Although Gasunie is not listed on the stock exchange, it follows – in line with the wishes of the shareholder – the principles and best practices of the Dutch Corporate Governance Code.
In 2012, the Executive Board continued to work out the details of the company strategy, which was subsequently approved by the Supervisory Board. Gasunie’s strategic goals are the following:
- To optimise the value of its existing infrastructure through operational excellence, improvement of its operational efficiency, and increased use of its existing assets. In 2012, the first measures were taken to increase efficiency, by implementing the Efficiency Masterplan, a programme aimed at achieving both structural and cultural change.
- To identify and follow up on new opportunities for expanding the gas roundabout concept, with a view to enabling Gasunie to maintain its leading position, and to use this position in the converging EU gas market, not least in the interest of maintaining security of supply in the Netherlands.
- To move towards the more sustainable use of energy, and to make gas more sustainable as an energy carrier. Gas will play a key role in the transition to sustainable energy sources and will also continue to play an important role in a sustainable society. Gasunie actively participates in various research projects, with the aim of ensuring that the gas infrastructure that has been so carefully built up will be an integral part of the energy infrastructure of the future.
In addition to pursuing the above strategic goals, the company is continuously managing strategic, operational and commercial risks, while developing further a strategic risk analysis.
To guarantee the correct execution of the above strategy, both collective and individual targets have been set within the applicable remuneration policy. These targets will be used to determine the variable part of salaries.
Health, Safety and Environment
On the basis of the results realised, the Supervisory Board can state that security of supply in 2012 was at a high level, with fewer pipeline incidents occurring than in 2011.
The Executive Board and all Gasunie employees deserve praise for the company’s excellent safety performance in 2012, with fewer incidents being reported than in 2011.
The Supervisory Board expresses its admiration for the Executive Board’s efforts to further improve business performance. Net profit is developing well, despite the fact that it is lower than it could have been, due to the repayment obligation imposed by the NMa. Revenue remains high, while costs have been reduced. The Supervisory Board is very pleased that Gasunie is in a position to pay a considerable dividend to the State for 2012.
In 2012, a number of steps were taken to increase efficiency. In particular, the Efficiency Masterplan was introduced. This is designed to deliver a substantial, structural improvement in the cost structure. Already before the end of the year, the Masterplan had resulted in the desired reduction in costs.
In 2012, the Dutch Industrial Appeals Tribunal CBb rejected the appeals against the NMa’s method decisions, ending a period of regulatory uncertainty for the company. Meanwhile, preparations for the next regulatory period are in progress.
Gasunie’s financial position, as reflected in its credit rating, remains good, indicating that the financial world recognises that Gasunie is a sound company.
The development of the gas infrastructure in the Netherlands is nearly at an end. In the coming decades, the Netherlands will shift from being a gas exporting country to a gas importing and a gas transporting country. Europe – and not its individual countries – will be its field of work in the near future. The company’s European strategy is essential in maintaining and growing the value of Gasunie. It is also fully in line with the desired European integration of gas infrastructure networks. With its cross-border network, Gasunie is in an excellent position to become an important player at European level. The company naturally wishes to use this advantage to make a contribution to the Dutch economy, not only now but also in the longer term. Attracting transit flows optimises the ROI of the Gasunie network, while also underpinning security of supply and the efficient functioning of the market. Gasunie’s current infrastructure in the Netherlands and Germany combined with the company’s participation in the Nord Stream pipeline and the BBL together form a direct east-west connection. Gasunie’s strategy will be an important factor in enabling the Netherlands to remain an important gas country in the future. Other significant steps taken by Gasunie in 2012 include the completion of the second Nord Stream pipeline and the nitrogen buffer at Heiligerlee.
Making energy more sustainable
Gas is playing a prominent role in the transition to making energy supply more sustainable. In fact, it is indispensable in supplementing solar and wind energy. Small-scale LNG is also expected to play an important part in the transition to more sustainable energy. In light of this, in 2012, Gasunie signed a letter of intent with Vopak for the development of an LNG Break Bulk terminal. Small-scale LNG is seen as a future alternative to diesel in road transport and in shipping.
