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Background : Our client is active in the market for charging points for electrical vehicles (“EVs”), and aims to become the leading operator of these charging points in Europe, through first acquiring an existing portfolio of charging points, and subsequently building and expanding this portfolio.

Request : The request was a valuation of the existing portfolio and funding need for the expansion of this portfolio.

Description of the assignment : Valuebasedmanagement.com provided an in-depth analysis of the market for charging points for EVs, from which a multi-scenario cash flow, revenue and cost model was constructed. This analysis included, amongst others, a forecast of the possibilities within the European market of charging stations, the position of our client and its portfolio within this market, a detailed cost analysis and a prognosis of future revenues and payback period. As our client is in a start-up phase in a rapidly changing market, a revenue and cash flow forecast for this company is subject to many uncertainties. Valuebasedmanagement.com used a top-down approach to capture these uncertainties, in which it firstly analyses the rising market for EVs, then assesses the demand for charging points within this market, subsequently narrows down to the share of our client from which it finally extracts a detailed financial model for the company.

Results : Firstly, the market for EVs was forecasted for a selected amount of countries, based on government estimates, for instance for the Netherlands as shown in Figure 1.

Electric Vehicles Netherlands

Figure 1: Electric Vehicles Netherlands

Subsequently, the demand for charging points was analysed, using the ratios of charging stations to amount of EVs. Combined with the existing amount of charging points, and the fraction available for exploitation of our client, it is possible to estimate the market potential, as shown in Figure 2.

Market Share Electric Vehicles

Figure 2: Market Share Electric Vehicles

 

 

 

 

 

 

 

 

 

The financial forecast is composed of two parts: the exploitation of charging points for own account and providing financing constructions for the acquisition of charging stations.  In the exploitation of charging points for own account, two versions are distinguished: the charging point in public and private domain.

With the market outlook as mentioned above possible set ups of the expansion of the portfolio are mapped. In figure 3 a scenario is depicted in which our client continue to invest in the portfolio till 2024.

different models

Figure 3 : Build up of portfolio of the different models

 

 

 

 

 

 

 

 

 

 

 

 

 

Furthermore, an extensive analysis including a detailed cost and revenue forecast was applied to determine the payback period and for each model.  Several key economic variables (like frequency of use, start tariffs, which can be varied over time, are used making a sensitivity analysis possible. The outcome of the cash flow profile for the own exploitation portfolio (which is derived from the CAPEX and the Cash Inflow elements of the installed base) for a scenario is depicted in Figure 4.

Figure Cash Flow of Own Operations

Figure 4 Cash Flow of Own Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

The second source of income is the provision of hire purchase and leasing constructions, combined with service offerings. The volume and buildup of the portfolio of financing constructions is shown in figure 4. This portfolio, combined with individual NPVs for each financing construction and a scenario analysis, makes up the second cumulative cash flow model, as shown in Figure 5.

Figure [ ] Credit Portfolio Volume

Figure 5  Credit Portfolio Volume

 

 

 

 

The credit portfolio is derived from the request of four different financial constructions (which are varied amongst others principal amount, the repayment schemes, interest profile, the prepayment profiles and default and recovery profiles). The outcome of a scenario of the lease portfolio is depicted in Figure 6. Again several scenarios can be made by for instance varying the prepayment- , default, and recovery curves or by making scenarios for interest developments in the future.

Figure [ ] Cash Flow Profile of Lease Porfolio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The operational cash flows of the two portfolios are used to assess the total funding need of the company. Besides the cash flow profiles of the two portfolios also overhead expenses, tax are included. With this cash flow profile the funding need can be derived and the capital structure can be made.  In this case we used only pure equity, shareholder debt and at a later stage (when the asset base is sufficient) bank debt. Please find below the total cash flow in Chart 7.

Cumulative Cash Flow

Figure 7 : Cumulative Cash Flow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuebasedmanagement.com successfully captured the uncertainty in the market by providing a base, upside and down scenario, and implementing all essential variables.

 

Figure     7