Post on 26-Jul-2018
transcript
Enquiries:
Stan Mason, P.Eng., President
Watts Wind Energy Inc.
Phone: +1.902.482.0920
Email: Invest@wattswind.com
Watts Wind Energy Inc. Important Notice:This document has been prepared by Watts Wind Energy Inc. (“Watts Energy”). Some of the information in this document has been obtained 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 document 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.
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 BEOBTAINED FROM AN AUTHORIZED SALES AGENT OR FINDER, BY CONTACTING 902-482-0920 OR INVEST@WATTSWIND.COM. THIS OFFERINGCONSTITUTES AN EXEMPT OFFERING OF THESE SECURITIES ONLY IN NOVA SCOTIA BY AUTHORIZED SALES AGENTS. INVESTORS SHOULD READ THEOFFERING DOCUMENT BEFORE MAKING AN INVESTMENT DECISION. WATTS WIND IS SUBJECT TO NUMEROUS RISK FACTORS AND POTENTIALCONFLICTS OF INTEREST AS DESCRIBED IN THE OFFERING DOCUMENT AND INVESTORS SHOULD CAREFULLY READ AND CONSIDER SUCH RISKFACTORS AND POTENTIAL CONFLICTS OF INTEREST.
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DISCLAIMER
Current Projects
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Watts Wind Current and Phase One Projects
Watts Section1.5 MW – 1 unitIn-service: 2011
Barrington3.2 MW – 2 unitsIn-service: 2015
New Glasgow6.4 MW – 4 unitsIn-service: 2015
Wedgeport1.7 MW – 1 unitIn-service: 2015
Watts Wind Energy - Overview
• Generating operating cash flow since March, 2011• Track record of consistent dividends• 9.7% projected average annual yield(1)
• Structured as a “CEDIF”(2) to provide Nova Scotians up to 65% in personal tax credits(3)
• Most MWs awarded under the NS ComFIT program, 33 MWs• Experienced board and management team
4Notes: 1) Tax credits are non-refundable provincial tax credits the applicability for which the Issuer is subject to additional requirements
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 9.7% is comprised of cash distributions of 6.4% and 3.3% in non-fundable NS tax credits.2) Community economic development investment fund3) Tax credits are non-refundable provincial tax credits the applicability for which the Issuer is subject to additional requirements.
Mandate for Clean Power in NS
• 40% of power generation must come from renewable sources by 2020
• ComFIT program introduced to help achieve this
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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 sodarunit. (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 operator
• 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.
Post - trade
Watts Does Not Bear the Risk of Speculative Development Activities…
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…it only invests in a project once there is a signed contract from NS Power Inc.
Project Construction
Speculative ‘Development’ Activities Watts Wind Activities
Project PipelineProject Name Project
Size (MW)
Wind (m/s)
Land Lease Option
Comments
Watts Section 1.5 6 - 7 Yes Operating
New Glasgow 6.4 7 – 8 Yes Under construction – Apr. 1 target
Wedgeport 1.7 7 - 7.5 Yes Under construction – Mar. 11 target
Barrington 3.2 7.5 - 8 Yes Under construction – Mar. 4 target
Porters Lake 3.2 6 - 7 Yes Fully developed – construction ready
Ketch Harbour 4.8 7 - 7.5 YesComFIT contract awarded. Advanced stage development.
Otter Lake 9.0 7 – 7.5 NoComFIT contract awarded. Early stage development.
Lingan 0.8 7.5 - 8 YesComFIT contract awarded. Advanced stage development.
Bayswater 1.6 7 – 7.5 NoComFIT contract awarded. Early stage development.
Arlington 3.0 7.5 - 8 No Kings County Bylaw review underway.
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Watts Business Structure
Watts Wind Energy Inc.
(A Nova Scotia CEDIF company)
Watts Wind LP
New Glasgow – 4 turbines
Barrington – 2 turbines
Wedgeport – 1 turbine
Watts Wind II LP
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Watt Section - 1 turbine
Watts Wind III LP
Porter’s Lake – 2 turbines
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Project Equity Partner
Elemental provides supplemental equity to Watts’ projects but stands behind Watts for its annual returns
Name Function Experience
David Regan, MBA Non-executive chairman
EVP, Corporate Development, DHX Media Ltd. Former management consultant with A.T. Kearney. INSEAD MBA.
Stan Mason, P. Eng. President Principal, Seaforth Engineering Group Inc. 15 years experience installing 50kW wind turbines around the world. Owns and operates a 750kw hydro power plant supplying NS Power.
Paul Pynn, P. Eng. Vice-president President and founder, Eon WindElectric Inc. 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
Former CFO of Linear Gold and Senior Manager with PwC. CFO-for-hire to emerging public and venture backed start-up companies.
J. William Ritchie Independent director
Angel investor, former director of Empire Company Ltd, Sobeys Inc. and co-founder of Scotia Bond Ltd. Current director of DHX Media Ltd. and e-Academy Inc.
