Interim Financial Report - Total Direct Énergie · juin-15 juillet-15 août-15 septembre-15 octobre-15 novembre-15 décembre-15 janvier-16 février-16 mars-16 avril-16 mai-16 juin-16

Interim Financial Report

For the period ended 30 June 2016

Direct Energie - Interim Financial Report 2016 - Page 2

TABLE OF CONTENTS

I. 2016 INTERIM MANAGEMENT REPORT ........................................................................................................... 3

1. REVIEW OF THE GROUP'S BUSINESS IN THE FIRST HALF-YEAR 2016 ..................................................................... 3

1.1. HIGHLIGHTS OF THE FIRST HALF-YEAR 2016 ....................................................................................................... 3 1.1.1. MARKET CONDITIONS .................................................................................................................................. 3 1.1.2. OTHER HIGHLIGHTS OF THE HALF-YEAR ..................................................................................................... 4

1.2. EVENTS AFTER THE 30 JUNE 2016 REPORTING DATE ......................................................................................... 7

2. GROUP INCOME IN THE FIRST HALF-YEAR 2016 ................................................................................................... 8

2.1. REVENUE FROM ORDINARY ACTIVITIES .............................................................................................................. 9 2.2. GROSS MARGIN .................................................................................................................................................. 10 2.3. CURRENT OPERATING INCOME ......................................................................................................................... 11 2.4. OPERATING INCOME .......................................................................................................................................... 13 2.5. NET INCOME AND EARNINGS PER SHARE ......................................................................................................... 13

3. REVIEW OF THE COMPANY'S CASH POSITION, CAPITAL AND FINANCIAL DEBT ................................................... 14

3.1. SIMPLIFIED CONSOLIDATED BALANCE SHEET ................................................................................................... 14 3.2. SHAREHOLDERS' EQUITY AND NET DEBT ...................................................................................................................... 14 3.3. GROUP CASH FLOW ................................................................................................................................................. 15

4. OUTLOOK FOR 2016 ........................................................................................................................................... 17

5. RISK FACTORS AND RELATED-PARTY TRANSACTIONS .......................................................................................... 18

5.1. RISK FACTORS ..................................................................................................................................................... 18 5.2. RELATED-PARTY TRANSACTIONS ....................................................................................................................... 18

II. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR 2016 ........................................ 19

III. AUDITORS' REPORT ON THE INTERIM FINANCIAL INFORMATION .................................................................. 66

IV. STATEMENT OF THE PERSON RESPONSIBLE ................................................................................................... 67

I. 2016 INTERIM MANAGEMENT REPORT

1. REVIEW OF THE GROUP'S BUSINESS IN THE FIRST HALF-YEAR 2016

1.1. HIGHLIGHTS OF THE FIRST HALF-YEAR 2016

1.1.1. MARKET CONDITIONS

Gas and electricity prices continued to decrease, this drop starting in 2014 and accelerating sharply in late 2015,

before recovering at the end of the half-year.

Forward electricity prices in France are thus fixed at nearly €33/MWh at the end of the half-year, after dropping

to lows of around €25/MWh in February and March 2016, well below the price of Arenh (Regulated Access to

Incumbent Nuclear Electricity), set at €42/MWh by the authorities.

Source: EEX

For their part, forward gas prices on the French market (GEP) are in turn set at levels slightly above €16/MWh at

the end of the half-year, a level close to that observed at the end of 2015, after dropping under €14/MWh in the

first quarter of 2016.

Source: Powernext - Peg Nord Prices (GEP North Price)

25

27

29

31

33

35

37

39

41

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Change in French Baseload Electricity Prices in €/ Mwh - July 2015 - June 2016

Cal 15 Cal 16 Cal 17 Cal 18 CAL 19

10

12

14

16

18

20

22

24

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Change in PEG North gas prices in €/ MwhJuly 2015 - June 2016

Cal 15 Cal 16 Cal 17

Direct Energie - Consolidated Financial Statements at 30 June 2016

4

This drop in prices observed in the first quarter, followed by a rebound in the second quarter, was particularly

correlated with changes in oil prices, which have experienced a broadly similar trend, and linked to the existence

of excess production capacities at the European level for electricity, and on a global level for gas. Concerning

electricity, the French government announced that it was planning to implement a price floor in the form of a

carbon tax, likely to affect thermal power generation capacities. While the scope of this price floor is still under

discussion, the proposal contributed to the significant rebound in electricity prices observed during the second

half of 2016.

The Group has been able to leverage this high price volatility and improve its supply terms according to its market

risk management policy.

1.1.2. OTHER HIGHLIGHTS OF THE HALF-YEAR

Continued sales spurred on by growth in France and Belgium

The Group maintained strong growth in its customer portfolio in the first half-year.

At 30 June 2016 the customer portfolio in France stood at nearly 1,433,000 customer sites in electricity and

393,000 customers sites in gas, representing increases of nearly 15% and 14% compared to customer portfolio

figures at 31 December 2015, and an average increase of nearly 15%.

This growth drive, after 2015 being marked by very high levels of acquisition, is propelled by a competitive and

innovative portfolio of product offerings in electricity and gas, the roll-out of several national advertising

campaigns, and the sponsorship contract with the SA Vendée Cycling, Jean-René Bernaudeau's cycling team. This

sponsorship became effective on 1 January 2016 and since this date the cycling team has competed as the "Direct

Energie Team".

Moreover, the cancellation of the regulated sales tariffs (TRVs) offered to business customers with a contracted

power in excess of 36 kVA in electricity (yellow and green tariffs) and natural gas consumption of at least 30

MWh/year at 31 December 2015, enabled the Group to significantly strengthen its customer portfolio in the

business and local community segments through targeted and customised product offerings and a strong sales

momentum.

At 30 June 2016, the Group therefore supplied more than 344,000 professional, business and community sites

compared to 254,000 at 31 December 2015.

This sales momentum was also sustained in Belgium, where the Group recorded more than 48,000 customer

sites at 30 June 2016 compared to more than 25,000 at 31 December 2015.

Extension of the ERDF services contract

During the second quarter of 2016, the Group and ErDF (now ENEDIS) signed a one-year extension of the services

contract which had ended on 30 September 2015. This extension, retroactively commencing on 1 October 2015,

led to recognising €21.7 million in income in the first half-year 2016.

Decision of the Conseil d’Etat (France's highest administrative court) on Regulated Tariffs for Electricity Sales

In June 2016 the Conseil d’Etat put an end to two tariffs decrees. The decree of 28 July 2014 was cancelled on

the grounds that the principle of legal certainty was not met in respect of blue tariffs for the period between 1

August 2014 and 31 October 2014. As concerns the decree of 30 October 2014, it was cancelled on the grounds


5

that it did not take into account retroactive tariff adjustments that were necessary in the case of residential blue

and green tariffs for the period from 1 November 2014 to 31 July 2015. The Conseil d'Etat gave ministers a three-

month deadline to implement these amending decisions.

The Group will be impacted by such cancellations and corresponding amending decisions, which will trigger a

positive tariff adjustment, once these amending decisions have been published by the competent ministers.

Rider to the transmission contract with GRDF

By a decision of 2 June 2016, the Paris Court of Appeal upheld the decision handed down by the CoRDiS on 19

September 2014. This decision established the principle that the natural gas supplier was not responsible for the

unpaid share of past or future distribution costs of the distribution network operator (GRDF). In pursuance of

this decision of the CoRDiS (Comité de règlement des différends et des sanctions), a contractual agreement was

formalised between the Parties during the second quarter of 2016 under which, in late May 2016, GRDF repaid

Direct Energie the unpaid share of distribution costs incurred prior to 31 December 2015, amounting to nearly

€10 million.

The Court of Appeal also held that the supplier was to be paid for the services performed on behalf of GRDF

through which the end customer obtained access to the distribution networks. In pursuance of this decision,

GRDF must first offer Direct Energie, within a period of two months, an amendment to the Distribution Network

Access Agreement offering compensation that is "proportionate and equitable to the costs avoided" by GRDF,

and also to pay Direct Energie remuneration at a price fixed by the Parties for past periods (since the date of

signing of the distribution agreement in 2005). No agreement was reached between the Parties at the end of the

two-month period and as such, the Group has not yet recognised any related income in its accounts.

Provision for loss-making contracts on gas interconnection capacities

As part of its gas supply strategy, the Group concluded in 2009 several contracts with French (GRTgaz), Belgian

(Fluxys) and Dutch (GTS) gas transmission system operators for the reservation, from 2011, of gas import

capacities through Belgium, for periods extending through 2027. The purpose of these contracts was to ensure

security in the gas supply as part of the Group's activities over the long-term, according to the principles

governing the procurement of a licence to supply natural gas in France.

Beginning in 2013, the market environment brought to light the current system's inability to ensure security of

supply, resulting, in particular, in inadequate storage capacity subscriptions. The government therefore initiated

consultations to clarify the obligations incumbent on suppliers in the field, as well as the available instruments

and resources. The specific aim of these consultations was to reform the storage subscription obligations.

During these consultations, the Group maintained its consistent position, whereby, when defining supplier

obligations in terms of security of supply, due consideration should be given to all available modulation tools,

including those related to gas import capacities in France. However, pending the finalisation of this reform and

without jumping to conclusions on the final outcome, the authorities have asked the Group to subscribe for

annual storage capacities independently of its own gas interconnection capacities.

Based on these consultations, the public authorities drafted the reform, which was reviewed by the Conseil d’Etat

in the second quarter of 2016. The draft reform does not reflect the Group's proposals to explicitly consider the

Gas Import capacities of each supplier among the available instruments or resources in terms of supply security.

Furthermore, in April 2016 the Conseil d’Etat, called to rule in the dispute initiated in 2014 by Eni and Uprigaz,

upheld that the authorities were entitled to impose an obligation on gas suppliers to subscribe storage capacities

in order to ensure supply security, without considering the interconnection capacities specific to each supplier


6

as an instrument allowing the latter to avoid the same. The Court of Justice of the European Union has been

called solely to resolve the issue concerning the geographical location of the storages included in meeting this

obligation.

In these circumstances and irrespective of implementation period of the draft reform, the contracts can no longer

be considered as participating directly in the obligations inherent to the Group's gas operations with respect to

security of supply, without there being any expectation of a favourable development in the regulations in the

short-term.

Accordingly, at the reporting date these contracts on access to gas interconnections were treated as onerous

contracts under IAS 37, since:

- it is clearly no longer possible to regard these as capable of meeting the Group's obligations in terms of

security of supply; and

- the costs associated with these contracts over their remaining life, with no prospect of early

termination, are much higher than their market value.

A provision for onerous contracts in the amount of €33.0 million has been recognised in the financial statements.

Strengthening of the Group's financial structure

During the first quarter of 2016, deposits paid in cash with the Group's counterparties to hedge changes in the

fair value of forward energy sales and purchases until such time as their physical delivery takes place, experienced

strong growth, directly related to the decline in wholesale electricity prices observed over the period.

The Group has secured new funding to offset this increase:

- shareholder loans for a total amount of €55 million on the closing date of the accounts;

- a short-term credit line with the Group’s regulated energy market clearing house, for a total amount of

€60 million;

- a €60 million increase in its bank revolving credit facility rising the usable amount to €120 million.

With a rebound in market prices in the second quarter, the Group had at 30 June 2016 nearly €177 million in

short-term financing sources in addition to available cash.

Direct Energie's shareholding structure

The Company was informed of the sale by Ecofin Ltd. of its entire shareholding in the Company's capital, totalling

1,684,656 shares representing 4.11% of Direct Energie's share capital, as a part of an accelerated bookbuilding,

executed on 15 June 2016 by Société Générale Corporate & Investment Banking and Gilbert Dupont.

As part of this investment transaction, Impala SAS, AMS Industries and Luxempart SA respectively acquired

60,000, 90,000 and 100,000 Company shares; the balance (1,434,656 Company shares) was reclassified on the

market.

Direct Energie has been informed that this investment has not raised any question as to the balances that existed

in the original understanding.


7

The Company's share capital and voting rights were as follows at 30 June 2016:

* Calculated using the definition of the Euronext indexes (i.e. excluding: interests over 5% except mutual funds and

retirement funds and interests held by executives, managers, employees, shareholders bound by an agreement, the

treasury shares).

** Number of theoretical voting rights determined according to the status of the shareholders in the CACEIS books as

approved at 30 June 2016.

1.2. EVENTS AFTER THE 30 JUNE 2016 REPORTING DATE

Decision of the Conseil d’Etat on the Engie/CRE dispute

On 13 July 2016 the Conseil d’Etat issued a decision following Engie’s request to overturn, on the grounds of

excess power, the ruling handed down on 26 July 2012 by the French Energy Regulatory Commission (Commission

de Régulation de l’Energie) concerning communication of the services agreement concluded between Direct

Energie and ERDF (now ENEDIS) on the management of customers under a single contract, and the decision of

10 December 2014 rejecting the informal appeal filed by Engie against this decision.

While finding that the appeal filed by Engie was submitted too late for examination, the Conseil d'Etat recognised

that the decision of 26 July 2012 was unlawful on the grounds that it provided that the agreement between

Direct Energie and ERDF was concluded for a transitory period and provided a remuneration that was limited to

suppliers with less than 1,750,000 customers which subscribed a single contract for electricity or gas. The Conseil

d'Etat thus ultimately upheld the argument that these two limits of the contract between ERDF and Direct

Energie were contrary to the principle requiring that the suppliers should not have to bear the costs generated

by the services that they provide on behalf of the DSO’s (distribution system operators).

This decision expressly confirms the principle that the distribution system operator pays a supplier consideration

for management costs for customers that have a single contract.

Planned Acquisition of a combined cycle gas turbine power plant in Belgium

The Group announced the signing, on 28 September 2016, of a sale and purchase agreement with the Italian

group Enel to acquire 100% of the share capital in its subsidiary, Marcinelle Energie. The latter, dedicated to

IMPALA SAS

AMS INDUSTRIES

LOV GROUP INVEST

EBM TRIRHENA AG

CONTROLLING SHAREHOLDER GROUP

LUXEMPART

Management and others

Free float*

TOTAL 100% 41,220,566 56,031,012 100%

2,408,833 5.84% 4,103,168 7.32%

5,444,021 13.21% 5,948,616 10.62%

29,175,971 70.78% 41,787,487 74.58%

4,191,741 10.17% 4,191,741 7.48%

4,474,544 10.86% 4,474,544 7.99%

4,167,870 10.11% 4,167,870 7.44%

14,427,751 35.00% 26,739,758 47.72%

6,105,806 14.81% 6,405,315 11.43%

Cap Table Direct Energie - 30 June 2016

Shareholders Number of shares

held% share capital

Number of voting

rights**% voting rights


8

electricity production, owns and operates a combined cycle gas turbine power plant located in Charleroi, Belgium

with around forty employees. Handed over in 2012 and equipped with Siemens-Ansaldo technology, very similar

to that held by the Group in Bayet (Allier), this plant has an installed capacity of about 400 MW.

