Societatea Energetica Electrica S.a. · BVB:EL
Societatea Energetica Electrica — Frontier Investor Days 2022
58 slides from Societatea Energetica Electrica's conference presentation, Sep 15, 2022
Slide 1: Electrica Group Presentation
Electrica Group Presentation Frontier Investor Days 2022 15-16 September 2022
Slide 2: Content
Content 1 Electrica Group’s overview 2 Group’s Financial Results 3 Group’s Budget for 2022 4 Main Corporate Events 5 Group Strategy implementation 6 Shareholdings’ structure and evolution of the shares & GDRs 7 Appendices 2
Slide 3: Electrica Group overview
Electrica Group overview Curectrica
Slide 4: Electrica is the most important national distribution operator and electricity supplier
Electrica Group overview Electrica is the most important national distribution operator and the electricity supplier with the largest client base Geographical presence Electricity supply (6M 2022) ~3.52 millions % 16.89% 4.9 TWh places of consumption total market share energy supplied (May 2022) on
Slide 5: Group structure
Group structure Electrica Group overview Electrica Group is the only Romanian group listed on the BSE & LSE and operates within production distribution, supply & energy service segments Distributie Energie Electrica 99.99% 2) 99.99%2) Electrica Furnizare S.A. Romania S.A. Electricity and natural gas
Slide 6: Electrica showcases remarkable performance following its 2014 dual listing
Electrica Group overview Electrica showcases remarkable performance following its 2014 dual listing Electrica is the only listed Romanian company active in both electricity distribution and supply in Romania. Its dual listing in July 2014 on both the Bucharest and London Stock Exchange was the most
Slide 7: Corporate Governance Bodies - Non-Executive Management
Electrica Group overview Corporate Governance Bodies - Non-Executive Management Board of Directors - Current Composition Mr. Cristian Bosoanca Chair Mr. Gicu Iorga Mr. Adrian Lotrean Mr. Cosmin Petrescu Mr. Dragos Neacsu Mr. Radu Florescu Mr. George Cristodorescu 7
Slide 8: Corporate Governance Bodies – Executive Management
Electrica Group overview Corporate Governance Bodies – Executive Management Executive Management Mr. Alexandru-Aurelian Mr. Stefan Frangulea Chirita Chief Financial Officer Chief Executive Officer 2017 2018 2017 2018 Ms. Livioara Sujdea Mr. Mircea-Toma Modran Chief Distribution Officer Chief IT&C Of
Slide 9: Electrica is Leading Player in Distribution and Supply
Electrica is Leading Player in Distribution and Supply Electrica Group overview Distribution Supply Volumes Distributed in 2021 Volumes Supplied in 2021 Volumes Supplied in Jan-May 2022 13.2% DEER_MN 18.42% 16.89% DEER_TS Electrica Furnizare 12.7% DEER_TN Others 46.3 TWh 50.99 TWh 20.19 TWh Altii 60
Slide 10: Electrica is the largest supplier by number of customers
Electrica Group overview On the overall supply market, Electrica is the largest supplier, by number of customers Overall Market Share – May 2022 The supply market comprises the competitive segment, universal service (US) as well as the Electrica supplier of last resort (SoLR) segment. Before 1 Janua
Slide 11: Group's financial results
2 Group’s financial results (at H1 2022) 11
Slide 12: Summary Consolidated Financials
Summary Consolidated Financials Group’s financial results Revenues EBITDA Growth and Margin Performance (RON mn.) EBITDA (RON mn.) and EBITDA Margin (%) 7,179 1,200 15% 16% 6,501 582 14% 11% 1,000 557 12% 800 10% 3,833 8% 600 294 953 6% 2,648 6,597 400 2% 5,944 4% 288 2% 357 200 3,538 101 -2% 0% 2,3
Slide 13: Consolidated EBITDA and net result evolution
Consolidated EBITDA and net result evolution Group’s financial results Comments Consolidated EBITDA variation H1 2022 vs. H1 2021 is RON -256 mn., being mainly the cumulative effect EBITDA (RON mn.) of the following factors: ❑ The negative variation of the energy margin RON -233 mn., out of which: •
Slide 14: Distribution segment - highlights
Distribution segment - highlights Group’s financial results Financial results Key figures H1 2022 EBITDA decreased by RON 532 mn., mainly as a result of the evolution of the indicators below: ▼ decrease in energy margin by RON -534 mn., as a net effect of: - ▲ increase in energy revenues RON +224 mn
