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

Good morning, ladies and gentlemen shareholders. Before we start the official opening of the Annual Shareholders Meeting for 2021, I would like to share with all of you a video made by some of the collaborators of Naturgy, and that includes the main milestones that the company is working on. If we could please watch the video. [Presentation]

Ladies and Gentlemen shareholders, I'm very pleased as the Chairman of the Board of Directors of welcoming you to the Annual General Shareholders Meeting that will be done now remotely but also with a limited number of shareholders here in the auditorium of the headquarters in San Luis Street in Madrid. I would also like to thank, first of all, the presence of all the members of the Board of Directors that have decided, in order to limit the amount of people in the room, to continue and follow the Annual General Shareholders Meeting through a -- in an alternative room. The calling of the AGM was published on the 5th of February 2021 in the websites of the company and also the websites of the CNMV and in several newspapers. The agenda is included in those announcements, but also on the attendance card that each of you has. And so I propose it is considered read. Do you agree? Thank you. Now the Secretary will talk to you about the quorum of attendance to the AGM.

The summary is the following. Present are 141 who are owners of 692,000,167 shares that account for a specific percentage of the share capital. So then we have represented a total of 1,650,000 that account for 11.07% of the share capital. So in total, we have 165 shareholders that account for 798,800 -- 798,855,603 shares that account for 82.4% of the shares. Obviously, these figures can still change depending on the last shareholders that can have up to 9:00 in the morning to register. The final quorum will be published on the website of the company together with the result of the voting. According to Articles 193 and 194 of the Spanish Corporation Law and 9 of the regulation of the AGMs -- of the AGM, we have all the necessary quorum in order to consider approved. Okay. So we declare the existence of a quorum for the AGM in a first call.

In this panel, we have here the secretary, myself, and also all the members of the Board that are connected remotely. Moreover and according to Article 203 of the Spanish Corporation Law and as it was made clear in the calling of the AGM, we have asked for the presence of the public notary of Madrid, Fernando de la Cámara, to take the minutes of the AGM. And I give the floor to the notary public.

Thank you very much. Good morning. I would like to state that the number of people present physically in this auditorium is not more than 30, which was declared by the medical services of the company as the maximum in order to fulfill all the COVID restriction measures. Now I would like to ask, according to what is present on the company registry, if you would like to make any reservation or complaint regarding anything that is said by the Secretary regarding the number of shareholders that are present and the share capital present in the AGM. If any shareholder would like to make any reservations, please let us know. We'll include it in the minutes.

Thank you very much, dear public notary. I would also like to thank the shareholders that wish to take the floor after my report. If you wish to do so, please make sure you give the attendance card to the staff in the room so that you can receive the form to fill in. Those shareholders that are participating remotely can send their questions through the form that has been provided for this purpose after the interventions of myself and the Secretary. And at the end, we'll answer all the questions that have been made. If any shareholder wishes the public notary to take note literally of their participation, please make sure you send us the text that you're going to use. And please, if you're going to do this remotely, please expressly state that. Once all the interventions have been -- have finalized, we'll vote the resolutions proposal. And I ask the Secretary to give certain indications about this process.

The basic rules for the process are the same every year, due to, well, with the specialties of the remote AGM. The voting for the resolution proposals regarding the items on the agenda will be done through a substraction system, that is all shares present or represented shall be deemed in favor of the motions, substracting the votes against and abstentions as well as those shares of the representatives who are present in person who leave the room before the meeting and say so to the secretary. And the same will be the case for the shareholders' representatives who are remote. The voting of the resolutions proposals regarding things that are not in the agenda will be considered through an addition system. That is all shares present or represented shall be deemed against the motion, adding the votes against -- adding the votes for of those who are represented or present. I would also like to inform you that for shareholders of the representatives that are here in person, if you would like to state that you're going to leave the meeting once the votes have started, you can go to the table that has been left for that purpose outside the room in order to make sure that you -- we take note of your vote. In the case of shareholders or representatives who are remotely attending the meeting, before abandoning the meeting, you can also give your vote at any point because you can vote until the end of the resolution proposals in the agenda. We will vote, first of all, the resolutions proposals that have been made by the Board of Directors. And then the others that have to do with the same affair and that are incompatible with the votes being approved. Finally, I also say that the shareholders connected remotely can vote from the beginning until the end of the reading of the resolution proposals.

