Iberdrola Sa S/Adr

Buenos dias, señoras y señores. Good morning, ladies and gentlemen. First, we would like to extend a warm welcome to all of you who have joined us today for our 2025 fiscal year results presentation. As is customary, we will follow the traditional structure of our events. We are going to begin with an overview of the results and the key development during the period. The presentation and the Q&A part will be delivered by the top executive team joining us today. Mr. Ignacio Galán, Executive Chairman, Mr. Pedro Zagra, CEO, and finally, Mr. Pepe Sainz, CFO. After the presentation, we'll move on to the Q&A session. I would like to remind you that we will only be taking questions submitted through our website. please send your question exclusively via www.iberdola.com. Finally, we expect today's event to last no more than 60 minutes. Should any question remain unanswered, the IR team will, as always, remain fully at your disposal. We hope that this presentation will be useful and informative for all of you. And now, without further ado, I would like to hand the floor over to Mr. Ignacio Galán. Thank you once again. Please, Mr. Galán.

Thank you, Ignacio. Good morning, everyone, and thank you very much for joining this conference call. In 2025, reported net profit reached €6,295 million, up by 3%. Even excluding €464 million on cash charges to adjust the value of our renewable pipeline in different countries. Excluding those charges, net profit would reach €6,749 million. Adjusted net profit, which as you know excludes the impact of capital gains, increased by 10.3% to 6,231 million euros above our gatherings. Adjusted EBITDA rose 15,684 million euros, up 3%, with 21% increase in net worth, reflecting our high-regulated assets base in improving framework in our core geographies. Partially offset by non-recurring impact of ancillary service costs in our power business, due to the reinforced system operation in Iberia, as well as lower prices. Total investment reached €14,460,000,000, with two-thirds allocated to transmission and distribution networks, driving the trapezoid growth in our regulated SSBs in just one year to almost €51,000,000. In power and customers, we added 2.7 new gigawatts in operation, and we have 4.7 gigawatts more under construction. The bull is reproducing next quarter. This stock expansion was combined with a further improvement in efficiency, thanks to an increase of only 1% in our current net operating expenses, well below gross margin. In financial strength, with net debt down 1.5 billion euros driven by an 8.2% increase in our operating gas flow up to 12,811,000,000 euros, This positive impact of our asset rotation and partnership plan and the capital increase last year, improving our FFA on adjusted net debt ratio to 25.5 comfortably in the range of BBB plus rating. Finally, yesterday the Board decided to propose to the General Meeting a total dividend of 0.68 euros per share. As you can see, 2025 has been a transformational year for Iberdrola thanks to the implementation of our strategy. In the last two months, we have made remarkable progress in all the pillars of the plan we presented a year ago, reinforcing our focus on network infrastructure with transmission as a new growth vector in the UK, where we have secured 14 billion euros of Totex for the next five years under Rio T3, including settlement interconnection like Eastern Green Link 1. In the U.S., after the commissioning the NCEC interconnection between Massachusetts and Canada. And now also in Australia, where we were recently awarded 1.2 billion line in the state of Victoria, as we expect to complete by 2030. On top of that, we have also continued increasing our distribution investment and progressing in the definition of new frameworks for the coming years in all our countries, mainly in Brazil, where the regulator has already approved the renewal of our distribution concession for 30 years, more providing us visibility up to 2060. In addition, the organic investment in the asset rotation transition completed in 2025 has also confirmed our strategic focus on networks, mainly due to the acquisition of electricity in the Midwest not fully integrated in the approaches of our grid and energy minorities. This record activity is also expanding our contribution to social development and geocreation across our geographies. With 4,500 new hires in 2025, and a total workforce of 45,400. 13.2 billion euros of purchase to thousands of companies that support half a million jobs across our supply chains. A tax contribution of 10.4 billion euros and 425 million euros allocated to research and development, reaffirming our position as leading private utility worldwide innovation. Thanks to our performance in 2025, we are facing 2026 as the beginning of a new growth phase. But before that, and given that we are from Bilbao, let me share with you the few figures that show our transformation over the last 25 years. Since 2001, we have multiplied our total asset base by 8 times, to 161 billion euros. Driven by the expansion of regulated networks, asset base, to 51 billion, 10 times more than 2001. Our generation capacity from 16 to almost 60 gigawatts today. And our storage capacity was multiplied over three times thanks to the investment made in existing hydro turbines to make them reversible, new palm storage facilities like Tamega and battery projects across the world. On top of that, our international expansion has fully transformed Iberdrola from an utility base in Spain with just 1% of our activity in other markets in 2000 to a global utility with 65% of our business in the UK, US, Germany, France, Brazil, and Australia. As a result, we are reaching our 125th anniversary, consolidated as the largest utility in Europe and one of the two largest worldwide with a market cap of about 135 billion euros, 12 times more than 2001. Even after paying 47 billion in dividends across the last 25 years. And you can be sure that the key pillars of this growth story where our vision, our strategic coherence, our ability to anticipate the short-term shift in the sector across our access to financial