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Company presentation at Budapest Stock Exchange

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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Company presentation at Budapest Stock Exchange

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  1. Company presentationat Budapest Stock Exchange • Gábor VilhelmHead of Treasury and Investor Relations 09 May, 2012

  2. Agenda • Introduction of the Company • Achievements of 2011 • 2012: Year of consolidation and operational excellence

  3. 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

  4. 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

  5. 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

  6. 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

  7. Diversified revenue sources with blue chip industrial clientele ensure outstanding riskmanagement Reliable International Blue Chip IndustrialClientele 6

  8. 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)

  9. 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

  10. Agenda • Introduction of the Company • Achievements of 2011 • 2012: Year of consolidation and operational excellence

  11. 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

  12. Agenda • Introduction of the Company • Achievements of 2011 • 2012: Year of consolidation and operational excellence

  13. 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

  14. 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

  15. 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

  16. 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

  17. 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

  18. 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

  19. Thank you for your attention!

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