Iberdrola, S.A. (IBE) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. First, we would like to extend a warm welcome to all of you who have joined us today for our 2026 9 months results presentation. As is a summary, we will follow the traditional structure of our event. We are going to begin with an overview of the results and the key developments during the period, and the presentation and the Q&A session will be delivered by the top executive team joining us today. Mr. Ignacio Galan, Executive Chairman; Mr. Pedro Azagra, CEO; and finally, Mr. Pepe Sainz, CFO. After the presentation, we'll move on to the Q&A session. I would like to remind you that we will only be taking questions submitted through our website. Please send your questions exclusively via www.berdrola.com. Finally, we expect that today's event to last no more than 60 minutes. Should any questions remain unanswered, the IR team will, as always, remain fully at your disposal. We hope that this presentation will be useful and informative for all of you. Now without further ado, I would like to hand the floor over to Mr. Ignacio Galan. Thank you. Once again, please, Mr. Galan.

Thank you, Ignacio. Good morning, everyone, and thank you very much for joining today's conference call. In the first 9 months 2026, reported net profit increased by 10% to EUR 5,816 million and adjusted net profit reached EUR 5,141 million with 9% up. 30% excluded this increase will be 3% excluding foreign exchange impacts. Adjusted EBITDA increased by 7% to EUR 11,191 million, driven by the strong performance of networks, up 15% due to higher asset base in all countries, rate increases and growing contribution from transmission. Total investment increased by 13% to EUR 10.1 billion in only 9 months with 75% allocated to United Kingdom, United States and Brazil. Network investment reached EUR 6.3 billion, up to 28%, leading to a 14% increase in regulated tariff base to EUR 56 billion. And we invested an additional EUR 3.6 billion in power and customers with more than 2,300 megawatts of new capacity operational from January to September for a total of 3,300 megawatts in the last 12 months. Thanks to our active debt management, we have combined those record investments with an ongoing reinforcement of our financial strength, reflecting net debt-to-EBITDA ratio of 3.4x. And we maintained 70% of our total debt at fixed rates, excluding Brazil, which provides us significant protection against potential increases in interest rates. Following this result, the Board of Directors approved yesterday an increase of 8.7% in the interim dividend to EUR 0.275 per share. As usual, we will add to this amount a supplementary dividend once approved in our Annual Shareholders' Meeting on 2027. Finally, in last month, the acceleration of electrification and new energy policies have allowed us to increase the visibility of additional regulated investment and growth opportunities across the United Kingdom, United States, Brazil and Spain up to 2030 and beyond. Moving to results. Adjusted EBITDA reached EUR 11.9 billion, up 7%, with almost 2/3 coming from the United Kingdom, United States and Brazil. Networks increased by 15% to EUR 6,430 million, contributing already 54% of the total EBITDA, thanks to higher regulated base in all countries. The positive impact of RIIO-T3 in the U.K. in April, new rates in New York, Connecticut and the U.S. plus additional revenue from transmission after the commissioning of NCC, rate increase and contribution from transmission in Brazil and a strong performance in Spain as well. Power customers EBITDA reached EUR 5,359 million as the strong increase in demand in the third quarter led to higher procurement costs for electricity that has been sold at prices fixed in 2025. This negative impact is not expected to continue in the coming quarters as new sales are already reflecting higher prices. In addition, this business was impacted by ancillary service in Iberia and higher costs in regulated gas tariffs, partially offset by the increasing contribution of pumping hydro in Iberia to the new facilities in operation like Valdecanas and Balparezo in the Tahoe and Terra Rivers. All in all, excluding FX impact EBITDA grew by 8% Total investments were up 13% year-on-year, reaching a new record of EUR 10.1 billion to September or more than EUR 15.5 billion in the last 12 months. The United Kingdom was once again our largest destination with more than EUR 3.1 billion invested in the first 9 months, 31% of the total, followed by United States and Brazil with 21% each, Spain with 60% and other European Union countries in Australia with 10% of the total investment. By businesses, network contributed 62% of the total investment, reaching EUR 6,237 million, 20% more than last year. In the U.K., network investment increased by 36%, reaching EUR 2.1 billion or 33% of the total, driven by 60% growth in transmission and 20% increase in distribution. Investment in Brazil also represents 1/3 of the total, almost doubling year-on-year, thanks to a 23% increase in distribution and the acquisition of Neoenergia minorities, which more than offset the decrease in transmission after the completion of the last project awarded. United States network investment reached EUR 1.5 billion with 10% decrease to the full commissioning of NCC transmission project last January. Finally, investment in Era in Spain increased by 20% year-on-year to EUR 525 million. As a result, our regulated asset base reached EUR 56 billion, up 14%. Transmission continues to be the key growth driver with 31% increase in RAP year-on-year to EUR 17 billion and distribution RAB rose by 8% to almost EUR 40 billion. By countries, the U.K., the U.S. and Brazil registered double-digit growth rates, reaching a combined contribution of 83% of our total regulated asset base. And this trend is expected to continue in the coming years. In the case of United Kingdom, distribution investment in ED2 framework were increased by 20%. In the U.S., the temporary distribution rate recently obtained in New York will support $2.2 billion of investment up to May 2027 and the Power New York multibillion project