1
FY 2010 consolidated resultsOutlook 2011
Brussels
February 25th, 2011
2
Disclaimer• This presentation is only provided for general information purpose about
Elia and its activities. The included statements are neither reported results nor other historical information. They are not provided to serve as the basis for any evaluation of Elia, and cannot be binding and/or enforceable upon Elia.
• As forward-looking statements, they are subject to assumptions, risk and uncertainties, actual future results may differ from those expressed in or implied by such statements.
• Although Elia uses reasonable cares to present information which is up-to-date to the best of Elia's knowledge, Elia makes no representation or warranty whatsoever as to the adequacy, accuracy, completeness or correctness of such information.
• Elia will not be liable for any consequences arising from or related to the use or interpretation of the information contained or absent in this presentation.
3
Summary
Operational highlights
Financials 2010
Outlook 2011
Agenda
4
Summary
• Operational highlights
- Consumption almost back at pre-crisis level
- Full realisation of investment plan; excellent network reliability
- European market : market coupling, enlargement of CASC & Coreso
- Update on Elia’s shareholdership and participations
• Financials 2010
- Excellent results despite lower OLO- Successful realisation of € 500m Eurobond at Eurogrid GmbH- Dividend increased to € 1,40 a share
• Outlook 2011- Capex Elia Group- Market integration & Innovation in international perspective
5
Summary
Operational highlights 2010
Financials 2010
Outlook 2011
Agenda
6
50Hertz’s network: consumption increased to 63.0 TWh
(62.3 TWh in 2008; 58.9 TWh in 2009)
Energy Consumption : Q4 back at pre-crisis level
Jan Feb Mar
AprMay Jun
Jul Aug Sep
Oct
NovDec
0
1.000
2.000
3.000
4.000
5.000
6.000
[GW
h]
200820092010
jan
febmar
aprmay jun jul aug
sepoct
nov dec
0
1.000
2.000
3.000
4.000
5.000
6.000
7.000
8.000
9.000
[GW
h]
200820092010
Elia’s network (1) : consumption increased to 86.6 TWh
(88.3 TWh in 2008 ; 81.7 TWh in 2009)
(1) The Elia consumption indicator covers the majority of electricity consumption.
It includes all production directly connected to the Elia grid plus net import-export balance
7
2. Among the lowest tariffs in EuropeComponents of transmission tariffs (EUR per Components of transmission tariffs (EUR per MWhMWh))
(1)
(1) The data of Norway were not available in the beginning of 2010 when the comparison was made for the expected tariffs 2010
Interconnections7%
Driven by renewables &
generation localisation
14%
Replacements49%
Driven by internal
consumption25%
Non electrical investments
5%
8
•• CapexCapex adjustedadjusted• from € 146.6 million initially• postponement customer projects
•• Main driversMain drivers• RES integration• Replacements• Internal demand• Interconnections
•• Excellent reliabilityExcellent reliability• 99,999%
CAPEX 2010 : € 113.9 m
3. Investments Elia Transmission 2010
Replacements7%
Driven by internal
consumption17%
Non electrical investments
8%
Driven by renewables &
generation localisation
68%
9
•• CapexCapex• From € 157m in 2009
•• Main drivers = RESMain drivers = RES• Onshore : € 106,3 m• Offshore : € 72,9 m
•• Main driversMain drivers• RES integration• Internal demand
