Gwynt y M r OFTO plc Investor Presentation April 2020 Disclaimer - - PowerPoint PPT Presentation
Gwynt y M r OFTO plc Investor Presentation April 2020 Disclaimer - - PowerPoint PPT Presentation
Gwynt y M r OFTO plc Investor Presentation April 2020 Disclaimer This material (the Investor Presentation) has been prepared by and is the sole responsibility of Gwynt y Mr OFTO plc (the Company) and has been prepared for the sole use
INVESTOR PRESENTATION APRIL 2020
Disclaimer
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- This material (the Investor Presentation) has been prepared by and is the sole responsibility of Gwynt y Môr OFTO plc (the Company) and has been prepared for the sole use of the parties to whom it is
delivered
- This material is confidential and may not be retransmitted, distributed, published, reproduced (in whole or in part) by any medium or in any form, or disclosed or made available by recipients to any other
- person. It has been prepared solely for informational purposes and does not constitute or form part of, and should not be construed as, an offer, a solicitation of invitation or inducement to purchase or
subscribe for any securities.
- No part of this material, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.
- No representation or warranty, either express or implied, is given or made by any person in relation to the fairness, accuracy, completeness or reliability of the information or any opinions contained
herein and no reliance whatsoever should be placed on such information or opinions. This material should not be regarded by recipients as a substitute for the exercise of their own judgement and
- assessment. Any opinions expressed in this material are subject to change without notice and neither the Company nor any other person is under any obligation to update or keep current the information
contained herein.
- Neither the Company, nor its advisors, nor any of their respective affiliates, agents, directors, partners and employees shall have any responsibility or liability whatsoever (for negligence or otherwise) for
any loss howsoever arising from any use of this material or its contents or otherwise arising in connection with this material.
- This material contains certain tables and other statistical analyses (the Statistical Information) as well as future looking statements (the Future Looking Information and, together with the Statistical
information, the Relevant Information) which have been prepared in reliance upon information furnished by the Company. Numerous assumptions were used in preparing the Relevant Information, which may or may not be reflected herein. As such, no assurance can be given as to the Relevant Information’s accuracy, appropriateness or completeness in any particular context; nor as to whether the Relevant Information and/or the assumptions upon which they are based reflect present market conditions or future market performance. The Relevant Information should not be construed as either projections or predictions or as legal, tax, financial or accounting advice.
- These materials may contain statements about future events and expectations that are forward-looking statements. Any statement in these materials that is not a statement of historical fact is a forward-
looking statement that is based on various assumptions and involves unknown risks and other factors which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Past performance should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance.
- Recipients are required to make their own independent investigation and appraisal of the business, financial condition and prospects of the Company and the nature of any relevant securities and no
reliance may be placed upon the information herein for such purposes.
- This material constitutes a marketing communication and is only addressed to and directed at persons in Member States of the European Economic Area who are Qualified Investors within the meaning
- f Article 2(1)(e) of the Prospectus Directive (Directive 2003/71/EC) (as amended or replaced). In addition, in the United Kingdom, this material is being distributed only to, and is directed only at,
Qualified Investors (i) who are investment professionals as defined by the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended or replaced) (the Order) and (ii) high net worth individuals and other persons falling within Article 49(2)(a) to (d) of the Order to whom it may otherwise lawfully be communicated and in all cases are capable of being categorised as a Professional Client or Eligible Counterparty for the purposes of the Financial Conduct Authority conduct of business rules (all such persons together being referred to as Relevant Persons).
- This material must not be acted on or relied on (i) in the United Kingdom, by persons who are not Relevant Persons, and (ii) in any other Member State of the European Economic Area other than the
United Kingdom, by persons who are not Qualified Investors. Nothing in this material constitutes investment advice and any recommendations that may be contained herein have not been based upon a consideration of the investment objectives, financial situation or particular needs of any specific recipient. Any investment or investment activity to which this material relates is available only to (i) in the United Kingdom, Relevant Persons, and (ii) in any member state of the European Economic Area other than the United Kingdom, Qualified Investors, and will be engaged in only with such persons. This material and its contents is confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person.
- The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the Securities Act) or the securities laws or "blue sky" laws of any state or other
jurisdiction of the United States and therefore may not be offered or sold within the United States or to, or for the account or benefit of, U.S. Persons except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any applicable State or federal securities laws. This material is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. In particular, this material and the information contained herein, are not for publication or distribution, directly or indirectly, to persons in the United States (within the meaning of Regulation S under the Securities Act) or to entities in Canada, Australia or Japan or any other jurisdiction which prohibits the same except in compliance with applicable securities laws. By reviewing this material, you acknowledge and agree to be bound by the foregoing.
