Statnett Annual Report 2017
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Samfunnsansvar Uavhengig attestasjonsuttalelse Annual report 2017 1 Content Financial framework conditions 4 A Word from the CEO 6 Highlights 2017 8 This is Statnett 10 Group management 12 Risk management 14 Board of Directors 16 Board of Directors’ report 18 Financial reporting 34 Statement of comprehensive income 34 Balance sheet 35 Statement of changes in equity 36 Cash flow statement 37 Notes 38 Auditor’s report 88 Corporate Social Responsibility 92 Global reporting Initiativ (GRI) 118 Independent assurance report CSR 125 2 Statnett is responsible for operating, developing and maintaining the transmission grid in Norway – including cables and power lines to other countries Statnett is responsible for the transfer of electric power to the whole of Norway and ensures that there is always a balance between consumption and power production 3 Annual Report 2017 Financial framework conditions Key Figures and Alternative Performance Measures* Key figures (MNOK) 2017 2016 2015 2014 2013 Accounting result Operating revenues 7,401 6,678 5,906 5,563 4,561 Depreciation and amortisation 1) -2,273 -2,120 -1,516 -1,150 -1,030 Driftsresultat før avskrivninger og amortisering (EBITDA) 3,585 3,272 3,230 2,528 1,376 EBIT 1,312 1,152 1,714 1,378 346 Profit before tax 976 783 1,410 1,120 89 Profit for period 2) 813 645 1,103 829 82 Adjustments Change in accumulated higher/lower revenue (+/-) before tax -646 -1,003 -444 -623 -1,042 Change in accumulated higher/lower revenue (+/-) after tax -491 -752 -324 -455 -750 Accumulated higher/lower revenue (+/-) -303 343 1,346 1,790 2,413 Underlying result (adjusted for change in higher/lower revenue) 2) Operating revenues 8,047 7,681 6,350 6,186 5,603 EBITDA 4,231 4,275 3,784 3,151 2,436 Underlying operating profit (EBIT) 1,958 2,155 2,158 2,001 1,388 Profit before tax 1,622 1,786 1,854 1,743 1,131 Underlying profit for the year 1,304 1,398 1,427 1,284 832 Key figures balance sheet Investments (additions, facilities under construction including interest on construction loans) 9,139 7,695 5,820 6,037 6,375 Property, plant and equipment 35,653 33,861 30,215 27,515 21,472 Long-term and current interest-bearing liabilities including hedging effect 39,189 32,633 28,289 24,643 19,909 Market value interest and currency swaps relating to loans 2,359 2,844 4,833 2,942 471 Interest-bearing liabilities adjusted for effect of interest and currency hedging 36,830 29,789 23,257 21,701 19,438 Equity 14,011 13,867 13,605 12,629 12,135 Equity adjusted for higher/lower revenue after tax 14,241 13,610 12,622 11,322 10,374 Total assets 58,721 50,743 45,547 41,107 34,897 Capital employed 3) 49,299 41,322 35,859 31,271 27,017 Key financial ratios Return on capital employed before tax, adjusted for higher/lower revenue 4) 4.3 % 5.6 % 6.4 % 6.9 % 5.7 % Return on equity after tax 5) 5.8 % 4.7 % 8.4 % 6.7 % 0.8 % Equity ratio 23.9 % 27.3 % 29.9 % 30.7 % 34.8 % Equity ratio after tax, adjusted for higher/lower revenue 24.3 % 26.8 % 27.7 % 27.5 % 29.7 % 1) Depreciation, amortisation and impairments per statement of total comprehensive income less impairments disclosed in Note 9 plants under construction. 2) The underlying result is based on regulated permitted revenue, while the accounting result will vary depending on established tariffs and congestion revenues. The difference is known as higher/lower revenue (see Note 2). 3) Capital employed = Property, plant and equipment + Facilities under construction + Trade and other current receivables + Trade and other current payables. 4) Return on capital employed before tax, adjusted for higher/lower revenue = EBIT, adjusted for higher/lower revenue / Average capital employed last two years. 5) Return on equity after tax =Net result for the year / Average equity last two years. * To provide a better understanding of Statnett’s underlying result we also present a number of alternative performance measures. Alternative performance measures are defined in ESMA’s guidelines as a financial measure of historical or future financial performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework. Statnett’s alternative performance measures are adjusted for higher/lower revenue and supplement the figures in the IFRS financial statements. In addition to annual higher/lower revenue, reported accumulated rhigher/lower revenue also include applied interest and any prior-year adjustments. Changes in selected key financial and operational ratios used by management to monitor alternative performance measures over time are also shown. 