Italian Investment Conference - Milan, 22 May 2019 - falckrenewables.com
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Italian Investment Conference
Milan, 22 May 2019
Forward -Looking Statements This presentation contains certain forward-looking statements that reflect the Company’s management’s current views with respect of future events and financial and operational performance of the Company and its subsidiaries. These forward-looking statements are based on Falck Renewables S.p.A.’s current expectations and projections about future events and have been prepared in accordance with IFRS currently in force and the related interpretations as set out in the documents issued to date by IFRIC and SIC, with the exclusion of any new standard which is effective for annual reporting periods beginning on or after January 1st 2019. Because these forward-looking statements are subject to risks and uncertainties, actual future results or performance may differ materially from those expressed in or implied by these statements due to any number of different factors, many of which are beyond the ability of Falck Renewables S.p.A. to control or estimate precisely, including changes in the regulatory environment, future market developments, fluctuations in the price and availability of fuel and other risks. You are cautioned not to place undue reliance on the forward-looking statements contained herein, which are made only as of the date of this presentation. Falck Renewables S.p.A. does not undertake any obligation to publicly release any updates or revisions to any forward-looking statements to reflect events or circumstances after the date of this presentation. The information contained in this presentation does not purport to be comprehensive and has not been independently verified by any independent third party. This presentation does not constitute a recommendation regarding the securities of the Company. This presentation is not intended to be/does not contain any offer, under any applicable law, to sell or a solicitation of any offer to buy or subscribe any securities issued by Falck Renewables S.p.A. or any of its subsidiaries. Neither the Company nor any member of the Company’s Group nor any of its or their respective representatives, directors or employees accept any liability whatsoever in connection with this presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it. 2
Agenda
Overview 4
2021 Strategic Update 10
1Q 2019 Highlights 31
Appendix 37
3
Overview
A Pure Play in Renewables – 1,026 MW Today ’s Portfolio
MW
292 16 46 354
413 413
354
113 113
98 98* 113
49 49
852 129 46 1,026*
+202 MW Under Construction
49 98
413
* Includes minority stake in La Muela (26%) wind farm and Frullo Energia Ambiente (49%) for a total amount of 37MW
5
Assets under Construction
% of
Contracts
Project MW Turbines Completion Expected COD
Signed
(in value)
Nordex N131/3900 EPC Turnkey
Aliden 46.8 62% Q4 2019
12 turbines of 3.9MW and Grid
Nordex N131/3900 EPC Turnkey
Brattmyrliden 74.1 12% Q4 2020
19 turbines of 3.9MW and Grid
Vestas V136 TSA, BOP, E-BOP
Hennoy 50.0 38% Q4 2019
12 turbines of 4.2MW and Grid
Okla 21.0 Vestas V117 11% Grid, TSA Q4 2020
5 turbines of 4.2MW
Siemens Gamesa TSA, BOP
Carrecastro 10.0 SG 2.6-114 23% Q4 2019
and Grid
4 turbines 2.6MW
Total 202 30%
6
A Full Range of Ser vices
Asset Management & Technical Services
2.5 GW 53 GW 4.6 GW
Asset Management Technical Advisory Transaction Advisory
Energy Management & Energy Efficiency
1.0 TWh 1,500 Clients
Energy Management Metering, Demand Response
7
Governance & Shareholders
Board Composition Executive Director
Non Executive Director
Current Shareholders Base
Independent Dir. according to T.U.F. and Corporate
Governance Code
The Board of Directors consists of twelve members. Six of them are Independent Directors
(50%); one was appointed Lead Independent Director.
The new Board of Directors – as approved at The Shareholders’ Meeting on 27 April 2017 –
reflects the group’s international presence and includes members with relevant experience.