The transaction amount, paid entirely in cash, is €36.5 million, and remains subject to the usual price

adjustments. It includes an earn out depending on the change in the electrical market structure in Belgium. The

transaction remains subject to the lifting of suspensory conditions (in particular, the authorisation from the

competent Belgian authorities), and should be completed at the earliest by the end of 2016.

After acquiring the power plant in Bayet at the end of 2015, this new transaction will bring the Group's installed

capacity to nearly 800 MW. Agreed on competitive terms, this transaction also confirms the implementation of

the planned vertical integration strategy with a stronger presence by the Group upstream and downstream, thus

ensuring better supply coverage of its customer portfolio.

2. GROUP INCOME IN THE FIRST HALF-YEAR 2016

The first half-year 2016 saw an increase of 70.8% in revenue from ordinary activities, including the Energy

Management Margin, compared to the first half-year 2015. Revenue reached €863.6 million mainly because of

a spike in electricity volumes sold.

Current operating income has also increased by 93% over the period to stand at €43.8 million in the first half-

year 2016.

This growth mainly reflects (i) the increase of the customer portfolio in France, particularly among major

accounts customers, contributing to sustained volume growth, (ii) optimized sourcing costs in a context of very

volatile market prices, (iii) the one-year extension of the service contract with Enedis, (iv) the reimbursement by

GrDF of unpaid gas distribution costs following the implementation of the decision handed down by the CoRDis,

and (iv) efforts implemented by the Group to control its structural costs. All these items more than offset the

effect of the Group's recognition of a provision for onerous contracts for long-term reserved transit capacity

among the Netherlands, Belgium and France. These items' impacts on accounting figures are set forth in section

1.1.2 Other highlights of the half-year.

Net profit was €52.4 million, or an increase of 126%. This growth, higher than the growth in current operating

income, was due primarily to the impact of deferred tax income of almost €34.5 million, linked in particular with

the recognition of deferred tax loss carryforwards applied by the Group given the incomes forecast for the years

2016 to 2018.

€ mH1 2016 H1 2015 Change in %

Revenue from ordinary activities 863,6 505,7 70,8%

Gross margin 107,1 78,4 36,6%

Current operating income 43,8 22,7 93,0%

Operating income 26,9 26,1 3,0%

Financial income/(loss) (5,4) (1,5) 258,0%

Net income from continuing operations 52,4 24,4 114,6%

Net income 52,4 23,2 126,0%


9

2.1. REVENUE FROM ORDINARY ACTIVITIES

The Group's revenue, including the Energy Management Margin, totalled €863.6 million in the first half-year, up

€357.9 million compared to the first half-year 2015. This represents an increase of 70.8%. Each of the Group's

business areas contributed to this growth, and particularly the Commercial trade segment. This growth was

propelled by the spike in electricity and gas sales in France with business and local authorities’ customers, a direct

result of the cancellation of the electricity and gas regulated sales tariffs for these customers on 31 December

2015.

Commercial trade Segment

The commercial trade segment's contribution to revenue for the half-year totalled €858.4 million, up from €352.9

million compared to the first half-year 2015, or an increase of 69.8%.

This growth is overwhelmingly attributable to the sale of electricity and gas in France, whose revenue over the

period totalled €842.9 million, up 67.2% compared to the first half-year 2015.

The Group's sales drive has allowed it to further expand is customer portfolio via back to back acquisitions. At 30

June 2016, the customer portfolio stood at around 1.433 million customer sites in electricity and 393,000

customer sites in gas, or increases of 32% for these two energies compared to 30 June 2015. Regarding the

electricity customer portfolio, the Group has taken advantage of the end of "yellow" and "green" regulated tariffs

since 31 December 2015, which has resulted in a significant entry of "Major Account" customers (multi-site

industrial and commercial customers and public authorities) in the beginning of the half-year. The average

customer portfolio over the first half-year 2016 is thus an increase of almost 29% compared to the first half-year

2015.

This growth in the customer portfolio has contributed to the significant increase in volumes of electricity and gas

sold: they settled respectively at 7.1 TWh, an increase of nearly 93% compared to the first half-year 2015, and

2.9 TWh, up 30% over the same period. While temperatures were relatively close to seasonal averages, but

slightly higher than those observed during the first half-year 2015, volume growth delivered outstripped that of

the customer portfolio for electricity. This is primarily due to the spike in "Major Account" clients, especially

yellow and green clients, whose unit consumption is much higher than those of residential customers.

In addition to the very significant increase in volumes sold, revenue from the electricity supply business has also

benefited from the impact of the increase in regulated sales tariffs applied from 1 August 2015 on the only

segment of residential blue customers (revaluation of 2.5%).

Conversely, the decrease in average gas regulated sales tariffs of nearly 12.7% between the first-half year 2015

and the first-half year 2016 hindered the growth in gas supply revenue.

In the first half-year 2016, revenue from the electricity and gas supply in Belgium was €15.5 million, up €14.1

million. This significant increase is explained by the fact that the launch of the electricity and gas marketing offers

by Direct Energie Belgium on the entire Belgian territory did not occur until the second quarter of 2015. Being

able to span the entire Belgian market from this date has therefore boosted the customer portfolio, which stood

at more than 48,000 customer sites at the end of June 2016 compared to more than 7,000 at 30 June 2015.

Volumes sold increased correspondingly with 50 GWh sold in electricity and 190 GWh in gas in the first half-year.

€ m H1 2016 H1 2015 Change in value Change in %

Commercial Trade 858,4 505,4 352,9 69,8%

Of which France 842,9 504,0 338,9 67,2%

Of which Belgium 15,5 1,5 14,1 957,0%

Production 5,2 0,2 5,0 n.a.

Revenue from ordinary activities 863,6 505,7 357,9 70,8%


10

Production Segment

Revenue for the Production segment increased robustly, reaching €5.2 million over the period on the back of the

acquisition on 30 December 2015 of the company 3CB SAS. 3CB SAS operates a Combined Cycle Gas turbine plant

(CCGT) with an installed capacity of 408 MW and its net contribution margin is recorded under Energy

Management margin.

As in 2015, other production asset projects under development have not had a material impact on the revenue

of the first half-year 2016.

2.2. GROSS MARGIN

The Group's gross margin for the first half-year 2016 amounted to €107.1 million, showing a strong increase of

€28.7 million (+36.6%). As for revenue, growth was mainly driven by the Commercial trade segment in France.


The commercial trade segment's contribution to the gross margin was €103.2 million for the first half-year 2016,

up €25.1 million compared to the first half-year 2015.

This growth is overwhelmingly attributable to the electricity and gas supply business in France, whose

contribution to the gross margin increased 29.3% to stand at €101.2 million over the period. This contribution

was a result of the combined effects of growth in the customer portfolio and sales volumes, particularly in major

accounts, in a climatic context that is close to seasonal norms.

Added to this are the combined effects for the electricity supply business:

- the 2.5% increase in the blue residential customer's regulated sales tariffs at 1 August 2015;

- the one-year extension, in the second half of 2016, of the service contract with ErDF, retroactive to 1

October 2015, which resulted in an additional contribution of €8.5 million to the gross margin compared

to the first half-year 2015;

- the decline in wholesale market prices in 2015 and the first quarter of 2016, which the Group leveraged

to optimise its supply terms. Purchases of electricity therefore increased at a slower rate than sales

volumes (+ 83% compared to + 93%): they amounted to €305.0 million in the first half-year 2016

compared to €166.5 million in the first half-year 2015.

Concerning the gas supply business, it benefited from the growth in the customer portfolio and sales volumes in

a context of lower market prices. However, its contribution to the gross margin was negatively impacted by the

recognition of a provision for onerous contracts amounting to €33.0 million on the gas interconnection capacity

reserved by the Group between Belgium, the Netherlands and France considering the current regulatory

environment and a bleak outlook for favourable developments in the short-term (see Section 1.1. Highlights of

the first half-year 2016).



Of which France 101,2 78,2 22,9 29,3%

Of which Belgium 2,1 (0,1) 2,2 n.a.

Production 3,8 0,2 3,6 n.a.

Gross margin 107,1 78,4 28,7 36,6%


11

The electricity and gas trading business in Belgium generated a gross margin of €2.1 million (compared to a loss

of €0.1 million during the first half-year 2015). The very significant increase in the customer portfolio has enabled

the Group to optimise its electricity and gas sourcing strategy, taking particular advantage of the effect of lower

market prices, thus ensuring profitable business growth.

Production Segment

The gross margin of the Production segment amounted to €3.8 million in the first half-year 2016, an increase of

€3.6 million compared to the first half-year 2015. This increase was a result of the acquisition of the company

3CB at year-end 2015 and the electricity production made during the first half-year in a context of favourable

seasonal market for gas thermal assets.

2.3. CURRENT OPERATING IN COME

The Group's current operating income amounted to €43.8 million for the first half-year 2016, up 93.0% from the

first half-year 2015. This growth was driven by the commercial trade segment, including electricity and gas sales

in France.


The commercial trade segment's contribution to current operating income was €47.7 million, up €24.7 million

compared to the first half-year 2015. This mainly reflects the sustained sales drive observed in the different

segments in which the Group operates, particularly in France, and the increase in major accounts since the

regulated sales tariffs on the yellow and green electricity segments were cancelled on 31 December 2015. This

growth was achieved while optimising procurement costs.

Current operating income for the commercial trade segment in France thus amounts to €50.4 million, up €25.3

million compared to the first half-year 2015.

Personnel expenses increased by €2.4 million. Excluding the impact associated with the stock option plans,

payroll expenses totalled €15.2 million compared to €12.9 million for the first half-year 2015. This increase,

excluding the impact of stock option plans, is directly linked to (i) expanding the sales teams in 2015 to effectively

respond to the scheduled end (31 December 2015) of the regulated sales tariffs for some corporate customers

and (ii) building out customer service to maintain a consistent quality of service in line with the Group's thriving

customer portfolio.

Other operating income and expenses decreased by €6.9 million. After signing in the second quarter of 2016 an

amendment to its distribution contract with GRDF including the implementation of the principle, established by

the decision of the CoRDiS of 19 September 2014, that the natural gas supplier should not assume outstanding

delivery costs incurred by the distribution network operator (GRDF), both for the future than the past, GRDF

reimbursed the Group almost €10 million for its unpaid distribution costs prior to 31 December 2015.

Excluding this non-recurring effect, other operating income and expenses totalled €31.8 million at 30 June 2016

compared to €28.9 million at 30 June 2015, an increase of €2.9 million. This is explained in large part by:



Of which France 50,4 25,1 25,3 100,7%

Of which Belgium (2,7) (2,1) (0,6) 26,7%

Production (3,9) (0,3) (3,6) 1275,8%

Current operating income 43,8 22,7 21,1 93,0%


12

- an increase in marketing expenses €4.8 million, a direct effect of the expansion of the Digital Group's

presence and launching the sponsorship of the SA Vendée Cycling team, now called Team Direct Energie,

on 1 January 2016;

- an increase of €3.4 million in external service provider expenses related both to the increased number

of acquisitions but also to the growth in customer portfolio assets over the period;

- impact of bad debt net of changes in provisions of €4.7 million over the period compared to €10.0 million

for the same period in 2015. This change is mainly explained by the Group's continued efforts in

managing its customer portfolio and its billing and collection terms;

- the increase in certain taxes of some €1.1 million related in particular to the marked improvement in

the Group's profitability.

The negative impact of depreciation on current operating income increased €2.1 million compared to the first

half-year 2015, in line with the continued acceleration of the sales momentum, which automatically translates

into higher customer and investment acquisition costs particularly in the Group's information systems.

Current operating income for the commercial trade segment in Belgium amounted to a loss of €2.7 million in the

first half-year 2016 compared to a loss of €2.1 million at the end of the first half-year 2015. This development is

directly related to the pursuit of securing a market share across the entire Belgian territory, requiring, despite a

significant pooling of support functions, direct investments, particularly in the marketing and sales areas, in order

to reach the size required for this activity.

Production Segment

The current operating income for the production activity amounted to a loss of €3.9 million for the first half-year

2016 compared to a loss of €0.3 million in the first half-year 2015. In addition to the recurring expenses related

to various development projects carried out by the Group, the current operating income is directly impacted by

3CB, which has operated the Bayet plant in the market since early 2016, whose contribution at 30 June was

impacted by:

- the seasonality of maintenance and upkeep expenses that took place mainly in the second quarter, a

less favourable period for production for gas thermal assets;

- the impact of recognising, on 1 January 2016, the entire annual expense associated with certain taxes,

in particular the IFER (flat-rate tax on installed capacity) in accordance with the principles established

by IFRIC (International Financial Reporting Interpretations Committee) standard 21.


13

2.4. OPERATING INCOME

The change in fair value of Energy derivative financial instruments operational in nature represented, in the first

half-year 2016, an expense of €16.8 million compared to a profit of €7.3 million during the first half-year 2015.

This change, which had no impact on cash, is directly related to the marked decrease in the fair value of Gas

derivative financial instruments, especially associated with the unwinding of gas-oil hedging swaps during the

period, whose fair value was strongly positive at 31 December 2015. During the first half-year 2015, this change

had increased to €7.3 million and is explained primarily by the change in energy prices, particularly by the slight

increase in gas and oil prices observed over the period compared to those at 31 December 2014.

In the first half-year 2015, disposals of non-current assets corresponded mainly to the write-off of €3.1 million

of the assets for a combined cycle gas development project of the Group that had become obsolete, given the

delays that arose in the project. Impairment of non-current assets of €0.5 million exclusively related to equity

investments in unconsolidated companies, recognised as available-for-sale assets, for which indications of losses

of value materialised.

Given these factors, operating income at 30 June 2016 amounted to €26.9 million compared to operating income

of €26.1 million in the first half-year 2015.

2.5. NET INCOME AND EARNINGS PER SHARE

Financial result deteriorated, moving from an expense of €1.5 million in the first half-year 2015 to an expense of

€5.4 million for the same period in 2016. This is explained mainly by the completion of a second private

placement of bonds in November 2015 for a total amount of €60 million, with a coupon of 4.40% for the first

tranche (€15 million) and 4.8% for the second (€45 million). In a context of significantly increasing margin call

volumes over the period, the Group also secured a credit line with ABN, its market transaction clearing house, in


Current operating income 43,8 22,7 21,1 93,0%

Change in fair value of financial derivatives operational in

nature(16,8) 7,3 (24,1) -329,2%

Disposals of non-current assets (0,0) (3,4) 3,3 -99,7%

Impairment of non-current assets (0,1) (0,5) 0,4 -79,7%

Income and expenses related to changes in scope of

consolidation- - - n.a.

Operating income 26,9 26,1 0,8 3,0%


Operating income 26,9 26,1 0,8 3,0%

Cost of net debt (5,2) (1,5) (3,7) 248,3%

Other financial income and expenses (0,1) 0,0 (0,1) n.a.