Slide 15: Distribution segment – main aspects
Group’s financial results Distribution segment – main aspects Relevant regulatory information: Distributed energy margin (RON mn.) ➢ At the beginning of the current PR4 regulatory period, ANRE made a total negative correction of closing the PR3 in the amount of RON (730) mn. (nominal terms), respect
Slide 16: 6M Analysis of regulated net result - OMF net result - IFRS net result
Group’s financial results 6M Analysis of regulated net result - OMF net result - IFRS net result for the distribution segment 16
Slide 17: RBAR-OMF analysis results distribution segment for 2022
Group’s financial results RBAR-OMF analysis results distribution segment for 2022 17
Slide 18: Supply segment – Electrica Furnizare
Supply segment – Electrica Furnizare Group’s financial results Key figures H1 2022 Financial results EBITDA significantly increased by RON 260 mn. compared to H1 2021, mainly following the evolution of the factors below: ~3.5 mn. ▲ the increase in revenues from the supply of energy and natural gas b
Slide 19: Electrica Serv (SERV)
Electrica Serv (SERV) Group’s financial results General overview Revenues (RON mn.) SERV provides repair and other energy-related services to third parties, as well as several services to the companies within the group (vehicles rental, building rental etc.). Starting with 1 December 2020, SERV abso
Slide 20: Dividend distribution
Dividend distribution Group’s financial results Distributed gross dividends (FY 2014 – 2021) (RON mn) Gross dividend per share (RON) and Dividend yield(1) (%) 291.6 6.9% 7.3% 6.9% 244.7 251.4 245.4 247.5 246.1 247.9 6.8% 5.2% 6.0% 6.1% 0.8600 5.2% 0.7217 0.7415 0.7237 0.7300 0.7248 0.7300 152.8 0.45
Slide 21: Group liquidity
Group’s financial results Group liquidity Total liquidity (RON mn.) ❑ At Group level, the total liquidity available in cash and overdraft limits as of 30 June 2022 was RON 312 mn., which is lower than the level recorded at the end of previous half-year. The level of cash on 30 June 2022 was RON 178
Slide 22: Group's Budget for 2022
Group’s Budget for 2022 Curectrica
Slide 23: Consolidated budget 2022 (RON th.) – IFRS values (1/2)
Consolidated budget 2022 (RON th.) – IFRS values (1/2) Group’s budgets for 2022 The significant variances are detailed below: Budget B2022 vs. B2022 vs. Description Actual 2021 1. The revenues’ increase of RON 4,182,941 th. is the net effect of: 2022 A2021 A2021 % ▲ increase in the energy revenues o
Slide 24: Consolidated budget 2022 (RON th.) – IFRS values (2/2)
Consolidated budget 2022 (RON th.) – IFRS values (2/2) Group’s budgets for 2022 As follows, with the exception of Electrica Productie Energie S.A. which is in the development phase of its activity after its incorporation, the only operational subsidiary that will record a net loss according to the p
Slide 25: 2022 Budget – Distributie Energie Electrica Romania (DEER)
2022 Budget – Distributie Energie Electrica Romania (DEER) Group’s budgets for 2022 The budget for 2022 was built on the assumptions presented below ➢ Distributed quantities ▪ The quantities forecasted to be distributed in 2022 were estimated through a statistical analysis of the evolution of the qu
Slide 26: 2022 Budget vs Actual 2021 – DEER
2022 Budget vs Actual 2021 – DEER (RON th.) Group’s budgets for 2022 DEER DEER B2022 vs. B2022 vs. Description TN TS MN Actual 2021 Budget 2022 TN TS MN A2021 A2021 % Revenues from distributed energy 682,649 694,950 697,752 2,075,351 2,603,812 839,859 850,158 913,796 528,461 25% Other energy revenue
Slide 27: 2022 Consolidated budget – Electricity supply and production segment
Group’s budgets for 2022 2022 Consolidated budget – Electricity supply and electricity production segment ▪ In October 2020, in the context of the electricity market liberalization, ANRE approved a new Regulation for electricity Suppliers of Last Resort designation (ANRE Order no. 188/2020), which e
Slide 28: 2022 Budget vs. Actual 2021 – EFSA
2022 Budget vs. Actual 2021 – EFSA (RON th.) Group’s budgets for 2022 Indicator Actual 2021 Budget 2022 B2022 vs. A2021 B2022 vs. A2021 [%] Electricity and gas revenues 5,288,918 8,896,754 3,607,836 68.2% Electricity and gas purchase (5,502,330) (8,202,878) (2,700,548) 49.1% Electricity, gas, reacti
Slide 29: Main Corporate Events
