Cez As · PSECZ:CEZ
Cez As — H1 2018 Earnings Presentation
39 slides from Cez As's earnings presentation, Aug 7, 2018
Slide 1: Presentation on CEZ Group Financial Results in H1 2018
PRESENTATION ON CEZ GROUP FINANCIAL RESULTS IN H1 2018 NON-AUDITED CONSOLIDATED RESULTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) August 7, 2018
Slide 2: Contents
CONTENTS Financial Highlights, Selected Events, and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 1
Slide 3: CEZ Group Financial and Operating Results
CEZ GROUP FINANCIAL AND OPERATING RESULTS (CZK bn) Q1 - Q2 2017 Q1 - Q2 2018 Change % Revenues 100.9 86.3 -14.6 -14% Revenues - comparable **** 85.4 86.3 +0.9 +1% EBITDA 31.3 26.9 -4.4 -14% EBIT 17.2 12.7 -4.6 -26% Net income 16.7 7.7 -8.9 -54% Net income - adjusted * 17.0 7.8 -9.1 -54% Operating CF
Slide 4: Year-on-Year Change in EBITDA by Segment
YEAR-ON-YEAR CHANGE IN EBITDA BY SEGMENT Values adjusted for temporary influences, which will be compensated in H2 2018. In total CZK +1.6 billion, of which CZK 1.2 billion from revaluation of hedging contracts for electricity generation and CZK 0.4 billion from commercial hedge of emission allowanc
Slide 5: Other Income and Expenses
OTHER INCOME AND EXPENSES (CZK bn) Q1 - Q2 2017 Q1 - Q2 2018 Change % EBITDA 31.3 26.9 -4.4 -14% Depreciation, amortization and impairments* -14.1 -14.2 -0.1 -1% Other income (expenses) 2.2 -3.4 -5.5 - Interest income (expenses) -1.7 -2.4 -0.7 -42% Interest on nuclear and other provisions -0.8 -0.9
Slide 6: EZ Share Price in 2018
EZ SHARE PRICE IN 2018 % EZ share price, wholesale electricity prices, 125 and Bloomberg Utilities Index Jun 30 120 EZ 115 CZK 584 (at Aug 3) 110 CZK 497 (at Dec 29, 2017) EEX CAL 19 electricity price 105 Bloomberg Utilities 100 Index 95 Shares began to be traded without 90 entitlement to the divide
Slide 7: Wholesale Electricity Prices Have Increased by More Than 20% Since Start of Year
WHOLESALE ELECTRICITY PRICES HAVE INCREASED BY MORE THAN 20% SINCE THE START OF THE YEAR, PRIMARILY DUE TO INCREASE IN CO2 ALLOWANCE PRICES Breakdown of Causes for Change in Cal19 BL Wholesale Electricity Price EUR/MWh (Jan 2, 2018 – Jul 23, 2018) 50 6.7 (0.6) 45.3 1.8 40 0.4 37.0 30 20 Power Price
Slide 8: EU 2030 Targets for RES and Energy Efficiency Were Set
EU 2030 TARGETS FOR RES AND ENERGY EFFICIENCY WERE SET A COMPROMISE WAS REACHED IN JUNE BETWEEN THE EUROPEAN PARLIAMENT, EU COUNCIL, AND EUROPEAN COMMISSION CONCERNING AN ENERGY EFFICIENCY DIRECTIVE, RES DIRECTIVE, AND ENERGY UNION GOVERNANCE REGULATION. Key outcomes/energy targets for 2030: Tentati
Slide 9: Annual Shareholders' Meeting of EZ, a. s. Held on June 22, 2018
ANNUAL SHAREHOLDERS’ MEETING OF EZ, A. S. WAS HELD ON JUNE 22, 2018 APPROVED DIVIDEND OF CZK 33 PER SHARE, OR CZK 17.8 BILLION A dividend of CZK 33 per share before tax was approved. The total amount approved as payment to shareholders is CZK 17.8 billion, which is about 86% of 2017 consolidated net
Slide 10: We Still Estimate EBITDA at CZK 51 to 53 Billion
WE STILL ESTIMATE EBITDA AT CZK 51 TO 53 BILLION AND ADJUSTED NET INCOME AT CZK 12 TO 14 BILLION CEZ Group Financial Outlook for 2018 CZK billion 60 51 – 53 40 20 12 – 14 0 EBITDA Adjusted net income Selected prediction opportunities and risks (reasons for the interval): Court decision on payment of
Slide 11: Contents
CONTENTS Financial Highlights, Selected Events, and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 10
Slide 12: Generation—New Energy
GENERATION—NEW ENERGY Germany (+46%) Germany (+32%) + Effect of acquisition of wind farms in Lettweiler Höhe + Effect of acquisition of wind farms in Lettweiler Höhe (belonging to the portfolio of CEZ Group since (belonging to the portfolio of CEZ Group since September 2017) September 2017) Czechia
Slide 13: Segment: Generation—New Energy
