Voltalia SA — Interim / Quarterly Report 2020

Sep 24, 2020

September 24, 2020

After a strong growth in the first half of 2020, Voltalia confirms its medium-term trajectory

Very strong growth in H1 2020

• In H1, growth¹ in revenues (+73%), EBITDA (+111%) and seasonal net loss (+77%) despite low wind resource in Brazil: new power plants and expansion of external services

Growth confirmed, despite temporary activity delays and currency effects impacting 2020 EBITDA

• Strong H2 improvement expected due to the seasonality of wind resource in Brazil and commissioning of new plants: H2 EBITDA expected to be 4.2 times H1 EBITDA, at constant exchange rates
• However, in H2, the Covid-19 crisis is strongly impacting the Brazilian real and slows down temporarily construction schedules of Voltalia plants and orders from third-party clients (Services)
• Rebasing 2020-2023 sequence of EBITDA ambitions accordingly (with EUR/BRL assumed at 6.3): around €100 million in 2020 (vs €160-€180 million), around €170 million in 2021 and €275-€300 million in 2023 (confirmed)
• Capacity ambitions are confirmed: 1 GW in operation by end 2020 and 2.6 GW in operation and construction with increased proportion of solar and a greater geographic diversification

Outstanding development and commercial activity since the beginning of the year

• Record level of new power sale contracts, reaching 867 MW since January (x2.2 compared with full year 2019)

***

Voltalia (Euronext Paris ISIN code: FR0011995588), international player in renewable energies, announces today its H1 2020 results² . Voltalia will comment on its H1 2020 results and short to mid-term perspectives during a live webcast starting at 8.30 AM Paris time on Thursday 24, 2020. All connection details are available on our website: https://www.voltalia.com/uk/investors.

"Voltalia recorded very strong growth in the first half of 2020. The contribution of new power plants, our expansion in Europe and Africa, the rebalancing towards solar and our strategy to develop Services to third-party clients supported this achievement. Voltalia's performance would have been even better without poor wind conditions in Brazil and currency variations. We adjust the 2020 EBITDA ambition to take into account a Brazilian real now weak and the effects of the covid-19 crisis on our construction sites and on our clients' activity but we confirm our year-end ambition of 1 GW of installed capacity. Looking beyond 2020, the momentum remains very strong. The record-high level of new contracts won since the beginning of the year (867 MW) supports our long-term capacity and results growth." comments Sébastien Clerc, CEO of Voltalia.

¹ At constant exchange rates

Key figures

			Change
In € millions	H1 2020	H1 2019		At actual rates At constant rates
Revenues	88.4	56.9	+55%	+73%
EBITDA	23.8	13.9	+71%	+111%
EBITDA margin	27%	24%	+2.4 pts	+5.3 pts
Net profit (Group share)	(15.8)	(8.7)	+81%	+77%

H1 2020 total consolidated revenues stands at €88.4 million, up by 73% at constant currency, and H1 2020 total consolidated EBITDA stands at €23.8 million, up by 111% at constant currency. The EBITDA margin, at 27%, improves by 5.3 points at constant currency, notably thanks to a better mix of activity in Services which is more than offsetting poor wind conditions in Brazil. Net profit (Group share), which is, as in the past, negative due to the seasonal nature of the wind resources of the power plants owned by Voltalia, also records a growth in volume with a net loss (Group share) increasing by 77% at constant exchange rates.

Business review

Energy sales: revenues and EBITDA growth thanks to portfolio growth and despite lower wind resource

			Change
In € millions Before eliminations of services provided internally	H1 2020	H1 2019	At actual Rates	At constant rates
Revenues	62.1	45.5	+36%	+54%
EBITDA	32.9	27.4	+20%	+36%
EBITDA margin	53%	60%	-7.2 pts	-7.1 pts
Production (in GWh)	915	757	+21%
Installed capacity (in MW, end of period)	820	534	+54%

H1 2020 revenues are €62.1 million, up by 54% at constant currency, and EBITDA is €32.9 million, up by 36% at constant currency, driven by the increase in installed capacity in operation across geographies, reaching 820 MW at the end of June 2020. The EBITDA margin is down by 7.1 points, impacted by lower wind resource in Brazil and the consolidation of Helexia.

