating EBT 22,906 46,739 56,753 76,627 76,488 0% Operating EAT 20,486 39,962 47,036 63,446 68,291 8% Balance sheet total** 2,353,797 2,519,698 2,537,101 2,747,035 2,823,844 3% Equity 608,556 698,594 687,057 722,713 751,561 4% Operating cash flow 103,755 153,017 174,282 189,315 212,947 12% * The Group operating KPIs are based solely on the company’s operating profitability and do not take any IFRS-related valuation effects into account. ** Some of the previous-year figures have been adjusted due to deferred tax assets and tax liabilities being recognised net for the first time, thus making them not reconcilable with the annual report for financial years 2018 and 2019 (additional details in section 2 of the notes). 2 Encavis AG ● ● ● Table of Contents Table of Contents 3 FOREWORD FROM THE MANAGEMENT BOARD 6 THE ENCAVIS SHARE 11 REPORT OF THE SUPERVISORY BOARD 17 MANAGEMENT REPORT AND GROUP MANAGEMENT REPORT FOR THE 2020 FINANCIAL YEAR 72 CONSOLIDATED FINANCIAL STATEMENTS OF ENCAVIS AG 72 Consolidated statement of comprehensive income 73 Consolidated balance sheet 75 Consolidated cash flow statement 77 Consolidated statement of changes in equity 80 Notes to the consolidated financial statements of Encavis AG 176 INDEPENDENT AUDITOR ’S REPORT 183 ASSURANCE OF THE LEGAL REPRESENTATIVES 184 GLOSSARY 3 Foreword from the Management Board Dear Shareholders, Ladies and Gentlemen, The past financial year was the perfect proof that even improbable events can come to pass and that our lives can be completely changed from one day to the next. But it also showed how flexibly we, as a company, can adapt to even radical changes of this magnitude within a short period of time, without losing any substance, speed or efficiency. Thanks to our early, quick and targeted actions, comprehensive communication at all times and that little bit of necessary luck, there have not been any restrictions or limitations at Encavis AG due to the pandemic. The nature of our approach and the sacrifices made by everyone involved have brought our company even closer together. Management Board and Supervisory Board meetings; meetings of executives; internal department workshops as well as external workshops; webinars; negotiations with banks, brokers, development partners, applicants, customers and institutional investors; roadshows with analysts and investors; our Capital Markets Day; and even our Annual General Meeting took place virtually. Our high-performance IT equipment aided all company divisions and departments in carrying out their tasks without a permanent presence in the office even during the first lockdown in the spring of 2020 as well as during the current lockdown. Our teams had to try out and develop new ways of working together. We are proud and relieved that we discovered and successfully implemented these methods in next to no time, which now enables us to safely navigate the company even through longer-lasting crises. At the same time, we are also equipped for the challenges of a new working world. The organic growth of our portfolio of wind and solar parks forms the basis for the implementation of >> Fast Forward 2025, our growth strategy. In the future, we will also realise both opportunities to purchase installations that benefit from guaranteed feed-in tariffs as well as to acquire parks for which the sale of the electricity produced is secured via long-term contracts with industrial customers (so-called power purchase agreements – PPAs). To this end, we have combined the expertise into its own PPA Origination department. To realise our growth targets, we have a project pipeline of wind and solar installations at our disposal with a total generation capacity of more than 3 GW that we have secured with the help of our strategic development partners. The completion and on-schedule grid connection of the La Cabrera solar park – our major project in Spain with a generation capacity of 200 MWp (megawatts peak) – as well as of the even-larger Talayuela solar park (300 MWp) are important milestones in our entry into the lucrative and seminal PPA market. We are very pleased about the timely completion because, after the lockdown in Spain and the associated temporary halts in construction, we had feared major delays. These parks open up the world of direct sales of green electricity to companies for us – a global market undergoing extremely dynamic growth. In the future – through the commissioning of our two major solar projects with a generation capacity of 500 MW– Spain will be the front runner within the Encavis solar park portfolio. With our two solar parks in Talayuela and La Cabrera, we will not only generate stable returns, but we will also avoid emitting around 3.4 