ROBUST OPERATIONAL PERFORMANCE Results presentation: H1 FY18 Half year ended 30 September 2017 13 December 2017
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A TRACK RECORD OF GROWTH A developer and operator of power plants in India with a track record of delivery and growth CAPACITY (MW) 900 714 776 600 20 30 107 113 190 270 IPO FY 08 FY 10 FY 11 FY 12 FY 13 FY 14 FY 15 FY 16/17* FY 18E FY 20E * Excluding legacy assets of 36MW from FY17 onwards 3
HIGHLIGHTS
KEY HIGHLIGHTS Total Generation 2.39 billion units Robust operational performance Gujarat PLF up to 81%; Chennai PLF 73% Revenue 114m; EBITDA 22m Significant progress on TN & Gujarat receivables Gearing of 55% (FY17: 55%) INR Net debt lower by Rs1 billion GBP Net debt lower 35m 62 MW Solar projects are on track for commissioning in FY18 5
70% 73% 63% 78% 81% 2,389 3,347 4,367 MAXIMISING EXISTING ASSETS OPERATIONAL PERFORMANCE GENERATION (GWH) FY16 FY17 H1FY18 CHENNAI PLF* (%) GUJARAT PLF* (%) FY16 FY17 H1FY18 *includes deemed generation * COD 1 Feb 2016 FY17 H1FY18 6
FINANCIALS
RESULTS KEY PERFORMANCE HIGHLIGHTS Half Year ended 30 th Sep ( m) H1 FY18 H1 FY17 FY17 Operational Units produced* 2,389 2,371 4,367 Average tariff (INR/kWh) 4.67 4.93 4.86 Financial Revenue 113.9 117.7 205.0 EBITDA 22.0 42.1 66.7 Interest (19.5) (18.2) (38.8) PBT (2.9) 17.9 17.5 Net debt 268.6 269.0 304.2 Ratios (Loss)/Earnings Per Share (pence) (0.76) 4.80 8.43 Net Cash from Operating activities 24.05 38.60 56.08 Net Cash used in Investing activities (incl purchase of investments) (4.30) (4.06) 5.14 (Decrease)/Increase in Net Borrowings (22.2) 21.2 57.4 * includes deemed generation PLF Increase from 70% in FY17 to 77% in H1 FY18 A decrease in EBITDA and PBT margins is primarily due to sustained higher coal prices Investment includes 3.2m in solar & shipping JV INR Net debt lower by Rs1 bn ( 12m) and Fx movement of approx.10% 8
(3) 4.1 20 17 4.9 18 5.3 4.8 (0.76) 22 8.4 29 22 99 100 128 118 114 31 33 42 51 205 67 REPORTED EARNINGS OUR TRACK RECORD REVENUES ( M) EBITDA ( M) H1 FY18 margins were under pressure due to higher coal prices FY14 FY15 FY16 FY17 H1 FY17 H1 FY18 PROFIT/(LOSS) BEFORE TAX ( M) (PRE- EXCEPTIONAL ITEMS) FY14 FY15 FY16 FY17 H1 FY17 H1 FY18 EARNINGS/ (LOSS) PER SHARE ( PENCE) FY14 FY15 FY16 FY17 H1 FY17 H1 FY18 FY14 FY15 FY16 FY17 H1 FY17 H1 FY18 9
NET DEBT & GEARING INR Net Debt lower by Rs1 bn ( 12m) Fx changes reduced Net Debt further 17m cash collections from TANGEDCO incl 8m due as at 31 Mar 16 Net Debt* as at (millions) 30 Sep 17 31 Mar 17 INR 23,487 24,585 :INR ex-rate 87.4 80.8 GBP ( ) 269 304 GEARING % 57% 55% 55% FY16 FY17 H1 FY18 10 FY17 & H1FY18 : Net debt : Long term Borrowings + Short Term Borrowings less Cash & Cash Equivalents (including pledged Restricted cash)
62 MW SOLAR PROJECT CONSTRUCTION IN PROGRESS 62 MW solar project construction in progress and is on track for commissioning in FY18 Civil works commenced Installation preparation work is on-going Imported PV modules delivery commenced from suppliers. Transmission network approval in place 124MW in pipeline; LOI signed & PPA awaited 11
GUJARAT UPDATE Gujarat s Group Captive status confirmed for FY18 Approval received from Chief Electrical Inspector of Gujarat confirming its Group Captive status for FY18 Company expects that the amounts delayed for FY18 (approx. 5m) will be recovered principally in the current year Dialogue ongoing on Group Captive status for FY16 and FY17 Receivables outstanding (Amounts withheld) 31.4 million as at 30th September 2017 26.1 million as at 31st March 2017 Gujarat Interest payments 3.9 million of interest overdue to term loan lenders due to amounts withheld by Discoms (as above) Enabling Gujarat to enter into Corrective Action Plan ( CAP ) CAP process is well established by RBI and is designed to assist borrowers in the rescheduling and/or restructuring of its long term loans CAP process should enable OPGG to better match the cash flows from the Gujarat plant with its debt obligations 12
