Elia group full year results 2013

Full year 2013 results

Analyst meeting

Brussels, 28 February 2014

2 / 30 Elia Group full year results 2013 / Brussels, 28.2.2014

Disclaimer

- This presentation is only provided for general information purpose about Elia and its

activities. The included statements are neither reported results nor other historical

information. They are not provided to serve as the basis for any evaluation of Elia, and

cannot be binding and/or enforceable upon Elia.

- As forward-looking statements, they are subject to assumptions, risk and uncertainties,

actual future results may differ from those expressed in or implied by such statements.

- Although Elia uses reasonable cares to present information which is up-to-date to the

best of Elia's knowledge, Elia makes no representation or warranty whatsoever as to

the adequacy, accuracy, completeness or correctness of such information.

- Elia will not be liable for any consequences arising from or related to the use or

interpretation of the information contained or absent in this presentation.

1.eghts 2013

• Key highlights 2013

• Operational highlights

• Financial results

• Outlook 2014

Key highlights 2013


• Adjusted transmission tariffs for Elia have been approved by the CREG

• Nearly full realization of ambitious investment plans in both countries

• Continuity of supply maintained during winter season in both areas

Operational

• Good results for the Group:

• Significant increase results 50Hz transmission

• Lower results for Elia transmission due to low Belgian OLO

• Proposed dividend of €1,54 per share

• New consolidation method for 50Hertz used as from 2014

Financial

• Establishment of new entity by Elia and 50Hertz to reinforce the position of the Elia Group for asset and share deals, by scouting for such deals and developing two lines of businesses: Consulting & Services and EPC/EPCM projects

• Regulatory status of play

• Investment programme for the Elia Group

• Changing government in Germany results in changing energy policy?

• Decisions federal government Belgium relating to the energy law

Outlook

Key highlights 2013

Operational highlights 2013


50Hertz’s network: 58,1 TWh

(58,2 TWh)

• Mild weather

• Decentralised generation

• Renewables

Elia’s network: 80,5 TWh

(81,7 TWh)

• Mild weather

• Decentralised generation

(1) The Elia consumption indicator covers the majority of electricity consumption.

It includes all production directly connected to the Elia grid plus net import-export balance

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

8,0

9,0

jan feb mar apr may june july aug sep oct nov dec

TWh

2010 2011 2012

0,0

1,0

2,0

3,0

4,0

5,0

6,0

jan feb mar apr may june july aug sep oct nov dec

TWh

2010 2011 2012

Energy consumption

8 / 30 Elia Group full year results 2013 / Brussels, 28.2.2014 8

France Luxembourg

Netherlands

Hamburg

Berlin Poland

Czech Republik

Denmark

7,8 TWh

0,7 TWh

8,8 TWh

4,4 TWh

2,4 TWh

0,8 TWh

1,2 TWh 2,5 TWh

0,5 TWh

5,4 TWh

2,4 TWh

1,4 TWh

8,8 TWh

27,9 TWh

Import - export

• Significant imports in Belgium due to continued outages of nuclear plants up to

June 2013

• The increased RES share within control zone 50Hertz results in important exports


43%

31%

1%

14%

11%

Replacements Internal consumption Interconnections Integrating renewables Non electrical investments

Elia group: Investments

Elia 50Hertz

• Investments in Belgium are mainly driven by replacements and the internal

consumption.

• In Germany, the integration of renewables is by far the most important driver.

3% 6%

89%

2%

€ 402,0 M

€ 247,7 M onshore

€154,3 M offshore

€ 202,7 M


Elia-TSO: Major investments

Large Infrastructure projects

• BRABO • Reinforcement around port of

Antwerp and increased capacity with the Netherlands

• Permit process ongoing

• Expected commissioning 2017-2018

• ALEGRO • HVDC interconnection with

Germany

• Increased market liquidity, reliability and security of supply

• Walloon government adopted the draft revision of the sector plan

• Expected commissioning 2019

Extension CAPEX driven by integration of renewables & localisation of generation

• Increasing renewables on- and offshore need to be integrated

• Localization of the power plants change

Replacement CAPEX

• Mostly investments in the high and low voltage substations

• Phase out of old population of assets commissioned before 1980’s

Extension CAPEX driven by internal

consumption

• Investments due to the change in profile of the power needs, even if energy has decreased over time,

