JSC Caucasus Energy and Infrastructure (CEI) JSC Caucasus Energy and Infrastructure (CEI) The Company Presentation The Company Presentation October 2008
CEI – CEI – Company Profile, Corporate ID Company Profile, Corporate ID Key Facts Highlights Domicile: Georgia � A joint stock company organized under the Georgian IPO: February 2008 legislation in 2007 Private Placement: US$50 million � Obtained a Georgian Stock Exchange listing in January, 2008 GSE Ticker Code: NRGY � Launched a GDR program with BONY in March, 2008 GDR Issue: March 2008 � Obtained licenses for the construction of two HPPs in Georgia GDR/Share Ratio: 1 GDR equals 10 company shares Bloomberg Ticker Code: 2728484Z LI Equity � Complete a database of technical and economic parameters Investment Advisor: Galt & Taggart Asset Management, LLC of potential greenfield HPP projects in Georgia Registrar: JSC Kavkasreestri � Since the first closing, the CEI share price grew from GEL Legal Counsel: BGI Legal 1.60 to GEL 1.70, up 6.3% Auditor: Ernst & Young Georgia LLC Base Currency: Georgian Lari (GEL) Outstanding shares, mln 50.0 Free Float (%) 100% Mcap, US$ mln 57.9 Ownership Structure Strategy � CEI holds a mandate to invest in Georgian and regional Sakaropel companies engaged in: Artradis Fund Consibilink 6.0% Other � Production, transmission and distribution of electricity 6.0% 8.0% 20.5% � Production, transmission and distribution of gas � Extraction, distribution and marketing of crude and oil products Kairos � Management of water utilities Eurasian Fund 19.8% � Development of cargo warehousing and logistics � Management of toll roads Kairos Fund � Waste management and recycling 39.7% � Development of carbon emission trade-related opportunities � CEI intends to concentrate on greenfield investments in small and medium-size HPPs and electricity transmission lines in Georgia 2
CEI – CEI – Key Projects Key Projects Dzegvi HPP Mtkvari HPP Location : Mtskheta District, Eastern Georgia Location : Akhaltsikhe District, Southern Georgia River : Mtkvari River : Mtkvari Head : 9.5 m Head : 72.0 m 3 /sec 3 /sec Water discharge : 160.0 m Water discharge : 55.0 m Number and type of units : 2; Kaplan Number and type of units : 2; Francis Construction time : 3.5 years Construction time : 4.5 years Potential installed capacity : 10.0 MW Potential installed capacity : 28.0 MW Annual power output : 60.0 GW/h Annual power output : 160.0 GW/h Estimated construction costs : US$ 17.0 mln Estimated construction costs : US$ 48.0 mln Estimated tariff range (kWh) : US¢ 5.0 - 6.0 Estimated tariff range (kWh) : US¢ 4.5 - 6.0 Estimated payback period : 8-10 years Estimated payback period : 8-10 years Expected life - span of the plant: 45 years Expected life - span of the plant: 50 years 3
CEI – – Consolidated Financial Statements (IFRS) Consolidated Financial Statements (IFRS) CEI 30-Sep-08 31-Dec-07 Balance Sheet (GEL) Change, % Income Statement (GEL) Q3-2008 Q2-2008 Change, % (Unaudited) (Audited) (Unaudited) (Unaudited) 12,156,597 24,022 50 . ,506% Total non-current assets Operating revenue - - n/a n/a Assets held for sale 1,086,539 - Non-operating revenue 2,234,544 1,523,988 47% 6,650,667 - n/a Trade and other receivables Total revenue 2,234,544 1,523,988 47% Bank deposits 53,703,049 - n/a (105,131) (117,829) -11% Professional services 9,194,023 1,590,229 478% Cash and cash equivalents Payroll (114,297) (104,159) 10% Total current assets 70,634,278 1,590,229 4 . ,342% (133,044) (100,166) 33% FX loss 5 . ,029% (21,616) (876) 2 . ,366% Total assets 82,790,875 1,614,251 Bank commissions Rent (16,885) (19,149) -12% Share capital 12,500,000 308,000 3 . ,958% (4,737) (3,567) 33% Depreciation 67,374,112 