ANNUAL REPORT 2012 - APG/media/A6EB2B5C19B84DA59415935... · 14 Report on business developments and the economic situation ... SARAS- DORF KAINACHTAL TAUERN Seps SK swissgrid Terna

ANNUALREPORT

2012

M€ 2012 2011 2010

THREE-YEAR COMPARISON

Sales revenue 536,4 466,4 316,9

Earnings before interest and taxes (EBIT) 43,0 23,4 56,4

Result from ordinary activities (EGT) 19,7 2,3 36,8

Net income for the year 15,6 1,0 34,8

Total assets 1.435,9 1.243,2 1.112,8

Non-current assets 1.155,2 1.083,5 1.044,4

Investment in property, plant and equipment 136,1 116,7 130,3

Scheduled depreciation of property, plant and equipment 62,8 59,1 54,4

Shareholders’ equity 274,3 258,1 254,4

Return on sales (ROS) 8,0 % 5,0 % 17,8 %

Return on equity (ROE) 6,6 % 0,8 % 12,3 %

Return on investment (ROI) 3,5 % 2,1 % 5,6 %

Capital-to-assets ratio 21,8 % 23,9 % 26,6 %

Debt repayment period 8,5 4,9 8,6

Net operating cash flow 128,6 64,7 82,9

Net gearing ¹ 301,4 % 263,5 % 223,4 %

Number of employees 451 434 434

(thereof apprentices) 24 22 19

Transport volume (GWH) 42.144 39.830 37.218

1Thenetgearingstatementwasrevisedin2012andthefiguresforthepreviousyearwereadjustedtoreflectthis.

ANNUAL REPORT2012

02

AUSTRIAN POWER GRID AG

Note on rounded totals: Differences can arise in the addition of rounded totals and percentages using EDP1 devices.

Note regarding gender-neutral formulation: In all designations of activity, only the male form has been used in each case respectively so as to afford improved legibility. This naturally refers to women and men to an equal extent.

CONTENTS

03 Board Members and Representatives10 Foreword by the Managing Board

Managementreport14 Report on business developments and the economic situation28 Report on research and innovation29 Report on major risks and uncertainties31 Outlook31 Report on branch operations31 Events subsequent to the balance sheet date

Financialstatements34 Balance sheet36 Income statement38 Changes to non-current assets40 Maturity breakdown42 Change to untaxed reserves

44 Notes – Explanations

56 Notes on participating interests in accordance with Section 238 (2) of the UGB58 Glossary60 Audit certificate62 Report of the supervisory board

03

ANNUAL REPORT 2012

BOARD MEMBERSAND REPRESENTATIVES

Supervisory Board

Employee representatives

Managing Board

Working and Auditing Committee

Gewerke DDr. Erhard Schaschl Chairman

Dr. Ulrike Baumgartner-Gabitzer Managing Director, 1st Deputy Chairwoman

Dr. Johann Sereinig Deputy Director-General

Dr. Martin Schmid

Mag. Dr. Georg W. Westphal Authorised signatory

Ing. Mag. Peter Koren Deputy Secretary General

Mag. Dr. Erich Entstrasser Executive Director

Mag. Leopold Rohrer Authorised signatory

Harald Novak Chairman of the Central Works Council, 2nd Deputy Chairman

Ing. Wolfgang Liebscher Central Works Council

Karl-Heinz Stieger Central Works Council

Andreas Gross Central Works Council

Baurat h. c. DI Dr. Heinz Kaupa (until 31 Dec. 2012)

Mag. Thomas Karall

DI Mag. (FH) Gerhard Christiner

DDr. Erhard Schaschl Chairman

Dr. Ulrike Baumgartner-Gabitzer 1st Deputy Chairwoman

Harald Novak 2nd Deputy Chairman

04

The past decade has brought about far-reaching changes for the energy economy in Europe. The commitment by the European Union to a long-term and sustainable conversion of the power supply to renewable sources of energy was set out in concrete target specifications. This develop-ment, which had already been triggered by the resolution of the Kyoto targets, was moved forward in the 20/20/20 climate targets of the European Union. In the years which followed, it was strengthened and accelerated by fur-ther resolutions at both European and national levels. An important milestone in this process was the decision by Germany to abandon nuclear power, which will also have effects especially on the Austrian power supply system.

The European energy map is undergoing fundamental change. The turnaround in energy means that the power supply systems will also change significantly. The ever more rapid extension of renewable generation requires the electricity grid infrastructure to be rebuilt. Genera-tion from wind power and the photovoltaic sector, which fluctuates strongly in part, means that grids with higher performance levels and capacities are required. The new power stations are mostly being built far from the large centres of consumption, their generation of electricity de-pends on the weather conditions and, in contrast to con-ventional power stations, they do not necessarily adhere to the consumption profile.

THEIMPACTOFTHEENERGYTURNAROUNDThe 20/20/20 climate targets of the European Union are and will remain a clear commitment by Europe to a sus-tainable energy supply. This will increase the share of re-newable energies in the overall generation of energy to 35 per cent by 2020. The setting of this target has far-reaching effects on the energy economy and poses enor-mous challenges. The European Union is aiming to achieve a CO2-neutral power supply by 2050. In order to achieve this, around 80 per cent of electricity generation will need to be derived from renewable sources. The expansion par-ticularly of wind power and the photovoltaic sector is ac-cordingly progressing at a rapid rate. The EWIS Study (Eu-ropean Wind Integration Study) anticipates a near tripling

of the installed wind power capacity in Europe, from 70 GW to far more than 200 GW, by as soon as 2020.

The forecasts for the development of renewable energies in Austria are at a very similar level. A quadrupling of the installed wind power capacity from currently just over 1,000 MW to up to 4,000 MW is expected by 2020. In order to create the basic pre-conditions for an optimum inte-gration of the new possibilities provided by wind power, the electricity transmission grid here in Austria urgently needs to be expanded in good time.

EUROPEANGRIDOPERATORSGETTINGPREPAREDThe transmission system operators in Europe are prepar-ing for the aforementioned developments. In the course of the last decade, cross-border cooperation within the framework of the European Network of Transmission Sys-tem Operators for Electricity (ENTSO-E) has intensified accordingly. In their Ten Year Network Development Plan (TYNDP), which is updated and published every two years, ENTSO-E defines the network expansion requirements of the coming ten years in the European transmission grid. The 2012 TYNDP identifies a need for an expansion of around 51,000 kilometres of new high-voltage lines and anticipates the need for a volume of investment of over € 100 billion in the coming decade.

Austrian Power Grid AG (APG) is also afforded particular significance within the framework of the ENTSO-E due to its central position in the heart of Europe. APG is assuming its responsibility towards Europe by undertaking targeted investment in the domestic grid infrastructure. Around € 1 billion has been invested by APG in the expansion and modernisation of its plants in the last ten years. A further € 2 billion are due to flow into measures to strengthen the grid by 2020.

Within the deregulated environment of the European en-ergy economy and prior to the setting of the target for the creation of an integrated European electricity mar-ket, transmission system operators are faced with new challenges due to the changed operating framework.

EUROPE’S ENERGY MAP IS CHANGING

04


0505

ANNUAL REPORT 2012

ENTSO-EEuropean Network of Trans-mission System Operators

Wind power station

Solar power station

Conventional power stations

ENTSO-E countries

Non-ENTSO-E countries

RENEWABLE ENERGIES IN 2050

06


WE KEEP IT GOING – AUSTRIAN POWER GRID AG – FACTS AND FIGURES

Tarvisio132-kV-Leitung

PleintingPirach

AltheimSimbach

Soverzene

Podlog

Sokolnice

MemmingenLeupolz

Pradella

Maribor

Slavetice

Györ/SzombathelyGyör

SLO

ST. PETER

D

CZ

H

CH I

DellmensingenObermooweiler

OBER-SIELACH

Hessenberg

WIENSÜDOST

BISAM-BERG

LIENZ

WESTTIROL

OberbrunnKrün

DÜRNROHR

Weißenbach

ERNSTHOFEN

SARAS- DORF

KAINACHTAL

TAUERN

SKSeps

swissgrid

Terna

Tennet

Tennet

AmprionTransnet BW

Eles

Mavir

Ceps

BonaduzMontlingenWinkel

380-kV-security ring

The APG grid concept builds on the 380-kV-security ring. This 380-kV-security ring guarantees the sustainable and reliable supply of all large consumption centres from two sides.

THE BACKBONE OF THE AUSTRIAN POWER SUPPLY

380-kV-transmission line380-kV-Salzburg transmission line project220-kV-line220-kV-transmission line projectSubstationSubstation projectAPG grid nodes

380-KV-RING

Austrian high voltage grid - Status as at 2012

07

ANNUAL REPORT 2012

In addition to the operation of power stations determined by market prices, the expansion of the volatile renewable sources of energy (e.g. wind power) massively affects the flows of electricity and strains within the transmis-sion grids. Overall, climbing and wildly fluctuating network loads have been detected together with the associated significantly increased demands on the electrical grid.

If demands on the provisioning infrastructure cannot be met with the existing grid infrastructures any more, this results in bottlenecks. The bottleneck management nec-essary as a result leads partially to limitations on the free market as well as increased costs. In addition to the tem-porary usage of bottleneck management for occasionally occurring bottlenecks (e.g. due to shut-downs caused by revisions), recurring bottlenecks can occur, i.e. bottle-necks caused by structures which can only be eliminated on a sustainable basis through grid expansion measures.

Harmonised rules (network codes) for use throughout Eu-rope are due to be developed for the energy economy by 2014. These network codes will define common standards for operating transmission grids and through this provide a key contribution towards raising grid security. Within the framework of several ENTSO-E working groups, APG is making an essential contribution towards developing the regulations required. APG acoordingly provided the con-venors for both drafting teams which have laid down the network codes on „electricity balancing“ and „operational security“.

APGMAKESTHEMARKETSince the beginning of the year 2012, APG has been the sole control area leader in Austria and is accordingly re-sponsible for cross-border electricity trading with neigh-bouring European states. The integration of the control areas of Tyrol and Voralberg through the cooperation of APG with the TIWAG grid and VUEN was a further essential step within the framework of progressing with the opening up of the domestic electricity market. Starting in 2012, APG is also conducting the market-based procurement of all energy regulating components (primary, secondary and

tertiary level regulation, including unwanted exchange).

FORWARD-LOOKINGPLANNINGFORSUCCESSFULENERGYTURNAROUNDThe long-term and sustainable conversion to renewable sources of electricity requires a fundamental conversion of the entire European power supply system. Not just the generation system is changing, but also the grid infra-structure has to be developed further to correspond with the completely new requirements. A really essential factor of success for the energy turnaround is forward-looking planning which coordinates developments in the field of electricity generation with the requirements for develop-ment in the power grid resulting from these.

APG has investigated the most varied scenarios for the energy economy in its grid Master Plan – jointly with rep-resentatives from the field of renewable energies and with the large NGOs – and derived from this the measures for further development of the APG grid which need to be taken. Based on these analyses, the Network Develop-ment Plan (NDP) will be compiled annually and will define the actual grid projects for the coming ten years. This NDP will be agreed with all relevant partner organisations in the energy economy, subjected to a public consultation process and finally be submitted for approval by E-Control Austria (ECA).

APGGRIDCONCEPTThe centrepiece of the APG grid concept is formed by the 380-kV-security ring. This ring concept is a sustainable and cost-optimised grid concept which will increase grid security in our country over the long term. The 380-kV- security ring is also a necessary basis for ensuring that the addition of newly generated electricity from renewable energy sources in Austria – especially from wind power in the east of Austria – can be integrated into the domestic power supply in optimal and sustainable ways. The APG grid concept has also been agreed with international grid partners and is part of the TYNDP. Six of the projects iden-tified as particularly urgent in the APG Grid Master Plan have been included in the provisional list of what are re-

Tarvisio132-kV-Leitung

PleintingPirach

AltheimSimbach

Soverzene

Podlog

Sokolnice

MemmingenLeupolz

Pradella

Maribor

Slavetice

Györ/SzombathelyGyör

SLO

ST. PETER

D

CZ

H

CH I

DellmensingenObermooweiler

OBER-SIELACH

Hessenberg

WIENSÜDOST

BISAM-BERG

LIENZ

WESTTIROL

OberbrunnKrün

DÜRNROHR

Weißenbach

ERNSTHOFEN

SARAS- DORF

KAINACHTAL

TAUERN

SKSeps

swissgrid

Terna

Tennet

Tennet

AmprionTransnet BW

Eles

Mavir

Ceps

BonaduzMontlingenWinkel

380-kV-security ring

08


WE KEEP IT GOING – AUSTRIAN POWER GRID AG – FACTS AND FIGURES

ferred to as PCIs – Projects of Common Interest – by the European Union. These are high-performance projects of transnational importance, for which implementation is due to be fast-tracked through facilitating their passage through the approval procedures required.

STATUTORY OBLIGATIONS OF THE TRANSMISSION GRIDOPERATORANDCONTROLAREALEADER

As a transmission system operator, APG has to fulfil ex-tensive statutory obligations in planning and operating its high-voltage systems. APG is obligated from a pub-lic service perspective to build and maintain a sufficient grid infrastructure while treating all customers without discrimination. As a transmission system operator and control zone leader in Austria, APG is also obligated to operate, expand and maintain the transmission grid in a safe, reliable, functional manner that takes into account environmental considerations. In particular, the law aims to ensure the ability of the grid to satisfy an appropriate demand for electricity transmission in the long term. In its NDP, APG defines a ten-year preview of those projects that represent the prerequisite for guaranteeing high en-ergy security in Austria for the future. The NDP is approved annually in accordance with a stakeholder process (con-sultation procedure) by an ECA permit and anticipates in-vestments of over € 2 billion up to the year 2022.

As a member of of ENTSO-E, APG must must fulfil com-mitments such as those enumerated in the “Operations Handbook” of the UCTE (now ENTSO-E), in addition to the statutory requirements mentioned. Adherence to the technical and organisational regulations outlined in the “Operations Handbook” for the secure operation of the ENTSO-E grid throughout Europe is analogous to the specifications in the Austrian Electricity Management and Organisation Act (ElWOG) (and the technical and organi-sational rules [TOR]) for safe system operation. In partic-ular, conformity with the (n-1) safety criterion in ENTSO-E transmission system operation is mandatory.

INCREASE IN CONSUMPTION IN AUSTRIAIN COMPARISON 1960–2011

Source: E-control, domestic power consumption without pumped storage

Consumption

Multiplication(based on 2011)

0 GWh

10,000 GWh

20,000 GWh

30,000 GWh

40,000 GWh

50,000 GWh

60,000 GWh

1960

x 5.64

1980

x 1.85

2000

x 1.18

2005

x 1.03

2011

10,5

71

32,2

14

50,6

78

57,8

88

59,6

43

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ANNUAL REPORT 2012

MAINTENANCE OF THE BALANCE BETWEEN GENERATION AND CONSUMPTION

GENERATION CONSUMPTION

FOREWORD BY THE MANAGING BOARD


Mag. Thomas Karall m.p. DI Mag. (FH) Gerhard Christiner m.p.

