Ogk-2 · RUS:OGKB
Ogk-2 — Merger or Acquisition (April 2011)
29 slides from Ogk-2's merger presentation, Apr 26, 2011
Slide 1: Creating the leading thermal power generating company in Russia
CREATING THE LEADING THERMAL POWER GENERATING COMPANY IN RUSSIA PRESENTATION FOR ANALYSTS AND SHAREHOLDERS OF OGK-2 AND OGK-6. 26 APRIL 2011
Slide 2: Disclaimer
Disclaimer The materials comprising this Presentation have been prepared by JSC OGK-2 and JSC OGK-6 ("OGK-2" and "OGK-6", respectively, and together the "Companies") solely for the use by the Companies’ management at the conferences and meetings with the Companies' shareholders and analysts. This Pr
Slide 3: Creating the leading thermal power generating company in Russia
Creating the leading thermal power generating company in Russia The leading thermal power generating company in Russia Installed capacity Investment program of over 4 GW 8.7 GW supported by capacity supply contracts Potential total merger synergies in 2011- 2015 RUR 7.8bn Installed capacity 17.9 GW
Slide 4: Agenda
Agenda 1. Transaction overview 4 2. Merger benefits 7 3. Merger synergies 13 4. Overview of the combined company 17 5. Key conclusions 22 6. Appendix 24 4 CREATING THE LEADING THERMAL GENERATING COMPANY IN RUSSIA
Slide 5: Transaction overview
Transaction overview Key details Summary Ownership structure On 25 April 2011, OGK-2 and OGK-6 Boards decided Currently to convene annual general shareholder meetings (AGM) on 21 June 2011 to approve, among other OGK-2 minorities OGK-6 minorities points, Companies’ reorganisation by way of accession
Slide 6: Transaction overview: key stages of reorganisation
Transaction overview Key stages of reorganisation Boards meetings AGMs 25.04.2011 21.06.2011 April 2011 May 2011 June 2011 July 2011 Aug 2011 Sept 2011 … 3.05.2011 4Q11 Record date for participation by shareholders of OGK-2 Completion of reorganisation and OGK-6 in AGMs Conversion of OGK-6 shares in
Slide 7: Agenda
Agenda 1. Transaction overview 4 2. Merger benefits 7 3. Merger synergies 13 4. Overview of the combined company 17 5. Key conclusions 22 6. Appendix 24 7 CREATING THE LEADING THERMAL GENERATING COMPANY IN RUSSIA
Slide 8: Merger benefits
Merger benefits The combined entity’s investment story 1. Creation of the leading player in the Russian thermal generation sector 2. Fuel costs optimisation to improve efficiency of generation and sales of electricity and capacity 3. A balanced fuel mix structure 4. Optimisation of the combined inve
Slide 9: Becoming one of the top Russian power generators
Merger benefits 1. Becoming one of the top 3 Russian power generators Summary Russian power generating companies Installed capacity as of 2010YE, GW The combined company will be*: 30 26 24 25 - The leading Russian thermal power generator 18 20 - The 3rd largest generator in terms of installed 15 13
Slide 10: Optimisation of fuel costs
Merger benefits 2. Optimisation of fuel costs Summary Overlapping OGK-2 and OGK-6 covered areas in South and North-West federal districts enables to pursue a single sales strategy The Companies can achieve significant synergies by redistributing output to stations with lower unit fuel consumption Co
Slide 11: A balanced fuel consumption structure
Merger benefits 3. A balanced fuel consumption structure Summary Fuel balance Gas constitutes over 50% in OGK-2 and OGK-6 fuel OGK-2 OGK-6 mix. When modern technologies are used, gas is the 0.5% 1.0% most efficient fuel 23.0% Gazprom is the key supplier of gas, a stable 44.0% 55.0% relationship with
Slide 12: Optimisation of investment program funding
Merger benefits 4. Optimisation of investment program funding Summary Key investment projects OGK-2 Installed Commissioning OGK-2 and OGK-6 key investment programs are # Facility Location capacity/Capacity date increase, MW aimed at increasing the installed capacity by 1 CCGU-180 Adler TPP 180/180 3
Slide 13: Agenda
Agenda 1. Transaction overview 4 2. Merger benefits 7 3. Merger synergies 13 4. Overview of the combined company 17 5. Key conclusions 22 6. Appendix 24 13 CREATING THE LEADING THERMAL GENERATING COMPANY IN RUSSIA
Slide 14: Merger synergies (1/3)
Merger synergies (1/3) Summary Synergies achievement The majority of synergies is expected to be 100% 95% 98% 100% 90% implemented by 2012-2013 90% 80% Annual synergies from merger of OGK-2 and OGK-6 70% can amount to RUR1.7 – 2.0bn by 2015 60% 50% 40% 30% 25% 20% 10% 0% 2011 2012 2013 2014 2015 Tot
Slide 15: Merger synergies (2/3)
