Issuu on Google+

FY 2006 Consolidated results

Analyst meeting February 16th, 2007


Agenda

Summary Financials 2006 Outlook 2007 Regulatory and legal aspects Highlights 2006


Summary • Financials 2006 - 2006 Results in line with expectations - Increase in dividend to € 1,28 a share

• Outlook 2007 • Regulatory and legal aspects - Update electricity law published on July 20th, 2006 - Update on the process for multi-year tariffs Royal Decree

• Highlights 2006 - Energy Consumption from Elia’s network in 2006 - Energy balance Elia net 2006 - Tariff evolution to the advantage of Elia’s customers - Investments 2006 - Significant increase in energy exchanges - Start of the Belgian Electricity Exchange on November 21st, 2006


Agenda

Summary Financials 2006 Outlook 2007 Regulatory and legal aspects Highlights 2006


Overview of Key IFRS Figures

IFRS Income statement (€ million) Consolidated turnover EBITDA (1) Operating result (EBIT) Financial result Taxes Consolidated net profit Net profit per share (€) Dividend per share (€) Balance sheet (€ million) Total assets Equity Net debt Equity per share (€) Total number of shares (end of period)

2006 2005 711,5 714,2 292,6 295,9 204,0 211,8 (98,3) (93,8) (29,8) (41,5) 75,9 76,5 1,58 1,60 1,28 1,27 31/12/2006 31/12/2005 3.898,1 3.855,8 1.308,6 1.282,7 2.074,9 2.080,1 27,32 26,80 47.898.052

(1) EBITDA = EBIT + depreciation + c hanges in provisions

47.898.052

Change In % -0,4% -1,1% -3,7% 4,8% -28,2% -0,8% -1,3% 0,8% 1,1% 2,0% -0,2% 1,9% 0,0%


2006 Profit and Loss Bottom-up Approach of Elia’s P&L in 2006 (EUR m) Determination of net profit Non tariff

635,6

Av. equity / Av. assets Deviation on ref. equity Equity deviation remuneration D-factor (B)

Costs Tariff

60,0

Surplus

75,9

Net profit

Charges

(1) (2)

94,3

Average RAB 2006 Reference equity (33%) Cost of equity Equity reference remuneration (A)

677,2

OLO of 4,1293%; Beta of 1,0358 and a risk premium of 2,54% Av. Equity =1.295,5 and Av. Assets = 3.790,5

(2)

34,18% 1,18% (3) 3,19% 1,29

Over-depreciation (C)

-8,18

Fair remuneration (A+B+C)

69,94

B/M Decision CREG over 2004

-1,75

Net profit Belgian GAAP

68,19

IFRS reconciliation

Revenues

3.444 1.136 (1) 6,76% 76,82

Net profit IFRS

7,7 75,89

(3) OLO of 4,1293%; deviation rate of 70bp and tax rate of 33.99%


Reconciliation Be GAAP - IFRS IFRS Impact on Equity and Net Profit for year ending 31 December 2006 68,2

1,3

5,1

1.3 (1)

3.4

75,9

Net Profit

(3,4)

2006 Belgian GAAP

Employee Benefits

1.329,5

Elia Re

91,1

Deferred taxes Capitalisation Software

Others

2006 IFRS

20,6

9,8

9,9

7,1

1.307,4

Deferred taxes

Capitalisation hard/software

Elia Re

Others

2006 IFRS

Equity

(160,6)

2006 Belgian GAAP

Employee benefits

Regulatory assets

(1) Mainly relates to reversal goodwill Bel Engineering, inventory valuation, provisions


Regulated Asset Base 2006 Evolution 2006 RAB

3.443

3.444 50 (87)

2005

Average RAB

141

(3)

Depreciation Divestments

3.371

(1) In 2006 Frozen Goodwill has been applied

(1)

Capex

Change in WCR

2006

3.444


Working Capital Requirements 2006 Changes in Working Capital Requirements (EUR m)

(1)

46,4 1,3

2006

(8,1)

(30,0) (60,0)

Inventory & trade debtors <1 year

(1)

