Press release

 

Paris, 14 March 2018

 

Operating profitability in line with target

Proposed dividend up by 40%

New growth in revenue and in EBITDA expected for 2018


The 2017 financial year demonstrates again the Group's capacity to expand business momentum with a record number of nearly 1 million customer sites acquired. Supporting this performance, the movement of vertical integration, marked primarily by the purchase of the Quadran group at the year's end, provides improved visibility of the future margins whilst reducing exposure to variations in wholesale market price. 

 

Customer portfolio up by 24% at 2.6 million customer sites

Revenue up by 16.2% at €1,966.3 million

Current operating income up by 17.6% at €102.1 million

Operating production capacities 1.35 GW

In thousands of euros   31/12/2017   31/12/2016   Change
       
Revenue from ordinary activities   1,966.3   1,692.4   16.2%
       
Gross margin   287.4   233.8   22.9%
       
EBITDA (*)   142.7   117.7   21.2%
             
Current operating income   102.1   86.8   17.6%
       
Net income (**)   51.9   123.6   

(*) EBITDA corresponds to Current operating income restated for depreciations and share-based payments
(**) non cash effect of deferred taxes that impact the Net income (net change of €(66.8) m between 2016 and 2017)

Today's Board of Directors has approved the 2017 annual 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.

Dynamic growth

Annual revenue 2017 posts an increase of 16.2% rising to €1,966.3 million. This performance is based on the contribution from the Commercial Trade segment, still dynamic at €1,900 million (up by 13.1%), on the thermal Production segment whose contribution has increased 4.5-fold to €54.9 million thanks in part to the integration of the Marcinelle power plant, and on the consolidation of the Quadran group over the final two months of the year (€10.9 million).

The ramp-up of both conventional and renewable production assets reflects the implementation of the vertical integration strategy lead by the Group since 2016. The objective of this strategy is to have diversified production capacities, adjusted to the flexible energy needs of the customer portfolio, and in line with the French energy mix.

With 949,000 acquisitions (gross) achieved over the year versus 782,000 in 2016 (up by 21.4%), the Group confirms its ability to expand its business momentum in France in an increasingly competitive environment. The customer portfolio sites is thus showing growth of 24% (a net increase of 495,000 sites) to reach 2,558 thousand sites at end of 2017.

In thousands 31/12/2017 31/12/2016 change
Residential 2,161 1,705 26.7%
Non residential 397 358 10.9%
Total 2,558 2,063 24.0%

 

In thousands 31/12/2017 31/12/2016 change
Electricity 1,968 1,607 22.5%
Gas 590 456 29.4%
Total 2,558 2,063 24.0%

 

Continuing with vertical integration

At end of 2017, the Group's production capacities stand at 1.35 GW, 800 MW of which is thermal power and nearly 550 MW gross of renewable energy. Over the year, Quadran and its subsidiaries have generated 773 GWh of power, and commissioned nearly 187 MW of new projects.

Benefiting from the Marcinelle plant's consolidation in the Production segment, thermal energy production rises significantly from 1.4 TWh to 3 TWh.

 

Operational profitability up again

In this setting of sustained acquisitions of customer sites and increase in the volumes of energy sold, the Group cleared a gross margin of €287.4 million, up by 22.9%.

The commercialisation of gas and electricity, the main contributor to gross margin, reports gross growth of 1.2% at €227.2 million, rising to 6.8% after restatement with regulatory positive impacts for 2016. The gross margin 2016 effectively benefited from net positive effects amounting to €11.9 million, stemming specifically from the contribution delivered by the services contract with Enedis, which ended in September 2016, and from tariff adjustments further to the publication of retroactive orders in the second half of 2016.

The contribution from the gas power plants was particularly high in 2017 (€49.7 million versus €9.2 million in 2016). It underscores the relevance of the vertical integration strategy, which allowed the flexible production assets to take advantage of stress situations on the wholesale market, and to offset the increase implied in supply costs downstream.

Note should be taken of the entry of the Quadran group into the consolidation scope as from 31 October, 2017 and whose contribution is €10.5 million.

