ANNUAL REPORT 2004 - KU Leuven · Business model and risk management 089 Tables 090 Annual accounts...
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Transcript of ANNUAL REPORT 2004 - KU Leuven · Business model and risk management 089 Tables 090 Annual accounts...
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Table of contents
Message from Gérard Mestrallet and Jean-Pierre Hansen 001
General Management 003
Electrabel today 004
Highlights 006
Shareholders’ guide 008
Key consolidated figures 009
Directors’ report 016
Main developments 018
Financial situation 022
Corporate governance 031
Members of the Board and Auditors 041
Regulatory background 042
Business management 050
Sales of energy and services 052
Electricity generation 060
Trading and Portfolio Management 067
Management of distribution networks 070
Corporate management 074
Branding 076
Human resources 078
Health and safety at work 081
Environment 083
Research and development 087
Business model and risk management 089
Tables 090
Annual accounts 094
Consolidated annual accounts 096
Annual accounts Electrabel S.A. 133
Glossary 138
Information 140
Sites in Europe
The making of ...Play EnergyThe pictures in this Annual Reportinvite you to share the energy of acurious child. Inventive and eager tolearn, the child explores the worldthrough play, and by making contact with others. Electrabel is curious to know what itscustomers want, eager to meet theirrequirements ever more closely. It is inventive in finding solutions,day after day. Our energy is bothfunctional and creative.
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BelgiumElectrabel S.A.Boulevard du Régent 81000 BRUSSELS, BELGIUMwww.electrabel.beTel. + 32 2 518 61 11
The NetherlandsElectrabel Nederland N.V.Dr. Stolteweg 928025 AZ ZWOLLE, THE [email protected]. + 31 38 427 29 00
LuxembourgTwinerg S.A.201, route d’Ehlerange 4108 ESCH-SUR-ALZETTE, LUXEMBOURG Tel. + 352 26 55 49 1
FranceElectrabel France S.A.Le César20 Place Louis Pradel69001 LYON, [email protected]. + 33 4 72 98 23 80
ItalyElectrabel Italia S.p.A.Via Orazio 3100193 ROMA, [email protected]. + 39 06 68 30 18 27
AceaElectrabel S.p.A.Piazzale Ostiense 200154 ROMA, ITALYwww.aceaelectrabel.itTel. + 39 06 57 99 66 91
SpainElectrabel España S.A.General Castaños 43a Planta28004 MADRID, [email protected]. + 34 91 310 62 70
GermanyElectrabel Deutschland AGFriedrichstraße 20010117 BERLIN, [email protected]. + 49 30 72 61 53 500
PolandElectrabel Polska Sp. z o.o.ul. Duleby 540-833 KATOWICE, [email protected]. + 48 32 358 89 99
Electrabel Elektrownia im. Tadeusza Kosciuszki Spólka Akcyjna w Polancu28-230 POLANIEC, [email protected]. + 48 15 865 65 65
HungaryDunamenti Eromu Rt.c/o Electrabel Magyarország Kft.Csenterics u. 82440 SZÁZHALOMBATTA, [email protected]. + 36 23 544 164
Colophon
This Annual Report was produced
by the Corporate and Marketing
Communications department.
Graphic design and production by
OgilvyOne Worldwide.
Editor activity report: Marc Magain
Models: Inarea and Silvio
Pasquarelli, Rome
Photographs highlights:
Raf Beckers, Grupo Generg,
JC Decaux Nederland, Alain Pierot
Printing: Antilope, Lier (Belgium)
Responsible editor: Fernand Grifnée,
Boulevard du Régent 8,
1000 Brussels, Belgium
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Message from Gérard Mestrallet and Jean-Pierre Hansen
2004 was an important year for Electrabel. The company took advantage of increasing liberalisation in Europe
to build on the positions it had established in its new key markets; and it successfully fought off competition in
its traditional market. Electrabel has always maintained growth within very strict profitability criteria, and so is
now poised to strengthen its position amongst Europe’s leading European energy companies.
For the first time ever, more than half of the company's electricity sales wereachieved in markets outside Belgium.
Passing this milestone is symbolic, marking as it does the transformation of Electrabel into a European company.
It is all the more important since in 2004 the company also surpassed its target of doubling its level of sales
compared with 1999. Electrabel has successfully met the challenge of the liberalised energy markets.
The company is now well established in Europe. It has worked carefully, staying in line with its profitability
criteria, but has also acted firmly, without being deflected by the problems of growth and internationalisation.
This gradual process is producing results. Because it had done the groundwork, Electrabel was able to make the
most of the phase of liberalisation for all non-household customers in Europe, which took effect in July 2004.
Its range of products and services, which continues to expand and improve to meet users' specific expectations,
has attracted more than five million customers across the continent.
Electrabel also managed liberalisation successfully in its traditional
market, where the public authorities advanced the timeframe laid
down by European directives. The company developed a pro-active,
commercial approach, drawing on its previous success, which was
closely targeted to customers and their needs. In 2004, the first full
year of liberalisation for all consumers in Flanders, those customers
who made a choice opted mainly for Electrabel, thus endorsing the
commercial approach adopted by the company.
Electrabel can set new targets for profitablegrowth.
Electrabel wants to go further. Its priority is still to ensure profitable
growth, reflected every year in the steady and regular increase in the
company’s current operating result and dividend.
To achieve this, the company has developed a sound business model based
on effective generating resources and the synergy between electricity and
natural gas, and intends to extract the maximum potential from this model.
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Jean-Pierre HansenChief Executive Officer
Gérard MestralletChairman of the Board of Directors
Electrabel is aiming to expand at a faster rate than the market, and will therefore concentrate on increasing sales
faster than its generating capacity. Its target is to expand generating capacity to 35 000 MW by 2009, or by around
4 % annually; and to increase sales to 200 TWh by the same date, or by 5 % a year. Given the limited potential for
expansion in the company's traditional market, these targets are ambitious, as were the previous ones, but they are
realistic.
The company is well equipped to maintain its competitive position and its strength in its traditional market. As in
the past, it will respect its commitments and it expects everyone to do the same. Electrabel has made a positive
contribution to liberalisation, which today is proving that it works.
The company has the strengths and the arguments to support its ambitions.
Electrabel's development in the various European markets has been based on sound operational foundations,
in terms of both generating facilities and sales.
The company is well placed to take advantage of the increasing ‘carbon constraint’ regulations. Greenhouse gas
emissions trading became a reality in 2005. Electrabel geared itself up to get the most from its strong position:
41 % of its generation capacity is nuclear, hydraulic or wind based, and is CO2-free; priority is given to the most
environmentally friendly fossil fuel, natural gas; and studies are being undertaken to improve the yield and
performances of coal-fired stations.
Besides its own internal strengths, Electrabel also benefits from the synergy it derives from being part of the
SUEZ group.
The company is constantly motivated to enhance its relationship with the customer.
Finally, Electrabel celebrates its centenary in 2005, and one great strength of that maturity is that the company
recognises that nothing can ever be taken for granted. This is particularly true in an open market, where
customers' needs and expectations are continually changing. This change runs very deep and is fast increasing
in pace. Electrabel will only succeed if it can anticipate, listen to and respond to market signals.
Electrabel knows it can count on the motivation of its staff to meet the demand created by liberalisation and
market competition. More than ever, each and every staff member is an ambassador for the company and the
Group; and more than ever each is aware that the company's ability to adapt and change can only stem from
the will and the dedication of the men and women it comprises.
Brussels, 4 March 2005
General Management – Situation on 07.03.2005
Jean-Pierre Hansen (4)
Chief Executive Officer
Alfred Becquaert (8)
General Manager Human Resources
Eric Bosman (7)
General Manager Trading and Portfolio Management
Sophie Dutordoir (1)
General Manager Marketing & Sales
Alfred Hofman (5)
General Manager North-East Europe
Jacques Hugé (10)
General Manager South Europe
Philippe Lermusieau (3)
General Manager France-Switzerland
Walter Peeraer (6)
General Manager Strategy,Communications, Administration
Nicolas Tissot (9)
Chief Financial Officer(Until 14.05.2005: Robin Leyssens)
Xavier Votron (2)
General Manager Generation, Distribution, IT
General organisationElectrabel is organised around an integrated General Management comprising geographical, operational and functional directorates-general. Under the leader-ship of the Chief Executive Officer, the General Managers have the mission ofimplementing the company's strategy, based on sustainable growth and Europeandevelopment in line with strict profitability criteria.
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Electrabel today
Electrabel is a leading European energy company and number one on the Benelux market. The company
pursues sustainable growth on its key markets, in line with strict profitability criteria. Electrabel offers its
residential, professional, business and industrial customers high-quality, added-valued energy solutions com-
bined with local convenience. The company fully exploits the many synergies between electricity and natural
gas. All its strategic options build in the environmental factor. The company gears each decision and action
to its four core values: customer-orientation, performance, attention to staff, and sense of responsibility. It has
a solid foundation based on a strong financial structure, high-level expertise, a clear business model and an
integrated risk management. Electrabel is part of SUEZ, an international industrial and services group that is
active in energy and the environment.
Sales: GWh electricity
Trading activities only
Sales: 30 724 GWh Generation: 4 711 MW Staff: 833
Sales: 75 988 GWh Generation: 12 976 MWDistribution networksStaff: 11 187
Sales: 2 789 GWh Generation: 376 MWStaff: 19
Sales: 5 429 GWh Generation: 4 818 MWStaff: 78
Sales: 3 GWh Generation: under constructionStaff: 16
Generation: 74 MW
Sales: 7 271 GWh Generation: 255 MWStaff: 150
Sales: 8 003 GWh Generation: 1 654 MWStaff: 1 473
Sales: 4 459 GWh Generation: 2 068 MWStaff: 449
Sales: 10 355 GWh Generation: 1 261 MWStaff: 1 068
Core business
Sales of electricity, natural gas and energy products and services
Electrabel provides comprehensive and tailor-made energy solutions for
industrial enterprises. It offers small businesses and residential customers a
quality, locally-based offer that meets all their specific expectations. On top of
these basic products, it provides value-adding services. To cover its
customers' needs more closely, Electrabel has built up a European network
of subsidiaries and partnerships with local operators. Sales outside Belgium
(including wholesale) account for more than 50 % of total volume. The com-
pany is striving to achieve a volume of sales of 200 TWh by 2009.
Electricity generation
Electrabel is strengthening its local geographical presence with generating
activities in a number of regions of Europe. Its diversified generating
equipment totalling 28 200 MW is managed with constant concern for
the environment. These European facilities are primarily made up of natural
gas power stations (more than 5 600 MW of high energy yield gas turbines,
of which 1 500 MW combined heat and power) and of extremely
reliable nuclear facilities. The share of renewable energy rises wherever
possible. 50 % of generation is CO2-emission free. It is Electrabel's ambition
to reach generating capacity of 35 000 MW by 2009.
Trading of electricity and natural gas
Electrabel engages in trading activities on all of Europe's energy markets,
from Scandinavia to Spain and from Benelux to Poland. Its trading activities
form an integral part of its comprehensive energy offer and play a key role
in its European strategy. Trading helps optimise the company's overall
energy position on the markets.
Management of electricity and natural gas distribution networks
In Belgium, Electrabel is responsible for the technical operation, mainte-
nance and development of the electricity and natural gas distribution
systems, on behalf of independent system operators. Electrabel's network
activities are geographically limited to Belgium but can be a real asset in rela-
tion to European expansion projects.
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Key figures
Sales
Electricity
Total sales GWh 145 059
Benelux 109 501
Europe outside Benelux 35 558
Number of final customers 5 554 507
Benelux 3 820 678
Europe outside Benelux 1 733 829
Natural gas
Total sales GWh 111 858
Number of final customers 2 108 778
Cable TV
Number of final customers 529 516
Water
Number of final customers 605 959
Generation
Electricity
Net generation capacity MW 28 193
Benelux 18 063
Europe outside Benelux 10 130
Net generation GWh 131 707
Benelux 90 191
Europe outside Benelux 41 516
Heat
Net generation GWh 12 109
Benelux 7 129
Europe outside Benelux 4 980
Staff
Number of employees 15 278
Benelux 12 039
Europe outside Benelux 3 239
Environment
Net capacity CO2-emission free % 41.0
Benelux 36.2
Europe outside Benelux 49.6
Net generation CO2-emission free % 49.7
Benelux 46.1
Europe outside Benelux 57.5
Finance e million
Turnover 12 148
EBITDA 2 167
Net current result (100 %) 1 133
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Increased liberalisation and a market functioning effectively
1 July 2004: the electricity and natural gas market
in the European Union is fully open for non-
household customers.
For the first time in its history, Electrabel is selling
more than half its electricity outside Belgium.
85 % of its total electricity sales volume in Belgium
is supplied to the liberalised market. 55 % of house-
hold customers in Flanders choose an electricity
supplier; 81 % of them opt for Electrabel.
The Competition Council designates Electrabel
as the standard supplier for eligible customers of
the mixed intermunicipal companies in Brussels
and Wallonia. The mandatory separation of net
operation and sales activities thus becomes a
reality throughout the country.
In Belgium, Electrabel launches four new auctions
of virtual production capacity (VPP).
Following the adaptation of their agreements, EDF
from now on disposes of a share in the Tihange
plant capacity in the Belgian market and Electrabel
disposes of a share in the Tricastin plant capacity in
the French market.
Competing successfully in the energy market
Electrabel has doubled its total electricity sales
volumes over the last five years. The breakthrough
in markets outside Belgium leads to considerable
growth in sales of natural gas.
Electrabel offers all its customers in Belgium new,
more transparent prices for electricity and natural gas.
AlpEnergie and Electrabel Green are two products that
enable customers, in France and Belgium respectively,
to buy electricity from renewable energy sources.
AceaElectrabel and ASM Terni launch a joint
venture that will sell electricity and natural gas to
eligible customers in the Umbria region.
Highlights
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Advertising campaigns and sponsorship everywhere
reinforce Electrabel's image of stimulating proximity.
In the Netherlands, Spark Energy is brought within
the Electrabel brand. And in the French market,
the company presents itself under the brand
‘Electrabel, Group SUEZ’.
Outstanding generating facilities –environmentally friendly too
The construction of CCGT power stations in
Belgium, Italy and Spain is nearly finished. Work
starts on the new CCGT station in Rosignano, Italy.
An agreement with SNCF (French Railways) enables
Electrabel to acquire 80 % of SHEM in the long term.
SHEM operates 49 hydraulic power units in France.
The replacement of the steam generators at the
Doel 2 nuclear unit increases its generating capacity
by 10 %.
In Poland, the Polaniec station begins generating
electricity from biomass.
Work is underway to extend the life cycle of the
Gelderland plant in the Netherlands and to repower
units in Italy and Germany.
In Belgium, the Netherlands and Portugal, the
company commissions new wind farms totalling
more than 40 MW.
Electrabel concludes a new environmental branch
agreement with the Flemish authorities to cut emis-
sions of SO2 and NOx from its power stations still
further.
Advanced know-how in trading
Electrabel is ready for the decentralised manage-
ment of its portfolio of CO2 emissions rights from
the beginning of 2005.
The company takes part in the Italian Power
Exchange, which began operations in April 2004.
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Shareholders’ guide
Dividend payment
Amount of the dividend less withholding tax
e 11.8200 per share
e 13.3960 per share accompanied by a VVPR coupon strip
Dividend payments from 24 May 2005 onwards
On presentation of coupon No 16, accompanied, if applicable, by VVPR coupon strip No 16.
At the counter at the following establishments in Belgium: Bank Degroof, Dexia Bank België,
Fortis Bank, ING België, KBC Bank, Petercam.
ShareQuotation
Euronext Brussels (ELEB – ISIN: BE0003637486)
Reuters (ELCBt.BR)
Bloomberg (ELEB.BB)
The share is included in the following stock exchange indexes
BEL20
Euronext TOP 100
DJ Euro STOXX Utilities
FTSE Eurotop 300
FTSE E 300 Utilities Index
FTSE E 300 Electricity Index
Presence in the Bel20 (March 2005)
Weight: 10.2 %
Market capitalisation on Euronext Brussels (March 2005)
e 18.1 billion
Share: 9 %
Total number of shares and voting rights on 31 December 2004
54 878 197
AgendaFinancial year 2004
04.03.2005 Meeting of the Board of Directors to adopt the annual accounts 2004, followed by a press release
20.04.2005 The Annual report 2004 is available on www.electrabel.com
12.05.2005 Annual General Meeting and circulation of the Annual report 2004
24.05.2005 Dividend payment for financial year 2004
Financial year 2005
03.05.2005 Press release about sales of the first quarter 2005
02.09.2005 Meeting of the Board of Directors to adopt the half-year accounts, followed by a press release and the circulation of an information sheet
02.11.2005 Press release about sales of the first three quarters 2005
11.05.2006 Annual General Meeting and circulation of the Annual report 2005
Key consolidated figures
FROM TURNOVER TO NET CURRENT RESULT – e million
2004 2003 2002 1 2001 2000
OPERATING INCOME (1 = 2 + 3) 12 458 10 987 9 627 12 716 8 514 Turnover (2) 12 148 10 845 9 390 12 580 8 409
Evolution 12.0 % 15.5 % - 49.6 % 33.1 %Electricity 7 893 6 740 5 781 6 638 5 001 Natural gas 2 125 1 641 1 315 3 741 1 403 Other fuels 20 37 29 83 75 Heat 196 181 170 156 58 Water 1 10 9 9 17 Other activities 1 913 2 236 2 086 1 953 1 855 Other operating income (3) 310 142 237 136 105
OPERATING CHARGES (4)(excluding depreciation, provisions and write off) -10 824 -9 511 -8 156 -11 081 -6 901
OPERATING RESULT BEFORE DEPRECIATION, PROVISIONS AND WRITE OFF (5 = 1 + 4) 1 634 1 476 1 471 1 635 1 613 Dividends and other financial results (6) 84 30 126 58 66 Share in the current pre-tax result of the intermunicipal companies (7) 341 445 447 435 437 Current pre-tax result of other equity method companies (8) 108 109 74 22 22
EBITDA (9 = 5 + 6 + 7 + 8) 2 167 2 060 2 118 2 150 2 138 Evolution 5.2 % -2.8 % -1.5 % 0.6 % 6.9 %
Depreciation and amounts written off (10) -521 -465 -717 -803 -763 Provisions (11) -270 -426 -245 -256 -213
EBIT (12 = 9 + 10 + 11) 1 376 1 169 1 156 1 091 1 162 Evolution 17.7 % 1.1 % 6.0 % -6.2 % 2.9 %
Debt charges (13) -162 -162 -194 -190 -185 Other financial result (14) 229 261 245 200 217
CURRENT RESULT (15 = 12 + 13 + 14) 1 443 1 268 1 207 1 101 1 194 Current income taxes (16) -310 -269 -258 -186 -244
NET CURRENT RESULT (17 = 15 + 16) 1 133 999 949 915 950 Evolution 13.4 % 5.3 % 3.6 % -3.6 % 13.8 %
SHARE OF THE GROUP IN THE NET CURRENT RESULT 1 019 882 809 805 848
Evolution 15.5 % 9.1 % 0.5 % -5.0 % 1.6 %
1 To give a more accurate picture of the Group’s operating activities and financial performance, the turnover from electricity and fuel trading now only comprises sales of excess energyproduction and fuel purchases, together with optimisation margins (sales – purchases) achieved in connection with these operations. From 2003 on the transport costs for energy andfuels are included in the purchases and not in services and other goods. The figures for the financial year 2002 have been restated in a similar way.
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RESULTS – e million
2004 2003 20021 2001 2000
Operating income 12 458 10 987 9 627 12 716 8 514 Operating charges 11 544 10 399 9 045 12 141 7 877 Operating result 914 588 582 575 637 Financial income 686 774 850 758 786 Financial charges 265 202 299 254 251Financial result 421 572 551 504 535
CURRENT PROFIT OF FULLY CONSOLIDATED COMPANIES AND SHARE IN THAT OF THE INTERMUNICIPAL COMPANIES 1 335 1 160 1 133 1 079 1 172 Share in the current profit of companies at equity, except intermunicipal companies 108 108 74 22 22
PRE-TAX CURRENT PROFIT OF THE GROUP 1 443 1 268 1 207 1 101 1 194 Exceptional income 743 194 1 302 130 79Exceptional charges 664 76 923 158 25Share in the exceptional result of companies at equity -156 29 -15 28 0
EXCEPTIONAL PRE-TAX RESULT OF THE GROUP -77 147 364 0 54
PRE-TAX PROFIT FOR THE YEAR OF THE CONSOLIDATED COMPANIES AND OF COMPANIES AT EQUITY 1 366 1 415 1 571 1 101 1 248 Tax on profit 307 290 290 191 244
CONSOLIDATED PROFIT 1 059 1 125 1 281 910 1 004
Minority interests share in the profit for the year 114 118 180 112 102Group share in the profit for the year 945 1 007 1 101 798 902
1 To give a more accurate picture of the Group’s operating activities and financial performance, the turnover from electricity and fuel trading now only comprises sales of excess energyproduction and fuel purchases, together with optimisation margins (sales – purchases) achieved in connection with these operations. From 2003 on the transport costs for energy andfuels are included in the purchases and not in services and other goods. The figures for the financial year 2002 have been restated in a similar way.
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BALANCE SHEET – e million
2004 2003 2002 2001 2000
FIXED ASSETS 12 119 12 289 12 280 12 986 12 997Formation expenses 4 10 12 21 23Goodwill 1 383 1 475 1 295 1 642 1 533Intangible assets 132 79 23 38 0Tangible assets 4 767 4 666 4 277 6 412 6 174Financial assets 5 833 6 059 6 673 4 873 5 267
CURRENT ASSETS 10 376 10 951 7 870 5 192 3 976Amounts receivable after more than one year 386 471 454 621 638Stock and contracts in progress 548 576 547 587 593Amounts receivable within one year 3 234 3 046 2 759 2 138 1 781Short-term investments 4 484 5 219 3 643 1 438 593Cash and cash equivalents 231 177 170 229 239Prepayments and accrued income 1 493 1 462 297 179 132
TOTAL ASSETS 22 495 23 240 20 150 18 178 16 973
CAPITAL AND RESERVES 5 282 5 179 5 110 4 766 4 652Capital 2 073 2 066 2 066 2 063 2 061Share premiums 928 905 902 892 889Revaluation reserves 710 743 787 760 689Reserves 1 341 1 264 1 079 772 741Goodwill 257 264 284 280 272Translation differences -27 -63 -8 -1 0Investment grants 0 0 0 0 0
MINORITY INTERESTS 1 507 1 846 1 954 2 066 1 965
PROVISIONS AND DEFERRED TAXES 5 952 5 579 5 079 4 910 4 434
AMOUNTS PAYABLE 9 754 10 636 8 007 6 436 5 922Amounts payable after more than one year 1 547 1 293 2 456 2 579 2 699Amounts payable within one year 6 559 7 661 3 852 3 243 2 611Accruals and deferred income 1 648 1 682 1 699 614 612
TOTAL EQUITY AND LIABILITIES 22 495 23 240 20 150 18 178 16 973EL
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2004 2003 2002 2001 2000
OPERATION (1) 497 1 064 871 1 499 884Cash flow 1 760 1 856 2 020 1 982 1 858Change in working capital requirements -310 111 -301 352 -95Dividends and directors' fees distribued -953 -903 -848 -835 -879
INVESTMENTS (2) -252 873 -499 270 2 412Formation expenses and intangible assets 19 30 3 50 14Tangible assets 470 446 300 410 394Financial assets 84 831 1 070 637 2 878Divestments in tangible and financial assets -750 -367 -1 860 -808 -783Change in receivables after one year -75 -67 -12 -19 -91
FINANCING (3) -774 -424 -6 -217 288Variation in capital -296 -50 -5 10 22Variation in loans -478 -374 -1 -227 266
VARIATION IN CONSOLIDATION SCOPE AND EXCHANGE RATE DIFFERENCES (4) 101 46 724 119 92
CASH FLOW CHANGE (1 - 2 + 3 + 4) 76 -187 2 088 1 131 -1 148Change in short-term investments and cash -681 1 584 2 146 834 -1 142Change in short-term financial debts 757 -1 771 -58 297 -6
TANGIBLE INVESTMENTS BY THE ELECTRABEL GROUP 470 446 300 410 394Electricity and heat generation 418 409 157 231 199 Electricity interconnection and transmission 0 2 84 94 96 Electricity distribution 24 9 27 40 36 Natural gas distribution 7 7 8 9 6Cable TV and other activities 21 19 24 36 57
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2004 2003 2002 2001 2000
MARKET PRICE – in e
Highest for the yearOrdinary share 332.30 249.20 256.00 257.30 334.90VVPR strip 3.00 3.00 1.60 0.80 0.24Lowest for the yearOrdinary share 246.40 208.00 218.00 210.50 216.50VVPR strip 1.66 1.21 0.42 0.12 0.10On last exchange day of the yearOrdinary share 328.00 249.20 231.50 234.00 240.80
NUMBER OF SHARES 1– in thousands
Ordinary share 54 878 54 719 54 697 54 620 54 594VVPR strip 10 235 10 076 10 054 9 977 9 951
NUMBER OF SHARES TRADEDEuronext Brussels 12 847 064 13 636 498 13 938 664 14 418 795 19 306 083
MARKET CAPITALISATION 1– e million 18 000 13 636 12 662 12 781 13 146
1 On 31 December of the year.
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2004 2003 2002 2001 2000
GROSS DIVIDENDAll shares 15.76 15.00 14.47 14.00 13.53
WITHHOLDING TAXOrdinary share 3.94 3.75 3.62 3.50 3.38Ordinary share with VVPR strip 2.36 2.25 2.17 2.10 2.03
NET DIVIDENDOrdinary share 11.82 11.25 10.85 10.50 10.15Ordinary share with VVPR strip 13.40 12.75 12.30 11.90 11.50
CASH FLOW 1 32.07 33.93 36.93 36.31 34.03NET CURRENT PROFIT 1 18.57 16.13 14.79 14.75 15.53PROFIT FOR THE YEAR 1 17.22 18.41 20.12 14.61 16.52
RETURN 37.2 % 12.9 % 3.3 % 1.4 % -23.0 %PRICE/EARNINGS 19.05 13.5 11.5 16.0 14.6
1 Number per share calculated based on the number of shares yielding dividend of the financial year.
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D I R E C T O R S ’ R E P O R T
Directors’ report
Main developments p. 018
Financial situation p. 022
Corporate governance p. 031
Members of the Board and Auditors p. 041
Forging ahead and building up
our presence on the market.
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Main developments
The proportion of electricity sales outside Belgium reached more than 50 % for the first time in 2004.
In 2004, the Electrabel group's electricity sales stood at 145.1 TWh, an increase of 5.7 % on the previous
year. Of this, 56 % was realised in the Benelux countries, 9 % in the France-Italy-Iberia region and 13 % in
the Germany-Poland-Hungary region. The balance, 22 %, was realised in the wholesale markets.
Taking into account sales by equity consolidated companies in which the Group owns a significant share
– Compagnie Nationale du Rhône for example – total sales were 155 TWh, of which more than half (51 %)
were realised outside Belgium, confirming the Group's status as a truly European operator. The target of
doubling volume over the period 2000-2004 compared with 1999 has been fully achieved.
In Belgium, the quantity of electricity sold in an increasingly deregulated market was down by 2.3 % in 2004,
while national consumption increased by 2 %. This change represents a loss of market share in the household
and non-household categories following the opening up of the market to competition since 2003, primarily in
Flanders. Sales to industrial customers, however, increased by 4.2 % compared with the previous year. This
increase is primarily due to general changes in economic activity.
The Group's natural gas sales in 2004 increased by 20.4 % to 111.9 TWh. In Belgium, where the proportion
of sales to the segments that are not yet deregulated now only represents 30 % compared to 70 % in 2003,
the growth rate is 1.4 %, which is in line with market growth of 1.7 %.
Electrabel reinforces its presence in Europe.
The electricity and natural gas markets in the European Union have been fully deregulated for all non-
household customers since 1 July 2004. In France, a key market for Electrabel's growth, the market has been
opened up for more than two million customers, representing 3.5 million sites. In Belgium, this development
marked a significant step forward for market deregulation in Wallonia and Brussels; the market in Flanders has
been fully open to competition since 1 July 2003. In the Netherlands, 1 July 2004 marked the date of the
total opening of the market to competition. In Italy, a further seven million customers became eligible on
1 July 2004, joining some 150 000 companies that were already eligible.
In line with its strategy of developing integrated positions in the markets in which it is active, the company
continued to develop both its generation facilities and sales activities in Europe.
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In the Benelux, Electrabel re-commissioned the Flevo and Awirs 5 power stations in order to meet market
demand. Nuclear capacity was increased by 40 MW following the replacement of the steam generators at
Doel 2. In late 2004, the company announced investments of e 50 million to extend the working life of
the Eems, Harculo and Bergum power stations, bringing total investments planned by Electrabel for its
facilities in the Netherlands up to e 100 million; this figure includes work announced previously in Gelderland.
Today, Electrabel is the leader in the Benelux market, which it regards as its domestic market. The 109.5 TWh
sold here can be divided up into 70.3 TWh sold in the deregulated bilateral market, 11.6 TWh sold in the
still-regulated market (only in Belgium) and the rest (27.6 TWh), which represents the company's wholesale.
In France, 2004 will be remembered as the year when the contracts with SNCF on Société Hydroélectrique
du Midi (SHEM) were concluded. Today, Electrabel holds a 40 % stake in this company, a figure which will
increase to 80 % as from 2007. The peak hydropower capacities of SHEM complement perfectly the basic
hydro and nuclear generation facilities that the Group operates in France; that is also the reason why
Electrabel showed its interest in participating in the development of the EPR nuclear project. To ensure maxi-
mum reputation and credit in France, the Group conducts its business activities in that country under the
brand name ‘Electrabel, Group SUEZ’. Sales currently total 14.5 TWh, to compare to 9.1 TWh sold by
Compagnie Nationale du Rhône.
In Italy, the Group – together with Acea – is currently in the process of developing several projects with a view
to increasing the generation facilities available to it: the project to repower the Tirreno Power thermal power
stations, construction of two 370 MW CCGT plants (Voghera and Roselectra). Another CCGT is planned for
Leinì; Electrabel has all the required administrative permits. These investments will allow the Group to double
its generating capacity whilst favouring technologies that respect the environment. Sales in Italy – again,
mainly in partnership with Acea – totalled 10.8 TWh. A joint venture by the name of Umbria Energy S.p.A
was established with ASM Terni for the purpose of marketing electricity and natural gas in the Umbria region.
Electrabel is continuing to establish itself on the Iberian market. Work continued on the construction of the
760 MW Castelnou plant in 2004; it is due to be commissioned at the beginning of 2006. The Carreco-
Outeiro wind farm (9 x 2.3 MW) came online in late 2004. The Group has also made a promising start in 2005:
Electrabel has received new environmental licences to build a 1 200 MW cogeneration plant in Morata de
Tajuña and has concluded an agreement with the manufacturer Gamesa to take over a wind farm consisting
of 40 wind turbines of 2 MW each in Fafe, Portugal.
Finally, in Germany and Central Europe, work has started on the repowering of the Römerbrücke cogene-
ration station; by mid 2005 the station should be generating 110 MW. A co-combustion biomass facility has
been installed in the Polaniec plant. The Group sold almost 21 TWh in this region: 8.1 in Germany, 8 in Poland
and 4.5 in Hungary.
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Electrabel is firmly committed to sustainable development and continues tocontribute towards achieving the Kyoto targets.
15 % of the Group's generation facilities (over 4 000 MW) are powered by renewable energy sources:
hydraulic, wind power or biomass.
Since 1990, Electrabel has reduced its CO2/kWh emissions by over 22 % in Belgium. Today, 41 % of its
generating facilities do not produce any CO2 emissions since they use nuclear fuel, hydroelectric power or
wind power.
In this respect, Electrabel is one of the leading European energy companies, taking account of the CO2 issue
in all of its investment projects. Given its large-scale wind projects in Portugal, Italy, France and the Benelux
countries, the dominant position of natural gas in its thermal power stations and the studies carried out to
lessen the impact of coal-based technology on the environment, this situation is sure to continue to improve
in the future.
