TIDMOPG
RNS Number : 3950R
OPG Power Ventures plc
28 February 2019
28 February 2019
OPG Power Ventures plc
("OPG", the "Group" or the "Company")
Trading update for Nine Months FY19
Summary
For the nine months to 31 December 2018
-- Production of 2.15 billion units, up 4.5 per cent on the corresponding period in FY18
-- Plant Load Factor ("PLF") at Chennai was 79%
-- Average tariff for nine months FY19 was Rs5.33 as a result of
7 per cent increase to Rs5.58 effective from October 2018 for
captive consumers
Operations
-- Coal prices reduced by 4 per cent from end of September 2018 to third week of February 2019
-- Unit 4 (180 MW) has been under shut down from early December
2018 whilst turbine repairs have been undertaken
Corporate
-- FY18 full year scrip dividend of 1p per share (FY17: 0.98p
per share) was paid in December 2018
-- Chennai Unit 1 term loans were fully repaid in December 2018, and
-- Parent company guarantee for short-term loan of Gujarat plant
was released upon loan repayment by the Gujarat Plant
Arvind Gupta, Executive Chairman, commented:
"We are pleased to report another strong operational performance
by Chennai plant for the first nine months of FY19 and we expect to
meet market profit expectations for our full FY19 results."
For further information, please visit www.opgpower.com or
contact:
+91 (0) 44 429
OPG Power Ventures PLC 11211
Arvind Gupta / Dmitri Tsvetkov
Cenkos Securities (Nominated Adviser +44 (0) 20 7397
& Broker) 8900
Stephen Keys
+44 (0) 20 7920
Tavistock (Financial PR) 3150
Simon Hudson / Barney Hayward
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 ('MAR')
Group Operations Summary
Nine Months Nine Months
FY19 FY18 FY18
------------ ------------
Generation (million kWh)
------------ ------------ ------
414 MW Chennai 1,969 1,817 2,493
Additional "deemed" offtake at
Chennai 176 236 277
-------------------------------- ------------ ------------ ------
Total Generation (MUe)1 2,145 2,053 2,770
-------------------------------- ------------ ------------ ------
Reported Average PLF (%)2
------------ ------------ ------
414 MW Chennai 79% 76% 77%
------------ ------------ ------
Average Tariff Realized (Rs)
------------ ------------ ------
414 MW Chennai 5.33 4.96 4.92
------------ ------------ ------
Note:
1. MU / Mue - millions units or kWh of equivalent power
2. Reported Average PLF based on Mue
Total Generation at the Chennai plant excluding deemed
generation during the first nine months of FY19 was 1.97 billion
units, 8.4 per cent higher than during the corresponding period in
FY18. This increase in generation was primarily due to higher plant
availability and increased demand by industrial customers and the
Company is pleased to report that FY19 EBITDA, Profit Before Tax
and Profit After Tax are expected to be within market
expectations.
The Company benefitted from higher tariffs, lower coal prices
and continuing strong operating performances of Units I, II and
III. However, Unit IV (180 MW) was shut down in early December 2018
to undertake turbine repairs caused by the malfunctioning of a high
pressure by-pass valve. Whilst this work was initially expected to
be no more disruptive than the shut down for annual maintenance,
the repair works, which have been progressed under the supervision
of the turbine manufacturer, continue and Unit IV is now expected
to re-start operations by mid-March 2019. As a result of this shut
down the Company is expecting to experience a one off loss of
generation of approximately 367 million kWh assuming PLF of
85%.
Average tariffs realised during the first nine months of FY19
were Rs5.33 (nine months FY18: Rs4.96) and for FY19 as a whole are
expected to be approximately Rs5.40, as tariffs were increased to
approximately Rs5.58 in October 2018 (FY18: Rs4.92). Deemed offtake
under the Long Term Variable Tariff Agreement ("LTVT") with
TANGEDCO is entitled to a fixed capacity charge of Rs1.50.
