Alfen N : Webcast 2020 FY Results

Alfen 2020 FY results

Webcast

17 February 2021

Disclaimer

This communication may include forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms such as guidance, expected, step up, announced, continued, incremental, on track, accelerating, ongoing, innovation, drives, growth, optimising, new, to develop, further, strengthening, implementing, well positioned, roll-out, expanding, improvements, promising, to offer, more, to be or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect Alfen N.V. (Alfen)'s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to Alfen's business, results of operations, financial position, liquidity, prospects, growth or strategies. Forward-looking statements reflect the current views of Alfen and assumptions based on information currently available to Alfen. Forward-looking statements speak only as of the date they are made, and Alfen does not assume any obligation to update such statements, except as required by law.

Alfen's revenue outlook estimates are management estimates resulting from Alfen's pursuit of its strategy. Alfen can provide no assurances that the estimated future revenues will be realised and the actual revenue for the financial year 2021 could differ materially. The expected revenues have also been determined based on assumptions and estimates that Alfen considered reasonable at the date these were made. These estimates and assumptions are inherently uncertain and reflect management's views which are also based on its historic success of being assigned projects, which may materially differ from the success rates for any future projects. These estimates and assumptions may change as a result of uncertainties related to the economic, financial or competitive environment and as a result of future business decisions of Alfen or its clients, such as cancellations or delays, as well as the occurrence of certain other events.

More details on Alfen's 2020 performance can be found in the 2020 annual report and the 2020 results press release, published together with this presentation. A more comprehensive discussion of the risk factors affecting Alfen's business can be found in Alfen's annual report 2020 which can be found on Alfen's website,www.alfen.com.

• • Alfen's number one priority remains the health & safety of its employees and partners. To continue safe and responsible operations, Alfen continues to enforce strict safety measures

• • Up to this point, Alfen has managed to keep its supply chain intact and its production up and running

• • Alfen's end-markets experience some impact as a result of COVID-19

• • Order intake and revenue growth may be impacted in the short-term, although the long-term energy transition drivers remain strong

2020 highlights

FY 2020 revenues of €189.0m, a growth of 32% compared with FY 2019 (€143.2m), driven by strong growth across all business lines: Smart grids (+14%), EV charging (+105%) and Energy storage (+26%)

Adjusted EBITDA of €24.4m (12.9% of revenues), up 68% versus €14.5m (10.1% of revenues) in 2019

Adjusted net profit grew with 102% to €12.5m versus €6.2m in 2019

Important new project and client wins, amongst which a 3-year framework agreement with PerPetum Energy for the supply of transformer substations for their renewable energy projects in the Netherlands, a 3-year framework agreement with British Gas,

UK's largest energy supplier, to supply EV chargers for its own business and also for customers of its parent Centrica, and a 5-year framework agreement with SemperPower for the supply of energy storage solutions

Alfen provides full-year 2021 revenue outlook of €225-250m, based on the ongoing energy transition while taking into account the impact of COVID-19

2020 in summary

2 Progress against strategy

Financials and outlook

Revenue growth of +32% in a challenging 2020

Revenues and other income

(€ million)

2019

2020

Energy storageEV chargingSmart grids

Energy storage

• • Although energy storage is an essential component of the future sustainable energy system, COVID-19 slowed down the growth of the energy storage market, delaying investments and projects

• • Yet, energy storage solution costs are coming down and the market appears to be recovering

• • On the back of this, Alfen has been able to secure new contracts and framework agreements towards the end of 2020 based on its strong market position

EV charging

• • The EV-market has been growing rapidly, also supported by additional governmental support and incentives for electric driving, despite the challenging year for the automotive industry due to COVID-19

• • Alfen benefitted strongly from increasing volumes under framework agreements that have been set-up over the past years, new client wins and further internationalisation

• • Further strengthening of international organisation and further international expansion

• • Successful relocation and significant production capacity expansion of Alfen's EV charging operations

Smart grids

• • Growth driven by continued grid investments to accommodate the growing number of decentralised wind and solar PV installations as well as the ongoing electrification

• • Alfen benefitted through its existing framework agreements with grid operators and through new contract and client wins in its microgrid business

• • Although the number of the renewables developments are growing considerably, some projects have been delayed as a result of COVID-19, which affected order intake and thus revenue

Profitability further increased in 2020 compared with 2019

Adjusted EBITDA

(€ million)

24.4

14.5

• • Strong revenue growth together with gross margin improvement and increased operational leverage, delivered growth of the adjusted EBITDA

  (as % of revenues)

