energy developments limited - asx2012/08/22 · edl business overview notes: 1. includes 21mw which...
TRANSCRIPT
2012 Full Year Results
22 August 2012
Energy Developments Limited
Greg Pritchard Managing Director
Gerard Dover Chief Financial Officer
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Important Notice
Forward Looking Statements
Statements contained in this presentation, particularly those regarding possible or assumed future performance, estimated earnings of Energy
Developments Limited ABN 84 053 410 263 (―EDL‖ or the ―company‖), potential growth of the company, industry growth or other trend
projections are or may be forward looking statements. Such statements relate to future events and expectations and therefore involve unknown
risks and uncertainties. Actual results may differ materially from those expressed or implied by these forward looking statements.
No offer of securities
Nothing in this presentation should be construed as an offer to sell or a solicitation of an offer to buy or sell EDL shares in any jurisdiction.
Reliance on third party information
Certain of the views expressed in this presentation contain information that has been derived from publicly available sources that have not been
independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. This
presentation should not be relied upon as a recommendation or forecast by EDL.
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Agenda
• Highlights
• Group Financial Results
• Business Performance
• Regulatory and Market Update
• Priorities and Outlook
Presenters:
Greg Pritchard Managing Director
Gerard Dover Chief Financial Officer
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Positioned to benefit from global
focus on clean energy
Defensive revenue streams
Proven expertise in the development
of specialist power projects and
emissions abatement solutions
Well capitalised with disciplined
approach to investment
opportunities
Established leadership in key
growth markets
Key Investment Highlights
EDL owns and operates a global portfolio of over 700MW of clean and remote energy projects
4
3
5
– Total fixed price revenue: >88%; Capacity based revenue: > 50%
– Revenues from A-rated counterparties: ~50%
– Customer focus with track record of contract renewals: >274MW in last 12 months
– Increasing free cash flow providing opportunities to reinvest
– A$22.5m of equity capital raised in FY12
– A$445m of corporate debt facilities established in FY12
– Target return hurdles for new investments
– Low cost and established clean energy technologies
– Bi-partisan support for RET and CFI in Australia; continued support for renewables in
UK and key US States
– WCMG and Vent Air Methane business provides low cost carbon abatement solutions
2
– Significant brownfield expansions of remote mining operations in Australia
– Remote Energy demand over next 5-10 years estimated at ~1.5GW
– Recently announced ~53MW McArthur River power station expansion
– Incumbent WCMG operator in Australia’s quality coking coal regions
– Increasing land fill access rights in fragmented US market
1
– Leading provider of clean energy from land fill and waste coal mine gas (methane)
– Australia’s leading specialist provider of remote power < 100MW segment
– In-house technical and O&M capability supported by remote condition monitoring and
track record of safe and reliable operations
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EDL business overview
Notes:
1. Includes 21MW which are operated and maintained only
2. Includes 12MW US Lorain expansion project (commissioned—Jul-12)
3. 50% owned JV
A global portfolio of Clean Energy assets and a leading Remote Energy business in Australia
4
Australia—Clean Energy
(Commenced Operations: 1992)
Installed capacity: ~262MW Installed capacity: ~80MW
US—Clean Energy
(Commenced Operations: 1997)
Installed capacity: ~89MW2
Site MW
Mucking 21
Rainham 17
Pitsea 15
Greece3 12
Other 15
Total 80
Site MW
Lorain County 27
Carbon Limestone 25
Covel 10
Tessman 8
Taylor 8
Other 11
Total 89
Site MW
Appin/Tower 97
Moranbah North 46
German Creek 32
Lucas Heights 17
Clayton /
Springvale
15
Other 55
Total 262
Australia—Remote Energy
(Commenced Operations: 1988)
Installed capacity: ~280MW1
Site MW
WKPP 70
Cannington 40
Pine Creek 35
Sunrise Dam 28
McArthur River 24
Other 83
Total 280
Europe —Clean Energy
(Commenced Operations: 1997)
