EDF Energies Nouvelles: Full-year 2009 Results up Sharply and Ahead of Objectives

Regulatory News:

At its meeting on 9 February 2010 chaired by Pâris Mouratoglou, the Board of Directors of EDF Energies Nouvelles (Paris:EEN) approved the Group’s consolidated financial statements for the 2009 financial year.

Commenting on this report, Pâris Mouratoglou, Chairman of the Board of Directors, stated:

"2009 was a very good year for EDF Energies Nouvelles. Despite tough conditions, we maintained our pace of development and again recorded very strong improvement in our operating and financial performance, which was even better than expected. Wind energy continued to make headway in all the countries in which we are present, while solar photovoltaic gained momentum, significantly exceeding the full-year capacity targets that we set a year ago. 2009 was also marked by the take-off in Distributed Energies and notably residential solar photovoltaic, which also boasts very substantial development potential. Looking ahead to 2010, we are confident in our ability to deliver further strong and profitable growth.”

CHANGE IN THE METHOD USED TO CONSOLIDATE US FACILITIES

Certain wind energy projects in the United States were developed in the form of a partnership with financial investors known as "tax investors” in order to monetize the tax benefits available under the US legislation ("Production Tax Credits” and accelerated tax depreciation), since enXco, EDF Energies Nouvelles’ US subsidiary, does not have a sufficiently large tax base to absorb them on its own. Given the Group’s assessment of the governance and risk-sharing arrangements between the partners, these wind farms have to date been proportionally consolidated.

The adoption in the United States of the Safe Harbor Act² led to a reassessment of the balance of risks between the partners. In addition, the publication by the International Accounting Standards Board of Exposure Draft 10 Consolidated Financial Statements provided guidance on analyzing the rights of these partners, which have turned out to be more protective than participating rights.

Accordingly, to better reflect the economic reality and substance of these agreements in the consolidated financial statements, i.e. the fact these wind farms are controlled by the Group, it was decided that these entities should now be fully consolidated³.

The relevant facilities are the Oasis (60 MW), Fenton (205.5 MW) and Wapsi North (100.5 MW) wind farms.

The Group’s financial results presented in this press release take into account this change in accounting method, which was applied retroactively from 1 January 2008.

OPERATIONAL PERFORMANCE

The Group’s gross installed capacity came to 2,945.4 MW, up 670.1 MW by comparison with 31 December 2008.

Net capacity stood at 2,257 MW, up 577.7 MW by comparison with 31 December 2008.

The Group’s capacity in service and under construction breaks down by segment and by country as follows:

Wind energy

Wind energy capacity in service amounted to a gross figure of 2,650 MW at 31 December 2009, up 619.4 MW compared with the previous year. All countries contributed to the growth in capacity with a nice balance between Europe (up 329.3 MW) and North America (290.1 MW).

During the fourth quarter, the Group commissioned the Hoosier wind farm in the United States (106 MW), as well as 37.5 MW in capacity in Mexico, 45 MW in Turkey and 25.3 MW in Italy.

At 31 December 2009, gross wind energy capacity under construction stood at 713.4 MW.

Solar

Gross capacity in service nearly quadrupled from 20.8 MWp at 31 December 2008 to 80.9 MWp at 31 December 2009.

New facilities were commissioned in France (up 18.5 MWp), Italy (up 13.2 MWp), Canada (up 23.4 MWp) and the United States (up 4.4 MWp).

At 31 December 2009, solar capacity under construction stood at 138.8 MWp.

All in all, capacity in service or under construction reached 219.7 MWp, compared with 49.9 MWp at 31 December 2008. As a result, the Group’s target of 100 MWp to 150 MWp in service or under construction, which was announced in early 2009, was exceeded by a significant margin.

FINANCIAL PERFORMANCE

INCOME STATEMENT

Revenues moved up to €1,173.1 million, representing an increase of 15.5% compared with the 31 December 2008.

Revenues broke down by geographic area as follows:

Revenues broke down by segment as follows:

Revenues from the Generation business grew by 52.6% to €362.1 million. Wind-generated electricity remained the key engine of growth, recording a very steep increase of 60.7% over the year. In spite of very unfavorable wind conditions in the United Kingdom, Italy and the United States, wind energy generation was boosted by the full-year impact of the wind farms commissioned in 2008 (813 MW gross/517 MW net) and the contribution made by those commissioned in 2009 (619 MW gross/530 MW net).