8
Sustainability at the Core
triggering virtuous,
sustainable
Tangible capital (e.g. development paths
To us, sustainability is the ability to financial)
generate value over the long term, while
maintaining the context conditions that
Intangible capitals
allow for such a generation more integration of
(e.g. natural,
relational, human) sustainability
objectives in our
plans & programs
It is not only about what we do, but how we
do it, and the values that we live by
9
2021 Strategic Update
De-Carbonization: Renewables and Much More
40 First few countries All regions meet
Last countries
to reach net-zero net-zero emissions
to reach net-
emissions zero emissions
2020
Global electricity 2030
30 consumption reaches
2010 35,000 TWh/year,
having risen close to Solar PV Majority of trucks Global energy Hydrogen at
2040
50% over the past passes oil as powered by systems at 1000 10% of final
Paris
Energy systemsCO2 emissions, Gt per year
decade the largest electricity or EJ per year energy
Agreem
20 energy hydrogen (double 2010)
ent
source
ratified Biofuels overtake
Global liquid First
2050 oil as the biggest
fuel demand Accelerated investment in intercontinental component of
for low-carbon energy quadruples hydrogen flight liquid fuels
passenger solar PV and wind capacity to
10 vehicles goes 5,000 GW total
into decline
850,000
Governments reach a common 2060 10 MW
India leads the
understanding as to the appropriate level of turbines
world in solar PV
0 the cost of emissions
Global India and China CO2 storage After celebrating 30
Action plans cumulative each reach one reaches 12 Gt years at near-zero
2070 per year
developed in C40 storage of Gt CO2 per emissions, cities are in
Cities targeting net- CO2 passes year stored
zero emissions by the one Gt sight of achieving
Net 2080
-10 2050 milestone 2090 their circular economy 2100
deforestation
goals globally
comes to an end
11 Source: Shell SKY ScenarioRenewables Asset Growth: Global Market Update
Installed Capacity Evolution (GW) Others** Coal
41 99
28%
World Power generation capacity Solar
1208 Oil&Gas
World Wind and Solar capacity
10073 527
3112
6961 Nuclear
6690
Solar* 56
897
28% Hydro
Wind* 351
13% 659
Focus on USA and Europe (GW)
9%
New Installations 17-30
Bioenergy
2014 2015 2016 2017E 2030 82
Wind
180
748
• Renewables capacity additions are expected to grow by ~2400
GW, reaching ~4,700 GW globally in 2030 from ~2,300 in 2017;
66
in particular, Wind & Solar move from ~915 GW of 2017 to
Renewables CAGR 17-30
~2,800 GW of 2030. Hydro 1,8%
Wind 7,1% 127 143
• Solar PV is set to account for the largest share of Renewables
Solar 11,2%
energy capacity additions, reaching ~1,600 GW in 2030 (35% Bioenergy 3,6%
Others * 8,7%
more than last year World Energy Outlook estimates)
USA Europe
12 Source: World Energy Outlook 2018 - International Energy Agency (IEA) – New Policies Scenario
* From World Energy Outlook 2017 – New Policies Scenario **Others include geothermal CSP and marineEvolving the Falck Renewables Business Model
It is not only about WHAT we do, but HOW we do it, and the VALUES that we live by
Wholesale Asset
Management Funds
Unbalancing
Dispatching and Technical Digital Assets
Hedging Advisory Financial
investors
Digital “Core”
Asset
Development Industrial
PPA Flexibility
Efficiency Public Administrations
Corporate Digital Infrastructure
Aggregator Clean Energy
Digital Services
Community
Financial Strength, Efficiency and Discipline
13Business Lines: Customer Driven Approach
Asset Management & Energy Management &
Asset Development & Ownership
Technical Advisory Energy Efficiency