continues progressing. And in Brazil, Neneria, will invest EUR 9 billion in distribution up to 2030, doubling previous investment levels after renewal of the concessions. And more than offsetting the expected decrease in transmission after the completion of the old project awarded that already represent EUR 4.3 billion of regulated asset base and will contribute more than EUR 250 million of annual EBITDA. In Spain, we will also continue increasing investment following the improvement in incentives included in the new regulatory framework. And finally, the authorization process for the acquisition of Caruna in Finland is progressing as expected. Investment in renewable reached EUR 3,257 million with EUR 1.2 billion investing in onshore wind, another EUR 1.2 billion in offshore wind, EUR 450 million in solar and EUR 400 million in storage and other technologies. As a result, we sold more than 2,700 megawatts of new capacity, of which 1,000 correspond to onshore wind, mainly in Continental Europe, Australia and United States 50 megawatts of offshore wind in the U.S. and Germany and 700 megawatts to solar and storage mainly in Iberia and Continental Europe. By countries, more than 600 megawatts were installed in the U.S., in line with the strong increase in capacity registered across the country over the last quarters. In the last 12 months, total capacity addition reached 3,200 megawatts as I mentioned before. Once again, the increasing cash generation allowed us to register record investment and preserve our strong financial position with a net debt-to-EBITDA ratio of 3.4x, fully compatible with our BBB+ rating. And we have continued to increase the share of fixed debt to 78%, excluding Brazil, providing significant protection for potential increases in interest rates. Following this result, and our strong current financial position, yesterday, the Board of Directors approved an interim shareholder remuneration of EUR 0.275 per share, 8.7% up. Next year, we will add to this amount the supplementary dividend approved at the next Annual General Meeting next year. As mentioned, in the last month, we have continued to see similar improvement in our investment outlook to 2030 and beyond, driven by increasing electrification targets and new energy policies. A few weeks ago, the International Energy Agency published a special report on electrification showing that just by using technologies currently available and cost efficient, global electrification rates could increase by more than 10 points in just 10 years. Under this scenario, global electricity demand will increase by 50% up to 2035. This remarkable growth trend after a decade of flat evolution is visible across all energy uses. For industry where 40% of low and medium temperature process could be fully electrified to transport or cooling and heating, both with 50% electrification potential. And according to the Electricity and Energy Agency, this potential is even higher in mature economies like Europe, where electrification rate could increase by 15 points to almost 40% of the total final energy consumption. These technological trends will be further supported by energy policies that are promoting new investment across our main markets, especially networks. European Union, the electrification action plan recently approved by the commission has set a target of 46% electrification by 2040. And the European grid package calls for a strong increase in network investment up to EUR 600 billion in just 5 years. include these measures like the acceleration of permitting and the design of regulatory framework with sufficient incentives. United Kingdom, the Clean Power 2030 plan targets 95% clean electricity in just 5 years, a building block of the country's net zero strategy to reduce emission by 87% by 2040, but also as a way to promote energy security and economy across the U.K. All this requiring present investment in transmission and distribution in line with the recent report published by the U.K. independent system operator, which estimate that only in transmission networks investment should reach GBP 89 billion in the next decade, far above the estimates made 2 years ago. This positive outlook is already translating into tangible growth opportunities in all businesses and geographies. In networks, we expect to increase our regulated base by around 60% up to 2030, reaching more than EUR 90 billion, driven by huge investment requirements, including growth investment linked to demand increase, especially in Brazil, but also in Spain and the rest of our markets, where we continue receiving more and more connection requests. as well as new transmission lines or interconnectors. On top of this, refurbishment investment will also rise considerably, mostly in the U.K. and the U.S. due to the high age of network assets, which average reach 45 years and in some cases, up to 70, 80 or even 90 years old. Finally, we also expect a strong growth investment linked to reliability and resilience due to the increased regulatory requirements. Given the positive investment outlook in the U.S. and the U.K., we expect an ongoing rise in the contribution of both countries to our network regulated base, reaching 65% by 2030. In power and customers, we expect 15 gigawatts of new capacity between '25 and 2030, of which 60% are already installed or under construction. 5 gigawatts were already commissioned between January '25 and September '26 and 3.8 gigawatts are currently under construction with 1.5 gigawatts starting operation already in the fourth quarter of 2026, mainly corresponding to Eastnglia II offshore wind farm in U.K. another 2.3 gigawatts in 2027 and 2028, including the Anglia 2 offshore wind in the U.K. and 700 megawatts of onshore wind and solar in the U.S. In addition, we have up to 6.5 gigawatt capacity that will start construction shortly and will be commissioned in '28, '29 and 2030. Around 1/3 of this capacity will be in the U.S., mainly driven by life extension and repowering opportunities across our 11 gigawatt fleet in the country. We'll now hand over to our CFO, which will present the group financial results in further detail. Pepe?

