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PresentationProactive Conference – 6 May 2015
This presentation has been prepared by OPG Power Ventures Plc (“OPG”). This
presentation and its contents is confidential and is being provided to you solely for your
information and may not be reproduced, redistributed or passed on, directly or indirectly, to
any other person or published, in whole or in part for any purpose without the consent of
OPG. The information and opinions presented herein are based on general information
gathered at the time of writing and are therefore subject to change without notice. While
market data and certain industry forecasts used in this document have been obtained from
publically available information and industry publications that OPG believes to be reliable,
OPG has not independently verified such information and cannot guarantee its accuracy or
completeness. This presentation and the information contained in it does not comprise a
prospectus or constitute or form part of any offer or invitation to sell or issue, or any
solicitation of any offer to purchase or subscribe for any securities, in any jurisdiction and
nothing herein shall form the basis of any contract or commitment whatsoever. Neither this
document nor the fact of its distribution nor the making of the presentation constitutes a
recommendation regarding any securities. This presentation is being provided to you for
information purposes only.
No reliance may be placed for any purposes whatsoever on the information contained in
this document or on its completeness, accuracy or fairness and shall not be used in
substitution for the exercise of independent judgement and each person made aware of the
information set forth herein shall be responsible for conducting its own investigation and
analysis of the information contained herein. No representation, express or implied, is made
or given on behalf of OPG, any of its subsidiaries, shareholders, directors, officers or any
other person as to the accuracy, completeness or fairness of the information or opinions
contained herein. Accordingly, none of OPG, any of its subsidiaries, any of OPG’S or its
subsidiaries’ financial advisors or any of OPG’s respective subsidiaries, affiliates, advisers,
representatives or any other person shall have any liability whatsoever (in negligence or
otherwise) for any loss howsoever arising from any use of this presentation or its contents or
otherwise arising in connection with this presentation.
Certain statements, beliefs and opinions contained in this presentation, particularly those
regarding the possible or assumed future financial or other performance of OPG, industry
growth or other trend projections are or may be forward looking statements. Forward-looking
statements can be identified by the use of forward-looking terminology, including the terms
“believes”, “estimates”, “anticipates”, “expects”, “intends”, “plans”, “goal”, “target”, “aim”, “may”,
“will”, “would”, “could” or “should” or, in each case, their negative or other variations or
comparable terminology. These forward-looking statements include all matters that are not
historical facts. By their nature, forward-looking statements involve risks and uncertainties
because they relate to events and depend on circumstances that may or may not occur in
the future and may be beyond OPG’s ability to control or predict.
Forward-looking statements are not guarantees of future performance. No representation is
made that any of these statements or forecasts will come to pass or that any forecast result
will be achieved.
Neither OPG, nor any of its associates or directors, officers or advisers, provides any
representation, assurance or guarantee that the occurrence of the events expressed or
implied in any forward-looking statements in this presentation will actually occur. You are
cautioned not to place reliance on these forward-looking statements. OPG is not under any
obligation and OPG expressly disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or otherwise.
No statement in this presentation is intended as a profit forecast or a profit estimate and no
statement in this presentation should be interpreted to mean that earnings per OPG share
for the current or future financial years would necessarily match or exceed the historical
published earnings per OPG share.
The distribution of this presentation or any information contained in it may be restricted by
law in certain jurisdictions, and any person into whose possession any document containing
this presentation or any part of it comes should inform themselves about, and observe, any
such restrictions. Any failure to comply with such restrictions may constitute a violation of the
laws of any such jurisdiction.
This document is only being distributed to and is only directed at (A) in the European
Economic Area, persons who are “qualified investors” within the meaning of Article 2(1) of
the Prospectus Directive (Directive 2003/71/EC) and (B) in the United Kingdom (i) persons
who are outside the United Kingdom, (ii) investment professionals falling within Article 19(5)
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the
“Order”), (iii) high net worth entities, and other persons to whom it may lawfully be
communicated , falling within Article 49(2)(a) to (d) of the Order or (iv) persons to whom an
invitation or inducement to engage in an investment activity (within the meaning of section 21
of the Financial Services and Markets Act 2000) in connection with the issue or sale of any
securities of OPG or any member of its group may otherwise lawfully be communicated or
caused to be communicated (all such persons (i) to (iv) above being referred to as “relevant
persons”). Any investment activity to which this communication may relate is only available
to, and any invitation, offer or agreement to engage in such investment activity will be
engaged only with, relevant persons. Any person who is not a relevant person should not act
or rely on this document or any of its contents.
