Societatea Energetica Electrica S.a. · BVB:EL

Societatea Energetica Electrica — Electrica Group — The Finest CEElection Conference 2020

52 slides from Societatea Energetica Electrica's conference presentation, Oct 5, 2020

  1. Slide 1: Electrica Group Presentation

    Electrica Group Presentation The Finest CEElection Conference 2020 Bucharest, 5 October 2020

  2. Slide 2: Content

    Content 1 H1 2020 Financial results  Key Group Information  Distribution Segment Overview  Supply Segment Overview 2 COVID-19 Impact on Group’s Activities 3 Main Corporate Events 4 Status of Group’s Strategy Implementation 5 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 (%) 6,280 5,613 15.17% 518 12.13% 11.57% 11.44% 378 3,101 3,200 261 5,762 277 5,235 681 718 2,840 2,923 486 359 2018 6M 2019 2019 6M 2020 2018 6M 2019 2019 6

  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 H1 2020 vs. H1 2019 is RON +127 mn, being mostly the net effect of:  The positive variation of the energy margin RON +216 mn, thereof: • RON +23 mn from the distribution seg

  5. Slide 5: Distribution highlights

    Distribution highlights Distribution segment overview Key figures 6M 2020 Financial results EBITDA for the distribution segment increased by RON 5.5 mn (+2%), mainly due to the evolution of: ▲ revenues: RON +47.4 mn (+3.6%), being predominantly the effect of the electricity revenues increase by ~3.8

  6. Slide 6: Electrica Serv

    Electrica Serv Distribution segment overview General overview Revenues Electrica Serv, a wholly-owned subsidiary of ELSA, provides repair and other energy ancillary (RON mn) 183 services to third parties and various services to the companies within the group (vehicles rental, building rental etc.).

  7. Slide 7: Supply market

    Supply market Overall Market Share – 5 months 2020 Supply segment overview Key Facts Electrica Furnizare, 19.97% 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

  8. Slide 8: Supply segment

    Supply segment Supply segment overview Key figures (6M 2020) Financial results Coverage EBITDA significantly increased by RON 135 mn compared to 6M 2019, as a result of the following factors: ▼ electricity purchase costs lower by approx. RON 141.4 mn compared to 6M 2019, ~3.57 mn mainly due to the d

  9. Slide 9: 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 3,540 3,553 3,569 8.5 4.9 4.9 4.6 4.6 3,288 3,278 3,284 3,289 2.5 2.5 3.7 4.4 2.2 2.1 253 262 269 280 2018 6M

  10. Slide 10: 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

  11. Slide 11: Measures adopted by the Electrica Group in COVID-19 context

    COVID-19 impact on Group’s activities Measures adopted by the Electrica Group in COVID-19 context State of emergency State of alert 16 March 14 May 14 August Business continuity and our customers’ wellfare are very important for us Our employees’ saftely remains a priority We permanently analyze Ele

  12. Slide 12: COVID-19 impact on distribution companies

    COVID-19 impact on Group’s activities Hypotheses of the impact of the COVID 19 pandemic on distribution companies Evolution of the cost of electricity needed to cover NL Network losses  In H1 2020, the cost of electricity needed to cover NL was by RON 10 mn higher than in H1 2019, but by RON 12.5 m

  13. Slide 13: COVID-19 impact 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; we are not able at the moment to make a reliable estimate on the impact of the amount of electricity s

  14. Slide 14: COVID-19 impact on supply company (2/2)

    COVID-19 impact on Group’s activities Hypotheses of 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 June 2020, state

  15. Slide 15: 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 as of 30 June 2020 was RON 1,088 mn. Without considering the unused overdraft line of Total liquidity (RON mn) RON 210 mn contracted in January related to th

  16. Slide 16: Main events in H1 2020 and up to date 1/2

    Main events in H1 2020 and up to date 1/2 Main Corporate Events ELSA’s General Meetings of Shareholders:  OGMS dated 29 April 2020 – the shareholders approved the following: • The individual and consolidated financial statements for 2019 • The individual and consolidated budget for 2020 • The propo

  17. Slide 17: Main events in H1 2020 and up to date 2/2

    Main events in H1 2020 and up to date 2/2 Main Corporate Events Other events: • 17 April 2020 – the rating agency Fitch Ratings affirms Electrica’s corporate rating at ‘BBB’, but revises its outlook from Stable to Negative following the revision of Romania’s rating outlook, in the national context,

  18. Slide 18: Strategy implementation on the distribution segment

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

  19. Slide 19: Strategy implementation on the 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 potentia

  20. Slide 20: Appendices

    Appendices Curectrica 20

  21. Slide 21: Group structure

    Group structure Electrica Group is the only Romanian group listed on the BSE & LSE and operates within distribution, supply & energy service segments Electrica Furnizare S.A. 99.99 %3) 99.99 %3) SDEE1) Transilvania Nord Electricity and natural gas Distribution Operator supply company HQ: Cluj-Napoca

