7c Solarparken Ag · XETR:HRPK
7c Solarparken — Colexon Energy — Investor Presentation (September 2014)
44 slides from 7c Solarparken's investor presentation, Sep 29, 2014
Slide 1: Capital Market Presentation: Towards the Full Potential by 2016
Capital Market Presentation TOWARDS THE FULL POTENTIAL BY 2016 Colexon Energy AG - September 29, 2014
Slide 2: Disclaimer
DISCLAIMER This presentation is for information purposes only and does not constitute a public offer or invitation to subscribe for or purchase any securities of Colexon Energy AG and neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoeve
Slide 3: Agenda
AGENDA I. Key facts …………………………………………………4 II. Market environment ……………………………………11 III. Outlook for German PV market …………………….….18 IV. Strategic focus 2014-‘16 ……………………………………25 V. Outlook 2014-’16 ……………………………………..…………35 VI. Investment highlights ……………………………………43
Slide 4: I. Key Facts
Capital Market Presentation I. KEY FACTS
Slide 5: Key facts of the new group
Key facts of the new group Pure-play PV asset owner / operator focused on Germany • New player arising from the business combination between Colexon Energy AG and 7C Solarparken NV. German footprint dominates • Combined portfolio 71 MWp of which > 90% Germany predominantly in Bavaria and Saxony. Sma
Slide 6: German PV assets are a compelling asset-class
German PV assets are a compelling asset-class Key attraction is a predictable yield • Renewables are increasingly important to diversify the supply mix, to drive the country‘s energy independency and to gradually replacing nuclear (and coal) • Binding national target for renewables development The E
Slide 7: Overview of IPP parks
- kWp 1.000 2.000 3.000 4.000 5.000 6.000 Moorenweis Sandersdorf Thierhaupten Immler Pflugdorf Grube Warndt Italy, various installations Hohenberg Opel Overview of IPP parks Blumenthal I Kettershausen Nobitz Hausen Landau Toyota Wolnzach Ground Zernsdorf Zerre VII Capacity Neudorf IPP Portfolio Dahl
Slide 8: Management team
Management team Multi-skillset with legal, financial and technical expertise Steven De Proost, Vorstand CEO Jan Habicht, Chief Quality Control Born 1974 in Ninove, Belgium Born 1978 in Gießen, Germany Strategy, business development, Monitoring, quality control of maintenance budgetting a
Slide 9: Management team: track-record of value creation at 7C Solarparken
Management team Proven track-record of value creation at 7C Solarparken NV Capacity IPP in kWp Issue price of new shares 7C Solarparken NV Last capital increase (Q3’13) prior to 7C Solarparken NV renewed discussions on business combination 45.000 with Colexon Energy AG 1,50 40.000 1,40 kWp 1,30 35.0
Slide 10: Shareholders structure
Shareholders structure Ownership divided between Vorstand, family offices and free float Shareholder % Lock-up Comment Rodolphe de Spoelberch 11,2% Member of the InBev family Power X Holding NV 8,3% Value investor from Belgium Distri Beheer 21 Comm VA 8,2% Belgian entrepreneur Steven De Proost 7,2%
Slide 11: II. Market Environment
Capital Market Presentation II. MARKET ENVIRONMENT
Slide 12: The past: Boom & Bust cycle
The past Boom & Bust cycle … Too generous incentives during 2007-’11 … … entailed uncontrolled market growth €/MWh 2010 Installed MWp 2013 NREAP '20 Comment 500 Belgium 2.847 1.340 Reached 2011 450 Bulgaria 1.107 303 Reached 2012 Czech Republic 2.221 1.695 Reached 2010 400 France 4.473 4.860 Reached
Slide 13: The past: affected the industry and stakeholders
The past … and affected the industry and stakeholders Negative effect on European PV industry but also on big utilities and consumers • Fast decrease in new-build across Europe caused • Shock in merit order leads to lower peak prices and cuts many insolvencies among developers / module profitability
Slide 14: The past: learning curve brought much lower costs
The past … but learning curve brought much lower costs PV module prices versus annual newly installed capacity (log-scale) 7,00 100.000 Fraunhofer Institute calculated that each 6,00 time the cumulative production doubled, the 10.000 5,00 price went down by 19.6 %. 1.000 4,00 Cumulative capacity 2
Slide 15: The present: Solar PV is now a competitive energy source
The present Solar PV is now a competitive energy source Cost of Ground PV = conventional new-build Cost of distributed PV < end-user price Levelised cost of new-build in €/MWh, Fraunhofer report End-user electricity price in Germany in €/MWh ex-VAT EEG Taxes Grid Supply EEX 300 250 200 150 100 50 -
Slide 16: The future: new ambitions by the European Commission
