2G Energy AG — Earnings Release 2012

May 31, 2013

News Details

Corporate | 31 May 2013 07:20

2G Energy AG: 2G Energy AG fully confirms corporate strategy with successful business year 2012

2G Energy AG / Key word(s): Final Results/Final Results

31.05.2013 / 07:20

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Corporate News

2G Energy AG fully confirms corporate strategy with successful business year 2012

– EUR 16.6 million of EBIT generated on EUR 146.5 million of revenue with a11.3 % EBIT margin

– Revenue share of international business grows from 10 % to 40 %

– Revenue share of natural gas-driven CHPs doubles to 30 %

– Dividend of EUR 0.37 per share proposed

– 2013 outlook: EUR 160 million of revenue and almost constant EBIT margin

Heek, May 31, 2013 – 2G Energy AG (ISIN DE000A0HL8N9), one of the leading German manufacturers of combined heat and power (CHP) plants, generated EUR 146.5 million of consolidated revenue in the 2012 financial year (previous year: EUR 167.3 million), according to audited figures. The company achieved earnings before interest and tax (EBIT) of EUR 16.6 million (previous year: EUR 19.5 million), representing a continued high EBIT margin of 11.3 % (previous year: 11.8 %). Consolidated net income stood at EUR 11.3 million in 2012 (previous year: EUR 13.6 million), and earnings per share amounted to EUR 2.58 (previous year: EUR 2.98) after deducting earnings attributable to third parties.

Significant foreign growth, sharp rise in natural gas share

As planned, 2G significantly reduced its dependencies on the German biogas systems market and subsidies from the German Renewable Energies Act (EEG) in the year under review. As a consequence, 2G doubled its share of revenue deriving from natural gas-driven combined heat and power plants (CHPs) to around 30 % (previous year: 15 %), and international sales grew markedly from 10 % in the previous year to approximately 40 %. Italy and the USA comprised the strongest foreign markets in terms of sales. In the USA, 2G founded it its own manufacturing company in Florida at the start of 2012, and holds an interest in a sales company.

Christian Grotholt, CEO of 2G Energy AG, assesses the 2012 financial year, and provides an outlook: ‘We can be satisfied with an 11.3 % EBIT margin that is almost at the previous year’s record level. A repeat of the sales and earnings record arising from the 2011 biogas systems boom, from which we benefited as a builder of combined heat and power plants, was not to be expected. We successfully further diversified ourselves both in Germany and abroad in 2012. With our proprietary developments agenitor 406, avus 500 plus and G-Box 20, we have rapidly gained shares in the growth market for CHPs. In CHP applications with weak gases such as mine, landfill and sewage gases, too, our CHPs’ top efficiencies are proving persuasive to customers both in Germany and abroad.’

With a look to the current and coming financial years, CEO Grotholt notes that, with the conclusion of the capacity expansions for production, logistics and services at its Heek site in April this year, 2G is able to double its revenue to around EUR 300 million (2012 bases). Together with the current optimization and standardization processes across the Group, the Management Board assumes that this objective, accompanied by a rising EBIT margin (target: 15 %), will be achieved before the year 2020.

Healthy balance sheet structure in 2012, equity ratio at 50.4 % after 45.3 %

The balance sheet structure of the 2G Energy Group remained very stable in the 2012 financial year. Total assets were up by 12.5 % year-on-year to reach EUR 94.7 million. Non-current assets rose mainly due to buildings and land added to property, plant and equipment that serves the capacity expansion at the Heek location. The transformation of the 2G Group into an international player on the CHP market is reflected in the year-on-year change in current assets. While receivables comprised a constant proportion of 24.6 % of total assets (previous year: 24.3 %), inventories increased to 33.1 % of total assets on the balance sheet date (previous year: 22.4 %) due to special purchasing transactions and to boost the company’s ability to deliver internationally. These measures support the company’s entry into foreign markets and boost sales and service quality. Working capital consequently rose from EUR 25.3 million to EUR 30.1 million, and cash and cash equivalents fell from EUR 25.6 million on the previous year’s reporting date to EUR 14.1 million. The 2G Group’s consolidated equity stood at EUR 47.8 million as of the balance sheet date (previous year: EUR 38.2 million), with the equity ratio improving to 50.4 % (previous year: 45.3 %). Bank borrowings include loans to help finance the capacity expansions at the Heek site.

Cost of materials ratio falls from 75.3 % to 65.4 %

The reduction in the cost of materials ratio from 75.3 % to 65.4 % of total operating revenue contributed to the good operating result and the 11.3 % EBIT margin. 2G has increased its vertical range of manufacturing, thereby reducing third-party input. The hiring of 132 new staff and continuous training are reflected in an increase in the personnel expense ratio from 6.7 % to 11.5 %. Marketing, operating and administrative expenses rose from EUR 7.1 million in the previous year to EUR 10.0 million in the year under review as part of the internationalization of business, especially with the expansion and establishment of the international service network. The net financial result stands at almost breakeven. The company incurred EUR 5.1 million of corporation taxes on income (previous year: EUR 5.9 million).

