7C Solarparken AG: H1'24 Results, as expected, below last year but no reason to revise guidance further down

Bayreuth (pta039/23.09.2024/21:00) - 7C Solarparken group (WKN: A11QW6 / ISIN: DE000A11QW68) announces that group EBITDA for the first half 2024 is substantially below the comparative period last year due to unfavorable weather conditions, downward pressure on the power price and above all, a one-off impairment on a receivable related to the 20 MWp project Reuden Süd (nearby Bitterfeld). EBITDA fell from EUR 33.0 Mio in H1'23 to EUR 23.2 Mio in H1'24. Excluding the aforementioned one-off impairment and adjusting for weather conditions, EBITDA would have exceeded the initial guidance for the year, which can be viewed as remarkable given the downturn of power prices and the increasing level of negative prices. Anticipating a potential decline in power prices, management already started to explore different routes-to-market as from 2022 by adding power price swaps as an instrument for hedging the income of the IPP portfolio. Aside from power price swaps, which can lead to even increased returns during lower or negative prices, the company benefits from a strong positioning with 70% of revenues stemming from fixed feed-in tariffs, unrelated to negative prices. Furthermore, those solar assets subject to negative prices, benefit from the company increasingly transitioning away from selling on the day-ahead markets into intraday balancing schemes. CFPS over the first half 2024 fell, in line with EBITDA, to EUR 0.21/share. Adjusting for weather and for the one-time non-cash impairment, CFPS would have come in at EUR 0.29/share. In spite of this one-time impairment, the group's balance sheet remains strong with an equity ratio of 44% and a net debt position of EUR 128 Mio. The company's book value remained almost unchanged at EUR 2.70/share.

OUTLOOK

During the last months, management closed a new series of value-creative swaps for a median price of EUR 72/MWh throughout 2025 (underlying tariffs < EUR 60/MWh). Furthermore, the group's energy management & curtailment strategy has started bearing its first fruits and will – together with the fixed tariffs enjoyed by the majority of assets in the IPP portfolio– counter increasing pressure from negative prices. In the current context of lower power prices, management has decided to announce a new Focus Plan 2024-25 that is based on four pillars: (i) Protection of existing cash flows through re-financing, re-furbishment and energy management, (ii) from Selective growth to opportunistic growth, i.e. giving up the 500 MWp growth target, (iii) considering options to recover value from Reuden Süd, and (iv) increasing focus on share buy-backs.

For 2025, management assumes a return to normal financial metrics with EBITDA of EUR 54 Mio and CFPS of 0.54/share. Upon redemption of the Schuldschein in Q1'25, the group's free cash flow generation is expected to increase substantially over time leading to EUR 50 Mio excess liquidity by 2027. In the absence of sufficient return on new-build projects, share buy backs will come highest on the agenda.

Steven De Proost, CEO of 7C Solarparken AG comments:

"Everyone is currently talking about negative prices, but we have acted already long beforehand. We mainly benefit from fixed feed-in tariffs and have secured swaps. Now we even turn negative prices into a profit center through selling power at different market segments. We therefore want a full focus on our existing parks, rather than chasing the 500 MWp level. Growth will of course still be possible, when high returns on the project itself (rather than on the market in general) are secured. We look forward to demonstrate to the market that we will pick up with historical profitability again, even in difficult times."

"Lastly, we want to express our profound sadness on the passing of our long standing Supervisory Board member Paul De fauw. We wish our heartfelt condolences to his family, his loved ones and all who were close to him."

The complete half yearly results will be published on our website tomorrow in the following section: https://www.solarparken.com/en/publikationen.php

(Ende)