10

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ANNUAL REPORT 2012

2012 posed many great challenges for APG – both in terms of the operating business and also with regard to the op-erating framework. The company was able to press ahead successfully with central grid expansion projects, thereby attaining essential improvements in the long-term guar-antee of energy security. A milestone was passed, for example, with the submission to the responsible authori-ties in Upper Austria and Salzburg of the Environmental Compatibility Declaration (ECD) for the second section of the 380-kV-Salzburg line project from the grid node at St. Peter to the Tauern grid node.

In 2011, APG began to put in place all the measures re-quired to become certified as an Independent Transmis-sion Operator (ITO) by 12 March 2012, in accordance with ElWOG 2010 and the third EU Internal Energy Market Pack-age. Among other measures, three additional departments were established (IT & Telecommunications, Procurement and Accounting & Finance), meaning that in 2012 APG was already able to complete all commercial and administra-tive tasks entirely on its own. The last tasks in the area of IT were likewise successfully concluded and all regulations and stipulations have now been met.

A priority for APG’s European involvement was cooper-ating in the drafting teams of the ENTSO-E. Within what are known as the Framework Guidelines, which state the aims of the individual network codes, two codes are listed ("Cross-border balancing energy exchange" and "Secure network operations"), in which APG has even provided the leaders of the respective drafting teams. Overall, APG is represented in 51 working groups of the ENTSO-E.

APG has been conducting market-based procurement of all energy regulating components (primary regulation, secondary regulation, tertiary regulation and unwanted exchange) itself since this year. This has enabled APG to strengthen its position as a service provider for the Aus-trian electricity market further.

APG became the sole control area leader for the whole of Austria with effect from the beginning of 2012. Cross-bor-

der electricity trading has since been handled centrally via APG, linking responsibility for balancing the generation and consumption of electric energy, and therefore also the reg-ulation of the Austrian grid. This is a key aspect of secure transmission grid operation and also provides the basis for the grid security of subordinate distribution grids.

APG did not register any interruptions at all in the 220/380-kV-grid in 2012 and therefore successfully ful-filled its task despite some critical grid situations. In par-ticular, a collapsed pylon, caused by an avalanche, could only be dealt with due to the highest levels of commitment demonstrated by our employees. In order to attain this high level of supply security, APG implemented numerous grid expansion measures, coordinated grid operation, em-ployee training and further training as well as research and innovation.

The decisions of the Austrian Constitutional Court (VfGH) to cancel the regulations on system usage tariffs (SNT-VO) for the years 2009, 2010 and 2011 poses economic challenges for APG. The passing of the Amendment to Sec-tion 50 of the ElWOG by the National Assembly on 5 De-cember 2012 has meant that balance sheet regulations have been adapted and the ability to make up the balance of the regulatory account has now been secured through this. There is a strong commitment to achieving stabilisa-tion of the legal basic principles in the field of tariffs.

Optimisation measures or further expansion of the grid in-frastructure will be required in future as well in order to be able to keep pace with the expansion rate of the renewable energies. This is because only the synchronisation of grid expansion and the integration of renewable energies will create the highest level of grid security in future.

APG itself will undertake everything to implement the projects laid down in the 2012 NDP in order to meet the economic mission of securing an optimised energy infra-structure.

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13

ANNUAL REPORT 2012

14


ABOUTUS

APG operates Austria’s transmission grid, which is part of the trans-European transmission grid of the Regional Group Continental Europe of ENTSO-E1. Furthermore, APG is responsible as the control area manager in the course of grid regulation for ensuring a stable balance between production and consumption at all times.

With a route length of approximately 3,500 kilometres and around 6,800 kilometres of connected lines, as well as 61 substations and switching systems, APG’s transmission network is the backbone of Austria’s power supply. It en-sures the exchange of power, inside and outside of Austria, between producers and consumers, while guaranteeing stable supply to the distribution grids.

HIGHLIGHTS2012

Major expansion projects successfully completed and begunIn 2012, APG successfully completed major projects that improve and provide long-term guarantees for domestic energy security.

In accordance with the EIA law, the ECD was submitted to the responsible authorities in Upper Austria and Salzburg on 28 September 2012 for the second phase of the 380-kV- Salzburg line, which will run from the St. Peter grid node to the Tauern grid node. We anticipate that the au-thorities will publish the edict and the ECD documents in the communities in the first quarter of 2013. The 380-kV-conversion of the section from the Tauern grid node to the Kaprun substation was taken out of the 380-kV-Salzburg line project and established as an independent project in APG’s 2012 NDP.

The first expansion stage of the new Zurndorf substation was built in 2012 as a community system with Netz Bur-genland Strom GmbH. The substation includes a 380-kV- APG system and a 110-kV-system from Netz Burgenland Strom GmbH. Two transformers, each with 300 MVA out-

put, currently serve as the interchange point. The current 380-kV-line from Sarasdorf (AUT) to Györ (H) is being cut into the substation. The system facilitates the feed-in from regionally produced wind energy into the transmis-sion grid and as additional grid support for Netz Burgen-land Strom GmbH’s distribution grid.

Another highlight was the construction of the new Greuth substation as a community system with Eneco Valcanale. This enables the connection of the first Austrian 132-kV- merchant-line towards Italy, held by Eneco Valcanale, to the APG transmission grid. To guarantee a safe, reliable and high-performance grid operation, APG installed an additional 220/132-kV-phase-shifting transformer. The system is integrated in the existing 220-kV-line from Obersielach to Lienz.

The new phase-shifting transformer was built in Lienz in 2012. This transformer enables ideal operation optimisa-tion for the 220-kV-line to Italy, thereby allowing the sus-pension of the radial operation of the Malta power plant to Italy. This means that we are now able to better control load flows to the interconnecting line to Italy than this was previously the case.

Commitment to the development of the European internal market for electricityEU regulations in force since 2009 that govern cross-border electricity trading2 obligates transmission system operators to work more closely together and coordinate their activities. The core of this cooperation is the net-work codes that are supposed to be created for all work areas, thereby replacing the old national rules and becom-ing directly applicable law. ACER, the European regulatory agency, has published its Framework Guidelines on this topic, which describe the goals of the individual codes. The ENTSO-E is then tasked with the formulation of the codes. APG is involved in the most important drafting teams for these codes; for two of these codes (“Cross-border bal-ancing energy exchange” and “Secure network opera-tions”), APG has even supplied the drafting team leaders. Two codes were already sent to ACER in 2012.

1 European Network of Transmission System Operators for Electricity

2 Regulation (EC) no. 714/2009

MANAGEMENT REPORT

Report on business developments and the economic situation

Implementation of an efficient intra-day marketWith the rapid increase of production from renewable en-ergy sources, the European energy market will become in-creasingly volatile. Short-term fluctuations in load lead to the necessity of quickly buying or selling balance groups during the day to avoid paying for expensive balancing energy. It therefore makes sense for the entire electricity market that we facilitate intra-day trading for short-term balancing. This is why the European Union has mandated the establishment of cross-border intra-day markets. APG already has a shared intra-day market with the Czech Republic, Hungary, Slovenia, Switzerland, and Germany. An intra-day market with Italy was established in 2012, and there was noteworthy relief in Germany with the set-up of an implicit intra-day market on the EPEX-Spot electricity exchange. Overall, the intra-day market developed in an extremely progressive manner in 2012. On some days, up to 170 intra-day registrations came in, representing an increase of 70 per cent over 2011. The share of intra-day schedules was already at more than 40 per cent over the day ahead, with the total number climbing continually. In general, we have noticed the following trend: the relative number of trading transactions is decreasing in the day ahead, to the favour of the intra-day market with its powerfully climbing trend.

Reorganisation of the balancing energy marketAs of 2012, APG is obligated to procure the components necessary for secondary control in a market-based man-ner in accordance with new statutory guidelines. Fur-thermore, APG took over allocation for tertiary balancing at the beginning of 2012. This was previously done by the balance group coordinator Austrian Clearing and Settle-ment AG (APCS). APG has therefore acquired all neces-sary balancing components (primary, secondary and tertiary balancing, as well as unwanted exchange) on the open market since 2012. The development and introduc-tion of an appropriate electronic, Internet-based trading system on which all energy acquisition components (bal-ancing energy, energy loss) can be centrally processed led

to positive feedback from the providers. APG also further strengthened its position as a service provider for the Austrian electricity market. The user friendliness of the trading system was further improved with ongoing quality improvements that were performed in coordination with system users.

To improve liquidity on the balancing energy market and for grid loss procurement, APG runs active participant competitions among Austrian and international electricity producers and traders. Furthermore, cooperative agree-ments with international transmission system operators were initiated in 2012 to enable the leveraging of potential synergies in the procurement of balancing energy compo-nents from 2013.

Implementation of a commercial full-function companyWith the implementation of the ITO, APG has functioned as a full-function company since 2012. The existing com-mercial area was expanded to include procurement, ac-counting and finance divisions. Procurement was fully integrated into APG. Both strategic and operative pro-curement are processed independently for APG. Procure-ment provided APG with services valued at € 130.6 million in 2012. Since 1 January 2012, APG also holds operative responsibility for accounting (monthly, quarterly and an-nual statements) and operative cash management. The conversion to APG’s own SAP system in January 2012 and changing auditors were further steps required for this un-bundling.

15

ANNUAL REPORT 2012

FRAMEWORKCONDITIONS

Influence of the 3rd EU Internal Energy Market Package in AustriaVERBUND decided, in the context of the 3rd EU Internal En-ergy Market Package and the EIWOG 2010, which brought stricter measures that affect unbundling, to implement the ITO which means it continues to be the owner of APG.

Per the ECA decree dated 12 March 2012, APG was certi-fied as an ITO. The official designation as an ITO was com-pleted with the Austrian Federal Law Gazette II 134/2012 on 19 April 2012 per announcement of the Federal Minis-ter for the Economy, Family and Youth.

Along with APG’s application for certification as an ITO, its application for confirmation and approval of the compli-ance officers and compliance programme, as well as its application for approval of contracts between APG and the companies of the VERBUND Group in accordance with Section 29 (3) ElWOG 2010, were also approved.

The certification as an ITO was granted under the follow-ing conditions:

≥ APG changed its entire public image, communication activities and brand policies in all affairs by 31 Decem-ber 2012 at the latest, thereby excluding any confu-sion with the public image of the vertically integrated company, VERBUND AG, and companies controlled by VERBUND AG.

≥ Support from VERBUND Management Service GmbH in the IT separation partial project, as well as some other contractually defined services connected with the un-bundling programme, must be ended by 31 December 2012. The IT separation must be concluded by the end of 2012.

The following internal measures were enacted at APG:

≥ All employees were regularly informed about ITO-spe-cific innovations and appropriate unbundling training sessions were conducted in order to sensitize them to the new situation. For example, all commercial and financial agreements between APG and the vertically integrated electricity companies must be submitted for approval by ECA.

≥ APG has been working since 1 January 2012 on the basis of a new independent set of rules.

≥ Since the beginning of 2012, the three new departments (IT & Telecommunications, Procurement, Accounting & Finance) have been working independently on their responsibilities.

≥ The legal corporation documents were revised and came into effect in March 2012.

≥ The compliance officer began his work.

THESYSTEMUSAGETARIFFREGULATIONANDTHEREGULATORYACCOUNT

Cancellation of the System Usage Tariff Regulation (SNT-VO)In view of the VfGH decisions to annul in full the SNT-VO for 2009, 2010 and 2011, APG is expecting challenges in the future: other issues before the Court are affected by these decisions, including grid usage charges for pumped stor-age power plants, grid loss charges and system services charges. The effects of the present case were extended to all related and known procedures at the VfGH, even if the individual regulations had not yet been submitted in detail before the Court.

The Court’s decision affects APG in the majority of all ex-isting SNT-VO cases. This procedure is now resuming and will continue. APG will – as necessary – exploit the appeals process.


MANAGEMENT REPORT16

Procedures according to the System Usage Charge Regulation (SNE-VO)Energy producers are contesting SNE-VO 2012, which is based on the ElWOG 2010, claiming that the law is unclear with regard to the components system usage charges for pumped storage power plants, grid loss charges and sys-tem services charges. The majority of power plant opera-tors have announced that they will withhold payment. Due to efforts to reach a policy solution, fewer complaints have been filed to date. The VfGH has already made its decision on the grid loss charges and confirmed that the SNE-VO 2012 conforms to the law in terms of grid loss charges.

Resolution on the amended ElWOGThe National Assembly’s resolution of 5 December 2012 unanimously approved the amendment to Section 50 of the ElWOG. This adapted the balancing regulations and set aside the legal uncertainties due to the procedures against the SNT-VO 2009-2011. There were no adjustments or new regulations of tariffs or charges for producers or con-sumers. The amendment provides the legal foundation for balancing the regulatory account in this difficult situation.

Regulatory accountThe ElWOG has envisioned a regulatory account in the reg-ulatory system since 2012, which leads to the creation of revenue consistency through the following effects:

≥ Recalculating differences between officially recognised and actual revenues

≥ Smoothing out extraordinary profits or expenses

≥ Recording the cancellation of charges by the VfGH or VwGH

≥ Recording of changes to charges by the regulatory commission

≥ Recording of the cancellation of the SNE-VO by the VfGH

GRIDSECURITYANDGRIDOPERATION

APG became the sole control area leader for the whole of Austria with effect from the beginning of 2012. Since then, cross-border electricity trading has been processed cen-trally through APG, which means responsibility for the bal-ancing of production and consumption of electrical energy and is thereby connected with grid management for all of Austria. This is an essential aspect of secure transmission grid operation and provides the basis for the grid security for downstream distribution grids.

APG did not report any supply interruptions in the 220/380-kV-grid in 2012, successfully fulfilling its task despite critical grid situations. In order to attain this high level of grid security, APG has implemented several meas-ures in the area of grid expansion, coordinated grid opera-tion, employee training, and research and innovation.

February 2012 provided an example of a critical grid situ-ation. There was an avalanche in the Hagen mountains in Salzburg that broke a power pylon and caused the loss of both line systems from Tauern to Salzburg. The rapid implementation of crisis management by APG and im-mediate resort to effective emergency measures (such as changing power plant operations, postponing sched-uled line openings for revision, etc.) continued to ensure full-coverage grid security. A special challenge was the implementation of several grid expansions, maintenance and revisions that had to be conducted during ongo-ing operations. Such challenges were mastered in 2012 thanks to forward-looking operational shut-down plan-ning, various provisional line arrangements, and relatively cost-effective energy conditions at shut-down times with exclusively technical grid measures (special switching, transformer controls, etc.). An effective instrument for overcoming bottlenecks to Italy went into operation with the phase-shifter in the Lienz substation. Now special grid switching and cost-intensive interventions in power plant operations can be avoided and regional grid security can be improved.

