Naturgy Energy Group, S.A. (NTGY) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, shareholders. Before we start with this AGM meeting, we would like to share with all of you a video that includes the initiatives that Naturgy has carried out over the last few weeks to help our customers and the society as a whole in their fight against COVID-19. Please, let's show the video. [Presentation]

Ladies and gentlemen, shareholders, it is an honor for me as Chairman of the Board of Directors to welcome you to this Annual General Shareholders Meeting that the company holds this year, and that due to the COVID crisis will be held remotely -- exclusively remotely. I would also like to thank the presence remotely of all the members of the Board of Directors of the company. And therefore, we consider open the session. I would like to remind you that the AGM's call was published on the 24th of April this year on the company's website and on the dailies, ABC, Expansión and Vanguardia, and on the website of the CNMV. Moreover, on the 19th of May, we published an extraordinary advert for this call, and so we ratified the holding of this AGM exclusively remotely. The agenda of the call is present in the adverts that I mentioned as well as in the attendance card that you have with you. And so I propose that we considered it read. Now the Secretary will provide you the data for the quorum to this AGM.

Thank you, dear Chairman. The summary of the list of attendees is the following: shareholders present, 124 that are the owners of 630,553,322 actions -- shares; represented shareholders, 559, which are the owners of 10 million. So there's a total of 684 shareholders that represent over 742 million, accounting for 75% of the share capital are here. We include the Treasury stock, however, those who do not have the right to vote. Those figures may still change depending on the last shareholders that have recorded -- that have registered themselves on the virtual platform until 9 a.m. in this morning. The final quorum will be published on the website of the company together with the results of the voting. So according to Articles 193 and 194, we consider it -- we consider this session under quorum as enough.

So given that we have over 75% of the attendance data, we consider that this AGM has been duly opened. The table is made up of the members of the Board of Directors that are present in the room and those that are connected via video conference as well as by the Secretary. Moreover, we'd like to inform you that according to Article 203 of the corporate law and as was presented in the call, we have requested the presence of the Notary of Madrid, Mr. Fernando de la Cámara to initiate the minutes of the AGM. And so now I'll give the floor to the Notary.

Thank you very much, dear Chairman. Good morning. My name is Fernando de la Cámara, a notary from Madrid. And I -- they've asked me to come to start the minutes of the meeting. I would like to ask all the shareholders present or those that are present remotely, if they have to make any comment regarding what the Secretary has said regarding the amount of shareholders present and the amount of share capital represented, if anyone would like to make any comments, we would include this in the minutes.

There are no comments?

No, we haven't received any electronically.

Okay. Well, thank you very much, dear Notary. The shareholders that wish to ask any question after my speech will be able to do so until the end of my presentation by sending their questions through the form that has been provided. If any shareholder wishes for the Notary to take literal note of the comments, please say so expressly in the electronic form. After that, we will vote for the agreement proposals, and I'll ask the Secretary to make some comments regarding how we're going to hold this.

So the basic rules of the process are the following. The voting of the proposals of all agreements regarding the topics that will be mentioned will be done according to a negative deduction system. That is, we'll consider votes in favor all of those that are present and represented, and we will deduct levels against. If those leave the room without voting, they will be considered in favor. With regard to the agreement proposals regarding issues that are not included in the agenda, we'll do it through positive deduction. Basically, we consider votes against those that are mentioned, deducting all the present and represented shares. If you leave the meeting without voting, they will be considered votes against. And we'll also vote, first of all, the agreement proposal set -- put forward by the Board of Directors and then those asked by the -- all the shareholders. And obviously, we will consider them all approved in the end if they've been voted. And you can vote up to the end of the reading of the proposals.