This document may not be distributed in the United States or to, or for the account or benefit
of, US Persons as defined in Regulation S of the US Securities Act of 1933, as amended
(the “Securities Act”). These materials do not constitute an offer of securities for sale in the
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with any securities regulatory authority of any state or other jurisdiction of the United States
and may not be offered or sold in the United States or to, or for the account or benefit of, US
Persons absent registration under the Securities Act or an exemption from it.
By attending the presentation and/or accepting or accessing this document you agree to be
bound by the foregoing limitations and conditions and will be taken to have represented,
warranted and undertaken that you have read and agree to comply with the contents of this
notice.
DisclaimerNOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA OR JAPAN
OPG Introduction
OPG is a fast growing UK listed power business with
operations in India and a focus on profitable growth
20 30107 113
190
270
420
750
0
200
400
600
800
IPO May-08
31-Mar-10 31-Mar-11 31-Mar-12 31-Mar-13 31-Mar-14 Current 31-Mar-16E
Operational & Under Commissioning
450 MW Tamil Nadu 300 MW Gujarat
• 77 MW Chennai I
• 77 MW Chennai II
• 80 MW Chennai III
• 180 MW Chennai IV **
• 25.4 MW Gas Mayavaram ***
• 10 MW Waste heat ****
* Commenced commercial sales from unit 1 in Apr’15 ; plant ramp up exp by Sep ‘15
** Expected to be operational by end of Apr’15*** Holds 44% minority interest
**** Holds 33% minority interest
Fully funded to 750 MW
4Source: Company
MW
Gujarat
Chennai I, II, III,
Waste Heat
Chennai IV
Mayavaram
Operational
Near commissioning
• 300 MW Gujarat *
5
• Fixed price tariff
• Fixed term
• Fixed return
• State support for land, debt
• E.g. Reliance, Adani, TATA
Power
Regulated - Majority players have long term PPA’s
with State utilities at fixed prices
HT III – Commercial Establishments:
HT IIB – Pvt. Educational Institutions etc:
HT IA – Industrial Establishments:
HT IB – Railway Traction:
HT IIA – Govt. & Govt. aided Edn. Institutions etc
LT IIA – Public services:
LT IC – Govt PSU domestic housing:
L TIIC – Places of Worship
L TIIB – Cottage, tiny industries:
LT IA – Domestic, Charitable & Handlooms:
LT IB – Villages & agriculture:
7.09
6.38
6.36
5.58
5.50
4.00
3.75
3.75
3.05
0.00
7.41
Tiered Pricing: Industry paying highest whilst
subsidized rural & agriculture rates (INR/kWh)
Source: Tamil Nadu Electricity Regulatory Commission Apr ‘12
OPG’s Flexible Revenue Model
Robust offtake profile through active contract management
• Uncapped ROE
• Variable term and market pricing
• Flexibility as to customers
• Meeting demands of high tension, industrial consumer
• Reliability of provision of power
Flexible - Group Captive
Generator
State utility
Industrial Consumer
30
50
70
90
110
Ap
r/12
Jun
/12
Au
g/1
2
Oct/12
Dec/1
2
Fe
b/1
3
Ap
r/13
Jun
/13
Au
g/1
3
Oct/13
Dec/1
3
Fe
b/1
4
Ap
r/14
Jun
/14
Au
g/1
4
Oct/14
Dec/1
4
USD/MT
Indonesia EcoCoal Spot Index(4,200 kCal/kg) -USD/MT
RB - USD/MT
NEWC -USD/MT
Flexibility in fuel sourcingOur flexibility between domestic and imported coal means we have not had a fuel shortage to date
6
OPG’s boiler configuration allows use of
• 100% Domestic; 100% Imported
• Or any mix of the 2
Option to use high moisture coal provides relative cost advantage
• Low premium
OPG Power Plants are located at close proximity to major coal ports
Our typical coal blend* (based on quantity): 30% Domestic
International Coal Prices trendEnergy Adjusted Cost of Coal Delivered at OPG Plant Gate
INR/ unit of energy
Coal Price trend
Major ports
