Societatea Energetica Electrica S.a. · BVB:EL

Societatea Energetica Electrica — Electrica — Q1 2020 Earnings Presentation

45 slides from Societatea Energetica Electrica's earnings presentation, May 15, 2020

  1. Slide 1: Presentation of Q1 2020 financial results

    Presentation of Q1 2020 financial results Bucharest, 15 May 2020

  2. Slide 2: Content

    Content 1 Q1 2020 Financial results  Key Group Information  Distribution Segment Overview  Supply Segment Overview 2 Main Corporate Events 3 COVID-19 impact on Group’s activities 4 Appendices 2

  3. Slide 3: Summary Consolidated Financials

    Summary Consolidated Financials Key Group Information Revenues EBITDA Growth and Margin Performance (RON mn) EBITDA (RON mn) and EBITDA Margin (%) 6,280 5,613 518 13.51% 12.13% 11.44% 378 4.69% 5,762 5,235 1,584 1,658 681 718 139 149 1,445 1,508 74 224 2018 3M 2019 2019 3M 2020 2018 3M 2019 2019 3M

  4. Slide 4: Consolidated EBITDA and net result evolution

    Consolidated EBITDA and net result evolution Key Group Information EBITDA (RON mn) Comments The consolidated EBITDA variation Q1 2020 vs. Q1 2019 is RON +150 mn, being mostly the net effect of:  The positive variation of the energy margin RON +178 mn, thereof: • RON +19 mn from the distribution seg

  5. Slide 5: Distribution highlights

    Distribution highlights Distribution segment overview Key figures 3M 2020 Financial results EBITDA for the distribution segment increased by RON 6 mn (+6.2%), mainly due to the evolution of: ▲ revenues: RON +21 mn (+3.2%), mainly the net effect of the distributed electricity revenues increase by ~3.

  6. Slide 6: SDTN

    SDTN Distribution segment overview Key figures 3M 2020 Financial results EBITDA is higher by RON 5.5 mn (+13.4%), mainly due to: ~1.30 mn ▲ distributed electricity revenues: +RON 11.5 mn (+7.5%), due to higher total quantity of Cluj Napoca users distributed electricity (+0.5%), and to the positive e

  7. Slide 7: SDTN (Cont’d)

    SDTN (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 12.62% 12.14% 194 622 613 9.86% 9.86% 9.94%* 9.94%* 9.56% 9.88% 166 74 218 67 206 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2018 3M 2019 2019 3M 2020 2018 3M 2019 2019 3M 20

  8. Slide 8: SDTS

    SDTS Distribution segment overview Key figures 3M 2020 Financial results EBITDA is higher by RON 8 mn (+27.2%), mainly due to: ▲ distributed electricity revenues: +RON 4.4 mn (+2.7%), mainly from the increase in the ~1.19 million quantity of electricity distributed on LV (+0.6%) and HV (+0.2%) and t

  9. Slide 9: SDTS (Cont’d)

    SDTS (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 761 223 703 11.67% 11.98% 200 10.17% 10.08% 9.40%* 9.40%* 9.61% 9.18% 77 76 234 232 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2018 3M 2019 2019 3M 2020 2018 3M 2019 2019 3M

  10. Slide 10: SDMN

    SDMN Distribution segment overview Key figures 3M 2020 Financial results EBITDA decrease of RON 2.4 mn, or 12.2% compared to 3M 2019, mainly due to: ▲ distributed electricity revenues: +RON 10.5 mn (+6.9%), mainly due to the positive evolution of distribution tariffs, effect partially offset by the

  11. Slide 11: SDMN (Cont’d)

    SDMN (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 249 14.01% 13.76% 240 880 802 11.71% 10.92%* 10.92%* 10.91% 10.63% 9.16% 85 89 273 264 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2018 3M 2019 2019 3M 2020 2018 3M 2019 2019

