Alfen Annual Report 2019 Enabling the energy transition ALFEN N.V. Alfen magazine Contents 2019 at a glance 4 About Alfen 6 Report of the Management Board 10 Business review 12 Corporate social responsibility 18 2019 month-by-month 28 Financial performance 34 Risks and Uncertainties 42 Corporate governance 52 Report of the Supervisory Board 64 Financial statements 74 Consolidated financial statements 76 Company financial statements 126 Other information 140 10 64 74 Report of the Report of the Financial Management Supervisory statements Board Board 2 Contents Contents 2019 at a glance First anniversary as a listed company at the Euronext stock exchange Revenue and other income (EUR) 143 million Continued internationalisation (vs 102 million in 2018) of sales and service Year-on-year revenue and other income growth 41 percent Launch of new innovative products (vs 37 percent in 2018) across all 3 business lines Adjusted EBITDA as % of revenues 10.1 percent Expansion of production capacity (vs 3.6 percent1 in 2018) for Smart grids and EV charging 1Like-for-like adjusted EBITDA (corrected for the IFRS16 lease accounting impact) as percentage of revenues in 2019 is 8.8% 4 Alfen - Annual Report 2017 Alfen - Annual Report 2017 5 About Alfen About Alfen Our growing business Smart grid solutions EV charging equipment Energy storage systems Alfen offers an in-house developed, Alfen offers an in-house developed Alfen offers an in-house developed produced and assembled range of and produced range of smart and and produced range of modular ener- secondary transformer substations. connected electric vehicle (EV) gy storage systems for applications In addition, we have in-house deve- chargers for use at home, office such as load balancing, peak shaving, loped and produced devices for grid and public locations. We have a grid frequency control, e-trading, automation and a proprietary back-end proprietary online management microgrids and mobile power supply. system for remote management and platform for our charging infra- We offer both stationary and mobile control of electricity grids. We also structure and offer standardised battery energy storage solutions. supply microgrids, grid connections solutions for smart charging, load Our proprietary developed embedded and supplementary offerings for e.g. balancing and charging hubs. software and back-office enables the greenhouse horticulture sector, EV remote control and supports all fast-charging hubs and solar PV farms. major storage applications. 156% About Alfen 23% 103.6 46% 26.1 15.6 13.4 74.0 57.0 8.3 51.1 12.3 44.8 9.7 9.0 5.7 Company profile 0.8 0.0 Alfen operates at the heart of the energy transition providing smart energy solutions to enable the electricity grid of the 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 future: reliable, sustainable and innovative. We have a unique combination of activities as we design, engineer, develop, produce and service smart grids, energy storage systems, and electric vehicle charging equipment. We combine our activities in integrated solutions to address the electricity challenges of our clients. Integrated solutions We build on our vast experience of more than 80 years in the energy industry. We have a market leading position in the Netherlands and experience fast international growth benefitting from our first mover advantage. Alfen offers system integration, project management and service for all three business lines. We also offer standardised integrated solutions across our business lines, which are increasingly needed to address the We are headquartered in Almere, the Netherlands, where we reside in three buildings with associated production complex integrated challenges emerging from the energy transition. facilities. In addition we are present in Belgium, Finland, France, Germany, Norway, Sweden, and the United Kingdom and serve the rest of Europe through our partners and resellers. 6 Alfen - Annual Report 2019 Alfen - Annual Report 2019 7 About Alfen About Alfen International footprint We employ staff in 10 countries being Austria, Belgium, Finland, France, Germany, Norway, Sweden, Switzerland, the Netherlands and the United Kingdom, and sell our products and services in more than 25 countries across Europe. Alfen sales organisation at 31 December 2019 Installed base of Alfen products 8 Alfen - Annual Report 2019 Alfen - Annual Report 2019 9 Report of the Management Board Business review Strong growth and leverage To realise our objectives, we have put in place a long- from scale term growth strategy that consists of four elements. First, we aim to benefit from strong market growth 2019 was a year of strong growth, with revenues trends and to further grow our market share. Second, increasing with 41%. We benefitted from growing we internationalise with a focus on Europe, further markets, internationalisation and important new client strengthening our position in existing countries and and contract wins. entering new countries. Third, we expand our existing service & maintenance offering and benefit from an We kept on investing in