Annual Budget

Transcription

1 25.1. Annual Budget

2 Management Commentary on Annual Budget Annual budget assumes 2.5% growth in EBITDA Caruna Networks BV Group budget is continuing on its growth path both in terms of net sales and EBITDA. Net sales are planned to be EUR 11 million higher than in The increase assumes growth in distribution volumes and average distribution prices compared to Also, the budget includes the new revenue recognition method for connection fees in accordance with IFRS 15, thus deferring the connection fee revenue to the assumed lifetime of the connection (35 years). Transmission costs in are budgeted to be EUR 3.7 million higher than in On-going OPEX is planned to decrease slightly from the 2017 level to EUR 75.9 million due to efficiency gains derived through new customer information and billing systems as well as from the change of the measurement service provider. Additional EUR 4 million expenses are budgeted for one-off costs related to strategic initiatives to develop business further. Total fixed costs are budgeted to be EUR 79.9 million. There are no major storms included in planned operating costs. In total, Group EBITDA is assumed to improve by 2.5% when compared to

3 Updated strategy to drive towards one million content customers Caruna has updated its strategic vision to one million content customers. The focus of the annual budget in is to drive business development towards this vision through six strategic key initiatives. 1 Improvements in customer experience including, among other items, the development and launch of a new service concept, adopting an enhanced key customer management model and further improving customer communication. 2 Delivery of planned investment program with safety & efficiency focusing on the implementation of a new low voltage concept through network construction, improvements in network documentation, as well as the conduction of a specific safety related certification program for sub-contractors. 3 Development of Caruna process management & leadership to better support new strategy and vision as well as to prepare Caruna for the operating environment changes. 4 Improvements in corporate citizenship and reputation achieved via comprehensive communication and interest promotion strategy, through development of customer-oriented tariff structures and by actively driving industry development to solve future challenges in the energy system. 5 M&A strategy and capability development to build the base and direction for future value growth. 6 Establishing a base for new services and innovation to respond to the operating environment changes as well as to boost R&D activities. The initiative includes the development of the Caruna innovation management model as well as running selected pilot projects for new types of services and solutions. 3

4 Investments in network reliability and customer satisfaction are planned to improve Reliability investments targeted to deliver requirements of Security of Supply legislation by 2028 continue during and the total amount of investments equal to EUR million, of which EUR 228 million are investments in the network. Impacts of the proceeding investment program are starting to result in improved average customer interruption time as well as in regulatory costs for outages. Average customer interruption time is targeted to stay under 46 minutes in and regulatory outage costs are assumed to drop from EUR 25.0 million to EUR 21.0 million. Customer satisfaction measure NPS (Net Promoter Score) is assumed to reach a positive result in for the first time since pricing related challenges in early This is derived from consistent improvement actions related to customer experience and service. There is positive development also with other key performance indicators (see the table below) when on-going OPEX, construction safety, EBITDA and the employee engagement index are assumed to improve during. KPI Budget 2017 Forecast¹ CAIDI (min) KAH (MEUR) On-going OPEX (MEUR) NPS (%) 5% tbd Reputation survey result - 58 EBITDA (MEUR) RAV (MEUR) 2,670 2,441 RC (MEUR) 2,604 2,363 RAV growth (MEUR) Employee engagement index LWIF 8 8 ¹ Forecast based on reported forecast in H1/2017 Result before taxes budgeted to be positive in In, the Group s taxable income turns profitable. The positive development is due to improved net sales, which are EUR 11.4 million higher than in 2017, ending up at EUR million. This increase in sales is due to both volume and price development. Connection fee invoicing is assumed to be EUR 13.6 million during but, in accordance with the new IFRS15 revenue recognition, 4

5 these are deferred for 35 years. Correspondingly the revenue from connection fees in is assumed to be EUR 0.4 million. The transmission costs budget of EUR 91.5 million assumes a slight increase in transmission volumes and higher costs for reactive power fees. Ongoing run-costs of the operations are assumed to decrease to EUR 75.9 million. The positive development is due to efficiencies gained via implemented customer information and billing systems, lower maintenance due to the progress of the investment program, as well as through the change in the measurement service provider. In addition to on-going costs, the Group s annual budget includes one-off items related to strategic development initiatives worth EUR 4.0 million. Depreciations are planned to be EUR million, the amount includes EUR 31.1 million of surplus depreciation related to acquisition. The slight increase in depreciations from 2017 is due to increased investment amounts, and thus higher depreciations as well as the scrapping of the old network. Financial costs include shareholder loan interests and senior facility interests as well as related arrangement fee amortizations and ongoing fees. The total budgeted financial costs are EUR million which are approximately at the level of The cost split is as follows; EUR 50.2 million interest on senior debt including capex facility, EUR 79.4 million interest on shareholder loans, EUR 2.5 million on-going fees and EUR 2.0 million loan arrangement fee amortisation. Additionally, the budget includes EUR 7.2 million corporate tax and EUR 6.5 million deferred tax. Group balance sheet contains EUR 2,366.1 million external loans, additional EUR million drawn down during to finance investments The total external interest-bearing debt (Senior Loan) at the end of is planned to be EUR 2,366.1 million including a EUR million CAPEX facility. The total amount of shareholder loans is expected to decrease to EUR million during via one repayment of EUR 30 million. RCF is not expected to be utilised during Regardless of a slightly positive result from the period the total equity of Caruna Group remains negative in, the equity of individual companies, however, are positive. If necessary, it is possible for the companies to further strengthen the equity by converting shareholder 5

