BKW FMB Energy Ltd Annual Report 2003

Financial Review
Sales and profi t up
In the year under review the BKW Group
reported a profi t of CHF 252.8 million,
representing a year-on-year in crease of 22
percent. Consolidated operating revenue
rose 41.6% to CHF 2,945 million, primarily
as a result of trading activities as well
as national and international sales.
28
Changes in presentation
according to IFRS
The consolidated fi nancial statements of
the BKW Group at 31.12.2003 were once
more prepared in accordance with the
International Financial Reporting Standards
(IFRS). No major changes were
made to the accounting principles in
2003. The scope of consolidation
changed only slightly in the year under
review: the 35% holding acquired in
Energie du Jura SA was accounted for using
the equity method and the 10% holding
acquired in EEF.ENSA (FEW) was
accounted for at fair value.
Increase in energy sales
Total operating revenue for 2003 rose by
41.6% to CHF 2,945 million, largely as a
result of a growth of CHF 551 million in
trading revenue and of CHF 164 million
in international sales, the latter due to
higher volumes and price levels. The
newly expanded gas business also contributed
to this result, posting sales of
CHF 63 million compared to CHF 9 million
in 2002. Sales in Switzerland rose by
CHF 37 million due to a 3.7% (240
GWh) increase in volume caused by a
2.6% rise in consumption by existing
customers and through new customer acquisitions.
The fi gure is also higher due
to the absence of non-recurring customer
discounts granted in 2002.
Higher operating income and
fi nancial result
Purchases from partner plants and third
parties mainly accounted for the rise in
electricity sales, leading to higher expenditure
on energy procurement. The
rise in operating expenses is also attributable
to expenses in connection with the
preparation and implementation of the
SWX listing and secondary placement
of BKW shares, intensive groundwork
ahead of the liberalisation of the Swiss
electricity market, and further expansion
of the international business. The Group
nevertheless succeeded in increasing op-
erating income before depreciation and
amortisation by 6.8% to CHF 370 million.
Similarly, after deducting depreciation
and amortisation, which was virtually
unchanged at CHF 84.5 million (+1.9%),
operating income rose by 8.3% to CHF
285.5 million. In 2003 the fi nancial result
benefi ted from exchange rate gains in
euros as well as the stock market recovery.
On the other hand it was negatively
impacted by a decline in income from interest
due to less favourable interest rate
conditions, coupled with the shift from
long-term to short-term time deposits.
The positive fi nancial result of CHF 21.7
million (2002: – CHF 17.3 million) signifi
cantly contributed to the 22% increase
in net profi t for 2003 which, after deductions
for taxes and minority interests,
amounts to CHF 252.8 million.
Growth in balance sheet total
Assets and liabilities and shareholders’
equity rose by a good 10% in the year under
review. Current assets are primarily
responsible for the increase on the assets
side. In particular, short-term fi nancial
claims rose along with trade accounts
receivable, other receivables and inventories.
Due to low interest rates, fi nancial
assets were primarily invested over the
short-term, leading to a marked rise in fi -
nancial claims under current assets and
an associated reduction in non-current fi -
nancial assets. In the fourth quarter of
2003 BKW posted an above-average rise
in net sales, resulting in a corresponding
increase in trade accounts receivable as
well as other receivables.
On the liabilities side, equity ratio was
slightly up from 44.5 % to 45.7%. The
BKW shares acquired from the cantons
of Berne and Jura in 2002 and 2003 were
mainly used for the cross-participation in
EEF.ENSA. Provisions for nuclear waste
disposal as well as for onerous contracts
related to energy procurement and sales
were recorded according to the applicable
valuation principles. In the fourth