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Keizerslaan 20 Boulevard de l'Empereur, 20 B-1000 Brussels

PRESS RELEASE

Tel.: +32 (0)2 546 70 11 Fax: +32 (0)2 546 70 10

27 August 2010

Elia enjoys a good first half of the year and has concluded acquisition of German transmission system operator, a transaction in line with the integration of the central European electricity markets 

Elia publishes good half-yearly results in spite of relatively low Belgian OLOs, with a rise in the net book value per share to €32.10.

German subsidiary Eurogrid/50Hertz achieves a net IFRS profit of €37.4 million (for the Elia portion, or 60% of the total) in the first half of the year.

Eliaconcludes a successful capital increase of €299.4 million.

GDF Suez leaves shareholding in Elia, while Publi-T increases its stake to 45.37% and becomes the main reference shareholder.

1. IFRS key figures Consolidated results of the Elia Group for the first six months of 2010, compliant to the International Financial Reporting Standards (IFRS): Consolidated results (millions €)

30 June 2010

30 June 2009

Difference (%) 10,4%

Operating income

412,3

373,5

REBITDA

186,7

158,3

17,9%

EBITDA

470,7

158,3

197,3%

Operating profit (REBIT)

132,5

109,5

21,0%

Operating profit, including non-recurring items (EBIT)

416,5

109,5

280,4%

Finance result

(60,4)

(57,8)

4,5%

Income taxes

(13,8)

(9,8)

40,8%

Profit, including non recurrent items, attributable to the owners of the Company Profit, excluding non recurrent items, attributable to the owners of the Company Profit, including non-recurrent items, per share (€) Profit, excluding non-recurrent items, per share (€) Balance sheet (in million €)

340,2

42,2

706,2%

56,2

42,2

33,2%

5,637

0,878

542,0%

0,931

0,878

6,0%

Total assets

5.656,1

4.420,0

Difference (%) 28,0%

Equity

1.937,4

1.365,4

41,9%

Net financial debt

2.479,9

2.444,4

1,5%

32,10

28,29

13,5%

60.355.217

48.270.255

25,0%

Equity per share (€) Number of shares (end of period)

30 June 2010

31 December 2009

EBITDA = EBIT + depreciation / amortisation + changes in provisions REBITDA = recurring EBITDA (excluding one-off items)

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Financial The Elia Group's acquisition of 60% of 50Hertz had a positive impact on its consolidated revenue as at the end of June 2010. As that acquisition was completed in late May 2010, only the results for June were included in Elia's consolidated income statement (revenue of €41.3 million and net profit, excluding non-recurrent items, of €11.8 million; the two figures represent 60% of the total). The results for the first five months were directly booked as consolidated shareholders' equity and therefore benefit Elia shareholders. The significant rise in the EBITDA, EBIT and net profit including non-recurrent items (EBITDA up 197.3%, EBIT up 280.4% and net profit up 706.2%) is due to the estimated fair value of the acquired assets being greater than the acquisition price. As a result, the Elia Group – on the basis of the information that is currently available – will have to book non-recurring non-cash income (gain on bargain purchase) of €290.1 million. 1 You will find further details of the financial performance of the two transmission system operator (TSO) activities (Elia Transmission in Belgium and 50Hertz Transmission in Germany) below in the individual segment reporting sections. Shareholders' equity for the Group was up 41.9% compared with 31 December 2009, rising from €1,365.4 million to €1,937.4 million. The main reasons for this were:  the capital increase of €299.4 million in June 2010;  the gain on bargain purchase of €290.1 million that had to be recorded because of the acquisition of 50Hertz. This led to a 13.5% rise in the book value per share, from €28.29 to €32.10, in spite of a 25% increase in the number of shares, from 48.3 million to 60.3 million. In contrast, the Group's net financial debt hardly increased due to the following factors:  the net financial debt of Elia Transmission (Belgium) fell by €75.1 million;  50Hertz Transmission (Germany) had a structural bank debt of €350 million and a cash position of €166.1 million on 30 June 2010. These debts are guaranteed only by the German activities.

1.A. Segment reporting for Elia Transmission (Belgium) The results of Elia Transmission for its TSO activities in Belgium in the first six months of 2010, as per the International Financial Reporting Standards (IFRS): Results Elia Transmission (Belgium) (millions €)

30 June 2010

30 June 2009

Difference (%)

Operating income

371,1

373,5

-0,6%

EBITDA

166,5

158,3

5,2%

Operating profit (EBIT)

116,2

109,5

6,1%

Finance result

(60,4)

(57,8)

4,5%

Income taxes

(9,1)

(9,8)

-7,1%

Net profit

44,6

42,2

5,7%

Total assets

4.687,3

31 December 2009 4.420,0

Net financial debt

2.369,4

2.444,4

Balance sheet (in million €)

30 June 2010

Difference (%) 6,0% -3,1%

EBITDA = EBIT + depreciation / amortisation + changes in provisions

1

See a more detailed calculation of the gain on bargain purchase price in Annex 2.5.

