HALF YEAR REPORT 2015
“Our mission is to be a leader in the creation of renewable energy, delivering complete solutions, working as a vertically integrated team to drive performance throughout the value chain while continuously delivering both commercial and utility scale power plants worldwide”
HALF YEAR REPORT 2015
Building Energy at a glance Building Energy is a global integrated independent renewable energy producer. Building Energy’s value proposition is to drive performance throughout the whole renewable energy downstream value chain, such as development, financing, construction and operation as well as owning and managing Solar PV, Wind, Biomass and Hydroelectric plants over the asset lifetime. Founded in 2010, Building Energy is one of most prominent Italian’s independent renewable energy power producers selling energy from 91MW of green power generation assets in South Africa, United States of America and Italy. Building Energy secured the construction of additional 255MW net capacity in four different technologies that are expected to reach the notice to proceed by the end of next year. Building Energy has in-‐house development, initial plant design, financing and operations capabilities and a perfect record of on time on budget project delivery; with a consolidated presence in Africa, America and Middle East the company has a significant number of generating assets for more than 2,100MW currently under development.
www.buildingenergy.it
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HALF YEAR REPORT 2015
Contents Highlights __________________________________________________________________________________________________ 3 Financial Summary ________________________________________________________________________________________ 4 Financial review by segment ______________________________________________________________________________ 6 Financial Statements _____________________________________________________________________________________ 10 Notes to the Interim Financial Statements ______________________________________________________________ 12
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HALF YEAR REPORT 2015
Highlights STRATEGIC HIGHLIGHTS -‐‑
Projects development in Near Notice to Proceed and Backlog phase reached 438MW.
-‐‑
In March 2015 we have been awarded preferred bidder by the South Africa Department of Energy in the fourth round of the REIPPPP of 138MW wind farm (Roggeveld) and 4.7MW hydroelectric plant (Krusivallei) for which the financial close is expected by the end of 2016.
-‐‑
Signed a MoU with NREA to build 100MW PV plant as part of the first wave of projects offered by the Egyptian Government under its feed-‐in tariff (FiT) program.
-‐‑
The Tocumen project in Panama (45MW Solar PV, fixed tilt located in proximity to Panama City International Airport) has received as of June 30th the final connection agreement by the local distribution company (ENSA), thus completing the permitting and licensing process. Preliminary works on site have been commissioned with Notice to Proceed expected by Q4 2015.
LOOKING AHEAD -‐‑
In July 2015 we signed off to the EPC Contractor (RES) the Notice to Proceed for the Cornell Geneva 2.8 MW Solar PV plant.
-‐‑
To support the strategic industrial plan in July an agreement has been signed with the pan-‐European fund Three Hills Capital Partners for the underwriting of a bond totaling Euro 30 million. The bond is listed on the MTF managed by Borsa Italiana, ExtraMot Pro professional segment.
-‐‑
In Serbia the biomass project in the Municipality of Krusevac (4MWe-‐20MWth) is in the process of getting the authorization to begin preliminary works on site, which are expected to start as of October 14th 2015.
-‐‑
In November we are going to participate to the round 4.5 of the REIPPPP presenting to the South African Department of Energy projects totaling 270MW in different technologies. In the United States we have been recently awarded preferred bidder for 16.8MW Solar PV in Annapolis, the largest photovoltaic plant ever built on a landfill.
-‐‑
During the fourth quarter we are expecting the financial close of the 16MW biomass plant in South Africa, 30MW wind farm in Iowa, 2.8MW PV plant for Cornell University and 10MW PV plant in Uganda.
Fabrizio Zago Chief Executive Officer September 30, 2015
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HALF YEAR REPORT 2015
Financial Summary Consolidated revenues of €6,580k, EBITDA of €(1,008)k and net loss of €(1,425)k. Compared to the previous period the increase in revenues and operating profit is mainly related to the connection of the Cornell University Snyder Road plant (as of September 2014), the effect of the full operational period for the O&M contract on Kathu 81 plant and the increase in intangible assets for capitalization of internal work.