Its status as the largest generator of electricity from renewable sources in Belgium – wind, hydro and biomass
– has recently enabled Electrabel to meet the demand for a green product voiced by a large proportion of its
residential and non-residential customers. By launching 'Electrabel Green' in late 2004 – energy which is
generated 100 % from renewable sources in Belgium – and by pledging to reinvest the entire amount of the
price paid by the customer in renewable generation facilities, Electrabel confirms that green energy is truly in
its nature. This product will complement its renewable product range elsewhere in Europe: AlpEnergie in
France (in partnership with CNR), Energia Naturale in Italy and Groene Elektriciteit® in the Netherlands.
The market works in Belgium. It is part of the Benelux market and isinterconnected with the French market.
The opening of the generation market, which began in 2003, continued in 2004. Everything seems to
indicate that this trend will increase further in 2005.
Even without taking account of the facilities made available by the interconnection capacities between the
Netherlands and Belgium, Electrabel's competitors had access to over 25 % of the available generation
facilities in Belgium at the end of 2004. SPE and EDF have their own capacities and can, like others, take part
in virtual power plant (VPP) auctions organised by Electrabel. In 2005, the share held by RWE (192 MW) in the
Zandvliet power station, Electrabel's commitment to ensure a specific degree of liquidity on the Belpex
exchange (100 MW) and the additional transmission capacities on the Franco-Belgian border (1 400 MW inter-
connection) will be added to these existing facilities.
This trend is also visible in terms of electricity and natural gas sales.
In 2004, Electrabel, faced with fierce competition, developed a highly productive business policy. Over a period
of approximately 20 months, more than 50 % of customers chose a supplier in the household market; 80 %
of these customers opted for Electrabel, thereby justifying the company's business decisions. At the start of 2005,
Electrabel’s share of the residential Flemish market was 70 % for electricity and 77 % for natural gas.
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These results have been achieved despite the fact that the prices charged to household customers and
similar types of customers are far more favourable than the average prices in the neighbouring countries.
Against this backdrop, the company's financial performance, which has remained profitable on its domestic
market, has been excellent. This is due to a business model which meets the realities of the market; diverse
and flexible generation facilities with one of the highest rates of availability; business policies which correspond
to the expectations of its customers; and continuous efforts to improve productivity and cost management.
Research and development focuses on the deregulated market.
Electrabel's research and development projects focus on two key areas. Firstly, Electrabel offers its customers
new products and services that enrich sales of energy. Secondly, within Electrabel, research into technical and
environmental efficiency contributes significantly to competitiveness in a liberalised market. Laborelec is the
company's technical and scientific competence centre.
Electrabel in 2004: preparing for the future.
The need for new generation facilities by 2030 is currently estimated at 600 000 MW for the EU-15 alone.
Electrabel is keen to consolidate its status as a leading power generator and intends to play a major role in
this regard.
At the end of 2004, the Board of Directors finalised its strategic guidelines for the period 2005-2009.
The company is aiming to achieve generating capacity of 35 000 MW and sales of 200 TWh by 2009. Based
on the currently stable situation in the Belgian market, in concrete terms, this corresponds to a major increase
in generation facilities and in sales volumes outside Belgium by 2009.
In view of the company's strengths, advantages and the projects currently on the drawing board, these aims
might seem ambitious, but they are nevertheless realistic.
Electrabel develops and deploys its commercial activities within the context of this European outlook. First of
all, the company capitalises on the flexibility of its portfolio by distributing its positions between wholesale
and retail sales. Secondly, it ensures that each customer segment – heavy industry, business customers and
residential customers – benefit from a specific approach. But a common thread runs through everything: the
company's commitment to offer real solutions that meet the customer's specific energy requirements.
In Europe, growing numbers of customers are becoming aware of the benefits of purchasing energy on a
larger scale. Electrabel is meeting this need and seizing opportunities for cross-selling. So far, Electrabel has
47 customers to whom it supplies energy for at least two sites in Europe, making a total of 18 TWh.
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Summary of the consolidated results
e million unless otherwise stated 2004 2003 Variation in %
CONSOLIDATED TURNOVER 12 148 10 845 12.0
FULLY CONSOLIDATED RESULTSOperating result 914 588 55.4Financial result 80 126 -36.2Current result of companies consolidated by the equity method (before taxes) 449 554 -18.9Current result 1 443 1 268 13.8Extraordinary result -77 147 -Result for the year before taxes 1 366 1 415 -3.5Income taxes 1 -307 -290 5.6Result for the financial year after taxes 1 059 1 125 -5.8
Current net result 2 1 133 999 13.4Extraordinary net result 2 -74 126 -
EBIT 3 1 376 1 169 17.7EBITDA 4 2 167 2 060 5.2
CONSOLIDATED CASH FLOWCash flow 5 1 760 1 856 -5.1Net investments (- = expenditures) 252 -873 -Net financing (- = repayments) -774 -424 82.6
CONSOLIDATED RESULTS (GROUP'S SHARE)Result for the financial year 945 1 007 -6.2
Net current result 1 019 882 15.5Net extraordinary result -74 125 -
RESULTS PER SHARE 6 – in eNet current result (Group's share) 18.57 16.13 15.1Result for the financial year (Group's share) 17.22 18.41 -6.5Cash flow after taxes 32.07 33.93 -5.5Gross dividend 15.76 15.00 5.1
1 Including the Group's share in taxes of companies consolidated by the equity method, i.e. e 25 million in 2004 and e 64 million in 2003.2 After allocating the various tax charges according to those elements in the result to which these charges are linked.3 EBIT = earnings before interests and taxes, i.e. operating result plus the dividends received from non-consolidated companies, together with the share
in the results of companies consolidated by the equity method.4 EBITDA = EBIT before depreciation, amortisation, provisions and amounts written off.5 Cash flow = net result before amortisation, provisions, amounts written off, and capital gains and losses.6 Based on the number of shares giving entitlement to a dividend for each period, amounting to 54 878 197 in 2004 and 54 697 196 in 2003.
Financial situation – on 31 December 2004
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Consolidation scope
The only major change in the consolidation scope since 2003 concerns Compagnie Nationale du Rhône (CNR)
in which the Group acquired a 47.88 % holding between June and December 2003. Following the purchase
of additional shares, this holding increased to 49.95 % in 2004, entitling the Electrabel group to 48.08 %
of the votes.
The sale of Aquinter to intermunicipal water distribution company TMVW in 2004 led to a drop in turnover
of e 23 million, without any significant impact on the net current result.
Turnover
The Group’s turnover amounted to e 12 148 million in 2004, a 12 % increase compared with 2003. The
breakdown is as follows:
e million 2004 2003 Variation in %
Electricity sales to end customers 6 653 5 842 13.9Benelux 1 4 994 4 251 17.5Europe outside Benelux 1 659 1 591 4.2Natural gas sales to end customers 1 614 1 359 18.8Benelux 1 540 1 298 18.6Europe outside Benelux 74 61 22.4Wholesale of electricity and fuel 1 1 773 1 217 45.7Miscellaneous goods and services 2 2 108 2 427 -13.1
TURNOVER 12 148 10 845 12.0
1 Supplies to certain counter-parties (distributors in the Netherlands) are from now on contained under wholesale. Sales for 2003 were restated by e 93 million in order to allow comparison.
2 Mainly on behalf of the network operators in Belgium.
Electricity
Turnover in Belgium increased by e 745 million. This increase is primarily due to the gradual deregulation of
the market: turnover includes sales to the deregulated market segments (household and non-household
customers) that have gradually been replaced by supply of primary energy to distributors (intermunicipal
companies) since 2002. This change is not reflected in the operating results because costs associated with the
marketing of these sales are not recharged to intermunicipal distribution companies (see below).
In the Netherlands and Luxembourg, turnover remained stable despite a slight drop in sales (down 0.5 TWh).
If changes in currency rates are excluded, the growth in turnover outside the Benelux countries increased to 4.7 %.
Natural gas
Turnover was up significantly, since, as in the electricity industry, Electrabel now supplies deregulated end cus-
tomers directly, without going via the mixed intermunicipal companies. The lower average price for natural
gas imported during the first three quarters of the year did nevertheless cushion this effect to some extent.
Services
Turnover from services, which primarily included the technical services on behalf of the network operators, fell
by e 319 million, the main reason being the impact of deregulation on the Belgian and Dutch markets. Costs
for marketing the energy in sectors open to competition in Belgium are gradually no longer being charged to
intermunicipal distribution companies. In the Netherlands, costs for accessing and using the networks will be
charged directly to the customer by system operators and not via the Group units.
Current result
The current result (fully consolidated) amounts to e 1 443 million. When taxes are taken into account, the
current net result amounts to e 1 133 million, an increase of 13.4 % compared with 2003.
e million 2004 2003 Variation in %
EBITDA (OPERATING CASH FLOW) 2 167 2 060 5.2Benelux 1 896 1 850 2.5Generation and sales of energy 1 1 493 1 323 12.8Transmission of energy in Belgium 2 62 82 -24.7Distribution in Belgium 3 341 445 -23.5Europe outside Benelux 4 271 210 29.0
Amortisation of goodwill -60 -60 0.4Other depreciations, amortisations and write-downs -461 -405 13.8Provisions for contingencies and charges -270 -426 -36.7
EBIT (OPERATING RESULT) 1 376 1 169 17.7Debt charges -162 -162 0.3Other financial elements 5 229 261 -12.1
CURRENT RESULT BEFORE TAXES 1 443 1 268 13.8Taxes on the current result 6 -310 -269 15.4
CURRENT RESULT AFTER TAXES 1 133 999 13.4
1 Generation, trading and marketing of energy and related products for the deregulated segment of the market and to the distribution system operators.2 The federal transmission system operator's (ESO/Elia's) share in the result.3 Share in the results of the intermunicipal companies in which Electrabel is a partner (managing the regional transmission networks and supplying
energy to the segment of the market that is not yet deregulated).4 Generation and sales of energy in Germany, Poland, Hungary, France, Italy, Spain and Portugal.5 Including the result of cash management and the cost of instruments for managing financial risks.6 Including taxes of companies consolidated by the equity method.
The operating result before depreciation, amortisation, provisions and other write-downs (EBITDA), saw a
general increase of 5.2 %. This result includes, in particular, a non-recurring dividend of e 71 million paid out
in 2004 by NEA, a company that groups together the Dutch electricity producers and which, inter alia, owned
the country's main power grid before it was transferred to the public authorities.
This element aside, operating cash flow generated by energy generation and sales activity in the Benelux
increased by e 99 million as a result, in particular, of the general increase in prices in the electricity market and
the recovery of a significant portion of the margins for marketing energy realised in the segments of the
market eligible for competition since 1 July 2003. These margins were previously realised by the intermunicipal
distribution companies, which explains the drop in income from these companies noted elsewhere.
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The loss of market share in the retail sector in Belgium has been offset by continued development of synergy
in the management of generation facilities and the portfolio of supply contracts between Belgium and the
Netherlands; and decreases in costs generated by the streamlining programmes implemented in these two
countries. This share of the market actually dropped from approximately 76 % at the end of 2003 to 70 %
by 31 December 2004.
Outside Benelux, operating cash flow increased by e 61 million in 2004 (e 62 million if the changes in
currency rates are left out of consideration). This positive development is due to improved margins in Germany
and, above all, to the development of activities in Italy and France.
The amount of other depreciation, amortisation and write-downs increased by e 56 million compared
with the previous year. The Group actually recorded significant write-downs of its trade debtors in order to
take account of the credit risks inherently linked to supplying energy to segments of the Belgian market that
are progressively being deregulated.
In 2004, net amounts for provisions for contingencies and charges decreased by e 156 million. Provisions
for pension commitments had to be increased by e 50 million in 2003, whilst a withdrawal of e 18 million
was recorded in 2004. The amounts for provisions for dismantling nuclear installations and managing irradiated
fuels were reduced to take account of an extraordinary change in these provisions that took effect on
1 January 2004 (see extraordinary result below).
Interest and other debt charges remained stable in 2004 at e 162 million. The balance of the financial result
includes revenue from net financial position, which generally remained highly positive during the financial
year; and changes in currency rates which were less favourable than the previous year.
Taxes calculated for the current result increased by e 41 million from the previous year. This increase of
15.4 % primarily reflects the increase in the current result before taxes.
Expressed as the Group's share, the net current result increased by 15.5 % in 2004 to e 1 019 million
compared with e 882 million in 2003. The third-party share in the net current result of e 114 million fell by
2.8 % compared with 2003.
Extraordinary result
The extraordinary result for the financial year totals e -77 million (fully consolidated as the Group's share).
When extraordinary taxes are taken into account, this result is e -74 million compared with e 126 million
(e 125 million as the Group's share) in 2003.
Under the Law of 11 April 2003 concerning provisions for dismantling nuclear power stations and the
management of irradiated nuclear fuels at these power stations, the Group's provisions were amended to
conform to the principles approved by the independant Follow-up Committee set up in 2004 in application of this
legislation. These adjustments are the result of the revision of certain calculation parameters, including the
lowered discount rates, and, where plant dismantling is concerned, the fact that calculations will now be
based on the current total value of future payments, whereas provisions used to be established
gradually. These changes took effect on 1 January 2004 and resulted in an extraordinary charge of e 233 million.
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The Group's share in the estimated supplementary pension and comparable charges related to staff providing
services on behalf of distribution system operators in Belgium was reviewed to take into account the changes
that led to the restructuring of the sector following the opening up of the market. This results in a net charge
of e 19 million.
These extraordinary charges were offset in part by the release of e 144 million of surpluses in the portfolio,
primarily consisting of e 120 million generated by the disposal of almost all securities held by the Group in
Total and the write-back of a e 15 million write-down in our stake in Union Fenosa.
The remaining net extraordinary result consists of various write-backs of depreciations, amortisations and
provisions, and the taxation effects of these different elements.
In 2003, the extraordinary result mostly comprised the capital gain from disposing of the remainder of the
Group's stake in Iberdrola (e 60 million), and a positive result of e 61 million which was recorded for assets
held by the Group, directly or indirectly, in Telenet following the setting up of financing to acquire all the cable
TV distribution activities from the Flemish mixed intermunicipal companies.
Consolidated net result
Taking these extraordinary elements into consideration, the fully consolidated net result for 2004 fell by 5.8 %
in 2004 to e 1 059 million compared with e 1 125 million in 2003. The e 175 million increase in the current
result is actually more than offset by the drop in the extraordinary result (e -224 million), and taxes increased
by e 17 million. In terms of the Group's share, the consolidated net result fell by 6.2 % to e 945 million
compared with e 1 007 million the previous year.
Consolidated balance sheet
Summary of consolidated balance sheet
e million 2004 2003 Variation
Fixed assets 12 119 12 289 -170Current assets 10 376 10 951 -575Total assets 22 495 23 240 -745
Equity 5 282 5 179 103Minority interests 1 507 1 846 -339Provisions and deferred taxes 5 952 5 579 373Debts 9 754 10 636 -882Total liabilities 22 495 23 240 -745
The balance is shown after appropriation of the result.
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Fixed assets
The main movements affecting the Group's fixed assets in 2004 can be summarised as follows:
e million
Intangible fixed assets (including formation costs) 47
Goodwill -92Acquisitions 1 -32Amortisation for the financial year -60
Tangible fixed assets 101Investments 2 470Disposals (at book value) -94Depreciation for the financial year -348Changes in the consolidation scope (at book value) 19Translation differences 54
Financial assets (including accounts receivable) -226Investments 3 63Disposals 4 -591Write-downs (including write-backs) 12Changes in consolidation scope, transfers and miscellaneous 290
TOTAL MOVEMENT -170
1 Net decrease mainly due to the definitive appropriation to other assets and liabilities of the goodwill recorded for Polaniec, Tirreno Power and CNR.2 Including e 418 million for construction and upgrading of electricity generation facilities. 3 Mainly CNR.4 Settlement of loans and sale of securities.
Current assets
The e 575 million drop in current assets in 2004 is essentially due to changes in the Group's treasury position
which fell by e 680 million. e 383 million of this decrease was due to the disposal of Total shares and must be
considered along with the reduction of e 756 million of the short-term financial debts in the liabilities of the
balance sheet.
Equity
Changes in the Group's equity in 2004 were as follows:
e million
Shareholders' equity on 31 December 2003 5 179
Capital increase and share issue premiums 29Change in revaluation surpluses, goodwill and translation differences -4Consolidated profit for the financial year (Group's share) 945Dividends and directors' fees payable by Electrabel S.A. -867
Shareholders' equity on 31 December 2004 5 282
The capital increase and the share issue premiums resulted from the decision by the Board of Directors on
10 October 2003 to enable the personnel of Electrabel and certain subsidiaries to invest in the company, in
accordance with the conditions for the authorised capital laid down in the Articles of Association. The
operation was carried out in two phases, in December 2003 and February 2004.
During the first subscription round, 22 070 shares were subscribed for a total of e 4 million. At the end of the
second round, 158 931 additional shares had been subscribed for a total of e 29 million. At the end of this
operation the unsubscribed portion of the authorised capital amounted to e 243 million.
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Provisions and deferred taxes
Overall, provision for contingencies and losses rose from e 5 517 million in 2003 to e 5 844 million at the end
of 2004, an increase of e 327 million. e 153 million was withdrawn for pension commitments to cover an
equivalent one-off payment into the pension funds, whilst the provisions related to nuclear generation (dismantling
and management of the fuel cycle) were increased overall by e 522 million, particularly as a result of the adjustment
to the increase of e 233 million recorded in the extraordinary result. Provisions for dismantling of non-nuclear
sites were also increased by e 35 million to take into account environmental restrictions with which the Group
has to comply. Finally, e 52 million was withdrawn for provisions for restructuring and other expenses linked
to the opening up of the market.
Debts
The Group's debt decreased by e 1 250 million. Net debt remains not only negative but actually increased by
e 570 million.
e million 2004 2003 Variation
Financial debts 2 723 3 973 -1 250Long term 1 446 1 206 240Current portion of long-term debt 124 858 -734Short term 1 153 1 909 -756
Short-term investments and cash at bank and in hand -4 716 -5 396 680
NET DEBT POSITION -1 993 -1 423 -570
Long-term debt fell following repayment of the convertible loan in Total shares which became due in 2004.
This decrease was partially compensated for by the use of new long-term credit lines. Short-term debts essen-
tially include bank advances and 'commercial paper'.
The Group's financial debts, 42 % of which are at fixed interest rate (compared with 52 % in 2003) are, to a
very large extent, still denominated in euros. The average maturity is 2.5 years compared with 2 years on
31 December 2003. The average current cost of debt has remained stable at 4.2 %.
The Group's cash flow is managed centrally by Electrabel Finance and Treasury Management, a Luxembourg-
based branch of Electrabel S.A.
Market risks and financial instruments
The Electrabel group uses financial instruments to cover the risk of fluctuating interest rates, exchange rates
and energy prices. These instruments are used to cover assets, liabilities and cash flow.
The Group's exposure to fluctuations in the market prices of electricity and gas is managed centrally using firm
or optional derivatives on organised markets (exchanges) or privately.
Exposure to energy trading is measured and managed permanently in accordance with the limits and
management policy set out by General Management.
The Group partially covers its investments in non-euro zone currencies by taking out financing in the same
currency.
The Group also uses hedging instruments (interest rate swaps, etc.) to reduce its exposure to rate risks and
optimise the fixed rate/variable rate structure of its debts. Given these hedging instruments, 42 % of
financial debts accrue interest at a fixed rate (compared to 52 % at end 2003).
The Group's exposure to credit risks is, where appropriate, limited by obtaining letters of credit and guaran-
tees. With regard to trading, credit limits are set according to the rating of the counterparties; netting
agreements complete the arrangement.
Consolidated cash flow statement
e million 2004 2003 Variation
Cash flow 1 760 1 856 -96Variation in working capital requirements -310 111 -421Payment of dividends -953 -903 -50Net operations 497 1 064 567
Investments -573 -1 307 734Disposals of assets 825 434 391Net investments 252 -873 1 125
Movements in capital -296 -50 -246New borrowings and repayments -478 -374 -104Net financing -774 -424 -350
Changes in consolidation scope and translation differences 101 46 55
CHANGE IN NET TREASURY POSITION 1 76 -187 263
1 Short-term investments, cash at bank and in hand and short-term financial debts.
Summary of non-consolidated results of Electrabel S.A.
e million unless otherwise stated 2004 2003 Variation in %
Turnover 8 616 7 523 14.5Operating result 728 678 7.3Financial result 443 499 -11.2Gross current result 1 171 1 177 -0.5Taxes -142 -184 -22.5Net current result 1 029 993 3.5Extraordinary result 1 -73 1 074 -Net result for the financial year 956 2 067 -53.7Transfer to untaxed reserves 1 5 -1 082 -Profit available for appropriation 961 985 -2.4
Net result per share – in e 17.42 37.79 -53.9Current net result per share – in e 18.74 18.16 3.2
1 The demerger and absorption of CPTE generated a large capital gain, corresponding essentially to the untaxed reserves of that company. These reserves were reconstituted within the acquiring company.
Appropriation of the profits
In e 2004 2003
Gross dividend for the financial year 15.7600 15.0000Net dividend for the financial year 11.8200 11.2500Net dividend with VVPR strip 13.3960 12.7500
Number of shares bearing dividends 54 878 197 54 697 196
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The profit available for appropriation by Electrabel S.A. amounts to e 961 million.
The Board will propose to the General Meeting of shareholders that an amount of e 75 million should be
appropriated to the available reserves, and that the result carried forward should be increased by e 18 million.
If this proposal is accepted, a net unit dividend of e 11.82 will be paid to shareholders, representing an increase
of 5.07 % compared with the net dividend for 2003. The net dividend payable to shares accompanied by a
VVPR strip (giving entitlement to a reduced 15 % rate of withholding tax) would then be e 13.396.
International accounting standards
Throughout 2004, the Group continued to prepare for the switchover to IFRS (International Financial Reporting
Standards). Financial information on the consolidated results for the 2005 financial year, including half-yearly
results, will be finalised and published in accordance with this new accounting system. To enable a relevant
comparison to be made with the results from 2004, a consolidated opening balance sheet, finalised on
1 January 2004, was drawn up in line with the new standards.
Applying the IFRS standards to the financial situation on 1 January 2004 resulted in a reduction of e 26 million
in consolidated shareholders' equity and had no impact on the Group's financial debt.
The options chosen for the switchover to the IFRS system, the adopted accounting methods, the opening
balance sheet on 1 January 2004, the accounts for the 2004 financial year and the necessary cross-checking
with accounts established in line with Belgian standards are presented in more detail in a brochure that forms
an integral part of this annual report.
Remuneration of the College of statutory auditors
The remuneration of the College is currently set at e 141 750 per year, non-indexed, for the auditing of the
statutory accounts. It amounts to e 375 000 for the auditing of the consolidated accounts. To these amounts
were added in 2004 for the Electrabel group a remuneration of e 1 959 250 associated primarily with the
introduction of IAS/IFRS standards and efforts to bolster audit-related constraints.
Prospects
In the deregulated Benelux market, Electrabel is now recognised as a prominent player, both in terms of its
market share and the quality of its services. In Belgium, where 2004 was the first complete financial year in a
market that is now largely open to competition, the Group's position remains and will continue to remain
highly dependent on a background that is extremely complex and unstable in terms of institutions and regula-
tions. Here, the Group is also increasingly exposed to the greater interaction between the national market and
markets in neighbouring countries. The gradual emergence of a genuine European energy market is the source
of new development opportunities but also an additional risk factor.
The Group has already clearly demonstrated its ability to seize such opportunities whilst respecting strict
profitability criteria and working towards a long-term vision of sustainable development. It will therefore continue
to develop and renew its production facilities and its supply sources in a diverse and balanced way, whilst
ensuring that it has a customer base that allows it to make the most of its technical expertise and the high-
quality services it offers. To achieve this, it can rely on its highly skilled staff and a sound financial basis which will
be further enhanced by selling a large proportion of its holding in Elia.
Changes in market prices for electricity, natural gas and other fuels will of course be one of the main factors that
will shape future results.
Brussels, 4 March 2005
The Board of Directors
Corporate governance – situation on 04.03.2005
Electrabel has closely observed the work of the Corporate governance Commission, which was
created on the initiative of the Federation of Enterprises in Belgium, Euronext Brussels, and the
banking, finance and insurance Commission. The Corporate governance Commission has brought
together in a single Code – the Belgian Corporate governance Code – all the Belgian and European
recommendations in the area of corporate governance.
On 28 September 2004 the Board of Directors set up a working group entrusted with examining the
measures needed to adapt the company's and governing bodies' current functioning, bearing in mind the best
practices, the above-mentioned Code, as well as the specificities of the company. This working group
comprises three directors: Jean-Pierre HANSEN, Lutgart VAN den BERGHE and Baron VANDEPUTTE.
The Electrabel Corporate governance Charter is now in course of preparation, with a view to publication in the
course of 2005. The Board of Directors has been kept regularly informed of the drafting work and has given its
approval where necessary. As the draft stands at the moment, the Charter should include provisions governing rela-
tions with shareholders and in particular the controlling shareholder, together with the respective roles of the Board
of Directors, the Chairman of the Board and the CEO. It should also redefine the missions of the bodies external
to the Board of Directors, in particular the one in charge of executive management. As regards the provisions for
remunerations, the company will apply the recommendations of the Corporate governance Code.
The Board of Directors
Composition
The Articles of Association state that the Board of Directors shall comprise at least five members, appointed
by the General Meeting. They hold office for a maximum period of six years and may be relieved of their duties
or re-elected by the General Meeting.
Conforming the Board’s internal rules, the term of office of the Chairman and the members of the Board shall
end no later than the ordinary General Meeting immediately following their 70th birthday.
The Board of Directors, on the proposal of the Remuneration and Appointments Committee, has agreed a
derogation to this rule for Baron CROES, independent director and Chairman of the Audit Committee. This
derogation is justified by the fact that, thanks to his expertise and know-how, he makes a significant contri-
bution to the work of the Audit Committee, of which he has been Chairman since its creation in 2003.
The Board of Directors has seventeen members and is made up of five categories of directors:
1. Seven directors are linked to the controlling shareholder
Gérard MESTRALLET, Chairman
Emmanuel van INNIS, Vice-Chairman
Patrick BUFFET
Jean-Pierre DEPAEMELAERE
Yvan DUPON
Gérard LAMARCHE
Jacques LAURENT
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2. Two directors belong to the management
Jean-Pierre HANSEN, Vice-Chairman and Chief Executive Officer
Xavier VOTRON
3. Two directors are linked to the municipalities
(with which Electrabel is associated via the mixed intermunicipal companies)
Luc HUJOEL
Geert VERSNICK
4. Four directors are independent
Baron CROES
Lutgart VAN den BERGHE
Baron VANDEPUTTE
Baron van GYSEL de MEISE
These four directors are qualified as independent under the terms of Article 524 of the Company Code.
The independent directors are called upon to issue an opinion to the Board of Directors prior to certain
decisions or operations involving an associated company (with the exception of subsidiaries), unless they
concern ordinary decisions or operations taking place under normal market conditions or representing
less than one percent of the consolidated net assets.
5. Two other directors
Pierre DRION
Jean-Pierre RUQUOIS
The Secretary to the Board of Directors and to the Committees created by the Board (see below) is
Patrick van der BEKEN (until 04.03.2005: François DESCLÉE de MAREDSOUS).
Decision making
The Board of Directors meets under the direction of the Chairman or, if he is prevented from doing so, a
Vice-Chairman, or in absence, by a director appointed by his colleagues.
The Board of Directors can deliberate and take decisions only if a majority of its members is present or repre-
sented. Each director can represent a maximum of two of his colleagues.
All decisions by the Board of Directors are taken by a majority vote of its members present or represented. If there
is tie, the Chairman has the casting vote. In practice, nearly all decisions are taken by consensus.
Over and above these statutory provisions, there is no rule governing the decision-making method of the Board
of Directors.
Remuneration
In accordance with Article 32 of the Articles of Association, a maximum of one per cent of the period’s profits
available for appropriation is made available to the Board of Directors, which may share it among its members in
accordance with its internal rules.
As in past years, the Board of Directors voluntarily limited the directors’ share of profits to an overall amount of
e 2 427 800, an increase of 5 % in relation to the preceding period. The share of profits for the directors who were
either appointed or who submitted their resignation during the year is calculated on a prorata basis.
The Board of Directors may allocate supplementary remuneration to a director who renders particular services
for the company. Such remuneration, in the form of an attendance fee, is granted to the members of the Audit
Committee and the Remuneration and Appointments Committee.
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Honorary members receive no remuneration.
The company has not made loans to the directors nor granted benefits in kind, share options, credits or
advances. The directors have not entered into any unusual transactions with the company.
Activities
In 2004, the Board of Directors met eight times. Apart from the usual supervisory duties, the Board of
Directors ratified the half-yearly and the annual accounts, approved the budgets and prepared the 2004
General Meetings. At every Board meeting, the Chief Executive Officer reports on the financial situation, the
treasury, sales and operations.
Other noteworthy topics that were taken up in 2004 or that the Board of Directors debated include the
following:
- changes on the European market and Electrabel’s development strategy on that market;
- completion of the examination of the possible takeover of a number of European assets of SUEZ-Tractebel;
- investments relating to tangible and financial assets;
- IT security;
- the CO2 issue;
- examination of the listing on the stock exchange of Elia System Operator (ESO);
- the programme for converting the accounts to IAS/IFRS standards;
- the Belgian Code on corporate governance;
- approval of the regulation on delegated powers and mandates, and its successive updates;
- proposals for nomination to the Board of Directors and the Executive Committee;
- the resignation and appointment of the Chief Executive Officer;
- the composition of the College of statutory auditors in the wake of the resignation of KPMG.
During the past period, a special information session was held for the directors to inform them in detail of
certain specific topics, such as changes in the legal and regulatory field and the impact of those changes on
the organization of Electrabel.
The rate of participation in the Board meetings of the past period reached 87 %.
The Executive Committee
Duties
The scope of authority and the powers of the Executive Committee are decided by the Board of Directors. Its
main task is to prepare the meetings and decisions of the Board of Directors. It oversees the correct reporting
to the Board. In addition, the Executive Committee is a forum for exchange of ideas on the activities of
Electrabel.
Composition
The Executive Committee has eight members, appointed for a three-year term.
Jean-Pierre HANSEN, Vice-Chairman and Chief Executive Officer
Emmanuel van INNIS, Vice-Chairman
Yvan DUPON, Director
Alain JANSSENS, Chief Executive Officer of Distrigas
Jacques LAURENT, Director
Robert-Olivier LEYSSENS, Chief Financial Officer
Walter PEERAER, General Manager Strategy, Communications, Administration
Xavier VOTRON, General Manager Generation, Distribution, IT
The Committee is chaired by Jean-Pierre HANSEN.
033
Remuneration
The remuneration of the members of the Executive Committee is set by the Board of Directors.
Activities
The Executive Committee held ten meetings in 2004.
The rate of participation in the Executive Committee meetings of the past period reached 94 %.
The Audit Committee
Duties
The Board of Directors created an Audit Committee in 2003 to assist the Board of Directors in verifying the
accounts and budgets, supervising audit activities, examining the reliability of financial information, organiz-
ing and supervising internal control as well as the follow-up of tasks accomplished by the College of statutory
auditors. The Audit Committee reports regularly on its activities to the Board.
The Board of Directors has approved internal regulations setting the general principles relating to the duties,
the powers and the functions of the Audit Committee.
Composition
The Board of Directors appoints the committee members. Its members are:
Baron CROES, Chairman
Jacques LAURENT
Jean-Pierre RUQUOIS
Activities
The Audit Committee met six times in 2004. The most noteworthy items taken up during the period were:
- the 2003 activities report of the internal audit, as well as the internal audit’s action plan for 2004;
- the organization of the internal audit and the training of auditors;
- examination of the annual accounts at 31 December 2003;
- the half-yearly results at 30 June 2004;
- the letter of recommendation (Management Letter) from the auditors to the management for the 2003
period, with management’s response;
- the company’s commitments relating to pensions, financing techniques, the entering of commitments in the
accounts and, lastly, the coverage of these commitments for the staff of the group’s Belgian companies;
- trading: the approach, control and follow-up of improvements recommended by the internal audit
department, as well as the limits on commitments;
- the state of play in the work to implement IAS/IFRS standards, which entered into force on 1 January 2005;
- the main litigation underway;
- the European environmental issue;
- general information security;
- the composition of the College of statutory auditors in the wake of the KPMG resignation.
