Endesa Aktie

Good morning, everyone, and thank you for joining us today for our First Half 2026 Results Presentation. With me today are our CEO, Gianni Armani; and our new CFO, Daniele Caprini.

Before we start, let me remind you that after the presentation, we will move to the Q&A session. And starting from today, we will only take questions submitted in advance by e-mail or through our website. In addition, given the busy earnings calendar with a large number of companies releasing results today, we aim to limit the duration of the call to 1 hour.

Thank you once again, and now I would like to hand over to Mr. Armani.

Thank you very much, Mar. The first half of the year delivered solid financial results with EBITDA increasing by 20% and net income growing by 41%. This performance reflects growth across all businesses, supported by higher contribution from regulated activities, including both distribution and non-mainland generation.

These results highlight the resilience of all our businesses and the disciplined execution of our strategy. Growth has been supported by continued efficiency efforts, allowing us to improve profitability and maintaining solid financial ratios. At the same time, we continued to accelerate the execution of our investment plan with network remaining the main focus. Overall, the robust operational and financial performance delivered with more than 60% of full year EPS target already achieved, together with a strong visibility that we have for the remainder of the year leaves us well positioned to raise our full year EPS guidance.

On Slide 4, in the first half of 2026, EBITDA increased to EUR 3.2 billion. More importantly, the contribution of our regulated businesses increased from around 40% to approximately 50% of total EBITDA. This reflects the weight of networks and other regulated activity within our portfolio, further strengthening the quality and resilience of our earnings.

The stronger earnings profile translated efficiently into solid bottom line results. Net income reached EUR 1.5 billion implying 45% EBITDA to net income conversion, while EPS increased 46% to EUR 1.44 per share. Lastly, cash generation remained strong with EBITDA to FFO standing at 70%, and FFO to net financial debt, reaching 38%, supporting a strong financial position.

Turning to market conditions on Slide 5. Power prices fell almost 20% despite the energy market being clouded by uncertainty and volatility stemming from the ongoing geopolitical tensions. This decline was partially offset by the significant increase in ancillary services cost since 1 year after the blackout event. The TSO reinforced operation continues to drive up overall system operating costs. In fact, according to external sources, this cost could exceed EUR 5.6 billion in 2026, probably equivalent to the distribution network costs.

Against this backdrop, electricity demand showed a modest growth with largest increase on residential segment, mainly due to temperature effects, followed by services and industrial demand, still affected by the uncertainty of geopolitical scenario. This reinforced our view that further investments in the grids will play a critical role in enabling economic growth supporting electrification and unlocking future demand. In this sense, the Royal Decree approved yesterday and of which we don't have yet the final text, significantly rise distribution investment kept providing additional headroom to accelerate CapEx deployment in the coming years.

As we can see in Slide 6, we continue to accelerate our investment plan with gross CapEx increasing by 14% year-on-year to EUR 1.1 billion. Networks remained our main investment area, representing more than half of total CapEx. This increased investment effort has already delivered operational improvements with lower network losses and TAP remaining at -- or even improving when exceptional weather-related events are excluded.

In renewables, the output reached 11 terawatt hours with 86% of main lead output coming from emission-free technologies. In supply businesses, the total customer base stood at 11.3 million, while free power customers increased to 6.3 million.

The Spanish retail market remains highly competitive, although we expect a more rational environment going forward as regulation tightens and market conditions evolve. Against this backdrop, our retail strategy remain focused on value creation, customer quality and profitability, supported by a more pull-oriented channel mix and the enhanced customer experience.

The customer proximity remains the key differentiator. With a network of more than 370 stores across Spain, we continue to reinforce our physical presence through the expansion of our directly managed commercial footprint, enhancing customer relations and strengthening control over customer experience. At the same time, we continue to drive customer growth in loyalty through our digital initiatives, while leveraging on MasOrange partnership, exploring new opportunities for customer acquisitions and enforcing loyalty and enhancing commercial offering.

Let me now hand over to Daniele for the financial results. Thank you, Daniele.

Thank you, Gianni. Before we begin, let me say that I am very pleased to be joining this call in my new role of CFO of Endesa.

Turning to Slide 8. Let me briefly highlight once more the outstanding economic and financial performance delivered in the first half of 2026. EBITDA increased by 20% year-on-year to EUR 3.2 billion, while net income rose by an even stronger 41% to EUR 1.5 billion. Net financial debt increased by EUR 0.2 billion to EUR 10.3 billion with the net financial debt-to-EBITDA ratio remaining at 1.6x.

Moving to Slide 10. Looking at the main drivers behind the strong financial performance. First, network EBITDA increased by 24%, mainly supported by the new regulatory framework in force since the 1st of January of this year and the effect of positive previous year resettlement, resulting from the update of certain remuneration parameters booked in first Q.

Generation & Supply EBITDA increased by 16%, driven by: first, higher customer EBITDA with the resilience, both in gas and power margins despite ancillary services cost increase, together with an improvement in fixed cost; second, stable renewable EBITDA as the negative price effect from lower references was offset by better volumes and lower fixed cost. Then in conventional generation, EBITDA also rose by 18%, supported by both margin expansion and the cost containment.

Margin increase was driven by EUR 0.2 billion improvement in non-mainland generation margin supported by the favorable regulatory framework, which enable future greenfield investments in this business as well as by prior year resettlements. This was partially offset by the normalization of the gas management margin. Operating costs decreased by EUR 45 million, further contributing to EBITDA growth.

Turning now to our Network business, and I'm now on Slide 11. As mentioned before, the new regulatory framework drove an improvement in earnings with the networks EBITDA rising 24% to EUR 1.2 billion, representing 36% of total EBITDA, Networks continues to increase its contribution to earnings further enhancing the visibility, resilience and the quality of our results. At the same time, we significantly accelerated investment with the network CapEx rising to 38% year-on-year to EUR 0.6 billion. This reflects the increasing needs for grid reinforcement and expansion to support the energy transition and growing electrification trends. This investment for -- is translating into continued growth of our regulated asset base, which reached EUR 11.4 billion, providing additional visibility on future regulated remuneration and reinforcing the long-term growth profile of the business.

Focusing on the retail business on Slide 12. Our retail action plan continues to deliver visible benefits, improving both the efficiency of our commercial model and the quality of our customer portfolio. We are seeing the benefits of a higher share of pool-driven acquisition and the lower cost to serve, reflecting a more efficient and disciplined customer acquisition approach. These improvements are also supporting stronger customer quality indicators. In particular, early churn decreased by 5%, while bad debt levels also continued to improve. Together, these strengths are enhancing the quality, profitability and the sustainability of our retail earnings.

Now I'm on Slide 13 and turning to our integrated power and the gas unitary price margin. The free power margin remained broadly flat in absolute terms, assorting the impact of higher ancillary services cost. Combined with lower liberalized sales volume, this drove the unitary margin up by 6% year-on-year to EUR 56 per megawatt hour.

We also reshaped our hedging approach to achieve a more flexible alignment between generation and supply profiles. This enhanced matching capability to optimize the management of our energy position, strengthening the value of our integrated business model.

Looking ahead, we expect the free power margin to remain in line with our full year 2026 guidance. Meanwhile, the gas margin remained broadly flat. Lower sales volumes dropped the unitary margin to EUR 11 per megawatt hour, up 7% year-on-year.

Our high hedging levels in both power and gas continue to provide strong visibility with limited exposure to market volatility.

Moving to Slide 14. Efficiencies continue to translate into tangible savings with fixed costs decreasing by 8% year-on-year. Efficiency gains more than offset inflationary pressures and the costs associated with business growth, supporting continued reduction in the cost base. This performance reflects the ongoing execution of our transformation program with more than 500 initiatives focused on simplifying the way we work, streamlining processes, optimizing assets and accelerating digitalization.

Across areas, such as workforce optimization, operational simplification, IT and software license optimization, asset management, procurement and commercial activities, these initiatives are already delivering tangible productivity gains. We expect them to progressively materialize throughout the year.

Moving now to Slide 15. Net ordinary income reached EUR 1.5 billion, up 42% compared to the first half of 2025, reflecting the strength of underlying operating performance and positive nonrecurrent effects. This resulted in an improvement in the net ordinary income to EBITDA conversion ratio to 46% from 38% a year ago. D&A and provision remained broadly stable at EUR 1.1 billion as lower bad debt partially offset the increased amortization linked to higher investment.

Financial results improved by EUR 0.1 billion year-on-year. mainly driven by less payment interest income recognized following several favorable administrative and decelerating ruling. Finally, the effective tax rate stood at around 24%.

Turning to next slide. Cash generation continued to be robust with the FFO reaching EUR 2.3 billion, implying a remarkable 70% cash conversion in spite of a transceiver negative effect in working capital. Net financial debt remains quite stable as the strong cash flow generation was almost enough to fund investment needs as well as EUR 1.2 billion of shareholder remuneration, including both the interim dividend paid in January and the share buyback program, which represented the cash flow outflow of approximately EUR 550 million.

It's worth highlighting the remarkable FFO net debt ratio at 38% over the last 2 months as well as the solid leverage ratio, which will allow us to accelerate and capitalize on investment opportunities.

And now I hand over to Gianni for the closing remarks.

Thank you very much, Daniele -- thank you, Daniele. Let me now turn on to a shareholder remuneration and provide an update on our share buyback program, a key pillar of our capital allocation strategy aimed at maximizing long-term value.

By the end of June, we had already completed more than 50% of our 2 billion share buyback program. keeping the execution firmly on track. Indeed, on July 15, we started the execution of the sixth tranche amounting to 500 million, further reinforcing our commitment to enhance shareholder returns. Beyond the attractive effect of the buyback, our commitment to shareholder value is also reflecting the confidence in the earnings outlook for 2026, as shown in Slide 19.

As highlighted earlier, following the strong performance delivered in the first half of the year, including the positive contribution of certain nonrecurring items. And given our confidence in the outlook for the remainder of the year, we are upgrading our 2026 earnings guidance. We now expect new -- net ordinary income to exceed EUR 2.4 billion, comfortably above the upper end of the original guidance range, translating into a higher earnings per share and supporting enhanced shareholder returns.

Before we conclude, let me leave you with some key messages. First, electrification remains the greatest opportunity for Spain. Unlocking a significant demand waiting for connection will require accelerating grid investments, not only to support economic growth and energy transition, but also to improve system efficiency and reduce overall cost -- system costs, particularly ancillary services costs that are needed to provide security for the network.

At the same time, in a volatile commodity environment, and this integrated business model remains a key competitive advantage providing resilience, mitigating market exposure and supporting sustainable long-term value creation.

Thank you for the attention, and we will now open to Q&A session.

[Operator Instructions] We receive a lot of questions for the call that we have tried to summarize by topics. In particular, we received questions from Alberto Gandolfi, Goldman Sachs, Fernando Garcia, RBC, Jorge Alonso, Bernstein, Arturo Murua, Jefferies, Rob Pulleyn, Morgan Stanley, Peter Bisztyga, Bank of America, Jenny Ping, Citi, Meike Becker, HSBC, Pablo Cuadrado, JB Capital, Pedro Alves Mageza, Davide Candela, Intesa and Javier Suares, Mediobanca. Thank you to all of you for participating.

The first one is, could you quantify the impact of nonrecurring items booked on the first half results? I think Daniele, that is for you.

Thank you, Mar. Approximately EUR 0.2 billion of the EUR 3.2 billion EBITDA reported in the first half of '26 was driven by positive nonrecurring items. This included around EUR 0.1 billion in distribution related to the prior year remuneration resettlements and further EUR 0.1 billion in non-mainland generation, primarily reflecting the favorable Supreme Court ruling on historical fuel remuneration.

Beyond the EBITDA impact, these items also contributed approximately to EUR 0.1 billion of late payment interest income positively affecting financial results.

The next question is also on the first half results. Can you explain the evolution of the non-mainland generation EBITDA?

This business delivered a margin increase of approximately EUR 200 million, primarily supported by the enhanced regulatory framework for '26, 2031, which provides for higher return, improve the recognized operating and economic standards. In addition, as I have just commented, this result benefit from the positive sentence recognizing a higher full remuneration for 2020, 2022 as well as from the lower O&M costs registered in the period.

It's important to emphasize that the new remuneration framework for this business is considerably more investment-friendly, enhancing the attractiveness of future investments.

We have received some questions asking for more detail on how the supply EBITDA in the second quarter has increased despite high customer losses and energy costs.

The improvement in retail EBITDA in first half '26 reflects, to a large extent, the benefits of the commercial and pricing action implemented over the past 2 months in our electricity retail business to address an exceptionally challenging market environment characterized by unusually high ancillary services cost. These measures progressively gained traction during the period and were further supported by lower energy sourcing costs, particularly in the second quarter.

In addition, the gas retail business delivered a strong performance, especially in the B2C segment, providing a further contribution to earnings growth. Finally, continued efficiency initiative led to a meaningful reduction in fixed operating costs across the retail business, further acing profitability.

Okay. Next, we have received a couple of questions about the efficiency plan evolution. The first one is how is the efficiency plan progressing? And on the same topic, how artificial intelligence is contributing to the efficiency plan?

Fixed costs in the first half '26 evolved in line with efficiency plan presented in February. As shown on Slide 14, efficiency gains more than offset inflationary pressures and the costs associated with business growth resulting in a continued reduction of our cost base. In addition, we continue to implement further efficiency initiatives that are expected to progressively materialize throughout the year, supporting the achievement of our cost discipline targets.

About the AI initiatives, the efficiency plan is increasing driven by AI initiatives that, at the moment, cover approximately 50% of business projects so far. The adoption is focused on high-value use case across customer operations, network management, asset maintenance, software engineering and cybersecurity workforce productivity and the service quality, operation, operational resins and so on. But some of our most advanced application are already delivering tangible benefits in generation and in distribution, particularly in private maintenance, network monitoring and fraud detection.

The next question is about the hydro. How sustainable is the strong hydro performance in the first half?

Well, hydro performance in first half '26 was slightly ahead of our initial expectation with the output reaching 5.4 terawatt hour, particularly not the contribution from pumped storage facilities up 29% versus first half '25. The strong hydro contribution provided additional support to generation earnings and overall integrated margin during the period. Looking ahead, our outlook remains constructive, but fully consistent with the business plan assumption of favorable either hydro year in 2026.

Reservoir levels remains healthy and comfortably above the 10-year average, providing good visibility for the remainder of the year.

Okay. We move now to the hot topic of the call, that is the update on guidance. The first question is what gives you confidence in upgrading net ordinary income target?

We are upgrading our net ordinary income guidance on the back of a strong first half performance, combined with the good visibility on the expected evolution of the business for the remainder of the year. The first half of the year delivered solid results supported by positive operational performance in all business lines. In addition, we benefit from nonrecurring positive effect both at the margin financial results left, which were not embedded in the guidance range presented at the Capital Markets Day.

Taking all these factors into account and based on our core current expectation for the second half, we now expect net ordinary income to comfortably exceed the upper end of our guidance range. We are very comfortable, and we see during the second half, what will happen, but we are very, very comfortable.

Indeed, the following question was precisely about the main operational drivers for the second half.

Well, the drivers are more or less the same. We don't expect any change on these drivers. But operationally, we expect the second half to follow a trajectory broadly similar. In distribution, non-mainland generation, we will continue to benefit from the positive impact of the updated regulatory framework applied to a growing asset base.

In the liberalized business, we expect to maintain free power margin broadly in line with the first half '26 level, landing at approximately at 44 -- EUR 54, EUR 55 per megawatt hour by year-end, almost notarizing higher-than-expected and similar service costs, which we estimate will have a net impact lower than EUR 100 million in full year '26.

Regarding the gas margin, after the good results recorded in the first half, we expect certain moderation in the coming quarters, according to the seasonality of the business.

An additional question is if Endesa could capture any upside from higher wholesale power prices expected for the second half of this year?

Very limited, if any, our marginal generation is effectively fully hedged through fixed price sales to our customer base. As a result, higher price will have a little impact on full year '26 earnings.

Okay. On a different topic, and I think this is a question for our CEO. Some analysts are asking if following the recent management changes in Endesa, do you expect the current strategic plan to remain unchanged? Or could there be some adjustment in the next Capital Market Day?

Currently, our strategy drivers remain unchanged. Clearly, investors expect continuity and our focus is in delivering the most out of the strategy plan that we have presented at the beginning of the year as a group is Endesa. We clearly will communicate a new investment plan in a Capital Markets Day at the beginning of 2027 with renewed market developments and the new regulatory trends. But of course, our focus is -- continues to be in the same directions with slight adjustments even in the future.

Okay. Regarding the share buyback program, we have received 3 different questions. The first one is if we are committed to complete the current share buyback program, Second is if we continue to purchase shares considering the current price, it makes sense or not. And finally, if we plan to launch a new sale buyback program after the completion of the current one.

Very briefly. Very briefly. Very briefly, as we shown in Slide 18, we are fully committed on the plan. The plan is clearly on track. We believe that the investments still remain value accretive given the performance that we are delivering on the results for the year and for the future, and represent an attractive use of capital. The outstanding shares that we canceled enhanced earnings per share and support higher dividend share per share, providing an attractive return for shareholders. And lastly, we actually are not thinking to launch an additional plan and the no extension of the current plan is currently under consideration.

Most of the analysts are asking for our view on the royal decree recently approved. Indeed, it was approved yesterday, which increased the cap on the network investments.

Yes, the Ministry with this decrease, fully aware that electrification is enabled by extension of grids. And this allows both electrification and the change of production mix that is in progress in Spain. Large part of the network are close to saturation. And this clearly is -- is a problem to be solved in order to unlock economic growth.

The new version of the royal decree even though we don't have the final text they should be published today or tomorrow, we believe, includes a significant improvement of initial additional cap that allowing up to EUR 10.2 billion of investments in distribution in the years between 2027 and 2030, versus the EUR 7.7 billion that we had in the initial draft. This is going clearly in the right direction, providing greater regulatory visibility and level and also locating network investments with a view until 2030.

Of course, this is the main focus of our strategy, and we believe that this is the right direction the regulatory framework is going.

We have 2 additional questions also related to the grid. The first one is what's your opinion on the new capacity reservation regime setting the royal decree law 7. And if we expect further regulatory intervention to free up grid capacity.

Yes. Of course, in demand and supply of grid capacity is creating grid tension. So in this -- the correct availability of capacity. This regime is clearly under review from the ministry and Royal Decree 7 of the beginning of the year has intended to modify the balance of the market, imposing new additional burden for speculative connection requests. Unfortunately, the released capacity for the application of the decree has been limited to 1.2 gigawatt in distribution and 1 gigawatt more or less in transmission. And this is not very much compared to the 45 gigawatt that are the outstanding request for capacity only in distribution.

We see that, of course, this situation will evolve. But the real solution for the -- in this tight market is by to expand distribution capacity and accelerate investments in this aspect.

Do we expect the future and further regulatory interventions?

This might be is clearly the allocation of capacity that is not effectively used is clearly an efficiency and inefficiency that the regulator has to validate and to adjust. There are several ways that can be done, and we are starting together with the Ministry ways to solve this issue.

Next, an update on data center. What is the main bottlenecks for the development? And which is the approach to this business?

Clearly, data center is going to be an infrastructure that will enhance productivity and has a potential to expand electrification together with being an intensive user of energy. Beyond the investment impact that may have on our grids and clearly being a potential customer. It's really important to facilitate the expansion of this kind of infrastructure in the system, and we expect the deployment gradually even in Spain, with a good visibility over the 5 and 10 years of the commitment of investments with a growing pipeline that we see in the sector.

The next question, what are the latest news on the Spanish blackout?

The administrative proceedings remain at the early stage. And at present, there is no visibility on the final outcomes. On this basis, we -- we don't assume any financial impact in our numbers. Indeed, these proceedings mainly related to historical technical compliance matters and do not establish a responsibility and a link between the behavior of specific infrastructures and plants for the blackout day.

The opening of the investigation does not imply in and pressure is -- and therefore, an outcome, specific outcome. We have already submitted all our allegations and continue to defend our position vigorously. The process is expected to continue for several months or years and potentially for a very long period of time, at this stage. And we believe it is important to separate the headlines from the actual risks.

Our view is that the blackout was a system-wide multifunction -- a multifactoral event linked to the voltage control system operations, and the increased complexity of managing a power system with renewable penetration. In this sense, the Spanish system is at the edge of the innovation in the transition, and this is experiencing new situation so that requires a different investments.

Since the incident, the system operator has introduced a number of changes, particularly in introducing enhanced voltage control requirements, additional stability mechanism, a more conservative operating procedure aiming at strengthening system security.

The fact that these measures were considered necessary suggest that the previous network framework and scope had a possibility of improvement in addressing the risk and that ultimately has materialized.

At Endesa, our position is unchanged. We maintain that our asset operate at full compliance and with applicable regulations during the event. And therefore, at this stage, we do not see grounds to assume any material financial impact.

On cost-based valuation, we see that now it's very important to prioritize an investment plan that solves the transitory operational system that has been -- that is operating -- that is operated by the cost of ancillary services is becoming an important cost for the system, and this requires a long-term solution.

Okay. Thank you, Gianni. I think that we can move to a different cluster. We have received some questions about the retail competition in Spain. In particular, the first question is in terms of customer evolution, the evolution also of the term rates or the margins in our business.

As expected and represented in the presentation, the Spanish market, the retail market remains highly competitive with increased customer mobility and the pressure from new entrants. Despite this, Endesa continue to deliver solid profitability, supported by commercial discipline and customer redemption initiatives and improved customer mix.

We have streamlined our sales agent network, removing channels associated with higher churn levels. Although this in the short term has a negative impact on customer volumes. This is explained with the enhanced portfolio quality that we are obtaining and support a more stable customer base over the medium term.

And the shortfall of clients' acquisitions in reality has a limited impact on the numbers of the retail business. In the market, there are already seeing signs of more rational and competitive environment. helped by the recent regulatory measures and higher ancillary cost that limit unsustainable pricing practices.

