DJ Voltalia SA: record 2018 results and future growth secured
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Voltalia SA
Voltalia SA: record 2018 results and future growth secured
18-March-2019 / 20:22 CET/CEST
Dissemination of a French Regulatory News, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
· Record set of results leading to Group net profit multiplied by 15 at
EUR8.5 million, validating two strategic pillars:
· synergies and profitability generated by Services, which achieve
positive EBITDA
· focus on non-subsidized markets brings additional value creation again
in 2018
· 1 GW target by 2020 secured: over EUR4 billion of future revenues
secured by those long-term power sale contracts
· Post-2020 growth prospects supported by a hefty (6.2 GW) and
fast-growing (+81% vs. 2017), pipeline of future projects, with further
acceleration in solar and in new geographies
Voltalia (Euronext Paris, ISIN code: FR0011995588), an international player
in renewable energies, announces today its results for the 2018 fiscal year.
"In 2018, we enjoyed a record financial performance, validating two of our
key strategic differentiating factors. First, our relaunch efforts in
Services enable profitability gain s, proving they are synergetic with our
power production activity. Second, being mostly active in non-subsidized
markets, we were able again to seize value-enhancing opportunities,
translating into materially higher selling prices in Brazil. Another major
achievement in 2018 was to secure our 1 GW objective and we have already 387
MW currently under construction. Finally, our investment in project
development is paying off: our pipeline of future projects reaches 6.2 GW
(+81% in 2018) and is a reservoir for growth of both our Energy Sales and
Services activities", declares Sébastien Clerc, Chief Executive Officer of
Voltalia.
Record financial performance in 2018
Change
In EUR million FY 2018 FY 2017 at actual at constant
rates FX rates
Revenues 180.7 181.2[1] -0% +13%
EBITDA 76.2 71.6 +6% +29%
EBITDA margin 42% 40% +2.7pts +5.5pts
Net profit (Group share) 8.5 0.6 x15 x23
In 2018, revenues are in line with 2017's performance, as solid growth in
operational business activity fully offsets the 16% drop in the Brazilian
real against the euro. 2018 EBITDA is up by 29% at constant exchange rates,
thanks to a good contribution of Services, high Energy Sales pricing and
good cost control overall. Increased EBITDA and EBITDA margin (+ 5.5 points)
contributed to a sharp rebound in Group net profit, reaching an all-time
high of EUR8.5 million.
Business review
Energy sales: improved EBITDA margin
Change
In EUR million FY 2018 FY 2017 at actual at constant
before rates FX rates
eliminations
of services
provided
internally
Revenues 131.7 145.6 -10% +5%
EBITDA 87.9 94.2 -7% +8%
EBITDA margin 67% 65% +2.0pts +2.1pts
Production (in 2 081 2 123 -2% -2%
GWh)
Installed 524 508 +3% +3%
capacity at
the end of the
period (in MW)
2018 revenues increase by 5% at constant exchange rates and EBITDA grows by
8% compared with 2017, as high pricing over the year and good cost control
more than offset a 2% decline in production:
· In Brazil, the renewal of the contract suspension strategy initiated in
2017 results in another year of excellent pricing, more than offsetting
lower production (- 3%) due to lower wind and despite higher availability
rates.
· Growth in other countries is mainly attributable to higher production
(+15%) driven by France and the commissioning of new solar plants.
Good cost control and lower fees associated with contract suspensions have a
positive impact on the EBITDA margin, increasing by 2.1 points at constant
exchange rates.
Services: doubling of revenues and achieving for the first time positive
EBITDA (6% margin)
Change
In EUR million FY 2018 FY 2017 at actual at constant
before eliminations of rates FX rates
services provided
internally
Revenues 117.2 59.2 x2.0 x2.1
EBITDA 6.7 (9.8) n/a n/a
EBITDA margin 6% (17)% n/a n/a
Services revenues are multiplied by 2 compared with 2017, driving a sharp
rebound in profitability.
