Energia
Edf: 2021 ANNUAL RESULTS, Financial targets achieved, Strong increase in EBITDA and Net Income compared to 2020 and 2019, Successful disposal and cost savings plans, Decrease in carbon intensity
2021 ANNUAL RESULTS
F inancial targets achieved
Strong increase in EBITDA and N et I ncome compared to 2020 and 2019
Successful disposal and cost savings plan s
D ecrease in carbon intensity
2021 Financial Results
Sales
€84.5bn +21.6% org.
EBITDA €18.0bn
+11.3% org.
Net income excluding non-recurring items
€ 4.7bn x2.4
Net income – Group share € 5.1bn
~ x8
Net debt/EBITDA
2. 4 x
Dividend per share €0.58
2021 Highlights
2021 Achievements
Nuclear
Wind and solar renewables
Customers and services
Enedis
Italy
International
E nvironmental & social achievements and targets
Outlook and Action plan
Announcements by the French P resident on 10 February 2022 in Belfort
Exceptional regulatory measures to limit increase in tariffs in 2022
Nuclear
2022
These estimates, which are highly sensitive to market prices, are presented for illustrative purposes and are based on information that the Group has currently available.
Launch of an action plan
As announced on January 13 2022 , EDF presented to its Board of Directors' meeting on February 17 2022 an action plan aimed at strengthening its balance sheet structure in the context of the events of early 2022.
This plan aims at pursuing the Group's strategy, which is based on a balanced mix of nuclear and renewable energies, develops energy efficiency services and provides its customers with even more innovation.
In order to finance this strategy, EDF notified its intention to:
The French State, EDF's largest shareholder, has indicated its position to the Board of Directors on the two points above, which will be communicated separately.
AMBITIONS
Meeting on 17 February 2022 under the chairmanship of Jean-Bernard Lévy, EDF's Board of Directors approved the consolidated financial statements at 31 December 2021.
Jean-Bernard Lévy, Chairman and Chief Executive Officer of EDF, commented :
"In 2021, EDF met its commercial, operational and financial targets.
The EDF Group's EBITDA grew significantly and reached its
highest level since 2015. The deployment of the CAP 2030 strategy
was a major success in 2021 , testifying t o
the skills and mobilisation of all men and women of Group .
The difficulties encountered at the beginning of 2022 have led EDF to implement an action plan aimed
to continue this strategy in support of the energy transition and France's industrial and climate objectives for the 2030 and 2050 horizons."
Change in EDF Group results
Change in EDF Group EBITDA
Organic growth in EBITDA of 11.3% between 2020 and 2021 is mainly related to an increase in nuclear output in France. This trend was also driven by the extremely positive performance in the trading business, by the significant improvements in Italy and in the French regulated activities, and by the reduction in production tax. However, outages and extended outages of nuclear reactors at the end of the year in France required the purchase of volumes on the market against a backdrop of a sharp rise in electricity prices. This had a strongly unfavourable impact. The United Kingdom was negatively impacted by the decrease in nuclear output and the sharp decline in realised nuclear prices stemming from substantial buybacks at high market prices.
O perational performance
Nuclear output in France reached 360.7TWh, up 25.3TWh year on year. This change mainly reflects the following factors:
Hydro output in France totalled 41.8TWh , down 2.9TWh compared with 2020.
In the United Kingdom, nuclear output was 41.7TWh, down 4.0TWh compare to 2020. This downturn resulted notably from more planned outages in 2021 than in 2020 and from the three-month extension of the Sizewell B outage. The Dungeness plant was closed definitively in June 2021 and the two Hunterston B reactors shut down permanently on 26 November 2021 and 7 January 2022 respectively.
In Belgium, the improved availability of thermal plants helped to increase the services provided to the electric system. Hydro generation benefited from extremely favourable conditions in 2021.
EDF Renewables output amounted to 17TWh (+1.6TWh), up 10.5% in organic terms, thanks to the commissioning of new capacity.
