COMPANY PRESENTATION. The Nordic Renewable Energy Conference Oslo, 28 May CEO Ole Kristian Sivertsen

Transcription

1 COMPANY PRESENTATION The Nordic Renewable Energy Conference Oslo, 28 May 2009 CEO Ole Kristian Sivertsen

2 Disclaimer This Presentation has been produced by Umoe BioEnergy ASA (the Company ), solely for information purposes. To the best of the knowledge of the Company and its board of directors, the information contained in this Presentation is in all material respect in accordance with the facts as of the date hereof, and contains no material omissions likely to affect its import. However, no representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein. This Presentation contains information obtained from third parties. Such information has been accurately reproduced and, as far as the Company is aware and able to ascertain from the information published by that third party, no facts have been omitted that would render the reproduced information to be inaccurate or misleading. This document contains certain forward-looking statements relating to the business, financial performance and results of the Company and/or the industry in which it operates. Forward-looking statements concern future circumstances and results and other statements that are not historical facts, sometimes identified by the words believes, expects, predicts, intends, projects, plans, estimates, aims, foresees, anticipates, targets, and similar expressions. The forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources are solely opinions and forecasts which are subject to risks, uncertainties and other factors that may cause actual events to differ materially from any anticipated development. None of the Company or any of their parent or subsidiary undertakings or any such person s officers or employees provides any assurance that the assumptions underlying such forward-looking statements are free from errors nor does any of them accept any responsibility for the future accuracy of the opinions expressed in this Presentation or the actual occurrence of the forecasted developments. The Company assumes no obligation, except as required by law, to update any forward-looking statements or to conform these forward-looking statements to our actual results. AN INVESTMENT IN THE COMPANY INVOLVES RISK, AND SEVERAL FACTORS COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS THAT MAY BE EXPRESSED OR IMPLIED BY STATEMENTS AND INFORMATION IN THIS PRESENTATION, INCLUDING, AMONG OTHERS, RISKS OR UNCERTAINTIES ASSOCIATED WITH THE COMPANY S BUSINESS, SEGMENTS, DEVELOPMENT, GROWTH MANAGEMENT, FINANCING, MARKET ACCEPTANCE AND RELATIONS WITH CUSTOMERS, AND, MORE GENERALLY, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN DOMESTIC AND FOREIGN LAWS AND REGULATIONS, TAXES, CHANGES IN COMPETITION AND PRICING ENVIRONMENTS, FLUCTUATIONS IN CURRENCY EXCHANGE RATES AND INTEREST RATES AND OTHER FACTORS (SEE ALSO RISK FACTORS INCLUEDED IN THIS PRESENTATION). SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALISE, OR SHOULD UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY FROM THOSE DESCRIBED IN THIS PRESENTATION. THE COMPANY DOES NOT INTEND, AND DOES NOT ASSUME ANY OBLIGATION, TO UPDATE OR CORRECT THE INFORMATION INCLUDED IN THIS PRESENTATION. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the Company or any of their parent or subsidiary undertakings or any such person s officers or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. By attending or receiving this Presentation you acknowledge that you will be solely responsible for your own assessment of the market and the market position of the Company and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company s business. This Presentation and the information contained herein do not constitute an offer of securities for sale in the United States and are not for publication or distribution to U.S.persons (within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the Securities Act )) 2

3 Content 1. Project Overview 2. Project Description 3. Market and Prices 4. Financial Structure 5. Key investment considerations 6. Appendix 3

4 Umoe BioEnergy An integrated bioethanol company Produces low cost, sustainable bioethanol from sugar cane Land and integrated agroindustrial operations in the State of Sao Paulo, Brazil Unique production environment: Vast land areas; favourable climate; well established industry State-of-the art, highly mechanized agricultural operations Two industrial production sites Production is expected to reach 230,000 m3 of hydrous ethanol in 2009 Employs more than 1,900 people Bioethanol + Power LAND RESERVES AGRICULTURAL OPERATIONS INDUSTRIAL OPERATIONS SALES 4

5 Why bioethanol from sugar cane in Brazil? Max energy- and climate benefit per invested amount One energy unit as production input provide eight energy units ouput. 70 to 90 percent reduction in CO2 compared to fossil fuel Efficient use of land areas Economically competitive at oil prices above USD 40 /brl (before CO2 tax) No conflict with food production, rain forest, biological diversity or water access Full tracability Renewable energy and cleaner fuel available now with immediate climate effect Established local market with growth capacity to meet internasjonal demand Producers of small and large motorbikes, cars, trucks and buses are focused bioetanol together with hybrid el. Solutions Governments are increasingly interested but with care for sustainability criterias. 5