Thank you, dear Chairman -- dear Secretary. I will now start my report to the Board and to the shareholders. Dear, ladies and gentlemen, I would like to start this annual presentation expressing on behalf of the Board of Directors my deepest condolences and total solidarity of Naturgy with all of those who have suffered, that has had the impact of the virus in their relatives. And I would also like to mention the effort done by the thousands of workers all over the world that Naturgy has continued developing through this global pandemic. The total commitment with the company, with our customers and with society as a whole during these difficult times really deserve our deepest recognition. And I would also like to mention the 2,500 employees of the company, 2,200 more or less in Spain and 1,300 in other countries, that have continued to work as if nothing had happened over these last few weeks guaranteeing the supply and assistance to all our customers. Thank you very much to all of you. Finally, and before we start, I would like to apologize if this new experience, the electronic AGM, is not of your liking. We will try to do it as best as we can, and we'll try to be as close to you as possible despite the physical limitations. My summary is going to be made up of 6 sections. So the presentation, I'm not going to read everything that's said on the screen. You can have access to the presentations through our website. But I would like to try and mention the most important messages. We'll start by talking about the special situation of the COVID-19. We could say that we are facing an unprecedented crisis, health crisis that was declared on the 11th of March a global pandemic and that has already affected over 5 million people all over the globe, or unfortunately, we can say that we have over 330,000 fatalities. The first thing that this has caused in terms of business is growth -- a growth outlook that is very negative, with outlooks that still believe there will be a recession in the economy globally, especially in all those countries where the company carries out its activities. More specifically, what's even more relevant is a drop over the last few months of the main energy indicators. As you probably know due to the press coverage, we've had drops of over 50% on the price of oil and gas or 40% in the benchmark index for the electricity price in the Spanish market. So these are figures that are unprecedented, as I said before, and they have shown a very negative development of the energy markets over the last few months. More specifically, over the last few months, the impact on electricity demand but also gas demand has shown that it has -- that the economy has faced a standstill, especially in the markets where our group is present, Spain, Chile, Panama, Brazil, Argentina and Mexico. They show drops of 2 digits in most of those markets. And that has a clear -- is a clear reflection of a halt in the economy, and that kind of -- that's reiterated by the weekly figures that we present in this graph. The company currently has shown what it truly is. There was a German philosopher who said, "At times of crisis, it is in those times when people show who they really are." Well, Naturgy has demonstrated what it really is. And the first thing that it has done is to prioritize and act on people supporting all our stakeholders. With regard to the employees, we have focused clearly on the health and safety of our employees, bearing in mind that the company works in essential services, and therefore, we cannot stop. With regard to the society, we have shown and demonstrated our social commitment, applying measures whose objective have been to try and support -- to try and help with actions that aim and aimed in the past to support our social interest groups. And with regard to our customers and suppliers, basically, we have tried to anticipate their needs. We started our actions proactively. In January, the company decided to preserve the health and safety of its employees, and we decided to interrupt trips to minimize the amount of traveling done because with the business travels, we could lead to infection areas. In February, we anticipated the problems, creating a Crisis Committee. Our Crisis Committee is made up with representatives of the company in the different countries and in the different business areas. And with daily meetings, this Crisis Committee is monitoring the impacts that the crisis may have in order to go ahead and make decisions. We also started and set up all the resources necessary so that all the staff that could work remotely could do so. We guaranteed that all the company's services continued to operated, but we wanted to guarantee the health and safety of our employees that work from home. We have a total of 75% of our staff who work from home who are still working remotely, but 25% of our staff had to continue working on the frontline, generating energy and solving on-site problems for our customers. And for them, our efforts focused on guaranteeing their individual protection and ensuring that the medical services were there, where they carried out their activities in order to minimize the risk of our staff and of their families. Because of all of this, we are also anticipating our reentry, we could say, focusing on health and safety and developing protocols and ways of action in which we prioritize the health and safety of our employees, but also getting ready, making sure that the new working place is ready for those employees, we hope that they will be able to return soon; and also helping and thinking about the new working habits that our employees will have to adapt to once they go back to their offices. We are convinced that thanks to the proactivity and thanks to this anticipation, the company is achieving its main objective, which is to help collaborators, their relatives and society so that this goes away ASAP and make sure that we are ready for the new reality that we hope will start soon. With regard to our support to the society, I'm not going to mention it too much because the video already explained it. But the 3 principles for our actions have been the following: to guarantee supply despite the level of confinement, lockdown that we've had in the different countries where we carry out our activities. Our first concern has always been to make sure that energy continued to flow to the businesses, to the households of our customers and to the industries that we're still operating, to make sure that they could continue providing their products to the societies, such as food and other essential commodities. The second one, solidarity. Solidarity of our staff. To the Board of Directors and company staff, we have donated an important amount of money individually that goes beyond EUR 2,300,000 to the Red Cross in a project that we called [ Red Cross Answers ], and whose objective is to help those that have been damaged the most. And then institutional solidarity. Not only did we want to show solidarity as people but also as a company, and that's why we understand the measures providing support to the medicalized hotels, but also to all the people that have been in the front line helping the society. Our customers, as we said in the video, and our providers were not left outside of our approaches. And we've tried to react in a proactive way, anticipating things to show that Naturgy was going to support the society, our customers, our suppliers. Regarding invoices, up to 4 million beneficiaries from a deferral of invoices, then 7 million beneficiaries in medical attention for free online. And then regarding our suppliers, with -- that we have almost 11,000 beneficiaries. 