Societatea Energetica Electrica S.a. · BVB:EL
Societatea Energetica Electrica — Romania & Frontier Investor Days (September 2023)
62 slides from Societatea Energetica Electrica's conference presentation, Sep 7, 2023
Slide 1: Romania & Frontier Investor Days
Romania & Frontier Investor Days based on the Presentation of H1 2023 Financial Results (Acc. OMFP 2844/2016) Bucharest, 7 September 2023 Public
Slide 2: Content
Content H1 2023 Financial results 1 ▪ Key Group Information ▪ Market Share Data ▪ Distribution Segment Overview ▪ Energy Services Segment Overview ▪ Supply Segment Overview ▪ Production Segment Overview ▪ Group Liquidity ▪ Dividends 2 Corporate Governance and Capital Market Evolution ▪ Group Structu
Slide 3: Disclaimer
DISCLAIMER The results presented are based on the consolidated financial statements prepared in accordance with the Order of the Minister of Public Finance no. 2844/2016 for the approval of the Accounting Regulations compliant with the International Financial Reporting Standards, as subsequently ame
Slide 4: Summary Consolidated Financials – OMFP 2844/2016
Summary Consolidated Financials – OMFP 2844/2016 Key Group Information Revenues EBITDA Growth and Margin Performance (RON mn.) EBITDA (RON mn.) and EBITDA Margin (%) 10,010 13.6% 1,60 0 16. 0% 609 1,40 0 14. 0% 1,20 0 13.2% 12. 0% 7,151 1,00 0 10. 0% 582 800 8.0 % 4,629 4,808 600 1,363 2.2% 6.0 % 9,
Slide 5: Consolidated EBITDA and Net Result Evolution
Consolidated EBITDA and Net Result Evolution Key Group Information Comments The consolidated EBITDA variation H1 2023 vs. H1 2022 is RON 535 mn., being mostly the cumulated effect of the factors below: EBITDA (RON mn.) ❑ The positive variation of the energy margin RON 554 mn., thereof: • RON +713 mn
Slide 6: Leading Player in Distribution and Supply
Leading Player in Distribution and Supply (latest available ANRE data) Market Share Distribution Supply Volumes Distributed in 2022 Volumes Supplied in 2021 Volumes Supplied in 2022 17.96% 13.3% DEER_MN 18.42 DEER_TN Electrica Furnizare 12.7% DEER_TS Others 47.19TWh 44.7 TWh 50.99 TWh Altii 60.3% 13
Slide 7: Distribution Segment – Highlights
Distribution Segment – Highlights (OMFP 2844/2016) Distribution Segment Overview Key figures H1 2023 Financial results EBITDA increased by RON 694 mn., mainly due to the evolution of: ▲ increase in energy margins by RON 713 mn., as an effect of: ~3.91 million ▲ increase in energy revenues by RON +19
Slide 8: Distribution Segment – Main Aspects
Distribution Segment – Main Aspects Distribution Segment Overview Relevant regulatory information: Distributed energy margin Distribution tariffs [RON/MWh] At the beginning of the current PR4 regulatory period, ANRE made a total negative (RON mn.) correction to close PR3 in the amount of RON (855) m
Slide 9: RRAB Analysis of the Distribution Segment
RRAB Analysis of the Distribution Segment Distribution Segment Overview Budgeted Result for the Year 2023 (RON mn.) Relevant regulatory issues: ➢ RON 451 mn., regulated result includes a negative deviation of the NL cost of RON 118 mn. (calculated for the quantity of 1,884 GWh and the price differen
Slide 10: Analysis of Regulated Profit – OMFP 2844
Analysis of Regulated Profit – OMFP 2844 Budgeted Result Distribution Segment Overview for the Distribution Segment for the Year 2023 (RON mn.) 10 Public
Slide 11: Analysis of RRAB – OMFP 1802 – OMFP 2844 Result
Analysis of RRAB- OMFP 1802 – OMFP 2844 Result Distribution Segment Overview Distribution Segment at H1 2023 (RON mn.) Relevant regulatory issues: The positive regulated result of RON 193 mn. does not include the effect of the capitalization of the negative deviation of the cost of NL - in realized
Slide 12: DEER - TN
DEER - TN Distribution Segment Overview Key figures H1 2023 Network losses cost Network losses (RON mn) (GWh) ~1.36 mn 639 users 633 649 71,110 km 34,162 km2 392 408 voltage lines coverage 296 322 area 167 RAB: RON 2.06 bn (est.) 2.73 TWh (-3.6%) 2021 H1 2022 2022 H1 2023 2021 H1 2022 2022 H1 2023 d
