6.1Creating shareholder value

As in previous years, Madrileña Red de Gas continues to strive for economic results that ensure its long-term sustainability. The sector’s situation remains challenging due to the ongoing transformations in the energy landscape, coupled with climate change, which is leading to increasingly warmer winters and a significant reduction in household consumption. Efforts to enhance process efficiency, improve service quality, and implement a solid expansion strategy continue to enable us to achieve positive results and deliver the necessary economic value to our shareholders.

The financial data for Madrileña Red de Gas has been prepared in 2024 solely under Spanish accounting standards (Spanish General Accounting Plan), and the company has discontinued the preparation of annual accounts under international IFRS standards. For this reason, the 2023 figures have been restated accordingly, while figures from prior years have not been updated. Therefore, this report includes financial information only for the years 2023 and 2024.

Cash Flow amounted to €78,5 million, compared to the €86,3 million the previous year. The lower deficit generated by the system as of December 31, 2024, compared to the same period of the previous year, resulted in an increase in cash flow relative to 2023. However, this effect was offset by a reduction in cash received as remuneration, due to downward adjustments made by the CNMC to the amounts initially recognized for 2023 and 2024. These adjustments were the result of lower-than-expected demand, caused by higher-than-average temperatures.

In 2024, investment amounted to €15.9 million, compared to €13.3 million executed in 2023. The company continues to invest steadily in its own networks and other projects aimed at network maintenance, fraud prevention, and the development of information systems, with the objective of improving operational efficiency and service quality.

Financial strength is a key pillar of Madrileña Red de Gas’s strategy. The company maintains strong levels of solvency and liquidity, consistent with investment-grade ratings.

The financial structure is efficient and long-term oriented. The company also holds a €75 million contingent credit facility, renewed in February 2024 until February 2027, aligned with the company’s actual needs over the coming years.

Flexibility in dividend policy is another key feature that strengthens the company’s financial position.

The group’s debt is issued by MRG Finance B.V. on the regulated market of Luxembourg under an EMTN program. This debt is rated as investment grade, BBB- by Standard & Poor’s and BBB by DBRS.

With regard to economic value generated and distributed, the figures remain very similar to 2023. The distributed economic value decreased slightly compared to 2023, primarily due to a reduction in payments to the government. However, in all other areas (operating costs, employee salaries and benefits, and payments to suppliers), the amounts increased over 2023.

6.2Expansion of the distribution network

Main trends and milestones by market

The business expansion over the past year has followed a consistent trend with previous years. Madrileña Red de Gas continues to demonstrate sustained growth, delivering a net positive increase in new supply points and total consumption.

According to the quarterly reports published by the CNMC for 2024, Madrileña Red de Gas remains the gas distributor with the highest number of active supply points in the Community of Madrid, with 906,763 natural gas supply points and 3,152 LPG points at the end of 2024, totaling 909,915 customers

Madrileña Red de Gas remains committed to offering significant incentives to both end customers and the commercial channel of installation companies, with the aim of promoting the construction and commissioning of new installations.

Commercial initiatives, complemented by inorganic actions such as LPG-to-natural-gas conversions and the acquisition of facilities, have once again enabled the company to achieve a net positive growth of more than 2,000 new supply points. This figure reflects a strong effort by the commercial team, especially in an unfavorable environment marked by campaigns discrediting natural gas in favor of alternative energy sources.

Analyzing the new 2024 supply points, these are the numbers:

• Existing Property: 8,093
• New Construction: 1,049
• Large Consumption Customers: 389
• Total: 9,531

Throughout 2024, Madrileña Red de Gas continued its efforts to extend the natural gas network to new municipalities within the Community of Madrid (Image 70), such as Casarrubuelos and Miraflores de la Sierra. At the same time, the company advanced its commitment to transformation by eliminating distribution through satellite LPG plants, which are clearly more polluting than natural gas.

In 2024, the natural gas network reached the municipality of Casarrubuelos, with more than 100 households connected during this first phase, which continues to expand.

Significant progress has also been made in the administrative procedures for the municipalities of Los Molinos, Moralzarzal, and Soto del Real.

