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EDF: Quarterly financial information



                     EDF: Quarterly financial information

                       Quarterly financial information

·         9M 2013 sales up 6.9%, +2.9% in organic growth^[1]
- Contribution by all Group businesses to organic growth
·         French nuclear output:
-  297.6 TWh, +0.9% vs. 9M 2012
-  2013 nuclear output revised to 405-410 TWh
·         Spark programme:
- Around €800m achieved at end-September, ahead of the 2013 initial target of
€1bn
- 2013 target revised upwards by 20% to €1.2bn
·         2013 financial targets reiterated

                          Change in EDF Group sales

   In millions of euros      9M 2012    9M 2013  %   o/w % o/w % o/w % organic
                           restated^[2]              forex scope
France                        28,228    29,095  3.1   0.0   0.0       3.1
United Kingdom                7,001      6,991  -0.1 -4.9  -0.1       4.9
Italy                         6,897      9,509  37.9  0.0  36.2       1.7
Other International           5,642      5,629  -0.2 -1.2   0.0       1.0
Other activities              3,842      3,935  2.4  -0.8   0.2       3.0
International & Other
activities                    23,382    26,064  11.5 -1.8  10.6       2.7
Total Group                   51,610    55,159  6.9  -0.8   4.8       2.9

Henri Proglio, Chairman  and Chief  Executive Officer said:  "The quarter  was 
marked by  sales growth  of near  7%,  and EDF  is reiterating  its  financial 
objectives for 2013. The Group has also reached new milestones with regard  to 
its development strategy in the past several weeks. In the United Kingdom, the
agreement reached with the British  government offers bright perspectives  for 
the French nuclear industry. In addition,  the agreement in sight with  Dalkia 
will enable  the Group  to become  a European  leader in  energy services  and 
strengthen  its   offer  to   industrial   clients  and   local   authorities. 
Consequently, EDF, backed by its  integrated business model, is  consolidating 
its position  as  the  world's  leading  energy  group  and  as  a  player  on 
international energy issues."

 

EDF Group sales over the first nine months of 2013 amounted to €55.2 billon up
6.9% compared with  the same period  in 2012. This  is mainly due  to a  scope 
effect from the takeover of Edison in  May 2012. Organic growth stood at  2.9% 
on the  back  of good  performance  in France,  which  benefited from  both  a 
positive volume effect due to colder weather compared with the same period  in 
2012 and the  increase in  regulated tariffs. Growth  was also  driven by  the 
United Kingdom  where sales  were  lifted by  higher  achieved prices  in  the 
wholesale  market  and   by  the   Other  Activities   segment  where   record 
commissioning from EDF  Énergies Nouvelles  in 2012  has resulted  in a  sharp 
increase in output this year.

                          2013 financial objectives

EDF Group is reiterating its financial objectives for 2013:

  o Group EBITDA: at least 3% in organic growth excluding Edison
  o Edison EBITDA: around €1 billion
  o Net financial debt/EBITDA: between 2x and 2.5x
  o Payout ratio: 55%-65% of net income excluding non-recurring items

The results  of  the  Spark  cost  savings  plan  have  exceeded  the  Group's 
expectations, with around €800 million in  savings already generated as of  30 
September 2013 or 80% of the 2013 initial target of €1 billion, which has been
revised upwards by 20% to €1.2 billion. As expected, the implementation of the
plan was  ramped  up in  the  second half,  particularly  with regard  to  the 
optimisation of investments, which account for a little more than half of  the 
programme to end-September. Savings were  generated across all of the  Group's 
entities and businesses.