•• Excellent reliabilityExcellent reliability• 2,5 incidents per 100km
CAPEX 2010 : € 179,2 m
Investments 50Hertz Transmission 2010
10
0
200
400
600
800
1.000
1.200
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
TW
h
Today
4. Focus on climate change & energy policies is key…
Offshore wind
Onshorewind
Elia with 50Hertz =
ideal position
11
... in a context of market integration
2011Undersea cable UK & NL
Fast evolution towards regional electricity markets on a European level
2012/2013South-West Market
Baltic market
2012/2013Central South market
9 November 2010Central West Market + Nordic
´´´
´´´
´´´
´´´
´´´
12
Such as day-ahead market coupling CWE-Nordic
Price convergence in CWE (10/11/2010 Price convergence in CWE (10/11/2010 –– 27/01/2011)27/01/2011)
BE=FR4,5%
BE=NL0,2%
DE=NL0,6%
DE=BE=NL<>FR0,8%
All different0,0%
DE=NL <>FR=BE18,8%
All equal61,7%
BE=FR=NL13,4%
DE=BE=NL<>FR DE=NL <>FR=BE BE=FR=NL BE=FR BE=NL DE=NL All equal All different
13
… and consolidation of power exchanges
´
´
´
NordpoolSpot
APX – Endex -Belpex
EPEX Spot
Tennet
APX Group
3.0%56.1%
Gasunie Fluxys
20.9%
Elia
BELPEX
20.0%
100%
RTE Elia Tennet
HGRT
Powernext
52,8%
51% 24.5% 24.5%
EPEX Spot
50%
14
Enlargement of CASC.eu & Coreso
• Capacity Allocation Service Company
• Incorportated in 2008 by 7 TSOs out of 5 countries
• 2010 : Enlarged to 12 TSOs out of 10 countries
• Equal shareholdership by RTE, Elia, Creos Lux, Tennet, Amprion, APG, EnBW Transportnetze, Swissgrid, Slovenija, Terna, 50Hertz Transmission and Hellenic TSO
Business evolution• ITVC shadow auctions with the Nordic countries
• Extension towards other EU countries
• Regional technical coordination center
• Incorporated in 2008 by RTE and Elia, National Grid joined 2009
• 2010 : Enlarged to Terna and 50Hertz Transmission
Business evolution• Controls now a region of 215m people or 43% of the EU
• Extension to other EU countries
15
Summary
Operational highlights
Financials 2010
Outlook 2011
Agenda
16
Consolidated key figures Elia Group 2010
Elia Group Consolidated (Elia+60% of
50Hertz) Income statement (€m) 2009 2010 Change in %Consolidated turnover 771,3 1037,5 34,5%REBITDA 327,9 409,4 24,9%EBITDA 327,9 687,9 109,8%Operating profit, including non recurring items (EBIT) 225,8 560,4 148,2%Financial result -120,5 -123,2 2,2%Taxes -20,0 -34,0 70,0%Consolidated net profit, including non recurrent items 84,0 401,7 378,2%Consolidated net profit, excluding non recurrent items 84,0 123,2 46,7%Profit, including non-recurrent items, per share (€) 1,75 7,36 320,6%Profit, excluding non-recurrent items, per share (€) 1,75 2,26 29,1%Dividend per share 1,38 1,40 1,4%
Balance sheet (€m) 31-Dec-09 30-Dec-10Total assets 4.451,9 5.904,0 32,6%Equity attributable to the equity holders of the Company 1.365,4 2.007,2 47,0%Net debt 2.444,4 2.551,4 4,4%Equity per share (€) (based on # of shares at year-end) 28,29 33,29 17,7%
Total number of shares (end of period) 48.270.255 60.355.217 25,0%
Elia Group Consolidated
17
Segment reporting : Elia & 50Hertz Transmission
50Hertz TransmissionGermanyElia System Operator
CASC9,46%
Elia Asset100%
HGRT24,5%
Coreso22,49%
APX 20%
Elia Re100%
Elia Engineering
100%
Eurogrid CVBA60%
50 Hertz Offshore
100%
50HertzTransmission
100%
Eurogrid GmbH100%
Gridlab GmbH100%
CAO12,5%
EMCC20%
Coreso10,0%
Elia TransmissionBelgium
