Activity and Sustainability Report 2020

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Letter from Our actions Management Supplementary Introduction Our organisation Financial statements the Chairman and our impact activities information 2020 Activity and Sustainability Report Contents

Letter from the Chairman 03 Female leadership in internationalisation 39 Financial statements 71 Added impact 44 Introduction 07 External verification certificate 72 Management activities 48 Annual accounts 77 Activity milestones 08 Map of business history 13 Operational and management capacity 50 Supplementary information 132 ‘Portfolio management in the Approvals, formalisations, outlays 53 Report parameters 133 midst of a pandemic’, by Rodrigo Madrazo, Portfolio by region and sector 54 Director-General of COFIDES 15 Principles of the Global Compact 137 Analysis of non-financial business risks 55 Interview with Marjeta Jager, Deputy Director GRI table of contents 138 Corporate governance 55 General of the European Union’s Directorate Report of external assurance 144 Social and environmental factors 56 General for International Partnerships 17 Commercial and institutional action 59 ‘Solidary Finance’, article by Magdy Martínez-Solimán, Director, Spanish International Cooperation for Our organisation 62 Development Agency (AECID) 23 Board of Directors and Management Team 63 Our actions and our impact 25 Adaptation to remote working at COFIDES 65 Internationalisation, pathway to economic recovery 26 Staff 66 Combating climate change in Africa 32 Carbon-neutral office 68 Driving digital conversion 35 Stakeholder relations 68

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Letter from the Chairman

In 2020, the COVID-19 pandemic wei- contrast, amounted to a very substan- ghed heavily on the world economy, tial M€156.86, due both to the large generating an unprecedented crisis. volume of formalisations in 2019 and Despite those exceptional circumstan- a client preference for liquidity. COFI- ces, COFIDES continued to provide its DES’s total portfolio rose to a record services to the very highest standards M€1138.5 in 2020, up 5.4 % over the of commitment and conduct its preceding year. business normally, with staff working remotely most of the time. All com- The projects formalised in the target pany employees have accommodated year will contribute to the creation and the new situation admirably. maintenance of direct, indirect and induced employment and more speci- COFIDES adopted strict measures to fically to the creation of an estimated monitor client and project status with 23 500 direct jobs, over 4200 of which a view to providing a speedy response will be held by women. to unexpected needs for liquidity. The company approved deferral of the Despite the obstacles stemming from payments due in 2020 on projects fi- the pandemic-induced constraints nanced with its own resources, as well on mobility, COFIDES intensified the as the Fund for Foreign Investment support afforded the Spanish Interna- (FIEX) and the Fund for SME Foreign tional Cooperation for Development Investment Operations (FONPYME). Agency (AECID) in managing its Fondo para la Promoción del Desarro- The year’s exceptionally low numbers llo (FONPRODE) [Development Pro- of approvals and formalisations motion Fund (FONPRODE)]. COFIDES are attributable to the uncertainty contributed to the substantial 60 % generated by COVID-19. Layouts, in growth in the number of proposals (10)

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submitted to FONPRODE’s staff salary incentives to the attain- Executive Committee and the ment of such goals. The company healthy 9 % increase in the sums also continued to support efforts involved. The volume of yearly to estimate the impact associated formalisations, involving among with contributions to the Sustaina- others four microfinance opera- ble Development Goals (SDGs) by tions and one investment fund, taking direct part in the internatio- was up 75 % on the preceding year. nal exercises pursuing the harmonisation of objective measurement 2019-2021 indicators. Strategic Plan Development projects COFIDES made further progress with the EU in the implementation of the action outlined in its Strategic COFIDES strengthened its leader Plan 2019-2021 and in particular ship position in negotiating, struc- of the presence of sustainability turing and furthering projects able Meeting with employees to discuss the 2019-2021 Strategic Plan. as the vector spanning across all to mobilise European Union public company business endeavours. resources and thereby multiply losses on renewable energy Latin American microfinancing An innovative impact investment private investment in developing investments in marginal areas of institutions. operation materialised in the countries. The outcomes, enhan- the sub-continent; the Huruma target year with the formalisa- ced trust and coordinated working Fund, which has mobilised Climate Change tion of the Huruma Fund. The relations with several community substantial amounts of private Funding company formalised the first two services and Spanish cooperation investment for developing com- operations funded with its own for development agencies, are petitive and sustainable farming The company has also made signi- resources with provisions lowering expected to be consolidated in in the neediest countries; and the ficant progress in complying with costs for clients meeting certain the years to come. Highlights COFIDES-headed Triple Inclusive its commitment to combat clima- sustainability goals. In a similar include the Renewable Energy Finance (TIF) Program, the EU’s te change, with adherence in May vein, for the second year running Program for Sub-Saharan Africa, first blending finance endeavour 2020 to the One Planet Sovereign it linked corporate objectives and which provides security for initial to provide technical assistance to Wealth Funds (OPSWF) initiative

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Finance Institutions’ (EDFI) Board governance. In keeping with the of Directors, a position of strategic Santiago Principles, IFSWF fosters significance inasmuch as it affords excellence in sovereign fund the company direct participation governance, transparency and in decision-making. COFIDES also responsible investment, as well became shareholder and member as professional, independent and of the Board of EDFI’s EDFI Mana- commercially-inspired investment gement Company, enhancing our management of such funds. We company’s access to investment believe that COFIDES’s mem- projects abroad. In addition bership in IFSWF may also afford to EDFI initiatives for tackling Spanish companies a fuller unders- COVID-19 and its effects, COFIDES tanding of and enhanced relations signed a joint statement with its with a significant number of global sister institutions committing to investors, thereby heightening the align all new financing decisions possibility of international invest- with the Paris Agreement climate ment in our country. objectives by 2022. The company also invested M€5 in each of the Under the conviction that our EDFI’s two new two financing actions and projects must be José Luis Curbelo’s participation in the One Planet Sovereign Wealth Funds Annual Summit, vehicles, European Financial Part- aligned with the Sustainable addressed by President of the French Republic, Emmanuel Macron. ners (EFP) VI and Interact Climate Development Goals and contribute Change Facility (ICCF) I, drawing 50 to compliance with Agenda 2030, whose 33 institutional investor Coordination with % from its own and 50 % from FIEX COFIDES renewed its commitment members hail from around the European Development resources. to the United Nations’ ten Global world. OPSWF aspires to integrate Compact Principles. Finance Institutions financial risks and opportunities It adhered as well to the Inter- related to climate change in the (EDFI) national Forum of Sovereign The Spanish Ministry of Ecological management of large, long-term Wealth Funds (IFSWF), a world- Transition and Demographic asset pools. In 2020 COFIDES continued to sit wide network of sovereign funds Challenges’ Office on Climate on the European Development committed to furthering good Change (OECC) awarded COFIDES

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its ‘CALCULO-COMPENSO’ seal, more important than ever in this our shareholders for their support granted to organisations that new stage of recovery. The years and the Secretariat of State for calculate and compensate for ahead will consequently bring Trade, all of whom have been the carbon footprint generated major challenges to COFIDES, to essential in our ongoing efforts to by their direct and indirect emis- which the company’s entire staff provide the private sector with the sions in the preceding year. The strive to rise transparently, responsi- financing needed to ensure in- company’s 2019 footprint was bly and solvently. Our involvement clusive and sustainable economic compensated in 2020 via collabo- in Recapitalisation Fund manage- growth with a positive impact. ration with one of the forestry CO2 ment will have no impact on the compensation projects registered efficient, high quality investment José Luis Curbelo, with the OECC. and supervision of either the COFIDES Chairman company’s own or any third party and Chief Executive Officer. COFIDES has recently been distin- resources for which it is responsible. guished with designation as fund manager for the Fondo para la By way of closing remarks, I wish Recapitalización de empresas to thank COFIDES’s staff for the afectadas por la COVID- 19 [Re- effort made to keep company capitalisation Fund for COVID-19 business at optimal levels des- affected companies]. The com- pite the difficult circumstances pany construed this commission prevailing. I naturally extend my to constitute acknowledgement of sincere gratitude to our clients, the quality of the work performed by its staff as well as of the management standards which, with shareholder and board member support, have been in place for many years. We are assuming this task, which carries substantial risk, in the certainty that support for companies’ competitive survival is

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Introduction 01

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Activity milestones

MANAGEMENT MILESTONES

Internationalisation

RECORD IN ASSETS UNDER DEFERRALS ON PAYMENTS EXTRAORDINARY SUBSTANTIAL MANAGEMENT DUE IN 2020 APPROVED FOR ALLOCATIONS OUTLAYS (in response to COVID-19) M€1,138.53 M€2OO M€156.86 34 operations. for FIEX. attributable to the large volume of operations formalised PORTFOLIO OF in the preceding year, which INVESTMENTS COMMITTED 26 handled also drove growth in total assets via fast-track M€10 under management. procedures. for FONPYME. M€1,302.37 in line with the preceding 22 year’s sum. YEAR-END DEFAULT RATES involving SMEs.

Formalisation of the first joint venture The deferred 4.10% FIEX portfolio. loan projects funded with COFIDES’s operations 3.54% COFIDES own own resources in which the company represent 12% resource portfolio. applied sustainability provisions. of 2020 total

portfolio. 10.58% FONPYME portfolio.

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Activity milestones

MANAGEMENT MILESTONES

Alliances for Development

• Support for FONPRODE management: 10 profiles submitted, inducing a 9 % rise in total value and a 60 % increase in number of proposals. The value of yearly formalisations, which included four microfinance operations and one investment fund, was 75 % above Introduction of the Huruma Fund on the occasion of the conference ‘Impact Investment in Times of Pandemic’. the preceding year’s figure. • COFIDES has an outstanding track record in structuring and furthering projects able to mobilise public and private resources for three projects and programmes meriting European Union (EU) support:

□ Huruma Fund activities were instituted in the Huruma Fund with a M€1 contribution 2020 with financial support from the private from its own resources. In addition, as an and institutional sectors, including COFIDES, EU-accredited institution, it manages M€10 AECID (FONPRODE) and the EU. The fund’s to cover the first loss tranche as well as objective is to improve smallholder and M€8.6 under the Technical Assistance Facility. medium-scale farmer access to financing in FONPRODE, co-managed by COFIDES, Latin America, the Caribbean, Sub-Saharan invested M€10, supplementing the M€70 Africa and Asia through microfinancing and committed by private investors. agrobusiness. COFIDES formalised its share in

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Activity milestones

MANAGEMENT MILESTONES

Alliances for Development

□ The Triple Inclusive Finance (TIF) Technical Assistance Facility, the first blended project headed by COFIDES in Latin America, was formalised. It aims to contribute to the financial inclusion of micro, small and medium-scale enterprise, combining AECID (FONPRODE) resources with the technical assistance afforded by the European Union’s Latin American Investment Facility (LAIF). COFIDES manages M€5.7 for technical assistance under this programme.

□ COFIDES formalised the Renewable Energy Program for Sub-Saharan Africa (an EIP program) with the EU, whose contribution consists in a M€20 guarantee and M€2 in technical assistance funding. The EU’s guarantee, managed by COFIDES, will serve to mobilise M€28 in AECID subordinated debt for such projects. That in turn will draw private investment in debt by lowering default risk.

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Activity milestones

CORPORATE MILESTONES

Reconocimiento especial a la mejor respuesta empresarial ante la pandemia [Honourable mention for the best business response during the pandemic]. 2019 • The economic and financial situation induced by the pandemic had a limited impact on 2020 turnover, which amounted to M€25.03, compared to M€25.45 in 2019. Containment

of expenses, with the combi- Carbon footprint certification seal. ned effect of a 28 % decline in operating costs and less value Honourable mention for the best business response during the pandemic, distinction awarded to COFIDES staff by the Spanish Exporters and Investors Club at a ceremony presided by Minister of deterioration than recorded in funds committed to furthering Industry, Trade and Tourism Reyes Maroto. 2019, brought target year profit good governance. to M€10.19, a figure closely alig- • Despite the year’s exceptional quality and efficiency despite ned with the preceding year’s • COFIDES was awarded carbon circumstances stemming from lockdown constraints. results. footprint calculation and com- the COVID-19 crisis, COFIDES’s pensation certification by the staff home-officing enabled • The Club de Exportadores e • The company adhered to the Spanish Ministry for Ecological the company to conduct its inversores [Spanish Exporters International Forum of Sove- Transition and Demographic business to standard and pro- and Investors Club] distin- reign Wealth Funds (IFSWF), a Challenge’s Climate Change vide its services with the usual guished COFIDES staff with worldwide network of sovereign Office (OECC).

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Activity milestones

CORPORATE MILESTONES

• The company likewise adhered EDFI Management Company to the One Planet Sovereign S.V. shareholder through Wealth Funds (OPSWF), an ini- participation in a rights issue. tiative that aspires to integrate financial risks and opportunities • COFIDES concluded a related to climate change in the partnering agreement for management of large, long- SME internationalisation with term asset pools. Elkargi, a mutual guarantee society engaging in business • To strengthen its international primarily in the Basque Formalisation of the first joint venture project with Elkargi as envisaged in the partnering agreement. alliances, COFIDES became an Country and Navarre. • COFIDES signed a joint state- • The company’s ISO 9001:2015 ment with its sister EDFIs to certification was renewed. align new financing decisions with the Paris Agreement cli- • A CRM was hired to enhan- mate objectives by 2022. ce the company’s customer management and institutional • COFIDES’s Awards Internacio- relations. nalización y Desarrollo [Interna- tionalisation and Development • COFIDES added an Integrity Awards], which distinguish Channel to its website, enabling companies and institutions for stakeholders to submit their su- their efforts in that regard, be- ggestions, complaints or claims. Sixth edition of the COFIDES’ “Internationalisation and Development” prize awardees with Minister of nefitted from broad media co- Industry, Trade and Tourism Reyes Maroto and Secretary of State for Trade Xiana Méndez, who participated th in the awards ceremony. verage again in this 6 edition.

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Map of business history

+35 10-35 5-9 1-4 0 projects projects projects projects projects

It includes the projects of the EFP and ICCF facilities.

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Countries and number of projects

Countries Number of projects Countries Number of projects Countries Number of projects Countries Number of projects

MEXICO 141 TURKEY 9 PARAGUAY 3 JAMAICA 1 CHINA 72 GERMANY 7 THAILAND 3 JAPAN 1 BRAZIL 53 RUSSIA 7 UKRAINE 3 KAZAKHSTAN 1 USA 44 ALGERIA 6 BULGARIA 2 KUWAIT 1 CHILE 39 EL SALVADOR 6 IVORY COAST 2 LITHUANIA 1 ARGENTINA 36 THE NETHERLANDS 6 GHANA 2 MALAYSIA 1 INDIA 30 CANADA 5 JORDAN 2 MALI 1 COLOMBIA 28 CUBA 5 LATVIA 2 MAURITANIA 1 MOROCCO 26 NIGERIA 5 NAMIBIA 2 MONGOLIA 1 PERU 24 SENEGAL 5 TUNISIA 2 MONTENEGRO 1 ROMANIA 21 URUGUAY 5 UGANDA 2 MOZAMBIQUE 1 POLAND 20 TANZANIA 5 VENEZUELA 2 NIGER 1 PORTUGAL 16 ECUADOR 4 SAUDI ARABIA 1 OMAN 1 CZECH REPUBLIC 14 SLOVAKIA 4 AUSTRIA 1 PAKISTAN 1 UNITED KINGDOM 13 HONDURAS 4 BENIN 1 QATAR 1 FRANCE 12 NICARAGUA 4 BELARUS 1 D. R. CONGO 1 DOMINICAN REPUBLIC 12 ANGOLA 3 SOUTH KOREA 1 SERBIA 1 ITALY 11 AUSTRALIA 3 SLOVENIA 1 SWITZERLAND 1 KENYA 11 BELGIUM 3 THE PHILIPPINES 1 TOGO 1 SOUTH AFRICA 10 EGYPT 3 GUINEA-BISSAU 1 VIETNAM 1 HUNGARY 9 U.A.E. 3 INDONESIA 1 ZAMBIA 1 PANAMA 9 MAURITIUS 3 IRAN 1

During 2020, under the EFP and ICCF facilities, there were commitments for 1 project in Egypt and 1 project in Argentina. New countries (2020)

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Portfolio management in the midst of a pandemic

Debt is an obligation contracted restructuring and monitoring. business continuation in the by a debtor with a creditor. Companies that were experien- context of an ongoing pandemic. Non-payment, however, is a cing problems prior to the pan- problem for both. If the situation demic have been able to opt for At year-end 2020, the fast track is the result of financial difficulties refinancing or deferring debt in had been implemented to protect affecting the former, collabora- keeping with COFIDES’s routine 26 operations, accounting for 12 % tion is the best solution to elude practice to prevent default. The of total portfolio assets. In a similar insolvency for, as John Maynard companies initially in good finan- vein, 6 % of the sums scheduled Keynes is quoted as having cial health but that have been to mature in the period running quipped: ‘If I owe you a pound, I affected by COVID-19 are benefi- from March 2020 to March 2021 have a problem, but if I owe you a ting from a fast-track procedure. have been deferred. As might million, the problem is yours’. be expected and as inferred by COFIDES’s Board of Directors, in those figures, the mechanism Rodrigo Madrazo, Active portfolio management, conjunction with the FIEX and was used more intensely by SMEs: COFIDES the guiding principle adopted by FONPYME Executive Committees, 47 % of the deferrals involved the Director-General. COFIDES to deal with COVID-19, have instituted that new portfolio FONPYME portfolio and just 20 % entails implementing measures to management mechanism. Under FIEX assets. COFIDES holds the adjust debt servicing to variations a rapid response scheme, the remainder on its balance sheet. in debtors’ business fortunes. The three governing bodies in ques- aim is to trust in the viability of tion authorise COFIDES’s mana- Active, meticulous portfolio the companies in which COFIDES gement to approve the deferral of monitoring and the COVID-19 has invested to encourage entre- debt maturity dates for companies deferral mechanism described preneurial internationalisation whose business has been adver- supplemented a battery of politi- while protecting portfolio value. sely impacted by COVID-19. The cal measures favouring company beneficiaries are then subject liquidity and business manage- The recipe followed can be to intensive surveillance, with ment decisions geared to optimi- summarised in two words: quarterly monitoring to verify sing working capital. As a result

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Portfolio management in the midst of a pandemic

and despite the complex interna- the pandemic, liquidity shortages tional circumstances, the portfolio may place many companies at managed by COFIDES exhibited a risk of insolvency. Weakened delinquency ratio of just 4.5 %, 48 solvency ratios resulting from basis points lower than the 4.98 the loss-induced depletion of % mean for the Spanish financial shareholder equity, along with the system as a whole. presence of debt, compromise the present viability and future Those figures hardly justify recovery of any number of busi- complacence: rather they inspire nesses. Against that backdrop, further efforts to surmount the COFIDES has taken a bold step crisis with the least possible forward by assuming the mana- damage. Given the duration of gement of the M€1 Fondo para

la Recapitalización de empresas capital and participatory loans. afectadas por la COVID 19 created Be that as it may, the ultimate under Royal Decree-Act 5/2021. aim justifies utmost motivation and effort. The economic policy This major management cha- measures implemented, taken to- llenge constitutes nothing less gether with the liquidity, support, than a foundational moment for a restructuring and recapitalisation company such as COFIDES, with provided, should map the route to its fairly limited size and narrow an unequivocal result: recovery. financial specialisation in equity

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Guest contributions Entrevista a Marjeta Jager

Guest contributions

Interview with Marjeta Jager, to access finance to boost public Deputy Director- General services and infrastructure; gives “Blending works. for the European Union’s investors access to new markets Directorate-General for EU grants of where they would not previously International Partnerships. have invested; and scales up over EUR 8 billion INTERVIEW the impact of EU development have leveraged Marjeta Jager is currently Deputy cooperation. around EUR 70 Director-General for the Direc- What is the added value torate-General for International brought by the EU’s support to Blending is a flexible tool. Throu- billion in loans”. Partnerships (DG INTPA). Ms Jager development cooperation gh blending, the EU uses its has been working in the European projects through blended development cooperation at di- Commission since 2005, starting as finance instruments? fferent times to boost investment Director for Security in DG Energy volumes, subsidise interest rates and Transport and later being Di- Particularly in this COVID period, for borrowers, provide risk capital rector for international energy and the EU’s partner countries need and financial guarantees, support transport files and coordination, as to access finance from many the quality of partner countries’ well as being Head of Cabinet of sources. EU blending links investment projects and improve the Transport Commissioner. development cooperation both the investment climate. to public and private sources of Before joining the Commission investment and to investment And blending works. Since EU Ms Jager was more than a decade opportunities in partner coun- operations started in 2007, EU working on the accession of Slove- tries. It channels additional fi- grants of over EUR 8 billion have nia to the EU for the Ministry of Fo- nance to sectors of the economy leveraged around EUR 70 billion reign Affairs and she was the first that are important for achieving in loans from financial institu- Deputy Permanent Representative our partner countries’ priorities tions and regional development (Coreper I) of Slovenia to the EU. and for the EU’s own policy goals. banks in support of poverty Blending helps partner countries reduction and sustainable

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Guest contributions Interview with Marjeta Jager

In the current COVID-19 pandemic, the EU’s is “A good example is the Huruma Fund, the first project prioritising investment through blended finance managed by COFIDES under the EU blending facility. to help countries across the world to “build back better”. This includes promoting the green By underwriting private sector risk, the fund works transition and the digital transformation, which across the world to support farmers, small producer are core priorities for the EU’s development policy. In Africa in particular, the EU supports organisations and businesses”. greater economic integration and trade promotion within regions and across the continent, through our Economic Partnership Agreements growth. These loans in turn have led to total link investment opportunities in partner and through support for the African Continental investment of more than EUR 115 billion. countries with potential public and private Free Trade Area. We strongly welcome European sources of investment. It helps to develop private sector engagement in all of these areas. A good example is the Huruma Fund, the first high quality project pipelines that can be project managed by COFIDES under the EU readily appraised by potential investors. It The pandemic is affecting the economies blending facility. By underwriting private sector reduces investment risk through risk capital of practically all the countries in the world. risk, the fund works across the world to support and financial guarantees. It also promotes What measures is the European Union taking farmers, small producer organisations and contact and dialogue between investors and to prevent the widening of the inequalities businesses, who have historically found it hard partner countries. For instance, the EU su- which already exist between countries? What to access finance, to fund improvements to pports Public-Private Dialogue with European strategy has it developed in this respect and improve quality and productivity and to move and African businesses to help improve the how is it managing the task of coordinating all up the agricultural value chain. investment climate, by promoting govern- its Member States in this area? ment reforms to attract more investment. What opportunities can it create in the EU blending also provides partner countries’ Reducing inequalities is primarily a goal, not private sector, both at European and private sector –including small businesses and a single measure that can be easily implemen- local level? start-ups– with access to finance. It facilitates ted or recommended. The structural gaps of access to quality education and skills; pro- our societies –be it skills mismatches, poor EU blending can increase opportunities for motes decent work, and scales up innovative access to quality education, health and social the European private sector at different levels finance. All of this can have knock-on benefits services, or lack of job opportunities– all con- in a number of important ways. It helps to for European businesses. tribute to this multifaceted challenge, further

