Cez As · PSECZ:CEZ

Cez As — ČEZ, a. s. — FY2013 Earnings Presentation

49 slides from Cez As's earnings presentation, Feb 27, 2014

  1. Slide 1: Conference Call on CEZ Group Financial Results for 2013

    CONFERENCE CALL ON CEZ GROUP FINANCIAL RESULTS FOR 2013 AUDITED CONSOLIDATED RESULTS PREPARED IN ACCORDANCE WITH THE INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) Prague, February 27, 2014

  2. Slide 2: Agenda

    AGENDA Financial highlights and key events in CEZ Group in 2013 Martin Novák, Chief Financial Officer Financial results Martin Novák, Chief Financial Officer Trading position of CEZ Group Michal Skalka, Director of Trading 1

  3. Slide 3: Key Results for 2013

    KEY RESULTS FOR 2013  earnings before interest, taxes, depreciation and amortization (EBITDA) CZK 82.1 bn  earnings before interest and taxes (EBIT) CZK 45.8 bn  Net income CZK 35.2 bn Comparison of results in 2013 vs. 2012 EBITDA CZK 82.1 bn -4.4% CZK 85.8 bn EBIT CZK 45.8 bn -19.8% CZK 57.1 bn

  4. Slide 4: CEZ coped with European energy crisis better than competitors

    CEZ GROUP HAS COPED WITH THE EUROPEAN ENERGY SECTOR CRISIS BETTER THAN COMPETITORS, ESPECIALLY IN TERMS OF FINANCIAL STABILITY AND DEBT ADEQUACY (S&P RATING) CEZ IS ONE OF A FEW EUROPEAN YEAR-ON-YEAR CHANGE OF EBITDA UTILITIES TO MAINTAIN THEIR S&P 2013 vs. 2012 RATING (A-) SO FAR 3 * Rating maintai

  5. Slide 5: We expect 2014 EBITDA of CZK 70.5 bn

    WE EXPECT 2014 EBITDA OF CZK 70.5 BN AND NET INCOME OF ABOUT CZK 27.5 BN Selected year-on-year negative effects: CZK bn  Trend of declining electricity prices EBITDA  Extraordinary revenue from trading in 100 82.1 80 70.5 emission allowances in 2013 (CER Gate) 60  Worsened national regulatory con

  6. Slide 6: Selected Events in the Past Quarter

    SELECTED EVENTS IN THE PAST QUARTER Bulgaria  License revocation proceedings for distribution and sales company were terminated by the Bulgarian regulatory authority SEWRC as unsubstantiated, since no reasons were found to revoke the license  A new tariff decision was made, with another decrease i

  7. Slide 7: Approved Allocation of Emission Allowances in the Czech Republic

    APPROVED ALLOCATION OF EMISSION ALLOWANCES FOR ELECTRICITY AND HEAT GENERATION IN THE CZECH REPUBLIC IN 2013 With a one-year delay, the European Commission made its decision on the 2013 allocation of emission allowances for electricity and heat generation in the Czech Republic in January 2014  On F

  8. Slide 8: European Commission Proposes Climate and Energy Framework to 2030

    THE EUROPEAN COMMISSION PROPOSES A CLIMATE AND ENERGY FRAMEWORK TO 2030 On January 22, the European Commission published a communication regarding Europe’s climate and energy policy until 2030, which proposes the following targets for all member states:  A binding reduction target for GHG emissions

  9. Slide 9: Position of Leading European Energy Companies Is Unified

    POSITION OF LEADING EUROPEAN ENERGY COMPANIES IS UNIFIED CEZ’s position is consistent with position of “Magritte’s group“ of leading European energy companies, of which CEZ is a member:  The first of the above targets – GHG emissions reduction - alone is fully sufficient for the transition to a low

  10. Slide 10: Well-Balanced Strategy Covering Three Time Frames

    CEZ REACTS TO TURBULENT DEVELOPMENTS IN MARKETS WITH A WELL-BALANCED STRATEGY COVERING THREE TIME FRAMES: Time Frame I (~5 years) Time Frame II (5–10 years) Time Frame III (10+ years) 3. We create new opportunities 2. We develop growth opportunities 1. We protect the Clean technologies value of exis

  11. Slide 11: Strategy Implemented in Seven Strategic Programs

    THE STRATEGY IS IMPLEMENTED IN SEVEN STRATEGIC PROGRAMS: Program Program goals New nuclear  Ensure conditions for financial feasibility and financing ability of the sources Temelín Units 3 & 4 project and possibly other nuclear projects Long-term  Extend the service life of the Dukovany Nuclear Po