Thank you very much, dear secretary. If it's okay with you, let's now go into my presentation and then that of the secretary, and then we'll continue with the Q&A by the shareholders. Allow me to start this presentation by thanking you, once again, your attendance to the AGM in 2021 and reminding you that due to the special situation in which the AGM takes place, we understand that we'll have to be more brief, even though you'll have all the presentations on the website of the company once the AGM has finished. So I would just like to highlight the most important things of my report. And we are at your disposal if you have any subsequent questions and you would like to address the company through the usual channels. My presentation will be divided into 6 sections, 4 have to do with the year 2020 and 2 regarding this new financial year 2021, where we've already had 2 years -- 2 months that have elapsed of this year. We'll also talk about the outlook for the future. Let's look back. Let's look at the year 2020. We must start our reflections by analyzing what happened in this scenario, that both from an economic and energy viewpoint, you all know that it wasn't the most in favor of us. Regarding the demand evolution for gas and electricity in all the markets where the company operates, there has been a general reduction of that demand. I would highlight drops such as 13% in Brazil or 6% in Spain, both for electricity consumption and gas consumption. Additionally, not only has there been a demand reduction, but also a general drop regarding the reference index for energy markets. And therefore -- and environment conditions in our industry that haven't been in favor of the positive development of businesses. So for instance, the Brent barrel has gone down by 35% versus the previous year or the electricity pool in the Spanish market has gone down by 29%. Also, the main index references for gas have dropped by more than -- by 20%. Additionally, exchange rates, which are very relevant in a company where important part of its activities are done outside of Spain, Latin American currencies, which are where we are more present in other geographies apart from Spain, have all suffered an important devaluation. We can say that, in terms of environment, we have had to face the perfect storm in terms of the conditions under which our businesses have developed. In the year 2020, the company has continued to work hard, working day after day, week after week. And more specifically, we're going to highlight the most important milestones of each quarter. But as you know, and as you probably followed on publication of relevant facts or according to the media coverage, the activity has not stopped even during those weeks, during those months when face-to-face work went down. Just to remind you of some that we can see here, obviously, we started the first quarter of the year with the arrival of COVID, the world pandemic. And the first thing that the company did before the state of alarm was declared in Spain was the establishment of a crisis committee, a crisis committee whose main objective was to protect employees, family members, relatives, clients through different initiatives that I'll mention later in order to protect our stakeholders. The second quarter started with relevant activities in terms of our commitment with energy transition with the consolidation of the closing of our coal plant, and the quarter finished with the publication of a new management structure. In the third quarter, we started looking back into the -- we're taking normal activities, and we focused our activities in 2 key aspects, adapting the company through the renegotiation of supply contracts, especially gas supply contracts to the new environment. And as I'll mention later, we also carried out some actions on the main gas suppliers over the next few years in the short term. And we also started an analysis of everything that will be initiatives that are framed within the EU recovery plant or what they call the next-generation plants. So we ended the year, in the fourth quarter, I would like to highlight 2 main aspects above the rest. The sale agreement for electricity distribution company in Chile, I'll talk about this later. And a final solution to problems that lasted since 2012 regarding our investments in Mexico. The company in the first quarter assessed and continued to review different initiatives. We have COVID initiatives to tackle the effects of the pandemic. We continued to optimize the efficiency plan to make our company more efficient and more prepared for the future. We maintained our investment -- continuous investment activity for energy transition focused on renewable energies and, as a consequence, acceleration of the transformation. I don't want to explain again all the initiatives the company has launched in 2020 regarding COVID, but I would like to remind you that they were focused on 4 stakeholders: employees and their families, society in general, our customers and our suppliers. Regarding the society, we have not been the only ones, but we have contributed to it. The country didn't stop. It never stopped having the appropriate supply of energy and services during the pandemic. We continued to work to make our business more competitive, a business that can face the changes in the future, a business, a company that can face these challenges in the most efficient way. And that's why in 2020, we've been able to reach the goals that only depend on us, which allows us to say that 2 years before expected, we've met our efficiency target. We see this from an absolute perspective, reached efficiencies, and also in a recurrent way. The recurring expense over margin is below 27%. As I was saying before, the company has started to adapt its competitive advantage regarding gas supply contracts. We've carried out negotiations with the main gas suppliers who had an influence in the contracts that expire over the next years regarding volume commitment, ACQ and flexibility. In other words, the amounts that can be managed quarter after quarter to avoid commitments of payment or purchase and also reviews of prices or reference indexes. There's still some reviews pending for 2021. They have a longer term. As a result of these negotiations in this first part, today, we can say that the company has reduced its purchase commitments by 30% and has been able to review the price indexation in a way, which is closer to our sales in international markets. The goal of all this is reducing the risk for our P&L and, therefore, volatility. As I was saying before, over the last quarter of 2020, we carried out negotiations, and we signed an agreement with China State Grid to sell all of our stake, 96%, in that country, in Chile. The valuation of the company agreed with the buyer was EUR 4.312 billion for 100% of the company, which will generate capital gains of approximately EUR 400 million, which are not still accounted for because the transaction is pending its closing. We expect to close it in the first half of this year or particularly the second quarter. Obviously, this transaction has some impact in the consolidated accounts reduction of net debt and a reduction of the consolidated EBITDA, which will also have positive impact in 2021 in capital gains that we expect, and the arrival of the entry of a significant cash flow. In the last quarter of 2020, we were finally able to close a problem that lasted since 2012 that has to do with our 50% stake in Union Fenosa Gas. As you all know, has -- its main purpose is the liquefaction plant of Damietta in Egypt. There were 3 parties in the agreement, Naturgy, the Egyptian government and the Italian hydrocarbon company, Eni. The total valuation for the company's stake was $1.5 billion, 50% attributable to Naturgy. And I can say that, once all the conditions of the agreement have been fulfilled, this week, tomorrow, the day after tomorrow, we will close all the agreements, we will receive the part that belongs to Naturgy. And therefore, we can say that the problem will be