We suggested to the company, who according to its business plan has been holding cash to prepare for M&A activity that has yet to materialized, that it would be better to return this cash to shareholders. SNAM requested the company to disclose cash levels required for ordinary business operations.
The company explained there were “special circumstances” associated with the industry it operates in and did not provide SNAM with a satisfactory answer. The company did agree to feedback details of the dialogue to top management and that SNAM’s suggestion may be partially reflected in their new FY2019 business plan.
While we consider it a success that SNAM was able to demonstrate to the company that we do not tolerate low dividends and high shareholders equity ratios, the company did not express willingness to change and therefore we will continue our dialogue going forward.