  12. Slide 12: We Increase Nuclear Power Plant Capacity and Emphasize Safety

    1. We protect the value of existing businessWE INCREASE NUCLEAR POWER PLANT CAPACITY AND EMPHASIZE SAFETY GWh 15,679 Record production at Dukovany Nuclear Power Plant 16,000  Dukovany’s output at an all-time high (almost 16 TWh). It was the first time we generated over 4 TWh at one unit out of four

  13. Slide 13: We Utilise Our Plants Efficiently and Adapt to Market Developments

    1. We protect the WE UTILISE OUR PLANTS EFFICIENTLY value of existing business AND ADAPT TO MARKET DEVELOPMENTS We increase both the efficiency and the flexibility of generation facilities  Following adopted stabilization measures, the efficiency of the Tušimice Power Plant reached 42.5% (36.98% be

  14. Slide 14: Important Success in Developing Growth Opportunities

    2. We develop growth CEZ ACHIEVED IMPORTANT SUCCESS opportunities IN DEVELOPING GROWTH OPPORTUNITIES Czech Republic  Successful entry to the mobile services market (more than 45,000 customers already)  Strengthened leading position among alternative gas suppliers in the Czech Rep. (ČEZ Prodej attr

  15. Slide 15: Mobile from CEZ Used by More Than 45,000 Customers

    TRANSPARENT AND FAIR SERVICES OF MOBILE FROM CEZ ARE ALREADY USED BY MORE THAN 45,000 CUSTOMERS “Mobile from CEZ”– telecommunication services made simple, transparent and fair  During the first 3 months, the Mobile from CEZ offer was taken advantage of by more than 35,000 customers; currently there

  16. Slide 16: Agenda

    AGENDA Financial highlights and key events in CEZ Group in 2013 Martin Novák, Chief Financial Officer Financial results Martin Novák, Chief Financial Officer Trading position of CEZ Group Michal Skalka, Director of Trading 15

  17. Slide 17: CEZ Group Financial Results

    CEZ GROUP FINANCIAL RESULTS (CZK bn) 2012 2013 Change % Revenues 215.1 217.3 +2.2 +1% EBITDA 85.8 82.1 -3.7 -4% Net income 40.2 35.2 -5.0 -12% Operating CF 64.6 72.6 +8.0 +12% CAPEX 50.4 44.1 -6.3 -13% Net debt * 161.0 156.5 -4.5 -3% 2012 2013 Change % Installed capacity * GW 15.8 15.2 -0.6 -3% Gene

  18. Slide 18: Drivers of Year-on-Year Change in Net Income

    DRIVERS OF YEAR-ON-YEAR CHANGE IN NET INCOME CZK bn 41 39 37 3.7 1.6 35 4.7 33 40.2 31 35.2 29 7.6 27 CZK -5.0 bn -12% 25 Net income EBITDA Depreciation, Financial and Income taxes Net income 2012 amortization and other income 2013 impairments (expenses) 17

  19. Slide 19: Key Drivers of Year-on-Year Change of EBITDA

    KEY DRIVERS OF YEAR-ON-YEAR CHANGE OF EBITDA bn CZK 88 86 6.0 84 82 3.2 1.2 0.6 80 85.8 1.3 78 82.1 1.3 82.7 82.1 76 8.5 CZK -3.7 bn 79.2 77.3 77.3 77.9 77.9 74 -4% 72 EBITDA Power Distribution Sale CE Power Albania CFR Payment Other EBITDA 2012 Production & Czech Production (Romania) 2013 Trading C

  20. Slide 20: Year-on-Year Change of EBITDA by Segment

    YEAR-ON-YEAR CHANGE OF EBITDA BY SEGMENT CZK bn 86 84 0.6 82 4.8 0.2 80 78 85.8 1.9 76 81.7 82.1 82.1 9.8 74 1.0 76.9 CZK -3.7 bn 76.0 72 75.0 75.0 -4% 70 EBITDA Power Power Distribution & Distribution & Mining CE Other CE EBITDA 2012 Production & Production & Sale CE Sale SEE 2013 Trading CE Tradin

