Enbw Financial Statements Group 2017, Notes
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Financial Statements of the EnBW Group 2017 7 Notes to the 2017 financial statements of the EnBW Group General principles In accordance with section 315e (1) German Commercial Code (HGB), EnBW Energie Baden-Württemberg AG (EnBW), as the highest-level parent company in the EnBW Group, prepares the consolidated financial statements according to the International Financial Reporting Standards (IFRS), the adoption of which is mandatory in the European Union as of the reporting date. The interpretations promulgated by the IFRS Interpretations Committee (IFRS IC) are also taken into account. IFRS and interpretations whose application is not yet mandatory are not adopted. The consolidated financial statements therefore comply with those IFRS and interpretations issued by the International Accounting Standards Board (IASB) which have been endorsed by the EU. The consolidated financial statements are presented in millions of euros (€ million). The income statement as well as the statement of comprehensive income, the balance sheet, the cash flow statement and the statement of changes in equity of the EnBW Group are presented separately. In the interest of clarity, items have been combined in the income statement and in the balance sheet, and disclosed separately and explained in the notes. The income statement has been prepared using the nature of expense method. Significant events in the reporting period such as the change to the discount rate for pension and nuclear provisions are described and detailed descriptions of the segments are given in the EnBW Group section of the management report. The consolidated financial statements are prepared as of the reporting date of the parent company’s financial statements. The parent company’s financial year is the calendar year. The registered office of the company is in Karlsruhe, Germany. The address is EnBW Energie Baden-Württemberg AG, Durlacher Allee 93, 76131 Karlsruhe. It is entered at the District Court of Mannheim under HRB no. 107956. EnBW’s principal activities are described in the segment reporting. EnBW’s Board of Management prepared and released the consolidated financial statements for issue on 1 March 2018. Consolidation principles The financial statements of the domestic and foreign companies included in the consolidation were prepared in a standardised manner in accordance with the accounting policies which are applicable at EnBW. Business combinations are accounted for using the acquisition method. The cost of a business combination is measured based on the fair value of the assets acquired and liabilities assumed or entered into as of the acquisition date. Non-controlling interests are measured at the proportionate fair value of the identified assets and the liabilities assumed. Incidental acquisition costs are expensed as incurred. If the business combination is achieved in stages, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss when the acquirer obtains control. Any excess of the cost of a business combination plus the amount of any non-controlling interest in the acquiree over the acquired identifiable assets, assumed liabilities and contingent liabilities is reported as goodwill if positive or, if negative, is reassessed and recognised through profit or loss. A change in the ownership interest in an entity which continues to be fully consolidated is accounted for as an equity transaction. All remaining interests are remeasured at fair value upon loss of control. 8 Financial Statements of the EnBW Group 2017 Receivables, liabilities and provisions between the consolidated entities are netted. Intercompany income is set off against the corresponding expenses. Intercompany profits and losses are eliminated unless they are not of minor importance. Consolidated companies In accordance with the full consolidation method, all subsidiaries under the control of the Group are included. The Group controls an associate if it is exposed to risks or has rights to variable returns as a result of its involvement in the associate, and the Group has the ability to use its power over the associate in a way that affects the amount of the returns from the associate. In the full consolidation process, the assets and liabilities of a subsidiary are included in the consolidated financial statements in their entirety. The equity method is used when there is a joint arrangement in the form of a joint venture or a significant influence may be exercised over the business policy of the associate, but the entity does not qualify as a subsidiary. At the time of acquisition they are recognised at cost and subsequently recognised according to the amortised proportionate net assets. The carrying amounts are increased or reduced each year by the proportionate profit or loss, dividends paid or other changes in equity. This means that when shareholdings are being