PPC records EBITDA of €1.5 billion at a pro-forma level with a reinstatement of a dividend distribution of €0.25/share – 2024-04-11 01:18:22

• Increase of installed RES capacity by 1.1 GW with a parallel reduction of lignite by 0.9 GW
• RES projects 2.8 GW under construction or ready for construction, which represent regarding 70% of the power needed to meet the 2026 target
• Reducing emissions CO₂ by 34% and score improvement in CDP by four ranks in B–
• 61% increase in investments in RES and Distribution projects in line with PPC’s goal to become a leading player in clean energy and critical infrastructure and services in Southeast Europe
• Disciplined financial position with the ratio of Net Debt/EBITDA in 2xwell below the upper limit of 3.5x which we have set
• Recording of a significant acquisition benefit of over €0.2bn. from the acquisition of its activities Enel in Romania demonstrating the attractive valuation achieved by PPC in the transaction
• Reinstatement following 10 years of dividend distribution at €0.25/share
• Confirmation of the outlook for 2024 with an estimate for recurring EBITDA at €1.7bn.

Basic Economic Sizes

Key events of 2023

PPC continued in 2023 the positive course of the previous years, achieving key milestones in accordance with its strategy for taking advantage of the opportunities arising from the Energy Transition.

Total investments amounted to €2.6 billion, including the acquisition of Enel’s activities in Romania, with a significant increase recorded in the RES and Distribution activities. PPC’s installed capacity in RES reached 4.6GW at the end of 2023, having currently projects with a total capacity of 2.8GW under construction or ready for construction, a capacity corresponding to approximately 70% of the capacity required to achieve the target for in 2026.

In addition to organic growth, PPC pursued further opportunities in the RES sector by entering into a strategic agreement with Intrakat Group to jointly develop a 2.7 GW RES portfolio, currently having a total project portfolio of approximately 18 GW.

As a result of the significant transformation that began in 2019, PPC is resuming its dividend distribution following a decade. The Board of Directors will propose to the Ordinary General Meeting of shareholders the distribution of a dividend of €0.25/share.

As part of its commitment to become a leading player in clean energy and critical infrastructure and services in Southeast Europe, PPC increased its installed renewable energy capacity by 32% to 4.6 GW in 2023, while investing €0.8 billion in projects RES and Distribution, increasing by 61% compared to 2022. At the same time, PPC further reduced CO emissions₂ Scope 1 by 34% from 14.8 million tonnes in 2022 to 9.7 million tonnes in 2023, taking another decisive step towards a greener production portfolio. These efforts are also reflected in PPC’s CDP score, which increased to B- in 2023, recording an improvement of four notches.

Financial performance

Increased operating profitability for 2023 with earnings before interest, taxes and depreciation (EBITDA) on a recurring basis standing at €1.3 billion, up 35%, due to the increased contribution of the Distribution activities and the acquisition of Enel’s activities in Romania from 25.10. 2023. On a pro forma level, i.e. taking into account the contribution of the activities in Romania and for the 12 months of 2023, recurring EBITDA was €1.5 billion.

The 2023 results have been affected by one-off effects totaling €32 million, mainly related to provisions for staff compensation, while the 2022 results by one-time effects totaling €302 million, mainly related to the extraordinary levy imposed on producers electricity for the period 1.10.2021 – 30.6.2022 and provisions for staff compensation[1].

Profits before taxes amounted to €622m once morest losses of €26m in 2022, mainly as a result of improved operating profitability. Pre-tax results were also positively impacted by the €234m buy-back benefit recorded on the acquisition of Enel’s Romanian operations, demonstrating the attractive valuation achieved by PPC in the transaction. In addition, the 2023 pre-tax profit includes the €124 million profit from the sale of former lignite areas to the Greek State, which was recorded in the results of the second quarter of 2023. In 2022, the pre-tax profit was positively affected by €198 million, mainly due to the reversal of the impairment of the investment in the new lignite unit Ptolemaida V by €177 million.

The net profits amounted to €485 million once morest losses of €9 million in 2022.

Disciplined financial position despite high investments in 2023. PPC maintained its Net Debt/PF EBITDA ratio at 2x, well below the 3.5x limit it has set, with net debt standing at €3.2bn as at 31.12.2023 .

