Societatea Energetica Electrica S.a. · BVB:EL
Societatea Energetica Electrica — Electrica Group — Investor Presentation (July 2020)
64 slides from Societatea Energetica Electrica's investor presentation, July 2020
Slide 1: Electrica Group Presentation
Electrica Group Presentation July 2020
Slide 2: Content
Content 1 Romanian economic environment and energy market 2 Electrica Group’s overview 3 Group’s Financial Results 4 Group’s Budget for 2020 5 COVID-19 impact on Group’s activities 6 Group Strategy implementation 7 Shareholdings’ structure and evolution of the shares & GDRs 8 Annexes 2
Slide 3: Romanian economic environment and energy market
1 Romanian economic environment and energy market 3
Slide 4: Economic context indicates severe GDP contraction in 2020, rebound in 2021
Romanian energy market and economic environment The economic context indicates a severe GDP contraction for Romania and EU in 2020, followed by a rebounce in 2021, but many uncertainties and challenges lie on the horizon The GDP contraction caused by the coronavirus Inflation is expected to fall to
Slide 5: Romanian energy market overview
Romanian energy market and economic environment Romanian energy market overview 23% 19% Electrica OPCOM – Operator of the energy trading More than 100 suppliers active on the Romania market Enel platforms E.on 3% Electricity Suppliers 49.5 TWh Cez Electricity generation Electricity Trading 3% Met Ro
Slide 6: Regulation events in 2019 and up to now
Romanian energy market and economic environment Regulation events in 2019 and up to now Distribution tariffs are approved annually, at the end Between 1-15 January 2020, the distribution tariffs of a specific year for the next one, while the computed with contribution to ANRE of 2% of regulated supp
Slide 7: Electrica Group overview
Electrica Group overview Curectrica
Slide 8: Largest national distribution operator and electricity supplier by client base
Electrica Group overview Electrica is the most important national distribution operator and the electricity supplier with the largest client base Geographical presence Electricity supply (12M 2019) ~3.55 million % ~18.6% 9.2 TWh household clients market share energy supplied on retail (August) marke
Slide 9: Only Romanian group listed on BSE & LSE; distribution, supply and services
Electrica Group overview Electrica Group is the only Romanian group listed on the BSE & LSE and operates within distribution, supply & energy service segments Electrica Furnizare S.A. (EFSA) SDEE1) Transilvania Nord (SDTN) Electricity and natural gas Distribution Operator supply company HQ: Cluj-Nap
Slide 10: 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 11: Corporate Governance Bodies - Non-Executive Management
Electrica Group overview Corporate Governance Bodies - Non-Executive Management Board of Directors Current Composition Mr. Valentin Radu Chair Mr. Gicu Iorga Mr. Bogdan Ms. Ramona Ungur George Iliescu Mr. Dragos Andrei Mr. Radu Florescu Mr. Iulian Cristian Bosoanca* *Mr. Iulian Cristian Bosoanca was
Slide 12: Corporate Governance Bodies – Executive Management
Electrica Group overview Corporate Governance Bodies – Executive Management Executive Management Ms. Corina Ms. Anamaria Mr. Mihai Darie Georgeta Popescu Acristini- CFO CEO Georgescu Chief Corporate Development Officer 2017 2018 Ms. Livioara Sujdea Ms. Catalina Popa Chief Distribution Chief Sales Of
Slide 13: Leading Player in Energy Distribution and Supply areas
Electrica is a Leading Player in Energy Distribution and Supply areas Group’s operational overview 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
Slide 14: Electrica is the largest supplier by number of customers
On the overall supply market, Electrica is the largest supplier, by number of customers Group’s operational overview Key Facts Overall Market Share – 2 months 2020 Electrica Furnizare, 20.03% The supply market consists of regulated and competitive segments: • The regulated segment comprises 5 bound
Slide 15: Group’s financial results
3 Group’s financial results 15
Slide 16: Summary Consolidated Financials
Summary Consolidated Financials Group’s financial results 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
Slide 17: Consolidated EBITDA and net result evolution
Consolidated EBITDA and net result evolution Group’s financial results 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
Slide 18: Financial results – distribution segment
Financial results – distribution segment Group’s financial results Revenues Net result (RON mn) (RON mn) 2,739 2,741 106 91 644 665 2018 3M 2019 2019 3M 2020 (21) (21) 2018 3M 2019 2019 3M 2020 EBITDA for the distribution segment increased by RON 6 mn (+6.2%), mainly due to the evolution of: ▲ reven
