Endesa Sa Madrid

Hello, good morning to all the people connected. Welcome to the nine-month 2025 results presentation, which will be hosted by Endesa CEO, José Bogas, and the CFO, Marco Palermo. Before we start, let me remind you that after the presentation, we will have the usual Q&A session. Thank you, and now let me hand over to our CEO, José Bogas.

Okay, thank you, Mark, and welcome to everybody. Let me open this presentation by highlighting the strong economic and financial performance of the period, which, as we will see, suddenly resulted in a remarkable gas generation. This clearly proves the resilience of our business model, which enabled us to meet our commitments, maintaining predictable results and consistently creating value despite a complex and uncertain market context. Regarding shareholder remuneration policies, we are making steady progress in the implementation of our Share by Back program, as we will detail later on. And finally, When it comes to the distribution remuneration framework, the current proposal clearly does not provide adequate support and incentives for the investment effort required by the National Energy Plan. Let's now have a look at the key financial and operational highlight of the period. On slide number four, we can see the solid financial results achieved in these nine months of 2025. EBITDA reached 4.2 billion euros, marking a 9% increase year on year, while net income came in at 1.7 billion euros, up by a sound 22% versus last year. Cash generation remains strong. with an FFO rising to 3.4 billion euros, a 29% increase year-on-year. These results allow us to confirm that we are well on track to reach the upper range of our forecast, both in terms of EBITDA and net income. We continue to progress on our capital allocation strategy, as you can see on slide number five. We acquire the remaining 62.5% stake in CETASA, enabling full consolidation of this green asset portfolio. In September, we entered into a strategic agreement with Masorand to provide combined energy and telecom offers. As part of the deal, which will be completed in the coming month, we will acquire Energia Colectiva, bringing over 350,000 energy customers to our portfolio and gaining access to more than one million potential clients. This will reinforce our commercial strategy and opens new opportunities to foster customer loyalty through an integrated service offering. Furthermore, the strategic partnership with Mazda, which we announced last March, was successfully concluded in early October. And lastly... As already commented on, we are progressing on the implementation of our sell-back program. After completing the second tranche, we launch a third one with a target of up to 500 million to be executed no later than February 28th next year. Slide number six provides a brief overview of the progress achieved on the capital allocation strategy and the execution of main industrial KPIs. We invested around 1.4 billion euros during the period, with nearly half allocated to networks. As shown in the slide, industrial KPIs confirm our progress. Starting with grid, our efforts are reflected in the improvement of the interruption time index, while total losses remain stable at around 10%, still significantly impacted by non-manageable losses due to localized fraud. In renewables, the consolidation of new renewable capacity allowed us to achieve a 79% emission-free output. And lastly, in the customer segment, it is important to keep in mind that we are pursuing a strategy focused on higher-value customers, reshaping our customer mix profile with a focus on long-term loyalty. From a market perspective, on slide number 7, commodity prices show signs of normalization throughout the period, gradually stabilizing after the volatility in the early 2025. In the Spanish electricity market, final prices were mostly affected by the post-blackout measures to prevent future incident and the resulting notable rise in ancillary services costs, while daily electricity price averaged 63 euros per megawatt hour, that is 21% increase year on year. It remains unclear how long the system operator will maintain its special anti-blackout measures, which poses a significant cost to the system. Besides, we must consider the lesson learned from the incident. Our electrical system is secure, but we must update the system operation that has undergone structural changes, now dominated by renewable technologies. In this scenario, we believe it is critical to reconsider the nuclear phase-out schedule, starting with Almaraz. This facility has become key as its location helps to strengthen the grid security in an area with vast renewable generation. In addition to rolling out all the measures to boost electrification, there are other steps we must take to ensure system security of supply, such as implementing a flexible control model. Slide number eight shows how mainland demand continues to consolidate sustained growth, recording a 2.4% year-on-year increase, that is 1.8% adjusted. When it comes to Endesa's area, demand rose by 4.2% and 2.5% respectively. Deep diving into the analysis by segment, Residential consumption expanded significantly, largely influenced by the rise in temperatures. the rebound of industrial and services demand is part of a broader sector-wide increase in energy usage. This clearly aligns with the market rise in connection requests seen in recent years, which are now starting to materialize into actual consumptions. In this regard, it is worth highlighting the growth of the service sector demand particularly in the Aragon area, which has seen a 9% year-on-year demand increase, mainly associated with the incorporation of data center activity. The strong performance achieved since last year is a clear sign of turning point of trend, not only in terms of the consolidation of the recovery in demand, but more importantly, in the materialization of a new industrial demand. On the next slide, we review, that is slide number nine, we review the most significant highlight of the distribution regulatory framework. Although the new remuneration proposal introduced certain improvement, it still falls significantly short on meeting the ambitious and urgent to achieve Spanish decarbonization and electrification goals. In subcontract, the context evolves in a different direction and reflects very different dynamics and challenges. Reconnection requests continue to steadily rise and some demand growth scenarios such as one of those considered in the 2025 to 2030 transmission network development proposal even exceeds 2030 PNEIC assumption. Rate availability was only 17% at the beginning of September, being virtually zero in Endesa's area as of today. Due to these capacity constraints, we have been forced to reject most of the new demand connection requests for 2025. It is crystal clear that investment in distribution networks must be accelerated to meet electrification goals. The Ministry's proposal being a step forward in rising the strategic investment limit by 62% for the 2026 to 2030 period. However, a fair and forward-looking regulatory framework that incentivizes investment is essential. Moreover, the pending rate of return update must urgently be resolve existing asymmetric with other European countries, as well as addressing inconsistencies with other regulated sectors. In conclusion, we urge the CMC to recognize this reality and to respond accordingly by approving a remuneration framework that rises to the challenge. And let me now hand over to Marco for the financial results.