• In Brazil, 54% of energy sales (vs. 73% in H1 2019), typical business seasonality is amplified by particularly unfavourable weather conditions with an EBITDA impact of -€2.5 million compared with last year and -€7.5 million for an average wind resource. In addition, the sanitary and economic crisis sees a strengthening of the euro, especially against emerging currencies. The average EUR/BRL rate is 5.4 in H1 2020 compared with 4.3 in H1 2019, resulting in a translation impact of -€4.5 million on the EBITDA. On the other hand, new wind projects generate €6.3 million of EBITDA in H1 2020.
• In France, 29% of energy sales (vs. 23% in H1 2019), the deconsolidation of the Coco-Banane solar plant's EBITDA is offset by the positive contribution of new hydroelectric and solar (including Helexia's rooftops) power plants and the good performance of other existing power plants.
• In other countries (United Kingdom, Belgium, Portugal, Spain, Italy, Greece and Egypt), 17% of energy sales (vs. 4% in H1 2019), EBITDA is materially higher, mostly driven by the excellent performance of the Râ Solar plant in Egypt, above expectations, and Helexia's integration.

Recently acquired Helexia, a solar rooftop and energy efficiency specialist consolidated since July 2019, represented 18% of H1 2020 energy sales. Helexia's revenues were 24% higher when compared with H1 2019 for an EBITDA margin of 35%, reflecting a less capital-intensive model than Voltalia's historical Energy sales business.

			Change
In € millions Before eliminations of services provided internally	H1 2020	H1 2019	At actual rates	At constant rates
Revenues	49.9	73.9	-32%	-29%
EBITDA	-1.9	1.2	NA	NA
EBITDA margin	-4%	2%	NA	NA

Services: lower internal EBITDA more than offset by higher external EBITDA to third-party clients

H1 2020 Services revenues were down 29% at constant exchange rates on H1 2019, with negative EBITDA reflecting lower internal sales which are eliminated in the consolidated accounts.

• Development, Equipment Procurement and Construction (78% of H1 2020 Services sales) recorded lower sales and EBITDA. This is due to (i) increased early-stage development costs to support geographic diversification, and (ii) less internal billing compared with H1 2019 which enjoyed significant contribution from the Cacao project in French Guiana and the Râ Solar project in Egypt. In parallel, external sales accelerated thanks to Construction contracts in progress, particularly in Africa and in Europe (mainly Portugal), and to the sale of two Brazilian ready-to-build wind projects for a total of 94 MW to Total-Eren³ and Toda⁴ .
• Operation & Maintenance (22% of H1 2020 Sales) recorded higher sales, including the contribution of Greensolver, but remained below breakeven, pending higher volume of activity to be derived from new business secured and from Voltalia's growing portfolio of plants.

Overall, the increased share of external sales to third-party clients in the activity mix resulted in much lower eliminations, with Eliminations and corporate costs at €7.2 million, down from €14.7 million in H1 2019. This better mix contributed to the improvement of the total EBITDA in absolute terms and relatively to revenues, while illustrating once again Voltalia's integrated strategy combining Energy sales and Services.

³ See Q4 2019 press release dated January 22, 2020

⁴ See press release dated August 25, 2020

Net result of -€16 million reflecting usual seasonality

				Change
In € millions	H1 2020	H1 2019	At actual rates	At constant rates
EBITDA before eliminations and corporate	31.0	28.6	+8.2%	+27.0%
Eliminations and corporate	(7.2)	(14.7)	-51.1%	-52.0%
EBITDA	23.8	13.9	+71%	+111%
EBITDA margin	27%	24%	+2.4 pts	+5.3 pts
Depreciation/Amortisation/Provisions (DAP)	(22.8)	(9.6)	x2.4	x2.6
Operating revenue (EBIT)	1.2	4.3	-73.0%	+2.8%
Financial result	(14.9)	(15.3)	-2.5%	+14.8%
Taxes and net income of equity affiliates	(4.3)	(0.9)	x4.8	x5.6
Minority interests	2.3	3.2	-27.3%	-11.4%
Net profit (Group share)	(15.8)	(8.7)	+80.6%	+76.8%

Consolidated EBITDA stands at €23.8 million, up by €9.9 million (+111% compared with 2019 at constant currency) driven by the positive development in the business, and despite low wind resource and the weakening of the Brazilian currency (together -€13 million EBITDA impact).