INVESTOR PRESENTATION APRIL 2020
Contents
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Welcome 4 Key Headlines from Operational Performance 5 Cable Outages and Recoveries 6 Key Operational Issues 7 Insurance 8 Key Financial Performance to 31 March 2020 9 Credit Ratings 10 Forward Look 11 Background Information 12
INVESTOR PRESENTATION APRIL 2020
Welcome
- This is the fourth Investor Presentation by Gwynt y Môr OFTO plc (“OFTO”) to Bondholders
- There will be a short presentation followed by a question and answer session
- The following representatives are present:
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OFTO Representative General Manager John Sinclair Rahul Jagdale OFTO Directors Simon Rooke Rebecca Collins Finance Manager Ros Holden Security and Bond Trustee Adam Wilson / John Woodger (Deutsche)
INVESTOR PRESENTATION APRIL 2020
Key Headlines from Operational Performance
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Availability
- 96.10% availability for year 2019/20 (100.00% for the 3 months to March 2020)
Maintenance
- Significant maintenance campaigns in Aug and Sep 2019.
- Weather delays meant that some planned onshore and offshore maintenance tasks
could not be completed and a further outage that is planned for July 2020. Cable repair Agreement
- The OFTO has Framework Agreements in place with Global Marine and Boskalis.
Both organisations are able to respond during the Covid-19 restrictions. Warranty items
- The OFTO is working with Siemens to close out the remaining 18 warranty items.
Siemens are confident that all items will be completed by 1 Aug 2020.
- Two 400kV cable sealing ends will be stripped down and re-made in July 2020.
General Performance
- There have been no safety incidents experienced during works on the assets
- The drive mechanism in a 400kV circuit breaker had to be replaced in Nov 2019;
- In Feb 2020, broken fibres were discovered in one of the subsea export cables, the
situation is being investigated. Otherwise all equipment is operating as expected. Costs
- Reactive maintenance costs to March 2020 reflects preparatory work for the two
planned maintenance outages in 2019 and the 400kV CB fault in November 2019
- Monitored Operating Costs in the Mar-20 operating model are within 80% and 120%
- f the Monitored Operating Costs in the Sep-19 model, as required by the CTA.
INVESTOR PRESENTATION APRIL 2020
Cable Outages and Recoveries
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▪
Following the repairs on export cables SSEC1 (repaired in June 2015) and SSEC2 (repaired in February 2016) there has been no further material performance issues. The total cost of the two cable repairs was £24.3m and the status of the cost recovery is as follows:
▪
A settlement was reached with the cable manufacturer NKT in Nov-17
▪
Ofgem granted an Income Adjusting Event (IAE) claim for the SSEC2 repair in Sep-17. This decision was quashed at a Judicial Review in January 2019. As a result: − the OFTO must repay the £8.5m received so far. over the period Apr-20 to Mar-21 − Ofgem is still considering whether to grant an IAE claim for the SSEC2 cable repair ▪ A settlement was reached with the insurers in Oct-19. ▪ The OFTO was unsuccessful in court proceedings to recover costs from the developer under the terms of the Sale and Purchase Agreement (judgement made on 8-Apr-20). As a result: − the OFTO must contribute to the developer’s legal costs. The full amount has yet to be determined but an interim payment must be made within the next 28 days, This will mean that: − the Historic DSCR will fall below lock-up levels at the next Calculation Date and the Monitored Operating Costs in the semi-annual period will be greater than 120% of forecast. − However, reserves remain fully funded and the ratios should remain above the default level.
INVESTOR PRESENTATION APRIL 2020
Key Operational Issues
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Cable integrity risk assessment (CIRA)
- The 2018 subsea cable survey identified areas where the cables are exposed or
shallow buried. The exposures are at points where the cables cross other assets.
- The OFTO is currently reviewing the options for addressing the situation.
- The OFTO has advised their insurance broker, WTW; the insurers have responded
by imposing exclusions against the risk of fishing / anchor damage. 400kV Cable Sealing Ends (CSE)
- Minor oil leaks have been found in three CSEs. Prysmian (the OEM) advised that
the CSEs should be stripped down and re-made.
- One CSE was repaired in Sep 2019; the others will be repaired in the 2020 outage.
- An Exceptional Event claim was submitted for the revenue lost in the first repair.
Cable sheath faults (onshore)
- During planned maintenance in Sep 2019, the OFTO identified two sheath faults
- n SSEC4. Sheath faults can indicate a developing cable fault.
- The sheath faults will be located and repaired during the Jul 2020 outage.
SSEC3 broken fibres
- In Feb 2020 the OFTO identified broken fibres in both the main and spare FOC in
- SSEC3. There has been no impact on Availability
- The breaks may be at or near a subsea repair joint and this will be confirmed when
the operator can reach the offshore substation to complete the necessary tests. This will then inform the next steps that the OFTO can take. X190 Circuit Breaker fault
- In Nov 2019 the OFTO experienced a fault on one of the two 400kV CBs. This
was repaired by the manufacturer ABB. The OFTO has now procured spare parts.
- An Exceptional Event claim is being prepared for submission to Ofgem.
