Poweo SA : DIRECT ENERGIE : 2012 Half year Results

POWEO DIRECT ENERGIE

PRESS RELEASE: 2012 Half-Year results

Paris,  October, 23^rd 2012

            (1)     Combined financials of Poweo and Direct Energie, excluding both the generation assets owned by Verbund and transactions realized between both companies.
             
             
             
             
             
      1.       Creation of the leading alternative energy operator in France

The merger-absorption, completed on July 2012, has created Poweo Direct Energie. With a portfolio of more than 1 million customers, the Group is now positioned as the long-standing leading alternative multi-energy operator in France.

Less than three months after the merger, notably thanks to an integration process implemented in a timely manner, the Group is already fully operational to maintain its growth and innovations dynamic for the benefits of its customers.

Thus, the teams have moved to a common site since September, 1^st, less than two months after the merger. The migration of commercial offers, customers acquisition programs, processes of market access and information systems is on-going and should be completed by the beginning of 2013. 

      2.       Major events since January, 1^st, 2012

Implementation of operational synergies

The merger-absorption should generate operational synergies with an estimated impact on EBITDA of nearly ?20 million a year, contributing to the Group's results from 2012 and 2013, with a full impact from 2014 onwards.   

Renunciation of the exercice of the call option on Poweo Production's generation assets

The Board of Directors of Poweo Direct Energie decided on October, 22^nd, 2012 to definitively abandon the exercice of the call option concluded with Verbund for the potential acquisition of a 100% stake in Poweo Production, owning among others several companies: Poweo Pont-sur-Sambre Production, Poweo Toul Production and Poweo Blaringhem Production.

This decision was taken prior to the maturity date of such call option (June, 30^th, 2013), notably in respect of (i) other development projects of generation assets in France, and (ii) uncertainties due to the safeguard procedure of  Poweo Pont-sur-Sambre Production opened in March 2012.

This evolution has no impact on the cash position and will give a clearer view of the new Group's activities.

Indeed, Poweo Pont-sur-Sambre Production, Poweo Toul Production and Poweo Blaringhem Production will not be consolidated anymore in the Poweo Direct Energie Group. Accordingly, the debt and operational losses relating to these projects fully owned by Verbund since February 2011 will not be integrated anymore in the Group's consolidated financial statements.

Resolution of the litigation regarding the distribution part of unpaid bills

CoRDiS' (Comité de règlement des différends et des sanctions) decision became effective and ErDF and Poweo Direct Energie have put an end to their litigation.

The distribution part of unpaid bills will not be borne anymore by Poweo Direct Energie. On a full year basis, the Group will benefit from savings amounting to ?10 million (estimate based on revenues of the current financial year). Details on the implementation of CoRDiS' decision will be submitted soon to the French Regulatory Commission's approval.

Conclusion of a service contract with ErDF

Poweo Direct Energie reached an agreement in October 2012 that defines for the next four years the payment conditions of Poweo Direct Energie by ErDF for customer relationship management.  

This agreement - that only applies to suppliers which have not yet reached sufficient size and do not benefit from sufficient economies of scales compared to incumbent suppliers - and the payment conditions in relation with services provided by Poweo Direct Energie to ErDF, were approved by the French Regulatory Commission (Commission de Régulation de l'Energie) - decision dated July, 26^th - and their non-discriminatory nature was confirmed by the French Competition Authority. Thus, Poweo Direct Energie collected ?26 million in the second half of 2012, in respect of 2012.

Development of the generation assets portfolio

New combined-cycle natural gas turbine (CCGT) power plant in Brittany

The French Government selected in February, 2012 the Poweo Direct Energie - Siemens consortium to build a nearly 400 MW CCGT plant in Landivisiau (Finistère). The two partners are associated in the Compagnie Electrique de Bretagne (CEB) with a 60% stake for Poweo Direct Energie (through its 100% owned subsidiary Direct Energie Génération) and a 40% stake for Siemens Financial Services (through its subsidiary Siemens Project Ventures). This project is part of the "Pacte Electrique Breton", aiming at securing the electrical supply in Brittany, one of the main zone of vulnerability in the French power system, and relieving the network during consumption peaks from the in-service date onwards (expected during the 2016-2017 winter). In this context, the profitability of this project, which will represent a total investment of nearly ?400 million for CEB, will notably be guaranteed by a capacity premium of ?40 million a year.

Declared ambition for the renewal of large hydroelectric concessions

In order to secure a competitive supply, Poweo Direct Energie is candidate for the renewal of French large hydroelectric concessions. These renewals will be launched within the coming months by the French Ministry of Ecology, Sustainable Development and Energy.

Poweo Direct Energie concluded long term industrial partnerships in order to submit bids in collaboration with European and French partners recognized for their know-how in running hydroelectric plants, notably the Swiss group Axpo (leading Swiss hydroelectric producer with a total installed capacity amounting to 3 GW) and the French producer CHCR (recognized for its expertise in high head dams).

Strong dynamism of the "Large Accounts et Local Authorities " segment

Poweo Direct Energie continues its development on the "multi-sites" segment, tendering on signifiant volumes.