EBITDA margin gains 5.3 points at constant currency, reaching 27% of revenues, also supported by the better mix of activity in Services.

Consolidated EBIT drops at €1.2 million. Depreciation and Amortisation increase by €4.1 million due to new plants commissioning and the consolidation of Helexia. The 2019 figures included EPC-related reversal of Provisions for €6.2 million⁵ .

Financial result improves slightly (by €0.4 million) due to the combined effects of lower interest rates for plants in Brazil and lower EUR/BRL exchange rate, with a total impact of €4.4 million, partly offset by increased project debt and the consolidation of Helexia's debt.

Taxes are up by €3.4 million, mostly driven by the mix of activity with higher Services sales to third-party clients, and the integration of Helexia.

Minority interests record a loss of €2.3 million. Plants co-owned with minority partners have a slower profitability rampup profile than fully-owned plants.

In H1 2020, Voltalia reports a €15.8 million Net loss (Group share), up by €7.1 million compared with H1 2019, consistent with the growth in activity. Voltalia's first semesters are characterized by seasonality with high wind regimes in Brazil skewed towards H2 (H2 production 70% higher on average than H1 for the last two years) and with H1 2020 not yet benefitting from the full contribution of new plants.

Simplified consolidated balance sheet

Voltalia's assets are mainly power plants in operation (78% of Property, plant and equipment), and in construction or in development. With 73% of its installed base in Brazil, Voltalia records a translation impact in H1 2020 related to the strengthening of the EUR against the BRL, which also reduces its debt in Brazilian real.

⁵ See H1 2019 press release dated September 25, 2019

In € millions	30/06/2020	31/12/2019	Change
Goodwill	59.9	63.5	-3.5
Intangible assets / Other intangible assets	175.4	169.0	+6.4
Property, plant and equipment	873.5	897.6	-24.1
Tangible and intangible fixed assets	1 108.9	1 130.1	-21.2
Cash and cash equivalents	160.8	269.7	-108.9
Other assets	157.3	155.0	+2.3
Total assets	1 427.0	1 554.8	-127.9
Equity, Group share	606.7	708.9	-102.5
Minority interests	37.6	51.3	-13.7
Financial debt	627.2	656.2	-29.0
Other current and non-current liabilities	155.5	138.4	+17.1
Total liabilities	1 427.0	1 554.8	-127.9

As of June 30, 2020, Fixed assets decline by €21.2 million (-1.9%) compared with December 31, 2019 due to:

• a €24.1 million net decrease in Property, plant and equipment due to the straight-line depreciation of plants in operation and currency variations, more than offsetting investment in new projects and construction for €168.4 million;
• a €6.4 million increase in intangible assets, mostly reflecting the capitalization of new power plant projects under development.

At June 30, 2020, the Group's cash position stands at €160.8 million, down by €108.9 million on 31 December 2019. This is essentially explained by Voltalia's investments, with cash used to temporarily bridge drawdowns of long-term project financing, saving interest charges.

At June 30, 2020, the Group's financial debt -contracted in local currency and backed by power production plants- is €627.2 million, down by €29.0 million. This decrease is attributable to currency variations, which more than offset a €63.0 million net increase in debt.

Voltalia maintains a very robust financial structure, with a very low gearing of 51%⁶ . The Group's financial debt is largely backed by power production plants for which debt is contracted in local currency, with an average residual maturity of 15 years. In addition, as of June 30, 2020, Voltalia has €150 million of unused corporate revolving credit facilities.

Developments since July 1st

Voltalia announces today the release of a report by ESG agency Sustainalytics. Voltalia now ranks 7th within its industry group (482 companies), progressing compared with 2019 (16th). Topics audited included Corporate governance, Community relations, Business Ethics, Land Use and biodiversity…

In Brazil, Voltalia launched in August the construction of VSM 4, a 59 MW wind plant in Voltalia's Serra Branca cluster, in the state of Rio Grande do Norte in Brazil, for a commissioning expected in H1 2021.