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– FY13F EBITDA guidance of A$150m to A$160m
– On-market buy-back announced
– TRIFR continues to improve (down to 2.1 in FY12 from 4.1 in
FY11)
– MW / Employee increased from 1.6 to 1.7
– Continued success in extending key gas and project agreements
– Installed operational capacity up 115MW3 (18%) to 711MW
– Increased Remote Energy capability and leadership: enGen
acquisition performing in line with expectations with platform for
further growth
– 28MW of projects currently in development or commissioning
– 61MW of new projects committed
– Funding in place
– Revenue of A$323m, an increase of 24% on FY11
– EBITDA1 of A$135m, up 10% on FY11
– Net operating cash flow of A$71m, an increase of 5% on FY11
– Investment of A$163m in acquisitions and expansions
– New debt facilities of A$445m2 established
FY12 Result Highlights
Successful year with a significant increase in scale and earnings growth
Positioned for continuing growth
Profitable Growth
Investment and
Enhanced Scale
Operational
Improvements
5
6MW commissioned in FY12
13MW expansion under development
enGen – Remote Energy Site
German Creek
Carbon Limestone (US)
Outlook
Note:
1. Earnings before interest, tax, depreciation, amortisation and specific items
2. Includes US$20m (exchange rate A$1.00/US$1.00)
3. Includes enGen acquisition of 98MW
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Performance Overview
12 months ended 30 June FY12 FY11 FY10 Change
FY11 -FY12
Revenue (A$m) 322.6 259.2 263.6 +24%
EBITDA before specific items (A$m) 135.2 122.8 126.8 +10%
Profit/(loss) before tax (A$m) 11.4 (45.0) 25.3 nm
EPS (cents per share) 5.6 (18.4) 10.5 nm
Capex and investment (A$m) 162.5 34.1 19.5 nm
Stay-in-business capex (A$m) 19.1 18.4 18.1 nm
Net operating cash flow (A$m) 70.5 67.3 75.6 +5%
Net debt/EBITDA3 (x) 3.2 2.7 2.9 0.5
Safety (LTIFR) 2.1 4.1 5.9 (49%)
Generation (MWh) 3,153 2,952 3,018 +7%
Installed capacity (MW) 711 5961 5992 +19%
Underlying business performance remains solid
Note:
1. Excludes August 2011 enGen acquisition (98MW)
2. French LFG (14MW) and Packington JV (5MW) sold in FY10
3. EBITDA before specific items
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0
750
1,500
2,250
3,000
3,750
FY08 FY09 FY10 FY11 FY12
AU Clean Energy AU Remote Energy UK Clean Energy US Clean Energy
0
25
50
75
100
125
150
175
FY08 FY09 FY10 FY11 FY12
AU Clean Energy AU Remote Energy UK Clean Energy US Clean Energy
=
0
200
400
600
800
FY08 FY09 FY10 FY11 FY12
AU Clean Energy AU Remote Energy UK Clean Energy US Clean Energy
=
0
100
200
300
FY08 FY09 FY10 FY11 FY12
Contracted / Recontracted Black Uncontracted Black Uncontracted Green
7 7
Recent Performance History
Installed capacity (MW) Revenue (A$m)
Total generation (GWh) EBITDA (A$m)
CAGR = 5.8%
CAGR = 6.2%
CAGR = 7.7%
CAGR = 8.1%
Proven track record of operational and financial performance
Note:
AU Clean Energy and AU Remote Energy cumulatively referred to as Australia by Management
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343 341363 365
409
102
0
100
200
300
400
500
FY08 FY09 FY10 FY11 FY12
EDL Employees enGen Employees
0
5
10
15
20
25
FY00 FY02 FY04 FY06 FY08 FY10 FY12
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Safety and People
EDL’s Health, Safety and Environment track record is its social license to operate and key to continued
success Total lost time injury frequency rate
8
Employee numbers
Moving towards a ‘Zero Harm’ target globally
Excellent industry-leading safety
performance
LTIFR improved c.50% to 2.1
74 of 76 sites 12 months LTI free to June
2012
Net employee numbers reduced 12% (post
enGen acquisition)
– improved MW/FTE from 1.6 in FY11 to
1.7x in FY12
Strategies in place to attract and retain key
talent N
um
ber
of
Em
plo
yees
Fre
quency R
ate
(per
mill
ion h
ours
work
ed)
Safety
People
Environment Two minor reportable incidents
467
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0
50
100
150
200
FY08 FY09 FY10 FY11 FY12
Stay in business capex Growth capex Acquisitions
9
Investing in Growth
Project MW Comments
Aug-11 enGen 98 Acquisition of ~98MW of
remote power generation
capacity
Dec-11 McArthur River
expansion
3 Expansion at existing remote
power station
Jun-12 US brownfield
expansions
28 Key US site expansions:
Carbon, Lorain and Taylor
218MW of generation have been acquired, developed or are fully funded and in development since FY11
FY12 Acquisition and Expansion Capex Capex (A$m)