  21. Slide 21: EBITDA by Segment: Power Production and Trading Central Europe

    EBITDA BY SEGMENT: POWER PRODUCTION AND TRADING CENTRAL EUROPE CZK bn 2012 2013 Change % Czech Republic 54.7 46.2 -8.5 -16% Poland 2.0 0.7 -1.3 -67% Total EBITDA 56.7 46.9 -9.8 -18% Czech Republic (CZK -8.5 bn)  Year-on-year drop in achieved electricity prices incl. decrease in hedging CZK/EUR exch

  22. Slide 22: EBITDA by Segment: Power Production and Trading Southeast Europe

    EBITDA BY SEGMENT: POWER PRODUCTION AND TRADING SOUTHEAST EUROPE CZK bn 2012 2013 Change % Bulgaria 0.4 -0.3 -0.7 - Romania 2.6 2.3 -0.3 -11% Total EBITDA 3.0 2.0 -1.0 -32% Bulgaria (CZK -0.7 bn)  Lower volume of production (CZK -0.3 bn)  Addition to provisions for ash disposal site reclamation (C

  23. Slide 23: EBITDA by Segment: Distribution and Sale Central Europe

    EBITDA BY SEGMENT: DISTRIBUTION AND SALE CENTRAL EUROPE CZK bn 2012 2013 Change % Distribution 12.6 15.8 +3.2 +26% Sale 5.0 3.7 -1.3 -27% Total EBITDA 17.6 19.5 +1.9 +11% Distribution CZ (CZK +3.2 bn)  Effect of RES correction factors from previous years (CZK +2.7 bn) due to the takeover of RES & C

  24. Slide 24: EBITDA by Segment: Distribution and Sale Southeast Europe

    EBITDA BY SEGMENT: DISTRIBUTION AND SALE SOUTHEAST EUROPE CZK bn 2012 2013 Change % Romania 2.5 1.8 -0.7 -28% Bulgaria 1.5 1.0 -0.5 -36% Albania -5.8 0.2 +6.0 - Total EBITDA -1.8 3.0 +4.8 - Romania (CZK -0.7 bn)  Extraordinary earnings in 2012 in connection with payment of debts by Romanian state r

  25. Slide 25: EBITDA by Segment: Mining CE, Other CE and Other SEE

    EBITDA BY SEGMENT: MINING CENTRAL EUROPE, OTHER CENTRAL EUROPE AND OTHER SOUTHEAST EUROPE EBITDA (CZK bn) 2012 2013 Change % Mining CE 4.5 5.1 +0.6 +12% Other CE 5.6 5.4 -0.2 -4% Other SEE 0.2 0.2 0.0 +2% Mining Central Europe (CZK +0.6 bn)  Higher revenue in connection with better sales of coal (C

  26. Slide 26: Other Income (Expenses)

    OTHER INCOME (EXPENSES) (CZK bn) 2012 2013 Change % EBITDA 85.8 82.1 -3.7 -4% Depreciation, amortization and impairments -28.7 -36.3 -7.6 -26% Financial and other income (expenses) -6.1 -1.4 +4.7 +79% Interest income (expenses) -2.6 -3.1 -0.5 -21% Interest on nuclear and other provisions -2.0 -1.8 +

  27. Slide 27: Development in Q4 – EBITDA by Segment

    DEVELOPMENT IN Q4 – EBITDA BY SEGMENT CZK bn 22 20 1.8 0.4 18 0.4 1.4 1.9 0.1 21.3 16 2.9 17.8 17.8 14 CZK -3.5 bn -16% 12 EBITDA Power Power Distribution & Distribution & Mining CE Other CE Other SEE EBITDA Q4 2012 Production & Production & Sale CE Sale SEE Q4 2013 Trading CE Trading SEE Key driver

  28. Slide 28: Development in Q4 – Continued

    DEVELOPMENT IN Q4 – CONTINUED (CZK bn) Q4 2012 Q4 2013 Change % Revenues 52.6 55.4 +2.8 +5% Operating expenses* -31.3 -37.6 -6.3 -20% EBITDA 21.3 17.8 -3.5 -16% Depreciation, amortization and impairments -8.8 -10.6 -1.8 -20% Financial and other income (expenses) -2.6 -1.5 +1.1 +42% Income taxes -3.0

  29. Slide 29: Cash Flow

    CASH FLOW bn CZK operating investing financing 100 5.6 90 67.0 80 70 60 3.8 50 40 5.5 84.9 44.1 30 1.7 20 CZK +7.1 bn 46.4 46.4 21.3 44.7 10 +40% 25.1 18.0 23.4 18.0 23.4 0 Cash and cash Income after Changes in Investments in Financial Loans and Dividends paid Other Cash and cash equivalents adjustm

