2018 Corporate Responsibility Report
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Naturgy operates in over 30 countries with more than 18 million customers, and nearly 50% of its employees work outside Spain. Its international presence puts it in an ideal position to capitalise on the growth of new regions which are in the process of economic growth, making it one of the world's most important operators.

Contribution to Ebitda by activity

Gas and Power

34%
of Ebitda: Spain, Europe and Latin America
Note: -5% other activities.

Infrastructures EMEA

45%
of Ebitda: Spain and Africa

Infrastructures LatAm South

20%
of Ebitda: Latin America

Infrastructures LatAm North

6%
of Ebitda: Latin America
Main figures of Naturgy [102-7]
Operations 2018 2017 2016
Gas distribution sales (GWh) 449.259 460.014 426.510
Gas transportation/EMPL (GWh) 117.526 100.371 111.720
Gas distribution supply points (in thousands) 10.605 10.491 10,224
Electricity distribution supply points (in thousands) 7.569 7.447 7.324
Gas distribution network (km) 119.998 116.181 113.083
Length of electricity distribution and transportation lines (km) 215.532 214.399 215.894
Electricity generated (GWh) 46.658 46.389 46.361
Personnel 2018 2017 2016
Number of employees1 12.700 14.718 15.502
Financial (euros million) 2018 2017  2016 
Net turnover 24.339 23.207 21.908
Gross operating profit (Ebitda) 4.019 3.903 4.664
Total investments 2.321 1.782 2.157
Net profit (2.822) 1.360 1.347
Accrued dividend 1.301 1.001 1.001
Stock information (euros/share) 2018 2017 2016
Share prices as at 31 December 22,26 19,25 17,91
Profit2 (2,83) 1,36 1,35
(1) Does not include number of employees in businesses classified as discontinued operations (786 people in 2018 and 2,053 people in 2017).
(2) Calculated considering the weighted average number of shares during the year.

An integrated and sustainable business model

Naturgy is present in the electricity and gas business, from procurement to distribution and commercialisation. This has enabled Naturgy to be the largest integrated gas and electricity company in Spain, and to be recognised as the gas distributor with the best financial performance globally by S&P Global Platts.


Gas procurement and transportation

Naturgy has a flexible, diversified and competitive 30 bcm portfolio of supply. The company has unique and integrated gas infrastructure featuring the management of sections of pipelines and a fleet of six methane tankers. The supply countries of Naturgy are:

 Others (LNG).
  Argelia.
  Nigeria.
  Peru..
  Trinidad and Tobago.
  Oman/Egypt/others.*
  United States.
  Qatar.
  Others (NG).
  Norway.
* Gas deriving from Unión Fenosa Gas.
Generation of electricity

The electricity production capacity of Naturgy is 15.6 GW and is based on a balanced, competitive and environmentally-friendly generation mix. Thus, the company performs its activity with different technologies: renewable (hydraulic and wind), combined cycle, cogeneration, coal and nuclear.

 Thermal.
  Hidraulic.
  Wind.
 Small hydro (0.7%) - Solar (1.0) - Cogeneration(0.4).
  Combined-cycle.

 

Electricity produced using renewable sources broken down by country (GWh)

 

 Spain.
  Mexico.
  Panama.
 Australia.
  Brazil.
  Costa Rica.
Gas and electricity distribution

The company distributes natural gas in the commercial domestic market and the industrial market of major customers, both in Spain and abroad. It is the leader in the Spanish and Latin American markets.

Length of the gas distribution network [EU4] Total Variation % 2017-2018
Distribution network (km) 119.998 3,29%

In addition, it performs electricity distribution activities in Spain, Argentina, Chile and Panama. This business line includes the distribution of electricity to small and major users: residential consumers, SMEs and corporations.

Length of the electricity distribution and transport network [EU4] Total Variation % 2017-2018
Distribution and transport network (km) 215.532 0,53%
Gas and electricity commercialisation

The commercialisation activity of Naturgy takes in the wholesale and retail gas and electricity segments in liberalised energy markets, both in Spain as well as the rest of the world. In Spain, it is the leading company in the energy commercialisation market: gas, electricity and other products in all segments, ranging from residential to industrial.

Gas
Million customers


11

Electricity
Million customers


7,4

Other lines of business

Energy services: which favour the diversification of activities and revenue streams, anticipating new market trends, meeting the specific needs of customers and offering them an integral service not focused solely on the sale of energy.

