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Sunflower Sustainable Investments Ltd.
Company Presentation – July 2014
DisclaimerThis presentation is made for convenience purposes only and is not designed to obviate the need to
inspect the reports publicly released by Sunflower Sustainable Investments Ltd., including the financial
statements. Certain information as presented in the presentation includes declarations, statements of
opinion, expectations, assessments and forecasts including in connection with the industry to which
the company belongs, which are forward looking. The information is based, inter alia, on estimates and
assumptions which may not materialize and/or transpire as wrong and involve risks, information and
events which are difficult to foresee and/or are unclear, and therefore the presentation of the future
information and the said explanations should not be deemed as a promise and/or guarantee of the
company’s future performance. The Company’s actual performance may materially differ from the
future information provided by the Company in good faith. The aforesaid does not constitute advice,
invitation, an offer or a recommendation to buy securities of the Company. The purchase of securities
of the Company shall be made only based on the Company’s valid prospectus on the date of purchase
and the immediate reports. Anyone making use of information appearing in the presentation, bears
sole responsibility therefore.
2
Business Card
The Company operates in the Renewable Energy market
The Company holds projects in the renewable sector of 81 MW and has additional 100 MW of projects in development stage
63 MW are connected to the electricity grid and 18MW are under construction or in purchase process
The Company’s business model is to invest in renewable energy projects which generate a strong and stable FFO
The Company owns several real estate properties in Israel with a total value of NIS 90 million
3
4
0
10
20
30
40
50
60
70
80
90
2008 2009 2010 2011 2012 2013 2014 (*)
The Group’s Investments in Projects in MW
(*) The capacity of 2014 includes 18 MW of projects under construction or purchase process and does not include projects in development stage of 100MW
Company’s Revenues from Electricity Million NIS
-
20
40
60
80
100
120
1
41
74 83
1
26 28
22
22
21
2
3
Italy Spain Israel
5
The Companies Activities
PV ProjectsWind Farms
53MW Active Projects10MW Active Projects2 Properties
Projects in purchase
process - 2MW
Projects under construction - 16MW
Projects in development stage - 100 MW
Book Value
NIS 90 million
Company’s share in all the
projects - 41MW
Company’s share in active projects and under
construction - 20MW
Company’s share in Projects in development stage-
82MW 6
Real Estate Properties
The Renewable Energy Sector PV Technology
The third largest Renewable Energy sector, after Hydro and Wind
The purchase cost of panels has decreased from approx. €3.5 million per
MW in 2008 to approx. €0.5 million per MW in 2014
$114 billion of investments in 2013 in PV projects, approx. 45% of the total
investments in the renewable energy
7
0
50
100
150
Installed Capacity in GW around the World
- PV Projects
The Renewable Energy Sector Wind Technology
The fastest growing renewable energy sector in the Western world
Low Regulatory Risks: Incentives for wind-generated energy are among the
lowest in the renewable energy industry
$80 billion of investments in 2013 in PV projects, approx. 30% of the total
investments in the renewable energy
0
50
100
150
200
250
300
350
Installed Capacity in GW around the world- Wind Farms
8
Solar Energy - Italy
By 2020, Italy is required to produce 17% of its consumed energy from
renewable sources, and by the end of 2012 13% were achieved
In the aggregate, by the end of 2013 PV facilities of approx. 18 GW were
connected to the electricity grid
The Company owns PV Plants with an installed capacity of 31 MW through a
subsidiary, in which the Company holds 85% and the remaining shares are
held by a local partner
The entire portfolio is financed by Italian banks in non-recourse financing
The total investment in Italy, in terms of 100% of the projects, is in an amount
of Euro 108 Million, out of which 27% is in equity
10
Solar Energy - Spain
By 2020, Spain is required to produce 20% of its consumed energy from
renewable sources, and by the end of 2012 14% were achieved
By the end of 2013, PV facilities of 5 GW were connected to the electricity
grid in Spain
The Company owns PV Plants with an installed capacity of 13 MW through
a subsidiary, in which the Company holds 50% and the remaining shares
are held by Shikun & Binui
