Cez As · PSECZ:CEZ
Cez As — Q3 2018 Earnings Presentation
37 slides from Cez As's earnings presentation, Nov 8, 2018
Slide 1: Presentation on CEZ Group Financial Results in Q1–Q3 2018
PRESENTATION ON CEZ GROUP FINANCIAL RESULTS IN Q1–Q3 2018 NON-AUDITED CONSOLIDATED RESULTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) November 8, 2018
Slide 2: A Little Energy Retrospective as Czech Republic Celebrates Its 100th Birthday
A LITTLE ENERGY RETROSPECTIVE AS CZECH REPUBLIC * CELEBRATES ITS 100TH BIRTHDAY Electricity consumption in INSTALLED Czechia has grown 195.5 MW CAPACITY IN 22,266.7 MW CZECHIA 74 times during the past 100 years. 1,140 GWh 87,037 GWh Gross consumption in Bohemia, Moravia, COUNTRYWIDE and Silesia tota
Slide 3: Contents
CONTENTS Financial Highlights, Selected Events, and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 2
Slide 4: CEZ Group Financial and Operating Results
CEZ GROUP FINANCIAL AND OPERATING RESULTS (CZK bn) Q1 - Q3 2017 Q1 - Q3 2018 Change % Revenues 146.7 129.3 -17.4 -12% Revenues - comparable * 124.7 129.3 +4.6 +4% EBITDA 41.1 38.7 -2.4 -6% EBIT 19.4 16.7 -2.7 -14% Net income 16.6 9.1 -7.5 -45% Net income - adjusted ** 17.3 11.3 -6.0 -35% Operating C
Slide 5: Year-on-Year Change in EBITDA by Segment
YEAR-ON-YEAR CHANGE IN EBITDA BY SEGMENT Main causes of year-on-year change in Q1–Q3 EBITDA: Generation—Traditional Energy Segment (CZK -1.5 billion) Higher expenses on emission allowances for generation (CZK -1.3 billion) Effect of settlement agreement with Sokolovská uhelná in 2017 (CZK -0.7 billi
Slide 6: Other Income (Expenses)
OTHER INCOME (EXPENSES) (CZK bn) Q1 - Q3 2017 Q1 - Q3 2018 Change % EBITDA 41.1 38.7 -2.4 -6% Depreciation, amortization and impairments* -21.6 -22.0 -0.3 -1% Other income (expenses) 0.0 -5.2 -5.2 - Interest income (expenses) -2.5 -3.6 -1.1 -45% Interest on nuclear and other provisions -1.2 -1.3 -0.
Slide 7: Refining Financial Outlook for 2018
REFINING FINANCIAL OUTLOOK FOR 2018: ESTIMATED EBITDA OF CZK 50 - 51 BILLION, ADJUSTED NET INCOME OF CZK 13 - 14 BILLION CZK EBITDA billions Selected negative effects not anticipated in 60 51 – 53 50 – 51 CEZ Group’s outlook from Aug 7, 2018: Delay in expected court decision on 40 payment of SŽDC de
Slide 8: Contents
CONTENTS Financial Highlights, Selected Events, and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 7
Slide 9: Generation—New Energy
GENERATION—NEW ENERGY Germany (+32%) Germany (+23%) + Effect of acquisition of wind farms in Lettweiler Höhe + Effect of acquisition of wind farms in Lettweiler Höhe (belonging to the CEZ Group portfolio since (belonging to the CEZ Group portfolio since September September 2017) 2017) Czechia (+1%)
Slide 10: Segment: Generation—New Energy
SEGMENT: GENERATION—NEW ENERGY EBITDA (CZK bn) Q1 - Q3 2017 Q1 - Q3 2018 Change % Czechia 1.6 1.7 +0.2 +12% Romania 1.6 0.9 -0.6 -40% Germany 0.3 0.3 +0.1 +25% Generation - new energy 3.4 3.0 -0.4 -11% Czechia (CZK +0.2 billion) Primarily higher generation at photovoltaic power plants Romania (CZK -
Slide 11: Segment: Distribution
SEGMENT: DISTRIBUTION EBITDA (CZK bn) Q1 - Q3 2017 Q1 - Q3 2018 Change % Czechia 12.1 12.6 +0.6 +5% Romania 1.4 1.3 -0.1 -9% Bulgaria 1.1 0.8 -0.3 -26% Distribution 14.6 14.7 +0.1 +1% Czechia (CZK +0.6 billion) Higher gross margin on electricity distribution, primarily due to a year-on-year increase
Slide 12: Segment: Sales
SEGMENT: SALES EBITDA (CZK bn) Q1 - Q3 2017 Q1 - Q3 2018 Change % Czechia 3.1 2.8 -0.3 -9% Romania 0.0 0.4 +0.4 >200% Bulgaria 0.7 0.2 -0.5 -72% Germany 0.0 0.3 +0.3 - Other states -0.2 -0.3 0.0 -9% Sales 3.5 3.4 -0.1 -3% Czechia (CZK -0.3 billion) Lower gross margin on sales of electricity (CZK -0.