KEY FIGURES € Thousand
H1 2015 (1)
Revenues and other income
H1 2014
6,580
5,027
EBITDA
(1,008)
(1,444)
Operating profit (EBIT)
(1,610)
(2,219)
Profit/(loss) before income tax
(1,064)
(1,845)
Profit/(loss) for the period
(1,425)
(1,654)
Building Energy Group profit/(loss)
(1,458)
(1,684)
33
30
Profit/(loss) to non-‐controlling interest EBITDA by segment
Power production
Operation & Maintenance
Development & EPC
Corporate
(2)
Total (3)
Total assets (3)
Equity book value (3)
Net financial position (4)
Net asset value
(2) (3) (4)
1,104
1,042
410
45
1,776
785
(4,297)
(3,315)
(1,008)
(1,444)
73,084
68,499
35,953
36,704
23,282
16,202
145,786
91.465
Notes
(1)
Consolidate revenues and other income are mainly driven by Power Production and capitalization for internal work. Revenues from other activities such as Development & EPC, are mainly related to the subsidiaries of the parent company and therefore eliminated in the consolidated financial statements. Corporate costs including eliminations for consolidation purposes. st Figures for 2014 as of December 31 , 2014 st Net Asset Value calculated on the basis of the calculation methodology set out in the Terms and Conditions of the Bond issued as of July 31 , 2015. The Net th Asset Value will be updated on a quarterly basis. The Net Asset Value as of June 30 2014 is shown for illustrative and comparison purposes only. It has st been calculated by applying to the projects pipeline existing as of that date the same criteria and parameters applied to the figure calculated as of July 31 , 2015.
These interim consolidated financial statements are prepared in accordance with international accounting standard (IAS/IFRS), and are not different from the those used in the preparation of the annual consolidated financial statement as mentioned in the group’s explanatory notes for the 2014 Consolidated Financial statement (pages 8-‐ 26), to which therefore please refer.
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HALF YEAR REPORT 2015
st
With regards of the consolidation perimeter as of December 31 2014, as shown at pages 48-‐50 of group’s explanatory notes for the 2014 Consolidated Financial statement, the following changes has occurred: (i) Be Renewable SRL and Be. Ro. Solar 1 have been liquidated and therefore excluded from the consolidation perimeter; (ii) Building Energy Development Latino America is fully consolidated since 100% controlled by Building Energy S.p.A. from June 2015. The preparation of the interim consolidated financial statements in conformity with international accounting standard requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. th
th
The interim Financial Report as of June 30 2015 and June 30 2014 have not been audited.
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HALF YEAR REPORT 2015
Financial review by segment Building Energy is reporting on the following business segment: Power Production, Operation and Maintenance (O&M), Development & EPC, Corporate and Elimination. The purpose of the segment report is to provide a comprehensive set of information on the profitability of the activities of the individual segments in order to present revenues and margins of development, construction, operation and maintenance services of controlling entities that are eliminated in the group consolidation process.
SEGMENT FINANCIALS YTD 2015 POWER PRODUCTION(1)
OPERATION & MAINTENANCE(1)
DEVELOPMENT & EPC(1)
CORPORATE(1)
ELIMINATION(1)
TOTAL
Revenues
1,409
789
4,580
359
(557)
6,580
Costs of Sales
(305)
(379)
(2,804)
(599)
154
(3,933)
(4,057)
403
(3,654)
1,104
410
1,776
(4,297)
0
(1,008)
€ Thousand
G&A expenses EBITDA
SEGMENT FINANCIALS YTD 2014 POWER PRODUCTION(1)
OPERATION & MAINTENANCE(1)
DEVELOPMENT & EPC(1)
CORPORATE(1)
ELIMINATION(1)
TOTAL
Revenues
1,308
375
3,642
490
(787)
5,027
Costs of Sales
(266)
(330)
(2,857)
(524)
521
(3,456)
(3,118)
103
(3,015)
1,042
45
(3,152)
(163)
€ Thousand
G&A expenses EBITDA
(1)
785
(1,444)
Figures include I/C and THP balances
POWER PRODUCTION Power production totaled 5,734 MWh in the first half 2015, up from 4,529 MWh in the same period last year. The increase is mainly due to Cornell Snyder Road Solar PV plant, connected in September 2014: 1,200 MWh. Operating revenues of Power Production segment reached €1,409k, with an increase of €101k compared to the same period of previous year (+8%). Operating expenses amounted at €(305)k, up from €(266)k in the previous period (+15%). EBITDA reached €1,104k, with an increase of 6%. EBITDA margin decrease from 80% in YTD 2014 to 78% in YTD 2015, mainly due to change in Italian change in law – decreto spalma-‐incentivi -‐ that affects revenues from Italian Solar plants.
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HALF YEAR REPORT 2015
OPERATION & MAINTENANCE Operation and Maintenance Revenues totaled €789k, up from €375k in the same period of the previous year, due to O&M services provided by the group to Guma-‐BE (O&M contractor of Kathu 81 Solar plant). Operating expenses increase from €(330)k in YTD 2014 to €(379)k in YTD 2015. th
As of June 30 , 2015 the group has contract for approx. 111 MW (81 MW in South Africa, 27.5 MW in Europe and 2.5 MW in the USA) generating an EBITDA of €410k.
