Cez As · PSECZ:CEZ
Cez As — H1 2020 Earnings Presentation
40 slides from Cez As's earnings presentation, Aug 11, 2020
Slide 1: Presentation on CEZ Group Financial Results in H1 2020
PRESENTATION ON CEZ GROUP FINANCIAL RESULTS IN H1 2020 NON-AUDITED CONSOLIDATED RESULTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) August 11, 2020
Slide 2: Contents
CONTENTS Financial Highlights and Selected Events Financial Performance of Business Segments Annual Outlook 1
Slide 3: CEZ Group Financial and Operating Results
CEZ GROUP FINANCIAL AND OPERATING RESULTS (CZK bn) Q1 - Q2 2019 Q1 - Q2 2020 Change % Revenues 100.0 106.3 +6.2 +6% EBITDA 34.8 38.7 +3.8 +11% EBIT 19.8 22.0 +2.1 +11% Net income 13.4 14.7 +1.3 +9% Net income adjusted * 14.2 16.4 +2.2 +16% Operating CF 27.9 31.1 +3.2 +11% CAPEX 11.6 12.2 +0.6 +5% Q1
Slide 4: Year-on-Year Change in EBITDA by Segment
YEAR-ON-YEAR CHANGE IN EBITDA BY SEGMENT Main causes of year-on-year change in H1 EBITDA: Higher realization prices of generated electricity, incl. the effect of hedges in Czechia and commodity trading (CZK +5.8 bn) Additional profit (overhedge) in H1 2020 from German hedging contracts for gener
Slide 5: Other Income (Expenses)
OTHER INCOME (EXPENSES) (CZK bn) Q1 - Q2 2019 Q1 - Q2 2020 Change % EBITDA 34.8 38.7 +3.8 +11% Depreciation, amortization and impairments* -15.0 -16.7 -1.7 -12% Other income (expenses) -3.5 -3.7 -0.2 -7% Interest income (expenses) -2.5 -2.6 -0.1 -4% Interest on nuclear and other provisions -0.9 -1.0
Slide 6: Debt Position and Structure
DEBT POSITION AND STRUCTURE CEZ GROUP MAINTAINS A STRONG LIQUIDITY POSITION Debt Level* Bond Maturity Profile (as at Jun 30, 2020) As at As at CZK bn Jun 30, 2019 Jun 30, 2020 25 Debt and loans CZK bn 154.3 164.2 20 Cash and fin. assets** CZK bn 11.1 10.5 15 Net debt CZK bn 143.3 153.7 Net debt/EBIT
Slide 7: The Annual General Meeting of ČEZ, a. s., Was Held on June 9
THE ANNUAL GENERAL MEETING OF ČEZ, A. S., WAS HELD ON JUNE 29 SHAREHOLDERS’ MEETING DECISIONS Approved the 2019 financial statements of ČEZ, a. s., and consolidated financial statements of CEZ Group Decided on the distribution of ČEZ, a. s., profit, a dividend (or a share in the profit to be dis
Slide 8: Government Approved Cooperation Agreements for New Nuclear Facility EDU II
THE GOVERNMENT OF THE CZECH REPUBLIC APPROVED COOPERATION AGREEMENTS TO PREPARE THE PROJECT “NEW NUCLEAR FACILITY EDU II” On July 27, 2020, the Government of the Czech Republic discussed the Act on Measures for Czechia's Transition to Low- Carbon Energy in order to enable the state to order the cons
Slide 9: Energy Regulatory Office Approved Parameters of New Regulatory Period for ČEZ Distribuce
THE ENERGY REGULATORY OFFICE APPROVED THE PARAMETERS OF THE NEW REGULATORY PERIOD FOR ČEZ DISTRIBUCE Summary of parameters for the 5th regulatory period, i.e. for the period of 2021–2025 There will be a 100% adjustment of the regulatory asset base (RAB) to the total residual value of assets by the
Slide 10: CEZ Group Steadily Reduces Its Carbon Footprint and Specific Emissions
CEZ GROUP STEADILY REDUCES ITS CARBON FOOTPRINT AND SPECIFIC EMISSIONS FROM THE PORTFOLIO CEZ Group continues its gCO2 / kWh CO2 emissions from electricity The average specific CO2 strategy of gradually reducing 700 generated by CEZ Group facilities emissions of the marginal electricity generation f
