Electrica IPO: company profile

Electrica is the largest electricity distribution and supply group in Romania, with some 3.6 million clients. The group’s core business segments are the distribution of electricity to users and the supply of electricity to households and non-household consumers. The group’s consolidated revenues were EUR 1.17 billion, in 2013, and generated a net profit of EUR 71 million.

Electrica is 100 percent state owned. The company announced its intention to sell new shares representing 105 percent of its current share capital via initial public offering (IPO), which will take place in June both on the Bucharest Stock Exchange and on the London Stock Exchange. Following the IPO, the state’s stake will fall below 50 percent.

The electricity distribution business

Electrica’s electricity distribution business is the largest in Romania both in terms of volume of electricity distributed to users and number of users. According to the Romanian Energy Regulatory Authority (ANRE), in 2013 the group distributed 16.1 TWh of electricity to approximately 3.6 million users, representing 39 percent of electricity distributed in Romania.

The distribution business is tightly regulated by the state and Electrica holds the monopoly for this activity in the regions of Romania where it operates: northern Muntenia and the whole of Transylvania. These operations are conducted through three separate companies, Electrica Distributie Muntenia Nord, Electrica Distributie Transilvania Sud, Electrica Distributie Transilvania Nord, in which Electrica holds 78 percent majority stakes and Romanian investment fund Fondul Proprietatea holds the remaining 22 percent.

At the end of March 2014, Electrica’s distribution business operated 8,389 km of high voltage lines, 45,643 km of medium voltage lines and 134,834 km of low voltage lines.

The distribution segment operates under long-term concession arrangements granted by the Ministry of Economy and Trade, valid until 2054, based on licenses issued by ANRE, valid until 2027, which have a renewal option for another 25 years. As part of its distribution business, Electrica provides equipment maintenance, repair and other auxiliary services to its network and, to a small degree, to third parties through its energy services subsidiary, Electrica Serv.

The electricity supply business

Electrica’s electricity supply business is also the largest in Romania in terms of number of consumers. According to ANRE, in 2013 the group supplied 9.7 TWh of electricity to approximately 3.56 million end consumers, representing 22.1 percent of the volume of electricity supplied in Romania.

The group’s supply segment operates through Electrica Furnizare and supplies electricity to consumers both on the regulated electricity market, in the regions where the distribution subsidiaries of the group operate, and on the competitive electricity market, all throughout Romania. Electrica holds 78 percent of Electrica Furnizare, with Fondul Proprietatea having the remaining 22 percent.

Financial results

Electrica posted consolidated revenues of RON 5.16 billion (EUR 1.17 billion) in 2013, 1.8 percent lower than in 2012. Operating profit before interest, amortization and depreciation (EBTDA) was RON 748 million (EUR 169 million), up 15 percent compared to 2012. However, net profit decreased by a quarter last year, to RON 314 million (EUR 71 million). The company’s net profit margin was 6 percent.

In the first quarter of 2014, revenues were RON 1.21 billion (EUR 274 million), 13 percent lower than in Q1 2013. Electrica reported consolidated EBITDA of RON 222 million (EUR 50 million) in the first quarter of 2014, compared to RON 180 million (EUR 41 million) in the first quarter of 2013. Net profit was up 8 percent, to RON 88 million (EUR 20 million).

End-March 2014, Electrica’s total assets were RON 10.1 billion (EUR 2.28 billion), according to the company’s balance sheet. Out of these, some RON 2.23 billion (EUR 500 million) were assets for sale, which consisted of minority stakes held by Electrica in electricity distribution companies which were privatized in the last ten years and are now controlled by Italian group Enel and German group E.On. These assets were supposed to be taken out of the company’s balance sheet and handed out to the Romanian state before Electrica’s IPO.

The group’s total debt amounted to RON 3.36 billion (EUR 760 million) while equity attributable to shareholders was RON 5.91 billion (EUR 1.34 billion).

You can find the group’s annual financial results (in English) here and first quarter results for 2014 here. More on the group’s website.

Andrei Chirileasa, [email protected]

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