2019 and the financial closure of 2019 is far behind us, clearly far behind after everything that has happened over the past months. But we need to speak about it, amongst other things, because part of the agreement proposals for this meeting, for this assembly are based on 2019 accounts. So some figures from that year that was close to 5 years ago. It was an intense year, intense activity quarter after quarter. I'm not going to go through all of them, but the actions carried out was significant for our company. We worked a great deal in efficiency to turn this company into a better one. We also worked regarding risks, our risk regarding management and we tried to reduce the risk of our portfolio. We mainly invested in growth in renewable energy and maintaining our distribution networks both for gas and power. And we have improved in actions as a consequence of our commitments regarding the environment and the society and our corporate governance. With regards to our results, you can see that the ordinary growth is 6%, the gross operating income. It has been somehow affected in one of our businesses, Gas & Power, by the evolution of commodities in the energy market, as. I have previously explained, in the international markets, in the markets in which we are present, they have been negative, and this has had an impact in our gross income. The rest of the businesses that are mainly focused on infrastructures and in gas and power networks, the growth was positive in all of them. And the North of Latin America, Mexico and Panama, we should highlight that area; and then we have Chile, Argentina and Brazil, 12%; and then 7% in Europe, in the euro area; and the gas and power networks in Spain should be highlighted. I would like to highlight an important figure. Our contribution to society through taxes, more than EUR 920 million, this is a highly significant figure that shows our social commitment in the financial area. In 2019, our company has maintained a balance between what we invested and what we distributed to our shareholders. We have not stopped investing. And as you can see, the cash generated, more than 95% of it comes from ordinary operations in our ordinary business. And there's a small percentage of divestments in assets. EUR 1.7 billion approximately is the part devoted to investments. And with that, we've maintained a debt level which is constant, around EUR 15.3 billion, which is a figure we're comfortable with regarding leverage ratios. And in more negative situations, this has allowed us to maintain stable rating level by Standard & Poor's. So first quarter of 2020 has been reported at the end of March. As you can see, our main milestones, well, we've continued to increase our value. The contribution margin of our recurring business in terms of ordinary business is more than EUR 1.1 billion, and the net profit, ordinary net profit is EUR 305 million. But there's some things that should be highlighted. First of all, energy market mainly and the power supply impacted by COVID crisis over the last 2 weeks of the quarter have caused a decrease in prices and a negative impact on the demand. In these results, we've included a new regulation regarding electricity distribution. Starting on the 1st of January, networks have a different retribution scheme. There's been a depreciation of currencies in Latin America, and there's been an intense financial activity in strengthening the balance and increasing liquidity, and I'll refer to this later. The company has maintained its debt level. It has continued to invest, and it has maintained liquidity in the first quarter that was close over EUR 9.6 million. Regarding shareholders' retribution. This general assembly is going to propose to ratify the 3 dividends that have been distributed for 2019 over the past 12 months, and besides, a supplementary dividend of EUR 0.01 per share as a closure of our remuneration policy regarding dividends that had been established at the beginning of the year and at the beginning of the strategic plan. Also, it will be the year the company has completed part of the share buyback program, almost EUR 300 million. And we have stopped exhausting all the possibilities of this program as a consequence of our prudent policy considering the situation. So as a conclusion, I would say that once again, we've complied -- we've honored the commitments that we had with all of you, dear shareholders, when we defined our remuneration policy for shareholders for the next 5 years started in 2018. Regarding our -- the share -- the value for shares, we cannot be happy. All the speculation regarding the discussions related to the bulletin opened by the CNMC when the remuneration level of gas distribution networks, as you can see in this chart, affected the company from June 2019. This made us close 2019, 6% -- just 6% over -- above the beginning of 2019. So in 2020, so far, our share value is suffering as the different economies and stock markets are suffering from this crisis. We expect to recover over the next months, and we expect that we can get the investors' trust back, taking into account that we need to understand the current complex situation. Dear shareholders, in June 2018, we presented a strategic plan with a 5-year horizon. We did it in a stable economic environment at global level, and we made a commitment in the long-term to turn the company around from a strategic point of view with clear focuses. Less than 24 months have gone by, less than 2 years from that launch. Over the past 22 months, we've experienced the most important thing that happened in the world in economic terms and more particularly regarding energy. That's why we think that we need to step up our transformation. The first 22 months can be considered positive. We've achieved many things. We've started a cultural change towards simplicity, transparency and what we called accountability. We've also started an improvement in our company in order to make it more efficient, more competitive, capturing efficiencies, reduce noncore processes. And we've created an OpEx Committee in order to challenge everything that can be challenged and turn our company into a different one. We've worked to simplify our balance, divesting in critical mass businesses and reorganizing our debt. We've also launched an investment discipline process that has made us focus our actions in prioritizing profitability over size. But from a self-criticism perspective where we've removed in itself complacency sign, we're convinced that many things are left to do. That's why we're launching right now a second phase in this plan, which is accelerating our transformation. We're convinced that we can always do better, and we want to make that commitment. We don't want to transform. We need to continue transforming. We need to work harder in reducing the risk profile of our company. We need to further optimize our operations, optimizing and automatizing our core processes. We need to strengthen our company's position not only from a financial point of view but also in terms of reputation and environmental, social and corporate governance commitment. And as a consequence, we clearly need to adapt the organization to the new challenges. We need to foster talent and renew enthusiasm. For us, accelerating our transformation is not a goal. It's a need. We need to carry out an asset turnover to put in line with energy transition. There's a clear goal in this: reducing our risk, reducing our volatility and our complexity. Our goal is also strengthening our relationships with regulators. We're willing to make stronger commitments to continue to provide energy in a more efficient way, to continue to guarantee energy supply, as we've done over the past weeks under the complex situation we've faced, and also finding solutions to make power available in case the natural situation is very negative for us. And more particularly, we're