Gﾃ傍EBORG ENERGI ANNUAL REPORT 2009
CONTENTS ANNUAL REPORT 2009 Directors’ Report A few words about Göteborg Energi Financial goals Significant events in 2009 Key ratios Subsidiaries Product areas 6-year review Investments Environment Management of risks and uncertainties Personnel Outlook for 2010 and onward Events after the end of the financial year Proposed treatment of unappropriated earnings Group contributions
3 3 4 5 6 8 10 11 13 14 16 17 18 18 18
Income statements Comments on Income Statements Balance sheets Comments on Balance Sheets Changes in equity Cash Flow Statements Comments on Cash Flow Statements Notes
Audit Report Examination Report Organisation chart Board of Directors Corporate Management
20 21 22 24 25 27 28 29
48 49 52 53 55
The Board of Directors and CEO of Göteborg Energi AB (corp. ID no. 556362-6794) hereby submit the following annual report for the Parent Company and the Group for the financial year 1 January 2009 to 31 December 2009.
A FEW WORDS A FEW WORDS
A few words A few words about Göteborg Energi about Göteborg Energi Göteborg Energi, domiciled in Gothenburg, is the leading energy company in West Sweden. Göteborg Energi offers Göteborg Energi, domiciled in Gothenburg, is the leading products within the following areas: electricity trading, energy company in West Sweden. Göteborg Energi offers electricity transmission, district heating, gas, data and products within the following areas: electricity trading, telecommunications, energy services, cooling and Ready Heat. electricity transmission, district heating, gas, data and Göteborg Energi’s customers are found above all in the telecommunications, energy services, cooling and Ready Heat. Gothenburg area and include both corporate/public Göteborg Energi’s customers are found above all in the organisations and private persons. Gothenburg area and include both corporate/public organisations and private persons. OWNERSHIP DIRECTIVE OWNERSHIP DIRECTIVE
OWNERSHIP Göteborg Energi AB is a wholly owned subsidiary of Göteborgs OWNERSHIP Kommunala Förvaltnings AB (GKF AB), corp. ID no. Göteborg Energi AB is a wholly owned subsidiary of Göteborgs 556537-0888. GKF AB is wholly owned by the municipality Kommunala Förvaltnings AB (GKF AB), corp. ID no. of Gothenburg. 556537-0888. GKF AB is wholly owned by the municipality of Gothenburg.
VISION Vision “A sustainable Gothenburg” VISION “A sustainable “A sustainable Gothenburg”
BUSINESS CONCEPT BUSINESS CONCEPT We are an energy company, a supplier of BUSINESS CONCEPT We arethat anuses energy company, a supplier of services the infrastructure to We are long-term an energy company, supplier of create inainfrastructure our offerings. services thatstability uses the to services uses the infrastructure to We meet that the needs of our customers by offerings. create long-term stability in our create long-term stability in our offerings. delivering services and products. Our We meet the needs of our customers by We meet the of ourconsultation customers bywith offerings are needs designed delivering servicesin and products. Our delivering services and products. Our theofferings customersare so that their competitive designed in consultation with offerings is areimproved. designedWe in consultation with situation are a company with the customers so that competitive their competitive the customers so that their a strong environmental profile. situation is improved. are a company with situation is improved. We areWe a company with a strong environmental profile. a strong environmental profile.
The City of Gothenburg’s reason for OWNERSHIP DIRECTIVE The City ofanGothenburg’s reason for in operating energy company is described The City ofan Gothenburg’s reason for operating energy company is described the ownership document, which was written in operating an energy company is described in andownership approved indocument, 2002. This document the which was written the ownership document, which wasbusiness written comprises the basis for the Group’s and approved in 2002. This document and approved instrategies 2002. Thisand document concept, goals, policies, as comprises the basis for the Group’s business comprises the basis for the Group’s well as allgoals, work within the Group. Thebusinessas concept, strategies and policies, concept, goals, strategies and policies, as ownership directive, thethe goals of the The Board well as all work within Group. well as all work the Group. The plan of Directors andwithin the Group’s business ownership directive,the thegoals goals of the Board ownership directive, ofmission. the Board together formulate the Group’s ofofDirectors and the Group’s business Directors and the Group’s business planplan together theGroup’s Group’s mission. together formulate formulate the mission.
Financial goals Financial goals Göteborg Energi’s vision is to help to bring about “a sustainable Gothenburg”, for which the prerequisites are economic value Göteborg Energi’s vision is to help to bring about “a sustainable creation and profitable growth. This is the point of departure Gothenburg”, for which the prerequisites are economic value for establishing the Group’s financial goals, which in turn form creation and profitable growth. This is the point of departure the basis for the Group’s business planning process at the for establishing the Group’s financial goals, which in turn form product area level. The financial goals are long-term, which the basis for the Group’s business planning process at the means that they are evaluated over a business cycle (roughly 3–8 product area level. The financial goals are long-term, which years). The goal is to achieve good profitability in combination means that they are evaluated over a business cycle (roughly 3–8 with a good equity/assets ratio. This will provide a sound years). The goal is to achieve good profitability in combination financial basis for preserving future freedom of choice. with a good equity/assets ratio. This will provide a sound financial basis for preserving future freedom of choice.
The aim is to sustain a return on equity after standard tax within the interval 8–12 per cent over a five-year period. The The aim is to sustain a return on equity after standard tax equity/assets ratio should be over 30 per cent. Return on equity within the interval 8–12 per cent over a five-year period. The after tax for 2009 amounted to 11.0 per cent (9.8). The equity/assets ratio should be over 30 per cent. Return on equity equity/assets ratio including minority share of equity amounted after tax for 2009 amounted to 11.0 per cent (9.8). The to 32.2 per cent (33.5) at year-end. equity/assets ratio including minority share of equity amounted to 32.2 per cent (33.5) at year-end.
RETURN ON EQUITY
Return of equity %
Equity/assets ratio %
Goal for return on equity 8-12%
Goal, equity/assets ratio
GÖTEBORG ENERGI | 3 | ANNUAL REPORT 2009 GÖTEBORG ENERGI | 3 | ANNUAL REPORT 2009
SIGNIFICANT EVENTS IN 2009
Significant events in 2009 NET PROFIT FOR THE YEAR Net sales for 2009 amounted to SEK 5,747 million, an increase of SEK 1,738 million compared with last year. The acquisition of Göteborg Energi Din El AB increased net sales by SEK 1,678 million. Profit after financial items amounted to SEK 604 million, which is SEK 94 million higher than last year.
FORMATION OF DINEL On 1 April 2009 the remaining shares in Plusenergi AB were acquired from Vattenfall AB. After the acquisition the name of the company was changed to Göteborg Energi Din El AB. The purchase price was SEK 327 million, which generated a goodwill of SEK 117 million in the Group. The operation in Göteborg Energi Din El AB consists of electricity trading.
NEW PRICE MODEL FOR DISTRICT HEATING A new price model for district heating based on actual metered consumption was introduced in January 2009. This makes it possible to quickly see the result of energy conservation measures. The new price model is more accurate, and makes district heating more competitive compared with other heating systems.
NEW WIND POWER VENTURES The new wind turbine in Gårdsten was inaugurated in the spring. In December 2009, Göteborg Energi signed an agreement with Rabbalshede Kraft to acquire 10 of 21 wind turbines in the Töftedalsfjället wind farm in the municipality of Dals-Ed. A wind turbine outside Askersund was also acquired in the autumn.
SWEDISH ENERGY AGENCY AWARDS AID TO GOBIGAS
COLLABORATION WITH SKF FOR SUSTAINABLE INDUSTRY Göteborg Energi and SKF have initiated a partnership for the purpose of reducing carbon dioxide emissions, which contribute to global warming. The idea is that Göteborg Energi will deliver climate-friendly energy in the form of district heating, biogas, district cooling and wind-generated electricity to SKF, a heavy energy consumer. The partnership also includes starting a research cluster for development of wind power technology.
COLLABORATION ON CHARGING OF ELECTRIC CARS The Swedish Energy Agency decided in May to support a three-year collaboration project between Göteborg Energi and Fortum for the development of new technology for charging of electric cars. Sweden’s biggest parking facility for electric cars was inaugurated in December in Gothenburg. The project is a collaboration between Göteborg Energi and Saxborn Fastigheter.
GOTHENBURG WIRELESS BROADBAND NETWORK Gothenburg Wireless was launched in the summer of 2009. The service offers customers wireless Internet access at a number of different locations in the center of Gothenburg.
GÖTEBORG ENERGI PART-OWNER IN AFV Göteborg Energi became a part-owner in Alternative Fuel Vehicle Sweden AB (AFV) in the autumn. The company converts cars to gas operation. About 400 Volvo V70s had been sold at the end of the year. Volvo Cars Sweden projects an annual sales volume of 3,000 cars. NET SALES AND EARNINGS
Göteborg Energi’s planned biogas factory, GoBiGas, was given the go-ahead by the Swedish Energy Agency in September, along with SEK 222 million in financial aid.
SEK M 6 000
A prerequisite is that the European Commission’s state aid review has a positive outcome. The GoBiGas project, which is a joint venture with E.ON, aims at producing biogas by gasifying biomass.
600 2 000
LIQUEFIED NATURAL GAS VENTURE
In cooperation with Gasnor and the Port of Gothenburg, Göteborg Energi has initiated a project to introduce liquefied natural gas (LNG) as a fuel in Gothenburg. The goal is to start deliveries to customers in 2013. Liquefied natural gas is an alternative to heavy fuel oil for heavy goods transport, mainly by sea.
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2007 Operating profit
Profit after financial items
Key ratios Key ratios, Group
Operating profit (SEK M)
Profit after financial items (SEK M)
Financial Net sales (SEK M)
Return on total capital (%) Return on equity after standard tax (%) after standard tax (%) Return on capital employed (%) Equity/assets ratio (%) Investments (SEK M)
Production of electricity including CHP electricity (GWh)
Electricity supply network (transmission of electricity) (GWh)
Sales of district heating, excluding Ready Heat (GWh)
Average number of employees in the Group
Percentage men (%)
Percentage women (%)
Emissions of nitrogen oxides (tonnes)
Emissions of sulphur (tonnes)
Sales of gas (natural gas, biogas, LNG) (GWh) Personnel
Average age Environment Emissions of fossil carbon dioxide (tonnes)
THE GROUP’S PRODUCED/TRANSITED ENERGY DELIVERIES GWh 5 000 2005
2 000 1 000 0 Electricity (renewable end CHP)
Electricity network (transmission of electricity)
(incl, ready heat)
(natural gas, biogas, LNG)
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Subsidiaries GÖTEBORG ENERGI GOTHNET AB
GÖTEBORG ENERGI DIN EL AB Since 1 April 2009, Göteborg Energi Din El AB is a wholly owned subsidiary of Göteborg Energi AB after Vattenfall and Göteborg Energi decided to dissolve their partnership in the electricity trading company Plusenergi AB, in which both owned equal stakes. Göteborg Energi Din El AB is based in Gothenburg but targets customers all over Sweden. The company purchases electricity directly from producers and on the Nordic Power Exchange, Nord Pool. Göteborg Energi Din El AB underwent vigorous customer growth in 2009 and has about 230,000 customers today. At the end of the year the number of employees was 96. Net sales Operating profit Profit after financial items
1,776.7 7.8 35.1
Net sales Operating profit Profit after financial items
The figures apply to the period April-December 2009.
173.2 24.9 17.7
(157.4) (32.6) (19.9)
GÖTEBORG ENERGI NÄT AB Göteborg Energi Nät AB, which is wholly owned by Göteborg Energi AB, conducts electricity supply network operations in Gothenburg. By “electricity supply network operations” is meant the provision of high-voltage systems for the transmission of electricity. These operations also include planning, design, construction, operation and maintenance of transmission lines, switchgears and transformers, connection of electrical installations and metering of transmitted power and energy. The company has approximately 251,000 network subscribers. A price increase, which increased net sales, has compensated for a lower transmitted volume. Higher costs for metering have had a negative effect on operating profit. The company has 57 (58) employees. Net sales Operating profit Profit after financial items
Göteborg Energi GothNet AB, a wholly owned subsidiary of Göteborg Energi AB, owns and operates a fibre optic network where the main products are transmission and black fibre as well as optical channels. The company also runs a telehousing facility. The most important customers are the City of Gothenburg’s municipal boards and companies, the Västra Götaland Region and various operators. These customers account for more than 60 per cent of the transmission revenues. The private market has increased by more than 30 per cent with the extension of the “Open Metropolitan Area Network”. Net sales have been positively affected by additional sales and more connections. The number of employees was 43, unchanged from last year.
792.6 106.2 99.1
(759.3) (128.5) (123.6)
Göteborg Energi Gasnät AB is wholly owned by Göteborg Energi AB. The company builds, owns and manages natural gas pipelines and other installations in connection with the transmission of natural gas. The company also distributes biogas. The company has no employees. Operation and maintenance, investment projects and administrative services are purchased from the Parent Company. Sörred Energi AB is wholly owned by Göteborg Energi AB. The company’s business activities include providing energy, electricity supply network, hot water, natural gas, compressed air, water and sewerage as well as managing the plants that are required for production and distribution within the Torslanda area, mainly to Volvo Cars and AB Volvo. The company has no employees. Operation and maintenance, investment projects and administrative services are purchased from the Parent Company. Falbygdens Energi AB conducts district heating operations, electricity production, fibre optic operations and contracting in Falköping Municipality. The company is wholly owned by Göteborg Energi AB. The company has 45 (47) employees. The wholly owned subsidiary Falbygdens Energi Nät AB conducts electricity supply network operations in Falköping and environs. The subsidiary has no employees. Falbygdens Bredband AB was formed in 2002 in partnership with Falköping Municipality. Falbygdens Energi AB owns 51 per cent of the company, which is building out broadband in Falköping Municipality. Partille Energi AB conducts district heating operations and gas sales in Partille Municipality. Göteborg Energi AB and Partille Municipality each own a 50 per cent stake in the company. The company is regarded as a subsidiary, since Göteborg Energi AB has a controlling interest via the
GÖTEBORG ENERGI | 6 | ANNUAL REPORT 2009
composition of the board of directors. Electricity network operations are conducted in the wholly-owned subsidiary Partille Energi Nät AB. The companies have no employees. Operation and maintenance, investment projects and administrative services are purchased from the Parent Company. Ale Energi AB, in which Göteborg Energi AB owns a 91 per cent stake, in turn owns 100 per cent of Ale Fjärrvärme AB. Ale Fjärrvärme AB conducts district heating operations in Ale Municipality. The companies have no employees. Operation and maintenance, investment projects and administrative services are purchased from Göteborg Energi AB. A new subsidiary, GoBiGas AB, was formed during the year to develop technology for production of Substitute Natural Gas (SNG). The company is under construction. Other subsidiaries are Fjärrvärme i Frölunda AB, Västenergi AB and Rya Nabbe Depå AB. The business operations of these companies are on a small scale.
INFLUENCE AND INVOLVEMENT FOR A BETTER FUTURE Göteborg Energi takes an active part in the climate debate locally, nationally and internationally. We do this via our involvement in trade organisations where we offer Göteborg Energi’s opinion on important questions of fact and carry on a political dialogue aimed at influencing the debate. Göteborg Energi participates in trade organisations such as Swedenergy, the Swedish District Heating Association, the Swedish Gas Association, KFS – the Swedish Association of Municipal Enterprises, the Swedish Urban Network Association and the Swedish Biogas Association.
ASSOCIATED COMPANIES Göteborg Energi AB owns 50 per cent of FordonsGas Sverige AB, which sells compressed gas for motor vehicles via its own filling stations. Lerum Fjärrvärme AB, previously Lerum Energiproduktion AB, produces and sells electricity and district heating in Lerum Municipality. Göteborg Energi AB owns a 49 per cent stake in the company. Göteborg Energi AB owns 25 per cent of Alingsås Energi AB, which sells electricity to customers primarily in Alingsås. Shares in Alternative Fuel Vehicle Sweden AB were acquired during the year. The company converts Volvo cars to operate on gas for Volvo Cars Sweden. Göteborg Energi AB owns a 23.98 per cent stake in the company.
GÖTEBORG ENERGI AND OUR STAKEHOLDERS Göteborg Energi has a large number of stakeholders in the surrounding community. They include shareholders, licensing authorities, customers, suppliers and cooperation partners, creditors, employees, media and politicians. Since Göteborg Energi is ultimately owned by the people of Gothenburg, the company has a great responsibility to maintain a dialogue with the community. Göteborg Energi’s vision of a sustainable Gothenburg requires an intensive dialogue with its stakeholders. Göteborg Energi’s goal in the years to come is to make the stakeholders a more integrated part of the sustainability process. In the stakeholder dialogue, particular emphasis is placed on people who are directly affected by Göteborg Energi’s production plants, i.e. those who live near the plants. There must be particularly good communication and an intensive dialogue with this group.
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Product areas The Group’s product areas consist of a subdivision based on the Group’s product range. Sales and produced/transited volumes per product area are reported including intra-Group sales.
ELECTRICITY TRADING Since 2009 the Group conducts electricity trading via Göteborg Energi Din El AB. The company purchases electricity directly from producers and on the Nordic Power Exchange, Nord Pool. Net sales from sales of electricity amounted to SEK 1,678 million.
ELECTRICITY (RENEWABLE) The product area develops, designs and operates plants for the production of renewable electricity, with a principal emphasis on wind, solar and wave, at present mainly wind power. Production of wind power amounted to 10 GWh/year (10). The goal is to operate 100 wind turbines with a combined production capacity of 500 GWh by 2015. Göteborg Energi’s wind turbine in Gårdsten was inaugurated at the beginning of the year. It will deliver green electricity to meet Gårdstenbostäder’s need of electricity for building services. A wind turbine in Mariedamm outside Askersund was acquired in the autumn. The Mariedamm wind turbine started production in mid-December. At the end of the year, an agreement was signed to acquire ten wind turbines in the Töftedalsfjället wind farm in the municipality of Dals-Ed. The Group’s net sales from sales of renewable electricity amounted to SEK 8 million (9).
