Financial Report power

Transcription

1 Financial Report 2008 power

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3 Financial Report Shareholders Aare-Tessin AG für Elektrizität (Atel) % BKW FMB AG (BKW) % Centralschweizerische Kraftwerke AG (CKW) 5.24 % Elektrizitäts-Gesellschaft Laufenburg AG (EGL) % Energie Ouest Suisse SA (EOS) % Stadt Zürich (Elektrizitätswerk der Stadt Zürich) (ewz) % Nordostschweizerische Kraftwerke AG (NOK) % Rätia Energie AG (RE) 1.85 % Board of Directors Konrad Peter, Chairman (independent), until 14 May 2008 Peter Grüschow, Chairman (independent), from 4 December 2008 Hans E. Schweickardt, Vice-Chairman (EOS) Dr. Conrad Ammann (ewz) Adrian Bult (independent) Thomas Burgener (cantonal representative) Heinz Karrer (Axpo) Otto E. Nägeli (independent) Herbert Niklaus (Atel) Fadri Ramming (cantonal representative) Doris Russi Schurter (independent) Kurt Rohrbach (BKW) Dr. Andrew Walo (CKW) Conrad Wyder (independent) Executive Board * Hans-Peter Aebi, CEO Luca Baroni, Finance & Accounting Rudolf Baumann, Operations Werner Meier, IT, until 22 February 2008 Knut Baur, IT (ad interim), from 28 February 2008 Thomas Tillwicks, Commercial Grid Management Monika Walser, Corporate Communications & Human Resources Auditors KPMG AG, Basle * As of 31 Dezember 2008

4 Financial Report Financial statements Income statement Notes to to Operating income Own work capitalised Other income Total operating income Material and third-party supplies Personnel expenses Depreciation / amortisation Impairments Other operating expenses Total operating expenses Earnings before interest and taxes Financial income Financial expense Earnings before taxes Taxes Net income

5 Financial Report Balance sheet Assets Notes Property, plant and equipment Intangible assets Fixed assets Fiduciary assets Trade accounts receivable Other receivables Prepaid expenses and accrued income Cash and cash equivalents Current assets Total assets Balance sheet Equity and liabilities Notes Share capital General reserve 127 Retained earnings Total equity Non-current financial liabilities Non-current liabilities Fiduciary liabilities Current financial liabilities Trade accounts payable Other liabilities Accrued expenses and deferred income Current liabilities Total liabilities Total equity and liabilities

6 Financial Report Cash flow statement Excluding fiduciary balance sheet items Notes to to Net income Net interest expense Interest income Tax expense Depreciation / amortisation Impairments Loss on disposal of assets 22 Decrease / increase in trade accounts receivable Decrease / increase in other receivables Decrease in prepaid expenses and accrued income Decrease / increase in trade accounts payable Decrease / increase in other current liabilities Increase in accrued expenses and deferred income Interest paid Interest received Taxes paid 34 Cash flow from operating activities Investments in property, plant and equipment Investments in intangible assets Payment of purchase price of fixed assets Cash flow from investing activities Increase in current financial liabilities Cash flow from financing activities Change in cash and cash equivalents Statement Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Change in cash and cash equivalents

7 Financial Report Explanations of cash flow statement Investing activities 2008 not affecting cash: Invoices not received at 31 December for investments in property, plant and equipment: CHF Invoices not received at 31 December for investments in intangible assets: CHF Capitalised interest on borrowed capital: CHF (CHF property, plant and equipment / CHF intangible assets) Financing activities 2008 not affecting cash: In the 2008 financial year, CHF of a short-term loan was converted to a long-term loan until January In the 2007 financial year, all investing and financing activities had an impact on cash. Statement of changes in shareholders equity In CHF 1000 Share capital General reserve Retained earnings Total shareholders equity Shareholders equity Allocation Dividends paid Net income At Allocation Dividends paid Net income At

