Ann: Trading Halt, page-18

A few thoughts:

1. The company is transitioning from a pure service provider to third parties, to a business model that includes owning its own portfolio of solar farms (BOO). The focus on 5 MWac farms has significant advantages with respect to grid connection and no output reduction risk.

2. The target initial BOO portfolio size of 100 MWac (ie. 20 x 5 MWac) will be developed and built over time, with the major constraint on timing of completion being availability of capital. The quoted value of $150m for this portfolio represents the required capex of $1.5m/MWac (which is in line with figures quoted by the IIG Solar Fund).

3. Project finance debt is readily available with a likely LTV of 50% and consequently each project can be expected to generate a pre-tax equity IRR of 10% (again using the IIG Solar Fund as a benchmark).

4. Going on the above, when completed and operational, a 100 MWac portfolio can reasonably be expected to produce equity cash flows (ie. after debt financing costs) of $7.5m per annum.

5. The company also has the optionality of selling individual sites (at any stage of the construction cycle) or the entire portfolio to a third party. I observe that the recent sale of the 5 MWac Daisy Hill Solar Farm was transacted at 2.1x capital invested.

I draw no conclusions at this point in time but I do think this is an interesting play on the Australian solar energy sector. All IMO and GLTAH.