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Agenda
• 2008-2012 results
Major milestones
Market evolution and energy margin
Fixed costs and EBITDA
CAPEX and net debt
2012 key results and achievements
• 2013-2017 strategic update
Base assumptions
New DAM price scenario
New market model: Enel OGK-5 position
Key priorities
Technical KPIs
Energy margin
Fixed costs
EBITDA
CAPEX
Cash flows
Conclusions
2008-2012 results Major milestones
Leveraging on Enel expertise with sizeable impact on company operations
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2008 2012
1H 2008
Enel S.p.A. acquires control
of OGK-5
2H 2011
Two new CCGT units commissioned
830MW efficient capacity added
1Q 2011
SAP WISE platform launched
2H 2009
Zenith project kick off
90 initiatives in efficiency and
savings
1H 2012
Consortium of four domestic and
international funds acquires 26% stake
in Enel OGK-5 1H 2009
Coal suppliers diversification
starts
2009 2010 2011
2H 2010
Reftinskaya revamping programme
kicks off
3Q 2008
Board approves Code of Ethics and Zero Tolerance to
Corruption
1H 2009
LT financing secured at
favorable terms in spite of crisis
0.5b EUR raised by 2010 at 4%
1H 2010
O&M restructuring project started
New CCGTs 1.6 BRUR margin from power sales and 4.2 BRUR capacity revenues generated in 2012
2008-2012 results Market evolution and energy margin
Gaining advantage from creation of competitive market Solid margin expansion even in adverse environment
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Market liberalization regulated power sales shrinking to ca. 15% of total sales
Fuel cost management Strong dark spread increase over 5 years
Energy margin evolution (BRUR)1
1 Represents margin from power sales and capacity revenues; heat margin not included
2 Vs. average Enel OGK-5 DAM selling price
2008-2012 results Fixed costs and EBITDA
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EBITDA evolution (BRUR)1 Costs evolution (Th RUR/MW installed, CPI adjusted)
1 EBITDA numbers for 2010-2012 as reported (with no provision adjustments)
Key cost cutting initiatives implemented:
- O&M personnel restructuring and 1st wave of restructuring of staff functions
- O&M service and material consumption control and optimization
- Overhead costs reduction
- Water consumption control actions
3x EBITDA increase over 5 years
stemming from energy margin expansion coupled with fixed costs
containment
Fixed costs
O&M costs
2008-2012 results CAPEX and net debt
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Leverage evolution (BRUR) CAPEX (BRUR)1
Over 70 BRUR invested in 2008-12
including ~30 BRUR into CCGTs at Nevinnomysskaya and Sredneuralskaya
Net debt Net debt/EBITDA
Leverage peak passed in 2010-2011
1 CAPEX paid
2008-2012 results 2012 key results and achievements
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Solid results maintained notwithstanding challenging market dynamics
Key facts Key results
2011 2012 %
Net power output 42 433 44 509 5%
Power sales 47 862 50 744 6%
2011 2012 %
Revenues 60 102 66 546 11%
EBITDA 13 550 15 021 11%
EBITDA margin 22,6% 22,6% -
Net income 4 964 5 553 12%
Net debt 27 443 24 968 -9%
Operating results (GWh)
Financial results (MRUR)
Earnings growth maintained despite weak market prices
Strengthened and enlarged cooperation with key fuel suppliers
New shareholders: 4 Russian and International Investment Funds
Launch of new Operation Organization prepared: shift from “shop” to “unit”
New Maintenance Organization implemented
ISO and OHSAS certificates revalidated for HQ and all the power plants
SAP WISE: increased utilization and completed functionality
CCGTs: first year of full operations
2013 - 2017 strategic update
Enel OGK-5 Analyst Day Strategic Plan 2013-171
1 All numbers presented within this chapter are under Enel IFRS IAS unless otherwise indicated
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2013-2017 strategic update Base assumptions
GDP growth and CPI, %
Installed capacity, GW1 Power demand, TWh1
CPI
GDP growth
CAGR 12-17: 1.4%
CAGR 12-17: 2.3%
1 In Europe+Urals price zone of Russia
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2013-2017 strategic update New DAM price scenario
Impact of new entrants
New entrants production replaces
‘old’ TPP’s
Net capacity additions in Enel OGK-5 markets in 2013-17:
Center: +8.3 GW South: +5.6 GW Urals: +6.7 GW
Gas vs. DAM assumptions1
DAM price lags behind gas tariff growth
High risk of gas spreads contraction
Fuel cost containment increasingly crucial
1 DAM price evolution in Enel OGK-5 markets (Centre, South, Urals)
TWh
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2013-2017 strategic update New market model: Enel OGK-5 position
Confidence that regulators will allow proper economic equilibrium
Flexibility and efficiency of the Company to ensure successful operations under new rules
Continuous monitoring and
proactive contribution to
new market model development
Focus areas:
Stable and predictable regulatory framework
Fair competition not restricted by excessive government intervention
Sufficient margins to promote modernization
Undistorted price indicators
Sound financial discipline on the wholesale market
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2013-2017 strategic update Key priorities
Optimizing plant operations in response to the evolving market competition
Market environment and regulatory Efficiency