Slide 13: DEER - TS
Distribution Segment Overview DEER - TS Key figures H1 2023 Network losses Network losses cost (RON mn) (GWh) ~1.22 mn users 548 692 59,238 km 34,072 km2 549 354 voltage lines coverage area 309 354 315 183 RAB: RON 1.88 bn (est.) 2.84 TWh (-9.6%) distributed energy 2021 H1 2022 2022 H1 2023 2021 H1
Slide 14: DEER - MN
DEER - MN Distribution Segment Overview Key figures H1 2023 Network losses cost Network losses (RON mn) (GWh) ~1.34 mn users 675 795 72,188 km 28,962 km2 684 voltage lines coverage 413 372 area 448 388 232 RAB: RON 2.13 bn (est.) 2.71 TWh (-10,2%) 2021 H1 2022 2022 H1 2023 2021 H1 2022 2022 H1 2023
Slide 15: Financial impact of electricity market evolution - distribution
Distribution Segment Overview The financial impact of the electricity market perspectives evolution - distribution Evolution of the cost of electricity needed to cover NL (net with income) Network losses ❑ In H1 2023, the cost of electricity purchased for NL (net with income) coverage decreased by R
Slide 16: Electrica Serv (SERV)
Energy Services Segment Overview Electrica Serv (SERV) (OMFP 2844/2016) General overview Revenues (RON mn.) SERV provides repair and other energy-related services to third parties, as well as several services to the companies within the group (vehicles rental, building rental etc.). Starting with 1
Slide 17: Supply Segment – Electrica Furnizare
Supply Segment – Electrica Furnizare (OMFP 2844/2016) Supply Segment Overview Key figures H1 2023 Financial results EBITDA decreased by RON 155 mn. compared to H1 2022, mainly following the evolution of the factors below: ~3.5 mn. ▼ the decrease in revenues from the supply of electricity and natural
Slide 18: Supply segment overview
Supply segment overview In the whole supply market, Electrica is the largest supplier by number of customers The supply market comprises the competitive segment, universal service (US) as well as the supplier of last resort (SoLR) segment. The competitive market segment comprises 84 suppliers (inclu
Slide 19: Supply - Key Aspects
Supply - Key Aspects Supply Segment Overview Volume of Electricity Supplied Volume of Electricity Supplied on Number of consumption places Number of consumption places on Retail Market H1 2023 (TWh) Retail Market H1 2023 (TWh) at 30 June 2023 (mn) at 30 June 2023 (mn) 4,6 4,6 4,2 3,5 3,5 3,5 4,2 3,9
Slide 20: Financial Impact of Electricity Market Evolution – Supply (1/2)
The Financial Impact of the Electricity Market Perspectives Evolution – Supply (1/2) ❑ In the period January - June 2023 the realized gross margin is RON 282 mn., - RON 191 mn. below the level achieved in 2022 (RON 473 mn.), and in terms of quantities there was a decrease of 286 GWh (-371 GWh in dom
Slide 21: Financial Impact of Electricity Market Evolution – Supply (2/2)
Supply Segment Overview The Financial Impact of the Electricity Market Perspectives Evolution – Supply (2/2) Receivables’ analysis (acc. OMFP 1802/2014) ❑ The balance of receivables increased by 4% (+RON 103 mn.) at the end of S1 2023 compared to June 2023 and reached RON 2.78 bn., in the context of
Slide 22: Production Segment – Highlights
Production Segment – Highlights (OMFP 2844/2016) Production Segment - Overview General overview Production Segment – Structure at the date of this presentation Starting with the year 2020, the Electrica Group proposed the development of a portfolio of % shareholdings as of Installed electricity prod
Slide 23: Group Liquidity
Group Liquidity Group Liquidity ❑ At Group level, the total liquidity available in cash and overdraft limits as of 30 June 2023 was RON 342 mn., higher than the level recorded at the end of Total liquidity (RON mn.) the previous period, 30 June 2022. The level of cash on 30 June 2023 was RON 147 mn.