Disposal and cost savings plan s achieved one year ahead of schedule
To offset the impacts of the health crisis on the Group's financial situation, cost savings and disposal plans were launched mid-2020 with a view to reducing operating expenses by €500 million between 2019 and 2022 and generating approximately €3 billion in disposals between 2020 and 2022. At end-2021, €545 million in cost savings had been achieved. Asset disposals signed or completed at 31 December 2021 had a favourable effect of around €3 billion on net debt and around €3.7 billion on the Group's economic debt .
These disposals are consistent with Group strategy and have helped to refocus on core businesses and to withdraw from carbonised activities (mainly the sales of the E&P business and of the IDG gas distribution network).
Both plans have exceeded their targets one year ahead of schedule.
Extension of 1,300MW French nuclear fleet depreciation period
The Group changed the depreciation period of its 1,300MW PWR plants in France on 1 January 2021, as the technical, economic and governance conditions had been met.
Since then, the provisions related to nuclear production decrease by €1,016 million. This decrease is largely taxed and generated a tax disbursement of €184 million.
The impact of the 50-year depreciation period extension on net income - Group share for this year is +€405 million.
Dividend proposed for 2021: € 0.58 per share, or a pay-out rate
of 45 %, with the option to pay in new shares
The EDF Board of Directors meeting on 17 February 2022 decided to propose to the General Meeting of Shareholders due to be convened to approve the accounts for the year ending 31 December 2021 on 12 May 2022 (hereinafter the General Meeting) the payment of a dividend of €0.58 per share in respect of 2021, corresponding to a 45% pay-out rate of current net profit .
Taking account of the interim dividend of €0.30 per share paid in December 2021, the balance of the dividend to be paid in respect of 2021 is €0.28 per share for shares with the ordinary dividend and €0.338 per share for shares with the bonus dividend.
Pending approval by the General Meeting in accordance with Article L. 232-18 of the Code of Commerce and Article 25 of the Company's Articles of Association, the EDF Board of Directors meeting of 17 February 2022 decided to propose to all shareholders the possibility of having the balance of the dividend due for the year ending 31 December 2021 paid in the form of new shares in the Company. If this option is exercised, the new shares will be issued at a price equal to 90% of the average of the first listed prices of the EDF share on the regulated Euronext Paris market over the 20 trading days preceding the General Meeting, less the amount of the balance of the dividend remaining to be paid for the year 2021, all rounded up to the next euro centime. The French State committed to scrip for the dividend relating 2021 year.
The EDF Board of Directors meeting of 17 February 2022 set the terms for settlement of the balance of the dividend for 2021 that shareholders will be asked to approve at the General Meeting:
Unless they have opted for payment in new shares between 20 May and 7 June 2022 inclusive, shareholders will receive the balance of their dividend in cash on the date of its payment, namely 13 June 2022.
Net income
The financial result totalled €360 million in 2021, up €2,942 million relative to 2020. This change is owing to several factors:
Restated for non-recurring items, the recurring financial loss came out at -€2,437 million compared with
-€3,705 million in 2020. In particular, the change in fair value of the dedicated assets portfolio is not included in the calculation of net income excluding non-recurring items.
Net income excluding non-recurring items amounted to €4,717 million at end-2021, up €2,748 million compared with end-2020. This change mainly reflects growth in EBITDA and that of the recurring financial loss in addition to less amortisation, linked to the extended depreciation period for 1,300MW plants.
Net income - Group share amounted to €5,113 million at end-2021, up €4,463 million. Apart from the considerable increase in net income excluding non-recurring items, the change includes the following after-tax items:
Cash flow and net financial debt
Group cash flow stood at -€1,525 million at the end of 2021, a significant improvement on 2020, when it came out at -€2,660 million . This trend mainly resulted from the strong growth in EBITDA and the amount of asset disposals completed in 2021, for a total €2,847 million.
Conversely, the working capital requirement (WCR) deteriorated by €1,526 million in 2021. The change in the WCR is mainly attributable to the deterioration in the WCR of the optimisation/trading activity and the increase in trade payables in an environment of high prices.
