H1 2012 results:
Robust growth in net income excluding non-recurring items of 10%
Takeover of Edison, now more than 80%-owned
- EBITDA: €9.1bn, +3.3%[1]
Net income excluding non-recurring items: €2.9bn, +10.3%
EDF Net income: €2.8bn, +4.6%
Net financial debt: €39.7bn, including the cumulative CSPE deficit amounting to €4.5bn
Financial targets over 2011-2015 reiterated
EDF SA's Board of Directors, meeting on 30 July 2012 under the chairmanship of Henri Proglio, approved the Group's condensed consolidated financial statements for the half-year ended 30 June 2012.
Henri Proglio, Chairman and CEO of EDF, said: "The first half of 2012 was marked by a significant increase in net income excluding non-recurring items of +10%, which reflected good operating results. Higher hydropower and renewable energy output partially offset lower nuclear output due to planned outages and more numerous outage extensions over the period in France. These solid results are attributable to the dedication and commitment of EDF teams. They are also due to the 22.5% increase in net capex, which amounted to €6bn; two-thirds of these investments were made in France where network quality investments, for instance, rose by 30%. Through its unique integrated-operator business model and its diversified energy mix, the Group has considerable strengths with which to contribute to building Europe's energy future."
Robust growth of net income excluding non-recurring items: +10.3%
| In millions of euros | H1 2011 restated* | H1 2012 | Growth (%) | Organic growth (%) |
| Sales | 33,464 | 36,222 | 8.2% | 7.1% |
| EBITDA | 8,675 | 9,075 | 4.6% | 3.3% |
| EBIT | 5,366 | 5,602 | 4.4% | 2.9% |
| EDF net income | 2,647 | 2,768 | 4.6% | |
| Net income excluding non-recurring items | 2,671 | 2,945 | 10.3% | |
*Data restated for the impact of the IAS 19 option (SoRIE method). (Refer to the appendices for more details on this restatement).
EDF Net income rose to €2,768 million, versus €2,647 million in H1 2011, representing an increase of 4.6%. It includes negative non-recurring items net of tax totalling €177 million (-€24 million in H1 2011).
Net income excluding non-recurring items reached €2,945 million, up sharply by 10.3% versus H1 2011.
This strong growth resulted particularly from a significant increase in operating results in H1 2012 and the stability of the net financial charge.
Group EBITDA reached €9,075 million, i.e. organic growth of 3.3%, driven by regulated activities in France and renewable energies.
International Activities were marked by a busier nuclear tranche outage programme in the United Kingdom and to an unfavourable economic and regulatory environment respectively in the Italy and the Other International segments.
Growth of EBITDA from the Other Activities segment was strong, with an organic increase of 28.4%, on the back of a substantial contribution from EDF Energies Nouvelles (+70.5% in organic growth).
Higher Capex financed by operating cash flow
| 31/12/2011 | 30/06/2012 | |
| Net Financial debt | 33.3 | 39.7 |
| (in € billions) | ||
| Net financial debt/EBITDA | 2.2x | 2.5x |
At 30 June 2012, net capex stood at €5,884 million, up 22.5% compared to H1 2011: 71% of investments were allocated to unregulated activities and 29% to regulated activities.
These investments were financed by the Group's operating cash flow of €6,586 million, up 10.4% versus H1 2011.
The change in net financial debt in H1 2012 integrated the effects from the takeover of Edison, a deterioration in the Working Capital Requirement due to an unusual weather effect in France, an increase in the impact of the CSPE and longer payment terms in Italy.
At 30 June 2012, the Group's net financial debt stood at €39.7 billion, including a cumulative CSPE deficit of €4.5 billion.
The net financial debt/EBITDA ratio was 2.5x at 30 June 2012, which is the maximum amount set by the Group. In order to reach its debt target, the Group continues to work to resolve the question of the CSPE deficit and will review, before the end of 2012, its cost and capex trajectory excluding safety investments.
2011-2015 financial targets reiterated
In this context, the Group reiterates its 2011-2015 financial targets, i.e.:
- EBITDA[4]: 4-6% in average annual growth
Net income excluding non-recurring items: 5-10% in average annual growth
Net financial debt/EBITDA ratio: less than 2.5x
Dividend payout: between 55% and 65%
2012 guidance is in line with these targets. The dividend for 2012 will be at least stable versus the dividend paid out for 2011.
