ENERGIEKONTOR AG Report on the third quarter of 2020
Brief portrait of Energiekontor AG
A solid business policy and a great deal of experience in renewable energies: Energiekontor has stood for this for 30 years. Founded in Bremerhaven in 1990, the Company is one of the pioneers in the industry and is now one of the leading German project developers. The core business ranges from planning and construction to the operational management of wind farms in Germany and abroad and was expanded in 2010 to include solar energy. In addition, Energiekontor operates wind and solar parks with a rated output of almost 287 megawatts in its own portfolio.
Energiekontor AG is also playing a pioneering role in economic terms and intends to realize the first wind and solar parks in all target markets as quickly as possible at market prices, independent of state subsidies.
In addition to its headquarters in Bremen, Energiekontor has offices in Bremerhaven, Hagen im Bremischen, Aachen, Bernau near Berlin, Potsdam and Augsburg. The Company also has branches in England (Leeds), Scotland (Edinburgh, Glasgow), Portugal (Lisbon), USA (Austin/Texas, Rapid City/South Dakota) and France (Toulouse, Rouen).
The proud record since the Company was founded: 126 wind farms and ten solar parks with a total output of over 1 gigawatt. This corresponds to an investment volume of approx. € 1.7 billion.
The Company went public on 25 May 2000. The share of Energiekontor AG (WKN 531350 / ISIN DE0005313506) is listed in the General Standard of the German Stock Exchange in Frankfurt and can be traded on all German stock exchanges.
Investor Information
Stock exchange listing: | Deutsche Börse, Frankfurt (tradable on the Frankfurt Stock Exchange, |
XETRA and all other German stock exchanges) | |
Market segment: | General Standard |
Class of shares: | Bearer shares |
Industry: | Renewable energies |
Initial listing (IPO): | 25 May 2000 |
SIN: | 531350 |
ISIN: | DE0005313506 |
Reuters: | EKT |
Shareholder structure: | 52.4 % Executive bodies; 47.0 % free float; 0.6 % Energiekontor AG |
Dr. Karsten von Blumenthal, First Berlin | |
Research: | Guido Hoymann, Metzler Capital Markets |
Jan Bauer, Warburg Research | |
Designated Sponsor: | Oddo Seydler Bank AG |
11/13/2020: Publication of report on the 3rd quarter of 2020 | |
Financial calendar: | 11/16-18/2020: Eigenkapitalforum (German Equity Forum), Frankfurt |
03/31/2021: Publication of annual report 2020 | |
05/14/2021: Publication of report on the 1st quarter of 2021 | |
Peter Alex | |
Investor Relations: | Tel: 0421-3304-126 |
E-mail: IR@energiekontor.com | |
Internet: www.energiekontor.com |
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REALIZED WIND AND SOLAR PARKS of Energiekontor AG
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TABLE OF CONTENTS | |
Electricity generation in group-owned wind farms .................................................................. | |
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Our mission statement
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The Energiekontor share
The Energiekontor share at a glance
International Securities Identification Number (ISIN) | DE0005167902 |
Securities identification number (WKN) | 516790 |
Ticker symbol | EKT |
Transparency level | General Standard |
Designated Sponsor | ODDO SEYDLER BANK AG |
Initial listing | 25 May 2000 |
Share capital in EUR at 30 September 2020 | EUR 14,328,160.00 |
Number of shares at 30 September 2020 | 14.328.160 |
Closing price on 30 September 2020 | EUR 38,00 |
High for the period from 1 January to 30 September 2020* | EUR 39.30 (30 September 2020) |
Low for the period from 1 January to 30 September 2020* | EUR 14.05 (16 March 2020) |
Market capitalisation on 30 September 2020 | EUR 544,470,080 |
* on XETRA |
Authorized capital
At the Annual General Meeting on May 26, 2016, the Management Board was authorized, with the approval of the Supervisory Board, to increase the share capital of the Company on one or more occasions on or before May 23, 2021 by a total of up to EUR 7,326,580.00 by issuing up to 7,326,580 new common and/or preferred bearer shares with or without voting rights in exchange for cash contributions and/or contributions in kind (Authorized Capital 2016).
The authorization includes the power to issue additional preferred shares (with or without voting rights) in the event of multiple issues of preferred shares, which take precedence over or are equal to the previously issued preferred shares in the distribution of profits or Company assets. The shareholders must generally be granted a subscription right. However, the Management Board was authorised, with the consent of the Supervisory Board, to exclude the statutory subscription right of the shareholders (for the exact conditions, see the resolution in the invitation to the Annual General Meeting on 26 May 2016 on the Company's website under the menu item Investor Relations > Annual General Meeting). This authorization has not yet been exercised.
Conditional capital
The General Meeting of Energiekontor AG on 23 May 2018 passed a resolution to conditionally increase the Company's share capital by up to € 500,000.00 by issuing up to 500,000 new bearer shares with a notional share in the share capital of € 1.00 each as subscription shares. The conditional capital increase shall serve the sole purpose of granting subscription rights to members of the Company's Management Board within the framework of a stock option plan (Section 192 (2) No. 3 AktG). Within the framework of the Stock Option Plan 2018, subscription rights for up to 500,000 shares of the Company may be issued to members of the Company's Executive Board until April 30, 2023. In April 2020, 100,000 subscription rights were issued to a member of the Executive Board under this program.