The future New ambitions formulated by the European Commission Renewed targets for 2030 at European level • Binding target to Member States to reduce domestic CO2 Renewable energy no longer a target emissions by 40% versus 1990 (now: -20% by 2020) as under „20/20/20“ but solely an • Europe should ac
Slide 17: The future: only competitive renewables will play a role
The future Only competitive renewables will play a role Sustainability / Competitiveness matrix of generation technologies How the EU profiles the future of renewables: • Only competitive technologies which experienced cost reductions through the learning curve. • Full legal security: against retroa
Slide 18: III. Outlook for German PV Market
Capital Market Presentation III. OUTLOOK FOR GERMAN PV MARKET
Slide 19: EEG 2.0 valid as from 01.08.2014
EEG 2.0 valid as from 01.08.2014 Focus on competitive renewables EEG 2.0 headlines German production 2020 and costs • Target 2020 of renewables raised from 25% to 35% • Stabilize EEG levy at current levels € 62.4/MWh 2014 • EEG 1.0 drove renewables up to 25% of the energy mix @ € 170/MWh; the remain
Slide 20: Capacity additions to slow further in 2014-20
Capacity additions to slow further in 2014-20 Slowdown due to low feed-in tariffs, cap of 10MWp and annual corridor New-build CFROI for large parks CFROI spread 10Y Bund 10,00% 9,00% • Average new-build Cash Flow Return on Investment 8,00% CFROI (*) 2007-’14: 8.0% 7,00% 6,00% • The period 2010-12 sa
Slide 21: Slowdown due to insufficient attractions for self-consumption (1/3)
Capacity additions to slow further in 2014-20 Slowdown due to insufficient attractions for self-consumption (1/3) • Self-consumption is the energy produced by PV that is at the Self-consumption of household , in power (W) same time consumed locally without using the grid. • Two key determinants infl
Slide 22: Slowdown due to insufficient attractions for self-consumption (2/3)
Capacity additions to slow further in 2014-20 Slowdown due to insufficient attractions for self-consumption (2/3) CFROI for self-consumption Rooftop installations Households Commercial SME Industry Capacity kWp 7 90 150 1.000 Capex €/kWp 1.475 1.225 1.150 975 Capex incl. non-recoverable VAT €/kWp 1.
Slide 23: Slowdown due to insufficient attractions for self-consumption (3/3)
Capacity additions to slow further in 2014-20 Slowdown due to insufficient attractions for self-consumption (3/3) • Given that the EEG levy will have to be paid in full for CFROI for rent-a-roof investors self-consumption purposes under rent-a-roof strategy 8,0% 7,6% Roof-owner 7,3% 6,8% 6,7% versus
Slide 24: Households and <250 kWp will lead the market
Capacity additions to slow further in 2014-20 Households and <250 kWp will lead the market Own forecast on market size for Germany 8.000 70.000 7.000 60.000 6.000 50.000 5.000 > 1 MWp 40.000 4.000 < 1 MWp 30.000 < 100 kWp 3.000 <10kWp 20.000 2.000 Market size 1.000 10.000 - - Households and < 250 kW
Slide 25: IV. Strategic Focus 2014-16
Capital Market Presentation IV. STRATEGIC FOCUS 2014-16 “Cash flows are key, not megawatts“
Slide 26: Operating model of the new company
Operating model of the new company Pure-play owner-operator of PV parks in Germany 1 2 3 Asset acquisition Optimisation Operations & Quality control ADDED VALUE IRR 0 > WACC 0 WACC 0 ↓ IRR 0 ↑ NPV protection Focus remains on acquisition and optimisation of existing assets across Germany as new-build
Slide 27: Three pillar strategy to drive cash flows
Three pillar strategy to drive cash flows Cost rationalisation, asset efficiency and selective growth CASH FLOW CONVERSION 1. high COST RATIONALISATION 2. ASSET EFFICIENCY Opex savings: € 2mio Improved management Major maintenance and of warranty period optimisation initiative to phase-out and
Slide 28: 1. Cost rationalisation: € 2mio opex reduction program
1. Cost rationalisation New management is rolling out a € 2mio opex reduction program Opex savings Ca. € 2mio cost savings identified at the corporate level of the “old“ Colexon Corporate level € mio 2012 2013 2014E 2016E # FTEs per MWp IPP Personnel expenses -2,5 -1,6 -1,7 -0,6 0,73 Other opex -4
Slide 29: 1. Cost rationalisation: external warranties and O&M
1. Cost rationalisation Improved management of “old issues“: external warranties - external O&M Phasing out warranty As EPC contractor, Colexon has assumed a 5 years product warranty often in period and sweating out combination with O&M service contracts that are either unprofitable or in some ext
Slide 30: 2. Asset efficiency: improve group PR by 0.75% (1/2)
2. Asset efficiency Maintenance & optimisation initiative to improve group PR by 0.75% (1/2) 1,0% 82,0% • Management has analysed the discrepancies in the 1,5% 1,0% performance between the installations of Colexon (PR=77%) 1,5% 77,0% and 7C Solarparken (PR=82%) . The difference of 5% can be explaine
