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Hrvatska elektroprivreda More than electricity Consolidated Financial Statements 1H 2020
Hrvatska elektroprivreda More than electricity
Consolidated Financial Statements
1H 2020
1H 2020 Key highlights
Operations results
Financial results
Q&A
Contents
2
3
This Presentation contains certain forward-looking statements that reflect HEP's current views with respect to future events and financial and operational performance, including but not limited to risks specific to HEP's business and the implementation of strategic initiatives, as well as other statements relating to HEP’s future business development and economic performance. Forward-looking statements are statements in this Presentation that do not relate to historical facts and events. The words "will", "believes", "assumes”, "intends", "estimates", "expects", "may", "plans", "seeks", "approximately", "aims", "projects", "anticipates" or similar expressions regarding indications or prognoses of future developments or trends, which are not statements based on historical facts, constitute forward-looking information. While these forward-looking statements represent HEP's judgments and future expectations concerning the development of its business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from HEP's expectations. In light of these risks, uncertainties and assumptions, it is possible that the future events referred to in this Presentation may not occur. Because these forward-looking statements involve known and unknown risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statements as a result of: absence of the ownership title with respect to certain properties, including real estate connected to 17 out of 26 of the hydro power plants which the Group currently operates in the Republic of Croatia; HEP's ability to maintain and increase market share for its products and services and control expenses; changes in the competitive environment and competitive pressures; any declines in property values and asset quality; any decline in the availability of financing at acceptable prices; changes in general economic and business conditions; changes and fluctuations in interest rates, share prices and exchange rates; political, governmental, legislative and regulatory changes or changes in political or social conditions; changes in HEP's credit ratings; changes in economic conditions in the countries in which the Group operates; the extent and nature of future developments in the lending market and in other market segments that have been affected by the global financial crisis and the European sovereign debt crisis; other market and macro-economic developments, including movements in local and international securities markets, credit spreads, currency exchange rates and interest rates, whether or not arising directly or indirectly from the global financial crisis or the European sovereign debt crisis; changes in internal risk control; limitations in the effectiveness of HEP's internal risk management processes, of its risk measurement, control and modelling systems, and of financial models generally; developments relating to HEP's access to capital and funding; changes in the financial position or creditworthiness of HEP's customers, obligors and counterparties, and developments in the markets in which they operate; management changes and changes to the structure of HEP's business group; the occurrence of operational failures, such as fraud, unauthorized trading and systems failures; technological developments; and the impact of all such future developments on positions held by HEP. Additional factors that could cause HEP's actual business, results of operations or financial condition to differ from the forward-looking statements include, but are not limited to, the other factors that HEP has indicated in other parts of this Presentation which could materially adversely affect its business and financial performance. The forward-looking statements included in this Presentation speak only as of the date of this Presentation. HEP undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise
Key Facts
Total electricity sales in Croatia
6,766 GWh
8%
Gas retail
972 GWh
13%
Electricity generation
5,640 GWh
8%
Heat sales
1,044 GWh
3%
Gas wholesale
2,680 GWh
23%
Compared to 1H 2019
%
4
HEP Group - 91 % electricity market share in Croatia
Key Facts Operating income
Operating expenses
HRK 7,140m
9% 13%
HRK 5,950m
Adj. EBITDA
HRK 2,284m
11%
Net profit
HRK 960m
12%
Net debt
HRK 148m
74%
Cash position
HRK 4,027m
40%
Total assets
HRK 42,694m
Number of employees 1H 2020: 11,501
Compared to 1H 2019
%
5
Electricity Market in Croatia1
Total sale by HEP Group suppliers decreased by 8% compared to the same period in the 2019.
1HEP Group internal data 6
7,121 7,330 6,766
951 702 660
864 925
810
1,719 1,784
707
8,938 9,031
8,380
0
2,000
4,000
6,000
8,000
10,000
12,000
1H 2018 1H 2019 1H 2020
GWh
HEP sale abroad
HEP usage for transmission
Losses on transmission and distribution
Sale - others
HEP sale
Total electricity demand in Croatia
1H 2020 Key highlights
Operations results
Financial results
Q&A
Contents
7
Power Generation in 1H 2020
Compared to the year before HPP generation was 16% lower
TPP generated same amount of electricity while NPP generation was 1% higher compared to the same period last year
Generation of heat energy was 4% lower
1HEP Group internal data
8
44%
27%
29%
0%
Electricity generation 1H 20201
5,640 GWh
60% 10%
30%
0%
Electricity - available capacity 1H 20201
HPP
NPP
TPP
RES
3,590 MWe
4,425
2,930 2,461
1,349
1,659 1,652
1,235
1,504 1,513
1,263 1,314 1,263
9
10 14
1H 2018 1H 2019 1H 2020
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000GWh
RES
Heat
NPP
TPP
HPP
Electricity Generation from HPP
26 HPP operated 2,116 MWe total available capacity
Not significant influence on EBITDA
1HEP Group internal data
2Adjusted EBITDA consists of operating profit/(loss) and depreciation and amortization for the period excluding financial expense, financial income,
corporate income tax expense.
