Pge Polska Grupa Energetyczna S.a. · GPW:PGE
Pge Polska Grupa Energetyczna — Q3 2019 Earnings Presentation
58 slides from Pge Polska Grupa Energetyczna's earnings presentation, Nov 12, 2019
Slide 1: Q3 & 9M 2019 Financial and Operating Results
Q3 & 9M 2018 Financial and Operating Results November 12, 2019
Slide 2: Agenda
2 Agenda Henryk Baranowski – President of the Board and CEO • Summary • PGE in transition Emil Wojtowicz – Vice-President of the Board, CFO • Situation on the electricity market • Financial results • Operational results • Outlook for 2020
Slide 3: Key takeaways
3 Key takeaways Henryk Baranowski President of the Board, CEO
Slide 4: Q3 and 9M 2019 in a nutshell
4 Q3 and 9M 2019 in a nutshell Financial results Q3 2019 9M 2019 • EBITDA: PLN 1.7bn (+16%) • EBITDA: PLN 6.1bn (+18%) • Cash flow from operations: PLN 1.6bn (n/a) • Cash flow from operations: PLN 4.8bn (+79%) • Net profit: PLN 0.4bn (+6%) • Net profit: PLN 2.2bn (+29%) Operations Q3 2019 9M 2019 •
Slide 5: Opole project commissioned
5 Opole project commissioned Investment summary: Gross capacity: • The largest infrastructure investment in Poland after 1989. - Air temperature of 2°C: 920 MWe - Air temperature of 22°C: 905 MWe • One of the most modern conventional power plants in the world Net efficiency: • SOx and NOx emissions
Slide 6: Turów project
6 Turów project Gross capacity: 490 MWe Net efficiency: 43.1% Fuel: lignite Net emissions: 0.91 t CO2/MWh Net CAPEX: PLN 4.3 bn Work progress: approx. 93% Date of commissioning: Unit 7 – October 30, 2020 Status: Environmental effect: • On the building site, construction and assembly Emission rate (t
Slide 7: Construction of new gas units in Dolna Odra
7 Construction of new gas units in Dolna Odra Emission rate [kg CO2/MWh] 1 000 900 750 Capacity market support level 800 < 550 kg CO2 / MWh 600 400 325 200 0 Operating coal New coal units CCGT units (H/J units class) Rationale of the project : • restoring generation potential and eventually replacin
Slide 8: Klaster project
8 Klaster project Project: Complex of three onshore wind farms Starza, Rybice and Karnice II under the common name Klaster. Installed capacity: 97.18 MWe Annual generation: approx. 277 GWh Expected lifetime/ RES support: 25 years/ 15 years Date of commissioning: Permission for Use for all farms plan
Slide 9: Offshore Program
9 Offshore Program Project description: • Construction of offshore wind farms at locations of Baltica 1, 2 and 3 and acquisition of new license areas or offshore projects. • Final scope of the Program will depend on the final shape of the Polish Energy Policy until 2040. Status: • Strategic partner:
Slide 10: Next steps towards electromobility
10 Next steps towards electromobility • Zeroemission public transport - agreement between PGE and Industrial Development Agency (ARP) on project related to the production of electric buses • Acquiring contracts for the supply, lease or long-term rental of EV buses • Coordination of production proces
Slide 11: Detailed financial and operating results
11 Detailed financial and operating results Emil Wojtowicz Vice-President of the Board, CFO
Slide 12: Electricity market
12 Electricity market Domestic consumption and generation Relative 2019 price stabilisation 16 500 GWh 16 000 Total generation • Decline in demand Y/Y in Q3 -1.8% (-0.7 TWh) 15 500 Domestic electricity consumption • Significant fall of generation Y/Y in Q3 -6.6% 15 000 (-2.7 TWh) 14 500 • Increased
Slide 13: Generation volume by fuel – Q3 2019 y/y
13 Generation volume by fuel – Q3 2019 y/y TWh 16.17 Q3 2019 National Power System (y/y): electricity 13.94 consumption lower by 0.7 TWh and net Q3 2018 import expanded by +2 TWh → lower 10.09 7.76 demand for energy generated in conventional power plants 4.82 5.06 Lignite: lower load factor (Bełchat