resources and supply chains, and our short-record execution. And are also, all of them, the best guarantee to sustain growth in the coming years. we are demonstrating we are a company then always we fulfill our promises even we over fulfill our promises we over deliver what we promise it's a bit different with others with their promise and they're not delivering as much as they are promising traditionally moving to 2025 Result, adjusted EBITDA reached 15,684 million euros with two-thirds coming from international business. The United Kingdom contributed with 3,306 million euros and U.S. 2,662 million. Brazil, close to 3 billion, and EBITDA from other European countries and Australia reached 791 million euros, with Iberia contributing the remaining 6 billion euros. As a result, 81% of our group EBITDA is already coming from A-rate countries. By businesses, networks adjusted EBITDA grew by 21%, thanks to higher regulated asset base in all countries, new tariffs in the U.S. and Brazil, and reconciliation in electricity in the U.S. While renewable power and customer EBITDA fell by 10%, as a result of lower market prices and the impact of the so-called reinforced operation implemented by ReElectro in Spain, partially offset by the addition of 2.7 gigawatts of new installed capacity worldwide. Total investment reached 14,460 million due to the acceleration of organic growth and the acquisition of energy minorities in Brazil. By countries, investment increased by 34% in the UK, driven by 47% rise in net worth due to the new transmission project and the ongoing investment of Scottish distribution manned web and electricity in the West, UK investment in power also increased by 21%, mainly in Assembly A3 offshore wind farm. The US investment increased by 2%, as the growth in transmission and distribution more than offset the slightly lower investment in power after the completion of projects under construction. Combined, US and UK contributed 60% of total investment. with 70% allocated to Iberia, 14% to Brazil, and 9% to other countries, mainly Australia, where investment more than doubled year on year, offsetting the decrease in Germany and France as offshore projects are put in service. By businesses, net worth reached 9 billion euros, almost two-thirds of the total. with 30% growth in organic investment mainly in the UK and Spain, and the US and Brazil, where the increase in distribution has more than offset the completion of transmission projects. Our regulated thread bay increased by 3% to €51 billion, with transmission already representing today 25% of our total network assets. And this pattern will continue in the next years, reflecting the progress made in our regulatory framework and the construction of new projects. The United Kingdom again published its final determination for EOT3, with almost 14 billion autotechs for Scottish power transmission up to 2031. This will imply multiplying by four the investment made in the previous five years, securing long-term growth and fully transforming the profile of Scottish power. In the United States, avant-garde benefiting for higher rates and the rising contribution to the result of new transmission projects, they will accelerate in 2026 thanks to the commissioning of our interconnection line between Canada and Massachusetts, adding 125 million euros per annum to Grupo Evita. In Spain, the new remuneration methodology for the period 2026-2031 has already been published. While in Brazil, the regulator has approved the renewal of our distribution concession for 30 years, up to 2060, and UNDG has completed its transmission project with a total contribution of 350 million euros to EBITDA per year. Finally, Iberdrola Australia was awarded as a transmission line the state of Victoria with an investment of 1.2 billion euros up to 2030. They will increase significantly our footprint and result in the country and we continue developing a pipeline of additional transmission projects in other different states. In power and customer, we invested $5,260 million, well spread across the UK, in the US, Siberia, and other countries. By technologies, we invested $1.7 billion in onshore wind, $1.4 billion in offshore wind, $1 billion in solar, and $1 billion in storage and retail. We have already put in service 2710 MW of onshore and offshore wind, solar, PV and storage. We have 4679 MW under construction, as well as a pipeline of more than 9000 MW ready for 2028. More than enough, of course, to secure all the new capacity expected in our plant. Regarding route to the market, we have also sold all our production for 2026 with an attractive mix of regulated contracts with an average duration of 14 years. Retail customers and long-term PPAs, which already represent two-thirds of our total energy sales, and will continue increasing thanks to the ongoing signature of new contracts. As a result, we have been recently recognized as the leading seller of PPAs in Europe and one of the three largest worldwide. Operating gas flow goes up by 8.2% to 12,811 million euros, reflecting the strong performance of networks and the stable contribution from powers. This rise in cash generation up to 1 billion in just one year, together with asset rotation and partnership and the capital increase of last summer has allowed us to reduce our adjusted net debt by 1.5 billion to 50.2 billion euros even after the consolidation of electricity in the West and acquisition of minorities in the US and Brazil. improving even more our ratios with FFO to adjusted net debt reaching 25.5% and adjusted net debt to EBITDA down to three times. Following this from operation and financial performance, yesterday the board decided to propose to the general shareholders' meeting a total dividend of 0.68 euros per share, adding 0.427 euros to 0.253 euros already paid three weeks ago as interim dividend. These figures represent a year-on-year growth of 6.3% in dividend per share and 3% in total dividend payments. up to 4.5 billion euros, taking into account the impact of a capital increase. I will now hand it over to our CFO, who will present the group financial results in further detail. Thank you.

