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

Good morning, ladies and gentlemen, dear shareholders. First of all, I would like to welcome to the company's seat in Avenida de América to the few shareholders that are kind enough to be here with us to make this day a bit more normal for an AGM. As it's been the case this past 2 years, we've held our AGMs both on-site and online. I would also like to thank the presence of the Board of Directors members. In order to make things easier for those who have decided to come here on site, they're present in the eighth floor, following this AGM online. Therefore, the seating is open for the Ordinary Shareholder Meeting for 2022 with the aim, among other things, to approve the annual accounts of 2021. . Today's call, as you've seen, was published on the 14th of February on the company's website and on the CNMV's website and in different national papers. The agenda is in the different goals and also in the attendance card that you have or that all that we have received. Therefore, if you allow me, I consider the agenda as read. So you agree, right? So now the Secretary will provide the data regarding attendance quorum to this AGM.

The summary of the attendees' list is as follows. Present shareholders, 227; holders of 793,571,388, 81.84% of the share capital represented; 387 represent holders of 82,900,000 shares, 8.55% of share capital; and in total, 614 shareholders and 876 million, representing 94. 4% of the share capital. We still need to record the last shareholders that registered to the platform. The final results will be published on the website together with the results of the vote. According to the Company's Act and our AGM regulation, we meet the legal requirements to declare this AGM as validly open. According to the attendance date, more than 90% of the share capital is represented. So I declare the AGM is validly called on first call. The panel will be made up by the Chairman and the Chair and the directors that are connected through video conference and the Secretary. According to Article 203 of the Companies Act and according -- and as it was stated in the call, we've required the Notary Public of Madrid, Mr. Fernando de la Cámara, to drop the minutes of the AGM. I'll give the floor to the Notary Public.

Thank you, Mr. Chairman. My name is Fernando de la Cámara, Notary Public of Madrid. I have been required by the company to write the minutes of this AGM, as it's mandatory for listed companies. According to the regulations of the company's, I ask if there are any questions or caveats regarding -- or comments regarding the comments made by the Secretary regarding the represented shareholders and the share capital as represented, should there be any comment, it will be recorded in the minutes. Thank you.

Thank you very much. Mr. Notary Public. Those shareholders, I will wish to take the floor after my report. We kind of request to hand in your attendance card to the staff in the room so that you can receive the form that has to be filled in. The shareholders that are online can send the questions and request the floor through the form to that purpose also online. Once all the statements have been made, Secretary and myself will answer your questions. If there's any shareholder that wants the Notary Public to take little note of the words, we kind of request you to say the data that you will be using or please state so in the online form so that is recorded in the minutes. After all the intentions have finished, we will vote the proposal for resolutions. The Secretary will give you some indications regarding the process. Basic rules, the regulated process are as previous years. In order to vote the proposals for resolutions regarding the things that are included in the agenda will be done according to a negative direction system, we'll consider both in favor corresponding to all the present and represented shares using the votes against and abstentions and shareholders, the owners of -- the holders of which aren't here, and they leave the meeting or if they're online, if they leave without voting. Votes for resolutions that are not included in the agenda will be voted according to a positive direction system. We'll consider votes against for all the shares present and represented and reducing votes in favor and abstentions and shares whose holders are here and leave online and leave the meeting without voting. I also inform you that for shareholders who aren't represented that are here on site, if they want to go on record and say that you're leaving the meeting, you can do so. There's a table at the exit where you can state what you vote before leaving the meeting. In case of shareholders are taking part online with or leaving the meeting, since they can vote at any point since the votes opened until the end of the AGM, they can do it at any point.

First of all, we will vote resolutions that were submitted by the Board of Directors and then the ones permitted by all the shareholders. Once the resolution has been approved, any of the resolution regarding the same issue that are incompatible will be canceled.

