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Company presentation at Budapest Stock Exchange. Gábor Vilhelm Head of Treasury and Investor Relations. 09 May , 2012. Agenda. Introduction of the Company Achievements of 2011 2012: Year of consolidation and operational excellence. Fast growing E-Star provides complex

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slide1
Company presentationat Budapest Stock Exchange
  • Gábor VilhelmHead of Treasury and Investor Relations

09 May, 2012

agenda
Agenda
  • Introduction of the Company
  • Achievements of 2011
  • 2012: Year of consolidation and operational excellence
slide3

Fast growing E-Star provides complex

alternative energy solutions for a wide customer base

Milestones

Client proposition

Businessmodel

Segments

  • Efficient, district heating services
  • Public lighting
  • Energy trading

2000

Establishment

Aggressive growth

2005

Customers

  • Industrial clients (including bluechips)
  • Municipalities
  • Residential clients

IPO

2007

International expansion + SPO

2009

Main Products

  • Hot water
  • Steam
  • Electricity
  • ESCO
  • Energy outsourcing
  • Public lighting

Further international growth (Romania)

2010

2011

Dual listing at Warsaw,

SPO (EUR 8M)

Closing bond program. I (EUR ~33 M), EETEK Acquisition (EUR 21M)

2012

Operational excellence and year of consolidation

slide4

Sustainable business model targeting mid-market

Business model

Mid-sized projects

(niche segment)

Utilization of renewable sources

Long-term contracts

  • 20-100 MW heat capacity
  • € 5-35 million annual investment per project
  • 15-49 years

Local heat market

Combined Technology Mix

Changes in fuel cost naturally hedged

  • Price mechanism based on change in fuel price

Annual heat curve

Gas boiler

Biomass boiler

Co-gen

slide5
E-Star’s technology free knowledge-based alternative energy business creates a keystone role for the company

Municipality

Industrial

Residential

Demand

Demand

Biomass boilers

Gas boilers

Availabletechnology

Availabletechnology

Biomass

Local resources

Local resources

Gas engines

Turbines

Geothermal / inert gas

Biogas

Geothermal

Natural gas

Coal

diversified i nternational project portfolio including wide range of clientele in all sectors
Diversified internationalproject portfolio including wide range of clientele in all sectors

EC Mielec

  • Heat and electricity
  • Capacity: 170.5 MWth and 24.4 Mwel

Euro-Energetyka

Mielec

Energy distribution and trading

Gorlice

EC Gorlice

Gheorgheni

  • Heat and electricity
  • Capacity: 87.2 MWth and 7.0 Mwel

Zalau

Győr

Rába-Audi Project

  • Energy and utility services
  • Blue-chip industrial consumers (Rába, Audi, Dana)
  • Capacity: 8.4 MWth and8.5 MWel

Targu

Mures

Public lighting

ESCO

District heating

slide7

Diversified revenue sources with blue chip industrial clientele ensure outstanding riskmanagement

Reliable International Blue Chip IndustrialClientele

6

slide8

E-Star has attracted international investment interest, as it has been becoming an industry leader

International

Hungary

  • World Finance TOP 100 (2010)
  • Only member from CEE region
  • Others include:
  • CitiGroup
  • Apple
  • Amazon
  • Coca Cola
  • Listed on Warsaw Stock Exchange(March 2011)
  • „Team of Stock Exchange” (2009)
  • Largest stock price increase (2010)
  • BUX indexmembership (2010)
  • Pegasus price in market leader category (2010)
ebitda has trippled and revenue has grown by six fold from 2008 to 2011
EBITDA has trippled and revenue has grown by six fold from 2008 to 2011.

Revenue (mln EUR)

Gross margin (mln EUR)

79 % CAGR

113% CAGR

EBITDA (mln EUR)

Equity and financial liabilities (mln EUR)

39 % CAGR

Equity*

Financial liabilities

  • * After the consolidation of EETEK, including 10% equity increase through an SPO.
  • (Each of the 240.000 shares were sold for HUF10.000)

8

agenda1
Agenda
  • Introduction of the Company
  • Achievements of 2011
  • 2012: Year of consolidation and operational excellence
e star closed a successful 2011 in line with an aggressive growth strategy
E-Star closed a successful 2011 in line with an aggressive growth strategy

2011

2012

2013

2014

2015

  • EnteringPoland
  • Consolidation
  • Operational excellence
  • Entering 4th country
  • Bring projects to perfection
  • Further growth
  • Entering 5th country

2011 greatest achievements

  • Technical listing at WSE
  • Entering Poland by EETEK acquisition (EUR 21 M + EUR 4.5 M)
  • SPO – EUR 8 M (10%)
  • Closing E-Star HUF nominated Bond Program – EUR 33.3 M
  • Successful bank financing (BZ WBK) – EUR 4 M + non-refundable state subsidy
  • NewGas Cogeneration – 8.4 MWe
  • Organizational improvement – 500 FTEs
  • Re-branding: from RFV to E-Star Alternative Plc.
  • Restructuring to reach cost efficiency (still under process)