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General market development
The global stock markets made a friendly start to 2020 and in some cases reached new record highs in February. The market situation changed abruptly with the Corona outbreak in Europe. The lockdown implemented by many countries brought the global economy to a virtual standstill. Under very high swings, the stock markets therefore fell by an average of 25-30 percent within one month. The DAX lost 35.5 percent and other German indices even more. Since the end of March, a recovery has been underway almost as quickly as the crash. By the end of June, most of the losses had been recovered and in the following months many stock indices were able to report new records. With a renewed increase in the number of Covid 19 sufferers, share prices worldwide - and in Germany too - fell again at the end of the third quarter.
Performance of the Energiekontor share since the beginning of 2020
The Energiekontor share started the current financial year at a price of € 21.30. Despite news from China about the outbreak of a virus infection, share prices in general and the Energiekontor AG share continued their upswing. On 17 February, the Energiekontor share reached its highest level in the last 19 years at
- 23.00. With the outbreak of the Corona virus in Northern Italy, the rise in the share price was abruptly halted and also unable to escape the negative sentiment and fell to EUR 14.10. The share was able to recover quickly from this low and subsequently embarked on a rally that drove it to new record highs. At the end of the third quarter, the share price reached a new all-time high of EUR 39.20, representing an increase of 84 percent compared to the beginning of the year. In the same period, the General Standard price index recorded a gain of almost 10 percent.
The monthly trading volume on XETRA rose in the first nine months of 2020 compared with the first nine months of 2019 from approx. 185,000 to just under 230,000 shares.
Performance of the Energiekontor share* compared to the General Standard share price index (Period: 12 months)
220%
Energiekontor | General Standard Kursindex | |
200%
180%
160%
140%
120%
100%
80%
Oct. | Nov. | Dec. Jan. Feb. Mar. | Apr. | May | Jun. | Jul. | Aug. | Sept. |
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Share buyback programme
By resolution of the annual general meeting of Energiekontor AG on 21 May 2015, the Board of Management was authorised pursuant to § 71 (1) No. 8 AktG to acquire and retire own shares in the Company of up to 10 percent of the share capital, without the retirement or its implementation requiring a further resolution of the general meeting. On the basis of this authorisation, the Company had acquired 377,144 no-par-value bearer shares in the Company with a proportionate amount of the share capital of €1.00 per share via the stock exchange up to 8 May 2020.
Using the above authorisation to retire own shares acquired in accordance with section 71 (1) no. 8 AktG, the Board of Management decided on 30 September 2020, with the approval of the Supervisory Board on the same day, to reduce the company's share capital by €350,000 from €14,678,160 to €14,328,160.
By resolution of the annual general meetings of Energiekontor AG on 20 May 2020, the Board of Management was authorised pursuant to § 71 (1) No. 8 AktG to acquire own shares of the company of up to 10 percent of the share capital. On the basis of this authorisation, the company had acquired 62,419 no- par value bearer shares in the company with a proportionate amount of the share capital of € 1.00 per share via the stock exchange in the period from 7 July to 30 September 2020.
In total, the company held 89,563 treasury shares on 30 September 2020.
Directors' Dealings
In the first nine months of 2020, no share transactions were carried out by the Executive Bodies of Energiekontor AG.
The member of the Supervisory Board Darius Oliver Kianzad and the members of the Managing Board Peter Szabo (Chairman), Günter Eschen and Carsten Schwarz did not hold any shares in the Company during the reporting period.
Shareholder structure as at 30.09.2020
As at 30 September 2020, the Company is aware of the following direct or indirect shareholdings of more than 3 percent of the capital:
Dr. Bodo Wilkens | |||
(Chairman of the | 3,759,835 shares | ||
Supervisory Board) | |||
Günter Lammers | |||
(Deputy Chairman of the | 3,752,474 shares | ||
Supervisory Board) | |||
Universal Investment | 1,445,087 shares | ||
Company mbH | |||
Pelion Green Future Alpha | 441,512 shares | ||
GmbH | |||
Other free float
33,78%
Executive Bodies
52,43%
Pelion Green Future | |
Alpha GmbH | Own shares |
3,08% | |
0,63% | |
Universal Investment
Company mbH
10,09%*
- Universal Investment Gesellschaft mbH last reported a shareholding that would have given it a 10.09% shareholding as of 30 September 2020. As no such notification was received, the current shareholding is likely to be below 10%.
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Share trading and market capitalisation in the 2020 financial year
The following table shows the monthly highs and lows, the monthly closing prices, the monthly turnover on XETRA and the market capitalisation of the Energiekontor share at the end of each month in 2020
2020 | Monthly closing | Monthly | Market capitalisation at | ||
High (€) | Low (€) | turnover | |||
month | price (€)* | (units)* | end of month (€) | ||
January | 20.50 | 22.20 | 21.40 | 132,863 | 314,112,624 |
February | 23.00 | 17.90 | 20.00 | 312,193 | 293,563,200 |
March | 22.00 | 14.10 | 17.25 | 363,624 | 253,198,260 |
April | 20.40 | 17.25 | 18.20 | 157,727 | 267,142,512 |
May | 21.30 | 17.75 | 20.50 | 211,958 | 300,902,280 |
June | 23.00 | 20.30 | 22.50 | 255,638 | 330,258,600 |
July | 26.10 | 21.90 | 25.80 | 224,866 | 378,696,528 |
August | 31.00 | 24.70 | 30.00 | 116,488 | 440,344,800 |
September | 39.30 | 28.20 | 38.40 | 282,970 | 550,201,344 |
* on XETRA
Source: Oddo Seydler, German Stock Exchange
Research Coverage
In fiscal 2020, three renowned analyst firms (First Berlin, Bankhaus Metzler, Warburg Research) regularly published equity research reports on Energiekontor and the markets in which the Company operates. Currently all of them assign a buy rating and the average target price is € 46.13. The research reports can be requested from Investor Relations.
