Redes Energeticas Nacionais Sa · EURONEXT:RENE
Redes Energeticas Nacionais Sa — REN - Redes Energéticas Nacionais — Investor Presentation (February 2023)
47 slides from Redes Energeticas Nacionais Sa's investor presentation, February 2023
Slide 1: Investor Presentation February 2023
INVESTOR PRESENTATION February 2023
Slide 2: Key messages
Key messages REN Operational Stable business Solid New strategic Overview excellence context results cycle Exclusive TSO, Highly efficient and Stable regulatory Strong financial REN at the core of reliable and reliable player, context discipline leading energy transition experienced committed to wit
Slide 3: Key messages
Key messages REN Operational Stable business Solid New strategic Overview excellence context results cycle Exclusive TSO, Highly efficient and Stable regulatory Strong financial REN at the core of reliable and reliable player, context discipline leading to energy transition experienced committed to
Slide 4: REN has 70-year track record as a leading energy infrastructure operator in Portugal
REN Overview REN has 70-year track record as a leading energy infrastructure operator in Portugal Foundation of CNE (National Electricity 2nd reprivatization phase 2nd reprivatization Company) (State Grid of China 25%; phase concluded Oman Oil 15%) (sale of Portuguese Foundation of State’s 11% stake
Slide 5: Exclusive TSO and 2nd largest natural gas DSO in Portugal, with international presence
REN Overview Exclusive TSO and 2nd largest natural gas DSO in Portugal, with international presence Business Portfolio Electricity Natural Gas Natural Gas Telecommunications Transmission Transmission Distribution business 9,404 km 1,375 km 6,263 km 7M€ Portugal 315M€ 112M€ 44M€ 92 km 166 km Chile 8M
Slide 6: Portugal's electricity transmission and system management activity
REN Overview Portugal’s electricity transmission and system management activity Electricity Transmission Electricity Transmission Grid Exclusive Transmission System Operator (TSO) 400kV line Transmission of very high voltage electricity and overall technical management of the system 220kV line 150kV
Slide 7: The only player in Portugal's natural gas transmission activity
REN Overview The only player in Portugal’s natural gas transmission activity Natural Gas Natural Gas Transmission Transmission Grid Exclusive TSO (concession until 2046) Infraestructures in operation Transportation of high-pressure natural gas and RNTGN – In project overall technical management of t
Slide 8: Second-largest concession in the Portuguese natural gas distribution activity
REN Overview Second-largest concession in the Portuguese natural gas distribution activity REN Portgás Natural Gas Distribution Distribution Grid 2nd largest gas distribution concession in Portugal among 11 companies with exclusive regional concessions Provides services in the coastal region of Nort
Slide 9: Growing its international presence in the Chilean energy transmission business
REN Overview Growing its international presence in the Chilean energy transmission business Electrogas (42.5% stake acquired in February 2017) Transemel (100% acquired in October 2019) 165.7 km natural gas and 20.5 km diesel oil pipeline 14 lines (92 km) and 5 substations (985 MVA) Connects Quintero
Slide 10: Holdings in the Spanish electricity TSO and Cahora Bassa hydro-plant in Mozambique
Holdings in the Spanish electricity TSO and Cahora Bassa hydro-plant in Mozambique Spain Mozambique Red Eléctrica Corporación (1% stake) Hidroeléctrica de Cahora Bassa (7.5% stake) Sole transmission agent and operator of the Spanish Concession holding company operating the Cahora electricity system
Slide 11: Key messages
Key messages REN Operational Stable business Solid New strategic Overview excellence context results cycle Exclusive TSO, Highly efficient and Stable regulatory Strong financial REN at the core of reliable and reliable player, context discipline leading to energy transition experienced committed to
Slide 12: REN is amongst the most efficient TSO's with superior quality of service
Operational Excellence REN is amongst the most efficient TSO’s with superior quality of service across international benchmarks Electricity Natural Gas Transmission Transmission Service level in line with or outperforming peers Line cost Opex on pipelines 60% 40% below below Avg. European Peers aver
Slide 13: Solid quality of service, with a reduction in transmission losses
Operational Excellence Solid quality of service, with a reduction in transmissions losses despite increase in electricity consumption Operational Indicators (9M22 Performance vs 9M21) Energy transmission losses Avg. interruption time Line Length 367km 1.76% 0.26pp 0.07min 0.02min 9,404km (4.1%) Elec
Slide 14: Focused on enabling a renewable future
Operational Excellence Focused on enabling a renewable future % Electricity consumption from renewable sources1 2018 2021 60% Two 70-hour periods 100% 45% renewable 41% Production in March exceeded consumption of mainland Portugal Europe Spain Portugal 2019 131-hour period with renewable production
Slide 15: Strong investment in the decarbonization in Portugal and Chile
Operational Excellence Strong investment in the decarbonization in Portugal and Chile, and in the expansion of Portugal’s electricity network In Electricity In Natural Gas Expansion Make H2 a reality Pave the next Solar To accommodate for tomorrow wave for gas new renewable ~5.1 GW 2022-2026 2026-20
Slide 16: Solid shareholder base with best-in-class corporate governance
Operational Excellence Solid shareholder base with best-in-class corporate governance Shareholder structure1 Board composition 40.9% 25.0% OTHER Board diversity and independence EXECUTIVE COMMITTEE 3 NON-INDEPENDENT 12.0% 14 MEMBERS MEMBERS 5 INDEPENDENT MEMBERS 6 0.6% 7.4% (3 from the audit 3.8% 5.