ANNUAL REPORT 2012

17

Increasingly volatile in-feeds from renewable energy sources have major effects on grid management. An ap-propriate quality management system was built to deal with this, thereby ensuring the best possible guarantee for the required quality.

A grid optimisation programme has been underway at APG since 2011 to be able to make even more efficient use of existing free line capacities. “Thermal rating” is an essen-tial part of this programme. This is understood as over-head line operations that are adapted to environmental conditions (temperature, wind, sunlight, etc.). This means that existing line capacity can be better utilized under fa-vourable conditions (cool and windy). The first line to oper-ate with thermal rating is scheduled to go into operation in the first quarter of 2013.

Based on nominated schedules in 2012, 44,865 GWh were imported and 38,972 GWh were exported from the APG control zone, which on balance resulted in surplus imports of 5,893 GWh. In comparison, we have seen that consump-tion in APG’s control zone stands at around 60,000 GWh (including pump usage and grid losses).

APG makes important contribution to European grid securityInternational cooperation with other transmission system operators makes an essential contribution to ensuring high grid security. The TSC initiatives (TSO Security Co-operation) have been an essential factor for years, con-stituting close cooperation in grid operations between eleven transmission system operators. All necessary measures are being taken at European level to further de-velop and implement TSC in order to facilitate further ex-pansion of renewable energies despite the current difficult conditions in European grid operations. These measures are also meant to provide maximum grid capacity to the electricity market and to keep interference in the mar-ket to a minimum. To this end, a contract for multilateral redispatch (changes in power plant operation) was con-cluded that enables the call-up of power plant utilisation in all eight member countries. This provides APG with an additional important tool for dealing with critical grid situ-

ations. In addition, an expansion of overall grid security calculations to 24-hour operations is planned for 2013.

Grid developmentThe demands on transmission grids are changing with the expansion of renewable energies in Europe. The increasing interaction between pumped storage power plants in the Alps and the massive expansion of wind power is resulting in increasing bottlenecks in APG’s centrally located grid, and these have to be removed.

APG is addressing this with both the grid master plan and the NDP, both of which analyse and justify urgently neces-sary grid expansion projects on the basis of comprehensive energy development scenarios. The NDP in particular con-tains details of specific expansion projects for the trans-mission grid over the next ten years. The NDP is prepared annually by APG and goes through a public consultation phase. After an intensive audit by the regulatory authori-ties and a review of stakeholder positions, the NDP was ap-proved by decree from the authorities in December 2012.

Reinforcement of the existing transmission grid infra-structure in Carinthia will be necessary to close Austria’s 380-kV-security ring and to ensure sensible interaction between pumped storage power plants in the Carinthian area and the further expansion of renewable energies in Austria and Europe. Project implementation is scheduled for a period of time after 2022.

INvESTMENTSINGRIDDEvELOPMENT

Approximately € 141.0 million was invested in tangible and intangible assets in the Grid segment in 2012, of which € 21.2 million was allocated to converting the Danube line to 380-kV-operations. Further major investments in grid expansion went to the construction of the Zurndorf substation (€ 22.1 million) and of a phase-shifting trans-former in the Lienz substation (€ 9.9 million).

Operational investments included the conversion of the Bisamberg substation (€ 5.3 million), implementation of the third EU Internal Energy Market Package (€ 4.4 mil-


MANAGEMENT REPORT18

lion), and the general upgrade of the 110-kV-line from Re-isseck to Landskron (€ 3.9 million).

THE380-Kv-SALzBURGLINE

The Salzburg line is an inter-regional project that con-nects the St. Peter grid node in Upper Austria and the Tau-ern grid node in Salzburg. The line is considered a TEN-E (Trans European Energy Networks) project due to its ma-jor significance at European level. International load flows from north to south have increased continually due to the expansion of renewable energies in Europe, as well as numerous pump storage projects in Austria. The increas-ingly tight bottleneck on the current 220-kV-line between Salzburg and the Tauern grid node will be removed by the expansion of the 380-kV-Salzburg line. This is a major step towards completing the 380-kV-ring – the backbone of electricity supply in Austria – and APG’s current central master plan to be able to guarantee long-term grid secu-rity. The line has a total length of 174 kilometres, of which 128 kilometres are new construction. Forty-six kilome-tres have already been completed in the first phase from the St. Peter grid node to the Salzburg substation, and they are currently operating at 220-kV. Various 110-kV- systems are being combined so that a total of 256 kilo-metres of lines can be dismantled. The project is also in-tegrating into the line the four substations of Wagenham, Salzburg, Pongau and Kaprun to supply the regional dis-tribution grids and to connect new power plant capacities to the new line.

The first phase of the 380-kV-Salzburg line from the St. Peter grid node to the Salzburg substation has been fully operational in its first phase status (220-kV-operation) since March 2011, and it represents a critical milestone for the completion of the Austrian 380-kV-ring.

In accordance with the EIA law, the ECD was submitted to the responsible authorities in Upper Austria and Salz-burg on 28 September 2012 for the second phase of the 380-kV-Salzburg line, which will run from the St. Peter grid node to the Tauern grid node.

All of the documentation for the ECD was produced within two years in intensive dialogue with affected property owners and communities on the basis of the route corri-dor presented in 2010. Overall, there is one unit of docu-ments to be submitted that consists of six boxes with 33 file folders. A total of 260,000 pages were produced for submission.

The audit and evaluation of the project’s possible effects on individual protected goods were performed on the ba-sis of this technical documentation. The ECD focuses on the protected goods of people, animals, soil, water and landscape. The aim of the ECD is also to present the de-cisive principles of selection for the submitted route path for overhead lines and their possible effects on people and nature.

We anticipate that the authorities will publish the edict and the ECD documents in the communities in the first quarter of 2013. The 380-kV-conversion of the section from the Tauern grid node to the Kaprun substation was taken out of the 380-kV-Salzburg line project. The Salz-burg project was established as an independent project in APG’s 2012 NDP.

Due to the anticipated duration of this process, construc-tion will begin at the end of 2015 at the earliest. Commis-sioning is therefore scheduled for 2019.

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19

NETWORKDEvELOPMENTPLAN

The NDP, which is prepared each year, has been a statutory requirement (under Section 37 ElWOG 2010) since 2011. This document is based on the long-term strategic plan-ning enumerated in APG’s 2020 master plan.

APG uses the NDP to inform all stakeholders about impor-tant transmission infrastructures in the APG grid that will have to be expanded within the next ten years. The heart of the NDP is a list of investments that have already been de-cided upon, as well as those projects that must be imple-mented within the next three years. Furthermore, the NDP includes additional grid expansion planning for the next ten years, which is based on longer-term development forecasts for energy development. Included projects are categorised into those that are of national and European interest (e.g. 380-kV-Salzburg line), and into those that are grid connection and grid networking projects (trig-gered by national market participants), as well as specific expansion projects. Grid connection and grid networking projects are incorporated into the NDP insofar as the nec-essary contractual prerequisites (conclusion of a general agreement or construction contract) exist, thereby pro-viding sufficient planning security. The 2012 NDP, which covers the 2013-2022 planning period, was approved by ECA decree on 29 November 2012.

The total of 40 projects included in the approved NDP are:

≥ New lines amounting to about 220 kilometres.

≥ Conversion of 390 kilometres of lines to a higher volt-age level, or laying additional circuits on existing pylons that have capacity.

≥ New construction and expansions of numerous substations with an expansion scope of about 180 switching fields in the voltage ranges 380/220/110-kV.

≥ The new construction of about 40 transformers with a total output of about 15,000 MVA is planned for the coupling of grid levels and the supply of distribution grids.

≥ Major projects such as the 380-kV-Salzburg line (new construction of about 128 kilometres) entail compre-hensive line coordinations and optimisations of the line route; about 256 kilometres of old, low-capacity lines can be taken down in the process.

Total investment volume amounts to about € 1.6 billion. In addition to further pre-projects, operational invest-ments and grid connection projects that were included in the 2012 NDP, APG estimates a total investment volume of more than € 2 billion over the next decade. This will require major effort from both APG and the authorities responsi-ble for approvals.

Completing the projects in the NDP as well as the asso-ciated buildout of grid capacity in a way that fulfils the relevant requirements are the essential prerequisites for facilitating the turnaround in energy policy.

HANDLINGOFCOORDINATEDPROCUREMENTOFGRIDLOSSES

The majority of Austrian transmission and distribution grid operators procure their grid losses centrally. APG performs shared procurement of energy volumes required to cover grid losses of Austrian transmission and distri-bution grid operators, as well as their daily delivery. This replaces the previous system for calculating and recog-nising procurement costs with coordinated procurement of the required grid loss energy. Opportunities for saving are thus created for APG and participating distribution grid operators, particularly with regard to full regulatory recognition of costs related to losses. About 85 per cent of Austria’s grid losses are administered on the basis of this procedure by APG. This demonstrates the industry’s high level of trust in APG.


MANAGEMENT REPORT20

APG is therefore a wholesale buyer on the European elec-tricity market, conducting market-based purchasing activities to cover grid losses in the wholesale electric-ity markets. APG uses daily spot trades to even up daily remaining shortfalls on the electricity markets. Shared energy balancing management is also performed by APG. Participating grid operators are thus supplied by APG with the energy volumes required to cover their grid losses on a daily basis.

TARIFFREvIEW2012ANDNEWSYSTEMUSAGEFEESASOF2013

The following points were attained during the 2012 tariff audit:

≥ A preservation of capital return in the amount of 6.42 per cent before taxes up to 2017 is being striven for.

≥ Prepayment of capital costs in 2012 and 2013 for ap-proved NDP investments continued, analogous to the procedure of the previous year.

The SNE-VO for 2013 (SNE-VO 2013) was published on 21 December 2012 and contains the following charges:

The tariff basis for APG’s gross and net tariffs climbed by 1.9 per cent in comparison with the SNE-VO 2012 to € 146.4 million. The entire tariff basis, including level 3, loss tariffs and system services, increased by 11.7 per cent to € 287.3 million.

Gross components are being raised by 2.5 per cent, and there will be a tariff reduction by 10.4 per cent for the net components due to high net amounts (low water supply). The power tariff for pumped storage remains unchanged.

Due to the significantly increased estimated procure-ment costs for secondary control, which was acquired on a market-based tender process for the first time starting in 2012, tariffs for producers will rise by 51.7 per cent. The differences between the actual procurement costs are

being rolled up and deducted from the tariffs for 2015.

INTERNATIONAL

Implementation of regional marketsIn accordance with EU regulation 714/2009, line capaci-ties in eight defined regions must be administered with regionally coordinated auctions that take into account physical load flows. Austria is a member of two regions, the CEE and CSE, and was officially selected by the CEW ministers as a member of the CWE market region in 2011. APG is involved as an observer in Southeast Europe. The aim of the EU regulation (third EU Internal Energy Market Package) is to create a uniform electricity market with a European price-coupling mechanism by 2014, gradu-ally integrating the current regional markets into a single electricity market. APG is located at the interface between western (CWE), eastern (CEE) and southern (CSE) Europe, therefore providing an important bridging function in the merging of these markets. In the CEE1 region, a central auction house (CAO) was established to coordinate the al-location of congested cross-border capacities. APG holds 12.5 per cent of the shares in CAO. This auction house cen-trally administers all of the borders in the CEE area and brought a load flow-based auction system to market in mid-2011, which may be a significant milestone for the introduction of a load flow-based market-coupling system in Europe. APG has occupied the position of Chairman of the Supervisory Board in CAO for the last three years.

Regarding the CSE2 region, the auction house for the CWE region, the Capacity Allocation Service Company (CASC), also took over cross-border capacity auctions for the CSE area in 2011, including the Austrian-Swiss border. This auction house, in which APG holds 8.33 per cent of the shares, is therefore the first inter-regional auction house for transmission capacities in Europe. APG has also occu-pied the chair of the CASC Supervisory Board since 2012. Because both auction houses perform practically the same activity, just for different borders, the merger would create essential synergy effects for transmission system operators as owners and for market participants.

ANNUAL REPORT 2012

1 Germany, Poland, Czech Republic, Slovakia, Austria, Hungary and Slovenia

2 Belgium, Netherlands, Luxembourg, France, Germany, Switzerland, Austria, Slovenia and Greece

21

Both houses decided in 2012 to move forward with this merger.

Austria’s integration into the CWE region also brought APG into the working groups for preparing a European system for load-flow-based market coupling, and APG can now bring its experience from development in the CEE area to the table. At the same time, an impact assessment was carried out with Switzerland, including discussions to en-able Switzerland – assuming approval by the European Union – to join the CWE area by 2014.

The increasing integration of rapidly fluctuating wind en-ergy sources into the electricity market will increase the significance of the intra-day market. APG already has an automated intra-day market with the Czech Republic, Hungary and Slovenia, and a manual intra-day market with Switzerland and Germany. An intra-day market with Italy also began in 2012, and an implicit intraday market was established with Germany in which trading transactions are processed directly via the exchanges.

European Policy Coordination (EPC)The third EU Internal Energy Market Package has created a new regulatory mechanism. ENTSO-E, the association of transmission system operators, is working together with the regulatory agency ACER to develop essential network codes by 2014 that will then be revised in comitology to produce a directly applicable law in Europe. APG is repre-sented in the most important drafting teams for the net-work codes in ENTSO-E and has provided the convenors for the teams drafting the code for electricity balancing and the code for operational security. APG, with other transmission system operators, was able to reach agree-ment in the negotiations on the drafting of a European in-frastructure package in that the goal of accelerating the approval procedure will be pursued at European level. APG also achieved preliminary status for six key line projects as PCI.

Inter TSO Compensation (ITC)In accordance with the European Commission ITC guide-lines for equalizing international electricity transport costs, a multilateral agreement was negotiated and signed between the European TSOs within ENTSO-E. In accord-ance with the guidelines, the total amount for this pan-European cost equalization is capped at € 100 million. The regulatory agency ACER began monitoring the volume of this common fund in 2012. European studies confirm that the fund is currently underfunded. In preparation for this, APG also conducted a study with Swissgrid that now forms the basis for APG’s position in the consultative process with ACER.


MANAGEMENT REPORT22

FINANCIALPERFORMANCEINDICATORS

APG’s revenues climbed year-on-year by € 70.1 million to € 536.4 million. The main reason for the increase is the handling of the balancing energy market, which has been performed by APG since the beginning of the year. Provisions due to the annulment of the SNT-VO and the challenges of the SNE-VO have negative effects on grid revenues. The deterioration in the results due to these provisions was partially compensated for by the formation of asset items. In addition, the regulatory account is being included for the first time in 2012 in accordance with Sec-tion 50 ElWOG among the figures recognised by regula-tors. Turnover variances are thereby assigned to the reg-ulatory account and then applied or withdrawn from the tariff customers in subsequent periods. An asset item was formed for the first time upon an ECA decree related to the tariff audit in 2013, and this item will cover the shortfall in the energy loss and secondary control.