Going forward, we expect competition to becoming progressively more balanced and the less stable positions to fall into distressed one.

Okay. Indeed, we received a follow-up question, that is what's your view on the tighter regulatory framework for energy retailers?

We believe that a robust regulatory framework is essential to ensure healthy competitive and financially sound retail market, this is going in the right direction, improving also the relation with the clients in the sectors.

Okay. We have one question on the inland business. Will you participate in the new capacity auction?

We are currently reviewing the details of the tender and submitting our allegations in order to improve the conditions of the tender. And of course, allowing the tender to be successful. This will be by the beginning of August, the submission of our allegation.

The auction confirms the need of additional capacity, firm capacity in non-Mainland systems. This could unlock investment opportunities for us. And of course, for competitors, we are positioned very well to contribute to the future of non-mainland generation business, and we are aiming to do so.

Okay. Another hot topic of the call is related to the status of the nuclear extension request.

Regarding the extension of the operating license of Almaraz until 2030, the Nuclear Security Council has just finished its technical assessment issuing a favorable opinion, confirming that Almaraz can continue operating safely under the highest technical standards until 2030. The file of this process, procedure will -- is now in the hands of the ministry that will be responsible of taking the final decision that we expect before the end of the year.

Okay. We have now some questions on different topics, renewables. The first one is if do you see still attractive investment opportunities in renewables under the current market conditions?

The economics of a stand-alone solar projects are becoming more challenging due to the lower capture price and an increased price cannibalization, and a growing number of 0 price hours rising of curtailment. All these is clearly showing not favorable perspective for these kind of investments.

As a result, the project selection and the asset configuration have become increasingly important. The market is shifting beyond the standalone renewables towards an integrated energy management model, where the combination of renewable storage, flexibility, and customer solution create clearly a greater value. In this environment, Endesa like other integrated utilities well positioned.

Next, and looking ahead, do you see a scope for additional investment on storage?

Clearly, storage is becoming an increasingly strategic component of Power System and important enabler of renewable integration. On top of the pumping storage already in our mix. We are also strengthening our commitment to batteries and hybridization of plants. Our -- in our business plan, we have increased significantly the planned investments with a sizable pipeline of EUR 300 million, more or less 400-megawatt battery capacity.

And the last 1 of this cluster, are you seeing acquisition opportunities in renewables.

We see increasing opportunities emerging from market consolidation, particularly in renewables. Some of the smaller developers and players face pressure from lower merchant margins and returns, financial constraints and the limitation of scale. We will assess this opportunity, as always, with a selective approach.

On the macro context, how is Endesa's exposure to the current geopolitical scenario?

In reality, our exposure is currently very, very limited. The resilience of our first half results of 2026 are a proof of it. We are fully in line with pre conflicting expectations, actually, more than these expectations. This demonstrates the strength of our business model, and we do not currently anticipate any material impact on the performance for the remainder of the year.

Next...

Let me add one thing. We actually can view in this situation, the value of -- that has been created by the sector in the energy market in Spain. Broadly across Europe, the impact has been significantly strong even in the electricity sector in Spain -- in reality, the sector has created a shield over this geopolitical tension. And despite the recent price volatility we assume -- we estimate that clients have been protected from an increase in the energy cost up to EUR 3.5 billion in the first half of the year. which is a significant protection given by the sector and the smart investment strategy that has been adopted in the last year.

Okay. In this context, as you concern about the possibility of new extraordinary taxes on utilities?

We see -- we don't see a risk of further market intervention in Spain, prices have been stable and there is no extra profit to extract from market speculation that has been adopted in Spain.

We have one question regarding the capacity payment mechanism. When do you expect the first auction to take place?

The approval of the mechanism is clearly in line with the trend that -- of a regulation in Europe. The need for stable firm capacity even in a scenario where renewables are prevalent is still very important and guaranteeing stable revenue stream more similar to a regulatory scheme is important to guarantee this firm capacity. We expect the first auction by the end of the year as probably the Ministry is planning to work on it.

Next, what's your view on the new European Commission regulatory proposal?

We see the initiatives that have been taken both on electrification plan and ETS reform, in line with the strategy that has been adopted by EU, reinforced by the need of that electrification drives that is allowing energy independence for the continent. And of course, electrification plan reinforces the strategy towards electricity and enhancing the capacity target, the consumption target in 2040 to 46% versus current 23%.

This is perfectly in line with our strategy and not only ideologically but also economically make sense.

The last question concerns the wildfire thing in recent days and the potential impact.

Wildfires and exceptional events are more and more frequent across Europe, in particular, in areas, in geographies like Spain. This is clearly an emergency that requires a different organization to manage these emergencies, and also requires planning of infrastructure in order to be more resilient. All these events put a huge strength on infrastructures and particularly energy infrastructures like electricity and the requirement -- the technical requirements in terms of redundancy resilience needs to be upgraded, some regulation, some markets have already moved to reinforce the regulation in this sense.

Okay. With that, we conclude today's presentation. So thank you very much for taking part of this conference call. As always, Investor Relations team will be available for any follow-up questions. And just to wish you all a wonderful summer break. Thank you very much.

Hello. Good evening, everyone. Today's First Quarter 2026 Results Presentation will be led by our newly appointed CEO, Gianni Armani, whom we warmly welcome today, together with 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 Mr. Armani.

Thank you very much, Mar, for your kind welcome. I have only recently taken up the role of CEO, and I would like to ask you the indulgence for a brief settling in period.

For this reason, during the Q&A session, we'll take a slightly secondary role, giving the floor to our CEO -- CFO that will answer to all your questions professionally. Thank you very much for the understanding. The quarter delivered solid financial results with EBITDA growing 14% and net income rising 24%.

The performance was primarily driven by the distribution business, which continues to demonstrate its strength, supported by effective and disciplined management, and of our grid and in the environment of the new regulatory framework. Once again, the period highlights the resilience of Endesa liberalized business model despite the environment shaped by the geopolitical uncertainty, the ongoing volatility of the energy markets, our strategy has enabled us to deliver consistent and robust results.

Finally, the quarter highlights the strategic importance of a well-diversified energy mix where renewables and nuclear generation, along with demand electrification remain a key to strengthening the energy independence and ensuring price stability.

These pillars are essential not only for the energy transition, but also for increasing the resilience and the reliability of the systems. And I would add to contribute to the growth of Spain as a country. The strong operational and financial execution provides the necessary visibility and the confidence to confirm the full year guidance.

With that, I will turn to the operational and financial developments of the period. On Slide 4, let me briefly comment on the operational evolution during the quarter. Starting with generation. The total output increased by 8% year-on-year, reaching more than 14 terawatt hours.

The performance was primarily driven by higher renewable production, which rose 18% compared to first quarter last year. Hydro output increased 13%, benefiting from a very favorable rainfall conditions during the period, while our reservoirs stands at record levels.

At the same time, wind and solar output grew 24%, supported by both higher installed capacity and solid resources conditions. Nuclear output was slightly lower, reflecting the scheduled [ refueling ] outages. Overall, the generation from non-emitting technologies, including nuclear, accounted for approximately 87% of total Peninsula production.

At the same time, CCGT generation was materially higher, benefiting from the increased demand for backup services for the TSO. Meanwhile, the sales slightly decreased by 5% to 18 terawatt hours, mainly driven by lower index volumes on Iberia, mostly B2B customers more exposed to market uncertainties and fixed price sales remained stable instead.

Finally, the number of free power customers grew by 3% year-on-year to 6.4 million, including the contribution of Energia Colectiva, which added just about 300,000 customers on power portfolio. From the market perspective, I'm now on Slide 5. The current geopolitical tensions around the Strait of Hormuz have once again placed the energy market on the forefront of the debate.

While the distribution of commodity supply routes is certainly affected affecting the global markets as far as gas is concerned. Strong U.S. LNG flows into Europe have limited the impact if you see it on the quarterly pricing levels compared to last year. TTF spot price averaged around EUR 40 per megawatt hour in first quarter this year, representing a 15% decline year-on-year.

At the same time, the CO2 prices reached EUR 76 per ton, up 4%. This evolution is particularly linked to -- is not particularly linked to the energy crisis, but more into structural factors linked to the progressive tightening of EU ETS mechanism and the introduction of the carbon border adjustment mechanism, the CBAM.

As a result, the average variant pool price in the first quarter stood at EUR 44 per megawatt hours, down 48% year-on-year. This notwithstanding the conditions -- the crisis conditions on the commodities. This comparatively low price levels has helped to contain the power bills, absorbing the impact of exceptionally high ancillary services cost driven by the TSO reinforced operation in dispatching since April 2025 blackout.

From a cross-country perspective, Spain average price remains very competitive when compared to main European economies, underscoring the reduced exposure to volatile prices, thanks to the higher share of renewables energy sources and a reliable nuclear fleet that contributes to reduce exposure.

On Slide 6, we review the demand evolution trends. Electricity demand at the start of the year keeps showing a growth trend consistent with the previous quarters. On adjusted basis, mainland demand grew around 1% year-on-year, which compares to 1.7% demand increase in Endesa areas, mainly leveraged on a steady contribution from services business and residential consumption.

The weak performance of industrial sector appears linked mainly to the uncertainty on the geopolitical scenario. In this context, the high level of network congestions across all major distribution nodes remain a critical concern for the future. As of April's last available figures, Spanish power grids saturation reached 90%, which largely hinders the connections of all these new demand vectors. It is clear that to unlock the potential that contains the total cost of energy, grid bottlenecks and inefficient system operations should be solved.

Therefore, efforts must be focused on providing a comprehensive framework to foster required investments in distribution for network security and voltage management. I will now hand over to Marco for the financial results. Thank you.

Thank you, Gianni. So turning to Slide 8. You can see the solid financial performance delivered in the first quarter of 2026. EBITDA reached EUR 1.6 billion, representing a 14% year-on-year increase, like Gianni was mentioning, while net income amounted to EUR 0.7 billion, up a strong 24% compared to last year.

Net debt increased by EUR 0.5 billion to EUR 10.6 billion with the net financial debt-to-EBITDA ratio remaining stable at 1.8x. Moving now to Slide 9. If we now focus on the main drivers behind the strong financial performance, EBITDA reached EUR 1.6 billion, up 14% year-on-year, supported by, first, the Networks EBITDA increased by 45%, representing approximately EUR 200 million, mainly supported by the new regulatory framework and the effect of positive previous year settlements from the update of some remuneration parameters.

Generation and supply EBITDA remained almost flat, driven by, on one side, stable renewables EBITDA that reflecting better volumes in the quarter, offset by the negative price effect from lower references. On the other side, flat customer EBITDA with resilience in gas business and power margin stability, although impacted by higher-than-expected ancillary services costs as we commented before.

And lastly, in conventional generation, EBITDA was almost flat with the normalization of gas management margin offset by progress on the efficiency plan. Now on Slide 10. These dynamics are reflected in the performance of our integrated power and gas unitary margins. The free power margin amounted to EUR 54 megawatt hour, remaining flat year-on-year despite higher ancillary services costs.

Meanwhile, the gas unitary margin stood at EUR 10 per megawatt hour, broadly in line with expectation as it began to normalize from the exceptionally strong levels recorded last year. Moving now to Slide 11 for the below EBITDA. Net ordinary income came in at EUR 0.7 million, 24% up versus the first quarter of 2025, reflecting strong operational performance and improving the net ordinary income to EBITDA conversion ratio to 44%. D&A remained flat at EUR 0.6 billion as the lower bad debt offsets the increased amortization linked to higher investments.

Financial results, almost flat year-on-year, lower cost of debt on one side that offsets the increase in average gross debt. And finally, the effective tax rate stood at around 20.5%.

Turning to the next slide. I'm on Page 12 now. Cash generation remains strong with funds from operations standing at EUR 1 billion and a cash conversion ratio of 65% FFO to EBITDA. Over the period, net financial debt increased by EUR 0.5 billion, up to EUR 10.6 billion. This reflects dividend payments of EUR 0.5 billion, together with the execution of the share buyback program, which generated a cash outflow of around EUR 300 million. Gross financial debt rose by EUR 1.2 billion, while the average cost of debt improved to 3.1%. And now I hand over to Gianni for their closing remarks.

Thank you, Marco. As we look at 2026 as a year, we do so with confidence in the strength and resilience of our business model, reflecting a solid visibility on earnings across all activities. We confirm our targets for the year in an EBITDA in the range of EUR 5.8 billion, EUR 6.1 billion and net ordinary income between EUR 2.3 billion and EUR 2.4 billion supported by the following business drivers.

First of all, generation and supply performance is sustained by a resilient model, that relies on efficient hedging strategy, significantly mitigating the exposure on market volatility and enhancing earnings abilities. In network, results are driven by the new regulatory framework that gives certainties and by a successful management of the grid with a continued focus on quality and reliability.

At the same time, we remain fully committed on efficiency that is a key driver to generate value, progressing steadily and in delivering an efficient and effective plan. To conclude, the presentation, we would like to highlight the priorities that need to be addressed in order to meet the upcoming energy challenges.

The current global context reinforces a clear message, accelerating electrification and renewable development, efficient renewable development within decarbonized mix is the most effective way to protect consumers and economies from geopolitical shocks, particularly in Europe.

Electrification is not only central for the energy transition and for the environment, but also to long-term affordability, resilience and security of supply. In parallel, investments in electricity networks need to be accelerated to accommodate structural demand growth and to ensure system reliability.

Grids are the bottlenecks of the transition, enabling renewable integration and strengthening overall system security. To make this possible, regulatory support is essential, in particular, approval to increase investment cap is critical to unlock CapEx required in distribution network and stability of regulation is even more important. Thank you for the attention. I will now hand over to Marco for the Q&A session.

[Operator Instructions] We'll start with a round of questions from our analysts, starting with the first question coming from Pedro Alves from CaixaBank.

Three, if I may. The first one on the Spanish royal decree on the grid investment cap. Can you tell us the current status of the royal decree, the approval process? Has there been any formal engagement from you with the ministry since the CMD?

I want to ask if you see a risk of the decree being eventually delayed? And if so, how would that affect your regulated asset base expansion trajectory towards your 2028 target? Second question on ancillary services. We are not seeing any sign of normalization in technical restrictions. Actually, [indiscernible] electric data show quite the opposite.

I think there was actually another important increase in the previous months. So are these costs evolving according to your expectations in the plan and in your guidance? And how is this impacting your retail margins basically and also the extra costs are being progressively recovered in terms of customer pricing? And last one, very quickly, just a clarification on the distribution EBIT. Can you please quantify the effect of the settlements corresponding to previous years?

Okay. So thank you very much, Pedro. And let me take the chance just to thank all the people connected now. It's very late. It has been a long day for you guys. I know a lot of events and together with us. So thank you very much. Pedro, on the Spanish Royal decree, we do expect to have news on that, I would say, if not before the summer and after the summer.

So in any case, during this 2026. I guess that what we are seeing after the publication of the congestion on the different nodes in the -- around the cities, but in the different [indiscernible] autonomous clearly reflects the need for a development of CapEx on the distribution side and on the transmission side.

So we guess that this should somehow trigger this decree that has been announced by the government last year. So I mean, we do expect this either before the summer or right after the summer. Question number two, regarding the ancillary services. So yes, you're right. There is -- there are no normalization signs. Actually, all the opposite. Now we should remember 2 things that in the first quarter of last year, we had no blackout. So of course, in January, those tends to be months of deep impact because prices tend to be a bit lower.

So generally, the cost of ancillaries tend to be higher. Having said that, this level of costs, it's somehow higher than the one that we were foreseeing. So I would say that on one side, this is slightly higher. But then on the other side, I guess that if you look at the results of the first quarter, the operative performance of the group, it's really, really strong. So despite this, that's probably the only thing that is going not as expected.

I mean, all the rest is really compensating the rest. And regarding distribution, I mean, just to give you an idea, the level of extraordinary there, it's around EUR 100 million. So if you have to net that also on the number that you have this quarter lands at 1.5 in terms of EBITDA. So I mean, also that, I guess that it's a good indication of the good performance of the company.

Next question comes from Javier Suarez from Mediobanca.

Congratulations to the new CEO. I have 3 questions. The first one is on the demand evolution on Slide #6. I'm interesting to see the underlying trends that you see on the market that justify the continuous increase on electric demand that we have seen in 2025, also in 2026.

And in this context, if the company can update us on any ongoing discussion with upscaler for the development of new data centers. Then, second question is on the details on network saturation. If you can give us your latest detail of that level of network saturation in the distribution network that can justify the increase on the existing regulatory caps on CapEx.

And the third and final question is on the guidance that has been affirmed today. After a very strong first quarter of the year. So the net income is representing more than 30% of the full year target. So I'm just [indiscernible] myself the reason why the company is maintaining that existing guidance. Is that for the sake of being conservative at the beginning of the year or there is any element that we should consider that should be making us being a little bit more conservative in the next few quarters.

Thank you, Javier, for the clear questions. I will try to be clear as well. So on Slide #6, regarding the -- what we are seeing on demand, I guess that just to give you a bit more of color, what we are seeing, and it's there is that the problems on the Strait of Hormuz and the war is somehow impacting strongly industry.

So on the industry side, there has been a clear signal of reduction of demand. While on the other side, you know that the trends below the residential and services are still very strong and do not depend on that.

On the data centers and hyperscalers, I guess that here, the news is that the new decree that somehow is trying to take away from the current demand, the capacity demand that has been allocated, the projects that do not have a real execution phase or that are not so much decided yet. We think that all this should somehow allow for the good project somehow allowing some space in the grid and therefore, giving potentially faster, more space to project like the serious one on -- coming from the hyperscalers.

So I mean, that should -- we should see this probably in a few months. But despite this, we still believe that clearly, in the congestion, I go to the question number 2, the congestion level all around Spain, particularly around the big cities, but now it's in an entire community, the community that is autonomous is so high, passing the 90% that basically the need for new investment is there and should be done.

So we see positively the new Royal Decree because somehow it's trying to tackle the problem short term. But, I mean, this -- somehow we have to take the chance just to do CapEx and resolving also problem medium and long term. And regarding question number three, on the net income, well taken. I mean, the short answer is we are conservative. This is the first quarter. So I mean, it's -- I guess that it's early just to discuss about whether reviewing the 2026 targets.

Clearly, I mean, the quarter has been very solid. And therefore, I mean, it's -- but still, it's only the first quarter, so let's wait. Thank you.

Okay. We move now to the next question coming from Javier Garrido from JPMorgan.

I will have 2 questions. The first is on the impact of the higher cost of ancillary services. There is a trade-off in between higher generation revenues and lower supply margins, but I would assume that you will continue as you did last year to increase prices to pass through the high ancillary services cost.

Is that a fair assumption? And if yes, when do you expect to neutralize the impact of the higher ancillary services costs on the integrated margin? And the second question is if you could quantify what would be the impact for Endesa from the suspension of the generation tax in Spain?

Okay. Thank you, Javier, for the 2 questions, actually, almost 3. So on the higher cost of ancillaries, yes, you're right. I mean, as we said, it's a bit higher of what we were thinking. As you know, we basically are somehow marginally exposed because on the other side, on the generation side, we do not recover all of this.

We are almost 30% of the market when it comes to as a supplier. So we bear the cost, 30% of the cost of the system. While when we move to the ancillary services, it's probably half of that. So there is always kind of an exposure. And I would say that probably this is just to quantify, I mean, still for the -- on the quarter, it's a low number. It's a few tens of million euros.

But I mean, that's the difference. And despite this, the result of the quarter has been very good. When it comes to how long does it take just to neutralize all of this, I guess that, unfortunately, it takes time. So I mean, we started to do that, but we are exposed. And as we said when we presented the business plan, we were seeing this somehow recovered at the end of the plan. So it takes us -- it's not a matter of months. It's not a matter of years. So it will probably take a couple of years just to do that. And when it comes to the last one being -- on the generation tax, yes.

So on the generation tax, basically, all the changes that has been done kind of neutral to us. The generation tax estimation is also there, I would say, when it comes to compensate this effect that I was mentioning on the higher ancillary costs. So also there are a few tens of millions. Thank you very much, Javier.

And now we have Rob Pulleyn from Morgan Stanley.

Welcome to Gianni. The first question, can you just clarify something? You mentioned a circa EUR 100 million, I suppose, one-off network resettlement. Was that anticipated in guidance to be recovered this year? And just to understand whether that sort of contributes to the guide to the full year cover or not.

And to be honest, actually, I think the other questions have already been asked, so I'll leave it there.

Rob, so thank you very much for the question. So I would say that we were not expecting this level when we set the guidance for the 2026, just to be clear on that.

Let me add what is the source of this, let's say, anticipated or nonanticipated coming. We worked a lot on transparency of our regulatory certifications. And this has effectively an impact on the years that have been certified.

And we have, let's say, a recovery of the certification of the previous years that is coming with a slight delay, and that is -- the last one was what year?

The last one was 2022, and we have now a proposal of a final settlement, 2023.

And so we have been working a lot on our documentation that we sent to [indiscernible] CSA and this is starting to work out. And the other element is linked to the change in the incentive scheme based on quality and losses, which, of course, is a pie that has been shared between all the different players in the market. And so part of this depends on our performance, but also on the performance of the others.

By the way, guys. So I mean, that -- I guess that truly shows how it is on the ball, our new CEO. I mean, so fully -- absolutely full is my previous activity.

Exactly. And on the other side, that also shows how beautiful it is to go live on this stuff such as to really get a feeling on things.

Next, I guess that is the last question from the call is Alberto Gandolfi from Goldman Sachs.

Welcome, Gianni. Two questions. One is on the churn rate. Can you tell us what are you seeing lately on the churn rate? Is there an acceleration before the phone for a lack of better word, poaching is about to end or quite the opposite has like the volatility in commodities, which has not really impacted electricity prices in Spain, but has that had an impact on the churn rate?

