Pge Polska Grupa Energetyczna S.a. · GPW:PGE
Pge Polska Grupa Energetyczna — FY2015 Earnings Presentation
53 slides from Pge Polska Grupa Energetyczna's earnings presentation, Feb 17, 2016
Slide 1: Q4 & FY 2015 Financial and Operating Results
Q4 & FY 2015 Financial and Operating Results February 17, 2016
Slide 2: Key takeaways
Q4 & FY 2015 Financial and Operating Results Key takeaways Marek Woszczyk - President and CEO 2
Slide 3: Highlights
Highlights PLN 4.3 bn PLN 6.8 bn Financial PLN 8.2 bn net cash from adjusted net Adjusted EPS results EBITDA profit to PLN 2.29 operations equity 55.6 TWh 33.4 TWh 39.0 TWh Net Distribution Sales to end Operations generation volume users (+1% y-o-y) (+3% y-o-y) (-2% y-o-y) Opole II Turów 11 Investme
Slide 4: Macroeconomic environment
Decent macro is not enough Macroeconomic environment Q4 2015 Q4 2014 FY 2015 FY 2014 Real GDP growth (y-o-y) 3.9%* 3.3% 3.6%* 3.3% Domestic Electricity Consumption growth (y-o-y) 1.0% 0.9% 1.7% 0.5% Domestic Electricity Consumption (TWh) 42.25 41.84 161.44 158.73 * Estimated BASE Forward next year p
Slide 5: Regulatory Update
Regulatory Update RES SUPPORT SCHEME DISTRIBUTION CAPACITY MECHANISMS • RES Act amended (Dec. 29, 2015) • 2016-2020 model introduced • Operational Reserve Capacity • Launch of the feed-in tariff and • Tariffs approved under reviewed 2016 budget increased by over 20% auctions postponed for half a yea
Slide 6: Opole II - expansion project (1/2)
Opole II - expansion project (1/2) General project information Expansion of existing thermal Power Plant Capacity 2 units of 900 MW each Total CAPEX ~PLN 11 bn Outlay in 2015/ Total spent ~PLN 2.7 bn/ ~PLN 3.3 bn Expected Commercial Unit 5 – IIH 2018; Operation Date (COD) Unit 6 – IH 2019 Milestones
Slide 7: Opole II - expansion project (2/2)
Opole II - expansion project (2/2) Current developments • Project’s overall progress in line with schedule and on budget • Current status: +35% • Both power trains, as well as all Balance of Plant (BoP) systems – civil and construction works in full swing: — shell of cooling tower #5 completed — ong
Slide 8: Modernizations pipeline
Modernizations pipeline Extending lifetime and efficiency • Comprehensive modernization of units 7-12 in Bełchatów - Budget – PLN 4.7 bn - Expected completion – 2016 - Current status: units 7, 8, 11 and 12 commissioned, unit 10 under modernization, unit 9 already connected to Power Grid (ahead of sc
Slide 9: Wind of change - acceleration in RES development
Wind of change - acceleration in RES development - 218 MW added General project information 4 onshore wind farms Capacity added in 2015 218 MW Capacity at the end of 2015 529 MW CAPEX in 2015/ Total spent ~PLN 865 m/ ~PLN 1,190 m Developments in 2015 PGE – installed wind capacity (in MW) 600 • In 20
Slide 10: Distribution - chasing the quality
Distribution - chasing the quality General project information Modernization and new developments Total grid length (2015 end) ~283.8 ths km* CAPEX in 2015 ~PLN 1,841 m Grid expansion in 2015 1,533 km of new distribution lines * incl. connection lines New transformers Connection Developments in 2015
Slide 11: Detailed financial and operating results
Q4 & FY 2015 Financial and Operating Results Detailed financial and operating results Magdalena Bartoś - Managing Director, CFO 11
Slide 12: Focusing on the key financial results