2


Financial (IFRS) Elia Transmission's revenue remained more or less unchanged in the first half of 2010 compared with the same period in 2009. The table hereafter provides more details of changes in the various revenue components. Detail revenue (in million €) Grid connection revenue

30 June 2010 16,9

30 June 2009 16,5

267,8

Difference (%) 2,4%

257,4

4,0%

Revenues from the reversal of surpluses from previous years (decision by the regulator) Ancillary services revenue

0,4

(3,6)

n.r.

57,3

54,2

5,7%

International revenue

14,3

10,2

40,2% 34,1%

Grid use revenue

Other revenue Subtotal revenue Deviations from approved budget (settlement mechanism) Total revenue

22,0

16,4

378,7

351,1

(7,6)

22,4

371,1

373,5

7,9% n.r. -0,6%

Grid connection revenue rose 2.4%, mainly due to an increase in the number of new connections for industrial customers in the first half of 2010 compared with 2009. The 4% increase in grid use revenue is a result of the continuation in the first half of 2010 of the general recovery in the Belgian economy that started in late 2009. Ancillary services revenue rose 5.7% due to the increase in business activity, resulting in a rise in transmitted volumes. International revenue increased by €4.1 million (a rise of 40.2%) compared with the same period in 2009, principally because of more revenue from daily transmission capacity, especially at Belgium's southern border as a result of large-scale unavailability in the French generation facilities in the first three months of 2010. The growth in other revenue (up 34.1%) is mainly due to the application of IAS 192 (up €3.9 million) and IFRIC 183 (up €2.7 million), meaning that customer contributions made for grid connections must be booked in full as revenue in IFRS and no longer deducted from the investment as previously. The operating result in the first half of the year was €7.6 million more than the budget approved in late 2007 by CREG as regards non-controllable costs and revenue, principally because of less corporate income tax (€11.6 million), less outlay for ancillary services (€9 million) and a lower-than-budgeted price index (€3.9 million), with these items being partially offset by lower auction revenue from international transmission capacity and other sales (€15.3 million). This discrepancy will change depending on positive or negative differences in the second half of the year. The increases in the EBITDA (up 5.2%) and the EBIT (up 6.1%) are mainly a result of continued strict monitoring and control of controllable costs and revenue (up €4.3 million). Net finance costs rose 4.5% mainly because the €1 billion Eurobond issue in April 2009 finances all long-term debts in 2010 whereas in the first quarter of 2009 approximately €800 million was financed in the short term. The consolidated IFRS net profit of €44.6 million as at 30 June 2010 consists of the following items:  fair remuneration on regulated assets €27.7 million  decommissioning of fixed assets €8.7 million  additional savings €6.1 million  CREG decision regarding 2009 €(3.2) million  costs of capital increase and acquisition of 50Hertz €(6.5) million  IFRS adjustments €11.6 million 2 3

IAS 19: annual recalculation of regulated assets in relation to future retirement obligations IFRIC 18: Transfers of Assets from Customers

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Consolidated IFRS net profit was up €2.4 million (5.7%) compared with 30 June 2009, the main reasons being:  drop in regulated profit due to lower OLOs €(2.3) million  more decommissioning of fixed assets €0.7 million  increased additional savings and revenue €4.3 million  CREG decision regarding 2009 €(3.2) million  costs of capital increase and acquisition of 50Hertz €(6.5) million  increase in IFRS adjustments €9.4 million In a decision taken on 25 June 2010, CREG stated that it did not agree with certain items in the 2009 results (for example, it queries additional savings that are indicated gross rather than net according to CREG and enforcement of black-start contracts). Elia disputes a number of provisions in the decision and is appealing against it. Total assets increased by 6% to €4,687.3 million, mainly due to the capital increase of €299.4 million in June 2010. Net financial debt fell by 3.1% or €75.1 million, primarily as a result of the abovementioned capital increase in June 2010 and a decrease in working capital. Operational The net offtake of electricity, at 38.8 TWh, was 4.4% up on the same period in 2009 (when it stood at 37.1 TWh). In the case of large industrial customers, the offtake returned to its level before the financial and economic crisis. This level has not yet been reached in the case of distribution (residential customers and SMEs). This is mainly due to the growth in local production and to measures to reduce electricity consumption. Whilst Belgium was still a net importer of electricity (0.4 TWh) in the first half of 2009, by the first half of 2010 it was a net exporter (0.2 TWh), with France as its principal export market. Investments To meet grid users' requirements, Elia invested €55.9 million during the first half of the year, mainly in upgrading high-voltage substations and laying high-voltage cables.

1.B. Segment reporting for 50Hertz Transmission (Germany) Financial (IFRS) The June 2010 results of 50Hertz Transmission, on the Eurogrid International level, were included in the consolidated Elia Group IFRS figures as at 30 June 2010. (60% proportionate consolidation) The first five months were booked as shareholders' equity and therefore also benefit Elia shareholders. Consequently, the figures on an annual basis (for 12 months, unther German GAAP) determine the dividend that can be expected from Eurogrid/50Hertz Transmission in 2011. For the sake of transparency, the figures for the first six months of 2010 (60%) are also reported using the International Financial Reporting Standards (IFRS) as a basis. A comparison with 2009 is not relevant both because of the important beneficial regulatory changes that were introduced on 1 January 2010 and because 50Hertz Transmission was still part of the Vattenfall Group in 2009. The June 2010 results and the half-yearly results should not be extrapolated to calculate the figures that can be expected on a annual basis.

