Cuentas anuales individuales e informe de gestión individual de Audax Renovables, S.A., correspondientes al ejercicio cerrado a 31 de diciembre de 2025.

(Together with the annual accounts and directors' report of Audax Renovables, S.A. for the year ended 31 December 2025)

(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

KPMG Auditores, S.L. Torre Realia

Plaça d'Europa, 41-43

08908 L'Hospitalet de Llobregat (Barcelona)

Independent Auditor's Report on the Annual Accounts

(Translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails.)

To the shareholders of Audax Renovables, S.A.

We have audited the annual accounts of Audax Renovables, S.A. (the "Company"), which comprise the balance sheet at 31 December 2025, and the income statement, statement of changes in net equity and cash flow statement for the year then ended, and notes.

In our opinion, the accompanying annual accounts give a true and fair view, in all material respects, of the equity and financial position of the Company at 31 December 2025, and of its financial performance and its cash flows for the year then ended in accordance with the applicable financial reporting framework (specified in note 2 to the annual accounts) and, in particular, with the accounting principles and criteria set forth therein.

We conducted our audit in accordance with prevailing legislation regulating the audit of accounts in Spain. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Annual Accounts section of our report.

We are independent of the Company in accordance with the ethical requirements, including those regarding independence, that are relevant to our audit of the annual accounts pursuant to the legislation regulating the audit of accounts in Spain. We have not provided any non-audit services, nor have any situations or circumstances arisen which, under the aforementioned regulations, have affected the required independence such that this has been compromised.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KPMG Auditores S.L., a limited liability Spanish company and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Paseo de la Castellana, 259C 28046 Madrid

On the Spanish Official Register of Auditors ("ROAC") with No. S0702, and the Spanish Institute of Registered Auditors' list of companies with No. 10.

Reg. Mer Madrid, T. 11.961, F. 90, Sec. 8, H. M -188.007, Inscrip. 9

N.I.F. B-78510153

Key audit matters are those matters that, in our professional judgement, were of most significance in the audit of the annual accounts of the current period. These matters were addressed in the context of our audit of the annual accounts as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Other information solely comprises the 2025 directors' report, the preparation of which is the responsibility of the Company's Directors and which does not form an integral part of the annual accounts.

Our audit opinion on the annual accounts does not encompass the directors' report. Our responsibility regarding the information contained in the directors' report is defined in the legislation regulating the audit of accounts, as follows:

1. Determine, solely, whether the non-financial information statement and certain information included in the Annual Corporate Governance Report and the Annual Report on Directors' Remuneration, as specified in the Spanish Audit Law, have been provided in the manner stipulated in the applicable legislation, and if not, to report on this matter.

2. Assess and report on the consistency of the rest of the information included in the directors' report with the annual accounts, based on knowledge of the entity obtained during the audit of the aforementioned annual accounts. Also, assess and report on whether the content and presentation of this part of the directors' report are in accordance with applicable legislation. If, based on the work we have performed, we conclude that there are material misstatements, we are required to report them.

Based on the work carried out, as described above, we have observed that the information mentioned in section a) above has been provided in the manner stipulated in the applicable legislation, that the rest of the information contained in the directors' report is consistent with that disclosed in the annual accounts for 2025, and that the content and presentation of the report are in accordance with applicable legislation.

The Directors are responsible for the preparation of the accompanying annual accounts in such a way that they give a true and fair view of the equity, financial position and financial performance of the Company in accordance with the financial reporting framework applicable to the entity in Spain, and for such internal control as they determine is necessary to enable the preparation of annual accounts that are free from material misstatement, whether due to fraud or error.

In preparing the annual accounts, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

The audit committee is responsible for overseeing the preparation and presentation of the annual accounts.

Our objectives are to obtain reasonable assurance about whether the annual accounts as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with prevailing legislation regulating the audit of accounts in Spain will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these annual accounts.

As part of an audit in accordance with prevailing legislation regulating the audit of accounts in Spain, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the annual accounts, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors2.

• Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the annual accounts or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the annual accounts, including the disclosures, and whether the annual accounts represent the underlying transactions and events in a manner that achieves a true and fair view.

We communicate with the audit committee of Audax Renovables, S.A. regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the entity's audit committee with a statement that we have complied with the ethical requirements regarding independence, and to communicate with them all matters that may reasonably be thought to bear on our independence, and where applicable, safeguarding measures adopted to eliminate or reduce the threat.

From the matters communicated to the audit committee of the entity, we determine those that were of most significance in the audit of the annual accounts of the current period and which are therefore the key audit matters.

We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter.

We have examined the digital file of Audax Renovables, S.A. for 2025 in European Single Electronic Format (ESEF) comprising an XHTML file with the annual accounts for the aforementioned year, which will form part of the annual financial report.

The Directors of Audax Renovables, S.A. are responsible for the presentation of the 2025 annual financial report in accordance with the format requirements stipulated in Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 (hereinafter the "ESEF Regulation"). In this regard, they have incorporated the Annual Corporate Governance Report and the Annual Report on Directors' Remuneration by means of a reference thereto in the directors' report.

Our responsibility consists of examining the digital file prepared by the Company's Directors, in accordance with prevailing legislation regulating the audit of accounts in Spain. This legislation requires that we plan and perform our audit procedures to determine whether the content of the annual accounts included in the aforementioned digital file fully corresponds to the annual accounts we have audited, and whether the annual accounts have been formatted, in all material respects, in accordance with the requirements of the ESEF Regulation.

In our opinion, the digital file examined fully corresponds to the audited annual accounts, and these are presented, in all material respects, in accordance with the requirements of the ESEF Regulation.

The opinion expressed in this report is consistent with our additional report to the Company's audit committee dated 25 February 2026.

We were appointed as auditor by the shareholders at the ordinary general meeting on 19 June 2025 for a period of one year, from the year ended 31 December 2025.

Previously, we had been appointed for a period of one year, by consensus of the shareholders at their general meeting, and have been auditing the annual accounts since the year ended 31 December 2017.

KPMG Auditores, S.L.