DEVELOPMENT & EPC Development and EPC Revenues amounted to €4,580k, up from €3,642k in YTD 2014. The increase is mainly due to the group decision of rebilling indirect costs together with personnel and direct costs in order to provide a fair representation of costs and revenues correlation of the development activity in accordance with the transfer price st best practice, as reported in the audited Financial Statement at December 31 2014. Operating expenses totaled €(2,804)k, comparable with the same period of previous year.
PROJECTS STATUS This section is intended to represent Building Energy‘s main developing projects. The aim is to provide a high level insight on group’s future outlook in the renewable energy market. Projects under development depending on their status are categorized as in Operation, Near Notice to Proceed, Backlog and Pipeline. Minimum requirements for a project to be included in the Near Notice to Proceed are: (i) in public tender markets, projects reached the awarding of preferred bidder status and/or secured financing; (ii) in regulated markets, projects needs have obtained main permits (i.e. EIA) and/or secured PPAs agreements and/or secured financing. Near Notice to Proceed projects with a secured offtake agreement and financing have a probability of realization higher than 90%. To be included in Backlog, projects needs to have reached bid awaiting status and/or have be shortlisted in case of public tender markets; while in regulated and merchant markets, Backlog projects needs to have obtained a positive outcome from the connection identification and/or have undertaken the land optioning and/or the financial model can assure the return threshold. The remaining part of the projects under development are included in the Pipeline in case of a positive result from a preliminary resource availability screening and/or have initiated the obtaining permitting process. th
The following table summarizes the status of the projects as of June 30 2015 in comparison with the same period of last year.
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HALF YEAR REPORT 2015
PROJECT STATUS
(1) (2)
MW(1)
H12014(1)
In Operation
91
89
Near Notice to Proceed
255
18
Backlog
183
182
Pipeline
1,638
1,470
H1 2015
MW do not reflect group ownership of projects. Status consistent with projects at reporting date.
Brief descripmon of Near Nomce to Proceed projects th
As of June 30 2015, the Company has identified eight projects to be classified as Near Notice to Proceed, for a total capacity of 255 MW of which 169 MW in the Africa region, 41 MW in the North America region and 45 MW in the Central and Latino America region. Africa th
On November 4 2013 in Round 3 of the South African Renewable Energy IPP Procurement Program (REIPPPP) the Mkuze 16 MW biomass project has been awarded preferred bidder. Project’s financial close is expected for Q4 2015 starting operation in 2017. th
In addition to Mkuze project, Building Energy has been announced preferred bidder on April 16 2015 in Bid Window 4 of the REIPPPP in South Africa of two projects totaling 143 MW (namely Roggeveld 138 MW wind and Kruisvallei 4.7 MW hydro projects). Financial closes are expected by the end of 2016. th
Moreover on November 14 2014, the Investment Committee of the GET FiT Solar Facility Program in Uganda has designated the JV amongst Building Energy and Simba Telecom as preferred bidder for the Tororo North 10 MW solar power project. Project’s financial close is expected for Q4 2015 starting operation in 2016. North America Following the construction of the first Building Energy’s owned 2 MW US solar power project (Snyder Road) at Cornell University campus in New York, the company has been successfully bidding two other solar projects under the NYSERDA renewable energy incentive program. Cornell Geneva and Cornell Ellis Tract solar power projects with an installed capacity of 3 and 8 MW respectively, have secured a PPA with Cornell University. In May 2015, Building Energy has secured the PPA agreement with Iowa local utility affiliate of Alliant for its 30 MW wind plant project Optimum Wind (Iowa). The fully authorized power plant, is thus expecting financial close and start of construction for Q4 2015 with COD by 2016 end.
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HALF YEAR REPORT 2015
Central and Latino America In Panama, the Tocumen project 45 solar PV located next to Panama City International Airport has received the final connection agreement by the local distribution company (ENSA), thus completing the permitting and licensing process. Preliminary works on site have been commissioned with NTP expected by Q4 2015.
CORPORATE AND ELIMINATIONS Corporate and Elimination EBITDA decrease from €(3,315)k in YTD 2014 to €(4,297)k in first half FY 2015, mainly due to increase in G&A expenses (+30%).
