ANNUAL REPORT 2016 Pražská Plynárenská, A.S., and the Pražská Plynárenská, A.S. Group
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ANNUAL REPORT 2016 Pražská plynárenská, a.s., and the Pražská plynárenská, a.s. Group PRAŽSKÁ PLYNÁRENSKÁ Combining energy and services CONTENTS 3 Introductory words by the Chairman 24 Report on the Business Activities of the of the Board of Directors Pražská Plynárenská, a.s. Group 4 Selected data about the Company 24 Data on the Group’s activities and financial 4 Basic information about the Company position 6 Ownership interests 26 Financial situation 8 Information about the Company’s 26 Activities in the field of research and bodies and management development 26 Human resources management 13 Report of the board of directors on 27 Risk management at PP, a.s. the business activity of the company and its assets 13 The energy industry in 2016 27 Other information 13 Information about the Company’s 28 Important events at the beginning of 2017 activities and financial position 14 Earnings before tax 28 Expected development of the Group 15 Financial situation 30 Financial section 15 Summary of real estate owned by PP, 31 Individual financial statements a.s. 16 Natural gas trading 36 Notes to the individual financial statements 16 Electricity trading 51 Consolidated financial statements 16 Marketing and customer care 56 Notes to the consolidated financial 18 Clean mobility statements 19 Social responsibility 20 Cooperation with other energy 93 Information about the persons responsible companies for the annual report and audit of financial 20 Information technology statements 21 Human resources management 22 Environment 94 Report on relations between the controlling 23 Risk management at PP, a.s. and controlled entity and on relations 23 Information about research of between the controlled entity and other development of new products or entities controlled by the same controlling procedures in the current accounting entity (related entities) for 2016 period 100 Abbreviations 102 Auditor’s report This annual report was compiled pursuant to Act No. 563/1991 Coll., on Accounting, as amended, and Act No. 90/2012 Coll., Act on commercial companies and cooperatives (Act on Commercial Corporations), as amended. All documents and materials referred to in this Annual Report may be reviewed at the Company’s Head office. Prague dated 14 March 2017 2 Annual Report 2016 Pražská plynárenská, a.s., and the Pražská plynárenská, a.s. Group INTRODUCTORY WORDS BY THE CHAIRMAN OF THE BOARD OF DIRECTORS Dear ladies and gentlemen, I am very pleased to start this review of the past year with positive news. The year 2016 was another successful one for us at Pražská plynárenská, a.s., as we managed to maintain our position on the domestic energy market despite the strong competition and achieved excellent financial results. In this context, I would like to highlight the efficient management of the Group, which succeeded in reducing total operating costs, and the optimally handled purchasing strategy in the energy sector, which employs the management of open positions to contribute substantially to increasing the business margin. I value the success of Pražská plynárenská, a.s. all the more because it was achieved in a time that is undeniably very complex and often confusing. The energy sector as such is changing beyond recognition at a tumultuous rate, as are customer preferences, needs and demands. This motivates and obliges us to make fundamental changes in our corporate strategy, and we are transforming established business models, customer services and creating new products corresponding to current demands literally on the go. I firmly believe these are changes for the better, and their meaning will be fully appreciated in the not so distant future. I would also like to point out one other important aspect. The good results of Pražská plynárenská, a.s. clearly prove that the often-discussed concept of “municipal companies”, of which we are one, makes sense, is viable and can function very well and efficiently. It is also worth emphasising that in effect, the resources we generate are reinvested to the benefit of citizens, and thus do not disappear into the private sector or abroad. I would like to thank not only all our employees for their great work, but also our business partners for their willingness and cooperation, and in particular our customers who have been very stable in relation to our Company. We greatly appreciate this and I can promise that we will continue to strive to make Pražská plynárenská, a.s. a reliable energy supplier they can depend on, and that will always do something more for them. Ing. Pavel Janeček Chairman