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Guest contributions Interview with Marjeta Jager

exacerbated by COVID-19. The pandemic has operations and intervention areas, and we are The pandemic is once again showing that we nonetheless reiterated the importance of working to integrate systematically in all our are more effective if we tackle grand challen- human development, because the resilience programmes the analysis of the level of income ges together. Among the many extraordinary of societies to this virus is strongly linked to the inequality in our partner countries. We also measures taken at EU level, the launch of capacity of their health and education systems need to reorient policy dialogue with partner Europe’s recovery strategy – NextGeneratio- and to social protection coverage. countries by raising inequality issues, and nEU – testifies a new spirit of solidarity among prioritising interventions in policy areas can EU Member States, which committed to this The EU is therefore adopting a multi-dimen- lead to a reduction in equalities (e.g. education, unprecedented recovery plan to let our socie- sional approach to reducing inequalities, health, social protection). To further reinforce ties emerge even stronger from the crisis. prioritising its support to partner countries to our commitment to evidence-based policy target inequality drivers and dynamics across making, partner countries will be supported Team Europe Initiatives are under development multiple policy areas. We are promoting poli- strengthen data collection to increase know by EU Delegations around the world in close cies to foster sustainable, inclusive, green and ledge on inequality. collaboration with EU Member States with this just recovery from the pandemic, including collective approach in mind, including initiati- progressive fiscal policies, labour market ves directly and indirectly targeting inequalities regulations, but also increasing investment in “Europe’s recovery related to human development and beyond. education at all levels. strategy -NextGenerationEU- What mechanisms does the External Invest- Under the Neighbourhood, Development and testifies a new spirit of ment Plan provide in order to enhance the International Cooperation Instrument (NDICI) solidarity among EU Member European Union’s development cooperation – ‘Global Europe’ for the next Multiannual and increase its impact in partner countries, Financial Framework period (2021-2027), to States, which committed to especially in the private sector? reach this objective, out of an overall budget this unprecedented recovery of EUR 79.5 billion, we are striving for at least The EIP promotes private investment in the 20% of the overall funding to go to human plan to let our societies EU’s partner countries in three ways. First, development and for an increase in funding for emerge even stronger funding. The current European Fund for education from 7% to 10%. from the crisis” Sustainable Development (EFSD) provides guarantees and blended finance for specific The EU, to reinforce its impact, is also mains- investment projects, through financial treaming the reduction of inequalities across its institutions such as COFIDES. From 2017 to

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Guest contributions Interview with Marjeta Jager

2020 we contributed EUR 5.4 billion to over to need, including blending and budgetary Climate change is one of the biggest 180 blending projects and 15 guarantees in guarantees, supported by technical assistan- issues we face and one which the EU and Sub-Saharan Africa and the EU Neighbour- ce. It would include an External Action Gua- its Member States are fully committed to hood region. Second, investment climate. We rantee, with an increased volume of up to EUR tackling. What strategy and measures are work with governments and private sector to 60 billion. The guarantees channelled through the EU developing in order to facilitate the improve the way to do business in our partner the EFSD+ will now cover the full spectrum transition to a low-carbon economy in our countries. Third, expertise. We deploy experts from private sector to sovereign operations, partner countries also? to design investment projects, and to support including commercial and non-commercial investment climate reforms. Strong coor- sub-sovereign operations. The EU is the strongest advocate of global dination is essential to the success of EFSD climate action and remains strongly com- between EU Delegations, Government, the “The EFSD+ gives the EU mitted to achieve the Paris Agreement’s business community and partner financial objectives. True to this commitment, the EU institutions such as COFIDES. a comprehensive, global and its Member States are the largest global financial mechanism to provider of public climate finance to deve- What is the new strategy that has been loping countries, having committed around outlined for the period 2021-2027? support partner countries in EUR 22 billion in 2019 and having more than building a green, digital, just doubled their contribution since 2013. Based on the success of the European Fund for Sustainable Development (EFSD), the EU and resilient recovery from The EU’s future external action for the period has decided to increase substantially its finan- the pandemic, in support 2021-2027 offers a unique opportunity to cial capacity as part of its new financial instru- of the SDGs and the Paris further boost our engagement with part- ment for external cooperation for the period ner countries to make collective progress 2021-2027, under the name “Global Europe”. Climate Change Agreement”. towards climate neutrality. NDICI, with its As a major part of the instrument, a new Eu- 30% climate-related spending target, will ropean Fund for Sustainable Development+ The EFSD+ gives the EU a comprehensive, provide the resources and our work will be (EFSD+) is proposed which would cover all global financial mechanism to support partner organised along four main strands of action. EU partner countries –not just Sub-Saharan countries in building a green, digital, just Africa and the EU Neighbourhood as the ori- and resilient recovery from the pandemic, in The first will be the full integration of climate ginal EFSD did–. The EFSD+ will use different support of the Sustainable Development Goals considerations into partner countries’ po- types of implementing modalities according and the Paris Climate Change Agreement. licies, strategies, projects and investments

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Guest contributions Interview with Marjeta Jager

that are financed through EU money. The have been turning the world into a global “Team Europe has second will be to assist our partners with village, where we are all interconnected and the implementation of their commitments affected by the same challenges. Therefore, has already mobilised under the Paris Agreement on climate in order to face these challenges more millions of euros through change. The third will be dedicated to efficiently, we have to be united: global enhancing partners’ capacities to adapt to problems, global answers. This is why the EU, various funds to finance climate change and manage disaster-related as a global player, is showing its thoughtful the global recovery risks. This will imply supporting them in commitment with multilateralism, not only and achieve an even preparing national disaster risk reduction in theory but also and above all, in practice. strategies; improving data analysis, collec- greater impact in the tion and management; and mobilising The EU is committed to continue working Latin America and the the corresponding investments. Lastly, we with all partner countries, without discri- intend to promote economic policies that minating against any of them, as they are Caribbean region”. are climate-friendly. Work under this hea- all important and key to us in this global ding will address environmentally harmful scenario. Such it is the case of Latin America, subsidies, the design of economic incentives a region with which we enjoy a close and for climate action, and the mobilisation of fruitful relationship, which have been stren- private capitals. gthened due to the need to join more efforts to recover from the COVID-19 pandemic. Given that Africa appears to be one of the top priorities and that the EU intends to It is worth noting that the EU is the largest remain a global player, what importance donor to the World Health Organisation’s does it give to other regions of external (WHO) COVAX initiative, which seeks to cooperation, such as Latin America, consi- ensure global access to the COVID-19 vacci- dering the fact that this region is suffering ne for those countries that cannot afford it. particularly badly from the effects of the Four Latin American countries have already pandemic? received COVID-19 vaccines through COVAX and this list will grow in the coming weeks For some time now, factors such as globa- and months. This demonstrates the EU’s lisation and digitalisation, among others, strong and sincere commitment to multila-

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Guest contributions Interview with Marjeta Jager

teralism and to our partner countries with facts and not just words.

Unfortunately, Latin America and the WE ARE Caribbean are facing the worst recession on STRONGER record and the pandemic only aggravates pre-existing structural challenges such as TOGETHER social inequalities, informal employment or insecurity. The EU recognises these #TeamEurope enormous constraints our partner countries face to recover from the ongoing crisis and for that reason we will continue supporting Latin America and the Caribbean in its effort to “build back better”, advancing in its green transition, digital transformation and sustainable economic recovery.

Some of our shared objectives are related with climate, such as the protection of the Amazon tropical forest, advancing the Agenda 2030 and the Paris Agreement and promoting climate and economic targeted support, like harnessing the tions, including COFIDES. All these stakehol- resilience in particularly vulnerable island potential of SMEs. ders are joining forces and promoting part- states in the Caribbean. Other ones are nerships and initiatives, like the well-known linked to democracy and economy, such To push forward this ambitious multilateral “Team Europe”, which has already mobilised as committing to democratic, open and agenda, the EU counts on the support of millions of euros through various funds to inclusive societies and transitioning to different European actors, such as Member finance the global recovery and achieve an a sustainable and diversified economy States, the European Investment Bank and even greater impact in the Latin America and that supports jobs and growth through European Development Financing Institu- the Caribbean region.

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Solidary Finance

world, will foreseeably necessitate qua non. Financial cooperation extra funding. must not be blind or insensitive to the effects it generates, choo- The volatility of long-term private sing its operations with utmost finance makesmultilateral fi- rigour and sound criteria. In other nancial cooperation an essential words, its explicit aims must instrument to offset the notably include tackling poverty and pro-cyclical effect of private furthering social inclusion. funds. Such cooperation provides access to financial markets for Consolidating financial coope- productive industries and seg- ration is imperative if Spanish ments of the population otherwi- cooperation is to reach volumes se excluded: the unbanked, comparable to those of its nei- the ‘too-SME’, those who live in ghbouring donor countries. A Madgy Martínez-Solimán, Spain is a middling but persistent financial deserts. Partnerships turning point in that direction Director, Spanish actor in financial cooperation for along those lines can translate came with the ambitious reform International Cooperation development. The pandemic has into extraordinary productivity introduced in 2010 when legis- for Development revealed even more clearly the gains, favouring a more inclusive lation creating the Fondo para Agency (AECID). need for liquidity in many deve- growth model. la Promoción del Desarrollo loping countries whose govern- (FONPRODE) and overhauling ments, creditworthy borrowers, In that context, the assessment of the system supporting interna- have seen their revenues collapse the impact of operations of this tionalisation restructured the in unison with a rise in public nature on development in terms former FAD into two distinct expenditures. Such spending, of externalities, environmental funds, Fondo para la internacio- allocated not only to meet public and social standards, support for nalización de la Empresa (FIEM) health needs but also to reacti- gender equality and protection of [Corporate Internationalisation vate economies in a post-COVID human rights is a condition sine Fund (FIEM)], and FONPRODE.

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Finanzas solidarias

The objectives sought with the development of their countries FONPRODE’s balance sheet development. Nor can it be latter, managed by the country’s of origin. Financing SMEs, the attests to the consolidation of deemed an alternative to tech- cooperation agency, include so-called ‘missing middle’, aids a financial cooperation, which rose nical cooperation: for financial ensuring the availability of water sector whose access to finance is from M€20 in 2017 to M€200 in operations to meet development and its sustainable management severely limited, despite its role as 2020 thanks to the fund’s active targets they must form part of and treatment for all; guarantee- primary job creator in transition participation in European coope- ambitious technical assistance ing access for all to affordable, economies. ration and to partnerships with programmes. Loan / grant blen- reliable, sustainable and modern IFIs. In the context of the new ding is often the optimal approach energy; building resilient infras- In the past, financial cooperation Act on Cooperation, the reform to advance ambitious develop- tructures; promoting inclusive has been known for its support (or consolidation) of Spanish ment objectives in host countries. and sustainable industrialisation; of industrialisation, farming cooperation undertaken by the and furthering innovation. In this modernisation and the construc- Government at the Ministry of endeavour AECID relies on the tion of major infrastructures in Foreign Affairs’ urging will call invaluable support of COFIDES developing countries, traditio- for rethinking the present arran- as financial consultant and ICO nally with backing in the form of gements and pose the need for as the Government’s financial sovereign security. In light of the a new architecture for Spanish agent. ever greater obstacles to building financial cooperation. the infrastructure needed to Financial cooperation with the grow developing economies, That will entail amending the private sector pursues inclusion, public-private partnerships FONPRODE Act without delay to supporting the development of (PPPs) are a promising vehicle afford this essential foreign policy a fully regulated microfinance for attracting private sector instrument greater flexibility, industry able to provide financial investment and management to new tools and administrative services such as savings, health- such endeavours. That has been structures, simplified processes care, pension and microinsurance reinforced with the institution and all the necessary human and accounts. It attempts to draw of new mechanisms such as financial resources. remittances into formal banking leveraging for private investors’ to encourage more dynamic resources, lowering those actors’ Financial cooperation is not participation on the part of dias- perceived risk. an end in itself, but a powerful poras in the modernisation and instrument for bankrolling

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Our actions and our impact 02

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Internationalisation, pathway to economic recovery

Internationally-oriented technology BMAT

BMAT has been working with Japanese clients from Spain for years. In the wake of its acquisition of Directors Gear, the country’s leading copyright management company, this SME decided to open a standing subsidiary in Tokyo in March 2020.

COFIDES backed the risk assumed by this specialised tech, a public music broadcast monitoring company, with a €500 000 joint venture loan from FONPY- Bmat team on January 2019.

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Internationalisation, pathway to economic recovery

ME funds to finance the purchase. gave us our first client and ever BMAT growth has rested on power supply generators can Total project investment amounts since we’ve tried to intensify our two pillars from the outset, be used either as a primary or to M€1.6. presence in that market’ says its faith in R&D+I as a strategy a backup source of electricity. BMAT COO Jaume Vintro. ‘Our for gaining market share and This SME has been present Furthering foreign market entry new Tokyo office affords us the international expansion, which in Mexico since 2014 with a by SME tech firms is among opportunity to combine Directors in the near future will focus portfolio spanning a number the priorities defined in the Gear’s knowledge base and our on the creation of more sub- of industries and clients. The COFIDES Strategic Plan 2019-2021 technology and data to position sidiaries in Latin America and financing provided by COFIDES to strengthen Spain’s business BMAT at the heart of Japan’s Europe. for this project will enable the fabric. In the present endeavour, musical ecosystem.’ firm to purchase generator the two companies built on prior sets to rent to power and cons- cooperation involving the intro- With its proprietary VERICAST Market adaptation truction companies that prefer duction of BMAT in Argentina software, BMAT can track music Genesal Energy that option to purchasing the and the United States. broadcast on the radio, televi- facilities outright. sion, public spaces and digital ‘From the outset, BMAT has been networks with a view to charging The company’s Mexican sub- closely bound to Asia. Japan royalties. sidiary was awarded an €800 000 joint venture loan from FONPYME and COFIDES’s own funds. It will invest a total of ‘Our Tokyo office positions M€1.6 in the country. Genesal Energy is a company us at the heart of Japan’s with over 26 years of experience The key to Genesal Energy growth musical ecosystem’. in generator set design and is its local presence, where it manufacture. Its products, detects its clients’ needs and can Jaume Vintro, manufactured at its plant at change to adapt quickly to meet BMAT COO. La Coruña, are essential in them. The company is presently markets prone to electricity rendering this same service from grid outages. Its uninterrupted its Peruvian subsidiary.

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Internationalisation, pathway to economic recovery

‘Receiving financial support at just the right time enables an SME to quickly scale up its activities when it spots a need’.

Julio C. Arca Ruibal, Genesal Energy Strategic Planning and Finance Manager.

For COFIDES supporting SMEs is Genesal Energy Strategic particularly important to enable Planning and Finance Manager them to broaden their business Julio C. Arca Ruibal contends opportunities. Guaranteeing that ‘receiving financial Spanish SME access to financing support at just the right time is one of the company’s priorities enables an SME to quickly to reinforce their activity abroad scale up its activities when it and contribute to their success- spots a need. That is how we’ve ful growth. consolidated our brand on the Genesal Energy facilities.

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Internationalisation, pathway to economic recovery

international market and medium and low-voltage transfor- undertaken a sound endeavour’. ‘Sustainability must mers, power quality equipment and circuit breakers. be a business Sustainability, priority’. ‘Even in the face of the difficulties key to financing brought on by a health crisis (refe- Grupo Arteche rring to the COVID-19 pandemic) in Alexander Artetxe, which our primary concern is health Grupo Arteche Chairman and only secondarily maintaining and CEO. company output, sustainability must continue to be a business priority’ according to Alexander Artetxe, Grupo Arteche Chaiman reinforcing company commitment power generation, transmission and CEO, ‘because any reference to sustainability and the envi- and distribution, as well as for to sustainability is a reference to ronment as a component with a industrial electric facilities and favourable impact on clients. renewable power plants. Its project was the first financed by COFIDES Where the sponsor’s sustainability with its own funds to envisage the strategy includes indicators that new sustainability component. In 2019, COFIDES undertook to can be periodically measured and The company has consolidated its define further measures that could certified by an independent body, position in Mexico with COFIDES’s be adopted to make its commit- COFIDES finance includes a variable financial backing in line with this ment to sustainability effective component to client benefit. shared vision. COFIDES has granted through the projects financed. An the host company, Arteche North exercise that involved all company Grupo Arteche specialises in electri- America S.A. de C.V., a M€3 joint divisions materialised in the form cal equipment design, manufacture venture loan to help finance the of the company’s Strategic Plan and commercialisation of high construction and fit-out of a new 2019-2021 with new provisions on technology solutions for electric plant in Mexico manufacturing

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Internationalisation, pathway to economic recovery

values. Those same values have part of its contribution to achieving Long-term partners been present in the company since the Sustainable Development IBARMIA its constitution 75 years ago and Goals. With the target company’s continue to underpin our plans for reduction of CO2 emissions, Grupo the future’. Arteche and COFIDES are working together to make that possible. One of COFIDES’s primary aims is to drive sustainable growth as

IBARMIA and COFIDES have worked hand-in-hand since this family enterprise, specialising ‘COFIDES’s in the design and manufacture of high technology machining support has plants, decided to conduct busi- been essential ness in China, the world’s number to undertake one consumer of machined tools. this operation, After over 10 years of commer- for China is a cialising products in the Middle strategic market Kingdom, in 2017 the SME, headquartered at Azkoitia in the for our company’. Spanish province of Guipuzkoa, benefitted from COFIDES support to enter into a joint venture with Koldo Arandia, a local partner. Today that com- IBARMIA Chairman pany is a wholly owned IBARMIA and CEO. subsidiary. Opening of Grupo Arteche’s facilities in Mexico.

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Internationalisation, pathway to economic recovery

In 2020 the two companies took a further step to strengthen the firm’s position on that market. COFIDES granted the SME a M€2 joint venture loan, drawing from FONPYME and its own funds. IBARMIA has allocated a total M€4 to purchase the entire host company and its inventory.

IBARMIA facilities.

COFIDES attaches utmost impor- IBARMIA Chairman and CEO crisis. COFIDES’s support has tance to favouring SME growth Koldo Arandia notes that ‘purcha- proven instrumental to undertake abroad and especially the expan- sing the entire company constitu- this operation, for China is a sion of companies committed to ted a substantial challenge for us strategic market for our company innovation and to contributing to in light of the uncertainty growing and today the primary source of the sustainable use of resources. out of the pandemic-induced our sales’.

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At the heart of the EU’s development policy for Africa

Renewable Energy Program for One of the programmes Sub-Saharan Africa that most accurately reflects COFIDES’s recent activity was formalised in 2020. Under the EU’s External Investment Plan (EIP), COFIDES and Spain’s international cooperation for development agency AECID jointly set up the Renewable Energy Program for Sub-Saharan Africa. The program merited EU support in the form of a guarantee issued by the European Sustainable Indirect management of inter- Development Fund (ESDF), national institutions’ budgets to the EIP’s financial arm. Such achieve shared goals is one of the backing s tantamount to full primary capacities developed by acknowledgement of the the company since it was accre- company’s capacity to coordi- dited by the European Union (EU) nate with public institutions to support development projects and to help the EU structure in host countries and by the and manage its participation Green Climate Fund to engage in in the program, designed to climate finance. meet a pressing need in most

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At the heart of the EU’s development policy for Africa

Sub-Saharan African countries. generation in areas of jobs, the two factors that help José Carlos Villena, Head of Sub-Saharan Africa lacking break out of the poverty cycle’. COFIDES’s Partnerships for access to the electricity grid. Development Division, con- In light of the risk inherent in tends that ‘implementation such operations, seldom su- and management of this type ‘Access to electric pported by conventional private of investment programmes finance, public institutions demand intense preliminary power is a key for play a key role. A number of work prior to launching the call economic and social institutional actors participate to select projects. It is not only development in low- in this program, which aims a matter of meeting technical to encourage private sector ‘We want to and financial requirements, income areas’. participation. Thanks to the EU’s scale-up this type but of identifying a sound guarantee, the Program has project that can attract private mobilised M€28 from FONPRO- of operations in sector interest. Implementing More specifically, the program DE, managed by the country’s the medium term the Renewable Energy for focuses on rural or peri-urban cooperation for development Sub-Saharan Africa Program areas with no power supply agency, to contribute to project to help meet meant rising to a sizeable cha- where the productive use of subordinated debt, thereby the region’s vast llenge with the medium-term energy may have a substantial lowering senior debt risk. The needs’. goal of proposing similar but impact on sustainable develop- volume of resources allocated more ambitious programs, ment. José Carlos Villena claims to the program is expected to and of gaining the experience that ‘access to electric power suffice for approximately required to maintain this line of is a key to economic and social four projects. José Carlos Villena, work with other international development in low-income Head of COFIDES’s bodies’. areas, for improving household A public call for proposals was Partnerships for standards of living and health launched in 2020 to identify Development Division. The Renewables Program and affording access to more projects that would potentially aims to support renewable, efficient technologies raises meet program requirements. off-grid and mini-grid power productivity and creates direct The result (over 150 proposals

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At the heart of the EU’s development policy for Africa

given the abatement associated Sustainable Development Goals with the type of projects we’re that inform this proposal. supporting’. José Carlos Villena explains that The EU’s External Investment ‘this program is important not Plan forms part of COFIDES’s only because it means installing strategy to contribute to the off-/mini-grid renewable power development it has been suppor- generation, but because it does ting for over 30 years. It affects so in Sub-Saharan Africa, one of the company’s role as mediator the regions where our presence in establishing partnerships with is lightest and where we want to public and private actors to foster apply our experience in coordina- sustainability, development, ting with the EU and the GCF in access to clean energy and pover- the decade to come’. ty reduction in keeping with the

Adjamé Market, Abidjan, Ivory Coast. received) afforded further proof ‘We’re very satisfied about how of the need to continue to the process has been handled’ introduce and consolidate the reports COFIDES Division Head, use of innovative instruments to according to whom ‘we should ‘We want to apply our African finance projects able to impact stress that this is a pilot program- host country development. The me that we hope to be able to experience in coordinating with the short list of preselected projects scale up in the medium term in EU and the GCF in the coming decade’. has since been published. light of the region’s vast needs Project selection and approval and private sector interest in this for program financing will be type of operations. We’re also forthcoming in 2021. considering involving the GCF,

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Driving digital conversion

A fund associated with and business-to-business (B2B) Companies that have benefitted digital conversion companies. from fund support are characte- K Fund II rised by an international or even K Fund II is associated directly global business vision. Ventura COFIDES holds a share in K Fund with digital conversion, for all the notes in that regard that ‘Spain is II, a venture capital fund crea- firms in which it will invest will a large enough market to con- ted by Kanoar Ventures that contribute to that goal, with ‘tools duct business profitably, but as K focuses on innovative startups that provide for remote working’ Fund II also aspires to create large and the development of new and ‘healthcare digitalisation, internet companies it invests only technologies. FIEX, Spain’s fund including the digitalisation of in firms with international ambi- for investments abroad, sourced historically analogue sectors’. The tions from the outset’. COFIDES’s M€5 share in K Fund. fund aims to invest in projects Companies focusing on research, with well-trained, multidiscipli- The teams involved in the innovation and the development nary, ambitious staff eager to projects selected by the of new technologies will be the learn and adapt. ‘They should be fund have prior experience. investment targets. geared to large markets where Nonetheless ‘we also invest there are business opportunities exceptionally in teams with less ‘K Fund II is directly K Fund Investment Manager in connection with internet-ena- experience but high potential’, related to digital Pablo Ventura explains that K bled digitalisation and scalability’. adds Pablo Ventura. Fund II will engage in seed or A conversion’. series finance (investment in early stage software companies). The ‘As K Fund II aspires to create large companies at issue are usually in internet companies, it invests only in Pablo Ventura, the product development stage K Fund Investment or beginning to scale up their firms with international ambitions from Manager. sales. K Fund strategy includes the outset’. business to end consumer (B2C)

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Driving digital conversion

SECTORS

Firm software, developer software, productivity tools and e-health.

AVERAGE TICKET SIZE

€600,000

Willing to invest from €100 000 to M€2 per company with a subsequent total investment of up to M€7 per project .

FUND TARGET SIZE

M€70

K Fund team.

