1 Key ratios of the innogy Group in the Czech Republic* in the structure reported within the Group, prepared in accordance with the Group’s accounting manual 2016 Total sales (CZK m)** 43,878 EBITDA (CZK m)** 14,380 Operating result (CZK m)** 11,209 Profit before taxation (CZK m)** 10,512 Profit after taxation (CZK m)** 8,529 Investments (CZK m)** 4,675 Number of employees (converted to FTE) 3,858 * For the purposes of this Annual Report, the innogy Group in the Czech Republic is understood to include the following companies: innogy Česká republika a.s., innogy Energie, s.r.o., innogy Gas Storage, s.r.o., innogy Energo, s.r.o., innogy Grid Holding, a.s., GasNet, s.r.o., GridServices, s.r.o., innogy Zákaznické služby, s.r.o. ** The item includes aggregated data for the above companies, net of the most important transactions between them, net of income from investments in subsidiary and associated companies, and net of the proceeds from the sale of such investments. Key ratios of innogy Česká republika a.s. (Czech Accounting Standards) 2016 Total sales (CZK m) 1,034 EBITDA (CZK m) 65 Operating result (CZK m) (85) Profit before taxation (CZK m) 3,425 Profit after taxation (CZK m) 3,366 Investments (CZK m) 209 Number of employees (converted to FTE) 289 innogy Česká republika a.s. is hereinafter also referred to as “the Company” or “innogy Česká republika”.
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Key ratios of innogy Česká republika a.s. (Czech...EBITDA (CZK m)** 14,380 Operating result (CZK m)** 11,209 Profit before taxation (CZK m)** 10,512 Profit after taxation (CZK m)**
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Key ratios of the innogy Group in the Czech Republic* in the structure reported within the Group,
prepared in accordance with the Group’s accounting manual
2016
Total sales (CZK m)** 43,878
EBITDA (CZK m)** 14,380
Operating result (CZK m)** 11,209
Profit before taxation (CZK m)** 10,512
Profit after taxation (CZK m)** 8,529
Investments (CZK m)** 4,675
Number of employees (converted to FTE) 3,858
* For the purposes of this Annual Report, the innogy Group in the Czech Republic is understood to include the following companies: innogy Česká republika a.s., innogy Energie, s.r.o., innogy Gas Storage, s.r.o., innogy Energo, s.r.o., innogy Grid Holding, a.s., GasNet, s.r.o., GridServices, s.r.o., innogy Zákaznické služby, s.r.o. ** The item includes aggregated data for the above companies, net of the most important transactions between them, net of income from investments in subsidiary and associated companies, and net of the proceeds from the sale of such investments.
Key ratios of innogy Česká republika a.s. (Czech Accounting Standards)
2016
Total sales (CZK m) 1,034
EBITDA (CZK m) 65
Operating result (CZK m) (85)
Profit before taxation (CZK m) 3,425
Profit after taxation (CZK m) 3,366
Investments (CZK m) 209
Number of employees (converted to FTE) 289
innogy Česká republika a.s. is hereinafter also referred to as “the Company” or “innogy Česká
republika”.
innogy Česká republika | Annual Report 2017
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Key ratios of the innogy Group in the Czech Republic* in the structure reported within the Group,
prepared in accordance with the Group’s accounting manual
2017
Total sales (CZK m)** 42,661
EBITDA (CZK m)** 16,005
Operating result (CZK m)** 13,115
Profit before taxation (CZK m)** 12,848
Profit after taxation (CZK m)** 10,498
Investments (CZK m)** 4,742
Number of employees (converted to FTE) 4,029
* For the purposes of this Annual Report, the innogy Group in the Czech Republic is understood to include the following companies: innogy Česká republika a.s., innogy Energie, s.r.o., innogy Gas Storage, s.r.o., innogy Energo, s.r.o., innogy Grid Holding, a.s., GasNet, s.r.o., GridServices, s.r.o. and innogy Zákaznické služby, s.r.o. ** The item includes aggregated data for the above companies, net of the most important transactions between them, net of income from investments in subsidiary and associated companies, and net of the proceeds from the sale of such investments.
Key ratios of innogy Česká republika a.s. (Czech Accounting Standards)
2017
Total sales (CZK m) 2,016
EBITDA (CZK m) 279
Operating result (CZK m) 104
Profit before taxation (CZK m) 5,569
Profit after taxation (CZK m) 5,495
Investments (CZK m) 147
Number of employees (converted to FTE) 505
innogy Česká republika a.s. is hereinafter also referred to as “the Company” or “innogy Česká
republika”.
innogy Česká republika | Annual Report 2017
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CONTENTS
1 The Chairman’s Statement _____________________________________________________ 4
2 Report of the Supervisory Board for 2017 _________________________________________ 6
Membership of bodies of other companies: Member of the innogy SE Board of Directors; Chairman of
the innogy Grid Holding, a.s. Board of Directors; Chairman of the Essent N.V. Supervisory Board;
Member of the envia Mitteldeutsche Energie AG Supervisory Board
Any other business activities: None
Thomas Merker
Vice-Chairman, Finance
Born: 28 November 1971
Education: Friedrich Schiller Universität Jena, Economics; Julius Maxmilian Universität, Würzburg;
Université de Caen
Membership of bodies of other companies: Member of the innogy Grid Holding, a.s. Board of Directors;
Executive Director and Shareholder of MIP Merker Immobiliengesellschaft, s.r.o.;
Vice-Chairman of the Východoslovenská distribučná, a.s. Supervisory Board
Any other business activities: None
The Company’s Board of Directors did not change in 2017.
innogy Česká republika | Annual Report 2017
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The Company’s Supervisory Board as at 31 December 2017
Filip Thon
Chairman
Born: 17 July 1972
Education: Institute of Chemical Technology Prague, doctorate at VŠB-Technical University of Ostrava
Membership of bodies of other companies: Chairman of the innogy Polska S.A. Board of Directors
Any other business activities: None
Maria-Theresia Elisabeth Thiell
Vice-Chairman
Born: 1 May 1959
Education: Westfälische Wilhelms-Universität, Münster, Doctorate in Law
Membership of bodies of other companies: Executive Director of innogy Hungária Kft. and innogy
Solutions Kft.; Chairman of the ELMŰ Nyrt and ÉMÁSZ Nyrt. Board of Directors; Chairman of the
innogy Polska S.A. Supervisory Board
Any other business activities: None
Lenka Šimarová
Member
Born: 16 November 1964
Education: Brno University of Technology, Faculty of Mechanical Engineering
Membership of bodies of other companies: None
Any other business activities: None
Changes in the Company’s Supervisory Board in 2017:
The term in office of Filip Thon, member and Chairman of the Supervisory Board, ended on 29 November 2017. The sole shareholder acting in the capacity of the general meeting elected Filip Thon to the Supervisory Board for another term in office with effect from 30 November 2017. The Supervisory Board elected Filip Thon as the Supervisory Board’s Chairman with effect from 30 November 2017.
The Company has granted the right of proxy to the following proxy-holders as of 31 December 2017:
Ms Erika Vorlová Mr Josef Benda Mr Martin Chalupský Mr Jiří Krtička Effective as of 6 April 2017, Kai Richter revoked the proxy that had been granted to him, and the right of proxy therefore terminated. Effective as of 30 April 2017, František Čech revoked the proxy that had been granted to him, and the right of proxy therefore terminated.
innogy Česká republika | Annual Report 2017
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3.4 Persons Responsible for the Annual Report and for the Audit of Financial
Statements
Auditor and the audit company responsible for the audit of the financial statements of innogy Česká
republika a.s. for 2017
Audit company: Responsible auditor: PricewaterhouseCoopers Audit, s.r.o. Hana Valešová Hvězdova 1734/2c Evidence No 2004 140 00 Praha 4 Registered in the Register of Audit Companies with the Chamber of Auditors of the Czech Republic under Evidence No 021 Prague, 19 March 2018 Person responsible for accounting Lucie Čejková Senior Manager, Accounting Persons responsible for the Annual Report of innogy Česká republika a.s. for 2017 The undersigned hereby affirm that the disclosures in this Annual Report are true and that no material circumstances have been omitted or distorted.
Martin Herrmann Thomas Merker Chairman, Board of Directors Vice-Chairman, Board of Directors innogy Česká republika a.s. innogy Česká republika a.s.
innogy Česká republika | Annual Report 2017
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innogy Česká republika | Annual Report 2017
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4 Management Report for 2017
4.1 Results
Results of the innogy Group in the Czech Republic
Profit after taxation (under the Group’s accounting manual) of the innogy Group in the Czech Republic
amounted to CZK 10,498 million in 2017. Its profit before taxation amounted to CZK 12,848 million.
Revenues, expenses and profit of the Company
The Company’s financial results were significantly impacted by the national merger of the Company
(the acquiring company) and innogy Business Services CZ, s.r.o. (the acquired company). The acquired
company was a wholly-owned subsidiary of the Company.
For 2017, innogy Česká republika achieved a profit after taxation of CZK 5,495 million. Profit before
taxation amounted to CZK 5,569 million.
2017 (CZKm) 2016 (CZKm)
Operating result 104 (85)
Sales of products and services 2,016 1,034
Cost of sales (1,297) (671)
Staff costs (546) (300)
Value adjustments of fixed assets (41) (141)
Other operating expenses and income (28) (7)
Financial result 5,465 3,510
Tax on profit or loss (74) (59)
Net profit after taxation 5,495 3,366
The total operating income amounted to CZK 2,267 million and total operating expenses were
CZK 2,163 million.
The financial result amounted to CZK 5,465 million. This result was mainly achieved thanks to income
from long-term investments in the form of profit distribution amounting to CZK 4,861 million.
Structure of assets and liabilities and equity
Structure of assets
As at 31 December 2017, the Company’s total assets increased by CZK 1,891 million to CZK 76,993
million compared with 31 December 2016. Fixed assets decreased by CZK 447 million to CZK 60,189
million. The change is mainly due to a decrease in the Company’s investments by CZK 802 million and
an increase in loans and borrowings (up by CZK 299 million) in controlled entities.
innogy Česká republika | Annual Report 2017
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Current and other assets increased by CZK 2,338 million and amounted to CZK 16,804 million
as at 31 December 2017. In the current assets category, short-term receivables increased by CZK 2,454
million year-on-year. Short-term receivables accounted for 97% of total current and other assets. The
increase in short-term receivables was mainly due to the larger volume of cash pooling receivables due
from companies in the innogy Group (up by CZK 1,973 million).
Financial assets showed a year-on-year decrease by CZK 120 million. Other assets, comprised of long-term receivables, and prepayments and accrued income, increased by CZK 5 million. Structure of assets (CZKm)
Structure of liabilities and equity
The Company’s equity grew by CZK 1,853 million to CZK 54,081 million as at 31 December 2017 and
accounted for 70% of the Company’s total liabilities and equity. The main reason for this growth in
equity is the improved result for the current accounting period, up by CZK 2,129 million.
Liabilities, accruals and deferred income amounted to CZK 22,912 million, and 55% of them were
short-term liabilities.
