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Enel Russia Investor Day –
Strategic Plan 2015-19
Moscow, 8 April 2015
Enel Russia Investor Day
Agenda
2014 main developments and strategic plan for 2015-19
2015-19 key financial figures
Closing remarks
2
2014 highlights and company profile
Company profile
Enel Russia’s profile
A strong track record in cost
containment
Real-terms costs decline in 2008-14:
 Fixed costs per MW down 20%
(from 0.99m to 0.79m RUR/MW)
 Coal price down 14%
(+36% in nominal terms vs. gas tariff
increase of 83%)
Optimal financial structure and
ample financial resources
Positive FCF and dividend
distribution
 1.1x Net debt/EBITDA as of
end-2014
 FCF-positive from 2013 after
completion of investment
programme
 Lowest interest rates in sector
 100% hedge of FX risks on
EUR-denominated debt
 Over 60b RUR of available
debt facilities as of end-2014
 Dividend distribution in
accordance with 40%
payout policy
 One of highest dividend
yields in sector
3
2014 highlights and company profile
Financial and operating highlights1
Actual 2013
Actual 2014
2014 Targets
Net power output
41.9 TWh
42.4 TWh
43.4 TWh
EBITDA
16.8b RUR
18.4b RUR
~15.5b RUR
Net Income
4.9b RUR
5.6b RUR
~5b RUR
Net ordinary income
4.9b RUR
7.1b RUR2
~5b RUR
Net Debt
19.3b RUR
21.1b RUR3
~18b RUR4
CAPEX accrued5
8.2b RUR
9.6b RUR
~9.6b RUR6
•
Key targets delivered
•
Net ordinary income sizably above guidance and previous year
1
Audited standalone IFRS results IFRS unless indicated otherwise
Adjusted for one-off PPE impairment of 1.6b RUR post tax
3 If adjusted by corresponding change in derivative assets, net debt at year-end 2014 is 11.9b RUR
4 Number derived from 1b RUR free cash flow guidance for 2014
5 Numbers under Enel IAS standards
6 Updated guidance adjusted for 1.6b RUR of CCGT repair costs
2
4
Strategic Plan 2015-19
Current macro environment
GDP
4%
3%
2%
1%
0%
-1%
-2%
-3%
-4%
Consumption vs. new additions
6,0%
2,0%
2,5% 2,5%
Installed capacity
change, 1st price zone
4,5%
Consumption change
3,0%
0,1%
1,5%
2015
2016
2017
2018
2019
-1,5%
-4,0%
-3,0%
1,2%
1,6%
0,0%
1,0%
0,1%
2015
2016
2017
1,3%
1,4%
-0,8%
2018
2019
-2,4%
65,0
13,5%
10,5%
10%
1,0%
FX, RUR/EUR
Inflation
15%
5,8%
58,5
56,5
57,3
2016
2017
2018
60,5
8,0%
6,5%
6,0%
5%
0%
2015
2016
2017
2018
2019
2015
2019
Overcapacity to become more prominent in mid-term, reinforced in 2015 by GDP
decline
5
Strategic Plan 2015-19
Strategic guidelines
CAPEX optimization in line with market conditions to
maximize free cash flows
Continued focus on efficiency of power plants
Carrying on fuel supply management optimization
Strict financial discipline
Growing bottom line to support stable dividends to our
shareholders
6
Enel Russia Investor Day
Agenda
2014 main developments and strategic plan for 2015-19
2015-19 key financial figures
Closing remarks
7
Strategic Plan 2015-19
Market assumptions
Gas tariff
Coal price
Power prices
• 2015-17: moderately below CPI of the previous year
• 2018-2019: slightly above CPI based on an ‘easing cycle’ assumption
• Coal price increase in line with CPI
• Regulated tariff: 0% for 2015, then adjusted to fuel price growth annually from
01.07.2016
• DAM price: follows gas price trend, but adjusted downward due to higher volumes of
electricity output attributable to new entrants
• Regulated tariff: flat for 2015 and CPI-linked indexation annually from 01.07.2016
Capacity prices
• KOM: 2015 KOM price decrease vs. 2014 and then growth by CPI annually from
01.01.2016. NGRES - must-run generator starting from January for all equipment1 for 11
months in 2015
• DPM: adjusted for government bond yields; ~1.6x increase in 2017-19 due to
redistribution of revenues for 11th-15th years of DPM
1
•
Tough market environment dominated by governmental tariff containment approach
•
