PRESS RELEASE
Paris, 18 March 2008
2007 Earnings
A year of transition towards the „integrated operator‟ model
POWEO, the leading independent electricity and gas operator in France, presents the key elements of its consolidated results for the year ended 31 December 2007:
€ million, IFRS standards 2007 2006
Energy supply Transport and taxes Services Revenue excluding Energy Management Energy Management Consolidated revenue Gross margin EBITDA1 EBIT2 Financial income Corporate tax Equity associates Consolidated net profit (loss) Net profit (loss) – minorities share Net profit (loss) – Group share
326.6 30.5 5.4 362.5 0.6 363.1 28.3 (16.6) (24.3) 2.7 (0.3) (21.8) (1.9) (19.9)
150.9 40.2 2.9 194.0 50.4 244.4 33.6 8.1 9.3 1.4 (3.4) 7.3 (0.1) 7.4
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Earnings before interest, tax, depreciation and amortisation Earnings before interest and tax
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Comments on earnings and financial situation The 2007 earnings are a reflection of POWEO‟s gradual transition toward an integrated operator model, combining its own generation capacity with an energy marketing activity and energy efficiency services. As was announced on 13 February of this year, consolidated revenue reached €363.1 million in 2007, for a 48% increase on the €244.4 million recorded in 2006. The bulk of the increase in sales volumes was attributable to large accounts and networks. Customer sites to which energy is supplied by POWEO reached 91,431 at 31 December 2007, up from 87,815 at 30 September 2007 and 80,300 at 31 December 2006, implying a year-on-year rise of 13.8%. As of 31 December 2007, this number broke down as follows: 82,044 electricity sites, of which 78,327 professional customers and 3,717 residential customers, and 9,387 gas sites, of which 7,842 professional and 1,545 residential. POWEO significantly improved its sourcing conditions in 2007 thanks to the capacity swap deal signed with EDF on 3 January 2007. The deal gives POWEO access to competitively-priced electricity generated with nuclear plants while locking in revenues for the first combined-cycle natural gas power plant (CCGT) being built at Pont-sur-Sambre. POWEO recorded a gross margin of €28.3 million in 2007, compared with €33.6 million in 2006, the latter figure having included a particularly high contribution from Energy Management deriving in particular from one-off gains of €30.0 million. Operating expenses increased under the combined effect of a higher headcount (average of 173 in 2007 against 73 in 2006), general expenses (rents and recruitment fees, in particular), and communication and marketing spend, which rose to €9.0 million in 2007 from €4.0 million in 2006. Expenses relating directly to advertising the residential offering at the time of the full liberalisation of that market on 1 July 2007 amounted to €4.1 million. POWEO recorded a full-year EBITDA loss of €16.6 million, factoring in a positive €3.2 million in the second half. The improvement stemmed chiefly from higher electricity prices in the latter part of the year and their impact on the Energy Management portfolio, marking a reversal of the trend observed in the first half of the year. Taking into account €2.7 million of financial income, a negative €0.3 million contribution from equity associates and the deduction of minority interests, the group share of net loss for 2007 came in at €19.9 million. Net cash flow from operations was €10.0 million negative. The gradual implementation of long-term financing, mainly for the Pont-sur-Sambre plant, along with the €150 million (gross amount) capital increase staged before the summer, made a €261.9 million positive cash contribution. Over the full year, net cash flow was a positive €117.0 million, lifting the gross cash balance to €156.9 million at 31 December 2007. Financial debt amounted to €80.4 million at 31 December 2007, compared with €14.9 million at end2006. Consolidated shareholders‟ equity stood at €265.5 million at the end of the year. POWEO SA‟s share capital consisted of 11,301,128 ordinary shares at 31 December 2007. This was split between Verbund (30%), Ecofin (25%), management and employees (15%) and the free float (30%). 2
Steady advances in the residential market Since the beginning of 2008, more than 21,000 new residential customer sites have confirmed their subscriptions to one of POWEO‟s electricity or gas offers. This means that as of 1 April 2008, more than 26,000 sites will have switched since the liberalisation of the residential market on 1 July 2007. In all, POWEO will thus be supplying energy to more than 110,000 sites. The number of sites transferred each month will increase from less than 300 in July 2007 to an estimated 7,400 as of 1 April 2008, boosted by the vote in January 2008 of a bill on reversibility and the ramping up of POWEO‟s direct sales network. It should be recalled that POWEO also has more than 8,000 boiler maintenance contracts in portfolio via POWEO Services, the network of energy services agencies