Slide 19: Electrica Serv
Electrica Serv Group’s financial results 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.) K
Slide 20: Financial results - supply segment
Financial results - supply segment Group’s financial results Revenues Coverage (RON mn) Net Result Green Certificates Net Revenues (RON mn) 4,769 Net Profit Margin Net Profit Electrica Furnizare 7.99% 3,995 518 Competitive Market 378 Regulated Market 2.70% 2.18% 4,250 3,617 1,261 1,329 139 149 108 -
Slide 21: Dividend distribution
Dividend distribution Group’s financial results Distributed gross dividends (FY 2014 - 2019) (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 6.8% 5.2% 6.1% 0.8600 0.7217 0.7415 0.7237 0.7300 0.7248 2014 2015 2016 2017 2018 2019***
Slide 22: Group’s Budget for 2020
Group’s Budget for 2020 Curectrica
Slide 23: Consolidated budget 2020 (RON mn) – IFRS values
Consolidated budget 2020 (RON mn) – IFRS values Group’s budgets for 2020 The significant variances are detailed below: 1. The revenues’ increase of RON 341.5 mn is the net effect of: Actual Budget B2020 vs B2020 vs Indicator ▲ increase in the energy revenues of RON 262.3 mn., mainly from: the increa
Slide 24: 2020 Budget – Distribution companies
2020 Budget – Distribution companies Group’s budgets for 2020 Distributed quantities • The quantities forecasted to be distributed in 2020 were estimated by taking into account the evolution of the actual quantities from 2019 compared to the budget/regulated values. • In case the actual values of
Slide 25: 2020 Budget vs Actual 2019 – SDTN
2020 Budget vs Actual 2019 – SDTN Group’s budgets for 2020 B2020 vs. B2020 vs. RON mn A2019 B2020 The most significant variations as compared with 2019, refer to: A2019 [Abs.] A2019 [%] Revenues from distributed energy 605.0 635.4 30.5 5.0% Revenues from distributed energy - positive variation of
Slide 26: 2020 Budget vs Actual 2019 – SDTS
2020 Budget vs Actual 2019 – SDTS Group’s budgets for 2020 B2020 vs. B2020 vs. RON mn A2019 B2020 The most significant variations as compared with 2019, refer to: A2019 [Abs.] A2019 [%] Revenues from distributed energy 616.4 628.9 12.5 2.0% Revenues from distributed energy - positive variation of
Slide 27: 2020 Budget vs Actual 2019 – SDMN
2020 Budget vs Actual 2019 – SDMN Group’s budgets for 2020 The most significant variations as compared with 2019, refer to: B2020 vs. B2020 vs. RON mn A2019 B2020 A2019 [Abs.] A2019 [%] Revenues from distributed energy - positive variation of RON 53.4 mn, Revenues from distributed energy 603.6 657
Slide 28: 2020 Consolidated budget – Supply segment
Group’s budgets for 2020 2020 Consolidated budget – Supply segment Assumptions - Regulated • The sales forecasts for the regulated segment were established based on the consumption history for the clients in the portfolio; market • The regulated tariffs applicable to the customers supplied under the
Slide 29: 2020 Budget vs. Actual 2019 – Electrica Furnizare
Group’s budgets for 2020 2020 Budget vs. Actual 2019 – Electrica Furnizare Operating margin Budget B2020 vs. B2020 vs. - Compared to the actual values of 2019, the planned operating margin increases by RON RON mn Actual 2019 229.9 mn, as a result of the RON 225.7 increase in the electricity, gas, gr
Slide 30: COVID-19 impact on Group’s activities
5 COVID-19 impact on Group’s activities 30
Slide 31: Legislative measures in COVID-19 context
COVID-19 impact on Group’s 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 Ma
Slide 32: 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
Slide 33: Measures to resume activity 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
Slide 34: 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
Slide 35: 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
Slide 36: 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
Slide 37: 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
Slide 38: 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
Slide 39: Group Strategy implementation
6 Group Strategy implementation 39
Slide 40: Strategic directions
Strategic directions Group Strategy Implementation Electrica is committed to ensuring the balance between creating long-term value for stakeholders and maximizing shareholder returns Ambition of regional player Governance and investor relations • Continuous improvement and implementation of best pra
Slide 41: Strategic objectives and initiatives 2019-2023
Group Strategy Implementation Strategic objectives and initiatives of the Electrica Group for the period 2019-2023 Strategic objectives 1 2 3 4 Expand into adjacent Improve operational Increase performance domains and obtain performance to Continue investments to and enhance the synergies with the c