Group's main results by segment
France: 6.3% organic growth in EBITDA driven by regulated activities
| In millions of euros | H1 2011 restated* | H1 2012 | Organic growth (%) |
| Sales | 19,495 | 20,706 | 6.2% |
| EBITDA | 5,733 | 6,072 | 6.3% |
| o/w unregulated EBITDA | 4,168 | 3,974 | -4.2% |
| o/w regulated EBITDA | 1,565 | 2,098 | 34.1% |
*Data restated for the impact of the IAS 19 option (SoRIE method).
In the unregulated activities, EBITDA stood at €3,974 million, down 4.2% in organic terms. This decline was a consequence of the negative impact of weather conditions in the first quarter of 2012 and net output that was down 3.6 TWh in H1 2012 versus H1 2011.
At the same time, the 5.9 TWh increase in hydropower output resulted from an efficient management of water stocks and the return of favourable hydropower conditions. At end-June 2012, water stocks had been built back up to their historical averages.
Regarding regulated activities (networks and Island activities), EBITDA was up 34.1% in organic terms to reach €2,098 million. This growth was due to the increase in transmission tariffs (TURPE), which went into effect on 1 August 2011, and the positive volume effect due to weather conditions.
International and Other Activities
United Kingdom: drop in EBITDA reflecting the nuclear outage programme and non-operating items
| In millions of euros | H1 2011 restated* | H1 2012 | Organic growth (%) |
| Sales | 4,390 | 4,821 | 3.1% |
| EBITDA before fair value impact | 1,090 | 1,073 | -8.3% |
| EBITDA | 1,186 | 1,075 | -16.1% |
*Data restated for the impact of the IAS 19 option (SoRIE method).
In the United Kingdom, organic sales growth was 3.1% to reach €4,821 million.
EBITDA, before the impact of the fair value adjustment on certain items from the acquisition of British Energy, stood at €1,073 million, an organic drop of 8.3%. This drop was primarily attributable to lower nuclear output (-1.2 TWh compared with the first half of 2011) tied to an increase in the outage programme in H1 2012 versus H1 2011 and B2B activity, which was down amid a highly competitive market.
EBITDA's organic growth decreased 16.1% to €1,075 million.
The positive effect of the fair value adjustment on the acquisition of British Energy has diminished considerably (€2 million in H1 2012 versus €96 million in H1 2011).
Italy: EBITDA down amid unfavourable economic conditions
| In millions of euros | H1 2011 | H1 2012 | Organic growth (%) |
| Sales | 3,052 | 3,607 | 16.5% |
| EBITDA | 218 | 211 | -14.2% |
In Italy, the Group generated €3,607 million in sales, an organic increase of 16.5%, due to rising market prices.
EBITDA in the Italy segment fell 14.2% in organic terms to €211 million. Accounting for the positive scope and forex effects, EBITDA in H1 2012 was down 3.2% compared with H1 2011. The takeover of Edison is a strategic development and will have a positive impact on EDF net income in the future.
EBITDA generated by Edison's electricity business was down due to margins that continue to fall and lower hydroelectric generation in a context of lower demand.
Regarding Edison's hydrocarbon activity, the outcome of renegotiations/arbitrages regarding supply contracts is expected for the second half of 2012 regarding Libya, where it is partnered with ENI, and Qatar, where Rasgas is its partner.
Other International: EBITDA down amid an unfavourable economic and regulatory context
| In millions of euros | H1 2011 | H1 2012 | Organic growth (%) |
| Sales | 3,800 | 4,009 | 6.3% |
| EBITDA | 638 | 552 | -17.2% |
Sales in the Other International segment increased to €4,009 million, up 6.3% in organic terms. EBITDA stood at €552 million, down 17.2% in organic terms.
In Belgium, EBITDA was off slightly due to unfavourable regulatory changes, the effects of which will increase in the second half of the year.
In Central and Eastern Europe, EBITDA dropped by €75 million (a 22.8% fall in organic terms). This lower performance resulted from the end in July 2011 of cogeneration support in Hungary, tighter margins on distribution activities in Slovakia as well as higher coal and biomass fuel prices in Poland.
