windlab limited (asx:wnd) october 2017.pdf · windlab limited (asx:wnd) roger price, chairman and...

Windlab Limited (ASX:WND)

Roger Price, Chairman and CEO

October 2017: ASX Spotlight Conference, New York

For further information please contact: [email protected]

WINDLAB LIMITED 2

This document has been prepared solely for the purpose of providing potential investors with information about Windlab Limited (WND, Windlab, or the Company). The information contained in this document does not purport to contain all of the

information that a potential investor may need or desire. Potential investors should conduct their own investigation and analysis of WND and of the information contained in this document and should rely solely on their own judgement, review and

analysis in deciding whether to invest in WND. This document is not intended to be financial product or investment advice nor is it a recommendation to acquire any securities. This document has been prepared without taking into account the objectives,

financial situation or needs of individuals. Before making any investment decision, potential investors are recommended to seek their own legal, taxation and financial advice appropriate to their individual circumstances.

This document does not constitute an offer, invitation or recommendation to any person to acquire securities. Neither the information contained in this document nor any further information made available by WND in connection with a potential

investment in WND will form the basis of, or be construed as, an offer to acquire securities. This presentation is for information purposes only and is not a prospectus, product disclosure statement, pathfinder document for the purposes of section 734(9)

of the Corporations Act 2001 (Cth) (“Corporations Act”) or other offer document under Australian law or the law of any other jurisdiction. This presentation does not constitute an invitation to apply for or purchase securities and does not contain any

application form for securities.

The information contained in this document has not been independently verified. This document includes certain forward looking statements, estimates and projections that involve subjective views of the anticipated future performance of WND that

may or may not be correct. Such forward looking statements, estimates and projections are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of WND.

WND and its representatives and associates may amend or replace the document at any time and are not obliged to provide the recipient with any additional information, or to update or correct any inaccuracies which may become apparent in this

document.

To the maximum extent permitted by law, WND and each of its representatives and associates make no representations or warranties whether express or implied as to the currency, accuracy, reliability or completeness of any information provided to the

recipient about WND or any potential investment in WND (including this document and any other written or oral communication about WND or any potential investment in WND) (Information). WND and each of its representatives and associates are

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The distribution of this document outside of Australia may be restricted by law and any such restrictions should be observed. This document may not be distributed or released to any person in the United States.

Disclaimer

WINDLAB LIMITED 3

Australian based, international renewable energy development company

WindScapeTM; distinct, technology based competitive advantage

Operate across the whole wind farm development value chain

Track record of project success, strong growth and profitability

Growing portfolio of operating interests and asset management revenues

About Windlab

Completed18 projects1033 MW

Total development

pipeline

48 projects>7,000 MW

Near term development

pipeline(permitted)

9 projects874 MW

Capacity under management 290 MW

FY2017(F)Revenue /

EBITDA

$23.2 m /$14.7 m

Note 1: Includes projects which have reached financial close and are either under construction or operating.

Global Offices

Brisbane

WINDLAB LIMITED 4

What we doApply science to develop, construct and operate better wind farms internationally.

WIND FARM PROJECT LIFECYCLE

~3 – 7 Years ~1 – 2 Years 25+ Years

Costs: ~A$2 – 5Million/project ~A$2M/MW

WIND FARM VALUE CREATION

Development Returns Infrastructure Returns

5 to 10X IRRs 8% to 15%

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Prospecting

Prospecting

Prospecting

FINDING THE COONOOER BRIDGE WIND FARM. A DIAGRAMMATICAL REPRESENTATION OF WINDSCAPETM IN ACTION

3Kms Resolution 1Km Resolution Looking closer!