Net investments amounted to €15,725 million, an increase of €1,580 million versus 2020, a year marked by the health crisis.
Cash flow from operations amounted to -€213 million, down €874 million compared with 2020.
Net debt was limited to €43.0 billion on a strong performance in terms of cash EBITDA (+€17.1 billion), completed disposals (+€2.8 billion) and a social hybrid bond issue (+€1.2 billion).
Main Group results by segment
France – Generation and supply activities
The net impact on EBITDA of the 25.3TWh increase in nuclear output, combined with the 2.6TWh decline in hydropower output after the deduction of pumped volumes, is estimated at +€1,081 million.
Energy prices had a negative impact on EBITDA estimated at -€1,140 million, outages and extended outages at the end of the year having required purchases on the market at extremely high prices. In contrast, energy buybacks in 2020 were made at low prices.
The impacts on the downstream market were negative and estimated at -€249 million owing to a loss of customers, while capacity prices invoiced to customers had a favourable impact.
Furthermore, EBITDA benefitted from the reduction in production taxes as part of the recovery plan for an estimated €322 million.
France – Regulated activities
The substantial increase in EBITDA resulted primarily from an increase in distributed volumes, at 15.8TWh for an estimated €251 million, stemming from colder weather and following the impact of the health crisis in 2020. It also resulted from growth in the grid connection activities, which made a positive contribution to EBITDA for an estimated €159 million.
The trend in prices had a positive effect estimated at €30 million, mainly owing to the positive trend in the TURPE indexation despite the negative effect of loss purchases against a backdrop of strong price increases on the market.
Furthermore, EBITDA benefitted from a €130 million reduction in production taxes as part of the recovery plan.
Renewable energies
EDF Renewables
The extreme cold snap in Texas in the first quarter had a significant negative impact on production EBITDA estimated at -€95 million. EDF Renewables was obliged to buy back energy at very high prices to meet its contractual commitments and had to book an impairment for one of its fleet assets, leading to a negative impact on net income.
The production EBITDA also benefits from an increase (+ 1.6 TWh) in volumes produced thanks to the capacities commissioned.
“Development & Sale of Structured Assets” made a favourable contribution to EBITDA, notably owing to disposals in the United States and Portugal.
Development costs increased, supporting the 27% growth in the portfolio of wind and solar projects of 73GW.
Group renewables excl. hydro France
EBITDA was impacted by the extreme cold snap in Texas in the first quarter. It was also adversely affected by the dip in wind generation in Belgium owing to unfavourable wind conditions. However, EBITDA benefited from an improved contribution of Edison wind generation in a favourable price environment.
Net investments rose slightly due in particular to the acquisition of 70% of E2i (Edison renewables platform) in 2021.
Energy Services
Dalkia
The strong EBITDA growth can be attributed primarily to the recovery in services and works following a first-half 2020 negatively impacted by the closure of numerous customer sites, the postponement of construction projects, and continued gains in performance in heating and cooling networks. It is also explained by a very good rebound in the works and energy efficiency activities in the UK.
Sales development remained strong, particularly in greening and operation and maintenance of heating networks, with contracts won in Issoire, Puteaux and Monplaisir (Angers) for exemple.
Group Energy Services
The organic growth posted at Group level by Energy Services can be attributed to the recovery in business at Dalkia and Edison after the slowdown linked to the health crisis in 2020 and to the development of customer services in France.
Framatome
EBITDA rose sharply as a result of brisk activity at “Fuel” and “Primary Component” production plants and the lesser impact of the health crisis.
The “Installed base” activity, mainly in North America and France, also contributed favourably to EBITDA.
The action plan on structural costs also continues to contribute to EBITDA.
Order intake amounted to around €3.7 billion at end-2021 , an improvement relative to 2020.
Framatome is developing its engineering expertise and expanding its Instrumentation and Control (I&C) capabilities with the acquisition of the I&C activity of Rolls-Royce .
