Annual Report 1999739KB - Essent

essent1999Essent: what criteria will apply to this approvalpolicy? In itself this outcome was satisfactory forEssent, but it remains incomprehensible why itscompetitor in this market, Gasunie, is not obligedto hive off its network activities and is moreoveralready 50% privately owned. Essent will test atinternational level whether it is reasonable forcentral government, which directly and indirectlyowns 50% of Gasunie, to give preferential treatmentto ‘its own gas company’.In waste processing too, the uncertainty surroundinggovernment policy is an obstacle to thehealthy development of the sector. The waste processingsector is in a transitional phase from aclosed to an open market although there are noclear ground rules or time frame. In particular,the question as to whether regional and nationalboundaries are and/or will remain open or closedhas created considerable uncertainty. Essentassumes that regional boundaries will lose theirsignificance and that the significance of nationalboundaries will also come under considerablepressure. At the moment, opportunities to optimisewaste processing and recycling beyondnational boundaries are being missed due to therestrictions on transporting waste across the borders.This is disadvantageous to Essent in businessterms and does not contribute to an optimumenvironmental policy. It would be desirable toclarify as soon as possible when regulations willbe introduced which recognise the fact that thewaste processing market has also become aninternational market. If governments consider itadvisable to impose restrictions on this internationalmarket, they must be clear and feasible inthe long term. The current impression is that theexisting restrictions could disappear at any time,resulting unexpectedly in entirely new marketconditions. This paralyses investment policy andleads to opportunism among all market players.The finances ResultThe share-for-share merger finalised inDecember 1999 between PNEM/MEGA Groep andEDON Groep took effect with retroactive effect to1 January 1999. Consequently, 1999 is the firstyear for which the new company Essent is reportingresults. These results are compared with a proforma consolidation of the results achieved in1998 by EDON Groep and PNEM/MEGA Groep.For this purpose, the accounting policies of thetwo companies have as far as possible beenbrought into line with each other.The profit on ordinary activities after tax totalledNLG 599 million, a rise of 36% compared with1998. In addition, the result for 1999 was significantlyinfluenced by a number of extraordinaryitems which contributed NLG 979 million to theresult on balance. Net profit totalled NLG 1,579million.Essent’s net turnover, representing operatingincome net of levies collected on behalf of thegovernment, remained at virtually the same levelas in 1998 at over NLG 8.4 billion. In 1999, anaverage growth in volume of 3% was achieved.An increase in the gross margin and other operatingincome of NLG 605 million and a rise in operatingexpenses of NLG 333 million were reflectedin the group’s operating profit totalling NLG 932(1998: NLG 660 million). Operating profit was41% higher than the pro forma operating profitfor 1998, partly due to the consolidation ofVAM Groep.Net financial expense amounted to NLG 334 million,a rise of 16% on 1998 (NLG 288 million).One of the main reasons for this rise was likewisethe consolidation of VAM Groep (NLG 63 million).If this effect is removed, net financialexpense totals NLG 271 million, an improvementof NLG 17 million compared with 1998. Thisfavourable development was due in part to thesettlement of an interest rate swap contract concludedby EPZ in respect of cash flows relating tothe construction of the Swentibold power station.The results of non-consolidated participatinginterests were NLG 58 million lower than in 1998.In 1998 results were boosted by an exceptionaldividend distribution of NLG 30 million receivedby MEGA Limburg due to the payment by a holdingcompany of a gain on the sale of its stake inLibertel. In addition, the 1998 profit of the participatinginterest in EPON was considerably higherthan in 1999.14annual report