Clean-tech sector in Poland Opportunities and challenges

1. Bartłomiej Pawlak, CEO, BOŚ Eko Profit Tel-Aviv, November 2013 Clean-tech sector in PolandOpportunities and challenges

2. Plan of the presentation Bank for Environmental Protection (BOŚ) and BOŚ Eko Profit – who we are Is clean-tech sector attractive in Poland? Renewables in Poland – before the new opening Waste management – a need for investment High-tech, competitive edge energy solutions How BOŚ and BOŚ Eko Profit could be helpful for the Israeli investors?

3. I.Bank for Environmental Protection (BOŚ) and BOŚ Eko Profit – who we are

4. BOŚ – medium size bank focused on clean-tech Business overview Ownership structure as of 2013 Public Finance Corporate business Retail business % of total loan portfolio 40% 28% 32% 39.1% Others 56.6% National Fund for Environmental Protection and Water Management • Mortgage loans • Deposit and • current accounts • Credit cards • Project finance • Investment loans • Factoring • Trade finance • Project finance • Financing of municipalities • Brokerage house • Leading position in the market of forward contracts 4.3% National Forest Holding • Capital investments • Business consulting BOŚ is a listed company but the majority shareholder is still the State Treasury Our key focus across all three key business areas is on environmentally friendly projects 4

5. BOŚ Bank – experience + simple decision making process • Leader on the eco-finance market (more than EUR 3bn loans granted in 1991-2013; EUR 9bn worth of investments co-financed); 50% market share in pro-ecological projects financing, internal team of experts specialised in ecological project financing, offering financial and legal consultation. • Capabilities in eco-finance projects • Knowledge and experience • in financing public finance sector • Well-established relationship with customer – a significant market share in financing local government units and municipal companies (around 10% at the end of 2010)¹ • Cooperation with European financial institutions • Cooperation with European financial institutions (EIB, CEB, KfW, NIB) in raising funds, that can be used to finance investment projects (value of assets acquired through cooperation with foreign commercial banks amounted to EUR 85.3m and CHF 37.5m). • Headquarters • in Warsaw Short and simple decision making process - credit decisions are made in the same place where the loan procedure takes place 1. Consolidated data 5

6. Business consulting Organisation of financing Capital investments Process management BOŚ Eko Profit – more than the investment fund • BOŚ Eko Profit S.A. is an investment company that extends and supplements bank’s offer in • clean-tech sector,offering comprehensive packages ofservices: • EQUITY +LOAN + CONSULTING • opportunity of raising capital or debt financing for those who develop their businessprojects • via SPVs, • engagement in projects: 1 up to 5 years, • wide consultancy knowledge: from business modeland structuring the project to exit strategy, • various financing forms: equity, loans, subordinated, converted loans (mezzanine finance), • complex and flexible approach: majority or minority shareholding • widespread solutions for seed capital and big players Exit Strategy

7. II.Is clean-tech sector attractive in Poland?

8. The main growth drivers are EU regulations and standards • EU policy goes along with the global trends such as Kyoto Protocol and the UN policy. • Protection of the environment, reduction of CO2 emissions, recycling, waste management. • EU legislation goes from indicative to legally binding direction in renewable energy, cogeneration, waste and water treatment. • EU members who do not comply with the regulations are subject to possible fines, losing EU financial support and other negative consequences. • The new EU budget of 2014-2020 will continue policy of strengthening local pro-ecological solutions. • For clean-tech solutions EU wants to spend in Poland EUR 12.4bn. The funds will be allocated according to two thematic objectives: • Supporting the shift towards a low-carbon economy in all sectors • Protection of natural environment and supporting efficient use of resources EURO 1 Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources Directive 2004/8/EC of the European Parliament and of the Council of 11 February 2004 on the promotion of cogeneration based on a useful heat demand in the internal energy market Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste Council Directive 1999/31/EC of 26 April 1999 on the landfill of waste Council Directive 1991/271/EEC of 21 May 1991 concerning urban waste water treatment

9. Growth drivers for pro-ecological projects • EU requirements and Poland’s commitments • CO2 emissions reduction by 20% by 2020 from 1990 levels • 19% share of renewable energy sources by 2020 (from approx. 9.5% in 2010) • 9% reduction in the national energy consumption by 2016 compared to 2001-2005 average • Reduction of biodegradable waste disposed of at landfills by 70% by 2020 (from 1995 levels) • 60% packaging reuse and 55% recycling level targets for 2014 (currently 53% and 35%) • Increase ofdemand • Growth in demand for electricity and heat by 4.5% and 9% respectively in 2010-2015 • Increase in generated municipal waste volume by 18% in 2011-2022 • Renewable energy sources and cogeneration – alternatives to conventional energy sources • Price increase • Co-financing from national and foreign sources • EU support for pro-ecological initiatives – approx. EUR 18bn in 2011-2014 • National programmes – approx. EUR 10bn in 2011-2014 • Technology development • New eco-friendly technology solutions, increasing efficiency of pro-ecological projects • Increase in eco-consciousness • Public support for pro-ecological initiatives • Popularization of the concept of corporate social responsibility 9