A 6 MW project is financed by a German bank in non-recourse financing
The total investment of the Company in Spain is in an amount of Euro 49
Million, out of which 63% is in equity
11
Solar Energy - Israel
Israel has set a target that by 2020 it will produce 10% of its consumed
energy from renewable sources, and by the end of 2012 approx. 1% was
achieved
The Company has small active facilities with an installed capacity of 4 MW
(Company’s share 2 MW)
The Company owns medium-size PV plants with a total capacity of 5 MW
(Company’s share 4 MW) and additional 2 MW are in purchase process
The Company sold 40% of the regular shares in projects with a capacity of
4MW and preferred shares for an amount of NIS 21,000,000
12
Wind Energy - Poland
The Company founded a subsidiary in which it holds 82% together with
three entrepreneurs
By 2020, Poland is required to produce 15% of its consumed energy from
renewable sources, and by the end of 2012 11% were achieved
0
1000
2000
3000
4000
Intalled Capacity in MW in Poland Wind Energy
14
Wind Energy - Poland
The Company owns 2 operating wind
farms with a total capacity of 10 MW
(Company’s share 7MW)
The Company owns 2 wind farms with a
total capacity of 16 MW which are under
construction (Company’s share 13MW)
The total investment of the Company in
Poland is in an amount of € 26 Million
and until end of construction additional €
16 million will be invested
The Company signed agreements for the
finance of the operating wind farms in
non-recourse financing of approx. 55%
15
Wind Energy - Finland
16
0
100
200
300
400
500
Intalled Capacity in Finland - Wind Energy in MW
By 2020, Finland is required to produce 38% of its consumed energy from
renewable sources, and by the end of 2012 34% were achieved
The Company signed an agreement for the purchase of permits in
development stage with a total capacity of 100 MW for a total consideration
of € 5 million (Company’s share 82MW)
The permits which will be fully developed will be purchased at the
completion of the development stage within two years
The estimated construction cost of the Projects, in case they will be
constructed in full and in accordance with the known construction costs, is €
160 Million
Summary of the Group’s Investments thousand Euros
(1) In terms of 100% of the Projects (2) including 2 MW in purchase process (3) including 16 MW under construction (4) the legislation was not enacted yet. please note the Company’s Management Discussion and Analysis attached to the financial reports of 2013. (5) regarding the change of legislation in Italy, which was not considered in the data, please see the company’s publication dated June 26, 2014. (6) regarding the change of legislation in Spain, which was considered in the data, please see the company’s publication dated June 24, 2014.
17
Average
Projected
Annual
Revenues
per MW (1)
Projected
Annual
Revenues
for 2013 (1)
Average
Cost per
MW
Term of
Incentive
(in years)
Company’s
Share in
Initial Cost
Company’s
Share
Total
Initial
Cost
(1)
Company’s
Share in
MW(1)
Country Incentive
534 (5)16,540 (5)3,48620 91,86185%108,07231Italy
Feed In
Tariff
668 (6)8,680 (6)7,5003048,75050%97,50013Spain
4942,4703,5472017,735100%17,7355 (2)
Israel 6632,6503,929209,43160%15,7184
5831,1653,319203,31950%6,6382
2565,1251,58915 (4)26,05282%31,77020 (3)
PolandGreen
Certificate2711,6251,67515 (4)5,72857%10,0506
Return of the Company’s Investments in
Italy and SpainIn Million of Euros
Company’s share only, 50% in Spain and 85% in Italy
ItalySpain
2431Net Investment after Finance
(3)(10)Withdrawal – Net Amount
2121Remaining Financial Investment on March
31, 2014
2010-20132008Year of beginning of activity
Investments in Countries in million of Euros
0
50
100
150
200
250
2010 2011 2012 2013 2014
Poland Israel Italy Spain
(*) Company’s Share, in 2014 includes 2 MW in Israel in purchase process and 16
MW in Poland under construction
The Group’s Investments in Countries (*)In Financial Terms
20
46%
24%
14%
16%
**2014
Italy Spain Israel Poland
53%28%
11%
7%
31.12.13
Italy Spain Israel Poland
56%35%
9%
31.12.12
Italy Spain Israel
(*) Company’s Share, investments before finance
(**) including projects under construction or in purchase process, not including Finland
21
Real Estate Business in Israel The Company owns properties with a total value of approx. NIS 90 million
A plot for the
construction
of an office tower in
Ra’anana
A yielding property in
Ra’anana in partnership
with REIT 1
Currently used as a parking lot100% occupation
NIS 30 Million Book ValueNIS 62 Million Book Value
NIS 0.6 Million Annual Income NIS 5 Million Annual Income
22
Company Holdings Structure
Sunflower
Sustainable
Investments
Ltd.