solved for good. Within our philosophy, you're familiar with it, we want to be transparent with all of us and all of you regarding our financial -- our accounts. We carried out a review of the asset valuation that were more impacted by this scenario, the economic scenario, as it's the case of our assets in the Argentinian gas distributor and the assets that are related to thermal generation in Spain. So as a result of this exercise, we carried out an accounting impairment of EUR 1.3 billion that have been included in the accounts for 2020. What are the impacts of this decision? First of all, in 2020, a purely accounting impact, there's no impact in cash, which entails a reduction of the net profit of the company of EUR 1.019 billion. Starting in 2021, a positive impact, considering the impact from lower amortizations equivalent to EUR 75 million a year. This decision that is related to our consistency and the transparency we have makes that our -- the value of our assets today is more in line with the energy transition we are undergoing. As a consequence of all these things and the ordinary management business, now I will explain the main lines of the financial results this year. First of all, the company in comparable terms and removing the accounting impact, as mentioned before to not including the results of Chile electricity distribution, although there's going to be an impact starting in fourth quarter, the accounting regulation makes us move on to the first part of the year and compare it with the previous year. So we reach an ordinary EBITDA. This is gross operating margin. What measure -- it's what measures the financial health of the business margin, the operating margin of this business once all the current expenses have been deducted, was EUR 3.714 billion. The ordinary net profit, which is net profit that comes from the ordinary business without considering aspect that will have effects for 2020, the reduction of the asset price, it has to do with accounting impact. This includes ordinary activities of the business and the result is EUR 872 million. The cash flow, and this is physical, the difference between the cash that arrived and the cash that exited during the year was EUR 3.4 billion. And a tax contribution to the company here, following the indications of Global Report Initiative that measures these parameters internationally, we include our own taxes and the taxes we pay on behalf of third party, EUR 2.3 billion. In a negative environment, we've complied with the indications given to the market in the middle of the year when we didn't know how deep and how long the pandemic was going to be. Within our P&L, I would like to highlight that the reasons for the drop in demand, the contribution of network and energy management has dropped 17%. Also the commercialization, which is highly linked to the energy demand. However, the fact that we are focusing in energy transition, this is having an impact in the P&L, and we see the ordinary EBITDA compared to the previous year in renewable energy has increased 7%. The activity in Spain accounts for 60% of the gross margin generated and the rest divide -- split up in 30% in 5 countries and 10% that would be the rest. This EBITDA, excluding anything related to the sale of Chile, has a very simple explanation. There's been a drop of 15% compared to the previous year, due mainly to a loss of around EUR 700 million linked to this scenario, a drop in the demand, devaluation of currencies and general drop of energy indexes; regulatory and contract-related changes. For example, the concession contract for EMPL pipeline expired at the end of service at the beginning of October, the first of the 3 agreements, but the business has been optimized and has improved in aspects that only depend on the company's management and not third-party impacts. This allows us to partially mitigate the negative impact in almost EUR 200 million. Debt. It has improved due to the significant generation of cash and the deconsolidation of the debt linked to the businesses that have been sold. For the first time, we're below 4x the EBITDA debt ratio. It's one of the relevant ratios in order to measure the financial soundness of a company such as ours and with our activity. This is a highly relative ratio. Regarding the companies -- the energy companies, this is very solid for the type of activity we have. And I would like to highlight that the cost of debt, the average financial cost of the whole debt, debt in Europe and also in other currencies that are weaker, is 2.5%. Regarding shareholders' remuneration. As you know, we've made 2 payments regarding interim dividends, one in July 2020 and another one in December 2020. Today, one of the resolution proposals we have at this AGM, we propose to supplement a dividend EUR 0.63 per share, which is in line with our strategic plan in 2018. Last but not least, we're going to go through the general profitability for shareholders, what shareholders may have earned based on an increase of the price of the shareholders plus the dividends, total profitability, which is what a shareholder analyzes in order to know whether the company they are investing in is appealing or attractive or not. If we compare this period from the 25th of March until now, and the IBEX, including the total profitability in IBEX, too, you can see that we are slightly in the positive side compared to a negative result in the reference index. But 2020 -- in 2020, we didn't just work in operational or financial aspects. We wanted to continue with our commitment regarding ESG. This is ESG. And in Spain -- in Spanish has been translated as ASG. So our results in 2020 prove this. You know the broad trends, the main ones, are 4 actions that all organizations require regarding climate action, sustainable communities, social impact and corporate governance. All of these actions or these trends have been reflected in a framework plan that has been drafted by the company and subject to the approval of the BoD after being analyzed by the Sustainability Committee of the Board, which has been recently created. There are 6 main axes based on which we expect that we, in 2021, we will continue to get results and facts that support our commitment. More particularly, in 2020, CO2 emissions were reduced 30% compared to 2017. So a relevant progress considering the origins of Naturgy's business. We have installed, and they're operational, 4,600 megawatts of generation power, renewable, in electricity and 265 biodiversity initiatives. So we've progressed also in social matters. We've reduced the accidents the company has had with our own workers, minus 71% compared to the previous year. And we progressed in suppliers audit according to our plan to make sure that we are coordinated, we are all on the same page that our goals and our suppliers goals are in line. Regarding decarbonization commitment. The company has released 30% less CO2 compared to 2017. We have reduced 7% in 2020 in greenhouse gases. We have increased our installed capacity free of emissions 10%. And we have committed investments of almost EUR 700 million, 26% more than the previous year. Moreover, our contribution to society's progress can be seen on the generated economic value, mainly as is the case in a company with a high level of subcontractors, focused on the suppliers, but also in all the elements of the chain of stakeholders by proving in 3 points the local purchases in the different subsidiaries in all the countries where we carry out our activities. All of that has meant that we have maintained an increased international recognition of the company in terms of ESG. I would like to highlight the rating that we have improved for second consecutive year. We have improved our global leader position in the multiutilities companies in the FTSE4Good index, where we have been rated with 4.9 out of 5. Our company is still very committed and those who value it internationally actually state so. If you allow me, I'll now focus on the second section. I'll talk now about 2021 and the future