8 Financial Report Notes Introductory remarks The 2007 and 2008 financial years were dominated by operational preparations in the run-up to market liberalisation of the Swiss transmission system on 1 January These preparations entailed complex projects involving heavy demands on internal and external resources. From 2009 swissgrid ag s business operations will take place in a regulated environment. The expenses generated by swissgrid ag make up the main component of Swiss grid usage. Accounting principles Financial statements of swissgrid ag have been prepared in accordance with Swiss company law and in compliance with Swiss GAAP FER. They present a true and fair view of the net assets, financial position and results of operations of the company. These Swiss GAAP FER financial statements also correspond to the statutory financial statements provided for by the Swiss Commercial Code. Valuation principles Property, plant and equipment Property, plant and equipment are carried at the cost of acquisition or production less cumulative depreciation and any impairment losses recognised. Depreciation is calculated using the straight-line method on the basis of the estimated useful economic lives of the assets. In the following asset categories, the economic lives are as follows: Construction in progress: only in the case of an impairment Plant and business equipment: 3 to 10 years Operational and administrative buildings: 5 to 10 years / lease term in the case of investments in real estate owned by third parties Impairments of property, plant and equipment The value of property, plant and equipment is assessed annually. If indications exist of a loss of value i.e. it is unlikely that the depreciation in the full cost can be passed on to the recipients of swissgrid s products or services the recoverable amount is calculated. If the book value is higher than the recoverable value, an impairment is recognised.

9 Financial Report Intangible assets Intangible assets are carried at the cost of acquisition or production less cumulative amortisation and any impairments. Amortisation is calculated using the straight-line method on the basis of the estimated useful economic lives of the assets. In the following asset categories, the economic lives are as follows: Intangible assets under development: only in the case of an impairment Software: 3 to 10 years Technical regulations: 3 years Impairment of intangible assets The value of intangible assets is assessed annually. If indications exist of a loss of value i.e. it is unlikely that the amortisation in the full cost can be passed on to the recipients of swissgrid s products or services the recoverable amount is calculated. If the book value is higher than the recoverable value, an impairment is recognised. Construction in progress / intangible assets under development Construction in progress and intangible assets under development are assets that are not yet completed or operational. Assets are all items of property, plant and equipment and intangible assets, including own work performed by swissgrid employees. As of each balance sheet date, an examination is carried out to determine whether existing construction in progress or intangible assets under development have no value in use. These are recorded as an impairment in the year of completion. Ordinary depreciation or amortisation of these assets begins once they are completed or ready for operation. Project work (third-party and own work) resulting from the forthcoming market liberalisation of Switzerland s transmission system is capitalised from the completion of the pre-project phase onwards, provided the aim of the project is to develop and build IT applications (hardware and software). Project work based on the legislative framework (Electricity Supply Act, Electricity Supply Ordinance, Energy Act, Energy Ordinance) and carried out in order to create the technical regulations that first enabled swissgrid to acknowledge its role as national grid company in the legal sense, is also capitalised. The majority of the project work performed in preparation for market liberalisation of Switzerland s transmission system will be effective as of 1 January The resulting depreciation or amortisation of these assets from 2009 onwards is a component part of the tariffs to be billed in accordance with the Electricity Supply Act and the Electricity Supply Ordinance.

10 10 Financial Report Trade accounts receivable Accounts receivable are valued at their nominal value less any impairments required for business reasons. Cash and cash equivalents Cash and cash equivalents includes cash in hand, cash at banks and financial investments at banks maturing in 90 days or less. They are accounted for at their nominal value. Liabilities Liabilities include current and non-current debts which are carried at the repayment amount. Interest on borrowed capital Interest on borrowed capital is recognised as an expense in the period in which it occurs. Interest on borrowed capital relating to the creation of an asset is capitalised from the 2008 financial year. The capitalised interest is calculated in the period from when the asset is first created to when it is first used. Employee pension plan swissgrid ag is a member of an industry-wide retirement benefit plan (PKE Pensionskasse Energie). This is a legally independent pension fund. All permanent employees of the company are included in this plan from 1 January of the year in which they turn 18. They are covered for permanent disability and death. From 1 January of the year in which they turn 25, the employees are also covered by retirement insurance. Economic benefits from a pension fund surplus (for example, in the form of a positive impact on future cash flows) are not capitalised, since the prerequisites for this are not met and the company does not intend to use such benefits to reduce employer contributions. Any benefit arising from freely available reserves of employer contributions is recorded as an asset. An economic obligation (for example in the form of negative effects on future cash flows due to a pension fund deficit) is recorded if the prerequisites for recognising a provision are fulfilled. The contributions for the period, the difference between the annually calculated economic benefit from pension fund surpluses and obligations, as well as the change in the employer s contribution reserve are recognised in the income statement as personnel expenses.