Slide 42: Areas of high interest for further development
Areas of high interest for further development Group Strategy Implementation Opportunities for inorganic growth Distribution of Supply of electricity electricity and natural gas Electrica Group New activities based Energy services on innovative technologies Traditional areas High interest areas 42
Slide 43: Ethics as a priority for sustainable development
Ethics - a priority as a preliminary requirement for the Group Strategy Implementation sustainable development of the Electrica Group Zero tolerance policy towards bribery, fraud, Organizational culture centered around a theft and other forms of corruption strong sense of ethics Developing an ethica
Slide 44: Strategy Implementation for the Distribution Segment
Group Strategy Implementation Electrica Group Strategy Implementation for the Distribution Business Segment (2019-2020) • EU funds of ~ 270mn RON were accessed DSOs Integration Project for MDM, AAM and SMI; • By 2023, over 500,000 network users will Robot Process be integrated into SMI, through inve
Slide 45: Strategy Implementation for the Supply Segment
Group Strategy Implementation Electrica Group Strategy Implementation for the Supply Business Segment (2019-2020) Supply Area Transformation Project New Products Complex transformation project targeting the entire organization, with focus on the optimization of the New products and services were sal
Slide 46: Strategy Implementation for the Energy Services Segment
Group Strategy Implementation Electrica Group Strategy Implementation for the Energy Services Business Segment (2019-2020) Services Companies New Products Integration For business clients, FISE Electrica As part of the development strategy of Serv implements the solutions the services segment, the p
Slide 47: Shareholdings’ structure and evolution of the shares and GDRs
7 Shareholdings’ structure and evolution of the shares and GDRs 47
Slide 48: Shareholder Structure at 31 March 2020
Shareholdings’ structure and evolution of the shares and GDRs 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 169,046,299 48.7948% 169,046,299 49.7850% Economy, Ene
Slide 49: Monthly volume and average price of shares and GDRs
Shareholdings’ structure and evolution of the 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 - Share
Slide 50: Comparative evolution with BSE indices
Shareholdings’ structure and evolution of the shares and GDRs Comparative evolution with BSE indices (January - 29 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) Perfo
Slide 51: Electrica closing price vs BET-TR
Shareholdings’ structure and evolution of the shares and GDRs Electrica closing price vs BET-TR (January - 29 May 2020) 10.00 5.00 0.00 -5.00 EL: 2.35% -10.00 BET-TR: -11.3% -15.00 -20.00 -25.00 -30.00 BET-TR Electrica adjusted price with dividends Source: Company data; BSE 51
Slide 52: Annexes
8 Annexes 52
Slide 53: Main events in Q1 2020 and up to date
Main events in Q1 2020 and up to date Annexes 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 2020; • The prop
Slide 54: Important Regulatory Changes – Distribution Activity
Important Regulatory Changes – Distribution Activity Annexes 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
Slide 55: Changes in Distribution Regulation - RP4
Changes in Distribution Regulation - RP4 Annexes 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 ap
Slide 56: Changes in Distribution Regulation
Changes in Distribution Regulation Annexes 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 19/201
Slide 57: Comparative elements RP4 vs RP3: RAB & Investment
Changes in Distribution Regulation Annexes 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 servic
Slide 58: Comparative elements RP4 vs RP3: Opex & NL
Changes in Distribution Regulation Annexes 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 comparati
Slide 59: Important Regulatory Changes – Supply Activity - 1
Important Regulatory Changes – Supply Activity - 1 Annexes 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 c
Slide 60: Important Regulatory Changes – Supply Activity - 2
Important Regulatory Changes – Supply Activity - 2 Annexes 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 AN
Slide 61: Background and basis of preparation for the financials
Background and basis of preparation for the financials Annexes 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 Romani
Slide 62: Glossary
Glossary Annexes 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 Dist
Slide 63: 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
Slide 64: 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