S.p.e.e.h. Hidroelectrica S.a. · BVB:H2O
S.p.e.e.h. Hidroelectrica — Investor Presentation (May 2023)
50 slides from S.p.e.e.h. Hidroelectrica's investor presentation, May 2023
Slide 1: #1 Power Producer in Romania and One of the Largest European Hydro Companies
#1 Power Producer in Romania and One of the Largest European Hydro Companies COMPANY PRESENTATION May 2023
Slide 2: Disclaimer
Disclaimer THIS DOCUMENT IS NOT AN OFFER OR AN INVITATION TO BUY OR SELL SECURITIES. IMPORTANT: Please read the following before continuing. This document has been prepared by S.P.E.E.H. HIDROELECTRICA S.A. (the “Company”) and relates to the Company and its subsidiary (together, the “Group”) and the
Slide 3: Hidroelectrica Overview
01 Hidroelectrica Overview Bogdan Badea – CEO / President of the Executive Board
Slide 4: Hidroelectrica at a Glance
Hidroelectrica at a Glance #1 Electricity Producer in Romania with 100% Renewable Energy Portfolio of Scale Strong Financial and Operational Performance Adj. EBITDA(8) (RON MM) 69.6% 74.5% 63.6% #1 electricity generation player ~29% ~95% 15.5 TWh in Romania of electricity of Romanian average annual
Slide 5: Hidroelectrica Plays an Instrumental Role in Romania's Power Sector
Hidroelectrica Plays an Instrumental Role in Romania’s Power Sector Coordinator & Energy Policy Issuer/Maker Independent Regulator Market Operator Romanian Energy Regulatory Ministry of Energy OPCOM Authority (ANRE) Generation Ancillary Transmission Distribution Energy Retail Services ~67% Renewable
Slide 6: We Benefit From Scale and Leading Market Position
We Benefit From Scale and Leading Market Position Highest Share of Renewable Energy Generation Among European Sizable Hydro Player in European Context Utilities with Hydro Presence Electricity Generation from Hydro Sources on Average from 2018 - 2022 (TWh)(1) Total European Electricity Generation by
Slide 7: Clear Strategy with Focus on Operational Efficiencies, Growth and Shareholder Returns
Clear Strategy with Focus on Operational Efficiencies, Growth and Shareholder Returns Operational Efficiency Diversified Growth Prudent Financial Strategy Executing Organic Diversifying into Growing Share in the Maximising Cash Optimising Existing Hydroelectric Adjacent Renewable Romanian Energy Gen
Slide 8: Leading European Renewables Platform
Leading European Renewables Platform #1 Power Generation Platform in Romania with 100% Green Portfolio Playing an Instrumental Role in the National Energy Transition 1 Differentiated Market Position and Competitive Advantages Secured by Well-Invested Asset Base 2 Robust Financial Profile with Strong
Slide 9: Robust Financial Profile with Strong Profitability and Cash Flow Generation, Supporting High Dividend Pay-outs
Robust Financial Profile with Strong Profitability and Cash Flow Generation, Supporting High Dividend Pay-outs… High Adj. EBITDA Margins(1)… …Driving Strong Cash Generation… … and Historically Attractive Regular and Adj. EBITDA(2) (RON MM) Operating Cash Flow(3) (RON MM) Special Dividend Payout of >
Slide 10: …and Offering High Strategic and Financial Flexibility
…and Offering High Strategic and Financial Flexibility Planned Use of Cash Priorities(1) Strong Net Cash Position (RON MM) Historically >90% Dividend 2,032 3,086 3,196 1 Pay-out Ratio(2) >90% The Company plans to continue paying high Historical Pay-out dividends to shareholders 3,677 3,695 Maintenan
Slide 11: Market Overview
02 Market Overview
Slide 12: Positive Long-Term Market and Macroeconomic Backdrop
Market Overview Macro Demand and Supply Power Prices 2 Positive Long-Term Market and Macroeconomic Backdrop Romania is Forecasted to Be One of the …With Comparatively Low Energy …Which is Expected to Grow in the Long Term Fastest Growing Economies in Europe… Consumption… Real GDP CAGR between 2022 –
Slide 13: Further Integration in Europe…
