The PGNiG stock delivers stable, long-term growth, attributable to the increasing Company value, which translates into a higher share price and dividend distributions. Since 2005, PGNiG has been a pillar of the Polish stock market.
From the day PGNiG shares were first listed on the Warsaw Stock Exchange (September 23rd 2005), they have been among the most recognisable and credible listed securities. They have been included in the WIG20 index since 2005 and are an important component − from the perspective of the Polish market − of regional developing market indices such as MSCI and FTSE, as well as RESPECT, the only social responsibility index on the Warsaw Stock Exchange. PGNiG has been included in the RESPECT Index since its inception, with its CSR policies recognised again in 2015, in the ninth edition of the Index. Since June 1st 2015, PGNiG has been a part of the MSCI Global Sustainability Index, listing companies with a strong focus on sustainable development.
Relative to the 2014 closing price, the PGNiG shares moved within the range from -6% to +56%, while WIG20 fluctuated between -24% and +10%.
Key reasons of this volatile performance included:
Throughout the year, the price of PGNiG shares ranged from PLN 4.20 to PLN 6.95. Strong volatility was seen at the beginning of the year, when the price per oil barrel on the New York Stock Exchange slid below USD 50, to its lowest since April 2009. On January 16th 2015, the Company stock hit the year’s low of PLN 4.20 to later rebound on a trend supported by its 2014 financial results, much better than analyst expectations, released on March 5th 2015. A 47% yoy improvement in net profit was driven by a higher margin on high-methane gas sales and strong operating performance of the Distribution segment. Investors also welcomed the PGNiG Annual General Meeting’s decision of April 16th 2015 on payment of record-high dividends of PLN 1.18bn (PLN 0.20/share).
On May 6th 2015, the price of PGNiG shares was PLN 6.59, hitting a new high from the former peak of PLN 6.55 in August 2013. The share price remained stable after the Q1 2015 results were released on May 8th 2015, showing a 7% EBITDA growth year on year. The robust operating performance in the quarter was supported by a lower unit cost of gas. The 11% drop in crude oil prices in USD was accompanied by a 22% hike in the USD/PLN exchange rate quarter-on-quarter. Further, on May 13th 2015 the Company released a notice of calling Gazprom to arbitration, thereby opening an arbitration procedure provided for under the Yamal Contract regarding the pricing terms of the long-term gas supply contract of September 25th 1996. Investors were able to price in the agreement with Gazprom anticipating a one-off compensation similar to the one received in 2013, and continued buying PGNiG shares. As regards macroeconomic factors boosting performance of the PGNiG stock, we should note the robust performance of emerging market stocks in H1 2015 and the relative weakness of other sectors comprising the WIG20 index on the WSE (banks and the Swiss Franc crisis, energy companies and the coal sector).
On June 22nd 2015, the shares closed at an all-time high of PLN 6.95. At the close of trading on October 6th 2015, PGNiG was the largest company listed on the WSE in terms of market capitalisation.
Until the performance figures for Q3 2015 were published, the Company stock had constantly traded at above PLN 6.00. On November 6th 2015, it dipped by nearly 7%, marking a downward trend which persisted until the end of the year. The fact that PGNiG’s financial performance fell short of expectations was attributable to a decline in gas and oil prices, resulting in a retail tariff cut as well as a reduction in the wholesale tariff announced by the President of the Energy Regulatory Office twice in 2015. Furthermore, to retain customers and sales volumes, the Company launched discount schemes for wholesale customers (in May 2015) and for SMEs (in June 2015), the effects of which were seen in the Q3 2015 performance.
On December 30th 2015 (the last session day in the year), the PGNiG stock price closed at PLN 5.14.
The price was nearly 72.5% above the issue price of 2005 and 35% above the closing price on the first day of listing. Factoring in the dividends of PLN 1.28 per share paid in 2005–2015, the investors who acquired PGNiG shares at the issue price and held them until the end of 2015 saw a profit of 115%.
| Index | Value/price as at Dec 30 2014 | 2015 high | 2015 low | Value/price as at Dec 30 2015 | PGNiG’s weight in the index as at Jan 7 2016 |
|---|---|---|---|---|---|
| WIG | 51 416 points | 57 379 points | 43 887 points | 46 467 points | 3,3% |
| WIG20 | 2 316 points | 2 549 points | 1 755 points | 1 859 points | 5,1% |
| WIG Oil & Gas | 3 381 points | 5 626 points | 3 289 points | 4 468 points | 25,5% |
| Respect Index | 2 674 points | 3 055 points | 2 145 points | 2 269 points | 9,8% |
| PGNiG | PLN 4,45 | PLN 6,95 | PLN 4,20 | PLN 5,14 | - |
Source: gpwinfostrefa.pl
| Rate of return in 2015 | Rate of return from PGNiG’s IPO* to Dec 31 2015 | |
|---|---|---|
| WIG | -9,6% | 39,9% |
| WIG20 | -19,7% | -24,3% |
| WIG Oil & Gas | 32,2% | 25,5%** |
| Respect Index | -15,2% | 126,9%*** |
| PGNiG | 15,5% | 34,9%**** |
Source: WSE.
* Closing price on September 23rd 2005.
** Calculated in relation to the reference value of the index (reference date: December 30th 2005).
*** Calculated in relation to the reference value of the index (reference date: December 31st 2008).
**** Relative to the issue price of PLN 2.98, PGNiG shares yielded a rate of return of 68.5%.
As at December 31st 2015, the share capital of PGNiG stood at PLN 5.9bn, and comprised 5.9 billion shares, with a par value of PLN 1 per share. The shares of all series, that is Series A, A1 and B, were ordinary bearer shares and each share conferred the right to one vote at the General Meeting.