Deferred charges and accrued income

Trade creditors & others

Based on Belgian GAAP accounts

Accrued charges & deferred income

Surplus 2006

(50,4)

Total Change in WCR


Breakdown Costs Evolution of Costs between 2006 and 2005 (EUR m) 637,7

635,6 137,8

146,2

116,5

-0,8%

1,5%

-0,6%

98,3 29,8

2006

Ancillary services (reserve energy)

144,0

Raw materials, Services & Other goods

117,2 18,3

18,5 88,5

138,9

5,2% 4,8% -28,2%

Personnel Expenses Others

84,1

Depreciation

93,8

Financial charges

41,5

Taxes

2005


Non - Tariff Revenues Breakdown of Non â&#x20AC;&#x201C; Tariff Revenues in 2006 and 2005 (EUR m) 94,3

63,2

62,6 113,3%

11,6 13,7 6,4

2006

29,4

International revenues

12,4

Fixed assets own construction capitalised

45,7%

9,4

Telecom & third party services

-46,7%

12,0

-6,5%

2005

Others


Tariff Revenues Breakdown of Tariff Revenues in 2006 and 2005 (EUR m) 677,2

685,7 3,2%

28,5

134,8

-10,3%

150,3

49,8

25,8%

39,6

-0,9%

467,3

29,4

463,2

60,0

Connection tariffs Tariffs for ancillary services Tariffs out of previous surpluses

Tariffs for grid use

34,7

2006

2005

Increase of recorded difference between approved budget and reality mainly due to international revenues

13,3

14,1

Shortfall on costs

46,7

20,6

Surplus revenues (tariff & non-tariff)


Deviation from Budget 2006 Sources of surplus over budget at the end of 2006 (EUR m)

10,1

3,2

60,0

Adjustments to the regulated profit

Total Surplus

35,1

11,6

Surplus regulated revenues

s nos ae R

Access and balancing fees

Surplus international & other income Auctioning fees North Auctioning fees South 3rd party services ETSO fees to receive

Shortfall in charges Purchase ancillary services ETSO fees to pay

RAB adjustment


Overview treatment of surpluses Overview of allocation and use of total surpluses In millions of EUR

Surpluses

2004

2005

2006

2007

Surplus 2003 Bonus 2003 Used Total 2003

134,6 3,2

25,4

36,4 3,2 -39,6 0,0

36,4

36,4

-36,4 0,0

36,4

Surplus 2004 Bonus 2004 Used Total 2004 Surplus 2005 Bonus 2005 Surplus 2006 Used Totaal 2005 Surplus 2006 Used Totaal 2006 Total Surplus Total to reverse

137,8 119,0 3,5 122,5 35,1 2,3 3,8 41,2

-25,4 0,0

28,0 -28,0 0,0

9,8 3,5 -13,3 0,0

7,4

2008

2009

2010

134,6 3,2 -101,4 36,4

9,8

23,8

23,8

23,8

9,8

23,8

23,8

23,8

27,7 2,3 3,8

-7,4 0,0 56,2

56,2 357,7

56,2 56,2

119,0 3,5 -41,3 81,2 35,1 2,3 3,8 -7,4 33,8

33,8

56,2

Total

(1)

56,2 0,0 56,2 80,0

23,8

23,8

23,8

207,6

About EUR 130m available for future tariff reductions beyond 2007 (1) To be allocated by CREG in decision B/M over 2006


Financial Debt Position Elia benefits from a strong credit rating Standard & Poor’s rating: Long Term:

A-

Outlook:

Stable

2.129,5

2.119,8 2.000 1.500

200,0

40,0

996,3

996,0

883,5

883,5

2005

Net debt 2.074,8 2.080,1 Leverage (D/D+E) 61,9% 62,4% EBITDA / Gross interest 3,0 3,2 Net debt / EBITDA 7,1 7,0 Average cost of debt 4,8% 4,5% % Fixed of gross debt 74,7% 72,4%

