JSC Caucasus Energy and Infrastructure (CEI) JSC Caucasus Energy and Infrastructure (CEI) The Company Presentation The Company Presentation February 2009
CEI – – Company Profile, Corporate ID Company Profile, Corporate ID CEI Key Facts Highlights Domicile Georgia A joint stock company organized under the Georgian law in 2007 IPO February 2008 Obtained a Georgian Stock Exchange listing in January 2008 Private Placement US$50 million Launched a GDR program with BONY in March 2008 GSE Ticker Code NRGY Completed a database of technical and economic parameters of GDR Issue March 2008 potential greenfield HPP projects in Georgia GDR/Share Ratio 1 GDR equals 10 company shares Obtained a license for the construction of 42MW Mtkvari HPP in Bloomberg Ticker Code 2728484Z LI Equity Georgia Investment Advisor Galt & Taggart Asset Management, LLC Successfully undertook the US$18.0 million worth REPO transaction Registrar JSC Kavkasreestri in December 2008, raising CEI’s Net Asset Value (NAV) per share Auditor Ernst & Young Georgia LLC from an estimated 1.81 GEL to an estimated 2.50 GEL Legal Counsel BGI Legal As at January 2008, the share price stands at GEL 1.60, resulting in Base Currency Georgian Lari MCap of GEL 38.6 mln (about US$23.2 mln) Outstanding Shares, mln 24.1 Free Float (%) 100 Mcap, US$ mln 23.2 Strategy Ownership Structure CEI holds a mandate to invest in Georgian and regional companies Others Kairos Fund Ltd engaged in: 26.6% 32.9% Production, transmission and distribution of electricity Production, transmission and distribution of gas Extraction, distribution and marketing of crude and oil products Management of water utilities Sakaropel 5.0% Development of cargo warehousing and logistics Management of toll roads Consibilink Ltd Waste management and recycling Kairos Eurasian 6.6% BNY (Nominees Development of carbon emission trade-related opportunities Fund Limited) 16.5% CEI intends to concentrate on greenfield investments in small and 12.4% medium-size HPPs and electricity transmission lines in Georgia 2
Key Project Key Project Mtkvari HPP Location : Akhaltsikhe District, Southern Georgia Potential installed capacity : 42.0 MW River : Mtkvari Annual power output : 240.0 GW/h Head : 100.0 m Estimated construction costs : US$ 65.0 mln Water discharge : 55.0 m 3 /sec Estimated tariff range (kWh) : US¢ 4.0 - 5.5 Number and type of units : 2; Francis Estimated payback period : 7 years Construction time : 4.5 years Expected life - span of the plant: 50 years ` 3
Corporate Outlook Corporate Developments Feasibility study on Mtkvari HPP is expected to be completed in In December 2008 CEI successfully conducted a REPO transaction, May 2009 under which, CEI shareholders were granted the right to sell up to 60% of their stake holding in the company back to CEI at the (GEL equivalent) price of US$ 0.70 per share. As a result of this Technical description of the project will be finalized in June 2009 transaction the company bought back 25.7 million shares worth GEL 29.7 million (US$ 18.0 million). In the aftermath of the transaction Environmental impact assessment report should be completed in the Net Asset Value (NAV) per share has increased from an May 2009 estimated 1.81 GEL to an estimated 2.50 GEL Construction of the Mtkvari hydro power plant will commence in Georgian company GeoEngineering Ltd. has completed a June 2009 topography of the surface map for Mtkvari HPP and started a geological survey of the hydro power plant area Talks with IFIs on funding the project are expected to be finalized in the fourth quarter of 2009 Icelandic project development company Verkis and Ukrainian UkrHydroProject have conducted a comprehensive study of the First IFI fund disbursement is expected in early 2010 Mtkvari HPP project. Findings have confirmed a possibility of increasing the power potential of Mtkvari HPP, from 28 MW to 42MW capacity Other Provisions UkrHydroProject won an informal tender for providing a comprehensive design of the Mtkvari HPP project Turkish and Georgian governments agreed to build a new 400-500 kV HV transmission grid between the countries, funded by the Georgian Government, EBRD and KSW Verkis was hired to conduct a feasibility study of the Mtkvari HPP project The newly appointed Prime Minister outlined that the construction of the power transmission grid is among the top priorities of the CEI is engaged in active talks with the International Financial new cabinet Institutions (IFIs) on their potential involvement in the Mtkvari HPP project through a combination of debt and equity financing 4