Slide 11: Development of CEZ Group Divestment Activities
DEVELOPMENT OF CEZ GROUP DIVESTMENT ACTIVITIES ROMANIA On June 25, 2020, CEZ Group received binding offers for assets in Romania. Mainly the distribution and sales companies and the Fântânele and Cogealac wind power plants are subjects of the sale. The bids have been evaluated and negotiations a
Slide 12: Selected Events in Development Activities in the Past Quarter
SELECTED EVENTS IN THE AREA OF CEZ GROUP'S DEVELOPMENT ACTIVITIES IN THE PAST QUARTER ČEZ ESCO is a 100% owner of ČEZ Energo The remaining share of 49.9% was purchased from TEDOM as at June 30, 2020. The approval by the Antimonopoly Office took place on July 20, 2020. ČEZ Energo was established
Slide 13: Other Selected Events in the Past Quarter
OTHER SELECTED EVENTS IN THE PAST QUARTER Nuclear energy Both ČEZ nuclear power plants defended the title of Safe Company. Audits of the OSH management system have helped ČEZ maintain a low rate of occupational injuries for employees and contractors in the long term. At the second unit of the Te
Slide 14: Contents
CONTENTS Financial Highlights and Selected Events Financial Performance of Business Segments Annual Outlook 13
Slide 15: Segment: Generation—Traditional Energy
SEGMENT: GENERATION—TRADITIONAL ENERGY EBITDA (CZK bn) Q1 - Q2 2019 Q1 - Q2 2020 Change % Czechia 16.4 19.3 +2.9 +18% Poland 0.4 0.4 -0.0 -0% Other states 0.0 0.0 -0.0 -75% Generation - traditional energy 16.9 19.7 +2.9 +17% Czechia (CZK +2.9 bn) Higher realization prices of generated electricity,
Slide 16: Electricity Generation: Generation—Traditional Energy Segment
ELECTRICITY GENERATION GENERATION—TRADITIONAL ENERGY SEGMENT Q1 – Q2 2019 Q1 – Q2 2020 Nuclear Power Plants (-6%) Nuclear Power Plants (-1%) − different timing of regular outages during the year − The timing of normal outages and the impact of extending the scope of operational controls, the inclusi
Slide 17: Segment: Generation—New Energy
SEGMENT: GENERATION—NEW ENERGY EBITDA (CZK bn) Q1 - Q2 2019 Q1 - Q2 2020 Change % Czechia 1.2 1.1 -0.0 -2% Romania 0.9 1.3 +0.4 +43% Germany 0.3 0.3 +0.1 +22% Other states -0.0 -0.1 -0.0 >200% Generation - new energy 2.3 2.7 +0.4 +17% Romania (CZK +0.4 bn) Higher gross margin from electricity due
Slide 18: Electricity Generation: New Energy & Sales Segments
ELECTRICITY GENERATION GENERATION – NEW ENERGY & SALES SEGMENTS Q1 – Q2 2019 Q1 – Q2 2020 Germany (+8%) Germany (+12%) + Better weather conditions + Worse-than-average weather conditions in 2019 Czechia (-1%) Czechia (+2%) − Lower production at small hydro plants due to + Higher production at ČEZ En
Slide 19: Segment: Sales
SEGMENT: SALES EBITDA (CZK bn) Q1 - Q2 2019 Q1 - Q2 2020 Change % Czechia 1.4 1.9 +0.5 +35% Germany 0.2 0.2 +0.0 +18% Romania 0.1 0.4 +0.3 >200% Bulgaria 0.2 0.3 +0.1 +45% Other states -0.0 0.1 +0.1 - Sales 1.9 2.9 +1.0 +52% Czechia (CZK +0.5 bn) Higher margin on commodity sales (CZK +0.5 bn) Roma
Slide 20: ESCO Companies Sales for H1 Increased Year-on-Year by 16%
ESCO COMPANIES SALES FOR H1 INCREASED YEAR-ON-YEAR BY 16% Influence of COVID-19 on initial sales expectations CZK bn CZK bn Q1 – Q2 2019 Q1 – Q2 2020 Germany (+18%) Germany (+4%) + Organic growth, especially of En.plus and the Elevion group + Organic growth and the impact of the Hermos + Effect of a