Leverage on Enel Group’s expertize in delivering excellence projects
Optimization of fuel costs via continuous improvement of supplier portfolio
Financial Discipline
CAPEX optimization to ensure sound cash flow generation
Focus on life-extension and environmental investments assuring stable profit generation in the long-term
Continuous monitoring and proactive contribution to new market model
development
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2013-2017 strategic update Technical KPIs
Installed capacity, GW
Net output, TWh
Coal: 25 MW increase due to revamping
CCGT: unchanged
Conventional gas: 80MW decrease due to decommis-sioning of outdated phase 1 at Sredneuralskaya in 2016
Coal: 21-22 TWh output per year in 2013-17
CCGT: gradual availability improvements drive net output up to 5.8 TWh in 2017
Conventional gas: gradual output decrease mainly due to the impact from new entrants
Optimizing plant operations in response to the evolving market competition
CCGT and Coal KPIs
CCGT availability
78%
2012
91%
2017
Reftinskaya unplanned outage
9%
2012
6%
2017
Reftinskaya utilization on available capacity
88%
2012
90%
2017
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2013-2017 strategic update Energy margin
Energy margin growth secured by fuel portfolio optimization and increase in equipment efficiency and availability
DAM sales (RUR/MWh)1
Capacity sales (TH RUR/MW/month)
‘Kdam’ revision
Energy margin, BRUR2
1 Fuel costs on the graph represent blended OGK-5 fuel costs (coal and gas) in RUR/MWh
2 Represents margin from power sales and capacity revenues; heat margin not included
~27.5
~32
Optimization of fuel costs via continuous improvement of supplier portfolio
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2013-2017 strategic update Fixed costs
Actions identified to maintain an acceptable costs level
O&M costs (Th RUR/MW installed, CPI adjusted)
Moderate increase in O&M costs attributable to maintenance costs associated with CCGT technology
Fixed costs (Th RUR/MW installed, CPI adjusted)
Flat CPI-adjusted fixed costs dynamics mainly due to containment of personnel and overhead costs
Key cost containment actions
Leverage on Enel Group’s expertize in delivering excellence projects
Final stage of O&M restructuring: Restructuring of O&M area, introduction of multiskilling in Operation
Second wave of restructuring of staff functions
Review of maintenance strategy for conventional gas fired plants
O&M cost and material consumption control and optimization
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2013-2017 strategic update EBITDA (BRUR)
Challenging targets to be achieved by continuous efforts in all company areas
2012-2015 EBITDA CAGR:
12%
15
~16.5
~21
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2013-2017 strategic update CAPEX
Essential stay-in-business investments
CAPEX 2013-17
Maintenance CAPEX
Other
RGRES revamping
RGRES 500MW unit filters
Other environment and safety
RGRES dry ash
CAPEX by year (BRUR)
2013 ~7.5
2014 ~7
2015 ~11
2016 ~8
2017 ~9
Total CAPEX:
~42.5 BRUR
Key features
CAPEX for 2013-17 reduced versus old business plan
RGRES and SGRES revamping projects modified
Environmental investments in priority to ensure Reftinskaya continuous operations
Maintenance CAPEX strictly focused on base and half-peak generating units
Focus on life-extension and environmental investments assuring stable profit generation in the long-term
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2013-2017 strategic update Cash flows
Solid positive free cash flows
~5
Cash flow (BRUR)
In
flo
w
Ou
tflo
w
Operating CF + WC
CAPEX
Free cash flow
Debt servicing ~5
CAPEX optimization to ensure sound cash flow generation
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2013-2017 strategic update Conclusions
2008 2012 2013-17
A prominent player on the generation market
A promising fuel mix
Acquired by foreign investor
Necessity to undergo massive investments
One of sector leaders in profitability
Benchmark setter in cost management
Stable corporate system
Transition from negative to positive FCF
Maintaining the solid track record of constant
earnings growth
Longer-term confidence in future brought by life extension of key assets
Strengthened balance sheet position and cash
flow generation
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Enel OGK-5 Analyst Day Strategic Plan 2013-17
This presentation contains certain statements that are neither reported financial results nor other historical information (“forward-looking statements”). These forward-looking statements are based on Enel OGK-5 ’s current expectations and projections about future events. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of Enel OGK-5 to control or estimate precisely, including changes in the regulatory environment, future market developments, fluctuations in the price and availability of fuel and other risks. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this presentation. Enel OGK-5 does not undertake any obligation to publicly release any revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation.
Disclaimer
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Enel OGK-5 Analyst Day Strategic Plan 2013-17
Alexey Leonov (Head of IR)
+7 495 539 31 31 ext. 7631
Visit our website at:
www.ogk-5.com
(Investor Relations)
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