WELCOME TO OUR PRESENTATION

Group Members
Md. Ziaul Haque Dipankar Das Rakib Das 23038 23013 23056

Iceland Submarine Cable Network

THE REPUBLIC OF ICELAND

Iceland at a glance: GDP $13.04 billion (PPP, 2012 est.) GDP growth 2.7% (Real, 2012 est.) GDP per capita $38,400 (PPP, 2012 est.) GDP by sectorServices 70.1%, industry 24.4%, agriculture 5.3% (2012 est.) Inflation (CPI) 5.3% (CPI, 2012 est.) Currency Icelandic krna (1 USD = 116.450 ISK) Gini coefficient 28 (2006) Labour force 180,000 (2012) Populaition 320,137 (2012) Labour force by occupation Services 73%, industry 22%, agriculture 4.8% (2008) Unemployment 5.6% (2012 est.)

THE REPUBLIC OF ICELAND

Iceland's economy had been diversifying into

manufacturing and service industries in the 1990s, and new developments in software production, biotechnology, and financial services were taking place. The tourism sector was also expanding, with the recent trends in ecotourism and whale watching. However, in 2008, the Icelandic economy entered a deep recession in correspondence to the global financial crisis. Although Iceland's economy grew 3.3% during the last quarter of 2009, the overall contraction in GDP over 2009 was 6.5%, less than the 10% originally forecasted by the IMF.

THE ICELANDIC SUBMARINE CABLE

Prospects: proposed to export 25% of the countrys electricity generation potential to the European continent. In order to undertake this 6.3 billion project - which represented over 80% of the annual GDP of the entire nation - the prime minister of Iceland and the president of the state-owned energy company, Landsvirkjun, first needed to arrange the projects financing. identifying a lead equity investor who could lure additional equity capital The magnitude of the project was such that it would take at least five years to complete the initial stages of construction.

THE ICELANDIC SUBMARINE CABLE

THE ICELANDIC SUBMARINE CABLE

Germany interested party

limited domestic energy sources
was heavily import-reliant to meet its total energy

needs. German electricity market was the largest in Europe, consuming 488 billion kWh. Due to its heavy reliance on coal (50%) and nuclear resources (31%)

Strategic analysis
PEST model
Porters 5 forces model SWOT analysis

PEST model

Porters 5 forces model

SWOT analysis

Total Capital:6.3 billion Equity Capital:2.07billion Debt Capital :4.23 billion Discount Rate:14%

 Borrowing rate:

Utility Corporate Bond Yield+ Risk premium =7.32+1.68=9%

RATIO
YEAR 2002 2003 2004 2005 2006 2007 2008 ROE ROE -1.06 -2.05 -2.87 0.16 3.88 2.84 1.99 YEAR YEAR ROE ROE YEAR YEAR ROE 2009 2010 2011 2012 2013 2014 2015 9.91 9.34 9.02 9.36 9.77 10.19 10.62 2016 2017 2018 2019 11.05 11.50 10.60 12.42

YEAR 2002 2003 2004 2005

ROE -0.32 -0.61 -0.86 .05

YEA0.60R 2008 2009 2010 2011

ROE 0.60 2.97 2.80 2.71

YEAR 2014 2015 2016 2017

ROE 3.06 3.19 3.32 3.45

2006 2007

1.16 0.85

2012 2013

2.81 2.93

2018 2019

3.18 3.72

NPV= 42,040.88

YEAR 2002 2003 2004 2005 2006 2007 2008

NCF -4688.6 -6477.6 -271.6 7355.4 5127.4 3499.4

YEAR 2010 2011 2012 2013 2014 2015

NCF 19949.4 18811.4 18317.4 19425.4 20316.4 21184.4 22073.4

YEAR 2016 2017 2018 2019

NCF 22976.4 23900.4 22045.4 25811.4

-2577.60 2009

Stimulation
NPV@2001
60 50

40

Frequency

30

20

10

0 $9,445.10

$41,647.32

$73,849.54

$106,051.76

$143,621.02

Real Option
Input Diversification Value

The option for strategic resource diversification may make this project especially attractive to potential equity investors. A power company dependent on coal or oil may find that adding geothermal and hydroelectric sources lowers the volatility of its input costs and could be a significant advantage of the project.

 Cables

Flexibility surrounding the cables falls into two main decision criteria: location and quantity. In addition to a cable endpoint in Germany, feasibility studies have approved North East Scotland, the Netherlands, and Belgium as potential recipients of the Icelandic power. Price stabilization, grid development, EU tax policy and legal uncertainties may prove one of these locations more valuable after the first cable has been laid, making these alternative options more attractive.

Recommendation
we would recommend them to implement the project

because Iceland has economic and geographic advantage for this sort of project. Country has $600 million trade deficit and 2% unemployment rate and also Iceland is completely depends on marine food exports. If they undertook the project it will help to diversify the export sectors

Thank you
Any Questions ?