The auditors attended several meetings, during which they could offer their views and/or submit a report on
the matters at hand.
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Remuneration and Appointments Committee
Duties
This committee was created by the Board of Directors in 2003; it deals with general company policy relating
to remuneration and nominations.
The committee’s duties were adopted by the Board during its meeting of 27 February 2004.
Composition
The Board of Directors appoints the committee members. Its members are:
Jean-Pierre HANSEN, Chairman
Pierre DRION
Emmanuel van INNIS
Activities
The Remuneration and Appointments Committee met twice in 2004. The main items it took up during those
meetings were proposals for appointment to the Board of Directors and the Executive Committee, the proposal
for directors’ share of profits for the 2003 period and remuneration for the General Management.
OVERVIEW OF OFFICES
Name Age on Nationality Board of Directors Executive Committee3
12.05.051 Committeemember term of category member term of
since office (see page since officeexpires2 031) expires2
Gérard MESTRALLET 56 French 2003 2009 1
Jean-Pierre HANSEN 57 Belgian 1992 2010 2 1992 2007 b, c
Emmanuel van INNIS 57 Belgian 1992 2006 1 1992 2006 b
Patrick BUFFET 51 French 2004 2010 1
Baron CROES 71 Belgian 1997 2009 4 a
Jean-Pierre DEPAEMELAERE 60 Belgian 1992 2008 1
Pierre DRION 63 Belgian 2001 2009 5 b
Yvan DUPON 61 Belgian 2001 2006 1 1995 2007
Luc HUJOEL 54 Belgian 1998 2009 34
Alain JANSSENS 43 Belgian 2004 2007
Gérard LAMARCHE 43 Belgian 2004 2010 1
Jacques LAURENT 70 Belgian 1993 2005 1 1992 2006 a
Robert-Olivier LEYSSENS 46 Belgian 2003 2006
Walter PEERAER 56 Belgian 2004 2007
Jean-Pierre RUQUOIS 61 Belgian 2001 2007 55 a
Lutgart VAN den BERGHE 53 Belgian 2003 2009 4 c
Baron VANDEPUTTE 59 Belgian 2004 2010 4 c
Baron van GYSEL de MEISE 65 Belgian 1990 2009 4
Geert VERSNICK 48 Belgian 2003 2009 36
Xavier VOTRON 53 Belgian 2001 2007 2 2001 2005
1 Date of the 2005 ordinary General Meeting.2 At the date of the ordinary General Meeting.3 (a) Audit Committee.
(b) Remuneration and Appointments Committee.(c) Workgroup corporate governance (see p. 031).
4 Luc Hujoel represented Intermixt as director of Electrabel from May 1997to May 1998.
5 Jean-Pierre Ruquois represented Sofina as director of Electrabel fromJanuary 1992 to May 2001.
6 Geert Versnick represented Finiwo as director of Electrabel from May1998 to November 2000.
Day-to-day management
In accordance with the Articles of Association, the company’s day-to-day management and representation for
purposes of this management are the tasks of the Chief Executive Officer, who is appointed by the Board.
Jean-Pierre HANSEN has been Electrabel’s Chief Executive Officer since 1 January 2005.
The General Management has the task of assisting the Chief Executive Officer in the day-to-day management of the
company, bearing in mind its European strategy and the synergy among the various métiers.
Until 31 December 2004, the General Management was chaired by Willy BOSMANS, Chief Executive Officer until
that date. Jean-Pierre HANSEN succeeded him on 1 January 2005 in this function.
The General Management comprises the operational, geographical and functional general managements. Its com-
position is found on page 003.
Policy of allocation of results
The company’s policy consists of maintaining a regular growth of dividends.
Subsidiaries
Electrabel is a developing European company and has created subsidiaries in several countries. The directors
and members of management represent the company in the Board of Directors and in other bodies of these
companies and report to the bodies established within Electrabel.
Relations with the dominant shareholder
SUEZ-Tractebel and the municipalities associated within the mixed intermunicipal companies have signed a
shareholders’ agreement providing, among other things, for a pre-emptive right for SUEZ-Tractebel in the
event that Electrabel shares are sold, as well as an option to buy these shares, which may be exercised in the
event of a hostile takeover bid.
Internal audit and risk management
The Internal audit department independently assesses the internal control systems set up by the management
in a range of fields. This assessment is carried out in keeping with a standardized control model and looks at
the efficiency of operational processes, the accuracy of the different reportings and the integrity of informa-
tion systems. The assessments take place in areas that pose a high risk to the company. The department reports
directly to the Chief Executive Officer, to the members of the General Management and to the Audit
Committee.
The audits conducted in 2004 entailed a certain number of financial and accountancy procedures (such as cash
management, IAS/IFRS, and bank payments), as well as staff payment arrangements, trading, the delegation of
powers and purchases. These audit activities were carried out in Belgium, the Netherlands, Luxembourg, France,
Spain, Germany, Poland and Hungary. Follow-up audits were also organized to evaluate any changes since the
2003 audits.
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On the subject of risk management, a Chief Risk Officer was appointed in October 2004. The determination of
company risks and the control of risk-reduction measures are carried out in coordination with the internal audit.
For further information on risk management in Electrabel, please see page 028.
Ethics
Electrabel has adopted a Code of ethical conduct that applies to Electrabel and all the Group’s companies. The
Ethics unit, chaired by the Chief Ethics Officer, oversees ethics in the company’s business and compliance with
ethics rules applicable to the company and its personnel.
The Chief Ethics Officer draws up a report every year for the General Management dealing with ethics in the
Electrabel group and remedial actions to be carried out.
The College of statutory auditors
Composition
See page 041.
The term of office
The current term of office of the auditors runs in principle until the 2006 ordinary General Meeting.
KPMG has however submitted its resignation, to take effect at the closing of accounts of the 2004 period. At
the ordinary General Meeting of 12 May 2005, Ernst & Young will be proposed as a candidate to replace
KPMG. If the General Meeting accepts this candidacy, the new College of statutory auditors will comprise
Deloitte & Touche and Ernst & Young.
Although its current term ends at the close of the 2006 ordinary General Meeting, a proposal will be
submitted to the 2005 ordinary General Meeting to appoint Deloitte & Touche as auditors for a new
three-year period terminating at the 2008 ordinary General Meeting. The aim of this proposal is to have the
terms of both auditors end at the same time.
Remuneration
See page 030.
Activities
In addition to fulfilling their legal control duties, the external auditors were actively involved in the work of the
Audit Committee (see above). They also carried out checks of internal control procedures, which gave rise to
a letter of recommendation (Management Letter).
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Curriculum Vitae of the directors – situation on 04.03.2005
Gérard MESTRALLET (born 01.04.1949)
Chairman. Gérard Mestrallet is engineer of civil aviation, graduate of Ecole Polytechnique and ENA. He joined
Compagnie de SUEZ as 'chargé de mission' in 1984. In 1986 he was appointed Deputy General Manager for
industrial matters. In February 1991 he was appointed CEO and Chairman of the General Management
Committee of Société Générale de Belgique. In 1995 he became Chairman and General Manager of Compagnie
de SUEZ, and subsequently, Chairman of the Directorate of SUEZ Lyonnaise des Eaux in June 1997. He was
appointed Chairman and General Manager of SUEZ on 4 May 2001. He has been a director of Electrabel since
2003 and Chairman of the Board since January 2005.
Jean-Pierre HANSEN (born 25.04.1948)
Vice-Chairman and Chief Executive Officer. Jean-Pierre Hansen holds a master's degree in electrical
engineering, a degree in economics and a doctorate in engineering. He entered the electricity and gas sector in
1975. As from 1 January 2005 Jean-Pierre Hansen is CEO of Electrabel, which function he already has exercised from
1992 to March 1999. Since March 1999 he has also held the position of Chairman of the Executive Committee of
Electrabel. He is also CEO of SUEZ-Tractebel and Chairman of Fabricom. He is Vice-Chairman of the Executive
Committee and Senior Executive Vice-President of SUEZ, with responsibility for Operations. He is a director of Distrigas,
Fluxys, Arcelor, AGBAR and ACEA, Vice-Chairman of the Federation of Enterprises in Belgium, associate professor of
economics at the UCL and at the École Polytechnique (Paris).
Emmanuel van INNIS (born 20.08.1947)
Vice-Chairman. Emmanuel van Innis, Doctor of Law, has been involved in the electricity and gas sector since
1971. He is director of SUEZ-Tractebel and a member of the Executive Committee of SUEZ, with responsibility for
Human resources. He is also Vice-Chairman of Fabricom and director of various subsidiaries within the Group,
such as Distrigas and Elyo. He is also director of the Federation of Enterprises in Belgium. He has been a director
of Electrabel since 1992, and was appointed Vice-Chairman in 1998.
Patrick BUFFET (born 19.10.1953)
Patrick Buffet, an 'ingénieur au Corps des Mines', joined the Société Générale de Belgique in 1994 as a member
of the Management Committee and Manager Industrial Holdings and Strategy. In February 1998, he was appointed
Deputy general manager and member of the Executive Committee of SUEZ Lyonnaise des Eaux group. In May
2001, he became SUEZ's Senior Executive Vice-President in charge of Business Strategy and Development. He has
been a director of SUEZ-Tractebel, of Fabricom and, since 13 May 2004, of Electrabel.
Baron CROES (born 29.03.1934)
Baron Croes, a graduate in mathematics and actuarial studies, previously held various posts in the AG insurance
group and Fortis, of which he was Executive board member until 1996. He is the President of the 'Institut Royal des
Élites du Travail' and of the 'Collège Royal des Doyens d’honneur du Travail'. He is also Vice-President of Immobel
and director of Tessenderlo-Chemie and Forelux.
Jean-Pierre DEPAEMELAERE (born 05.07.1944)
Jean-Pierre Depaemelaere holds a master's degree in electromechanical engineering. He entered the electricity
and gas industry in 1972. After occupying various positions within Electrabel (General Manager Strategy and
General Manager Distribution), he was Chief Executive Officer of the former Distrigas from 1994 to 2000.
Since 2001 until his retirement in august 2004, he was General Manager Corporate Human Resources of SUEZ-
Tractebel and Advisor to the International and Institutional Relations department of SUEZ. Since October 2004
he is an independent director of Real Software. He has been a director of Distrigas and Fluxys, and, since 1992,
of Electrabel.
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038
Pierre DRION (born 10.01.1942)
Pierre Drion, who holds a business degree and another in economic and financial science, is CEO of the Group
Petercam. He is also Chairman of Spadel, director of Axa Belgium and Vice-Chairman of Belgian Bankers’
Association. He is director of Electrabel since 2001.
Yvan DUPON (born 16.11.1943)
Yvan Dupon, a graduate in business and finance, began his career in the electricity and gas industry in 1962, and
has occupied various posts within the Distribution department, including General Manager of Distribution
Flanders in 1994. Until the end of 2003 he was responsible for coordinating Electrabel's distribution activities. He
is also a director of Distrigas and other companies within SUEZ-Tractebel. He has been a director of Electrabel since
2001.
Luc HUJOEL (born 10.02.1951)
Luc Hujoel holds a master's degree in economics. He is Chairman of the College of Experts of Intermixt. He is also
General Manager of the Sibelga intermunicipal company, general advisor to the Interfin intermunicipal company,
expert advisor to Sibelgas and General Manager of IBE-IBG. He has been a director of Electrabel since 1997.
Gérard LAMARCHE (born 15.07.1961)
Gérard Lamarche joined Société Générale de Belgique in 1988 as Controller and in 1992 became a member of
the Corporate Strategy Directorate. In 1995, he joined Compagnie de SUEZ and in 1997, he served first as chief
of staff for the Chairman and CEO and eventually assumed the duties of Senior Vice-President and Controller of
SUEZ Lyonnaise des Eaux. He became Director and Executive Vice-President for Ondeo Nalco, then a SUEZ
subsidiary, returning to SUEZ Headquarters in 2003 to become deputy CFO. He presently serves as Senior
Executive Vice-President of SUEZ in charge of Finance. He has been a director of SUEZ-Tractebel, SUEZ
Environment and, since 13 May 2004, of Electrabel.
Jacques LAURENT (born 28.10.1934)
Jacques Laurent has a master's degree in electrotechnical engineering, and holds various offices in the electricity
and gas sector. He is Chairman of the Board of Directors of Fluxys. He is also Chairman of Eurodif and Trasys, and
he is director of Belgonucléaire. He has been a director of Electrabel since 1993.
Jean-Pierre RUQUOIS (born 07.05.1944)
Jean-Pierre Ruquois holds a business degree, another in economics and an MBA. He is Advisor of the manage-
ment of Sofina and has been a director of Electrabel since 2001, after having represented Sofina on the Board of
Directors for many years.
Lutgart VAN den BERGHE (born 07.11.1951)
Lutgart Van den Berghe holds a doctorate in economics. She is also a full professor at the University of Ghent and
the Vlerick Leuven Ghent Management School, where her main field of research is corporate governance. At the
Vlerick Leuven Ghent Management School she is also director and President of the Entrepreneurship, Governance
and Strategy skills centre. Prof. Dr. Lutgart Van den Berghe is Chief Executive Officer of the Institute of Directors, a
member of the supervisory board of various multinational companies including CSM (NL), SHV (NL) and Solvay (NL)
and she is director of Belgacom. She has been a director of Electrabel since 2003.
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Baron VANDEPUTTE (born 17.01.1946)
Baron Vandeputte earned a degree in law, philosophy, notary studies and economics and then earned a Master of
Science degree from Edinburgh University. He was Chief Executive Officer of the Federation of Enterprises in Belgium
until 14 June 2004. Since then he has held the position of General counsellor. Prior to his activities at the Federation
of Enterprises in Belgium, Baron Vandeputte worked at the Bureau du Plan and taught at the Universitaire Faculteiten
Sint Ignatius (UFSIA). He is also a board member of EHSAL. He has been an Electrabel director since 13 May 2004.
Baron van GYSEL de MEISE (born 14.09.1939)
Baron van Gysel de Meise has held various directorships with Sarma and Nopri, Sarma-Congo, Élevages des
Marungu et Kundelungu in Katanga (Congo) and Brasserie de Haacht. He is Chief Executive Officer of the Plaza
Hotel in Brussels. He was appointed director of Ebes in 1972, and from 1976 to 2000 he was director of Traction
Électricité (which later became Tractebel).
Geert VERSNICK (born 15.12.1956)
Geert Versnick holds a law degree and was a member of the Bar of Ghent from 1980 to 2000. In addition to
holding a number of political offices he has been a member of Parliament since 1994, and in this capacity he
serves on numerous committees, both at national and European level. From May 1998 to November 2000 he
represented Finiwo as a director on the Electrabel Board. He has been a director of Electrabel in a personal capacity
since May 2003. He was Chairman of the Board of Directors of GeDIS from November 2002 to November 2003.
Since 2001 he has been Alderman for Public Works of the City of Ghent.
Xavier VOTRON (born 19.02.1952)
Xavier Votron holds a master's degree in electrical engineering and a degree in nuclear science. Since 1976 he has
occupied various positions in the company in the Generation and Distribution departments. In 2000 he was appoin-
ted General Manager Generation, and in May 2001 he became General Manager with responsibility mainly for
Generation and Industrial Sales Belgium. In January 2004 he became General Manager for Belgium-Luxembourg.
Since March 2005 he holds the position of General Manager Generation, Distribution, IT. He is also Chairman of
Laborelec, Twinerg and Zandvliet Power. He has been a director of Electrabel since 2001 and of Distrigas since 2003,
and is also a director of various subsidiaries in Belgium.
040
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RSMembers of the Board and Auditors – situation on 04.03.2005
Board of Directors
Chairman: Gérard MESTRALLET
Vice-Chairman and Chief Executive Officer:
Jean-Pierre HANSEN
Vice-Chairman: Emmanuel van INNIS
Directors:
Patrick BUFFET
Baron CROES
Jean-Pierre DEPAEMELAERE
Pierre DRION
Yvan DUPON
Luc HUJOEL
Gérard LAMARCHE
Jacques LAURENT
Jean-Pierre RUQUOIS
Lutgart VAN den BERGHE
Baron VANDEPUTTE
Baron van GYSEL de MEISE
Geert VERSNICK
Xavier VOTRON
Company Secretary:
Patrick van der BEKEN
Executive Committee
Chairman: Jean-Pierre HANSEN
Members:
Yvan DUPON
Alain JANSSENS
Jacques LAURENT
Robert-Olivier LEYSSENS
Walter PEERAER
Emmanuel van INNIS
Xavier VOTRON
Honorary members of the Board of Directors:
Baron BODSON: Honorary Chairman
Jacques COPPENS, Jean DEMEURE,
Baron André ROLIN: Honorary Vice-Chairmen
Marcel AMORISON, André CLAUDE,
Edgard DEBEYS, Albert de BROUWER,
Jean de GARCIA de la VEGA,
Michel DELTENRE, André GOHMANN,
Pierre MASURE, Pierre NIHOUL,
Etienne SNYERS, Jacques TIMMERMAN,
Stanislas ULENS: Honorary directors
College of statutory auditors
Deloitte & Touche Company auditors
Representatives:
Josephus VLAMINCKX, Ludo VAN HOYWEGHEN,
Company auditors
Klynveld Peat Marwick Goerdeler Company auditors
Representatives:
Pierre-Paul BERGER, Alexis PALM,
Company auditors
Klynveld Peat Marwick Goerdeler Company auditors
submitted their resignation effective at the close of the
accounts of 2004. During the ordinary General Meeting
of 12 May 2005, the candidacy of Ernst & Young
Company auditors will be proposed to replace them.
Statutory appointments during the ordinary General
Meeting of 13 May 2004
Board of Directors: Etienne SNYERS submitted his
resignation effective at the ordinary General Meeting
of 13 May 2004. The term of office of Jean-Pierre
HANSEN came to an end at the close of the ordinary
General Meeting of 13 May 2004. The General
Meeting renewed his term of office, which will end at
the ordinary General Meeting of 2010.
The ordinary General Meeting nominated Patrick
BUFFET, Gérard LAMARCHE and Baron VANDEPUTTE
as directors. These terms of office will end at the
ordinary General Meeting of 2010. The General
Meeting also named Baron VANDEPUTTE independent
director under the terms of article 524 of the Company
Code.
Appointment of Honorary directors: the General
Meeting nominated Jean de GARCIA de la VEGA and
Etienne SNYERS Honorary directors.
Changes in the composition of the Board and the
Committees since 13 May 2004
The Board of Directors appointed Alain JANSSENS and
Walter PEERAER members of the Executive Committee
starting on 13 May and 1 September 2004, respectively.
Willy BOSMANS submitted his resignation as director
and member of the Executive Committee effective
1 January 2005.
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Ventes d’énergie et de services p. 062
Production d’électricité p. 069
Trading et Portfolio Management p. 075
Exploitation de réseaux de distribution p. 077
Playing an active role in creating a genuine
open market at European level.
R E G U L A T O R Y B A C K G R O U N D
Regulatory background
The liberalisation of electricity and natural gas markets in Europe continues to move forward.
But while the sector is being opened up to competition, it is not sufficiently well organised.
Given the lack of analysis of the market’s organisation, liberalisation is tending to create a
number of sub-markets rather than a single market. What is more, the absence of measures
encouraging investment adds to the risks created by lower reserve capacities.
This same problem of an inadequate framework holds for CO2. The CO2 emissions market was
launched at the start of 2005 in a context riddled with uncertainties for the corporate players.
The electricity and natural gas sector hopes to attain greater consistency, transparency and
continuity. Electrabel, whose growth potential is mainly focused on Europe, is pushing strongly
for harmonisation in this area. After having made a fair contribution to liberalisation of the
Belgian market, it is taking part in setting up a genuine market on the continental European
plate (Benelux, France and Germany).
Application of the European directives is progressing.
In October 2004, 18 Union Member States had not yet complied with the duty of incorporating the obligations
of the second market opening directives into their national laws. This is sometimes simply a matter of form:
in Belgium, for example, liberalisation is in fact already much wider and deeper than the requirements set by
the European authorities.
The electricity and natural gas directives nevertheless set opening deadlines that have to be observed by all
Member States: on 1 July 2004, all non-household customers in Europe had to be made eligible; the market
must be completely open by 1 July 2007 at the latest.
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This liberalisation is taking place in a context that varies widely from one region to the next. The delay in certain
countries, differences between Member States in the incorporation of directives and the limited capacities of
the cross-border interconnections are not producing an integrated single market. In fact they lead to a series
of locally liberalised markets, whose organisation and rules are not necessarily similar.
A true single market has to be designed, structured and given a framework.
Europe has run true to its historical form. Rather than concentrating on the actual construction of a single
market, it has gradually set up indicators or theoretical liberalisation standards, measuring the pace and scope
of liberalisation, but not how it is organised: the rates and deadlines for market opening, the unbundling of
regulated activities, the types of regulation and tariffs, etc. Competition is therefore permitted under different
conditions in different markets, but without any overall organisation.
National markets still seem to make up the economic, legal, political and psychological reality. For example,
2004 saw the preparation of the energy framework law in Germany, expected to become effective in 2005,
but there are still considerable unknowns as to how the regulation will actually work in practice. In the
Netherlands, the opportunities available in the household market will not be clear until the authorities decide
the extent to which sales will be unbundled from distribution system operation.
Without a comprehensive analysis of market organisation, it would be foolish to believe that a single market
will spring up spontaneously and regulate itself. Precise and stable standards must be defined at European
level to meet the specific constraints and requirements of the sector, as well as the activities of authorities,
regulators and system operators.
Plans for allocating greenhouse gas emissions trading in Europe varyappreciably from one Member State to another.
The situation is similar to the question of CO2. Regardless of the coming into force of the Kyoto Protocol
on 16 February 2005, in late October 2003 the European Commission approved a directive on trading green-
house gas emission allowances. The European Union has led the world in setting up a multinational market
imposing binding limits on carbon dioxide emissions.
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The Member States were supposed to have incorporated the directive into their national laws and to have
submitted their national allowance allocation plans to the European Commission. These plans are the key to
the system, since they break down emissions allowances by industrial sectors and by emitting installations.
At the start of 2005, when the European emissions trading system came into force, some Member States had
still not incorporated the directive into their legislation. Others had not yet had their plans approved by the
Commission or had not taken decisions for breaking down allowances among installations.
What is more, the large part of subsidiarity left to the Member States – and sometimes to their regional bodies –
in drawing up these plans gave rise to considerable disparities. In the energy sector, analysis of the different
national allowance allocation plans nonetheless reveals a clear tendency: the national authorities are inclined
to treat the power generation sector more strictly than other industrial sectors.
Flanders’ allocation plan for the electricity sector shows a complete lack of balance.
The situation in Belgium alone, for example, is one of extreme contrasts. In Wallonia, the share allocated to the
electricity sector is in line with the target of a 7.5 % reduction in 2008-2012 compared with 1990. By contrast,
in Flanders, the electricity sector has to bear the brunt of the burden to meet the target of a 5.2 % reduction
in CO2 emissions, i.e. 80 % of the total in 2005. Virtually the whole effort by industry – 95 % – is to be made
by the electricity sector. However, electricity and heat generation in Flanders accounts for only 18 % of green-
house gas emissions. For Electrabel, this means reducing emissions by 30 % in 2005 and 50 % in 2010.
Because the law shutting down Belgian nuclear power stations after 40 years of operation still applies, this plan
means that electricity will be derived mainly from natural gas, whereas the security of supply and the volatility
of prices are today more than ever major issues in Europe.
CO2 EMISSIONS BY THE ELECTRICITY SECTORShortage of emission rights • In %
2005 2006 2007
Belgium 24.7 27.6 31.5Flanders 31.3 36.5 41.7Wallonia 3.8 -1.7 -2.3
The Netherlands 0.0 0.0 0.0Luxembourg -0.3 1.1 0.9France 2.8 2.8 2.8Spain 6.4 6.4 6.4
Hypothesis: without additional intervention in generating facilities
Greenhouse gas emissions trading is still subject to many uncertainties.
The European emissions market came into operation on 1 January 2005. Electrabel had prepared for it care-
fully. However, on top of disparities in national (and regional) allowance parameters, there was still a lack of
practical rules at the start of the year in various Member States, for example, in the case of greenhouse gas emis-
sion permits, which normally incorporate the definition of the monitoring and reporting methodology.
Furthermore, few national registers were in operation, without which emissions trading cannot take place.
In addition, there were a number of unknowns concerning the fiscal and accountancy treatment of quotas.
One example is the development of IFRS standards for tradable emissions that could have a major effect on
how allocated and traded allowances influence the presentation of the company’s half-yearly and yearly
results. These standards apply to all companies that fall within the scope of the European emissions trading
market while being listed on the stock exchange.
Many difficulties persist concerning the recognition of emission reductions arising from investments, such as
those carried out in developing countries, concerning, for example, the establishment of methodologies.
There is some apprehension that the current rules being applied to the own development mechanisms projects
may actually hamper the rapid and substantial development of these same projects.
Whether or not the Kyoto Protocol extends beyond 2012, there is the more global and longer term issue of
coordination with emissions trading schemes that will be implemented in Canada and Japan. How will they
work? What impact will they have on the European market?
The electricity sector – and particularly Electrabel – wants clarity andharmonisation of the rules governing different markets.
Like any industry, the electricity and natural gas sector can only benefit from rules that are clear and which
avoid market distortion. At European level, the market model must be analysed and implemented as a matter
of urgency. The same holds for greenhouse gas emissions trading.
Electrabel is today one of the leading European energy companies, so it naturally supports the concept of
European harmonisation.
Harmonisation will work first and foremost to the advantage of consumers, who expect supply to be flawless.
That is a legitimate aspiration and, in order to meet it, sufficient reserve generation capacities must be available.
But as these capacities decline, blackouts are an increasing risk. Europe must urgently implement mechanisms
in this sector to encourage investment in reserve capacity; as things stand, there is some doubt as to how this
investment will be financed.
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Wholesale prices have risen sharply.
There was a spectacular increase in electricity prices in 2004. On wholesale markets, prices reflected – among
other things – an increase of more than 50 % in the price of oil and more than 130 % in the price of coal
between 2002 and 2004. Inevitably, the price of the end product on the market is directly governed by the higher
cost of the fuels that are its raw material. Price changes also reflect speculation resulting from many uncertainties
in the markets.
This upward pressure was encouraged by ‘diseconomies of scale’ linked to liberalisation and the break-up of
vertically integrated electricity companies. The extra charges imposed by public authorities and the drive towards
generation from renewable sources have also had an effect on prices.
In Belgium, Electrabel helps make the market work.
Electrabel made its fair contribution to market liberalisation in Belgium by scrupulously complying with – and
even anticipating – legal requirements and regulations, and by implementing the decisions of regulators and
the Competition Council. The company unbundled networks and sales activities extensively, and put in place
all the tools needed for the proper working of the system.
Electrabel’s position as a national power generator has eroded in less than two years from virtually 100 % of
the market to less than 75 %, with a quarter of its generating capacities being made available to competitors.
That tendency has increased, following the end of industrial collaboration with the public generator SPE in
2003. At its own initiative, Electrabel made available its share of the capacity at the Tihange 1 power station
on the Belgian market to EDF; furthermore the company rigorously followed the commitment made in 2003
to the Competition Council for auctioning virtual power plants.
The percentage of Belgian eligible customers choosing a supplier is amongthe highest in Europe.
The number of customers choosing their supplier proves that the Belgian market is working well. At the end
of 2004, i.e. eighteen months after full liberalisation in Flanders, Electrabel had 70 % of the household market;
55 % of customers in Flanders had chosen a supplier, with 81 % opting for Electrabel. In total, 10 % of
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See also page 069.
household customers changed suppliers. In comparison, at the end of an identical period of eighteen months
after liberalisation, 0.8 % of customers in Germany had changed suppliers and 2.9 % in Norway.
An integrated ‘Benelux, France, Germany’ market should gradually be put inplace. Electrabel is helping towards this goal.
Thanks to its history, Electrabel is now Benelux’s leading energy company. To stay among the front-runners on
the continent, the company must make progress in Europe. Electrabel currently owns nearly 50 % of gener-
ating facilities in Benelux and 8 % of generating facilities on the continental plate comprising Benelux, France
and Germany.
Creation of this market is part of the company’s strategic objectives. Electrabel is participating in this under-
taking, but cannot act alone. The increase in interconnection capacities at the French-Belgian border, planned
for end 2005, will facilitate exchanges with France, which has good interconnections with Germany. Linking
Belpex, the Belgian power exchange, with the French and Dutch energy exchanges Powernext and APX is
expected to further enhance the functioning and liquidity of this market.
Subject to the development of certain mechanisms at European level – sharing of information on the
availability of transmission capacities and coordination between regulators and transmission system oper-
ators – the continental European plate will represent a decisive step forward in the drive to a genuine
single market.
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B U S I N E S S M A N A G E M E N T
Sales of energy and services p. 052
Electricity generation p. 060
Trading and Portfolio Management p. 067
Management of distribution networks p. 070
Being seen by customers as one
of Europe’s front-runners.
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Sales of energy and services
Proximity is Electrabel’s main advantage. Because electricity and natural gas are basic utilities,
Electrabel offers everyone a basic service of unquestionable quality at the best price. Sales rely
on diversified and outstanding generating facilities and on experienced sales teams close to
Electrabel’s five million customers. Services are adapted to customers’ needs: domestic
comfort for household customers; specific solutions for non-household customers; and tailor-
made approaches based on long experience for industrial customers.
Electrabel’s sales continue to grow. For the first time, electricity sales outsideBelgium accounted for more than 50 % of total sales.
In 2004 Electrabel had electricity sales totalling 145.1 TWh, an increase of 5.7 % compared to 2003. Taking
into account the sales realized by equity consolidated companies in which Electrabel owns a significant share
(e.g. Compagnie Nationale du Rhône) the total sales volume is up to 155 TWh, 51 % of which are realised
outside Belgium. This confirms Electrabel’s status as a truly European operator. The target of doubling the 1999
sales volume over the period 2000-2004 is largely exceeded. The new target for electricity sales is 200 TWh
by 2009, or average yearly growth of 5 %, well above average annual growth in consumption in Europe and
in Belgium, respectively estimated at 1.9 % and 1.7 %.
Sales of natural gas are showing very strong growth: from 93 TWh in 2003 to 112 TWh in 2004, an
expansion of 20.4 %. Markets outside Belgium, which account for more than one third of total sales, are
driving this growth.
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Total sales in Belgium fell slightly. Eligible customers make up anever greater percentage of the company’s sales.
In Belgium, Electrabel’s electricity sales in 2004 slipped 2.3 % (69.8 TWh compared
with 71.4 TWh in 2003), while national consumption of electricity expanded by 2 %. In
natural gas, sales rose 1.5 % (66.7 TWh compared to 65.7 TWh in 2003). This results from
real competition on a market that is increasingly open.
In Flanders, all customers became eligible in July 2003. So 2004 was the first year to
see the effects of market opening for a full twelve-month period. On 1 July 2004, non-
household customers in Brussels and Wallonia also became eligible to choose their supplier.
For Electrabel, sales in Belgium to eligible customers account for an increasingly large share of total sales:
in 2004, they made up more than 84 % of Belgian electricity sales and over 75 % of natural gas sales.
Electrabel is gaining market share in the Netherlands.
In the Netherlands, Electrabel has cornered more than 20 % of electricity contracts for large companies.
It also gained market share with small and medium-sized enterprises. Total sales in 2004 reached 30.7 TWh,
a growth of almost one third. 24.9 TWh of natural gas were sold, of which 95 % on the wholesale markets.
