enagás corporate strategy in times of crisis. antonio llardén, enagás executive chairman
TRANSCRIPT
Corporate strategy in times of crisis
IESE. Barcelona, 24 January 2014
Antonio Llardén, Enagás Executive Chairman
1. About Enagás
2. How to face the crisis
3. New environment, new strategy
4. Corporate governance
5. Results
6. Conclusions
Index
3
1. About Enagás
Enagás is the leading natural gas transmission company in Spain and Technical Manager of the Gas System, and is authorised as an
independent TSO by the European Union.
4
1. About Enagás
5
1. About Enagás
Enagás shareholder structure
Enagás is an infrastructure company
It is an independent company that is not part of any vertically integrated group
Since the IPO of the company in 2002, it has been listed in the Ibex 35
(€ Mn) 2012Net profit 379.5
EBITDA 934.3
Investment 761.4
Assets put into operation 994.4(GWh)
Demand for natural gas transported
in the System418,964
Key figures
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1. About Enagás
2. How to face the crisis
3. New environment, new strategy
4. Corporate governance
5. Results
6. Conclusions
Index
7
Growing in times of crisis:
Explain
Act
React
Anticipate1
2
3
4
2. How to face the crisis
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1. About Enagás
2. How to face the crisis
3. New environment, new strategy
4. Corporate governance
5. Results
6. Conclusions
Index
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3. New environment, new strategy
Efficiency drive
Cost control and
efficiency plan
Implemented in 2008
Intensified and extended to 2014
Better results each year
Tight grip over operating costs
NOTE: Estimates for 2013 are based in 2013 budget and Company targets
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3. New environment, new strategy
Unlocking the value of the company's know how
Acquisition of core business assets
Vertically-integrated energy companies dispose of “non-strategic assets”
Drawing on Enagás' technological know-how, experience, and operating and financial resources
Acquisitions that fit with debt and profitability targets established in theStrategic Plan
Positioning of the company as a strategic partner
40 years' experience of global management of a complex gas
system and the LNG chain
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3. New environment, new strategy
International activity
Enagás' know-how in LNG a decisive factor for vendors and other partners
(1) 51% in an SPV owning 40%, in partnership with Oman Oil.
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3. New environment, new strategy
Anglo-Saxon approach in financing
56% debt in fixed rate Mainly Bank financing
Excelent ratings S&P/Fitch: AA-/A+ Liquidity: €417 mill
Situation on 31/12/2012
51%
49%
38%
40%22%
ICO+BEI Bank debtCapital markets
Before crisis (31/dic/2006)
36%
64%
Bank debtICO+BEI
82% debt in fixed rate Diversified and balanced sources of funding
Ratings S&P/Fitch: BBB/A- (made conditional to Spain´s Kingdom rate) Liquidity €2.232 mill
Lowest financial cost of the non financial IBEX-35 companies
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3. New environment, new strategy
Adaptation of the company's corporate governance policy
One of the highest free floatsin the Ibex 35 index
85%
One of the companies on the Spanish stock market with the largest number
of international investors
75%
Enagás complies with the most demanding national and international corporate governance recommendations
Main profile of international
investors: long-term investors, pension funds
and wealth funds
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3. New environment, new strategy
Growth of asset base and workforce
Growth of gross fixedassets Workforce
x2 +20%
In a high crisis context, Enagás has duplicated its size creating employment
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3. New environment, new strategy
Strong commitment to CSR
Enagás is member of the most relevant sustainabilityindexes: DJSI, FTSE4Good, Global Compact, Ethibel ….
In 2011 Enagás was world leader in DJSI
Enagás’ management model has achievedthe European Excellence Awards 500+ EFQM
Enagás is adhered to the International Integrated Reporting Council (IIRC) to develop an Integrated
Reporting Framework
Enagás´ has been verified as Family-Responsible, Equal opportunities and Top Employers Company
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3. New environment, new strategy
Explain: transparency and communication with the stakeholders
Regulators
Marketplayers
Banks
MediaInvestmentfunds
Government
Shareholders
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1. About Enagás
2. How to face the crisis
3. New environment, new strategy
4. Corporate governance
5. Results
6. Conclusions
Index
18
Board limited to a maximum of 17 membersRemuneration of the Board of Directors disclosed individually
Appointments, Remuneration and Corporate Responsibility CommitteeIncrease in number of women directors 2 women on the board of directors
Majority of Independent directors on the Board and in the two committees
Appointment of a Lead Independent DirectorElectronic voting/forum for shareholdersEvery Committee of the Board is chaired by an Independent Board member
External assessment of Internal Control over Financial Reporting system in line with Sarbanes-Oxley Act requirements
4. Corporate governanceIn 2007, Enagás aligned its internal regulations with the recommendations of the
Unified Good Governance Code and has adopted various measures in this regard since:
2007
2009
2011
2012
NOTE: Currently the Board has 15 members, 60% Independent and 20% women, percentages higher than the average for Ibex 35 companies
Importance
of proxy
advisors as
voting
prescribers
2010
2008
Separation of functions (Chairman/CEO) & CEO appointmentEstablish in By-laws: maximum number of Directors (15), maximum number of boards of listed companies on which Directors may sit (5), Committees chaired and with majority of Independents
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4. Corporate governance
Thanks to these measures, and despite the majority of investors being foreign, all the
resolutions proposed in the 2013 Shareholders’ Meeting were adopted with
practically 100% of the votes in favour:
The recommendations of the main Proxy Advisors (ISS and Glass Lewis) were favourable
1 99.720% 5.1 99.339% 5.5 99.549%
2 99.557% 5.2 99.172% 6 99.861%
3 99.779% 5.3 99.308% 7 96.440%
4 98.502% 5.4 95.892% 9 99.952%
% approval of agenda items in the 2013 GSM
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1. About Enagás
2. How to face the crisis
3. New environment, new strategy
4. Corporate governance
5. Results
6. Conclusions
Index
21
5. Results
‐70%
‐60%
‐50%
‐40%
‐30%
‐20%
‐10%
0%
10%
20%
d‐06 d‐07 d‐08 d‐09 d‐10 d‐11 d‐12 d‐1
Ibex Enagas
Ibex-29.9%
Enagás+7,8%
Enagás stock price evolution vs Ibex 2007-2013 during the validity of our Strategic Plan
3
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5. Results The company has met, and even surpassed, its guidance for the sixth
consecutive year despite the challenging economic environment.
Enagás has managed to attract and retain foreign capital, from both investors
and lenders.
Enagás has known how to continue to pursue its main corporate purpose
(supply security, maintenance of the Spanish gas infrastructure network,
necessary investments, etc.) while simultaneously transforming itself from a
medium-sized listed company into an internationally-focused business with a far
more Anglo-Saxon governance model and ambitious future goals.
NOTE: Estimates for 2013 are based in 2013 budget and Company targets
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1. About Enagás
2. How to face the crisis
3. New environment, new strategy
4. Corporate governance
5. Results
6. Conclusions
Index
24
Anticipate1 Stop of interbank market on September 2007
Public capital injections in banks (USA, France, UK, Germany, Netherlands,
Switzerland…)
1
React1 Efficiency plans
Change in financing policy
We faced an overhang risk in the Stock Market
Internationalization
Act1
First entrance in capital markets
Investment policies in line with the new environment
Acquisitions of new assets
New international investors
Explain1
Transparency with shareholders, banks, rating agencies and regulators
2
3
4
6. ConclusionsGrowing in times of crisis:
Thank you for your attention
IESE. Barcelona, 24 January 2014