ANNUAL CORPORATE GOVERNANCE REPORT

Of listed companies
Identification details of the issuer
End date of 12-month period of reference: 31/12/2021
Tax id code (CIF): A28027944
Company name: NH Hotel Group, S.A.
Registered office: Santa Engracia, 120 – 7ª planta, Madrid.

ANNUAL CORPORATE GOVERNANCE REPORT
FOR LISTED PUBLIC LIMITED COMPANIES

A – OWNERSHIP STRUCTURE

A.1 Complete the following table on the share capital and voting rights attributed, including, where appropriate, those corresponding to loyalty shares, at the year-end date:

Indicate if the company’s articles of association contain the provision for loyalty shares conferring double voting rights.

Indicate whether there are different classes of shares with different associated rights:

A.2 Please provide details of the significant direct and indirect shareholdings at year end, including any directors having a significant shareholding:

A.3 Detail, whatever the percentage, the shareholding at year-end of members of the Board of Directors who hold voting rights attributed to shares in the company or through financial instruments, excluding directors who have been identified in section A.2 above:

A.4 If applicable, state any family, commercial, contractual or corporate relationships that exist among significant shareholders to the extent that they are known to the company, unless they are significant or arise in the ordinary course of business, except those that are reported in Section A.6:

A.5 Indicate, where applicable, the commercial, contractual or corporate relationships existing between major shareholders, and the company and/or its group, unless they have little relevance or arise from normal trading activities:

A.6 Describe the relationships, unless significant for the two parties, that exist between significant shareholders or shareholders represented on the Board and directors, or their representatives in the case of proprietary directors.

Explain, as the case may be, how the significant shareholders are represented. Explain, as the case may be, how the significant shareholders are appointed. Specifically, state those directors appointed to represent significant shareholders, those whose appointment was proposed by significant shareholders and/or companies in its group, specifying the nature of such relationships or ties. In particular, mention the existence, identity and post of directors, or their representatives, as the case may be, of the listed company, who are, in turn, members of the Board of Directors or their representatives of companies that hold significant shareholdings in the listed company or in group companies of these significant shareholders.

A.7 Indicate whether the company has been informed of shareholders’ agreements which affect it, as established in Articles 530 and 531 of the Capital Companies Act. If so, describe them briefly and list the shareholders bound by the agreement:

Indicate whether the company is aware of any concerted actions among its shareholders. If so, provide a brief description:

In the event of any modification or termination of these pacts, agreements or agreed actions during the year, please specify it:

A.8 Indicate whether any individual person or legal entity exercises, or could exercise, control over the Company in accordance with Article 5 of the Stock Market Act. If so, identify them:

YES

A.9 Fill in the following tables regarding the Company’s treasury stock:

At 31 December 2021, the Group had 96,246 own shares compared to 103,947 own shares at 31 December 2020. The reduction in treasury stock during the period relates to the liquidity contract signed with Santander on 10 April 2019.

A.10 Describe the conditions and the term of the current mandate of the Board of Directors to issue, repurchase or transmit treasury stock, as conferred by the General Shareholders’ Meeting.

The General Shareholders’ Meeting held on 30 June 2021 authorised the Board of Directors of the Company to repurchase treasury stock under the terms indicated below:

a) The acquisition can be made by any title accepted in Law, once or more times, provided that the acquired shares, added to those the Company already owns, do not exceed 10% of the Company’s share capital, together with those owned by other companies in the group, if applicable.

b) The acquisition, including the shares which the Company, or a person acting in their own name but on behalf of the Company, may have acquired beforehand and have in its portfolio, can be made as long as this does not lead to net equity being below the amount of share capital plus the reserves made unavailable by law or the Company’s articles of association. For these purposes, equity will be considered the amount qualified as such pursuant to the criteria for preparing the annual accounts, reduced by the amount of the profit directly attributed to it, and increased by the amount of the uncalled subscribed share capital, as well as the amount of the nominal and the premiums for issuing the subscribed share capital that is accounted for as a liability.

c) The shares must be fully paid up.

d) The authorisation will be valid for 5 years from the day this agreement comes into force.

e) The minimum purchase price will be 95% and the maximum price will be 105% of the listed market value at the close of Spain’s continuous market the day before the transaction, and the purchase transactions will adhere to security market regulations and customs.

The shares acquired due to the authorisation can be disposed of or amortised, or used in the payment systems set out in Article 146.a) paragraph 3 of the Capital Companies Act, and in particular may be wholly or partly allocated to the beneficiaries of the Payment Plan or Plans for Company executives or employees.

A.11 Estimated floating capital:

A.12 State whether there are any restrictions (article of associations, legislative or of any other nature) placed on the transfer of shares and/or any restrictions on voting rights. In particular, state the existence of any type of restriction that may inhibit a takeover attempt of the company through acquisition of its shares on the market, and those regimes for the prior authorisation or notification that may be applicable, under sector regulations, to acquisitions or transfers of the company’s financial instruments.

A.13 State whether the General Shareholders’ Meeting has agreed to adopt neutralisation measures against take-over bids, pursuant to Law 6/2007.

If so, please explain the measures approved and the terms under which such limitations would cease to apply.

A.14 State if the company has issued shares that are not traded on a regulated EU market.

If so, please list each type of share and the rights and obligations conferred on each.

B – GENERAL SHAREHOLDERS’ MEETING

B.1 Indicate whether differences exist between the minimum quorum established in the Spanish Capital Companies Act (LSC) and the quorum of the General Shareholder’s Meeting. If so, explain these differences.

B.2 Indicate, and if applicable, specify any differences from the system established in the Capital Companies Act (LSC) for adopting company agreements:

B.3 Indicate the regulations applicable to modification of the company articles of association. In particular, note the majorities required for changes to the articles of association and, if any, the regulations governing the protection of shareholders’ rights when making changes to the articles of association.

Title VIII, covering Articles 285–345, of Royal Decree-Law 1/2010 of 2 July, approving the Revised Text of the Capital Companies Act (hereunder, LSC), and Articles 158–164 of Royal Decree 1784/1996 of 19 July, approving the Regulation of the Companies Register (hereinafter, RRM) establish the legal system applicable to the modification of articles of association. The text of the articles of association of NH Hotel Group faithfully reflects these legal regulations, with no higher quorum or majority required than is set out therein.

B.4 Give details of attendance at General Shareholders’ Meetings held during the year of this report and the previous year:

B.5 State whether any point on the agenda of the General Shareholders’ Meetings during the year has not been approved by the shareholders for any reason.

B.6 State if the Articles of Association contain any restrictions requiring a minimum number of shares to attend General Shareholders’ Meetings, or on distance voting:

B.7 State whether it has been established that certain decisions other than those established by law exist that entail an acquisition, disposal or contribution to another company of essential assets or other similar corporate transactions that must be subject to the approval of the General Shareholders’ Meeting.

B.8 Indicate the address and access on the Company website to information on corporate governance and other information on General Shareholders’ Meetings which must be available to shareholders on the Company website.:

All information of relevance to shareholders, including information on corporate governance and other information on General Shareholders’ Meetings is available at all times on the NH Hotel Group website, www.nh-hotels.es, in the section “Shareholders and Investors”.

C – COMPANY MANAGEMENT STRUCTURE

C.1 Board of Directors

C.1.4 Complete the following table with information relating to the number of female directors at the close of the past 4 years, as well as the category of each.

C.1.5 Indicate whether the company has diversity policies in relation to the Board of Directors of the company with regard to issues such as age, gender, disability, or professional training and experience. Small and medium-sized companies, in accordance with the definition established in the Accounts Auditing Law, will at least have to report the policy they have established in relation to gender diversity.

PARTIAL POLICIES

Should this be the case, describe these diversity policies, their objectives, the measures and way in which they have been applied and their results over the year. Also indicate the specific measures adopted by the Board of Directors and the nomination and remuneration committee to achieve a balanced and diverse presence of directors.

If the company does not apply a diversity policy, explain the reasons why.

On 22 December 2020, in compliance with the contents of Recommendations 14 and 15 of the Unified Good Governance Code, in their respective new wordings after the reform agreed by the CNMV on 26 June 2020, the Board of Directors approved a new Recruitment Policy for Directors and Management Positions that includes the aim that the number of female Directors is, at least, 40% of the members of the Board of Directors before the end of 2022 and beyond.

In order to fulfil the aforementioned goal, the Appointments, Remuneration and Corporate Governance Committee shall ensure that the selection procedure does not suffer from any implicit bias that may hamper the selection of female directors and that women that fulfil the professional profile sought are included among the potential candidates.

C.1.6 Explain the measures agreed, if any, by the Appointments Committee to ensure that the selection process is not implicitly biased against selecting female Directors, and so that the company deliberately seeks to include women who meet the desired professional profile among potential candidates. Also indicate whether these measures include encouraging the company to have a significant number of female senior executives:

The Appointments, Remuneration and Corporate Governance Committee ensures that each time a vacancy occurs in the Board of Directors and the corresponding selection process begins, at least one woman is a candidate.

If in spite of any measures adopted there are few or no female directors or senior managers, explain the reasons for this:

So far, no women have been found who fit the professional profile sought.

C.1.7 Explain the conclusions of the nomination committee regarding verification of compliance with the policy aimed at promoting an appropriate composition of the Board of Directors.

The Appointments, Remuneration and Corporate Governance Committee has concluded that, despite women having taken part in the selection process for Directors women, to date none have meet the required profile

C.1.8 Explain, if applicable, the reasons why proprietary directors have been appointed at the request of shareholders whose holdings are below 3% of share capital:

Indicate whether the Board has declined any formal requests for presence on the Board from shareholders whose equity interest is equal to or greater than that of others at whose request proprietary directors have been appointed. If so, explain why the requests were not granted:

C.1.9 State the powers delegated by the Board of Directors, as the case may be, to directors or Board committees, including those related to the possibility of issuing or repurchasing shares.

C.1.10 Identify any members of the Board who are also directors or officers in other companies in the group of which the listed company is a member:

C.1.11 Details on the positions of director, administrator or executive, or their representative, held by the directors or representatives of directors who are members of the company’s Board of Directors in other companies, whether or not they are listed companies:

D. William Ellwood Heinecke is also Chairman of the Executive Committee of Minor International Public Company Ltd, as well as the Chairman of the Appointments, Remuneration and Corporate Governance Committee of Indorama Ventures Public Company Limited.

Indicate, where applicable, any other remunerated activities of the directors or representatives of the directors, whatever their nature, aside from those indicated in the table above.

C.1.12 State whether the company has established rules on the number of boards on which its directors may hold seats, providing details if applicable, identifying, where appropriate, where this is regulated:

YES

Article 29 of the Board Regulations expressly establishes that directors must dedicate the necessary time and effort to performing their duties, and must notify the Appointments, Remuneration and Corporate Governance Committee of any circumstances that may interfere with the required dedication. Similarly, directors may not belong to more than 10 boards of directors, excluding the Board of NH Hotel Group, S.A. and the boards of holding companies and family companies, without the express authorisation of the Appointments, Remuneration and Corporate Governance Committee based on the individual circumstances in each case.

C.1.13 State total remuneration received by the Board of Directors:

C.1.14 Identify members of senior management who are not also Executive Directors, and indicate their total remuneration for the year:

C.1.15 State whether there has been any change to the regulations of the Board during the year:

YES

On 28 July 2021, the Board of Directors approved amendments to certain articles of the Board Regulations for the purpose of adapting its content to Law 5/2021 of 12 April, which amends the consolidated text of the Capital Companies Act and to adapt its content to the best practices of good corporate governance.

C.1.16 Specify the procedures for selection, appointment, re-election and removal of directors: List the competent bodies, steps to follow and criteria applied in each procedure.

he directors are appointed by the General Shareholders’ Meeting, or provisionally by the Board of Directors in accordance with the provisions contained in the Capital Companies Act and the company’s articles of association.

Proposals for appointments or the re-election of members of the Board of Directors is the responsibility of the Appointments, Remuneration and Corporate Governance Committee in the case of independent directors and is the responsibility of the Board itself for all other cases. Proposals should always be accompanied by a report from the Board assessing the proposed candidate’s competence, experience and merits, which will be attached to the minutes of the General Shareholders’ Meeting or that of the Board.

Proposals for appointing or re-electing any non-independent Director must also be preceded by a report from the Appointments, Remuneration and Corporate Governance Committee.

The Board of Directors must ensure that the selection process for its members favours diversity in terms of gender, experience and knowledge and does not suffer from implicit biases that may lead to any type of discrimination and, particularly, that it facilitates the selection of female directors.

In terms of appointing external directors, the Board of Directors and the Appointments, Remuneration and Corporate Governance Committee have a duty to ensure, within the scope of their respective competencies, that the election of candidates falls on people with a solid reputation, proven skills and experience, and who are prepared to dedicate a sufficient part of their time to the Company, taking the utmost care in choosing people who may be selected to be independent directors.

The Board of Directors will propose or designate people who meet the requirements set out in article 9.3.2 of the Regulation of the Board of Directors to cover the position of independent directors.

In any event, those subject to any incapacity, disqualification, prohibition or conflict of interests set forth in current legislation may not be proposed for appointment as Board members. All those directly or indirectly holding interests of any type or that have an employment, professional or mercantile relationship, or relations of any other type with competitor companies, shall be considered as incompatible for the position of director, except when the Board of Directors, with a favourable vote of at least 70% of its members, agrees to set aside this condition. The above is without prejudice to any other waiver that, in compliance with current legislation, the General Shareholders’ Meeting had to provide.

C.1.17 Explain how far the annual assessment of the board has led to important changes in its internal organisation, and on the procedures applicable to its activities:

After the annual assessment of the Board of Directors carried out in November 2021, for following strengths were noted:

• The materials delivered to the Audit Committee have sufficient information so that when proposals for decisions on specific matters are presented, the Committee assesses the pros and cons to make the decision.
• The Annual Directors’ Remunerations Report is sufficiently transparent and adequately reflects the Company’s remuneration situation.
• The directors are informed about the Corporate Governance regulations applicable to the Company.

There remain, however, areas to improve for which an action plan has been put in place with the aim of optimising the areas of opportunity detected. The two main areas of opportunity detected are: a greater focus on strategic initiatives and a greater frequency of meetings by the Audit and Control Committee.

Describe the evaluation process and the areas evaluated by the Board of Directors with or without the help of an external advisor, regarding the functioning and composition of the Board and its committees and any other area or aspect that has been evaluated.

The evaluation process of the NH Board of Directors is carried out annually to identify the directors’ perceptions regarding the practices of the Board of Directors and its committees in aspects such as composition, operation, sessions or performance of the functions.

During 2021 assessment of the Board of Directors was carried out internally. The process was similar to previous years, where information is collected using forms filled in by the directors and then a results report and action plan for 2022 was prepared.

The 2021 assessment was answered by all members of the Board of Directors.

The directors responded on various issues in reference to NH’s governing bodies (operations, Board functions, strategic planning, operational and financial supervision, etc.), as well as questions about the sessions of each committee (planning, presentations, communication and participation, etc.)

C.1.18 Describe, in those years in which the external advisor has participated, the business relationships that the external advisor or any group company maintains with the company or any company in its group.

Not Applicable.

C.1.19 Indicate cases in which Directors are compelled to resign.

Directors shall step down when the period for which they were appointed comes to an end or when agreed by the General Shareholders’ Meeting based on the powers legally attributed to it.

Article 14.2 of the Regulations of the Board of Directors also stipulates that Directors shall place their office at the disposal of the Board of Directors and tender their resignation in any of the following circumstances:

a) When they cease the executive positions to which their appointment as Director was associated or when the reasons for which they were appointed disappear, it being understood that said circumstance occurs to a Proprietary Director when the Entity or Business Group they represent ceases to hold a shareholding significant in the Company’s share capital or when, for an Independent Director, they are integrated into the executive line of the Company or any of its subsidiaries.

b) Where they are subject to any incapacity, disqualification, prohibition or conflict of interests established in current legal provisions.

c) Where they are seriously reprimanded by the Appointments, Remuneration and Corporate Governance Committee for failing to comply with any of their obligations as Directors.

d) When their continued presence on the Board may affect the good standing or reputation that the Company enjoys in the market, or put its interests at risk in any other way. In this case, the Director must immediately inform the Board of the facts or procedural difficulties that affect said reputation or risk. In the event that the Board is informed or becomes aware in another manner of any of the circumstances mentioned above in advance, it must investigate the case as quickly as possible and, depending on the specific circumstances, decide, based on a report from the Nomination and Remuneration Committee, whether or not any measure must be adopted, such as the opening of an internal investigation, asking the director to resign or proposing that he or she be dismissed.