So if you can tell us what's going on and what you think is going to happen in the next few months? And the last one, just to be really, really, really clear, networks. Last year, in the full year, you had about EUR 100 million, let's call it, kind of nonrecurring, another EUR 200 million. So I'm trying to understand what is really the earnings power of this business before one-offs, regulatory compensation from previous years.

Should we think this year underlying as EUR 2 billion to EUR 2.1 billion EBITDA, and we use this as a basis for forecasting future years. So it's quite important we managed to clean this up, if you don't mind.

Thank you, Alberto. And so on churn, yes, we have seen in the market a super high level of churn, and we were anticipating that given the new Royal Decree that somehow will try to prevent the level -- the high level of fraud that was in there.

And given that it gets into operation in a few months, I mean, the level has been very high. Now very, very recently, we are seeing this changing a bit. So it has been spiking and now just reducing. I don't know whether they are preparing for what it is about to come. And then on networks, yes, you're right. When we presented the plan, we basically carefully set as a new reference, approximately EUR 2 billion for networks because there was -- there were EUR 100 million of extraordinary there, just to set the new number. I would say that probably now you can assume the EUR 2.1 billion you were somehow mentioning.

Okay. At this point, we have tackled all the questions. I have received some through the web, but most of them have been addressed. Yes, one follow-up question coming from Pedro [indiscernible] , JB Capital, okay? He's asking about the evolution of the ancillary services, in particular, the cost of the ancillary service during the first quarter. How do we expect the evolution during the year? And if we have in mind if it should be passed as a regulated cost...

Okay. So thank you for the question. I mean here on ancillaries, I mean, we were mentioning before. The first year -- the first month of the year generally are the ones with the higher impact. So particularly when the cost of electricity is kind of lower, you can clearly see at Page 5 in February, for example, but also somehow in March.

So it tends then to go -- to get lower along the year. So we do expect that the evolution will be probably very similar also to the other -- with the same seasonality that we have been seeing also last year. And in terms of whether this could be regulated, I mean, yes, we think it should be.

I mean, there has been, I guess, on this at least 80 suppliers that have been somehow making this proposal. It is like this in the rest of Europe, apart from Portugal and Spain. And particularly now, I guess that it's pretty much evident that this is a cost of the system, not really a cost of the suppliers or somehow to be borne by the suppliers. So thank you.

Okay. With this, we finish the presentation, just to thank you for your participation. And as always, the IR team will be available in case you have any further questions. Thank you very much.

[Interpreted] Good morning, ladies and gentlemen, dear shareholders. I would like to thank you all for your attendance, whether in person or online at this General Shareholders' Meeting. On behalf of the Board of Directors, and on my own behalf I would like to welcome you all to this event. I would also like to thank all the shareholders who have participated in this meeting through their vote or remote proxy.

Remote voting and proxy mechanisms as well as remote participation, facilitate, encourage and enable active participation at this GSM by all shareholders who wish to do so but are unable to attend in person. We must now verify compliance with the legal requirements for the valid convenience of this GSM.

And I'll give the floor to the secretary, who, together with me, will exercise the powers of management provided for in the meeting regulations.

[Interpreted] Thank you very much, Mr. Chairman. Good morning. Ladies and gentlemen, it is hereby stated for the record that in Madrid and Endesa's registered office, Calle de la Ribera del Loira 60 at 11 a.m. on April 28, 2026, the GSM of Endesa is scheduled on first call as convened by resolution of the Board of Directors dated March 24, 2026. The notice of the meeting was published on March 26, 2026, in the official gazette of the commercial register on the company's website and on the website of the National Securities Market Commission.

The text of the notice of meeting is available to both the shareholders present at this room and those participating remotely and it is therefore deemed to have been read for all purposes.

The Board of Directors agreed to require the presence of a notary public to draw out the minutes of the GSM for this purpose, Mr. Francisco Javier Gardeazabal del Rio, Notary Republic from Madrid is present with us and will be responsible for drafting the minutes of the meeting. Since the publication of the notice of the meeting, the proposed resolutions prepared by the Board of Directors regarding the agenda items and the corresponding reports have been available to shareholders on the company's website on a continuous basis and also at the company's headquarters in Spain.

Also today, the information is available in paper format or via USB drive for those who are physically present in this room, it is also available in PDF files and we are linked to the website for those connected remotely. Therefore, the aforementioned information is meant to have been read for all purposes.

We wish to inform you that an independent expert is conducting a review of compliance with the procedures for convenient holding this meeting, which includes a review of the vote in a proxy process. Pending the conclusions of the final verification, the systems and procedures applied by Endesa are in accordance with current regulations regarding shareholders' meetings.

Finally, it should be noted that a provider of certified electronic publication services has verified as of the date of publication of the notice of the meeting and person to law, the posting of the documents on the website of Endesa. There -- an interruptive maintenance on the aforementioned website, their availability with the option to download and print them and all such documents have remained unaltered.

Furthermore, the availability and operation of the live streaming service for this meeting are being verified. The following is a breakdown of the provisional quorum data. In attendance, either in person or by proxy, are 4,096 shareholders, holders of 895,841,248 shares representing 85.994% of the subscribed share capital with voting rights from which it follows that a sufficient quorum is available for the valid convenience of this GSM and to address all items on the agenda.

Once the counting of the votes is completed. And before the Q&A session, we shall read the figures of the final quorum. Mr. Chairman, you have the floor.

[Interpreted] In view of the data read by the Secretary, this GSM is validly convened under this chairmanship and as assisted by the secretary without [indiscernible] still the subsequent preparation of the final list of attendees. The voting channel for shareholders attending this meeting remotely will remain available until the secretary finishes reading the proposed resolutions.

The presiding Board is comprised of the members of the Board of Directors who are attending in person and those connected to this meeting via audio conference in accordance with Section 7 of Article 10bis of the General Meeting Regulations, the notary now has the floor.

[Interpreted] Adequately ensure the quorum of the meeting. Dear shareholders, if there are any objections regarding the provisional data that we have just disclosed on the valid constitution of the meeting, please approach this table or do so by not using the online attendance application for proper recording. Mr. Chairman, having verifying all the relevant information, there are no objections to be informed.

[Interpreted] Thank you very much, Mr. Notary Public. In accordance with the corporate law and the regulations of the general meeting, shareholders have been able to request any information and clarifications they deemed necessary regarding the matters included on the agenda of the meeting.

The publicly available information provided by the company to the National Securities Market Commission since the last GSM and regarding the auditor's report, person to law in accordance with Article 10bis of the GSM regulations, and person to the notice of the meeting, shareholders attending this GSM remotely have had the opportunity to exercise this right in writing.

We're applicable during the Q&A session, a summary reading will be given of the request, full information and questions until 10:30 today, as received via the remote attendance system all in accordance with the law on the notice of the meeting. We kindly ask the shareholders who are attending in person and who wish to take the floor, indicate so at this moment to the notary public, providing their identification details on the number of shares they own or represent.

According to Article 18.1 of the general meeting regulations, shareholders who wish to have their full content of their remarks recorded in the minutes must expressly request so has made the written text of the said remarks to the notary prior to speaking for verification and subsequent inclusion in the region of record.

Finally, shareholders are reminded that the time allocated for each statement would be 5 minutes according to the GSM regulations. We shall try to provide an answer during the GSM. Otherwise, we will provide a written response within 7 days, both on to law.

And now I'll give the floor to the Chairman.

[Interpreted] My dear shareholders, it is on our end, a pleasure on behalf of the Board of Directors of Endesa to welcome you. This is the first anniversary of the blackout on April 28, 2025. The Board has been regularly and constantly occupying itself with this event. And we've always considered our correct actions during the blackout, and that will be your best defense. In any case, we will continue to exert the same transparency we've always used vis-a-vis our electricity system.

You have available ample documentation beyond what is legally required. This documentation gives a thorough explanation of our last fiscal year. This year further supports the solidity of our strategy and our ability to create value. Therefore, I will just mention a few highlights of 2025 that as of the date of closing, continue to have impact on our business.

As has been the case in the past, Endesa has undertaken its activity in 2025 in an international environment of uncertainty events after the closing of the fiscal year have only made things worse. On top of the uncertainty as of late, we need to add the war between Iran, the U.S. and Israel, which have enhanced political -- geopolitical tensions.

Some of that tension is having its impact on energy markets and there are quite a few alerts regarding potential and deep economic changes. It is hard to establish what will be the full consequences and extent of this war, because for a world that is thirsty for energy as the International Agency for Energy normally mentions this type of events requires attention.

It's been only a few weeks since the EU presented a set of measures to face this new crisis which for the second time in just 5 years makes very apparent how EU depends on fossil fuels through pipelines, accelerate EU, undertake measures in proportion to the challenge will be presenting the fourth plan for electrification. It has impact on broad economic areas, and it will engage both companies and citizens. These are the main goals of the plan and Endesa is prepared to participate in it and achieve it.

In this challenging environment, the value and significance of a company is measured by its ability to face uncertainty and drive for the progress in the communities where it operates. The results achieved in 2025 once again show our role as a factor of stability and development. Once again, last year Endesa fulfilled its part.

Once again, we need to look forward and that is gathered in our '26 to '28 strategic plan that our CEO will report about thereafter. This plan requires high investments and commitment to the energy transition, such as the renewable energies and the distribution networks on which the European plans concentrate.

We've also approved the 2026- '28 sustainability plan, which complements the strategic plan and further boosts this transition. With this plan, we integrate sustainability in the development of our business and investment decisions. We maintain our goal of net zero by 2040 and our goal of supporting electrification, which further supports the decarbonization process.

The results we will be presenting confirm once again that Endesa has matched the sustainability of its model with profitability, our commitment to create value for shareholders has been confirmed by the very good evolution of the share price. On top of that, the remuneration we provide through a EUR 1.57 per share for year 2025 proposed further reinforces this.

In Point #6, we propose amortizing shares through the third and fourth tranche of the share buyback program approved by the BOD on March 26, 2025. You have a specific report that further justifies the proposal to reduce the number of shares. This share buyback program responds to the goal of guaranteeing for shareholders greater and more diverse profitability.

Endesa maintains our governance -- its governance system in place. And once again, we have proceeded with the evaluation process, which has translated into positive results and that corresponds to the contribution of all Board members. And once again, I would like to thank them for their contribution.

We have modified the policy -- the management policy on nature and biodiversity to adapt the European directive on corporate sustainability reports. And our goal is to reinforce Endesa's position among the main sustainability indices. The evolution of the regulatory framework plus monitoring best practices in the field have informed the update of our policy and human rights.

The Board is particularly paying attention to cybersecurity team and manages cybersecurity risk through its policy. We've modified the audit and compliance committee, which is now -- which now has oversight over cybersecurity.

And as you know, it is my duty to report to this GSM to what extent we comply with the recommendations in the code of governance for publicly listed company. We comply with 96.87% of the recommendations in it. We do not meet recommendation #48, which requires a compliance committee and the remuneration committee that are separate.

The reason is very well known by you, and we maintain that this is the best option. The existence of 1 committee guarantees the coordination and -- between these two fields and talent retention and goal achievement. Additionally, I should say that we partially meet recommendation #64 regarding the payments due to exits or termination of contracts and we comply with it with the contracts that have been signed following the approval of this recommendation.

We have several proposals for agreement to the appointment of 2 Board directors and the renewal of the mandate of 1 director. Tomorrow, the mandate of Mrs. Francesca Gostinelli, as a Proprietary Director; and Mrs. Cristina de Parias, an Independent Director are coming to an end. And I would like to hereby thank them for their performance and the contribution, and I wish them the very best in their professional careers.

To replace them, we propose under Items 8 and 9, the appointment of Mrs. Angela Eliseo as Proprietary Director; and Mrs. Ana Munoz Merino as Independent Director.

With these 2 proposals, we have analyzed in-depth the makeup of the Board and its committees and the competencies and demands of all the members. And all of this in connection with the needs of the company in compliance with corporate governance and committees and the selection of candidates for the Board.

We propose to the Board to the reelection of Mr. Jose Bogas for 2 years. Mr. Bogas has been the CEO of Endesa. Upon the end of his mandate, the Board considers it is appropriate for him to join as a non-executive Director and he's going to become an external director.

Thanks to that, we ensure an orderly succession of the CEO position, and we can still benefit from the deep knowledge of the group and the industry that Mr. Jose Bogas has. You can very well imagine, and I cannot extend myself in this recognition to his career and the great performance that he has paid Endesa. But in this very solid event, I would like to say on behalf of Endesa, I thank you very much, Jose and I invite you to give him a big hand.

After the GSM, the Board of administrators will complete the process to appoint the new CEO. If the proposals for appointment and reelection are approved, we will have a 58 percentage of independent directors, 34% of proprietary and 7.1% of external directors, all of that in recommendation with the -- all of that in alignment with the code of governance. And the female ratio will be appropriate and the succession ratios as well.

I want to wrap up by mentioning the progress of our company last year. We have confirmed Endesa provides stability. And this is due to several reasons that I must mention. First, this is all thanks belonging to the Enel Group. And I would like to mention the great performance of our staff. And once again, I would like to highlight my recognition to all our employees and all those who have supported us during these years of deep changes.

Shareholders through 2025, Endesa has responded well to your trust. And I ask you to continue to trust us, which is indispensable for this company and we can very well ask that given the results we have achieved. Thank you.

[Interpreted] I now give the floor to the CEO.

[Interpreted] Good morning, ladies and gentlemen, dear shareholders, Mr. Chairman, Mr. CEO of Enel and Deputy Chairman of Endesa, members of the Board of Directors, ordinary Chairman of Endesa, Rodolfo Martin Villa, members of the Endesa team and dear friends. Thank you very much for attending our company's GSM. I'm highly honored to address you all at this annual meeting.

This occasion holds a special meaning for me because it's a very last time that I will address you as CEO of Endesa, after 12 years in this role, the last time I address this floor.

This year represent just a fraction of the 44 years I have dedicated myself to the company during which I assure you that I have woken up every day, feeling proud to work for and lead 1 of the countries leading electric utilities.

And throughout my career, I have had the opportunity to witness many of the major transformations in the energy sector, milestones such as implementation of this stable legal framework in 1988, the liberalization of the electricity market driven by the electricity sector back in 1997 and the initial developments in renewable energy in the early 2000s.

However, the most profound changes have occurred over the past 12 years. During this time, we have aligned ourselves with COP21 International Climate Change Conference held in December 2015 in Paris. And we have spearheaded the energy transition contributing to the development of a new model based on decarbonization, the electrification of demand and the digitalization of the system.

From the very onset, my commitment was to drive Endesa's evolution from within to move beyond coal and establish ourselves as a leading electricity company in Spain and Portugal. It has not been an easy path, but the results are clear.

Today, we are one of the leading companies in the energy transition, and we are moving with determination towards zero emissions future, supported by the development of renewable energy. But before I turn to the future, let me analyze the current context and review the results for fiscal 2025.

The international situation has placed the energy market at the very center of the current debate. Once again, we find ourselves facing a scenario marked by geopolitical uncertainty, in which various conflicts have a direct impact on prices and the stability of supply.

The war in Iran is creating tensions in the oil and gas market. And although Endesa does not depend directly on this country for its energy supply, it is part of an interconnected global market where any disruption in the availability of transport routes of raw materials ultimately affects prices.

Instability in the Strait of Hormuz, a key checkpoint through which a significant portion of global hydrocarbon trade passes, is putting pressure on the European market, which is reflected, among other things, in gas prices in Spain.

In Europe, the electricity pricing system is based on marginal prices, which is the most efficient method for allocating available resources to guarantee supply at all times. It is necessary to rely on backup technologies such as combined cycle plants, which use natural gas during certain hours. So when the price of gas rises in international markets, that cost is passed on to a greater or lesser extent to the price of electricity.

It is worth noting that this is not the first time we have faced a similar situation with going back to the oil crisis of the last century. In 2022 with the war in Ukraine, we experienced an extraordinary increase in wholesale prices as a result of reduced gas supply. At that time, the European market dependent on Russia and exceptional measures were adopted to stabilize the system.

Now -- the situation for the Spanish electricity market is not the same now as it was at that time. Spain has an undeniable strategic advantage. It's growing renewable capacity coupled with the reliability of its nuclear fleet. The impact on electricity prices in Spain unlike in other countries, has been limited.

According to the Energy Think Tank, Ember, so far in 2026, gas has influenced electricity prices in Spain in only 15% of the hours. In recent years, we have made more progress in the energy transition than anyone else.

Our renewable energy is now the most reliable tool for reducing our exposure to the volatility of international markets. Electricity is neither the source of this crisis nor an additional risk factor. On the contrary, it is the primary driver of energy independence and the only structural solution to reduce the volatility linked to imported fossil fuels.

It is no coincidence that even amid international tensions, electricity prices in Spain remain amongst the lowest in the European Union. This model is already bearing fruit, significantly reducing exposure to imported gas and providing greater stability for households and industry.

Every megawatt hour produced within our borders is another step towards strategic autonomy and economic competitiveness. And this autonomy and diversification of our energy mix strengthens the system's resilience in the face of unforeseen situations. And there is certainly no shortage of sale situations.

This winter, we experienced a series of extreme weather events that put our infrastructure to the test. A significant portion of the more than 325,000 kilometers of grid we manage has been affected by floods, strong winds, storms and snowfall.

In light of this situation, I would like to highlight our team's commitment and responsiveness, thanks to the professionalism of our employees and an increasingly digitized grid, we have been able to anticipate challenges and act swiftly ensuring uninterrupted service at all times.

And when discussing adverse events in our sector in 2025, we must mention the power blackout that occurred on the Iberian Peninsula exactly 1 year ago today, on April 28, 2025, 1 day before our previous GSM. The Spanish power grid experienced a serious voltage control failure.

Much has been said since then about this blackout. It was an incident whose cost must be attributed to structural deficiencies and shortcomings in planning, forecasting on the system, operators' response to the high voltage fluctuations in the power grid.

In this situation of high voltage flotations, various inter-related technical factors converged. Among them was insufficient scheduling of synchronous generation to ensure system stability in certain areas, particularly in the Southwestern part of the Peninsula where they coupled synchronous power, proved clearly insufficient to absorb and stabilize the voltage fluctuations that were taking place.

Renewable generation, which accounted for the largest share of the energy mix but they could not actively participate in voltage control because the existing operational framework, which falls under the jurisdiction of the CNMC and which has been repeatedly criticized by Red Electrica, had not yet provided for its full integration into dynamic voltage control services.

We should also add the pecularity of the Spanish system with the request of the system operator operates at higher voltage levels compared to the rest of Europe, thereby increasing the systems vulnerability in the face of any anomaly.

On the morning of that day, wide range in voltage fluctuations were recorded, repeatedly exceeding the 420 kV threshold, which is considered normal in the rest of Europe. Our teams relayed the situation from the control centers to the system operator and rapid fluctuations in wind and solar production ultimately disrupted the systems balance triggering cascading outages.

Their report by the panel of experts from the European network of operators published last month points in that same direction. Its conclusions confirmed that the blackout was a result of a combination of deficiencies in voltage and reactive power control, which triggered oscillations rapid reductions in production and generation disconnections.

In the last weeks, the CNMC has initiated function proceedings subject to statements of defense against most of the entities involved in the electricity system, and these proceedings analyze and where appropriate will penalize operational incidents at generation plants recorded in the 2 years prior to the date of the blackout, albeit they do not evaluate the operations of those facilities on the day the incident occurred.

This is, therefore, an exercise that may be necessary from a regulatory standpoint, but which does not help clarify the causes or determine accountability for what happened that day. I can, therefore, confirm that on that day, all of our power plants operated correctly as planned.

Having said that, it is important to convey a message of reassurance. It is unlikely that an incident of this nature would occur again. Since then, the system has been operating with a greater share of synchronous technologies, which enhances the stability and security of the supply.

Now the voltage control will remain a challenge in a system with growing penetration of renewable energy. Therefore, and in line with experts recommendations, we consider it essential that all technologies can contribute actively to system stability, including renewables. Our facilities are prepared for this. Likewise, it will be necessary to reinforce the grid at critical points through solutions such as synchronous compensators as other countries in our region have already done.

But above all, we must move forward with clear cut rules, institutional coordination and ongoing dialogue between the regulator, the system operator, government agencies and companies. At Endesa, we have always maintained that collaboration is the best tool for ensuring a secure, robust and future-ready electricity system.

Having said that, let me now return to the subject of Nuclear Energy. We must be pragmatic and ask ourselves, beyond the technical limitations and difficulties of shutting them down according to the current schedule, whether we can do without nuclear energy in the current scenario.

It is the really an alternative today capable of replacing it without compromising the system and without consequences. As I have pointed out on other occasions, we are not proposing to keep nuclear power plants running indefinitely.

We are proposing to align the phase-out schedule with the actual pace of the energy transition, allowing time for the necessary infrastructure to be developed in a fully sustainable model to take hold. Postponing certain closures would allow for precisely that an orderly transition.

Renewable energy and nuclear energy are not mutually exclusive, but rather complementary. Both must co-exist if we are to ensure a balanced transition without jeopardizing the security of supply and the stability of the grid.

Nuclear power plants play a strategic role in several spheres. First, they contribute to the technical stability of the grid by providing inertia and facilitating voltage control. Second, they provide constant generation 24 hours a day, which helps moderate price volatility.

A complete shutdown of the nuclear fleet would lead to an increase in the price of electricity of around EUR 13 per megawatt hour, a 20% rise from current levels as estimated by several recent studies.

And we should also add the impact this could have on climate goals. Nuclear energy does not emit CO2 and its contribution in this respect has been decisive. Without nuclear power, the system will have to rely more heavily on combined cycle plants, increasing gas consumption, raising generation costs, boosting CO2 emissions into the atmosphere and increasing our dependence on international markets.

Furthermore, the global and European trend is clear. Far from being phased out, nuclear energy is being reinforced or reclaimed as a key pillar of electricity systems. Neighboring countries are extending the operational life of their plants and promoting new projects.

