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Press release                                                                                         Ormes, 9 October 2008.

Major contract signed in Ethiopia: €210 million
2008 Half-Yearly Results and Outlook

Contract signed with EEPCo for the delivery of 120 wind turbines

Today, in the presence of Anne-Marie Idrac, French Secretary of Foreign Trade, Ato Alemayehu Tegenu, Ethiopian Minister of Energy and Mines the Vergnet group represented by Marc Vergnet signed a major contract with the Ethiopian Electric Power Corporation, EEPCo represented by Ato Meheret Debebe. This is the largest contract ever signed between a French company and an Ethiopian company.

The contract, involving the sale and installation of 120 1 MW GEV HP wind turbines over a period of three years, with the first 30 units to be delivered in 2009, will result in the largest wind farm in sub-Saharan Africa. The contract is in line with Ethiopia’s energy policy, in response to the fastpaced growth of domestic demand and its intention to eventually export electricity to neighbouring countries.

Vergnet was awarded this bid due to the competitiveness of its wind turbines, which are perfectly suited to the Farwind zones, which present considerable logistic constraints.

The complete integration of the value chain (design, manufacture, installation and maintenance using local teams) was also a key advantage.

A fully financed project

EEPCo will draw on two complementary sources of financing to carry out this project:
- A €165 million bank loan syndicated by BNP Paribas based on a €130 million COFACE guarantee;
- Together with an €45 million loan from AFD (the French Development Agency).

Leading partners

Vergnet has decided to work with two leading partners in connection with this contract. The group has appointed an engineering firm specializing in the management of major international projects to serve as general contractor and it will assign the supply of the high voltage equipments to AREVA.

A Group dimensioned to manage growth

Vergnet has been preparing to take on new dimensions for many years now. Its teams, production capacities, and management structure have been considerably strengthened in order to enable the group to manage the growth of its 1 MW GEV HP business.
The operating capacities already put in place will be fully operational by year-end 2009, with a production capacity of 100 GEV HP and 50 GEV MP per year. The group is thus well positioned for the future.

2008 Half-Yearly Results and Outlook
Six months focusing on investments

As expected, half-yearly earnings declined from the same period in 2007, given the investment plan implemented at all levels of the company in connection with the 1 MW GEV HP.

Revenue was €7.8 million and operating income was €-3.3 million, versus €12.5 million and €-0.6 million, respectively, for first half 2007. Net earnings were €-2.0 million versus €-0.4 million a year earlier.

As of 30 June 2008, Vergnet had €33.1 million in equity and €10.2 million in cash and equivalents; this enabled it to pursue its GEV HP manufacturing plan.

2008 Financial impact of signing the Ethiopian contract

Given the timeframe established by EEPCo for the start-up of the first 30 MW stage, Vergnet decided to modify its production plan for fourth quarter 2008.

As agreed with the client in question, the production of 10 GEV HP which were to be shipped to it at year-end will be allocated to the Ethiopian contract in order to be able to speed up shipments beginning in early 2009, the start-up date for the work. These deliveries will be postponed to the second half of 2009. This decision will thus impact the 2008 targets, with the group revising forecasts downwards, to €28 to €30 million in revenue (versus the planned €40 to €42 million) and to €-6 to €-5 million in earnings (versus the planned €-4.5 to €-3.5 million).

This negative impact on 2008 will have a positive impact for fiscal year 2009.

Outlook: a change in dimension in 2009, after a year of transition in 2008

Fiscal year 2009 will thus be a year of change in dimension for the Group. It should be marked by strong growth in its business and earnings given the growth in GEV HP. The contract signed in Ethiopia thus fits in well with the company’s strategy.

Marc Vergnet comments, “The group has a unique line of wind turbines perfectly suited to the needs of the Farwind zone. This has enabled us to win the bid in Ethiopia and puts us in a very good position for the future. I congratulate my teams on winning this excellent contract and I am confident in their motivation to ready Vergnet for 2009”.

Next update:
15 October 2008: Presentation of H1 2008 Results
27 February 2009: FY 2008 Revenue
16 April 2009: FY 2008 Results

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