6 loans or internal loans into equity. Shareholder interest payments are planned in accordance to agreement and no dividends are scheduled during. The additional EUR million capex facility drawdown is assumed during to finance the planned investments (EUR million). Loan covenant ratios are compliant with the Financing Agreements Loan covenant ratios (Senior Interest Coverage Ratio and Senior Leverage Ratio) are compliant with Financing Agreements both at the end of June as well as at the end of December. Ratio Jun 30, Backward Dec 31 Backward Jun 30, Extended Forward Dec 31, Extended Forward Senior Interest Cover Ratio 4.2x 4.0x - - Lock-up Lock-up breach Default Default breach Senior Leverage Ratio 9.3% 8.8% 10.7% 11.4% Lock-up Lock-up breach Default Default breach

7 CONSOLIDATED INCOME STATEMENT for Caruna Networks BV Group EUR million, cumulative H1 H2 Total Distribution sales Other sales NET SALES Direct costs SALES MARGIN Other Income Personnel costs Repairs & Maintenance External Services Other expenses Total fixed costs EBITDA Depreciation and amortisation OPERATING PROFIT Financial Income Interest on Senior loan Interest on Shareholder loan Ongoing fees Loan arrangement fee amortization Other Financial Items Total financial income / expense PROFIT BEFORE TAX Income tax Deferred tax RESULT FOR THE PERIOD

8 CONSOLIDATED BALANCE SHEET for Caruna Networks BV Group as per and EUR million Jun 30 Dec 31 ASSETS Goodwill Intangible assets 1, ,538.1 Tangible assets 2, ,368.6 Other non-current assets Non-Current Assets 3, ,969.2 Trade & other receivables Cash and cash equivalents Total Current Assets Total Assets 4, ,138.5 SHAREHOLDERS EQUITY Share capital Invested distributable equity funds Profit for the period Retained earnings Other equity fund Total Equity LIABILITIES Senior Loan 2, ,366.1 Shareholder Loan Total interest-bearing Debt 3, ,269.7 Deferred Tax Liabilities Connection Fees Liabilities Other Non-Current Liabilities Non-Current Liabilities 4, ,135.8 Trade payables Accrued interest expenses Other current interest-free payables Current Liabilities Total Liabilities 4, ,269.7 Total Liabilities + Equity 4, ,

9 CONSOLIDATED CASH FLOW for Caruna Networks BV Group EUR million H1 H2 Total EBITDA (GROUP) Non-Cash Adjustments Interest paid, Senior loan Interest paid, Shareholder loan Ongoing fees paid Corporation Tax paid Cash generated from operations Change in receivables Change in payables Change in net working capital TOTAL NET CASH FLOW FROM OPER. ACTIVITIES Capital Expenditure Capital gains NET CASH USED IN INVESTING ACTIVITIES CASH FLOW BEFORE FINANCING ACTIVITIES Change in Senior Loan Change in Shareholder Loan Dividends Paid Change In Paid In Share Capital NET CASH / FINANCING ACTIVITIES NET CHANGE IN CASH

10 LOAN COVENANT CALCULATIONS as per and for Caruna Networks BV Group Backward Backward Backward Backward Extended Extended EUR million Jul Jun 30 Jan 1 - Dec 31 H2/2017 H1/ Jun 30 H1/ H2/ Dec 31 Jun 30, 36 months fwd Dec 31, 36 months fwd Senior Interest Cover Ratio, Denominator: EBITDA /- Unrealised gains or losses of electricity derivatives Taxes Consolidated EBITDA - taxes, total Senior Interest Cover Ratio, Numerator: Interest Costs, Senior Fair valued interest rate derivatives adjustment Ongoing fees, Senior Net Finance Charges, Senior total Senior Interest Cover Ratio 4.2x 4.0x 4.2x 4.0x EUR million Jul Jun 30 Jan 1 - Dec 31 H2/2017 H1/ Jun 30 H1/ H2/ Dec months total 36 months total Senior Leverage Ratio, Denominator: EBITDA /- Unrealised gains or losses of electricity derivatives Interest Costs, Senior Fair valued interest rate derivatives adjustment Ongoing fees, Senior Taxes Funds from Operations, FFO Senior Leverage Ratio, Numerator: Senior debt 2, , , , , , , ,455.1 Cash Net debt - Senior 2, , , , , , , ,419.0 Senior Leverage Ratio 9.3 % 8.8 % 9.3 % 8.8 % 10.7 % 11.4 % 10

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