Energia
Edf: 2019 half-year results. Stable EBITDA. Confirmation of 2019 targets and 2019-2020 ambitions.
2019 half-year results
Stable EBITDA
Confirmation of 2019 targets and 2019-2020 ambitions
EDF's Board of Directors meeting on 25 July 2019, under the chairmanship of Jean-Bernard Lévy, approved the condensed consolidated financial statements at 30 June 2019.
Jean-Bernard Lévy, EDF's Chairman and CEO stated: “ The first half-year results in 2019 are in line with our forecasts. Bolstered by a strengthened balance sheet, the Group is continuing its deployment of the CAP 2030 strategy and confirms its annual targets. The professionalism of our teams has made possible to achieve major milestones in the Grand Carenage , HPC and Taishan projects, and to bring about some major successes in the solar and off-shore wind power sectors. At the same time, the Group is constantly innovating for energy transition, paving the way for new offers that are totally in step with our clients' lifestyles. “
Change in EDF Group's results
Change in EDF Group's EBITDA
EBITDA in first-half 2019 was stable on first-half 2018, benefitting from favourable market conditions in France and a very strong performance by EDF Trading. However, it was negatively impacted by the unfavourable trend in TURPE 5 distribution tariff indexation and increase in expenses for contributions to the Electricity Equalisation Fund in French regulated activities, and by the deterioration of conditions in the UK, (introduction of a cap on standard variable tariffs (SVTs), suspension of capacity revenues and downturn in nuclear generation).
Footnotes to the first and second pages
(1) The financial statements at 30 June 2019 have been prepared in accordance with IFRS 16 as from 1 January 2019 (use of the modified retrospective method). Comparative figures have not been restated in accordance with the transitional provisions of the standard.
(2) Organic change at comparable scope, IFRS 16 standard and exchange rates.
(3) Net income excluding non-recurring items is not defined by IFRS and does not appear directly in the Group's consolidated income statement. It corresponds to net income excluding non-recurring items, excluding net changes in fair value on energy and raw materials derivatives, trading activities and net changes in the fair value of debt securities and shareholders' equity net of tax.
(4) Enterprise value of US$750m, with an additional consideration of US $100m contingent on the commissioning of the Cassiopea gas development project in Italy. Edison could also receive royalties associated with further potential developments in Egypt, which would bring the aggregate value to c. US $930m.
(5) Net financial debt increased by €4.5bn in connection with the implementation of IFRS 16 on 1 January 2019.
(6) With unchanged legal and regulatory environment in France.
(7) Based on the scope and exchange rates at 01/01/2019 and assumptions for nuclear generation in France of 395TWh.
(8) Sum of personnel expenses and other external consumption. At comparable scope, IFRS 16 and exchange rates. At constant pension discount rates. Excluding changes in operating expenses from service activities.
(9) The impact of IFRS 16 on cash-flow is derived from the increase in EBITDA, reduced by financial interests on the IFRS 16 net financial debt.
(10) For 2020: depending of the impact, currently under assessment, of the decision of the French Nuclear Authority of 19 June 2019 on the schedule and completion cost of the Flamanville 3 project.
(11) Adjusted for the remuneration of hybrid loans recognised in equity.
(12) The disposal of Edison's Exploration and Production (E&P) activity was classified as a discontinued operation within the meaning of IFRS 5 as of 1 January 2019. The data published for the 2018 financial year have been restated for the impact of the presentation of the E&P activity in the process of being sold.
Operational performance
Nuclear output in France totalled 203.7TWh, up 1.1TWh compared to first-half 2018 owing to improved fleet availability.
Hydropower output in France came to 20.1TWh , down 31.6% (-9.3TWh) on first-half 2018. This can be attributed to particularly unfavourable hydro conditions, with first-half 2019 ranking as the second driest half-year over the last 30 years.
Nuclear output in the United Kingdom amounted to 24.5TWh, down 5.7TWh compared with first-half 2018. The contraction resulted from the extension of Hunterston B and Dungeness B outages.
In Italy, electricity generation and ancillary services increased significantly over the first half of the year.
In Belgium, both nuclear and wind power generation increased.
EDF Renewables output amounted to 7.5TWh. As expected, the total was down slightly (by 0.3TWh) compared to the first-half 2018 owing to the disposals completed in late-2018 and early-2019. The gross portfolio of projects under construction at 30 June 2019 reached a record level of 4GW, equally balanced between onshore wind power and solar power.
Net income
The financial result corresponds to a financial expense of €130m in first-half 2019, an improvement of €1,488m compared to the first-half 2018. This resulted primarily from the positive variation in the fair value of the portfolio of dedicated assets in line with the performance of the equity and bond markets in the first half of the year. This variation in fair value is not included in the calculation of net income excluding non-recurring items.