INVESTOR PRESENTATION APRIL 2020
Insurance
The current insurance policies include 100% cover at LEG 3 subject to two exclusions:
- Any cable failures with similar root causes to the 2015 cable failures, and
- the high risk areas in the CIRA where the offshore cables are exposed or shallow buried.
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INVESTOR PRESENTATION APRIL 2020
Key Financial Performance to 31 March 2020
- All revenues have been invoiced and received within the contractual terms
- Payments to key contractors have been made as per contracts
- Key financial deliverables have been met, including:
− The regulatory accounts for year ended 31 March 2019 were filed; and − the audited statutory accounts for March 2019 have been filed with Companies House
- The PBCE remains undrawn. The EIB letter of credit stands at £42.0m as at March 2020
− The costs of rectification for the unplanned cable failures was met from operational cashflow and cash reserves in accordance with the funding documents
- Scheduled interest and principal payable on the bonds
− were paid in full as per the payment schedule in 2019, (March £10,106k, September £10,435k) and £10,572k in March 2020 − forecast to continue uninterrupted during the remaining term of the bonds
- The reserve bank accounts are now fully funded following rectification of the 2015 cable faults.
- A distribution of £996k is intended to be made to shareholders per the March 2020 operating model.
No distribution was made in the September 2019 operating model.
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INVESTOR PRESENTATION APRIL 2020
Credit Ratings
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- A public credit rating on the £339.2 million 2.778% senior secured bonds due 2034 is maintained
with Moody’s Investors Service
- Current credit rating is A3, stable outlook.
- Moody’s reaffirmed this in its Credit Opinion published on 1 November 2019
- The OFTO remains committed to maintaining the public credit rating with Moody’s for the benefit
- f its investors.
INVESTOR PRESENTATION APRIL 2020
Forward Look
- To finalise the position with Ofgem on the IAE claim
- Determine an appropriate course of action for dealing with the de-buried / shallow cable
- Resolve the position with broken fibres in the SSEC3 cable
- Close out Siemens warranty issues
- Complete planned inspection and maintenance tasks during 2020
- Maintain availability with minimum need for intervention
- To continue to meet scheduled interest and principal payments on the bonds
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INVESTOR PRESENTATION APRIL 2019
Background Information
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INVESTOR PRESENTATION APRIL 2020
Background
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- The Gwynt y Môr offshore wind farm (576MW) is
located in the Irish Sea approximately 15km off the North Wales coast
- The wind farm and the associated transmission
connection was developed by RWE
- Ownership of the transmission assets transferred
to the OFTO in February 2015
- The OFTO is owned by Balfour Beatty and Equitix
- The assets include two offshore substations, one
- nshore substation and four subsea cables which
connect the wind farm to the UK national grid
- The assets provide the only route to market for the
electricity generated by the Gwynt y Môr wind farm
Source: British Crown and SeaZone Solutions Limited
INVESTOR PRESENTATION APRIL 2020
The Gwynt y Môr OFTO Transmission Assets
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Asset Description Offshore substations (OSPs) Two OSPs house the necessary equipment for connection and switching of the wind turbine arrays. Main apparatus includes four 132/33kV transformers, 132 kV and 33kV switchgear. OSPs are located within the wind farm and away from shipping lanes therefore minimising collision risk Subsea cables Link the onshore cables to the OSPs. There are four 132 kV subsea cables; two from the Eastern OSP, each 22.4km in length, and; two from the Western OSP, each 19.0 km in length. Onshore cables Link the subsea cables to the onshore substation. There are four 132kV onshore cables, each 11km in length Substation at Bodelwyddan Contains the equipment to connect the onshore cables to the distribution network and also the associated reactive compensation equipment. This includes two 400/132/13.9kV 320 MWA transformers and 132kV GIS switchgear and reactive compensation/ harmonic filtering equipment Spares Include a spare onshore and offshore transformer, 1.0 km of 132kV offshore cable (630mm2) plus 5 joint kits.
Transition Joint Bay
Gwynt y Môr 160 turbines @ 3.6MW 576MW
Western OSP 2x 132/33kV transformers + switchgear 132kV Marine Cables (2x 19km) 132kV Underground Cables 4x 11km OFTO Assets Eastern OSP 2x 132/33kV transformers + switchgear 132kV Marine Cables (2x 22.4km) Bodelwyddan Onshore Substation 2x 400/132kV transformers
INVESTOR PRESENTATION APRIL 2020
Company and Structure
- The OFTO’s revenues originate from the Licence that was awarded by Ofgem on the asset
transfer date.
- The revenue stream covers a 20 year period to February 2035
- As at 31 March 2020 the company’s financing structure contains following instruments
– Listed bonds due February 2034 (outstanding principal £279.9m); – RPI Swaps for 58.5% of revenue (as a hedge for inflationary scenarios); – PBCE Letter of Credit provided by EIB for 15% of the outstanding principal on the bonds; – Subordinated debt provided by the OFTO’s shareholders; and – Share capital
- The company financing structure and shareholder structure remains as disclosed at Financial
Close
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