FY2018 Financial Results Presentation Friday 26 th October 2018 - PowerPoint PPT Presentation

Kenya Electricity Generating Company PLC FY2018 Financial Results Presentation Friday 26 th October 2018 www.kengen.co.ke

2017/18 Highlights Financial Year 2017/18 Highlights Energy Sold Revenue 7,989 GWhs KShs 45,290 Mn ▲ 4.2% ▲ 5.7% PBT Dividend KShs 11,746 Mn KShs 0.40 ▲ 2.5% 33% pay-out Full Year Results to 30 June 2018 2

Business Environment

Kenya’s growth recovery has been swift Real GDP Growth, % Year-on-Year 6.3 6.3 6.3 6.1 5.7 5.7 5.7 5.5 5.5 5.4 5.3 4.8 4.7 4.7 2Q18 4Q17 1Q15 3Q15 1Q16 3Q16 1Q17 3Q17 1Q18 • Strong recovery from 2017’s headwinds, with Year -on-Year growth accelerating to 6.3% in 2Q18; • Projected GDP to average 6.1% by 2020 • Manufacturing, contributed 9.6% and grew by 3.1% Source: KNBS Full Year Results to 30 June 2018 4

Kenyan Power Sector Institutional Framework Policy Direction Energy Regulatory Ministry of Energy Commission Recommend License Issue Policy Geothermal IPPs Enforce License Imports Development R Requirement Generation (31% Market Corporation share) E G PPA and Bulk Tariff U Kenya Agreement Transmission KETRACO Power L Wheeling A T Retail Tariff Approval Kenya Rural Electrification Rural Distribution Electrification Authority Power I Projects O N Customer Complaints Source: ERC Full Year Results to 30 June 2018 5

Energy Sector Key Programs …..Opportunity for KenGen to export power and expand customer base █ Electricity Regional Trade • 1,100km (500kV HVDC) Ethiopia- Kenya transmission line initiated • Kenya – Uganda (127km), Kenya-Tanzania (94km), 400kV planned transmission lines █ System reinforcement and Upgrades • 5,000 of HV transmission lines and 65 HV Substations • Construction of an Ultra-modern Dispatch and Control Centre • Universal access to electricity from current ~70% █ Energy Bill 2017 , enactment and implementation Source: Ketraco Full Year Results to 30 June 2018 6

Emerging Opportunities ….. Improved political climate expected to upswing economic growth. Other notable economic drivers include; Require supporting Increased focus on Special Economic Zones Infrastructure - Power Manufacturing Full Year Results to 30 June 2018 7

Steady growth in Electricity Demand (MW) CAGR 6.2 % 1,802 1,710 1,586 Power demand is projected to increase 1,468 1,512 driven by: 1,354 ● 1,236 Economic activity ● Increased electricity access ● Implementation of Vision 2030 Projects ● Devolution – 47 counties 2012 2013 2014 2015 2016 2017 2018 Full Year Results to 30 June 2018 8

National Installed Capacity & Output Mix - 2018 Generation Output – GWh (%) Installed Capacity – MW (%) 10,702 GWhs 2,359 MW 219 (2%) 55 (2%) Wind & Others 2,206 (21%) 803 (34%) Thermal • Kenya - one of the lowest Thermal cost developers of 1,205 Thermal, (23%) 5,052 geothermal power in the 455 (12%) (47%) Geothermal 673 (29%) world • Geothermal - Kenya’s reliable base load Geothermal, 1,906 (50%) 829 3,225 Hydro (35%) (30%) 2018 2018 Source: Kenya Power, KNBS Full Year Results to 30 June 2018 9

Our Strategic Score Card

Our Strategic Focus Capacity • Increase our capacity to remain relevant 1 increase market player Value • Provide adequate return to shareholders 2 creation • Profitably supply cheaper renewable (green) 3 Lower tariffs electricity to the economy Full Year Results to 30 June 2018 11

KenGen Market Share - 2018 … Our strategy is to continue being a major player in the power generation market in Kenya … Installed Capacity (MW) Generation Output (GWhs) IPPs IPPs 728 2,713 (31%) (25%) KenGen 1,631 (69%) KenGen 7,989 (75%) Full Year Results to 30 June 2018 12

KenGen Energy Mix – 2018 (GWhs) 89% of our generation output is renewable CAGR 5.8 % IPPs Wind, 47 (1%) Thermal, 888 IPPs 7,989 7,822 7,556 (11%) 7,027 6,023 6,084 KenGen Hydro, 3,187 (40%) KenGen Geothermal, 3,867 (48%) 2013 2014 2015 2016 2017 2018 Full Year Results to 30 June 2018 13

Shared Prosperity and Social impact …,for sustainability and social license o Mirira Primary School Water and Rehabilitation of class rooms o 400,000 seedlings for reforestation o KenGen Benefitted 650+ secondary and university students o KenGen Employee Giver Initiative Full Year Results to 30 June 2018 14

Financial Review

Net Operating Revenue KShs Millions Pass through Pass through revenue costs 159 45,290 ( 9,247 ) 9,623 35,508 35,884 ( 159 ) 6,222 Steam revenue 29,286 Electricity revenue Operating Fuel charges Water charges Total Revenue Fuel costs Water costs Revenue Net of Revenue Reimbursable costs Full Year Results to 30 June 2018 16

