2024 annual report

2024

ANNUAL REPORT

ANNUAL REPORT

Address: Tuset, 8-10, 7ª planta

08006 Barcelona (Spain)

Tel.: (+34) 93 290 61 00

myc@miquelycostas.com https://www.miquelycostas.com accionista@miquelycostas.com

COMMITMENT TO SUSTAINABILITY, RIGOUR AND TRANSPARENCY

T

his Report has been drafted as a result of the Miquel y Costas Group's commitment to transparency and accountabil-

ity in the 2024 financial year. In line with

recent years, the economic and financial data have been incorporated into a single document, together with the Group's main achievements and business indicators, reflecting its transversal vision of sustainability as a driver of development and a key factor in the creation of long-term value.

During the year, the Group continued to articulate its strategy around sustainability as a core value and reaffirmed its commitment to sustainable development and environmental protection.

Miquel y Costas Group's business purpose is "To apply the necessary knowledge to cellulose to provide society with products that contribute to the sustainability of the planet and improvement of the environment." This principle is reflected in the development of technologies and processes that reinforce circularity, resource efficiency and innovation with a positive environmental impact. In this regard, all the Group's products are designed in accordance with sustainability and quality criteria, which has enabled us to consolidate the recognition of our business model, as evidenced by the fact that we hold leading positions in the major international indices.

Miquel y Costas understands sustainability from an integrated perspective, addressing environmental, social and governance (ESG) aspects as a whole. For this reason, this Report not only reflects our commitment to the environment, but also the promotion of active policies in the social sphere, focused on the well-being, health and safety of our human team, as well as the creation of inclusive

The Group continued to articulate its strategy around sustainability as a core value.

and diverse working environments geared towards continuous improvement. Training, occupational risk prevention and equal opportunities remain key areas of action.

In terms of governance and good corporate governance, the Group has continued to strengthen its supervision and control mechanisms, with the aim of ensuring transparent, ethical and efficient management. Throughout 2024, the integration of ESG factors into strategic decision-making has been enhanced, thereby consolidating an organisational culture based on accountability, compliance and transparency. Likewise, good governance practices have been reinforced, promoting greater professionalisation of management bodies, balance in decision-making and supervision aligned with the principles of sustainability and the commitments acquired with stakeholders.

As in previous years, this Annual Report complements the information contained in the Non-Financial Information Statement and exemplifies Miquel y Costas' commitment to clear, rigorous, transparent and accessible information. A firm commitment to sustainability as a distinguishing and strategic element to continue building a competitive and solvent industrial project that serves society.

PRESENTATION 3

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LETTER FROM THE CHAIRMAN

I

Dear shareholders,

am very pleased to be able to present the Annual Report for the financial year 2024, a year in which the Miquel y Costas Group has once again demonstrated its solidity and capacity to adapt in an international economic environment

noted for increasing complexity and uncertainty.

The 2024 financial year has been marked by a slowdown in global economic growth, in a context of persistent geopolitical tensions, such as the wars in Ukraine and Gaza. According to the World Bank, global gross domestic product (GDP) is expected to grow by 2.7% in 2024, in line with the previous year, but still below pre-pandemic levels. This moderate growth reflects the resilience of some advanced economies, such as the United States, which has grown by 2.8%. In Spain, GDP grew 3.2%, leading the way among the main economies of the euro-zone. However, other European economies, such as France and Italy, showed more modest growth of 1.2% and 0.7%, respectively, and Germany experienced a decline of 0.2%.

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With regard to the evolution of the industries in which our Group operates, in the 2024 financial year, national production of paper and cardboard was 8.5% higher than in the previous year, with growth seen in all types of paper. The pulp sector grew 5.3%. At a European level, production increased by 5.3% in the paper and cardboard sector and decreased by 2.8% in the pulp sector.