100metre Resolution Land use overlay Virtual Wind Farm

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Revenue model

HOW DOES WINDLAB GENERATE REVENUE? DEVELOPMENT MARGIN EXTRACTION:

Development margins from the sale or part sale of projects at or near financial close

1

Success fees from previously sold or partnered projects. Success fees are typically received on completion of certain development milestones and / or when a project reaches financial close

2

Asset management fees for wind farm management of both Windlab developed and third party owned projects

3

Equity or other commercial interests in operating projects retained beyond financial close

4

Development margin

Target: $250,000 / MW, which

typically equates to 8% – 12% of

total capex

Received through a combination of

cash and carried interests

Windfarm capex

Wind turbines, including the cost of

transport to the site

Civil works

Site preparation

Concrete foundations for wind

turbines

On-site electrical works

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MARKET OVERVIEW

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Market Overview

Wind technologyWind turbine technology has advanced to enable larger turbines, taller hub heights, and bigger generators

Larger turbines and rotor diameters

Bigger generatorsTaller hub heights

Wind turbines make up the largest capex component of an onshore wind project. Continued advances in technology are driving increased capacity factors and lower costs

Source: International Energy Agency, “Technology Roadmap: Wind energy, 2013 edition”.

9

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Market Overview

Cost of energy generation

LCOE IN AUSTRALIA

Source: Bloomberg New Energy Finance.

LCOE is a measure of the average cost of producing electricity from a specific generating technology, representing the cost per MWh of building and operating a generating plant in order to provide reasonable return over an assumed financial life.

WINDLAB LIMITED 11

Market Overview

Australia’s changing energy mix

CAPACITY BY REGION

AGE OF COAL GENERATION CAPACITY

Source: AEMO. Data is current at 19 May 2017.


CURRENT MIX IN THE NEM FUTURE SOLUTION

The Australian energy market is projected to continue to transition away from fossil fuel generation towards renewable generation, particularly solar and wind

9,000MW of coal generation is expected to close over the course of thenext 15 years

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Market Overview

Africa


CURRENT SITUATION FORECAST RENEWABLES CAPACITY

SUB SAHARAN AFRICA (EXCLUDING SOUTH AFRICA)

Sub Saharan Africa (SSA) is the most electricity poor region in the world

Windlab operates in or has identified pipeline projects in Tanzania, Mozambique,

Zambia, Ethiopia and Kenya

These countries are home to more than 300 million people

Increases in energy demand have severely outstripped capacity growth with millions

experiencing frequent black outs

Government support for immediate and substantial investment in electricity

generation projects to meet the fourfold increase in demand expected by 2040

SOUTH AFRICA

Coal currently supplies 77% of the country’s electricity generation1

Regular electricity shortages

National renewable energy target of 17,800 MW capacity by 2030

Rapid developments in the wind energy industry place South Africa among the

leading new wind markets globally due to the government’s Renewable Energy

Independent Power Producer Procurement Program (REIPPPP)

Economic downturn and subsequent reduced demand, coupled with political

interference has stalled the current procurement program. Management believes

fundamentals for renewables are strong with aging coal plant replacement and

demand growth

Africa is the most electricity poor region in the world. Rapid population and economic growth is driving demand for electricity, much of which is expected to be met by renewables

SSA (EXCLUDING SOUTH AFRICA)

SOUTH AFRICA

Note 1: Global Wind Energy Council, “Global Wind 2016 Report”.

PROJECTS

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Projects

Track record – completed and sold

NAME LOCATION CAPACITY TURBINES SITE

IDENTIFIED

OPERATIONAL DETAILS

OaklandsHill

Victoria, Australia

63 MW 32 2005 2012 Windlab completed the development in partnership initially with Investec, and later AGL.

Collgar Western Australia, Australia

206 MW 111 2006 2012 Project jointly developed with Investec, sold to UBS Infrastructure and REST Superannuation at financial close.