18
Key figures Elia Transmission 2010
• Operating margins in line with 2009
• Financial results positively impacted by sale of Belpex to APX and lower debt level
• Net profit increased due to IFRS adjustments despite lower regulated profitbecause of lower Belgian 10year bund (OLO)
Good results within a stable regulatory frameworkGood results within a stable regulatory framework
Income statement (€ million) 2010 2009Consolidated turnover 763,3 771,3EBITDA (1) 336,8 327,9Operating result (EBIT) 229,6 225,8Financial result (112,7) (120,4)Taxes (20,8) (20,0)Consolidated net profit 94,6 84,0Balance sheet (€ million) 31/12/2010 31/12/2009Total assets 4.796,8 4.451,9Net debt 2.385,2 2.444,4
(1) EBITDA = EBIT + depreciation + changes in provisions
IFRS
19
•• Belgian GAAP net profit: Belgian GAAP net profit: decrease mainly due to lower OLO, 50Hertz decrease mainly due to lower OLO, 50Hertz acquisition & capital increase and CREG review of 2009acquisition & capital increase and CREG review of 2009
•• IFRS net profit: IFRS net profit: increase mainly due to much higher adjustments, mainly increase mainly due to much higher adjustments, mainly for employee benefitsfor employee benefits
Net profit breakdown 2010-2009
In million € 2010 2009 DifferenceFair remuneration 53,5 58,6 -5,1Goodwill decommissioning 16,2 15,5 0,7Incentive mechanism 7,7 6,3 1,4Surplus values Belpex & Dividend HGRT 6,1 0,7 5,4CREG review -3,2 0,0 -3,2Net profit Belgian GAAP (tariffs) 80,3 81,1 -0,8Capital increase & Acquisition 50Hertz -7,3 0,0 -7,3Deconsolidation Belpex/Others -0,8 0,5 -1,3Total net profit Belgian GAAP 72,2 81,6 -9,4IFRS adjustments 22,4 2,4 20,0Total IFRS net result 94,6 84,0 10,6
20
Bu
dg
et
Reali
ty
Controllable items : Budget <> Reality
Total outperformance = € 14,7m
X = € 7m Y = Y = €€ 7,7m7,7m
Revenues = + 3,7
Bu
dg
et
Reali
ty
Costs = -11
29
3,4
(1
) 28
,2
31
,9
28
2,4
(1) Consist of € 297,7m agreed by CREG minus € 4,3m indexation correction to give back to tariffs
Increase in efficiency
Extra revenues(eg third party services)
21
Bu
dg
et
= 4
36
,3
Reality
= 3
93
,7
Tariff = 12,4
Bu
dg
et
Reality
Bu
dg
et
Reality
Bu
dg
et
= 6
75
,6
Reality
= 6
88
Non controllable items : Budget <> Reality
Net profit = 3,8
Costs = - 42,6
Costs = 42,6 m
Revenues = -21,2 m
Net profit = 3,8 m
Tariff = 12,4 m
Tariff surplus = 41,9 m
Indexation = 4,3 m8
0,3
Revenues = -21,26
1,2
84
,1
40
,0
22
To be allocated by CREG 2009 2010 2011 2012 and
beyond Total
To give back to the tariffs based on tariff decision of 2007 for the period 2008-2011 22.760,00 34.070,00 46.028,06 Use -22.760,00 -34.070,00
Allocated to future tariffs 0,00 0,00 46.028,06
Shortage 2007 -9.897,90
Total 2007 - allocated -9.897,90
Shortage 2008 -18.249,45
Total 2008 - allocated -18.249,45
Shortage 2009 -31.517,31 Total 2009 - allocated -31.517,31
Surplus 2010 + CREG review (malus 2009; gross) 41.943,80 41.943,80 CREG Review (specific ancillary services) 3.528,00 3.528,00
Total 46.028,06 -14.192,86 31.835,20
Regulatory account (all amounts in € 000)
Overview treatment of regulation surplusesOverview of allocation and use of total surplusesOverview of allocation and use of total surpluses
After 3 years (2008-2010) of the first regulatory period, Elia has a difference between budget & reality of only € 4,3 million.
