Interview with the Executive Chairman

 

Antonio Llardén, Executive Chairman of Enagás

Shareholder remuneration is our strategic priority: we will be increasing the dividend by 5% per year until 2020

The Executive Chairman of Enagás explains the main aspects of 2016 and the company’s outlook for the 2017–2020 period.​

What were the 2016 results like? What aspects would you highlight?

The best way to recap the year is to say that, once again, we were able to meet our forecast targets for the tenth consecutive year. We increased our net profit by 1.1% on 2015 and made 417 million euros. The dividends paid by our affiliates reached 90.5 million euros, easily exceeding the 65 million we forecast, which together with the reduction in our finance charges enabled us to achieve these good results.

What were the main investments made by Enagás in 2016?

Enagás invested 912 million euros in 2016. The most significant investment of the year was the purchase of 40% of GNL Quintero, the Chilean regasification terminal in which we already had a 20% stake. The amount, 400 million dollars, accounted for almost half of the total investments made during the year. With 60% we are now the majority shareholder, and in 2017 we will begin to include this company fully in our consolidated accounts.

In addition, we are continuing to invest in a very attractive project that is of great importance for Europe, the Trans Adriatic Pipeline (TAP), in which we hold a 16% stake.

In Spain, we should highlight the purchase of 42.5% of Saggas, the Sagunto regasification plant, which takes our stake to 72.5%.

How did Enagás shares perform in 2016?

Enagás performed better that comparable companies, not only in Spain but in Europe. After several really positive years, the IBEX 35 closed 2016 generally down, which in our case was a fall of 7%. It should be borne in mind that this year saw markets punish blue chip companies, like us, and the utilities sector in general.

The objectives of your Strategic Plan until 2020 have recently been revised. What stands out most in this updated forecast?

One important point is that we have raised our forecast for average annual growth in net profit to 3% from the previous 2%. This was possible thanks to the investment efforts made in 2016, and the investments due to be made until 2020.

Furthermore, we are upholding our commitment to our shareholders independently of market conditions, and their remuneration continues to be one of the strategic priorities at Enagás. As we announced, we will be increasing the dividend by 5% per year until 2020

What about the Enagás international strategy? Have any basic aspects changed?

Our international strategy remains on course and is based on three key pillars: the optimum and efficient management of investments already made; recouping as soon as possible our investment in the Peruvian GSP project, after termination of our concession; and a thorough analysis of interesting projects and possible new investment in countries that are attractive for the development of gas infrastructures.

We will slow down the process somewhat, given that one way or another, after investing more than 700 million euros in 2016, we have put forward a large part of the international investments we had forecast we would make by 2020.

How did the demand for gas behave in 2016? What is the outlook for 2017?

This was the second year in a row in which the demand for gas in Spain grew, mainly the result of increased industrial demand, which increased by 3%, in line with economic growth.

Between now and 2020, we estimate demand to grow at an average rate of 3.5% per year. We have started 2017 with record demand for natural gas in Spain, owing to the cold snap and a number of nuclear plants in France being offline. We have had the highest consumption in the Spanish Gas System since 2012, and it was met as normal thanks to the flexibility given by the regasification plants and underground storage facilities, which are key to guaranteeing supply.
 
Enagás continued to further its sustainability strategy. What new aspects would you highlight from last year?

Sustainability is one of our strategic pillars and a commitment shared by all the professionals who work for the company. Our sustainable management model enables us to integrate sustainability into our management, and to focus our efforts on the most relevant issues. In this way we contribute to achieving the Sustainable Development Goals and we renew our commitment to the ten principles contained in the Global Compact.

The energy efficiency initiatives we have put into place in our infrastructure allowed us to prevent the emission into the atmosphere of 92,000 tonnes of CO2 in 2016, and we have reduced our carbon footprint by 49% over the last two years.

At the beginning of the year we were acknowledged as the tenth most sustainable company in the world by the 2017 Global 100 Most Sustainable Corporations in the World index, which gave me and the entire Enagás team great satisfaction. We have also renewed our presence on the Dow Jones Sustainability Index (DJSI) for the ninth consecutive year, with a Gold Class rating.

We are aware of the key part natural gas has to play if we are to advance towards a low-carbon economy, which is why we are promoting its use in sectors such as maritime transport, through projects such as CORE LNGas hive, coordinated by Enagás. We are also encouraging the use of natural gas-powered vehicles, because we need less polluting cars if we are to fulfil another extremely important objective to which we are committed, that of improving air quality.

In the field of Corporate Governance, what measures were taken in 2016 to continue on track with best practices?
 
We have one of the most international shareholder profiles in the entire Spanish market, and this has led us to adopt in recent years not only Spanish regulations regarding Good Governance, but also the most stringent international guidelines. Our Board of Directors, through the Appointments, Remuneration and CSR Committee, monitors the correct application of the best practices in the fields of Good Governance and Sustainability. In 2016 we adapted and updated all our policies related to Corporate Governance, which means that we are currently complying with the highest standards in this field.

The Board also approved the 2016–2018 Long-Term Incentive Plan, which includes a programme for multi-annual remuneration for senior management and a triennial bonus for other employees linked to compliance with the Enagás strategic plan. This has enabled us to align the interests of Enagás shareholders, management and all employees, and has responded to the requests by institutional investors and proxy advisors, with whom we continue to maintain a freely flowing dialogue with regard to Corporate Governance.

How does Enagás stimulate the motivation and commitment of its professionals?

Our 91 measures for a work-life balancehas allowed us to renew Enagás certification as a Family-Friendly Company for yet another year. The signing of the new Enagás Collective Bargaining Agreement provides a stable framework for the company’s labour relations with its professionals for the next four years and incorporated new aspects such as salary increases and professional development. We are also committed to diversity, and in the last two years we have increased the proportion of women in pre-executive and executive positions from 21% to 30%. It was highly satisfying that the 2016 working conditions survey, which had a 71% response rate, showed that practically every employee considered Enagás to be a good company to work for, corroborating the fact that we received certification from Top Employers España for the seventh year running.

Finally, is there another aspect that you would like to comment on? 

I would like to stress that this Annual Report, which we have prepared in an integrated format for the fifth year in a row, not only covers the company’s performance, but the most important impacts in the economic, social and environmental field.

Finally, I would like to thank the 1,337 professionals at Enagás for their efforts and commitment. They are the main resource we have with which to continue developing and operating gas infrastructures and to ensure the company’s future growth.

I would also like to thank the members of our Board of Directors for their responsibility, involvement in the interests of the company and dedication throughout the year.

And, of course, I would like to thank all our shareholders, on my behalf and on behalf of the Board of Directors, for your trust and support. Rest assured that our main priority for the coming years continues to be the value creation for you.