C.1.20 Are reinforced majorities other than those applicable by law required for any type of decision?:

YES

If so, describe the differences.

C.1.21 Explain if there are any specific requirements, other than those relating to Directors, to be appointed Chairman of the Board of Directors.

C.1.22 Indicate whether the Articles of Association or the Board Regulations establish any age limit for Directors

C.1.23 State whether the Articles of Association or the Board Rules establish any term limits for independent directors other than those required by law.

C.1.24 State whether the Articles of Association or Board Rules establish specific proxy rules for votes at Board meetings, how they are to be delegated and, in particular, the maximum number of delegations that a director may have, as well as if any limit regarding the category of director to whom votes may be delegated and whether a director is required to delegate to a director of the same category. If so, briefly describe these rules.

Article 40 of the Articles of Association sets the rules around delegating votes, stating that “Directors shall personally attend Board meetings and, when they are unable to do so in exceptional circumstances, shall ensure that the proxy granted to another member of the Board shall include the relevant instructions insofar as possible.”

Similarly, in development of the aforementioned statutory article, article 22 of the Board Regulations establishes that the Directors will make their best effort to attend the Board meetings and its Committees in person or online and, whenever they cannot do so, they will ensure that the representation they confer in favour of another Board member includes, to the extent that it is possible, the appropriate voting instructions.
For internal purposes, Directors who delegate their vote to another Director, with precise voting instructions, will be deemed to have attended the corresponding Board or Committee. In this sense, the Directors undertake to attend 85% of meetings, with said calculation including attendance in person, by videoconference, and those via delegation with voting instructions.

Non-executive Directors can only delegate their representation to another non-executive director.

The Board of Directors has not governed the maximum number of times a Director may delegate their vote.

C.1.25 Indicate the number of meetings that the Board of Directors has held over the year. Also indicate, if applicable, the number of times the Board met without the chairman being present. Meetings where the chairman sent specific proxy instructions are to be counted as attended.

C.1.26 State the number of meetings held by the Board of Directors during the year in which all of its directors were present. For the purposes of this section, proxies given with specific instructions should be considered as attendance

C.1.27 tate if the individual and consolidated financial statements submitted to the Board for preparation were previously certified:

Identify, if applicable, the person/s who certified the individual and consolidated financial statements of the company for preparation by the Board:

C.1.28 Explain the mechanisms, if any, established by the Board of Directors to ensure that the financial statements it presents to the General Shareholders’ Meeting are prepared in accordance with accounting regulations.

The Audit and Control Committee is, amongst other things, responsible for ”supervising and evaluating the process of preparation and the completeness of the financial and non-financial information, as well as the control and management systems for financial and non-financial risk relating to the company and, if applicable, the group – including operational, technological, legal, social, environmental, political and reputational risk, or risk related to corruption – reviewing compliance with regulatory requirements, the appropriate delimitation of the scope of consolidation and the correct application of accounting criteria” (article 25 b), paragraph 3 of the Board Regulations). They also provide that the Committee has the function of “ensuring that the external auditor holds an annual meeting with the Board of Directors in plenary session in order to make a report regarding the tasks performed and the development of the company’s accounting situation and risks” (article 25 b), paragraph 5.6 of the Board Regulations).

It ensure that the members of the Audit and Control Committee have the necessary training, it is a requirement that the members of the Audit Committee, in particular its Chairman, be appointed in consideration of their knowledge and experience in accountancy, audit and risk management issues, both financial and non-financial (article 25 a) of the Board Regulations).

At any event, all Directors may obtain the necessary advice from the Company to perform their duties, and may request legal advisers, accountants, financial advisers or other experts to be appointed and paid for by the Company.

C.1.29 Is the Secretary of the Board a Director?

If the secretary is not a director, please complete the following table.

C.1.30 State, if any, the concrete measures established by the entity to ensure the independence of its external auditors, financial analysts, investment banks, and rating agencies, including how legal provisions have been implemented in practice.

The Board of Directors has established a stable and professional relationship with the Company’s external accounts auditor through the Audit and Control Committee, strictly respecting its independence. By way of an example, the Audit and Control Committee holds regular meetings with the external auditor without the executive team being present. In this sense, article 25. b) of the Regulations of the Board of Directors expressly establishes that one of its responsibilities is to pass along to the Board of Directors proposals for selecting, appointing, re-electing and substituting external auditors, as well as conditions for their contracting and regularly collecting information from them on the audit plan and its execution, in addition to preserving its independence in exercising its functions.

Furthermore, the Audit and Control Committee is responsible for establishing suitable relationships with auditors or audit firms in order to receive information regarding any issues that may jeopardise their independence, so that these can be examined by the committee, and any other matters related with the process of conducting financial audits, as well as any other communications stipulated in the financial auditing legislation and audit regulations. In any event, it must receive written confirmation on an annual basis from the auditors or auditing firms of their independence from the Company or entities related to it either directly or indirectly, as well as information on any additional service of any kind provided to such entities and the corresponding fees received by the aforementioned auditors or by persons related to them in accordance with the provisions set forth in legislation regarding auditing.

Likewise, every year, prior to issuing the audit report, the Audit and Control Committee must also issue a report in which it gives its opinion on the independence of the auditors or auditing firms. This report must always contain an assessment of the additional services referenced in the above paragraph, considered individually and together, that are separate from the legal audit and with regard to their independence and to audit regulations.

C.1.31 State whether the Company has changed its external auditor during the year. If so, please identify the incoming and outgoing auditor:

If there were any disagreements with the outgoing auditor, explain their content:

C.1.32 Indicate whether the audit firm performs any non-audit work for the company and/or its group and, if so, state the amount of fees it received for such work and express this amount as a percentage of the total fees invoiced to the company and/or its group for audit work:

YES

C.1.33 Indicate whether the auditors’ report on the financial statements for the preceding year contains a qualified opinion or reservations. If so, indicate the reasons given to shareholders at the general meeting by the chairman of the Audit Committee to explain the content and extent of the qualified opinion or reservations.

C.1.34 State the number of consecutive years the current audit firm has been auditing the financial statements of the company and/or group. Furthermore, state the number of years audited by the current audit firm as a percentage of the total number of years that the financial statements have been audited:

C.1.35 Indicate and, if applicable, provide details of whether there is a procedure whereby Directors can have the information necessary to prepare for meetings of the management bodies with sufficient time:

YES

C.1.36 Indicate whether the company has established rules obliging directors to inform the Board of any circumstances, whether or not related to their actions in the company itself, that might harm the company’s standing and reputation, tendering their resignation where appropriate. If so, provide details:

YES

C.1.37 Indicate whether, apart from such special circumstances as may have arisen and been duly minuted, the Board of Directors has been notified or has otherwise become aware of any situation affecting a director, whether or not related to his or her actions in the company itself, that might harm the company’s standing and reputation:

C.1.38 List the significant agreements signed by the company and that come into force, are modified or are terminated in the case of a change in control of the company resulting from a take-over bid, and their effects.

The NH Group has signed several financing contracts that contain a clause establishing their early maturity in the event of circumstances that give rise to a change in control of the NH, amongst which includes a Revolving credit contract and a Syndicated Credit Line for 250 million euros backed by the ICO that matures in 2026.

In addition, during 2021, NH issued guaranteed senior bonds for a nominal amount of 400,000,000 euros that mature in 2026, which include certain consequences should control of the Issuer change, such as the possibility of NH being required to repurchase the senior bonds.

Likewise, the change of control following a public takeover bid could have different effects on other leasing and hotel management agreements signed by the Company. NH has carried out a study of these clauses and estimates that the change of control will not have a significant economic impact.

C.1.39 Identify individually for director, and generally in other cases, and provide detail of any agreements made between the company and its directors, executives or employees containing indemnity or golden parachute clauses in the event of resignation or dismissal or termination of employment without cause following a takeover bid or any other type of transaction.

Indicate whether, beyond the cases established by legislation, these agreements have to be communicated and/or authorised by the governing bodies of the company or its group. If they have, specify the procedures, events and nature of the bodies responsible for their approval or for communicating this:

C.2 Committees of the Board of Directors

C.2.1 List all the committees of the Board of Directors, their members and the proportion of Executive, Proprietary, Independent and other external Directors thereon:

Explain the functions assigned to this committee, including where applicable those that are additional to those prescribed by law, and describe the rules and procedures for its organisation and functioning. For each of these functions, briefly describe its most important actions during the year and how it has exercised in practice each of the functions assigned to it by law, in the articles of incorporation or in other corporate resolutions.

The Appointments, Remuneration and Corporate Governance Committee shall comprise a minimum of three and maximum of six Directors and shall be exclusively non-executive directors appointed by the Board of Directors, two of whom, at least, must be Independent Directors. The Chairman of the Committee shall be chosen by the Independent Directors that comprise it.

The Appointments, Remuneration and Corporate Governance Committee will have at least the following responsibilities:

1. Evaluate the competences, knowledge and experience necessary on the Board of Directors. For these purposes, it shall define the abilities and functionsrequired by candidates to cover each vacancy, and assess the time and dedication required to correctly carry out their functions.

2 Establish a representation goal for the less represented sex on the Board of Directors and create guidelines for how to achieve said goal.

3. Pass along to the Board of Directors proposals for appointments of Independent Directors for their designation by co-opting or for theirsubmission to the decision of the General Shareholders’ Meeting, as well as proposals for the re-election or removal of said Directors by the General Shareholders’ Meeting.

4. Inform the Board of proposals for appointments of remaining Directors for their designation by co-opting or for their submission to the decision of the General Shareholders’ Meeting, as well as proposals for their re-election or removal by the General Shareholders’ Meeting.

5. Provide notification of proposals for appointing or removing senior management and the basic conditions of their contracts.

6. Examine or organise the Chairman of the Board’s and the chief executive’s succession and, if appropriate, bring proposals before the Board so that such successions are effected in an orderly fashion.

7. Propose to the Board of Directors the remuneration policy for the directors and general managers or for those who perform functions of upper management directly reporting to the Board, Executive Committee or Chief Executives, as well as the individual remuneration and other contractual conditions for the Chief Executives, ensuring compliance therewith.

8. Supervise and monitor compliance with corporate governance rules and with the corporate social responsibility policy and plan, proposing any necessary Reports to the Board, while also ensuring that corporate culture is in line with their purpose and values.

9. Monitoring the application of the general policy on communication of economic and financial information, non-financial and corporate information and communication with shareholders and investors, proxy advisors and other stakeholders. The manner in which the entity communicates and handles relations with small and medium-sized shareholders must also be monitored.

10. The periodic evaluation and review of the company’s corporate governance system, and environmental and social policy, with a view to ensuring that they fulfil their purposes of promoting the interests of society and take account, as appropriate, of the legitimate interests of other stakeholders.

11. Supervision of the company’s environmental and social practices to ensure that they are in alignment with the established strategy and policy.

12 Supervision and evaluation of the way relations with various stakeholders are handled.

The Board of Directors shall be informed of all the tasks carried out by the Appointments, Remuneration and Corporate Governance Committee during its first meeting, and in all events the corresponding documentation shall be made available to the Board so that it can take these actions into consideration when performing its duties.

The Appointments, Remuneration and Corporate Governance Committee shall meet as often as considered necessary by its Chairman, or when requested by two of its members or the Board of Directors.

Furthermore, non-member Directors may attend Appointments, Remuneration and Corporate Governance Committee meetings on a one-off basis, when invited by the Chairman of the Committee.

The Audit and Control Committee shall comprise a minimum of three and a maximum of six directors, appointed by the Board of Directors. All members sitting on said Committee shall be External Directors, the majority of whom, at least, must be independent directors, and one of whom must be designated by taking into consideration their knowledge and experience in accounting, auditing, or both. The Chairman of the Audit Committee must be appointed from among its independent members. The Chairman must also be replaced every four years; previous chairmen may be re-elected one year after their previous mandate has ended.

The Audit Committee will have at least the following responsibilities:

1. Report to the General Meeting of Shareholders on any matters broached within the sphere of its competence.

2. Supervise the effectiveness of the company’s internal control, internal auditing, where applicable, and risk-management (including tax risk) systems, as well as discussing with auditors or audit companies any significant weaknesses in the internal control system identified during audits.

3. Oversee the process of drawing up and submitting regulated financial reporting.

4. Pass along to the Board of Directors proposals for selecting, appointing, re-electing and substituting external auditors, as well as conditions for their contracting and regularly collecting information from them on the audit plan and its execution, in addition to preserving its independence in exercising its functions.

5. Establish suitable relationships with auditors or audit firms in order to receive information regarding any issues that may jeopardise their independence, so that these can be examined by the committee, and any other matters related with the process of conducting financial audits, as well as any other communications stipulated in the financial auditing legislation and regulations. In any event, it must receive written confirmation on an annual basis from the auditors or auditing firms of their independence from the Company or entities related to it either directly or indirectly, as well as information on any additional service of any kind provided to such entities and the corresponding fees received by the aforementioned auditors or by persons related to them in accordance with the provisions set forth in legislation regarding auditing.

6. Issue, once a year and prior to the release of the auditor’s report on the financial statements, a report expressing an opinion on the independence of the auditors or audit firms. This report must always contain an assessment of the additional services referenced in the above paragraph, considered individually and together, that are separate from the legal audit and with regard to their independence and to audit regulations.

7. Provide previous information for the Board of Directors on all matters established by law, the articles of association and in the Regulation of the Board, and, in particular on:
a. The financial information which the company must periodically publish;
b. The creation or acquisition of any equity investments in special purpose vehicles and companies registered in tax havens; and
c. Related party operations.

8. Safeguard the independence and effectiveness of the internal audit area; propose the selection, appointment, re-election and removal of the manager of the internal audit service; propose the budget for this service; receive periodic information about its activities; and verify that senior management takes into account the conclusions and recommendations of its reports.

9. Set up and oversee a mechanism that allows employees confidentially and anonymously to report any breaches of the Code of Conduct.

10. Supervise compliance and internal codes of conduct, as well as the rules of corporate governance.

The Audit and Control Committee will meet at least once every quarter and as many times as may be necessary, after being called by the Chairperson on their own initiative or upon the request of two of the Committee or the Board of Directors.

The Audit and Control Committee may require any of the Company’s employees or managers, including the Company’s Accounts Auditor, to attend its meetings. Through its Chairman, the Audit and Control Committee will give the board an account of its activities and work done, either at the meetings scheduled for the purpose or at the very next meeting when the Chairman of the Audit and Control Committee deems it necessary. The minutes of its meetings will be available to any member of the board that requests them.

Non-member Directors may attend Audit and Control Committee meetings on a one-off basis, when invited by the Chairman of the Committee.

Identify the directors who are member of the Audit Committee and have been appointed taking into account their knowledge and experience in accounting or audit matters, or both, and state the date that the Chairperson of this committee was appointed.

C.2.2 Complete the following table with information regarding the number of female directors who were members of Board committees at the close of the past four years:

C.2.3 Indicate, as applicable, the existence of regulations governing the committees attached to the Board, where they are available for consultation and any amendments that have been made to them during the year. Also indicate whether any annual reports on the activities of each committee have been voluntarily prepared.

The Company Articles of Association (Articles 45–48), and the Regulations of the Board of Directors (Articles 23–26) comprehensively cover all regulations relating to the Board’s Committees. The aforementioned internal regulations of the Company are available on the company website (www.nh-hotels.es), in the section “Shareholders and Investors” – “Corporate Governance”. Said website also includes all information regarding the composition of each Committee. During the 2021 financial year, amendments were made to the regulation of the board committees.
The Audit and Control Committee and the Appointments, Remuneration and Corporate Governance Committee annually issue a report on the activities they have carried out during the financial year.

D – RELATED AND IN-GROUP TRANSACTIONS

D.1 Explain, where applicable, the procedure and competent bodies for the approval of related-party and intragroup transactions, indicating the company’s criteria and general internal rules that regulate the abstention obligations of the affected directors or shareholders and detailing the Internal information and periodic control procedures established by the company regarding related-party transactions whose approval has been delegated by the Board of Directors.

Articles 33.1.c) of the Articles of Association and 5.5.c) of the Board Regulations attribute the approval of Related-Party Transactions to the Board of Directors, understanding as such the transactions that the Company or its subsidiaries carry out with Directors, with shareholders holding 10% or more of the voting rights or represented on the Board or with any other person who should be considered a related party, in accordance with the applicable regulations, unless said approval is reserved to the Shareholders’ Meeting or when approval by the Board is not required due to applicable legislation or the Company’s internal regulations. The General Shareholders’ Meeting will be responsible for approving Related-Party Transactions whose amount or value is equal to or greater than 10% of the total assets according to the last annual balance sheet approved by the Company.