In this context, the Miquel y Costas Group has maintained its commitment to growth and consolidated its solid operating performance. Consolidated net turnover amounted to 309.2 million euros, stable compared to the previous year, despite the moderation in prices and the tensions in international trade. All business lines have performed positively, with the exception of Other Specialist Papers, for circumstantial reasons which are in the process of being remedied.

In the financial year 2024, the Miquel y Costas Group has once again demonstrated its solidity and capacity to adapt in an international economic environment noted for increasing complexity

and uncertainty.

Consolidated net profit amounted to 48.7 million euros, which represents a 14% increase compared to 2023, and it is significant that the improvement in results has been seen in all business lines. Buoyed by moderating inflation, this growth has been achieved despite volatile energy prices and rising cellulosic raw materials, and reflects the effectiveness of the business strategies implemented, as well as the efficient execution of our investments.

During the year, investments in tangible and intangible fixed assets amounted to

24.7 million euros, in line with our strategic commitment to strengthen production capacity, improve quality, foster environmental excellence and drive innovation. The work carried out to develop the projects included in the 2024-2026 Plan by the engineering teams has been substantial, to which 120 million euros are earmarked.

We have allocated 2.7 million euros to R&D&I activities, focusing our efforts on the development of high value-added products and the optimisation of production processes.

LETTER FROM THE CHAIRMAN 9

During this financial year, we have made significant progress in one of our fundamental pillars, sustainability, allocating 15 million euros to environmental initiatives, thus reaffirming our commitment to sustainable development, one of the driving forces behind Miquel y Costas' strategy to combat climate change and protect the environment. This aim has materialised in ensuring the responsible use of natural resources and in continuing to develop the circular economy in production processes, thus minimising the environmental impact of our operations, both main and auxiliary, in all centres and respecting the environment at all times. This effort has led to the Group retaining its leading positions in the major international indices, with an A rating in CDP Climate Change and CDP Forests, and an A- rating in CDP Water Security.

Our corporate culture is noted for prudence, the firm commitment of our highest governing body to sustainability and agile decision-making. This has enabled us to strengthen our commitment to the United Nations Global Compact and the Sustainable Development Goals, as detailed in this Report. In the same vein, I would like to highlight our commitment to those affected by Storm DANA in Valencia. Our factory in Mislata was at the authorities' disposal from the outset, and the team was always up to the task.

We have made significant progress in one of our key pillars, sustainability, by allocating 15 million to environmental initiatives.

All this would not be possible without our staff, and their well-being and safety have once again been our number one priority. In order to strengthen our Group's culture of prevention and job satisfaction, we have invested 4.7 million euros in occupational health and safety, almost doubling the amount allocated to this objective in the previous financial year.

With regard to shareholder remuneration, dividends were distributed four times in 2024. The first was on account of the 2023 profits for a total amount of 4.4 million euros; the second was a complementary dividend on account of the 2023 results for an amount of 4.9 million; and a third and fourth both on account of the 2024 results, the first in the amount of 4.2 million and the second in the amount of 4.3 million. All told, a total of 17.8 million euros was paid out during the year, exceeding the previous year's distributions by 3.5% with a 4.1% increase in the dividend paid per share. The total number of shares in the treasury stock as at 31 December 2024, i.e. at the end of the financial year, is 2,029,906 shares.

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On the stock market, our shares were traded in 256 sessions, with a trading volume of 2,322,125 shares and an effective amount of 28.7 million euros, reaching a maximum price of 13.7 euros and closing the year at 12.8 euros per share.

The Miquel y Costas & Miquel Foundation has continued to carry out its work in 2024, promoting educational, cultural, sporting, research and technological innovation projects, in line with our aim of positively contributing to the social communities surrounding the Group's production centres, as well as to society in general.

The announcement by the new US administration of new tariffs has created uncertainty in the markets, which we will address by strengthening our principles and our strengths. Now more than ever, the Miquel y Costas Group reaffirms the business philosophy that inspires our purpose, in the sense of carrying out a "sus-tained investment policy and a continuous effort in innovation within a framework of financial solvency". To this end, we have a solid financial position and a well-established shareholder base committed to sustainable, long-term value creation.