Main Corporate Events Curectrica
Slide 30: Main events in H1 2022 and up to date (1/2)
Main events in H1 2022 and up to date (1/2) Main Corporate Events ELSA’s General Meetings of Shareholders: ❑ ELSA’s EGMS on 21 March 2022: ▪ Approved the empowerment of Electrica representative to participate in Societatea Electrica Furnizare SA (EFSA) EGMS for the approval of a total ceiling of RON
Slide 31: Main events in H1 2022 and up to date (2/2)
Main events in H1 2022 and up to date (2/2) Main Corporate Events ▪ During the meeting on 5 May 2022, the Board of Directors of the Company (CA) decided to revoke Mrs. Georgeta-Corina Popescu from the position of General Manager, without cause, starting with 16 May 2022 and the appointment of Mr. Ch
Slide 32: Group Strategy implementation
5 Group Strategy implementation 32
Slide 33: Electrica Group – Corporate Strategic Objectives (updated April 2022)
Group Strategy Implementation Electrica Group – Corporate Strategic Objectives (updated April 2022) OBJECTIVES Targets Initiatives/update • 10% higher overall stock yield during 2022-2026 Increase of liquidity with the scope of inclusion in the FTSE Market value growth of than the result in the 2014
Slide 34: Sustainability is one of the Values of Electrica
Group Strategy Implementation Sustainability is one of the Values of Electrica Next steps: In 2022 we published, for the 6th consecutive year, our Group Elaboration of a Group Sustainability Sustainability report, based on Strategy the GRI reporting Standard Continuing to collect internal data and t
Slide 35: Shareholdings' structure and evolution of the shares and GDRs
6 Shareholdings’ structure and evolution of the shares and GDRs 35
Slide 36: Shareholder Structure at 30 June 2022
Shareholdings’ structure and evolution of the shares and GDRs Shareholder Structure at 30 June 2022 Percent of share Shares with voting Shareholder Shares capital right Romanian State through the Ministry of Energy 169,046,299 48,7948% 49,7850% EBRD 17,355,272 5,0096% 5,1112% Electrica 6,890,593 1,9
Slide 37: Monthly volume and average price of Electrica's shares and GDRs
Shareholdings’ structure and evolution of the shares and GDRs Monthly volume and average price of Electrica’s shares and GDRs 3,500,000 12.00 3,008,775 3,000,000 11.00 2,500,000 10.00 2,000,000 9.00 1,495,713 1,471,084 1,500,000 8.00 1,000,000 797,172 822,771 7.00 785,761 732,200 642,990 500,000 6.0
Slide 38: Electrica's adjusted closing price vs BET-TR
Shareholdings’ structure and evolution of the shares and GDRs Electrica’s adjusted closing price vs BET-TR (1 January – 13 September 2022) 10.00 5.00 0.00 -5.00 EL: -18.63% BET-TR: +0.32% -10.00 -15.00 -20.00 BET-TR Electrica adjusted price with dividends Source: Company’s data, BSE 38
Slide 39: Appendices
Appendices Curectrica
Slide 40: Important Regulatory Changes – Distribution Activity (1/2)
Appendices Important Regulatory Changes – Distribution Activity (1/2) ❑ RP4 Regulations on Distribution tariffs • RRR: ANRE approved Order no. 75 of 6 May 2020, which established a regulated rate of return (RRR) for electricity and gas, distribution and transmission of 6.39% for the existing RAB, un
Slide 41: Important Regulatory Changes – Distribution Activity (2/2)
Appendices Important Regulatory Changes – Distribution Activity (2/2) ❑ Methodological norms for the recognition in tariffs of the additional NL costs of the purchase of electricity to cover CPT compared to the costs included in the regulated tariffs- ANRE proposal subject to public consultation ✓ T
Slide 42: Changes in Distribution Regulation - RP4
Appendices 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
Slide 43: Changes in Distribution Regulation
Appendices 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 RAB (acc. GEO 19/2
Slide 44: Changes in Distribution Regulation: RAB & Investment RP4 vs RP3
Appendices 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 recorded into the DSOs accounts as tangible assets an
Slide 45: Changes in Distribution Regulation: Opex & NL RP4 vs RP3
Appendices 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 formula (approved 1. OpexC 2019 is not established based on formulae, but