Due to the inclusion of balancing energy market process-ing starting in 2012, electricity purchase expenses in-creased by a total of € 68.9 million to € 326.2 million.

in € ’000s 2012 2011

Sales revenue 536,430.1 466,353.9

Result before interest

and taxes (EBIT) 43,017.7 23,366.2

Profit on ordinary

Activities (EGT) 19,683.0 2,257.1

Net income for the year 15,570.5 1,004.7

Net profit for the year 0.0 0.0

Average capital employed 1,068,600.4 817,138.6

Return on equity (ROE) 6.6% 0.8%

Return on investment (ROI) 3.5% 2.1%

ROCE 3.0% 2.1%

Return on sales (ROS) 8.0% 5.0%

Profit and loss

Personnel expenses rose year-on-year by € 6.9 million to € 56.8 million. This increase is due overwhelmingly to in-terest rate adjustments and the cancellation of the cor-ridor provision when calculating social capital. Further-more, the implementation of the ITO caused associated growth in personnel due to new hires and the termination of personal secondments. The restructuring of social capital interest components into the financial results (no effect on the results) only exercised a partial compensa-tory effect.

Other operating expenses sank in 2012 by € 35.0 million from € 97.7 million to € 62.8 million. This reduction was due primarily to the discontinuation of the tariff provi-sion for auction revenues for the years 2007-2011, which was first created in 2011, and upon consultation with the chartered accountant was represented in other operating expenses.

Earnings before interest and taxes (EBIT) stood at € 43.0 million, rising year-on-year by € 19.7 million.

Profit on ordinary activities was € 19.7 million, net income for the year was € 15.6 million, which was € 14.6 million more than the previous year.

ANNUAL REPORT 2012

23

An acquisition in the amount of € 71.6 million up to € 1,155.2 million is posted in fixed assets, because invest-ments in tangible and intangible assets exceeded depre-ciation significantly by € 141.0 million.

Receivables climbed primarily due to the creation of asset items to cover shortfalls related to grid losses and sec-ondary control, as well as the opposite position for SNE-VO provisions, from € 143.0 million to € 257.5 million.

Liabilities with affiliated companies reduced by € 3.9 mil-lion from € 566.8 million to € 562.9 million. In contrast, li-abilities from deliveries and services rose by € 0.9 million to € 9.2 million, and overall liabilities fell by € 3.6 million to € 582.4 million.

Compounding of the asset item created in accordance

with Section 50 (5) of the EIWOG and the reclassification of interest rates for personnel provisions from personnel expenses had a negative effect on the financial results, which meant that the financial result fell year-on-year by € 3.4 million to € -18.6 million.

The rise in the net debt-equity ratio from 263.5 per cent to 301.4 per cent is due primarily to increased provisions.

Cash flows for the financial year are presented in a sepa-rate list.

The fictitious debt repayment period increased from 4.9 to 8.5 years, due to legal regulations concerning how this figure is calculated (Section 24 of the Company Reorgan-isation Act). This is mainly due to the fact that in 2011, when determining the surplus of ordinary activities provi-sions were set aside for the first time to compensate for the discontinuation of the SNT-VO, thereby increasing the surplus. The formation of other assets associated with this matter remains unconsidered though. If the situation were viewed from a business perspective (taking the other assets that were set aside into consideration), the modi-fied fictitious debt repayment period in 2011 would rise to 8.4 years.


MANAGEMENT REPORT

Assets and liabilities

in € ’000s 2012 2011

Fixed assets 1,155,153.9 1,083,549.5

Current assets 262,989.8 146,213.5

Working capital –210,036.9 –83,875.5

Net debt¹ 942,608.1 783,279.7

Equity 274,284.7 258,075.5

Current liabilities 285,541.3 155,269.1

Current assets 76,023.6 71,393.5

Capital-to-assets ratio 21.8 % 23.9 %

1 Recalculation by adjusting calculation logic

Financial position

1 Recalculation by adjusting calculation logic

in € ’000s 2012 2011

Net operating cash flow 128,567.1 64,694.9

Net cash flow from investment activities -138,314.0 –101,708.2

Net cash flow from financial activities 11,495.2 39,621.6

Financial result -18,642.4 –15,262.2

Gearing 301.4% 263.5%

Fictitious debt repayment period 8.5 years 4.9 years

1

24

Net income for the year 15,570.5 1,004.7

Depreciation and amortisation of intangible assets and of property, plant and equipment 66,041.1 61,147.4

Write-downs on long-term investments 0.0 0.7

Result from disposal of assets –254.8 –355.7

Change in long-term provisions 44,067.9 116,971.3

Income from the reversal of building-cost contributions and government grants –3,966.6 –2,882.3

Other income and expenses without impact on cash flow -1,430.8 1,377.8

Change in inventories –63.8 –77.7

Change in trade receivables and other receivables ¹ –118,884.9 –110,777.1

Change in trade payables and other liabilities ² 12,580.2 1,522.3

Change in short-term provisions 114,908.2 –3,236.5

Net operating cash flow (1) 128,567.1 64,694.9

Investments in intangible assets and property, plant and equipment –142,001.7 –121,753.9

Disposals of intangible assets and property, plant and equipment 2,855.2 20,131.4

Investments in long-term financial assets -14.0 –211.7

Disposals of financial assets 846.4 126.0

Net cash flow from investment activities (2) -138,314.0 –101,708.2

Profit transferred –471.8 0.0

Change in capital reserves 0.0 0.0

Building-cost contributions and government grants received 22,560.0 15,486.8

Disposals of building-cost contributions and government grants -6.3 0.0

Change to long-term Group financing –20,902.8 –20,902.8

Change in short-term Group clearing balances 10,316.2 45,037.6

Net cash flow from financial activities (3) 11,495.2 39,621.6

Change in liquid funds 1,748.3 2,608.3

Liquid funds as per 01 Jan. 2,614.0 5.7

Liquid funds as per 31 Dec. 4,362.3 2,614.0

in € ’000s Note 2012 2011

CASHFLOWSTATEMENT

1 including prepaid expenses and deferred charges2 including deferred income and assets

ANNUAL REPORT 2012

25

(1) Net cash flow from operational activitiesNet cash flow from operational activities is calculated using an indirect method and rose year-on-year by € 63.9 million to € 128.6 million.

A major increase affected both net profit and provisions in this financial year.

The change in long-term provisions must be attributed to the increase in provisions for regulatory tariff reductions in the amount of € 57.1 million and the decrease in long-term provisions for disputed system service charges by € 16.3 million as well as the increase in provisions for pensions by € 3.5 million.

The increase in receivables from deliveries and services, as well as other receivables, can be attributed above all to the increase in regulatory assets by € 112.2 million.

The change in short-term provisions must be primarily attributed to the increase in provisions for disputed sys-tem service charges in the amount of € 102.5 million and the increase in provisions for open invoices from grid loss procurement by € 3.6 million as well as the increase in provisions for legal and consulting costs by € 1.1 million.

(2) Net cash flow from investment activitiesThe outflow of funds from investment activities for tan-gible and intangible assets amounted to € 142.0 million. The major investments pertained to the conversion of the Danube rail to 380-kV-operations, the construction of the Zurndorf substation, the procurement of a phase shifter for the Lienz substation, and the investment in transformers for the Südburgenland and Zell/Ziller sub-stations. Taking into account the disposal of tangible and intangible assets, as well as changes in financial assets, a resource need of € 138.4 million resulted in the invest-ment area.

(3) Net cash flow from financial activities€ 22.6 million flowed into retained construction cost contributions and investment subsidies that were as-

sociated primarily with the construction of the Zurndorf and Greuth substations.

Profit redirected to the parent company due to contrac-tual obligations amounted to € 0.5 million.

Additional resource needs due to investment activity were covered with short-term Group financing.

NON-FINANCIALPERFORMANCEINDICATORS

Integrated management system (IMS)All of APG’s locations and lines are certified under the EMAS regulation (European environmental manage-ment system), ISO 14001 (international environmental management system), ISO 9001 (international quality management system), OHSAS 18001 (safety and health management system) and ISO 27001 (information secu-rity management). The advantages of using an IMS, and having it assessed externally each year, are the continued improvements in all areas, increases in performance and efficiency, higher legal security, checking for the applica-tion of regulations, and the optimisation that accompa-nies external auditors.

The synergies in the IMS were optimally utilised in 2012 as well through the shared audit of all of the norms and standards used at APG. A new team of three auditors from Lloyd’s Register Quality Assurance (LRQA) and the audi-tors from CIS – Certification & Information Security Serv-ices GmbH assessed the entire system in a week-long au-dit of all norm requirements.

The audit determined that a stable, IMS is being main-tained. Tasks and responsibilities are constantly control-led, and processes and procedures are well documented. Constant improvement, for example, was proven by the implementation of measures from the IMS programme, which is described in the sustainability report. The certifi-cates were therefore extended in all areas.


MANAGEMENT REPORT26

Sustainability at APGAPG is responsible for the safe electricity supply to all of Austria, both today and in future. APG approaches this challenge proactively and conscientiously, while pay-ing attention to a sustainable orientation. In its mission statement, APG expresses its commitment to the princi-ples of sustainable trade. The classic three pillars of sus-tainability (economy, ecology and social factors) form the framework of APG’s initiatives. The foundation is a corpo-rate policy that respects economic requirements as well as ecological limits and strives for social equilibrium.

APG’s data and activities were previously contained in the VERBUND sustainability report, and all environment-relat-ed data was incorporated into APG’s environmental state-ment. APG produced its own comprehensive sustainability report for the financial year 2011, which contained the environmental statement audited under the EMAS Regu-lation. This sustainability report offers the public, in addi-tion to general corporate statements and current project reports, a comprehensive collection of data and figures for the areas of business, the environment, and social fac-tors for the 2011 reporting year. The report was verified by LRQA and rated at A+ level. The A+ rating is the best level according to the Global Reporting Initiative (GRI), which provides global standards for sustainability reports. The report is examined by CSR auditors. APG plans to publish a continuation of the sustainability data for 2012 in 2013.

EmployeesOur employees make an essential contribution to the fur-ther development of our company with their accomplish-ments and dedication.

The broad ranges of tasks can only be managed with forward-thinking personnel planning and cost-conscious considerations.

Standardised salary systems for all managers, all employ-ees and all manual workers enable a transparent system of remuneration that is oriented towards performance and success. The executive contracts, which were refor-

mulated in 2012, ensure clarity and transparency in man-agement.

Various advertising campaigns that target specific groups were conducted to intensify APG’s market position as an employer brand.

In addition to existing cooperation with the Technical Uni-versity of Graz, we also made an important step in 2012 towards working together with the Technical University of Vienna. This should take into account increased demand for highly skilled technical personnel. The focus was coop-eration with the managing board of the Institute for Elec-trical Engineering and the Career Center.

Various targeted measures led to a significant increase in the share of women among newly hired staff. Every fourth new employee in the 2012 reporting year was female.

A structured introduction phase for new employees in our company forms the foundation of above-average employ-ee retention.

In 2012, APG further strengthened its activities in the “APG Academy”, especially in the areas of technology and grid operation. This programme seeks to train workers in accordance with requirement profiles by means of specific training sessions and workshops. This programme also conveys knowledge and experience from TSO operations.

The employee group of skilled workers and master crafts-men is very important for ensuring grid and system opera-tions. Our company places great value on the education of our own apprentices, conveying the required competen-cies and abilities at the right time for future challenges. In a four-year training course in the dual professions of elec-trical engineering and metal technology, dedicated master craftsmen educate our apprentices, giving them the tools for a seamless transfer of responsibilities.

ANNUAL REPORT 2012

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REPORTONRESEARCHANDINNOvATION

APG worked in cooperation with numerous partners from business and science on 26 research projects in 2012. The research focuses on grid expansion and energy-sector scenarios, grid monitoring and system management, as well as the weather, climate and environment.

Research expenditures at APG in 2012 were approximate-ly € 0.9 million.

Several projects in grid expansion and energy-sector sce-nario research analysed the effects of new trends (espe-cially the integration of renewable energies) on the grid and the market. For example, in the currently ongoing process of creating the APG master plan energy-sector scenarios up to 2030/50 were developed together with the TU Graz and the TU Vienna and their effects on the APG grid were analysed.

Furthermore, APG is involved in the FP7 project e-Highway 2050, a research project funded by the EU for a total dura-tion of three years, in which European scenarios are being developed up to 2050. The focus is on the development of a European super-grid by 2050 that will be built on the grid topology already planned for 2020 (according to TYNDP 2012). The project is being developed in close collabora-tion between European TSOs, ENTSO-E, research institu-tions and industry.

For grid monitoring and system management, research on the thermal rating, iced line monitoring and wide area measurement projects continued successfully. For ex-ample, the last preparations took place in 2012 for the first use of thermal rating in the first quarter of 2013 on a 220-kV-line.

The scientific exchange with other infrastructure com-panies in Austria is particularly important to APG when it comes to weather and climate. The storm infrastructure platform initiated by APG was held for the fourth time at the Austrian Broadcasting Corporation (ORF) in May 2012,

for example. This event involved an important exchange of experiences with storm events among the participants (APG, ZAMG, ÖBB, ORF, ALDIS (Austrian Lightning Detec-tion and Information System), Austro Control, Weath-erpark GesmbH, the Austrian Federal Fire Brigade As-sociation, ASFINAG, ALLIANZ Insurance, EconGas). The intensive scholarly examination of a storm phenomenon (broken pylons caused by storm Emma in 2008) was also among the topics at the Conseil International des Grands R.seaux Electriques (CIGRE) session in 2012. The “wind field analysis” project results were also presented (effects from downbursts on overhead lines; meteorological thun-derstorm study – climatological, meteorological and CFD analysis). APG, Weatherpark GesmbH and the Central In-stitute for Meteorology and Geodynamics worked together on the contribution to the CIGRE session.

APG is open to new ideas and supports the innovation process through outstanding knowledge management and by tapping all of the company’s resources. The APG Academy has hosted seven Grid Circles, two research workshops, and several business talks at which employees and guest speakers presented and discussed their work, their projects and their experiences with current topics such as sustainability, energy data management and grid development with APG employees.

The results of the ENTSO-E Academy workshop on the topic of “Renewable Energy Integration” (held by REE on 11 September 2012 in Madrid) were also presented. APG has been an active member of the ENTSO-E Academy since 2011, which is an ENTSO-E initiative that aims to support its members (TSOs) in their activities associated with training and further education, especially of opera-tional grid personnel.

Cooperation continued with the research institute at the Vienna University of Economics and Business on the sub-ject of regulation.


MANAGEMENT REPORT28

REPORTONMAjORRISKSANDUNCERTAINTIES

Risks and opportunities are part of any business venture. The early detection and professional evaluation of risk are therefore integral components of planning, management and all decision-making processes. APG understands risk as the possibility of a negative deviation from planned company goals. In the evaluation and management of risk, we also look for opportunities.