In this scenario, an early shutdown in Spain would represent a clear divergence from international trends, depriving the system of a technology that contributes decisively to security of supply, competitiveness and decarbonization targets. We are, therefore, facing an issue that demands reflection and dialogue.

We are talking about strategic assets that are key to our economy and our energy independence. And this, in short, is the context in which we have operated over the past year. This, if anything, makes our results even more impressive.

In fiscal year 2025, we comfortably exceeded the targets we had set, both in terms of gross profit, which reached EUR 5.756 billion, 9% more than the previous year and in net ordinary profit, which grew by 18% compared to the prior year, reaching EUR 2.351 billion. This performance allows us to propose a dividend to be distributed to you, the shareholders, that is 22% higher than expected, rising from EUR 1.3 to EUR 1.58 per share.

Taking a broader view, the results are even more remarkable. Since 2014, when I took over as CEO of Endesa and the last public offering of shares took place at EUR 13.50, total returns stand at 361%, therefore, two-fold in the average return of the IBEX 35 as a whole.

Over the past 12 years, the Endesa team has managed to nearly double gross profit rising from EUR 3.09 billion in 2014 to EUR 5.756 billion. Similarly, net ordinary profit has risen from EUR 943 million in 2014 to EUR 2.351 billion at 2.5 fold increase.

Efficiency has been and will remain another central pillar of our strategy. Fixed costs in 2025 amounted to EUR 2.169 billion, EUR 279 million lower than the EUR 2.448 billion posted in 2014. That is to say 11% less despite the expansion of the business scope and inflation.

Finally, the share price has risen from EUR 13.50 at the time of the last initial public offering to over EUR 38 today. The strong results posted in 2025 were due to the solid performance across business segments. Another key pillar has been the efficient use of capital to strengthen our asset base.

Throughout 2025, we completed 4 major transactions. On the one hand, we acquired hydroelectric and wind power assets totaling more than 700 megawatts. And on the other, we sold a stake in our PV assets. We also finalized the acquisition of the MasOrange Group's electricity and gas retail business with 370,000 electricity customers and 53,000 gas customers, which became operational in February 2026.

As a result of all this, Endesa generated free cash flow amounting to EUR 4.51 billion, nearly EUR 500 million more than in 2024, which enabled us to cover a high percentage of our investments, dividend payments and the first phase of the share buyback program, while maintaining a leverage ratio of just 1.8x.

Over the course of the year, we invested EUR 3.155 billion, up 55% compared to fiscal year 2024, of which 77% was allocated to grids and renewable energy, the cornerstones of the energy transition. These results reinforce our ability to continue growing from a position of leadership and allow us to approach the future with ambition to capitalize on all opportunities arising from the necessary electrification of the economy.

We have, therefore, updated our strategic plan for the next 3 years with a total investment of EUR 10.6 billion. This accounts for a 10% increase over the previous plan and marks the company's largest investment commitment since 2014. Of the total plant, approximately 80% will be allotted to the 2 main pillars of the energy transition, distribution networks and renewable energy, respectively.

A special attention will be given to strengthening the distribution grid because as I have already pointed out, it's not enough to generate energy unless we have the necessary infrastructure to carry energy and make it available to consumers. Therefore, strengthening the grid is critical to ensuring sustainable growth.

We shall allocate EUR 5.5 billion to this area accounting for a 38% increase over the previous plan. Nonetheless, this investment is contingent on the evolution of the regulatory framework, and in particular, on the approval of the royal decree that will allow us to exceed current investment limits and ensure a recognition of the investments made.

Currently, grid capacity is one of the main hurdles to economic growth, the electrification of industry and the achievement of decarbonization targets, highlighting the need to increase current regulatory investment limits.

The situation is restraining industrial development and holding back projects that will strengthen Spain's position as an energy leader in Europe. We must recognize that we are in a context of increasing electrification of the economy to promote energy autonomy and decarbonization.

Furthermore, the development of new technologies such as cloud, data storage, AI and digital services is driving additional demand for energy and create connection capacity.

With regards to renewable generation, we plan to invest EUR 3 billion based on selective criteria with a particular focus on wind power and energy storage. By 2028, we aim to add 1,900 megawatts of new capacity, of which 1,500 megawatts will come from wind projects and battery systems.

Likewise, we have a pipeline of approximately 3,000 megawatts of hybrid renewable projects in the Iberian Peninsula aimed at securing long-term supply contracts, particularly with large consumers, such as data centers.

Finally -- and with customers at the very heart of our business, we shall allocate more than EUR 900 million to the sales division with the aim of strengthening in-person customer service, fostering partnerships to offer cross-selling opportunities and achieving efficiencies to adapt to an increasingly competitive landscape.

We expect to reach 6.7 million customers in the open market by the end of 2028. We hope that our commitment to in-person service combined with the recent approval of regulations restricting spam calls and telephone sales will reduce fraud in this area.

In short, we approach the coming years with responsibility and ambition fully committed to the energy transition through 4 key pillars to be developed over the next 3 years, namely growth based on highly predictable, low-risk activities, efficiency as a cornerstone of the strategy, financial flexibility that provides sound options for growth and value creation. And all of this converges towards a single clear objective to deliver solid and attractive earnings growth for our shareholders.

We are navigating complex times from an energy standpoint. While the present of the electricity sector is uncertain, the future is certainly promising. The next 3 years are shaping up to be a decisive moment for the electricity sector in Spain.

Our country has clean, cheap and abundant energy, which puts us in a privileged position to attract new demand and strengthen our industrial fabric. The deployment of renewable energy and nuclear power allows us to offer highly competitive prices. And this advantage, if well managed, can become a key differentiator in turning this opportunity in reality.

That said, the path forward will depend largely on the decisions that are made. It will be essential to develop a regulatory framework that encourages and supports long-term investment.

Electricity can and must be the driving force behind industrial growth, and at Endesa and the Enel Group, we shall continue working to lead this process, contributing to the development of a more efficient and sustainable energy model.

Before concluding, I would like to extend my gratitude to all Endesa employees. The commitment and dedication of our team are this company's greatest asset. Without a doubt the best part of my 44 years at Endesa has been them in every stage of my time with this company. I can say without a doubt that Endesa's workforce is this company's greatest asset.

I would also like to thank our shareholders for the trust they have placed in me over the past years. It has been a true honor to have their support. And of course, I would like to thank the people who have been key mentors in my career over the years.

There are many such mentors, and I have learned something from each and every one of them, but allow me to mention Rodolfo Martin Villa, Manuel Pizarro and Rafael Miranda. I would also like to thank the following for their support: Juan Sanchez-Calero, Chairman of Endesa; Flavio Cattaneo, CEO of Enel and Deputy Chairman of Endesa; and each and every member of the Board of Directors.

I would also like to take this opportunity to thank the Board members who are leaving our Board, Francesca Gostinelli and Cristina de Parias for their support and dedication. I would like to welcome our new Board members, Angela Eliseo and Ana Munoz Merino.

My final remarks are to wish the new CEO of Endesa every success. I am convinced that he will know how to guide the company towards new goals and reach even greater heights. I will continue to support this company, which I consider my home as a member on the Board of Directors.

I will conclude here. Thank you very much to everyone.

We thank the Chief Executive Officer for his remarks, and the floor is now open to the Secretary.

The final list of attendees has been prepared electronically in accordance with the terms set forth in Article 98 of the Commercial Registry Regulations. This list duly certified will be attached as an appendix to the minutes.

The final quorum is as follows: Shareholders being present by the law, 708 holding 746,290,437 shares, accounting for 71.639% of the share capital. Shareholders legally represented, 3,442 holding 149,593,724 shares accounting for 14.36% of the share capital. In attendance are a total of 4,150 shareholders and 895,884,161 shares representing 85.998% of the subscribed share capital with voting rights, which means that a sufficient quorum is present for the valid convening of the general meeting and to discuss all items on the agenda.

Endesa holds treasury stock amounting to 12,555,123 shares, representing 1.205% of the share capital. The treasury stock has been included for the purpose of calculating the voting thresholds required for the constitution of the meeting and the adoption of resolutions, although in accordance with the provisions of the law, the exercise of voting rights corresponding to such shares is suspended.

In view of the final data provided by the Secretary. It is confirmed that the requirements necessary for the valid constitution of the General Shareholders' Meeting in a single call have been met and that the meeting may decide on all items of the agenda. The notary now has the floor.

Shareholders, if there are any objections or protests regarding the final details presented and the valid constitution of the meeting, please approach this desk or do so using the telematic attendance applications for its proper record. Mr. Chairman, having verified the information, there are no objections.

Thank you. The floor is now open for shareholders to speak. Likewise, the Secretary will convey the request for information or comments from shareholders received electronically.

Thank you, Mr. Chairman, in accordance with the rules of the General Shareholders' Meeting, please note that the time allotted to shareholders for each statement shall be 5 minutes. Furthermore, please note that in accordance with applicable regulations, the statements must pertain to matters included on the agenda, information provided by the company to the CNMV since the last GSM or the auditors report.

Once a shareholder's speaking time has concluded, any requested information or clarifications that are appropriate will be provided if possible. Any valid requests for information that cannot be addressed at this meeting will be answered within 7 days following the conclusion of this General Shareholders' Meeting in accordance with applicable regulation.

I will now read the comment from Mr. [ Pedro Gonzalez Fuertes ] holding 6,000 shares.

Good morning, ladies and gentlemen, shareholders. As a shareholder of the company, I would first like to thank the work undertaken by our CEO, Mr. Bogas, for 42 years with Endesa since '84 to 2026, first as General Manager, and as of late, as CEO. He has a technical profile, and he knows very well what creating and distribution each kilowatt is necessary, which is very important in this industry because quite often, companies are managed by economists who seek quick profitability without thinking about the processes and the future of the company.

After the takeover bid in 2009 to the company, our share price is EUR 4 away from that share price, which was undesirable for this humble shareholder and still kept 4% of the shares. Values go first. This company is part of my family and getting to a EUR 36 share price is fantastic. I see the accomplishments of the management after following all the taxes and events that the industry has gone through.

As a shareholder, I am concerned with our EUR 1.1 billion financial debt. Year-over-year, it's growing and curbing our growth. The strategic plan '26 to '28 includes an investment of EUR 10.6 billion, which is very much necessary to achieve progress and stability and to be competitive, we must be efficient across all areas. Being efficient is not equivalent to removing the staff, but rather becoming more productive.

EUR 5.2 billion is very necessary in the networks because the grid is saturated by the demand. It is necessary to maintain the quality of service to clients and avoid the events in Sevilla, for example, and have greater control over illegal use of the grid. The EUR 3 billion is necessary for the storage of energy and to have hydraulic energy being used more flexibly for stability. The EUR 1.9 billion in commercialization will support a guarantee of service in terms of quality and price to new clients.

And regarding the blackout in 2025, I think this company has reacted well. The management and the stability of the company's service is the responsibility of Red Electrica and they need to establish what they need to meet the demand every day. But somebody wanted the full demand to be met with renewables exclusively. And that is complicated as of today, particularly if there is no quick response we serve as batteries.

While we don't get that or you need a backup of equipment that can absorb the tension, the latency of the asynchronous engines and avoid the fluctuations and oscillations of the network, as is the case after the blackout without a backup.

Technology such as combined cycle, which is not necessary for the demand, it is necessary to maintain the stability of the network which is something that was not in place a year ago, and that's why everything went down. What happened with the report by Red Electrica regarding the generators of the thermal networks that were going to work synchronously? Have they all been sent to scrap?

Finally, I wish this strategic plan will make us more efficient, and we can consolidate our position in the energy industry of this country. Thank you very much.

And once read this comment by Mr. Pedro Gonzalez Fuertes, Mr. [ Miguel Andes Pastor Perez ] holding 305 shares would like to take the floor. Please go ahead.

Good morning. My name is Miguel Andes Pastor. Some of you may know me because I already took the floor last year at this GSM. I claimed for a few things, but I don't want to go back to my remarks from last year.

I would like to read this proposal for agreement. It is about customer care. If you're not familiar, since 2018, I have been making claims to Endesa in many ways and through many channels. Last year, following the GSM, I received support, and I was finally listened to after 8 years. I am thankful to the GSM and [ Maria Gonzalez ] in particular, who's the person in customer care, who has been tending to my claims.

In any case, once again, I need to go back to this proposal for agreement. In one of my many claims, I made a claim through the Regional Government of Andalusia. Last year, I read it. Mr. Pastor went against Endesa Distribution Digital Networks Limited Corporation. Regarding the request for the distributing company to bill based on the actual reads of the meters and having the physical means necessary to do so, meaning since 2018, Endesa has been billing with estimated meters and they were absolutely disproportionate and meaningless.

And in 2021 and '22, I claimed about this, and it was quite absurd. In one of the contracts, I have a water pump that only works in the summer to water the olive trees and in the winter doesn't make sense, so it works 6 months a year. So for the 6 months of the year where there is no consumption whatsoever, for 8 years, I have been charged 13,000 kilowatts per month, systematically for 8 years, every single month, including the months where there is no consumption at all for 8 years.

Thanks to my intervention in the GSM last year, and also thanks to the readings of the meter that I've been sending to Maria, who's come personally, you've been able to verify what I've been claiming for 8 years and which is what makes sense.

Now this year, finally, the bills have gone down, except for the adjustment, which continue to be out of proportion. It's 1,000%, 5,000%. It really doesn't make any sense at all. At a time when there is no consumption or consumption number 4, I'm charged EUR 104 for the adjustments. That is not proportionate and it still needs to be adopted.

But the truth is that in this last year, the readings match the readings of the meter. And for years, I've been sending the videos and the pictures and that I have never been listened to. Well, finally, it seems I'm being heard.

Yesterday and this morning, I was talking to Maria and please, what I want is for the bills to be rectified since 2021. Last year, I brought some data and graphs that show all the bills since 2021. The month-by-month consumption in the first invoice and the real consumption. There are three ways to calculate them, and I make my mistakes oscillate to 6%, and this is 150%.

I would like Endesa to commit to this. Just like last year, they have, I would like them to please issue the bill again from 2021 to date, and I have finally being billed right this year, and the cause has been found. I have really studied this, and I've gone into a lot of detail.

I'm an engineer. I've worked on this my whole life, and I can give you a lot of details about why the invoices were wrong. I've actually figured out the algorithm used for the wrong bills that was used systematically that had nothing to do.

So next week, I am meeting a specialist from Endesa to discuss this. And I would be happy to explain to you how the bills have been calculated. I figured that was the algorithm because you would see 13,500 kilowatts always. It's just impossible to hit the same number, not without oscillations.

Well, it's just wrong, very wrong, even for the 6 months where there is no consumption. So the same way this last year has been reissued, I would ask you to please reissue the bills since 2021. I have data going back to 2018, but I ask you to please reissue the invoices since 2021 and do it right.

I've talked to many people within Endesa. I'm sorry, but I really need it to come to an end. So the Endesa staff would tell me, please, send this question because this really creates a lot of problems with clients. So if I can get to the right bills calculated, your staff won't have as many problems.

Thank you very much, Mr. Miguel Andes. There is another intervention by Mr. [ Ricardo Ferrao Roche ], representing 270 shares. Mr. Ricardo, you have the floor.

Thank you. Good morning. My name is Ricardo Ferrao, and I'm the General Manager of the trade union in Endesa, and to all the Board of Directors, shareholders and employees of Endesa. Over the last 6 weeks, Comisiones Obreras has been traveling through all the Endesa, and we wanted to know firsthand what -- how the staff feels about the company.

We've visited more than 150 work centers. We do not come up with things. We detect and manage problems on the ground, and we try to solve them through collective agreements. And I'm not bearing good news.

In the staff, there is general unease and the reasons in a nutshell are these. Across all age ranges, they mentioned there is lack of professional development opportunities. This means they're not motivated. Among the youngest group, this lack of motivation is compounded by worse remuneration. And plus, they are not given access to training events that would help them forward their careers.

There's also deficiencies in how vacancies are managed. There's lack of transparency. There is no employee within Endesa who has not suffered this. And this problem has been ongoing for a decade. Something happens -- something similar happens in connection with meritocracy, but that's a whole new matter.

Meritocracy is used to patch the inequality of salaries. This is not even decided by the line manager, but by the organization. So anything but a system that is meritocratic. If the problem were not as severe, one might joke about this. The staff is constantly asking for horizontal promotion systems that are objective and really value the experience.

As a result, the work environment is bad at Endesa. The headcount says their workload is increasing and they don't want to go back to remote work. There is a lot of stress because of the schedule registration tool and the harsher disciplinary code. Those are the instruments of threats, and these threats create fear. What we have detected as a whole is that they do not deserve the treatment.

Hyper-connectivity, 24/7 is also an issue. The headcount is expected to be always connected. And that really clashes with the work-life balance. For example, the breakfast pass is not included in the effective work computation. This makes for longer work days. And in terms of productivity, this is not useful. Some workers feel that they are tied to the leg of the table and the disciplinary Board is briefing on them.

Truth is that the company doesn't want to acknowledge this in their comments, but with their practices, most of the headcount feels under threat. They also mentioned there is chaos given the constant reorganizations in the commercial department.

In distribution and generation, they ask to take into account not only climate events, but also the area where the work center is and the area where the worker lives. This is not done at present, and there might be risk during the commute.

In conventional and hydraulic centers, they mentioned that there is an acute lack of staff and resources, which leads to greater rotation. And in the smaller and more remote areas of Endesa, they feel that Endesa is being directed or led from Madrid, and they're not taking into account.

From a financial perspective, it seems the Italian holding only wants short-term results, not a long-term strategy. The truth is that both employees and clients seem -- no one is interested to see what happens in this company, and they drop every year. And I would like to see where Endesa will be in 5 to 10 years, and we demand an answer to this question.

Plus let's not forget our contractors, which are the weakest link. There's an excess of contractors working in precarious conditions. Corporate social responsibility cannot just be a slogan. It really -- we really need to walk the path. And I will finish by saying that we know in Endesa for many decades, and it used to lead this industry in Spain and Latin America.

The remuneration to shareholders is increasing by 20%, but the headcount is not -- doesn't have their salary linked to inflation. The official results of the company are shared today. This is everybody's success. The employees' as well. However, we cannot celebrate the poor impact this has on its employees.

The company is facing changes in the SteerCo. We really hope they will bear fruit. Comisiones Obreras, first trade union in Spain supports consensus and collective agreement. If the SteerCo lets go of the aggressive policy of the last 6 years and makes progress with our demands, we will collaborate. A company such as Endesa is built on trust, not fear. Trust recognizes the work of the headcount, fear doesn't. Thank you very much.

Following the comments, as we prepare them -- as we prepare the answers, we invite you to see some images from Endesa.

[Presentation]

We will proceed to address the remarks by the shareholders. First, regarding the remarks made by Pedro Gonzalez Fuertes holding 6,000 shares. Thank you very much, Mr. Pedro for your remarks. Thank you very much for your kind words.

Regarding the reference to the debt of Endesa. I understand your concerns, but I can confirm that the leverage ratio is below the average in the industry. It's a very healthy 1.8%. The debt towards the end of our plan is very comfortable, very consistent with the solid financial structure and compatible with the credit rating we hold.

On top of that, a higher leverage ratio in 2028 is necessary to make the investments of the plan, which will boost up our revenues and eventually enhance the remuneration to shareholders.

Regarding the blackout of the year ago, we have already mentioned this in our remarks. The study that you make reference to in your comments is by Red Electrica. At Endesa, we've always supported any improvement to the system. In short, thank you very much for your remarks, and we hope you will continue to support us for the longest time.

Regarding the remarks by Miguel Andes Pastor representing 305 shares. First, thank you very much for your comments. As you have presented, this is a personal matter, an individual matter as a client regarding your individual invoices that have no direct linkage to the agenda of this GSM. However, the company is very much aware of your position and the current services are being directly managed.

We want to provide the right solution to the useful customer care channels. And in order to preserve the workings of the agenda, we will have to address this matter outside of the GSM. Thank you very much for understanding.

Third and finally, in response to Mr. Ricardo Ferrao Roche, representing 270 shares. I would like to start by thanking you for your comments. Of course, in October 2024, the sixth agreement was signed. It's very modern and has placed people at the core to guarantee employment and guarantee that salaries grow above inflation through 2025, and salaries have also improved by universalizing the pay to employees.

We do support meritocracy, and we have several measures for objective appointments. We cannot go back to old systems where development is based on seniority rather than merit.

And commitments regarding training and development. For in 2025 and '26, the company has launched a new development model that is structured and meritocratic. It's called the talent strategy. It's based on merit, and through performance management, we identify people who through their contributions, engagement and approach are quite noteworthy.

I would highlight the model of high performance for whom we have a structured career development setup from a technical management point of view. The main levers of this model are the training, the development, mobility and professional experience and there are specific initiatives for our youngest employees.

We have a robust, high-quality model for talent development. In 2025, more than 55 hours of training by employee were given and the recognition of employees was very positive. And then there was also an upskilling program accounting for 26% of the training hours given and it includes a specific training on AI.

And finally, there are specific initiatives to train and develop the youngest employees, the junior experts, swapping and share next-gen talent, for example, they promote the mobility of our youngest employees and the recognition programs such as Energy Go and Talent Scout.

The vacancy system of the company manages more than 1,000 processes per year, internal and external and internship and reemployment. This is a key process. And last year, we brought in-house its management. It is transparent, objective, and it is audited regularly.

The work environment has improved. In 2025, the outcome of the survey were positive, and they have improved on the previous year. And the rate is at 92%. And regarding work-life balance measures, in the collective agreement, there are many measures and more than 7,000 workers have -- are using them and remote work more than 50% of the headcount can spend 3 days in the office and 2 days at home. It is a widespread model in Spain.

And then regarding the breakfast break at work time when precisely because of the demand of the lawsuit presented by your trade union, has already been tried, and the judges have settled. It is not work time. I don't think we should mention that any further.

