ORES Assets scrl ANNUAL REPORT 2017 1 TABLE OF ORES Assets scrl ANNUAL REPORT 2017 CONTENTS I. Introductory message from the Chairman of the Board of Directors and the Chief Executive Officer p.4 II. ORES Assets consolidated management report p.6 Activity report and non-financial information p.6 True and fair view of the development of business, profits/losses and financial situation of the Group p.36 III. Annual financial statements p.54 Balance sheet p.54 Balance sheet by sector p.56 Profit and loss statement p.60 Profit and loss statement by sector p.61 Allocations and deductions p.69 Appendices p.70 List of contractors p.87 Valuation rules p.92 IV. Profit distribution p.96 V. Auditor’s report p.100 VI. ORES scrl - ORES Assets consolidated Name and form ORES. cooperative company with limited liability salaries report p.110 VII. Specific report on equity investments p.128 Registered office Avenue Jean Monnet 2, 1348 Louvain-la-Neuve, Belgium. VIII. Appendix 1 point 1 – List of shareholders updated on 31 December 2017 p.129 Incorporation Certificate of incorporation published in the appen- dix of the Moniteur belge [Belgian Official Journal] on 10 January 2014 under number 14012014. Memorandum and articles of association and their modifications The memorandum and articles of association were modified for the last time on 22 June 2017 and published in the appendix of the Moniteur belge on 18 July 2017 under number 2017-07-18/0104150. 2 3 networks. However, it also determining a strategy essen- Supported by a suitable training path, the setting up of a tially hinged around energy transition; several of our major "new world of work" within the company should also pro- business programmes and plans are in effect conducted to mote the creativity, agility and efficiency of all ORES’ active succeed in this challenge with the public authorities, other forces. market stakeholders and, of course, the public. This transformation is also essential to guarantee an exem- "TRANSFORM THE NETWORKS…" plary service quality to the customer, in terms of reliability and grid management costs, within an ever more complex and In order to enable and optimise the use of renewable energy, intermittent energy system. This has always been a human ORES must therefore transform its networks. The distribu- and technical challenge, and will be even more so in tomor- tion infrastructures were not originally designed to incorpo- row's world. rate energies, the production of which is decentralised and I. INTRODUCTORY MESSAGE FROM THE intermittent. The company has to make these infrastructures “MAKING CUSTOMERS' LIVES EASIER” "smarter", equip them with new voltage regulation, remote monitoring, remote metering and remote control tools, sup- The emergence of renewable energies therefore presents a CHAIRMAN OF THE BOARD OF DIRECTORS ported by a high-performance and suitable IT and telecom- technological challenge for the system operator which will munications base. transform the energy distributor business. From a societal AND THE CHIEF EXECUTIVE OFFICER perspective, the way in which energy is produced and consu- In parallel, ORES has to modernise its customers' metering med – and consequently distributed – has also changed the tools in order to better measure energy flows – energy consu- public's expectations: direct access to information, faster and med and specifically the impact of new uses such as heat more efficient exchanges, and digital communication, with- 2017 was an especially eventful year for ORES. Turbulent, continue to modernise our networks in the years to come in pumps and electric vehicles, but also the energy surplus out however losing human contact. ORES wants to meet even, from time to time. The issues of ethics and governance a cost-effective manner. produced by customers with solar panels and which is fed these expectations through an innovative, efficient and cus- of public service companies were are the heart of the debate. into the grid, for example. At the start of 2018, the Walloon tomised service. From the request to connect a residence Faced with criticisms formulated without distinction over all All these expressions of confidence are currently encouraging Government approved a preliminary draft decree on first rea- to repairs in the event of a storm, the 2,300 members of those involved serving the community, ORES wanted to reite- us to continue along the track to which we have committed ding which fixes 2034 as the deadline for equipping 80% of staff are committed to making every effort on a daily basis rate the relevance of its business model and its plan. in order to prepare for the future. Walloon households with an intelligent or "smart" electric to make our customers' lives easier – individuals, companies meter. This is an ambitious project for system operators; for and, of course, communes. Last year, words were translated “A RECOGNISED BUSINESS MODEL” "BUILDING TOMORROW'S ENERGY the customers, the arrival of the new meter is synonymous into actions, innovations and, when