Economic performance

In 2017, our strong operational performance, both in terms of cost control and the valorisation our generation assets, was overshadowed by the negative contribution of nuclear.

Agnès Butterlin, Chief Financial Officer


Challenge

The profitability of the company’s activities is the foundation of its development, enabling investment in the future of the company and its employees, and compensation for shareholders. The operating profit must, in particular, finance maintenance and renewal of production capacities and the development of new activities, in order to meet market evolutions – both technological and social.

Action

EDF Luminus strives to maintain the profitability of its activities, which requires cost optimisation for its traditional businesses (thermal production, supply of energy). The evolution of the market prices and the increasing regulatory constraints impact the profitability of these activities. Investments are therefore being made in growth markets, such as energy services and renewable energy.

Highlights

Operational income was impacted by unexpected nuclear surcharges

In 2017, the operating income of EDF Luminus was affected by the increase in nuclear-related costs (unavailability of several plants, increase in dismantling and waste costs, surcharges linked to the management of spent fuel).

This negative result overshadowed the strong operational performance of the activities that are under the direct control of EDF Luminus, especially production assets, as well as the effectiveness of the measures undertaken to reduce costs.


  ATS continues to grow and confirms its performance

The principal subsidiary of EDF Luminus, ATS Groep, which specialises in providing energy services (electricity, heating, energy efficiency) in industry and buildings, continues to grow, with good profitability conditions.

 

In 2016, turnover rose 8%, reaching 118.6 million euro. Operational income was 8.1 million euro (up from 7.2 in 2015) and net income was 5.2 million euro (up from 4.6 million euro).

 

Provisional results for the year 2017, which were presented to the general meeting of the ATS Groep on 27 May 2018, should show strong progress in turnover and the operational income.

 

A major project for ICV Group, a global leader in the production of vinyl, contributed to this increase. Two new production chains were implemented on the sites of Avelgem (East Flanders) and Dalton (USA). In total, more than 80,000 man-hours were worked, for the engineering, automation, cabling (more than 280 km), construction of electric switchboards, etc.

Indicators

 

The detailed annual accounts of EDF Luminus NV are available on the website of the National Bank of Belgium.

 

Slight increase in turnover

Turnover in billions of euro

Source: Annual Report of the Board of Directors to the general meeting on 27 April 2018 (BEGAAP).

2017 turnover was 3 020 M€ (up from 2 921 M€ in 2016), a slight increase (3.7%), linked principally to an increase in energy purchase and resale transactions on the wholesale markets, carried out in order to balance positions (136 M€).

This increase did not have a significant impact on the gross margin.


Operational income down

Decreased operating result

Source: Annual Report of the Board of Directors to the general meeting on 27 April 2018 (BEGAAP).

Operational income was -22,9 M€. This decrease can be attributed to:

  • the unavailability of several nuclear power plants (the unscheduled outage of Doel 3 starting in September 2017, the outage of Chooz B during the fourth quarter);
  • the establishment of additional provisions for our nuclear waste treatment obligations, and for the reduction of the discount rate, for a total of 29 million euros;
  • the costs of purchasing energy on the wholesale markets, which were very high during some winter months.

Negative net result

Net result in millions of euros

Source: Annual Report of the Board of Directors to the general meeting on 27 April 2018 (BEGAAP).

In 2017, the net result was -21,5 M€, a strong decrease compared to 2016 (+56,6 M€), due to the reduction in operational income.


 

Financing current and future nuclear energy costs

 

As the owner of 10.2% of four Belgian nuclear power plants, EDF Luminus contributes to the operational and maintenance costs of these plants, as well as to the current investments, proportionate to its shareholding. These costs are billed by the operator and include a «management fees» component. The company also contributes to the provisions with regard to plant dismantling and the management of spent fuel.

 

The Nuclear Provisions Council recommended to Synatom, the company managing nuclear provisions, that it progressively lower the discount rate, to 3.5% at the end of 2018. The recommended rate for 31 December 2017 was 3.85% .

 

The revision of technical specifications as well as the revision of the discount rate, fixed for the financial year 2017 at 3.85%, had the following impact:

  • An increase in the dismantling provision of 8.4 M€,
  • An additional charge of 16 M€ for the management of spent fuel.
 

Balance sheet and shareholder value decrease

On 31 December 2017, the balance sheet total stood at 1,646 M€, a decrease of 169 million euro compared to 2016. On the assets side, the fall was caused by the decrease in cash flow. For liabilities, the fall was due to the decrease in shareholder equity and the reimbursement of a 100 million euro loan that came due.

 

The negative net result and the dividend payment impacted shareholder equity, which was 707 million euro, of which 491 million euro was capital.

Positive cash flow

The net cash position was 57 M€ (compared to 204,1 M€ in 2016). This decrease can be attributed in large part to:

  • the continued investment programme, especially in wind energy,
  • the elements that adversely impacted the operational income,
  • the elements that adversely impacted the operational income,

Source: Annual report filed with the National Bank of Belgium..

Slight decrease in taxes and contributions

Taxes and contributions in millions of euros

Source: EDF Luminus.

EDF Luminus is subject to withholding tax, withholding and withholding tax, tax on motive power and waste water and a nuclear contribution.

EDF Luminus did not pay corporate taxes for the year 2017 due to the net loss recorded for the year, except for a minimal flat-rate tax.

 

The total amount of principal taxes and contributions paid by EDF Luminus, excluding corporate taxes, was 38.22 million euro. This represents a slight decrease compared to 2016, due to a 4 million euro decrease in nuclear taxes, in part compensated by an increase in payroll taxes (hiring of highly qualified employees).

 

The nuclear contribution alone was nearly 9 million euros.


Regarding the “distribution contribution” for the four nuclear power plants in which EDF Luminus owns a 10.2% share, the federal government fixed, for the period 2017-2026, a mechanism that collects the higher amount between (a) a minimum annual amount and (b) 38% of the margin generated by the Belgian nuclear park. This margin is affected by the evolution of various data: cost indices, production volumes and electricity prices.

Dividend distribution of 35 million euros

The general meeting of 27 April 2018 approved a deduction from the reserves of 39.4 million euro, which was used to absorb the loss reported following the close of the financial year 2017, and to enable the distribution of a 35 million euro dividend.

 

The balance of the profit to carry forward was 0€ at the end of 2017.

Source: Annual report of the board of directors to the general meeting of Friday 27 April 2018.


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