Societatea Energetica Electrica S.a. · BVB:EL

Societatea Energetica Electrica — Electrica Group — H1 2019 Earnings Presentation

44 slides from Societatea Energetica Electrica's earnings presentation, Oct 17, 2019

  1. Slide 1: Electrica Group Romanian Day in Stockholm

    Electrica Group Romanian Day in Stockholm Stockholm, 17 October 2019 1

  2. Slide 2: Content

    Content  H1 2019 Financial results  Key Group Information  Distribution Segment Overview  Supply Segment Overview  Main Corporate Events  Appendices 2

  3. Slide 3: Key Group Information

    Key Group Information Electrica is the most important national distribution operator and the electricity supplier with the largest client base Geographical presence Electricity supply (H1 2019) ~3.5 million % ~18.8% 4.6 TWh household clients market share energy supplied Cluj Napoca Electricity distr

  4. Slide 4: Electrica Group is the only Romanian group listed on the BSE & LSE

    Key Group Information 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-

  5. Slide 5: Leading Player in Distribution and Supply

    Key Group Information Leading Player in Distribution and Supply 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 Sales in 2018 Area Covered b

  6. Slide 6: Summary Consolidated Financials

    Key Group Information Summary Consolidated Financials Revenues EBITDA Growth and Margin Performance (RON mn) EBITDA (RON mn) and EBITDA Margin (%) 5.603 5.613 18% 373 378 12% 12% 11% 3.101 2.654 261 5.230 155 5.235 601 681 2.499 2.840 477 359 2017 H1 2018 2018 H1 2019 2017 H1 2018 2018 H1 2019 Reven

  7. Slide 7: Consolidated EBITDA and net result evolution

    Key Group Information Consolidated EBITDA and net result evolution EBITDA (RON mn) Comments The consolidated EBITDA variance as compared to H1 2018 amounts to RON -118 mn, with impact of RON - 109 mn in the net result. The key element behind this negative variance is the evolution of the energy marg

  8. Slide 8: Distribution highlights

    Distribution highlights Distribution segment overview Comments • Net profit lower by RON 59 mn, deriving mainly from a lower EBITDA by RON 56 mn yoy (-16.6%), as a result of : − revenues higher by approx. RON 83 mn (+6.6%), particularly from the increase of distributed volumes by 0.3% and the positi

  9. Slide 9: SDTN

    Distribution segment overview SDTN Comments  H1 2019 RAB of RON 1,793 mn (estimated); users: 1.28 mn (H1 2019)  Net profit lower by RON 18 mn, mainly due to EBITDA lower by RON 14 mn (-11.3%), as a result of: − the increase in revenue from distributed electricity by approx. RON 13 mn, both as a re

  10. Slide 10: SDTN (2)

    Distribution segment overview SDTN (2) Network losses costs Network losses Network losses (RON mn) (GWh) (%) 163 166 630 622 10,43% 10,34% 10,20% 10,15% 9,86% 9,86% 9,86% 9,47% 103 321 329 77 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2017 H1 2018 2018 H1 2019 2017 H1 2018 2018 H1 2019

  11. Slide 11: SDTS

    Distribution segment overview SDTS Comments  H1 2019 RAB of RON 1,639 mn (estimated); users: 1.18 mn (H1 2019)  Net profit lower by RON 29 mn, mainly due to EBITDA lower by RON 31 mn (-27.2%), as a result of: − the increase in revenue from distributed electricity by approx. RON 6 mn, both as a res

  12. Slide 12: SDTS (2)

    Distribution segment overview SDTS (2) Network losses cost Network losses Network losses (RON mn) (GWh) (%) 766 761 200 10,55% 10,19% 10,17% 188 10,17% 10,23% 10,08% 10,03% 9,36% 117 383 374 94 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2017 H1 2018 2018 H1 2019 2017 H1 2018 2018 H1 201

  13. Slide 13: SDMN

    Distribution segment overview SDMN Comments  H1 2019 RAB of RON 1,825 mn (estimated); users: 1.33 mn (H1 2019)  Net profit lower by RON 14 mn, mainly due to EBITDA lower by RON 19.5 mn (-3%), as a result of the increase of the costs of network losses by RON 15 mn  As at 30 June 2019, a significan

  14. Slide 14: SDMN (2)

    Distribution segment overview SDMN (2) Network losses cost Network losses Network losses (RON mn) (GWh) (%) 901 880 240 11,71% 230 11,31% 11,43% 11,55% 10,57% 9,55% 9,16% 9,16% 129 438 430 114 Reg. Realized Reg. Realized Reg. Realized Reg. Realized 2017 H1 2018 2018 H1 2019 2017 H1 2018 2018 H1 2019

  15. Slide 15: Electrica Serv

    Distribution segment overview Electrica Serv Revenues Comments (RON mn) 359  Electrica Serv, a wholly-owned subsidiary of Electrica, provides repair and other energy ancillary services to third parties and various services to the companies within the group (vehicles rental, building rental etc.) 