Financial income/(loss) (5,4) (1,5) (3,9) 258,0%

Corporate income tax 30,5 (0,2) 30,7 n.a.

Share of net income from companies accounted for by the

equity method0,3 (0,0) 0,3 n.a.

Net income from continuing operations 52,4 24,4 28,0 114,6%

Net income from discontinued operations - (1,2) 1,2 n.a.

Net income 52,4 23,2 29,2 126,0%

of which Net income, Group share 52,4 23,2 29,2 126%

of which Net income, minority interests - - - n.a.


14

the amount of €60 million and raised €55 million in shareholder loans. These two transactions substantially

increased the interest expense recognised.

The impact of current taxes for the period amounted to an expense of €4.0 million, directly linked with the

improvement in pre-tax income of the tax consolidation group, for which Direct Energie is the parent company,

and given the use of tax loss carryforwards. The impact of deferred taxes in the first half-year 2016 is €34.5

million in income due, on the one hand, to the additional use of tax loss carryforwards associated with the

Group's expected future earnings over the period extending from the second half-year 2016 until 2018 for an

amount of €14.0 million, and on the other hand, the net change in deferred taxes on temporary differences

recognised during the period for an amount of €20.5 million.

At 30 June 2016, the share of net income from companies accounted for under the equity method was €0.3

million.

Net income from discontinued operations of €(1.2) million in the first half-year 2015 corresponded mainly to the

adjustment to fair value of the interest held by the Group in the Direct Energie Distribution Company which itself

owned interests in the companies EBM Distribution Network and Gascogne Energie Service. This company had

been classified as discontinued operations according to the criteria of IFRS 5, given the progress of the sale

process initiated by the Group, and scheduled to be finalized in the fourth quarter of 2015.

Consolidated net income for the first half-year 2016 is a profit of €52.4 million compared to a profit of €23.2

million for the first half-year 2015.

Under the effects of the strong growth in the Group's income and slow growth in the average number of shares

outstanding and the average number of outstanding diluted shares, earnings per share and diluted earnings per

share at 30 June 2016 amounted to €1.28 per share and €1.21 respectively, both up more than 120% compared

to 30 June 2015.

3. REVIEW OF THE COMPANY' S CASH POSITION, CAP ITAL AND FINANCIAL D EBT

3.1. SIMPLIFIED CONSOLIDATED BALANCE SHEET

3.2. SHAREHOLDERS' EQUITY AND NET DEBT

At 30 June 2016, the Group's equity amounted to €41.4 million, an increase of €70.7 million compared to 31

December 2015. This is mainly as a result of the profits of €52.4 million for the first half-year and the positive

change in fair value of derivative hedging instruments, associated with the load profile of the Group's customers,

In eurosH1 2016 H1 2015

Earnings per share 1,28 0,57

Diluted earnings per share 1,21 0,55

€ m30-June-2016 31-Dec-2015 Change in %

Non-current assets 174,7 145,5 20%

Current assets 663,8 468,1 42%

Total Assets 838,5 613,6 37%

Shareholders' equity 41,4 (29,4) -241%

Non-current liabilities 222,5 224,5 -1%

Current liabilities 574,7 418,4 37%

Total Liabilities and shareholder's equity 838,5 613,6 37%


15

amounting to €22.5 million, recorded directly in other comprehensive income in accordance with IFRS, and mainly

due to supplies of electricity volumes associated with these hedging instrument in the period.

Net debt is the difference between financial debt excluding the impact of margin calls and cash assets. At 30 June

2016 net debt amounted to €53.8 million compared to €147.9 million at year-end 2015.

This sharp reduction in net debt is due both to the decrease in cash deposits made with the Group's counterparties

as part of purchase and energy sales transactions, recorded as financial assets in the Group's accounts, a decline

that was consecutive, in particular, to changes in the market prices of commodities during the first half-year 2016

and to the Group's optimisation of its supply terms, as well as the increase in net cash flow generated by the

Group, taking into account the financing required to acquire new customers triggered by the strong growth in the

business observed in the half-year.

3.3. GROUP CASH FLOW

During the first half-year 2015 and 2016, changes in the Group's cash position was as follows:

Cash flow from operating activities

Between the first half-year 2015 and the first half-year 2016, cash flow from operating activities grew by some

€101.5 million to stand at €86.5 million at 30 June 2016.

This is due to the combination of an increase in income before taxes and financial expenses, relatively stable

working capital requirements, the change in the latter amounting to an expense of €4.2 million in the first half-

year 2016 compared to a negative impact of €50.9 million in the first half-year 2015, and the positive impact of

non-cash items amounting to €63.5 million in the first half-year 2016 compared to €11.1 million in the first half-

year 2015.

Non-cash items in 2016 mainly included the charge to a provision for a loss-making contracts of €33.0 million

relating to the transport capacity reserved by the Group between Belgium, the Netherlands and France and the

€ mH1 2016 H1 2015

Income before taxes and financial expenses 27,3 24,9

Non-cash items 63,5 11,1

Change in working capital requirement (4,2) (50,9)

Net cash flow from operating activities 86,5 (15,0)

Property plant and equipment (16,5) (12,2)

Fixed financial assets 39,0 (4,2)

Changes in consolidation scope - -

Net cash flows used in investment activities 22,5 (16,4)

Change in borrowings 56,6 24,6

Net financial expenses (2,3) (0,8)

Treasury shares 0,0 0,0

Other flows (5,1) (6,1)

Net cash flows used in financing activities 49,3 17,7

Net change in cash and cash equivalents 158,3 (13,7)

Cash and cash equivalents at beginning of year 32,0 31,3

Cash and cash equivalents at end of year 190,2 17,6


16

impact of the negative change in fair value of financial instruments totalling €16.8 million. This is attributable to

the sharp decrease in fair value of Gas derivatives financial instruments related, in particular, to the unwinding

of the period of gas-oil hedging swaps, whose fair value was strongly positive at 31 December 2015.

Adjusted for non-cash items, income before taxes and financial expenses at 30 June 2016 increased by €54.8

million compared to the same income adjusted for non-cash items at 30 June 2015, reflecting an upswing in the

Group's activity, particularly in electricity and gas sales in France for individual customers and in particular "Major

Account" customers (industrial and multi-site customers and public authorities) with the end of the "yellow" and

"green" regulated sales tariffs effective from 31 December 2015.

The seasonal nature of the Group's business tends to increase the need for working capital in the first half-year.

Individual customers are predominantly annualised. The Group collects payments on a straight-line basis until

maturity of the balance invoice in line with their payment plan, while energy purchases (gas, oil and electricity)

are mostly settled within the month following delivery. However, since 1 January 2016, this rate differential

between the linear method for collecting customer receivables and the payment of energy purchases was

partially offset by a regulatory change. The domestic tax on the end consumption of electricity (TICFE), paid by

the Group on a quarterly basis on the 25th of the month following the end of each quarter, has replaced the

Contribution to the Public Electricity Service (Contribution au Service Public de l’Electricité (CSPE)) which, prior to

that date, was paid on a monthly basis. These two opposing impacts, added to the Group's efforts to optimize

the recovery of its customer receivables, explain the relative stability of working capital requirements for the

first half-year 2016.

Cash flows from investing activities

Cash flow from investing activities amounted to €22.5 million in the first half-year 2016 compared to a negative

impact of €16.4 million in the first half-year 2015.

This positive impact on the Group's cash position is mainly due to changes in commodity market prices during

the first half-year 2016 which, combined with energy deliveries and forward purchases made during the period,

allowed the Group to recover €35.6 million in deposits and guarantees, paid at year-end 2015 to the ABN clearing

house and other counterparties with whom the Group makes energy purchase and sales transactions to supply

its customer portfolio.

Conversely, investments have had an impact on the Group's cash position and increased to €16.5 million over

the half-year compared to €12.2 million over the same period in 2015. This increase in investments is primarily

related to increasing customer acquisition costs, reflecting the momentum and accelerated growth of the

business.

Cash flows from financing activities

Cash flows from financing activities reflect the continued strengthening of the Group's financial flexibility with

the aim, in particular, of improving its ability to absorb significant variations in gas and electricity market prices

as observed in late 2015 and early 2016, while pursuing its ongoing strategy for commercial success. The positive

impact of financing activities in the first half-year 2016 was primarily related to changes in borrowing due to:

- the creation of shareholder loans in the amount of €55 million;

- the negotiation of a short-term credit line with ABN, the Group’s regulated energy market clearing

house, for a total amount of €60 million;

- repayment of the RCF used at the end of 2015 totalling €60 million.

Other financing flows for the period corresponded to the payment of net financial interest of €2.3 million, an

increase of €1.5 million compared to the first half-year 2015, following, in particular, the issue of new bonds

during the second half of 2015, the arrangement of shareholders loans in early 2016, the payment of a €8.2


17

million dividend, up €2.1 million compared to the amount paid in 2015, and the receipt of €3.2 million resulting

from exercise of the share subscription options.

4. OUTLOOK FOR 2016

The Company highlights the objectives that it has set for 2016, which are detailed in its 2015 registration

document filed on 28 April 2016 with the Financial Market Authority (Autorité des Marchés Financiers (AMF))

under the number R. 16-037 and available on the Company's website www.direct-energie.com (the "2015

Registration Document"):

I. revenue growth of more than 35%, at temperatures consistent with seasonal averages;

II. growth of more than 20% of its customer portfolio in terms of number of sites; and

III. growth in current operating income of more than 30%, at temperatures consistent with seasonal

averages.

Given the commercial success observed during the period, combined with the agreement finalised with ERDF on

the one-year extension of the service contract, the assumption by GrDF of unpaid distribution costs, the expected

impact of the two retroactive tariff orders made pursuant to the decision of the Conseil d’Etat in June 2016 and,

despite recording in the interim accounts a provision for onerous contracts for long-term transit capacity among

the Netherlands, the Belgium and France, the Company revises its annual targets for 2016 as follows:

I. revenue over €1.5 billion, at temperatures consistent with seasonal averages;

II. over 2 million customer sites in the portfolio;

III. current operating income of around €85 million at temperatures consistent with seasonal averages.

Given the expected commercial performances in 2016, the Group will update its customer portfolio growth

objectives by 2018, at the next annual results publication.

http://www.direct-energie.com/


18

5. RISK FACTORS AND REL ATED-PARTY TRANSACTIONS

5.1. RISK FACTORS

The risk factors that the Group faces are described in the 2015

Registration Document.

The nature of these risks has not changed significantly during the first half-year of the 2016 financial year. These

risks are likely to occur during the second half-year 2016 or in subsequent years.

5.2. RELATED-PARTY TRANSACTIONS

The main transactions carried out between related parties are disclosed in Note 27 to the consolidated interim

financial statements.


19

II. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE HALF YEAR 2016

INCOME STATEMENT ...................................................................................... Erreur ! Signet non défini.

STATEMENT OF COMPREHENSIVE INCOME .......................................................................................... 21

STATEMENT OF FINANCIAL POSITION ................................................................................................... 22

STATEMENT OF CHANGES IN EQUITY.................................................................................................... 23

STATEMENTS OF CASH FLOWS .............................................................................................................. 24

INFORMATION ON THE DIRECT ENERGIE GROUP ................................................................................. 25

Note 1. ACCOUNTING PRINCIPLES AND METHODS............................................................................... 25

Note 2. HIGHLIGHTS OF THE YEAR ........................................................................................................ 28

Note 3. MAIN CHANGES IN SCOPE OF CONSOLIDATION ...................................................................... 30

Note 4. REVENUE FROM ORDINARY ACTIVITIES ................................................................................... 31

Note 5. COST OF SALES .......................................................................................................................... 31

Note 6. PERSONNEL EXPENSES.............................................................................................................. 31

Note 7. OTHER OPERATIONAL INCOME AND EXPENSES ....................................................................... 32

Note 8. FINANCIAL INCOME/(LOSS) ...................................................................................................... 33

Note 9. INCOME TAX ....................................................................................... Erreur ! Signet non défini.

Note 10. EARNINGS PER SHARE ............................................................................................................ 35

Note 11. INTANGIBLE ASSETS ................................................................................................................ 36

Note 12. PROPERTY, PLANT AND EQUIPMENT ..................................................................................... 38

Note 13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES ........................................................... 40

Note 14. INVENTORY ............................................................................................................................. 41

Note 15. TRADE RECEIVABLES ............................................................................................................... 42

Note 16. OTHER CURRENT AND NON-CURRENT ASSETS ...................................................................... 42

Note 17. CASH AND CASH EQUIVALENTS .............................................................................................. 43

Note 18. SHAREHOLDERS' EQUITY ........................................................................................................ 43

Note 19. SHARE-BASED PAYMENTS ...................................................................................................... 45

Note 20. PROVISIONS ............................................................................................................................ 45

Note 21. LEASE-FINANCE AGREEMENTS ............................................................................................... 47

Note 22. TRADE PAYABLES .................................................................................................................... 48

Note 23. OTHER CURRENT AND NON-CURRENT LIABILITIES ................................................................ 48

Note 24. FINANCIAL ASSETS AND LIABILITIES ...................................................................................... 48

Note 25. SEGMENT REPORTING ............................................................................................................ 60

Note 26. OFF-BALANCE SHEET COMMITMENTS ................................................................................... 62

Note 27. RELATED PARTIES ................................................................................................................... 63

Note 28. EXECUTIVE COMPENSATION .................................................................................................. 63

Note 29. POST-REPORTING EVENTS ...................................................................................................... 64

Note 30. SCOPE OF CONSOLIDATION .................................................................................................... 65



INCOME STATEMENT

In thousands of euros Note 30/06/2016 30/06/2015

Revenue from ordinary activities 4 863 565 505 653

Cost of sales 5 (756 490) (427 281)

Gross margin 107 075 78 373

Personnel expenses 6 (17 167) (13 631)

Other operating income and expenses 7 (31 506) (31 308)

Depreciation and amortisation (14 575) (10 721)

Current operating income 43 826 22 713

Changes in fair value of Energy financial derivative

instruments operational in nature(16 781) 7 322

Disposals of non-current assets 11-12 (11) (3 356)

Impairment of non-current assets (112) (550)

Operating income 26 923 26 129

Cost of net debt (5 237) (1 504)

Other financial income and expenses (138) 2

Financial income/(loss) 8 (5 375) (1 501)

Corporate income tax 9 30 533 (190)

Share of net income from companies accounted for by the

equity method13 332 (14)

Net income from continuing operations 52 414 24 424

Net income from discontinued operations - (1 236)

Net income 52 414 23 189

of which Net income, Group share 52 414 23 189

of which Net income, minority interests - -

Earnings per share 10 1,28 0,57

Diluted earnings per share 10 1,21 0,55

Earnings per share from continuing operations 10 1,28 0,60

Diluted earnings per share from continuing operations 10 1,21 0,58

Earnings per share from discontinued operations 10 - (0,03)