Market Overview Macro Demand and Supply Power Prices 2 Further Integration in Europe… Convergence with the European Union is Key in Securing Long-Term Support from EU-led Programmes Adoption of the Euro by Adherence to the Accelerated structural Strengthening 2029 Schengen zone reforms institutions
Slide 14: …and Strong Government Commitment to Deliver on the National Energy and Climate Plan
Market Overview Macro Demand and Supply Power Prices 2 …and Strong Government Commitment to Deliver on the National Energy and Climate Plan Romania’s Recovery and Resilience Plan National Renewable and Nuclear Build-out Targets are Achievable Stimulating legislative and regulatory framework for priv
Slide 15: Demand-driven Expansion of the Romanian Electricity Generation Portfolio…
Market Overview Macro Demand and Supply Power Prices 2 Demand-driven Expansion of the Romanian Electricity Generation Portfolio… Romania’s Overall Capacity and Renewable Share is Increasing Gross Demand by Source (TWh) 2025 - 2035 CAGR: 1.9% 49% 54% 62% (1) 69.5 74.5 61.9 As Romania’s economy develo
Slide 16: ... Underpinned by an Increase in Base Load Demand from Electrification…
Market Overview Macro Demand and Supply Power Prices 2 ... Underpinned by an Increase in Base Load Demand from Electrification… A Base Demand is Set to Increase B … Fuelled by Growing Demand for EVs, Electrolysers and Heat Pumps Demand Power Demand (TWh) Base Demand Demand Power Demand (TWh) Technol
Slide 17: … and Supported by Significant EU Funding of Renewables Rollout
Market Overview Macro Demand and Supply Power Prices 2 … and Supported by Significant EU Funding of Renewables Rollout Core market Significant growth opportunity 1 Modernisation Fund Revenue derived from the auctioning of 2% of total Onshore Offshore Battery certificates allocated under Technology H
Slide 18: Electricity Prices Have Surged as a Result of the Russian-Ukraine War
Market Overview Macro Demand and Supply Power Prices 2 Electricity Prices Have Surged as a Result of the Russian-Ukraine War, with Electrification Trends and Hydrology Conditions Driving Future Power Prices Power Prices Have Rallied Since the End of 2021 Key Drivers Impacting Romanian Power Historic
Slide 19: Portfolio and Asset Management Overview
03 Portfolio and Asset Management Overview 19
Slide 20: Business Unit Summary
Business and Portfolio Overview Business Unit Generation Ancillary Services Energy Supply 3 Business Unit Summary Generation and Ancillary Services Energy Supply Provider of 187 ~6.3GW 108MW 15.5TWh Balancing ~5k hMW 3.7TWh ~461k / ~22k Hydropower Plants Production Hydro Onshore Wind 5-year Avg. Net
Slide 21: Hydro Generation Portfolio Summary
Business and Portfolio Overview Business Unit Generation Ancillary Services Energy Supply 3 Hydro Generation Portfolio Summary Refurbishment Maintenance Production Capacity Mix Avg. Availability Annual Gross Production capex spend capex spend Branch Capacity(1) (MW)(2) (last 5 years)(2) (in GWh)(2)
Slide 22: Hydro Generation Portfolio Summary
Business and Portfolio Overview Business Unit Generation Ancillary Services Energy Supply 3 Hydro Generation Portfolio Summary Refurbishment Maintenance capex spend capex spend Production Capacity Mix Avg. Availability Annual Gross Production Branch Capacity(1) (MW)(2) (last 5 years)(2) (in GWh)(2)
Slide 23: Onshore Wind Generation
Business and Portfolio Overview Business Unit Generation Ancillary Services Energy Supply 3 Onshore Wind Generation Generation Output and Site Availability (2018A – 2022A) Wind Highlights 99 99 99 99 98 108MW 36 Vestas V112 98.6% 400 100 350 90 avg. availability last 5 installed capacity 3MW turbine
Slide 24: Ancillary Services
Business and Portfolio Overview Business Unit Generation Ancillary Services Energy Supply 3 Ancillary Services Overview Hidroelectrica’s Services are Essential to the National Energy System(2) Auction bidding for Daily competitive Each supplier bids a hourly interval slots auction process for maximu
Slide 25: Energy Supply (1/2)