United Kingdom
The extremely sharp decrease in EBITDA resulted mainly from a 4TWh downturn in nuclear output for an estimated -€198 million and from a substantial decrease in realised nuclear prices (-£12.6/MWh) stemming from a considerable volume of buybacks at high market prices, estimated at -€550 million.
Downstream activity was also impacted by the energy crisis in the United Kingdom. In particular, the contribution of the residential customer segment decreased as the rise in energy prices was not fully passed in 2021 on to customers with capped prices.
The acquisition of Green Network Energy's customers on the one hand, the integration of Utility Point and Zog Energy clients'portfolio in accordance with the supplier of last-resort mechanism on the other hand, have required additional purchases.
Business in the industrial and commercial segment increased relative to 2020, the latter having been adversely affected by the health crisis.
Italy
The electricity activities reported EBITDA growth, in particular thanks to the improved use of combined cycle gas turbines and of ancillary services in an environment of highly volatile market prices. The contribution from renewable energy generation also increased, especially wind power, against a backdrop of high prices.
Gas business benefited from the capital gain generated from the disposal of Infrastrutture Distribuzione Gas (IDG), the surge in activity (impact of the health crisis) in the industrial customer segments and a colder weather in 2021 than in 2020.
Ebitda also benefited from the growth of the services activities.
Other notable developments included the entry of a new financial partner, which acquired a 49% stake, in renewables platform: the aim being to develop new generation capacities.
Other international
In Belgium , the decline in EBITDA resulted primarily from reduced wind farm production, linked to less favourable wind conditions compared with 2020, and purchases at high prices, particularly at the end of the year.
Net installed wind capacity increased to 591MW , up 7.8% compared with end-2020. Nuclear output is increasing. The improved availability of thermal plants helped to increase the services provided to the electric system.
After the slowdown in 2020 owing to the health crisis, service activities returned to growth and downstream activities held up well against a backdrop that continued to suffer from intense competition and extensions to social tariffs.
Luminus finalised the acquisition of around 330,000 customers from Essent Belgium, the Belgian gas and electricity supplier .
In Brazil , EBITDA increased in organic terms thanks to the increase in the price of the Power Purchase Agreement (PPA) relating to the EDF Norte Fluminense plant, by 28% in November 2020 and 7% in November 2021, as well as sales at high prices on the spot market.
Other activities
The increased EBITDA of gas activities resulted mainly from the revaluation of long-term contracts (with no cash effect) in line with the substantial improvement in medium- and long-term USA-Europe spreads and an improvement in the operational margins of the Group's gas businesses.
EDF Trading posted EBITDA of €1,200 million, up an organic 89.6% relative to 2020. This was an outstanding performance given the extreme volatility on the commodities markets.
The trend was also underpinned by the sale of real estate in France.
Main subsequent events
after the third-quarter 2021 press release
Nuclear
Renewables
EDF Energy
Sustainable financing
Edison
Framatome
Other
APPENDICES
Consolidated income statement
(1) Other external expenses are reported net of capitalised production costs.
(2) Including net increases in provisions for renewal of property, plant and equipment operated under concessions.
Consolidated balance sheet
Consolidated cash flow statement
(1) The published figures for the 2020 financial year include the reclassification of €79 million between “net financial expenses disbursed” and “changes in financial assets”.
(2) Contributions via capital increases, or capital reductions and acquisitions of additional interests or disposals of interests in controlled companies. In 2021, this item included €1,304 million related to CGN's payment for the NNB Holding Ltd. (for Hinkley Point C project) and Sizewell C Holding Co, €865 million related to the sales of 49% of Edison Renewables, and €(276) million related to the acquisition of 70% of E2i
Energie Speciali . In 2020, this item included an amount of €998 million relating to CGN's payment for the capital increases by NNB Holding Ltd. (for the Hinkley Point project) and Sizewell C Holding Co.
(3) Other non-monetary changes include the 1 January 2021 reclassification of debit positions relating to margin calls on derivatives, previously netted within other financial liabilities for an amount of €281 million.
(1) Since 2018, customers are counted per delivery site. A customer can have two delivery points: one for electricity and another for gas.