Internationalisation is very clearly generating very low commercial of key importance for this fund. margins. Building large, healthy ‘Software companies generally businesses therefore calls for rest on the premise that their huge customer volumes, for product can be scaled up and which internationalisation is a consequently base their strategy must’ he notes. on highly competitive pricing,

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Driving digital conversion

Innovation and sector benchmarks’. When selec- technology, growth drivers ‘We feel proud to be ting a target Kibo Ventures atta- Kibo Ventures Fund III ches utmost importance to the able to contribute to the component that distinguishes COFIDES holds shares in Kibo technological development the technology-based service or Ventures V Fund III, a venture ca- of Spanish companies that product. ‘We seek to understand pital vehicle geared to investing in how taking this technology and tech firms to favour their growth blossom into international strategy to market will afford and international expansion. Its benchmarks’. the company potential sector M€5 holding was purchased with benchmark status’, explains Sonia FONPYME fund. Fernández. Sonia Fernández, Sonia Fernández, Kibo Ventures Kibo Ventures partner. partner, reports that this venture ‘Today more than capital fund invests primarily in ever, innovation tech firms in A series rounds, i.e., from sectors such as cybersecuri- and our task is to help them scale when they are raising seed capital ty, digital education, mobility and up by entering the international and technology and have shown their product to logistics, artificial intelligence and marketplace’ she contends. One drive growth’. be marketplace-ready. ’Our task is big data, to SaaS models in areas of the basic investment criteria to provide support in the scale-up including HR, training and fintech is that targets must have global stage and help internationalise to name a few. scale output capacity and clearly The name Kibo means ‘full of the business,’ she explains. The international ambitions: ‘As a fund hope’ in Japanese, a trait that fund adopts a generous view of Internationalisation is an essential we can help them find the opti- characterises Sonia Fernández, eligibility, although the compa- component in Kibo Ventures mal staff, commercial and opera- for ‘we feel product to be able nies selected must have an ob- investments. ‘We come in when ting structures for international to contribute to the technolo- vious technological component companies are commercialising success. We assess projects in gical development of Spanish and operate in a digital environ- their products, as a rule on the terms of the solutions they propo- companies that blossom into ment. Since 2012 the fund has local market after detecting a se for real market problems and international benchmarks. We invested in a bevy of industries, need for their product/service, their capacity to become genuine fortunately have plenty of talent

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Driving digital conversion

SECTORS Big Data and artificial intelligence, mobility, logistics, digital education, digital health, HR Tech and fintech.

AVERAGE TICKET SIZE M€2 to M€3 as initial investment.

FUND TARGET SIZE

M€100 Kibo Ventures team. and access to excellent, well-tra- benchmark companies in our advice and help to conduct the ined engineers who inspire an society. ‘Today more than ever, next funding round. Thereafter, optimistic vision of our potential innovation and technology drive given their larger size, interna- to build very sound projects growth’, Fernández contents. tional funds lead those rounds’. from Spain’. After investing in over 50 com- Sonia Fernández notes that the panies, Kibo has established In that regard she believes companies hosting fund invest- extensive relationships with progress in innovation and ment normally benefit from the major international funds technology will continue to be other funding. ‘One of the most working out of Europe and the essential to creating jobs and prominent values we provide is United States.

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Female leadership in internationalisation

One of COFIDES’s objectives is to favour women’s access to and acknowledgement by the business world, under the conviction that companies where women are integrated are more valuable,efficient and profitable. The company believes female talent generates personal and social wealth. For those reasons, it recognises women’s role in internationalisation and leadership in the words of four women who have forged their personal talent in decision-making positions with a number of companies, success earned on the grounds of career-long capacity, effort and training.

Nexxus: internationalisation We operate in high-growth experience, for our philosophy and female contribution sectors where innovation is is that leadership is based on Maite Ballester overhauling the industry, with choosing the right person with low capex needs and a healthy proven know-how and skills. Nexxus Iberia is a development appetite for internationalisation. capital fund that works with In that respect some traits businesspeople to hasten the Nexxus Iberia provides compa- characteristic of women match growth of the companies in nies support for internationali- our leadership style for these which it invests. Our approach sation, enabling them to rise to projects quite well. consists in helping Spanish challenges, lowering their risks Maite Ballester, and Portuguese SMEs intensify and minimising associated Empathy. Imperative for Nexxus Capital their international presence in costs. Along those lines, we accessing other markets, for it partner. Europe, Latin America and the value diversity in our manage- favours fluent and bidirectional USA. We invest in companies ment teams very highly. The communication with new with an EBITDA of M€3 to internationalisation initiatives clients, staff, suppliers and M€15 with a mean investment adopted by our hosts are other stakeholders. on the order of M€10 to M€20. often led by women with prior

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Female leadership in internationalisation

Emotional intelligence applied profiles must be integrated at José Sampol the company has to management style, particu- all company levels: diversity undertaken projects in 19 coun- larly for teamwork. The decision is a must in terms not only of tries on four continents. to internationalise generates gender, but also of geography, intense in-house debate calling academic background, age and SAMPOL places substantial for emotional intelligence to in- area of expertise to analyse both stakes on diversity and equal corporate diverse points of view challenges and opportunities opportunities. We owe the in process analysis and roll-out. from a wider range of angles. success of our internationalisation endeavour largely to cultural, linguistic, gender, age, Flexibility, creativity and inno- Long-term vision. International Carmen Sampol, educational and outlook-on-life vation. A willingness to adapt expansion is necessarily a long- Grupo SAMPOL diversity. Our stand in favour to change, to self-reinvent, is term proposition: each step CEO. of diversity has been a key to imperative to internationalisa- must be planned in advance and growth. tion. New ways must be sought targets must be timed to be able to conduct business, hire and to measure progress. Female leadership Although our sector, enginee- manage talent, develop a sense in companies pursuing ring, energy efficiency and of belonging and create a brand internationalisation digitalisation, is predominantly image. Every market and every Briefly, women make very Carmen Sampol masculine, we are undergoing country is different and needs valuable contributions to our global cultural change with a to be broached in a very specific host company management Grupo SAMPOL is a Spanish steep rise in female talent the manner. teams. Our business culture multinational headquartered at world over. Companies are very fosters that participation Palma de Mallorca and present well positioned to capitalise on because we deem it to be an in Canada, Cap Vert, Colombia, that increase in female talent. Diversity. Women not only element that strengthens Dominican Republic, Honduras, We must assume our major provide but foster diversity. our performance. Italy, Jamaica, Mexico, Panama, responsibility for including that Diversity is needed for successful Peru, and Puerto Rico. In the talent in our organisations, internationalisation planning 85 years since it was founded which at SAMPOL is structured and implementation. Differing in 1934 by my grandfather under our Equality Plan.

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Female leadership in internationalisation

We must enlist the best lea- difference and elasticise my who put their trust in me and ders, irrespective of sex, able to opinions, but also to adapt expe- viewed me, simply, as the right motivate staff and help our or- rience from one environment to professional for the responsibili- ganisations innovate and grow. another and apply knowledge on ty to be assumed. Diversity and with it female a case-by-case basis. talent strengthen and intensely For most companies today, inter- enrich our organisations. Those international aspirations nationalisation is a key ambition. were significantly influenced I would encourage women, in the early years of my career along with men, to adopt a lead in the nineteen nineties by a role in such processes, in parti- Ángela Pérez, challenge I set myself, consis- cular if they aspire to manage- Elecnor Structured ting in proving that a young ment positions that today more Finance Manager. Spanish woman could partici- than ever demand international pate successfully in the highly experience. Anglicised and masculinised Female world of international finance. Inasmuch as women account internationalisation When I first started, very few for 50 % of the world population, Ángela Pérez women were willing to live companies must not overlook outside Spain, travel frequently 50 % of the leadership, manage- Throughout my career internali- or accept long working hours ment and training potential, or sation has been more a lifestyle and uncertain holidays. But I the intellectual capacities, brou- than a professional option. From must add that very few compa- ght by women to business. In my earliest experience in an nies were willing to confide in addition, employers benefit from investment bank, I have always or promote women to positions typically female leadership qua- worked in international finance of responsibility in international lities such as empathy, conflict and investment. Over the environs. It is consequently settlement skills and collabora- years, I have learned to analyse only fair to recognise and tive management, so necessary surrounds, surmount platitudes acknowledge the companies in international environments and prejudice, respect cultural and superiors (primarily men) characterised by diversity.

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Female leadership in internationalisation

Companies must evolve in three an end to salary gaps and glass Female leadership is particu- key areas to include women in roofs so more women feel as larly well suited to such situa- their internationalisation pro- motivated as men to embark on tions due, among others, to cesses, especially in leadership the international adventure. the following traits that distin- positions. Firstly, they must do guish it from male leadership: away with preconceived ideas That said, work/family balance excellent organisational skills; about women’s prioritisation continues to be a challenge with clear and empathetic com- of personal fulfilment over which each of us must contend munication; global vision that professional concerns; secondly, personally. I invite everyone strengthens inclusive leader- they must ensure the flexibility to seek the valour required to ship by coordinating different and resources needed to enable confront the challenges inhe- Cristina López, areas; and nimble and dyna- women and men to participate rent in internationalisation, a RTS S.A. Quality and mic management to establish in international business without pathway strewn with complexity Environment Manager. speedy and creative solutions forfeiting a balanced personal but paved with opportunity. to unforeseen circumstances. life; and thirdly they must put Female Those features of female lea- leadership, key dership tend to intensify staff to successful commitment, especially where internationalisation women’s management vision Cristina López poses challenges and res- ponds to issues such as what RTS’s internationalisation, to the company does, where it which a new endeavour in aspires to be in the medium China to manufacture original term and how its strategy is automobile parts has been perceived. added, is a strategic decision based on the benefits to A feeling of belonging and be potentially derived from involvement by all areas and economic diversification. employees is the key to a

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Female leadership in internationalisation

successful internationalisa- was often advised to seek professionally thanks to During my career I have held tion strategy, where female another discipline where my hard work, effort and positions of responsibility in a leadership stands out for the women’s presence was less sacrifice, as well as the trust number of industrial fields. My aforementioned aptitudes. patchy, in the belief that placed in me by the people knowledge of chemistry and building a career in a predomi- who hired me and valued the my proactivity, analytical ca- When I decided to pursue a nantly male pursuit would be benefits I could bring their pacity and organisational skills degree in a technical field I no easy task. I have advanced organisations. afforded me leadership opportunities in areas such as quality, R&D+I and manufacturing in Grupo Bionor. My career in that company enabled me to grow personally and professionally through team and business management. All those traits were taken into consideration when I was hired as RTS Quality Manager in 2015. I have now been confronted with a new challenge, managing the environment division. I have confronted that challenge with high expectations and optimism, under the conviction that I am capable of taking it on, in light of my ability to assume new responsibilities through which to continue to grow personally and professionally.

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Added impact

COFIDES supports Spanish company internationalisation by providing They contributed to creating and maintaining: oversight services to ensure the process is conducted with suitable and responsible management and contributes to the socio-economic growth of host countries while also favouring the Spanish economy itself. 35,324 Both aims have a beneficial impact on achievement of the universal indirect jobs. goals defined in the 2030 Agenda. 23,549 Impact on host countries direct jobs. COFIDES fosters the establish- policies and action, participated 29,436 ment of partnerships with the in international initiatives and induced jobs. private sector to finance projects worked with other global actors that generate beneficial and las- to progress towards achievement ting effects on host countries. The of global development goals. (See company has been measuring the timeline of company action to en- impact of the projects it finances hance development and impact). M€625.89 4,234 for the last 15 years. In that time, in wages and salaries. jobs for women. it has implemented in-house

In 2020 portfolio projects financed yielded: Technology and Alignment of 15 projects know-how transfer in

with the 2X Challenge initiative. M€275.77 A M€1,591.35 52% in tax revenues. rise in gross national product. of projects. G7 Program to promote and increase women’s participation

44 Letter from Our actions Management Supplementary Introduction Our organisation Financial statements the Chairman and our impact activities information

Added impact

Within the bounds of sustaina- with such principles since 2019 actively in the ‘Harmonisation ble finance in which the ‘do no when COFIDES adhered to the Initiative on Responsible Finan- harm’ premise is incorporated Investing for Impact: Operating cing and Impact Measurement’ as a vector spanning across all Principles for Impact Manage- working group set up to har- endeavours, COFIDES’s busi- ment initiative. monise the measurement of ness contributes to essentially investment impact in the cen- seven SDGs. Moreover, in the context of the tral SDGs: employment, climate EDFI, COFIDES participated change, gender and inequality. To attest to its commitment to the 2030 Agenda, for the second year running the company Contribution of COFIDES to the SDGs included a series of sustainability goals in connection with employment, responsible manufacturing, infrastructure, climate change abatement and capital flows to emerging and developing countries as part of its own corporate objectives.

In 2020 COFIDES issued its first statement on alignment of its investments and processes with the Operating Principles for Impact Management. The content of that disclosure statement was the target of an internal audit and the first statement and audit on alignment

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Added impact

Timeline of COFIDES action in development and impact

Implementation 15 years of the Operation RIO of RIO Impact Rating Measurement of effects on development: (Spanish initials, Employment, tax revenues, national product, balance of payments, skill RIO) development, local community, international standards.

1988 1992 2001 2005 2007 2009 2013 2015 2017 2019 2020

COFIDES Creation of COFIDES Adherence IFD Statement EDFI Principles IFD Statement COFIDES COFIDES Impact 1st audit constitued a European social- to UN Global on Corporate for Responsible on Contributing gender development objective- IFC Impact dual mandate: Development environmental Compact Governance Financing to More and policy for policy linked salary Management internasiona- Finance policy Principles Better Jobs operations component Operating lisation and Institutions Principles development (EDFI). Memorandum of UN awards COFIDES EDFI Principles EDFI social- EDFI working IFIs Harmonized COFIDES founding for Responsible EDFI Statement environmental group Impact Development for the member of Financing of on Climate and working group on development Results Investment EDFI. Sustainable Energy Finance Indicators for Promotion in Development Private Sector the SDG (2009 update) Investment Operations EDFI Resolution on Advancing Gender-Smart Investing COFIDES action EDFI task force on harmonising Participation in impact IFD/EDFI initiatives indicators

Adherence to other international initiatives

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Added impact

Impact in Spain

With the crisis induced by COFIDES Surrounds COVID-19, in 2020 COFIDES was Portfolio operations in 2020 obliged to revisit its strategy and adapt to Spanish com- Only 6% of the debt service was deferred panies’ needs, with a view to between March 2020 and March 2021. minimising the impact of the Deferred payment A total of 34 operations benefitted from Over one-third (34%) of managers pandemic on employment and restructuring deferrals, 26 of which were awarded via fast-track deem that COVID-19 had a heavier the portfolio delinquency rate. procedures and 22 to SMEs. impact on their domestic than That translated into restructu- on their international business, ring, with payment deferrals as These deferred operations represented 12%. compared to 22% who perceived the the chief flexibility measure. opposite (Expansión internacional Fast-track approval for operations requiring loan de la empresa española. Un nuevo service deferral. escenario global, KPMG 2020) Flexibility measures Expedited sign-off for approved deferrals.

The default rate declined both in COFIDES’s own Decline in banking system default (down 0.4 pp) and in FIEX’s (down 0.2 pp) assets. Default rate rates in 2020 (-0.3 pp) further to Bank In FONPYME in contrast the rate was similar to of Spain data. the 2019 figure.

1 Payment deferrals in 15 COFIDES, 10 FIEX and 22 FONPYME portfolio operations, some of which were co-financed by COFIDES/FIEX or COFIDES/FONPYME

47 Letter from Our actions Management Supplementary Introduction Our organisation Financial statements the Chairman and our impact activities information

Management activities 03

48 Letter from Our actions Management Supplementary Introduction Our organisation Financial statements the Chairman and our impact activities information

Management activities

mobilise bi- and multilateral OVERALL assets through mechanisms CLIENT SATISFACTION such as the Interact Climate Change Facility (ICCF), Euro- pean Financing Partners (EFP), EU blending finance facilities and the United Nations’ Green Climate Fund. 4.37/5 Once again and even under (2019: 4.44/5) the exceptional circumstances induced by the COVID-19 crisis, our yearly client satisfaction survey revealed a high degree of satisfaction with the services rendered. The courtesy and accessibility of COFIDES staff and compliance with expectations were the items Our activities and impact are Such practices are applied at scored most highly. The service the outcome of a management COFIDES to the management provided throughout the year endeavour that pursues on- of its own assets and of those of was generally perceived to be going improvement and aspires the FIEX and FONPYME State excellent. At the same time, to the very highest standards funds. They are also deployed client companies continued of responsibility and alignment in its support for FONPRODE to suggest that documentary with pioneering international fund management and in its requirements should be further market benchmark practices. capacity to co-finance and simplified.

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Operational and management capacity

ROLE SOURCE KEY FIGURES

• Equity, 31.12.2020: M€150.11. • Approvals, 2020: 20 projects for M€27.15. Management COFIDES • Formalisations, 2020: 19 projects for M€26.04. • Portfolio committed, 31.12.2020: 159 operations for M€126.60.

Exclusive management of FIEX on behalf of the Ministry of Industry, Trade and Tourism’s Secretariat of State for Trade. • Equity, 31.12.2020: M€1,007.58. Management FIEX • Approvals, 2020: 8 projects for M€40.21. • Formalisations, 2020: 9 projects for M€44.15. • Cumulative revolving commitments: 292 projects for M€2,465.76. • Portfolio committed, 31.12.2020: 139 operations for M€1,087.93.

Exclusive management of FONPYME on behalf of the Ministry of Industry, Trade and Tourims’s Secretariat of State for Trade. • Equity, 31.12.2020: M€75.62. Management FONPYME • Approvals, 2020: 15 projects for M€22.09. • Formalisations, 2020: 14 projects for M€18.66. • Cumulative revolving commitment: 235 projects for M€189.60. • Portfolio committed, 31.12.2020: 113 operations for M€87.84.

• One of Spain’s major cooperation for development financial instruments whose primary goal is to contribute to eradicating poverty. • Managed by the Agencia Española de Cooperación Internacional (AECID). • COFIDES began to lend support to AECID in October 2015 for cooperation in reimbursable development operations. Management • COFIDES provides management support for the following. FONPRODE support i. Reimbursable action planning. ii. Identification of operations eligible for financing. iii. Financial, legal, environmental, social and development due diligence analyses. iv. Operation formalisation. v. Economic-financial and portfolio performance monitoring.

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Operational and management capacity

ROLE SOURCE KEY FIGURES

The Renewable Energy Program for Sub-Saharan Africa was formalised under the EU’s External Investment Plan (EIP). A program intended to secure guarantees for FONPRODE, it was submitted to the EU in conjunction with AECID to support off-/mini-grid renewable power generation projects in rural Sub-Saharan Africa. Guarantees • M€20 in guarantees and M€2 project technical assistance under management. • A call was launched in 2020 to select the projects to receive program support. Up to four of the 20 short-listed projects are expected to be supported.

In 2020, COFIDES formalised its Triple Bottom Line Inclusive Finance in Latin America (TIF), a technical support facility. This program combines FONPRODE reimbursable financing for financial service providers (FSP) participating in loans to micro, small and medium-scale enterprises (MSMEs) with the technical support resources furnished by the EU (LAIF) for action in three main areas: • Furtherance of inclusive finance: digital ecosystems; new products; support for MSME post-COVID-19 recovery; Technical support EU microlending technology. Programmes • Green microfinance: in-house or outsourced environmental risk management; social and environmental management systems; green products; climate-smart farming. Multi- and • Institutional strengthening of FSPs with an emphasis on support to mitigate the effects of the economic and bilateral health crisis. assets • Formalisation of COFIDES’s participation in the Huruma Fund with M€1 from its own assets on the occasion of a rights issue open to private sector investors. COFIDES mobilises public resources furnished by the EU and AECID, favouring the success of this new high social-impact project for improving access to finance by smallholders or excluded farmers in Latin America and the Caribbean, Sub-Saharan Africa and Asia. Two investments for a total of M€7 were approved for Ecuador in 2020. Other blending • The conclusion of the EU’s budgetary period in 2020 gave way to the new Multiannual Financial Framework, in projects effect in 2021-2027. The MFF will include a new financial instrument for EU action abroad, the Neighbourhood, Development and International Cooperation Instrument (NDICI), with an allocation of nearly G€79.5. The NDICI will furnish ongoing support for development projects in strategic sectors such as renewable energy in host countries, although under a single, more flexible umbrella that will also envisage innovative financial instruments such as the External Action Guarantee, and the EFSD+ mechanism.

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Operational and management capacity

ROLE SOURCE KEY FIGURES

EFP-European Financing Partners: financing scheme sponsored by the European Investment Bank (EIB) and COFIDES’s sister bilateral European Development Finance Institutions (EDFIs). EFP • Assets committed by EFP, 31.12.2020: M€600.6 for 45 projects in 17 countries. • COFIDES and FIEX participation in EFP assets, 31.12.2020: M€18.62 for 30 operations in 13 countries.

ICCF-Interact Climate Change Facility: investment facility created by the Agence Française de Développement (AFD. French development agency), the European Investment Bank (EIB) and the Association of bilateral Development Financial Institutions (EDFI) to finance viable private investment projects that contribute to mitigating climate change EDFI lines ICCF and further energy efficiency in countries hosting official development assistance. of action • Assets committed by EFP, 31.12.2020: M€502.0 for 33 projects in 19 countries. • COFIDES and FIEX participation in ICCF assets, 31.12.2020: M€11.41 for 23 operations in 14 countries. Multi- and bilateral assets COFIDES acquired a 12.5 % holding in EDFI Management Company capital. • AgriFI: Blending facility funded by the EU and managed by the EDFI Management Company to support investment geared to medium-scale and smallholder and/or agricultural MSMEs in one project each in Senegal, Nigeria and Myanmar and two multi-country projects each in the regions of Asia, Latin America and the Caribbean EDFI Management and Africa. Company • ElectriFi: Blending facility funded by the EU and managed by its EDFI Management Company to back investments to carry electricity to rural and excluded populations. It aspires to further the adoption of renewable energy. • COFIDES holds two seats on the Investment Committee. In 2020, in the wake of a rights issue, COFIDES was elected to its Board of Directors for the first time.

Other • In October 2018 COFIDES was designated a Green Climate Fund-accredited organisation and to date continues to be the sole Spanish institution so accredited. The process was concluded in late 2019 with the formalisation of the Green Climate Multi- and accreditation master agreement (AMA). Fund bilateral • Efforts to identify potential projects and operations were intensified in 2020. Replies were furnished to any number assets of queries around potential operations that could be backed with Green Climate Fund resources.

