Redes Energeticas Nacionais Sa · EURONEXT:RENE
Redes Energeticas Nacionais Sa — REN - Redes Energéticas Nacionais — Non-Deal Roadshow (November 2016)
34 slides from Redes Energeticas Nacionais Sa's roadshow presentation, November 2016
Slide 1: November 2016
> = iN EMG EAM ety se: vend winner questafe VERCURV is BUSINESS Anan Europe 2016 AWARDS 2019 gxciincamsesimm WA ‘THE INTERNATIONAL STEVIES* magazine
Slide 2: Equity Story
EQUITY STORY Top of the industry TSO in efficiency and service quality Solid domestic business with stable regulation Sustainable domestic investment plan with potential upside in international development Strong financial position and Net Income protection Attractive dividend policy 1
Slide 3: Equity Story
EQUITY STORY Top of the industry TSO in efficiency and service quality Solid domestic business with stable regulation Sustainable domestic investment plan with potential upside in international development Strong financial position and Net Income protection Attractive dividend policy 2
Slide 4: REN is the Portuguese TSO holding the electricity and natural gas concessions
REN IS THE PORTUGUESE TSO HOLDING THE ELECTRICITY AND NATURAL GAS CONCESSIONS REN, headquartered in Lisbon, is an integrated TSO focused in the operation of two major business areas: • Transmission in high voltage electricity1 and overall technical management of the Portuguese electricity system • T
Slide 5: REN is present in electricity transmission and natural gas transportation, storage and terminal activities
REN IS PRESENT IN THE ELECTRICITY TRANSMISSION AND NATURAL GAS TRANSPORTATION, STORAGE AND TERMINAL ACTIVITIES Electricity Value Chain REGULATED ACTIVITIES Generation Transmission Distribution Supply Tariffs build-up Energy Cost + Use of Transmission Network + Global System Costs(1) + Use of Distrib
Slide 6: REN has successfully concluded its privatization process
REN HAS SUCESSFULLY CONCLUDED ITS PRIVATIZATION PROCESS FROM… … TO 2012 ACTUAL Own shares Other 0.7% State Grid State Grid 17.1% of China of China 25.0% 25.0% Own shares 0.7% Other 36.9% Portuguese State 11.0% Columbia 2.0% Wagner 5.0% 15.0% 15.0% Oman Oil Oman Oil REE 5.0% 2.1% EDP 5.0% 5.3% 5.0% 8
Slide 7: Today, REN is one of the most efficient TSOs
TODAY, REN IS ONE OF THE MOST EFFICIENT TSOS… OPEX1/KM OF EQUIVALENT LINE 2014; thousand €/km Electricity Natural Gas -27% 41 30 -63% 27 10 Peers Average2 Peers Average2 High efficiency allows to reduce REN’s weight on tariffs 1 Adjusted to PPP (base year: 2011) 2 Excluding REN; Includes Terna, REE,
Slide 8: ...while maintaining best practice quality in Europe
…WHILE MANTAINING BEST PRACTICE QUALITY IN EUROPE INTERRUPTION TIME1 ENERGY NOT SUPPLIED2 Avg 2009-13; Minutes lost per year Avg 2009-13; MWh / GWh of domestic electricity consumption Portugal 0.39 Poland 0.02% Slovenia 1.03 Portugal 0.08% Slovenia 0.19% Lithuania 1.24 Spain4 0.29% Spain3 1.74 Lithu
Slide 9: Equity Story
EQUITY STORY Top of the industry TSO in efficiency and service quality Solid domestic business with stable regulation Sustainable domestic investment plan with potential upside in international development Strong financial position and Net Income protection Attractive dividend policy 8
Slide 10: Solid domestic business
SOLID DOMESTIC BUSINESS CAGR 2010-15 OPERATING CASH FLOW1 NET INCOME Million € Million € +2.4% +1.0% 466 477 467 124 121 121 434 113 116 419 110 386 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 1 EBITDA excluding materially relevant non-cash items, such as own works and subsidies amor