10. Estimated market size of pro-ecological projects Segment • Estimated expenditure for 2011-2020 2010 2013 2015 2016 2020 Wastewater treatment and water protection • EUR 12 billion Cogeneration • EUR 1 billion • EUR2.6 billion Waste management • EUR 1.5 billion • EUR1.5 billion Renewable energy sources • EUR 5 billion • EUR 4 billion Expected volume of BOŚ pro-ecological loans in 2011-2020 is EUR 2bn, of which EUR 1bn by 2015 Source: Deloitte analysis based on: GUS, Ochrona Środowiska 2010 (Environmental Protection 2010), Warszawa, 2010 r.; Krajowy plan gospodarki odpadami 2014 (National Waste Management Plan 2014), Warszawa, 2010 r.; Deloitte, Fortum, 4P Research Mix: Gospodarka odpadami w Polsce 2011 (Waste Management in Poland 2011), Warszawa, 2011 r.; Andrzej Reński: Perspektywy rozwoju skojarzonego wytwarzania ciepła i energii elektrycznej w Polsce (Perspectives on the development of electricity and heat cogeneration in Poland), Rynek Energii, nr 6/2008; Instytut Energetyki Odnawialnej (Institute of Renewable Energy): Atrakcyjność inwestycji w energetyce odnawialnej do 2020 r. (Attractiveness of renewable energy investments till 2020), 2010 r.; Ministerstwo Gospodarki (Ministry of the Economy): Krajowy plan działania w zakresie energii ze źródeł odnawialnych (National action plan on energy from renewable sources), Warszawa 2010 r., 10

11. III.Renewables in Poland – before the new opening

12. Renewables – chance for stability and growth • The fastest growing sector of the Polish economy within the last couple of years till 2012 • Over EUR 3bn engaged by the banking sector in renewables in Poland • Ineffective current support system based on so called „green certificates” slowed down the market for months; GC prices dropped below the level of financial effectiveness of many RES projects. • However, the 2020 targets according to National Action Plan (2010) of CO2 reduction and growth of green energy production are in danger. In October 2013 the Ministry of Economy announced a new draft legislation that should reduce or eliminate some of the growth barriers of RES sector in Poland: • The new approach: any new or existing green energy producer will have a choice: either to stay with the existing support system for (in total) 15 years or they will be able to switch to the new one – based on auctions with the same time perspective of 15 years of stable feed-in-tariff price. Recent news and stabilization of the GC price has encouraged investors to start new RES projects

13. Prosumer – the new category of energy producer • In 2013 the already implemented changes to the existing legislation created a new factor on the green energy map: the prosumer. • Prosumers are those small investors who consume most of the energy produced by themselves end sell the surplus of the production to the grid. • Today there are 1000 green energy producers in PL vs. 4 000 000 in the UK. • Prosumer opens the door for small RES instalations in Poland i.e. PV panels on mass scale according to simplified procedures. • Prosumers are the new category of the producers of energy – in 2014 there will be new programs to support their business by donations or preferential loans. This process will require both high-tech solutions and financing at the large scale

14. IV. Waste management – a need for investment

15. Act on maintaining cleanliness and order in municipalities • Implemented on 1 July 2013 – beginning of the long and costly process. • The new law took the management of the municipal waste from the hands of the private sector and gave it to the municipalities • Almost all Polish municipalities finalized tenders for the waste collecting companies operating in their areas. Money for waste collection goes directly to the municipal budget and should be spent on the new investments directly or through SPVs created with private investors (i.e. via PPP solution). Poland is on the very beginning of this road. • Poland is obliged to reduce the number of biodegradable waste disposal sites and increase the level of incineration, selection, utilization, reuse and recycling. • The value of the waste market is EUR 1.5bn The investors are waiting for the new grants & preferencial loans that will come into effect from 2014.

16. V. Other opportunities of the clean-tech sector

17. Opportunities for high-end solutions New challenges for Poland: • Efficient power and heat energy storage systems which support the stability of the grid • Dispersed model of energy production - based on households ‘ on-grid solutions as: • small biogas plants, solar panels, PV panels, heat pumps, • Smart grid solutions, dynamic tariffs, system of monitoring and remote control . • Energy efficiency solutions programs – for street lights, offices, factories, shopping malls. • All of these sectors require huge investments and transfer of know-how Clean-tech will be one of the fastest growing sectors of the Polish economy within the next couple of years.

18. VI. How BOŚ and BOŚ Eko Profit could be helpful for Israeli investors

19. BOŚ and BOŚ Eko Profit – partners for investors • Clean-Tech has been our everyday business since the beginning of 1990s. • Credibility & experience - well recognized brand, stable partner, a passport to the Polish market, other Polish companies, new business opportunities • Beachhead - on the Polish market – deep knowledge of rules, regulations, business environment, people and companies • One-stop-shop - equity, debt financing, partnership and consulting • Outsourcing - from due diligence, financial model to exit strategy • Complex solutions – BOS Group is deeply involved in creating new comprehensive solutions for the market that need both Polish and foreign partners. The BOŚ Group business model develops from financial services to the packages of products and turnkey solutions with financing.

20. Thank you for your attention • Bartłomiej Pawlak • BOŚ EKO PROFIT S.A. • Phone: 22 850 85 90 • E-mail: bartlomiej.pawlak@bosbank.pl • www.bosekoprofit.pl