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Approvals, formalisations and outlays

COFIDES, FIEX, FONPYME · 2020 FORMALISATIONS BY PRODUCT IN 2020. COFIDES/FIEX/FONPYME (M€) No. projects M€

Approvals 33 89.45

Formalisations 33 88.85 Capital Outlays 54 156.86 M€ 88.85 Debt total financing FONPRODE Management support lent by COFIDES · 2020 Other lending No. projects M€ 10.00 M€ 3.94 2.90 2.65 5.00 5.00 1.00 Profiles 10 78.46

Proposals 10 190.7 Direct EFP/ICCF Participation Bullet/project Loan with a Participation Participation 58.36 equity rights issues in bond finance/ sustainability- in venture in high- Council of Minister investment issues need-adapted linked capital/ impact fund 12 199.42 approvals guarantee variable venture debt loan component funds Formalisations 5 40.93

Total Total direct ﬁnancing intermediated ﬁnance 82.85 6.00

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Portfolio by region and sector

COFIDES, FIEX, FONPYME Country * % of total investment COFIDES, FIEX and FONPYME together 2 International ** 15 account for M€1230.11 of the M€2250.74 of M€ 2020 the assets under management. USA 12 Total portfolio 1,138.53 Mexico 11 Assets committed 1,302.37 Geographic distribution of Chile 10 FONPRODE portfolio3: Portfolio committed 2020 China 7

No. operations 301 United Kingdom 6

Countries 59 Peru 4 Russia 4

Sector % Poland 3 37.4% Sub-Saharan Africa Automobile ind. 21 Colombia 3

Transport infr. 14 Panama 3 Energy infr. 11 Indonesia 2 36.9% Agri-food 10 Brazil 1 Latin America and Caribbean

Naval/ aeronautics 7 Nicaragua 1

Finance 6 Algeria 1 11.5% Chem.-Pharm. 4 Ecuador 1 Eastern Asia and Pacific

Metal-mecanical 4 India 1

Services-Environment 3 Other 15 11.1% Mediterranean and Arab world Engineering 3 * The world map showing COFIDES’s historic activities is Waterworks 2 reproduced in the section headed ‘Map of business history’. ** Operations pursuing sponsoring company 3.1% Other 15 internationalisation via direct financing in Spain. Eastern Europe and Middle East

2 COFIDES is involved in managing FONPRODE: FONPRODE equity in 2019; FIEX, FONPYME and COFIDES equity in 2020. 3 In 2019. (Source: COFIDES). 54 Letter from Our actions Management Supplementary Introduction Our organisation Financial statements the Chairman and our impact activities information

Analysis of non-financial business risks

Positive investment impact rests Further to that assessment, com- Good practices evaluated on suitable management of the panies’ corporate governance as initial, intermediate financial and non-financial risks was rated Commitment to 5.6 present in the projects financed. or advanced. corporate governance COFIDES analyses the social-envi- Board of Directors 6.3 ronmental and corporate gover- The corporate governance ob- structure and operation nance factors forming part of its jectives pursued in 2021 include: operations, an exercise essential study of the possibility of prepa- Process control 6.6 to favouring long-term sustai- ring specific corporate gover- Transparency of nability upon conclusion of the nance questionnaires for certain information 7.8 company’s temporary investment operations (project finance and involvement. funds); inclusion of a specific item Shareholders 6.4 on gender equality in the corporate governance questionnaire; Corporate Governance * 0-10 scale. review of corporate governance COFIDES is aware of the im- rating, aligning it with the assess- Corporate governance rating in operations formalised in 2020 portance of good corporate ment criteria defined by Standard governance in the parent & Poor’s and included in the new companies it supports financia- rating tool deployed by COFIDES. 11% 21% Advanced stage - A lly. Their practice in that respect was analysed in 2020 using the same parameters as in the Intermediate stage - B preceding year.

Initial stage - C 68%

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Analysis of non-financial business risks

Social-environmental investment The content of that statement risk analysis is in line with the measures adopted to implement the In keeping with Company social company’s Strategic Plan 2019- and environmental policy, 2021 and its commitment to projects are assigned a rating sustainability, which will impact based on potential risk or envi- both the profile of COFIDES’s ronmental and social impact for portfolio and its approach to classification and subsequent business. monitoring. The Report Parame- ters section contains a description of the four rating categories.

Social and efforts set out in the statement environmental factors are: to exclude new coal and fuel oil financing immediately; Social rating Environmental rating Commitment to financing no coal or fuel oil projects and to a net-zero to phase out other fossil fuel financing with total exclusion GHG portfolio by 2050. 9% 12% 13% by 2030; to establish investment In November 2020 COFIDES targets in projects tackling 33% 15% 12% and its sister development climate change in 2022; to finance institutions adhered to transition investment portfolios a joint statement entitled EDFI to net-zero GHG emissions by Statement on Climate and 2050; and to make climate-re- 65% 43% Energy Finance in which they lated financial disclosures in committed to aligning any new line with the recommendations decisions on financing with the put forward by the Task Force climate objectives set out in the on Climate-related Financial Paris Agreement. The most pro- Disclosures (TCFD). A B+ B C A B+ B C minent commitments and best

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Analysis of non-financial business risks

Analysis of decent work in projects financed

UN Global Compact (2005). EDFI Principles for Responsible Financing of Sustainable Development (2009, updated in 2019). Framework IFIs Statement on Contributing to Creating More and Better Jobs (2013). IFC Operating Principles for Impact Management (2019). EDFI resolution on progressing toward gender-focused investment (2019).

Environmental and social policy in investments (2001, updated in 2015). Policy Gender policy in investments (2015).

EDFI - Environmental and social. EDFI - Harmonisation Initiative on Responsible Financing and Impact Measurement. EDFI - COVID-19. Working Invest EU - Environmental and social. groups Development Finance Institutions - Gender Finance Collaborative. Secretary of State of Trade - Internationalisation and human rights. Global Compact - Human rights.

Fundamental human rights: child and forced labour, non-discrimination and freedom of association. Health and safety: occupational risk plan and in-house management, audits and specialised areas. Analysis Decent working conditions: description of working hours, migrant worker hiring, remuneration, social beneﬁts, management systems, certiﬁcations and security staff. Potential impact on supply chain. Potential impact on local communities. Risk and social impact rating. Online training session on microfinance institution Customer Protection Principles. OECD Guidelines for Multinational Companies. Global Compact. Lifelong learning for social-en- sed in 2021 is the review of the ILO Conventions: Fundamental + Decent work + Migrant Workers + Indigenous Peoples. Contract UN Conventions: Childhood and Women. vironmental professionals is es- social-environmental question- Mechanisms for raising complaints and suggestions. Information on severe incidents. sential to the acquisition of new naire used to collect information analytical skills, in turn aligned for analysing the non-financial No. of direct jobs: 23,549. Mean dealy wage: €72.82. with national and international features of projects. Another is Indicators Female employment: 18% *. Sponsors adhering to Global Compact: 14%. progress in the matter. In 2020 to revisit gender policy, inten- * Includes data furnished by 38% of portfolio projects. the focus was on gender equality ded to prevent adverse effects and microfinance institutions’ on women and further their Further information in: Customer Protection Principles. empowerment in keeping with International Financing, Development and Non Financial Risks - Handbook One of the tasks to be addres- gender equality. for companies financed by COFIDES

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Analysis of non-financial business risks

Social-environmental project undertaken at COFIDES monitoring in the context of included: i) a review of agree- COVID-19 ments to urge companies to In March 2020 COFIDES imple- take health and safety measures mented a Contingency Plan in keeping with health authority and a Business-as-Usual Plan to recommendations and to put uphold its commitments with their best effort behind lowering clients and its service quality, the impact on their payrolls; adopting measures to mitigate and ii) participation in formu- the impact of the pandemic. lating due diligence guides for social-environmental project The most prominent of the monitoring against the back- social-environmental action drop of the pandemic. Participation in Inicia 2 Programme - Company values, targeting secondary education students.

Integrity channel In 2020 COFIDES included an Integrity Channel page on its this channel to submit requests website with instructions on how to exercise their data protection any stakeholder can submit their rights. It is a confidential vehicle suggestions, complaints or re- owned and run by an outside ports if, among others, they feel company, which receives and a COFIDES-financed or -planned manages submissions. No outsi- project is detrimental to them. de communication was received Anyone interested may also use in the target year.

Complaint Channel

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Commercial and institutional action

TYPE OF INSTITUTION DESCRIPTION ACTION INVOLVED

• In 2020 COFIDES continued to form part of the Association of bilateral European Development Finance Institutions’ (EDFI) Board of Directors.

• COFIDES participates in the following networking groups and task forces: Energy and Infrastructure; Corporate, Agribusiness, Manufacturing and Services; Legal Documentation; Private Equity; Emergency Facility; Moratorium; Financial Institutions, Sub-Working Group Environmental & Social COVID; Human Resources Networking Group; EDFI DFI Coordination on COVID-19 Operational Response; Development, Environmental and Social Impact; DFI Gender Finance Collaborative; Harmonisation Initiative on Responsible Financing and Impact Measurement. The company also takes part in the association’s Annual General Meeting.

• In November 2020 COFIDES and all other EDFI member financial institutions signed a joint EDFI statement committing to aligning all new financial decisions with the Paris Agreement climate targets by 2022.

Institutional action In 2020 COFIDES joined two international fora established under the leadership of sovereign wealth funds, the International Forum of Sovereign Wealth Funds (IFSWF) and the One Planet Sovereign Wealth Funds (OPSWF), ultimately to intensify the mobilisation of financial assets available to co-finance Spanish company projects. As a member of IFSWF, COFIDES committed to honouring the Santiago Principles, generally accepted sovereign fund governance, investment and risk management principles and practice. With adherence to OPSWF, the company Other became the first Spanish institution to be represented in the forum, which aims to mobilise sovereign fund assets to international innovate and expand investment opportunities aligned with the Paris Agreement climate goals (COP21). initiatives • COFIDES also attends annual general assemblies and meetings of organisations such as the World Bank, IRENA (International Renewable Energy Agency) and the aforementioned IFSWF and OPSWF.

• In addition, in a year tainted by the COVID-19 crisis, COFIDES participated in a number of IFC (International Finance Corporation)-headed task forces seeking to coordinate an immediate response to the crisis to benefit the private sector in developing countries and economies.

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Commercial and institutional action

TYPE OF INSTITUTION DESCRIPTION ACTION INVOLVED

• On the domestic scale, COFIDES concluded a partnering agreement to further SME internationalisation with Elkargi, a mutual guarantee company whose business is concentrated in the Basque Country and Navarre. Under Partnering that agreement, COFIDES will provide Elkargi SME partners and their foreign subsidiaries in emerging and agreements in developing countries with financing for productive investment or commercial presence-building. Spain • COFIDES also concluded a partnering agreement with Fundación Real Instituto Elcano de Estudios Internacionales y Estratégicos [royal institute for international and strategic studies].

Institutional • COFIDES organised the sixth edition of its Internacionalización y Desarrollo prizes intended for institutions making action outstanding contributions to internationalisation, development or impact investment and Spanish companies with a sizeable international dimension. The organisations distinguished in this sixth edition were: Other institutional Grupo Ortiz, Inbonis Rating, International Finance Corporation-World Bank and the three-way institutional events partnering involving the Secretariat of State for Trade, the Spanish Chamber of Commerce and CEOE, the national employers’ association.

• Secretary of State for Trade Xiana Méndez was among the guest speakers at an event held to introduce the Huruma Fund and to foster the growth of funds for financial inclusion.

• In 2020 the company’s commercial activity was conditioned by the COVID-19-induced crisis and funding constraints affecting FIEX in particular. The combination of those two factors required COFIDES to modulate and adapt its promotional activity to changes and delays in project roll-out in the wake of the new circumstances and to the assets available at any given time.

Direct commercial contacts with potential clients: COFIDES Commercial • A total of 756 potential clients with internationalisation projects were contacted, fewer than the 1010 recorded in commercial action 2019 for the aforementioned reasons. activity • Proactivity in identifying target companies was, at 66%, similar to the 2019 figure (70%).

• SMEs accounted for 75% of the contacts, up from 63% in 2019, given the greater availability of FONPYME funds throughout the year.

• Videoconferencing was the vehicle most commonly used (79%) to hold the 222 meetings organised with potential clients.

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Commercial and institutional action

TYPE OF INSTITUTION DESCRIPTION ACTION INVOLVED Dissemination and promotion: • These activities were conducted primarily via webinars and online seminars. • Symposia and seminars under agreements with Agència per la Competitivitat de l’Empresa (ACCIÓ) and Institut Valencià de Competitivitat de l’Empresa (IVACE) [respectively Catalonian agency and Valencian institute for business competitiveness]. Follow-up meetings and presentations of co-financing opportunities with Instituto Vasco de Finanzas [Basque finance institute], Basque Trade & Investment, Instituto de Fomento (INFO) [development institute for the Murcian region], Empresa Pública Andaluza de Promoción Exterior (Extenda) [Andalusian export and foreign investment authority], Sociedad Gestora de Entidades de Inversión de Tipo Cerrado, S.A.U. (Xesgalicia) [Galician COFIDES investment institution management company]. Commercial commercial • Close collaboration with other representative institutions: Elkargi, Banco Sabadell (Exportar para Crecer), Club de action activity Exportadores, Spanish and Spanish-Brazilian Chambers of Commerce. • Cooperation with ICEX España Exportación e Inversiones [Spanish public export and investment body]: meetings with its financial counselling division in connection with companies identified by ICEX to have projects eligible for COFIDES financing. Organisation of a webinar to disseminate COFIDES’s services in lieu of the finance symposium on foreign operations held in previous years. • On the international scale, the company continues to build on its relations with multi- and bilateral development institutions such as IDB, CAF (Development Bank of Latin America), IFC, ALIDE, CABEI and the company’s sister EDFIs. Working meetings are held with organisations fostering investment such as Procolombia and ProEcuador and with the Ecuadorian, Egyptian, Finnish, French and Korean Embassies.

Encounter at COFIDES headquarters with CAF-International Development Bank Presentation of the monographic issue of Información Comercial Española (ICE, journal in economics published Chairman Luis Carranza. by the Spanish Ministry of Industry, Trade and Tourism) on opportunities in Africa.

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Our organisation 04

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Board of Directors and Management Team

Board of Directors CHAIRMAN AND CHIEF EXECUTIVE OFFICER Mr. José Luis Curbelo Ranero.

Mr. Alfonso Noriega Gómez, Head of the Chairman’s Office Instituto de Crédito Oficial (ICO).

Mr. Antonio Bandrés Cajal, Head of International Financing and EU Affairs Instituto de Crédi- to Oficial (ICO).

Mr. David Noguera Ballús, Assistant General Director. Banco de Sabadell, S.A.

Mr. Fernando Jiménez-Ontiveros Diego, Director General for Multi- lateral, Horizontal and Financial Cooperation. AECID.

Board of Directors meeting held in January 2020. Ms. Idoya Arteagabeitia, Partner. Pinsent Mansons España, S.L.P.

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Board of Directors and Management Team

Mr. Jaime Uscola Lapiedra, Management Team Head of International Business. Banco Santander España, S.A. Chairman and Chief Assistant Manager, Risk Division Mr. Javier Estévez Zurita, Executive Officer Ms. Consuelo Díaz Martínez Director of Solutions and Business Mr. José Luis Curbelo Ranero Transformation. Banco Bilbao Vizcaya Argentaria, S.A. Director-General Assistant Manager, Mr. Juan Ignacio Moratinos Alonso, Mr. Rodrigo Madrazo García Investment Division Deputy General Director for Programme de Lomana Mr. Miguel Ángel Ladero Santos Management and Execution, Directorate General for Industry and SME. Ministry of Industry, Trade and Tourism. Head of General Assistant Manager, Internal Ms. María Aparici González, Secretariat Division Control Division Deputy General Director, International Ms. Ana Victoria Fernández Sáinz Ms. María Victoria de Luis Durán Trade in Services and Digital Trading. de la Maza Ministry of Industry, Trade and Tourism.

Mr. Pablo López Tallada, Assistant Manager, Director of Global Trade Finance. Assistant Manager, Talent Finance Division Banco Bilbao Vizcaya Argentaria, S.A. and IT Division Mr. Fernando Aceña Moreno Ms. Carolina Fernández-Puebla Mr. Pablo de la Torre Rodríguez, Muñiz Head of Commercial Department, International Business. Banco Santander España, S.A. Assistant Manager, Business Assistant Manager, Partnerships Development Division for Development Division Secretary, non-member and legal counsel Ms. Ana Cebrián Parrondo Mr. José Carlos Villena Pérez Ms. Ana Victoria Fernández Sáinz de la Maza.

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Adaptation to remote working at COFIDES

The new circumstances called for an Demo videos on how to use the most exceptional effort on the part of the Infor- common communication and videoconfe- mation Technology Department to ensure rencing tools were also prepared. the remote working system was up and running, providing remote support for users Throughout the year, with all employees while meeting everyday maintenance and home-officing, a measure recommended development needs. by health authorities, afforded COFIDES greater operating, geographic and office Remote working would not have been such hour flexibility. a success, however, without the cooperation and resilience of all company employees. The technological steps to be taken next Change is never easy, in particular when will be geared to establishing full indepen- COFIDES Information Technology Team. sudden, drastic and imposed in a context of dence from workstations. The goal is to widespread concern and uncertainty, but ensure that, irrespective of staff location, At COFIDES, remote working was initially a with the staff in general making every effort access to information, receipt of incoming management-supported pilot project de- to adapt, we were able to carry on. calls and general working procedures are signed to assess the company’s readiness to exactly the same in and outside company embark on this innovative endeavour and its The most pressing technological challenge offices and COFIDES services are provided impact on productivity and teamwork. was to provide the company with a ho- with the optimal quality for which the me-officing system that ensured secure company is reputed. With the onset of the pandemic, however, access to company resources from personal remote working became more a necessity facilities. When the pandemic first hit not than an option. Thanks to these arrange- all company employees had laptops whose ments the company was able to attend to security was under COFIDES IT team control. business normally from the very first day of Staff-wide cybersecurity training sessions Alejandro Colino, lockdown and retain full operationality while were consequently held to heighten aware- Assistant Director, Information it lasted. ness of the risks involved in remote working. Technology Department.

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Staff

COFIDES sees in its human STEERING COMMITTEE LEVEL OF SCHOOLING TYPE OF EMPLOYMENT resources its primary com- CONTRACT petitive advantage. Its efforts Temporary, consequently focus on ongoing members. 10 full-time improvement in staff experience, 10% know-how, capacities and skills 50% women. PhDs. 8.75% to ensure consistent optimality AVERAGE SENIORITY in a number of dimensions: 91.25% training, motivation, remune- Permanent, ration, flexibility, adaptation, % full-time 51 years. 58.75 innovation and engagement, 10. MScs/MBAs. among others. All are determi- Permanent, full-time nants in meeting independently MEAN AGE set or mandated achievements 80% 28 male and goals. Five-year university employees. years. 45.26 degrees. 45 female employees.

Number Women 6.25% Four-year university Temporary, full-time Senior and technical managers 20 50% degrees. 2 male Technical staff 50 62% employees.

Support staff 10 90% 12.50% 5 female Other specialised employees. TOTAL 80 62.5% courses.

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Staff

Training In 2019 COFIDES adhered to the #Dónde están ellas? INVESTMENT [where are the women?] (MEAN PER EMPLOYEE) initiative headed by European Parliament’s office in Spain. That manifesto furthers gender €2,000 equality through women’s active participation in outside STAFF COVERED BY events organised by the sig- TRAINING PLAN natories. A total of 33 % of the speakers at events organised by COFIDES in 2020 were 100% women.

MEAN TRAINING HOURS BY CATEGORY

34 Senior managers.

85.2 Technical managers and staff.

19.85 Support staff.

MEAN HOURS BY SEX

69.55 hours

86.00 hours

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Carbon-neutral office

In 2020 the Spanish Ministry of Award of this seal is a token Ecological Transition and Demo- of COFIDES’s commitment graphic Challenges’ Office on to sustainability, as set out in Climate Change (OECC) awarded the company’s Strategic Plan COFIDES its “CALCULATE- 2019-2021. In 2021 COFIDES COMPENSATE” seal, associated purports to broaden the scope with the calculation of and com- of this certificate to include tier pensation for the carbon footprint 3 (travel, office supplies and (tiers 1 and 2) generated by the commuting). It will also imple- company’s direct and indirect ment a tiers 1 and 2 emissions emissions in 2019. That footprint abatement plan in pursuit of was compensated in 2020 via “CALCULATE-COMPENSATE” company collaboration with one certification in 2024. of the forestry CO2 compensation projects registered with the OECC.

Stakeholder relations

The national and international private and public sectors are progre ssively joining forces with academia and the third sector to rise to the world challenges identified in Agenda 2030. COFIDES, aligned with that trend, maintains working relations with a number of organisations in those realms.

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Stakeholder relations

STAKEHOLDER RELATIONS

CATEGORY STAKEHOLDER TYPE OF RELATIONSHIP FREQUENCY

General Assembly Semi-annual

Board of Directors Monthly SHAREHOLDER Public / private shareholder Audit and Risk Commission Periodic

Working group meetings Sporadic

Secretariat of State for Trade FIEX and FOMPYME Executive Committees Monthly Directorate General of International Trade and Investment Institutional meetings on specific subjects Sporadic

Secretariat of State for International FONPRODE Executive Committee Quarterly NATIONAL Cooperation and for Ibero-America and the GOVERNMENT Caribbean AECID Bilateral meetings Periodic

Ministry of Finance Office of the State Comptroller [IGAE] audits Annual

Court of Auditors Oversight reports Sporadic

Negotiation Ongoing Integrated analysis Companies Business meetings investment fora and seminars Sporadic

Satisfaction surveys Annual

State public authorities Meetings on several levels

Other public bodies Seminars and fora Sporadic BUSINESS AND Private associations INTERNATIONALISATION Partnership agreements PARTNER Regional government agencies Board of directors Sporadic

Annual General Meeting Annual

EDFI EFP/ICCF investment committees

Working groups on specific subjects Periodic Task Force

European Commission (DG DEVCO) Blending finance meetings Sporadic

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Stakeholder relations

STAKEHOLDER RELATIONS

CATEGORY STAKEHOLDER TYPE OF RELATIONSHIP FREQUENCY

UN Meetings Sporadic BUSINESS AND (Green Climate Fund) INTERNATIONALISATION Meetings PARTNER Other multilateral organisations Sporadic Seminars and fora

Academic Reports THINK TANK Foundations and associations Sporadic Symposia and seminars THIRD SECTOR NGOs

In-house meetings Periodic

Management Committee notes Weekly

Works council Monthly

STAFF Employees Open house days Sporadic

In-house newsletter Periodic

Suggestion box Ongoing Anonymous suggestion box

Press releases Sporadic Nationwide, regional daily newspapers. MEDIA Social networks Ongoing Specialised journals Advertising Sporadic

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Financial statements 05

71 Letter from Our actions Management Our Financial Supplementary Introduction the Chairman and our impact activities organisation statements information

External verification certificate Letter from Our actions Management Our Financial Supplementary Introduction the Chairman and our impact activities organisation statements information Letter from Our actions Management Our Financial Supplementary Introduction the Chairman and our impact activities organisation statements information Letter from Our actions Management Our Financial Supplementary Introduction the Chairman and our impact activities organisation statements information Letter from Our actions Management Our Financial Supplementary Introduction the Chairman and our impact activities organisation statements information Letter from Our actions Management Supplementary Introduction Our organisation Financial statements the Chairman and our impact activities information

Annual accounts Financial Statements for the financial year ending 31 December 2020 Balance on 31 December 2020 (in thousands of euros)

ASSETS Notes 2020 2019 NON-CURRENT ASSETS 94,207 79,143 Intangible assets 5 48 141 Industrial property - - Software applications 48 141 Tangible assets 6 601 703 Other facilities 397 476 Furnishings 137 163 Computer hardware 66 63 Transport items 1 1 Long-term financial investments 93,558 78,299 Equity instruments 10 and 11 3,898 2,433 Loans to companies 11 78,004 65,809 Other financial assets 11 115 115 Accounts receivable, funds 11 11,541 9,942 Current tax assets - - CURRENT ASSETS 59,203 66,190 Non-current assets held for sale 7 475 475 Trade and other receivables 11 9,627 10,325 Accounts receivable 439 1,997 Accounts receivable, funds 9,143 8,328 Credits with Public Administrations 45 - Short-term financial investments 11 26,972 29,944 Equity instruments 5,000 5,000 Loans to companies 10,740 12,823 Interest outstanding on loans to companies 336 338 Other financial assets 10,896 11,783 Short-term accruals 142 15 Cash and other equivalent liquid assets 12 21,987 25,431 Treasury 21,987 25,431 Other equivalent liquid assets - TOTAL ASSETS 153,410 145,333

Memorandum account cash receivable 20 204 -

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Balance on 31 December 2020 (in thousands of euros)

EQUITY AND LIABILITIES Notas 2020 2019 EQUITY 150,105 141,555 Issued capital 13 39,396 39,396 Reserves 100,520 91,969 Legal and statutory 7,879 7,879 Other reserves 92,641 84,090 Profit for the year 3 10,189 10,190 CURRENT LIABILITIES - - Long-term provisions - - Other provisions - - Long-term accounts payable 15 - - Debts with credit institutions - - Other financial liabilities - - Current tax assets - - CURRENT LIABILITIES 3,305 3,778 Liabilities linked to non-current assets held for sale 7 613 613 Trade and other payables 1,050 1,715 Sundry creditors 15 238 573 Personnel (remunerations outstanding) 15 383 375 Current tax liabilities 17 380 Other public administration debts 17 429 387 Other financial liabilities 15 - - Short-term accruals 16 1,642 1,450 TOTAL EQUITY AND LIABILITIES 153,410 145,333

Memorandum account cash payable EU liabilities 20 204 -

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Profit and Loss Account for the financial year ended 31 December 2020 (in thousands of euros)

ONGOING OPERATIONS Notes 2020 2019 Net turnover 19.1 25,029 25,453 Personnel expenses 19.2 (6,354) (6,294) Salaries and similar (4,861) (4,746) Welfare contributions (1,493) (1,548) Other operating expenses (4,222) (5,609) External services 19.3 (3,057) (3,787) Taxes 19.3 (119) (108) Losses, impairment and variations in provisions for trade operations 11.1 and 11.2 (1,046) (1,714) Depreciation of fixed assets 5, 6 (171) (190) Impairment and results of disposals of fixed assets 5, 6 and 7 - - Impairments and losses - - Results of disposals and others - - Other results 426 175 OPERATING RESULTS 14,708 13,535 Financial revenues 19.4 11 35 From tradeable securities and other financial instruments From third parties 11 35 Financial expenses 19.5 (170) (103) Notes payable to credit institutions - - (5,609) Other notes payable (170) (103) Exchange rate differences (975) 149 FINANCIAL RESULTS (1,134) 81

RESULTS BEFORE TAX 13,574 13,616 Taxes on profits 17 (3,385) (3,426)

RESULTS FOR THE FINANCIAL YEAR 3 10,189 10,190

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Statement of Changes in Equity for the financial year ending 31 December 2020 (in thousands of euros)

A) Statement of Recognised Income and Expenditure for the year ending 31 December 2020.