Including the 2007 shortage of €9,9m, a total amount of € 14,2m has to be recovered from the next regulatory period
(1)
(1) To be recovered by the ARP, not from the bottom line (shareholders)
23
IFRS Impact IFRS Impact onon Net Net ProfitProfit as of 31 as of 31 DecemberDecember 20102010
Reconciliation Belgian GAAP - IFRS
72,2
94,6
11,96,4 18,3
(2,8)(9,8) (1,6)
31/12/2010Belgian GAAP
Transferassets fromcustomers
Costs capitalincrease
Employeebenefit
Regulatedasset
Deferredtaxes on IFRSadjustments
Other 31/12/2010IFRS
• IFRIC 18 imposes immediate recognition in revenues of customer contributions fornetwork connections (+ € 11,9 million)
• IAS 19 requires yearly recalculation by external actuarian of Employee benefits & relating regulated assets; Increase due to additional cash contributions, lower discount rate & excess returns on assets under management (+€ 18,3-2,8 million)
Income statement (€ million)60% from June till
December 2010Proforma : 100% 12 months 2010
Consolidated turnover 275,0 791,7REBITDA (excluding non recurring items) 72,6 206,8EBITDA (1) 351,2 671,0REBIT (excluding non recurring items) 52,3 142,0Operating result (EBIT) 330,8 606,2Financial result (10,5) (27,3)Taxes (13,2) (39,5)Net profit including non recurring items 307,1 539,3Net profit excluding non recurring items 28,6 75,0Balance sheet (€ million) 31/12/2010 31/12/2010Total assets 1.452,4 2.420,7Net debt 166,3 277,2
(1) REBITDA = REBIT + depreciation + changes in provisions
IFRS
24
Key figures 50Hertz Transmission 2010
(1) Exlcuding also the € 13,3 million acquisition costs (Elia’s part equals 60% or € 8 million); € 28,6m - € 8m acquisition costs + 286,5m badwill = € 307,1m
(1)
• Comparison with 2009 figures is not useful due to significant changes in the Germanregulatory framework from 01/01/2010 and because 50Hertz was still a subsidiaryof Vattenfall Europe
• Recurring IFRS full year 2010 result cannot be seen as a reference for 2011
25
IFRS Impact IFRS Impact onon Net Net ProfitProfit as of 31 as of 31 DecemberDecember 20102010
Reconciliation German GAAP - IFRS
61,857,4
75,0
(7,5)(6,4)
17,8(17,6)18,1 13,2
GermanGAAP
31/12/10
KWKStrassfurth
Shortage ofvolumes2006-08recoveredin 2010
Offshorecosts 2010;
asset torecover in
2012
Decrease provision
M-to-Mvaluation
purchased electricity
Deferredtaxes
IFRS 31/12/10
Acquisition costs
IFRS31/12/10(recurring)
• KWK Strassfurth is a receivable to be paid in 2011 through the tariffs that cannot berecognised in German GAAP
• Offshore costs to be recovered in the future from the tariffs cannot be recognised in German GAAP
• Acquisition costs mainly relate to one-off consulting & advisory costs
(1) Shortage of volumes in 2006-2008 (€ 51m) are recorded as regulatory asset in IFRS equity in PPA; € 17,6m is bookedIn 2010 as net profit in German GAAP which has to be reversed in IFRS
(1)
26
PPA : Completed & ApprovedPurchasePurchase PricePrice AllocationAllocation has been has been completedcompleted & & finalfinal approvalapproval receivedreceived
• IFRS 3 imposes within maximum 1 year a full analysis to allocate the paid goodwill or received badwill through a so-called Purchase Price Allocation (PPA)
• PPA identifies all assets and liabilities as well as all contingent rights and obligations which all have to be recognised at acquisition date at “Fair Value”
• PPA was executed at the level of Eurogrid GmbH (acquisition & finance vehicle in Germany) and signed off by the auditors of Eurogrid GmbH
• PPA revealed a final one off non cash gain on bargain purchase of € 477,5 million
Gain from a bargain purchase (in € million) 100% 60%
Acquisition price as of 19/05/2010 464,6 278,8
Consolidated IFRS Equity of 50Hertz as of 31/05/2010 942,1 565,3 Gain from a bargain purchase per 31/05/2010 477,5 286,5