Slide 17: REN is taking sustainable steps toward meeting its targets
Operational Excellence REN is taking sustainable steps toward meeting its targets ENVIRONMENTAL SOCIAL GOVERNANCE TARGETS -50% CO2 emissions by 2030 vs. 2019 >1/3 of women in 1st line management Increasing ESG weight in managers’ positions by 2030 performance metrics already by 2022 Carbon neutral b
Slide 18: Good performance in international ESG scores but with ambition to do more
Operational Excellence Operational Excellence Good performance in international ESG scores but with ambition to do more REN’s Rating 62 B A 19.2 B 2022 2021: 43 2021: C 2021: BBB 2021: 19.4 2021: B Scale 1-100 D-A CCC-AAA 100-0 D-A (Scores as of December, 2022. S&P CSA scores for 2022 not yet public
Slide 19: Key messages
Key messages REN Operational Stable business Solid New strategic Overview excellence context results cycle Exclusive TSO, Highly efficient and Stable regulatory Strong financial REN at the core of reliable and reliable player, context discipline leading to energy transition experienced committed to
Slide 20: Fully regulated domestic business
Stable Business Context Fully regulated domestic business Regulatory framework Stable regulatory No consumer Allowed framework credit risk revenues 4-year regulatory periods, Tariff revenues are not Allowed revenues assure cost for electricity and natural dependent on State of capital remunera
Slide 21: Introduction of TOTEX regulation in the electricity business
Stable Business Context Introduction of TOTEX regulation in the electricity business REN’s domestic allowed revenues breakdown Electricity 2022-251 Natural Gas 2020-23 Revenue Cap for TOTEX + Efficiency Sharing + Incentives Return on RAB + D&A Recovery + Opex Recovery Mechanism (RAB x RoR) (CAPEX2 +
Slide 22: Revenue Cap for TOTEX and additional revenues coming from incentives
Stable Business Context Revenue Cap for TOTEX and additional revenues coming from incentives Transmission Regulatory Model 2018-21 Transmission Regulatory Model 2022-251 IMDT incentive IREI Incentive Efficiency sharing mechanism Other CAPEX3 Recovery of Opex (RoR, D&A) Total The IMDT incentive may t
Slide 23: Electricity Revenues 2022-25
Stable Business Context For the regulatory period 2022-2025, ERSE established a TOTEX model – a revenue cap applied to total controllable costs Overview Detail REN recognizes in the income statement the annual The annual remuneration starts at 264.3M€ and is updated rent fixed by the regulator for
Slide 24: REN is naturally hedged against inflation
Stable Business Context REN is naturally hedged against inflation, as the company’s main remuneration drivers take inflation into account Theory Overall, inflation (rising prices) erodes the purchasing power, which leads to the common belief that it will reduce the value of future cash flows Gas
Slide 25: Committed to continue delivering stable performance
Stable Business Context Committed to continue delivering stable performance Domestic business Transemel Distribution Revenues regularizations (one-off) 481 486 477 456 447 Transmission 9 47 46 44 44 364 11.1 EBITDA1 38 8.2 472 EBITDA 6.7 6.0 2.9 6.8 7.2 439 431 412 403 M€ 326 M€ 8.2 2017 2018 2019 2
Slide 26: New businesses allow for RAB stabilization and sustainable operational results
New businesses allow for RAB stabilization and sustainable operational results, despite mature domestic business… REN EBITDA Regulated asset base and other investments’ M€ assets, M€ CAGR CAGR -1% +2% 476.0 487.5 492.3 486.2 4,217 4,136 470.2 460.8 4,098 4,054 0.0 8.9 7.0 47.1 6.4 2.0 6.8 149 69 3,9
Slide 27: With a transparent and stable rate of return mechanism
… With a Transparent and stable rate of return mechanism RoR indexation mechanism RoR evolution, % Electricity (Tx) Natural gas (Tx) Natural gas (Dx) 9.0 Electricity (base) At the Base RoR indexed to Return (%) start the average 8.8 Rate of Portuguese 7.0 government 10-Y 6.0 6.1 6.3 5.2 4.9 4.6 4.