9
4,425
2,930 2,461
0
1,000
2,000
3,000
4,000
5,000
1H 2018 1H 2019 1H 2020
GWh HPP generation1
-16% -34%
0
200
400
600
800
1000
1200
1400
1.I
.14
1.I
V.1
41
.VII
.14
1.X
.14
1.I
.15
1.I
V.1
51
.VII
.15
1.X
.15
1.I
.16
1.I
.16
1.I
V.1
61
.VII
.16
1.X
.16
1.I
.17
1.I
V.1
71
.VII
.17
1.X
.17
1.I
.18
1.I
V.1
81
.VII
.18
1.X
.18
1.I
.19
1.I
V.1
91
.VII
.19
1.X
.19
1.I
.20
1.I
V.2
0
Accumulation levels, GWH1
(1.1.2014-01.07.2020)
2,398 4,425 2,929 2,461
2,807
2,372
2,057 2,284
-
500
1,000
1,500
2,000
2,500
3,000
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
1H 2017 1H 2018 1H 2019 1H 2020
HRK m GWh HPP generation and Adj. EBITDA2 correlation
HPP Generation
Adj. EBITDA
Electricity Generation from TPP
7 TPP with total available capacity of 1,060 MWe2
All cogeneration plants have obtained
environmental permits
1HEP Group internal data 2Total available capacity at 1H2020, HEP Group internal data
10
1,349
1,659 1,652
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
1H 2018 1H 2019 1H 2020
GWh TPP generation1
23% 0% 7%
20%
72%
1%
TPP by fuel type, available capacity2
Crude oil
Coal
Gas
Wood biomass
191
304
197
2,678 2,763 2,731
21 35 42 -
500
1,000
1,500
2,000
2,500
3,000
-
50
100
150
200
250
300
350
1H 2018 1H 2019 1H 2020
GWh x103 tons TPP fuel consumption1
Coal (000 tons)
Gas (GWh)
Wood biomass (000 tons)
Transmission & Distribution
1HEP Group internal data 11
8,251 8,255
7,646
6,500
6,700
6,900
7,100
7,300
7,500
7,700
7,900
8,100
8,300
8,500
1H 2018 1H 2019 1H 2020
GWh
Distribution volume1
616 685 594
7.5
8.3
7.8
7.00
7.20
7.40
7.60
7.80
8.00
8.20
8.40
540
560
580
600
620
640
660
680
700
1H 2018 1H 2019 1H 2020
% of total distribution volume
GWh
Distribution network losses
Losses innetwork
% of totaldistributionvolume
12,693
11,066
9,939
6,500
7,500
8,500
9,500
10,500
11,500
12,500
13,500
1H 2018 1H 2019 1H 2020
GWh
Transmission volume1
301 194 174
2.4 1.8
1.8
0.00
0.50
1.00
1.50
2.00
2.50
0
50
100
150
200
250
300
350
1H 2018 1H 2019 1H 2020
% of total transmission volume GWh
Transmission network losses
Losses innetwork
% of totaltransmissionvolume
Power Supply HEP Group supplies 91% of all electricity sold in Croatia
HEP Elektra supplies customers under public service obligation (universal service and guaranteed supply) while HEP-Supply supplies all other customers that have opted for a market supplier
HEP Supply is the largest non-tariff supplier among 12 others2 in Croatia
HEP Supply supplies c. 85% of commercial customers in the Croatian market2
1HEP Group internal data
2electricity sold, as of 1H 2020, www.hera.hr 12
HEP 49%
Others 51%
Gas Wholesale in Croatia1
HEP 15% Others
85%
Gas Retail in Croatia1
91%
9%
Electricity consumption 1H 2020 per supplier1
HEP Group
Others
3,995 4,186 3,728
2,775 2,753 2,724
348 391
314
951 702
660
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1H 2018 1H 2019 1H 2020
GWh Electricity sold by customer category, GWh1
Others with market supply(commercial and households)
HEP Guaranteed supply -Commercial
HEP Universal service -Households
HEP market supply(commercial and households)
1H 2020 Key highlights
Operations results
Financial results
Q&A
Contents
13
Development of Operating Income1
1Unaudited Financial Statements for 1H 2020, available at www.hep.hr
Revenue from electricity sale decreased by HRK 769,6m (12.3%), due to pandemic of Covid-19, and: 7.7% decreased sale of electrical energy in Croatia 48.5% decreased export of electrical energy 24.1% decreased supply outside of Croatia
2.7% lower thermal power sales revenue due to 3% lower sale Sale of gas is 8.8% lower than year before due to 23% lower sale
to retail customers Other operating income increased by 31%
14
-770
-10
-67
+141
7.845
7.140
Operating income 1H 2019
Electricity sale
Thermal power sale
Gas
Other income
Operating income 1H 2020
HRK m
Financial Performance
1Unaudited Financial Statements for 1H 2020, available at www.hep.hr
2Adjusted EBITDA consists of operating profit/(loss) and depreciation and amortization for the period excluding financial expense, financial income, corporate
income tax expense 3Includes depreciation and amortization 15
7,573 7,845 7,140
6,192 6,812
5,950
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1H 2018 1H 2019 1H 2020
HRK m Operating income and expenses1
Operatingincome
Operatingexpenses
4% 10% -9% -13%
26%
13%
10% 1% 1% 14%
15%
20%
20%
12%
9%
2% 1% 17%
18%
21%
Total operating expenses split 1H 2020 vs 1H 20191
Cost of electricity
Fuel cost
The cost of gas for sale on thewholesale marketGas supply costs - market supply
Cost of purchased material
Employee costs
Depreciation and amortization costs