1 923
58 266
16 246
407151
31 December 2017
Tangible and intangible fixed assets
Long-term investments
Short-term receivables
Financial assets
Other assets
1 866
58 769
13 792
527147
31 December 2016
Tangible and intangible fixed assets
Long-term investments
Short-term receivables
Financial assets
Other assets
innogy Česká republika | Annual Report 2017
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Structure of liabilities and equity (CZKm)
Risk management
At the Company, its Board of Directors is responsible for risk management.
The Company records all identified risks in the Risk Catalogue. All risks are also recorded in a matrix of
risks, which helps to identify the most serious risks in terms of the probability of their occurrence and
size of potential damage. For each risk, the risk owner is clearly defined and is responsible for
managing this risk. The Company covers the most significant risks with the help of insurance, hedging
transactions, caps on risk positions, provisioning, and the application of various preventive measures,
depending on the nature of each particular risk.
The business unit formed of the subsidiary companies innogy Energie, s.r.o. and innogy Energo, s.r.o.
has also set up a Risk Management Committee, the members of which are representatives of the
managements of the two companies. The Risk Management Committee mainly focuses on the
proactive management of the market and credit risks to which the companies are exposed when
trading in commodity markets and also when supplying energy and services to their customers.
The Company measures all derivatives at their fair value as at the balance sheet day. The Company
does not use hedge accounting.
54 081
63
12 625
10 061 162
31 December 2017
Equity
Provisions
Short-term liabilities
Long-term liabilities
Accruals and deferred income
52 228
46
12 589
10 073 165
31 December 2016
Equity
Provisions
Short-term liabilities
Long-term liabilities
Accruals and deferred income
innogy Česká republika | Annual Report 2017
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4.2 innogy’s Business Activities in the Czech Republic
Natural gas and electricity trade
The year 2017 was marked by a further consolidation of the new brand, innogy, which has been
confirmed by the continued stabilisation of the portfolio of customers taking natural gas and the
continued growth of the portfolio of customers taking electricity, and also other successful projects
and products in non-commodity services.
New customers have signed up for the breakthrough solution for household consumption monitoring
in the form of the innosvět service, household insurance, and rooftop photovoltaic systems. In the
segment of Individually Operated Customers, new forms of cooperation were offered in advisory
services (for example, the iClever service) and primarily an innovative solution for industrial LED
lighting under the iSmart brand opened another successful stage in non-commodity services.
Intensively pursuing its business strategy, innogy Energie, s.r.o. was able to retain its market leadership
in natural gas sales; it also followed up on the dynamic growth of its electricity market share in
previous years. In 2017 again, innogy Energie was one of the most successful players selected by
customers when switching their supplier for a new partner.
As regards the temperature profile, with its average temperature of 8.61 °C (source: CHMI) 2017 was
again warmer than the long-term normal temperature, which is 7.89 °C. Nevertheless, the negative
impact of temperatures on the natural gas volumes sold was offset by the significantly higher
consumption in January, which was much colder than the long-term normal temperature and the
same month in preceding years.
Natural gas sales
In 2017, innogy Energie, s.r.o. sold 28,362,597 MWh of natural gas to its final customers. Compared
with 2016, the sales to final customers declined by 3,104,990 MWh (down by 10%), mainly due to
sales in the Large Customers category. The drop in sales in this category (down by 18%) is mainly
related to the loss of key accounts. The Small Customers category also registered a slight decline (by
1%), as did the Households category (by 0.4%).
Natural gas purchase
In 2017, natural gas purchase amounted to 29,200,153 MWh (largely from RWE Supply & Trading CZ,
a.s.; sourcing from other suppliers was insignificant). Compared with 2016, total procurement
decreased by 2,743,492 MWh, mainly due to lower sales.
innogy Česká republika | Annual Report 2017
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Natural gas sales and purchase (MWh)
2017 2016
Sales to final customers Large Customers 14,198,086 17,225,232
Small Customers 3,258,508 3,291,997
Households 10,906,004 10,950,358
Total sales to final customers 28,362,597 31,467,587
Others* 600,555 494,998
Total sales 28,963,153 31,962,585
Total purchase 29,200,153 31,943,645
* Sale back (RWE Supply & Trading CZ, a.s. and OTE, a.s.) Note: The difference between purchase and sales reflects the balancing model of the market, which we internally call the trader’s imbalance.
Electricity sales
Electricity was sold to customers in three basic categories. The most important category continued to
be Large Customers, followed by Small Customers, Households (MOO), and Small Customers, Business
(MOP).
innogy Energie, s.r.o., sold a total of 2,637,918 MWh of electricity to its final customers. The quantities
sold to final customers surged by 15% year-on-year, mainly thanks to the continued organic growth of
the Small Customers, Households (MOO) portfolio.
Electricity purchase
In 2017, electrical energy purchase for final customers amounted to 3,251,025 MWh (largely from
Slovenské elektrárne, a.s., RWE Supply & Trading GmbH, and Sokolovská uhelná, právní nástupce, a.s.;
sourcing from other suppliers was negligible). Total procurement rose by 517,240 MWh compared
with 2016.
Electricity sale and purchase (MWh)
2017 2016
Sales to final customers Large Customers 1,626,027 1,390,408
Small Customers (business)
202,006 173,302
Small Customers (households)
809,884 732,852
Total sales to final customers 2,637,918 2,296,562
Others * 625,165 487,649
Total sales 3,263,083 2,784,211
Total purchases 3,251,025 2,733,785
* Resale to other traders and OTE, a.s. Note: The difference between purchase and sales reflects the balancing model of the market, which we internally call the trader’s imbalance.
innogy Česká republika | Annual Report 2017
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Marketing activities
Without exaggeration, the year 2017 can be called the year of innogy and continued re-branding.
While in 2016 the Marketing department of innogy Energie, s.r.o. presented the new innogy brand to
all customers, both current and prospective, in 2017 it continued to promote it through support for
the values offered and embodied by the new brand. Let’s remember that innogy is an acronym
composed of three important words, the combination of which is the expected basis of our continued
business success in the Czech Republic and in Europe. The words are innovation, technology, and
energy. Fusing them to form innogy makes it very clear that it will be the technology and innovation
leader in the energy world, offering its customers products and services that will make their everyday
life easier and more pleasant.
Evidence of this strategy, pursued in 2017, can be seen primarily in the new and unique Consumption
Monitoring service (launched in September 2017), which includes the innosvět mobile application and
an energy consumption sensor based on the Internet of Things (the whole service is hereinafter
referred to as innosvět). innosvět is a new form of service, thanks to which the traditional energy
sector expands beyond its original realm and starting to offer customers its own services with a high
added value. What does the innosvět service actually involve? For the first time ever, customers have
been given an opportunity to keep energy consumption in their households fully and continuously
under their control, including predictions of consumption. The consumption sensor installed on the
gas meter can send current consumption data to innogy at regular intervals for further processing.
Together with the new innosvět mobile application, the sensor provides customers with continuous
online information about gas consumption. It offers them, particularly when an underpayment for the
current billing period is expected, an immediate response preventing unexpected energy
underpayments. The innosvět application, available for the Android and iOS mobile platforms, also
offers a number of other functionalities and useful gadgets.
innogy’s new communication style that compares two selected historical periods, presenting all the
benefits of the new service using the contrast resulting from the comparison, was the basis for
introducing the innosvět service. The Marketing department developed the new communication style
in the first half year to replace the Jarmil’s Family stories that had been used until then; they were,
after all, too closely tied to the original RWE brand. The results of the new form of communication to
date (AdTrack 1/2018) vindicate the change, proving that both customers and employees have
positively reacted to this new form of communication. In 2017, Marketing of innogy Energie, s.r.o.,
working together with the Company’s Corporate Affairs, also continued in its support for the
partnership with the Czech Lion awards through an accompanying advertising campaign with a popular
group of actors and audience appeal. This time, the cast was directly associated with that of Anděl
Páně 2 (Angel of the Lord 2), a sequel to a popular fairy tale, which is part of the long-term Energy of
Czech Film sponsorship project.
Naturally, support for all other products and services continued in 2017. Earlier launched services and
products with a higher added value, such as household insurance policies offering customers a high
level of coverage for their households and featuring quick compensation payments and the lease of
economical LED bulbs and smoke and carbon monoxide detectors, were further promoted. New
services were also launched: the installation of rooftop photovoltaic systems and special incentives
innogy Česká republika | Annual Report 2017
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offering electric bicycles at low prices. In the sale of conventional commodities, the offer of innovative
pricing products (mainly within the CRM system) was continued and support was provided to a further
simplification of customer service processes, in particular regarding digitalisation. During the year, the
implementation of a new CMS, called SiteCore, was prepared and additional online services such as
prepisenergii.cz and innogy24.cz were developed.
The Marketing department of innogy Energie, s.r.o. also supported the branch network and sought to
improve the footfall in the branches. In 2017 it therefore launched a unique book series, The innogy
Library; exclusive publications written by pre-eminent personalities of Czech culture (Václav
Postránecký, Tereza Kostková and others) were released as part of this book series. Customers could
receive one of these books as an exclusive gift for signing a contract or an addendum to a contract. In
case of their interest, we also offered them the opportunity to have the book signed by the author at
one of the autograph sessions organised right at our branches. The second half of the year also saw
the start of the preparations for the pilot redesign of the Ostrava branch. The key objective of this
project is to make the ambience of the customer centre more attractive and offer an experience
comparable with that of calling on a sales or technology “boutique”.
Natural gas distribution
In natural gas distribution, GasNet, s.r.o. operates a distribution system serving an area, defined in its
licence, which is the largest in the Czech Republic in terms of the area covered by and the length of the
operated gas pipelines. A distribution system operator’s key obligations include providing for the safe,
reliable and economical operation and the maintenance, replacement and development of
the distribution system in the delineated area, while gaining funds for these activities by selling
distribution capacity. Natural gas distribution is subject to regulation; in particular the Energy
Regulatory Office (ERO) oversees distribution system operators’ non-discriminatory approach. The ERO
also sets out the gas distribution charges and approves distribution system operators’ grid codes, and
adjudicates any disputes between market participants.
As at 31 December 2017, the system served 2,297,867 supply points. Although the number of supply
points declined by 1,535 year-on-year the natural gas quantity distributed in 2017 increased by about
3.5% to 73 TWh.
The Online servis PDS [DSO Service Online] application continued to be the main communication
channel between the distribution system operator and distribution network users. Compared with the
preceding period, a relatively significant increase was registered for all indicators of the utilisation of
the application. The number of logins into this application was a record, almost 149,000 in 2017, i.e.
408 logins per day on average. End users submitted 334,000 requests related to distribution capacity
booking (915 requests per day on average) and 185,000 readings (507 readings per day on average)
via the application.
A new feature implemented in the Online servis PDS application in 2017 is the option for the user to
plan the specific date for servicing jobs involving the installation and dismantling of metering
instruments. The deployment of this functionality has enhanced comfort on the part of customers; in
most cases, the customer is in direct contact with the sales person and can therefore plan already at
innogy Česká republika | Annual Report 2017
19
this stage, through the sales person, the specific date for metering instrument installation or
dismantling, immediately knowing the free dates available for this service.