The current context of uncertainty and trade and geopolitical tensions poses significant challenges for the global economy and for our Group. However, the strength of our business model and the commitment of our entire team enable us to face the future with confidence and determination and to continue to meet the expectations of our shareholders, our customers and society as a whole.

Finally, I would like to thank you, our shareholders, for your trust and loyalty, the Board of Directors and the management team for their leadership, and all the people that form part of the Group for their professionalism, dedication and hard work on a daily basis. I extend this gratitude to our customers, suppliers and other stakeholders for their continued cooperation and commitment. Guided by our Business Purpose, we will continue to develop the Group's industrial project, adapting it to new societal demands and consolidating Miquel y Costas as one of the world leaders in the field of specialist papers.

Chairman

LETTER FROM THE CHAIRMAN 11

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The origins of the Miquel y Costas Group date back to the second half of the 17TH century and are rooted in the beginnings of the Catalan and Spanish paper manufacturing industry. The firm, with roots in Capellades

(a region of Anoia, 65 kilometres from Barcelona) as an initiative of the Miquel family, coming from the wool industry, began producing paper by hand and went on to manufacture it industrially at the start of the 19TH century, with the introduction of the continuous paper making machine. With activities in Cuba, the company soon took on an international dimension that has since constituted one of its identifying traits.

In order to cope with this exporting dimension and the investment required for its modernisation, Miquel y Costas & Miquel was founded in 1874. Its growth, based on cigarette paper for the tobacco industry and specialisation in production, would lead to the transformation of Miquel y Costas

The origins of the Miquel y Costas Group date back to the second half of the 17TH century.

& Miquel (MCM) into a Public Limited Company in 1929. The confirmation of its exporting dimension and the success of some of its first brands, such as El Pino, made MCM an example of a born global company. The company had a significant market in Latin America, whilst consolidating its presence in the domestic market, thanks, amongst other things, to the modernisation of the Besós factory (Barcelona) and the tremendous success of the Smoking cigarette paper books.

The civil war and subsequent autarchy conditioned the production possibilities

of MCM, forcing a retreat from the Spanish market in contrast to its initial dimension as an exporter. The inclusion of the Banco

Exterior de España in the company's capital and the merger between MCM and the Payá Miralles family facilitated the move into the specialisation in different types of paper,

as well as the recovery of exports. The company's new size intensified the entry of shareholders from outside of the founding family at the end of the 1980s.

The final and most promising phase of MCM began in 1992, coinciding with the arrival

of Jorge Mercader Miró as chairman, the stabilisation of the reference shareholder base and the implementation of a management model aimed at building an industrial project based on financial and technological soundness and independence, and aimed at healthy progress sustained over time. The company's listing on the Stock Exchange in 1996, rigorous management and a policy of continuous investment allowed the Miquel y Costas Group to consolidate itself as one of the most renowned international paper manufacturing groups in the areas of cigarette paper, special pulps and industrial paper.

In 2024, the Miquel y Costas Group had a turnover of 309.2 million euros, with sales in 125 countries of the items produced in its Capellades, La Pobla de Claramunt, Barcelona, Tortosa, Mislata and Villareal factories.

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MAIN HISTORICAL MILESTONES

ORIGINS

The Miquel family began manufacturing paper in a mill powered by the waters of the river Anoia in Capellades, Barcelona.

Despite the late arrival of the continuous paper making machine to Spain, the company soon took on an international dimension, with presence in Cuba at the end of the 19TH century that rapidly extended to Latin America.

THE FOUNDATIONS OF THE INDUSTRIAL PROJECT

The expansion of the company structure laid the foundations for the new company of Miquel y Costas & Miquel (MCM) and facilitated the creation of an

authentic industrial product based on the Capellades mills. Its specialisation in production, the introduction of technical changes and the importance acquired by the Cuban market allowed MCM

to emerge as an example of a born global company.