Current / upcoming expansion projects
Project MW Comments
Jul-12 Hill 60 15 Expansion of remote power
station
Nov-12 German Creek
expansion
13 Expansion of WCMG power
station
Jun-13 US greenfield site
expansions
8 Leveraging existing landfill
operator relationship
Jan-14 McArthur River 53 Further expansion at existing
remote power station
Target return on capital employed > 10%
enGen: Acquired in August-2011
McArthur River: Expanded December-2011,
further expansions beginning August-2012
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Proven
track
record
Growth
platform
Leader in
Remote
Energy
Low risk
revenues
High quality
customers
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enGen Acquisition
Significantly enhanced EDL's position in the Remote Energy market
~98MW of installed generation focused on remote off-grid mine sites and remote communities
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– Proven track record in industry
– > 30 years operating experience
– Focus on fuel efficient customer solutions
– Horizon Power; AngloGold Ashanti;
Barrick Mining Corp; Newmont
– Well positioned for extensions /
expansions
– Fixed revenues based on installed capacity
– Customer takes fuel risk
EDL RE Asset Locations post acquisition
4
– Platform for further expansions in the key
Western Australian market
– Market demand over next 5-10 years
estimated at ~1.5GW
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– Leading specialist provider of remote
power < 100MW in Australia
– 280MW installed
– 66MW in development
KEY: enGen Asset
Existing EDL RE Asset For
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Recent Success in Contract Extensions
Excellent track record of contract renewals
Site Counterparty MW Length Contract Type
Appin Tower BHP ~74 4 years to 2016 Tolling Services Agreement
Carbon Limestone and Lorain
County (US)
AMP Ohio 56 10 years to 2021 Power Purchase Agreement
MRM Phase 3 Expansion Xstrata ~53 20 years Tolling Services Agreement
Cannington mine BHP 40 4 years to 2018 Tolling Services Agreement
Sunrise Dam mine AngloAshanti Gold 28 2 year PPA extension Tolling Services Agreement
Darlot mine Barrick Gold 12 2 year PPA extension Tolling Services Agreement
Taylor County (US) Coweta Fayette Electric 8 15 year PPA extension Power Purchase Agreement
MRM Short-term Expansion Xstrata ~3 3 years to 2015 Tolling Services Agreement
Yulara CNG Transport Power & Water Corp N/A 7 years to 2018 CNG Supply Agreement
Recent off-take renewals
~274MW of off-take contracts have been agreed or extended since June 2011
Note:
1. Tolling Services Agreement: EDL is paid a fixed capacity tariff for installed generation capacity and a variable energy tariff for electricity generated
2. Power Purchase Agreement: EDL is paid for electricity generated
3. CNG Supply Agreement: EDL is paid for the installed compressed natural gas (CNG) infrastructure and the transport of the CNG
Site Counterparty MW Length Contract Type
Carbon Limestone, Lorain
County (US)
Republic Services 56 27 years to 2039 Landfill Gas Supply Agreement
Pitsea and Rainham (UK) Veolia 32 17 years to 2029 Landfill Gas Supply Agreement
Taylor County (US) Veolia 8 20 years to 2032 Landfill Gas Supply Agreement
Recent supply renewals
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Agenda
• Highlights
• Group Financial Results
• Business Performance
• Regulatory and Market Update
• Priorities and Outlook
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Income Statement
Income Statement (A$m) FY12 FY11 FY10 Change
FY11 -FY12
Revenue 322.6 259.2 263.6 +24%
Operating EBITDA 158.1 142.5 142.5 +11%
Corporate and Development (22.9) (19.7) (15.7) +16%
EBITDA before specific items 135.2 122.8 126.8 +10%
D&A (59.6) (52.0) (52.2) +15%
Net financing costs (38.0) (33.6) (33.6) +13%
Profit before tax and specific items 37.6 37.2 41.0 +1%
Specific items
Business strategy, acquisition, disposal and integration costs (7.3) (11.1) (15.7) (34%)
Impairment (39.0) (54.0) — (28%)
Finance costs 20.1 (17.1) — nm
Profit before tax 11.4 (45.0) 25.3 nm
Tax expense (2.1) 16.2 (8.9) nm
Net profit 9.3 (28.8) 16.4 nm
Group results
Specific Items Commentary
Business strategy, acquisition, disposal and integration costs in FY12 includes costs incurred through the enGen acquisition and compares to A$11.1m of
costs in FY11 that mainly relate to losses on disposal of certain foreign operations and advisory costs