Our investor relations activities
Transparency and openness in a continuous dialogue with our shareholders and capital market participants are our standards. Our investor relations work is aimed at strengthening confidence in our shares in the long term and achieving a fair valuation on the capital market. To this end, we provide our shareholders and the capital market with accurate, prompt and relevant information both on Energiekontor's business and on the market environment in which we operate. In addition, Energiekontor is committed to complying with the principles of good corporate governance.
In one-on-one or group discussions at investor roadshows, our management and investor relations team answered questions from investors and financial analysts on business-strategy and -development of Energiekontor and on industry and market trends. Since the outbreak of Covid-19, videoconferencing has been used and the number has even increased since then.
Investor Relations Contact:
Peter Alex
Head of Investor Relations
Phone: +49 421 3304 -126
E-mail: ir@energiekontor.com
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Industry and market development
China continues to lead the renewable energy sector growth in both wind and solar power, followed by the US. Together, the two countries each account for well over half of the annual growth in wind and solar power.
The main driving force for further growth in the sector remains the international targets on climate protection and sustainable energy supply. The countries within the EU have committed themselves to binding expansion targets. Not only the international agreement reached at the UN Climate Change Conference in Paris at the end of 2015 has shown that there is now an almost worldwide consensus on climate protection and the necessary containment of carbon dioxide emissions, even if this is sometimes called into question in the course of changes of government. With the foreseeable change in the White House, the renewable energy sector in the USA should receive a significant boost.
Wind and solar energy worldwide
Despite the Corona crisis and the falling electricity demand associated with the economic lockdown, wind and solar energy increased significantly in the first half of 2020. The share of these renewable energies in global electricity production rose to 9.8 percent according to an evaluation by the British energy turnaround think tank Ember. In absolute figures, the amount of electricity generated from solar and wind energy rose from 990 to 1130 terawatt hours. Since 2015 the share of photovoltaic and wind power in electricity production has doubled.
In Germany, the two renewable sources currently cover 42 percent of demand, and 21.4 percent in the EU as a whole. In the USA, too, the volume of renewable energies grew by 16 percent in the first half of the year. If other sources such as hydropower are added, renewable energies currently cover around 28 percent of global electricity demand, according to the International Energy Agency (IEA).
According to Ember's analysts, this growth is mainly at the expense of coal. In the USA and the EU, the amount of coal-based electricity fell by more than 30 percent in the first half of the year - even though the government of Donald Trump, for example, vehemently supports the domestic coal industry. Worldwide the amount of coal-fired electricity shrank by 8.3 percent. However, two-thirds of the decline can be explained by lower demand as a result of the economic slump, and only about one-third by the fact that renewable energies are squeezing coal out of the market. Moreover, coal-fired power generation is still not shrinking fast enough to meet the Paris climate targets. To prevent global temperatures from rising by more than 1.5 degrees Celsius, an analysis by the CarbonBrief portal suggests that a decline of 13 percent per year would be necessary, at least until 2030.
Wind and solar energy in Germany
On 16 January 2020, the basis for a coal phase-out law, which is to regulate the end of coal-fired power generation by 2038, was laid within the framework of a federal/state agreement on the coal phase-out. This had been preceded by several draft laws on reductions in the hard coal sector and months of negotiations with various lignite companies. The agreement provides for an orderly decommissioning path until 2038, which includes the decommissioning of approximately 2.8 GW of power plant capacity by the end of 2022 and a further 5.7 GW by the end of 2029, as well as a review of the decommissioning planned after 2030 at the revision dates 2026 and 2029, with the aim of ending coal-fired electricity generation as early as 2035 if possible. If this happens, half of the lignite capacity will not be shut down until between 2035 and 2038.
But renewable energies will also receive a further boost, not least as a result of the "European Green Deal" presented at the end of 2019 by the new Commission President Ursula von der Leyen, a concept with the aim of reducing net greenhouse gas emissions to zero in the European Union by 2050 and thus becoming the first continent to become climate neutral. In combination with the shutdown of the last nuclear power plants in 2022, the medium-termphase-out of coal-based electricity generation in Germany will also promote the expansion of renewable energies.
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The "Federal Government Hydrogen Initiative" points in the same direction. This national hydrogen strategy interlinks climate, energy, industrial and innovation policy. The aim is to make Germany an international pioneer in green hydrogen and to achieve and secure long-term world market leadership in hydrogen technologies. This can only be achieved if renewable energies are significantly expanded.