Thank you Chairman, and good morning to everybody. 25 adjusted net profit. reached 6,231 million euros representing a 10.3% increase compared to the 5,651 million euros in 24 adjusted net profit. Reported net profit was 12% up to 6,285 million euros. 2025 net profit would have reached 6.7 billion euros if capital gains had not been more than applied to adjustments in our power division, and as the chairman has said, mainly in renewables. As the main perimeter change, I have to say, ENW has been fully consolidated since March. Another thing to note for you is that the Mexico P&L and debt is included here for illustrative purposes because in our reported accounts is classified as an asset held for sale due to the expected closing of the transaction very soon. FX evolution has had a minor effect on results thanks to our FX hedging policy. With the dollar 4%, the pound 1.1% and the real 7.6%, all of them depreciated against the euro. Our 6,231 million adjusted net profit is beating our adjusted guidance and is close to the 6,285 million euros reported net profit. In this slide, you can see the details of the adjustments from 25 reported net profit to adjusted net profit. The 379 million exclusion of UK man-meters capital gain in Q3 is more than compensated with the 464 million in adjustments in our power division, which are write-offs in our renewable pipeline. And the network cost recognition, one-off in the US, a non-CAS item, which is taken out from our adjusted net profit, is also partially compensated with inclusion of the CAP allowance in the UK as it is a cash income. Adjusted revenues rose 0.6%, driven by the network business, while procurements fell 0.7%, driving up adjusted gross margin by 1.8% to 24.3 billion euros, and here we are excluding the cost recognition in the US networks. Excluding capital gains from asset rotation accounted at the operating income, and one of efficiencies 25 net operating expenses improved 4.1%, affected by lower storm costs that also diminished gross margin. Adjusted net personal expenses rose 1.9% due to a higher number of employees, as the Chairman has commented. Adjusted external services declined by 5.2%, mainly due to the 350 million euros lower storm costs, and adjusted other operating income increased by 10% compared to 24% due to the indemnities of past year costs partially offset by the 121 million euros negative impact of the East of Anglia sale that it is compensated at the financial results. Excluding mentioned stock-related impacts and other adjustments, net operating expenses on a recurring terms grew 1%. Analyzing the results of the different businesses and starting by networks, its adjusted EBITDA grew 21% to 7,794 million euros, mainly driven by the strong performance of the UK and the US and a significant last quarter improvement in Spain. Transmission EBITDA is up 28% to 1.1 billion euros and distribution EBITDA 19% to 6.7 billion euros. In the U.S., the EBITDA reached $2,491 million, 73% more, with higher rates in distribution and better contribution from transmission, and positive impact since Q1 by the decision from the New York regulator that allows to register a regulatory asset under IFRS regarding past costs of $551 million. Taking out this effect, EBITDA is still up a remarkable 35% on an adjusted basis to $1,940 million. In the UK, EBITDA increased 28.7% to £1,595 million, including 10 months positive E&W contribution and a growing contribution from transmission. In Brazil, EBITDA was up 13.8% to 3.13%, 1,837 million reais thanks to higher revenues in distribution due to demand, inflation and increase in rate reviews over a higher asset base. Transmission contributed positively with 1.6 billion Brazilian EBITDA, 56% up or 583 million reais more than in 24 as all the lines have been completed. In Spain EBITDA grew by 31% to 2015 million. The result was positively impacted by the recognition in Q4 of incentives related to 24 and 25. The remuneration increased for the 24-25 period 6.58% and from the positive effects in Q4-24 of a negative one-off inefficiency cost. 25% Power EBITDA reached 7.9 billion euros versus 8.8 billion in 2024, both excluding capital gains from asset rotation, which are 1.3 billion lower in 2025 as higher production due to 2,700 megawatts additional installed capacity did not compensate lower volumes and prices. Emission-free generation reached 85%. In Iberia, the bid down was 3,121 million euros, a 16.8% down, with higher production more than offset by lower margin and sales, explaining part of the year-on-year valuation, and higher ancillary services costs, lower code rulings, and higher levies, despite the termination of the 1.2% revenue tax, explaining the remaining decrease. Hydro reserves have reached an all-time record of more than 9 TWh as of today. In the U.S., EBITDA grew 0.9%, reaching $1,069 million, supported by higher prices and new solar capacity. This growth came despite the fact that 24 was positively impacted by the Arctic blast storm one-off and by the sale of Kitty Hawk in the fourth quarter of last year. In the UK EBITDA grew 0.4% to £1,536 million, considering the £324 million capital gain