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Results 50HertzTransmission (Germany) (millions €) (*) 60%

June 2010

Proforma 1H 2010

Operating income

41,3

REBITDA

20,4

81,0

304,4

365,0

EBITDA Operating profit (REBIT) Operating profit, including non-recurring items (EBIT)

250,6

16,4

58,5

300,4

342,5

Finance result

0,0

(5,9)

Income taxes

(4,7)

(15,2)

Profit, including non recurrent items, attributable to the owners of the Company

295,7

321,4

Profit, excluding non recurrent items, attributable to the owners of the Company

11,8

37,4

Balance sheet (in million €) Total assets Net financial debt

30 June 2010

-

1.247,6

-

110,4

-

(*) 60% proportionate Consolidation

Operational In the first half of 2010, a net total of 46.8 TWh was taken off the 50Hertz Transmissiongrid. This means that the net offtake of electricity was 2.9% higher than in the same period in 2009.

Investments To meet the needs of grid users, 50Hertz Transmission invested €59.5 million in the first half of the year (mainly in Mecklenburg-Western Pomerania and transformer capacities in the south of Dresden and the north of Freiberg and, through its subsidiary 50Hertz Offshore, in a connection with an offshore wind farm, Baltic 1, in the Baltic Sea). 2. Significant events in the first half of the year Sale by Electrabel / GDF SUEZ of its remaining shareholding in Elia and change in the composition of the Board of Directors. After selling an initial part of its stake in Elia to Publi-T on 30 March 2010, Electrabel / GDF Suez sold the remainder to institutional investors on 18 May 2010, thereby bringing the free float of the Elia share to 52.10%. As a result, the directors representing Electrabel (Jacqueline Boucher, Sophie Dutordoir and Ronnie Belmans – who had chaired the Board of Directors since Elia was founded in 2001) resigned immediately after the general meeting of shareholders on 11 May 2010. They were replaced by three new directors: Jennifer Debatisse, Dominique Offergeld and Leen Van den Neste. Independent director Luc Van Nevel succeeded Ronnie Belmans as the chairman of the Board of Directors. Elia and Industry Funds Management (IFM) finalised on May 19th 2010 the acquisition of the German TSO 50Hertz Transmission. Elia and IFM, one of the major global infrastructure investment managers, acquired on May 19th the German Transmission System Operator 50Hertz transmission from Vattenfall Europe. Thanks to this operation, IFM and Elia acquired a 40% and a 60% stake respectively. On the basis of a shareholder agreement between Elia and IFM, the acquisition was defined as a joint venture. The group that is now in the top five Transmission System Operators in Europe operates a grid that supplies more than 29 million people in Belgium and Germany and that is committed to providing secure access to a larger and greener energy mix, thus reinforcing security of supply, while simultaneously increasing system security for its customers.

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Elia capital increase of €299.4 million for the 100% subscribed. The capital increase Elia launched between 8 and 18 June 2010, with a view to financing the acquisition of a 60% stake in German grid operator 50Hertz Transmission, was fully subscribed. During the subscription period with preferential rights for existing shareholders, whereby for every four preferential rights they could take up one new share at a price of €24.80, 91.84% of the shares available (11,085,617 of the 12,071,043 new shares on offer) were subscribed. On 22 June 2010, the other 3,941,704 rights were offered to institutional investors in a private placement. All remaining preferential rights were sold as scrips for €0.20 per scrip, bringing the share purchase price to €25.60. The new shares were listed for the first time on 25 June 2010. Inauguration of Elia's new national control centre. The new national control centre is housed in a passive building that is designed based on innovative and sophisticated technologies in terms of environmental management and sustainability, and the Brussels Institute for Management of the Environment (IBGE/BIM) has therefore granted it the title of ‘exemplary building’, entitling it to a grant. Inauguration of Aubange-Moulaine line. Recently the 220 kV interconnection line between Aubange (Belgium) and Moulaine (France) was upgraded and fitted with a second three-phase transmission line. Conductors with a higher flow density were used, allowing capacity to be more than doubled, from 300 MW to 800 MW. The official inauguration took place on 25 June 2010 in the high-voltage substation at Moulaine (France). The interconnection makes a valuable contribution to system security and security of energy supplies and also promotes the integration of the electricity market in Europe. Launch of Central-West European and Scandinavian market coupling mechanism: target date 9 November. At the specific request of the German regulator, the TSOs and power exchanges that are together leading the Central-West European (CWE) marketcoupling project have taken the appropriate steps to at the same time couple the CWE electricity market to the Scandinavian electricity market. The simultaneous launch of the two projects will mean that an integrated wholesale market for electricity can be achieved in one fell swoop across nine European countries stretching from France to Finland and from Germany to Norway. Consolidation of power exchanges: Elia transfers its stake in Belpex to APX-Endex and acquires a shareholding in the Group. On 19 April 2010, Elia and TenneT announced that they would transfer stakes in the Belgian power exchange Belpex of respectively 60% (in the case of Elia) and 10% (in the case of TenneT) to APX-Endex. At the same time, Elia would acquire a 20% stake in the APX Group, whose main shareholder is TenneT, meaning that Elia would also gain a voice in APX-Endex's management bodies. The expectation is that this transaction will be officially approved and completed in the autumn of 2010. This operation marks another important step for Elia towards a single North-West European electricity market and helps to improve international trade opportunities. TenneT will keep 56.1% of the APX-Endex shares, while NV Nederlandse Gasunie will retain 20.9% and Fluxys SA/NV will maintain 3%. 3. Outlook Since the 2010 results depend on parameters that will only be announced in late 2010 (such as the inflation figure as by December 2010) or that can only be calculated at that time (such as the average Belgian 10-year interest rate, the beta of the Elia share, and the total investment amount), no specific profit forecasts can be provided for the year as a whole. However, as indicated in the capital-increase prospectus, Elia intends to maintain its dividend at the current level (if no changes are made in the regulatory framework or no negative developments, e.g. lower OLOs, occur in the market environment). 4. Declarations by responsible persons Chairman of the Executive Committee and Chief Executive Officer Daniel Dobbeni and Chief Financial Officer Jan Gesquière declare that to the best of their knowledge: a) the summary of financial information, prepared in conformity with applicable accounting standards, gives a true and fair view of the assets, financial position and results of the Elia Group;