ELECTRICITY SUPPLY NETWORK (TRANSMISSION OF ELECTRICITY) We connect the customer to the electricity supply network and transport electricity to households, offices and industry. A subsidiary, Göteborg Energi Nät AB, owns the network and designs, operates and maintains it. A large investment programme is under way in the electricity supply network operation which includes reinforcements and reinvestments as well as burial of overhead power lines. Investments in the electricity supply network totalled SEK 239 million. The Group owns distribution networks in Göteborg, Partille and Falbygden. Net sales for transmission of electricity amounted to SEK 988 million (956). The total transit volume amounted to 5,151 GWh (5,326), of which 4,786 GWh (4,858) was transported to external customers. The work of complying with legal requirements regarding monthly reading of all electricity deliveries as from 1 July 2009 is finished. Approximately 260,000 meters have been replaced.
Most of the customers receive invoices based on actual meter readings. A few customers have not yet begun to receive these invoices due to the fact that their meter has not been replaced or that functioning communications have not yet been achieved. The total cost to the Group of this work amounts to about SEK 700 million.
DISTRICT HEATING AND READY HEAT We use waste heat from various industrial processes and our own production to heat water that is sent out into the district heating network for heating of residential and commercial premises as well as for hot water. The product area also includes Ready Heat, which is used for properties that cannot utilise district heating. This is often done in a local heating system with a local boiler plant, where it is possible to use different fuels. There are production and distribution facilities for district heating in Gothenburg, Ale, Partille, Falköping and Floby. Net sales amounted to SEK 2,947 million (2,655) and thereby account for about 51 per cent (66) of the Group’s total net sales, a lower percentage since electricity trading has been added. The total delivery volume amounted to 4,459 GWh (3,705) including 43 GWh (44) of Ready Heat, 3,893 GWh (3,537) of which was delivered to customers. In addition, 1,071 GWh (626) of CHP was produced and delivered. The year’s investments included district heating pipelines to Torslanda and Jonsered for connection to Gothenburg’s district heating network, plus customer connections including new connections to the areas of St Jörgen/Lillhagen and Eriksberg in Gothenburg. Gas from solid biofuels took another step forward with the commissioning of the gasification reactor at Chalmers.
GAS (NATURAL GAS, BIOGAS, LNG) AND GAS NETWORK (TRANSMISSION OF GAS) The gas product area includes sales of natural gas, town gas and biogas. Natural gas is imported from Denmark. Biogas is a renewable fuel that is recovered from sewage sludge and compost. The subsidiary Göteborg Energi Gasnät AB owns the network and is responsible for distribution. Our second upgrading plant, which was inaugurated in 2008 in Falköping, delivers biogas for vehicles from sewage sludge and household refuse. Net sales for gas trading (natural gas, biogas, LNG) amounted to SEK 801 million (800). Deliveries amounted to 2,468 GWh (2,365), of which 643 GWh (687) to external customers. Net sales for the gas network (transmission of gas) amounted to SEK 140 million (133). The total transit volume
GÖTEBORG ENERGI | 8 | ANNUAL REPORT 2009
during the year amounted to 3,611 GWh (2,499), of which transmission to external customers was 751 GWh (768). Göteborg Energi AB and DONG Energy AB own equal stakes in FordonsGas Sverige AB. FordonsGas Sverige AB is accounted for according to the equity method, whereby the consolidated income statement only recognises the Group’s share of the net profit for the year in the company. The volume of compressed gas for vehicles amounted to 12.3 GNm3 (12.3). The volume was negatively affected at the beginning of the year in particular, when motor vehicle traffic decreased due to the financial crisis. Net sales amounted to SEK 107 million (105), an increase of 2 per cent. Today there are a total of 101 filling stations in Sweden, 28 of which are owned by FordonsGas Sverige AB. Most of them are in southern and central Sweden. The gas infrastructure is being built out with 10–15 new filling stations per year. FordonsGas is planning to build ten new filling stations in 2010. FordonsGas Sverige AB’s fuel gas, which received the Nordic ecolabel (Svanen) in 2008, is still the only vehicle fuel to have been awarded this environmental certificate.
DATA AND TELECOMMUNICATIONS Göteborg Energi GothNet AB sells communications services via service providers. The company owns and operates the metropolitan area network that enables both residents and enterprises to choose from a wide range of services such as Internet, fixed telephony, TV and storage services. Demand on the market has increased slightly, except for a lower volume of connections to homes, since new construction of private homes has declined as a result of the financial crisis. During the year GothNet launched Gothenburg Wireless, the wireless metropolitan area network that is being built with an open technology model for all users, regardless of mobile operator. Central portions of Gothenburg have been equipped with WLAN, permitting mobile surfing at a speed ten times faster than with 3G. Falbygdens Energi is building out its broadband platform in Falköping Municipality and launched IP-TV during the year. Net sales for data and telecommunications amounted to SEK 180 million (168). The increase stems mainly from increased revenue from the fibre optic network as a result of several years of expansion of the network, despite lower market prices. The combined operating profit in the Group for the data and telecommunications product area amounted to SEK 26 million (34).
and energy service agreements, which give the customer control over his energy use. Since the 2006 Act on Energy Performance Certificates entered into force on 31 December 2008 (with certain exemptions), we have been fully booked to prepare such certificates. The number of comfort agreements signed has been constant in the industrial sector. Meter-related services, which is a new product area under development that started in 2008, offers meter reading and development of new products based on Zigbee services. ZigBee is a communications protocol based on low-cost GSM communications, primarily for control and monitoring, that can be connected to the new meters. Due to some delay in the installation of new meters, sales of meter-related services have been lower than previously projected. We now take care of all data collection within the Group. The first agreements with customers regarding two new products for the home, fire alarm and individual electricity metering, were signed in 2009. The product area includes activities relating to the infrastructure for charging of electric cars. Together with the property owner, Göteborg Energi at the end of the year inaugurated the largest facility in Sweden where we provide charging service at 25 parking spaces in Gothenburg. We plan to set up an additional 100 charging posts during 2010. Net sales amounted to SEK 276 million (198), of which meter-related services accounted for SEK 91 million (28), consisting for the most part of intra-Group sales.
COOLING Ready Cooling is a cooling plant that is installed in an individual property or for several properties. District cooling is produced centrally in a very environmentally efficient manner with cold water from the Göta Älv River and with waste heat from district heating production, and is distributed in a district cooling network. The first delivery of green district cooling took place in the summer of 2008. During the year the expansion of district cooling in central Gothenburg continued. Net sales in this product area amounted to SEK 48 million (31). The produced volume totalled 69 GWh (59), of which 58 GWh (47) was delivered to customers.
NET SALES PER PRODUCT AREA
SEK M 8 000
Gas District heatibg incl. ready heat
ENERGY SERVICES AND METERRELATED SERVICES
Electricity network (transmission of electricity)
We help our customers make their properties energy-efficient with everything from comfort agreements, where we guarantee a desired indoor climate, to property operation, energy performance certificates, energy statistics and monitoring. The product area includes several different types of agreements and products, such as comfort agreements with heating or cooling
Other includes: Electricity (renewable and CHP), Gas network and Data- and Telecommunications
GÖTEBORG ENERGI | 9 | ANNUAL REPORT 2009
6-year review SEK M
Consolidated income statement, summary Operating revenues
Net financial items
Profit after financial items
Minority share Netprofit Consolidated Balance Sheet, summary Assets
Equity and liabilities Equity Minority interest Provisions Provisions for tax Non-current liabilities
Total equity and liabilities
after standard tax, %
Return on capital employed, %
Key figures for the Group, summary Net sales Return on total capital, % Return on equity,
Equity/assets ratio, %
Production of electricity including CHP, GWh
Electricity supply network (Transmission of electricity), GWh Sales of district heating, excluding Ready Heat and CHP, (GWh) Sales of gas (natural gas, biogas, LNG), GWh
Average number of employees in the Group
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Investments The energy sector is a very capital-intensive sector. Investments are planned with a long time horizon are long-term. Their execution is often dependent on obtaining various permits. In many cases, the construction and commissioning process may have an implementation phase that extends over many years. Investments have long-term financial consequences for the Group’s operations. Many plants have an economic life of up to 30–40 years and in some cases up to 50 years. Advance planning and financing of the investing activities are therefore important aspects of the Group’s business. Conversion of the energy industry to renewable energy sources is desirable from an environmental perspective. This requires both large capital resources and long-term financial endurance. The profitability of investments in renewable energy is dependent on the future price trend in the energy sector and government incentives for conversion. Often the projects are also dependent on political decisions in the area of energy taxation. Prerequisites for such investments are long-term stability and predictability. The Group invests in various types of plants. Connection of new customers takes place through densification of existing distribution networks for district heating, gas, electricity, cooling and broadband, but also in conjunction with the development of new residential, commercial or industrial areas. Investments in production plants for district heating, CHP, cooling and network stations for electricity distribution are made to address capacity shortages or in conjunction with conversions to renewable energy. The investments are sometimes subject to legislation. The “Act concerning monthly reading of customers’ electricity consumption” requires that all electricity meters must be replaced with automatic digital meters and data collection systems for monthly reading. In the early 1980s, heavy investments were made in district heating in central Gothenburg by interconnection of district heating networks and build-out up to adjoining districts, as a result of which Gothenburg has an inter-linked district heating network. These investments have continued since then to new development areas in both Gothenburg and neighbouring municipalities. A deter-mined drive to build out district heating to more and more detached houses has been pursued since the beginning of the 21st century. Most detached houses suitable for district heating are now connected to the district heating network. Production resources for district heating have been increased since the turn of the century by the construction of the Rya CHP Plant and have also been changed by conversions of boiler plants from natural gas and coal to biogas. These investments account for a considerable portion of the investments made in recent years. The natural gas network in Gothenburg was built in the mid1980s. It supplies both our own district heating plants and heating and process customers with natural gas. The natural gas network is also connected to filling stations for fuel gas. Biogas plants complement deliveries of fuel gas. At the Arendal Biogas Plant, Gasendal, in Gothenburg, biogas digested at Gryab is purified to remove carbon dioxide in particular, after which it can be utilised directly in our natural gas network. Our second upgrading plant was inaugurated in the spring of 2008 in Falköping. The plant, which was built in cooperation with Falköping Municipality and FordonsGas Sverige AB, delivers biogas
for vehicles produced by digestion of sewage sludge and household refuse. Getting the production of second-generation biofuels going is important in order to meet environmental goals and reduce carbon emissions. We are conducting the Gothenburg Biomass Gasification Project, GoBiGas, together with E.ON to erect and operate a gasification plant in the Rya area of Gothenburg. The project involves the production of biogas by gasification of biomass and waste from forestry. The carbon-neutral gas will be used as a vehicle fuel, in industrial processes and in CHP production. The gasification reactor built together with Chalmers University of Technology enables different fuels for the development of gasification of raw biomass (including wood chips and pellets) to be tested and evaluated. The town gas network in Gothenburg is currently being converted to natural gas wherever possible. Göteborg Energi’s wind turbine in Gårdsten was inaugurated at the beginning of the year. It will deliver green electricity to meet Gårdstenbostäder’s need of electricity for building services. A wind turbine in Mariedamm outside Askersund was acquired in the autumn. The expansion of an interconnected broadband network in Göteborg was begun at the turn of the 21st century and is still in progress. The electricity supply network is constantly being expanded. Additions are currently being made to switching stations in the Gothenburg area. The district cooling system in central Gothenburg will continue to be expanded for a number of years to come. IT investments include a data collection system for electricity meters, a network information system, and a customer and invoice management system. During the next few years and up to the mid-2010s, investments are planned mainly in renewable energy, above all biogas and wind power. THE GROUP’S INVESTMENTS
SEK M 1 600
GÖTEBORG ENERGI | 11 | ANNUAL REPORT 2009
2008 New investments
The Group’s capital expenditure in plants during the year amounted to SEK 1,225 million (1,326). Of these investments, new investments amounted to SEK 1,049 million (1,102) and reinvestments to SEK 176 million (224). Investments in electricity supply network amounted to SEK 239 million (299). The investments consist of such things as SEK 17 million for underground cable between Sävedalen and Partille, SEK 17 million for refurbishment of existing network in Falbygden, SEK 40 million for service connections for high and low voltage, SEK 77 million for local expansion, and SEK 56 million for investments in 130 and 50 kV substations. Investments in burial of overhead power lines will continue until 2010. The year’s investments to meet the requirements of new legislation on monthly reading that entered into effect during the year amounted to SEK 257 million. The total investment is estimated at about SEK 700 million. Investments in district heating operations amounted to SEK 317 million (272). Examples of district heating investments are SEK 93 million for district heating pipelines to Torslanda and SEK 22 million to Jonsered, SEK 21 million for conversion of the Sävenäs hot water boiler to produce steam for electricity generation, and SEK 85 million for customer connections, including new connections to the areas of St Jörgen/Lillhagen and Eriksberg in Gothenburg. Investments in production and distribution facilities amounted to SEK 56 million.
Capital expenditure for wind turbines amounted to SEK 77 million (28). The investment in the Mariedamm wind turbine amounted to SEK 33 million, in Volvo SEK 21 million and in Rabbalshede SEK 16 million. Investments in further expansion of the district cooling network in central Gothenburg amounted to SEK 64 million (107). Investments in the gas product area amounted to SEK 33 million (40), including SEK 21 million in the GoBiGas project. The year’s investments in IT and telecommunications amounted to SEK 186 million (182), of which the IT investments, amounting to SEK 91 million, went for the most part to a new invoicing system, a personnel administration system, plus data collection and network information systems. The investments in the telecommunications area (total SEK 95 million) included SEK 67 million for expansion of the fibre optic network, including reinforcements and connection of customers, and SEK 25 million for technical equipment.
GÖTEBORG ENERGI | 12 | ANNUAL REPORT 2009
Environment The Group conducts activities for which notification and/or a permit under the Environmental Code are required in the Parent Company and in the subsidiaries Göteborg Energi Nät AB, Falbygdens Energi Nät AB, Partille Energi AB, Ale Fjärrvärme AB and Sörred Energi AB.
ENVIRONMENTAL WORK A separate environmental report with particulars on environmental permits, emissions and mode of operation is prepared for each plant for which a permit is required. The environmental impact of the activities mainly stems from airborne emissions from combustion, which is regulated in the conditions for the activity. In order that such environmental considerations will permeate our activities, the real environmental work takes place out in the ordinary line organisation, but we also have a number of environmental experts in different parts of the organisation that work on a more Group-wide basis. Göteborg Energi AB and the subsidiaries Göteborg Energi Nät AB, Falbygdens Energi Nät AB, Ale Fjärrvärme AB, Partille Energi AB, Partille Energi Nät AB, Göteborg Energi Gasnät AB and Sörred Energi AB have environmental management systems certified to ISO 14001.
PLANTS FOR WHICH PERMITS ARE REQUIRED The plants in Göteborg Energi AB are intended for the production of electricity and heat and are included in Gothenburg’s district heating system. The Environmental Health Department in Göteborg is the supervisory authority. Göteborg Energi Nät AB conducts electricity supply network operations. The company has approximately 100 network stations in the water protection areas for the Göta Älv River and the Delsjö lakes. These activities are subject to notification in accordance with the Environmental Code. The Environmental Health Department in Gothenburg is the supervisory authority. Ale Fjärrvärme AB conducts district heating operations. The supervisory authority is the Environmental Services Department in Ale Municipality. In the Falbygdens Energi Group, district heating operations and electricity production are conducted in the Parent Company Falbygdens Energi AB, while electricity supply network, broadband and contracting operations with related services are conducted in the subsidiary Falbygdens Energi Nät AB. District heating operations and electricity production are activities for which notification and/or a permit under the Environmental Code are required. The supervisory authorities are the Environmental Health Department in Falköping Municipality and the County Administrative Board in Västra Götaland.
In the Partille Energi Group, the Parent Company Partille Energi AB conducts gas and district heating operations, while electricity supply network operations are conducted in the subsidiary Partille Energi Nät AB. The district heating operations in the Parent Company require a permit. The
supervisory authority is the County Administrative Board in Västra Götaland.
PERMITS UNDER THE ENVIRONMENTAL CODE The following changes occurred in 2009 with regard to permits and decisions under the Environmental Code: • The permit under the Environmental Code for the Marconi boiler plant was revoked, since the plant has been decommissioned. • Several Ready Heat plants for which notification is required were declared closed (Floda Centre, Lillhagen and St Jörgen). • Cleanup after an oil leak at the Angered Boiler Plant in 2008 was concluded and a final report submitted in 2009. • Permit applications are pending for Gasendal and Skarvik.
ENVIRONMENTAL INCIDENTS IN 2009 OIL LEAKAGE FROM CABLE Oil leaking from a cable spilled into a surrounding ditch along highway 155 on Hisingen. Very little oil escaped the ditch, since steps were taken to prevent this. Approximately 500 litres of oil have been collected, which is equivalent to the amount that leaked out from the cable. The oil contains a low PCB concentration. Cleanup measures will be carried out in early 2010. The leakage was probably caused by ground vibrations caused by heavy traffic on highway 155, where the cable is located, and by the fact that the cable is about 40 years old.
L E A K A G E O F L U B R I C A T I N G OI L Leakage of about 200 litres of lubricating oil occurred at the Rosenlund Plant. The oil, which is viscous, leaked down into gravel underneath the building. The spill has been cleaned up. Total emissions, tonnes* Sulphur Nitrogen oxides Carbon dioxide (fossil) Carbon dioxide (from biofuel) Particulates Refrigerant loss
2009 9.4 195 545,000 156,000
2008 4.8 159 331,000 202,000
2007 6.9 178 455,000 132,000
* Emissions from production plants in the Group REPORTING The environmental statement in the annual report is one of three annual statements concerning our environmental performance. The other two are the environmental reports for each plant for which a permit is required and the EMAS statement. In the environmental statement we try to provide as comprehensive a picture as possible of our environmental impact. The EMAS statement describes the environmental impact of district heating, while the environmental reports contain data on production conditions, emissions, permit conditions etc. for each plant for which a permit is required. All of these reports can be downloaded from our website: www.goteborgenergi.se.