Solar-generated electricity, which recorded a very strong increase, grew on the back of the full-year contribution made by the Narbone facility commissioned in France during 2008 and the 60.1 MWp in capacity that entered service in France, Italy, Canada and the United States during 2009.

Thermal production was affected by strikes in the French Antilles at the beginning of the year. Conversely, hydro, which enjoyed a strong second half, and biomass, which was underpinned by the resumption of production at the Lucena plant in Spain, contributed to revenue growth at the Generation business.

Revenues from the Operations & Maintenance business grew by 42.5% to €34.2 million. Business was boosted by the contracts signed during 2008 in the United States (increase of 2,139 MW) and new contracts signed covering 671 MW during 2009. At 31 December 2009, enXco’s Operations & Maintenance contracts covered a total of 4,719 MW in capacity, or close to 5,400 turbines.

Revenues from the Development and sale of structured assets (DSSA) business fell back 12.6% to €497.6 million. Business trends were held back by unfavorable comparatives as 2008 was a record year featuring the sale of three large-scale wind farms (Walnut, Grand Meadows and Goodnoe) representing a total of 347.5 MW in capacity. During 2009, the DSSA business recorded the sale of the Crane Creek (99 MW) wind farm and of part of the Spearville II (48 MW) project in the United States, as well as of a large proportion of the revenues on a percentage-of-completion basis related to the Linden (50 MW) project, due to be delivered shortly. In the French solar segment, the Group sold the ground-based Mangassaye (5.1 MWp) solar farm on Reunion Island, as well as 11.6 MWp in roof-based projects (industrial, commercial and farm building roof arrays). In the wind segment, the Group finalized the sale of the Fierville wind farm (28 MW). In 2010, DSSA activity will be focused almost exclusively in the second half.

The Distributed energies business recorded revenues of €279.2 million, up 50.9% compared with 2008. The sale of solar systems to individuals and businesses, which is handled by EDF ENR SA and Photon Technologies, recorded strong growth, with 3,460 installations in consumers’ homes during 2009, up from 1,045 in 2008. EDF ENR SA’s revenues surged from €20.5 million to €70.7 million, while Photon Technologies’ revenues, which were fully consolidated for the first time, came to €24.7 million. Tenesol’s revenue contribution moved up 13.3% to €108.5 million, while Supra’s advanced by 9% to €72 million.

The Group’s EBITDA⁴ totaled €334.2 million in 2009, representing an increase of 47.3% on 2008. Excluding the change in the method used to consolidate the US projects, EBITDA came to €322.2 million, compared with the €215.9 million reported in 2008, representing an increase of 49,2%. The Group’s EBITDA thus came in well above the forecast for 2009 of €280 million to €300 million.

• In Europe, EBITDA moved up 42.2% to €215.4 million. This increase was attributable principally to the strong growth achieved by the Generation business and the improved performance of EDF Energies Nouvelles Réparties, which made a positive contribution over the year as a whole. In addition, the acquisition of a 50% interest in the Monte Grighine (98.9 MW) wind farm as part of the strategic partnership with Danish company Greentech gave rise to €20.3 million in badwill. Corporate and development costs rose steeply in line with the Group’s expansion, especially in the solar segment.
• In North America, EBITDA stood at €118.8 million, up 57.8% compared with 2008 on the back of the Generation business, which, in spite of poor wind conditions, was boosted by the commissioning of the Wapsi North (100.5 MW) wind farm in late 2008, and of the Shiloh II (150 MW) and Hoosier (106 MW) wind farms during 2009. This rise was also attributable to the improved profitability of the DSSA business, which had posted an exceptional negative margin on the Goodnoe project in 2008. In addition, the positive impact of exchange rate fluctuations totaled €5.7 million.

Operating income rose by 39% to €230.1 million. Depreciation and amortization stood at €103.3 million, compared with €61.3 million in 2008, in line with the higher pace of wind and solar energy assets commissioned during 2008 and 2009.

Net financial expense worked out at €104 million in 2009, compared with €47.5 million in 2008. This €56.5 million increase was notably attributable to:

• the increase in interest expense linked to the commissioning of new facilities and the higher WCR. This rise was, however, mitigated by the fall in interest rates, which, net of the lower returns achieved on available cash, had a positive impact of around €15 million on net financial expense;
• a provision of €20.2 million set aside to cover the Group’s exposure vis-à-vis Silicium de Provence (SilPro), in which it holds an indirect minority shareholding and which entered court-ordered liquidation in August 2009.