measured, only the company’s proportional equity, rather than its assets and liabilities, is shown in the consolidated financial statements. Any goodwill is included in the stated value of the shareholding in question. Any negative differences are recognised in profit or loss in the investment result. Joint arrangements that are classified as joint operations are reported based on the proportion of the assets, liabilities, income and expenses which are attributable to us in compliance with the respective applicable IFRS. Interests in subsidiaries, joint ventures or associates which, in the Group’s opinion, are of minor significance, or are not controlled due to their participation structure and as such no significant influence is exercised over them, are reported in accordance with IAS 39. Indicators for determining the materiality of subsidiaries are the revenue, earnings and equity of these companies. There are no reciprocal shareholdings in the EnBW Group as defined by section 19 (1) German Stock Corporation Act (AktG). The consolidated companies are as follows: Type of consolidation Number of companies 31/12/2017 31/12/2016 Fully consolidated companies 146 122 Entities accounted for using the equity method 22 17 Joint operations 3 3 Changes in the consolidated companies Of the companies included in the consolidated financial statements by way of full consolidation, 18 (previous year: 12) domestic companies and 14 (previous year: 3) foreign companies were consolidated for the first time in the reporting year, 2 (previous year: 4) domestic companies and zero (previous year: 3) foreign companies were deconsolidated. In addition, 6 domestic companies (previous year: 4) were merged. The increase in fully consolidated companies and entities accounted for using the equity method was primarily due to the full consolidation of VNG-Verbundnetz Gas Aktiengesellschaft (VNG). In addition, the two wind farms EnBW Hohe See GmbH & Co. KG and EnBW Albatros GmbH & Co. KG are no longer fully consolidated after a loss of control but are accounted for as a joint venture using the equity method in the consolidated financial statements. First-time full consolidation of affiliated entities 2017 First-time full consolidation of VNG-Verbundnetz Gas Aktiengesellschaft In order to strengthen the gas business, EnBW acquired 74.21% of VNG-Verbundnetz Gas Aktiengesellschaft, Leipzig, from EWE Aktiengesellschaft, Oldenburg, in the second quarter of 2016. After obtaining control by gaining a majority on the Supervisory Board, VNG and its subsidiaries, which were previously accounted for as a joint venture using the equity method, are now fully consolidated in the EnBW consolidated financial Financial Statements of the EnBW Group 2017 9 statements as of 18 May 2017. VNG is a horizontally and vertically integrated group of companies in the European gas industry that is particularly active in the areas of exploration and production, gas transport and gas storage, as well as trading and services. The fair value of the VNG shares at the time of full consolidation was €1,314.1 million. As the disposal of the VNG shares accounted for using the equity method was worth €1,298.6 million, there was investment income of €15.5 million. The value of the non-controlling interest was calculated pro rata at fair value based on the identifiable net assets of VNG and stands at €412.5 million. The goodwill represents, in particular, synergies in the grids sector and is not deductible for tax purposes. Following its full consolidation, VNG contributed €2,308.7 million to revenues and €-32.7 million to earnings after income taxes in the 2017 financial year. If VNG had been fully consolidated since the beginning of the year, Group revenue would have increased by €1,416.3 million to €23,390.3 million and earnings after income taxes would have increased by €36.1 million to €2,212.4 million. The following assets and liabilities were taken over as part of the acquisition: in € million Carrying Recognised at amount acquisition according to IFRS Intangible assets 44.4 290.5 Property, plant and equipment 1,436.2 1,881.0 Other non-current assets 456.8 659.1 Cash and cash equivalents 296.7 296.7 Other current assets 1,351.2 1,351.2 Total assets 3,585.3 4,478.5 Non-current liabilities 961.6 1,318.0 Current liabilities 1,558.1 1,561.1 Total liabilities 2,519.7 2,879.1 Net assets 1,065.6 1,599.4 Non-controlling interests 412.5 Net assets attributable to the shareholders of EnBW AG 1,186.9 Fair value of the VNG shares 1,314.1 Goodwill 127.2 The fair value of the trade receivables acquired as part of the business combination stood at €1,029.9 million. It is anticipated that the total amount of the trade receivables will be largely collected so that the gross value corresponds to the fair value of the trade receivables. Changes in the shareholdings of fully consolidated companies with loss of control in 2017 Sale of interest in EnBW Hohe See GmbH & Co.