Value chain expansion to power sales growth Assessing new business in energy sector – how it works 7 September 2011 Ondřej Jež Vojtěch Opleštil Sanitized version

PwC Agenda Introduction of PwC Project team The project in brief How we worked Findings and recommendation Project assessment Q&A 2 7 September 2011Value chain expansion to power sales growth

PwC Goal of this presentation We will try to show you “how it works” 1.To show a real life approach to solving problem of a concrete client 2.To familiarize you with the way of work in strategic consulting Value chain expansion to power sales growth 3 7 September 2011

PwC Agenda Introduction of PwC Project team The project in brief How we worked Findings and recommendation Project assessment Q&A 4 7 September 2011Value chain expansion to power sales growth

PwC Introduction of PwC In transaction services we cover many industries Worldwide 151 countries employees Czech Republic Three offices (Praha, Brno, Ostrava) Some 700 employees Services Consulting and deals Audit and assurance Tax and legal Consulting and deals Strategy Consulting Business Recovery Services Forensic services Transaction Services Corporate Finance (Valuation, M&A, Infrastructure, Government & Utilities) Value chain expansion to power sales growth 5 7 September 2011 Transaction strategy Energy & Utilities Industrial Products Retail Financial Services Transportation Healthcare Other

PwC Agenda Introduction of PwC Project team The project in brief How we worked Findings and recommendation Project assessment Q&A 6 7 September 2011Value chain expansion to power sales growth

PwC Four people were involved on daily basis and also took care of relationship 7 7 September 2011Value chain expansion to power sales growth Václav Prýmek Relationship Partner Client`s PM Matouš Michněvič Relationship Manager Daniel Cappelletti Partner for strategy Ondřej Jež Project Manager PwC ČR Project Team External Advisor

PwC Agenda Introduction of PwC Project team The project in brief How we worked Findings and recommendation Project assessment Q&A 8 7 September 2011Value chain expansion to power sales growth

PwC Project in brief The project extended our audit services 9 7 September 2011Value chain expansion to power sales growth Multicriterial assessment of potential revenue opportunities Content of the project Core team 4 PwC people 5 client`s employees Team 6 weeks, then implementation Timing An integrated mining and power generation company Central Europe Industry

PwC Our client, its challenges and their impact on the project We benefited from good knowledge of the client Need of deep expert knowledge Our client Large electricity and heat producer Not a part of a large group Good previous knowledge of the client Simpler project planning How did we win the project Prior good relationship with the client New ideas developed into tangible project scope and approach Need to analyze the whole business model Focusing on both costs and revenues Challenges the client was facing Impact of profits by other factors Increasing competition Changes in the sales field 10 7 September 2011Value chain expansion to power sales growth

PwC Agenda Introduction of PwC Project team The project in brief How we worked Findings and recommendation Project assessment Q&A 11 7 September 2011Value chain expansion to power sales growth

PwC Steps within the project Within the 6 project weeks we focused on 7 steps 1.Technical aspects of entering the retail market 2.Demand assessment 3.Price and margin assessment 4.Definition of assumptions for the financial plan 5.Capacity related costs and variable costs assessment 6.SW assessment 7.Business plan consolidation Content of the project 12 7 September 2011Value chain expansion to power sales growth 1.Assess client positioning in the market 2.Identify areas for revenue generation and potential profits 3.Understand key internal stakeholders and owners position and expectations 4.Prepare proposal reflecting clients’ expectation and demonstrate added value Before the project starts

PwC Before the project What happens before the project is even more important 1.Technical aspects of entering the retail market 2.Demand assessment 3.Price and margin assessment 4.Definition of assumptions for the financial plan 5.Capacity related costs and variable costs assessment 6.SW assessment 7.Business plan consolidation Content of the project 13 7 September 2011Value chain expansion to power sales growth 1.Assess client positioning in the market 2.Identify areas for revenue generation and potential profits 3.Understand key internal stakeholders and owners position and expectations 4.Prepare proposal reflecting clients’ expectation and demonstrate added value Before the project starts

PwC Agenda Introduction of PwC Project team The project in brief How we worked Findings and recommendation Project assessment Q&A Attachments 14 7 September 2011Value chain expansion to power sales growth

PwC Findings and recommendation Electricity retail could significantly increase company profits (assuming implementation in line with other market players’ performance) If sales to end-consumers replace current portfolio, it could make up for the losses caused by emission allowances Proposed support to help implement the retail functions and processes We have also identified another area for improvement as part of our engagement: optimization of auxiliary services and review operational model FindingsNext steps 15 7 September 2011Value chain expansion to power sales growth

PwC Agenda Introduction of PwC Project team The project in brief How we worked Findings and recommendation Project assessment Q&A Attachments 16 7 September 2011Value chain expansion to power sales growth

PwC Assessment We have received positive feedback from the client Benefits for the client Better understanding of the project topic and its context Initiation of communication and unification of top- management’s view on the topic Quantified opportunity Benefits for PwC Quality reference Better understanding of a specific market Further space for cooperation with the client and increased trust 17 7 September 2011Value chain expansion to power sales growth Prerequisites for a successful project Well defined project goals Realistic client’s expectations Cooperative client’s employees and clear task delegation Functioning project management structure

PwC Agenda Introduction of PwC Project team The project in brief How we worked Findings and recommendation Project assessment Q&A Attachments 18 7 September 2011Value chain expansion to power sales growth

PwC Thank you for your attention Ondřej Jež Questions Should you have any questions do not hesitate to contact me at or Value chain expansion to power sales growth 19 7 September 2011

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