Slide 24: Dividend Distribution
Dividend Distribution Dividends Distributed gross dividends (FY 2014 – 2021) (RON mn) Gross dividend per share (RON) and Dividend yield(1) (%) 291.6 6.9% 7.3% 6.9% 251.4 245.4 247.5 246.1 247.9 6.8% 6.0% 244.7 5.2% 5.2% 6.1% 0.8600 0.7217 0.7415 0.7237 0.7300 0.7248 0.7300 152.8 0.4500 1.4% 40.0 0.1
Slide 25: Group structure
Group structure Group Structure Electrica Group is the only Romanian group listed on the BSE & LSE which operates within energy production, distribution, supply & energy service segments Distributie Energie Electrica 99.99% 2) Electrica Furnizare S.A. 99.99%2) Romania S.A. Distribution Operator Elec
Slide 26: Corporate Governance Bodies
Corporate Governance Bodies Corporate Governance Bodies • Mr. Iulian Cristian Bosoanca – Chair • Mr. Gicu Iorga Board of • Mr. Ion-Cosmin Petrescu Directors • Mr. Adrian-Florin Lotrean Current Composition • Mr. Radu-Mircea Florescu • Mr. Dragos-Valentin Neacsu • Ms. Valentina Elena Siclovan • All bo
Slide 27: Corporate Strategic Objectives (updated April 2022)
Status of Group’s Strategy Implementation Electrica Group – Corporate Strategic Objectives (updated April 2022) Objectives Targets Initiatives (updates) Increase of liquidity with the scope of inclusion in the FTSE Russell • 10% higher overall stock yield during 2022-2026 indexes – Electrica has 2 m
Slide 28: Sustainalytics' ESG Scores for Electrica
Status of Group’s Strategy Implementation Sustainability is one of the Values of Electrica Next steps: In 2023 Electrica published, for the 7th consecutive year, the Group Elaboration of a Group Sustainability Sustainability report, based on the Strategy GRI reporting Standard Continuing to collect
Slide 29: Relevant Corporate Events in 2023 (1/4)
Relevant Corporate Events in 2023 and up to date (1/4) Main Corporate Events On 27 April 2023, the Ordinary General Meeting of Shareholders (OGMS) and the Extraordinary General Meeting of Shareholders (EGMS), which took place physically and online through the voting platform https://electrica.voting
Slide 30: Relevant Corporate Events in 2023 (2/4)
Relevant Corporate Events in 2023 and up to date (2/4) Main Corporate Events ▪ In the meeting of 26 April 2023, the Board of Directors of Electrica approved the consolidated value of the Investment Plan (CAPEX) of the Group for the year 2023 – RON 1,083.2 mn. ▪ On 15 May 2023, ELSA’s Board of Direct
Slide 31: Relevant Corporate Events in 2023 (3/4)
Relevant Corporate Events in 2023 and up to date (3/4) Main Corporate Events ▪ On 20 January 2023, the Ministry of Energy, as the concessionaire, amended the concession contract with the Electrica Group for the distribution segment to reflect that, in the event of early termination of the concession
Slide 32: Relevant Corporate Events in 2023 (4/4)
Relevant Corporate Events in 2023 and up to date (4/4) Main Corporate Events ▪ On 19 June 2023, Electrica announced its shareholders and investors that its subsidiary Distributie Energie Electrica Romania (DEER) has attracted EUR 57 mil. non-reimbursable financing through the Modernisation Fund. ▪ O
Slide 33: Shareholder Structure at 30 June 2023
Shareholder Structure at 30 June 2023 Shareholder Structure Percentage of Percentage of share Shareholder No. of Shares shares with voting capital (%) right (%) Romanian State through the Ministry of Energy 169,046,299 48.7948% 49,7850% European Bank for Reconstruction and Development (EBRD) 17,355,
Slide 34: Monthly Volume and Average Price of Electrica's Shares and GDRs
Monthly Volume and Average Price of Electrica’s Shares and GDRs (1 Jan 2023 – 29 Aug 2023) BSE:EL & LSE:ELSA 3,000,000 12.00 2,477,762 2,500,000 10.00 2,287,637 8.44 8.59 2,000,000 1,812,392 8.00 7.49 7.00 1,640,284 1,429,127 1,500,000 6.00 1,145,678 1,153,818 1,000,000 889,958 4.00 500,000 2.00 4,0
Slide 35: Electrica's adjusted closing price vs BET-TR