Coal price increase due to RUR devaluation vs. Tenge to create additional pressure
on earnings in 2015
Excluding a 170MW CCGT unit to be decommissioned within 2015
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Strategic Plan 2015-19
Installed capacity and production
Installed capacity (MW)
9677
Net output (TWh)
9429
42,4
45,0
43,1
44,1
19,0
17,2
16,4
5,7
5,4
5,8
-248
5048
4800
18,9
Conventional gas
CCGT
5,2
829
829
3800
3800
18,3
20,3
20,5
21,9
2015
2019
2014
2015
2017
2019
Coal
Capacity decommissioning
Net output trends
 170 MW at Nevinnomysskaya decommissioned over 2015
 Coal and CCGT output dynamics mainly affected by
maintenance/modernization schedule
 78 MW at Sredneuralskaya decommissioned over 2016
 Elevated output at conventional gas units to remain in 2015
and decrease onwards due to impact from new entrants
Higher coal availability essential for supporting energy margin
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Strategic Plan 2015-19
Energy margin
Day-ahead market spreads, RUR/MWh1
Energy margin (b RUR)
+7% CAGR 2014-19
481
Conventional gas
432
40,6
CCGT
139
34,7
Coal
28,7
2014
2015
2016
2017
2018
0,7
2019
Capacity prices, Th RUR/MW/month
0,8
14,7
12,8
7,9
10,7
8,1
4,3
5,0
11,0
10,2
12,8
2014
2015
2017
16,8
KOM2
477
CCGT (DPM)
2019
Regulated
145
114
2014
12,8
1,0
26,7
1,1
2015
2016
2017
2018
Heat
Capacity – CCGTs
Capacity – conventional units
Power
2019
 Energy margin drop in 2015 due to lower KOM prices; additional pressure to be
exerted by coal price increase
 Growth from 2015 onwards due to increasing spreads and higher DPM prices
1
2
Calculated as average DAM price minus fuel costs in RUR/MWh for each technology
2015 KOM projection includes must-run tariff for Nevinnomysskaya GRES
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Strategic Plan 2015-19
Fixed costs
Fixed costs (B RUR)1,2
Cost containment highlights
+6% CAGR 2014-192
Continued implementation of cost efficiency
initiatives in Operations and Maintenance
15,1
13,8
12,5
11,4
3,4
Launch of overhead optimization project
5,1
Further headcount optimization to partially
compensate for salary growth due to inflation
3,2
3,0
2,8
4,9
4,33
4,7
4,3
4,8
5,7
2014
2015
2017
Overhead & other
Personnel
6,6
Benefiting from operational synergies with the
Group
2019
O&M
 Fixed costs dynamics below CPI, as optimization of manageable costs
helps to offset water consumption costs and property tax increase
1
Enel IAS classification and numbers
CAGR and numbers for 2015, 2017 and 2019 shown in nominal terms
3 2014 personnel costs amount adjusted for non-recurring actuarial gain of 1.2B RUR
2
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Strategic Plan 2015-19
EBITDA
EBITDA (B RUR)1
+6% CAGR 2014-19
25,1
20,4
18,4
17,1
14,6
2014
1
2015
Enel IAS for 2015, 2017, 2019; 2014 – reported standalone IFRS result
2016
2017
2019
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Strategic Plan 2015-19
Net ordinary income
Net ordinary income (B RUR)1
+17% CAGR 2014-19
15,5
10,5
7,1
7,0
4,3
2014
1
2015
2016
2017
2019
Enel IAS adjusted for standalone IFRS for 2015, 2017, 2019; 2014 – reported standalone net income adjusted for one-off PPE impairment of 1.6B RUR post tax
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Strategic Plan 2015-19
CAPEX1
Highlights
CAPEX 2015-2019
2015-19 CAPEX amount contained vs. old BP
despite RUR depreciation and higher CPI
49%
Environment
Maintenance
41.3
B RUR
Maintenance CAPEX refocused to reflect
market conditions and focus on cash
generation units
Other
CAPEX by year (B RUR)
47%
4%
~45.1 B RUR CAPEX
planned for 2015-19 in
old plan
2015
2017
2019
~7
~9
~8
(reduction by 8%)
CAPEX optimized in response to unfavorable macro environment
1
CAPEX numbers refer to CAPEX accrued
14
Strategic Plan 2015-19
Cash flows and net debt
Cumulated cash flows 2015-19 (B RUR)1
Net debt (B RUR)1
100,7
-11,3
+2,7
-4,0