convinced that we need to continue to invest in the long term. We need to focus this investment in strengthening our infrastructures, paying particular attention to renewable energies and generation. With regards to the public administration, we expect them to provide us with stable regulatory frameworks. We hope that our profitability is considered reasonable, but within this reasonable profitability, people need to understand that it's an acknowledgment of the investment risk. We hope that in every country we are present, that regulators understand that only with a stable framework and long-term visibility, they can attract investments, create jobs, and therefore, wealth for everyone. And we want to do this in partnership. Partnership means hand-in-hand. And I would like to highlight 2 conditions: we need to do this in a transparent way. We shouldn't have any aces up our sleeves; and we need to do this in an easy way with constant dialogue based on trust. These are our aspirations, partnership relationship with the regulators that allow us to continue to growth and to intensify our investment activities. In the year ahead of us, our company needs to be more competitive. We need to work in our gas supply contracts. The gas market -- world gas market has significantly changed. The reference indices for every key variable have suffered, as you've seen in the previous chart from significant decreases. That's why our goal is right now reviewing these supply contracts to adapt them to the market conditions. We need to prioritize reaching agreements, using if possible as the last resort, legal procedures or arbitration procedures. We need to continue to redefine our operations. These operations need to focus in improving our customer satisfaction. We need to be focused in optimizing and automatizing our processes and also in adapting our company to new forms of working. We have adapted to a very special way of working, but we'll also have to adapt to ways of working that will come out from this experience over the last few weeks. And that is why we believe that this redefining of our operations has to allow us to improve our commitment level in order to make the company more efficient, more competitive. And we are convinced that we'll be able to reach our objectives of 2022 in 2020. As I was saying before, the company over the last few weeks, over the last few months, has also worked deeply in another aspect, which has to do with the strengthening of liquidity: liquidity as a tool to have peace of mind, peace of mind for everyone, peace of mind for our employees and peace of mind for the customers who have -- and power supply provided by Naturgy. We have improved liquidity by EUR 2 billion versus December 2019. Our liquidity now is above EUR 10 billion. And therefore, as you can see, according to the maturity curve of the debt over the next few years, we are quite calm regarding the financial health of our company. And also, we have advanced and we'll continue to advance in our commitments with the society, the environment and governance. Through the Naturgy Foundation in 2019, we have assisted over 90,000 people, helping their -- [ refurbishing ] their homes, training volunteers in order to help households improve their energy bills and energy efficiency and also helping those customers who, through our volunteers, in anything that has to do with energy property. We have also advanced in terms of corporate governance, namely in everything that has to do with the people represented in our Board of Directors. I have to say, in fact, that we have done good work because we haven't lost talent and we have improved in the gender equality in our Board. And we are committed to improve this in the future. But as I said, transformation has to continue, and it has to continue in a changing environment, an environment that needs new focus of priority. And I would like to mention 3, and I would like to mention or highlight 3 because this set of needs is what has led to an organizational change that I will mention in a minute. Traditional business has to continue evolving and optimizing. And because of that, we have decided to create a new unit, the management unit for energy and networks, that aims to foster traditional business. There are also opportunities in the market related to this energy transition, and they will continue to exist increasingly. So over the last few days, we've read about the opportunities that will derive from investments linked to transition plans in the different countries. And this is one of the new incentives or catalysts of private investment. We do not want to stay out of that. We wanted to actively participate. And that is why we have decided to create a unit that we called unit of renewables innovation and new businesses in order to be at the forefront and not to lose any opportunities. And finally, the clients, the customer. Technology, database management and everything that has to do with new ways of dealing with the customers, thanks to the technological advances, shows that there is another opportunity to transform for the benefit of all. And that is why there's a greater segmentation of customers between wholesale customers and retail customers, as we call them. And that's why we have a decision to create retail marketing business unit in order to capitalize and make the most of all those opportunities. In order to lead each of these 3 new units, we've also strengthened our team. And I would like to underline that word strengthen because it's a concept that adds, not that replaces. And it adds with renowned professionals with a long experience with also, in 2 of 3, with entrepreneurship experience, which brings with them a new perspective of the business from a shareholder. [ Pedro Lareja, Jose Valredo and Carlos Bersino ] will lead those 3 units. I mentioned their CVs and experience is on the screen. And I can tell you that these are 3 professionals that have come to Naturgy with 2 clear objectives: to add to the Naturgy project and also to add experiences and add different perspective that they bring from other sectors and that will bring a fresh air in our -- to our discussions, and that I'm sure will be of value in our transformation. I would like to finish because I do not want this AGM to be too long with the conclusions. To conclude, I would say that the company has responded. We have demonstrated leadership in a new environment, difficult and unpredictable environment, and we believe that we are responding as expected. Also, we want to continue advancing, moving forward in all areas with -- in sustainability policies, corporate governance and with everything that would allow us to advance as a company and as people. We fulfill our commitments. We are people who commit and who work to make sure that these commitments become a reality for customers, employees, shareholders and for the society as a whole. And finally, we will accelerate. We will accelerate our transformation. We will adapt as a company to the new scenario. We will add talent to this project in order to make this company better day by day. Finally, and without going into detail into the agreement because the Secretary will mention them and we'll put them subject to your approval, I would like to say to you that today, we will vote on 15 agreements, some of them regarding the income statements and the management of 2019, others that relate to changes in corporate governance and others that have to do with changes in policies, articles of association and regulations that the Secretary will present to you. So thank you very much for your time and for your attention. And I thank you once again on behalf of the management team for the trust that you have put on us year after year and on the company. Thank you very much.

