1. Warsaw, 13 May 2014
ENEA CG builds its position through
the implementation of area strategies
Q1 2014
Krzysztof Zamasz
President of the Board
Dalida Gepfert
Vice-President of the Board for Financial Affairs
Paweł Orlof
Vice-President of the Board for Corporate Affairs
Grzegorz Kinelski
Vice-President of the Board for Commercial Affairs
2. 2
Agenda
Energy market and key operating data
ENEA CG's results in Q1 2014
Area strategies
New power unit in Kozienice
3. Grzegorz Kinelski
Vice-President of the Board for Commercial Affairs
Volatile market and regulatory environment
affected the situation on the energy market
4. 4
• Higher average price of baseload yoy by 1.3%
• SPOT market was under the influence of
higher prices of allowances for emissions of
CO2 and a high, taking into account the
weather conditions, demand in the Public
Power System.
• A greater number of failures was noted and
unplanned deficiencies in the generating
capacity, which strengthened higher price
levels on SPOT market
• From the beginning of the year energy prices
on the futures market increased slightly
(impact of allowances for emissions of CO2)
• The prices strengthened almost till the end
of February 2014
Energy prices were affected by power deficiency
and growths on the CO2 market
130
140
150
160
170
180
190
200
210
220
230
I II III IV V VI VII VIII IX X XI XII
PLN/kWh
Average electricity prices on SPOT market on PPE
Baseload - 2012 Baseload - 2013 Baseload - 2014
140
146
152
158
164
170
176
182
188
194
200
0
20
40
60
80
100
120
140
160
180
200
04/10/201213/03/201305/06/201306/08/201301/10/201319/11/201314/01/201420/02/201428/03/2014
PLN/MWh
MW
Transaction prices and volumes - baseload for 2015
trade volumes weighted average price
5. 5
• Low prices of coal on external
markets
• Decrease in coal prices in
Q1 2014 to almost the lowest
values in the presented time slot
(comparable to prices from June
to August 2013)
• The market of allowances for
emissions of CO2 was strongly
dependant on political decision made
in the European Union
• Despite backloading still a great
surplus of EUA in EU ETS
• Price drops in March resulted mainly
from the allocation of free allowances
From the beginning of 2014 coal prices are in the downward trend
0
2
4
6
8
10
IIIIIIXIIXIXIXVIIIVIIVIVIVIIIIIIXIIXIXIXVIIIVIIVIVIVIIIIII
2 01420132012
EUR/t
EUA and CER quotations - closing prices on SPOT market
EUA 3 Phase EUA 2 Phase CER
70
80
90
100
110
120
I II III IV V VI VII VIII IX X XI XII I II III IV V VI VII VIII IX X XI XII I II III
2012 2013 2014
USD/t
Monthly indices of coal prices (globalCOAL)
Richards Bay (RSA) Newcastle (Australia) Amsterdam-Rotterdam-Antwerpia
6. 6
[GWh] Q1 2013 Q1 2014 Change
Total generation of energy, including: 3 039.2 3 141.7 3.4% √
Conventional generation 2 802.5 2 866.0 2.3% √
Generation from RES 236.7 275.7 16.5% √
Higher energy production in ENEA CG
ENEA CG in Q1 2014 increased energy production
both form conventional sources and RES
7. 7
2014 2015 2016
Hedging prices 155 - 165 PLN/MWh 160 - 170 PLN/MWh 165-175 PLN/MWh
0%
20%
40%
60%
80%
100%
2014 2015 2016
% of hedged electricity
29-34%
0-5%
100%
Ca. 1/3 volumes on generation for 2015 is contracted
8. 8
Agenda
Energy market and key operating data
ENEA CG's results in Q1 2014
Area strategies
New power unit in Kozienice
10. 10
[PLN mln] Q1 2013 Q1 2014 Change
Net sales revenues 2 380.3 2 373.7 -0.3%
EBITDA 549.9 461.5 -16.1%
Net profit 296.8 209.3 -29.5%
Net debt/EBITDA -0.8 -0.4 -
The results were negatively affected by: a drop in the average selling price
to end users and lower prices of energy on the wholesale market
11. 11
EBITDA in Q1 2014 was under the pressure of lower energy prices
and a high base of application of Q1 2013 to the segment of trade
5.8% 37.5% 15.1% 13.9% 19.4%23.1%[PLN mln]
355.2
266.7
194.7
-51.2
5.4
-39.8 -0.9 -2.0
194.7
0,0
100,0
200,0
300,0
400,0
500,0
600,0
EBITDA 1Q 2013 Trade Distribution Generation Other activity Exclusions* EBITDA 1Q 2014
549.9
461.5
-10.5%1.9%-46.8% -24.3%
* Includes undistributed expenses
of the whole Group and exclusions
EBIT
Amortisation/
depreciation
Growth in segment
Drop in segment
Change in segment yoy [%]