necessary, transforma- LANDSCAPE" with an improvement in service quality – remote meter rea- tions which we invite you to discover in this document. While With our local authority shareholders, we have chosen a ding, tracking consumption, more accurate bills, improved underscoring a shared vision: "Making energy easier makes so-called “pure player” model for ORES. It allows the com- Because here is where ORES' challenge resides. Although our fault detection – and new ways of consuming energy, inclu- life easier”. Yesterday, today and tomorrow. pany to concentrate all its efforts on its core businesses: dis- core missions are essential to guarantee the public's comfort ding in the future the possibility of tariff offers "rewarding" tribution system operator for the electricity, natural gas and on a day-to-day basis and to enable the market to work pro- virtuous behaviour – consuming when the wind blows and the public lighting stock networks. Having been passed under the perly, the company is devoting an increasingly large share sun shines – for the benefit of the community. Cyprien Devilers microscope the year before, this model was endorsed – and even of the resources allocated to it to its transformation and to Chairman of the Board of Directors sometimes held up as an example – by the regional authorities. setting up tomorrow's energy landscape. You will be aware "AND TRANSFORM THE COMPANY" that the federal and regional Energy ministers have drawn Fernand Grifnée Initiated from 2013 with the merger of eight Walloon up an inter-federal energy pact for 2030 and 2050, which In order to put these fundamental technological changes into Chief Executive Officer inter-municipal companies which then were to become ORES has been approved by the Walloon Government. The latter practice, while maintaining its financial equilibrium, the com- Assets, the company’s governance reforms were finalised in therefore wishes to speed up the energy transition process pany has had to scrutinise its organisation. In 2017 it carried 2017. These reforms have enabled ORES to rationalise its for our Region. This is a crucial issue. This change will lead out a reorganisation exercise, at the end of which it set up structures while retaining a strong link with the local authori- Belgium towards a low-carbon energy system hinged around a "Transformation" department responsible for changing its ties for which it works. renewable energy and energy efficiency in order to contribute organisation and coordinating the company's major strategic to the essential fight against global warming. programmes. Seeing its impact on the management of the The Group's good management and financial soundness networks increase a little more every day, our IT department have also been acknowledged by the financial markets, and ORES has always asserted its desire to be the facilitator of for its part was restructured in order to more effectively meet particularly by the European Investment Bank (EIB). We have this process. This desire is manifested by practical actions the needs caused by these same major projects and by the benefits concluded significant financing agreements with the day-to-day, the most telling being without doubt the connec- change in ORES' businesses. EIB for a total amount of €550 million which will enable us to tion of green, decentralised electrical production units to the 4 5 2.1.2. AT THE HEART OF THE ENERGY MARKET Apart from operating and developing the networks, ORES budget meters at the request of suppliers at their non-paying carries out many fundamental tasks in order to ensure that customers' premises. the liberalised energy market functions properly. The system operator therefore carries out readings of more than 1.4 mil- ORES is active in more than 75% of Walloon’s territory. Our lion meters, validates consumption data and manages this areas of business activity as DSO cover all the communes data in a strictly confidential manner. It keeps nearly 2 mil- appearing on the coloured part on the two maps below. The lion pieces of data updated in the access register: for each first in yellow concerns electricity distribution, the second in point of connection to the distribution network, this register blue concerns natural gas distribution. ORES’ teams do not contains data of both a technical and administrative nature operate in the communes that are not coloured, apart from and the data of the corresponding energy supplier. ORES where there are specific agreements. also provides energy to socially protected customers and fits Management of electricity distribution networks II. ORES Assets management report, consolidated as at 31 december 2017 Dear Sir/Madam, In accordance with the Code des sociétés (Company Code) and our articles of association, we have the honour of reporting on the activities of the ORES group during the 2017 financial year, and to submit the annual financial statements for ORES Assets for your approval, as well as the consolidated financial statements for the year ending 31 December 2017 for your information.