from the UK smart meters divestment CQ3. But adjusted EBITDA, taking out this capital gain, was down 20.8% to £1,212 million, with lower prices and lower volumes in renewables, and lower EBITDA from the supply business, driven by lower volumes. Net operating expenses included £108 million negative one-off impact linked to the East of Anglia III sale, which is more than compensated at the net financial results. In the rest of the world, EBITDA grew 10.4% to 796 million euros, due to the higher contribution from offshore wind farms, some in France and Baltic Eagle in Germany, but with lower contribution from supply business in Portugal, due to a 30 million negative impact of the ancillary services costs as a consequence of the blackout. In Brazil, EBITDA fell 2.7% to 1,283 million reais as a consequence of lower production and lower margins, but with a positive impact of 297 million reais linked to the negative adjustment recorded in Q4-24 following the classification of Baixo Iguazu as held for sale. Finally, in Mexico, EBITDA reached US$632 million, decreasing 71% with lower reported contribution due to the asset sold on February 26 last year and the higher contribution from the retained business tanks, sorry, the sold in February 25 last year and with higher contribution last year. from the retained business tax to higher availability and demand. As mentioned at the beginning, the performance of the EBITDA from Mexico is for illustrative purposes, as on the official account is classified as head for sale, so the results are on the discontinued operation paragraphs before the net profit line. depreciation and amortization and provisions, with €524 million of adjustments in 2025 and €1,500 million in 2024, mainly in the power business, increased by 3% to €5,793 million, driven by a higher asset base despite lower bad debt provisions. Adjusted EBIT reached €9.9 billion and grew 3.1% in line with adjusted EBIT. Net financial costs increased by €288 million due to minus €1,863 million, mainly driven by €263 million higher debt-related costs due to €6.2 billion higher average net debt with an impact of €357 million, while interest-related costs and FX improved by €94 million due to FX depreciation, especially of the real and the dollar. Derivatives had a positive contribution of €164 million, mainly due to the East of England III derivative contribution, while the rest had a negative impact, mainly due to the Mexico hedges compensated at the net profit level in the tax line, lower capitalized interest and other items. Cost of debt improved 6 basis points to 4.75%, mainly thanks to lower short-term interest rates, especially in the euro, despite higher interest rates in Brazil. Excluding the real, cost of debt improved 15 basis points to 3.55%. 25 net debt, as the chairman has said, is $1.5 billion lower than the $51.7 billion reported in the 24-year end, reaching $50.2 billion. This positive evolution was given by the 12.8 billion FFO generation, plus the 4.6 billion as a result of asset rotation and East of Hungary III debt deconsolidation, and the 5 billion capital increase, more than covering the 12.6 billion CAPEX, plus the 1.9 billion of Neonegia Previ acquisition, and the 4.6 billion dividend, as well as a 2.2 billion ENW net debt consolidation. As a consequence, our credit ratios are strong for our BBBAA1 rating. Our adjusted net debt to EBITDA was 3.02 times, the FFO adjusted net debt reached 25.5%, and our adjusted leverage ratio was 43.8%, 1.6 percentage points lower than at the end of 2024. Regarding our financing strategy, we delivered a year of unprecedented execution, awarded by the IFR magazine as the best this year in the world in 25. In addition to the capital increase, Eberdrola signed 16.7 billion euros of new financing under highly competitive conditions in different markets. We placed 4.9 billion euros in bonds, achieving several milestones. Our first green senior under the EU green bond standards and IGMA standards. A non-dilutive green convertible with a high savings versus a senior structure ever in Iberdola. Our lowest coupon among all hybrids issued in the euro market in 2025 and the tightest spreads in New Energy and NYSEC. In structure finance, we secured €4.5 billion driven by the East of Anglia III project financed by 23 banks and the Danish Export Trade Agency. We also reinforced our liquidity position with €3.8 billion in credit lines including €2.5 billion sustainable syndicated facility for the holding and avant-garde, which has now become a benchmark in terms of pricing. In multilateral and development financing we added 2.5 billion euros including green funding from the EIB supporting next generation investment and the first green loan granted by the National Wealth Fund to a European company to finance projects in the UK. 25 adjusted net profit grew 10% to 6,231 million euros, while reported net profit rose 12% to 6,285 million. Let me stress again that the net profit would have exceeded 6.7 billion euros if 25 capital gains had not been more than applied to adjustments in our power division. Now the Chairman will conclude the presentation. Thank you very much.