⁶ Financial Debt / (Equity + Financial Debt)

Voltalia sold in August to Japanese construction firm Toda a 28 MW ready-to-build wind project located in its Serra Branca cluster. As part of this project, Voltalia will carry out construction, operation, maintenance, and administrative services for Toda.

Beginning of September, Voltalia signed a 14-year power sale contract with Copel, a Brazilian utility company. Voltalia will build a 260 MW solar plant (SSM 3 to 6) in its Serra Branca cluster. The solar plant is expected to be commissioned in the first half of 2022.

Voltalia announces today that it has won a Services contract with Vale and Cemig covering the Santo Inácio Wind Complex in Brazil which capacity amounts to 98,7 MW. For an initial 5 year-period, Voltalia will provide maintenance services on the electric balance of the plant and supervise operations provided by the turbine manufacturer, based on Voltalia's in-house performance analysis tool.

In France, Voltalia commissioned in August a 3.9 MW solar shelter plant in the South Region which benefits from a 20-year power sales agreement.

In September, Voltalia and its partner Ikea started marketing solar rooftop solutions to Ikea's clients.

In Greece, Voltalia won 12 MW of new solar projects in August, expected to be commissioned during the first half of 2021. The Greek Regulatory Authority of Energy awarded Voltalia 20-year power sales agreements. Voltalia also won 10 MW of construction-and-maintenance contracts for a photovoltaic project owned by a third-party client who secured power sales agreements during the same auction.

In Portugal, Voltalia announces today it has won new construction contracts, increasing its Portuguese backlog of construction contracts for third-party clients to a total of 300 MW.

Growth trajectory confirmed despite short-term covid-19-related challenges

As communicated this year, the sanitary and economic crisis makes Voltalia's environment less predictable. The three main risks identified by Voltalia were i) currency variations (mainly the Brazilian real); ii) the ability to carry out the construction of current and future Voltalia projects; and iii) the capacity of Voltalia's clients in Services (mainly development sales and construction projects) to move forward in their decision-making process.

Short-term challenges

In H1, Voltalia recorded low levels of wind in Brazil. Since the beginning of the year, Voltalia is also experiencing a continuous weak BRL against the EUR, with the EUR/BRL rate around 6.3 on average since the start of H2, compared with 5.4 in H1 2020 and 4.3 in H1 2019. In addition, while Voltalia-owned sites under construction have only suffered minor delays in H1 2020, as for VSM1 (163 MW), the Covid- 19 crisis now affects construction schedules. Originally delayed by a few weeks, projects are now behind by 4-6 months (VSM2&3 and Mana Storage) or even more (Cacao). Finally, certain Services' third-party clients are delaying contract signatures or notices to proceed.

Rebasing 2020-2023 sequence of EBITDA ambitions accordingly

• The low levels of wind of H1 2020 in Brazil had a -€7.5 million EBITDA impact.
• Assuming a EUR/BRL of 6.3 from today until the end of the year, i.e. an average exchange rate of 5.9 (versus 5.0 assumed to calculate the low end of the 2020 ambition), the weakness of the BRL is estimated to have a full-year 2020 EBITDA impact of -€25 million.

• Over the full-year 2020, the combined effect of Covid-related delays (Construction, Services) on EBITDA is estimated to be -€27 million.

As a result, Voltalia now expects its 2020 EBITDA to reach around €100 million (assuming average wind/solar/hydro resource from today), a 50%+ growth compared with 2019 and 90%+ growth at constant currency, but below its €160-180 million initial ambition range. In 2021, once it will benefit from the contribution of the 1 GW portfolio of operating plants and normalizing Services, Voltalia's EBITDA is expected to reach around €170 million (assuming average wind/solar/hydro resource and a EUR/BRL rate of 6.3). By 2023, with Voltalia benefiting from further capacity growth, EBITDA is expected to reach €275-300 million, assuming a EUR/BRL rate of 6.3⁷ .