  12. Slide 12: Electrica Serv

    Electrica Serv Distribution segment overview Revenues (RON mn) General overview 183 Electrica Serv, a wholly-owned subsidiary of ELSA, provides repair and other energy ancillary services to third parties and various services to the companies within the group 161 (vehicles rental, building rental etc

  13. Slide 13: Supply market

    Supply market Supply segment overview Overall Market Share – 2 months 2020 Key Facts Electrica Furnizare, 20.03% The supply market consists of regulated and competitive segments: • The regulated segment comprises 5 bound suppliers of last resort (SoLR), integrated Others (<4% each), within the same

  14. Slide 14: Supply segment

    Supply segment Supply segment overview Coverage Key figures (3M 2020) Financial results EBITDA significantly increased by RON 150 mn compared to 3M 2019, as a result of the following factors. ~3.56 mn ▼ electricity acquisition costs lower than at 3M 2019 by approx. RON 100 Electrica Furnizare consum

  15. Slide 15: Supply - key aspects

    Supply- key aspects Supply segment overview Volume of Electricity Supplied on Retail Market Number of consumption places (‘000’s) (TWh) Regulated Competitive Regulated Competitive 9.3 8.5 3,541 3,540 3,553 3,561 4.4 253 258 269 276 3.6 2.4 2.5 3,288 3,282 3,284 3,285 4.9 4.9 1.1 1.2 1.3 1.3 2018 3M

  16. Slide 16: Background and basis of preparation for the financials

    Background and basis of preparation for the financials  Historical consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union (IFRS-EU). Background  The presentation and functional currency is Romanian Leu (

  17. Slide 17: Dividend distribution

    Dividend distribution Dividends Distributed gross dividends (FY 2014 - 2019) (RON mn) Gross dividend per share (RON) and Dividend yield(1) (%) 291.6 6.9% 7.1% 7.3% 244.7 251.4 245.4 247.5 246.1 6.8% 5.2% 6.1% 0.8600 0.7217 0.7415 0.7237 0.7300 0.7248 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017

  18. Slide 18: Main events in T1 2020 and up to date

    Main events in T1 2020 and up to date Main Corporate Events ELSA’s General Meetings of Shareholders:  OGMS dated 29 April 2020 – within the OGMS, the shareholders approved the following: • The individual and consolidated financial statements for 2019; • The individual and consolidated budget for 20

  19. Slide 19: Legislative measures in COVID-19 context

    COVID-19 impact on Group activities Legislative measures in COVID-19 context 16 March 21 March 23 March 29 March 27 April 14 May State of emergency and several measures imposed, also with impact on the supply segment Capping the prices of electricity and natural gas at the level practiced on 29 Marc

  20. Slide 20: Measures adopted by Electrica Group in COVID-19 context

    COVID-19 impact on Group’s activities Measures adopted by Electrica Group in COVID-19 context 1 2 3 4 5 Business continuity Our employees’ safety We permanently analyze We recommend our We support the and our customers’ remains our priorities Electrica Group’s clients to use electronic remarkable ef

  21. Slide 21: Measures to resume the activity at Group level in COVID-19 context

    COVID-19 impact on Group’s activities Measures to resume the activity at Group level in COVID-19 context, in accordance with legal provisions At Group level At distribution operators level At supply activity level  introducing and imposing specific hygiene  maintaining the measures of the  resumi

  22. Slide 22: Hypotheses of the impact of COVID-19 on distribution companies (1/2)

    COVID-19 impact on Group’s activities Hypotheses of the impact of the COVID 19 pandemic on distribution companies (1/2) Evolution of the cost of electricity needed to cover NL  In Q1 2020, the cost of electricity needed to cover NL was by RON 10 mn higher than in Q1 2019, but by RON 7.6 mn below th

  23. Slide 23: Hypotheses of the impact of COVID-19 on distribution companies (2/2)

    COVID-19 impact on Group’s activities Hypotheses of the impact of the COVID-19 pandemic on distribution companies (2/2) Distributed electricity [TWh] The evolution of the quantity of electricity distributed 18.1  In Q1 2020, the amount of electricity distributed was 4.5 TWh, decreasing by 1% 2.5 co