The framework for the expansion of renewable energies in Germany is provided by the Renewable Energy Sources Act (EEG). Since the introduction of the EEG, the share of renewable energies in gross electricity consumption has risen from 6 percent in 2000 to almost 40 percent in 2019. In the first half of 2020, renewable energies already contributed 45 percent of gross electricity consumption, although it should be noted that overall demand was significantly lower than in the same period of the previous year due to the economic slump.
Wind energy in Germany
The Renewable Energy Sources Act (EEG) stipulates that since 1 January 2017 the promotion of renewable energies for new permits has been regulated by a tendering model.
The 2020 tendering rounds, like almost all rounds since the suspension of the special rules for non-approved projects, are characterised by the signing of the tender volume, i. e. the amount of bids submitted is lower than the amount tendered. The volume of 3,494 MW tendered in the first six tender rounds (including the tender of 10/1/2020) is compared to the awarded wind energy projects with a capacity of 2,273 MW.
The maximum permissible value for tenders in 2020, as in 2019, was 6.2 ct/kWh. Even though the range of bids has increased compared to the rounds at the end of 2019, many of the bids are based on this value.
With an expected subsidy of around 2,600 MW for the current year, a significant increase over the previous year (1,843 MW) will be achieved, but this volume will again remain well below the figure desired by the Federal Government according to the expansion plan (4,100 MW).
Solar energy in Germany
In the first six solar tenders in 2020, 1,400 MW were tendered, and bids were submitted for over 3,400 MW. This means that the quantity put out to tender was almost two and a half times oversubscribed.
The cross-technology call for proposals on 1 April and the innovation call for proposals on 1 September were both clearly oversubscribed and dominated by solar systems.
While there are significantly more projects with the corresponding output in the solar sector than are put out to tender, in the wind sector bids are submitted for just under two-thirds of the volume put out to tender. Even if the situation in the wind sector should improve somewhat, it can be expected that the volume put out to tender will hardly be reached in future tenders.
Foreign countries
As the general conditions in the international markets in which Energiekontor operates have changed only insignificantly compared with the explanations in the 2019 annual report, we refer here to the comments made there.
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The Company
Business model of Energiekontor AG
Energiekontor AG has specialised in the project planning and operation of wind and solar parks at home and abroad. As one of the pioneers in this field, the company can draw on 30 years of experience and covers the entire value-added chain in the field of onshore wind farms and solar parks, from acquisition and project development to financing and the construction of the plants and their operation.
As of the date of this report, the Energiekontor Group has planned and erected 631 wind turbines with a total output of around 973 MW in 126 wind farms in Germany, Great Britain and Portugal as well as ten PV ground-mounted systems of around 63 MW in Germany. The total investment volume of these projects amounts to approximately € 1.7 billion.
In addition to the sale of turnkey projects, the Energiekontor Group operates a portfolio of the Group's own wind and solar parks as an independent electricity producer. As of September 30, 2020, the Group had around 287 MW in its own operational portfolio.
The Company is active in the national markets of Germany, Great Britain, Portugal, USA and France.
In organisational terms, the Energiekontor Group is divided into three business divisions, according to which segment reporting is also based:
- Project planning and sales (wind, solar)
-
Electricity generation in group-owned wind and solar parks
(c) business development, innovation and others
a) Project planning and sales (wind, solar)
The project planning and sales segment (wind, solar) comprises the project planning of onshore wind and solar parks, which are either included in the company's own portfolio or sold to third parties. This segment covers the entire value chain of the acquisition, from planning, financing and construction or repowering to the sale of the plants. The wind and solar parks are sold in Germany and abroad to institutional investors, complete private buyers or local residents. An independent project company is founded for each wind / solar park.
The repowering of sites, i. e. the replacement of old plants with new, more powerful plants, has been an important part of the Energiekontor Group's business activities for many years. Starting in 2021, a large number of wind farms in Germany will be phased out of the 20-year guaranteed remuneration every year. It is therefore foreseeable that repowering projects will gain enormously in importance in the future.
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b) Electricity generation in group-owned wind and solar parks
This segment encompasses electricity generation in the Group's own wind and solar parks. The expansion of the portfolio of the Group's own wind and solar parks is the core component of the company's organic growth. In addition, the operation of the Group's own wind and solar parks allows Energiekontor to cover ongoing corporate costs, e.g. in the event of delays in project implementation, and also increases independence from political conditions and interest rate and commodity price developments. Moreover, hidden reserves are created by the assets in the company's own portfolio. If necessary, these assets could be sold, and the financial resources tied up in them plus the hidden reserves released. Additional potential lies in the possibility of upgrading the company's own wind farms, for example through repowering or efficiency-enhancing measures.
The Energiekontor Group added the first wind farm to its own portfolio in 2002. Since then, the portfolio has been continuously expanded. This is currently done mainly by taking over self-developed projects into the own portfolio. This means that about half of all projects developed by the company itself each year are to be transferred to the company's own portfolio. In the past, economically interesting operational wind farms have also been purchased. These were both projects developed and sold by Energiekontor itself in earlier years and projects from other developers and operators. The total output of the wind and solar parks owned by Energiekontor in Germany, the UK and Portugal amounted to 286.7 MW at the end of the reporting period.