11 Financial Report 11 Transactions with related parties Related parties are organisations and persons that can have a significant influence, either directly or indirectly, on financial or operational decisions of swissgrid ag. Shareholders who hold at least 20 % of the voting rights in swissgrid ag, either alone or together with others, are considered to be related parties. Other criteria in addition to the proportion of voting rights are also taken into account for shareholders (e.g. representation in committees, possibility of exerting influence based on shareholder structure). Subsidiaries of related shareholders, such as partner plant companies whose equity is wholly owned by related shareholders, are also considered to be related parties. Members of the Board of Directors and the Executive Board are also considered to be related parties. Relations with related parties, if significant, are disclosed in the respective notes relating to the balance sheet and the income statement. All transactions are conducted at arm s length.

12 12 Financial Report 1. Operating income Third parties 409 Related parties Operating income includes services for basic, project and design work, representation of interests and grid operation. In its capacity as grid operator, swissgrid ag is responsible for the secure, reliable, and cost-effective operation of the high-voltage grid. Operating income is generated solely with swissgrid shareholders. 2. Other income Third parties Related parties Other income is generated from operating activities in other business areas, such as operation of the schedule balance groups, management of additional cost financing, and acting in the function of auction coordinator. 3. Material and third-party supplies Project expenses and consulting in connection with the setup of swissgrid and the maintenance, repair and replacement of assets Of which, with third parties Of which, with related parties Hardware / software maintenance Of which, with third parties Of which, with related parties

13 Financial Report Personnel expenses Salaries, bonuses, allowances Employee insurance Other personnel expenses Headcount at Persons Full-time equivalents Executive Board remuneration Fixed remuneration (incl. per diem expenses) Variable remuneration Total remuneration to the Executive Board Of which to the highest earning member of the Executive Board Fixed remuneration (incl. per diem expenses) Variable remuneration Total remuneration to the highest earning member of the Executive Board The above amounts represent gross remuneration paid out in cash (excl. employer contributions for social insurance and non-cash benefits). The figures are based on the expenses debited to the financial statements (accrual basis). Remuneration to ad interim Executive Board members is not listed. Other personnel expenses include mainly recruitment costs, work done by third parties (temporary staff, freelancers), expenses and training.

14 14 Financial Report 5. Other operating expenses Third parties Board of Directors fees and expenses Other related parties Board of Directors fees and expenses represent fixed gross remuneration paid out in cash (excl. employer contributions for social insurance and VAT in cases where the payment is made to the employer). Remuneration to the Chairman of the Board of Directors is CHF per year (CHF of which is reimbursement of expenses; as of December 2008, the fee is CHF per year incl. reimbursement of expenses of CHF ) The other members of the Board of Directors receive remuneration of CHF per year (CHF of which is reimbursement of expenses). Because the position of Chairman of the Board of Directors was partly vacant in the 2008 financial year and the Board of Directors had fewer members compared with the previous year, the total remuneration for 2008 is lower than for Other operating income with related parties comprises rental and ancillary costs for swissgrid premises and rental costs for communication equipment.

15 Financial Report Financial income Interest income from third parties Financial expense Interest expenses to third parties Interest expenses to related parties Capitalised interest on borrowed capital 559 Foreign exchange losses

16 16 Financial Report 8. Fixed assets Table of plant, property and equipment 2008 In CHF 1000 Prepayments and construction in progress Plant and business equipment Operational and administrative buildings Total Acquisition cost at Additions Disposals Reclassification Acquisition cost at Cum. depreciation at Depreciation Impairments Disposals Reclassification Cum. depreciation at Net book value at Net book value at Due to a change in the framework conditions, one project had to be fundamentally revised. This led to an impairment of CHF Computer systems totalling CHF and construction work totalling CHF were purchased from related parties. Fire insurance values amounted to CHF as at 31 December 2008.

17 Financial Report 17 Table of plant, property and equipment 2007 In CHF 1000 (TCHF) Prepayments and construction in progress Plant and business equipment Operational and administrative buildings Total Acquisition cost at Additions Disposals Reclassification Acquisition cost at Cum. depreciation at Depreciation Impairments Disposals Reclassification Cum. depreciation at Net book value at Net book value at No impairments were necessary in No plant, property or equipment was purchased from related parties in the 2007 financial year. Fire insurance coverage amounted to CHF as at 31 December 2007.

18 18 Financial Report Table of intangible assets 2008 Software Technical regulations In CHF 1000 Purchased Own work Total Purchased Own work Total Acquisition cost at Additions Disposals Reclassification Acquisition cost at Cum. amortisation at Amortisation Impairments Disposals Reclassification Cum. amortisation at Net book value on Net book value at Due to a change in the framework conditions, several projects had to be stopped or fundamentally revised. This led to impairments of CHF (previous year: CHF 0). Work totalling CHF (previous year: CHF ) was carried out by related parties in the 2008 financial year. Technical regulations were drawn up which are shown as intangible assets under development as at 31 December 2008.