In the Distribuce plynu online [Gas Distribution Online] application, primarily intended for submitting
applications for connection to the distribution system in all customer categories, applications for
opinions on non-gas construction projects, requests to check available capacity and requests for vector
data, has been modified in terms of the provision of topographies to applicants in the Contractor
category (construction firms). Solely External Topography Managers are now providing topographies
to applicants. The total number of requests and applications submitted through the Distribuce plynu
online application rose to 256,000.
As in preceding years, in 2017 customer systems were further developed to match the requirements
of the evolving gas market and to help support new services.
A major innovation in 2017 was the launch of a service that simplifies and expedites the re-connection
of supply points. Customers can now place orders for the verification of the technical condition of
their gas consuming equipment/appliances; this service is then carried out as part of supply point
connection. This eliminates the need to arrange for the verification of the technical condition of the
gas consuming equipment/appliance, including the relevant certificate, with a third-party entity in a
separate step before gas meter installation. The new service is intended for all customers in the
category of small customers and households (MODOM), who are re-connecting following prior
disconnection, provided that no more than six months have passed from the disconnection date.
The legislative requirements under Regulation (EU) 2016/679 of the European Parliament and of the
Council (General Data Protection Regulation, GDPR), the purpose of which is to tighten the rules for
personal data protection, have precipitated heavy impacts on information systems. Because of
the voluminous nature of the issue GDPR implementation is being addressed by the Company in a
separate project, which will extend into 2018.
In the spirit of the latest trend of using mobile applications, customers were provided with a mobile
application for collecting meter readings; for MODOM customers, the application helps to transmit
data on gas consumption at their supply points, both data on their reference self-readings and data on
readings taken for the purpose of extraordinary billing, very conveniently.
The new services that provide customers with a better picture of their off-take profile and the status
of the distribution system include the sending of informative text messages on the overstepping of
their booked distribution capacity and the service (which is being prepared) of sending informative
text messages in case of unplanned outages of the distribution system.
Preventive measures to avoid illegal off-takes continue to be sought proactively. For this purpose a
pilot project called Smart Metering has been launched, whereby a gas meter featuring a function of
gas supply cut-off via remote transmission is installed at supply points that have been repeatedly
disconnected for illegal gas off-takes. In the light of the favourable experience, the gradual rollout of
this type of gas meters can be expected in the coming years.
Representatives of GasNet, s.r.o. also participated in European DSOs’ joint activity concerning the
monitoring and evaluation of methane emissions from distribution systems with a view to developing
innogy Česká republika | Annual Report 2017
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a standardised European methodology for methane emission evaluation in the operation of up to
1.5MPa natural gas distribution systems.
In 2017, GasNet, s.r.o. continued to increase its investment activity somewhat, chiefly focusing on
enhancing the safety and reliability of the distribution infrastructure. Investment in tangible assets rose
to CZK 3,845 million; investment in intangible assets also rose slightly year-on-year, and amounted to
CZK 123 million.
The largest part (CZK 3,397 million) of these funds is being channelled into the renovation of
the distribution system due to the extent of the distribution network and its age: a part of the system
has been developed since the 1940s.
The investment plans for network upgrades are always subjected to a multi-criteria assessment based
primarily on the overall optimisation of the network, the underlying design of which reflects the
specific demand for gas at each particular site. When implementing these plans, the company
successfully coordinates construction work with other utility infrastructure managers, which helps to
cut costs and mitigate the negative impacts of refurbishment on citizens in the affected localities.
CZK 67 million was spent on acquiring new networks, and the downward trend in these acquisitions
therefore continues; the trend began to be felt in previous years and is attributable to the high level of
gas supply penetration achieved in our distribution area. Establishing easements over operated gas
pipelines also incurs a significant part of financial costs, specifically CZK 79 million in 2017.
In the intangible assets category, investments were mainly channelled into information system
security, compliance with the cyber security law, preparations for GDPR, and software support for
field workers in capital construction. Some of the intangible asset expenditure was spent on preparing
general development plans for the areas in question.
In 2017, R&D mainly focused on issues related to improving the efficiency and safety of the operation
of the distribution system and also the development of digitalisation. Specific examples include the Air
Screening project based on the principle of the remote sensing of the Earth. From above, at distances
ranging from tens of metres to hundreds of kilometres, the surroundings of distribution gas pipelines
can be scanned; the operating conditions such as gas leakages and activities in protection and safety
zones can subsequently be evaluated. When testing selected equipment in the field, its capabilities
and limits were assessed as part of preparing the conditions for its potential deployment in practical
operation. The completion of testing in one of the phases of the Building Information Modelling (BIM)
project, focused on digitising the input information for gas regulating stations, continued in 2017 using
360° software applications. The results of the testing yielded to date create realistic conditions for the
future satisfaction of the requirements for digitalisation in relation to the changes being prepared as
part of the state administration’s strategy. Another important area was preparations for natural gas
greening, which in practice means injection of renewable gases, including those based on biomethane,
into the distribution system. GasNet, s.r.o. has therefore actively joined a European project managed
by GERG (The European Gas Research Group), the objective of which is to specify the conditions for
the development of harmonised EU legislation. A very important parameter of renewable gases is
their quality specs, which was also a focus of this project. The process, now already organised on a
innogy Česká republika | Annual Report 2017
21
regular basis, of monitoring new technologies and energy market developments, and also the target
areas for preparing and awarding new research projects, continued in 2017.
Natural gas storage
innogy Gas Storage, s.r.o., a wholly-owned subsidiary of innogy Česká republika, operates six
underground gas storage (UGS) facilities at Dolní Dunajovice, Lobodice, Štramberk, Třanovice,
Tvrdonice and Háje. Their storage capacity totals 2.7 bcm. The first five of these UGS facilities are
situated in northern and southern Moravia, where natural geological structures, originally containing
natural accumulations of natural gas and oil, are used for gas storage. The only exception is the
Lobodice plant, which was developed in an aquifer by displacing water from porous rock. The Háje UGS
facility serves for covering peaks in natural gas demand of the industrial centres in the Central
Bohemian Region and in Prague; an excavated underground cavern has been used for gas storage
there for more than 19 years.
In operating its UGS facilities, innogy Gas Storage, s.r.o. focuses on the efficiency, reliability, availability
and flexibility of its services while ensuring a high standard of safety at work and in operations.
In 2017, innogy Gas Storage, s.r.o. carried out capital projects under the approved investment plan. It
acquired assets valued CZK 322 million, mainly in connection with improving operating safety and
reliability.
Storage capacity sales
In 2017, innogy Gas Storage, s.r.o. offered all of its services in a transparent and non-discriminatory
manner to 23 storage customers from six EU countries.
In 2017, innogy Gas Storage, s.r.o. achieved the same record number of storage capacity auctions
when it offered various combinations of working gas volumes and withdrawal/injection capacities, as
well as separate storage capacities and separate withdrawal/injection in 16 auctions. Customers
increasingly used non-standard products, including interruptible daily capacities.
Heat supply, CNG in transport, and electro-mobility
innogy Energo, s.r.o. primarily follows two core business lines. One is establishing, modernising and
operating district heating and local heat supply systems and electricity generation, including
arrangements for financing. The implementation usually takes the form of comprehensive projects for
modernising district heating systems using cogeneration units.
The other, and equally important, core business line is the rollout and operation of CNG fuelling
stations and CNG sales in transport. In 2017, innogy Energo, s.r.o. already operated more than 20 CNG
fuelling stations and it continues to prepare new sites for additional CNG stations with a view to
increasing their number by at least 15 new stations in the next two years. Leveraging the company’s
proprietary technology know-how for CNG station installation is considerably contributing to this
effort.
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innogy Energo, s.r.o. also pursues business in electro-mobility, for which it has prepared a
comprehensive offer of products and services centred on charging stations. The first projects have
been carried out in this segment and innogy Energo is also set to roll out a backbone network of public
ultra-fast charging stations.
In 2017, the implementation of projects for optimising district heating operations based on high-
efficiency combined heat and power generation dominated in the area of thermal and electric energy
generation and distribution. These primarily included the completion of the installation and
commissioning of a new cogeneration unit in the town of Rumburk, the installation of a cogeneration
unit in a part of the town of Beroun, where the connection of new residential development projects to
district heating is also being prepared, and the completion of the first stage of the decentralisation of
the heat supply system in the town of Nymburk.
For the largest CHP operation of innogy Energo, s.r.o., the Náchod CHP plant, which has been
completely retrofitted, 2017 was a breakthrough year. Coal burning was definitively discontinued in
the operation and only natural gas fired boilers are producing heat now. The conversion to natural gas
has profoundly greened up the entire operation while the district heating system has been completely
modernised as a whole with a view to reducing heat distribution losses.
As regards marketing and communication activities innogy Energo, s.r.o. has put in place, in the heat
and power generation and distribution segment, a strategy for approaching potential customers
amongst municipalities and in the commercial sphere. For CNG, its activities mainly focused on
educational events targeting firms and businesses in locations with recently opened CNG fuelling
stations, also including presentations of new web and mobile applications.
4.3 Communication Activities
In 2017, the Company’s Corporate Affairs coordinated and arranged most of the internal and external
communication activities for innogy companies in the Czech Republic, in particular the completion of
the re-branding process. Thus, internal and external communication was largely centred on
communicating the new innogy brand, and also on presenting new and innovative products and
services.
The year 2017 was the twelfth season of the Energy of Czech Film sponsorship project. We supported
the following feature films: Rodinný přítel (Family Friend), Dezertér (Deserter) and Nápadník (Suitor)
from the Zahradnictví (Garden Store) trilogy of Director Jan Hřebejk, a new film made by the Svěrák
father and son duo, Po strništi bos (Barefoot), and Director Miroslav Krobot’s comedy Kvarteto (The
Quartette). Documentaries also strongly featured in the film sponsorship project. Support was
provided to footage on Vladimír Míšík, Petr Zuska, and the collaboration between conductor Daniel
Barenboim and the Prague Spring International Music Festival. This festival has long been an
inseparable part of the Company’s sponsorship activities.
In addition to our partnership with the Karlovy Vary International Film Festival and Czech Film Review
Awards, the Energy of Czech Film project also includes long-standing sponsorship of the FILM
FOUNDATION, i.e. backing for talented scriptwriters. The Company contributed to the system of in-
innogy Česká republika | Annual Report 2017
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house grants at the Film and Television Faculty of the Academy of Performing Arts in Prague. For
innogy Energie, s.r.o., the Company’s Corporate Affairs set up an advertising alliance with the Uherské
Hradiště Summer Film School, with Barrier-free Cinema on the occasion of the 52nd Karlovy Vary
International Film Festival, and a joint partnership for the 24th edition of The Czech Lion Awards. For
innogy Energo, s.r.o., general partnership with Cena Trilobit Beroun (the Beroun Trilobite Awards) was
arranged.
The long-term Energy of Czech Skiing sponsorship project entered into its 13th season at the end of
2017. Together with innogy Energie, s.r.o., the Company supports 13 ski resorts across the country.
Before the new season, we raised the profile of the innogy brand in the Svatý Petr ski resort in
Špindlerův Mlýn and in the SkiResort Černá hora ski resort in Pec. The Company continued to promote
safe skiing in Czech mountains by installing information and safety elements.
The long-term cooperation with ski resorts brings benefits for all innogy Energie customers who hold
the innogy Card. Cardholders can, among other things, receive a 20% discount on one-day adult ski
passes and a 10% discount on family ski passes at the entrance to ski resorts.