On the Spanish Official Register of Auditors ("ROAC") with No. S0702

(Signed on original in Spanish)

Alberto Fernandez Solar

On the Spanish Official Register of Auditors ("ROAC") No. 22.472 25 February 2026

RESPONSIBILITY STATEMENT FOR THE ANNUAL FINANCIAL REPORT

AUDAX RENOVABLES, S.A. AND SUBSIDIARIES

Annual Accounts and Directors' Report as at 31 December 2025

The members of the Board of Directors of Audax Renovables, S.A., in compliance with article 8 of the Royal Decree 1362/2007, confirm that to the best of their knowledge the individual annual accounts and the consolidated group's annual accounts for the year ended on 31 December 2025 and drawn up on the meeting on 25 February 2026 have been prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit and loss of Audax Renovables, S.A. and of the entities included in the consolidation taken as a whole, and that the directors' report includes a fair review of the development and performance of the business and the position of Audax Renovables, S.A. and of the entities included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face, duly signed by all directors.

BOARD OF DIRECTORS

Mr Francisco José Elías Navarro Chairman

Mr Josep Maria Echarri i Torres Member

Mr Ramiro Martínez-Pardo del Valle Member

Ms Anabel López Porta Member

Ms Rosa González Sans Member

Badalona, 25 February 2026

Individual Annual Accounts as at 31 December 2025

CONTENTS OF THE ANNUAL ACCOUNTS OF AUDAX RENOVABLES, S.A.

Note Page

Individual Balance Sheet 1

Individual Income Statement 3

Individual Statement of Recognised Income and Expenses 4

Individual Statement of Changes in Total Equity 5

Individual Cash Flow Statement 6

Notes to the individual Annual Accounts 7

1. General information 7

2. Bases of presentation of the annual accounts 7

3. Regulatory framework 12

4. Accounting and valuation standards 14

5. Intangible assets 25

6. Property, plant and equipment 26

7. Shareholdings in group and multi-group companies and associates 27

8. Financial investments 36

9. Trade and other receivables 38

10. Cash and other cash equivalents 39

11. Net equity 39

12. Provisions 45

13. Financial liabilities 46

14. Other liabilities 50

15. Trade and other payables 50

16. Risk management 51

17. Tax situation 56

18. Income and expenses 59

19. Commitments and contingencies 62

20. Information on related party transactions 63

21

67

Information on members of the Board of Directors and Senior Management

1. Auditors' fees 68

2. Environment 68

3. Subsequent events 68

Appendices 69

Directors' Report 75

‌ASSETS Note 31/12/2025 31/12/2024

LIABILITIES AND NET EQUITY Note 31/12/2025 31/12/2024

"Free translation from the original in Spanish. In the event of discrepancy, the Spanish-language version prevails."

AUDAX RENOVABLES, S.A.

‌B) Total Statement of Changes in Net Equity

Individual Statement of Changes in Net Equity (EUR thousands)

Share premium

Treasury

Other equity

Profit (loss)

Valuation

The attached notes are an integral part of the individual annual accounts

Individual Cash Flow Statement (EUR thousands)

11 (15,000) (15,000)

liabilities (15,000) (15,000)

Payment of dividends

1. ‌General information

   Audax Renovables, S.A., (hereinafter: the Company or Audax Renovables) was incorporated in Barcelona on 10 July 2000 as a joint stock company for an unlimited duration.

   In the year 2022 the Company changed its registered address to Calle Electrónica 19 in Badalona, Barcelona, Spain, from the previous one at Calle Temple 25 in Badalona, Barcelona, Spain.

   It is mainly engaged in all types of activities related to the development of electricity generation from renewable sources, for which purpose it can set up, acquire and hold shares, bonds, interests and rights in companies whose corporate objects are the development, construction and exploitation of facilities for the generation of electricity from renewable energy sources.

   Moreover, the Company's objects include energy retailing, purchase and sale of electricity, including export and import, fuel retailing for energy production, natural gas retailing, CO2 emissions trading and telecommunications retailing; as well as all the necessary additional activities.

   Additionally, the Company may acquire, hold, administer and dispose of all types of titles, securities, financial assets, rights, interests or shares in individual or social enterprises, on its own behalf, excluding intermediaries, and under the applicable legislation on Stock Exchange and Collective Investment Institutions.

   Audax Renovables, S.A. carries out its activity outlined above as the Company's objects.

   Audax Renovables, S.A. is a mixed holding company which is the parent company of a Group of subsidiary companies, joint ventures and associated companies that are engaged in the activities involving generation of electricity from renewable sources and retailing of electricity and natural gas, and constitute together the Audax Renovables Group (hereinafter, the Audax Renovables Group or the Group).

   Moreover, the Audax Renovables Group is part of the Excelsior Group, whose parent company is Excelsior Times, S.L.U., with its registered address at Calle Electrónica 19, Badalona, Barcelona, Spain. The Excelsior Group's consolidated annual accounts for the year 2024, formulated on 31 March 2025, have been submitted to the Commercial Register in Barcelona.

   The shares of Audax Renovables, S.A. are admitted to trading on the continuous market of the Spanish Stock Exchange. The annual accounts of Audax Renovables S.A. and the consolidated annual accounts of the Audax Renovables Group as at 31 December 2024 were approved by the General Meeting of Shareholders on 19 June 2025 and were submitted to the Commercial Register in Barcelona.

   The annual accounts of Audax Renovables, S.A. for the year 2025 were formulated by the Directors on 25 February 2026 and will be subject to approval at the General Meeting of Shareholders and are expected to be approved without modification.

2. ‌Bases of presentation of the individual annual accounts

   The Directors have formulated these annual accounts in compliance with the regulatory framework of financial information applicable to the Company, which is the one established in:

   1. The Commercial Code and other commercial legislation.

   2. The Spanish General Accounting Plan approved by Royal Decree 1514/2007 with its subsequent amendments.

   3. The mandatory standards approved by the Accounting and Auditing Institute while developing the Spanish General Accounting Plan as well as its complementary standards.

   4. The rest of the Spanish applicable accounting rules.

   These annual accounts have been obtained from the accounting records of the Company and are presented in accordance with the current applicable financial legislation and in particular, the accounting principles and criteria therein contained, such as to show a fair image of the equity, the financial situation and the results of the Company and the cash flows that have taken place during the year. These annual accounts, which have been formulated by the Company's Board of Directors, will be submitted to the approval of the Ordinary General Meeting of Shareholders, and are expected to be approved without any modification.

   The figures in the balance sheet, income statement, statement of recognised income and expenses, statement of changes in net equity, the cash flow statement and in the notes to the annual accounts are listed in EUR thousands, unless indicated otherwise.