10

agenda2
Agenda
  • Introduction of the Company
  • Achievements of 2011
  • 2012: Year of consolidation and operational excellence
slide13

Aggressive consolidation measures 2012

2011

2012

2013

2014

2015

  • Financial and operational controlling
  • Supervising all operating project
  • Operational excellence through increased efficiency and cost control
  • Operating Management System
  • Controlling cash costs
  • Set up of gas trading unit
  • Developed functional spikes
  • Operational excellence through increased efficiency and cost control
  • Enhancing capital discipline
  • Business service center development

Operations management

Corporate development

  • Extended board to support business development
  • Polish companyset -up
  • Re-branding
  • SPO & BOND
  • Optimization of organization and internal processes
  • Setting up venture capital fund subsidiary
  • Country 4# company set-up
  • Building new innovation capacities
  • Improved project implementation and know-how transfer
  • Country 5# company set-up
  • Regional procurement & supply chain management
  • Shared Value Creation (SVC)

Business development

  • Entry: Poland district heating
  • Growth return in Hungarian ESCO
  • Expansion at current project sites
  • Significant cost cutting
  • Review of strategy
  • Entry: country #4
  • Entry into new segments within existing countries
  • Building new industrial client portfolio
  • Market consolidation in core segments
  • New R&D projects, cutting edge solutions
  • Entry: country #5
  • Regional consolidation
  • Technology flagship in alternative energy within CEE

Entering Poland

Operational excellence

Entering country #4

Regional champion &

Entering country #5

slide14
E-Star is reviewing it’s investment programs and considering divesting opportunities according to operational excellence

Stable Cash Flow

Hungary

  • 35 Municipal costumers
  • More than 180 project sites
  • Operation with a 11-year history
  • ESCO, Public Lightning, DH, and RESZ

Stable Cash Flow

Reviewing of divestment opportunities

Poland

  • Activity-based on concession rights
  • Exclusive DH supplying to municipalities
  • DH and electricity for industrial consumers
  • Energy production and trading
  • Coal based CHP Cogen and brand new Gas Cogen bought for PLN 26,7 M (PLN 13 M non returnable subsidy)

Reviwing of Mures and Zalau projects

Investment Period

Romania

  • Activity based on 35-49 years concession rights
  • Delays in CAPEX program which lasts until 2016
  • 25% expected ROE due to country risk factor
  • Cheap biomass
  • Impressive value creation
  • DH and electricity
  • Clientele: municipal, residential, industrial
consolidation measures in 2012
Consolidation measures in 2012.

Reduction of employeecosts at HQ

  • Number of employees have been reduced by 38 %
  • Employee running rate costs reduced by EUR 800 k annually
  • E-Star froze wages and salaries in 2012
  • No bonuses were paid for 2011 financial year

Reduction of external advisory and legal fees

  • Savings reach EUR 2.5M annually

Other

  • IT services have been outsourced
  • E-Star contracted gas supply agreement on cheaper price
  • E-Star is beingoptimised its operation in PL
e star s financing which is considered to be a key role of success relies on four strong pillars
E-Star’s financing which is considered to be a key role of success relies on four strong pillars

EQUITY INCREASE

Subsidies and EU funds

  • Zero-dividend policy
  • SPO in form of private placement of ~EUR 8 M completed on June 9, 2011
  • PLN 13 M non returnable subsidy for gas cogen engines set up at Mielec project
  • More subsidy funds are expected to be secured for de-dusting programme
  • Financing structure:
  • Support business development
  • Maintain strong Balance Sheet
  • 30% Equity – 70% Debt

Domestic and int. BONDprogram

Group-level BANKrefinancing

  • Provides financing for development of new projects
  • E-Star aims to fund a constant proportion of our balance sheet from the bond market
  • 2010-11: ~EUR 33.3 M issued in Hungary, pioneer role on market, 90% to institutional investors, 10% to retail clients
  • 2012: EUR 9 M planned to be issued in Poland
  • Loan structure adjusted to the maturity and cash flow generation potential of our current projects
  • Diversified banking relations
  • Regional, group-level cash pooling and cash flow management

15

refinancing and financing programs advance well
Refinancing and financing programs advance well
  • Syndicated refinancing of RESZ project lead by E-Star’s house bank in the amount of EUR 6,5 M bank facility
  • VAT financing in addition
  • Raising OVD limits
  • Closing expected by 2012 H1

Refinancing Acquired Hungarian Project

Refinancing Acquired Polish Projects

  • EUR 9 M Bond financing
  • As an alternative to the bond programme: bank financing provided by E-Star’s Polish house bank institution in the same amount (EUR 9 M)
  • Closingexpected by 2012 H1

16

contact
Contact

E-Star AlternatívNyrt.

1122 Budapest Hungary, Székácsutca 29.

mobile: +36 20 779 7405, +36 20 779 7406

phone: +36 1 279 3551

fax: +36 1 279 3550

email: info@e-star.hu, url: www.e-star.hu