POWEO : Revenue for the first nine months of 2011

PRESS RELEASE Paris, 16 December 2011. Revenue for the first nine months of 2011 down 31.4% at €344.6 million, in line with the trends observed for the first half-year

• Consolidated group revenue for the nine months to 30 September includes a contribution of €88.3 million, down by 33.1%, from the generation assets sold in February 2011 but still consolidated in view of the call option held by POWEO until June 2013

• Excluding the generation assets, POWEO's core activities accounted for sales of €256.3 million for the nine months ended 30 September 2011, down by 30.8% on the same period in 2010, in line with the trend seen in the first half of 2011 which derives essentially from deliberately reduced exposure to the grid operator and major account segments

• Following approval by the Competition Authority of the sale by VERBUND to DIRECT ENERGIE of its 46% stake in POWEO, the transaction was completed on 30 September

2011; main shareholders have started talks in view of merging the two companies

• After two years of regulatory and strategic uncertainty, and thanks to the NOME (Nouvelle Organisation du Marché de l'Electricité) law, POWEO intends to position itself attractively and durably vis-à-vis the long-established operators and to seize the numerous opportunities that France's energy markets will offer in the years to come

Key activity indicators for POWEO, independent electricity and gas operator, for the first nine months of 2011 (unaudited figures):

Revenue (€ millions)	3rd quarter	YTD 30 September
Revenue (€ millions)	2011	2010	Change	2011	2010	Change
Electricity sales Gas sales Services and other Transport & taxes	38.2 7.5 4.5 14.2	59.7 10.3 4.2 18.7	-36.1% -27.2% +9.2% -24.3%	140.6 47.1 15.5 55.3	204.6 79.7 11.7 66.5	-31.3% -40.9% +32.3% -16.8%
Revenue excluding energy management	64.4	92.9	-30.7%	258.5	362.6	-28.7%
Energy management	(10.3)	(14.9)	+30.6%	(2.2)	7.9	-127.8%

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Revenue excluding generation

54.1

78.0

-30.7%

256.3

370.5

-30.8%

Electricity generation	15.8	37.0	-57.2%	88.3	132.0	-33.1%
Consolidated revenue	69.9	115.0	-39.2%	344.6	502.5	-31.4%

By way of reminder, POWEO has undergone some significant changes since the beginning of the year, firstly with the sale of its generation assets to VERBUND, the Austrian national operator and main shareholder in POWEO since 2006, then the coming into force of the NOME law, which greatly improves the conditions for the supply of electricity but did not come into effect until 1 July, and lastly the sale by VERBUND of its 46% shareholding in POWEO to DIRECT ENERGIE, its main competitor among the independent operators (see press release of 28 September 2011 on the half-year results).
Against this backdrop POWEO posted consolidated revenue of €344.6 million for the first nine months of 2011, down by 31.4% on the same period of 2010. This figure includes the 33.1% reduction in revenue from the generation assets, from €132.0 million to €88.3 million, due mainly to the market price cap clause applying to MWh generated by the Pont-sur-Sambre CCGT plant and sold to VERBUND. For the third quarter alone, which traditionally sees a low level of activity bearing in mind the seasonality habitually observed in the operation of a natural gas combined cycle (CCGT) power plant, the fall in revenue from the generation assets amounted to 57.2%.
As regards POWEO's core activities, sales of electricity for the first nine months of 2011 showed a downward trend (-31.3%) in line with that seen in the first half of the year (-29.3%). As in the first half- year, more than half the fall in value was due to the deliberate reduction of exposure to the grids, and to a lesser extent to remote-metered customers (large accounts), these segments offering thin margins and requiring a substantial amount of working capital.

Electricity sales by segment (€ millions)	3rd quarter	YTD 30 September
Electricity sales by segment (€ millions)	2011	2010	Change	2011	2010	Change
Profiled residential customers (1)	6.3	6.5	-4.0%	26.5	31.2	-15.1%
Profiled professional customers (1)	10.4	13.2	-21.1%	39.2	44.9	-12.5%
Remote-metered customers (2)	14.8	19.1	-22.6%	56.3	72.1	-21.9%
Grids and others	6.8	21.0	-67.6%	18.5	56.5	-67.2%
Total electricity sales	38.2	59.7	-36.1%	140.6	204.6	-31.3%

(1) Residential or professional customer sites for which consumption is estimated by reference to standard consumption profiles and corrected periodically by visual meter reading.

(2) Professional or industrial customer sites for which consumption is significant and therefore determined in real-time by automated meter reading.

The fall in gas sales for the first nine months of 2011, while still very pronounced (-40.9%), is also in line with the trend seen in the first half of the year (-42.9%), with the same strategy of reducing commercial exposure to grids and large accounts:
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Gas sales by segment (€ millions)	3rd quarter	YTD 30 September
Gas sales by segment (€ millions)	2011	2010	Change	2011	2010	Change
Profiled residential customers (1)	4.5	5.3	-14.6%	25.6	35.4	-27.6%
Profiled professional customers (1)	1.6	1.4	+13.4%	11.5	12.9	-10.9%
Remote-metered customers (2) and grids	1.4	3.7	-61.1%	10.1	31.4	-68.1%
Total gas sales	7.5	10.3	-27.2%	47.1	79.7	-40.9%

(1) Residential or professional customer sites for which consumption is estimated by reference to standard consumption profiles and corrected periodically by visual meter reading.

