Societatea Energetica Electrica S.a. · BVB:EL

Societatea Energetica Electrica — Electrica Group — WOOD's Winter virtual EME Conference 2020

51 slides from Societatea Energetica Electrica's conference presentation, Dec 3, 2020

  1. Slide 1: Electrica Group Presentation

    Electrica Group Presentation WOOD's Winter virtual EME Conference Bucharest, 3 December 2020

  2. Slide 2: Content

    Content 1 Q3 2020 Financial results  Key Group Information  Distribution Segment Overview  Supply Segment Overview  COVID-19 Impact on Group’s Activities 2 Main Corporate Events 3 Status of Group’s Strategy Implementation 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 (%) 1,200 21.80% 25.00% 4,607 4,776 1,000 17.36% 20.00% 409 385 11.92% 12.65% 15.00% 800 10.00% 600 5.00% 4,222 1,506 4,367 1,577 400 829 0.00% 124 132 549 2

  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 9M 2020 vs. 9M 2019 is RON +280 mn, being mostly the cumulated effect of:  The positive variation of the energy margin RON +245 mn, thereof: • RON +51 mn from the distributi

  5. Slide 5: Distribution highlights

    Distribution highlights Distribution segment overview Key figures 9M 2020 Financial results EBITDA for the distribution segment increased by RON 52.8 mn (+11.7%), mainly due to the evolution of: ▲ revenues: RON +42.4 mn (+2.1%), being predominantly the effect of the electricity revenues increase by

  6. Slide 6: Distribution segment – COVID-19 impact

    Distribution segment – COVID-19 impact The impact of the COVID 19 pandemic on distribution companies Evolution of the cost of electricity needed to cover NL Network losses  In 9M 2020, the cost of electricity needed to cover NL was by RON 6.5 mn higher than in 9M 2019, but by RON 22.3 mn below the

  7. Slide 7: Electrica Serv

    Electrica Serv Distribution segment overview General overview Revenues (RON mn) 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 (vehicles rental, 110 building rental etc.).

  8. Slide 8: Supply market

    Supply market Overall Market Share – 8 months 2020 Supply segment overview Key Facts Electrica Furnizare, 19.47% 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

  9. Slide 9: Supply segment

    Supply segment Supply segment overview Key figures (9M 2020) Financial results Coverage EBITDA significantly increased by RON 130 mn compared to 9M 2019, mainly following the evolution of the below factors: ▼ electricity purchase costs lower by approx. RON 63 mn compared to 9M 2019, ~3.58 mn especia

  10. Slide 10: 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 9.2 3,541 3,543 3,553 3,580 8.5 253 265 269 294 6.9 6.8 3.7 4.4 3.3 3.1 3,288 3,279 3,284 3,286 4.9 4.9 3.6 3.7 9M 2019

  11. Slide 11: Supply segment – COVID-19 impact (1/2)

    Supply segment – COVID-19 impact 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; we are not able at the moment to make a reliable estimate on the impact of the amount of electricity supplied to customer

  12. Slide 12: Supply segment – COVID-19 impact (2/2)

    Supply segment – COVID-19 impact The impact of the COVID 19 pandemic on supply company (2/2) 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 September 2020, state of emergency

  13. Slide 13: Group liquidity

    Supply segment – COVID-19 impact Group liquidity  At Group level, the total liquidity available in the form of cash and overdraft limits as of 30 September 2020 was RON 1,238 mn. Without considering the unused overdraft line of RON 210 mn contracted in January related to the master accounts of the

  14. Slide 14: Main events in T3 2020 and up to date

    Main events in T3 2020 and up to date Main Corporate Events ELSA’s General Meetings of Shareholders:  EGMS dated 21 August 2020 – the shareholders approved the empowerment of ELSA’s representative to participate in the EGMS of the absorbed companies – SDMN and SDTS, in case of the Distribution Oper

  15. Slide 15: Strategy implementation: distribution segment

    Status of Group’s Strategy Implementation Implementing the Electrica Group’s strategy on the distribution segment (2019-2020) Distribution operators integration project (DSO) Integration project of the two energy services companies (ES) Absorbing company: SDTN Absorbing company : EL SERV Current sta

