The two Swiss energy companies Atel and EOS have recorded good results for the 2008 financial year. Collectively, Olten-based Atel and Lausanne-based EOS reported consolidated revenue of CHF15.8 billion, operating income (EBITDA) of CHF1.7 billion and group profit of CHF790 million, and together sold a total of 130 TWh of electricity. Since the merger on February 1, 2009, Atel and EOS have been operating under the name Alpiq with registered office in Neuchatel.
EOS operating results
2008 exceptional result
In 2008, EOS maintained its growth, achieving a turnover of CHF3.5 billion, i.e. 56% more than in 2007. Operating profit (EBIT) stands at CHF228.9 million, a rise of 103% compared with the previous year. Net profit for 2008 is CHF205.9 million, i.e. 137% more than in 2007.
(In 2007, EOS Holding reversed a previous impairment of assets amounting to CHF247.2 million.)
The group’s commercial activities contributed to the excellent performance represented by the 2008 results. The main reason for the growth of EOS on the markets is the optimized management of its hydropower generating assets and the realization of the value of peak energy, demand for which is increasing as the new renewable energies grow in Europe. Despite the market fall at the end of the year, trading results are higher, amounting to CHF38 million (CHF31 million in 2007), i.e. a rise of 20% compared with 2007. The balance sheet total remains stable at CHF4.7 billion. Equity as a proportion of the balance sheet total is 69% (72% in 2007).
CHF135 million capital expenditure in 2008
With operating investments of CHF135 million, the group implemented its growth strategy in Switzerland and Europe. It continued investing in the development of its generating assets (CHF124 million) and its transmission grid (CHF11 million). The main hydropower projects are the restoration of the Cleuson-Dixence lined shaft (the plant being scheduled to return to service at the start of 2010), the raising of the Fah dam at Simplon (EES+) and increasing the capacity of the Forces Motrices Hongrin-Léman (FMHL+) facility. The Chavalon project is still very much a current project even if its realisation will depend on the framework conditions set by the Swiss Confederation. In 2008, EOS also strengthened its commitment to the new renewable energies, diversifying its portfolio for that reason in Switzerland and neighbouring countries. This development is based on three technologies: small hydropower (plants with a capacity of less than 10 MW), wind power and biomass.
Greater commitment to the new renewable energies
In 2008, EOS launched eight new renewable energy-related projects, which were all accepted by swissgrid. All in all, some 52 million kWh from additional renewable sources will be generated between now and 2012. These projects concern two windfarms – one at Le Peuchapatte in Jura Canton and the other in the Gros-de-Vaud / Nord Vaudois area -, a small hydro power plant at Fleschen in Valais Canton and 5 biomass schemes in Fribourg Canton. These projects represent a total capital expenditure of about CHF80 million in French-speaking Switzerland over 4 years.
EOS also invested in the new renewable energies in neighbouring countries, mainly France, Germany and Italy. By the end of 2009, the total production will be some 113 million kWh per year.
Towards a mobility that is more energy efficient
As announced in 2008, EOS has undertaken to promote more efficient technological solutions that in the long run will enable Switzerland’s CO2 emissions to be considerably reduced. To reach this objective, research must mainly concentrate on heating and transport, which alone account for 76% of Switzerland’s total CO2 emissions. In that context, electricity has a key role to play, especially by replacing traditional heating systems with heat pumps or by the development of electric vehicles. In December 2008, EOS signed a memorandum of understanding with the Renault-Nissan Alliance whereby the two parties undertook to co-operate to promote electric vehicles and explore fully the rollout of a battery recharging network.
Atel Group results
The Atel Group reported good results in 2008, increasing operating income (EBITDA) by 2.2% to CHF1.281 billion despite impairment of the nuclear decommissioning fund. At CHF1.001 billion, operating profit was close to the high prior-year figure. At CHF733 million, the Group’s consolidated profit was 5.8% lower than the record figure reported in 2007.
High availability of power stations, successful operations in niche segments of the European energy market and the outstanding performance of the Energy Services segment had a positive impact on the results, while lower liquidity on energy markets, coupled with targeted adjustments to trading and sales activities and the effects of the crisis on financial markets had a negative impact.
Total assets rose by CHF1.2 billion to CHF10.6 billion due to investments and the related financing as well as open financial trading positions. The relevant balance sheet ratios remained stable at a high level. The group continues to enjoy high liquidity and a sound equity ratio of 36%.
Equity including minority interests was around CHF200 million higher at CHF3.8 billion. As part of the public swap offer carried out by Atel Holding in January 2008 for shares in Aare-Tessin Ltd. for Electricity, around CHF1.4 billion was reclassified from minority interests to share capital and share premium.
Energy segment faced with difficult market environment
The Energy segment enjoyed favourable conditions in the first half of 2008, with rising energy prices resulting in an increase in the half-year figures. In the second half-year, European electricity markets were gripped by the turmoil on financial markets coupled with a fall in primary energy prices, leading to a sharp drop in the number of trading partners, market liquidity and hence the number of trading opportunities. Growth was also slowed down by regulatory constraints coupled with rising auction costs for cross-border trading and sales. The Energy segment recorded a 25.2% reduction in physical electricity trading to 96.3 TWh, due in particular to adjustments to the sales and trading strategy. Additional negative factors affecting the results were a further decline in the market valuation for the decommissioning and disposal funds for nuclear facilities, as well as exchange rate losses. Revenue generated by the segment fell by 6.9% to CHF10.712 billion, with EBIT of CHF867 million (-5.7%).