Business and Portfolio Overview Business Unit Generation Ancillary Services Energy Supply 3 Energy Supply (1/2) Energy Supply is a Highly Fragmented Market… …with Hidroelectica Building-up a Sizable Position Over the Years Demand by Source (TWh) Romanian Energy Market Breakdown as of December 2022 (
Slide 26: Energy Supply (2/2)
Business and Portfolio Overview Business Unit Generation Ancillary Services Energy Supply 3 Energy Supply (2/2) Supply Highlights Supplies directly to end retail 1 year 100% RON 10 customer ~8% Fixed avg. cost to >99% pass market typical price through of acquire customer contract contracts new renew
Slide 27: Growth Strategy
HIDROELECTRICA Growth Strategy
Slide 28: Clear Defined Strategy For The Future
Growth Strategy Introduction Optimisation Expansion Energy Supply 4 Clear Defined Strategy For The Future Optimising Existing Driving operational efficiencies through the modernisation and refurbishment of Operational 1 Hydroelectric Assets our existing asset base – targeting predictable and consist
Slide 29: Core Areas of Focus for Portfolio Optimisation
Growth Strategy Introduction Optimisation Expansion Energy Supply 4 Core Areas of Focus for Portfolio Optimisation 1 2 3 Electricity Generation Systems and Ancillary Unlocking additional Infrastructure Equipment capacity from existing plants Improvement and / or Focus on improving plant Major infras
Slide 30: Renewable Growth Opportunities
Growth Strategy Introduction Optimisation Expansion Energy Supply 4 Renewable Growth Opportunities Clear Growth Trajectory Across Multiple Renewable Technologies… … with systematic and disciplined investment approach Incremental Opp. over Hidroelectrica 0.6% the Period Potential Targets Hydropower (
Slide 31: Pipeline Summary
Growth Strategy Introduction Optimisation Expansion Energy Supply 4 Pipeline Summary Potential Opportunities Outside of the Opportunities included within Business Plan Business Plan Hydro Cumulative RON 808m Capacity Hydro RON 618m Added(1) > 100 MW Capex Outlay 206MW RON 148m Wind 2023E 2024E 2025E
Slide 32: Excellent Recent Track Record, Poised for Future Growth
Growth Strategy Introduction Optimisation Expansion Energy Supply 4 Excellent Recent Track Record, Poised for Future Growth Hidroelectrica has Overseen Significant Growth in its Retail Supply Business Current Market Snapshot Household and Non-household Customers (2021-2022) Commercial efforts by the
Slide 33: Clear Strategy to Leverage Existing Route to Market and Expand Market Share
Growth Strategy Introduction Optimisation Expansion Energy Supply Clear Strategy to Leverage Existing Route to Market and Expand 4 Market Share 1 Clear strategy to grow share in supply market Technical Digitisation of Implementation of Improving call center Infrastructure customer latest innovative
Slide 34: Financial Highlights and Outlook
05 Financial Highlights and Outlook
Slide 35: A Leading Hydro Company Built on Robust Fundamentals…
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 A Leading Hydro Company Built on Robust Fundamentals… • Highly cashflow generative • Performance supported by the current power prices have yielded a c.57% CAGR in revenues and an • Long useful life and outstanding
Slide 36: ...With a Solid Financial Profile Paving the Way for Success…
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 ...With a Solid Financial Profile Paving the Way for Success… Sustainable Revenues …With High Adjusted(1) EBITDA Margins… …Driving Strong Cash Generation Revenues (RON MM) EBITDA (RON MM) Operating Cash Flow(2) (RON
Slide 37: …And High-Quality Assets to Deliver Strong Operating Performance
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 …And High-Quality Assets to Deliver Strong Operating Performance Generation Hydro Unit Availability (%) Supply Volumes ✓• FY21 includes 0.2 TWh addition from the ✓• Hidroelectrica’s portfolio shows a solid ✓• Supply
Slide 38: Strong Revenue Growth Driven By Power Prices and Diversification…