4 Annual Report 2017 Financial framework conditions Statnett’s revenues Revenues and results Statnett’s reported revenues in the financial statements Statnett has recorded significant higher and lower comprise grid rental from customers in the transmission revenues since 2009. This has resulted in major grid and congestion revenues. Congestion revenues arise fluctuations in recognised operating revenues and when power is transmitted from areas with a low power operating results. Revenues and results adjusted for price to areas with a high power price in the Nordic region higher/lower revenues show that underlying activities are and through interconnectors between Norway and the much more stable than the accounting figures including Netherlands. The grid rental (tariff) is established ahead of higher/lower revenues. Changes in underlying revenues each calendar year. and results over the last five years are primarily attributable to higher grid capital due to an increase in the number of Revenues are regulated and controlled by the Norwegian commissioned facilities, as well as a slightly lower NVE Water Resources and Energy Directorate (NVE), which interest rate during the period. establishes an annual income ceiling (permitted revenue). Permitted revenue is intended to cover costs of developing Statnett’s formulated strategy includes instructions for and maintaining the grid and to provide a reasonable return establishing the annual tariff for the transmission grid. In on grid investments. The transmission grid must be accordance with NVE’s guidelines, Statnett aims to planned, constructed, operated, utilised and maintained in facilitate constant and predictable tariffs over time and has a cost-effective manner based on commercial principles. elected to spread the repayment of earlier accumulated higher revenue over several years. By the end of 2017, Actual accounting income from regulated activities in each Statnett had an accumulated lower revenue of NOK 303 financial year will normally differ from the final permitted million. revenue, which the NVE establishes after the end of the year. These differences are known as higher or lower The investment level affects revenues and the revenues, which in accordance with NVE regulations, are balance sheet equalised over time through adjustment of future grid Only completed investments are included in the basis for tariffs. Consequently, higher/lower revenues represent Statnett’s premitted revenue. Statnett’s equity reported in temporary balances in Statnett’s financial statements, the financial statements includes accumulated higher / which in accordance with IFRSs, are not recognised in the lower revenue. To establish Statnett’s actual equity, equity balance sheet. is adjusted for accumulated higher/lower revenue after tax. Operating revenues Net interest-bearing liabilities have risen in line with investment levels. In 2014, Statnett received an equity injection of NOK 3.25 billion, with the aim of securing a minimum 25 per cent equity ratio by the end of 2017. At the end of 2017, the equity ratio adjusted for accumulated higher/lower revenue after tax was 24 per cent. Total assets and equity ratio Income surpluses/shortfalls 5 Ånnual Report 2017 A Word from the CEO A Word from the CEO on 2017 In 2017 Statnett celebrated its 25th anniversary. The Increased exchange of power anniversary provides an ideal opportunity to review with other countries, some of our current projects in the context of our additional variable power history and above all in the context of the major production and more active changes we can expect over the next 25 years. consumers will result in a more complex power system, Statnett was established as a part of the deregulation of the with more stakeholders and energy market in 1991, with a remit of operating and more rapid changes in the developing the power grid, guaranteeing security of supply power flow. This poses and establishing the foundations for an efficient market. increasing challenges with The market reform 25 years ago resulted in more efficient regard to operation of the utilisation of hydropower resources and the transmission power system. To deal with grid, and promoted cost-efficiency across the entire power these challenges, we will industry. While the previous changes were driven by require both a more robust innovative regulation on the part of the Norwegian grid and improved IT systems authorities, the current changes are in particular being for monitoring and control. driven by global, European and Norwegian climate policy, We will also have to further develop our partnerships with and most of all a rapid changes in energy technology and our neighbouring countries and the distribution system ICT. operators that are in direct contact with end-users. Norway already has an emission-free power sector with a Statnett has collaborated with Nordic associate companies significant share of our energy coming from flexible to develop a future-oriented model for managing the hydropower. Hydropower will be a cornerstone of Norway’s continuous balancing of the power system. In addition, power system in the foreseeable future.