Slide 11: Stable and supportive regulation in Portugal
STABLE AND SUPPORTIVE REGULATION IN PORTUGAL Activity Remuneration Remuneration of the regulated activities is based on the definition of the allowed revenues, which assure the principle of recovering operating costs (with efficiency targets) as well as the cost of capital. The model is defined for
Slide 12: A return mechanism linked to the 10Y Portuguese bond yield
A RETURN MECHANISM LINKED TO THE 10Y PORTUGUESE BOND YIELD… Electricity Base RoR Gas RoR The Base RoR is indexed to the average Portuguese sovereign 10-year bond yields (OT’s) The RoR is indexed to the average Portuguese sovereign 10y bond yields (OT’s) through a linear function The RoR starti
Slide 13: ...leading to a stable RoR
…LEADING TO A STABLE ROR 18,0 TÍTULO DO GRÁFICO 16,0 14,0 12,0 Título do Eixo 10,0 8,0 Electricity 6,0 Base RoR 4,0 10Y PT Gov. 2,0 Bonds 0,0 2009 2010 2011 2012 2013 2014 2015 9M16 Electricity 7.55% 7.39% 7.56% 9.55% 8.06% 7.76% 5.99% 6.13% Base RoR Avg. 10Y PT 4.21% 5.42% 10.26% 10.56% 6.30% 3.75%
Slide 14: Remuneration in detail
REMUNERATION IN DETAIL Remuneration regime based on allowed revenues, set by the regulator ERSE for 3-year regulatory periods Electricity (current period: 2015-2017) Gas (current period: 2016-2019) CAPEX Efficiency Mechanism: Return on Base Premium (75 bps) RoR x RAB Capital Transmission RoR if REN
Slide 15: Equity Story
EQUITY STORY Top of the industry TSO in efficiency and service quality Solid domestic business with stable regulation Sustainable domestic investment plan with potential upside in international development Strong financial position and Net Income protection Attractive dividend policy 14
Slide 16: A strategic agenda grounded on a sustainable domestic investment plan and international upside
A STRATEGIC AGENDA GROUNDED ON A SUSTAINABLE DOMESTIC INVESTMENT PLAN AND INTERNATIONAL UPSIDE STRATEGIC GUIDELINES KEY TARGET (2015-18) Average annual CAPEX in Portugal between Local business 175-200 million € remains a top priority Stable RAB (2015-18 CAGR of ~0%) Explore international Execute fir
Slide 17: Capex Plan 2015-18
CAPEX PLAN 2015-18 Million € Average yearly CAPEX 2007-14 ~240 ~60 ~300 2015-18 125-140 50-60 175-200 Additionally, REN plans to invest 200-250 700-800 up to 100/150 €M Equity (900 €M EV) 500-550 internationally Electricity Gas Domestic CAPEX REN’s CAPEX will always take into account the company’s f
Slide 18: REN is exploring selective international growth avenues
REN IS EXPLORING SELECTIVE INTERNATIONAL GROWTH AVENUES Guidelines for international investments Target markets NATURE International expansion in Emerging Markets (Latin America, Africa) • Focus in electricity and gas transmission networks • Prioritization of target markets based • Both M&A and gree
Slide 19: Net income is expected to grow in the next years
NET INCOME IS EXPECTED TO GROW IN THE NEXT YEARS EBITDA Million € -2% p.a. 490 450-460 RECURRENT NET INCOME Million € 2015 2018E Despite an increase in OPEX efficiency, EBITDA is expected to +2% p.a. decrease due to the reduction in RoR and a stable RAB 118 120-130 FINANCIAL RESULTS Million € 2015 2
Slide 20: Equity Story
EQUITY STORY Top of the industry TSO in efficiency and service quality Solid domestic business with stable regulation Sustainable domestic investment plan with potential upside in international development Strong financial position and Net Income protection Attractive dividend policy 19
Slide 21: In recent years REN has...