   The annual accounts have been prepared according to the principle of historical cost, with the exception of derivative financial instruments, financial assets at fair value with changes in profit and loss and financial assets at fair value with changes in other comprehensive income.

   The consolidated annual accounts of the Audax Renovables Group for the year 2025 have been prepared in accordance with the International Financial Reporting Standards adopted by the European Union (IFRS-EU), under Regulation (EC) No. 1606/2002 of the European Parliament and the Council.

   The main figures shown in the audited consolidated annual accounts are as follows (in EUR thousands):

   Total Assets	1,359,646
   Equity attributed to the Parent Company	222,888
   Non-controlling interests	12,388
   Net turnover	1,875,263
   Profit (loss) after tax attributable to the Parent Company	19,594
   a) Comparison of the information

   As required by the Spanish General Accounting Plan, the information contained in these annual accounts for the year 2025 is presented uniquely and exclusively for comparative purposes with the relevant information for the year 2024.

   The annual accounts present, for comparative purposes, under each heading of the balance sheet, the income statement, the statement of changes in net equity, the statement of cash flows, and of the notes to the annual accounts, together with the figures for the year 2025, the figures for the previous year, which were included in the annual accounts for the year 2024.

   1. Going concern

      As at 31 December 2025, Audax Renovables S.A. presents negative working capital of EUR 103,424 thousand (negative amount of EUR 47,308 thousand as at 31 December 2024). This negative working capital is mainly due to the short-term funding instruments in the capital markets (MARF and AIAF) with maturity throughout the year 2026 (Note 13) as well as certain short-term debts to the Group entities. The Company expects to pay off the short-term debts by renewing the aforementioned funding instruments in the capital markets (MARF and AIAF).

      Moreover, Audax Renovables, S.A. is the parent company of a group of companies as described in Note 1. Therefore, it has the possibility of managing the treasury together with the Group and/or distribute dividends among those subsidiaries, which have generated unrestricted reserves and do not have limitations to their distribution. With this regard, it should be noted that the Group, at the consolidation level, has a positive working capital amounting to EUR 30,097 thousand (EUR 112,269 thousand as at 31 December 2024), as disclosed in the consolidated annual accounts formulated at the same date as these individual annual accounts.

      Furthermore, at the consolidation level of the Group, as reflected in the consolidated annual accounts, the group has generated positive cash flows from operating activities in 2025 and 2024 in the amounts of EUR 51,228 and 74,194 thousand respectively, and expects to continue generating positive cash flows from operating activities.

      It should be also considered that there are loans granted to subsidiaries, which fall due within more than one year, and therefore have been registered as non-current financial assets (see Note 7 and 20). Notwithstanding, Audax Renovables S.A. has control over these companies, and the agreements provide for the possibility of early repayment or partial repayment of the loans by certain subsidiaries.

      Therefore, the Directors of the Company present the annual accounts according to the principle of going concern.

   2. Relative importance

      So as to determine the information that needs to be broken down in the notes for each of the different accounts of the financial statements or other items, the Company has considered its relative importance in relation to the current annual accounts for the year 2025.

   3. Critical aspects of the measurement and estimation of uncertainty

      The preparation of the annual accounts requires the use of certain estimates and judgements. These estimates and judgements, by definition, will rarely coincide with real future data. We set out below the estimates and judgements where there is a significant risk that they will give rise to a material adjustment to the amounts of assets and liabilities recorded in the following financial year:

      1. Intangible and tangible assets

         The determination of useful life of intangible and tangible assets requires estimates of their degree of use, as well as expected technological evolution. The assumptions regarding the degree of use, technological framework and future development involve a significant degree of judgement, insofar as the timing and nature of future events are difficult to foresee.

      2. Recoverability of equity instruments and receivables from Group companies

         Equity instruments and receivables from Group companies are measured as a whole at cost less the accumulated amount of valuation adjustments due to impairment (carrying amount). The impairment is determined as the result of the comparison between the book value of the investment to its recoverable value understood as the greater of the fair value less the costs of sale and the present value of the cash flows that are expected to be received. The recoverable values have been calculated on the basis of the calculations of value in use from discounted cash flows based on the Company's assumptions. These calculations require the use of judgements, which, amongst others, mainly include the discount rate and sales prices of electricity (Note 7). In addition, the Company's activities are subject to existing regulation whose amendments may affect the valuation of the assets. Consequently, if the real data differs from the estimates and judgements used, the recoverable amounts resulting from the various CGUs may vary and, consequently, require a higher or lower impairment of assets. To be able to report how sensitive this calculation of impairment is, Note 7 sets out a sensitivity analysis for reasonable variations of key judgements which has been established by the Company's Management.

      3. Derivatives and other financial instruments

         The fair value of the financial instruments that are traded on active markets is based on market price at the balance sheet date. The quoted market price used for the financial assets is the current bid price.

         The fair value of the financial instruments that are not traded on active markets is determined using valuation methods. The Group uses a variety of methods and makes assumptions which are based on the market conditions existing at each of the balance sheet dates.

         • The fair value of interest rate swaps is calculated as the present value of the future estimated cash flows.

         • The fair value of the exchange rate forward contracts is determined by using the forward rate traded on the market at the date of the balance sheet.

         • The fair value of the commodity price derivatives is determined by using the future curves of prices traded on the market at the date of the balance sheet.

      4. Fair value

         For the purpose of information disclosure, it is assumed that the book amount of trade receivables and of accounts receivables less value adjustments due to their expected impairment is close to their fair value. Likewise, the fair value of the rest of financial liabilities for the purpose of financial information disclosure is estimated by discounting future contractual cash flows at the current market interest rate available to the Group for similar financial instruments.

      5. Provisions

         The Company makes an estimate of the amounts to be settled in the future, including the amounts relating to contractual obligations, possible onerous contracts deriving from them, the settlement of outstanding litigation, and other liabilities. These estimations are subject to the interpretation of current events and circumstances, projections of future events and estimates of their financial effects.

      6. Corporate income tax

         The Company evaluates the recoverability of the deferred tax assets based on estimates of future taxable income and the capacity to generate sufficient tax profits during the periods in which these deferred taxes are deductible. Deferred tax liabilities are registered in accordance with the estimates concerning the net assets which in the future will not be tax-deductible.

