-Conergy aims for a cancellation of the supply contract with MEMC
-Prepayment made written down as a precaution
-Legal doubts over the enforceability of certain contractual provisions; Supervisory Board authorises Management Board to initiate legal challenge
Hamburg, 20. April 2009 – The Supervisory Board of Conergy AG today approved the consolidated financial statements for the 2008 fiscal year, as submitted by the Management Board. According to these financial statements, and as previously announced in the preliminary figures at the beginning of March, revenue amounts to EUR 1,006m. This represents an increase of 40% compared to the previous year (EUR 719m). In relation to the preliminary figures presented on 5 March 2009, earnings before interest and taxes (EBIT) fell by EUR 54m to EUR -213m (2007: EUR -213m). The worsening of the results is due to non-cash writedowns and provisions. As Conergy is aiming for a cancellation of the supply contract with MEMC Electronic Materials, Inc., using legal means if necessary, this amount includes writedowns of prepayments, which Conergy made in mid 2008 in connection with the agreed long-term wafer supply contract; this has led to a corresponding worsening of the result.
The publication of the annual results, originally intended for 27 March, had to be postponed because of the ongoing negotiations with MEMC Electronic Materials, Inc.. Contrary to expectations, it has not yet been possible to bring these negotiations to a conclusion. At the beginning of the year, Conergy entered into talks with MEMC with the aim of renegotiating the agreed wafer supply contract. This action was taken because of the significant changes in the economic environment, particularly the very rapid swing from a seller's to a buyer's market. Since legal doubts have emerged over the enforceability of some contractual provisions and the validity of the contract as a whole, the Supervisory Board of Conergy AG has today authorised the Management Board to take legal action contesting the supplier contract, if necessary as soon as in April, if an amicable agreement cannot be reached in the next few days. As a precautionary measure, the Management Board has therefore already written down the prepayment made in the annual accounts approved today. In addition, expected litigation costs have been taken into account as an expense. At the same time, negotiations are continuing, with the aim of an amicable cancellation of the contract, in return for the prepayment made and a new supply contract with a term of one year. Although there is a common understanding between the parties regarding this arrangement, a binding agreement has not yet been reached and it cannot be forecast with certainty that such an agreement will be reached.
With these renegotiations, the Management Board is consistently pursuing the restructuring of the Conergy Group. The cancellation of the contract with MEMC would be associated with high one-time costs, but it would open up new options for the future.
“Conergy’s profitability comes first for us,” said Dieter Ammer, Chief Executive Officer of Conergy AG. “The contract with MEMC signed by the previous Management Board does not reflect in any way the very strong decline in market prices for wafers. In addition, we have strong doubts about the legal structure of the contract. We would be prepared to accept the high costs of cancelling the contract because, on the one hand, they are not cash-effective and, on the other hand, they would improve Conergy’s profitability on a sustainable basis onwards. Of course, we would prefer an amicable solution.”
In its continued operations, the annual loss recorded by the company therefore now stands at EUR -254m (previous year: EUR -213m). Including discontinued operations, the annual loss came to EUR 307m (previous year: EUR -248m). Conergy will present its complete financial statements on 29 April 2009.
Revenue in first quarter below prior-year level
Business at the beginning of the year developed below expectations for the Conergy Group. According to preliminary estimates, revenue in the first three months of the year amounted to EUR 65m. This would correspond to a decline of 70% compared with the prior-year quarter, which had exceptionally high revenue. Following a difficult fourth quarter, which was burdened by the financial crisis and the recession in particular, January and February continued to be influenced by the same factors. On the other hand, there was some improvement in business in March, but the comparatively poor preceding months could not be compensated. Accordingly, the Management Board assumes that it will be very difficult to maintain revenue this year at the same level as in 2008. This is also caused by a change in the business model of Epuron, which will lead to lower revenue but at the same time to higher gross margins. The complete first quarter report will be published on 14 May.
About Conergy
Since its founding in 1998, Hamburg-based Conergy AG has sold more than a gigawatt in renewable energy, making it one of the biggest European suppliers of solar energy and other renewable energies, and a world leader in solar system integration. Of the one gigawatt in renewable energies, Conergy has installed more than 400 megawatts in its major projects. Of the total one gigawatt, 200 megawatts falls to its wind energy park projects and 800 to its globally marketed solar modules. According to the German Solar Industry Association (BSW) this is just under a fifth of the entire installed photovoltaic output in Germany. Calculative one in ten modules worldwide was produced, sold or installed by Conergy.
Listed on the Frankfurt Stock Exchange since 2005, the group pursues a global growth strategy, The company now produces, installs and designs solar power systems and wind turbines in around 15 countries. The Conergy Group is represented with its own branches on four continents.
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