Thank you, Mr. Secretary. So if you agree, no, we're going to go on to the explanation of 2021. And this will be subject to your consideration and vote. In order to do that, I'm going to use some slides that I will be presenting. For those of you here in the room, you can look at the screens. For those of you who are online, it's now the main part of the screen. I would like to insist the fact that my presentation is broken down in 5 parts. First of all, I'm going to explain the energy scenario; second, our results for 2021, which is subject -- submitted to the AGM's consideration today; then I'm going to provide you with some explanations regarding the company's activities during 2021 in terms of environmental sustainability and governance commitments; then we'll continue with some explanation on project Gemini, I'll explain it in with more detail; and last but not least, a summary. And the Secretary will analyze it also with the proposals that will be submitted to this AGM for vote. So we're going to start with the energy scenario. As you know, it's changing every day. But during 2021, and I would like to insist on the fact that this is an AGM focused on results of 2021, that's why we're going to refer to that. Although it seems that it's really far away, too many things have happened this these past weeks, and we barely remember 2021. But this is what this AGM is about. The most important thing to highlight is that in those countries in which Naturgy is present, operators -- energy operators regarding electricity or gas, recovery of demand was widespread, quite widespread. And we almost reached pre-COVID levels. I'll remind you that the comparison to 2020 is not stable considering that in 2020, there was a pandemic going on in the world with many effects of activity being closed down in most countries in which Naturgy is present. But as you can see on the chart that I'm showing now, in general terms, energy demand in these markets for the company meant widespread growth. It is also true that this -- the last quarter of 2021, and in particular, this -- the first quarter of 2022, the evolution of energy market has caused a significant change in the stability trend that we've seen these past years regarding the oil barrel reference and also the gas reference at European level, what we call TTF. And also, as a consequence, the electricity Spanish market, what we call, the pool, you can see the sudden changes in Q4 and Q1 '22. The recent conflict between Russia and Ukraine has caused peaks, significant peaks in gas prices and electricity gases. And this has taken us to prices over 45% and 70% of gas and electricity these past weeks. Please don't think that this is a special increase in prices. It's just for Spain. As we can see in this chart, it's also happening in Europe. Electricity prices have increased in an unprecedented way. As you can see to your left, Spanish prices, the average of weight in 2020 was around EUR 35-megawatt, has multiplied almost 4x in 2021 and they've multiple 2x in Q1 '22. This has not been extraordinary. The other European countries have also suffered the same changes in prices. And as you can see to your right, these electricity prices have followed gas prices in the European hub. As you know, the electricity market has a similar function in EU member states. And what we see in this chart is that prices, electricity prices have followed the gas spot prices. Spain continues to move forward. Its energy mix is evolving in a relevant way. Here, I just want to highlight what's happened in this country for the past 20 years and the evolution we expect for the next 10. This evolution, this goal is based on public data that were communicated by the Government of Spain to the European Commission in March 2021 a year ago in the so-called, PNIEC, the integrated plan for energy and climate. As you can see, Spain's goal is decouple as quickly as possible from depending on the outside and base a relevant part of electricity generation in renewable sources. In green, in this bar chart, you see the part in green, in 2000, it was less than 20% of electricity generated. And the goal is for -- is in 2030 to have approximately 3/4 of electricity generated -- will be generated from renewable sources. Obviously, this requires a transition and some supplementary conditions. The first one would be what I would like to highlight. The part of this bar has to do with electricity generation based on CCGTs in 2010, represented 23% of the energy mix. It will still be relevant in the following years because even in 2030, approximately 10% of electricity -- of the electricity needed to cover demand will still require CCGTs, gas, turbine to generate electricity. As you can see, to the first 10 years of this period, Spain needed 180 terawatt hour to 270 terawatt hours. So in 10 years, the electricity consumption in Spain, the needs of electricity in Spain increased 80 terawatt hour. We expect that almost 0.5% for the terawatt, this is what Spain is to grow in the next 20 years. So 1/4 compared to the growth we've had in the first 10 years of this century. The role CCGT as generation technology to back up the system is key and will be key. And it will be key because of the following. First of all, the growing penetration of renewable energy in the energy mix requires supporting technologies. I would like to remind you that water and wind in particular and natural resources that are intermittent and cannot be planned. Also, coal plants in 2000 represented almost 40% of the energy mix. They're not part of it any longer. So the replacement of electricity generation through set plans is needed to prevent energy shortages. We also have to bear in mind that starting in 2027, we start a progressive plan of closing energy provided by nuclear power plant. This time line was approved in 2020 -- I apologize, 2019, [ the speaker says ], and it's progressive between 2017. The first nuclear power plant that will close is Almaraz, and 2035, that would be Trillo. And last but not least, I would like to highlight quite opportunity that has to do with -- what the government has said lately, which is trying to depend less from on third countries and also the possibility of having CCGTs within energy, means they could use renewable gases, so an increase in the use of renewable gases. So they will be able to change energy needs in terms of importing natural gas. So now we're going to move on to results for 2021. They were published in a relevant fact, published by the company in February as a continuation of its approval by the Board of Directors. And as you can see in the documents that were provided, it's included in financial and nonfinancial report that's available in our website. So I'll go quickly through it. And I would like to highlight the most important milestones. The main figures of the year are on the screen. Ordinary EBITDA, gross operating result in recurring terms, which is EUR 3.983 billion, net result -- consolidated result of EUR 1.231 billion. And this allowed the company, as you can see, to cover our total investments worth EUR 1.801 billion more than its profit. In terms of debt, the final debt for the year is EUR 12 billion -- EUR 12.831 billion, then I'll explain how it compares to our debt in previous years. And operating cash flow, above EUR 1 billion, and a tax contribution to society. And then I'll explain how we justify in our sustainability report that this was a contribution from Naturgy to this idea as a whole of almost EUR 2.8 billion. We could say that 2021 has had a very sound operating results in all action or operation lines. And it's a first step of recovery after the pandemic in 2020. And regarding results, and in particular ordinary comparable result, we see an improvement in the gross operating result and also an improvement in net result. I remind you that in 2020, and as a consequence of asset impairments that were considered during the pandemic, we carried out an accounting adjustment. And as I explained later, this makes comparisons really not easy. So where does this gross operating outcome comes from? I would like to talk about 2 different businesses, the ones related to the validity of markets generation, trading and all the management and international trading, which accounts for approximately 40% of the business, so the businesses that have to do with distribution, energy distribution and transportation networks, both electricity and gas. And this accounts for 60% of our results or our profit. And if we focus on the different territories, results in Spain do not reach 60% of the business origin and a bit more than 40% at international level. And here, the 5 countries where