DRIVEN BY EXTERNAL CUSTOMERS CHOICES MARKET DRIVEN DISCIPLINE AND EFFICIENCY
14Capital Allocation 2018 – 2021
BALANCING RISKS New Plan* Old Plan*
(€M) (€M) Returns (New Plan)
AND REWARDS (%) (%)
MW added 18-21: + 480 MW
489 506
Owned Assets 77% 87%
Incremental EBITDA 18-21: €64M
IRR → Wacc + 150 – 200 bps
Services 81 40 Incremental EBITDA 18-21: €17M
(Energy Management, Energy Efficiency, 7% IRR ~10%
13%
Asset Management & Technical Advisory)
56 31
Asset Development 8.5% 4.5% IRR > 15%
9 2
Digitalization 1.5% 0.5%
IRR ~ 10%
15 *Cash-out: Capex + Development ExpensesEnhanced 2018 -2021 Dividend Policy
Dividend distribution: maximum between the CAP and the FLOOR
DIVIDEND «FLOOR» €/cent DIVIDEND «CAP»
→ provides downside protection
+41%
Old Plan (7% Cagr)
6.7 6.9 Pay-out ratio (“PAY-OUT”) of
6.3 6.5
40% of Group Net Earnings
5.3 6.3
4.9 5.8 → provides upside if results are better
than expected
Paid in Paid in Paid in Paid in Paid in Paid in
2017 2018 05/15/2019 2020 2021 2022
SUSTAINABLE POLICY WITH CLEAR 2021 VISIBILITY
16Key Strategic Pillars 2019 -2021
Asset Development Growth to amplify options
Improving Asset Management and Technical Advisory capabilities
to enhance efficiency and competencies
Energy Management and Energy Efficiency: new growth pillars
and greater regional focus
Financial Strength to deliver robust results and contemplate upsides
17Further Growth in Installed Capacity
North Europe
France, UK,
Netherlands Installed Capacity (MW) by Region Installed Capacity (MW) by Technology
Nordics
(2016 – 2021) (2016 – 2021)
Wind
Norway, Sweden
+74% Solar
USA Other
South Europe +7% 1375 1430
Italy, Spain 2%
+25%
1133 13% 18%
1062 537
543 21%
1026*
822 511
455
511 183 192
47
419 97 152 193 92%
83% 79%
113 137 113 76%
403 403 423 413
503 503
2016 2018 2019 Old 2019 New 2021 Old 2021 New 2016 2018 2021 Old 2021 New
Energy
Output
1.9 3.4
(TWh)
18 * Includes 56MW wind portfolio in France accounted in 2018Asset Development Targets
Additions 2019-2021 (MW) Net Pipeline end of 2018 – Coverage (MW)
404 404
~90%
South Europe 100 Solar 50%
North Europe 42%
32 Under
USA Construction
80 202
Nordics To be Net
secured Pipeline
Wind 180
50%
192 58%
To be secured
202MW Additions 2021 Targets (MW) Self Sustaining Business by 2025**
19-21* + ~700
€M
~200MW in
excess 364
400
350 Avg.Full Devex
336 ~63k€/MW
50 2025
COD within 21 Net Pipeline 2021
(COD > 2022)
Old Plan (MW) ~200 ~ 275
COVER PLANNED ADDITIONS + EXCESS MW M&A AS AN OPPORTUNISTIC WAY TO ACCELERATE
19 * Excluding projects under Construction
** Excluding internal development feesAsset Management & Advisory Activities
ASSET MANAGEMENT
• Technical asset management
• Monitoring and performance analysis
• Yield optimisation
• Technical asset management 11 years
TRANSACTION ADVISORY
• Commercial Asset Management in the renewable
Over 200
employees
2.5 GW of solar and
• Revenue control Energy industry
from different
wind projects under • M&A and debt transactions
management
backgrounds • Financial modelling
• Debt raising
• Design of financing and refinancing
structures
• PPA structuring
TECHNICAL ADVISORY
Global player with
offices in 60 GW
Diversified activity:
• Site and production (or energy) assessments 11 countries and “One-stop shop”
of experience
including solar PV
• Engineering and design experience in for investors
and wind power
40 countries
• Technical due diligence for sponsors, services
investors and lenders
• Owner’s engineering, project management
and construction monitoring
HELPING GREEN INVESTMENTS PROSPER
• Tenders for EPC and O&M contractors
20Digital Assets Management Platform
ASSET MANAGEMENT DEEP EXPERTISE LEADS TO..
