Investors Presentation
Today’s agenda 1 Audax Renovables: our growth story 2 What makes us special? 3 Our strategic roadmap for 2022 4 Conclusions 2
Today’s presenters José Elías – Founder, Chairman & Majority Shareholder Eduard Romeu – Deputy Chairman & CFO Anabel López – General Manager 3
Audax Renovables in a nutshell #1 energy supplier, uniquely positioned to lead the energy transition in Europe ✔ Poised to deliver ✔ ✔ ✔ Sound Privileged Leading throughout access to the financial independent international most efficient foundations supplier footprint source of energy in Iberia Revenue by region 2018 Supplied energy market +305k ~ € 1.0bn share in the Spanish SME International segment in 2018 (1) 24% customers revenue 1 +10 TWh 5% € 53m energy EBITDA sold Iberia 76% 3% +185 MW ~ € 1.0bn capacity market cap +320 MW Investment 3% BBB- (2) under grade development 4 Note: Operating and financial figures as of December 2018; (1) Based on volumes sold (MWh), considering only independent players |(2) Rating assigned by Axesor to Audax Renovables S.A.individual Source: Company, Red Eléctrica
Two key milestones which defined what Audax is today How we sell electricity The source of the electricity we sell 2013 2016 Spanish unemployment Spanish Risk premium (b.p.) Wind and Solar PV LCOE 26.1% (29%) (60%) 431 24.8% 280 293 151 21.4% 19.9% 2013 2018 2013 2018 2010 2011 2012 2013 2010 2011 2012 2013 Wind Solar PV Decreasing Spanish Pool price Acquisition of: 53.6 42.2 2011 2012 2013 2014 (185 MW) Socialised indexed tariff Secure an efficient source of energy 5 Source: European Commission, Bloomberg, OMIE
Unique positioning within the supply business Independent mid-sized players have been gaining market share from incumbents GOLDILOCKS POSITIONING: FUTURE WINNER OF THE ENERGY TRANSITION Traditional players Small players ✔ Customised solutions ✔ Strategy: defined focus on the most profitable customer segment and sourcing optimisation ✔ First mover in the PPA market ✔ Solid financials: Improving margins and profitability ✔ Rating: Healthy financial position (BBB-) More flexible Bigger 6
1 Audax Renovables: our growth story
Audax Renovables today A successful and disruptive alternative energy supplier Phase I Phase II Organic growth Internationalisation and inorganic growth ~ € 1.0bn Unieléctrica integration Buys 70.86% stake in Fersa Energías Market cap. (1) Signs the largest solar Renovables S.A. PV contract (PPA) in (currently Audax Europe Renovables, S.A.) for € 21m bond issue on Starts the construction of € 50m MARF a wind farm in Enters Polish market Panama (66MW) Enters Italian market ~ € 1.0bn through acquisition of with acquisition of Big Deltis Energia € 35m bond issuance 2018 revenues Energy Acquires Generiber 2018 2016 2017 2019 Audax Energía acquisition 2015 2014 10 TWh energy Acquires Dutch Merger of Audax Creates Audax 2013 sold in 2018 supplier MAIN Energie GmbH in Renovables and 2012 Energie Germany and starts Audax Energía gas supply business 185 MW (2) inst. Enters the Bond issuance 2009 Portuguese ( € 65m) Acquires customer capacity in market , our first portfolio from international 2018 Compagnia subsidiary Energetica Italiana (CEI) 320 MW solar José Elías acquired Orus Energía, S.L. PV pipeline 8 Source: Company; (1) As of 27/05/2019; (2) Excluding development in Panama
One of the most competitive energy supplier in Spain Audax will capitalise on the disruptive PV technology to source its electricity at a materially lower cost than its direct competitors on) Spanish electricity generation mix (2018) (1) Merit order to set pool price Price ( € /MWh) Traditional Demand ~10 TWh players 3% 3% 2% Spanish 14% 20% electricity Iberdrola, Pool price pool price Endesa, formation Naturgy 248 TWh based on a marginalist ~ 220 TWh 22% system 21% Supply 15% Solar PV Wind Nuclear Supplied Coal Gas Hydro energy Oil Other renewable Audax needs to source ~10 TWh a year, compared to ~220 TWh for the 3 large incumbents Audax can focus its sourcing strategy on disruptive PV technology (niche market player) Large incumbents forced to rely on the full spectrum of the existing technology mix Audax will therefore benefit from a significant competitive advantage to achieve faster its growth while improving its margin 9 Source: Red Eléctrica; (1) Gas includes CCGT and Co-generation, Other renewable includes Solar thermal and Other