(1) PPA required a correction of € 6,1 million of which 60% for Elia (€ 3,6 million): As per 30/6/2010 €290,1 minus e3,6m = €286,5m
27
495,8 495,8
2000,0 2000,0
297,6 123,1
124,0
0
500
1.000
1.500
2.000
2.500
3.000
31/12/2010 31/12/2009
Shareholders' loans Eurobonds Eurogrid GmbH EIB + Accrued interests
Standard & Poor’s rating:Long Term: A-Outlook: Negative
Financial Debt Position Elia Group
2.917,42.618,9
Elia Elia benefitsbenefits fromfrom a a strongstrong credit rating and credit rating and improvingimproving credit credit ratiosratios
(1) € 2bn Eurobonds has to be refinanced in 2013, 2014, 2016, 2019 at € 500m each year
(2) € 500m Eurobond Germany (60% = € 300m) has to berefinanced in 2020
(1)
Unused credit linesas of 31 December 2010
Amount(€m)
European Investment Bank 65Committed bank loans 125Commited club deal (Germany) 500 Euribor + (120-150) bpUncommitted bank loans 170Commercial paper program 250
To be negotiatedTo be negotiated
Interest rate
Euribor +5 bpEuribor + 75 bp
(2)
31-Dec-10 31-Dec-09Net debt (€m) 2.551,4 2.444,4Leverage (D/D+E) 55,97% 64,16%REBITDA/Gross Interest 2,82 2,46Net debt/REBITDA 6,23 7,45Average cost of debt 5,24% 5,31%% fixed of gross debt 83,01% 81,07%
28
First successful € 500m Eurobond issuance
29
Elia groupElia group’’s dividend policy ensures a steady and growing dividends dividend policy ensures a steady and growing dividend
Dividend Policy Elia Group
• Increase in dividend to € 1, 40 per share despite 25% increase in number of shares
• Pay-out ratio over 2010 IFRS results amount to 68,4%
1,41,28
1,381,371,301,27
68,4%
79,3%80,5%79,6%
63,9%
80,8%
00,20,40,60,8
11,21,41,61,8
2005 2006 2007 2008 2009 2010
In E
UR
60%
65%
70%
75%
80%
85%
90%
95%
Dividend Pay-out ratio
30
Summary
Operational highlights 2010
Financials 2010
Outlook 2011
Agenda
Interconnections2%
Driven by renewables &
generation localisation
8%
Replacements56%
Driven by internal
consumption24%
Non electrical investments
10%
31
Outlook CAPEX 2011 : Elia Transmission
• Capex = €120 m
• Main drivers • RES integration
• Replacements
• Demand
32
• Capex = €260 m of which
• Onshore : € 122 m
• Offshore : € 138 m
• Main Drivers:• RES Integration
• Replacements
Outlook CAPEX 2011 : 50Hertz Transmission
Replacements7%
Driven by internal
consumption4%
Non electrical
investments7%
Driven by renewables &
generation localisation
82%
• Stevin: extension 380 kV grid to the coast
• Procedure for inclusion in land-use plan (GRUP) launched
• Commissioning foreseen in 2015
• Brabo : 380 kV grid extension Antwerp port area
• First phase Lillo-Zandvliet : planning permit procedure launched
• Allegro : interconnection with Germany
• feasibility study concluded and positive; detailed study started
• Nemo : undersea cable with UK
• Feasability confirmed; project phase 3 launched to define technical aspects and licence procedures; commissioning foreseen as from 2016
• Northern Line : interconnection with Tennet GmbH
• Schleswig-Holstein: Planning approval in progress
• Southwest Coupling Line : 380 kV line towards the South of Germany
• Vieselbach-Altenfeld: Planning approval in progress
• Altenfeld-Redwitz: Regional Planning Procedure started
• Baltic 2 : Offshore undersea cable
• Connection between windfarm Baltic 1 and windfarm Baltic 2
Main projects for 2011 and beyond
34
Innovation (R&D) in an international perspective
Active contribution in
inter-TSO cooperation on
innovation
• Market coupling studies and initiatives:• Pentalateral (Benelux, France, Germany) & Nordic countries • CWE (Central Western Europe)
• Grid reinforcement and extension studies and initiatives:• ENTSO‐E 10 year network development plan• North Sea off‐shore working group of EU Commission• Friends of Supergrid