GÖTEBORG ENERGI | 13 | ANNUAL REPORT 2009
MANAGEMENT OF RISKS AND UNCERTAINTIES
Management of risks and uncertainties The business activities of the Göteborg Energi Group are exposed to a large number of risks, which can influence the possibilities of achieving our goals. In order to manage threats and opportunities, Göteborg Energi has established a corporate risk policy. The policy clarifies the Board’s guidelines for risk management and is based on the following components:
• • • • •
Identification of where the risks are Reliable methods for measuring the risks Effective management of risks and opportunities Reporting according to established procedures Control according to established risk policy
AREAS OF RISK FOR THE GROUP
Göteborg Energi’s risk policy deals with how risks are to be identified within the Group. This is done so that Göteborg Energi can fulfil its vision of continuing to be a stable company in the future. A number of risk areas for the Group have been identified.
• • •
POLITICAL RISKS Many aspects of the company’s operations are affected by government regulations and political decisions. The financial premises for investments in production plants can be altered by new regulations and political decisions, especially with regard to taxation. Göteborg Energi works actively with environmental scanning in order to be able to influence future decisions.
RISK FACTORS FOR THE GROUP
Göteborg Energi has a system for identifying the concrete risk factors that affect the Group in the different risk areas. These risk factors serve as a basis for the management, reporting and control of risks that occurs within the Group.
• • • • •
PRODUCTION PLANTS Business risks that are difficult to limit cost-effectively are the dependability of heat deliveries on weather and plant availability. Most of the Group’s profit for the year is earned during the first three and the last two months of the year. Major disruptions have an immediate effect on Group earnings.
Political risks Financial risks (see also Note 40) Environmental risks
Production risks Plant risks Commodity price risks (see also Note 41) Electricity distribution risks Electricity trading risks
PLANT RISKS Risks of damage to plants and production stoppages are identified continuously, and preventive maintenance is the most important means for minimising the plant risks.
MANAGEMENT, REPORTING AND CONTROL OF RISKS The Board of Directors has overall responsibility for internal control and risk management within Göteborg Energi. The Board has in turn delegated responsibility for risk management to the management of Göteborg Energi in accordance with the delegation structure. Each unit manages its own risks and is free to act within its own risk mandate. The outcome in the concerned units is followed continuously and reported to the executive management.
RISK MANAGEMENT MEASURES
• • • • • •
Society and its citizens are very sensitive to interruptions in the supply of electricity or heating. Interruptions often have serious consequences for societal services such as public transport, health care and elderly care. The Group’s goal is to minimise such supply interruptions. Goals for supply interruptions are set and checked against the outcome, and steps are taken to minimise future interruptions. Commodity risk exposure is described in Note 41, “Sensitivity analysis”.
• • • • •
Maintenance and investments in plants Commodity derivatives trading Differentiation of fuels Production according to efficiency Prioritisation of future products Island operation of Rya CHP Plant in the event of a fault in the national grid Changes in the electricity supply network to deal with storms Action plans to manage environmental risks Environmental scanning of political trends Hedging of derivatives for financial management Prioritisation of sustainable business solutions
ADDED VALUE OF RISK MANAGEMENT
SUCCESS FACTORS IN RISK MANAGEMENT
Göteborg Energi’s risk management work ultimately strengthens the competitiveness of its operations and enables opportunities for future value creation to be exploited. In prioritising products and activities, future environmental, safety and sustainability requirements within Göteborg Energi and among our stakeholders are always taken into consideration. In this way, Göteborg Energi’s risk management work also creates opportunities.
• • • •
By means of a consistent analysis of our risk exposure, we learn more about the overall risks faced by the Group. In combination with greater knowledge of specific risks, this will enable us to make more efficient use of our future investments. This will ultimately benefit our customers, since better knowledge of the risk profile enables us to price our products in a way that better reflects the risks.
District heating Biogas District cooling Low accident risk
GÖTEBORG ENERGI | 14 | ANNUAL REPORT 2009
MANAGEMENT OF RISKS AND UNCERTAINTIES
The Göteborg Energi Group is exposed to a number of risks in its activities. The work with the management and development of these risks is of great importance to the Group and a success factor for Göteborg Energi. Risk management always takes place with a view towards stricter future requirements on safety, environment and sustainability. FINANCIAL RISKS (SEE ALSO NOTE 40) The purpose of the Group’s financial risk management is to meet the Group’s long-term financing needs and to manage the Group’s financial risks in a cost-effective manner. Agreements in the financial area often involve long-term commitments. When external agreements are signed, the counterparty’s creditworthiness must be ensured.
Interest rate risks are managed so that the short-term interest rate level does not have any substantial impact on the Group’s earnings. Interest rate exposure consists of interestbearing liabilities and assets as well as interest rate derivatives and is calculated as the average fixed interest term. There is no exposure in foreign currency. The net of total currency exposure and hedging should be close to zero.
ENVIRONMENTAL RISKS By “environmental risk” is meant the probability of accidents and problems in company operations and their impact on the environment. A project has been established for identification and quantification of a future action plan to deal with these issues and economic environmental consequences in the future.
COMMODITY PRICE RISK The purpose of energy trading with price hedging of fuels and electricity is to smooth out fluctuations in fuel prices over time by the use of financial derivatives. There have been great fluctuations in commodity prices during the year. The production system for district heating contains a structural risk limitation. The heat is produced by a number of different plants using different fuels. The price relationship between the different fuels determines which plant is the most cost-effective to use. The competitiveness of district heating compared with pellets and heat pumps in particular is of vital importance for sustaining or increasing revenues and for an efficient utilisation of both our own production plants and the plants of the waste heat suppliers.
A competitive district heating price is affected by the trend in the purchase prices of our fuels in relation to the price trend for pellets and electricity. A development of our customer offering with a change in the basic price model and increased flexibility via a number of elective options is also considered important for the competitiveness of district heating. The customer is increasingly able to influence his heating costs, which benefits those customers who introduce smart ways of saving energy and increasing efficiency.
It is difficult to judge the risk of a major failure occurring. Most of the overhead power lines have been tested after the big storms (Gudrun and Per) of recent years. This means that the risk of prolonged customer power cuts caused by weather-related disturbances has been significantly reduced. A significant risk and uncertainty factor for electricity distribution is what form the Swedish Energy Agency’s oversight of the electricity network companies will take.
Oil leakage at heat production plants, leaks from oil-filled electricity network cables, asbestos in pipes and pollution of air, water and soil are all environmental risks that have serious consequences for citizens and the environment. Large nonrecurring cleanup costs are the consequence. Consistent environmental work has been pursued over the years to eliminate these environmental risks.
The risk of capacity shortages in heat production is limited due to our differentiation of fuels and production plants. There were margins in heat production capacity during the year. Energy taxes are public policy instruments that affect the Group’s fuel costs as well as its potential for producing heat efficiently. Converting production resources to renewable energy reduces the risk. Volume demand in some of the Group’s areas of activity is decreasing due to efficiency improvements by customers in their energy consumption. Risk exposure is being dealt with by efficiency improvements and rationalisations in these areas, at the same time as resources are being shifted to areas with future potential, such as marketing of services and renewable energy.
ELECTRICITY DISTRIBUTION A failure or a regional fault in the national grid is a risk. The Rya CHP Plant can, in an emergency situation and to a limited extent, produce electricity in “island operation” if input problems from the national grid are of long duration. Important plants can be disabled by fire or sabotage of equipment, leading to a power cut. This can have serious consequences for the community and can also disturb the national infrastructure.
We can share our knowledge with our customers and help them proactively in their risk management by selling them our services. A strong balance sheet is a great asset in times of unrest and violent fluctuations on the commodities, currency and financial markets. Our goal is that the equity/assets ratio should exceed 30 per cent. Financial strength is a prerequisite for converting to renewable energy.
GÖTEBORG ENERGI | 15 | ANNUAL REPORT 2009
ELECTRICITY TRADING Electricity price risk is measured over the power portfolio in accordance with the principles used by Nord Pool for calculation of security requirements for contracts notified for clearing. The power portfolio is exposed to liquidity risk. By distributing the price risk mandate over different delivery periods, the liquidity risk can be managed to some extent.
Improperly managed derivatives trading or internal improprieties in energy and currency trading or the central finance function could lead to considerable losses for the Group. The Group is aware of the risks and has taken steps to minimise it via its corporate risk policy and internal control systems.
Personnel GENDER EQUALITY AND DIVERSITY PROJECT
Göteborg Energi should be an attractive workplace in the Gothenburg area with good working conditions and career opportunities.
Göteborg Energi has received EU funding to increase knowledge in the area of gender equality and diversity. After a survey of the current situation, the purpose is to train all managers in diversity and gender equality issues so that they learn more about gender issues and can then pass on their greater knowledge and understanding to their subordinates. The project will continue during 2010.
MANAGEMENT/LEADERSHIP DEVELOPMENT Managers at all levels – business sector directors, department heads and unit managers – have undergone training in management and leadership. The training has focused on strategic business administration, leadership and corporate development and has been tailored to the different management levels.
REORGANISATION INITIATED IN 2009 A decision was taken in 2009 to carry out a far-reaching reorganisation of large parts of the Group. The process was begun in the autumn of 2009 and is expected to be completed in the spring of 2010. The purpose of the reorganisation is to review the organisation’s collective competence and to redistribute resources in order to streamline and develop the organisation to become more customer-oriented.
EMPLOYEE SATISFACTION INDEX (ESI) Göteborg Energi is working on a broad front to raise its Employee Satisfaction Index (ESI). The work is being pursued both centrally and locally out in the line organisation with various activities. The local work includes “organisational criteria”, “the work situation”, “stress”, “collaboration and knowledge sharing” and “leadership”. A workshop has been held on internal communication. The managers identify needs linked to ESI, which are then prioritised.
DISTRIBUTION MEN-WOMEN IN THE GROUP 100% 80%
Sickness absence in Göteborg Energi is low, just under 4 per cent, and relatively stable over time (five-year period). The goal is to maintain this low level, which was achieved in 2009 as well. We work with preventive health care. Procedures have been introduced for early intervention and care of our chronically ill employees.
40% 20% 0% EMPLOYEES Men
Key statistics, personnel
Average number of employees
Proportion female/male managers: Female managers
Sickness absence in %, Group
GÖTEBORG ENERGI | 16 | ANNUAL REPORT 2009
BOARD OF DIRECTORS
OUTLOOK FOR 2010 AND ONWARD
Outlook for 2010 and onward Growth is the order of the day in most parts of the world now, although to a varying degree. The finance markets are getting back to normal again. Experience from previous crises suggests that the recovery will be relatively moderate, burdened by overcapacity and unemployment. This will contribute to modest price increases and continued low key interest rates. Growth is expected both this year and next after the effect of stimulus measures wears off. The wrong policy could lead to a poorer trend than expected. 2010 has started well with cold winter temperatures. The Group’s production system has coped well with deliveries. It has required a great deal of skill and effort to ensure continued supplies after a long string of mild winters. Given the large proportion of waste heat in our district heating system, we only have to use some of our fuel-based plants when it gets really cold. Due to our purchasing and hedging strategy, with long advance planning when it comes to energy commodities, the effect of price changes are spread out over time. Göteborg Energi has been positioned to deal with the potential vagaries of a turbulent financial market. All in all, a favourable effect on energy commodities and financial expenses is expected during 2010. We see greater stability but still face challenges from other factors that influence the Group’s earnings. Continued development of and conversion to renewable energy is high on the list. Partnerships are necessary and productive in most areas where we are focusing on growth and new ventures. We became even more involved in the transport sector during 2009. The Group is continuing to invest in gas for ordinary vehicles while
getting more involved in the infrastructure for gas for heavier vehicles and for shipping. More ordinary filling stations for compressed gas are being built, and plans are being made for the first filling station for liquefied gas for trucks. In cooperation with Gasnor and the Port of Gothenburg, we are involved in a project for an LNG terminal in the Gothenburg harbour. We have also gone in as a part-owner in Alternative Fuel Vehicle Sweden AB, which converts cars to gas operation. In order to be able to supply vehicles with more biogas in the future, we are conducting a number of projects for the production of biogas. All are being conducted in collaboration with local partners, and some lie in the absolute forefront of technological development. The Government has decided to impose an energy tax of 2.4 öre/kWh from 2011 for combined heat and power plants (CHPs). Moreover, they have decided to keep a carbon dioxide tax of 7 per cent for CHPs owned by the energy sector. The Swedish Energy Agency is conducting a study that will recommend strategies to stimulate increased use of biogas. The question of long-term policy instruments to encourage renewable fuels has not yet been solved, and tax relief for company cars that run on biogas will cease after 2011. We initiated a far-reaching reorganisation during 2009 that will be completed during the first half of 2010. The purpose is to review the collective competence in the organisation and redistribute resources in order to be able to meet the future needs of the market.
GÖTEBORG ENERGI | 17 | ANNUAL REPORT 2009
EVENTS AFTER THE END
Events after the end of the financial year There are no significiant events to report after the end of the financial year.
Proposed treatment of unappropriated earnings The following unappropriated earnings are available for distribution in the Parent Company (amounts in SEK). Retained earnings Net profit for the year
The Board of Directors proposes that the earnings be distributed as follows: Dividend to shareholders 0 Carried forward to new account 267,852,686 Total (SEK)
The Group’s non-restricted equity in accordance with the Consolidated Balance Sheet amounts to SEK 543 million. For the company’s and the Group’s results and financial position at the end of the financial year, the reader is referred to the following financial reports.
Group contributions Group contributions have amounted over the long term to 28–50 per cent of profit after financial items. A Group contribution has been paid to Göteborgs Kommunala Förvaltnings AB in the amount of SEK 200 million. GROUP CONTRIBUTION/DIVIDEND 50% 40% 30% 20% 10% 0%
2006 Dividend as % of profit
GÖTEBORG ENERGI | 18 | ANNUAL REPORT 2009
CONTENTS FINANCIAL REPORTS Financial reports Income Statements Comments on Income Statements Balance Sheets Comments on Balance Sheets Changes in equity Cash Flow Statements Comments on Cash Flow Statements Notes
20 21 22 24 25 27 28 29
Note 1 Note 2 Note 3 Note 4 Note 5 Note 6 Note 7
29 32 32 32 33 33
Accounting and valuation principles Net sales by product Service and connection charges Average number of employees and personnel costs Sickness absence Gender distribution among senior executives Depreciation/amortisation according to plan and impairment losses Note 8 Share in profit of associated companies Note 9 Result from other securities and receivables Note 10 Interest income Note 11 Interest expenses Note 12 Appropriations Note 13 Tax on net profit for the year Note 14 Deferred tax Note 15 Software Note 16 Utility easements Note 17 Goodwill Note 18 Buildings and land Note 19 Plant and machinery Note 20 Equipment, tools, fixtures and fittings Note 21 Construction in progress and advance payments relating to property, plant and equipment
33 33 34 35 35 35 35 35 36 36 36 36 37 37 38
Note 22 Interests in Group companies Note 23 Receivables from Group companies Note 24 Interests in associated companies Note 25 Other securities held as non-current assets Note 26 Other non-current receivables Note 27 Other receivables Note 28 Deferred expenses and accrued income Note 29 Untaxed reserves Note 30 Minority share of equity Note 31 Provisions Note 32 Interest-bearing liabilities Note 33 Accrued expenses and deferred income Note 34 Cash and cash equivalents Note 35 Related party transactions Note 36 Lease and rental payments Note 37 Information on the Parent Company Note 38 Remuneration to auditors Note 39 Pledged assets, contingent liabilities and other liabilities Note 40 Financial instruments Note 41 Sensitivity analysis Note 42 Events after the balance sheet date Note 43 Definitions of key ratios
Unless otherwise specified, all amounts are in millions of kronor (SEK M). Figures in brackets refer to last year.