6 Total Project Overview Technical Scope 2 vertically integrated hydrous ethanol plants million tons per year 50,000 ha of sugarcane (90% own) 80 MW cogeneration plant Financing structure Project costs: R$ 905 million Debt / Equity at completion: 30% / 70% Securing BNDES Financing: - R$ 267 MM [R$300 MM] - Direto with bank guarantee Marketing strategy High ratio of contracted ethanol sales (70%) - Local contracts of 1-3 years - Seeking international long term contracts - Focus on big players Contracted power sales (10 years) Competitive Positioning Expansion opportunities in the region Power sales (~ R$ 42 MM per year) ~ 90% mechanical harvesting State of the art technology and logistics March 2007 Construction Start 2.9 million tons April 2009 Q H Q Financial close for Cogen financing Start of power sales 3.6 million tons 6

7 The Paranapanema Project current status Industrial Complex Works 1 Remodeled and expanded destillery in full production WORKS 1 - NARANDIBA WORKS 2 - SANDOVALINA Industrial Complex Works 2 Greenfield mill constructed close to Works 1 Delivered by leading Brazilian industrial group Ramp up production to full capacity in Q Securing feedstock from high yield arable land Project designed to own 85% of feedstock need Arable land secured with ownership and long-term lease contracts 7

8 Sponsorship structure UMOE Group Others 85.56% 14.44% UMOE BioEnergy Norway Christiania Bioenergia Participações S.A. Brazil Destilaria Paranapanema S.A. June 2007: UMOE takes a 18% share in the Project May 2008: UMOE acquires control of the Project through an equity issue November 2008: UMOE becomes the main shareholder of the Project. Umoe BioEnergy is born 8

9 Content 1. Project Overview 2. Project Description 3. Market and Prices 4. Financial Structure 5. Key investment considerations 6. Appendix 9

10 Strategic location Available land for expansion Access to main export corridors as ports of Santos and Paranaguá Proximity to main domestic market Source: Company s management 10

11 Location of the Project Map of Paranapanema region Map of Brazil Unit II Unit I Located in the Western São Paulo state region: 2,500 km south of the Amazon Large areas of unused degraded and pasture lands: does not displace any agricultural land 11

12 Favorable zoning for expansion São Paulo State Agricultural zoning Project Project Region Source: Unica Hectares Total Area Available for sugarcane 108,936 Area in competition with other plants 45,793 Net Area Available for the Project 63,143 Required by the Project 16,524 Source: RPA São Paulo State offers rich soil, high productivity and good climate conditions The Project region offers strong potential for expansion: Defined as strategic for growth of sugarcane by the Government of São Paulo No zoning restrictions against sugar cane expansion, as in many concentrated sugarcane districts of São Paulo Optimal topography for mechanised agricultural operations 12

13 Agricultural complex and Infrastructure Total Project land area will reach 50,000 ha 33,000 ha already contracted as of December 2008 Contracts signed for 2 cycles ( 12 years) 27,000 ha already planted and to be harvested in 2009/2010 Total agricultural capex : R$ 203 million 58% completed / R$ 117 million invested R$ 85 million still to be invested until April 2011 Idea/RPA, a reputable consultant, reviewed and validated agricultural assumptions: Land availability, average radius (25km) and lease rates Land productivity and sugarcane quality (TRS, Fiber content) Capex costs (Planting, reform, infrastructure, equipment fleet) Operating costs (Harvest/CLT, Tillering/Cana Soca, Administrative) Timelines and schedules (planting, harvest, reform). 13

14 Industrial Mills and Cogeneration Unit Unit I Unit II Crushing Capacity (Millions tons per year) Ethanol production capacity (Millions litres per year) Yields (in liters/ton) Harvest period (Days) Power sold to the grid (GWh) Mechanical Completion Sep Nov Start of commercial operations Oct Apr First crop season at full capacity Start of power sales - H

15 Industrial Mills and Cogeneration Unit Total industrial capex of R$ 496 million 63% completed / R$ 315 million invested R$ 188 million still to be invested until April 2011 for expansion and cogeneration Fourteam, a reputable consultant, reviewed and validated industrial assumptions: Technology used and design Energy balance and cogeneration exports Industrial yields Capex plan (including storage and infrastructure) and timetable Industrial operating and maintenance costs (fixed and variable) 15

16 Competitive Advantages Umoe BioEnergy Industry average Benefit Power sales Yes (state of the art technology) 40 / 370 mills Increased revenues with very reduced Opex / resource efficiency Controlled Cane Supply Average distance from land to mills 100% 73% Security of feedstock 25 km 36 km Reduced transportation costs Mechanical Harvest >90% 50% Costs, productivity, environment Land productivity 81,5 t / ha 79 t / ha Less planting area / cost Total Recoverable Sugars (ATR) kg / t 136 kg / t Increased final product manufactured / Lower Unit Production cost Source: BNP Paribas, SP 1 6

17 Content 1. Project Overview 2. Project Description 3. Market and Prices 4. Financial Structure 5. Key investment considerations 6. Appendix 17

