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INVESTOR DAY – Endesa Generacion Sa

Endesa Generacion Sa · Oct 8, 2014 · 80 slides

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Slides

  1. INVESTOR DAY – Endesa Generacion Sa – slide 1
    Investor day 8 October, 2014
  2. INVESTOR DAY – Endesa Generacion Sa – slide 2
    Agenda 1. Opening remarks Borja Prado 2. Market and sector trends Jos D. Bogas 3. Endesa key strengths Jos D. Bogas 4. New industrial plan 4.1. Regulated business Distribution Jos Luis Marn 4.2. Regulated business Non-mainland…
  3. INVESTOR DAY – Endesa Generacion Sa – slide 3
    Todays presenters Borja Prado Jos D. Bogas Chairman CEO Jos Luis Paolo Bondi Marn CFO MD Endesa Red Manuel Javier Morn Uriarte MD Endesa MD Endesa Generacin Energa 4
  4. INVESTOR DAY – Endesa Generacion Sa – slide 4
    1. Opening remarks Borja Prado
  5. INVESTOR DAY – Endesa Generacion Sa – slide 5
    Key recent developments Divestiture of Latin American business Re-focus on Iberian market Distribution of extraordinary dividend 6
  6. INVESTOR DAY – Endesa Generacion Sa – slide 6
    Endesa recently announced a reorganisation Today Envisaged new structure Enel Enel 100% 100% 100% Enel Energy Enel Energy Endesa Europe Europe Latam 92.06% 92.06% 20.30% Endesa 40.32% Endesa Enersis 100% Endesa Latam…
  7. INVESTOR DAY – Endesa Generacion Sa – slide 7
    Shareholders will receive a record dividend Monetisation of LatAm investments at a premium to their 8,253m maximum value in the last 3 cash dividend (1) Dividend years payment 14,606m Additional dividend to achieve a 6,353m…
  8. INVESTOR DAY – Endesa Generacion Sa – slide 8
    Endesa refocused on its leading position in the Iberian market Main operating Key financials figures (2013) (1) (2013 reported) (1) Regulated Largest distributor of electricity in 112 TWh 21.5bn revenues Distribution…
  9. INVESTOR DAY – Endesa Generacion Sa – slide 9
    Endesa: a pure player in the Iberian market Industrial plan focused on the Iberian market More efficient capital structure Visible and stable cash flow as a base for attractive dividend policy 10
  10. INVESTOR DAY – Endesa Generacion Sa – slide 10
    2. Market and sector trends Jos D. Bogas
  11. INVESTOR DAY – Endesa Generacion Sa – slide 11
    Market and Sector Trends Improving macroeconomic environment with attractive prospects Spanish GDP Spanish unemployment rate 10Y bond yield (%) 0.6% 27% 8 0.4% Spanish 7 0.2% 0.2% 26% German 0.1% 26% 26% 6 26% 5 25% 26%…
  12. INVESTOR DAY – Endesa Generacion Sa – slide 12
    Market and Sector Trends Significant signs of recovery in electricity demand Accumulated electricity consumption index Total mainland demand growth for industrial customers (12 months) September 2014 (LTM, yoy, index with year…
  13. INVESTOR DAY – Endesa Generacion Sa – slide 13
    Market and Sector Trends Stable and financially balanced electricity sector Energy reform virtually completed with potential upsides System revenues minus costs (bn) 1,2 1.2 No further tariff deficit Surplus 0.2 0,2 0,5…
  14. INVESTOR DAY – Endesa Generacion Sa – slide 14
    3. Endesa key strengths Jos D. Bogas
  15. INVESTOR DAY – Endesa Generacion Sa – slide 15
    Endesa Key Strengths Endesa is focused on shareholder value leveraging 5 key distinctive strengths Highly regulated business 1 Uniquely positioned Proven track record of to capture growth 5 2 operational efficiency…
  16. INVESTOR DAY – Endesa Generacion Sa – slide 16
    Endesa Key Strengths 1 Significant portion of EBITDA from regulated activities 2013 EBITDA breakdown (1) Distribution 51% Generation & Supply 39% Regulated EBITDA (1) 65% Non-mainland generation 10% (1) 2013…
  17. INVESTOR DAY – Endesa Generacion Sa – slide 17
    Endesa Key Strengths Proven track record of operational efficiency 2 Distribution cash cost (1) Generation cash cost (2) Supply cash cost (/customer) (k/MW) (/customer) -43% -13% -21% 94 56 32 49 25 53 (3) 2009…