Notes 2019 2019

Profit and loss account results 3 10,189 10,190

TOTAL RECOGNISED INCOME AND EXPENSE 10,189 10,190

B) Statement of Total Changes in Equity for the year ending 31 December 2020.

Issued Legal Voluntary Results of Dividends capital reserve reserves the year Total (Note 3.1) (Note 13.1) (Note 13.2) (Note 13.3) (Note 3)

BALANCE ON 31 DECEMBER 2018 39,396 7,879 76,373 9,192 - 132,840

Total recognised income and expenditure in 2019 - - - 10,190 - 10,190

Distribution of 2017 profit: -

Reserves - - 7,717 (7,717) (1,475) (1,475)

Dividends - - (1,475) 1,475 -

BALANCE ON 31 DECEMBER 2019 39,396 7,879 84,090 10,190 - 141,555

Total recognised income and expenditure in 2020 - - - 10,189 - 10,189

Distribution of 2019 profit: -

Reserves - - 8,551 (8,551) (1,639) (1,639)

Dividends - - (1,639) 1,639 -

BALANCE ON 31 DECEMBER 2020 39,396 7,879 92,641 10,189 - 150,105

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Cash Flow Statement for the financial year ending 31 December 2020 Notes 2020 2019 OPERATING CASH FLOW Results for the year before tax 13,574 13,616 Adjustments to the results 1,376 1,972 Amortisation of fixed assets (+) 5, 6 171 190 Valuation adjustments due to impairment (+/-) 10 - - Variation in provisions (+/-) 11.1 and 11.2 1,046 1,714 Results of retirements and disposals of fixed assets (+/-) - - Financial revenues (-) (11) (35) Financial expenses (+) 170 103 Other revenues and expenses (-/+) - - Change in working capital (14,168) (6,323) (Increase)/Decrease in debtors and other accounts receivable 698 (802) (Increase)/Decrease in other current assets 2,843 (8,664) Increase/(Decrease) in creditors and other accounts payable (665) (452) Increase/(Decrease) in other current liabilities 235 92 Other non-current assets (+/-) (17,279) 3,503 Other cash flows from operating activities (3,587) (3,454) Interest paid (-) (170) (103) Interest received (+) 11 35 Income tax receipts (payments) (+/-) (3,428) (3,386) Cash flows from operating activities (2,805) 5,811 CASH FLOW FROM INVESTMENT ACTIVITIES Investment payments (-) (40) (158) Intangible assets 5 - (128) Tangible assets 6 (40) (30) Divestment charges (+) 65 126 Tangible assets 65 Other financial assets - 126 Cash flows from investment activities 25 (32) CASH FLOWS FROM FINANCING ACTIVITIES Receipts and payments for financial liability instruments - - Return and amortisation of - - Debts with credit institutions (-) - - Dividend payments and payments on other equity instruments 3.1 (1,639) (1,475) Dividends (1,639) (1,475) Cash flows from financing activities (1,639) (1,475) EFFECT OF EXCHANGE RATE VARIATIONS 975 (149) NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (3,444) 4,155 Cash or cash equivalents at the beginning of the year 12 25,431 33,056 Cash or cash equivalents at year end 12 21,987 37,211

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Financial Statements for the financial year ending 31 December 2020

1. Nature of company, and operation of these funds are regulated Trade of the Ministry of Industry, Trade and business activity and group by Spanish Royal Decree 1226/2006 of 27 Tourism. composition October, which repealed the previous The Compañía Española de Financiación del Royal Decree 2815/1998 and which in turn The second final provision of Spanish Law Desarrollo, COFIDES, S.A., S.M.E. (hereinafter was amended by Royal Decree 862/2010 8/2014 of 22 April, concerning State coverage the Company or COFIDES), is a state-owned of 2 July, Royal Decree 321/2015 of 24 April of the risks of the internationalisation of the company whose corporate purpose is to and Royal Decree 72/2016 of 19 February. Spanish economy, provides that the ma- further, with break-even criteria, the econo- These funds are provided annually from nagement of the Development Promotion mic and social development of emerging the Spanish State General Budget and Fund (hereinafter FONPRODE, the Spanish and developing countries, mainly through have as their purpose to pursue the inter- acronym), including the study, planning, the granting of financing to private projects nationalisation of Spanish companies and negotiation and monitoring of the aid it with Spanish involvement in those countries. the Spanish economy in general, through gives, is the responsibility of the Ministry of syndicated financial instruments, under Foreign Affairs and International Cooperation, In order to comply with its corporate pur- co-financing arrangements with the com- through the Secretary of State responsible pose, in addition to its own resources the pany sponsoring the project. for international development cooperation Company also manages third party public and the Spanish Agency for International and multilateral resources. Spanish Law 14/2013, concerning support Development Cooperation, with the support for companies and their internationalisa- of COFIDES. Spanish Law 66/1997, of 30 December 1997, tion, in addition to amending Spanish Law designated COFIDES as manager of the 66/1997 which created FIEX and FONPYME, The passing of Spanish Law 8/2014 meant Fund for Foreign Investment, (hereinafter incorporated COFIDES’ authority to colla- new recognition of COFIDES as a Spanish De- FIEX, the Spanish acronym) and of the borate in the identification and analysis of velopment Finance Institute, in addition to its Fund for SME Foreign Investment Opera- investment projects eligible for financing membership in the European Development tions (hereinafter FONPYME, the Spanish under the Business Internationalisation Finance Institutions Association (hereinafter acronym), on its own behalf and on behalf Fund (hereinafter FIEM, the Spanish acron- EDFI). The role of COFIDES in supporting the of these Funds. In addition, the activities ym), managed by the Secretary of State for management of FONPRODE is regulated by

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Annual accounts report

Article 8 of Royal Decree 597/2015 of 3 July, The Company’s registered office for business order to present a true and fair view of the which approved the Fund’s Regulations. and tax purposes is located at Paseo de la Company’s equity and financial position Castellana, 278, planta 3, Madrid, Spain. on 31 December 2020 and the results of its Since May 2016, COFIDES has been accredi- operations, the changes in its equity and its 2. Criteria for presenting statements ted by the European Commission (hereinaf- cash flows during the financial year ending ter EC), permitting it to manage community The financial statements have been prepared on that date. budget funds indirectly. COFIDES can in accordance with the Spanish National Chart assume the role of main co-financier in blen- of Accounts approved by Spanish Royal Decree The Company’s directors deem that the ding operations, a European Union financing 1514/2007, of 16 November, which was amen- 2020 financial statements will be approved instrument which combines European Union ded in 2016 by Spanish Royal Decree 602/2016, by the General Meeting of Shareholders subsidies with financing from accredited of 2 December, as well as with other business with no amendments whatsoever. public and private financial institutions. legislation currently in force. 2.2. Comparison of information In October 2018, COFIDES was designated The financial statements have been prepared an accredited entity by the Green Climate by the Company directors for submission For the purposes of comparison, the Fund (hereinafter the GCF), the United to the shareholders at the Annual General financial statements present, for each of Nations Framework Convention on Climate Meeting, and it is considered that they will be the balance sheet items, the profit and Change fund which was created at the end approved with no amendments whatsoever. loss account, the statement of changes in of 2010. Accreditation by the GCF permits equity, the cash flow statement and the COFIDES to mobilise resources from the The figures included in the annual accounts report, in addition to the figures for 2020, Fund in order to finance public or private are expressed in thousands of euros, unless those for the previous financial year, which climate change mitigation and/or adap- otherwise stated. formed part of the financial statements tation projects in developing countries. for 2019, approved by the General Meeting COFIDES can structure projects worth up 2.1. True and fair view of Shareholders on 27 May 2020. For this to M$250 and with any level of environmen- purpose and due to a better comparability tal and social risk (including category A). The financial statements were prepared of the balances, the comparative figures for GCF resources, combined with loans from based on COFIDES’ accounting records. 2019 have been restated as follows: accredited entities, can be utilised in the The financial statements for 2020 were form of concessional loans, equity holdings, prepared pursuant to existing commercial • 11,780 thousand euros have been reclassi- securities and donations. legislation and the standards established in fied from “Other equivalent liquid assets” the Spanish National Chart of Accounts, in to “Other financial assets”, both of which

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Annual accounts report

are current assets in the balance sheet the analysis is the expected loss for each 2019 presented in these annual accounts. rating category, which serves as the basis Basis for distribution Euros for determining the impairment rates. The Profits for the year 10,189,480.33 • 5,000 thousand euros have been reclassi- Company verifies the appropriateness of the Distribution fied from “Other financial assets” to “Equi- impairment rates established with respect Distribution of dividends 1,638,750.00 ty investments”, both of which are current to the updated expected loss data on an assets in the balance sheet presented in annual basis. Legal reserve these annual accounts. Capitalisation reserve (*) 771,701.83 The Company has an Investment Division Voluntary reserve 7,779,028.50 2.3. Critical aspects of the appraisal and and a Risk Division, whose specific tasks TOTAL 10,189,480.33 estimation of significant uncertainties include supervision and risk management and discretion in the application of of its commercial financial operations and The proposal for distribution of the earnings for accounting policies analysis of the impairment of these financial the year ended 31 December 2020, proposed assets during the year (see Note 4.6.7). by the directors and pending approval by the The preparation of the financial statements General Meeting of Shareholders, consists of: requires the application of significant 2.4. Functional and reporting currency accounting estimates and the use of dis- 2020 cretion, estimates and assumptions in the The financial statements are presented in Basis for distribution Euros process of applying the Company’s accoun- thousands of euros, rounded to the nearest Profits for the year 10,189,230.51 ting policies. The following is a summary of thousand, which is the Company’s functional Distribution the aspects which have involved greatest and reporting currency. Distribution of dividends 1,016,025.00 discretion or complexity, or in which the as- Legal reserve sumptions and estimates are significant for 3. Distribution of earnings Capitalisation reserve (*) 855,073.03 the preparation of the financial statements. 3.1. Distribution of earnings Voluntary reserve 8,318,132.48

Valuation adjustments due to impairment The distribution of earnings for the year TOTAL 10,189,230.51 ending on 31 December 2019, proposed by The Company has an Impairment Risk Cove- the directors and approved by the General (*) In compliance with the requirements of rage Policy based on the historical analysis Meeting of Shareholders on 27 May 2020, Article 25 of Spanish Law 27/2014, of 27 No- of the behaviour of operations according was as itemised below: vember, regarding corporation tax, in relation to their internal credit rating. The result of to the capitalisation reserve it is proposed

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that, as part of the distribution of earnings 4. Accounting and valuation criteria 4.1.3. Service life and amortisations for 2020, an amount of 855,073.03 euros (771,701.83 euros in 2019) from the earnings for The main accounting and valuation criteria Intangible assets are amortised by distribu- the year be used for the capitalisation reserve used by the Company in the preparation of ting the sum subject to amortisation evenly (see Note 17). these financial statements are as follows: across the service life of the asset, pursuant to the following criteria: 3.2. Limitations on dividend payments 4.1. Intangible assets

Estimated Amortisation service life in The Company is required to transfer 10% of Intangible assets are initially valued at their method years its earnings for the year to the legal reserve acquisition price or production cost. until the balance of this reserve reaches Industrial property Straight-line 10 at least 20% of share capital. Unless this After the initial valuation, intangible assets are Software Straight-line 4 reserve exceeds 20% of share capital, it valued at cost, minus accumulated amortisa- applications cannot be distributed among shareholders tion and, if appropriate, any accumulated losses (see Note 13). due to impairment. For these purposes, the sum subject to amortisation is understood to be the acqui- Once the sums specified by law or the Each intangible asset is analysed to determine sition cost minus, if applicable, the residual by-laws are covered, dividends may only whether its service life is finite or indefinite. value. be distributed against the year’s profit or freely available reserves providing the 4.1.1. Industrial property The Company revises the residual value, net equity, as a result of the proposed service life and amortisation method for dividend payment, does not slide below This item includes the activation of the intangible assets at least yearly, at the end the share capital. For these purposes, the amount corresponding to the registered of the financial year. Any amendments to profit directly posted as net equity may not company name. the criteria initially established are recorded be directly or indirectly used for dividend as changes in the estimate. payments. If previous years’ losses lowered 4.1.2. Software the Company’s net equity to less than the value of its share capital, any profit must be Software is recorded at its acquisition price. used to offset such losses. Maintenance expenses are booked when incurred.

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4.1.4. Impairment of fixed assets Amortisation of tangible assets is determined by 4.2.4. Impairment of asset value applying the following criteria: The Company evaluates and determines the The Company assesses and determines the valuation corrections for impairment and the Estimated valuation corrections for impairment and the Amortisation service reversal of losses due to impairment of intan- method life in reversal of losses due to impairment of the gible assets in accordance with the criteria set years value of tangible assets in accordance with out in Note 4.3. Other facilities Straight-line 10 the criteria set out in Note 4.3.

Furnishings Straight-line 10 4.2. Tangible assets 4.3. Value impairment of non-financial Computer Straight-line 4 assets subject to amortisation or 4.2.1. Initial valuation hardware depreciation Transport Straight-line 10 The assets included as tangible assets are items The Company follows the criteria to evaluate booked at their acquisition price or produc- whether there is any indication that non-finan- tion cost and listed in the balance sheet The Company revises the residual value, service cial assets subject to depreciation or amorti- at that value minus amortisation and, if life and amortisation method for intangible sation may be impaired, in order to ascertain appropriate, any accumulated impairment assets at the end of each financial year. Any whether the carrying value of such assets losses. amendments to the criteria initially established exceeds their recoverable value, which is taken are recorded as changes in the estimate. to be the higher of fair value, minus costs of 4.2.2. Amortisations sale, and their value in use. 4.2.3. Subsequent costs Tangible assets are amortised by distributing Once the impairment loss or its reversal the amortisable amount evenly over their Subsequent to the initial recognition of an has been recorded, the amortisation for the service lives. For this purpose, the amortisa- asset, only costs which entail an increase in following years is adjusted based on the new ble amount is understood as the acquisition capacity, productivity or service life are capita- carrying value. cost minus its residual value. The Company lised. Costs involved in the daily maintenance determines the amortisation costs for each of tangible assets are thus recorded as expen- Notwithstanding the above, if the specific cir- intangible asset. ses in the profit and loss account as they are cumstances of the assets reveal an irreversible incurred. loss, the loss is recorded directly in losses from fixed assets in the profit and loss account.

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Impairment losses are recorded in the profit 4.5. Leases 4.6. Financial instruments and loss account. Leases where the contract essentially trans- Classification and separation of 4.4. Non-current assets held for sale fers all risks and rewards inherent in owner- financial instruments ship of the assets are regarded as finance The Company classifies under “Non-current leases, with others regarded as operating When initially recorded, financial instruments assets held for sale” those assets whose leases. are classified as a financial asset, financial carrying value will be recovered mainly liability or equity instrument, in accordance with through their sale, rather than through 4.5.1. Lessor accounting the substance of the contractual agreement continuing use, when they meet the and the definition of a financial asset, financial following requirements: Income from operating leases is recorded liability or equity instrument. in the profit and loss account upon accrual. • They are available in their present con- Direct costs attributable to the contract are The Company classifies financial instruments dition for immediate sale, subject to the included as an increase in the value of the into different categories for the purposes of usual and customary terms for the sale leased asset and are recorded as an expense valuation, based on their characteristics and the of such assets. over the term of the contract, applying the instructions of management at the time they same criteria used to record income from are initially recorded. • Their sale is highly likely. the lease. 4.6.1. Loans and accounts receivable Non-current assets held for sale are valued 4.5.2. Lessee accounting as the lower of their carrying value and their Loans and accounts receivable consist of fair value minus cost of sale, except for defe- The Company has operational lease con- trade and non-trade receivables with fixed rred tax assets. These assets do not amortise tracts with third parties for the premises or determinable payments which are not and, if necessary, the appropriate valuation where it conducts its usual business, as well quoted in an active market. adjustments are made so that the carrying as a vehicle which was used by personnel. value is not higher than the fair value minus These assets are initially recorded at fair cost of sale. Payments for operating leases, net of value, including transaction costs incurred, incentives received, are recorded as expen- and are subsequently valued at amorti- Related liabilities are classified under ses on a straight-line basis over the term of sed cost, using the effective interest rate “Liabilities related to non-current assets the lease. method. held for sale”.

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However, financial assets which do not have 4.6.3. Other financial assets at fair value 4.6.5. Interest a fixed interest rate, which mature in no more than one year or for which payment Investments in companies are initially recor- Interest is recorded using the effective interest is expected to be received in the short term ded at cost, which is equivalent to the fair rate method, and dividends when the right to and the effect of not updating them is not value of the consideration given, including receive them is declared. significant, are valued at their nominal value. the transaction costs incurred, and are subsequently valued at cost minus any accumulated 4.6.6. Retirement of financial assets 4.6.2. Financial assets held for trading impairment losses. Financial assets are retired when the right to These include financial assets originated Although the Company has shareholdings of receive cash flows related to them expire or or acquired with the objective of obtaining over 20% in some firms, these are not conso- are transferred and the Company has subs- short-term profits. When they are initially lidated as they are support investments for tantially transferred all the risks and rewards recorded in the balance sheet, they are which there are agreed repurchase deadlines of ownership. recorded at fair value, which, unless there and they are therefore not considered to be is evidence to the contrary, is the price of permanent investments and are not subject The retirement of a financial asset in its the transaction. Transaction costs directly to fully integrated management as part of the entirety entails recording the results for the attributable to these are recorded in the profit Company’s strategy. difference between its carrying value and and loss account. For equity instruments, the sum of the consideration received, net the initial value includes the amount of the 4.6.4. Investments held through maturity of transaction costs, including assets obtai- preferential subscription rights and similar ned or liabilities assumed and any deferred rights which have been acquired. Investments held through maturity are debt loss or gain in income and expenses recor- securities with a set maturity date, involving ded in equity. After they are initially recorded, financial fixed or determinable sums and traded on an assets held for trading are valued at their fair active market, which the Company fully intends 4.6.7. Impairment of financial assets value, without deducting any transaction and has sufficient capacity to hold through their costs which might be incurred upon disposal. maturity date, unlike securities classified under A financial asset or group of financial assets is Changes in fair value are recorded in the other categories. The valuation criteria appli- impaired and a loss from impairment has oc- profit and loss account. cable to financial instruments classified in this curred if there is objective evidence of impair- category are the same as those applied to loans ment as a result of one or more events which and accounts receivable. occurred after the asset was initially recorded, and the event or events which caused the loss

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have an impact on the estimated future cash the age of the debt. Once classified, Rating Percentage flows of the financial asset or group of assets in general the decline in value (DV) is which can be reliably estimated. estimated collectively for each in-house A 0.20% rating category - the in-house rating B+ 0.20% On 28 June 2017, the Board of Directors of the operation before securities are approved an update of the risk coverage taken into account - and is presented B 0.20% policy due to portfolio impairment, using in a grid which assigns a certain DV for the Banco de España’s guidelines regarding each rating category. B- 0.20% this matter as a reference. The application of this new policy has entailed the following Risk coverage due to impairment of va- C+ 4% lines of action: lue in doubtful debts is generally classi- C 10% fied as follows: debts of 3 to 6 months, • The Policy on impairment provisions for 6 to 9 months, 9 to 12 months, 12 to 15 C- 20% operations is applicable to all of them months, 15 to 18 months and over 18 with the sole exception of open-price months, and the percentages applied DM3 30% equity transactions for which, in accor- to the categories are 30%, 70%, 80%, DM6 70% dance with the accounting plan, the and 90%, 95% and 100% respectively. impairment of these transactions is DM9 80% determined by the difference between • In the case of operations with country the acquisition cost and the value of risk, the DV corresponding to its solven- DM12 90% the holding which, in the absence of a cy is maintained as long as it is equal to reliable market value, will be assimila- or greater than the country risk. DM15 95% ted to the theoretical carrying value of DM18 100% the investee company. • The Policy also provides for the possibility of estimating the amount of DV • This Policy is based on an individualised on an individual basis (individual risk risk analysis for each operation, which estimation) for portfolio operations Directors in July 2017. In this case the results in the assignment of a certain classified as watch list loans or doubtful applicable impairment is determined in-house rating, except in the case of debts classified as such in accordance based on a specific report issued by doubtful debts due to late payment in with the Company’s Asset Classifica- the Investment Divisions which which the variable to be considered is tion Policy, approved by its Board of underpin this.