years. I have structured my presentation in 2 parts. The first one has to do with the trends of the environment. In the second one, I'll talk about the initiatives and the plans that the company is working on. It's obvious that the energy environment is changing. It's changing hugely and very quickly. And if we mention a quote by Charles Darwin, either you adapt or die. And I think that the first thing that we need to do when adapting is knowing what we need to adapt. If we had to define in a very brief manner the change vectors that are affecting our industry, we've reduced them to 4. We didn't want to be too simplistic. I'm sure that most of you will -- can think of others. But in terms of general action lines, I would like to highlight 4. First of all, the electrification, the growing electrification of the economy. We can see, when we look at the analysis of the most renowned institutions, the world energy outlook is one, for instance, of the most important benchmarks as well as arena. And they've gone -- they say that electrification will increase from 20% to 50%. Also, an important increase in terms of renewable electricity generation that today accounts for about 25% of the electricity generated and that could, in fact, account for over 85% by the year 2050. Also, the important presence of renewable gas. And there, we understand both biomethane but also hydrogen as the most relevant renewable gases that will account for a gas demand that we believe may exceed natural gas demand nowadays by year 2040, we believe it'll be in between 3.5 trillion and 5.2 trillion cubic meters per year. And due to these 4 trends, a clear decarbonization that will continue to increase. And I would like to highlight 2 ideas behind this presentation. First of all, electrification. Electrification is the way to lead to a decarbonization of the economy, but this is not enough. So we want to foster electrification with renewable energy solutions, but we have to complement this with the use of renewable gases that, as experts say, play a very key role. We are also changing importantly the value chain of energy, both in terms of generation, as I've already mentioned, but also storage. We are sure that over the next few years, the storing, especially batteries, will have to support the renewable generation, which, by definition, is intermittent. It doesn't rain when we want to -- it doesn't -- it's not windy when we want to nor do we have sunny days 365 days a year. So we need to use storage technologies in order to offset this intermittence in the generation sources. Our networks need to be increasingly smart. We have to make sure that they will be able to include the growth in renewables. The renewables generation will be -- will take place in places different to where energy is being generated currently. And so due to this, the fact that we can use renewable gases and renewable electricity, we'll be able to have greater penetration, collaboration between the networks. And finally, this -- I'm not leaving it to the end because it's the least important. Actually, we have to think about our clients as prosumers with activity, with demands that will also include in their decision-making the possibilities to self-generate and self-consume their own energy. These trends in the industry are clear, and I think are being confirmed quite clearly. It means that the company has to look again at its management priorities over the next few years. And that is what'll set, what will set our strategy and our work over the next few years. First of all and in terms of regulatory activity, in the year 2020 and at the beginning of 2021, new regulation bulletins have been approved for gas and electricity businesses in Spain. So we have quite a few years to work on the future regulations that will come in 2026 and 2027. The year 2021, '22 and '23 will be years of intense regulatory activity in some countries where the company is still present. 2021, for instance, will be -- there will be a lot of regulatory activity in Brazil and Mexico, 2022 in Argentina and '23 in Chile and Panama. We'll also work a lot on the future of electricity networks. Electricity networks, as I said before, need to be ready to take on the future challenges. And more specifically, that means that we have defined as important, as necessary to carry out investments that will also lead to the economic recovery of the country, investments that amount to EUR 23 billion, more or less, that will have to be materialized between the years 2021 and 2030. If we do simple calculations on this, this means that Naturgy will have to make an investment effort of about EUR 3.5 billion in this 10-year period, focused specifically on increasing digitization in our networks, making our networks smart networks and being committed to interconnection between all the renewable generation sources in order to be -- in order to have good operations. So there is a lot of investment to be done in terms of electricity. And gas, gas also has a future. In 2050, we believe that gas will be fully renewable. We'll have transport and distribution gas networks through which we will only see renewable gas being channeled through those pipes. I think this will -- this means that we will have a full decarbonization of the economy by 2050. Meanwhile, the company will continue to work also in the field of network digitization, actually physically getting the networks, we're investing in the network, to make sure that the network, the gas pipelines can take on these new types of gas that has different characteristics and also the development of renewable gases. Naturgy already has projects in this field for a total of over EUR 4 billion. As I said before, the company's vocation is to be a leader in energy transition, and that's why we have worked in the third and fourth quarter of the year on the identification of projects that have to do with investment, but that also have to do with a future in the different fields of activities encompassed within the next-generation EU funds. We have identified and presented proposals to the authorities for a total of EUR 14 billion that will be implemented through different action lines. We want to foster sustainable mobility. We want to foster and empower fair transition through renewable gas projects; energy efficiency, including self-consumption and CO2 capturing; the digitization of our networks and renewable gases in terms of the development of wind farms, PV farms and also new generation sources such as offshore wind energy and wave energy. Hydrogen has become one of the novelties in the society. In fact, we have already 4 hydrogen projects in force, 4 of which I will mention 2, and I would like to mention 2 for 2 reasons. First, because they have a very important size. La Robla, in fact, is today the largest hydrogen generation plant in Spain and also because La Robla and Meirama, these 2 projects not only will it allow us to go forward in the generation of hydrogen, but also they are -- they focus on giving alternatives to the regions where coal plants have closed in order to foster fair transition. In Meirama and in La Robla, we have 2 plants that together add to nearly 18,000 tons per year of hydrogen generation. And that will allow us not only to give employment to local workers who used to work at a coal plant but also, we will continue in the path of sustainable development through the industrial manufacturing of hydrogen. I would like to thank you for your attention in this brief presentation that you will have fully at your availability on the company's website after the AGM comes to an end. And I would also like to say that we are at your disposal if there are any questions that cannot be asked during today's session. Please, through the usual channels, you can send us any questions you have, and we'll try to answer as fully as possible. And I'll give the floor to Manuel García Cobaleda, the Secretary General, who will complete my presentation with the legal aspects of the company's and AGM's development. Thank you very much.

