Alfen N : Alfen Press Release FY21 Results

P R E S S R E L E A S E

Published on 16 February 2022, 7:00 CET

Alfen 2021 revenues of €250m and 2022 revenue outlook of €330-370m

2021 adjusted EBITDA margin of 14.8%

• FY 2021 revenues of €249.7m, a 32% growth compared with FY 2020 (€189.0m).
• Adjusted EBITDA of €36.8m (14.8% of revenues), up 51% versus €24.4m (12.9% of revenues) in 2020.
• Adjusted net profit grew 77% to €22.1m versus €12.5m in 2020.
• Continued strong growth with existing clients throughout Europe and important new contract wins, such as a contract with Agreco Products to provide 3 stationary storage solutions (including grid integrations) of which the largest is a 20MW/40MWh system as well as 4 mobile energy storage systems.
• Alfen continues to safeguard supply deliveries by actively managing its supply chain.
• Alfen provides full-year 2022 revenue outlook of €330-370mdriven by the growing momentum of the energy transition, especially for EV charging and Energy storage.
• Alfen reconfirms its strategy and medium-term objectives.

ALMERE, THE NETHERLANDS - Alfen N.V. (AEX: ALFEN), specialist in energy solutions for the future, today reports its consolidated financial statements for 2021.

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Marco Roeleveld, CEO of Alfen, said:

"2021 was another strong year for Alfen in which we again delivered profitable growth and closed the year with a strong fourth quarter. All our markets kept developing favourably as the energy transition is gaining more momentum. We benefitted from our strong market position across Europe and realised 32% revenue growth combined with an adjusted EBITDA margin of 14.8%, despite COVID-19 and supply chain challenges.

We remain vigilant for new variants that may arise as COVID-19 continued to have some impact on our markets, often indirectly. This materialised predominantly in global supply chain pressure, not only for component sourcing but also for supply logistics. The situation also caused challenges for Alfen, but we have been able to mitigate these. We expect that supply chain pressures will continue well into 2022 and potentially 2023. Therefore, we continue to manage our supply chain closely and to monitor the situation carefully.

Where possible, we continued to work from home and converted live meetings to virtual ones. We have fully embraced the new normal and started using new ways of working and tools in order to accommodate. We are very proud of the flexibility and resilience that our employees have demonstrated.

Based on our growing markets, our strong market position as well as our unique integrated business model, we look forward to 2022 with confidence. This is also supported by strong momentum in the energy storage market where we have secured various new contracts. As such, we continue to invest in our organisation, new innovations and facilities. I am pleased that we have concluded a lease contract for a new production location and office building which is three times larger than our current largest facility, which sets us up well for further growth.

For 2022, we expect our revenues to be between €330m and €370m driven by the growing momentum of the energy transition, especially for EV charging and Energy storage."

Financial highlights

Key figures
In € millions
	2017			2018			2019			2020			2021
Revenues and other income	74.3		101.9		143.2		189.0		249.7
Y-o-y growth	21%		37%		41%		32%		32%
Gross margin	21.6		30.2		50.3		69.3		89.8
As % of revenues and other income	29.1%		29.6%		35.1%		36.7%		36.0%
Operational expenses	17.6		27.8		36.4		45.5		53.6
As % of revenues and other income	23.7%		27.3%		25.4%		24.1%		21.5%
Adjusted EBITDA	4.9		3.6		14.5		24.4		36.8
As % of revenues and other income	6.6%		3.6%		10.1%		12.9%		14.8%

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Revenues and other income increased 32% from €189.0m in 2020 to €249.7m in 2021, driven by growth across all business lines: Smart grids (+8%), EV charging (+94%) and Energy storage (+4%).

Gross margin was 36.0% in 2021 compared with 36.7% in 2020. Alfen continued to benefit from its strong market position and leverage from increased scale, but this was partly offset by a challenging supply chain in 2021 as well as by product mix effects within each business line.

Personnel costs increased by 16% to €40.1m compared with €34.4m in 2020. Average FTEs increased from 571 in 2020 to 636 in 2021.

Other operating costs increased by 23% to €13.5m compared with €11.1m in 2020.

Adjusted EBITDA amounted to €36.8m (14.8% of revenues), a 51% increase compared to €24.4m (12.9% of revenues) in 2020. The adjusted EBITDA margin improvement is a result of Alfen's operational leverage strategy. EBITDA adjustments in 2021 amounted to €0.6m (versus €0.5m in 2020) and comprised of share- based payment expenses.

Adjusted net profit grew 77% from €12.5m in 2020 to €22.1m in 2021.

Capex amounted to €11.7m (4.7% of revenues) as compared to €9.6m (5.1% of revenues) in 2020. Capex in 2021 includes investments in IT-infrastructure and Data Security, R&D test facilities, new moulds for Smart grids as well as Production and Warehousing related improvements. Alfen capitalised €7.7m of development costs (€5.0m in 2020) which demonstrates the company's continued efforts to invest in innovations for the future.

Working capital1 increased to €23.8m (versus €2.5m at 31 December 2020). The increase is mainly related to an increase of Alfen's stock level. Given the supply chain challenges, Alfen maintains higher safety stock levels, further supported by strategic stock down payments for batteries and electrical components.

Operating cash flow was €10.5m compared with €20.1m in 2020. The reduced operating cash flow is mainly related to the increase of Alfen's stock level.