Slide 46: Regulatory-related Developments – Supply – H1 2022 (1/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (1/10) Amendment of Law no. 123/2012 by GEO no. 143/2021 GEO no. 143/2021 amending the Electricity and natural gas law no. 123/2012 • the supply of the universal service (US): by any supplier on the competitive market (by providing for th
Slide 47: Regulatory-related Developments – Supply – H1 2022 (2/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (2/10) Electricity and natural gas compensation scheme for the 2021-2022 cold season Government Emergency Ordinance - GEO No. 118/2021, approved with amendments via Law No. 259/2021, GEO No. 130/2021, GEO No. 2/2022, GEO No. 3/2022 • The
Slide 48: Regulatory-related Developments – Supply – H1 2022 (3/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (3/10) Electricity and natural gas compensation scheme for the 2021-2022 cold season GEO no. 3/2022 (amendments to GEO no. 118/2021, enforced from 1st of February until 31st of March 2022) • increasing the consumption margin for granting
Slide 49: Regulatory-related Developments – Supply – H1 2022 (4/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (4/10) Capping-type support scheme for electricity and natural gas consumption – enforceable from 1 April 2022 until 31 March 2023 GEO no. 27/2022 on the measures enforceable for the end consumers of the electricity and natural gas market
Slide 50: Regulatory-related Developments – Supply – H1 2022 (5/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (5/10) Capping-type support scheme for electricity and natural gas consumption - enforceable from 1 April 2022 until 31 March 2023 GEO no. 42/2022 amending GEO no. 27/2022 on the measures enforceable for the end consumers of the electrici
Slide 51: Regulatory-related Developments – Supply – H1 2022 (6/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (6/10) ANRE order no. 12/2022 — for approving the Procedure regarding the establishment and individualization of civil sanctions for misdemeanors related to the turnover resulting from the control activity: • the purpose of the procedure
Slide 52: Regulatory-related Developments – Supply – H1 2022 (7/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (7/10) ANRE order no. 24/2022 — Order on the amendment of the Regulation for the granting of licenses and authorizations in the electricity sector, approved by ANRE Order no. 12/2015: • ANRE can grant several licenses for electricity mark
Slide 53: Regulatory-related Developments – Supply – H1 2022 (8/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (8/10) ANRE order no. 64/2022 — amending the Performance Standard for the electricity distribution service, approved by the Order of the President of the National Energy Regulatory Authority no. 46/2021. • the reading interval of the meas
Slide 54: Regulatory-related Developments – Supply – H1 2022 (9/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (9/10) ANRE order no. 72/2022 for the approval of the Regulation on the storage of natural gas in the natural gas transport system • the regulation includes: natural gas storage methods (natural gas storage in the natural gas transportati
Slide 55: Regulatory-related Developments – Supply – H1 2022 (10/10)
Appendices Regulatory-related Developments – Supply – H1 2022 (10/10) • the introduction of automatic takeover by the nominated FUI/SoLR of non-household customers with a power approved by the technical connection notice/connection certificate of no more than 1 MVA, in the event of termination of th
Slide 56: Glossary
Glossary LV Low Voltage AMR Automatic Meter Reading MP Merger Plan ANRE Romanian Energy Regulatory Authority MV Medium Voltage B2B Business to Business MWh MegaWatt hour B2C Business to Consumer NBV Net Book Value BET-TR Bucharest Exchange Trading - Total Return Index NL Network Losses BoD Board of
Slide 57: 2022 Financial Calendar
2022 Financial Calendar • 25 February Publication of the 2021 financial annual consolidated and individual preliminary results Publication of the 2021 financial annual results - documents for the Ordinary General Meeting of • 28 February Shareholders • 4 March Investor and analyst teleconference for
Slide 58: 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 based on the Q2 2022 and H1 2022 financ
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