  16. Slide 16: Supply market overview

    Supply market overview Supply segment overview Overall Market Share - May 2019 Overview Electrica Furnizare 18.84% Others (<4% individual) 21.42%  Supply market consists of regulated and competitive segments:  The regulated segment comprises 5 incumbent suppliers of last resort Alro 4.14% (SoLR),

  17. Slide 17: Supply segment

    Supply segment Supply segment overview Coverage Comments  Net profit lower by RON 63 mn, mainly due to EBITDA lower by RON 75 mn (- Electrica Furnizare 46%), as a result of: − Higher electricity purchase costs for supply and balancing compared to the Competitive Market same period from 2018, as a r

  18. Slide 18: Supply business overview

    Supply business overview Supply segment overview Volume of Electricity Supplied on Retail Market Number of Consumers (TWh) Consumers (‘000’s) Regulated Competitive Regulated Competitive 9.2 3,577 3,552 3,541 3,540 8.5 215 234 253 262 4,2 3,6 4.3 4.6 3.362 3.318 3.288 3.278 1,8 2,2 5,0 4,9 2,5 2,4 20

  19. Slide 19: Dividend distribution overview

    Dividend distribution overview Dividends Distributed gross dividends (FY 2014 - 2018) (RON mn) Gross dividend per share (RON) and Dividend yield(1) (%) 291.6 6.9% 7.3% 6,8% 244.7 251.4 245.4 247,5 5.2% 6.1% 0.8600 0.7217 0.7415 0.7237 0,7300 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Dividend

  20. Slide 20: Main corporate events in H1 2019 and to date

    Main corporate events in H1 2019 and to date Main corporate events General Meetings of Shareholders:  OGMS dated 7 February 2019 – the shareholders elected, through the simple voting method, three members of the Company’s Board of Directors following the vacancy of the positions in the Board of Dir

  21. Slide 21: Other relevant events in H1 2019 and to date

    Other relevant events in H1 2019 and to date Main corporate events Intragroup agreements: Beneficiary Agreement’s scope Amount (RON th) Date of entry into force Expiry date SDTN 3,292 25 Apr 2019 24 Sept 2019 SDMN Rendering services in the AMR 5,496 1 Mar 2019 31 Aug 2019 system SDTS 5,706 1 Jan 201

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

    Background and basis of preparation of the financials Appendices  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 Roma

  23. Slide 23: Consolidated budget 2019 (RON mn) – IFRS values

    Consolidated budget 2019 (RON mn) – IFRS values Appendices – 2019 Budgets The individual significant variances are detailed below: Budget B2019 B2019 1. The revenues’ increase of RON 420.7 mn is the net effect of: Indicator Actual 2018 vs. A2018 vs. A2018 % 2019 • Increase in the energy revenues of

  24. Slide 24: 2019 budget – distribution companies

    2019 budget – distribution companies Appendices – 2019 Budgets The methodology for establishing the distribution tariffs (“the methodology”) for the 4th regulatory period – RP4 (2019- 2023) was approved through ANRE Order no. 169/2018, whereas the new regulated rate of return (RRR) was approved thro

  25. Slide 25: 2019 Budget vs Estimate 2018 – SDTN

    Appendices – 2019 Budgets 2019 Budget vs Estimate 2018 – SDTN B2019 vs. E2019 B2019 vs. RON mn E2018 B2019 [Abs.] E2019 [%] Revenues from distributed energy 574.5 602.3 27.7 4.8%  Network losses cost: the value approved by ANRE is of RON 145,4 mn, Other energy revenues 32.6 27.7 (5.0) -15.2% determ

  26. Slide 26: 2019 Budget vs Estimate 2018 – SDTS

    Appendices – 2019 Budgets 2019 Budget vs Estimate 2018 – SDTS B2019 vs. E2019 B2019 vs. E2019 RON mn E2018 B2019 [Abs.] [%] Revenues from distributed energy 596.6 620.9 24.3 4.1% Other energy revenues 30.0 28.8 (1.2) -4.1%  Network losses cost: the value approved by ANRE is of RON 176.6 mn, determi

  27. Slide 27: 2019 Budget vs. Estimate 2018 – SDMN

    Appendices – 2019 Budgets 2019 Budget vs. Estimate 2018 – SDMN B2019 vs. E2019 B2019 vs. E2019 RON mn E2018 B2019 [Abs.] [%] Revenues from distributed energy 554.8 603.9 49.1 8.8% Other energy revenues 42.9 29.1 (13.8) -32.2% Income from internally generated CAPEX 14.8 24.9 10.1 68.6%  Network loss

