The first Romanian privatization through the capital market

Transcription

1 The first Romanian privatization through the capital market A success story Bucharest, April 10 th, 2017

2 Market Overview Electrica Overview Group Strategy Corporate Governance Market Overview

3 Romanian Electricity Market Overview Market Overview Romania has an unbundled power sector and is in the process of liberalising power supply to end-users. Generation The sources of electricity produced in 2015 consisted of Coal (27%), Hydro (27%), Nuclear (18%), Oil & Gas (14%), Wind (11%), Solar (2%) and Others (1%) Transmission Distribution Supply Interconnections Transelectrica is the sole Transmission System Operator responsible for transmission grid management and development, electricity market operation, (including green certificates) system balancing Eight non-overlapping geographical areas, of which Electrica covers three Revenues regulated through a Tariff Basket Cap methodology based on Regulated Asset Base Players: Electrica, Enel, CEZ, E.ON Power prices fully liberalized for large industrial consumers Full liberalization expected Jan 2018 Following the liberalization, the percentage of the total power consumed that was freely traded increased year by year, up to 66% in 2014 and up to 69% in 2015 Electricity consumption per capita for Romania was 39.4% of EU average in 2014 Romania has interconnection capacities with: Bulgaria, Hungary, Moldova, Serbia, Ukraine In 2015, Romania exported c TWh of electricity (representing 20% of the internal consumption), up by 28% vs 2014, and imported 3.8 TWh, up by 150% Source: Company data, ANRE, Transelectrica, Eurostat.

4 Romanian Electricity Market Overview (Cont d) Market Overview Generation Renewables, Municipal Cogeneration and Other IPP s Transmission and Balancing Distribution Supply Around 100 Players Source: ANRE.

5 Distribution Market Overview Market Overview Key Facts Electricity distribution in Romania is currently controlled by eight licensed electricity distribution companies Each company is responsible for the exclusive distribution of electricity within its licensed region, based on a concession agreement with the Romanian State acting through the Ministry of Energy Electrica and Enel own three distribution companies each, while CEZ and E.ON own the other two Electrica is a leading player in the distribution sector, in terms of area covered and users Romanian Electricity Distribution Map Number of Users ( 000 s) 39% 40% 40% 9,051 9,135 9,187 Distributed Volume (TWh) 39% 40% 40% ,486 5,515 5, ,565 3,620 3, Electrica Rest of Market Electrica Rest of Market Source: ANRE latest annual report

6 Supply market overview Market Overview Key Facts Supply market consists of Regulated and Competitive segments: The regulated segment comprises 5 companies, integrated within the same group as the corresponding distribution operators; Overall Market Share 2016 Others (<4% individually) 40% Electrica Furnizare 23% The competitive segment comprises 105 players in November 2016, 97 of which have less than 4% market share TWh Electrica is the largest supplier overall, and on both regulated and competitive segments. Enel 16% Cez Vanzare 7% Tinmar Energy 6% E.ON Energie 8% Share of Competitive Market 2016 Share of Regulated Market 2016 Tinmar Energy 9% E. ON 12% Electrica Furnizare 16% CEZ 13% Electrica Furnizare 39% Others (<4% individually) 46% 30.5 TWh E.On 7% 12.3 TWh Repower 4% Cez Vanzare 5% TransenergoCom 5% Enel Energie 8% Enel 36% Source: ANRE - latest available data, for supply November 2016

7 Supply business overview Market Overview Volume of Electricity Supplied on Retail Market (TWh) Number of Consumers Consumers ( 000 s) Regulated Competitive Competitive Regulated ,566 3,591 3,610 3, ,532 3,517 3,520 3, Consumers by Volume Consumers Consumers by Revenues Competitive, 40% Competitive, 50% Regulated, 50% Regulated, 60% Source: Company data.

