Corporate Strategy in times of Crisis IESE BCN 240114 OK - Enagás€¦ · Corporate strategy in...

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




5. Results

6. Conclusions

Index

7

Growing in times of crisis:

Explain

Act

React

Anticipate1

2

3

4


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1. About Enagás




5. Results

6. Conclusions

Index

9


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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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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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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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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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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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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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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Explain: transparency and communication with the stakeholders

Regulators

Marketplayers

Banks

MediaInvestmentfunds

Government

Shareholders

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1. About Enagás




5. Results

6. Conclusions

Index

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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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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




5. Results

6. Conclusions

Index

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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




5. Results

6. Conclusions

Index

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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

Corporate Strategy in times of Crisis IESE BCN 240114 OK - Enagás€¦ · Corporate strategy in...

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