K-electric Ltd. · PSX:KEL
K-electric — Investor Presentation (June 2014)
23 slides from K-electric's investor presentation, June 2014
Slide 1: Investor Presentation
Strictly Private and Confidential Investor Presentation June 2014
Slide 2: Pakistan Country Overview
Pakistan Country Overview Country Overview Significant Progress in Recent Months Demographics (mn) FY13 China Population 183 1 Re- initiation of privatization program – 15 to 64 years 61% Sustained – Targets include Oil & Gas Development Labor Force 61 Progress Under Company, United Bank Limited,
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 3 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; the recently elected government has under- taken measures addressing structural issues, plaguing the power sector, resulting in an improved sector outlook Challenges Poli
Slide 6: K-Electric Overview
K-Electric Overview K-Electric 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 controllin
Slide 7: K-Electric: Key Value Drivers
K-Electric: 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
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, K-Electric is of strategic importance to the municipality and the country Karachi’s Importance to Pakistan Strategic Loc
Slide 9: Compelling Commercial Proposition
2 Compelling Commercial Proposition K-Electric is the only remaining vertically integrated power utility in Pakistan with exclusive licensing rights for Karachi, a customer base of 2.4mn Presence Across the Entire Power Value Chain Generation Transmission Distribution All power units and grid statio
Slide 10: Overview of Generation Capacity
2 Overview of Generation Capacity Total installed capacity of over 2,300 MW with nearly 40% of K-Electric’s capacity being less than 5 years old 1 1,260 MW Bin Qasim Power Station 1 (BQPS 1) 2 220 MW Korangi CCPP Capacity 1,260 MW (6 units) Capacity 220 MW (4 units) GDC 920 MW (5 units)(1) GDC 190 M
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% to 36.7% Capacity Enhancement K-Electric Capacity (MW) c. 1,000 MW increase in installed generation capacity since 39% 2009 Capacity added thr
Slide 12: Operational Outperformance – Transmission
3 Operational Outperformance – Transmission Increased reliability in transmission network, with 189km of old EHT line rehabilitated and an additional 62km of EHT lines added Power Transformers Reliability Transformer Trips 50% reduction in transformer tripping in FY2013 vs. FY2009 688 616 65% le
Slide 13: Operational Outperformance – Distribution
3 Operational Outperformance – Distribution T&D losses at the end of March 2014 stood at 25.9%, representing a 10% reduction since FY09. Today, 69% of the city has distribution losses of c. 18% Key Initiatives T&D Losses (%) – Rolling Average Organization restructured to deliver business objective
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 to 10,497) K-Electric Initiatives: Learning and Organizational Development Initiatives Conversion of
Slide 15: Robust Financial Performance: Multi Year Tariff Structure
Robust Financial Performance: Underpinned by a 4 Multi Year Tariff Structure Seven year tariff was determined by NEPRA in 2002 to provide stability to the tariff regime. Enacted in 2005 at time of privatization and extended until 2016 in 2009 Background and Components of Current Tariff Structure I
Slide 16: Robust Financial Performance
4 Robust Financial Performance K-Electric revenue increased at a CAGR of 15.8% between 2009 and 2013 on the back of decreasing T&D losses. K-Electric achieved positive operating profitability in FY11 and net profitability in FY12 Revenue (US$mn) EBITDA (US$mn) 6.7x 15% 14% 14% CAGR 15.8% 1,951 11% 1
Slide 17: Robust Financial Performance (Cont'd)
4 Robust Financial Performance (Cont’d) Significant capital expenditures over the last 5 years have allowed K-Electric to achieve its objective to increase generation capacity and improve T&D infrastructure. Return to profitability has accelerated K-Electric’s deleveraging pace Capex (US$mn) Change
Slide 18: Opportunity to Further Enhance Operational Efficiency
5 Opportunity to Further Enhance Operational Efficiency Key Generation Initiatives In Place Conversion of 400 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 Jan 2016 Conversion
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 Syed Nayyer Hussain Arshad Zahidi Syed Moonis A. Alvi Chairman Previously CFO / CSO Chief Executive Officer Chief G&T Officer Chief Financial Officer and Director KE Bo
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 K-Electric's Turnaround Success
Recognition of K-Electric’s Turnaround Success K-Electric’s transformational turnaround success has been recognized by local and international institutions 2014: FT / IFC Transformational Business Award 2012 & 2013: Harvard Business School Case Studies for Project Finance - Energy Published 2 case s
Slide 23: Disclaimer
Disclaimer The information contained in this presentation is given without application of the information contained in this presentation and presentation and its contents confidential; and (ii) you will not any liability whatsoever to K-Electric Ltd or their respective for advice relating to any leg