the company has more activities are: Mexico, Brazil, Chile, Panama and Argentina. I would like to highlight an additional 12% in a number of countries, almost 20, that also make a contribution of 12% to the consolidation of this result of profit at group level. I would like to mention the hard work of the whole company and its managers. They've managed risks this year, and this has been key to mitigate significant volatility and also to prevent impacts on the different businesses. The operating gross profit has improved. It has improved in ordinary terms, also in accounting terms. Let's take a look at the real recurring changes that we can expect in the future and the gross operating profit. We need to compare the 2 blue bars we see here, which are the ordinary EBITDA. That's for each year. As you can see, EBITDA has improved mainly due to the management of market businesses. I've highlighted before the activities included in them, also network businesses, and there have been reductions in the ordinary aspects of the business. Now let's take a look at net profit or net result, the final result in the bottom line of the P&L. I would like to say that in 2020, we included asset impairments worth more than EUR 1.2 billion, so the comparison between 2020 and 2021 is not really appropriate. But at ordinary level, the improvements in financial results and business activity has improved our results significantly. Our debt has decreased. The company's indebtment -- well, the net debt on EBITDA is 3.6x. This metric is a common one in the industry, and it somehow explains the financial health the company may have regarding its ability to pay back the banks. And now it's in a more than acceptable range according to rating agencies. And the average cost of debt is 2.5%. I'd like to insist here that this average cost is related to the average of our debt denominated in euro and also in all the currencies of the countries where the company is present. Our debt was able to -- we were able to reduce our debt due to a significant cash generation. This was used to reduce our debt in almost EUR 800 million, pay the shareholders and carry out investments. We've carried out investments, going back to our investment strategy, had been reduced in 2020 as a consequence of the pandemic and the ability to execute many of our plans. You know that one of the commitments of the company towards shareholders is to provide a predictable recurrent dividend paid and 2 payments, 2 installments, 1 in summer and another 1 in autumn; and a final complementary payment after the holding of the AGM. In August '21 and November 21, we paid these 2 1st dividends to be paid. And as we had committed to that commitment, what the proposal that we're going to do is to pay the -- resolution is to pay the complementary dividend of EUR 0.50 per share, together with the EUR 0.70 that has been already been paid, make up to a total of EUR 1.20 per share, which is what we had committed for this year. So to your right, you see the total yield evolution of the company. And let me recall that the total yield, our profitability is estimated, taking into account the evolution of the share based on the dividend, it's a total yield that a shareholder has had in the company, and it's in the last 16 months -- 13 months, sorry, between January 1, '21 and March 14, 2022, a total profitability of 35% versus the evolution that other rates have had, such as the IBEX or the Euro Stocks Utilities. In this sense, let me say that the company, as reflected in the chart, has had a little -- has been affected and it's listed because of speculation at the end of 2021, but it's back in track after the month of February 2022. So if you will allow me in order to conclude this section about the year 2021, I'd like to highlight 3 ideas for you to take home regarding the management of the business. First, which has -- which is everything that has to do business related to the market, what we call the liberalized businesses. The management has been focusing on 2 main elements that will continue to be the main elements were to set our goals for the management of 2022: risk management, volatility, uncertainty is what relates to risk. And the objective of the company is to eliminate to the maximum uncertainty which is really affecting many sectors, but more specifically, the energy sector. So it's one of the main objectives of the management to focus in the better management of risk and possible risks and to ensure supply, ensuring supply so that our distribution grids, our generation plants and our clients both for electricity and gas have the guarantee of supply in no matter what circumstance. So -- and we're working to adequate to recover to the demand by operationally improving each and every one of the operations in the field. And these operational improvements must lead to a better capacity of service, reaction capacity response to incidences and to face all those challenges, even climate changes that may occur, so that the reaction time to the events that may happen are as short as possible. Our -- if we make major investments in our grid so that we can get access in the most remote places to gas, that will improve our infrastructure, and that's what we want. And at the group level, we want to reduce our net debt and reinforcing liquidity to face this in certain times that we are living that will demand financial caution so that we are ready for any negative event that may happen. The company is not alien to everything that has to do to its approach on a comprehensive plan for climate change, sustainability actions and governance actions, what we now call the GSA aspect, which is what it has to do with the milestones achieved during 2020. So we focus on the green line. We see the environment. So I'd like to highlight about all 3 achievements. First, a relevant improvement in the direct CO2 emissions, 9% below the emissions we had the prior year. We want to continue investing to install more than 5.2 gigawatts of power of renewable hydrogen. And third, more than 300 biodiversity initiatives that have been carried out. If you need more details, let me address you to this sustainability report which is in our website. And for the attendants present here in the room, you have a book available for you to follow these biodiversity initiatives. With the -- in the social leg, also 3 main aspects, though the chapter much more extends in the report. We want to improve our rate of accidents versus 2020. We have improved in severeness degrees at almost 40%. You know that security for our employees is one of our main elements that we take care of. And we want to improve all this so we have rates of minus 37%. That's what we've had this year. We also want to increase the amount of providers that are audited under the same criteria that we use ourselves. We want to work with committed providers, committees as we are, in these terms of sustainability and the environment where we have decided to be at. And we've got 72% providers that are audited under the same schemes and with the same criteria as we are for environment, sustainability and government. And with everything that has to do, the commitment towards gender equality for 2030, let me highlight that 80% of the new recruitments done during 2021 have been women with an average age of 25. That must help us to reach that gender equality objective by 2030. And the third leg, corporate governance, 3 major milestones. First, the approval of the new sustainability guiding plan or master plan, the Sustainability Commission recently created by the Board of Directors. It's first commissioning was to formally approve the sustainability plan by the Board. Amongst these and other achievements, the company has been awarded in 2021 and by Standard & Poor Global Platts as the Best Energy Company in 2021. And all the achievements with regards to climate change, and what are other changes have been acknowledged by the CDP. So let's now talk about decarbonization. We're advancing in the decabonization of activities. You can see the direct CO2 emissions that have reduced drastically since 2017 until 2021. But another important aspect is the emission factor of the generation because the emission factor has to do with productivity and the efficiency of our generation that emits CO2. And the emission factor has reduced by 20% versus the previous year and 33% versus 2017. 