APG’s opportunity and risk management views itself as part of the framework of the Committee of Sponsoring Or-ganizations of the Treadway Commission – Enterprise Risk Management (COSO-ERM). The COSO-ERM framework consists of the components internal environment, goal-setting, risk management process, monitoring activities (internal control system), information, communication and surveillance.

APG’s risk management process is comprised of the fol-lowing individual steps: identification, analysis, evalua-tion, management (implementation of measures), and reporting. Updates, re-evaluations and report generation take place on a quarterly basis.

APG focuses particularly on major risks such as outages in the transmission grid and the communication and con-trol systems, delays in the 380-kV-grid expansion, and environmental catastrophes that result in destruction of parts of the system. Financial and operational risks, as well as compliance and legal risks, regulatory risks and risks in the area of energy procurement and the market, are subject to monitoring and evaluation.

The following measures were implemented to minimise these risks:

Systemandoperationalrisks≥ Pressing ahead with the 380-kV-grid expansion≥ Optimisation of the existing grid≥ Operation of three phase-shifting transformers for

targeted grid load control and as a replacement for transformers

≥ Operation of the “Power Grid Control” electricity grid control centre in Vienna-Favoriten

≥ Constant improvements in the course of maintenance processes

≥ Design of a disaster fallback plan and ongoing train-ing for employees in the area of breakdowns and crisis situations

≥ Increase in fire protection and facility protection

Projectrisks≥ Creation of an NDP for a period of ten years≥ Implementation of project controlling≥ Operation of anti-claim management

Financialrisks≥ Creation of a long-term finance plan according to the

NDP≥ Liquidity and cash management planning≥ Monitoring of changes in interest rates≥ Preparation of a financing strategy (share of variable or

fixed interest)

Marketrisks≥ Introduction of strict risk management in energy

procurement≥ Assessment of creditworthiness, awarding of credit

limits, and supervision of compliance≥ Development of suppliers and increase in provider

diversity

ANNUAL REPORT 2012

29

Regulatoryrisks≥ Cost controlling to ensure cost acceptance≥ Hiring of independent experts for audit certificates≥ Cooperation with national and international interest

groups, associations and authorities

Compliancerisks≥ Monitoring of legal developments≥ Implementation of a code of conduct, clear rules and

process descriptions≥ Conduction of employee training, especially for anti-

corruption and ITO≥ Hiring of a compliance officer

Legalrisks≥ Monitoring of legal developments≥ Cooperation with national and international interest

groups, associations and authorities≥ Legal consulting from external experts≥ Database of contracts and decisions with an automat-

ed reporting system

Personnelrisks≥ Ensuring an attractive working environment≥ Programmes that promote health and safety≥ Training of managers and employees≥ Ensuring succession planning and employee

development

Information security and cybersecurityOne of APG’s major success factors is in all areas of infor-mation technology, including informatics, line technology and telecommunications.

APG was the first of five Austrian energy companies certi-fied under the international ISO/IEC 27001 security stand-ard to recognise the constantly increasing requirements in the area of IT security and data protection. APG’s ISO 27001 certification was successfully approved in 2012. ISO 27001, the international standard for information se-curity, covers security organisation in addition to issues related to IT security technology. Security organisation

includes such topics as employee awareness, physical se-curity and building protection. ISO 27001 therefore offers a framework for developing a standardised management system to protect both analogue and digital information.

In order to sensitise our employees appropriately to the usage of such technologies and to dealing with corporate information flows, we hold regular training sessions and provide modern media to support and perpetuate aware-ness about information security.

APG also has a dedicated information security organisa-tion that is outlined in the “Information Security Policy”. This document forms the foundation for raising uniform awareness about information security and sets a stand-ard for implementing measures that are reasonable both in terms of risk and economics.

The Federal Chancellery began an initiative to begin work-ing out a national cyberstrategy in 2012. APG is actively involved in this process. In this context, APG participated in a cybersecurity planning exercise in June 2012 that was organised by the Curatorium for Security in Austria to-gether with the Federal Chancellery, the Ministry of the In-terior, the Ministry of Defence, and the Ministry of Finance. This resulted in important knowledge, and APG delivered a variety of input. As an operator of critical infrastructure, APG has a special interest in a comprehensive security strategy in this domain.

OUTLOOK

APG views the goal of expanding renewable energies and thereby also the transmission grid as an overall system, the implementation of which will be further developed in 2013. The number of installed wind and photovoltaic sys-tems continues to rise, thereby increasing the proportion of volatile input sources. Current plans foresee an expan-sion in European electricity production from regenera-tive sources from the current level of 80 GW to 450 GW in 2020. Austrian production will be expanded in wind power (from currently 1 GW to 4 GW in 2020) and photovoltaics

30


MANAGEMENT REPORT

(from currently 0.3 GW to 2 GW in 2020).

The strong increase in power input from renewable re-sources presents APG with enormous technical challenges. Further optimisation and an increased expansion in the grid infrastructure will be necessary in future to be able to keep up with the speed of growth in renewable energies. This is because only the synchronisation of grid expansion and the integration of renewable energies will create the highest level of grid security in future.

Long approval procedures, different regulatory threshold values (i.e. noise), a lack of route support, and gaps in leg-islation governing upgrading electricity lines can delay line optimisation.

APG itself will undertake everything to implement the projects laid down in the 2012 NDP in order to meet the economic mission of securing an optimised energy infra-structure.

To remain able to guarantee grid security, European co-operation must become stronger. In this context, the TSC initiative is setting up a new organisational unit that deals especially with grid security topics (such as ongoing cal-culations to avoid line overloads, bottleneck management, etc.). APG has also been an active partner in this security cooperation since 2013.

An important milestone for 2013 is the rapid introduction of legally stable conditions for cost sharing between produc-ers and consumers.

REPORTONBRANCHOPERATIONS

There were no subsidiaries in the financial year.

EvENTSSUBSEqUENTTOTHEBALANCESHEETDATE

There have not been any events since the balance sheet date that require separate notice within the Annual Report.

Vienna, 31 January 2013

The Managing Board

Mag. Thomas Karall m.p.DI Mag. (FH) Gerhard Christiner m.p.

31

ANNUAL REPORT 2012


32

ANNUAL REPORT 2012

33

FINANCIAL STATEMENTSAUSTRIAN POWER GRID AG

Notes 2012 in € 2011 in € ’000s

BALANCESHEETAT31DEC.2012

Assets

A. Non-currentassets

I. Intangible assets (1) 7,816,859 6,214.8

II. Property, plant and equipment (2) 1,135,375,162 1,064,676.4

III. Long-term investment (3) 11,961,833 12,658.3

1,155,153,854 1,083,549.5

B. Currentassets

I. Inventories (4)

1. Raw materials and supplies 651,821 588.1

651,821 588.1

II. Receivables and other assets (5)

1. Trade receivables 57,156,835 44,869.0

2. Receivables from affiliated companies 1,523,588 0.0

3. Receivables from companies in which

participating interests are held 11,154,094 1,835.6

4. Other receivables and assets 187,621,955 96,306.8

257,456,472 143,011.4

III. Cash and credit balances at bank 4,881,473 2,614.0

4,881,473 2,614.0

C. Deferredincomeandassets (6)

1. Deferred taxes 17,553,459 13,206.7

2. Miscellaneous 217,483 184.4

17,770,942 13,391.1

1,435,914,562 1,243,154.0

34

ANNUAL REPORT 2012

Notes 2012 in € 2011 in € ’000s

Liabilities

A. Shareholders’equity

I. Share capital (7) 70,000,000 70,000.00

II. Capital reserves (8) 15,383,543 15,256.3

III. Profit reserves (9) 188,901,169 172,819.1

IV. Net profit for the year (10) 0 0.0

274,284,712 258,075.5

B. Untaxedreserves (11)

1. Valuation reserve due to special depreciations 50,977,839 51,961.3

2. Other untaxed reserves 356,149 356.1

51,333,988 52,317.4

C. Provisions (12)

1. Provisions for severance payments 22,635,999 21,157.4

2. Provisions for pensions 63,393,310 59,846.0

3. Other provisions 365,681,173 212,270.2

451,710,482 293,273.6

D. Liabilities (13)

1. Liabilities to banks 519,210 0.0

2. Payments received on account of orders 880,000 275.0

3. Trade accounts 9,197,067 8,273.4

.4. Payables to affiliated companies 562,944,866 566,808.2

5. Payables to other companies in which

participating interests are held 0 8.8

6. Other liabilities 8,833,422 10,607.8

of which taxes € 7,551,608.89 (previous year € 8,806,000)

including social security and other obligations € 756,210.62

(previous year € 741,300)

582,374,565 585,973.2

E. Deferredincomeandassets (14)

1. Building-cost contributions 61,534,813 37,533.1

2. Miscellaneous 14,676,002 15,981.2

76,210,815 53,514.3

1,435,914,562 1,243,154.0

35

Notes 2012 in € 2011 in € ’000s

FINANCIAL STATEMENTS


INCOMESTATEMENTFORTHE2012FISCALYEAR

1. Sales revenue (15) 536,430,136 466,353.9

2. Other own work capitalised 8,408,725 7,575.8

3. Other operating income (16)

a. Earnings from the disposal of and addition to

fixed assets with the exception of financial assets 290,768 364.8

b. Income from the liquidation of reserves -85,037 4,481.1

c. Miscellaneous 5,042,938 4,907.5

5,248,669 9,753.4

4. Operatingperformance(subtotaloflines1to3) 550,087,530 483,683.1

5. Expenditures for electricity and other

purchased services and production services -326,116,384 -257,312.3

6. Personnel expenses (17)

a. Wages -303,848 -247.1

b. Salaries -36,557,228 -33,888.2

c. Expenditures for severance payments -2,670,163 -1,678.4

d. Expenditures for old-age pension -8,592,155 -5,865.5

e. Expenses for social security contributions as required by law as well as

income-based charges and compulsory contributions -8,154,793 -7,674.3

f. Other social expenditures -567,859 -640.6

-56,846,046 -49,994.1

7. Depreciation and amortisation (18) -66,041,075 -61,147.4

8. Other operating expenses (19)

a. Taxes not included under line 19 -463,448 -206.5

b. Miscellaneous -62,295,196 -97,503.4

-62,758,644 -97,709.9

9. Operatingresult(subtotaloflines4to8) 38,325,381 17,519.4

36

Notes 2012 in € 2011 in € ’000s

ANNUAL REPORT 2012

10. Income from investments, of which

from affiliated companies € 548,679.32 (previous year € 37,400) 846,794 275.4

11. Income from other long-term

Securities and loans 20,186 30.7

12. Other interest and similar income, of which

from affiliated companies € 24,951.83 (previous year € 81,400) 3,816,520 88.9

13. Earnings from disposal of financial assets 14,593 0.0

14. Expenses from long-term investments

and securities of current assets, of which -5,796 -1.6

a. Depreciation and amortisation € 0 (previous year: € 800)

15. Interest and similar expenses, of which from

affiliated companies € 13,569,483 (previous year € 15,014,400 ) -23,334,678 -15,655.6

16. Financialresult(subtotalfromlines10to14) (20) -18,642,381 -15,262.2

17. Resultfromordinaryactivities 19,683,000 2,257.2

18. Income tax (21) -4,112,526 -1,252.5

19. Netincomefortheyear 15,570,474 1,004.7

20. Reversal of untaxed reserves 983,389 2,643.1

21. Allocation to capital reserves -16,082,023 -3,647.8

22. Profit transferred under Profit Transfer Agreement -471,839 0.0

25. Netprofitfortheyear 0 0.0

37

CHANGESTONON-CURRENTASSETS

I. Intangibleassets

1. Concessions, industrial property rights,

electricity purchase rights, user fees and similar

rights and benefits as well as licenses derived therefrom 25,885.5 4,841.6 60.9 39.8 30,706.0 22,889.1 7,816.9 6,214.8 3,232.4

25,885.5 4,841.6 60.9 39.8 30,706.0 22,889.1 7,816.9 6,214.8 3,232.4

II. Property,plantandequipment

1. Land, similar rights and buildings,

including buildings on leasehold land

A. with residential buildings 265.0 0.0 0.0 0.0 265.0 265.0 0.0 0.0 0.0

B. with plant facilities and other structures 217,677.2 5,679.7 1,299.2 9,380.2 231,437.9 126,370.3 105,067.5 96,176.2 4,920.9

C. undeveloped land 545.7 0.2 0.0 0.0 545.8 0.0 545.8 545.7 0.0

2. Machinery 3,756.8 433.2 0.2 82.9 4,272.7 1,118.1 3,154.7 2,820.4 181.2

3. Electrical installations 950,647.3 44,370.2 2,371.2 27,626.3 1,020,272.7 758,011.3 262,261.4 221,612.0 30,227.9

4. Lines 1,165,879.9 13,025.6 135.4 16,659.1 1,195,429.2 550,780.6 644,648.7 639,798.3 24,706.2

5. Other plant and office equipment 25,481.9 4,766.8 793.7 1,373.4 30,828.4 18,729.5 12,098.9 8,797.8 2,772.5

6. Payments on account and assets under construction 94,926.0 67,833.9 0.0 -55,161.7 107,598.1 0.0 107,598.1 94,926.0 0.0

2,459,179.8 136,109.6 4,599.7 -39.8 2,590,649.9 1,455,274.8 1,135,375.2 1,064,676.4 62,808.7

Totalproperty,plantandequipmentandintangibleassets 2,485,065.3 140,951.2 4,660.6 0.0 2,621,355.9 1,478,163.9 1,143,192.0 1,070,891.2 66,041.1

III.Financialassets

1. Shares in affiliated companies 37.9 127.2 37.9 0.0 127.2 0.0 127.2 37.9 0.0

2. Participating interests 1,857.2 0.0 0.0 0.0 1,857.2 0.0 1,857.2 1,857.2 0.0

3. Loans to companies in which

participating interests are held 30.0 0.0 15.0 0.0 15.0 0.0 15.0 30.0 0.0

4. Long-term securities 16,582.3 0.0 818.8 0.0 15,763.5 5,855.2 9,908.3 10,664.7 0.0

5. Other loans 68.4 14.0 28.3 0.0 54.1 0.0 54.1 68.4 0.0

18,575.9 141.2 900.0 0.0 17,817.1 5,855.2 11,961.8 12,658.3 0.0

Non-currentassets 2,503,641.2 141,092.4 5,560.6 0.0 2,639,173.0 1,484,019.1 1,155,153.9 1,083,549.5 66,041.1


Accumulated Residual Residual Scheduled depreciation carrying amount carrying amount depreciation andin € ’000s At 01 Jan. 2012 Additions Disposals Transfers as of 31 Dec. 2012 and amortisation 31 Dec. 2012 31 Dec. 2011 amortisation 2012


38

The value of the properties on 31 Dec. 2012 was € 26,379.6 thousand

31. Dec. 2011 was € 26,012.0 thousand

I. Intangibleassets

1. Concessions, industrial property rights,

electricity purchase rights, user fees and similar

rights and benefits as well as licenses derived therefrom 25,885.5 4,841.6 60.9 39.8 30,706.0 22,889.1 7,816.9 6,214.8 3,232.4