Diversified customer structure

2G enjoys a diversified customer structure in terms of both customer groups and geographic markets. No individual customer account for more than 5 % of CHP revenue in 2012. Among the customer groups, resellers, generally biogas system builders, accounted for the largest revenue share at almost 40 %, with around half of the CHP systems for this group being exported abroad. 2G generated around 14 % of its sales revenue volume with the industrial/commercial sectors, 13 % with German energy utility groups, and around 12 % with farmers. 2G’s foreign subsidiaries contributed 16.5 % to CHP revenue. In the current financial year, 2G is continuing the process of significantly increasing its shares of the natural gas-driven CHP market, and is further expanding its revenue shares outside Germany.

Solid start to FY 2013

2G enjoys a solid order book position at the previous year’s level of around EUR 53 million, 33 % of which is derived from abroad, and which is split approximately 60 % among biogas applications and 40 % among natural gas applications. The German Engineering Federation (VDMA) reported on an overall restrained and slightly declining new order intake for the German mechanical and plant engineering sector for the months of January, February and March. In the first quarter of 2013, the 2G Energy Group’s revenue amounted to EUR 15.4 million in a somewhat weak economic environment, especially in Southern Europe. A comparison with the previous year’s quarter (Q1 2012: EUR 25.6 million) also exhibits a shortfall as deferred revenues from the final quarter of the biogas system boom-driven 2011 financial year were still being booked at the start of 2012. Traditionally, the first quarters of the year tend to be weak, with the final quarter being by far the strongest in terms of sales. Earnings before interest and tax (EBIT) amounted to EUR 0.2 million (previous year: EUR 0.8 million). The 2G Group’s transformation process to become an international market participant is evident in the higher fixed cost block within its cost structure at the start of the year.

Outlook: Stable trend continues this year

2G takes overall optimistic view of 2013 business trends, assuming EUR 160 million of consolidated revenue and an almost constant EBIT margin. 2G expects that the German Renewable Energies Act (EEG) will be adapted to reflect modified tasks following elections to the Lower House of the German Parliament in September 2013. In particular, this will boost the preparedness of German energy utility groups to invest in natural gas-driven CHP systems. 2G also anticipates a signal effect for other European countries, which should deliver further impulses for expansion abroad. In parallel with the foreign business, customer service is to be expanded internationally to generate around 25 % of revenue in the medium term. 2G aims to make the USA its strongest international sales market outside Germany by the end of the current financial year.

Management and Supervisory boards propose EUR 0.37 dividend

Following the approval and adoption of the 2012 financial statements, the Supervisory Board at its meeting on May 27, 2013, concurred with the Management Board’s proposal to the Annual General Meeting to again pay a EUR 0.37 dividend per share for the 2012 financial year.

Download of 2012 annual report

The company is making its detailed 2012 annual report available for downloading at http://www.2-g.de/?langid=1&seitenid=86 (German version) and

http://www.2-g.de/?langid=2&seitenid=86 (English version, available from June 5, 2013).

About 2G Energy AG

2G Energy AG is amongst the world’s leading suppliers of cogeneration systems for decentralized energy supply by means of combined heat and power. The Company’s product portfolio includes systems with an electrical capacity between 20 kW and 2,000 kW for the operation with natural gas, biogas or bio methane. So far, 2G was able to successfully install more than 3,500 modules in 25 countries. 2G serves a wide range of customers from farmers to industrial clients, municipalities, real estate industry up to big utility companies. The high level of customer satisfaction is founded on the close-knit service network as well as the high technical quality and performance of 2G power stations. Thanks to the combined heat and power performance they achieve an overall degree of efficiency between 85 percent and well above 90 percent. To further enlarge the technologically leadership the Company continuously invests in its R&D activities. Next to the construction of combined heat and power stations, 2G Energy offers integrated solutions reaching from the planning stage and installations to serial service and maintenance work. Due to its projectable and scalable availability combined heat and power stations shall play a crucial role as part of intelligent networked energy systems – so called virtual power stations – within the ongoing switch to clean energy.

2G Energy is a public listed company (ISIN DE000A0HL8N9) in the Entry Standard of Deutsche Börse AG a segment within the Open Market (regulated unofficial market). It has a capital stock of 4,430,000 EUR, equalling 4,430,000 shares. Main shareholders are the two company founders with together 58.9 %, freefloat is 41.1 %. In the 2012 financial year (January 1 to December 31), 2G Energy generated EUR 146.5 million of revenue, EUR 16.6 million of earnings before interest and tax (EBIT), and EUR 11.3 million of net income. The company employs around 435 staff.

Financial calendar 2013

May 31, 2013 Publication of Group financial report as of Dec. 31, 2012

July, 17 2013 Ordinary AGM, Münster

Sept. 30, 2013 Publication of Group H1 financial report as of June 30, 2013

Nov. 12/13, 2013 Eigenkapitalforum Deutsche Börse AG, Frankfurt

Further information

IR contact:

2G Energy AG

Benzstr. 3, 48619 Heek, Germany

Telefon: +49 2568 93 47-2795

Telefax: +49 2568 93 47-15

email: ir@2-g.de

www.2-g.de

End of Corporate News

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Language:	English
Company:	2G Energy AG
	Benzstr. 3
	48619 Heek
	Germany
Phone:	+49 (0)2568-9347-0
Fax:	+49 (0)2568-9347-15
E-mail:	service@2-g.de
Internet:	www.2-g.de
ISIN:	DE000A0HL8N9
WKN:	A0HL8N
Listed:	Freiverkehr in Berlin, Düsseldorf, Stuttgart; Frankfurt in Open Market (Entry Standard)

End of News	DGAP News-Service

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