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37 37 37 38 38 38 38 38 38 39 41 41 41 41 42 42 42 42 42 45 46 46
Income statements Group Amounts in SEK M
Operating revenues Net sales Capitalised work on own account Service and connection charges
Other operating revenues Total operating revenues Operating expenses Commodities and consumables Other external costs
Depreciation/amortisation and impairment of intangible assets and property, plant and equipment
Interest income and similar line items
Interest expenses and similar line items
Total operating expenses Result from interests in associated companies
Operating profit Result from financial investments Result from interests in Group companies Result from other securities and receivables
Profit after financial items Appropriations Tax on net profit for the year Minority shares in net profit for the year Net profit for the year
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Comments on Income Statements The Group’s net sales during the period amounted to SEK 5,747 million (4,009), an increase of SEK 1,738 million compared with last year. Consolidation of the subsidiary Göteborg Energi Din El AB acquired in April 2009 increased net sales by SEK 1,678 million. As a result of the cold weather at the beginning and end of the year, 2009 was a normal year with regard to temperature. The sold volume of district heating and Ready Heat amounted to 3,893 GWh (3,537), an increase of 356 GWh compared with last year. Net sales includes SEK 117 million in allocation and trade in emission allowances, a decrease of SEK 27 million. The transited volume in the electricity supply network (transmission of electricity) amounted to 4,786 GWh (4,858), a decrease of 72 GWh or SEK 8 million, which was compensated for by a price increase that contributed SEK 49 million. Sales of gas reduced net sales by SEK 69 million due to lower volume. Other operating revenues amounted to SEK 142 million (24), an increase of SEK 118 million compared with last year. Additional revenue from the acquisition of Plusenergi amounted to SEK 96 million, and capital gain from sales of emission allowances to SEK 21 million. Commodities and consumables during the period amounted to SEK 3,170 million (1,708), an increase of SEK 1,462 million. Consolidation of Göteborg Energi Din El AB increased the cost for commodities and consumables by SEK 1,442 million. The fuel cost increased by SEK 30 million due to a higher delivery volume of district heating, despite lower gas prices. The effect of price hedging strategies increased the cost of commodity derivatives by SEK 76 million, since forward contracts under the Group’s risk policy were signed at high price levels in 2008. Within the framework of the system of emission allowances, costs for use of emission allowances were recognised in the amount of SEK 125 million, an increase of SEK 44 million. Other external costs during the period amounted to SEK 973 million (804), an increase of SEK 169 million. Consolidation of Göteborg Energi Din El AB increased the Group’s cost by SEK 119 million. The cost for consultants increased by SEK 55 million. The cost for data collection increased by SEK 17 million. The cost for the phaseout of town gas increased by SEK 15 million. Operating and maintenance costs decreased by SEK 20 million. Land compensation for electricity supply network decreased by SEK 15 million. Personnel costs amounted to SEK 766 million (530), an increase of SEK 236 million. The average number of employees was 1,108 (1,018), an increase of 90 persons. Consolidation of Göteborg Energi Din El AB increased personnel costs by SEK 42 million and the number of employees by 91 persons. Takeover of personnel from Sörred increased the number of employees in the Group by 21 persons and personnel costs by SEK 5 million. Personnel costs increased by 50 million for other personnel changes, full effect of the two-year salary
agreement that has been in force since April 2008, performance pay and higher pension costs. Furthermore, restructuring costs of SEK 25 million have been recognised. The accounting effect of pensions costs reported in accordance with the Swedish Financial Accounting Standards Council’s recommendation 29 was a negative difference of SEK 113 compared with last year, of which SEK 80 million was due to the fact that the pension costs decreased on changeover to a defined-contribution pension plan in 2008. Depreciation/amortisation and impairment of intangible assets and property, plant and equipment amounted to SEK 619 million (584), an increase of SEK 35 million. Amortisation of goodwill decreased by SEK 7 million. The impairment loss recognised for plants amounted to SEK 44 million (36), of which SEK 29 million relates to empty pipes laid in connection with excavation for other purposes, SEK 8 million to usufruct for rock caverns and SEK 6 million to conversion to town gas. A higher investment volume entailed increased depreciation costs. Result from interests in associated companies during the period amounted to SEK 46 million (15), an increase of SEK 31 million compared with last year. The profit share from Plusenergi AB contributed SEK 26 million. Operating profit amounted to SEK 691 million (708), which was SEK 17 million lower than last year. The operating margin, which was also adversely affected by the consolidation of Göteborg Energi Din El AB, amounted to 12.0 per cent (17.7). Net financial items amounted to SEK -87 million (-198), an improvement of SEK 111 million compared with last year. Result from interests in Group companies reduced earnings by SEK 17 million due to the Group’s capital loss from the sale of Borås Elhandel AB. The lower interest rate level during the year reduced interest expenses by SEK 83 million. Gains from redeemed interest rate swap agreements increased the net profit for the year by SEK 57 million (27). An interest rate swap agreement with a fixed interest rate of 5.3 per cent was redeemed at the end of the year, yielding a capital loss. The aggregate result of redeemed interest rate swap agreements amounted to a negative value of SEK 22 million to be offset against earnings over the next 3.3 years. The proportion of the loan portfolio consisting of interest rate derivatives was 32 per cent (30). The average fixed interest term was 38 months (28), which lies within the limits of company policy. Profit after financial items amounted to SEK 604 million (510), which is SEK 94 million better than last year. The Group’s net profit after minority shares amounted to SEK 595 million (504). Return on equity after tax amounted to 11.0 per cent (9.8). See Note 43 for definitions of rates of return.
GÖTEBORG ENERGI | 21 | ANNUAL REPORT 2009
Group Amounts in SEK M
ASSETS NON-CURRENT ASSETS Intangible non-current assets
Total intangible non-current assets
Property, plant and equipment Buildings and land
Plant and machinery
Equipment, tools, fixtures and fittings
Construction in progress and advance payments relating to property, plant and equipment
Total property, plant and equipment Long-term investments Interests in Group companies
Receivables from Group companies
Interests in associated companies
Receivables from associated companies Other securities held as non-current assets
Other non-current receivables
Deferred tax asset
Total financial non-current assets TOTAL NON-CURRENT ASSETS
CURRENT ASSETS Inventories Commodities and consumables Total inventories Current receivables Trade receivables Receivables from Group companies Receivables from other Group companies Receivables from associated companies
Deferred expenses and accrued income
Total current receivables Cash and cash equivalents
TOTAL CURRENT ASSETS
Gﾃ傍EBORG ENERGI | 22 | ANNUAL REPORT 2009
Group Amounts in SEK M
Parent Company 31/12 2008
EQUITY, PROVISIONS AND LIABILITIES EQUITY
Restricted reserves/Statutory reserve
Non-restricted reserves/Retained profit/loss Net profit for the year TOTAL EQUITY
PROVISIONS Provisions for pensions
Deferred tax liability
TOTAL PROVISIONS NON-CURRENT LIABILITIES Liabilities to credit institutes Other liabilities TOTAL NON-CURRENT LIABILITIES
CURRENT LIABILITIES Trade payables Liabilities to Group companies Liabilities to other Group companies
Liabilities to associated companies
Accrued expenses and deferred income
TOTAL CURRENT LIABILITIES
TOTAL EQUITY, PROVISIONS AND LIABILITIES
MEMORANDUM ITEMS Pledged assets
Gﾃ傍EBORG ENERGI | 23 | ANNUAL REPORT 2009
Comments on Balance Sheets The balance sheet total (total assets) amounted to SEK 13,047 million (11,668). The Group’s operations are capital-intensive and non-current assets comprise 83 per cent of the balance sheet total. Investments amounted to SEK 1,225 million (1,326) and depreciation/amortisation and impairment losses to SEK 619 million (584). Retirement of assets and capital losses on sales of plants amounted to SEK 15 million (3). Construction in progress amounted to SEK 514 million (831) – a decrease of SEK 317 million. The decrease in work in progress is due to the fact that large projects were capitalised and completed during the year. Interests in associated companies decreased by SEK 183 million. The remaining interests in Plusenergi AB (Göteborg Energi Din El AB) have been acquired and the company is now a wholly owned subsidiary within the Group. Dividends of SEK 3 million (4) have been received. Current receivables on the balance sheet date amounted to SEK 1,850 million (1,263). Trade debtors and accrued energy revenues amounted to SEK 1,419 million (806). Trade debtors increased by SEK 292 million, largely due to the consolidation of Göteborg Energi Din El AB. Cash and cash equivalents on the balance sheet date amounted to SEK 430 million (151). Cash and cash equivalents included a balance in the Group account with the City of Gothenburg. This receivable amounted to SEK 75 million (147) on the balance sheet date. The increase in cash and cash equivalents is attributable to the consolidation of Göteborg Energi Din El AB.
The equity/assets ratio on the balance sheet date was 32.2 per cent (33.5). The equity/assets ratio lies within the framework of the Group’s long-term objective of having an equity/assets ratio in excess of 30.0 per cent. Provisions amounted to SEK 1,584 million (1,503) – an increase of SEK 81 million compared with last year. The change mainly pertains to provisions for deferred tax in untaxed reserves. Current non-interest-bearing liabilities amounted to SEK 1,580 million (1,195). The current liability to the City of Gothenburg for Group contributions amounted to SEK 200 million (156). Trade payables amounted to SEK 419 million (409) and accrued expenses attributable to purchases of electricity and waste heat, as well as fuel taxes, are included at SEK 495 million (264). Interest-bearing liabilities consist of long-term loans and a portion of the current loans and totalled SEK 5,586 million (5,007). Lenders include the European Investment Bank in the amount of SEK 157 million and the City of Gothenburg in the amount of SEK 5,425 million. Of the Group’s non-current interest-bearing liabilities, SEK 1,502 million (2,300) will fall due for payment after five years or more. In keeping with the risk policy, no more than 30 per cent of the external long-term loan liability may fall due for payment during one calendar year. Individual loans may not have a term in excess of 15 years. All conditions are complied with.
GÖTEBORG ENERGI | 24 | ANNUAL REPORT 2009
CHANGES IN EQUITY
Changes in equity Amounts in SEK M
Restricted reserves/ Statutory reserve
Group Opening balance 1/1 2008 Transfer between restricted and non-restricted reserves Group contributions paid Tax effect of Group contributions paid Net profit for the year
Closing balance 31/12 2008
Opening balance 1/1 2009
Transfer between restricted and non-restricted reserves Group contributions paid Tax effect of Group contributions paid Net profit for the year Closing balance 31/12 2009
Parent Company Opening balance 1/1 2008 Group contributions paid
Tax effect of Group contributions paid
Group contributions received
Tax effect of Group contributions received
Net profit for the year
Closing balance 31/12 2008
Opening balance 1/1 2009
Group contributions paid Tax effect of Group contributions paid
Group contributions received
Tax effect of Group contributions received
Net profit for the year Closing balance 31/12 2009
The Groupâ€™s restricted reserves include an equity method reserve of SEK 25 million (175). The share capital consists of 400 shares at a quotient value of SEK 1 million. No changes have occurred during the year. Equity amounted to SEK 4,062 million, an increase of SEK 277 million since last year.
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CHANGES IN EQUITY
GROUP CONTRIBUTIONS RECEIVED Specification of Group contributions received by Parent Company in SEK M From: Falbygdens Energi AB Fjärrvärme i Frölunda AB Göteborg Energi Nät AB Ale Energi AB Sörred Energi AB Rya Nabbe Depå AB Total
2009 17.2 0.9 4.6 35.1 57.8
2008 17.6 0.9 37.2 1.5 23.3 0.2 80.7
GROUP CONTRIBUTIONS PAID Specification of Group contributions paid by Parent Company in SEK M Recipients: Göteborgs Kommunala Förvaltnings AB Göteborg Energi Nät AB Göteborg Energi Gasnät AB Göteborg Energi GothNet AB Total
2009 199.5 3.2 26.7 16.4 245.8
2008 155.6 16.1 11.9 183.6
GÖTEBORG ENERGI | 26 | ANNUAL REPORT 2009
CASH FLOW STATEMENTS
Cash Flow Statements Group 2009
604.1 -2.0 388.3
510.3 7.2 540.0
372.9 1.3 362.9
469.6 5.8 76.5
26.2 324.3 -208.7
-3.7 -44.0 -63.6
27.1 -88.1 200.5
-4.1 -71.5 41.1
Cash flow from operating activities Investing activities Acquisition of subsidiaries Sale of subsidiaries Acquisition of associated companies Investments in property, plant and equipment Investments in intangible assets Sales non-current assets Increase(–)/Decrease(+) in current receivables
-84.6 77.8 -21.0 1,132.1 -92.9 4.3 -28.6
-1,240.1 -86.1 6.9 -22.1
-327.2 -21.0 -742.1 -83.9 3.6 -334.0
-786.8 -86.1 6.8 -95.3
Cash flow from investing activities Financing activities Increase(–)/Decrease(+) in interest-bearing liabilities Settlement of Group contributions
Cash flow from financing activities
CASH FLOW FOR THE YEAR Cash and cash equivalents at start of year Cash and cash equivalents at year-end * Adjustments for non-cash items Depreciation/amortisation according to plan Capital gains/losses from sales of non-current assets Impairment losses/revaluations Change in interest receivable/payable Change in provisions Change in interests in associated companies Subsidiaries Anticipated dividend Other adjustment items Total Financial items Interest and dividends received Interest paid
279.0 150.8 429.6
34.3 116.2 150.8
-75.9 150.8 74.9
34.7 116.1 150.8
619.2 15.0 44.5 -85.0 -11.7 -214.5 16.9 3.9 388.3
547.6 2.5 36.2 35.3 -69.6 -11.2 -0.8 540.0
322.5 13.2 46.6 -19.4 -
296.1 1.4 36.2 -7.2 -
Amounts in SEK M
Operating activities Profit after financial items Tax paid Adjustments for non-cash items* Cash flow from operating activities before change in working capital Cash flow from changes in working capital Increase(–)/Decrease(+) in inventories Increase(–)/Decrease(+) in current receivables Increase(–)/Decrease(+) in current liabilities
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Parent company 2009
COMMENTS ON CASH FLOW STATEMENTS
Comments on Cash Flow Statements The Group’s cash flow from operating activities before change in working capital amounted to SEK 990 million (1,058), a decrease of SEK 68 million. Capital tied up in working capital decreased by SEK 142 million (increase: 111) due to a decrease in inventories, current receivables and current liabilities. Under investing activities, SEK 1,225 million (1,326) was used for investments in non-current assets. The Group had a net negative cash flow after investments of SEK 145 million (395). A Group contribution of SEK 156 million (134) was paid to the owner. The Group’s net borrowing increased during the year by SEK 580 million (564). Cash flow for the year was SEK 279 million (34). Cash and cash equivalents at the end of the year amounted to SEK 430 million (151).
Cash flow after investments and payment of a Group contribution to the owner have a great effect on the Group’s net debt. Net debt, which includes all interest-bearing liabilities less cash and cash equivalents and short-term investments, amounted on the balance sheet date to SEK 5,157 million (4,856), an increase of SEK 301 million. The debt/equity ratio, in other words interest-bearing liabilities less cash and cash equivalents divided by equity including minority interests, decreased at the balance sheet date to 123 per cent (124). The Group’s cash flow from operating activities and investments provides a picture of the self-financing rate.
GÖTEBORG ENERGI | 28 | ANNUAL REPORT 2009
Notes NOTE 1
ACCOUNTING AND VALUATION PRINCIPLES
The annual accounts for Göteborg Energi AB have been prepared in accordance with the Annual Reports Act and the Swedish Financial Accounting Standards Council’s recommendations RR 1 – RR 29 and otherwise in accordance with generally accepted accounting principles. The Swedish Financial Accounting Standards Council has been replaced by the Swedish Financial Reporting Board, and Göteborg Energi AB complies with the applicable updates for which the Swedish Financial Reporting Board has assumed responsibility (UFR 1 8). The calculation methods and accounting principles applied in the annual accounts for the Parent Company and the Group are unchanged compared with last year, with the exception of the change that has occurred regarding the useful lives of the asset classes “electricity supply networks” and “district heating networks”. C ON S OL I D A T E D A C C O U N T S The consolidated accounts include the Parent Company and subsidiaries in which Göteborg Energi AB holds more than 50 per cent of the number of votes for all shares, or in some other way exercises a controlling influence. The consolidated balance sheet has been prepared in accordance with the purchase method, which means that the equity of subsidiaries at the acquisition date, determined as the difference between the fair values of assets and liabilities, is eliminated in its entirety. The Group’s equity therefore only includes the proportion of the subsidiary’s equity that has accrued after the acquisition. If the consolidated historical cost of shares exceeds the value of the company’s net assets stated in the acquisition plan, the difference is reported as goodwill on consolidation. Companies acquired during the year are included in the consolidated accounts at amounts pertaining to the time after the acquisition. Sales and purchases, as well as accrued internal profits within the Group, are eliminated in their entirety, taking into account deferred tax. Intra-Group balances are eliminated in their entirety. The minority share in the net profit for the year is recognised in the consolidated income statement. The minority share in the equity of subsidiaries is recognised as a separate item in the consolidated balance sheet. ACCOUNTING OF ASSOCIATED COMPANIES By “associated companies” is meant companies that are not subsidiaries in which Göteborg Energi AB has a holding of at least 20 per cent of the number of votes for all shares. In the consolidated accounts, Göteborg Energi accounts for associated companies in accordance with the equity method.
According to this method, the book value in the Group of interests in associated companies is recognised at historical cost at the time of acquisition and is subsequently adjusted with the Group’s share of the change in the net assets of the associated company. In the consolidated income statement, the Group’s share in the associated company’s profit before appropriations and taxes is recognised as shares in profits. Shares in profits are recognised in the Group’s operating profit, since the holdings are exclusively business-related. The Group’s share of the associated companies’ reported taxes, including change in deferred taxes, is included in the Group’s tax expenses. In the Parent Company accounts, interests in associated companies are recognised at historical cost. Only dividends received that have been earned after the acquisition are recognised in the income statement. REVENUE RECOGNITION Most revenues come from sales of district heating and transmission of electricity. Revenue recognition is based in part on billing of actual meter readings and in part on calculation of what has been delivered but not yet billed. Revenues from sales of services and products are recognised at the time of delivery. By “net sales” is meant the selling price less VAT. Intra-Group sales are eliminated in the consolidated accounts. Consultancy and contracting services are performed on a cost-plus basis or at a fixed price. The percentage-ofcompletion method is applied for fixed-price contracts. In cases where losses are anticipated, provision is made for such losses measured at the company’s cost price. Service and connection charges are non-recurring payments for connection of electricity, gas, cooling and district heating. The entire charge is recognised as income on delivery of the connection, at the same time as the expense for the connection is booked as a non-current asset and depreciated according to plan. RECEIVABLES AND LIABILITIES IN FOREIGN CURRENCIES Receivables and liabilities in foreign currencies have been translated at the closing rate. Hedged receivables and liabilities in foreign currencies are measured at the hedged rate. Unrealised gains and losses are offset against each other and recognised at net value in the operating profit. FINANCIAL INSTRUMENTS Financial instruments recognised in the balance sheet include cash and cash equivalents, securities, receivables, operating liabilities and borrowing. To the extent that onerous contracts are held pertaining to financial derivatives for which there is no hedged asset, liability or expected cash flow, they are recognised as provisions.
GÖTEBORG ENERGI | 29 | ANNUAL REPORT 2009
LONG-TERM INVESTMENTS Securities intended to be held for a long time are classified as non-current assets and reported at historical cost on the settlement date. Impairment losses are recognised if a lasting diminishment of value is determined. S H OR T - T E R M I N V E S T M E N T S The Group’s short-term holdings are recognised at historical cost on the settlement date and valued at the lesser of historical cost and fair value (quoted purchase price at the closing of the stock exchange) on the balance sheet date. This principle is applied to the portfolio as a whole, which means that unrealised losses are offset against unrealised gains. LIABILITIES TO CREDIT INSTITUTES Financial liabilities are recognised at nominal value on the settlement date. Accrued interest is recognised as it accrues in net financial items. DERIVATIVES The Group utilises derivative instruments to cover the risks of exchange rate changes and to hedge its exposure to interest rate risks in accordance with a fixed policy. Changes in value in the hedged transaction are offset by the hedging instrument. Forward exchange contracts protect the Group against changes in currency rates by setting the rate at which an asset or liability in foreign currency will be realised. Any increase or decrease in the amount required to settle the asset or liability is compensated for by a corresponding change in value of the forward exchange contract. These gains and losses are therefore offset and are not recognised in the financial statements. Interest rate swap agreements protect the Group against interest rate changes. Any differences in interest received or paid as a result of interest rate swaps are recognised as interest income or interest expense distributed over the agreement period. Energy derivatives consist of financial agreements for the purpose of hedging the price of fuels purchased and sold in heat production, electricity consumption and electricity production. The profit or loss effects of derivatives are recognised in the same periods as the delivery periods of the underlying agreements. POWER TRADING PORTFOLIO Göteborg Energi Din El AB is active on the energy derivatives market and hedges, within the framework of the company’s trading policy, the prices of future purchase flows as delivery agreements are signed with customers. Furthermore, some limited trading occurs that is not linked to physical transactions. These hedged future purchase flows comprise the company’s power trading portfolio. Earnings effects from the power trading portfolio are recognised in the same period when the underlying agreements expire. These derivative instruments are not recognised in the balance sheet.