Sales teams have been consolidated into a single unit that includes Spark Energy marketeers. The idea is
to improve service to customers, particularly SMEs, the core of Electrabel’s targeted customers in this
country.
Electrabel also carried out a strategic analysis of the opportunities represented by household and professional
customers. These will depend on the future structure of the market as determined by the authorities.
Belgium: deregulated marketBelgium: regulated marketThe NetherlandsLuxembourg
Europe outside BeneluxFranceItalyGermanyPolandHungary
ELECTRICITY SALES IN 2004 BY COUNTRYWholesale included
Belgium: deregulated marketBelgium: regulated marketThe NetherlandsItalyGermany
NATURAL GAS SALES IN 2004 BY COUNTRYWholesale included
20.5 %
29.1 %
15.3 %
35.5 TWh22.5 %
12.6 % 44.4 %
21.2 %
8.0 %
145 TWh
1.9 %
22.2 %
1.0 %
112 TWh
17.8 %
3.5 %
24.5 % 55.5 %
Spain: 0.003 TWhSwitzerland: 0.04 TWh
Commercial experienceThe expertise acquired in Belgium
during the accelerated phases of liberalisation in Flanders was put to use
across Europe. At the start of 2004,Belgian marketing and sales teams assistedtheir Italian and French colleagues inpreparing the liberalisation of the non-household market segment.
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Electrabel has taken advantage of greater market opening in its Europeantarget markets France, Italy and the Iberian Peninsula.
In France, total electricity sales amounted to 5.4 TWh (9.1 TWh sold by CNR not included), shared amongst the
three customer segments: eligible non-household customers, wholesale markets, and transmission and distri-
bution system operators (supplies compensating for system losses).
Thanks to its long experience of working with municipalities in Belgium, Electrabel has been
able to develop partnerships with non-nationalised companies and distributors in France.
This enables the company to reach household customers and small businesses effectively
and profitably, without developing new commercial networks, and to access 250 000
customers.
In Italy, electricity sales amounted to 10.4 TWh (0.4 TWh sold by AlpEnergie not included),
of which 3.0 TWh were supplied to still ineligible customers. There has been noticeable
growth in the liberalised market, where sales amounted to 7.4 TWh (1.6 % more than in
2003). In July 2004, a joint venture, Umbria Energy, was created with a local distribution company, ASM Terni,
with the aim of gaining a large share of the electricity and natural gas markets in Umbria.
The partnership agreement with the Swiss firm EOS ended on 31 December 2004 and this sales activity will
be absorbed into AceaElectrabel’s business during 2005.
In the Iberian Peninsula, Electrabel is currently setting up a local generation base to support its future sales.
Electrabel continues to seize opportunities on German and CentralEuropean markets.
In Germany, electricity sales rose 15 % to a total of 7.3 TWh (0.8 TWh sold by Gera and AlpEnergie not
included), mainly to industrial customers and distribution companies. Sales to household customers were con-
centrated in the Saarbrücken area (Energie SaarLorLux) and in Thuringe in Central Germany
(Energieversorgung Gera). Electrabel also successfully targeted a new market segment, the public authorities.
It was awarded the supply contract for the Land of Berlin and will be supplying 70 % of its electricity needs for
the years 2005 and 2006. Opportunities that will depend on the future structure and functioning of the German
market are being studied with a view to sustaining this growth.
In Poland, 8 TWh of electricity were sold in 2004, primarily through contracts with distribution companies.
The share of sales to industrial customers came to 0.7 TWh, i.e. six times more than 2003, and the number of
direct customers rose from four to ten.
In Hungary, the majority of the electricity produced by the Dunamenti power station (4.5 TWh) was sold
directly to the single state buyer, on the basis of long-term contracts. The sales teams are preparing for the
opportunities that will arise from genuine opening of the domestic market and from the freeing of transmission
capacities at borders and the establishment of a wholesale market.
The accession of Poland and Hungary to the European Union in May 2004 should make these markets gradually
more mature.
See also page 064.
Computerised billingIn France, Electrabel customers receivetheir bills through a computerised systemvery similar to the one implemented in theNetherlands. To prepare for liberalisation ofnon-household customers in France, the com-pany took advantage of its earlier experienceas well as economies of scale. As from 2002,French, Dutch and Belgian computer expertshave been working together to implementand adapt software packages.
054
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Electrabel offers customers many different ways of contacting the company.
In its European customer relations, Electrabel offers customers several ways of contacting the company, each
adapted to the needs of each type of customer, thus making the company very accessible.
For industrial customers, there are contact relays offering a high level of availability. They take charge of
these customers’ specific needs. The idea is to make things as easy as possible for them as far as energy is
concerned, via personal commercial contacts and a dedicated administrative and technical team available
24 hours a day.
Public authorities, multi-site customers (banks, insurance companies and distribution chains) and small
and medium-sized enterprises also have contact channels suited to their needs: in a number of countries
there are specialised communication centres, dedicated sales teams and Internet pages that were completely
redesigned in 2004. In France, a new customer communication centre became operational in Lyon in May and
a seventh commercial branch was opened in October in Toulouse.
Contact points for household and non-household customers are becoming more diversified.
The company is easily accessible through its Internet site and in Belgium, for instance, through ‘Energy
Line’, a customer communication centre. Electrabel answers enquiries and offers its services at a number of
locations for customers seeking more personalised contact: post offices, Makro chain stores, and more
specialised partners such as the leading household appliance chain stores. Electrabel has set up a
partnership with 3 000 electricity and natural gas professionals, making up an additional sales and service
channel for customers.
In Belgium, Electrabel now has a universal transparent pricing structure forall eligible customers.
Since 1 July 2004 (for electricity) and 1 January 2005 (for natural gas), Electrabel has been using a universal
price structure showing a breakdown of the different cost components for all customers in the open market.
The energy component is clearly identified. It is separated from the charges for the use of the transmission
and distribution systems, and from taxes and fees.
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Thanks to this price structure, customers have a clear view of the conditions under which they are buying energy.
They can easily compare different offerings on the market. Any change in price components over which
Electrabel has no control is clearly passed on to the customer, and is visible on the energy bill.
Along with the adoption of this new pricing policy, Electrabel launched a large-scale information campaign
aimed at all its eligible customers.
It has to be emphasised that, in all cases, Belgian household customers pay pre-tax prices that are lower than
before the liberalisation, and equal to or lower than the average in neighbouring countries. Electrabel’s drive
to boost its competitiveness in recent years has benefited its household customers, in spite of hefty price
increases on wholesale markets.
Electrabel’s product offering encourages loyalty amongst Belgian householdand professional eligible customers.
In parallel with this information campaign, the company has developed a new commercial offer for eligible
household and professional customers: advantageous contracts for both electricity and natural gas.
Customers choosing to sign a contract with Electrabel get a 2 % reduction on the energy price. This advantage
is matched with an immediate rebate of e 10 if the customer chooses for payment by direct debit. In addition,
for all its Belgian customers, Electrabel automatically applies the most advantageous pricing structure for the
customer’s usage profile.
This campaign has met with great success. Over and above the financial argument, it confirms that customers
want a carefree energy supply, based on continuity and security, and matched with high-level service.
This concern for respect in customer relationships is also reflected in the support Electrabel brought to the
development of the Codes of Conduct ‘on outbound sales’ and ‘on distance sales’ – due to the ‘Customers in
the liberalised electricity and natural gas market’-agreement – developed and signed by the suppliers in
September 2004 at the initiative of the Federal Minister for Consumer Protection. Both Codes of Conduct,
aiming at fair customer canvassing, came into force in March 2005. The focus is also placed on the clarity and
legibility of the general and particular terms of proposed contracts.
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Tariff measures are also implemented for Belgian customers who are stillineligible.
Generally, according to international studies, regulated Belgian prices for residential customers fall within the
average of prices in neighbouring countries. However, there is still a group of non-eligible residential
customers for whom these prices are slightly higher than those in neighbouring countries: households con-
suming 3 500 kWh per year without a night tariff (the so-called ‘normal’ tariff). A subsidy may be granted to
these customers from a fund that is used to pay for replacing one-rate time-of-day meters with two-rate time-
of-day meters. This would enable customers to reduce their electricity bills and optimise overall energy
management. Each intermunicipal company has established this fund in order to encourage these customers
to adopt the two-rate time-of-day tariff. The long-established generators, including Electrabel, will increase
the fund for the non-eligible customers by e 6 million.
Electrabel reaches out to its customers to offer them green energy.
In Belgium, at the end of 2004, Electrabel launched a product known as Electrabel Green, i.e. electricity from
100 % renewable sources, generated in Belgium, in tune with the specific market expectations of some
customers.
At the beginning of 2004, Electrabel launched the range of products known as AlpEnergie in France, which
enables customers to buy all or part of their energy from certified renewable sources. If the customer chooses
the 100 % renewable electricity product, the related surcharge is paid to the NOE (Nature Option Énergie)
fund, which finances research, development and construction in France of renewable generating equipment.
AlpEnergie has met with considerable success: in 2004, this range of products accounted for one third of
Electrabel’s sales to end users in France.
In Poland, Electrabel sells electricity from renewable sources to STOEN, a distributor in Warsaw. In Germany,
since April 2004, customers have had the option of buying certified renewable-source electricity (solar, wind
or hydroelectric). In the Netherlands, Electrabel provides renewable energy to the Ronald McDonald
Kinderfonds houses under a sponsorship programme. From 2005 onwards, AceaElectrabel will be offering
green power produced from hydraulic sources to its eligible customers in Italy.
In addition to guaranteeing a secure supply and basic services, Electrabeloffers its household customers specific solutions.
Electrabel remains sensitive to its customers, developing solutions and services to meet their expectations.
The main concern of household customers is comfort and a carefree energy supply. In 2004, Electrabel
stressed the advantages its customers draw from having a single electricity and natural gas supplier. The com-
pany emphasized the qualities of natural gas: user-friendliness, flexibility and contributing to the protection
of the environment. Electrabel also offers services to meet the expectations of customers. DoMyCare is a
heating system maintenance service and offers emergency repairs for heating, electric appliances and plumbing.
It is provided by a network of qualified partners. The company also acts as an intermediary between customers
and their distribution system operator for issues related to new connections and moves.
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Another example is the quarterly entitled ‘Energiek!’, distributed to 2.5 million liberalised household
customers. It contains information and practical advice on energy and its uses at home. Similar information is
available on the Electrabel website, which has new sections online. In 2004, for instance, a special section
was developed to enable customers to find their way through the labyrinth of energy subsidies offered by the
public authorities.
The needs of non-household customers prompted Electrabel to develop aspecific range of services.
Professional customers, small and medium-sized enterprises, multi-site customers and public
bodies, whatever their size, need optimal energy management. Electrabel offers them a
range of products and services enabling them, with the aid of specialists, to enhance their
productivity, security and comfort while cutting costs.
In Belgium, this range of services is very comprehensive: replacement of transformers
containing PCB, for which a European directive requires destruction no later than the end
of 2005; installation of high-voltage substations; energy consulting services and instru-
ments for continuously monitoring and analysing consumption; combined heat and
power generation; electronic invoicing services; training in energy savings, electricity and
natural gas safety, special techniques, etc.
Big industries can count on Electrabel’s truly European dimension.
With its diversified generating capacities in different European markets, Electrabel is one of the few energy
companies capable of meeting the needs of industries operating in more than one country. Local generating
capacities ensure quality supply. Commercial teams, sometimes drawing on support from business units of the
SUEZ group, can respond to local needs for services.
More and more customers are becoming aware of the advantages of European energy procurement.
Important contracts signed in 2004 reflect this trend.
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Energy savingsIn France, the Finance and IndustryMinistry chose Electrabel to supply elec-tricity, carry out energy audits and provideenergy management advice for one of itsbuildings. Electrabel and INEO then teamedup and thus drew on the strengths of theSUEZ group to implement this contract.INEO took part in the installation ofremote-reading meters. This joint effortsaves the Finance Ministry nearly 15 % oftotal energy consumption at the Bercysite.
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As an electricity and natural gas supplier, Electrabel also aims to provide its European customers with the same
level of assistance at all their sites, with a view to optimal energy use. The European Value Package, which
offers a range of identical services in different countries, is in keeping with this approach.
Trading and Portfolio Management, working with local sales organisations, developed products aimed at
covering the risks related to customers’ energy portfolio. These products have been chosen, for instance, by
Airbus in France, Norddeutsche Affinerie in Germany and Nederlandse Spoorwegen in the Netherlands.
Electrabel is stepping up the availability of its industrial services in Europe.
Electrabel is continually improving its services, as is shown by the development of tools
increasing energy savings and rational use of energy. Initially consisting of audits and
consumption monitoring, these services are gradually being fleshed out and diversified:
proposals for solutions, support for their implementation and follow-up. The range
continues to evolve towards ever greater sophistication.
Electrabel is working to make these services available in its various markets. The study of
each market’s needs is a prerequisite, particularly in the new phases of liberalisation. Privileged
customers are identified on the basis of the added value Electrabel can share with them.
The year 2004 also saw the development of a new service offering companies assistance in buying, selling or
trading CO2 allowances, in line with the start of the emissions trading scheme at the beginning of 2005.
Electrabel is replacing steam networks.
In Verviers, Electrabel has shut down its steam generating facilities, which were no longer competitive. 99 %
of steam customers have accepted the offer of support for replacing their heating system with natural gas,
which is already distributed in Verviers.
In Aalst, where the same type of process is under way to prepare for the shutdown of steam distribution in
2007, 200 customers have already accepted Electrabel’s offer for switching over to natural gas at the end of
2004.
See also page 047.
Audits and follow-upThe Energy Coach® approach used in the
Netherlands profiles Electrabel as a highadded-value supplier. In France, the combined
effectiveness of energy audits and con-sumption monitoring via Internet has grown inimportance in various airports: Lyon, Bâle-Mulhouse, Toulouse and Paris are all Electrabelcustomers. In Marseille, Electrabel andTractebel Engineering teams have worked
together on this type of audit.
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Electricity generation
Electrabel is continuing to build up diversified generating facilities across Europe. The aim
is to reach a critical mass of generating capacity in countries identified as commercial
targets, with a view to sourcing sales. More than 5 000 MW of capacity are currently under
construction or in a project phase. This expansion, together with investments in existing
power stations, aims to strengthen installations that are efficient, diversified and adapt-
able to market contingencies. Environmental objectives encourage the use of renewable
energy.
Electrabel’s generating capacity continues to grow in Europe.
Electrabel manages generating facilities with a capacity of 28 200 MW all over Europe, of which 54 % out-
side of Belgium. Various projects will add to this geographical diversity, anchoring development throughout
Europe.
The current objective is to reach 35 000 MW by 2009, or average annual growth of 4 % of generating capacity,
slightly below the target for sales growth over the same period (5 % yearly average). This is in line with
Electrabel’s philosophy: ensuring a local presence and proximity, synonymous with secure supply for customers,
while increasing sales more than investments.
Investment choices aim to consolidate the diversity advantage, in terms of both technology and primary
sources of energy. Doing so allows for effective steering depending on variations in market fundamentals.
Nuclear and renewable energy make up over one third of generating facilities. Of the projects under
construction or in the study phase, a large proportion centre on combined-cycle gas turbines, thus confirming
Electrabel’s position as European leader in this field. Electrabel is also studying other investment opportunities
to diversify its primary energy sources.
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Electrabel benefits from shared expertise. The European dimension bringsefficiency and economies of scale.
Project coordination at European level reached cruising speed in 2004. The transversal
approach to power generation makes it possible to group expertise at European level, ben-
efiting the entire organisation, and to make the most of the effects of scale and synergy.
In the development phase, transversal organisation is also the rule for local technical
and economic studies. Past expertise is shared and investment risks can be better
assessed before decisions are taken. Support is provided in the implementation phase
– from investment agreements to industrial commissioning – to make the best possible
use of experience but also to create more leverage on suppliers to generate economies of
scale.
Emphasis is placed on efficiency and monitoring the performance of generating equipment at European level.
Regular benchmarking of power stations of the same type leads to better performance, based on indicators.
Maintenance is now optimised through the Maintenance Competence Centre and the Diagnostic Centre.
Electrabel has continued investing in existing plants and in the installationof new capacity.
Benelux. In the generating zone made up of Belgium, the Netherlands and the Grand Duchy of
Luxembourg, Electrabel no longer has surplus generating equipment to cover sales contracts. This situation
results from obligations to sell virtual power plant capacity (VPP) and to make available to EDF the electricity
generated in proportion to its ownership in the Tihange 1 nuclear unit (481 MW). As a result, Electrabel
has to optimise its existing power stations.
As in 2003, no new generating equipment was commissioned in 2004, with the exception of wind farms.
The industrial commissioning of the CCGT station in Zandvliet (385 MW in a 50-50 partnership with RWE)
is thus eagerly awaited for mid-2005.
See also page 069.
Shared technical solutionIn 2004, a problem occurred at the
combined cycle gas turbine plant in Saint-Ghislain due to the blockage of shut-off
valves on the steam turbine, a generic prob-lem with that generation of plants. The solu-tion implemented at Saint-Ghislain wasimmediately communicated to the identicalbut more recent power station Electrabeloperates at Esch-sur-Alzette in the GrandDuchy of Luxembourg. The information
was also shared with teams implementingnew projects.
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In this context, the gas turbine at Flevo (120 MW – Netherlands), which had been mothballed since 2000,
received a new boiler and was re-commissioned in June 2004. In July, the natural gas and fuel unit
Awirs 5 (294 MW), also on hold for four years, was put back into service.
After a technical incident in August 2004, unit 20 of the Dutch power station of Eems (695 MW) was put
back in service at the beginning of 2005.
Electrabel wants to maintain the variety of its equipment, major works for which will get
underway in mid-2005. In the Netherlands, investments will be made in the coal-fired
power station at Gelderland (602 MW) to extend its lifetime to 2017. Similar invest-
ments are planned for the Harculo 60, Eems 20 and Bergum 10 and 20 stations,
which will remain operational at least until 2012. In Belgium, the coal-fired plant at Ruien
(879 MW) is being modernised and units 3, 4 and 5 will be fitted with desulphurisation
and denitrification equipment. These facilities will gradually be placed in service as the
revision work progresses.
The replacement of steam generators at unit 2 of the Doel nuclear plant has resulted in a 40 MW increase in
capacity, and demonstrates Electrabel’s desire to ensure safe and efficient operation of its nuclear stations.
The year 2005 will see ten-yearly overhauls for Doel 1, 2 and 4 and for Tihange 1 and 3 units.
The performance of nuclear facilities in 2004 was remarkable in terms of both availability and output.
In current-day circumstances, optimal generation of electricity is the ever-present watchword in both Belgium
and the Netherlands. In the Netherlands, the project ‘Optimalisatie Techniek’ has led to a reorganisation of
generation activity strengthening productivity and efficiency, in parallel with implementation of the SAP
software package at all power stations. Beneficial effects already emerging should be confirmed in 2005.
In Belgium, the interface between maintenance and operations services is being analysed with a view to
favouring enhanced management of power stations.
As far as operation of generation units is concerned, the company aims for the best performance while
providing extremely accurate follow-up of all indicators and encouraging optimal flexibility.
Specialized skillsPolish specialists from Polaniec assistedtheir Dutch colleagues with the renovationof control-command equipment at theGelderland power station. The teams thatdeveloped and implemented the desul-phurisation-denitrification (DeSOx-DeNOx)project at Ruien (Belgium) visited a numberof reference installations: Polaniec, Langerlo(Belgium), Gelderland and Vado Ligure(Italy).
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France. Electrabel has a total of 4 818 MW installed capacity in France. Basic production is covered by
1 108 MW of nuclear capacity. Under the agreement concluded with EDF at the start of 2004, Electrabel can
use its share of the electricity generated by the Tricastin nuclear station in the French market. These 458 MW
come on top of the 650 MW generated by Chooz B.
The company also has installed capacity of 3 710 MW from hydroelectric sources: 2 937 MW from
Compagnie Nationale du Rhône (CNR) whose output mainly comes from run-of-river power stations
(19 stations); and 773 MW from Société Hydroélectrique du Midi (SHEM), mainly composed of peak capacity
(49 power stations). In 2004, Electrabel raised its stake in CNR to 49.95 %, for which it provides opera-
tional management. Its control of SHEM capacities will be further consolidated with the agreement reached
in November 2002 with SNCF: Electrabel acquired a 40 % stake in SHEM early in 2005 and will increase its
share to 80 % in 2007.
Remote command and control of power stations are strong points offering considerable
flexibility. SHEM’s main peak-load units are already directed from a single dispatching
centre in Lyon. In April 2005, as a result of the investments made in 2004, the 19 CNR
stations (100 turbines for basic output) will also be controlled remotely, while simul-
taneously regulating the Rhône.
In 2004, Electrabel also expressed an interest in participating in the EPR project
(European Pressurized water Reactor), an evolutionary nuclear station with capacity of
1 600 MW.
Italy. Electrabel’s installed capacity is the equivalent of 1 261 MW: 346 MW at the Rosignano combined
heat and power plant; 321 MW operated directly by AceaElectrabel Produzione (of which Electrabel holds
70 %, alongside Acea); 594 MW through ElectrabelAcea’s 50 % share in Tirreno Power (total capacity of
1 188 MW). Various repowering projects, for instance at Tirreno Power’s main station, Torrevaldaliga, will
increase the overall capacity by more than 1 000 MW by 2007.
This investment at the Torrevaldaliga station, 40 kilometers from Rome, is extremely important. The power
station is being modernised and will replace fuel with natural gas in two combined cycles, thus improving
its environmental performance. It will be put back into service in 2005 in two phases: the first section (375 MW)
Limited outage periodIn mid-October, a defective circuit-
breaker at a SHEM hydroelectic powerstation (40 MW) in the French Pyrenees
might have led to a 10-week shutdown ata time when this unit is important for covering consumption peaks. In the end,the shutdown lasted only a week, becausethe faulty equipment could be replacedby an identical circuit-breaker available
in Belgium.
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is operational since the start of 2005; the second (188 MW) will be put into service at
the start of the second half year of 2005.
Investments to switch generating equipment to natural gas are continuing. The new
CCGT station in Voghera (370 MW; Lombardy) will be up and running in spring 2005,
while construction of another CCGT plant, Roselectra, got under way in Rosignano in
September 2004 (370 MW; Tuscany); it is expected to be operational in October 2006.
At the start of 2005, Electrabel secured the permits needed to build a third unit of this
type in Leinì, near Turin.
Iberian Peninsula. Electrabel is working on its position in the generating sector. Construction of the CCGT
power station in Castelnou (760 MW; Aragon) is continuing, with commissioning set for the start of 2006.
Other projects are being studied, including a CCGT plant (1 200 MW) in Morata de Tajuña, near Madrid, for
which Electrabel has already received the necessary permits, and another CCGT plant in Torrelavega (800 MW)
near Santander.
In Portugal, Electrabel has made appreciable progress in developing its wind turbine projects.
Germany and Central Europe. In Germany, Electrabel operates the Gera plant (74 MW). In Saarland, the repow-
ering of the combined heat and power unit Römerbrücke in Saarbrücken started up in 2004. This will reduce the
unit’s emissions, improve its yield and boost its capacity by 41 MW through an additional gas turbine. It will
be back in service in mid-2005 with capacity of 110 MW. Electrabel is studying the opportunities for other
generating investments in Germany. The decision will hinge mainly on market developments.
Electrabel is participating – as a member of the European association VGB PowerTech – in a research project
at an existing power station in Germany. This project aims at enhancing the yield of coal-fired stations and
improving their environmental record.
In Poland, the Polaniec station (1 654 MW) is now considered to have reached its ideal configuration. The new
centralised control room is operational. In time, it will replace the 16 pre-existing decentralised rooms: over the
next few years and along major overhauls, the necessary works will be undertaken to connect all remaining
generating units to this new control room.
In Hungary, the Dunamenti power station (2 068 MW) is playing a more central role than ever before, in a
country where it accounts for almost 25 % of the installed capacity. With its conventional units and its
GENERATING CAPACITY IN EUROPERenewable energy sources
Wind Hydroelectric Biomass
Belgium 8 farms, 42 MW 10 power stations, 22 MW 4 power stations2 farms, 16 MW* 1 power station*347 MW*
The Netherlands 1 farm, 3,5 MW 2 power stationsFrance 100 MW* 68 power stations, 3 710 MWItaly 150 MW* 24 power stations, 129 MWPortugal 3 farms, 41 MW 9 power stations, 33 MW
2 farms, 89 MW*550 MW*
Poland 1 power station
* Under construction* Project
See also page 054.
Water chemistryDuring the construction of the CCGTpower station in Voghera, concerns wereraised over water chemistry. The auditalready carried out by Laborelec, Electrabel’sresearch and development expertise unit, atthe sister plant of Esch-sur-Alzette (GrandDuchy of Luxembourg), was forwarded to Italy.Voghera also had information on chemicalmonitoring in operational mode at thepower stations in Esch-sur-Alzette andSaint-Ghislain (Belgium).
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CCGT unit, Dunamenti mainly supplies the single state buyer, whereas its combined heat and power unit is
the biggest power station in the free market. Studies on the feasibility of repowering or a CCGT extension are
under way.
Environmental issues determine investments and projects. Co-combustion is encouraged.
Spending on the Ruien plant will bring this coal-fired unit into line with future regional and European acid
emissions requirements. Aimed at maintaining the generating mix, they will only be rational economically in
the context of a reasonable CO2 regulatory framework in the Flemish Region. The choice of investments,
notably in renewable energy, will be determined by the big environmental issues, particularly the reduction
of acid emissions and greenhouse gas emissions (CO2), along with related mechanisms (green certificates,
emissions trading, etc.).
Electrabel selects these projects on the basis of strict criteria. In Belgium, for example, biomass is encour-
aged, often in combined generation with coal. Electrabel has multiplied its research efforts in this area in
recent years. They are now being put into practice at different power stations (Langerlo, Ruien, Rodenhuize,
Mol and Awirs), which are burning olive pits, wood pellets, gas from wood gasification, sewage sludge and
coffee bean shells. Since spring 2005, Awirs 4 is fuelled exclusively by wood pellets, with a capacity of 80 MW.
In the Netherlands, investments to extend the life cycle of the Gelderland power station include co-combustion.
Since October 2004, the coal-fired Polaniec station in Poland has been one of the biggest biomass
co-combustion installations in Europe: no fewer than 400 000 tonnes/year of wood from the maintenance of
state-owned forests can be burned there. The longer-term target is for renewable energy to make up 12 %
of its total output.
In working with biomass, Electrabel remains very attentive to the destabilizing effects it can have: pressure on
markets for wood and other sources of biomass have a direct influence on prices of these raw materials and
thus on the economic viability of such projects.
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See also page 083.
See also page 046.
Ambitious wind projects are being implemented all over Europe.
Electrabel participates in wind energy wherever potential yield is sufficient, particularly in southern Europe.
Following agreement with the wind turbine manufacturer Gamesa, Electrabel’s first wind farm in Portugal, Fafe
(80 MW), will be operational at the beginning of 2005. Under the same agreements with Gamesa, several other
projects are planned in both the Iberian Peninsula and Italy.
In addition, the Portuguese firm Generg, in which Electrabel holds a 42.5 % share, commissioned two wind farms
in 2004 (28 MW), thus raising the company’s total renewable capacity to 74 MW. It is still developing several other
wind farms with total capacity of 400 MW, set to be commissioned during 2005-2007.
In mid-July, the biggest wind farm in Belgium was inaugurated in Hoogstraten. These six new generators with
nominal capacity of 2 MW bring Electrabel’s total wind capacity in the country to nearly 42 MW, of which around
twenty under partnerships. Applications for licences have also been submitted for around 100 MW. In
the Netherlands, Electrabel markets the output of two wind turbines based in Lelystad with a capacity of
1.75 MW each.
Globally, including some 100 MW being studied in France, capacity of nearly 1 100 MW of wind energy is in the
project phase.
The Bütgenbach dam was renovated in line with environmental considerationsand local activities.
In 2004, Electrabel carried out works at the Bütgenbach dam in Belgium; its lake is an important
recreational centre in summer. This operation marks the start of a large-scale maintenance programme at
Belgian hydroelectric installations. Mastery of the environmental and socio-economic impact when drain-
ing the Bütgenbach waters will serve as an example for similar operations in the future.
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Trading and Portfolio Management
Internal Portfolio Management manages Electrabel’s energy portfolio. This department optimises
allocation of the internal and external resources Electrabel can mobilise to source sales. Trading
not only provides visibility in wholesale markets but also makes it possible to intervene in these
markets. It also gives support for the activities of local business units. A new product, European
CO2 allowances, is now part of these basic mechanisms.
With its central position, Portfolio Management plays a strategic role in riskmanagement.
Internal Portfolio Management is the department that centralises data while capitalising on the opportunities and
flexibility of deregulated markets. It has a complete overview of Electrabel’s portfolio, from generation facilities
to commercial obligations and market developments. Its role is to provide optimal direction, create flexibility
between electricity and natural gas, and manage centralised risks.
In 2004, considerable efforts were made to fine-tune a hedging policy to ensure that residual market risks are
compatible with the company’s capacity to bear them. In the course of a rough year in terms of fuel prices,
hedging and arbitrage enabled Electrabel to lower the impact of price fluctuations on earnings. In the
circumstances, Electrabel especially made the most of its flexible natural gas and electricity positions: deliver-
ing and securing natural gas at a particular place, using it – or not – at a given power station, marketing it on
wholesale markets, or selling it directly to customers.
For Electrabel, CO2 allowances become a product like any other, managedby Portfolio Management.
Europe’s emissions trading scheme began in January 2005. The mechanisms of this CO2 market are based on
emissions allowances, management of which is being built into the overall Portfolio Management model. This
means that all business units will be able to take up this new challenge optimally and to control the risks linked
to quota prices on the market. EL
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See also page 048.
See also page 047.
In 2004, Trading and Internal Portfolio Management prepared the tools and mechanisms that are vital for
centralised CO2 management. This is now used to minimise residual risks for the company and to exploit the
opportunities related to accounting and tax issues. Electrabel will be using the period 2005-2007 to attain its
efficiency in markets that will be even more restrictive later.
In the Netherlands, Electrabel took part in a CO2 emissions trading exercise organised by the authorities in
mid-2004. The company satisfied all the legal conditions and won the best commercial score of the dozens
of companies participating.
Trading provides support for Electrabel’s expansion in European growthmarkets.
In keeping with its strategy of centralising and consolidating trading activities based on
transparency, Electrabel Nordic’s positions on the Nordpool were transferred to Brussels.
The entire portfolio is thus managed centrally while maintaining a local presence (Oslo,
London, Berlin, Prague, Milan, etc.) to ensure, where necessary, appropriate action in
these markets.
Since 2004 was an important year in terms of market opening in Europe, trading stepped
up its operations in support of Electrabel’s European development.
Some Eastern European countries that are new members of the European Union are also
opening up their electricity borders. Electrabel can and will be operating directly in these
markets. Positions have already been taken and operations carried out in Poland and Hungary, but also in
countries where Electrabel has no generating facilities, such as the Czech Republic and Slovakia.
In Italy, acting through its subsidiary AceaElectrabel Trading, Electrabel is present on the Italian Power
Exchange (IPEX), which was launched in April 2004 and is exclusively open to electricity generators.
AceaElectrabel Trading has taken over the trading operations of the generation subsidiary AceaElectrabel
Produzione. Tirreno Power (50 % owned by AceaElectrabel) also participated in IPEX.
Electrabel has also begun importing natural gas into Italy through AceaElectrabel Trading. This activity
skyrocketed immediately. The company initiated and collaborated in the effort to develop a contractual standard
for transactions on the Punto di Scambio Virtuale (virtual hub), which has made for greater liquidity of trading.
Date Offer in MW Bidders Buyers MW sold
Base load Peak load Total
09.12.2003 167 83 250 18 7 23025.02.2004 180 90 270 14 6 26526.05.2004 170 85 255 15 9 24003.09.2004 277 138 415 15 7 36518.11.2004 300 150 450 16 9 275
16.02.2005 267 133 400 13 10 330
VIRTUAL POWER PLANT AUCTIONING
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Exchange of CO2 quotasPursuant to the Kyoto Protocol, CO2
emissions quotas will be traded at glo-bal level. Electrabel has made the firstmove, signing an agreement with Vega, aBrazilian waste treatment company that ispart of the SUEZ group. Its programme inBrazil for reducing methane emissions fromdecomposing organic waste will generatequotas. Electrabel will buy some of theseto use them in its overall CO2 management(for allocation to generation or tradingactivities).