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• In cases where collateral is provided, arising from non-commercial operations other 4.7.3. Retirement and modification provided that its valuation and enfor- than derivatives. of financial liabilities ceability are considered acceptable, the applicable provision is the amount of They are recorded on the balance sheet at The Company retires a financial liability or the risk less the value of the security. fair value, which, barring evidence to the part of it when it has fulfilled the obligation contrary, is the price of the transaction, contained in the liability or is legally relea- Loss or reversal of the impairment is recor- equivalent to the fair value of the conside- sed from the fundamental responsibility ded in the profit and loss account. ration received adjusted for any transaction contained in the liability either by virtue of costs directly attributable thereto. legal proceedings or by the creditor. In relation to the requests for deferral of payment of instalments for 2020 arising After they are initially recorded, these The Company recognises the difference from the effects of COVID-19, the Board financial liabilities are valued at their amor- between the book value of the financial of Directors of the Company agreed, at its tised cost. Accrued interest is entered into liability or of a part of it that is written off or meeting of 29 April 2020, not to automati- the profit and loss account, applying the assigned to a third party and the compen- cally apply the penalty established in the effective interest method. sation paid, including any assigned asset Impairment Policy for operations classified different from the cash or liability assumed, as watch-list loans as a result of the auto- That notwithstanding, commercial opera- with a charge or credit to the profit and mation of the Asset Classification, which, tion debits with a maturity of no more than loss account. while reasonable in normal situations, one year which have no contractual interest may not be so in exceptional circumstan- rate, as well as payouts demanded by third 4.8. Foreign exchange transactions, ces not foreseen at the time they were parties on holdings, whose sum is expected balances and flows drawn up. to be paid in the short term, are valued at their nominal value when the effect of failu- Foreign exchange transactions were 4.7. Financial liabilities re to update cash flows is not significant. converted to euros at the exchange rate in effect on the date of the transaction. 4.7.1. Debits and accounts payable 4.7.2. Security deposits Monetary and non-monetary assets and These include financial liabilities arising from Security deposits included in lease contracts liabilities denominated in foreign currencies the purchase of goods and services in the are valued in accordance with the criteria were converted to euros at the exchange course of the Company’s business and debits described for financial instruments. rate in effect at year end.

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Non-monetary assets valued at fair value 4.9. Cash and other equivalent liquid assets render the services which entitle them to such were converted to euros at the exchange remuneration. rate in effect at year end. This item includes cash at hand and in current accounts and deposits, as well as temporary The Company records the expected cost In the cash flow statement, flows from acquisitions of assets, which meet all the of employee profit-sharing or incentive foreign exchange transactions were con- following requirements: plans when a present obligation, legal or verted to euros at the cash exchange rate in implicit, exists as a result of past events and effect on the date of the transaction. • They can be converted to cash. the value of the obligation can be reliably estimated. The positive and negative differences • Their maturity when acquired was no more arising from foreign currency transaction than three months. 4.11. Severance payments settlements and from the conversion to euros of monetary assets and liabilities • They are subject to no significant risk of Severance payments are recorded as soon denominated in foreign currency are recor- change in value. as a detailed formal plan is in place and the ded in results. personnel affected have a valid expectation • They form part of the Company’s normal cash that the employment relationship will be Exchange rate losses or gains on non-mo- management policy. terminated, either because the plan is netary financial assets and liabilities valued underway or because its principal characte- at fair value are recorded together with For the purposes of cash flow, the occa- ristics have been announced. the variation in the fair value. Nevertheless, sional overdrafts which form part of the the exchange rate variation component of Company’s cash management policy are In accordance with existing labour legis- non-monetary financial assets denomina- included as minus cash and other equiva- lation, the Company is obligated to pay ted in foreign currency is recorded in results lent liquid assets. severance, under certain circumstances, when the assets are classified as saleable to employees whose employment it termi- and fair value hedging is in place for said 4.10. Short-term remuneration nates. Severance pay which can be reliably component. The rest of the variation in fair for employees quantified is recorded as an expense in the value is recorded as described in Note 4.6 year in which the Company has created a (Financial instruments). The Company records the expected cost of valid expectation in respect of the parties short-term remuneration as the employees concerned.

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4.12. Provisions ties, using the regulations and tax rates in 4.14. Classification of current force or approved and pending publication and non-current assets and liabilities Provisions are recorded when the Company on the closing date of the financial year. has a present obligation, be it legal, con- The Company classifies assets and liabilities tractual, implicit or tacit, as a result of a past Current or deferred profit tax is recognised as current when they are expected to be event; when an outlay of resources from in results, unless it arises from a transaction refunded or paid in the normal operating future earnings is likely to be needed to meet or economic event that has been recog- cycle of the Company. They are maintained such obligation; and when the sum of the nised in the same or a different financial primarily for business purposes and their obligation can be reliably estimated. year, against net equity or of a business expected date of settlement is within combination. twelve months of closing. The financial effects of such provisions are recorded in the profit and loss account as Timing adjustments are recorded in all Financial liabilities are classified as current financial expenses. cases except for the exceptions established when they must be settled within twelve by existing legislation, while deductible months of closing, even if the original tenor The provisions do not include either the fiscal timing adjustments are recorded whenever is for a period of more than twelve months, effects or expected earnings from the sale or they are likely to be offset by future positive and when long-term refinancing or payment abandonment of assets. taxable income. restructuring arrangements are in place which expired after the end-date but before Provisions are reversed against results Deductible timing adjustments are recor- the financial statements are prepared. when it becomes unlikely that an outlay of ded whenever they are likely to be offset by resources will be required in order to cancel future positive taxable income. 4.15. Revenues and expenses the obligation. Deferred tax assets and liabilities are valued Revenues and expenses resulting from 4.13. Tax on earnings at the tax rates which will be applicable in increases or decreases in the Company’s the years when the assets are expected to resources are recorded on an accrual basis Expenses or revenues from tax on earnings be refunded or the liabilities to be paid. in the period referred to in the financial include both current and deferred taxes. statements, providing the sum thereof can Deferred tax assets and liabilities are recor- be reliably determined. Assets or liabilities due to current profit tax ded on the balance sheet as non-current are valued at the amounts expected to be assets or liabilities, regardless of the expec- Ordinary management revenues are recor- paid or recuperated from the tax authori- ted refund or payment date. ded at the fair value of the consideration

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received or to be received, in proportion to 5. Intangible assets the fraction of the service provided by the end of the financial year. The details and movements of the various items comprising intangible assets are as follows:

The Company records the ordinary reve- Thousands of euros 2020 nues and costs associated with the ope- Industrial Software Advances on rations in which it acts as mere manager, Total property applications software collecting the sums involved on behalf of the funds managed. In these operations, Cost on 1 January 2020 - 1,035 - 1,035 only the fees earned are recorded as Acquisitions - - - - ordinary revenues. Likewise, it records Retirements - (62) - (62) ordinary revenues and associated costs of Transfers - - - - its own loans granted, including both fees and interest. Cost on 31 December 2020 - 973 - 973 Accumulated amortisation on 1 January 2020 - (894) - (894) 4.16. Related party transactions Acquisitions - (44) - (44) Retirements - 13 - 13 Related party transactions are recorded in accordance with the valuation standards Transfers - - - - outlined above. Accumulated amortisation on 31 December 2020 - (925) - (925) Net carrying value on 31 December 2020 - 48 - 48 Since the prices of related party operations are suitably accommodated, the Company’s directors deem that they entail no risk of losses which would generate significant tax liabilities.

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Thousands of euros 2019

Industrial property Software applications Advances on software Total

Cost on 1 January 2019 - 907 - 907 Acquisitions - 128 - 128

Retirements - - - -

Transfers - - - -

Cost on 31 December 2019 - 1,035 - 1,035

Accumulated amortisation on 1 January 2019 - (853) - (853)

Acquisitions - (41) - (41)

Retirements - - - -

Transfers - - - -

Accumulated amortisation on 31 December 2019 - (894) - (894)

Net carrying value on 31 December 2019 - 141 - 141

5.1. Fully amortised assets 5.2. Insurance

The cost of fully amortised intangible assets still in The Company has taken out a number of insurance policies to cover the risks use on 31 December is as follows: to its intangible assets. The cover provided by these policies is regarded as sufficient.

Thousands of euros 2020 2019 5.3. Other information Industrial - - property No purchase or sale transactions involving non-current assets were concluded with group companies. Software 851 851 applications On 31 December 2020, there were no purchase commitments relating to intangible TOTAL 851 851 assets, nor were there any on 31 December 2019.

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6. Tangible assets

The details and movements of the various items which make up the tangible assets are as follows:

Thousands of euros 2020 Computer Other facilities Furnishings Transport items Total hardware

Cost on 1 January 2020 832 377 285 2 1,496 Acquisitions 1 7 36 - 40

Retirements - - (2) - (2)

Transfers - - - - -

Cost on 31 December 2020 833 384 319 2 1,538

Accumulated amortisation on 1 January 2020 (356) (214) (222) (1) (793)

Acquisitions (80) (33) (30) (143)

Retirements 1 1

Transfers - - - - -

Accumulated amortisation on 31 December 2020 (436) (247) (253) (1) (937)

Net carrying value on 31 December 2020 397 137 66 1 601

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Thousands of euros 2019

Computer Other facilities Furnishings Transport items Total hardware

Cost on 1 January 2019 832 367 265 2 1,466 Acquisitions - 10 20 - 30

Retirements - - - - -

Transfers - - - - -

Cost on 31 December 2019 832 377 285 2 1,496

Accumulated amortisation on 1 January 2019 (276) (182) (185) (1) (644)

Acquisitions (80) (32) (37) - (149)

Retirements - - - - -

Transfers - - - - -

Accumulated amortisation on 31 December 2019 (356) (214) (222) (1) (793)

Net carrying value on 31 December 2019 476 163 63 1 703

6.1. Fully amortised assets

The cost of totally amortised tangible assets still in use on 31 December is as follows:

Thousands of euros 2020 2019

Other facilities 33 33

Furnishings 66 66

Computer hardware 166 175

TOTAL 265 274

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6.2. Insurance a deed registered in the Gernika-Lumo 8. Risk policy and management property register. The property was recor- The Company has taken out a number ded at its fair value (1,356 thousand euros) 8.1. Financial risk factors of insurance policies to cover the risks to on that date. its tangible assets. The cover provided by The Company’s business is exposed to these policies is regarded as sufficient. Given that Company management is acti- various financial risks: foreign exchange vely pursuing the sale of the property, it was risks, credit risks, liquidity risks and cash flow 6.3. Other information recorded under the heading “Non-current interest rate risks. Global risk management assets held for sale”, and remains under focuses on the uncertainty of the economic No purchase or sale transactions involving that heading on 31 December 2020. environment and attempts to minimise po- non-current assets were concluded with tentially adverse effects on the Company’s group companies. The estimated costs related to the sale of financial profitability. this asset are recorded under the heading On 31 December 2020 there is a commitment “Liabilities associated with non-current Active risk management falls under the to purchase property, plant and equipment assets held for sale”, with the amount of scope of both the Company’s Investments amounting to 59 thousand euros. There was 613 thousand euros on 31 December 2020 and Risk Areas, in accordance with the no purchase commitment from 2019. (613 thousand euros in 2019). policies approved by its Board of Directors and, more specifically, with the Company’s 7. Non-current assets held On 31 December 2015, the Company recently revised operational performance for sale considered, as a result of a new appraisal criteria, under which financial risk control, commissioned from a specialised company, information and supervision mechanisms On 28 February 2012, Bilbao Commercial that the valuation of the property had been have been significantly reinforced. The Court No.2 awarded the Company a property reduced to 725 thousand euros. Investments Area identifies, evaluates and located in the municipality of Munguia, itemises the financial risk involved in pro- Vizcaya, in mortgage foreclosure proceedings On 31 December 2018, the Company posals for new operations submitted to the as repayment of a loan. The award value of considered making a new valuation ad- Company and also manages financial risks said property was 1,327 thousand euros. The justment to the property to a fair value of in connection with live operations in order property was not under lease to third parties. 475 thousand euros, as a result of a new to anticipate future contingencies. The Risk appraisal carried out at the beginning of Area, in turn, manages the risk of the port- On 19 April 2012, the Company was granted 2019. This valuation is maintained at year folio as a whole and enforces the Company’s possession of said property by means of end 2020. in-house risk criteria, at both the individual

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and global levels. All of this is conducted, for 8.1.2. Foreign exchange risk these matters in the operations financed, accounting purposes, in accordance with in line with international parameters on the the provisions of Section 4.6.7. Since the Company operates internationally, subject (World Bank Group and European a number of its operations are exposed to equivalent standards). 8.1.1. Credit risk foreign exchange risk, specifically as regards the U.S. dollar. Foreign exchange risk is incu- The Company assesses the governance of In keeping with the provisions of its opera- rred in forward trade transactions, recorded the company sponsoring the project being ting criteria, the Company does not have assets and liabilities, and net investments in financed and rates them using the corpora- any significant concentration of credit risk. business abroad. te governance rating. The Company has policies in place in order to accurately evaluate its financing opera- 8.1.3. Liquidity risk 8.2. Operational risk factors tions and ensure that all of its clients have an appropriate credit history. The Company conducts prudent liquidity Operational risk is that which can lead to risk management, based on maintaining losses due to human error, inadequate or Corrections in valuations due to client sufficient cash and marketable securities faulty internal processes, system failures and insolvency entail a fair amount of discretion and by regularly estimating its maximum as a result of external events. This definition on the part of management, as well as a refinancing activity based on an analysis of includes legal risk and excludes strategic vision of individual balances based on client its expected cash flows. and/or business risk and risk to the Com- credit ratings, current market trends and pany’s reputation. a historical analysis of pooled insolvencies. 8.1.4. Social, environmental and In order to determine the country-specific governance risk Operational risk is inherent to all activities, component in corrections of individual products, systems and processes, and its valuations, the country’s credit rating is con- Risk of incurring losses due to not incor- origins vary hugely (processes, internal and sidered, based on information provided by porating social, environmental and gover- external fraud, technology, human resour- external agencies. In relation to corrections nance issues that may negatively affect the ces, business practices, providers). Opera- in valuations deriving from an aggregate viability and sustainability of projects into tional risk management is integrated into analysis of default history, a reduction in the the analysis. the Company’s global risk management size of the balance implies a reduction in structure. valuation corrections, and vice-versa. The Company has an environmental and social policy for the management of credit In this regard, the Company has an inte- and reputational risks associated with grated internal control methodology with

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policies covering personnel management The amounts of rent paid under operating The minimum future payments in euros and training, investment in information leases and recorded as expenses are for non-cancellable operating leases are technologies and policies for monitoring shown below: given below: credit operations, as well as other management methodologies developed by the Thousands Thousands 2020 2019 2020 2019 different divisions of the Company with of euros of euros the support of senior management. The Internal Control Division carries out periodic Buildings 903 900 Up to one year 687 687 monitoring and internal audits of these Vehicles 7 8 Between one 687 1,374 established policies and processes. This and five years Other 15 17 division reports organically to the Chair- More than five years - - man’s Office and functionally to the Audit TOTAL 925 925 and Risk Committee. TOTAL 1,374 2,061

9. Operational leases - lessee

The Company has operational lease contracts with third parties for the premises where it conducts its usual business, as well as a vehicle which is used by members of the institution.

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10. Investments in equity instruments

The breakdown of investments in equity instruments and classified as “Other financial assets at fair value” is as follows:

Thousands of euros 2020 Net carrying Company Country Activity % Holding Cost Impairment value of holding European Financing Partners Luxembourg (i) 7.63 6 - 6

Interact Climate Change Facility, S.A. Luxembourg (ii) 7.69 6 - 6

AURICA III FCR Spain (iii) 1.875 2,575 - 2,575

AUTOPISTA DEL NORDESTE, S.A.S Colombia (iv) 0.07 205 - 205

OMAN FUND-INTERNATIONAL-K1 Oman (v) 0.49 435 - 435

ORTIZ-COLOMBIA-SISGA-K1 Colombia (vi) 3.75 506 - 506

FONDO HURUMA INTERNACIONAL (vii) 1.25 125 - 125

EDFI MANAGEMENT COMPANY S.V. Luxembourg (viii) 12.5 40 - 40

TOTAL 3,898 - 3,898

(i) Financial intermediation to countries in Asia, the Caribbean and the Pacific. (ii) Financial intermediation for environmental projects. (iii) Financial intermediation for projects oriented towards international expansion. (iv) Infrastructure, transport. (v) Management of investments of one or more venture capital enterprises. (vi) Infrastructure, transport. (vii) Financial intermediation for projects in the agricultural sector, with a system for measuring social impact. (viii) European development finance institution.

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Thousands of euros 2019 Net carrying Company Country Activity % Holding Cost Impairment value of holding European Financing Partners Luxembourg (i) 15.38 6 - 6

Interact Climate Change Facility, S.A. Luxembourg (ii) 7.69 6 - 6

AURICA III FCR Spain (iii) 1.875 1,562 (94) 1,468

AUTOPISTA DEL NORDESTE, S.A.S Colombia (iv) 0.07 205 (22) 183

OMAN FUND-INTERNATIONAL-K1 Oman (v) 0.49 264 - 264

ORTIZ-COLOMBIA-SISGA-K1 Colombia (vi) 3.75 506 - 506

TOTAL 2,549 (116) 2,433

The equity instruments indicated in the evidence, events occurring since initial evidence of lack of recoverability of the foregoing tables for 2020 and 2019, for valuation and lack of recoverability of the net carrying value of investments in equity which the fair value cannot be reliably carrying value - are not met in order to instruments. estimated, are valued at cost minus, where record an impairment of holdings in ventu- appropriate, the accumulated amount of re capital funds that are in the investment EUROPEAN FINANCING any corrections made to adjust for impair- period, since the decline in carrying value PARTNERS, S.A. (EFP) ment of their value. over the first few years of the fund’s life is expected and known at the time of initial Since its creation in 1994, the European In foreign holdings, the functional currency valuation of the investment, and this does Financing Partners S.A. (EFP) facility has is the currency of the country where the not alter its expected return, according to supported projects amounting to EUR company has its headquarters. Furthermo- the plan implemented and the investments 600.6 billion. It has steadily expanded since re, the net investment in holdings matches underpinning the venture capital funds are its inception and and the investment period the carrying value of the investment. expected to yield a positive return over the was recently extended until October 2022. investment period, the unrealised capital With regard to impairment of the funds gains of which, where they exist, are reflec- The goal of the EFP is to support sustai- in which COFIDES has holdings, the ted in the year-end management reports. nable private sector development within conditions set in the standard - objective At present, therefore, there is no objective its geographical scope, ACP and ODA

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recipient countries. The type of support The aim of the ICCF is to support low-car- total are expected to be made. The target instruments it covers are equity, mezzanine, bon sustainable development within its return is 15%. ordinary loan and counter-guarantee that geographical scope, ACP and ODA recipient facilitate financing. The project investor countries. The main focus is on eliminating The fund was launched by Aurica Capital, a must assume own risk in the project for an or reducing greenhouse gas emissions. The subsidiary of Banco de Sabadell, which also appropriate amount, demonstrating their type of support instruments covered by participates as an investor. commitment to the project. this facility are ordinary loans, subordinated loans and counter-guarantees that facilitate Total paid-in capital at year-end amounted to COFIDES/FIEX’s interest in participating in financing. The project investor must be 82% of committed capital. this initiative is mainly due to the fact that willing to assume own risk in the project the instrument operates in a geographical for an appropriate amount, demonstrating AUTOPISTA DEL NORDESTE, S.A.S. area that includes Latin America, where their commitment to the project. Spanish companies have a considerable Ortiz Construcciones y Proyectos is the presence. The instrument accepts financing COFIDES/FIEX’s interest in participating in parent company of a multinational business proposals from any sector, and COFIDES this initiative is mainly due to the fact that it group whose activity is focused on the cons- has identified an operation that could be involves a sector (renewable energies), and truction sector (including civil engineering submitted to the EFP. a geographical area, which includes Latin works, construction, EPC energy), although America. in recent years it has followed a strategic As of 31 December 2020, there are 45 opera- process based on the internationalisation tions financed by FIEX under this facility. As of 31 December 2020, there are 29 opera- and diversification of its business mix. tions financed by FIEX under this facility. INTERACT CLIMATE CHANGE Concession contract awarded in 2014 as part FACILITY, S.A. (ICCF) AURICA III FCR of the bidding process for the first wave of the fourth generation of 4G road conces- The Interact Climate Change Facility S.A. Investment in a fund aimed at providing sions in Colombia (4G Program). (ICCF), with a current total commitment financing through capital operations to of up to M€502. The facility was originally Spanish companies with a profile oriented The concession term is 25 years, extendable formalised on December 20, 2010, with a towards international expansion. The by 4 more years if the income volume commitment period that has been exten- duration of the fund is 10 years and the expected and stipulated in the concession ded until October 2022. investment amounts will be between M€10 contract is not reached. The construction and M€30. Between 6 and 8 investments in term is 5-6 years.

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This concession was awarded in December of disclosure, competition, transparency, Authority (OIA), previously State General 2014 to a consortium formed by Ortiz Cons- confidentiality, equality and non-discrimina- Reserve Fund (SGRF) which was founded in trucciones y Proyectos (25%), KMA (25%), tion set forth in Article 192 of the revised text 1980 with the aim of obtaining sustainable Valorcon (25%) and Equipo Universal (25%). of the Spanish Public Sector Contracts Act, results from investments made from the in force at the beginning of the contracting surplus generated by oil sales after meeting The operation consists of providing finan- process. the government’s budgetary requirements, cial support to the Ortiz Group through the in order to secure funds for future genera- contribution of funds to the concession MCH PRIVATE EQUTITY INVESTMENTS, tions. The SGRF manages and invests these company Autopistas del Noreste in the SGEIC, S.A. was awarded the management funds in a diversified portfolio in more than form of capital, subordinated debt and of the fund. It is one of the most prestigious 25 countries around the world. It is supervi- counter guarantees for capital and subordi- managers in the Spanish venture capital sed by the Ministry of Economy and Energy. nated debt. sector. CONCESIÓN TRASVERSAL DEL SISGA, S.A.S. COFIDES/FIEX became shareholders of the The CNMV (Spanish National Securities concession company in July 2017, when the Market Commission) registered the fund in This consists of financing the construction, shares were purchased and paid for. its Register of Venture Capital Funds on 13 restoration, operation and maintenance of July 2018. The fund is earmarked for invest- the existing Transversal del Sigla highway SPAIN OMAN PRIVATE EQUITY ment in minority shareholdings in subsi- corridor (137 km), with almost all the improve- FUND. I.L.P. diaries of Spanish groups or in the Spanish ment work being done via three instruments: parent company with the aim of supporting equity, subordinated debt and counter-gua- Fund established as a result of COFIDES’ their international development. It has a rantees (capital and subordinated debt). agreement with SGRF to set up the Spain duration of 10 years with two 1-year exten- Oman Private Equity Fund. sions, and the investment period is 3 years COFIDES/FIEX’s financial support consisted with a 1-year extension. 12-15 investments of acquiring a shareholding of up to 15% in Management was entrusted to a private will be made for amounts of M€7 – M€30 the Ortiz Group (with FIEX and COFIDES management company, selected through per operation. funds) and a similar percentage of the an open procurement procedure in the first concession company’s subordinated debt, half of 2018, within the framework of the The size of the fund is M€200. FIEX contri- up to a maximum of M€14 (85% FIEX). public sector contract regulations applica- buted an investment of M€99 and COFIDES ble to COFIDES for service contracts, spe- with an investment of M€1. The rest was The project was formalised on 30 December cifically in compliance with the principles contributed by the Oman Investment 2016, although the investment was subject

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to the fulfillment of certain conditions fund through equity (15%), equity debt (15%) company EDFI Management Company, precedent (mainly financial closing). The and senior debt (70%), aimed at: S.A. (“EDFIMC”) is acquired for an indefinite overall financing for the project will reach period of time to indirectly implement the equivalent in COP (Colombian peso) 1. Microfinance institutions. COFIDES’ corporate purpose as a bilateral of a maximum of M€25 (between the development finance institution. It is there- previous operation and the extension). The 2. Other finance institutions, with a mini- fore not a finance investment in execution financial closing of the concession took mum of 70% of investments under these of its mandate and is therefore not subject place in May 2018 and the conditions pre- two headings. to the intrinsic temporal nature of COFIDES’ cendent of FIEX’s disbursement were met in usual operations. October 2018. 3. Small and medium-sized business organisations, with a maximum of 30% of the EDFIMC was created in 2016 by European FONDO HURUMA INTERNACIONAL portfolio. Development Financial Institutions (“EDFI ASBL”), an association that includes most Investment in a newly created fund aimed They should all invest in expanding opera- European bilateral development finance at financing agricultural producers, with tions in the rural sector, with low-income institutions (“EDFIs”) and of which COFIDES a system for measuring social impact. The clients, in emerging markets, and their opera- is a member, with the aim of becoming a main end recipients of investment are tions should have a positive social impact on new European institution for development finance institutions with an investment low-income communities. finance. At present, EDFIMC’s main activity focus on the agricultural and rural sectors is the management and administration of and organisations of agricultural producers, The portfolio is expected to consist of 25 ElectriFi and AgriFi, two facilities funded collection centres or suppliers of inputs investments of between 1 and 10 billion euros mainly by the European Union, with a or machinery, among others. The main with an average amount of 4 billion euros. presence in markets where COFIDES has investment areas are Latin America, Asia The investments will have a term of 7 years little experience of direct financing to date. and Africa. This is the first operation that for equity and junior debt investments and EDFIMC intends to continue to increase its COFIDES will lead under the EU’s blending between 2 and 4 years for senior debt with a financing activity in developing countries, framework. limit of 6 years. in particular through their management of European funds. In addition, EDFIMC The purpose of the Fund is to invest in EDFI MANAGEMENT COMPANY S.V. acts as operational manager of ICCF and venture capital in the broad sense, ensuring EFP facilities funded by the main European that the investee qualifies at all times as an Investment of an institutional nature, DFIs, including COFIDES, and the EIB. eligible investment for a social enterprise whereby a minority stake in the Belgian

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In this context, EDFI ASBL’s initiative to The movements in the valuation adjustments for impairment of equity transactions on strengthen the capital structure of EDFIMC, 31 December are as follows: for a value of M€1.2, with a majority shareholding made up directly of accredited Thousands of euros 2020 2019 EDFIs from EU Member States, has resulted Cost 2,898 2,549 in the participation, in addition to EDFI Net impairment - (116) ASBL, of the following six EDFIs: COFIDES, BIO (Belgium), FINNFUND (Finland), Net carrying value 2,898 2,433 FMO (Netherlands), IFU (Denmark) and Impairment variation - - PROPARCO (France). The guiding principle of this project is parity between the participating EDFIs, with the exception of 2020 2019 EDFI ASBL, which is granted a special role, Thousands of euros Non-current Non-current in its capacity as founding and promoting Impairment on 1 January (116) (116) partner and indirect representative of those EDFIs associated with EDFI ASBL that do Net decreases 116 - not participate in the project. Accumulated impairment on - (116) 31 December COFIDES’ investment, made in parallel with the other partners, was formalised in October 2020 through the subscription of 261 EDFIMC shares, equivalent to 12.5% of its share capital, and disbursement of EUR 40,130.06 (25% of the nominal value of the capital increase subscribed). COFIDES was also appointed as a member of the new EDFIMC board of directors.