Focusing on the key financial results PLNm Q4 2015 Q4 2014 yoy FY 2015 FY 2014 yoy Sales revenues 7,381 7,281 1% 28,542 28,143 1% EBITDA 1,997 1,420 41% 8,228 8,129 1% Recurring* EBITDA 1,970 1,558 26% 7,511 6,340 18% Net profit to equity (reported) 995 439 127% -3,032 3,638 n.a. Recurring net profi
Slide 13: Summary of generation performance
Summary of generation performance Q4 2015 production (% change y-o-y) 2015 production (% change y-o-y) 0.30 1.23 (-3%) (-2%) (+2%) (-3%) (-2%) (-10%) (-10%) Coal Coal 0.28 (65%) 3.01 0.82 11.91 (-1%) (25%) (0%) (-17%) (+15%) (28%) (-1%) 0.05 (-38%) (+14%) (15%) 0.20(15%) 0.36(+13%) (54%) TOTAL 0.30(
Slide 14: Focusing on performance indicators
Focusing on performance indicators Generation assets Lignite Hard coal CHPs Wind assets Availability 84.9% 88.1% 89.6% 98.1% 2015 Availability 83.4% 81.8% 88.9% 98.3% 2014 Load factor* 84.4% 66.6% 78.5% 28.9% 2015 Load factor* 86.5% 69.7% 68.2% 24.1% 2014 * Load factor for conventional assets in GOF
Slide 15: Development of EBITDA by major value drivers
Development of EBITDA by major value drivers PLN m 2014 EBITDA REPORTED 8,129 One-offs 1,789 2014 EBITDA RECURRING* 6,340 Wholesale price of electricity 484 Volume of electricity** 75 Hard coal with transport** 47 Biomass 21 CO2 cost 176 Regulatory services 73 Electricity resold 122 Margin on retail
Slide 16: Recurring FY 2015 EBITDA – composition and development
Recurring* FY 2015 EBITDA – composition and development 7,511 2,446 71 3,995 390 608 Conventional Renewables** Supply*** Distribution Other EBITDA FY 2015 3,995 390 608 2,446 71 7,511 Share in 2015 EBITDA (%) 53% 5% 8% 33% 1% FY 2014 3,104 393 266 2,396 181 6,340 Change (PLNm) 891 -3 342 51 -110 1,1
Slide 17: Capital expenditures in FY 2015
Capital expenditures in FY 2015 PLN 3,446 m CAPEX in Significant projects FY 2015 PLN 247 m 3% Construction of Opole II PLN 2,663 m 19% Refurbishment and modernization in Bełchatów PLN 1,043 m PLN 1,841 m 36% TOTAL CAPEX Modernization of distribution assets PLN 1,059 m PLN 931 m 10% PLN 9.4 bn (+49%
Slide 18: Division EBITDA outlook for 2016
Division EBITDA outlook for 2016 2016 outlook Main drivers vs 2015 • Wholesale full year average blended price in range of 168-170 PLN/MWh • Volumes on lignite lower as unit #1 in Bełchatów shifted to peak capacity reserve • Volumes on hard coal lower after shift of 2 units in Dolna Odra to cold res
Slide 19: CAPEX outlook for 2016
CAPEX outlook for 2016 2016 outlook • Opole project will enter most CAPEX-intensive year with targeted CAPEX at approx. PLN 3.5bn • Turów project on-going. Significant step up in CAPEX expected • Final spending in Gorzów as project confirmed to be finalized in H1 2016 Slightly lower than 2015 • RES
Slide 20: Additional information
Q4 & FY 2015 Financial and Operating Results Additional information 20
Slide 21: Commodity markets; adverse trends continued
Commodity markets; adverse trends continued. (Decent realized price on the back of historic hedges) CO2 allowance (EUA_DEC15) Hard coal PGE average wholesale price of electricity EUR/t USD/t1 PLN/MWh +25% FY15 avg. 173 8.4 78.4 -29% 74.8 75.0 72.4 8.0 7.4 174 174 174 6.7 7.1 60.9 58.6 172 6.2 6.3 56
Slide 22: Key Financials
Key Financials Selected consolidated financial data, IFRS (PLN m) Q4 2015 Q4 2014 Q4’15 FY 15 FY 14 FY15 PLN m PLN m vs. Q4’14 PLN m PLN m vs. FY14 Data restated Data restated Sales 7,381 7,281 1% 28,542 28,143 1% including LTC compensations 102 185 -45% 546 1,539 -65% Recurring* Sales 7,279 7,096 3