Slide 21: Segment: Distribution
SEGMENT: DISTRIBUTION EBITDA (CZK bn) Q1 - Q2 2019 Q1 - Q2 2020 Change % Czechia 9.1 8.9 -0.2 -2% Romania 0.7 0.9 +0.2 +33% Bulgaria 0.6 1.1 +0.4 +67% Distribution 10.4 10.9 +0.5 +5% Czechia (CZK -0.2 bn) Lower gross margin on electricity distribution (CZK -0.2 bn) due to COVID-19 Higher fixed o
Slide 22: Mining Segment, Support Services Segment
MINING SEGMENT, SUPPORT SERVICES SEGMENT EBITDA (CZK bn) Q1 - Q2 2019 Q1 - Q2 2020 Change % Czechia 2.5 1.7 -0.8 -31% Mining 2.5 1.7 -0.8 -31% Czechia (CZK -0.8 bn) Decrease in revenues from coal sales to CEZ Group (CZK -0.5 billion), mainly due to the extended outage of the Ledvice 4 power plant
Slide 23: Contents
CONTENTS Financial Highlights and Selected Events Financial Performance of Business Segments Annual Outlook 22
Slide 24: ČEZ Continues Hedging Its Generation Revenues, 71% Sold for 2021
ČEZ CONTINUES HEDGING ITS GENERATION REVENUES, 71% SOLD FOR 46 EUR/MWH FOR 2021 Forecast realization price of generation in Czechia in 2020 (estimated at August 11, 2020): The estimated average realization price of the generated electricity is 45.7 EUR/MWh. The estimated average purchase price o
Slide 25: We Increase the Financial Outlook for 2020
WE INCREASE THE FINANCIAL OUTLOOK FOR 2020, ESTIMATING EBITDA AT CZK 62 TO 64 BN, ADJUSTED NET INCOME AT CZK 21 TO 23 BN CZK bn EBITDA Selected reasons for specifying the financial outlook compared to the outlook 80 62 – 64 from May 12, 2020: 60.2 61 – 64 Higher revenue from commodity trading 60
Slide 26: Expected Year-on-Year Change in EBITDA in Individual Business Segments
EXPECTED YEAR-ON-YEAR CHANGE IN EBITDA IN INDIVIDUAL BUSINESS SEGMENTS Mining (CZK -1.3 to -1.7 bn) EBITDA 2019 60.2 Lower coal sales for ČEZ power plants (due to rising emission allowance prices and lower electricity prices due to COVID-19 and outages) and due to lower customer demand outside CEZ
Slide 27: Annexes
ANNEXES Cash Flows EBITDA—Q2 Year-on-Year Comparison Net Income—Q2 Year-on-Year Comparison Capital Expenditures Balance Sheet Overview Electricity Consumption Currency Risk Hedging Market Developments Electricity Procured and Sold Definitions of Alternative Indicators according t
Slide 28: Cash Flows
CASH FLOWS Cash Flows from Operating Activities (CZK +31.1 bn) Profit after adjustments incl. income taxes (CZK +29.4 billion): profit before tax (CZK +18.2 bn); income tax paid (CZK -1.6 bn); interest paid with the exception of capitalized interest and interest received (CZK -3.1 bn); adjustments
Slide 29: EBITDA – Q2 Year-on-Year Comparison
EBITDA – Q2 YEAR-ON-YEAR COMPARISON CEZ Group EBITDA (CZK -0.7 bn): Mining (CZK -0.6 bn): lower revenues from coal sales, mainly due to lower demand from CEZ Group Generation – Traditional Energy (CZK -0.1 bn): higher realization prices of produced electricity incl. impact of hedging transaction
Slide 30: Net Income – Q2 Year-on-Year Comparison
NET INCOME – Q2 YEAR-ON-YEAR COMPARISON (CZK bn) Q2 2019 Q2 2020 Change % EBITDA 13.6 12.8 -0.7 -5% Depreciation, amortization and impairments* -7.5 -9.7 -2.2 -29% Other income (expenses) -1.9 -2.1 -0.2 -12% Income taxes -0.6 -0.5 +0.1 +20% Net income 3.5 0.5 -3.0 -85% Net income adjusted 3.8 2.5 -1
Slide 31: Capital Expenditures Broken Down by Segment