Thank you, Pepe, and good morning, everybody. Let's start with the analysis of the financial results. I'm now on slide 11. As we have just mentioned, EBITDA rose to around €4.2 billion, up 9% from the previous year. This solid performance was driven by several key factors. First, the removal of the 1.2% extraordinary levy, which negatively impacted last year's results by around 200 million euro. And second, the 8% increase in generation and supply BTDA more than offsets the lower contribution from distribution affected by one-off capital gains that we booked in 2024. Moving to slide 12 for a closer look at generation and supply segment. ABTDA expansion was primarily driven by the 8% gross margin increase, while fixed costs rose slightly, impacted by negative one-offs in the O&M. The moving parts of the margin evolution were as follows. Conventional generation delivered a 16% increase, driven by strong results in gas management, supported by positive prior hedging position. more than offsetting the lower results from shore position management with less opportunities in the current price context, and a nuclear margin decline mainly explained by higher variable costs due to taxes. basically the full and resa tax and the 7% tax on generation. Supply business also contributed positively, mostly due to stronger gas retail margin, while the power supply was stable year on year. Finally, the renewable business remained flat overall. Higher hydrovolumes were offset by lower wind and solar output and lower capture price. Moving to slide 13 now, the free power margin evolution reflects all these dynamics, normalizing compared to the record high attained last year. The integrated unitary margins stood at 53 euro megawatt hour, with a power supply margin of 18 euro megawatt hour. This supply margin remained nearly flat, underscoring the effectiveness of our strategy focused on customer value over volume, and mostly offsetting the impact of rising ancillary services and peak costs. For the full year, we expect the integrated unitary margin to remain at the current level of around €53 MWh. On slide 14 now, we analyze the gas business from an integrated perspective. The gas margin showed a strong improvement supported by favorable previous hedging positions and resilient pricing in the B2C segment. The unitary margin reached 10 euro megawatt hour with expectation of ending the year at around 9 euro megawatt hour. Moving now to slide 15 in the below EBITDA, DNA slightly increased compared to the previous year, mainly due to higher amortization from investment in distribution and increased depreciation in renewables. which included the consolidation of the hydro asset incorporated since February. Financial results showed a notable improvement driven by a reduction in average gross debt and lower cost of debt. Finally, the effective tax rate stood at approximately 24.5%, no longer impacted by the non-deductibility of the 1.2% temporary levy that penalized last year's results. Net income rose by a solid 22%, with net ordinary income to eBTDA conversion ratio reaching 41% in the period. Turning to the next slide, page 16. Cash generation continues to be strong, with an FFO standing at €3.4 billion, improving on the previous year's levels, mainly due to the robust EBITDA growth and the positive working capital evolution versus previous year, which was impacted, you probably remember, by the 530 million euro Qatar arbitration payment. On the other hand, the higher corporate income tax payment made in this third quarter reflects the exceptional results achieved in 2024 compared to 2023. On slide 17 now, Net financial debt came in at around 10 billion euro, with cash generated in the period more than covering the deployment of CAPEX, including 1 billion of inorganic CAPEX. In addition, the change in debt reflects dividend payments totaling €1.5 billion and the completion of the second tranche of the share-buy-back programme, which resulted in a cash outflow of approximately €450 million. Gross financial debt remains unchanged, with the average cost declining to 3.3%. And now I hand over to Pepe for the closing remarks.