Electricity Revenue -Capacity Total of KShs 21,140 Million in Capacity Revenue % Availability Factors - 0.2% 1.2% -5.1% 94.1% 93.9% 91.4% 90.2% 85.0% 79.9% 2017 2018 2017 2018 2017 2018 Hydro Geothermal Thermal Revenue in Kshs Millions 2.2% -6.1% 11,177 10,931 7,583 -11.2% % 7,120 3,200 2,843 2017 2018 2017 2018 2017 2018 Full Year Results to 30 June 2018 17

Electricity Revenue - Energy Total of KShs 8,146 Million in Energy Revenue Units sold (GWhs) 17.8% - 4.6% 3,867 3,283 3,339 3,187 1.9% -25.6% 888 871 63 47 2017 2018 2017 2018 2017 2018 2017 2018 Hydro Geothermal Thermal Wind Revenue in KShs Millions 14.8% 5,935 5,171 16.8% -24.0% % 7.1 % 1,038 1,212 604 564 520 395 2017 2018 2017 2018 2017 2018 2017 2018 Full Year Results to 30 June 2018 18

Financial Performance to 30 June 2018 Summary Income Statement (KShs Millions) % ▲ 30-Jun-17 30-Jun-18 Electricity Revenue 29,007 29,286 1.0% Better energy and Steam Steam Revenue 5,189 6,222 20% revenues owing to; • Fuel Charge 9,069 9,623 6% Completion of wellhead plants • Water Charge 167 159 -5% Improved evacuation from Olkaria upon completion of Total Revenue 43,432 45,290 4% Olkaria – Suswa line Fuel Costs (8,813) (9,247) 5% Water Costs through (167) (159) -5% Net Revenue 34,453 35,884 4% • Increased steam costs due to Operating expenses (21,804) (23,668) 9% improved dispatch • Operating Profit 13,545 11,442 -16% Higher depreciation on capitalization of completed EBITDA 22,789 21,590 -5% wellheads EBITDA Margin 66% 60% • Net Finance costs (2,084) 304 Slight increase in interest Profit Before Tax 11,461 11,747 2% income and a lower interest expense owing to reduced Tax Expense (2,455) (3,855) 57% closing balance of the Profit After Tax 9,006 7,891 -12% Infrastructure Bond EPS 1.37 1.20 -12% DPS (KShs) Nil 0.40 Full Year Results to 30 June 2018 19

Summary of Cash Flows KShs Millions Financing Investing Operating 14,621 17,510 8,954 4,949 221 7,831 3,110 3,383 Opening Cash Capex Other New Debt repaid Net interest Closing Balance,1 Generated expenditure investing borrowings payments Balance,30 July 2017 by activities June 2018 operations Full Year Results to 30 June 2018 20

STATEMENT OF FINANCIAL POSITION …. stable, largely unchanged 30 June 2017 30 June 2018 % KShs Millions Movement Restated ASSETS Property, Plant and Equipment 323,843 328,083 1% Other Non-current Assets 10,130 9,368 -8% Financial asset at fair value 13,117 10,490 -20% Current Assets 29,640 31,412 6% TOTAL ASSETS 376,730 379,353 1% EQUITY AND LIABILITIES Share Capital 16,488 16,488 0% Share Premium 22,151 22,151 0% Reserves and Retained Earnings 144,197 151,465 5% Non-current Liabilities Borrowings 127,884 121,288 -5% Deferred Income Tax 42,057 45,496 8% Trade & other payables 3,860 1,586 -59% Current Liabilities 20,093 20,879 4% TOTAL EQUITY AND LIABILITIES 376,730 379,353 1% Full Year Results to 30 June 2018 21

Debt Profile as at 30 th June 2018 ……,affordable concessionary borrowings for growth Debt Maturity Profile (KShs Million) Gross debt by source of funding 4% GoK Guaranteed 12% 11,797 10,833 3% 10,231 10,231 GoK On-lent 32% 8,954 DFIs Infrastructure Bond Commercial 49% 2018 2019 2020 2021 2022 Funding currency • Weighted Average Maturity 80,000 KShs Equivalent 46% of 15.3 Years 60,000 (Millions) 30% • Weighted Average Cost of 40,000 16% 8% Debt of 3.10% 20,000 0 USD EUR JPY KES Full Year Results to 30 June 2018 22

Future Outlook

Capacity Growth Focused On Renewables … To grow supply ahead of demand and retain market leadership Currently under implementation Olkaria V, Olkaria I AU 6, 476 MW 165 MW 83 MW 2019 2021 Commissioning Comprising of wind, solar and geothermal sources Full Year Results to 30 June 2018 24

Olkaria V Construction Progress at site Olkaria V Geothermal plant, 165.4 MW on course for commissioning in July 2019 Clockwise from top left 1. Power House construction works 2. Electrical & Control Building Works 3. Steam field works 4. Generators arriving in Olkaria Full Year Results to 30 June 2018 25

2018/19 Key Initiatives ….Our Promise Improve Shareholder value Operational Excellence Timely Project Delivery Protect our Revenue Innovative Partnerships Additional installed capacity Full Year Results to 30 June 2018 26