So now we have received some questions from the shareholders that are participating electronically. The company is at the disposal of all shareholders that would like to ask questions later. You just have to call us or send us an e-mail to the e-mail address and phone numbers that appear on our website. In fact, some of the questions -- one of the questions, in fact, has been sent by e-mail and has been accepted, and we will read it. If any shareholders haven't been able to send questions through the platform, please do so over the next few days. So we received 5 questions, dear Chairman. First of all, a question by [ Don Carlos Castro ]. He says, through the communication media, I follow the different initiatives that Naturgy has set up in order to support its customers and the site as a whole during COVID-19. And I would like to take the opportunity to thank you for your efforts in these difficult times and to ask you to go -- to explain a little bit more of the measures that you have carried out and how the company has faced this situation. A second question by [ Mercedes Dicamra ] regarding the ESG policies. He says, one of the reasons for which I support Naturgy is for the sustainability commitments that it has shown. And I would like to know what initiatives have -- is the company going to develop in the future in this field? A third question is by [ Sonia Prieto Jimenez ] regarding the future of the company. My question has to do with the strategic plan of the company. I would like to know if due to the situation of COVID, Naturgy is really ready to continue moving forward in the plan's development and to reach the objectives set for 2022. We have another question that has just come by [ Mr. Alvaro Moreno Antonia ]. And he says, as a shareholder of Naturgy, I would like to present the following. My father in 2005 reached preferential shares from Union Fenosa and it was sold as a package. And it was a lie. It was said that was a fixed imposition. I would like to say that the lie was created by this -- was said by this person. They were sold as an abuse and it was a sham sold to the elderly without their knowledge. So please amortize all these preferential shares that have been at my father's hands for over 15 years. I think that he needs to make the most of the savings that is so hard for him to get. And finally, there's a fifth question that came by e-mail and is asked by [ Jose Pablo Barbaro ]. It's three questions, in fact. First, the government has understood that energy supply is one of the key things for families, and that's why it was included in the package measures to fight coronavirus. And the question is, why are you not -- why do you not commit to the -- before the shareholders to not cut anyone's energy throughout the state of emergency? Also, regarding the dividends. With the dividends paid out, could you focus your attention in the fight against energy vulnerability? And how many families could save those -- their energy being cut? And why do not -- why don't we help the families that need it with this money? Because energy is a basic need. Regarding the euros that were devoted to energy vulnerability, I would like to ask, isn't it the time to turn the screw a bit more on that project and improve the material conditions of those families? Shouldn't you increase the budget for that plan so that vulnerable families do not have to suffer to pay for the bills? So these are all the questions asked, dear Chairman.