Net income excluding non-recurring items totalled €1,402m at end-June 2019, down €337m compared to the first-half 2018, owing in particular to an increase in financial expenses and net depreciation and amortisation consistent with the trend in investments in the nuclear segment.
Net income – Group share came to €2,498m in first-half 2019, up 44.7% owing to the financial result.
Cash flow and net financial debt
Net investments excluding 2019-2020 disposals, Hinkley Point C and Linky amounted to €5,695m in first-half 2019, for an increase of €559m. This can be attributed mainly to an increase in investments in nuclear maintenance.
Operating cash flow stood at €2,505m, down €1,182m compared to the first-half 2018, the consequence notably of an increase in investments and a lower contribution from the variation in the working capital requirement.
Group cash flow totalled €1,049m, down €497m, stabilising the group's net financial debt for two consecutive half year.
The Group's net financial debt stood at €37.4bn at end-June 2019. Excluding the impact of IFRS 16, it was down €506m compared with 31 December 2018.
Main Group results by segment
France – Generation and supply activities
Sales in France - Generation and supply activities in the first half of 2019 amounted to €14,299 million, up +4.5% in organic terms compared to the first half of 2018.
The contribution to Group EBITDA by the segment amounted to €3,971 million, +6.5% in organic terms compared to the first half of 2018.
The substantial decrease in hydropower output (-8.4TWh ), only very slightly offset by a rise in nuclear output (+1.1TWh), had an unfavourable impact on EBITDA estimated at -€342 million.
Better conditions on the wholesale markets had a positive effect estimated at +€114 million.
On the downstream market , the positive price movements on market-price offers more than made up for erosion of market shares (-8.4TWh including losses of volumes for customers on the regulated sales tariffs). This resulted in a positive impact of +€305 million compared to the first half of 2018.
The weather in the first half of 2019 had a favourable impact estimated at+ €40 million.
Regarding regulated sales tariffs , the tariff rise at 1 June 2019 and the tariff reduction in August 2018 (reflecting the completion of the repayment of the 2012-2013 tariff catch-up component) led to an estimated rise in EBITDA of +€26 million (excluding energy savings certificates) compared to the first half of 2018.
Operating expenses were reduced by €173 million (-4.2%).
A number of factors had a total effect of -€85 million on EBITDA, principally the rise in costs to meet energy savings certificates obligations partially offset by net reversals from provisions.
France – Regulated activities
Sales in France - Regulated activities in the first half of 2019 amounted to €8,307 million, down -1.2% in organic terms compared to the first half of 2018.
EBITDA for the segment stood at €2,578 million, -6.3% in organic terms compared to the first half of 2018.
EBITDA was affected by indexations on the TURPE 5 tariffs with an estimated impact of
-€68 million, and the unfavourable weather effect, with an estimated impact of -€36 million.
Other factors had a combined estimated negative impact of -€128 million on EBITDA: they mainly related to an increase in expenses for contributions to the Electricity Equalisation Fund , and the negative effect of changes in provisions for employee benefit obligations.
This evolution is partially offset by a growth in the grid connection services (+€21 million) and the decrease of operating expenses (-€43 million).
Renewable energies
EDF Renewables
Sales in EDF Renewables in the first half of 2019 amounted to €776 million, up 2.2% in organic terms compared to the first half of 2018.
EDF Renewables' contribution to Group EBITDA was €405 million, corresponding to organic growth of +€7 million (+1.9%) compared to the first half of 2018.
EBITDA from generation recorded an organic increase of 2.4% compared to the first half of 2018, despite the disposals completed in late 2018 and early 2019. This change is primarily attributable to price effects and more favourable wind conditions.
Development and sales of structured assets were supported by disposals undertaken in the early part of the year, notably in US and Poland.
In addition, development costs and head office costs rose, particularly to support growth.
At 30 June 2019, the net installed capacities totalled 8GW, stable overall from 31 December 2018. The gross portfolio of projects under construction at 30 June 2019 reached a record level of 4GW, equally balanced between onshore wind power and solar power.
Group Renewables
EBITDA for all of Group Renewables amounted to €881 million in the first half 2019, down 24% in organic terms owing to unfavourable hydro conditions in first-half 2019.
Energy services
Dalkia
Sales in Dalkia in the first half of 2019 amounted to €2,152 million, up 6.4% in organic terms compared to the first half of 2018.
Dalkia's EBITDA for the first half of 2019 was €195 million, corresponding to year-on-year organic growth of €21 million (+13.2%).
The growth in EBITDA reflects the dynamic sales activity, particularly in heat networks and energy performance contracts (signing of a new multiservice contract with Safran covering 26 sites, a new public service delegation for urban heating in Grande Île at Vaulx-en-Velin and Villeurbanne for 15.5 years). It also benefited from the commissioning at the end of 2018 of several cogeneration installations at industrial sites.