Benefits of the Mtkvari Mtkvari HPP Location HPP Location Benefits of the Direct electricity supply to the energy deficient eastern Georgia through the existent power network Alternative access to the Western Georgian transmission grid, once the Southern connection is Mtkvari built HPP Electricity export to Turkey, through a new transmission grid, expected to be completed in 2011- 2012 Electricity export to Russia and Azerbaijan, through the existent transmission network 5
CEI – – Consolidated Financial Statements (IFRS) Consolidated Financial Statements (IFRS) CEI Balance Sheet (GEL) 31-Dec-08 31-Dec-07 % Change YTD 2008 YTD 2007 Income Statement (GEL) % Change (Unaudited) (Audited) (Unaudited) (Audited) Property, plant and equipment 12,116,844 - N/A Operating revenue - - N/A Intangible assets 1,949 - N/A Investment income 6,570,197 - N/A Investment in subsidiary 202,739 - N/A Other non-operating revenue 8,110,519 -65,969 N/A Deferred income tax assets - 24,022 N/A Total revenue 14,680,716 -65,969 N/A Total non-current assets 12,321,533 24,022 51,192.7 Salaries and other benefits -375,601 -4,831 7,674.10 General and administrative expenses -590,137 -89,347 560.5 Assets held for sale 888,600 - N/A Depreciation and amortisation charges -13,315 - N/A Trade and other receivables 18,653,780 - N/A Finance cost -89,366 - N/A Available-for-sale financial assets 2,522,358 - N/A Total expenses -1,068,419 -94,178 1,034.50 Bank deposits 8,213,562 - N/A Profit/(loss) before income tax 13,612,297 -160,148 N/A Cash and cash equivalents 47,346,995 1,590,229 3,554.6 Total current assets 77,625,295 1,590,229 4,781.4 Income tax (expense)/benefit -2,068,968 24,022 N/A Total assets 89,946,828 1,614,251 5,472.0 Profit/(loss) for the period 11,543,329 -136,126 N/A Share capital 12,500,000 308,000 3,958.4 Share premium 43,968,760 1,495,000 2,841.1 Treasury shares -6,464,612 -58,000 11,045.9 Other reserve 397,271 - N/A Retained earnings/(accumulated deficit) 11,407,204 -136,126 N/A Total equity 61,808,623 1,608,874 3,741.7 Non-current liabilities Deferred tax liability 3,101 - N/A Total non-current liabilities 3,101 - N/A Trade and other payables 143,127 5,377 2,562.0 Income tax payable 1,597,350 - N/A Borrowings 26,394,626 - N/A Total current liabilities 28,135,104 5,377 523,171.5 Total equity and liabilities 89,946,828 1,614,251 5,472.0 6
CEI - - Management Management CEI Mr. Irakli Bezhuashvili (CFO) Mr. Archil Mamatelashvili (CEO) Irakli Bezhuashvili joined CEI in the capacity of Chief Archil Mamatelashvili joined the Company in the Financial Officer in April 2008. Prior to joining CEI, Mr. capacity of Chief Executive Officer in October 2007. Bezhuashvili served as a Senior Consultant at Prior to joining CEI, Mr. Mamatelashvili served as the PricewaterhouseCoopers as well as an Audit Manager Country Manager for Energo Pro S.A. in Istanbul, at UBC International Ltd. He has also occupied the post Turkey (April 2007 – October 2007) and as the Deputy of Director at Georgian Branch of Eilamed Raj BV. Irakli Minister of Energy of Georgia (March 2005 – April Bezhuashvili obtained his Bachelor’s degree in 2007). Mr. Mamatelashvili holds an Undergraduate Municipal Engineering and Economy from Technical degree in Economics from Tbilisi State university, and University of Georgia. Mr. Bezhuashvili is an accredited a joint international MBA degree from Weatherhead member of the Association of Certified Chartered School of Management of Case Western Reserve Accountants (ACCA). University/IMC. 7
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