Slide 14: Generation volume by fuel – 9M 2019 y/y
14 Generation volume by fuel – 9M 2019 y/y TWh National Power System (y/y): electricity 49.09 9M 2019 consumption lower by 0.8 TWh and net 43.44 import expanded by +2.7 TWh → lower 9M 2018 demand for energy generated in 29.38 conventional power plants 24.82 Lignite: lower load factor (Bełchatów 13.5
Slide 15: Key data
15 Key data Consolidated [PLN m] Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y EBITDA 1 677 1 441 16% 6 072 5 144 18% Recurring EBITDA 1 634 1 440 13% 4 933 5 243 -6% EBIT 621 507 22% 3 067 2 366 30% Recurring EBIT 670 580 16% 2 115 2 667 -21% Net profit to equity 471 416 13% 2 173 1 697 28% Net profit to
Slide 16: Main drivers of EBITDA
16 Główne czynniki budowy wartości EBITDA PLNm Q3 2018 EBITDA REPORTED 1 441 One-offs 1 Q3 2018 EBITDA RECURRING* 1 440 Wholesale price of electricity 989 Volume of electricity 445 +684 Optimization of electricity portfolio 113 Heat 26 Hard coal with transport 34 Natural gas 30 -85 Biomass 21 CO2 co
Slide 17: Generation assets - conventional
17 Generation assets - conventional Under pressure of overhauls and balance of the National Power System Availability Capacity Factor 80.2% 77.5% 84.8% 83.2% • Lower power plant load due 77.8% 71.0% to increased net import and 60.8% 57.2% 60.3% lower demand 41.9% • Overhauls: unit no. 2 in 25.4% 27.
Slide 18: Generation assets – wind farms
18 Generation assets – wind farms Higher windiness Availability Capacity Factor • Average windiness higher 97.0% 97.3% due to better July and September • Higher availability mainly due to lower failure 18.7% 21.1% frequency Q3 2018 Q3 2019 Wind farms
Slide 19: Distribution assets
19 Distribution assets Efficiency, quality, growth Volume of electricity distribution in Network losses [%] 9M (TWh) (last twelve months) 6.00 +0% • Rise in 9M volume 5.80 27.08 27.12 5.55 distributed despite drop of 5.60 26.20 -4% domestic demand for 5.40 5.20 electricity 25.43 5.20 5.00 • 1% volum
Slide 20: Capital expenditures
20 Capital expenditures PLN 1 331 m CAPEX PLN 165 m Key projects in 9M 2019 4% PLN 1 360 m 29% Opole Power Plant – units 5 & 6 PLN 902 m Conventional Generation 29% TOTAL CAPEX Turów Power Plant – unit 7 PLN 318 m PLN 4.5 bn PLN 59 m (+19% y/y) 1% Modernisation of distribution assets PLN 724 m Distr
Slide 21: Reported EBITDA: outlook for 2020
21 Reported EBITDA: outlook for 2020 Outook Key factors 2020 vs 2019 • Average wholesale realised price at ~PLN 275-280/MWh • Output under pressure of falling unitary margins in view of potential higher import level and commissionings of new generation capacities with lower variable cost Conventiona
Slide 22: CAPEX: outlook for 2020
22 CAPEX: outlook for 2020 Outlook Key factors 2020 vs 2019 • Lower development CAPEX in Conventional Generation (completion of Opole unit no. 5&6, Conventional final stage in construction of unit no. 7 in Turów power plant) Generation District heating • Continued BAT/BREF modernisations • Construct
Slide 23: Additional information
23 Additional information
Slide 24: Stabilized prices at energy exchange
3% 24 Stabilized prices at energy exchange CO2 allowance (EUA_DEC19) Hard coal (Polish Steam Coal Index PSCMI1) PGE average wholesale price of electricity (Conventional Generation)* 26.9 EUR/t 25.6 PLN/GJ 11.9 12.0 11.97 PLN/MWh 245 242 246 11.26 11.2 22.2 10.5 10.8 20.9 9.5 19.1 181 167 174 174 179
Slide 25: Key financial data
25 Key financial data Consolidated [IFRS, PLN m] Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y Sales 9 696 6 091 59% 27 932 18 962 47% including LTC compensations* 1 1 0% -14 -82 -83% Recurring Sales 9 695 6 090 59% 27 946 19 044 47% EBITDA 1 677 1 441 16% 6 072 5 144 18% Recurring EBITDA** 1 634 1 440 13
Slide 26: One-off items
