José Bogas: "the quest for energy independence must be a catalyst for deploying renewables and electrifying demand"

• The company held its General Shareholders' Meeting in Madrid today. Its CEO, José Bogas, stressed that "2022 has required action in a particularly complex scenario for the energy sector" and that Endesa "has satisfied its strategic approach and exceeded the financial objectives it had set".
• The General Shareholders' Meeting had a quorum of 84.174% of the company's capital and approved all the items on the agenda. These included the re-election of the Chairman of Endesa, Juan Sánchez-Calero, as well as Ignacio Garralda Ruiz de Velasco, Francisco de Lacerda and Alberto de Paoli as directors.
• The company has highlighted that the coming months will be decisive in achieving energy objectives, curbing theclimate emergency and achieving energy independence.
• He also underlined its position of leadership in sales to customers in the deregulated electricity market. The number of customers in the deregulated market came to 6.8 million, with growth of more than 900,000 year on year.
• Endesa has emphasised the role of the company as an industrial agent and key catalyst in the energy transition process on the Iberian peninsula. He also emphasised that he will maintain fluid and permanent dialogue with the government and with the institutions to ensure the energy policies applied are beneficial for all citizens.
• He also highlighted that in 2022, Endesa has continued on the path towards decarbonisation that it started on years ago and that it had managed to link this to the continuation of industrial activity in the main sites that form part of its history, thus offering them a present and a future.
• Both the Chairman and CEO informed shareholders that 2023 will once again be a complex year with a changing regulatory environment: in Europe, as part of the legislative work ongoing to define the regulatory framework for the electricity market; and in Spain, on account of the ongoing review of the Integrated National Energy and Climate Plan.
• In relation to the Integrated National Energy and Climate Plan, the CEO defended that it is necessary to review and adapt a number of hypotheses and scenarios to make sure the system remains solid during the energy transition.
• Concerning the reform of the electricity market in Europe, he insisted on the need for the reform to be homogeneous across the continent, with the highest degree of consensus and that there are no individual solutions.

Endesa held its General Shareholders' Meeting today at its corporate headquarters in Madrid, with a quorum of 84.174% of the company's capital. The firm's CEO, José Bogas, explained the complex energy context that the company has navigated during the last year during his speech to shareholders, highlighting the importance of energy independence. "The quest for energy independence must be a catalyst for deploying renewables and electrifying demand. Our goal is to ensure that the transition comes to fruition and that the future is electric, secure and sustainable," he said.

As part of his speech to shareholders, he touched on the complicated conditions that the company's management has faced in recent months. He also offered a reminder that in 2021, the industry was immersed in a crisis of supply and demand after the lockdown measures to combat Covid, exacerbated by an unprecedented escalation in the price of gas.  "The tension generated in society and in the electricity sector when using energy resources as a measure of pressure, whether on account of scarcity, shortages or price speculation, are key to interpreting what we saw in 2022," he explained.

Legal and regulatory certainty

The company's chief executive also highlighted that, at a national level, there were four defining elements during this year plagued with uncertainty: ongoing regulatory changes (131 regulatory changes in 24 months); the intervention of the electricity market, which has made it possible to better contain prices in Spain, but also generating distortions in the market; misinformation and the response from the sector. He emphasised that "we are at a time when enormous investments are required to guarantee the transition and energy independence and today more than ever, legal and regulatory stability is necessary".

He also highlighted that, now that Europe is debating the new model of the electricity market, the approach taken by the European Commission with regard to the reform “is a step in the right direction”: it avoids price intervention in relation to generation and facilitates contracting over longer terms. However, he insisted on the need for "the reform to be homogeneous at a European level, with the highest degree of consensus and that there are no individual solutions. This could compromise the market."

Balance sheet for the 2022 business year

The CEO then reviewed the main financial and business milestones achieved by Endesa over the past year, stressing that, despite everything, "today we can say that we are in a better place than a year ago, especially on account of the drop in gas prices. Although it is true that we cannot be sure about how the gas price could perform in the medium term. With this in mind, we must not lower our guard," he warned.

With regard to the former, he indicated the following key points:

• Gross operating profit (EBITDA) of Euros 5,565 million 30% up on 2021.
• Ordinary net income Euros 2,398 million , 26% up year on year, surpassing initial forecasts.
• And a dividend per share of 1.5854 euros per share, also above expectations, amounting to Euros 1,679 million.

He also highlighted that Endesa rounded off a historic year in terms of customers, increasing its customer base to 12.3 million electricity and gas customers in Spain and Portugal. The company had also increased its customer base in the deregulated market to 6.8 million by year-end, 900,000 up year on year.

Sustainability and decarbonisation

The CEO also underlined that these strong results would allow Endesa to:

• Invest 15% more through 2025, as presented to the market in its latest strategic plan, up to Euros 8,600 million , especially to grow renewable generation and distribution networks, allowing Spain to make progress with energy independence and reduce polluting emissions. 
• Solidly remunerate shareholders, including the almost 200,000 Spanish families who have deposited part of their savings in company shares.
• Maintain a direct workforce of about 9,300 people and reassess salaries following the 5.9% rise in inflation in 2022, a factor which makes the company stand out compared to other Ibex 35 companies.
• Contribute to Spain's economic and social development: Endesa is now among the three companies with the highest tax contribution in Spain, standing at Euros 3,843 million in 2022 (43% corresponding to taxes incurred and 57% to taxes collected).
• Accompany Spain and Portugal on their path towards the energy transition, committing investments that exceed the deadline set out in the strategic plan: for example, Euros 1,500 million in the future of Andorra, Teruel as well as a further Euros 600 million in Pego, Portugal, the only two just transition tenders that have been held on the Iberian peninsula and both of which were awarded to Endesa by the Spanish and Portuguese governments, respectively.

