Company Presentation September 2017 - Terna Energy
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Table of Contents Section 1: Company and Asset Overview Section 2: Highlights Section 3: Financial Performance 2
Terna Energy Company Overview 14% • Largest Greek renewable company • 786 MW of installed capacity(1) 40% Terna 25% GEK Terna G. Peristeris Parent Holding Energy S.A. Chairman • 194MW under construction or ready to build capacity • Geographic diversification with 35.9% of sales in Eastern Energy Renewables Construction Europe and US • Strong financial profile with 2016 revenues of €225.6 MM Poland Bulgaria USA Greece and EBITDA of €115.8 MM Wind Wind Wind Wind Solar Hydro • Market capitalization: €448 MM as of 12 September 2017 Key Financials Sales by Geography and by Business Unit FY 2016 CAGR € MM 2012A 2013A 2014A 2015A 2016A ‘12 – ‘16 By Geography By Business Unit Concessions USA e‐ticket Revenue 124.0 139.6 158.2 198.6 225.6 16.1% Electric Energy (11.7%) (5.6%) Revenue Trading 63% 12.9% 13.0 25.5% 13.6% (14.0%) Growth Eastern EBITDA 53.0 69.9 74.0 99.3 115.8 21.6% Europe (24.2%) Energy Construction EBITDA Growth 60.6% 32.1% 5.7% 34.2% 16.6% from (13.4%) RES EBITDA Margin 42.7% 50.1% 46.8% 50.0% 51.3% Greece 67.0% (64.1%) Notes: 1. As of March 2017 4
Asset Portfolio Overview 44 Projects Assets in Operation Didimos Lofos Energy Type Capacity (MW) Ownership COD PPA Life Left (Y) Greece 362 Greece Mitoula Chonos Chylos 5 12 100% 100% 2006 H1 2014 16.1 16.5 Hilos Didimos Lofos 26 100% 2005 15.0 Eleousa Derveni 24 2014 17.5 Derveni-Mikro Gouri 32 100% H1 2014 17.0 Lefkes Kerasia W/F Eressou Ipsoma Fourka Derveni-Sliva Krekeza 30 100% 2011 21.4 Xirovouni Loggarakia 18 100% H1 2014 17.1 Louzes 24 100% 2008 18.2 Mavrovouni 20 100% 2011 21.2 Mavrovouni (2) 8 2015 17.9 Kastri- Kokkalia Mavroplagia - Kastro 17.2 2017 19.5 Dafnozonara Mitoula 34 100% 2006 16.0 Karavi- Alogovouni Mougoulios 16.5 2017 19.9 Perdikokoryfi 14 100% 2006 15.9 Timpano - Tripiri Psiloma Soros Plagia - Psiloma 14.9 2017 19.9 Servouni - Vorina Litharia Pyrgari 5 100% 2001 4.1 Louzes Skopia Pyrgari Rahoula Pashalies (I+II) 38 100% 2011 (I) / July 2014 (II) 21.4 / 17.1 Gouri Tsouka Tsougari Skopia 20 100% 2010 20.3 Profitis Elias Stavroti Vigla 18 100% H1 2014 16.5 Vathihori II Tsilikoka Mavrovouni St. George Project 73.2 2016 19.2 Servouni - Kalogeriki Rachi Tsikna - Profitis Elias 11 100% 2001 3.8 Loggarakia Tsilikoka 10 100% 2000 3.0 Rahoula Pashalies (I + II) Tsouka 12 100% 2000 3.0 Xirovouni 6 100% H1 2014 16.5 Krekeza Dafnozonara 11 100% 2011 21.0 Eleousa 7 51% 2008 18.5 St. George Island Louzes 1 100% 2013 22.1 Vathihori 6 100% 2011 21.4 Stavroti Vigla Vathihori II 2 80% 2013 22.5 Adendro 1 2016 18.7 USA 138 Perdikokoryfi Mountain Air, Idaho 138 100% 2012 22.5 Chonos Poland 30 Chelmza 4 2015 18.5 Chojnice 6 2015 18.5 Czarnozyly 16 100% 2012 14.5 Gorzkowice 12 100% 2011 13.9 Poland Bulgaria USA Krzyzanow 20 100% 2011 13.6 Makow 12 2014 17.4 Nasielsk 10 100% 2012 22.3 Sieradz 8 100% 2013 15.6 Szadek 8 100% 2012 21.8 Tuchola 6 2015 18.5 Bulgaria Karapelit 12 100% 2012 15.1 Legends Vranino 18 100% 2013 15.8 Wind Energy Solar Energy Hydroelectric Projects Total Portfolio: 604 5
Terna Energy Market Positioning 1 The Leading Greek Renewable Company in attractive market 2 Attractive Core Asset Portfolio with Complementary Diversification 3 Strong Operational and Technical Excellence 4 A Stabilized Renewable Regulatory Framework in a Recovering Greek Economy 5 An Attractive and Value Creating Growth Story 6 Rapid Deleveraging from EBITDA Growth and High Cash Flow Conversion 7 A Proven Experienced, and Professional Management Team 6
2. Highlights
