Enel Green Power business plan. Rome - April 3 rd PDF Free Download

Enel Green Power 20142018 business plan Rome April 3 rd 2014

EGP 20142018 business plan Agenda Snapshot on 2013 key achievements F. Starace, CEO Focus on geothermal R. Deambrogio, Head of Italy & Europe Focus on North America F. Venturini, Head of North America Focus on Latin America M. Bezzeccheri, Head of Latin America 20142018 strategic guidelines F. Starace, CEO Asset value maximization: global approach to O&M R. Gonzalez, Head of O&M 20142018 key business plan figures G. Carone, CFO Closing remarks F. Starace, CEO 1

EGP 20142018 business plan Executing on business plan: 2013 highlights Additional capacity 1 GW EBITDA 1.8 bn Group net income 528 m Net debt 5.4 bn Strong growth coupled with safe and sound financial discipline 2

EGP 20142018 business plan Historic EBITDA profile ( bn) +38% 1.8 Over 11% CAGR in the period 1.3 1.1 0.7 bn of 2013 EBITDA from growth 1.1 bn of 2013 EBITDA from legacy markets 2010 2013 EBITDA from legacy markets EBITDA from growth Strong growth and diversification in new markets 3

EGP 20142018 business plan Value creation Return on Average Capital Employed 9.4% (0.9%) 8.5% 1.1% 9.6% ROACE 2010 IPO scope IPO scope ROACE 2013 Growth ROACE 2013 New capacity prompts increase in returns 4

EGP 20142018 business plan Key strategic considerations World electricity demand expected to grow by 60% by 2030 requiring an 80% increase in generation capacity Renewables will continue to play a key role particularly given increasing competitiveness vs. other sources First mover into new markets will secure the higher yield projects Operating excellence and scale in EPC 1 and O&M crucial to succeed Diversification increases opportunities and mitigates risks Maintain financial strength and flexibility 1. Engineering, Procurement and Construction 6

EGP 20142018 business plan World electricity demand evolution 1 Electricity demand (TWh) Additional capacity (GW) Total installed capacity (GW) 2x +6,500 2 2.5x 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 2006 2014 2022 2030 350 300 250 200 150 100 50 0 2006 2014 2022 2030 10,000 7,500 5,000 2,500 0 2006 2014 2022 2030 Renewable energies will account for 70% of the expected new power generation capacity up to 2030 1. Source: Bloomberg New Energy Finance 2013 2. Cumulated additional capacity in the period Conventional Renewables 7

EGP 20142018 business plan World production mix evolution (TWh) Emerging markets North America Europe Renewables +66% Renewables +34% Renewables +36% 18,200 4,700 4,900 5,100 12,900 4,300 2012 2020 2012 2020 2012 2020 Electricity production: +41% Electricity production: +10% Electricity production: +4% Source: IEA 2013 World Energy Outlook Conventional Renewables 8

EGP 20142018 business plan Brazilian auctions outcome 1 (GW) 2009 2010 2011 2012 2013 Total % on total 1.8 2.0 2.9 0.3 4.7 11.7 75% 0.1 0.6 0.7 4% 0.7 0.7 0.8 2.2 14% 1.0 1.0 7% Total 1.8 2.8 4.7 0.3 6.0 15.6 100% Hydro Wind Biomass Gas 1. Including: 2009: Leilao Reserva; 2010: A3, Leilao Reserva; 2011: Leilao Reserva, A3, A5; 2012: A5; 2013: Reserva, A5, A5, A3 Data refer to contracted capacity 9

EGP 20142018 business plan Integrated business model Business Development Engineering & Construction First mover advantage EPC costs optimization Procurement O&M Asset value maximization Identification of top sites is crucial 10

Italy & Europe North America Emerging markets Investor Relations EGP 20142018 business plan First mover advantage: gross pipeline (GW) March 2013 84% 16% 9.1 March 2014 gross pipeline 20.4 GW March 2014 73% 27% 10.7 78% March 2013 5.4 March 2014 5.0 3% 15% 3% 1% March 2013 8.0 March 2014 4.7 Emerging markets take the lead with over 50% of the pipeline New markets Latin America Geo Hydro Wind Biomass Solar 11