And regarding the competition in the industry. Well, we are a leading company. And therefore, we must adapt to the market constantly and quickly. Regarding weather alerts, we have a protocol that enables the workers to know in advance how to act. And of course, we always put the safety of our employees first, and we provide the basic services for that.

Thank you very much for your remarks, and we do hope that starting today, the -- your trade union will seek contributing to this company rather than going to the courts.

We have a strategic plan that is firm, rigorous, and has won the trust of our markets, clients, and I'm sure, employees as well. The support is reflected in our increased share price, and therefore, our increased value as a company.

And once the -- this session has come to end. I would like to give the floor to the Secretary.

Thank you, Mr. Chairman. In accordance with the company's General Meeting regulations Article 20.6, votes in favor of the resolutions proposed by the Board shall be considered to be those corresponding to all shares attending the meeting, whether present in person or electronically represented minus the votes corresponding to shares whose holders have notified the notary of votes against blank votes.

And as mentioned in the minutes shall therefore set out the votes against blank votes and abstentions resulting from the remote voting process prior to this meeting as well as the votes against blank votes and abstentions received from shareholders through telematic means and also those, if any submitted to the notary, if any, by the shareholders or representative attending the meeting for each proposed resolution.

Finally shareholders present at the GSM shall be those listed in the attendance list, excluding those whose holders have left the meeting before the voting process and have recorded the circumstance before the notary. I shall now proceed to read a summary of the resolutions submitted for consideration by this GSM.

First, the approval of the individual annual financial statements of Endesa, S.A. as well as the consolidated annual financial statements of Endesa, S.A. and its subsidiaries for the fiscal year ended December 31, 2025.

Second, approval of the individual management report of Endesa, S.A., and the consolidated management report of Endesa, S.A. and its subsidiaries for the fiscal year ended December 31, 2025.

Item #3, approval of the consolidated nonfinancial information statement and sustainability information for the fiscal year ended on December 31, 2025.

Number four, approval of the management report for the fiscal year then ended. Number five, approval of the allocation of net profit for the fiscal year proposed by the Board of Directors at its meeting held on February 20, 2026, for the fiscal year 2025 amounted to EUR 1,665,809,453.62. And the subsequent distribution of a dividend charged to said profit under the following terms.

Distribution basis for fiscal year 2025. First of all, profit and loss, which in this case, accounts for profit in the amount of EUR 1,665,809,453.62 with the balance being EUR 2,433,751,130.84, that is to say EUR 4,099,560,584.46.

Allocation shall be as follows: To dividend, maximum amount to be distributed corresponding to EUR 1.584 gross per share taking into account the shares entitled to dividend as on December 31, 2025, that is to say 1,038,804,244 shares, that is to say, EUR 1,645,465,922.50 with a remnant of EUR 2,454,094,661.96 with a total EUR 4,099,560,584.46.

On December 16, 2025, the Board of Directors of Endesa, S.A. approved the distribution of an interim dividend based on the results for the fiscal year 2025 in the amount of EUR 0.50 gross per share and this interim dividend was paid on January 12, 2026. The final dividend, that is to say the total, that is to say EUR 1.084 gross share charged to 2025 financial results will be paid on July 10, 2026.

Item #6 share capital reduction through the cancellation of up to 87,967,289 treasury shares, that is say, 8.44% of the current share capital that have been acquired through the share buyback programs executed as the Third and Fourth Tranches of the framework program for the buyback of treasury shares approved by the Board of Directors on March 26, 2025 with the objective of canceling, delegating to the Board of Directors the authority to execute the reduction of share capital.

#7, reelection of Mr. Jose Damian Bogas Galvez as External Director of the company for the statutory term of 4 years.

8.1, termination of Mrs. Francesca Gostinelli, whose term expires on April 29, 2026, and thanking her for her services to the company. 8.2, appointing Ms. Angela Eliseo as Management Director of the company for the statutory term of 4 years.

9.1, termination of Ms. Cristina de Parias Halcon whose term expires on April 29, 2026. Thanking her for her services to the company. Number 9.2, appointment of Ms. Ana Munoz Merino as Independent Director of the company for the statutory term of 4 years.

#10, binding vote on the Annual Report on Remuneration of Directors for the 2025 fiscal year. Item 11, approval of the 2026-2029 Director remuneration policy. #12 approval of the 2026-2028 strategic incentive, which includes payment in company shares.

And the last item for instrumental purposes, delegation to the Board of Directors for the implementation and execution of the resolutions adopted by the Shareholders' Meeting as well as to replace the powers granted by the meeting and granting of powers for the execution of public deeds and registration of said resolutions.

Based on the participation on voting data available, it is hereby certified that each and every item on the agenda has been approved by a large majority. Once the votes against and abstentions expressed before the notary public have been counted in the final results, the approved resolutions will be published in full on the company's website within the statutory term of 5 days.

Actually, we are going to do this, this very afternoon. Mr. Chairman, therefore, each and every item on the agenda is deemed to be timely approved. The notary public will draft the minutes of the meeting in a timely manner.

Ladies and gentlemen, thank you very much for your attendance. The GSM is thus adjourned.

[Statements in English on this transcript were spoken by an interpreter present on the live call.]

Hello. Good morning, and welcome, everyone, to this event where, as you can see from the agenda now on the screen, our CEO, Jose Bogas; and our CFO, Marco Palermo, will first comment on the results achieved in 2025, and then we will present the updated strategic plan for the next 3 years.

After some closing remarks, we will open the Q&A session.

Thank you. And now I would now -- sorry, like to turn to Mr. Bogas. Thank you.

Thank you, Mar. Good morning, and welcome to everybody, everyone. Let me start with the results achieved this year, which I'm sure speak for themselves. EBITDA reached EUR 5.8 billion, comfortably above the upper end of our guidance, while net ordinary income reached EUR 2.3 billion, exceeding target and representing an 18% increase year-on-year. Economic and financial performance was particularly strong underpinned by robust cash generation and disciplined execution. We remain fully engaged to our capital allocation strategy, successfully delivering on the main strategic priorities set last year as we will discuss later.

This solid performance reflects our ability to deliver on our commitments and our continued focus on value creation for shareholders. Accordingly, we will propose a dividend of EUR 1.58 per share at the next Annual General Meeting, well above our target set and 20% higher year-on-year.

On Slide #5, we would like to highlight the steady progress made in executing our capital allocation road map throughout 2025. Several transactions were successfully completed during the year, strengthening both our asset base and our commercial capabilities.

In February 2025, we closed the acquisition of 600 megawatts of hydro assets, while in July, we completed the acquisition of the remaining stake in CETASA, fully consolidating its wind asset portfolio. Together with the entry of a partner into our solar asset portfolio, this transaction illustrates how we are reducing the risk profile of our generation asset.

And finally, the alliance with MasOrange fully consolidated since February 9, 2026, enhanced our commercial offering through telecommunication solution, reinforcing our commercial strategy and strengthening customer loyalty.

Slide #6 provides an overview of the progress made on capital allocation and the execution of our key industrial KPIs. Over the period, we invested EUR 3.2 billion, more than 50% above versus previous year's figure, 77% being allocated to grid and renewable assets. This strong effort led to an improvement in the interruption time index, while total losses remained broadly stable, largely impacted by non-manageable losses. In renewable, the integration of approximately 1.2 gigawatt of new capacity enabled us to reach 80% emission-free installed capacity.

Finally, in the customer segment, we progressed on a strategic shift towards higher-value customers, reshaping our customer mix with a clear focus on long-term loyalty and value creation.

This strong operating performance turns into outstanding value creation for our shareholders, and I am now on Slide #7. Nothing better illustrate the success of our long-term vision and the resilience of our business model and the consistent returns delivered to our shareholders.

Over the 2014 to 2025 period, Endesa has clearly outperformed the main benchmark indexes, underscoring the strength and credibility of our value proposition. As mentioned earlier, we will propose a dividend of EUR 1.58 per share, excluding treasury stock outstanding as of 31st of December 2025, would imply a dividend yield of more than 5%.

Finally, our EUR 2 billion share buyback program is currently around 30% executed as we remain fully committed to completing this within the planned time frame. In fact, a new tranche of EUR 0.5 billion has been approved and will be completed up to July 2026.

And now I will hand over to Marco, who will go into the financial results in more detail.

Thank you, Pepe, and good morning, everybody. This year's strong results were achieved in a market context characterized by demand growing for the second consecutive year, increasing 2.9% year-on-year and 2.0% on an adjusted basis.

In Endesa distribution area, where adjusted demand is growing by 2.8%, consumption increased across all customer segments. This reflects not only Spain's economic recovery during the year, but also a rebound in industrial and services demand as part of a broader sector-wide increase in energy usage. This clearly marks a turning point in the trend. The sharp rise in connection requests seen in recent years is now starting to materialize, representing a unique opportunity to reindustrialize the economy and to electrify the demand.

Turning now to the price scenario on Slide 10. Although the average pool price has remained broadly unchanged year-on-year, the intraday volatility has been extremely high, ranging from EUR 145 per megawatt hour in the mid-winter to 0 or even negative prices in spring, coinciding with the strong renewable resources and low demand. This level of volatility has become a structural feature of a system with very high renewable penetration.

Spain continues to display some of the most competitive power prices in Europe. That said, it is important to note that the final energy prices were affected by post-blackout measures adopted by the TSO, which led to a significant increase in ancillary services costs.

Let me now focus on the main drivers behind our financial performance. As mentioned earlier, EBITDA reached almost EUR 5.8 billion. I'm now on Slide 11, up 9% year-on-year. This strong performance was supported by, first, generation and supply EBITDA increased by 11%, driven by in conventional generation, a strong gas management margin, reflecting the positive impact of hedges executed in previous years, partially offset by lower opportunities on the short position.

In renewables, EBITDA was slightly lower, reflecting lower volumes and prices, both in wind and solar, while the hydro margin increased driven by higher volumes and the shape effect. And supply delivered sound results across both businesses, gas and power, with power performing well despite higher ancillary services cost.

Turning to Networks. EBITDA increased by EUR 0.1 billion primarily explained by previous year's resettlements. If we go to Page 12 now, all these dynamics are reflected in our integrated power and gas unitary margins. The free power margin stood at EUR 52 megawatt hour, representing a decrease of only 5% year-on-year despite the increase in ancillary services cost, which weighed on results. On the other hand, gas margin reached EUR 9 per megawatt hour, a strong improvement driven by the factors mentioned above.

Moving now to Slide 13. Net ordinary income came in at EUR 2.3 billion, significantly above the upper end of the guidance, reflecting strong operational performance and improving the net ordinary income to EBITDA conversion ratio to 41%. D&A increased by 9%, mainly reflecting higher amortization linked to increased investment level. Financial results almost flat and the effective tax rate stood at around 23.5%, no longer affected by the temporary levy that impacted last year's results.

Turning to the next slide, Page 14 now. We delivered strong cash generation with FFO reaching an outstanding EUR 4.1 billion and a cash conversion ratio of 70% FFO on EBITDA, already above the level targeted for 2027.

On Slide 15 now, the sound cash flow generated by the operation more than covered total investments, including EUR 1 billion of inorganic investments. Over the period, net financial debt increased by EUR 0.8 billion, up to EUR 10.1 billion, reflecting dividend payments amounting to EUR 1.5 billion as well as the execution of the share buyback program that resulted in a cash outflow of around EUR 500 million. Gross financial debt remained almost flat with the average cost declining to 3.3%.

And with this, I will now hand over to Pepe to present the strategic plan for the next 3 years.

Okay. Thank you, Marco. As we move from the review of our full year results to the outlook for the coming years, it is important to start by looking at the broader energy market context in which our strategic plan 2026 to 2028 will unfold.

Spain still demonstrate a very high dependence on oil and gas, and this will not decline unless we accelerate the electrification of final demand. Electrification is not only essential to cut emission and reduce energy dependence, but also a key opportunity to reindustrialize the country, thanks to competitive renewable resources. In the medium term, electricity demand grows towards level close to the PNIEC for conventional uses, but renewable hydrogen demand is significantly delayed due to the systematic halt of projects.

As a result, energy dependence will remain around 60% in 2030 and electrification near 31%, both below target. Demand growth by 2030 is driven by GDP-linked inertia, the electrification of industry, transport and buildings, although compensated by efficiency gains. Data centers will represent less than 5% of total demand.

In the longer term, in order to meet the European Union's 2040 goals, conventional demand should grow by around 3% per year driving electrification to almost 50%. On top of that, hydrogen would add 120 terawatt hour of new demand.

The development of this promising scenario necessarily requires significant investment in new infrastructure. The streamlining of project approval processes and above all, a stable regulatory and attractive framework.

As shown on Slide 18, as of the 31st January 2026, the Spanish distribution network is close to its capacity limit with a saturation level of 88%. The situation is even more critical at Endesa, where around 94% of network nodes already saturated and unable to accommodate new demand. With this framework, we have been able to grant only 18% of total demand connection requests received.

To provide some context for these figures, the 26 gigawatt connection request received along the year is well above peak demand of our entire national distribution network. Grid constraints are delaying or canceling investment. Grid saturation being a major barrier for economic growth, industrial electrification and the achievement of Spain's decarbonization target.

In this context, boosting investment in distribution network is essential to ensure that the country does not miss a opportunity for sustainable economic growth. The ministry is fully aware of the severity of the situation and the forthcoming royal decree aimed at increasing investment limit is expected to provide additional headroom and improve the framework for accelerating the grid reinforce.

Spain faces growing security of supply challenges. Wind and storage deployed capacity is significantly behind PNIEC targets, creating stress during period of low renewable output. Solar is expanding rapidly, potentially above the PNIEC, but without sufficient storage, it cannot replace firm dispatchable capacity. This leads to seasonal curtailments and winter deficits triggering the higher gas-fired generation.

Nuclear plays a critical role in ensuring security of supply. We believe that extending plant lifetimes strengthens system stability by providing inertia and voltage control, reducing CO2 emission and lowering wholesale prices by at least EUR 10 per megawatt hour. With the removal of specific taxes, nuclear's full cost would fall below the cost of replacing its production with a mix of solar batteries and CCGTs, which would be roughly twice as high.

To guarantee long-term reliability, Spain must secure firm capacity, accelerate storage, adapt the nuclear closure schedule to real PNIEC products and maintain combined cycles as essential backup for future renewables.

Moving now to our 2026-2028 strategic plan. Let's now break down how this energy landscape shapes the key highlight of our strategy for the next year, and I am now on Slide #21.

We now present a clear and balanced approach focused on growth, risk return discipline and financial strength. First, we will deploy EUR 10.6 billion investment plan over the period with more than 50% allocated to network, reinforcing our commitment to support electrification and reinforce grid resilience. The plan also includes selective investment in value-accretive renewable projects.

Second, our resilient low-risk asset portfolio will deliver predictable growth, providing a strong visibility on future performance with around 85% of EBITDA regulated or contracted.

Third, our financial strength enable us to deliver sustained profitable growth. EPS is set to grow at a steady 5% year-on-year on average, driven by higher investment business growth and the ongoing effort to improve productivity and efficiency.

Turning now to Slide 22. Let me walk you through the investment profile of our new plan. We plan to invest EUR 10.6 billion, 10% more than the old plan with a clear strategic focus on networks and selective renewable projects, key enablers of the energy transition, which together will account for around 80% of the total.

Investment in grid will increase by around 40%, reaching EUR 5.5 billion. This increase assumes the approval of the Royal Decree that would allow CapEx above the current regulatory cap as well as the full recognition of the investment deployed. This level of investment is essential to accommodate new demand connections, support electrification and reinforce network resilience.

In renewables, the plan involves EUR 3 billion of investment focused on selective project positioned to capitalize on rising demand. And finally, in non-mainland, in addition to maintenance investment, only those related to the outcome of the capacity auction have been considered in order to extend the useful life of our power plants.

And on Slide 25, focusing on grid investment. 52% of the investment in this plan will be deployed on networks. This plan marks a significant step forward in the share of investment contributing to RAB growth, plus 60% versus previous plan.

Indeed, out of the EUR 5.5 billion CapEx, around 80% will flow into the RAB. As a result, our RAB will increase 13% by 2028. Worth highlight is that around 70% of the total CapEx plan or around EUR 900 million will be accounted as RAB and will contribute to EBITDA growth beyond 2028. Operational performance will continue to improve with lower TEP and reduced technical losses.

Moving to Slide 26. During the time frame of the plan, we are allocating around EUR 3 billion of investment, 80% devoted to asset development, investment are 20% down compared to last year due to the more selective approach and to the fact that some specific projects have been rescheduled, extending the completion date.

We are working to bring into operation 1.9 gigawatts of renewable capacity by 2028, mainly wind and batteries. This will allow us to achieve 25 terawatt hour output. Batteries and storage projects will play a key role, enable us to optimize production, stabilize renewable output, while ensuring power availability throughout the day. This project will deliver attractive returns with an IRR versus WACC spread to around 300 basis points with 21% of the CapEx contributing beyond 2028.

Moving to next slide on Slide #27. I would like to comment on our site portfolio to develop a hybrid platform that offer optimal condition for data centers. This project combined existing grid connection rights, transfer land for fast deployment and the ability to provide full supply solution based on renewable and grid access.

Within this plan, we are also progressing selectively on some singular projects such as Pego, which is scheduled to be in construction in 2027 and will incorporate 600 megawatts of new hybrid renewable capacity, wind, solar and batteries with an estimated investment of EUR 600 million. Its hybrid configuration enables an energy profile close to baseload, making it highly suitable for large-scale customers such as data centers. Endesa is well positioned to capture emerging business opportunities in the data center segment.

When it comes to customer business drivers, I am on Slide #26. We will strengthen our position through loyalty, commercial alliance and better value management. On the one hand, we will expand our physical store networks, improving face-to-face services, especially relevant after the approval of the regulation restricting spam calls and phone contracting that will help to reduce fraud in the short term while improving more than 10% churn rate in the medium term.

On the other hand, new alliances such as the consolidation of MasOrange from 2026 broadens our blended offer portfolio and reinforce loyalty programs. As a result of all these initiatives, our customer base is set to grow from 6.2 million to 6.7 million free power clients by 2028, while total our sales remain stable.

Finally, it should be noted that the launch of an efficiency plan to improve our competitiveness in the current market environment.

Looking at our second strategic highlight on Slide #27, one of the key assets we intend to foster is the high visibility and low risk of our earnings profile. Over the period, we expect to deliver around EUR 18 billion of cumulative EBITDA around EUR 85 million stemming from regulated or contracted activities, providing clear visibility on future delivery.

Grid, we are almost fully regulated and a large part of our generation portfolio, including non-mainland generation and regulated renewables also benefit from remuneration schemes.

Finally, a relevant share of electricity generation is already lacking through long-term contract and PPAs as well as by our fixed price customer portfolio, which benefits from a strong inertia, given us substantial visibility and predictability over a 3-year plan period.

And now let me hand over to Marco, who will explain the main financial target of this new plan.

Thank you, Pepe. I would like to introduce the third strategic highlight. We go now to Page 30, financial strength by showing a slide that clearly illustrates the resilience of our business.

Our 2025 results already exceeded the target set under the previous 2025-2027 plan, highlighting the strength, the consistency and the quality of our performance. 2025 net ordinary income reached EUR 2.3 billion, 21% above the original guidance.

Moreover, when compared with the former 2027 guidance in the old plan, it already represents an outperformance of approximately EUR 0.2 billion. Importantly, this strong performance is reflected by a sound 41% of EBITDA to net ordinary income conversion ratio.

On Slide 31 now. Overall, these results reinforce our confidence in the business outlook, and they are a good starting point for the growth plan for the coming 3 years. EBITDA is expected to grow at a compound annual rate of around 4%, together with an improvement in cash conversion with the FFO to EBITDA ratio increasing to 78%.

Net ordinary income is also expected to grow at a similar pace at approximately 4% per year, reaching a range of EUR 2.5 billion, EUR 2.6 billion by 2028. Profitability will remain stable with the net ordinary income to EBITDA ratio broadly maintained at around 40%.

Turning to capital structure. Net debt is expected to increase to a range of EUR 14 million, EUR 15 billion by the end of the plan period.

With this overview in mind, let me now take you through the evolution of our main business lines on Slide 32. EBITDA is expected to increase by around 10% over the plan, reaching a range of EUR 6.2 billion, EUR 6.5 billion by 2028. This growth is underpinned by three main drivers, which we will discuss in more detail in the following slides.

First, an improvement in the distribution margin, supported by higher investment levels under the new regulatory framework. Second, the expansion of the generation and supply businesses. where the increase in the integrated power margin more than offset the expected normalization of the gas margin.

And finally, a reduction in fixed cost driven by the rollout of a new productivity program supporting competitiveness in an increasingly challenging environment. We will now take a closer look at each of these drivers in the following slides.

Let me now turn to Networks on Slide 33. Networks' EBITDA is expected to increase by a solid 10% over the plan period, reaching EUR 2.3 billion in 2028. This growth is primarily driven by the strong expansion of the regulated asset base, which is expected to increase by around EUR 1.5 billion over the plan period.

Our second key driver is the entry into force of the new regulatory framework for the 2026-2031 period. Taken together, these factors will support an increase in regulated remuneration over the planned horizon.

Turning now to Slide 34. Let me provide you with a more detailed view on the evolution of the free power and gas margin of the plan period. Starting with the power business. Sales to liberalized customers will remain broadly stable with an increase in free fixed price sales, representing around 80% of the total free sales. These volumes are increasingly covered by infra-marginal technologies due to the higher renewable output, leading to structurally lower sourcing cost.

By 2028, the free power unitary margin will increase driven by, first, a strong improvement in the supply margin, mainly explained by the recovery of extraordinary ancillary service costs incurred after the 2025 blackout by the resilience of fixed price customer portfolio and by the reduction of sourcing costs.

Second, positive generation margin on higher renewable volumes then more than compensate the impact of a lower price scenario.