Slide 28: Key messages
Key messages REN Operational Stable business Solid New strategic Overview excellence context results cycle Exclusive TSO, Highly efficient and Stable regulatory Strong financial REN at the core of reliable and reliable player, context discipline leading energy transition experienced committed to wit
Slide 29: Stable net income
Solid Results Stable net income Net income1 Electricity base RoR 10Y PT Government Bonds M€ Spread RoR/ avg. cost of Average cost of debt debt (p.p) 2.8 3.9 2.6 3.1 1.9 3.9 3.8 3.0 2.8 2.8 2.9 152 138 142 141 143 137 121 124 121 126 124 9.6% 7.6% 8.1% 7.8% 5.7% 6.0% 6.1% 6.3% 4.7% 5.2% 4.9% 4.6% 4.5
Slide 30: Balanced credit profile with commitment to investment grade credit metrics
Solid Results Balanced credit profile with commitment to investment grade credit metrics and low cost of debt Gross debt maturity profile and funding Average Cost of debt evolution Rating agencies sources1 (%) credit ratings Sep 2022, M€ Avg. Maturity Sep 22 2,412 3.2yrs 4.1 2.0% 20 Other EIB3 16.2%
Slide 31: Delivering compelling returns to shareholders, outperforming industry and index
Solid Results Delivering compelling returns to shareholders, outperforming industry and index Cumulative Total Shareholder Return1 since REN’s IPO Indexed from 100 180 PSI20 REN EuroStoxx Utilities 150 155.3% 120 90 60 Eurostoxx Utilities 30 37.0% 0 PSI20 -30 -22.4% -60 Dec Dec Dec Dec Dec Dec Dec D
Slide 32: REN has maintained an attractive and stable dividend policy
Solid Results REN has maintained an attractive and stable dividend policy REN Dividend per Share Dividend yield2 € % Cash flow dividend payout 11.0 of ~30% since 2015 and above reference peers’ average 8.7 0.218 0.171 0.171 0.171 0.171 6.2 5.2 4.8 4.3 4.1 4.4 1.3 2018 2019 2020 2021 20221 TSO1 TSO2
Slide 33: Key messages
Key messages REN Operational Stable business Solid New strategic Overview excellence context results cycle Exclusive TSO, Highly efficient and Stable regulatory Strong financial REN at the core of reliable and reliable player, context discipline leading to energy transition experienced committed to
Slide 34: In 2021, REN has successfully met its 2021-24 Business Plan targets
New Strategic Cycle In 2021, REN has successfully met its 2021-24 Business Plan targets 2021 versus BP 2021-24 Key highlights 461 450 - 470 EBITDA, Domestic businesses regulatory remuneration €M remained under pressure of low 10Y PGB yields 97 90 -105 Net Income benefited from the positive trend of
Slide 35: REN will continue to push for investments in Portugal and Chile
New Strategic Cycle REN will continue to push for investments in Portugal and Chile Average annual Capex, €M 2018-20 2021-24 190-220 Up to 40% 156 Increase in Electricity domestic avg. 150-175 Gas transmission annual capex vs. 118 last strategic cycle Gas distribution 13 15-20 25 25 + €900M to be in
Slide 36: REN has a strong equity story, supported by investment growth and solid financials
New Strategic Cycle REN has a strong equity story, supported by investment growth and solid financials Up to +35% 200-235 175 Strong capex level Total aligned with strategy, capex, M€ Capex growth leading to a stable RAB and RAB stability 2015-20 2021-24 Total 3.9 3.9-4.0 assets, B€ 463 450-470 REN
Slide 37: Robust debt management and attractive returns