8 Market Overview Electrica Overview Group Strategy Corporate Governance Electrica Overview

9 Key Facts before IPO Electrica Overview and Electrica Electrica established as a stand-alone company post restructuring of CONEL 1 Electrica Group established comprising 8 distribution and supply subsidiaries Electrica transferred by operation of law to Fondul Proprietatea (FP) stakes of 12% in Electrica Transilvania Nord, Electrica Transilvania Sud, Electrica Muntenia Nord - the precursors of the current 3 distribution companies and of Electrica Furnizare Remainder 10% shares in EDTN, EDTS, EDMN and EF transferred by operation of law to FP in 2007 Electrica Furnizare S.A. set-up following the merger of the three supply companies On July 3rd 2014 Electrica s shares were admitted to trading on both BSE and LSE following a successful IPO through capital increase Moldova and Dobrogea service companies pending liquidation proceedings, Oltenia -insolvent, Banat bankrupt Spin off of minority holdings: E.ON Moldova Distributie, E.ON Energie Romania, Enel Distributie Dobrogea, Enel Distributie Banat, Enel Energie, Enel Distributie Muntenia, Enel Energie Muntenia, Enel Electrica Soluziona, BRM and Hidro Tarnita Market Enel s acquisition of 51% in Electrica Dobrogea and Electrica Banat E.ON s acquisition of 51% in Electrica Moldova SA Unbundling of the distribution and supply businesses Enel s acquisition of 64.4% of Electrica Muntenia Sud CEZ s acquisition of the remaining 30% stake of CEZ Distributie and CEZ Vanzare E.ON s acquisition of Electrica s remaining holdings in E.ON companies CEZ s acquisition of 51% of Electrica Oltenia Source: Company data. 1. CONEL was created as a holding company concentrating all the players in power generation, transmission, distribution and supply.

10 Electrica Significant Subsidiaries Electrica Overview 22% 78% 100% Electrica Furnizare (EF) 3.60 mn consumers 1 Market share % Revenues 3 : RON 4,432 mn EBITDA 3 : RON 185 mn Societatea de Distributie a Energiei Electrice Transilvania Nord S.A 1.25 mn users 1 Market share % Revenues 3 : RON 857 mn EBITDA 3 : RON 269 mn Societatea de Distributie a Energiei Electrice Transilvania Sud 1.12 mn users 1 Market share % Revenues 3 : RON 790 mn EBITDA 3 : RON 256 mn Societatea de Distributie a Energiei Electrice Muntenia Nord S.A 1.3 mn users 1 Market share % Revenues 3 : RON 801 mn EBITDA 3 : RON 227 mn Electrica Serv (ES) Revenues 3 : RON 365 mn EBITDA 3 : RON 17 mn Supply business: 10.6 TWh on the retail market in 2016 SDEE Transilvania Nord Distribution business (2016): 3.67 mn users / area of 97,196 km 2 covered / distributed c TWh RON 4.5 bn ( 1.0 bn) Regulated Asset Base (RAB) / concession ending in 2054 (+24.5 years extension) External services: SE Muntenia SE Oltenia SDEE Transilvania Sud SDEE Muntenia Nord 2016 Financials 3 Revenues: RON 5,518mn ( 1,229mn) a 0.3% increase vs 2015 EBITDA: RON 960mn ( 214mn) a 4% rise compared to 2015 Net Profit: RON 469mn ( 104mn) a 2.8% decrease vs 2015 Net Debt / (Cash): RON (2,366mn)/( 521mn) Source: Company data, ANRE. 1. As of 31 December 2016 Consumer = Any natural person or legal entity that enters a contract to purchase electricity. User = Any producer, transmission system operator, distribution system operator, supplier, eligible consumer or captive consumer connected to the network; 2. As of 31 December Market share is based on volumes; 3. As of 31 December 2016 as per the financial section converted from RON to using 31 December 2016 exchange rate of for balance sheet data and average rate of for income statement data; 4. As of 30 November Market share is based on volumes