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Through both trading and direct sales by local units, Electrabel is gradually getting a firm foothold in local
natural gas markets.
Natural gas-fired power stations are prominent in Electrabel’s future generating capacities in Europe. Working
closely with local business units, Trading and Internal Portfolio Management are building up the natural gas
supply portfolio for these future units.
The success in auctioning virtual power plants is increasing liquidity in theBelgian market.
The auctioning of virtual power plant capacities – on which Electrabel committed itself in July 2003 to the
Belgian Competition Council – has continued successfully. The confidentiality of the transactions and participants’
anonymity are guaranteed by the participation of Endex (European Energy Derivatives Exchange) as service
provider, IBM Business as consultant and PricewaterhouseCoopers LLP as observer of the Belgian regulatory
body. A first auction was held in December 2003.
Another four auctions were held successfully in 2004 (February, May, September and November). For each
auction, twenty products are offered, divided up into base and peak-load capacities, each featuring different
durations and delivery start dates. With some 15 companies taking part, each auction had at least six rounds of
bidding. Market operators bought some 2.6 TWh through the VPPs in 2004. In all, Electrabel has already sold
10.6 TWh and made available 780 MW.
To demonstrate the smooth working of the auctions and their contribution to market liquidity, since
1 September 2004, Endex has been publishing online daily reference prices for Belgian electricity contracts
concluded privately (eight market players sit in the Price Committee). Reference prices are close to the levels
reached during auctions.
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Management of distribution networks
Netten Vlaanderen, Réseaux Bruxelles and Réseaux Wallonie are in charge of managing,
maintaining and developing electricity and natural gas distribution systems on behalf of
distribution system operators. This organisation, in three business units, allows Electrabel to
adapt to the specific regulations of each region. To provide a competitive and high-quality
service to system operators, the units engaged in the same business aim to exploit synergy,
economies of scale and performance. Network activities, while limited geographically to
Belgium, can turn into a real advantage with regard to certain expansion projects in Europe.
The new distribution architecture has been completely validated.
In the first quarter of 2004, the Competition Council gave the final green light for the
organisation of distribution in liberalised markets. In January, the natural gas distribution
architecture was approved for Wallonia; in March, the architecture for electricity and
natural gas was approved for the Brussels Region. The unbundling model for networks
and sales was thus formally adopted for all of Belgium.
The distribution system operators that succeeded to the mixed intermunicipal
companies determine system management rules and delegate all technical operations
to the Networks regional organisations. More than 5 000 Electrabel staff members
are active in this business which, in Belgium, is operated under the name
‘Netmanagement’.
070
Similar businessesExchanges have been organisedbetween managers of Electrabel NettenVlaanderen and of Lyonnaise des Eauxto enable each company to learn fromthe way the other operates. Electricity distribution systems obviously differ fromdrinking water systems, but day-to-daypractices present opportunities for co-operation that can create real ways ofimproving productivity, efficiency andservice to customers. This exampleshows that Electrabel may take advan-tage of the existing synergies withinthe SUEZ group.
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In Flanders, solutions are being put in place to tackle the inevitable hazardsof new processes.
In Flanders, the market was fully liberalised in July 2003. The unbundling of networks and sales activities
became operational at that time. Millions of items of data were transferred to new computer systems
designed according to legal requirements for administrative and technical management. All processes and
methods had to be adapted to the market environment within a very limited period of time. Staff members
were trained accordingly.
Such an operation had never been seen before. In 2004, Netten Vlaanderen was able to solve the start-up
problems of this new organisation. These inevitable hitches were minor in both number and seriousness.
Internally, the teams demonstrated their capacity to solve them.
In Brussels and Wallonia, the first phase of liberalisation of distributioncustomers took place in July.
The Flemish Region’s experience with the implementation of new computer systems and data migration is
being put to use in the different phases of liberalisation in Brussels and Wallonia. This began on 1 July 2004,
when non-household customers became eligible there.
In time, computerised processes and applications will be harmonised in Flanders and Wallonia, while
taking specific local characteristics into account. The new computer application for processing and
managing customers’ technical data will also be harmonised. This major project is being developed and
will be implemented first in Flanders and then in Wallonia, where full market liberalisation is set for
January 2007.
In Brussels and Wallonia, the deadline of 1 July 2004 also marked the creation of special phone numbers for
non-household customers having questions or requests on networks issues.
Netten Vlaanderen, Réseaux Bruxelles and Réseaux Wallonie are working tocustomers’ satisfaction.
As with Electrabel’s other activities, networks organisations are customer-oriented. They provide quality
services to the distribution system operators who delegate the technical operation, maintenance and
development of their installations. The improvement of numerous services provided to these operators is
part of the Electrabel drive to ever greater quality.
The award of ISO 9001 certification is in line with this, as are certain specifically regional projects: in Flanders,
the optimisation of the call centre or the possibility for construction entrepreneurs to request system
plans 24 hours a day on the Internet; in Brussels, centralisation of all activities at a single site; in Wallonia,
implementation of a new internal waste management scheme.
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Programmes are being carried out to enhance performance.
To carry out these tasks efficiently, Electrabel has developed an overall strategy. By harmonising proce-
dures and methods and by creating maximum synergy, particularly for processes and use of material, the
efficiency and productivity of network activities can be improved. Economies of scale mean reductions in
investments and operating costs in each of the business units. In 2004, the three units outsourced their
fleet management.
Netten Vlaanderen and Réseaux Wallonie are together implementing the NEXT programme (Net EXcellence
Tomorrow) to enhance their efficiency. For instance, they have identified best practices for various works.
Implementation began in the course of 2004.
These programmes are keeping costs down, the final objective being to respond to regulators’ demands for
lower tariffs on distribution systems.
In Wallonia, more than 16 000 customers have subscribed to Internet via cable television, tvc@blenet.
The Walloon mixed intermunicipal companies, whose operating partner is Electrabel, serve more than half a
million cable TV customers.
The success of tvc@blenet as Internet access provider is clear. From 8 000 at the end of 2003, the number
of subscribers rose to more than 16 000 at the end of 2004. The aim is to double that figure again at
the end of 2005. Networks are being modernised and made bi-directional, which is essential for
Internet use. Some 350 000 households have access to tvc@blenet, which is 50 000 more compared
with end 2003.
In the Verviers region, Electrabel helped streamline natural gas distribution activities.
Electrabel concluded an agreement with Association Liégeoise du Gaz (ALG) and the City of Verviers to
improve the organisation of natural gas distribution in the Province of Liège. Previously, the mixed inter-
municipal company Intermosane managed the natural gas distribution in Verviers, while ALG covered the
rest of the Province. An economically fair agreement, taking into account the interests of the transferred
staff members, led to the takeover by ALG of the natural gas distribution activity in Verviers. The sales
operation is being transferred to Electrabel as the market gradually opens up and, until then, it remains
in the hands of the mixed intermunicipal company Intermosane.
Electrabel is open to agreements of this type when they can enhance organisation and streamline network
activities.
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Electrabel pulls out of the water distribution business.
At the end of 2004, Electrabel finally pulled out of direct operation of water distribution in Flanders which it
provided through the intermunicipal company IWVB.
Since then, it has handled only the commercial management of 500 000 customers.
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C O R P O R A T E M A N A G E M E N T
Branding p. 076
Human resources p. 078
Health and safety at work p. 081
Environment p. 083
Research and development p. 087
Business model and risk management p. 089
Tables p. 090
Building a consistent European organisation
highlighting its local features.
Branding
A strong brand is of the essence in a free market. It shapes the company’s image and is a land-
mark for customers. It forms part of the company’s identity and reputation. The brand also
builds unity, motivates staff and serves as a reference for shareholders.
The brand name is an asset to be maintained day-in and day-out acrossEurope.
In 2003, after an extensive process of analysis and positioning, Electrabel adopted a new logo and baseline:
‘You’ve got the energy.’ The brand is now a company asset that is maintained and enriched through its various
applications. In 2004, particularly during its spring and autumn advertising campaigns in Belgium,
Electrabel placed the customer at the heart of its message. Electrabel wants to stimulate their energy and
so stresses its proximity and relationship with them.
In order to reinforce its position in the French market, Electrabel started to present itself systematically as
a part of the SUEZ group by mid-2004. To this end it changed its commercial brand ‘Énergie du Rhône’ to
‘Electrabel, Group SUEZ’.
Electrabel is part of society and of its customers’ daily lives.
Like the other initiatives establishing interaction between the company and its human environment, initia-
tives taken to anchor the brand all work in the same direction: Electrabel is a company that is close to its
customers and at the heart of their everyday life. In 2004, Electrabel gave its support to a number of major
popular events.
076
See also page 055.
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Electrabel’s sponsorship budgets are steered towards the environment, such as the Electrabel
Fund created by the company under the auspices of the King Baudouin Foundation. In
2004 the company provided funding for about 20 of the 115 projects submitted to it, the
top criterion being that such projects result from concrete civic commitment. Electrabel
also directly supports social rehabilitation projects.
The brand also expresses the company’s internal strengths.
The human touch, commercial dynamism and customer-orientation logically come to the
fore since they also reflect the attitude of the company’s staff. Electrabel has continued its
efforts in this respect. The ‘Human Energy’ operation aims at helping all sales staff better understand the
context of a free market and, as a result, better grasp the role they can and must play in that framework.
The ‘All Ambassadors’ initiative has similar aims, but puts the focus on the tremendous image potential for
Electrabel of each and every one of its staff members.
As part of the same philosophy, Electrabel is mobilising in support of the ‘We are SUEZ’ programme, aimed
at building group spirit among the Group’s 160 000 staff members. The idea is both to establish value-adding
synergy and to make each staff member aware of his or her participation in an overall strategy and in its
expression to the outside world.
Communication also focused on institutional and private investors.
In 2004, on top of regular face-to-face meetings with analysts, 20 road shows were held, establishing more
than 250 direct contacts with institutional investors across the globe (Brussels, London, Paris, New York, etc.).
As Electrabel shares are very much sought after, there are numerous contacts with small shareholders and
investment clubs. Electrabel also organised a number of specific corporate visits (to the trading room, power
stations, etc.) for these investors.
The company also took part in meetings for investors, outlining in particular its position on CO2 allowances
and the related emissions trading scheme. Finally, on the Electrabel web site, the section dedicated to
shareholders and financial analysts has been further expanded.
Advertising campaignsImage campaigns were also launched
in the Netherlands where Electrabel isnow the only brand since Spark Energy
has been fully integrated; in Italy where theAceaElectrabel brand name is established in the liberalised market; and in France where the reputation of SUEZ was turned to good account. The aim is to develop allcampaigns on the basis of a single visual
concept.
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Human resources
In a competitive environment, identifying, developing and enhancing the value of internal
competences is the best way of ensuring Electrabel’s future development. Working in a
European group considerably broadens prospects for the individual. Career mobility makes it
possible to draw on many different backgrounds and levels of experience, which benefits the
company. It also enables staff to satisfy their personal aspirations.
All staff members have access to tools which enable them to participatefully in their career plan.
2003 was a very important year for the design of the framework that now forms the basis for human resources
in Electrabel as a European company. The company’s processes have been redefined, over and above any
distinctive national or job-specific features.
The competences required for each job have been precisely identified. The complex process
of implementing these grids and principles in the business units was carried out during
2004. The frame of reference is open and flexible. The aim is for all staff members to
define a career plan suited to their aspirations.
To attain this goal, staff members have been given a ‘tool box’, mainly via the
intranet. All executive staff members know what competences are required for their
jobs and, if necessary, can supplement them. Based on these profiles, they can also
prepare a career plan in concert with management. A self-evaluation questionnaire
can be used to judge operational and behavioural performance. A training catalogue is
078
On-the-ground trainingIn 2004, Trading and InternalPortfolio Management stepped up its staff training in Europe. All staffmembers were invited to attend trainingsessions outside their national unit,which helped them to see where theystand in the company’s overall context,and gave them a better view of the effectof their personal contribution on thevalue chain, as well as a better under-standing of the expectations andmotivations of their internal clients.
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also available and staff members can enrol in the courses they require. Likewise, when a vacancy occurs
– within the SUEZ group as well – a precise description of the job and the required competences is
available online.
The ultimate objective is to encourage mobility that responds to personalaspirations and the company’s needs alike.
Performance management is also a part of this. Staff members evaluate their performance through interviews
with their manager. These personalised interviews are now in general use. Their qualitative aspect enables all
staff members to map out the best career itinerary in terms of their personal aspirations, taking into account
the company’s needs.
The use of these various processes contributes to genuine mobility in the company. In 2004, nearly three
quarters of the 300 vacancies for management jobs in Belgium were filled internally. The internal dynamics and
attractive career opportunities are also a strong argument for external recruitment, in practically all types of
posts: economic, commercial and technical.
In Benelux, opportunities also arose in high-level technical jobs, mainly in generating activities. Special pro-
grammes enable new recruits to move up quickly into high-flying job categories, particularly by systematically
assuring the transfer of knowledge from staff members reaching the end of their career, in particular their
day-to-day expertise.
Attaining the right human scale continues to be important.
In the Netherlands, the human resources chapter of the ‘Optimalisatie Techniek’ programme led in 2004 to
the redefinition and redistribution of jobs in generating activities. Programmes are also under way in Belgium
for generation (Focus) and for networks (NEXT) activities.
In Belgium, the Collective Labour Agreement signed by all trade unions, which runs until the end of 2005, led
to harmonious management of various rationalisation measures – internal reorientation, departure plans – in
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079
See also page 072.
finance, information technology and human resources. The creation of a single service centre for personnel
administration has cut operating costs by 20 %. Employee Self Service, an administrative portal site for all staff
members and hierarchy, also helps reduce overheads.
FEBEG replaces UEGB.
A new representative employers' federation for the electricity and gas companies in Belgium has been set up.
The FEBEG (Belgian Federation of Electricity and Gas Companies) will replace the UEGB (Union of Belgian
Electricity and Gas Operators). In a competitive market, this event is significant: the Federation will aim to
defend the interests of every employer of the sector.
One of its first jobs will be to guide the new operators in the gradual application of the minimum labour
conditions laid down by the Joint Committee 326.
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Health and safety at work
Electrabel is setting ever higher targets for occupational well-being. This policy is defined at
European level and is put into practice as required at local level. It applies to staff members as well
as the company’s partners and subcontractors. These programmes are developed in consultation
with everyone concerned.
Safety policy is shared at European level through common rules.
During the second half of 2003, Electrabel published its Code of Conduct on Health and Safety at Work,
which, in the spirit of the SUEZ Health and Safety Charter, establishes common reference points and require-
ments. It is up to each subsidiary in different countries to put this Code into practice following their own
specific requirements.
This in-depth and long-term task continued in 2004. The corporate safety organisation also
began to set up links with the network of local safety advisers. It assisted them as neces-
sary with audits, advice and evaluations aimed at improving the development of action
plans and strategies.
Systematic reporting has also been put in place. It will regularly supply information on the
development of safety indicators for all consolidated subsidiaries, in order to monitor the
results of their occupational health and safety policy more accurately.
In 2004, one of Electrabel’s priorities at European level was the inclusion of safety consider-
ations in the planning and development of industrial projects, whether greenfield or existing
installations.
An active risk management policy enabled Electrabel to achieve the objectivesof the Global Prevention Plan 2000-2005.
In Belgium, the company finished the Global Prevention Plan for the period 2000-2005, exceeding its targets.
The frequency rate, with a target level of 5, dropped to 4.87. In other words, for every million hours worked,
13.6 accidents occurred in 1999, while only 4.87 occurred in 2004. The real severity rate also declined. For
every thousand hours worked in 1999, the average number of days lost due to accidents was 0.33, down to
0.11 in 2004.
The safety figures for this period show an improvement of some 30 %. The results obtained were possible
thanks to the permanent support of management and a structured approach to prevention based on active
risk management: identifying, evaluating, suppressing or reducing risks to an acceptable level. But the Global
Plan 2000-2005 was only one stage of a continuing process. Targets for 2006 are even more ambitious:
indicators of 4.5 for frequency rate and 0.09 for real severity rate.
081
Safety auditsSafety teams were actively involved in the
preparation of the works at Zandvliet(Belgium), Gera (Germany), Polaniec
(Poland), Voghera (Italy) and Castelnou(Spain). Safety audits were carried out at theGelderland and Eems power stations in theNetherlands. In Poland, occupational healthand safety organisations and practices areaudited with a view to certifying them. In France, progress was made on risk prevention through Electrabel’s ties with
CNR and SHEM.
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Electrabel goes on with this voluntarist policy throughout Europe. It enabled the company to improve its
general European results in 2004. Globally, the frequency rate of accidents, which was still of 5.5 in 2003, was
reduced to 4.1. The real severity rate also improved significantly, reaching 0.09, down from 0.15 the previous
year.
Any serious accident, particularly if it involves fluids, is analysed using a ‘tree’ of causes. The company is
also pursuing its drive to provide training in occupational safety management for managers and hierarchy
in the field.
Ghislenghien: a disaster in 2004.
On 30 July, Electrabel was seriously affected by the Ghislenghien disaster – which occured on the natural gas
transport system – in which one staff member was killed and another seriously wounded. Electrabel provided
aid and comfort to staff members and families. Following analysis of the event, arrangements for intervention
in cases of natural gas leaks were thoroughly reviewed and the lessons of the experience have been learned
– a good example of the active management approach.
Likewise, on crisis management, the lessons learnt from this catastrophe have brought about changes in
internal procedures, particularly in terms of psychological support for those involved.
All Electrabel units in Belgium are adopting the new Global Prevention Plan2005-2010.
Preparing the Global Prevention Plan 2005-2010 was the biggest project undertaken during 2004. It is based
on the conclusions, observations and results of the previous plan. In addition to the lessons learnt from
experience, the plan also takes account of risk analyses and organisational or legislative changes. Drawn up in
consultation with local teams, health and safety committees and trade union organisations, and with further
contributions from the external health and safety service, insurers and even certain contracting
companies, it has been agreed by general management and senior managers.
There are two aspects to the plan: improvement of the risk management system and positive action in six
priority areas. One of the major challenges of the year 2005 will be for all business units to implement this
plan. A strategy for this has been worked out with the local safety advisers and the communication teams:
communication material, presentations, and training.
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Environment
A sense of responsibility is one of Electrabel’s values. Citizenship motivates a constant
commitment to sustainable development. This dynamic approach works alongside a regulatory
framework, the continuing effort to boost performance, and customer-oriented innovation.
Regional, national and European regulatory frameworks determineElectrabel’s activities.
The issue of acid emissions is a good illustration of Electrabel’s proactive attitude to sustainable development.
In 1991 the electricity sector signed a branch-agreement with the Belgian public authorities. In 2003, com-
pared with the reference year 1980, emissions of SO2 and NOX had fallen 93 % and 66 % respectively,
outperforming the initial targets of 80 % and 40 %.
In 2003 and 2004, the Federation of Electricity Companies in Belgium negotiated and concluded a new
agreement with the Flemish Region, setting new, very ambitious targets: for 2005, reduction of almost
65 % for SO2 emissions and of 47 % for NOX compared to 1990, and for 2008, objectives of 90 % and
70 % respectively. Consultations with the Walloon Region are also continuing, prompted by implementation
of the European directive on national emissions ceilings. They will probably lead to a branch-agreement in
the course of 2005.
The company is the main player on its home ground and a voluntaryparticipant elsewhere.
Electrabel puts a lot of time and effort into agreements of this type. As the long-established operator in
Belgium, it is the main player in their development and implementation. It is also participating with the
Regions in the country to incorporate the European Directive on Large Combustion Plants, which sets even
more binding emissions standards.
OVERVIEW OF ENVIRONMENTAL OBLIGATIONSKyoto Protocol and European Union
Reduction of greenhouse Reduction of SO2 Contribution of electricity gas emissions and NOx in 2010 produced from renewable energy in 2008-2012 compared to 1990 sources to gross electricity compared to 1990 consumption by 2010Kyoto Protocol EU directive EU directive
SO2 NOx
EU-15 -8 % -77 % -51 % 22 %EU-25 21 %Belgium -7.5 % -71 % -50 % 6 %The Netherlands -6 % -75 % -52 % 9 %Luxembourg -28 % -71 % -50 % 5.7 %France 0 % -70 % -57 % 21 %Italy -6.5 % -72 % -51 % 25 %Spain +15 % -66 % -27 % 29.4 %Portugal +27 % -53 % -17 % 39 %Germany -21 % -90 % -61 % 12.5 %Poland -6 % -56 % -31 % 7.5 %Hungary -6 % -50 % -17 % 3.6 %
In the other countries where it has begun operations more recently, Electrabel is an active partner too.
In the Netherlands, for instance, it is a party to the benchmarking ‘energie-efficiëntie’ and the ‘coal’ branch-
agreements. The same holds in Hungary, where the switchover to less polluting fuels has reduced emissions,
and where Electrabel has implemented extensive emission reduction programmes, bringing them into line
with the strictest standards. In recognition of its environmental efforts, the Dunamenti power station was
awarded the Environmental Prize 2004 by the local municipality.
Electrabel adapts its generating equipment to meet environmentalrequirements.
Provided the framework is clear, Electrabel will adopt the necessary measures. The previous agreement on acid
emissions had been a decisive factor in the company’s investment decisions. The company gave precedence to
high-yield gas-fired power stations: combined-cycle gas turbines and combined heat and power units.
The new agreement will consolidate that trend. Over the period concerned, the company will invest more than
e 40 million a year in improvements to its installations: desulphurisation and denitrification, replacement of
burners, technical changes and modernisation, reduction of sulphur levels in the fuels.
Over the years, Electrabel has built up generating facilities in which renewable energy, nuclear, natural gas and
other fuels form a balanced mix. This makes it possible to pursue ambitious environmental targets, since its
facilities are among the least polluting in Europe. They are continually being improved, particularly with the
aim of maintaining diversified generating capacity and expanding the use of renewable energy.
The constant attention paid to the CO2 problem demonstrates once more that Electrabel is an active and
responsible participant in sustainable development. Today, at European level, 41 % of its total generating
capacity, or 11 554 MW, produces no CO2 emissions.
Monitoring operations is part of regulatory requirements and helps toimprove performance.
In 2004, Electrabel refined all its CO2 emissions monitoring tools. The effective and strict collection of emis-
sions data is the cornerstone of the new CO2 trading scheme set up at European level.
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See also page 065.
See also page 047.
SO2 AND NOX EMISSIONS BY POWER STATIONSFlanders • Agreement between FPE and the government: objective
Base As of As of As of As of1990 2005 2008 2011 2013
SO2 in kilotonnes 72 25 7.5 6 4.3Evolution with respect to 1990 -65 % -90 % -92 % -94 %
NOx in kilotonnes 47 25 14 12.5 11Evolution with respect to 1990 -47 % -70 % -73 % -77 %
Electrabel is experienced in monitoring and reporting on generation data. Environmental data figure promi-
nently in this process.
In 2004, Electrabel stepped up the monitoring of its European generating facilities. A coordination strategy
has been devised to establish regular sustainable development reporting.
External certification is only sought when it brings real added value.
The Doel and Tihange nuclear sites in Belgium and the Torrevaldaliga and Vado Ligure
power stations in Italy have been awarded ISO 14001 certification and the EMAS
European label. The International Organization for Standardization (ISO) and
Environmental Management and Audit Scheme (EMAS) are both environmental manage-
ment systems, certified and controlled by external bodies. EMAS is the more advanced
and detailed of the two.
In the Netherlands, with the exception of one station on hold, all installed capacity has
ISO 14001 certification. In Belgium, all CCGT stations, the Kallo gas-fuel unit and the Coo pumping power
station are also certified. In Italy, ISO certification has been awarded to the Vado Ligure, Tor Di Valle, Salisano
and Torrevaldaliga stations. Other units are in the process of obtaining certification: Rosen and Montemartini
in Italy, Esch-sur-Alzette in Luxembourg and Polaniec in Poland.
For sites and activities where external certification is not necessarily useful because it brings no real added
value, Electrabel uses the internal management system, developed in collaboration with Vlerick Leuven Ghent
Management School and known as IPMS (Integrated Performance Management System). In 2004, the
‘environmental’ IPMS was implemented for all coal-fired power stations in Belgium.
The Networks units have been working to implement an environmental management system that meets the
requirements of the IPMS system.
Promoting rational use of energy contributes to the customers’environmental record.
Electrabel helps to implement solutions for the environment working with its customers. Rational use of energy
as an integral part of domestic comfort is one of the elements of Electrabel’s policy for residential customers.
Performance monitoringThe introduction of a computerised tool
at SUEZ group level has resulted in betterinternal follow-up of performance. Theultimate aim is to coordinate all environ-mental policy at European level through thecreation of networks of expertise.
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ENVIRONMENTAL MANAGEMENT SYSTEMSNet generating capacity certified at end 2004 • In MW
ISO 14001 EMAS
Combined cycle gas turbine 3 480 0Combined heat and power 141 0Conventional thermal 3 376 448Nuclear 5 159 5 159Hydroelectric 1 187 0
Total 13 343 5 607Share in total capacity 47 % 20 %
For companies and the tertiary sector, both public and private, Electrabel has developed a range of services to
improve energy efficiency: consumption monitoring equipment, energy audits and assistance with clean
technologies. Electrabel also directs its research and development towards environmental issues as part of
this policy.
Electrabel publishes Environmental Report.
Electrabel’s environmental policy and achievements are detailed and commented on in a yearly Environmental
report, which provides environmental indicators and results.
The Doel and Tihange nuclear power sites also publish an annual report on their environment policy state-
ments in the context of EMAS certification procedures.
Electrabel is taking part in the development of solar energy applications.
Photovoltec, a firm in which Electrabel owns a 42.5 % stake along with Total (42.5 %) and IMEC (15 %), has
decided to multiply its photovoltaic cell production capacity six-fold. The Tienen plant in Belgium should then
generate enough cells each year to equip the roofs of 40 000 households.
Electrabel has also decided to participate in a project named ‘Provincial Centre for Sustainable Construction and
Housing’ in the Antwerp Province. It is financing the installation of photovoltaic cells in the main building.
See also page 058.
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Research and development
Electrabel’s research and development activities focus on two areas: sales, by building
products and services to meet customers’ expectations; and internal efficiency, where the drive
for technical and environmental performance contributes significantly to competitiveness.
Laborelec is the company’s technical and scientific expertise centre. It is also involved in tech-
nology watch projects.
Electrabel works to stay in the lead by developing products its customers want.
Electrabel offers its customers a range of products and services that build on the basic activity of supplying
energy.
The challenge is to maintain a lead, ensuring that Electrabel stands out from its competitors. The company was
a pioneer in the development of equipment for measuring the voltage quality of electricity supplied to industry.
Electrabel now offers continuous monitoring of data, particularly consumption levels, via Internet.
As far as energy audits are concerned, the company offers Energy Savings Coaching, which comprises
assistance for implementing and monitoring the energy audit recommendations. An even more sophisticated
product is being developed: the idea is to establish a link between customers’ energy use and their other
concerns. Here too, Electrabel can draw on the support and expertise of other SUEZ group business units.
087
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Research and development enhances Electrabel’s internal efficiency.
In the liberalised markets, excellence in the management of power stations is a must, in terms of effective-
ness, availability and safety. This market-driven requirement is reinforced by the current reduction in reserve
capacities.
The new Diagnostic Centre concentrates the expertise Electrabel has been developing for a number of years.
A good deal of information on the running of power stations is controlled remotely (vibration of turbines,
chemical levels in water, etc.) and enables experts to diagnose and, as necessary, determine the intervention
mode that is least disruptive to the safety and effectiveness of a station.
Research never loses sight of the medium and long term, whether it is customer-oriented or geared towards operation.
It is not Electrabel’s purpose to carry out fundamental research, but the company is nevertheless involved
in ambitious university research programmes. It is also interested in medium- or long-term projects in which it
sometimes participates. A technology watch team brings together representatives from the
different business activities.
Electrabel closely observes distributed power generation. It is involved in the European
project known as EU-DEEP (EUropean Distributed Energy Partnership), which is studying
residential combined heat and power (boiler connected to a micro-turbine). The project
has a twofold objective: to build expertise which in time could develop into a product;
to study the impact of decentralised generation on power systems and networks.
This knowledge is of interest to several activities within Electrabel: sales, generation and
distribution networks.
An important research project is currently focusing on environmental performance in generation. For example,
Electrabel is taking part in a research project in Germany on coal-fired power stations. Other projects are
dedicated to the life cycle of existing power stations and to the flexibility required by market liberalisation. The
idea is to improve detection and in time control the negative effects of use (wear and tear, fatigue, etc.) in
order to be more flexible than initially planned; but emphasis is also being given to new technical processes
that allow frequent shutdowns and restarts. Finally, Electrabel is participating in the European Pressurised
water Reactor project (EPR).
Water treatmentResearch and Development fits in with the transversal approach within the SUEZ group. Water denitrification is agood illustration of this. It is being studiedin the context of waste water from power stations. The research findings can beextended to the Group companies that mar-ket water, which have to deal with similarproblems. A water denitrification pilot unitis to be installed in the course of 2005.
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See also page 061.
Business model and risk management
Risks are constantly on the rise in a liberalised market. In Electrabel’s business model, each busi-
ness unit assumes primary responsibility for risk management. Internal Portfolio Management
plays a central role in optimising the company’s overall position and managing its market risks.
Strict monitoring guarantees harmonised working of this model.
Electrabel is exposed to significant risks in the liberalised market.
In the energy markets, Electrabel – like any other operator – is confronted with many risks, some of which
have emerged with liberalisation.
Market risks are connected to both the price of raw materials and of wholesale electricity markets. The last
two years have demonstrated the highly volatile nature of prices in a liberalised market.
Regulatory risks appear to be increasingly pronounced. Precise and stable rules are still awaited. A single
decision by the public authorities can often have a considerable effect on the company’s activities.
Environmental risks are also increasing and count heavily in investment decisions. They generally entail a share
of regulatory risk (decision on allowances, for example).
Accidental and technological risks already existed before liberalisation. Their effect can be multiplied on a
competitive market.
All these risks, in particular those stemming from the market and from regulators’ decisions, are not
transferred in full to the customer through the value chain.
Managing these risks has become a central activity in the energy business. Electrabel implements a model that
aims to control these risks and their possible negative impact, and to increase the value of its portfolio through
such control. This is the responsibility of the Chief Risk Officer.
Risk reporting has been considerably harmonised.
In 2004, Electrabel stepped up its efforts to improve and consolidate risk reporting, both internally and in
relation to SUEZ. Governance principles and good practices inspired by Enterprise Wide Risk Management as
well as joint analysis grids have been introduced to identify, quantify and report risks in the business units.