The Supervisory Board warmly endorses the initiatives taken by the Executive Board in the field of corporate social responsibility (CSR). Our CSR activities are reported on annually in a separate report. The Board particularly approves of the steps Gasunie has taken with respect to:
- Making energy supplies more sustainable in the future, through its active participation in research projects relating to green gas and power-to-gas
- Reducing the company’s own footprint, for example by reducing direct emissions and increasing energy efficiency
- Creating awareness among Gasunie employees by including CSR goals in the criteria for variable remuneration.
Inquiry into the takeover of the BEB network
The Dutch Minister of Finance commissioned an independent inquiry into Gasunie’s takeover of the German BEB network in 2007. The inquiry was made due to the impairments that Gasunie had to take in the years following the acquisition, because of the German regulator setting tariffs at a much lower level than had been foreseen at the time of the acquisition. The inquiry’s findings were published in December 2012. Gasunie cooperated fully with this inquiry and supports its recommendations. Indeed, a large number of them had already been implemented based on the company’s own evaluation.
The Supervisory Board expresses its deep regret that the impairments on the German network turned out to be necessary. Nonetheless, the Supervisory Board considers the BEB network to be of great strategic value, particularly because it contributes to greater liquidity and the more efficient functioning of the market, factors that also benefit consumers in the Netherlands. Moreover, investments in infrastructure are necessarily long-term, with the profits only materialising over the course of time.
To facilitate an open discussion about the inquiry’s findings, three members of the Supervisory Board, in consultation with the shareholder and the Executive Board, have offered to resign from the Supervisory Board.
The annual accounts for 2012 were drawn up by the Executive Board and audited by the external auditors, Ernst & Young Accountants LLP. The auditors’ opinion compiled by Ernst & Young Accountants LLP is included after Other information.
The Supervisory Board has accepted these accounts and recommends that the General Meeting of Shareholders adopt the 2012 annual accounts. It also recommends that the General Meeting of Shareholders adopt the profit appropriation for 2012 proposed by the Executive Board.
Finally, the Supervisory Board recommends that the General Meeting of Shareholders discharge the members of the Executive Board from liability for the policy implemented and the Supervisory Board for the supervision exercised.
Composition of the Supervisory Board and posts held
On 1 May 2012, Mr C. Griffioen stepped down as a member of the Supervisory Board. Mr R. de Jong was appointed by the shareholder to the Board with effect from 16 May 2012.
The Supervisory Board has three advisory committees: the Audit Committee, the Remuneration, Selection & Appointments (RSA) Committee and the Strategic Investments Committee. Each committee consists of three or four members of the Supervisory Boards. A summary of the principal employment and other commitments of the members of the Supervisory Board is given at the end of this annual report. The date of the Meeting of Shareholders at which the annual accounts of the previous financial year were adopted is taken as the date of retirement or reappointment. The current composition of the Supervisory Board is not in agreement with the balanced composition as mentioned in the Management and Supervision Act (Art. 2:166 of the Dutch Civil Code). When new members need to be appointed, attention will be paid to strictly complying with this provision. The profile of the position has been adjusted accordingly.
In the judgement of the Supervisory Board, Gasunie has complied with best-practice provision III.2.1 of the Dutch Corporate Governance Code, which determines that all Supervisory Board members, with the exception of a maximum of one person, must be independent in the sense of best-practice provision III.2.2. Gasunie has also complied with best-practice provision III.6.3, which determines that transactions with conflicts of interest must be published in the Annual Report, mentioning the conflicting interest. For the sake of completeness, we note that no transactions with conflict of interest took place in 2012.
|Name||Date of first appointment||End of 4-year term||Date of reappointment(s)|
|G.J. van Luijk (1943)||1 Sept. 2005||2015||2007/2011|
|H.L.J. Noy (1951)||1 July 2005||2016||2008/2012|
|A. Lont (1958)||1 Sept. 2005||2013||2009|
|J.P.H.J. Vermeire (1944)||1 Oct. 2007||2014||2010|
|M.J. Poots-Bijl (1969) *||1 Sept. 2011||2013|
|R. de Jong (1948) **||16 May 2012||2014|
|*||Ms M.J. Poots-Bijl replaces Mr M.H. van der Woude in accordance with the original retirement schedule.|
|**||Mr R. de Jong replaces Mr C. Griffioen in accordance with the original retirement schedule.|
NB: The order of retirement given in the schedule is based on the members’ dates of birth. Account is taken of the principles and best practices for the Supervisory Board, Article 3.3 (e): “None of its members may be appointed after the third period of office of four years, or after the twelfth year in office”.