Diluted earnings per share from discontinued operations 10 - (0,03)



STATEMENT OF COMPREHENSIVE INCOME

In thousands of euros

Total GroupNon-controlling

interestsTotal Group

Non-controlling

interests

Net income 52 414 52 414 - 23 189 23 189 -

Available-for-sale financial

assets - - - - - -

Deferred tax impact - - - - - -

Cash flow hedges 22 469 22 469 - 20 395 20 395 -


Share in profit of associates- - - 8 8 -

Total recyclable items 22 469 22 469 - 20 403 20 403 -

Actuarial gains and losses - - - - - -


Total non-recyclable items- - - - - -

Total Comprehensive income74 883 74 883 - 43 591 43 591 -

30/06/2016 30/06/2015



STATEMENT OF FINANCIAL POSITION

In thousands of euros Note 30/06/2016 31/12/2015

Intangible assets 11 44 182 40 949

Property, plant and equipment 12 46 345 47 661

Investments in associates 13 1 306 902

Non-current derivative financial instruments 24 7 918 8 494

Other non-current financial assets 24 1 146 1 458

Other non-current assets 16 5 759 5 279

Deferred tax assets 9 68 085 40 780

Non-current assets 174 741 145 522

Inventory 14 23 313 36 245

Trade receivables 15 321 604 220 596

Current derivative financial instruments 24 23 666 35 843

Other current financial assets 24 40 511 70 688

Other current assets 16 63 223 69 500

Cash and cash equivalents 17 191 436 35 230

Current assets 663 752 468 102

TOTAL ASSETS 838 492 613 624

Share capital and share premiums 12 193 9 003

Retained earnings and net income / (loss) 116 751 71 717

Treasury shares (52) (88)

Other comprehensive income (87 512) (109 981)

Shareholders' Equity - Group share 41 380 (29 350)

Non-controlling interests - -

TOTAL SHAREHOLDERS' EQUITY 18 41 380 (29 350)

Non-current provisions 20 33 041 5 051

Non-current derivative financial instruments 24 57 517 81 354

Other non-current financial liabilities 24 115 413 114 829

Other non-current liabilities 23 2 545 2 164

Deferred tax liabilities 9 13 941 21 130

Non-current liabilities 222 457 224 528

Current provisions 20 11 692 6 776

Trade payables 22 128 624 187 818

Current derivative financial instruments 24 89 246 83 851

Other current financial liabilities 24 134 951 69 113

Other current liabilities 23 210 143 70 887

Current liabilities 574 656 418 446

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 838 492 613 624



STATEMENT OF CHANGES IN EQUITY

* Changes in fair value of derivative financial hedging instruments, which, at 30 June 2016, corresponded

exclusively to energy purchases, are recorded net of tax in other comprehensive income for the effective portion

of the hedge and in income for the period for the ineffective portion. The change in fair value of €22,469

thousand on the first half-year 2016, on a temporary basis, is primarily related to deliveries recorded over the

first half-year 2016 for hedging instruments open at 31 December 2015. The balance as at 30 June 2016 will be

subsequently recycled to income, symmetrically to the hedged item when physical delivery of the corresponding

energy purchases takes places.


Changes in fair

valueOther

Shareholders' Equity

at 31/12/2014,

historical

4 079 4 923 48 534 (101) (21 590) (527) 35 319 - 35 319

Impacts of IFRIC 21 - - 704 - - - 704 - 704


at 01/01/2015,

restated

4 079 4 923 49 238 (101) (21 590) (527) 36 022 - 36 022

Net income - - 23 189 - - - 23 189 - 23 189

Other comprehensive

income- - - - 20 395 8 20 403 - 20 403

Comprehensive

income- - 23 189 - 20 395 8 43 591 - 43 591

Capital increase- - - - - - - - -

Options - - 559 - - - 559 - 559

Treasury shares

purchases/sales- - - 27 - - 27 - 27

Dividends paid - - (6 118) - - - (6 118) - (6 118)


at 30/06/2015

4 079 4 923 66 868 (74) (1 195) (519) 74 082 - 74 082


at 31/12/2015

4 079 4 923 71 717 (88) (109 981) 0 (29 350) - (29 350)

Net income - - 52 414 - - - 52 414 - 52 414

Other comprehensive

income18 - - - - 22 469 - 22 469 - 22 469

Comprehensive

income- - 52 414 - 22 469 - 74 883 - 74 883

Capital increase- - - - - - - - -

Options exercised 43 3 148 - - - - 3 190 - 3 190

Options 19 - - 862 - - - 862 - 862

Treasury shares

purchases/sales- - - 36 - - 36 - 36

Dividends paid - - (8 242) - - - (8 242) - (8 242)


at 30/06/20164 122 8 071 116 751 (52) (87 512) 0 41 380 - 41 380

Non-

controlling

interests

Total

Shareholders'

equity

Note

Other comprehensive

incomeShare

capital

Share

premiums

Retained

earnings

and net

income /

(loss)

Treasury

shares

Shareholders'

Equity

Group share



STATEMENT OF CASH FLOWS

In thousands of euros 30/06/2016 30/06/2015

Consolidated net income 52 414 23 189

Tax expenses/income (30 533) 190

Financial income/(loss) 5 375 1 501

Income before taxes and financial expenses 27 255 24 880

Depreciation and amortisation 14 575 10 721

Impairment 112 550

Provisions 31 446 3 168

Expenses related to share-based payments 862 559

Change in fair value of financial instruments 16 781 (8 848)

Other financial items with no cash impact 11 4 892

Share of income from associates (332) 14

Items with no cash impact 63 456 11 055

Change in working capital requirement (4 248) (50 934)

Net cash flow from operating activities 86 463 (14 999)

Acquisition of fixed assets (16 502) (12 175)

Disposals of fixed assets - 3

Change in deposits and guarantees 35 644 (3 457)

Change in financial assets - (164)

Net change in loans originated by the company 3 356 (604)

Net cash flows used in investment activities 22 497 (16 398)

Sums received from shareholders during capital increases 3 190 -

Treasury shares 36 27

Proceeds from borrowings 117 494 25 128

Repayment of borrowings (60 870) (533)

Interest paid (2 975) (1 139)

Interest received 657 355

Dividends paid (8 242) (6 118)

Net cash flows used in financing activities 49 291 17 721

Net change in cash and cash equivalents 158 250 (13 676)

Net change in cash and cash equivalents from discontinued operations - (28)

Cash and cash equivalents at beginning of year 31 993 31 308

Cash and cash equivalents at end of year 190 243 17 605



INFORMATION ON THE DIRECT ENERGIE GROUP

Direct Energie (the Company) is a société anonyme (public limited company) incorporated under French law,

registered in France. The Group's registered office is located at 2 bis rue Louis Armand Paris 75015, France, and

its shares are listed on the regulated Euronext Paris market.

Direct Energie covers all aspects of the energy value chain, operating in both the production and supply of

electricity and natural gas, thus ensuring a balanced and sustainable development for the Group. Direct Energie

is the leading alternative multi-energy supplier in France.

The consolidated financial statements published by Direct Energie and its subsidiaries (the Group) are presented

in euros and rounded to the nearest thousand, unless stated otherwise.

On 28 September 2016 the Board of Directors approved and authorised the publication of the Group's

consolidated financial statements at 30 June 2016.

Note 1. ACCOUNTING PRINCIPLES AND METHODS

1.1 Declaration of conformity

The interim consolidated financial statements published by Direct Energie SA and its subsidiaries ("the Group"),

which cover the six-month period ended 30 June 2016, are prepared in accordance with IAS 34 "Interim Financial

Reporting", which allows for the inclusion of a selection of explanatory notes. The interim consolidated financial

statements do not therefore include all notes and disclosures required by IFRS for annual financial statements

and should be read in conjunction with the consolidated financial statements for the 2015 financial year.

With the exception of the changes described below, the accounting methods and principles are identical to those

applied in the consolidated financial statements at 31 December 2015 and described in Note 1 "Accounting

Methods and Principles" in the consolidated financial statements at 31 December 2015.

Comparative data for 2015 figures have been prepared on the same basis.

1.2 Change in accounting standards

The accounting principles and methods applied to the consolidated financial statements at 30 June 2016 are

identical to those used in the consolidated financial statements at 31 December 2015, with the exception of

mandatory IFRS standards, amendments and interpretations for the financial year beginning on 1 January 2016

and which the Group did not adopt early.

1.2.1 Amendments which are mandatory as from 1 January 2016

The following amendments, adopted by the European Union, have become mandatory as of 1 January 2016:

- Amendments to IAS 19 "Employee Benefits";



- Amendments to IFRS 11 "Acquisition of an interest in a joint operation";

- The amendments to IAS 16 and IAS 38 "Acceptable methods of depreciation and amortisation";

- Amendments to IAS 1 "Disclosure Initiative";

- IFRS 2010 - 2012 Annual Improvements Cycle;

- IFRS 2012 - 2014 Annual Improvements Cycle.

Application of these amendments did not materially impact the Group's consolidated financial statements at 30

June 2016.

1.2.2 Texts not adopted by the European Union and not early adopted by the Group

- IFRS 9 "Financial Instruments";

- IFRS 15 "Revenue from Contracts with Customers";

- IFRS 16 "Leases";

- Amendments to IFRS 10 and IAS 28 "Sale or transfer of assets between an investor and its associate/joint

venture";

- Amendments to IFRS 10, IFRS 12 and IAS 28 "Investment entities: applying the consolidation exception";

- Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealised Losses";

- Amendments to IAS 7 "Disclosure Initiative";

- Clarifications to IFRS 15 "Revenue with Contracts from Customers";

- Amendments to IFRS 2 "Clarifications of classification and measurement of share-based Payment

Transactions".

The potential impact of these standards and amendments on the Group accounts remains under review.

1.3 Use of estimates and judgements

The preparation of financial statements requires the use of judgements, estimates and assumptions in

determining the value of assets and liabilities, income and expenses for the year and for the evaluation of

contingent assets and liabilities existing at the reporting date. Depending on changes in these assumptions or

economic conditions that may differ from those existing at the reporting date, the amounts reported in the

Group's future financial statements may differ from current estimates.

The assumptions which the Group uses to make estimates and judgements are mainly the following:

- Measurement of the fair value of assets acquired and liabilities assumed in business combinations;

- measurement and impairment losses related to goodwill and other fixed assets;

- the measurement of provisions;



- energy un-metered (“Energy in the meter”) revenues;

- financial instrument valuations;

- measurement of recognized tax loss carry-forwards.

Any change in assumption in these areas could have a material impact on the Group's financial statements.

Further information on these estimates is presented in Note 1 to the annual consolidated financial statements

for the 2015 financial year.

1.4 Specific items relating to preparation of the interim financial statements

1.4.1 Seasonal nature of the business

By nature, the Group's activities are very sensitive to changes in climate. Indicators and results presented in the

interim consolidated financial statements at 30 June 2016 are not necessarily indicative of those that will be

presented in the financial statements at 31 December 2016.

1.4.2 Income tax

The income tax expense for the interim period is typically calculated by applying the last known estimated

effective tax rate on the net income of the consolidated companies for each entity or tax group.



Note 2. HIGHLIGHTS OF THE YEAR

2.1 Extension of the ERDF services contract

During the second quarter of 2016, the Group and ErDF (now ENEDIS) signed a one-year extension of the services

contract which had ended on 30 September 2015. This extension, retroactively commencing on 1 October 2015,

led to recognising €21.7 million in income in the first half-year 2016.

2.2 Rider to the transmission contract with GRDF

By a decision of 2 June 2016, the Paris Court of Appeal upheld the decision handed down by the CoRDiS on 19

September 2014. This decision established the principle that the natural gas supplier was not responsible for the

unpaid share of past or future distribution costs of the distribution network operator (GRDF). In pursuance of

this decision of the CoRDiS (Comité de règlement des différends et des sanctions), a contractual agreement was

formalised between the Parties during the second quarter of 2016 under which, in late May 2016, GRDF repaid

Direct Energie the unpaid share of distribution costs incurred prior to 31 December 2015 amounting to nearly

€10 million.

The Court of Appeal also held that the supplier was to be paid for the services performed on behalf of GRDF

through which the end customer obtained access to the distribution networks. In pursuance of this decision,

GRDF must first offer Direct Energie, within a period of two months, an amendment to the Distribution Network

Access Agreement offering compensation that is "proportionate and equitable to the costs avoided" by GRDF,

and also to pay Direct Energie remuneration at a price fixed by the Parties for past periods (since the date of

signing of the distribution agreement in 2005). No agreement was reached between the Parties at the end of the

two-month period and as such, the Group has not yet recognised any related income in its accounts.

2.3 Decision of the Conseil d’Etat (France's highest administrative court) on Regulated Tariffs

for Electricity Sales

In June 2016 the Conseil d’Etat put an end to two tariffs decrees. The decree of 28 July 2014 was cancelled on

the grounds that the principle of legal certainty was not met in respect of blue tariffs for the period between 1

August 2014 and 31 October 2014. As concerns the decree of 30 October 2014, it was cancelled on the grounds

that it did not take into account retroactive tariff adjustments that were necessary in the case of residential blue

and green tariffs for the period 1 November 2014 and 31 July 2015. The Conseil d'Etat gave ministers a three-

month deadline to implement these amending decisions.

The Group will be impacted by such cancellations and corresponding amending decisions, which will trigger a

positive tariff adjustment, once these amending decisions have been published by the competent ministers.



2.4 Provision for loss-making contracts on gas interconnection capacities

As part of its gas supply strategy, the Group concluded in 2009 several contracts with French (GRTgaz), Belgian

(Fluxys) and Dutch (GTS) gas transmission system operators for the reservation, from 2011, of gas import

capacities through Belgium, for periods extending through 2027. The purpose of these contracts was to ensure

security in the gas supply as part of the Group's activities over the long-term, according to the principles

governing the procurement of a licence to supply natural gas in France.

Beginning in 2013, the market environment brought to light the current system's inability to ensure security of

supply, resulting, in particular, in inadequate storage capacity subscriptions. The government therefore initiated

consultations to clarify the obligations incumbent on suppliers in the field, as well as the available instruments

and resources. The specific aim of these consultations was to reform the storage subscription obligations.

During these consultations, the Group maintained its consistent position, whereby, when defining supplier

obligations in terms of security of supply, due consideration should be given to all available modulation tools,

including those related to gas import capacities in France. However, pending the finalisation of this reform and

without jumping to conclusions on the final outcome, the authorities have asked the Group to subscribe for

annual storage capacities independently of its own gas interconnection capacities.

Based on these consultations, the public authorities drafted the reform, which was reviewed by the Conseil d’Etat

in the second quarter of 2016. The draft reform does not reflect the Group's proposals to explicitly consider the

Gas Import capacities of each supplier among the available instruments or resources in terms of supply security.