Electrica’s adjusted closing price vs BET-TR (1 January – 29 August 2023) BSE:EL & LSE:ELSA 17.23 20.00 15.00 4.45 10.00 14.68 5.00 3.00 EL: +14,68% 0.00 BET-TR: +17,23% -5.00 -10.00 BET-TR Electrica adjusted price with dividends Source: Company’s data, BSE 35 Public
Slide 36: Median monthly volume vs FTSE Russell liquidity threshold
Electrica’s Median monthly volume vs FTSE Russell liquidity threshold (1 January 2022 – 29 August 2023) BSE:EL & LSE:ELSA 80,000 76,576 70,000 60,000 50,000 80,892 78,728 78,705 77,493 77,330 77,294 40,000 30,000 20,000 19,648 10,000 0 Monthly Median Volume FTSE Russell Threshold Souce: Company data
Slide 37: Appendices: Regulatory aspects – Distribution and Supply
Appendices Regulatory aspects – Distribution Regulatory aspects – Supply 37 Public
Slide 38: Important Regulatory Changes – Distribution Activity (1/2)
Important Regulatory Changes – Distribution Activity (1/2) Regulatory Aspects - Distribution ❑ RP4 Regulations on Distribution tariffs • RRR: 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% f
Slide 39: Important Regulatory Changes – Distribution Activity (2/2)
Important Regulatory Changes – Distribution Activity (2/2) Regulatory Aspects - Distribution ❑ MF instructions for asset capitalization according to the provisions of art. III of GEO no. 119/2022 ✓ Capitalized amounts are recorded in accounting through accounting article 208 "Other intangible assets
Slide 40: Changes in Distribution Regulation - RP4
Changes in Distribution Regulation - RP4 Regulatory Aspects - Distribution 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
Slide 41: Changes in Distribution Regulation
Changes in Distribution Regulation Regulatory Aspects - Distribution 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% t
Slide 42: Methodology for distribution tariffs – RAB & Investment RP4 vs RP3
Changes in Distribution Regulation Regulatory Aspects - Distribution 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 account
Slide 43: Methodology for distribution tariffs – Opex & NL RP4 vs RP3
Changes in Distribution Regulation Regulatory Aspects - Distribution 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
Slide 44: Regulatory Developments – Supply (1/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (1/15) GEO no. 27/2022 on the measures enforceable for the end consumers of the electricity and natural gas market from 1 April 2022 until 31 March 2023, amending and completing some energy-related
Slide 45: Regulatory Developments – Supply (2/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (2/15) Law No. 206/2022 to approve Government Emergency Ordinance No. 27/2022 regarding the measures applicable to final customers on the electrical energy and natural gas market during 1 April 2022
Slide 46: Regulatory Developments – Supply (3/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (3/15) GEO no. 119/2022 - to amend and supplement the GEO n98xo. 27/2022 on the measures applicable to final customers on the electrical energy and natural gas market during 1 April 2022 – 31 March
Slide 47: Regulatory Developments – Supply (4/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (4/15) Law no. 357/2022 - Law on the approval of Government Emergency Ordinance no. 119/2022 for the modification and completion of Government Emergency Ordinance no. 27/2022 on the measures applica
Slide 48: Regulatory Developments – Supply (5/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (5/15) The ceilings for electricity prices applicable to non-household final customers are: • maximum 1 leu/kWh, for 85% of the average monthly consumption at the place of consumption (application a
Slide 49: Regulatory Developments – Supply (6/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (6/15) GEO no. 192/2022 - Emergency Ordinance amending and supplementing Government Emergency Ordinance no. 27/2022 on the measures applicable to end customers in the electricity and natural gas mar