INCOME TAXES Recognised income taxes include tax to be paid or received for the current year, adjustments of taxes paid in previous years, changes in deferred tax and shares in the tax of associated companies. All tax liabilities and receivables are measured at nominal amounts and in accordance with enacted tax rules and rates. The tax effects relating to items recognised in the income statement are also recognised in the income statement. The tax effects of entries recognised directly in equity are recognised in equity. Deferred tax is calculated in accordance with the balance sheet method on all temporary differences that arise between carrying amounts and tax bases of assets and liabilities. Deferred tax liabilities relating to temporary differences attributable to investments in subsidiaries are not recognised in the consolidated accounts when the Parent Company can in all cases determine the date for reversal of the temporary differences and it is not considered likely that reversal will take place in the foreseeable future. In the Parent Company, due to the relationship between accounting and taxation, the deferred tax liability on untaxed reserves is recognised as part of the untaxed reserves. INVENTORIES Inventories are measured, with the application of the first-in first-out principle, at the lesser of cost and the net realisable value on the balance sheet date. Collective measurement is applied for homogeneous product groups. The necessary deduction is made for obsolescence. WORK IN PROGRESS In the Parent Company, due to the relationship between accounting and taxation, cost-plus contracts in progress are recognised in the income statement as the contracts are performed and billed. Fixed-price contracts are recognised during the period of the contract as work in progress in the balance sheet and are not recognised in profit and loss until the contract has been completed. INTANGIBLE ASSETS Software, utility easements and goodwill are recognised as intangible non-current assets. These assets are measured at cost, less accumulated amortisation. Impairment testing is carried out regularly. GOODWILL Goodwill consists of the amount by which the historical cost exceeds the fair value of the Group’s share of the acquired subsidiary’s identifiable net assets on the acquisition date. Goodwill attributable to Göteborg Energi Din El AB, Falbygdens Energi AB, Ale Energi AB, Lerum Fjärrvärme AB and Sörred Energi AB is amortised at a rate of 10 per cent per year. The investments are regarded as strategic in all cases, which warrants the longer depreciation period compared to the 5 years provided for in the Annual Reports Act. Goodwill
GÖTEBORG ENERGI | 30 | ANNUAL REPORT 2009
attributable to FordonsGas Sverige AB is amortised at a rate of 20 per cent per year. The Group’s expenditures for development do not meet the criteria that apply to capitalisation of intangible assets. Regarding amortisation periods for other intangible noncurrent assets, see below. P R OP E R T Y , P L A N T A N D E Q U I P M E N T Property, plant and equipment are recognised at historical cost, less depreciation according to plan and any impairment losses. Expenditures for improvements of the performance of assets in excess of the original level increase the carrying amount of the assets. Expenditures for repair and maintenance are recognised as costs as they arise. Cash flow-based models are used to test impairment, where future discounted cash flows are compared with carrying amounts. Interest on capital that has been borrowed to finance the construction of the Rya CHP Plant is included in the asset to the extent the interest is attributable to the construction period. Other borrowing costs are recognised as expenses. Göteborg Energi uses two depreciation concepts: • Depreciation according to plan • Accelerated depreciation The following applies for planned depreciation: The main principle is that depreciation is based on historical costs. Regarding the non-current assets Göteborg Energi AB took over from the City of Göteborg as of 1 Jan. 1989, the company’s historical costs are not depreciated, but rather the actual historical costs in the municipal administration at the time. Exceptions are buildings, where planned depreciation is based on the company’s historical cost. Planned depreciation starts the month the asset is put into operation. Depreciation is then carried out systematically and is calculated in relation to the estimated useful life of the asset. The established useful life is tested regularly. If a new estimation deviates significantly from previous estimations, the depreciation amounts for the current and future periods are adjusted. The straight-line depreciation method is used for all types of assets. The following percentages are applied: Utility easements Buildings Distribution facilities Plant and machinery Equipment, tools, fixtures and fittings
1% per year 2–4% per year 2–10% per year 10–33% per year 10–33% per year
B O R R O W I N G C OS T S Interest on capital that has been borrowed to finance the manufacture of an asset is included in the historical cost to the extent the interest is attributable to the manufacturing period. The capitalised interest is equivalent to the actual interest.
Other borrowing costs are recognised as expenses as they are incurred. LEASING No finance leases were signed in 2009. In accordance with the recommendations of the Swedish Financial Accounting Standards Council, agreements of a financial nature entered into before 1997 have not been recognised in the balance sheet. The profit for the year has been charged with costs for assets leased under operating leases. These lease payments (excluding charges for service, insurance and maintenance) are recognised on a straight-line basis over the entire lease period. Assets leased in this manner are primarily vehicles and copying machines. P E N S I O N C OS T S A N D P E N S I O N OB L I G A T I ON S The companies in the Group have undertaken defined-benefit pension obligations with defined-contribution elements in accordance with the PA-KFS occupational pension agreement. For these pension obligations and for most older occupational pension agreements, insurance has been taken out with insurance companies. The employees in Falbygdens Energi AB have supplementary occupational pension agreements in accordance with the ITP/STP plan. In Göteborg Energi AB and Göteborg Energi Nät AB, pension obligations are recognised for a small number of contractual and early retirement pensioners whose premiums cannot be insured until they have reached pensionable age in accordance with FAR SRS’s recommendation no. 4, Reporting of pension liabilities and pension costs. For these obligations a present value has been calculated on the basis of such factors as pension level, age and the degree to which full pension has been earned. This present value has been calculated on actuarial grounds and is based on the salary and pension levels prevailing on the closing date. The capital value of uninsured pension obligations is recognised as a provision in the balance sheet. The interest part of the change in the pension liability is recognised in the legal entity as interest expense. Other pension costs are charged to operating profit. Pension obligations and pension expenses in the consolidated financial statements are calculated in accordance with the accounting recommendation RR 29 Employee Benefits. This means that calculations are made with assumptions regarding such factors as future salary increases, inflation and discount rate (actuarial assumptions). With regard to defined-benefit plans, calculations are made using the Projected Unit Credit Method, which means that the recognised pension obligation is measured at the present value of expected future pension payments. Effects of changes in actuarial assumptions or of adjustments in assumptions based on experience are recognised in accordance with the minimum requirements of the accounting recommendation. This means that effects of actuarial gains and/or losses in the consolidated accounts are not recognised in the income statement or balance sheet if the net amount of unreported accumulated actuarial gains or losses does not exceed 10 per cent of the present value of the defined-benefit obligation at the start of the year.
GÖTEBORG ENERGI | 31 | ANNUAL REPORT 2009
Actuarial gains or losses outside the 10 per cent corridor are distributed over the employees’ average remaining period of employment, at present approximately 6 years. OT H E R P R OV I S I ON S T H A N P R O V I S I O N S F O R P E N S I O N S Other provisions are obligations that are uncertain in terms of maturities or the size of the amounts. Provision is made for known obligations or anticipated risks after individual assessment. In those cases where the timing of the payment is significant, provision is made in the amount of the present value of the estimated obligation on the balance sheet date. Other provisions than provisions for pensions mainly consist of a provision for conversion of the town gas network in Göteborg and a provision for future environmental obligations associated with the Group’s operations. ACCOUNTING OF BUSINESS SEGMENTS Business segments are accounted for based on the Group’s internal division into business sectors. G R O U P C ON T R I B U T I O N S A N D S H A R E H O L D E R S ’ C ON T R I B U T I ON S Group contributions are recognised according to their financial implications. Transfers of capital in the form of Group contributions were made during the year for the purpose of tax equalisation. Group contributions paid or received for the purpose of tax equalisation are recognised directly in non-restricted equity after deduction of the tax effect entailed by the contribution. Only the tax attributable to the income statement’s revenues and expenses is recognised in the consolidated income statement. Shareholders’ contributions received are recognised directly in non-restricted equity. Shareholders’ contributions paid are recognised in the historical cost of the shares in the subsidiary. CASH FLOW STATEMENTS The Cash Flow Statements have been prepared in accordance with the indirect method. CASH AND CASH EQUIVALENTS The Group’s cash and cash equivalents are included in a Group account with Göteborg Municipality. G R O U P C OM P A N I E S By “Group companies” is meant the companies included in the Group with Göteborg Energi AB as the Parent Company.
R E S E A R C H A N D D E V E L OP M E N T Since no projects were identified in 2009 that satisfy the requirements for capitalisation, all expenditures for research and development have been charged to operating profit. The Group allocates funds to a foundation, which in turn annually distributes money to researchers who have made advances in the energy sector. STATE AID Government subsidies related to profit and loss have been recognised as a revenue item in the consolidated income statement. These subsidies mainly consist of state aid in the form of electricity certificates and emission allowances. Conditions associated with state aid recognised in the income statement have been complied with. Government subsidies related to investments in noncurrent assets are recognised as a reduction of the value of the assets the subsidy is intended to cover. Conditions associated with government subsidies recognised in the income statement have been complied with.
NET SALES PER PRODUCT AREA
THE GROUP’S NET SALES PER PRODUCT AREA INCLUDING INTRA-GROUP SALES Group 2009 Electricity trading Electricity (renewable) Electricity supply network (transmission of electricity) District heating Gas (natural gas, biogas, LNG) Gas network (transmission of gas) Data and telecommunications Energy services and Meter-related services Other operations Eliminations and Group items Total
Parent Company 2009 2008
1,776.7 8.1 987.7
2,946.8 800.9 139.9
2,655.4 799.8 133.0
2,708.0 787.6 -
2,450.4 776.4 -
SERVICE AND CONNECTION CHARGES
Service and connection charges are non-recurring payments in conjunction with electrical and district heating installations.
OT H E R G R O U P C O M P A N I E S By “other Group companies” is meant the companies included in the Group with Göteborgs Kommunala Förvaltnings AB as the Parent Company, with the exception of the companies included in the Group with Göteborg Energi AB as the Parent Company.
GÖTEBORG ENERGI | 32 | ANNUAL REPORT 2009
AVERAGE NUMBER OF EMPLOYEES AND PERSONNEL COSTS 2009 No. of of whom empl. men in %
Göteborg Energi AB Subsidiaries Group total
888 220 1,108
67.0% 63.0% 66.0%
2008 No. of of whom empl. men in % 878 140 1,018
68.0% 83.6% 70.1%
SALARIES, REMUNERATIONS AND OTHER PERSONNEL COSTS Group 2009 2008 466.7 411.5 5.7 4.0 461.0 407.5 172.6 133.8 74.7 2.2 72.5 51.8 765.8
-40.7 1.3 -42.0 25.8 530.4
Parent Company 2009 2008 376.8 350.9 1.8 1.4 375 349.5 137.2 129.0 67.9 0.7 67.2 46 627.9
2009 Absence during period 4.0% 47.2% 5.1% 3.4% 3.2% 3.9% 4.2%
Parent Company - sickness absence 60 days or more - sickness absence women - sickness absence men - sickness absence employees < 29 years - sickness absence employees 30–49 years - sickness absence employees > 49 years
Most of the Group’s personnel, 888 persons (878), are employed in Göteborg Energi AB. In addition, 57 persons (58) are employed in Göteborg Energi Nät AB, 39 persons (38) in Göteborg Energi GothNet AB, 43 persons (44) in Falbygdens Energi AB and 81 persons (0) in Göteborg Energi Din El AB. The average number of employees in the Group amounted to 1,108 (1,018), of whom 34 per cent (29.9) are women and 66 per cent (70.1) are men.
Amounts in SEK M Salaries and remunerations - to the directors and CEO - to other employees Social security contributions by law and agreement Pension costs - to the directors and CEO - to other employees Other personnel costs Total
52.4 0.7 51.7 22.9 555.2
Payroll expenses for 2009 amounted to SEK 467 million (412). Social security contributions, including special payroll tax, amounted to SEK 98 million (93). Pension costs including special payroll tax on pension costs and tax on returns from pension funds amounted to SEK 110 million (-15), SEK 125 million more than last year. The accounting effect of pensions costs reported in accordance with the Swedish Financial Accounting Standards Council’s recommendation RR 29 was a negative difference compared with last year due to the fact that the pension costs decreased in 2008 on changeover to a defined-contribution pension plan. The managing director of the Parent Company has a pension under the ITP plan, supplemented with an endowment assurance. Taken together this provides a pension level of 75 per cent of salary from the age of 62 to 65. An agreement has been reached on severance pay of 24 months’ salary if notice of termination is given by the company. According to the employment contract, there is a mutual period of notice of six months.
GENDER DISTRIBUTION AMONG SENIOR EXECUTIVES 2009 No.of Of whom executives men 21 71.4% 9 77.8% 11 63.6% 60 80.0% 52 75.9% 24 75.0% 81 77.8%
Parent Company Board members Management Subsidiaries Board members Management Group total
2008 Absence during period 4.0% 57.7% 4.7% 3.6% 4.1% 4.0% 4.0%
2008 No. of Of whom executives men 19 73.7% 9 77.8% 10 70.0% 76 71.1% 58 70.7% 18 72.2% 95 71.6%
DEPRECIATION/AMORTISATION ACCORDING TO PLAN AND IMPAIRMENT LOSSES
Depreciation/amortisation and impairment losses amounted to SEK 619 million (584).Impairment losses amounted to SEK 44 million (36), of which SEK 29 million relates to pipes laid for future needs, SEK 8 million usufruct for rock caverns and SEK 6 million part of the town gas network.
SHARE IN PROFIT OF ASSOCIATED COMPANIES Group
Plusenergi AB Alingsås Energi AB FordonsGas Sverige AB Lerum Fjärrvärme AB
40.9 2.1 1.6 1.4
14.9 -1.1 -0.7 2.3
2.6 0.2 0.2
The share of profit in the Parent Company refers to dividend.
GÖTEBORG ENERGI | 33 | ANNUAL REPORT 2009
RESULT FROM INTERESTS IN GROUP COMPANIES Group 2009
NOTE 14 DEFERRED TAX PERTAINING TO ITEMS RECOGNISED DIRECTLY IN EQUITY
Parent Company 2009 2008
Group 2009 2008 Tax effect of Group contributions received/paid Total
Parent Company 2009 2008
NOTE 10 INTEREST INCOME DIFFERENCE BETWEEN RECOGNISED TAX EXPENSE AND TAX EXPENSE BASED ON APPLICABLE TAX RATE Group 2009 2008 Interest income of which from subsidiaries
Parent Company 2009 2008
NOTE 11 INTEREST EXPENSES Group 2009 2008 Interest expenses of which to subsidiaries
Parent Company 2009 2008
Interest expenses include the interest element in pension liability in the amount of SEK 19 million (28), of which SEK 1 million for the Parent Company.
Group 2009 2008 Accounting profit before tax Tax at current tax rate Tax effect of non-deductible expenses Amortisation of consolidated goodwill Other temporary differences Effect of changed tax rate on deferred tax Tax effect of non-taxable revenue Recognised tax expense
Difference between book depreciation and depreciation according to plan Total
510.3 142.9 0.9
278.3 73.2 0.5
274.5 76.9 0.6
Group 2009 2008
Parent Company 2009 2008 -94.6 -195.1
Group 2009 2008
Parent Company 2009 2008
Provision for future environmental measures Provision for restructuring of town gas network Premature termination of swap agreement Other temporary differences
Total deferred tax assets
S P E C I F I C A T I ON O F D E F E R R E D T A X L I A B I L I T Y
NOTE 13 TAX ON NET PROFIT FOR THE YEAR
Current tax Tax effect Group contributions Deferred tax Share of associated companies’ tax Total
606.5 159.5 0.7
S P E C I F I C A T I ON O F D E F E R R E D T A X A S S E T
NOTE 12 APPROPRIATIONS Group 2009 -
Parent Company 2009 2008
Group 2009 2008 Parent Company 2009 2008
-9.1 -52.5 -95.7 -12.8
-43.6 -20.0 -5.0
-49.4 -22.8 -
-28.8 20.4 -
Provision for pensions untaxed reserves other temporary differences Total deferred tax liabilities
Deferred tax has been reported at the rate of 26.3 per cent.
GÖTEBORG ENERGI | 34 | ANNUAL REPORT 2009
Parent Company 2009 2008
35.8 1,397.2 78.8
38.9 1,286.1 84.2
NOTE 18 BUILDINGS AND LAND
NOTE 15 SOFTWARE Group 2009 2008
Parent Company 2009 2008
Opening historical costs Purchases By acquisition of subsidiaries Sales and retirements Reclassification
385.6 86.7 15.3
300.6 86.1 -
384.8 83.2 -
299.0 86.1 -
Closing acc. costs Opening amortisation Acc. amortisation, sales and retirements Amortisation for the year
463.8 -248.9 7.8
385.6 -227.5 0.8
459.4 -249.3 7.8
384.8 -227.5 -
Closing acc. amortisation
Closing residual value according to plan
NOTE 16 UTILITY EASEMENTS
31 December Opening historical costs Capitalised expenditure for the year Reclassification of construction in progress Closing acc. costs Opening amortisation Amortisation for the year Closing acc. amortisation Closing residual value according to plan
Group 2009 2008 30.0 27.1 6.2 2.2
Parent Company 2009 2008 4.7 4.7 -
36.2 -4.9 -1.0
30.0 -4.0 -0.9
4.7 -0.4 0.0
4.7 -0.3 -0.1
The Group owns a number of properties. Buildings that represent substantial values include the head office on Rantorget and the Rosenlund Plant. All the properties are regarded as properties used in business operations in accordance with RR 24 Investment Property.