26 One-off items Computation of recurring EBITDA and recurring EBIT: [PLN m] Q3 2019 Q3 2018 9M 2019 9M 2018 LTC adjustment (including court verdicts) 1 1 -14 -82 Change of reclamation privision 0 0 -246 -17 Change of actuarial provision 0 0 -36 0 Additional EUA allowances 42 0 1435 0 One-off items
Slide 27: Recurring EBITDA in Q3 2019 – composition and development
27 Recurring* EBITDA in Q3 2019 – composition and development 167 1 634 599 100 29 649 90 Conventional District Renewables Supply Distribution Other EBITDA Generation heating Q3 2019 649 90 100 29 599 167 1 634 Share in Q3 2019 EBITDA (%) 40% 6% 6% 2% 37% 9% Q3 2018 532 -27 132 152 622 29 1 440 Chan
Slide 28: Recurring EBITDA in 9M 2019 – composition and development
28 Recurring* EBITDA in 9M 2019 – composition and development 1 825 4 933 411 430 1 970 607 -310 Conventional District Renewables Supply Distribution Other EBITDA Generation heating 9M 2019 1 970 607 411 430 1 825 -310 4 933 Share in 9M 2019 EBITDA (%) 40% 12% 8% 9% 37% -6% 9M 2018 1 816 661 354 420
Slide 29: Capital expenditures
29 Capital expenditures Segment (PLNm) Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y Conventional Generation 1 172 808 45% 2 753 2 106 31% District heating 153 227 -33% 264 510 -48% Distribution, including: 540 473 14% 1360 1 069 27% New clients connection 193 152 27% 516 370 39% Distribution grid 155 231
Slide 30: Key operating data
30 Key operating data Net electricity generation by sources, sales and distribution [TWh] Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y Lignite-fired power plants 7.75 10.07 -23% 24.76 29.32 -16% Hard coal-fired power plants 4.40 4.59 -4% 10.79 12.52 -14% Coal-fired CHPs 0.45 0.51 -12% 2.86 2.95 -3% Gas-f
Slide 31: Opole – initial volumes provided to the system
31 Opole – initial volumes provided to the system Unit [TWh] Q1 Q2 Q3 9M Net generation, including: 0.57 1.01 0.91 2.49 No. 5 reported volume* - 0.69 0.91 1.59 start phase (CAPEX adjustment) 0.57 0.33 - 0.89 Net generation, including: - 0.22 1.05 1.26 No. 6 reported volume* - - 0.34 0.34 start phase
Slide 32: Change in Conventional Generation segment
32 Change in Conventional Generation segment District Heating as a separate segment Since 2019 PGE presents the new segment – District Heating. In previous periods results of the segment were presented within Conventional Generation segment. New presentational framework aims to improve transparency
Slide 33: Segmental revenues and costs – Conventional Generation
33 Segmental revenues and costs Conventional Generation [PLN m] Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y Sales, including: 4 954 3 144 58% 14 252 9 114 56% Sale of electricity 4 761 2 963 61% 13 528 8 493 59% Auxiliary services 84 82 2% 266 246 8% Sale of heat 18 15 20% 109 115 -5% Sale of certificat
Slide 34: Segmental revenues and costs – District Heating
34 Segmental revenues and costs District Heating* [PLN m] Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y Sales, including: 1 120 925 21% 4 221 3 910 8% Sale of electricity 830 646 28% 2 772 2 194 26% LTC revenues 1 1 0% -14 -82 n/a Sale of heat 228 205 11% 1 265 1 242 2% Sale of certificates of origin 5 25
Slide 35: Segmental revenues and costs – Renewables
35 Segmental revenues and costs Renewables [PLN m] Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y Sales, including: 213 217 -2% 771 618 25% Sale of electricity 117 101 16% 450 317 42% Sale of certificates of origin 41 46 -11% 132 98 35% Auxiliary services and leasing* 53 68 -22% 184 202 -9% Cost by kind, i
Slide 36: Segmental revenues and costs – Distribution
36 Segmental revenues and costs Distribution [PLN m] Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y Sales, including 1 510 1 432 5% 4 538 4 352 4% Revenues from distribution services 1 432 1 360 5% 4 302 4 142 4% Other revenues from core activities 51 46 11% 156 133 17% Cost by kind, including 1 235 1 125