  24. Slide 24: Hypotheses of the impact of COVID-19 on supply company (1/2)

    COVID-19 impact on Group’s activities Hypotheses of the impact of the COVID 19 pandemic on supply company (1/2)  The COVID 19 pandemic influenced the consumption trend at European and local level; without being able to make a credible estimate at the moment on the impact of the amount of electricit

  25. Slide 25: Hypotheses of the impact of COVID-19 on supply company: receivables analysis

    COVID-19 impact on Group’s activities Hypotheses of the impact of the COVID 19 pandemic on supply company (1/2) Receivables analysis  Regarding the postponement of the payment of electricity and natural gas bills, GEO no. 29/2020 for SMEs remains applicable. Based on this, until 30 April 2020, stat

  26. Slide 26: Group liquidity

    COVID-19 impact on Group’s activities Group liquidity  At Group level, the total liquidity available in the form of cash and overdraft limits Total liquidity (RON mn) available as of 31 March 2020 was RON 1,174 mn. Without considering the overdraft line of RON 210 million contracted in January rela

  27. Slide 27: Appendices

    Appendices Curectrica 27

  28. Slide 28: Group structure

    Group structure Electrica Group is the only Romanian group listed on the BSE & LSE and operates within distribution, supply & energy service segments Electrica Furnizare S.A. 99.99 %3) 99.99 %3) SDEE1) Transilvania Nord Electricity and natural gas Distribution Operator supply company HQ: Cluj-Napoca

  29. Slide 29: Important Regulatory Changes – Distribution Activity

    Important Regulatory Changes – Distribution Activity  RP4 Regulations on Distribution tariffs • ANRE approved Order no. 75/6 May 2020, which established a regulated rate of return (RRR) for electricity and gas, distribution and transmission services of 6.39% for the existing RAB, until the end of R

  30. Slide 30: Changes in Distribution Regulation - RP4

    Changes in Distribution Regulation - RP4 Regulated Revenue and tariff calculation 1 2 3 4 5 6 7 8 7 Regulated Revenue Reactive en. Regulated Contr. Non- Tariff NL Cost Depreciation RRR2 & 95% profit Revenue OPEX1 controllable other activ. 9 Forecasted Volume OPEX 1  The starting point is approved b

  31. Slide 31: Changes in Distribution Regulation

    Changes in Distribution Regulation Methodology for determining distribution tariffs - Summary RP4 vs RP3 RP3 RP4 1 RRR January 2019: 5,66% existing RAB & 1% incentive RP4 network invest.(acc. ANRE) Return RRR (7.7%) applied to RAB. 29 March 2019–30 April 2020: 6,9% total BAR (acc. GEO 19/2019 & GEO

  32. Slide 32: Methodology for determining distribution tariffs – Comparative elements RP4 vs RP3

    Changes in Distribution Regulation Methodology for determining distribution tariffs – Comparative elements RP4 vs RP3 RAB & Investment RP3 methodology RP4 methodology 1. RAB includes: assets used for the distribution service, which are 1. RRR includes: Assets used for the distribution service record

  33. Slide 33: Methodology for determining distribution tariffs – Comparative elements RP4 vs RP3

    Changes in Distribution Regulation Methodology for determining distribution tariffs – Comparative elements RP4 vs RP3 Opex & NL RP3 methodology RP4 methodology Controlable OPEX 1. OpexC 2019 is established based on formulae 1. OpexC 2019 is not established based on formulae, but by comparative analy

  34. Slide 34: Important Regulatory Changes – Supply Activity - 1

    Important Regulatory Changes – Supply Activity - 1 GEO no. 1/2020 regarding some fiscal-budgetary measures and for the amendment and completion of some normative acts (including GEO no. 114/2018):  Until 31 December 2020, for household consumers the electricity supply is carried out under condition