Impairment expense in FY12 includes A$26.9m resulting from cessation of the NGAC scheme in June 2012. The Australian Government's Clean Energy
Future Plan includes a number of legislated changes that may have a positive impact on EDL from 1 July 2012 and are described in more detail on pages
25 and 26. No revenue from these legislative changes will be recorded until the Plan has been finalised and can be reliably measured. Other asset
impairments in FY12 are A$12.1m. This compares to A$49m in WKPP impairment and A$5.1 of other impairments in FY11
Finance costs in FY12 relate to a $20.1m exchange gain on settlement of foreign currency loans and capitalised fee write-offs of A$17.1m in FY11
associated with the July 2011 refinancing
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Aust105.4
AU121.9
Europe34.3
Europe31.9
US2.7
(5.8)
6.4
(2.2)
19.1
(1.8)
US4.3
FY11 Operating EBITDA Volume Price Costs New assets FX FY12 Operating EBITDA
AU105.4
AU184.1
AU245.9
Europe55.2
US19.9
(8.6)
6.4(3.7)
69.3
FY11 Revenue Volume Price New assets FX FY12 Revenue
US
Europe56.3
Revenue and EBITDA
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Notes:
1. Excludes Corporate and Development costs and specific items
2. Includes changes in capacity-based volume revenues
Group revenue (FY11 to FY12) (A$m)
1
AU 2.1
Europe 3.9
US 0.4
AU 67.8
US 1.7
Europe (2.6)
US (1.1)
AU2 (7.6)
Europe (0.3)
US (0.7)
Group Operating EBITDA1 (FY11 to FY12) (A$m)
AU 2.1
Europe 3.9
US 0.4
AU 18.2
US 0.9
AU2 (5.3)
Europe (0.2)
US (0.3)
AU 1.5
Europe (4.5)
US 0.8
Europe (1.6)
US (0.2)
US
20.4 US
19.9
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Cash Flow
Cash flows (A$m) FY12 FY11 FY10 FY12-FY11
Change
EBITDA 135.2 122.8 126.8 +10%
Business strategy, acquisition, disposal and integration costs (7.3) (3.9) (15.7) +87%
Change in working capital and non-cash items (17.5) (16.3) 2.8 +7%
Cash from operations 110.4 102.6 113.9 +8%
Net finance costs (36.5) (29.8) (32.8) +22%
Tax paid (3.4) (5.5) (5.5) (38%)
Net operating cash flow 70.5 67.3 75.6 +5%
Stay-in-business capex (19.1) (18.4) (18.1) (3%)
Net operating cashflow after stay-in-business capex 51.4 48.9 57.5 +5%
Strong and stable cash flow conversion
Commentary
Mature technology and operations across all regions
producing strong cash flows
Cash flows are impacted by timing of generation and sale of
green credits
Stable stay-in-business capex despite significant increase in
MW
Opportunities to optimise working capital
Change in working capital and
non cash items ($Am)
FY12 FY11 FY10
Greece JV (3.2) (3.5) (4.3)
Change in Green credits on hand (7.8) (7.1) 2.1
Change in Working Capital (6.5) (5.7) 5.0
(17.5) (16.3) 2.8
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FY12 Sources A$m
Net operating cash flow 70.5
Rights issue proceeds 22.5
Net increase in borrowings 63.2
Other net proceeds 2.0
Cash on hand at 30 June 2011 70.1
FX on Cash 0.5
Total Sources 228.8
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Sources and Uses
Commentary
Appropriate balance of debt and equity used to fund acquisitions and expansions
FY12 Uses A$m
Australia—Remote Energy 111.8
United States—Clean Energy 44.3
Lease extensions and gas rights 8.0
Other capex 2.8
Stay-in-business capex 19.1
Uses 186.0
Cash on hand at 30 June 2012 42.8
Total Uses 228.8
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Balance Sheet
(A$m) FY12 FY11 FY10
Cash 42.8 70.1 67.7
Receivables,
Inventory, Green
Credits and
Prepayments
77.3 75.9 70.7
Property, Plant and
Equipment
643.7 568.6 646.4
Goodwill and
Intangibles
52.6 9.0 2.5
Deferred tax and other
assets
40.8 32.5 36.6
Total assets 857.2 756.1 823.9
Payables and
provisions
52.6 60.1 56.3
Borrowings and other
financial liabilities
480.6 396.8 438.8
Interest rate swap
liabilities
32.8 15.8 22.7
Deferred revenue 18.2 11.8 12.6
Deferred tax liabilities 6.4 7.6 9.1
Total liabilities 590.6 492.1 539.5
NET ASSETS 266.6 264.0 284.4
FY12 FY11 FY10
Net Debt (A$m) 437.8 326.7 371.1
Net Debt / EBITDA1 3.2x 2.7x 2.9x
EBITDA1 / Interest 3.6x 3.7x 3.8x
Debt to Assets 56% 52% 51%
Average Interest Rate 7.5% 7.1% 7.8%
Balance sheet Debt ratios
FY12 FY11 FY10
Debtor Days 52 42 44
Creditor Days 50 98 81
Inventory ($m) 15.4 12.5 11.4
Working capital
Note:
1. Before specific items
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Funding Strength
18
Debt maturity profile—facility size
Funding capacity