Thank you very much, Chairman. Good morning to everybody. 9 months reported net profit grew 10% to EUR 5.8 billion and adjusted net profit grew close to 9% to EUR 5,141 million, supported by a 7% increase in adjusted EBITDA to EUR 11.9 billion. Since last year, the dollar has depreciated 4.1% against the euro, the pound 1.7%, while the real has appreciated 5.5%. Excluding it, adjusted EBITDA growth would have been -- would have reached 8% and adjusted net profit 13%. The adjustments to the reported P&L are as follows: -- in this quarter, in Q3, there is an impact of GBP 382 million U.K. smart meter capital gain, which is excluded from the adjusted net profit in '25. The remaining adjustments were already reported at June. Regarding Mexico, in according with IFRS 5, Mexico is classified as discontinued operations. Therefore, its contribution is excluded from EBITDA in both reported and adjusted results. At net profit level, Mexico is presented on the discontinued operations in the reported account, while in the adjusted figures is reflected under the equity line. As a consequence, in the second quarter, we excluded the positive capital gain of around EUR 1 billion from the sale of the remaining Mexican business to Cox. As usual, U.K. capital allowances are adjusted at net profit level in '25 and '26. Finally, U.S. past recognition is excluded from adjusted net profit in '25, EUR 530 million gross EUR 389 million net. You can find all these effects explained in more detail in the annex on Slide 37, 38 and 39. Adjusted revenues increased 8% versus 4.2% at June. Procurements rose to 12.3% compared with 4.8% also at June, mainly driven in Q3 by higher purchase volumes and prices required to support the strong demand and reinforced system operations. Selling prices have started to increase, and the benefit is expected to be reflected in future periods. Adjusted gross margin grew 4% and excluding the negative FX impact, would have grown 5%. Adjusted net operating expenses were 1% lower year-on-year and remained flat, excluding the FX impact. 9 months '25 adjusted other operating income excludes the EUR 382 million U.K. smart meter capital gain. Net personnel expenses increased 8.2% as the second quarter of '25 included some positive nonrecurring impacts. Average headcount increased by 2.9%. External services grew 1.7% and adjusted other operating income, once excluded the mentioned EUR 382 million U.K. smart meter capital gain improved by 37% as in Q3 of '25, we had a negative impact of EUR 121 million due to the deconsolidation of Visto Anglia 3. Analyzing the Networks business, its adjusted EBITDA grew 15% to EUR 6,430 million, with a balanced contribution from the 4 geographies and driven by a strong performance in all of them. Networks EBITDA already accounts for 54% of the group EBITDA, reflecting the increasing contribution that will continue growing in the following years as the Chairman has commented and as Iberdrola invests predominantly in networks. In the U.S., adjusted EBITDA increased 19% to $1,780 million. Excluding the $550 million past recognition booked in the first quarter of '25 included in the reported figures, underlying performance benefit from higher rates in distribution and an increased contribution from transmission, including NECEC following the January 16 COD. In the U.K., EBITDA increased 20% to GBP 1,355 million with increasing contribution from transmission driven by the new RIIO-T3 framework in place from April 26 onwards. In Brazil, EBITDA grew 4% to BRL 10.4 billion, driven by higher revenues in distribution due to better rates and demand, partially offset by a temporary accounting negative impact from recent concessions renewal as the investments have been completed, there is also a higher contribution from transmission. In Spain, EBITDA increased 18% to EUR 1,586 million due to the new financial remuneration and additionally, the recognition of operational expenditure allowances from previous years, especially visible in Q3. 9 months Power and customer business adjusted EBITDA decreased 2% to EUR 5.4 billion. During the period, Iberdrola produced 91 terawatt hours of electricity, 3% higher than in '25, driven by the U.S. and the U.K. amid increasing demand with 90% sourced locally and fully emissions-free, advancing in the energy self-sufficiency while strengthening the availability and reliability of our supply. In Iberia, EBITDA was EUR 2.9 billion, 4.6% lower, with sales increased due to demand growth, but impacted by higher procurement costs with a slightly lower renewable production, mainly due to lower wind and more gas production. We have been selling at 25 prices, but procurement cost in this quarter has been much higher. We are already selling at higher prices, which will help to offset the increase in procurement costs. The benefit is expected to materialize from '27 onwards. In addition, we registered a negative impact from regulated gas rate linked to the higher cost of gas as well as an increase in ancillary services. We are appealing to the regulator these ancillary services charges to be included as fixed cost in the rates. In the U.K., adjusted EBITDA increased 8.4% to GBP 880 million, thanks to higher wind but with lower prices that will be reviewed for '27. Reported figures are affected by the smart meters capital gain in Q3 of '25. In the U.S., EBITDA grew by 4.2% to $847 million. Growth was driven by the higher contribution from wind and solar assets, supported by 750 megawatts added over the last 12 months and stronger power prices, partially offset by lower thermal contribution as well as timing effects. In the rest of the world, EBITDA decreased 11.9% to EUR 580 million, with higher production with lower prices, also additionally affected by the sale of Hungary and France and the negative impact of higher ancillary services in Portugal. In Brazil, EBITDA increased 6.3% to BRL 1,007 million with higher contribution from the retail business, partially offset by lower renewable production. D&A and provisions grew 1%, reaching EUR 4,245 million, in line with previous quarters, driven by higher provisions, partially offset by the life extension in the wind assets. Adjusted EBIT grew 11%, reaching EUR 7,645 million. Net financial result increased by EUR 524 million to a negative of EUR 1.7 billion, mainly driven by negative derivatives impact, especially in the second quarter, reflecting the Istopangriati positive one-off of EUR 292 million accounted in the second quarter and '25 and FX hedges linked to the exchange rates as they were positive '25 and negative this year, especially due to the recent revaluation of the dollar and the real. Debt cost increased 22 basis points consequence of higher Brazilian rates and the real appreciation. Excluding the real, debt cost fell 7 basis points to 3.47%. Debt has had a moderate growth of EUR 600 million in the quarter to EUR 54.6 billion, even after August EUR 2.5 billion dividend payment unaffected by currency appreciation. The evolution in the year also reflects the strong effort in CapEx, more than offset by FFO generation and asset rotation proceeds. Iberdrola maintains solid credit metrics with a comfortable BBB+ Baa1 rating. This financial strength allows the group to continue investing while preserving balance sheet flexibility. Our adjusted net debt to EBITDA stood at 3.4x. The adjusted FFO over adjusted net debt was 22.4% and an adjusted leverage ratio 45.8%. Ratios are in line or better than in the first half and weaker than 1 year ago but remember that we did the capital increase in Q3 of last year. 9 months '26 adjusted net profit grew by 9% to EUR 141 million compared to EUR 4,727 million adjusted net profit in the 9 months of '25. Excluding the FX impact, adjusted net profit would have grown by 13%. Reported net profit grew 10%. The difference between adjusted net profit is mainly explained by the EUR 1 billion capital gain from the Mexico transaction recognized in the second quarter, partially offset by capital allowances in the U.K. [indiscernible]. Chairman will conclude the presentation. Thank you very much.