  2019

  10.1%

  2020

  12.9%

• • This is enabled through Alfen's strong market position, further leverage from scale and a shift towards increasingly complex solutions

• • Alfen continues to drive forward its strategy of leveraging its fixed cost base to further improve profitability

2019

2020

Commercial successes in 2020

Selected examples

Smart grids

New 3-year framework agreement with PerPetum Energy for the supply of transformer substations for their renewable energy projects in the NetherlandsSecured a 3-year framework agreement in Finland to supply 300 substations each year to three grid companies in the eastern part of Finland

Won the framework agreement for the exclusive supply of substations, with an initial term of four years which can be extended with four additional years

EV charging

Won a 3-year framework agreement with British Gas,

UK's largest energy supplier, to supply EV chargers for its own business and also for customers of its parent Centrica

Energy storage

New 3-year framework agreement with the Germanenergy supplier EnBW to supply

Alfen's full portfolio of energy storage solutions

Secured a 3-year framework agreement with Engie S.A. to supply EV charge points to their customers throughout Europe via Engie's European subsidiaries

Entered into a 5-year framework agreement for the supply of energy storage solutions with SemperPower

Continued investments in innovations for the future

Selected examples of recent innovations

Smart grids

Recycled cement for substations for CO2 footprint reduction

During cement production, considerable amounts of CO2 are released. To reduce Alfen's CO2 footprint, Alfen started a pilot to use recycled cement for the concrete housing of its substations inorder to further reduce its impact on the environment

EV charging

Implementation of latest communication protocol OCPP2.0

Alfen implemented the new Open Charge Point Protocol (OCPP) 2.0 that replaces the existing OCPP 1.6 version. OCPP is an open communication standard between smart chargers and a back-office for charge point management. Version 2.0 provides additional features such as more smart charging support from back-offices and information for price transparency

Next generation mobile energy storage solution

After launching a mobile energy storage system in 2018 as one of the first in the market, Alfen launched its 2nd generation mobile energy storage solution in 2020 with new and improved features of which various systems are already in operation. This further solidifies its market leading position in this segment

Renewed CSR strategy is delivering impact under four focus UN Sustainable Development Goals

7. Affordable & clean energy Management of customer relationship	9. Industry, Innovation & Infrastructure Research & Development
1.4 142,000 Million tonnes CO2e emissions avoided1 Households supplied with renewable energy in 20202	10M€ Invested in R&D and innovations for the future in 2020
8. Decent work & economic growth Occupational Health & Safety	12. Responsible consumption & production Product quality performance
Lost time injury frequency rate3 Sickness absence rate Alfen Industry average4	Selected results of operational excellence program Streamlining Alfen Elkamo's transformer substation production & logistics which resulted in increased capacity, improved quality and reduced lead times Successfully moved Alfen's EV charging production operations to a new and larger facility, where Alfen further optimised production process efficiencies Optimised the EV charging service tools and processes to further improve Alfen's service capabilities as well as the collaboration with Alfen's partners

2020 in summary

2 Progress against strategy

Financials and outlook

Four levers of growth

Market growth

Benefitting from strong market growth trends and further grow market share

Internationalisation

Significant internationalisation opportunity, further strengthening position in existing countries and entering new countries

Service & maintenance

Expanding existing service offering and benefitting from increasing installed base

Cross-selling

Increasing cross-selling opportunities between Alfen's three business lines and offering of integrated solutions

Market growth

Benefitting from fast growing market segments

Smart grids

EV charging

Energy storage

Substation investments Dutch top-3 DSOs1

(# of new substations)

1,708

1,671

1,712

2019

2020

2021

Dutch solar PV installed capacity2

(GW)

2022

Annual installed EV charge points3

(# of charge points in thousands)

2018

2023

2019

Rest of EuropeSpain

ItalySweden

Norway Netherlands UK

Annual installed energy storage capacity in Western Europe, excluding residential3

(Li-ion battery energy storage in MW)

2025

France

Germany

2020

Rest of Western Europe

Spain

France Italy

Germany

UK

2025

Internationalisation

Further building international organisation

Growing international revenues

Alfen's revenues outside of the Netherlands in Europe

(in € millions and as % of group revenues)

• • Continuation of strong growth of international revenues, predominantly driven by the EV charging business line

• • Alfen further strengthened its international organisation and expanded to Italy, Spain and Poland

• • Besides its own organisational presence, Alfen benefitted from clients with an international footprint and has its products installed in more than 25 European countries

Countries with Alfen sales presence as per 31 Dec 2019Additional countries with Alfen sales presence as per 2020Other European countries with Alfen products installed

Expanded and further optimised service offering

Alfen has further expanded and optimised its service offering across its business lines in 2020

For instance, Alfen widened its service offering for Smart grids and for its EV charging business and Alfen further optimised its service proposition to fulfil customer needs even better

For EV charging, Alfen offers remote and on-site service throughout Europe, where the company has international service partners lined up in Finland, France, Germany, Italy, Norway, Portugal, Spain, Sweden and the United Kingdom.

