Solar Millennium AG
Solar Millennium AG adopts strategic realignment – corporate strategy adjusted to secure growth and earnings prospects
Solar Millennium AG / Key word(s): Half Year Results/Strategic Company Decision / Corporate News Solar Millennium AG adopts strategic realignment – corporate strategy adjusted to secure growth and earnings prospects – Corporate strategy adjusted to changed market requirements particularly in the U.S. to secure sales and earnings – Postponement of financial close for Blythe solar power plant project on photovoltaics basis into the next 2011/2012 fiscal year – Total operating performance of EUR 34.6 million in the first half of the 2010/2011 fiscal year (previous year EUR 43.0 million) with EBIT of EUR -32.6 million (previous year: Erlangen, 19 August 2011 With respect to the development of the world’s largest solar energy location with a capacity of up to 1,000 MW in the Californian city of Blythe, U.S., Solar Millennium AG (ISIN DE0007218406) decided to take a new path in the last week. Instead of the previously projected concentrated solar power (CSP) technology in the form of parabolic trough power plants, the first two 250 MW plants are now to be equipped with photovoltaics (PV). With this decision, the managements of Solar Millennium and Solar Trust of America are reacting to the changed market conditions in the U.S. featuring far more profitable prospects for the use of PV in solar power plants that do not require storage. Dr. Christoph Wolff, the CEO of Solar Millennium AG, explains this as follows, ‘At the moment, the U.S. market is clearly focused on peak load supply. Due to the drastic drop in PV prices, we agreed with the Californian utility to convert the power purchase agreements to PV’. Wolff continues, ‘The simultaneous sudden price increases for raw materials and construction would have reduced our return on equity and risk provisioning for our construction share in the Blythe CSP project to marginal values. Against this backdrop, we made the entrepreneurial decision a few days ago to focus on PV in the U.S. In anticipation of this market development, our U.S. subsidiary built up the respective expertise early on. This enables us to meet the specific needs of the U.S. market.’ The decision to revert to the significantly less costly PV variant also means that Solar Millennium will finance the power plants on the free capital market and forego the loan guarantee by the U.S. Department of Energy for Blythe 1 and 2. Wolff adds, ‘The decision to use photovoltaics in Blythe does not mean the Solar Millennium Group is turning away from its core technology of solar-thermal power plants. According to our understanding, the market differentiates between base load solar-thermal electricity generation or concentrated solar power on the one hand and photovoltaics for peak load demand on the other. Whereas the electricity from solar-thermal power plants was more economic only less than two years ago, this relation has changed completely due to the sharp drop in PV module prices, particularly from Asia. Due to its suitability for base load supply, many regions still attach great value to CSP in their energy mix, thus supporting the Solar Millennium Group’s growth opportunities.’ Results in the first half of the fiscal year As expected, the result of Solar Millennium is negative in the first half of the fiscal year, because the financial closes for Blythe and Ibersol were not scheduled to take place before the second half of the fiscal year. Given the shift of the Blythe financial close into the next fiscal year, the result for the full fiscal year of 2010/2011 is now also expected to be negative. Solar Millennium AG closed the first half-year period from 1 November 2010 to 30 April 2011 with total operating performance in accordance with IFRS of EUR 34.6 million, compared to EUR 43.0 million in the previous year, and EBIT of EUR -32.6 million, down from EUR -25.1 million in the previous year. The most noticeable sales contribution to total operating performance was generated by the steady progress in the construction of Andasol 3 in Spain, which went according to plan. Another positive effect on total operating performance resulted from the higher changes in inventories item of EUR 21.3 million (previous year: EUR 10.5 million). This item reflects the further advancement of projects worldwide and the two core markets of Spain and the U.S. in particular. Business activities in Spain are focusing on the two Ibersol and Arenales projects that each feature storage and a capacity of 50 MW. While the Company is still working hard on the financial close of the Ibersol project at the moment, the financing of Arenales was concluded only recently. Following the entry of the Deutsche Bank subsidiary RREEF Infrastructure in the Arenales project and the conclusion of bank financing at the beginning of August, the first ground-breaking measures in the scope of an early-work agreement have already