Madrileña Red de Gas is five years old and has strengthened its position as the first independent gas distribution company. During this financial year of 2015, there has been a change of shareholders, thus ensuring the continuity of MRG’s strategy.

Madrileña Red de Gas is now five years old. During this time, the company has undergone profound changes, steadily improving all of its relevant activity indicators, , without any of the draw-backs that all too frequently accompany these transformation processes. We have confirmed our position as the first independent gas distribution company, and the most efficient.

Moreover, during the past financial year , a unique event of particular significance has occurred which is expected to be of great relevance for the future development of the company. This is the change of shareholders, with a complete change in the shareholding panorama.

With all of this, a key stage in the life of MRG is coming to an end, and another, no less important is being opened that is full of opportunities for the future.
Madrileña Red de Gas continues to be the very thing which defined it in the first place: a company with a regulated activity; the management of a natural gas distribution network; an independent company, unrelated to any vertically integrated business group; a company in pursuit of excellence.

Companies which undertake regulated activities, particularly energy management companies, are subject to three differing demands, each of which determine their fields of activity, their direction and the limits of the latter.

The first is compliance with the legal obligations regulating its activities. On this front, we have set our main priorities as safety and excellence in the management of the network, which are expressed in three areas: the quality of the maintenance, the decision to invest in expansion and, consequently, high levels of availability with minimum disruptions.

The second is customer service. From the beginning, Madrileña has also set the focus of its attention on quality of service, both in terms of measured objective quality and perceived quality. Indicators such as emergency response times, reductions of intervention times in installation operations and resolution of breakdowns, or the reduction of supply loss, give some idea of the levels of service we have achieved. Moreover, they confirm the opinions of our customers.

Of no less importance, the third demand is to give satisfaction to the legitimate expectations of our shareholders. Improved efficiency across the board has allowed us to satisfactorily reward our shareholders year after year.

During these five years, we have shown that these three demands are not only compatible with each other, but are also mutually reinforcing. The improvements in efficiency have enabled us to allocate increasing resources to quality and to the remuneration of the shareholders, while at the same time ensuring new levels of investment without prejudice to the financial ratios. The key lies in sustained efforts for internal improvement. Improvement of the processes, organisation and costs, in all items and without exception. Alignment of the management team and the company’s entire staff with these objectives has been the driving force that has brought Madrileña Red de Gas to the standard of excellence it boasts today.
In fact, our approach to the fulfilment of these three demands and to understanding the relationships between them are at the very heart of Madrileña’s business model: a modern energy (Utility) company; agile, efficient and customer-oriented, anticipating your needs and in a constant process of improvement in order to give the right response to all of this.

Our future vision is based on four pillars: the consideration of gas as a clean and versatile energy and of the resultant role that we should play in the energy mix in Spain and the rest of the world; our commitment to our customers in terms of the excellent quality of our services, and our commitment to the territory in which we operate with respect to expanding the network; and finally, to constant internal improvement, which is the foundation of all the aforementioned.

Natural gas has been called upon to play a key role in changing the energy mix over the coming decades. Its advantages over other fossil fuels (abundance of supply sources, reduced emissions, versatility in basic applications) will ensure its tenure as a benchmark solution to the energy question in various sectors. For this reason, we actively encourage the penetration of gas into geographical regions and areas where it is still unavailable or limited, where it can advantageously replace other more polluting or expensive fuels. Additionally, we are working with the Regional Government of Madrid on a variety of initiatives to promote the efficient use of gas.

This policy is supported by the recovery of the Spanish economy, already evident in the improvement of the activity and in household incomes, which translates, among other things, into improving trends in the demand for energy, which had fallen considerably during the years of economic crisis and are now showing signs of recovery.

Although a large amount of the potential has already been developed regarding the internal improvement, there are still opportunities being incorporated into our internal objectives which will begin to bear fruit in the coming years, along with growth, which we are implementing by various means.

I would also like to mention the regulatory reform completed in 2014. Reference is made to this in the letter accompanying the annual report for the preceding financial year. Once this reform has been completed, the stability achieved will provide support of the utmost importance for development of our activity as well as for our perception of the markets. A consequence of this reform has been the positive evolution of the gas system deficit, which we trust will continue in the years to come, combined with our solid credit rating, recently improved, which will be more of a boost to the quality of the management and the strength of the company. We hope that this regulatory stability is maintained over the medium and long term as an essential basis for developing the activities of the energy sectors.

Once again, I would like to make a special acknowledgement of the personal commitment, level of professionalism and motivation of our staff. Without them, it would not have been possible to achieve the results of this year and previous years and they therefore deserve explicit recognition, along with the desire and expectation to continue along this path in future years.

The change in ownership of the Company, mentioned at the beginning, has been implemented fully in line with the logic of the industrial investments and profiles of our previous and current shareholders. The change ensures the continuity of the company in its strategy and long-term vision, supporting the growth and improvement of a stable company in a regulatory, institutional environment that is also stable.

Summarising our strategic vision of the future, we continue to believe that gas is a competitive energy, with an important future role, given the growth potential of the activity, mainly due to the low penetration of gas in Spain when compared with the countries surrounding us. Similarly, we guarantee our commitment to our customers with regard to the safety and quality of service.

Finally, with a medium and long term outlook of regulatory stability, we expect our activity to continue developing to the full satisfaction of our customers, our shareholders and the institutions.

 

Pedro Mielgo

Chairman