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Tables
ENERGY BALANCE – in GWh
2004 2003 %
1. Generation of Belgian nuclear power plants operated by Electrabel 44 898.9 44 920.3 0.02. Drawings on nuclear power plants outside Belgium 7 835.2 7 596.1 3.13. Generation of Belgian thermal and hydroelectric power plants operated by Electrabel1 23 483.3 23 972.5 -2.04. Generation of thermal power plants operated by Electrabel outside Belgium 36 965.0 36 847.3 0.35. Generation of Belgian combined heat and power units 5 163.7 5 449.2 -5.26. Purchases on the markets and from other producers 33 976.6 26 199.9 29.77. Purchases from Belgian in-plant generators 201.4 290.4 -30.68. Generated, drawn and purchased energy (1 + 2 + 3 + 4 + 5 + 6 + 7) 152 524.1 145 275.8 5.09. Supplies to various producers 4 956.7 5 187.6 -4.510. Energy absorbed by pumping 1 696.6 1 446.4 17.311. Available energy (8 - 9 - 10) 145 870.8 138 641.7 5.212. Losses 811.5 1 463.4 -44.513. Sales by Electrabel group – generation (11 - 12) 145 059.3 137 178.4 5.714. Direct customers 131 725.9 113 117.2 16.5
a) open market in Belgium2 56 425.5 47 318.3 19.2b) outside Belgium 43 645.4 46 147.3 -5.4c) wholesale 31 655.0 19 651.6 61.1
15. Distributors in Belgium 13 333.4 24 061.2 -44.6a) sales to mixed intermunicipal companies 11 590.4 22 064.8 -47.5b) sales to other distributors 1 743.0 1 996.4 -12.7
16. Other direct purchases by Belgian mixed intermunicipal companies 606.5 762.9 -20.517. Energy purchased by Belgian mixed intermunicipal companies (15a + 16) 12 196.9 22 827.7 -46.618. Losses 836.4 1 313.0 -36.319. Sales by Belgian mixed intermunicipal companies (17 - 18) 11 360.5 21 514.7 -47.2
a) customers regulated market 11 149.8 20 091.7 -44.5b) distributors not associated with Electrabel 210.7 1 423.0 -85.2
20. Consolidated final sales by Electrabel group 144 829.4 136 628.3 6.0a) customers open and regulated markets (14 + 19a) 142 875.7 133 208.9 7.3b) distributors not associated with Electrabel (15b + 19b) 1 953.7 3 419.4 -42.9
1 Final net generation.2 Including the customers of Electrabel Customer Solutions.
OVERVIEW OF PERSONNEL – situation on 31.12.2004 – in full-time equivalents – on active service
MANAGEMENT OTHERS TOTAL %
Sales 416 1 867 2 283 14.9Generation 662 4 743 5 405 35.4Trading and Portfolio Management 76 36 112 0.7Networks 537 4 334 4 871 31.9
Flanders 346 2 241 2 587 17.0Brussels 49 718 767 5.0Wallonia 142 1 375 1 517 9.9
Central departments 815 1 792 2 607 17.1
TOTAL 2 506 12 772 15 278 100.0
Consolidation scope: as from 2003 the figures include the personnel of the fully and proportionally consolidated subsidiaries of the Electrabel group mentioned in the organisation charton page 096-097, as well as the personnel of Énergie du Rhône. 2004 figures also include the personnel of the Polaniec subsidiaries. The figures for 2003 have been restated on thesame basis (see page 078).
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MAIN EVOLUTION OF GENERATING FACILITIES – in MW
Country 2004 2005 2006 Projectunder construction
COMMISSIONING OF NEW UNITSCombined cycle gas turbine
Zandvliet Power (50 % Electrabel) Belgium 192.5Voghera1 Italy 370Roselectra1 Italy 370Leinì1 Italy 370'Greenfields' Italy 2 x 400Castelnou Spain 760Morata de Tajuña Spain 1 200Torrelavega Spain 800
Conventional thermalFenne2 Germany 112
Wind farmHoogstraten Belgium 6 x 2Lanaken Belgium 4 x 2Perwez3 Belgium 5 x 1.5BASF Belgium 6 x 3Büllingen Belgium 6 x 2Izegem Belgium 2 x 2La Roche Belgium 4 x 2Strépy Belgium 2 x 2.3Electrabel Belgium 300Lelystad Netherlands 2 x 1.75CNR France 100AceaElectrabel Italy 150Carreco-Outeiro (Generg) Portugal 9 x 2.3Chaminé (Generg) Portugal 3 x 2.3Fafe (agreement with Gamesa) Portugal 40 x 2Meadas (Generg) Portugal 3 x 3Generg and agreements with Gamesa Portugal 550
HydroelectricRendeux Belgium 0.03
MODERNISATION OF EXISTING UNITSNuclear
Doel 2 (replacement steamgenerators) Belgium +40
Conventional thermalTorrevaldaliga (repowering)4 Italy 562.5 Napoli Levante (repowering)4 Italy 187.5 Vado Ligure (repowering)4 Italy 378.5 Römerbrücke (repowering) Germany +41
SHUTDOWNConventional thermal
Napoli Levante4 Italy 75.5Torrevaldaliga4 Italy 312.5Vado Ligure4 Italy 305
Combined heat and powerCockerill Sambre (Liège)5 Belgium 105
Heat generationVerviers Belgium –
Comments
1 Operated by AceaElectrabel2 Integration into generating facilities; convention with Saar Energie3 Joint venture with Air Energy4 Ownership Tirreno Power (50 % ElectrabelAcea)5 End of collaboration
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PROFILE OF POWER STATIONS – situation on 31.12.2004 – in MW
Unit/Power station Net generating Usable capacity fuels
Nuclear generation 5 159.4Doel 2 736.4 Nuclear fuel
Doel 1 392.5Doel 2 432.5Doel 3 965.8Doel 4 945.6
Tihange 2 423.1 Nuclear fuelTihange 1 481Tihange 2 967.7Tihange 3 974.4
Hydroelectric 1 328.8Pumped storage station 1 307
Coo I 474Coo II 690Silenrieux (Plate Taille)5 143
Hydroelectric power station 21.8Bévercé 9.2Bütgenbach 1.8Cierreux 0.1Coo-diversion 0.4Heid-de-Goreux 8.1La Vierre 1.9Lorcé 0.1Orval6 0.1Rendeux 0.03Stavelot 0.1
Wind farm 42.2Bütgenbach 8Gembloux7 6Hoogstraten 12Kasterlee 0.7Pathoekeweg (Bruges) 3Rodenhuize 4Schelle 4.5Wondelgem 4
THE NETHERLANDS 4 710.5
Combined cycle gas turbine 1 705Eems 1 705 Gn
Combined heat and power 161Gas turbine with heat generation 161
Air Products (Rotterdam) 43 GnAlmere 118 Gn, L
Conventional thermal generation 2 841Conventional thermal 602
Gelderland (Nijmegen) 602 S, L, BmConventional thermal with repowering 2 200
Bergum 664 GnEems 695 GnFlevo 491 Gn, LHarculo 350 Gn, L, Bm
Gas turbine 39Eems 17 GnFlevo 22 Gn
Wind farm 3.5Lelystad8 3.5
Unit/Power station Net generating Usable capacity fuels
BELGIUM 12 976.2
Combined cycle gas turbine 1 655Drogenbos 460 Gn, LHerdersbrug (Bruges) 460 Gn, LSaint-Ghislain 350 Gn, LVilvoorde 385 Gn
Combined heat and power 827.3Counterpressure turbine with heat generation 54.5
Cockerill Sambre (Charleroi) 45 Gn, Gc, GfVPK (Oudegem)1 9.5 Gn
Gas turbine with heat generation 686.1
Amylum (Aalst)2 48 GnBayer (Lillo)2 43 GnChembel (Geel)2 43 GnDegussa (Antwerp)2 43 GnEsso (Antwerp)2 38.8 Gn, GrFluxys (Zeebrugge)2 40 GnLangerbrugge 59 L, GnMonsanto (Antwerp)2 43 GnOudegem Papier2 14.5 GnPhenolchemie (Beveren)2 22.8 GnSAPPI (Lanaken)2 43 GnSolvay (Jemeppe-sur-Sambre)2 94 GnTotal Raffinaderij Antwerpen2 154 Gn, Gr
Gas engine with heat generation3 86.7 Gn, Bm
Conventional thermal generation 3 963.5Conventional thermal 2 613
Amercoeur 256 S, L, Gn, GcAwirs 416 S, L, GnKallo 522 L, GnMol 255 S, L, Gn, BmMonceau 92 S, L, Gn, GfRodenhuize 526 S, L, Gf, BmRuien 546 S, L, Gn, Bm
Conventional thermal with repowering 935
Langerlo 602 S, L, Gn, BmRuien 333 S, L, Gn, Bm
Gas turbine 108Drogenbos 78 GnMol 30 L, Gn
Turbojet 228Aalter 18 LBeerse 32 LBuda 18 LCierreux 17 LDeux-Acren 18 LIxelles 18 LNoordschote 18 LSchaerbeek 18 LTuron 17 LZedelgem 18 LZeebrugge 18 LZelzate 18 L
Energy recovery 79.5Indaver (Beveren) 20ISVAG (Wilrijk) 10.5IVBO (Bruges)4 4Schaerbeek 45
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PROFILE OF POWER STATIONS – situation on 31.12.2004 – in MW
Unit/Power station Net generating Usable capacity fuels
POLAND 1 654
Conventional thermal generation 1 654Conventional thermal 1 654
Polaniec 1 654 S, L, Bm
HUNGARY 2 068.3
Combined cycle gas turbine 236.4Dunamenti 236.4 Gn
Combined heat and power 143.5Gas turbine with heat generation 143.5
Dunamenti 143.5 Gn
Conventional thermal generation 1 688.4Conventional thermal 1 688.4
Dunamenti 1 688.4 Gn, L
TOTAL NET GENERATING CAPACITY 28 192.5
Comments
In Belgium, at the beginning of 2005, Electrabel put 780 MW of virtual powerplant capacity at the disposal of third parties.
In Belgium, Electrabel has power stations with heat generation in Aalst andZwevegem (Bekaert).
1 Convention with VPK2 Industrial partnership3 ± 40 sites4 Convention with IVBO5 Convention with the MET6 Ownership Orval7 Joint venture with Air Energy8 Commercialisation of generation9 Convention with EDF10 Operated by AceaElectrabel11 Ownership Tirreno Power (50 % ElectrabelAcea)12 Convention with Saar Energie13 Supply of heat to the Saarbrücken region
Usable fuels
Bm = biomassGc = gas from cokeriesGf = gas from blast furnacesGn = natural gasGr = refinery gasL = liquid fuelS = solid fuels (coal)
Unit/Power station Net generating Usable capacity fuels
LUXEMBOURG 376.4
Combined cycle gas turbine 376.4Esch-sur-Alzette 376.4 Gn
FRANCE 4 817.6
Nuclear generation 1 107.6 Nuclear fuelChooz B9 650Tricastin 457.6
Hydroelectric 3 710Hydroelectric power station 3 710
CNR (19 stations) 2 937SHEM (49 stations) 773
ITALY 1 261.2
Combined cycle gas turbine 120Tor di Valle10 120 Gn
Combined heat and power 369Steam and gas turbine with heat generation 346
Rosen (Rosignano) 346 GnGas turbine with heat generation 23
Tor di Valle10 23 Gn
Conventional thermal generation 643.5Conventional thermal 562.5
Napoli Levante11 115 S, Gn, LTorrevaldaliga11 152.5 Gn, LVado Ligure11 295 S, L
Gas turbine 81Montemartini10 81 L
Hydroelectric 128.7Hydroelectric power station 128.7
AceaElectrabel (7 stations)10 97.3Tirreno Power (17 stations)11 31.5
PORTUGAL 73.8
Hydroelectric 33.2Hydroelectric power station 33.2
Generg (9 stations) 33.2
Wind farm 40.6Carreco-Outeiro (Generg) 20.7Chaminé (Generg) 6.9Vergao (Generg) 13
GERMANY 254.5
Combined heat and power 74Steam and gas turbine with heat generation 74
Gera 74 Gn, L
Conventional thermal generation 180.5Conventional thermal 180.5
Fenne12, 13 112 SRömerbrücke (Saarbrücken)13 68.5 S, Gn, L
094
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Persuing sustainable growth in line with
strict profitability criteria.
Consolidated annual accounts
Consolidated organisation chart p. 096
Balance sheet p. 098
Income statement p. 100
Appropriation account p. 102
Cash flow statement p. 102
Additional information p. 103
Notes to the accounts p. 111
Report of the College of statutory auditors p. 132
Annual accounts Electrabel S.A. p. 133
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Consolidated organisation chart of the Electrabel group – situation on 31.12.2004
097
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Balance sheet – e thousand
ASSETS 2004 2003
FIXED ASSETS 12 118 550 12 288 526
Formation expenses 3 956 10 359
Goodwill 1 382 875 1 474 411
Intangible assets 132 101 79 111
Tangible assets 4 766 708 4 666 102
Land and buildings 437 374 481 868
Technical plants and machinery 3 567 183 3 663 182
Furnitures, vehicles and equipments 22 062 48 273
Lease and other similar rights 39 493 42 984
Other tangible assets 5 466 4 184
Assets under construction and advance payments 695 130 425 611
Financial assets 5 832 910 6 058 543
Enterprises consolidated by the equity method 5 034 085 4 868 481
Participating interests 3 361 848 3 736 218
Amounts receivable 1 672 237 1 132 263
Other enterprises 798 825 1 190 062
Participating interests, holdings and shares 268 577 245 793
Amounts receivable 530 248 944 269
CURRENT ASSETS 10 376 116 10 951 143
Amounts receivable after more than one year 385 822 471 254
Trade debtors 19 251 16 899
Other amounts receivable 366 571 454 355
Stocks and contracts in progress 547 708 576 097
Stocks 545 095 530 234
Supplies 298 452 263 208
Work in progress 242 677 256 681
Finished products 23 37
Goods 1 288 7 891
Advance payments 2 655 2 417
Contracts in progress 2 613 45 863
Amounts receivable within one year 3 233 605 3 046 260
Trade receivable 2 484 693 2 244 459
Others amounts receivable 748 912 801 801
Short-term investments 4 484 206 5 219 213
Other investments 4 484 206 5 219 213
Cash and cash equivalents 231 441 177 071
Prepayments and accrued income 1 493 334 1 461 248
TOTAL ASSETS 22 494 666 23 239 669
EQUITY AND LIABILITIES 2004 2003
CAPITAL AND RESERVES 5 281 822 5 179 427
Capital 2 072 722 2 066 719
Issued share capital 2 072 722 2 066 719
Share premiums 927 566 905 009
Revaluation reserves 709 877 743 090
Reserves 1 341 123 1 263 671
Goodwill 257 461 264 035
Translation differences -27 077 -63 254
Investment grants 150 157
MINORITY INTERESTS 1 506 978 1 845 583
PROVISIONS AND DEFERRED TAXES 5 951 731 5 578 840
Provisions for liabilities and charges 5 844 448 5 516 646
Pensions and similar commitments 868 451 1 020 602
Major repairs and maintenance 359 566 383 659
Other liabilities and charges 4 616 431 4 112 385
Deferred taxes 107 283 62 194
AMOUNTS PAYABLE 9 754 135 10 635 819
Amounts payable after more than one year 1 547 489 1 293 048
Financial debts 1 446 056 1 206 155
Subordinated debentures 0 0
Unsubordinated debentures 25 789 24 789
Leasing and similar obligations 35 442 36 685
Credit institutions 1 300 245 1 140 062
Other loans 84 580 4 619
Other amounts payable 101 433 86 893
Amounts payable within one year 6 559 013 7 660 519
Current portion of amounts payable after more than one year 124 036 857 563
Financial debts 1 152 761 1 909 322
Credit institutions 919 006 464 978
Other loans 233 755 1 444 344
Trade payable 2 197 037 2 155 951
Suppliers 2 197 037 2 155 951
Advances received on contracts in progress 1 304 336 1 316 042
Taxes, payroll and social security 333 399 340 142
Taxes 130 455 162 795
Payroll and social security 202 944 177 347
Other amounts payable 1 447 444 1 081 499
Accruals and deferred income 1 647 633 1 682 252
TOTAL EQUITY AND LIABILITIES 22 494 666 23 239 669
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Income statement – e thousand
2004 2003
OPERATING RESULT 913 832 587 978
Operating income 12 457 575 10 987 708
Turnover 12 147 701 10 845 112
Variation in stocks of finished goods, work and contracts in progress -56 357 10 783
Fixed assets – own construction 139 243 21 740
Other operating income 226 988 110 073
Operating charges 11 543 743 10 399 730
Supplies and goods 7 547 106 6 327 936
Purchases 7 575 203 6 312 698
Variation in stocks -28 097 15 238
Services and other goods 1 704 323 1 588 080
Payroll, social security costs and pensions 1 394 594 1 426 333
Depreciation and amounts written off formation expenses, tangible assets and intangible assets 434 023 444 134
Amounts written off stocks, contracts in progress and trade receivable 86 964 20 689
Provisions for liabilities and charges 198 968 423 655
Other operating charges 177 765 168 903
FINANCIAL RESULT 421 286 571 620
Financial income 685 694 773 596
Income from financial assets 502 439 574 526
Of fully consolidated companies 161 936 129 495
Share in the result of intermunicipal companies 340 503 445 031
Income from current assets 125 046 113 329
Other financial income 58 209 85 741
Financial charges 264 408 201 976
Debt charges 162 081 161 563
Write-downs on current assets other than those under operating result -66 66
Other financial charges 102 393 40 347
PRE-TAX OPERATING RESULT OF THE CONSOLIDATED ENTERPRISES AND SHARE IN THAT OF THE INTERMUNICIPAL COMPANIES 1 335 118 1 159 598
Share of pre-tax operating result from equity method companies other than intermunicipal companies 108 323 108 568
PRE-TAX OPERATING RESULT OF THE GROUP 1 443 441 1 268 166
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2004 2003
EXCEPTIONAL PRE-TAX RESULT OF THE GROUP -77 752 146 925
Exceptional income 743 362 194 067
Release of depreciation and amounts written off intangible and tangible assets 2 959 2 823
Release of amounts written off financial assets 32 939 48 326
Release of provisions for exceptional liabilities and charges 339 267 55 393
Gains on disposal of fixed assets 135 014 81 250
Other exceptional income 233 183 6 275
Exceptional charges 664 399 76 122
Exceptional depreciation and amounts written off formation expenses, intangible assets and tangible assets 1 343 353
Amounts written off financial assets 3 981 0
Provisions for exceptional liabilities and charges 405 794 52 228
Loss on disposal of fixed assets 19 912 2 292
Other exceptional charges 233 369 21 249
Share of exceptional result from equity method companies -156 715 28 980
PRE-TAX PROFIT FOR THE YEAR OF THE FULLY CONSOLIDATEDENTERPRISES AND OF ENTERPRISES CONSOLIDATEDBY THE EQUITY METHOD 1 365 689 1 415 091
Taxes on profit 306 766 290 461
Taxes 325 046 315 392
Taxes on the profit of fully consolidated enterprises and intermunicipal companies 316 804 275 258
Share of taxes in enterprises consolidated by the equity method, except intermunicipal companies 8 242 40 134
Adjustment of taxes and release of tax provisions -18 280 -24 931
CONSOLIDATED PROFIT FOR THE YEAR 1 058 923 1 124 630Minority interests share in the profit for the year 114 163 117 409
Group share in the profit for the year 944 760 1 007 221
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Appropriation account – e thousand
2004 2003
PROFIT FOR THE YEAR 1 058 923 1 124 630
Group profit 944 760 1 007 221
Minority interests 114 163 117 409
TRANSFER TO RESERVES 77 452 184 451
PROFIT TO BE DISTRIBUTED BY ELECTRABEL 867 308 822 770
Dividends 864 880 820 458
Directors' fees 2 428 2 312
PROFIT ALLOCATION TO MINORITY INTERESTS 114 163 117 409
Cash flow statement – e million
2004 2003
OPERATIONS (I) 497 1 064
Cash flow 1 760 1 856
Change in working capital requirements -310 111
Dividends and directors’ fees -953 -903
INVESTMENTS (II) 252 -873
Investments
Formation expenses and intangible assets -19 -30
Tangible assets -470 -446
Financial assets – Participating interests -53 -831
Financial assets – Amounts receivable -31 0
Disinvestments
Tangible assets 133 46
Financial assets – Participating interests 188 220
Financial assets – Amounts receivable 429 101
Change in receivables after one year 75 67
FINANCING (III) -774 -424
Capital variation -296 -50
New loans and repayments of loans -478 -374
VARIATION IN PERIMETER, TRANSLATION DIFFERENCES AND OTHER MOVEMENTS (IV) 101 46
CASH FLOW VARIATION (I + II + III + IV) 76 -187
Change in treasury investments and liquid assets -681 1 584
Change in short-term financial debts 757 -1 771
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Additional information – e million
ASSETS
Formation expenses
This entry consists primarily of the sum remaining to be written off from loan issue expenses.
Goodwill
Goodwill corresponds to the difference between the price paid at the time of acquisition of shareholdings in
consolidated subsidiaries and the revalued net assets of these companies.
e million Gross value Accumulated Net book depreciation value
Joint Venture AceaElectrabel 50 -5 45
Cosutrel 185 -92 93
Compagnie Nationale du Rhône 104 -6 98
Dunamenti 72 -63 9
Electrabel Nederland N.V. 1 395 -398 997
Energie SaarLorLux 11 -2 9
Gera 19 -6 13
Rosignano 81 -38 43
Tirreno Power 65 -6 59
Other 50 -33 17
TOTAL 2 032 -649 1 383
This entry has changed since 31 December 2003 as follows:
e million
Newly consolidated companies (notably Bel Engineering, Electrabel Green Projects Flanders, Electrabel Green Projects Flanders WHH) +5
Additional share purchases (Compagnie Nationale du Rhône, Synatom) +10
Additional acquisition price (AceaElectrabel) +11
Definitive appropriation to assets and liabilities of companies acquired in 2003 (Polaniec, Tirreno Power) -57
Depreciation expense -60
TOTAL -91
Intangible assets
Intangible assets include the development of IT systems depreciated over five years, the net value of AceaElectrabel
Elettricità's customer goodwill (e 45 million) depreciated over 18 years and the value of 'green certificates'
purchased or received by companies in the Group (e 48 million) as part of measures to support the production of
renewable energy but not yet registered with the authorities at the end of 2004.
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Tangible assets
The increase in the net value of tangible assets in 2004 (e 101 million) is due to the following factors:
e million
Changes in perimeter 19
Investments 470
Current depreciation during the financial year -350
Write-back of exceptional depreciation during the financial year 2
Disposals and decommissionings -94
Translation differences 54
TOTAL +101
The changes in the perimeter of consolidation are due to:
- the adjustment in value of the Polaniec and Tirreno Power power stations as part of the allocation of acquisition
goodwill (e 23 million),
- the sale of Aquinter (e -14 million),
- the entry of Electrabel Green Projects Flanders and Roselectra into the scope of consolidation (e 10 million).
Investments primarily involve power stations in Benelux and elsewhere in Europe and may be summarised as follows:
e million
Investments in the Benelux 218
Investments in Europe outside Benelux 252
Germany 14
Spain (construction of Castelnou CCGT plant) 45
Hungary 13
Italy (construction of power stations in Voghera and Rosignano and repowering of Tirreno Power units) 166
Poland 14
TOTAL 470
Financial assets: participating interests in companies consolidated by the equity method
This heading covers Electrabel's share in the equity of companies consolidated by the equity method. This involves the
following companies:
e million 2004 2003
Belgelec Finance 102 61
Compagnie Nationale du Rhône 352 327
Generg 11 11
Gera 28 27
Elia group 696 752
Mixed intermunicipal companies 2 167 2 555
Other 6 3
TOTAL 3 362 3 736
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104
Changes in this item result on the one hand from the acquisition or disposal of shares and on the other hand from
changes in the equity of the companies concerned. The level of equity evolves according to the result for the
period and decreases by the amount of dividends paid out.
Financial assets: receivables on companies consolidated by the equity method
This entry covers a loan of e 1 124 million granted to Elia System Operator. The figure is primarily constituted
of long term advances to intermunicipal distribution companies.
Financial assets: participating interests, holdings and shares in other companies
This section covers non-consolidated participating interests and comprises the following assets:
e million Location 2004 2003
Acea S.p.A. Italy 30 27
Cegedel Luxembourg 27 27
Electrabel Green Projects Flanders Belgium - 4
Eurodif France 17 17
Indaver Belgium 31 31
ScottishPower UK 18 18
Union Fenosa Spain 106 90
Other - 40 32
TOTAL 269 246
The main variations in this item relates to a write-back of amounts written off for the Union Fenosa securities
(e 16 million). Electrabel Green Projects Flanders entered into the consolidation scope in 2004.
Amounts receivables after more than one year
This heading primarily covers the deferred tax assets calculated principally on the Group's commitments as
regards pensions and similar benefits (e 310 million on 31 December 2004 compared with e 322 million on
31 December 2003).
Stocks and contracts in progress
Stocks are divided up as follows:
e million 2004 2003
Stock of fissile materials and associated contracts in progress (including assembly costs) 243 257
Fuel stocks for conventional power stations (fuel oil and coal) 141 120
Spare parts and materials 87 73
Contracts in progress, advance payments and other goods 77 126
TOTAL 548 576
Amounts receivable within one year
In addition to the Group's trade debtors, this heading also covers, in particular, the companies' tax balance and the
VAT to be reclaimed by Electrabel S.A. (e 350 million on 31 December 2004 against e 249 million on 31 December
2003) and current accounts receivable from Belgian intermunicipal companies (e 59 million on 31 December 2004
against e 277 million on 31 December 2003).
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Short term investments
The reduction of e 735 million under this heading is primarily due to:
- the sale of almost all the Group's securities held in Total (e -383 million) in the first half of 2004. These securities, sold
to repay the convertible loan granted by Belgelec Finance in 1999, were monetized in 2003 at a value of e 493 million.
- a e 741 million reduction in term deposits, offset by an increase of e 441 million in the total amount invested in
mutual funds and fixed income securities ('commercial paper') held by the Group.
Prepayments and accruals
This entry is accounted for mainly by the energy that has been supplied to clients but not yet invoiced.
Clients' energy consumption is read once a year (e 1 331 million on 31 December 2004 against e 1 225 million on
31 December 2003). The energy supplied between meter readings is paid for by advanced payments requested from
clients (cfr. the amounts payable within one year in the liability section of the balance sheet).
LIABILITIES
Share capital and reserves: Electrabel share
The Group's equity increased by e 103 million from e 5 179 million at the end of 2003 to e 5 282 million in
December 2004. This increase is due to:
e million
The increase in capital and issue premiums +29
The decrease in revaluation surpluses -33
The variation in translation differences (forint and zloty) +36
The variation in consolidation differences for the intermunicipal companies -7
Electrabel's share in the consolidated result in 2004 +945
The proposed dividends and directors' share of profits to be paid for 2004 -867
TOTAL +103
Minority interests
The minority interests are mainly those of SUEZ-Tractebel in Cosutrel (e 1 417 million) and those of Hungarian
company MVM in Dunamenti (e 70 million).
The reduction in this entry (e -339 million) is primarily due to a reduction in Cosutrel's capital and the dividends
paid to minorities in 2004.
Provisions for liabilities and charges
Provisions for liabilities and charges primarily include:
e million 2004 2003
The dismantling of facilities 1 692 1 184
The back-end of the nuclear fuel cycle 2 655 2 606
Restructuring costs 101 146
Amounts payable after more than one year
The amounts payable after more than one year increased by e 254 million due to the use of new long term lines
of credit.
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Current portion of amounts payable after more than one year
The amounts payable after more than one year falling due during the year decreased by e 734 million primarily
due to the repayment of a e 614 million loan borrowed from Belgelec Finance (convertible loan in Total securities).
Amounts payable within one year
Amounts payable in the short-term consist of short-term advances and 'commercial paper' issued.
Advance payments of contracts
This heading primarily covers advance payments for energy supplied to customers whose meters are read once a year.
Other amounts payable
These amounts consist primarily of the dividends and directors' share of profits to be paid during the financial year,
i.e. e 867 million against e 823 million at the end of 2003, and the commitments related to the registration of
‘green certificates’ (e 116 million) as part of measures to support generation of renewable energy.
Accruals and deferred income
Since 2002, this heading has included compensation for the revaluation of the transmission network following the
restructuring and refinancing of these activities (e 1 089 million). This figure will be carried over into the results as
and when the shares in Elia System Operator held by the Group are sold.
The accruals and deferred income of liabilities also include income to be transferred as received following ‘cross
border lease’ operations for power stations, i.e. a total sum of e 130 million at the end of 2004.
INCOME STATEMENT
Own construction booked as fixed assets
This heading covers the exchange value of 'green certificates' acquired in 2004 due to the production of electricity
using renewable energy sources (e 93 million).
Other operating income
This heading covers the current surpluses on disposals of tangible assets, compensation from insurance companies,
rental income, recovery of expenses and various compensations received.
The increase in this heading is due in particular to an increase in surpluses on disposal of facilities and material and
reimbursement of costs borne by Tirreno Power following the requirement imposed by the Italian government on
producers of electricity to install power stations under conditions that do not meet usual profitability criteria
('stranded costs').
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Purchases
This entry primarily covers:
e million 2004 2003
Purchases of fossil fuels (oil, coal, gas) and nuclear fuels 2 272 2 055
Purchases of electricity 1 877 1 361
Purchases of gas for public distribution 1 090 1 107
Electricity transmission costs and transport costs for gas and other fuels 2 036 1 516
The change in electricity purchases is primarily due to the increase in wholesale purchases. Full liberalisation of the
market in Flanders since 1 July 2003 explains the development of gas and electricity transmission costs resulting from
the intermunicipal distribution companies consolidated by the equity method.
Services and other goods
The main items included under this heading are:
e million 2004 2003
Rent and rental charges 68 78
Works in respect of fixed assets 784 698
Payments to third parties (for consulting work, fees, etc.) 389 403
Fees paid (to public authorities, network operators, Ondraf/Niras, etc.) 186 195
Insurance premiums 51 49
Salaries, social security contributions and pensions
Salaries, social security contributions and pensions decreased by e 32 million.
The average number of employees in the Group – in full-time equivalents, on active service and non-active service –
fell from 17 360 in 2003 to 16 585 in 2004. This decrease primarily concerns Benelux and Poland.
The reduction in personnel costs and number of employees is primarily due to restructuring plans implemented in
these countries.
Depreciation and write-downs on formation expenses, intangible and tangible fixed assets
This entry covers the amounts for depreciation over the year on:
e million 2004 2003
Formation expenses 6 6
Goodwill 60 60
Intangible assets 18 18
Tangible fixed assets 350 360
Nuclear generation 28 18
Conventional generation and cogeneration 257 268
Transmission and distribution networks 22 35
Other facilities 43 39
TOTAL 434 444
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Provisions for liabilities and charges
The decrease in net values for provisions for liabilities and charges primarily concerns provisions for pensions and
similar commitments, dismantling and treatment of generation facilities and back-end of the nuclear fuel cycle.
Other operating charges
This heading primarily covers taxes related to the ownership or use of power stations and networks (withholding
tax on income from property, discharge of water used by power stations, ionising radiation, motive force, etc.).
Income from financial fixed assets
This heading covers the Group's share in the current result before tax for intermunicipal companies consolidated by
the equity method (e 341 million in 2004 against e 445 million in 2003).
Income from current assets
Income from current assets includes interest on cash or short term deposits and from the current accounts of the
mixed intermunicipal companies.
Extraordinary result
The main components in the extraordinary result are summarized below:
e million 2004 2003
Adjustment of the balance for provisions for dismantling and management of irradiated fuels in nuclear power stations -233 0
Surpluses and losses on disposals of shareholdings (mainly Total in 2004 and Iberdrola in 2003) 133 79
Write-back of amounts written off on shareholdings (Union Fenosa in 2004 and 2003, Telenet in 2003) 15 75
Other 7 -7
TOTAL -78 147
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CASH FLOW STATEMENT
Cash flow
Cash flow may be reconciled with the result by removing from the result the items that did not lead to either a
disbursement or a receipt of cash.
e million 2004 2003
Result after tax 1 059 1 125
Depreciation of formation expenses and intangible fixed assets* 24 24
Depreciation of goodwill 60 60
Depreciation of tangible fixed assets* 348 360
Changes to provisions (including financial provisions) 332 423
Deferred taxes 27 -25
Other non-disbursed elements** 62 -21
Incorporation in disinvestments, expressed in sales prices, of capital gains and losses realised on fixed assets -152 -90
Cash flow after tax 1 760 1 856
* Including extraordinary depreciations. ** In particular the replacement of the share in the result of the intermunicipal companies by dividends actually received by the Group, together
with write offs on financial participations, accounts receivable and inventories.
Dividends and directors' share of profits
Dividends and the directors' fees include the sums distributed by Electrabel S.A. and the dividends paid outside the
Group by fully consolidated companies (primarily by Cosutrel to SUEZ-Tractebel).