Terna Energy Market Positioning 1 The Leading Greek Renewable Company in attractive market The Leading renewable energy provider Terna Energy Historical Load Factors • 786 MW globally, of which 759 MW in wind • 516 MW in Greece (#1 market share) 26‐30% 24% • As the first mover in wind energy, Terna Energy secured the best wind load locations for its farms • Allocation on a first come first serve basis Best‐in‐class load factor • Stands at 30.2%(1) • Substantially higher than a number of other European wind markets Terna European Wind Market Notes: 1. As of March 2017 8
Terna Energy Market Positioning (cont’d) 2 Attractive Core Asset Portfolio with Complementary Diversification • Asset portfolio well diversified geographically Portfolio Installed Capacity (1) By Country By Type Greece: 516 MW, 31 locations SHPS & Pump Storage P/V Bulgaria USA (18 MW, 2.3%) (9 MW, 1.1%) USA: 138 MW, 1 location (30 MW, 3.8%) (138 MW, 17.6%) Biomass & Poland: 102 MW, 10 locations Co‐generation (1 MW, 0.1%) Bulgaria: 30 MW, 2 locations Poland Greece (102 MW, 13.0%) (516 MW, 65.6%) Wind Total: 786 (759 MW, 96.5%) MW Portfolio Expected Capacity (2) By Country By Type • Pipeline: Strategic focus on wind in Greece and USA as USA SHPS & Pump Storage P/V (18 MW, 1.5%) (9 MW, 0.7%) core market due to advantageous market dynamics (427 MW, 34.3%) Greece Biomass & (684 MW, Co‐generation • Hydro and solar assets built on an opportunistic basis 55.0%) (4 MW, 0.3%) • New long term target to reach 2.000 MW Bulgaria (30 MW, 2.4%) Wind Poland (1211 MW, 97.6%) (102 MW, 8.2%) Total: 1.242 MW Notes: 1. As of March 2017 2. Total estimated MW Q1 2019 9
Terna Energy Market Positioning (cont’d) 3 Strong Operational and Technical Excellence • Founder and shareholder, as well as key senior managers have civil Skilled Engineering and mechanical engineering backgrounds Team • Large technical team of over 80 engineers • Very strong operational and technical capabilities given backbone of the construction focused parent GEK Terna Construction Synergies • In‐house construction of projects • Track record of projects completed on time and on budget • Maintenance agreements with the turbine manufactures working with Terna Energy’s engineering teams ensures transfer of valuable Maintenance & know‐how to the company Insurance Coverage • Full insurance coverage both for damages and revenue loss • Turbines come with 5‐year guarantees; expected life of c.25 years 10
Terna Energy Market Positioning (cont’d) 4 A Stabilized Renewable Regulatory Framework in a Recovering Greek Economy Government remains committed to its RES target By resolving the RES deficit, the new regime for 2020 offers a stable framework for the long term GW 5.4 GW Remaining € MM 7,5 Target Reached (84,3) (116,8) 2,2 2,2 2,1 (152,6) (241,7) Solar Realised Wind Realised PV… Solar PV…(2) Target Wind…(2) (576,1) 2013 2014 2015 2016 Q1 2017 The Greek economy is recovering Greece Real GDP Growth (1) % 2,7 2,2 2,2 0,0 (0,2) 2015A 2016A 2017E 2018E 2019E Notes: 1. IMF Forecasts World Economic Outlook, April 2017 2. As of June 2017 11
Terna Energy Market Positioning (cont’d) 5 An Attractive and Value Creating Growth Story • Terna Energy has delivered strong growth Terna Energy has Delivered Growth Successfully historically. For the 2014–2016 period, the MW Company has: 1.242 1. Increased its installed capacity at a CAGR of 1.119 7.4%, from 640 MW to 738 MW 937 427 2. Grown capacity in Greece at a CAGR of 427 >20% from 161 MW to 362 MW 738 288 640 664 132 3. Invested over €286 MM in Capex 138 544 138 132 4. Delivered projects on budget and on time 508 138 132 132 138 138 116 132 • Going forward, the Company has a strong and credible growth plan 104 104 684 517 561 394 468 • Aim under the 7‐year plan to reach 386 266 302 2,000 MW • Proceeds from the bond will partially be used 2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E to fund construction of new projects, alongside project specific financing Greece Eastern Europe USA 12