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11. Financial assets

The composition of financial assets on 31 December is as follows:

Equity instruments Accounts receivable, funds Loans to companies Total (Note 10) and other financial assets Thousands of euros Non-current Current Non-current Current Non-current Current Non-current Current

Financial year 2020:

Loans and accounts receivable - 78,004 10,740 11,656 20,859 89,660 31,599

Available-for-sale assets

- At fair value 3,898 5,000 - - - - 3,898 5,000

- At cost ------

Total 3,898 5,000 78,004 10,740 11,656 20,859 93,558 36,599

Financial year 2019:

Loans and accounts receivable - 65,809 12,823 10,057 22,446 75,866 35,266

Available-for-sale assets

- At fair value 2,433 5,000 - - - - 2,433 5,000

Total 2,433 5,000 65,809 12,823 10,057 22,446 78,299 40,269

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These amounts are broken down in the balance sheet as follows:

Financial year 2020:

Long-term financial investments

Equity instruments 3,898 - - - - - 3,898 - Loans to companies - - 78,004 - - - 78,004 - Other financial assets - - - - 115 - 115 - Accounts receivable, funds - - - - 11,541 - 11,541 -

Trade and other receivables

Accounts receivable - - - - - 439 - 439 Accounts receivable, funds - - - - - 9,143 - 9,143 Public Administrations 45 45

Short-term financial investments

Equity instruments 5,000 5,000 Loans to companies - - - 10,740 - - - 10,740 Accrual of interest on loans to - - - - - 336 - 336 companies Other financial assets - - - - - 10,896 - 10,896 Accrual of interest on other ------financial assets

Total 3,898 5,000 78,004 10,740 11,656 20,859 93,558 36,599

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Financial year 2019:

Long-term financial investments

Equity instruments 2,433 - - - - - 2,433 - Loans to companies - - 65,809 - - - 65,809 - Other financial assets - - - - 115 - 115 - Accounts receivable, funds - - - - 9,942 - 9,942 -

Trade and other receivables

Accounts receivable - - - - - 1,997 - 1,997 Accounts receivable, funds - - - - - 8,328 - 8,328

Short-term financial investments

Equity instruments 5,000 5,000 Loans to companies - - - 12,823 - - - 12,823 Accrual of interest on loans to - - - - - 338 - 338 companies Other financial assets - - - - - 11,783 - 11,783 Accrual of interest on other ------financial assets

Total 2,433 5,000 65,809 12,823 10,057 27,446 78,299 40,269

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11.1. Loans to companies

11.1.1. Loans and accounts receivable

Loans are granted under financing agreements concluded with third parties to promote private projects involving Spanish interest carried out in developing countries. In addition to using its own resources, the Company may grant these loans through financing agreements with other public financial institutions. Conditions regarding the term of these loans as well as the interest rate and any security required are individually stipulated in the contract signed for each loan. The variations in the loan figures in the financial year are listed below:

2020 2019

Thousands of euros Non-current Current Non-current Current

Cost on 1 January 69,963 13,335 72,923 14,637 Increases 25,204 - 18,794 -

Decreases (1,285) (13,335) (8,419) (14,637)

Short-term transfers (11,493) 11,493 (13,335) 13,335

Cost on 31 December 82,389 11,493 69,963 13,335

Accumulated impairment on 31 December (4,385) (753) (4,154) (512) Net carrying value on December 31 78,004 10,740 65,809 12,823

At 2020 year end, granted and outstanding loans amounted to 17,952 thousand euros (15,662 thousand euros at 2019 year end).

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Some of these debt instruments are formalised through the acquisition of shares in the companies financed by COFIDES; this notwithstanding, given the repurchase conditions established, these transactions are considered to be debt instruments and not equity instruments. The detail of the loans formalised under this heading is as follows:

Thousands of euros 2020

Net carrying Company Country Activity % Holding Cost Impairment value of holding Electrón Investment S.A. Panama (i) 2.30% 3,810 (153) 3,657

Globalvia Chile SPA Chile (ii) 8.17% 5,607 (224) 5,383

TOTAL 9,417 (377) 9,040

Thousands of euros 2019

Net carrying Company Country Activity % Holding Cost Impairment value of holding Electrón Investment S.A. Panama (i) 2.30% 3,720 (149) 3,571

Globalvia Chile SPA Chile (ii) 8.17% 5,406 (216) 5,190

TOTAL 9,126 (365) 8,761

(i) Construction, operation and maintenance of two power plants. (ii) Civil construction works.

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The detail of the annual maturities of the loans The movements in the amount of impairment losses on loans is as follows: on 31 December are as follows:

Thousands of euros 2020 2019 2020 2019

2020 - 13,335 Thousands of euros 2021 11,493 10,991 Non-current Current Non-current Current

2022 13,998 16,525 Impairment on 1 January (4,154) (512) (7,206) (751) 2023 12,069 8,839 Net increases 231 241 3,052 239 2024 and 11,517 33,608 subsequent years (for 2019) Net decreases - - - -

2025 and 44,805 - Pay offs - - - - subsequent years Transfers - - - - Total 93,882 83,298 Discontinuation of provisions - - - - The financial income and accrued interest Short term - - - - pending generated by these loans during / long term transfers the years 2020 and 2019 are as follows: Accumulated impairment (4,385) (753) (4,154) (512) on 31 December Thousands of euros 2020 2019

Accrued financial income 2,440 2,359 The valuation corrections listed in the above table were calculated using the methodology (Note 19.1) applicable to each operation as described in Note 4.6.7.

Accrued interest pending 336 338 (Note 11.2)

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11.2. Receivables from funds and other financial assets

The items under this heading on 31 December were as follows:

2020 2019 Thousands of euros Non-current Current Non-current Current

Trade accounts receivable 11,541 9,627 9,942 10,325 Other financial investments: Interest accrued on loans to companies - 336 - 338 (Note 11.1.1) Other financial assets 115 15,896 115 16,783 Accrual of interest on other financial assets - - - - Total 11,656 25,859 10,057 27,446

11.2.1. Trade accounts receivable The breakdown for trade accounts receivable is given below:

2020 2019 Thousands of euros Non-current Current Non-current Current

Accounts receivable - 10,835 - 11,001

Accounts receivable, funds 12,232 9,052 12,376 8,328 Other accounts receivable - 136 - 1,053 Total 12,232 20,023 12,376 20,382 Impairment of trade accounts receivable (691) (10,396) (2,434) (10,057) Total trade accounts receivable 11,541 9,627 9,942 10,325

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The entries in the 2020 and 2019 financial years under “Impairment of trade accounts receivable” are detailed below:

2020 2019 Thousands of euros Non-current Current Non-current Current

Balance on 1 January (2,434) (10,057) (2,404) (5,937) Net allocations (309) (339) (30) (4,951) Transfers - - - - Discontinuation of provisions 2,052 - 831 Applications - - - - Balance on 31 December (691) (10,396) (2,434) (10,057)

“Accounts receivable” refers primarily to the sums due and pending payment of third-party loans, in connection with the operations specified in Note 11.1.1 above.

“Accounts receivable, funds” includes the amount of commissions accrued and pending for management and other services connected with the FONPYME and FIEX funds.

11.2.2. Other financial assets

2020 2019 Thousands of euros Non-current Current Non-current Current

Other financial assets Securities 115 - 115 - Deposits - 10,896 - 11,783 Total 115 10,896 115 11,783

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Non-current:

“Other (non-current) financial assets” included 115 thousand euros at year-end 2020 (115 thousand euros at year-end 2019), consisting primarily of deposited securities in connection with the Company’s leases, as specified in Note 9.

Current:

The list of certificates of deposits with a term of less than one year at the end of 2020 is as follows:

Term deposits Interest accrued Annual Date Type Maturity date (Thousands and outstanding interest rate formalised of euros) (Thousands of euros)

Financial year 2020 Term deposits with Banco Sabadell $ 0.21% 07/12/2020 19/01/2021 896 -

Term deposits with Banco Sabadell -0.25% 23/11/2020 23/12/2021 10,000 - Totals 10,896 -

At the end of 2019 the detail of same was as follows:

Term deposits Interest accrued Annual Date Type Maturity date (Thousands and outstanding interest rate formalised of euros) (Thousands of euros)

Financial year 2019 Term deposits with Banco Sabadell $ 1.82% 25/11/2019 04/01/2020 1,780 -

Term deposits with Banco Sabadell 0.00% 18/10/2019 18/11/2020 10,000 - Totals 11,780 -

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11.3. Assets at fair value valued at fair value 11.4. Sums denominated in foreign currency (short-term equity instruments) The breakdown of monetary financial instruments denominated in foreign currency The subscription in an Investment Fund is recorded under (U.S. dollars) is as shown below: this heading. The acquisition cost and the fair value of financial assets classified in this category on 31 December Thousands of euros 2020 2019 were as follows: Long-term financial investments: Loans to companies 6,145 6,294 2020 2019 Thousands Total non-current assets 6,145 6,294 Acquisition Acquisition of euros Fair value Fair value cost cost Short-term trade and other accounts receivable:

Shares 5,000 5,000 5,000 5,000 Accounts receivable 506 616 Short-term financial investments: Loans to companies 483 405 Although the fair value of this investment is slightly higher than cost, amounting to 95 thousand euros, it has been Interest accrued on loans to companies 29 35 decided for prudent valuation reasons to maintain the value Cash and other cash equivalent liquid assets at acquisition cost. The fair value has been calculated on the Cash in bank 597 1,139 basis of the net asset value. Other equivalent liquid assets 896 1,780 Total current assets 2,511 3,975 No shares were purchased or sold in the financial year 2020. Total financial assets in foreign currency 8,656 10,269

The EUR/USD exchange rate used at year-end 2020 and 2019 was:

2020 2019 Exchange rate 1.2271 1.1234

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12. Cash and other cash equivalent liquid assets The companies with direct holdings in the share capital are listed below: The amounts under the heading “Cash and cash-equivalent liquid assets” on 31 December are itemised as follows: Shareholder % Holding Amount ICEX Spain Trade and Investments 25.74% 10,139 Thousands of euros 2020 2019 Instituto de Crédito Oficial 20.31% 7,999 Cash and banks 21,987 25,431 Banco Santander, S.A. 20.17% 7,952 Highly liquid short-term investments - - Banco Bilbao Vizcaya Argentaria, S.A. 16.68% 6,569 Total 21,987 25,431 Banco Sabadell, S.A. 8.33% 3,281 Empresa Nacional de Innovación, S.A. 7.63% 3,005 13. Equity Corporación Andina de Fomento 1.14% 451

The composition and movement of equity are presented in the Total 100% 39,396 statement of changes in equity. 13.2. Legal reserve 13.1. Capital Pursuant to Article 274 of the Spanish Corporate Enterprises Act, 10% of The company’s share capital on 31 December 2020 and 2019 consis- companies’ yearly profit must be earmarked for the legal reserve, until ted of 6,555 registered, subscribed and paid-up shares with a face the funds provisioned amount to at least 20% of the share capital. value of 6,010.12 euros each. All shares have the same political and economic rights. Such funds may not be distributed and if used to offset losses, in the event that other reserves are insufficient to cover this item, they must be The shares are freely transferable. replenished with future profits.

On 31 December 2019, the Company had funded this reserve to the maximum amount established by law and, therefore, the distribution of 2019 income proposed by the directors (see Note 3) does not assign it for distribution to the legal reserve.

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13.3. Voluntary reserves the revised text of the Spanish Corporate 14. Contingent assets and liabilities Enterprises Act) Voluntary reserves are freely available. The Company, in conjunction with its legal ad- During the last five years, dividends have visors, has rated the probability of success in a 13.4. Capitalisation reserve been distributed for an amount between 15% series of proceedings lodged primarily to claim and 20% of profits distribution. In addition, sums outstanding receipt as likely or possible. On 31 December 2020, the Company had a for 2020, the Company has proposed a It has consequently recorded a provision for capitalisation reserve of 3,744 thousand euros dividend distribution of 1,016 thousand euros such sums pending receipt on 31 December (2,972 thousand euros in 2019); the increase (Note 3). 2020 and 2019 under impairment of accounts of 772 thousand euros is detailed in Note 3 of receivable. this report. At the ordinary general meeting of shareholders held on 27 May 2020, which approved 15. Financial liabilities 13.5. Information regarding shareholders’ the proposal for the distribution of the 2019 right to withdraw due to failure to result, no shareholder voted against the The composition of financial liabilities on 31 distribute dividends (Article 348 bis of proposal. December was as follows:

Debts with credit Derivatives Total institutions and others Thousands of euros Non-current Current Non-current Current Non-current Current

Financial year 2020: Loans and accounts receivable - - - 621 - 621

Total - - - 621 - 621 Financial year 2019: Loans and accounts receivable - - - 948 - 948

Total - - - 948 - 948

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15.1. Debts with credit institutions On 31 December 2020 and 2019 there were no outstanding balances with credit institutions. Amounts denominated in foreign currency On 31 December 2020 and 2019, there were no financial liabilities denominated in foreign currency. 15.2. Derivatives and others - Loans and accounts payable

2020 2019 Thousands of euros Non-current Current Non-current Current

Sundry payables - 238 - 573 Personnel (remunerations outstanding) - 383 - 375 Other financial liabilities - - - - Total - 621 - 948

15.3. Information on the average period of payment to providers

The average period of payment to providers during the year was 27.76 days (26.37 days in 2019).

15.4. Classification by maturity date

The classification of financial liabilities by maturity date is as follows:

2020 Thousands of euros Subsequent 2021 2022 2023 2024 Total years Debts with credit institutions ------

Trade accounts payable 238 - - - - 238

Personnel 383 - - - - 383

Other financial liabilities ------

Total 621 - - - - 621

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2019 Thousands of euros Subsequent 2020 2021 2022 2023 Total years Debts with credit institutions ------

Trade accounts payable 573 - - - - 573

Personnel 375 - - - - 375

Other financial liabilities ------

Total 948 - - - - 948

16. Short-term accruals

The heading “Current liabilities” includes an entry for both 31 December 2020 and 2019 for the regularisation of consultant fees charged to the Fund for Foreign Investment (FIEX) billed but not regarded as accruing during the year, in accordance with Provision 2 of the Order issued by H.E. the Minister of Economy and Finance of 28 July 19991, also known as the FIEX Rule.

1 “...If at the end of each financial year, the expenses incurred by the Fund for Foreign Investment’s fund manager in the study and tendering phase specified above amount to less than seventy-five (75) per cent of the sums accruing thereto for the respective consultant fees laid down in Paragraph 1.a above, fifty (50) per cent of this difference will be held in the fund manager’s account and used to pay fees accruing in subsequent financial years. The fund manager may receive no further sums for this item until such surplus has been fully expended”.

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17. Tax matters

The detail of balances payable to public authorities on 31 December is as follows:

2020 2019 Thousands of euros Non-current Current Non-current Current

Assets Current tax assets - - - - Withholdings and payments on account - - - - Value Added Tax - - - - Total - - - - Liabilities Current tax liabilities - - 380 Social security - 109 - 117 Value Added Tax - 215 - 165 Withholdings - 105 - 105 Total - 429 - 767

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According to existing legislation, tax sett- 17.1. Tax on earnings lements cannot be regarded as conclusive until audited by the tax authorities or until The reconciliation between the year’s revenue and expenses and the tax base (fiscal earnings) for the obligation period has elapsed, currently corporation tax is shown below: established as four years. The Company’s Thousands of euros 2020 2019 books for the last four years are open to audit by tax authorities in respect of all the Earnings for the year 10,189 10,190 taxes for which it is liable. It is the opinion Corporation tax 3,385 3,426 of the Company and of its tax advisors that Earnings before tax 13,574 13,616 no fiscal exposures for significant amounts exist which may, in the event of an audit, Permanent differences 34 - induce conflicting interpretations of the Temporary differences treated as permanent, due to - - provisions of tax law applicable to the limitation of amortisation for the year (70%) Company’s operations. Capitalisation reserve (855) (772)

Temporary differences treated as permanent, As a result of, among other things, the related to losses, impairment and variations in 850 858 different possible interpretations of current provisions for trade operations tax legislation, additional liabilities could arise as a result of an inspection. In any Tax base (fiscal earnings) 13,602 13,702 event, based on the information available, 25% tax 3,401 3,426 the analytical methodology applied and Adjustments to previous years (4) the specific advice received, the Company Expenses due to taxes paid on earnings abroad 6 7 deems that such liabilities, should they arise, would not significantly affect the Deductions for the current year (18) (7) financial statements. Expenses due to tax on earnings 3,385 3,426

(*) In compliance with the requirements of Article 25 of Spanish Law 27/2014, of 27 November, regarding corporation tax, in relation to the capitalisation reserve it is proposed that, as part of the distribution of earnings for 2020, an amount of 855,073.03 euros (771,701.83 euros in 2019) from the earnings for the year be used for the capitalisation reserve (see Note 17).

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The estimated corporation tax payable is as follows: 19. Revenues and expenses

Thousands of euros 2020 2019 19.1. Net turnover

Tax base (fiscal earnings) 13,602 13,702 This heading covers financial revenues and fees earned by the Company related to Corporation tax at 25% 3,401 3,426 activities carried out on its own behalf. Deductions (18) (7) Payments on account (3,260) (2,878) It also includes fees earned as a result of the Company managing FIEX and FONPY- Withholdings (168) (161) ME funds, and multilateral organisations’ development programmes and funds (Note 1). Also included are revenues from the management of FONPRODE and Taxes paid abroad - - from the analysis and presentation of operations to the FIEM. Corporation tax payable (45) 380

18. Environmental information

No significant assets were earmarked for environmental protection or improvement on 31 December 2020, nor were any relevant expenses related to this incurred during the year.

No environment-related subsidies were received in 2020 or 2019.

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The itemised list of the aforementioned interest and fees earned on the Company’s own behalf and the fees computed for FIEX and FONPYME based on the provisions of the Order issued by H.E. the Minister of Economy and Finance on 28 July 1999 is given in the table below:

Thousands of euros Item Basis for calculation 2020 2019

COFIDES interest Financial revenues from interest on loans to companies 2,440 2,359

Profits from equity investments Profits from equity investments 138

Total interest 2,578 2,359

Consultancy fees 1.65% of the investment proposal submitted to FIEX. 761 2,566

1% on investments drawn from FIEX and 1.5% on Formalisation fees 1,153 1,971 FONPYME-financed investments.

Outlay fees 1% of the sums actually paid out by FONPYME. 196 116

Management fees 1.25% of the value of FIEX's live investment portfolio. 11,216 10,145

Performance fees 20% of dividends and other returns actually received by the funds. 4,952 3,492

Settlement fees 1.5% of the value of investments paid out and actually settled with FIEX. 870 1,916

Other COFIDES fees Fees other than FIEX and FONPYME fund management fees. 3,303 2,888

Total fees 22,451 23,094

Total 25,029 25,453

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19.2. Personnel expenses “Independent professional services” primarily covers external consultant fees associated with projects implemented by the Company in Personnel expenses, in thousands of euros, are itemised below: 2020 and 2019.

Thousands of euros 2020 2019 19.4. Financial revenues Wages and salaries 4,777 4,656 This account primarily covers sums accruing in 2020 and 2019 as Board of Directors' per diem payments 84 90 yields on sums held in the Company’s current accounts and other Company social security payments 1,098 1,104 investments maintained as other financial assets in term deposits. Other personnel expenses 395 444 Total 6,354 6,294 19.5. Financial expenses

19.3. External services and other taxes This heading covers expenses of a financial nature related to the mana- The “External services” and “Other taxes” accounts are itemised below: gement of the EFP and ICCF facilities in which the company does not act as a promoting partner. Additionally, negative interest rates applied Thousands of euros 2020 2019 to the balances held by the Company in current accounts and deposits Publicity, advertising and public relations 99 175 are recorded. Leases 925 925 20. Memorandum accounts Repairs and upkeep 218 173 Independent professional services 918 1,468 This includes accounts that reflect events or circumstances that may Insurance premiums 42 41 give rise to rights or obligations affecting the Company’s financial Training expenses 153 160 structure. Also included are registry accounts used for internal control of assets or liabilities and equity management information or control of Travel expenses 44 502 future financial situations. Other expenses 659 343 Total 3,057 3,787 The Company’s memorandum accounts record the current account Taxes 119 108 balances to be applied to expenditure and technical assistance for the Total 119 108 Community budget programmes, Triple Inclusive Finance (TIF) and the Renewable Energy Programme for Sub-Saharan Africa (PIP), for which Total 3,176 3,895 management agreements were concluded during the year.