THE SUCCESS OF SMOKING

MCM began to manufacture cigarette paper books and acquired Papelera Barcelonesa, which is now the Besós factory in Barcelona. This operation was

accompanied by the mechanisation of the paper process. Ten years later, it registered Smoking, a cigarette paper brand that was iconic for many generations. Its success required an increase in production with a new workshop.

PUBLIC LIMITED COMPANY

From 1929 to 1936, MCM

experienced a profound change. The company was established as a Public Limited Company and, in addition to the Latin American market, sales on the domestic market grew. Continuous paper production in the Besós factory (Barcelona) was the industrial basis for the consolidation of MCM as a leading company in cigarette paper in Spain and Latin America.

EXPANSION AND MODERNISATION

MCM came in on the capital of paper pulp production company Celesa. Over the next two decades it experienced a phase of expansion and modernisation with the launch on the market of printing paper, the incorporation of Payá Miralles (with the factory in Mislata, Valencia) and the company's listing on the Stock Exchange of Barcelona.

BOOSTING INTERNATIONALISATION

The company's internationalisation received a boost with the creation of the Argentina branch. In order to make one of its main goals for the future a reality, the Miquel y Costas Group created MB Papeles Especiales. The coming on board of Jorge Mercader Miró as chairman in 1992 marked a point of inflection. 58% of the share capital was listed on the continuous market, international funds of recognised prestige came on board as shareholders and the Group reaffirmed its position as

a solvent, future-facing industrial project.

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LEADERS IN SUSTAINABILITY

The prestigious organisation CDP awarded the Miquel y Costas Group the triple "A" rating (an A in Water Security, A in Forest and A in Climate Change), all in the "leadership" range. From amongst the more than 20,000 companies all over the world assessed by CDP, the Group is one of only 12 to receive the triple "A" rating and the only one with this recognition in Spain and Southern Europe.

These ratings confirm Miquel y Costas' commitment to

sustainability as one of its core values.

LEADERSHIP IN SPECIAL PAPER

With the goal of doubling the special paper production side of its business, the Miquel y Costas Group inaugurated the Terranova Papers factory, in Pobla de Claramunt, Barcelona. Its commitment to innovation and sustainability were reflected in the cutting-edge technology of its machinery and in the efficiency and sustainability of its production processes, unprecedented in Spain.

MORE GROWTH

AND DIVERSIFICATION

Miquel y Costas acquired Clariana, a leader in the manufacturing of coloured paper in Spain, within

its strategy for growth and diversification. The Group continued working to write new pages in a story that has seen it become a global reference in paper and materials made from cellulose that meet the ever more complex needs of the market and of society.

Additionally, the Group has gone a step further and officially communicated its adherence to the 10 Principles of the United Nations Global Compact relating

to human rights, work, environment and the fight against corruption.

As an active member, Miquel y Costas is committed to ensuring that these principles form part of the company's strategy, culture and daily operations, collaborating on projects that promote the achievement of the Sustainable Development Goals (SDGs) and publishing its progress in this area.

OUR ORIGINS 15

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COMPOSITION OF THE COMPANY'S BOARD OF DIRECTORS

as of 31 December 2024

MIQUEL Y COSTAS GROUP 17

MIQUEL Y COSTAS GROUP

PARENT COMPANY

MIQUEL Y COSTAS & MIQUEL, S.A.

Papeles Anoia, S.A. Miquel y Costas tecnologías, S.A.

Miquel y Costas Energía y Medio Ambiente, S.A.

Sociedad Española Zig Zag, S.A.

Desvi, S.A.

MB Papeles Especiales, S.A. Terranova Papers, S.A.

Miquel y Costas Logística, S.A.

Celulosa de Levante,S.A.

Clariana, S.A.

MIQUEL Y COSTAS & MIQUEL, S.A.

