Glow Energy Plc. Results for 12M/2014 - listed...

Glow Energy Plc. Results for 12M/2014

Place: Empire Tower 31st Floor

Date: 24 February 2015

GLOW GROUP – Results of 2014 – 24/02/2015

Disclaimer

The views expressed here may contain information derived from publicly

available sources that have not been independently verified. No

representation or warranty is made as to the accuracy, completeness or

reliability of the information. Any forward looking information contained in

this presentation has been prepared based on number of assumptions which

may be incorrect and/or not properly represent actual situation incurring in

the future. The actual information contained in this presentation is for the

purpose of illustration and presentation only. Should there be any

discrepancies with audited/reviewed financial statements, annual report, and

other official filings to SEC, the information presented in such documents

should be relied upon as official information.

This presentation should not be relied upon as a recommendation or forecast

by Glow Group. This presentation shall not be construed as either an offer to

sell or a solicitation of an offer to buy or sell shares in any jurisdiction.

2

GLOW GROUP – Results of 2014 – 24/02/2015 3

Headline Comments


Headline Comments

4

4Q/2014

NNP, at 2,018 MTHB, is in line with our expectations; down 17% on 3Q/2014.

IPP Business

Seasonality of APR.

GHECO1 and GIPP have reached full CAH.

Cogen Business

Fairly stable price and spread environment (fall in oil prices not yet reflected in gas

prices and Ft).

Lower IC volumes (power – 8.5%; steam – 8.3% QoQ), mostly as a result of

customer maintenance activities.

12M/2014

NNP, at 9,668 MTHB, is up 20% on 2013.

Earnings growth mostly driven by IPP business:

Higher availability and dispatch of GHECO1 (95.2% versus 71.7%).

Higher Dispatch of HHPC (609 GWh versus 325 GWh).

Gross Profit from the Cogen Business is also up:

Higher IC volumes (power +8.1%; steam +3.7%).

Higher spreads (Ft increase to 0.69 THB/kWh in May; lower average IC coal

prices).

But: somewhat lower load Factors of CFB units.


Results Overview


General Comments

Financial Lease

From 1Q/2014, Thai GAAP has started adopting a new accounting standard with respect to Financial Lease. In our view, the changes resulting from the adoption of this new accounting standard do not affect cash flows and are therefore not directly operations-related. We therefore show results excluding the impact of Financial Lease, except when mentioned.

Normalized Net Profit

Glow’s management focuses on core profitability. Therefore, we consider Normalized Net Profit (NNP) as our key profitability metric. NNP is defined as Net Profit, excluding (i) Net Unrealized FX Gains/Losses, (ii) Deferred Tax Income/Expense, and (iii) the impact of the Financial Lease treatment. NNP is also the metric we focus on in considering our dividend payments.

Unrealized FX Gains and Losses.

Glow IPP, GHECO-One and HHPC have outstanding loans in USD which will be repaid with USD linked cash flows.

Under Thai GAAP the outstanding USD loan is converted at year-end to THB at the then current exchange rate. Any difference in the outstanding loan amount in THB resulting from a change in exchange rate compared to last year leads to an Unrealized FX Gain (THB appreciation) or Loss (THB depreciation).

Since the USD loans in Glow IPP, GHECO-One and HHPC are served by USD linked cash flows, these Unrealized FX Gains/Losses should, in Glow’s view, be ignored from an economic point of view.

• Deferred Taxes.

From 1Q/2013, Thai GAAP has started adopting Deferred Tax accounting practices. In our view, Deferred Tax Income/Expense is an accounting item resulting from differences in accounting and tax book values, and is therefore not directly operations-related.