This approval will follow a report by the Audit and Control Committee (Article 48.3 of the Articles of Association and 25 b) of the Board Regulations). The affected Directors or those who represent or are related to the affected shareholders must abstain from participating in the deliberation and voting of the resolution in question. Specifically, the duty of loyalty obliges the Director to abstain from participating in the deliberation and voting for agreements and decisions in which they or an associate have a direct or indirect conflict of interests. Those agreements or decisions that affect their position as a Director shall be excluded from the above requirement to abstain, such as their selection or removal for positions in the administration body or others of similar significance. Proprietary Directors who represent or are related to the parent company must not abstain, without prejudice to the particularities provided for in Law.

Non related-party transactions will be:
(i) those made between the company and its wholly-owned subsidiaries, directly or indirectly;
(ii) those made by the company with its subsidiaries, provided that no other party related to the former has an interest in said subsidiary;
(iii) the contracts of executive directors and senior managers

The Board of Directors has not delegated the approval of Related-Party Transactions.

Said Procedure establishes in detail everything relative to i) the obligation of communicating possible situations of conflict of interest to the Secretary of the Board, who will send them to the Audit and Control Committee periodically; ii) the obligation of the affected Director to abstain from attending and intervening in the phases of deliberation and voting regarding those matters in which they are involved in a conflict of interest, both in meetings of the Board of Directors as well as before any other company body, committee or board that participates in the corresponding transaction or decision, and iii) the obligation of keeping a registry of said transactions.

Finally, to comply with Recommendation 6 of the Code of Good Governance, the Annual Audit and Control Committee Report includes a sections on Related Operations that have been managed in said Committee. This Report was published on the Company’s website to coincide with the Board meeting.

D.2 Individually list the operations that are significant due to their amount, or relevant due to their subject matter, carried out between the company or its subsidiaries and the shareholders holding 10% or more of the voting rights or represented on the company’s Board of Directors, indicating the competent body for its approval and if any affected shareholder or director has abstained. Where the competence has corresponded to the shareholders’ meeting, indicate if the resolution proposal has been approved by the board without a vote against by the majority of the independent members:

D.3 Individually list the operations that are significant due to their amount, or relevant due to their subject matter, carried out by the company or its subsidiaries with the company administrators or directors, including operations carried out with companies that the administrator or director controls or jointly controls, and indicating the competent body for its approval and if any affected shareholder or director has abstained. Where the competence has corresponded to the shareholders’ meeting, indicate if the resolution proposal has been approved by the board without a vote against by the majority of the independent members:

D.4 Individually list intragroup operations that are significant due to their amount, or relevant due to their subject matter, carried out by the company with its parent company or with other companies belonging to the parent group, including the subsidiaries of the listed company, unless no other related party of the listed company has interests in said subsidiaries or the latter are wholly owned, directly or indirectly, by the listed company.

In any event, note any intragroup transaction conducted with entities established in countries or territories which are considered tax havens:

D.5 Individually list the operations that are significant due to their amount, or relevant due to their subject matter, carried out by the company or its subsidiaries with other related parties and considered as such under the International Accounting Standards adopted by the EU, which have not been reported in the previous headings.

D.6 Describe the mechanisms established to detect, determine and resolve possible conflicts of interest between the Company and/or its Group, and their directors, managers, major shareholders or other related parties.

Article 32 of the Regulations of the Board establishes the duty of loyalty and the duty to prevent situations of conflict of interest that the Directors must comply with. Thus, the aforementioned article states that Directors must perform their duties with the loyalty of a faithful representative, operating under good faith and in the Company’s best interest. In particular, the duty of loyalty obliges Directors to:

a) Not exercise their powers for purposes other than those for which they have been conceded.
b) Keep the information, data, reports or background that they have had access to in the performance of their duty confidential, even when they have left the position, except for cases where allowed or required by the law.
c) Abstain from participating in the deliberation and voting for agreements and decisions in which they or an associate have a direct or indirect conflict of interests. The agreements or decisions that affect them in their capacity as Director, such as their appointment or revocation for positions in the administrative body or the like, will be excluded from the previous obligation to abstain. Proprietary Directors who represent or are related to the parent company must not abstain, without prejudice to the particularities provided for in Law.
d) Perform their duties under the principle of personal responsibility with freedom of criteria or judgement and independence with regard to instructions from and connections to third parties.
e) Adopt the necessary measures for avoiding situations in which his/her interests may enter into conflict with the company’s interests and with his/her responsibilities to the company.

In particular, avoiding the situations of conflict of interest referred to in the above letter e), obliges the Director to abstain from:
i) Carrying out transactions with the Company, except where they were ordinary transactions carried out under standard conditions for clients and of little importance, with these being understood to be those whose information is not necessary to express the true image of the equity, financial situation and profit and loss of the company.
ii) Using the Company name or their position as director to unduly influence the completion of private transactions.
iii) Making use of company assets, including confidential Company information, for private purposes.
iv) Exploiting the Company’s business opportunities.
v) Receiving benefits or remuneration from third parties other than the Company and its Group of associate companies while carrying out my duties, except where these were mere acts of courtesy.
vi) Carrying out activities on their own account, or for third parties, which would entail either actual or potential effective competition with the Company or which, in any other way, would place them in permanent conflict with the Company’s interests.

The above provisions shall also be applicable in the case that the beneficiary of the prohibited acts or activities is an associate of the Director, in accordance with the definition provided in article 231 LSC.

The Company may waive the prohibitions set out in this article, as established in article 230 LSC.

In any event, directors must notify the Board of Directors of any direct or indirect situation of conflict of interest that they or their associates may have with the Company. Situations of conflict of interest involving Directors will be subject to inclusion in the Annual Report.

Additionally, on 11 November 2021 the Board of Directors approved an update to the Procedure on Conflicts of Interest and Related Party Transactions,
available on the Company’s website, which includes the approval of such transactions in greater detail. In this way, the aforementioned Procedure
implements the provisions of the Regulations of the Board of Directors and the Internal Code of Conduct on the Securities Market of the NH Hotel Group, S.A., and aims to detail the rules to be followed when the Company’s interests or those of any of its Group’s companies directly or indirectly clash with a Director’s personal interests. Said Procedure details everything related to i) the obligation of communicating possible situations of conflict of interest to the Secretary of the Board, who will send them to the Audit and Control Committee periodically; ii) the obligation of the affected Director to abstain from attending and intervening in the phases of deliberation and voting regarding those matters in which they are involved in a conflict of interest, both in meetings of the Board of Directors as well as in any other company body, committee or board that is involved in the corresponding transaction or decision, and iii) the obligation of keeping a registry of said Transactions.

Lastly, it should be noted that all related-party transactions signed between Minor International Public Company Limited (and its group of companies) and NH have been signed under market conditions and in compliance with the provisions of both legal and statutory precepts and the aforementioned Procedure, as well as in the Framework Agreement signed between the parties on 7 February 2019, which was duly communicated to the Market through a Relevant Fact and is published in full on the Company’s website.

During all Board Meetings dealing with issues related to Minor, the Proprietary Directors were absent when dealing with said matters and therefore did not participate in the adoption of the corresponding agreement.

D.7 Indicate whether the company is controlled by another entity in the meaning of Article 42 of the Commercial Code, whether listed or not, and whether it has, directly or through any of its subsidiaries, business relationships with said entity or any of its subsidiaries (other than the listed company) or carries out activities related to those of any of them.

YES

Indicate whether the respective areas of activity and any business relationships between the listed company or its subsidiaries and the parent company or its subsidiaries have been defined publicly and precisely:

YES

Identify the mechanisms in place to resolve potential conflicts of interest between the parent of the listed company and the other group companies:

E – RISK CONTROL AND MANAGEMENT SYSTEMS

E.1 Explain the scope of the company’s financial and non-financial Risk Management and Control System, including tax compliance risk:

The risk management system of the NH Hotel Group, which is rolled out in both the Group’s corporate head office and its Business Units, aims to identify events that may negatively affect achievement of the objectives of the Company’s Strategic Plan, providing the maximum level of assurance to shareholders and stakeholders and protecting the group’s revenue and assets, as well as its reputation.

The risk management model is based on the integrated COSO ERM 2017 (Enterprise Risk Management) framework, and includes a set of methodologies, procedures and support tools that allow the NH Hotel Group:

1. To adopt adequate governance in relation to the Company’s risk management, as well as promoting an appropriate risk management culture.
2. To ensure that the Company’s defined objectives are aligned with its strategy and risk profile.
3. To identify, evaluate and prioritise the most significant risks that could affect achievement of strategic objectives To identify measures to mitigate these risks, as well as establish action plans based on the Company’s tolerance to risk.
4. To follow-up on the action plans for the 10 main risks, within a continuous improvement model framework.

Such methodologies and procedures are also used in relation to tax risk management. The NH Hotel Group has a Corporate Tax Strategy that forms part of the Group’s Corporate Governance System, the objective of which is to establish the values, principles and rules that must govern the Group’s activities in terms of tax, with a Tax Risk Management and Control Procedure.

On the other hand, NH Hotel Group’s Corporate Risk Management Policy (approved by the Board of Directors in 2015), as well as the internal manual (updated in 2021) that implements it, aim to define the basic principles and the general framework of action to identify and control all types of risks (including emerging and ESG risks) that may affect the companies over which the NH Hotel Group has effective control, as well as ensuring alignment with the Company’s strategy.

In addition, there are a number of specific policies that complement the Corporate Risk Management Policy and that are established in relation to certain risks:

– Purchasing policy.
– Travel policy.
– Sustainability policy.
– Information security policy.
– Corporate credit policy.
– Corporate tax policy.
– Corporate gifts policy.
– Corporate committees policy.
– Anti-fraud and corruption policy.
– Money laundering and terrorist financing prevention policy.
– Corporate responsibility policy.
– Debt financing policy.
– Code of Conduct.
– Internal Code of Conduct (ICC).
– Human Rights Policy
– Energy and Environment Policy
– Director Selection Policy

The Group’s Risk Map is updated annually and approved by the Board of Directors once reviewed and validated by the Audit and Control Committee. The Company updated its Risk Map in 2021 through a process in which 28 Senior Executives identified and assessed the main risks faced by the Company. The value of each risk is obtained as a result of the product of probability and impact according to a predefined scale (4×4, 5 matrix). This Map was approved by the Board of Directors at its meeting on 28 July 2021.

For the main risks of the Risk Map, the Audit and Control Commission receives a report regularly detailing the operation of the risk management and control system and includes conclusions on it. The implementation status of the previously agreed action plans is, amongst other information, included in the report.

Each of the main risks on the Company’s Risk Map is assigned a Risk Owner who, in turn, is a member of the Management Committee.

Each year, coinciding with the update of the Risk Map, Risk Management is responsible for reassessing the risk catalogue, this includes financial and non-financial risks and emerging risks and ESG (Environmental, Social and Governance, for its acronym in English). The definitive catalogue is updated with the Senior Management taking part in the process, validated by the Management Committee Audit and Control Committee before being approved by the Board of Directors. Additionally, Risk Owners can report/suggest a new risk to the Risk Office.

The 2021 risks catalogue includes 78 risks (vs. 75 risks in 2020).

E.2 Identify the company bodies responsible for creating and implementing the financial and non-financial Risk Management and Control System, including tax risks:

The Company’s Board of Directors is responsible for overseeing the risk management system, in line with the provisions of Article 5 of the Regulation of the Board of Directors.

As regulated by Section 3 of article 25 b) of the Regulation of the Company’s Board of Directors, the Audit and Control Committee supports the Board of Directors in supervising the effectiveness of the internal control, internal audit and the risk management systems, including tax risks. In this regard, carried out during the various meetings held in 2021 were control and monitoring of the Company’s main risks, their evolution in recent years and the main mitigation and response measures.

On the other hand, amongst other functions, the Company’s Management Committee manages and controls risks based on risk tolerance, assigns ownership of the main risks, periodically monitors their evolution, identifies mitigation actions as well as defining response plans. For these purposes, the Executive Risk Committee, made up from members of the Management Committee and Senior Executives, supports the Management Committee in such oversight, as well as promoting a culture of risks in the Company. For them, the Company has an internal risk management manual (updated in 2021) that details the principles, processes and controls in place.

Risk Management, integrated into the Internal Audit department, is responsible for ensuring the risk management and control system in the Company functions properly and is linked to the strategic objectives.

To ensure that there are no conflicts of independence and that the NH risk management and control system works as set out in the Corporate Risk Management Policy, an independent third party reviews its operation regularly.

As an additional guarantee of independence, Risk Management is independent of the Business Units and, as with Internal Audit, it maintains a functional reporting line to the Audit and Control Committee.

In line with the foregoing, NH follows the Three Lines model published by the Global IIA in July 2020.
• First line: carried out by each function (business and corporate units) that owns the risk and its management (Operations, Commercial, Marketing, etc.).
• Second line: performed by the functions responsible for risk supervision (Risk Management, Compliance, Data Protection, Internal Control, etc.)
• Third line: carried out by Internal Audit or an independent third party according to the organisational model.

In regard to tax, the Corporate Tax Department forms part of the Finance Department and is responsible for designing, implementing and monitoring the Group’s Tax Risk Management.

E.3 State the primary risks, including tax compliance risks, and those deriving from corruption (with the scope of these risks as set out in Royal Decree Law 18/2017), to the extent that these are significant, which may affect the achievement of business objectives.

The NH Hotel Group’s risk catalogue includes a total of 78 risks grouped into the following six categories:

a) Financial Risks, such as fluctuation of interest rates, exchange rates, inflation, liquidity, non-compliance with financing undertakings, restrictions on financing and credit management.

b) Compliance Risks, arising from possible regulatory changes, interpretation of legislation, regulations and contracts, and non-compliance with internal and external regulations. This section would include tax, environmental, and fraud and corruption risks. It also covers Reputational Risks, arising from the Company’s behaviour which negatively affects fulfilment of the expectations of one or more of its stakeholders (shareholders, customers, suppliers, employees, the environment and society in general).

c) Business Risks generated by inadequate management of procedures and resources, whether human, material or technological. This category encompasses difficulty in adapting to changes in customer demand and needs.

d) Risks arising from External Factors, such as the consequences resulting from natural disasters, pandemics, political instability or terrorist attacks.

e) Systems Risks, produced by attacks or faults in infrastructures, communications networks and applications that may affect security (physical and logical) and the integrity, availability or reliability of operational and/or financial information.

f) Strategic Risks, produced by difficulty accessing markets and difficulties in asset disinvestment.

E.4 State whether the entity has risk tolerance levels, including for tax risk:

The NH Hotel Group’s risk management model allows it to identify, evaluate and prioritise the most significant risks that could affect achievement of the Company’s strategic objectives.

For the main risks on the Risk Map, the Audit and Control Committee regularly receives the implementation status for the agreed action plans, to ensure that the residual risk falls within tolerable limits. The evolution of the Company’s main risks are also presented at the meetings held throughout the year by the Executive Risk Committee, formed from members of the Management Committee and Senior Executives.

The NH Hotel Group’s Risk Management and Control System seeks to ensure that the Company’s defined objectives are aligned with its strategy and risk profile. In the same vein, the corporate Risk Map is aligned with the Strategic Plan, the process of setting objectives and, finally, the annual budgeting process. To guarantee this alignment, the tolerances defined to monitor the main risks to which the Company is exposed are periodically analysed by the Risk Owners and adjusted if required. In this way, the periodic monitoring of the Company’s main risks, as well as the Strategic Plan set the risk tolerance levels.

For tax matters, the Group acts in line with its Corporate Tax Strategy and the Tax Risk Management and Control Procedure. On 11 November 2015, the Group approved its adherence to the Good Tax Practices Code which was approved on 20 July 2010 in the plenary session of the Large Companies Forum.

E.5 State which financial and non-financial risks, including tax risks, have had an impact over the year.

The unforeseeable and extremely severe outbreak of COVID-19 has created unprecedented challenges and uncertainties for the hotel industry. Many hotels have been closed temporarily as a result of the travel restrictions and events being cancelled. As a result, the occupation rate and income have been negatively affected, although all the contingency measures (temporary layoff procedures, and negotiation with hotel owners and suppliers) have been put in place to partially mitigate this fall in income.

Moreover, this exceptional situation has had a negative impact on cash flow due to the lower income arising from lower business, and impairment to customers’ credit profiles, partially offset by cost savings measures put in place Group-wide.

As a result of COVID-19, the Company is experiencing an increase in litigation, mainly relating to (i) leasing agreements and the various commitments taken on in them (although we are reaching agreements with the majority of hotel owners respecting rent reduction or instalments or CAPEX reduction commitments) and (ii) the working environment.