Founded in 1879, its activity is focused on the production of thin, special paper of low grammage, especially for the cigarette industry, in the Barcelona, Capellades and Mislata factories. The company has a representative office

in the Philippines.

S.A. Payá Miralles

Fourtube, S.L.

MIQUEL Y COSTAS CHILE, SOCIEDAD POR ACCIONES

MIQUEL Y COSTAS ARGENTINA, S.A.

MIQUEL Y COSTAS

REPRESENTATIONAL OFFICE IN THE PHILIPPINES

DEUTSCHLAND GMBH

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DEPENDENT COMPANIES

CELULOSA DE LEVANTE, S.A.

With a factory in Tortosa. Company that produces textile pulps from flax and hemp for the cigarette industry and others as well as other fibres (sisal, abacá, jute and cotton) for other industrial sectors.

PAPELES ANOIA, S.A.

With its registered address in Barcelona. Company that markets national and imported paper and products that complete the range offered by the Group.

S.A. PAYÁ MIRALLES

Registered address in Valencia. Owner of the Mislata factory.

MIQUEL Y COSTAS TECNOLOGÍAS, S.A.

Registered address in Barcelona. Technological and industrial consultancy company.

MIQUEL Y COSTAS ENERGÍA Y MEDIO AMBIENTE, S.A.

Located in La Pobla de Claramunt (Barcelona). Electricity generation facility management company.

MB PAPELES ESPECIALES, S.A.

With an industrial facility in La Pobla de Claramunt (Barcelona). Produces special paper for industrial use.

TERRANOVA PAPERS, S.A.

With a production plant in Pobla de Claramunt (Barcelona). Produces special paper with very high porosity.

MIQUEL Y COSTAS LOGÍSTICA, S.A.

Registered address in Barcelona. Its activity is the provision of logistics services.

SOCIEDAD ESPAÑOLA ZIG ZAG, S.A.

Registered address in Barcelona. Sells cigarette paper booklets.

DESVI, S.A.

Registered address in Barcelona. Holds majority shares in the Group's companies in Argentina, Chile and Germany.

Its main activity is the provision of services.

CLARIANA, S.A.

Registered address in Castellón. Manufactures coloured paper and card.

MIQUEL Y COSTAS ARGENTINA, S.A.

Registered address in Argentina. Manufactures cigarette paper and other paper products.

MIQUEL Y COSTAS CHILE, SOCIEDAD POR ACCIONES

Registered address in Chile. Sells the Group's paper and paper products.

MIQUEL Y COSTAS DEUTSCHLAND GMBH

Registered address in Germany. Sells the Group's and other related products.

MIQUEL Y COSTAS GROUP 19

GROUP STRUCTURE

The Group's consolidated balance sheet includes the dependent companies shown below.

MIQUEL Y COSTAS & MIQUEL, S.A.

DESVI, S.A.

The companies of the Group are consolidated using the full consolidation method, except for the company Fourtube, S.L., which is consolidated using the equity method.

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MIQUEL Y COSTAS GROUP

ECONOMIC DATA

M: million euros; t: tonnes.

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2024 ANNUAL REPORT

SUSTAINABILITY AND THE ENVIRONMENT

HUMAN RESOURCES

A QUICK RECAP OF THE YEAR 23

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A COMPANY FOR A NEW SOCIETY

This declaration constitutes the central pillar that presides over the activity of Miquel

y Costas, a group of companies that manufactures special paper and materials made from cellulose. In order to achieve its objective, Miquel y Costas develops innovative production, distribution and management technology that ensures the quality of its processes and, as the result

of these, that of its products, systematically committed to sustainability and the preservation of the environmental chain.

Miquel y Costas defines itself as a solvent industrial project, sustained by recognised financial and technological solvency that ensures its continuity and independence and which integrates social and individual values into its corporate values.

Its purpose paints a picture of a future-facing company with the ultimate goal of serving society. Its results stem from the excellence and competitiveness of its

products, as well as its company philosophy focussed on healthy and sustained progress over time.