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HALF YEAR REPORT 2015
Financial Statements INTERIM CONSOLIDATED PROFIT AND LOSS STATEMENT PROFIT AND LOSS STATEMENT € Thousand
Revenues Other operating revenues Increase in intangible assets for capitalization of internal work Raw materials, semi-‐finished and finished products
NOTES
H1 2015
H1 2014
(1)
2,109
2,682
359
490
(2)
4,112
1,856
(26)
(40)
(3)
(4,306)
(3,335)
Personnel
(3,091)
(2,751)
Other operating costs
(165)
(345)
Depreciation, amortization and provisions
(602)
(775)
Operating profit (EBIT)
(1,610)
(2,219)
Financial income and charges
608
(648)
Share of profit from participating interest valued by the equity method
(63)
1,023
Profit/(loss) before tax
(1,064)
(1,845)
Income tax
(361)
191
Profit/(loss) for the period
(1,425)
(1,654)
Services
Profit/(loss) attributable to:
Equity holders of the parent
(1,458)
(1,683)
Non-‐controlling interest
33
30
(1,425)
(1,654)
The interim financial information has not been audited
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HALF YEAR REPORT 2015
INTERIM CONSOLIDATED BALANCE SHEET STATEMENT BALANCE SHEET € Thousand
NOTES
Property, plants and equipment
H1 2015
FY 2014
19,396
19,577
(4)
18,752
14,105
400 13,285
400 13,959
Deferred taxes Other non-‐‑current assets
(5)
1,524 11,187
1,428 8,891
Total non-‐‑current assets Inventories
64,544 96
58,360 96
Trade and other receivables Current financial assets
(6)
1,856 52
991 204
Other current assets Accruals and prepayments
1,210 2,507
1,182 1,903
Tax receivables Cash and cash equivalents
(7)
1,771 1,048
2,208 3,555
8,540 73,084
10,139 68,499
Intangible assets Goodwill Investments valued by the equity method
Total current assets TOTAL ASSETS
12,000 17,020
12,000 17,020
Share capital Share premium reserves Reserves and retained earnings
6,718
8,853
Profit/(loss) of the period
(1,458)
(2,344)
TOTAL GROUP SHAREHOLDERS’S EQUITY
34,280
35,529
Equity of non-‐‑controlling interest Profit/(loss) of non-‐‑controlling interest
1,640 33
1,251 (76)
TOTAL EQUITY Debt towards banks and other lenders
(8)
35,953 17,118
36,704 14,743
73 553
0 514
Deferred tax Staff related funds
Provisions for risks
166
223
Total non-‐‑current liabilities
17,910
15,480
Trade and other payables
6,831
6,645
Tax liabilities
(9)
2,460
1,746
Debits towards banks and other lenders Accruals and deferrals
(8)
7,139 365
5,014 434
Other current liabilities Total current liabilities
2,425 19,220
2,476 16,315
TOTAL LIABILITIES TOTAL LIBILITIES AND EQUITY
37,130 73,084
31,795 68,499
The interim financial information has not been audited
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HALF YEAR REPORT 2015
Notes to the Interim Financial Statements NOTE 1
REVENUES YTD 2014: €2,682K; YTD 2015 €2,109K (€-‐573K)
Year to date revenues from third parties are €2,109k of which: th
-‐ Energy sales: €1,409k (YTD2014: €1,308k). As of June 30 , 2015 the group has 6 Solar PV plants in operation for a total of 10MW – 7.5MW in Italy and 2.5MW at the Cornell University. The contribution of the 2.5MW Solar PV plant at Cornell University -‐ connected in October 2014 – of €321k has been offset by the reduction of the incentives to the Italian plants that generated revenues for €1,088k (compared with €1,296k YTD 2014). The so st called “decreto spalma-‐incentivi” reduced the incentives by 8% starting from January 1 , in addition to the reduction of the energy sale price (RID); th -‐ O&M revenues: €650k (YTD 2014: k€ 242). As of June 30 , 2015 the group has contract with third parties for approx. 103.5 MW (81MW in South Africa, 20MW in Europe and 2,5MW in the USA) -‐ EPC: €35k (YTD 2014: €6,936k); -‐ Other minor: €15k. The main difference compared to the same period of last year are related to the reduction in the EPC revenues due to the completion of the construction of the Kathu 81 projects in FY 2014.
NOTE 2
INCREASE IN ASSETS FOR INTERNAL WORK YTD 2014: €1,856K; YTD 2015: €4,112K (€2,256K)
The increase in intangible assets for capitalization of internal work is higher than that recorded during the first half of 2014 because they are also including part of indirect costs, which the rollover was not yet reflected in the final balance of the first half of 2014. As for the breakdown by nature, € 3,676k are related to the capitalization of personnel €436k to the capitalization of external costs related to projects under development.