Okay. If it's okay with you, let's answer them between the Secretary and myself because some of the questions that have been put forward have to do with aspects that mainly related to legal aspects, and training of the Secretary on those fields is much deeper and better than mine. The company shares, well, I think that we have described in the introductory video and during my presentation what the company has done for the society. What the company has done for the society, for its employees, 75% of them are working remotely, 25% are constantly monitored in order to confirm -- to check their health and safety. Also, initiatives for our customers, voluntary initiatives that were made before the government said anything. Also, actions for our suppliers, mainly focused on large amount of suppliers, companies, self-employed SMEs who may need financial help and the company can provide them with financial help. As also for groups of interest and solidarity towards the preferential groups that we mentioned with solidarity actions that we have carried out individually, some members of the Board of Directors and of the Steering Committee and some employees have contributed voluntarily to that. I don't think it makes sense for me to say it again what we have done. But I think there is another aspect that I didn't mention that you all shareholders must know. The company has not stopped the level of commitment of the company and all of its management and steering bodies is total. We have a Crisis Committee that meets daily at 5 in the afternoon, including Saturdays and Sundays, that dealt with the different issues that were presented during that day and that monitor the evolution of the problems related to COVID in the different countries in which we develop our activities. An example of that, the Steering Committee started meeting daily, and now it's meeting weekly to monitor all the important decisions that have to be made by the company on a daily basis. It's also an example of that. And also the commitment of the Board of Directors that from the beginning of the pandemic have met weekly, receiving detailed information of everything that happened. That is another example. I would also like to underline the effort -- and I didn't mention this before, but I would like to share it now. The company has tried, and I think it has achieved not to stop, and it has decided to strengthen the bonds between all its units during these difficult times. With regard to the ESG policies, I would like to say that, first of all, this is very relevant. It's very relevant to say that the company and its Board of Directors, so from the highest level, they have decided to create a Sustainability Committee within the Board of Directors. And this is not just pure cosmetics. This demonstrates one more commitment, another action linked to the core of this company in the last 177 years of history. We are convinced that we are a company but also a social player, that our decisions on our work go beyond the P&L account. And that's why we have created a Sustainability Committee, which will help us to strengthen our commitments in this field of ESG. But -- I didn't mention this during my speech, but I would like to take now this opportunity to assert some of those and are part of the master plan that we have in our commitment with sustainability, such as reducing CO2 gases. We are -- we have a reduction of over 20% in -- we've reached 20% of our objectives, rather, and it's much better than what we had in 2017. We've also reached 30% of renewable power sources now versus what we had in 2017. We have reduced by 20% water consumption during that period. And also, we have reduced waste by over 70%. These are examples -- practical examples of commitment in environmental issues. Also, these commitments can be seen on a daily basis. We are monitoring them so that the international recognition and FTSE4Good or the Dow Jones Sustainability, amongst others, their support show that these are not just commitments but they actually become commitments and are achieved. And finally, gender, we have always been in the midst of 2 sides of the river: the area -- the shore of skills and the shore of gender. And we have managed to include a greater number of women in the Board of Directors without losing talent. We, in fact, win in talent when we look at other professional skills and their experience so they can help the company to fulfill our commitments in terms of ESG. [ Ms. Sonia Prieto ] asked about the strategic plan, the degree of compliance and whether the current conditions are going to change anything. As I explained during my presentation, of course, if the environment changes, companies need to adapt. This is not our plan. Our road maps are not set in stone because we know that we can have hurricanes. And what's going on right now, it's a huge hurricane. This doesn't mean that we don't have a steady commitment regarding the foundations of our plan, as established in 2018. I think that we've been able to face this crisis, thanks to the fact that we were better prepared than 2 years ago. The plan made us to start to be fit so we were healthier in order to face this situation -- this unexpected situation. We are aware of the fact that 2020 is not going to be an easy year, not just for Naturgy. It's not going to be easy in general terms because the demand is going to be impacted. We've seen that there's been an impairment in energy commodity markets, and besides, there's a lot of uncertainty and volatility. That's why I'd like to insist on the need to continue our transformation, and we need to adapt to future conditions. We've strengthened our balance and our liquidity. We need to strive for excellence. This means having ambitious goals, wanting to be a better company. We want to intensify our regulatory action. We want to be considered as a reliable partner in every market in which we are present. And for that, during my presentation, I said that we have proposals, and we are expecting answers. We're going to adapt our organization and our talent to be better prepared for the future. [ Ms. Prieto ], I would like to tell you that this situation has arrived. We've faced it in a better situation. If we've had faced in 2 years' time, we would be in a better position. I hope in 2 years' time, I will be able to tell you that we've captured every opportunity generated starting today. So I would like the Secretary to answer the question regarding the preference shares.