Furthermore, in April 2016 the Conseil d’Etat, called to rule in the dispute initiated in 2014 by Eni and Uprigaz,

upheld that the authorities were entitled to impose an obligation on gas suppliers to subscribe storage capacities

in order to ensure supply security, without considering the interconnection capacities specific to each supplier

as an instrument allowing the latter to avoid the same. The Court of Justice of the European Union has been

called solely to resolve the issue concerning the geographical location of the storages included in meeting this

obligation.

In these circumstances and irrespective of implementation period of the draft reform, the contracts can no longer

be considered as participating directly in the obligations inherent to the Group's gas operations with respect to

security of supply, without there being any expectation of a favourable development in the regulations in the

short-term.

Accordingly, at the reporting date these contracts on access to gas interconnections were treated as onerous

contracts under IAS 37, since:

- it is clearly no longer possible to regard these as capable of meeting the Group's obligations in terms of

security of supply; and

- the costs associated with these contracts over their remaining life, with no prospect of early

termination, are much higher than their market value.

A provision for onerous contracts in the amount of €33.0 million has been recognised in the financial statements.

2.5 Strengthening of the Group's financial structure

During the first quarter of 2016, deposits paid in cash by the Group's counterparties to hedge changes in the fair

value of forward energy sales and purchases until such time as their physical delivery takes place, experienced

strong growth, directly related to the decline in wholesale electricity prices observed over the period.

The Group has secured new funding to offset this increase:



- shareholder loans for a total amount of €55 million on the closing date of the accounts;

- an additional short-term credit line with the Group’s regulated energy market clearing house, for a total

amount of €60 million;

- a €60 million increase in its bank revolving credit facility rising the usable amount to €120 million.

With a rebound in market prices in the second quarter, the Group had at 30 June 2016 nearly €177 million in

short-term financing sources in addition to available cash.

Note 3. MAIN CHANGES IN SCOPE OF CONSOLIDATION

No significant change in scope of consolidation took place during the first half-year 2016.



Note 4. REVENUE FROM ORDINARY ACTIVITIES

Note 5. COST OF SALES

Note 6. PERSONNEL EXPENSES

Share-based payments and expenses related to termination benefits are detailed in Note 19 "Share-based

payments" and Note 20.2 "Provisions for employee benefits" respectively.


Electricity sales 383 425 206 410

Gas sales 93 935 79 807

Service sales 368 451 210 480

Other income 13 198 9 823

Revenues excluding Energy Management 859 008 506 520

Energy Management Margin - Electricity (1 878) (939)

Energy Management Margin - Gas 1 240 73

Energy Management Margin - Production 5 195 -

Energy Management Margin 4 557 (867)

Revenue from ordinary activities 863 565 505 653


Energy purchases (335 315) (202 314)

Transmission and DNO services (400 952) (213 731)

Other costs (5 876) (5 297)

Change in inventories (14 348) (5 938)

Cost of sales (756 490) (427 281)


Salaries and employer contributions (16 049) (13 014)

Expenses related to termination benefits (256) (58)

Share-based payments (862) (559)

Personnel expenses (17 167) (13 631)



Note 7. OTHER OPERATIONAL INCOME AND EXPENSES

Other operating income and expenses are as follows:

They consist mainly of:

- external costs specifically related to managing the customer relationship, legal services and advice, and

external communication;

- a positive impact recorded under "Bad debt" and associated with the repayment, during the first half-

year 2016, by the gas distribution network operator (GRDF) of the unpaid share of distribution costs

prior to 31 December 2015 (see Note 2.2 "Rider to the transmission contract with GRDF").


Capitalised production 1 280 1 439

Operating subsidies 7 106

Other income 4 548 4 004

Other operating income 5 835 5 549

External expenses (36 763) (22 829)

Taxes (5 133) (2 419)

Bad debt 2 843 (8 383)

Net increase in current asset provisions 1 460 (1 595)

Net increase in provisions for risks and charges 447 (1 513)

Other expenses (196) (117)

Other operating expenses (37 341) (36 856)

Other operating income and expenses (31 506) (31 308)



Note 8. FINANCIAL INCOME/(LOSS)

8.1 Cost of net debt

This item primarily includes interest on bonds, interest on shareholder loans, interest expenses on guarantees,

interest expense on the future markets, interest on bank loans and draws on credit facilities, bank interest and

other bank charges, interest income on cash investments and shareholder loans with Group entities not

consolidated by the full consolidation method and the change in fair value of marketable securities and cash

equivalents.

Interest expense includes interest on bonds and bank loans, interest on shareholder loans set up in the first half-

year 2016, interest on drawings of credit facilities, interest on deposits granted at the Group's request by banks

to certain counterparties and interest paid on the future markets.

8.2 Other financial income and expenses




Financial income/(loss) (5 375) (1 501)


Interest expense (5 894) (1 858)

Interest income 673 175

Net income from marketable securities and cash equivalents (15) 180



Other financial income 0 0

Total other financial income 0 0

Provision accretion (0) 3

Other financial expenses (138) (1)

Total other financial expenses (138) 2




Note 9. INCOME TAX

9.1 Breakdown of income tax expenses

The tax income recognised in income for the period amounted to €30,533 thousand (compared to an expense of

€190 thousand at 30 June 2015). The breakdown of this tax income is as follows:

9.2 Effective tax income

The change in effective tax is mainly explained by the recognition by the Group of deferred tax income in the first

half-year 2016, amounting to €34,494 thousand (compared to €1,252 thousand for the first half-year 2015).

The €34.5 million impact of deferred taxes on the period reflects:

- firstly, the additional recognition of tax loss carryforwards associated with the Group's future earnings

forecasts for a total impact of €14.0 million (compared to the recognition of tax loss carryforwards of

€4.5 million at 30 June 2015). The expected timeline to recover the recognized loss carryforwards covers

the second half of 2016, and the years 2017 and 2018. It takes into account the regulatory environment

in which the Group operates, development opportunities for its customer portfolio and the forecasted

evolution of its supply costs, which are the three main items affecting the Group's profitability

prospects;

- secondly, the net change in deferred taxes on temporary differences recognised during the period for a

total amount of €20.5 million.


Tax payable (3 961) (1 442)

Deferred tax 34 494 1 252

Corporate income tax 30 533 (190)


Net income 52 414 23 189

Share in profit/(loss) of associates (332) 14

Corporate income tax (30 533) 190

Discontinued operations - 1 236

Pre-tax profit of consolidated companies 21 549 24 628

Actual tax (expense)/income 30 533 (190)



Note 10. EARNINGS PER SHARE

At 30 June 2016, as in 2015, the weighted average number of shares outstanding is the average number of Direct

Energie shares outstanding over the period.

As in 2015, at 30 June 2016 the calculation of diluted net earnings per share did not take into account stock

option plans whose exercise price is higher than the average price of Direct Energie shares for the first half-year.

At 30 June 2016, seven stock option plans had a lower exercise price than the average price of Direct Energie

shares over the six-month period, which amounted to €22.18 in the first half-year 2016. These subscription plans

have thus been considered in calculating the diluted earnings per share.

At 30 June 2015, four stock option plans had a lower exercise price than the average price of Direct Energie

shares over the six-month period, which amounted to €10.91 in the first half-year 2015. These subscription plans

had thus been considered in calculating the diluted earnings per share.

30/06/2016 30/06/2015


Net income, Group share - Continuing operations 52 414 24 424

Net income, Group share - Discontinued operations - (1 236)

Net income, Group share 52 414 23 189

Impact of dilutive instruments - -

Diluted net income, Group share 52 414 23 189

In thousands of shares

Average number of shares outstanding 40 911 40 793

Impact of dilutive instruments 2 285 1 416

Diluted average number of shares outstanding 43 196 42 209

In euros

Earnings per share 1,28 0,57

Diluted earnings per share 1,21 0,55

Earnings per share from continuing operations 1,28 0,60

Diluted earnings per share from continuing operations 1,21 0,58

Earnings per share from discontinued operations - (0,03)

Diluted earnings per share from discontinued operations - (0,03)

NUMERATOR

DENOMINATOR

EARNINGS PER SHARE



Note 11. INTANGIBLE ASSETS

11.1 Change in intangible assets


Brands and

licences

Customer

acquisition

Other intangible

assets

Assets in

progressTotal

At 31 December 2014 8 806 138 968 30 276 3 402 181 452

Acquisitions 563 19 565 4 326 173 24 627

Disposals - - - -

Changes in scope 65 - - - 65

Other changes (543) (37) 366 (3 296) (3 509)

At 31 December 2015 8 891 158 497 34 968 279 202 635

Acquisitions 1 783 11 488 2 021 589 15 881

Disposals - - - - -

Changes in scope - - - - -

Other changes (10) - 93 (93) (10)

At 30 June 2016 10 664 169 985 37 082 775 218 505

At 31 December 2014 (6 589) (109 169) (24 293) (673) (140 724)

Depreciation and amortisation (1 366) (17 149) (3 660) - (22 175)

Disposals - - - - -


Other changes 540 - - 673 1 213

At 31 December 2015 (7 415) (126 318) (27 953) 0 (161 686)

Depreciation and amortisation (1 389) (9 258) (2 000) - (12 648)

Disposals - - - - -


Other changes 10 - - - 10

At 30 June 2016 (8 794) (135 576) (29 953) 0 (174 323)

At 31 December 2014 2 216 29 799 5 983 2 729 40 728

At 31 December 2015 1 476 32 179 7 015 279 40 949

At 30 June 2016 1 870 34 408 7 129 775 44 182

GROSS VALUES

DEPRECIATION AND AMORTISATION

NET VALUES



11.2 Customer acquisition costs

During the first half-year 2016, the Group capitalised €11,488 thousand of customer acquisition costs as part of

its sales drive (compared to €8,364 thousand in the first half-year 2015).

11.3 Other intangible assets

Other intangible assets consist mainly of IT developed by the company for its business and management

activities.

11.4 Intangible assets in progress

Intangible assets in progress at 30 June 2016 correspond mainly to the recognition of expenses incurred for the

acquisition of customers which have not been transferred into Direct Energie's supply perimeter and the costs

related to the installation and configuration of software for the part still under development.

At 31 December 2015, the decrease of €3,296 thousand of assets in progress mainly related to the write-off of

fixed assets for the Group's combined cycle gas turbine development projects, which had become obsolete given

the delays in the completion of these projects on the Hambach and Verberie sites. An impairment provision for

all the assets in progress for the Verberie project was booked prior to their write-off in 2015.



Note 12. PROPERTY, PLANT AND EQUIPMENT

12.1 Change in property, plant and equipment

At 31 December 2015, changes in the scope of consolidation had a net impact of €45,549 thousand on tangible

assets. They result from the integration, at their fair value, of the assets of the company 3CB following the

acquisition carried out on 30 December 2015. These consist primarily of production assets, required for electricity

generation from the combined-cycle power plant, and land located in Bayet Allier.


Land and

buildings

Production

facilities

Other fixed

assets

Assets in

progressTotal

At 31 December 2014 6 - 3 064 6 349 9 418

Acquisitions - - 265 857 1 122

Disposals - - (13) - (13)

Changes in scope 4 727 38 041 251 2 529 45 549

Other changes - - 80 (7 168) (7 087)

At 31 December 2015 4 733 38 041 3 648 2 567 48 990

Acquisitions - 128 511 (17) 622

Disposals - - (3) - (3)


Other changes - - - (11) (11)

At 30 June 2016 4 733 38 169 4 155 2 540 49 598

At 31 December 2014 (6) - (1 644) (2 826) (4 476)

Depreciation and

amortisation- - (326) - (326)

Disposals - - 9 - 9


Other changes - - 676 2 788 3 464

At 31 December 2015 (6) - (1 284) (38) (1 329)

Depreciation and

amortisation(83) (1 539) (305) - (1 927)

Disposals - - 3 - 3


Other changes - - - - -

At 30 June 2016 (89) (1 539) (1 586) (38) (3 253)

At 31 December 2014 - - 1 420 3 523 4 943

At 31 December 2015 4 727 38 041 2 363 2 529 47 661

At 30 June 2016 4 644 36 630 2 570 2 501 46 345

GROSS VALUES

DEPRECIATION AND AMORTISATION

NET VALUES



12.2 Land and buildings

Land and buildings acquired for €4,727 thousand in 2015 correspond to the fair value of land and buildings owned

by 3CB.

12.3 Production facilities

Production facilities include the fair value of the generation assets of the combined cycle power plant located in

Bayet.

12.4 Property, plant and equipment in progress

Property, plant and equipment in progress mainly include current developments within the company 3CB.

At 31 December 2015, the €7,168 thousand decrease reported under "Other movements" in the item "Assets in

progress" included €6,105 thousand for the write-off of property, plant and equipment used in the development

of the Group's combined cycle gas turbine projects which had become obsolete as a result of delays in the

completion of these projects, located in Hambach (for €3,318 thousand) and Verberie (€2,788 thousand).

Moreover, an impairment provision for all the assets in progress for the Verberie project was booked prior to

their write-off in 2015 and therefore they did not impact income.



Note 13. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES

The companies Direct Energie EBM Entreprises, Compagnie Electrique de Bretagne and Sophye LacMort are

consolidated by the equity method and classified as joint ventures. The Ossau company was liquidated on 19

January 2016.

At 30 June 2016, the main features of the joint ventures were as follows:

At 30 June 2016, contributions from the joint ventures were:

Direct Energie

EBM Entreprises

Compagnie

Electrique de

Bretagne

SOPHYE LACMORT

Reporting date 30/06/2016 30/06/2016 30/06/2016

Relationship Joint venture Joint venture Joint venture

Country of main establishment France France France

Main activitySale of gas and

electricity

Construction and

operation of

thermal power

plant

Acquisition and

operation of

hydroelectric

concessions

Equity holding and voting rights 50% 60% 50%

Accounting method Equity method Equity method Equity method


Direct Energie

EBM Entreprises

Compagnie

Electrique de

Bretagne

SOPHYE LACMORT

Current assets 22 238 851 11

Non-current assets 210 12 456 -

Current liabilities 19 843 11 911 2

Of which current financial liabilities 168 11 706 -

Of which non-current financial liabilities 19 675 206 2

Non-current liabilities 2 - -

Net assets 2 603 1 396 9

Share of net assets 1 301 837 4

Other adjustments - (837) -

Carrying value of equity interests 1 301 (0) 4

Dividends received by the Group - - -

Revenue 28 690 - -

Net income 810 (121) (1)

Comprehensive income 810 (121) (1)

Share of net income 405 (72) (0)

Share of comprehensive income 405 (72) (0)

30/06/2016



At 31 December 2015, contributions from the joint ventures were:

The key indicators of the joint ventures presented in 2016 cover a six-month period.