E.6 Explain the response and monitoring plans for all major risks, including tax compliance risks, of the company, as well as the procedures followed by the company in order to ensure that the Board of Directors responds to any new challenges that arise.

The design of the response to risk takes into account the following factors: the cost/benefit analysis between the impact of risk and the actions to be taken to manage it, the tolerance to risk and the strategic goals of the NH Hotel Group.

The Company follows an extensive coverage policy by taking out insurance policies for the risks to which it is exposed. It also has a policy of continuously reviewing this coverage.

The Strategic Planning Department oversees the achievement of strategic goals by continuously monitoring strategic objectives and the detection of new risks.

The Internal Audit Department, in carrying out its Risks function, advises the risk managers in defining response plans to mitigate the main risks and supervises their implementation. In each of its meetings, the Executive Risk Committee’s monitors the degree of implementation of the Risk Map’s action plans as well as new risks and challenges that could affect the company and the industry in the short, medium and long term.

The Audit and Control Committee regularly carries out the following supervisory and control functions, as specified in Article 25 b) of the Regulation of the Board of Directors:

The Tax Department oversees the Group’s tax risk management. The Group has approved a Tax Risk Management and Control Procedure in order to identify and, as far as possible, mitigate any tax risk that may arise in Spain or in the countries in which the Group operates.

In addition, during the 2021 financial year, the Company has continued with the process of defining and identifying emerging risks and ESG risks (environmental, social and corporate governance). The first are risks that are expected to have a significant impact on the operations and, therefore, the Company’s financial results in the future (long term, 3–5 years or more), although it is possible that in some cases they have already begun to impact the NH Hotel Group business.

The second covers the following three types of risk:

• Environmental risks are risks relating to the contribution and performance of the business in relation to environmental challenges (e.g., waste, pollution, greenhouse gas emissions, deforestation and climate change).
• Social risks relate to how the company treats people (et, human capital management, diversity and equal opportunities, working conditions, health and safety, and improper sale of products).
• Corporate governance risks examine how the company is governed (e.g., directors’ remuneration, tax practices and strategies, bribery and corruption, and the Board of Directors’ diversity and structure).

Therefore, during the periodic risk oversight and monitoring process in the Executive Risk Committee and the Audit and Control Committee, as well as during the annual risk identification and evaluation process, the Company has the appropriate mechanisms to guarantee that emerging risks and new challenges are taken into account and responded to appropriately. The final result of this analysis is reflected in the corporate Risk Map that is submitted annually to the Board of Directors for approval.

Below highlights the emerging risks that the Company has already detected and on which monitoring and analysis, impact assessment and mitigation work is being carried out:

– Technological risks (cyber-attacks, information security, technological innovation)
– Risks related to social behaviour patterns (collaborative economy, changing customer preferences, demographic changes)
– Risks related to climate change (natural disasters, extreme weather events)
– Regulatory risks (data privacy/GDPR, new environmental legislation)
– The dependence on intermediaries and specifically online travel agencies (OTAs) and distributors and the sophistication of technological reservation tools are also considered emerging risks.
– Some geopolitical risks that affect the tourism sector such as terrorism, the change in the economic cycle, political instability and, to a lesser extent, Brexit.
– Some risks arising from external factors such as pandemics or strikes, both internal (hotel staff) and external (e.g. air traffic controllers)

F – INTERNAL RISK CONTROL AND MANAGEMENT SYSTEMS IN RELATION TO THE FINANCIAL REPORTING PROCESS (ICFR)

Describe the mechanisms comprising the System of Internal Control over Financial Reporting (ICFR) of your company.

F.1 The company’s control environment

Report on at least the following, describing their principal features:

F.1.1 The bodies and/or departments that are responsible for: (i) the existence and maintenance of an adequate and effective ICFR system; (ii) its implementation; and (iii) its supervision.

Amongst others, the Board of Directors has the powers to determine the risk management and control policy as well as the internal information and control systems as stated in section 3 of article 5 of its governing rules. Likewise, the Board of Directors is responsible for a suitable and effective Internal Control System regarding the Group’s Financial Information which aims to provide the Group with a reasonable assurance as to the reliability of the financial information produced and published on the financial markets.

Conversely, the Group’s Finance Management is responsible for the design, implementation and proper working of the ICFR.

The Audit and Control Committee is responsible for monitoring the effectiveness of internal control in accordance with section b) of article 25 of the Board of Directors’ governing rules. This responsibility is in turn delegated to Internal Audit.

F.1.2 State whether the following are present, especially if they relate to the creation of financial information:

• Departments and/or mechanisms in charge of: (i) design and review of corporate structure; (ii) clear definition of lines of responsibility and authority with an adequate distribution of tasks and functions; and (iii) assurance that adequate procedures exist for proper communication throughout the entity.

Defining and reviewing the organisational structure of the Group is the responsibility of the Management Committee.

Significant changes to the organisation chart, i.e., those affecting Senior Management, are approved by the Board of Directors, after being proposed by the Appointments and Remuneration Committee. The organisation chart is available to all employees on the Group’s intranet.

Both the hierarchical and functional lines of responsibility are duly communicated to all Group employees.

The internal communication channels are used for this, amongst which we highlight the intranet, the PPP agreement for employees, executive meetings and information boards in each hotel.

In order to fulfil the objectives and responsibilities relating to maintenance and supervision of the Financial Reporting Control process, specific functions have been defined which apply to those responsible for each process involved with Financial Reporting, in order to ensure compliance with the implemented controls, analyse how well they function, and report any changes or incidents that may occur.

On an ascending scale of responsibility, this structure includes the supervisors of each process in the area of control, the directors of each business unit and the directors of each corporate area directly concerned with the processes related to the internal Financial Reporting Control System.

Within the Corporate Accounting & Financial Reporting Area of the Corporate Finance Department, Internal Control is entrusted with receiving information from the different individuals responsible for the process and is also responsible for ensuring correct operation of the Internal Control System.

• Code of conduct, the body approving this, degree of dissemination and instruction, including principles and values, (state if there is specific mention of transaction recording and creation of financial information), a body charged with analysing breaches and proposing corrective actions and sanctions.

Since 2006, the NH Group has had a Code of Conduct, which is periodically reviewed by the Compliance Office to adapt and update its content where appropriate.

Responsibility for approving the Code of Conduct rests with the NH Group’s Board of Directors. This document affects all NH Group employees, and applies not only to employees, managers and members of the Board of Directors, but also, in certain cases, to other stakeholders, such as customers, suppliers, competitors, shareholders and the communities in which NH runs its hotels.

The Code of Conduct summarises the professional conduct expected of NH Hotel Group’s employees who are committed to acting with integrity, honesty, respect and professionalism in the performance of their work.

The NH Group is committed to complying with the laws and regulations in the countries and jurisdictions in which it operates. These include laws and regulations on health and safety, discrimination, taxation, data privacy, competition, anti-corruption, prevention of money laundering and commitment to the environment. The key areas covered by the Code of Conduct are:

– Commitment to people.
– Commitment to customers.
– Commitment from suppliers.
– Commitment to competitors.
– Commitment to shareholders.
– Commitment to communities and society.
– Commitment to the Group’s assets, knowledge and resources.
– Commitment to the stock market.
– Obligations regarding fraudulent or unethical practices.

Since 2014, NH Group has driven the creation of the Compliance function, the scope of which applies to the following key areas:

1) Internal Code of Conduct: Sets out minimum standards to be respected in relation to the purchase and sale of securities and privileged and confidential information and its processing.
2) Conflict of Interests Procedure: Establishes the rules to be followed in situations where there is a conflict of interests between the Company, or any of the companies making up the Group, and the direct or indirect personal interests of the Directors or persons subject to the conflict of interests rules. This procedure was updated in 2021 resulting from certain amendments to the Capital Companies Act.
3) Code of Conduct: Intends to establish the main values and rules which should govern the conduct and actions of each of the employees and executives of the Group, as well as the members of the governing bodies of the companies that form part of the Group.
4) Criminal Risk Prevention Model: Describes the crime prevention and management principles in place in the NH Hotel Group and defines the structure and operation of the control and monitoring bodies set up within the Company, systematising existing controls for the purpose of preventing and mitigating the risk of crimes being committed in the Company’s various areas. The monitoring, updating and assessment of the controls is carried out periodically by the Compliance Office using the SAP GRC tool. The Compliance Committee, together with the Compliance Office, is responsible for crime prevention management and, therefore, for the definition, implementation and supervision of the Crime Prevention Model.

Compliance Committee

Set up in 2014, the Compliance Committee is made up of members of the Management Committee who have sufficient knowledge of the activities of NH Hotel Group and, at the same time, have the necessary authority, autonomy and independence to guarantee the credibility and binding nature of the decisions taken. It has the power to oversee compliance of key areas of the Compliance System: the Group’s Internal Code of Conduct, Conflict of Interests Procedure, Code of Conduct and Criminal Risk Prevention Model, among other functions.

The Compliance Committee oversees the management carried out by the Compliance Office and monitors all internal processes and policies implemented in the Company and their observance and compliance. It also has the power to impose disciplinary measures on employees in matters within their mandate.

Compliance Office

Led by the Compliance Officer, the Compliance Office reports directly to the Chief Legal & Compliance Officer of NH Hotel Group and the Compliance Committee, and is responsible for disseminating and overseeing compliance with the Code of Conduct, monitoring and regular supervision of the Criminal Risk Prevention Model, creating and updating corporate policies and monitoring their compliance and managing queries on the Code of Conduct, among other functions.

More specifically, the corporate policy on the prevention of money laundering and financing of terrorism was updated in 2021 to amend the new threshold limits for cash payments, among other aspects. Likewise during 2021, NH Hotel Group provided the head of the Compliance Office with the resources necessary for continuous training in compliance matters.

Dissemination of the Code of Conduct

IThe Code of Conduct is available in ten languages, of which six are published and on the corporate website and intranet, and is applied in all countries where NH Hotel Group operates. Also, since 2017, Company employees can access it from their mobile devices through the “My NH” application. Staff in centres operating under NH Hotel Group brands also have a Practical Guide and a document of frequently asked questions. Through the Human Resources departments of each business unit, the NH Group has authorised a procedure whereby each employee is required to adhere to it, with training on the Code of Conduct being made available to all employees.

At 31 December 2021, adherence to the Code of Conduct through the online course is at 77%.

Financial information and recording of operations:

In regard to financial information and recording operations, a transparent information behaviour is adopted in the Group’s Code of Conduct construed as the undertaking to release reliable information to the markets, both financial and of any other nature.

– It is additionally specified in the section on “Obligations regarding fraudulent or unethical practices” that the NH Group adopts a transparent information behaviour, understood as the undertaking to release reliable information to the markets, both financial and of any other nature. Hence, the Company’s internal and external financial and economic reporting shall faithfully reflect its economic, financial and equity position in accordance with generally accepted accounting standards with the falsification, manipulation or deliberate use of false information being considered fraud.
– Individuals (amongst whom include, employees, directors, members of the Board of Directors) must transmit information in a manner that is truthful, complete and understandable. Under no circumstances may they knowingly provide incorrect, inexact or inaccurate information and must refrain from:
– Keeping a record of transactions in non-accounting media not recorded in official books.
– Keeping accounts which, referring to the same activity and financial year, hide or fake the company’s true situation.
– Recording expenses, income, assets or liabilities which are non-existent or not in line with reality.
– Noting businesses, acts, transactions or, in general, financial transactions in the compulsory books, or making a note of them with figures other than the true ones.
– Making entries in accounting books, incorrectly indicating their purpose.
– Using false documents.
– Deliberately destroying documents before the end of the legally-required time limit for retaining them.

• Whistleblower channel allowing notifications to the Audit Committee of irregularities of a financial and accounting nature, in addition to potential breaches of the code of conduct and unlawful activities undertaken in the organisation, indicating whether this channel is confidential and whether anonymous notifications can be made, protecting the rights of the whistleblower and the person reported.

NH Hotel Group has a whistleblower channel that allows employees, managers, members of the administrative bodies, suppliers, customers or any stakeholder to notify any possible breach of the Code of Conduct or any type of irregularity confidentially and without fear of reprisal. This procedure ensures transparency, confidentiality and respect throughout all its stages. After new European regulations related to whistleblower channels came into force on 17 December 2021, NH Hotel Group decided to adapt its internal protocol for the reporting and management of complaints by implementing a new external platform.

The procedure for reporting and dealing with possible non-compliance and reports relating to the Code of Conduct is administered by the responsible of the Group’s Internal Audit Department, who acts independently and ensures the channel’s confidentiality, giving an account of the most significant incidents over the course the year to the Group’s Audit and Control Committee.

Complaints should preferably be lodged electronically using a channel expressly set up for the purpose and available to all stakeholders (codeofconduct@nhhotels.com), through which they are forwarded to the Internal Audit Department. In addition, they may be sent by post for the attention of the Senior Vice President of NH Hotel Group, S.A. Corporate Internal Audit Department at Santa Engracia 120, 28003 Madrid, Spain.

More information is available in the 2021 Consolidated Non-Financial Information Statement.

• Training and periodic refresher programmes for staff involved in the preparation and revision of financial information, as well as assessment of the ICFR (Internal Control System for Financial Information), that covers at least accounting rules, audits, internal control and risk management.

Within the training and refresher programmes for the preparation and review of financial information, staff in the Corporate Finance Department involved in this have attended training programmes and refresher sessions on certain subjects, which in 2020 had a particular focus on the main implications derived from the COVID-19 pandemic on the financial information and the need to reflect its accounting impacts in the financial statements.

Likewise, it is worth highlighting the training of the Company’s Internal Control team in the continuous improvement and optimisation of processes through the “Lean Six Sigma Black Belt for the Services Industry” certification, as well as their knowledge in the design, implementation and monitoring of the internal control system through the COSO certificate in Internal Control from the Institute of Internal Auditors. This knowledge is employed in the training and continuous improvement of reporting the financial information controls of the first line users.

Finally, the Corporate Internal Audit Department, being responsible for reviewing the ICFR model, has a specific training plan on risks and the reporting tool, audit and fraud prevention conferences, and other topics of interest related to the function. Also, at today’s date, three members of the department hold the “Certified Internal Auditor” certification, the only certification for internal auditors recognised worldwide. The other members of the internal audit team are in the process of obtaining it.

F.2 Financial reporting risk assessment

Report on at least the following:

F.2.1 The main characteristics of the risk identification process, including error and fraud risk, as regards:

• Whether the process exists and is documented.

The goal of the process of assessing financial risks is to establish and maintain an effective process for identifying, analysing and managing the current risks relevant to the preparation and reporting of financial information.

NH Hotel Group has:

– A Corporate Risk Management Policy approved by the Board of Directors in November 2015. This Policy is publicly available on the corporate website.
– A Corporate Risk Management Manual, approved by the Executive Risk Committee in March 2018, that develops the aforementioned policy.
– An operating procedure for the Risk Committee approved by the Executive Risk Committee in July 2017. The procedure is published in the NH intranet and accessible to all the company’s employees.
– A Corporate Tax Policy approved by the Board of Directors in November 2015. This Policy is publicly available on the corporate website.
– A drafting process of the Risk Map.

The Risk Map is updated annually and Senior Executives from finance are involved during the process to identify and assess risks.

There is a formally documented matrix that includes the most important controls and risks of the Internal Control over Financial Reporting System (ICFR). This matrix is reviewed annually by Internal Audit and the external auditor, who issues an opinion on the ICFR. The matrix is continuously updated with identification of the most significant financial risks and implementation and execution of the relevant mitigating controls with the aim of reasonably ensuring the integrity and precision of the financial information issued by the Group.

• If the process covers all of the objectives of financial information, (existence and occurrence; completeness; valuation; delivery; breakdown and comparability; and rights and obligations), whether it is updated and with what frequency.

In order to ensure the reliability of Financial Reporting, when identifying risks and controls, the accounting errors that may arise from the following objectives for financial information are always considered:

– Completeness: balances or transactions that should be recorded but are not.
– Transaction cut-off: those booked in a period other than when they were accrued.
– Accuracy: transactions recorded with errors (amounts, conditions).
– Occurrence / Existence: registered transactions which have not taken place within the reporting period.
– Valuation / Allocation: record of transactions involving incorrect sums due to inadequate valuation calculations.
– Presentation / Classification: classification errors in the various entries of the financial statements.
– Understandability: lack of quality of financial information which makes it difficult to understand for a person with reasonable economics and business knowledge.
Throughout 2021, the Internal Control team continued to update the control activities in the Company’s ICFR risk and control matrix model, an exercise – since the beginning in March 2020 – focused on identifying the main risks arising from an economic environment impacted by the COVID-19 pandemic, adapting the design and implementation of key controls to the current position of the Group, and reasonably ensuring the mitigation of associated risks.