A sustainable competitive advantage A flexible sourcing strategy in line with the technology and generation mix changes to secure a long-term competitive advantage Decreasing Pool price Estimated pool price vs. Audax’s sourcing strategy mitigants within Audax’s strategy: Pool Price 2018: € 64/MWh 1. PPA structure follows Pool Price (1) : Price a declining price € 54/MWh ( € /MWh) Short to mid -term volatility in curve power prices expected given 2. PPAs signed at phase out of older technology (partly) offset by growth of different moments ~ € 10-20/MWh renewables over time 3. Flexibility to transfer PPA to end customer 4. Always relies on cheapest technology to ensure the lowest Long-term pool price: cost of energy ~ € 30/MWh 5. Volume effect will Audax’s PPA pricing strategy dilute exposure to PPA in the long term 2040+ 2018 2019 10 Source: Company, OMIE; (1) January to April 2019 average
Key strategic advantage having anticipated the energy market transition Price Sound margin expansion through PPA contracts ( € /MWh) First mover Future PPA agreements are advantage in expected to further decrease our average PPA price the Spanish contributing to the PPA market that sustainability of our margin expansion in the long-term secures LT profitability & Selling competitive Price advantage vs. Av. PPA price PPA 1 peers Pool Price PPA 2 2020 2030 2019202020212022202320242025202620272028202920302031203220332034203520362037203820392040 Current margin Margin achieved through PPA strategy 11 Source: Company
2 What makes us special?
Our key achievements 1 Leading Spanish independent supplier for SMEs Seasoned management 5 2 First-mover advantage team with deep industry in the PPA market with a knowledge and strong unique positioning to commitment to the consolidate the market company Extensive experience in 4 3 wind and solar PV International expansion development, with operations in 8 construction, financing countries and operation 13
SMEs customer approach through value-added offers increasing profitability and loyalty Audax is focused on SME customers … … and indexed tariff segment Price remains fixed over the contract’s Higher profitability of SMEs vs. other customers duration Fixed tariff Pool price risk hedged through PPAs and derivatives Value added / Bespoke tariffs Pool price + fixed margin Higher market penetration in an environment Indexed of decreasing prices tariff Higher gross margin vs. industrial customers … Exported to international markets … and higher EBITDA margin vs. retail customers Customer pays flat monthly amounts until Flat since a leaner corporate structure is required tariff final of contract adjustment Audax’s customer portfolio 2018 (% sold TWh) Audax’s supply revenue by product type 2018 Flat tariff 1% Retail 14% 10 TWh € 949m SMEs 51% Fixed tariff 34% Large corporations Indexed tariff 65% 35% 14 Source: Company
First-mover advantage as an off-taker in the irreversible energy transition By 2022 two thirds of supplied energy will be covered by owned-asset or external-asset PPAs PPA contracted capacity (MWh) 2/3 Ideal partner for independent generators: Target supplied energy • Investment-grade rating with (BBB-) (1) covered by PPAs • Flexible off-taker able to negotiate ad-hoc conditions • Largest independent supplier offering sizeable contracts 1.7GW of PPA contracts with 20-year maturity : Trina 1/3 (300MW), JP Morgan (660MW) and Allianz (708MW) Sizeable PPA backlog with third parties and own solar PV developments FY19E FY20E FY21E FY22E Already secured or in the process of being secured Allianz Cox-Sonnedix Trina Close to signing Current wind farms PV development Target PPA signing 15 Source: Company; (1) Rating assigned by Axesor corresponding to Audax Renovables S.A.individual
Internationally scalable business model Domestic supply business International supply business (1) TOTAL 2009 2013 2014 2015 Start activity 2016 2017 Revenue € 723m € 225m € 949m 2018 4.6 5.4 10.1 TWh sold 2018 Rationale behind international investments Largest European market Strategy based on inorganic Poised to with solid growth growth replicate the c.24m additional connection Potential to achieve material strategy points following full liberalisation energy sales in the short term implemented in our core region when Key contributor to Entry with Deltis market international consolidation acquisition conditions Huge potential of indexed tariff Good fit with the group culture appear Replicate vertical integration High brand awareness in its market 16 Source: Company; (1) Excluding generation business revenue, but including Generiber’s (representation company)
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