33% of installed capacity is free of emissions already. And this proves our clear commitment of the company in the reduction of emissions and the investment in clean technology. And as I was saying before, an economic value of more than EUR 23 billion that shared with the society, which among groups of societies, providers, employees, investors, and it's necessary to carry out this investment plan. Let me highlight here. More than 2,100 vulnerable families helped and assisted during this year. Out of the more than 700 voluntary employees that we have in our vulnerability assistance, energy vulnerability assistance plan. We are auditing our providers, as I was saying before. And finally, let me highlight another initiative where we have more than 400,000 clients listed, which is the initiative called Compromiso, Commitment, that with escalation of the price of electricity, we have provided to the market, clients and nonclients, the possibility to give a fixed price of electricity when the escalation of the pool price started. So we did that in September before having any other initiative from our competitors or from any kind of regulation that followed the same track in order to try and find a way to avoid that. Because of opportunistic reasons, some clients could be not -- would not be able to use these technologies, and therefore, their fixed cost would increase. Let me now go to explain briefly, what we have already -- we have explained in the relevant fact issued in February and that you have very probably read in the newspapers. And I'm talking about Gemini project, Projecto Geminis. Before starting before about this project, let me just give you 2 major ideas. First, we are analyzing -- as we said, we were starting to analyze a project, which simply -- what I can tell you is that, that confirms that what we were thinking is fit for purpose. So it's crystal clear that the idea is fit for purpose, even though we have to still analyze more. And the second idea is that the decision on the calendar on the time line as any decision is, of course, depending on different elements: The conditions of the market and the visibility on regulation, the -- if we get the adequate ratings and if we get the administrative permits and authorizations. So we have a calendar, we have a time line, which may and will adapt and that will have to adapt depending on uncertainties. And why is it fit for purpose? Why the Board of Directors back in time decided to approve starting to analyze this project? Well, I want to share with you the key elements of the sector because I think that's going to help you to better understand the reasons why the company thinks that these projects is adequate to the problems we have in the evolution and the dynamics in a sector which in such turmoil, in such a transformation such as the energy sector. So we're facing at a sector level a super investing cycle, which has to do with the energy transition mainly. Everything has to do to adapting the energy mix. Everything has to do to the shifting towards a greater energy independence from raw materials coming from abroad that requires and will require major investments. That is not something immediate. This is something that is going to be happening step-by-step, little by little, in the country's energy mix, especially after the major investment that has to be carried out. Second, we must simplify and re-approach the business models. This is not specific for our country. You know that everywhere in the world, especially our neighboring countries, are carrying out and have carried out in the last years a re-approaching of their management models in order to be more simple, better understandable and, therefore, more efficient. Third, which is everything that has to do with these energy crisis. I think everybody will agree if we say -- if I say that this energy crisis has led us to rethinking the energy system. And within this new approach of the energy system, we're going to have 2 major parts in the equation: one will be to guarantee the supply security to our clients, to society, to our industries, to our homes; and also to have a more flexible generation, and if you will allow me, a more independent generation. It is also true that from the stance of the sector, we clearly see more and more that there are synergies between the tailor-made generation in clients. Let me explain this in greater detail, what we intend to say with the sentences that clients and flexible generation are 2 parts of the same coin. And if they're united, the volatility in the market will be lesser, and that volatility will affect less to the risk of the business or to the business per se. So it will be a lower risk. So therefore, the importance of what we call sustainability environment and government aspects will have more and more -- will be more and more in line with the taxonomy of the EU and will be presenting many of the decisions in regulation that will be passed in the future. So before these key elements, the company wants to react, wanted to react. So Gemini Project, Geminis, is a good project to analyze and see if it provides a good answer to all these challenges I've been covering right now, amongst other things because we've got 2 kinds of businesses. We've got the network or grid business and the market, and synergies between both businesses are limited. And the fact that if we separate them, that will generate operational costs of quite a nature, right? We've read the last reports quoting the surplus and cost of separating and the surprising cost on the independent management of both businesses. And let me deny that. We are working already in quite an autonomous way. So separating them would have no impact -- or that, it would be minor because we're already doing that. And we want to generate growth opportunities. When a company has its capital cost and shareholders require to be profitable as they need to, competition capacity increases when the company is more complex. And when the company doesn't have capital cost necessary for each business line, the capacity to compete reduces. And we're convinced that companies would be much more competitive with a better resource allocation when necessary and where necessary. And organizations have to be more agile and flexible and focused on their differential skills and powers. That will help, of course, in this project to be much more successful. And also, the management and employees, if so, will have better visibility at a longer term with a clearer project and a much more sustainable project. And that will of course, respond to the interest of our shareholders, which you know, as you know, even as of today, regulators compare us to work -- for example, in Spain, in all the gas distribution grid or electricity grid we have to work according to a directive, which is the unbundling directive, separating and making independent these 2 activities versus the deregulated activities. So the conclusion is that we understand that this will make the future of both groups more dynamic, reinforces the attractiveness of both groups and, therefore, it is positive for the shareholders and for the employees. If you wish to see the Project Gemini from the stance of the groups affected in one or the other part of the business at the geographical level, you have here the breakdown of everything has to do the geographies where they are present, the activity mix between electricity and gas and the business profile. I would like to talk more about the business profile because, as you see, the company has a company with a profile which is fully regulated in another company. The profile is of the market is not -- it's deregulated. So as you can see, there are very different profiles. So how have we approached this project with a structure that harms no shareholders? On the contrary, it makes -- having 2 companies with the shareholders remain, and these 2 companies will have the possibility to benefit from the advantages of these projects. So we're not thinking about a project going against any interest whatsoever, and that would be the structure of both. And the structure is going to be very similar, as you can see in this slide. So let me now finish with the proposal for resolutions. Let me summarize what the Secretary is going to detail point after point. From points 1 to 8, we're going to ask for the approval of the annual accounts and the report on management and the remuneration reports; point 9 has to do with the verification of the appointments from the Board of Directors; points 10 to 13, changes in the bylaws; and 14 and 15, delegations. If you think it necessary into the Board of Directors and the people proposed to carry out all the proceedings related to the resolutions approved as of today. So this is the end of my report. Thank you so much for having listened to me. And I'm at your disposal, each one of you, if you wish, if you have questions, Well, we'll just open the floor for interventions.