All capacity ambitions confirmed

Despite construction delays, short and long-term capacity ambitions are confirmed: from 1 GW in operation expected by end 2020, capacity is expected to rise to 2.6 GW in operation and construction by end 2023.

This ambition is strongly supported by recent long-term contracts wins: 867 MW of new contracts won since the beginning of 2020, after 389 MW in 2019 and 241 MW in 2018.

All in all, Voltalia has already secured 92% (or 2.4GW) of its 2023 ambition. Recent wins strongly support the rebalancing of Voltalia's portfolio towards more solar (now 50% of all contracted capacity) and more Europe / Africa (34% of total contracted capacity). They also diversify the client base of Voltalia with over 400 MW signed with corporate clients.

Next on the agenda: Q3 2020 revenues on October 21, 2020

About Voltalia (www.voltalia.com)

Voltalia is an international player in the renewable energy sector. The Group produces and sells electricity generated from wind, solar, hydraulic, biomass and storage facilities that it owns and operates. Voltalia has generating capacity in operation and under construction of more than 1.3 GW and a portfolio of projects under development representing total capacity of 8.5 GW.

Voltalia is also a service provider and supports its investor clients in renewable energy projects during all phases, from design to operation and maintenance.

As a pioneer in the corporate market, Voltalia provides a global offer to private companies, ranging from the supply of green electricity and energy efficiency services to the local production of their own electricity.

The Group has 994 employees and is present in 20 countries on 4 continents and is able to act worldwide on behalf of its clients.

Voltalia is listed on the regulated market of Euronext Paris, compartment B (FR0011995588 – VLTSA) and is part of the Enternext Tech 40 and CAC Mid & Small indices. The Group is also included in the Gaïa-Index, an index for socially responsible midcaps.

Voltalia Investor Relations: invest@voltalia.com +33 (0)1 81 70 37 00

Press Contact Actifin jjullia@actifin.fr +33 (0)1 56 88 11 11

⁷ Confirming the ambition announced in the press release dated June 6, 2019

Installed capacity at end June 2020

In MW	Wind	Solar	Biomass	Hydro	Hybrid*	June 2020
Brazil	580.3				16.0	596.3
Egypt		32.0				32.0
France	52.2	73.8		4.5		130.5
French Guiana		6.6	1.7	5.4		13.7
Greece		4.7				4.7
United Kingdom		7.3				7.3
Portugal		8.8				8.8
Italy		10.2				10.2
Belgium		11.6				11.6
Spain		4.5				4.5
Total	632.5	159.5	1.7	9.9	16.0	819.6

*4 MW of solar and 12 MW thermal

Electricity production report

(in GWh)	Wind	Solar	Biomass	Hydro	Hybrid*	H1 2020
Brazil	685.1				20.9	706.0
Egypt		38.5				38.5
France	75.6	50.7		2.8		129.2
French Guiana		2.3	5.3	7.2		14.7
Greece		3.6				3.6
United Kingdom		4.7				4.7
Portugal		3.1				3.1
Italy		6.4				6.4
Belgium		7.0				7.0
Spain		2.1				2.1
Total	760.8	118.3	5.3	10.0	20.9	915.2

*Includes the production of Oiapoque solar

Forward-Looking Statements

This press release contains certain forward-looking statements relating to the business of Voltalia, which shall not be considered per se as historical facts, including the ability to manufacture, market, commercialize and achieve market acceptance for specific projects developed by Voltalia, estimates for future performance and estimates regarding anticipated operating losses, future revenues, capital requirements, needs for additional financing. In addition, even if the actual results or development of Voltalia are consistent with the forward-looking statements contained in this press release, those results or developments of Voltalia may not be indicative of their outcome in the future. In some cases, you can identify forward-looking statements by words such as "could," "should," "may," "expects," "anticipates," "believes," "intends," "estimates," "aims," "targets," or similar words. Although the management of Voltalia believes that these forward-looking statements are reasonably made, they are based largely on the current expectations of Voltalia as of the date of this press release and are subject to a number of known and unknown risks and uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievement expressed or implied by these forward-looking statements. In particular, the expectations of Voltalia could be affected by, among other things, uncertainties involved in Voltalia's produced electricity selling price, the evolution of the regulatory context in which Voltalia operates and the competitiveness of renewable energies or any other risk and uncertainties that may affect Voltalia's production sites' capacity or profitability of as well as those developed or identified in any public documents filed by Voltalia with the AMF, included those listed in Chapter 2 "Risk factors and risk management" of the 2019 Universal Registration Document(document de reference) filed with the French financial market authority (the Autorité des marchés financiers – the "AMF") on March 25, 2020. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements made in this press release will in fact be realized. Notwithstanding the compliance with article 223-1 of the General Regulation of the AMF (the information disclosed must be "accurate, precise and fairly presented"), Voltalia is providing the information in these materials as of this press release, and disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