Tax expense moved down from €38 million in 2008 to €21.4 million in 2009. The effective tax rate fell to 16.96%, compared with 32.25% in 2008. This reduction was chiefly attributable to:

• the fact that the badwill recognized on the Monte Grighine project is not taxable;
• the lower tax rates enacted in certain countries in which the Group operates, such as Bulgaria, Greece, Turkey and French overseas departments and territories; the use in the United States of the tax credits (PTC and ITC) earned in 2009 and those accumulated over the 2006-2008 period which were the subject of a carry-back transaction in 2008.
• the grant of significant tax deductions in France on projects carried out under the special tax regimes applicable to French overseas departments and to adoption of the Tremonti-Ter temporary investment subsidy system in Italy.

Net income, Group share came to €97.9 million, up 38.7% compared with 2008.

CASH FLOW

Operating cash flow generated during 2009 came to €236 million, which represented 71% of the Group’s EBITDA.

The increase in the working capital requirement came to €192.8 million and was primarily the result of the higher WCR of the DSSA business.

Capital expenditures totaled €1,318.6 million, representing an increase of 23.3%. This increase reflects both the sharp expansion in the solar segment, in which capital expenditures totaled €345.8 million in 2009, and further investment in the wind segment, where capital expenditures reached €912 million. Investments by EDF Energies Nouvelles Réparties came to €60.8 million.

FINANCIAL STRUCTURE

At 31 December 2009, consolidated shareholders’ equity came to €1,572.5 million, up from €1,474.1 million at 31 December 2008.

The Group’s net debt went up from €1,313.8 million to €2,737.6 million at 31 December 2009. This figure includes €625 million in financing for the working capital requirement linked chiefly to the DSSA business and the inventory of photovoltaic modules and €932.4 million related to farms under construction that for the time being are not generating any revenues, but will help to drive future growth.

DIVIDENDS

The Board of Directors will propose payment of a dividend of €0.38 per share in respect of the 2009 financial year at the forthcoming Annual General Meeting. This represents a 40.7% increase and works out at 30.1% of net income, Group share, in line with the payout ratios seen in previous years. The dividend is due to be paid on 15 June 2010.

OUTLOOK

Since the method used to consolidate the US wind farms has changed, leading to an impact on the Group’s net wind energy capacity in the United States, the operational objective set for 2012 has been adjusted accordingly. It has risen from 4,000 MW to 4,200 MW net, including 500 MWp in solar capacity. At 31 December 2009, net capacity in service or under construction stood at 2,724.2 MW, in line with this objective.

During 2010, the Group expects to generate EBITDA of between €430 million and €450 million. This estimate is based on an average euro/US dollar exchange rate during 2010 of 1.4 and average wind and insolation conditions. Excluding non-recurring items (€20.3 million in negative goodwill related to Greentech), this estimate implies further strong revenue growth for the Group (37% to 43%).

¹ This objective takes into account the change in the method of consolidation used for certain US wind farms presented on the following page

² The Safe Harbor Act clearly defines the requisite conditions to be met in order for the US administration to accept a legal structure aimed at bringing in partners to a project qualifying for PTCs linked to the generation of electricity using wind energy.

³ For wind farms of which enXco is the only industrial operator

⁴ Ebitda represents operating income before depreciation and amortization, investment grants and impairment losses

Disclaimer

This press release does not constitute an offer to purchase or an offer to sell securities in the United States or any other jurisdiction.

This press release includes forward-looking statements. Although EDF Energies Nouvelles believes that its expectations with respect to such forward-looking statements are based on reasonable assumptions, EDF Energies Nouvelles cautions investors that these forward-looking statements involve various risks and uncertainties. In particular, there is no certainty that projected events will take place or that projected results will be achieved. A description of he main risks and uncertainties is included in the "Document de Référence” of EDF Energies Nouvelles available on the AMF’s website (www.amf-france.com) and on EDF Energies Nouvelles’s website (www.edf-energies-nouvelles.com).

About EDF Energies Nouvelles

With operations in Europe and North America, EDF Energies Nouvelles is a market leader in green electricity production. With a development focused on wind energy for several years and more recently on solar photovoltaic, the Group is also present in other segments of the renewable energies market: small hydro, marine energy, biomass, biofuel and biogas. In addition, the Group is expanding in the distributed renewable energies sector.

EDF Energies Nouvelles, 50 %-owned by the EDF Group, is listed in Euronext Paris since November 2006 (code "EEN", ISIN code: FR0010400143).

www.edf-energies-nouvelles.com

APPENDIX

Revenues broken down by quarter

Consolidated income statement

Consolidated balance sheet

Consolidated cash-flow statement