Slide 23: Computation of recurring EBITDA and recurring net profit to equity
Computation of recurring EBITDA and recurring net profit to equity Summary of one-off adjustments Computation of recurring EBITDA key one-off items Q4'15 Q4'14 FY15 FY14 LTC compensations -103 -185 -546 -1,539 LTC adjustment 0 0 0 -246 Reclamation provision (discount rate) 100 2 -93 213 Release of p
Slide 24: Key Operating Data
Key Operating Data Net electricity generation by sources (TWh) Q4 2015 Q4 2014 Q4'15 2015 2014 2015 vs. Q4'14 vs. 2014 Lignite-fired power plants 9.34 10.07 -7% 38.98 39.22 -1% Hard coal-fired power plants 2.72 2.81 -3% 11.04 11.35 -3% Coal-fired CHPs 0.38 0.32 19% 1.30 1.10 18% Gas-fired CHPs 0.75
Slide 25: Capital expenditures in Q4 2015
Capital expenditures in Q4 2015 PLN 1,298 m CAPEX in Significant projects Q4 2015 PLN 84 m 2% Construction of Opole II PLN 889 m 19% PLN 703 m Refurbishment and modernization in Bełchatów PLN 465 m 36% TOTAL CAPEX Modernization of distribution assets PLN 443 m 10% PLN 3.6 bn PLN 366 m (+45% yoy) New
Slide 26: Capital expenditures
Capital expenditures CAPEX for Q4 and FY 2015 (PLN m) Q4 2015 FY 2015 Q4 2015 Q4 2014 FY 2015 FY 2014 vs Q4 2014 vs FY 2014 Segment Conventional Generation 2,481 1,565 59% 6,495 4,362 49% Distribution 703 738 -5% 1,841 1,508 22% New clients connection 187 171 9% 585 499 17% Distribution grid 361 328
Slide 27: Recurring Q4 2015 EBITDA – composition and development
Recurring* Q4 2015 EBITDA – composition and development 1,970 599 1,080 113 187 -8 Conventional Renewables** Supply*** Distribution Other EBITDA Q4 2015 1,080 113 187 599 -9 1,970 Share in Q4 2015 EBITDA (%) 55% 6% 9% 30% - - Q4 2014 773 68 64 601 52 1,558 Change (PLNm) 307 45 123 -2 -59 412 Change
Slide 28: Detailed segmental revenues and costs: Conventional Generation
Detailed segmental revenues and costs Conventional Generation (PLN m) Q4 15 Q4 14 FY 15 FY 14 Sales, including 3,237 3,339 -3% 12,715 12,906 -1% Sale of electricity 2,631 2,688 -2% 10,574 9,844 7% LTC compensations 103 185 -44% 546 1,539 -65% Sale of heat 228 231 -1% 710 675 5% Sale of certificates
Slide 29: Detailed segmental revenues and costs: Renewables
Detailed segmental revenues and costs Renewables (PLN m) Q4 15 Q4 14 FY 15 FY 14 Sales, including 215 174 24% 761 767 -1% Sale of electricity 97 86 13% 337 348 -3% Sale of certificates of origin 51 43 19% 172 204 -16% Cost by kind, including 217 159 36% 666 597 12% D&A 111 57 95% 284 217 31% Materia
Slide 30: Detailed segmental revenues and costs: Distribution
Detailed segmental revenues and costs Distribution (PLN m) Q4 15 Q4 14 FY 15 FY 14 Sales, including 1,602 1,524 5% 6,082 5,781 5% Revenues from distribution services 1,482 1,423 4% 5,716 5,439 5% Other operating revenues 92 74 24% 260 233 12% Cost by kind, including 1,287 1,282 0% 4,734 4,611 3% D&A
Slide 31: Detailed segmental revenues and costs: Supply
Detailed segmental revenues and costs Supply* (PLN m) Q4 15 Q4 14 FY 15 FY 14 Sales, including 4,713 3,945 19% 15,783 14,431 9% Sale of electricity 2,518 2,355 7% 9,467 8,900 6% Revenues from distribution services 1,044 1,042 0% 4,078 4,028 1% Sale of certificates of origin 0 4 -100% 9 82 -89% Cost
Slide 32: Conventional Generation – EBITDA Q4 2015
Conventional Generation – EBITDA Q4 2015 Key changes in EBITDA (PLN m) 1200 1000 800 600 400 Sale of Sale of Revenues Change in Margin Revenues Sale of EBITDA electricity electricity from Fuel and Personnel provision for Capitalized EBITDA on from property CO2 Other 2014 difference difference agreem