We've received just one question remote. Let me read it, and I will give the copy to the Notary Public. [ Jose Babot Barbero ] asks, last 29 March 2021, the Catalonian government and other company of the sector signed an agreement to forgive a debt of 35 families in Catalonia, allowing them to start from scratch. The company assumes more than EUR 28 million, 73% of the debt, stemming from these vulnerable families from 2015 until 2020. So the Catalonian government wants to have agreements with other energy companies as of this year. The question is, if -- with the context of the prices and the vulnerable families that cannot pay, is Naturgy going to be proactive to solve this situation? And it's a second company in a number of clients in Catalonia, the questions are the following. First, after more 7 years of the low 24, 2015, is the company going to negotiate as the competitor did with the government in Catalonia? I the company willing to assume that the to liberalize these -- to free these vulnerable families? And are you going to do it before the end 2022, if you agree to do so?

Well, thank you for this question that we have received at the beginning of this event. Allow me to -- apart from my reply to lead you to the sustainability report that is available in the website, because some of the topics I'm going to tackle in my reply are even -- have even greater detail in these report. And we are ready to go deeper into the reply through our sustainability plan department and through the Naturgy Foundation, of course, which one of its main goals is to manage and to take care of initiatives that have to do with vulnerable families. So in this sense, let me recall that in the last years, more than 137,000 people have benefited from the initiatives stemming from our foundation, which is 1 of the 3 main objectives, the 3 main working access that the foundation has. That's why the Board of Directors annually votes -- sorry, provides financial resources to the foundation so that the foundation can carry out its activities. Let me also say, dear shareholders, that the Act referred to by [ Mr. Babot ] is still -- has no regulation still. So it's just a bill, and many of the specificities that should be covered by the law are still pending from this -- from being regulated. And as any act, of course, with any act, the company commits because it's -- we have to do so, to act according to that act. But unfortunately speaking, that regulation is still not approved. But Naturgy's commitment towards vulnerability is really well known by [ Mr. Babot ], is real. Only in 2021, as you can read in this report I was referring to before, we've serviced 2,200 families. We have rehabilitated 270 homes with 700 volunteers and with the collaboration of the company, with more than -- the company has collaborated with more than 18 companies or organizations, such as Red Cross and Caritas. So let me highlight that the company is really committed towards helping in energy vulnerability. So in this sense, finding solutions for the families, we do, I do respect any initiative taken by any other energy companies such as the one [ Mr. Babot ] was talk -- alluding to, to solve energy poverty problems. But there isn't a single way. Each company takes its path, and the one we consider more adequate, socially speaking. And as I said, whenever we have to abide the law, we will do so, of course. I said it as an example before in my intervention, the [ committedly ], Compromiso rate, we were the first one launching the fixed price tariff in September at times when the pool price was highly above the rate we provided to our clients. And not only our clients, but we offered it to the market, but of course, under our own flexibilities because you know that the electric generation is in for marginal. Let me highlight here, [ Mr. Babot ], these facts that just are proof of our commitment towards not only vulnerability but towards society a whole. We are a responsible energy company. We want to carry out our activity within what's adequate, fair, giving back to society some of what they give us. I don't know if the Secretary General has something to add to this question?

