the open joint-stock second generation company of the ... · 7gld0786_template3 3 competitive...
TRANSCRIPT
7gld0786_template4
The Open Joint-Stock Second Generation Company of the wholesale electricity marketOGK-2
_____________UBS. NY. M2008
7gld0786_template3
1
OGK-2
Fuel: gasElectricity production: 1,9 TWh
PSKOVSKAYA GRES430 MW/121 Gcal/h
Fuel: coal, gasElectricity production: 3,2 TWh
SEROVSKAYA GRES526 MW/220 Gcal/h
Fuel: gasElectricity production: 24,1 TWh
SURGUTSKAYA GRES3,280 MW/958 Gcal/h
Fuel: gasElectricity production: 9,8 TWh
STAVROPOLSKAYA GRES2,400 MW/220 Gcal/h
Fuel: coalElectricity production: 9,0 TWh
TROITSKAYA GRES2,059 MW/315 Gcal/h
North-Western Grid
Central Grid
Southern Grid
Middle Volga Grid
Urals Grid
Siberian Grid
Far Eastern Grid
Russian companyOGK-2 founded at
March, 2005.
OGK-2 generates and trades energy at the wholesale
electricity market.
Overall installed capacity
is 8,695 MW
OGK-2 is one of the largest sellers
on the free market.
OGK2 was the first Russian
wholesale genco whose shares were
publicly offered on the London
Stock Exchange.
OGK-2’s share are listing also on the Russian
Stock Exchanges (MICEX and
RTS).
7gld0786_template3
2
OGK-2 and market positioning
9 531
9 052
8 695
8 672
8 630
8 487
OGK-1
OGK-6
OGK-2
OGK-5
OGK-4
OGK-3
MW
364
346 345
336331
326
300
310
320
330
340
350
360
370
OGK-6 OGK-3 OGK-2 OGK-5 OGK-1 OGK-4
equi
vale
nt fu
el, g
/KW
h
OGK-2 is the third largest company in Russia in terms of installed capacity
OGK-2 has an ambitious investment program that is aimed at commissioning 2,780 MW by end 2012 at its current production sites and modernizing and reconstructing existing equipment.
It is the country’s second most modern OGK
3032
38 38
4244
0
5
10
15
20
25
30
35
40
45
50
OGK-4 OGK-2 OGK-3 OGK-6 OGK-1 OGK-5
year
s ol
d
68
63
57
55
41
41
OGK-4
OGK-2
OGK-1
OGK-5
OGK-3
OGK-6
средний КИУМ в %
…and second largest in electricity generation
The company has high fuel efficiency standards
Source: OGK’s data
7gld0786_template3
3
Competitive AdvantageOGK2 is a predominantly gasfired genco. Gas constituted 73% of its total fuel balance structure.
However, coal also plays an important role, accounting for 26%, nearly the entire remainder, and the share is set to increase as a result of the planned investment program. We expect coal prices to grow at a slower pace than gas prices.
The company's key fuel suppliers are Surgutneftegaz (33%), Gazprom (26%) and Access Industries (27%).
High growth rates for consumption of electricity at the regions
Forecast Deficit in generation capacity in2011 г, GW
9,8 9,2
6,0 5,44,1
0,402468
1012
Urals IES CenterIES
SiberianIES
Nothern-West IES
SouthernIES
MiddleVolga
IES
Second place in the nomination “Best Social report”
“Program for Implementing the EnvironmentalPolicy” of OGK-2 took first place in the nomination “The Best
Environmental Policy of the Holding RAO UES Russia”
«Best annual report»
«Best manager of corporate governance practice at electric generation companies»
«Best account of Russia»
…have been proved to be true an external estimation
System of ecological management
Corporative governance practice
Automation of administration systems based on SAP R/3
Enterprise Content Management
Quality management system (ISO 9001:2000)
High corporative standards
Coal26%
*without taking new generation capacity
Fuel mix
Gas73%
Black-oil0,6%
2007
Gas60%
Black-oil0,5%
Coal39,5%
2015
5,4% 5,3% 4,9% 4,7% 4,3%
3,0%
0%1%2%3%4%5%6%
Nothern-West IES
SouthernIES
SiberianIES
CenterIES
Urals IES MiddleVolga
IES
Average annual growth rates (2007-2011)
Some 76% of its total electricity output is generated at capacities located in the already energy-deficient Urals Integrated Energy System (IES).