25,885.5 4,841.6 60.9 39.8 30,706.0 22,889.1 7,816.9 6,214.8 3,232.4

II. Property,plantandequipment

1. Land, similar rights and buildings,

including buildings on leasehold land

A. with residential buildings 265.0 0.0 0.0 0.0 265.0 265.0 0.0 0.0 0.0

B. with plant facilities and other structures 217,677.2 5,679.7 1,299.2 9,380.2 231,437.9 126,370.3 105,067.5 96,176.2 4,920.9

C. undeveloped land 545.7 0.2 0.0 0.0 545.8 0.0 545.8 545.7 0.0

2. Machinery 3,756.8 433.2 0.2 82.9 4,272.7 1,118.1 3,154.7 2,820.4 181.2

3. Electrical installations 950,647.3 44,370.2 2,371.2 27,626.3 1,020,272.7 758,011.3 262,261.4 221,612.0 30,227.9

4. Lines 1,165,879.9 13,025.6 135.4 16,659.1 1,195,429.2 550,780.6 644,648.7 639,798.3 24,706.2

5. Other plant and office equipment 25,481.9 4,766.8 793.7 1,373.4 30,828.4 18,729.5 12,098.9 8,797.8 2,772.5

6. Payments on account and assets under construction 94,926.0 67,833.9 0.0 -55,161.7 107,598.1 0.0 107,598.1 94,926.0 0.0

2,459,179.8 136,109.6 4,599.7 -39.8 2,590,649.9 1,455,274.8 1,135,375.2 1,064,676.4 62,808.7

Totalproperty,plantandequipmentandintangibleassets 2,485,065.3 140,951.2 4,660.6 0.0 2,621,355.9 1,478,163.9 1,143,192.0 1,070,891.2 66,041.1

III.Financialassets

1. Shares in affiliated companies 37.9 127.2 37.9 0.0 127.2 0.0 127.2 37.9 0.0

2. Participating interests 1,857.2 0.0 0.0 0.0 1,857.2 0.0 1,857.2 1,857.2 0.0


participating interests are held 30.0 0.0 15.0 0.0 15.0 0.0 15.0 30.0 0.0

4. Long-term securities 16,582.3 0.0 818.8 0.0 15,763.5 5,855.2 9,908.3 10,664.7 0.0

5. Other loans 68.4 14.0 28.3 0.0 54.1 0.0 54.1 68.4 0.0

18,575.9 141.2 900.0 0.0 17,817.1 5,855.2 11,961.8 12,658.3 0.0

Non-currentassets 2,503,641.2 141,092.4 5,560.6 0.0 2,639,173.0 1,484,019.1 1,155,153.9 1,083,549.5 66,041.1

Accumulated Residual Residual Scheduled depreciation carrying amount carrying amount depreciation andin € ’000s At 01 Jan. 2012 Additions Disposals Transfers as of 31 Dec. 2012 and amortisation 31 Dec. 2012 31 Dec. 2011 amortisation 2012

ANNUAL REPORT 2012

39

The value of the properties on 31 Dec. 2012 was € 26,379.6 thousand

31. Dec. 2011 was € 26,012.0 thousand



MATURITYBREAKDOWN

Loans


participating interests are held 15.0 0.0 0.0 15.0 15.0 15.0 0.0 30.0

2. Other loans 15.6 38.5 0.0 54.1 9.2 52.6 6.6 68.4

30.6 38.5 0.0 69.1 24.2 67.6 6.6 98.4

Receivablesandotherassets

1. Trade accounts receivable 57,156.8 0.0 0.0 57,156.8 44,869.0 0.0 0.0 44,869.0

2. Receivables from affiliated companies 1,523.6 0.0 0.0 1,523.6 0.0 0.0 0.0 0.0


participating interests are held 11,154.1 0.0 0.0 11,154.1 1,835.6 0.0 0.0 1,835.6

4. Other receivables and assets 407.7 154,940.0 32,274.3 187,622.0 21,278.2 39,254.0 35,774.6 96,306.8

70,242.2 154,940.0 32,274.3 257,456.5 67,982.8 39,254.0 35,774.6 143,011.4

Liabilities

1. Liabilities to banks 519.2 0.0 0.0 519.2 0.0 0.0 0.0 0.0

2. Payment received on orders 880.0 0.0 0.0 880.0 275.0 0.0 0.0 275.0

3. Trade accounts payable 7,964.6 1,136.2 96.3 9,197.1 6,642.5 1,489.8 141.1 8,273.4

4. Payables to affiliated companies 71,437.9 333,611.1 157,895.8 562,944.9 54,398.5 333,611.1 178,798.6 566,808.2

5. Payables to affiliated companies in which

a participating interest is held 0.0 0.0 0.0 0.0 8.8 0.0 0.0 8.8

6. Other liabilities 8,380.4 453.1 0.0 8,833.4 10,143.6 464.2 0.0 10,607.8

89,182.0 335,200.4 157,992.2 582,374.6 71,468.4 335,565.1 178,939.7 585,973.2

in € ’000s up to 1 year more than 1 year more than 5 years Total up to 1 year more than 1 year more than 5 years Total

Remainingmaturityasof31Dec.2012

40

ANNUAL REPORT 2012

Loans


participating interests are held 15.0 0.0 0.0 15.0 15.0 15.0 0.0 30.0

2. Other loans 15.6 38.5 0.0 54.1 9.2 52.6 6.6 68.4

30.6 38.5 0.0 69.1 24.2 67.6 6.6 98.4

Receivablesandotherassets

1. Trade accounts receivable 57,156.8 0.0 0.0 57,156.8 44,869.0 0.0 0.0 44,869.0

2. Receivables from affiliated companies 1,523.6 0.0 0.0 1,523.6 0.0 0.0 0.0 0.0


participating interests are held 11,154.1 0.0 0.0 11,154.1 1,835.6 0.0 0.0 1,835.6

4. Other receivables and assets 407.7 154,940.0 32,274.3 187,622.0 21,278.2 39,254.0 35,774.6 96,306.8

70,242.2 154,940.0 32,274.3 257,456.5 67,982.8 39,254.0 35,774.6 143,011.4

Liabilities

1. Liabilities to banks 519.2 0.0 0.0 519.2 0.0 0.0 0.0 0.0

2. Payment received on orders 880.0 0.0 0.0 880.0 275.0 0.0 0.0 275.0

3. Trade accounts payable 7,964.6 1,136.2 96.3 9,197.1 6,642.5 1,489.8 141.1 8,273.4

4. Payables to affiliated companies 71,437.9 333,611.1 157,895.8 562,944.9 54,398.5 333,611.1 178,798.6 566,808.2

5. Payables to affiliated companies in which

a participating interest is held 0.0 0.0 0.0 0.0 8.8 0.0 0.0 8.8

6. Other liabilities 8,380.4 453.1 0.0 8,833.4 10,143.6 464.2 0.0 10,607.8

89,182.0 335,200.4 157,992.2 582,374.6 71,468.4 335,565.1 178,939.7 585,973.2

in € ’000s up to 1 year more than 1 year more than 5 years Total up to 1 year more than 1 year more than 5 years Total

Remainingmaturityasof31Dec.2012 Remainingmaturityasof31Dec.2011

41



As of Addition Reversal As ofin € ’000s 01 01.2012 Transfer Disposal 31 12. 2012

CHANGETOUNTAxEDRESERvES

valuationreserveduetospecialdepreciations

1. Accelerateddepreciationinacc.withSection7aoftheIncomeTaxLaw(EStG)1988

1.1 Structures 5,686.4 851.5 177.9 6,360.0

1.2 Machinery 485.9 0.0 0.0 485.8

1.3 Electrical installations 18,565.9 1,980.5 63.2 20,483.2

1.4 Lines 16,068.8 193.7 2.7 16,259.8

1.5 Offices and plant equipment 696.3 0.2 9.7 686.7

1.6 Assets under construction 4,006.3 –3,025.8 0.0 980.5

45,509.6 0.0 253.6 45,256.0

2. Accelerateddepreciationinacc.withSections8and122oftheIncomeTaxLaw(EStG)1972

2.1 Lines 3,255.3 0.0 680.4 2,574.9

3,255.3 0.0 680.4 2,574.9

3. Transferofhiddenreservesinacc.withSection12oftheIncomeTaxLaw(EStG)

3.1 Land, similar rights and buildings

including buildings on leasehold land 1,390.6 0.0 2.5 1,388.2

3.2 Lines 1,803.2 0.0 46.9 1,756.3

3.3 Offices and plant equipment 2.5 0.0 0.0 2.5

3,196.3 0.0 49.4 3,146.9

51,961.2 0.0 983.4 50,977.8

Otheruntaxedreserves

1. Investmentallowanceinacc.withSection10oftheIncomeTaxLaw(EStG)

1996 75.2 0.0 0.0 75.2

1997 139.0 0.0 0.0 139.0

1998 61.9 0.0 0.0 61.9

1999 37.9 0.0 0.0 37.9

2000 42.2 0.0 0.0 42.2

356.1 0.0 0.0 356.1

Totaluntaxedreserves 52,317.4 0.0 983.4 51,334.0

42

ANNUAL REPORT 2012

43

I.ACCOUNTINGPOLICIES

Preliminary remarkDifferences in calculation from rounding up or down may arise in the rounded off totals of figures and percentages due to the use of automated calculation tools.

Non-current assetsLimited-life fixed assets are valued at the cost of acqui-sition or manufacture minus scheduled depreciation. The catalogue of uniform depreciation rates in APG essentially comprises the following rates of depreciation:

Tangible and intangible assets which have been used over the fiscal year for more than six months are depreciated at the full annual rate; those which have been used for less than six months are depreciated at one-half the an-nual rate.

Purchased intangible assets are valued at the cost of ac-quisition and are subject to scheduled depreciation based on the standard useful life, if applicable.

The manufacturing costs of internally manufactured as-sets include appropriate material and production costs in addition to direct costs. The optional method of valuation of included social security, severance payments and con-tributions to employee pension funds pursuant to Section 203 (3) Austrian Commercial Code (UGB) as well as capi-talised interest on borrowed capital pursuant to Section 203 (4) UGB was not used. Low-value assets pursuant to Section 226 (3) UGB are fully depreciated in the year of acquisition.

Financial assets are reported at the cost of acquisition or the attributable lower rate; in the case of temporary de-creases in value, investment securities are valued at cost or the most recent recognised value. Loans subject to interest are reported at their nominal value. Receivables with the maturity of more than one year are reported as loans under financial assets.

Current assetsInventories of raw materials and supplies are valued at the cost of acquisition with the application of the strict lower of cost or market principle. A permanent inventory is kept of stored supplies and spare parts valued according to the sliding average price method. Risks to inventory arising from length of storage and reduced usefulness are ac-commodated by appropriate reductions in value.

Receivables and other assets are valued at their nominal value provided that a lower value should not be reported on the basis of discernible individual risks. Receivables in foreign currency are valued at the mean exchange rate at the time at which they arose, or at the lower reference rate of the European Central Bank (ECB) on the reporting date (if not otherwise hedged).

Rates of Useful life depreciation in % in years

Intangibleassets

Rights to telecom facilities 10 10

Rights to software products 25 4

Other rights 5 20

Buildings

Residential and business buildings 2 and 3 33.3 and 50

Industrial buildings 3 33.3

Technicalfacilitiesandmachines

Machines 4 and 5 20 and 25

Electrical installations 5 20

Telecom facilities 10 10

Lines 2 50

Operational and office equipment 10–25 4–10


NOTES – ExPLANATIONS

44

Prepaid expenses and deferred chargesIf tax relief in coming years is anticipated, the option will be used of deferring taxes on the asset side of the balance sheet, and the deferred taxes for Group members 1 will be reported based on the apportionment of taxes for current earnings. These deferred items result from differences between cumulative results under corporate law and tax law for items with expenses that will only be offsettable in the future.

Deferred income and assets include building cost con-tributions and government grants which are depreciated based on the useful life of the tangible assets.

ProvisionsProvisions include all identifiable risks associated with a concluded fiscal year which were deemed necessary based on reasonable and prudent business judgement.

The provisions for severance payments were allocated to the full actuarial amount using the conventional projected unit credit method in international accounting. The accu-mulation period for severance payment provisions is 25 years. For all employment relationships starting after 31 December 2002, the employee is no longer directly enti-tled to statutory severance payment from the employer. For these employment contracts, the employer will pay a monthly 1.53 per cent of the remuneration to an employee provision fund, and the contributions will be invested in an account held by the employee. Any provisions of the col-lective agreement for utilities which go beyond statutory entitlements are covered in the reserves for severance payments.

Due to plant agreements and contracts, employees must receive pension payments upon taking retirement and upon meeting certain conditions. Dedicated pension fund assets of BAV Pensionskassen AG are partially available for these mandatory benefits. Provisions calculated based on the conventional projected unit credit method in inter-national accounting are netted under pension fund assets. To the extent that these performance-oriented pension

obligations must be met by BAV Pensionskassen AG, the employer is obliged to make contributions in case there are insufficient pension fund assets.

Provisions for existing pensions, entitlements to pensions and pension-like obligations are calculated based on the projected unit credit method. On the basis of the opinion KFS/RL 2/3b issued by the Board of Experts in the Austrian Chamber of Public Accountants on 9 July 2012, continued use of the corridor method for fiscal years beginning on or after 1 January 2013 is no longer permissible. The APG exercised the option of early application. All cumulative actuarial profits and losses were reported in the income statement at the time of the change in accounting policy.

In the context of adopting the new accounting policy, the reporting of interest expenditures from personnel-related obligations was changed in the income statement. Inter-est expenditures are now reported under financial results according to international standards, and not under per-sonnel expenses as before.

The entries from the previous year were not adjusted.

The calculation method was based on the “AVÖ 2008-P – Rechnungsgrundlagen für die Pensionsversicherung – Pagler & Pagler” [Computational Framework for Pension Insurance].

1 See income tax

ANNUAL REPORT 2012

45

The calculations of 31 December 2012 and 2011 are based on the following assumptions:

The same interest rate was used for the expected return on plan assets which was used to calculate the associated provisions.

LiabilitiesLiabilities were valued at the amounts payable with due re-gard to the principle of prudence. Liabilities in foreign cur-rency from goods and services are valued at the reference rate of the ECB on the reporting date if this rate lies above the rate applicable on the day of transaction.

Income taxAPG is not a taxable entity in terms of the corporate tax since its membership in the Group of companies of VER-BUND AG is in the capacity of head of the Group (Group and Tax Compensation Agreement of 21 September 2005).

The head of the Group receives 25 per cent of attributed

positive income from the Group members for corporate taxes that they generate when allocated taxes are positive, and they are credited 25 per cent of attributed negative income in case of loss when allocated taxes are negative. Offsetting the tax allocations reduces tax expenditures in the income statement of the head of the Group.