Consolidated income statement (unaudited)

In € thousands	At 30 June 2020	At 30 June 2019		Change %
Revenues	88 439	56 882	31 557	55%
Purchases and sub-contracting	(12 414)	(2 807)	(9 607)	342%
External expenses	(31 694)	(26 684)	(5 010)	19%
Payroll expenses	(19 388)	(13 529)	(5 859)	43%
Other operating income and expenses	(1 160)	60	(1 220)	(2 033)%
Total operating expenses	(64 656)	(42 960)	(21 696)	51%
EBITDA	23 783	13 922	9 861	71%
% EBITDA	27%	24%	2%	10%
Other financial income and expenses	(2 960)	(206)	(2 754)	1 337%
Allocations and reversals of depreciation, amortisation and provisions	(19 662)	(9 418)	(10 244)	109%
Operating revenue (EBIT)	1 161	4 298	(3 137)	(73)%
% EBIT	1%	8%	(6)%	(83)%
Borrowing costs	(15 325)	(17 765)	2 440	(14)%
Other financial income and expenses	415	2 480	(2 065)	(83)%
Income tax and other taxes	(4 286)	(1 148)	(3 138)	273%
Income from companies at equity	(44)	237	(281)	(119)%
Net profit (loss)	(18 079)	(11 898)	(6 181)	52%
% Net profit (loss)	(20)%	(21)%	-%	(2)%
Group Share	(15 781)	(8 739)	(7 042)	81%
Minority interests	(2 298)	(3 159)	861	(27)%
Earnings per share (in euros):
Before dilution	(0,1662)	(0,1788)	(0,0688)	71%
After dilution	(0,1652)	(0,1776)	0,0124	(7)%

Consolidated balance sheet (unaudited)

In € thousands	At 30 June 2020	At 31 December 2019	Change
Goodwill	59 944	63 457	(3 513)
Intangible assets in progress	40 951	40 400	551
Property, plant and equipment	134 458	128 559	5 899
Equity affiliates	873 522	897 638	(24 116)
Non-current financial assets	2 447	3 048	(601)
Deferred tax assets	21 571	21 593	(22)
Other non-current assets	2 042	2 360	(318)
Non-current assets	1 134 935	1 157 055	(22 120)
Inventories and work in progress	36 110	40 951	(4 841)
Trade receivables	66 028	59 022	6 016
Financial assets	3 453	5 079	(1 626)
Other current assets	25 683	22 965	3 708
Cash and net cash equivalents	160 770	269 744	(108 974)
Current assets	292 044	397 761	(105 717)
Total Assets	1 426 979	1 554 816	(127 837)
Group equity	606 663	708 898	(102 235)
Non-controlling interests	37 644	51 310	(13 666)
Equity	644 307	760 208	(115 901)
Non-current provisions	2 908	3 431	(523)
Provisions for post-employment benefits	1 354	1 172	182
Deferred tax liabilities	3 045	2 687	358
Long-term borrowings	564 608	592 561	(27 953)
Non-current liabilities	9 015	9 239	(224)
Non-current liabilities	580 930	609 090	(28 160)
Current provisions	5 614	6 374	(760)
Short-term borrowings	62 556	63 675	(1 119)
Trade and other payables	83 244	77 401	5 843
Other tax liabilities	18 788	15 866	2 922
Other current liabilities	31 540	22 202	9 337
Current liabilities	201 742	185 518	16 223
Total Liabilities	1 426 979	1 554 816	(127 837)