Eandis HY2011 report IFRS

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Eandis HY2011 report IFRS

www.eandis.beRegulated information Melle, 31 August 2011HALF-YEARLY FINANCIAL REPORT OF THE EANDIS-GROUP 1 AS PER 30 JUNE 2011HIGHLIGHTS 2As from 1 July 2011 Luc De Bruycker has succeeded Guy Peeters as Chairman of Eandis’Management Committee. Walter Van den Bossche has become Vice-Chairman of theManagement Committee.Electrabel withdraws its representatives from Eandis’ governing bodies as from 30 June2011.Eandis has established - in collaboration with Infrax, Ores and Sibelga – the new companyAtrias cvba. Atrias should develop a new standard for the market processes and informationexchanges by the year 2015.Eandis and the mixed Flemish distribution system operators (DSOs) have decided to launch abroad-scale pilot project for smart meters.Thanks to a reallocation in the share capital of each of the DSOs the capital attributable tothe public authorities has increased to an average of 79 per cent; the private partner’sportion in the share capital has decreased to an average of 21 per cent.The Constitutional Court has partly nullified the so-called Ratification Act for the distributiontariffs of electricity, but this judgment has no direct impact on the DSO tariffs which hadbeen approved earlier.Antwerpse Waterwerken (AWW) has joined De Stroomlijn, an Eandis subsidiary. Thisconfirms De Stroomlijn’s unique position as customer contact centre for network relatedcompanies.1 The Eandis-group comprises Eandis cvba and its consolidated subsidiaries De Stroomlijn cvba, Indexis cvba and Atriascvba.2 All comparisons are with the figures reported as per 30 June 2010, unless stated otherwise.1

Total operating revenue and operating costs have increased with approx. 7 per cent inrelation to an increase in the activity level.The increase of the costs for Rational Use of Energy (RUE) subsidies to [•] million EUR, or + [•]per cent, reflects the enduring success of the RUE measures.A status-quo in the number of staff for Eandis cvba with 4.303 employees (4.175,50 full-timeequivalents), i.e. a limited increase with 7 employees or + 0,16 per cent compared to 31December 2010.No profit or loss, since all costs can be fully transferred to the distribution system operatorsbased on the ‘transfer at cost’ principle.MANAGEMENT REPORTThe management of the company has undergone some major changes during the first half of theyear 2011. Guy Peeters, Chairman of the Management Committee, has terminated his professionalcareer. The Board of Directors has nominated Luc De Bruycker, previously director-general and Vice-Chairman of the Management Committee, as his successor. Walter Van den Bossche, directorFinance and Administration, was nominated as director-general and Vice-Chairman of theManagement Committee. These nominations entered into force on 1 July 2011 and are valid untilthe Annual Shareholders’ Meeting in 2013. At that moment Walter Van den Bossche will assume thechairmanship of the Management Committee. The Board of Directors has requested the renewedmanagement to investigate a few possible strategic options on the mid term for the Eandis Group.Electrabel, private shareholder in the 7 Flemish mixed distribution system operators, has decided towithdraw as from 30 June 2011 all of its representatives in Eandis’ governing bodies (Board ofDirectors, HR Committee and Audit Committee). Electrabel has also reduced its representation inthe DSOs’ governing bodies and foregone a number of its statutory and contractual rights.Electrabel’s financial participation in the DSOs will remain unchanged as it was realized after thecapital optimization carried out on 30 June 2011. After this optimization an average of 79 per cent ofthe DSOs’ share capital is held by the public authorities, 21 per cent of the capital is held byElectrabel.In a judgment dated 31 May 2011, the Constitutional Court has partly nullified the Ratification Act of15 December 2009; this act was in particular nullified insofar as it relates to the articles 9 to 14 ofthe Royal Decree of 2 September 2008 with respect to the distribution tariffs for electricity.However, this judgment does not have a direct impact on the tariffs which had been approvedearlier and which the DSOs charge for the use of their network infrastructure.On 9 May 2011 Eandis and three other distribution grid companies (Infrax, Ores and Sibelga)established a new company, Atrias cvba. Atrias has the mission to develop by the year 2015 a newUMIG, i.e. a standard for the market processes and information exchange, and to pave the way for afuture federal Clearing House. Eandis has taken a 25 per cent stake in Atrias’ share capital. Atrias isincluded in the consolidation as from the half year results 2011 according to the equity method.2