Terna Energy Market Positioning (cont’d) 6 An Attractive and Value Creating Growth Story Priority pipeline €MM, unless otherwise stated Project Finance Capacity Project Cost Cash Grant Equity / Cash Project Type Debt COD Priority (MW) € MM € MM € MM € MM UNDER CONSTRUCTION 194 MW Vermio project Wind 44 MW 59 ‐ 39 20 H1‐2018 High Fluvanna 1 (USA) Wind 150 MW 232 ‐ 196 36 H2‐2017 High PRE‐CONSTRUCTION PROJECTS 161.5 MW Fluvanna 2 (USA) Wind 160 MW 237 ‐ 200 37 H2‐2018 High Epirus Waste Waste 1.5 MW 42 20 15 7 2019 High Management PRE‐LICENSED 121.4 MW PROJECTS Peloponnese Waste Waste 2.4 MW 122 64 35 23 2019 High Management Evoia SPA Wind 100 MW 140 ‐ 91 49 2019 Medium Servouni Wind 19 MW 20 ‐ 13 7 2019 Medium TOTAL HIGH PRIORITY 358 MW 692 84 485 123 High priority pipeline projects 13
Terna Energy Market Positioning (cont’d) 7 Rapid Deleveraging from EBITDA Growth and High Cash Flow Conversion Steady 25% EBITDA CAGR Strong Growth in Realized EBITDA € MM • Long term visibility on volume off takes • Contracted prices 116 99 • Track record of project developments 74 70 53 2012A 2013A 2014A 2015A 2016A EBITDA Cash Flow Conversion Outstanding cash flow conversion (1) € MM • No maintenance capex 59% 63% 80% 105% 100% • Despite crisis delays in payments have 103,8 116,2 remained steady in the last years 59,2 • Rapid deleveraging on a like‐for‐like basis 31,0 44,0 2012A 2013A 2014A 2015A 2016A Operating Cash… Cash Flow Conversion Notes: 1. Cash Flow Conversion = Operating Cash Flow / EBITDA 2. Operating Cash Flow after Working Capital Changes 14
3. Financial Performance
Strong Financial Performance Run‐rate EBITDA increases with capacity Installed Capacity and Revenue EBITDA and EBITDA Margin €MM €MM 508 543 640 664 738 43% 50% 47% 50% 51% 226 199 158 140 116 124 99 70 74 53 2012A 2013A 2014A 2015A 2016A 2012A 2013A 2014A 2015A 2016A Revenue MW Installed Capacity EBITDA % EBITDA Margin 16
Segmental Performance Wind Installed Capacity Key project Commissioned in 2016 MW Project COD Installed Capacity St. George 2016 69 MW Mavroplagia – 1.242 Kastro H1 – 2017 17 MW 1.119 Mougoulios H1 – 2017 17 MW 937 Plagia – Psiloma H1 ‐ 2017 15 MW 738 640 664 508 543 Projects Under Construction Project COD Volume Vermio project H1‐2018 44 MW Fluvanna 1 (USA) H2‐2017 150 MW 2012A 2013A 2014A 2015A 2016A 2017E 2018E 2019E Included in LTM installed capacity of 604 MW Installed Capacity Installed capacity incremental to the 604 MW 17
Capital Expenditure Historical Capital Expenditure Typical Funding Structure €MM Subsidised Equity/Group 217,0 Cash 25%–30% 150,7 Project Debt 45%–50% 79,7 47,0 56,4 Government Grants 25%–30% 2012A 2013A 2014A 2015A 2016A Non‐Subsidised • 14 new projects built since 2014, adding 244 Equity/Group MW of capacity Cash Project c.30% • No maintenance capex Debt c.70% • Maintenance costs accounted for as operating expenses on the Income Statement Projects without grants benefit from higher contracted tariffs, allowing to raise more project debt and to de‐lever • All capex is for expansion faster 18
Q1 2017 Performance Update Key drivers Revenues MW €MM 33% 32% +10% 786 • Continued increase in capacity (+18% y‐o‐y) 664 55,5 50,4 • Lower load factor Q1 2016 Q1 2017 Q1 2016 Q1 2017 Energy results negatively impacted by weather conditions, Installed Capacity Installed Capacity in Q1 in particular % Load Factor EBITDA and EBITDA Margin €MM Renewables Construction • Outstanding performance in both renewables and 77% 74% 16% 22% construction segments 30,0 34,1 Extraordinary levels of EBITDA margins in the renewables segment with 74% for the first quarter of 2017 1,4 Construction EBITDA more than doubled in Q1 2017 vis‐à‐ 0,6 vis Q1 2016 Q1 16 Q1 17 Q1 16 Q1 17 EBITDA % EBITDA Margin 19
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