Alfen increasingly benefitted from its growing installed base, both through existing and new customers

Cross-selling

Benefitting from cross-sell and integrated solutions offering

Cross-sell example |

Integrated solutions example |

December 2020: Alfen entered into a framework agreement with Centrica's daughter company British Gas, UK's largest energy supplier, to supply EV chargers for its own business. Additionally, the smart EV charge points will be offered by Centrica to its commercial customers who plan to electrify their fleets

February 2021: Alfen was selected by Centrica Business Solutions, a leading UK energy and services company, as a preferred partner for the supply of sub 10MW battery energy storage solutions across Europe

November 2020: Alfen supplied an integrated energy solution with energy storage, charging plaza and local grid connection for PZEM, a Dutch energy supplier

The charging plaza is fitted with smart Alfen Eve Double charge points and has been combined with Alfen's dynamic load balancing solution to optimise charging speeds

Alfen benefitted from the unique ability to be able to offer integrated, smart and reliable solutions for the energy challenges of its clients

2020 in summary

2 Progress against strategy

Financials and outlook

Income statement

In € '000	2020	2019
Revenue and other income	189,010	143,169
Smart grids	118,472	103,584
EV charging	53,547	26,136
Energy storage	16,991	13,449
Gross margin	69,329	50,269
as % of revenues	36.7%	35.1%
Personnel cost	34,401	27,190
Other operating cost	11,087	9,208
EBITDA	23,841	13,872
as % of revenues	12.6%	9.7%
Adjusted EBITDA	24,375	14,525
as % of revenues	12.9%	10.1%
Adjusted net profit	12,513	6,237

• • Revenue growth driven by growth across all business lines

• • Margin increased by 1.6 percentage point as a result of Alfen's strong market position, leverage from increased scale, a shift towards increasingly complex solutions and favourable product mix effects within each business line

• • Personnel cost increased with 27% compared to 32% revenue growth, resulting in further operational leverage. Average FTEs increased from 464 in 2019 to 571 in 2020

• • Adjusted EBITDA growth of 68% in 2020 compared with 2019. This improvement is a result of higher gross margins as well as the operational leverage strategy

Balance sheet

In € '000	31 Dec 2020	31 Dec 2019
Non-current assets	37,806	27,732
Current assets	56,402	48,762
Cash and cash equivalents	52,344	134
Total assets	146,552	76,628
Non-current liabilities	18,430	14,642
Current liabilities	53,894	45,671
Bank overdraft	-	3,267
Equity	74,228	13,048
Total equity and liabilities	146,552	76,628

• • Capex amounted to €9.6m (5.1% of revenues) as compared to €6.7m

  (4.7% of revenues) in 2019. Capex in 2020 includes investments in new moulds for Smart grids as well as investments in a new and significantly larger EV charging production facility. Additionally, Alfen capitalised €5.0m of development costs which demonstrates the company's continued efforts to invest in innovations for the future

• • Working capital1 reduced to €2.5m (versus €3.1m at 31 December 2019)

  despite further growth of the business. Inventory increased due to some strategic stock for additional resilience related to COVID-19 as well as increased stock levels reflecting further growth of the business, however, this was offset mainly by an increase of the trade and other payables

• • In June 2020, Alfen raised capital of which the proceeds are used to further strengthen Alfen's leading position as a provider of smart energy solutions

Outlook 2021

Alfen expects that, in 2021, COVID-19 will continue to impact the wider economy and its end-markets, which may impact order intake and revenue growth. To what extent, depends on the duration of the pandemic and how quickly vaccines can successfully be rolled out and get the virus under control, as well as any measures adopted by governments

At the same time, Alfen expects the energy transition to keep building further momentum as European governments increasingly take action to further support the European Union's Green Deal to become climate neutral by 2050

As such, Alfen continues to anticipate long-term positive market developments in all its business lines and in 2021, plans to further invest in its organisation, new innovations and further optimisation of its production facilities

Alfen expects 2021 revenues to be between €225m to €250m based on the ongoing energy transition while taking into account the impact of COVID-19