Amakhala Emoyeni (Phase 1)

Eastern Cape, South Africa

134 MW 56 2009 2016 In 2011, Windlab executed a sale agreement with Cennergi, a JV between Exxaro and India's Tata Power Company to acquire Phase 1 of the project on award of a PPA. The project received a 20 year PPA with South Africa's national utility Eskom

Bull Creek Alberta, Canada 29 MW 17 2007 2015 Windlab sold 100% of its interests in the project to BluEarth Renewables in December 2011

Cooper’s Gap

Queensland, Australia

453 MW 123 2007 Construction Windlab completed the development in partnership initially with Investec, and later AGL. The project reach financial close in 2017

OAKLANDS HILL COLLGAR AMAKHALA EMOYENI (PHASE 1) BULL CREEK

Windlab has developed and sold its interests in five projects which are either under construction or fully operational

COOPER’S GAP

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Projects

Track record – operating and under construction

COONOOER BRIDGE

OPERATING

Windlab has equity interests in projects under construction and in operation in Australia, with a royalty agreement over an operating project in South Africa

WEST COAST ONE

OPERATING

KIATA

UNDER CONSTRUCTION Located near Bendigo, Victoria

19.8 MW capacity, 6 turbines

Consistently highest capacity factor wind farm in Australia

Innovative community engagement scheme. Open engagement, community ownership, rapid approval, and strong community support

20 year off take with ACT Government signed in February 2015

Financial close in April 2015. Full operations in April 2016, on-time and under budget

Equity: 3.5% Windlab; 3.5% Local Community; Balance Eurus Energy

20 year asset management agreement

Located 140 km north of Cape Town in the

Western Cape Province of South Africa

94 MW capacity, 47 turbines

Project sold to Investec, later taken up by

Moyeng Energy (a consortium consisting of

Engie, Investec, and Tiso Resources)

Financial close in June 2013

Commenced operations in June 2015

20 year offtake agreement with ESKOM.

RSA Government guarantee

Windlab holds a royalty agreement for 1%

of gross revenue; payable annually ~

$400K pa, escalating at South African CPI

Located near Horsham, Victoria

30MW capacity, 9 turbines

Largest turbines in Australia (126m rotor)

Community ownership and open

engagement

10 year Largescale Generation Certificate

contract with the Victorian Government

Rapid development - 3.5 years. Financial

close in November 2016. Construction

commenced in March 2017. Commercial

operation date planned for December 2017

Equity: 25% Windlab, 2.7% local

community, balance John Laing Group

WINDLAB LIMITED 16

Projects

Asset Management

EXISTING ASSET MANAGEMENT AGREEMENTS

PROJECT SIZE CONTRACT TERMS

Coonooer Bridge 20 MW 20 years, CPI indexed. Commenced in 2016

Ararat 240 MW 10 years, CPI indexed. Commenced in 2016

Kiata 30 MW Construction, plus 5 years, CPI indexed, with 5 year option

Windlab provides wind farm management services for projects through construction and operations

During construction: stake holder and construction management via oversight of the Engineering and Procurement Contract

During operations: electricity market operations, contract management, performance management, on-going community engagement and back office services

Windlab expects to provide asset management services to most Windlab developed projects in Australia and South Africa

Windlab is actively pursuing asset management opportunities for third party renewable energy projects (like Ararat) in Australia

WINDLAB LIMITED 17

Projects

Development pipeline summaryWindlab has a geographically diverse development portfolio of 48 projects at various stages of development which represent an estimated potential capacity of more than 7,000 MW

20182017

Kennedy Phase 1 Lakeland

SUMMARY OF DEVELOPMENT PIPELINE

EXPECTED TIMING OF KEY DEVELOPMENTS

COUNTRY ACQUISITION VALIDATIONAPPROVALS AND

PERMITTING

OFFTAKE AND

FINANCINGTOTAL

Australia 5 4 3 2 14

North America - 2 1 2 5

South Africa 3 3 1 5 12

SSA (excluding South Africa)

15 1 1 - 17

Total 23 10 6 9 48

2019 2020

Kennedy Phase II

VerdigreIshwati

Emoyeni

Umsinde Emoyeni

GreenwichMsenge

Emoyeni

IzuduliEmoyeni

WINDLAB LIMITED 18

Projects

Kennedy Energy Park Phase I

LocationHughenden, North Queensland, in land from Townsville. Part of Windlab’s Kennedy energy precinct