Slide 31: 2. Asset efficiency (2/2): Thierhaupten case study
2. Asset efficiency Maintenance & optimisation initiative to improve group PR by 0.75% (2/2) Thierhaupten: 5.0 MWp Case study • Being Colexon‘s second largest park with annual revenues of alomst € 2mio, the PR of Thierhaupten has been structurally below the expert studies (81-82%) since commissionin
Slide 32: 3. Selective growth: consolidating the 1-5 MWp segment
3. Selective growth Through opportunistically consolidating the 1-5 MWp segment Performance ratios of existing parks (Meteocontrol) Segmentation German PV installations FOCUS ON UNDERPERFORMING ASSETS • The open market is limited to freefield and industrial roofs • Operating parks with PR 75-80%, kn
Slide 33: 3. Selective growth: returns above new-build IRR
3. Selective growth … at returns of at least 250bps above new-build IRR Year 2014 2015 2016 … 2028 2029 2030 2031 2032 2033 2034 … 2039 Period 0 1 2 14 15 16 17 18 19 20 25 kWp 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 kWh/kWp 1.020 1.017 1.014 978 975 972 969 966 963 961 946
Slide 34: 3. Selective growth: expanding the PV Estate portfolio
3. Selective growth … and expanding our ca 60ha PV Estate portfolio PV Estate is passive ownership of real estate with PV installations on it. Why we invest in PV Estate: Recurring cash flows without technical risk: typical formulated as 3-4% of the FIT revenues generated by the installation durin
Slide 35: V. Outlook 2014-16
Capital Market Presentation V. OUTLOOK 2014-‘16 “Targeting Cash Flow Per share to rise to € 0.40/share“
Slide 36: Reverse acquisition: financial reporting impact
Reverse acquisition Financial reporting impact Reverse acquisition • Transaction performed as a reverse acquisition: while the legal acquirer is Colexon Energy AG, the economic acquirer (under IFRS) is however 7C Solarparken NV. As a result, the figures of 7C Solarparken NV will be presented for the
Slide 37: New steering metric: cash flow per share
New steering metric Cash flow per share (CFPS) Net cash flow = Economic EBITDA “clean“ – cash interest - taxes EBITDA • For capital intensive companies with infrastructure assets on balance sheet, we believe that the net cash flow (often Economic referred to as “Funds From Operations“) is the best m
Slide 38: Budget 2014 for the new group
Budget 2014 for the new group Starting CFPS for the new group: € 0.26 for 2014 7C Solarparken NV Colexon Energy AG New group Net cash flow = EBITDA - interest payments - taxes EBITDA - minorities Actual, BE GAAP Budget Budget Assuming 12 months Key figures in € 000 H1 '14 2014 2014 2014 Revenues 6.7
Slide 39: Guidance 2014-16: Economic EBITDA to rise to € 20mio
Guidance 2014-16 Economic EBITDA to rise to € 20mio as midpoint of range € 19-21mio 1.2 0.6 1.9 0.7 20.0 Standard deviation (+) of irradiation volatility: +5%: € 21 mio 0.15 Standard deviation (-) of irradiation volatility: -5%: € 19 mio 15.4 STARTING POINT: ECONOMIC EBITDA 2014 = € 15.4mio • Cost s
Slide 40: Guidance 2014-16: net economic debt to fall below € 115mio
Guidance 2014-16 Net economic debt to fall to below € 115mio by 2016 Economic debt 2014-16 in € ‘000 149.402 Situation end 2014: 1.350 Economic debt: € 149.4mio 1.500 Liquidity: € 5.3mio 5.460 Restricted cash/DSRA : € 8.4mio 4.904 130.372 5.548 Restricted cash on Bausparkonto : € 2.4mio 4.96
Slide 41: Guidance 2014-16: CFPS to rise to € 0.40/share
Guidance 2014-16 CFPS to rise to € 0.40/share by 2016 CFPS 2014-16 0,40 12,0 Net economic debt/economic EBITDA 0,28 8,7x 0,26 0,26 0,23 7,3 < 6,0x Colexon 7C Solarparken New group 2012 2013 2014 2014 PF 2015 2016 2014 2015 2016 CFPS targeted at € 0.40 by 2016 Net debt/EBITDA to drop to below 6.0x Re
Slide 42: Further growth potential: exercise of option rights
Guidance 2014-16 Further growth potential EXERCISE OF OPTION RIGHTS Exercise price per share 1,98 • All “old“ Colexon shareholders have the right to 1,76 subscribe to a bond of € 1.5mio, priced at 3% and to 1,50 1,56 be paid back in twelve months. The bond is also accompanied by 4.436.139 options wh
Slide 43: VI. Investment Summary
Capital Market Presentation VI. INVESTMENT SUMMARY
Slide 44: Investment summary: Towards the full potential
Investment summary Towards the full potential • Portfolio of FIT-driven German PV assets, offering high regulatory security Stable cash flows • Long life assets with remaining FIT duration 16 years • Interest costs locked for long-term • Cost initiatives € 2mio Efficiency potential • Upside for impr
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