EGP 20142018 business plan First mover advantage: emerging markets phase zero (GW) March 2014 phase zero by geography 11.2 GW March 2014 phase zero by technology 11.2 GW 89% 2% 11% 59% 11% 28% Anticipation of market trends is core to profitable growth New markets Latin America Geo Hydro Wind Solar 12

EGP 20142018 business plan Ongoing development 2014 2018 additional capacity (GW) 4.4 4.6 0.5 0.1 1.9 2.1 Additional capacity 20132017 Additional capacity 20142018 ENEOP COD 1Q 2014 Projects in execution Residual target with close to 60% of the plan already secured 13

EGP 20142018 business plan Solid net pipeline 1 Coverage ratio (GW) Residual target by geography 2.1 GW Net pipeline by geography 6.5 GW 2.1 6.5 15% 16% 37% 27% 11% 24% 32% 38% Residual target March 2014 3.2x covering 3.2x our residual target 1. Refers to project with COD expected within 2018 Italy & Europe North America New markets Latin America 14

EGP 20142018 business plan 2014 upcoming renewable tenders 1 Apr May Jun Jul Aug Sep Oct Nov Dec Costa Rica 60MW Egypt 250MW Morocco 850MW Mexico 300MW South Africa 600MW Brazil 1,000MW Brazil 1,000MW Panama 200MW Brazil 1,500MW Chile 500MW Peru 300MW Italy 356MW Turkey 600MW Russia 500MW Guatemala 200MW South Africa 400MW Egypt 200MW Brazil 300MW Brazil 200MW Panama 100MW Chile 1,000MW Peru 200MW Saudi Arabia 400MW Costa Rica 40MW Kenya 300MW Italy 156MW 1. Figures also refer to EGP s expectations on overall volumes tendered by governments Geo Hydro Wind Biomass Solar 15

EGP 20142018 business plan Cost roadmap 1 Wind total capex ( /W) PV total capex ( /W) 1.2 1.2 1.1 1.4 1.2 1.0 0.8 0.7 2012 2013 2018 2012 2013 2018 Declining costs pushing competitiveness 1. Expected cost trend in the industry 17

EGP 20142018 business plan O&M guidelines Zero accidents Production maximization Cost efficiency Better integration in existing networks 19

EGP 20142018 business plan Enlarged complexity 2009 2013 600 plants 2,500 generating units 4.8GW 1,500 O&M people 750 plants 5,000 generating units 8.9GW 1,800 O&M people + 150 power plants, + 2,500 generating units, + 4.1 additional GW 20

EGP 20142018 business plan Results achieved vs targets announced in 2012 Leadership in O&M Portfolio volatility Lost production factor O&M Costs/MW 1 2011 Actual Historical Actual Target 2016 2011 Actual Target 2016 8% 6.8% +8% +6.8% 5.0% 3.1% 100 93 2.5% 90 5% +5% 3.7% +3.7% 5.0% 100 2.9% 73 3.5% 2.4% +3.5% +2.4% 2.0% 80 4.0% 100 4% 2.9% +4% +2.9% 2.3% 3.0% 97 95 1. Normalized on 2011 O&M costs 21

EGP 20142018 business plan O&M roadmap Targets definition Organization Systems & data analysis Strategic processes LPF 1 and O&M costs targets Organization optimization Global Professional System Control & monitoring systems & SAP Contracts & logistics Operational efficiency Predictive maintenance 1. Lost production factor 22

EGP 20142018 business plan A step further towards excellence: 2018 targets Leadership in O&M Lost production factor O&M Costs/MW 1 Historical Actual Target 2016 Target 2018 2011 Actual Target 2016 Target 2018 5% 2.5% 2.5% Confirmed 100 90 90 Confirmed 5% 2% 2% Confirmed 100 80 70 NEW 4% 3% 2% NEW 100 95 95 Confirmed 3.3% 1.5% NEW 100 90 NEW Portfolio volatility targeted at +/2% by 2018 1. Normalized on 2011 O&M costs for hydro, wind and geo, on 2013 for solar 23