The eight-year partnership with Czech Television’s highly rated reality show called S ČT sport na vrchol
(All the Way to the Top with Czech Television Sport), geared towards seeking out skiing talents amongst
amateurs, continues in the 2017/2018 skiing season. The Company again helped to sponsor the
careers of young skiers at Sportovní gymnázium [a grammar school promoting sports] in Vrbno pod
Pradědem and Sportovní akademie [Sports Academy] in Špindlerův Mlýn.
In respect of financial donorship, in 2017 the Company’s key partners included the Nadace Naše dítě
foundation, the Nadace Charty 77 foundation – Konto Bariéry, the Nadace ADRA foundation, and the
ŽIVOT 90 registered institute. Through these charities, the Company allocated CZK 6 million.
In September 2017, Corporate Affairs organised Summer Sport Games for the employees of all innogy
companies in the Czech Republic. For some companies, Corporate Affairs arranged employees’ work
and social events in the regions. innogy companies’ employees could attend one of the première Po
strništi bos screenings at the end of the summer holiday months.
Our employees’ social commitment was again boosted through the innogy Companius long-term
project. It is conditional on employees’ active volunteering for a non-profit organisation that innogy
companies in the Czech Republic will support in financial or even organisational terms. In 2017, innogy
Companius worked with a total budget of CZK 1.7 million (allocated to 81 projects), and the
Company’s share amounted to CZK 1 million. The funds were mainly channelled into assistance for
sport, cultural and educational activities and also social purposes. Employees of innogy companies in
the Czech Republic actively helped during various events, such as the Prague Wheelchair Sports Club’s
Floorball Benefit Tournament, the autumn clean-up at the Paraple Centre, and the Christmas party for
elderly citizens organised by Život 90 every year.
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4.4 Human Resources
In 2017, Human Resources focused on streamlining personnel management processes and improving
HR service provision in all innogy companies in the Czech Republic. The strategic objectives included
digitising the personnel agenda, identifying and supporting internal talents and employees in critical
positions, enhancing the Employer Brand, and also employee development and training and support
for talent. The common denominator of all Human Resources projects and activities was boosting
innogy’s good reputation as a stable, modern and innovative employer, and also support for innogy’s
commercial activities.
Last year, several major events were organised under Human Resources’ auspices, primarily on topics
of the innogy style project. It combines flexible forms of working and a personalised approach to
employees and their needs. As in preceding years, events called Brain and Breakfast, Diversity Talks,
i.e. Breakfast with…, attracted great interest. Employees had opportunities to meet interesting
personalities from science, culture, industry, sport and healthcare. In 2017, innogy was awarded as a
Family Friendly Firm. The recognition highlighted overall personnel policy in relation to employees on
maternal and parental leave and their re-integration into working life. The innogydoma platform via
which mothers and fathers on parental leave communicate with their employer was also recognised.
Human Resources were actively dedicated to the diversity programme again in 2017.
Regarding the cooperation with universities and student organisations, the Company took part in
several job fairs across the country, for example, the Career Days. August 2017 saw the successful
completion of the Trainee Programme for 2016-2017. Many graduates have found employment in
some of innogy companies in the Czech Republic. In 2017, Human Resources significantly broadened
the range of goods and services available in the electronic application for employee benefits, the
Benefit Portal. Additional bargain offers for innogy employees were obtained, primarily from suppliers
in tourism and services. Employees had an opportunity again to donate their benefit points for
charitable purposes in 2017.
Staffing levels
As at 31 December 2017, the innogy Group in the Czech Republic had 4,082 employees, of whom
the Company employed 505 as at the same date.
Wages
Wage levels continued to develop in accordance with the principles and arrangements agreed in
the Collective Agreement and Company management’s plans and intentions for human resources.
Development and remuneration
As the previous years, 2017 again saw the Annual Staff Performance Reviews (appraisals) and
Development Plan Design for all innogy employees in the Czech Republic. The sophisticated system of
training devotes great attention to upgrading employees’ professional qualifications and to their
personal development, employing the 70:20:10 model. This ratio refers to the fact that knowledge
does not mean practical skills, and we should therefore not rely only on the traditional forms of
development such as seminars and e-learning, to which we should allocate only 10% of the time
innogy Česká republika | Annual Report 2017
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dedicated to personal and professional development. The key is to use new knowledge in practice
(70%) and receive feedback and recommendations from colleagues and managers (20%).
This model is also based on two pillars: (a) the personal responsibility and initiative of every employee
and his/her line manager, (b) effective combinations of various forms of development for acquiring
certain skills. Human Resources have a consultant’s role and guarantee the process and offering of
development activities.
Managers could also go through thematic workshops, called innovinky (formerly HR packages) in
Prague, Brno and Ostrava, while employees received information via the intranet and an educational
screen saver.
In 2017, innogy companies in the Czech Republic spent CZK 33.47 million on education and
development, which was 1.74% of the payroll costs (excluding severance pay and other one-off
rewards). In 2017, 18,980 educational events were held, attended by 4,232 employees. The total
number of participants in all educational events was 31,469. Of the above amount, the Company spent
CZK 10.92 million on education and development in 2017, i.e. 3% of its payroll costs. It organised 3,289
educational events with 541 employees attending. The total number of participants in all educational
events organised by the Company was 3,774.
Social policy
The Company performed its obligations under the Collective Agreement signed for the period from
1 January 2016 to 31 December 2018. This Collective Agreement was signed with Odborový svaz SOS
Energie [SOS Energy Trade Union], Sdružení základních organizací Odborového svazu UNIOS innogy
[Association of Branches of the UNIOS innogy Trade Union] and ECHO Teplárna Náchod in January
2016.
Although the Collective Agreement was in effect until the end of 2018, revisions were negotiated by
the Company's management and trade union representatives in the second half of 2017. The decision
was made in consideration of the favorable business performance of innogy in the Czech Republic and
our commitment to be an employer of choice for the best talents and experts on the market. The
negotiated amendments mainly include higher wages and improved working conditions in the
forthcoming years.
4.5 OHS and Environmental Protection
Occupational health and safety
The Company continued to focus on promoting the OHS culture. In 2017 workshops were again
organised for managerial personnel to enhance their positive influence on the OHS culture.
A mobile application for reporting safety walk-through inspections and interviews was also put into
operation; it is guiding us in the digitalisation direction in respect of OHS as well. The application also
helps employees to report defects in workplaces, near misses, and occupational injuries.
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A number of activities also focused on compliance with the requirements of legislation. To this end,
the categorisation of work was updated and documents on fire protection, OHS, and environmental
protection rules were revised.
One of the key OHS indicators is LTIF (Lost Time Injury Frequency, i.e., the incidence of occupational
injuries resulting in incapacity for work for more than one day per million hours worked). The target for
2017 was LTIF lower than 1.85, including injuries to suppliers’ employees. The actual LTIF rate was 2.01
for all innogy companies, including occupational injuries on the part of suppliers. In total, 15
occupational injuries resulting in incapacity for work occurred in the innogy Group in 2017, of which
one in the Company. The most frequent causes of injuries were slipping, tripping, and falling. At
GridServices, s.r.o., a fatal traffic accident occurred towards the end of the year. The culprit of the
accident had not been identified by the date of this Annual Report.
Environmental protection
Environmental protection is very high on the agenda of innogy Česká republika and is covered in all of
its activities, processes and decisions. The managements of innogy companies in the Czech Republic
adopted a new Environmental Protection Policy in 2017.
In relation to a long-term environmental target, i.e. reducing NOx and CO emissions, GridServices,
s.r.o. and GasNet, s.r.o. focused on upgrading the air pollution sources in gas pre-heating at gas
regulating stations.
To mitigate the negative environmental impacts caused by the operation of underground gas storage
facilities, innogy Gas Storage, s.r.o. carried out active measures to protect biotope and to promote
biodiversity. In cooperation with Agentura ochrany přírody a krajiny [Nature Conservation Agency of
the Czech Republic] it continued in the Living Islands project – the planting of new trees and bushes as
replacement for those that had to be felled and cut in the safety and protection zones to ensure safe
operation.
innogy Energo, s.r.o. continued to upgrade the operation of CHP plants and heat supply substations,
primarily the CHP operation in Náchod. In May 2017, this CHP plant stopped coal burning and now
produces heat using solely natural gas boilers.
innogy Energo, s.r.o. continued investing in CNG station network rollout. CNG vehicles feature zero
emissions of sulphur, particulate matter, and aromatic hydrocarbons, and are therefore
environmentally friendlier.
innogy Energie, s.r.o. and GasNet, s.r.o. are the entities that are subject to the commitments arising
from the environmental agreements with the Ministry of Finance of the Czech Republic; these
agreements provide for the defrayal of the costs incurred in honouring environmental commitments
established before the privatisation. These include old environmental pollution caused by earlier town
gas production plants operated by the former state-owned company. In Karlovy Vary, one of the most
extensive remediation projects for old environmental pollution was started in September.
The other innogy companies in the Czech Republic had only negligible environmental impacts thanks
to their trading and administrative operations. The year 2017 did not see any environmental
innogy Česká republika | Annual Report 2017
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emergency or event having a negative impact on the environment in the operations of innogy
companies.
4.6 Subsequent Events
No events with a major impact on the assessment of the Company’s business had occurred by the date
of this Annual Report.
On 11 March 2018, RWE AG and E.ON SE announced that they had reached agreement on the basis of
which RWE AG would sell its 76.8% stake in innogy SE to the E.ON Group. They also stated that a
binding contract had not yet been signed and that the agreement included an exchange of parts of
assets between the two companies. innogy SE is the controlling company of the innogy Group, the
structure of which also includes innogy Česká republika a.s.
4.7 Outlook
The year 2018 will be marked by the continued building of the innogy brand in the Czech market, not
only as a supplier of traditional energy services but also, and primarily, as a supplier of a continuously
widening range of non-commodity products and services. innogy Energie, s.r.o. will continue to focus
on comprehensive energy solutions based on the maximum use of new information technology and to
digitalise services, and will further build on the successful foundations laid in recent years (including
For household customers, we have prepared attractive commodity products, the main objective being
to retain and develop our current customer portfolio; dynamic development in digitalisation, in
particular the next developmental stages of the innosvět product, is also a priority in this segment.
Going forward, innogy Gasnet, s.r.o. will continue in enhancing the safety and reliability of natural gas
supply to customers. This policy entails a gradual increase in the planned capital expenditure on the
renovation of the distribution system. In 2018, capital expenditure on renovation is planned to exceed
CZK 3,400 million. When planning all capital projects, an essential factor is the economic aspect of
system operation. All capital projects are carried out in line with efforts to increase the long-term
competitiveness of natural gas as an energy commodity for decades to come. This mainly consists in
improving the efficiency of gas distribution, thereby optimising the grid operation cost to the
distributed gas quantity ratio and, in turn, the grid’s economy.
The high standard of safe operation will be maintained, primarily through the continued elimination of
technical risks as an inseparable part of the planned renovation of the grid. This will also be supported
by the new predictive model for selecting the gas installations for renovation; the model respects
experience with the development of the failure rate of each piece of equipment and so helps to
allocate funds as effectively as possible with a view to minimising leakages.