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Own parks as of 30 September 2020:
Total power/ | Total power/ | ||
Name of wind or solar park | MW | Name of wind or solar park | MW |
Mafomedes (Energiekontor | |||
Altlüdersdorf | 13.5 | holds 97%) | 4.2 |
Balje-Hörne | 3.9 | Marão | 10.4 |
Beckum | 1.3 | Montemuro | 10.4 |
Breitendeich | 6.0 | Penedo Ruivo | 13.0 |
Briest (Tandem II) | 7.5 | Wind farms in Portugal | 38.0 |
Briest II | 1.5 | ||
Debstedt | 3.0 | Hyndburn | 24.6 |
Engelrod | 5.2 | New Rides | 9.0 |
Flögeln | 9.0 | Withernwick | 18.5 |
Geldern | 3.0 | Withernwick II | 8.4 |
Giersleben | 11.3 | Wind farms in Great Britain | 60.5 |
Halde Nierchen I | 5.0 | ||
Halde Nierchen II | 4.0 | Garzau-Garzin | 10.0 |
Hanstedt-Wriedel | 16.5 | Solar parks in Germany | 10.0 |
Heinsberg-Waldenrath | 7.3 | ||
Kajedeich | 4.1 | ||
Krempel | 14.3 | ||
Krempel II | 6.5 | ||
Kreuzau-Steinkaul | 5.5 | ||
Lengers | 4.5 | ||
Mauritz-Wegberg | |||
(Energiekontor hält 88,52 %) | 7.5 | ||
Niederzier-Steinstraß | 8.3 | ||
Nordleda | |||
(Energiekontor hält 51 %) | 6.0 | ||
Osterende | 3.0 | ||
Prenzlau | 1.5 | ||
Schwanewede | 3.0 | ||
Sievern (Tandem II) | 2.0 | ||
Thüle | 14.0 | ||
Wind farms in Germany | 178.2 | Total | 286.7 |
(c) business development, innovation and others
All services aimed at optimising the creation of value from operations following the commissioning of wind and solar parks are grouped together in the business development, innovation and other segment. These include, in particular, the technical and commercial management of the wind farms, including the direct marketing of the electricity generated, as well as all measures aimed at reducing costs, extending the service life and increasing yields in order to optimise the yields of wind and solar plants, e. g. by
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- Rotor blade extension and improvement of blade aerodynamics
- Updates in the plant control system or replacement of the old controls with new, modern controls
- more precise wind tracking and increased generator output
- Reduction of failure rates through preventive maintenance
- Reduction of downtimes by converting all wind farms to permanent live data monitoring with automated fault clearance workflow
- Consistent reduction of electricity generation costs for existing parks
- Conclusion of short-term PPA contracts for post-EEG wind farms
Irrespective of whether the projected plants are sold or taken over into the company's own stock, Energiekontor generally provides the commercial and technical management and thus generates a current cash flow for the company.
In the commercial sector, the core tasks include in particular forward-looking liquidity management, invoicing the energy supplier, service and maintenance companies and lessors and long-term optimisation of profitability. Communication with banks, insurance companies, tax consultants and investors is also part of this. Furthermore, the settlements for feed-in management are carried out variably, either via the flat-rate or peak load procedure.
In the technical area, the tasks include not only the monitoring of the wind turbines and the evaluation and assessment of data, but mainly the coordination of repair and maintenance operations as well as the planning and implementation of preventive maintenance measures. This procedure can significantly extend the service life of the individual plant and the overall project. At the same time, the costs for the repair of the main components can be significantly reduced. The primary objective is to maximise the availability and yield of the plants and to guarantee safe operation over the entire lifetime. To this end, the plant data is monitored around the clock using live data and automated workflows. In addition, we guarantee the legally compliant operation of the parks by complying with all legal requirements and also assume responsibility as operator.
Technical innovations, such as the extension of rotor blades, are also part of the Performance, revenue and cost optimisation. This is a procedure patented by Energiekontor for increasing the rotor diameter, which has been successfully tested and used in practice for several years. The assembly is carried out on the hanging blade, i.e. without dismantling the blade. This allows crane costs and downtimes to be significantly minimised. In the last three years, the improvement measures at the company's own wind farms have already had a positive effect on the operating result.
Objectives and strategy
In the three decades since the company was founded, the market for renewable energy has been subject to constant change and development. In 1990, when the first electricity feed-in law was introduced, wind and solar energy were still absolute exotics and only hydropower made a modest contribution to the total energy supply. It was not until the turn of the millennium that the triumphal march of renewables slowly began, and renewables grew out of their sometimes smiled at niche. It is well known that the large electricity companies, which now play an important role in the renewable energy sector, were initially extremely critical of the new technologies. Today, however, renewable energies have developed into a mature, established and recognised technology that already makes a significant contribution to energy supply in many industrialised countries. In Germany, the share of renewable energies in gross electricity generation is currently already over 45 %. The higher the share of renewable energies in meeting demand, the more sustainable and environmentally friendly the overall energy supply will be.
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The self-conception of Energiekontor: Pioneer in renewable energies
Since its foundation, Energiekontor has had a clear vision of the future: a world in which the entire energy demand is covered 100 percent by renewable energy. The company has placed this vision at the beginning of its mission statement. It is the guiding principle of Energiekontor's entrepreneurial activities and the strongest motivation for its employees in their efforts to come closer to this goal every day with creative ideas and the joy of shared success.