The State Treasury remains PGNiG’s majority shareholder.
On December 2nd 2015, following the Minister of State Treasury’s acquisition of new shares in the increased share capital of Towarzystwo Finansowe Silesia Sp. z o.o., the State Treasury’s interest in the share capital decreased to 70.83% of the share capital and total vote in the Company.
On June 26th 2008, a disposal by the Minister of State Treasury of one PGNiG share in accordance with general rules triggered the eligible employees’ rights to acquire for free a total of up to 750 million PGNiG shares. The start date for executing agreements on acquisition of free Company shares was April 6th 2009 and the rights to acquire free PGNiG shares by eligible employees expired on October 1st 2010. As at December 31st 2015, almost 60,000 eligible employees subscribed for 728,292,000 shares. The free Company shares acquired by eligible employees were locked up until July 1st 2010, while trading in free shares acquired by members of the Company’s Management Board was restricted until July 1st 2011.
| Shareholder | Number of shares/votes attached to the shares as at Dec 31 2015 | Percentage of share capital/total vote at the GM as at Dec 31 2015 |
|---|---|---|
| State Treasury | 4 178 771 608 | 70,8% |
| Other shareholders | 1 721 228 392 | 29,2% |
| including OFE: |
543 721 767 | 9,2% |
| Total | 5 900 000 000 | 100,0% |
| 2015 | |
|---|---|
| ING NN OFE [%] | 225 |
| Aviva OFE [%] | 213 |
| OFE PZU "Złota Jesień" [%] | 139 |
| METLIFE OFE [%] | 074 |
| AXA OFE [%] | 065 |
| ALLIANZ POLSKA OFE [%] | 042 |
| GENERALI OFE [%] | 036 |
| BANKOWY OFE [%] | 035 |
| NORDEA OFE [%] | 033 |
| AEGON OFE [%] | 030 |
| OFE POCZTYLION [%] | 016 |
| PEKAO OFE [%] | 014 |
Apart from the largest shareholder, the State Treasury, over 20% of the shares are held by institutional investors, 60% of whom are Polish investors. As regards the investment style and frequency, PGNiG shares are favoured by investors who believe that the Company will grow faster than the market or its sector, and investors who buy shares to hold them for more than two years.
15% of PGNiG shares are held by foreign investors, chiefly institutional investors from Europe (nearly 50% of them from the UK). Every 25th PGNiG shareholder is a retail investor buying and selling securities through his/her own brokerage account.
| 2015 | |
|---|---|
| Retail investors [%] | 40 |
| State Tresury [%] | 708 |
| Polish institutional investors [%] | 128 |
| Foreign institutional investors [%] | 79 |
| Other shareholders [%] | 45 |
Substantial holdings of PGNiG shares are included in the portfolios of open-end pension funds. As at the end of 2015, these long-term investors held more than 9% of PGNiG’s equity, valued at just under PLN 3bn. Relative to 2014, the number of shares held by open-end pension funds declined by 17%. The sale of PGNiG shares may have been prompted by the PGNiG Group’s financial results for Q3 2015, reported in November, which were below market expectations on account of falling gas and crude oil prices. Moreover, negative analyst recommendations prevailed throughout the period (13 out of 19 recommendations were to ‘Sell’) .
The funds holding the largest equity interests in PGNiG were those which manage the largest portfolios of future pensions, that is ING, Aviva and PZU Złota Jesień. The share of open-end pension funds in the PGNiG shareholder base rose significantly from the IPO in 2005, when it accounted for 3.5% of the share capital (valued at PLN 711m). Pension funds are typically long-term investors whose equity portfolios are characterised by low turnover, especially with respect to large dividend-paying companies, such as PGNiG. They have a stabilising effect on the Company’s shareholding structure, while limiting its free float, which can translate into lower trading volumes. The average daily value of trading in PGNiG shares in 2015 was PLN 28m, which is a solid result considering the low free float.
Investor relations is an area of business activity constantly gaining in importance, reflecting the rapid growth of the Polish capital market evidenced by the growing NAV of investment funds and the rising number of publicly-traded companies, now close to 490. There are almost 1.5m investment accounts registered in Poland, including a dynamic group of retail investors who invest their capital through the Warsaw Stock Exchange. The importance of investor relations also follows from increasing legal and regulatory requirements, imposed by such bodies as the Polish Financial Supervision Authority and resulting from the transposition of EU law into the Polish legal framework.
Since early 2015, work has been under way to enhance PGNiG’s website. The Investor Relations section, revamped in 2014, contains all current and periodic reports, information on dividend payments and shareholding structure, current prices of PGNiG shares, and broker recommendations, as well as guidance reports compared with actual earnings, and selected financials, including quarterly financial and operating data since 2010. The website also features PGNiG’s updated investor presentations, with a brief and accessible summary of the PGNiG Group’s equity story, as well as the telephone and email contact details of the PGNiG Investor Relations Department. In 2015, the Investors Relations section was visited over 180,000 times.
PGNiG was among the finalists of the 8th edition of the Issuer’s Golden Website (Złota Strona Emitenta) competition. The quality of the website was attested to by the highest marks received in ‘technological’ criteria: intuitiveness, ergonomics, navigability and appropriate use of technologies.
In 2014, representatives of the Company held close to 130 meetings with investors and stock analysts. We also continued our involvement in the ‘Shareholder Democracy’ (Akcjonariat Obywatelski) project, initiated in 2012. PGNiG is taking active part in its 2015/2016 edition by attending meetings with retail investors, preparing educational materials on the Polish gas market for investors and providing financial support for the project.