31/12/2006

31/12/2005

Unused Credit lines European Investment Bank Commercial Banks : Short term

0

Shareholders' loans

2006

250,0

1.000 500

€ millions

Eurobonds

Banks LT

European Investment Bank

Amount (€ m) 85 570

Interest rate Euribor + 5 bp To be negotiated


Dividend Policy Elia’s dividend policy ensures a steady dividend 2,05

2,1

(1)

89,60%

In EUR

1,6

1,27

1,17

1,27

89,90%

1,28

90,00% 85,00%

1,1 80,00%

80,91%

0,6

79,26%

77,59%

75,00%

0,1 -0,4

2002

2003 Dividend

2004

2005

2006

70,00%

Pay-out ratio

• Small increase in dividend to € 1,28 per share • Pay-out ratio over 2005 Belgian Gaap result is 89,9% (80,8% under IFRS) (1) Contains exceptional dividend of EUR 0,88


Agenda

Summary Financials 2006 Outlook 2007 Regulatory and legal aspects Highlights 2006


Outlook 2007: RAB Evolution 2007 RAB as approved by CREG

3.598

3.476

2006

Average RAB

3.495

74 (88)

(5)

141

Depreciation

Divestm. & Decomm.

Capex

(1)

Change in WCR

2007

3.537

(1) Approved budget 2007 start with RAB which is € 32m higher than ACTUAL RAB (€3.444m) as of year-end 2006


Outlook 2007: CAPEX Breakdown CAPEX

CAPEX 2005-2009 (IPO) € 800 m

CAPEX 2007 € 141m

4%

10% 22%

19%

29%

24%

44%

48%

Replacements

Driven by interconnections with neighbours

Driven by internal consumption

Driven by import levels & generation localisation


Outlook 2007: Fair remuneration Determination of net profit 2007 by the regulator (Belgian GAAP)

Average RAB 2007 Reference equity (33%) Cost of equity Equity reference remuneration (A) Av. equity / Av. assets Deviation on reference equity Equity deviation remuneration D-factor (B)

CREG 3.537 1.167 (1) 6,05% 70,6 34,29% 1,29% 2,72% (2) 1,2

Over-depreciation (C)

-8,2

Fair remuneration (A+B+C)

63,6

B/M Decision CREG over 2006

-

Net profit as set by regulator

63,6

(1) (2)

• For the tariff 2007, the regulator accepted the principle that financial debt must not be deducted from the working capital requirements • D-factor is calculated according to the CREG formula • Decommissioning is applied for 2007 budget • Elia filed proceeding at Court of Appeal in december 2006 against bonus malus decision 2005

OLO of 3,4230%; Beta of 1,0330 and a risk premium of 2,54% OLO of 3,4230%; deviation rate of 70bp and tax rate of 33.99%


Agenda

Summary Financials 2006 Outlook 2007 Regulatory and legal aspects Highlights 2006


Update on legislation Electricity law of April 29, 1999 was adjusted on June 1st, 2005 and additionally adjusted on July 20th, 2006. Most important changes are :  the date for the introduction of multi-annual tariffs for the transmission system, which is fixed at 1 January 2008;  a European benchmark, on the basis of comparable system operators, designed to define fair returns and depreciations for the transmission system operator;  an objective indexing formulae for the costs, directly controlled by the system operator, and set out in the Royal Decree following advice given by the regulator;  the reform of the federal regulator into three departments (administration, market's technical operation and monitoring prices and accounts) headed by a chairman.


Update process R.D. multi-year tariffs

• Process was formally started up on August 16th, 2006 by Minister of Energy who sent letter to Regulator (CREG) • Formal meetings between • CREG and Elia were held on September 18th and 22nd • Cabinet, CREG & Elia on November 15th, 2006 and January 15th, 2007

• Discussion between cabinets of government expected to start soon.