*on-balace volume of equivalent fuel
independent suppliers
Source: OGK-2, RAO UES of Russia
7gld0786_template3
4
Investment projectsOGK-2’s investments is aimed at commissioning new capacity at its current production sites in the energy-
deficient and heavily industrialized regions. All new electricity volumes will be sold at free market prices. The free average electricity market price is above than electricity tariff.
Commissioning2780 MW
(by end 2012)Stavropolskaya GRES
+ 800 MWTroitskaya GRES
+ 1320 MW
Serovskaya GRES+ 660 MW
OGK2 offers strong exposure to the liberalization of Russia’s electricity market and expectedprofit growth.
7gld0786_template3
5
Liberalization schemeElectricity Capacity market
All energy is being traded according to predefined tariffs (two-sided agreements subject to regulations)
• Under the regulated agreement, the company has to sell the amount of electricity defined by the FST balance at the FST tariff
2012 - ...
2008 - 2011
2006 - 2007
Transition model• Gradual liberalization of capacity trading (total
capacity distributed through regulated agreements is reduced). The process is synchronized with electricity trading liberalization.
• Available capacity is sold at the free market with no price regulations
Targeted capacity trading• All output is being sold at the free market either
through non-regulated two-side agreements or through the automated distribution system (ATS)
Starting from 2008, all regulated tariffs will be indexed with the tariff formula: the electricity wholesale tariff formula will make it possible to pass inflation, fuel costs and other expenses through to the end-tariff as of 1 January 2008.
New consumption not written into electricity balance for 2007 going directly on to the free market; and new capacity introduced after 1 January 2008 being 100% free from tariffs.
15-20
35-40
45-50
65-70
70-75
80-85
85-90
90-95
80-85
60-65
50-55
30-45
25-30
15-20
10-15
5-10
100
1H2007
2H2007
1H2008
2H2008
1H2009
2H2009
1H2010
2H2010
2011
Regulated sector Liberalizated sector
New capacity
Free-market30%
Regulated market70%
In 2007 OGK-2 sold 17 122,3 mlnKWh at the free market.
Source: RAO UES of Russia
7gld0786_template3
6
Free-market orientationSale electricity in 2007 Electricity tariffs and prices (RUB/MW.)
795,
1
753,
9
760,
9
841,
0
877,
0
562,
2
708,
9
712,
5 1 25
4,4
1 55
9,0
1 18
7,6
864,
5
1 01
2,7
1 45
7,6
1 34
4,3
1 38
6,2
1 37
0,4
945,
9
1 24
5,1
1 43
6,9
1 36
4,7
2 13
7,8
1 82
4,1
1 59
6,5
0,0
500,0
1 000,0
1 500,0
2 000,0
2 500,0
Jan Feb March Apr May Jun Jul Aug Sep Oct Nov Dec
Purchase Sell
488 536 606 437 299
0
200
400
600
800
Pskov Stavropol Serov Troitsk Surgut
Electricity tarif f in 2007 Average price in 2007
OGK-2 is one of the largest sellers on the free market.
In 2007 30% of all generated electricity was sold on the free market.
The company actively trades the energy produced by other power generation firms
Free-market30%
Regulated market70%
649 634 626
555521
Source: OGK-2
Mln. KWh
Source: OGK-2
Purchase and selling electricity on the free-market in 2007 (mln. KWh)
Source: OGK-2
7gld0786_template3
7
Operating results
Electricity output, mln. KWh Heat output, th. Gcal17
35,4
3087
,2 9703
,9
9026
,3
4802
2,1
4808
3,6
2446
9,3
8987
,6
2414
7,5
9830
,2
3228
,3
1890
0
10000
20000
30000
40000
50000
60000
Psko
vska
ya G
RES
Sero
vska
ya G
RES
Stav
ropo
lska
ya G
RES
Surg
utsk
aya
GRE
S-1
Troi
tska
ya G
RES
OGK-
2
2007 2006
60 103
80
1733
516
249
2
2523
492
1781
81109
60
0
500
1000
1500
2000
2500
3000
Psko
vska
ya G
RES
Sero
vska
ya G
RES
Stav
ropo
lska
ya G
RES
Surg
utsk
aya
GRE
S
Troi
tska
ya G
RES
OGK-
2
2007 2006
Source: OGK-2
7gld0786_template3
8
Financial results
Growth of revenue,(mln RUB)
19 39725 434
33 759
2005 2006 2007