2014 Headline P&L

7

Difference

2014 Act 2014 Act without lease

with lease without lease vs with lease (%)

Revenue 73,266 74,212 947 1.3%

Gross Margin 24,532 25,479 947 3.9%

EBITDA 19,952 20,898 947 4.7%

Depreciation 4,720 5,057 337

EBIT 15,232 15,841 609 4.0%

Exchange Gain(Loss) (62) (62) (0)

- Realised exchange gain / loss 1 1 0

- Unrealised exchange gain / loss (63) (63) 0

Profit Before Tax 11,841 12,450 609 5.1%

Corporate Income Tax 1,117 1,117 0

Deferred Tax (111) 76 188

Net Profit 9,139 9,540 401 4.4%


Comparison YoY

Difference

2014 Act 2014 Act

2013 Act 2014 Act vs 2013 Act vs 2013 Act (%)

Revenue 69,699 74,212 4,514 6.5%

Gross Margin 22,097 25,479 3,382 15.3%

EBITDA 18,256 20,898 2,642 14.5%

EBIT 13,238 15,841 2,603 19.7%

Exchange Gain(Loss) (1,003) (62) 941

- Realised exchange gain / loss 29 1 (28)

- Unrealised exchange gain / loss (1,032) (63) 969

Profit Before Tax 8,918 12,450 3,532 39.6%

Corporate Income Tax 887 1,117 229

Deferred Tax 144 76 (68)

Net Profit 7,214 9,540 2,325 32.2%

NNP 8,056 9,668 1,612 20.0%


Selected Key Drivers


GIPP Dispatch (GWh)

GHECO1 Dispatch (GWh)

HHPC Dispatch (GWh)

10

GIPP Availability*

GHECO1 reached fully CAH on

31/Dec/2014 at 9.00 p.m.

GIPP reached fully CAH on

19/Dec/2014.

5,100.8

4,316.3

YTD Dec/2013 YTD Dec/2014

4,120.3

5,462.5


324.9

608.9


96.78% 97.91%


71.69%

95.20%


GHECO-1 AVAILABILITY (%)

416465 453

310

438479 467 484 475 492 471 448

475 473 450

311

442

315

412 414463

359

467 445 458

123

212272

426

265

0 0 0 0

43

74 72 77 7765

26 28

6843 35

1,289

(+20.7%)

1,271

(-1.4%)

793

(-37.6%)

117 226

(+93.2%)

119

(-47.4%)

146

(+22.7%)

1,068

1,227

(-8.0%)

1,426

(+16.2%) 1,411

(-1.1%)

1,398

(-0.9%)

1,334

-

Transmission line outage in 4Q/2013

Maintenance in Aug/2014

EGAT has requested reserve shutdown from time-to-time since 3Q/2014

Major DCS upgrade and EGAT COC testing in Jan/2014

IPP Availability and Dispatch

+32.6%

+87.4%

-15.4%

963

(+21.4%)

GHECO1 Availability*

*Including de-rating.

Glow IPP Business


232

175

222259

235

97

205

267237

264 275 267 263

215 226

11

CFB1 ~27 days planned outage & 6 days unplanned outage

CFB2 ~23 days planned outage & ~ 23 days unplanned outage

670

(-17.3%)

810

(+20.9%)

726

(-10.4%)

813

(+12.0%) 810

Cogen Main Assets Generation Volumes

CFB3 ~ 12 days planned outages & ~ 21 days unplanned outage;

load-gear problem in the period Jan/2014 to Jul/2014 has restricted

output (BI claim expected to be concluded in 2015)

3,239.1

3,019.5


287

262 261

233

159

278 276 269 265

241258

227

273 266 275

1) Average steam conversion - Gas is 3.95 ton/MWheq and Average steam conversion – Coal is 2.90 ton/MWheq

591

(-6.0%)

709

(+20.0%)

806

(+13.7%)

704

(-12.7%)

629

2,703.7

2,811.9


Higher Phase5 dispatch as a result of a production shift from coal to

gas.

Planned outage 52 days & unplanned outage 9 days

Major maintenance in Mar/April 2014

+4.0%

-6.8%

CFB 1-3 Dispatch (GWhe)

Phase5 Dispatch (GWhe)

Glow Cogen Business


422

354 389

450

379

436 444 437 403

434 451 447 444

372 403

603 554 578

616 587 637 616 594 604

654 664 630 630

539 616

1,265

(+7.1%)

1,284

(+1.5%)

1,332

(+3.7%)

1,219

(-8.5%)

Industrial Customer Volumes

12

IC Steam Sales (ktons)

IC Power Sales (GWh) Lower QoQ volumes mostly driven by shutdowns of production facilities for

maintenance by 2 major customers.

