A COMMUNITY OWNED, INDEPENDENT RENEWABLE POWER PRODUCER Disclaimer - - PowerPoint PPT Presentation

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A COMMUNITY OWNED, INDEPENDENT RENEWABLE POWER PRODUCER Disclaimer - - PowerPoint PPT Presentation

A COMMUNITY OWNED, INDEPENDENT RENEWABLE POWER PRODUCER Disclaimer Watts Wind Energy Inc. Important Notice: This presentation has been prepared by Watts Wind Energy Inc. ( Watts Wind ). Some of the information in this document has been


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A COMMUNITY OWNED, INDEPENDENT RENEWABLE POWER PRODUCER

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Disclaimer

Watts Wind Energy Inc. Important Notice: This presentation has been prepared by Watts Wind Energy Inc. (“Watts Wind”). Some of the information in this document has been

  • btained from sources which Watts Wind believes to be reliable, we do not represent or warrant its accuracy and such information may be

incomplete or condensed. This presentation may contain or refer to certain forward-looking statements relating, but not limited to, Watts Wind's expectations, intentions, plans and beliefs with respect to Watts Wind. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or equivalents or variations, including negative variations, of such words and phrases, or state that certain actions, events or results, "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. Forward-looking statements rely on certain underlying assumptions that, if not realized, can result in such forward-looking statements not being achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of Watts Wind to be materially different from the historical results or from any future results expressed or implied by such forward- looking statements. Although Watts Wind has attempted to identify important factors that could cause actual actions, events or results or cause actions, events or results not to be estimated or intended, there can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Other than as required by applicable Canadian securities laws, Watts Wind does not update or revise any such forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events. Accordingly, readers should not place undue reliance on forward-looking statements. The proposed investment structure in this Offering Document is complex and may not provide investors with the same rights, information and protections compared to other offerings. Potential security holders may not receive information from the investments made by the

  • Issuer. Investing under this offering will not provide investors with the same protections if the distribution was made using a prospectus.

This document may not be reproduced (in whole or in part) to any other person without the prior written permission of Watts Wind. THIS CEDIF OFFERING MAYBE A HIGH RISK INVESTMENT. THE CEDIF OFFERING IS MADE THROUGH AN OFFERING DOCUMENT, WHICH CAN BE OBTAINED FROM AN AUTHORIZED SALES AGENT OR FINDER, BY CONTACTING 902-482-0920 OR INVEST@WATTSWIND.COM. THIS OFFERING CONSTITUTES AN EXEMPT OFFERING OF THESE SECURITIES ONLY IN NOVA SCOTIA BY AUTHORIZED SALES AGENTS. INVESTORS SHOULD READ THE OFFERING DOCUMENT BEFORE MAKING AN INVESTMENT DECISION. WATTS WIND IS SUBJECT TO NUMEROUS RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST AS DESCRIBED IN THE OFFERING DOCUMENT AND INVESTORS SHOULD CAREFULLY READ AND CONSIDER SUCH RISK FACTORS AND POTENTIAL CONFLICTS OF INTEREST.

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Why Renewable Energy?

NS renewable energy threshold requirements:

  • 25 percent by 2015
  • 40 percent by 2020

Community feed-in tariff (“COMFIT”) program introduced to help achieve targets

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Watt Section (2011) 1.5 MW (1 WTG) Barrington (2015) 3.2 MW (2WTGS) New Glasgow (2015) 6.4 MW (4 WTGs) Wedgeport (2015) 1.7 MW (1 WTG) Ketch Harbour (2016) 4.9 MW (3 WTGs) Porters Lake (2016) 3.2 MW (2 WTGs)

Watts’ Current Operations

13 turbines erected across six sites

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Watts Wind Energy - Overview

  • Generating operating cash flow since March, 2011
  • Track record of consistent dividends
  • 14.2% and 10.2% projected average annual yield(1) over ten

and 20 years, respectively

  • Structured as a “CEDIF”(2) to provide Nova Scotians up to 65%

in personal tax credits(3)

  • Experienced board and management team

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Notes: 1) Assumes a top marginal tax rates for a Nova Scotia resident used and includes non-refundable provincial tax credits assuming an investor has sufficient taxes payable Additional conditions apply to the non-refundable tax credits. The 14.2% is comprised of cash distributions of 7.7% and 6.5% in non-fundable NS tax credits. 2) Community economic development investment fund 3) Tax credits are non-refundable provincial tax credits the applicability for which the Issuer and investor is subject to additional requirements.