SEGMENT: GENERATION—NEW ENERGY EBITDA (CZK bn) Q1 - Q2 2017 Q1 - Q2 2018 Change % Czechia 1.0 1.1 +0.1 +8% Romania 1.1 0.8 -0.3 -29% Germany 0.2 0.3 +0.1 +37% Generation - new energy 2.3 2.2 -0.2 -7% Czechia (CZK +0.1 billion) Higher production and selling prices of electricity Romania (CZK -0.3 bil
Slide 14: Segment: Distribution
SEGMENT: DISTRIBUTION EBITDA (CZK bn) Q1 - Q2 2017 Q1 - Q2 2018 Change % Czechia 8.5 8.6 +0.1 +2% Romania 0.9 0.8 -0.1 -8% Bulgaria 0.7 0.6 -0.1 -18% Distribution 10.0 10.0 -0.1 -1% Czechia (CZK +0.1 billion) Higher gross margin on electricity distribution, primarily due to a year-on-year increase i
Slide 15: Segment: Sales
SEGMENT: SALES EBITDA (CZK bn) Q1 - Q2 2017 Q1 - Q2 2018 Change % Czechia 2.3 1.7 -0.6 -25% Romania 0.1 0.4 +0.3 >200% Bulgaria 0.6 0.1 -0.5 -81% Germany 0.0 0.1 +0.1 - Other states -0.2 -0.2 0.0 +12% Sales 2.7 2.1 -0.6 -22% Czechia (CZK -0.6 billion) Lower gross margin of EZ Prodej, primarily due t
Slide 16: Selected Events—Development Team
SELECTED EVENTS—DEVELOPMENT TEAM ACQUISITION-BASED AND ORGANIC GROWTH CONTINUES IN ENERGY SERVICES AND RES The ESCO Group’s non-commodity product sales in H1 amounted to CZK 7.7 billion. We expect ESCO Group’s full-year sales will surpass CZK 16 bn in accordance with our ambitions. German wind farms
Slide 17: Contents
CONTENTS Financial Highlights, Selected Events, and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 16
Slide 18: 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 (-11%) Coal-Fired Power Plants (-0%) Czechia (-12%) Czechia (-1%) Longer outages at M lník 3 and P
Slide 19: Segment: Generation—Traditional Energy
SEGMENT: GENERATION—TRADITIONAL ENERGY EBITDA (CZK bn) Q1 - Q2 2017 Q1 - Q2 2018 Change % Czechia 12.2 9.1 -3.1 -26% Poland 0.6 0.5 -0.1 -17% Generation - traditional energy 12.7 9.5 -3.2 -25% Czechia (CZK -3.1 billion) Lower realization prices of generated electricity in H1, including the effects o
Slide 20: Mining Segment and Other Segment
MINING SEGMENT AND OTHER SEGMENT EBITDA (CZK bn) Q1 - Q2 2017 Q1 - Q2 2018 Change % Czechia 2.1 2.0 -0.1 -3% Mining 2.1 2.0 -0.1 -3% Mining Segment (CZK -0.1 billion) Lower coal consumption by CEZ Group partially offset by higher external sales Higher fixed expenses and changed frequency of payments
Slide 21: EZ Continues Hedging Its Generation Revenues in the Medium Term
EZ CONTINUES HEDGING ITS GENERATION REVENUES IN THE MEDIUM TERM IN LINE WITH STANDARD POLICY Share of Hedged Production of EZ* Facilities as at July 31, 2018 Hedged volume from May 1, 2018 to Jul 31, 2018 100% Hedged volume at Apr 30, 2018 100% of deliveries in 2019–2022 corresponds to 52–56 TWh 75%
Slide 22: Overview of 2019 Hedging of Electricity Generation for Selected Utilities
OVERVIEW OF 2019 HEDGING OF ELECTRICITY GENERATION FOR SELECTED UTILITIES Average hedge price (EUR/MWh) and hedging ratio of electricity generation of 2019 (%) ~ 77 % ~ 75 % ~ 64 % ~ 80 % ~ 90 % ~ 60 % Hedged from the planned supply EUR/MWh volume (%) 35 33 30 29 28 28 27 24 Gradual hedging of 25 fu
Slide 23: Selected Events—Operations Team
SELECTED EVENTS—OPERATIONS TEAM GENERATION—NUCLEAR ENERGY Electricity generation at nuclear power plants was 14.9 TWh in H1 2018, i.e., 1.0 TWh more than in H1 2017 Nuclear power plants generated 14.9 TWh, i.e. 7% more than in H1 2017, primarily due to successful execution of scheduled outages and l
Slide 24: Annexes
ANNEXES Information About Publication of Sustainability Report Cash Flows EBITDA—Q2 Year-on-Year Comparison Net Income—Q2 Year-on-Year Comparison Credit Facilities and Bonds Investments in Fixed Assets Balance Sheet Overview Mining Electricity Consumption Market Developments Electricity Procured and
Slide 25: EZ Published Its Sustainability Report for 2017
EZ PUBLISHED ITS SUSTAINABILITY REPORT FOR 2017 EZ published its Sustainability Report for 2017 in June, in compliance with statutory requirements and dates. Beyond the scope of statutory requirements for nonfinancial information, the report was prepared in accordance with international guidelines f
Slide 26: Cash Flows