Lower QoQ volumes mostly driven by shutdowns of production facilities for maintenance by 2 major customers.

1,840

(+6.1%)

1,814

(-1.4%)

1,948

(+7.4%)

1,785

(-8.3%)

1,181

1,735

7,118.9 7,384.8


4,718.95,099.1


+8.1%

+3.7%

Glow Cogen Business


0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Oct

-13

Nov

-13

Dec

-13

Jan-

14

Feb

-14

Mar

-14

Apr

-14

May

-14

Jun-

14

Jul-1

4

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Avg. PEA Price Gas Cost Coal Cost

Normalized Spread Trends

13

Glow Cogen Business

2.46 THB/kWh

0.65 THB/kWh

Note: 1) PEA Price = Base Tariff at 2.8 THB/kWh + actual FT

2) Gas Cost = Blended Cogen gas price in THB/mmBTU x normalized gas-fired heat-rate at 8,600* BTU/kWh / 10^6

3) Coal Cost = Average FOB coal price in THB/mmBTU x normalized coal-fired heat-rate at 10,300 BTU/kWh / 10^6


3.29

3.44

2013 2014

Average PEA Price (THB/kWh)

98.47

81.09

2013 2014

Average Coal Price (USD/ton JPU)

2.10

2.41

2013 2014

Average Coal Spread (THB/kWh)

0.51

0.60

2013 2014

Average Gas Spread (THB/kWh)

YoY Prices/Spreads Comparison

14

+4.6%

+16.9% +14.9%

-17.7% +2.4%

Glow Cogen Business

323

331

2013 2014

Average Gas Price (THB/mmBTU)


Variance Analysis


2,090 2,076

3,133

2,442

(337) (73)(174) 30 7 9 115 2,018

NNP 4Q/2013Act

NNP 1Q/2014Act

NNP 2Q/2014Act

NNP 3Q/2014Act

Gross Profit MaintenanceCosts

OtherOperating

Costs

Depreciation& Asset

replacements

FinanceExpenses

Income Tax MinorityInterest(MI)

NNP 4Q/2014Act

172172

EBITDA Impact-584 MTHB

Below EBITDA+45 MTHB

4Q/2014 vs. 3Q/2014 (Quarter Only)

16

2,442 (227)

(21) (202) 26 2,018

NNP 3Q/2014 Act Cogen Business GIPP GHECO-1 HHPC NNP 4Q/2014 Act

172172

1 2

1) Including one-off insurance proceeds for GHECO-One in an amount of THB 297 million (before tax).

2) NNP for 3Q/2014 , adjusted for seasonal ity (i.e. using APR for Q4/2014)), would have been 2,320 MTHB.


8,056 131 39 1,133

309 9,668

NNP 2013 Act Cogen Business GIPP GHECO-1 HHPC NNP 2014 Act

2014 YTD vs. 2013

17

8,056 3,382

(561) (178) (39) (12) (229) (749)9,668

NNP 2013 Act Gross Profit Maintenancecosts

Other Operatingcosts

Depreciation &Asset

replacements

Finance Expenses Income Tax Minority Interest(MI)

NNP 2014 Act

EBITDA Impact+2,643 MTHB

Below EBITDA-280 MTHB


Financing Structure


Debt Maturity Profile

19

27,548 24,491

36,294 30,506

63,842

54,998

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2013 2014

Consolidated Glow Group Gross Debts

Cogen Business IPP Business (1)

23 17 18 13

7 7 8

8

9 10 10 11 10

67

61 58 65

38 34 30 37 36

30 25 29 26

90

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

GHECO-One(2)

HHPC(3)

Glow IPP

Glow Cogen Repayment Profile (MTHB)

Total Gross consolidated Debt was 54,998 MTHB in 2014 versus 63,842 MTHB in 2013

USD loan (excluded tranches swapped into THB), as of Dec 2014 GIPP: 71 MUSD GHECO-One: 367 MUSD HHPC: 23 MUSD

Note: 1) Value of debts for IPP Business consists of 19,507 MTHB for GHECO-One, 2,342 MTHB for Glow IPP, and 2,641 MTHB for HHPC