  18. INVESTOR DAY – Endesa Generacion Sa – slide 18
    Endesa Key Strengths Integrated management of generation, purchases and supply 3 Integrated Key factors Endesas electricity unit margins (1) management (/MWh) Diversified, flexible fuel Procurement 49,9 procurement 44,3…
  19. INVESTOR DAY – Endesa Generacion Sa – slide 19
    Endesa Key Strengths Proven margin resilience even during an unprecedented adverse market context 3 Adverse market conditions 20112013 Endesa EBITDA evolution 20112013 impact Demand contraction -3.6% (bn) 4.0 Reduced…
  20. INVESTOR DAY – Endesa Generacion Sa – slide 20
    Endesa Key Strengths Optimised capital structure 4 Net debt (bn) Average cost 6.4% of debt Average cost 3.0% of debt 7.5 4.5 Re-leverage 6.4 -3.4 -8.3 8.3 Pre-transaction LatAm Proceeds Debt incurred for…
  21. INVESTOR DAY – Endesa Generacion Sa – slide 21
    Endesa Key Strengths Uniquely positioned to capture growth 5 opportunities in the Iberian market Potential growth drivers Endesas position Increase in Largest electricity supplier and distributor demand / prices 60% of…
  22. INVESTOR DAY – Endesa Generacion Sa – slide 22
    4. New industrial plan Jos D. Bogas
  23. INVESTOR DAY – Endesa Generacion Sa – slide 23
    New Industrial Plan New trends are opening business opportunities in mature markets Potential implications for Spains Trends energy industry Economy Improving macroeconomic conditions Recovery of electricity and gas demand…
  24. INVESTOR DAY – Endesa Generacion Sa – slide 24
    New Industrial Plan Commodities to remain stable throughout the plan period Brent Coal API2 (/bbl) (/ton) 110 107 104 100 87 81 78 83 2013 2014E 2015E 2016E 2013 2014E 2015E 2016E Gas TTF CO2 price (/mmbtu) (/ton)…
  25. INVESTOR DAY – Endesa Generacion Sa – slide 25
    New Industrial Plan Slight improvement in market fundamentals Electricity Demand in Spain Mainland Thermal Gap in Spain - Mainland (% annual growth) (TWh) +10% 69 68 Demand (TWh) 245 250 255 62 61 1.8% 2.0% -0.4%…
  26. INVESTOR DAY – Endesa Generacion Sa – slide 26
    New Industrial Plan The new industrial plan is based on four key priorities Realise full potential of new regulation Enhance operational efficiency Key strategic priorities Maximise integrated generation-supply value…
  27. INVESTOR DAY – Endesa Generacion Sa – slide 27
    4.1. Regulated business: Distribution Jose Luis Marn
  28. INVESTOR DAY – Endesa Generacion Sa – slide 28
    Distribution Largest distributor in Iberia Endesas presence in distribution Key operational figures (2013) Distribution lines 323,631km High voltage (66 kV) 19,566km Medium voltage (1-66 kV) 117,543km Catalonia Aragon Low…
  29. INVESTOR DAY – Endesa Generacion Sa – slide 29
    Distribution Proven track record of stable cash flow generation EBITDA minus NET CAPEX (20112013) (bn) 1.3 1.3 1.3 Robust cash flow generation Resilience in adverse market conditions 2011 2012 2013 30 Note:…
  30. INVESTOR DAY – Endesa Generacion Sa – slide 30
    Distribution A new regulatory framework has been established with a more stable and transparent remuneration New regulatory framework RAB-based mechanism Standard costs for opex and capex Remuneration rate: 6.5% nominal…
  31. INVESTOR DAY – Endesa Generacion Sa – slide 31
    Distribution New regulation RAB-based with standard values and ex-ante recognition of investments Overview of remuneration framework for distribution activities applicable from 2015 First regulatory period: 20152019 (6-year…
  32. INVESTOR DAY – Endesa Generacion Sa – slide 32
    Distribution Action plan for Distribution Realise full potential of new regulatory 1 framework 2 Continuous focus on cost efficiencies 3 Full deployment of proven smart meter technology 4 Improve networks and…
  33. INVESTOR DAY – Endesa Generacion Sa – slide 33