In the case of subsequent deviations, the tax offsetting for the Group members is adjusted only if material.

Regulatory assets and liabilitiesIf grid tariffs are established by a regulator on the basis of estimated cost or profits and reduced or extra costs or profits from the past are considered when setting the tariff in the future, the grid operator is entitled to recover extra costs or losses from grid users in the form of higher rates in future years, or is obligated to reimburse the grid users for reduced costs or increased profits in the form of lower rates. Such claims or obligations are termed regula-tory assets or liabilities. In this case, APG is subject to the tariff schedule regulated by the ECA.

II.NOTESTOTHEBALANCESHEETANDINCOMESTATEMENT

General informationIn the interest of clarity, the individual items in the bal-ance sheet and income statement are summarised. These items are discussed separately in the Notes. The form and content of the individual items of the balance sheet and the income statement are reported in accordance with the uniform Group requirements in VERBUND.

The items in the balance sheet and income statement that did not carry an amount in either the fiscal year or the pre-vious year are not listed pursuant to Section 223 (7) of the UGB.

Pursuant to Section 223 (4) UGB, the descriptions of the items were shortened or expanded to the actual content with the aim of preparing clear and understandable Annual Financial Statements.

2012 2011

Interestrate

Pensions and pension-like

Liabilities 4.00 % 4.75 %

Severance payments 4.00 % 4.75 %

Trend

Increases in pension 2.25 % 2.25 %

Increases in salary 2.75 % 2.75 %

Contribution payments for pension-

like obligations – Existing contracts 7.00 % 7.50 %

Contribution payments for pension-like

Obligations – New contracts 4.00 % 4.50 %

Fluctuation 0.00–4.00 % 0.00–4.00 %

Retirement age for women 56.5–65 56.5–65

Retirement age for men 61.5–65 61.5–65

Anticipated long-term interest

on fund assets 4.00 % 2.00 %

NOTES – EXPLANATIONS


46

If changes to the nomenclature were made in comparison to the previous year, the reported amounts of the previous year were adapted pursuant to Section 223 (2) UGB.

Notes on assetsA.Non-currentassetsFor details, see the separate itemisation, “changes to non-current assets".

(1)I.IntangibleassetsThe residual carrying amount of acquired rights to use fa-cilities of affiliated companies is € 677.5 thousand (previ-ous year: € 325.6 thousand).

(2)II.TangibleassetsThe interest on borrowed capital on the balance sheet date initiated with the financing of fixed assets through 1989 for the transmission systems introduced in 1999 by VERBUND AG was € 8,884.3 thousand (previous year: € 9,451.0 thousand).

(3)III.FinancialassetsThe information required by Section 238 line 2 UGB is pre-sented under the itemisation, "Notes on participating in-terests pursuant to Section 238 line 2 UGB".

The development and structure of participating interests and fixed asset securities can be found in the separate Ap-pendix: “Changes to non-current assets."

FixedassetsecuritiesThese primarily consist of shares in Austrian investment funds and loans. The write-ups omitted pursuant to Sec-tion 208 (3) of the UGB are € 1,614.1 thousand (previous year: € 896.7 thousand).

B.Currentassets(4)I.Inventory

(5)II.ReceivablesandotherassetsFor details, see the separate itemisation "Maturity break-down".

Regulatory assets include losses according to the EIWOG Section 50 (5) (abolition of the system usage fee regula-tion for 2009–2011 and the pending abolition of the sys-tem usage fee regulation for 2012), unusual additional costs according to ElWOG Section 50 (2), as well as ad-ditional costs pursuant to ElWOG Section 50 (7) that are covered by future tariffs.

Other receivables include income to the amount of € 187,292.9 thousand that became cash-effective ac-cording to Section 225 (3) of the UGB after the balance sheet closing date.

in € ’000s 2012 2011

Raw materials and supplies 651.8 588.1

in € ’000s 2012 2011

Otherassets

Regulatory assets 187,214.2 75,028.6

Payroll 170.3 165.3

Security deposits 85.8 1.4

related to social security and other obligations 39.6 5.1

Tax offices 33.3 11.4

Sale of fixed assets 0.0 17,147.3

Investment grants 0.0 3,690.2

Prepayment of rent 0.0 126.2

Accrued interest from loans 0.0 12.3

Other 78.8 120.4

187,622.0 96,306.8

ANNUAL REPORT 2012

47

(10)Iv.NetprofitfortheyearThe net profit for the year underwent the following development:

(11)B.UntaxedreservesFor details, see the separate itemisation, "Change to untaxed reserves."

(12)C.Provisions1.Provisionsforseverancepayments

In 2002, provisions pursuant to Section 14 Income Tax Law (EStG) were transferred tax-free to reserves consid-ered already taxed (Section 124 b line 68 EStG).

2.Provisionsforpensions

The actuarial losses that accumulated for pensions and pension-like obligations by 1 January 2012 are reported collectively under personal expenses to the amount of € 3,079.6 thousand.

(6)C.Deferredincomeandassets

These deferred items result from differences between cu-mulative results under corporate law and tax law for items with expenses that will only be offsettable in the future. The calculation is based on a tax rate of 25 per cent.

Notes on liabilitiesA.Shareholders’equity(7)I.SharecapitalThe share capital equals € 70,000.0 thousand and is divided into 70,000,000 no par value bearer shares.

(8)II.CapitalreservesCapital reserves comprise earmarked capital reserves to the amount of € 7,000.0 thousand (previous year: € 7,000.0 thousand) and unappropriated capital reserves to the amount of € 8,383.5 thousand (previous year: € 8,256.3 thousand). The earmarked capital reserves cor-respond to ten per cent of share capital.

(9)III.RevenuereserveProfit reserves comprise unappropriated reserves to the amount of € 112,243.9 thousand (previous year: € 96,161.9 thousand) and unappropriated investment-related reserves to the amount of € 76,657.3 thousand (previous year: € 76,657.3 thousand).

in € ’000s 2012 2011

Deferred items 17,553.5 13,206.7

Other 217.5 184.4

17,771.0 13,391.1

in € ’000s

as of 31 Dec. 2012 0.0

Net income for the year 15,570.5

Change in profit reserves -16,082.0

Change in untaxed reserves 983.3

Profit pooling with VERBUND AG –471.8

asof31December2012 0.0

in € ’000s 2012 2011

Actuarial reserves based on

actuarial calculation 22,636.0 21,157.4

taxed portion of provisions 22,636.0 21,157.4

in € ’000s 2012 2011

Pension reserves 63,393.3 59,846.1

of which are pension-like obligations 25,551.5 28,819.4



48

3.Otherprovisions

The provision for grid accounting results from repayment obligations totalling received income of € 171,412.8 thou-sand from the cancellation of the SNT-VO for 2009–2011, provisions for the pending abolition of the SNE-VO 2012 and uninvoiced services for grid accounting in the amount of € 17,704.8 thousand.

Regulatory provisions comprise extra profits which will be taken into account in future tariffs.

(13)D.LiabilitiesFor details, see the separate itemisation "Maturity break-down".

Payables to affiliated companies include € 551,919.3 thousand (previous year: € 565,725.2 thousand) of fi-nancial liabilities and € 11,025.5 thousand (previous year: € 1,083.0 thousand) of other liabilities. The paya-

in € ’000s 2012 2011

otheremployee-relatedreserves

Holiday not taken 3,188.8 2,895.6

Premiums 2,497.7 2,470.3

Pre-pensions, voluntary severance

payments and semiretirement 1,502.2 2,800.8

Holiday bonus 1,485.0 1,434.7

Contingent losses from personnel secondment 747.4 1,435.9

Time credits 377.1 369.0

Other 147.1 97.1

9,945.3 11,503.4

bles to affiliated companies in which a participating in-terest is held include € 0.0 thousand (previous year: € 8.8 thousand) trade accounts receivable.

Other liabilities include € 481.5 thousand that became cash-effective according to Section 225 (6) of the UGB after the balance sheet closing date.

(14)E.Accruedanddeferreditems

Building cost contributions relate to third-party contribu-tions associated with the use of individual facilities. The accrued and deferred items include € 7,105.6 thousand (previous year: € 7,649.1 thousand) of affiliated compa-nies.

in € ’000s 2012 2011

Otherliabilities

From taxes 7,551.6 8,806.0

Related to social security and other obligations 756.2 741.3

Payroll 16.5 0.8

Other 509.1 1,059.8

8,833.4 10,607.9

in € ’000s 2012 2011

Building cost contributions

(financial contributions) 61,534.8 37,533.1

Other

Investment grants 13,544.1 13,558.1

Prepayments for grid use 925.3 979.2

Advance lease payment for telecom

fixed assets affiliated companies 206.7 280.8

Prepayments for auctions 0.0 1,163.1

76,210.9 53,514.3

in € ’000s 2012 2011

Grid billing 189,117.6 99,386.5

Regulatory reserves 117,867.8 52,166.4

Supplies and services

not yet invoiced 48,750.4 49,210.8

Other 0.0 3.0

355,735.8 200,766.7

ANNUAL REPORT 2012

49

Notes to the Income Statement(15)1.Salesrevenue

in € ’000s 2012 2011

Revenuefromgridtariffsettlement

Domestic Energy companies 346,997.0 372,457.5

industrial customers 14,394.3 13,722.3

Other customers 55,505.6 18,267.1

416,896.9 404,446.9

EU Energy companies 3,486.2 1,333.1


20,313.8 10,597.5

Other countries Other customers 160.5 2,172.1

160.5 2,172.1

437,371.2 417,216.5

Usageandmanagementfees

Domestic Energy companies 6,468.0 7,635.3

Industrial customers 43.4 41.3

Other customers 581.7 209.8

7,093.1 7,886.4

EU Energy companies ¹ 785.9 1,167.6


86,852.3 32,733.2

Other countries Energy companies 0.0 1,106.4

Other customers 0.0 -994.0

0.0 112.4

93,945.4 40,732.0

Otherrevenue 5,113.5 8,405.4

536,430.1 466,353.9

¹ According to the auction rules and resulting agreements with international grid partners, the APG invoices the auction participants (electricity traders) for the entire auction revenues. According to the agreement, 50 per cent of these revenues are to be refunded to the respective grid partners. For this transaction to occur, the grid partners submit invoices to the APG.



50

(16)3.Otheroperatingincome

(17)6.Personnelexpenses

In 2011, interest for personnel reserves to the amount of € 5,462.7 thousand was reported. In 2012, the interest was reported under financial results. The item for 2012 is correspondingly not comparable with that for the previous year.

in € ’000s 2012 2011

in € ’000s 2012 2011

a) Income from the disposal of non-current assets

excluding financial assets 290.8 364.8

b) Income from the liquidation of reserves 85.0 4,481.1

c) Miscellaneous 5,042.9 4,907.5

5,248.7 9,753.4

a) Wages 303.8 247.1

b) Salaries 37,292.4 34,529.9

37,596.2 34,777.0

c) Expenditures for severance payments and contributions to employee pension funds

Severance payments 1,907.3 1,633.0

Change in severance payment provisions 510.5 1.6

Contributions for employee provision fund 179.8 136.7

Expenditures and income for Group takeovers/joinings 72.6 -92.9

2,670.2 1,678.4

d) Expenses for pensions

Early retirement, pension payments and similar obligations 5,837.3 6,000.5

Changes to provisions for pensions and similar obligations 709.5 –369.2

Expenditures and income for Group takeovers/joinings 7.2 –45.9

Change in reserves for pre-pensions and semi-retirement –1,364.2 –1,024.0

Change in reserves for contingent losses from personnel secondment –735.1 –666.2

Pension fund contributions (including supplementary contributions) 3,402.4 1,328.6

7,857.1 5,223.8

e) Expenses for social security contributions as required by law

as well as income-based charges and compulsory contributions 8,154.7 7,674.3

f) Other social security expenditures 567.8 640.6

56,846.0 49,994.1

ANNUAL REPORT 2012

51

(18)7.Depreciationandamortisation

(20)16.Financialresults

(19)8.Otheroperatingexpenses

in € ’000s 2012 2011

in € ’000s 2012 2011

in € ’000s 2012 2011

a) Depreciation and amortisation of intangible assets and non-current assets, property, plant and equipment

Scheduled depreciation and amortisation 65,921.0 61,032.0

Immediate write-offs of low-value assets according to Section 13 Income Tax Law (EStG) 120.0 115.4

66,041.0 61,147.4

Otherinterestandsimilarincome

From affiliated companies 25.0 81.4

Interestandsimilarexpenses

From affiliated companies 13,569.5 15,014.4

a) Taxes, unless classified as income tax 463.4 206.4

463.4 206.4

b) Other

External deliveries and services for repair and maintenance 14,616.0 14,555.4

Regulatory costs 12,470.4 10,376.9

Telecommunication and data services 8,712.9 8,577.1

IT support, EDP 4,337.6 4,826.1

Temporary staff and personnel secondment 4,045.5 3,458.6

Legal, auditing and consulting expenses 3,216.7 3,749.9

Operating costs for buildings, rent and leases 2,381.8 1,708.4

Allocations to other regulatory provisions 1,879.1 32,641.6

Travel expenses 1,583.5 1,483.0

Other administrative expenses 1,049.7 4,343.3

Apprenticeship and in-service training 885.9 713.8

Depreciations and valuation allowance for accounts receivable 228.9 6.0

Other expenses 6,887.2 11,063.4

62,295.2 97,503.5

62,758.6 97,709.9



52

(21)18.Incometax

III.OTHERDISCLOSURES

1.Totalamountofotherfinancialobligations

in € ’000s 2012 2011

in € ’000s Total obligations 2013 2013–2017

From the Group parent

Income tax for the current period 8,459.3 1,277.5

Deferred taxes –4,346.7 –25.0

4,112.6 1,252.5

Essentialitems

Rent and lease agreements, insurance ¹ 10,705.0 51,611.0

Other (insurance, compensations, fees for use/operational management) ¹ 4,959.8 23,024.6

Purchase commitments 82,921.3 73,207.1 82,921.3

Of which to affiliated companies 9,597.3 47,986.3

¹ An exact amount cannot be calculated for the total amount of the obligations because the contractual periods are indefinite

A limited obligation to pay additional contributions to land owners exists for a period of up to 10 years following the commissioning of a transmission line if part of the con-struction land is rededicated.

Being a transmission system operator, APG is commit-ted under ElWOG to balancing generation and demand, to operating a safe system as well as to frequency and volt-age maintenance. To meet these obligations, APG pur-chases grid services in the form of secondary and ter-tiary reserve capacity, balancing capacity, voltage and power-factor control, loss coverage, own consumption of substations as well as failure and congestion manage-

ment from VERBUND AG, VERBUND Hydro Power AG and VERBUND Trading AG.

An agreement is in place with VERBUND Management Service GmbH for the settlement of services in the areas of information technology, insurance, property law and management, procurement, financial accounting, payroll and administrative services.

An agreement was concluded with VERBUND-Finan-zierungsservice GmbH for the settlement of services re-lating to the handling of payments and cash management.