      7. Income recognition

         Income from energy supply is recognized when the commodity is delivered to the customer on the basis of periodic meter readings. Moreover, it includes an estimate of the energy supplied and not yet invoiced at the moment of the accounting cycle closing, because, due to the normal course of the meter reading cycle, it was not yet measured.

         The estimation of the energy accrued and not yet invoice is carried out differently with regard to each business segment of the Group according to its particularities. The main variables which intervene in the determination of the income estimate are the price and the volumes of used and purchased energy.

         • Prices: are determined depending on the prices offered to different types of clients considering the estimate consumption curves.

         • Consumption: application of the estimate daily consumption derived from the historical profile of different types of clients adjusted periodically and by other factors which can be measured and which affect the consumption.

         • The volume of energy acquired by the retailers of the group in order to meet the demand.

         The Group has expertise and uses information systems sufficiently developed, which allow to guarantee the precision of the estimates recorded under this heading in the net turnover section of the income statement and to meet the requirements established by the accounting standards. Historically, no material adjustments have been made to the amounts recorded as accrued revenue and no adjustments are expected in the future.

         Certain figures of the electrical system, including those corresponding to other companies, which make it possible to estimate the global settlement of the system that is supposed to materialise in the corresponding final settlements, might affect the determination of the amount corresponding to the deficit of the settlements of the regulated electrical activities in Spain.

      8. Climate change and energy transition

         In 2021 the Audax Renovables Group reshaped its strategic direction by committing itself to the business of energy generation from renewable sources with the objective to contribute to the fight against climate change through the generation of 100% renewable energy and thus become a vertically integrated company dedicated to the activity of energy generation and retailing. At the close of the year the Group owns a portfolio of wind and photovoltaic projects in different stages of development and operation with the capacity to generate up to 1,037 MW.

         With regard to climate change and energy transition it should be mentioned that the adaptation to climate change and the energy management are material sustainability subjects for Audax. Therefore, the Board of Directors approved in the fourth quarter of 2025 the new Strategic Plan 2026-2030 of the company, which integrates structurally the material sustainability aspects of the company's business.

         The objectives established in the Strategic Plan emphasise that the Group shall continue increasing its installed renewable capacity, strengthening its presence in the countries where it operates and thus contributing to the energy transition and fight against climate change. According to the Plan, the company expects to increase its installed capacity by 500 MW by 2030 and to work on projects of hybridisation of the power plants, which will allow to optimise the use of the network and reduce the intermittency.

         Moreover, at the end of the year the Group approved its first objective of greenhouse gas emissions reduction, related to the scopes 1 and 2 of the carbon footprint, as a part of the Sustainability Strategic Plan 2023-2025 and in line with the provisions of the Royal Decree 214/2025 and in coherence with the requirements of the ESRS E1.

         The objective is focused on reducing the emissions connected with the energy consumption of the offices and electrification of the vehicle fleet of the Group. The company aspires to achieve a reduction of 84% of its emissions from the scopes 1 and 2 by 2030, and has initiated its endeavours to delineate a plan for the reduction of emissions in order to achieve the established goal.

         Both objectives form the basis of the company's strategy to respond to the foreseeable changes in the economic environment and, in particular, in the energy sector, in relation to the climate change and energy transition, in order to meet the interests and the expectations of the stakeholders.

         These Annual Accounts have been prepared considering the emissions reduction commitments of the Group, as well as the risks and uncertainties related to the climate change and energy transition. These consolidated annual accounts have been formulated considering the provisions of the IASB publication "Effect of climate-related matters on financial statements" (updated in July 2023) regarding the impact of the climate change on the application of the IFRS to the financial information and the guidelines established in the climate change standard "ESRS E1. Climate Change", which implements the corporate sustainability information framework defined by the Corporate Sustainability Reporting Directive (CSRD) in this respect. Lastly, the recommendations issued by The European Securities and Markets Authority (ESMA) were also taken into account, including the last document published in October 2024.

         With regard to the regulations, the Paris Agreement had a very significant impact on the development of new climate policies and approval of new regulations. The EU has approved various regulations in this matter, upon undertaking the commitment of climate neutrality by 2050 and "The European Green Deal", which establish the new growth strategy of the EU. Spain likewise has issued various regulations on the matter, particularly Climate Change and Energy Efficiency Law 7/2021, therefore the laws concerning climate change and energy transition are evolving constantly and may have unfavourable effect on, as well as bring opportunities for, the activities of the Group. The effect may be positive as well as negative, therefore it is key for the Company's strategy to monitor the legislation regarding sustainability matters. The goal to reduce emissions established by the Group is considered to be aligned with a decarbonisation route compatible with the Paris Agreement and the objective of climate neutrality of the EU by 2050, according to the requirements of Royal Decree 214/2025.

         The risks related to climate change are not expected to affect the Group's ability to pay dividends to the shareholders, because of strong cash generation and existing reserves.

      9. Armed conflict between Russia and Ukraine, and Israel and Palestine

   On 24 February 2022 a war between Russia and Ukraine broke out. The invasion of a European country is an unprecedented event since the middle of last century, and has led to catastrophic humanitarian consequences as well as serious implications for the world economy and financial markets.

   After the Russian invasion of Ukraine, the European Union and countries such as the USA, Australia, Japan and the UK imposed some unprecedented measures and sanctions on Russia. These measures, as well as the sanctions imposed by Russia in response, had a global impact resulting in increased prices of raw materials, inflationary pressure, restrictions in the supply chain and volatility on the financial and commodity markets.

   One of the most affected sectors is the energy sector, with a significant increase of the prices of petrol and natural gas, especially in 2022. Due to possible shortages of natural gas caused by the conflict, the European gas market responded with an increase, and the seriousness of the situation also caused a high volatility on the market, along with corresponding impacts on the electricity prices. These difficulties were multiplied by the increased technological risks to which the businesses and Administrations are exposed, and which led to the implementation of security measures and heightened internal control for the protection of the digital infrastructure.

   Added to the aforementioned crisis is the biggest escalation in recent years of the conflict between the Palestinians and Israelis after the terrorist attack on Israel in October 2023. Although it is considered that this conflict will not have major consequences for the global energy market as long as it remains contained within the region, it reduces the expectations of normalisation in the region and increases the geopolitical risk premium in certain markets, which are already tense.