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b) the interim report gives a faithful presentation of the significant events that occurred during the first six months of 2010, and their impact on this summary of financial information. 5. Auditors' report See Annex, section 2.12. 6. Financial calendar Nine-month interim information for 2010 Publication of 2010 annual results Publication of annual report 2010 General meeting of shareholders Payment of dividend for 2010

12 November 2010 mid-February 2011 early April 2011 10 May 2011 May 2011

About Elia: Elia is the Belgian transmission system operator, transmitting electricity from producers to distribution system operators and major industrial users. Elia owns the entire very-highvoltage grid (150 to 380 kV) and some 94% (ownership and user rights) of the highvoltage grid infrastructure (30 to 70 kV) in Belgium. The Elia grid constitutes a key link between the electricity markets of northern and southern Europe and also between Belgian producers and consumers. For further information, please contact Elia: Media: Lise Mulpas Axelle Pollet

+32 (0)2 546 73 75 +32 (0)2 546 75 11

+32 (0)478 65 28 90 +32 (0)475 84 38 91

lise.mulpas@elia.be

+32 (0)472 40 69 97

bert.maes@elia.be

axelle.pollet@elia.be

Investor relations: Bert Maes

+32 (0)2 546 72 39

Website: this press release and its annexes are available on the website www.elia.be Annex: Condensed interim financial statements: Condensed consolidated statement of financial position Condensed consolidated income statement Condensed consolidated statement of comprehensive income Condensed consolidated statement of changes of equity Condensed consolidated statement of cash flows Notes on the interim financial information

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ANNEX 1. Condensed interim financial statements 1.1. Condensed consolidated statement of financial position (30 June 2010 – 31 December 2009) (in million ₏) Assets

Notes

30 June 2010

31 December 2009

(2.3)

Non-current assets

4.843,9

3.976,6

Property, plant and equipment

2.939,8

2.089,6

Intangible assets

1.749,6

1.730,1

111,2

105,8

7,5

9,4

Other investments (including derivatives)

17,4

16,7

Deferred tax assets

18,4

25,0

812,2

443,4

Trade and other receivables Investments in equity accounted investees

Current assets Inventories Trade and other receivables Income tax receivable Cash and cash equivalents Other assets

14,5

13,7

428,6

218,1

0,5

0,7

297,0

174,6

71,6

36,3

5.656,1

4.420,0

Equity

1.939,3

1.367,1

Equity attributable to equity holders of the Company

1.937,4

1.365,4

1.501,1

1.207,3

Total assets Equity and liabilities

Share capital

(2.3)

(2.9)

Share premium Reserves Hedging reserve Retained earnings Non-controlling interest Non-controlling interest Non-current liabilities Loans and borrowings Employee benefits

(2.8)

8,5

8,5

66,4

36,0

(26,8)

(18,7)

388,2

132,2

1,9

1,7

1,9

1,7

2.881,6

2.804,7

2.566,7

2.618,9

121,5

142,9

Derivatives

40,6

28,2

Provisions

43,2

4,8

Deferred tax liabilities

87,2

6,8

Other liabilities

22,4

3,1

Current liabilities

835,2

248,2

210,2

0,1

Loans and borrowings Provisions

25,2

13,9

492,2

233,9

Income tax payables

15,3

0,2

Other liabilities

92,3

0,0

5.656,1

4.420,0

Trade and other payables

Total equity & liabilities

8


1.2. Condensed consolidated income statement (30 June 2010 – 30 June 2009)

(millions €)