Ownership

Developed under a JV with the Eurus Energy Holdings Corporation. Each will invest approximately $25 million1 at financial close to maintain their respective 50% equity interests in the project

Type

Wind (43.5 MW)

Solar (15 MW)

Battery storage (2 MW / 4 MWh)

Funding

$18 million ARENA funding – zero coupon repayable grant

$90 million non-recourse debt

Status Fully approved

TimelineFinancial close: Current quarter

Commercial operations: Q4 2018

An innovative hybrid renewable energy project with world class solar and wind resources

GENERATION PROFILE

THE PROJECT ADDRESSES MANY OF FINKEL’S RECOMMENDATIONS

Source: Windlab; AEMO.

PROJECT SUMMARY

Increasing penetration of

renewables

Combining of complementary wind and solar

Storage for reliability,

frequency support and synthetic inertia

1. Approximate equity contribution

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Projects

Kennedy Energy Park Phase II

Location80 kilometres north of Kennedy Energy Park Phase I

Ownership Windlab – 100%

Type

Land is large enough to support more than 1,200 MW of wind energy generation and additional solar generation and on-site storage

Status

Extensive wind and solar resource

monitoring and assessment complete

A number of environmental studies

complete

Indigenous land use agreement has been

finalised with the local Yirrandali people

Full development application expected to

be submitted to the State Government in

late 2017

In June 2017 the Queensland government unveiled plans to build a new transmission line in North Queensland to support the development of Kennedy Phase II and other renewable energy projects

POWERING NORTH QUEENSLAND PLAN

In June 2017 the Queensland Government unveiled its “Powering North

Queensland Plan”

Includes a proposal to build a new 500 kilometre transmission line in

the north of the state to unlock barriers to more than 2,000 MW of large

scale wind, solar and hydro projects, and create 5,000 jobs

The Queensland government announced the decision on the basis that it

is now cheaper to build new wind and solar than new coal plants

Windlab will be a major beneficiary of this government proposal as the

Company controls the 1,200 MW wind and solar park, Kennedy Phase II

PROJECT SUMMARY

Source: Queensland Government Department of Energy and Water Supply.

At 1,200 MW, Kennedy Energy Park Phase II is likely to be Australia’s largest wind farm project

FINANCIALS

2020WINDLAB LIMITED

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Financials

Historical and forecast profit and lossStrong historical and forecast revenue and EBITDA growth with a CAGR of 65% and 119% respectively between 1 January 2014 and 31 December 2017, including a growing stream of annuity cashflows coming from asset ownership and management

5,137

9,099

17,082

23,232

1,395 2,029

9,923

14,654

-

5,000

10,000

15,000

20,000

25,000

FY2014 FY2015 FY2016 FY2017 (F)

A$

'00

0

Revenue Operating EBITDA

The revenue forecast for FY2017 includes:

$4.0 million already received in April

2017 in relation to the Moyeng

portfolio, and $0.3 million received in

May in relation Greenwich

$10.3 million already received in

September 2017 in relation to the third

and final milestone payment for

Coopers Gap

$5.0 million to be received as a result of

the financial close for Kennedy Energy

Park Phase I

$3.7 million from annuity asset

management revenue and interests in

operating wind farms

FY = fiscal year end 31 December.

WINDLAB LIMITED 22

2017 Achievements

Sold project rights on 3 projects in South Africa

Commenced construction and completed erection of Kiata Wind Farm, Vic Aust.