  30. Slide 30: CEZ Group Maintains a Strong Position of Liquidity

    CEZ GROUP MAINTAINS A STRONG POSITION OF LIQUIDITY Utilisation of short-term lines (as of Dec 31, 2013) CZK 0.7 bn CZK 2.0 bn Available credit  Net Debt/EBITDA was 1.91 as of Dec 31, facilities* 2013 Comitted, not drawn  CEZ Group has access to CZK 29 bn in committed credit facilities, using just

  31. Slide 31: 2013 Net Income, Net of One-Off Impacts, Almost CZK 39 bn

    2013 NET INCOME, NET OF ONE-OFF IMPACTS (ESPECIALLY IMPAIRMENTS), WAS ALMOST CZK 39 BN CEZ Group’s 2013 net income – net of one-off impacts – is approx. CZK 38.8 bn CZK bn 50 38.8 Selected one-off items (CZK -3.6 bn): 3.6 Impairments of fixed assets and goodwill 40 amortization (CZK -8.4 bn) 30 Ef

  32. Slide 32: Agenda

    AGENDA Financial highlights and key events in CEZ Group in 2013 Martin Novák, Chief Financial Officer Financial results Martin Novák, Chief Financial Officer Trading position of CEZ Group Michal Skalka, Director of Trading 31

  33. Slide 33: Electricity Consumption Dropped in the Czech Republic

    ELECTRICITY CONSUMPTION DROPPED YEAR-ON- YEAR IN THE CZECH REPUBLIC Consumption in the Consumption in CZ Czech Republic* (temperature adjusted)** 58.80 58.66 TWh 58.66 58.42 TWh Consumption development by segment:* -0.2 % -0.4 %  -1.4% wholesale customers  +0.9% households  +0.9% small businesses

  34. Slide 34: CZ – Year-on-Year Decrease in Production

    CZ – YEAR-ON-YEAR DECREASE IN PRODUCTION REFLECTS REFURBISHMENT OF PRUNÉŘOV AND SALE OF CHVALETICE TWh TWh 64.0 -3% 62.3 -0.3% 70 70 62.3 62.2 0.5 Natural gas 0.5 +30% 0.6 1.9 60 +15% 2.2 60 2.2 1.4 -38% 50 Renewables 50 30.3 +1% 30.7 30.7 30.9 +0.4% 40 40 Nuclear 0.7 +24% 30 30 0.8 0.9 0.9 -13% 20

  35. Slide 35: Abroad – Reduced Production in Bulgaria Partially Compensated

    ABROAD – REDUCED PRODUCTION IN BULGARIA PARTIALLY COMPENSATED BY GROWTH IN POLAND AND ROMANIA TWh TWh 5 4.8 -9% 5 4.5 4.4 +3% 4.4 Bulgaria (Varna coal -63% 0.6 power plant) 4 1.5 4 0.6 +38% 0.8 1.3 1.3 +8% 1.3 3 +26% 3 1.0 Romania (Renewable sources) 2 2 2.3 +13% 2.5 Poland (ELCHO and 2.5 -8% 2.4 1

  36. Slide 36: Severočeské doly – Additional Growth in Coal Extraction in 2014

    SEVEROČESKÉ DOLY - WE EXPECT ADDITIONAL GROWTH IN COAL EXTRACTION IN 2014 Coal sale (m tons) 23.7 +6% 25.1 22.8 +4% -5% +11% Other customers CEZ* +1% +10% 2012 2013 2014 E  Severočeské doly a.s. sold a total of 23.7 m tons of fuel in 2013, increasing its saleable production by 0.9 m tons compared t

  37. Slide 37: CEZ Continues Hedging Revenues from Electricity Sales

    CEZ CONTINUES HEDGING ITS REVENUES FROM SALES OF GENERATED ELECTRICITY IN THE MEDIUM TERM IN LINE WITH STANDARD POLICY Share of hedged production from CEZ* facilities as of Feb 15, 2014 (100 % corresponds to 57–59 TWh) Hedged volume from Nov 1, 2013 to Feb 15, 2014 Hedged volume as of Nov 1, 2013 10

