OPG Power Ventures plc Renewable Growth Projects Pursued (2662D)
05 July 2016 - 9:33AM
UK Regulatory
TIDMOPG
RNS Number : 2662D
OPG Power Ventures plc
05 July 2016
5 July 2016
This announcement contains inside information.
OPG Power Ventures Plc
Renewable Growth Projects Pursued
OPG Power Ventures Plc ("OPG", the "Group" or the "Company"),
(AIM: OPG), the developer and operator of power generation
facilities in India, is pleased to announce an investment in 62 MW
of solar projects as part of the Group's ongoing growth
strategy.
62 MW Solar Projects in Karnataka (India) - 25 year PPA -
expected commissioning in 2017
The Board has approved the Company's investment of GBP45 million
in four new solar projects across various locations in Karnataka,
one of the most industrialised states in India. This investment is
to be funded from a combination of internal cash generation and
debt and the Directors expect all four of these new projects to be
generating cash flow by June 2017.
The projects were secured in a competitive bidding process and
the Company has signed long term (25 year) power purchase
agreements (PPAs) at an average tariff of Rs 5 with Karnataka Power
Corporation. The targeted return levels are expected to be met
without any subsidies being available.
Maiden dividend expectations unchanged - longer term
expectations enhanced
The Board announced its initial expectations with regards to
dividends on 24 May 2016 and that expectation remains unaffected by
this approved investment. The Company's dividend objective is to
attain a pay out of 15 per cent of full year net earnings, subject
to the level of free cash flow generated calculated after scheduled
debt repayments and expected capital expenditure and progress to a
long term dividend strategy that pays out a third of the Company's
total net earnings in any year. The solar energy business is
expected to make a significant contribution towards this target
while keeping the Group on a growth trajectory.
Projects consistent with OPG's Aims and Strategy
OPG's aim is to be a sector leader by reference to:
- Quality of earnings
- Growth it delivers; and
- Performance against its own stringent safety and environment management standards.
To meet these objectives, the Company's strategy is established
to continually maximise the performance of its existing assets,
reduce the cost of its capital and to deliver accretive growth
projects within its core areas of expertise. At present, attractive
growth projects in renewable energy bring with them strong
potential for the Company to replicate the nation's energy
generation mix and add to the quality of its earnings and are
consequently believed to offer the Company excellent organic growth
potential.
OPG's Renewable Energy Strategy
As outlined in June 2015 we have been increasing our focus on
renewable energy as a result of the improved attractiveness of
projects, in particular in the solar energy segment. With solar
panel costs falling, their performance improving and an improving
project financing environment, we have continued to prioritise
projects that can be funded through a combination of debt and
internal resources and that can be expected to generate visible
long term revenues which meet our targeted return levels without
any subsidies being made available.
We will continue to evaluate projects consistent with our stated
strategy of adding accretive growth projects that replicate the
national energy mix, enable debt to be paid down and dividends to
be paid.
India and solar power
The Government of India, recognising the role of both thermal
and renewable energy to power the country's growth and climate
change commitments, has set out a target to achieve 100 GW of solar
capacity by 2022 with the individual states setting out capacity
targets and long term PPA's. Capital costs for solar plants have
come down significantly both globally and even further in India
and, set within the backdrop of India's high irradiation, solar
power has become economically viable without subsidies in India.
Further, with declining interest rates and project finance terms of
15-20 years combined with banking and sector reforms, the Directors
consider the backdrop to India's energy sector to be
favourable.
CEO Arvind Gupta commented:
"We have started our next phase of growth with a clear strategy
that we believe could be a significant contributor to the growth in
OPG's future earnings. In fact, I believe adding low risk solar
generation capacity that is sold forward into the long term is
significantly beneficial to the quality and robustness of our asset
base and earnings. Such quality of growth reflects OPG's continued
commitment to being a leading developer and operator in the growing
Indian energy sector."
For further information, please visit www.opgpower.com or
contact:
+91 (0) 44 429
OPG Power Ventures PLC 11 211
Arvind Gupta / V Narayan +44 (0) 20 7850
Swami / Ajay Paliwal 7070
Cenkos Securities (Nominated
Adviser & Broker)
+44 (0) 20 7397
Stephen Keys / Camilla Hume 8900
Macquarie Capital (Europe)
Limited (Joint Broker) +44 (0) 20 3037
Raj Khatri / Nick Stamp 2000
Tavistock
+44 (0) 20 7920
Simon Hudson / James Collins 3150
About OPG
OPG operates and develops power generation related assets in
India, principally under the group captive model, and currently has
750 MW of recently built thermal power generation assets in
operation. It aims to be recognised as a sector leader for the
quality of its earnings, the growth it delivers and its performance
against its own safety and environment management standards. For
growth OPG has set its target to build at least 300 MW solar energy
projects in India in the next three years and correspondingly, its
asset base is increasingly expected to better replicate India's
energy generation mix.
In the six months ended 30(th) September 2015, according to its
unaudited results for the period, the Company generated revenues of
approximately GBP56 million, EBITDA of GBP23.25 million and
earnings per share of 3.41 pence. OPG is listed on the Alternative
Investment Market ("AIM") of the London Stock Exchange and trades
with symbol "OPG.L"
-ends-
This information is provided by RNS
The company news service from the London Stock Exchange
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July 05, 2016 04:33 ET (08:33 GMT)