Coal Costs
The average landed cost of coal was GBP50.5 (Rs 4,622) per tonne
during nine months of FY19, which was approximately 2 per cent
higher than in FY18. Coal prices have reduced by 4 per cent from
the end of September 2018 to the third week of February 2019. We
are cautiously optimistic that the lower coal prices will provide
some additional benefits in FY20.
Focus on Deleveraging
All scheduled interest and principal repayments at Chennai,
amounting in aggregate to GBP23.2 million (Rs2.06 billion),
including GBP16.2 million (Rs1.44 billion) of principal repayments,
were made during the nine months ended 31 December 2018.
As at 31 December 2018, total borrowings were GBP87.5 million
(Rs7.75 billion), including term loans of GBP76 million (Rs6.74
billion) and working capital loans of GBP11.5 million (Rs1.01
billion). Gross debt is higher than previously projected on account
of increase in working capital loans which were utilised primarily
to repay trade payables and purchase coal inventory and FX impact
of weakened INR against GBP. This should start reversing when
Chennai IV recommences production (expected by mid-March). After
scheduled repayments, term loans are expected to reduce to GBP69.1
million (Rs6.32 billion) at 31 March 2019, assuming 91.5 INR/GBP
exchange rate, as projected.
The Company achieved a major milestone by fully repaying term
loans with respect to Unit I of the Chennai plant (77 MW out of 414
MW) in December 2018. The remainder of the Chennai plant term loans
are scheduled to be fully repaid for Unit II and III in calendar
year 2022 and for Unit IV in Q3 2023.
Update on shipping Joint Venture
In 2014, the Company formed a Joint Venture with Noble
Chartering Ltd ("Noble"), to secure competitive long term freight
rates for its imported coal requirements. In this Joint Venture
company, the Company and Noble jointly purchased two 64,000 MT
cargo vessels.
As previously reported, during FY18, Noble, due to a change in
their group strategy, requested the Joint Venture to be terminated.
As the vessels were still under construction the termination
process was to be initiated in FY19. As part of this process, one
of the vessels was sold in January 2019. We currently expect that
the sale of the second vessel and the termination of the Joint
Venture to be concluded during CY 2019.
Release of parent company guarantee given for short-term loan of
Gujarat plant
As previously reported, the Company has no obligations with
respect to the deconsolidated Gujarat plant's borrowings apart from
a parent company guarantee of GBP5.8 million with respect to a
short-term loan taken by the Gujarat plant. The Gujarat plant fully
repaid this short-term loan, following which the parent company
guarantee was released by the lender. With the release of this
guarantee, the Company has no obligations with respect to the
Gujarat plant's borrowings.
Scrip Dividend and Issue of Equity
As previously reported, the final FY18 dividend of 1 pence per
share was paid in December 2018 and a total of 31,601,503 new
Ordinary Shares were allotted by the Company to shareholders.
62 MW Karnataka Solar projects
Group's Karnataka solar projects (62MW) are situated north of
Bengaluru. All plants are operational and have met all critical
operating metrics. The Capacity Utilisation Factor for the solar
projects is expected to be around 18 per cent in FY 19.
Outlook
The Board is confident that Unit IV of Chennai plant will
shortly return to normal operations and will provide strong
operational performance. The Company continues to expect its FY19
EBITDA, Profit Before Tax and Profit After Tax to be within market
expectations. The Company continued to repay its scheduled term
loans during the first nine months of FY19 and these term loans are
expected to reduce during the last quarter of FY19, as scheduled.
The Indian economy is expected to be the fastest growing major
economy resulting in high GDP growth and higher demand of
electricity. Hence, looking forward to FY20, the Company is
expected to benefit from robust tariffs and the projected level of
coal prices. Term loans will continue to be repaid in accordance
with their repayment schedule and the Company expects to maintain
its long term profitability and sustainable business model.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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