Continuing operations Revenue Cost of sales

Notes

30 June 2010

30 June 2009

Difference (%)

(2.3)

Gross profit Other income Services and other goods Personnel expenses Depreciation, amortization, impairment and changes in provisions Other expenses Results from operating activities, before non-recurring items (REBIT) Non-recurring items

384,9 (3,0)

357,1 (3,1)

7,8 (3,2)

381,9 27,4 (150,0) (60,5) (54,2)

354,0 16,4 (145,5) (59,9) (48,7)

7,9 67,1 3,1 1,0 11,3

(12,1)

(6,8)

77,9

132,5

109,5

21,0

284,0

Results from operating activities (EBIT)

416,5

Net finance costs

(60,4)

(57,8)

4,5

7,7 (68,1)

5,4 (63,2)

42,6 7,8

(1,9)

0,4

(575,0)

354,2

52,1

579,9

Finance costs Finance income Share of profit of equity accounted investees (net income tax) Profit before income tax Income tax expense

(13,8)

(9,8)

40,8

Profit from continuing operations

(2.7)

340,4

42,3

704,8

Profit for the period,

340,4

42,3

704,8

Owners of the Company

340,2

42,2

706,2

Non-controlling interest

0,2

0,1

100,0

340,4

42,3

704,8

5,637 5,637

0,878 0,878

542,0 542,0

Profit attributable to:

Profit for the period

Earnings per share (€) Basic earnings per share Diluted earnings per share

9


1.3. Condensed consolidated statement of comprehensive income (30 June 2010 – 30 June 2009) (millions ₏)

Notes

30 June 2010

30 June 2009

340,4

42,3

Difference (%) 704,7

(8,2)

(3,5)

134,3

14,3

1,4

921,4

6,1

(2,1)

(390,5)

346,5

40,2

761,9

Owners of the Company

346,7

40,1

764,5

Non-controlling interest

0,2

0,1

80,0

346,5

40,2

761,9

Profit for the period Other comprehensive income Effective portion of changes in fair value of cash flow hedges, net of tax Defined benefit plan actuarial gains and losses, net of tax Other comprehensive income for the period, net of income tax Total comprehensive income for the period

(2.3)

Profit attributable to:

Total comprehensive income for the period

10


1.4. Condensed consolidated statement of changes of equity (30 June 2010 – 30 June 2009 (in million ₏)

Share capital

Share premium

Hedging reserve

Retained earnings

Total

Minority interests

Total equity

Balance at 1 January 2009

1.202,1

8,5

(16,0)

153,5

1.348,1

1,6

1.349,7

0,0

0,0

42,2

42,2

0,0

42,2

0,0

(3,5)

0,0

(3,5)

0,0

(3,5)

0,0

0,0

0,0

1,4

1,4

0,0

1,4

0,0

0,0

(3,5)

1,4

(2,1)

0,0

(2,1)

Total comprehensive income for 0,0 0,0 the period Transactions with owners, recorded directly in equity

(3,5)

43,6

40,1

0,0

40,1

0,0

(65,9)

(65,9)

0,0

(65,9)

Total comprehensive income for fhe period Profit or loss

0,0

- Increase reserves Other comprehensive income Effective portion of changes in fair value of cash flow hedges, net of tax Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income

Contributions by and distributions to owners - Dividends to equity holders Total transactions with owners

0,0

0,0

0,0

0,0

0,0

(65,9)

(65,9)

0,0

(65,9)

Balance at 30 June 2009

1.202,1

8,5

(19,5)

131,2

1.322,3

1,6

1.323,9

Balance at 1 January 2010

1.207,3

8,5

(18,7)

168,2

1.365,4

1,7

1.367,1

0,0

0,0

340,3

340,3

0,2

340,5

(1,6)

(1,6)

Total comprehensive income for fhe period Profit or loss

0,0

- Retained earnings Eurogrid at acquisition date - Increase reserves

(1,6)

Other comprehensive income Effective portion of changes in fair value of cash flow hedges, net of tax Defined benefit plan actuarial gains and losses, net of tax Total other comprehensive income Total comprehensive income for the period

0,0

(8,2)

0,0

(8,2)

0,0

(8,2)

0,0

0,0

0,0

14,3

14,3

0,0

14,3

0,0

0,0

(8,2)

14,3

6,1

0,0

6,1

(8,2)

353,0

344,8

0,2

345,0

Transactions with owners, recorded directly in equity

Contributions by and distributions to owners Shares issued - Dividends to equity holders Total transactions with owners Balance at 30 June 2010

293,7

0,0

0,0

0,0

293,7

0,0

293,7

0,0

0,0

0,0

(66,6)

(66,6)

0,0

(66,6)

293,7

0,0

0,0

(66,6)

227,1

0,0

227,1

1.501,0

8,5

(26,9)

454,6

1.937,3

1,9

1.939,2

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1.5. 1.5.Condensed consolidated statement of cash flows (30 June 2010– 30 June 2009) (in million ₏)