OPG Plant Locations
Source: Bloomberg Source: Company
Mundra Kandla
Gujarat
Mumbai
Goa
Mangalore
Kovalam Mayavaram
Nagapattinam
Chennai
EnnoreChennai I, II, III, IV, Waste Heat
Dhamra
Jambudwip
70% Imported
Paradip
Krishnapatnam
*Chennai I, II, III have a domestic coal linkage;
Chennai IV – imported only, Gujarat – imported initially (first shipment already received)
-
200
400
600
800
1,000
FY12 FY13 FY14
IndonesianCoal
Indian Coal
OPG Recent performance
Recent operational update
8
Source: Company
• Average Plant Load Factor (PLF) of 94% and average tariff of Rs 5.71 in Q3 FY15;
• 300 MW Gujarat – commercial operations commenced
• 180 MW Chennai IV - expected to commence operations around end April 2015
• Over 10% increase in tariff on 55 MW Group Captive sales in Tamil Nadu
• Coal supply unaffected by ongoing coal block reallocation
• Interest Rate reduction by Reserve Bank of India
Key highlights
Operating assets of 420 MW
Maximising generation
Source: CEA & Company
PLF – Consistently above Industry Average*
9
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
FY11 FY12 FY13 FY14
Chennai I
Chennai II
Chennai III
All India Private Sector(Thermal IPPs)
Average Plant Load Factor of operating units significantly above the industry average
Projects Capacity (MW) Avg. PLF (FY14)
Chennai I 77 96%
Chennai II 77 99%
Chennai III 80 92%
Total 234** 96%
** Gujarat 150 MW commenced operations in Apr;15;
Legacy assets: 10 MW Waste heat; 25.4 MW: Mayavaram*Chennai II became operational in October 2012 and Chennai III in June 2013
10
180 MW Chennai unit
• Commercial operations is expected to commence around
end of Apr’15
• Transmission infrastructure in place
• Sales agreed to Tamil Nadu Generation & Distribution
Corporation (TANGEDCO) at Rs 5.50 until Sep’15
• On same site as Chennai I, II and III
• Close to port
300 MW Gujarat plant
• Commenced commercial sales in Apr’15
• Interim transmission line construction in use
• Multi circuit line expected to be completed by Gujarat Energy
Transmission Corporation (GETCO) in Q2 CY15
• Ramp up of plant expected by Sept’15
• Close to port
Recently operational & under commissioning assets
480 MW
11
Financial snapshot – delivery and growth
21.58
38.48
56.19
98.81
FY11 FY12 FY13 FY14
FY11 FY12 FY13 FY14
1.71
2.48
4.14
FY12 FY13 FY14
52.98
103.90
171.63
213.26
Mar'13 Sep'13 Mar'14 Sep'14
EPS (£ pence) Net Debt (£m)
Revenue (£m)
Source: Company
10.08 11.3017.74
30.97
FY11 FY12 FY13 FY14
FY11 FY12 FY13 FY14
EBITDA (£m)
12
Leading share price performance
Market FTSE AIM
Share price 89 pence
Market Cap Market Cap (£): 314.84m
Shares outstanding 351.50m
Leading share price performance amongst peers
2009 2010 2011 2012 2013 2014
YTD Mean (£) 101,550 112,725 92,987 127,959 110,499 206,057
-
100,000
200,000
300,000
Average Daily Mean Value
YTD Mean (£)
£
2009 2010 2011 2012 2013 2014
YTD Median (£) 29,960 24,327 35,624 40,604 36,059 98,236
-
30,000
60,000
90,000
120,000
Average Daily Median Value
YTD Median (£)
£
Liquidity of shares up significantly in 2014 and no
“zero” trading days
%
Source: Bloomberg
Source: LSE, 1 May 2015
Source: Broker Profile
0
40
80
120
160
200
Jan
-14
Feb
-14
Mar
-14
Ap
r-1
4
May
-14
Jun
-14
Jul-
14
Au
g-14
Sep
-14
Oct
-14
No
v-14
Dec
-14
Jan
-15
Feb
-15
Mar
-15
Ap
r-1
5
OPG KSK MYT GKO AIM
Share price performance rebased to 100
India Macro developments
80
90
100
110
120
130
140
150
160
170
BSE - Midcap Nikkei FTSE UKX S&P 500
India's Equity Indices outperforms major Global Indices
Interest Rates and Inflation, %
Indian Equity Markets performance
Stabilized rupee exchange rate
Source: RBI & GoI Source: RBI & GoI
Growth, inflation and
current-account deficit
concerns