• The existence of a process for identifying the scope of consolidation, taking into account, among other factors, the possible existence of complex company structures, shell companies, or special purpose entities.

The Group’s Finance Management performs a financial consolidation every month.

This process involves reporting the consolidated income statement and balance sheet of the business units for each Administration-Finance Department to the Corporate Controlling and Finance Departments.

Each year, the Administration-Finance Departments of the business units confirm the companies that are part of their corresponding consolidation perimeters to the corporate Consolidation team, within the Corporate Accounting & Financial Reporting Area of the Corporate Finance Department.

Additionally, throughout the year, the business units report on variations which arise in their consolidation perimeters to the corporate Consolidation team which, in turn, coordinate the modification of these in the Group’s financial reporting and consolidation systems.

On the other hand, the Tax Area of the Corporate Finance Department is responsible for maintaining the Group’s organisational chart and periodically reporting the updated version to a distribution list of people within the Corporate Finance Department to control changes in the consolidation perimeter.

• If the process takes into account the effects of other types of risk (operational, technological, financial, legal, tax, reputational, environmental, etc.) to the extent that they affect the financial statements.

In designing the risk management process associated with generating Financial Reports, the following objectives have been focused on:

– Identifying the processes related to the Financial Information Internal Control System.
– Identifying the most relevant risk categories for each of the different Financial Information Internal Control System processes defined in the point above.
– Definition and analysis of controls for each specific risk and establishment of their degree of effectiveness.

A risk matrix has been established for each of the processes detailed above, in which the most relevant risks for each process are defined, along with the operational controls and their effectiveness in mitigating the risks that affect them.

• The governing body within the company that supervises the process.

The Company’s Board of Directors is responsible for supervising the risk assessment process. To carry out the aforementioned supervision duties, the Board of Directors turns to the Audit and Control Committee, which performs this duty through Internal Audit or the external auditor depending on the nature of the risk.

F.3 Control Activities.

Report on whether the company has at least the following, describing their main characteristics:

F.3.1 Review and authorisation procedures for financial information and a description of the ICFR, to be disclosed to the securities markets, indicating those responsible, as well as documentation describing the flow of activity and controls (including those relating to the risk of fraud) of the various types of transactions which may materially affect the financial statements, including accounting closing procedures and the specific review of significant judgements, estimates, valuations and projections.

There is a financial information review and authorisation procedure in the NH Hotel Group which is set out below:

- Internal reporting of financial information:

Each month, the Corporate Controlling and Finance Departments report on the management information most pertinent to the Group – income statement and the evolution of the key economic indicators – to the Group’s Management Committee, which in turn reports to the Company’s Board of Directors for review. Prior to reporting to this governing body, the information firstly undergoes a review process by the operations and finance directors at a business unit level, a second review process by the Corporate Controlling and Finance Departments and a final joint Corporate review with the operations and finance directors of the business units.

NH’s external auditor also makes limited reviews of the NH Group’s consolidated condensed interim financial statements under IAS 34, “Interim Financial Reporting” and the audit of NH Group’s consolidated annual accounts under IFRS standards. Furthermore, NH’s external auditor also makes limited reviews of the NH Group’s consolidated financial information according to the International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”.

– Reporting of information to stock markets:

The consolidated accounts and the half-yearly consolidated financial reports are prepared based on the financial information reports of the business units, as explained above, the financial consolidation process undertaken by corporate Consolidation team, and other additional information required to prepare the consolidated accounts is reported by the various areas of the Corporate Finance Department and other Corporate Departments always with the review of the corresponding people responsible for it. Once the consolidated financial statements have been received, they are reviews by the Group’s Finance Management and by the Audit and Control Committee before being prepared and approved by the Board of Directors (section b) of article 33 of the Parent’s Articles of Association and sections 3. d) and 5. b) of Article 5 of the Board of Directors’ Governing rules). Once prepared, they are published through the National Securities Market Commission.

Additionally, each quarter, the Group publishes financial information to the stock markets. The Group’s Finance Management is responsible for issuing such information while the Board of Directors, in accordance with section 3 of article 40 of its Governing rules, is responsible for ensuring the preparation is carried out in compliance with the principles, criteria and professional practices with which the Annual Accounts are produced and that said quarterly information enjoys the same reliability. To this end, said information is reviewed by the Audit and Control Committee which, when it deems it appropriate, requires the presence of both external and internal auditors.

Likewise, the Board of Directors may request analysis of specific issues, as well as the details of particular financial transactions which, because of their importance, require greater analysis.

The Corporate Finance Department is responsible for keeping the year-end process up-to-date in accordance with its execution in force at any given time, relying on the Corporate Operations Department for this, which publishes the year-end process on the corporate intranet. This process includes the ICFR controls implemented to mitigate those risks identified at financial year-end among which are those risks related to the different review levels of the financial information generated.

On the other hand, the NH Hotel Group has implemented an internal control system on financial information (ICFR) based on COSO (Committee of Sponsoring Organizations of the Treadway Commission), as a framework that seeks to ensure that the relevant components and principles of internal control are present and operating jointly in the Group, to achieve the following objectives:

– Effectiveness and efficiency of operations
– Reliability of financial information
– Compliance with applicable laws and regulations
– Safeguarding assets

To comply with the objective of ensuring reliability of financial information reported to the markets, the NH Hotel Group has implemented a model based on three lines:

– The first line is made up of all NH employees involved in preparing and reporting financial information, as well as users of the Shared Services Centre that support the Company in back-office related activities.
– The second line is Internal Control, within the Corporate Accounting & Financial Reporting Area of the Corporate Finance Department, which is responsible for managing and updating the ICFR risk and control matrix as a tool to implement controls that mitigate the identified risks. Among its other responsibilities, it periodically reviews the self-assessment of the controls executed and reported by the first line, communicating and reporting on the main area to improve.
– The third line is the Corporate Internal Audit Department, which delegates the audit of the ICFR to the Audit and Control Committee. The Group’s internal control model is audited annually to afford the Audit and Control Committee and Board of Directors reasonable security as to its effectiveness and, as a result, the reliability of the financial information generated and published on the stock market.

Since 2019, as a result of the maturity of the internal control system for financial reporting (ICFR), internal certification of financial information controls was made involving the directors of the business units, corporate directors and members of the Group’s Management Committee, as applicable to their duties.

The Group’s ICFR risk and control matrix considers the relevant business cycles in drafting the financial information prepared and published by the Group, which are detailed below:

– Accounting close, consolidation and financial reporting process
– Purchasing and suppliers
– Sales and customers
– Cash
– Financing
– Fixed assets
– Inter companies
– Tax
– Human resources
– Provisions and contingencies
– Loyalty programme
– Shared services centre
– Business support technological processes

The structure of the financial risk and controls matrix includes the following information:

- Organisational unit: the organisational level to which the controls are implemented and determines the scope of the assessed entities.
– Process and sub-process: set of activities related to a specific function within the operation of an organisational unit. They include those with a potential significant impact on the financial information prepared by the Group.
– Risk: the possible events or actions which could affect the capacity of the company to meet financial reporting objectives and/or implement strategies successfully.
– Description of the control: definition of the control activities included in the policies, procedures and practices applied by the Group to ensure it meets its control objectives and the risk is mitigated.
– Evidence: documentation prepared by the control’s owner when executing the control in the first line and that is reported to the following lines of defence to determine the control’s effectiveness in mitigating the associated risks.
– Classification of the controls: preventive or detective, manual or automatic; this last one depending on whether they can be monitored using data from automated tools.
– Ownership of the controls: they belong to the first line in accordance with the COSO model. They are those who execute the controls and those responsible for their self-assessment and the assessment of their design.
– Managers of the controls: within the first line are the owners of the sub-processes who are responsible for overseeing the correct execution and reporting of the control activities.
– Frequency: makes reference to how often the controls are executed and reported.

To manage the internal financial information controls model, which is embodied in the update to the risk matrix and ICFR controls, the Internal Control corporate team carries out a series of activities, the following of which are of note:

– Planning the evaluation reporting activities for the controls by the first line users.
– Evaluation of the controls’ effectiveness in covering the main financial information risks.
– Communication with the first line on incidents detected in relation to the lack of effectiveness of controls resulting from their reviews, and monitoring of compliance with the implemented action plans.
– Communication of incidents and monitoring compliance with the implemented action plans resulting from the annual audits carried out by the Corporate Internal Audit Department.
– Update of the ICFR risks and controls matrix based on: analysis carried out by the Internal Control team on the scope of the matrix in accordance with quantitative criteria such as balances of the consolidated financial statements, and qualitative criteria such as the complexity of the balances calculation and degree of automation in generating and recording economic transactions, in the main; reporting of proposals to change the design of controls by first line users or identified in the self-assessment reports, in accordance with the modifications made to those processes that directly or indirectly have an impact on generation and/or reporting of financial information.

Within the risks identified in the business cycles defined in the ICFR matrix are the risks of fraud and the controls associated with its mitigation.

Likewise, the matrix includes controls specific to the review of relevant judgements, estimates, valuations and projections whose execution mitigates the risk of reporting unreliable financial information.

Additionally, the Group has a documented procedure which collates the policies to follow in the valuation of those assets of the consolidated balance sheet which involve the making of judgements, estimates, valuations and/or projections with a material impact on the consolidated financial statements.

F.3.2 Internal IT control policies and procedures (access security, change controls, their operation, operational continuity, and segregation of duties, among others) which support relevant processes within the company and relate to the creation and publication of financial information.

Information Security (InfoSec) within Information Systems (IT & Systems) of the NH Hotel Group has a set of security policies and procedures aimed at ensuring the integrity, availability and confidentiality of the company’s operational and financial information.

NH Hotel Group has formally defined procedures that regulate changes, maintenance and developments on the systems that hold financial information. Controls are defined in these procedures to ensure that an appropriate system development methodology is followed, assessing the risks and impacts associated with the changes, as well as involving key business users and conducting sufficient and adequate testing before being placed into production.

There is a model implemented that guarantees the appropriate operation of the company’s information systems. This model includes event monitoring processes, incident management procedures, guidelines regarding operational continuity (backups, disaster recovery plan, business continuity plan, etc.), as well as user management policies and passes.

F.3.3 Internal control policies and procedures intended to guide the management of subcontracted activities and those of third parties, as well as those aspects of assessment, calculation or evaluation entrusted to independent experts, which may materially affect financial statements.

The NH Hotel Group has outsourced accounting management to a company with a Shared Services Centre.

NH Hotel Group’s ICFR model includes control activities related to the year-end process and that affect those companies included within the scope of the outsourcing company and which in turn belong to the Group’s consolidation perimeter.

Said control activities are executed and reported by users of the Shared Services Centre, although the NH Hotel Group is responsible for their effectiveness to reasonably mitigate the associated risks.

In addition, the control processes and activities of the NH Hotel Group ICFR risk and control matrix provide reasonable assurance to the Company on the quality of the Shared Services Centre backoffice service, as well as its continuity, and that has a direct impact in the quality of the financial information generated and reported by the Company, which is always in compliance with current legislation in each country where it provides its services.

The NH Hotel Group has also obtained the ISAE 3402 “International Standard on Assurance Engagements” report from an independent third party as a guarantee that the control activities that support the service provider’s control objectives operated properly during 2021.

F.4 Information and Communication

Report on whether the company has at least the following, describing their main characteristics:

F.4.1 Aspecifically assigned function for defining and updating accounting policies (accounting policy area or department) and resolving doubts or conflicts arising from their interpretation, maintaining a free flow of information to those responsible for operations in the organisation, as well as an up-to-date accounting policy manual distributed to the business units through which the company operates.

Through the Corporate Accounting & Financial Reporting Area, NH Hotel Group’s Finance Management is responsible for defining, updating and correctly applying the accounting policies as well as responding to questions and queries which arise in their interpretation. In this same sense, it is charged with communicating any change which occurs in accounting matters to the heads of the business and corporate units and which affects them in the reporting of financial information.

The Group has an accounting policies manual and a consolidation manual -both published on the intranet- in accordance with the International Financial Reporting Standards (IFRS), which are those which govern the NH Hotel Group.

It is the responsibility of all departments within the Company to periodically review their defined processes, policies and procedures, and which must be updated to correspond to the current reality at any time, so that may be audited by the Corporate Internal Audit Department following the annual audit plan approved by the Audit and Control Committee.

F.4.2 Measures for capturing and preparing financial information with consistent formats for application and use by all of the units of the entity or the group, and which contain the main financial statements and notes, as well as detailed information regarding ICFR.

As discussed in section F.4.1, the consolidated financial information which the NH Group publishes on the stock market is in accordance with International Financial Reporting Standards (IFRS). In this sense, the information reported from the Group’s business units follows these international regulations. Likewise, there is a single accounts plan applied by all the companies which are included in the consolidated group.

Grupo NH has a common consolidation tool for all companies. This tool centralises all the information corresponding to the accounting of the companies which make up the financial consolidation of the NH Hotel Group into a single system. The input of financial information from the ERP to the consolidation system is automatic for those companies already migrated to the common ERP implemented in most Group companies, or manually for those companies with a different ERP, which in any case are a minor exception.

In this sense, preventive controls have been defined in the consolidation tool itself which ensure data is input correctly.

Finance Directors of the business units report the financial information to the Corporate office monthly using two unique standard reporting packets designed and periodically updated by the corporate Consolidation team, within the Corporate Accounting & Financial Reporting Area of the Corporate Finance Department for the reporting of the financial management information and the consolidated balance sheet.

The dumping of information from the accounts and the accounting headings to the reporting is the same for both models, having previously been approved by the Corporate Finance Department. Any change in criteria for the dumping and presentation of information to be reported is communicated from the Corporate office to the Finance Directors of the business units.

In turn, the Corporate Finance Department uses the same reporting models to prepare the management reports and annual accounts reported to the financial markets.

All this ensures that the information reported between business units is comparable as well as being homogeneous to be included in the Group’s consolidated financial reporting.

At an internal control level, the team responsible for managing the ICFR model seeks process standardisation in all the Group’s business units, so that the risk and control matrix is singular, while considering the specificities that each country or regulation may have in some processes such as human resources or tax

Additionally, the self-assessment report and assessment of the controls’ design through SAP GRC allows a single reporting model for all business units. Likewise, this method allows reporting evidence of the control activities according to the latest version of the controls recorded in the system.

F.5 Supervision of the system

Report on at least the following, describing their principal features:

F.5.1 The activities of the Audit Committee in overseeing ICFR as well as whether there is an internal audit function one of the responsibilities of which is to provide support to the committee in its task of supervising the internal control system, including ICFR. Additionally, describe the scope of ICFR assessment made during the year and the procedure through which the person responsible prepares the assessment reports on its results, whether the company has an action plan describing possible corrective measures, and whether its impact on financial reporting is considered.

Supervisory activities of the Audit Committee

The Audit and Control Committee is the advisory body to which the Board of Directors has delegated its supervisory functions to update and supervise the ICFR. As part of this function and to fulfil the tasks delegated by the Board, the Committee receives and reviews the financial reports which the NH Group issues to the markets and regulatory bodies, particularly the consolidated annual financial statements accompanied by the Audit Report. The Committee supervises the preparation process and the completeness of the financial reports of the Company and its subsidiaries, and checks that the legal requirements applicable to the NH Group are complied with, the consolidation perimeter is appropriate and that generally accepted accounting standards are applied correctly.

The Audit and Control Committee receives an annual report from the Internal Audit SVP on its assessment of the effectiveness of the ICFR model, the weaknesses detected during Internal Audits, and the status of the action plans approved to remedy any detected weaknesses.

The Audit and Control Committee supports and supervises the work of the Internal Audit department in its assessment of the ICFR. The Committee proposes the selection, appointment and replacement of the Manager of the Internal Audit services, validates and approves the strategy, the Internal Audit annual plan and annual objectives, and is responsible for evaluating the performance of the Internal Audit Department Manager annually.

The Internal Audit Plan for assessing the ICFR is presented to the Audit and Control Committee for approval before it is put into practice, in order to include all the opportune considerations.

Once a year, the degree of implementation of the main recommendations submitted and approved is previous audits is submitted to the Audit and Control Committee.

Internal Audit Function

Internal audits are carried out by the Group’s Internal Audit Department, which reports functionally to the Audit and Control Committee and administratively to the General Secretary & Chief Legal & Compliance Officer. This hierarchical structure guarantees the Internal Audit function’s independence and to encourage direct communication to and from the Audit and Control Committee.