Thank you, Pepe. To conclude, over the first 9 months, we have seen consistent growth trend that we expected to continue in the fourth quarter. driven by an additional 15% increase in network RAB up to December, mainly due to transmission investment in the U.S., U.K. and Brazil and rate increases in distribution across markets like the one recently approved in Brazil. Power and customer result will reflect 3,300 megawatts already installed in the last 12 months, plus 1,500 additional megawatts that will be operational in the fourth quarter, benefiting from higher prices expected year-end and in 2027 as well as the increasing contribution from Pump and hydro in Iberia to the new asset in operation. Finally, cash flow generation will continue increasing due to new investment, mainly in regulated networks and long-term contracted business and to our ongoing operational efficiency measures, supporting our strong financial position and our A+ rating. All these factors allow us to improve today our guidance for full year 2026 result to more than 10% growth in adjusted net profit. And we are targeting to maintain a 10% average growth rate in adjusted net profit over the next 5 years, benefiting from increasing investment opportunities in networks, renewable generation and storage across all our markets. Our anticipation, our business model, our execution capabilities place Iberdrola in the best position to capture these opportunities. Over the last 25 years, we have built a non-repecable footprint of network licenses across the U.K., U.S., Brazil and Spain and shortly also in Finland. competitive and diversified generation fleet with increasing repowering and life extension opportunities as well as a mature portfolio of greenfield projects across all our geographies. A strong commercial capabilities and large base of residential and industrial customers, a solid balance sheet, a full access to capital supply chains and talent. So we will provide you further details regarding all these aspects in our Capital Market Day next March. So thank you very much for your attention. We can now begin with the Q&A session. Thank you.