In the other countries (the United States, Brazil, etc.), EBITDA decreased by €8 million because of deteriorating US market conditions and nuclear output, which was mainly affected by unplanned outages in addition to lower output in Brazil that was particularly attributable to two gas turbines being stopped for maintenance.
Other Activities: organic EBITDA growth driven by EDF Energies Nouvelles
| In millions of euros | H1 2011 | H1 2012 | Organic growth (%) |
| Sales | 2,727 | 3,079 | 11.0% |
| EBITDA | 900 | 1,165 | 28.4% |
Sales from the Other Activities segment totalled €3,079 million, up 11.0% in organic terms.
EBITDA amounted to €1,165 million, recording a robust 28.4% organic gain.
EDF Energies Nouvelles turned in organic growth of 70.5% in its EBITDA, which was primarily driven by an increase in wind and solar power output in Europe and North America. Sustained activity from Development and Sale of Structured Assets (DSSA), which will be higher in H2, also contributed to the increase in EBITDA.
Despite good performance in Europe, earnings at EDF Trading were down (-8.6% in organic terms), due to difficult market conditions in North America.
Upcoming EDF group release:
- Q3 2012 sales on 13 November 2012
Disclaimer
This press release does not constitute an offer to sell securities in the United States or any other jurisdiction. This press release may contain forward-looking statements and targets concerning, for example, the Group's strategy, financial position or results, which do not constitute a guarantee of future performance or results of the company. EDF considers that these forward-looking statements and targets are based on reasonable assumptions, which can be however inaccurate and are subject to numerous risks and uncertainties, many of which are outside the control of the company, and as a result of which actual results may differ materially from expected results. Important factors that could cause actual results, performance or achievements of the Group to differ materially from those contemplated in this document include in particular the successful implementation of EDF strategic, financial and operational initiatives based on its current business model as an integrated operator, changes in the competitive and regulatory framework of the energy markets, as well as risk and uncertainties relating to the Group's activities, the climatic environment, the volatility of raw materials prices and currency exchange rates, the strengthening of safety regulations, technological changes, changes in the general economic and political conditions in the countries where the Group operates, and risk and uncertainties relating to the consequences of the nuclear accident in Japan. Detailed information regarding these uncertainties and potential risks are available in the reference document (document de référence) of EDF filed with the Autorité des Marchés Financiers on 10 April 2012, which is available on the AMF's website at www.amf-france.org and on EDF's website at www.edf.com. EDF does not undertake, nor does it have any obligation to provide updates of the information contained in this press release.
The EDF group, one of the leaders in the European energy market, is an integrated energy company active in all areas of the business: generation, transmission, distribution, energy supply and trading. The Group is the leading electricity producer in Europe. In France, it has mainly nuclear and hydraulic production facilities where 96.5% of the electricity output is CO2-free.
EDF's transmission and distribution subsidiaries in France operate 1,305,000 km of low and medium voltage overhead and underground electricity lines and around 100,000 km of high and very high voltage networks. The Group is involved in supplying energy and services to approximately 27.9 million customers in France. The Group generated consolidated sales of €65.3 billion in 2011, of which 43.1% outside of France. EDF is listed on the Paris Stock Exchange and is a member of the CAC 40 index.
CONTACTS:
H1 2012 highlights (after 10 May 2012)
French Ministerial order related to regulated tariffs on electricity sales
On 20 July 2012, the French minister of the economy and finances and the minister of ecology, sustainable development and energy decreed that the regulated tariffs on sales (not including tax) of electricity would increase 2% on average for all tariffs (yellow, green, blue).
EDF will carry out the work needed to fulfil the ASN's (French Nuclear Safety Authority) recommendations at its nuclear fleet
Following the recommendations put forward by the ASN on 28 June 2012 as part of its additional safety assessments, EDF confirms its commitment to completing the work needed to increase the safety level at its nuclear facilities.
EDF's mandatory tender offer on Edison
On 27 June 2012, the Consob, the Italian financial markets authority, authorised EDF's subsidiary Transalpina di Energia S.r.l to launch a mandatory tender offer on the ordinary shares of Edison S.p.A that EDF did not own (1,003,045,298 shares representing 19.36% of the company's capital) at a price of €0.89 per share. The offer period started on 2 July 2012 and will end on 3 August 2012, subject to possible extension.