Thank you very much, dear Chairman. First of all, I would like to talk about the partial takeover bid presented by IFM announced on the 26th of January. This is a takeover bid for up to 220 million of the shares at EUR 23 a share. We have a total of nearly 1 billion. So this is -- this accounts for 27% more or less -- 23% of the shares at 23 shares -- EUR 23 per share until it becomes effective. We'll see how the results will be applied, that will be processed at 0.63 shares -- EUR 0.63 per share. With regards to the regulatory demands, obviously, we have to create a file by the CNMV, but it cannot be approved until the government gives us their authorization that's included in the international investments' regulation, given that it's a listed company. The timing, the takeover bid was published on the 26th of January. After the 5th of February, IFM said that it had left their file at the CNMV, the proposal, and it's been with them at the moment. On the 18th of February, they announced that the file had been taken -- had been considered, that had been accepted. And there have been news published that CNMV has started to look into the permits in Mexico, but also the payments within the government, even though we don't know the development of how those proceedings are going. Therefore, we -- it's pending authorization. The Board of Directors will have to give a statement at the beginning of the acceptance period during the first 10 days. And they will do it then or even earlier, if we can see this appropriate. What is a novelty is that IFM has told us, so that we can inform you about its key intentions in terms of Naturgy if the takeover bid is actually accepted. First of all, they say that they wish to stay as a long-term shareholder. This goes in line with what they say in the website. In the website, they say they are investors who do not go on -- do not have a specific period after which they have to get rid of their participations, of their stake. They are -- they want to be represented on the Board of Directors. Obviously, they support the energy transition and the necessary investments. They also want to support a sustainable dividend policy. And this is only a partial takeover bid, obviously, and they want to maintain the company being listed and with headquarters in Spain. This is what they've asked us to tell you. And I guess, it will be in agreement with the file once it's made public. So dear Chairman, with this, we finish our presentation. And now it's time for questions from the shareholders.