31 December Opening historical costs Purchases Sales and retirements Reclassification
Opening historical costs Acquisitions for the year
Closing acc. costs Opening amortisation Amortisation for the year
527.2 -253.7 -26.7
410.4 -220.1 -33.6
Closing acc. amortisation Opening impairment losses Impairment losses for the year
-280.4 -5.1 -
-253.7 -5.1 -
Closing acc. impairment losses Closing residual value acc. to plan
Parent Company 2009 2008
1,147.1 8.8 -1.7 9.4
964.5 -1.9 71.7
963.5 -0.6 1.6
Closing acc. costs Opening depreciation Acc. depreciation, sales and retirements Reclassifications Depreciation for the year
1, 246.8 -283.4 1.5
1,163.6 -245.3 1.5
1,034.3 -269.8 1.3
964.5 -238.4 0.5
Closing acc. depreciation Opening impairment losses Reclassifications Impairment losses for the year Closing acc. impairment losses Closing residual value according to plan Assessed value building
-323.4 -14.1 0.1 -8.5
-283.4 -14.1 -
-301.7 -14.1 0.3 -8.5
-269.8 -14.1 -
Assessed value land
Consolidated goodwill refers to the acquisitions of Gﾃｶteborg Energi Din El AB, Ale Energi AB and Sﾃｶrred Energi AB. Group 2009
1,163.6 6.5 -2.6 79.3
NOTE 17 GOODWILL
Gﾃ傍EBORG ENERGI | 35 | ANNUAL REPORT 2009
NOTE 19 PLANT AND MACHINERY
NOTE 20 EQUIPMENT, TOOLS, FIXTURES AND FITTINGS Parent Company 2009 2008
Opening historical costs Purchases Sales and retirements Reclassification
12,886.7 142.6 -268.6 1,203.9
11,939.2 188.5 -39.2 798.2
7,226.9 -106.2 975.8
6,697.3 -22.5 552.1
Closing acc. costs Opening depreciation Acc. depreciation, sales and retirements Reclassifications Depreciation for the year Closing acc. depreciation Opening revaluations Depreciation for the year of gross carrying amount Closing acc. revaluations Opening impairment losses Impairment losses for the year Closing acc. impairment losses Closing residual value according to plan Assessed value power station
13,964.6 -5,250.4 250.6
12,886.7 -4,845.5 26.7
8,096.5 -2,724.1 90.9
7,226.9 -2,510.4 14.5
-464.6 -5,464.4 11.6 -2.5
-431.6 -5,250.4 14.1 -2.5
-257.0 -2,890.2 -
0.1 -228.3 -2,724.1 -
Group 2009 2008
Parent Company 2009 2008
Opening historical costs Purchases By acquisition of subsidiaries Sales and retirements Reclassification
159.2 3.2 110.7 -25.4 14.1
148.2 3.7 -9.3 16.6
101.3 -21.6 9.4
92.6 -6.7 15.4
Closing acc. costs Opening depreciation Acc. depreciation, sales and retirements Depreciation for the year By acquisition of subsidiaries Closing acc. depreciation Opening impairment losses Impairment losses for the year By acquisition of subsidiaries
261.8 -102.8 25.3
159.2 -94.6 9.0
89.1 -69.8 21.6
101.3 -64.4 6.7
-19.6 -42.4 -139.5 -0.1 -0.3
-17.2 -102.8 -0.1 -
-13.6 -61.8 0.0 -0.1
-12.1 -69.8 -
Closing acc. impairment losses Closing residual value according to plan
Equipment, tools, fixtures and fittings consist of office equipment such as furniture, computers, office machines et cetera.
Plant and machinery consists of distribution facilities and other technical installations. Distribution facilities mainly include pipes and conduits for gas, electricity, fibre optics and district heating, including culverts and devices intended for building services, such as boilers, transformers, cisterns, pumps, fans and switchgears et cetera. Technical installations include subscriber depots for district heating and natural gas. Certain installations may comprise fixtures to real property in someone elseâ€™s property.
GĂ–TEBORG ENERGI | 36 | ANNUAL REPORT 2009
C O R P . I D N O . A N D D O M I C I L E OF G R O U P C OM P A N I E S
NOTE 21 CONSTRUCTION IN PROGRESS AND ADVANCE PAYMENTS RELATING TO PROPERTY, PLANT AND EQUIPMENT
31 December Opening historical costs Purchases Reclassification to completed non-current asset Closing acc. costs
Group 2009 2008
Parent Company 2009 2008
831.3 979.8 -1,297.0
619.0 1,036.9 -824.6
661.0 742.1 -1,057.1
443.5 786.8 -569.3
NOTE 22 INTERESTS IN GROUP COMPANIES
Parent Company 2009 2008
Opening historical costs Acquisitions Reclassification
1,367.5 327.2 50.0
Closing acc. costs Opening impairment losses
Closing acc. impairment losses Closing book value
S P E C I F I C A T I ON O F I N T E R E S T S I N G R O U P C O M P A N I E S
Ale Energi AB - Ale Fjärrvärme AB Falbygdens Energi AB - Falbygdens Energi Nät AB - Falbygdens Bredband AB Fjärrvärme i Frölunda AB GoBiGas AB Göteborg Energi Din El AB Göteborg Energi GothNet AB Göteborg Energi Nät AB Göteborg Energi Gasnät AB Partille Energi AB - Partille Energi Nät AB Rya Nabbe Depå AB Sörred Energi AB Västenergi AB Total
Interest in % 91% 100% 100% 100% 51% 100% 100% 100% 100% 100% 100% 50% 100% 100% 100% 100%
No. of Book shares value SEK M 23,000 13.5 23,000 10,000 376.6 788,974 1,300 1,000 6.0 200 0.2 100,000 377.0 75,000 73.7 100 627.2 1,000 1.0 3,012 27.0 10,000 1,000 3.4 1,000 232.0 1,000 0.1
Ale Energi AB Ale Fjärrvärme AB Falbygdens Energi AB Falbygdens Energi Nät AB Falbygdens Bredband AB Fjärrvärme i Frölunda AB GoBiGas AB Göteborg Energi Din El AB Göteborg Energi GothNet AB Göteborg Energi Nät AB Göteborg Energi Gasnät AB Partille Energi AB Partille Energi Nät AB Rya Nabbe Depå AB Sörred Energi AB Västenergi AB
556588-8111 556041-0978 556014-6663 556407-5165 556026-9606 556370-7008 556778-3701 556572-4696 556406-4748 556379-2729 556029-2202 556478-1440 556528-5698 556459-5113 556618-8651 556418-8240
Ale Ale Falköping Falköping Falköping Göteborg Gothenburg Gothenburg Gothenburg Gothenburg Gothenburg Partille Partille Gothenburg Gothenburg Gothenburg
NOTE 23 RECEIVABLES FROM GROUP COMPANIES
Opening historical cost New loans Amortisation Current portion of non-current receivable
Parent Company 2009 2008 896.6 794.4 374.3 135.0 -37.3 -29.8 -3.0
NOTE 24 INTERESTS IN ASSOCIATED COMPANIES
31 December Opening historical cost Acquisitions Shares in profits of associates Reclassification Book value
Group 2009 2008 270.9 264.4 21.0 30.7 6.5 -234.7 87.9
Parent Company 2009 2008 104.9 104.9 21.0 -50.0 75.9
S P E C I F I C A T I ON O F I N T E R E S T S I N A S S O C I A T E D C OM P A N I E S
Göteborg Energi AB has by agreement a controlling influence in Partille Energi AB, in which it has had a 50 per cent interest since 30 December 1999. The share of voting power corresponds to the share of equity.
Corp. ID no
Alingsås Energi AB Alternative Fuel Vehicle Sweden AB FordonsGas Sverige AB Lerum Fjärrvärme AB Plusenergi AB Total
GÖTEBORG ENERGI | 37 | ANNUAL REPORT 2009
Interest in % 25% 23.98%
No. of shares 3,333 489
Group 2009 2008 6.7 5.2 1.0 -
Parent Company 2009 2008 1.1 1.1 1.0 -
50% 49% 50%
23,000 48,039 50,000
36.2 44.0 -
15.8 42.2 207.7
31.8 42.0 -
11.8 42.0 50.0
Interests in associated companies are recognised in the Parent Company at historical cost and in the Group at the share of equity. The share of voting power corresponds to the share of equity. Plusenergi AB has changed from being an associated company to a subsidiary during the year.
NOTE 27 OTHER RECEIVABLES Group 31 December
Alingsås Energi AB Alternative Fuel Vehicle Sweden AB FordonsGas Sverige AB Lerum Fjärrvärme AB
Corp. ID no
556499-0413 556763-5775 556578-0540 556527-7638
Alingsås Gothenburg Gothenburg Lerum
Lerum Energi AB, corp. ID no. 556109-3955, is domiciled in Lerum.
Shares in Lerum Energi AB Stake in Falbygdens Vind ek. för. Other securities Book value
Interest in %
No. of shares
NOTE 26 OTHER NON-CURRENT RECEIVABLES
Total other receivables
Parent Company 2009 2008
Opening historical cost Change
Includes receivable from the City of Gothenburg in the amount of SEK 86 million for financing of underground tunnels used in the company’s operations, but remaining in municipal ownership. This receivable is being amortised over a 50-year period. Other non-current receivables include SEK 50 million as the current portion of the capital loss from the redemption of swap agreements, SEK 6 million in connection credits given to customers, and SEK 7 million receivable from the World Bank’s Carbon Fund.
NOTE 28 DEFERRED EXPENSES AND ACCRUED INCOME
31 December Prepaid rents Prepaid service agreements Rya CHP Plant Prepaid energy taxes Prepaid insurance premiums Accrued energy and network charges Other items Total
Total contracts in progress Other receivables Restitution fuel tax VAT receivable Emission allowances and electricity certificates Other
NOTE 25 OTHER SECURITIES HELD AS NON-CURRENT ASSETS
Contracts in progress Accumulated contract expenses and reported profit less reported losses
C O R P . I D N O. A N D D O M I C I L E O F G R O U P C O M P A N I E S
Group 2009 2008
Parent Company 2009 2008
98.8 9.1 669.4
80.1 8.6 347.9
98.8 8.5 253.9
80.1 8.6 282.4
NOTE 29 UNTAXED RESERVES
31 December Accumulated difference between book depreciation and accelerated depreciation Total
GÖTEBORG ENERGI | 38 | ANNUAL REPORT 2009
Parent Company 2009 2008 2,983.6 2,889.0 2,983.6
NOTE 30 MINORITY SHARE OF EQUITY
PENSION LIABILITY/ASSET ACCORDING TO THE BALANCE SHEET Group
Opening share Partille Energi AB Ale Energi AB
129.1 5.8 0.5
125.3 3.4 0.4
The minority share of equity consists of Partille Municipality’s 50 per cent holding in Partille Energi AB, amounting to SEK 131 million, Ale Municipality’s 9 per cent holding in Ale Energi AB, amounting to SEK 3 million, and Falköpings Municipality’s 49 per cent holding in Falbygdens Bredbands AB, amounting to SEK 1 million.
NOTE 31 PROVISIONS PENSIONS The employees in Göteborg Energi AB, Göteborg Energi Nät AB and Göteborg Energi GothNet AB are covered by the PAKFS occupational pension agreement, which is primarily a defined-benefit pension plan. Previous obligations under the PA-KL occupational pension agreement were also definedbenefit. Benefits under PA-KFS are calculated on the basis of duration of employment and salary level at the time of retirement. The salary level is calculated as an average of the five best annual salaries during the seven-year period immediately prior to the two last years of employment. PA-KFS mainly covers occupational pension, and for each year the employee earns additional pension entitlement, which is recognised as pensions earned during the period and an increase in the pension obligation. Pension obligations for a small number of contractual and early retirement pensioners, whose premiums cannot be insured until they have reached pensionable age, are recognised as pension liability in Göteborg Energi AB. The City of Gothenburg has issued a guarantee for the pension liability in Göteborg Energi AB. Employees in Falbygdens Energi AB are covered by the ITP plan, which is insured in Alecta. According to a statement by the Swedish Financial Accounting Standards Council’s Emerging Issues Task Force, RedR4, this is a defined-benefit plan in which many employers participate. For the financial year 2008, the company has not had access to information according to the Swedish Financial Accounting Standards Council’s Emerging Issues Task Force statement RedR4 that makes it possible to account for this plan as a defined-benefit plan. The ITP pension plan that is secured via insurance in Alecta is therefore accounted for as a defined-contribution plan.
Interest-bearing pension liability (+) /asset (-)
Pension obligations and pension expenses in the consolidated financial statements are calculated in accordance with the applicable accounting recommendation (RR 29 Employee Benefits). This means that calculations are made with assumptions regarding such factors as future salary increases, inflation and discount rate (actuarial assumptions). With regard to defined-benefit plans, calculations are made using the Projected Unit Credit Method, which means that the recognised pension obligation is measured at the present value of the expected future pension payments. Effects of changes in actuarial assumptions or of adjustments in assumptions based on experience are recognised in accordance with the minimum requirements of the accounting recommendation. This means that effects of actuarial gains and/or losses in the consolidated accounts are not recognised in the income statement or balance sheet if the net amount of unreported accumulated actuarial gains or losses does not exceed 10 per cent of the present value of the definedbenefit obligation at the start of the year. Actuarial gains/losses on pension obligations at year-end amounted to 2 per cent of the present value of the pension obligation. The actuarial loss is mainly due to changed assumptions regarding the discount rate. Actuarial gains or losses outside the 10 per cent corridor are distributed over the employees’ average remaining period of employment, at present approximately 6 years. OBLIGATIONS CONCERNING EMPLOYEE BENEFITS, DEFINEDBENEFIT PLANS
Group 2009 2008
Fully or partially funded pension obligations, present value at 31 December Plan assets, fair value at 31 December
Total Unrecognised actuarial gains (–), losses (–), pension obligations Unrecognised actuarial gains (–), losses (–), plan assets Pension liability acc. to balance sheet TOTAL PENSIONS COSTS
Pensions earned during the period Return on plan assets Interest on obligation Reduction (changeover to PA-KFS 09) Net actuarial gain (–), loss (+) recognised during the year
10.0 -17.7 19.1 31.7
20.7 -26.4 28.9 -64.1 9.2
Pension cost, defined-benefit plans Pension cost, defined-contribution plan Special payroll tax, total pension costs
43.1 45.8 21.6
-31.7 20 -2.8
Total pensions costs
GÖTEBORG ENERGI | 39 | ANNUAL REPORT 2009
PENSION OBLIGATIONS Opening balance pension obligations Pensions earned during the period plus cost of contractual pensions Interest on obligations Benefits paid Reduction (changeover to PA-KFS 09) Unrecognised actuarial gains (+), losses (-), pension obligations Pension obligations, present value
19.1 -22.7 -14.6
28.9 -24.4 -88.6 29.1
PLAN ASSETS Opening balance plan assets Return on plan assets Payments from employer Benefits paid Unrecognised actuarial gains (+), losses (-), pension obligations Plan assets, present value
503.0 17.7 33.4 -22.6 78.8
519.3 26.4 40.2 -24.3 -58.6
“Pension adjustment” reflects the inflation rate. This factor is determined using the inflation rate targets set by the Swedish Central Bank (Sveriges Riksbank). The factor “Expected return on plan assets” reflects the expected future rate of return on funding in KPA AB for the purpose of securing the insured pension obligations. E N V I R O N M E N T - R E L A T E D P R O V I S I ON S Provisions of SEK 15 million relate to the remediation of land and other obligations associated with the activities of the Group. The provision for environment-related measures is expected to result in disbursements over the coming 5-year period. Group 31 December
Provisions at beginning of year
Change for the year
Total provisions at year-end
PENSION LIABILITY Opening balance pension liability Pension costs Funds contributed by employer
-108.0 43.1 -33.4
-36.1 -31.7 -40.2
Pension liability according to balance sheet
ACTUARIAL ASSUMPTIONS The actuarial calculation of pension obligations and pension costs is based on the following important assumptions:
P R OV I S I O N F OR R E S T R U C T U R I N G A N D M O D E R N I S A T I O N O F T H E T O W N G A S N E T W O R K I N G OT H E N B U R G The present value of the remaining total restructuring cost has been calculated to be SEK 51 million and includes conversion and phaseout costs plus compensation to customers. The provision is expected to result in disbursements over the coming 3-year period.
Group 31/12 2009 31/12 2008 Discount rate Expected return on plan assets Personnel turnover rate Annual salary increase Annual increase in income base amount Inflation Expected remaining working life, years
3.0% 3.5% 3.0% 2.0% 2.0% 1.0% 6.0
4.5% 5.0% 3.0% 3.0% 3.0% 2.0% 13.0
The reference for the expected discount rate is the return obtained on Swedish government bonds with maturities corresponding to the expected average remaining working lives of the employees. The expected rate of salary increase reflects expected future percentage salary increases. The factor is a composite of inflation, seniority and promotions. The assessment is based on historical data on salary increases and the expected future rate of inflation. Historical data is also used as the basis for assessing the personnel turnover rate. This factor reflects the expected percentage of the employees who will leave the Group by natural attrition. “Expected remaining working life” is assessed on the basis of the current age distribution of the employees and the expected personnel turnover rate. The income base amount is established annually and is used to determine the ceiling for pensionable salary in both the public pension system and the PA-KFS pension plan.