• Smart Grid prospective studies and projects, e.g.• European Electricity Grid Initiative (EEGI)
Strong involvement in
EU funded innovation
projects
• EWIS: Power network reliability for integration of wind power
• OPTIMATE: Comparative benefits of several market design options
• TWENTIES: Demonstration project to remove barriers to the massive integration of RES in the electricity grid
• ECOGRID: Demonstration project of a real‐time electricity market integrating a high percentage of RES and electric vehicles
• AFTER: Vulnerability evaluation of electricity networks
Elia Group
35
Key role in market integration & RES
Elia Group
36
Questions &
AnswersInvestors Relations – Contact details
Bert MaesTel: + 32 (0)2/546.72.39Mail: [email protected]: http://www.elia.be
37
Appendices
38
CREGAverage RAB 2011 3.837Reference equity (33%) 1.266Cost of equity 5,04%Equity reference remuneration (A) 63,9
Av. equity / Av. RAB 36,02%Deviation on reference equity 3,02%Equity deviation remuneration 4,63%S-factor (B) 5,4
Over-depreciation (C) -8,2
Fair remuneration (A+B+C) 61,1
Goodwill decommissioning 14,2
Controllable cost incentive 0,0
Net profit as set by tariffs 75,3
Determination of net profit 2011 by the regulator (Belgian GAAP)Determination of net profit 2011 by the regulator (Belgian GAAP)
(1) OLO of 3,9278%; Beta of 0,3191 and a risk premium of 3,5% (2) OLO of 3,9278% and deviation rate of 70bp(3) To be recomputed ex-post based on real OLO, real beta, real RAB & Equity, real decommissioning and real
controllable cost savings
Outlook 2011 : Fair remuneration
Not available for profit distribution;€14,2 is the estimated yearly amount for the period 2008-2011
39
Convergence Trilateral market coupling
FR=BE=NL FR=BE<>NL FR<>BE=NL FR<>BE<>NL
2007 62.9% 26.5% 9.6% 1.0%
2008 69.1% 15.4% 14.7% 0.8%
2009 57.0% 13.2% 28.2% 1.6%
Till 9th of Nov 2010 59.6% 25.9% 13.2% 1.3%
40
Means strong visibility for the cost basis of Means strong visibility for the cost basis of EliaElia’’ss customers customers
Tariffs for use of the grid and tariffs for ancillary services:comparison 2001 - 2008
0
2
4
6
8
10
12
14
16
2001 2002 (Q4)
2003 (Q2 toQ4)
2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 (Q4)
2003 (Q2 toQ4)
2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 (Q4)
2003 (Q2 toQ4)
2004 2005 2006 2007 2008 2009 2010 2011 2001 2002 (Q4)
2003 (Q2 toQ4)
2004 2005 2006 2007 2008 2009 2010 2011
On the 380/220/150 kV network At transformer output to the 70/36/30 kV network On the 70/36/30 kV network At transformer output to medium voltage
Annual power System management Ancillary services Loss compensation
Fixed tariffs for the period 2008-2011
41
Stable tariffs in Belgium, decreasing in GermanyConstant Euros of 2009 (EUR per Constant Euros of 2009 (EUR per MWhMWh))
42
Baseload market clearing prices CWE and Nordic region
0
50
100
150
200
250
1‐Oct 6‐Oct 11‐Oct
16‐Oct
21‐Oct
26‐Oct
31‐Oct
5‐Nov 10‐Nov
15‐Nov
20‐Nov
25‐Nov
30‐Nov
5‐Dec 10‐Dec
15‐Dec
20‐Dec
25‐Dec
30‐Dec
4‐Jan 9‐Jan 14‐Jan
19‐Jan
24‐Jan
Euros/MWh
NO2 DK1 DK2 SE Germany Belgium France Netherlands
BeNe & France successfully integrated with Luxembourg, Germany and the Nordic countries in 2010
43
Successfully day-ahead market integration CWE + Nordic
Daily Baseload Spot Power Prices June 2010 to January 2011
0102030405060708090
100110
1-Jun-10 1-Jul-10 31-Jul-10 30-Aug-10 29-Sep-10 29-Oct-10 28-Nov-10 28-Dec-10 27-Jan-11
Euro
/MW
h
APX Power NL Belpex NORD POOL Powernext OMEL EEX
44
Elia Group Corporate structure
1. 1 share Publi-T
99.99%
100% 100%
Licensed System Operator
Elia Engineering12/2003
Engineeringconsultancy firm
Elia Re 02/2002
Captivereinsurancecompany
HGRT12/2001
52,25%shareholderof Powernext
