E.ON in the Czech Republic IXIS Securities Investor Seminar

Transcription

1 E.ON in the Czech Republic IXIS Securities Investor Seminar Michael Fehn Chairman of the Board of Directors E.ON Czech Holding AG 21. November 2005, Prague

2 Time schedule 10:30 11:15 Presentation of E.ON Czech Group 11:15 11:45 Discussion 11:45 13:00 Lunch time and discussion Page 2

3 Agenda I. Overview of Power and Gas Markets in the Czech Republic II. III. E.ON Czech Group E.ON Central Europe East Page 3

4 Overview of Power and Gas Markets in the Czech Republic

5 Czech Republic - Overview Current Country Overview General Data President: Václav Klaus Size: 78,866 km 2 Population: 10.2 million Population density: 130 inhabitants/km 2 Capital: Prague (1.2 m residents) Economic Data CZK GNP (KP): 682,127 million 23,353 million Economic growth: 4.4% (2004: 4.4%) Inflation rate: 2.4% (2004: 2.8%) Unemployment: 8.6% (2004: 8.3%) CZK/ : (as of ) Source: Czech Statistics Office Page 5

6 General information about Power and Gas market Power 2004 Gas 2004 Transmission provider: ČEPS 8 regional distribution companies Transmission provider : Transgas 8 regional distribution companies Power consumption: 56.4 TWh Gas consumption: 9.7 bn m 3 Installed capacity: 17,434 MW There from : 73 % ČEZ 27 % others producers Power import: 9.8 TWh Power export: 25.5 TWh Gas production: 0.4 bn m 3 Storage capacity: 2.1 bn m 3 Gas import: 10 bn m 3 Gas transit: 43.2 bn m 3 Page 6

7 Power Market Hydro 2.3 Net Generation 2004 Coal 62.7% Large Industry 58% Net Consumption 2004 Households 27% Gas and Steam 3.2% Nuclear 31.8% SMI 15% Net Generation: TWh Net Consumption: 56.4 TWh Source: CTK Business News, 2005 Page 7

8 Power Interests in the Czech Republic (2004) PRE 5,670 GWh Market share: 12 % PRE-H 50.78% Honor Invest 34.00% MPSV 14.19% SCE 6,438 GWh Market share: 13 % CEZ 56.92% RWE 4.42% Envia Mit 29.16% VNG 2.71% City Most 2.57% City Teplice 1.54% ZCE 4,401 GWh Market share: 9 % CEZ 99.10% ZCE Plzeň STE SCE Ústí nad Labem PRE Praha České Budějovice Hradec Králové VCE E.ON CZECH Group Brno SME E.ON Czech Group 12,515 GWh Market share: 25 % Ostrava STE 6,213 GWh Market share: 12 % CEZ 97.7% Cities 1.00% VCE 6,196 GWh Market share: 12 % CEZ 98.84% Cities 0.22% SME 8,296 GWh Market share: 17 % CEZ 89.38% EDF International 9.20% Page 8

9 Gas Interests in the Czech Republic (Market / Shareholdings) ZCP 8,282 GWh Market share: 8 % RWE 50.1% ECH 47.8% JCP 4,383 GWh Market share: 4 % RWE 46.7% OÖF 39.1% ECH 13.1% PPH 11,954 GWh Market share: 12 % RWE 49.2% Prague Holding 50.2% City Prag 51.0% RWE 25.0% ECH 24.0% JMP 23,980 GWh Market share: 24 % RWE 50.1% ECH 43.7% SPP Bohemia 2.3% Shareholding: Gas Sales for 2004 ZCP 47.8 Plzeň JCP 13.1 STP 14.3 SCP Ustí n. Labem PPH 24 Prague České Budějovice Hradec Králové VCP 16.5 JMP 43.7 Brno SMP 9.5 Ostrava SCP 12,401 GWh Market share: 12 % RWE 51.8% VNG 25.6% Wintershall 20.2% STP 10,829 GWh Market share: 11 % RWE 51.2% Wintershall 31.0% ECH 14.3% VCP 10,551 GWh Market share: 11 % RWE 50.1% SPP Bohemia 18.8% ECH 16.5% SPP 10.0% SMP 18,009 GWh Market share: 18 % RWE 58.1% SPP Bohemia 20.3% ECH 9.5% SPP 8.5% Page 9