EBITDA margin [%]
12. 12
[PLN mln] Q1 2013 Q1 2014 Change
Generation 163.4 123.7 -24.3%
[PLN mln] Q1 2013 Q1 2014 Change
Trade 109.6 58.3 -46.8%
EBITDA in Q1 2014 was under the pressure of lower energy prices
and a high base of application of Q1 2013 to the segment of trade
Segment of trade
Lower EBITDA by PLN 51.2 mln (-46.8%)
• lower average purchase price of energy
by 12% √
• higher sale volumes by 544 GWh √
• lower average selling price by 16.8%
Segment of distribution
Higher EBITDA by PLN 5.4 mln (1.9%) √
• lower average purchase price of electricity for
covering book-tax difference by 27% and lower
purchase volumes by 24.7 GWh √
Segment of generation
Lower EBITDA by PLN 39.8 mln (-24.3%)
• lower margin on generation of conventional
electricity - Segment of System Power Plants
[PLN mln] Q1 2013 Q1 2014 Change
Distribution 287.2 292.6 1.9%
13. 13
The Group's financial standing is stable,
supported with a significant amount of cash
1 573
209
195
-542
175
-321
1 289
500
1 000
1 500
2 000
Cash
1.01.2014
Net profit Amortisation/
depreciation
CAPEX External funding Other Cash
31.03.2014
[PLN mln]
14. 14
ENEA CG adjusts to the demanding situation on the energy market
The generated financial results are compliant with market expectations
Higher strength of the Group as a result of widening
of the Corporate Strategy with area strategies
Consistently implemented CAPEX programme:
PLN 542 mln capital expenditures with a favourable value
of net debt/EBITDA ratio -0.4
15. 15
Agenda
Energy market and key operating data
ENEA CG's results in Q1 2014
Area strategies
New power unit in Kozienice
16. Krzysztof Zamasz
President of the Board
The implementation of area strategies
has a direct impact on the growth
in the value of ENEA CG
17. 17
The Group's organisation DNA is the key to an efficient management
development of a homogeneous economic body
in which the key role is played by ENEA S.A.
introduction of a statutory management
mechanism of the Group Companies
shortening of the decision-making process
shortening of the paths of communication
between the parent company and daughter
companies
shortening of times of preparation of financial
statements and executive information
The approval of the new corporate governance
and ENEA Capital Group management plan will allow for:
New
organisational
and functional
shape
of ENEA CG
oriented on
market and
Customer
18. 18
Compliant with the Corporate Strategy for 2014-2020,
ENEA CG is five basic areas of operations
ENEA S.A.
ENEA
Wytwarzanie
ENEA Trading ENEA Operator ENEA Centrum
Generation
Wholesale
trade
Distribution Support
Trade
19. 19
Distribution: The area strategy will ensure safety, quality, reliability
and cost efficiency
Intelligent network development programme
Book-tax difference reduction programme
Better efficiency of the process of connecting
Customers to the network
Development and implementation
of the fixed cost programme
Implementation of a programme for better
reliability and reduction in the failure rates of
the network
Effective operation within operation
and development of the network
Development and unification of IT tools
supporting the network management
CAPEX 2014-2020
PLN 5.9 bn
20. 20
Generation: Efficient generating portfolio will guarantee energy supply
reliability
Development of renewable energy sources
(RES)
Development of cogeneration sources
Higher sales of network heat
Realisation of environmental investments
Construction of the power unit No. 11
Realisation of modernisation projects
Implementation of initiatives relating
to better efficiency
CAPEX 2014-2020
PLN 13.6 bn:
Conventional sources: PLN 5.9 bn
RES: PLN 4.5 bn
Cogeneration sources: PLN 3.2 bn
21. 21
SSC: ENEA Centrum is a Shared Service Centre rendering support services
for ENEA CG Companies
Reimplementation and development of SAP,
upgrade IFS
Development of the billing and CRM
Decentralised IT infrastructure
Development of the Call Center platform
Mass Correspondence Centre for ENEA CG
SSC projects: SSC IT, SSC Accounting and
Remuneration, SSC Common Customer Service,
SSC HR, SSC Logistics, SSC Legal
Common Internet service for the Group
ENEA Operator
Sp. z o.o.