Notes

30 June 2010

30 June 2009

Cash flows from operating activities

(2.3)

Profit for the period

56,7

42,3

Adjustments for: Net finance costs

60,3

60,0

Income tax expense

9,1

8,4

Share of profit of investments accounted investees, net of tax

1,9

-0,4

54,0

48,8

3,3

2,1

Depreciation of property, plant and equipment and amortization of intangible assets Loss on disposal/sale of property, plant and equipment Impairment losses of current assets

0,7

0,5

Change in provisions

-6,7

-2,2

Change in fair value of derivatives

0,0

-3,0

Change in deferred taxes

4,9

1,3

Changes in fair value of financial assets through income

-0,1

0,0

Change in non-cash items

0,1

0,0

Change in inventories

0,5

-0,3

16,1

54,4

Change in trade and other receivables Other current assets

-0,1

0,0

Change in trade and other payables

22,4

-102,5

Change in other current liabilities

-52,5

-7,1

Interest paid

-64,9

-85,9

-5,1

-3,6

100,6

12,8

-59,2

-57,4

Income tax paid Net cash from operating activities Cash flows from investing activities Acquisition of property, plant and equipment and intangible assets Investments in equity accounted investees Acquisitions of investments recognised at cost ( less acquired cash) Proceeds from sales of investments Interest received Net cash used in investing activities

Proceeds from issue share capital

(2.9)

Expenses related to issue share capital Dividends paid (-)

(2.8)

0,0

0,0

-150,4

0,0

0,0

0,2

4,3

1,1

-205,3

-56,1

299,7

0,0

-6,0

0,0

-66,6

-66,0

Repayment of borrowings (-)

0,0

-540,2

Proceeds from withdrawal borrowings (+)

0,0

1.123,8

Minority interest

0,0

-0,1

Net cash flow from (used in) financing activities

227,1

517,5

Net increase (decrease) in cash and cash equivalents

122,4

474,2

Cash & Cash equivalents at 1 January

174,6

27,3

Cash & Cash equivalents at 30 June

297,0

501,5

12


2. Notes on the interim financial information 2.1. General information Parent company Elia System Operator SA/NV (hereinafter "Elia" or "the Company") is a public limited company established in Belgium, having its head office at Boulevard de l’Empereur 20, B-1000 Brussels. Elia System Operator SA/NV is listed on Euronext Brussels. The Group is the transmission system operator supplying electricity in Belgium and Germany. It transmits electricity from producers to distribution system operators and major industrial users, and is responsible for importing and exporting electrical energy to and from neighbouring countries. This condensed consolidated interim financial report of the Company for the six months to 30 June 2010 contains the balance sheet and income statement of the Company and its subsidiaries (collectively referred to as "the Group") and the Group's interests in associated companies and jointly controlled entities. The condensed consolidated interim financial statements were approved by the Board of Directors of Elia System Operator SA/NV on 26 August 2010.

2.2. Basis for preparation of the financial statements (a) Statement of compliance The consolidated interim financial report for the first half of 2010, including the comparative figures for 2009 has been prepared in accordance with International Financial Reporting Standard (IFRS) IAS 34 on Interim Financial Reporting, issued by the IASB and approved by the European Union. This report does not contain all the information required to be disclosed in the complete financial statements and must be read in conjunction with the Group’s consolidated financial statements for the year ending 31 December 2009.

(b) Operating and reporting currencies The condensed interim consolidated financial statements are presented in millions of euro, the euro being the Company's operating currency. All figures are rounded to the nearest one hundred thousand.

(c) Standards, amendments and interpretations The basis and calculation methods applied for the first half of the year are the same as those used to prepare the consolidated financial statements as at 31 December 2009, but due to the acquisition of “50Hertz” the following calculation methods were changed: -

Basis of consolidation – Associates (Joint ventures) "Joint ventures" refers to jointly controlled entities, established pursuant to a contractual agreement and subject to the required approval for strategic, financial and operating decisions. Investments in joint ventures are consolidated proportionally: a proportionate part of the assets, equities & liabilities, and income and expenditure statements must be in accordance with IFRS as applied by Elia, but exclusive of any purchase price allocation, with similar items in the consolidated figures grouped into the same category. The gain or loss realised via the acquisition will be recognised as a surplus or as gain on bargain purchase If, following integration, the joint venture takes over a controlled entity (authorised to manage, either directly or indirectly, the financial and operating activities of the subsidiary in question to derive benefit from those activities), the requirements laid down in IFRS 3 Business Combinations must be applied.

13


-

Segment reporting Pursuant to IFRS 8 and in response to the acquisition of 50Hertz, the designation of segments to be reported on by the Group has changed; segment reporting is now based on the Company's main operating activities and the economic sector in which it is active. This segmentation forms the basis of Company's internal management reporting and as such the decision-making body is best placed to assess and understand the type and financial profile of its activities in a transparent manner. The Group has identified the following operating segments based on the aforementioned criteria: Elia Transmission (Belgium), which comprises Elia System Operator and the companies whose activities are directly linked to the role of Belgian transmission system operator (i.e. group before the acquisition of 50Hertz); 50Hertz Transmission (Germany), which comprises Eurogrid International CVBA and companies whose activities are directly linked to the role of transmission system operator in Germany.