New reserve bank Governor
Incoming Modi government
Source: Bloomberg
Real GDP Growth Rate
Source: RBI
50.0
52.0
54.0
56.0
58.0
60.0
62.0
64.0
66.0
68.0
Mar
/12
May
/12
Jul/
12
Sep
/12
No
v/1
2
Jan
/13
Mar
/13
May
/13
Jul/
13
Sep
/13
No
v/1
3
Jan
/14
Mar
/14
May
/14
Jul/
14
Sep
/14
No
v/1
4
Jan
/15
Mar
/15
USD/INR
6.8
7.0
7.2
7.4
7.6
7.8
8.0
8.2
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Ap
r/12
Jun
/12
Au
g/1
2
Oct
/12
Dec
/12
Feb
/13
Ap
r/13
Jun
/13
Au
g/1
3
Oct
/13
Dec
/13
Feb
/14
Ap
r/14
Jun
/14
Au
g/1
4
Oct
/14
Dec
/14
Feb
/15
Repo Rate %Inflation %
Inflation (LHS) Repo Rate(RHS)
Growth, inflation
and current-account
deficit concerns
New reserve bank
Governor
Figures for FY13 and FY14 are based on the new GDP methodology with 2011-12 as
base year. FY15 & FY16 numbers are estimates
5.4
3.9
8.07.1
9.5 9.69.3
6.7
8.6 9.3
6.25.1
6.97.4
7.8
0.0
2.0
4.0
6.0
8.0
10.0
12.0
FY0
2
FY0
3
FY0
4
FY0
5
FY0
6
FY0
7
FY0
8
FY0
9
FY1
0
FY1
1
FY1
2
FY1
3
FY1
4
FY1
5e
FY1
6e
Incoming Modi
government
India: 6th Largest power producer in the world
but needs much more…
15
• 6th largest power producer: 268 GW
• 5th biggest coal producer: 565 MT
• 5th highest wind capacity: 21 GW
IEA anticipates
• 400 GW additional in 15 years
• USD1.6 tn Investment by 2035
All India Installed Capacity 268 GW
(Fuel wise breakdown)
Source: World Bank ,11*India, CEA Nov 14
Per Capita Consumption (kWh)
…..to meet demand and match world per capita consumption
268 GW
Source: CEA, Coal Ministry of India
Source: CEA
60%
16%
12%
9%2% 1% Coal
Hydro
Renewables
Gas
Nuclear
Diesel
684 774 9172,438
4,6045,949 6,486
13,246
0
3000
6000
9000
12000
15000
India (2011) India (2012) India (2013) Brazil South Africa China Russia US
kwh
Reforms and initiatives introduced in the last 12 months
16
Single ministry for power, coal and renewable energy
• Targets “Power to All by 2020”
• Improvement in transmission and distribution
Renewables boost • Renewable energy impetus with earmarked investments and budgetary measures and other incentives
• Government targets 175GW of renewable capacity addition by 2022
Mines and Mineral/
Coal Mines Bill
• Private companies would be allowed to participate in bidding for mining (coal and other minerals) for merchant
use
• Transparent auction process for allocation of 204 mines cancelled by supreme court on Sept, 2014
• Of 204, 28 coal mines are awarded – 15 operating mines and 13 near term producing mines
• All mining leases would be granted through auction by competitive bidding, including e-auction
Foreign Investment in Insurance sector
• Amended insurance law to raise the cap on foreign investment into Indian insurance companies to 49% from the
26%
Interest rate cut • RBI cuts key interest rates by 50 bps, 25bps each in Jan & Mar 15
Tax reforms • Government is rationalising tax structure; much awaited Goods & Services Tax (GST) bill is in final stages and
expected to be passed soon
• Pledge to not initiate any new retrospective tax claims; simplify corporation tax regime
Land Acquisition Bill • Make land acquisition easier for private and PPP projects in defence and infrastructure sector
Electricity Act reforms proposed
• Proposed amendment aims at promoting competition and efficiency in generation and distribution
• Make Renewable Purchase Obligations (RPO) mandatory
• Planning reforms to unbundle DISCOMS
OPG Now is a special time for us
An important time for us
18
Achieved + Proven Operations + Proven Development skills + 750 MW assets
Achieved+
Track record of profitability and financial management
Achieved+
Proven the business model
Achieved+
Increased equity research coverage, liquidity and governance
= Onwards and upwards
Recommended