Variations in capital
The amount appearing under this heading includes the Electrabel S.A. capital increase subscribed by members
of personnel, together with the minority interests’ share in increases and decreases in capital carried out by
companies that are fully consolidated but that are less than 100 % owned by the Group.
Changes in perimeter, translation differences and other movements
In 2004, this entry primarily covers the surplus on Total securities (e 120 million), these having been previously
registered in the short term investments.
In 2003, this entry primarily covers the impact on the cash flow of including Polaniec and Tirreno Power in the
consolidation scope (e 56 million) and the changes in the exchange rate on Hungarian, Norwegian and Polish
cash flow (e -23 million).
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Notes to the accounts – e thousand
CONSOLIDATION METHODS
Full consolidation
The basic principle is that the subsidiary's entire balance sheet and income statement are added on an item-
by-item basis to those of the parent company, eliminating intra-group transactions and balances. Minority
interests in the consolidated assets, liabilities and income are accounted for in separate items in both the balance
sheet and income statement. This method is applied to the accounts of subsidiaries controlled de facto or the jure
by Electrabel (see hereafter ‘Scope of consolidation’).
Proportional consolidation
The group share in any of the subsidiary's balance sheet and income statement items are combined on a line-
by-line basis with like items in the parent's balance sheet and income statement, after eliminating intra-group
transactions and balances. Accordingly, minority interests are reflected neither in the balance sheet nor in the
income statement. This method is used where joint control is exercised with third parties.
Equity method
Where the parent company's investment in a company gives it significant influence but no power of control in the
strict sense, the value of the investment in the parent's balance sheet is substituted by the share that investment
represents in the equity of the investee. The difference, normally a net surplus, is included in consolidated Group
equity. At the same time, the parent company's dividend income disclosed in the income statement is substituted
by its share in the results of the entity carried at equity. This share is stated globally and not itemized. Other
balance sheet and income statement items are not affected, because there is no elimination of intra-Group
transactions and balances.
In the Electrabel group, this method is mainly applied to the mixed intermunicipal companies with which Electrabel is
associated due to the fact that, under the relevant legislation on intermunicipal companies (intermunicipal Companies
Act of 22 December 1986, Walloon Region Decree of 5 December 1996 and Flemish Region Decree of 6 July 2001)
it holds no majority in their governing bodies despite owning more than 50 % of the capital in many cases.
Since the intermunicipal companies carry out a range of different activities, each governed by their own financing
and profit/loss appropriation rules, the equity method is applied separately to each activity (electricity, natural gas,
cable TV) as if each were a separate company.
TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN COMPANIESThe balance sheets of foreign companies have been converted into euros at the official rate at the end of the
accounting period, while the profit and loss accounts have been converted at the average rate for the period.
The Group’s share in the differences resulting from this translation method is booked under ‘Translation differences’
in the consolidated capital and reserves.
CLOSING DATEThe consolidated accounts are closed at 31 December, the closing date for the parent company and the great
majority of the consolidated companies. When the closing date of a company falls between 30 September and
31 December, its annual accounts are taken into consideration as per this date, in accordance with the relevant
legislation. If the closing date is before 30 September, interim accounts as per 31 December are drawn up for the
purposes of consolidation.
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SCOPE OF CONSOLIDATIONThe consolidation scope comprises the companies over which Electrabel has full control, de facto or de jure, either
directly or indirectly, enabling it to exercise decisive influence over the appointment of the majority of directors or
managers, or over the management policy of these companies. These subsidiaries are fully consolidated. The scope
of consolidation also includes companies in which Electrabel directly or indirectly exercises joint control with other
partners. These joint subsidiaries are consolidated using the proportional method.
Companies in which Electrabel exercises a significant influence but not control are carried at equity. Some companies
in which Electrabel holds more than 20 % of the capital are excluded from consolidation either because they have
negligible shareholders’ equity or their results are not significant. Including them in the consolidated financial state-
ments would add no material information to a true and fair view of the Group's financial position.
CHANGES IN THE CONSOLIDATION SCOPEReaders are referred to the Directors’ Report for significant changes in the consolidation scope.
FULLY CONSOLIDATED SUBSIDIARIES
Name Head Office VAT N° Control % Interest %
Belgium
Cosutrel S.C. (division A)* Brussels BE 442.100.363 53.05 53.05
Cosutrel S.C. (division E)* Brussels BE 442.100.363 100.00 100.00
Electrabel Customer Solutions S.A. Brussels BE 476.306.127 95.80 95.80
Electrabel Green Projects Flanders C.V.B.A. Brussels BE 465.399.763 63.99 63.99
Electrabel Green Projects Flanders WHH C.V.B.A. Brussels BE 862.382.557 63.98 63.98
Electrabel Netten Vlaanderen N.V. Merelbeke BE 477.445.084 100.00 100.00
Laborelec C.V. Linkebeek BE 400.902.582 100.00 100.00
N-Allo C.V.B.A. Brussels BE 466.200.311 99.91 99.91
Synatom S.A. Brussels BE 406.820.671 100.00 100.00
Teveo N.V. Ostend BE 406.933.410 99.97 99.97
Germany
Electrabel Deutschland AG Berlin DE 202.634.064 100.00 100.00
Energie SaarLorLux AG Saarbrücken DE 204.366.919 51.00 51.00
Spain
Castelnou Energia S.L. Madrid ES B 82.459.702 100.00 100.00
Electrabel España S.A. Madrid ES A 82.508.441 100.00 100.00
Hidrobages S.A. Madrid ES A 08.762.395 100.00 100.00
France
Electrabel France S.A. Lyon FR 444.256.986 100.00 100.00
The Grand Duchy of Luxembourg
Electrabel Invest Luxembourg S.A.** Luxembourg - 100.00 100.00
Twinerg S.A. Esch-sur-Alzette LU 175.44.021 65.00 65.00
* Ex-Cocetrel ** Ex-Electrabel Finance S.A.
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Name Head Office VAT N° Control % Interest %
Hungary
Dunamenti Rt. Százhalombatta - 74.82 74.82
Electrabel Hungary Kft. Százhalombatta - 100.00 100.00
Italy
Electrabel Italia S.p.A. Rome IT 06.289.781.004 100.00 100.00
Roselectra S.p.A. Rosignano IT 01.388.480.491 99.50 99.50
Rosignano Energia S.p.A. (‘Rosen’) Rosignano IT 01.079.020.499 99.50 99.50
Voghera Energia S.r.l. Voghera IT 01.889.170.187 80.00 80.00
Norway
Electrabel Nordic A.S. Oslo NO 874.281.182 100.00 100.00
The Netherlands
Casmo Power Spain B.V. Amsterdam - 100.00 100.00
Electrabel International Holding B.V. Amsterdam NL 809.759.500.B01 100.00 100.00
Electrabel Nederland Beheersmaatschappij B.V. Zwolle - 100.00 100.00
Electrabel Nederland Coöperatieve U.A. Zwolle - 100.00 100.00
Electrabel Nederland Holding B.V. Zwolle NL 808.013.269.B01 100.00 100.00
Electrabel Nederland N.V. Zwolle NL 807.342.051.B01 100.00 100.00
Spark Energy N.V. Zwolle NL 808.521.482.B01 100.00 100.00
Poland
Electrabel Polska Sp. z o.o. Katowice PL 866.15.32.643 100.00 100.00
Elektrownia im. Tadeusza Kósciuszki Spólka Akcyjna w Polancu Polaniec PL 867.00.01.429 100.00 100.00
Elpoautomatyka Polaniec PL 866.16.01.433 100.00 100.00
Elpobud Polaniec PL 866.16.01.456 100.00 100.00
Elpoeko Polaniec Polaniec PL 629.21.76.802 100.00 100.00
Elpoinformatyka Polaniec PL 866.16.04.348 100.00 100.00
Elpolab Polaniec PL 866.16.01.427 100.00 100.00
Elpologistyka Polaniec PL 866.16.01.462 100.00 100.00
Elporem Polaniec PL 866.16.01.479 100.00 100.00
Elpoterm Polaniec PL 866.16.01.410 100.00 100.00
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MAIN COMPANIES NOT FULLY CONSOLIDATED
Name Head Office VAT N° Control % Reason for exclusion
Belgium
Westenwind C.V.B.A. Ghent BE 460.106.830 80.00 1
Spain
Caelgese S.A. Torrelavega ES 83.081.950 65.00 2
Electrabel Power Project Spain S.L. Madrid ES B 82.672.510 100.00 1
Morata Madrid ES B 82.709.700 100.00 1
United States of America
Casmo Power L.L.C. Wilmington - US 76-0700948 100.00 1Delaware
The Netherlands
Electrabel Nederland Sales B.V. Zwolle NL 809.502.318.B01 100.00 1
EPON International B.V. Zwolle NL 807.342.051.B03 100.00 1
EPON Power Engineering B.V. Zwolle NL 807.342.051.B02 100.00 1
EPON O & M Services B.V. Zwolle NL 807.342.051.B04 100.00 1
Italy
Piemonte Energia S.r.l. Rome IT 12.835.310.157 100.00 2
Pontinia Power S.r.l. Rome IT 08.187.800.589 100.00 2
Poland
Centrum Ratownictwa i Ochrony Straz Pozarna Polaniec PL 866.16.01.172 100.00 1
Reason for exclusion
1 Altogether, these holdings are of negligible importance at the closing date of the financial year. Their inclusion
would be of no interest from the point of view of the consolidated property appreciation, the consolidated financial
situation or the consolidated result.
2 These holdings have as their object to study, to build and operate power stations at various sites in Italy and
Spain. Since these power stations are still at the planning stage, they will not be consolidated until significant
investments have been committed.
PROPORTIONALLY CONSOLIDATED COMPANIES
Name Head Office VAT N° Control % Interest %
Belgium
Zandvliet Power N.V. Antwerp BE 477.543.470 50.00 50.00
Italy
AceaElectrabel S.p.A. Rome IT 05.863.631.007 40.59 40.59
AceaElectrabel Elettricità S.p.A. Rome IT 07.305.361.003 40.59 40.59
AceaElectrabel Energia S.p.A. Altino IT 07.284.941.006 40.59 40.59
AceaElectrabel Produzione S.p.A. Altino IT 02.019.870.696 70.30 70.30
AceaElectrabel Trading S.p.A. Rome IT 02.018.600.698 50.00 50.00
ElectrabelAcea S.p.A. Rome IT 07.242.791.007 70.00 70.00
Tirreno Power S.p.A. Rome IT 05.848.381.009 35.00 35.00
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COMPANIES CONSOLIDATED BY THE EQUITY METHOD
A. Belgium – distribution intermunicipal companies
Name Head Office VAT N° Interest % in these activities
Electricity Gas TV
Gaselwest C.V.B.A. Roeselare BE 215.266.160 62.76 68.11 23.90
Ideg S.C.R.L. Namur BE 201.400.308 48.01 99.65
I.E.H.-I - S.C.R.L. Charleroi BE 223.414.061 34.29
I.E.H.-II - S.C.R.L. Charleroi BE 223.414.061 30.15
I.G.A.O. C.V.B.A. Antwerp BE 204.889.734 52.55
Igeho S.C.R.L. Tournai BE 202.500.366 99.15
I.G.H.-I - S.C.R.L. Charleroi BE 228.524.872 34.98
I.G.H.-II - S.C.R.L. Charleroi BE 228.524.872 36.33
Imea C.V.B.A. Antwerp BE 204.647.234 51.25 25.67
Imewo C.V.B.A. Eeklo BE 215.362.368 66.15 69.40
Inatel S.C.R.L. Fosses-La-Ville BE 213.329.625 59.96
Interest S.C.R.L. Eupen BE 205.843.502 65.55 50.00
Intergem C.V.B.A. Dendermonde BE 220.764.971 52.31 61.80 20.18
Interlux S.C.R.L. Arlon BE 204.360.687 52.10 99.99
Intermosane S.C.R.L. Liège BE 204.260.125 57.53 85.14 50.00
Interteve C.V.B.A. Lier BE 213.011.505 23.48
Iveka Kempen C.V.B.A. Malle BE 222.030.426 40.00 50.14 20.76
Iveka Nete Lier C.V.B.A. Malle BE 222.030.426 40.00 50.00
Iverlek I - C.V.B.A. Leuven BE 222.343.301 50.01 61.12 24.29
Iverlek II - C.V.B.A. Leuven BE 222.343.301 50.00 58.07 21.17
Iverlek III - C.V.B.A. Leuven BE 222.343.301 73.03
Sedilec S.C.R.L. Louvain-La-Neuve BE 222.548.583 31.62 36.11
Seditel S.C.R.L. Louvain-La-Neuve BE 222.592.531 50.00
Sibelga S.C.R.L. Brussels BE 222.869.673 50.00 50.00
Sibelgas C.V.B.A. Brussels BE 229.921.078 50.00 50.00
Simogel S.C.R.L. Mouscron BE 201.258.172 39.10 36.29 53.96
Telekempo C.V.B.A. Ekeren BE 213.011.604 24.47
Telelux S.C.R.L. Marche-en-Famenne BE 212.686.950 0.47
Tevelo C.V.B.A. Beveren BE 213.051.491 24.23
Teveoost N.V. Lokeren BE 212.057.935 27.21
Tevewest N.V. Brugge BE 212.004.089 28.25
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B. Other companies
Name Head Office VAT N° Interest %
Belgium
Belgium Electricity Lines Engineering S.A.* Brussels BE 471.869.861 64.05
Elia Assets S.A. Brussels BE 475.028.202 64.05
Elia System Operator S.A. Brussels BE 476.388.378 64.05
Germany
Energieversorgung Gera G.m.b.H. Gera DE 150.518.454 49.90
Kraftwerke Gera G.m.b.H. Gera DE 158.885.818 49.90
France
Compagnie Nationale du Rhône S.A. Lyon FR 957.520.901 49.95
Énergie du Rhône S.A.S. Lyon FR 435.080.866 69.47
The Grand Duchy of Luxembourg
Belgelec Finance S.A. Luxembourg - 49.30
Italy
AlpEnergie Italia S.p.A. Milan IT 12.603.500.153 50.00
Portugal
Generg S.G.P.S. Lisbon PT 504.680.544 42.50
*Bel Engineering.
MAIN COMPANIES NOT CONSOLIDATED BY THE EQUITY METHOD
Name Head Office VAT N° Interest % Reason for exclusion
Belgium
Belgonucléaire S.A. Brussels BE 403.126.258 33.86 1
Nobema S.A. Brussels BE 419.240.730 33.34 1
Les vents de l’Ornoi S.A. Grand-Leez BE 480.079.823 26.10 1
Les vents de Perwez Wavre BE 866.959.175 24.91 1
Limtra C.V.B.A. Hasselt BE 229.940.775 32.28 2
Inzo N.V. Ostend BE 214.455.221 20.93 1
Recybel S.A. Brussels BE 449.342.996 49.00 1
France
CN’Air Lyon FR 450.809.835 49.95 1
Reason for exclusion
1 Altogether, these holdings are of negligible importance at the closing date of the financial year. Their inclusion
would be of no interest from the point of view of property appreciation, the financial situation or the consoli-
dated result.
2 Electrabel is not in a position to exert a significant influence in this company.
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VALUATION RULES
Formation expenses
Formation expenses are covered in the accounting period in which they arise, with the exception of the following:
- capital increase expenses: straight-line depreciation over a maximum of five years,
- pre-operating expenses: straight-line depreciation over a maximum of five years,
- loan issued fees: straight-line depreciation not exceeding the period of the underlying loan.
Intangible assets
Research and development. Research expenses are covered during the accounting period in which they are
incurred. Development costs of new products or new activities are not capitalised. Investment in computer systems is
recorded in the assets and is depreciated using the straight-line method over a maximum of five years.
Goodwill
Goodwill is the difference between the balance sheet value of the shares held in the subsidiary and the share of
the consolidated investee's equity capital represented by those shares. Goodwill is subdivided into goodwill arising
on initial consolidation and changes within the reporting period.
Initial goodwill is calculated when a company is first entered in the consolidated accounts. Electrabel's first
consolidated balance sheet was drawn up on 31 December 1976. If there is a new entry in the consolidated
accounts, the difference between the acquisition price and the percentage share in the company's shareholder
equity is, to the extent possible, allocated to the assets or liabilities where that difference originated. The
differences that cannot be partially or totally allocated to these headings are recorded under ‘goodwill’ on the
consolidated balance sheet - on the asset side if the acquisition price exceeds the percentage share of the
shareholders' equity, or on the liability side if it falls short of the percentage of the shareholder's equity.
If the goodwill is recorded on the asset side, it is amortised using the straight-line method over a duration that
takes reasonable and prudential account of the economic circumstances and the objectives pursued at the time of
the acquisition, in addition to the characteristics particular to the sectors of activity where the acquired company
operates. The goodwill amortisation period is expected to reflect the estimated time period required for its
recovery. The main factors considered in deciding on the length of this period, which should cover the expected
economic lifespan, are the nature and stability of the markets where the acquired company operates, the positions
it holds on these markets and the strategic importance of the acquisition for the long-term development of the
Group. The amortisation period may be adjusted depending on particular circumstances, such as the duration of
the operating permit or that of the concessions.
Exceptional write-downs of goodwill are carried out when events occurring after the acquisition lead to adverse,
significant and long-lasting changes in the expectations and targets set at the time of the acquisition.
Tangible assets
Acquisition value. Tangible assets are allocated to the assets on the balance sheet either at their acquisition value
or cost price, or at the value at which they were transferred. Heading III under tangible assets includes the value
of the percentage share financed by the Group for the capacity and power of the Chooz B power plant, owned
by EDF. These values are depreciated as if Chooz B were a Group-owned power plant. EDF, as owner, allocates
100 % of the Chooz B investment to its tangible assets.
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Incidental expenses. Expenses incidental to investments are included in the acquisition value of the relevant
tangible assets. They are amortised at the same rate as the installations to which they pertain.
Third-part contributions. Contributions by third parties to the financing of tangible assets are deducted from the
latter's acquisition value. However, they are not deducted from the depreciation base, and no depreciation is entered
if the net book value of the installations, after deduction of contributions, is zero.
Revaluation. The Group’s policy is not to revalue its assets. Revaluation surpluses recognised by the mixed
intermunicipal companies on their own tangible assets up until deregulation of the electricity market are kept under
the Group’s own equity. Depreciations continue to be calculated on the basis of the non-revalued amounts.
Interim interest. Interim interest accruing to capital borrowed in the Group to 31 December 1983 and used to
finance the Group's share of the construction costs of the nuclear power plants Doel 3 and 4, as well as Tihange
2 and 3, until they are put into operation, is recorded in the Group's tangible assets at original cost.
Moreover, the interim interest accruing from borrowed capital for the financing of the construction of production
units outside Belgium was recorded in the Group's tangible assets. The interim interest is depreciated at the same
rate as the facilities to which it refers.
Depreciation. Depreciation is calculated using the straight-line method.
The investments carried out are depreciated only from the moment the facilities are put into operation. The
technical facilities financed by means of leases are depreciated either based on the contract repayment schedule or
on the depreciation rate applied to the category of fixed assets to which they belong.
The main depreciation periods are as follows:
- 20 to 33 years for industrial, administrative and residential buildings,
- 20 to 40 years for generating facilities,
- 25 years for electricity and gas distribution networks and for related technical installations,
- 50 years for civil engineering on hydraulic structures,
- 10 years for cogeneration and energy recovery installations,
- 10 years for remote transmission equipment, fibre optics, fittings and tooling equipment,
- 10 years for power plant control room simulators and containers for fissile materials.
The generating facilities of the acquired companies are depreciated over the remaining lifetime of the units
concerned, as assessed at the time of acquisition.
Financial assets
Stocks, shares and other participating interests. Stocks, shares and other participating interests in non-
consolidated companies are entered on the asset side of the balance sheet at their acquisition cost or contribution
value, net of any incidental expenses and any unpaid amounts.
At the end of each accounting period, each security is evaluated individually in relation to the circumstances,
profitability and future outlook of the company concerned. The evaluation method is chosen objectively, bearing
in mind the nature and characteristics of the security. In most cases, the net asset value is used as a standard, or
the market value if the latter is lower than the net asset value. The evaluation method of a given security is used
systematically from one accounting period to another, unless a change of circumstances warrants the use of a
different method, in which case an annotation to that effect shall be made in the notes to the accounts.
If the evaluation shows a lasting fall in the value of a security in relation to its asset value, the security is written
down by an amount equal to the capital loss. An exceptional write-back of amounts written down may be entered
if a long-term capital gain is recorded on securities previously written down. Apart from these exceptional circum-
stances, the general practice is never to mark up securities, even if capital gains, including long-term capital gains,
are observed during the evaluation of securities.
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Receivables entered as financial assets. Receivables entered in the accounts as financial assets are recorded at
their nominal value. Fixed-interest securities are recorded at their acquisition value. If their repayment at the due
date appears uncertain or doubtful, these debts and securities will be written down proportionately.
Receivables due within one year and after more than one year
Receivables are recorded at their nominal value and may be written down if their partial or full repayment by the
due date appears uncertain or doubtful.
Unpaid receivables from debtors who have petitioned for bankruptcy or made a composition with creditors are
automatically treated as bad debts and immediately written off for their total net value (VAT excluded). Other
receivables may be written off as appropriate in each case.
Stocks
Fuel. Fuel and other raw materials are entered on the asset side at their acquisition price, i.e. the purchase price plus
incidental expenses such as non-recoverable taxes and any transport costs.
Stocks are valued at the end of the accounting period on the basis of the average weighted price calculated per type
of fuel and per power station. Write downs may be entered into the accounts if the market price is lower than the
net book value.
Consumables, supplies and goods. Consumables, supplies and goods are capitalised at their acquisition price,
including any incidental expenses. The corresponding stocks are valued using the average weighted price method.
Consumables and supplies which are obsolete and unusable in the business, or whose estimated realizable value
is lower than their book value, are written down.
Orders in progress. Orders in progress are recorded on the balance sheet's asset side at their cost price.
Prepayments and accruals
Since consumption by household and professional customers is metered only once per year, the quantities of
energy consumed by these customers between the date of the last meter-reading and 31 December are estima-
ted and included in prepayments and accruals on the assets side. These amounts consumed are covered by invoices
for advance payments under 'Payables within one year' on the liabilities side of the balance sheet.
Capital grants
The amount of capital grants is recorded as a liability on the balance sheet, minus transfers to the income state-
ment. These transfers are staggered using the straight-line method over a period of time corresponding to the
depreciation period of the installations having received the grants.
Provisions and deferred taxes
At the end of each accounting period, the Boards of Directors of Group companies, acting in good faith and in a pru-
dential manner, shall decide on the provisions to be made against foreseeable liabilities and possible losses arising in
the current or previous accounting periods.
Provision for pensions and similar commitments. In accordance with the laws and customs of the countries in
which they operate, the Group's companies have a range of obligations to fulfil with regard to pensions, early
retirement schemes, severance pay and welfare plans. These obligations generally apply to all employees and
employee categories of the companies concerned. The total cost of these obligations, in terms of pensions and
related advantages that correspond to a defined benefit, is calculated on the basis of actuarial assessments con-
ducted in keeping with the principles of the revised IAS 19 standard. These calculations bear in mind assumptions
relating to mortality, labour turnover, and salary projections in light of the economic conditions prevailing in each
country or Group company. Discount rates are set with reference to the rate of return and the date of evaluation
for bonds issued by prime companies, or by the state if there is no representative market for private borrowing.
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Plans whose commitments are greater than available funds are recorded under liabilities as a provision for liabilities
and charges. If the value of a plan is greater than the commitments, the amount is entered on the asset side of the
balance sheet under prepayments and accruals. Deferred taxes that cover these commitments are recorded under
accruals and deferred income if they are passive deferred taxation, and in receivables due after more than one year
if they are active deferred taxation.
In order to prevent the discounting of the provisions leading to abrupt variations in the results of the company
without any relation to the company's real performance, it has been decided that a large portion of the actuarial
results observed when evaluating these commitments should be carried forward to later years, in line with the
latitude permitted by international accounting standards.
Provision for major repairs and maintenance. Provisions are systematically established for the purpose of peri-
odical checks of and major repairs to production facilities. These provisions are based on prior estimates, done
before each review phase, of the cost of the work. These costs are spread out over the number of years of each
review phase or the number of years remaining before the expenditure is incurred. Provisions established during
previous accounting periods are periodically reviewed, adjusted if necessary and are carried over to the income
statement if they are no longer deemed relevant.
Provision for dismantling and clean-up.
Nuclear power stations: charges associated with dismantling of nuclear power stations are covered by provisions
set aside in the liabilities, under the control of the Supervisory Committee set up under the law of 11 April 2003.
These provisions correspond to the discounted value of the best estimate of the future costs of shutting down,
dismantling and cleaning up the power stations.
Conventional power plants: a provision is set aside to defray expenses arising from the clean-up and demolition
of conventional power plants, based on the most appropriate technical and budgetary estimates.
Provision for storage, removal and reprocessing of nuclear fuel and waste (the back-end of the nuclear fuel cycle).
Future charges for storage, reprocessing and removal of irradiated fuel from the nuclear power stations (down-
stream fuel cycle) are covered by provisions set aside in the liabilities, under the control of the Supervisory
Committee set up under the law of 11 April 2003. These provisions are determined on basis of an average unit
cost estimated from the discounted value of the best estimate of the costs corresponding to all the used quantities
during the operating lifetime of the power stations.
Debts
Debts are entered into the accounts at their nominal value.
Netting of turnover in trading
In line with customary practice in the sector, the turnover for electricity and fuel trading operations only includes the
trading margin, which corresponds to the net sales of related purchases.
Rights and commitments not reflected in the balance sheet
Rights and commitments not reflected in the balance sheet are indicated, by category, in the notes to the accounts
at the nominal value of the commitment indicated in the contract or, failing that, at the estimated value. Rights
and commitments not liable to be quantified are shown in a token entry.
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Financial instruments and derivatives
In managing the risks inherent in its activities, Electrabel makes use of certain financial instruments enabling it to
hedge risk exposures caused by fluctuations in interest rates, exchange rates and fuel prices.
While these instruments hedge asset or liability risk exposures in a precise fashion, their valuation is conducted
using the rule of symmetry. Under this rule, the positive or negative fluctuations brought about by changes in value
of financial instruments are entered in the income statement, in the same way as the transactions to which they
relate.
The same rule is applied when groups of assets and liabilities of the same nature are hedged. The market value of
open positions generated by financial transactions that are not specifically identified as hedging instruments is
assessed at the closing of accounts. By virtue of the prudence concept, any resulting deferred losses are covered.
Currency commitments, holdings and transactions
Current foreign exchange transactions are entered into the accounts at the spot market rate on the day of their
recording. In the event of forward cover, the concerned asset and liability items are valued at the cover rate.
Non-monetary assets and liabilities, i.e. mainly formation expenses, tangible and intangible assets, financial assets
and stocks, continue to be valued at the historic conversion rates. This value is used to calculate depreciations and
any write-downs (see above).
The differences in exchange rates observed at the time of liquidation of monetary assets and liabilities (receivables,
borrowing and debts) are directly recorded in the income statement. The advance payments made are considered
monetary or non-monetary assets, depending on their allocation.
At the end of the accounting period, the main monetary items denominated in foreign currencies are reassessed
based on the spot rate on the day the accounts are closed, with the exception of those items that are specifically
hedged, to which the hedging rate is applied. The net translation variations per currency observed at this time are
recorded in accruals and deferred income if they constitute an underlying profit and in the income statement if
they constitute an underlying loss. The translation variations observed in marketable securities are included in the
income statement, even if they are profits.
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FORMATION EXPENSES
Expenses incurred for capital formation or increase, loan issues and other
formation costs
Net book value at the end of the previous period 10 359
Changes during the period
Variation in perimeter 22
Expenses incurred 301
Depreciation -6 057
Transfers to tangible assets -669
NET BOOK VALUE AT THE END OF THE PERIOD 3 956
INTANGIBLE ASSETS
Merger goodwill, software, other intangible assets
Acquisition cost
At the end of the previous period 107 880
Changes during the period
Variation in perimeter 1 845
Acquisitions 66 232
Decommissionings -2 166
Translation differences 179
At the end of the period 173 970
Depreciation and amounts written-down
At the end of the previous period 28 769
Changes during the period
Variation in perimeter -1 242
Change for the period 18 498
Decommissionings -4 302
Translation differences 146
At the end of the period 41 869
NET BOOK VALUE AT THE END OF THE PERIOD 132 101
NET BOOK VALUE AT THE END OF THE PREVIOUS PERIOD 79 111
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TANGIBLE ASSETS
Considering the accounting constraints arising from the special system of control to which enterprises of our
sector are subjected, we have been authorised by Article 125 of the Company Law, to modify the categories of
tangible assets on the balance sheet since 1980.
This change mainly consists of a transfer:
- of civil engineering, from item 22 to item 23,
- of equipment, from item 23 to item 24,
- of residential housing, from item 26 to item 22.
Acquisition cost
At the end of the previous period 979 288 16 009 084 342 180 58 885 22 198 425 821
Changes during the period
Variation in perimeter -50 136 -192 753 -318 0 -225 8 511
Acquisitions 2 409 77 147 2 293 0 2 232 386 405
Sales and disposals -20 940 -272 356 -66 841 -1 282 -2 057 -2 414
Transfers from one itemto another 7 173 117 035 1 719 -72 93 -124 078
Translation differences 25 249 102 405 740 0 260 1 012
At the end of the period 943 043 15 840 562 279 773 57 531 22 501 695 257
Revaluation surpluses
At the end of the previous period 3 465 2 139
Changes during the period
Recorded 0 0
Reversed -3 -1 976
At the end of the period 3 462 163
Depreciations and write-downs
At the end of the previous period 500 885 12 348 041 293 907 15 901 18 014 210
Changes during the period
Variation in perimeter -26 488 -226 508 -280 0 -207 0
Changed 25 096 303 729 14 708 3 420 1 045 0
Reversed following sales and closures -2 736 -214 634 -51 221 -1 283 -2 057 0
Transfers from one item to another 0 83 0 0 0 -83
Translation differences 12 374 62 831 597 0 240 0
At the end of the period 509 131 12 273 542 257 711 18 038 17 035 127
NET BOOK VALUE
AT THE END OF THE PERIOD 437 374 3 567 183 22 062 39 493 5 466 695 130
AT THE END OF THE PREVIOUS PERIOD 481 868 3 663 182 48 273 42 984 4 184 425 611
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Land andbuildings
Technicalplant andmachinery
Furniture,vehicles
and equip-ments
Leasingand other
similarrights
Other tangibleassets
Assets under constructionand advancepayments
FINANCIAL ASSETS
Participating interests, holdings and shares
Companies at equity Other method companies
Acquisition cost
At the end of the previous period 3 062 510 315 866
Changes during the period
Variation in perimeter* -4 085
Acquisitions 15 741 16 149
Sales and retirals -156 670 -3 160
Transfers 1 041
Other changes 199
At the end of the period 2 921 581 326 010
Changes resulting from using the equity method
At the end of the previous period 684 528
Changes during the period
Cancellation of dividends received -444 770
Share in the profit 267 149
Variation in perimeter* -11 585
Share in other variations to capital and reserves -41 120
Translation differences
At the end of the period 454 202
Amounts written off
At the end of the previous period 52 395
Changes during the period** -11 990
At the end of the period 40 405
Uncalled amounts
At the end of the previous period 10 820 17 678
Changes during the period 3 115 -650
At the end of the period 13 935 17 028
NET BOOK VALUE AT THE END OF THE PERIOD 3 361 848 268 577
NET BOOK VALUE AT THE END OF THE PREVIOUS PERIOD 3 736 218 245 793
* Mainly Belgium Electricity Lines Engineering S.A. and Compagnie Nationale du Rhône.**Mainly write back of amounts written off on Union Fenosa.