Gazprom and EDF sign a Cooperation Agreement on gas power generation in Europe
On 22 June 2012, EDF and Gazprom signed a cooperation agreement in respect of a potential collaboration for gas-fired power plants in Europe. The document provides for the possibility of joint construction of gas-fired power plants and acquisition of existing ones on a parity basis. The agreement also states that Gazprom will be the exclusive supplier of gas for the needs of jointly-held gas power plants.
The European Commission conditionally approves existing aid on regulated electricity tariffs in France
On 12 June 2012, the European Commission approved existing State aid contained in regulated electricity tariffs for large and medium-sized electricity consumers in France, subject to compliance with several conditions, namely the reform of the French electricity market and an annual review of the standard tariffs, followed by their elimination at the end of 2015. The tariffs in question are the regulated standard tariffs for corporates ("green" and "yellow" tariffs) and the transitional market adjustment tariff ("TaRTAM") that applied under the system implemented between 2006 and 2011, which has been repealed since. The Commission took the view that the tariffs are compatible with the EU rules on State aid due to the fact that they will help limit the market power of the incumbent operator over a transitional period.
China: the construction of the EPR reactor Unit 1 at Taishan takes a major step forward with the installation of the vessel
On 5 June 2012, the construction of the EPR reactor at Taishan in China, coordinated by EDF, CGNPC and AREVA, has reached a milestone in its development with the lowering of the vessel into the Unit 1 reactor building, after which it was installed in its final location in the reactor pit.
EnBW arbitration
On 25 May 2012, the Group announced that it had received an arbitration notice from the German company Neckarpri GmbH (an investment vehicle set up by the Land of Baden-Württemberg under the framework of EDF group's sale of EnBW, which was finalised on 17 February 2011). Neckarpri claims that the price it paid for acquiring EDF group's stake in EnBW was excessive and requests restitution for the excessive amount. Alternatively, Neckarpri requests cancellation of the sale of the EDF group's stake in EnBW. EDF considers this request to be completely unfounded and exorbitant.
Record drop in CO2 emissions for EDF in 2011
On 15 May 2012, EDF group announced a record fall in its CO2 emissions in 2011, with 99.6g of CO2 per kWh produced, equivalent to a reduction of 11% compared to 2010. For the first time, the Group has fallen below the threshold of 100g/kWh for all of its electricity production facilities combined. In France, the fall has been even more impressive, with a 25% reduction in CO2 emissions in just one year: EDF's CO2 emissions fell to 30.4g/kWh, in no small part due to its carbon-free production plants (nuclear, hydraulic etc.).
EDF launches Electranova Capital, investment fund
On 15 May 2012, EDF announced that it was joining forces with Idinvest Partners, a well-known expert when it comes to funding SMEs, to create a venture capital fund called Electranova Capital. The aim of this fund, endowed with a minimum investment capacity of €60 million, is to encourage the emergence of innovative projects focusing on new, environmentally-friendly technologies with a view to embracing the challenge of a low-carbon energy model, for both energy generation and usage. The goal of this fund is to finance innovative young companies in the energy sector with strong potential for growth, both in France and in Europe, via minority shareholdings.