   Considering the reference scenario, and in pursuance of meeting the recent recommendations of the European Securities and Markets Authority (ESMA) of 13 May 2022 and 28 October 2022 respectively, the Audax Group monitors the circumstances and evolution of the current situation caused by the crisis in order to manage potential risks. For that purpose, the analysis which are carried out are supposed to evaluate the direct impact of the conflict on the business activity, the financial situation and economic performance, with a special reference to the general increase of the prices of raw materials and, if possible, to a reduced availability of materials supply in the regions affected by the conflict.

   Moreover, the Group does not hold shares in companies operating in Ukraine, Russia or Belarus, nor has it made any investments in those countries. The Group does not have undistributable balances of cash or cash equivalents as a consequence of the measures and sanctions described above. For references to interest rate risks, credit risks and liquidity risk, see Note 16.

   Considering that it is a scenario, which undergoes constant changes and it is difficult to predict to what degree and how long the armed conflicts will affect it, the Audax Group carries out constant control of the macroeconomic and business variables in order to be provided, in real time, with the best estimates of possible impacts, taking also into account various recommendations of the national and supranational control authorities in this area.

3. ‌Note 3 - Regulatory Framework

   1. General regulatory framework and strategic importance

      The year 2025 turned the energy regulations into a strategic priority for the Audax Group. The regulatory environment, both European and national, not only determines legal compliance, but also conditions business opportunities and operational risks. Recent legislative changes reinforce the energy transition by emphasising decarbonisation and efficiency, and introduce new compliance obligations, such as environmental, social and governance (ESG) reporting, cybersecurity and energy efficiency requirements.

      1. European regulatory framework in 2025

         1. Background

            Since 2018 the energy regulations in the EU have undergone important revisions, culminating in Governance Regulation 2018, which obligates the Member States to present by June 2024 their updated integrated national energy and climate plans. In July 2021 the package «Fit for 55» was designed in order to achieve climate neutrality by 2050 and a reduction of at least 55% of the greenhouse gas emissions by 2030. The REPowerEU Plan, launched in May 2022, promotes energy saving, clean energy production and diversification of supply sources. In 2024-25 the regulation continued evolving in consonance with the European Green Deal and the commitments undertaken in the COP28, laying the foundations for the transition towards clean energy.

         2. Key initiatives of 2025

            1. Electricity and gas market reform - Regulation (EU) 2024/1747 and Directive (EU) 2024/1711, approved in June 2024, redefine the design of the market in order to stabilise the prices by dissociating the renewable electricity cost from the cost of gas. These regulations

               promote the Power Purchase Agreements (PPA) and introduce obligatory bidirectional contracts for difference for new renewable installations with government support, guaranteeing a fixed price of megawatt hour and reducing the market risk.

            2. Corporate sustainability and CSRD - the Corporate Sustainability Reporting Directive (CSRD) and its ESRS standards entered into force and require that Audax disclose exhaustive environmental and social information. Although it increases operating costs by requiring ESG data systems and internal controls, it also strengthens the sustainable reputation of the company.

            3. Emissions and ETS2 - the EU created a parallel system ETS2 with regard to the fossil fuel suppliers for construction and transport. Unlike in the case of the original emissions trading system, ETS2 obligates the suppliers to acquire emissions rights generated by the end use. It requires a monitoring plan, auctions rights without free allocations and incorporates a cap price of €45/t in order to reduce volatility. Audax shall apply financial hedging to mitigate the impact on the EBITDA when the system becomes fully implemented in 2027.

            4. Digitalisation, cybersecurity and artificial intelligence - Directive (EU) 2022/2555 NIS2 establishes strict requirements of cybersecurity from February 2025 and obligates the essential operators, such as Audax, to implement risk management measures and to inform about significant incidents in less than 24 hours. The future EU AI Act shall classify high risk use by 2026 and require auditing the demand forecasting and client service algorithms.

            5. Renewables and storage - RED III Directive (EU 2023/2413) raises the renewable goal to 42.5% by 2030 and fosters self-supply and energy communities through «acceleration zones» with simplified procedures. It recognises the energy storage as a public interest activity, urging the States to eliminate obstacles to the connection of batteries in congested areas.

      2. Regulatory framework by country of operation

         1. Spain

            The year 2025 brought important regulatory changes for the operations of Audax in Spain:

            1. End of cap price for gas - The exceptional measures, which limited the price of gas since 2022, ended in January 2025. The elimination of the «Iberic exception» cancelled the mechanism of production cost adjustment.

            2. Tariff of Last Resort (TUR) Reform - Orders TED/1013/2024 and TED/1487/2024 (20 September and 26 December 2024) entered into force on 1 January 2025, changing the methodology of the TUR through quarterly update of the variable term, the incorporation of new cost components and increase of the market margin of reference.

            3. Permanent obligation of gas storage - Various ministerial orders established the permanent system of natural gas storage duties, in accordance with Royal Decree 1184/2020, fixing system charges, which include storage fees.

            4. Post-blackout measures - After the extraordinary blackout of April 2025 in Spain and part of the Iberian Peninsula, Royal Decree-law 7/2025 (24 June) was published and later derogated; Royal Decree 997/2025 (5 November) introduced measures to strengthen the electricity system, centred on monitoring the operators and promoting storage and electrification.

            5. Client service law - Law 10/2025 (26 December) regulates the minimum quality levels and assessment of the client service of businesses supplying basic services, such as gas and electricity. Published on 27 December 2025 and in force since 28 December 2025, it establishes a free-of-charge, effective and universally accessible service with true and sufficient information. The adaptation period is of twelve months, therefore Audax shall comply with the regulation by 28 December 2026.

      In 2026 Spain anticipates regulatory changes:

      1. Diversification of gas sources and interconnections - Regulations are expected to diversify natural gas supply and to design interconnections with France, possibly by introducing criteria for allocation of cross-border capacity.

      2. Vulnerable consumer protection and thermal energy consumption - The measures applied in 2025 to the electricity consumption may be extended to the gas consumption at the end of 2026.

      3. Energy storage system - A future royal decree shall define the legal system of the storage installations, including access, connection, market participation, fee exemption and technical security requirements.

      4. Renewable auctions - It is probable that auctions for 2026-27 shall have new categories for storage projects and hybrid installations.