Finally, a slight improvement from the short position engagement. Moving to the gas business. Total sales will decline by around 33%, reflecting the expiry of the Qatar and the Nigeria gas contracts. Gas margin will normalize over the planned period, essentially due to retail gas margin remaining broadly stable. And in contrast, other gas margin normalizing from the exceptional high levels recorded in 2025.

Turning now to Slide 35. Productivity has always been at the core of our strategy. But over the next 3 years, it will be even more critical to maintaining competitiveness in an increasingly challenging market environment. Over the planned period, fixed costs are expected to decline by 10%. This improvement is driven by a strict and well-defined efficiency program to be deployed throughout the period.

A key enabler of this program is the broad deployment of digitalization and progressive implementation of AI-based solution across the company. These initiatives support more intelligent and real-time grid operations, higher efficiency and reliability in generation, more personalized customer interactions and productivity improvements across selected corporate and support functions. Together, they allow us to structurally improve our cost base while enhancing operational performance. Efficiency measures will be primarily concentrated in the liberalized businesses where there is greater flexibility to capture value.

Actions include organizational streamlining, process reengineering, increase in-sourcing of critical activities and the recalibration of services provided by external suppliers.

In summary, disciplined cost control, combined with AI-driven efficiencies enable us to protect margins, improve competitiveness and sustained performance over the long term.

Turning to Slide 38 now -- sorry, 36 now. Looking at the net ordinary income, we expect a solid and sustained growth trajectory of the period with a compound average growth rate of approximately 4%, reaching a range of EUR 2.5 billion, EUR 2.6 billion by 2028.

The EBITDA to net ordinary income ratio will remain around 40% throughout the plan. The updated plan represents a clear improvement in earnings per share growth. EPS is now projected to grow at around 5% per year on average, a meaningful acceleration compared with the previous plan where we envisaged up 3%. This acceleration is driven by a combination of higher underlying earnings and the positive impact of capital allocation actions, including the execution of the share buyback program which further enhances per share value for shareholders.

On Slide 37 now, we will maintain a solid financial position, leveraging on strong cash generation and financial flexibility to fund growth while delivering sustainable shareholder remuneration.

Over the course of the plan, net financial debt is expected to increase by approximately EUR 4 billion to EUR 5 billion. This evolution is fully explained by the balance between robust cash flow generation and a significant step-up in capital allocation.

On the sources of funds, we will generate close to EUR 14 billion of funds from operation over the period. This reflects the strength and resilience of our underlying cash generation, supported by EBITDA growth and solid cash conversion with the FFO to EBITDA ratio expected to reach a sound 78%.

The total cash outflows will amount to around EUR 18 billion. Cash investments are projected at approximately EUR 11 billion, and shareholder remuneration remains a key priority with dividend payments totaling around EUR 5 billion over the period complemented by EUR 1.5 billion related to the completion of the remaining share buyback program.

Consequently, net debt-to-EBITDA is expected to move from the current level of around 1.8x, reaching 2.3x by the end of the plan period.

And now I will hand over to Pepe for the closing remarks.

Thank you, Marco. On Slide #39, we are confident that our strategy will generate visible and predictable returns, which is why we are updating our dividend policy based on current net ordinary income targets and the expected execution of the share buyback program, dividend per share is projected to grow at an average rate of approximately 4% over the period. This increase takes as a starting point an extraordinary 2025 DPS of EUR 1.58 per share.

For the planned period, we improved the dividend policy by guaranteeing a minimum payment of 70% on net ordinary income further reinforced by the implementation of the remaining share buyback program by December 2027. Overall, we believe this represents a clear, sustainable and accretive remuneration policy, providing a high degree of visibility to our shareholders.

Turning to Slide #40. In summary, Endesa is well positioned to capture demand growth opportunities beyond the horizon of the plan. This is why it is important to extend our perspective to 2030 for the business most directly linked to the energy transition. New demand will naturally transform into additional generation needs and further network strengthening requirements that will also put upward pressure on energy prices.

Starting with renewables, the completion of the CapEx currently under construction, together with the additional capacity required to serve incremental demand will allow installed capacity to reach around 15 gigawatts by 2030. At the same time, our regulated asset base is expected to continue expanding steadily in line with the significant investment needs required by the Spanish electricity system over the coming years.

RAB is projected to grow to around EUR 15 billion by 2030, implying a compound average growth of approximately 5%. This evolution reinforces the visibility and stability of our earnings profile and underlines and there's a long-term commitment to supporting the country's electrification and decarbonization objectives. This turns directly into stronger financial performance. Earnings per share are expected to increase from EUR 2.3 per share in 2025 to a range of EUR 2.8 to EUR 3 per share by 2030, also implying an average yearly growth of around 5%.

On Slide #41, despite the increase in leverage envisaged in the business plan, Endesa preserves substantial financial flexibility, our strong balance sheet provides capability to move closer to the sector average leverage of around 3x without comprising capital discipline. These additional resources could be selectively allocated across several strategic priorities, starting maximum value from the hybrid project hub capitalizing on growing demand assessing selected M&A opportunities fully aligned with our long-term strategic framework and a strict value criteria accelerating the deployment of storage, leveraging on the increasing need for system flexibility. All of these opportunities will support additional growth, reinforcing the upward trend in EPS. Moreover, the possibility of enhancing shareholder remuneration policy is an optionality.

Turning to environmental sustainability on Slide 42. This slide outlines Endesa's clear and credible decarbonization pathway. By 2030, Endesa's emission trajectory is fully alone with a 1.5-degree pathway reinforcing the credibility of our long-term ambition.

Looking further ahead, our objective is to reach close to zero emission by 2040. In the short term, our focus remains on reducing direct greenhouse gas emission in the mainland system. By 2028, this translate into a further step down in emission supported by the continued decarbonization of the generation mix and the increasing weight of low-carbon technologies. This decarbonization road map is underpinned by a balanced approach that combines environmental ambition with system reliability and social responsibility.

To conclude this presentation, let me turn to Slide 43 and share a few closing remarks. Our growth ambition is firmly anchored in highly predictable low-risk activities with a clear focus on business and projects that offer long-term visibility, stable cash flows and resilient returns.

Efficiency is a central pillar of our strategy and a key lever to enhance performance and competitiveness. At the same time, we benefit from a strong financial flexibility, which provide meaningful optionality for growth and value creation.

And finally, all these strategic drivers converge on a single, clear objective, delivering solid and attractive remuneration for our shareholders.

Ladies and gentlemen, this concludes our 2025 financial results and 2026 to '28 strategic update presentation.

Thank you very much for your attention, and we are ready to take questions.

[Operator Instructions]

Okay. We start now with the questions from our analysts. And the first one is Peter Bisztyga from Bank of America.

I guess kind of my main question is to try and understand what has really changed versus your prior plan that drives basically like 600 megawatts -- sorry, EUR 600 million EBITDA improvement in your new 2028 guidance versus your previous 2027 guidance. If I look at your bridge on networks, EBITDA there is only EUR 100 million higher than in your previous plan. I think you're targeting, I think, only 600 megawatts more power generating capacity than the previous plan. So there must be a like a huge increase in your customer profitability, so in your retail business.

So can you kind of confirm that, that's really where the biggest delta here is versus your kind of previous expectations? It would be useful actually if you could give euro per megawatt hour guidance on your sort of free power margin, gas margin and retail margin in 2028. You used to give that -- don't seem to in this presentation deck.

You also actually don't guide specifically to EBITDA in renewables and customers, and I'm just wondering why that is? And then, sorry, final part to that very long question is how much EBITDA benefit do you assume in 2028 from the capacity market and also from the Almaraz extension, please?

Okay. So good morning, Peter. Let's go through the three questions basically. So 2028, let me help you to bridge it with 2025. Basically, you have on distribution, as you were correctly noticing, I mean, we adjusted the 2025 because there were EUR 100 million of extraordinary. So if you look at with the adjusted 2025, it's a 15% increase, if you look at with the unadjusted is 10%. But basically, there, there is an improvement of EUR 300 million. And it could be even more because if you look, it's not everything optimized.

If you look at charts, for example, '23, you can see that the CapEx generating margin beyond the plan, we put it at 17%. So basically, there is another EUR 1 billion that is not in RAB at the end of the plan. So -- but because, of course, it takes time just to build all the networks. So there is a that could be even more eventually. That is on the distribution, so EUR 300 million on the distribution that if you count the result of 2025 is EUR 200 million.

Then you have another part that is on the margin -- on the free power margin that is the recovery of the ancillary services that we suffer in 2025. I mean, we always said that it was north of EUR 200 million, so slightly more than EUR 200 million. And we plan in 3 years' time, just to have all the time just to recover that.

Then you have another part that is related to the higher production of inframarginal. That is the combined of two. On one side, we are, of course, doing a lot of repowering both in hydro and wind. So this somehow boost also the production, but we are also building new capacity.

And therefore, you have a positive effect because on one side, you have less lower prices. But on the other side, you had another 8 terawatt production. So that net-net will bring you approximately EUR 300 million.

And then you have another EUR 200 million of savings on OpEx. This is on the positive side. On the negative side, we will adjust the high marginality that we have enjoyed in 2025 on the gas, and that adjustment would count probably around EUR 400 million. So net-in-net, that's where you find basically this EUR 600 million of difference. This is on question number one.

On question number two, just going a bit quicker. The free power margin that we are envisaging for the 2028, it's between EUR 55 and EUR 60 per megawatt hour. That basically is like taking the reference of 2025, the EUR 52 that were impacted by the ancillary services cost and bringing back these services there. Of course, there is most -- is more complex because you have power prices lowering down, but also the sourcing cost is going down, and that's why you basically keep that marginality.

And on capacity, I would tell you that probably that is an upside of our business plan because basically, there is not much of capacity there, because we do not have visibility yet on what will be the market there, and we do not have visibility yet or what will be the plans that will benefit and they will win the payers bid there. So I mean it's like we will basically see what will come out. Thank you.

Next question comes from Pedro Alves from CaixaBank.

Congrats for the results and the presentation of cost targets. The first question, please, would be on the sensitivity of your 2028 targets to pool prices in Iberia and the TTF price as well for your gas margins?

Second question on data centers. You mentioned ongoing discussions with data centers. So the question is, if you think that you could realistically announce something this year.

And the third question on the CapEx envelope of EUR 10.6 billion. If you can provide us how much is roughly growth versus maintenance the CapEx?

Okay. So thank you, Pedro. So on question number one, sensitivity on power and gas. On the power side, I guess that is another -- probably another feature of this plan. In this plan, we are not incorporating a strong increase of demand. So what we are seeing, just to give you an idea, is for this year, 2026, an increase of 1.2%. That, frankly, is lower than last year. And then in the following years, we are approximately at 2.4%. So basically, I mean it's not because we believe that this will be the increase in the demand, but it's because we really don't know where to place the real ramp up. We feel that probably it is starting. Of course, when we started the plan, we had not this feeling. But I mean, there -- it depends on what will happen on the demand.

So on the demand side, I feel that we were kind of conservative. On prices, as you have seen, I mean, we adopted the forward that were at that time. So basically, in 2027, going to EUR 58 megawatt hour. So I mean there, I guess that there is a kind of balance between the two.

And on gas, I mean, reality on gas in our plan, all the profitability and all the marginality will basically come from the retail business at the end of the plan. So basically, we are assuming that on the -- as I said in the speech, then from the other gas, there is not coming much of marginality, frankly.

Regard data centers. In data centers, are we planning to announce something soon? I guess that definitely, we are planning to do something in the course of the year, of this 2026. We have some of the developments that are more advanced.

We decided just to put one of the references of something that is very well known, that is the Pego project in the presentation. And there, we signed agreement. The positive part I guess of the plan is that in the plan, there are basically, there is not the upside of the data center.

Why do I say so? First of all, because, as I said, in the demand increase, we are not assuming the data centers really kicking in, first. Second, in the plan, we are not assuming any particular PPA basically and higher price PPA. And the third, we are not assuming any upside or any extra margin related to the sale of the land or the access to the grid connection. Why is it so? Because, I mean, we want to see exactly what are numbers that we will somehow see when we sign the agreements.

And on the third question regarding how much is growth and how much is maintenance. I would say that basically, the maintenance CapEx is approximately 30% of the total, with the rest, of course, being incremental CapEx, growth CapEx. Thank you, Pedro.

We have missed a last question from Pedro. If you allow me, the sensitivity to EUR 1 of increase of prices -- power prices, it translates to around EUR 20 million. Okay? Thank you, Pedro.

Now we have Javier Garrido from JPMorgan.

First question would be on the supply business. I was wondering whether you can be a bit more specific about the supply margin in '25. And particularly, you could also elaborate a bit more on how do you plan to take control of customer losses given that the pace of reduction has slowed down, but you are still losing customers. How do you plan to make that increase in customers even if we exclude the MasOrange acquisition?

The second question would be on the dividend policy. You could clarify a bit more the dividend policy. Am I right in understanding that the new dividend policy is at least 70% payout ratio, so that it results in at least 4% DPS CAGR? Or is there any different interpretation?

And the third question is on the cash conversion of EBITDA. It increases significantly from 70% to 78% through the plan? Would you mind to please elaborate on why that increase? What's exactly driving the improved cash conversion?

Okay. Thank you, Javier. And sorry to Pedro before for losing the last part of your question.

Javier, so basically on supply on 2025, as you have seen, the marginality, the free power margin was 52%, so lower than the previous year, and it was a mix effect. I mean, it was lower than in 2024, but not so much lower when compared to what has been the impact of the ancillary services. So somehow there, I guess, that in 2025, you can see the good performance of the business. You're right. I mean, we have suffered last year of many losses of clients. But again, I mean, there are kind of two markets, I would say, there. There is a market that is healthy. There is a long-term client that experience a normal churn rate and then there is another market that experiences a very high churn rate. And if you allow me, even a very high level of fraud. And that has been constantly rotating.

So I mean, what we understood at a certain point was that we were basically losing money on them. Because we were putting money just to acquire them and putting money and putting more money and then losing those -- the permanence of those clients was very short. There was no time just to get back the investment. So I mean, it simply made no sense.

So we prefer to go for something different. So we accepted losing part of the clients, and we went for the acquisition of MasOrange that was basically not because we acquired the clients, but because we were now able to serve bundled products. And apparently, it is working because, of course, in the -- at the end of last year, we were reducing a lot the losses. And I mean, we cannot comment on this year, but I guess the situation is somehow also the acquisition of MasOrange is proving that probably we have seen it correctly.

When you go to the dividend policy, yes, you're right. It's the correct understanding. So basically, at least our payout will be 70% and at least the 70% converts in at least 4% of CAGR on the DPS.

And then on the cash conversion, I guess that, of course, there is a kind of a challenging target that we are giving to us. But basically, we're doing a lot of jobs, a lot of job on every business just to improve the cash profile of each one of those. So we think that all these efforts that actually we started in the previous years can somehow come to give all the fruits at the end of our business plan. Thank you.

Okay. Thank you, Javier. We move now to Alberto Gandolfi from Goldman Sachs.

I'll have three questions as well. Could you please elaborate on your churn rate assumption? And how much is it right now? And how sustainable are the current levels before the new entrants start to lose money? So can you maybe elaborate a bit on the dynamics that you embedded in the plan on this?

Secondly, there is a very exhaustive slide on cost savings on the reduction in the fixed cost. I think you have four buckets, right, network automation to AI, labor. Would it be possible to tell us what the biggest buckets are one or two perhaps? How much of this is natural attrition, people that are retiring or being pre-retired? And then you hire someone coding on copilot or close that replaces five people. So how structural is this? Can we assume that this EUR 300 million reduction will carry on beyond '28 and for several years to come?

And the third question. I mean, you still have ample balance sheet headroom. So if you were to think about how to utilize it in the medium term going to beyond '28? Is there any way you could rank in terms of priorities, either what you favor or what is possible? So would that be more organic growth in Power Grid? Would it external growth in clients or power gen? Would it be more share buyback?

Thank you, Alberto. So regarding the first one on churn. I would say that there, the assumption of what we are experiencing right now, it's an elevated churn that is in the range of, I would say, 25%, 30%, okay? It's very high churn. And as I was saying, it's very somehow concentrating on some of the clients.

Now are we seeing this somehow going to normal level during the plan? No. We are still assuming that at the end of the plan, the churn will remain very high, not at a normal rate. But yes, a bit decreasing. And we are assuming this because we think that at least the frauds and all the part of that is somehow impacting strongly on the churn should somehow be reduced. We recently approved Royal Decree on that, trying to get rid at least that part.

And we really hope that, that will be somehow effective in reducing at least that. And on the other side, I mean, all the measures that we are somehow putting in the plan and that we are delivering, we started doing this last year in terms of, for example, physical point and that, of course, attract the clients and then they have a lower churn, but also all the changes that we made, the bundled products. I mean, there are many, many things because this is -- there is not something one specific stuff that stops the churns. So all this kind of stuff, we really think that will kick in. So again, very high churn in 2025. We still assume that at the end of the plan, we will be still high, but lower than this because of the reduction of the things that we are doing and also hopefully, the reduction in the fraud level.

Regarding the second question, cost reduction, I mean, this is not making me very popular here. But I mean, here, there are many things. We started this -- first of all, is it structural? Of course, it is structural. We started this last year. Because it takes time just to have a structural contention of costs and productivity. And it's -- there are a lot of measures there. Some of those will reduce costs. Some others will improve the quality and not necessarily reducing cost, but -- so I mean there are a bundle of things.

When it comes to whether this somehow touches also the personnel, I mean this is kind of still sensitive. What I can tell you is that this is not the first time whether we do this. I guess that is history. In history, this company has been used to make these structural changes.

So for example, when the call was closed or when we decided to move to the cloud and blah, blah, blah. So I mean, in all these moments, the company has been capable of treating this properly and of course, doing it in the proper way with the support of all the employees.

And on the third point regarding the ample balance sheet that we keep -- yes, it is true, we still keep it. We think it's actually a plus, it's a benefit. Why so? Because we think that there could be opportunity. The opportunity could come from the fact, for example, that if you look at the plan, there is, yes, an increase on the CapEx in distribution, but there is a decrease on the renewables that vis-a-vis the old plan that it's not something that explained it itself. But what we think is that we have a lot of things there ready to go. We need to assess exactly where the -- when the demand will start to kick in, just to somehow eventually go even more with investment there.

And priorities, I guess that some of the things we can do ourselves. I guess that there could be things available in the near future. So I mean, of course, on all this, we do not comment. But in terms of our priority, I guess that it's very clear where we have been putting money along the last couple of years. So I mean, I will go to that. And will there be space eventually also for more shareholder remuneration or shareholder remuneration improvement? Of course. I mean, we will somehow balance. We have ample room there, and we will somehow balance.

Thank you, Alberto. Next question is coming from Manuel Palomo from Exane BNP.

I've got three questions, if I may. The first one goes into one of the things that you've mentioned in order to achieve improvement in the integrated margin. First thing I'd like to know to get the confirmation that you assumed the extension of Almaraz 1 and 2. And in case there's no extension, what could be the impact in terms of terawatt hours? And if you are assuming in case that it gets extended, any additional CapEx related to it?

The second one also related to the, well to the, production output is. What is the impact you're assuming from hydro normalization after an excellent '25? And it looks like still a very good '26?

And lastly, on the generation output, why adding 1.5 gigawatts of wind and solar in Spain, given the level of curtailments that we are seeing? Do you really need it? Or would it be -- wouldn't it be enough just go into the wholesale market and purchasing the electricity?

Second question is on the other side of the integrated margin is on clients. You are assuming 500,000 additional clients, if I'm correct. I understand that you have already purchased [ MasOrange ] plots, my question is, are you expecting to see a decline in the final achieved price to customers? And could you give us a reference?

And lastly, it is about the regulated business. If I'm correct, you're roughly assuming EUR 1.8 billion per year CapEx. Is this granted? Or will you need any additional authorization from the Spanish government/regulator?

Okay. So Manuel, let me go through, I guess, that let's see if I get all of those.

First of all, on free power margin, actually, you were asking on Almaraz and someone else, I guess, that I forgot this before. On the Almaraz extension, yes, we are putting in as an assumption coherent with the request that we did to the nuclear authority that there will be an extension of Almaraz. Almaraz for us in the plan is basically one group in 2028 and means approximately 3-terawatt hour of increasing production.

There, I would say that there are -- there is a positive that is that you have 3 terawatt hours more that you sell. But there is also a negative because, of course, the nuclear allowed the system just to keep a lower power price. So I mean that's why it is so important for Spain to keep it. Therefore, if you take it off, you have an effect on the prices there. So the mix of the two is positive for us because we are talking about the 3-terawatt hour but the combined effect is less than EUR 100 million.

And on Hydro, yes, on hydro in what we are seeing, I mean, it's public dominance. I mean the hydro production in 2026, actually, apparently, it's better than in 2025. We had a very good start in 2025 than not a very good ending of the year in 2025. Apparently, it looks like it's better this year.

On generation output, the combined, I mean, when you see solar, wind and so on, in reality, they are concrete projects, and those are related to, as I said, data centers. So it's -- can we buy this on the market? Yes, but those projects are the ones that have closer data center. So I mean, in that case, we would rather prefer the little more marginality if you build, if you develop the project and you serve the data centers instead of trying to buy energy on the market.

On clients, I mean, the 500,000 more just basically, I mean, we are at the target right now. So if you look at from that perspective, with MasOrange, it means that we have to try to defend this until 2028. Do we see a decline in price? Of course. I mean, with the decline in price of the market, you -- it's lower, of course, that you see a decline in price on the customer, but you do also see a decline in the cost of sourcing. So that's why you maintain the marginality.

It is true that then the prices on the market takes a bit of time just to reflect. So it is true that when the prices on the spot goes down, they do not immediately reflect on the B2C or on the SME, blah, blah, blah, but also the opposite is true. When they increase, they do not immediately reflect on the final market.