APPENDICES
Change in booking method of actuarial gains and losses related to employee benefits (SoRIE method)
From 1 January 2012 onwards, the Group changed the method of recognition of actuarial gains or losses related to post-employment benefits, pursuant to the option offered in IAS 19
This change in accounting method has the following consequences:
Actuarial gains or losses are now recorded in equity
The « corridor » method (and the amortization in result of actuarial gains or losses) is abandoned
The reasons underlying this change in accounting method (retrospective application) for the financial statements published in 2012 in respect of 2011 full-year are:
Elimination of the volatility due to the "corridor" method in the profit and loss account
Better readability of the financial statements
Implementation of an option already used by the majority of CAC 40 companies and European peers and compulsory as of 1 January 2013
Consolidated income statements
| (in millions of Euros) | H1 2012 | H1 2011 (1) | ||||
| Sales | 36,222 | 33,464 | ||||
| Fuel and energy purchases | (17,950) | (14,964) | ||||
| Other external expenses | (4,595) | (4,483) | ||||
| Personnel expenses | (5,783) | (5,420) | ||||
| Taxes other than income taxes | (1,597) | (1,511) | ||||
| Other operating income and expenses | 2,778 | 1,589 | ||||
| Operating profit before depreciation and amortisation | 9,075 | 8,675 | ||||
| Net changes in fair value on Energy and Commodity derivatives, excluding trading activities | 98 | (28) | ||||
| Net depreciation and amortisation | (3,283) | (3,131) | ||||
| Net increases in provisions for renewal of property, plant and equipment operated under concessions | (94) | (208) | ||||
| (Impairment) / reversals | (294) | (269) | ||||
| Other income and expenses | 100 | 327 | ||||
| Operating profit | 5,602 | 5,366 | ||||
| Cost of gross financial indebtedness | (1,240) | (1,107) | ||||
| Discount effect | (1,562) | (1,524) | ||||
| Other financial income and expenses | 992 | 821 | ||||
| Financial result | (1,810) | (1,810) | ||||
| Income before taxes of consolidated companies | 3,792 | 3,556 | ||||
| Income taxes | (1,235) | (995) | ||||
| Share in income of associates | 343 | 262 | ||||
| Group net income | 2,900 | 2,823 | ||||
| Net income attributable to non-controlling interests | 132 | 176 | ||||
| EDF net income | 2,768 | 2,647 | ||||
| Earnings per share (EDF share): | ||||||
| Earnings per share in Euros | 1.50 | 1.43 | ||||
| Diluted earnings per share in Euros | 1.50 | 1.43 | ||||
Figures for first-half 2011 have been restated for the impact of the change in accounting method for actuarial gains and losses on post-employment benefits.
Statements of net income and gains and losses
recorded directly in equity
| (in millions of Euros) | H1 2012 | H1 2011(1) |
| Group net income | 2,900 | 2,823 |
| Changes in the fair value of available-for-sale financial assets | 560 | (172) |
| Changes in the fair value of available-for-sale financial assets transferred to income | (183) | (194) |
| Changes in the fair value of hedging instruments | (1,149) | 161 |
| Changes in the fair value of hedging instruments transferred to income | 241 | 309 |
| Changes in actuarial gains and losses on post-employment benefits | (1,575) | (650) |
| Translation adjustments | 997 | (1,227) |
| Taxes | 329 | 298 |
| Gains and losses recorded directly in equity | (780) | (1,475) |
| Net income and gains and losses recorded directly in equity | 2,120 | 1,348 |
| EDF net income | 1,899 | 1,276 |
| Net income attributable to non-controlling interests | 221 | 72 |
Figures for first-half 2011 have been restated for the impact of the change in accounting method for actuarial gains and losses on post-employment benefits.
Consolidated balance sheets
| ASSETS (in millions of Euros) | 30/6/12 | 31/12/11 (1) |
| Goodwill | 10,655 | 11,648 |
| Other intangible assets | 7,040 | 4,702 |
| Property, plant and equipment operated under French public electricity distribution concessions | 46,194 | 45,501 |
| Property, plant and equipment operated under concessions for other activities | 7,119 | 6,022 |
| Property, plant and equipment used in generation and other tangible assets owned by the Group | 65,915 | 60,445 |
| Investments in associates | 7,754 | 7,544 |
| Non-current financial assets | 25,313 | 24,260 |
| Deferred tax assets | 3,233 | 3,159 |
| Non-current assets | 173,223 | 163,281 |
| Inventories | 13,627 | 13,581 |
| Trade receivables | 20,789 | 20,908 |
| Current financial assets | 20,825 | 16,980 |
| Current tax assets | 778 | 459 |
| Other receivables | 11,593 | 10,309 |
| Cash and cash equivalents | 4,920 | 5,743 |
| Current assets | 72,532 | 67,980 |
| Assets classified as held for sale | 1 | 701 |
| Total assets | 245,756 | 231,962 |
| EQUITY AND LIABILITIES (in millions of Euros) | 30/6/12 | 31/12/11 (1) |
| Capital | 924 | 924 |
| EDF net income and consolidated reserves | 28,223 | 27,559 |
| Equity (EDF share) | 29,147 | 28,483 |
| Equity (non-controlling interests) | 5,756 | 4,189 |
| Total equity | 34,903 | 32,672 |
| Provisions related to nuclear generation - Back-end nuclear cycle, plant decommissioning and last cores | 37,265 | 37,198 |
| Provisions for decommissioning of non-nuclear facilities | 1,024 | 809 |
| Provisions for employee benefits | 16,287 | 14,611 |
| Other provisions | 1,868 | 1,338 |
| Non-current provisions | 56,444 | 53,956 |
| Special French public electricity distribution concession liabilities | 42,074 | 41,769 |
| Non-current financial liabilities | 46,110 | 42,688 |
| Other liabilities | 4,803 | 4,989 |
| Deferred tax liabilities | 6,091 | 4,479 |
| Non-current liabilities | 155,522 | 147,881 |
| Current provisions | 3,670 | 4,062 |
| Trade payables | 11,792 | 13,681 |
| Current financial liabilities | 20,067 | 12,789 |
| Current tax liabilities | 512 | 571 |
| Other liabilities | 19,290 | 19,900 |
| Current liabilities | 55,331 | 51,003 |
| Liabilities related to assets classified as held for sale | - | 406 |
| Total equity and liabilities | 245,756 | 231,962 |
Figures for 2011 have been restated for the impact of the change in accounting method for actuarial gains and losses on post-employment benefits.