New Strategic Cycle Robust debt management and attractive returns Optimize cost of FFO/ Net 11-13% 12-14% debt debt, % beyond 2022 (~11% in 2021) Protect net profit Strong credit Committed to Net 2.8-2.7 2.7-2.5 ratings investment grade debt, B€ 2018-20 2021-24 Dividend floor at Aim for a payout 0.1
Slide 38: REN will continue to enhance its performance focusing on its strategic pillars
Solid Results REN will continue to enhance its performance focusing on its strategic pillars At the core of energy transition Investment growth story, Solid financials delivering superior service and sustainable quality ESG highest standard shareholder returns Strong and Steady regulatory Strong gro
Slide 39: Appendix – 9M22 Business Performance Highlights
Appendix – 9M22 Business Performance Highlights 39
Slide 40: 9M22 Key Messages
Appendix – 9M22 Business Performance Highlights 9M22 Key Messages EBITDA improved 5.1% YoY to €360.9M, mainly driven by Domestic EBITDA performance (+€12.5M) reflecting higher assets and opex remuneration (+€16.4M), slightly offset by greater core opex (+€4.2M), due to higher electricity costs at th
Slide 41: 9M22 Results
Appendix – 9M22 Business Performance Highlights 9M22 Results 9M22 9M21 9M22 / 9M21 Results EBITDA1 360.9 343.4 17.5 5.1% Net financial income1 -25.8 -31.1 5.3 -17.1% Net income 81.4 68.4 13.1 19.1% Recurrent net income 107.0 93.0 13.9 15.0% Capex2 Investment 126.0 141.7 -15.7 -11.1% Transfers to R
Slide 42: Increase in EBITDA driven by domestic business assets remuneration and international business performance
Appendix – 9M22 Business Performance Highlights Increase in EBITDA driven by domestic business assets remuneration and international business performance EBITDA evolution breakdown €M EBITDA contribution by business segment4 % €+17.5M (+5.1%) Electricity Gas Distribution5 5.0 360.9 Gas Transmission
Slide 43: Transfers to RAB and CAPEX broadly in line with 2022
Appendix – 9M22 Business Performance Highlights Transfers to RAB and CAPEX broadly in line with 2022 Transfers to RAB €M Key highlights Electricity Gas Transportation Gas Distribution Electricity €+2.8M 150 kV connection between the Fernão Ferro and Trafaria (+3.5%) substations (underground cable
Slide 44: OPEX was unchanged YoY, while core OPEX grew 5.1%
Appendix – 9M22 Business Performance Highlights OPEX was unchanged YoY, while core OPEX grew 5.1% Core OPEX1 evolution €M Key highlights €+4.2M (+5.1%) Core external costs 1.3 85.6 • Electricity costs in LNG terminal (+€7.9M) • Forest clearing costs (-€4.0M) 2.9 81.5 Non-core costs • Pass-through co
Slide 45: Net Profit increased as a result of higher EBITDA and financial results
Appendix – 9M22 Business Performance Highlights Net Profit increased as a result of higher EBITDA and financial results, partially offset by higher depreciations, taxes and CESE Net profit evolution breakdown €M Key highlights €13.1M (19.1%) The increase in EBITDA 17.5 5.3 reflecting the positive
Slide 46: Disclaimer
DISCLAIMER This document has been prepared by REN – Redes Energéticas Nacionais, SGPS, S.A (the "Company") and its purpose is merely informative. As such, this document may be amended and supplemented at the discretion of REN and it should be read as a overview of the matters addressed or contained
Slide 47: Thank you
THANK YOU REN’s IR & Media app: REN GET IN TOUCH INVESTORS Visit our web site at www.ren.pt or contact us: Madalena Garrido – Head of IR Alexandra Martins Telma Mendes Av. EUA, 55 1749-061 Lisboa Telephone: +351 210 013 546 ir@ren.pt
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