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Receivables
Companies at equity Other method companies
Net book value at the end of the previous period 1 132 263 944 269
Changes during the period
Variation in perimeter
Additions 204 452 8 446
Repayments -14 266 -431 340
Write back of amounts written-downs 16 948
Transferts 349 788 -1 041
Translation differences -7 034
NET BOOK VALUE AT THE END OF THE PERIOD 1 672 237 530 248
RESERVES AND PROFIT BROUGHT FORWARD
At the end of the previous period 1 263 671
Changes during the period
Electrabel share in the consolidated profit 944 760
Electrabel profit to be distributed -867 308
AT THE END OF THE PERIOD 1 341 123
GOODWILL
Consolidation goodwill Equity method goodwill
Positive Negative Positive Negative
Net book value at the end of the previous period 1 361 360 264 113 051 263 771
Variation in perimeter 14 683 12 822
Variations due to a modification in the percentage holding -59 188 -6 574
Depreciation -53 860 -5 993
NET BOOK VALUE AT THE END OF THE PERIOD 1 262 995 264 119 880 257 197
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PROVISION FOR PENSIONS AND SIMILAR COMMITMENTSUnder a collective agreement of 2 May 1952, a part of the employees of the main Group companies benefit from sup-
plementary retirement pensions which provide them with an aggregate pension income for a full service life equal
to 75 % of the final year's earnings, having regard to statutory provisions in the matter (pension plan system based
on defined benefits or ‘objective to be reached’). These supplementary payments are partial reversionary (joint and
survivor) annuities with the widow or widower, and may be supplemented by orphan's benefits where relevant.
Supplementary survivor's benefits are paid to rightful claimants in the event of death in service.
The above-mentioned collective agreement expressly provides that these benefits must fulfil three criteria:
- the entitlement to a supplementary pension vests only at legal pensionable age,
- they are charged to operating expenses in the same way as wages and salaries,
- the entitlement is linked to the evolution of the company’s activities.
The same guarantees are granted to employees hired since 1 January 1993 and all management staff, but under
a statutory funded pension scheme financed from staff and employee's contributions. Employees in service prior
to 1 January 1993 were allowed to opt-for to the new scheme, and since 1997 over 90 % of them in Belgium have
been in the funded pension scheme. The contributions are paid respectively to the non-profit organizations Elgabel ASBL
and Pensiobel ASBL, which act as pension funds for the Electricity and Gas industries. A group insurance plan was
introduced to provide the same benefits for management staff.
The charges of the pension plan system based on defined contributions (‘Fixed premiums’) are taken into costs
when the contributions are paid. This system is mainly applicable to staff of the main Group companies, hired
since 1 May 1999 for management staff and since 1 February 2002 for employees. The contributions are paid to the
non-profit organisations Powerbel ASBL and Enerbel ASBL.
ACTUARIAL SCENARIOS
2004 2003
Actualization rate 4.7 % 5.0 %
Expected profitability from assets 5.4 % 5.5 %
Average rate of wage increase (inflation excluded) According to company wage policy
Inflation rate 1.9 % 1.8 %
Growth rate of medical costs (inflation included) 2.5 % 2.5 %
Growth rate of hospitalisation premiums (inflation included) 1.0 % 1.0 %
Growth rate of price advantages (inflation included) 0.25 % 0.25 %
SUMMARY OF PENSIONS AND OTHER COMMITMENTS
2004 2003
Pensions Other Pensions Other
commitments commitments
Costs of services rendered -1 309 833 -294 432 -1 274 791 -284 926
Fair value of hedge assets 715 316 7 232 560 691
Actuarial spreads – not ascertained 13 117 1 239 -11 424 -9 047
Costs of past services – not ascertained
TOTAL NET COMMITMENTS -581 400 -285 961 -725 524 -293 973
Plans for which commitments exceed funds -582 490 -285 961 -726 629 -293 973
Plans for which funds exceed commitments 1 090 1 105
ANALYSIS OF FLUCTUATIONS IN NET COMMITMENTS IN 2004
Pensions Other commitments Total
Fluctuation in the cost of services rendered
Costs of services rendered at opening of period -1 274 791 -284 926 -1 559 717
Cost of services rendered during the period -25 964 -9 557 -35 521
Interest on actualization -60 803 -13 665 -74 468
Contributions paid -4 247 -4 247
Variation in perimeter 4 235 -5 500 -1 265
Profits or losses on write-downs, sale or winding-up -3 406 317 -3 089
Depreciation of costs for past services
Actuarial profits or losses -58 516 -4 364 -62 880
Services paid 113 909 25 234 139 143
Other -250 -1 971 -2 221
Costs of services rendered at close of period -1 309 833 -294 432 -1 604 265
Fluctuation of hedge assets
Fair value of assets at opening of period 560 691 560 691
Expected revenue 31 446 345 31 791
Services paid -113 911 -25 234 -139 145
Contributions received 203 512 25 234 228 746
Variation in perimeter
Actuarial profits or losses 33 578 6 887 40 465
Other
Fair value of assets at close of period 715 316 7 232 722 548
Actuarial profits or losses – not booked 13 117 1 239 14 356
Costs of past services – not booked
COMMITMENTS AT CLOSE OF PERIOD -581 400 -285 961 -867 361
COMMITMENTS AT OPEN OF PERIOD -725 524 -293 973 -1 019 497
ANALYSIS OF THE PENSIONS CHARGE FOR FINANCIAL YEAR 2004
Pensions Other commitments Total
Costs of services rendered during the period -30 211 -9 557 -39 768
Interest on actualisation -60 803 -13 665 -74 468
Expected return from hedge assets 31 446 345 31 791
Depreciation of actuarial spreads 1 254 -221 1 033
Depreciation of costs for past services
Profits or losses on write-downs, sales, winding-up -3 406 317 -3 089
Actuarial profits or losses -3 031 11 402 8 371
Other 1 380 393 1 773
TOTAL -63 371 -10 986 -74 357
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ANALYSIS OF FLUCTUATIONS OF PROVISION OBSERVED IN THE BALANCE SHEETAS AT 31 DECEMBER 2004
Plans for which Plans for which commitments exceed funds exceed
funds commitments
Balance as at 1 January 2004 -1 020 602 1 105
Variation in perimeter -1 265
Total charge -74 295 -62
Contributions paid 228 699 47
Translation differences -988
Balance booked as at 31 December 2004 -868 451 1 090
PROVISIONS FOR OTHER LIABILITIES AND CHARGES
2004 2003
Back end of nuclear fuel cycle 2 655 043 2 606 286
Dismantling of nuclear facilities 1 489 757 1 016 414
Demolition and clean-up of conventional generation sites 202 480 167 726
Removal and storage of radioactive waste 20 903 20 522
Involvement in the Creys-Malville fast breeder reactor project via the SBK company 0 4 599
Restructuration (Belgium, the Netherlands and Italy) 101 255 146 175
Classification of the site of Langerbrugge 6 817 6 817
Cost of market liberalisation* 104 678 97 454
Stop of the heat network in Aalst 0 10 800
Various liabilities and charges 35 498 35 592
TOTAL 4 616 431 4 112 385
*Adaptation of IT systems, Belgian and Dutch ‘stranded costs’, ...
AMOUNTS PAYABLE AFTER MORE THAN ONE YEAR (INCL. CURRENT PORTION OF AMOUNTS PAYABLE AFTER MORE THAN ONE YEAR)
Maturing Maturing Maturing Totalwithin the year in one to five after five years
years
Financial debts 117 399 1 015 757 430 299 1 563 455
Subordinated debentures 0 0 0 0
Unsubordinated debentures 0 25 789 0 25 789
Leasing debts and similar obligations 2 358 10 563 24 879 37 800
Credit institutions 113 302 900 822 399 423 1 413 547
Other loans 1 739 78 583 5 997 86 319
Other amounts payable 6 637 0 101 433 108 070
TOTAL 124 036 1 015 757 531 732 1 671 525
TURNOVER BY CATEGORY OF BUSINESS
2004 2003
Electricity 7 893 295 6 740 391
Gas 2 125 264 1 640 591
Other fuels 20 434 36 950
Steam and heat 196 002 181 242
Water 554 9 437
Services and other activities 1 912 152 2 236 501
TOTAL TURNOVER 12 147 701 10 845 112
AVERAGE NUMBER OF STAFF AND EMPLOYMENT COSTS
2004 2003
Average number of staff employed 16 585 17 360
Employment costs 1 394 594 1 426 333
Payroll and social benefits 819 805 854 447
Employer’s contribution to social security 248 834 241 844
Employer’s premiums for non-statutory insurance 159 265 157 359
Other personnel costs 48 011 49 999
Pensions 118 679 122 684
OTHER EXCEPTIONAL INCOME AND CHARGES (SIGNIFICANT AMOUNTS)
2004 2003
Unique contribution paid to the pension funds -183 477
Recuperation of non-statutory pension and similar commitments to the companies consolidated by equity method 193 721
Costs linked to the wind turbine project in the North Sea -16 146
INCOME TAX
2004 2003
Income tax 262 604 286 182
Tax on the intermunicipal companies consolidated by the equity method 16 720 24 242
Deferred taxes 27 442 -19 963
TOTAL INCOME TAX 306 766 290 461
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CONTINGENT RIGHTS AND COMMITMENTSPersonal guarantees given or irrevocably promised by the enterprise as security for third-party debts or commitments
Enterprises linked by participating interests
Associated intermunicipal companies 60 788
Other enterprises
Ondraf/Niras 13 727
Other personal guarantees given in particular to hedge trading activities 53 972
Real guarantees given or irrevocably promised by the enterprise on its own assets
Pledging of shares held by the Electrabel group, to cover debts and commitments of the Group 238 405
Deposits made by the Electrabel group to guarantee the commitments and debts of companies in the SUEZ-Tractebel/Electrabel group 136 249
Property and values held by third parties in their own name but at the risk and on behalf of the enterprise, if they are not entered in the balance sheet
Guarantees given by third parties on behalf of the enterprise 165 030
Guarantees received, third-party property and values received on trust* 724 583
Significant commitments to acquire fixed assets
Commitment to acquire shares 1 360 962
Commitments to acquire fixed assets 1 354 323
Rights and commitments related to
Exchange rate 706 845
Interest rates (cumulative notional amounts hedged against interest-rate risks) 521 987
Significant disputes and other significant rights and commitments
Commitment to Sibelga, in case of withdrawal of the municipalitie(s) or liquidation of the intermunicipal company equivalent to the amount of pension fund capital which has been paid to retired employees, their heirs and assignees, but which is not immediately claimable 31 411
Contribution of the use of Electrabel distribution facilities to the mixed intermunicipal companies Ideg, Interlux, Telelux, Intermosane and Interest P.M.
In 1999, Electrabel entered into a ‘Cross Border’ agreement on the Genk-Langerlo power plant’s production capa-
city. This allowed Electrabel to hand over its right to draw the capacity produced from this power plant to a third
party and to repurchase its right afterwards from the same third party.
On account of the payment in advance of the instalment payments stipulated on the repurchase agreement to
financial intermediaries, and owing to the agreements made between the parties, the debt towards the lessor has
not been booked on the debit balance. This debit, transferred to third parties, is now regarded as legally settled.
However, in case of default by some financial intermediary, Electrabel has a commitment towards the lessor, which
will gradually die out with the instalment payments made by those intermediaries. This commitment amounts to
e 517 million for 2004.
* Mainly guarantees received from the counterparts to hedge trading activities of the Group.
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Electrabel has also carried out ‘cross border’ operations on its generating units in the Netherlands.
As a result of the transactions carried out by Electrabel Nederland N.V., long lease and building rights over these
assets have been granted to third parties, through the intermediary of independent legal entities. However, since
Electrabel Nederland N.V. retains the user rights and economic ownership of these assets, they are recorded in the
same way as assets over which Electrabel Nederland N.V. has legal and economic ownership.
In relation to these transactions, there are as well rights as contractual and conditional commitments.
In the face of these commitments, Electrabel issued letters of credit for e 127 million.
RELATIONS WITH SUBSIDIARIES AND AFFILIATED ENTERPRISES
Subsidiaries Affiliated enterprises
2004 2003 2004 2003
Financial assets
Participating interests 26 837 22 668 32 694 32 516
Amounts receivable 484 932 2 025 339 1 672 238 8 507
Amounts receivable
After more than one year 0 71 449
Within one year 53 123 43 807 243 318 353 980
Cash investments
Receivables 1 136 422 1 151 958
Amounts payable
After more than one year 81 935 68 362
Within one year 521 972 2 264 237 357 377 357 841
Financial result
Income from financial assets
Dividends 77 356
Interests 76 071 96 954
Incomes from current assets 24 186 22 136
Debt charges 21 975 39 529
FINANCIAL RELATIONS WITH DIRECTORS OR MANAGERS OF THE CONSOLIDATINGCOMPANYTotal entitlements for the year allocated to directors and managers of the consolidating enterprise in respect of their
functions in this company, in its subsidiaries and its associated enterprises, including respective retirement pensions for
former directors and managers. Due to negligible size of identifiable entitlements and to the reciprocal transfer which
occurs when other entitlements are allocated, this amount is equivalent to that accounted for by the parent company:
e 1 864 thousand.
Report of the College of statutory auditors
Report on the consolidated financial statements for the year ended 31 December 2004 to the shareholders’ meeting of the company
To the Shareholders,
In accordance with legal and statutory requirements, we are pleased to report to you on our audit assignment,
which you have entrusted to us.
We have audited the consolidated financial statements as of and for the year ended 31 December 2004, which
have been prepared under the responsibility of the Board of Directors and which show a balance sheet total of
e 22 494 666 (000) and an income statement resulting in a consolidated profit for the year of e 1 058 923 (000).
We have also examined the consolidated Directors' report.
Unqualified audit opinion on the financial statements
We conducted our audit in accordance with the standards of the ‘Institut des Reviseurs d’Entreprises/Instituut der
Bedrijfsrevisoren’. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free of material misstatement taking into account the
legal and statutory requirements applicable to consolidated financial statements in Belgium.
In accordance with these standards, we considered the Group's administrative and accounting organization of your
company as well as its internal control procedures. We have obtained explanations and information required for
our audit. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing accounting policies used, the basis for con-
solidation and significant estimates made by management, as well as evaluating the overall consolidated financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a fair and true view of the Group’s assets, liabilities,
consolidated financial position as of 31 December 2004, and the consolidated results of its operations for the year
then ended and the information given in the notes to the consolidated financial statements is adequate.
Moreover, the consolidated Directors’ report contains the information required by the Companies Code and is
consistent with the consolidated financial statements.
Antwerp, 7 March 2005
The College of statutory auditors
‘Société Civile sous forme de Société Coopérative à
Responsabilité Limitée’
Klynveld, Peat, Marwick, Goerdeler,
Company auditors
Represented by
Pierre-Paul BERGER
Alexis PALM
‘Société Civile sous forme de Société Coopérative à
Responsabilité Limitée’
Deloitte & Touche,
Company auditors
Represented by
Josephus VLAMINCKX
Ludo VAN HOYWEGHEN
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Annual accounts Electrabel S.A.
In view of the importance of the parent company’s capital and turnover figures in the consolidated accounts,
a more detailed publication of the statutory annual accounts and the associated commentary in this brochure
would be redundant in most instances since it would merely be repeating the explanations given in the consolidated
accounts.
In agreement with the Companies Code, it has been decided to present an abbreviated version of the statutory
annual accounts of Electrabel S.A.
The College of Statutory auditors has published an unreserved report on the statutory annual accounts of
Electrabel S.A.
Those documents have been submitted to the National Bank of Belgium and are available on the website
www.electrabel.com. A copy may be obtained simply by writing to the following address:
Electrabel
Communications
Boulevard du Régent 8
B-1000 Brussels
Belgium
Tel. + 32 2 518 65 90
Fax + 32 2 511 65 99
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Balance sheet – e thousand
ASSETS 2004 2003
FIXED ASSETS 11 751 819 11 628 435
Formation expenses 0 5 452
Intangible assets 68 674 30 340
Tangible assets 1 554 955 1 694 965
Financial assets 10 128 190 9 897 678
CURRENT ASSETS 7 122 938 6 538 488
Amounts receivable after more than one year 2 274 78 534
Stocks and contracts in progress 201 161 334 557
Amounts receivable within one year 2 473 705 2 217 322
Short-term investments 4 170 729 3 732 521
Cash and cash equivalents 187 821 66 914
Prepayments and accrued income 87 248 108 640
TOTAL ASSETS 18 874 757 18 166 923
EQUITY AND LIABILITIES 2004 2003
CAPITAL AND RESERVES 6 673 222 6 555 906
Capital 2 072 722 2 066 719
Share premiums 927 566 905 009
Reserves 3 536 802 3 466 468
Profit brought forward 135 982 117 553
Investment grants 150 157
PROVISIONS AND DEFERRED TAXES 615 207 587 485
Provisions for liabilities and charges 615 207 587 485
AMOUNTS PAYABLE 11 586 328 11 023 532
Amounts payable after more than one year 6 546 298 5 775 656
Amounts payable within one year 4 741 344 4 920 742
Accruals and deferred income 298 686 327 134
TOTAL EQUITY AND LIABILITIES 18 874 757 18 166 923
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Income statement – e thousand
2004 2003
Operating income 8 840 908 7 883 631
Operating charges 8 113 021 7 205 564
OPERATING RESULT 727 887 678 067
Financial income 902 911 770 202
Financial charges 460 131 271 306
FINANCIAL RESULT 442 780 498 896
PRE-TAX OPERATING RESULT 1 170 667 1 176 963
Exceptional income 281 765 1 189 631
Exceptional charges 354 129 116 185
EXCEPTIONAL RESULT -72 364 1 073 446
PRE-TAX PROFIT FOR THE YEAR 1 098 303 2 250 409
Taxes on profit 142 232 183 593
PROFIT FOR THE YEAR 956 071 2 066 816
Transfer from untaxed reserves 0 1 089 152
Removal from untaxed reserves 4 666 7 025
PROFIT FOR THE YEAR AVAILABLE FOR APPROPRIATION 960 737 984 689
Appropriation account – e thousand
2004 2003
PROFIT TO BE APPROPRIATED 1 078 290 1 040 323
Profit for the period available for appropriation 960 737 984 689
Profit brought forward from previous year 117 553 55 634
APPROPRIATION TO CAPITAL AND RESERVES -75 000 -100 000
To legal reserve
To other reserves -75 000 -100 000
RESULT TO BE CARRIED FORWARD -135 982 -117 553
Profit to be carried forward -135 982 -117 553
PROFIT TO BE DISTRIBUTED -867 308 -822 770
Dividends -864 880 -820 458
Directors' fees -2 428 -2 312
If the proposed allocation of the profit is approved, and taking into account the tax regulations, the total net dividend off withholding tax will be fixed at: 11.8200 EUR 11.2500 EUR
With STRIP VVPR: 13.3960 EUR 12.7500 EUR
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Additional notes – e thousand
SHAREHOLDER PROFILE (Law of 2 March 1989)
This declaration has been established as well for SUEZ-Tractebel S.A. (result of the merger between ‘Société
Générale de Belgique’ and Tractebel since 31 October 2003) as for the parent company SUEZ S.A. and their
Group companies – situation on 10.12.2003 (54 697 196 shares issued).
Declared participations Types of voting Number of voting % right rights declared
SUEZ-Tractebel group shares 26 421 716 48.31
SUEZ-Tractebel S.A., place du Trône 1 – 1000 Brussels shares 26 095 788 47.71linked to SUEZ S.A.
Axima Contracting, rue du Monténégro 138-144 – 1190 Brussels shares 55 200 0.10
Axima Services, boulevard du Roi Albert II, B 28 – 1000 Brussels shares 190 150 0.35
Electronavale & Industrielle N.V., Kontichsesteenweg 25– 2630 Aartselaar shares 30 850 0.06
Fabricom GTI, rue Gatti de Gamond 254 – 1180 Brussels shares 22 526 0.04
Indata S.A., avenue Wansart 20 – 1180 Brussels shares 4 000 0.01
Nobema S.A., Place du Trône 1 – 1000 Brussels shares 474 0.00
O.C.A. S.A., Chaussée de Tubize 489 – 1420 Braine-l'Alleud shares 11 160 0.02
TEM S.A., rue de Fierlant 110 – 1190 Brussels shares 11 550 0.02
Laborelec S.C.R.L, rue de Rhode 125 – 1630 Linkebeek shares 18 0.00
SUEZ S.A. 934 292 1.71
SUEZ S.A., rue de la Ville l’Évêque 16 – 75008 Paris
SUEZ GROUP 27 356 008 50.01
Pure intermunicipal finance companies acting together among themselves and with SUEZ-Tractebel 2 380 064 4.36
Pure intermunicipal finance companies acting together with SUEZ-Tractebel 170 926 0.31
TOTAL SUEZ GROUP AND INTERMUNICIPAL
COMPANIES ACTING TOGETHER 29 906 998 54.68
137
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CAPITAL
Amount Number of shares
SHARE CAPITAL
Subscribed capital
At the close of the previous period 2 066 719
Changes during the period
Increase in capital reserved for personnel 6 003 158 931
At the end of the period 2 072 722
Analysis of capital
Share categories
Company shares w.r.v.r. 2 072 722 54 878 197
Registered or bearer shares
Registered 30 156 114
Bearer 24 722 083
UNSUBSCRIBED AUTHORISED CAPITAL
At the end of the period 243 164
INCOME TAXES2004
Breakdown of item 670/3
Taxes on the result of the period
Taxes and deductions due or paid 325 920
Estimated Belgian tax excesses -166 497
Foreign corporate tax of the period 1 521
Taxes on the result of the previous period 59
Breakdown of item 770/3
Adjustment of taxes
Estimated adjustment of taxes 18 771
Main sources of disparities between pre-tax profit, expressed in the accounts, and the estimates taxable profit, with special indication of those arising from timing differences between the accounting profit and the tax profit (if the result of the period is appreciably influenced by it at tax level)
Deduction of income from permanent participating interests 742 863
Use of the deduction for investments 26 448
Sources of deferred taxation (insofar as that information is significant for the estimation of the financial position of the company)
Deferred tax asset
Deduction for investments 78 677
Deferred tax liability
Untaxed reserves 1 569 741
Capital and share premiums 587 237
Autorità per l’energia elettrica e il gas (Italy)
Independent public authority, in charge of the regulation and
control of the electricity and natural gas sectors.
Cogeneration
Combined generation of heat and power.
Commission de Régulation de l'Énergie (France)
An independent administrative authority charged with regulating
the liberalised electricity and gas markets.
Degrees/day
Expresses in degrees Celsius to what extent the average daily
temperature is below 16.5 °C. The colder it is, the higher the
number of degrees/day.
Dienst uitvoering en toezicht Energie (The Netherlands)
This organisation has the responsibility for implementing the
Dutch Electricity and Gas Acts, as well as supervising compliance
with these Acts. DTe falls under the Ministry of Economic Affairs
and has been included as a chamber within the Dutch
Competition Authority (NMa). As a result, effective synergy is
achieved between DTe and the other directorates of NMa.
Electricity and Gas Regulatory Commission (Belgium)
An autonomous body, charged with advising the authorities on
the organisation and operation of the liberalised electricity and
gas markets. Moreover, it oversees and monitors the application
of relevant laws and regulations.
A General Council, consisting of representatives of the federal and
regional governments, of associations of employees, employers
and small businesses, of environmental associations, and of
generators, distributors and consumers monitors its operation.
For the regulated segment of the market, the Commission has
taken over the task of the Electricity and Gas Monitoring
Committee.
Elia (Belgium)
Company acting as Transmission System Operator. It is legally
independent and operationally autonomous. Its shareholders are
Electrabel, SPE and the municipalities, which are represented by
Publi-T.
GRTN (Italy)
GRTN (Gestore della Rete di Trasmissione Nazionale) is
responsible for the operation of the Italian high-voltage
transmission system. The shares of GRTN are held by the
Ministry of Economy and Finance, exercising the shareholder’s
rights jointly with the Ministry of Production Activities.
Laborelec
Belgian laboratory for the electricity industry, subsidiary of
Electrabel.
Mixed intermunicipal company (Belgium)
Association of municipalities with the aim of providing public
utility services in partnership with a private partner, such as
Electrabel. Intermixt, a public utility organisation, comprises all
municipal representatives in the mixed intermunicipal companies
for distribution of electricity, natural gas and cable TV.
Netmanagement (Belgium)
The brand under which Electrabel manages the electricity and
natural gas networks on behalf of distribution system operators.
These are responsible for the construction, operation and
maintenance of the distribution system in a given area.
Quality index
Expresses the savings in energy resulting from the simultaneous
production of electricity and heat, compared with the separate
production of electricity using a CCGT unit (55 % yield) and of
heat using a traditional boiler (90 % yield).
RTE (France)
Created by law, RTE (Réseau de Transport d’Électricité) is the sole
operator of the French high-voltage transmission system.
TenneT (The Netherlands)
The transmission system operator for the Dutch hight-voltage
grid. The State is the sole shareholder.
Glossary
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BtoB Business-to-Business
(industry and companies)
BtoC Business-to-Consumer
(household and professional
customers)
CCGT Combined Cycle Gas Turbine
CHP Combined Heat and Power
CNR Compagnie Nationale du
Rhône
CRE Energy Regulatory Commission
(‘Commission de Régulation
de l’Énergie’ - France)
CREG Electricity and Gas Regulatory
Commission (‘Commission de
Régulation de l’Électricité et
du Gaz’ - Belgium)
CWAPE Walloon Committee for Energy
(‘Commission Wallonne pour
l’Énergie’)
DSO Distribution System Operator
DTe Implementation and
Supervisory Service on Energy
(‘Dienst uitvoering en toezicht
Energie’ - The Nederlands)
EBITDA Earnings Before Interests,
Taxes, Depreciation and
Amortization
EMAS Environmental Management
and Audit Scheme
EU European Union
IFRS International Financial
Reporting Standards
ISO International Organization
for Standardization
RUE Rational use of energy
SHEM Société Hydroélectrique
du Midi
TSO Transmission System Operator
VPP Virtual Power Plant
VREG Flemish Regulatory Authority
for Electricity and Gas
(‘Vlaamse Reguleringsinstantie
voor de Elektriciteits-
en Gasmarkt’)
VVPR Reduced Withholding Tax
(‘Verminderde Voorheffing/
Précompte Réduit’)
ELECTRICITY
W watt
kW kilowatt
1 kW = 1 thousand W
MW megawatt
1 MW = 1 million W
GW gigawatt
1 GW = 1 billion W
kWh kilowatt-hour
1 kWh = 1 thousand Wh
MWh megawatt-hour
1 MWh = 1 thousand kWh
GWh gigawatt-hour
1 GWh = 1 million kWh
TWh terawatt-hour
1 TWh = 1 billion kWh
V volt
kV kilovolt
1 kV = 1 thousand V
BT low voltage (230 and 400 V)
MT medium voltage (1 to 30 kV)
HT high voltage (36 to 220 kV)
THT very high voltage (380 kV)
A ampere
kVA kilovoltampere
1 kVA = 1 thousand VA
MVA megavoltampere
1 MVA = 1 million VA
GAS
kWh kilowatt-hour
1 kWh = 1 thousand Wh
MWh megawatt-hour
1 MWh = 1 thousand kWh
GWh gigawatt-hour
1 GWh = 1 million kWh
TWh terawatt-hour
1 TWh = 1 billion kWh
LP low pressure (< 0.1 bar)
MP medium pressure
(0.1 to 15 bar)
HP high pressure (> 15 bar)
NG natural gas
CNG compressed natural gas
LNG liquefied natural gas
OTHER
CO2 carbon dioxide
NOx nitrogen oxides
SO2 sulphur dioxide
Abbreviations Symbols
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Electrabel S.A.Boulevard du Régent 8 – 1000 Brussels
Belgium
www.electrabel.com
Tel. + 32 2 518 61 11 – Fax + 32 2 518 64 00
VAT BE 403 170 701
RPM/RPR 0403.170.701 Brussels
Investor relationsKoen Rademaekers
Tel. + 32 2 518 65 90
Fax + 32 2 511 65 99
Jan Van Brabant
Tel. + 32 2 518 65 99
Fax + 32 2 511 65 99
All financial information onwww.electrabel.comThe annual report together with the detailed
statutory annual accounts of Electrabel S.A. can
be found in PDF format on www.electrabel.com
Here you will also find:
- appointments by the annual general meeting of
12 May 2005,
- the most recent shareholder’s agenda,
- all annual reports from 1998 onwards,
- all financial information about the company
towards investors and shareholders.
The yearly, half-yearly and quarterly results (sales)
will also be found under ‘Newsroom – Press
releases’.
Environmental reportOur Environmental report 2004 is published on
www.electrabel.com in PDF format.
It is available as a brochure in English, French
and Dutch.
DemandsFor copies of these reports and other
documents:
Electrabel
Boulevard du Régent 8 – 1000 Brussels
Belgium
www.electrabel.com
Tel. + 32 2 518 62 22 – Fax + 32 2 518 64 00
Information
C’est avec plaisir que nous vous enverrons ce rapport annuel en français.
Graag bezorgen wij u dit jaarverslag in het Nederlands.
Table of contents
Message from Gérard Mestrallet and Jean-Pierre Hansen 001
General Management 003
Electrabel today 004
Highlights 006
Shareholders’ guide 008
Key consolidated figures 009
Directors’ report 016
Main developments 018
Financial situation 022
Corporate governance 031
Members of the Board and Auditors 041
Regulatory background 042
Business management 050
Sales of energy and services 052
Electricity generation 060
Trading and Portfolio Management 067
Management of distribution networks 070
Corporate management 074
Branding 076
Human resources 078
Health and safety at work 081
Environment 083
Research and development 087
Business model and risk management 089
Tables 090
Annual accounts 094
Consolidated annual accounts 096
Annual accounts Electrabel S.A. 133
Glossary 138
Information 140
Sites in Europe
The making of ...Play EnergyThe pictures in this Annual Reportinvite you to share the energy of acurious child. Inventive and eager tolearn, the child explores the worldthrough play, and by making contact with others. Electrabel is curious to know what itscustomers want, eager to meet theirrequirements ever more closely. It is inventive in finding solutions,day after day. Our energy is bothfunctional and creative.
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BelgiumElectrabel S.A.Boulevard du Régent 81000 BRUSSELS, BELGIUMwww.electrabel.beTel. + 32 2 518 61 11
The NetherlandsElectrabel Nederland N.V.Dr. Stolteweg 928025 AZ ZWOLLE, THE [email protected]. + 31 38 427 29 00
LuxembourgTwinerg S.A.201, route d’Ehlerange 4108 ESCH-SUR-ALZETTE, LUXEMBOURG Tel. + 352 26 55 49 1
FranceElectrabel France S.A.Le César20 Place Louis Pradel69001 LYON, [email protected]. + 33 4 72 98 23 80
ItalyElectrabel Italia S.p.A.Via Orazio 3100193 ROMA, [email protected]. + 39 06 68 30 18 27
AceaElectrabel S.p.A.Piazzale Ostiense 200154 ROMA, ITALYwww.aceaelectrabel.itTel. + 39 06 57 99 66 91
SpainElectrabel España S.A.General Castaños 43a Planta28004 MADRID, [email protected]. + 34 91 310 62 70
GermanyElectrabel Deutschland AGFriedrichstraße 20010117 BERLIN, [email protected]. + 49 30 72 61 53 500
PolandElectrabel Polska Sp. z o.o.ul. Duleby 540-833 KATOWICE, [email protected]. + 48 32 358 89 99
Electrabel Elektrownia im. Tadeusza Kosciuszki Spólka Akcyjna w Polancu28-230 POLANIEC, [email protected]. + 48 15 865 65 65
HungaryDunamenti Eromu Rt.c/o Electrabel Magyarország Kft.Csenterics u. 82440 SZÁZHALOMBATTA, [email protected]. + 36 23 544 164
Colophon
This Annual Report was produced
by the Corporate and Marketing
Communications department.
Graphic design and production by
OgilvyOne Worldwide.
Editor activity report: Marc Magain
Models: Inarea and Silvio
Pasquarelli, Rome
Photographs highlights:
Raf Beckers, Grupo Generg,
JC Decaux Nederland, Alain Pierot
Printing: Antilope, Lier (Belgium)
Responsible editor: Fernand Grifnée,
Boulevard du Régent 8,
1000 Brussels, Belgium
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OR
T20
04
E
A N N U A L R E P O R T 2 0 0 4