Enables Data Driven Digital Service and
2.9 €M project cost
generates new revenues streams
PROCESS
AUTOMATION DATA DRIVEN
REAL TIME
DIGITAL DECISIONS
CONTENTS
Digital Factory Allows O&M costs optimization and
PRODUCTION
15 resources SCALABLE AND EFFICIENCY
Opex reduction
MODULAR
RELIABLE KPIS
NEW O&M
DOWNSTREAM
DIGITAL PREDICTIVE
SERVICES GOVERNANCE
Leads to operating margin improvement
9000 man days of internal development
in the Asset Management services
…VALUE DIGITAL SERVICE AS A PRODUCT
Beta testing from April 2019
21Our Offering Helps Clients and System Sustainability
ENERGY MANAGEMENT ENERGY EFFICIENCY
Portfolio Demand Distributed Distribution Energy
Metering
Management Response Generation Storage Efficiency
SOLUTION AND BENEFITS
€MWh
Active roles on Active roles on
energy markets Optimise local energy markets
Self production production /cons.
of energy
1,500 active clients served in Italy with Energy Audits and Advisory from Energy
metering solutions. Team, more than 40 M€ investment
OFFERING
Leader in interruptibility services for C&I opportunities identified
Falck Renewables with more than 80% market. Falck Next capex-based services, leverage
Energy Active dispatching, portfolio management on ET clients and team competences
and hedging (ca 1 TWh)
22 Source: World Economic Forum study; Bain & Co.Italy, Our Core Market, with Expansion Plan in The UK / Spain
ITALY UK SPAIN
• Market opening up with
ENERGY 197 M€ • Interruptibility, UVAM
• New pilots on voltage
430 M€ • Advanced market
through regulatory
Starting recent Royal Decree.
MANAGEMENT and frequency changes and redesign • Potential future
(DEMAND
RESPONSE
6% YoY 19-23 6% YoY 19-23 participation of
demand to services
ONLY)
• Established market for • Large market with • Potential for energy
ENERGY
2.8 B€ ESCo, consolidating 3.8 B€ various players 1.3 B€ efficiency from old
EFFICIENCY • Public Sector significant • Public sector infrastructures and new
opportunities in PPP opportunities through gasification of regional
PRIVATE + 7% YoY 19-23 4% YoY 19-23 dedicated schemes 5% YoY 19-23 areas
PUBLIC
Core Focus Market Potential Expansion Market Growth Opportunity
23 Source: Accenture; Energy Strategy Group; Bain; FIEE; Falck Estimates;
DR Demand Response; DSM Demand Side Management; ESCo Energy Service CompanyEnergy Management & Energy Efficiency Targets to 2021
ENERGY
ENERGY
MANAGEMENT
EFFICIENCY
• Dispatching of own plants and third parties • New cogeneration projects
Targets • Portfolio management (hedging, risk) • Public Administration (lighting) projects
• MW of Demand Response under management • Energy Service Company offering
• Storage and plants ancillary services
1.5 TWh 2 MW
0.8 TWh 5 municipalities
2021
Approx. 30 MW Also through M&A
Pilots and through M&A
Key Competitors
24Energy Management & Energy Efficiency: Key Financials
Revenues (€M)
Domestic acquisition
+2.7x 8%
43
34% 19%
Organic
16 16
9
39%
2019 Old Plan 2021 2019 New Plan 2021
International acquisition
EBITDA (€M) 18-21 Capex (€M)
+4.5x
9
+2.4x
3 81
2
34
0 Old New
2019 Old Plan 2021 2019 New Plan 2021
25Scenario Assumptions (presented during 2018 CMD)
PUN €/MWh Green Certificates