In February 2011 the Boards of Directors of Eandis and the Flemish mixed DSOs have decided tolaunch a broad-scale pilot project for smart meters. Approximately 50.000 smart meters will beinstalled (40.000 at Eandis, 10.000 in the Infrax area). This project should allow for an optimizationof the technical systems to a mature technology which is suitable for a general roll-out. Theeconomic viability of a global roll-out will be investigated in a cost/benefit analysis. Special attentionwill be paid to the (surplus) value of a smart meter for the consumers and society in general, to theadvantages in the field of energy efficiency, and to privacy and data security aspects.As from 1 May 2011, De Stroomlijn has enlarged its scope of activities with the settlement of callsfrom customers of the Antwerp Water Works (AWW), a water distributing company in the Antwerpregion. AWW also joins De Stroomlijn as one of its shareholders; as a result, Eandis’ portion in DeStroomlijn’s share capital is reduced from 65,92 per cent to 64,03 per cent.Eandis and the Flemish mixed DSOs keep their focus on the Rational Use of Energy (RUE). The mostremarkable event in this respect was the signing at the end of February 2011 by the City of Antwerp,the Antwerp Autonomous Municipal Company for Education, distribution system operator IMEA andEandis of an agreement for the largest RUE-project in Flanders. Through 92 projects a total amountof 16,6 million EUR will be invested in energy saving measures, aiming at improving the overallquality of 50 school buildings and their comfort of use. After implementation of these projects theenergy bills of these 50 school buildings will be down by approx. 26 per cent.Eandis actively participates in several projects of research, innovation and development in the fieldof electric mobility. For example, Eandis is currently collaborating with a number of partners withinthe ‘Electric Vehicles in Action’ platform (EVA) in order to facilitate the innovation and adoption ofelectric vehicles.As announced in the 2010 Annual Report the increase of Eandis cvba’s staff has stabilized during thefirst half of 2011. The net increase between January and June 2011 amounted to 7 persons to a newtotal of 4.303 staff members.RISK FACTORSThe risk factors as described in the 2010 Annual Report and the prospectus dated 2 June 2010 (asupdated on 24 November 2010) have remained valid for the first semester of 2011.OUTLOOKFor the second semester of 2011 Eandis expects that, barring unforeseen economic developments,there will be no substantial deviations vis-à-vis the defined objectives. Meanwhile, Eandis is closelymonitoring the financial and economic evolutions.3

REPORTING STATUSThese condensed financial statements for the period ended 30 June 2011 were approved forpublication by Eandis’ Board of Directors on 31 August 2011.On 31 August 2011 Eandis’ statutory auditor, Ernst & Young Bedrijfsrevisoren represented by Mr JanDe Luyck, issued a limited review report on the consolidated half-year financial information for thesix-month period ended 30 June 2011, stating that the interim financial information has beenprepared in accordance with IAS 34, “Interim Financial Reporting” as adopted by the EU.STATEMENT BY THE RESPONSIBLE PERSONS“The undersigned persons state that, to the best of their knowledge,the condensed financial statements of Eandis cvba and its subsidiaries as of 30 June 2011have been prepared in accordance with the International Financial Reporting Standards(IFRS), and give a true and fair view of the assets and liabilities, financial position andresults of the whole of the companies included in the consolidation; andthe interim management report gives a fair overview of the information required to beincluded herein.Melle, 31 August 2011,For the Board of Directors,Luc DE BRUYCKER, Director-general, Chairman Management CommitteeWalter VAN DEN BOSSCHE, Director-general, Vice-Chairman Management Committee“4


PROFILE OF THE REPORTING ENTITYEandis cvba and its subsidiaries De Stroomlijn cvba, Indexis cvba and Atrias cvba (together the‘Eandis-group’ or the ‘Group’) is the independent company that carries out operational tasks andpublic service obligations for electricity and gas at cost price for the Flemish mixed distributionsystem operators Gaselwest, IMEA, Imewo, Intergem, Iveka, Iverlek and Sibelgas. The Group’s resulttherefore is without any profit or loss.ANNEXCondensed IFRS financial statements for the six-month period ended 30 June 2011:Income statementStatement of comprehensive incomeBalance sheetCash flow statementStatement of changes in equityCommentsNotes7

Statement of comprehensive income(in thousands of EUR)30 June201130 June2010Actuarial gain (loss) on long term employee benefits -4.379 -23.768Actuarial gain (loss) on rights to reimbursement on long term employee benefits 4.379 23.768Other comprehensive income 0 0Result for the period 0 0Total comprehensive income for the period 0 09