being built up in and around large cities. As a consequence POWEO now provides 34,000 residential customers with energy or services. POWEO plans to bolster its direct sales network in 2008 to assure further sustained growth in new customer site acquisition, with additional support coming from the “green” offers launched last January. An in-house sales network allows notably for higher quality of customer service, which stands as a constant goal for POWEO. Expanding generation capacity POWEO has projects underway across France to build thermal generation capacity, chiefly CCGT plants, and others involving all types of renewable technologies (wind, solar, biomass and hydroelectric power). As indicated on 13 February, POWEO‟s project portfolio expanded in 2007 and projects now total more than 3,800 MW for thermal energy and more than 1,200 MW for renewable energies including 500 MW in offshore wind power. The projects have reached different stages of completion and present estimated success rates ranging from 30 to 100%. This represents a potential capacity, on an unweighted basis, of over 5,000 MW that POWEO intends to develop over the next five years, the goal being to build substantial generation capacities over the long term, specifically including 25% renewable energies. The main components of the CCGT plant being built at Pont-sur-Sambre in Northern France were delivered to the site in February and construction is on schedule. POWEO hopes to obtain within the coming weeks building permits and operating licences for the Beaucaire site, and requests for permits for the Toul site have just been filed to relevant authorities. The POWEO wind energy plants currently in service represent a combined generation capacity of 41 MW, and construction of two new plants with capacity of 12 MW each will get underway in 2008. As regards the financing of the industrial plan, POWEO has not been experiencing so far any restrictions in its access to credit or a deterioration in the terms of recently negotiated project-financings. The interest expressed by the financial community in financing energy-related projects, combined with support from its large shareholders, is maintaining POWEO‟s confidence in its ability to finance its development in the coming years.
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Enhanced access to nuclear electricity POWEO successfully bid for 49 MW of nuclear capacity over 15 years in the auctions recently held by EDF for alternative suppliers, adding to the 160 MW secured through the capacity swap agreement mentioned above. This means that, to supply its customers, POWEO currently has access to more then 200 MW of electricity generated by nuclear plants, which corresponds to the estimated annual consumption of 300,000 households. POWEO will in all likelihood participate in the next auctions, scheduled for the third quarter of 2008 and first quarter of 2009. However, the nuclear electricity required to drive its commercial growth will come first and foremost from new capacity swap agreements, hinging upon the deployment of POWEO‟s generation fleet. Outlook for the short and medium terms Based on the trends observed since the beginning of the year, POWEO intends to achieve consolidated revenue growth of at least 20% in 2008, excluding the potential impact of the Energy Management business. POWEO will nonetheless record another operating loss in 2008; the amount will notably depend on the number of customer sites added, given the costs associated with acquiring new customers. In more general terms, POWEO will continue in 2008 to invest in its strategy of becoming a vertically integrated operator and thus pave the way for sustainable and profitable growth thanks to a highly flexible power generation base and a diversified customer portfolio. For the medium term, POWEO still intends to have attracted 1.2 million customers by the end of 2010, of which 1 million residential and 200,000 professional, allowing it to record revenue in excess of €1 billion. Next financial release POWEO will report its revenue for the first quarter of 2008 on Thursday 15 May 2008 before trading hours.
About POWEO POWEO, the alternative electricity and gas operator in France, aims to benefit from highly flexible power generation capacities within the framework of its integrated operator strategy. These capacities will enter into operation from 2009 onwards, with at least 25% based on renewable energies in the mid-term. POWEO is listed on the Alternext compartment of Euronext (ALPWO / FR0004191674). For more information please visit our website www.poweo.com Press Contacts Christophe Droguère, Poweo – christophe.droguere@poweo.com –Tel + 33 (0)6 16 80 16 73 Laurent Manologlou, Hill & Knowlton – laurent.manologlou@hillandknowlton.com – Tel +33 (0)1 41 05 44 52 Caroline Langlais, Hill & Knowlton – caroline.langlais@hillandknowlton.com – Tel +33 (0)1 41 05 44 23 Investor Relations Patrick Massoni - patrick.massoni@poweo.com -Tel +33 (0)1 70 60 75 09
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