CASH FLOWS Cash Flows from Operating Activities (CZK +21.1 billion) Income after adjustments, incl. income tax (CZK +23.5 billion): income before taxes (CZK +9.3 billion), depreciation and amortization of nuclear fuel (CZK +16.0 billion), valuation allowances and other adjustments (CZK +1.7 billion)
Slide 27: EBITDA—Q2 Year-on-Year Comparison
EBITDA—Q2 YEAR-ON-YEAR COMPARISON Values adjusted for temporary influences, which will be compensated in H2 2018. In total CZK +1.6 billion, of which CZK 1.2 billion from revaluation of hedging contracts for electricity generation and CZK 0.4 billion from commercial hedge of emission allowances purc
Slide 28: Net Income—Q2 Year-on-Year Comparison
NET INCOME—Q2 YEAR-ON-YEAR COMPARISON (CZK bn) Q2 2017 Q2 2018 Change % EBITDA 12.3 9.4 -2.9 -24% Depreciation, amortization and impairments* -6.7 -7.1 -0.4 -6% Other income (expenses) 3.2 -1.9 -5.0 - Income taxes -0.8 0.0 +0.8 - Net income 8.0 0.5 -7.5 -94% Net income - adjusted 8.2 0.6 -7.6 -93% D
Slide 29: CEZ Group Maintains a Strong Liquidity Position
CEZ GROUP MAINTAINS A STRONG LIQUIDITY POSITION Utilization of Short-Term Lines (as at June 30, 2018) CZK 0.3 CEZ Group has access to CZK 26.1 billion Available credit billion in committed credit facilities, facilities using CZK 5.2 billion as at June 30, CZK 5.2 2018. billion Undrawn, committed Com
Slide 30: Capital Expenditure Broken Down by Segment
CAPITAL EXPENDITURE BROKEN DOWN BY SEGMENT CZK billion H1 2017 H1 2018 Generation—Traditional Energy 5.1 2.4 Of which: Nuclear fuel acquisition 1.7 1.1 Generation—New Energy 0.2 0.1 Mining 0.3 0.3 Distribution 5.3 5.3 Czechia 3.9 4.3 Romania 0.7 0.6 Bulgaria 0.7 0.4 Sales 0.0 0.1 Other * 1.0 0.7 Tot
Slide 31: Balance Sheet Overview
BALANCE SHEET OVERVIEW Equity decreased by CZK 11.5 billion Dividends declared CZK -17.7 billion Property, plant and equipment, nuclear fuel, and investments decreased by Other comprehensive income CZK -4.2 billion CZK 16.4 billion Net income CZK +7.7 billion Reclassification of Bulgarian companies
Slide 32: Mining
MINING Severo eské doly—Coal Extraction (Millions of Tons) Other customers EZ* 25 21.5 +1% 21.7 12 20 10.7 -5% 5.6 -3% 10.4 5.9 10 2.7 15 +12% 3.0 8 6 10 15.6 +3% 16.1 4 8.0 -8% 7.4 5 2 0 0 H1 2017 H1 2018 2017 2018 E Total decrease in extraction by 0.3 million tons of coal Coal production estimated
Slide 33: 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) TWh TWh 18.56 18.43 18.34 18.30 Changes in consumption (-0.2%) by segment: +0.3% large e
Slide 34: Market Developments
MARKET DEVELOPMENTS CZK Development of CEZ share price C02 allowances / emission rights 600 EUR/t 20 500 15 10 400 5 300 i A A A A A Cy 2 © S £ £ S SS SF Sf YS S ££ £ ££ S SS FS YY —forward 2019 EUR / MWh Electricity USD /t Coal and gas EUR/MWh 45 ao) 40 35 35 30 25 + 35 0 A A A A A A Cy Cy Cy A NY
Slide 35: Electricity Balance (GWh)
Electricity balance (GWh) Index Q1 - Q2 2017 Q1 - Q2 2018 2018/2017 Electricity procured 28,640 27,584 -4% Generated in-house (gross) 31,816 30,743 -3% In-house and other consumption, including pumping in pumped-storage plants -3,176 -3,159 -1% Sold to end customers -18,897 -19,043 +1% Sold in the w
Slide 36: Electricity Balance (GWh) by Segment
Electricity balance (GWh) by segm ent Generation - traditional Generation - new Q1 - Q2 2018 energy energy Distribution Sale Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 26,611 -4% 973 -0% 0 - 0 - 0 - 27,584 -4% Generated in-house (gross) 29,759 -3% 984
Slide 37: Electricity Balance (GWh) by Country
Electricity balance (GWh) by country Q1 - Q2 2018 Czechia Poland Romania Bulgaria Germany Others Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 25,681 -4% 1,129 +2% 629 -8% 3 - 142 +46% 0 - 0 - 27,584 -4% Generated in-house (gross) 28,673
Slide 38: 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 39: Indicator Definitions
Indicator additional debt to grow its business. CEZ Group uses this 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 pe