Thank you, Mr. Galan. And the following financial professionals have raised the following questions. Alberto Gandolfi, Goldman Sachs; Meike Becker, HSBC; Pedro Alves, CaixaBank; Peter Crampton, Barclays; Rob Pulleyn, Morgan Stanley; James Brand, Deutsche Bank; Peter Bisztyga, Bank of America; Ahmed Farman, Jefferies; Manuel Palomo, BNP Paribas; Fernando Garcia, Royal Bank of Canada; Skye Landon, Rothschild; Jorge Alonso, Bernstein Societe Generale; Javier Garrido, J.P. Morgan; Javier Suarez, Mediobanca; and finally, Gonzalo Sanchez-Bordona, UBS. The first question is related to the main drivers of Iberdrola-adjusted net profit growth in the first nine months of the year 2026.

So I think the business drivers were very clear. Networks, higher RAB in all countries, as I mentioned, reaching EUR 56 billion. Also, we have a strong performance in all countries, U.K., higher contribution for electricity in Northwest that we consolidate in March, increasing contribution from transmission of the T3 that we had started construction in April. And U.S., higher rates in New York and Connecticut. The contribution of the transmission interconnection between Canada and Massachusetts and CEC from January. And in Brazil, increasing revenues and distribution, thanks to better tariffs in most cases, better rates, higher contribution of the transmission I mentioned we just completed. It's more than 6,000 kilometers of transmission line completed. In Spain, a strong performance, thanks to the investment recognition of OpEx allowance from previous years. In power, higher demand in Q3. And the only problem here is with prices fixed in 2025 resulted in higher procurement cost that has been mentioned by Pepe. But now is the new sales are already reflecting these new prices. And so I think that can be already a positive contribution on that one. Higher production in the U.K., U.S., EU countries and increasing contribution of pumped hydro, especially that one, we are beating records of production during this year. negative impact as well of regulated tariff and the increase in ancillary service in Iberia, which are asking to be regulated. As you know, that is the case of Portugal. We are already in this moment just putting part of it as a part of regulated thing, which is not affecting negative to us. So all in all, I think the adjusted net profit was 9%, which is 13% if we are excluding FX impact that Pepe mentioned before as well.

Next, what nonrecurring items affected EBITDA and net profit in the first 9 months of 2026? And how do they compare with the 2025 fiscal year?

Pepe?

Yes. Well, as you know, in such a large group, there are always some nonrecurring impacts across the different businesses. But as we have defined them in Page 18 of the presentation, basically, it comes from the asset rotation capital gains or losses in general, we've been consistent on that. There is an exception with this accounting treatment of the sales in the U.S., which didn't have a cash impact. So basically, at the EBITDA level in '26, there is no adjustment from nonrecurring impacts, defined as we have done it in the Page 18. And in '25, we have had -- we are taking the positive impact of EUR 530 million due to the network passcode recognition in the U.S. and the positive impact of the EUR 382 million that we had also positive in the U.K. due to the sale of the smart meter businesses. And obviously, at the net profit, the impact of these 2 is netted from taxes, so EUR 389 million from network cost recognition in the U.S. and EUR 191 million for smart meters in the U.K. And in addition to that, we had the EUR 953 million of capital gains from the asset rotation this year that we are taking out for reflecting on an adjusted basis.