· Development, Construction & Procurement revenues and EBITDA record a
major improvement, driven by i) the sale of ready-to-build projects to
Actis, more than compensating higher prospection spending linked to
increased development effort and ii) a return to profitability of the
Construction & Procurement business, in line with intense activity for
Voltalia's own plants.
· Operation & Maintenance revenues decrease, reflecting the end of
contracts, partly mitigated at EBITDA level by extra services provided to
existing third-party clients.
Sustained efforts in the relaunch of the commercial activity in Services are
beginning to pay off, with a positive EBITDA margin of 6%.
Two differentiating factors creating value
A power producer and a service provider
Since 2016 and its accelerated development in Services, Voltalia operates a
differentiating business model combining Power production and Services
provision.
Development is the cornerstone of that strategy, with material investments
in prospection and development in 2017 and 2018, fuelling its pipeline of
projects in development. It reaches 6.2 GW at the end of 2018: x3.4 since
the launch of the new strategy in Services with the acquisition of Martifer
Solar in 2016. By developing -at a low marginal cost- more projects,
Voltalia is able to be selective, keeping projects that best fit its
strategy and selling others to third-party clients together with bundled
Procurement / Construction / Operation & Maintenance services. In 2018 the
Group successfully sold 252 MW of ready-to-build projects to Actis within
Voltalia's Serra Branca cluster, as part of a partnership for up to 500 MW
in total.
Construction, Operation & Maintenance and the associated expertise in 5
technologies (wind, solar, hydro, biomass and storage facilities) are key to
Voltalia's value proposition in its Power production business. Economies of
scale are unlocked by the dual source of activity: internal projects and
third-party projects. In 2018, working on larger construction volumes
enabled to secure a competitive framework agreement with a leading
photovoltaic panel manufacturer. Working for third-party clients is also a
way to explore new countries and technologies: construction contracts were
signed in various new African and European countries and a battery storage
unit was built in the UK, all strengthening Voltalia's geographical and
technological expertise.
Green power producer generating electricity at a competitive price
Voltalia has a unique profile with 85% of its installed based producing
electricity at a competitive price. With this differentiating strategic
focus on non-subsidized markets, Voltalia can seize many value-enhancing
opportunities.
They arise at all stages of the lifecycle of a plant:
· Before the long-term power sale agreement starts, Voltalia can
anticipate construction of plants and sell electricity at attractive
prices through private contracts on the free market. This anticipation is
beneficial, for example, to the VSM 1 and 2 power plants, which will be
commissioned before end 2020 while their long-term power sale contracts
will start in 2021 (64MW+64 MW), 2023 (99MW) and 2024 (64MW).
· During the long-term power sale agreement, opportunities can arise in
non-subsidized markets. For instance, the successful renewal in 2018 of
the contract suspension strategy initiated in 2017 in Brazil enabled to
sell electricity at a higher price through private short-term contracts on
the free market.
· After the end of the long-term power sale agreement, being the cheapest
source of electricity on a market will position Voltalia's plants well,
while subsidized plants may suffer from a steep drop in revenues.
Today, in the renewable energy sector, almost all long-term power sale
contracts are with utilities. In markets where renewables are competitive
compared to fossil fuels, new opportunities arise with new clients:
corporations just looking for a cheap source of electricity. In 2018,
Voltalia signed its first long-term contract with a corporate: BRF, one of
the world's largest agribusiness companies. Thanks to more than 10 years of
experience accumulated on the free market through its activity in Brazil,
Voltalia is able to offer attractive opportunities to corporate clients
across Europe, Africa and Latin America.
Other items from the P&L: record-high net profit
Change
In EUR million FY 2018 FY 2017 at actual at constant
rates FX rates
EBITDA before eliminations 94.6 84.5 +12% +31%
and corporate
EBITDA impact of (18.3) (12.9) +42% +43%
eliminations and corporate
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EBITDA 76.2 71.6 +6% +29%
Depreciation, amortisation (29.1) (27.1) +6% +21%
and provision
Other operating income and 0.1 1.3 -93% -99%
expense
Operating profit (EBIT) 47.2 45.7 +3% +30%
Financial result (29.9) (36.5) -18% -2%
Taxes and net income of (11.3) (5.8) x2.0 x2.3
equity affiliates
Minority interests 2.6 (2.9) n/a n/a
Net profit (Group Share) 8.5 0.6 x15 x23
In 2018, intense activity of insourced Services for the benefit of the
Group's own assets translates into higher revenues eliminations, at EUR68.2
million. Eliminations and corporate costs represented EUR18.3 million of
EBITDA, a 43% increase compared with 2017.