Slide 13: Revenues from Sales of Energy Services Are Rising
REVENUES FROM SALES OF ENERGY SERVICES ARE RISING DUE TO BOTH ACQUISITION AND ORGANIC GROWTH ESCO Sales (CZK billions) Germany (>200%) Germany (+167%) + Effect of Elevion Group acquisition (since Sept 1, 2017) + Effect of Elevion Group acquisition, including organic + Effect of Kofler Energies Group
Slide 14: Overview of CEZ Group's New Acquisitions in Energy Services
OVERVIEW OF CEZ GROUP’S NEW ACQUISITIONS IN ENERGY SERVICES IN THE PAST PERIOD Germany On July 31, the acquisition of a 100% stake in the Kofler Energies Group was completed. The group is the German market’s leading design and engineering company providing solutions for various industrial sectors an
Slide 15: Other Selected Events Development Team
OTHER SELECTED EVENTS DEVELOPMENT TEAM Renewables Abroad France—The construction of the first project in France, the Aschères-le-Marché wind farm with an installed capacity of 13.6 MW, started in October. Its commissioning is expected in H2 2019. Poland—After more than 2 years of preparation of amen
Slide 16: Contents
CONTENTS Financial Highlights, Selected Events, and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 15
Slide 17: Generation—Traditional Energy
GENERATION—TRADITIONAL ENERGY Nuclear Power Plants (+7%) Nuclear Power Plants (+5%) + Optimization of outages at both power plants + Optimization of outages at both power plants Coal-Fired Power Plants (-6%) Coal-Fired Power Plants (-2%) Czechia (-7%) Czechia (-3%) Lower generation by the D tmarovic
Slide 18: Segment: Generation—Traditional Energy
SEGMENT: GENERATION—TRADITIONAL ENERGY EBITDA (CZK bn) Q1 - Q3 2017 Q1 - Q3 2018 Change % Czechia 13.6 12.2 -1.4 -10% Poland 0.8 0.7 -0.1 -16% Generation - traditional energy 14.3 12.8 -1.5 -10% Czechia (CZK -1.4 billion) Higher realization prices of generated electricity, including the effect of he
Slide 19: Mining Segment and Other Segment
MINING SEGMENT AND OTHER SEGMENT EBITDA (CZK bn) Q1 - Q3 2017 Q1 - Q3 2018 Change % Czechia 3.3 3.0 -0.3 -8% Mining 3.3 3.0 -0.3 -8% Mining segment (CZK -0.3 billion) Higher fixed expenses (CZK -0.2 billion) due to rise in wages, higher electricity costs, and changed frequency of payments for mined
Slide 20: Selected Events Operations Team
SELECTED EVENTS OPERATIONS TEAM Achievable capacity of Temelín NPP increased to 2,164 MWe On September 1, the capacity of Unit 2 was also increased from 1,080 to 1,082 MWe. The more efficient utilization of energy potential contained in the drainage system of steam path of the high pressure turbo ge
Slide 21: Electricity Prices Have Increased Since the Start of the Year
ELECTRICITY PRICES HAVE INCREASED SINCE THE START OF THE YEAR PRIMARILY DUE TO THE RISING PRICE OF CO2 ALLOWANCES EUR/MWh Breakdown of Causes for Change 60 in Wholesale Electricity Price in 2019 (EEX, CAL 19 BL; Jan 2, 2018–Oct 24, 2018) 1.5 52.5 8.4 50 3.9 40 1.7 37.0 30 20 Power Price Coal Price R
Slide 22: EZ Continues Hedging Its Generation Revenues
EZ CONTINUES HEDGING ITS GENERATION REVENUES IN THE MEDIUM TERM IN LINE WITH STANDARD POLICY Hedge price of generated electricity and EUA purchase price Oct 31 Electricity selling price €35.8 €38.8 €39.1 €37.4 €37.4 (EUR/MWh) EUA purchase price €5.7 €8.9 €13.1 €5.2 €5.4 (EUR/t) 100% Note: The averag
Slide 23: Annexes
ANNEXES Cash Flows EBITDA—Q3 Year-on-Year Comparison Net Income—Q3 Year-on-Year Comparison Credit Facilities and Bonds Investments in Fixed Assets Balance Sheet Overview Mining Electricity Consumption Market Developments Electricity Procured and Sold Definitions of Alternative Indicators According t
Slide 24: Cash Flows
CASH FLOWS Cash Flows from Operating Activities (CZK +36.5 billion) Income after adjustments, including income tax (CZK +36.0 billion): earnings before tax (CZK +11.6 billion), depreciation and amortization of nuclear fuel (CZK +24.0 billion), impairments and other non-cash income and expenses (CZK
Slide 25: EBITDA—Q3 Year-on-Year Comparison
EBITDA—Q3 YEAR-ON-YEAR COMPARISON CEZ Group EBITDA (CZK +2.0 billion): Mining (CZK -0.2 billion): Provisioning for mine damage (CZK -0.1 bn); rise in wages and increase in electricity costs (CZK -0.1 bn) Generation—Traditional Energy (CZK +1.7 billion): Higher realization prices of generated electri
