Cez As · PSECZ:CEZ
Cez As — Q1–Q3 2017 Earnings Presentation
38 slides from Cez As's earnings presentation, Nov 7, 2017
Slide 1: Presentation on CEZ Group Financial Results in Q1–Q3 2017
PRESENTATION ON CEZ GROUP FINANCIAL RESULTS IN Q1–Q3 2017 NON-AUDITED CONSOLIDATED RESULTS PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) November 7, 2017
Slide 2: Contents
CONTENTS Financial Highlights and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 1
Slide 3: Financial Highlights: Q1–Q3 2017
FINANCIAL HIGHLIGHTS: Q1–Q3 2017 Operating revenues increased by 1% year-on-year to CZK 146.7bn. EBITDA decreased by 6% year-on-year to CZK 41.1bn. Net income increased by 13% year-on-year to CZK 16.6bn. Adjusted net income* increased by 4% year-on-year to CZK 17.3bn. CEZ share price development sin
Slide 4: CEZ Group Financial and Operating Results
CEZ GROUP FINANCIAL AND OPERATING RESULTS (CZK bn) Q1 - Q3 2016 Q1 - Q3 2017 Change % Revenues 145.1 146.7 +1.6 +1% EBITDA 43.8 41.1 -2.7 -6% EBIT 21.6 19.4 -2.2 -10% Net income 14.7 16.6 +1.9 +13% Net income - adjusted * 16.7 17.3 +0.6 +4% Operating CF 40.5 36.2 -4.3 -11% CAPEX 21.5 19.2 -2.3 -11%
Slide 5: Year-on-Year Change in EBITDA by Segment
YEAR-ON-YEAR CHANGE IN EBITDA BY SEGMENT Main causes of year-on-year change in Q1–Q3 EBITDA: Traditional Energy Lower realization prices of generated electricity in Czechia, including the effect of hedges (CZK -3.1bn) Higher expenses on emission allowances in Czechia (CZK -1.3bn) Higher generation a
Slide 6: Other Income (Expenses)
OTHER INCOME (EXPENSES) (CZK bn) Q1 - Q3 2016 Q1 - Q3 2017 Change % EBITDA 43.8 41.1 -2.7 -6% Depreciation, amortization and impairments* -22.2 -21.6 +0.5 +2% Other income (expenses) -3.3 0.0 +3.4 - Interest income (expenses) -1.6 -2.5 -0.9 -53% Interest on nuclear and other provisions -1.1 -1.2 -0.
Slide 7: Expected Annual EBITDA of CZK 52bn, Adjusted Net Income of CZK 19bn
EXPECTED ANNUAL EBITDA OF CZK 52 BN, ADJUSTED NET INCOME OF CZK 19 BN CZK bn EBITDA 60 53 52 Selected negative effects as compared to expectation from 40 Aug 8, 2017: 20 Expected postponement of court decision concerning the payment of 0 SŽDC debt from 2011 beyond 2017 2017 E (Aug 8) 2017 E (Nov 7)
Slide 8: Expected Year-on-Year Change in Net Income: Main Causes (2017 vs. 2016)
EXPECTED YEAR-ON-YEAR CHANGE IN NET INCOME MAIN CAUSES (2017 VS. 2016) CZK bn Adjusted net income 2016 19.6 Main causes of year-on-year change: EBITDA Effect of unbilled electricity settlement in Czechia in 2016 and effect of correction factors (CZK -2.7bn) Higher expenses on emission allowances EBI
Slide 9: Contents
CONTENTS Financial Highlights and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 8
Slide 10: Generation—New Energy
GENERATION—NEW ENERGY Germany Germany + Acquisition of wind parks (Fohren-Linden and Rhineland- + Acquisition of wind parks (Fohren-Linden and Rhineland- Palatinate sites + wpd portfolio) Palatinate sites + wpd portfolio) Czechia (-5%) Czechia (-2%) Effect of weather conditions, lower generation at
Slide 11: Segment: Generation—New Energy
SEGMENT: GENERATION—NEW ENERGY EBITDA (CZK bn) Q1 - Q3 2016 Q1 - Q3 2017 Change % Czechia 1.6 1.6 0.0 -1% Poland -0.4 0.0 +0.4 +94% Romania 1.2 1.6 +0.4 +30% Germany 0.0 0.3 +0.3 - Other states 0.0 0.0 0.0 -4% Generation - new energy 2.4 3.4 +1.0 +42% Poland (CZK +0.4bn) Effect of additions to impai
Slide 12: Segment: Distribution
SEGMENT: DISTRIBUTION EBITDA (CZK bn) Q1 - Q3 2016 Q1 - Q3 2017 Change % Czechia 12.3 12.1 -0.2 -2% Romania 1.5 1.4 -0.1 -3% Bulgaria 0.9 1.1 +0.2 +18% Distribution 14.6 14.6 -0.1 -1% Czechia (CZK -0.2bn) Higher operating expenses to cover distribution grid needs including natural disasters and othe
Slide 13: Segment: Sales
SEGMENT: SALES EBITDA (CZK bn) Q1 - Q3 2016 Q1 - Q3 2017 Change % Czechia 3.2 3.1 -0.2 -5% Romania 0.3 0.0 -0.3 -88% Bulgaria 0.3 0.7 +0.3 +88% Other states 0.2 -0.3 -0.4 - Sales 4.1 3.5 -0.6 -14% Czechia (CZK -0.2bn) Higher fixed expenses, primarily in relation to separation of service for EZ Distr