Multi-Option
Syndicated
Facility
(including
revolver)
WKPP Project
Finance
CAT Finance
Committed A$425.0m A$142.8m US$20.0m
Drawn
(at 30 Jun-12)
A$372.9m A$127.4m US$10.7m
Available A$52.1m A$15.4m US$9.3m
– New financing facilities provide headroom to fund near term
growth. EDL continues to assess alternate sources of funding
– Export Credit Guarantees to support financing of equipment
purchases
Current funding facilities
Current financing activities
0
100
200
300
Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Feb-18
Syndicated facility Revolver CAT Finance WKPP
– New multi-option syndicated corporate facility allows EDL to
appropriately finance its large portfolio of small scale generation
assets
– Established in July 2011
– Increased to A$425m in June 2012
– New US$20m Caterpillar Financial Australia facility agreed in May
2012 for the purposes of Caterpillar equipment purchases
– No significant refinancing until June 2016
– Significant headroom with all debt covenants
– Net leverage ratio < 3.75x1
– Net interest coverage ratio > 2.50x1
– Total gearing2 < 65%1
Note:
1. Multi Option Syndicated Facility covenant only (i.e. excludes WKPP Project Finance debt)
2. Calculated as total debt to total assets
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Agenda
• Highlights
• Group Financial Results
• Business Performance
• Regulatory and Market Update
• Priorities and Outlook
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63.0 58.9
(6.6)
2.3
FY11 EBITDA Volume Price Costs FY12 EBITDA
0.2
20 20
Australia—Clean Energy
Australia—Clean Energy
Australia’s largest landfill gas power generator and largest operator of waste coal mine gas (WCMG) projects
Commentary
Higher market black prices offset by reduction in green credit prices
Tolling contract extensions achieved but with a lower capacity
Costs carefully managed to improve operational efficiency
Development of German Creek WCMG expansion (13MW) to be
completed by November 2012
Operating EBITDA (A$m)
Note:
1. Includes changes in capacity-based revenues
1
(A$m) FY12 FY11 FY10 Change
FY11-FY12
Operating capacity (MW) 262 262 262 +0%
Revenue 92.3 101.8 105.0 (9%)
Black 70.8 74.4 77.8 (5%)
Green 21.5 27.4 27.2 (22%)
Operating costs (33.4) (38.8) (42.7) (14%)
Cost of sales (6.1) (9.2) (13.1) (34%)
Direct O&M (9.9) (11.9) (13.4) (17%)
Indirect O&M (17.4) (17.7) (16.2) (2%)
Operating EBITDA 58.9 63.0 62.3 (7%)
margin (%) 63.8 61.9 59.3 +1.9
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Australia—Remote Energy
Australia—RE1
Remote Energy business provides essential infrastructure to remote mining operations and towns and
communities, beyond the reach of the electricity grid
Note:
1. Includes WKPP and enGen contribution for 10 months (acquired 31 August 2011)
Commentary
Continued growth across remote energy portfolio with the acquisition of
enGen in August 2011
Excluding enGen, contract negotiations and increased demand for
remote energy has resulted in a 4% increase in revenue
Expansion project at Hill 60 (WA) (15 MW) was completed in July 2012
and will provide a further uplift in revenues in FY13
Synergy benefits in the RE portfolio include reduction of 35 FTE positions
Operating EBITDA (A$m)
42.4
63.0
18.21.9
FY11 EBITDA enGenacquisition
Volume Price Costs FY12 EBITDA
(0.8)
1.3
(A$m) FY12 FY11 FY10 Change
FY11-FY12
Operating capacity (MW) 280 178 176 +57%
Revenue 153.6 82.3 78.9 +87%
Black 153.6 82.3 78.9 +87%
Operating costs (90.6) (39.9) (38.9) 127%
Cost of sales (48.6) (13.1) (14.1) nm
Direct O&M (10.8) (6.9) (7.5) +57%
Indirect O&M (31.2) (19.9) (17.3) +57%
Operating EBITDA 63.0 42.4 40.0 +49%
margin (%) 41.0 51.5 50.7 (10.5)
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Europe—Clean Energy
Europe
EDL's European operations comprise ten LFG sites, mainly located close to London, and the Greece JV
Commentary
UK operations experienced gas restrictions from over-tipping and
increased outages, offset by stronger wholesale prices
Indexed fixed price contracts continue to provide revenue certainty, with
green revenues increasing 2%
Cost of sales increased due to the renegotiation of certain royalty
arrangements as part of landfill gas extensions, yielding a significant NPV
uplift
UK Government continues to support UK green energy through
Renewable Obligation legislation
Foreign exchange negatively impacts JV share of profits
Europe Operating EBITDA (A$m)
(A$m) FY12 FY11 FY10 Change
