1.1 Message from the Chairman
2018 was a year which was in line with our best expectations.
Summarizing the previous year is a simple task when we’re talking about a period of time where most of the company's goals were met.
This message is to be succinct and objective so as to allow a quick reading and provide the most important information on the year gone by.
At the General Meeting of Shareholders in May, we closed a fairly positive cycle (2015-2017) and presented the strategy for the next three-year period.
The new plan is largely based on the principles which were already in effect: operational focus on safety; quality and efficiency; financial discipline; a stable financial return for shareholders; maintenance of investment grade rating and ongoing emphasis on training and implementing the best management practices and most suitable technologies for our activities.
These principles apply to all of our teams. We know that there are no perfect organizations, but we feel sure that we continue on the right path and that there is strong internal accord in the pursuit of our goals.
I always like to say that these principles are dynamic and that we are often faced with new challenges, which sometimes represent difficulties and sometimes opportunities. We always seek to be aware of what is taking place around us, so that we are not surprised. Over the course of the year we’ll be systematically monitoring all events and metrics and we’ll implement measures to adapt or correct as we see fit.
Laying down the foundations for the future.maintain a positive balance and financial solidity.
Our Board of Directors accompanies and takes part in the discussion, assessment and decision processes relating to the most relevant topics. The different committees of the Board of Directors meet their responsibilities and contribute to a transparent working environment which is informed and demanding and one which has greatly helped to establish the vision and mission adopted by REN.
2018 was a year which was in line with our best expectations. Our results are positive and – as you can see – we managed to grow and compensate the areas in which we knew we were going to encounter a reduction in income due to the fall in the remuneration rates of our assets.
Among the challenges we face, I feel I must mention the public discussions which continue as to whether REN should be re-nationalized; the cases involving managers and companies which have or have had a relevant role in energy in recent decades and the merger, purchase and sale proposals of companies in our sector. We have dealt with numerous episodes with total serenity, staying focused on that which is important and always meeting our duties.
The extraordinary levy on energy (CESE) which REN is required to pay continues to be one of the greatest obstacles to our good financial performance. The total effective tax rate applied to the company is now over 40%. Although many energy sector analysts and investors recognize the quality of REN’s performance, this situation leads them to consider that the company is overly penalized by the current tax system.
Our relationship with the State with regard to regulatory aspects and the definition and implementing of energy policies fully respects the rules laid down in the concession contracts. The year opened with the starting of a new Regulatory Period for Electricity (2018-2020). It ended with the expectation that we will see our multiannual investment plans being approved for the first time by the Secretary of State for Energy.
Almost two years after the announcements of investment in Electrogas and Portgas, I feel I must mention the efficient manner in which these processes were brought to a successful conclusion. In Chile, operations continue and the change in shareholder practically went unnoticed. While at Portgas, I also believe we can say that everything went extremely well. Despite the complexity of the process, we managed to execute our plans ensuring that there were no social conflicts or negative effects on the quality or safety of the services provided – and always complying with the objectives set out.
Many are the initiatives we are committed to and many are the milestones we have reached.
We continue committed to defending the principles of the United Nations Global Compact and promoting equal opportunities, both with regard to gender and inclusion.
We maintain clear emphasis on the training of our employees in all aspects, remaining committed to consolidating a culture of incentive and respect for others in all areas of our work as a company.
Much of our work has an impact which goes beyond our main activity. For example, I would like to highlight our collaboration with different national partners – firefighters, municipal authorities and social associations – in the preservation of the forest and more specifically in the fight against forest fires.
The REN Award is one of our key contributions to innovation and a recognition of Portuguese engineering schools. This award now stretches back 24 years and has distinguished some of the best Master’s Degree work in energy that has been undertaken in Portugal.
Always aware of the best forms of developing our activity on the technical front, Nester – a joint initiative with our shareholder State Grid in the field of science – continues to carry out research projects in several different areas and is today involved in several successful international initiatives. At the end of 2018, we decided to extend our collaboration with SGCC that started in 2012 in multiple areas covering research and development, business development, renewable energy management, technical sharing and training.
A number of operating records were also broken – renewable energy production and consumption maximums, natural gas consumption maximums, mooring of the 500th methane tanker at Sines, are just a few of the most important.
The competence of our staff is recognized by our counterparts and REN continues to be a benchmark as one of the operators with greatest experience and best results in energy transition currently underway to some degree all over the world.
I could continue here to list facts and achievements last year, but that would be forgetting my initial promise to keep this short. I would though like to end my note of introduction to the 2018 Report and Accounts with a word of thanks to all those who have helped make REN an example of excellence, from our employees to the members of the Board of Directors, and all our shareholders and partners.