In 2022, the company continued on the path towards decarbonisation that it started on years ago and that it had managed to link this to the continuation of industrial activity in the main sites that form part of its history, thus offering them a present and a future.

He also highlighted that "sustainability" defines the company and that thanks to this, Endesa is among the best valued in social, environmental and good governance aspects worldwide and on the IBEX-35. As the CEO pointed out on several occasions, and today before the shareholders as well, "companies will have a future as long as they place the customer and sustainability at the heart of their activity.  The challenge posed by climate change is forcing society to make progress towards a new sustainable economy based on an efficient, electric and renewable model that contemplates the principles of circular economy. And by this I mean integral sustainability, in which climate, economic-financial, inclusivity, equality, equity, and truthfulness, transparency and trust issues all come together," he said.

Public-private collaboration

Bogas took the opportunity to highlight that "the transition presents a future full of opportunities, but that the climate emergency leaves little time to make the most of them". He also defended that we have to ensure that the way out of this crisis is sustainable, renewable and inclusive and pointed out that Endesa remains on course, is reliable, has solid plans and is making firm progress towards meeting the objectives it has set despite the volatile, uncertain and changing context. With this in mind, he stressed the importance of understanding and permanent collaboration between companies and governments. “We will maintain fluid and permanent dialogue with the government and with the institutions to ensure the energy policies applied are beneficial for all citizens”, asserted the CEO.

With this in mind, he pointed out that the coming months will be decisive in achieving the energy objectives to curb the climate emergency and to achieve energy independence. Against this backdrop, he highlighted the importance of the legal and regulatory framework that will serve as a guide in the coming years for achieving the objectives set by the European Union.

Specifically, he pointed to the review of the Integrated National Energy and Climate Plan that is required this year: "At Endesa, we have always applauded and been aligned with most of the provisions of the Integrated National Energy and Climate Plan. However, we believe that a number of the hypotheses and scenarios must be reviewed and adapted to give strength to the system during the energy transition; it is also necessary to revisit all aspects in relation to permits and their impact on the deployment of renewable energies, as well as giving legal certainty to the necessary investments in distribution networks or recharging stations to promote electric mobility".

Corporate governance

In turn, Endesa's Chairman, Juan Sánchez-Calero, provided an in-depth review of the strategy and adoption of the best Good Corporate Governance practices during the year and highlighted the excellent results of the external assessment to which the operation and performance of the Board of Directors and its committees were submitted once again.  As regards the degree of compliance with the Recommendations of the Code of Good Corporate Governance of the CNMV, the Chairman reported that the rate of compliance stood at 95.31%, with just one non-compliance (number 48) out of a total of 64 recommendations.

Sánchez-Calero stressed that the composition of the Board and its committees is a key factor, as this affects the effectiveness and quality of their decisions and their ability to effectively promote Endesa's social interest. He also defended that the directors proposed for re-election have the competence, experience and merits required to remain in their positions, in addition to representing a factor of stability and continuity for the governance of the company.

Thus, having geld a vote, the shareholders approved:

• The re-election of Juan Sánchez-Calero, as the CEO of the company and independent director. 
• The re-election of Ignacio Garralda Ruiz de Velasco, Francisco de Lacerda, currently the chairmen of the Appointments and Remuneration Committee and the Audit and Compliance Committee, respectively, also in their capacity as independent directors.
• And the re-election of Alberto de Paoli as proprietary director on behalf of the shareholder Enel.

Furthermore, the Chairman stressed that Endesa complies with the most demanding standards of good governance and stressed that:

• The Board of Directors continues to be made up by twelve members, a size that we consider necessary to achieve effective and participatory functioning, pursuant to Recommendation 13 of the Code of Good Governance.
• The Executive Committee consists of 58.33% independent directors, 33.33% proprietary directors and 8.33% executive directors.
• There is a majority presence of independent directors on the three committees of the Board of Directors, a condition also fulfilled by each of their Chairmen.
• In relation to gender balance, the underrepresented sex currently accounts for 41.67% of the members of Endesa's Board of Directors. We have anticipated the requirements set out in the European legislation, which must be transposed in Spain by the end of 2024.

CEO statement, José Bogas (made for press outside the meeting)

"2022 has been an enormously demanding year for management. We have managed to keep Endesa on course, despite the unprecedented and very complicated economic, political, social and regulatory situation, both at home and abroad.  Nonetheless, we have been able to meet our financial targets and continue on the path towards energy transition. And although in general terms the situation has improved, we are not going to lower our guard and we will continue to move forward firmly. Of course, if there is one thing that 2022 has left us is that the search for energy independence must be intensified, utilising renewables and electrifying demand" .