18 In Million Metric tons Ethanol Market Strong domestic demand from increasing fleet of flex fuel vehicles +34% and + 40% progression in ethanol sales in 2008 and 2007 respectively Supply and demand balance is comfortable despite current crisis Domestic demand remains strong Number of projects being postponed Export of ethanol are likely to be significantly reduced in 2009/2010 Car sales Supply & Demand balance 300, , , , ,000 50,000 1,400 1,200 1, Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 - FLEX FUEL GASOLINE DIESEL Sugar Cane demand Cane demand for hydrous Crushing capacity Source: BNP Paribas Source: DATAGRO 18

19 BRL per m3 Hydrous Ethanol Price Considerations Hydrous ethanol price is typically influenced by domestic gasoline price, seasonality, sugar price Neverthless, ethanol price cannot remain below industry production cost (768R$ as of December 2008 per Datagro) for a long period of time Datagro s Price projection assumptions: Short/medium term: industry production costs Long term: derived from international crude oil price 1, Management case Breakeven for the Project DATAGRO

20 Content 1. Project Overview 2. Project Description 3. Market and Prices 4. Financial Structure 5. Key investment considerations 6. Appendix 20

21 Uses and Sources From 2008 to February 2011 USES Million BRL % SOURCES Million BRL % Industrial Capex % Equity % Agricultural Capex % Cash Flow from Op % Other Capex 4.7 1% Financial expenses % Debt % Others % Total % Total % From April 2009 to February 2011 USES Million BRL % SOURCES Million BRL % Industrial Capex % Equity % Agricultural Capex % Cash Flow from Op % Other Capex 1.1 0% Financial expenses % Debt % Others % Total % Total % 21

22 Content 1. Project Overview 2. Project Description 3. Market and Prices 4. Financial Structure 5. Key investment considerations 6. Appendix 22

23 Key Investment Considerations The two mills will be operating at 2.9 million tons crushing capacity from June 2009 Application of the best in class industry practice and governance Cogeneration Mechanical harvesting 90% of own sugar cane The Project was validated by 3 highly reputable independent consultants Technical Agricultural Market Very conservative capital structure 70% equity after completion of expansion and cogeneration Highly committed main sponsor Market conditions difficult short term, but expected to improve from

24 Experiences Project specific Agressive and poor initial project planning Project execution challenges and delays Lack of financial control and planning in first 12 months Lack of adherence to required licenses and permits, end underestimated license complexity and timeline Poor project quality control at outset 24

25 Experiences General framework and conditions Generally well regulated Strengthened regulations and permits environment and social responsibility focus Rules not always well enforced and policed lead to unbalanced conditions and requirements across country Bureaucracy is a huge time and effort cost to industries Unpredictable tax regime Sugar industry cleaning up still required to secure 100% stamp of sustainability Easy to differentiate Umoe BioEnergy from industry average 25

26 Content 1. Project Overview 2. Project Description 3. Market and Prices 4. Financial Structure 5. Key investment considerations 6. Appendix 26

27 Management team Ole Kristian Sivertsen CEO Sivertsen has been Group Chief Financial Officer of Umoe since He is on the board of Umoe Shipping AS, Umoe Industri AS and Umoe Invest AS, and has held a number of senior corporate finance positions in Aker Kværner as well as in I.M. Skaugen, Finansbanken and Den norske Creditbank Silverio Totaro Garbin Industrial and Engineering Officer Garbin has over 20 years of experience in managing and marketing a diversity of projects, both large-scale and highcomplexity, in the Engineering, Civil Construction, Mining, Chemical, Power and Telecommunication sectors working for market leading companies - Bunge, Promon, Turner. Significant results as to profitability, productivity and quality in the developed projects Ole Kristian Sivertsen, CEO Paulino Raphael Neto Supply Chain Officer International exposure in Asia, Europe and North America. Mechanical engineer and specialized in supply-chain management, he worked in national and international groups as Procter Gamble, Schlumberger, Diageo and the national conglomerate Votorantim. Broad relationship with the market, full command of supply chain techniques and best practices applications Alexandre Fontoura Sales and Marketing Officer Fontoura has more than 20 years background in agricultural commodities (sugar, ethanol, grains, cotton) with strong knowledge on the market of ethanol, cash & derivatives and foreign exchange trade, business development, logistics and marketing. Agronomist and Business Administration, with specialization in Foreign Trade and International Business at Univ. Federal de Pernambuco and MBA in Business Management at CEDEPE, he has worked in companies as SGS Société Générale de Surveillance, Grupo Tavares de Melo and Louis Dreyfus Commodities Enoch Rezende - Agricultural Officer Rezende is an Agronomist and Business Administration with Master Degree in Vegetal Production and MBA in Agribusiness. Management of Greenfield projects and agro-industrial operation. More than 20 years of experience from sugar cane mills acquisitions and integration processes. Worked in companies as Infinity Bio Energy, Andrade (within industry top agricultural productivity rank), Ciba Geigy and Socicana (suppliers association). 27