Slide 50: Regulatory Developments – Supply (7/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (7/15) GEO no. 32/2023 - Emergency Ordinance for amending and supplementing Government Emergency Ordinance no. 166/2022 regarding some measures to provide support to categories of vulnerable people
Slide 51: Regulatory Developments – Supply (8/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (8/15) ANRE Order no. 5/2023 — Order for the approval of the Regulation for the supply of electricity to final customers, as well as for the modification and completion of some orders of the ANRE pr
Slide 52: Regulatory Developments – Supply (9/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (9/15) ANRE Order no. 9/2023 — Order regarding the establishment of the mandatory quota for the purchase of green certificates for the year 2022 • enter into force on 1 March 2023; • the mandatory q
Slide 53: Regulatory Developments – Supply (10/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (10/15) ANRE Order no. 13/2023 — Order for the approval of the framework contract for the supply of electricity in the universal service regime, the general conditions for the supply of electricity
Slide 54: Regulatory Developments – Supply (11/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (11/15) ANRE Order no. 19/2023 — Order for the amendment of the green certificate invoicing procedure, approved by the Order of the president of the National Energy Regulatory Authority no. 187/2018
Slide 55: Regulatory Developments – Supply (12/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (12/15) ANRE Order no. 18/2023 — Order regarding the approval of the Methodology for monitoring the wholesale electricity market • modifying and completing the Methodology by updating the methodolog
Slide 56: Regulatory Developments – Supply (13/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (13/15) ANRE Order no. 59/2023 — Order regarding the approval of the Procedure for the recovery of improperly issued green certificates and for the modification of the Regulation for the issuance of
Slide 57: Regulatory Developments – Supply (14/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (14/15) ANRE Order no. 67/2023 — Order regarding the approval of the tariff for the purchase of system services for the transport and system operator Compania Nationala de Transport al Energei Elect
Slide 58: Regulatory Developments – Supply (15/15)
Regulatory Aspects - Supply Regulatory-related Developments entered in force until July 2023 – Supply (15/15) ANRE Order no. 76/2023 — Order regarding the amendment of the annex to the Order of the President of the National Energy Regulatory Authority no. 139/2022 for the approval of the tariffs cha
Slide 59: Glossary
Glossary ANRE Romanian Energy Regulatory Authority IFRS International Financial Reporting Standard B2B Business to Business IMS Integrated Management System BET-TR Bucharest Exchange Trading - Total Return Index IPO Initial Public Offering BM Balancing Market LSE London Stock Exchange BoD Board of D
Slide 60: 2023 Financial Calendar
2023 Financial Calendar • 7 March Publication of the 2022 financial annual results - documents for the Ordinary General Meeting of Shareholders • 13 March Investor and analyst teleconference for presentation of 2022 consolidated financial results • 27 April Annual General Meeting of Shareholders • 2
Slide 61: 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; +40 731 796 111 • Address: 9 Grigore Alexandrescu Str., 1st District, Bucharest, 010621 This document was prepared by Electrica for the presentation o
Slide 62: Executive Management of Electrica
Executive Management of Electrica Mr. Alexandru Chirita Mr. Stefan Frangulea Chief Executive Officer Chief Financial Officer 2017 Ms. Livioara Sujdea Ms. Andreea Lambru Chief Distribution Officer Chief Business Development Officer 62 Public
Societatea Energetica Electrica — Romania & Frontier Investor Days (September 2023) on 6ix