The Team Consists of Experienced Wind Engineers and Finance Professionals
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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 the Issuer conducting and successfully closing additional offerings.
Note: 1) Assumes a $10,000 investment at $1.30/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 9.7% is comprised of cash distributions of 6.4% and 3.3% in non-fundable NS tax credits.
For a $10,000 investment:
Financial Estimates – Watts Believes Average Annual Yield to Investors Will Be 9.7%(1)
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Year Tax Credit
Dividend Total
1 $ 3,500 $ 456 $ 3,956
2 $ 838 $ 838
3 $ 843 $ 843
4 $ 839 $ 839
5 $ 2,000 $ 789 $ 2,789
6 $ 789 $ 789
7 $ 922 $ 922
8 $ 1,193 $ 1,193
9 $ 1,189 $ 1,189
10 $ 1,000 $ 1,184 $ 2,184
Year Tax Credit
Dividend Total
11 $ 1,005 $ 1,005
12 $ 343 $ 343
13 $ 324 $ 324
14 $ 305 $ 305
15 $ 260 $ 260
16 $ 238 $ 238
17 $ 214 $ 214
18 $ 249 $ 249
19 $ 276 $ 276
20 $ 617 $ 617
Totals: $ 6,500 $ 12,872 $ 19,372
Note: 1) Assumes a $50,000 investment at $1.30/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 9.7% is comprised of cash distributions of 6.4% and 3.3% in non-fundable NS tax credits.
Financial Estimates – Watts Believes Average Annual Yield to Investors Will Be 9.7%(1)
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Year Tax Credit
Dividend Total
1 $17,500 2,280 19,780
2 4,188 4,188
3 4,213 4,213
4 4,193 4,193
5 $10,000 3,946 13,946
6 3,946 3,946
7 4,609 4,609
8 5,967 5,967
9 5,944 5,944
10 $5,000 5,922 10,922
Year Tax Credit
Dividend Total
11 5,027 5,027
12 1,714 1,714
13 1,618 1,618
14 1,523 1,523
15 1,301 1,301
16 1,189 1,189
17 1,071 1,071
18 1,243 1,243
19 1,379 1,379
20 3,087 3,087
Totals: $32,500 $64,359 $96,859
For a $50,000 investment:
Summary
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• Mitigated risks• Limited exposure to highly uncertain development activities
• Preference in project cash flow distributions ahead of other equity providers for all projects
• Long-term contracts• All projects benefit from 20 year NSPI contracts
• Governance• Experienced independent directors with CFA’s
• Alignment of interests with directors who have invested > $300k cash at same price as outside investors
• Experienced team• Principals have installed and managed >100 MWs
• Three years of dividends
Project Size Customer Responsibilities
Amherst Wind Farm- Nova Scotia
32 MW – 15 SuzlonS90 turbines
Sprott Power Corp. Owners engineers for development and construction. 2010/2011
Digby Wind Farm- Nova Scotia
30 MW – 20 GE 1.5MW turbines
Nova Scotia Power Inc.
Owners engineers for construction. 2010
Fermeuse Wind Farm - Newfoundland
27 MW – 9 VestasV90 turbines
Skypower Corp. Owners engineers for development and construction.2009
Maryvale Wind Farm, - Nova Scotia
6 MW – 4 VensysV77 turbines
Maryvale Wind Inc. Project manager for development and construction.2010
Phase 2 West Cape Wind Farm - PEI
34 MW – 17 VestasV80 turbines
Ventus Energy Manage construction of roads, foundations and crane pads to prepare for turbine installation spring 2008.
Norway Wind Farm - PEI
9 MW - 3 - Vestas V90 turbines
Ventus Energy Construction manager erection of the turbines and completion of the substation.2007/2008
Phase 1 West Cape Wind Farm - PEI
22 MW - 11 VestasV80 turbines
Ventus Energy Construction manager erection of the turbines and completion of the substation and collection system. 2007/2008
Gifforrn Wind Farm, Gifforn, Germany
20 MW – 8 - 2.5MW Fuhrlander turbines
Fuhrlander North America
Technical support wind farm installation 2007
Phase 1 Higgins MnWind Farm - NS
3.6 MW - 3 - 1.2 MWVensys turbines
Springhill RiverhurstWindpower Ltd.
Manage development, construction and commissioning.2006
Partial List of Recent Wind Energy Project Work by Watts Principals(1)
Watts Wind Principals Have Installed More Than 200 MWs of Wind Power(1)
16Notes: (1) Projects supported by EonWindelectric Inc. of which Watts Wind officers and directors Paul Pynn and Stan Mason are principal and director, respectively.
Civil engineering Road constructionFoundation
Site Preparation – Maryvale Project(1)
18Notes: (1) Project was supported by EonWindelectric Inc. of which Watts Wind officers and directors Paul Pynn and Stan Mason are principal and director, respectively.
Turbine selectionInstallation and grid connectionCommissioning
Turbine Installation – Watt Section Project
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