Further details on the investment made in network expansion and transformation can be found in Chapter 9 on Social Impact.

In 2024 more than 200 installations in single-family homes were commissioned, and a solid project pipeline has been established for the coming year, ensuring positive growth in the horizontal saturation market in 2025

Analyzing trends across the various business areas, it is worth noting that 2024 saw a renewed boost in the horizontal saturation market. The commercial actions implemented in this segment have been well aligned with user needs; new potential market niches have been identified through the decentralization of multi-unit buildings, successfully replacing obsolete energy sources such as fuel oil, propane, and even coal.

Marketing efforts in private residential developments with piped propane installations have also marked a key achievement in the growth of the horizontal saturation market. Many of these installations are reaching the end of their service life, prompting administrations and homeowners’ associations to consider switching their energy supply. The deep territorial knowledge of Madrileña Red de Gas’s commercial team plays a fundamental role in identifying these opportunities and tailoring the best offer for each residential development.

As a result, in 2024 more than 200 installations in single-family homes were commissioned, and a solid project pipeline has been established for the coming year, ensuring positive growth in the horizontal saturation market in 2025.

In 2024, the new construction market clearly reflected the shift in preference toward renewable systems, particularly aerothermal energy. In response, and in collaboration with Nedgia, Redexis, and Gas Extremadura, Madrileña Red de Gas participated in REBUILD 2024 to strengthen its presence in this sector.

REBUILD is the leading event driving and promoting the evolution of building construction, offering manufacturers and distributors in the construction industry the opportunity to:

• Identify new key players and industrial partners in construction, such as builders, developers, investors, architects, engineers, and other professionals.
• Establish high-quality relationships with current and potential clients.
• Showcase their leadership and value within the industry.
• Present innovative products and solutions to boost sales strategies.
• Collaborate and form partnerships as industrial allies in an event that is transforming the construction sector.

The opportunity to be present at such a major event was not missed. In collaboration with Inmergas, a hybrid technology was showcased—seemingly a condensing natural gas boiler with integrated domestic hot water (DHW) storage, which also incorporates electric aerothermal technology within the boiler unit itself.

The Expansion team has continued to work diligently with property developers, holding individual meetings to emphasize that using a natural gas system today paves the way for hydrogen integration in the future—especially by promoting the hybridization of aerothermal and natural gas systems.

To support this effort, a promotional leaflet was developed targeting real estate developers, homeowners’ associations, and boiler rooms with outdated systems, highlighting hybrid systems as the optimal energy solution for modernizing obsolete installations.

Additionally, throughout the year, more than 3,000 meters of third-party networks have been constructed for future urban developments. These networks are designed to accommodate renewable gases, also paving the way for future hydrogen (H₂) networks.

Finally, with regard to new residential developments, it is important to highlight the reactivation of the administrative concession for new urban developments in the municipality of Brunete, which represents a significant step forward in the municipality’s pipeline expansion.

Highlighted commercial activities

In 2024, new commercial campaigns were launched, focusing on specific market niches in order to tailor offers to each household’s particular needs.

This personalized approach not only helps increase customer satisfaction but also enhances the effectiveness of the existing pipeline network.

• The company continues to promote decentralization projects, offering incentives of up to €650 per supply point.
• The campaign targeting multi-family dwellings was renewed, with contributions of up to €450 per supply point.
• Campaigns for single-family homes were expanded, offering incentives of up to €500 per supply point.

In 2024, Madrileña Red de Gas launched two referral campaigns—one in summer and another in autumn—as part of its referral program. Under this initiative, the referrer received a €75 reward and the referred customer received €125 once their gas supply was activated.

El The goal of this program is to reward existing customers who successfully recommend the service to their contacts, with both parties receiving a gift for their participation.

Birth of Caldegreen

In 2024 Caldegreen was introduced, a cheerful and engaging animated character created to communicate current topics related to natural gas and renewable gases.

Caldegreen adds personality and appeals to a broad audience, helping Madrileña Red de Gas to communicate more effectively.