Agenda

Summary Financials 2006 Outlook 2007 Regulatory and legal aspects Highlights 2006


1. Energy Consumption in Elia’s balancing zone Injected energy Elia's balancing zone per month GWh/month 9.000

Total Energy consumption in Elia’s balancing zone increased to 89,4 TWh in 2006 from 86,9 TWh in 2005

25,0

8.000 20,0

7.000

This is mainly due to :

6.000 15,0 5.000 °C 4.000 10,0 3.000

• Increase in industrial activity (2006 GDP growth of 3%) • Larger take-off from residential clients • More extreme temperatures

2.000

5,0

 Severe winter months  Hot summer months

1.000

0

0,0 Jan

Feb

Maart

Energy2005

April

Mei

Energy 2006

Juni

Juli

Aug

Av. temperature 2005

Sept

Okt

Nov

Dec

Av. temperature 2006


2. Energy Balance Elia net 2006 (in GWh)

Import France:

Export 10.636

France:

1.981

Luxemburg:

2.479

Luxemburg:

1.697

Netherlands:

5.604

Netherlands:

5.018

Total:

8.696

Total:

18.719

Net import: 10.023

Consumption Elia net

Net production (= Gross production â&#x20AC;&#x201C; ancillaries) Power plants: From DSOâ&#x20AC;&#x2122;s: Local production: Total:

72.618 39

Direct clients:

28.145

Distribution:

57.780

Pumps: Total:

6.480 79,137

Net losses: 1.539

1.696 87.621


3. Evolution of tariffs since 2001 Since 2001, decrease of transmission tariffs for all types of clients Tariffs for use of the grid and tariffs for ancillary services: comparison 2001 - 2007 16 14 12

8 6 4 2

On the 380/220/150 kV netw ork

At transformer output to the 70/36/30 kV netw ork

On the 70/36/30 kV netw ork

System management

Ancillary services

2007 (*)

At transformer output to medium voltage

(*) Hypothesis : the concerned client is supposed not to have a local production

Annual power

2006 (*)

2005

2004

2003 (Q2 to Q4)

2002 (Q4)

2001

2007 (*)

2006 (*)

2005

2004

2003 (Q2 to Q4)

2002 (Q4)

2001

2007 (*)

2006 (*)

2005

2004

2003 (Q2 to Q4)

2002 (Q4)

2001

2007 (*)

2006 (*)

2005

2004

2003 (Q2 to Q4)

2002 (Q4)

0 2001

â&#x201A;Ź/MWh

10

Loss compensation


Infrastructure Losses System Services Non related TSO

Finland

Estonia

Denmark West

Denmark East

Voltage level 400-220 kV

Belgium

Sweden

Spain

Slovenia

Slovak Rep

Romania

Portugal

Poland

Norway

Netherlands

Lithuania

Italy

Ireland

Hungary

Greece

Great Britain

Germany

France

Czech Republic

Austria

ETSO European comparison 2005 tariffs Voltage level 400-110 kV

30

25

20

15

10

5

0


Breakdown 2006 Energy bill Transmission cost is a small part of clientâ&#x20AC;&#x2122;s total energy cost

Residential client

Midsize industrial client

Large industrial client

3.500 kWh, 12 kVA 1.300 kWh night

2-10 GWh, 500-2.500 kW 4.000h / year

50-70 GWh, 10.000kW 5.000-7.000h / year

(2)

5% 15% 23%(1)

Transmission

(2)

9% 14%

9%

57%

Energy

10% 5%

77%

76%

Distribution

Federal levies & taxes (direct & indirect)

Source : CREG (for residential clients) + computed by Elia based on 2005 breakdown (for industrial clients) (1) 18 out of the 23% relates to VAT (2) Not subject to VAT


4. Investments 2006 Upgrade interconnection Monceau – Chooz (F) van 150 tot 220kV • Phase shifting transformer Monceau: in service as of January 2007 • Optimalisation interconnection flow with France • Adds to border capacity, mainly in the summer • Investment of about € 10m


Investments 2006 Underground cable 150kV Koksijde – Slijkens and extension HV-station Koksijde • Reinforce reliability of network in coast region: closing of “coastal loop” • Connection offshore wind farm up to 900 MW • In service as of May 2006 • Investment of about € 48m


Investments 2006

• Additional transformer 150kV Harenheide (Brussels) and Zaventem

• Strengthen electricity supply in North of Brussels and region Zaventem • Underpins economical development of the region • Investment of about € 13m