At 30 June 2016, the impact of the joint ventures in contributing profits amounted to €332 thousand. The

percentage of the Group's holding in joint ventures Direct Energie EBM Companies, Compagnie Electrique de

Bretagne and Sophye Lacmort has not changed since 31 December 2015. At 30 June 2016, their carrying value

amounted to a total of €1,306 thousand. These carrying values include shares in income of €332 thousand.

Note 14. INVENTORY

The carrying value of inventory items by category is as follows:

At 30 June 2016, the Group's inventories are composed primarily of gas. A provision for depreciation of inventory

was recorded for €1,108 thousand, due to its net realisable value.


Direct Energie

EBM Entreprises

Compagnie

Electrique de

Bretagne

OSSAU SOPHYE LACMORT

Current assets 16 509 450 1 11

Non-current assets 416 11 938 - -

Current liabilities 15 131 10 871 - 2

Of which current financial liabilities 350 9 568 - -

Of which non-current financial liabilities 14 781 1 303 - 2

Non-current liabilities 1 - - -

Net assets 1 793 1 517 1 10

Share of net assets 896 910 0 5

Other adjustments - (910) - -

Carrying value of equity interests 896 - 0 5

Dividends received by the Group - - - -

Revenue 35 560 - - -

Net income 137 (211) (6) (2)

Comprehensive income 137 (211) (6) (2)

Share of net income 68 (126) (3) (1)

Share of comprehensive income 68 (126) (3) (1)

31/12/2015

In thousands of euros Gross value Provisions Net value Gross value Provisions Net value

Gas inventory 21 875 (1 108) 20 767 36 223 (2 502) 33 721

Spare parts inventory 2 546 - 2 546 2 523 - 2 523

Inventory 24 421 (1 108) 23 313 38 746 (2 502) 36 245

30/06/2016 31/12/2015



Note 15. TRADE RECEIVABLES

Net trade receivables comprise the following:

The trade receivables are all due within one year.

Note 16. OTHER CURRENT AND NON-CURRENT ASSETS

Other current and non-current assets include the following:

Current and non-current "prepaid expenses" are mainly related to early unwinding of forward purchases/sales

of energy carried out on the markets, which are recognised in the profit and loss account on the date of physical

delivery, as well as energy purchases for energy volumes delivered in the month following their billing, IT

maintenance costs, rent and expenses for communication and insurance.

"Tax and social security receivables" consist mainly of tax receivables on value added services.

"Other receivables" consist mainly of receivables relating to the implementation of the "Basic Need Tariff" (Tarif

de Première Nécessité) and "Special Gas Solidarity Tariff" (Tarif Spécial de Solidarité).


Trade receivables 341 698 240 757

Impairment (20 095) (20 161)

Trade receivables 321 604 220 596


Prepaid expenses 44 739 50 870

Tax and social security receivables 11 627 11 565

Other receivables 6 857 7 065

Other current assets 63 223 69 500


Prepaid expenses 5 312 3 097

Tax and social security receivables - 959

Other receivables 447 1 222

Other non-current assets 5 759 5 279



Note 17. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash on hand, bank balances and short term investments. Cash and cash

equivalents included in the cash flows statement include the following amounts recorded in the statement of

financial position:

Note 18. SHAREHOLDERS' EQUITY

18.1 Share capital

At 30 June 2016, Direct Energie's share capital amounted to €4,122,057 divided into 41,220,566 shares with a

nominal value of €0.1 each. The changes in the share capital in the first half-year 2016 is explained by the

recording, at 30 June 2016, of a capital increase of €42,760 resulting from the exercise of stock options.

18.2 Instruments granting holders access to new Direct Energie SA shares

At 30 June 2016, the instruments granting holders access to new Direct Energie SA shares consisted of stock

option plans that the Group has offered to certain Group employees, including executives. The characteristics of

these plans are presented in Note 19 "Share-based Payments".

The maximum number of new shares that can be created on exercise of these instruments is 2,517 thousand

shares at 30 June 2016.

18.3 Treasury shares

At 30 June 2016, a balance of €52 thousand corresponding in particular to 0.9 thousand treasury shares held

under a liquidity contract is recorded as a reduction to consolidated shareholders' equity.

18.4 Consolidated share premiums and reserves

Consolidated share premiums and reserves, including profit for the year, amounted to €124,822 thousand at 30

June 2016. They include share premiums paid as part of capital increases and the premium following the merger


Marketable securities and cash equivalents - -

Cash 191 436 35 230

Cash and cash equivalents - assets 191 436 35 230

Bank overdrafts (1 193) (3 237)

Net cash and cash equivalents 190 243 31 993



between Poweo and Direct Energie, reduced by the impact of the cancellation of treasury shares, and the

earnings retained by the Group.

18.5 Gains and losses recognised in shareholders' equity, Group share

Changes in fair value of derivative financial hedging instruments, which, at 30 June 2016, corresponded

exclusively to energy purchases, are recorded net of tax in other comprehensive income for the effective portion

of the hedge and in income for the period for the ineffective portion. The change in fair value of €22,469

thousand on the first half-year 2016, on a temporary basis, is primarily related to deliveries recorded over the

first half-year 2016 for hedging instruments open at 31 December 2015. The balance as at 30 June 2016 will be

subsequently recycled to income, symmetrically to the hedged item when physical delivery of the corresponding

energy purchases takes places.

18.6 Non-controlling interests

At 30 June 2016, no subsidiary in which the Group holds partial rights and obligations on the share capital is

consolidated by the full consolidation method.

18.7 Capital management

Direct Energie's main objective, in terms of managing its capital structure, is to maximise the profitability of

capital invested by its shareholders based on risks involved and control of financial resources required for its

short and medium-term development.

The Group assesses the adequacy of its acquisition or investment projects based on their strategic interest, but

also on their financial profile. It structures their financing after taking into account profitability factors and the

potential opportunities and drawbacks in the debt and capital markets.

Direct Energie is not subject to any external requirement on minimum equity, with the exception of legal

requirements.

In thousands of euros 30/06/2016 Change 31/12/2015 Change 31/12/2014

Available-for-sale financial assets - - - - -

Cash flow hedges (87 512) 22 469 (109 981) (88 392) (21 590)

Deferred tax impact - - - - -

Share in profit of associates - - - 527 (527)

Total recyclable items (87 512) 22 469 (109 981) (87 864) (22 117)

Actuarial gains and losses (92) - (92) - (92)

Deferred tax impact 31 - 31 - 31

Total non-recyclable items (61) - (61) - (61)

Gains and losses recognised in shareholders'

equity(87 573) 22 469 (110 042) (87 864) (22 178)



Note 19. SHARE-BASED PAYMENTS

The amounts recognised for share-based payments are:

Note 20. PROVISIONS

20.1 Change in provisions

During the first half-year 2016, the Group recorded a provision for loss-making contracts for gas interconnection

capacity reservation contracts among the Netherlands, Belgium and France, for an amount of €33.0 million (see

Note 2.4 "Provisions for loss-making contracts on gas interconnection capacities"). This provision was calculated

taking into account the following parameters:

- capacity reservation costs until the contracts' expirations, determined in accordance with contractual

principles;

- the forecast for related revenues:

o firstly, the gas price differential between the entry and exit points of these capacities, based

on market prices for the observable time period (2016-2018) and projections based on historic

trends beyond that time period, and

o secondly, the establishment of a regulatory mechanism for the revaluation of these capacities

in order to encourage gas companies to subscribe them again after 2021 (the date on which

the long-term reservation contracts for current capacity begin to expire);

- a discount rate of 1.09%, corresponding to the 10-year yield on AA rated corporate bonds.


Stock options (862) (559)

Free shares - -

Other - -

Expenses related to share-based payments (862) (559)

In thousands of euros31/12/2015 Allowance Use Write-back Accretion

Change in

scopeOther 30/06/2016

Provisions for

employee benefits1 116 256 - - 0 - - 1 372

Provisions for risks and

charges10 711 35 386 (2 375) (361) - - - 43 361

Provisions 11 827 35 642 (2 375) (361) 0 - - 44 734



The flows of allowances, uses, writing back and accretion presented above are split as follows in the profit and

loss account:

20.2 Provisions for employee benefits

The key assumptions used to determine the existing commitment at 30 June 2016 are:

- a discount rate of 1.09%, corresponding to the 10-year yield on AA rated corporate bonds;

- a 2% salary increase rate;

- retirement at the initiative of the employee;

- mobility rates vary in accordance with age;

- 2011-2013 INSEE mortality table.

At 30 June 2016 the Group recognised an expense of €256 thousand for liabilities related to end-of-career

benefits. The provision for the Group's commitments in respect of end-of-career benefits amounted to €1,372

thousand. On the same date, cumulative actuarial gains and losses recognised in equity amounted to €61

thousand. No actuarial loss was recognised in shareholders' equity for the year.

20.3 Provisions for contingencies and charges

The provisions made at 30 June 2016 are primarily related to:

- loss-making contracts amounting to €32,960 thousand relating to gas transmission capacity reserved by

the Group among the Netherlands, Belgium and France. This provision was calculated taking into

account the costs of contractual capacity and revenues associated with the use of these capacities over

the remaining term of the contracts (see Note 2.4 "Provisions for loss-making contracts on gas

interconnection capacities");

- pending legal proceedings for €3,226 thousand (€3,171 thousand at 31 December 2015);

- the estimation of the Group's obligations in terms of energy efficiency certificates and guarantees of

origin relating to Law No. 2005-781 of 13 July 2005 for €2,199 thousand. This provision was recorded in

accordance with procedure set forth in Regulation 2012-04 of the ANC (the French Accounting

Standards Board) (€2,355 thousand at 31 December 2015);

- provisions for dismantling (€4,072 thousand compared to €3,935 thousand on 31 December 2015) and

for works (€211 thousand compared to €232 thousand at 31 December 2015) relating to the company

3CB;

- various risks for €693 thousand (€1,019 thousand in 2015).

In thousands of euros Net allowance

Cost of sales 32 960

Personnel expenses 256

Other operating income and expenses (447)

Other financial income and expenses 138

Total 32 906



20.4 Current and non-current share of provisions

The breakdown between current and non-current provisions is as follows:

Note 21. LEASE-FINANCE AGREEMENTS

The net book value of assets under finance leases is allocated between the different categories of assets based

on type. The Group's lease-finance agreements relate to a leaseback of its integrated information management

systems and leases on office and computer equipment.

The lease-finance agreements have a duration of 3 to 4 years and stipulate that the Group becomes the owner

of the property at the end of the financing period.

A breakdown of the future minimum lease payments under these agreements are as follows:

In thousands of euros Current Non-current Total Current Non-current Total

Provisions for employee benefits - 1 372 1 372 - 1 116 1 116

Provisions for risks and charges 11 692 31 669 43 361 6 776 3 935 10 711

Provisions 11 692 33 041 44 734 6 776 5 051 11 827

30/06/2016 31/12/2015

Total

In thousands of euros 30/06/2016 Less than 1 year 1 to 5 years Over 5 years

Minimum payments 545 249 296 -

Financial expenses (16) (11) (5) -

Present value of minimum payments 529 238 291 -

Term



Note 22. TRADE PAYABLES

Note 23. OTHER CURRENT AND NON-CURRENT LIABILITIES

The components of other current and non-current liabilities are as follows:

At 30 June 2016, the tax and social security liabilities consist mainly of VAT liabilities and the domestic tax on the

end consumption of electricity (TICFE), paid quarterly and which replaced, with effect from 1 January 2016, the

Contribution to the Public Electricity Service, which was paid monthly.

The current portion of deferred income results mainly from the service provision contract with ERDF.

Note 24. FINANCIAL ASSETS AND LIABILITIES

Trade receivables, cash and cash equivalents and accounts payable are included within the scope of IAS 39 and

are shown in these tables but appear on separate lines of the statement of financial position.


Supplier payables 65 645 68 606

Invoices not yet received 62 979 119 212

Trade payables 128 624 187 818


Tax and social security liabilities 201 555 68 130

Deferred income 7 992 2 409

Other liabilities 597 348

Other current liabilities 210 143 70 887


Tax and social security liabilities - -

Deferred income 2 545 2 164

Other liabilities - -

Other non-current liabilities 2 545 2 164

http://www.douane.gouv.fr/articles/a11944-taxe-interieure-sur-la-consommation-finale-d-electricite-ticfe

http://www.douane.gouv.fr/articles/a11944-taxe-interieure-sur-la-consommation-finale-d-electricite-ticfe



24.1 Financial assets excluding financial derivative instruments

24.1.1 Financial assets by categories

The various categories of financial assets (excluding financial derivative instruments) broken down into current

and non-current are as follows:

24.1.2 Available-for-sale financial assets

The Group's available-for-sale financial assets mainly consisted of equity investments in non-consolidated

companies amounting to €26 thousand. The change in fair value of available-for-sale assets are as follows:

At 30 June 2016, a review of the value of various available-for-sale securities has led the Group to recognise an

impairment loss of €112 thousand.


Available-for-sale financial assets - 26 26 - 138 138

Loans and receivables at amortised cost (excluding

trade receivables)40 511 1 120 41 631 70 688 1 320 72 008

Other financial assets 40 511 1 146 41 657 70 688 1 458 72 146

Trade receivables 321 604 - 321 604 220 596 - 220 596

Cash and cash equivalents 191 436 - 191 436 35 230 - 35 230

Financial assets 553 550 1 146 554 697 326 514 1 458 327 972

30/06/2016 31/12/2015

In thousands of euros Fair value

At 31 December 2014 661

Acquisitions 26

Disposals - carrying value excluding change in fair value recognised in shareholders' equity -

Disposals - change in fair value derecognised in shareholders' equity -

Change in fair value recognised in shareholders' equity -

Change in fair value recognised in net income (550)

Changes in scope -

Other -

At 31 December 2015 138

Acquisitions -

Disposals - carrying value excluding change in fair value recognised in shareholders' equity -

Disposals - change in fair value derecognised in shareholders' equity -

Change in fair value recognised in shareholders' equity -

Change in fair value recognised in net income (112)

Changes in scope -

Other -

At 30 June 2016 26



24.1.3 Loans and receivables at amortised cost (excluding trade receivables)

A breakdown of loans and receivables at their amortised cost is as follows:

Security deposits mainly relate to cash deposits with certain counterparties, including the regulated energy

market clearing house, used to cover changes in fair value of purchases and sales of energy futures.

No impairment loss was included in the amounts of loans and receivables at their amortised cost at 31 December

2015. The Group found no impairment of loans and receivables at their amortised cost at 30 June 2016. The net

carrying value of loans and receivables at their amortised cost is an appropriate measurement of their fair value.

Interest income recognised in "Cost of net debt" in the profit and loss account for the first half-year 2016

amounted to €550 thousand compared to €112 thousand in the first half-year 2015.

24.1.4 Trade receivables

Amortization and impairment losses included in trade receivables amounted to €20,095 thousand at 30 June

2016 (compared to €20,161 thousand at 31 December 2015). The carrying value of these financial assets is an

appropriate measurement of their fair value. Trade receivables and the impairment losses are presented in Note

15 "Trade receivables".