     

                            Strategic developments

                  Agreement reached on the commercial terms
            for the planned Hinkley Point C nuclear power station

On 21 October 2013, EDF Group and the UK government agreed on the key
commercial terms of the investment contract for Hinkley Point C (HPC). The
Contract for Difference (CfD), of which strike price is set at £92.5/MWh^[3],
will last for 35 years from the date of commissioning and will generate a rate
of return (IRR^[4]) of around 10% for the project, in line with EDF Group's
investment criteria. The project is eligible for the UK Guarantees scheme, the
government's infrastructure guarantee programme, under terms and conditions to
be agreed upon.
Agreement in principle on the scope of the UK Guarantees scheme and on the key
terms of the investment contract allows EDF Group to move ahead to secure
partners for the project. The share of equity is expected to be 45-50% for
EDF, 10% for Areva, 30 to 40% for China General Nuclear Corporation (CGN) and
China National Nuclear Corporation (CNNC). Discussions are also taking place
with a shortlist of other interested parties who could take up to 15%.
Finalisation of these agreements and construction of the plant are subject to
a final investment decision, provided certain key steps are completed,
including agreement of the full investment contract, finalisation of
agreements with industrial partners and a decision from the European
Commission on State aid.

      Agreement in sight between EDF and Veolia Environnement on Dalkia

As part of the  Group's strategy to clarify  its industrial partnerships,  EDF 
and Veolia  Environnement have  entered into  advanced discussions  aiming  to 
reach an  agreement on  their  joint subsidiary  Dalkia,  one of  the  world's 
leading providers  of energy  services.  On 28  October  2013, the  Boards  of 
Directors of EDF and Veolia Environnement met and approved the continuation of
these  negotiations.   The  discussions   currently  underway   envisage   the 
acquisition by EDF of the entire assets and activities of the Dalkia group  in 
France, while  Veolia  Environnement  would  acquire  the  entire  assets  and 
activities of Dalkia International. In connection with the transaction, Veolia
Environnement would make a cash payment  of €550 million to EDF to  compensate 
for the difference in value between  the stakes owned by the two  shareholders 
in the various entities of the Dalkia group.

The deal is expected to enable EDF Group to significantly develop its presence
in energy services. It offers  substantial potential for synergies given  that 
the businesses and expertise of EDF and Dalkia complement each other.

For EDF, the transaction is expected to  improve the Group's net debt and  net 
debt/EBITDA ratio.  The impact  in 2014  on  net debt  should be  positive  by 
approximately €1 billion, including roughly €400 million from the  transaction 
and around €600 million  from the change in  consolidation rules that go  into 
effect on 1 January 2014^[5].

Regarding EBITDA, the full-year  impact is likely to  be limited (negative  by 
less than  €100 million),  the unfavourable  effect from  end of  proportional 
consolidation of Dalkia International and Dalkia Investissement being  largely 
offset by the positive effect of the transaction (full consolidation of Dalkia
in France).

The transaction is expected to be finalised at the earliest mid-2014.

                              Change in 9M sales

          France: sales growth driven by colder weather than in 2012

In millions of euros 9M 2012 9M 2013  D  Organic growth %
 Total France        28,228  29,095  867       3.1

In France, 9M 2013 sales amounted  to €29.1 billion reflecting organic  growth 
of 3.1%. This growth was due to  a positive volume effect of €625 million  due 
to colder weather conditions than during  the same period in 2012. Growth  was 
also the result of the regulated tariffs increase for €500 million.
Sales were also driven by electricity  sales on the wholesale markets, as  the 
Group was a net seller of 4 TWh in  the first nine months of the year, and  by 
the increase in gas sales due to the cold weather.
These factors contributed to offset the drop in sales due to the expiration of
several long-term contracts.

At end-September,  nuclear  output came  to  297.6  TWh, up  2.6  TWh  (+0.9%) 
compared with the  first nine  months of  2012 despite  more planned  outages. 
However, the Group's outage extensions were longer than planned notably during
the third quarter. The action  plan implemented by the  Group at the start  of 
the year to manage outage durations have limited extensions compared with 2012
but has not yet fully delivered the expected impact. As such, on the basis  of 
output generated  at end-September  and given  the outage  programme  schedule 
until year's end, the Group is now setting a nuclear output target of  between 
405 and 410 TWh in 2013.

Hydropower output stood at 33.7 TWh at end-September, which was an increase of
7.3 TWh  (+27.7%)  compared with  the  first nine  months  of 2012.  This  was 
achieved by  good hydro  conditions  in the  first  half-year. As  the  winter 
approaches, reservoirs are close to their historic averages.