Furthermore, this growth was driven by sales of energy savings certificates in excess of the regulatory obligations, which were concentrated in the first half of the year whereas in 2018 they took place in the second half of the year.
Group Energy Services
EBITDA for Group Energy Services amounted to €216 million in the first half of 2019, up 7% in organic change thanks to positive evolution of Dakia.
Framatome
Sales in Framatome in the first half of 2019 amounted to €1,537 million, up +1.1% compared to the first half of 2018. A significant share of sales was realised with other entities of the Group.
Framatome's EBITDA was €207 million, -6.2% in organic terms, including the margin realised with other EDF group entities. Framatome's contribution to Group EBITDA for the first half 2019 stood at €74 million.
The “Fuel” business retreated in the first half of 2019, due to lower production levels at the European plants and unfavourable phasing effects during the first half of 2019.
The “Installed base” business improved its performance in the US and Germany (80% exports) in a highly competitive market, but was affected in France by project execution costs for export and French customers.
The “Components” business is recovering profitability, and continued the step-up in production initiated in 2018 concerning equipment to replace steam generators and equipment for new projects.
Framatome's EBITDA also benefited from continuation of the operating and structure costs reduction plan.
United Kingdom
In the United Kingdom, sales amounted to €4,536 million in the first half of 2019, down 2.2% in organic terms.
EBITDA amounted to €128 million, down 75.9% in organic terms compared to June 2018.
EBITDA was adversely affected by lower nuclear output, the setting up from 1 January 2019 of SVT (Standard Variable Tariff) price cap and the suspension of the capacity market.
Nuclear output amounted to 24.5TWh, down 5.7TWh compared to June 2018 due to the extension of Hunterston B and Dungeness B outages.
Residential customer accounts were slightly lower (-1.1%) compared to end 2018 in a highly competitive environment.
Italy
In Italy, sales in the first half of 2019 reached €4,029 million, up 0.3% in organic terms from the first half of 2018. EBITDA recorded an organic increase of 28.2% to €328 million.
The electricity activities registered a good performance, essentially due to higher generation output, the contribution of electricity ancillary services, and commissioning of new wind farms (+115MW).
EBITDA for the gas activities was also up. In the first half of 2018 it had been affected by an unfavourable price effect relating to wholesale market purchases in a period of sourcing pressures.
EBITDA for the retail activity was down slightly year-on-year. The margins on electricity were lower, particularly in the residential customer segment. Margins for gas improved, especially in the industrial customer segment
Other international
Sales in the Other international segment amounted to €1,365 million, up 18.2% in organic terms compared to the first half of 2018. EBITDA recorded an organic increase of 35.9% to €166 million.
In Belgium , EBITDA showed an organic increase of +€14 million (+17.7%). The performance of thermal generation has a positive effect on EBITDA estimated at +€17 million at 30 June 2019. Production of renewable energy benefited from the increase in installed wind power capacities, which totalled 450MW at 30 June 2019 (up by +15% compared to 30 June 2018). Service activities are continuing to grow. Supply activities are still marked by the strongly competitive environment.
EBITDA in Brazil also showed organic growth of +€33 million, largely due to the +16% adjustment to the Power Purchase Agreement (PPA) price in November 2018, and a smaller maintenance programme than in 2018 which meant that lower energy purchases were needed to cover the PPA requirements.
Other activities
Sales in Other activities amounted to €1,670 million, up 33.6% in organic terms over the first half of 2018. EBITDA recorded an organic increase of 55.9% to reach €501 million.
EBITDA at EDF Trading amounted to €477 million in the first half of 201, an organic increase of 44.2% compared to first half 2018.
EDF Trading turned to its advantage movements in European market prices in the first half of 2019, which was marked by a particularly significant decrease in gas prices, and took positions which are profitable at 30 June 2019. Its activities on the international energy markets, LNG (Liquefied Natural Gas) and LPG (Liquefied Petroleum Gas) also contributed to this performance.
EDF and Jera broadened their partnership to include LNG optimisation and trading activities since 1 April 2019.
Main events
since the 2019 first quarter press release
Major Events
EDF Renouvelables
Group Energy Services
Nuclear industry
Group Disposal
Others highlights
APPENDICES
Consolidated income statement
In application of IFRS 5, the net income of operations held for sale is presented on a separate line of the income statement for the financial periods presented. The im pact of application of IFRS 5 on the published figures for 2018 is presented.
Consolidated balance sheet
(1) The financial statements at 30 June 2019 apply IFRS 16 from 1 January 2019 (using the modified retrospective approach).In accordance with the new standard's transition provisions, the comparative figures have not been restated.