of the Board of Directors 3 SELECTED DATA ABOUT THE COMPANY The information provided in this chapter applies to the non-consolidated financial statements, unless stated otherwise. The individual financial statements were compiled in accordance with the Generally Accepted Accounting Principles in the Czech Republic. The average CZK/EUR exchange rate for 2016 was CZK/EUR 27.033 and was used for conversion of all data in the tables, including comparative information. BASIC INFORMATION ABOUT THE COMPANY Business name: Pražská plynárenská, a.s. (‘PP, a.s.’ or the ‘Company’) Registered office: Prague 1 – Nové Město, Národní 37 Post code: 110 00 Company ID No.: 601 93 492 Tax ID No.: CZ60193492 Entry in the Commercial Municipal Court in Prague, Section B, File 2337 Register: Bank details: ČSOB, a.s. – Account No.: 916780043/0300 Phone: +420 267 171 111 Data box ID: au7cgsv Business offices: Jungmannova 31, palác Adria, Prague 1 U Plynárny 500, building No. 37, Prague 4 Palackého třída 1931/105, Pardubice Královéhradecká 1566, Ústí nad Orlicí Vítězná 2197, Sokolov Web pages: www.ppas.cz COMPANY PROFILE Pražská plynárenská, a.s. traditionally belongs to the most important domestic energy suppliers and it has been a reliable energy supplier to approximately 415,000 offtake points all over the Czech Republic. It is a Czech supplier for which ensuring convenient customer service, energy security and a wide range of premium services, often unique in the Czech Republic, are the main priorities in relation to customers. It further bases its competitiveness on the background of a stable and strong Company, a responsible and honest approach, and not least the ability to react flexibly and swiftly to the changing needs and demands of customers. In the area of energy use, the Company supports new, ecological and efficient technologies in a long-term perspective, especially the usage of natural gas and new electricity in transportation. IMPORTANCE OF THE COMPANY AND ITS CONTRIBUTION TO THE REGION In addition to its business activity, Pražská plynárenská, a.s. is consistently active in the field of public welfare activities and the development of civic society. Its business success based on the loyalty of clients is returned to the general public in the form of traditional and long-standing support of various cultural, sports and social projects. Although today the Company is a reliable energy supplier throughout the Czech Republic, the history of Pražská plynárenská, a.s. is integrally linked to the City of Prague, where the predecessor of what is now Pražská plynárenská, a.s. can be traced back to municipal gasworks since the mid-19th Century. Pražská plynárenská, a.s. and its predecessors alike have been owned by the Capital City of Prague since 2014, thus coming full circle in an imaginary sense. 4 Annual Report 2016 Pražská plynárenská, a.s., and the Pražská plynárenská, a.s. Group BASIC ECONOMIC INDICATORS (2012 – 2016) 2012 2013 20145 2015 2016 Revenues in CZK ‘000 9,335,952 8,942,537 14,221,895 15,891,270 12,158,535 in EUR ‘000 345,354 330,801 526,094 587,847 449,766 Profit before tax in CZK ‘000 722,292 624,9083 812,636 771,589 1,337,553 in EUR ‘000 26,719 23,116 30,061 28,542 49,479 Profit after tax in CZK ‘000 672,963 582,0533 735,471 647,051 1,155,047 in EUR ‘000 24,894 21,531 27,206 23,936 42,727 Equity in CZK ‘000 3,673,145 6,872,4004 6,823,774 3,878,801 5,009,169 in EUR ‘000 135,876 254,223 252,424 143,484 177,652 Share capital in CZK ‘0001 1,439,907 1,439,907 1,439,907 431,9726 431,972 in EUR ‘000 53,265 53,265 53,265 15,979 15,979 in MWh Natural gas Sales2 ‘000 7,354.2 6,620.1 14,380.7 17,933.8 12,595.4 in m3 mil. 696.9 624.2 1,354.5 1,684.7 1,178.0 Number of offtake points as at 31 Dec. 417,581 403,804 397,073 393,994 384,608 in MWh Electricity Sales ‘000 2.0 39.3 82.2 108.3 371.5 Number of offtake points as at 31 Dec. 1,276 15,357 18,267 22,988 28,991 1 Share capital registered in the Commercial Register. 2 Volumes of natural gas measured in m3 are converted into kWh using a calorific value coefficient, the value of which is obtained from NET4GAS, s.r.o., based on a monthly handover protocol. 3 In 2014 the correction was recognised in the calculation of adjustments to overdue receivables based on the decision of Company’s management. This correction was also reflected in amounts stated for 2013. 4 In 2014 the revaluation of shares in subsidiaries and associates was performed using the equity method based on the decision of Company’s management. Amounts presented for 2013 were restated as if the revaluation of shares accounted for using the equity method was performed as at 1 January 2013. 5 In 2014 Pražská plynárenská, a.s. and Pragoplyn, a.s.