Current operating income shows growth of 17.6% at €102.1 million, thus highlighting the Group's ability to control costs in a context of high growth. The main components underlying this performance are as follows:

  • the benefits of the vertical integration strategy, with thermal power assets contributing €25.3 million as opposed to €(5.7) million the year before;
  • a €(6.5) million* increase in the other operating income and expenses linked to the French energy supply business, of which €(16.4) million attributable to an increase of expenditures incurred with external service providers in relation with the customer portfolio growth and the high pace of acquisitions. This rise in expenditures is partially offset by different components generating a net positive impact of €9.9 m (clearing of different recourses against administrative rulings, court decisions and legal disputes, increase of the unpaid receivables notably due to exogenous factors.)

(*) restated with the non recurring impact from the repayment in 2016 by GRDF of almost €10 million of unpaid amounts for distribution costs relative to the gas supply business

 

Impact of deferred taxes on the net income

The increase in the cost of net borrowings from €(10.8) million in 2016 to €(14.4) million in 2017 reflects the shift in the Group's financial structure further to the purchase of the Quadran Group at the end of October 2017, financed in particular by a dedicated acquisition loan of €230 million.

Furthermore, whereas the Group recognised deferred tax income of €40.9 million in 2016, a deferred tax expense of €(25.9) million was recorded in 2017. This variation of €(66.8) million, having no impact on cash-flow and which explains solely the fall in net income to €51.9 million versus €123.6 million at the end of 2016, is related primarily to:

  • on the one hand, the reversal of temporary differences over the year linked in particular to the unwinding of energy forward purchases and which carried, at the end of 2016, significant deferred tax assets;
  • and on the other, to the utilisation of losses carried forward from previous financial years and specifically from 2016.

 

Changes to the financial structure further to the integration of Quadran

Shareholders' equity amounted to €395.9 million, up by €178.4 million compared to 31 December 2016. This increase is explained for the most part by the capital increase carried out in July 2017 amounting to around €130 million in view of the acquisition of the Quadran group, and by the year's result of €51.9 million.

This external growth operation logically leads to a change in the financial structure of the new consolidated entity. Besides the acquisition debt, borrowings now also integrate the non-recourse project debts issued by the Quadran group to finance the development of its power production capacity. The consolidated net financial debt thus stands at:

€ m   31/12/2017   31/12/2016
Gross financial debt (*)   423   196
Margin calls received in cash   57   132
Margin calls paid in cash   (16)   (3)
Cash and cash equivalents (gross)   (291)   (369)
Net financial debt Direct Energie   173   (44)
     
Financial debt corporate   64    
Financial debt projects   465    
Retained earnings for financing   (14)    
Cash and cash equivalents (gross)   (43)    
Net financial debt Quadran   472   
         
Consolidated net financial debt   645   (44)

(*) including the €230 million term loan raised for the acquisition of the group Quadran

At 31 December 2017, interest rates on 86% of the Group's financial debt are fix or hedged.

 

Impact of the application of IFRS 15 starting January 2018

The implementation of the standard IFRS 15, mandatory as from 1 January 2018, has resulted in supply services, carried out by the grid operators and billed to end-users, no longer being recognised in revenue. This change has no impact on the Group's gross margin or its cash flow.

Restated with this change, 2017 revenue would have amounted to €1.141 million (a negative impact of €(825) million on published revenue).

 

2018 targets

Trusting in its ability to expand business momentum and to pursue the development of its production activities, specifically in the renewable segment, the Group has set itself 2018 objectives that again point to strong growth:

  • a portfolio of three million customer sites;
  • revenue between €1,350 million and €1,400 million at seasonal average temperatures, a growth rate ranging from 18.4% to 22.7%
  • commissioning of new renewable energy projects by the Quadran group totalling 190 MW;
  • EBITDA, at seasonal average temperatures, ranging between €195 million and €205 million.

The Group has decided to provide information on a projected range of EBITDA following the Quadran acquisition. This indicator, now monitored by the Board of Directors of Direct Energie, is indeed relevant to measure the performance of the renewable assets, and thus becomes key to evaluate the consolidated financial profitability.

Furthermore, the group reaffirms its target of reaching a portfolio of four million customer sites by the year 2020.

 

Proposed dividend up by 40%

The Board of Directors, at the next Shareholders' General Meeting to be held on 29 May 2018, has decided to propose a 2017 financial year dividend of €0.35 per share, an increase of 40%, with detachment scheduled for 1 June 2018 and payment on 4 June 2018.

The Board of Directors has also decided to the cancellation of 400,000 treasury shares, i.e. 0.88% of share capital, pursuant to the authorisation granted by the combined Shareholders' General Meeting of 30 May 2017 under the 21st resolution, as part of its share buy-back programme. Share capital now stands at €4,483,247.90 divided into 44 832 479 shares. The total number of theoretical voting rights is 70 019 021.