The following new standards, amendments and interpretations will come into force for the financial year beginning 1 January 2010 for entities whose reporting period is a calendar year: IFRS 3 (revised) Business Combinations and corresponding amendments to IAS 27 Consolidated and Separate Financial Statements, IAS 28 Investments in Associates and IAS 31 Interests in Joint Ventures, to be applied to business combinations with an acquisition date on or after the beginning of the first annual accounting period commencing on or after 1 July 2009; IFRS 1 (revised) First-time Adoption (applicable as from 1 July 2009); and IAS 39 (amended) Financial Instruments: Recognition and Measurement of Eligible Hedged Items (in force since 1 July 2009). The following new standards, amendments and interpretations will come into force for the financial year beginning 1 January 2010 but are currently of no relevance for the Group: IFRIC 12 Service Concession Arrangements (in force since 1 January 2008 but approved by the EU from 30 March 2009); IFRIC 15 Arrangements for the Construction of Real Estate (in force since 1 January 2009 but approved by the EU from 1 January 2010); IFRIC 16 Hedges of a Net Investment in a Foreign Operation (in force since 1 October 2008 but approved by the EU from 1 July 2009); IFRIC 18 Distribution of Non-Cash Assets to Owners, in force for financial years periods commencing on or after 1 July 2009. The following new standards, amendments and interpretations have been issued but do not apply to the financial year commencing on 1 January 2010 and have not been applied ahead of time: IAS 32 (amended) Financial Instruments: Classification of Rights Issues.

2.3. Scope of consolidation The acquisition of 50Hertz was completed in May 2010. As a result of this, the composition of the Group's scope of consolidation has altered. The table below gives an overview of the altered scope of consolidation as at 30 June 2010 compared with the situation as at 31 December 2009.

14


Company

30 June 2010

31 December 2009

Parent company: - Elia System Operator SA/NV

Full

Full

Subsidiaries: - Elia Asset SA/NV - Elia Engineering SA/NV - Belpex SA/NV - Elia Re SA

Full Full Full Full

Full Full Full Full

Joint ventures: - Eurogrid International CVBA - Eurogrid GmbH - 50Hertz Transmission GmbH - 50Hertz Offshore GmbH

Proportionate Proportionate Proportionate Proportionate

Not Not Not Not

Associates: - HGRT SAS - Coreso SA/NV - CASC-CWE SA/NV

Equity Equity Cost price

Equity Equity Cost price

included included included included

The altered scope of consolidation means that the figures as at 30 June 2010 cannot be compared with those of 2009: consolidated statement of financial position: current period including amounts from the Eurogrid/50Hertz segment as at 30 June; consolidated income statement: current period including one month's result from 50Hertz, in addition to non-recurring income on account of a gain on bargain purchase; consolidated statement of cash flows: current period including one month of cash flow movements by 50Hertz. Given that the acquisition was not completed until May, the consolidated income statement and the consolidated statement of cash flows are only affected by one month of operations by 50Hertz and thus the Elia Group has only factored in figures pertaining to 50Hertz as from 1 June 2010.

2.4. Seasonal fluctuations The Group's profit profile follows a seasonal pattern, primarily due to the higher volumes of electricity consumed during the winter which have to be transmitted by the system operator from power producers to distributors and large industrial customers.

2.5. Acquisition of 50Hertz and gain on bargain purchase. On 12 March 2010, the Company and IFM announced the acquisition of 50Hertz from the Vattenfall Group. This was completed on 19 May 2010. It comprised all shares held by 50Hertz Transmission, including the wholly owned subsidiary 50Hertz Offshore and its two minority shareholdings EMCC (12.5%) and CAO (20%) ("50Hertz"). With a view to this acquisition, the Company and IFM set up the holding company Eurogrid International CVBA. Eurogrid International's shares are owned 60% by the Company and Elia Asset SA/NV (the latter holding a single share) and 40% by IFM Luxembourg. The shares held by 50Hertz Transmission were acquired via Eurogrid GmbH, a private German limited-liability company established on 2 March 2010. Eurogrid GmbH is a wholly owned subsidiary of Eurogrid International. The acquisition price for all shares held by 50Hertz was â‚Ź464.6 million. Via Eurogrid GmbH, the Company paid â‚Ź278.8 million for a 60% stake. IFRS 3 Business Combinations is applicable to Eurogrid GmbH. Against this backdrop, the Group has already begun to analyse the fair value of assets and equities & liabilities and any resulting purchase price allocation. In accordance with IFRS regulations, the Company has one year to complete this exercise and, in view of the fact that the purchase price allocation has not yet been finalised, this could result in adjustments to the fair value of 50Hertz's assets and equities & liabilities. Therefore

