enel ogk-5 investor presentation · 2009. 11. 11. · enel ogk 5 investor relations october 2009...

Enel OGK-5 Investor Presentation

October 2009

October 2009 ENEL OGK-5 Investor Presentation

Enel OGK 5Investor Relations

Enel OGK-5 Investor PresentationContents

ENEL OGK-5 Factsheet

Enel: A Global Dimension

Enel: Presence in Russia

Well-Balanced Position in Fast Growing Markets

2009 First-Half Results:

Financial Highlights

Power Generation and Sales

Unit Margin

EBITDA

Headcount Reduction Plan

Net Debt and Liquidity Evolution

Strategic Mid-Term Guidelines

Key Levers and Target Areas of Value Creation

New Investments

Installed Capacity Evolution

2



ENEL OGK-5 Factsheet

Overview

ENEL OGK-5 is an independent Russian wholesale power generation company with annual revenues exceeding $1.3 billion

ENEL OGK-5 owns 4 thermal power plants serving Moscow, Ural and South regions, with current installed capacity of 8.7GW

ENEL OGK-5 was the first power company spun off during RAO UES reorganization

Enel, Italy’s leading utility company owns 55.9% equity stakeShares listed on RTS and MICEX since 2006, 7.3 free float

Moody’s credit rating Ba3 InternationalAa3 NationalStable outlook

S&P’s governance rating 6.0 GAMMA

ENEL OGK-5 enjoys a stable credit rating and the best corporate governance score in Russian

power industry

Ownership Capitalisation: Jan – Aug 09 ($m)

Ratings

0

200

400

600

800

1000

1200

1400

1600

1800

Jan09 Feb09 Mar09 Apr09 May09 Jun09 Jul09 Aug09

Market Cap, $m

ENEL OGK-5

OGK AVG

3



5.7 GW22.5 TWh

0.7 GW1.9 TWh

North America

0.6 GW2.5 TWh

Central America

5.4 GW21.7 TWh6.5 TWh

Chile

1.6 GW8.8 TWh5.2 TWh

Peru

2.9 GW12.9 TWh7.3 TWh

Colombia

1.1 GW3.9 TWh14.5 TWh

Brazil

4.5 GW14.4 TWh13.4 TWh

Argentina

8.2 GW40.7 TWh17.4 TWh

Russia

Slovakia

40.3 GW96.3 TWh137.2 TWh

Italy

1.0 TWh

France

22.5 GW85.5 TWh109 TWh

Iberia1

0.6 GW3.7 TWh

Bulgaria

9.9 TWh

Romania

Greece

0.1 GW0.2 TWh

1.Including: 100% Endesa net of the assets to be transferred to Acciona, full year OGK-5 and E. Muntenia Sud production and sales.

Excluding January - June 08 production and sales of Viesgo.

2008 Installed capacity (GW)2008 Net production (TWh)2008 Tot sales to final customers (TWh)Enel: A Global Dimension1

An international integrated energy player

0.1 GW0.9 TWh

Morocco1

4



Enel: Presence in RussiaFirst Vertical Integration Built in Russian Energy Sector

Integration allows hedging the risks on huge liberalised market,primarily hedging gas supply risks for ENEL OGK-5

SupplyPower generationUpstream gas

20% of SeverEnergiya

(50% - Gazprom, 30% - ENI)

55.9% of ENEL OGK5 49.5% of RusEnergoSbyt

• Largest independent retail power company in Russia

• Over 35 TWh sold in 2008

• Strong regional reach with 25 offices and 7 branches

• RES is main supplier to Russian Railways (15 year long-term power supply contract).

o

• Gas fields in the north of Western Siberia

• Covering up to 50% of needs of OGK-5’s gas-fired plants

Integration characteristics:• Operating companies must build their own competencies while guided by Enel expertise• Strategic target: to grow margins over long term and develop a balanced generation mix

Core asset of Enel’svertical chain in Russia

5



Well Balanced Position in Fast-Growing Markets

0.6%

12.4%

12.3%

8.0%

1.4%

8.6%

EBITDA margin (2008)

72

225

233

70

112

133

EV/IC, $/kW

(18/09/09)

None

Moody’s Aa3.ru1

None

None

None

Moody’s Aa3.ru1

Credit Rating

0.03

0.61

0.54

0.37

0.07

0.45

EBITDA/MW, m RR/MW

(2008)

0.2

5.3

4.7

3.1

0.6

4.3

EBITDA, b RR

(2008)Positioning

9,052

8,732

8,630

8,497

8,695

9,531

Installed Capacity (IC),

MW

49%

57%

75%

46%

65%

56%

Utilization factor (2008)