  22. Slide 22: Background and basis of preparation for the financials

    Background and basis of preparation for the financials  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 Romanian Leu (

  23. Slide 23: Important Regulatory Changes – Distribution Activity (1/2)

    Important Regulatory Changes – Distribution Activity (1/2)  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 end of

  24. Slide 24: Important Regulatory Changes – Distribution Activity (2/2)

    Important Regulatory Changes – Distribution Activity (2/2)  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 DO has the rig

  25. Slide 25: 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

  26. Slide 26: 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

  27. Slide 27: Distribution tariffs methodology: RP4 vs RP3 (RAB & Investment)

    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

  28. Slide 28: Distribution tariffs methodology: 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 formulae 1. OpexC 2019 is not established based on formulae, but by comparative analy

  29. Slide 29: 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

  30. Slide 30: 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

  31. Slide 31: Supply Regulation Area – Secondary Legislation – 1/3

    Supply Regulation Area – Secondary Legislation – 1/3 ANRE Order no. 1/2020 on approval of tariffs and monetary contributions levied by National Energy Regulatory Authority in 2020: - following GEO no. 1/2020, the responsibility for establishing the values ​of contributions due to ANRE reverted to AN

  32. Slide 32: Supply Regulation Area – Secondary Legislation – 2/3

    Supply Regulation Area – Secondary Legislation – 2/3 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

  33. Slide 33: Supply Regulation Area – Secondary Legislation – 3/3

    Supply Regulation Area – Secondary Legislation – 3/3 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

  34. Slide 34: 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

  35. Slide 35: SDTN

    SDTN Distribution segment overview Key figures 6M 2020 Financial results EBITDA is lower by RON 4.5 mn (-4.1%), mainly due to the evolution of: ~1.30 mn ▲ distributed electricity revenues: +RON 8 mn (+2.7%), from the positive evolution of the users distribution tariffs, effect partially canceled by

  36. Slide 36: SDTN (Cont'd)

    SDTN (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 194 622 613 11.00% 9.86% 9.86% 9.94%* 10.15% 9.94%* 9.88% 166 9.56% 103 110 329 343 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2018 6M 2019 2019 6M 2020 2018 6M 2019 2019 6M

  37. Slide 37: SDTS

    SDTS Distribution segment overview Key figures 6M 2020 Financial results EBITDA is higher by RON 9 mn (+11%), mainly due to the following elements: ▼ distributed electricity revenues: -RON 2 mn (-0.6%), from the decrease in the quantity of electricity ~1.19 million distributed on all voltage levels,

  38. Slide 38: SDTS (Cont'd)

    SDTS (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 761 223 703 200 10.17% 10.08% 10.28% 10.03% 9.40%* 9.61% 9.40%* 9.18% 116 113 374 361 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2018 6M 2019 2019 6M 2020 2018 6M 2019 2019 6

  39. Slide 39: SDMN

    SDMN Distribution segment overview Financial results Key figures 6M 2020 EBITDA increase of RON 11.9 mn, or 18.2% compared to 6M 2019, mainly due to: ▲ distributed electricity revenues: +RON 16.7 mn (+5.6%), mainly due to the positive evolution of distribution tariffs, effect partially offset by the

  40. Slide 40: SDMN (Cont'd)

    SDMN (Cont’d) Distribution segment overview Network losses cost Network losses Network losses (RON mn) (GWh) (%) 249 240 880 802 11.71% 11.55% 11.86% 10.92%* 10.92%* 10.91% 10.63% 9.16% 129 135 430 426 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2018 6M 2019 2019 6M 2020 2018 6M 2019 201

  41. Slide 41: 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

  42. Slide 42: 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

  43. Slide 43: 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

  44. Slide 44: 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

  45. Slide 45: Shareholder Structure at 30 June 2020

    Shareholder Structure at 30 June 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% 17,355,272

  46. Slide 46: Monthly volume and average price of Electrica's 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 - Shares - Monthly Volume LSE - GDRs - Monthly Volume BSE - Shares -

  47. Slide 47: Comparative evolution with BSE indices

    Comparative evolution with BSE indices (January 2020 – 31 July 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) Performance Source: Company data, BSE 47

  48. Slide 48: Electrica's adjusted closing price vs BET-TR

    Electrica’s adjusted closing price vs BET-TR (January 2020 – 31 July 2020) % 10.00 5.00 0.00 -5.00 EL: 4% BET-TR: -12.5% -10.00 -15.00 -20.00 -25.00 -30.00 BET-TR Electrica adjusted price with dividends Source: Company data; BSE 48

  49. Slide 49: Glossary

    Glossary MP Merger Plan AMR Automatic Meter Reading MV Medium Voltage ANRE Romanian Energy Regulatory Authority MWh MegaWatt hour B2B Business to Business NBV Net Book Value B2C Business to Consumer NL Network Losses BET-TR Bucharest Exchange Trading - Total Return Index OGMS Ordinary General Meetin

  50. Slide 50: 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

  51. Slide 51: 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

  52. Slide 52: Q&A

    Q&A 52

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