11 Leading Player in Distribution and Supply Electrica Overview Distribution Supply Volumes Distributed in 2015 Volumes Supplied in % SDMN SDTS 22% Electrica Others 60% 42.4 TWh 1 13% SDTN Others 46.2 TWh 12% 78% Electrica: 40.3% Area Covered by Distribution Network Regulated Market Sales in % SDMN 12% Electrica 238,391 km 2 14% SDTS SDTN Others 12% 14.1 TWh 38% Enel E.On CEZ 59% 15% Electrica: 41% 38% Source: ANRE latest annual report

12 Summary Consolidated Financials Revenues Revenues (RON mn) Adjusted EBITDA 1 Growth and Margin Performance EBITDA (RON mn) and EBITDA Margin (%) 5,383 5, ,503 5, % 18% 17% 18% 4,969 4,771 5,156 5, Revenues from Green Certificates Revenues (ex-green Certificates) Net Profit Net Profit (RON mn) NP Related to Equity Accounted Investments-(2) NP Group NI Margin 5% 8% 9% 8% Capital Structure: Net Cash Position Net Debt 3 /(Cash) (RON mn) (298) (2,551) (2,534) (2,366) Source: Company data. 1. Group EBITDA adjusted for non-recurring events (i) consolidated impairment/ reversal of impairment of trade and other receivables, net and (ii) consolidated write down/reversal of write down of inventories, net. 2. NP Related to Equity Accounted Investments relates to the shareholdings that Electrica spun off in April Net debt is calculated as bank borrowings + bank overdrafts + financial leases + Financing of PP&E - Cash and cash equivalents - bank deposits - T-bills and government bonds

13 Market Overview Electrica Overview Group Strategy Corporate Governance Group Strategy

14 Electrica Group Strategy To continue succeeding in the long term and to be aligned to the best practices, Electrica has set its Vision, Mission and Values with respect to the Group which serve as a foundation for formulating and implementing its corporate goals, objectives and business strategy. Vision Mission Electrica s vision is to expand the Group s leading position in the electricity distribution and supply market segments, both nationally and regionally. The mission of the Group is to deliver long term value to the shareholders by distributing and supplying electricity and providing exceptional services to the customers in a safe, reliable, affordable and sustainable manner. The values exercised across all structures of the Group are presented in the figure below. Electrica Group has set these values as the guiding principles for fulfilling its corporate goals and for communicating them to internal and external stakeholders. They reflect the Group s commitment towards an internal environment where integrity and ethics are the building blocks of the organizational culture, based on open and honest communication. Commitment and focus towards customers Corporate values Professional and proficient approach Values Commitment towards labour safety Transparency and integrity Dynamism and flexibility Robust growth while demonstrating environmental and corporate social responsibility Team spirit

15 Electrica Group Strategy (cont d) Major strategic themes Operational excellence for efficiency and quality; Ensuring a committed and qualified workforce; The highest standards in corporate governance. Corporate Strategic Directions To preserve and enlarge the electricity distribution and supply segments in Romania which are the most attractive and where the Group has a competitive advantage in the market, by looking for other investment opportunities in Romania. To explore potential opportunities to expand the distribution and supply segments in the region. These must be consistent with the regulated business profile and strict financial investment criteria and an appropriate regulatory and legal framework should be available in these countries. To enlarge the portfolio of the business, by developing value-added services related to distribution and supply activities, which can be offered to customers. Divest the unprofitable business segments or activities. Strategic Goals Electrica s overriding goal with respect to the Group s is to create a sustainable long term return on investment for our shareholders. To reach this overriding goal, Electrica has set the following strategic goals with respect to the Group: Overall financial performance of the Group Excellence in financial processes management Overall operational performance of the Group Quality of services provided Employees productivity and support of their development Implementation by the subsidiaries of the distribution segment investment programme Corporate Governance and enhancement of our sustainability profile