2) GHECO-One Loan consists of USD tranche and THB tranche (converted @ 30 Baht/USD)

3) HHPC outstanding debt as of 1 February 2015 is 81 MUSD after refinancing in January 2015

4,000

5,500

1,000

1,500

4,600

4,000 3,400

5,555

5,500 5,500 5,600

4,000

3,400

5,555

2015 2016 2017 2018 2019 2020 2021

Bank loan Bond


Gearing Indicators

20

Note: 1) Gross D/E = Total Outstanding Debts / Total Equities

Net D/E = (Total Outstanding Debts – cash) / Total Equities

Gross Debt to EBITDA = Total Outstanding Debts / EBITDA

Net Debt to EBITDA = (Total Outstanding Debts – cash) / EBITDA

2013 2014

D/E Ratio

Conso: Gross D/E (Net D/E) 1.57 (1.43) 1.20 (1.08)

Cogen: Gross D/E (Net D/E) 0.89 (0.85) 0.67 (0.65)

Debt to EBITDA (Conso)

Gross Debt to EBITDA (Net Debt to EBITDA) 3.50 (3.18) 2.63 (2.35)

Gross D/E is projected to fall below 1 towards end 2015.


Dividends Policy and History

21

Our policy is (in simplified terms) to pay “a normal dividend of not less than 50% of NNP”.

Additionally, since our IPO (2005) we have grown our (normal) dividend by at least 5% per year.

2013 and 2014 dividend growth reflects strong increase in profitability following the completion of

our 2008/2012 expansion program (80% increased in installed capacity).

0.600 0.600 0.600 0.700 0.735 0.772 0.810 0.851 1.100

1.500

0.975 1.054 1.136 1.123 1.179 1.238 1.300

1.904

2.205

0.750

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Special

Annual

Interim

Dividend Split (THB/share)

2.250

1.575 1.654

1.736 1.823 1.914 2.010 2.110

2.755

38% 36% 35% 38% 38% 38% 38% 31% 33%

+5% +5% +5%

+5% +5% +5%

+31%

[3.305]

+20%


Selected Updates


Sensitivity to Oil Price Movements

23

Oil Price Gas Price

IC Power Tariff

IC Steam Tariff

• Wellhead price adjustment

interval

• LNG (high correlation with

oil price) vs. PNG (partial

indexation to oil price only)

• Gas-based capacity represents +/- 2/3 of the Thai system

• Ft adjustment (every 4 months) reflect changes in

(prospective) gas prices

• Gas price-linked (energy) tariff

EGAT Sales IC Sales:

Gas-Power

IC Sales:

Gas-Steam

IC Sales:

Coal-Power

IC Sales:

Coal-Steam

Limited Impact Positive Impact Negative Impact Negative Impact Negative Impact

• Pass through of gas

price changes under

the PPA’s

• Partial pass through of

gas price changes into

the Tariff

• Pass through of gas

price changes into the

tariff, but margin is also

implicitly linked to gas

prices

• Tariff decreases; fuel

cost does not; margin

therefore decreases

• Tariff decreases; fuel

cost does not; margin

therefore decreases

+/- 2/3 of

Total Sales +/- 1/3 of Total

Sales

+/- 80% of

IC Capacity +/- 20% of

IC Capacity


0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

Oct

-13

Nov

-13

Dec

-13

Jan-

14

Feb

-14

Mar

-14

Apr

-14

May

-14

Jun-

14

Jul-1

4

Aug

-14

Sep

-14

Oct

-14

Nov

-14

Dec

-14

Jan-

15

Feb

-15

Mar

-15

Apr

-15

May

-15

Jun-

15

Jul-1

5

Aug

-15

Sep

-15

Oct

-15

Nov

-15

Dec

-15

Avg. PEA Price Gas Cost Coal Cost

24

The trends in the graph above are shown for illustration only, using simplified assumptions:

Oil price stable at 50 USD/bbl.

(Single) FOB coal price stable at 65 USD/ton JPU.

Glow Cogen Business

2.46 THB/kWh

0.65 THB/kWh

2015F*

Normalized Spread Outlook


Thank You!

25

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