IN RECENT YEARS REN HAS… …RECOVERED ITS INVESTMENT …REDUCED ITS AVERAGE COST …MOVED TO LONGER TERM GRADE… OF DEBT… DEBT INSTRUMENTS Avg. cost of debt, % Debt maturity, years 2013 2016 5.70 5.54 4.7 4.67 Investment 4.05 3.44 3.2 grade (with positive outlook) Speculative 2012 2013 2014 2015 9M16 2012
Slide 22: Current debt management priorities are focused on cost of debt optimization
CURRENT DEBT MANAGEMENT PRIORITIES ARE FOCUSED ON COST OF DEBT OPTIMIZATION … Debt management strategy Average cost of debt I Adjust rapidly the cost of debt to an 5.7% 5.5% Funding raised improving market environment 4.7% 4.7% through 4.0% long term 4.1% Keeping bank Save costs afacilities flexible
Slide 23: ...and net income protection
…AND NET INCOME PROTECTION… Debt management strategy II INTEREST RATES: Locking costs at very low rates benefiting from the spread to RoR floor or from future potential for RoR increase Interest rate mix (floated vs fixed) Funding RoR Large raised upside Cap through long term Calibrate bank Debt exp
Slide 24: ...which allows for less volatility in results
…WHICH ALLOWS FOR LESS VOLATILITY IN RESULTS Debt management strategy The ability to adjust the cost of debt to a changing RoR leads to a stable spread between cost and return, and consequently, to less volatility in results Funding raised through long term bank facilities Net Income during a Protec
Slide 25: ...consolidating its robust debt profile with investment grade credit metrics
…CONSOLIDATING ITS ROBUST DEBT PROFILE WITH INVESTMENT GRADE CREDIT METRICS Currently, REN has a robust debt profile with balanced maturity, diversified sources of funding, strong liquidity and Robust growing average maturity2) credit profile Gross debt maturity profile Gross debt funding sources1)
Slide 26: Equity Story
EQUITY STORY Top of the industry TSO in efficiency and service quality Solid domestic business with stable regulation Sustainable domestic investment plan with potential upside in international development Strong financial position and Net Income protection Attractive dividend policy 25
Slide 27: REN provides a predictable and strong return to shareholders...
REN PROVIDES A PREDICTABLE AND STRONG RETURN TO SHAREHOLDERS… DIVIDEND PER SHARE € 0.171 0.171 0.171 0.171 REN plans to maintain the nominal dividend per share year on year, providing one of the highest dividend yields in the industry 2015 2016 2017E 2018E 26
Slide 28: ...above its industry and country peers
…ABOVE ITS INDUSTRY AND COUNTRY PEERS REN’S STOCK PROVIDES A VERY ATTRACTIVE RETURN REN’S STOCK IS VERY COMPETITIVE IN PORTUGAL VIS-À-VIS ITS EUROPEAN PEERS Dividend yield June 2016 6.75 6.75 4.66 4.83 4.91 4.78 4.00 4.00 4.17 3.08 REN TSO1 TSO2 TSO3 TSO4 TSO5 EuroStoxx REN Avg Portuguese PSI20 Util
Slide 29: Appendix
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Slide 30: Main financial indicators
MAIN FINANCIAL INDICATORS 9M16 9M15 2015 Variation €M €M €M Δ% [Δ Abs.] EBITDA 357.2 372.3 489.7 -4.1% [-15.1] Financial Result(1) -63.4 -70.5 -98.8 10.0% [7.1] Average RAB 9M16 Recurrent Net Profit 96.4 93.3 118.1 3.3% [3.1] Net Profit(2) 70.5 91.6 116.1 -23.1% [-21.2] Average RAB 3,502.0 3,534.2 3
Slide 31: Corporate responsibility programs, sustainability strategy, achievements
CORPORATE RESPONSIBILITY PROGRAMS SUSTAINABILITY STRATEGY ACHIEVEMENTS 30
Slide 32: Board composition
BOARD COMPOSITION 3 AUDIT 3 COMMITTEE EXECUTIVE COMMITTEE 1 INDEPENDENT 12 BOARD MEMBERS 5 OTHER 3 1 1 Source: REN 31
Slide 33: Disclaimer
DISCLAIMER This presentation was prepared by the management of REN – Redes Energéticas Nacionais, SGPS, S.A. (“REN”) merely for informative purposes and is not and should not be construed as an offer to sell or buy, a solicitation, a recommendation or an invitation to purchase or subscribe any secur
Slide 34: REN's IR & Media app
REN’s IR & Media app: Visit our web site at www.ren.pt or contact us: Ana Fernandes – 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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