Fuel Mix

None

OGK-2

None

OGK-1

None

OGK-3

None

OGK-6

S&P GAMMA-6.04

ENEL OGK-5

S&P CGS 42/4.43

OGK-4

Corp. Governance

Rating

Gas

Coal

Gas Coal

Gas

Coal

CoalGas

CoalGas

Gas

Coal

1 National scale2 International scale

3 National scale4 Corresponds to the CGS of 6/6.0

Strong Platform for securing a leading role in a huge liberalizing marketTop corporate credit rating and governance practices in the power sector

6



Financial Highlights1

Solid performance and financial flexibility in a challenging business environment

1 Unaudited financial results under IFRS2 According to the current fixed assets evaluation methodology (fair value model)3 Net Debt as of 31 December 20084 Net Debt at the end of the period divided by 12 months rolling EBIDTA

Unit 1H 2008 1H 2009 Chg

Revenues

EBITDAEBITDA margin

Net Income2

Net Debt

EBITDA/Net Financial Expenses

Net Debt/EBITDA4

Net Debt/Equity

M RUR

M RUR

M RUR

M RUR

n.

n.

n.

%

20 216

2 373

767

6 1093

17

1.2

0.07

19 213

3 728

1 726

11 522

14

1.7

0.18

-5%

+57%

+125%

+89%

12 19

2009 First-Half Results

7



Power Generation and Sales

Trend in power generation and sales influenced by the drop in energy consumption and non-recurring stack maintenance at Reftinskaya

Significant improvement of plant availability on a recurring basis due to a more effective maintenance policy

Net Output (TWh)

1H08 1H09

21.017.3

47% 49%

53%51%

Power Sales (TWh)

1H08 1H09

24.419.7

66% 69%

34%31%

84%

1H08

87%

1H09

Plant availability1

2.8%

1H08

2.0%

1H09

Unplanned outage ratio

Gas

Coal

Regulated

Not regulated

1 Without considering the effects of non-recurring stop for stack maintenance at Reftinskaya (4x500 MW units) in 1H2009 and recovery of Unit 10 at Reftinskaya GRES in 1H08 after the fire accident in December 2006


8



Unit Margin on Sales (RUR/MWh)1

Unit Price

1H08 1H09

5885

Unit Margin on Sales

1. Excluding capacity payment

+46%1H08 1H09

581 609

+5%

Unit Cost of Sales2

1H08 1H09

523 524

-

Considerable unit margin growth due to the increase of power tariff outpacing average fuel cost growth

2. Including energy purchases


9



EBITDA evolution (m RUR)

EBITDA growth driven by increase in generation margin and cost reduction notwithstanding inflation dynamics (11.9%)

+1349+409

-81

3728

2373Increase of generation

margin

Other items

1H2008 1H2009

Manageable costs1

+57%

-322

Not manageable costs

1 Including non-recurring restructuring costs of 308 million RUR recognized in 1H2008


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Headcount Restructuring Plan

Restructuring Plan Highlights

Goals• Align the HC/MW ratio to the best

international standards • Change the quality mix and decrease

the average age of employees

Actions• Optimization of processes and

organizational structure (lean methodology approach)

• Centralization of staff functions• Development of multi-skill

competencies • Adoption of a new ERP platform

(SAP/R3) • Decommissioning of old units.

1H008 1H2009

42723984

-104 -115 -69

Technical staff

O&M staff Administrative staff

Headcount Restructuring Plan

Successful implementation of the downsizing plan: − Headcount/MW ratio reduced down to 0.46− Lowest headcount/MW ratio in the sector

-288 units


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Net Debt and Liquidity Evolution (1)

Fixed/Hedged

Variable

Fixed + Hedged on Total Debt

31 Dec 08 30 Jun 09

6109

11522

-3796

+7572

+1371

Cash flow from operations

CAPEX

Non-current assets

Net financial charges

+266

+89%

31Dec08 30Jun09

80%

20%

73%

Average Cost of Debt

7.5%

1H08

10.4%

1H09

RUR

EUR n.a. 6.0%

Net Debt (m RUR)

27%


12



Available credit facilities (B RUR)

28.2

10.4

100%

60%

40%

Utilized amount (%)

65%

40%

+171%

31Dec08 30Jun09 31Dec08 30Jun09

Short-term

Long-term

Net Debt and Liquidity Evolution (2)

Improved debt portfolio in a challenging business environment:- Better balanced debt structure with respect to capital employments- Residual life extended from 10 months to 8 years and 3 months


13



Strategic Mid-Term Guidelines

• Maintain a leading role in the russian power generation market • Maintain a leading role in the russian power generation market

• Take full advantage of market liberalization process • Take full advantage of market liberalization process

• Extract 100% efficiency from the current asset portfolio • Extract 100% efficiency from the current asset portfolio

• Financial discipline in compliance with requirements of

credit rating (Ba3/Aa3.ru) and financial covenants with lenders

• Financial discipline in compliance with requirements of

credit rating (Ba3/Aa3.ru) and financial covenants with lenders

• Control investment risk profile under the current regulatory scenario • Control investment risk profile under the current regulatory scenario

