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OPG Power Ventures pays maiden dividend

Last updated: 13:35 06 Dec 2016 GMT, First published: 07:59 06 Dec 2016 GMT

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The company's operation in India is growing and thriving.

OPG Power Ventures PLC (LON:OPG) paid its first ever dividend after reporting a doubling in revenues and generating free cash of almost £21mln.

The first-half divi from the India-focused generator will be 0.26p, which is expected to be around a third of the Total distribution under OPG’s payout ratio.

Turnover was £117.7mln for the six months ended September, while EBITDA is up 81% to £42.1mln.

The company’s gearing has fallen three points to 55%, or a net £269mln.

Operationally, OPG has performed well with a strong ramp up of power plants commissioned last year in Gujurat.

Total generation has increased 30% year on year to 2.4bn units. Plant load factor at Gujarat was 71% and 77% at its Chennai sites.

The company said cash collection for the latter was “stronger”.

"Our new assets have ramped up well, operations have performed robustly and the board remains confident in recommending a maiden dividend to shareholders,” said chairman Arvind Gupta.

“It is the right time for us to pursue growth and all eyes are on India for growth amongst the world's major economies. 

“Having already recorded the highest growth rates, industrial production and demand levels seem set to rise into the long term. 

“Electricity is, and will continue to be, a key enabler in India's future and we aim to be a leader in servicing that demand."

OPG is diversifying its portfolio from traditional, coal-fired electricity generation and has agreed outline project financing for 62 megawatts of solar projects on the sub-continent. 

A further 124 megawatts is now in the pipeline, bringing its development and pipeline, which would get OPG more than halfway to its target of 300 megawatts.

Shares in the company marked time at 67p, valuing the business at £236mln.

Broker Cantor Fitzgerald said: “OPG’s dividend policy should result in a full year payout in line with our expectations and the link to audited earnings should mean an attractively growing dividend over the next few years in our view.

“Coal costs are set to increase in the second half but we think this may be mitigated at least in part by better pricing and output.”

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