Depreciation, amortisation and provisions increase by 21% at constant
exchange rates, mainly due to the full-year contribution of the SMG power
plant (+EUR2.7 million), whose turbines were in preservation mode until June
2017, the commissioning of new power plants (+EUR1.4 million) and increased
provisions (+EUR1.6 million), partly offset by a positive currency impact
(EUR3.9 million).
EBIT reaches EUR47.2 million in 2018 up by 13.6 million euros at constant
exchanges rates, a 30% increase compared with 2017.
The financial result, mainly financing costs from long-term project
financing, improves by EUR6.5 million at EUR(29.9) million in 2018, mainly
driven by the drop in the Brazilian real.
Taxes are up by EUR5.5 million, reflecting the increased profitability of
Voltalia.
Minority interests record a EUR2.6 million loss. Plants with minority
shareholders have a slower profitability ramp-up, and, as opposed to 2017,
they did not benefit from contract suspensions in 2018.
Group net profit reaches EUR8.5 million, its highest level so far. Voltalia
enjoyed a strong catch-up in the second half of the year (+EUR14.1 million),
coming mostly from wind and solar seasonality.
Simplified consolidated balance sheet
In EUR million 31/12/2018 31/12/2017
Goodwill 46.0 46.1
Other intangible assets 96.4 70.1
Tangible fixed assets 608.2 618.6
Cash and cash equivalents 108.6 71.2
Other current and non-current assets 127.4 106.3
Total assets 986.6 912.2
Equity, Group share 317.6 322.0
Minority interests 54.7 67.2
Total financial debt 506.0 417.4
Other current and non-current liabilities 108.3 105.6
Total liabilities 986.6 912.2
The balance sheet reflects the Group' strong investment strategy. In 2018,
tangible and intangible fixed assets reach EUR750.6 million. At December 31,
2018, 89% of fixed assets are related to plants in operation. The variation
since December 31, 2017 is mainly explained by the contribution of new power
plants (+EUR71 million) fully offset by the linear depreciation of power
plants in operation (-EUR26 million) and a negative currency impact (-EUR53
million). Most of intangible assets lie in assets in operation (EUR28
million) or projects either secured or in construction (EUR64 million).
The Group's financial structure is robust. 77% of the total financial debt
of Voltalia at the end of 2018 is contracted for power plants, financed by
long-term project finance debt in local currency.
At December 31, 2018, Voltalia has EUR108.6 million in cash and cash
equivalent, a EUR37.4 million increase compared with December 31, 2017.
Business developments since January 2019
· Mid-January 2019, Voltalia announced the launch of the construction of
the Savane des Pères facility, a 3.8 MW solar plant coupled with a 2.6 MW
/ 2.9 MWh battery storage system, enabling to cover household consumption
during peak hours. It benefits from a 25-year contract with a secured
tariff, starting from the commissioning of the plant, expected in the
second semester of 2019.
· End January, Voltalia announced the construction start of the VSM 2 wind
project, located in the Serra Branca cluster, neighbouring the VSM 1
project already in construction. It will therefore benefit from
significant economies of scale for the construction process and for the
connection facilities, on top of exceptional wind conditions. Long-term
power sale agreements secured for VSM 2 will start in 2021 (64 MW) and
2024 (64 MW). The electricity produced between the commissioning of the
plant (expected in the course of 2020) and these dates will be sold at
attractive prices under free-market short-term contracts.
