Direct Energie : 2016 Full Years Results

Press release

Paris, 13 March 2017

ANNUAL RESULTS 2016 Revised 2016 targets exceeded 782,000 customer sites acquired in France 66.5% revenue growth to€1,692.4 million

Current operating income multiplied by 2.6 to €86.8 million

Proposed dividend raised by 25% to €0.25 per share

€ millions	31/12/2016	31/12/2015	Change
Revenue from ordinary activities	1,692.4	1,016.5	+66.5%
Gross margin	233.8	148.5	+57.4%
Current operating income	86.8	34.0	x 2,6
Net income	123.6	27.2	x 4,5
Earnings per share (in euro)	3.01	0.67

Today's Board of Directors meeting approved the 2016 consolidated accounts. The audit procedures on the consolidated accounts have been completed and the audit report for the certification of the financial statements is being issued.

Record business growth in France, excellent commercial performance

2016 annual revenue is up by 66.5% to €1,692 million. This very strong increase is in particular attributable to the ongoing commercial growth with, in France, a 31.6% increase in gross acquisitions to 782,000 over the year compared with 594,000 a year earlier.

The increase in volume of electricity (13.9 TWh delivered, up 84%) and gas (5.4 TWh, up 42%) sold is in particular supported by corporate and public authority customers acquired by the Group(89,000 net sites) following the end of regulated tariffs for both electricity and gas for this customer category on 31 December 2015.

In 2016, the Group's customer portfolio rose 29.7% (472,000 net new sites acquired compared with 303,000 in 2015), which breaks down as follows at 31 December 2016:

in thousands	at end 2016	at end 2015	Change
Residentials	1,705	1,337	+27.5%
Non residentials	358	254	+40.9%
Total	2, 063	1, 591	+29.7%

in thousands	at end 2016	at end 2015	change
Electricity	1,607	1,248	+28.8%
Gas	456	343	+32.9%
Total	2, 063	1, 591	+29.7%

Strong improvement in net profitability

In a context of sustained customer site acquisitions and increased volumes of energy delivered, the Group successfully optimised its terms of supply and has adapted to the volatility in wholesale prices, especially for electricity. Combined with a positive €14.2 million impact from tariff catch-up following the publication of retroactive decrees in October 2016 (*), the gross margin is up by a sharp 57.4% to

€233.8 million. This performance includes a negative €31.6 million impact of a provision taken for the loss-making contract concerning gas transit capacities between the Netherlands, Belgium and France.

For the first time over a full year, the gross margin also includes the contribution of the Bayet gas-fired combined-cycle power plant for around €9 million.

Control of operating expenses, which once again grow slower than revenue, bring the current operating income to €86.8 million (x 2.6). To note the positive impact, around €10 million for the past, of retroactive application of the CoRDis decision implementing assumption by GrDF of unpaid amounts for distribution costs relative to the gas supply business.

Net income also achieves record level at €123.6 million (multiplied by 4.5). It outpaces the current operating income thanks to improvement of fundamentals combined with:

• a rise in wholesale prices at the end of 2016 resulting in a positive change in fair value of energy derivatives operational in nature for €21.4 million compared with an expense of €(11.6) million in 2015;

• tax income of €29.5 million partly linked to the application of tax-loss carry forwards relative to the improvements of earnings outlooks.

(*) Cancellation of the 28/07/2014 decree concerning the period of August 2014 to October 2014 (non-compliance with the principle of legal certainty for the "blue" tariffs) and the 30/10/14 decree concerning the period of November 2014 to July 2015 (failure to take into account the necessary tariff catch-up for residential "blue" tariffs and "green" tariffs).

Shareholders' equity boosted, solid cash position

At 31 December 2016, the Group Shareholders' equity is €217.5 million compared with a negative

€(29.3) million at 31 December 2015. This €246.8 million increase is attributable, on the one hand, to the sharp improvement in net profitability, and on the other, to the positive €123.6 million change in the fair value of hedging instruments. Restated for the effect generated by the rise in wholesale prices and physical deliveries in 2016 of energy volumes purchased before 1 January 2016, shareholders' equity comes to €203.9 million (up €123.2 million compared with 31 December 2015).

The cash generation, along with the improved profitability, brings net financial debt to €(43.6) million.

€ M	31/12/2016	31/12/2015
Gross financial debt	196,170	183,093
Margin calls received in cash	132,362	850
Margin calls paid in cash	(3,230)	(60,568)
Gross cash	(368,867)	(35,230)
Net financial debt (*)	(43,565)	88,145

(*) Given the volatility of wholesale prices and the margin call levels that may result, the Group presents its net financial debt including all the financial effect of these margin calls.

The financial debt is mainly composed of bond debt (€183 million) maturing between 2019 and 2023; the last private placement in this format having raised €68 million in November 2016 to finance both the acquisition of customer sites and the purchase the of Marcinelle gas-fired power plant at the end of December for an enterprise value of around €36.5 million.

In addition to its available cash, the Group can also rely on significant liquidities of around €206 million through its unused credit facilities.

Continued growth in 2017 with once again increased targets

After a record 2016, 2017 will again be a year of growth in terms of activity and profitability. Buoyed by investment in communication and marketing, growth will in particular be driven by faster customer site acquisitions, again in a context of controlled operating expenses.

The Group targets for 2017:

• a portfolio of 2.5 million customer sites;

• revenue of €2,000 million at seasonal average temperatures; and

• current operating income of €100 million at seasonal average temperatures.