Electricity75.5%
Heat1.8%
Other 0.2%Capacity
22.5%
Structure of proceeds in 2007
Source: russian financial report
2005 г. 2006 г. 2007 г.*
Revenues 19 396 553 25 433 668 33 759 235
Operation expenses: (18 286 647) (21 874 546) (33 090 137)
Reversal of impairment of property, plant and equipment, net 1 140 481 4 307 159 -
Depreciation of property, plant and equipment (856 310) (855 823) (621 556)
Other operation income 229 077 97 827 (109 263)
Operation profit 1 338 983 3 656 949 559 835
Finance costs (186 395) (267 558) (134 000)
Profit before income tax 1 152 588 3 389 391 425 835
Total income tax charge (598 342) (955 378) (386 551)
Profit for the year 554 246 2 434 013 39 284
EBITDA’ ** 1 054 812 205 613 1 714 391
EBITDA 2 195 293 4 512 772 1 181 391
EBITDA’ / Revenues, % 5 1 5
Sales, (mln KWh)*
48 20456 353
2006 2007
Total expenses without Reversal of impairment of property ,
(mln RUB)
19 385
26 351
33 333
2005 2006 2007
Source: 2005-2006 – IFRS; 2007 – non-audition russian financial report
* Non-audition russian financial report; ** EBITDA before Reversal of impairment of property, plant and equipment, net and IPO costs
7gld0786_template3
9
Assets and liabilitiesLiabilities** (1H 2007)
accounts payable22%
long-term debt13%
deferred tax28%
floating debt31%
other liabilities6%
$375 mln
Debt*
177
114
19,6
41
48 238,8
0
50
100
150
200
250
300
2006 1H 2007 2007
US$
, млн
short-term long-term
Assets** (1H 2007 г.)
permanent assets; 75%
stok; 9%
cash assets; 3%
debt receivable; 7%
пother assets; 6%
$904 mln
** Source: MSFO* Fx average rates (rur / $): 2005 г. – 28,31; 2006 г. – 27,09; 2007 г. – 25,55
7gld0786_template3
10
IPO on LSE
ОГК-2’s shares are traded on Russian MICEX and RTS stock exchanges and OGK-2 strives for best practice in corporate governance and investor relations.
Are traded on RTS (T+0 market) since July 17, 2006, listed as b-sharesAre traded on MICEX since July 19, 2006, listed as b-sharesAre traded on RTS (classic market) since July 20, 2006, listed as b-shares
OGK-2 GDR shares are traded on LSE since October 4, 2007
OGK-2 IPO results: 6.25 bln shares, 24.967 bln RUB (>50% of the planned 42 bln roubles) – remarkable result considering tough market conditions.
Placement price: $0.16 ($16 for GDR, multiplier = 1:100).Expectations: between $0.1475 and $0.18
Underwriters and bookrunners Со-manager
7gld0786_template3
11
OGK-2 Shareholder’s Equity structure
Post-IPO (at present)
Ordinary shares: 32 732 921 913.Charter capital: 11 872 mln RUB (rounded).
Post-reorganization of RAO (from 1.07.2008)
Ordinary shares: 32 757 822 542.Charter capital: 11 881 mln RUB (rounded).
4,22%1,90%
12,84%
2,16%
13,41%
65,47%
RAO UES of Russia
Westmead Limited
Schoeni Enterprises Ltd
«Gazenergoprom-Invest»
UFGIS Trading Ltd
Other
52,84%47,16% Gazprom
Minority shareholders
7gld0786_template3
12
RAO UES of Russia reorganization
AntitrustRegulatorsgive green lightto OGK-2reorganization
As a result of the second stage of the restructuring a number of independent companies (OGK, TGK, FSK etc.) will be created and the RAO UES will be
liquidated
Dec 2007
AdditionalOGK-2 stockissue andissue prospectare registered
OGK-2 Holding is created as a part of former RAO UES
AdditionalOGK-2 stockissue reportis registered
March 2008
1 Jul 2008
Aug 2008
OGK-2shares tocommencetrading on theexchange
Aug 2008
Main andadditionalissue aremerged
Oct 2008
RAO UES liquidation
OGK-2 additional issue shares give the same rights as the main ones
OGK-2 Holdingbecomes a
part of OGK-2OKG-2 Holding
shares are converted into OGK-2 shares
RAO UES shares are
converted to OGK-2 shares
OGK-2 Holding shares converted to OGK-2 shares are treated as additional issue OGK-2 shares until they are
merged with the main issue in October 2008