31 December Provisions at beginning of year Provisions for the year Provisions utilised Total provisions at year-end
Parent Company 2009 2008
59.3 12.6 -20.4
59.3 12.6 -20.4
OT H E R P R OV I S I ON S Other provisions include refunds of connection charges, which is expected to result in disbursements over the coming 5-year period, and special payroll tax attributable to differences between the pension costs recognised in legal entities and the pension cost recognised in the consolidated accounts, determined with the application of RR 29 for defined-benefit pension plans. Group 31 December
Provisions at beginning of the year Provisions for the year
Total provisions at year-end
GÖTEBORG ENERGI | 40 | ANNUAL REPORT 2009
NOTE 32 INTEREST-BEARING LIABILITIES Group 2009 2008
31 December Current portion European Investment Bank Short-term loans City of Gothenburg Total current interest-bearing liabilities European Investment Bank City of Gothenburg Other non-current liabilities Total non-current interest-bearing liabilities Total interest-bearing liabilities
Parent Company 2009 2008
92.1 4,600.0 4.2
157.2 4,600.0 4.6
92.1 4,600.0 98.0
157.2 4,600.0 -
Of the Group’s non-current interest-bearing liabilities, SEK 1,502 million will fall due for payment after five years or more. The equivalent amount for the Parent Company is SEK 1,500 million. Of the Group’s other current liabilities amounting to SEK 1,283 million, interest bearing liabilities account for SEK 890 million.
NOTE 33 ACCRUED EXPENSES AND DEFERRED INCOME
31 December Accrued interest expenses Accrued payroll expenses, social security contributions Accrued commodities and fuel taxes Accrued other items Accrued IT costs Accrued conversion costs Provision to Research Foundation Göteborg Energi AB Deferred income Total
NOTE 34 CASH AND CASH EQUIVALENTS
Group 2009 2008
Parent Company 2009 2008
41.6 34.5 25.0 10.0
36.0 25.0 10.0
Provisions for future contractual pensions are recognised in the Group as pension asset.
31 December Cash and bank balances Balance Group account City of Gothenburg Total
Intangible non-current assets Property, plant and equipment Long-term investments Current assets Other receivables Cash Deferred tax liability Provisions Current liabilities Purchase price paid/received Cash Impact on Group’s cash and cash equivalents
Parent Company 2009 2008
Acquisition of subsidiaries 2009 131,003 2,630 12,590 723,839 317,597 242,337 -41,060 -34,500 -791,954 -326,940 242,337 -84,603
Sale of subsidiaries 2009 14,179 1,122 223,884 22,257 -8,755 -135,626 100,130 -22,257 77,873
Cash and cash equivalents in the Parent Company include balances in a Group account with the City of Gothenburg to the extent they exceed the Parent Company’s settlement liabilities to subsidiaries in the Göteborg Energi Group.
NOTE 35 RELATED PARTY TRANSACTIONS P U R C H A S E S A N D S A L E S B E T W E E N G R OU P C OM P A N I E S , M U N I C I P A L C OM M I T T E E S A N D M U N I C I P A L C OM P A N I E S The Group is under the controlling influence of its owner, the City of Gothenburg. Of Parent Company purchases during the year, 8 per cent (4) are purchases from own subsidiaries, 1 per cent (3) are purchases from associated companies, 1 per cent (1) are purchases from other companies in the GKF Group, and 7 per cent (7) are purchases from municipal committees and companies. Of sales during the year, 25 per cent (19) are sales to own subsidiaries, 7 per cent (10) are sales to associated companies, 2 per cent (1) are sales to other companies in the GKF Group, and 15 per cent (13) are sales to municipal committees and companies. Large closely-related customers include the Framtiden Group, Higab, Lokalförsörjningsförvaltningen (Supply of Premises Committee) and Got Event AB. These sales have taken place at market prices. Large closely-related suppliers include Renova AB, the Road Traffic Committee and Göteborgs Gatu AB. These purchases have taken place at market prices.
GÖTEBORG ENERGI | 41 | ANNUAL REPORT 2009
year mainly relate to vehicles, switchgears and certain office equipment.
The CEO and company management have no close relations with external organisations with which the Group has a contractual relationship. There have been no transactions with senior executives or key persons beyond salaries and other remunerations in accordance with Note 4.
C ON T R A C T U A L F U T U R E M I N I M U M L E A S E A N D R E N T A L PAYMENTS
RECEIVABLES/LIABILITIES OUTSIDE THE GÖTEBORG ENERGI GROUP WITH REGARD TO OTHER GROUP C OM P A N I E S A N D M U N I C I P A L C O M M I T T E E S Group 2009
31 December Receivables GFK Group companies Municipal committees and companies Total Liabilities GFK Group companies Municipal committees and companies Total
Parent Company 2009 2008
Group 2009 2008 49.5 82.1
Parent Company 2009 2008
Payments due within one year Payments due after one year but within five years Payments due after five years
NOTE 37 INFORMATION ON THE PARENT COMPANY Göteborg Energi AB is a wholly-owned subsidiary of Göteborgs Kommunala Förvaltnings AB, corp. ID no. 556537-0888, with domicile in Gothenburg. Göteborgs Kommunala Förvaltnings AB is wholly-owned by the City of Gothenburg.
For details on loans from the City of Gothenburg, see Note 32.
NOTE 38 REMUNERATION TO AUDITORS
P U R C H A S E S F R OM A S S O C I A T E D C O M P A N I E S 31 December
Group 2009 2008
Parent Company 2009 2008
Plusenergi AB Others
S A L E S T O A S S OC I A T E D C O M P A N I E S 31 December
Group 2009 2008
Parent Company 2009 2008
Plusenergi AB Others
RECEIVABLES/LIABILITIES WITH REGARD TO A S S O C I A T E D C OM P A N I E S 31 December Receivables Plusenergi AB Others Total Liabilities Plusenergi AB Others Total
Group 2009 2008
Parent Company 2009 2008
Deloitte City Audit Office Consultancy fees Deloitte Other
Parent Company 2009 2008
NOTE 39 PLEDGED ASSETS, CONTINGENT LIABILITIES AND OTHER LIABILITIES Most of the Group’s loans are from the Municipal Group Bank. The City of Gothenburg has pledged a municipal guarantee for other loans. Göteborg Energi AB was ordered by the Swedish Energy Agency to maintain an emergency stockpile of oil of not less than 104 m for 2009/2010. The oil stockpile amounted to 6,021 m at 31 December 2009. 3
Group 2009 2008
NOTE 36 LEASE AND RENTAL PAYMENTS Lease and rental payments during the financial year amounted to SEK 85 million (63) in the Group and SEK 44 million (41) in the Parent Company. Lease and rental payments during the
GÖTEBORG ENERGI | 42 | ANNUAL REPORT 2009
NOTE 40 FINANCIAL INSTRUMENTS PRINCIPLES OF RISK MANAGEMENT The Göteborg Energi Group is exposed to a number of risks in its activities. To manage these risks, Göteborg Energi has established a corporate risk policy. The policy should be a comprehensive document that regulates the Group’s financial activities and factors which affect the earnings of the Göteborg Energi Group. The policy is submitted to the Board of Directors for approval. The purpose of the policy is to: • define the division of responsibilities for financing activities in the Group • meet the Group’s long-term financing needs achieve lower net financial expenses within the framework of limited financial risk • eliminate currency risks • serve as a platform for the formulation of more indepth policies, rules, instructions and procedures. The policy clarifies the Board of Directors’ hedging guidelines for earnings and principles and requirements for internal control. The policy is harmonised to the City of Gothenburg’s finance policy. The Board of Directors of Göteborg Energi AB establishes the risk policy for activities within the Göteborg Energi Group. The policy is reviewed by the Board of Directors once a year. The CEO is responsible for ensuring that the risk policy is complied with and that regular reports are made to the Board of Directors. The Group Finance Staff identifies, evaluates and hedges financial risks in close cooperation with the Group’s operating units. The activities in the finance function are organised as follows: • Front Office – Group Finance Staff • Middle Office – Group Finance Staff • Back Office – Accounting Department FINANCIAL RISKS The Group’s financial risks are managed by the Group Finance Staff, which is also the Group’s internal bank. REFINANCING RISK The Group is dependent on external borrowing in order to be able to finance its current investment needs. The financing risk is minimised by means of a uniform maturity structure and a long average remaining maturity in the loan portfolio. We are more foresighted in our contacts with credit institutes and banks in order to ensure stable liquidity in the Group. The average remaining maturity at year-end was 3.6 years (4.7). No more than 30 per cent of the external long-term loan liability may fall due for payment during one calendar year. Individual loans may not have a term in excess of 15 years. The Group’s liquidity is centralised via a Group account system.
COUNTERPARTY RISK Agreements in the financial area often involve long-term obligations to the Group. The counterparty in external agreements for derivatives – including interest rate, oil, gas or electricity derivatives – must have a credit rating of at least A3 from Moody’s or A from Standard & Poor’s. In connection with the delivery of securities (or the equivalent) or payments, the transaction risk is limited by requiring the same credit rating as for derivative transactions. The derivatives portfolio must be in proportion to the underlying loan portfolio. Counterparty category
Highest amount per Highest category (SEK M) amount per counterparty (SEK M)
Swedish credit institute with the same credit rating as the Swedish State
Promissory note with state guarantee
Swedish credit institute with best Swedish short-term credit rating and a long-term credit rating of at least A (Standard & Poor’s) or at least A3 (Moody’s)
Certificates with credit rating K1/A1/P1
No more than 50 per cent of the total invested amount may be invested in certificates with a credit rating of K1/A1/P1. The Group’s liquidity must be invested in securities with very high liquidity and the lowest credit risk. It must never be invested in subordinated debt, such as subordinated debentures. INTEREST RATE RISK By “interest rate risk” is meant the risk for immediate and substantial impact on Group profit due to changes in the general interest rate level. Interest rate exposure consists of interest-bearing liabilities and assets as well as derivatives and is calculated as the average fixed interest term on the net of the interest-bearing liabilities and assets. The Group lends at a variable rate and uses interest rate swaps for future interest payments. Interest rate risks in the Group’s loan portfolio are measured as average fixed interest term. The average fixed interest term at year-end was 38 months (28). The average fixed interest term in the Group’s aggregate loan portfolio, including derivative contracts, is permitted to be within the interval 12 to 60 months, with a target value of 30 months. The fixed interest term in external financial investments may not exceed 6 months.
GÖTEBORG ENERGI | 43 | ANNUAL REPORT 2009
CURRENCY RISK Exposure in foreign currencies should be avoided but can be accepted for short periods. This means that the net of total currency exposure and effected hedging should be zero. To eliminate currency risk, the use of spot transactions and forward exchange contracts or swap contracts is permitted. Currency risk in conjunction with hedging of earnings in district heating and gas deals is managed within the framework of the corporate risk policy. C OM M O D I T Y P R I C E R I S K – I N S T R U M E N T S F O R FINANCIAL HEDGING AND CONTRACT HEDGING The price hedging strategy for our most important commodities includes financial price hedging via derivative contracts in accordance with our price hedging norm. The price hedging norm is based on Göteborg Energi’s definition of a normal year. Fuel prices and the price of emission allowances have a great impact on the company’s earnings. Financial price hedging and contract hedging are used to minimise the price risk. FINANCIAL HEDGING Costs of electricity consumption, natural gas for district heating production and natural gas sales, as well as revenues from electricity production and district heating sales, are covered by the price hedging strategy where derivative contracts are used for financial price hedging. Financial price hedging of electricity and natural gas should conform to our price hedging norm. Aside from hedging according to the price hedging norm, strategic positions can be taken. Price hedging should start at most 24 and at least 6 months before the start of the consumption/sales period. During the price hedging period, the minimum permissible hedged volume is 50 per cent of the price hedging norm. The equivalent maximum permissible hedged volume is 120 per cent of the forecast normal year volume.
Amounts in SEK M Interest rate derivatives Interest rate swaps Interest rate ceilings Total interest rate derivatives Currency derivatives Currency swap Forward exchange contracts Total currency derivatives Commodity derivatives Oil derivatives Electricity derivatives Natural gas derivatives
Göteborg Energi handles declaration of emission allowances and the quota obligation for electricity certificates on its own. C ON T R A C T H E D G I N G Some of the fuels that are used for electricity and heating production, as well as fixed-price contracts for natural gas trading, are price-hedged by means of contracts. The contracts should cover the coming heating season, but may also extend over longer periods. The prices in the contracts should be fixed or index-adjusted. Indexed contracts may not be written in such a way that upward indexation could entail a sharp fuel price increase and thereby constitute a price risk. Waste heat costs, excluding specific winter deliveries, should be price-hedged contractually with price ceilings and long-term contracts. FINANCIAL DERIVATIVES The aggregate value of the derivatives on the balance sheet date was SEK 5,640 million (2,195). Their nominal value was SEK 5,590 million (2,401). The difference between nominal and fair value on the balance sheet date was SEK 50 million (-206).
2009 Fair value
2008 Fair value
120.7 1,239.5 1.2
128.6 1,315.8 1.1
7.9 76.3 -0.1
271.6 79.1 -
187.6 61.2 -
-84.0 -17.9 -
Total commodity derivatives
Total financial derivatives
GÖTEBORG ENERGI | 44 | ANNUAL REPORT 2009
No derivative instruments were recognised in the balance sheet on the balance sheet date. The fair value of the derivatives has been calculated with the expenses and revenues that would have arisen if the contracts had been terminated on the balance sheet date. M A T U R I T I E S OF L OA N S A N D C A P I T A L P E R Y E A R The Group’s total credits at 31 December amounted to SEK 5,586 million (5,007). INTEREST RATE DERIVATIVES, INTEREST MATURITY AND FIXED INTEREST TERM The nominal amounts of the Group’s outstanding interest rate derivatives on the balance sheet date amounted to SEK 1,800 million (1,500). The difference between nominal and fair value on the balance sheet date was SEK -15 million (-130).
derivatives. The total market value for the commodity derivatives on the balance sheet date was SEK 84 million (-102).
Bought volume Brent Crude 284,500 barrels Sold volume Brent Crude -52,400 barrels Bought volume Gas Oil 3,100 tonnes Sold volume Gas Oil -3,100 tonnes Total oil derivatives
148.7 -27.5 11.1 -11.6 120.7
8.2 -0.8 2.4 -1.9 7.9
Oil derivatives in SEK M
Electricity derivatives in SEK M Bought volume Sold volume Total electricity derivatives
NOTE 41 SENSITIVITY ANALYSIS Derivatives
Interest rate swap Interest rate swap Interest rate swap Interest rate swap Interest rate swap Interest rate swap
200.0 200.0 200.0 400.0 400.0 400.0
17/10 2018 20/10 2018 27/11 2018 3/3 2019 23/11 2019 9/12 2019
Interest rate 4.25% 4.25% 3.55% 3.17% 3.59% 3.56%
The average fixed interest term was 38 months (28). Fixed interest term
< 3 months 3 months – 1 year 1 year – 5 years > 5 years
CURRENCY DERIVATIVES On the balance sheet date the Group’s open forward contracts had durations of between 1 month and 43 months. All contracts are held for hedging purposes, and the difference between nominal and fair value on the balance sheet date was SEK -19 million (26). Currency derivatives in SEK M EUR bought sold USD bought sold Total currency derivatives
Exchange rates 10.29 10.19 7.38 7.55
Nominal amount 1,939.4 373.1 186.8 50.5
C OM M O D I T Y D E R I V A T I V E S On the balance sheet date the Group had open oil and electricity derivatives. All derivatives are held for hedging purposes, and the difference between nominal and fair value on the balance sheet date was SEK 8 million (-84) for the oil derivatives and SEK 76 million (-18) for the electricity
-17.0 -0.2 -5.0 2.5
Weather conditions and availability in different production plants are risks that are difficult to limit in a cost-effective manner and that affect heat deliveries. Large deviations in deliveries or availability have an immediate effect on Group earnings. Most of the Group’s profit for the year is earned during the first three and the final two months of the year. The Group strives to reduce this dependency by means of new price and contractual arrangements with customers and suppliers. Due to the risk policy’s purchasing and hedging strategy, changes in prices of commodities only affect profits in the long term. Commodities, electricity prices, currencies and interest rates are included in the Group’s financial risk management. According to the established risk policy, electricity trading is to be conducted with a long planning horizon. Short-term changes in price levels therefore have only a limited impact on the coming year’s budget. Currencies are hedged in similar amounts and with similar terms as commodity derivatives. Electricity consumption and production prices are also hedged in energy trading. The electricity supply network companies are responsible for hedging the need for loss electricity in the network. Hedging takes place on an ongoing basis. The earnings impact during the budget year of a price change is thus less, since the electricity price is contracted for longer periods. It is estimated that the effect of a change in the price of crude oil of USD 10/barrel on the profit for the year will be about SEK 50 million. A change in the SEK/USD exchange rate of SEK 1 affects the profit for the year by about SEK 49 million. By means of energy trading, the actual risk exposure is limited to SEK 29 million for crude oil and SEK 32 million for currency in the profit for 2010. Pricing for district heating customers is not indexed to changes in the oil price. The production system for district heating contains a structural risk limitation. The heat is produced by a number of different plants using different fuels. The price relationship between the different fuels determines which plant is the most cost-effective to use. The most cost-effective plants are used first and the less cost-effective ones after that.
GÖTEBORG ENERGI | 45 | ANNUAL REPORT 2009
Electricity consumption and electricity production prices are hedged in energy trading. The electricity supply network companies are responsible for hedging the need for loss electricity in the network. Hedging takes place on an ongoing basis. A change in the electricity price of SEK 0.01/kWh translates into a change of about SEK 3 million in the profit for the year. The impact is not immediate since the electricity price is contracted for longer periods. The actual risk exposure through energy trading is limited to about SEK 2 million against the profit for 2009. The margin on electricity produced in the Rya CHP Plan is hedged by its linkage to the price of the volume of natural gas that is consumed to produce the electricity. Risks in electricity trading are managed by way of the Group’s risk policy and the risk mandates decided on by the Board of Directors of Göteborg Energi Din El AB. A change in energy taxation will have a significant effect on the Group’s profit and cash flow, other factors being equal. In a longer perspective, changes in energy taxation are also of importance for the Group’s investment decisions. The Group borrows at a variable rate, for the most part three-month STIBOR. Exposure to interest rate changes is hedged by means of interest rate derivatives, which convert a variable rate to a fixed rate over a given period. Interest rate risk only arises in a longer perspective, since the Group’s average fixed interest term is currently 38 months. The exposure that arises during the year is therefore only associated with new borrowing and turnover of current interest rate derivatives. A 1 per cent change in the interest rate level therefore only affects the Group’s interest expenses in the long term by about SEK 37 million on an annual basis.