      5. Household and community storage, electric mobility and buildings - Regulations are expected on security requirements, connection systems and tax incentives for household and community storage. The transposition of the Building Directive (deadline 29 May 2026) will require buildings of zero emissions, with renewable standards and pre-installation of charging points.

         b.2.) Portugal

         The Portuguese regulatory framework of 2025 introduced adjustments to the cost structure of the electric system and suppressed distorting mechanisms:

         • Revision of the Energy and Climate National Plan - The amendment of PNEC 2030, approved in April 2025 (Resolution no. 127/2025), extends the decarbonisation, efficiency and renewable energy ambitions, establishing goals of 12.4 GW of wind, 20.8 GW of solar energy, and important expansion of storage by 2030.

         • Social contributions - Directive 13/2023 of ERSE created the OLMC fee in order to finance social policies through contributions from suppliers. In 2024 Audax and other retailers paid

           €0.77/MWh in electricity and €1.07/MWh in gas. Thanks to Decree-Law 104/2023 the contribution for 2025 is established at €1.6574/MWh and is split into 12 months instead of 9, which alleviates the costs and improves Audax's margins.

         • Elimination of the "clawback" - Decree-Law 139-B/2025 definitively derogates the "clawback" mechanism, which, since 2023, deducted extraordinary profit from non-emitting producers. Its abolition improves potential income of renewable power plants of Audax in Portugal.

         • Tariff regulation - Regulation 1218/2025 of ERSE updates the tariff framework, preparing the regulatory period of 2026-29 and increasing flexibility for low-voltage consumers. From 2026 the clients with purchased capacity of up to 20.7 kVA will be able to change their tariff option at any time, eliminating the previous 12-month contract commitment.

         • Directives on blackout and contract register - Directive 10/2025 of ERSE establishes exceptional settlement regulations for the blackout of 28-29 April 2025, ensuring that firm market programmes shall not incur penalties. Directive 11/2025 requires a mandatory register of bilateral electricity contracts (PPA) of over one year of duration, capacity ≥1 MW, and annual volume ≥1,5 GWh, when at least one of the parties is established in Portugal; the register is hosted on a platform managed by OMIP.

      In 2026 the approval of the Decree-Law transposing Directive 2024/1711 is expected and may introduce significant changes into the regulatory framework of the electricity system and revise the billing periods in order to reflect better the consumption patterns with intelligent meters.

4. ‌Accounting and valuation standards

   1. Intangible assets

      1. Licences and trademarks

         The licenses and trademarks which have a defined useful life are stated at cost less accumulated amortisation and impairment provisions recognised. The amortisation is calculated using the straight-line method in order to assign the cost of the trademarks and licenses during their estimated useful life (4 years).

      2. Computer software

         Licenses for computer software acquired from third parties or developed by the company itself are capitalised on the basis of the costs incurred to acquire and prepare them for a specific program use. These costs are amortised during its estimated useful life (between 3 and 4 years).

         The expenses related to the maintenance of computer software are recognised as cost when incurred. Cost related directly to the production of unique and identifiable software controlled by the Company, and when it is probable that it will generate economic profit exceeding the cost during more than one year, is recognised as intangible asset. Direct costs include staff costs of software developers and a suitable percentage of general costs.

      3. Other intangible assets

      The Company recognises as assets the incremental costs of obtaining a contract with a client if the entity expects to recover those costs.

      With regard to the contracts without substantial annual renewal costs, the commission paid for the acquisition of contracts for power supply signed with those customers are recorded by the Company as intangible assets and are transferred to the profit and loss account under the heading of Amortisation charge, linearly during the expected average life of the client. The average expected life of contracts with customers ranges between 1 and 3 years (Note 4.16).

   2. Property, plant and equipment

      Property, plant and equipment are recognised at their acquisition price or cost of production minus their accumulated depreciation and accumulated recognised impairment losses.

      The net financial expenses, and other expenses directly attributable to property, plant and equipment, are included in the acquisition cost until they are brought into use.

      The costs of extension, modernisation or improvement of property, plant and equipment are capitalised only when they represent an increase in their capacity, productivity or a lengthening of their useful life, and as long as it is possible to know or estimate the carrying value of the assets that are written off inventories when replaced.

      The costs of major repairs are capitalised and depreciated over their estimated useful lives while recurrent maintenance expenses are taken to income statement during the year in which they are incurred.

      The depreciation of property, plant and equipment is calculated on a straight-line basis according to their estimated useful lives, taking into account ordinary wear and tear. The estimated useful lives are as follows:

      Years of estimated useful life

      Plant and machinery 10 - 25

      Other plants, facilities and equipment 10

      Other property, plant and equipment 10

      The residual value and useful life of assets are reviewed, and adjusted if needed, at each balance sheet date.

      When the book value of an asset is greater than its estimated recoverable value, it is immediately written down to the recoverable value.

      The profit and loss on the sale of property, plant and equipment is calculated by comparing the income obtained from the sale against book value and then taken to the income statement.

   3. Financial instruments

      1. Financial assets Classification

         Financial assets owned by the Company are classified into the following categories:

         • Financial assets at amortised cost: includes financial assets, including those admitted to trading on a regulated market, for which the Company maintains the investment in order to receive the cash flows derived from the fulfilment of the contract, and the terms of the contract allow for the asset to create, on specific dates, cash flows which are exclusively collections of principal and interest on the outstanding principal.

           In general, the following items are included in this category:

           1. Trade receivables: originated from sales of goods or supply of services in business transactions with deferred payment, and

           2. Non-trade receivables: originated from the transactions of loans granted by the Company, where the amount receivable is or may be determined.

         • Financial assets at fair value through net equity: included in this category are the financial assets whose contract terms create, on specific dates, cash flows which are exclusively collections of principal and interests on the outstanding principal, and are not held for trading, nor do they fall under the previous category. Moreover, this category includes also investments in equity instruments allocated irrevocably by the Company at the moment of their initial recognition, as long as they are not held for trading and should not be measured at cost.

           The nature of the financial assets classified into this category, if any, shall be explained together with the criteria applied in such allocation, as well as an explanation shall be provided of how the Company fulfilled the necessary criteria of such recognition.

         • Financial assets at cost: this category comprises the following investments: a) equity instruments whose fair value cannot be reliably determined, and the derivatives where the underlying asset is the investment; b) hybrid financial assets whose fair value cannot be reliably established, except for when the requirement are met for their accounting at amortised cost; c) contributions made in joint accounts agreements and similar; e) equity loans with interest of a contingent nature; d) financial assets which should be classified in the following category, but their fair value cannot be reliably established.