STRONG FUNDAMENTALS FOR INDIAN ECONOMY & POWER SECTOR
INDIA POWER SECTOR EXPECTED GROW IN LINE WITH GDP Underlying macro economics remain strong India s GDP increased to 6.3% in Q2 FY18 from 5.7% in Q1 FY18 ; (FY17-7%) GDP Forecasted to grow 7-8% annually over the next 3 4 years Improved credit outlook Moody s upgraded India s sovereign Bond rating to Baa2 from Baa3 Power sector demand forecast robust Target of Power for All now by 2019 (2020 previously) Per capita demand growing by 8% per annum UDAY Reforms drive tariff increases to improve financial position of & demand by Discoms Key Objective to reduce revenue - cost realisation gap Average Cost and Revenue Gap of approx. Rs 0.47 in FY 17 (9 Months); FY 16: Rs 0.56 Tariff increases by many states including Tamil Nadu TANGEDCO tariff increases of avg 6% under a MoU with the Ministry of Power for FY18-19 across all categories of consumers 14
INDIA: DOMESTIC COAL PRODUCTION TO INCREASE DOMESTIC PRODUCTION INCREASES COAL INDIA S DOMESTIC PRODUCTION EXPECTED TO INCREASE 660 MT in FY18 up from 554 MT in FY17 1 billion tonnes by 2020 New railway capacity & high speed freight corridor underway to improve logistics New policy SHAKTI to improve coal availability Mt 200 150 100 INDIAN COAL IMPORTS REDUCE AS DOMESTIC PRODUCTION INCREASES 71 105 136 168 155 149 133 REDUCED COAL IMPORTS DUE TO INCREASE IN DOMESTIC PRODUCTION Recent price hike in imported coal prices sees shut down of some coastal plants 50 0 FY12 FY13 FY14 FY15 FY16 FY17 FY18E Source: ICRA Research 2017 15
INTERNATIONAL COAL PRICES HAVE BEEN VOLATILE Current Chinese domestic coal price approx. 700 RMB for 5500 NAR /5750 GAR; China policy measures to bring coal prices within 500-575 RMB band (Approx $70-75 adjusted for tax & freight) Long term consensus forecasts expect coal prices to decrease by 30% USD/t 120.00 100.00 80.00 60.00 40.00 20.00 Source: Argus, Bloomberg 109.69 73.45 53.54 47.20 39.11 26.63 Avg Price Indo coal : FY17 $36 Current year: $43 NEWC Indonesian Coal Index 4200 GAR Newcastle Coal Price (US$/t) Consensus Forecast 90.0 80.4 80.0 70.9 68.4 70.0 60.0 46.80 93.00 65.51 16 Source: Consensus Economics Nov 17
OUTLOOK
OUR PRIORITIES Areas Plan Actions during the year Cash flows Maximise cashflows from existing assets Higher PLF & generation Gujarat Group Captive resolution Tangedco collection of receivables Safety & Environment Performance Sustainable & Responsible Growth Maintain internal standards - exceeding regulator Continued improvement in Total Reported Injury Rate 62 MW of solar projects being developed Plan for 300 MW renewables in 5 years Augment long term dividend strategy Maintain discipline and position for attractive growth opportunities Exceeding in most parameters Zero TRIR achieved in Chennai & Gujarat (FY17: Chennai 0 ; Gujarat 0.23) 62 MW in construction 18
APPENDIX
INDIA POWER SECTOR OVERVIEW ALL INDIA INSTALLED CAPACITY C.329 GW (FUEL WISE BREAKDOWN) Coal 59% Gas 8% Hydro 14% Nuclear Other Solar 2% 3% 4% Wind 10%..TO MEET DEMAND AND MATCH WORLD PER CAPITA CONSUMPTION PER CAPITA CONSUMPTION (KWH) 13,246 774 914 957 1,010 1,075 2,438 4,604 5,945 6,486 India (FY12) India (FY13) India (FY14) India (FY15) India (FY16) Brazil South Africa China Russia US Source: CEA, World Bank 20
OPG S REVENUE MODEL GROUP CAPTIVE FLEXIBLE - GROUP CAPTIVE Uncapped ROE Variable term and market pricing Tiered Pricing: Industry paying highest, rural & agriculture rates are subsidized (INR/kWh) 8.4 Flexibility as to customers Meeting demands of high tension, industrial consumer Reliability of provision of power State utility 8.4 TN : 6.9 6.67 6.35 5.75 4.60 4.30 3.17 High tension 21 Generator Industrial Consumer HT III Commercial Establishments HT IA Industrial Establishments: 0.00 HT IB Railway Traction, Educational institutions LT IIA Public services: L TIIB(1) Govt Educational Institutions, Hospitals LT IC Govt PSU domestic housing: L TIIC Places of Worship LT IA Domestic, Charitable & Handlooms LT IB Villages & agriculture Source: TNERC Dec 14