FY11-FY12
Operating capacity (MW) 80 80 80 0%
UK Revenue 53.1 51.7 54.3 +3%
Black 31.6 30.6 33.6 +3%
Green 21.5 21.1 20.7 +2%
UK Operating costs (24.4) (20.9) (21.4) +17%
Cost of sales (9.9) (6.8) (8.0) +46%
Direct O&M (8.2) (7.6) (7.7) +8%
Indirect O&M (6.3) (6.5) (5.7) (3%)
UK Operating EBITDA 28.7 30.8 32.9 (7%)
margin (%) 54.0 59.6 60.6 (5.6)
Share of profits from JVs 3.2 3.5 4.3 (9%)
Europe Operating EBITDA 31.9 34.3 37.2 (7%)
34.3 31.9
3.9
(4.5)
FY11 EBITDA Price Volume Costs FX FY12 EBITDA
(0.4)
(0.2)
(1.6)
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United States—Clean Energy
US
Commentary
US business generation increased due to the partial contribution from
expansion projects recently completed at Taylor, Carbon and Lorain (28
MW)
Ohio (the location of EDL’s largest operating sites) has recently
reaffirmed its commitment to renewable energy, underpinning the outlook
for green energy
Continued focus on operational improvement and efficiencies
Further greenfield investment of 8MW expected to commence operation
in FY13
New 10 year PPA with AMP Ohio commenced in January 2012 with price
increases locked in over the contract
Project capex supported by US Treasury grants (US$6.4m recouped in
FY12)
Recent expansions in key US states with supportive renewable energy policies
Operating EBITDA (A$m)
(A$m) FY12 FY11 FY10 Change
FY11-FY12
Operating capacity (MW) 89 76 74 +17%
Revenue 20.4 19.9 21.1 +3%
Black 16.5 15.8 18.1 +4%
Green 3.9 4.1 3.0 (5%)
Operating costs (16.1) (17.2) (18.2) (7%)
Cost of sales (2.2) (1.3) (2.4) +69%
Direct O&M (6.3) (8.1) (8.0) (22%)
Indirect O&M (7.6) (7.8) (7.8) (4%)
Operating EBITDA 4.3 2.7 2.9 +63%
2.7
4.3
0.4
0.9
FY11EBITDA
Price Volume New assets Costs FX FY12EBITDA
(0.2)
(0.3)
0.8
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Agenda
• Highlights
• Group Financial Results
• Business Performance
• Regulatory and Market Update
• Priorities and Outlook
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EDL will benefit from operating in a more certain regulatory regime 25 25
Regulatory Update
– The United States currently has no national renewable energy or carbon abatement policy
– Ohio, EDL’s largest operating market with 59MW of installed generation (64% of total US installed generation), has recently reaffirmed
its commitment to the RPS target (25% of all generation from renewable sources by 2025)
– Under Ohio law, at least 50% of certificates surrendered under the RPS by retailers must be sourced from within Ohio,
underpinning the value of EDL’s green certificates
EDL is manoeuvred through a changing regulatory environment
Clean Energy—Australia
Clean Energy—United States
– Current target of 15% of all generation from renewable sources by 2015
– No material change
Clean Energy—United Kingdom
– Clean Energy Future legislation, effective 1 July 2012 saw the introduction of a $23/tonne carbon price flowing through to increased
National Electricity Market pricing from 1 July
– Renewable Energy Target (―RET‖) scheme has been amended to include WCMG generation assets for a transition period to 2020
– RET generation cap for EDL Moranbah North and German Creek power stations has been agreed (528GWh pa) and accreditation
completed
– Carbon Farming Initiative legislation is operational, providing some incentives for EDL’s landfill gas sites
– Formal accreditation process expected to be completed shortly
– Initiatives have been undertaken to maximise emissions abatement from EDL managed landfill sites
– NSW Greenhouse Gas Reduction Scheme (―GGAS‖) has closed as of 1 July 2012 – absence of transitional provisions resulted in write-off
of NGAC inventory of $18.8m after tax at 30 June 2012
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Clean Energy will be favourably impacted by Australia’s Clean Energy Future legislation
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Australian Carbon Tax
Net positive impact on EDL’s financial performance
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Impact on EDL's
Black Revenue
As existing PPAs expire, EDL expects to negotiate
new PPAs or sell direct to the NEM at pricing inclusive
of the cost of carbon
Impact on EDL's
Green Revenue
LFG: Certain sites eligible for the creation of ACCUs
under the CFI legislation, as well as the continued
creation of LGCs under the RET1
WCMG: German Creek and Moranbah North projects
(77MW), will be eligible for the creation of LGCs