No. Simply, I would just say that the law is pending to have its regulation as to the law that [ Mr. Babot ] was referring to, just that note.

Are there more questions? No more questions. But from the attendees to the room, would you like to take the floor? Yes. Yes, go ahead. Can we please give the microphone to the gentleman.

[ Thomas Escudero ]. Well, my question...

Can you take your mask off so you can -- we can hear you better? Thank you.

My question is about the policy that the company is going to follow before the new self-consumption strategies that we are seeing in the market, self-consumption from solar panels for individuals, but also green hydrogen, et cetera, et cetera. I mean, the new energy streams that are requiring private investments by individuals. What's the -- your policy that you're going to have with regards to this current phenomenon?

Thank you very much, [ Mr. Escudero ]. I would like to highlight 2 parts in your question, if you allow me. As you've said, there are some new energy drivers that have appeared these past years that were not common in the traditional energy industry. One of them is self-consumption. The company clearly supports self-consumption, and the internal reorganization that took place at the end of 2021. We first did a division for self-consumption leaded by a very capable person. We have a woman who is in charge of developing self-consumption in residential customers. In this case, in the short term, it's focused mainly in PV because it's the technology that's available. And the main advantage is that [ Elara's ] private customers, they live in houses or buildings with different plants. The company provides -- has a plan that they can carry out this investment and can benefit from the savings generated by self-consumption. So our strategic approach for self-consumption is significant. It's consolidated. And it's one of the commercial growth axis for the next years. Green hydrogen, as you were saying, it's just one of the new energy drivers looking forward. People, we've heard a lot about hydrogen. This past month, we haven't heard much less about renewable gases. They have a faster ability or likelihood to become part of the energy mix. Perhaps you don't know this, but I would like to explain it to you. Other European countries are already adding renewable gases to natural gas. So they have a blend. They can increase the volume of renewal gases up to 20% to reduce natural gas -- traditional natural gas consumption. And therefore, first, we can reduce what we buy from third countries. Spain does not produce natural gas. We need to bring it from abroad. So the increasing use of renewable gases would reduce the energy mix. And then we could reuse renewable gases that, as you were saying, they would be released to the atmosphere. That would be biomethane or biogases, biomass, et cetera. Hydrogen is another part, as you know, in next-generation programs that are related to EU funding. Naturgy has presented more than EUR 12 billion different projects. This project were considered by the administration of around EUR 8 billion, and hydrogen is part of them. It's a midterm solution. It's not short-term solution, considering that it requires renewable electricity facilities to distribute and generate hydrogen at low energy cost. As of today, well, as you know, renewable energies compete to be part of the traditional energy mix. And therefore, at some point we will need to decide whether we invest renewable energy to produce hydrogen or electricity that goes directly to families or companies. Naturgy has taken due note of this goal of using green hydrogen. And as it was announced in 2021, we've launched projects, hubs for hydrogen generation one in [indiscernible] together with Enagás. We've launched one of the most significant initiatives -- probably the most significant initiative in Spain today regarding hydrogen. Obviously, we don't roll out continuing to do it. And therefore, hydrogen is a point for growth in energy. And I would like to tell you that it's not just hydrogen, also ammonia, which is another way of generated hydrogen or a few that does not release CO2 and which has its origin in producing hydrogen. So in coming years, you'll hear us talk a lot about these energy drivers at the AGM because they're clearly changing the traditional map of energy mix.