19 Financial Report 19 Intangible assets under development Total intangible assets Purchased Own work Total Purchased Own work Total

20 20 Financial Report Table of intangible assets 2007 Software Technical regulations In CHF 1000 Purchased Own work Total Purchased Own work Total Acquisition cost at Additions Disposals Reclassification Acquisition cost at Cum. amortisation at Amortisation Impariment Disposals Reclassification Cum. amortisation at Net book value at Net book value at

21 Financial Report 21 Intangible assets under development Total intangible assets Purchased Own work Total Purchased Own work Total

22 22 Financial Report 9. Fiduciary balance sheet items (by business area) Fiduciary assets 2008 In CHF 1000 ITC Auctions SBG imbalances Financing of additional costs Total Trade accounts receivable Other receivables Prepaid expenses and accrued income Cash and cash equivalents Total Fiduciary liabilities 2008 In CHF 1000 ITC Auctions SBG imbalances Financing of additional costs Total Trade accounts payable Other liabilities Accrued expenses and deferred income Total Fiduciary assets 2007 In CHF 1000 ITC Auctions SBG imbalances Financing of additional costs Total Trade accounts receivable Other receivables Prepaid expenses and accrued income Cash and cash equivalents Total Fiduciary liabilities 2007 In CHF 1000 ITC Auctions SBG imbalances Financing of additional costs Total Trade accounts payable Other liabilities Accrued expenses and deferred income Total

23 Financial Report 23 Business areas ITC, Auctions, SBG imbalances swissgrid ag is the clearing centre for the Cross Border Trade Agreement (CBT), serves as auction coordinator as well as operator of the schedule balance group system (SBG), and manages books and bank accounts in a fiduciary capacity in connection with these activities. Only fiduciary assets and liabilities are shown in the financial statements. The income statement does not contain any figures for the business areas ITC, Auctions and SBG imbalances. Financing of additional costs Since Art. 7 Para. 7 of the Energy Act (EnG) and the associated amendment to the Energy Ordinance (Arts. 5a 5c EnV) came into force on 1 January 2005, the new financing mechanism for additional costs has been applied. The principle of additional cost financing is based on a clearing process. Public electrical utilities that incur additional costs due to the feed-in of energy from independent producers declare such costs to the independent body. swissgrid ag has been functioning as the independent body since 2006, and as such passes on the aggregated additional costs incurred by all public electrical utilities as well as its enforcement costs to all grid operators who distribute electricity to end consumers across Switzerland. These costs are passed on in proportion to the volumes of electricity delivered to end consumers declared by the grid operators. The independent body is required to submit reports to the Federal Office of Energy. These reports cover, among other things, notification of defaulting grid operators, suspected cases of false declarations of additional costs, and the enforcement costs incurred. In connection with these activities, swissgrid ag manages books and bank accounts in a fiduciary capacity. The corresponding balances are shown in the balance sheet in these financial statements. From 2009, additional cost financing will be managed by the cost-covering feed-in remuneration (CFR) foundation.

24 24 Financial Report 10. Trade accounts receivable Third parties Related parties The majority of trade accounts receivable from related parties are in connection with the management of performance mandates. 11. Other receivables Third parties Pension funds 3 35 Related parties Prepaid expenses and accrued income Third parties Related parties Share capital The share capital consists of fully paid-up registered shares with a par value of CHF 1 per share. 14. Non-current financial liabilities Third-party loans (bank loans) Related party loans The loan was unsecured and runs until January 2010.

25 Financial Report Current financial liabilities Third-party loans (bank loans) Related-party loans Trade accounts payable Third parties Related parties Other liabilities Pension funds 214 Third parties Related parties Accrued expenses and deferred income Third parties Related parties Accruals for personnel expenses and employees insurance coverage Accruals for taxes