Slide 14: EZ Prodej – New, More Comprehensible Offer of Commodity Products for Retail Customers
EZ PRODEJ – NEW, MORE COMPREHENSIBLE OFFER OF COMMODITY PRODUCTS FOR RETAIL CUSTOMERS Clearly expressing what we supply and for what period the contract is made for Consistent for electricity and gas in order to make the offer as comprehensible as possible for the customer New product “GAS for Indef
Slide 15: Smart Energy Turnkey Solutions from EZ
SMART ENERGY TURNKEY SOLUTIONS FROM EZ COMPREHENSIVELY ANSWER THE NEEDS OF RETAIL CUSTOMERS EZ TURNKEY HEATING Heating maintenance Energy consulting Subsidy management Financing Unit sale and installation Commodity tado° smart Economically controls temperature based on users’ behavior and thermostat
Slide 16: The Development Team Continues to Fulfill the Growth Strategy Through Acquisitions
THE DEVELOPMENT TEAM CONTINUES TO FULFILL THE GROWTH STRATEGY THROUGH ACQUISITIONS Elevion—one of the largest providers of comprehensive energy services in Germany—has been fully consolidated in CEZ Group’s accounts since September Following approval of the communicated transaction by competition au
Slide 17: Selected Events—Development Team
SELECTED EVENTS—DEVELOPMENT TEAM Distribution regulation in Czechia In August, the Energy Regulatory Office published its proposal for price regulation policy in 2019–2020, proposing to maintain the principles of regulation from 2016–2018 also in the period of 2019–2020. At the same time, it started
Slide 18: Contents
CONTENTS Financial Highlights and Annual Outlook Results and Selected Events—Development Team Results and Selected Events—Operations Team 17
Slide 19: Generation—Traditional Energy
GENERATION—TRADITIONAL ENERGY Nuclear Power Plants (+9%) Nuclear Power Plants (+18%) + Shorter outages at Temelín NPP + Shorter outages at Temelín NPP Coal-Fired Power Plants (-6%) Coal-Fired Power Plants (-6%) Czechia (-6%) Czechia (-6%) Sale of Tisová power plant, longer outages at Pruné ov 2 and
Slide 20: Segment: Generation—Traditional Energy
SEGMENT: GENERATION—TRADITIONAL ENERGY EBITDA (CZK bn) Q1 - Q3 2016 Q1 - Q3 2017 Change % Czechia 16.6 13.6 -3.0 -18% Poland 0.9 0.8 -0.1 -14% Other states 0.0 0.0 0.0 +57% Generation - traditional energy 17.4 14.3 -3.1 -18% Czechia (CZK -3.0bn) Lower realization prices of generated electricity, inc
Slide 21: Mining Segment and Other Segment
MINING SEGMENT AND OTHER SEGMENT EBITDA (CZK bn) Q1 - Q3 2016 Q1 - Q3 2017 Change % Czechia 3.2 3.3 +0.1 +2% Mining 3.2 3.3 +0.1 +2% Mining (CZK +0.1bn) Higher revenue from coal sales, primarily due to higher demand for sorted coal by external customers EBITDA (CZK bn) Q1 - Q3 2016 Q1 - Q3 2017 Chan
Slide 22: Selected Events in Nuclear Power
SELECTED EVENTS IN NUCLEAR POWER Temelín Nuclear Power Plant On Jul 31, 2017, an outage of Unit 2 ended 12 days ahead of schedule. It lasted 73 days in total. The most important activities included the modernization of a cluster of safety valves on the pressurizer and overhaul of circulating cooling
Slide 23: 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 Deliveries from EZ* Facilities As at Oct 31, 2017 100% Hedged volume from Aug 2, 2017 to Oct 31, 2017 Hedged volume as at Aug 1, 2017 ~1% 75% Transaction currency hedging Natural currency hed
Slide 24: Annexes
ANNEXES EBITDA—Q3 Year-on-Year Comparison Net Income—Q3 Year-on-Year Comparison Cash Flows Credit Facilities and Bonds Investments in Fixed Assets Balance Sheet Overview Mining Electricity Consumption Market Developments Electricity Procured and Sold Definitions of Alternative Indicators According t
Slide 25: EBITDA Q3 Year-on-Year Comparison
EBITDA Q3 YEAR-ON-YEAR COMPARISON CEZ Group EBITDA (CZK -0.9bn): Generation—Traditional Energy (CZK -1.0bn): Lower realization prices of generated electricity, including the effect of hedges (CZK -1.4bn); higher expenses on emission allowances (CZK -0.2bn); higher fixed costs (CZK -0.2bn) primarily
Slide 26: Net Income Q3 Year-on-Year Comparison