· Early February, Voltalia launched the construction of its second
very-high-voltage transmission line in Brazil, 50 km long. With a voltage
of 500 kV, able to connect new projects for a total capacity of 2 GW in
the Serra Branca cluster, it is tailored to the needs of existing and
future projects in the cluster.
· End of February, Voltalia announced its first Construction, Operation &
Maintenance contract in Albania for a 2.5 MW solar plant.
2019 and beyond
2019: working on delivering on the 1 GW objective
For Energy sales, in the absence of contract suspensions in Brazil, prices
are expected to remain within the regular long-term power sales framework of
set prices indexed to inflation. The first contribution of new plants in
France and Egypt is expected, mostly in the second half of the year.
In Services, ongoing contracts with third-party clients are currently
limited, as most teams are mobilized on Voltalia's own plants and delivering
on the 1 GW objective.
In 2019, the Group will continue to benefit from economies of scale and
maintain a disciplined cost control.
Strong medium-term visibility: over 1 GW in 2020 with EUR4bn of revenues
secured until 2044
In 2018, wins in France, Brazil and on the African continent brought
Voltalia's portfolio of secured projects to 1,048 MW, securing the 1 GW
target set in 2016[2]. Construction has already been launched for 387 MW and
the remainder will be launched shortly.
Since 2016, Voltalia has delivered on a strategy aiming at growing in solar
and in new geographies; accelerated by the acquisition of Martifer Solar.
Between the announcement (in September 2016) and the achievement of this 1
GW target, Voltalia's capacity will have more than doubled (x 2.3) and will
also be more diverse: Voltalia-owned solar capacity will have been
multiplied by more than 10 to represent 19% of the 1 GW capacity.
Additionally, when Voltalia's installed capacity will pass the 1 GW
milestone, the capacity will be 69% Brazil (compared to 84% in 2016), 19%
Europe (16% in 2016) and 12% Africa (0% in 2016).
This major achievement backs the achievement of the Group's 2020 EBITDA
target.
A vast pipeline (+81% in 2018), foundation to the growth beyond 2020
Beyond 2020, Voltalia can rely on a significant pipeline of projects in
advanced development to sustain future growth. The projects in this pipeline
have passed criteria regarding access to land, connection capacity,
operating authorizations and planning permits, and financial profitability.
At the end of 2018, this pipeline stands at 6.2 GW, a 81% increase vs.
December 2017. The growth is mostly related to solar projects, whose
capacity is multiplied by 2.4 to reach 3.7 GW (60% of the total pipeline),
throughout all geographies. This expanding pipeline of projects creates more
strategic options for Voltalia both as power producer and as service
provider.
Today's speed of growth of renewables in the world has no precedent. In the
second half of this year, Voltalia will unveil new ambitions beyond 2020.
Next on the agenda: Q1 2019 revenues on April 24, 2019
About Voltalia (www.voltalia.com [1])
· Voltalia is an international player in the renewable energy sector. The
Company produces and sells electricity generated from wind, solar, hydro,
biomass and storage facilities, with a total capacity of 911 MW either in
operation or construction as of today.
· Voltalia is also a service provider, assisting its investor clients
active in renewables at each project stages, from conception to operation
and maintenance.
· With 550 employees in 18 countries over 4 continents, Voltalia is able
to act worldwide on behalf of its clients.
· Voltalia has been listed on the Euronext regulated market in Paris since
July 2014 (FR0011995588 - VLTSA) and is a component stock of the Enternext
Tech 40 index and the CAC Mid&Small index. The Group is also included in
the Gaïa-Index, an index for socially responsible midcaps.
Voltalia Actifin
Chief Administrative Officer: Marie de Press Contact: J. Jullia
Lauzon
+33 (0)1 56 88 11 11
Investor Relations: invest@voltalia.com
+33 (0)1 81 70 37 00
APPENDIX
Simplified consolidated statement of profit and loss (non-audited)
(in thousands of euros) As of 31 December As of 31 December
2018 2017
Revenues 180 660 181 188
Total operating expenses (104 452) (109 588)
EBITDA 76 209 71 600
% EBITDA margin 42% 40%
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