Italy & Investor Relations EGP 20142018 business plan Evolution of net installed capacity (GW) 2013 2018 71% 29% Europe 1 Emerging North America markets 1.2 Additional capacity +2.9GW 4.1 2013 2018 1.7 2.4 Additional capacity +0.7GW +4.6GW 2013 2018 6.0 6.9 Additional capacity +1GW Top notch load factor at close to 40% 1. 2018 data includes planned decommissioning New markets Latin America 26

EGP 20142018 business plan Capital expenditure ( bn) Growth capex by geography 10% Capex associated with additional capacity 1 Projects in execution 17% 46% Capex spent <2014 Work in progress 0.7 bn 2.3 bn 27% Capex to be allocated Residual target 3.1 bn Total growth capex = 5.4 bn Average = 1.6 m/mw Total 20142018 capex equal to 6.1 bn 2 1. Does not include equity participations 2. Including maintenance capex Italy & Europe North America New markets Latin America 27

EGP 20142018 business plan Revenues profile Breakdown by nature Predictable and stable cashflows Increasing share of PPAbased markets 28% 16% Declining weight of incentives 2013 2018 Revenues from incentives Growth not relying on incentives 28

EGP 20142018 business plan Forward sales Italy Latin America North America 90% 41% 96% 93% 91% 91% 2014 2015 2014 2015 2014 2015 Hedged volumes Unhedged volumes Structural longterm hedging at 70% 29

EGP 20142018 business plan Cost base evolution Opex (K /MW) +51% installed capacity 2013 78 Manageable costs 11 Nonmanageable costs 3 2018 64 18% unit operating expenses Largest reduction from manageable costs Efficiency driving savings 30

EGP 20142018 business plan Cashflow evolution ( bn) 9.8 6.1 Debt evolution milestones 2015: ENEOP 1.4 1.0 1.3 2015: cashflow parity 2018: net debt/ebitda at 2.1x CFFO Capex Interests Dividends FCF Strong cashflow generation in the period with 2018 Net debt stable vs. 2013 31

EGP 20142018 business plan Theoretical balance sheet structure Assets 2018 Liabilities 2018 Gear up foreign subsidiaries with local currency debt Exploit low cost local opportunities Widen the array of financial instruments used Currency 1 Currency 2 Currency 3 Towards a currency balanced balance sheet 32

EGP 20142018 business plan Targets recap Additional capacity (GW) Growth capex 1 EBITDA ( bn) 4.6 10% 1.9 2.3 2.6 17% 5.4 bn 46% 1 27% 2014 20142018 2014 2016 2018 Italy & Europe North America New markets Latin America Dividend policy: 30% payout ratio 1. Excluding maintenance capex 34

EGP 20142018 business plan Successful growth story EBITDA profile ( bn) Portfolio concentration index 1 2.6 1.8 1.9 2.3 0.17 0.15 1.3 0.13 0.13 0.08 2010 2013 2014 2016 2018 IPO 2013 2018 EBITDA from legacy markets EBITDA from growth Confirmed validity of strategic choice to grow outside legacy markets 1. Concentration: Low (0 0.15), Medium (0.15 0. 25), High (>0.25) 35

EGP 20142018 business plan Closing remarks Consistent execution of business plan objectives Positive global trend on renewables continues to underpin growth Confident in our ability to deliver growth at or above our hurdle rate Proven business model supported by strong, flexible balance sheet 36

Enel Green Power 20142018 business plan Strategic annexes Rome April 3 rd 2014

EGP 20142018 business plan Strategic annexes Gross pipeline (GW) By probability of success By technology 12.5 20.4 15.9 0.7 0.7 3.0 0.1 20.4 0.9 7.0 Highly confident (90%) Likely (50%) Potential (20%) March 2013 Wind Hydro Geo Solar Biomass March 2013 By geography By COD 4.7 5.0 10.7 20.4 0.2 7.2 6.0 4.2 1.6 1.2 20.4 Italy & Europe North America Emerging markets March 2013 2014 2015 2016 2017 2018 >2018 March 2013 38

EGP 20142018 business plan Strategic annexes additional capacity By geography By technology 21% 16% 70% 4.6 GW 4.6 GW 38% 25% 4% 7% 16% 3% Italy & Europe North America New markets Latin America Geo Hydro Wind Biomass Solar 39