  16. Slide 16: Strategy implementation: supply segment

    Status of Group’s Strategy Implementation Implementing the Electrica Group’s strategy on the supply segment (2019-2020) Vertical integration project –generation Supply area transformation project from renewable resources Complex transformation project targeting the entire Project aiming at potential

  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% 7.3% 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 2014 2015 2016 2017

  18. Slide 18: Appendices

    Appendices Curectrica 18

  19. Slide 19: Group structure

    Group structure Electrica Group is the only Romanian group listed on the BSE & LSE and operates within distribution, supply & energy service segments 100 % Electrica Furnizare S.A. 99.99 %3) 99.99 %3) SDEE1) Transilvania Nord Long Bridge Milenium Electricity and natural gas Distribution Operator sup

  20. Slide 20: Important Regulatory Changes in 2020 – Distribution Activity (1/3)

    Important Regulatory Changes in 2020 – Distribution Activity (1/3)  RP4 Regulations on Distribution tariffs  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 BAR, until the

  21. Slide 21: Important Regulatory Changes in 2020 – Distribution Activity (2/3)

    Important Regulatory Changes in 2020 – Distribution Activity (2/3)  Law no. 155/24 July 2020 entered into force on 30 July 2020 and amended the Energy Law no. 123/2012:  Licenses - the situations in which the distribution service can be done without a license are defined; the concessionaire DSO ha

  22. Slide 22: Important Regulatory Changes in 2020 – Distribution Activity (3/3)

    Important Regulatory Changes in 2020 – Distribution Activity (3/3)  Law no. 26/2020 - amends GEO no. 33/2007 regarding the organization and functioning of ANRE:  ANRE's activity will not be restricted by any other authority  the express specification of the date of approval of the distribution ta

  23. Slide 23: 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

  24. Slide 24: 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 1

  25. Slide 25: Methodology 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 recorded into the DSOs accounts as tangible assets and are physi

  26. Slide 26: Methodology comparative elements RP4 vs RP3: Opex & NL

    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 by comparat

  27. Slide 27: Supply Regulation Area – Primary Legislation – 1/2

    Supply Regulation Area – Primary Legislation – 1/2 GEO no. 1/2020 on some fiscal-budgetary measures and for amending and supplementing some normative acts (including GEO no. 114/2018): - until 31 December 2020, for household customers the supply of electricity is carried out under conditions regulat

  28. Slide 28: Supply Regulation Area – Primary Legislation – 2/2

    Supply Regulation Area – Primary Legislation – 2/2 GEO no. 74/2020 for amending and supplementing the law on electricity and natural gas no. 123/2012: - producers operating dispatchable production units, only for units not benefiting from support schemes, in the ascending order of prices set by ANRE

  29. Slide 29: Supply Regulation Area – Secondary Legislation – 1/4

    Supply Regulation Area – Secondary Legislation – 1/4 ANRE Order no. 1/2020 on approval of tariffs and monetary contributions levied by ANRE in 2020: - following GEO no. 1/2020, the responsibility for establishing the values ​of contributions due to ANRE reverted to ANRE ANRE Order no. 12/2020 on ame

  30. Slide 30: Supply Regulation Area – Secondary Legislation – 2/4

    Supply Regulation Area – Secondary Legislation – 2/4 ANRE Order no. 61/2020 for approval of Regulation on the programming of dispatchable production units, dispatchable consumers and dispatchable storage facilities, of Regulation on operation and settlement of BM and of Regulation on calculation and

  31. Slide 31: Supply Regulation Area – Secondary Legislation – 3/4

    Supply Regulation Area – Secondary Legislation – 3/4 ANRE Decisions no. 1074/2020, no. 1075/2020, no. 1076/2020 and no. 1077/2020 regarding establishment of regulated price for delivered electricity and of quantities of electricity sold on the basis of regulated contracts between 1 July and 31 Decem

  32. Slide 32: Supply Regulation Area – Secondary Legislation – 4/4

    Supply Regulation Area – Secondary Legislation – 4/4 ANRE Order no. 150/2020 for the approval of the Regulation on the organized trading framework on the centralized natural gas markets administered by the Electricity and Natural Gas Market Operator OPCOM - S.A. - establishes an organized, alternati