 

    United Kingdom: sales driven by higher prices achieved in the wholesale
                                    market

In millions of euros  9M 2012 9M 2013  D  Organic growth %
 Total United Kingdom  7,001   6,991  -10       4.9

In the United  Kingdom, sales came  out to  €7.0 billion, up  4.9% in  organic 
terms. The  depreciation of  the pound  sterling versus  the euro  during  the 
period led to a negative forex effect of €341 million.
Sales were underpinned  by the increase  in prices achieved  on the  wholesale 
markets compared with the first nine months of 2012. Nuclear output (-0.3  TWh 
in the first nine months of the year) is in line with the Group's ambition  to 
replicate the  strong operational  performance of  2012 of  60 TWh  despite  a 
busier planned outage programme.
Electricity sales  on  the wholesale  markets  increased due  to  the  Group's 
commitment with the European Commission to sell between 5 and 10 TWh per  year 
on the UK wholesale market over the period 2012-2015. These sales came out  to 
6.9 TWh, which was a 4.4 TWh  increase compared with the first nine months  of 
2012 and partially offset lower structured sales.

            Italy: higher electricity sales on the wholesale market

In millions of euros 9M 2012 9M 2013   D   Organic growth %
 Total Italy          6,897   9,509  2,612       1.7

The Italy segment includes EDF Fenice and Edison (in which EDF now holds 97.4%
of the capital^[6]), which has been fully consolidated since EDF took control
on 24 May 2012.

In Italy,  sales climbed  1.7% in  organic terms  to €9.5  billion. The  scope 
effect linked  to  the takeover  of  Edison totalled  €2.5  billion.  Edison's 
contribution to sales was €9.2 billion, or organic growth of 2.5%.
Sales in electricity  activities were driven  by a positive  volume effect  as 
sales on the wholesale  markets increased amid  a difficult environment  where 
demand was down, offsetting a negative price effect.
In hydrocarbon  activities,  sales  to residential  and  professional  clients 
increased in a context of a decline in demand because of lower consumption  of 
thermoelectric plants.
However, activity continues to be hit by  the drop in the price of gas,  which 
continues to weigh heavily on sales and margins.

  Other International: small increase in sales without significant effect on
                                   margins

In millions of euros       9M 2012 9M 2013  D  Organic growth %
 Total Other International  5,642   5,629  -13       1.0

The Other International segment recorded a slight organic sales increase of 1%
to €5.6 billion.
In Belgium, sales at EDF Luminus were up by 0.8% due to higher electricity and
gas  sales  on  the  wholesale  market  as  a  result  of  their  optimisation 
activities, without a significant impact on margins.
In Austria,  sales of  gas  and electricity  were  down as  market  conditions 
deteriorated.
In Poland,  the  5.9%  drop  in organic  sales  resulted  from  lower  prices, 
electricity  volumes   and  lower   prices   and  volumes   of   environmental 
certificates.
In the rest  of the  world, organic  sales were up  11.1%, led  by the  United 
States in particular, where sales were lifted by higher nuclear output.

    Other Activities: good operating performance of EDF Énergies Nouvelles

In millions of euros      9M 2012  9M 2013 D  Organic growth %
                         restated*
 Total Other activities    3,842    3,935  93       3.0

            *Data restated for the impact of the change in the presentation of
EDF Energies Nouvelles' DSSA activities

Sales on the Other Activities segment rose to €3.9 billion, reflecting organic
growth of 3%.
EDF Énergies Nouvelles saw  its organic sales grow  significantly by 33.1%  on 
strong wind output growth (+2 TWh, or +39%) driven by the full-year impact  of 
2012 commissioning in the United States and Canada. At 30 September 2013,  EDF 
Énergies Nouvelles had 6,349 MW gross installed capacity in addition to  1,493 
MW in gross capacity under construction.
EDF Trading's sales rose  5.5% in organic  terms on the  back of good  results 
from its coal/freight trading business. 

