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Antonio Brufau: 2010 Overview

2010 has been a good year for Repsol. We have continued to apply our strategic plan and we have achieved very positive results in all Business Lines.

Together with these strategic accomplishments, the profit and loss account has shown a net profit of €4.693 billion. Obviously this figure also includes the extraordinary results of certain corporate transactions, mainly the one concluded in Brazil with our partners at Sinopec.

If we remove the impact of the extraordinary results, our typical profit, i.e. that which comes from recurring operations, increased by 55% in relation to 2009 to reach €2.36 billion. This figure is very significant, even more so when we consider the difficult climate experienced during 2010. 

You will therefore allow me to tell you that during this difficult year I believe that the company passed its test with flying colours, that it rose to its challenges and achieved results that I would consider extremely positive.

The transaction concluded in Brazil with our partner Sinopec showed that our activity in Brazil, which until that time had represented an investment of $1.2 billion, was valued by our partners to the order of $10.7 billion. You can therefore see the difference between the value recognised by a third party and the effort made by the company, of $10.7 billion as opposed to $1.2 billion.

As well as this corporate transaction in Brazil which, I reiterate, reflects the enhanced value of all our efforts, we have continued to work very hard in the Gulf of Mexico, Venezuela, Bolivia, Peru and Algeria. This is to say, in all areas where there are ongoing projects that will enable us to consolidate the future growth of our company.

In addition to these big discoveries, we are developing new areas that I am convinced will also lead to exploratory successes in the future, in such notable places as Indonesia, Angola, Oman and even Alaska.

Along with these Upstream projects, we also have liquefied natural gas projects. Last year we had the honour of opening the Pampa Melchorita plant in Peru. This industrial project, undoubtedly the biggest in Peru's history, allows our company to provide a highly efficient liquefied gas to the Pacific and to areas where liquefied natural gas is basically needed and in high demand.

In 2009 we opened Canaport, a regasification plant on the border between the United States and Canada. At the same time, our assets in Trinidad and Tobago and our position in Spain through Gas Natural allow us to be a significant player in the liquefied natural gas market.

I would also like to highlight two big projects, in the Downstream area, in which I feel enormously proud of the efforts our people are putting in. This is especially true of the Cartagena refinery, which as you may be aware is going to double its refining capacity from 110,000 to 220,000 barrels per day. Not only will Cartagena double its refining capacity, but it will also become the best refinery in the entire European refining system.

Furthermore, at Petronor we are building the Coker unit that will basically allow us to add an enormous amount of value to the whole refining system.

These two investments together stand at €4.2 billion and are therefore enormously important investments. Cartagena on its own is the largest industrial investment ever made in Spain and will enable our company to continue as an industry leader and basically be held in high esteem around the world, since Repsol is always going to be a leader in refinery, marketing, lubricants, direct sales, etc.

We also have very good news on YPF's performance in Argentina. As you will know, YPF is our major investment in Latin America, in a country that is growing at a very fast rate, with growth of between 7% and 8%. It has also been growing in a sustained manner, and it is very obvious that the economy, the institutions, the organisation and the country itself are making great strides that will allow our company to be positioned in one of the best areas of the emerging region that is Latin America.

I wouldn't want to forget to mention Gas Natural Fenosa, a company in which we hold more than 30% of the capital. We feel enormously comfortable and at ease in this situation. Gas Natural for its part is providing our company with a good business line and a strong profit and loss account.

Obviously when talking about power companies and global energy companies, I also want to make particular reference to our new energies division. We have created a division specifically for the advancement of new business lines that take into account the basic premises of new-energy sustainability and CO2 emissions in order to enhance the value of all the activities that our company is carrying out, including on the income statement.

These are essentially the main milestones that have marked the course of 2010. 
It is clear that the management of the portfolio, the deal with our partners at Sinopec and the partial divestment of assets that we did not consider to be strategic, have afforded us an excellent financial situation. I can therefore say that, for the first time in a great many years, our debt is currently no greater than €1.7 billion. Consider that the capital employed in our company is almost €40 billion.

I believe that this is of enormous importance when interpreting what the future of our company is going to be like. We have an enormous number of opportunities, our operations are going to generate enough cash flow to finance these opportunities, and at the same time we have a tremendously solid financial structure. 

We have performed better than the rest of the sector, which is how we have to view ourselves. At the same time, we have also had a better stock-market performance than the companies on the IBEX 35.

Together with our strong performance in generating market value for our shares, our shareholders are also going to enjoy a dividend of €1.05, approved by the Board of Directors at the last board meeting. This puts us in the position of being able to allocate the dividend that the company was able to pay out two years ago. This represents a notable increase in relation to what we did the previous year and what we paid out the previous year.

I wouldn't like to finish without emphasising a subject which is very important to me. I have told you that this is a stable and responsible firm, which must look to ensure the security of energy supply to the countries where we are working, and which must, at the same time, be responsible when it comes to all members of our society. We are a part of this society, and society must be afforded an equal footing in Repsol.

Our objective is therefore to integrate people with different abilities, just as we all have, and to provide equal opportunities to all. For me, this is one of the basic premises of this company, a company that aspires to enshrine social responsibility and sustainability as a fundamental premise, before it begins to earn money.

I therefore feel very proud of all the acknowledgements and recognition that Repsol has had over the course of the year. For example, we have been recognised by the Telefónica Awards as the best large private company in Spain in every aspect with regard to working with differently-abled people and incorporating them into our personnel.

In addition, we have been internationally recognised in the various sustainability, management transparency and social action indexes, for example the Dow Jones Sustainability Indexes (both World and European), as one of the best companies in the areas of transparency, environmental management and social action.

I therefore like to start with the profit and loss account and finish with these reflections, because finishing with these reflections means that, in the end, what is most important is that Repsol is an efficient company, a profitable company, a company that thinks in the long term, but at the same time is also a company that is socially acceptable. And I sincerely believe that our efforts are yielding results, and that through the coming together of all our people, we will achieve a better society.

All of this would not be possible were it not for the help of our people. I would like to thank you all for this, and to encourage you to continue supporting us, just as you did in good times in 2010, just as you did in more difficult times in 2009, in what I hope will be better times in 2011 and the years to come.

Thank you very much.

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