And so what percentage of investment does the company expect for R&D in these new technologies?

Well, the budget will increase as these new technologies consolidate the more theoretical aspect. We need to start with pilot plant. But in our 5-year investment plan, we haven't detailed it because the most important part is new generation technologies. Renewable electricity, if you remember, in July, we presented a plan in which more than 8 billion were allocated to generation to installing renewable energy sources, and part of them will be devoted to hydrogen. Is there any other question among the present shareholders? Well, there are no other comments or questions, I would like to request the Secretary that before moving on to the voting part, I would like him to explain the degree of compliance the company has regarding -- seen in these recommendations on governance. The code includes 64 recommendations, 6 of them are not to do with Naturgy. So out of the 58, the company at 31st of December 2021 was in compliance 47 of them, 8 partial compliance and the other 3 has explained why it's not reasonable to comply with them. I refer to these 2 groups -- last groups. The last ones first, those regarding what we provided an explanation saying why we think they're not appropriate for Naturgy. 17, the number of independent Board members. Based on the shareholders that we complied with this recommendation would be in breach of the law. So we -- first of all, we need to comply with that instead of the recommendation. Then there's another recommendation. 48, that advisers to split into the appointment and committee, but that goes against the idea of simplification Naturgy has [indiscernible]. Regarding the recommendation that we comply with, but in a partial way, in some of them, their goals are achieved in different ways, such as the LTI approved by the AGM in 2019 that established a time horizon that is above what's usual. It was 5 years. And one of the proposers as presented today is that its duration is going to be extended to 8 years. This is an innovative system that does not fully fit the traditional remuneration models for recommendations 58 and 62. Another recommendation has to do with internal functioning of the Board. Some of them say that we think that we can -- we don't need to change it, for example, 25, which is obviously a number of maximum of Board of Directors a Board member can belong to. And we have not considered this is necessary because they attend to almost 100% of the meetings, even though there were 23 meetings in '21, which is more than other companies in IBEX do. So we didn't consider appropriate to follow that recommendation. Thank you very much. The Secretary will read the proposals that will be submitted to the approval of the AGM.