The Internal Audit function, via a team consisting of 3 auditors located in both Corporate and the business units, ensures, within reason, the effectiveness of the internal control system, supervising and evaluating the design and effectiveness of the risk management system applied to the company.

This function has internal auditing statutes which were updated in 2017 and have been formally approved by the Audit and Control Committee, and an internal audit manual which sets out the Department’s working methods.

In relation to monitoring the ICFR, the Internal Audit Department is responsible for:

– Independently evaluating the internal control model for financial reporting.
– Testing the assertions of the Board.
– Testing the effectiveness of internal controls in the companies within the scope of application.
– Helping to identify weaknesses in controls and reviewing action plans to correct inadequate controls.
– Carry out follow-up work to see if the action plans to mitigate weaknesses in controls have been properly implemented.
– Coordinating between the Board and the external auditor when clarification is needed on scope and testing plans.

Scope of ICFR 2021

The NH Group’s ICFR model is implemented and consolidated in all its business units. Whenever there is any change in the Group’s portfolio, it is applied to the model’s organisational structure.

The last addition to the model was in 2020, extending it to the companies in the Boscolo portfolio, which are reported within the Northern and Southern Europe business units.

Taking this last addition, we can confirm that the ICFR model integrates 100% of the Group’s total revenues.

Conversely, to implement the ICFR internal control reporting model at a hotel level, NH started a pilot project to report controls executed at a hotel level involving 20 hotels in Europe. In a first phase, this project involved identifying key controls executed in the hotels that have a reasonable effectiveness in mitigating the main risks with a potential impact on the Company’s financial statements. Likewise, the users of the hotels involved were trained and provided with the necessary support to guarantee the reporting of controls.

After the temporary suspension of the project due to the successive waves of the pandemic at the end of 2020 and during the f irst months of 2021, the Group resumed the project in the fourth quarter of 2021, which also involves three hotels of the Latin American business unit.

Finally, it is worth mentioning that during 2021 – a year still impacted by the COVID-19 health crisis – the Company continued to apply a reporting
approach to ICFR controls based on the most important controls to cover financial information risks, including additional controls necessary to mitigate specific risks in this context.

F.5.2 If there is a procedure by which the account auditor (in accordance with the contents of the Normas Tecnicas de Auditoria (NTA) – “Auditing Standards”), internal auditor and other experts may communicate with senior management and the Audit Committee or senior managers of the company regarding significant weakness in internal control identified during the review of the annual accounts or any others they have been assigned. Additionally, state whether an action plan is available for correcting or mitigating any weaknesses detected.

The Audit and Control Committee meets at least quarterly to review the periodic financial reports. It also discusses matters relating to internal controls and/or other current initiatives.

The Financial Department, through the Chief Financial Officer, is responsible for notifying the Company’s Senior Management of any important matter relating to the ICFR and/or financial reporting through the meetings of the Management Committee.

All the weaknesses detected by the Internal Audit Department during its work are subject to recommendations and action plans agreed with the audited department. The Internal Audit Department supervises the implementation of the agreed actions and reports their status to the NH Group’s various governing bodies (mainly the Audit and Control Committee) every six months.

The external auditor notifies the Audit and Control Committee of the conclusions of its audit procedures, and any other matters which may be considered important. The external auditor also has access to the Audit and Control Committee in order to share, comment on or report any aspects they consider necessary or pertinent, including without the presence of the Company’s Management. The external auditor, without breaching his/her independence, will participate in the dialogue with Management.

F.6 Other relevant information.

None.

F.7 Report by the external auditor.

Report:

F.7.1 Whether the ICFR reports sent to the markets have been reviewed by the external auditor, in which case the company must include the corresponding report as an appendix. If not, reasons why should be given.

The scope of the auditor’s review procedures has been carried out in accordance with Circular E14/2013 of 19 July 2013 from the Spanish Institute of Chartered Accountants, whereby the published Guidelines for Action and auditor’s report model referred to the information related to the internal control system of the financial information of the listed companies which is attached as an annex.

G – DEGREE OF COMPLIANCE WITH CORPORATE GOVERNANCE RECOMMENDATIONS

Indicate the Company’s degree of compliance with the recommendations of the Code of Good Governance for listed companies.

In the event that a recommendation is not followed or only partially followed, a detailed explanation should be included explaining the reasons in such a manner that shareholders, investors and the market in general have enough information to judge the company’s actions. General explanations are not acceptable.

1. That the Articles of Association of listed companies do not limit the maximum number of votes that may be cast by one shareholder or contain other restrictions that hinder the takeover of control of the company through the acquisition of shares on the market.

Complies

2. That when the listed company is controlled by another entity in the meaning of Article 42 of the Commercial Code, whether listed or not, and has, directly or through its subsidiaries, business relations with said entity or any of its subsidiaries (other than the listed company) or carries out activities related to those of any of them it should make accurate public disclosures on:

a) The respective areas of activity and possible business relationships between the listed company or its subsidiaries and the parent company or its subsidiaries.

b) The mechanisms in place to resolve any conflicts of interest that may arise.

Complies

3. That, during the course of the ordinary General Shareholders’ Meeting, complementary to the distribution of a written Annual Corporate Governance Report, the chairman of the Board of Directors makes a detailed oral report to the shareholders regarding the most material aspects of corporate governance of the company, and in particular:

a) Changes that have occurred since the last General Shareholders’ Meeting.

b) Specific reasons why the company has not followed one or more of the recommendations of the Code of Corporate Governance and the alternative rules applied, if any.

Complies

4. That the company should define and promote a policy on communication and contact with shareholders and institutional investors, within the framework of their involvement in the company, and with proxy advisors that complies in all aspects with rules against market abuse and gives equal treatment to similarly situated shareholders. And that the company has made such a policy public through its web page, including information related to the manner in which said policy has been implemented and the identity of contact persons or those responsible for implementing it.

And that, without prejudice to the legal obligations regarding dissemination of inside information and other types of regulated information, the company should also have a general policy regarding the communication of economic-financial, non-financial and corporate information through such channels as it may consider appropriate (communication media, social networks or other channels) that helps to maximise the dissemination and quality of information available to the market, investors and other stakeholders.

Complies

5. That the Board of Directors should not submit to the General Shareholders’ Meeting any proposal for delegation of powers allowing the issue of shares or convertible securities with the exclusion of preemptive rights in an amount exceeding 20% of the capital at the time of delegation.

And that whenever the Board of Directors approves any issue of shares or convertible securities with the exclusion of preemptive rights, the company should immediately publish the reports referred to by company law on its website.

Complies

6. That fisted companies which draft reports fisted below, whether under a legal obligation or voluntarily, publish them on their web page with sufficient time before the General Shareholders’ Meeting, even when their publication is not mandatory:

a) Report on the auditor’s independence.

b) Reports on the workings of the audit and nomination and remuneration committees.

c) Report by the Audit Committee on related party transactions.

Complies

7. That the company should transmit in real time, through its website, the proceedings of the General Shareholders’ Meetings.

And that the company should have mechanisms in place allowing the delegation and casting of votes by means of data transmission and even, in the case of large-caps and to the extent that it is proportionate, attendance and active participation in the General Meeting to be conducted by such remote means.

Complies

8. That the Audit Committee should ensure that the financial statements submitted to the General Shareholders’ Meeting are prepared in accordance with accounting regulations. And that in cases in which the auditor has included a qualification or reservation in its audit report, the chairman of the Audit Committee should clearly explain to the general meeting the opinion of the Audit Committee on its content and scope, making a summary of this opinion available to shareholders at the time when the meeting is called, alongside the other Board proposals and reports.

Complies

9. That the company should permanently publish on its website the requirements and procedures for certification of share ownership, the right of attendance at the General Shareholders’ Meetings, and the exercise of the right to vote or to issue a proxy.

And that such requirements and procedures promote attendance and the exercise of shareholder rights in a non-discriminatory fashion.

Complies

10. That when a duly authenticated shareholder has exercised his or her right to complete the agenda or to make new proposals for resolutions in advance of the General Shareholders’ Meeting, the company:

a) Immediately distributes the additions and new proposals.

b) Publishes the attendance card credential or proxy form or form for distance voting with the changes such that the new agenda items and alternative proposals may be voted upon under the same terms and conditions as those proposals made by the Board of Directors.

c) Submits all of these items on the agenda or alternative proposals to a vote and applies the same voting rules to them as are applied to those drafted by the Board of Directors including, particularly, assumptions or default positions regarding votes for or against.

d) That after the General Shareholders’ Meeting, a breakdown of the results of said additions or alternative proposals is communicated.

Not applicable

11. That if the company intends to pay premiums for attending the General Shareholders’ Meeting, it should establish in advance a general policy on such premiums and this policy should be stable.

Not applicable

12. That the Board of Directors should perform its functions with a unity of purpose and independence of criterion, treating all similarly situated shareholders equally and being guided by the best interests of the company, which is understood to mean the pursuit of a profitable and sustainable business in the long term, promoting its continuity and maximising the economic value of the business.

And that in pursuit of the company’s interest, in addition to complying with applicable law and rules and conducting itself on the basis of good faith, ethics and a respect for commonly accepted best practices, it should seek to reconcile its own company interests, when appropriate, with the interests of its employees, suppliers, clients and other stakeholders that may be affected, as well as the impact of its corporate activities on the communities in which it operates and on the environment.

Complies

13. That the Board of Directors is of an adequate size to perform its duties effectively and collegially, and that its optimum size is between five and fifteen members.

Complies

14. That the Board of Directors should approve a policy aimed at favouring an appropriate composition of the Board and that:

a) Is concrete and verifiable.

b) Ensures that proposals for appointment or re-election are based upon a prior analysis of the skills required by the Board of Directors; and

c) Favours diversity of knowledge, experience, age and gender. For these purposes, it is considered that the measures that encourage the company to have a significant number of female senior executives favour gender diversity.

That the result of the prior analysis of the skills required by the Board of Directors be contained in the supporting report from the nomination committee published upon calling the General Shareholders’ Meeting to which the ratification, appointment or re-election of each director is submitted.

The nomination committee will annually verify compliance with this policy and explain its findings in the annual corporate governance report.

Complies

15. That proprietary and independent directors should constitute a substantial majority of the Board of Directors and that the number of executive directors be kept to a minimum, taking into account the complexity of the corporate group and the percentage of equity participation of executive directors.

And that the number of female directors should represent at least 40% of the members of the Board of Directors before the end of 2022 and thereafter, and no less 30% prior to that date.

Complies

The proprietary and independent directors are a large majority on the Board of Directors, as they are 7 out of the 9 on the Board.

Although the Company has approved a new Policy for recruiting Directors and management posts, including the aim of reaching the percentage of female directorsn in compliance with the Recommendation, at 31 December 2021 there were no female members on the Company’s Board of Directors.

16. That the number of proprietary directors as a percentage of the total number of non-executive directors not be greater than the proportion of the company’s share capital represented by those directors and the rest of the capital.

This criterion may be relaxed:

a) In companies with a high market capitalisation in which interests that are legally considered significant are minimal.

b) In the case of companies where a plurality of shareholders is represented on the Board of Directors without ties among them.

Complies

17. That the number of independent directors should represent at least half of the total number of directors.

That, however, when the company does not have a high level of market capitalisation or in the event that it is a large-cap company with one shareholder or a group of shareholders acting in concert who together control more than 30% of the company’s share capital, the number of independent directors should represent at least one third of the total number of directors.

Complies

18. That companies should publish the following information on its directors on their website, and keep it up to date:

a) Personal and biographical profile

b) Any other Boards to which the director belongs, regardless of whether the companies are listed, as well as any other remunerated activities engaged in, regardless of type.

c) Category of directorship, indicating, in the case of individuals who represent significant shareholders, the shareholder that they represent or to which they are connected.

d) The date of their first appointment as a director of the company’s Board of Directors, and any subsequent re-election.

e) The shares and options they own.

Complies

19. That the Annual Corporate Governance Report, after verification by the appointments committee, explains the reasons for the appointment of proprietary directors at the proposal of the shareholders whose equity interest is less than 3%. It should also explain, where applicable, why formal requests from shareholders for membership on the Board meeting were not honoured, when their equity interest is equal to or exceeds that of other shareholders whose proposal for proprietary directors was honoured.

Not applicable

20. That proprietary directors representing significant shareholders should resign from the Board when the shareholder they represent disposes of its entire shareholding. They should also resign, in a proportional fashion, in the event that said shareholder reduces its percentage interest to a level that requires a decrease in the number of proprietary directors.

Complies

21. That the Board of Directors should not propose the dismissal of any independent director before the completion of the director’s term provided for in the articles of incorporation unless the Board of Directors finds just cause and a prior report has been prepared by the nomination committee. Specifically, just cause is considered to exist if the director takes on new duties or commits to new obligations that would interfere with his or her ability to dedicate the time necessary for attention to the duties inherent to his or her post as a director, fails to complete the tasks inherent to his or her post, or is affected by any of the circumstances which would cause the loss of independent status in accordance with applicable law.

The dismissal of independent directors may also be proposed as a result of a public takeover bid, merger or other similar corporate transaction entailing a change in the shareholder structure of the company, provided that such changes in the structure of the Board are the result of application of the proportionate representation criterion provided in Recommendation 16.

Complies

22. That companies should establish rules requiring that directors inform the Board of Directors and, where appropriate, resign from their posts, when circumstances arise which affect them, whether or not related to their actions in the company itself, and which may harm the company’s standing and reputation, and in particular requiring them to inform the Board of any criminal proceedings in which they appear as suspects or defendants, as well as of how the legal proceedings subsequently unfold.

And that, if the Board is informed or becomes aware in any other manner of any of the circumstances mentioned above, it must investigate the case as quickly as possible and, depending on the specific circumstances, decide, based on a report from the nomination and remuneration committee, whether or not any measure must be adopted, such as the opening of an internal investigation, asking the director to resign or proposing that he or she be dismissed. And that these events must be reported in the annual corporate governance report, unless there are any special reasons not to do so, which must also be noted in the minutes. This without prejudice to the information that the company must disseminate, if appropriate, at the time when the corresponding measures are implemented.

Complies

23. That all directors clearly express their opposition when they consider any proposal submitted to the Board of Directors to be against the company’s interests. This particularly applies to independent directors and directors who are unaffected by a potential conflict of interest if the decision could be detrimental to any shareholders not represented on the Board of Directors.

Furthermore, when the Board of Directors makes significant or repeated decisions about which the director has serious reservations, the director should draw the appropriate conclusions and, in the event the director decides to resign, explain the reasons for this decision in the letter referred to in the next recommendation.

This recommendation also applies to the secretary of the Board of Directors, even if he or she is not a director.

Complies

24. That whenever, due to resignation or resolution of the General Shareholders’ Meeting, a director leaves before the completion of their term of office, explain the reasons for their resignation, or in the case of non-executive directors, their opinion of the reasons for cessation, in a letter addressed to all members of the Board of Directors.

And that, without prejudice to all this being reported in the annual corporate governance report, insofar as it is relevant to investors, the company must publish the cessation as quickly as possible, adequately referring to the reasons or circumstances adduced by the director.

Complies

25. That the appointments committee ensures that non-executive directors have sufficient time in order to properly perform their duties.

And that the Board regulations establish the maximum number of company Boards on which directors may sit.

Complies

26. That the Board of Directors meet frequently enough so that it may effectively perform its duties, at least eight times per year, following a schedule of dates and agenda established at the beginning of the year and allowing each director individually to propose items do not originally appear on the agenda.

Partially complies

Pursuant to the provisions of article 21 of the Board Regulations, the Board of Directors will ordinarily meet as often as the Chairman deems most appropriate for the proper functioning of the Company, and must meet at least once a quarter.

During 2021, in response to the Company’s needs, the Board of Directors met on a total of seven occasions.

The calendar of the ordinary sessions will be set by the Board itself before the beginning of each financial year. This calendar may be amended by agreement of the Board itself or through a decision of the Chairman, in which case the amendment must be notified to the Directors as soon as possible.

The Directors may request that the Chairman include matters on the Agenda, and the Chairman is bound to such inclusion where the request is made at least ten days before the scheduled date of the meeting and where the pertinent documentation was sent with it, to be given to the other members of the Board of Directors.

27. That director absences only occur when absolutely necessary and are quantified in the Annual Corporate Governance Report. And when absences do occur, that the director appoint a proxy with instructions.

Complies

28. That when directors or the secretary express concern regarding a proposal or, in the case of directors, regarding the direction in which the company is headed and said concerns are not resolved by the Board of Directors, such concerns should be included in the minutes, upon a request from the protesting party.

Complies

29. That the company should establishes adequate means for directors to obtain appropriate advice in order to properly fulfil their duties including, should circumstances warrant, external advice at the company’s expense.