Consolidated cash flow statement
A key player in energy transition, the EDF Group is an integrated electricity company, active in all areas of the business: generation, transmission, distribution, energy supply and trading, energy services. A global leader in low-carbon energies, the Group has developed a diversified generation mix based on nuclear power, hydropower, new renewable energies and thermal energy. The Group is involved in supplying energy and services to approximately 39.8 million customers , 29.7 million of which are in France. It generated consolidated sales of €69 billion in 2018. EDF is listed on the Paris Stock Exchange.
Disclaimer
This presentation does not constitute an offer to sell securities in the United States or any other jurisdiction.
No reliance should be placed on the accuracy, completeness or correctness of the information or opinions contained in this presentation, and none of EDF representatives shall bear any liability for any loss arising from any use of this presentation or its contents.
The present document may contain forward-looking statements and targets concerning the Group's strategy, financial position or results. EDF considers that these forward-looking statements and targets are based on reasonable assumptions as of the present document publication, which can be however inaccurate and are subject to numerous risks and uncertainties. There is no assurance that expected events will occur and that expected results will actually be achieved. 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, its international scope, the climatic environment, the volatility of raw materials prices and currency exchange rates, technological changes, and changes in the economy.
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
15 March 2019 , which is available on the AMF's website at www.amf-france.org and on EDF's website at www.edf.fr.
EDF does not undertake nor does it have any obligation to update forward-looking information contained in this presentation to reflect any unexpected events or circumstances arising after the date of this presentation
This press release is certified. You can check that it's genuine at medias.edf.com
( [1] ) Hydropower output after deduction of pumped volumes represents 17.1TWh in the first half of 2019 (25.5TWh in the first half of 2018).
( [2] ) Linky is a project led by Enedis, an independent EDF subsidiary as defined in the French Energy Code.
( [4] ) Net financial debt increased by €4.5bn in connection with the implementation of IFRS 16 on 1 January 2019.
( [8] ) Breakdown of sales across the segments, before inter-segment eliminations.
( [14] ) The 30/06/2019 financial statements are prepared applying the IFRS 16 standard. The comparative data was not restated and the EBITDA impact would have been of €83 million as 30/06/2018 .
( [15] ) Breakdown of sales across the segments, before inter-segment eliminations.
( [16] ) Indexed adjustment of -0.21% to the TURPE 5 distribution tariff from 1 August 2018 and +3.0% to the TURPE 5 transmission tariff from 1 August 2018.
( [17] ) For the years 2012-2017 following publication of the official decisions. A provision has been booked for 2018 and the first half of 2019.
( [18] ) Sum of personnel expenses and other external expenses. Based on comparable scope, IFRS 16 and exchange rates and constant discount rates for pensions. Excluding changes in operating expenses of the service activities.
( [19] ) The 30/06/2019 financial statements are prepared applying the IFRS 16 standard. The comparative data was not restated and the EBITDA impact would have been of €27 million as 30/06/2018.
( [20] ) Breakdown of sales across the segments, before inter-segment eliminations
( [21] ) For the renewable energy generation optimized within a larger portfolio of generation assets, in particular relating to the French hydro fleet after deduction of pumped volumes, sales and EBITDA are estimated, by convention, as the valuation of the output generated at spot market prices (or at purchase obligation tariff) without taking into account hedging effects, and include the valuation of the capacity, if applicable.
( [22] ) The 30/06/2019 financial statements are prepared applying the IFRS 16 standard. The comparative data was not restated and the EBITDA impact would have been of €17 million as 30/06/2018 .
( [23] ) Breakdown of sales across the segments, before inter-segment eliminations.
( [26] ) Breakdown of sales across the segments, before inter-segment eliminations.
( [27] ) Breakdown of EBITDA across the segments, before inter-segment eliminations.
( [28] ) I ncluding a €21m charge related to the revaluation of inventories, carried out as part of the determination of the Framatome acquisition balance sheet
( [29] ) The 30/06/2019 financial statements are prepared applying the IFRS 16 standard. The comparative data was not restated and the EBITDA impact would have been of €8 million as 30/06/2018.
( [30] ) Breakdown of sales across the segments, before inter-segment eliminations
( [33] ) The 30/06/2019 financial statements are prepared applying the IFRS 16 standard. The comparative data was not restated and the EBITDA impact would have been of €5 million as 30/06/2018.
( [34] ) Breakdown of sales across the segments, before inter-segment eliminations
( [35] ) Lunimnus and EDF Belgium
( [36] ) The 30/06/2019 financial statements are prepared applying the IFRS 16 standard. The comparative data was not restated and the EBITDA impact would have been of €6 million as 30/06/2018.
( [37] ) A full list of press releases is available on EDF's website www.edf.fr
( [38] ) L a liste exhaustive des communiqués de presse d'EDF Renouvelables est disponible sur le site internet : www.edf-renouvelables.com
Attachment
2321 Rosecrans Avenue. Suite 2200
90245 El Segundo Stati Uniti