We've only received 1 question from someone who is in the room. And so I'll ask [ Mr. José Antonio Del Barrio Colmenarejo ] to ask his question, please.

Dear Francisco Reynés, I already said to you, I feel empathy for you. I was also a shareholder of Abertis when you were there. And I am convinced of your full professionalism, and that is why I'm going to ask you and all the members of the Board, which I am sure are great professionals, the following. I'm going to ask you to be...

Mr. José Antonio, if you wish, given that there is -- you can take off your mask, if you wish, because there's plenty of distance between us.

Okay. I would just like to ask you, I'm going to ask other members of the Board of Directors, whether they are independent, proprietary directors or other, to please make sure that you are totally transparent when supporting or not the takeover bid, the partial takeover bid by IFM investors. I think the price offered of EUR 23 per share is a bit tight to take such a significant position in Naturgy. I don't know if Caixa wants to sell and leave. I don't know. Because the other funds came in not that long ago, and I don't think they'll be willing to leave. I would like to remind you that Naturgy's share price over the last 4 years has been fluctuating from EUR 25 to EUR 19. Obviously, with COVID, it's gone down like the whole IBEX Stock Exchange has gone down a lot. So I don't know, I think these people have given a price -- have stated a price. But I think they should -- you should try to work harder to make sure that the price per share increases. And I'm also going to ask another question about the compromised dividend for 2021 and 2022 of EUR 0.51 and EUR 0.59. If this -- if IFM decides to buy the part with 20% of one fund plus 20% of all the -- plus 24%, in the end, we'll have a 10%, 18% of free float on the stock exchange. So if they ask for a stock exchange exclusion this committed dividends, will they be paid in the years that you have committed to paying?