our business to prepare increasing installed base. Finally, we have the ambition ourselves for further strong growth in the coming years. to increase cross-selling across Alfen’s three business We added new production lines for our fast growing EV lines and offering of integrated solutions. charging and Smart grids businesses and we were able to expand our organisation from 410 to 497 employees, benefitting from our position in the heart of the energy Market developments transition as well as from an increased public profile after our IPO. We also continued to invest in new innovations Thanks to our position in the heart of the energy across our business lines, further strengthening our transition, we benefit from positive market trends in frontrunner position in Smart grid solutions, EV charging each of our business lines. and Energy storage. Combining our business lines allows us to provide fully integrated solutions, which In our Smart grids business line, we benefitted is becoming increasingly important to address the from continued grid investments, a strong market electricity challenges of our clients. environment for projects in the solar PV sector and increasing revenues from service. Alfen Elkamo is From left to right: Marco Roeleveld (CEO), Jeroen van Rossen (CFO), Richard Jongsma (CCO) As we gained scale in 2019, we have been able to benefitting from grid investments in Finland, expansion significantly increase our profitability, with an adjusted to Sweden and cross-sell opportunities based on our EBITDA of 10.1% of revenues, compared to 3.6% in 20182. position in EV charging and energy storage. During Through Alfen’s strong market position, favourable the second half of 2019, an additional production line product mix effects, procurement programs, increased was gradually taken into operation to facilitate this production efficiencies, and leverage of our fixed cost growth and prepare our company for further growth. base, we successfully demonstrated the first steps Our Smart grid solutions business line is increasingly towards our medium term profitability objective of a diversifying from grid operators to a broader customer mid to high teens adjusted EBITDA as percentage of base. Key commercial successes in 2019 include the revenues. new framework agreement with Dutch DSO Enexis for 4 years (which can be extended with 4 additional years), Business review a project for Solarcentury to supply 54 substations to Long-term Shareholder value their 110MW Vlagtwedde solar PV farm, the contract creation win to supply secondary substations to 19 Swedish grid companies for 3 years (plus 2 optional years) and a The energy transition is a long-term trend that fuels the contract to supply 50 substations for Shell’s ultrafast EV growth of Alfen. Based on that, we set the following four charging network across the Netherlands. medium-term objectives at the time of the IPO in March 2019 was an exciting year for Alfen as we continued to grow 2018, to drive shareholder value: (i) grow our topline Our EV charging business line has grown rapidly with with an average 40% a year, (ii) increase our adjusted 113%. This increase is driven by a broadening supply our business at a rapid pace and successfully demonstrated the EBITDA margins to mid to high teens, (iii) reduce CAPEX of (affordable) EVs in the market, favourable incentive first steps of our leverage strategy towards our medium term to under 3% of revenues, and (iv) realise more than 50% schemes and further internationalisation. Our Eichrecht profitability objective of a mid to high teens adjusted EBITDA as of revenues outside the Netherlands. compliant chargers strengthened our market position percentage of revenues. 2Like-for-like adjusted EBITDA (corrected for the IFRS16 lease accounting impact) as percentage of revenues in 2019 is 8.8% 12 Alfen - Annual Report 2019 Alfen - Annual Report 2019 13 Business review Business review in Germany during the second half of 2019. In the UK, our existing sales teams in the Netherlands, a grant for smart EV charging equipment (OLEV) that Belgium, Germany, United Kingdom, France, Finland “Combining our business lines was effective since the summer of 2019, played into and Sweden, and we further expanded to Norway (in our favour given our strong position in smart charging. June 2019). As a result, we are now covering most of Additionally, we developed a dedicated EV charger for Western Europe with our own sales force, where the allows us to provide fully integrated the French market positioning us well to benefit from energy transition is developing rapidly. growth in that market. In 2019, we benefitted from solutions, which is becoming expanding our business with our existing customer Additionally, we are increasingly benefitting from base as well as through new customer additions. With a client base with an international footprint such as our existing customer Allego, a contract to supply Vattenfall, E.ON, IONITY, Fortum, BMW, Shell and increasingly important to address the 1,000 public chargers to the local municipalities in the Allego.