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 Strong Revenue Growth Driven By Power Prices and Diversification… Total Revenues (RON MM) and Total Energy Sold (TWh) Strong Revenues Growth Historically (RON MM and TWh) 17.4 16.0 15.3 16.3 11.0 14.7 3,162 6,961 (2
Slide 39: …With a Cost-Efficient Organisation to Achieve Strategic Objectives
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 …With a Cost-Efficient Organisation to Achieve Strategic Objectives and Optimize Processes Operating Costs as a Proportion of Revenue Highlights Operating Expenses (RON MM) % of Revenues ✓• Despite recent higher inf
Slide 40: Significant EBITDA Growth Mainly Driven by Supportive Energy Landscape
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook Significant EBITDA Growth Mainly Driven by Supportive Energy 5 Landscape EBITDA Bridge Highlights (RON MM) ✓• Growth 2020A 2021A 2022A driven by: – Increased power prices (1) – Scale up in Supply EBITDA 2,594 67.5% EB
Slide 41: Attractive Cash Flow Generation Benefiting from Hidroelectrica's Position
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook Attractive Cash Flow Generation Benefiting from Hidroelectrica’s 5 Position as #1 Electricity Producer in Romania Attractive Cashflow Generation Highlights Operating Cash Flow(1) (RON MM) and Cash Conversion(2) (%) ✓•
Slide 42: Investment Strategy Underpinned By Strong Organic Growth and Diversification
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 Investment Strategy Underpinned By Strong Organic Growth, Asset Refurbishment Strategy and Asset Diversification Historical Capex Investment Plan To Deliver Future Growth Historical Capex (RON MM) 2023-2025 Investme
Slide 43: Conservative Capital Structure and Solid Long-term Relationships with Banks
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 Conservative Capital Structure and Solid Long-term Relationships with Banks Ease the Procurement of Funds to Enable Growth Strong Net Cash Position… … Resulting in a Conservative Capital Structure (RON MM) Net Debt
Slide 44: Historical Variations in Hydrology…
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 Historical Variations in Hydrology… Hydrological Conditions are Particularly Important Given Impact on Energy Output Levels Hidroelectrica Annual Gross Hydro Production (TWh) Run of river water flow reached Run of r
Slide 45: …Managed By Prudent Hedging Strategy Contributing to Operational Excellence
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 …Managed By Prudent Hedging Strategy Contributing to Operational Excellence Proven and Resilient Hedging Strategy Hedging is Reflected in Prudent Volumes Sold via Forward Contracts… Electricity Sales (TWh) Forward c
Slide 46: Price Forecasting Building Blocks
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 Price Forecasting Building Blocks Market Drivers Company Input Electricity markets Volume Profile Commercial Power Curve MACEE (until March 2025) MACEE Balancing Balancing Current Contracted Levels OPCOM PCCB(1) Int
Slide 47: Historical Revenue Build-up
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 Historical Revenue Build-up 2020 2021 2022 Total Production TWh 14.6 16.7 13.5 External Acquisitions TWh 1.4 0.6 1.1 Generation Energy Sold TWh 16.0 17.4 14.7 Balancing TWh (0.5) (0.9) (0.9) Sales to Supply TWh (0.6
Slide 48: Mid-Term Financial Outlook (1/2)
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 Mid-Term Financial Outlook (1/2) • FY23 net production has the potential to reach 16.3TWh in FY23, benefitting by favourable hydrology in FY23 to date • Thereafter, we assume average net production (before impact of
Slide 49: Mid-Term Financial Outlook (2/2)
Financial Highlights Key Summary Financials & KPIs Risk Management Company Outlook 5 Mid-Term Financial Outlook (2/2) Approved Capex, RONm • Maintenance and other regular Capex planned to be around RON 115m p.a. • Refurbishment and Growth Capex planned to decrease after FY25 subject to Refurbishment
Slide 50: End Presentation
HIDROELECTRICA End Presentation
S.P.E.E.H. Hidroelectrica — Investor Presentation (May 2023) on 6ix