In order to do things fast as we did in the past, if they're comfortable majorities would you say it was approved based on those that are at the table regarding delegations and anticipated votes. And if you're on site and you want to vote against or abstain, please raise your hand once the proposal is read. And at the end of the vote of all the proposals, the shareholder, the notary public and myself will go to the table to take due note of the number of shares and the identity of that person that is either to abstain or vote against. If you wish to vote online, you can do it through the vote form that at your disposal. And those votes will be communicated to the notaries that they're included in the minutes. The results can be seen by all of you tomorrow in the company's website in this section regarding AGM. And last but not least, I would like to inform you that the points on the agenda that I have a long description, I'll just summarize them since the full text has been at your disposal since the day the AGM was convened. First of all, approving the annual accounts and the management report of the Naturgy Group S.A. for the year closed on the 31st of December 2021. Approved. Second, approving the consolidated annual accounts and the management report of Naturgy Energy Group, S.A. for the exercise closed on the 31st December 2021. Do we approve? Approved. Third, approval of the consolidated nonfinancial information report included in the consolidated management report of Naturgy Energy Group. Approved. Fourth, approving the following allocation of the profit for the year close to 31st of December, 2021. First of all, dividend, an amount with aggregate gross import, which is with the addition of following 2 amounts: EUR 675 million prepaid dividend that was previously paid equivalent to EUR 0.70 per share x the number of shares that were not Treasury stock on the corresponding date. We exclude this because they have the right to receive dividends. And second, the supplementary dividend that's proposed now, which is the amount resulting from multiplying EUR 0.50 x the number of shares that are not considered treasury stock. And in that -- from that dividend, EUR 679 million previously being paid on the fourth of August and 15th of November. The proposal is paying the supplementary dividend starting on the 22nd of March. We allowed the Board of Directors to do all the necessary actions to do this allocation and, in particular, to appoint the institution that should be the payment agent. And to the remnant, there's going to be an amount that will be the result to deduct from the distribution basis, the amount allocated to the dividend, which is more than EUR 3 million. So that's for the prepaid dividend and the one paid on the 22nd of March. Approved. Fifth, approving the management carried out by the Board of Directors during 2021. Approved. Sixth, approving the remuneration policy of Naturgy Energy Group Board members applicable since it was approved for the following 3 years. Approved. Seventh, approving the effect Article 2019 of the company, how is the changes proposed by the Board of Directors regarding this tension or the duration of the LTI of Naturgy Energy Group to make it match the strategic plan '21, '25. Usually, it was supposed to finish in July 2023, and that's going to finish in July 2025. And approving the actions of its implementation by the Board. Approved. Eighth, approving the annual report of remuneration of the Naturgy's Board members approved by the Board on the first of February 2, the text of which is available to the shareholders together with the rest of the documents regarding the AGM. Approved. Ninth, Board member appointments. Number one, confirming the appointment by Mr. Enrique Alcantara-García Irazoqui that took place in the 31 May 2021 according to the company's asked and appointing the proposal of the Board for 4 years starting from the moment in which this resolution is approved. This Board member will be a proprietary directors proposed by [ Cabedia ]. He's present online. He accepts the appointment and declares that there's no legal incompatibility. It's approved. At the same terms, confirming the appointment due to cooptation of Mr. Jaime Siles that took place on the 10th of February 2022. He will be appointed and with a favorable report of the Remuneration Committee will be appointed Board member -- proprietary Board member. He's present here. He accepts the appointment and states that there's no legal incompatibility. Approved. Also approving the appointment of Mr. Ramón Adell that took place on the 10th of February 2022 and appointing them at the proposal of the Board and with the report of the Remuneration Committee, Board member for 4 years starting when the resolution is approved. He will be a Proprietary Director. He's present here. He accepts the appointment and declares that there's no legal incompatibility. Approved. Tenth, authorizing and approving according to Article 515 of the company's Act that the extraordinary AGMs of this company can be convened with the minimum period of 15 days as long as shareholders can vote online with -- in a way that's acceptable all of them. This authorization is granted until the next AGM, Ordinary AGM is held. Approved. So next one, this is not for approval. It's just for information purposes. The internal regulation of the Board has been changed in different articles made available to the shareholders. And it's in order to cover the recommendations published by the CNMV regarding listed companies. Also, the materiality thresholds have been changed regarding the CEO and also the Sustainability Committee has been changed its composition. The AGM receives this information. Then changing Article 6 of the bylaws to allow to hold 100% online AGM, including a new paragraph to Section 3 of set article. Approved. Thirteenth. There are 5 sections here. This is a change in Article 7, 9, 10, 11 and 13 of the AGM regulation. It requires a separate vote. So I request due approval for each section, but they have the same consideration. It's in order to allow online AGM. First of all, Article 7 of the regulation. Approved. Second, Article 9. Approved. Third, Article 10. Approved. Fourth, Article 11. Approved. And finally, Article 13. Approved. The last 2 proposals are delegations in favor of the Board. First one 14th proposal, approving delegating the Board of Director the ability to increase share capital with the limits established by the company's -- how companies act within a period -- of the legal period of 5 years according to what the law requires according to the limits established. And last proposal has to do with the ability to implement the resolutions approved by you, delegating the Board of Directors with express powers of replacement in the Chairman, Secretary of Boards that are considered fit all the powers that I consider appropriate to supplement, develop, execute, interpret or remedy any resolutions approved by the AGM, being able to carry out changes and additions that are necessary. And then delegating and empowering the Chairman and the Secretary of the Board so that any of you can sign private documents and grant before Notary Public, any public due that are necessary or fad to execute the previous resolutions before the relevant registries. Approved.

Thank you very much, Mr. Secretary. This is the end of this AGM, Ordinary AGM for 2022. I would like to particularly thank shareholders that are here on site in Avenida de América and also those of you who are online, and including, in particular, the Board of Directors who's following this a the room in the same building. Next year, we'll see each other again, and I would like you -- I would like to thank you for being here. So this is the end of this meeting, and the setting is over. [Statements in English on this transcript were spoken by an interpreter present on the live call.]