CAPITAL EXPENDITURES BROKEN DOWN BY SEGMENT CZK bn H1 2019 H1 2020 Generation—Traditional Energy 3.8 4.1 Of which: Nuclear fuel acquisition 1.6 1.1 Generation—New Energy 0.5 0.2 Mining 0.8 0.9 Distribution 5.7 6.2 Czechia 4.4 5.0 Romania 0.5 0.6 Bulgaria 0.7 0.5 Sales 0.6 0.4 Support Services* 0.3 0
Slide 32: Balance Sheet Overview
BALANCE SHEET OVERVIEW Property, plant, and equipment, nuclear fuel, and construction work in Equity decreased by CZK 3.8 bn progress decreased by CZK 3.8 bn Dividends approved to shareholders CZK -18.2 billion Property, plant, and equipment, gross and unfinished tangible investments CZK +11.7
Slide 33: Electricity Consumption in the Distribution Area of ČEZ Distribuce
ELECTRICITY CONSUMPTION IN THE DISTRIBUTION AREA OF ČEZ DISTRIBUCE Consumption in the Distribution Temperature- and Calendar-Adjusted Area of ČEZ Distribuce Consumption* TWh TWh 18.70 18.36 Changes in consumption (-5.0%) by segment: 17.78 -9.7% large end-use 17.45 customers +4.2% residential cus
Slide 34: Currency Hedges for Estimated Electricity Generation in 2021–2024
CURRENCY HEDGES FOR ESTIMATED ELECTRICITY GENERATION IN 2021–2024 Currency Hedges for Estimated Supplies of Generated Electricity as at June 30, 2020 2021 2022 2023 2024 Total currency hedges 96% 96% 87% 73% (natural & transactional) as at Jun 30, 2020 Natural currency hedging (debts in EUR, 81% 80%
Slide 35: Market Developments
MARKET DEVELOPMENTS CZK Development of EZ share price oo 600 EUR/t CO2 allowances / emission rights 40 500 30 4 400 4 20 4 a “. s © 2 2 @ © o@ & © o) © 2 © 2 © © iS x x x x x #$ $ $ a a SCO SS PP of N os % n NG x os e —— forward 2021 EUR / MWh Electricity USD /t Coal and gas EUR/MWh 60 105 70 50 4 4
Slide 36: Electricity Balance (GWh)
Electricity balance (GWh) Index Q1 - Q2 2019 Q1 - Q2 2020 2020/2019 Electricity procured 29,005 26,783 -8% Generated in-house (gross) 32,075 29,805 -7% In-house and other consumption, including pumping in pumped-storage plants -3,071 -3,022 -2% Sold to end customers -18,005 -16,984 -6% Sold in the w
Slide 37: Electricity Balance (GWh) by Segment
Electricity balance (GWh) by segment Generation - traditional Generation - new Q1 - Q2 2020 energy energy Distribution Sale Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 25,504 -8% 1,101 +5% 0 - 178 +7% 0 - 26,783 -8% Generated in-house (gross) 28,510 -8
Slide 38: Electricity Balance (GWh) by Country
Electricity balance (GWh) by country Q1 - Q2 2020 Czechia Poland Romania Bulgaria Germany Others Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 24,887 -8% 995 -4% 731 +7% 3 +8% 166 +8% 0 - 0 - 26,783 -8% Generated in-house (gross) 27,746 -
Slide 39: Methods Used to Calculate Indicators Unspecified in IFRS
Methods Used to Calculate Indicators Unspecified in IFRS In accordance with ESMA guidelines, ČEZ provides detailed information on indicators that are not reported as standard in IFRS financial reporting framework or the components of which are not directly available from standardized statements (fro
Slide 40: Components Used in Calculation of Individual Indicators
Most of the components used in the calculation of individual indicators are directly shown in financial statements. The components of calculations that are not included in the financial statements are usually shown directly in a company’s books and are defined as follows: Highly Liquid Financial Ass