under the RET, for a transitional period of 8 years
(EDL RET cap of 528GWh will translate to 528,000
LGCs per annum)
Impact on EDL's
Costs
The carbon price will not apply to EDL’s LFG sites
Revenue uplift will exceed the cost, as the
emissions intensity of WCMG generation (0.6tCO2-
e/MWh) is less than the average for the
Queensland grid (0.86tCO2-e/MWh)
Clean Energy Remote Energy
No impact – generation is not grid connected
(carbon cost is a pass-through to the counterparty
under the PPA or Power Supply Agreement)
N/A
No impact – carbon cost is passed-through to the
counterparty under the PPA
Note:
1. Subject to finalisation of CFI regulations and the LFG accreditation process
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Agenda
• Highlights
• Group Financial Results
• Business Performance
• Regulatory and Market Update
• Priorities and Outlook
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Development projects
commissioned on time and
budget
Building pipeline in growth
markets
Drive operational
improvements across the
business
Extend access agreements to gas
supplies
Continue accessing diversified
funding sources
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Priorities in FY13
– AU Remote Energy: MRM (53MW in development for commissioning by January-14), and
Hill 60 (15MW by August-12)
– AU Clean Energy: German Creek (13MW by November-12)
– US Clean Energy: US greenfield (8MW by June-13)
– Australian Clean Energy focused on extending access to long-dated gas reserves -
LFG and WCMG
– Increase capacity factors in Clean Energy
– Continue to streamline O&M activities and cost base
– Procurement and working capital efficiencies
– Secure and expand capacity with key customers
– Australian Clean Energy: Extend and expand Bowen Basin WCMG assets
– Australian Remote Energy: Extend and expand with existing and
prospective resources customers and power off-takers
– US Clean Energy: Further brownfield and greenfield expansions; leverage
strong counterparty relationships e.g. Republic (no.2 US waste company)
– Access broad corporate and project level funding sources
– Retain strong cash flow for reinvestment in profitable growth
– Enable bidding for new projects on a ―fully funded basis‖
EDL has five key areas of strategic focus for FY13
1
5
4
2
3
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FY12 FY13Low
FY13High
4.3 6 8
Guidance – Key assumptions FY13
Guidance
Australian ACCU certificate price ($) 21
Australian LGC certificate price ($) 37
AUD:USD Exchange Rate 1.05
AUD:GBP Exchange Rate 0.65
Capital management initiatives
On-market buy-back
Up to A$5m of EDL shares over the next 12 months
– Does not limit EDL's focus on reinvestment in profitable growth
– Takes advantage of volatility or weakness in equity markets
Amount brought back will depend on market conditions, alternative
investment opportunities and other factors
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Outlook
EDL expects to achieve a significant uplift in FY13 EBITDA
(A$m) 1H12
(Actual)
2H12
(Actual)
FY12
(Actual)
1H13
Guidance
2H13
Guidance
FY13
Guidance
EBITDA
Australia1 47 52 99 55-58 58-61 113-119
UK 15 17 32 15-16 16-17 31-33
US 1 3 4 3-4 3-4 6-8
Total
EBITDA 63 72 135 73-78 77-82 150-160
Commissioning of new capacity on the dates shown above
99.0
FY12 FY13
Low
FY13
High
113119
Note:
1. Australia includes Clean Energy, Remote Energy and Corporate Costs
Australia
FY12 FY13
Low
FY13
High
31.9 31 33
UK
FY12 1H 2H
US
Note:
1. Includes corporate costs
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Outlook—Forecast Growth in MW from Committed Projects
In development and committed project pipeline forecast to increase installed capacity by 13% from FY12
Note:
1. Includes committed projects only
582
711748
801
FY11 ClosingInstalled MW
enGenAcquisition
US Expansion MRMExpansion
FY12 ClosingMW
Hill 60 Wyandot Sand Valley German CreekExpansion
FY13 ForecastMW
McArthur RiverExpansion
FY14 ForecastMW
9828 3
15 3 513
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Appendix A
Additional information
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Technology
Technology Overview Generation Process Example
Clean
Energy:
Landfill Gas
Landfill gas (LFG) produced from the anaerobic decomposition of
biodegradable waste which has been deposited in landfill sites
LFG consists of ~50% methane, with the balance of gas content