A 1 per cent change affects payroll expenses by about SEK 7 million on an annual basis. Other external costs are only partially dependent on the general price trend for goods and services. Each change of one percentage point has an earnings impact of about SEK 7–10 million. Changes in salary agreements and the general price trend also have some impact on the investment budget.
NOTE 42 EVENTS AFTER THE BALANCE SHEET DATE There are no events to report after the balance sheet date.
NOTE 43 DEFINITIONS OF KEY RATIOS R E T U R N ON E Q U I T Y A F T E R T A X Profit after financial items and 26.3 per cent (28) standard tax in relation to average equity. R E T U R N ON T OT A L C A P I T A L Operating profit after depreciation plus financial income in relation to average balance sheet total. R E T U R N O N C A P I T A L E M P L OY E D Operating profit after depreciation plus financial income in relation to average capital employed. By “capital employed” is meant balance sheet total less non-interest-bearing liabilities but including provisions for tax. E QU I T Y / A S S E T S R A T I O Equity including minority share of equity in relation to the balance sheet total. AVERAGE NUMBER OF EMPLOYEES Total number of hours worked in relation to normal annual working hours. Annual working hours is based on 1,800 hours per full-time employee.
GÖTEBORG ENERGI | 46 | ANNUAL REPORT 2009
Göteborg, 15 February 2010
Lennart Alverå Chairman of the Board
Anders Hedenstedt CEO
Our audit report was submitted on 15 February 2010. DELOITTE AB Hans Warén Authorised Public Accountant
Our examination report was submitted on 15 February 2010. Lennart carlsson General examiner appointed by the City council
Elisabet olin General examiner appointed by the City Council
GÖTEBORG ENERGI | 47 | ANNUAL REPORT 2009
Audit Report TO THE ANNUAL GENERAL MEETING OF SHAREHOLDERS OF G ÖT E B OR G E N E R G I A B , C O R P OR A T E I D N O . 5 5 6 3 6 2 - 6 7 9 4 We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the Board of Directors and Managing Director of Göteborg Energi AB for the financial year 2009. The company’s annual accounts and consolidated accounts are included in the printed version of this document on pages 1–47. These accounts and the administration of the company are the responsibility of the Board of Directors and the managing director, who also ensure that the annual accounts and consolidated accounts are prepared in compliance with the Swedish Annual Reports Act. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit. We have conducted our audit in accordance with generally accepted auditing standards in Sweden. Those standards require that we plan and perform the audit to obtain reasonable assurance that the annual accounts and the consolidated accounts are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles and their application by the Board of Directors and the managing director and significant estimates made by the Board of Directors and the managing director when preparing the annual accounts and consolidated accounts, as well as evaluating the overall presentation of information in the annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from
liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any Board member or the managing director. We have also examined whether any Board member or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Reports Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion as set out below. The annual accounts and the consolidated accounts have been prepared in accordance with the Swedish Annual Reports Act and thereby give a true and fair picture of the company’s and the Group’s results of operations and financial position in accordance with generally accepted auditing standards in Sweden. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts. We recommend to the Annual General Meeting of Shareholders that the income statements and balance sheets of the Parent Company and the Group be adopted, that the profit of the Parent Company be dealt with in accordance with the proposal in the administration report, and that the members of the Board of Directors and the managing director be discharged from liability for the financial year. Gothenburg, 15 February 2010 DELOITTE AB Hans Warén Authorised Public Accountant
GÖTEBORG ENERGI | 48 | ANNUAL REPORT 2009
Examination Report TO THE ANNUAL GENERAL MEETING OF SHAREHOLDERS O F G ÖT E B OR G E N E R G I A B , C O R P O R A T E ID NO. 556362-6794 TO THE CITY COUNCIL OF GOTHENBURG FOR INFORMATION We have examined the operations of the company for 2009. We conducted our examination in accordance with the provisions of Chapter 10 Section 3 of the Companies Act, the Local Government Act and generally accepted standards, also taking into consideration the decisions of the City Council and the Annual General Meeting of the Shareholders. This requires that we plan and perform the examination to obtain reasonable assurance that the operations of the company have been conducted in an expedient and, from a financial perspective, satisfactory manner and that the company’s internal controls are sufficient. A summary report of the examination has been prepared in an examination report, which has been submitted to the company’s Board of Directors. In our view, the operations of the company have been conducted in an expedient and, from a financial perspective, satisfactory manner and the internal controls have been sufficient. There is accordingly no ground for criticism of the administration of the Board of Directors and the managing director. Göteborg, 15 February 2010 Lennart Carlsson General examiner appointed by the City council
Elisabet Olin General examiner appointed by the City Council
GÖTEBORG ENERGI | 49 | ANNUAL REPORT 2009
WORK OF THE BOARD OF DIRECTORS
Work of the Board of Directors Göteborg Energi AB is wholly owned by the City of Gothenburg. The owner intends to exercise long-term ownership. The goal of the company’s operations is to supply customers with products and services in the energy sector in a reliable and cost-effective manner. Continuous efforts are made to develop systems and procedures that ensure transparency, a clear division of responsibilities between different areas of responsibility and the smooth functioning of the work of the Board of Directors.
DEPARTURES FROM THE CODE OF CORPORATE GOVERNANCE The work of corporate governance is pursued continuously within Göteborg Energi with the aim of clarifying and delegating responsibility within the company and optimising the management of the company and the work of the Board of Directors.
ANNUAL GENERAL MEETING The Annual General Meeting of Shareholders was held on 9 March 2009.
BOARD MEMBERS AND AUDITORS The Board of Directors of Göteborg Energi AB reflects the political situation in the municipality and is appointed by the City Council. The Board consists of 9 members, 6 deputies and 3 members appointed by the employees. The managing director and deputy managing director, as well as individual senior executives in the company, participate in Board meetings as rapporteurs. The Board has overall responsibility for Göteborg Energi’s organisation and the administration of its operations. The work of the Board conforms to the current rules of procedure for the Board. The meetings of the Board follow an annual plan designed to ensure the requisite decision-making and satisfy the Board’s need for information. During the year Board held 10 meetings. The Board has dealt with the shortand long-term economic development of the Group and taken major strategic decisions. The 2007 Annual General Meeting decided to select Deloitte AB as auditors. Auditors are selected for the coming four-year period. The auditor in charge is Hans Warén, Authorised Public Accountant. Two general examiners have also been appointed by the City Council: Lennart Carlsson and Elisabet Olin.
ISSUES DEALT WITH BY THE BOARD OF DIRECTORS DURING THE FINANCIAL YEAR 16 February 2009 • Annual accounts and annual report for 2008 and the auditors’ examination • Financial strategy • Rebuild of K11 Rosenlund • Statement of comment on motion to design procedures for implementation and follow-up of C=2 frameworks in the City budget • Statement of comment on motion regarding renewable energy in Göteborg Energi AB and Göteborg Energi Din El AB • Wind power at Brahehus 9 March 2009 • Proposal for part-ownership of Alternative Fuel Vehicle Sweden AB (AFV) • Skanled – Change of ownership stake and capacity booking 29 April 2009 • Financial follow-up report 1 • The Board’s Management and Administration Report 29 May 2009 • Business plan 2010–2012 • Separate disclosure for District Heating • Price adjustment 2010 15 July 2009 • Budget Directive 2010 31 August 2009 • District heating build-out to central Torslanda • New 140 kV transformer at Rosenlund Plant • Project K16 Kallebäck – K8 Gårda K16 Kallebäck – K11 Rosenlund • Project part of section K16 Kallebäck – K11 Rosenlund 5 October 2009 • Shareholders’ contribution in FordonsGas Sverige AB • Financial follow-up report 2 28 October 2009 • Annual budget • New wind power capacity Falbygden, Källeberg/Björstorp 25 November 2009 • Financial follow-up report 3 21 December 2009 • Board representation 2010 • Hourly metering and demand rates • Internal control • Wind power Dals Ed, Rabbalshede • Biogas at Viken, Falköping • Risk policy • Performance pay 2010
GÖTEBORG ENERGI | 50 | ANNUAL REPORT 2009
WORK OF THE BOARD OF DIRECTORS
EVALUATION OF THE WORK OF THE BOARD The Board of Directors evaluates its work by means of a special process once a year. The evaluation takes place under the guidance of the chairman and the results are reported to the Board.
COMPANY MANAGEMENT AND MANAGING DIRECTOR The governance of Göteborg Energi AB emanates from the managing director and the Group Management, who are responsible for the operating activities. The managing director, who is also the CEO, leads the activities within the framework established by the Board. The managing directors of the subsidiaries and persons in the Group Management report to the CEO.
INTERNAL GOVERNANCE AND CONTROL On 26 February 2009, the City Council of Gothenburg issued a “General ownership directive for directly and indirectly owned companies”. This ownership directive was adopted at the General Meeting of Shareholders of Göteborg Energi AB on 9 March 2009. Sweden’s municipalities and county councils have issued a document entitled “Principles for governance of companies owned by Swedish local authorities”, where the purpose is to move forward the positions in corporate governance by local authorities. According to the general ownership directive adopted by the City Council for the City of Gothenburg, the Board of Directors shall ensure that the company has good internal governance and control and shall keep informed of and evaluate how the company’s system for internal governance and control is working. The basis for internal control in Göteborg Energi consists of the control environment with organisation, decision-making channels and responsibilities that can be found in governing documents such as policies, guidelines and delegations.
GÖTEBORG ENERGI | 51 | ANNUAL REPORT 2009
Organisation chart Parent company Group City of Gothenburg
Göteborgs Kommunala Förvaltnings AB
Parent Company Group Göteborg Energi
100% Göteborg Energi AB
100% Göteborg Energi Din El AB
100% Göteborg Energi Nät AB
100% Göteborg Energi Gasnät AB
100% Falbygdens Energi AB
100% Falbygdens Energi Nät AB
100% Göteborg Energi GothNet AB
51% Falbygdens Bredband AB
23,98% Alternative Fuel Vehicle Sweden AB
Other companies in the Group Göteborg Energi
91% Ale Energi AB
50% Partille Energi AB
100% Ale Fjärrvärme AB
100% Partille Energi Nät AB
49% Lerum Fjärrvärme AB
10,5% Lerum Energi AB
GÖTEBORG ENERGI | 52 | ANNUAL REPORT 2009
50% FordonsGas Sverige AB
100% Sörred Energi AB
25% Alingsås Energi AB
BOARD OF DIRECTORS
Board of Directors MEMBERS OF THE BOARD
LENNART ALVERÅ (s), Chairman Born: 1952 Member of the Board since: 1995 Other posts: Ombudsman IF metall.
HÅKAN JOHANSSON (fp) Born: 1941 Member of the Board since: 2003 Other posts: Member of the board of Falbygdens Energi AB and deputy member of the board of Partille Energi AB.
SUSANNA HABY (m), Deputy Chairman Born: 1957 Member of the Board since: 2003 City councillor Other posts: Deputy Chairman of the Planning and Building Committee and member of the Property Management Committee.
ANETTE BERNHARDSSON (s) Born: 1947 Member of the Board since: 1998 Dental nurse Other posts: Chairman of SDN Tynnered.
HENRY KENAMETS (mp) Born: 1955 Member of the Board since: 2003 Book publisher and environmental consultant Other posts: Member of the board of Alingsås Energi AB, Ekocentrum, Göteborgs Spårvägar AB and the committee for The Nordic Ecolable (Svanen).
URBAN JUNEVIK (v) Born: 1960 Member of the Board since: 2007 Property superintendent
KRZYSZTOF MORZKOWSKI (m) (not in picture) Born: 1950 Member of the Board since: 2008 (former deputy) Corporate executive Other posts: Member of local tax committee and deputy member of the board of Falbygdens Energi AB.
GÖRAN WIRMARK (s) Born: 1952 Member of the Board since: 1980 In charge of joint research, Volvo Group Other posts: Member of the board of Göteborg Energi Din El AB, Deputy member of the Environmental Committee in the Västra Götaland Region, chairman/member of various research organisations in Sweden and Europe.
LARS LORENTZON (m) (not in picture) Born: 1958 Member of the Board since: 2008 Corporate advisor bank
ANDERS HEDENSTEDT, CEO Born: 1947 Year of employment: 2002 Other posts: Chairman of the World Energy Council’s Swedish Committee, Göteborg Energi GothNet AB, Göteborg Energi Din El AB, FordonsGas Sverige AB, Partille Energi AB, Falbygdens Energi AB, Swedenergy (Svensk Energi), Geode. Member of the board of Alternative Fuel Vehicle Sweden AB (AFV).
GÖTEBORG ENERGI | 53 | ANNUAL REPORT 2009
BOARD OF DIRECTORS
SOFI BRINGSONIOU (s) (not in picture) Born: 1982 Deputy since: 2004 Student Other posts: Substitute in Regional Council Health Services Committee 5 and lay judge in Gothenburg City Court.
RESAD BRUNCEVIC (c) (not in picture) Born: 1953 Deputy since: 2007 Feature leader, Volvo 3p Other posts: Deputy Chairman of the Center Party’s Gothenburg district.
SARAH ADOLFSSON (m) Born: 1980 Deputy since: 2008 Student
CHRISTINA BROAD (salaried employee), secretary (not in picture) Born: 1961 City solicitor
HENRIK NILSSON (s) (not in picture) Born: 1955 Deputy since: 1995 Metalworker
KRISTIAN AXELSSON (fp) Born: 1973 Deputy since: 2003 Medical student Other posts: Deputy member of the boards of Alingsås Energi AB and Icomera.
MICHAEL KOUCKY (mp) Born: 1970 Deputy since: 2007 Environmental physicist
THORE SAHLIN, Deputy CEO Born: 1951 Year of employment: 1975 Other posts: Chairman of the Swedish District Heating Association, deputy chairman of Göteborg Energi Din El AB, member of the boards of Nordvärme and Euro Heat & Power, Lerum Fjärrvärme AB, the District Heating Board and other organisations. CEO Partille Energi AB.
AUDITORS Deloitte AB (since 2003) Auditor in charge HANS WARÉN (not in picture)
EMPLOYEE REPRESENTATIVES MONA-LISA RHODIN (SKTF) SKTF Chairman ULF BERNDTSSON (SKTF) SKTF deputy chief safety officer, SKTF deputy chairman SVEN WIKTORSSON (SACO) SACO Chairman
GÖTEBORG ENERGI | 54 | ANNUAL REPORT 2009
Anders B Dahl
ANDERS HEDENSTEDT CEO Born: 1947 Year of employment: 2002 Other posts: Chairman of the World Energy Council’s Swedish Committee, Göteborg Energi GothNet AB, Göteborg Energi Din El AB, FordonsGas Sverige AB, Partille Energi AB, Falbygdens Energi AB, Swedenenery (Svensk Energi) and Geode. Member of the board of Alternative Fuel Vehicle Sweden AB (AFV). THORE SAHLiN Deputy CEO Born: 1951 Year of employment: 1975 Other posts: Chairman of the Swedish District Heating Association, deputy chairman of Göteborg Energi Din El AB, member of the boards of Nordvärme and Euro Heat & Power, Lerum Fjärrvärme AB, the District Heating Board and other organisations. CEO Partille Energi AB. MARgARETA FiSCHER CFO (not in picture) Born: 1956 Year of employment: 2004 Other posts: Member of the board of Sörred Energi AB, Göteborg Energi Din El AB and GoBiGas AB.
BjöRN CARLSSON Director of Service Business Sector Born: 1946 Year of employment: 1985 Other posts: Member of the board of Göteborg Energi Nät AB and deputy member of the board of FordonsGas Sverige AB. PETER TRygg Director of Support Business Sector Born: 1956 Year of employment: 1990 Other posts: Chairman of Göteborg Energi Nät AB, Partille Energi Nät AB and Falbygdens Energi Nät AB, member of the boards of Sörred Energi AB and Alternative Fuel Vehicle Sweden AB (AFV). ANETTE WiNTER Director of Services Business Sector Born: 1959 Year of employment: 2002 Other posts: Member of the board of Göteborg Energi Din El AB, deputy member of the boards of FordonsGas Sverige AB and Sörred Energi AB, member of Smart Metering within Eurelectric.
Bengt göran Dalman
ANDERS B DAHL Marketing Director Born: 1964 Year of employment: 2003 Other posts: Member of the board of Göteborg Energi GothNet AB. Deputy member of the board of Sörred Energi AB and of Byggcentrum. LENA LäRNEkLiNT Director of Human Resources Born: 1947 Year of employment: 2004 Other posts: Member of the boards of Göteborg Energi GothNet AB, Göteborg Energi Nät AB and Falbygdens Energi Nät AB. Member of the trade association KFS. BENgT göRAN DALMAN Director of Energy Business Sector Born: 1952 Year of employment: 1977 Other posts: Chairman of Göteborg Energi Gasnät AB, Sörred Energi AB, Ale Fjärrvärme AB and other companies. Member of the board of the Swedish Gas Association and Swedenergy’s Production Council. Chairman of the Swedish Gas Association’s Natural Gas Committee and other organisations.
Pia Brühl Hjort
LENNART HANSSON CEO Göteborg Energi Din El AB Born: 1954 Year of employment: 1999 Other posts: Chairman of Swedenergy’s marketing council. MATS DEvERT CEO Göteborg Energi GothNet AB Born: 1958 Year of employment: 1988 Other posts: Member of the board of Falbygdens Bredband AB and deputy chairman of the Swedish Urban Network Association. PiA BRüHL HjORT CEO Göteborg Energi Nät AB Born: 1966 Year of employment: 2006 Other posts: Member of the boards of Partille Energi Nät AB, Falbygden Energi Nät AB, Göteborg Energi Gasnät AB, Lerum Energi AB, EMiX AB and Elforsk AB.
Göteborg Energi AB • Box 53 • SE-401 20 Göteborg • Telephone +46 (0)20 62 62 62 • www.goteborgenergi.se Photographers: Anders Bryngel and others • Print and repro: Sandstens • Paper: Munken Lynx (FSC certified paper)