(2) Professional or industrial customer sites for which consumption is significant and therefore determined in real-time by automated meter reading.

Lastly, the contribution of the energy management business was a substantially negative €10.3 million for the third quarter alone, as a result of changes in the market value of the positions, bringing the contribution for the first nine months to a negative €2.2 million.
These developments stem mainly from the fall in electricity market prices between 30 June and 30
September 2011 (€1 to €2 per MWh depending on maturities), POWEO having a price sensitivity of about €8 million for a €1 change in forward prices per MWh.

Reduction in the number of customer sites prior to the NOME law's coming into effect

The market reform embodied in the NOME law gives new entrants, from 1 July 2011 on, regulated access to nuclear electricity through a system known as ARENH, which allows them a higher gross margin. Thus the purchase price per nuclear-based MWh is now €40, giving an estimated all-in cost to POWEO of about €43 per MWh expected for H2 2011 taking account of additional peak-load purchases carried out in the market. However, the enabling legislation provides for the ARENH price to increase to €42 per MWh from 1 January 2012.
Against this backdrop of high prices in the first half of 2011, before the NOME law came into effect, and taking account of the prospect of an increase in the ARENH price in a few months' time, since the beginning of the year POWEO has placed the emphasis on qualitative rather than quantitative customer recruitment, and has not attempted to counteract the natural attrition of its customer base.
The number of active customer sites net of account closures consequently fell by 11.9% during the first nine months of 2011 to 339,890 as at 30 September 2011, from 385,800 at the end of last year, broken down as follows:
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Number of active customer sites	30 Sept. 2011	30 June 2011	31 Dec. 2010	Change 9 months	30 Sept. 2010	Change 12 months
Electricity of which Residential of which Professional	248,075 160,665 87,410	255,770 165,000 90,770	281,300 179,300 102,000	-11.8% -10.4% -14.3%	286,500 182,200 104,300	-13.4% -11.8% -16.2%
Gas of which Residential of which Professional	91,815 85,342 6,473	94,060 87,580 6,480	104,500 98,000 6,500	-12.1% -12.9% -0.4%	106,700 100,500 6,200	-14.0% -15.1% +4.4%
Total of which Residential of which Professional	339,890 246,007 93,883	349,830 252,580 97,250	385,800 277,300 108,500	-11.9% -11.3% -13.5%	393,200 282,700 110,500	-13.6% -13.0% -15.0%

Nearly all customer segments saw comparable declines over the course of the past nine months, with the exception of professional consumers of gas. As indicated when publishing its interim results, POWEO intends to continue with its cautious and quality-based approach to customer recruitment in the coming months.

Sale of a non-strategic asset and modification of some financial guarantees

In order to strengthen its financial structure notably hurt by the operating loss incurred in the first half of 2011, POWEO has just signed a sale agreement relating to a financial asset considered as non- strategic and whose completion will take place within the coming weeks.
Besides, a few modifications will soon apply to financial guarantees that POWEO must provide within the framework of its energy sourcing contracts, allowing to reduce the cash trapped in this respect.
Taking into account the expected impact of these two items, POWEO considers that its available cash position should exceed €30 million as at the end of January 2012, in addition to the cash pledged for various deposits and guarantees issued, mainly relating to its energy sourcing contracts; this trapped cash should represent a total amount of approximately €50 million.

Changes to the Board of Directors and talks on the plan to merge with DIRECT ENERGIE

Direct Energie is the leading independent energy supplier in France, with nearly 700,000 residential and professional customers. The group is also active in electricity generation via the direct supervision of various generation assets (some ten hydroelectric stations, two wind farms and several CCGT projects including an 800 MW facility at Hambach, Moselle).
In accordance with the agreements announced this past summer (see press release of 27 July 2011), the sale by VERBUND to Direct Energie of its 46% shareholding in POWEO was completed on 30
September 2011, following approval obtained at the end of September from the Competition
Authority. By way of reminder, the shareholding of POWEO following this transaction breaks down as follows: DIRECT ENERGIE 46%, Ecofin 25%, Luxempart 10% and a free float of 19%.
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In order to reflect this change in the shareholding of POWEO, the composition of POWEO's Board of Directors was changed on 4 October 2011. Mr Gunther Rabensteiner, Gerhard Gamperl, Eduard Schreiner and Johann Sereinig, resigning directors, were thus respectively replaced through co- optation by Mr Xavier Caïtucoli, Cédric Christmann, Stéphane Courbit and Jacques Veyrat. As a reminder, in addition to these new members, POWEO's Board of directors is composed of Mr Charles Beigbeder, non-executive chairman, Jacquot Schwertzer, Loïc Capéran and Mrs Carine Salvy, appointed on proposal of ECOFIN further to Mr Joan Becks's resignation.
The new Board of directors has set up a committee composed of representatives of the main minority shareholders to study the possibility of a merger with DIRECT ENERGIE. Committee's works are in process.

About POWEO

As an independent French electricity and gas operator, POWEO supplies energy and energy efficiency and environmental services to nearly 350,000 customer sites. POWEO's shares are listed continuously on the Alternext compartment of the Euronext Paris Stock Exchange (ALPWO / FR0004191674). For more information please visit the website: groupe.poweo.com.

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