EDF Energies Nouvelles 2010 Half-year Results

At its meeting on 26 July 2010 chaired by Pâris Mouratoglou, the Board of Directors of EDF Energies Nouvelles approved the Group’s consolidated financial statements for the first half of the 2010 financial year.

“The first half of 2010 was marked by the strong progress in the solar photovoltaic business, which is now fully living up to its intended role as a growth driver alongside wind energy. EDF Energies Nouvelles has recorded another increase in its earnings, which is especially impressive since this year, revenues from the Development and Sale of Structured Assets business will be highly concentrated in the second half of the year. We are right on track to meet our objectives.”

OPERATIONAL PERFORMANCE

At 30 June 2010, the Group’s installed capacity all segments combined came to 3,183.5 MW gross, up 238.1 MW compared with at 31 December 2009. Net installed capacity stood at 2,452.6 MW, up 195.6 MW compared with at 31 December 2009.

Wind energy

Wind power continues to make progress in all target countries. During the first six months of 2010, EDF Energies Nouvelles’ wind energy capacity increased by 156.1 MW gross (112.5 MW net). The Group commissioned the final tranches of the Monte Grighine wind farm (73.6 MW out of a total of 98.9 MW) project in Italy, the Rusholme wind farm (24 MW) in the United Kingdom, the Skopies wind farm (18 MW) in Greece, an 11.7 MW tranche of the Soma I wind farm in Turkey and the final tranche of the La Ventosa (30 MW out of a
total of 67.5 MW) project in Mexico.

Wind turbines capacity under construction stood at 604.6 MW gross (318 MW net) at 30 June 2010. Construction of the Lakefield wind farm in the United States (201 MW) is due to begin during the third quarter of this year, with a scheduled commissioning date in the third quarter of 2011.

Solar

The solar energy business maintained its strong momentum. During the first half of the year, EDF Energies Nouvelles commissioned 61.3 MWp in gross (51.8 MWp net) solar photovoltaic capacity, with 27.3 MWp in France, 28.5 MWp in Spain and 5.4 MWp in Italy. In addition, the Group launched the construction of a further 162.3 MWp in capacity.

All in all, at 30 June 2010, solar capacity under construction came to 234.1 MWp gross (138.2 MWp) and is primarily located in France, Italy and Canada.

Other segments

Capacity in the other segments stood at 235.2 MWp gross (187.5 MW net) at 30 June 2010, up 20.7 MWp compared with at 31 December 2009. This change was chiefly the result of the sale of the Energies Antilles (16.7 MW) and Energies Saint-Martin (13.6 MW) thermal power plants during June 2010 and the acquisition of two biogas production units in the United States (equivalent of 50 MW in capacity).

FINANCIAL PERFORMANCE
INCOME STATEMENT
First-half 2010 revenues came to €545 million, up 28.1% compared with the first half of 2009.

The revenues posted by the Generation business recorded a strong increase of 30.1% thanks to the strong progress in wind power and solar energy output.

In spite of unfavourable wind conditions in the United States and very poor wind levels in the United Kingdom, wind-generated electricity production was boosted by the full-year impact of the facilities commissioned in 2009, notably in France and the United States, the new facilities commissioned in the first half of 2010 in Europe and very good wind conditions in Portugal.

Solar photovoltaic generation made a significant contribution to the growth recorded by the Generation business. Its strong growth was driven by the fullyear impact of facilities commissioned in 2009, notably in Italy, France and Canada, and by the facilities commissioned during the first half of 2010 (up 61.3 MWp).

The Generation business was also underpinned by first-class hydro conditions in Bulgaria. Revenues from the Operations & Maintenance business grew by 64.4% to €31.4 million. This strong growth was primarily attributable to the change in the method used to consolidate Reetec, which is now fully consolidated instead of accounted for under the equity method, since the Group has raised its interest in the company to 72%.

Revenues from the Development and Sale of Structured Assets (DSSA) business advanced to €177.2 million, up 24.7% compared with the first half of 2009. The driving force for revenues came from operations in France, with the sale of the Canton du Quesnoy (10 MW) wind farm and 7.1 MWp in large roof array projects in the solar photovoltaic segment. The Group also recorded revenues on a percentage-of-completion basis on one tranche (11.7 MWp) of the Gabardan power plant. As indicated when the Group’s 2009 full-year results were announced, revenues in the United States will be concentrated in the second half of the year, with the sale of the Nobles (201 MW) wind farm, construction of which is due to be completed at the end of the year.

Revenues from the Distributed Energies business moved up 22.3% to €117 million. The installation of solar systems in homes and businesses was disrupted by poor weather conditions and by sourcing problems affecting inverters.