The key objectives of distribution system development include support for projects that help to
improve the efficient and economical operation of the various sites, such as housing and industrial
construction, and also support for strategically important projects such as the rollout of CNG stations.
innogy Česká republika | Annual Report 2017
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In this respect, a great emphasis is also placed on unused gas service pipes. The plan is to arrest the
trend of their increasing numbers and to gradually bring them back to life again.
innogy Energo, s.r.o. will continue to roll out the CNG fuelling station network so as to be able to offer
its services in new regions. It will also continue to work on popularising CNG as a major alternative fuel
contributing to transport greening while also offering an appreciable benefit in fuel cost savings.
Besides CNG, innogy Energo, s.r.o. started to promote its services in electro-mobility. It will develop its
offer to install charging stations at customers while preparing its own portfolio of public charging
infrastructure, all of this in line with innogy’s overall strategy.
The optimisation and modernisation of district heating systems will also continue with a view to
providing for a competitive range of services in this sector as well. In addition to upgrading the current
operations we will also identify new acquisition opportunities and carry out solutions for new
customers, including the potential acquisition of existing operations from their original owners.
Gas storage prices have been low throughout Europe for several years, and so the medium-term
outlook for innogy Gas Storage, s.r.o. remains constant.
In respect of internal processes, innogy is facing the challenging implementation of the legislative
requirements related to GDPR.
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innogy Česká republika | Annual Report 2017
30
5 Financial Part
5.1 Financial Statements
Company name: innogy Česká republika a.s. Identification number: 24275051 Legal form: joint stock company Primary business: provision of services to innogy companies in the Czech Republic Balance sheet date: 31 December 2017 Date of preparation of the financial statements: 12 February 2018
BALANCE SHEET (in thousand Czech crowns)
Ref. ASSETS Row 31.12.2017 31.12.2016
a Gross Provision Net Net
b c 1 2 3 4
TOTAL ASSETS 001 80,552,224 (3,559,389) 76,992,835 75,101,380
B. Fixed assets 003 63,747,937 (3,559,389) 60,188,548 60,635,500
B. I. Intangible fixed assets 004 974,689 (949,826) 24,863 32,618
B. I. 2. Royalties 006 963,900 (949,363) 14,537 32,533
B. I. 4. Other intangible fixed assets 010 824 (463) 361 85
B. I. 5. Advances paid and intangible fixed assets in the course of construction 011 9,965 - 9,965 -
B. II. Tangible fixed assets 014 4,507,725 (2,609,563) 1,898,162 1,833,802
B. II. 1. Land and constructions 015 3,701,843 (1,940,310) 1,761,533 1,778,585
B. II. 2. Equipment 018 779,432 (669,253) 110,179 50,033
B. II. 4. Other tangible fixed assets 020 1,151 - 1,151 1,151
B. II. 5. Advances paid and tangible fixed assets in the course of construction 024 25,299 - 25,299 4,033
B. III. Long-term investments 027 58,265,523 - 58,265,523 58,769,080
B. III. 1. Investments - subsidiaries and controlling party 028 48,343,095 - 48,343,095 49,145,241
B. III. 2. Loans and borrowings - subsidiaries and controlling party 029 9,922,428 - 9,922,428 9,623,839
C. Current assets 037 16,661,993 - 16,661,993 14,343,182
C. II. Receivables 046 16,255,428 - 16,255,428 13,815,834
C. II. 1. Long-term receivables 047 9,033 - 9,033 23,734
C. II. 1. 4. Deferred tax asset 051 8,903 - 8,903 23,513
C. II. 1. 5. Receivables - other 052 130 - 130 221
C. II. 2. Short-term receivables 057 16,246,395 - 16,246,395 13,792,100
C. II. 2. 1. Trade receivables 058 417,549 - 417,549 137,288
C. II. 2. 2. Receivables - subsidiaries and controlling party 059 15,395,276 - 15,395,276 13,422,679
C. II. 2. 4. Receivables - other 061 433,570 - 433,570 232,133
C. II. 2. 4. 3. Taxes - receivables from the state 064 34,195 - 34,195 38,692
C. II. 2. 4. 5. Estimated receivables 066 378,860 - 378,860 164,656
C. II. 2. 4. 6. Other receivables 067 295 - 295 245
C. IV. Cash 071 406,565 - 406,565 527,348
C. IV. 1. Cash in hand 072 13 - 13 1
C. IV. 2. Cash at bank 073 406,552 - 406,552 527,347
D. Prepayments and accrued income 074 142,294 - 142,294 122,698
D. 1. Prepaid expenses 075 88,191 - 88,191 78,042
D. 3. Accrued income 077 54,103 - 54,103 44,656
innogy Česká republika | Annual Report 2017
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Ref. LIABILITIES AND EQUITY Row 31.12.2017 31.12.2016
a b c 5 6
TOTAL LIABILITIES AND EQUITY 078 76,992,835 75,101,380
A. Equity 079 54,081,171 52,228,065
A. I. Share capital 080 48,861,246 48,861,246
A. I. 1. Share capital 081 48,861,246 48,861,246
A. II. Share premium and capital contributions 084 (275,316) 692
A. II. 2. Capital contributions 086 (275,316) 692
A. V. Profit / (loss) for the current period 099 5,495,241 3,366,127
B. + C. Liabilities 101 22,749,431 22,708,239
B. Provisions 102 63,377 46,015
B. 4. Other provisions 106 63,377 46,015
C. Liabilities 107 22,686,054 22,662,224
C. I. Long-term liabilities 108 10,061,296 10,072,954
C. I. 6. Liabilities - subsidiaries and controlling party 116 10,061,296 10,072,954
C. II. Short-term liabilities 123 12,624,758 12,589,270
C. II. 3. Short-term advances received 128 2,087 4,940
C. II. 4. Trade payables 129 279,755 214,084
C. II. 6.
Liabilities - subsidiaries and controlling party 131 12,131,786 12,293,363
C. II. 8. Liabilities - other 133 211,130 76,883
C. II. 8. 3. Liabilities to employees 136 23,567 14,856
C. II. 8. 4. Liabilities for social security and health insurance 137 11,267 7,115
C. II. 8. 5. Taxes and state subsidies payable 138 52,603 7,811
C. II. 8. 6. Estimated payables 139 122,509 46,190
C. II. 8. 7. Other liabilities 140 1,184 911
D. Accruals and deferred income 141 162,233 165,076
D. 1. Accrued expenses 142 143,783 144,060
D. 2. Deferred income 143 18,450 21,016
innogy Česká republika | Annual Report 2017
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Company name: innogy Česká republika a.s. Identification number: 24275051 Legal form: joint stock company Primary business: provision of services to innogy companies in the Czech Republic Balance sheet date: 31 December 2017 Date of preparation of the financial statements: 12 February 2018
INCOME STATEMENT (in thousand Czech crowns)
Ref. TEXT Row Accounting period
2017 2016
a b c 1 2
I. Sales of products and services 01 2,015,639 1,034,255
A. Cost of sales 03 1,297,428 670,501
A. 2. Raw materials and consumables used 05 85,982 91,020
A. 3. Services 06 1,211,446 579,481
D. Staff costs 09 546,126 299,810
E. Value adjustments in operating acitivities 14 40,887 141,329
E. 1. Value adjustments of fixed assets 15 40,887 141,329
E. 1. 1. Depreciation, amortisation and write off of fixed assets 16 175,387 149,729
E. 1. 2. Provision for impairment of fixed assets 17 (134,500) (8,400)
III. Operating income - other 20 116,425 69,920
III. 1. Sales of fixed assets 21 110,180 66,726
III. 2. Sales of raw materials 22 172 -
III. 3. Other operating income 23 6,073 3,194
F. Operating expenses - other 24 143,732 77,676
F. 1. Net book value of fixed assets sold 25 151,497 47,887
F. 3. Taxes and charges from operating activities 27 5,360 5,554
F. 4. Operating provisions and complex prepaid expenses 28 (24,465) 11,033
F. 5. Other operating expenses 29 11,340 13,202
* Operating result 30 103,891 (85,141)
IV. Income from sales of long-term investments - shares 31 5,229,870 3,178,605
IV. 1. Income from sales of investments - subsidiaries or controlling party 32 5,229,870 3,178,605
VI. Interest and similar income 39 543,781 515,925
J. Interest and similar expenses 43 296,916 159,971
VII. Other financial income 46 10,573 5,176
K. Other financial expenses 47 22,238 29,705
Financial result 48 5,465,070 3,510,030
** Net profit / (loss) before taxation 49 5,568,961 3,424,889
L. Tax on profit or loss 50 73,720 58,762
L. 1. Tax on profit or loss - current 51 52,764 51,634
L. 2. Tax on profit or loss - deferred 52 20,956 7,128
** Net profit / (loss) after taxation 53 5,495,241 3,366,127
*** Net profit / (loss) for the financial period 55 5,495,241 3,366,127
Net turnover for the financial period 56 7,916,288 4,803,881
innogy Česká republika | Annual Report 2017
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Company name: innogy Česká republika a.s. Identification number: 24275051 Legal form: joint stock company Primary business: provision of services to innogy companies in the Czech Republic Balance sheet date: 31 December 2017 Date of preparation of the financial statements: 12 February 2018
CASH FLOW STATEMENT (in thousand Czech crowns)
Ref. TEXT Accounting period
2017 2016
a b 1 2
Cash flows from operating activities
Net profit on ordinary activities before tax 5,568,961 3,424,889
A. 1. Adjustments for non-cash movements: (5,404,343) (3,399,876)
A. 1. 1. Depreciation and amortisation of fixed assets 175,387 149,729
A. 1. 2. Change in provisions (158,965) 2,633
A. 1. 3. Profit from disposal of fixed assets (327,429) (157,107)
A. 1. 4. Profit distribution income (4,861,124) (3,040,337)
A. 1. 5. Net interest income (246,865) (355,954)
A. 1. 6. Other non-cash movements 14,653 1,160
A * Net cash flow from operating activities before tax and changes in working capital 164,618 25,013
A. 2. Working capital changes: 124,033 75,448
A. 2. 1. Change in receivables and prepayments (44,590) 199,856
A. 2. 2. Change in short-term payables and accruals 168,623 (124,408)
A ** Net cash flow from operating activities before tax 288,651 100,461
A. 3. Interest paid (297,703) (17,610)
A. 4. Interest received 534,334 516,765
A. 5. Income tax paid (49,531) (71,862)
A. 6. Profit distribution received 4,861,124 3,040,337
A *** Net cash flow from operating activities 5,048,224 3,568,091
B. 1. Acquisition of fixed assets (259,871) (66,911)
B. 2. Proceeds from sale of fixed assets 264,488 204,994
B. 3. Loans to related parties 12,102 8,122
B. 4. Decrease of share capital in subsidiary 491,898 1,807,009
B. 5. Purchase of innogy Business Services CZ, s.r.o. (see note 5) (687,920) -
B *** Net cash flow from investing activities (179,303) 1,953,214
C. 1. Change in long- and short-term liabilities (174,805) 161,404
C. 2. Changes in equity: (3,366,127) (5,438,606)
C. 2. 6. Profit distribution paid (3,366,127) (5,438,606)
C *** Net cash flow from financing activities (3,540,932) (5,277,202)
Net increase/(decrease) in cash and cash equivalents 1,616,640 244,103
Cash and cash equivalents at the beginning of the year including the impact of the merger as at 1 January 2017 2,332,747 1,765,650
Cash and cash equivalents at the end of the year 3,949,387 2,009,753
Note
The financial statements have been prepared in the Czech language and in English. In all matters of interpretation of information, views or
opinions, the Czech version of the financial statements takes precedence over the English version.