Complies

30. That, without regard to the knowledge necessary for directors to complete their duties, companies make refresher courses available to them when circumstances make this advisable.

Complies

31. That the agenda for meetings should clearly indicate those matters on which the Board of Directors is to make a decision or adopt a resolution so that the directors may study or gather all relevant information ahead of time.

When, under exceptional circumstances, the chairman wishes to bring urgent matters for decision or resolution before the Board of Directors which do not appear on the agenda, prior express agreement of a majority of the directors shall be necessary, and said consent shall by duly recorded in the minutes.

Complies

32. That directors shall be periodically informed of changes in equity ownership and of the opinions of significant shareholders, investors and rating agencies of the company and its group.

Complies

33. That the chairman, as the person responsible for the efficient workings of the Board of Directors, in addition to carrying out his duties required by law and the Articles of Association, should prepare and submit to the Board of Directors a schedule of dates and matters to be considered; organise and coordinate the periodic evaluation of the Board as well as, if applicable, the chief executive of the company, should be responsible for leading the Board and the effectiveness of its work; ensuring that sufficient time is devoted to considering strategic issues, and approve and supervise refresher courses for each director when circumstances so dictate.

Complies

34. That when there is a coordinating director, the articles of incorporation or Board regulations should confer upon him or her the following powers in addition to those conferred by law: to chair the Board of Directors in the absence of the chairman and deputy chairmen, should there be any; to reflect the concerns of non-executive directors; to liaise with investors and shareholders in order to understand their points of view and respond to their concerns, in particular as those concerns relate to corporate governance of the company; and to coordinate a succession plan for the chairman.

Not applicable

35. That the secretary of the Board of Directors should pay special attention to ensure that the activities and decisions of the Board of Directors take into account such recommendations regarding good governance contained in this Good Governance Code as may be applicable to the company.

Complies

36. That the Board of Directors meet in plenary session once a year and adopt, where appropriate, an action plan to correct any deficiencies detected in the following:

a) The quality and efficiency of the Board of Directors’ work.

b) The workings and composition of its committees.

c) Diversity of membership and competence of the Board of Directors.

d) Performance of the chairman of the Board of Directors and the chief executive officer of the company.

e) Performance and input of each director, paying special attention to those in charge of the various Board committees.

In order to perform its evaluation of the various committees, the Board of Directors will take a report from the committees themselves as a starting point and for the evaluation of the Board, a report from the nomination committee.

Every three years, the Board of Directors will rely upon the assistance of an external advisor for its evaluation, whose independence shall be verified by the appointments committee.

Business relationships between the external adviser or any member of the adviser’s group and the company or any company within its group must be specified in the annual corporate governance report.

The process and the areas evaluated must be described in the annual corporate governance report.

Complies

37. That if there is an executive committee, it must contain at least two non-executive directors, at least one of whom must be independent, and its secretary must be the secretary of the Board.

Not applicable

38. That the Board of Directors must always be aware of the matters discussed and decisions taken by the executive committee and that all members of the Board of Directors receive a copy of the minutes of meetings of the executive committee.

Not applicable

39. That the members of the Audit Committee, in particular its chairman, be appointed in consideration of their knowledge and experience in accountancy, audit and risk management issues, both financial and non-financial.

Complies

40. That under the supervision of the Audit Committee, there should be a unit in charge of the internal audit function, which ensures that information and internal control systems operate correctly, and which reports to the non-executive chairman of the Board or of the Audit Committee.

Complies

41. That the person in charge of the unit performing the internal audit function should present an annual work plan to the Audit Committee, for approval by that committee or by the Board, reporting directly on its execution, including any incidents or limitations of scope, the results and monitoring of its recommendations, and present an activity report at the end of each year.

Complies

42. That in addition to the provisions of applicable law, the Audit Committee should be responsible for the following:

1. With regard to information systems and internal control:

a) Supervising and evaluating the process of preparation and the completeness of the financial and non-financial information, as well as the control and management systems for financial and non-financial risk relating to the company and, if applicable, the group – including operational , technological, legal, social, environmental, political and reputational risk, or risk related to corruption – reviewing compliance with regulatory requirements, the appropriate delimitation of the scope of consolidation and the correct application of accounting criteria.

b) Ensuring the independence of the unit charged with the internal audit function; proposing the selection, appointment and dismissal of the head of internal audit; proposing the budget for this service; approving or proposing its orientation and annual work plans for approval by the Board, making sure that its activity is focused primarily on material risks (including reputational risk); receiving periodic information on its activities; and verifying that senior management takes into account the conclusions and recommendations of its reports.

c) Establishing and supervising a mechanism that allows employees and other persons related to the company, such as directors, shareholders, suppliers, contractors or subcontractors, to report any potentially serious irregularities, especially those of a financial or accounting nature, that they observe in the company or its group. This mechanism must guarantee confidentiality and in any case provide for cases in which the communications can be made anonymously, respecting the rights of the whistleblower and the person reported.

d) Generally ensuring that internal control policies and systems are effectively applied in practice.

2. With regard to the external auditor:

a) In the event that the external auditor resigns, examine the circumstances which caused said resignation.

b) Ensure that the remuneration paid to the external auditor for its work does not compromise the quality of the work or the auditor’s independence.

c) Making sure that the company informs the CNMV of the change of auditor, along with a statement on any differences that arose with the outgoing auditor and, if applicable, the contents thereof.

d) Ensure that the external auditor holds an annual meeting with the Board of Directors in plenary session in order to make a report regarding the tasks accomplished and regarding the development of its accounting and risks faced by the company.

e) Ensure that the company and the external auditor comply with applicable rules regarding the rendering of services other than auditing, proportional limits on the auditor’s billing, and all other rules regarding the auditor’s independence.

Complies

43. That the Audit Committee be able to require the presence of any employee or manager of the company, even stipulating that he or she appear without the presence of any other member of management.

Complies

44. That the Audit Committee be kept abreast of any corporate and structural changes planned by the company in order to perform an analysis and draft a report beforehand to the Board of Directors regarding economic conditions and accounting implications and, in particular, any exchange ratio involved.

Complies

45. That the risk management and control policy identify or determine, as a minimum:

a) The various types of financial and non-financial risks (including operational, technological, legal, social, environmental, political and reputational risks and risks relating to corruption) which the company faces, including among the financial or economic risks contingent liabilities and other off-balance sheet risks.

b) A risk control and management model based on different levels, which will include a specialised risk committee when sector regulations so require or the company considers it to be appropriate.

c) The level of risk that the company considers to be acceptable.

d) Means identified in order to minimise identified risks in the event they transpire.

e) Internal control and information systems to be used in order to control and manage identified risks, including contingent liabilities and other off balance sheet risks.

Complies

46. That under the direct supervision of the Audit Committee or, if applicable, of a specialised committee of the Board of Directors, an internal risk control and management function should exist, performed by an internal unit or department of the company which is expressly charged with the following responsibilities:

a) Ensure the proper functioning of risk management and control systems and, in particular, that they adequately identify, manage and quantify all material risks that may affect the company.

b) Actively participate in the creation of the risk strategy and in important decisions regarding risk management.

c) Ensure that the risk management and control systems adequately mitigate risks as defined by policy issued by the Board of Directors.

Complies

47. That in designating the members of the nomination and remuneration committee – or of the nomination committee and the remuneration committee if they are separate – care be taken to ensure that they have the knowledge, aptitudes and experience appropriate to the functions that they are called upon to perform and that the majority of said members are independent directors.

Complies

48. That large-cap companies have separate nomination and remuneration committees.

Not applicable

49. That the nomination committee consult with the chairman of the Board of Directors and the chief executive of the company, especially in relation to matters concerning executive directors.

And that any director be able to ask the nomination committee to consider potential candidates that he or she considers suitable to fill a vacancy on the Board of Directors.

Complies

50. That the remuneration committee exercises its functions independently and that, in addition to the functions assigned to it by law, it should be responsible for the following:

a) Propose basic conditions of employment for senior management.

b) Verify compliance with company remuneration policy.

c) Periodically review the remuneration policy applied to directors and senior managers, including remuneration involving the delivery of shares, and guarantee that individual remuneration be proportional to that received by other directors and senior managers.

d) Oversee that potential conflicts of interest do not undermine the independence of external advice rendered to the Board.

e) Verify information regarding remuneration paid to directors and senior managers contained in the various corporate documents, including the Annual Report on Director Remuneration.

Complies

51. That the remuneration committee consults with the chairman and the chief executive of the company, especially in matters relating to executive directors and senior management.

Complies

52. That the rules regarding composition and workings of supervision and control committees appear in the rules governing the Board of Directors and that they are consistent with those that apply to mandatory committees in accordance with the recommendations above, including:

a) That they are comprised exclusively of non-executive directors, with a majority of them independent.

b) That their chairmen be independent directors.

c) That the Board of Directors select members of these committees taking into account their knowledge, skills and experience and the duties of each committee; discuss their proposals and reports; and require them to render account of their activities and of the work performed in the first plenary session of the Board of Directors held after each committee meeting.

d) That the committees be allowed to avail themselves of outside advice when they consider it necessary to perform their duties.

e) That their meetings be recorded and the minutes be made available to all directors.

Not applicable

53. That verification of compliance with the company’s policies and rules on environmental, social and corporate governance matters, and with the internal codes of conduct be assigned to one or divided among more than one committee of the Board of Directors, which may be the Audit Committee, the nomination committee, a specialised committee on sustainability or corporate social responsibility or such other specialised committee as the Board of Directors, in the exercise of its powers of self-organisation, may have decided to create. And that such committee be composed exclusively of non-executive directors, with a majority of these being independent directors, and that the minimum functions indicated in the next recommendation be specifically assigned to it.

Complies

54. The minimum functions referred to in the foregoing recommendation are the following:

a) Monitoring of compliance with the company’s internal codes of conduct and corporate governance rules, also ensuring that the corporate culture is aligned with its purpose and values.

b) Monitoring the application of the general policy on communication of economic and financial information, non-financial and corporate information and communication with shareholders and investors, proxy advisors and other stakeholders. The manner in which the entity communicates and handles relations with small and medium-sized shareholders must also be monitored.

c) The periodic evaluation and review of the company’s corporate governance system, and environmental and social policy, with a view to ensuring that they fulfil their purposes of promoting the interests of society and take account, as appropriate, of the legitimate interests of other stakeholders.

d) Supervision of the company’s environmental and social practices to ensure that they are in alignment with the established strategy and policy.

e) Supervision and evaluation of the way relations with various stakeholders are handled.

Complies

55. That environmental and social sustainability policies identify and include at least the following:

a) The principles, commitments, objectives and strategy relating to shareholders, employees, clients, suppliers, social issues, the environment, diversity, tax responsibility, respect for human rights, and the prevention of corruption and other unlawful conduct

b) Means or systems for monitoring compliance with these policies, their associated risks, and management.

c) Mechanisms for supervising non-financial risk, including that relating to ethical aspects and aspects of business conduct.

d) Communication channels, participation and dialogue with stakeholders.

e) Responsible communication practices that impede the manipulation of data and protect integrity and honour.

Complies

56. That director remuneration be sufficient in order to attract and retain directors who meet the desired professional profile and to adequately compensate them for the dedication, qualifications and responsibility demanded of their posts, while not being so excessive as to compromise the independent judgement of non-executive directors.

Complies

57. That only executive directors should receive variable remuneration linked to corporate results and personal performance, as well as remuneration in the form of shares, options or rights to shares or instruments referenced to the share price and long-term savings plans such as pension plans, retirement schemes or other provident schemes.

Consideration may be given to delivering shares to non-executive directors as remuneration providing this is conditional upon their holding them until they cease to be directors. The foregoing shall not apply to shares that the director may need to sell in order to meet the costs related to their acquisition.

Complies

58. That as regards variable remuneration, the policies incorporate limits and administrative safeguards in order to ensure that said remuneration is in line with the work performance of the beneficiaries and are not based solely upon general developments in the markets or in the sector in which the company operates, or other similar circumstances.

And, in particular, that variable remuneration components:

a) Are linked to pre-determined and measurable performance criteria and that such criteria take into account the risk incurred to achieve a given result.

b) Promote sustainability of the company and include non-financial criteria that are geared towards creating long term value, such as compliance with rules and internal operating procedures and risk management and control policies.

c) Are based on balancing the attainment of short-, medium- and long-term objectives, so as to allow remuneration of continuous performance over a period long enough to be able to assess its contribution to the sustainable creation of value, such that the elements used to measure performance are not associated only with one-off, occasional or extraordinary events.

Partially complies

The Company’s executive short-term variable remuneration has ten per cent linked to the performance assessment of both Executive Directors. The eight competences measured in this performance assessment are non-financial and are linked to predetermined and measurable performance criteria, as is recommended. Moreover, targets have been set relating to the company’s positioning in certain sustainability indices for both Directors

In relation to long-term variable remuneration, although it does not include non-financial criteria as a measure of achievement, it does include a “clawback” clause with an application period of two years from the end of each cycle and for which the payback of the award may be demanded in the following cases:

i. Restatement of the Company’s financial statements wherever not due to the modification of applicable accounting standards or interpretations.

ii. Any of the Executive Directors being sanctioned for serious breach of the code of conduct and other internal regulations which may be applicable.

iii. When the settlement and payment of the award was wholly or partially produced on the basis of information whose falsehood or serious inaccuracy is manifestly demonstrated a posteriori.

59. That the payment of variable remuneration components be subject to sufficient verification that previously established performance or other conditions have effectively been met. Entities must include in their annual report on director remuneration the criteria for the time required and methods used for this verification depending on the nature and characteristics of each variable component.

That, additionally, companies consider the inclusion of a reduction (‘malus’) clause for the deferral of the payment of a portion of variable remuneration components that would imply their total or partial loss if an event were to occur prior to the payment date that would make this advisable.

Partially complies

There is no deferral scheme in the Company’s current annual variable remuneration system for any of its participants. With long-term variable remuneration, its very nature allows the Company’s performance to be seen in the medium and long term (3 years), in addition to ex post control instruments which would be activated when circumstances arise which make it evident that the payment was made on an erroneous premise.

60. That remuneration related to company results should take into account any reservations that might appear in the external auditor’s report and that would diminish said results.

Complies

61. That a material portion of variable remuneration for executive directors depends upon the delivery of shares or instruments indexed to share value.

Complies

62. That once shares or options or financial instruments have been allocated under remuneration schemes, executive directors be prohibited from transferring ownership or exercising options or rights until a term of at least three years has elapsed.

An exception is made in cases where the director has, at the time of the transfer or exercise of options or rights, a net economic exposure to changes in the share price for a market value equivalent to at least twice the amount of his or her fixed annual remuneration through the ownership of shares, options or other financial instruments.

The forgoing shall not apply to shares that the director may need to sell in order to meet the costs related to their acquisition or, following a favourable assessment by the nomination and remuneration committee, to deal with such extraordinary situations as may arise and so require.

Explain

The “Performance Shares Plan 2017–2022” establishes the obligation to retain the shares delivered to the Executive Directors for at least one year. In addition, the Executive Directors will be obliged to hold an amount in shares equivalent to at least one year of fixed remuneration throughout their entire tenure. To determine compliance with this obligation, it considers the share price on the day they were delivered.

63. That contractual arrangements should include a clause allowing the company to demand reimbursement of the variable remuneration components in the event that payment was not in accordance with the performance conditions or when payment was made based on data subsequently shown to have been inaccurate.

Partially complies

NH has put ex post reimbursement control formulae in place in the “Performance Shares Plan 2017- 2022” in line with market standards and the recommendations from Proxy Advisers and Institutional Investors. The Appointments, Remuneration and Corporate Governance Committee has the power to decide to propose the cancellation or recovery of undue payment of the multi-year variable remuneration in the event that any of the following circumstances occur:

a) breach of the internal code of conduct by the beneficiary;

b) material restatement of the Company’s financial statements, when required by an external auditor, where this affects fulfilling the aims of the multi-year variable remuneration plan, except where this arises in accordance with an amendment to accounting standards;

c) the variable remuneration accrued or was paid in accordance with inexact or incorrect information or data.

The Executive Directors are the only ones affected by the reimbursement formulae, as they are the only directors benefiting from the Company’s “Performance Shares Plan”.

64. That payments for contract termination should not exceed an amount equivalent to two years of total annual remuneration and should not be paid until the company has been able to verify that the director has fulfilled all previously established criteria or conditions for payment.

For the purposes of this recommendation, payments for contractual termination will be considered to include any payments the accrual of which or the obligation to pay which arises as a consequence of or on the occasion of the termination of the contractual relationship between the director and the company, including amounts not previously vested of long-term savings schemes and amounts paid by virtue of postcontractual non-competition agreements.