         • Financial assets at fair value through profit and loss: includes the financial assets held for trading and those financial assets which have not been classified into none of the previous categories. Moreover, this category comprises the financial assets allocated optionally by the Company at the moment of their initial recognition, which otherwise would be included in other category, because such allocation eliminates or reduces significantly certain valuation incoherence or accounting asymmetry which would otherwise arise.

           Initial measurement

           In general, the financial assets are initially measured at fair value of the consideration paid increased by the directly attributable transaction costs. However, the transaction costs directly attributable to the assets recorded at fair value through profit and loss shall be recognised in the profit and loss account for the year.

           Subsequent measurement

           The financial assets at amortised cost are measured applying this valuation criterion, with the accrued interest recorded in the profit and loss account applying the effective interest rate method. The financial assets included in the category of fair value through net equity are recorded at their fair value without deducting the transaction costs that may be incurred for the purpose of disposing of them. The changes in fair value are recorded directly in net equity until the financial asset is derecognised from the balance sheet or is impaired, at which moment the amount recognised in this way is allocated to the profit and loss account.

           The financial assets at fair value through profit and loss are measured at their fair value and the result of the changes in their fair value is recorded in the profit and loss account.

           The investments classified in the previous c) category are measured at cost less the accumulated amount of the value adjustments due to impairment, if applicable. These adjustments are calculated as the difference between book value and the recoverable amount, understood as the greater of fair value less cost of sale and present value of the future cash flows generated by the investment. Except when there is a better proof of the recoverable amount of the investments in equity instruments, the net equity of the investee entity is taken into account, adjusted by the unrealised gain existing at the date of the measurement net of tax effect.

           Impairment

           At least at the closing date of the year the Company carries out an "impairment test" to the financial assets which are not recorded at fair value through profit and loss. It is considered that there is objective evidence of impairment if the recoverable amount of the financial asset is lower than its book value. In

           any case, with regard to the equity instrument at fair value through net equity, it is presumed that there is an impairment if the decrease of its trading price persists for a year and a half or amounts to 40% without the recovery of its value. The impairment is recorded in the profit and loss account.

           The Company derecognises financial assets at their expiration or assignment of the rights to the cash flows of the corresponding financial asset and when the risks and profits inherent to its ownership are transferred substantially, such as definitive sale of assets, trade receivables assignment in factoring where the entity does not retain any credit risk or interest risk or financial asset securitisation where the assigning entity does not retain subordinate financing or grants no kind of guarantee or assumes no other kind of risk.

           On the contrary, the Company does not derecognise the financial assets and recognises a financial liability at the amount equal to the received consideration in the case of financial asset assignment when the risks and profits inherent to its ownership are substantially retained, such as discount securities, recourse factoring, sale of financial assets with repurchase at fixed price or at sale price with interest, and securitisation of financial assets where the assigning entity retains subordinate financing or other kind of guarantee which absorb substantially all the expected losses.

      2. Financial liabilities

         Financial liabilities assumed or incurred by the Company are classified into the following valuation categories:

         • Financial liabilities at amortised cost: these are debits and payables of the Company, arising from the purchase of goods and services during business operations, or which, not resulting from business operations and not being derivative instruments, stem from transactions of loans obtained by the Company.

           These liabilities are measured initially at fair value of the received consideration adjusted by the cost of the transaction attributable directly. Subsequently, these liabilities are measured at amortised cost.

         • Financial liabilities at fair value through profit and loss.

         The Company shall indicate, if applicable, the types of financial liabilities classified into this category (for example, derivatives which do not meet the requirements to be considered as hedge instruments).

         Derivative liabilities are measured at fair value according to the same criteria as those applied to the financial assets at fair value through profit and loss described in the previous section.

         The assets and liabilities are presented separately in the balance sheet and are disclosed only at their net value when the company has the enforceable right to compensate the recognised amounts and, moreover, intends to settle these amounts at net value or to realise the asset and write it off simultaneously.

         The Company derecognises financial liabilities when the obligations from which they arise expire.

      3. Financial derivatives

         The Company uses financial derivative instruments for the purpose of hedging the risks to which its future cash flows are exposed. Basically, these are the risks related to electricity price fluctuations.

         Financial derivatives are recognised at fair value on the contract date, and are successively recalculated at fair value. The method for recognising the gain or loss depends on whether the derivative is classified as a hedging instrument, and if so, the nature of the asset hedged.

         For the purpose of classifying these financial instruments as hedges, they are initially designated as such and the hedge relation is documented. Moreover, the Company verifies initially and periodically throughout the useful life (at least at each accounting closing date) whether the hedge relation is effective, i.e., whether it is prospectively likely that the changes in fair value or the cash flows from the hedged item (attributable to the covered risk) will be compensated with the changes in the hedging instrument.

         The Company applies the following types of hedges, which are accounted for according to the description below:

         • Fair value hedge: In this case, the changes in the value of the hedging instrument and the item hedged, attributable to the hedged risk, are recognised in the income statement.

         • Cash flow hedges: In this kind of hedge the part of profit or loss of the hedging instrument determined as efficient hedge is recognised temporarily in net equity and allocated to the profit and loss account in the same period when the element hedged affects the profit or loss, except for when the hedge correspond to a transaction expected to result in the recognition of a nonfinancial asset or liability, in which case the amounts recorded in net equity will be included in the cost of the asset or liability when it is acquired or assumed.

         • Hedges of net business investments abroad: this kind of hedging transactions are designed to cover the exchange rate risk in the investments in subsidiary and associated companies and are treated as fair value hedges because of the exchange rate component.

         The hedge accounting is interrupted when the hedging instrument expires or is sold, terminated or executed, or it no longer meets the criteria of hedge accounting. At that moment any accumulated profit or loss corresponding to the hedging instrument recorded in net equity is maintained within the net equity until the expected transaction takes place. When the transaction subject to the hedge is not expected to take place, the net accumulated profit or loss recognised in net equity is transferred to net income statement for the period.

         For the purpose of considering each hedging transaction to be effective, the Company documents that the economic relation between the hedging instrument and the hedged item is aligned with the risk management objectives.

         The Company uses only cash flow hedge derivatives. For these derivatives, the effective part of changes in the fair value of the derivatives designated and qualifying as cash flow hedges is recognised in net equity.

         The profit or loss related to the settlements of these contracts is recognised under the heading of Procurements of the income statement.

         The amounts accumulated in net equity are released to the consolidated income statement in the year in which the hedged items affect profit or loss.