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Statement of changes in shareholders' equity for the year ended 31 December 2017
(CZK'ooo) Share capital
Share premium and capital
contributions Retained earnings Total
As at 1 January 2016 48,861,246 9,982,692 5,438,606 64,282,544
Profit distribution paid - - (5,438,606) (5,438,606) Share premium and capital contributions pay-out - (9,982,000) - (9,982,000) Net profit for 2016 - - 3,366,127 3,366,127
As at 31 December 2016 48,861,246 692 3,366,127 52,228,065
Transformation - the impact of the merger - 411,912 - 411,912
As at 1 January 2017 48,861,246 412,604 3,366,127 52,639,977
Profit distribution paid - - (3,366,127) (3,366,127) Adjustments between the decisive and effective day of the merger* - (687,920) - (687,920) Net profit for 2017 - - 5,495,241 5,495,241
As at 31 December 2017 48,861,246 (275,316) 5,495,241 54,081,171
* See note 1.2. and 5.
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5.2 Notes to the Financial Statements
1. General information
1.1 Introductory information about the Company innogy Česká republika a.s., (“the Company”) was incorporated on 25 September 2012 by the Municipal Court in Prague, Section B, Insert 18556 and has its registered office at Limuzska 3135/12, Prague 10 Strasnice, the Czech Republic. The Company’s primary business activity is provision of services to innogy companies in the Czech Republic. Identification number of the Company is 242 75 051. The Company updated its Articles of Association that are now fully governed by the new Corporations Act. This fact became effective as at 8 April 2014. The Company is not a shareholder having unlimited liability in any undertaking. The members of the Board of directors as at 31 December 2017 were as follows:
Name Position
Martin Friedrich Herrmann Chairman Thomas Merker Vice-Chairman
The members of the Supervisory board as at 31 December 2017 were as follows:
Name Position
Filip Thon Chairman Maria-Theresia Elisabeth Thiell Vice-Chairman Lenka Šimarová Member
The Company granted proxies for following persons as at 31 December 2017:
Name
Erika Vorlová Josef Benda Martin Chalupský Jiří Krtička
The changes in the Company’s bodies, which occurred during 2017: With effective date 6 April 2017 Kai Richter terminated granted power of attorney, which had expired in that moment. With effective date 30 April 2017 František Čech terminated granted power of attorney, which had expired in that moment. On 29 November 2017 the term of office of the member and chairman of the Supervisory Board, Filip Thon, has been completed. The sole shareholder acting on behalf of the General Meeting elected Filip Thon a member of the Supervisory Board for a further term of office with effective date from 30 November 2017. The Supervisory Board elected Filip Thon as Chairman of the Supervisory Board with effective date from 30 November 2017.
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In accordance with Generally Accepted Accounting Principles in the Czech Republic, the Company did not prepare the consolidated financial statements because, as the controlled entity, it is included in the consolidated financial statements of innogy SE registered at Opernplatz 1, 451 28 Essen, Germany, which prepares the consolidated financial statements under the International Financial Reporting Standards as adopted by the European Union.
1.2 Information on the domestic merger On 16 August 2017, the domestic merger project was approved between the Company (the Successor Company) and innogy Business Services CZ, s.r.o. (the Dissolving Company). The Company filed the merger project to the collection of documents of the Commercial Register at the Municipal Court in Prague on 1 October 2017. The Dissolving Company was a 100% subsidiary of the Successor Company as at 1 October 2017. The decisive day of the domestic merger in accordance with § 70 para. 1 point. c) of the Act on Transformation of Companies and Cooperatives was 1 January 2017. From this date, the Dissolving Company actions are treated as acts carried out on behalf of the Successor Company. The legal effects of the merger occurred at the beginning of the day when the merger was registered in the Commercial Register, i.e. on 1 October 2017. The merging companies agreed to terminate the Dissolving Company without liquidation and dissolve it via the merger with the Successor Company, while all assets, including rights and obligations arising from the employment relationship of the Dissolving Company were transferred to the Successor Company as of the effective date of the merger, i.e. on 1 October 2017. The Successor Company entered the legal status of the Dissolving Company. Comparative figures for the 2016 period have not been adjusted for the impact of the merger in these financial statements, they only represent the Company's figures before the merger, therefore they are not comparable to the 2017 period figures without taking into account the impact of the merger. The statements and notes to the financial statements should be read together with the pro forma opening balance sheet and the notes to the opening balance sheet of the Company's as at 1 January 2017. The impact of merger is shown in the following table (in thousands CZK):
Designation ASSETS
The Successor Company
The Dissolving Company
Impact of the merger
The Company
31.12.2016 31.12.2016 1.1.2017
Net Net Net
TOTAL ASSETS 75,101,380 718,507 (365,509) 75,454,378
B. Fixed assets 60,635,500 102,015 - 60,737,515
B. I. Intangible fixed assets 32,618 12,148 - 44,766 B. II. Tangible fixed assets 1,833,802 89,867 - 1,923,669 B. III. Long-term investments 58,769,080 - - 58,769,080
C. Current assets 14,343,182 600,466 (365,474) 14,578,174
C. I. Inventories - - - - C. II. Receivables 13,815,834 600,185 (365,474) 14,050,545 C. III. Short-term investments - - - - C. IV. Cash 527,348 281 - 527,629
D. Prepayments and accrued income 122,698 16,026 (35) 138,689
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Designation LIABILITIES AND EQUITY
The Successor Company
The Dissolving Company
Impact of the merger
The Company
31.12.2016 31.12.2016 1.1.2017
TOTAL LIABILITIES AND EQUITY 75,101,380 718,507 (365,509) 75,454,378
A. Equity 52,228,065 411,912 - 52,639,977
A. I. Share capital 48,861,246 100,000 (100,000) 48,861,246 A. II. Share premium and capital contribution 692 107,120 304,792 412,604 A. III. Other reserves - 1,330 (1,330) - A. IV. Retained earnings/Accumulated losses - 144,302 3,221,825 3,366,127 A. V. Profit/(loss) for the current period 3,366,127 59,160 (3,425,287) -
B. + C. Liabilities 22,708,239 304,811 (365,474) 22,647,576
B. Provisions 46,015 43,091 - 89,106
C. Liabilities 22,662,224 261,720 (365,474) 22,558,470
C. I. Long-term liabilities 10,072,954 - - 10,072,954 C. II. Short-term liabilities 12,589,270 261,720 (365,474) 12,485,516
D. Accruals and deferred income 165,076 1,784 (35) 166,825
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2. Accounting policies
2.1 Basis of preparation The financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the Czech Republic relevant for large companies and have been prepared under the historical cost convention except as disclosed below.
2.2 Intangible and tangible fixed assets
All intangible (and tangible) assets with a useful life longer than one year and a unit cost of more than CZK 60 thousand (CZK 10 thousand) are treated as intangible (and tangible) fixed assets. Purchased intangible and tangible fixed assets are initially recorded at cost, which includes all costs related with its acquisition. All research costs are expensed. Development costs of which results are intended for trading are capitalized as intangible fixed assets and recorded at the lower of cost and the value of future economic benefits. All other research costs are expensed when occurred. Intangible fixed assets are amortized applying the straight-line method over their estimated useful lives as follows (unless the related agreement or license conditions stipulate a shorter or a longer period): Intangible fixed assets Estimated useful life
Software 3 years Other intangible fixed assets 6 years
Tangible fixed assets, except for land which is not depreciated, are depreciated applying the straight-line method over their estimated useful lives as follows: Tangible fixed assets Estimated useful life
Buildings and constructions 15 - 50 years Machinery and equipment 3 - 15 years Furniture and fittings 5 - 8 years
The depreciation plan is updated during the useful life of the intangible and tangible fixed assets based on the expected useful life. A provision for impairment is established when the carrying value of an asset is greater than its estimated recoverable amount. The estimated recoverable amount is determined based on expected future cashflows generated by the certain asset or based on current expert evidence. Repairs and maintenance expenditures of tangible fixed assets are expensed as incurred. Technical improvements of intangible fixed assets exceeding CZK 40 thousand per year for each partial completed payment are capitalized. Technical improvements of intangible and tangible fixed assets exceeding CZK 10 thousand per year for individual movable assets and sets of movable assets and CZK 40 thousand per year for buildings are capitalized.
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2.3 Investments in subsidiaries and investments in associates
Investments in subsidiaries represent ownership interests in enterprises that are controlled by the Company (“the subsidiary”). Investments in associates represent ownership interests in enterprises over which the Company has significant influence, but not control (“the associate”). Investments in subsidiaries and associates are recorded at cost less a provision for impairment.
2.4 Receivables Receivables are stated at nominal value less a provision for doubtful amounts. A provision for doubtful amounts is created on the basis of an ageing analysis and individual evaluation of the credit worthiness of the customers. Receivables from related parties have not been provided for.
2.5 Foreign currency translation Transactions denominated in a foreign currency are translated and recorded at the rate of exchange published by the Czech National Bank of ruling as at the transaction date. Cash, receivables and liabilities balances denominated in foreign currencies have been translated at the exchange rate published by the Czech National Bank as at the balance sheet date. All exchange gains and losses on cash, receivables and liabilities balances are recorded in the income statement.
2.6 Derivative financial instruments
Derivative financial instruments including foreign exchange contracts, currency and interest rate swaps and other derivative financial instruments are initially recognized on the balance sheet at cost and subsequently are re-measured at their fair value. All derivatives are presented in other receivables or in other payables when their fair value is positive or negative, respectively. Derivatives embedded in other financial instruments are not separately recognized. Changes in the fair value of derivatives held for trading are presented net and included in the financial result.
2.7 Changes of accounting policies and corrections of prior period errors
Changes to accounting policies (inclusive of deferred tax impact) and corrections of errors arising from incorrect accounting or unrecorded expenses and income in prior periods, if material, are recorded on financial statements line Restatements of retained earnings.
2.8 Determining the fair value
Fair values are determined based on market prices or discounted cash flow models.
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2.9 Provisions
The Company recognises provisions to cover its obligations or expenses, when the nature of the obligations or expenses is clearly defined and it is probable or certain as at the balance sheet date that they will be incurred, however their precise amount or timing is not known. The provision recognised as at the balance sheet date represent the best estimate of expenses that will be probably incurred, or the amount of liability that is required for their settlement. The Company recognises a provision for its income tax payable which is presented net of advances paid for the income tax. If advances paid are higher than the estimated income tax payable, the difference is recognised as a short-term receivable.
2.10 Revenue recognition
Sales are recognised when the service is rendered and are stated net of discounts and value added tax.