  28. Slide 28: Consolidated budget for 2019 – Supply segment

    Appendices – 2019 Budgets Consolidated budget for 2019 – Supply segment • The selling prices for customers of the supplier of last resort (SoLR), for the period January – February 2019, were established based on ANRE regulation (ANRE Order no. 39/2018); • The selling prices for the customers of the

  29. Slide 29: 2019 Budget vs. Actual 2018 – Electrica Furnizare

    Appendices – 2019 Budgets 2019 Budget vs. Actual 2018 – Electrica Furnizare Energy margin: B2019 vs. B2019 vs. - competitive segment margin in line with historical profitability on medium term; Indicator Actual 2018 Budget 2019 decrease of the regulated segment margin A2018 A2018 % Electricity and g

  30. Slide 30: Important Regulatory Changes – Distribution Activity

    Appendices Important Regulatory Changes – Distribution Activity  RP4 Regulations on Distribution tariffs  The methodology for setting the distribution tariffs for RP4 was approved by ANRE Order no.169/18 September 2018, amended by ANRE Order no. 193/18 December 2018 and by ANRE Order no. 60/23 May

  31. Slide 31: Changes in Distribution Regulation - RP4

    Appendices 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 5  The starting point

  32. Slide 32: Changes in Distribution Regulation

    Appendices Changes in Distribution Regulation Methodology for determining distribution tariffs - Summary RP4 vs RP3 RP3 RP4 1 RRR = 5.66% applied to RAB, to which a supplement of 1% is added for Return RRR (7.7%) applied to RAB. RRRxRAB new network investments RAB includes the regulated net amount o

  33. Slide 33: Changes in Distribution Regulation: Comparative elements RP4 vs RP3

    Appendices 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 1. RRR includes: Assets used for the distribution ser

  34. Slide 34: Changes in Distribution Regulation: Comparative elements RP4 vs RP3

    Appendices 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 compar

  35. Slide 35: Important Regulatory Changes – Supply Activity

    Appendices Important Regulatory Changes – Supply Activity GEO no. 114/2018 concerning measures in the area of public investment and fiscal-budgetary measures, amended by GEO no.19/2019:  The monetary contribution charged from the energy license holders equals 2% of the turnover achieved by them fro

  36. Slide 36: Corporate Governance Bodies

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

  37. Slide 37: Shareholder Structure at 30 June 2019

    Appendices Shareholder Structure at 30 June 2019 Geographical distribution of shareholders outside Romania Total number of shares: 52,932,091 * Dedeman SRL, Romania owns between 5% and 10% of the total number of shares Total number of shares: 345,939,929 37

  38. Slide 38: Monthly volume and average price of Electrica's shares and GDRs

    Appendices Monthly volume and average price of Electrica’s shares and GDRs 10.000.000 13,00 9.000.000 12,50 8.000.000 12,00 7.000.000 11,50 6.000.000 11,00 5.000.000 10,50 4.000.000 10,00 3.000.000 9,50 2.000.000 9,00 1.000.000 8,50 - 8,00 BSE - Shares - Monthly volume LSE - GDRs - Monthly volume BS

  39. Slide 39: Comparative evolution with BSE indices (Jan 2019 – 31 July 2019)

    Appendices Comparative evolution with BSE indices (Jan 2019 – 31 July 2019) % 125,00 120,00 115,00 110,00 105,00 100,00 95,00 90,00 EL (BSE) Performance BET Performance BET-FI Performance BET-NG Performance BET-XT Performance ELSA (LSE) Performance Source: Company data, BSE 39

  40. Slide 40: Electrica closing price vs BET-TR (Jan 2019 – 31 July 2019)

    Appendices Electrica closing price vs BET-TR (Jan 2019 – 31 July 2019) 35,00 30,00 25,00 EL: 25.1% BET-TR: 35.5% 20,00 15,00 10,00 5,00 0,00 -5,00 -10,00 BET-TR Electrica adjusted price with dividends Source: Company data; BSE 40

  41. Slide 41: Glossary

    Appendices Glossary ANRE Romanian Energy Regulatory Authority LV Low Voltage BoD Board of Directors MV Medium Voltage BSE Bucharest Stock Exchange MWh MegaWatt hour CAPEX Capital Expenditure NBV Net Book Value NL Network Losses DAM Day Ahead Market OGMS Ordinary General Meeting of Shareholders DSO D

  42. Slide 42: 2019 Financial Calendar

    Appendices 2019 Financial Calendar  15 February Publication of the annual consolidated preliminary results - 2018  7 March Investor and analyst teleconference for 2018 consolidated financial results  25 April General Meeting of Shareholders for the approval of the 2018 annual financial results 

  43. Slide 43: 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 H1 2019 financi

  44. Slide 44: Q&A

    Q&A 44

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