88,1
21,1
-41,3
15,8
1,1
1,1
8,2
net cash
46,8
-16,7
0,4
30,1
2014
2015
2017
2019
Net debt
Net debt/EBITDA
EBITDA
Income NWC and Financial
Tax
other expenses
paid
FFO
CAPEX
FCF
Dividends Net FCF
at 40%
payout
 Positive free cash flow maintained throughout the five-year period
 Cash position reached by the end of the BP horizon
1
Enel IAS for 2015-2019; net debt and net debt/EBITDA for 2014 – standalone IFRS
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Enel Russia Investor Day
Agenda
2014 main developments and strategic plan for 2015-19
2015-19 key financial figures
Closing remarks
16
Closing remarks
Responding to challenges
Challenges
Response
Gas tariff containment
•
Smart management of fuel suppliers portfolio, long-term contracts
Growing overcapacity
concerns and increasing
pressure of new entrants
•
•
•
Continuous focus on cost efficiency
Improvement of generating fleet, readiness to decommission non-sustainable units
Exploring solutions with regulatory bodies for economically justified support of outdated
equipment decommissioning and overall system reliability
Coal price increase
• Flexible pricing mechanism to mitigate FX effect
• Joint work with Minenergo on relevant tariff decisions
Pressure on FinEx due to
RUR depreciation and
higher interest rates
• 100% of total debt not subject to FX fluctuations
• A range of available debt instruments to choose from
• Flexibility in cash flows
CPI pressure on fixed costs
Pressure on CAPEX from
RUR depreciation
• Actions elaborated to contain O&M, personnel and overhead costs
• Review of long-term investment plan
Risk of payments
disruption from the market
• Bilateral free capacity sales contracts with reliable customers
• Cash outflows optimization, shifting of payments
• Constant availability of a comfortable amount of cash
Confidence in passing through tough times
17
Closing remarks
Financials summary
2014
2015
2016
2017
2014-2019
CAGR
EBITDA
18.4b RUR
14.6b RUR
17.1b RUR
20.4b RUR
+6%
Net ordinary income
7.1b RUR2
4.3b RUR2
7.0b RUR2
10.5b RUR
+17%
DPS at 40% payout3
0.08
RUR/share
0.05
RUR/share
0.08
RUR/share
0.12
RUR/share
+17%
Net debt/EBITDA
1.1x
1.1x
0.8x
0.4x
net cash
in 2019
1
Standalone IFRS numbers for 2014, Enel IAS numbers for 2015-19 unless specified otherwise
Standalone IFRS net income adjusted for one-off PPE impairment of 1.6b RUR post tax
3 As per the dividend policy currently embedded in the Strategic Plan
2
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Enel Russia Investor Day
Disclaimer
Disclaimer
This presentation contains certain statements that are neither reported financial results nor other
historical information (“forward-looking statements”). These forward-looking statements are based
on Enel Russia ’s current expectations and projections about future events. Because these
forward-looking statements are subject to risks and uncertainties, actual future results 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 Russia to control or estimate precisely,
including changes in the regulatory environment, future market developments, fluctuations in the
price and availability of fuel and other risks. You are cautioned not to place undue reliance on the
forward-looking statements contained herein, which are made only as of the date of this
presentation. Enel Russia does not undertake any obligation to publicly release any revisions to
any forward-looking statements to reflect events or circumstances after the date of this
presentation.
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Enel Russia Investor Day
Contacts
Enel Russia Investor Relations
Alexey Leonov
+7 495 539 31 31 ext. 7631
[email protected]
Ekaterina Orlova
+7 495 539 31 31 ext. 7746
[email protected]
Visit our website at:
www.enel.ru
(Investor Relations)
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