K-electric Ltd. · PSX:KEL
K-electric — Investor Presentation (May 2015)
23 slides from K-electric's investor presentation, May 2015
Slide 1: KE Presentation May 2015
KE Presentation May 2015
Slide 2: Pakistan Country Overview
Pakistan Country Overview Country Overview Significant Progress in Recent Months Demographics (mn) FY 14 China Population 186 1 Low oil price levels are expected to save Pakistan – 15 to 64 years 62% US$5-6bn in oil imports annually Improving Labor Force 64 Current account balance (as % of GDP)
Slide 3: Pakistan Power Sector Structure
Pakistan Power Sector Structure Government of Pakistan has restructured the sector through privatisation and unbundling. 8 distribution companies and 4 generation companies are still in the privatisation pipeline Key Highlights Current Electricity Sector Overview Historically the power sector cons
Slide 4: Pakistan Power Sector: Opportunity
Pakistan Power Sector: Opportunity Pakistan is a power deficit market which represents an attractive investment opportunity for the power sector An Acute Energy Shortage … … Fuelled by an Expensive Generation Mix … Chronic underutilisation of capacity leading to energy deficit of more than 6GW Pakis
Slide 5: Pakistan Power Sector: Reform Underway
Pakistan Power Sector: Reform Underway Circular debt has historically clogged capacity and stifled liquidity in the power sector; given recent oil price decline, rate of circular debt is expected to decline significantly, which should help the economy. Moreover, government has also undertaken measur
Slide 6: KE Overview
KE Overview KE Background Incorporated in 1913, K-Electric (“KE”) (formerly known as Karachi Electric Supply Company) is a publicly listed fully integrated power utility involved in generation, transmission and distribution KE was privatized in 2005 Abraaj acquired a controlling stake(1) in KE
Slide 7: KE: Key Value Drivers
KE: Key Value Drivers 7 1 Commercial Proposition FavorableGovernment GovernmentPolicy Policy Strategic Importance of Favorable Karachi 6 2 Strong & Credible Management Experienced Compelling Commercial Management Strategic Importance Proposition 5 3 Opportunity to Further Enhance Opportunity to Furt
Slide 8: Strategic Importance of Karachi
1 Strategic Importance of Karachi The city of Karachi is essential to Pakistan’s economy and drives much of the country’s economic growth. As the city’s sole electricity provider, KE is of strategic importance to the municipality and the country Karachi’s Importance to Pakistan Strategic Location
Slide 9: Compelling Commercial Proposition
2 Compelling Commercial Proposition KE is the only remaining vertically integrated power utility in Pakistan with exclusive licensing rights for Karachi and a customer base of 2.5mn Presence Across the Entire Power Value Chain Generation Transmission Distribution All power units and grid stations ar
Slide 10: Overview of Generation Capacity
2 Overview of Generation Capacity Total installed capacity of over 2,247 MW with nearly 45% of KE’s capacity being less than 6 years old 1 Bin Qasim Power Station 1 (BQPS 1) 2 Korangi CCPP Capacity 1,260 MW (6 units)(1) Capacity 247 MW (4 units, 2ST) GDC 920 MW (5 units)(2) GDC 215 MW Year 1983 – 19
Slide 11: Operational Outperformance – Generation
3 Operational Outperformance – Generation Installed generation capacity has been enhanced by over 1,000 MW and overall efficiency has improved from 30.4% in FY 09 to 37.3% in 9M 2015 Capacity Enhancement KE Capacity (MW) c. 1,037 MW increase in installed generation capacity since 2009 33% 2,247
Slide 12: Operational Outperformance – Transmission
3 Operational Outperformance – Transmission Increased reliability in transmission network through the addition of 12 new grid stations and 62km of new EHT lines, while also rehabilitating 189km of old EHT line, resulting in an increased transmission capacity of 768 MVA Power Transformers Reliability
Slide 13: Operational Outperformance – Distribution
3 Operational Outperformance – Distribution FY 14 T&D losses stood at 25.3%, representing a c. 11 percentage point decline since 2009 Key Initiatives T&D Losses (%) – Rolling Average Organization restructured to deliver business objectives Built modern customer services centres and 35.9% 34.9% R
Slide 14: Operational Outperformance – HR Restructuring
3 Operational Outperformance – HR Restructuring Enhanced workforce effectiveness through creation of a performance-driven and workforce optimization (reduction of head count by approximately 7,000 KE Initiatives: Rightsizing Accountability Management Change Promotion of 3,500 Non-Management
Slide 15: Robust Financial Performance: Multi Year Tariff Structure
Robust Financial Performance: Underpinned by a 4 Multi Year Tariff Structure The current MYT structure is a performance based / efficiency driven tariff whereby KE can increase its returns by beating inherent efficiency benchmarks incorporated into the tariff structure Background and Components of C
Slide 16: Robust Financial Performance
4 Robust Financial Performance KE revenue increased at a CAGR of c.12% between 2009 and 2014 on the back of decreasing T&D losses. KE achieved positive operating profitability in FY 11 and net profitability in FY 12 Revenue (US$mn) EBITDA (US$mn) CAGR 11.8% 7.1x 18% 1,951 14% 15% 15% 1,824 1,892 11%
Slide 17: Robust Financial Performance (Cont’d)
4 Robust Financial Performance (Cont’d) Significant capital expenditures over the last 5 years have allowed KE to achieve its objective to increase generation capacity and improve T&D infrastructure. Return to profitability has accelerated KE’s deleveraging pace Total Capex (US$mn) Change in Working
Slide 18: Opportunity to Further Enhance Operational Efficiency
5 Opportunity to Further Enhance Operational Efficiency Key Generation Initiatives In Place Conversion of 420 MW of existing “furnace oil” capacity into coal-fired plants — Structured as an IPP – draft PPA with the newly formed IPP being reviewed — Expected to be completed by 2018 Conversion of
Slide 19: Opportunity to Further Enhance Operational Efficiency (Cont’d)
5 Opportunity to Further Enhance Operational Efficiency (Cont’d) Transmission and Distribution Initiatives 1 2 Key Transmission Initiatives Key Distribution Initiatives K-Electric is in the planning phase of undertaking a Smart Grid Initiative significant transmission enhancement and rehabilitat
Slide 20: Experienced Management
6 Experienced Management Highly experienced team with deep industry knowledge and a strong track record Tabish Gauhar Tayyab Tareen Arshad Zahidi Syed Moonis A. Alvi Chairman Chief Executive Officer Chief G&T Officer Chief Financial Officer and Director KE Board Exec. Director KE Board Exec. Directo
Slide 21: Favorable Government Policy
7 Favorable Government Policy The Government of Pakistan has set-forth an investor friendly policy to “build a power generation capacity that can meet Pakistan’s energy needs in a sustainable manner” Key Incentives to Invest in Pakistan’s Power Sector One-window The Private Power & Infrastructure
Slide 22: Recognition of KE’s Turnaround Success
Recognition of KE’s Turnaround Success KE’s transformational turnaround success has been recognized by local and international institutions Certificate of Excellence 2012 & 2013: Harvard Business School Case Studies Corporate Social Responsibility Awards 2015 Published 2 case studies highlighting KE
Slide 23: Disclaimer
Disclaimer The information contained in this presentation is given without to a potential investment in the regions described. This any liability whatsoever to K-Electric Ltd or their respective presentation does not constitute a recommendation to invest in members, directors, officers or employees