And regarding the regulator, so regarding the level of investment, what is still missing is what the government announced that basically was a decree just to allow till 2030, an increase of the cap that currently is 0.13% of the internal product for up to 63%. So basically 60% more. So that is what has been announced by the government at the end of 2025, and we are expecting this decree to come.

I hope that I got all your question.

Let me get some color about the nuclear and perhaps about the distribution. You should take -- why we have decided just to stand or to delay the close of Almaraz in our plan. First of all, you should take into account that the time table for closing nuclear plants was set in 1918. And since then, the context and priorities has changed substantially.

The second thing is all countries are addressing extension and new power station even. But on top of that, for us, there are technical, environmental and economic reason for delaying its closer.

Technical reason, let me say, on the one hand, it makes no sense for group belonging to the same plant closing in different years. That is, and you know that it was expected the close of Almaraz 1 in the year '27 and 2 in the year '28.

The second thing is that the interim storage facility, the so-called ATI will not be completed until 2030 at the earliest and nuclear waste cannot be managed until then. So it can send just to delay a little.

On the other hand, there is a significant delay in the deployment of storage and wind power also. The system requires synchronous generation to manage both frequency and voltage and the energy balance up to 2030 would be more balanced, if you want and secure and with less energy dependence if we continue with these power plants.

With regard to the environmental reason, the closure of the nuclear power plants would not lead to a slower growth in renewables, but rather to an increase in combined cycle production and consequently in a mission. And the economic reason and Marco has said maintaining nuclear power generation, reduce the cost of the electricity market. So all in all, we have acted to the ministry just to delay the shutdown of Almaraz. And we are confident that it would be done.

With regard to the networks, let me say that increasing investment in the Spanish network remains essential for the integration of renewable, for the electrification of demand and for ensuring system stability. As you know, the grid has virtually no remaining capacity to accommodate rising demand. And in any case, this increase in demand is going to be a very good team for the renewables, especially for the solar power plants. It would be a good thing for the economy of the country. So at the end, we have decided that it's going to be a good thing for all the government, for the country and for us. So that's the reason why we have decided.

Let me say that we assume that the Spanish government has already anticipated, will rise the regulatory investment limit. The ministry projects a significant increase in investment in networks between 2026 and 2030, totaling 11.3% if I'm right, EUR 3.6 billion coming from transmission and EUR 7.7 billion from -- for distribution and exceptional, as Marco has said, a 62% increase in the investment limits in order to adapt them to the new context of the energy transmission.

This EUR 7.7 billion increase in distribution investment limit is something around EUR 1.5 billion per year turns into a capital rising from the current EUR 2.1 billion to something around EUR 3.6 billion. So this could imply something around EUR 600 million in additional net investment for Endesa on top of the EUR 900 million that we had today. So based on this, we feel confident just to increase the investment in the network in Spain.

Next analyst is Javier Suarez from Mediobanca.

Three questions on the context, the European context for electricity company. The first one is on the debate that maybe the Italian government and the German government have opened up on an effort to reduce overall electricity prices through the Eurozone. So I'm interested to see your view on the implication that this may have on the pricing setting dynamics through the Eurozone? And how do you think that debate is going to evolve? And in this context, you can share with us the assumption that you are embedding into your business plan regarding carbon prices to 2028. That would be the first question.

The second one is on the data center discussion. So it's evident that there would be installation of new data centers to Europe and the Iberian Peninsula as well. So I wanted to ask you your view on the model that should be implemented to avoid unintended consequences, because obviously, there is going to be higher electricity demand, and that could impact overall electricity prices as well. So do you see that, that may impact the way data centers are going to be installed and what would be the way of isolating those unintended consequences?

And the third question is on the slide when you are talking about a leverage evolution and financial flexibility. When you are referring to a scouting brownfield opportunities, if you can elaborate on those, how those opportunities should look like as you're referring to renewables energies on the Iberian Peninsula? Or are you referring to a broader set of opportunities?

And also on the storage plan, how do you see installation of new storage impacting the dynamics for the Spanish electricity sector?

Okay. Thank you, Javier. I will try to give some color, and then Marco will go deeply on that. About the effort to reduce prices. Well, first of all, I would like to say that the energy transition at least, in my opinion, is entering a more mature challenging phase. Clean energy development continues, but delivering deeply decarbonized resilient energy system is far more complex than simply, I would like adding megawatt, renewable megawatt.

Technology evolution when we see the technology evolution, Hydrogen is the most delayed driver of the PNIEC due to economic reasons, less than -- I think that in the PNIEC it was expected something around 50-terawatt hour in the year 2030. And I guess it's going to be less than 10-terawatt hour.

Talking about the storage, PNIEC include plus 15 -- gigawatt of storage needed by 2030, up to 22.5 gigawatt, if I remember well. It is clear that we are going to be in a figure lower than 9-gigawatt instead of the 15 gigawatt expected. So that -- and why this? Many things is -- one of the thing is the delay in the development of these technologies. The other thing is the geopolitical tension and macroeconomic pressure, taking into account the COVID pandemic, the war in Ukraine and the delay is the, let's say, predictable trade tariff. So we are living in a market uncertainty, complexity and commodity price volatility.

Energy demand was flat during the last year, but now we are expecting that outpaced improvement in energy efficiency. Also, there are movement in all the countries. So at the end, things could change. But in case of -- in the case of the carbon prices, I think the CO2 price should be and will be one of the main drivers of this transformation.

So the focus for me is not going to be -- or not should be the reduction of the price of the CO2. It should be the electrification and the decarbonization. We should continue adding renewables. And we should -- we are obliged just to electrify the demand.

So taking this into account, I think that it has no sense just to look for a reduction in the CO2 price. What I think is that the solution should be yes to subsidize some industries, perhaps the very high industry, very high consumption industries instead of that. I think that there is no sense to approve the one decree in Italy and also it's not going to be something general in the rest of Europe. What I think is that it's not going to be downward in our plan.

Thank you, Javier. I mean, question number two related to data center. I mean, it's a very interesting question and will take us a very long time to debate on that. But the data centers consumption are consumption basically are baseload. So what we are seeing -- what we are proposing what we are seeing also on the data centers, developers and hyperscalers is they are conscious that from the fact that, of course, they will impact the demand. And therefore, we do see merit in trying to develop for them this integrated bundle of technologies in order to try to replicate a baseload and in order to have the data centers that is closed by to his own feeding, to his own supplier somehow.

Then, of course, the grid would be a kind of back up for the peaks or for the moments where exactly this bundle of technologies, altogether, the wind, the solar and the battery are not able to provide the energy. But what we are seeing is that -- and we're seeing this in Aragon, I mean, this is starting. You are having the development of the data center, but in the close by, you're having also the development of renewables. And actually, the data centers, they are trying to develop close to big areas of development of renewables in order to have their suppliers in the close by. Of course, it's not perfect. It's not a perfect baseload. But for the time being, it's the best approximation of that.

And on question number 3, regarding financial flexibility. I cannot be too specific because, of course, I mean, this -- I will be generic, because I don't want to screw conversation that we're having. But I would say that it's not a secret that we are interested in hydro. And when I'm in hydro, it's modulating hydro, but it's also storage hydro.

Actually, in the plan, we have expansion of pumping in our plan. So we do not see the results in the plan. But yes, we do the CapEx in the plant. And we are looking for more. We are looking also at storage to develop our own storage or eventually, we could be interested in batteries for the time being. It's not of a secret that we are interested in wind. And I mean, I guess that, that in distribution, we are satisfied with all the investments that we have, but of course, I mean, it's also an area. So I would say that there is a big list of technologies and of areas where we could be interested. Again, yes, focused on the Iberia Peninsula.

We move now to Rob Pulleyn from Morgan Stanley.

Congrats on an impressive plan and thanks for all the answers so far. You'll be glad to know I have one question, and that's just to clarify something on the buyback. So you mentioned the second tranche of EUR 500 million is 30% complete, if I heard you correctly. But I think you also said -- and is that going to be completed by mid-July? Or is that the third tranche? Effectively, can we just get a little bit of color on the sequencing of the buyback? So is the second tranche through to July, the third tranche in the second half of this year and then the fourth tranche will come in 2027? Or do I misunderstand this?

So Rob, yes. First tranche was basically completed, almost completed. We bought, if I remember correctly, EUR 440 million out of the EUR 500 million and we are now canceling the shares.

The second tranche that we launched another EUR 500 million should lapse by the 27th of February. And out of this, I mean, it's now ongoing. I guess that we bought approximately EUR 120 million probably at a price that was a bit higher than EUR 30 per share. But I mean, it's the one that, in any case, should elapse from the 27th -- of by the 27th of February.

So the third tranche that we just announced will start -- will kick in from the 2nd of March until basically the end of June, and it's another EUR 500 million. And then with -- I guess that our idea is to continue with another tranche we have.

At that point, we should have approximately another EUR 900 million to complete by 2027. And I mean, I guess, that we will continue also in the second part of 2026 with other tranche. I mean, that's like -- let's see, but it's our area. And we should be finished in any case by 2027.

Thank you, Rob. Next question comes from Arturo Murua from Jefferies.

I just have one. Going back to the decree to increase the network investments. My understanding is that part of this increase will only be remunerated if the demand comes through after a few years. So if you could share a bit of more color how this will work? And how are you counting this in your numbers?

Okay, Arturo. So basically, here, the point is that generally, what we try to do is to start an investment in the grid at the beginning of the year and to try to put in operation by the end of the year, so that we can get the RAB on that.

Now sometimes there are -- particularly if you increase the pace of investments, there are investments that you start at a certain year and that not necessarily are put into operation at the end of the year. So there is a kind of ramp up. So in this ramp up when you have this ramp up, you have at the beginning the negative effect that you are investing and you are seeing -- you are always keeping the pace and you are seeing the remuneration from the next year. But of course, when you finish this ramp up, you have the benefit that you can still enjoying the ramp up even though you're not investing. Now we are in the first part. That is ramping up the investment and so not immediately seeing all the benefits.

So that's why we wanted to highlight. Because in the plan, I would say that at the end of 2028, we are missing almost EUR 1 billion of RAB there that, of course, will come later but the plan in itself is not optimized. I mean, that's what it is. We cut at the plan at the end of 2028 and there were almost EUR 1 billion of investment that were done, but not yet in operations or not yet in RAB. So that, of course, you find out the next year. And that's why we wanted also to give you a flavor of what could be 2030 because this is something that is embedded in the plan in all the businesses.

In distribution, you will see the benefit also in the year to come. And the same in the generation because also in the generation, we have some of the projects, I was mentioning, for example, the pumping, we were putting the money, and we were not seeing yet the EBITDA. So I mean, there are things that you only see later on. So that's why we wanted to give also a flavor of what could be the 2030 because the plan in itself is not optimized. We cut it at 2028, and that's it.

Next question comes from Jorge Alonso from Bernstein.

I have a couple of questions, please, and it's on the cost cutting and efficiency plan of this EUR 300 million. Could you give us some more color about in which areas can be allocated? So it will be more in distribution? Should we see that more in the whatever thermal generation just to understand, at the unit level, where can we see the impact of that efficiencies at EBITDA level?

The other one is in distribution as well if you can quantify the expected incentives, the amount of incentives that you are expecting or considering in the calculation of the revenues or EBITDA in the plan? And as well, and I think that we already answered is that we see CapEx in 2028 in distribution of EUR 1.9 billion, but the legal cap will be the EUR 900-plus another EUR 600 million, so it's around EUR 1.5 billion.

So if we should consider the normalized CapEx going forward between EUR 1.5 billion, EUR 1.6 billion or do you still see room because of the need of investing EUR 1.9 billion or EUR 2 billion annually beyond 2028?

Thank you, Jorge. So on cost cutting, important question there because, of course, there are areas where we are not putting a particular focus. And those areas are mainly the one-off distribution because with the current scheme of how the regulator decided just to somehow squeeze the profitability of the efficiencies. I mean, there is not so much merit to whatever you do, actually, you're doing more for someone else.

So I mean, on distribution is less of a focus and as well as on Nuc because it's another regulated staff and super sensitive. So all our effort is basically focused on, as you were correctly mentioning on generation. But I would say also supply that, of course, I mean, the market is changing a lot. We think that AI is -- will impact this a lot. And the things that we are doing and the restructuring that we are doing will impact it a lot. And as always, the structure and stuff that, of course, given what we are seeing could come as a revolution, it's an area that will be impacted.

When we come to question #3 regarding the CapEx, yes, you're correct. I mean the EUR 1.9 billion. Is this over the limit? No, it's not over the limit. You have to remember that basically the limit applies to the 13% of the GDP, the 0.13% of the GDP, the GDP has been increasing. So of course, you have this limit that is increasing year-by-year. And on top of that, you put the expansion that is allowed until 2030. So our plan is designed not to overcome that limit in any of the year. Actually, we are every year, we are slightly below that. We cannot risk to go over that limit.

And there was incentives. What was the question?

[indiscernible]

Yes. No. I mean on the incentives, Jorge, we will not give you numbers, but yes, there is, of course, an improvement. I mean, we also highlighted that basically offsets what you have been -- what we have been experiencing as a negative on the OpEx efficiencies.

We have now Jenny Ping from Citi.

A couple of questions from me, please. Firstly, just a clarification question on the power price sensitivity. You said EUR 1 per megawatt hour is EUR 20 million. Is that on EBITDA or net income? Secondly, in one of the notes in your slide around the net income growth of 4%. I think you explicitly say in the footnote that you've assumed a 71 million shares in terms of the net result of the buyback. If I take out what you've already bought back in 2025 implies a sub EUR 30 a share of price in terms of buybacks.

So does that mean that you're expecting to limit your buyback, anything above a EUR 30 threshold? So that's the second question.

And then thirdly, maybe I missed and apologies if I did. What are you -- where are you now on the Ireland generation investments where you've got to on that and the expectation of spending over the next 3 years, please?

So power price, the EUR 20, it's for the EUR 1, it's on EBITDA level. On your assumption, I mean your deduction on the limit of our share buyback, I mean what I can tell you is that, we have been buying share last week. I mean, we just published. This is -- we can share it as a public information. We just shared it last night, it was published last night.

The program has been buying last week for all the week. And I guess that the price of last week was around EUR 32 per share, I mean, something like that. So no. I mean, actually, the plan will buy at the price that is the price of the share on the market basically.

And on the islands on the third question, regarding the islands there, we -- there has been the -- actually the final results of the tender. And we were assigned with some of those.

Actually, we had an extension of life in some of the power plants. Some of this life extension were coming also from -- with the incremental CapEx. And I mean, that's what we are starting to work on for the near future. It is also worth noticing that there will be -- there has been also other players than being allocated new capacity in different islands, and we welcome that. And we think that -- I mean, that's what exactly what it is needed on the islands, and we welcome also the fact that we were not alone in defending the regulation there vis-a-vis the regulator. And in terms of investment, we are foreseeing approximately EUR 200 million, EUR 300 million along the plan.

We have now Pablo Cuadrado from JB Capital.

Yes, quick questions for me. One will be on the tax rate that is assumed in the plan. I wonder -- I look at the full year results, and there was a decline of 3.5% on the tax rate year-on-year. Clearly, there were the removal of the tax impact and the revenue impact that it was before. But still, is the basically 2025 figure that 23.5%, the one that we should assume for the next few years?

And second question will be on -- I saw that you provided the return, let's say, versus WACC that you get on the renewal segment at around 300 basis points, while the CapEx is going down in this new plan. I was wondering whether you can share which is the spread over WACC on the return that you are supposed to like on the network investments that they are clearly increasing in this plan.

And final one is on the unitary generation supplier margin. Clearly, what you put on the slide in that you are expecting an increase and explained perfectly the reasons. But shall we assume given that there is no figure that basically the reference that you provided last year, is the EUR 57 per megawatt, if I'm not mistaken, still should be a valid reference going through 2028?

Thank you, Pablo. So on tax rate, well, you should expect now that we do not have the extraordinary levy, you should expect as approximately south of 25% generally year-on-year. We generally can be lower because sometimes, I mean, we have also investments that are recognized as deduction, for example, in innovation and in this kind of things. So those when you have this kind of investment, then you tend to have a slightly lower tax rate.

In terms of profitability actually from, expected profitability from our investment, yes, you're right, there are the 300 bps for what it is greenfield renewables. In the case of networks, we work with 200 basis points because, of course, the risk profile of those investments is lower, and therefore, it is okay with lower requirements in terms of bps.

And in terms of prices, for 2028. I mean, of course, we didn't put the number there for a reason. But again, I guess that you're not far -- what I said is that we are in the range of EUR 55 to EUR 60. So with -- your EUR 57, you're not very far away from -- I mean, you're there basically.

Good. This was the last question from the conference call. So thank you very much for attending this meeting. And as always, IR team will be available in case you need something else. Thank you very much. Have a nice day.

Hello. Good morning to all the people connected. Welcome to the 9 months 2025 results presentation, which will be hosted by Endesa's CEO, Jose 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, Jose Bogas.

Okay. Thank you, Mar, 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, hopefully, resulted in a remarkable cash generation. This clearly proves the resilience of our business model, which enable 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 a steady progress in the implementation of our share buyback 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 highlights of the period. On Slide #4, we can see the solid financial results achieved in this 9 months of 2025. EBITDA reached EUR 4.2 billion, marking a 9% increase year-on-year, while net income came in at EUR 1.7 billion, up by a sound 22% versus last year.

Cash generation remains strong with an FFO rising to EUR 3.4 billion, 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 #5. We acquired the remaining 62.5% stake in Cetasa, enabling full consolidation of this wind asset portfolio. In September, we entered into a strategic agreement with MasOrange to provide combined energy and telecom offers. As part of the deal, which will be completed in the coming months, we will acquire Energía Colectiva, bringing over 350,000 energy customers to our portfolio and gaining access to more than 1 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 Masdar, 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 share buyback program. After completing the second tranche, we launched a third one with a target of up to EUR 500 million to be executed no later than February 28th next year.

Slide #6 provides a brief overview of the progress achieved on the capital allocation strategy and the execution of main industrial KPIs. We invested around EUR 1.4 billion 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 remained stable at around 10%, still significantly impacted by nonmanageable 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 customer, reshaping our customer mix profile with a focus on long-term loyalty. From a market perspective, on Slide #7, commodity prices shown signs of normalization throughout the period, gradually stabilizing after the volatility seen 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 EUR 63 per megawatt hour, that is a 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 phaseout 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 implementation -- implementing a flexible control model.

Slide #8. 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 #9, we review the more 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 require to achieve Spanish decarbonization and electrification goals. In subcontract, the contact evolves in a different direction and reflects very different dynamic and challenges. Grid connection 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 PNIEC assumption.

Grid availability was only 17% at the beginning of September, being virtually 0 in Endesa's area as of today. Due to this 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 network must be accelerated to meet electrification goals. The ministry's proposal being a step forward in raising the strategic investment limit by 62% for the 2026 to 2030 period. However, a fair and forward-looking regulatory framework that incentivize investment is essential.

Moreover, the pending rate of return update must urgently resolve asymmetric with other European countries as well as addressing inconsistences 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 EUR 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 EUR 200 million. And second, the 8% increase in generation and supply EBITDA 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. EBITDA 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 short position management with less opportunities in the current price context and a nuclear margin decline, mainly explained by higher variable cost due to taxes, basically the full Enresa 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 hydro volumes 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 margin stood at EUR 53 megawatt hour with a power supply margin of EUR 18 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 EUR 53 megawatt hour. 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 EUR 10 megawatt hour with expectation of ending the year at around EUR 9 megawatt hour.

Moving now to Slide 15 in the below EBITDA. D&A 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 nondeductibility of the 1.2% temporary levy that penalized last year's results. Net income rose by a solid 22% with net ordinary income to EBITDA conversion ratio reaching 41% in the period.

Turning to the next slide, Page 16. Cash generation continued to be strong with an FFO standing at EUR 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 EUR 530 million 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 EUR 10 billion, with cash generated in the period more than covering the deployment of CapEx, including EUR 1 billion of inorganic CapEx.

In addition, the change in net debt reflects dividend payments totaling EUR 1.5 billion and the completion of the second tranche of the share buyback program, which resulted in a cash outflow of approximately EUR 450 million. Gross financial debt remained unchanged with the average cost declining to 3.3%. And now I hand over to Pepe for the closing remarks.

Thank you, Marco. As we mentioned throughout the presentation, the solid delivery across all business areas reaffirm our confidence in achieving the top end of the full year guidance. This confirms the successful execution of our strategy and the resilience of our integrated business model. The soundness of our results is reflected in our commitment to shareholders with a solid dividend policy further supported by the share buyback program that will drive sound and long-term returns to our investors.

Lastly, we firmly believe that capital allocation must rely on fair and forward-looking regulation, a stable regulatory framework that incentivize necessary investment is essential to unlock the full potential of our capacity to accelerate the energy transition.

Thank you for your attention, and let's now move to the Q&A session.

[Operator Instructions].

Okay. We start now with a round of different questions. And the first one comes from Peter Bisztyga from Bank of America.

So 3, if I may. First one, just on numbers. Just looking at your strong 9-month performance, it looks like you need only EUR 300 million of net income to hit your full year guidance at the top end of the range. That would be down quite a lot versus the sort of EUR 600 million that you did in Q4 last year. So I was wondering if you could just explain what the year-on-year negative moving parts are going to be in the fourth quarter.

Then next question is on ancillary services. I was just wondering what was the positive impact of higher ancillary services charges on your generation business in the 9 months? And despite your flat retail margin, do you think that you can pass on those higher ancillary services costs to your customers in 2026? So should we expect your supply margin to actually increase above 18% next year on that basis?

And then finally, you lost another 130,000 regulated customers in Q3. I know you've said that you focus on high-value customers. But just wondering what proportion of your remaining 6.3 million liberalized customers you see as low value and are willing to lose? So at which point do you sort of have to start focusing on customer numbers rather than margins again?