ANNUAL REPORT 2012

In 2012, untaxed reserves were liquidated to the amount of € 983.4 thousand (previous year: € 2,643.1 thousand), thus increasing taxes on income and earnings by € 245.85 thousand.

The profit from ordinary business activity was thus reduced by the taxes on income and earnings to the amount of € 4,112.6 thousand (previous year: € 1,252.5 thousand).

53

In fiscal 2012, no arm’s length agreements pursuant to Section 237 line 8a UGB were concluded with members of the Supervisory Board or any companies close to indi-vidual members of the Supervisory Board. Services were rendered for various Group companies under VERBUND, and these agreements were approved by the ECA.

No other off-balance-sheet transactions pursuant to Sec-tion 237 line 8a UGB were concluded by APG.

Due to plant agreements and contracts, employees must receive pension payments upon taking retirement and upon meeting certain conditions. To the extent that these pension obligations must be met by BAV Pensionskassen AG, the employer is obliged to make contributions in case there are insufficient pension fund assets. Due to the de-velopment of the financial markets, the BAV Pensionskas-sen AG reported an obligation to make additional contri-butions in the amount of € 48.0 thousand (previous year: € 1,676.7 thousand) to cover performance-oriented pen-sion commitments.

At the balance sheet date, 41 employees had received a “letter of loyalty” granting them a higher degree of dis-missal protection. To qualify, an employee must have worked for VERBUND for twenty years and be at least 45 years old.

4.BoardmembersThe details regarding the executive bodies of the company (members of the Managing Board and Supervisory Board) can be found above the Management Report. Three mem-bers of the Managing Board were appointed for the entire fiscal year.

DI Dr. Heinz Kaupa retired on 31 December 2012.

The figures include the final compensation for DI Dr. Heinz Kaupa. In 2012, €41,780.54 was contributed to the pen-sion fund for the members of the Managing Board. The emoluments for members of the Board of Supervisors for the fiscal year totalled €60,500 (previous year: €62,900).

5.GrouprelationsThe APG’s parent company which is subject to consolida-tion is VERBUND AG, Am Hof 6a, 1010 Vienna.

APG is a member of the group of companies headed by the parent company pursuant to Section 9 (8) Austrian Corpo-ration Tax Act (KStG).

Irrespective of the group and tax apportionment agree-ment concluded with the parent company, VERBUND AG and APG continue to maintain the unmodified profit trans-fer agreement of 20 November 2001.

Variable Fixed emoluments Emoluments Total

Compensation for three Members

of the Managing Board 1,095,842.71 124,469.30 1,220,312.01



* Since it can only be determined whether the targeted goal of the fiscal year has been reached during the first quarter of the subsequent year, the payment of variable compensation for the respective fiscal year will be at a delay starting in June the following year in 14 equal parts. Consequently, the proportionate variable amounts paid out to the members of the Managing Board for fiscal year 2011 are reported in 2012. The payment of variable compensation for 2012 will begin in June 2013. (Due to a change in the modality of payment in 2011, all of the variable portions for fiscal year 2010 were paid out in 2011.)

*

54

2.Headcount

3.Expensesforseverancepaymentsandpensions

Average 2012 2011

Average 2012 2011

Salaried employees 427 412

Apprentices 24 22

451 434

Employees 11,262.3 7,543.9

ANNUAL REPORT 2012

Mag. Thomas Karall m.p. DI Mag. (FH) Gerhard Christiner m.p.

TheManagingBoardVienna, 31 January 2013

The consolidated financial statement has been filed under the commercial register of the Vienna Commercial Court

6.Influenceofthe3rdEUInternalEnergyMarketPackageinAustriaVERBUND has resolved to reorganise APG as an ITO and thereby retain ownership of APG pursuant to the 3rd EU Internal Energy Market Package and the EIWOG 2010, which promulgates more stringent provisions against un-bundling.

As authorised by the ECA on 12 March 2012, APG became a certified ITO, and its official designation as an independ-ent transmission system operator was granted in an an-nouncement by the Federal Minister of Economy, Family and Youth in the Federal Law Gazette II 134/2012. Accord-ing to Section 27 (2) no. 3 ElWOG, the compliance officer assumed his responsibility on 1 March 2012.

Business transactions according to Section 8 (3) ElWOG will be pursued by the following companies in particular:

≥ Electricitydelivery: VERBUND Hydro Power AG, VER-BUND Thermal Power GmbH & Co KG, Ennskraftwerke Aktiengesellschaft, VERBUND AG

≥ Gridservices: VERBUND Hydro Power AG, VERBUND Thermal Power GmbH & Co KG, Ennskraftwerke Ak-tiengesellschaft, Österreichisch-Bayerische Kraft-werke Aktiengesellschaft, Donaukraftwerk Jochenstein Aktiengesellschaft, KELAG-Kärntner Elektrizitäts-Ak-tiengesellschaft, STEWEAG-STEG GmbH, VERBUND AG

≥ Telecommunications: VERBUND Telekom Service GmbH

≥ Managerialservices:VERBUND Management Service GmbH, VERBUND AG

≥ Financing:VERBUND Finanzierungsservice GmbH, VER-BUND International Finance GmbH

≥ Engineering: PÖYRY Energy GmbH

≥ Personnelsecondments:VERBUND Management Serv-ice GmbH, PÖYRY Energy GmbH

55


NOTES ON PARTICIPATING INTERESTS IN ACCORDANCE WITH SECTION 238 LINE 2 OF THE UGB

Capital share in % per Last Financial (+) Annual profit/ in € ’000s Headquarters 31 December 2012 statements (-) -annual loss Shareholders’ equity

Affiliatedcompanies

fullyconsolidated

VERBUND Umwelttechnik GmbH (VUM) Klagenfurt 100.00 2012 + 471.8 583.1

Participatinginterests

OeMAG Abwicklungsstelle für Ökostrom AG Vienna 24.40 2011 + 423.8 5,469.8

1

¹ Shareholders’ equity in accordance with Section 224 (3)(a) of the UGB

56

ANNUAL REPORT 2012

57


GLOSSARY

EBITEarnings before Interest (including personnel-related interest) and Taxes:

NetcashflowBalance of cash inflows and outflows; usually broken down into net cash flows from operating activities, in-vestment activities and financing activities.

NetcurrentassetsCurrent assets (including short-term loans and short-term deferred income and assets) less short-term liabili-ties (including short-term accruals and deferrals).

Gearing¹The ratio of net debt to shareholders’ equity, plus untaxed reserves adjusted for deferred taxes and government grants.

Capital-to-assetsratioThe ratio of shareholders’ equity, plus untaxed reserves adjusted for deferred taxes and government grants, to total capital.

FictitiousdebtrepaymentperiodThe ratio of debts to the surplus of funds from ordinary activities.

Calculation

Operating result

+ Financial result

+ Interest charges

= EBIT

Calculation

Net cash flow from operational activities

+ Net cash flow from investment activity

+ Net cash flow from financing activity

= Netcashflow

Calculation

Net current assets from operations

+ Net current assets from financing

= Netcurrentassets(workingcapital)

Calculation

Net debt

÷ Shareholders’ equity

= Gearing

Calculation

Shareholders’ equity

÷ Total capital adjusted for closed items

= Capital-to-assetsratio

Calculation

Provision

+ Liabilities

- Other securities and current-asset shares

= Subtotal

÷ Surplus of funds from current activities

= Fictitiousdebtrepaymentperiod

¹ The figure has been adjusted.

58

ANNUAL REPORT 2012

NetdebtInterest-bearing debt less cash (including securities and current-asset shares) adjusted for closed items on the assets and liabilities side (such as cross-border leasing transactions).

ROEReturn on Equity: Result from ordinary activities in rela-tion to the shareholders’ equity, plus untaxed reserves adjusted for deferred taxes and government grants, at the beginning of the fiscal year.

ROIReturn on Investment: The ratio of earnings before inter-est expenses (including personnel-related interest) and taxes to total capital at the beginning of the fiscal year.

ROCEReturn on Capital Employed: Earnings before interest (in-cluding personnel-related interest) less taxes in relation to the average capital employed.

ROSReturn on Sales: The ratio of earnings before interest ex-penses (including personnel-related interest) and taxes to sales revenue.

Calculation

Interest-bearing provisions

+ Interest-bearing liabilities

- Balanced by closed items

= Gross debt

- Financial assets

= Netdebt

Calculation

Profit on ordinary activities

÷ Shareholders’ equity as of 1 January

= ROE

Calculation

EBIT

÷ Total capital adjusted for closed items per 1 Jan.

= ROI

Calculation

EBIT – taxes on EBIT

÷ capital employed

= ROCE

Calculation

EBIT

÷ Sales revenue

= ROS

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AUDIT CERTIFICATE

Audit certificate for the financial statementsWe audited the attached annual financial statements plus accounting records of APG AG, Vienna, for the fiscal year from 1 January 2012 to 31 December 2012. These annual financial statements consist of a balance sheet dated 31 December 2012, an income statement for the fiscal year ending 31 December 2012 and notes to the financial statements.

Responsibility of the legal representatives of the company for the annual financial statements and accounting records The legal representatives of the company are responsible for accounting records, for producing the annual finan-cial statements, which must present fairly, in all mate-rial respects, the company’s net assets, financial position and results of operations in accordance with Austrian Accounting Standards. This responsibility includes: the design, implementation and maintenance of an internal system of controls, to the extent such is relevant to the production of annual financial statements and to present-ing a true and fair view of the company’s net assets, fi-nancial position and results of operations in all material respects, so as to ensure their being free of material mis-representations of an intentional or unintentional nature. It likewise extends to the adoption and application of ap-propriate accounting and valuation policies and the stat-ing of estimates that appear to be of a reasonable nature in view of the given circumstances.

Auditor’s responsibility and discussion of the nature and scope of the mandatory audits Our responsibility is to express an opinion on these annual financial statements based on our audit. We conducted our audit in accordance with the laws and regulations ap-plicable in Austria and the professional standards on au-diting. These standards require that we plan and perform the audit in conformance with the accounting industry regulations and in such a manner to obtain reasonable as-surance that the annual financial statements are free of material misrepresentation.

An audit involves implementing auditing measures to ob-tain accounting documentation pertaining to figures and other data provided in the annual financial statements. The choice of auditing measures to conduct is at the au-ditor’s discretion, in view of the perceived potential for material misrepresentations of an intentional or unin-tentional nature. In assessing the risk, the auditor must evaluate the internal system of controls to the extent such is relevant to the production of the annual financial statements and to presenting a true and fair view of the financial position of the company in all material respects in order to determine suitable auditing measures in view of the given circumstances – not however in order to provide an opinion on the effectiveness of the company’s internal system of controls. An audit furthermore involves assess-ing the appropriateness of the accounting and valuation policies applied and the significant estimates made by the legal representatives, as well as evaluating the overall fi-nancial statement presentation.

We believe the accounting documentation we obtained was sufficient and suitable to afford a reasonable basis for our audit opinion.

Audit opinion Our audit did not give rise to any objections. In our opin-ion, which is based on the results of our audit, the an-nual financial statements are in accordance with legal requirements and present fairly, in all material respects, the net assets and financial position of the company as of 31 December 2012. The Austrian Power Grid AG – Annual Report 2012 (pursuant to Corporate Code) presents the company’s earning position for the fiscal year from 1 Jan-uary 2012 to 31 December 2012 in an equally appropriate manner and in accordance with the Austrian principles of proper accounting.

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ANNUAL REPORT 2012

Opinion of the Management Report Regulations require that the management report is to be audited to ensure that it accords with the annual financial statements, and that other data or information provided in the management report do not misrepresent the com-pany’s business position. The auditor’s opinion must also state the extent to which the management report accords with the annual financial statements.

In our opinion, the management report is in accordance with the annual financial statements.


Ernst & Young Wirtschaftsprüfungsgesellschaft m.b.H.Mag. Erich Lehner m.p.Austrian Chartered Accountant

Mag. Elfriede Baumann m.p.Auditor

The publication or dissemination of the annual financial statement in any form deviating from the approved (un-abridged German) version (such as a shorter version or translation) may not mention the audit certificate or our audit without our express approval.

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REPORT OF THE SUPERVISORY BOARD

During the year under report, the Supervisory Board per-formed its duties and exercised its powers under the law and the articles of incorporation in four meetings of the Supervisory Board, one extraordinary meeting of the Su-pervisory Board and four working/auditing committee meetings. Because of the nature of APG’s activities, a vol-untary audit committee was set up within the meaning of the Austrian Stock Corporation Law. The working commit-tee also acts as an auditing and emergency committee. A presiding and reimbursement committee was also estab-lished, which has convened twice.

The conduct of business of the Managing Board has been examined on an on-going basis by the Supervisory Board, drawing on verbal and written reports on business ac-tivities and the state of the company. These examinations provided no cause for complaint. Accounting procedures and the annual financial statements were audited by Ernst & Young GmbH, Vienna. The auditor has prepared a writ-ten report on the results. It was found that the Managing Board has supplied all such information and documentary evidence as has been required; that the accounts and annual financial statements comply with the statutory provisions; that such statements, in accordance with the principles of proper accounting, faithfully reflect the com-pany’s net assets, financial position and results of opera-tions; and that the management report is consistent with the annual financial statements.

The Supervisory Board examined the annual financial statements, certified without qualification by the audi-tor, as well as the management report of the Managing Board. The management report of the Managing Board was approved and acknowledged. The annual financial statements were approved by the Supervisory Board and are therefore deemed adopted under Section 96 (4) of the Stock Corporation Act (Aktiengesetz).

The Chairman of the Supervisory Board is in regular con-tact with the Managing Board. In particular, they regularly discuss the business trends and new European develop-ments. The Managing Board generally met fortnightly.

The Chairman of the Supervisory Board and the Managing Board confirm that discussions were held in an open man-ner, both in the meetings of the Supervisory Board and the meetings of the working and auditing committees, as well as in the meetings of the Managing Board.

On 31 December 2012, the Speaker of the Managing Board, Heinz Kaupa, entered into retirement. Heinz Kaupa played a significant role in charting the course of APG over the years. The Supervisory Board acknowledges his outstand-ing service to the company and expresses its sincerest gratitude for his unstinting dedication.

The Supervisory Board also expresses its thanks to the Managing Board as well as all employees of the company for mastering the difficult challenges with which they have been presented.


On behalf of the Supervisory Board

DDr. Erhard Schaschl(Chairman)

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ANNUAL REPORT 2012

IMPRINTPublisher: Austrian Power Grid AGWagramer Straße 19, A-1220 Vienna

Contact: www.apg.atE-Mail: [email protected]

Concept and editing: brandfan Werbe GmbHArt and design: Albert ExergianCover photo: APGPhotograph of the Managing Board: Richard TanzerPhotos on pages 12-13: APGPhotos on pages 22-33: APGTranslated by: Interlingua Language Services GmbH, Vienna Printed by: Grasl Druck & Neue Medien GmbH

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