NET INCOME Q3 YEAR-ON-YEAR COMPARISON (CZK bn) Q3 2016 Q3 2017 Change % EBITDA 10.7 9.7 -0.9 -9% Depreciation, amortization and impairments* -7.1 -7.6 -0.5 -7% Other income (expenses) -2.4 -2.1 +0.3 +12% Income taxes -0.3 -0.1 +0.1 +57% Net income 0.9 -0.1 -1.0 - Net income - adjusted 1.9 0.3 -1.6 -
Slide 27: Cash Flows
CASH FLOWS Cash Flows From Operating Activities (CZK +36.2bn) Income after adjustments (CZK +37.2bn): earnings before taxes (CZK +19.5bn), depreciation and amortization of nuclear fuel (CZK +25.2bn), loss from associates and joint ventures (CZK +1.4bn), income from sale of fixed assets (CZK -5.8bn),
Slide 28: CEZ Group Maintains a Strong Liquidity Position
CEZ GROUP MAINTAINS A STRONG LIQUIDITY POSITION Utilization of Short-Term Lines (as at Sep 30, 2017) CZK 1.8bn Available credit facilities CEZ Group has access to CZK 28.7bn in committed credit facilities, using CZK 10.1bn as at Sep 30, 2017. Undrawn, CZK 10.1bn committed Committed facilities are ke
Slide 29: Investments in Fixed Assets
INVESTMENTS IN FIXED ASSETS CZK 19.2bn in total (Q1–Q3 2017) Conventional and other generating facilities: Construction of a new supercritical unit in Ledvice Other investments in facility renovation 4.7 Distribution segment: Czechia: CZK 7.1bn 8.7 Mining segment: Abroad: CZK 1.5bn 0.9 Modernization
Slide 30: Balance Sheet Overview
BALANCE SHEET OVERVIEW Fixed tangible assets, nuclear fuel, and investments decreased by CZK 6.6bn Equity decreased by CZK 7.4bn Primarily due to depreciation and amortization (see slide Other Income Paid dividends of CZK 17.8bn (Expenses)), partially offset by capital expenditure (see CAPEX) Other
Slide 31: Mining
MINING Severo eské doly—Coal Extraction (Millions of Tons) Other customers 25 EZ* 25 +3% 22.1 21.4 20 20 5.8 -1% 5.7 +3% 15.5 15.1 15 15 4.0 +4% 4.2 10 10 15.6 +5% 16.4 11.1 +2% 11.3 5 5 0 0 Q1–Q3 Q1–Q3 2016 2017 E 2016 2017 Increase in saleable output of 0.4 million tons of coal, Year-on-year incre
Slide 32: Electricity Consumption in the Distribution Area of EZ Distribuce Grew Year-on-Year
ELECTRICITY CONSUMPTION IN THE DISTRIBUTION AREA OF EZ DISTRIBUCE GREW YEAR-ON-YEAR Temperature- and Calendar-Adjusted** Consumption in the Distribution Consumption Area of EZ Distribuce (in the Distribution Area of EZ Distribuce) 26.53 26.36 * TWh TWh Changes in consumption (+3.7%) by segment:* 25.
Slide 33: Market Developments
MARKET DEVELOPMENTS Development of CEZ share price Biel te coos P P EUR/t C02 allowances / emission rights 9 500 4 6 400 300 2 © © o © © A A \ Ay ue ae of ae of we RA a ee ae & er en ae CS ES CS —forward 2018 EUR/ MWh Electricity USD /t Coal and gas EUR/MWh 39 95 =r 60 A ” a MU 34 PMU WOW, wv \ V A
Slide 34: Electricity Balance (GWh) Q1–Q3 2017
Electricity balance (GWh) Index Q1 - Q3 2016 Q1 - Q3 2017 2017/2016 Electricity procured 40,362 41,510 +3% Generated in-house (gross) 45,148 46,065 +2% In-house and other consumption, including pumping in pumped-storage plants -4,786 -4,555 -5% Sold to end customers -26,821 -27,158 +1% Sold in the w
Slide 35: Electricity Balance (GWh) by Segment
Electricity balance (GWh) by segment Generation - Generation - new Q1 - Q3 2017 traditional energy energy Distribution Sale Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 40,114 +2% 1,396 +25% 0 - 0 - 0 - 41,510 +3% Generated in-house (gross) 44,649 +1% 1
Slide 36: Electricity Balance (GWh) by Country
Electricity balance (GWh) by country Q1 - Q3 2017 Czechia Poland Romania Bulgaria Others Eliminations CEZ Group GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- GWh +/- Electricity procured 38,562 +3% 1,816 -5% 989 +19% 5 -0% 139 - 0 - 41,510 +3% Generated in-house (gross) 42,867 +2% 2,050 -5% 1,003
Slide 37: 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 38: Net Debt / EBITDA Indicator Definition
Indicator Intangible Assets. Net debt / EBITDA Purpose: This indicates a company’s capability to decrease and pay back its debt as well as its ability to take on additional debt to grow its business. CEZ Group uses this indicator primarily to assess the adequacy of its capital structure to the struc