24.1.5 Cash and cash equivalents

Cash and cash equivalents amounted to €190,243 thousand at 30 June 2016 compared to €31,993 thousand at

31 December 2015. The income recorded on cash and cash equivalents in the first half-year 2016 amounted to

€108 thousand compared to €243 thousand in the first half-year 2015 and is recorded in "Cost of net debt" in

the profit and loss account.


Security deposits 33 128 1 120 34 249 64 322 1 320 65 642

Loans to non-consolidated companies 7 027 - 7 027 6 059 - 6 059

Other loans and receivables 355 - 355 307 - 307

Loans and receivables at amortised cost 40 511 1 120 41 631 70 688 1 320 72 008

30/06/2016 31/12/2015



24.2 Financial liabilities excluding financial derivative instruments

24.2.1 Financial liabilities by category

The different categories of financial liabilities broken down into current and non-current are as follows:

24.2.2 Financial liabilities measured at amortised cost (excluding suppliers)

The breakdown of financial liabilities measured at amortised cost is as follows:

Loans from credit institutions at 31 December 2015 included a draw of €60 million on the syndicated loan

arranged in the second quarter 2015.

Other borrowings consist primarily of bonds for €117.5 million, shareholders' advances on current accounts

issued for the purpose of securing the Group's financing structure for €55.7 million and a credit line with the

Group’s market clearing house to cover its liquidity needs primarily associated with margin call payments for

€60 million.

These loans are subject to covenants, tested at each balance sheet date, and which were met at 31 December

2015.

Drawings on credit facilities correspond to bank overdrafts at 30 June 2016. The net cash position is presented

in Note 17 "Cash and cash equivalents".

Interest expense on financial liabilities amounted to €5,894 thousand in the first half-year 2016 (compared to

€1,858 thousand in the first half-year 2015) and were recognised in the profit and loss account under "Cost of

net debt".

The fair value of financial liabilities measured at their amortised cost is as follows:


Financial liabilities measured at amortised cost 134 951 115 413 250 363 69 113 114 829 183 943

Financial liabilities at fair value through income- - - - - -

Other financial liabilities 134 951 115 413 250 363 69 113 114 829 183 943

Trade payables 128 624 - 128 624 187 818 - 187 818

Financial liabilities 263 575 115 413 378 987 256 932 114 829 371 761

30/06/2016 31/12/2015


Loans from credit institutions - - - 60 005 - 60 005

Loans related to finance leases 238 291 529 235 410 646

Bank overdrafts 1 193 - 1 193 3 237 - 3 237

Security deposits and margin calls 5 126 - 5 126 876 - 876

Other borrowings 128 394 115 122 243 515 4 760 114 419 119 179

Financial liabilities measured at amortised cost 134 951 115 413 250 363 69 113 114 829 183 943

30/06/2016 31/12/2015

In thousands of euros Fair value Carrying value Fair value Carrying value

Financial liabilities measured at amortised cost 254 750 250 363 185 802 183 943

30/06/2016 31/12/2015



The repayment table of financial liabilities measured at their amortised cost is as follows:

24.2.3 Trade payables

The trade payables are presented in Note 22 "Trade payables". The carrying value of these financial liabilities is

an appropriate measurement of their fair value.

24.3 Net debt

This change in net debt is due both to the decrease in cash deposits made with the Group's counterparties as

part of purchase and energy sales transactions recorded as financial assets in the Group's accounts. This decline

that was notably consecutive to changes in the market prices of raw materials during the first half-year 2016 and

to the Group's optimisation of its supply terms, as well as the increase in net cash by the Group, taking into

account the financing required to acquire new customers, triggered by the strong growth in the business

observed in the half-year.

In thousands of euros Less than 1 year 1 to 5 years Over 5 years Total Less than 1 year 1 to 5 years Over 5 years Total

Loans from credit institutions - - - - 60 005 - - 60 005

Loans related to finance leases 238 291 - 529 235 410 - 646

Bank overdrafts 1 193 - - 1 193 3 237 - - 3 237

Security deposits and margin calls 5 126 - - 5 126 876 - - 876

Other borrowings 128 394 44 263 70 858 243 515 4 760 43 604 70 815 119 179

Financial liabilities measured at amortised cost 134 951 44 554 70 858 250 363 69 113 44 015 70 815 183 943

30/06/2016 31/12/2015


Financial liabilities 134 951 115 413 250 363 69 113 114 829 183 943

Margin calls excluding debt hedges 5 100 - 5 100 850 - 850

Financial liabilities excluding margin calls 129 851 115 413 245 263 68 263 114 829 183 093

Financial assets at fair value through profit & loss - - - - - -

Cash and cash equivalents 191 436 - 191 436 35 230 - 35 230

Cash assets 191 436 - 191 436 35 230 - 35 230

Net debt* (61 586) 115 413 53 827 33 034 114 829 147 863

30/06/2016 31/12/2015

* Net debt is the difference between financial liabilities excluding the impact of margin calls and cash assets.



24.4 Derivative financial instruments and hedge accounting

24.4.1 Derivative financial instruments by category

24.4.2 Derivative financial instruments not classified as hedges

The breakdown of the fair value of derivative financial instruments not classified as hedging instruments

recognised in the statement of financial position is as follows:

The Group's derivative financial instruments not classified as hedges include:

- derivative financial instruments concluded in the framework of economic hedges of operating flows on

underlying energy volumes (derivatives operational in nature);

- derivative financial instruments held for trading (trading derivatives).

Changes in fair value of non-hedging derivatives are recorded in the profit and loss account under "Energy

Management Margin" for trading derivatives. Changes in fair value of energy derivatives - operational in nature

are recorded under current operating income in the "Net changes in the fair value of Energy derivative financial

instruments - operational in nature".


Positive fair value of trading derivatives 10 - 10 16 - 16

Positive fair value of hedging derivatives 7 330 4 534 11 865 5 271 4 856 10 127

Positive fair value of Energy derivatives operational

in nature16 326 3 384 19 710 30 556 3 638 34 194

Positive fair value of derivatives 23 666 7 918 31 584 35 843 8 494 44 337

Negative fair value of trading derivatives (9) - (9) (15) - (15)

Negative fair value of hedging derivatives (59 895) (39 482) (99 377) (63 986) (56 123) (120 108)

Negative fair value of Energy derivatives

operational in nature(29 342) (18 036) (47 378) (19 850) (25 231) (45 081)

Negative fair value of derivatives (89 246) (57 517) (146 763) (83 851) (81 354) (165 204)

Net fair value of derivatives (65 580) (49 599) (115 180) (48 007) (72 860) (120 867)

30/06/2016 31/12/2015


Positive fair value of trading derivatives 10 16

Negative fair value of trading derivatives (9) (15)

Net fair value of trading derivatives 1 1

Positive fair value of Energy derivatives operational in nature 19 710 34 194

Negative fair value of Energy derivatives operational in nature (47 378) (45 081)

Net fair value of operational derivatives (27 668) (10 887)

Net fair value of derivatives not classified as hedges (27 667) (10 886)



The maturities of the amounts and notional volumes of the derivative financial instruments not classified as

hedges are as follows:

Binding purchases and sales of CO2 recorded at 30 June 2016 related to the operation of the Bayet plant acquired

by the Group at year-end 2015.

24.4.3 Derivative financial instruments classified as hedging

The fair value of derivative financial instruments classified as hedging instruments recognised in the statement

of financial position is as follows:

Hedge accounting is applied in accordance with IAS 39 and relates to derivatives on commodities in future cash

flow hedges.

The impact of the changes in fair value recorded in the Group's shareholders' equity is as follows:

Notionals in GWh

Fair value in thousands of euros less than 1 year 1 to 5 years over 5 years less than 1 year 1 to 5 years over 5 years

Firm energy purchases (12 963) (4 636) - (249 888) (141 106) -

Firm energy sales 13 140 2 069 - 207 702 45 630 -

Optional energy purchases - - - - - -

Total energy 177 (2 568) - (42 187) (95 476) -

Notionals in tonnes


Firm purchases of CO2 (425 000) (165 000) - (3 172) (1 337) -

Firm sales of CO2 75 000 35 000 - 428 184 -

Total CO2 (350 000) (130 000) - (2 743) (1 152) -

(44 930) (96 628) -

Notionals in GWh

Amounts in thousands of euros less than 1 year 1 to 5 years over 5 years less than 1 year 1 to 5 years over 5 years


Firm energy sales 13 362 1 365 - 280 234 39 660 -


Total derivatives not classified as

hedges(898) (4 727) - (35 492) (154 628) -

30/06/2016

Amounts

31/12/2015

Notionals Amounts

Notionals

30/06/2016

Notionals Amounts

Total derivatives not classified as hedges


Positive fair value of hedging derivatives 11 865 10 127

Negative fair value of hedging derivatives (99 377) (120 108)

Net fair value of hedging derivatives (87 512) (109 981)



Changes in fair value in shareholders' equity include changes in fair value of hedging derivatives, which were

valued at the previous reporting date and are not due at year-end and the fair value of hedging derivatives

subscribed during the year.

Fair value changes included in income for the recycled portion correspond to the fair value of hedging derivatives,

which were valued at the previous reporting date and which expired during the year. The total impact of hedging

derivatives on the profit and loss account, including derivatives subscribed and accrued during the same year, is

an expense of €292,172 thousand (compared to an expense of €93,031 thousand in the first half-year 2015),

associated with energy purchases recorded in cost of sales at the time of physical delivery.

Cash flow hedges by period were as follows:


Net fair value of hedging derivatives at beginning of period (109 981) (21 590)

Change in fair value recognised in shareholders' equity 11 667 (104 384)

Change in fair value recognised in net income - recycling 10 802 15 992

Change in fair value recognised in net income - ineffectiveness - -

Other changes - -

Net fair value of hedging derivatives at end of period (87 512) (109 981)

Notionals in GWh



Firm energy sales 107 19 - 4 156 901 -


Total hedging derivatives (7 520) (5 597) - (304 785) (225 087) -

Notionals in GWh



Firm energy sales 1 240 298 - 49 472 12 116 -


Total hedging derivatives (9 317) (8 899) - (386 582) (358 223) -

30/06/2016

Notionals Amounts

31/12/2015

Notionals Amounts



24.5 Fair value of financial assets and liabilities by level

24.5.1 Financial assets

Financial assets measured at fair value are divided as follows among the various levels of fair value:

The Group has classified the fair values of financial assets and liabilities among levels 1, 2 and 3 according to the

criteria outlined in Note 1.4.6.3.4 "Determining the fair value of financial derivatives" to the consolidated

financial statements at 31 December 2015.

Available-for-sale financial assets

Available-for-sale financial assets consist of unlisted securities whose assessment is based on recent comparable

market transactions observed and are considered to be level 3.

Financial assets at fair value through profit or loss / cash and cash equivalents

Financial assets at fair value through profit or loss and cash and cash equivalents are considered level 1 because

the Group has net asset values for these financial assets.

Derivative financial instruments

Financial instruments recognised in level 2 are determined using models commonly used in energy activities and

are based on directly or indirectly observable market inputs.

The derivative financial instruments classified as level 3 include unobservable inputs and their fair value, required

a use of internal assumptions.

The methods and assumptions used are theoretical by nature, and a significant amount of judgement was

involved in interpreting market data. The use of different assumptions and/or different valuation methods could

have a material effect on the estimated fair value of these financial instruments.

In thousands of euros Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Available-for-sale financial assets - - 26 26 - - 138 138

Financial assets at fair value through income - - - - - - - -

Cash and cash equivalents 191 436 - - 191 436 35 230 - - 35 230

Hedging derivatives - 11 865 - 11 865 - 10 127 - 10 127

Trading derivatives - 10 - 10 - 16 - 16

Energy derivatives operational in nature - 9 493 10 217 19 710 - 23 438 10 756 34 194

Financial assets at fair value 191 436 21 367 10 243 223 046 35 230 33 581 10 894 79 705

30/06/2016 31/12/2015



24.5.2 Financial liabilities

Financial liabilities measured at their fair value are divided as follows among the various levels of fair value:

The classification by level of derivative financial instruments is as specified above (Note 24.5.1).

24.5.3 Change in fair values of level 3

At 30 June 2016, the change over the period in the fair value of financial assets and liabilities considered as level

3 was as follows:

At 30 June 2016, level 3 financial assets primarily included a gas purchase contract, the fair value of which is

calculated on the basis of an internal model, with the following observable and estimated inputs:

- observable market inputs: forward gas market price-PEG north, forward market prices of gas and oil

products-TTF;

- inputs estimated internally: volatility of gas and oil prices, gas-oil correlation, bid-ask spread.

The valuation of this gas supply contract in these accounts amounted to €10.2 million at 30 June 2016 compared

to €10.8 million at 31 December 2015.

Level 3 financial liabilities primarily include an electricity purchase contract, the fair value of which is calculated

on the basis of an optional internal model, with the following observable and estimated inputs:

- observable market inputs: forward electricity market price at the market horizon, forward market price

of guarantees of origin at the market horizon;

- inputs estimated internally: forward electricity market prices beyond the market horizons, forward

market price of guarantees of origin beyond the market horizons, production factors (estimated using

historical data), production by plants, market price of the capacity, energy losses, indices of the cost of

production buyback and parameters related to the call option.

In thousands of euros Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

Financial liabilities at fair value through income - - - - - - - -

Cash and cash equivalents - - - - - - - -

Hedging derivatives - 99 377 - 99 377 - 120 108 - 120 108

Trading derivatives - 9 - 9 - 15 - 15

Energy derivatives operational in nature - 42 240 5 138 47 378 - 39 203 5 878 45 081

Financial liabilities at fair value - 141 626 5 138 146 763 - 159 326 5 878 165 204

30/06/2016 31/12/2015


31/12/2015

Change

through

profit & loss

Change

through

shareholders'

equity

Acquisitions Disposals Transfers 30/06/2016

Available-for-sale financial assets 138 (112) - - - - 26

Hedging derivatives - - - - - - -

Trading derivatives - - - - - - -

Derivatives operational in nature 10 756 (539) - - - - 10 217

Financial assets at fair value, level 3 10 894 (651) - - - - 10 243

Hedging derivatives - - - - - - -

Trading derivatives - - - - - - -

Derivatives operational in nature 5 878 (741) - - - - 5 138

Financial liabilities at fair value, level 3 5 878 (741) - - - - 5 138



The valuation of this electricity supply contract as a financial liability amounts to €5.1 million at 30 June 2016

compared to €5.9 million on 31 December 2015.

24.6 Market risks and risk management

The main risk factors are:

24.6.1 Credit risk

The Group may conduct transactions (sales or purchases) with numerous counterparties for a significant amount.