Slide 37: Segmental revenues and costs – Supply
37 Segmental revenues and costs Supply [PLN m] Q3 2019 Q3 2018 y/y 9M 2019 9M 2018 y/y Sales, including: 4 358 3 295 32% 13 500 10 214 32% Sale of electricity 3 232 2 559 26% 8 775 7 466 18% Sale of CO2 allowances 453 234 94% 1 729 358 383% Sale of natural gas 107 87 23% 392 427 -8% Sale of other fu
Slide 38: Conventional Generation – EBITDA in Q3 2019
38 Conventional Generation – EBITDA in Q3 2019 1 200 1 000 800 600 400 200 0 Electricity Result on the Electricity Revenues EBITDA production optimization of Costs CO2 Personnel EBITDA production from agreement Other Q3 2018 difference in the electricity of fuel costs costs Q3 2019 difference in pri
Slide 39: Conventional Generation – EBITDA in 9M 2019
39 Conventional Generation – EBITDA in 9M 2019 3 800 3 300 2 800 2 300 1 800 1 300 800 300 Electricity Electricity Result on the Revenues from EBITDA production production Costs CO2 Personnel EBITDA optimization of the agreement Other 9M 2018 difference in difference in of fuel costs costs 9M 2019 e
Slide 40: District Heating – EBITDA in Q3 2019
40 District Heating – EBITDA in Q3 2019 140 120 100 80 60 40 20 0 -20 -40 Electricity Electricity Heat production Heat production Revenues from EBITDA production production Costs CO2 Personnel EBITDA difference in difference in property Other Q3 2018 difference in difference in of fuels costs costs
Slide 41: District Heating – EBITDA 9M 2019
41 District Heating – EBITDA 9M 2019 1 200 1 000 800 600 400 200 0 Electricity Electricity Heat production Heat production Revenues from EBITDA production production Costs CO2 Personnel EBITDA difference in difference in property Other 9M 2018 difference in difference in of fuels costs costs 9M 2019
Slide 42: Renewables – EBITDA in Q3 2019
42 Renewables – EBITDA in Q3 2019 140 130 120 110 100 90 80 70 60 50 Revenues from Revenues from EBITDA Revenues Personnel EBITDA property agreement Other Q3 2018 from electricity* costs Q3 2019 rights with TSO** Change -1 -5 -14 -6 -6 EBITDA Q3 2018 132 69 46 67 19 EBITDA Q3 2019 68 41 53 25 100 *
Slide 43: Renewables – EBITDA in 9M 2019
43 Renewables – EBITDA in 9M 2019 460 440 420 400 380 360 340 320 300 Revenues from Revenues from EBITDA Revenues Personnel EBITDA property agreement Other 9M 2018 from electricity costs 9M 2019 rights with TSO* Change 61 34 -17 -9 -13 EBITDA 9M'2018 354 214 98 198 61 EBITDA 9M'2019 275 132 181 70 4
Slide 44: Distribution – EBITDA in Q3 2019
44 Distribution – EBITDA in Q3 2019 700 650 600 550 500 450 400 350 300 EBITDA Volume of Change of Personnel EBITDA Network losses** Property tax Other Q3 2018 distributed energy distribution tariff* costs Q3 2019 Change -12 58 -39 -5 -25 0 EBITDA Q3 622 1 021 75 96 264 2018 EBITDA Q3 1 067 114 101
Slide 45: Distribution – EBITDA in 9M 2019
45 Distribution – EBITDA in 9M 2019 2 200 2 000 1 800 1 600 1 400 1 200 1 000 EBITDA Volume of distributed Change of Personnel EBITDA Network losses** Property tax Other 9M 2018 energy distribution tariff* costs 9M 2019 Change 4 101 -74 -16 -87 5 EBITDA reported 1 892 3 141 259 288 806 9M 2018 Recur
Slide 46: Supply – EBITDA in Q3 2019
46 Supply – EBITDA in Q3 2019 180 160 140 120 100 80 60 40 20 0 Result on Services for Result on Financial EBITDA Personnel Provision for EBITDA electricity Result on electricity other segments coal instruments Others Q3 2018 costs onerous contracts Q3 2019 volume in GK PGE trading revaluation Chang
Slide 47: Supply – EBITDA in 9M 2019
47 Supply – EBITDA in 9M 2019 600 500 400 300 200 100 0 Result on Services for Result on Financial EBITDA Result on electricity Personnel Provision for EBITDA electricity other segments coal instruments Others 9M 2018 margin costs onerous contracts 9M 2019 volume in GK PGE trading revaluation Change