    Distribution 1 Realise full potential of new regulatory 2 framework 3 Potential sources for incremental 4 Opportunity Economies of scale: the largest distributor in Spain to outperform Cost efficiencies achieved to date vs.…
  34. INVESTOR DAY – Endesa Generacion Sa – slide 34
    Distribution 1 Continuous focus on cost efficiencies 2 3 4 Key drivers Cash cost (1) (/customer) 94 -43% Continuous BPS leveraged on new Enel 53 organisation 2009 2013 Flexible organisational structure based on…
  35. INVESTOR DAY – Endesa Generacion Sa – slide 35
    Distribution 1 Full deployment of proven smart meter 2 technology 3 4 Rationale Smart meters Enel-based technology with 39 million smart meters installed worldwide Fostering further value potential of smart grids and new…
  36. INVESTOR DAY – Endesa Generacion Sa – slide 36
    Distribution 1 Improve networks and develop new 2 innovative technologies 3 4 Description & Benefits Timing Network reliability Modular improvement Network mesh improvement investment along Enhanced reliability, safety and…
  37. INVESTOR DAY – Endesa Generacion Sa – slide 37
    Distribution Distribution capex for the action plan of 1.1bn over 3 years Network maintenance: approximately 50% of the plan Distribution capex plan The remainder will be primarily dedicated to: Smart meters deployment and…
  38. INVESTOR DAY – Endesa Generacion Sa – slide 38
    4.2. Regulated business: Non-mainland generation Manuel Morn
  39. INVESTOR DAY – Endesa Generacion Sa – slide 39
    Non-mainland Generation Endesa is the market leader in non-mainland generation Endesas presence in non-mainland generation Endesas key operational figures (2013) Mabn Isla de Menorca Total electricity production 12.3 TWh Son…
  40. INVESTOR DAY – Endesa Generacion Sa – slide 40
    Non-mainland Generation Continued focus on efficiency aligned with regulators aim to reduce system costs Key drivers Cash cost (k/MW) Optimisation of services contracts: In-sourcing Contracts renegotiation 58 Moving from fixed…
  41. INVESTOR DAY – Endesa Generacion Sa – slide 41
    Non-mainland Generation New regulation framework underway with a more stable and transparent remuneration... Key features from the new regulatory framework RAB-based mechanism Remuneration rate: 6.5% pre-tax for the first…
  42. INVESTOR DAY – Endesa Generacion Sa – slide 42
    Non-mainland Generation ...that focuses on maximising efficiencies Overview of remuneration framework applicable from 2015 First regulatory period valid until 2019 Remuneration rate over net Regulatory Asset Base (RAB) of 6.5%…
  43. INVESTOR DAY – Endesa Generacion Sa – slide 43
    Non-mainland Generation Action plan for non mainland generation 1 Promote a regulatory improvement 2 Continuous focus on operational efficiency 3 Optimise current generation portfolio 4 Position islands as a nest of…
  44. INVESTOR DAY – Endesa Generacion Sa – slide 44
    4.3. Liberalised business: Generation and supply Jos Bogas
  45. INVESTOR DAY – Endesa Generacion Sa – slide 45
    Liberalised business Endesas liberalised business is uniquely positioned Leadership in generation with competitive mix Leadership in the supply market Integrated management of generation-supply portfolio Additional value…
  46. INVESTOR DAY – Endesa Generacion Sa – slide 46
    Liberalised business Market leader by generation output with competitive mix Endesas installed capacity Endesas generation mix in mainland Spain in mainland Spain (1) (GW, 2013) (% 2013) Fuel-Gas 3% 100% 100 % CCGT 3% CCGT…
  47. INVESTOR DAY – Endesa Generacion Sa – slide 47
    Liberalised business Market leader in supply Endesas position Endesas number of contracts (2013) (2013) Electricity 11.4 million electricity customer (1) VAS Leader in Spain 1.5 2nd player in Portugal Gas Gas 1.2 1.2…
  48. INVESTOR DAY – Endesa Generacion Sa – slide 48