Commenting on the financial results, the President and CEO of PPC S.A. Mr. Georgios Stassis stated:

“2023 was another pivotal year for PPC with strong results, progress on the RES development plan, reduction of the carbon footprint and completion of a major acquisition that gives us the opportunity to become a leading player in clean energy, critical infrastructure and services in Southeast Europe . We are restoring the dividend distribution following a decade as a result of PPC’s major transformation that began in 2019. We have now secured almost 70% of the power required to meet our 2026 RES power target, significantly reducing risk of implementing our plan. We continue to leverage our vertically integrated position which provides resilience to our results while at the same time securing our investments in the RES sector. The strategy that aour commitment has begun to pay off and we are confident that the implementation of our plan will further increase value for our shareholders, customers and society.”

Outlook for 2024

For 2024, PPC confirms the targets announced at the Capital Markets Day in January 2024, despite lower prices in the wholesale market, given the resilience of its vertical model, as it happened in extraordinary circumstances (covid, energy crisis). Specifically, PPC expects recurring EBITDA of €1.7 billion.

Trading Activity

Electricity demand in Greece increased in the fourth quarter of 2023 by 1.5% compared to the corresponding period of 2022, with the result that the decrease in demand was limited to 1.7% for the whole of 2023. In Romania, the electricity demand decreased by 5% in 2023[2].

The average share of PPC in the supply market in Greece decreased to 56.5% in 2023 from 62.4% in 2022. In the Interconnected System, the corresponding size decreased to 56.1% in December 2023 (from 63.3% in December 2022), while the average share per trend was 48.0% (from 88.3%) in High Trend, 40.7% (from 44.2%) in Medium Trend and 63.2% (from 63.7 %) at Low Voltage^[3]. In Romania, PPC’s average share in electricity sales was 18%[4].

Production Activity

In electricity production, the average share of PPC in Greece decreased to 39.1% in 2023 from 43.4% in 2022, mainly due to lower production from natural gas plants, but also from lignite plants due to the gradual exit of PPC from lignite. In Romania, PPC’s average share in RES production (wind/solar) was 14.1%, remaining approximately at the same levels compared to 2022 (13.5%).

The transition to cleaner forms of energy continued with a decrease in the installed capacity of lignite units by 0.9GW, which was more than covered by an increase in RES capacity by 1.1GW. At the same time, the reduction of CO emissions₂ (Scope 1) by 34% led to an improvement in CO emission intensity₂ to 0.5 tonnes per MWh produced from 0.66 tonnes per MWh produced in 2022.

Distribution Activity

The distribution business continues to grow in line with our strategy to modernize our networks. In 2023, almost all performance indicators improved in both key countries where PPC operates due to increased investment and accelerating digitization. In particular, the SAIDI index decreased to 137 minutes (from 138 minutes) in Greece and to 89 minutes (from 91 minutes) in Romania. The SAIFI ratio in Greece remained stable at 1.8 times and in Romania it decreased to 2.5 times (from 2.6 times).

Smart meter penetration was quite high in Romania reaching 47% (up from 41%) and in Greece it is expected to increase further from the current 10% once wider deployment of smart meters begins.

The integration of RES plants in Greece showed signs of stabilization in 2023, following significant growth in previous years with regarding 1GW connected to the grid once morest 1.1GW in 2022. In Romania, a significant increase was recorded with connections of regarding 0.4GW in 2023 once morest 0, 1GW in 2022.

The Regulated Asset Base increased to €4.3 billion from €3.9 billion in 2022, due to higher investments in Greece and the capitalization of previous years’ network losses in Romania.

Telecommunications

In the development of Fiber-to-the-home, the plan is progressing having reached 140,000 homes in Attica at the end of 2023 and 185,000 at the end of March 2024. The goal is for the FTTH network to reach 500,000 households and businesses at the end of 2024 and in 1.7 million in 2025. Wholesale commercial availability is expected to begin in 2024 either as a wholesale service with speeds that can reach up to 10 Gbps or with the availability of a dark fiber service, with which the each provider can offer its end customer whatever services it wants.

E–mobility

In the field of electric mobility, at the end of 2023 PPC, through its subsidiary PPC blue, held a leading market share of 35% in public charging points in Greece with 2,015 points, almost double compared to the end of 2022. PPC blue introduced the 2023 Index of Sustainability avoiding CO emissions₂ for users who choose to charge at PPC blue’s public charging points which are served 100% by RES.

[1] The EBITDA of 2023 has been negatively affected by the provision for staff compensation of €25 million as well as the valuation of electricity purchase contracts of €7 million. Accordingly, the EBITDA of 2022 has been negatively affected by the extraordinary contribution of €245 million ., which was imposed on electricity producers, from the provision for staff compensation of €50 million as well as from the retroactive charge of €7 million due to the recovery of special allowances from the implementation of the 2021-2024 ESSE.

[2] Based on Transelectrica data

[3] Based on data from the Energy Exchange Group (EnEx)

[4] Based on Transelectrica data

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