Campaign plan (:

• Raising awareness about the current state of natural gas and the transition to renewable gases, emphasizing their benefits.
• Educating the public on energy policies and the energy transition, encouraging critical thinking and the adoption of clean technologies.
• Fostering citizen engagement through interactive social media content that encourages reactions and shares.
• Delivering impactful educational content, including two videos, three blog posts, and a dedicated landing page focused on debunking myths, explaining how renewable gases work in home boilers, and highlighting their role in combating climate change.

Sign of the commercial agreement Madrileña Red de Gas / Aliara

In recent years, as a complement to the traditional commercial distribution channel in less attractive but low-saturation areas, Madrileña Red de Gas has internalized a dedicated sales team through an agreement with Aliara Energía (a company within the Elisandra IV Group). The goal has been to implement commercial actions in areas where the traditional channel has limited reach. Launched in the second half of the year, the project focused on the vertical saturation market in apartment buildings with low gas penetration, combining mass flyer distribution of an aggressive offer with scheduled visits and phone calls to property managers.

Public offer 2024

Thanks to all the commercial campaigns carried out in 2024, more than 150 installation companies have joined Madrileña Red de Gas in this effort, signing its 2024 public offer and participating in the commercial plans published on the company’s website.

www.madrilena.es/colaboradores

Commissioning characterized by efficiency

In order to continue building on the improvements implemented during the previous year and to keep offering the best possible customer service, minor defects have continued to be resolved during the activation visit in older installations. As was the case in 2023, this approach has helped reduce intervention times, since without these immediate repairs, the activation would have to be postponed. Customers would otherwise be required to find an authorized installer, which in some cases even led them to cancel the activation due to the associated cost or inconvenience.

The additional cost of these repairs is offset by higher customer satisfaction and a reduction in both administrative procedures and site visits, as a second trip to the property is no longer necessary.

In line with the company’s ongoing pursuit of process improvements, 2024 has seen a particular focus on supply points that, although representing a smaller volume, provide significant value to Madrileña Red de Gas as a gas distributor—namely, commercial premises and industrial clients.

Until the previous year, if a customer signed a contract for a premises with a gas supply history, the request entered the system in the same manner as a residential supply, without taking into account the difference in usage. While residential gas installations tend to remain unchanged over time, commercial and industrial facilities are frequently modified.

This mismatch led to delays in activating gas service, as well as complaints from marketing companies, which have specific deadlines tied to the commercial offers made to customers. The process of submitting and approving the required technical documentation, as established by current regulations, did not begin until the contract had already entered the system.

Thanks to system updates and constant communication with installation companies, these supply points are now blocked from contracting until all technical documentation is received. Although this may seem like a small change, it has significantly improved documentation traceability for each supply point, allowed for better anticipation of the customer’s contracted rate, and reduced the time to activation once the contract is submitted.

Looking ahead to 2025, the company plans to completely review and improve the customer onboarding process, with the goal of optimizing procedures and delivering a more efficient service

Moreover, with a continued focus on installation safety and recognizing the importance of effective communication, the ongoing collaboration between various departments enabled the detection in 2024 of several industrial clients with fraudulent activity or unreported system extensions. These represent serious regulatory breaches that pose risks not only to the businesses themselves but also to neighboring properties, and they lead to economic losses for Madrileña Red de Gas due to unrecorded gas losses. Within timeframes of no more than 15 days, these installations were brought into compliance, ensuring both safety and legal regularization.

Looking ahead to 2025, the company plans to completely review and improve the customer onboarding process, with the goal of optimizing procedures and delivering a more efficient service. Too often, outdated processes persist, and attempts at improvement are made without reconsidering whether the original design was optimal. This hinders broader innovation. The goal is to define the best possible system as if it were being designed from scratch. Planned improvements will focus on enhancing traceability, streamlining operations, and enabling customers to schedule their appointments more quickly and in a more personalized manner.

Pushing towards renewable gases distribution

Chapter 9, “Risk Management,” outlines the efforts undertaken by Madrileña Red de Gas to address the risks and opportunities presented by the necessary energy transition. This is achieved through its role as a gas distributor in promoting renewable gas projects, including hydrogen (H₂) and biogas.

The expansion of the network is designed with the goal of providing energy solutions that meet current needs and capabilities, while also being ready to support a sustainable future.