A sustainable penetration of the energy market with 100 percent renewable energy will only be possible if the production costs for electricity from renewable energies are lower than those from fossil and nuclear energy sources. In order to promote the expansion of renewable energies, Energiekontor is striving to play a pioneering role in the markets addressed and wants to be one of the first to realise wind and solar parks whose electricity production costs are lower than those of the conventional energy industry. As soon as this is achieved, a large number of barriers will disappear. Social support in politics and society will also increase significantly when wind and solar energy are no longer dependent on public funding measures. The spread of renewable energies will thus receive a strong boost.
As a pioneer in the realisation of wind and solar parks at pure market prices, Energiekontor is not only making an important contribution to helping renewable energies achieve a breakthrough on the way to 100 percent full supply. At the same time, Energiekontor's pioneering role secures a lead over other competitors and thus a strong competitive position in the industry. Thus, the efficiency measures for cost reduction along the entire value chain, which have been prepared for a long time and are constantly being further developed, should give Energiekontor decisive competitive advantages in order to drive forward the expansion of renewable energies as an innovative pioneer and independently of government support measures.
Sustainable growth on solid foundations
Overall, the growth model of Energiekontor AG is closely oriented to the company's mission statement. By strengthening the regional approach and opening up new foreign markets, the organic growth of the company is consolidated in order to actively accelerate the expansion of renewable energies even in an increasingly competitive environment. In doing so, the management relies heavily on the participation and development of the employees and creates the necessary organisational framework. The basis and foundation of the growth strategy is the financial stability of Energiekontor, which is based to a very large extent on the stable cash surpluses from electricity generation in the Group's own wind and solar parks and from commercial and technical management activities.
Strengthening the regional approach
Energiekontor has always emphasised a regional approach. This allows for close cooperation with local and regional authorities and tailor-made regional approaches with a high level of local acceptance. At the same time, this generates a competitive advantage in the respective region and accelerates project development. From an organisational point of view, this approach is implemented with our own local teams and largely independent decision-making powers. This principle is to be further strengthened by expanding the number of regions in which Energiekontor has a local presence, both in Germany and abroad.
Development of new foreign markets
A key element of Energiekontor's growth strategy is increased internationalisation through successive expansion of the existing country portfolio and the expansion of solar activities in order to tap additional growth potential for the coming years. In addition to Germany, the solar sector will be expanded above all in the USA and France, as these countries have much more favourable irradiation conditions and corresponding electricity production costs.
Following acquisition successes, Energiekontor has made significant progress in project development in the USA and is seeking to sell rights to two solar projects. The solar segment in the USA is managed from the office in Austin (Texas), while the office in Rapid City (South Dakota) is responsible for the wind segment.
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Only native speakers with regional roots are used, a principle that also contributes significantly to success in all other markets.
In France there are offices in Toulouse for the development of solar activities and an office in Rouen for wind activities. As solar projects can generally be planned more quickly, we expect the first success stories from the solar sector in France as well.
Innovation and efficiency measures
In recent years, Energiekontor has developed a series of measures to increase economic efficiency in the planning, construction and operation of wind and solar parks and to optimise processes along the entire value chain.
There are three directions of attack:
- increasing the economic efficiency of the projects planned by Energiekontor
- the increase in earnings from wind and solar parks in the Group's own portfolio
- accelerated solution finding in project development
These measures are closely linked to the deepening of the decentralised organisation and an employee-led project organisation.
Design areas and organisational decentralisation
Innovation and efficiency are not necessarily limited to technical innovations. For Energiekontor, increasing the efficiency of the company includes deepening its decentralised organisation. Thus the management consciously relies on a strong decentralisation of work and decision-making processes with flat hierarchies in order to avoid unnecessary bureaucratisation and to ensure flexibility and quick decisions even with a growing number of employees. At the same time, the company creates scope for creative and flexible solutions and motivates each individual employee to act on their own responsibility.
Own park portfolio as a reliable generator of growth
The engine and core element of the growth model is the expansion of electricity generation from the Group's own wind and solar parks. Continuous income is generated by selling the electricity generated in the wind and solar parks. A further guarantee for continuous income is the assumption of the operational management of the completed and running parks by specialised teams from the Energiekontor Group. This applies both to the wind and solar parks in the company's own portfolio and to the turnkey plants that are sold to energy suppliers, strategic investors or financial investors. By taking over the operational management, the vast majority of the buyers remain associated with Energiekontor AG as customers and thus secure the company ongoing income from the wind and solar parks even beyond the completion date.
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Growth model of Energiekontor AG
Together with the steady income from the operation of the company's own and third-party parks, the income from the sale of electricity ensures financial stability and forms the basis for the company's sustainable growth. With the cash surpluses generated, Energiekontor essentially covers the costs of project development, including group-wide personnel and overhead costs. The proceeds from the sale of the wind and solar parks developed in-house generate the net income for the year and are used to pay taxes and dividends and to form liquidity reserves.
Electricity generation in the Group's own wind farms is to be expanded through:
- Takeover of self-developed and built projects
- Repowering of own portfolio
- Optimisation and increased efficiency
About half of the projects developed in-house are to be transferred to the company's own portfolio, the other half is intended for distribution. Management reserves the right to adjust this ratio depending on the business situation.