• Delocalization of the electricity needs


BALTIC 2

• Connection of 288 MW offshore wind park under construction

• 3 cables, spanning 120km offshore and 16 km onshore

• Expected to become operational in 2014

SOUTH-WEST CONNECTOR

• Section Vieselbach – Altenfeld : under construction

• Section Altenfeld – Redwitz: Plan approval in preparation

• Decision expected 3rd quarter 2014

BARWALDE - SCHMOLLN

• Under construction

• Innovative construction method minimizing costs

• Expected to become operational in autumn 2014

UCKERMARKLINE & BERLIN NORTH

RING

• Plan approved on first section Berlin North Ring

• Other section and Uckermarkline in ongoing plan approval phase

• Decisions expected in 2014

SOUTH-EAST DC PASSAGE

• Project necessity defined and legally approved

• Part of German Grid Need Act

• Joint project with Amprion (450 km)

• Preparation of regional planning

50Hertz: Major Investments

Financial results 2013


Corporate structure and shareholders’ structure

Free float1

52.26%

Publipart

2.52%

Publi-T

45.22%

Elia System Operator NV

Elia Asset NV

99.99%

Elia Engineering

100%

Elia Re

100%

CASC

8.33%

HGRT

24.50%

Coreso

22.49%

APX

29.02%

Eurogrid International

CVBA

60.00%

Eurogrid GmbH

100%

Gridlab GmbH

100%

E offshore A

LLC

100%

50Hertz

Transmission

100%

Coreso

10.00%

EMCC

20.00%

50Hertz

Offshore

100%

CAO

12.50%

Atlantic Grid

Investment A

Inc. - 100%

Atlantic Grid A

Interm. Holdco

10.00%

Atlantic Grid A

Operational

Holdco

EEX

2.25%

Main change is the new participation of 50Hertz in the European Energy

Exchange (EEX)

Ampacimon

36.81%


Elia group : consolidated key figures

• Positive evolution in EBIT(DA) due to improved EBITDA in both 50Hertz and Elia

• Finance result positively impacted by lower interest charges in Belgium and a

change in discounting of auction revenues in Germany

• Taxes mainly increase due to the 2012 one-off effect in the figures of Elia

• Increase in the net profit of 13,4% to € 175,8 M as a result of the significant

increase in Germany, partly compensated by the decrease in Belgium

(in € Mio) 2013 2012 Change

Total revenues 1.389,5 1.306,6 6,3%

EBITDA 486,9 455,5 6,9%

(R)EBIT 345,4 305,4 13,1%

Finance result (108,5) (134,8) -19,5%

Taxes (61,5) (16,2) 279,6%

Net profit 175,8 155,0 13,4%

58 %

42 %

2012

Elia 50Hertz

44% 56

%

2013

Net profit


Elia: 2013

• Total revenues, EBIT(DA) and taxes are impacted by the one-off effect in 2012 from the recognition of

the deferred tax benefit on the transferable notional interest deduction reserve

• Finance result down mainly due to lower interests to be paid on the loan with floating interest rates

• Regulated profit (€ 75,6 Mio) fairly in line with 2012 (- 2,1%), net profit negatively impacted by the

important discount effect of the recoverable pension cost last year


Total revenues 832,7 770,1 8,1%

EBITDA 313,9 291,6 7,6%

(R)EBIT 209,3 188,6 11,0%

Finance result (109,2) (117,5) -7,1%

Taxes (23,4) 17,5 -233,7%

Net profit 77,1 89,2 -13,6%

53,5 63,8

51,6 44,5

16,2

16,1

13,5 19,3

7,7

6,3

8,2 6,9

3,8 5,3

2,1

-1,5

0,1

-0,4

5,59% 5,96%

5,35% 5,17%

3,44%

4,21%

2,98% 2,43%

-10

0

10

20

30

40

50

60

70

80

90

100

2010 2011 2012 2013

In €

Mio

Regulated returns

Fair remuneration Goodwill

Incentive efficiency Incentive CAPEX

Other ROE

OLO


Elia: 2013

3.743,3

3,763,0

3,807,3

3.935,1

202,7

- 96,8

62,5

- 23,3

- 17,3

2010

2011

2012

2013

In € Mio

Regulated asset base

New investments

Depreciations

Changes in WC

Goodwill decomissioning

Other

• Results are still suffering from low long term Belgian interest rate (2,43% in 2013 vs. 2,98% in

2012), partly compensated by higher goodwill decommissioning

• Negative effect from the recoverable pension cost is due to the important discount effect in 2012