103 103 104 Euribor & Libor 2019 2020 2021
Euribor Old Plan 0.25% 0.50% 1.00%
92 92 94
62 59 58 Euribor New Plan 0.00% 0.25% 0.50%
47 46 UK Libor Old Plan 1.20% 1.30% 1.40%
50
UK Libor New Plan 1.20% 1.30% 1.40%
2019 2020 2021 2019 2020 2021
New Plan
Old Plan FX 2019 – 2021
Wholesale GBP/MWh ROCs
EUR/GBP: 0.91
54 51 51 EUR/USD: 1.18
48 49 50
46 49
45 48 49 50
2019 2020 2021 2019 2020 2021
262019 Guidance (€M)
184 >30 -737
EBITDA Group Net Earnings Net Financial Position
IFRS 16
EXPECTED*
YEARLY IMPACT
+6 -1.5 -70
ON FINAL FIGURES
FOR WHOLE 2019
FINANCIAL YEAR
Guidance, referred to figures without IFRS 16 impact, unchanged
27
* based on GBP/EUR of 0.912021 Guidance
€213M > €40M ~ €804M
2021 EBITDA Group Net Earnings** 2021 NFP*
+2.5% +33% -1%
Vs Old Plan Vs Old Plan Vs Old Plan
€325M ~ €747M
Fully funded by amended Corporate 2017-2021 Operating Cash Flow
committed Credit Line ending 31
December 2023 and operating cash +14.5%
flow. Vs Old Plan
28 *NFP calculated with exchange rate £/€ 0.91 and $/€ 1.18 Doesn’t include IFRS16 adoption ** Before impairments and provisionsCumulative Capex 2019 - 2021
(€M) By Area (€M) By Contribution to EBITDA
Partial/Nill 22% North Europe 13%
North Europe 22%
Nordics 36%
South
Europe 15%
506 506
South Europe 26% Nordics 36% USA 13%
USA 16%
29NFP Evolution
2016 2018 2021
(€M)
Cash
136
available NFP Variation (242) vs. (251) Old Plan
121 SPV Cash SPV Cash 124
Project
Finance (794) Financial
Tax Equity / charges, (640) Project
Operating Other Derivatives Finance
Cash Flow minorities FV and Financial
& contributions exchange Operating charges,
Development rate Dividends, Cash Flow Tax Equity / Derivatives
expenses Buy Back & Other FV and
Capex 60 Capex Development minorities exchange
Other debt (25) (36)* expenses contributions rate
(562) (50) (555) Dividends,
17 (105)* Buy Back
(257) Corporate
(279) 311 Loan
(89) Other debt
(31)
(506) 436 (804)
* It includes IFRS 9 and Operating Cash Flow net of Development expenses
30 excludes IFRS 16 adoption1Q 2019 Highlights
1Q 2019 Highlights – Solid Results on Strong Market Fundamentals
Services
• Higher Ebitda at €63.0M vs €54.8 1Q • Better comprehensive captured* prices in the • Energy Management through Falck
2018 above expectations. €61.6M net UK (+9%) and in Italy (+2%) vs 1Q 2018 in line Renewables Energy (“FRE”): 265 GWh
of IFRS 16 adoption with the industrial plan assumptions dispatched in-house in Italy (100% of energy
• Production slightly below 1Q 2018 (-2%): poor produced) vs 102 GWh in 1Q 2018 + Hedging +
• Earnings before Taxes reaches €35.3M
wind conditions in Italy and grid curtailments Fixing activities in Italy and the UK
vs €29.8M in 1Q 2018. €35.9M net of
IFRS 16 adoption (large portion compensated) in the UK. • Reached 4.3MW UVAM in Italy
• NFP at €675M (€602M net of IFRS 16 • Projects under construction: activities on • digital asset management launched in
adoption) higher than €547M end of schedule and COD confirmed for all 5 projects beta testing from April
2018: increase driven by acquisition of (+11% progress vs end of 2018)
French assets (56MW) and Capex for • Reached 1,026 MW of total installed capacity
construction for €83M (989.5 MW according to IFRS 11)