Slide 26: Net Income—Q3 Year-on-Year Comparison
NET INCOME—Q3 YEAR-ON-YEAR COMPARISON (CZK bn) Q3 2017 Q3 2018 Change % EBITDA 9.7 11.8 +2.0 +21% Depreciation, amortization and impairments* -7.6 -7.7 -0.2 -2% Other income (expenses) -2.1 -1.8 +0.3 +16% Income taxes -0.1 -0.8 -0.7 >200% Net income -0.1 1.4 +1.5 - Net income - adjusted 0.3 3.5 +3.1
Slide 27: CEZ Group Maintains a Strong Liquidity Position
CEZ GROUP MAINTAINS A STRONG LIQUIDITY POSITION Utilization of Short-Term Lines (as at Sept 30, 2018) CZK 1.4 billion CEZ Group has access to CZK 27 Available credit facilities billion in committed credit facilities, using CZK 14.6 billion as at Sept 30, 2018. Greater use of Undrawn, CZK 12.4 commit
Slide 28: Capital Expenditure Broken Down by Segment
CAPITAL EXPENDITURE BROKEN DOWN BY SEGMENT CZK billions 1-9/2017 1-9/2018 Generation—Traditional Energy 7.5 3.9 Of which: Nuclear fuel acquisition 2.0 1.3 Generation—New Energy 0.5 0.2 Mining 0.9 0.7 Distribution 8.7 8.7 Czechia 6.5 6.9 Romania 1.1 0.9 Bulgaria 1.1 0.8 Sales 0.1 0.3 Other * 1.6 1.5
Slide 29: Balance Sheet Overview
BALANCE SHEET OVERVIEW Property, plant and equipment, nuclear fuel, and investments decreased Equity decreased by CZK 16.9 billion by CZK 14.1 billion Dividends CZK -17.6 billion Reclassification of Bulgarian companies as assets held for sale CZK -10.1 Other comprehensive income CZK -11.0 billion bi
Slide 30: Mining
MINING Severo eské doly—Coal Extraction (Millions of Tons) Other customers EZ* 25 25 21.5 0% 21.5 20 20 5.9 -3% 5.7 15.5 -2% 15.3 15 15 4.2 +2% 4.3 10 10 +1% 15.8 15.6 11.3 -3% 11.0 5 5 0 0 Q1–Q3 Q1–Q3 2017 2018 E 2017 2018 Decrease in sold volume by 0.2 million tons of coal due Current estimated so
Slide 31: Electricity Consumption in the Distribution Area of EZ Distribuce
ELECTRICITY CONSUMPTION IN THE DISTRIBUTION AREA OF EZ DISTRIBUCE Temperature- and Calendar-Adjusted Consumption in the Distribution Consumption* Area of EZ Distribuce (in the Distribution Area of EZ Distribuce) 26.77 TWh TWh +1.1% Changes in consumption 26.49 26.43 (+0.3%) 26.36 by segment: +0.3% +
Slide 32: Market Developments
MARKET DEVELOPMENTS eu Development of CEZ share price EUR/t CO2 allowances / emission rights 30 500 om 400 10 300 ° “o My My A MS A Oo > o No No Ss f £ - & “ Ss or Ff fF Sf a a AM gS RM a NAN oS ——forward 2019 EUR / MWh Electricity USD/t Coal and gas EUR/MWh 60 105 70 Lette) 30 20 35 0 4 0 A A A A @
Slide 33: Electricity Balance (GWh)
Electricity balance (GWh) Index Q1 - Q3 2017 Q1 - Q3 2018 2018/2017 Electricity procured 41,510 41,203 -1% Generated in-house (gross) 46,065 45,665 -1% In-house and other consumption, including pumping in pumped-storage plants -4,555 -4,462 -2% Sold to end customers -27,158 -27,536 +1% Sold in the w
Slide 34: Electricity Balance (GWh) by Segment
Electricity balance (GWh) by segm ent Generation - traditional Generation - new Q1 - Q3 2018 energy energy Distribution Sale Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 39,878 -1% 1,286 -8% 0 - 39 - 0 - 41,203 -1% Generated in-house (gross) 44,321 -1%
Slide 35: Electricity Balance (GWh) by Country
Electricity balance (GWh) by country Q1 - Q3 2018 Czechia Poland Romania Bulgaria Germany Others Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 38,349 -1% 1,839 +1% 825 -17% 5 - 184 +32% 0 - 0 - 41,203 -1% Generated in-house (gross) 42,553
Slide 36: Methods Used to Calculate Indicators Unspecified in IFRS
Methods Used to Calculate Indicators Unspecified in IFRS In accordance with ESMA guidelines, EZ provides detailed information on indicators that are not reported as standard in IFRS statements or the components of which are not directly available from standardized statements (financial statements).
Slide 37: Net Debt Indicator Definitions
Indicator indicator primarily to assess the adequacy of its capital structure to the structure and stability of its expected cash flows. Definition: Net Debt / EBITDA. EBITDA is the running total for the past 12 months, i.e. EBITDA for the period from October 1 of previous year until September 30; N