10 E.ON Czech Group

11 E.ON Czech Group - History Acquired first share in VČP Acquired municipal shareholdings Established E.ON Czech Holding AG 2001 Majority holding in JME and JČE 2003 Start of the new organizational structure 2005 Page 11

12 With the acquisition of majorities in JME and JCE in 2003 E.ON achieved leading position in the Czech Republic Power - stocks until 3Q / 2003 E.ON Energie 5.9% SCE Ústí nad Labem PRE ZCE Praha STE Plzeň JCE E.ON Energie 33.9% České Budějovice E.ON Energie 41.7% E.ON Energie 30.3% Hradec Králové VCE SME Ostrava JME Brno Comment Acquisition of the first stock of VČP in 1994 Sequentional acquisition of the municipal shares till 2003 ZCE Plzeň E.ON Energie 13.6% E.ON Energie 44.9% Power stocks - today SCE Ústí nad Labem PRE Hradec Králové Praha STE VCE SME Ostrava České E.ON Czech Group Budějovice ECD/ECR/ECE Brno Shareholdings of the minorities in distribution companies Majority in JME & JCE in Q4 / 2003 (assets- and minority swaps with EAG, ČEZ) Steering the companies in 2004 by starting the czech.on project New organizational structure in 2005 Page 12

13 Key figures 2004 E.ON Czech Group please overwrite text Earnings in millions approx. 700 EBIT in millions approx. 90 Employees approx. 2,700 Customers 1,420,383 Electricity sales in GWh 12,515 Network length in km* 65,002 *Figure concerning Network length in km involves very high voltage, high voltage, and low voltage network Page 13

14 Framework of unbundling and regulation in the Czech Republic Legal unbundling is required from (gas, electricity) Complete market liberalization: electricity , gas Legal framework is in force since (No 228 Act 670/2004) Regulator operative since nd regulation period is in force ( ) Tariff stipulated ex ante (30.11.) for next calendar year Regulation principles: capped revenues principle of motivation Page 14

15 Motivation for implementing Unbundling as of January 1, 2005 Unbundling connected with Restructuring enables conceptional a new solution Cost-saving implementation of legal and corporate group requirements One-time change in existing structure and processes One-time impact against company and employees Keeping of the best possible services for customers Implementing synergy potentials Page 15

16 What is our Positions as far as the Implementation of Statutory Requirements is concerned? I. Accounting 3 accounting areas (grid, sales, service) II. Legal Company structure (E.ON Distribuce, E.ON Energie and E.ON Česká republika) III. Organizational Independence of management positions Freedom to make decisions IV. Informational Customer Care Center (Call Center, Accounting) Improvement to be accomplished until 12/2006 Page 16

17 Elements of the organization structure E.ON Česká republika, a.s. E.ON Distribuce, a.s. Corporate Services Company development / Strategy Communication / Policy IT / Process management Personnel Finances / Taxes / FM Legal Risk management Controlling / Interests Controlling Strategic Materials Management / Logistics Marketing Service-Center Accounting Payroll Accounting (incl. Staff Accounting) Logistics - Operational Purchase - Stock-keeping Facility Management - Property Management - Vehicle Fleet - Infrastructure Services (Internal Services, Mailing, Cleaning ) Call- / Billing-Center Asset Services (Grid) - Operation and Maintenance 110 kv, 22 kv u.0,4 kv - Grid Construction and Designing Meter Reading - Meter Management Central- Function Services Asset Operation - Dispatching - Grid Administration - Power Management - Documentation and Administration of TIS E.ON Bohemia JME / JČE MEAS Distribution Power- Purchasing/Sales Asset Management - Strategic Grid Planning - Execution of Contracts - Regulator Management E.ON Energie, a.s. Power Purchasing Individual Customers Small and Medium Companies Product Management Back Office, Sales Central function: Control functions for companies ; Services: may be ordered on principle, co-operations possible Page 17