BUSINESS PURPOSE 25

Key elements to tackle the present while looking to the future

1. With a history that dates back to the start of the 18TH century, today, Miquel y Costas is a business group that ambitiously takes on the challenges of the 21ST century. To do this, the Group is operating a business project in the industrial field, committed to society, its customers and its stakeholders. The

   history, prestige and future of the Miquel y Costas brand are a great asset which is driving us towards a creative future.

   
   
   

2. Today, Miquel y Costas is a diversified group that produces and distributes special paper and other materials of great complexity and added value made from cellulose that constitute the foundation for its credibility, prestige and competitiveness. All its companies operate under the paradigm of sustainability and environmental management.

3. Its commitment to the future is based on the innovative characteristics of its products and its production processes, as well as the firmness of its corporate values. The Group's trajectory is proof

   of the reputation of an industrial product the main vector of which is knowledge, always based on perseverance.

   
   
   

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4. The quality of the products manufactured is the fruit of efficient, creative management that prioritises the needs of its clients and anticipates changes in the market. The investment in R+D+i right along the Group's chain of

   production and distribution is recognised on the market and caters for a very qualified demand attracted by the quality and value of its products.

5. With advanced industrial equipment and efficient, sustainable production processes, Miquel y Costas develops high qualification cellulose products. The Group's goal is to invest 3% of its sales in research and innovation and it is looking to increase this percentage.

6. Its commitment to knowledge, which has been key to its trajectory, allows it to make the competitiveness of its costs compatible with the excellence of its products. Product knowledge contributes value; knowledge of processes also allows cost efficiency.

7. Investment in manufacturing, management and distribution technology allows it to take on a multicultural market made up of 150 countries and offers a supply guarantee in the short and long term. This availability is valued by its clients, particularly at times of accelerated change in technology and the volatility of the economic context.

   The Group has advanced industrial equipment and efficient, sustainable production processes.

   
   
   

   BUSINESS PURPOSE 27

   Miquel y Costas focuses on reducing the CO2footprint of its companies in line with the goals of the Paris Agreement.

   
   
   

   Sustainability and the environment

8. For some time, Miquel y Costas has been focussing on making its business activity compatible with the defence of the environment. In order to comply with this commitment, the Group's companies reduce their consumption of water and electricity, recycle the waste produced through their activity and offer the markets biodegradable and compostable products. Its trajectory pursues the goal of becoming a net benefactor of sustainability and the environment.

9. Miquel y Costas is focussed on reducing the CO2 footprint of its companies in line with the goals of the Paris Agreement and extending circular economy throughout the whole production and distribution chain, submitting itself to the rating systems of the international agents. The Group involves its suppliers in this rigorous policy by requiring that they guarantee the implementation of the same practices.

10. Miquel y Costas contributes to a more sustainable world with the development of complex materials made from cellulose to replace and improve upon non-recyclable plastics and metals. These new materials, which have an impact on areas of high consumption and social repercussion, require considerable research and development and constitute one of its main lines for the future.

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    Various factors affect the Group's capacity to obtain innovative developments in its products and services.

    
    
    

    Independence

11. Financial solvency is one of the Group's strengths and a top rate base on which to build plans for growth and start out in new directions and develop new production capacities. The solidity of its finances and its equity balance allow it to meet the demands of the market by accessing and using the most advanced technology, in addition to maintaining stable growth, thus preserving its independence.

12. The capacity to efficiently manage the dynamic arising from the diversification of products and markets and vertical integration into the value chain, through effective decentralisation, requires complex management, key to its competitiveness and which is not easily understood by third parties.

13. The organisation's constant evolution, the management technologies and the close relationship of the Group's

managers with its clients and suppliers imply a level of collaboration that results in its capacity to obtain innovative new product and service developments. The capitalisation of these values, guaranteed by the Group's independence and desire for continuity, sustain the project's trajectory.

BUSINESS PURPOSE 29