NOTE 3
SERVICES YTD 2014: €3.335K; YTD 2015 €4.306K (€971K)
Below is the breakdown of costs for services to the first half of 2015: -‐ -‐ -‐ -‐ -‐ -‐ -‐ -‐
O&M consultancy services: € 261k; IPP consultancy services: € 70k; EPC consultancy services: €9k; Development technical consultancy services € 421k; Long term car rental: € 156k; Insurance for the personnel: € 108k; Rent for Expat personnel apartments: € 109k; Board of Directors: € 610k;
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HALF YEAR REPORT 2015
-‐ -‐ -‐ -‐ -‐
Facilities, Telecommunication & IT: € 351k; Travel expenses: €793k; General and administrative expenses (incl. banking commission): € 393k Professional consultancy fees (incl. legal, accounting and audit): k€ 722; Marketing: € 303k.
The significant decrease compared to the balance in the same period of last year is due to the completion of the Kathu project, which took place in August 2014.
NOTE 4
INTANGIBLE ASSETS FY 2014: €14,105K; YTD 2015 €18,752K (€4,647K)
The increase of €4,647k compared to the FY 2014 is due mainly to continue project developments occurred during the first half of the year in particular on project which are getting close to receive the Notice to Proceed or are included in the group Backlog of project attributing a 90% probability to reach the NTP status. The geographical distribution of the investments in developments included in the intangible assets Year to Date is the following: -‐ -‐ -‐ -‐
Africa: €9,951k America: €6,864k; Asia e Far East: €311k; Europe: €1,477k.
It’s worth notice that in the second half of 2015 the financial close of five projects is expected (two in the USA, one in South Africa, one in Serbia and one in Uganda)
NOTE 5
OTHER NON CURRENT ASSETS FY 2014: €8,891K; YTD 2015 €11,187K (€2,296)
The increase in other non-‐current assets is mainly due to: -‐ € 1,424k for the recognition of a receivable from associated company which in 2014 was not consolidated with the integral method; -‐ €590k as increase in receivables due from REISA which is not consolidated; The balance YTD is substantially composed as follows: -‐ Financial receivables from non-‐consolidated companies: €7,219k; -‐ Cash collateral to RMB of €1,084k (as further guarantee to the bid bond related to the project awarded in round 4 of the South African REIPPPP); -‐ Costs incurred to obtain financing in the US and deferred pro rata for € 297k; -‐ Cash collateral of €951k to Banca Popolare di Sondrio to guarantee the performance bond of the O&M contract between Guma-‐Building and REISA; -‐ Advance payments and deposits for € 785k. In total the group has cash collateralized guaranties for a total amount of €2,035 YTD.
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HALF YEAR REPORT 2015
NOTE 6
TRADE AND OTHER RECEIVEBLES FY 2014: €991; YTD €1,856 (€865)
The balance breakdown is as follow: -‐ -‐ -‐ -‐ -‐
Receivables from electricity sales in Italy: €590k Receivables from electricity sales in USA: € 239k Receivables for O&M works in Italy: €141k; Receivables for O&M works in South Africa: € 341k Other receivables for consultancy and management and EPC services to other associated companies not consolidated: € 545k
NOTE 7
CASH AND CASH EQUIVALENT FY 2014: €3,555; YTD €1,048 (€-‐2,507K)
The YTD balance of € 362 k is denominated in Euro and is related to the accounts of Building Energy S.p.A. and its controlling entities; while the equivalent of € 686 resulting from the conversion of foreign currencies such as USD for € 399k mainly related to the activities of Building Energy Holding US and RAND for € 269k mainly related to the activities of Building Energy South Africa.
NOTE 8
DEBTS TOWARDS BANKS AND OTHER LENDERS FY 2014: €19,757; YTD 2015 €24,257 (€4,500K)
The increase in the period, before currency adjustments for the debts to banks originally denominated in currencies other than the euro and of the rental payments to the leasing companies financing the plants, is mainly due to the following changes: -‐ Increase in medium/long term debt of € 2,450k obtained by the parent company Solar NRG bearing the annual interest rate of 7%; -‐ Increase in debts towards banks within 12 months of € 2,067k, of which € 700k for advance invoices and € 1,250 of short-‐term loans. The composition of the balance is as follows: -‐ -‐€ 13,903k: debt to leasing companies (of which €13,530k in the medium/long-‐term and €373k short-‐term); -‐ Debts to other lenders of €3,850k of which €2,450k towards the controlling shareholder Solar NRG S.p.A. and €1,400 towards Siron S.p.A.; -‐ Due to banks for mortgages: €2,290k (including €638k over 12 months and €1,652 k within one year) -‐ Other short-‐term debt to banks for € 4,214k. www.buildingenergy.it The Board of Directors of Building Energy S.p.A. th
Milan, September 30 , 2015
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HALF YEAR REPORT 2015
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