Entered option agreement for the sale of Greenwich Wind Farm, Ohio

Entered JV with Globeleq for development of Mozambique portfolio

IPO of the company, raising A$50 million

Financial Close of AGL’s Cooper’s Gap Wind Farm – largest in Australia (453MW)

Identified and in process of securing 15 highly prospective and commercially competitive sites across Sub Saharan Africa

Added 5 early stage projects to Australian portfolio

Secured PPA and debt financing for Kennedy Energy Park, Phase I

WINDLAB LIMITED

Investment Thesis

Strong industry fundamentals

Management team with proven track record, extensive technical and commercial experience

WindScapeTM provides a distinct technological competitive advantage in wind farm site prospecting, design and optimisation resulting in less risk, higher certainty and repeatability

Extracting value from existing development pipeline

Diversified portfolio and project pipeline across multiple jurisdictions

History of strong profitability and growth, with earnings increasingly from recurring revenues (asset management and ownership / commercial interests in operating wind farms)

Large rapidly growing global market

APPENDICES

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Projects

Development pipeline – late stage

NAME LOCATION CAPACITY2DEVELOPMENT

APPROVAL ORPERMIT

OWNERSHIP

BEYONDFINANCIAL CLOSE

ASSET

MANAGEMENT

Kennedy Energy Park Phase I Queensland, Australia 60 MW

Lakeland Queensland, Australia 100 MW Underway

Greenwich Ohio, USA 60 MW x x

Verdigre Nebraska, USA 230 MW3 x x

Msenge Emoyeni Western Cape, South Africa 140 MW

Ishwati Emoyeni Karoo region, South Africa 140 MW

Umsinde Emoyeni (Phase I & II) Karoo region, South Africa 280 MW

Iziduli Emoyeni Karoo region, South Africa 82 MW

Nine projects with a combined capacity of 874 MW1 hold a development approval or permit.Additionally, the Lakeland project in Queensland has an approval underway and is expected to reach financial close in FY2018

Notes 1. Nine of the projects (including both phases of Umsinde Emoyeni) with a combined approved capacity of 1,090 MW are shown above (also see notes 2 and 3). Another project which

Windlab previously developed and sold has approval to increase installed capacity by 32 MW. Windlab will receive an ongoing royalty payment in relation to this extension 2. Likely maximum installed capacity3. Verdigre has an approved capacity of 80 MW, however is likely to be upgraded to a maximum capacity of 230 MW as shown in the table above

WINDLAB LIMITED 26

Financials

Profit and loss and balance sheet

SUMMARY PRO FORMA PROFIT AND LOSS

$’000 Pro Forma HistoricalPro Forma

Forecast

December year end FY2014 FY2015 FY2016 FY2017

Revenue 5,137 9,099 17,082 23,232

Gross margin 4,604 5,113 13,642 20,031

Operating EBITDA 1,395 2,029 9,923 14,654

Impairment of projects (241) (490) (4,400) -

EBITDA after significant items 1,154 1,539 5,523 14,654

EBIT 748 1,185 5,244 14,354

PBT 654 1,185 4,861 14,290

NPAT 688 1,193 3,267 9,301

NPAT (before significant items) 929 1,683 7,667 9,301

BALANCE SHEET

$’000

As at 31 December 2016 Audited Pro Forma

Assets

Current assets

Cash and cash equivalents 8,593 31,060

Trade and other receivables 1,040 1,040

Inventory 5,302 5,302

Other current assets 168 168

Total current assets 15,103 37,570

Non current assets

PPE 304 304

Investments 13,883 13,883

Inventory 5,103 5,422

Deferred tax asset – 761

Total non current assets 19,290 20,370

Total assets 34,393 57,940

Liabilities

Current liabilities

Trade and other payables 2,169 2,169

Provisions 904 904

Total current liabilities 3,073 3,073

Non current liabilities

Provisions 179 179

Borrowings 15,008 4,565

DTL 2,729 2,729

Total non current liabilities 17,916 7,437

Total liabilities 20,989 10,546

Net assets 13,404 47,394

Shareholders equity

Issued capital 19,016 54,440

Accumulated losses (7,485) (9,183)