 

                         OTHER HIGHLIGHTS SUBSEQUENT
                       TO THE 30 JULY 2013 PUBLICATION

France

Inauguration of the fossil-fired plant in Port Est on Reunion Island
On 11 October 2013, EDF Group inaugurated the Port Est fossil-fired plant with
a capacity of 210 MW. This plant runs on fuel oil and was built to replace the
Port Ouest facility, which was closed in April 2013. It is equipped with
innovative technologies and its performance is particularly good from an
industrial and environmental perspective: it has next generation diesel
motors, which cuts fuel consumption by 15%. Catalytic devices reduce emissions
by 85%.
EDF Group invested €500 million for this new electricity generation facility
serving the Reunion Island in order to meet the growing structural need for
electricity consumption of the people of Reunion.

Ribbon-cutting ceremony at the Saclay institute
On 10 October 2013, Henri Proglio, alongside prime minister Jean-Marc Ayrault
and the Ecology, Sustainable development and Energy minister Philippe Martin,
laid the first stone of the foundation of EDF Lab in Saclay, the biggest
research and development centre in Europe. Located on a 30-acre campus, the
site will combine a global R&D centre and the new Campus EDF. It is slated to
open in 2015. The R&D teams will strive to develop the technologies of
tomorrow and the training centre will equip the company's employees with new
skills. The centre will foster ties with academia and training programmes as
well as universities and the country's elite colleges.

The EPR vessel arrives at the Flamanville site
On 7 October 2013, the vessel, a major component of the EPR nuclear facility,
was delivered to the construction site in Flamanville (Manche) at the end of a
trip that started in early September.
This new stage highlights an acceleration in operations in the nuclear island
as well as electro-mechanical work on the site. The vessel will be installed
in the reactor building in the coming months. Following the installation of
the dome on 16 July, 95% of civil engineering on the Flamanville EPR site is
now complete.

Exclusive negotiations for Citelum acquisition, a key player in the public
lighting market
On 30 September 2013, EDF Group, through its wholly-owned subsidiary EDEV (EDF
Développement Environnement), entered into exclusive negotiations with Dalkia
France with a view to acquiring 100% of the capital in Citelum, one of the
major players in the international public lighting and urban electrical
equipment industry. This transaction would help the Group to enhance the
services it offers to local authorities and to work together more effectively
to safeguard their energy future, a vital key to development. EDF could offer
new responses to its local authority clients when it comes to public lighting
for the design of eco-neighbourhoods.

Domes for Dunkirk methane plant installed
The last of the three domes of the methane gas facility in Dunkirk was
successfully installed on 22 August 2013. In all, three domes were installed
at the facility in less than two months. A new milestone has thus been reached
for the construction site, which began in April 2012 and is scheduled to be
commissioned at end-2015.

Smart grids

EDF opens the first European laboratory dedicated to smart grids
On 13 September 2013, EDF inaugurated the Concept Grid, an experimental
platform, which is the only of its kind in the world, that will seek to drive
and support the development of traditional electricity grids as they become
"smart grids". Located at the Renardières (77) R&D centre, Concept Grid makes
it possible to conduct complex, full-scale stress tests that would be
impossible to carry out on the real grid.
The Group also launched the Smart Electric Lyon project, which aims to test,
under real conditions, a wide array of solutions based on the latest IT and
communication developments. These solutions aim to control electricity
consumption, improve the comfort of life at home and increase the performance
of companies and local authorities. Solutions started to be tested in 25,000
households in Lyon and in roughly 100 companies and local authorities, at
home, work or in their jurisdictions.

EDF Énergies Nouvelles

Acquisition of Longhorn wind energy project (200 MW) in Texas
On 4 November 2013, EDF Energies Nouvelles annouced an agreement between its
US subsidiary, EDF Renewable Energy, and Renewable Energy Systems Americas
Inc. (RES Americas), a North American renewable energy company, to acquire the
200 MW Longhorn wind energy project in Texas. Construction of the project,
currently in late-stage development, is due to begin by the end of the year in
order to qualify for the Production Tax Credit (PTC). Located in northern
Texas, the Longhorn wind project will take advantage of the Competitive
Renewable Energy Zone (CREZ) transmission lines connecting the wind generating
capacity of the Texas Panhandle to areas in the state where electricity demand
is highest. EDF Renewable Energy has secured a long-term, fixed-price hedge
agreement for the expected energy production of the project. The project will
be built by RES Americas on behalf of EDF Renewable Energy.