89,2

77,1

(7,1) 5,8

1,5 (0,9) (1,2)

(4,7)

(10,1) 4,6

Net profit evolution 2012 - 2013


• Increased EBIT(DA) mainly a result from the increased cost recovery for investments, both in the

old (T-2) and new system (T-0)

• Finance result positively impacted by discounting of auction revenues

50Hertz: 2013


Total revenues 557,6 539,4 3,4%

EBITDA 173,1 163,9 5,6%

(R)EBIT 136,1 116,8 16,5%

Finance result 0,7 (17,5) -104,0%

Taxes (38,2) (33,6) 13,7%

Net profit 98,7 65,8 50,0%

36,4 30,7

42,5

13,06%

11,01%

15,24%

0

5

10

15

20

25

30

35

40

45

2011 2012 2013

In €

Mio

(60%

)

Dividend yield

Dividend Yield


50Hertz: 2013

110,7

166,4

(15,4) 14,7

15,8

18,9 (14,7) 20,9

14,3

5,4 (7,2) 3,0

Net profit evolution 2012 -2013 (1)

(1) Numbers are based on 100% of 50Hertz

2.699,9

3.045,4

3.064,0

402,0

-92,4

-313,4

22,0

2011

2012

2013

In € Mio

Regulated asset base (1)

New investments

Depreciations

Changes in WC

Other

• Net profit mainly boosted by the increased cost recovery for investments, lower regulatory risk

provisions and the discounting of auction revenues, partly offset by no EEG bonus and lower

result on the Korridor model

• Regulated asset base growing with the important investments, however offset to a large extent by

the improving EEG prefinancing position


Elia Group: Consolidated key figures

1.997,6 2.244,0

298

298 495

495 60

60 155,3

4

2012 2013

In €

Mio

Debt

Short termborrowings 50Hertz

EIB Elia

Shareholder loan

Eurobond 50Hertz

Eurobond Elia

16,1%

18,0%

65,9%

Maturity

Within 1 y

Within 3 - 5 y

After 5 y

• Debt within Elia increased due to the refinancing of the € 500 Mio Eurobonds with the new € 550

Mio (15 y) and € 200 Mio (20y) Eurobonds.

• Short term borrowings decreased significantly within 50Hertz as a result of the positive evolution

on the prefinancing of the EEG mechanism

• Maturity profile improved significantly with the new Eurobonds. In 2014, a € 500 Mio bond is

coming to maturity


Elia Group: Consolidated key figures

(in € Mio) 2013 2012

Net debt 2.773,8 2.910,8

Leverage (D/D+E) 55,31% 57,99%

REBITDA/Gross

Interest 3,96 3,08

Net debt / REBITDA 5,61 6,39

Average cost of debt 3,94% 4,93%

% fixed of gross debt 84,37% 83,89%

Standard & Poor’s rating Elia Group:

Long Term: A-

Outlook: Stable

Moody’s rating German segment:

Long Term: Baa1

Outlook: Stable

• Decrease in net debt is mainly a result of the significant improvement in the prefinancing of the

EEG mechanism by 50Hertz

• Average cost of debt decreased thanks to the replacement of the Eurobond and low interest

charges that were due on the floating interest loan

• Ratings were again confirmed for both Elia and 50Hertz


1,38 1,40 1,47 1,47

1,54

79,3% 68,4% 64,5%

57,4% 53,1%

2009 2010 2011 2012 2013

€ /

sh

are

Dividend Pay-out ratio

Total amount

paid out (€m) 66,6 84,5 88,7 89,0 93,3

Proven track record of growing dividend over time, with a compound annual growth rate

of 2,22%

Elia Group: Dividend policy

CAGR = 2,22%


Impact changed method of consolidation for 50Hertz

as of 2014 Proportionate

consolidation Equity pick-up Change

Total revenues 1.389,5 832,7 (556,8)

EBITDA 487,0 313,9 (173,1)

(R)EBIT 345,4 209,3 (136,1)

Finance result (108,5) (109,2) (0,7)

Taxes (61,5) (23,4) 38,2

Share of profit of equity accounted

investees 0,3 98,7 98,7

Net profit 175,8 175,8 0,0

Total assets 6.532,2 5.555,7 (976,5)

Net financial debt

2.733,9 2.628,4 (105,5)