Concerning the electricity and gas supply business, the Group monitors the outstanding customer receivables

and recognises any write-downs that may be necessary on those that would be deemed to be of a low probability

of collection. In particular, write-downs provisions cover the entire risk of the Group's loss in case of non-recovery

of trade receivables with a maturity exceeding one year. At 30 June 2016, the write-downs on trade receivables

amounted to €20,095 thousand (compared to €20,161 thousand at 31 December 2015).

Regarding its energy trading business, the Group trades with leading counterparties in the European market. The

Group judges the risk of default of such counterparties to be insignificant. The breakdown of the fair value by

counterparty type at 30 June 2016 is as follows:

24.6.2 Counterparty risk

It is defined as the total loss that would be suffered by the Group's operational activities and markets if one of

the counterparties were to default and breach its contractual obligations.

The Group is exposed to a counterparty risk when it uses derivative financial instruments.

In the case of financial instruments at fair value through profit and loss, this risk is the positive fair value. When

assessing derivatives, the counterparty risk factor is taken into account when determining the fair value of these

derivatives.

24.6.3 Liquidity risk

The Group conducts daily monitoring of its liquid assets in terms of liquidity and liquidity needs in the short and

medium terms to ensure that it has at its disposal, at all times, sufficient financial resources to finance operations

and investments for the Group's development.

The Group has two syndicated loans totalling €115 million; a bank credit facility, the amount of which was

increased to €120 million during the first half-year 2016; a short-term credit line with the Group’s regulated

energy market clearing house, for a total amount of €60 million; short-term credit facilities by its partner banks


Organised market with clearing house (95 906) (105 041)

Energy companies (12 618) (9 322)

Banking institutions (6 656) (6 504)

Net fair value of derivatives at end of period (115 180) (120 867)



(€16 million at 30 June 2016); and shareholder loans set up in the first quarter 2016 for a total amount of €55

million at the reporting date.

24.6.4 Market risk

Direct Energie enters into binding contracts for the purchase and sale of energy on the organised markets or

negotiated directly with counterparties.

These derivative financial instruments are included in the management and optimisation of supply to customers.

These instruments are sensitive to changes in the market prices of raw materials, which have a high volatility.

The Group reviews its derivatives portfolio on a weekly basis in order to carry out specific monitoring of market

risks. The effect on the profit and loss account and reserves of the Group's financial instruments in the event of

a uniform impact on all the forward rates is presented in the following table:

In thousands of euros Net income Reserves Net income Reserves

Forward purchases/sales of electricity - hedges - 65 715 - 91 088

Forward purchases/sales of electricity - not classified

as hedges17 754 - 21 565 -

Sensitivity of electricity purchases/sales 17 754 65 715 21 565 91 088

Forward purchases/sales of gas - hedges - - - -

Forward purchases/sales of gas - not classified as

hedges218 - (17 391) -

Sensitivity of gas purchases/sales 218 - (17 391) -

Sensitivity of electricity and gas purchases/sales 17 972 65 715 4 174 91 088

30/06/2016 31/12/2015Change in prices

+€5/MWh

-10% gas

+10% oil



Note 25. SEGMENT REPORTING

The segmented disclosure is presented in accordance with IFRS 8 "Operating Segments".

25.1 Operating segments

The operating segments used to present the segment reporting have been identified based on internal reports

used by the Group's Board of Directors to allow for the allocation of resources to different segments and to

assess their performance. The Board of Directors is the "chief operating decision maker" as defined by IFRS 8.

Comparative segment information for the year 2015 are presented in the same breakdown.

The segments defined by the Group are as follows:

- "Commercial trade", which corresponds to the business line of supplying energy to end consumers;

- "Production", which means the Group's subsidiaries in charge of power generation development

projects carried out at plants.

At 30 June 2015, the aggregate "Other segments" included the Group's other holdings, including local distribution

companies, which were sold on 1 October 2015, through the sale of the subsidiary Direct Energie Distribution

and the interests held by this subsidiary.



25.2 Segment-specific indicators

Segment reporting is determined before inter-segment eliminations.

In thousands of euros Production Other Eliminations

France Belgium France France France France Belgium

Income statement items

Revenue from ordinary activities 860 202 15 519 27 585 - (39 741) 848 046 15 519 863 565

of which external revenue 842 850 15 519 5 196 - - 848 046 15 519 863 565

of which inter-segment revenue 17 352 - 22 389 - (39 741) - - -

Gross margin 101 156 2 089 3 829 - - 104 986 2 089 107 075

EBITDA 64 063 (2 656) (2 144) - - 61 919 (2 656) 59 264

Current operating income 50 353 (2 656) (3 871) - - 46 482 (2 656) 43 826

Other information

Depreciation and amortisation (12 848) - (1 727) - - (14 575) - (14 575)

Impairment (112) - 0 - - (112) - (112)

Segment assets, net 771 557 7 861 59 074 - - 830 631 7 861 838 492

Investments 16 159 - 343 - - 16 502 - 16 502

At 30/06/2016

Commercial Trade TotalTotal

In thousands of euros Production Other Eliminations

France Belgium France France France France Belgium

Income statement items

Revenue from ordinary activities 504 686 1 468 207 - (708) 504 185 1 468 505 653

of which external revenue 503 978 1 468 207 - - 504 185 1 468 505 653

of which inter-segment revenue 708 - - - (708) - - -

Gross margin 78 232 (66) 207 - - 78 439 (66) 78 373

EBITDA 36 370 (2 096) (281) - - 36 088 (2 096) 33 993

Current operating income 25 090 (2 096) (281) - - 24 809 (2 096) 22 713

Other information

Depreciation and amortisation (10 720) (1) - - - (10 720) (1) (10 721)

Impairment (550) - - - - (550) - (550)

Segment assets, net 426 847 (1 243) (5 742) 386 - 421 491 (1 243) 420 248

Investments 12 024 14 137 - - 12 161 14 12 175

Commercial Trade TotalTotal

At 30/06/2015



25.3 EBITDA reconciliation with the current operating income

EBITDA, as defined in the table above, is the primary indicator followed by the Group's Board of Directors to

measure the performance of the various segments. This corresponds to an EBITDA that excludes non-recurring

items not related to the Group's operating activities but does include some provisions inherent in these activities.

In particular, EBITDA monitored by the chief operating decision maker does not include the income and expenses

related to changes in scope of consolidation, but does include provisions for bad debts.

Note 26. OFF-BALANCE SHEET COMMITMENTS

As part of its business, the Group enters into binding or optional energy forward purchase and sale contracts in

order to adjust its supplies and cover the consumption of its customers. The analysis led to certain contracts

being excluded from the scope of application of IAS 39. The maturities of the amounts and notional volumes of

contracts excluded from the scope of IAS 39 are:


EBITDA 59 264 33 992

(+) Depreciation and amortisation (14 575) (10 721)

(+) Share-based payments (862) (559)

Current operating income 43 826 22 712

Notionals in GWh



Firm energy sales 210 437 - 4 555 7 343 -

Total firm Energy commitments (4 645) (7 026) - (130 900) (185 802) -

Notionals in GWh


Firm energy purchases (1 798) (277) - (42 195) (7 157) -

Firm energy sales 899 4 - 18 875 117 -

Total firm energy commitments (899) (272) - (23 320) (7 040) -

30/06/2016

Notionals Amounts

31/12/2015

Notionals Amounts



Note 27. RELATED PARTIES

27.1 Transactions with companies included in the scope of consolidation

Transactions with companies included in the scope of consolidation relate to transactions with associates and

joint ventures. They mainly consist of purchases and sales of energy or services.

27.2 Transactions with other related parties

Transactions with other related parties at 30 June 2016 primarily consist of transactions with companies with a

shareholding in Direct Energie.

Note 28. EXECUTIVE COMPENSATION

The Group's senior executives are the Chairman and CEO, and Deputy CEOs.

In the first half-year 2016, total executive compensation amounted to €555 thousand, plus €6 thousand in

benefits in kind. In the first half-year 2015, total executive compensation amounted to €615 thousand, plus €7

thousand in benefits in kind.

During the first half-year 2016, the Group recorded expenses in its accounts relating to the stock option plans

held by its executives for €368 thousand. This amount was €182 thousand for the first half-year 2015.

An expense of €28 thousand in pension obligations was also recognised. This expense was €29 thousand for the

first half-year 2015.

At 30 June 2016, provisions for these pension obligations totalled €193 thousand (compared to €165 thousand

at 31 December 2015).

No loans or advances were made to members of the Board of Directors in 2015 and 2016.

In thousands of euros 30/06/2016 31/12/2015 30/06/2016 31/12/2015 30/06/2016 31/12/2015

Sales to related parties 22 018 22 492 70 85 22 088 22 577

Purchases from related parties (298) (600) (1 556) (296) (1 854) (895)

Receivables from related parties 17 950 17 678 - - 17 950 17 678

Liabilities to related parties (8 064) (4 115) (55 679) (1) (63 743) (4 116)

Other related partiesScope of consolidation Total



Note 29. POST-REPORTING EVENTS

29.1 Decision of the Conseil d’Etat on the Engie/CRE dispute

On 13 July 2016 the Conseil d’Etat issued a decision following the Engie’s request to overturn, on the grounds of

excess power, the ruling handed down on 26 July 2012 by the French Energy Regulatory Commission (Commission

de Régulation de l’Energie) concerning communication of the services agreement concluded between Direct

Energie and ERDF (now ENEDIS) on the management of customers under a single contract, and the decision of

10 December 2014 rejecting the informal appeal filed by Engie against this decision.

While finding that the appeal filed by Engie was submitted too late for examination, the Conseil d'Etat recognised

that the decision of 26 July 2012 was unlawful on the grounds that it provided that the agreement between

Direct Energie and ERDF was concluded for a transitory period and provided a remuneration that was limited to

suppliers with less than [1,750,000] customers which subscribed a single contract for electricity or gas. The

Conseil d’Etat thus ultimately upheld the argument that these two limits of the contract between ERDF and Direct

Energie were contrary to the principle requiring that the suppliers should not have to bear the costs generated

by the services that they provide on behalf of the DSO’s (distribution system operators).

This decision expressly confirms the principle that the distribution system operator pays a supplier consideration

for management costs for customers that have a single contract.

29.2 Planned Acquisition of a combined cycle gas turbine power plant in Belgium

The Group announced the signing, on 28 September 2016, of a sale and purchase agreement with the Italian

group Enel to acquire 100% of the share capital in its subsidiary, Marcinelle Energie. The latter, dedicated to

electricity production, owns and operates a combined cycle gas turbine power plant located in Charleroi, Belgium

with around forty employees. Handed over in 2012 and equipped with Siemens-Ansaldo technology, very similar

to that held by the Group in Bayet (Allier), this plant has an installed capacity of about 400 MW.

The transaction amount, paid entirely in cash, is €36.5 million, and remains subject to the usual price

adjustments. It includes an earn out depending on the change in the electrical market structure in Belgium. The

transaction remains subject to the lifting of suspensory conditions (in particular, the authorisation from the

competent Belgian authorities), and should be completed at the earliest by the end of 2016.

After acquiring the power plant in Bayet at the end of 2015, this new transaction will bring the Group's installed

capacity to nearly 800 MW. Agreed on competitive terms, it also confirms the implementation of the planned

vertical integration strategy with a stronger presence by the Group upstream and downstream, thus ensuring

better supply coverage of its customer portfolio.



Note 30. SCOPE OF CONSOLIDATION

Direct Energie2 bis rue Louis Armand

75015 Paris 100% 100% Parent company

Direct Energie Génération2 bis rue Louis Armand

75015 Paris 100% 100% FC

Yfrégie2 bis rue Louis Armand

75015 Paris 100% 100% FC

Hambrégie2 bis rue Louis Armand

75015 Paris 100% 100% FC

Compagnie Electrique de Bretagne2 bis rue Louis Armand

75015 Paris 60% 60% EM

Direct Energie Concessions2 bis rue Louis Armand

75015 Paris 100% 100% FC

SOPHYE LACMORTRoute du Moulin

38570 Tencin50% 50% EM

Direct Energie EBM Entreprises2 bis rue Louis Armand

75015 Paris 50% 50% EM

Direct Energie BelgiumAvenue Louise 149/24

1050 Bruxelles100% 100% FC

Direct Energie ServicesAvenue Louise 149/24

1050 Bruxelles100% 100% FC

3CB SAS2 bis rue Louis Armand

75015 Paris 100% 100% FC

Name of entity Registered office % interest % controlConsolidation

method



III. AUDITORS' REPORT ON THE INTERIM FINANCIAL INFORMATION

To the Shareholders,

In compliance with the assignment entrusted to us by your annual general meetings and in accordance with the

requirements of article L. 451-1-2-III of the French monetary and financial code ("Code monétaire et financier"),

we hereby report to you on:

the review of the accompanying condensed half-yearly consolidated financial statements of Direct Energie,

for the period from January 1 to June 30, 2016,

the verification of the information presented in the half-yearly management report.

These condensed half-yearly consolidated financial statements are the responsibility of the board of directors.

Our role is to express a conclusion on these financial statements based on our review.

1. Conclusion on the financial statements

We conducted our review in accordance with professional standards applicable in France. A review of interim

financial information consists of making inquiries, primarily of persons responsible for financial and accounting

matters, and applying analytical and other review procedures. A review is substantially less in scope than an

audit conducted in accordance with professional standards applicable in France and consequently does not

enable us to obtain assurance that we would become aware of all significant matters that might be identified in

an audit. Accordingly, we do not express an audit opinion.

Based on our review, nothing has come to our attention that causes us to believe that the accompanying

condensed half-yearly consolidated financial statements are not prepared, in all material respects, in

accordance with IAS 34 - standard of the IFRSs as adopted by the European Union applicable to interim financial

information.

2. Specific verification

We have also verified the information presented in the half-yearly management report on the condensed half-

yearly consolidated financial statements subject to our review.

We have no matters to report as to its fair presentation and consistency with the condensed half-yearly

consolidated financial statements.

Neuilly-sur-Seine and Paris-La Défense, September 28, 2016

The statutory auditors

French original signed by

DELOITTE & ASSOCIES ERNST & YOUNG et Autres

François-Xavier Ameye Philippe Diu



IV. STATEMENT OF THE PERSON RESPONSIBLE

We certify that, to our knowledge, the condensed financial statements for the half year were prepared in accordance with applicable accounting standards and present a fair view of the assets, financial position and results of Direct Energie and all the companies included in the consolidation, and that the attached interim management report presents a fair view of the significant events that occurred during the first six months of the financial year, their impact on the financial statements, the main transactions carried out between related parties and a description of the principal risks and uncertainties for the remaining six months of the year.

Paris, 28 September 2016.

The Chairman and CEO

Xavier Caïtucoli

Documents

Interim Financial Report - Total Direct Énergie · juin-15 juillet-15 août-15 septembre-15 octobre-15 novembre-15 décembre-15 janvier-16 février-16 mars-16 avril-16 mai-16 juin-16