Explain

In no event will the Executive Director appointed in 2017, Ramón Aragonés Marín, and the Executive Director appointed in 2021, Rufino Pérez Fernández, be entitled to receive any compensation derived from the termination of their position and ending of such commercial relationship. However, the possible indemnities derived from an ending of the employment relationship will continue in effect during their terms as Executive Directors, recognising that period as time employed. Once ended, as appropriate, the business relationship will take over the labour relationship which was in effect between company and employee until the taking on of the new position in all its effects, except in serious and culpable breach and thus declared jurisdictionally.

H – OTHER RELEVANT INFORMATION

1. If there is any significant aspect regarding corporate governance in the company or other companies in the group that has not been included in other sections of this report, but which it is necessary to include in order to provide a more comprehensive and reasoned picture of the structure and governance practices in the company or its group, describe them briefly below.

2. This section may also be used to provide any other information, explanation or clarification relating to previous sections of the report, so long as it is relevant and not repetitive.

Specifically, indicate whether the company is subject to any corporate governance legislation other than that of Spain and, if so, include any information required under this legislation that differs from the data required in this report.

3. The company may also indicate whether it has voluntarily subscribed to other ethical or best practice codes, whether international, sector-based, or other. In that case, indicate the code in question and the date it was subscribed to. It should be specifically mentioned that the company adheres to the Code of Good Tax Practices of 20 July 2010.

1. RELEVANT CORPORATE GOVERNANCE ASPECTS THAT HAVE NOT BEEN INCLUDED IN THE OTHER SECTIONS:

SECTION A.3
The following is a breakdown of the number of shares directly held by each Board member listed in the reference section:
Mr Alfredo Fernández Agras holds 177,834 shares
Mr Ramón Aragonés Marín directly holds 130,216 shares. Additionally, Mr Aragonés holds a total of 98,485 Performance Shares that may be executed as long as the stated objectives are met.
Rufino Pérez Fernández directly holds 35,633 shares. Additionally, Mr Pérez holds a total of 45,455 Performance Shares that may be executed as long as the stated objectives are met.

SECTION A.5
In regard to the commercial or contractual relations between Minor IPC and the Company and/or its group, refer to section D, Related Transactions.

SECTION A.6
The following details the positions that Proprietary Directors who represent to the shareholder Minor IPC hold in companies belonging to its group.

In view of the foregoing, it is reported that Mr Chojnacki is a Director of the following companies in the Minor IPC group: Anantara Vacation

Anantara Vacation Club (HK) Limited
Anantara Vacation Club (Cambodia) Co., Ltd.
Anantara (Shangai) Tourism Consulting Co, Ltd.
Avadina Hills Co., Ltd.
Avani Lesotho (Pty) Ltd
Baan Boran Chiangrai Limited
Bai Dai Tourism Company Limited
BC Aus Operating Company Pty.Ltd
BC Australia Operating Company Pty.Ltd
Beinjing Qian Bai Ye Investment Consultation Co, Ltd
Beinjing Riverside & Courtyard Investment Management co. Ltd
BTG Holding Company Limited
Chicken Time Company Ltd.
Coco Palm Hotel & Resort Co., Ltd
Corbin & King Limited
Delicious Food Holding (Singapore) Pte. Ltd.
Espresso Pty.Ltd
First Avenue Company Pty.Ltd
Flexivac Co. Limited
H & A Park Co., Ltd.
Harbour View Corporation
Hoi An River Park Company Limited
Hua hin Village Limited
Huahin Resort Limited
Jada Resort and Spa (Private) Limited
Kulutara Luxury Hotel (Private) Limited
Layan Bang Tao Development Co., Ltd.
Layan Hill Residence Co., Ltd.
MFG International Holding (Singapore) Pte. Ltd.
MFG IP Holding (Singapore) Pte. Ltd
MHG Australia Holding Pte. Ltd.
MHG Australia Investment PYT Ltd.
MHG Continental Holding (Singapore) Pte. Ltd.
MHG Desaru Hotel SDN. BHD.
MHG Desaru Villas SDN. BHD.
MHG Holding Limited
MHG International Holding (Singapore) Pte. Ltd.
MHG IP Holding (Singapore) Pte. Ltd
MHG Lesotho (Pty) Ltd
MHG Management Tunisia
MHG Npark Development Co., Ltd
MI Squared Limited

Minor BT Holding (Singapore) Pte. Ltd
Minor Corporation Pcl.
Minor Development Limited
Minor DKL Construction Pty Ltd
Minor DKL Food Group Pty Ltd
Minor DKL Management Pty Ltd
Minor DKL Stores Pty Ltd
Minor Food Group (Singapore) Pte. Ltd.
Minor Food Holding Co., Ltd
Minor Hotel Group (Maldives) Private Limited
Minor Hotel Group Gaborone (Pty) Ltd
Minor Hotel Group Limited
Minor Hotel Group Management (Shanghai) Limited
Minor Hotel Group South Africa Pty Ltd
Minor Hotel Portugal
Minor Lifestyle Limited
Mint Residential (VIC) PTY LTD
Mspa International Cairo
Mspa International Limited
NH Hotel Group SA
NMT Limited
NYE and RGP Development Co., Ltd
Oaks Hotel & Resort Limited
PH Resort (Private) Limited
Plexus Maldives Pvt. Ltd.
PT Wika Realty Minor Development
Quang Nam Minor Hotel Co., Ltd
Rajadamri Lodging Limited
Rajadamri Residence Co., Ltd
Rani Minor Holding II Limited
Samui Resort & Spa Limited
Sands Hotels (Pty) Ltd
Seredib Hotel Pcl
Sizzler China Limited
Spoonful (Thailand) Company Limited
Spoonful Pte Ltd
Tanzania Tourism & Hospitality Investments Limited
TCC Operations Pty Ltd
TGT Operations Pty Ltd
The Coffee Club (International) Pty Ltd
The Coffee Club (Korea) Pty Ltd
The Coffee Club (Mena) Pty Ltd
The Coffee Club (NSW) Pty Ltd
The Coffee Club (NZ) Pty Ltd
The Coffee Club (Vic) Pty Ltd
The Coffee Club Franchising Company Pty Ltd
The Coffee Club Investment Pty Ltd
The Coffee Club Properties (NSW) Pty Ltd
The Coffee Club Pty Ltd
The Coffee Club Supply Pty Ltd
The Good Life Global Ltd.
The Minor Food Group Pcl
The Sothea (K.V.) Pte. Ltd.
XRNRO Pty. Ltd.
XRNRP Pty. Ltd.
XRNRS Pty. Ltd.
Zanzibar Tourism & Hospitality Investments Limited

Mr Heinecke holds the following positions in Minor IPC group companies:

Arabian Spas (Dubai) (LLC)(Director)
Benihana Asia Pte.Ltd (Director)
Benihana Holding Pte. Ltd (Director)
Benihana UK Limited (Director)
Bravo Jets Limited (Director)
CARDAMON Tented Camp Co.,Ltd.(Director)
Chao Phaya Resort & Residence Limited (Board Chairman)
Chao Phaya Resort Limited (Director)
Corbin & King Limited (Director)
Eutopia Holdings Private Limited (Director)
G5 Jets Limited (Director)
Maerim Terrace Resort Limited (Board Chairman)
MD JETS Limited (Director)
MHG Desaru Hotel SDN.BHD (Director)
MHG Desaru Villas SDN.BHD (Director)
Minor BKH Limited (Board Chairman)
Minor DKL Food Group Pty.Ltd (Director)

Minor Food Group (Singapore) Pte., Ltd (Director)
Minor Holdings (Thai) Limited (Director)
MJETS Limited (Director)
MJETS Maintenance Limited (Director)
MSpa Medical Co., Ltd. (Director)
MSpa Ventures Limited (Board Chairman)
O Plus E Holdings Private Limited (Director)
Paciﬁc Cross International Limited (Director)
Panaram Limited (Director)
Per Aquum Management JLT (Director)
Phuket Vessel Holding Limited (Director)
Plexus Maldives Pvt Ltd (Director)
Plu Luang Limited (Board Chairman)
R.G.E. (HKG) Limited (Board Chairman)
Rajadamri Residence Limited (Board Chairman)
Sea Fly Limited (Director)
Sri Bhathana Garden Limited (Director)
Tanzania Tourism and Hospitality Investment Limited (Director)
Western – Mjets Limited (Director)
Zanzibar Tourism and Hospitality Investment Limited (Director)
Zuma Bangkok Limited (Director)

Mr Dillipraj Rajakarier is a Director of the following Minor IPC group companies:

Anantara (Shangai) Tourism Consulting Co, Ltd
Anantara Vacation Club (Cambodia) Co.,Ltd.
Anantara Vacation Club (HK) Limited
Arabian Spas (Dubai) (LLC)
Avadina Hills Co., Ltd.
Avani Lesotho (Pty) Ltd
Baan Boran Chiangrai Limited
Bai Dai Tourism Company Ltd
Barbarons Beach Hotel MHG
BC Aus Operating Company Pty.Ltd
Chao Phaya Resort and Residence Limited
Chao Phaya Resort Limited
Chicken Time Co, Ltd.
Coco Palm Hotel & Resort Limited
Coco Recreation Limited
Coco Residence Limited
Corbin & King Limited
Eutopia Holdings Private Limited
Expresso Pty. Ltd.
Flexivac Co. Limited
Fundyard Hotel Management (Guangdong) Co., Ltd.
GHA Holding Ltd
H&A Park Co.,Ltd.
Harbour View Corporation Limited
Hoi An River Park Company Limited
Hua Hin Resort Limited
Hua Hin Village Limited
Jada Resort and Spa (Private) Limited
Kalutara Luxury Hotel & Resort (Private) Limited
Layan Bang Tao Development Co., Ltd.
Layan Hill Residence Co., Ltd.
Liwa Minor Food & Beverages LLC
M SPA International Cairo LLM
M Spa International Limited
M Spa Ventures Limited
Maerim Terrace Resort Limited
MHG Australia Investments Pty Ltd
MHG Desaru Hotel Sdn. Bhd.
MHG Desaru Villas Sdn. Bhd.
MHG Holding Limited
MHG Lesotho (Pty) Ltd
MHG Management Tunisia
MHG Npark Development Company Limited
MHG Phuket Limited
MI Squared Limited
Minor Cheese Limited
Minor Dairy Limited
Minor DKL Construction Pty Ltd
Minor DKL Food Group Pty Ltd
Minor DKL Management Pty Ltd
Minor DKL Stores Pty Ltd
Minor Hotel Group Gaborone (Pty) Ltd
Minor Hotel Group Limited
Minor Hotel Group (Maldives) Private Limited
Minor Hotel Group MEA DMCC
Minor Hotel Group South Africa (PTY) Limited
Minor Hotel Management (Shanghai) Limited
Minor Hotels Portugal, S.A.

Minor Hotels Zambia Limited
Minor International Public Company Ltd
MINT Residential (VIC) Pty Ltd.
Nh Hotel Group SA
NYE and RGP Development Co.,Ltd.
O Plus E Holdings Private Ltd.
Oaks Hotels & Resorts Limited
Oaks Hotels & Resorts DMCC
Per Aquum Management JLT
PH Resorts (Private) Ltd.
Phuket Beach Club Owner Limited
Plexus Maldives Pvt. Ltd
PT Wika Realty Minor Development
Quang Nam Minor Hotel Co. Ltd
R.G.E. (HKG) Limited
Rajadamri Hotel Public Company Limited
Rajadamri Lodging Limited
Rajadamri Residence Limited
Rani Minor Holding II Limited
Rani Minor Holding Limited
Samui Beach Club Owner Limited
Samui Beach Residence Limited
Samui Resort and Spa Limited
Sands Hotels (Pty) Limited
Sanya Anantara Consulting Ltd
Sanya Anantara Real Estate Limited
Select Service Partner Limited
Serendib Hotels Pcl
Siam Success Realty Ltd
Sizzler(China) Limited
Spoonful (Thailand) Company Ltd
Spoonful Pte. Ltd
Tanzania Tourism and Hospitality Investment Ltd
TCC Operations Pty Ltd
TGT Operations Pty Ltd
The Coffee Club Pty Ltd
The Coffee Club (International) Pty Ltd
The Coffee Club (Korea) Pty Ltd
The Coffee Club (Mena) Pty Ltd
The Coffee Club (NSW) Pty Ltd
The Coffee Club (NZ) Pty Ltd
The Coffee Club (Vic) Pty Ltd
The Coffee Club Franchising Company Pty Ltd
The Coffee Club Investment Pty Ltd
The Coffee Club Properties Pty Ltd
The Coffee Club Properties (NSW) Pty Ltd
The Coffee Club Supply Pty Ltd
The Good Life Global Ltd.
The Minor Food Group Pcl
The Sothea (K.V.) Pte. Ltd.
XRNRO Pty. Ltd.
XRNRP Pty. Ltd.
XRNRS Pty. Ltd.
The Sothea (K.V.) Pte Ltd.
Verita MHG Company Ltd
Wanda Minor Hotels HK Ltd
XRNRO Pty. Ltd.
XRNRP Pty. Ltd.
XRNRS Pty. Ltd.
Zanzibar Tourism and Hospitality Investment Ltd.
Zuma Bangkok Limited

Mr Kosin Chantikul is a Director of the following companies belonging to the group Minor IPC Ltd:

Avadina Hills Co, Ltd
Bodhi Hotel&Resort Put Ltd
Corbin & King Ltd
MHG Desaru Hotel Sdn Bhd
MHG Desaru Villas Sdn Bhd
MHG Management (India) Private Ltd
Minor Food Holding Co, Ltd
Minor International PCL
NH Hotel Group SA
Mspa Mediacal Co., Ltd
S&P Syndicate PCL
Scomadi Worldwide Limited
Scomadi Worldwide Holdings Limited
Siam Success Realty Ltd.
Verita MHG Company Limited

SECTION C.1.11
Other than the positions stated in the reference section, Mr Heinecke also holds the following:

– Executive Management Committee Chairman of Minor International Public Company Limited
– Member of the Appointments, Remuneration and Corporate Governance Committee of Indorama Ventures Public Company Limited.

Additionally, Mr Aragonés is a member of the Management Committee of Minor International Public Company Limited

SECTION D.2
Regarding the Subordinated Convertible Term Loan Agreement for an amount of 100,000,000 euros between MHG Continental Holding (Singapore) as lender and NH as borrower, it was already converted into shares of the company during the 2021 financial year.

None of the operations contemplated in section D.2 have met the requirements to be proposed for approval to the Shareholders´ Meeting.

In addition NH Group has carried out, during the 2021 financial year, various transactions with its significant shareholder (Minor Group), that were approved in previous years. The aforementioned transactions are explained in the annual accounts for the year 2021.

SECTION D.·
The operation contemplated in section D.3 has fulfilled the requirements to be proposed for approval to the Shareholders´ Meeting.

2. CODES OF ETHICAL PRINCIPLES AND GOOD PRACTICES

NH Hotel Group, S.A. it is a member of the United Nations Global Compact and supports and contributes to the Sustainable Development Goals (SDGs) that contemplate the protection and promotion of fundamental human rights.

Another global frame of reference for NH is the Global Code of Ethics for Tourism, approved in 1999 by the United Nations World Tourism Organization (UNWTO) Assembly. It is a set of 10 principles designed to guide the main tourism development actors, helping to maximise the benefits of the sector, while minimising its impact on the environment, cultural heritage and local communities.

In this vein, in September 2012, NH joined ECPAT (End Child Prostitution, Child Pornography and Trafficking of Children for Sexual Purposes) to protect children against sexual exploitation in tourism; also promoted by UNWTO and UNICEF.

NH is part of the International Tourism Partnership (ITP), a global platform for leading companies in the hotel sector that share a common commitment to social responsibility and sustainability. This organisation establishes four main goals, among which is the protection and promotion of human rights, a target that NH endorses and supports.

In 2018, the 16 NH hotels in Mexico initiated a process to voluntarily adhere to the National Code of Conduct for the protection of children and adolescents in the travel and tourism sector that aims to prevent and combat it with special emphasis on child exploitation. It is promoted by the Secretariat of Tourism of the Government of the Republic (SECTUR). In addition, training will be offered to employees in the prevention of human trafficking and child exploitation.

The Company participates in various forums and projects to promote the fight against climate change and the reduction of carbon emissions. Finally, since 2015, NH has adhered to the 20 July 2010 Code of Good Tax Practices.

This Annual Corporate Governance Report was approved by the Board of Directors of the company at the meeting held on.

24/02/2022

Indicate whether any director voted against or abstained from approving this report.