Poweo SA : Direct Energie: First half 2013 Financial Results

Operational merger successfully completed


Strong growth of EBITDA and Gross Margin


Significant improvement in profitability from 2014

October 18th, 2013

The 30/06/2012 financial data, unaudited, are those of Direct Energie prior to the merger.
The pro-forma financial results are available on the Group website 

(*)Consolidated EBITDA is the main indicator used to monitor the Group's performance. It excludes exceptional items and non-core business operations, but takes into account certain changes in provisions. Specifically, the EBITDA reported to the General Management for the retail business unit includes changes in provisions for impairment of customer receivables but does not include income and expenses linked to changes in the consolidation scope

Over 1 million customer sites

The group delivered a solid performance with sales up 73% to ?414M for the first half year ending on 30 June 2013.

The portfolio is now operated under a single IT environment and by a unique customer service department, and aggregates:

• 815 000 electricity sites totaling a 3,1 TWh load curve during H1 2013,
• 220 000 gas sites totaling a 1,7 TWh load curve during H1 2013.

The successful implementation of the operational merger has constituted a major area of focus. The pace of customer acquisitions allowed to offset the impact of the churn which averaged 1,5% per month. The Group fully reviewed its acquisition channels on the mass market: telesales (incoming calls at 30 99), web subscriptions, price comparators websites, selected distribution partners (Darty,.).

Significant increase in gross margin, optimized costs and a positive consolidated EBITDA

The Gross margin rose to ?53.4M (12,9% of turnover).
Thanks to its efficient sourcing strategy and to the ARENH mechanism (Accès Régulé à l'Electricité Nucléaire Historique), the Group managed to optimize the sourcing costs of the energy supplied to its customer base. The Gross margin also benefited from the contribution of a pluri annual agreement entered into with ERDF during the second half of 2012.

Even though merger costs affected the 2013 H1 results, merger synergies started to materialize over the period.

The Group generated a consolidated EBITDA of ?12.5M over the first half of the year.

Positive net cash situation

The turnaround in profitability enabled the Group to diversify its financing sources including short term credit facilities. As of 30 June 2013, cash and cash equivalents amounted to ?25.4M.

Back to commercial conquest

Customer acquisitions have risen sharply since summer 2013, and should reach 131 000 new sites by the end of the year, driven by:

• The launch of a nationwide advertising campaign on 1 August 2013,
• Innovative offers addressing the ongoing issues of the energy sector: Online offer, smart metering based offer .

The Group was awarded the customer satisfaction prize («Elu Service Client de l'Année 2014»). This 7^th straight consecutive year award reflects Direct Energie's high standards in terms of customer satisfaction and excellence of its operating procedures.

A favorable regulatory framework

After years of adverse conditions, the alternative suppliers' environment is gradually balancing and offers new opportunities:

• Gradual convergence of regulated tariffs (TRV) with the ARENH sourcing costs : 5% increase of electricity rate starting 1 August 2013 and a scheduled second 5% increase for 1 August 2014,
• ARENH price unchanged until end of year 2013,  no adjustment anticipated for 2014,
• Decreasing market prices.

Gross margin is therefore expected to strengthen on second half and full year 2013. Profitability will also benefit from merger related synergies which are expected above ?20M, as previously announced.

The Group is therefore targeting a net profit for full year 2013 and significant growth of earnings in 2014.

Ambitions confirmed in developing generation capacities

The Group, selected alongside its partner Siemens for building and operating a Combined Cycle Gas turbine unit as part of the "Pacte Electrique Breton", is actively working on obtaining permits and authorizations for the Landivisiau project before end of 2014.

Through its partnership with AXPO, Direct Energie has reaffirmed its determination to take part in the French hydro concessions renewal tenders.

Treasury shares

The Board of Directors today approved the interim financial statements for the 2013 first half and also decided to convene an Extraordinary General Meeting in order to approve the cancellation of the treasury shares resulting from the merger operation dated 11 July 2012. These shares represent 16.2% of the company's share capital.

Following today's meeting of the Board of Directors, Xavier Caïtucoli, CEO of Direct Energie said:

"After a successful merger, Direct Energie is now fully operational and will achieve all its synergies as early as 2014. The entire staff is mobilized to accelerate the Group's development, which now relies on a solid earnings outlook."

Publications
Direct Energie's interim consolidated financial statements for the six months ended 30 June 2013 have been prepared in accordance with IAS 34 "Interim Financial Reporting" which provides for presentation of selected notes to the financial statements. The unaudited interim consolidated financial statements for the half year ended 30 June 2013 and the activity report for the same period are available on the Group's website (www.direct-energie.com:
http://www.direct-energie.com).

Direct Energie, the 3rd largest electricity and gas supplier on the French market, serves over 1 million customer sites: 815.000 in electricity and 220.000 in gas.

After a period of deliberate stabilization of its customer base to facilitate implementation of the operational merger, the Group recently resumed its strategy of sales conquest, underpinned by a nationwide communication campaign.

Thanks to a competitive cost structure and the recent increases of regulated tariffs, Direct Energie is now in a position to develop a profitable growth strategy.

The Group is also actively pursuing its industrial goal of building generation capacities with the ambition of becoming an integrated key player in "Energy Transition".

Direct Energie is a listed company on the Alternext compartiment of Euronext Paris Stock Exchange, (ALDIR / FR0004191674).
 www.direct-energie.com:
http://www.direct-energie.com

Press contact :
Image Sept
Grégoire Lucas - glucas@image7.fr:
mailto:glucas@image7.fr
Tel + 33 (0)1 53 70 74 94
Marie Artzner - martzner@image7.fr:
mailto:martzner@image7.fr
Tel + 33 (0)1 53 70 74 31 / + 33 (0)6 75 74 31 73

Institutional contact:
Ivan Roussin:
Tel +33 (0)6 19 30 05 03
ivan.roussin@direct-energie.com:
mailto:ivan.roussin@poweo-direct-energie.com
Mathieu Behar
Tel +33 (0)6 12 48 85 85
mathieu.behar@direct-energie.com:
mailto:mathieu.behar@direct-energie.com