    Liberalised business The integrated management of the liberalised business optimises value and enables resilient margins Energy management Key success factors... Long term expertise in the liberalized market Pass through…
  49. INVESTOR DAY – Endesa Generacion Sa – slide 49
    Liberalised business Active fuel procurement creates additional value Gas procurement contracts (current portfolio) Main Actions Rasgas Sonatrach 16% 16% Active management of gas and coal to provide an additional source of…
  50. INVESTOR DAY – Endesa Generacion Sa – slide 50
    Liberalised business Regulatory reform is almost complete, with potential upside from outstanding items Outstanding items Mothballing mechanism to solve current market overcapacity New capacity payment scheme concerning…
  51. INVESTOR DAY – Endesa Generacion Sa – slide 51
    Liberalised business: Generation Action plan for generation 1 Continuous focus on cost efficiencies 2 Nuclear plants useful life extension Environmental investment on selective 3 coal generation plants Maintain options for…
  52. INVESTOR DAY – Endesa Generacion Sa – slide 52
    Liberalised business: Generation 1 Continuous focus on cost efficiencies 2 3 Nuclear Hydro Coal CCGTs Unit Cash cost (k/MW) 56 -13% Prepare the Continuous Contracts Staff flexibility 49 plants for long improvement…
  53. INVESTOR DAY – Endesa Generacion Sa – slide 53
    Liberalised business: Generation 1 Continuous focus on cost efficiencies 2 3 Coal power and CCGT plants (Solomon Associates) Potential Potential under-spending Pacesetters Typical range over-spending (20% of plants) (best…
  54. INVESTOR DAY – Endesa Generacion Sa – slide 54
    Liberalised business: Generation 1 Nuclear plants useful life extension 2 3 2013 Endesas nuclear position Action Plan Asc I and II Garoa (1,033 MW and 1,027 MW) Promote the extension of useful life 50 (466 MW) (100% and 85%…
  55. INVESTOR DAY – Endesa Generacion Sa – slide 55
    Liberalised business: Generation 1 Environmental investment in selective coal 2 3 generation plants Endesas coal plants enjoy the most competitive position in the thermal gap Action Plan Endesas estimated performance of plants…
  56. INVESTOR DAY – Endesa Generacion Sa – slide 56
    Liberalised business: Generation Generation capex for the action plan of 1bn over 3 years Generation capex Around 80% is equally split between to nuclear (stress test completed by 2016) and maintenance for the rest of…
  57. INVESTOR DAY – Endesa Generacion Sa – slide 57
    Liberalised business: Supply Action plan for supply Trends Action plan Short term 1 Reinforce leading position in electricity and grow in gas Increased sophistication of customer base: Continuous focus on cost New…
  58. INVESTOR DAY – Endesa Generacion Sa – slide 58
    Liberalised business: Supply 1 Reinforce leading position in electricity 2 and grow in gas 3 4 Objectives by market Electricity Customers (m) Sales (TWh) 11.4 96.1 Reinforce leadership in Portugal & 0.2 9.0 Spain Others…
  59. INVESTOR DAY – Endesa Generacion Sa – slide 59
    Liberalised business: Supply 1 Continuous focus on cost efficiencies 2 3 4 Main actions Unit Cash Cost (/customer) Call centers (integration and full (/customer) Customer call recording) service Externalisation of offices…
  60. INVESTOR DAY – Endesa Generacion Sa – slide 60
    Liberalised business: Supply 1 Further development of new products and 2 services 3 4 VAS portfolio VAS Action Plan Energy related maintenance services 65 Significant B2C Equipment solutions Gross increase…
  61. INVESTOR DAY – Endesa Generacion Sa – slide 61
    Liberalised business: Supply 1 Create value from future growth 2 opportunities 3 4 Action Plan Innovation Further develop technological 360 services based on Internet Energy efficiency multi service platform of Things…
  62. INVESTOR DAY – Endesa Generacion Sa – slide 62
    5. Financial overview Paolo Bondi
  63. INVESTOR DAY – Endesa Generacion Sa – slide 63