(2) Including ÉS (Électricité de Strasbourg).
This presentation is for information purposes only and does not constitute an offer or solicitation to sell or buy instruments, part of the company or the assets described here, in the US or any other country.
The present document may contain forward-looking statements and targets concerning the Group's strategy, financial
position or results. While EDF believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions at the time they were made, these assumptions are fundamentally uncertain and imply a certain amount of risk and uncertainty which is beyond the control of EDF. As a result, EDF cannot guarantee that these assumptions will materialise. Future events and
actual financial and other outcomes may differ materially from the assumptions used in these forward-looking statements, including, and not limited to, potential timing differences and the completion of transactions described therein.
Risks and uncertainties (notably linked to the economic, financial, competition, regulatory and climate backdrop) may include changes in economic and business trends, regulations, as well as those described or identified in the publicly-available documents filed by EDF with the French financial markets authority (AMF), including those presented in Section 2.2 “Risks to which the Group is exposed” of the EDF Universal Registration Document (URD) filed with the AMF on 15 March 2021 (under number D.21-0121), which may be consulted on the AMF website at www.amf-france.org or on the EDF website at
www.edf.fr as well as the financial report as of 31 December 2021, which is also available on the EDF website.
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. Its authenticity can be checked on medias.edf.com
( 1 ) Hydro output excluding French island activities before deduction of the consumption of pumped volumes. After deduction of combined pumped-storage hydropower volumes, hydropower output stood at 35.9TWh in 2021 (38.5TWh in 2020).
( 2 ) Sum of personnel expenses and other external expenses. At constant scope, accounting standards, exchange and pensions discount rates, and excluding inflation. Excluding sales costs of energy service activities and nuclear engineering services of Framatome and in particular projects such as Jaitapur.
( 3 ) Signed or completed disposals: impact on Group's economic debt (Standard and Poor's definition).
( 4 ) Net economic debt according to Standard and Poor's definition.
( 5 ) Adjusted for the remuneration of hybrid bonds booked as equity.
( 6 ) Subsequent to regulatory changes and the harmonisation of European standards on the payment process for optional dividends, the date of the end of the option period may vary from one financial intermediary to the next. For pure registered shareholders, BNP Paribas Securities Services, as the institution in charge of the securities service of the EDF company, has set this date at 3 June 2022 at the latest in order to supervise and centralise the responses of pure registered shareholders.
( 7 ) Restated data: 2020 pro forma data includes the reclassification of Linky and HPC investments as net investments, and a reclassification between “Disbursed financial expenses” of +€79 million “Other non-monetary changes” of -€49 million and “Dedicated assets” of -€30 million.
( 8 ) Cash flow generated by operations is not an aggregate defined by IFRS as a measure of financial performance, and is not directly comparable with indicators of the same name reported by other companies. This indicator, also known as Funds from Operations (“FFO”), incorporates net cash flow from operations, change in WCR after adjustment where relevant for the impact of non-recurring effects, net investments (excluding 2020-2021 disposals, Hinkley Point C and Linky), as well as other items including dividends received from associates and joint ventures.
( 9 ) Net financial debt is not determined by accounting standards and is not directly visible in the Group's consolidated balance sheet. It corresponds to loans and financial debt less cash and cash equivalents as well as liquid assets. Liquid assets are financial assets made up of funds or securities with an initial maturity of more than three months, easily convertible into cash, and managed under the framework of a liquidity target.
( 10 ) Breakdown of sales across the segments before inter-segment eliminations.
( 11 ) Regulated activities include Enedis, Électricité de Strasbourg and French islands electrical activities.
( 12 ) Indexation of TURPE 5 Distribution of +2.75% and TURPE 5 Transport of -1.08% at 1 August 2020 and TURPE 6 Distribution of +0.91% and TURPE 5 Transport of +1.09% at 1 August 2021.
( 13 ) Breakdown of sales across the segments before inter-segment eliminations.
( 14 ) Hydro France EBITDA totalled €3,221m in 2021 and €531m in 2020. For the renewable energy generation activities optimised as part of a broader 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.