18 E.ON Czech Group new Set-up as of January 1, 2005 E.ON Czech Holding Verwaltungs GmbH (ECHV) E.ON Česká republika, a.s. (ECR) Services and customer service Suppliers Customers E.ON Energie, a.s. (ECE) Retail and generation Service contracts (SLA) E.ON Distribuce, a.s. (ECD) Distribution ČEPS Customers Regulator Sales license Grid license Page 18

19 Organization structure of E.ON Czech Group 2005 Supervisory Board E.ON Czech Holding AG Board of Directors M. Fehn, L. Pronnet, P. Ficht, K. Dietrich-Nespěšný E.ON Česká republika, a.s. Board of Directors M. Fehn, L. Pronnet, P. Ficht, K. Dietrich-Nespěšný Brno and České Budějovice E.ON Distribuce, a.s. Board of Directors J. Havel, Z. Bauer, M. Kopčík Brno E.ON Energie, a.s. Board of Directors M. Šafář, R. Lucký, Dr. W. Burkner České Budějovice Registered Office Prague Page 19

20 E.ON Central Europe East

21 E.ON Energie now has a strong position in regulated distribution market Status quo in Central Europe East: + Strong distribution positions in Hungary / Czech Republic / Slovakia + Successful step-in in Bulgaria and Romania (+) Power-/Gas Convergence kick-off in Hungary (-) Gas minority portfolio in Czech Republic - No vertical integration in CEE - Still no position in Poland Page 21

22 E.ON Energie promptly used its chances in Central Europe East 1995 Acquisition of Hungarian minorities in power and gas distribution 1996 Acquisition of Czech minorities in power and gas distribution 1998 Majority acquisition of Hungarian DÉDÁSZ 1999 Majority acquisition of Hungarian TITÁSZ 2000 Minority acquisition of Latvian Latvijas Gaze (now under E.ON Ruhrgas) % acquisition of Slovakian ZSE. Majority acquisition of Hungarian ÉDASZ Minority acquisition of Lithuanian Lietuvos Dujos (now under Ruhrgas) 2003 Majority acquisition of Czech JME and JCE Transfer of shares held by E.ON Ruhrgas in Czech and Hungarian gas distribution activities to E.ON Energie AG 2004 Acquisition of two Bulgarian power distributors Start of squeeze-out at the Hungarian power distributors 2005 Acquisition of one Romanian power distributor (E.ON Moldava) Acquisition of one Romanian gas distributor (DistriGaz Nord - E.ON Ruhrgas) New legal unbundled structure in the Czech Republic Page 22

23 Key figures of E.ON Central Europe East companies Czech Republic Turnover 705 m Sales Customers 12.5 TWh 1.4 m Slovakia 1) Turnover 557 m Sales Customers 7.1 TWh 1 m I Bulgaria 2) Turnover 221 m Sales Customers 4.8 TWh 1.1 m Germany Czech Republic Austria Slovenia Poland E.ON Czech Group ZSE Édász Dédász Croatia Slovakia Hungary Titász Ukraine Romania Central Europe East Turnover 431 2,331 m Sales Customers TWh 7.2 m E.ON Moldova Moldavia Hungary Turnover 1,172 m Sales Customers 14.7 TWh 2.4 m Romania 3) Turnover 233 m MON Sales Customers 4.2 TWh 1.3 m Serbia Gorna Varna Numbers Dec. 2004, only numbers of electricity companies are shown 1) Full consolidation probably from 2006 AL 2) Full consolidation from ) Full consolidation from 10/2005; IFRS numbers Macedonia Bulgaria Greece Turkey Page 23