    2013 Endesa pro forma financials reflects impacts of 2014 for comparison purposes Most relevant impacts Reported 2013 m Spain & Portugal Pro Forma IFRS 11 LatAm Extr. Change 2013 Endesa restructuring dividend Revenues 21,512…
  64. INVESTOR DAY – Endesa Generacion Sa – slide 64
    Relevant factors to be considered for adequate comparisons from 2014 onwards EBITDA 2014 (E): 2.9bn Extended D&A life to reflect the expected useful life D&A of plants Capital Structure Releveraging Associates…
  65. INVESTOR DAY – Endesa Generacion Sa – slide 65
    Modification of D&A reflects expected useful life extension of Nuclear and CCGT plants D&A life CCGTs 40 years 25 years Current D&A life From Q4 2014 Nuclear 50 years 40 years Current D&A life From Q4 2014 Coal…
  66. INVESTOR DAY – Endesa Generacion Sa – slide 66
    A more efficient capital structure derived from releveraging the company 67
  67. INVESTOR DAY – Endesa Generacion Sa – slide 67
    New debt conditions allows Endesa to have the lowest cost of debt amongst peers with a comfortable debt maturity Gross balance of maturities outstanding at June 30, 2014 adjusted for 6.4bn extraordinary dividend: 7,874m (1) (2) m…
  68. INVESTOR DAY – Endesa Generacion Sa – slide 68
    Capex plan of 2.5bn over 3 years with more than 50% devoted to regulated businesses Investment plan 1.0 0.9 0.6 Annual Capex (bn) 2014E 2015E 2016E 69
  69. INVESTOR DAY – Endesa Generacion Sa – slide 69
    Strong cash flow generation will support dividend distribution and future growth 20152016 cumulative operating cash flow generation bn 6.0 4.1 (1.9) Cumulative Cumulative Cumulative 2015-16E EBITDA 2015-16E Capex 2015-16E…
  70. INVESTOR DAY – Endesa Generacion Sa – slide 70
    6. Guidance and closing remarks
  71. INVESTOR DAY – Endesa Generacion Sa – slide 71
    A very attractive dividend policy with a minimum annual DPS growth target of 5% New dividend policy 2014 ordinary dividend of 0.76/share (1) Amount Minimum annual DPS growth target of 5% Bi-annual dividend payment Timing…
  72. INVESTOR DAY – Endesa Generacion Sa – slide 72
    Guidance 20142016: creating value for shareholders 2014 2015 2016 EBITDA 2.9bn 2.9bn 3.1bn Net Income n.m. 1.0bn 1.1bn DPS 0.76/share Minimum 5.0% annual growth 73
  73. INVESTOR DAY – Endesa Generacion Sa – slide 73
    Closing remarks 74
  74. INVESTOR DAY – Endesa Generacion Sa – slide 74
    Investor day 8 October, 2014
  75. INVESTOR DAY – Endesa Generacion Sa – slide 75
    Annexes
  76. INVESTOR DAY – Endesa Generacion Sa – slide 76
    Key assumptions Key assumptions General macro Unit 2014E 2015E 2016E Spain GDP growth y-o-y % 0.8% 1.4% 1.6% Portugal GDP growth y-o-y % 0.9% 1.3% 1.5% FX US/ 1.34 1.32 1.31 Spain CPI % 0.2 0.6 1.2 Portugal CPI % 0.2 1.0 1.3…
  77. INVESTOR DAY – Endesa Generacion Sa – slide 77
    Pro-forma Income Statement for 2013 A B C: A+B D E F: C+D+E Adjustment for Reported Adjustment for Restated Adjustment for extraordinary Pro-forma 2013 IFRS 11 2013 LatAm sale dividend 2013 (mm) Income 31,203 (263) 30,940 (9,415) -…
  78. INVESTOR DAY – Endesa Generacion Sa – slide 78
    Pro-forma Balance Sheet as of December 31, 2013 A B C: A+B D E F: C+D+E Adjustment for Reported Adjustment for Restated Adjustment for extraordinary Pro-forma (mm) 2013 IFRS 11 2013 LatAm sale dividend 2013 Assets Non-Current Assets…
  79. INVESTOR DAY – Endesa Generacion Sa – slide 79
    Focus on Associates equity method consolidation Installed Book value Change in capacity 2013 2014 Company Stake Description (MW) (m) (1) due to IFRS11 Enel Green Power Espaa 40% Renewable capacity 1,900 825 Endes Gas T&D 20% Gas…
  80. INVESTOR DAY – Endesa Generacion Sa – slide 80
    Revenues and Costs of the System m 2014E 2015E 2016E Revenues 19,374 19,423 19,984 Access Revenues 14,641 14,677 14,781 Capacity Payments Balance 705 691 1,045 Capacity payments revenues 1,462 1,470 1,483 Capacity payments 757…

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