Different growth dynamics
The company's growth takes place in different ways in the individual segments. In the project development segment, Energiekontor is driving growth by intensifying location acquisition and the regional approach, as well as expanding into new markets. In contrast, the area of power generation in the Group's own wind and solar parks is growing as the company takes over projects from project development into its own portfolio. The more wind farms are transferred to the Group's own portfolio, the greater the increase in cash surpluses from electricity sales and operational management activities. This in turn means that more funds are available for project development to drive growth. Further growth is thus essentially determined by the further expansion of the own park portfolio and the increase in cash surpluses from the operation of own wind parks and operational management. This organic growth process is reinforced by accompanying innovation and efficiency measures, which lead to further increases in earnings and further increase the cash surplus from electricity generation in the Group's own wind and solar parks.
A positive side-effect of this growth strategy is that it reduces dependence on project sales and income from project sales. Even if no income could be generated from project sales, the Group's liquidity position and the financing of project development (including Group-wide personnel and overheads) is secured by the cash surpluses generated from electricity generation in the Group's own wind and solar parks and from
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operations management. The risk of financial imbalances is thus minimised as far as possible. In this respect, the Energiekontor growth model also differs from the business models of many competitors in the industry who do not have a comparable portfolio of their own wind and solar parks.
Economic objective
With this strategy, Energiekontor plans to increase EBT from project development in the medium term in a stable and sustainable manner to around € 30 million p.a. This already takes into account the fact that about half of the projects realised each year are to be transferred to the company's own portfolio, whereby the construction profits of these own-stock parks are eliminated as part of the group consolidation and therefore have no impact on the consolidated profit.
The expansion of the portfolio of the Group's own wind farms is intended to establish Energiekontor as a medium-sized regenerative electricity producer and ensure that it is largely independent of general market developments. It is planned to further expand the company's own park portfolio and, with the income from
the park and operational development, to achieve a sustainable EBT of 25-30 million per year.
The expansion of the company's own park portfolio is to come from its own project development, the repowering of existing parks and, if necessary, the acquisition of third-party parks. These new investments are to be financed by project financing loans, project-related bonds, own work and ongoing liquidity surpluses from the operation of the own park portfolio.
Overall, EBT generated by the Group is expected to rise to between €55 and €60 million p.a. in the medium term.
In recent years, Energiekontor has created the conditions for stable and sustainable growth and is ideally equipped to meet the challenges of the future in a competitive market environment.
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Business performance
Project planning and sales (wind, solar)
In Germany, four wind farms with a total capacity of 63 MW are under construction at the time of publication of this report. In addition, one solar park with a capacity of 8.4 MW.
As is well known, the Waldfeucht wind farm, which was sold last year and has a capacity of 13.5 MW, was commissioned in January. In addition, three solar parks with a cumulative capacity of around
13.3 MW was sold to the Tübingen public utility company. The Beckum wind farm repowering project, which has also already been sold and is currently under construction, is scheduled to go into operation in November.
Financial close has already been reached in the course of the year for four wind farms with a total capacity of 67.5 MW, and preparations are underway for further projects with a nominal capacity of around 50 MW. However, these projects will not be commissioned until the end of 2021 at the earliest.
In this year's invitations to tender issued by the Federal Network Agency, we were awarded various contracts in both the wind and solar sectors. On the one hand, we were awarded contracts for five wind farms with a total volume of 97.9 MW, and on the other hand we were successful with two solar farms (15.9 MW).
We were able to announce another important success on 5 May: We concluded a long-term PPA (power purchase agreement) with the French electricity supplier ENGIE for a solar park planned by Energiekontor. Due to the significant drop in electricity prices as a result of the economic downturn and the resulting low electricity consumption, we did not conclude further PPAs as originally planned. As soon as electricity prices pick up again as a result of an economic recovery, we expect to conclude corresponding contracts in the near future. We also aim to conclude follow-up PPAs for wind farms which will in future be exempt from the 20-year EEG remuneration. We are currently waiting for electricity prices to rise here as well.
Currently, Energiekontor is in the process of selling project rights to investors for two solar projects it is currently working on in the USA, in order to gain initial experience in this market and generate initial revenues. This is the first stage in our three-stage development process of the US market, which we are applying here, as it is extremely important to us that all risks in the course of the project remain manageable and controllable. Therefore, we first want to gain initial experience in the USA in connection with the sale of these project rights. Later on, the projects are to be carried through to financial close. Only then are there plans to construct turnkey projects as usual.
The project pipelines in Germany and abroad are being continuously expanded. Foreign markets will become increasingly important in the medium term, particularly as a result of the expansion of projects in Scotland, but also in the USA and France, which are at various stages of development. In total, the project pipeline has since been further expanded to approx. 4,800 MW.
Electricity generation in group-owned wind farms
The total output of the group's own portfolio amounts to just under 287 MW.
Wind yields in the third quarter were unusually low and thus had a negative impact on the figures for the reporting period. While we are slightly below the long-term average in Germany and the UK as a whole, the deviation in Portugal is even significant. The shortfall in yield for German wind farms was around 5% and in the UK around 2%, while wind yields in Portugal were actually down by around 15%. As in previous years, however, the segment result will largely depend on wind conditions in the fourth quarter.