Key Corporate Responsibility indicators
Service excellence 2018 2017 2016
Global satisfaction with service quality (on a scale of 0–10)
Spain1 7,42 7,27 7,11
Latin America 7,96 8,30 7,63
Chile CGE2 5,67 5,60 5,48
Moldova 8,23 8,04 7,94
Portugal 7,51 7,29 7,06
Commitment to results 2018 2017 2016
Net turnover 24.339 23.207 21.908
Gross operating profit, Ebitda (euros million) 4.019 3.903 4.664
Evolution the DJSI percentile 100 100 94
Responsible management of the environment 2018 2017 2016
Direct greenhouse gas emissions (GHG) (MtCO2eq) 18,3 20,5 22,4
Emission factor including nuclear (tCO2/GWh) 342 388 371
Generation of hazardous waste (kt) 8,3 9,8 9,4
Environmental investments and expenses (euros million)3 494 96 60
Interest in people 2018 2017 2016
Number of employees4 12.700 14.718 15.502
Men/Women (%) 69/31 71/29 71/29
Women in management posts (%) 28,3 26,2 25,7
Personnel costs (euros million) 1.010 1.009 974
Annual investment in training (euros) 10.454.626 14.322.806 14.014.713
Employees covered by collective bargaining agreements (%) 75,9 77,2 79,5
Health and safety4 2018 2017 2016
Accidents requiring sick leave 28 45 65
Days lost 1.524 1.708 2.424
Mortalities 0 0 0
Frequency rate 1,00 1,30 1,72
Severity rate 0,055 0,05 0,06
Incident rate 1,99 2,65 3,48
Absenteeism rate (%) 2,68 2,18 2,15
Responsible supply chain 2018 2017 2016
Suppliers with contracts currently in force 8.670 9.877 12.072
Total purchase volume awarded (euros million) 3.147 3.428 3.599
Purchasing budget targeted at local suppliers (%) 94,94 90,75 91,9
Assessment of suppliers ESG (number)5 6.906 4.758 -
Commitment to society 2018 2017 2016
Evolution of the contribution from Naturgy (euros million) 11 12,86 9,98
Breakdown by type of action (%)
Social 30,04 61,00 27,00
Environmental 26,48 8,00 22,00
Cultural 43,48 31,00 51,00
Sponsorship and social action activities (number) 253 361 403
Integrity and transparency 2018 2017 2016
Correspondence received by the Code of Ethics Committee 199 141 178
Correspondence received per 200 employees 3,18 1,67 1,92
Average time for resolving correspondence (days) 26 44 63
Audit projects analysed on the basis of operational risks 58 77 88
Communications received in the area of human rights6 0 0 0
Number of persons trained on the Human Rights Policy7 7.508 10.132 10.180
(1) Figures for residential customers.
(2) Figures measured on a scale of 1 to 7.
(3) The 2018 data includes investment in renewable energies.
(4) It does not include the number of employees in businesses classified as discontinued operations (786 people in 2018 and 2,053 people in 2017).
(5) Environmental, Social and Governance (ESG). The suppliers ESG assessment is conducted at the main subsidiaries of the group where the Achilles tool is implemented, and through which the business classification of suppliers is carried out.
(6) The human rights issues referred to in this indicator are freedom of association and collective bargaining, respect for the rights of ethnic minorities and the rejection of child labour and, in general, any form of exploitation.
(7) The decrease in the figure reported is due to a change of criterion, as in previous reports this included those persons that had been trained, whether or not at the company, and the figure included in this report only considers the current active workforce.
Quality, environment and health and safety certifications chart
 Quality
 Integrated Management System
 Environment
 Health and safety
NB: (*) Recent changes.
Integrated management system

For years, Naturgy has had an integrated quality, environment, health and safety management system (IMS) that is continuously changing and improving, certified according to the requirements of the ISO 9001:2015, ISO 14001:2015 and OHSAS 18001 standards. This system is audited externally every year.

The processes certified through this system are:

  • Extraction and injection of natural gas.
  • Transport and operation of the Maghreb-Europe gas pipeline.
  • Electricity generation (thermal, hydraulic and renewable sources).
  • Distribution of natural gas and electricity.
  • Wholesale and retail commercialisation of natural gas and electricity.
  • Development and execution of engineering projects.
  • Energy management in the organised Iberian electricity markets.
  • Corporate activities involving Customer Service, Billing and Payment, Training and Management of Office Buildings.

With regard to the previous year, 2018 saw completion of certification of the electricity distribution and commercialisation activities in Chile and health and safety and IMS certification for wholesale commercialisation activities in Spain. Additionally, in the gas distribution process in Spain, the scope of gas distribution has been expanded by incorporating the process of LPG conversion to NG.

With regard to the Integrated Management System, it should be highlighted that both Energy Management certification in the field of Commercialisation according to the ISO 50001 standard and Road Traffic Safety certification was achieved according to the ISO 39001 standard were achieved in Spain.

The present and future of Naturgy: strategic bases

In June 2018, Naturgy presented its new Strategic Plan 2018–2022, in which it prioritises the generation of value through simplicity and accountability, optimisation, financial discipline and shareholder retribution.

The company is working on simplifying its corporate structure, as well as on its governing bodies and the organisation. The new management of the company gives the business units full responsibility in their sphere of action, whilst adapting the organisation to the company’s needs.

Within the context of its new Strategic Plan, Naturgy introduces an ambitious efficiency plan. It commits to reducing its annual operating expenses by a cumulative Euros 500 million by 2022, thus contributing to significantly improving its profitability.

Also, in the timeline of the 2018–2022 Plan, the company plans to invest Euros 8.4 billion –of which Euros 5.3 billion correspond to growth investments already identified. In this way, the proportion of investments targeted at growth increases, representing more than 60% of the total for the period.

In addition, the company plans to substantially improve shareholder remuneration by increasing its dividend to Euros 1.3 per share in 2018, which represents a 30% increase year-onyear. Regarding the dividend per share, Naturgy undertakes to raise this by a minimum of 5% per annum from 2018, up to Euros 1.59 per share in 2022. In order to strengthen the new shareholder remuneration policy, and in case inorganic investments that comply with the established minimum investment criteria do not materialise, the company may dedicate a maximum amount of Euros 2 billion in the period to share buyback, with a maximum of Euros 400 million per year.

Regarding the financial targets for 2022, the new Plan sets an Ebitda of Euros 5 billion and a net profit of Euros 1.8 billion.

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