  35. Slide 35: Important Regulatory Changes – Supply Activity - 2

    Important Regulatory Changes – Supply Activity - 2 ANRE Order no. 1/2020 regarding the approval of tariffs and monetary contributions perceived by the National Energy Regulatory Authority in 2020  The responsibility for establishing the values of the contributions due to ANRE returned to ANRE; for

  36. Slide 36: Leading Player in Distribution and Supply according to ANRE’s most recent annual report

    Leading Player in Distribution and Supply according to ANRE’s most recent annual report Distribution Supply Volumes Distributed in 2018 Volumes Supplied in 2018 Electrica Furnizare 13.2% 17.1% SDMN Others SDTS 14.0% SDTN 44.8 TWh 50 TWh Others 60.6% 12.2% 82.9% Electrica: 39.4% Regulated Market Sale

  37. Slide 37: Corporate Governance Bodies

    Corporate Governance Bodies  Mr. Valentin Radu – Chair  Mr. Dragos Andrei Board of Directors  Mr. Iulian Cristian Bosoanca Current  Mr. Radu Florescu Composition  Mr. Bogdan George Iliescu  Mr. Gicu Iorga  Ms. Ramona Ungur  All board members are non-executive, elected in accordance with the

  38. Slide 38: Shareholder Structure at 31 March 2020

    Shareholder Structure at 31 March 2020 Percent of Percent of Shares with Shareholder Shares shares with share capital voting right voting right Romanian State through the Ministry for Economy, Energy and Business 169,046,299 48.7948% 169,046,299 49.7850% Environment EBRD 17,355,272 5.0096% 17,355,27

  39. Slide 39: Monthly volume and average price of Electrica’s shares and GDRs

    Monthly volume and average price of Electrica’s shares and GDRs 10,000,000 12.00 9,000,000 11.50 8,000,000 11.00 7,000,000 10.50 6,000,000 10.00 5,000,000 9.50 4,000,000 9.00 3,000,000 8.50 2,000,000 8.00 1,000,000 7.50 - 7.00 BSE - Shares - Monthly volume LSE - GDRs - Monthly volume BSE - Shares -

  40. Slide 40: Comparative evolution with BSE indices (January 2020 – 8 May 2020)

    Comparative evolution with BSE indices (January 2020 – 8 May 2020) % 110.00 105.00 100.00 95.00 90.00 85.00 80.00 75.00 70.00 65.00 EL (BSE) Performance BET Performance BET-FI Performance BET-NG Performance BET-XT Performance ELSA (LSE) Performance Source: Company data, BSE 40

  41. Slide 41: Electrica closing price vs BET-TR (January 2020 – 8 May 2020)

    Electrica closing price vs BET-TR (January 2020 – 8 May 2020) 10.00 5.00 0.00 -5.00 -10.00 -15.00 EL: -4.7% BET-TR: -16.0% -20.00 -25.00 -30.00 BET-TR Electrica adjusted price with dividends Source: Company data; BSE 41

  42. Slide 42: Glossary

    Glossary ANRE Romanian Energy Regulatory Authority LV Low Voltage BoD Board of Directors MV Medium Voltage BSE Bucharest Stock Exchange MWh MegaWatt hour CAPEX Capital Expenditure NBV Net Book Value NL Network Losses DAM Day Ahead Market OGMS Ordinary General Meeting of Shareholders DSO Distribution

  43. Slide 43: 2020 Financial Calendar

    2020 Financial Calendar  28 February Publication of the 2019 annual consolidated and individual preliminary results  10 March Investor and analyst teleconference for 2019 consolidated financial results  29 April General Meeting of Shareholders for the approval of the 2019 annual financial results

  44. Slide 44: Investor Relations & Disclaimer

    Investor Relations & Disclaimer • Email: ir@electrica.ro • Web: https://www.electrica.ro/en/investors/ Investor Relations • Tel: +40 (0)21.208.50.35 • Address: 9 Grigore Alexandrescu Str., 1st District, Bucharest, 010621 This document was prepared by Electrica for the presentation of Q1 financial re

  45. Slide 45: Q&A

    Q&A 45

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