Balance sheet(In thousands of EUR)30 June201131 December2010Non-current assets 780.328 797.412Property, plant and equipment 11.836 14.261Investments in an associate 5 0Financial assets 1.102 1.092Rights to reimbursement on long term employee benefits 447.369 462.031Long term receivables, other 320.016 320.028Current assets 571.792 565.426Inventories 30.922 28.090Trade and other receivables 37.413 30.275Receivables cash pool activities 495.710 499.409Current tax assets 1.273 2.748Cash and cash equivalents 6.474 4.904TOTAL ASSETS 1.352.120 1.362.838EQUITY 1.099 1.091Equity attributable to owners of the parent 20 20Share capital and reserves 20 20Non-controlling interest 1.079 1.071LIABILITIES 1.351.021 1.361.747Non-current liabilities 767.394 782.062Provisions for employee benefits 447.369 462.031Loans, non-current 320.025 320.031Current liabilities 583.627 579.685Loans, current 359.879 379.030Trade payables and other current liabilities 223.685 179.968Liabilities cash pool activities 0 20.202Current tax liabilities 63 485TOTAL LIABILITIES 1.352.120 1.362.83810

Cash flow statement(In thousands of EUR)30 June201130 June2010Result for the period 0 0Depreciation on property, plant and equipment 3.034 3.829Amounts written off on current assets (Write back -; recorded +) -18 -11Loss/profit on realization receivables 64 6Net finance expense -552 -189Gain and loss on sale of property, plant and equipment 0 -18Income tax expense 3.176 4.556Operating cash flow before changes in working capital and provisions for employeebenefits5.704 8.173Change in inventories -2.832 739Change in trade and other receivables -4.574 4.919Change in trade payables and other current liabilities 42.483 28.937Net operating cash flow 35.077 34.595Financial expenses paid -8.165 -1.427Financial income received 6.098 41Financial discount on debts 627 535Income tax paid -1.671 -2.706Net cash flow from operating activities 37.670 39.211Proceeds from sale of property, plant and equipment 0 19Acquisition of property, plant and equipment -609 -2.179Acquisition of financial assets -15 0Proceeds/(acquisition) from other long term receivables 12 -1Net cash flow used in investing activities -612 -2.161Issuance of capital 8 0Repayments of loans 0 -7.000Issuance of bonds 0 150.180Change in short term loans and borrowings -19.151 -306.281Change in cash pool (Current account) -16.505 273.633Provide long term loans 0 -150.000Dividends received 160 0Net cash flow used in financing activities -35.488 -39.468Net change in cash and cash equivalents 1.570 -2.418Cash and cash equivalents - at beginning of period 4.904 6.364Cash and cash equivalents - at end of period 6.474 3.94611

Statement of changes in equity(in thousands of EUR)ShareCapitalReservesEquityattributableto ownersof theparentNoncontrollinginterestTotalBalance as per 1 January 2010 18 2 20 1.071 1.091Changes in consolidation scope 0 0 0 0 0Result for the period 0 0 0 0 0Other comprehensive income 0 0 0 0 0Subtotal 0 0 0 0 0Balance as per 30 June 2010 18 2 20 1.071 1.091Balance as per 1 January 2011 18 2 20 1.071 1.091Changes in consolidation scope 0 0 0 8 8Result for the period 0 0 0 0 0Other comprehensive income 0 0 0 0 0Subtotal 0 0 0 0 0Balance as per 30 June 2011 18 2 20 1.079 1.09912

CommentsIncome statementRevenue amounts to 605.328 kEUR, an increase of 40.196 kEUR compared to the first half of 2010.The increase is related to the costs, which can be entirely charged mainly to the distribution systemoperators.The cost of trade goods increases to 84.729 kEUR or 12.726 kEUR more compared to the first half of2010, especially for the division Electricity.The costs for services and other goods amount to 317.705 kEUR, an increase of 18.058 kEURcompared to the first half of 2010. This increase is mainly due to costs for the smart metering projectand costs related to investments and distribution network operating costs.The costs for rational use of energy (RUE) amount to 23.609 kEUR for the first half of 2011 or 2.925kEUR more than in the same period of last year.Due to a higher number of staff members as compared with the first semester of 2010 thepersonnel expenses increased with 12.391 kEUR to 203.191 kEUR.The financial income increases to 9.495 kEUR, an increase of 7.799 kEUR due to the provisions forinterest receivable on loans to the distribution system operators. The other interest income relatesto interest mainly achieved through the cash pool activities with the DSOs, the financial discountobtained from the suppliers and dividend received from financial assets.The financial expenses increase to 8.943 kEUR, an increase of 7.436 kEUR as a result of the set up ofprovisions for interest payable on the bond loans and interest paid on other financial obligationswith the banks.During the first half of 2011 interest rates are on average higher than in 2010. Therefore thefinancial income and expenses are higher in 2011 than they were in 2010.The result is always without any profit or loss, since all the costs can be charged on mainly to thedistribution system operators, shareholders.BalanceReview and analysis of the first six months of 2011 compared to the full year ended on 31 December2010.As a result of the establishment of Atrias, a central clearing house with Infrax, Ores and Sibelga, theGroup has recorded an amount of 5 kEUR as an investment in an associate.The right to reimbursement on long term employee benefits decreases from 462.031 kEUR to447.369 kEUR, a decrease of 14.662 kEUR. This decrease is the result of the decrease in the provisionfor employee benefits with this same amount.13