So [ Mr. Alvaro Moreno ], on behalf of his father who must be the holder of one or of several of these shares, Naturgy, after the merger with Union Fenosa, carried out a share buyback a few years afterwards. There were a couple of series, and both of them were purchased in 2014 and 2015. And as far as I can remember, this purchase took place over their listing value -- was the decision of the Board of Administration. So maybe the holding company of these shares did not communicate it to his father. Anyway, we're available if you want to contact us. Some people have contacted us in the past. So we are still available to find solutions.

I would like to tell the Secretary to remind [ Mr. Barbaro ] that asked about energy propertythe legal limitations that the current legislation has regarding action flexibility by companies.

[ Mr. Pablo ] is asking for a question. He says, the government has established a series of measures. Article 2019 establishes that our state of emergency is effective. The energy supply cannot be interrupted. It's logic because you need to balance different interests, different concurring interests: on the one hand, the customer's interest that association is defending; but the other interests that the government is taking into account, and that's why it establishes different degrees. For example, shareholders, in the case of a company, most of our shareholders are retired people that are complementing their pension. On the other hand, the beneficiaries from social action plans are one of our main shareholders. So we have to consider the interest, too, all the interest of the value chain. The government was aware of the fact that if a trader did not receive money from their customer, they would need to transfer this high cost to distributing companies that are regulated. And therefore, the government needs to protect their ability to provide energy. Therefore, the government needs to take that decision, that's what they're doing, and we're complying with that decision. Regarding the possibility of devoting an amount of money to social actions, this is subject to the approval of this AGM. So the shareholders as whole need to take a decision of where the company profit should be allocated. Regarding a question asked last year, the commitment of Naturgy's and its Board of Administration is complying with regulations, of course, but also providing tailored solutions for every customer, collaborating with third parties and public administrations to channel support for clients. [indiscernible] has sent request in the past. We've dealt with them on a case-by-case basis.

Dear shareholders, we're not -- we're clearly not -- we're aware that we did not provide very comprehensive answers. And we cannot see you here in the room and we cannot see your faces, so I would like to suggest something. This is a very particular situation. If any one of you has further questions, please send them to the Secretary of the company. We'll try to answer them as comprehensively as possible to provide you as much information as possible. The fact that you're not present here today makes it impossible for us to see whether you're satisfied with the answers or not. We understand that this is an extraordinary situation, so we need to be available to you after the AGM. So this is the end of the question section since we have not received more questions. So for those of you who have asked a question, if you're not satisfied with the answer, or for those of you who haven't asked a question, if you want to ask a question, please feel free to ask them over the next days and we'll send the explanations you may require.

So now the Secretary will explain the degree of compliance of the CNMV's recommendations regarding corporate governance.

The code contains 64 recommendations. Seven of them are not applicable to Naturgy, so I'll focus on the other 57. Out of this 57, at 31st of December, we complied 100%, 47 of them; 6, partially; and for the other 4, we'll explain -- we'll provide an explanation because we need to comply with them in a different way. So I want to refer to the last 2 groups. So recommendations with an explanation. The Board considers that they're not applicable to us, for example, #17, regarding the number of independent Board members. If we complied with it, we would be in breach of the regulations because the shareholders have a right of proportion of representations. So we need to comply with law before we can comply with the recommendation. And recommendation 48, which recommends to split the Committee of Appointments and Retribution in two, we think that this does not make sense in our company since this would entail to organize the tasks of the Board of Administration this way. And then regarding the external auditor and the variable remuneration, it is one of the agreements we are presenting to the AGM because we think it can be drafted in a better way. Regarding recommendations that we partially complied with, in some of them, the goals have already been reached in a different way. For example, 2018 AGM established a horizon beyond the 3 years to satisfy the recommendation for the long-term incentive. So we think that we complied this in a better way compared to the recommendations 58 or 62. All these recommendations affect the internal function of the Board. And some of them, we think that we do not need to introduce any modification. For example, #25 regarding the number -- a maximum number of Board members from companies that can be a part of the Board. Regarding this, I would like to speak to you about the presence of women in our Board. Our Board has improved corporate governance in different ways, reduction of its size, establishing a majority of independent Board members in every committee even though it's not required by law, and also the skills matrix has been public. No company in IBEX has made it. This has to do with the transparency that guides our actions. The Board is aware of things to be improved, more particularly in gender equality. The Board is committed with this goal, and right now has 25% of women and has anonymously agreed to establish 30%, at least 4 female Board members, before the end of 2020; and then 40% in 2021, we aspire parity to. And this agreement -- this commitment has the support of the referenced shareholders, Criteria JV and CVC.

Thank you, Mr. Secretary. Right now we're going to move to the last part of the AGM, which has do did with submitting for the approval of shareholders different agreement proposals for AGM. I'll give the floor to the Secretary, who has received the vote by shareholders who are present or represented. And since this is a different situation, there are not people present, the Secretary is going to tell us directly if there's a quorum or not to approve these items.