Net cash position at 31 December 2021 amounted to €28.9m, compared with a net cash position of €32.4m at 31 December 2020.

1 Calculated as total current assets excluding cash and cash equivalents, minus total current liabilities excluding bank overdrafts

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Segmental review

In the Smart grid solutions business line, 2021 revenues were €128.2m, a 8% growth compared with €118.5m in 2020. Alfen's markets keep growing and it is becoming increasingly clear what the impact on the grid will be as more electricity is produced and consumed. Especially as more and more renewables are integrated, such as solar and wind power, which result in more peak loads and volatile load profiles on the grid. Grid operators progressively talk about how the grid is reaching its limitations and how it needs to be expanded and reinforced. In the Netherlands alone, it is estimated that 100B€ of investments are needed towards 2050 to make the grid future proof. Still, short-term there could always be some challenges. For instance, Alfen has seen that in the second half of 2021 some projects were delayed as grid connections could not be established in time. Also, supply chain pressures caused cost inflation for solar PV project materials, putting some business cases under further review. Such effects might have some temporary impact, but long-term it is clear that significant grid investments are needed.

Alfen is well positioned to benefit from the ongoing electrification with its grid knowledge and expertise. In this light, Alfen is pleased that it secured the new Liander framework agreement to supply secondary substations for the coming four years with the intent to extend for another four years and to keep supporting the largest grid operator in the Netherlands in building out the grid. Additionally, Alfen kept providing its smart grid solutions to customers with significant private grids, such as solar parks and rooftop solar locations, greenhouses, EV fast charging stations and industrial locations.

Besides securing the Liander framework agreement win, other selected commercial successes include a 4- year framework agreement for the supply of secondary substations to Vattenfall Eldistribution in Sweden. The contract can be extended twice with an additional year. Another example is a contract with CHINT Solar Netherlands to provide the transformer substations for multiple solar PV parks that they are developing in the north of the Netherlands which together have a power rating of more than 50MWp.

Innovation highlights of 2021 include a new variant of Alfen's state-of-the-art Pacto substation especially developed for the new Liander framework agreement, Alfen launched a new innovative prefab walk-in station specially designed for the Benelux market, and Alfen introduced detailed visual KPIs in its smart grid production facility that improves production speed and efficiency.

In 2021, Alfen produced approximately 3,240 substations, a 2% decline compared to 2020 with approximately 3,320 substations.

In the EV charging equipment business line, 2021 revenues were €103.8m, a 94% growth compared with €53.5m in 2020. Across Europe we have seen positive market developments for electric driving. First, there is a diverse supply of EV's in the market as car manufacturers continue to increase their commitment to the electrification of their portfolios. Second, there are multiple market stimulants, both financial and regulatory, to support the transition to electric driving. For instance, all new buildings in England will be required to install electric vehicle charge points from 2022 onwards.

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Alfen benefitted from increasing volumes under framework agreements that have been set-up over the past years, new client wins and further internationalisation. Its internationalisation strategy continued to deliver growth across Europe and in 2021 approximately 60% of EV charging revenues was generated outside of the Netherlands.

Furthermore, Alfen continued to further diversify its customer base. Selected commercial successes are supplying EV charge points to e-commerce company OTTO in Germany, supplying EV charge points to distribution company No Limit in Poland with Naatu Teraz Energia to enable charging of their light duty truck vehicle fleet, and supplying EV chargers to ARVAL lease throughout Belgium with 50Five which is a specialist in EV charging solutions.

Selected innovation examples in Alfen's EV charging business comprise the introduction of its next generation hardware architecture that provides increased flexibility to accommodate different market requirements and allows accelerated corresponding software developments. Alfen also implemented the ISO 15118 standard which provides more extensive communication between its charge points and electric vehicles and can for instance allow an EV to identify itself without the need for a charge card. Additionally, security is a core value for Alfen and it further improved its security standards and protocols. To illustrate, Alfen now offers password protection for individual charge points which can easily be accessed with its new smartphone app which allows quick and easy installation and configuration of its chargers.

In 2021, Alfen produced approximately 114,800 charge points, a 107% growth compared to 2020 with approximately 55,500 produced charge points.

In the Energy storage systems business line, 2021 revenues were €17.7m, a 4% growth compared with €17.0m in 2020. The battery energy storage market picked up momentum after COVID-19 headwinds. Alfen sees a further maturation of the market, which in Europe is still in a nascent stage.

There are various signs of this growing momentum. In the UK the government simplified planning permission processes reducing lead times from one to two years to a few months. Additionally, the UK has in place a clear framework for grid stability services. Another example is that Alfen started to see requests for generation capacity, partially considered to be filled with battery energy storage. All together Alfen is convinced of this market potential and its strong market position. To illustrate, Alfen has seen its qualified leads pipeline growing strongly in 2021.

This led to various new contract wins that will support 2022 revenue. For instance, Alfen secured a contract with Agreco Products, specialist in sustainable energy solutions, to provide 3 stationary storage solutions of which the largest is a 20MW/40MWh system as well as 4 mobile energy storage system. For this contract Alfen will also provide grid integrations by leveraging its smart grids capabilities. Furthermore, Alfen's mobile energy storage solution continues to find traction as Greener, a provider of clean mobile battery power, will expand its existing fleet of 43 Alfen TheBattery Mobiles with another 20. Also Bredenoord, specialist in

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