ENEA Trading
Sp. z o.o.
ENEA
Wytwarzanie S.A.
ENEA S.A.
ENEA Centrum
Sp. z o.o.
Accounting
Customer
Service
Logistics
HRIT
22. 22
Wholesale trade: In ENEA CG we concentrate the competences
and commercial authorisations in one place
Development of operations within origination
type products
Development of trade operations
on conterminous markets
Strengthening of the leader position
on the trading market
Commencement of trading operations
within ICE
Development of operations within trade in gas
Fuel area integration
Optimisation of fixed costs
Integration and development of trading
systems
The superior goal
of ENEA Trading is
the first
contribution
margin
management in
the whole value
chain of ENEA CG
23. 23
Sales: Our goal is a growth in the share in the electricity market
Sales on the area of the whole Poland
Attractive offer of products and services
Integrated sponsoring and marketing
activities
Activity within origination type products
Growth in margin
New operating model of Customer service
24. 24
Agenda
Energy market and key operating data
ENEA CG's results in Q1 2014
Area strategies
New power unit in Kozienice
25. Paweł Orlof
Vice-President of the Board for Corporate Affairs
2014 is a key year as regards the implementation of
the project of the construction of a new unit
26. 26
All the tasks planned for realisation for Q1 2014
were precisely performed
The main concreting and foundation
works were realised,
Construction of the cooling tower
is on the schedule, all the concrete
structures are already ready
Construction of the unit No. 11
is on the schedule,
The progress at the end of Q1 2014
is ca. 30%.
0%
20%
40%
60%
80%
Scope of works to be performed in 2014
65%
30%
2013 Q1 2014 Q2-Q4 2014 2015
27. ENEA CG builds its position through
the implementation of area strategies
Q1 2014
gielda@enea.pl
29. 29
-56.9
163.4
14.9 2.3 123.7
0
100
200
EBITDA
IQ 2013
Segment
Elektrownie
Systemowe
Segment
Ciepło
Segment
OZE
EBITDA
IQ 2014
Attachment No. 1 – A drop in the segment of generation results from a lower
margin on energy generation in the segment of System Power Plants
[PLN mln] Generation – EBITDA Q1 2014 bridge
EBITDA
Q1 2013
Segment of System
Power Plants
Segment of Heat Segment of RES EBITDA
Q1 2014
Growth
Drop
30. 30
[PLN mln] Trade – EBITDA Q1 2014 bridge
Attachment No. 2 – Lower first contribution margin charged the result of
the segment of trade in Q1 2014
109.6
58.3
0
20
40
60
80
100
120
EBITDA
IQ 2013
Marża
pierwszego
pokrycia
Koszty
własne
Pozostałe
czynniki
EBITDA
IQ 2014
-3.1
-8.3
-39.9
EBITDA
Q1 2013
First contribution
margin
Costs of sales Other factors EBITDA
Q1 2014
Growth
Drop
31. 31
Attachment No. 3 – In the segment of distribution a lower average price and lower volumes
of energy purchases for the coverage of the book-tax difference covered the increase
in provisions for employee benefits
Distribution – EBITDA Q1 2014 bridge[PLN mln]
287.2 292.6
14.3 1.3
-8.2 -2.0
0
100
200
300
400
EBITDA
IQ 2013
Regulacja Majątek
sieciowy
Organizacja Pozostałe spółki EBITDA
IQ 2014
EBITDA
Q1 2013
Regulated area Gird assets Organisation Other factors EBITDA
Q1 2014
Growth
Drop