 

"2017 is a new financial year of profitable growth for our business in a tougher competitive environment. Direct Energie has slightly exceeded its goal for current operating income, thus underscoring our strategy of vertical integration that has made a strong contribution over the year. 2017 was also a major milestone in the Group's consolidation; I am delighted with the integration of the Quadran group and their teams, with whom we will be pursuing the commissioning of new renewable energy production capacities. Thanks to robust fundamentals, Direct Energie will deliver another year of strong commercial growth," declares Xavier Caïtucoli, Chairman and CEO of Direct Energie.

 

 

Next publication:

Revenue for 1st quarter 2018 on 14 May 2018 after the markets close

Code ISIN: FR0004191674/Code LEI: 969500AZY2G5SSJC5G90

Ticker code: DIREN/Euronext Paris, compartiment A

Publications: The Group's annual activity report, the financial statements and the presentation used for the analyst information meeting may be consulted on the Group's website (www.direct-energie.com).

 

About Direct Energie

As France's leading alternative energy player, Direct Energie positions itself as the energy operator of the 21st century by focusing its strategy on customer satisfaction, innovation and the development of the energies of the future. Operating in France (continental and overseas territories) and Belgium, the Group supplies electricity and gas to over 2.6 million residential and non-residential customer sites. Direct Energie also produces electricity through renewable production facilities (onshore wind, solar, hydraulic, and biogas) and conventional plants (natural gas combined cycle), located throughout the region.

In 2017, the Group achieved consolidated revenue of €1,966 million.

For more information, visit our website www.direct-energie.com

Press contact Image Sept:                          

Grégoire Lucas - gregoire.lucas@image7.fr  - Tel + 33 (0)1 53 70 74 94                     

Marie Artzner - martzner@image7.fr -  Tel + 33 (0)1 53 70 74 31 or + 33 (0)6 75 74 31 73

 

CM CIC Market Solutions

Stéphanie Stahr - stephanie.stahr@cmcic.fr - Tel + 33 (0)1 53 48 80 59

Direct Energie

Investor Relations: Mathieu Behar - mathieu.behar@direct-energie.com - Tel +33 (0)1 73 03 74 16

Press Relations: Frédérique Barthélémy - frederique.barthelemy@direct-energie.com - Tel +33 (0)1 73 03 78 72

Profit & Loss Account

In thousands of euros   31/12/2017   31/12/2016
     
Revenue from ordinary activities   1,966,284   1,692,429
     
Cost of sales   (1,678,884)   (1,458,660)
     
Gross margin   287,400   233,769
     
Personnel expenses   (39,956)   (34,583)
Other operating income and expenses   (107,300)   (83,242)
Depreciation and amortisation   (38,082)   (29,186)
     
Current operating income   102,063   86,758
     
Changes in fair value of Energy financial derivative instruments operational in nature   2,162   21,394
Disposals of non-current assets   (759)   (2,453)
Impairment of non-current assets   -   (112)
Income and expenses related to changes in scope of consolidation   (7,305)   (628)
     
Operating income   96,161   104,959
     
Cost of net debt   (14,417)   (10,819)
Other financial income and expenses   (467)   (389)
     
Financial income/(loss)   (14,884)   (11,208)
     
Corporate income tax   (29,326)   29,454
Share of net income from companies accounted for by the equity method   (66)   352
     
Net income from continuing operations   51,885   123,557
     
Net income from discontinued operations   -   -
     
Net income   51,885   123,557
     
of which Net income, Group share   51,871   123,557
of which Net income, minority interests   14   -
     
Earnings per share (in euros)   1.21   3.01
Diluted earnings per share (in euros)Résultat dilué par action (en euros)   1.14   2.85

Balance Sheet Assets

In thousands of euros   31/12/2017   31/12/2016
     
Goodwill   220,916   -
Intangible assets   70,214   50,170
Property, plant and equipment   718,179   76,217
Holdings in equity accounted companies   34,319   1,434
Non-current derivative financial instruments   14,596   19,334
Other non-current financial assets   40,765   1,342
Other non-current assets   4,873   8,210
Deferred tax assets   46,362   66,467
     
Non-current assets   1,150,224   223,173
     
Inventory   68,454   38,458
Trade receivables   523,602   413,279
Current derivative financial instruments   132,443   137,084
Other current financial assets   59,054   18,364
Other current assets   109,651   30,263
Cash and cash equivalents   333,582   368,867
     