We have definitive quorum. It has been increased in 4, the number of attending shareholders, due to last minute attendance. 688 shareholders, representing 748 million shareholders shares, 0.1% more as we had, so 75.6%. So I'll I try to take things more agile in case there are big majorities. I'll just state if the proposal has been approved based on the votes received without detailing votes in favor, against and abstentions. The result can be seen by the shareholders on the company website. In long items in our agenda, I'll just summarize them because this text is available for everyone. First proposal, approving the annual accounts and the management report of Naturgy Group S.A. for December 2019. Approved. Second, approving the consolidated annual accounts and the consolidated group management report for Naturgy Group. Approved. Third, approving nonfinancial information and statement included in the consolidated management report of Naturgy Group S.A. Approved. Fourth, transfer to the voluntary reserves account the amount of EUR 27,162,020.19 from our goodwill reserve. Approved. Fifth, approving the management by the Board of Administration. Approved. Sixth, reelect, based on the proposal of the Appointment and Remuneration Committee and the report of the Board of Administration as Director of the company for a legal term of office of 4 years of Ms. Helena Herrero Starkie. She will be independent adviser. She's present here. She accepts the appointment. Approved. Reelecting in the same conditions for legal term of office of 4 years to Mr. Marcelino Armenter Vidal. He will be a proprietary adviser. He accepts the appointment, and he has no legal incompatibility. Approved. Reelecting under the same conditions as Board of the company over a legal term of 4 years of Mr. Rajaram Rao. He is present and he accepts the appointment. He declares he that has no legal incompatibility. Ratifying the appointment through co-optation of Rioja S.à.r.l., represented by Mr. Javier Jaime Guijarro, took place by the Board of Administration in the 1st of August 2019 for a legal term of 4 years, starting the approval of this proposal by the AGM. This company will be a proprietary director. It's represented by Mr. Javier Jaime Guijarro. There's no legal incompatibility. This is approved. Fifth, the same way, appointment through co-optation of Ms. Isabel Estapé in March 2020, with effect of the report by the committee, legal term of office of 4 years starting or effective since this is approved by the AGM. She's present in this AGM and accepts the appointment. And sixth, we ratify the appointment of Ms. Lucy Chadwick by the Board of Administration 6th of March 2020 for a legal term of office of 4 years. She will be proprietary director. She has declared that there's no legal incompatibility and accepts appointment. Seventh, approving this profit allocation. The figure is EUR 4.4 billion. First of all, EUR 1.3 billion, which is the -- some of the 3 interim dividends, which is EUR 1.336 per action for the number of shareholders that didn't have -- that were not Treasury stock that have the right to receive this, and multiply EUR 0.01 for the actions that have the right -- for the shares that have the right to receive this supplementary dividend. This distribution will be carried out through our clear participating entities, and the Board of Administration is authorized to do this. It can establish the date on which the holders would be established and also the date for the payment. So the final figure is EUR 4.4 billion. Eighth, reducing the share capital of Naturgy up to EUR 21,465,000 corresponding to the shareholders to this Treasury stock the company had at the 24th of July 2019 and the 21 million additional shareholders of EUR 1 nominal value, the due date, the 30th of June 2020. As a consequence, the maximum figure of capital reduction will be EUR 21,465,000 through amortization of up to 21,465,000 Treasury stock, EUR 1 as a nominal value. The definitive figure of capital reduction will be established by the Board of Administration. The procedure for the purchase of shareholders will be established according to the call for the AGM. Also, we propose to delegate the powers according to the term established in the agreement proposal included in the AGM call, and more particularly, in the new draft of Article 4 of the company's bylaws. Approved. Ninth proposal, approving the remuneration policy for Naturgy's Board members that -- for the disposal of the shareholders. This has been approved. Tenth, approving the annual report of retributions of Naturgy Board members. Approved. Next proposal, authorizing and approving according to the law that the AGM can be called with a minimum period of time of 15 days. Twelfth, modifying the social bylaws to allow the remote attendance to AGMs. Approved. And also, Article 6 of bylaws, to adapt -- adapted to the legal regulation for the Board of Administration. Approved. Thirteenth, modifying Article 8 of the AGM regulation to strengthen the competencies regarding health issues for the President of the AGM. Approved. 13, including a new any article in order to regulate remote assistance to the AGMs. Approved. Fourteenth. We inform that Article 6 of the Board of Administration regulation is -- changes does not require any approval, but we are just informing about it. Fifteenth, delegating the Board of Administration and its Chairman, Secretary of the Board to continue to fit the powers needed -- considered necessary in order to complement, develop, execute, interpret or replace the agreement -- the resolutions approved by the general assembly and carrying out any of the implications needed, and delegating and granting powers to the Chairman and the Secretary so that they can sign as many documents as are necessary in order to register the agreements taken at the AGM. Approved.

Thank you, dear Secretary. We have in this atypical manner reached the end of the ordinary AGM that is not very ordinary. It's not very common to do it like this. We are in Madrid, and most of you are present remotely. So we conclude the session. We hope that all shareholders are in good health and continue to be so given the potential risks that we still have from a health perspective. We hope that next year, we'll be able to hold the meeting, the AGM, again as usual, face-to-face. We'd like to thank you for attending from home and for your patience. Let's hope that you've been able to follow it properly. We apologize if you haven't -- it's not to your liking, the AGM this year. If there are any questions left to answer, please send them to us, and we'll respond in writing over the next few days. Once again, we thank you for your attendance, and we conclude the session finished. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]