Yes. Any other question, Mr. Secretary?

No other questions.

So since we just have 1 question, this is very easy this year. I'll try to answer to your question, and then we'll continue with the vote on the resolution proposals. First of all, I would like to thank you. Thank you for your kind words. I understand this is for the whole team, not just for me. As I was saying, when we greeted each other 5 minutes before the beginning of this assembly, working at a company is not an individual team. It's a team. It's a team work. This is not tennis. This is rugby, so to speak, because there are many people here. So on behalf of the whole company and the BoD and the employees, I would like to thank you for your kind words. Second, you have asked us to be transparent to the whole process. And you request a clear position by the Board when it comes to recommendation or lack thereof. What -- transparency is guaranteed, not just related to this takeover bid, it's always guaranteed. I think that transparency is the way we understand our relations to the market; to you, the shareholders. So you can take it for granted. And second, don't worry. This is mandatory according to the law. And Mr. Secretary, please correct me if I'm wrong. But over the first 10 days of the period, all the shareholders will have to decide whether they take part in the takeover bid or not as the BoD has to make a statement giving its opinion, it has to be published. This is according to the law. So we're going to be transparent, and you will know what our recommendations are regarding the potential indications we may give in this sense. Well, I would like to add something. Listed companies are based on the freedom of the shareholders. They're free to take the decision they think fit. So we'll have a recommendation. But the ultimate decision will lie within each one of the shareholders. We'll only give the best information we can give so that you can decide what you think is convenient for you with freedom. And in this sense, I would like to refer to your idea of the potential exclusion from the stock market. Well, today, there's no approach that we know of, and you have the same opportunity to know about this, the same as us. The Secretary has said that this is a partial takeover bid. It's not a proposal of 100% of the shareholders. So any proposal, any shareholder can have can be assessed. There's no implication regarding stock market exclusion according to our information we have right now, so we don't have to get into that. And regarding the dividends in the next years, we've been very transparent with all of you. And we have included a clear statement, because you're not the first one to ask about this, in the annual accounts of 2020 when we explained the proposal of a supplementary dividend for 2020. We do it in consistency with the commitments in the strategic plan 2018. At the same time, we say that in 2021, we're going to review our strategic plan as a consequence of everything that has happened. You've seen very clearly how we faced situations regarding demand, energy and currency devaluations. Our team is working in a strategic plan for the future. And of course, the dividend is part of it, and the company will always try to give a sustainable dividend in the long term for the company. Once this plan is completed, we'll explain it to you. In the meantime, I would like to thank you for your words, and I would like to thank you for trusting this company that's 177 years old. We are analyzing our environment and the future so that we can have another 177 years. So if there are no more questions, I'm going to give the floor to the Secretary to start our votes regarding resolution proposals.