commenced. Solar Millennium was able to involve OHL Industrial as a strong partner and general contractor. Against the backdrop of the changed situation in the U.S. in particular, the Executive Board adheres to its decision not to issue a guidance for the current fiscal year at the moment. As soon as the contracts for financing and building the solar power plants have been actually concluded, the Executive Board intends to issue target figures for a two-year period. The developments in the last weeks and changes in the management have increased the pressure to take action considerably. This is the reason why the announced strategy program is being implemented earlier than previously planned. The Executive Board expects that the liquidity situation will remain stable with the entry of additional investors in the Ibersol and Arenales solar power plant projects as well as the issue of the eighth bond and the Ibersol fund, and that it will be secured with the financial close for the Blythe location. The Executive Board anticipates that the conclusion of an agreement with a financing partner will strengthen the structure of the capital basis. In the course of its medium-term planning, the Executive Board expects a considerable increase in total operating performance and earnings caused by the implementation of the pending projects and the effect from the strategic realignment. The complete 2010/2011 interim report is available for download on the website of Solar Millennium AG in the ‘Investors – Download‘ section at www.SolarMillennium.de Solar Millennium AG, Erlangen, (ISIN DE0007218406) is a company that operates globally in the renewable energy sector, with its main focus on solar power plants. Together with its subsidiaries and associates, the Company specializes in solar-thermal power plants, particularly parabolic trough plants, and has taken a global leadership position in this field. Solar Millennium is striving to further extend its expertise in this area with the aim of achieving and securing sustainable technology leadership. The Company covers all important business sectors along the value chain for solar power plants: from project development and financing to technology and the turnkey construction and operation of power plants. Solar Millennium realized Europe’s first parabolic trough power plants in Spain as well as the first modern parabolic trough solar field in Egypt. In Blythe (California), Solar Millennium is presently developing the largest solar power plant in the world. Additional projects are planned around the world with a total capacity of several thousand megawatts. The current regional focus is on Spain, the U.S., the Middle East and North Africa. About solar-thermal power plant technology: Solar-thermal power plants generate electricity by converting solar radiation into heat energy. In a parabolic trough power plant, trough-shaped mirrors concentrate the incidental radiation onto a pipe in the focal line of the collector. Its absorption heats a fluid heat medium in the pipe, generating steam in the power block through a heat exchanger. As in conventional power plants, the steam powers a turbine to generate electricity. By integrating thermal storage, electricity can be supplied on demand, even after sunset. For further Information: Solar Millennium AG Corporate Communications presse@SolarMillennium.de Tel.: +49 (0)9131 9409-0 This press release constitutes neither an offer to sell nor the solicitation of an offer to buy any securities of Solar Millennium AG. The press release shall not form the basis for investment decisions regarding securities of the company. Any such investment decision of a prospective investor shall be based solely on such prospective investor’s own investigations and assessments. This release contains forward-looking statements. These statements are not a description of past facts, but rather relate to expectations and opinions of Solar Millennium AG. These statements are based on current plans, assessments and forecasts of the company. Investors should not rely on these statements. Forward-looking statements must be understood in the context of the circumstances existing at the time when they were made. The company assumes no obligation to update the forward-looking statements in this release based on new information or future events. Forward-looking statements always involve risks and uncertainty. Due to a multitude of factors, actual events and actual developments may differ significantly from the forward-looking statements contained herein. This press release was originally prepared in German. The translation of this release or parts thereof is considered as a service for journalists, analysts and investors who are not able to understand German. Only the German version is legally binding. End of Corporate News 19.08.2011 Dissemination of a Corporate News, transmitted by DGAP – a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. 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