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21. Operations with related parties 21.1. Related institutions

The related parties with which the Company conducted business - and The balances in the accounts with related institutions are the nature of their relationship - are listed below: shown below:

Financial year 2020 2020 Nature of the relationship Thousands of euros FIEX FOMPYME Total FIEX Fund managed by the Company ASSETS: FONPYME Fund managed by the Company Long-term financial investments Instituto de Crédito Oficial Company shareholder Accounts receivable, funds (Note 11.2.1) 11,862 370 12,232 ICEX Company shareholder Trade and other receivables Board members Accounts receivable, funds 8,115 203 8,318 Senior Management: Chairperson LIABILITIES: Director-General Long-term accounts payable Short-term accounts payable Financial year 2019 Accounts payable to financial institutions - - Nature of the relationship (Note 15.1)

FIEX Fund managed by the Company 2019 FONPYME Fund managed by the Company Thousands of euros FIEX FOMPYME Total Instituto de Crédito Oficial Company shareholder ASSETS: ICEX Company shareholder Long-term financial investments Board members Accounts receivable, funds (Note 11.2.1) 11.924 453 12.377 Senior Management: Chairperson Trade and other receivables Director-General Accounts receivable, funds 7.940 387 8.327 LIABILITIES: Long-term accounts payable Short-term accounts payable Accounts payable to financial institutions - - (Note 15.1)

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Operations with related institutions are itemised below:

2020

Thousands of euros Instituto de Crédito Oficial FIEX FONPYME Total (ICO)

Net turnover - 18,411 707 19,118 Financial expenses Notes payable to credit institutions - - 18,411 707 19,118

2019

Thousands of euros Instituto de Crédito Oficial FIEX FONPYME Total (ICO)

Net turnover - 19,403 803 20,206 Financial expenses Notes payable to credit institutions - - 19,403 803 20,206

21.2. Directors and senior management

During the year ending on 31 December 2020, the Company’s directors received remuneration in the form of per diems for a total of 84 thousand euros (90 thousand in 2019).

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For the purposes of information in this financial statements report only, the following table lists the total remuneration received by the Company’s senior management, with the exception of the directors mentioned in the preceding paragraph:

Thousands of euros Salaries Other remunerations

Year Fixed Variable Bonuses Other

2020 232 63 - -

2019 227 61 - -

The books showed no advances or loans to any company directors or managers on 31 December 2020 or 2019, nor had any obligations been assumed as security on their behalf. Moreover, the Company has undertaken no pension or life insurance obligations for any of its present or former directors.

The members of the COFIDES Board of Directors attest to their compliance with the provisions of Article 229 of the Spanish Corporate Enterpri- ses Act. Details on their shareholdings, positions and duties, carried out on their own or third-party behalf, in companies engaging in the same business as COFIDES are given in the attached Annex I.

22. Employee information

The number of employees and directors of the Company in the last two years, broken down by category, is as follows:

2020 2019 Directors 12 12

Senior + Technical Management 20 21

Technical team 50 52

Support staff 10 11 Total 92 96

* In 2020, the new employee hiring process was conducted under the protection of Additional Provision 29 of Spanish Law 6/2018, of 3 July, concerning the General State Budget, extended for the year 2019. Only temporary hires, necessitated by exceptional cases in order to cover urgent and non-deferrable needs or to temporarily cover the loss of employees on temporary contracts, took place. In all cases, prior authorisation was obtained from the Ministry of Finance and the Ministry of Territorial Policy and Civil Service, through the State Secretariats for Budgets and Expenditure and for Civil Service, as well as from the majority shareholder, as is set out in the aforementioned additional provision.

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The distribution by gender of company personnel and of the directors at the end of the year is as follows:

2020

Thousands of euros Average number Women Men Total of people with disabilities >33%

Directors 2 10 12 -

Senior + technical management 10 10 20 -

Technical team 31 19 50 1

Support staff 9 1 10 -

Total 52 40 92 1

2019

Thousands of euros Average number Women Men Total of people with disabilities >33%

Directors 1 11 12 -

Senior + technical management 10 11 21 -

Technical team 31 21 52 1

Support staff 9 2 11 -

Total 51 45 96 1

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23. Auditors’ fees The fees paid for auditing services amounted to:

Thousands of euros 2020 2019

Auditing 28.00 28.10

Other services - - Total 28.00 28.10

In addition, services were contracted for the amount of 2,397 euros for the audit of the financial statements of EC/FI HURUMA FUND.

24. Events after the reporting period

From 31 December 2020 until the preparation of these annual accounts by the Board of Directors of the Company, no event occurred that significantly affects these annual accounts and that needs to be mentioned, except that on 30 January 2021, Royal Decree 1/2021 of 12 January was published, amending the Spanish National Chart of Accounts approved by Royal Decree 1514/2007 of 16 November. The purpose of the new Chart of Accounts, in force from 1 January 2021, is basically to introduce the changes necessary to align accounting and valuation standard 9 “Financial instruments” and accounting and valuation standard 14 “Revenue from sales and services” with IFRS-EU 9 and IFRS-EU 15, respectively.

Company management has begun to assess the impact of this new Chart of Accounts and, based on initial estimates, believes that it will not have a significant impact on the financial statements.

Moreover, Royal Decree-Law 5/2021 of 12 March, on extraordinary measures to support business solvency in response to the COVID-19 pandemic, created the “Fund for the recapitalisation of companies affected by COVID” with an allocation of 1 billion euros, and assigned the management of the fund to the Company. The fund will avail of various debt, equity and quasi-equity financial instruments to support companies, seeking a balance between risk, return and the use of public resources to support viable projects. The operations will also include instruments providing for the State’s share in the companies’ future profits as well as an exit strategy due to the temporary nature of the fund, set at eight years.

All operations carried out under the fund shall be recorded in specific accounts, separate and independent from those of the Company.

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Details of company directors’ shareholdings and positions in other companies on 31 December 2020

Number of Percentage Directors Company Position and duties shares holding

Mr. José Luis Curbelo Ranero - - - -

BBVA - <0.001% - Ms. María Aparici González Banco Santander - <0.001% -

Ms. Idoya Arteagabeitia González - - - -

Director/Investment Committee Axis Participaciones Empresariales - - Fond-ICO Infraestructuras Head of International Financing ICO - - and EU Affairs Mr. Antonio Bandrés Cajal Fondo Marguerite I - - Management Board member

Fondo Marguerite II - - Management Board member

Comité Ejecutivo FIEX FONPYME - - Board member

Mr. Javier Estévez Zurita - - - -

Mr. Pablo López Tallada BBVA - - Director of Global Trade Finance

<0.005% Deputy Director Banco Sabadell - On behalf of my Mr. David Noguera Ballús Structured Finance Director associates, <0.005%

Sabadell Corporate Finance, S.L. - - Chairman

Head of the ICO Mr. Alfonso Noriega Gómez - - - Chairman’s Office

Commercial Head of International Mr. Pablo de la Torre Rodríguez Banco Santander, S.A. - Less than 0.01% Bussiness Santander España

Mr. Fernando Jiménez-Ontiveros Diego - - - -

Mr. Juan Ignacio Moratinos Alonso - - - -

Mr. Jaime Uscola Lapiedra Banco Santander, S.A. - Less than 0.01% Management

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Annual accounts report

Details of company directors’ shareholdings and positions in other companies on 31 December 2019 Number of Percentage Directors Company Position and duties shares holding Mr. José Luis Curbelo Ranero - - - - BBVA - <0.001% - Ms. María Aparici González Banco Santander - <0.001% - Director/Investment Committee Axis Participaciones Empresariales - - Fond-ICO Infraestructuras Head of International Financing ICO - - and EU Affairs Mr. Antonio Bandrés Cajal Fondo Marguerite I - - Management Board member Fondo Marguerite II - - Management Board member Comité Ejecutivo FIEX FONPYME - - Board member Banco Santander, S.A. - Direct and indirect >0.005% Executive Vice-President Through stock options Banco Santander, S.A. - and performance Director of Risk Santander España Mr. José Corral Vallespín shares, <0.005%

On behalf of my associates, Banco Santander, S.A. - - directly and indirectly, <0.005%

Mr. Javier Estévez Zurita - - - - Mr. Pablo López Tallada BBVA - - Director of Global Trade Finance <0.005% Deputy Director Banco Sabadell - On behalf of my Mr. David Noguera Ballús Structured Finance Director associates, <0.005% Sabadell Corporate Finance, S.L. - - Chairman Mr. Alfonso Noriega Gómez - - - Head of the ICO Chairman’s Office Commercial Head of International Mr. Pablo de la Torre Rodríguez Banco Santander S.A. - Less than 0.01% Business Santander España Mr. Fernando - - - - Jiménez-Ontiveros Diego

Mr. Juan Ignacio Moratinos Alonso - - - - Mr. Jaime Uscola Lapiedra Banco Santander, S.A. - - -

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Supplementary information 06

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Report parameters

This Activity / Sustainability Report covers fiscal year 2020. The reports for earlier years are available on the COFIDES website. COFIDES’s replies to the items in the 2020 Progress Report are shown below, in the section on the Principles of the UN Global Compact.

This report has been prepared in accordance with the GRI Standards: Core option4 and submitted to AENOR (Spanish standardisa- tion and certification agency) for external verification.

Materiality analysis. Report content processing and definition

The contents attempt to address the information requested by stakeholders consulted in preceding years. The 2019 analysis of materiality was contrasted with the results of the consultations with stakeholders conducted on the occasion of the design of the Strategic Plan.

4 The Global Reporting Initiative (GRI) is an international standard used to report an organisation’s performance and its economic, environmental and social impact.

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Supplementary information

RESPONSE – GRI STANDARDS. KEY ISSUE Specific issue Dimension * Additional information

COFIDES corporate governance: COFIDES corporate governance ID 102-18

• Governance structure 102-18

• Control systems CGR – Section 5.2: Control systems

• Risk management CGR – Sections 5.1, 5.2.3, 5.2.6 and 5.2.7

Socioeconomic compliance ID 419-1

• Compliance scheme Customer privacy ED 418-1

Anti-corruption ID & ED 205-2; 205-3

COFIDES’s values, principles, standards and COFIDES’s values, principles, standards and norms of behaviour ID & ED 102-16 norms of behaviour

Management focus: Comprehensive due diligence (with particular emphasis on social Policies and procedures to assess social and ED product portfolio and environmental issues) environmental risks FS6

COFIDES financing: additionality in the Spanish financial sector Indirect economic impacts ED 203-2

Management focus: significant indirect Impact on countries hosting investments Indirect economic impacts ED economic impacts 203-2

Tackling climate change Risks and opportunities due to climate change ID & ED 201-2

SDG implications Indirect economic impacts ED 203-2

Consolidation of Spanish companies financed Indirect economic impacts ED 203-2

Management focus: Staff information Training and education ID training and education 404-1

* ID: Internal Dimension / ED: External Dimension.

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Supplementary information

The data and qualitative information in this Report refer to the national indicators computed by COFIDES on the non-financial aspects of and international socio-economic context. portfolio projects are based essentially on information provided by project sponsors on the occasion of due diligence proceedings. Report dimension, scope and limitations Although project analysts specialising in different areas are responsible for verifying the information received, non-financial information In its external dimension, this Report includes information on is not presently as reliable as the financial information on projects, the projects financed by COFIDES and more specifically on their which is audited. management and impact. It also addresses in-house (internal) data deemed to be relevant to understanding company operating proce- With its consistent focus not only on the financial aspects of projects dures. The impact of COFIDES’s business activities is synthesised in but also on others that ensure their sustainability, COFIDES seeks to the table below. systematise information with which to attribute greater weight to these matters in both the companies internationalised and in the company itself. The information on external impacts excludes data Impact on COFIDES’ Thoroughness of Dimension from earlier years, for the portfolio varies annually with new invest- sustainability influence information ments and divestments. As the data on impact are therefore necessarily confined to direct investment and the respective projects, they INTERNAL Low High Low exclude international financing and other funds’ assets managed by COFIDES.

EXTERNAL: High Medium High As noted, the data on projects and companies financed are based on Lending the information furnished by the latter. No sampling techniques are deployed nor are any assumptions made. Efforts focus on obtaining EXTERNAL: the largest possible number of replies for subsequent compilation Investment High High High and linear pooling. Improvements are being sought for non-financial in equity data collection by broaching client companies from a new perspec- tive. The directive on non-financial information is also expected to contribute to the awareness of the importance of social-environmen- This report includes information on the projects formalised in 2020 tal indicators. The internal dimension indicators are compiled by the as well as on the project portfolio on 31 December of that year. The respective areas and pooled linearly.

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Supplementary information

Additional information

The four risk rating categories listed in the section ‘Social-environmental investment risk analysis’ are defined in the table below.

Risk/impact Description

Risks and/or potential, severe, widespread, generally A: High irreversible or unprecedented adverse impacts of varying nature

Risks and/or potential, moderate and primarily local B+: Medium - and reversible adverse impacts characterised by high specific features that may lead to risks or impacts of greater magnitude and scope

Risks and/or potential, moderate, local and reversible B: Medium adverse impacts that can be effectively mitigated with well-known methods of proven efficacy

Scantly significant or non-existent risks and/or C: Low potential impacts

The number of indirect jobs quoted in the section ‘Impact on host countries’ was calculated on the general assumption that every direct job generates one to two indirect jobs at businesses supplying the goods and services needed for production. Induced jobs, in turn, are generated by the higher demand associated with employees’ new earnings. Al- COFIDES looks forward to receiving stakeholder remarks and sugges- though the criterion for estimating the number varies, one job is gene- tions on this Report. Further information on any item hereunder may be rally deemed to be induced for every two direct or indirect jobs. requested from: [email protected]

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Principles of the Global Compact

Area Principle COFIDES

1. Businesses should support and respect the protection of Investment due diligence. internationally proclaimed human rights. Human rights Inclusion of international standards on decent 2. Business should make sure that they are not complicit in human employment in financing agreements. rights abuses.

Inclusion of ILO Fundamental Conventions 87 on 3. Businesses should uphold the freedom of association and the freedom of association and the right to organise effective recognition of the right to collective bargaining. and 98 on collective bargaining in financing agreements.

Inclusion of ILO Core Conventions C029 and C105 4. Businesses should uphold the elimination of all forms of forced on the elimination of forced labour in financing and compulsory labour. agreements Labour Inclusion of ILO Core Conventions C138 and C182 5. Businesses should uphold the effective abolition of child labour. on the elimination of child labour in financing agreements

Inclusion of ILO Core Conventions C100 and C111 on 6. Businesses should uphold the elimination of discrimination in the elimination of discrimination in employment respect of employment and occupation. and occupation in financing agreements

7. Businesses should support a precautionary approach to Investment due diligence. environmental challenges.

8. Businesses should undertake initiatives to promote greater Investment due diligence. Environment environmental responsibility. Climate finance.

9. Businesses should encourage the development and diffusion of Climate finance. environmentally friendly technologies.

System for compliance with anti-corruption principles. 10. Businesses should work against corruption in all its forms, Anti-corruption including extortion and bribery. Inclusion of OECD Anti-Bribery Convention in financing agreements.

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GRI table of contents

GRI Standard Contents Pages numbers Comments

General contents

Profile of the organisation

102-1 Name of the organization CGR 3 Compañía Española de Financiación del Desarrollo, COFIDES, S.A., S.M.E.

102-2 Activities, brands, products and 8-12; 25-47; 50-53 https://www.cofides.es/en/financing services

102-3 Location of the headquarters CGR 3 Paseo de la Castellana 278. 28046 Madrid.

102-4 Location of operations 13-14; 54 https://www.cofides.es/en/our-work/success-stories

102-5 Ownership and legal form CGR 4-6

102-6 Markets served 25-47; 54; 59-61 https://www.cofides.es/en/financing

8-12; 50-53; 66; 77-80 102-7 Scale of the organization CGR 5-6; 42-45

102-8 Information on employees and other 66; 127-128 workers GRI 102: COFIDES hires consultancy services in connection with its financing business. It also General 102-9 Supply chain 124 content purchases products and services for Company headquarters. 2016 Neither organisation size nor structure has changed significantly. Under ‘Other operating expenses; outsourced services’, specifically consultancy costs associated with operations, 102-10 Significant changes in the CGR 6 declined by 37% as a result of the COVID-19 crisis and less available funding, which entailed organization and its supply chain a lower volume of approvals as well as formalisations, in particular as concerns larger scale projects. That in turn affected the volume of work outsourced to consultants during the year.

3-6; 55-58 102-11 Precautionary principle or approach The precautionary principle is applied in comprehensive risk management in financing. CGR 25; 32

https://www.cofides.es/en/biblioteca-de-documentos/corporate-governance- approach-statement 102-12 External initiatives https://cofides.es/system/files/2021-07/2019%20EDFI-Responsible-Financing-SDG_Principles.pdf https://www.cofides.es/en/biblioteca-de-documentos/contributing-creating-more- and-better-jobs-statement

ALIDE, ASCRI, Club de Exportadores e Inversores, Development Aid, EDFI, Global Compact Spanish 102-13 Membership of associations 59 Network, Instituto de Auditores Internos, International Forum of Sovereign Wealth Funds.

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GRI table of contents

GRI Standard Contents Pages numbers Comments

General Contents

Strategy

102-14 Statement from senior 3-6; 15-16 decision-making

Ethics and integrity

102-16 Values, principles, standards Code of Ethics: https://www.cofides.es/en/about-us/governance CGR 32 and norms of conduct https://www.cofides.es/en/about-us/mission-vision-and-values

Governance

102-18 Governance structure 63-64; CGR 8-31

Stakeholder participation

102-40 List of stakeholder groups 68-70 COFIDES's business stakeholders include its client companies.

102-41 Collective bargaining agreements COFIDES’s entire staff (100 %) is covered by the Region of Madrid’s Office Worker Agreement. GRI 102: General 102-42 Identification and selecting Stakeholders were identified by COFIDES’s Sustainability staff on the occasion of the drafting of prior content stakeholders Sustainability Reports and ratified by the area management and COFIDES’s Chairman-CEO. 2016 102-43 Approach to stakeholder 68-70 engagement

SR 2017 Pages 30-32 https://www.cofides.es/sites/default/files/adjuntos/2019-11/presentacion-plan-estrategico- https://www.cofides. cofides-2019-2021.pdf es/sites/default/files/ biblioteca/2019-01/ sustainability-report- cofides-2017-english.pdf SR 2018 Pages 24-25 102-44 Key topics and concerns raised https://www.cofides. es/sites/default/files/ biblioteca/2019-07/ sustainability-report- cofides-2018-english- pagina.pdf 49; 68-70; 133

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GRI table of contents

GRI Standard Contents Pages numbers Comments

General Contents

Reporting practice

102-45 Entities included in the Not applicable. consolidated financial statements

102-46 Defining of report contents and 2-6; 15-16; 68-70; topic boundaries 133-135; 138; 144

SR 2017 Pages 30-32 (https://www.cofides. es/sites/default/files/ biblioteca/2019-01/ sustainability-report- cofides-2017-english. pdf) 102-47 List of material topics SR 2018 Pages 24-25 https://www.cofides.es/biblioteca-de-documentos/presentacion-plan-estrategico-2019-2021 (https://www.cofides. es/sites/default/files/ GRI 102: biblioteca/2019-07/ General sustainability-report- content cofides-2018-english- 2016 pagina.pdf) 134

102-48 Restatement of information No significant change.

102-49 Changes in reporting No significant change.

01/01/20 - 31/12/20 102-50 Reporting period Some of the FONPRODE data refer to 2019 (specified in text).

102-51 Date of most recent report 2019 Activity / Sustainability Report.

102-52 Reporting cycle Annual.

102-53 Contact point for questions [email protected] regarding the report

102-54 Claims of reporting in 133 accordance with the GRI Standards

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GRI table of contents

GRI Standard Contents Pages numbers Comments

General Contents

Reporting practice GRI 102: 102-55 GRI Content Index 138 General content External assurance was awarded in accordance with internal procedures, subject to the Act on Public Procurement. 2016 102-56 External assurance 144 AENOR certifies the Quality Management System. Senior management approved the request for external assurance of the Activity / Sustainability Report. Material issues

Corporate governance

Control systems

GRI 103: 2016 management CGR 32-36 approach

Control systems CGR 32-36

Risk Management

GRI 103: 2016 management CGR 32-36 approach

Risk Management CGR 32-36

Financial sector

Portfolio of products

3-6; 55-58 SR 2015 Page 7 (https://www.cofides. GRI 103: 2016 es/sites/default/files/ management https://www.cofides.es/en/our-work/sustainable-investments biblioteca/2019-01/ approach sustainability-report- cofides-2015-english.pdf) CGR 35

Percentage of the portfolio for business FS6 54 SMEs in portfolio: 48%. lines by region, size and sector

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GRI table of contents

GRI Standard Contents Pages numbers Comments

Economic dimension

Economic performance

GRI 103: 2016 ED: 25-47 management ID: 66-67 approach

201-1 Direct economic value generated and ED: 25-47 distributed ID: 53; 66-67; 77-80 GRI 201: Economic performance 2016 ED: 3-6; 11-12; 32-34; 201-2 Financial implications and other risks 44-45; 52; 56 and opportunities due to climate change ID: 68

Indirect economic impact

GRI 103: 2016 management ED: 3-6; 15-16; 25-47 approach

GRI 203: Indirect 203-2: Significant indirect economic ED: 3-6; 15-16; 59-61; economic impact impacts 68-70; 134 2016

Anti-corruption

GRI 103: 2016 ID and ED: CGR 32-34; management 137 approach

205-2 Communication and training on ID and ED: CGR 32-34 https://www.cofides.es/en/about-us/governance anti-corruption policies and procedures GRI 205: Anti-corruption 2016 205-3 Confirmed incidents of corruption ID and ED: CGR 33-34 and actions taken

Social dimension

Training and learning

GRI 103: 2016 management ID: 66 approach

GRI 404: Training 404-1 Average training hours per ID: 67 and learning 2016 year per employee

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GRI table of contents

GRI Standard Contents Pages numbers Comments

Social dimension

Human rights assessment

GRI 103: 2016 management ED: 55-58; 137 approach

412-2 Employee training on human rights No specific human rights training was delivered in 2020. COFIDES takes part in a number of working ED: 57 policies and procedures groups on this matter.

GRI 412: Human rights assessment 2016 412-3 Significant investment agreements and contracts that include human rights ED: 56-58; 137 clauses or that underwent human rights screening

Customer privacy

GRI 103: 2016 management ID: COFIDES has procedures in place to comply with the legal provisions on personal data processing. approach

418-1 Substantiated complaints concerning GRI 418: Customer breaches of customer privacy and losses of ID: No such complaints were received in 2020. privacy 2016 customer data

Socioeconomic compliance

GRI 103: 2016 management ID: CGR 32-34 approach

GRI 419: 419-1 Non-compliance with laws Socioeconomic and regulations in the social and No indication of non-compliance of this nature was forthcoming in 2020. compliance economic area

Key: ID: Internal dimension ED: External dimension CGR: Corporate Governance Report SR: Sustainability Report

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Report of external assurance

VMS-2021/0010

AENOR has verified the Sustainability Report by the organization

S S VTitle: Activity and Sustainability Report 2020

ǡ ǡǤǤǡǤǤǤReporting period: 2020

In accordance with GRI Standars option: Core

Issue date: 2021-05-19

Rafael GARCÍA MEIRO

Chief Executive Officer

AENOR INTERNACIONAL S.A.U. Génova, 6. 28004 Madrid. España Tel. 91 432 60 00.- www.aenor.com

Letter from Our actions Management Supplementary Introduction Our organisation Financial statements the Chairman and our impact activities information

Image credits

All the photographs that appear in this Report are property of COFIDES or have been assigned by its owners, except:

Page 10 - Max Panamá on Unsplash

Page 32 - Uta Scholl on Unsplash

Page 34 - Eva Blue on Unsplash

Page 42 - Rfstudio on Pexels

Page 43 - Thisisengineering on Unsplash

Page 45 - Chevanon Photography on Pexels

Page 67 - Paolo Nicolello on Unsplash

Page 133 - Tian Kuan on Unsplash

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