• No impact on S&P rating – consistently consolidating 50Hertz at 100%

• Due to mechanical adjustment, ratio’s will look slightly worse. However no impact on

financing as both Elia and 50Hertz are strictly ringfenced

Outlook 2014


• CREG wants to formulate a new tariff methodology by the end of 2014, including a framework for the offshore investments

• A draft methodology will be issued by the CREG in June 2014

• Consultation round will be organized by the CREG from June up to the fall of 2014

• Afterwards the CREG will issue a new tariff methodology by the end of the year which will be used for the period 2016-2020

Belgium

• New tariff period has started as from 1 January 2014

• Positive changes in the Korridor model

Germany

Regulatory state of play


35%

24% 2%

26%

13%

Replacements Internal consumptionInterconnections Integrating renewablesNon electrical investments

Elia Group: Investments 2014

Elia 50Hertz

• Integrating renewables and investments due to generation localization are becoming

more important in Belgium.

• In Germany, investments increase year-over-year with 25,7%, mainly driven by the

offshore connections

3% 3%

89%

5%

€ 505,2 M

€ 257,9 M onshore

€ 247,3 M offshore

€ 252,5 M


Elia TSO – main investment projects

• Auditor of the Council of State issued negative advices on the Flemish Regional Spatial

Plan, which includes the approval of the Stevin project

• Possible repercussions on Belgian Offshore Grid and Nemo

Brabo 4

Nemo - HVDC Connection UK 3

1 Stevin

5 Allegro – HVDC Connection Belgium-Germany

Belgian Offshore Grid 2

6 East Loop reinforcement

7 Interconnection BE-Lux

8 Reinforcement Avelgem


50Hertz – main investment projects

Bertikow – Pasewalk 9

Uckermark-line Neuenhagen – Bertikow 8

6 3rd interconnector to Poland

10 Offshore connections in Baltic Sea

380-kV-Nordring Berlin 7

11 Combined Grid Solution

3 Offshore connection Baltic 2

Completed projects in 2013 and 2012 1

2 Bärwalde – Schmölln

12 Wolmirstedt – Perleberg

4 South-West interconnector

5 Grid connection UW Förderstedt

1

6

8

9 1

7

10

11 3

2

4

5

1

Fertig gestellt

12

1

1

1

1

1

1

Existing grid

Planning procedure

Approval procedure

Under construction

Completed

Power Plant

Substation

(50Hertz)

Substation

(not 50Hertz)


Belgium: Proposed changes in the Energy law

28

Developments in the changing energy environment give rise to

proposals from the legislator on adapting the energy law. Main

topics of those resolutions:

- Plan Wathelet:

To further ensure the security of supply, the plan is introducing

the concept of strategic reserves. Role of Elia : yearly

consultation about the needed volumes and activation of the

strategic reserves

- Change in corporate governance rules Elia

Composition of the different committees advising the Board of

Directors will be changing

- Offshore

- Support mechanism for new wind farms has been decided upon

- Elia will be granted the right to ask for the concession to

construct the offshore platforms.

0

2000

4000

6000

8000

10000

12000

14000

January 2014 2014/2015 2015/2016 2016/2017

MW

Installed capacity non-profiled units

Max

Min

- 3.100 MW


Until now only key parameters have been established.

The legislative process has not yet started. Entry into

force is foreseen for August 2014.

- RES share of electricity consumption to be between 40%

and 45% by 2025 and between 55% and 60% by 2035

(previously minimum targets were set: 2020 35%; 2030

50%)

- A binding corridor for the deployment of renewables

energies

- Offshore wind target: 6.5 GW by 2020 (previously 10

GW by 2020)

- Feed-in tariffs remain method of choice, mechanisms

for quantitative expansion control to be introduced by

2018 (tenders to be tested for large solar power systems

by 2016)

- Mandatory “market premium” with sliding premium for

new RES plants

Germany: Main outline of the proposed amendment

of the Renewable Energies Act (EEG)

Line of attack of the Energiewende remains unchanged.

8,33

13,53 14,11

20,36

23,58

2,047

3,530 3,592

5,277

6,240

0

5

10

15

20

25

2010 2011 2012 2013 2014

EE

G s

urc

harg

e [

ct/kW

h]

Costs

[B

n.

€]

Costs EEG surcharge

Questions & Answers

Brussels, 28.2.2014

Tom Schockaert

Investor Relations

+32 (0)2/546.75.79

[email protected]

www.eliagroup.eu

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