EGP 20142018 business plan Strategic annexes total projects in execution (MW) Business unit Wind Hydro Geo Solar Other Total Italy France Italy & Europe 12 18 18 1 1 38 38 70 70 121 18 139 Brazil Chile Costa Rica Mexico Latin America 228 160 202 590 102 50 152 1 136 137 331 296 50 202 879 USA North America 400 400 400 400 South Africa New countries 199 199 Total EGP 1,219 153 38 454 70 1,934 317 317 516 516 40

EGP 20142018 business plan Strategic annexes projects under construction (MW) Business unit Wind Hydro Geo Solar Other Total Italy France Italy & Europe 12 18 30 38 38 70 70 120 18 138 Brazil Chile Costa Rica Mexico Latin America 110 99 202 411 102 50 152 36 36 212 135 50 202 599 USA North America 400 400 400 400 South Africa New countries Total EGP 841 152 38 39 70 1,140 3 3 3 3 41

EGP 20142018 business plan Strategic annexes projects ready to build (MW) Business unit Wind Hydro Geo Solar Other Total Italy France Italy & Europe 1 1 1 1 Brazil Chile Costa Rica Mexico Latin America 118 61 179 1 100 101 119 161 280 USA North America South Africa New countries 199 199 Total EGP 378 1 415 794 314 314 513 513 42

EGP 20142018 business plan Strategic annexes 2018 installed capacity By geography By technology 51% 62% 9% 13.4 GW 13.4 GW 18% 7% 22% 22% 8% 1% 1 1. Including cogeneration Italy & Europe North America New markets Latin America Geo Hydro Wind Biomass Solar 43

EGP 20142018 business plan Strategic annexes 2018 net production By geography By technology 49% 54% 15% 7% 45 TWh 20% 45 TWh 24% 25% 4% 2% Itay & Europe North America New markets Latin America Geo Hydro Wind Biomass Solar 44

EGP 20142018 business plan Strategic annexes capital expenditure Growth capex by geography Growth capex by technology 10% 47% 17% 46% 5.4 bn 5.4 bn 20% 27% 14% 17% 2% Itay & Europe North America New markets Latin America Geo Hydro Wind Biomass Solar 45

Enel Green Power 20142018 business plan Financial annexes FY 2013 results Rome April 3 rd 2014

EGP 20142018 business plan Financial annexes FY2013 results: net installed capacity (MW) Business unit Wind Hydro Geo Solar Other Total Italy Rest of Europe Bulgaria France Greece Romania Italy & Europe 720 926 42 186 200 498 1,646 1,512 20 20 1,532 723 723 112 115 79 36 227 3,067 1,061 42 186 299 534 4,128 Iberia Spain Portugal Latin America Brazil Chile Costa Rica Mexico Panama Guatemala Iberia & Latam 1,778 1,652 126 432 84 180 24 144 2,210 43 43 732 93 92 31 53 300 163 775 13 13 13 74 37 37 74 1,908 1,745 163 1,164 177 272 55 197 300 163 3,072 USA Canada North America 1,163 103 1,163 317 317 72 72 28 28 1,580 103 1,683 Total EGP 5,122 2,624 795 268 74 8,883 47

EGP 20142018 business plan Financial annexes FY2013 results: additional capacity (MW) Business unit Wind Hydro Geo Solar Other Total Italy Rest of Europe Bulgaria France Greece Romania Italy & Europe 4 21 20 1 25 1 1 21 84 48 36 105 26 105 20 49 36 131 Iberia Spain Portugal Latin America Brazil Chile Costa Rica Mexico Panama Guatemala Iberia & Latam 84 84 264 84 180 384 84 84 264 84 106 USA Canada North America 434 434 4 4 25 25 2 2 465 Total EGP 807 4 26 107 944 48