Activities of the Supervisory Board
In addition to meetings of the committees mentioned below, the Supervisory Board met seven times in 2012. At these meetings, the Board consulted closely with the Executive Board not only on the matters mentioned above but also on Gasunie’s strategic focus and its possible consequences for financial and corporate policy. The Board accepted the recommendations of its Remuneration, Selection & Appointments Committee regarding the variable remuneration and the targets for 2012 for the members of the Executive Board. In addition, the Board looked into the matter of strategic alliances, and various infrastructure projects, such as the multi-year replacement programme. The Board’s own functioning was evaluated in 2012.
The Audit Committee met three times in 2012, discussing amongst other things the 2012 quarterly reports, the 2012 semi-annual report, the auditor’s statement to the 2012 semi-annual accounts, the 2011 annual report and annual accounts, the 2013-2015 business plan, the 2013 funding plan, the audit results, the audit plan for 2013 and beyond, the appointment of the next auditor, the pension update, the 2011 Document of Representation and the 2012 strategic risk analysis.
At the meetings of the Supervisory Board, the chairman of the Audit Committee accounted for the supervisory measures implemented by the Audit Committee with regard to the company’s financial activities. The audit plan, management letter and auditor’s statement to the annual accounts were discussed with the auditor.
Remuneration, Selection & Appointments Committee
The Remuneration, Selection & Appointments Committee met three times in 2012. The topics discussed by the Committee included the remuneration policy, the status of the pension plans, the employment contracts, the realisation of the targets for 2011, and determination of the targets of the members of the Executive Board for 2012. The Committee expressed its opinion on the composition of the Supervisory Board (including the appointment of a new member, in consultation with the Works Council), and also on succession planning regarding the Executive Board.
In 2012, Mr H.A.T. Chin Sue stood down as a member of the Executive Board, and Mr R. Oudejans was appointed as a member of the Executive Board.
Strategic Investments Committee
The Strategic Investments Committee met five times in 2012. The main task of this Committee is to facilitate an efficient corporate process for approving major investments. The Committee advises the full Supervisory Board on major investment proposals. The Committee expresses an opinion on the economic feasibility of the investment proposals and tests the proposals against strategic policy. The Committee discussed matters such as developments in the field of small-scale LNG, the 2017 GTS Open Season and the various infrastructural and strategic projects in progress.
|Name||Supervisory Board||Audit Committee||Remuneration, Selection & Appointments Committee||Strategic Investments Committee|
|C. Griffioen RA1||Vice-chairman1||Chairman1||Member1|
|R. de Jong||Member2||Member3|
|G.J. van Luijk||Chairman||Chairman||Member|
|1||resigned as of 1 May 2012|
|2||from 16 May 2012|
|3||from 1 July 2012|
|4||from 1 July 2012|
|5||until 1 July 2012|
|6||from 1 July 2012|
|7||from 1 May 2012|
Remuneration policy for the Executive Board
The remuneration policy for the individual members of the Executive Board is described elsewhere in this Annual Report.
Meetings with the Works Council
A representative of the Supervisory Board attended consultations between the Executive Board and the Works Council on two occasions in 2012.
The Supervisory Board wishes to express its appreciation of the results achieved in 2012, and thanks the Executive Board, the rest of the management and all employees for their dedication and hard work. The Board wishes them every success in meeting the goals for 2013.
On behalf of the Supervisory Board of
N.V. Nederlandse Gasunie,
G.J. van Luijk, Chairman