The other long term receivables remain almost unchanged and amount to 320.016 kEUR. Thisreceivable originates from lending on to the distribution system operators funds that were obtainedby Eandis from the issuance of the bonds during 2010.Trade and other receivables amount to 37.413 kEUR, or an increase of 7.138 kEUR. This increase isdue to the recording of provisions for accrued income, mainly for interest receivable from thedistribution system operators.Receivables cash pool activities from the Distribution system operators slightly decrease with 3.699kEUR from 499.409 kEUR to 495.710 kEUR.The non-controlling interest increases with 8 kEUR following the participation of AntwerpseWaterwerken (AWW) in the share capital of De Stroomlijn, a subsidiary of Eandis.The long-term loans include the proceeds of two bond issuances during 2010 for a total of 320.025kEUR. These bond loans were issued above par at 101,995 per cent and 101,920 per centrespectively and are due in 2017 and 2020 respectively.The current loans decrease from 379.030 kEUR to 359.879 kEUR, a decrease of 19.151 kEUR.The trade payables and other current liabilities increase from 179.968 kEUR to 223.685 kEUR,mainly as the result from increased provisions for invoices to be received, interest payable on thebond loans and accrued expenses related to personnel expenses.Cash flowThe net cash flow from operating activities represents a net inflow of 37.670 kEUR in the first half of2011 and 39.211 kEUR in the first half of 2010.The net cash flow from investing activities represents a net outflow of 612 kEUR in the first half of2011 and 2.161 kEUR in the first half of 2010.The net cash flow from financing activities represents a net outflow of 35.488 kEUR in the first halfof 2011 and 39.468 kEUR in the first half of 2010.Risk factorsThe risk factors as described in the 2010 Annual Report and the prospectus dated 2 June 2010 (asupdated on 24 November 2010) have remained valid for the first semester of 2011.14

NotesReporting entityEandis cvba and its subsidiaries De Stroomlijn cvba, Indexis cvba and Atrias cvba (together the“Group”) is the independent company that carries out operational tasks and public serviceobligations for electricity and gas at cost price for the Flemish mixed distribution system operatorsGaselwest, IMEA, Imewo, Intergem, Iveka, Iverlek and Sibelgas. The Group’s result therefore iswithout any profit or loss.These consolidated interim financial statements for the six months ended 30 June 2011 wereapproved for publication by the Board of Directors on 31 August 2011.IFRS standardsThe consolidated IFRS financial statements for the six-month period ended 30 June 2011 have beenprepared in accordance with International Accounting Standard 34 ‘Interim Financial Reporting’, asadopted by the European Union.They do not contain all the information necessary for a full set of financial statements, and shouldtherefore be read in conjunction with the Group’s financial statements for the year ended on 31December 2010.The accounting policies used in the preparation of the consolidated financial statements correspondto the accounting policies applied in the preparation of the consolidated financial statements for theyear ended 31 December 2010 except for the new standards or interpretations in force since 1January 2011. A detailed list of these new standards and interpretations was included in the financialstatements of 31 December 2010 (see note – Summary of significant accounting rules). Theapplication of these new standards, interpretations, and amendments to published standards donot significantly affect the Group’s results.The Group has chosen not to early apply standards and interpretations.Important events during the reporting periodThe Eandis consolidation changed due to the establishment of Atrias cvba on 9 May 2011. Eandis hastaken a 25 per cent stake in this company’s share capital. Therefore, Atrias is included in the Eandisconsolidation according to the equity method, and for the first time in the financial statements forthe six-month period ended 30 June 2011.15

Transactions with related partiesThe nature of the transactions with the members of the Management Committee and the directorsduring the first semester of 2011 do not materially differ from the transactions as included in the2010 Annual Report.Subsequent eventsNo major events after balance sheet date have materialized.CONTACTEandis cvba, Brusselsesteenweg 199 – B-9090 MelleVAT number: BE 0477.445.084PressSimon VAN WIJMEERSCH, tel. +32 9 263 45 54 - mail: simon.vanwijmeersch@eandis.beInvestor relationsKoen SCHELKENS, tel. +32 9 263 45 04 - mail: koen.schelkens@eandis.be16

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