16 Market Overview Electrica Overview Group Strategy Corporate Governance Corporate Governance

17 Current Structure of the Board of Directors and its Committees Board of Directors - Composition Board of Directors - Structure Board of Directors - Committees Executive Management Cristian Busu Chairman Arielle Malard de Rothschild Corina Popescu Ioana Dragan Willem Schoeber Chair of the Strategy and Corporate Governance Committee Pedro Mielgo Alvarez Chair of the Audit and Risk Committee Bogdan Iliescu Chair of the Nomination and Remuneration Committee All board members are non-executive, four of whom are independent and are elected in accordance with the Articles of Incorporation. On December 14 th, 2015 a new seven-member Board of Directors is elected by the GMS through cumulative voting method for a 4-year mandate. On October 21 st, 2016 OGMS appointed Mr. Willem Schoeber as an independent member of the Board of Directors following the vacancy of a position in the Board of Directors of Electrica. On January 27 th, 2017 Mr. Cristian Busu was reappointed Chairman of the Board for a one-year mandate. Audit and Risk Committee (AR), comprising three non-executive members, having relevant financial experience - supervises the financial reporting process, the efficiency of the internal control, audit and risk management systems. Nomination and Remuneration Committee (NR), comprising three non-executive directors - defines selection criteria for new members, makes proposals for new members and recommends the remuneration policy for nominated directors, managers and key personnel. Strategy and Corporate Governance Committee (SCG), comprising three non-executive directors, one of them being the Chairman of the Board - provides guidelines for the strategy and corporate governance and supervises the implementation. The Board of Directors appointed the following executive managers for a mandate of four years: Mr. Dan Catalin Stancu Chief Executive Officer (starting October 24 th, 2016) Ms. Iuliana Andronache Chief Financial Officer (starting October 27 th, 2015) Ms. Alexandra Borislavschi Executive Manager of Strategy and Corporate Governance Division (starting August 4 th, 2015) Ms. Livioara Sujdea Chief Distribution Officer (starting February 1 st, 2017) Mr. Dan Crisfalusi IT & Telecom Officer (starting March 6 th, 2017) Ms. Gabriela Marin Human Resources Division (starting August 4 th, 2015 revoked starting as of October 5 th, 2016) Mr. Ramiro Angelescu Sales Coordination Division (starting August 4 th, 2015 revoked starting as of January 27 th, 2017)

18 Shareholder Structure Free float is 51.2% after the IPO, with the Romanian State retaining the rest. Before the IPO Shareholder Structure as of February 15 th % 100% 32.86% 48.78% 4.80% 8.66% Romanian State Romanian State EBRD BNY MELLON DRS - London Stock Exchange Legal Person Shareholders Individual Shareholders Total Shares: [168,751,185] Total Shares: [345,939,929] Source: Central Depositary.

19 Market Evolution on BSE and LSE Market Capitalization RON bn. (as of Mar 16 th, 2017) IPO price RON 11, USD Total Shares 345,939,929 Closing price on first day on BSE RON Free float 51.2% after the IPO Closing price on first day on LSE USD Dividends from 2014 net profit RON /share; Total RON 250 mn Highest closing price on BSE RON (23 Feb 2017) Dividends from 2015 net profit RON /share; Total - RON 292 mn Highest closing price on LSE USD (19 Sep 2014) Total liquidity since IPO on BSE RON 1.75 bn Lowest closing price on BSE RON (11 Jul 2014) Total liquidity since IPO on LSE USD 155 mn Lowest closing price on LSE USD (27 Jan 2016) BSE s top liquidity position 6 th (last 12 months, based on trading value) Last price on BSE RON (14 Nov 2016) Total yield since IPO on BSE 41.7%: 27.3% from share price, 14.4% from dividends Last price on LSE USD (14 Nov 2016) 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Monthly trading volume and average monthly closing price of shares on BSE (in RON) and GDRs on LSE (in USD) Source: BSE, LSE BSE - Shares - Monthly volume BSE - Shares - Average monthly closing price (RON) LSE - GDRs - Monthly volume LSE - GDRs - Average monthly closing price (USD)

20 Comparative evolution with BSE indices % EL (BSE) Performance BET Performance BET-FI Performance BET-NG Performance BET-XT Performance ELSA (LSE) Performance Source: Company data; BSE

21 Q&A