Consolidated cash flow statements
| (in millions of Euros) | H1 2012 | H1 2011(1) | |||
| Operating activities: | |||||
| Income before taxes of consolidated companies | 3,792 | 3,556 | |||
| Impairment (reversals) | 294 | 269 | |||
| Accumulated depreciation and amortisation, provisions and change in fair value | 3,773 | 3,238 | |||
| Financial income and expenses | 686 | 661 | |||
| Dividends received from associates | 22 | 290 | |||
| Capital gains/losses | (275) | (460) | |||
| Change in working capital | (2,458) | (1,519) | |||
| Net cash flow from operations | 5,834 | 6,035 | |||
| Net financial expenses disbursed | (814) | (1,007) | |||
| Income taxes paid | (892) | (582) | |||
| Net cash flow from operating activities | 4,128 | 4,446 | |||
| Investing activities: | |||||
| Acquisition/disposal of companies, net of cash acquired/transferred | (172) | 3,708 | |||
| Purchases of property, plant and equipment and intangible assets | (6,233) | (4,883) | |||
| Net proceeds from sale of property, plant and equipment and intangible assets | 349 | 78 | |||
| Changes in financial assets | (4,368) | (1,132) | |||
| Net cash flow used in investing activities | (10,424) | (2,229) | |||
| Financing activities: | |||||
| Transactions with non-controlling interests | (237) | (1,233) | |||
| Dividends paid by parent company | (1,072) | (1,068) | |||
| Dividends paid to non-controlling interests | (115) | (171) | |||
| Treasury shares | (1) | (6) | |||
| Cash flows with shareholders | (1,425) | (2,478) | |||
| Issuance of borrowings | 8,489 | 2,228 | |||
| Repayment of borrowings | (1,786) | (1,943) | |||
| Funding contributions received for assets operated under concessions | 85 | 93 | |||
| Investment subsidies | 72 | 22 | |||
| Other cash flows from financing activities | 6,860 | 400 | |||
| Net cash flow from financing activities | 5,435 | (2,078) | |||
| Net increase/(decrease) in cash and cash equivalents | (861) | 139 | |||
| Cash and cash equivalents - opening balance | 5,743 | 5,567 | |||
| Net increase/(decrease) in cash and cash equivalents | (861) | 139 | |||
| Effect of currency fluctuations | 50 | (76) | |||
| Financial income on cash and cash equivalents | 25 | 17 | |||
| Effect of reclassifications | (37) | 46 | |||
| Cash and cash equivalents - closing balance | 4,920 | 5,693 | |||
- Figures for first-half 2011 have been restated for the impact of the change in accounting method for actuarial gains and losses on post-employment benefits.
[1] Growth at constant scope and exchange rates
[2] Excluding the impact of the government's measures on social contributions
[3] Impact of the fair value adjustment on certain items from the acquisition of British Energy (organic change of -€100 million)
[4] EBITDA growth at constant scope and exchange rates
[5] Excluding the impact of the government's measures on social contributions
[6] Net impact of hydropower and nuclear
[7] Compared with the dates of operating lifespan announced when British Energy was acquired
[8] And 80.64% of voting rights