2.11 Related parties The Company’s related parties are considered to be the following:
Parties, which directly or indirectly control the Company, and their subsidiaries and associates;
Parties, which have directly or indirectly significant influence on the Company;
Members of the Company’s or parent company’s statutory and supervisory boards and management and parties close to such members, including entities in which they have a controlling or significant influence; and/or
Subsidiaries, associates and joint-venture companies. Material transactions and outstanding balances with related parties are disclosed in notes 11 Related parties transactions and 13 Employees.
2.12 Leases The costs of assets held under both finance and operating leases are not capitalised as fixed assets. Lease payments are expensed evenly over the life of the lease. Future lease payments not yet due are disclosed in the notes but not recognised in the balance sheet.
2.13 Employment benefits
The Company recognizes a provision relating to rewards, bonuses, untaken holiday and other employment benefits. Regular contributions are made to the state to fund the national pension plan. The Company also provides contributions to defined contribution plans operated by independent pension funds and capital life insurance. The contribution for pension and life insurance is recognized as an expense.
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2.14 Deferred tax Deferred tax is recognized on all temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax asset is recognized if it is probable that sufficient future taxable profit will be available against which the asset can be utilized.
2.15 Cash-flow statement The Company has prepared a Cash flow statement using the indirect method. Cash and cash equivalents include cash in hand, stamps and vouchers and cash in banks, including bank overdrafts. Cash equivalents are short-term highly liquid investments that can be exchanged for a predictable amount of cash and no significant changes of value over time are expected. Cash equivalents are, for example, deposits with a maturity of less than 3 months from the date of acquisition and liquid debt securities traded in public markets. The Company uses so-called cash-pooling within the group. A receivable (liability) that arises from cash-pooling is presented in the Cash flow statement as a part of the item Cash and Cash equivalents if it is due within 3 months after the balance sheet date. The Company decided to change its accounting policy in the current accounting period and considers also the other short-term intercompany deposits due within 3 months after the balance sheet, that are not part of the cash-pooling balance, as Cash and cash equivalents. Comparative figures have been adjusted.
2.16 Subsequent events The effects of events, which occurred between the balance sheet date and the date of preparation of the financial statements, are recognised in the financial statements in the case that these events provide further evidence of conditions that existed as at the balance sheet date. Where significant events occur subsequent to the balance sheet date but prior to the preparation of the financial statements, which are indicative of conditions that arose subsequent to the balance sheet date, the effects of these events are quantified and disclosed, but are not themselves recognised in the financial statements.
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3. Intangible fixed assets
(CZK’ooo) Impact
of merger 1 January 2017 Additions/
transfers Disposals 31 December
2017
Cost Software 679,536 967,882 12,161 (28,165) 951,878 Other royalties - 12,306 - (284) 12,022 Other intangible fixed assets 728 824 - - 824 Intangible fixed assets in the course of construction 40 40 9,925 - 9,965
Total (452,268) (2,233,407) (133,531) 360,975 (2,005,963)
Provision for impairment - (738,100) 134,500 (603,600)
Net book value 89,867 1,923,669 1,898,162
(CZK’ooo) 1 January 2016 Additions/
transfers Disposals 31 December
2016
Cost Land 209,348 768 (1,102) 209,014 Buildings, halls and other constructions 3,582,827 180,111 (63,045) 3,699,893 Equipment 442,720 9,970 (13,740) 438,950 Other tangible fixed assets 1,163 - (12) 1,151 Advances paid for tangible fixed assets and tangible fixed assets in the course of construction 11,819 (7,688) (98) 4,033
Total 49,145,241 49,145,241 3,040,337 2 19,305,432 pieces of shares in total nominal value of CZK 13,043,908 thousand.
On 17 July 2017, the Company purchased a share in innogy Business Services CZ, s.r.o. valued at CZK 687,920 thousand from innogy SE. On 16 August 2017, the domestic merger was approved, with its decisive date on 1 January 2017. As at the date of legal effect of the merger (see note 1.2.), this share was eliminated against the capital contributions of the Company.
On 18 December 2017, the Company purchased share in innogy TelNet Holding, s.r.o. valued at CZK 1 from innogy Energo, s.r.o.
Due to optimization of the capital structure and reducing of the surplus of own resources of innogy Grid Holding a.s. on 13 February 2017 the General Meeting of innogy Grid Holding a.s. decided about the decrease of the share capital from CZK 26,066,963 thousand to CZK 25,170,364 thousand. Decrease of the share capital was executed via reduction of the nominal value of all shares from CZK 675.66 to CZK 652.42 per share via exchange for shares with a lower nominal value. The new amount of the share capital of innogy Grid Holding a.s. was registered in the Commercial Register on 20 June 2017.
Due to optimization of its capital structure and reducing of the surplus of own resources of innogy Grid Holding a.s., the General Meeting of innogy Grid Holding a.s. decided on 24 November 2017 about the decrease of the share capital from CZK 25,170,364 thousand to CZK 24,158,024 thousand. The decrease of the share capital will be executed via reduction of the nominal value of all shares from CZK 652.42 to CZK 626.18 per share via exchange for shares with a lower nominal value. The new amount of the share capital of innogy Grid Holding a.s. was not registered in the Commercial Register as at the balance sheet date.
The decrease in the value of the investment in innogy Grid Holding, a.s. of CZK 802,146 thousand during 2017 relates with the decrease in share capital of CZK 448,658 thousand and also with the
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decrease in capital contributions of CZK 353,488 thousand. The resulting receivable from innogy Grid Holding, a.s. was partially offset – see note 11 Related party transactions. innogy Energie s.r.o. is located in Prague 10 – Strašnice, Limuzská 3135/12. innogy Gas Storage s.r.o. is located in Prague 10 – Strašnice, Limuzská 3135/12. innogy Zákaznické služby s.r.o. is located in Ostrava, Plynární 2748/6. innogy Grid Holding a.s. is located in Prague 10 – Strašnice, Limuzská 3135/12. innogy Energo s.r.o. is located in Prague 10 – Strašnice, Limuzská 3135/12. innogy TelNet Holding, s.r.o.is located in Prague 10 – Strašnice, Limuzská 3135/12. There is no difference between share on equity and share on voting rights for all above listed subsidiaries.
6. Receivables Receivables can be analysed as follows: (CZK’ooo) 31 December 2017 31 December 2016
Trade receivables - due 375,676 131,493 - overdue 41,873 5,795
Total trade receivables 417,549 137,288
Receivables - subsidiaries and controlling parties 15,395,276 13,422,679 Estimated receivables 378,860 164,656 Other receivables 54,710 67,477
Total net book value of receivables 16,255,428 13,815,834
Receivables - subsidiaries and controlling party include receivables from cash-pooling and receivables from short-term loans (see note 11 Related party transactions). Estimated receivables as at 31 December 2017 consist of earn-out from Vychodoslovenska energetika Holding a.s. of CZK 364,735 thousand based on the operating profit of innogy Slovensko s.r.o. for 2017 (as of 31 December 2016: CZK 144,126 thousand for 2016).
As at 31 December 2017 the Company has a contingent receivable from Vychodoslovenska energetika Holding a.s. of CZK 469,722 thousand regarding the income earn-out from expected operating profit of innogy Slovensko s.r.o. for the period 2018 (as at 31 December 2016: CZK 683,263 thousand for the period 2017-2018). This earn-out claim stems from the contract from 2015 with Vychodoslovenska energetika Holding a.s. about the sale of share in innogy Slovensko s.r.o. As at 31 December 2017 and 31 December 2016 the Company has not created any provision for doubtful receivables. Unsettled receivables have not been secured and none of them are due after more than 5 years. The Company has no other receivables nor contingent receivables, which are not recognized in the balance sheet, except for items described above.
As at 31 December 2017 the Company is fully owned by innogy Beteiligungsholding GmbH, with its registered office at Opernplatz 1, 451 28 Essen, Germany, registration number: HRB 28332. As at 31 December 2016 the Company was fully owned by innogy International Participations N.V. incorporated in the Netherlands, 5211 AK's-Hertogenbosch, Willemsplein 4, identification number: 341 68 241. On 5 December 2017, there was a transfer of 100% ownership in the Company from innogy International Participations N.V. to innogy Zweite Vermögensverwaltungs GmbH, with its registered office at Opernplatz 1, 451 28 Essen, Germany, registration number: HRB 27585, which subsequently transferred its shareholding to innogy Beteiligungsholding GmbH on 13 December 2017. This change was not recorded in the Commercial Register at the balance sheet date. The parent company of the whole group is RWE Aktiengesellschaft registered in Germany. innogy SE with the registered office at Opernplatz 1, 451 28 Essen, Germany prepares the consolidated financial statements of the smallest group of entities of which the Company forms a part as a subsidiary. RWE Aktiengesellschaft with its registered office at Huyssenallee 2, 451 28 Essen, Germany prepares the consolidated financial statements of the largest group of entities of which the Company forms a part as a subsidiary. The consolidated financial statements of the smallest group of entities of which the Company forms a part as a subsidiary can be obtained at the registered office of innogy SE and the consolidated financial statements of the largest group of entities of which the Company forms a part as a subsidiary can be obtained at the registered office of RWE Aktiengesellschaft. The Company is fully governed by the Corporations Act and used the option not to create a reserve fund. This fact is further enabled by the Articles of Association of the Company. On 10 May 2016, the General Meeting decided to distribute the capital contributions of CZK 9,982,000 thousand in order to optimize the capital structure of the Company. The distribution was settled via non-cash settlement against drawing of a long-term loan in amount of CZK 10,000,000 thousand from innogy International Participations NV. The General Meeting approved the financial statements for 2016 and decided on distribution of 2016 profit of CZK 3,366,127 thousand on 21 March 2017. Until the date of preparation of these financial statements, the Company has not proposed distribution of the profit earned in 2017.
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8. Provisions
(CZK’ooo) Income tax Other Total
Opening balance as at 1 January 2016 - 34,982 34,982
Charge for the year 50,934 45,396 96,330 Used in the year - (34,363) (34,363) Advances for Income tax/offset (50,934) - (50,934)
Closing balance as at 31 December 2016 - 46,015 46,015
Impact of the merger 1,264 41,827 43,091
Opening balance as at 1 January 2017 1,264 87,842 89,106
Charge for the year 51,372 50,200 101,572 Used in the year (1,264) (74,665) (75,929) Advances for Income tax/offset (51,372) - (51,372)
Closing balance as at 31 December 2017 - 63,377 63,377
The Company recorded provisions for employee benefits of CZK 37,556 thousand (as at 31 December 2016 CZK 36,015 thousand). Advances for Income tax of CZK 85,568 thousand paid by the Company as at 31 December 2017 (as at 31 December 2016: CZK 89,626 thousand) were netted off with provision for Income tax of CZK 51,372 thousand created as at 31 December 2017 (as at 31 December 2016: CZK 50,934 thousand). For an analysis of the current and deferred income tax see note 14 Income tax.