Slide 33: Conventional Generation – EBITDA FY 2015
Conventional Generation – EBITDA FY 2015 Key changes in EBITDA (PLN m) 6 000 5 000 4 000 3 000 2 000 Sale of Sale of Revenues Change in Margin Revenues Sale of EBITDA electricity electricity from Fuel and Personnel provision for Capitalized EBITDA on from property CO2 Other 2014 difference differenc
Slide 34: Renewables – EBITDA Q4 2015
Renewables – EBITDA Q4 2015 Key changes in EBITDA (PLN m) 120 100 80 60 40 20 0 Sale of Revenues Sale of Sale of Sale of property Sale of Sale of EBITDA electricity from Personnel EBITDA electricity property rights – wind electricity property Other 2014 - wind agreement costs 2015 - wind rights - wi
Slide 35: Renewables – EBITDA FY 2015
Renewables – EBITDA FY 2015 Key changes in EBITDA (PLN m) 420 380 340 300 Sale of Revenues Sale of Sale of Sale of property Sale of Sale of EBITDA electricity from Personnel EBITDA electricity property rights – wind electricity property Other 2014 - wind agreement costs 2015 - wind rights - wind new
Slide 36: Distribution – EBITDA Q4 2015
Distribution – EBITDA Q4 2015 Key changes in EBITDA (PLN m) 700 600 500 400 300 Other Volume of Change of distribution EBITDA Network Transmission Fixed EBITDA distributed distribution related Other 2014 losses services* costs*** 2015 energy tariff* revenues** Change 16 48 11 -11 -26 18 5 EBITDA Q4’
Slide 37: Distribution – EBITDA FY 2015
Distribution – EBITDA FY 2015 Key changes in EBITDA (PLN m) 2 800 2 600 2 400 2 200 2 000 Other Volume of Change of distribution Transmission EBITDA Network Personnel EBITDA distributed energy distribution related services* Fixed costs*** Other 2014 losses costs 2015 tariff* revenues** Change 135 15
Slide 38: Supply – EBITDA Q4 2015
Supply – EBITDA Q4 2015 Key changes in EBITDA (PLN m) 200 150 100 50 0 Margin EBITDA Property rights Management EBITDA on Other 2014 redemption costs service 2015 electricity Change 115 27 -1 0 EBITDA Q4’14 46 319 274 128 127 EBITDA Q4’15 434 247 127 127 187 As of Q1’15 Supply and Wholesale will be
Slide 39: Supply – EBITDA FY 2015
Supply – EBITDA FY 2015 Key changes in EBITDA (PLN m) 700 500 300 100 Margin EBITDA Property rights Management EBITDA on Other 2014 redemption costs service 2015 electricity Change 240 88 38 -2 EBITDA FY14 246 1,328 1,064 465 483 EBITDA FY15 1,568 976 503 485 610 As of Q1’15 Supply and Wholesale wil
Slide 40: Debt Structure and Liquidity (as at December 31, 2015)
Debt Structure and Liquidity (as at December 31, 2015) Fixed vs floating debt (drawn debt) Bank loans repayment schedule (PLNm)* Drawn Debt by currency 2 000 Floating 1 800 26% PLN USD 1 600 35.8% 2.6% 1 400 1 200 1 000 800 600 400 CHF 200 0.5% EUR 0 Fixed 61.2% 74% * Illustrative only, assumption o
Slide 41: Debt development by quarters
Debt development by quarters Gross debt and net debt* (PLN m) 6 000 5 409 5 045 5 000 4 802 4 811 4 822 4 838 4 660 4 000 3 000 2 706 2 718 2 637 2 405 2 522 2 000 1 586 1 000 462 266 101 0 -1 000 -1 020 -1 018 -2 000 -1 921 -2 313 -2 386 -3 000 -2 530 -2 922 -3 031 -4 000 Mar-13 Jun-13 Sep-13 Dec-1
Slide 42: Debt maturity profile
Debt maturity profile Debt maturity profile (PLNm) as at December 31, 2015 2 400 2 000 1 600 1 200 800 400 0 42
Slide 43: PGE cash position provides plenty of headroom
