K-electric Ltd. · PSX:KEL
K-electric — Investor Presentation (November 2015)
22 slides from K-electric's investor presentation, November 2015
Slide 1: KE Presentation November 2015
KE Presentation November 2015
Slide 2: Pakistan Country Overview
Pakistan Country Overview Country Overview Significant Progress over the Recent Past Demographics (mn) CY 15 China Population 189 1 – 15 to 64 years 63% Low oil price levels are expected to save Pakistan US$5-6bn in oil imports annually Labor Force 64 Improving Afghanistan Urban Population 73 Econ
Slide 3: Pakistan Power Sector Structure
Pakistan Power Sector Structure Government of Pakistan (“GoP”) has restructured the sector through privatisation and unbundling. 9 distribution companies and 4 generation companies are still in the privatisation pipeline Key Highlights Current Electricity Sector Overview Historically the power sec
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 36.7% in 1Q16 Capacity Enhancement KE Capacity (MW) c. 1,037 MW increase in installed generation capacity since 2009 33% 2,247 Cap
Slide 12: Operational Outperformance – Transmission
3 Operational Outperformance – Transmission Increased reliability in transmission network through the addition of 12 new grid stations and 63km 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 15 T&D losses stood at 23.7%, representing a c. 12.2 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%
Slide 14: Operational Outperformance – HR Restructuring
3 Operational Outperformance – HR Restructuring Enhanced workforce effectiveness through creation of a performance-driven culture and workforce optimization (reduction of head count by approximately 7,000) KE Initiatives: Rightsizing Accountability Management Change Promotion of 3,500 Non-Ma
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.9.6% between 2009 and 2015 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$mn) CAGR 8.3x 21% 9.6% 18% 1,951 1,890 1,878 14% 16% 14%
Slide 17: Robust Financial Performance (Cont'd)
4 Robust Financial Performance (Cont’d) Significant capital expenditures over the last 6 years have allowed KE to achieve its objective to increase generation capacity and improve T&D infrastructure. Return to profitability has accelerated KE’s deleveraging pace Total Capex (US$mn) Change in Working
Slide 18: Opportunity to Further Enhance Operational Efficiency
5 Opportunity to Further Enhance Operational Efficiency Key Transmission & Distribution Initiatives 1 1,000 MVA transmission enhancement and rehabilitation project. Contracts finalized with Siemens Germany and Shanghai Electric, China. Estimated Cost of the project US$ 400 million 1,000 MVA transm
Slide 19: Experienced Management
6 Experienced Management Highly experienced team with deep industry knowledge and a strong track record Waqar Siddique Tayyab Tareen Dale Sinkler Syed Moonis A. Alvi Eram Hasan Chairman and Chief Executive Officer Chief G&T Officer Chief Financial Officer Chief Supply Chain Officer Director KE Board
Slide 20: Favorable Government Policy
7 Favorable Government Policy The GoP 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 Board (“PPIB”) Ty
Slide 21: 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 22: 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