Next, which are the main drivers supporting the upgrade in your 2026 guidance?

So as I commented last July, our good performance in first half has already improved in this quarter. since I mentioned before, I think increasing our regulated asset base in all countries. I think we are investing more. So the RA is increasing in all countries. There are some framework with better rates as well in regulated. It's as well increased contribution from our transmission business, the T3, I think as much investment we are making, that is directly contributing to our P&L. And C&C is already full completed. And in Brazil as well, all our transmission is completed now is, as I mentioned, is making a contribution of circa EUR 250 million, EUR 200 million per annum additional. And also the full ownership of Neoenergia since beginning of the year, we have already this Neoenergia, which is 100% our own. I think power, as well I mentioned, I think we had already built 3.3 new gigawatts in the last 12 months. But I think to this one, we will add another 1.5 gigawatts before the year-end, now is in construction. I think we have -- we are achieving better prices. I think it's -- as was mentioned by Pepe, we have been selling most part of the year with 2025 prices in our retail business that now we are already signing 2020 for the rest of the year and for 2027, prices much higher according with the wholesale prices of the market. And I will transform this negative impact we have already had on this one in a positive one. As well, as I mentioned, we are beating record pumped hydro, and we expect that to continue as well in the following months. Of course, our efficiencies, we will continue systematically on that one in all terms. Now certain of the efficiency is coming as well by the introduction of artificial intelligence in some of our processes that is already just started delivering some positive effect. The positive management of the debt and financial expenses, Pepe mentioned as well. And that all the reason. This reason is what has already allowed us to provide already to increase the guidance to double-digit growth in adjusted net profit by year-end, more than 10%. So that is what we have been saying before.

Next, regarding the next Capital Markets Day. It has been over a year since you presented your strategic plan. What has changed? What upside do you foresee for your current plan? And what should investors expect from the next Capital Markets Day?

So I think all the trends and all the expectation is already moving in our direction. So you see -- I present already the documents that has been made by International Energy Agency, by European Commission, by British government. So all of them are coincident with our vision, which has been already developing across the last 25 years. And that's a low what. So increase in electricity demand, more electrification. So that makes ourselves and we need to make higher investment than expected, both in networks and in power and renewables. And I think if we make more investment, if the demand is increasing, if the prices looks already are trends, which continue at a good level, this provides better result. And that is what allow us to fix already this target of 10% average growth in adjusted net profit for the next 5 years. Nevertheless, I think we will provide you more details in our Capital Market Day. But I think I'm quite optimistic. I think for years, I think we've been predicating renewables, networks and storage. And now all the documents we've been published are talking about more power renewables, more networks and more storage. So -- and I think we are 25 years already making this one. so which I think we have the basis for growing more than no one else because we have already the base for making this already growth much higher than others. We now are discovering the needs needed to make more power in renewables, more networks and more storage. I think as I mentioned, in terms of networks, we have already a unique footprint. So we are present in different countries and all countries are already the same targets. United States, for one reason, U.K. for another reason, Iberia for another reason and Brazil for another reason and soon as well Finland for another reason. So -- but all of them are considering one thing, needed more and more and more investment in networks, transmission and distribution. So in this transmission, for instance, if you look already at our documents, I think now it represents roughly 1/3 of our total RAB. So it was almost 0 a few years ago. It is not considered, but the growth in this area is huge. In U.K., you multiply by 5 our transmission business. In the United States, we have billion transmission in this moment in construction for injecting electricity into New York City. In Brazil, we just completed almost EUR 5 billion of transmission lines that we have nothing a few years ago. So all those are the trends will make us to be already positive and optimistic about the future of the result of the company.

Next is asking about Caruna acquisitions, approval processes, explaining the strategic rationale and expected return from this new company in the group.

David?