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Securing Power Purchase Agreement Wind Resource Assessment Site Prospecting and Land Lease Negotiation Environmental Impact Screening Project Operation and Management

  • Prospecting for

suitable project sites which included finding the basis resources, including land, wind and a transmission market

  • Negotiating land

access agreements

  • Assessing the

environmental impacts such as wildlife, birds, bats, vegetation, ground and surface water, noise and visual impacts.

  • Measuring the wind

data at the project sites (typically using a meteorological tower (MET tower) and possibly a sodar

  • unit. (Land based

sodar units are typically used in conjunction with MET towers as a second source of wind speed data, useful in extrapolating 60m wind data to 80m turbine hub height).

  • Entering into a

PPA (typically with a utility) as part of a Request for Proposal process, a Feed- in-Tariff, such as the ComFIT, or some other process.

  • Procuring the wind

turbine(s).

  • Final interconnection

studies and entering into an interconnection agreement with the utility or systems

  • perator
  • Ongoing operations

and maintenance of the wind turbine(s).

  • Obtaining all

municipal and building permits.

  • Obtaining all

necessary debt and equity financing

  • Preparing the

engineering plans, specifications and contractor tendering documents

  • Contracting with

suppliers and subcontractors

  • Construction of the

balance of plant, include roads and power lines.

  • Installation of

turbines, including installing the foundation, raising the wind turbines, electrical connections, utility interconnection, etc.

Watts Does Not Bear the Risk of Speculative Development Activities…

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…it only invests in projects with 20 year contracts with NS Power Inc.

Project Construction

Speculative ‘Development’ Activities Watts Wind Activities

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Watts Wind Energy Inc.

(A Nova Scotia CEDIF company) Watt Section Wind LP New Glasgow – 4 turbines Barrington – 2 turbines Wedgeport – 1 turbine Watts Wind II LP

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Watt Section

  • 1 turbine

Ketch Harbour – 3 turbines Porter’s Lake – 2 turbines Watts Wind III LP Liverpool Wind Energy Storage Project Inc. Two turbines One RAES storage unit

Corporate Structure

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Revenue Projections

Highly predictable and stable revenues

  • 2,000,000

4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Projected 10 Year Revenue By Project Group

Liverpool Watts Wind II & III Watt Section

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9 $1.00 $1.00 $1.20 $1.30 $1.30 $- $0.20 $0.40 $0.60 $0.80 $1.00 $1.20 $1.40 $0 $500,000 $1,000,000 $1,500,000 $2,000,000 $2,500,000 $3,000,000 $3,500,000 $4,000,000 $4,500,000 $5,000,000 2010 2011 2012 2013 2014 2015 Cumulative Amount Raised Price/Share

Equity Raise History

More than $4.5 million invested to date from over 200 shareholders

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$0.00 $0.01 $0.02 $0.03 $0.04 $0.05 $0.06 $0.07 $0.08

F2011 F2012 F2013 F2014 F2015 2nd Half 1st Half

Cash dividends of $0.26 per share distributed to date

Dividend History

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11 $0.00 $10.00 $20.00 $30.00 $40.00

$50.00 $60.00 $70.00

Hypothetical Shareholder Benefits

F2015 dividend F2014 dividend F2013 dividend F2012 dividend F2011 dividend 2011 tax credit (1)

Up to 61% in Benefits in Past Five Years for a Hypothetical Investment of $100 in 2010

Notes: 1) Tax credits are non-refundable provincial tax credits the applicability for which the Issuer and the investor is subject to additional requirements.

Plus, an additional 20% tax credit(2) possible in March

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$50,000 Investment (non-RRSP)

  • $17,500

(35%) Nova Scotia Equity Tax Credit $32,500 Net Cost (non-RRSP)

  • $15,000

If new money to RRSP a deferral at the marginal tax rate (1) $17,500 Net Cost (RRSP)

  • $10,000

If held for ten years(2) (less discount for time value of money)

  • $5,000

If held for fifteen years(2) (less discount for time value of money) $2,500 Total cost of investment if held for fifteen years (less discount for time value of money and provided shares maintain their value)

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A $50k Investment Could Have a Hypothetical Net Cost of $2.5k, Assuming the Following:

(1) For illustration, a 30% marginal rate is used and the assumption is that there is sufficient RRSP room available. In addition, please note that this results in a tax deferral, not a tax credit. The above example may not be applicable to all investors. (2) The additional 20% and 10% non-refundable tax credits are subject to additional requirement s by the Issuer and the investor.

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Note: 1) Assumes a $10,000 investment at $1.40/share and top marginal tax rates for a Nova Scotia resident used and includes non-refundable provincial tax credits assuming an investor has sufficient taxes payable Additional conditions apply to the non-refundable tax credits. 2) The 10.2% is comprised of cash distributions of 7.7% and 6.5% in non-fundable NS tax credits.