1,495,000 4 . ,407% Share premium (6,391) (190) 3 . ,264% Business trips (53,500) (58,000) -8% Treasury Shares (20,916) (1,855) 1 . ,027% Other operating expenses Retained earnings/ 2,529,165 (136,126) 1 . ,958% Total operating expenses (423,017) (347,792) 22% (accumulated deficit) 5 . ,018% Total equity 82,349,777 1,608,874 1,811,527 1,176,195 54% Profit/(loss) before income tax Trade and other payables 441,098 5,377 8 . ,104% Income tax (275,221) (166,502) 65% 8 . ,104% Total current liabilities 441,098 5,377 Net profit 1,536,306 1,009,693 52% Total liabilities 82,790,875 1,614,251 5 . ,029% 4
Primary World Energy Consumption Indicators, 2007 Primary World Energy Consumption Indicators, 2007 35,000 30,000 25,000 20,000 TPES/pop (toe/ 000,capita) Elct. Cons./pop (kWh/capita) 15,000 10,000 5,000 0 D a R e d a n y c K a a d n a a A e e a n y a y C a n i i i S i n a e n i n d S c l U i n c l a i g a b s k r r n a i t k a a E p n o e S a a o j i w U s a i s h r u e l n a a m e g W a r o e O u t v U r i u C r p k m a J r s r l k b e o r R o c e E G u i T F e U r j G N C l r a r I S B e A R e G T m z h A c r o e F z C Source: International Energy Agency, Key Energy Indicators 2008 � Georgia’s energy consumption per unit of GDP is one of the lowest in the CEE region at 0.73 TOE/US$ in 2007, which limits the downside potential in case of further energy efficiency improvements � In 2007, Georgia’s annual electricity consumption per capita reached 1,800 kWhs, compared to 8,000 kWhs in Germany, 8,500 kWhs in Japan, 13,500 kWhs in the US and 24,300 kWhs in Norway, which illustrates a huge upside potential for the electricity usage in the country as economy develops 5
Georgian Electricity Sector Georgian Electricity Sector Highlights Georgian Electricity Market � The Georgian Electricity sector is mostly privately owned Ministry of Energy of Georgia Policy Maker and partially liberalized GNEWRC � Only Transmission, Dispatch, the largest hydro power plant (HPP), located in the conflict zone and a thermal % in Generation % in Consumption power plant (TPP) are owned by the state Enguri (40%) S P Telasi (22%) � Wholesale generation tariffs are fully liberalized and any (+Vardnili) generation company is permitted to sell electricity to any ESCO EnergoPro (27%) P P (40%) Other HPPs wholesale customer at a directly negotiated tariff P Other Distributors (16%) P (12%) Thermal � Retail tariffs are regulated by Georgian National Electricity and Water Regulatory Commission S Direct Customers (27%) P (3%) Thermal � However, small HPPs (less than 13 MW capacity) can sell Export (8%) (5%) Import electricity at unregulated tariffs to any wholesale or retail customer Technical Operator GSE Note: P - Privately Held; S - State Owned; GSE – JSC Georgian State Electrosystem Electricity Balance, Georgia Highlights � HPPs account for roughly 78% of the country’s electricity Supply, TWH 2005 2006 2007 2008E 2009F 2010F 2011F HPP 5.9 5.4 6.7 6.8 7.5 7.6 7.6 supply, whilst TPPs generate 17% and imports contribute Thermal 1.0 2.2 1.5 1.4 1.5 1.6 1.7 another 5% Total Production 6.9 7.6 8.2 8.2 9.0 9.3 9.5 � The electricity generation at the HPPs has increased, Imports 1.4 0.8 0.4 0.7 0.8 0.7 0.8 mainly due to better operating conditions and upgrades Total Supply 8.3 8.4 8.6 8.9 9.8 10.0 10.3 across the sector Demand, TWH 2005 2006 2007 2008E 2009F 2010F 2011F � The share of TPPs and imports in Georgia’s energy sector Domestic consumption 7.9 8.2 8.0 8.3 9.1 9.3 9.5 is set for a steady decline Export 0.4 0.2 0.6 0.6 0.8 0.7 0.7 Total Demand 8.3 8.4 8.6 8.9 9.8 10.0 10.3 Source: The Ministry of Energy of Georgia, CEI Estimates 6
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