26 26 Financial Report 19. Other, off-balance sheet liabilities Fixed purchase and operating commitments Under the terms of Art. 20, Para. 2a of the Electricity Supply Act, as of 2009 swissgrid operates the Swiss high-voltage grid. Under the terms of Art. 33, Para. 4 of the Electricity Supply Act, the transmission system must be transferred to swissgrid ag by the current owners and taken over by swissgrid ag by no later than 31 December Until the handover, swissgrid ag must compensate the owners for their chargeable costs (Art. 15 of the Electricity Supply Act). Owners costs of CHF 328 million were determined for 2009 in accordance with the ElCom ruling of 9 March Several of those participating in the proceedings took the ruling by ElCom to the Federal Administrative Court. For this reason, no exact cost specifications can be made for 2009 or for subsequent years. swissgrid ag assumes that these will be somewhere in the range between the originally declared costs of CHF 417 million and the costs of CHF 328 million ruled by ElCom. Long-term leases Long fixed-term leases exist with several parties. The obligations arising from these leases are shown as follows: In CHF 1000 Year 1 Year 2 7 Total Off-balance sheet lease liabilities Off-balance sheet lease liabilities exist from vehicle leases. The amounts are as follows: In CHF 1000 Year 1 Year 2 7 Total

27 Financial Report Employee pension plan Employer s contribution reserve Nominal value Renounced use Other impairments Discount Balance Sheet Previous year s balance Result from employer s contribution reserve in personnel expenses In CHF Previous year 2008 Prev. year Patronage fund Pension fund (PKE) Total Economic benefit / economic obligation and retirement benefit plan expenses Over- / underfunding Economic share of the organisation Change compared with previous year / affecting income in FY Contributions concerning the business period Pension benefit expenses within personnel expenses in TCHF Previous year 2008 Previous year Patronage fund 276 Pension fund with underfunding (PKE) Total

28 28 Financial Report 21. Risk assessment The company-wide risks of swissgrid ag are identified, changes to risks currently being monitored are re-evaluated and the results of previous measures are regularly determined as part of a multi-level process. On this basis, the current risks are evaluated according to their probability and impact. Those risks that are assessed as significant are avoided, reduced or hedged through corresponding measures determined by the Board of Directors. 22. Events after the balance sheet date The following events occurred after the balance sheet date of 31 December 2008: On 6 March 2009, ElCom issued a ruling governing costs and tariffs for Level 1 grid usage and ancillary services. The ruling does not address the issue of whether higher costs for ancillary services can be passed on. A negative decision on this issue could jeopardise the liquidity and financial security of swissgrid. As this part of the ruling contradicts the Electricity Supply Ordinance (Art. 31b) as revised by the Federal Council in December 2008, swissgrid has lodged an appeal with the Federal Administrative Court against the ElCom ruling. Events after the balance sheet date have been taken into account up to 6 May 2009, the date on which the financial statements were approved by the Board of Directors of swissgrid ag.

29 Financial Report 29 Proposed appropriation of retained earnings The Board of Directors proposes to the Annual General Meeting that the retained earnings for 2008 be appropriated as follows: In CHF Amount carried forward from the previous year Net profit for the year Retained earnings Allocation to the General Reserve (Art. 671 Para. 1 and Para. 2 Item 3 Swiss Code of Obligations (CO)) To be carried forward Total appropriation On behalf of the Board of Directors Chairman: Peter Grüschow

30 30 Financial Report Report of the Statutory Auditor Report of the Statutory Auditor on the Financial Statements to the General Meeting of swissgrid ag, Laufenburg As statutory auditor, we have audited the financial statements of swissgrid ag, which comprise the income statement, balance sheet, statement of cash flows, statement of changes in shareholders equity and notes as presented on pages 4 to 29 for the year ended 31 December Board of Directors Responsibility The board of directors is responsible for the preparation of the financial statements in accordance with Swiss GAAP FER, the requirements of Swiss law and the company s articles of incorporation. This responsibility includes designing, implementing and maintaining an internal control system relevant to the preparation of financial statements that are free from material misstatement, whether due to fraud or error. The board of directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are reasonable in the circumstances. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers the internal control system relevant to the entity s preparation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control system. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

31 Financial Report 31 Opinion In our opinion, the financial statements for the year ended 31 December 2008 give a true and fair view of the financial position, the results of operations and the cash flows in accordance with Swiss GAAP FER and comply with Swiss law and the company s articles of incorporation. Report on Other Legal Requirements We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) and independence (article 728 CO) and that there are no circumstances incompatible with our independence. In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an internal control system exists, which has been designed for the preparation of financial statements according to the instructions of the board of directors. We further confirm that the proposed appropriation of available earnings complies with Swiss law and the company s articles of incorporation. We recommend that the financial statements submitted to you be approved. KPMG AG Orlando Lanfranchi Licensed Audit Expert Auditor in Charge Roman Martin Licensed Audit Expert Basle, 6 May 2009

32 swissgrid ag Werkstrasse 12 CH-5080 Laufenburg The German version is legally binding.