Merger synergies (2/3) Merger of OGK-2 and OGK-6 can result in a number of synergies due to centralisation and optimisation of processes Synergies Overview Centralisation of procurement and engineering functions can result in reduction of outsourced services 1. Reduced procurement of third-party ope
Slide 16: Merger synergies (3/3)
Merger synergies (3/3) Synergies Overview Following OGK-2 and OGK-6 merger, a more efficient procurement system (large order discounts) and fuel measurement system (coal weighting 5. Centralised fuel procurement (coal) methodology) are planned to be established The share of coal in fuel mix of both
Slide 17: Agenda
Agenda 1. Transaction overview 4 2. Merger benefits 7 3. Merger synergies 13 4. Combined company overview 17 5. Key conclusions 22 6. Appendix 24 17 CREATING THE LEADING THERMAL GENERATING COMPANY IN RUSSIA
Slide 18: One of the leaders in European and Russian power generation
Combined company overview One of the leaders in European and Russian power generation Positioning vs. selected European generating companies* 250 output, kWh bn 200 2010 electricity output 150 100 50 0 0 10 20 30 40 50 * European generating companies with installed power capacity below 55 GW Source:
Slide 19: Combined company overview: financial results
Combined company overview Financial results Pro-forma combined debt portfolio 2010 IFRS financial results, RURmm as of 2010 FYE, RURmm Combined 2 Financials OGK-2 OGK-6 1,533 company** Revenues 47,864 48,599 96,463 Opex 44,002 45,665 Profit / (loss) from operations 3,600 3,309 Bonds Eurofert Trading
Slide 20: Priority investment projects
Combined company overview Priority investment projects Sector growth assumptions Priority investment projects Electricity consumption forecast, bn kWhn OGK-2 2,000 1,860 Installed capacity/capacity Commissioning 1,710 # Facility Location increase, MW date 1,700 1,619 1 CCGU-180 Adler TPP 180/180 31.
Slide 21: Combined company's corporate structure
Combined company overview Combined company’s corporate structure GENERAL SHAREHOLDERS MEETING Companies’ management has developed the target AUDITOR INTERNAL AUDIT COMMISSION corporate structure of the combined company BoD RELIABILITY COMMITTEE BOARD OF DIRECTORS (BoD) BoD AUDIT COMMITTEE BoD STRATE
Slide 22: Agenda
Agenda 1. Transaction overview 4 2. Merger benefits 7 3. Merger synergies 13 4. Overview of the combined company 17 5. Key conclusions 22 6. Appendix 24 22 CREATING THE LEADING THERMAL GENERATING COMPANY IN RUSSIA
Slide 23: Key conclusions
Key conclusions 1 The merger will create the leading thermal generating company in Russia in terms of installed capacity and electricity output 2 Strategy of the combined company is to improve the efficiency of operations, management, and implementation of investment programs 3 Potential total merge
Slide 24: Agenda
Agenda 1. Transaction overview 4 2. Merger benefits 7 3. Merger synergies 13 4. Overview of the combined company 17 5. Key conclusions 22 6. Appendix 24 24 CREATING THE LEADING THERMAL GENERATING COMPANY IN RUSSIA
Slide 25: OGK-2 (1/2)
OGK-2 (1/2) Overview Ownership structure* Approximately, 70% of generating capacities are located in Urals federal district OGK-2 was established on the basis of 5 power plants in Pskov (Pskov GRES), Sverdlovsk (Serov GRES) and Chelyabinsk (Troitsk GRES) regions as well as Gazprom energoholding and
Slide 26: OGK-2 (2/2)
OGK-2 (2/2) Operating results Fuel balance, coal equivalent fuel consumption* 55 49.8 66% 50 48.0 47.2 47.6 0.5% 65% 65% 45 65% 23.0% 40 64% 348 35 64% Gas 30 63% 63% 150 25 Coal 20 62% 63% 15 62% 62% Other 10 62% 2.5 2.5 2.4 2.4 Electricity, gce/kWh Heat, kgce/Gcal 5 61% 76.5% 0 61% 2007 2008 2009
Slide 27: OGK-6 (1/2)
OGK-6 (1/2) Overview Ownership structure* Approximately, 40% of generating capacities are located in Central unified energy system OGK-2 combines 5 power plants in Rostov (Novocherkassk GRES), Leningrad (Kirishi GRES), Vologda (Cherepovets GRES), Ryazan (Ryazan GRES) and 39.4% Gazprom energoholding
Slide 28: OGK-6 (2/2)
OGK-6 (2/2) Operating results Fuel balance, coal equivalent fuel consumption* 45 60% 38.9 40 1.0% 34.1 49% 34.9 50% 35 43% 29.0 44% 30 40% 363 36% Gas 25 30% 44.0% 153 20 Coal 15 20% Other 10 4.3 4.4 4.4 10% Electricity, gce/kWh Heat, kgce/Gcal 5 4.4 55.0% 0 0% 2007 2008 2009 2010 Electricity output
Slide 29: Thank you for your attention!
THANK YOU FOR YOUR ATTENTION! 29 PRESENTATION CREATING FORTHE ANALYSTS LEADING AND THERMAL SHAREHOLDERS GENERATING OF OGK-2 COMPANY ANDIN OGK-6. RUSSIA 26 APRIL 2011