Reserves 706 970

NCI 1,167 1,167

Total shareholder’s equity 13,404 47,394

WINDLAB LIMITED 27

Management team

ROGER PRICE

EXECUTIVE CHAIRMAN AND

CHIEF EXECUTIVE OFFICER

30 years’ of executive, technology, sales and extensive investment experience across multiple

industries internationally

Roger has been Chairman of Windlab since 2007, and CEO since 2011

Previously Chief Executive Officer of Reino International

Currently a director of Audinate Group Limited and a Partner and Director of Innovation

Capital

ROB FISHER

CHIEF OPERATING AND

FINANCIAL OFFICER

Rob has been Windlab’s CFO for the past five years, and now leads the finance, technical, and

asset management functions

Chartered Accountant with 15 years experience in senior finance roles with fast growing

companies in Australia and internationally including Project Financial Controller with an ASX

listed property developer

DR NATHAN STEGGEL

CO-FOUNDER AND TECHNICAL

DIRECTOR, BSC. MSC. PHD.

Nathan has over 15 years of wind industry experience

Previously post-doctoral fellow at leasing research institutes in the UK (EnFlo) and Australia

(CSIRO’s Wind Energy Research Unit). Nathan was the lead developer of WindScape

DR KEITH AYOTTE

CO-FOUNDER AND CHIEF

SCIENTIST, BSC, MSC. PHD.

Over 30 years’ of experience in the fields of meteorology, wind flow in complex terrain, and

computational fluid dynamics

Previously employed at Environment Canada, NCAR and CSIRO, three of the world's most

prestigious institutes for atmospheric research

PETER VENN

MANAGING DIRECTOR, AFRICA

Peter has 15 years’ of technology sales and commercial management experience

Prior to joining Windlab he was in charge of SAS Institute’s energy sector in the Middle East,

Africa & Asia Pacific

WINDLAB LIMITED 28

Board

ROGER PRICE

EXECUTIVE CHAIRMAN AND

CHIEF EXECUTIVE OFFICER

See previous page

JOSEPH O’BRIEN

INDEPENDENT NON-EXECUTIVE DIRECTOR

20 years’ experience within the energy-supply industry, spanning electricity supply across

infrastructure and trading markets

Previously CEO of Hill Michael

Currently serves as the Executive Chairman of VisIR, a specialist private-equity investor

PIPPA DOWNES


Over 25 years of experience in global financial services organisations

Previously Managing Director and Equity Partner at Goldman Sachs in Australia

Currently serves on the boards of the Infotrack Group, Sydney Olympic Park Authority and

ALE Property Group

CHARLES MACEK


Over 15 years’ experience on the boards of companies in diverse industries

Previously on the boards of both Wesfarmers and Telstra

Currently the chair of the boards of Vivid Technology Limited, chair of the Remuneration and

HR Committee of Vicinity Ltd., consultant to the Investment Committee of Unisuper Ltd., and a

Senior Corporate Advisor to the MMC group

JOHN COOPER


Over 10 years’ experience on the boards of companies in both executive and non-executive

roles in the engineering, mining and construction industries

Previously CEO and managing director of CMPS&F and non-executive director of Murray &

Roberts International

Currently a member of the board of Aurizon Holdings and Sydney Motorway Corporation.

Formerly a non-executive director of UGL Group

WINDLAB LIMITED 29

Projects

Australia

See notes on following page

Construction

Construction

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Projects

Africa and North America

Notes: 1. Early stage developments are not shown due to commercial sensitivity.2. Windlab is likely to retain a carried equity interest in this project upon financial close of between 15%

and 25% through the partial reinvestment of development margin received.3. Coopers Gap project is no longer owned by Windlab however ongoing technical wind services are

provided at the site, for which Windlab receives various milestone payments.

4. Windlab has entered into an option agreement to sell the Greenwich project for US$4 million, paid as success fees on financial close and commercial operation.

5. Verdigre is no longer owned by Windlab but Windlab retains a contractual right to success fees when the project reaches financial close and commercial operation.

6. WIndlab is likely to retain a carried equity interest in these projects upon financial close of between 12% and 20% through the partial reinvestment of development margin received.

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