Slide 48: Debt development and structure (as at Sep. 30, 2019)
48 Debt development and structure (as at Sep. 30, 2019) Gross debt and net debt (in PLN million) 14 000 12 670 12 000 11 703 10 000 8 000 6 000 4 000 2 000 0 -2 000 -4 000 Gross debt Net debt Fixed vs floating rates Currency profile of drawn debt (drawn debt) (including hedging transactions) EUR PLN
Slide 49: Debt maturity and available financing
49 Debt maturity and available financing Debt maturity profile (PLN m) as at September 30, 2019 (excluding current account credits) 2 800 2 400 2 000 1 600 1 200 800 400 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Drawn debt and availability of external financin
Slide 50: PGE cash position provides…
50 PGE cash position provides… Q3 2019 H1 2019 Gross Debt (PLN m) 12 670 11 980 … plenty of headroom Net debt (PLN m) 11 703 10 948 in the balance Net Debt/LTM EBITDA 1.60x 1.55x sheet Net Debt/Equity 0.24x 0.22x MOODY’S FITCH Long-term company rating (IDR) Baa1 BBB+ Rating outlook Stable Stable Dat
Slide 51: Q3 2019 Output and sales of electricity
51 Q3 2019 Output and sales of electricity Illustrative Households** Conventional Generation 2.31 TWh 12.24 TWh 2.40 TWh (Q3 2018) 14.67 TWh (Q3 2018) Wholesale and Supply balancing market 21% District heating 15.47 TWh 10.89 TWh* 8.02 TWh (Q3 2018) 10.78 TWh (Q3 2018) 1.30 TWh 79% 1.15 TWh (Q3 2018
Slide 52: 9M 2019 Output and sales of electricity
52 9M 2019 Output and sales of electricity Illustrative Households** Conventional Generation 7.34 TWh 35.93 TWh 7.17 TWh (9M 2018) 42.09 TWh (9M 2018) Wholesale and Supply balancing market 22% District heating 44.21 TWh 32.78 TWh* 25.09 TWh (9M 2018) 31.51 TWh (9M 2018) 5.83 TWh 78% 5.67 TWh (9M 201
Slide 53: Fundamentals of the distribution business
53 Fundamentals of the distribution business RAB (with RAB-AMI) development* Regulated revenue composition* (PLN m) (PLN m) 1 787 1 295 1 835 1 145 6 017 6 131 5 985 2 908 2 822 2 512 16 380 16 884 15 647 1 226 1 057 1 104 1 170 1 202 1 231 882 1 004 1 016 RAB 2017 CAPEX Deduction RAB 2018 CAPEX Ded
Slide 54: Cash from operations, investments and net debt
54 Cash from operations, investments and net debt Consolidated Cash Flows [PLN m] Q3 2019 Q3 2018 9M 2019 9M 2018 Operating CF 1 572 -15 4 765 2 668 Investing CF -1 665 -1 434 -4 851 -4 339 Financial CF 545 1 567 546 445 Change of cash and equivalents 452 118 460 -1 226 Consolidated Balance Sheet Q3
Slide 55: CO2 allowances – regulations and settlement
55 CO2 allowances – regulations and settlement Free EUA recognized at a zero value (Cons. FS, note 14) Regulations in the III Settlement Period EUA As of 2013 only carbon allowances for heat production are Quantity Value received free of charge. Carbon allowances for electricity (m tons) (PLN m) pro
Slide 56: Sell-side analysts covering PGE
56 Sell-side analysts covering PGE Institution Analyst BDM Krystian Brymora BOŚ Jakub Viscardi Citigroup Piotr Dzięciołowski Erste Group Tomasz Duda Exane BNP Paribas Michael Harleaux IPOPEMA Robert Maj JP Morgan Michał Kuzawiński mBank Kamil Kliszcz Pekao Maksymilian Piotrowski PKO BP Andrzej Rembe
Slide 57: Disclaimer
57 Disclaimer This presentation has been prepared by the management of PGE Polska Grupa Energetyczna S.A. (the “Company” or “PGE”) and other entities. This presentation does not constitute or form part of and should not be constructed as, an offer to sell, or the solicitation or invitation of any of
Slide 58: Investor Relations contacts
58 Investor Relations contacts Jakub Frejlich Tel: (+48 22) 340 10 32 jakub.frejlich@gkpge.pl Mob: +48 695 883 902 Krzysztof Dragan Tel: (+48 22) 340 15 13 krzysztof.dragan@gkpge.pl Mob: +48 601 334 290 Filip Osadczuk Tel: (+48 22) 340 12 24 filip.osadczuk@gkpge.pl Mob: +48 695 501 370 Małgorzata Ba
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