( 15 ) Breakdown of sales across the segments before inter-segment eliminations.
( 16 ) Group Energy Services comprise Dalkia, Dalkia Electrotechnics, CHAM, SOWEE, IZI Solutions, IZI Solutions Renov, Izivia, EDEV, EDF China Holding, EDF Pulse Croissance and the services activities of EDF Energy, Edison, Luminus and EDF SA. They consist in particular of street lighting, heating networks, decentralised low-carbon generation based on local resources, energy consumption management and electric mobility.
.
( 17 ) Breakdown of sales across the segments before inter-segment eliminations.
( 18 ) Breakdown of EBITDA across the segments, before inter-segment eliminations.
( 19 ) At Framatome scope.
( 20 ) See press release 8 November 202 1 press release.
( 21 ) Breakdown of sales across the segments before inter-segment eliminations.
( 22 ) Breakdown of sales across the segments before inter-segment eliminations.
( 23 ) Luminus and EDF Belgium.
( 24 ) Net capacity for Luminus. Gross installed wind capacity totalled 658MW at end-2021 (+11.9%).
( 25 ) See the Luminus press release of 3 May 2021.
( 26 ) Breakdown of sales across the segments before inter-segment eliminations.
( 27 ) The full list of press releases is available on our website: www.edf.fr
( 28 ) The full list of press releases is available on our website: www.edf-renouvelables.com
( 29 ) The full list of press releases is available on our website: www.edfenergy.com
( 30 ) A full list of Edison's press releases is available on the website: www.edison.it
( 31 ) The full list of press releases is available on our website: www.framatome.com
( 1 ) Organic change at comparable scope, standards and exchange rates vs 2020 .
( 2 ) Net income excluding non-recurring items is not defined by IFRS, and is not readable
directly in the consolidated income statement. It corresponds to net income excluding non-recurring items and net changes in fair value on Energy and Commodity derivatives, excluding trading activities, and excluding net changes in fair value of debt and equity securities, net of tax.
( 3 ) The French State committed to scrip for the dividend relating 2021 year.
( 4 ) According to the com plementary delegated act of 02/02/2022 subject to definitive adoption in 2022.
( 5 ) See 12 January 2022 press release. Cost in 2015 euros and excluding
interest during the construction period .
( 6 ) See 10 February 2022 press release.
( 7 ) Purchase of remaining shares of the E2i holding company and
investment by a new financial partner. Edison retains control over the new platform.
( 8 ) See 13 January 2022 press release.
( 9 ) ARENH: Regulated access to historic nuclear power. Attribution of an additional 20TWh for the period from 1 April 2022 to 31 December 2022 at €46.2/MWh .
( 10 ) For residential regulated tariffs customers and “blue professionals” and for all
customers (both residentials and professionals ) located in the non-interconnected zones (ZNIs).
( 11 ) See 13 January 2022, 7 and 11 February 2022 press releases.
( 12 ) This amount includes an estimate of the impact of the tariff
postponement on the 2022 cashflow amounting to approximately €1.5bn, based on market prices at 31 December 2021 .
( 13 ) Base d on the assumption
of 2022 forward prices at 31 December 2021 .
( 14 ) See 13 January 2022 press release "Exceptional measures announced by the French government".
( 15 ) Based on, purely for illustrative purpose s , a reference share price of €8 per share and a discount in line with market practice .
( 16 ) Target payout ratio of net income excluding non-recurring items (adjusted for the remuneration of hybrid bonds accounted for in equity) for 2022 and 2023 of 45-50%.
( 17 ) Signed or completed disposals: impact on the Group's economic debt reduction (S&P definition).
( 18 ) Based on scope and exchange rates at 01/01/2022. At stable regulatory environment (ARENH ceiling at 100TWh), with the assumption of 31 December 2021 forward prices for 2023, and considering an assumption of French nuclear output for 2022 and 2023 as announced in the press releases of 7 and 11 February 2022 .
( 19 ) A s per current S&P methodology.
Attachment
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