A master agreement was notably signed on September, 18^th with a French group in the Environment sector in relation with about 15,000 delivery points spread accross the whole French Territory and totalling an annual consumption of approximately 90 GWh. With a common approach based on both sustainable development and innovation, Poweo Direct Energie put in place for this specific customer a new entirely paperless process of electronic data sharing and tax dematerialization.

The Group has also won the public tender procedure for the street lightning contract of SDEC Energie (Syndicat d'Electricité du Calvados). This contract represents 3,500 delivery points spread across 555 municipalities including the city of Caen and totalling an annual consumption of approximately 31GWh.

These types of contracts, that are supposed to be applied to other potential customers, illustrate Poweo Direct Energie's know-how, its ability to adapt to multi-site customers' needs as well as the relevance of the Group's offers.

Confirmation of  best-in-class customer service

Poweo Direct Energie earned the "2013 award for best customer service" in the "Electricty and gas supplier" category. The survey was conducted by Viséo Conseil on the mystery shopper principle by means of 430 contacts split between calls, e-mails and contacts through the Internet. Since its creation in 2008, Poweo and Direct Energie have successively earned all "best customer service" awards, proving that the Group considers the quality of its customer relationship is key to its differentiation strategy.

Given that the merger took place on July, 11^th 2012, Poweo Direct Energie's full-year net result will comprise:

• Direct Energie's H1 2012 net result, including the impact of Poweo consolidated under the Equity Method;
• The combined Group's H2 2012 net result;
• Exceptionnal items (including accounting entries mainly related to the merger)

             
Over 2012, those impacts should be balanced in terms of consolidated net result.
             
      3.       Operationnal data and financials
             
                  a.        Poweo Direct Energie combined information

As of July, 11^th 2012, the Group had close to 1 million customers, of which 78% for electricity and 22% for gas.

Over the first half of 2012, total customer portfolio slightly increased (+0.1%).

Customer base evolutions since 01/01/2012 have been as follows:

The combined portfolio consumption reached 4.75 TWh over H1 2012, of which approximately 2.9 TWh for electricity and 1.9 TWh for Gas.

The combined portfolio churn^[1]:
#_ftn1 decreased to reach 1.72% over H1 2012, compared to 2.07% over H1 2011.

Excluding both generation assets owned by Verbund and transactions realized between the companies, combined sales of Poweo and Direct Energie would have reached ?388 million.

                  b.       Poweo's  acounts prior to merger

Because the merger was approved by the General meeting of shareholders held on July, 11^th 2012, the Board of Directors formely closed Poweo's consolidated accounts under IFRS for the first half of the year.

Customer base evolutions compared to the beginning of the year and H1 2011 are as follows:

Poweo's customer base evolutions over H1 2012, before the merger, reflect a portfolio management oriented towards refocus and control of the financial situation.

Key consolidated financials of Poweo for H1 2012 are presented below:

1. Earnings before interest, tax, depreciation and amortisation
2. Earnings before interest and tax

      4.       Conclusion

The merger-absorption created the the leading multi-energy alternative operator in France, with 1 million customers and approximately 10 TWh supplied.

Poweo Direct Energie is positioned as a sustainable leader with a profitable growth profile.

Xavier Caïtucoli, Chief Executive Officer of Poweo Direct Energie, declared: "Poweo Direct Energie is now fully operational to achieve ambitious objectives. The rationalization of the Group, the control of its core businesses, the profitable upstream/downstream integration strategy and its capacity to innovate are strong advantages that will enable the Group, despite a regulation which is not yet stabilized, to be on the edge of the expected necessary energy transition."

Poweo Direct Energie will present to the financial community the new Group, its strategy and perspectives before publishing 2012 IFRS consolidated accounts.

Pro forma financials as of 30/06/2012 are available at the following address: http://investisseurs.poweo.fr:
http://investisseurs.poweo.fr//

About POWEO DIRECT ENERGIE

Born out of the merger between Poweo and Direct Energie, Poweo Direct Energie covers all businesses in the energy value chain. It is involved in electricity and natural gas generation, supply and distribution, thus guaranteeing the company's balanced and sustainable development to meet the needs of its customers. Poweo Direct Energie is the leading alternative supplier of electricity in France and currently has more than 1,000,000 residential and business customers. Finally, Direct Energie develops a portfolio of Combined Cycle natural Gas Turbine plants (CCGT). Direct Energie has just won the tender organized by the government for the construction of a 400MW CCGT plant in Brittany.

Poweo Direct Energie is listed on the Alternext compartment of the Euronext Paris Stock Exchange (ALPWO / FR0004191674). For more information please visit the company's website: www.direct-energie.com:
http://www.direct-energie.com/

Press Contact

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Grégoire Lucas - glucas@image7.fr - Tel + 33 (0)1 53 70 74 94
Marie Artzner - martzner@image7.fr - Tel + 33 (0)1 53 70 74 31

Institutional contact

Ivan Roussin - ivan.roussin@poweo-direct-energie.com - Tel +33 (0)6 19 30 05 03