Union
9.71%
Roni Biram
&
Gil Deutsch
45.44%Redmill
15.17%
Public
12.74%
Beresheit
Fund
16.94%
EBITDA and FFOthe Group’s Total Activity in thousand NIS
EBIDTA - Earnings Before Interest, Taxes, Depreciation, Amortization, reappraisal of real estate
and capital gain
FFO - Funds from Operations - the reported operating profit, net of financing expenses (including
profit from securities and apart from rate differences) and current taxes, and net of revenues and
expenses of a capital nature, plus the Company’s share in the renewable energy business
depreciation and other amortization
The profit from securities and income interest in 2013 was NIS 8 million, while in 2012 it was NIS
12 million and in Q1 2014 it was NIS 1 million, while in Q1 2013 it was NIS 2 million
23
Q 1 2014 Q 1 2013 2013 2012
EBITDA 15,570 12,817 89,828 76,616
FFO 6,841 4,125 39,151 43,526
Summary Balance Sheets in thousand NIS
March
31, 2014
December
31, 2013
Cash, Cash Equivalents and Short-term Investments 110,376 177,366
Investments in affiliated companies 82,805 82,048
Investment in Renewable Energy Projects, after Depreciation 640,542 602,157
Investment Property 92,382 92,380
Asset classified as held for sale 22,760 22,760
Short-term Credit and Current Maturities of Long-Term Loans and
Bonds 90,279 110,262
Long-Term Loans from Banking Corporations 378,050 381,917
Loans from non-controlling shareholders in subsidiaries 31,917 30,115
Bonds 197,511 199,652
Equity 293,153 294,430
Net Debt without affiliated companies 587,381 544,580
Total Balance Sheet 1,032,510 1,051,820
24
Net Debt including affiliated companies
(this data is not included in the consolidated financial statements)670,817 625,913
Q 1 2014 Q 1 2013 2013
Revenues 21,752 16,686 99,910
Cost of Revenues 11,555 9,509 43,863
Gross Profit 10,197 7,177 56,047
Valuation losses of photovoltaic plants - - (35,022)
Valuation gains of investment property, net - - 21
General and Administrative Expenses (4,210) (3,827) (14,493)
Other income (expenses), net 180 (94) 403
Equity in net earnings (losses) of affiliated
companies 214 (850) 1,118
Operating Profit 6,381 2,406 8,074
Financing Expenses, net (7,374) (20,558) (37,549)
losses before Taxes on Income (993) (18,152) (29,475)
Taxes on Income 451 (3,001) 7,069
Net losses (1,444) (15,151) (36,544)
Summary Income Statement Figures in thousand NIS
The
redu
ction
of valu
e o
f the P
V P
lants in
20
13
was in
Spain
du
e to th
e ch
ange o
f legislation
. In th
e finan
cial repo
rts of 2
01
3 th
e loss is in
clud
ed in
th
e equ
ity in n
et earnin
gs of affiliated
com
pan
ies
25
Summary
As of 2010 until today:
the capacity of Projects in MW was doubled
The investment in Projects was tripled
The Company’s income from producing electricity is four times higher
The Wind sector is the main growth engine of the Company and the Company
is looking for investments opportunities in:
Poland - the Company is planning to substantially increase its investment
and to expend its activity in this market
Finland - the Company preparing for significant activity in this new territory
The Company intent is to use its knowledge and experience in the PV and
Wind sectors in order to expend its activity in the target territories
26
Annex: Real Estate in Israel
1. “Amdocs Building” at Ra’anana
junction
The company holds 50% of a property,
which is located at Raanana-center
junction (south), near Route 4
Built-up area of the property – approx.
13,425 sqm
Most of the property is currently leased to
Amdocs
Fair book value- NIS 62 million
Annual income from the property - approx
NIS 5 million
Occupancy rate - 100%
28
Annex: Real Estate in Israel
2. 2007 Lot
A lot on an area of approx. 4,600 sqm
located near Amdocs Building
The lot has building rights for the
construction of a multi-story tower known as
the “Raanana City Gate Tower”
REIT 1 has an option to buy 50% of the
built-up tower
Fair value on the books - approx. NIS 30
million
The lot is used as parking lot as of 2012
29
The Wind Sector in Finland
Incentives to Start Activity in Finland
҉ Finland is one of the only countries in Europe with a rating of AAA
҉ The wind market in Finland is in an early stage and by the end of 2013 wind projects with a total capacity of approx. 380 MW were erected which are included in the tariff scheme, out of which approx. 160 MW were erected during 2013
҉ The current tariff scheme set a capacity of 2,500 MW
҉ An average wind farm in Finland can produce approx. 3,000 kWh per annum
Feed in Tariff
҉ Wind farms in Finland are entitled, in addition to the market price of electricity, to an additional amount equal to the difference between the market price and € cent 8.35 per kWh
҉ Wind farms that will be connected before the end of 2015 will be entitled of € cent 10.53 per kWh
҉ The additional amount equal to the difference between the set amount and the market price will be calculated based on a market price not lower than € cent 3 per kWh
҉ The current market price is approx. € cent 4 per kWh
҉ The tariff is for a period on 12 years
The Wind Sector in Finland
҉ Development - most of the development of new projects is executed by local developers with limited experience in the field, while there are also experienced international developers working with local teams
҉ Services - all the construction and operation services are provided by local companies while there are also international advisors active in the market
҉ Turbine Manufacturers - most of the turbine manufacturers are active in the market and they are adjusting their turbines to the severe weather
҉ Investment - in the past, investments were made by local energy companies and investors but lately international investors are part of the market
҉ Banks - Nordic banks are financing wind projects
The Company’s Project
҉ The Company signed an agreement for the purchase of licenses for the construction of up to 5 Wind Farms with a capacity of approx. 20 MW each, which are still in the development process
҉ The consideration for the purchase of the licenses is in an amount of € 50,000 per MW, and the estimated total amount is around € 5 million, in case the transaction will be completed for all the wind farms
҉ Based on the current construction costs, the Company estimates that the cost of the construction of the Wind Farms will be in an amount of € 1.6 million per MW