EBITDA

The Group’s EBITDA totalled €168.9 million, up 15.2% compared with the first half of 2009. Excluding non-recurring items (€20.4 million in negative goodwill arising on the acquisition of the Monte Grighine project in 2009), growth ran at 33.8%.

„h In Europe, EBITDA recorded an increase of 27.8% to €128.2 million (up 60.5% excluding non-recurring items) on the back of the brisk trends in the Generation business and strong growth in the DSSA business. The latter was particularly boosted by the solar photovoltaic segment and also by the sale of the thermal power plants. These positive factors largely offset the increase in development and overhead costs, as well as  unusually strong seasonal fluctuations in the Distributed Energies business.

„h In the Americas, EBITDA declined by 12.1% to €40.7 million because DSSA revenues there will be concentrated in the second half of the year and thus coverage of development and overhead costs was lower during the first half. Even so, the Generation business, which was severely affected by poor wind conditions, underpinned the region’s EBITDA owing to the facilities commissioned in 2009, notably the Hoosier wind farm in the United States and the La Ventosa wind farm in Mexico, as well as the Arnprior solar farm in Canada.

First-half operating income went up from €96.4 million in 2009 to €100.2 million in 2010. Depreciation and amortisation came to €68.7 million, up 36.8% compared with the first half of 2009, reflecting the new wind and solar farms commissioned.

Net financial expense came to €59.9 million in the first half of 2010, up from €53.5 million in the year-earlier period. This increase was driven by two factors:

– the increase in interest expense on account of the financing arranged for the new facilities commissioned;
– the positive trend in other income and expenses, which represented a net expense of €4.9 million in the first half of 2010 compared with €19.3 million in the year-earlier period. In 2009, the Group posted a €20.2 million provision to cover receivables from and commitments vis-àvis Silicium de Provence (SilPro).

Income tax expense came to €7.1 million, representing an effective tax rate of 17.5%. This tax rate principally reflects:

– the impact of the capital gain on the disposal of the Energies Antilles and Energies Saint-Martin thermal power plants, which represented a longterm capital gain subject to a very low rate of taxation;
– tax rates lower than those in France in several countries in which the Group is present (Mexico, Portugal, Italy and Bulgaria)
– accrued tax losses in Mexico have been recorded as deferred tax assets following the start-up of the La Ventosa wind project.

Net income, Group share came to €38.6 million, compared with €41.8 million in the first half of 2009, representing a decline of 7.7%. Excluding non-recurring items in 2009 (negative goodwill related to the Monte Grighine project and the provision for SilPro, which partly offset each other, the first being a gain, the second a charge), the Group’s consolidated net income went from €29.4 million to €38.6 million, representing an increase of 31.3%.

CASH FLOW

Operating cash flow generated during the first half came to €112.8 million, which represented 66.8% of the Group’s EBITDA. The Group’s working capital requirements decreased by €238.4 million owing to the reduction in inventories and turbine downpayments, as well as the decline in inventories of solar panels. The Group also received partial payments from buyers of DSSA projects. Capital expenditure during the first half of the year rose by 23.6% to €555 million. Investments in the solar photovoltaic segment amounted to €226.9 million.

FINANCIAL STRUCTURE

At 30 June 2010, consolidated equity came to €1,563 million. The Group’s net debt increased by €454.7 million to €3,220.9 million. This increase derived chiefly from investments. In addition, the impact of appreciation in sterling and to an even greater extent in the US dollar led to an increase of €105 million in debt (since the euro/USD exchange rate went down from 1.44 at 31 December 2009 to 1.23 at 30 June 2010). Lastly, the impact of valuing the interest-rate swaps on a marked to market basis represented an increase of €69 million in non-cash debt and a reduction in equity of the same amount.

OUTLOOK

EDF Energies Nouvelles is reiterating its 2010 EBITDA target of between €430 million and €450 million, as well as its year-end 2012 installed capacity target of 4,200 MW net, including 500 MWp in solar capacity.

With operations in Europe and North America, EDF Energies Nouvelles is a market leader in green electricity production. With a development focused on wind energy for several years and more recently on solar photovoltaic, the Group is also present in other segments of the renewable energies market: small hydro, marine energy, biomass, biofuel and biogas. In addition, the Group is expanding in the distributed renewable energies sector.

EDF Energies Nouvelles, 50 %-owned by the EDF Group, is listed in Euronext Paris since November 2006 (code "EEN", ISIN code: FR0010400143).

www.edf-energies-nouvelles.com