      4. Deposits

         The deposits received as a consequence of lease agreements on letting the meters to the clients are measured according to the criteria applied to financial liabilities. The difference between the received amount and the fair value is recognised as advance collection allocated to the income statement during the lease period (during the period when the service is provided). The advance payments whose application is going to take place in a long term are subject to financial adjustments at the balance sheet date of every year, depending on the market interest rate at the moment of its initial recognition.

      5. Derecognition and modification of financial liabilities

         The Company derecognises a financial liability or a part of it when the obligation specified in the contract is fulfilled or when the Group is legally exempted from the principal responsibility contained in the liability whether through a court proceeding or by the creditor.

         The exchange of debt instruments between the Company and the counterparty or substantial modifications of the liabilities initially recognised are accounted for as an extinguishment of the original financial liability and recognition of a new financial liability, provided that the terms of the instruments are substantially different.

      6. Issuance and acquisition of equity instruments and financial instruments and recognition of dividends

      The Group classifies issued, incurred or assumed financial instruments as financial liabilities in its entirety or in one of its parts, providing that, depending on the economic situation, it means for the Group a direct or indirect contractual obligation to deliver cash or another financial asset or to exchange financial assets or financial liabilities with third parties under conditions that are potentially unfavourable.

      The Company recognises the increases and decreases of capital in net equity when the issuance and subscription has been carried out.

      In the issuance of compound financial instruments with equity and liability components the Group measures the equity component at the residual amount obtained after subtracting from the fair value of the instrument as a whole the amount of the liability component, including any derivative financial instrument. The liability component is measured at fair value of a similar instrument which does not contain an equity component. However, if an issued instrument is puttable at any time at the investor's request or because of a contingency which cannot be controlled by the Group, the initial value of the financial liability is equal to its issue price. Derivative financial instruments are later measured at fair value through profit or loss. The liability component of the financial instrument is later measured at amortised cost. Transaction costs related to an issue of a compound financial instrument are allocated according to the carrying amount of each of the components at the time of classification.

      In an issue of convertible bonds, the Company recognises the conversion option as other equity instruments, providing that it is not classified as a derivative financial instrument. The financial liability component and transaction costs are recognised as stated above.

      At the date of the conversion the Company cancels the liability component and proceeds to credit the capital account and, if applicable, the share premium account. Moreover, the original component of net equity is reclassified to the share premium account.

      In case of agreement on bonds repayment, the Company cancels the liability and, at the difference against consideration paid, accounts for the result of the transaction as a financial profit or loss in the income statement. Likewise, the original net equity component is reclassified to the reserves account

      When the Company cancels a convertible bond before maturity, through early redemption or repurchase where conversion terms remain unchanged, the Company distributes the consideration paid and transaction costs related to the redemption or repurchase between the liability and equity components of the instrument at the date of the transaction, in a way which is congruent with the method used in the distribution carried out for the initial recognition of the instrument.

      Once the allocation of the consideration paid between the two components is made, the resulting gain or loss related to the cancellation of liability is recognised in the profit or loss account, and the amount corresponding to the equity component is recognised directly in a reserves account.

      If the initial terms of the convertible instrument are amended in order to induce early conversion, the difference, at the date when the terms are amended, between the fair value of the consideration the investor is to receive on conversion of the instrument under the new terms and the fair value of the consideration that the investor would have received under the original terms is recognised as a financial profit or loss in the income statement.

   4. Fair value measurement

      Fair value is the price which would be received from selling an asset or paid for the transfer of a liability in an orderly transaction between market participants at the date of the measurement, whether the price is directly observable or estimated by using a different valuation method.

      The measurement at fair value of the financial assets and liabilities is classified according to a hierarchy which reflects the relevance of the variables used in order to carry out such measurement. This hierarchy is comprised of three levels:

      • Level 1: Measurements based on the trading price of identical instruments on the active market.

      • Level 2: Measurements based on the observable variables of an asset or liability.

      • Level 3: Measurements based on variables which are not supported by observable market data.

        If there is no listed price available on an active market, the Group uses valuation methods which maximise the use of relevant observable input data and minimise the use of non-observable input data. More specifically, and with regard to different derivative financial instruments not marketable on regulated markets, the Group establishes the fair value by using valuation methods which include the use of recent free transactions between interested and duly informed parties, involving other substantially similar instruments, the analysis of discounted cash flows at interest rates and exchange rates applied in the market at the date of the presentation and models of establishing option prices, improved in order to reflect the specific circumstances of the issuer.

   5. Inventories

      Inventories are measured at the lower of cost and net realisable value. The cost is determined by the weighted average cost.

      The cost of inventories includes the cost of raw materials and all costs directly attributable to the purchase and/or manufacturing, including the costs incurred in bringing the inventories to their present location.

      The Company's inventories correspond only to the minimum stock of gas necessary to carry out the retailing activity.

   6. Cash and other cash equivalents

      Cash and cash equivalents include cash in hand and bank deposits payable on demand in credit institutions. Also included within this concept are other short-term investments of high liquidity, if they are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Therefore, the account includes investments with maturity of less than three months from the date of purchase.

      Investments in investment funds are considered as cash and cash equivalents only if the underlying assets of the fund meet the criteria specified above.

      For the purposes of the Company's cash flow statement, cash and cash equivalents include bank overdrafts which are repayable on demand and form an integral part of the Company's cash management. Bank overdrafts are recognised in the balance sheet as financial liabilities from borrowings from credit institutions.

      The Company classifies as financing the cash flows related to the interest collected and paid and as operating - the dividends collected.

   7. Net equity

      Share capital is represented by ordinary shares.

      The costs of issuing new shares or options, net of tax, are presented directly against the net equity, as reduced reserves

      In the event of acquiring treasury shares, the compensation paid, including any incremental cost attributable directly, is deducted from net equity until its settlement, new issuance or disposal. When subsequently these shares are sold or are issued again, any received amount, net of any incremental cost of the transaction attributable directly, is included in net equity.

      The dividends on ordinary shares are recognised as a reduced value of equity when they are approved by the Company's shareholders.

   8. Provisions and contingent liabilities

The Directors of the Company have established a difference in the annual accounts between:

a) Provisions: credit balances that cover current obligations related with past events. Its settlement is likely to originate an outflow of cash, although the amount and/or the moment of the settlement cannot be determined.