million tonnes of harmful CO 2 emissions over the ten-year PPA period – all without being dependent on government subsidies. By generating power from renewable energy, we are already making a crucial contribution to an energy supply which is environmentally friendly and sustainable. The energy of the Group produced regeneratively through the use of photovoltaics and wind power in 2020 alone prevented the emission of more than 1.25 million tonnes of harmful CO 2. You can find further details and background information about our sustainability strategy and about our measures and the initial successes of our Group-wide efforts and ambitions with regard to environmental, social and governance issues in the Encavis AG sustainability report – published for the first time for 2020 – on our website at https://www.encavis.com/en/sustainability/. Our subsidiary Encavis Asset Management AG in Neubiberg near Munich continues to undergo positive development. The target group consisting of institutional investors such as insurance companies, building societies and cooperative banks entrusted us once again with considerable funds during the reporting period. The Encavis Infrastructure Fund II (EIF II) special fund reached its maximum target volume totalling EUR 480 million in equity, thus closing one of the largest renewable energy funds in Germany with a total of more than 50 credit institutes invested. Altogether, a volume of significantly more than EUR 1 billion will be able to be invested in wind and solar parks with this special fund. Additional institutional investors hired us to act as consultants in the design of funds and the establishment of a portfolio of wind and solar parks. 4 Encavis AG ● ● ● Foreword from the Management Board The Encavis Group underwent very positive development overall during the financial year. The continuing expansion of the portfolio and the high degree of availability of our installations contributed to us being able to achieve our forecast targets in spite of more or less average meteorological conditions in many parts of Europe; we were thus able to generate revenue in the amount of EUR 292.3 million. This equates to an increase of more than 6.7% on the previous- year value of EUR 273.8 million. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 3.3% to approximately EUR 224.8 million (previous year: EUR 217.6 million). Operating earnings before interest and taxes (EBIT) came to EUR 132.2 million compared to EUR 132.2 million in the previous year (increase of 0%). During the reporting year, the expansion of our capacities and the positive development of asset management were compensated for by the significantly less favourable meteorological conditions compared to the previous year. Nevertheless, cash flow from operating activities rose significantly by some EUR 23.6 million to EUR 212.9 million (+12.4%). At EUR 0.43, operating earnings per share – a KPI which is crucial in management of the Group – also exceeded the forecast figure of EUR 0.41. The guidance which we had confirmed multiple times throughout 2020 was therefore slightly exceeded for all KPIs. During the Covid-19 pandemic, we managed to demonstrate to the capital market that our business model and our business operations are nearly unaffected by the other uncertainties of the pandemic. The constantly increasing prices of the Encavis share in 2020 significantly outperformed the traditional DAX, MDAX and SDAX indexes; only the ÖkoDAX was able to make up ground in the second half of the year. At the end of 2020, the share closed at its high mark for the year of EUR 21.35 – more than double the high in the previous year of EUR 9.39. Effective on 22 March 2021, the Encavis AG share was moved via the fast-entry process from the SDAX to the MDAX, the index with the 60 largest exchange-listed companies in Germany after the DAX, measured by market capitalisation and daily trading volume. But we are happy that the successful development of Encavis AG is not reflected only in our share price. In October 2020, the European ratings agency Scope Ratings confirmed its investment-grade rating of BBB− with a stable outlook for Encavis Honoured Shareholders, we would of course like you to take part in the successful growth of Encavis AG, beyond the positive development of the share price, which is why we – in accordance with our long-term dividend strategy from the Annual General Meeting – recommend the distribution of a dividend of EUR 0.28 per voting share for the 2020 financial year. As in years past, this will once again be offered as an optional dividend, enabling shareholders to choose between receiving the dividend in the form of shares in the company or in the form of cash.