PGE cash position provides… FY 2015 Q3 2015 … plenty Gross Debt (PLNm) 5,409 4,838 of headroom Net debt (PLNm) 2,637 101 in the balance Net Debt/LTM EBITDA 0.32x 0.01x sheet Net Debt/Equity 0.07x 0.003x Moody’s Fitch Long-term company rating (IDR) Baa1 BBB+ Rating outlook Stable Stable Date of ratin
Slide 44: Fundamentals of the distribution business
Fundamentals of the distribution business RAB development* Regulated revenue composition* (PLNm) (PLNm) 1,655 1,203 5,655 5,604 1,565 1,042 5,443 2,442 2,597 2,638 14,095 14,618 15,069 972 1,008 1,041 1,003 1,050 1,065 1,027 999 860 RAB 2014 CAPEX Deduction RAB 2015 CAPEX Deduction RAB 2016 2014 201
Slide 45: Voluntary Leave Program (VLP)
Voluntary Leave Program (VLP) Provisions for VLP [PLN m] FY15 FY14 VLP provision balance bop 235 3 creation of provision (release) -20 404 utilization -146 -171 provision balance eop 70 235 Participation in VLP (no. of employees) FY15 FY14 Conventional Generation segment 802 1,154 Distribution segme
Slide 46: Q4 2015 Key business flows
Q4 2015 Key business flows Key business flows (illustrative only) Generation Wholesale Households 13.84 TWh 15.31 TWh Regulated market 14.42 TWh (Q4 2014) 18.65 TWh (Q4 2014) 2.32 TWh Electricity from power 2.34 TWh (Q4 2014) plants (under „exchange Power exchange Supply 23% obligation”) Electricity
Slide 47: FY 2015 Key business flows
FY 2015 Key business flows Key business flows (illustrative only) Generation Wholesale Households 55.58 TWh 60.89 TWh Regulated market 54.84 TWh (FY 2014) 62.44 TWh (FY 2014) 9.04 TWh Electricity from power 9.04 TWh (FY2014) plants (under „exchange Power exchange Supply 23% obligation”) Electricity
Slide 48: CO2 allowances – regulations and settlements
CO2 allowances – regulations and settlements Regulations in the III Settlement Period Free EUA recognized at a zero value – note 16, FY’15 consolidated FS • As of 2013 only carbon allowances for heat production are EUA CER/ERU Total value received free of charge. Quantity Value Quantity Value • Carb
Slide 49: LTC compensations – current status of court disputes
LTC compensations – current status of court disputes Generators from the PGE Capital Group are in disputes with the ERO President regarding stranded cost compensations in years 2008-2010. Stranded cost compensation in 2011-2014 are not subject to court disputes. Status of court cases: Year Opole PP
Slide 50: Sell-side analysts covering PGE
Sell-side analysts covering PGE Domestic analysts Foreign analysts Institution Analyst Institution Analyst • BOŚ • Michał Stalmach • HSBC • Dmytro Konovalov • BZ WBK • Paweł Puchalski • Merrill Lynch • Denis Derushkin • Citigroup • Piotr Dzięciołowski • Morgan Stanley • Bobby Chada • Deutsche Bank •
Slide 51: Stay tuned with PGE IR
Stay tuned with PGE IR PGE RESULTS 5-YEAR RESULTS CSR BIG BOOK COMMUNICACTION ANALYST PACK REPORT 51
Slide 52: Investor relations contacts
Investor relations contacts Head of IR IR Officers Jakub Frejlich Krzysztof Dragan Tel: (+48 22) 340 10 32 Tel: (+48 22) 340 15 13 Mob: +48 695 883 902 Mob: +48 601 334 290 Filip Osadczuk Tel: (+48 22) 340 12 24 Mob: +48 695 501 370 Małgorzata Babska Tel: (+48 22) 340 13 36 Mob: 661 778 955 Bernard
Slide 53: Disclaimer
Disclaimer This presentation has been prepared by the management of PGE Polska Grupa Energetyczna S.A. (the “Company” or “PGE”) and other entities and is furnished on a confidential basis only for the exclusive use of the intended recipient and only for discussion purposes. This document has been pr
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