Other operating expenses
1H 2020
1H 2019
+574
+156
-234
+6
+118
-705
-602
-165
-178
+18
+5
+68
-9
+272
+34
+71
2.372
2.057
2.284
Adj. Ebitda 1H 2018²
Total operating income
Electricity purchase cost
Fuel cost
Costs of gas sold
Staff cost
Other Costs³
Depreciation
Adj. Ebitda 1H 2019²
Total operating income
Electricity purchase cost
Fuel cost
Costs of gas - wholesale market
Costs of gas - supply market
Material cost
Staff cost
Other Costs³
Depreciation
Adj. Ebitda 1H 2020²
HRK m
80%
5%
10% 6%
77%
5%
10%
8%
Total operating income split H1 2020 vs H1 20191
Revenue from elecitrity sales
Revenue from thermal sales
Revenue from sale of gas(wholesale & retail)
Other operating income
1H 2019
1H 2020
Cash flow1
1Unaudited Financial Statements for 1H 2020, available at www.hep.hr
Strong liquidity position
Additional liquidity HRK 600 million under short term financing sources with local banks
Continuous capital expenditures Wind farm Korlat Solar power plant Cres, Vis Modernization and
revitalization of distribution and district heating network
Smart meters
16
-1.002
-72
-893
-272
-1.940
+1.168
+1.643
+2.422
+193
2.780
2.874
3.352
4.027
Cash at FY 2018
Net cash from operations
Net cash from investing
Net cash from financing activities
Cash at 1H 2019
Net cash from operations
Net cash from investing
Net cash from financing activities
Cash at FY 2019
Net cash from operations
Net cash from investing
Net cash from financing activities
Cash at 1H 2020
HRK m
HEP Group Debt
1Unaudited Financial Statements for 1H 2020, available at www.hep.hr
2Adjusted EBITDA consists of operating profit/(loss) and depreciation and amortization for the period excluding financial expense,
financial income, corporate income tax expense
17
1,105
571 148
2,372 2,057
2,284
0.5x
0.3x
0.06x 0.0
0.1
0.2
0.3
0.4
0.5
0.6
0
500
1,000
1,500
2,000
2,500
1H 2018 1H 2019 1H 2019
HRK m Net debt/Adj. EBITDA development1
Net Debt
Adj. EBITDA²
Net Debt/ Adj.EBITDA²
Credit Rating Agency Issue date Rating
Standard & Poor's 26 November 2019 BB+/Stable – SACP bb+
Moody's 30 April 2019 Ba2/Positive outlook
39 60 81 85 52 52
3,503
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2020 2021 2022 2023 2024 2025
HRK m Debt maturity profile1
Bonds
Loans
1H 2020 Key highlights
Operations results
Financial results
Q&A
Contents
18
Q&A
Contacts for Institutional Investors & Financial Analysts – [email protected]
Marko Ćosić
Board Member and
CFO
+385 1 632 28 31
Ana Celjak
Finance and Treasury
Director
+385 1 632 22 07
Ivana Sučić Funko
Head of Investor
Relations
+385 1 632 22 31
Ivan Dodig
Investor Relations
+385 1 632 27 98
19
This presentation contains information relating HEP Group ("HEP") that must not be relied upon for any purpose and may not be redistributed, reproduced, published, or passed on to any other person or used in whole or in part for any other purpose. By accessing this document you agree to abide by the limitations set out in this document as well as any limitations set out on the webpage of HEP on which this presentation has been made available.
This document is being presented solely for informational purposes. It should not be treated as giving investment advice, nor is it intended to provide the basis for any evaluation or any securities and should not be considered as a recommendation that any person should purchase any securities.
This presentation may contain forward-looking statements based on current assumptions and forecasts made by HEP management and other information currently available to HEP. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. HEP does not intend, and does not assume any liability whatsoever, to update these forward-looking statements or to conform them to future events or developments.
Neither HEP nor any respective partners of HEP undertake any obligation to provide the recipient with access to any additional information or to update this presentation or any information or to correct any inaccuracies in any such information.
Certain numerical data, financial information and market data (including percentages) in this presentation have been rounded according to established commercial standards. As a result, the aggregate amounts (sum totals or interim totals or differences or if numbers are put in relation) in this presentation may not correspond in all cases to the amounts contained in the underlying (unrounded) figures appearing in the consolidated financial statements.
Furthermore, in tables and charts, these rounded figures may not add up exactly to the totals contained in the respective tables and charts.
Disclaimer
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