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Due to the still low level of own capacities in the solar segment, the above-average solar radiation in the reporting period did not lead to any significant increase in earnings.
Business development, innovation and others
The management fee depends largely on the energy generated in the wind and solar parks managed. In the first half of the year, this largely developed according to plan.
Outlook
The forecast for the current financial year is based on the growth plans of Energiekontor AG on the basis of a solid business model and against the background of the different systems of remuneration for electricity generated from renewable sources.
Under the premise of a 100% supply of renewable energies to meet the energy demand, Energiekontor has set itself the goal of realising the first wind and solar parks whose electricity production costs are lower than those of the conventional energy industry, in order to help renewable energies as a whole to achieve greater market penetration. The company's various departments have been preparing for this for years with various efficiency measures along the entire value chain. At the same time, these cost-cutting measures represent a competitive advantage and help the company to achieve a good position within the industry in a tightening market environment with increased cost pressure.
In addition to participating in future German tenders in the wind and solar sectors, Energiekontor is concentrating above all on concluding power purchase agreements with major industrial partners (PPAs). With these PPAs, the company has already been able to successfully gain experience in Great Britain for many years and to gain trust among the industrial partners.
In addition, the focus for the development of further projects is now on Scotland, where, with excellent wind conditions, large-scale wind farms are to be realised economically without support measures. At present, building permits have been granted for eight major projects in Scotland; further permits are expected in the short term.
Segment EBT in the "Project Planning and Sales (Wind, Solar)" segment is expected to be significantly higher than in the previous year. A large number of completed or planned project sales in the wind and solar sector provide an encouraging overall outlook in this segment.
The segment "Power Generation in Group-owned Wind and Solar Parks" would generate slightly higher segment EBT compared to the previous year, assuming an almost normal wind year and further economic optimisation measures. However, segment EBT will in all probability be burdened by a one-time special effect in Great Britain.
In the segment "Operating Development, Innovation and Other" we anticipate a slight increase in terms of sales and EBT. This is due to further efficiency measures and the increased volume of wind farm management compared with the previous year. However, since management remuneration for all wind and solar parks is linked to the electricity revenue generated, the positive effects of the portfolio expansion on earnings could be offset by the counteracting effects of a below-average fourth quarter.
Overall, the Management Board expects consolidated EBT for the 2020 financial year to be in the double- digit million range and thus well above the EBT for 2019. After a number of difficult years, Energiekontor is thus building on the very successful period up to 2016. In the future, we anticipate even significantly better results and maintain average earnings increases of around 20 % p. a. are realistic.
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Supplementary report
The sale of the Boddin wind farm was announced on 10/9/2020, the following day the sale of the Heinsberg wind farm.
No other events of particular significance have occurred since the end of the interim reporting period.
Miscellaneous
Risk Management
The statements described in the Opportunities and Risks Report of the Annual Financial Report 2019 continue to apply with regard to current developments. The annual financial report and other financial reports of Energiekontor AG are published on our homepage www.energiekontor.deunder "Investor Relations - Financial Reports".
Declaration on corporate governance
The declaration on corporate governance in accordance with the German Accounting Law Modernisation Act (BilMoG) can be found on the website www.energiekontor.de under the heading "Investor Relations/Corporate Governance".
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Imprint
Publisher
Energiekontor AG
Mary-Somerville-Straße 5
28359 Bremen
Phone: +49 421 3304 - 126
Telefax: +49 421 3304 - 444
info@energiekontor.de
www.energiekontor.de
Picture credits
Helene Lüers, Bremen
Energiekontor picture archive
Note on pro forma key figures (EBIT, EBITDA, cash flow)
The earnings indicators EBIT and EBITDA used in this report as well as the cash flow indicator are examples of so-called pro forma figures. Pro forma figures are not part of the national accounting regulations, the German Commercial Code (HGB) or the international accounting regulations according to the International Financial Reporting Standards (IFRS). Since other companies may not calculate the pro forma figures presented by Energiekontor Group in the same way due to the lack of legal definitions of these terms, the pro forma figures of Energiekontor Group are only comparable to a limited extent with figures of other companies with this or similar names. The pro forma figures presented in this interim report should therefore not be considered in isolation as an alternative to the operating result, net profit, consolidated net profit or other reported key figures of the Energiekontor Group.
Disclaimer
This report contains forward-looking statements. These are statements that do not represent historical facts, including statements about the expectations and opinions of the management of Energiekontor AG. These statements are based on current plans, estimates and forecasts of the management of the company. Investors should not rely on these statements without reservation. Forward-looking statements are made in the context of their time of origin and the environment in which they are made. The company assumes no obligation to update the forward-looking statements contained in this report as a result of new information or future events. This does not affect the company's obligation to comply with its statutory information and reporting duties. Forward-looking statements always involve risks and uncertainties. A variety of factors can lead to the fact that the events that have actually occurred and will occur in the future can deviate considerably from the forward- looking statements contained in the report.
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Investor Relations
Peter Alex
Mary-Somerville-Strasse 5 28359 Bremen
Phone: +49 421 3304 - 126
Telefax: +49 421 3304 - 444
ir@energiekontor.de
www.energiekontor.de
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Energiekontor AG published this content on 13 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 November 2020 08:28:01 UTC