Elia: A Single Economic Unit
24.5%
Publi-T Publipart
2.53%45.37%
Freefloat
52.10%
Electricity and gasexchange
APX Group10/2010
20%8.33%22.485%
CASC.eu10/2008
10 countries12 TSOsAuctioning
Coreso12/2008
Real timecontrol ofEU flows
EurogridInternational
03/2010
Holding company for
50Hertz Transmission
60.0%Elia System Operator
Elia Asset1 Network Owner
45
• Capex = €260 m of which
• Onshore : € 122 m• Offshore : € 138 m
• Main Drivers:• RES Integration• Replacements
Outlook CAPEX 2011 : 50Hertz Transmission
2
1
3
Northern Line- Mecklenburg-Western Pomerania: built- Schleswig-Holstein: Approval in progress
Southwest Coupling Line - Vieselbach-Altenfeld- Altenfeld-Redwitz
Off-shore Baltic 1 and Baltic 2 connections
2
3
2
13
1
46
Reclassify costs, revenues => controllable & nonReclassify costs, revenues => controllable & non--controllablecontrollable
Charges Revenues
Tariff
Non Tariff
Non ControllableCosts (NC)
Net profit
ControllableCosts ‘(C)
CNC
NC
C
Net profit
Tariff
(1) Mainly consists of purchases of materials, services and other goods & remuneration except the ancillary services & pension costs for retired employees
(2) Mainly consists of Telecom services, Third party services, surplus value on sale fixed assets and insurance claims
(1)
(2)
4-year fixed tariff system with netting of costs & revenues
47
Composition of net profit
1.1.Fair remunerationFair remuneration• Equity remuneration based on formula
• Deduction over-depreciation of the past (€ 8,2m net) till Q3 2012
2.2.DecommissioningDecommissioning• Goodwill from decommissioning included in tariffs
• Reserved for financing future investments
3.3.IncentivisationIncentivisation on controllable costson controllable costs• Ceiling = same amount as efficiency gain (X-factor)
4.4.NewNew: Transfer pricing agreement: Transfer pricing agreement• 60% of the margin on the results of foreign consulting activities
• Financial participations in RAB : dividends & surplus values
→ 60% to Elia and 40% to tariff reductions
• Financial participations outside RAB
→ All costs & revenues outside Belgian regulation
48
BottomBottom--up Approach (EUR m): calculation of net profitup Approach (EUR m): calculation of net profit
730,7
69,7
94,9
663,6
41,9
Charges Revenues
Tariff
Non tariff(of which €31,9m
controllable)
Costs(of which€282,4mcontrollable)
Net profit
(1) OLO of 3.4374%; Beta of 0,3139 and a risk premium of 3,5%(2) Av. Equity =1.371,1 and Av. Assets = 3.757,7(3) OLO of 3,4374% & deviation rate of 70 bp
TariffSurplus
2010 P&L IFRS Elia Transmission
2010 2010EAverage RAB 2010 3.757,7 3.757,8Reference equity (33%) 1.240,0 1.240,1Cost of equity 4.54%1 5,23%Equity reference remuneration (A) 56,3 64,9
Av. equity / Av. assets 36,49%2 36,16%Deviation on ref. equity 3,49%3 3,16%Equity deviation remuneration 4,14% 4.63%s-factor (B) 5,4 5,5
Over-depreciation (C) -8,2 -8,2
Fair remuneration (A+B+C) 53,5 62,2
Goodwill decommissioning 16,2 14,2Controllable cost incentive 7,7 0,0Decision CREG regarding 2009 -3,2Surplus value Belpex & Dividend HGRT 6,1
Net profit Belgian GAAP (tariffs) 80,3 76,4
Costs capital increase & acquisition -7,3Deconsolidation Belpex & Others -0,8IFRS reconciliation 22,4
Net profit IFRS for Elia Transmission 94,6
49
• Regulator approved € 262,3 m net controllable costs for 2011 (270,3 m CC minus X = € 8 m imposed cost savings)
• Budget Elia 2011: Initial budget 270,3 X factor (costsaving) - 8,0Y factor (potential outperformance) - 8,0
(1) Controllable non-tariff revenues
€ m
2008 2009 2010 2011
255,3
-4m–6m
-7m-8m
- X = -25m in total
(1)
270,3
255,3260,6
265,3
251,3254,6
258,3262,3
CPI-X (approved)
Budget including CPI
247,3248,6
251,3254,3 Target = CPI-X-Y -4m
–6m-7m
-8m -X -Y = -50m total
X – Y Factor (controllable costs)