• Positive impact from GBP exchange • Increase of Perimeter: +56MW wind in France
ratio (1.2% vs average 1Q 2018) consolidated starting from 1 March 2019
• Completed the disposal of Esposito Servizi
Ecologici on 15 January 2019
32 * Effective price received by plants (energy + incentive)
Guidance Confirmed1Q 2019 Highlights
(€M) 1Q 2019 1Q 2018 YoY Change
REVENUES 105.9 92.1 13.8
EBITDA 63.0 54.8 8.2
% on revenues 59.5% 59.5%
EBIT 43.9 38.5 5.4
EARNINGS BEFORE TAXES 35.3 29.8 5.5
NFP (675.1) (547.2)* (127.9)
INSTALLED CAPACITY 1,026 MW° 950 MW 77 MW
ENERGY PRODUCTION 676 GWh 691 GWh (14 GWh)
* End of 2018 * Includes minority stake in La Muela (26%) wind farm and
33 Frullo Energia Ambiente (49%) for a total amount of 37MW1Q 2019 EBITDA Bridge
Assets
(€M)
(1.2) 0.1 0.4 61.6 1.4 63.0
4.3 0.8 0.4
54.8 2.0
GBP/EUR
↑ UK WIND ↓ WIND ITA ↑ 2019: 0.8725
↑ RENDE
↑ FRANCE ↑ ITALY WASTE ↓ WIND SPAIN 2018: 0.8834
MAINTENANCE
WIND
↓ WASTE ITALY ↓ TREZZO
↑ US SOLAR
↑ WIND UK MAINTENANCE
(COMPENSATED)
1Q 2018 PERIMETER PRICES VOLUMES OPEX SERVICES G&A/ EXCHANGE 1Q 2019 IFRS 16 1Q 2019
OTHER RATE BEFORE IFRS 16
341Q 2019 Cash Flow
(€M)
CASH CASH 63
113
SPV SPV CASH
CASH 139
105
CII HOLDCO 12
CII HOLDCO 9
PROJECT
FINANCING PROJECT
(700) FINANCING
(737)
FV DER. (38)
IFRS 16 (73)
OTHER (36)
FV DER. (37)
OTHER (42)
ACQUISITION 60
CONSTRUCTION 22
35 OTHER 11Q 2019 Debt Breakdown
Gross Debt Nature Without Gross Debt by Currency Without Gross Debt Without
Derivatives and Leases Derivatives and Leases Derivatives and Leases Hedged
18%
1Q 1Q
46%
50% 2018 2018
82%
4%
€778M €778M €778M
Financing with recourse GBP Hedged
Project financing without recourse EUR Un-hedged
Other financings without recourse USD
Average interest rate (including interest rate swap) of 3.76%*
36
Gross Debt = Project Financing + Other Debt + Debt vs CII HoldCo *excluding IFRS 9 effectAppendix
1Q 2019 Financial Highlights
*
*
*
38Assets: Captured Price Over view Eur/MWh
1Q 2019
94
1Q 2018
92
D%
1%
Eur/MWh 53 45 18%
2%
147 150
CAPTURED ENERGY +
€/MWh GBP/MWh 90 9% 98
INCENTIVE PRICE
2019 2019
Price exposure Price exposure
2%
(7%)
15%
20%
FiT + Grid Benefits FWd Hedging + PPA Merchant
90 Avg. 71 €/MWh 90
60 60
Avg. 61 €/MWh
70 70
WHOLESALE
50 50
PRICE*
50 50
Average
Avg. 62 €/MWh 57 GBP/MWh
Avg. 51 €/MWh 40 40
Avg. 60 €/MWh Average
Avg. 50 €/MWh 46 GBP/MWh
Sicily South Italy Sardinia
39
* Source: GME, HerenYoung Asset Base
March 2019
*
Residual Project Life
Residual Debt Life
Project cash flow after debt repayment
Wholesale price
Residual incentive life
40 * PPA secured and SRECInstalled Capacity and Production by Plants in 1Q 2019
Plants MW Energy produced 1Q 2019 (GWh)
WIND
SOLAR
WTE/BIO
* The installed capacity is 159 MW, production limit at 138 MW
MINORITIES
41
TOTAL 1,026 676Asset Management & Technical Advisory Targets
Consolidated Worldwide presence → Revenues 2021 + 17%
Highlights ↑ Cost Efficiency
Positive Impact of the Digital Assets Platform
(€M) +17% (€M) +71%
25 3.6
Asset 21
Management
58%
2.1
65% 14%
Technical EBITDA
margin
Advisory
10%
EBITDA
33% margin
30%
Transaction 5% 9%
Advisory 2019 2021 2019 2021
Revenues EBITDA
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