  33. Slide 33: Leading Player in Distribution and Supply according to ANRE

    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

  34. Slide 34: SDTN

    SDTN Distribution segment overview Key figures 9M 2020 Financial results EBITDA is higher by RON 6.1 mn (3.6%), mainly due to the evolution of: ▲ distributed electricity revenues: +RON 11.8 mn (+2.7%), from the positive evolution of the ~1.31 mn distribution tariffs, effect partially canceled by the

  35. Slide 35: SDTN (Cont'd)

    SDTN (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 447 452 9.86% 9.86% 9.94%** 9.94%** 9.56% 9.88% 9.74% 9.37% 140 145 118 109 37 35 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 9M 2019 Q3 2019 9M 2020 Q3 2020 9M 2019 Q3 2019 9

  36. Slide 36: SDTS

    SDTS Distribution segment overview Key figures 9M 2020 Financial results EBITDA is higher by RON 14.7 mn (+10.3%), mainly due to the evolution of the following elements: ▼ distributed electricity revenues: -RON 4.2 mn (-0.9%), from the decrease in the quantity of ~1.19 million electricity distribute

  37. Slide 37: SDTS (Cont'd)

    SDTS (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 10.17% 10.08% 9.40%** 9.40%** 9.61% 9.18% 152 484 467 8.86% 8.90% 145 36 32 110 106 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 9M 2019 Q3 2019 9M 2020 Q3 2020 9M 2019 Q3 2019

  38. Slide 38: SDMN

    SDMN Distribution segment overview Key figures 9M 2020 Financial results EBITDA increase of RON 48.7 mn, or 44.5% compared to 9M 2019, mainly due to: ~1.32 million ▲ distributed electricity revenues: +RON 31.9 mn (+7.1%), mainly due to the positive evolution of distribution tariffs, effect partially

  39. Slide 39: SDMN (Cont'd)

    SDMN (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 11.71% 10.92%** 10.92%** 10.91% 10.63% 181 569 553 10.35% 10.25% 172 9.16% 43 46 139 127 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 9M 2019 Q3 2019 9M 2020 Q3 2020 9M 2019 Q3

  40. Slide 40: Legislative measures in COVID-19 context

    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 March 2020, with the possibility of redu

  41. Slide 41: Measures adopted by Electrica Group in COVID-19 context

    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 effort of the welfare are very financial

  42. Slide 42: Measures to resume the activity at Group level in COVID-19 context

    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  resuming the cash collection activities meas

  43. Slide 43: Corporate Governance Bodies

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

  44. Slide 44: Shareholder Structure at 30 September 2020

    Shareholder Structure at 30 September 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% 17,35

  45. Slide 45: Monthly volume and average price of Electrica's shares and GDRs

    Monthly volume and average price of Electrica’s shares and GDRs 35,000,000 12.00 11.50 30,000,000 11.00 25,000,000 10.50 10.00 20,000,000 9.50 15,000,000 9.00 10,000,000 8.50 8.00 5,000,000 7.50 - 7.00 BSE - Shares - Monthly Volume LSE - GDRs - Monthly Volume BSE - Shares - Average monthly closing p

  46. Slide 46: Comparative evolution with BSE indices

    Comparative evolution with BSE indices (January 2020 – 30 October 2020) % 115.00 105.00 95.00 85.00 75.00 65.00 EL (BSE) Performance BET Performance BET-FI Performance BET-NG Performance BET-XT Performance ELSA (LSE) Performance Source: Company data, BSE 46

  47. Slide 47: Electrica's adjusted closing price vs BET-TR

    Electrica’s adjusted closing price vs BET-TR (January 2020 – 30 October 2020) % 20.00 15.00 10.00 EL: 11.0% BET-TR: -10.4% 5.00 0.00 -5.00 -10.00 -15.00 -20.00 -25.00 -30.00 BET-TR Electrica's price adjusted with dividends Source: Company data; BSE 47

  48. Slide 48: 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

  49. Slide 49: 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

  50. Slide 50: 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 Q3 financial re

  51. Slide 51: Q&A

    Q&A 51

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