According to CNMV recommendations, before voting the proposals, we're going to summarize the compliance of CNMV recommendations. In 2020, the company has worked in 2 areas of improvement changing 17 of the recommendations that were given in June 2020 by the CNMV. First of all, an action plan. Implementation of an action plan to adapt to the new requirements of CNMV that affected the regulation of the Board and the competences of the different committees with that. We've adapted to almost all of the new recommendations dated June 2020. Second, implementation of measures to improve the compliance of the other recommendations that were not changed by CNMV Last June. We've complied, for example, recommendation #60, which entails including a caveat by the external auditor regarding variable remuneration. Of the actions carried out by the company, 31st of December 2020, out of the 64 recommendations by CNMV, 58 are applicable to us. And we fully comply with 47, 8 have partial compliance, and we have an explanation over 3. Regarding this 8 -- the other 3, I'm going to give you some explanations. The first one where we provide an explanation. The Board considers that its application is not appropriate for the company such as Naturgy. Recommendation #17, which requires a minimum number of 50% -- 50% of the directors should be independent. If we complied with this recommendation, we would be breaching the law, and we cannot breach the law. So we cannot comply with that recommendation. Another recommendation, which is splitting the remuneration -- Appointments and Remuneration Committee has to be splitted in 2. This is not efficient for a company that wants simplification in its structure. Regarding partial recommendations, we comply these recommendations in a different way. The LTI, well, it's 5 years. It does not fully adapt to recommendations 58 or 62. Other recommendations affect exclusively the internal functioning of the Board. For example, establishing a maximum number of committees of Board the directors can belong to. If you analyze our accounts, Board met, attendance has been over 90%. So we don't think it was necessary to comply with this recommendation and the 24 meetings we've had. We've decided to continue like this, and the company achieves its goal of self-sufficiency. So let's continue with our votes. The resolution proposals will be shown on the screen so that you can follow them. With the purpose of making the AGM more agile, in case there's a big majority, we only say if each proposal has been approved based on the votes that are at the table, there's a quorum of over 82%, without detailing votes in favor, against and abstention. I will also suggest that if you're voting here in the room, if you decide to vote against or abstaining that proposal, just raise your hand. And after all the proposals, you can come with me and the notary public to state your vote at the table. If you want to vote online, you can do it through the voting form that is available for you. Until we finish reading the proposals, your votes will be accounted for, and they will be communicated to the notary so that he can record in the minutes. The result could be seen in the website of the company. And the items that are very long to read, I'll give you a summary since the full text has been available for you since the AGM was called. First, proposal approving annual accounts and management report by Naturgy corresponding to the year closed, 31st of December 2020. It is approved. Second, approving the annual accounts, consolidated annual accounts and consolidated management report of Naturgy Energy Group for the year closed at December 31, 2020. Approved. Third, approving the nonfinancial information report included in the consolidated management report of Naturgy Energy Group. It's approved. Fourth, regarding the result application. Since the dividend will be charged to the reserves, it's longer than usual. So in a nutshell, the dividend proposed for 2020, EUR 1.44, EUR 0.81 have been paid as interim dividends. EUR 0.63, if approved, will be paid on 16th of March. There are almost 1 billion shares. The dividend for the year is EUR 1.4 billion. The text is in the proposal, the resolution proposal. So if your agree, I'm not going to read everything because it's 2 pages long. Is it approved? Approved. Fifth, approving the management by the BoD during 2020. Approved? It's approved. Sixth, approving the remuneration policy of Naturgy Energy Group directors for years 2021, '22 and '23. Approved? Yes. Seventh, approving the annual report on the remuneration of Naturgy Energy Group, S.A. directors. Approved? It is approved. Eight, approving the appointment of KPMG auditors as auditors of the company and the consolidated group for 3 years, '21, '22 and 23 after the end of Ernst & Young appointment. Approved? It's approved. Ninth, this is not subject to vote. It's just information for the shareholders. We inform the AGM that the regulation of the BoD has been amended to adapt to the CNMV recommendations. The name of the 2 committees we had have been changed since the new one has been created that started to work last spring. The notary has been formed. Tenth, last one. Delating the Board of Directors with the power of substitution of the President, Secretary of Directors as considered fit as much as possible according to the law. The power is considered necessary in order to supplement, develop, execute, interpret, remedy and formalize any resolution adopted by the AGM, being able to change as much as necessary. Approved? Yes. And second, delegate and empower as much as necessary according to the law, the Chairman and the Secretary of the Board that any of them can sign private documents and granted for notary any public documents that are necessary, convenient to execute the previous resolutions and register the same in the corresponding registries with that expressed power of remedy without changing the scope, nature of content. Is it approved? Yes, approved.

So unfortunately, as it happened last year, it's been an honor, but a bit different, being able to talk to all of you. Most of you are online. The commitment of the Board of Directors, I speak on behalf of all of them, remains the same, the same commitments we've had over the past years. Let's hope that next year we can have normal meetings, physical meetings so that we can receive your support as we usually do during this type of event. We'd like to thank all of you who are present here today and those of you who are remotely. We'd like to thank you all for your support. We feel your support to our management, our daily activities and celebration of the holding of this meeting. Thank you very much. [Statements in English on this transcript were spoken by an interpreter present on the live call.]