EGP 20142018 business plan Financial annexes FY2013 results: net production (GWh) Business unit Wind Hydro Geo Solar Other Total Italy Rest of Europe Bulgaria France Greece Romania Italy & Europe 1,259 1,954 86 362 432 1,074 3,213 6,560 47 47 6,607 5,301 5,301 129 93 86 7 222 13,249 2,094 86 362 565 1,081 15,343 Iberia Spain Portugal Latin America Brazil Chile Costa Rica Mexico Panama Guatemala Iberia & Latam 4,396 4,044 352 718 167 68 483 5,114 146 146 3,108 501 456 99 167 1,220 665 3,254 27 27 27 355 164 191 355 4,924 4,381 543 3,826 501 623 167 650 1,220 665 8,750 USA Canada North America 3,529 313 3,842 1,060 1,060 280 280 45 45 133 133 4,914 446 5,360 Total EGP 12,169 10,921 5,581 294 488 29,453 49

EGP 20142018 business plan Financial annexes FY2013 results: load factor Load factor FY 2012 FY 2013 Load factor FY 2012 FY 2013 40% 43% 43% 47% 35% 35% 27% 29% 81% 83% 38% 40% 15% 14% 38% 40% 38% 40% Geo Hydro Wind Biomass Solar 50

EGP 20142018 business plan Financial annexes FY2013 results: highlights 1 ( m) Revenues 2 EBITDA +12% +10% 2,476 2,778 1,626 1,787 FY 2012 FY 2013 Group net income FY 2012 FY 2013 Net debt +36% +18% 387 528 4,614 5,446 FY 2012 FY 2013 Dec 31, 2012 Dec 31, 2013 1. FY2012 and FY2013 revenues, EBITDA, Group net income discontinue Enel.si. FY2012 EBITDA and Group net income also include the impact of IAS 19 2. Including the effect of hedging activities relating to commodity risk management 51

EGP 20142018 business plan Financial annexes FY2013 results: EBITDA analysis ( m) +10% 1,626 359 (126) +161 (16) (38) (18) 1,787 FY 2012 Volume effect Price effect Other revenues Opex Forex FY 2013 67% EBITDA margin 1 65% 1. Generation activity only and 2012 ratio calculated on restated numbers 52

EGP 20142018 business plan Financial annexes FY2013 results: EBITDA Italy & Europe ( m) +12% Italy Europe +112 932 124 149 (73) 83 (33) (14) 1,044 163 808 881 FY 2012 Volume Price Volume Price Other FY 2013 Italy Europe 53

EGP 20142018 business plan Financial annexes FY2013 results: EBITDA Iberia & Latam ( m) % Iberia Latam 497 51 (50) (14) 25 (2) (10) 497 497 497 198 204 299 293 FY 2012 Volume Price Volume Price Other Forex FY 2013 Iberia Latam 54

EGP 20142018 business plan Financial annexes FY2013 results: EBITDA North America ( m) +25% +49 197 90 5 (38) (8) 246 FY 2012 Volume Price Other Forex FY 2013 55

EGP 20142018 business plan Financial annexes FY2013 results: from revenues to costs ( m) FY 2012 FY 2013 Δ Energy revenues Revenues from incentives Other revenues 1,634 666 176 1,764 864 150 130 198 (26) +8% +30% 15% Total revenues 2,476 2,778 302 +12% Direct costs energy & fuel purchases transmission costs other 168 129 39 279 184 54 41 111 55 15 41 +66% +43% +38% n.m. Personnel costs 211 190 (21) 10% Operation & maintenance 258 272 14 +5% G&A and other 213 250 37 +17% Total costs 850 991 141 +17% 56

EGP 20142018 business plan Financial annexes FY2013 results: from EBITDA to Group net income ( m) FY 2012 reported FY 2012 restated FY 2013 Δ EBITDA 1,678 1,626 1,787 161 +10% D&A (706) (696) (722) (26) +4% EBIT 972 930 1,065 135 +15% Net financial expense (230) (228) (268) (40) +18% Income/(expense) from equity investment 47 47 64 17 +36% EBT 789 749 861 112 +15% Income tax (298) (284) (324) (40) +14% Continued operations 491 465 537 72 +15% Discontinued operations 61 61 n.m. Net income 491 465 598 133 +29% Minorities 78 78 70 8 10% Group net income 413 387 528 141 +36% 57

EGP 20142018 business plan Financial annexes FY2013 results: IFRS 11 application ( m) FY 2013 reported FY 2013 IFRS 11 Δ 19MW in Europe Revenues 2,778 2,710 (68) EBITDA 1,787 1,782 (5) 51MW in Spain EBIT 1,065 1,101 36 EBT 861 860 (1) 155GWh Net income 598 598 58