  38. Slide 38: CEZ Started Transactions Reporting Pursuant to EMIR

    CEZ STARTED TRANSACTIONS REPORTING PURSUANT TO EMIR REGULATORY REQUIREMENTS Compliance with the EMIR Regulation (Regulation (EU) 648/2012 on derivative transactions)  Since Feb 12, 2014, CEZ has been duly reporting its commodity exchange transactions and OTC commodity, interest rate and currency de

  39. Slide 39: CEZ FIX Offer Used by Nearly 370,000 Customers

    THANKS TO FAVORABLE ELECTRICITY PRICES, THE CEZ FIX OFFER HAS BEEN USED BY NEARLY 370,000 CUSTOMERS Annual payment for power electricity* CEZ products allow saving money too; it is not “Household using electricity for lighting” necessary to seek an alternative supplier (CZK)  The quality of alterna

  40. Slide 40: 2013 Value Creation for Shareholders and Customers

    IN 2013 CEZ GROUP SUCCEEDED IN VALUE CREATION FOR SHAREHOLDERS AND CUSTOMERS AND SUCCESSFULLY COPED WITH ONGOING CRISIS OF EUROPEAN ENERGY SECTOR  We concluded two strategic agreements that will significantly contribute to the future stability of CEZ and to the stability of coal and electricity mar

  41. Slide 41: CEZ Group Repeatedly Proves Social Responsibility

    CEZ GROUP REPEATEDLY PROVES THE SOCIAL RESPONSIBILITY  in the interest of safety, electricity supply security and European competitiveness, we have joined an initiative of the leading European energy companies with the aim of contributing to the solution of current energy sector crisis  CEZ Group

  42. Slide 42: Annexes

    ANNEXES  Market developments  Investments in fixed assets  Balance sheet overview  EBITDA 2013 vs. Guidance 2014  Balance of electricity 41

  43. Slide 43: Market Developments

    MARKET DEVELOPMENTS Development of ČEZ share price compared to PX index and Bloomberg European Utilities, % 140% CO2 allowances / emission rights EUR / t 120% 15 100% 80% 10 60% 40% 5 20% 0% 0 PX Bloomberg European Utilities Index ČEZ forward 2013 forward 2014 EUR / MWh Electricity USD / t Coal and

  44. Slide 44: Investments in Fixed Assets (CAPEX)

    INVESTMENTS IN FIXED ASSETS (CAPEX) Investments in fixed assets 2013: CZK 44.1 bn Conventional facilities CZK 18.4 bn Počerady CCGT plant: Work in 2013 mainly involved commissioning the steam turbine and its control system, finishing infrastructure lines and having flood control measures officially

  45. Slide 45: Balance Sheet Overview

    BALANCE SHEET OVERVIEW Fixed assets  Increase in property, plant and equipment incl. nuclear fuel (CZK +6.8 bn): Equity and long-term liabilities Investments in power plant renewal and construction – mostly in the  Increase in equity of CZK +8.9 bn: Net income (CZK +35.2 bn); dividends (CZK -21.3

  46. Slide 46: Expected Y-o-Y Decrease in EBITDA Main Reasons

    EXPECTED Y-O-Y DECREASE IN EBITDA MAIN REASONS Drop of CEZ* electricity realization prices: EBITDA 2013 82.1  Decline in wholesale electricity prices Drop of CEZ*  Decrease in hedging CZK/EUR exchange rate electricity realization 75.4 6.6 CEZ* emission allowances: prices  Extraordinary revenue fr

  47. Slide 47: Electricity Balance (GWh)

    Electricity balance (GWh) Index 2012 2013 2013/2012 Electricity procured 62,217 60,183 -3% Generated in-house (gross) 68,832 66,709 -3% In-house and other consumption, including pumping in pumped-storage plants -6,615 -6,526 -1% Sold to end customers -41,867 -36,593 -13% Sold in the wholesale market

  48. Slide 48: Electricity Balance (GWh) by Segment

    Electricity balance (GWh) Power Production Distribution Power Production Distribution 2013 & Trading CE & Sale CE & Trading SEE & Sale SEE Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 58,397 -2% 0 - 1,787 -26% 0 - 0 - 60,183 -3% Generated in-house (gros

  49. Slide 49: Electricity Balance (GWh) by Country

    Electricity balance (GWh) 2013 Czech Republic Poland Other Central Europe Bulgaria Romania Albania Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 56,155 -3% 2,240 +13% 0 - 532 -63% 1,255 +27% 0 - 0 - 60,183 -3% Generated in-house (gross) 6

ČEZ, a. s. — FY2013 Earnings Presentation on 6ix