For a $10,000 investment:

Financial Estimates – Watts Believes Average Annual Yield to Investors Will Be 14.2%(1) over Ten Years

13 Year Tax Credit Dividend Total 1 $ 3,500 $ 868 $ 4,368 2 $ 804 $ 804 3 $ 794 $ 794 4 $ 769 $ 769 5 $ 2,000 $ 745 $ 2,745 6 $ 593 $ 593 7 $ 744 $ 744 8 $ 786 $ 786 9 $ 786 $ 786 10 $ 1,000 $ 784 $ 1,784 Year Tax Credit Dividend Total 11 $ 803 $ 803 12 $ 1,077 $ 1,077 13 $ 524 $ 524 14 $ 509 $ 509 15 $ 504 $ 504 16 $ 505 $ 505 17 $ 491 $ 491 18 $ 476 $ 476 19 $ 521 $ 521 20 $ 794 $ 794 Totals: $ 6,500 $ 13,876 $ 20,376

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Note: 1) Assumes a $50,000 investment at $1.40/share and top marginal tax rates for a Nova Scotia resident used and includes non-refundable provincial tax credits assuming an investor has sufficient taxes payable Additional conditions apply to the non-refundable tax credits. The 14.2% is comprised of cash distributions of 7.7% and 6.5% in non-fundable NS tax credits.

14 Year Tax Credit Dividend Total 1 $17,500 $ 4,338 $ 21,838 2 $ 4,018 $ 4,018 3 $ 3,971 $ 3,971 4 $ 3,846 $ 3,846 5 $10,000 $ 3,724 $ 13,724 6 $ 2,963 $ 2,963 7 $ 3,722 $ 3,722 8 $ 3,929 $ 3,929 9 $ 3,928 $ 3,928 10 $5,000 $ 3,920 $ 8,920 Year Tax Credit Dividend Total 11 $ 4,015 $ 4,015 12 $ 5,385 $ 5,385 13 $ 2,619 $ 2,619 14 $ 2,547 $ 2,547 15 $ 2,521 $ 2,521 16 $ 2,523 $ 2,523 17 $ 2,454 $ 2,454 18 $ 2,382 $ 2,382 19 $ 2,604 $ 2,604 20 $ 3,969 $ 3,969 Totals: $ 32,500 $ 69,380 $ 101,880 For a $50,000 investment:

Financial Estimates – Watts Believes Average Annual Yield to Investors Will Be 14.2%(1) over Ten Years

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Name Function Experience David Regan, MBA

Non-executive chairman EVP, Corporate Development, DHX Media Ltd. Former management consultant with A.T. Kearney.

Stan Mason, P. Eng.

President President of Unify Energy with over 20 years of engineering and project management in the renewable energy sector.

Paul Pynn, P. Eng.

Vice-president President and founder, OneWind. Installs and maintains turbines for large wind farms. Installed, managed or supported in excess of 250 MW of wind power.

Michael Kinley, CA

CFO Former CFO of several public companies and former partner at KPMG.

Gordon Stevens, CFA Independent director

Former VP with Goldman Sachs and chartered accountant with Deloitte. Founder and president of the Uncommon Group.

Keith Abriel, CA, CFA Independent director

CFO of publicly listed DHX Media Ltd. Former CFO of Linear Gold and Senior Manager with PwC.

  • J. William Ritchie

Independent director

Angel investor, former director of Empire Company Ltd, Sobeys Inc. and co-founder of Scotia Bond Ltd.

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Experienced Team

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  • Mitigated risks
  • Diversified revenue streams from 13 turbines
  • Limited exposure to highly uncertain development activities
  • Preferred project returns
  • Long-term contracts
  • All projects benefit from 20 year NSPI contracts
  • Experienced team
  • Principals have installed and managed >100 MWs
  • Eight consecutive, semi-annual dividends
  • Governance
  • Experienced independent directors including a CA and two CFA’s
  • Directors have invested > $900k cash at same prices as outside investors

Summary

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Appendix

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New Glasgow Project – Tower Erection

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  • Civil engineering
  • Road construction
  • Foundation

Maryvale Project - Site Preparation*

*Project was supported by One Wind Services Inc. of which Watts Wind officers and directors Paul Pynn and Stan Mason are principal and director, respectively.

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Watt Section Project – Tower Shipment

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Watt Section Project – Tower Erection

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  • Turbine selection
  • Installation and grid connection
  • Commissioning

Watt Section Project – Turbine Installation

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How to Invest

If you are interested in investing please contact;

  • invest@wattswind.com
  • or call 902-482-0920