9. Payables, commitments and contingent liabilities
(CZK’ooo) 31 December 2017 31 December 2016
Trade payables - due 279,755 214,084 Liabilities - subsidiaries/controlling parties 12,131,786 12,293,363 Estimated payables 122,509 46,190 Other payables - due 90,708 35,633
Total short-term liabilities 12,624,758 12,589,270
Liabilities - subsidiaries and controlling parties – long-term 10,061,296 10,072,954
Total long-term liabilities 10,061,296 10,072,954
Total short-term and long-term liabilities 22,686,054 22,662,224
Trade and other payables have not been secured against any assets of the Company and are not due after more than 5 years. Short-term liabilities - subsidiaries and controlling party include payables from cash-pooling to companies within the group, long-term liabilities - subsidiaries and controlling party represent long-term part of loan received from innogy International Participations N.V (see note 11 Related party transaction). The Company has the following commitments in respect of operational leases: (CZK’ooo) 31 December 2017 31 December 2016
Due within one year 21,573 22,371 Due after one year but within five years 25,628 28,871
Total commitments in respect of operational leases 47,201 51,242
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Total other contracted capital commitments amounted to CZK 10,000 thousand as at 31 December 2017 (as at 31 December 2016: CZK 40,780 thousand). As part of governance activities of innogy companies in the Czech Republic the Company provides guarantees on behalf of related parties mainly to energy market operators. As at 31 December 2017 the Company issued guarantees of CZK 507,824 thousand (as at 31 December 2016: CZK 558,545 thousand), from which issued guarantees to OTE, a.s. of CZK 504,554 thousand (as at 31 December 2016: CZK 554,550 thousand).
Total sales of products and services 2,015,639 1,034,255 1,184,259
11. Related party transactions
The Company had the following transactions with related parties: (CZK’ooo) 2017 2016
Revenues Sales of services 2,000,230 1,008,040 Interest income 542,926 514,757 Other* 376,710 139,413
Total 2,919,866 1,662,210
Costs Material and energy consumption 45,879 51,793 Services 185,121 176,629 Interest expense 296,916 159,971 Other 5,540 1,651
Total 533,456 390,044
Purchase of property 5,088 28,751
Total 5,088 28,751 * Other revenues mainly consist of earn-out from Vychodoslovenska energetika Holding a.s. based on the operating profit of innogy Slovensko s.r.o. – see note 6 Receivables.
Profit distribution received for 2017 and 2016 is disclosed in note 5 Investments in subsidiaries and investments in associates.
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The following related party balances were outstanding:
Liabilities Liabilities to companies within the consolidation group 22,398,890 22,573,932 Out of which: Trade payables 45,255 37,399 Loans payable 22,193,082 22,366,317 Other payables 17,492 26,368 Accruals and deferred income 143,061 143,848 Liabilities to associates 3,412 1,823 Out of which: Trade payables 3,412 1,823
Total 22,402,302 22,575,755
Provided and received loans and receivables and payables from cash-pooling bear interest at market interest rates. Accruals and deferred income as at 31 December 2017 primarily consist of interest amounted to CZK 141,582 thousand (as at 31 December 2016: CZK 142,347 thousand) related to long-term loan received from innogy International Participations N.V. Based on debt acquirement contract from 31 May 2017 receivables from innogy Grid Holding, a.s. were transferred to long-term loan to GasNet, s.r.o in amount of CZK 310,248 thousand. Based on debt acquirement contract from 31 May 2016 receivables from innogy Grid Holding, a.s. were transferred to long-term loan to GasNet, s.r.o in amount of CZK 274,219 thousand. Company cars with purchase price amounted to CZK 32,661 thousand (as at 31 December 2016: CZK 14,337 thousand) are made available for use to members of management. The Company has paid the rent of premises for foreign members of management, which amounted to CZK 376 thousand in 2017 (2016: CZK 751 thousand). A long-term motivation program was created for management, for which a provision of CZK 2,205 thousand has been created as at 31 December 2017 (as at 31 December 2016: CZK 308 thousand). Besides the above stated, there was no other cash or in kind consideration provided in 2017 and 2016 to the shareholder, members of the Board of Directors and Supervisory Board and management.
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12. Fees paid and payable to the audit company
The information relating to the fees paid and payable for services performed by the audit company is included in the consolidated financial statements of innogy SE.
13. Employees 2017 2016
Average number of members of management 25 12 Average number of other staff 480 277
Total number of employees 505 289
(CZK’ooo) Management Other staff Total
2017 Wages and salaries 70,721 331,103 401,824 Social security costs 17,181 111,155 128,336 Remuneration of the Supervisory Board members 120 - 120 Other social costs 1,862 13,984 15,846
Total staff costs 89,884 456,242 546,126
2016 Wages and salaries 43,878 177,408 221,286 Social security costs 8,840 60,924 69,764 Remuneration of the Supervisory Board members 120 - 120 Other social costs 620 8,020 8,640
Total staff costs 53,458 246,352 299,810
The Company's management includes executive directors and other directors and managers directly reporting to them. The management category as at 31 December 2017 and 2016 also consists of two members of the Board of Directors, that are not employees of the Company. Based on paragraph 39b (6) point d) Implementing Decree No. 500/2002 Coll., the Company does not present the remuneration of the Board of Directors separately. In 2016, staff costs of the Dissolving company amounted to CZK 259,195 thousand and the weighted average number of employees was 266. Other transactions with the Company’s management are disclosed in note 11 Related party transactions.
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14. Income tax Analysis of the income tax expense:
(CZK’ooo) 2017 2016
Current tax expense (19%) 51,373 50,934 Deferred tax expense 20,956 7,128 Adjustment of prior year tax expense based on final CIT return 1,391 700
Total income tax expense 73,720 58,762
Analysis of current tax:
(CZK’ooo) 2017 2016
Net profit before taxation 5 568,961 3,424,889
Non-taxable income (5,375,058) (3,185,096) Difference between accounting and tax depreciation (26,346) (26,988) Tax non-deductible costs 109,062 65,679
Net taxable profit 276,619 278,484
Donations (5,759) (10,315)
Reduced net taxable profit 270,860 268,169
Tax incentives (91) (18)
Corporate income tax at 19% 51,373 50,934
The deferred tax was calculated at 19% (tax rate for 2017 and subsequent years). The deferred tax asset / (liability) analysis:
(CZK’ooo) 31 December 2017 1 January 2017 31 December 2016
Deferred tax asset/(liability) arising from: Difference between accounting and tax net book value of fixed assets (3,139) 14,770 14,770 Other provisions 12,042 8,743 8,743 Merger impact - 6,346 -
Net deferred tax asset 8,903 29,859 23,513
15. Cash flow statement Analysis of cash and cash equivalents disclosed in the Cash flow statement:
(CZK’ooo) 31 December 2017 1 January 2017 31 December 2016
Cash in hand 13 1 1 Cash at bank 406,552 527,347 527,347 Receivable from cash-pooling and other cash equivalents within the group 3,542,822 1,482,405 1,482,405 Merger impact - 322,994 -
Total cash and cash equivalents 3,949,387 2,332,747 2,009,753
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16. Subsequent events The change of the shareholder was registered in the Commercial Register after the balance sheet date, the change of the sole shareholder to innogy Zweite Vermögensverwaltungs GmbH was registered on 15 January 2018. Furthermore, the change of the sole shareholder to innogy Beteiligungsholding GmbH was registered on 24 January 2018 (see note 7 Equity). On 10 January 2018, the Company made a payment to capital contributions of innogy TelNet Holding, s.r.o. in the amount of CZK 171,300 thousand. No other events occurred subsequent to year end that would have a material impact on the financial statements as at 31 December 2017. 12 February 2018
Martin Herrmann Thomas Merker Chairman, Board of Directors Vice-Chairman, Board of Directors innogy Česká republika a.s. innogy Česká republika a.s.
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6 Independent Auditor’s Report
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7 Report on Relations for the Accounting Period of 2017
Pursuant to Section 82 et seq. of Act No 90/2012 on Business Companies and Cooperatives
(“the Business Corporations Act”), as amended, the Board of Directors of innogy Česká republika a.s.
(“the Company”) prepared this report on relations between the Company and controlling persons and
between the Company and other persons (“related parties”) under common control for the
accounting period of 2017, insofar as such persons are known to the Company. This report forms an
annex to the Company’s annual report for 2017. The sole shareholder of the Company has the right to
access the report on relations at the same time and under the same conditions as the financial
statements.
7.1 Structure of relations
The Company is part of the RWE Group. Within the meaning of Section 79 of the Business
Corporations Act, the Company is subject to uniform management consisting in the coordination and
strategic management of at least one of the important components or activities of the Group’s
business, such arrangement pursuing the objective of promoting the Group’s interests on a long-term
basis as part of the Group’s consistent policy. The Company’s membership of the RWE Group is
published on the Company’s website.
a) Controlling persons
In the past accounting period the Company was controlled by the following controlling persons from
1 January 2017 to 4 December 2017:
i. Directly - innogy International Participations N.V., with its registered office at 5211AK
‘s-Hertogenbosch, Willemsplein 4, the Netherlands, which was the sole shareholder of the Company,
ii. Indirectly - innogy SE, with its registered office at Opernplatz 1, 45128 Essen, Germany, - RWE Downstream Beteiligungs GmbH, with its registered office at Huyssenallee 2, 45128
Essen, Germany, - RWE Aktiengesellschaft, with its registered office at Huyssenallee 2, 45128 Essen,
Germany, which was the ultimate controlling person.
From 5 December 2017 to 12 December 2017 the Company was controlled by the following
controlling persons:
i. Directly - innogy Zweite Vermögensverwaltungs GmbH, with its registered office at Opernplatz 1,
45128 Essen, Germany, which was the sole shareholder of the Company, ii. Indirectly
- innogy SE, with its registered office at Opernplatz 1, 45128 Essen, Germany, - RWE Downstream Beteiligungs GmbH, with its registered office at Huyssenallee 2, 45128
Essen, Germany, - RWE Aktiengesellschaft, with its registered office at Huyssenallee 2, 45128 Essen,
Germany, which was the ultimate controlling person
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From 13 December 2017 to 31 December 2017 the Company was controlled by the following
controlling persons:
i. Directly - innogy Beteiligungsholding GmbH, with its registered office at Opernplatz 1, 45128
Essen, Germany, which was the sole shareholder of the Company, ii. Indirectly
- innogy Zweite Vermögensverwaltungs GmbH, with its registered office at Opernplatz 1, 45128 Essen, Germany, which was the sole shareholder of the Company,
- innogy SE, with its registered office at Opernplatz 1, 45128 Essen, Germany, - RWE Downstream Beteiligungs GmbH, with its registered office at Huyssenallee 2, 45128
Essen, Germany, - RWE Aktiengesellschaft, with its registered office at Huyssenallee 2, 45128 Essen,
Germany, which was the ultimate controlling person.
The Board of Directors is not aware of the Company having any additional controlling persons.
b) Other controlled persons
The Company requested the above controlling persons to provide a list of the other persons that were
under common control in the past accounting period. The Company’s Board of Directors has drawn up
this Report on the basis of the information provided by the controlling persons and other information
available to the Board of Directors. The scheme of the relations between controlling and controlled
persons as at 31 December 2017, i.e. the last day of the accounting period, can be found in Annex 1
hereto.
c) Role of the controlled person
The Company is the managing person in the RWE Group for the Czech Republic, with the exception of
RWE East, s.r.o. and RWE Supply & Trading CZ, a.s. As part of its activities, the Company provides the
other companies in the Czech Republic with its specific managerial and technical expertise and
services. These include, for example, the process management service, including controlled document