Okay. Thank you, Peter. I will try just to give some color to the first question and the last one, and then Marco will add whatever. With regard to the guidance, well, as we have said, we can confirm that we expect to reach the top end of the Capital Market Day guidance for the full year 2025. That is clear, and we feel very, very, very comfortable. But we don't use to change our guidance, but believe us, we feel very, very comfortable.

Regarding the customer that we have lost in the last quarter, how much customer we are thinking that could be in a vulnerable, let's say, that position. Well, it is clear for us that the competitiveness in the Spanish sector is a good thing, and it's improving the way in which we offer and supply services to our customers. But it is clear also that just because of the more than 25% churn rate that we have at the level of the system and also at the level of Endesa, there are many switchers that it's very difficult just to obtain any profitability from this.

As you could see, we have reduced our customers and -- but our margins in supply even with the increase in the ancillary costs continue -- being the same at the last year, more or less. So that means that these customers that we have lost are not a value customers. So as we have said, we are trying to put first the value over the number of customers that we have. On the other hand, I would like just to add that this movement that we have done with MasOrange is trying just to really change a little bit our offer to our customer, trying to offer bundled services of telecoms and energy and given a better service just to increase the fidelity of this customer.

So well, we will continue on that, and we will see if this strategy really reduced the losses and even more increase the customer in our customer base. And now Marco will add to whatever and talk about the ancillary services.

Okay. Peter, thank you for your questions. Again, let me add something also on question number one. Yes, guys, I mean, it's like there is no secret here. It's EUR 0.3 billion as a net income for fourth quarter. Generally, the fourth quarter is a strong quarter. So I mean, that's why we are saying that we are very, very comfortably in the higher part of the range. Regarding question number 2, ancillary services. So there were 2 questions, I guess, there. But basically, first one, just to give you a few numbers, in order to have an idea on quarters for us, the penalization of the increase of ancillary services this year weighs approximately as a gross penalization, EUR 75 million per quarter, okay? So basically, 9 months is approximately EUR 200 million.

On the other side, this is the gross penalization because you have some recovered this on the generation side. So around EUR 25 million per quarter. So if you sum up, it's like basically the impact -- the negative impact in 9 months should be approximately EUR 120 million, something like that. So that's why we say that we believe that for year-end, we will probably be around EUR 150 million net negative impact from ancillary services on our accounts. That, of course, if you see it, gross is a higher number.

And in terms of supply margin, I mean, the supply margin stays where it stays because we have done -- we have managed our portfolio, but all those -- I would say that all those management was we were thinking to do that. So -- I mean, it's now what we have to do is working on absorbing somehow this higher cost on ancillaries. So that's why we have to continue to work this year, but also next year on recovering these costs. And on the loss of customers, I guess that the job that we're basically doing there, I would say, is almost done.

And part of this is probably also related to the fact that on one side, we've been losing those clients that made no sense in terms of acquisition from the push channels. On the other side, I mean, we're -- somehow we decided just to go through with the acquisition of the clients our clients from MasOrange that somehow showed a different trend in terms of churn and so on that I guess is mostly related to the fact that they have a bundle -- they buy bundled products and probably in these offers, it's easier to see the value that you give to the customer. Thank you, Peter.

Thank you, Peter. And now we have Alberto Gandolfi from Goldman Sachs.

Also 3 questions. I want to bypass a bit questions on regulation. I'm sure you get some more later. But can I ask you, if you were to receive a decent outcome, it's quite binary here, right? Either returns are good or they are just not quite good. So if you have a decent outcome, how much RAB growth do you think Endesa can deliver over the coming 5 years?

The second question is, can you place a share buyback somewhere in your capital allocation priorities? Do you think this is going to be an ongoing -- not just a tool, but an ongoing feature, meaning like a base case until December '27? And could we see this continuing to '28? I'm thinking in case returns, for instance, are not particularly good in distribution. So should we look at your share buyback almost as a safety net -- as a silver lining here on capital allocation? Or is it more central?

And the last question, you have been -- I think we need to give you credit. You've been the first company to talk about an inflection in power demand. You've been the first company to talk about particularly for Iberia, for Spain. Can I ask you -- it seems to me there's like 35 gigawatt of connection request to the grid when it comes to data centers in Spain. Obviously, we cannot imagine that 35 gigawatts will come online because it's the entire demand of Spain. But can I ask you 2 points on this 35 gigawatts. How much is from hyperscalers, therefore third-party data center specialized companies vis-a-vis entrepreneurs that are trying to make money out of this early-stage development?

And secondly, how much of the 35 gigawatts do you think it's realistic to assume will become operational by 2030 or '35 in Spain? Is it 5%, 10%, 20%? Just trying to gauge here what we should expect for this very important driver.

Okay. Thank you, Alberto. Let me say you something in relation with the 2 first questions. Well, we are an under-leveraged company. That means that -- and we have strong potential just to invest or just to -- in general, just to give value to our shareholders. If we could give this value through investment in the system, we will do it. If we are not able yet because of the regulation or yes, because anything, we will look for ways just to return this value to our shareholders, as we have done with the share buyback that we have launched.

So it is very clear for us that we want to give value to our shareholders. If it is possible just to do it through investment in the system, we will do it through the investment in the system. If not, we will do things like the shareholder buyback that we have done or similar thing. So that is clear, absolutely for us. With regard to the decent outcome in the distribution regulation, well, what I could tell you is that our last plan that is the plan from the year 2025 to the year '27, we invest around EUR 4 billion in gross investment in distribution. And we increased something around EUR 0.7 billion, EUR 0.8 billion in the RAB in the year 2027.

What we said in that context is that we have further firepower, let's say, that has to invest even more. But if -- so if we obtain a decent remuneration, we will try to increase this investment in the future. With regard to the power demand, you're right, the 35 gigawatt of data center. Well, we will see how many will be materialized up to the year 2030 because, well, it would depend in many things. Let me say to you something. The government of Spain has increased the cap, the limit from the 100 to the 162, that will give us an increase that don't reach the one previously forecasted in the PNIEC. So we are short on that.

So in that way, what I think is that we will be able just to reach the increase in demand that it was forecasted in the PNIEC and even perhaps a little bit more. And I'm talking around 3% each year up to the year 2030. But all these demand increase will be beyond the year 2030. We will have a huge increase in this year up to the year 2030, as I have said. But unfortunately, the investment that we are going to do like the Spanish sector in the distribution and transmission networks is not going to be the total amount forecasted in the PNIEC. Marco?

So thank you, Alberto. And sorry if I go long on the question. I don't know why I feel that I would like to talk today. So on question number one, on the RAB increase, in the last plan that we presented -- I mean, I remember that we had approximately EUR 3 billion of net CapEx along the plan and that we were giving us an increase in RAB that was lower than EUR 1 billion. But was a previous -- the current plan, it's not the new one, and it was based on other kind of assumption.

Now we have to see what is the regulation that comes out finally also in terms of level of investment and what are the kind of investments that are allowed, but it looks like this figure can somehow improve. Second question, share buyback. Is it a priority? Well, of course -- I mean, I guess that the answer is basically in the number. If you look at our net debt, and our gross debt now, I mean, despite the fact that we've been, of course, doing CapEx, we have been doing M&A. And despite the fact that we have been completing the first tranche of the share buyback, so EUR 450 million, we are still at 1.8x net debt to EBITDA.

So I mean, whatever we do, we are still there. So that's why we decided just to launch -- to stop with the previous tranche and launch a new one because we do see that there is space here for a lot. Just to give you some numbers, I always said that probably this company should run at a net debt to EBITDA that is between 2.5x and 3x. So if you take the numbers of today, the EUR 5.6 billion EBITDA, I mean, you multiply there is space at least for another EUR 5 billion. And of course, as you can see, probably, you can understand that despite whatever we can assume on distribution, there is still ample margin for share buyback, and that's why we launched the third tranche.

And on the third question on the power demand, we are -- it's in the make, Alberto. The answer to this question is in the make. In the sense that, that's exactly what we are discussing right now for the new business plan. And what we can say is that in this request for data centers, in terms of numbers, of course, there are many little entrepreneurs. But those little entrepreneurs, generally speaking, that they ask for small quantities of capacity. While the big guys, the one with the brand on top of the hat they go for the big numbers. So I mean, their presence is relevant when it comes to the proportion of big guys somehow requesting capacity for their data centers.

Okay. We move now to Manuel Palomo from Exane BNP.

I will ask just a couple. And sorry to insist on the buyback and on the regulation. But I was wondering whether -- well, continuing with the buyback at the current share price levels, which with the stock yielding below 5% makes still a lot of sense or whether it would make much more sense to invest as much as possible in electricity distribution business, even if the 6.46% return is not changed. So it's not improved that we expect it will be. So my question is whether you will do as much as you can even if the regulation does not improve?

And my second question is on the margins. I'd like you to please help me to understand what will happen with the margins for the next year because we've got one very positive driver, which is hopefully the pass-through of the ancillary services to final clients. But on the other side, I guess that we are all expecting some normalization in the hydro results. So my question is whether you could help us to understand where you expect the integrated margin for electricity to land in 2026?

Okay. Thank you, Manuel. Let me try to say something about the first question. You are right that, let me say, perhaps the Spanish regulation with regard to the distribution remuneration is one of the more complex of Europe and could be all over the world. What I really think is that we need certainty. And what we are obtaining is uncertainty just because of this very, very complex regulation that really you need to -- or we need to understand when we have -- when we will have the final and full picture of this, then we will take our decision about this.

But let me say that it is a little bit confused. I would prefer more clear, transparent, direct regulation. And if you allow me, I would tell you something about Paracelsus. Paracelsus was 16th century alchemist that said that the difference between medicine and poison was the dose. This sets of regulation can become poison for the network. So I ask the regulator just to simplify and just to give more clear regulation. Having said that, we need to have the full picture, and we will evaluate what to do.

Okay. So given that also Pepe is very inspired today, I will try to make answer short because otherwise, it would take too long here. So yes, CapEx is a priority. Let's see the final results, and then we will check. Regulation. On regulation -- sorry, on margins, what we do expect for 2026 integrated margin in line with this year. You were saying correctly, maybe the hydro next year will not be exactly the one that we have this year, not very sure about it. But if that is the case, I hope that also solar and wind will not be next year, the one that has been this year because actually, there was not so much sanction and even less wind until now in the year 2025. And I would say that's it.

So basically, integrated margin 2026, in line with the margin of 2025. Thank you, Manuel -- sorry, here, they are saying buyback and versus CapEx. So CapEx, of course, again, we will do -- we want to grow. So if there are a condition, we will grow. Of course, they should be profitable -- this should be a profitable growth. And in terms of buyback, I guess that there is -- as I said, there is space in the debt, basically, frankly, for both. Then I mean, buyback, it's a way of giving back to our shareholders. That could be also a dividend policy. But all this stuff will be somehow managed and addressed in our Capital Market Day end of February next year because they are all in the make. Thank you.

The next question comes from Pedro Alves from CaixaBank.

Just one question, please, on -- just to understand how you frame your thoughts in terms of capital allocation besides the potential investments in distribution networks. So basically on potential M&A opportunities because given your balance sheet flexibility and the fact that valuations for renewables pipeline in Spain have sort of come down over the past year. Do you see this perhaps as the moment to buy, for instance, a renewable developer being, for instance, a smart hedge given the uncertain state of nuclear in Spain.

I mean if nuclear does close, you reduce your share position in inframarginal generation and benefit from higher power prices without nuclear. And well, if it's extended, you obviously still capture the upside from your nuclear fleet. Just to understand if you can really hit the pedal now on M&A.

Thank you, Pedro. So on your question, do we have space for M&A in our balance sheet? Yes. And that's exactly what we have been doing with the acquisition of the assets of Acciona, with the majority of the wind assets in Acciona, with the acquisition of clients from MasOrange. So I mean, that's -- if we see an opportunity, of course, we do it. Now does this brings us to buy renewable developers? I don't think so because, I mean, we have plenty of projects in wind, in solar, in BESS, I mean, plenty of that.

What we will love eventually is something that is up and running. So if there are things there that are up and running -- but again, probably not on solar but on the other technologies. And those kind of things are not easy to find or not cheap to buy.

We have now Javier Garrido from JPMorgan.

I think most of them have been addressed, to be honest. So I will focus on 2 on results. Firstly, on your financial costs. Do you think that the Q3 numbers give a good outlook for the steady rate of financial costs going forward, given that your gross debt has now stabilized? And regardless of what decisions you make then on extra shareholder remuneration, you plan to keep a similar structure of financing in terms of the balance between fixed and variable costs and short and long-term debt profile?

And then the second question is on the regulation and Fred. So if I understand correctly, your priority when you think about the potential improvements that might come in the final determinations of the regulator would be to get more visibility and predictability about the inclusion of assets into the RAB and lose the risk of having stranded assets. Is that correct? Or is there any other top priority in your mind about what should improve in the regulation for you to be more aggressive in your distribution CapEx profile?

Let me try to answer the last one in terms of the regulation. And well, it is a whole all the remuneration of the distribution. As I have said, it is complex -- very complex. We need just to understand clear. But the most important thing for me is to have the guarantee that all the investment that we are going just to go ahead with will be remunerated. That is something that in the last drop, and we are waiting for the next drop really create some kind of uncertainties.

And there are many levers just to improve the remuneration in this regulation that we should understand clearly just to take the decision, but we prefer just to go ahead with investment in the system, in the network and to give the enough profitability just to give value to our shareholders. That is what we want. That is why we are working now. If we don't have the opportunity, we will look for another ways just to give value to our shareholders.

Thank you, Javier. So let me answer the questions on the financial structure and financial costs. So can we assume that the financial costs that you're seeing right now are the stable financing costs? I would say, yes, in terms of price, so in terms of rate, even though I still expect that maybe we can do slightly better than that. And in terms of quantity, I mean, let's hope that we will have the opportunity to increase our debt. So I mean on the proportion fixed versus variable, we are now approximately 60% fixed and 40% variable. And I guess that probably this is close to what we want to have vis-a-vis the future in terms of structure. Thank you.

The next analyst is Javier Suarez from Mediobanca.

Three questions from me as well. The first one is on the electricity demand dynamics in Slide #8. You have mentioned that there is a sharp increase on electricity demand. There has been a mention of some impact on new data centers in the area of Aragon. So could you be a little bit -- give us more granularity on the underlying dynamics for electricity demand increase affecting the industry services and residential activities. That would be very helpful.

Then on the regulation, again, back to the need for a different proposal. Can you help us to understand which could be, in your view, the implication on some optimal regulatory outcome? And if you see the necessity for the government to intervene maybe calling a committee of collaboration between the sector, the regulator and them as well? And then the third comment is on the supply activity and the decrease on number of clients by minus 6% year-to-date. So can you help us to understand why do you see that the client base is going to remain sticky in an environment that you have defined of a significantly higher competition?

Okay. Thank you, Javier. Trying to be short in the answer, I will pass the question to -- just not to repeat. Marco?

I mean, here things becoming hot, the climate here. So I mean, on question number one, regarding electricity demand, I mean, here, probably the nice -- the only comment that I would add, if you go back to Page #6, I guess it was, sorry -- yes, when we had the split of the -- only to comment that data centers are in the service cluster. So on industry, you start to see a recovery of industry, and that's what was easy to see for us because we were seeing our clients somehow switching from gas to power. So I mean, we were seeing this somehow or asking for more capacity. So we were seeing this starting to happen.

On services is where you find the chapter of data centers that I mean, here, it looks like if you look at our area, strong increase. I mean, we believe that still much has to be seen here. And on residential, I mean, it's what has always been somehow sustaining the consumption for the time being, and it's even more related then to weather and these kind of things. On question #2, on regulation and what could be the effect of a suboptimal regulation, well, I mean, on one side, if maintained, I mean, if there is really a decision on that, of course, it means much longer time for developing the network that the country needs to have and the country deserves. So basically, it's somehow unfortunately losing an opportunity.

Then does this mean that in the process things can change? I mean, I don't know. I mean, for the time being, I still want to hope that, I mean, the fundamentals will somehow will somehow be there because it's too of a good opportunity for the country. On question number three, regarding the supply decrease. I mean, frankly, the churn level that we are seeing right now, we don't think it's a sustainable level for any market, for any country. I mean -- it's over 25%, I mean, in that range. I mean we believe that it's because of many things. There are a lot of components there. I'm not so sure that all the clients are so happy just to switch so much in some cases. I can tell you that it's a level of fraud that is terrific.

So we think that sooner or later, this will be somehow -- this will decrease. And in a way of somehow -- I mean, of course, fighting the fraud and so on, and it's not only in our hands. But for what we can do, of course, it's in our hands just to give a compelling proposal to clients. So that's why we decided just to acquire the clients coming from MasOrange that somehow they come with the bundled proposal. And on the other side, also try to have an agreement with them in order to offer also to the other clients of our base, other services and other offers that they can find somehow attractive. All of this in order to decrease the churn level that, as I said, is not sustainable.

Okay. The next question comes from Fernando Lafuente from Alantra.

Hopefully, the last one on regulation, just about the timing in which you expect the new drafts or new steps from the CNMC, both on the model and on the WACC. And also on networks, in this case, I would like to have your view on what would be a recurrent EBITDA for this year? And under the current circumstances, how do you see that EBITDA evolving ahead of 2026?

And lastly, on the capital allocation, it's very good to hear you being more active on capital allocation and especially this message regarding shareholders' returns. My question is on the dividend policy, Marco. You basically commented that a little bit, and I know you said the Capital Markets Day. But my question is basically if under this strategy of increased value for shareholders, you could consider a new dividend policy with, let's say, more visibility or less volatility than what we've seen in the past and obviously, without wanting to give you a specific answer on what's going to be the new policy. But what are your views on that side?

Fernando, talking about the timing in the regulation and the CMC, who knows? But let me say, having said who knows, it's going to be before the year-end. The real thing is that we are waiting in the next days just to have another draft, that hopefully will take into account at least some of our comments on this regulation. And we hopefully think that it will improve the picture that we have today. It could be enough just to take a decision or not, I don't know. But we will see in a short period of time, the first results and movement. But the last draft or the last or the final picture could be before the end of the year.

Fernando, thanks for the questions. Number two, on network. I guess that the recurrent EBITDA, the one that we were seeing for this 2025 is approximately EUR 2 billion. In 2026, we were seeing this going up in the previous plan, EUR 100 million in 2026. So then, I mean, let's see what happens, what is the final regulation and what are the decisions that we take on CapEx.

And on number three, dividend policy, I mean, that's another thing that is in the make. We are having this kind of discussion right now. And yes, I guess that there are 2 parts here. On one side, CFO claiming for having somehow some flexibility in order then to fix the dividend. And on the other side, somehow giving confidence to our investors about the profile for the future. So I mean, those 2 things, I guess, that not necessarily are not compatible. That's the way we are starting to work. Having said that, your answer -- your question was very elegant. I don't know if my answer was at your level. Sorry for that.

Next question comes from Rob Pulleyn from Morgan Stanley.

The first one, if I can just revisit something from earlier. Could you confirm for the network CapEx, what is the upside to your current guidance, given the investment caps increased and appreciating it's contingent on the regulatory package. I believe that the 3-year guidance you've given to '27 is that the regulatory CapEx on networks would be EUR 1.2 billion. It'd be interesting to hear what upside potential there could be for that if the stars aligned and the regulator gives you what you ask for.

And secondly, apologies if this has been answered, but I hadn't heard it. Could you give us a steer as to how the repricing of your supply contracts is going to pass on this ancillary service costs you spoke to earlier and how that will look for '26 and '27 in terms of passing that through to your retail base?

Thanks, Rob. So on network CapEx level, again, it's difficult to say without having the details, and it's difficult to say because we are in the makeup of the new business plan. What I can tell you is that if the outcome is positive, we believe that the previous -- the current business plan that actually was envisaging approximately EUR 3 billion of net CapEx along the 3 years could be substantially increased. I don't want to give numbers on that.

Regarding question number two on the supply, I mean, as I said, the supply margin you have seen, it's basically constant, is EUR 18, and it's because of the management of the portfolio that we did along the year. And that was what we thought doing before the increase of ancillary services came into the play. Now in order to somehow digest this increase in ancillary services, that I was estimating, is approximately something in the region of EUR 150 million, could be a bit more probably at the year-end 2025, we need time.

And part of it has been done because there are contracts that somehow foresee that, but part of it cannot be done immediately. So it will -- something that will take us busy along 2026 and maybe a bit longer than that.

We move now to Fernando Garcia from RBC.

I have just 2 left. So coming back to the data center topic, are you having any conversations to do PPAs with data centers? And second question, for the EUR 5 billion potential leverage optionality that you commented before, specifically related to share buyback, is there any financial limitation to do that, like, for example, EPS accretion?

So on data centers, are we having a conversation on PPAs? Yes, of course, and it's mostly related with the big guys, I would say. Question number two, that is on the leverage optionality. I guess that there -- I mean, frankly, the only thing we are checking and seeing in the share buyback use is not reducing the -- structurally the liquidity of our shares, okay? That is the only real limitation and the only thing that we are carefully look for the use of the share buyback mechanism for the time being.

Okay. This was the last question from the conference call. And now I will read just one pending question that comes from Philippe Ourpatian from ODDO. And the question is regarding the Portuguese statement from the rate of return and if this could be a good proxy for Spain. He mentioned the increase of 170 basis points in the write-off return. Please, Pepe.

Thank you. Let me say that increase of 170 basis points will give us something around 7.1%, 7.2%. Well, it is better than the one that we have today. I think it would have more sense. Also, if we take into account what the CMC are doing with other regulated sector in Spain, that will give us something around 7.2% that is very closer to the one in Portugal.

Well, the other thing is that the financial remuneration rate all over Europe is something between 7% to 8%, let's say that. So well, it would be in the lower range that we see in other countries but -- well, I think it would be better than the one that we have today, of course.

Okay. Now yes, this was the very last question of the conference call. Thank you for your participation. And as always, IR team will be available in case you need any further questions. Thank you very much.