• Additional transformer 150kV Eupen • Reinforces reliability of network and underpins economical development of region Eupen • Investment pays off optimal after putting in service underground cable 150kV Lixhe – Battice • Investment of about € 4,5m


5. Significant increase in energy exchanges Major increase in exchanges with F and NL; Export +8,4% to 8,696 GWh & Import +31,9% to 18,719 GWh Belgium

Max. import cap. (MW)

% of opening

2006

North

Winter

1.344

3.300

12.343

10,89% 26,74%

Summer

1.257

2.300

11.145

11,28% 20,64%

5,604 GWh

South

Max. (MW) Net offtake Elia-grid 06

Total 06

Total 05

37,62% 31,92%

29,30% 24,10%

Total energy exchanges 2005-6

1,981 GWh

10,636 GWh

South

Netherlands 5,018 GWh

France

North

2,479 GWh 1,697 GWh

2006 2005 Direction Exchanged Exchanged Change 57,6% F B 10,636 GWh 6,750 GWh -10,8% B F 1,981 GWh 2,221 GWh 13,3% NL B 5,018 GWh 4,430 GWh 10,4% B NL 5,604 GWh 5,074 GWh 4,8% Lux B 2,479 GWh 2,366 GWh 23,6% B Lux 1,697 GWh 1,373 GWh Total 27,415 GWh 22,214 GWh 23,4%

Luxembourg


Border Optimalization and Capacity increases Increase and Optimalization of the border capacity with neighbouring countries France and the Netherlands: in line with programme

1. 2.

Reinforcement of Avelin – Avelgem Release of capacity from historical contract •

3.

Chooz (France) – Monceau (Belgium) 220 kV •

4.

7.

Will further optimize utilization of maximum border capacity NL

Phase shifter in 380kV station Zandvliet •

Jan 2007 Jan 2007 1Q 2007 2008

Will further optimize utilization of maximum border capacity NL

Moulaine (France) – Aubange (Belgium) 220 kV •

Since Jan 2006

Will further optimize utilization of maximum border capacity FR

Two Phase shifters in 380kV station Van Eyck (Kinrooi) •

6.

Will further optimize utilization of maximum border capacity

Phase shifter in 220 kV station Monceau •

5.

as decided by French, Dutch and Belgian Regulators

Since Nov 2005

2010

Second circuit 220 kV will be installed

Max capacity (winter) : 4.300 MW when all projects commissioned


6. Belgian Power Exchange (Belpex)

• •

Order book opened on November 20th, 2006 at 6 PM

20 diversified participants (suppliers, traders, producers) from 6 countries (NL,CH,UK,FR,BE,DE)

In 2006 average daily volume was following average electricity prices : - Belix - Belix peak (8am-20pm) - Belix off-peak (20pm-8am)

First fixing on November 21st, 2006 at 11 AM with an exchanged volume of 24.098 MWh

13.312 MWh with the €45,69/MWh €59,19/MWh €32,19/MWh

Market coupling induced an average export volume of 2.438 MWh and an average import volume of 2.896MWh


Belpex volume growth since launch


Daily average power prices: Belpex, APX, Powernext 120

110

100

90

â&#x201A;Ź/MWh

80

70

60

50

40

30

20 17-Sep

1-Oct

15-Oct

29-Oct

12-Nov

26-Nov

APX

Belpex

10-Dec

24-Dec

Powernext

7-Jan

21-Jan

4-Feb


FR-BE-NE TLC Congestion Overview

Border

Belgian-French border Constrained

Belgian-

Constrained

2%

Dutch border

F ≠ B ≠ NL

Unconstrained

F ≠ B = NL

16 %

Unconstrained F = B ≠ NL

17 % F = B = NL

65 %


Questions & Answers Investors Relations – Contact details  Bert Maes Tel: + 32 (0)2/546.72.39 Mail: bert.maes@elia.be Website: http://www.elia.be


FY 2006 Consolidated results

Analyst meeting February 16th, 2007


/FY%20