We announce historic results for 2008
UNION FENOSA has had a fantastic 2008 financial year in which it achieved the best results in its history.
The net profit attributed to the parent company rose in 2008 to stand at €1.194bn, an increase of 21.1% with respect to the previous year. This is equivalent to €1.3 per share.
The 2008 financial year was characterised by a less favourable energy market, with moderate growth in both national and international demand, an increase in the price of energy, a strong increase in the price of CO2 and a high average pool price in Spain.
Revenue rose to €7.189bn, an increase of almost 20% when compared with 2007. In the area of generation, revenue was helped by an increase in prices and the addition of the Kangra mine in South Africa to the consolidation. In the areas of distribution the improvement came from an increase in regulated income. In the area of gas there was an increase in both the volume of sales and price, and in the international area, which provided almost 50% of the profits, all of the businesses developed favourably despite being affected by the weakness of the dollar.
There were many important events during the year but the highlights include the addition of 538 MW of installed capacity, the programmed stoppages to the coal plants in Spain to make environmental adjustments, the incorporation of Kangra into the results for the full year and the entry into operation of the last of the three groups at the combined cycle plant in Sagunto in Valencia. UNION FENOSA has also maintained its endeavours as an investor, making investments totalling €1.225bn in the 2008 financial year.
These fantastic operating results were supported by a solid financial position and liquidity, both of which were achieved despite the financial climate being subject to a severe tightening in credit conditions.
The gearing and debt/Ebitda ratios were 50.9% and 3 times respectively, and the gross financial debt as of 31 December 2008 was €6.885.1bn. This includes €750.1m which relates to UNION FENOSA´s contribution to financing the 2006 and 2008 tariff deficits.
In addition to the positive development of the businesses, the results have been reinforced by the sale of UNION FENOSA´s shareholdings in the distribution company Meralco (Philippines), France Telecom (AUNA) and the telecommunications company R, which have provided €287m of net capital gains.
Significant improvement in the return for shareholders in an adverse environment
Movement in the UNION FENOSA share price has been remarkable in comparison with the significant falls experienced by the main stock market indices around the world. These indices have fallen by around 40% worldwide and in the particular case of the IBEX-35 the reduction was over 39%.
In contrast, the UNION FENOSA share price rose by more than 15% during the 2008 financial year and the company was the only member of the selective IBEX-35 to show gains with respect to the close of the previous financial year. The total return for shareholders, taken to be the sum of the dividends and revaluation, was more than 19%. UNION FENOSA is the European electricity company that has provided the highest returns for shareholders over the last three years.
Fantastic development in profits, 2005-2008
In 2008, UNION FENOSA has achieved the highest profits in its history and the expected recurring profit has almost doubled when compared with that achieved in 2005.
An important step in the development of the Company took place during the period from 2005 to 2008 with the completion of a process to concentrate on the "core energy business". This has included some important operations such as the integration of Soluziona into Indra.
In parallel, the Strategic Plan 2007-2011 was launched with the objective of achieving a new scale, both in terms of size and profitability. During the first year and a half of this BIGGER plan, the Company has reactivated its capacity to develop business and as a result it currently has committed €7bn of the €9bn of total investment included in the plan. This investment in continuity and development is expected to lead to the achievement of more than 90% of the objectives in the Strategic Plan, maintaining the current solid structure of the balance sheet.
These good results are also the culmination of an era in which Grupo ACS was the majority shareholder in the Company. During this era, from 2005 to 2008, net recurring profit has doubled and dividends have grown annually by 39.7%, leading to an annual return of 22% for the shareholders. This era was also characterised by investment of €3.189bn, an improvement in the operating efficiency ratio of 14%, and an average annual growth in Ebitda of over 15.6%.
This increase has been achieved while still maintaining a solid financial position. There has been an improvement in financial gearing from 54% to 51% and in the Debt/Ebitda ratio from 4.2 times to 3 times.
Corporate Social Responsibility
In 2008, the presence of UNION FENOSA in the Dow Jones Sustainability Index and Dow Jones Sustainability Index STOXX indices has been renewed. These indices are very important because they recognise the achievements in terms of sustainability and very few companies are included. The Company has continued to strengthen its position in energy efficiency, something which was recognised at the Global Energy Awards in New York. These are organised by the agency Platts and considered to be the “Oscars” of the energy world. The Company has also continued to drive social development in the countries in which it has a presence.
The aforementioned policies and achievements in the area of Corporate Responsibility are set out in full in the Corporate Sustainability Report (incluir aquí enlace al documento), which details the dialogue processes with the different interest groups, the responsible management indicators and the main projects carried out.
Likewise, the Corporate Governance Annual Report (incluir aquí enlace al documento) and the Report on the Activities of the Audit and Compliance Commission (incluir aquí enlace al documento) include details on the activities of the bodies governing the Company throughout the financial year.
Integration of UNION FENOSA into Gas Natural
The year 2009 is going to be crucial for UNION FENOSA because the Company is being integrated into Gas Natural. The result will be one large integrated energy group which is Spanish owned but has a European dimension, which is well positioned in the different markets for coal, gas and electricity and which has a balance between activities in Europe and those in other countries.
The two companies complement each other in terms of their activities and their geographical coverage. Both have ambitious growth plans which are expected to be combined to create a single common plan and, without a doubt, their capacities will be combined and their corporate cultures, which share the ideal of professionalism and the sense of public service, will be integrated. We are convinced that there will be opportunities for self-realisation and self-fulfilment in the headquarters of the new organisation.