carbon dioxide and trace amounts of volatile organic gases
– Methane is 21 times more potent than carbon dioxide in its
greenhouse effect on climate change
Generating power from landfill gas is a conventional process with
few technical barriers to the exploitation of the resource
LFG generation is now regarded as one of the most mature and
successful renewable energy technologies, providing efficient base
load generation
Following the completion of the tipping process,
waste deposited in the landfill site is covered and
allowed to decompose
– The conditions in the landfill are carefully
controlled to promote the production of gases
The gases are collected via a system of wells and
pipes that extract gas from the site and supply the
engines
– Generation engines are typically
containerised, installed onsite and connected
to the gas supply and the electricity
transmission network
Clean
Energy:
WCMG
Pre-draining and post draining of coal seams liberates methane gas
trapped within the seam
Coal mining process has always required the removal of methane
for safety reasons, however, more recently there are also strong
environmental and commercial considerations for draining and
beneficiating the gas
Historically, the methane has been either flared or released directly
into the atmosphere, however, given WCMG can be used as a fuel
for power generation, there is an opportunity to capture the gas and
generate electricity
WCMG is extracted from the coal seam through
three distinct processes:
– Surface to in-seam
– Underground to in-seam
– Surface to goaf
Gas extracted through is then transported via
pipeline to an EDL WCMG generation facility
– Generation engines are typically
containerised, installed onsite and connected
to the gas supply and the electricity
transmission network
Remote
Energy
Remote energy provides electricity to remote towns, communities
and mines that are not connected to the electricity network
EDL provides power to its customers either on a tolling basis or with
a cost pass-through of fuel costs, thereby reducing input cost risk
EDL has developed remote area power plants
which utilise natural gas (pipeline, LNG or CNG)
and/or distillate to economically meet the energy
requirements of mining operations, remote towns
and communities and other off grid locations
Power Generation from Waste Coal Mine Gas
Broome Power Station (WKPP)
EDL operates proven, reliable, low technology assets
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FX impact
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Profit and Loss
Balance sheet
(1.0)
4.4
-1.3
(0.2)
0.5
(0.9)
0.5
(3.2)
(2.1)
FX on PPE
and
intangibles
FX on
Investments
FX on cash FX on
borrow ings
FX on
payables
FX on
receivables
FX on
others
Net impact
FY12
Average rate: FY12 FY11
AUD:GBP 0.6507 0.6210
AUD:USD 1.0365 1.0027
AUD:EURO 0.7717 0.7248
Closing rate:
AUD:GBP 0.6505 0.6614
AUD:USD 1.0159 1.0595
AUD:EURO 0.8077 0.7362
(3.7)
1.8
0.5
0.2 0.3(0.8)
FX on Revenue FX on Operating Expense FX on Depreciation FX on Financing Costs FX impact - other Net FX Loss before tax
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Appendix B
Glossary
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Glossary
35
Term Definition
ACCU Australian Carbon Credit Units (AU)
AMP Ohio American Municipal Power - Ohio
Black Revenues Revenues from the sale of electricity
CAGR Compound Annual Growth Rate
CE Clean Energy
CEF Clean Energy Future (AU)
CFI Carbon Farming Initiative (AU)
CNG Compressed Natural Gas
EDL Energy Developments Limited
enGen Energy Generation Pty Ltd
GGAS Greenhouse Gas Reduction Scheme (AU)
Green Revenues Revenues from the sale of regulatory credits
LFG Landfill Gas
LGC Large Scale Generation Certificate
LTI Lost Time Injury
LTIFR Lost Time Injury Frequency Rate
MRM McArthur River Mine
MW Megawatt
Term Definition
MWh Megawatt Hour
NEM National Electricity Market (AU)
NGAC New South Wales Greenhouse Gas Abatement Certificate
O&M Operations and Maintenance
PPA Power Purchase Agreements
RE Remote Energy
REC Renewable Energy Certificate (US)
RET Renewable Energy Target (AU)
ROC Renewable Obligation Certificates (UK)
RPS Renewable Portfolio Standard (US)
TRIFR Total Recordable Injury Frequency Rate
TSA Tolling Services Agreement
UK United Kingdom
US United States
VAM Vent Air Methane
WCMG Waste Coal Mine Gas
WKPP West Kimberley Power Project (AU)
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