Thank you, Chairman. Regarding the approval process, the authorization process is advancing as expected. There are 3 regulatory approvals required to close the transaction. The first one is the European Commission antitrust that has been already received. The second one is the European Commission FSR. All questions received during the pre notification phase has been replied successfully. And after positive feedback received from the authorities, the formal notification has already been submitted. And third is the FDI in Finland. The has been submitted and the authorities are processing it. As a conclusion, approvals are expected to be received before the end of 2026 and transaction closing is expected early in 2027. Regarding the strategic rationale and expected returns, just to remind that Caruna is the largest distribution company in Finland. serving 1.5 million population. Finland is a market that will require huge investment due to electrification with additional opportunities in AI and in transmission. A clear example is the recent announcement made by Google of EUR 15 billion in data centers. Caruna has high-quality assets and a strong team in a stable AA rated country. It is an accretive transaction since the first year, and net profit is expected to grow at an average of 7% rate in the next decade. Just as a reminder, we financed the transaction with the funds and the capital gains obtained from the sale of our thermal generation in Mexico.

So I think I had the opportunity last week to visit Finland with the occasion of the official visit of the Spanish I have the opportunity of meeting in the official dinner with the President of the Republic, with the ministers, with the Prime Ministers and with members of the financial community. I think I came more than delighted. I think we are more than welcome. Everybody was very positive toward our transaction, our deal. The country expectation is very, very positive in all terms. It's tremendous stability politically. So independently who is running the country, I think there are clear ideas about what has to be done in our sectors. to provide the stability and predictability. They would like to continue expanding the grid and repowering the grid to electrify more and more and to make the grid even more reliable. I think more than half of the grid is underground, so which I think that is something which is unique in Europe. But they would like to continue making in the same line. So I was very positive and delighted, and I'm very glad what David has mentioned that all the permits is going to be obtained soon and to complete the transaction even shorter than expected.

Next, should investors expect further M&A transaction after Caruna? Sorry, I repeat because my phone was off. Should investors expect further M&A transaction after Caruna?

I think you know always my answer. So I think let's first complete Caruna and lets me afterwards to talk another thing. I think historically, always, we have already made the same process. We are very predictable. We integrate -- we acquire something, we integrate. And when it's fully integrated, we start thinking on other opportunities. But we are not making 3 things at time. I think it's first priorities and focus is to complete the transaction of Caruna. One will be completed, we will integrate this Caruna into our system. And who knows what is going to be in the future. But now it's not our future. It's not -- we are not already dreaming and thinking what you're going to make in 2033 once I think now it's all our people is fully focused, as David was mentioned, is looking and accelerating all the permits needed. All our business people are ready prepared for making the integration and with the rest with the metal system processes, et cetera, et cetera, of the group. And when this will be completed, we will see, but now it's not looking at more things than those which is already, as always, complete the transaction, integrating the transaction.

Next is, what is your view on the new U.K. government and its approach to energy policy, regulation, grid investments and the autumn budget?

So the first thing is the Prime Minister is not an unknown for Scottish Power. So you know we have already worked with Andy Bern and his team in the Greater Manchester area during the time he was a major. So we have the distribution in this area. We know well his administration and all the things related. But I think what we are seeing on the comment he is already making already, we are seeing continuity in the key policies. So I think they continue with more support to electrification. They are looking for more self-sufficient in the country, using all kind of means for making that happen. So they would like to diminish the external dependence of imports, which is coincident with the European Commission is already predicating as well. B commission is trying for all means to increase the share of electricity, not because only electricity is because of diminishing dependence of importing energy from third parties of fossil fuels and others. So in this sense of more electrification, the government has announced reduction to 0 to the VAT for electricity bills. And as well, they are already announcing the acceleration of more grid connection, even if pushing us to accelerate that one, opening the door to a special company, which is based in British grid or something else, which is a little amount, but I think it's already -- just it's only EUR 4 billion, more than EUR 100 billion investment required. So -- but I think that is an incentive for moving faster, and that can help already as well for obtaining permits and on turning already acceleration and more agility in all the things which is needed for need faster. You know as well that the regulation for transmission is already given incentives for acceleration of the contraction. We can reach 100 basis points extra return if we accelerate and we that is why working very hard. And the government is very, very pushing on that one. That is the British government, but I can say exactly the same thing related to the Scottish government. I have the opportunity to have a meeting with the Scottish Prime Minister last week as well. And I think he was more than pleased in helping us for doing the necessary for accelerating all the investment required in Scotland for making already more electrifying more and more the economy because of the positive effect we have already for the economy. There are still thousands of megawatts pending connection, and that is what we have to deliver as soon as possible for the benefit of the British citizen and the Scottish citizens.

Next is regarding Spain. What is your assessment on the regulatory measures being considered in Spain, including the removal of the 7% generation tax and a higher investment limit for electricity networks?