• Take advantage from Enel’s vertically integrated presence in Russia • Take advantage from Enel’s vertically integrated presence in Russia

• Ensure satisfactory cash return to shareholders • Ensure satisfactory cash return to shareholders

Solid strategy to maximize shareholder value in unsteady times

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Key Levers and Target Areas of Value Creation

Regulatory Management

Energy Management

Plant Availability

and Efficiency

Cost Optimization

Tailored actions focused on improvement of operating performance and organic growth

Investmentprogram

• Shinking of frequency and duration of general overhauls• Optimization of planned outages throug predictive maintenance• Redesign of maintenance activities management• Heat rate optimization trough equipment modernization and launch of new CCGT

• Shinking of frequency and duration of general overhauls• Optimization of planned outages throug predictive maintenance• Redesign of maintenance activities management• Heat rate optimization trough equipment modernization and launch of new CCGT

• Proactive and consistent positioning on regulatory priorities (energy market liberalization, capacitymarket rules, regulated tariffs)• Cooperation and dialogue with regulatory bodies based on Enel Group’s experience in liberalizedmarkets

• Proactive and consistent positioning on regulatory priorities (energy market liberalization, capacitymarket rules, regulated tariffs)• Cooperation and dialogue with regulatory bodies based on Enel Group’s experience in liberalizedmarkets

• Focus on bidding strategy improvement and production optimization • Diversification of fuel sources and logistics• Taking advantage of Enel’s vertical chain in Russia (upstream gas and power retail)• Free bilateral contract portfolio development to mitigate price volatility in DAM Market

• Focus on bidding strategy improvement and production optimization • Diversification of fuel sources and logistics• Taking advantage of Enel’s vertical chain in Russia (upstream gas and power retail)• Free bilateral contract portfolio development to mitigate price volatility in DAM Market

• On time commissioning of new CCGT units in compliance to capacity contract requirements• Dry Ash removal system to ensure continuity and increase availability of Reftinskaya power station• Only necessary replacement (life ended critical equipment) to preserve existing capacity and improve performance• Environmental action plan according to best available techniques

• On time commissioning of new CCGT units in compliance to capacity contract requirements• Dry Ash removal system to ensure continuity and increase availability of Reftinskaya power station• Only necessary replacement (life ended critical equipment) to preserve existing capacity and improve performance• Environmental action plan according to best available techniques

• Procurement optimization (design to cost,, supplier diversification) • Reorganization of core and infrastructural process supported by the new ERP platform (SAP/R3)• Headcount downsizing plan and centralization of staff functions• Participation to ENEL GROUP ZENIT program

• Procurement optimization (design to cost,, supplier diversification) • Reorganization of core and infrastructural process supported by the new ERP platform (SAP/R3)• Headcount downsizing plan and centralization of staff functions• Participation to ENEL GROUP ZENIT program

15



MODERNISATION & ENVIRONMENT

DRY ASH REMOVAL SYSTEM AT REFTINSKAYA GRES

Capacity: 410MWFuel: gasCommissioning: 2010

New Investments

NEW COMBINED CYCLE UNIT AT SREDNEURALSKAYA GRES

NEW COMBINED CYCLE UNIT AT NEVINNOMYSSKAYA GRES

Availability increaseStrong contribution to

improving environmentOpportunities to sell dry

ash to construction companies

Commissioning: 2011

Longer life, better availability and efficiencyReduction of fuel con-sumption and O&M costsEnvironmental compliance with Enel standards and EBRD requirements

Capacity: 410MWFuel: gasCommissioning: 2010

NEW UNITS: Strict control over timing and cost, state-of-the-art technologies, world-famous contractors

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56%44%

Installed Capacity Evolution

93408732

Capacity increase through

modernisation

New CCGTs at Sredneuralskaya

and Nevinnomysskaya

power stations

Decommissioning of outdated

facilities

2008 2013

Fuel Mix Evolution

2008

2013

+ 608 MW

Increase in installed capacity of 608 MW (+7%)- CCGT: + 820 MW -Fuel/Gas: -212 MW

In 2013 well balanced and more efficient fuel mix

50%

9%

41%

Coal

Gas

CCGT

Coal

Gas

8732 9340+20

+820

-232

17



Disclaimer

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 JSC 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 JSC 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. JSC 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.

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Contact us

• Alexey Leonov (Head of IR)

+7 495 380 02 30 ext. 5618

[email protected]

Visit our website at:

www.ogk-5.com (Investor Relations)

Visit our website at:

www.ogk-5.com (Investor Relations)

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enel ogk-5 investor presentation · 2009. 11. 11. · enel ogk 5 investor relations october 2009...

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