EGP 20142018 business plan Financial annexes FY2013 results: operating capex 1 ( m) By geography By technology By activity North America 145 11% 57% Iberia & Latam 772 62% 827 Growth 1,148 85% Italy & Europe 428 32% 233 17% 8% 111 9% 4% Other 53 121 15% Maintenance 197 Total operating capex for the period = 1,345 m 1. Net of cashgrant relating to the PV factory and Greece Geo Hydro Wind Biomass Solar 59

EGP 20142018 business plan Financial annexes FY2013 results: net debt evolution ( m) +832 Dec 31, 2012 Cashflow from operations Operating capex Interests, taxes and dividends Cons. of NA projects Other Dec 31, 2013 4,317 4,961 297 4,614 1,493 1,345 703 338 61 485 5,446 2.8x Net debt/ebitda 1 3.0x Tax partnership liabilities 1. 2012 ratio calculated on restated numbers 60

EGP 20142018 business plan Financial annexes FY2013 results: debt structure ( bn) 5.4 0.9 6.3 52% 1.5 0.5 0.6 0.5 3.1 48% Net debt as of Dec 31, 2013 Cash & equivalent Financial receivables Gross debt as of Dec 31, 2013 Dev. institutions and ECAs Tax partnership liabilities Structured finance Bank loans & other Total third party Third party Parent company Average maturity = 6.5yrs Average cost of debt = 4.8% Current availability = 3.6 bn 61

EGP 20142018 business plan Financial annexes FY2013 results: gross debt structure Gross debt by currency Gross debt by interest rate Gross debt maturity 79% 74% 87% 6.3 bn 6.3 bn 6.3 bn 18% 3% 26% 13% Euro US Dollar Other Floating Fixed + hedged S/T L/T Average maturity = 6.5yrs Average cost of debt = 4.8% Current availability = 3.6 bn 62

EGP 20142018 business plan Financial annexes FY2013 results: longterm debt maturity ( m) 2013 2014 2015 2016 2017 >2017 Total Third party 218 217 268 241 2,070 3,014 Parent company 2 2 2 2 2,475 2,483 Total 220 219 270 243 4,545 5,497 63

EGP 20142018 business plan Financial annexes FY2013 results: consolidated balance sheet 1 ( m) FY 2013 FY 2012 Δ Net fixed assets 14,530 13,578 952 Net working capital (290) (529) (239) Gross capital employed 14,240 13,049 1,191 Sundry provisions (556) (482) (74) Assets held for sale 25 25 Net capital employed 13,709 12,567 1,142 Total shareholders equity 8,263 7,953 310 Net financial debt 5,446 4,614 832 1. FY 2012 have been restated to include IAS 19 application and final PPA allocation 64

EGP 20142018 business plan Disclaimer This presentation contains certain forwardlooking statements that reflect the Company s management s current views with respect to future events and financial and operational performance of the Company and its subsidiaries. These forward looking statements are based on Enel Green Power S.p.A. s current expectations and projections about future events. Because these forwardlooking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of Enel Green Power S.p.A. to control or estimate precisely, including changes in the regulatory environment, future market developments, fluctuations in the price and other risks. You are cautioned not to place undue reliance on the forwardlooking statements contained herein, which are made only as of the date of this presentation. Enel Green Power S.p.A. does not undertake any obligation to publicly release any updates or revisions to any forwardlooking statements to reflect events or circumstances after the date of this presentation. This presentation does not constitute a recommendation regarding the securities of the Company. Pursuant to article 154bis, par 2, of the Consolidated Financial Act of February 24, 1998, the executive in charge of preparing the corporate accounting documents at Enel Green Power S.p.A., Giulio Antonio Carone, declares that the accounting information contained herein correspond to document results, books and accounting records. 65

EGP 20142018 business plan Contact us Donatella Izzo, IR manager Elena Accorinti Alessandro Marchi Etienne Martoïa T: +39 06 8305 9104 F: +39 06 6444 2758 Email: iregp@enel.com Web site: www.enelgreenpower.com 66

Enel Green Power business plan. Rome - April 3 rd 2014