Current assets   1,226,786   1,006,314
     
TOTAL ASSETS   2,377,010   1,229,487

Balance Sheet Liabilities

In thousands of euros   31/12/2017   31/12/2016
     
Share Capital and share premiums   169,106   15,307
Retained earnings and profit or loss   229,538   188,769
Treasury shares   (16,503)   (207)
Other comprehensive income   7,502   13,630
     
Shareholders' equity - Group share   389,644   217,499
     
Non-controlling interests   6,271   -
     
TOTAL SHAREHOLDERS' EQUITY   395,915   217,499
     
Non-current provisions   41,131   37,658
Non-current derivative financial instruments   12,479   17,311
Other non-current financial liabilities   933,599   182,843
Other non-current liabilities   5,982   4,759
Deferred tax liabilities   46,124   13,065
     
Non-current liabilities   1,039,315   255,637
     
Current provisions   19,100   14,169
Trade payables   350,740   242,602
Current derivative financial instruments   117,646   103,925
Other current financial liabilities   122,145   145,689
Other current liabilities   332,149   249,966
     
Current liabilities   941,780   756,351
     
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY   2,377,010   1,229,487

Statement of changes in equity

   Share capital Share premiums Retained earnings and profit or loss Treasury shares Changes in fair value   Shareholder's equity (Group's share)   Non controlling interests   Total shareholder's equity
In thousands of euros     
             
             
Shareholder's equity at 31/12/2016   4 150 11 157 188 769 (207) 13 630   217 499   -   217 499
             
Net income   - - 51 871 - -   51 871   14   51 885
Other comprehensive income   - - - - (6 128)   (6 128)   35   (6 093)
             
Comprehensive income   - - 51 871 - (6 128)   45 743   49   45 792
             
Capital increase   295 145 023 - - -   145 318   -   145 318
Options excercised   74 8 407 - - -   8 481   -   8 481
Options   - - 2 527 - -   2 527   -   2 527
Treasury shares purchases/sales   - - (16) (16 296) -   (16 312)   -   (16 312)
Dividends paid   - - (10 407) - -   (10 407)   -   (10 407)
Other changes   - - (3 205) - -   (3 205)   6 222   3 017
             
Shareholder'equity at 31/12/2017   4 519 164 587 229 538 (16 503) 7 502   389 644   6 271   395 915

Cashflow table

En milliers d'euros   31/12/2017   31/12/2016
Consolidated net income   51 885   123 557
Tax expenses / income   29 326   (29 454)
Financial income / (loss)   14 884   11 208
Income before taxes and financial expenses   96 095   105 311
     
Depreciation and amortisation   38 080   29 186
Impairement   (0)   112
Provisions   15 545   31 926
Effect of changes in consolidation scope and other gains/losses on disposals   1 855   0
Expenses related to share-based payments   2 527   1 738
Change in fair value of financial instruments   3 270   (25 280)
Other financial items with no cash impact   (98)   2 138
Share of income from associates   77   (352)
Items with no cash impact   61 257   39 468
     
Income tax paid   (8 300)   (10 636)
Change in working capital requirement   (67 522)   84 873
     
Net cash flow from operating activities   81 531   219 016
     
Acquisition of fixed assets   (108 142)   (33 770)
Disposal of fixed assets   154   0
Change in deposits and guarantees   (91 358)   184 812
Acquisition of shares in companies not fully integrated   0   (10)
Disposal of shares in companies not fully integrated   141   -
Disposal of securities available for sale   299   -
Acquisition of subsidiary and merger, not including the acquired cash   (268 165)   (35 453)
Net change in loans originated by the company   (10 304)   2 154
     
Net cash flow from investment activities   (477 374)   117 733
     
Sums received from shareholders during capital increases   137 688   6 304
Treasury shares   (16 312)   (119)
Proceeds from borrowings   277 582   185 541
Repayment of borrowings   (11 546)   (177 117)
Interest paid   (16 882)   (11 173)
Interest received   521   901
Dividends paid   (10 407)   (8 242)
     
Net cash flow from financing activities   360 645   (3 904)
     
Net change in cash and cash equivalents   (35 199)   332 844
     
Cash and cash equivalents at beginning of year   364 837   31 993
Cash and cash equivalents at end of year   329 638   364 837


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