15


the income on preferential acquisition could be subject to further adjustment. Taking these factors into account, 50Hertz's equity as at 31 May 2010 was €948.10 million. This amounts tallies with the Company's original fair-value estimate of 50Hertz's net assets, said estimate being between €890.3 million and €984.1 million. This original estimate was calculated with assistance from an independent valuation expert using three methods and based on the following assumptions: DCF method (discounting of future free cash flow (FCF) based on the Regulated Asset Base (RAB) in estimating the residual value of future free cash flow): due to the nature of the Company, the net cash flow may be negative based on anticipated investment plans; DDM method: discounting of anticipated future dividends as per the Company's assessments; market-based model based on anticipated EBIT and EBITDA: used by several comparable listed companies in western Europe such as Red Electrica Corporation SA, Enagas, Terna, Fluxys, Snam Rete Gas, National Grid and Redes Energiticas Nacionais S.A. The market-based model was used primarily to validate the results obtained using the DCF and DDM valuation methods. The Company agrees with the conclusion drawn by its independent expert that the DCF method provides greater asset stability in relation to the residual value. In particular, the P/E ratio is not adversely affected by it not being possible to compare similar factors on account of different regulatory frameworks, depreciation methods and unregulated income among other things. Recognition of income on a preferential acquisition takes into account the underlying market value of 50Hertz determined via appropriate procedures following due diligence by Elia and its advisors as part of acquiring 50Hertz. The purchase price to be paid for the acquisition of 50Hertz results from negotiations between the parties following a competitive sale process. Vattenfall has released no information as to the reasons why 50Hertz has been sold with a certain badwill. However, as stated in its annual report 2009, Vattenfall’s debt position has increased over the past few years, while its cash flow decreased, and Vattenfall AB announced in that context that it intended to improve profitability through concrete measures, amongst other things by reprioritising and reducing its investments and divesting non-core assets. In addition, Vattenfall is subject to certain unbundling requirements under the Third Energy Package.

The table below shows how income on preferential acquisition is calculated. against 100%

against 60%

Parent's company value of investment (1)

464,6

278,8

Equity 50Hertz per 31/05/2010 (2)

948,2

568,9

Gain on bargain purchase at 31/05/2010 = [(2)-(1)]

483,6

290,1

millions €

16


2.6. Segment reporting – reconciliation Consolidated results 2010 (millions €)

Operating income REBITDA EBITDA Operating profit (REBIT) Operating profit, including non-recurring items (EBIT) Finance result Income taxes Profits, including non recurrent items, attributable to the Owners of the Company Profits, excluding non recurrent items, attributable to the Owners of the Company Balance sheet (in million €) Total assets Net financial debt

30 June 2010

30 June 2010

30 June 2010

30 June 2010

Elia Transmission (Belgium) 371,1 166,5 166,5 116,2

50Hertz Transmission (Germany) 41,3 20,4 304,4 16,4

Consolidation entries 0,0 0,0 0,0 0,0

116,2

300,4

0,0

416,5

(60,4) (9,1)

0,0 (4,7)

0,0 0,0

(60,4) (13,8)

44,6

295,7

0,0

340,2

44,6

11,8

0,0

56,2

30 June 2010 4.687,3 2.369,4

30 June 2010 1.247,6 110,4

30 June 2010 (278,7) 0,0

30 June 2010 5.656,1 2.479,9

2.7. Income tax rate The ratio of income tax to pre-tax profit as detailed in the condensed consolidated income statement results in an income tax rate of 3.9%. This low rate is due to the gain on bargain purchase in the Eurogrid/50Hertz segment following the acquisition of 50Hertz and on which no income tax is due. If the gain on bargain purchase is excluded from the pre-tax profit, the rate rises to 20.9%. 2.8. Dividend On May 11th the shareholders approved the payment of a gross dividend of €1.38 per share (€1.035 per share without VVPR strip and €1.173 per share with VVPR strip) in total for an amount of €66.6 million. 2.9. Capital increase. For more information about the capital increase see Page 6. section 2, alinea 3. 2.10.

Risks

Pursuant to Article 13 of the Royal Decree of 14 November 2007, the Elia Group confirms that the underlying risks facing the Company are the same as those described on pages 71-73 and 114-118 of the Group's consolidated annual report.

2.11.

Significant events after 30 June

Due to the particularly heavily thunderstorms with very high winds that hit Belgium in the late afternoon of 14 July 2010, the high-voltage grid had to deal with a number of simultaneous incidents. The whole country, especially Wallonia, was very hard-hit. The winds brought various high-voltage pylons to the ground or were badly damaged. Some 20 grid components, at a range of voltage levels, were temporarily or permanently knocked out. Elia immediately established a crisis centre in Namur to coordinate work to secure the facilities and to start resupplying customers. The final repair works will probably last until April-June 2011.

17

Elia Group 412,3 186,7 470,7 132,5


Elia is insured for such incidents, and therefore the cost of repairing the damage can be recovered from the insurance companies and reinsurance company Elia Re, meaning that this has no significant impact on consumer tariffs. 2.12.

Auditors’ report

18


19

/2010  

http://www.eliagroup.eu/en/about-us/newsroom/news/2010/~/media/files/Elia/PressReleases/2010/EN/20100827halfyearresults.pdf

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