Commissioning of the Lac-Alfred phase 2 wind farm (150 MW) in Québec
On 9 September 2013, EDF Énergies Nouvelles, via  its local subsidiary EDF EN
Canada, commissionned the second phase of Lac Alfred wind farm, with an
installed capacity of 150 MW. This brings Lac-Alfred's total capacity up to
300 MW amongst the largest in Quebec. Lac-Alfred is co-owned by EDF EN Canada
and Enbridge Inc. on a 50/50 basis. The electricity generated is purchased by
Hydro-Quebec under a 20-year power purchase agreement. The 150 wind turbines
(75 for each phase) were supplied by manufacturer REpower. EDF Renewable
Services, a local subsidiary of EDF Energies Nouvelles, will operate and
maintain the wind farm under an Operations & Maintenance contract.

Commissionning of a 164 MW wind farm in Mexico
On 3 September 2013, EDF Énergies Nouvelles, via its local subsidiary EDF EN
Mexico, commissioned the Bii Stinu wind farm, located in a very windy region
of Oaxaca in southern Mexico where EDF EN Mexico already operates the La Mata
Ventosa wind farm (67.5 MW). This new facility comprises 82 turbines with 2 MW
in unit capacity provided by Spanish manufacturer Gamesa.
The wind farm is 50% co-owned by EDF EN Mexico and by Mitsui&Co. Ltd group via
its Mexican subsidiary MIT Renewables Mexico. The electricity generated by the
facility will be purchased by a set of international and Mexican groups
(Arcelor Mittal Steel Lazaro Cardenas, Walmart Mexico, Grupo Modelo, Grupo
Herdez and Continental Automotive Guadalajara), which have signed a 15-year
power purchase agreement.

Commissionning of a 143 MWc solar plant in California
On 2 September 2013, EDF Renewable Energy, US subsidiary of EDF Énergies
Nouvelles, commissionned the 143 MWp Catalina photovoltaic plant. Located in
the Mojave Desert of California, the power plant extends over more than 360
hectares south-west of the Tehachapi and Piute mountains. The region, which is
very sunny throughout the year, is ideally suited to this large-scale project.
The Catalina project comprising more than 1.1 million thin-film solar panels
is the largest photovoltaic facility ever built by EDF Energies Nouvelles and
ranks as the 8th largest plant worldwide^[7] in terms of installed capacity.
Under construction since May 2012, the power plant has been gradually
commissioned since December 2012. The photovoltaic facility supplies the
electricity it generates to San Diego Gas & Electric Company under a 25-year
power purchase agreement. EDF Renewable Services, a subsidiary of EDF
Renewable Energy, provides operations and maintenance services.

-------------------------

[1] Growth at constant scope and exchange rates

[2] Data for 2012 were restated for the change in the presentation of EDF
Energies Nouvelles' Development and Sale of Structured Assets (DSSA)
activities

[3] £89.5/MWh if Sizewell C goes ahead. There will be a payment from Sizewell
C to Hinkley Point C equivalent to £3/MWh upon the final investment decision
being made on Sizewell C reflecting the fact that the "first of a kind" costs
of EPR reactors are borne by both the Hinkley Point C and Sizewell C sites

[4] Internal Rate of Return of a project is a standard measure of
profitability used by investors

[5] On 1 January 2014, pursuant to IFRS 11, Dalkia International and Dalkia
Investissement will no longer be consolidated on a proportional basis but
rather by the equity method

[6] As well as 99.5% of the voting rights

[7]Reference: Bloomberg New Energy Finance

Quarterly financial information

------------------------------------------------------------------------------

This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
the
information contained therein.

Source: EDF via Thomson Reuters ONE
HUG#1741368
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